N.R. Agarwal Industries Ltd.,, Vapi v. The Dy.CIT.,Cent.Circle-3,, Surat

ITSSA 341/AHD/2012 | 2007-2008
Pronouncement Date: 26-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 34120516 RSA 2012
Assessee PAN AAACN7721N
Bench Ahmedabad
Appeal Number ITSSA 341/AHD/2012
Duration Of Justice 1 year(s) 13 day(s)
Appellant N.R. Agarwal Industries Ltd.,, Vapi
Respondent The Dy.CIT.,Cent.Circle-3,, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 26-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 26-07-2013
Assessment Year 2007-2008
Appeal Filed On 13-07-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA VP AND SHRI A. MOHAN ALAN KAMONY AM) ITA NO.341 342 343 AND 344/AHD/2012 (A. Y.: 2007-08 2008-09 2009-10 AND 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. PLOT NO.169 II PHASE GIDC VAPI 396195 PA NO. AAACN 7721 N VS THE D. C. I. T. CENT. CIR-3 AAYAKAR BHAVAN SURAT (APPELLANT) (RESPONDENT) ITA NO.390 391 392 AND 393/AHD/2012 (A.Y.: 2007-08 2008-09 2009-10 AND 2010-11) THE D. C. I. T. CENT. CIR-3 AAYAKAR BHAVAN SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. PLOT NO.169 II PHASE GIDC VAPI 396195 PA NO. AAACN 7721 N (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI J. P. SHAH AND SHRI ASHWIN PAREKH AR DEPARTMENT BY SHRI SHELLY JINDAL CIT DR DATE OF HEARING: 21-06-2013 DATE OF PRONOUNCEMENT: 26-07-2013 O R D E R PER A. MOHAN ALANKAMONY: THESE APPEALS FILED BY THE ASSESSEE AND BY THE REVENUE ARE DIRECTED AGAINST TH E COMMON ORDER OF THE LEARNED CIT(A)-II AHMEDABAD DATED 12-06-201 2 IN APPEAL NO. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 2 CIT(A)-II/CC.3/229 TO 232/2011-12 PASSED U/S 250 R EAD WITH SECTION 143(3) AND 153(A) OF THE IT ACT FOR THE ASSESSMEN T YEARS 2007-08 TO 2010-11. FACTS OF THE CASE BEING SIMILAR AND THE IS SUES INVOLVED THEREIN BEING IDENTICAL ALL THESE APPEALS WERE HEA RD CONSIDERED TOGETHER AND THE SAME ARE BEING DISPOSED OFF BY THI S COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT (SS) A NO.341 TO 344/AHD/2012 (ASSESSEES APPEAL FOR AY 2007-08 TO 2010-11) 2. FIRST WE SHALL TAKE UP THE APPEALS OF THE ASSE SSEE. THOUGH THE ASSESSEE HAS RAISED NUMBERS OF ELABORATE GROUNDS IN EACH RELEVANT ASSESSMENT YEAR VIDE LETTER DATED 20-06-2013 THE ASSESSEE HAS FURNISHED CONCISE GROUNDS OF APPEAL FOR EACH ASSESS MENT YEAR THE SAME ARE REPRODUCED HEREIN UNDER FOR REFERENCE: ASSESSMENT YEAR 2007-08 1. THE LEARNED C.I.T.(A) ERRED IN HOLDING WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE THAT THE ASSESSEE WILL BE ENTITLED TO DEDUCTION U/S. 80IA (4) ON THE PROFIT T HAT REMAINS AFTER REDUCING THE INTEREST EXPENDITURE OF RS.29 70 234/-. 2. THE LEARNED C.I.T.(A) ERRED IN HOLDING THAT THE ASSESSEE HAD COMPUTED THE EXCESS VALUE OF LP STEAM BY RS.56 71 681/- AND THEREBY CLAIMED THE EXCESS DEDUCTION U/S 80IA (4) OF THE ACT. THE COMPUTATION MADE BY THE C. I. T. (APPEALS) RESULTING INTO EXCES S OF RS.56 71 681/- IS INCORRECT. 3. THE C. I. T. (APPEALS) ERRED IN HOLDING THAT 80I A (4) RELIEF WILL BE REDUCED BY DEEMED BROUGHT FORWARD LOSS. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 3 4. THE C. I. T. (APPEALS) ERRED IN ENHANCING INCOME CHARGEABLE TO TAX BY RS.41 61 167/- BY HOLDING THAT THE ASSESSEE HAS DIVERTED EXPENDITURE TO FIRST HALF OF F. Y. 2006-07. 5. THE C. I. T. (APPEALS) ERRED IN ENHANCING INCOME CHARGEABLE TO TAX BY RS.1 16 03 400/- BY HOLDING TH AT THE ASSESSEE HAS CLAIMED EXCESS COAL CONSUMPTION IN UNIT III TO REDUCE INCOME CHARGEABLE TO TAX. 6. THE C. I. T. (APPEALS) OUGHT TO HAVE GRANTED TEL ESCOPING EFFECT OF GIVING THE DEDUCTION OF ADDED EXPENDITURE FROM ADDED INCOME. ASSESSMENT YEAR 2008-09 1. THE LEARNED C.I.T.(A) ERRED IN HOLDING WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE THAT THE ASSESSEE WILL BE ENTITLED TO DEDUCTION U/S. 80IA (4) ON THE PROFIT T HAT REMAINS AFTER REDUCING THE INTEREST EXPENDITURE OF RS.11 09 755/-. 2. THE LEARNED C.I.T.(A) ERRED IN HOLDING THAT THE ASSESSEE HAD COMPUTED THE EXCESS VALUE OF LP STEAM BY RS.1 43 01 776/- AND THEREBY CLAIMED THE EXCESS DEDUCTION U/S 80IA (4) OF THE ACT. THE COMPUTATION MADE BY THE C. I. T. (APPEALS) RESULTING INTO EXCES S OF RS.1 43 01 776/- IS INCORRECT. 3. THE C. I. T. (APPEALS) ERRED IN HOLDING THAT 80I A (4) RELIEF WILL BE REDUCED BY DEEMED BROUGHT FORWARD LOSS. 4. THE C. I. T. (APPEALS) ERRED IN ENHANCING INCOME CHARGEABLE TO TAX BY RS.65 43 504/- BY HOLDING THAT THE ASSESSEE HAS CLAIMED EXCESS COAL CONSUMPTION IN UNI T III TO REDUCE INCOME CHARGEABLE TO TAX. 5. THE C. I. T. (APPEALS) OUGHT TO HAVE GRANTED TEL ESCOPING EFFECT OF GIVING THE DEDUCTION OF ADDED EXPENDITURE FROM ADDED INCOME. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 4 ASSESSMENT YEAR 2009-10 1. THE LEARNED C.I.T.(A) ERRED IN HOLDING THE ASSE SSEE HAD COMPUTED THE EXCESS VALUE OF LP STEAM BY RS.6 39 99 459/- AND THEREBY CLAIMED THE EXCESS DEDUCTION U/S 80IA (4) OF THE ACT. THE COMPUTATION MADE BY C. I. T. (APPEALS) RESULTING INTO EXCESS OF RS.6 39 99 459/- IS INCORRECT. 2. THE C. I. T. (APPEALS) ERRED IN HOLDING THAT 80I A (4) RELIEF WILL BE REDUCED BY DEEMED BROUGHT FORWARD LOSS. 3. THE C. I. T. (APPEALS) ERRED IN ENHANCING INCOME CHARGEABLE TO TAX BY RS.3 51 65 000/- BY HOLDING TH AT THE ASSESSEE CLAIMED EXCESS COAL CONSUMPTION IN UNI T III TO REDUCE INCOME CHARGEABLE TO TAX. 4. THE C. I. T. (APPEALS) OUGHT TO HAVE GRANTED TEL ESCOPING EFFECT OF GIVING THE DEDUCTION OF ADDED EXPENDITURE FROM ADDED INCOME. 5. THE C. I. T. (APPEALS) OUGHT TO HAVE GRANTED DEP RECIATION ON FURNITURE AT THE RESIDENCE OF THE MANAGING DIREC TOR. 6. THE C. I. T. (APPEALS) ERRED IN ENHANCING THE IN COME BY HOLDING THAT THE ASSESSEE HAS CLAIMED EXCESS COAL CONSUMPTION OF RS.2 02 24 750/- IN UNIT II. ASSESSMENT YEAR 2010-11 1. THE LEARNED C.I.T.(A) ERRED IN HOLDING THE ASSE SSEE HAD COMPUTED THE EXCESS VALUE OF LP STEAM BY RS.6 48 81 794/- AND THEREBY CLAIMED THE EXCESS DEDUCTION U/S 80IA (4) OF THE ACT. THE COMPUTATION MADE BY C. I. T. (APPEALS) RESULTING INTO EXCESS OF RS.6 48 81 794/- IS INCORRECT. 2. THE C. I. T. (APPEALS) ERRED IN HOLDING THAT 80I A (4) RELIEF WILL BE REDUCED BY DEEMED BROUGHT FORWARD LOSS. 3. THE C. I. T. (APPEALS) ERRED IN ENHANCING INCOME CHARGEABLE TO TAX BY RS.2 43 27 693/- BY HOLDING TH AT IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 5 THE ASSESSEE HAS CLAIMED EXCESS COAL CONSUMPTION IN UNIT III TO REDUCE INCOME CHARGEABLE TO TAX. 4. THE C. I. T. (APPEALS) OUGHT TO HAVE GRANTED TEL ESCOPING EFFECT OF GIVING THE DEDUCTION OF ADDED EXPENDITURE FROM ADDED INCOME. 5. THE C. I. T. (APPEALS) OUGHT TO HAVE GRANTED DEP RECIATION ON FURNITURE AT THE RESIDENCE OF THE MANAGING DIREC TOR. 3. THE ABOVE CONCISE GROUNDS OF THE ASSESSEE ARE F URTHER CONSICED AND SUMMARIZED ISSUE-WISE HEREIN BELOW FOR ADJUDICATION:- ISSUE NO.1:- DISALLOWANCE OF PROPORTIONATE INTEREST EXPENSES FOR THE LOAN EXTENDED BY THE ASSESSEE TO ITS 80IA U NIT WHILE COMPUTING THE PROFIT YEARNED BY THE 80IA UNIT. (GRO UNDS NO. 1 FOR A. Y. 2007-08 AND 2008-09). ISSUE NO.2 :- DISALLOWANCE OF DEDUCTION U/S 80IA (4) OF THE AC T TOWARDS THE CLAIM OF LP STEAM. (GROUND NO.2 FOR ASS ESSMENT YEAR 2007-08 AND 2008-09 AND GROUND NO.1 OF ASSESSM ENT YEAR 2009-10 AND 2010-11). ISSUE NO .3:- SET OFF OF LOSS WORKED OUT BY THE AO IN CO-GEN POWER PLANT AGAINST THE PROFIT OF PAPER UNIT. (GROU ND NO.3 FOR ASSESSMENT YEAR 2007-08 & 2008-09 GROUND N0.2 FOR ASSESSMENT YEARS 2009-10 AND 2010-11). ISSUE NO .4:- ENHANCEMENT OF INCOME CHARGEABLE TO TAX OF RS. 41 61 167/- BY THE LEARNED CIT(A) HOLDING THAT THE ASSESSEE HAS DIVERTED EXPENDITURE TO FIRST HALF IN F.Y.2006-07 (GROUND NO.4 OF AY 2007-08). ISSUE NO .5:- ENHANCING THE INCOME CHARGEABLE TO TAX BY THE LEARNED CIT(A) BY HOLDING THAT THE ASSESSEE HAD CLA IMED EXCESS COAL CONSUMPTION IN UNIT III TO REDUCE INCOM E CHARGEABLE TO TAX (GROUND NO.5 OF A. Y. 2007-08 GR OUND NO.4 OF A. Y. 2008-09 GROUND NO.3 OF A. Y. 2009-10 AND GROUND NO.3 OF A. Y. 2010-11). IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 6 ISSUE NO .6:- ALLOWING TELESCOPING EFFECT BY GIVING THE DEDUCTION OF ADDED EXPENDITURE FROM ADDED INCOME (G ROUND NO.6 FOR AY 2007-08 AND GROUND NO.5 FOR AY 2008-09 GROUND NO.4 FOR AY 2009-10 AND 2010-11). ISSUE NO.7 :- GRANTING DEPRECIATION ON FURNITURE AND FIXTURES PROVIDED AT THE RESIDENCE OF MANAGING DIRECTOR (GRO UND NO.5 FOR AY 2009-10 AND 2010-11. ISSUE NO.8:- ENHANCING THE INCOME CHARGEABLE TO TAX BY THE LEARNED CIT(A) HOLDING THAT THE ASSESSEE HAD CLAIME D EXCESS COAL CONSUMPTION IN UNIT II TO REDUCE INCOME CHARGE ABLE TO TAX (GROUND NO.6 OF A. Y. 2009-10). ASSESSEES APPEAL ITA NO.341/AHD/2012 FOR AY 2007-08 ITA NO.342/AHD/ 2012 FOR AY 2008-09 ITA NO.343/AHD/2012 FOR AY 2009-10 AND ITA NO.344/AHD/2012 FOR 2010-11 4. ISSUE NO.1:- DISALLOWANCE OF PROPORTIONATE INTEREST EXPENSES FOR THE LOAN EXTENDED BY THE ASSESSEE TO I TS 80IA UNIT WHILE COMPUTING THE PROFIT EARNED BY THE 80IA UNIT (GROUNDS NO. 1 FOR A. Y. 2007-08 AND 2008-09):- DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT PURSUANT TO SEARC H ACTION U/S 132 OF THE ACT IT WAS OBSERVED BY THE LEARNED AO THAT T HE ASSESSEE HAD EXTENDED INTEREST BEARING FUNDS TO ITS 80IA UNITS HOWEVER DID NOT CHARGE SUCH INTEREST TO THE UNIT WHILE ARRIVING AT THE PROFITS EARNED BY IT THEREBY INFLATING THE PROFITS OF THE 80 IA UNIT S OF THE ASSESSEE FOR WHICH THE ASSESSEE HAD CLAIMED DEDUCTION. THEREFORE THE LEARNED AO MADE ADDITION BY CHARGING PROPORTIONATE INTEREST TO THE IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 7 ASSESSEES 80IA UNITS WHILE COMPUTING DEDUCTION U/S 80 IA OF THE ACT. WHEN THE MATTER CROPPED UP BEFORE THE LEARNED CIT(A ) THE LEARNED CIT(A) SUBSCRIBED TO THE RATIO ADOPTED BY THE LEARN ED AO HOWEVER RE-WORKED THE DISALLOWANCE OF INTEREST AT RS.29 70 234/- AND RS.11 09 755/- FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09 RESPECTIVELY. 4. 1 THE LEARNED AR ARGUED BEFORE US STATING THAT THE ASSESSEE HAD SUBSTANTIAL CAPITAL WHICH IS MUCH MORE THAN THE LOA N EXTENDED TO THE 80 IA UNITS AND THEREFORE THE LEARNED AO WAS NOT JUSTIFIED IN DISALLOWING THE PROPORTIONATE INTEREST WHILE COMPUT ING PROFITS OF THE 80 IA UNITS. THE LEARNED AR HAD FURTHER RELIED IN THE DECISION OF THE CASE IN CIT VS RELIANCE UTILITIES AND POWER LTD. R EPORTED IN 313 ITR 340 WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE HAS OWN FUNDS OR INTEREST FREE FUNDS THEN THE PRESUMPTION WOULD B E THAT SUCH LOANS EXTENDED BY THE ASSESSEE WOULD BE FROM ITS OW N FUNDS/INTEREST FREE FUNDS. FURTHER ON PERUSING THE BALANCE SHEET OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 AND 20 08-09 IT IS APPARENT THAT THE SHARE CAPITAL AND RESERVES AND SU RPLUS OF THE ASSESSEE AGGREGATED TO RS.37 52 71 973/- AND RS.43 15 86 742/- RESPECTIVELY. THEREFORE FOLLOWING THE RATIO LAID D OWN BY THE HONBLE HIGH COURT (SUPRA) WE HEREBY DELETE THE ADDITION OF RS.29 70 234/- FOR THE ASSESSMENT YEAR 2007-08 AND RS.11 09 755/- FOR THE ASSESSMENT YEAR 2008-09 MADE ON ACCOUNT OF DISALLOW ANCE OF INTEREST SINCE THE TERM LOAN OBTAINED BY THE ASSESS EE COMPANY FROM OUTSIDE SOURCE IS COMPARATIVELY MUCH LESS THAN OWN CAPITAL & IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 8 RESERVES. THUS THE GROUND NO.1 FOR BOTH THE ASSESS MENT YEAR 2007- 08 AND 2008-09 ARE ALLOWED IN FAVOUR OF THE ASSESSE E. 5. ISSUE NO.2 :- DISALLOWANCE OF DEDUCTION U/S 80IA (4) OF THE ACT TOWARDS THE SALE OF LP STEAM TO THE ASSESSEES ANCILLARY UNITS. (GROUND NO.2 FOR ASSESSMENT YEAR 2007-08 AND 2008-09 AND GROUND NO.1 OF ASSESSMENT YEAR 2009-10 AND 2010 -11):- THE LEARNED AO OBSERVED THAT THE ASSESSEE WAS INFLATING THE PROFIT OF THE ITS 80 IA UNITS BY SALE OF LOW PRESSURE STEAM TO TH E ASSESSEES ANCILLARY UNITS BY CLAIMING IT AS POWER AND ADOPTIN G HIGH RATE OF ELECTRICITY PER UNIT FOR THE LOW PRESSURE STEAM SOL D TO THE ANCILLARY UNITS. THE LEARNED AO FURTHER OBSERVED THAT THE ASS ESSEE WAS USING THE LOW PRESSURE STEAM GENERATED BY ITS 80 IA UNITS FOR DRYING UP OF PAPER SHEETS AND NOT FOR GENERATING ELECTRICITY. ON LY THE HIGH PRESSER STEAM GENERATED BY THE ASSESSEE WAS USED FOR PRODUC ING ELECTRICITY. SINCE THE ASSESSEE WAS UTILIZING THE LOW PRESSURE STEAM GENERATED BY IT AS A RAW MATERIAL FOR PRODUCING PAPER SHEETS AND NOT FOR GENERATING ELECTRICITY THE LEARNED AO DISALLOWED T HE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IA OF THE ACT FOR THE PROFITS GENERATED OUT OF THE SALE OF LOW PRESSURE STEAM TO ITS ANCILL ARY UNITS. FURTHER THE LEARNED AO WAS OF THE VIEW THAT STEAM IS NOT PO WER AND THEREFORE THE ASSESSEE IS NOT ENTITLED TO DEDUCTIO N U/S 80IA OF THE ACT FOR THE REVENUE EARNED BY IT FROM THE STEAM GENERAT ED. WHEN THE MATTER REACHED THE LEARNED CIT(A) THE LEARNED CIT( A) FOLLOWING THE DECISIONS OF VARIOUS HIGHER AUTHORITIES HELD THAT S TEAM GENERATED DURING THE PROCESS OF GENERATING ELECTRICITY UNIT I N CAPTIVE POWER IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 9 PLANTS IS BY-PRODUCT AND THEREFORE IS ELIGIBLE FO R DEDUCTION U/S 80IA OF THE ACT. HOWEVER SINCE THE METHOD OF CALCULATIO N OF LP STEAM WORKED OUT BY THE LEARNED AO WHICH WAS FURTHER MO DIFIED BY THE LEARNED CIT(A) WAS NOT ACCEPTABLE TO THE ASSESSEE THE ASSESSEE HAS RAISED THIS GROUND. 5.1 THE LEARNED AR SUBMITTED BEFORE US THAT ONE MOR E OPPORTUNITY MAY BE GIVEN FOR PRESENTING ALL THE DETAILS BEFORE THE REVENUE FOR THE CORRECT CALCULATION OF THE COST OF LP STEAM SUPPLIE D TO THE ANCILLARY UNITS OF THE ASSESSEE. THE LEARNED DR POINTED OUT T O THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL THAT STEAM IS NOT POWER FOR CLAIMING DEDUCTION U/S 80 IA OF THE ACT AS THE INTE NTION OF THE LEGISLATURE WAS TO PROVIDE DEDUCTION TO THE INDUSTR IAL UNDERTAKING PRODUCING ELECTRICITY. THE LEARNED DR FURTHER ARGUE D THAT ALL THE DECISIONS OF THE HIGHER JUDICIARIES CITED BY THE AS SESSEE AND RELIED ON BY THE LEARNED CIT(A) WERE WITH RESPECT TO SALE OF STEAM PRODUCED BY CAPTIVE POWER PLANTS AS BY-PRODUCTS BUT IN THE AS SESSEES CASE THE LP STEAM PRODUCED WAS NOT BY-PRODUCT OF THE CAP TIVE POWER PLANT BUT THE CO-GENT PLANT OF THE ASSESSEE WAS SPE CIALLY DESIGNED TO PRODUCE LP STEAM FOR THE CONSUMPTION OF ITS ANCILLA RY UNITS. SINCE THIS ISSUE IN THE REVENUES APPEAL THAT STEAM IS NOT POWER IS HELD IN FAVOUR OF THE REVENUE ON PAGE 22 PARA 19.1 HEREIN B ELOW THIS GROUND RAISED BY THE ASSESSEE HAS BECOME INFRUCTUOU S AND THEREFORE IT IS DISMISSED AS SUCH. 6. ISSUE NO.3:- SET OFF OF LOSS WORKED OUT BY THE AO IN CO- GEN POWER PLANT AGAINST THE PROFIT OF PAPER UNIT. ( GROUND NO.3 IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 10 FOR ASSESSMENT YEARS 2007-08 & 2008-09 GROUND N0.2 FOR ASSESSMENT YEARS 2009-10 AND 2010-11):- FROM THE ORDER OF THE LEARNED CIT(A) IT IS EVIDENT THAT THE LEARNED CIT(A ) HAS DIRECTED THE LEARNED AO TO REDUCE THE INCOME OF THE ELIGIBLE UND ERTAKING VIZ. POWER PLANT CLAIMING DEDUCTION U/S 80IA OF THE ACT BY BROUGHT FORWARD BUSINESS LOSSES OF THAT UNDERTAKING IF ANY IN VIE W OF THE SPECIFIC PROVISIONS OF SECTION 80IA(5) OF THE ACT BY PLACIN G RELIANCE IN THE CASE OF ACIT V/S GOLDMINE SHARES AND FINANCE (P).LT D. REPORTED IN 113 ITD 209. SINCE THE LEARNED AR HAS NOT PRODUCED ANY CONTRARY DECISIONS WE DO NOT HAVE ANY REASON BUT TO CONFI RM THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. IT IS ORDERED ACCORDI NGLY. THUS THE GROUNDS RAISED FOR THE RELEVANT ASSESSMENT YEARS AR E DISMISSED. 7. ISSUE NO.4:- ENHANCEMENT OF INCOME CHARGEABLE TO TAX OF RS. 41 61 167/- BY THE LEARNED CIT(A) HOLDING THAT THE ASSESSEE HAS DIVERTED EXPENDITURE TO FIRST HALF IN F.Y.2006- 07 RELEVANT TO ASSESSMENT YEAR 2007-08 (GROUND NO.4 OF AY 2007-08) :- DURING THE COURSE OF APPELLATE PROCEEDINGS THE LEARNED CI T(A) HAD NOTICED THAT THE COAL CONSUMPTION FOR GENERATION OF ELECTRI CITY AND STEAM IN UNITI AND UNITII WHEN COMPARED WITH THE COAL CONS UMPTION OF GENERATION OF ELECTRICITY AND STEAM IN UNIT III THERE WAS A HUGE DISCREPANCY. SUCH DISCREPANCY WAS ALSO PERSISTENT I N THE SUBSEQUENT ASSESSMENT YEARS. WHEN QUERIED BY THE LEARNED CIT ( A) THE MANAGING DIRECTOR OF THE APPELLANT COMPANY MADE SUB MISSIONS WITHOUT PRODUCING ANY DOCUMENTS VOUCHERS OR EVIDEN CE. THE ANNUAL ACCOUNT OF THE COMPANY THOUGH REFLECTED THE RELEVAN T DATA WERE NOT IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 11 SUPPORTED BY ANY DOCUMENTARY EVIDENCE OR COMPUTATIO NS. AFTER A DETAILED ANALYSIS AND BASED ON THE AVAILABLE DATA THE LEARNED CIT(A) WORKED OUT THE DETAILS AND MADE COMPUTATION RESULT ING IN AN ADDITION OF RS. 41 61 167/-. 7.1 THE LEARNED AR ARGUED BEFORE US THAT THE COMPAN Y WAS MAINTAINING ACCOUNTS AND OTHER DATA IN SAP (ERP) AN D THEREFORE ALL THE RELEVANT DATA WERE AVAILABLE WHICH WAS NOT EXAM INED BY THE LEARNED CIT(A). THE LEARNED AR FURTHER SUBMITTED THAT ONE MORE OPPORTUNITY MAY BE PROVIDED TO THE ASSESSEE TO PRES ENT ALL THE REQUISITE DATA BEFORE THE REVENUE. 7.2 THOUGH THE LEARNED DR STRONGLY OBJECTED TO THE SUBMISSION OF LEARNED AR HE HAD FINALLY AGREED FOR THE MATTER TO BE REMITTED BACK TO THE FILE OF LEARNED CIT(A) FOR DENOVA CONSIDERAT ION PROVIDED THE ASSESSEE ASSURES THAT ALL THE REQUISITE MATERIALS W ILL BE PRODUCED BEFORE THE REVENUE PROMPTLY FOR THE SPEEDY DISPOSAL OF THE CASE. 7.3 AFTER HEARING BOTH THE SIDES AND PERUSING THE M ATERIALS ON RECORD WE FIND THAT THE ASSESSEE HAD NOT CO-OPERAT ED WITH THE LEARNED CIT(A) DURING THE APPELLATE PROCEEDINGS SAT ISFACTORILY BY PRODUCING ALL THE RELEVANT MATERIALS. HOWEVER THE LEARNED CIT(A) AFTER DETAILED EXAMINATION OF THE ISSUE BASED ON TH E AVAILABLE DOCUMENTS ARRIVED AT THE CONCLUSION THAT THE BALAN CE COST ATTRIBUTED TO HP STEAM USED IN ELECTRICITY GENERATION IN UNIT- III WOULD BE RS.41 61 167/- FOR WHICH ADDITION HAS TO BE MADE . IN THIS REGARD WE ARE OF THE VIEW THAT THE CASUAL ATTITUDE OF THE ASS ESSEE REQUIRES TO BE IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 12 DISCOURAGED FOR NOT CO-OPERATING BEFORE THE REVENUE . HOWEVER IN THE INTERESTS OF JUSTICE WE REMIT THE MATTER BACK TO THE FILE OF THE LEARNED CIT(A) TO LOOK INTO THE ISSUE AFRESH AFTER OBTAINING REMAND REPORT FROM THE LEARNED AO. FURTHER WE DIRECT THE ASSESSEE TO CO- OPERATE WITH THE REVENUE IN ITS PROCEEDINGS BY PROD UCING ALL THE RELEVANT DOCUMENTS AND DETAILS OF INFORMATION GENER ATED BY THE ERP SOLUTIONS/SAP FOR SPEEDY DISPOSAL OF THE CASE. IT I S ORDERED ACCORDINGLY. 8. ISSUE NO .5:- ENHANCING THE INCOME CHARGEABLE TO TAX BY THE LEARNED CIT(A) BY HOLDING THAT THE ASSESSEE HAD CLAIMED EXCESS COAL CONSUMPTION IN UNIT III TO REDUCE INCOM E CHARGEABLE TO TAX (GROUND NO.5 OF A. Y. 2007-08 GROUND NO.4 O F A. Y. 2008- 09 GROUND NO.3 OF A. Y. 2009-10 AND GROUND NO.3 OF A. Y. 2010- 11):- DURING THE COURSE OF APPELLATE PROCEEDINGS THE AS SESSEE HAD SHOWN ITS INABILITY TO PROVIDE THE DATA FOR GENERAT ION OF STEAM FOR THE ASSESSMENT YEAR 2007-08 AND 2010-2011. FURTHER THE ASSESSEE HAD SHOWN ITS INABILITY TO SUBMIT THE DETAILS OF STEAM GENERATED BY ITS UNIT III AND ALSO DID NOT SUBMIT THE BASIS FOR ARRIVING AT THE STEAM GENERATED AND THEIR INTERNAL TECHNICAL CALCULATION. FURTHER THE DATA OF STEAM GENERATED PROVIDED BY THE ASSESSEE ON THE BAS IS OF INTERNAL TECHNICAL CALCULATION WAS NOT SUPPORTED BY ANY COGE NT EVIDENCE SUCH AS LOG BOOKS ETC. HAMPERED BY THE INSUFFICIENT DATA PROVIDED TO THE LEARNED CIT(A) BY THE ASSESSEE; THE LEARNED CIT(A) AFTER ELABORATE CONSIDERATION CALCULATED THE ASSESSEES EXCESS COA L CONSUMPTION SHOWN IN UNITS WHICH DO NOT HAVE THE BENEFITS OF 80 IA OF THE ACT IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 13 WHICH WAS CORRESPONDINGLY REDUCED BY THE ASSESSEE I N THE UNIT HAVING 80 IA BENEFITS. BASED ON THE ABOVE THE LEAR NED CIT(A) MADE THE ADDITIONS AS DETAILED BELOW FOR THE RELEVANT AS SESSMENT YEARS:- SR. NO. ASSESSMENT YEAR AMOUNT (RS.) 01 2007-08 1 16 03 400 02 2008-09 65 43 504 03 2009-10 3 51 65 000 04 2010-11 2 43 27 693 8.1 THE LEARNED AR SUBMITTED BEFORE US THAT THE ASS ESSEE IS MAINTAINING RECORDS IN SAP (ERP) AND THEREFORE AL L THE RELEVANT DATA ARE AVAILABLE ALONG WITH SUPPORTING DOCUMENTS. THE LEARNED AR FURTHER REQUESTED THAT ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO PRESENT ITS CASE BEFORE THE REVENUE. 8.2 THE LEARNED DR STOUTLY OBJECTED TO THE SUBMISSI ON OF THE ASSESSEE HOWEVER CONCEDED IN THE SAME MANNER AS I N THE EARLIER ISSUE (SUPRA). 8.3 AFTER HEARING BOTH THE SIDES AND PERUSING THE M ATERIALS ON RECORD BEFORE US WE HEREBY DECIDE THE ISSUE AS HEL D IN PARA 7.3 OF THIS ORDER HEREINABOVE AND ACCORDINGLY REMIT BACK THE ISSUE TO THE FILE OF THE LEARNED CIT(A) FOR FRESH CONSIDERATION AFTER OBTAINING REMAND REPORT FROM THE LEARNED AO AND WITH FURTHER DIRECTIONS AS SPECIFIED HEREIN ABOVE IN PARA 7.3 (SUPRA). IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 14 9. ISSUE NO .6 :- ALLOWING TELESCOPING EFFECT BY GIVING THE DEDUCTION OF ADDED EXPENDITURE FROM ADDED INCOME (G ROUND NO.6 FOR AY 2007-08 AND AY 2008-09 GROUND NO.4 FOR AY 2009-10 AND 2010-11):- THIS ISSUE IS DIRECTLY RELATED TO THE ISSUE NO.5 S TATED HEREIN ABOVE WHICH WE HAVE REMITTED BACK TO THE FIL E OF THE LEARNED CIT(A). THE LEARNED AR ARGUED BEFORE US STATING THA T TELESCOPIC BENEFITS TO THE CORRESPONDING UNIT SHOULD BE GIVEN WHILE SHIFTING THE EXPENDITURE FOR COAL CONSUMPTION FROM ONE UNIT TO T HE OTHER. SINCE THE ISSUE WITH RESPECT TO ALLOCATION OF COAL CONSUM PTION TO ALL THE UNITS DISCUSSED IN ISSUE NO.5 SUPRA IS REMITTED BACK TO T HE FILE OF LEARNED CIT(A) THIS ISSUE OF TELESCOPING BECOMES INFRUCTUO US AND DISMISSED AS SUCH. HOWEVER WE MUST SAY THAT THIS ISSUE HAS T O BE LOOKED INTO KEEPING IN VIEW OF THE OVERALL ACCOUNTING PROCEDURE S AND METHOD FOLLOWED BY THE ASSESSEE COUPLED WITH THE ACTUAL FA CTS OF THE CASE VIZ. TOTAL PURCHASES OF COAL MADE BY THE ASSESSEE ACTUAL CONSUMPTION OF COAL BY EACH UNIT AND CLOSING STOCK OF COAL BY MAINTENANCE OF COAL CONSUMPTION LOG BOOK FOR ALL TH E RELEVANT UNITS BY TAKING HELP OF THE ERP SOLUTIONS INSTALLED BY TH E APPELLANT COMPANY. IT IS HELD ACCORDINGLY. 10. ISSUE NO.7 :- GRANTING DEPRECIATION ON FURNITURE PROVIDED AT THE RESIDENCE OF MANAGING DIRECTOR (GROUND NO.5 FOR AYS 2009-10 AND 2010-11):- DURING THE COURSE OF THE SEARCH MR. RAJENDRA AGARWAL THE MANAGING DIRECTOR OF THE ASSE SSEE COMPANY HAD DISCLOSED RS.50 LACS AS UNDISCLOSED EXPENDITURE OF THE COMPANY UNDER THE HEAD FURNITURE AND FIXTURES FOR THE EXP ENDITURE INCURRED FOR IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 15 PROVIDING FURNITURE AND FIXTURES AT HIS RESIDENCE. THEREAFTER THE ASSESSEE COMPANY HAD CLAIMED DEPRECIATION @ 10% FOR A PERIOD OF SIX MONTHS WHICH WORKS OUT TO RS.2 50 000/- FOR THE RELEVANT ASSESSMENT YEAR AND RS.4 75 000/- FOR THE SUBSEQUEN T ASSESSMENT YEAR 2010-11. THE LEARNED AO DISALLOWED THE CLAIM O F DEPRECIATION ON SUCH FURNITURE AND FIXTURES SINCE THE EXPENSES INCURRED WAS FOR THE RESIDENTIAL HOUSE OWNED BY THE MANAGING DIRECTO R OF THE ASSESSEE COMPANY. 10.1 ON APPEAL THE LEARNED CIT(A) CONFIRMED THE OR DER OF THE LEARNED AO. THE LEARNED AR ARGUED BEFORE US STATING THAT THIS EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINES S SINCE IT WAS A PERQUISITE OFFERED TO THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. THE LEARNED DR COULD NOT CONTROVERT THE SUBMISSIONS OF THE LEARNED AR. AFTER HEARING BOTH THE SIDES AND PERUSING THE M ATERIALS ON RECORD WE FIND STRENGTH IN THE SUBMISSIONS OF THE LEARNED AR. PROVIDING FURNITURE AT THE RESIDENTIAL HOUSE OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY IS NOTHING BUT PERQUISITE OFFERED TO THE MANAGING DIRECTOR BY THE ASSESSEE COMPANY AND THER EFORE THE SAME HAS TO BE TAXED AS SUCH IN THE HANDS OF THE MA NAGING DIRECTOR AND AT THE SAME TIME THE ASSESSEE COMPANY SHOULD B E ALLOWED DEPRECIATION FOR SUCH ASSETS SINCE IT IS PUT TO USE DURING THE COURSE OF THE BUSINESS OF THE ASSESSEE COMPANY. THEREFORE TH E GROUNDS RELATED TO THIS ISSUE ARE ALLOWED IN FAVOUR OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 16 11. ISSUE NO.8 :- ENHANCING THE INCOME CHARGEABLE TO TAX BY THE LEARNED CIT(A) BY HOLDING THAT THE ASSESSEE HAD CLAIMED EXCESS COAL CONSUMPTION IN UNIT II TO REDUCE INCOME CHARGEABLE TO TAX (GROUND NO.6 OF A. Y. 2009-10):- FACTS OF THIS ISSUE ARE IDENTICAL TO ISSUE NO.5 DISCUSSED EARLIER IN THIS O RDER. THE ONLY DIFFERENCE IS WITH REGARD TO EXCESS CONSUMPTION OF COAL IN UNIT II AS AGAINST UNIT III. BOTH THE PARTIES AGREED TO FOLLOW THE DECISION HELD FOR ISSUE NO.5 DISCUSSED SUPRA AND ACCORDINGLY WE HER EBY REMIT BACK THE ISSUE ALSO TO THE FILE OF THE LEARNED CIT(A) FO R FRESH CONSIDERATION AFTER OBTAINING REMAND REPORT FROM THE LEARNED AO A ND WITH FURTHER DIRECTIONS AS SPECIFIED HEREIN ABOVE IN PARA 7.3. 12. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. (REVENUES APPEAL) ITA NO.390 391 392 AND 393/AHD/2012 (A.Y.: 2007-08 2008-09 2009-10 AND 2010-11) 13. THE SURVIVING COMMON GROUNDS FOR ALL THE RELEVA NT ASSESSMENT YEARS MENTIONED HEREIN-ABOVE (EXCEPT THE FIGURES) R AISED BY THE REVENUE ARE TAKEN FROM THE ASSESSMENT YEAR 2007-08 AND THEY ARE REPRODUCED HEREIN UNDER FOR REFERENCE:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2 00 000/- MADE ON ACCOUNT OF INFLATION OF PURCHASES WITHOUT CONSIDERING THE FACT THAT THE PURCHASE PARTIES WERE IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 17 NOT MAINTAINING THE STOCK REGISTER AND THEIR BOOKS OF ACCOUNTS WERE REJECTED AT THE TIME OF ASSESSMENT U/S 153C OF THE I. T. ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACT IN DELE TING THE INTEREST DISALLOWANCE OF RS.1 75 27 159/-:- A) ON THE BASIS OF ADDITIONAL EVIDENCES SUBMITTED BEFORE HIM AND WITHOUT GIVING OPPORTUNITY TO THE AO IN CONTRAVENTION OF THE PROVISIONS OF RULE 46A OF THE I. T. RULES. B) WITHOUT CONSIDERING THE FACT THAT THE ASSESSEES CASE FALLS WITHIN THE AMBIT OF SECTION 14A OF THE I . T. ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN ALLOWING TH E DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA (4) (IV ) OF THE I. T. ACT OF RS.1 09 06 211/- WITHOUT CONSIDERING THE FACT THAT: A) AT THE TIME OF SEARCH THE ASSESSEE DID NOT MAINTAIN SEPARATE BOOKS OF ACCOUNTS AS PER SECTION 80IA(4) OF THE I. T. ACT. B) THE AUDIT REPORTS OF THE POWER UNIT SUBMITTED LATER ON DURING THE ASSESSMENT PROCEEDINGS ARE UNRELIABLE. C) THE DECISION OF HON. ITAT AHMEDABAD IN THE CASE OF DCIT VS JAI CHEMICAL INDS. IS NOT APPLICABLE IN THIS CASE BECAUSE THE AO HAS NOT PRESUMED THAT NO SEPARATE BOOKS OF ACCOUNTS HAVE BEEN PREPARED. D) AT THE TIME OF SEARCH ON 16/07/2009 SHRI SANTOSH ZAGADE (DGM) SHRI RAMESH IYER (CFO) AND DURING POST SEARCH PROCEEDINGS THE IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 18 MANAGING DIRECTOR SHRI RAJENDRA AGARWAL ON 29/07/2009 ADMITTED THAT NO SEPARATE AUDIT OR SEPARATE BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED IN RESPECT OF TOTAL CLAIM OF DEDUCTION IN RESPECT OF POWER AS WELL AS STEAM. E) THE LOG BOOKS MAINTAINED FOR ELECTRICITY GENERATION AND STEAM GENERATION FOUND DURING THE COURSE OF SEARCH CANNOT BE CONSIDERED AS A BOOKS OF ACCOUNTS OF THE ELIGIBLE UNIT. F) STEAM IS NOT POWER FOR CLAIMING DEDUCTION U/S. 80IA (4) (IV) (A) IN VIEW OF THE ACCOMPANYING CLAUSES OF THIS SECTION VIZ. 80 IA (4) (IV) (B) AND 80 IA (4) (IV) ( C) OF THE I. T. ACT AS THE INTENTI ON OF THE LEGISLATURE WAS TO PROVIDE DEDUCTIONS TO THE INDUSTRIAL UNDERTAKINGS PRODUCING ELECTRICITY . G) THE SALE OF STEAM CANNOT BE TREATED AS PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION U/S. 80 IA (4) OF THE I. T. ACT IN VI EW OF THE JUDGMENT OF THE APEX COURT IN THE CASES OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY (113 ITR 84) STERLING FOODS (237 ITR 579) AND PANDIAN CHEMICALS LTD. (262 ITR 278). WITHOUT PREJUDICE TO THE ABOVE 4) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING ASSESSEES CLAIM U/S. 80IA (4) IN THE ALTERNATIVE WORKING OF THE DEDUCTION BY THE AO A) BY RELYING UPON THE ADDITIONAL EVIDENCES SUPPLIE D BY THE ASSESSEE DURING APPELLATE PROCEEDINGS AND WITHOUT GRANTING ANY OPPORTUNITY TO THE AO BEFORE WORKING OUT THE COST ALLOCATION TO THE LOW PRESSURE STEAM (LP STEAM) PRODUCED ON AN ENTIRELY NEW FORMULA THEREBY VIOLATING THE PROVISIONS OF RULE 46A OF THE I. T. RULES. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 19 B) BY DIRECTING HIM TO CHARGE THE SALE RATE OF ELECTRICITY GENERATED AT THE RATE CHARGED BY THE GEB FROM OTHER CUSTOMERS AT THE RATE OF RS.5.32 PER UNIT INSTEAD OF RS.2.62 PER UNIT ADOPTED BY THE AO. C) BY RELYING UPON VARIOUS JUDGMENTS OF THE TRIBUNALS WHICH STATED THAT SALE RATE SHOULD BE THE RATE AT WHICH ELECTRICITY IS SOLD BY GEB TO OTHER CONSUMERS IN SPITE OF THE FACT THAT THESE JUDGMENTS DID NOT APPLY IN THIS CASE SINCE THE AO HAS ADOPTED THE SALE RATE OF ELECTRICITY TO ITS OWN UNIT AT THE AVERAGE RATE AT WHICH CO-GEN PLANTS IN GUJARAT SELL THE POWER TO THE GEB. D) BY NOT CONSIDERING THE FACT THAT THE RATE OF ELECTRICITY GENERATION @ RS.5.32 BY THE GEB INCLUDES THE GENERATION COST THE DISTRIBUTION COST THE TRANSMISSION COST AND OTHER SUBSIDY COSTS AND THESE COSTS ARE NOT BORNE BY THE ASSESSEE WHILE GENERATING POWER FROM ITS CO-GEN PLANT AND THEREFORE THE LD. CIT(A) OUGHT TO HAVE TAKEN THE RATE OF GENERATION @ RS.2.62 PER UNIT AS ADOPTED BY THE AO. 14. IN ADDITION TO THE ABOVE COMMON GROUNDS THE R EVENUE IN ITS APPEAL IN IT(SS) A NO.393/AHD/2012 FOR THE ASSESSME NT YEAR 2010- 11 HAS RAISED THE FOLLOWING TWO OTHER GROUNDS VIZ. GROUNDS NO.2 AND 4 AS PER APPEAL FORM NO.36: 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT IN ALLOWING THE INTEREST EXPENSES OF RS.6 00 000/- AS NO NEXUS WAS ESTABLISHED BETWEEN THE UNACCOUNTED DISCLOSED INCOME OF RS.50 00 000/- AND ITS APPLICATION IN RENOVATION OF THE BUNGALOW. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 20 4. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DEL ETING THE ENTIRE ADDITION OF RS.86 19 041/- AS THE ASSESSEE HAD ALREADY BOOKED ALL THE EXPENSES RELATED TO THIS UNRECORDED SALES. 15. GROUND NO.1: ESTIMATED ADDITION OF RS.2 LACS FOR ALL THE RELEVANT ASSESSMENT YEARS ON ACCOUNT OF INFLATION O F PURCHASES OF WASTE PAPERS FROM VARIOUS VENDORS : - DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE LEAR NED AO THAT THE ASSESSEE HAD PURCHASED WASTE PAPERS FROM TWO SUPPLI ERS VIZ. MAHAVIR SALES CORPORATION AND PAPER SALES CORPORATI ON WHO WERE ALSO ASSESSED U/S 153C OF THE ACT. IT WAS FURTHER NOTICED BY THE LEARNED AO THAT THESE SUPPLIERS WERE NOT MAINTAININ G STOCK REGISTERS AND WERE UNABLE TO IDENTIFY THE LIST OF THEIR CLIEN TS. HENCE THE LEARNED AO REJECTED THEIR BOOKS OF ACCOUNT AND ASSUMING THE POSSIBILITY OF INFLATION OF PURCHASES BY THE ASSESSEE MADE AN ESTI MATED ADDITION OF RS.2 LACS FOR ALL THE RELEVANT ASSESSMENT YEARS. 15.1 THE LEARNED CIT(A) DELETED THE ADDITION FOR TH E FOLLOWING REASONS:- (A) THE ASSESSING OFFICER HAS NOT POINTED OUT ANY S PECIFIC PURCHASES AS NON-GENUINE. (B) THE APPELLANT/ASSESSEE HAD MAINTAINED ALL THE E VIDENCES OF PURCHASES MADE ALONG WITH DELIVERY CHALLANS WEI GH BRIDGE RECEIPTS ETC. (C) THE APPELLANT/ASSESSEE HAD ALSO PRODUCED THE SU PPLIERS IN RESPONSE TO SUMMONS ISSUED U/S 131 OF THE ACT. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 21 (D) THE REJECTION OF BOOKS OF ACCOUNT OF THE SUPPLI ERS CANNOT BE MADE AS A BASIS FOR ESTIMATING ADDITION IN THE H ANDS OF THE APPELLANT/ASSESSEE. (E) PAYMENTS TO ALL THESE SUPPLIERS WERE MADE BY CH EQUE AND ALL THE PURCHASES WERE ACCOUNTED. 16. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARN ED AO WHEREAS THE LEARNED AR RELIED ON THE ORDER OF THE L EARNED CIT(A). 17. AFTER HEARING BOTH THE PARTIES PERUSING THE MA TERIALS ON RECORD AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE LEARNED CIT(A) HAS MADE ELABORATE FINDING AND H E IS QUITE JUSTIFIED BY ALLOWING THE ISSUE IN FAVOUR OF THE AS SESSEE. IN THIS SITUATION WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDER. ACCORDINGLY THIS GROUND RAISED BY THE REVENUE IS D ISMISSED FOR ALL THE RELEVANT ASSESSMENT YEARS. 18. GROUND NO.2 DELETING THE INTEREST DISALLOWED BY THE LEARNED AO SINCE INTEREST BEARING LOAN WAS EXTENDED TO 80IA UNITS OF THE ASSESSEE: - SINCE WE HAVE ALLOWED THE GROUND RAISED BY THE ASSESSEE IN THE ASSESSEES APPEAL EVEN FOR THE PAR TIAL DISALLOWANCE SUSTAINED BY THE LEARNED CIT(A) ON THE SAME ISSUE WHICH IS DISCUSSED AT ISSUE NO.1 (SUPRA PAGE 6 PARA 4) THIS GROUND RAISED BY THE REVENUE HAS BECOME REDUNDANT AND THEREFORE W E DISMISS THE SAME FOR ALL THE RELEVANT ASSESSMENT YEARS. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 22 19. GROUND NO.3 (A) TO 3 (E):- IN THE GROUND NO.3 SUB-CLAUSE (A) TO (E) RELATES TO MAINTENANCE OF BOOKS OF ACCOUNT:- LEARNED DR ARGUED IN SUPPORT OF THE LEARNED AO AND RE ITERATED THE STAND OF THE AO. ON THE OTHER HAND THE LEARNED AR SUBMITTED BEF ORE US THAT ALL THE RELEVANT RECORDS WERE MAINTAINED IN SAP/(ERP) B Y THE ASSESSEE AND AGREED FOR THE CASE TO BE REMITTED BACK IN ORDE R TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRESENT ALL THE RELEVANT DOCUMENTS BOOKS OF ACCOUNT MAINTAINED IN SAP ETC. CONSIDERING THE SUBMISSION OF THE LEARNED AR AND FACTS AND CIRCUMS TANCE OF THE CASE WE ALSO FEEL IT TO BE APPROPRIATE THAT FOR SU CH VERIFICATION THE MATTER IS REQUIRED TO BE REMITTED BACK TO THE FILE OF THE LEARNED CIT(A) FOR DE NOVO CONSIDERATION AND ACCORDINGLY REMIT BAC K THESE ISSUES TO THE FILE OF THE LEARNED CIT(A) WITH A DIRECTION TO CONSIDER THESE ISSUES AFRESH AFTER OBTAINING REMAND REPORT FROM THE LEAR NED AO AND PASS APPROPRIATE ORDER AS PER LAW AND MERIT. THESE GROU NDS OF APPEAL OF THE REVENUE VIZ. 3 (A) TO 3 (E) ARE TREATED AS ALLO WED FOR STATISTICAL PURPOSE. 19.1 GROUND NO.3 (F) AND 3(G ):- IN THESE GROUNDS THE REVENUE HAS CLAIMED THAT IN THE ASSESSEES CASE STEAM CANNOT BE CONSIDERED AS POWER AND THEREFORE THE PROFIT DE RIVED FROM SALE OF STEAM CANNOT BE GIVEN BENEFIT U/S 80IA (4) OF THE ACT. THE LEARNED AO IN HIS ALTERNATE STAND HAS HELD THAT STE AM IS NOT POWER AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S 80 I A (4) OF THE ACT FOR THE FOLLOWING REASONS:- IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 23 (I) DEDUCTION UNDER SECTION 80IA (4) IS MEANT FOR G ENERATION AND DISTRIBUTION OF POWER AND STEAM WHICH IS USED F OR DRYING UP THE PAPER CANNOT BE CONSIDERED AS POWER. THE PRODUCTION OF STEAM IS ONLY A BY-PRODUCT WHICH IS U SED FOR ITS MANUFACTURING ACTIVITY AND IS ONLY AN INTERMEDI ARY RAW MATERIAL FOR MANUFACTURING PROCESS. (II) THE PRIME PURPOSE OF SECTION 80 IA(4) WAS TO G IVE IMPETUS TO POWER SECTOR AND STEAM IS ONLY AN INTERMEDIARY RAW MATERIAL WHICH IS USED FOR THE PRO CESS OF PAPER MANUFACTURING THEREFORE IT IS NOT POWER. (III) THERE IS NO DIRECT NEXUS OF SALE OF STEAM WIT H THE ESSENTIAL ACTIVITY OF INDUSTRIAL UNDERTAKING BEING GENERATION OF POWER. RELIANCE WAS PLACED ON DECISIO NS OF HONBLE APEX COURT IN THE CASES OF PANDIAN CHEMICAL S LIMITED 262 ITR 278 CAMBAY ELECTRIC SUPPLY INDUSTR IAL COMPANY 113 ITR 84 AND CIV V/S STERLING FOOD 237 IT R 579 AND HELD THAT FOR CLAIMING DEDUCTION ON ANY INC OME IT IS THE BURDEN OF THE APPELLANT TO ESTABLISH THAT IN COME HAS IMMEDIATE AND DIRECT NEXUS WITH ESSENTIAL ACTIVITY OF INDUSTRIAL UNDERTAKINGS. (IV) HAD THE APPELLANT NOT BEEN INTO PAPER PROCESSI NG UNIT STEAM WOULD HAVE BEEN EITHER UN-UTILIZED OR REMAINE D NON-SALEABLE COMMODITY AND EVEN IN THAT CASE STEAM WOULD NOT HAVE ATTRACTED DEDUCTION UNDER SECTION 80 IA. (V) THE DEDUCTION IS ALSO NOT ALLOWABLE FOR THE RE ASON THAT THE APPELLANT HAS GENERATED POWER FOR CAPTIVE PURPO SE AND REFERRING TO THE DECISION OF HONBLE CHENNAI I. T. A. T. IN THE CASE OF CHETTINAD CEMENT CORPORATION LIMITED (ITA NO.1026/MDS/2005) WHICH HELD THAT DEDUCTION IS ONLY WHEN SEPARATE BUSINESS UNDERTAKING IS PUT FOR GENER ATION AND DISTRIBUTION OF POWER AND THE SAME IS NOT AVAIL ABLE WHEN BUSINESS ENTERPRISE IS SIMPLY PUTTING UP CAPTI VE POWER PLANT TO MEET IN-HOUSE REQUIREMENT. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 24 (WE FIND THAT THIS DECISION CITED BY THE LEARNED AO CANNOT BE SUSTAINABLE IN THE LIGHT OF THE DECISION RENDERED B Y THE HONBLE MADRAS HIGH COURT IN THE CASE TAMILNAD PETROPRODUCT S LTD. VS ACIT REPORTED IN 338 ITR 643 WHEREIN IT WAS HELD TH AT PROFITS OR GAINS DERIVED BY IN-HOUSE CONSUMPTION WOULD ALS O BE ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT AND ACCO RDINGLY WE REJECT THIS ARGUMENT OF THE LEARNED AO.) 19.2 THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE AS SESSEE STATING THAT STEAM IS POWER AND THEREFORE ELIGIBLE FOR DE DUCTION U/S 80 IA OF THE ACT RELYING ON THE FOLLOWING DECISIONS:- (I) DCIT VS MAHARAJA SHREE UMAID MILLS LTD. 120 TT J 711 (II) DCW LIMITED 132 TTJ 442 (III) SIAL SBEC BIOENERGY LTD 83 TTJ 886 19.3 THE LEARNED DR AGREED BEFORE US THAT IN THE AB OVE MENTIONED JUDGMENTS IT HAS BEEN HELD THAT FOR THE GENERATION OF STEAM IN CO- GENERATION PLANT BENEFIT OF SECTION 80IA OF THE AC T SHOULD BE GRANTED. HOWEVER THE LEARNED DR FURTHER POINTED OUT THAT IN ALL THE ABOVE DECISIONS THE PROFIT DERIVED FROM THE SALE OF STEAM WAS GIVEN BENEFIT OF SECTION 80 IA OF THE ACT BECAUSE STEAM WAS THE R ESIDUE BY- PRODUCT OF THE CO-GENERATION PLANT. THE LEARNED DR STATED THAT FROM THE FACTS OF THE PRESENT CASE BEFORE US THE CO-GENE RATION PLANT OF THE ASSESSEE WAS SO DESIGNED IN ORDER TO PRODUCE STEAM IN SUBSTANTIAL QUANTITY FOR THE BENEFIT OF THE ANCILLARY OBJECT OF THE ASSESSEE COMPANY FOR MANUFACTURING ITS MAIN PRODUCT VIZ. PA PER AND THEREFORE STEAM WAS NOT RESIDUE BY-PRODUCT OF THE CO-GENERATION IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 25 PLANT BUT DUAL PRODUCT VIZ. HIGH PRESSURE STEAM GE NERATED FOR PRODUCING ELECTRICITY AND LOW PRESSURE STEAM FOR CO NSUMPTION AS RAW MATERIAL FOR MANUFACTURING PAPER. FURTHER THE LEARNED DR REFERRED TO THE PRINCIPLES FOR INTERPRETATION OF ST ATUTE RELYING ON THE DECISION IN THE CASES OF K. P. VARGHESE VS. I. T. O. (131 ITR 597) (SC) AMERICAN HOTEL AND LODGING ASSOCIATION EDUCAT ION INSTITUTE VS CBDT (289 ITR 46) (DEL.) DELHI FLOUR MILLS CO. LTD . VS CIT (95 ITR 151) (DEL.) SOORAJMULL NAGARMULL VS. CIT (190 ITR 418) (CAL.) CIT VS. M. K. VAIDYA (224 ITR 186) (KAR.) AND CIT VS. V ENKATSWARA HATCHERIES PVT. LTD. (273 ITR 174) (SC). THE LEARNE D DR ALSO REFERRED TO THE BUDGET SPEECH OF THE HONBLE FINANC E MINISTER DATED 27 TH FEBRUARY 1993 PART B PARA 57 AND 58 WHEREIN IT WAS STATED:- 57. ELECTRICITY IS A CRITICAL INPUT FOR THE FUTURE GROWTH OF OUR ECONOMY. I THEREFORE PROPOSE TO INTRODUCE A FIVE-YE AR TAX HOLIDAY IN RESPECT OF PROFITS AND GAINS OF NEW INDUSTRIAL UNDE RTAKINGS SET UP ANYWHERE IN INDIA FOR EITHER GENERATION OR GENERATI ON AND DISTRIBUTION OF POWER. THE FIVE-YEAR TAX HOLIDAY WI LL BEGIN FROM THE YEAR OF GENERATION OF POWER. 58. THE FIVE-YEAR TAX HOLIDAY IN BOTH THESE CASES WILL BE PART OF SECTION 80-IA OF THE INCOME-TAX ACT. AT THE END OF THE FIVE-YEAR PERIOD THESE UNITS WILL BE ENTITLED TO THE EXISTIN G DEDUCTION UNDER SECTION 80-IA FOR THE REMAINING PERIOD. WITH THE ABOVE MENTIONED SUBMISSIONS THE LEARNED D R ARGUED THAT THE INTENTION OF THE LEGISLATURE WAS EXPLICIT AND U NAMBIGUOUS THAT THE BENEFIT OF SECTION 80IA WOULD BE AVAILABLE ONLY FOR UNITS PRODUCING AND DISTRIBUTING ELECTRICITY AND NOT FOR PRODUCING ANY OTHER FORM OF POWER. THE LEARNED DR THEREFORE PLEADED THAT THE ASSESSEE SHOULD NOT BE GIVEN BENEFIT OF SECTION 80 IA OF THE ACT WI TH RESPECT TO SALE OF IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 26 STEAM BECAUSE LOW PRESSURE STEAM GENERATED BY THE A SSESSEES UNIT IS NEITHER RESIDUE BY-PRODUCT NOR POWER AS CON STRUED BY THE DECISIONS OF THE HIGHER JUDICIARY AND THE ACT BUT IT IS A PRODUCT SPECIALLY MANUFACTURED FOR THE CONSUMPTION OF PAPER UNIT OF THE ASSESSEE. 19.4 THE LEARNED AR STOUTLY OPPOSED TO THE CONTENTI ON OF THE LEARNED DR AND CITED THE DECISION OF THE CASE CIT V S TANFAC INDUSTRIES LTD. TAMILNADU PETROPRODUCTS LTD. VS AC IT 13 TAXMANN.COM 139 (MAD. HC) AND THE OTHER CASES MENTI ONED SUPRA WHEREIN IT WAS HELD THAT THE VALUE OF STEAM USED FO R CAPTIVE CONSUMPTION BY THE ASSESSEE IS ELIGIBLE FOR DEDUCTI ON U/S 80IA OF THE ACT. IT WAS THEREFORE PRAYED THAT DEDUCTION MAY B E GRANTED U/S 80 IA OF THE ACT FOR THE VALUE OF THE STEAM PRODUCED BY T HE ASSESSEE. 20. AFTER HEARING BOTH THE SIDES AND PERUSING THE M ATERIALS ON RECORD WE FIND THAT THIS ISSUE NEEDS CONSIDERATION . THE REPRESENTATIVE OF THE ASSESSEE COMPANY HAD HIMSELF ADMITTED BEFORE THE LEARNED CIT(A) THAT THE CO-GENERATION PL ANT OF THE ASSESSEE IS NOT A SIMPLE CAPTIVE POWER PLANT BUT I T IS CO- GENERATION PLANT WHERE LOW PRESSURE STEAM IS NOT GE NERATED BY DEFAULT BUT IS GENERATED BY DESIGN. THUS IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE CAPTIVE POWER PLANT OF T HE ASSESSEE IS NOT A PLANT FOR GENERATING ELECTRICITY ALONE BUT IT IS S O DESIGNED TO GENERATE LOW PRESSURE STEAM AS WELL IN SUBSTANTIAL QUANTITY. THEREFORE THE LOW PRESSURE STEAM PRODUCED BY THE ASSESSEES PLANT IS NOT RESIDUE BY-PRODUCT BUT A PRODUCT BY ITSELF. ON FURTHER PER USING THE FACTS IT IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 27 EMERGES THAT THE ASSESSEE COMPANY HAD UTILIZED MORE QUANTITY OF STEAM IN ITS OVERALL OPERATION WITH RESPECT TO MANU FACTURING OF PAPER THAN GENERATION OF ELECTRICITY. THE QUANTITY OF HP STEAM AND LP STEAM PRODUCED DURING THE VARIOUS YEARS ARE REPRODU CED HEREIN FOR REFERENCE:- ASSESSMENT YEAR 2007-08 (*) % 2008-09 (*) % 2009-10 (*) % 2010-11 (*)% A TOTAL QUANTITY OF STEAM GENERATED 78044 100% 186493 100% 227827 100% 233973 100 B LESS: LOW PRESSURE STEAM EXTRACTED FOR PAPER DRYING. 46090 59% 114490 61% 136547 60% 154616 66% (A- B) HIGH PRESSURE STEAM UTILIZED FOR GENERATING ELECTRICITY 31954 41% 72003 39% 91280 40% 79357 34% (*) % OF HP STEAM AND LP STEAM FROM THE TOTAL STEAM PRODUCED. 21. THUS IT IS EVIDENT FROM THE ABOVE THAT THE ASS ESSEE WAS UTILIZING 60% OF STEAM PRODUCED FOR DRYING OF PAPER IN THE PAPER INDUSTRY AND ONLY 40% WAS USED FOR GENERATING POWER /ELECTRICITY. IT WAS FURTHER ARGUED BY THE LEARNED DR THAT IN ALL TH E CASES REFERRED TO BY THE LEARNED AR IN SUPPORT OF HIS CONTENTIONS; TH E FACT WAS THAT THE LP STEAM GENERATED FROM THE OPERATION OF CO-GENERAT ION PLANT WAS RESIDUE BY-PRODUCT AND THEREFORE NOT APPLICABLE T O THE FACTS OF THE CASE BEFORE US. THE LEARNED DR DISTINGUISHED THE CA SES CITED BY THE LEARNED AR AS FOLLOWS:- IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 28 (I) DCIT VS MAHARAJA SHREE UMAID MILLS LTD. 120 TT J 711. WHILE ARGUING THIS CASE THE LEARNED AR HAS SPECIFI CALLY STATED AS FOLLOWS:- IN THE PRESENT CASE OF UNDERTAKING POWER GENERATI ON UNIT OF THE ASSESSEE WAS CONCEIVED AB INITIO TO HAVE THE SY STEM OF WASTE HEAT RECOVERY FOR GENERATION OF STEAM OF REQU IRED PRESSURE WHICH COULD ALSO BE MADE AVAILABLE FOR THE OPERATIONS OF THE TEXTILE UNIT OF THE ASSESSEE. THE STEAM SO GENERATED THROUGH THE ATTACHMENT OF POWER GENERATIO N UNIT WAS BY USING THE RESIDUAL HEAT BEING EXHAUSTED BY T HE ENGINE WHILE PRODUCING ELECTRIC POWER. SUCH STEAM IS THUS GENERATED AS BY-PRODUCT OF PLANT OR GENERATION OF ELECTRICITY . THE STEAM PRODUCED BY THE PLANT IN THIS CASE WAS BY -PRODUCT. MOREOVER THE SPEECH OF THE HONBLE FINANCE MINISTE R WAS NOT BEFORE THE ITAT JAIPUR BENCH OR BEFORE THE OTHER B ENCHES OF THE TRIBUNAL FOR CONSIDERATION WHERE-IN THE HONBLE FIN ANCE MINISTER HAD EXPRESSED THE INTENTION FOR INTRODUCING THE REL EVANT AMENDMENTS TO SECTION 80 IA OF THE ACT THE RELEVAN T PART OF THE SPEECH IS REPRODUCED (AT THE COST OF REPETITION) HE REIN-BELOW FOR REFERENCE:- 57. ELECTRICITY IS A CRITICAL INPUT FOR THE FUTURE GROWTH OF OUR ECONOMY. I THEREFORE PROPOSE TO INTRODUCE A FIVE-YE AR TAX HOLIDAY IN RESPECT OF PROFITS AND GAINS OF NEW INDUSTRIAL UNDE RTAKINGS SET UP ANYWHERE IN INDIA FOR EITHER GENERATION OR GENERATI ON AND DISTRIBUTION OF POWER. THE FIVE-YEAR TAX HOLIDAY WI LL BEGIN FROM THE YEAR OF GENERATION OF POWER. 58. THE FIVE-YEAR TAX HOLIDAY IN BOTH THESE CASES WILL BE PART OF SECTION 80-IA OF THE INCOME-TAX ACT. AT THE END OF THE FIVE-YEAR PERIOD THESE UNITS WILL BE ENTITLED TO THE EXISTIN G DEDUCTION UNDER SECTION 80-IA FOR THE REMAINING PERIOD. (II) DCW LTD. VS ADDL. CIT 37 SOT 322. THE RELEVA NT PORTION OF THE JUDGMENT OF THE MUMBAI BENCH OF THE IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 29 TRIBUNAL IS REPRODUCED HEREIN BELOW FOR REFERENCE W HEREIN IT COULD BE CONSTRUED THAT THE STEAM PRODUCED BY TH E PLANT WAS BY-PRODUCT:- 18.9 IN THE LIGHT OF ABOVE DISCUSSION WE FIND T HAT THE STEAM PRODUCED BY THE ASSESSEE IS ELIGIBLE UNIT IS A BY-P RODUCT AND INCOME FROM SALE OF STEAM IS THE INCOME DERIVED FROM INDUS TRIAL UNDERTAKING THEREFORE DEDUCTION UNDER S. 80-IA IS ALLOWABLE. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND THE CLAIM OF THE ASSESSEE IS ALLOWED. (III) SIAL SBEC BIONERGY VS DCIT (DEL) 83 TTJ 866 IN THIS CASE THE QUESTIONED FRAMED BY THE TRIBUNAL WAS THAT WHETHER THE STEAM GENERATED BY THE ASSESSEE WHICH ROTATES THE TURBINE AND IN THE END GENERATE ELECTRICITY WHEN TA KEN OUT AND USED FOR OTHER PURPOSES IS A FORM OF POWER AND THUS A P OWER OR NOT ? THE BENCH HELD THAT THE RESIDUE BY-PRODUCT BEING THE STEAM IS ELIGIBLE FOR DEDUCTION U/S 80 IA OF THE ACT. (IV) CIT VS M/S. TANFAC INDUSTRIES LTD. TAX CASE ( APPEAL) NO.1773 OF 2008 ORDER DATED 06-11-2008 OF THE HONB LE MADRAS HIGH COURT:- FURTHER IN THIS CASE THE LEARNED DR DISTINGUISHED T HAT THE ASSESSEE WAS A MANUFACTURER OF FLUORINE BASED CHEMICALS WHER EIN GAS WAS CAPTIVELY CONSUMED AND BENEFITS U/S 80 I OF THE INC OME TAX ACT WAS CLAIMED. THE QUESTION POST BEFORE THE HONBLE MADRA S HIGH COURT WAS THAT:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPELLATE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80- I OF THE INCOME TAX ACT IN RESPECT OF CAPTIVE CONSUMPTION O F AHF GAS AS WELL AS SALE OF BY-PRODUCT IS VALID IN LAW? IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 30 THE HONBLE MADRAS HIGH COURT FOLLOWING THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE CIT VS AHMED ABAD MANUFACTURING AND CALICO PRINTING CO. LTD. 162 ITR 760 WHEREIN IT WAS THAT THE ASSESSEE WOULD BE ENTITLED TO THE DEDU CTION UNDER SECTION 80- I OF THE INCOME TAX ACT 1961 IRRESPECT IVE OF WHETHER THE PRODUCT IS SOLD IN THE OPEN MARKET OR IS USED BY TH E ASSESSEE ITSELF. ON APPEAL BY THE REVENUE AGAINST THIS ORDER THE H ONBLE APEX COURT DISMISSED THE SLP (CIVIL) 9004/2009 ON 27-07-2009 IN THE CASE CIT MADRAS VS TANFAC INDUSTRIES LTD. FROM THE ABOVE IT WAS ARGUED BY THE LEARNED DR THA T THE ISSUE BEFORE THE HONBLE HIGHER JUDICIARY WAS DEDUCTION U /S 80 I OF THE ACT I.E. IN RESPECT OF PROFITS AND GAINS OF INDUSTRIAL UNDERTAKING AFTER A CERTAIN DATE IN REGARD TO THE CAPTIVE CONSUMPTION OF GAS IN A CHEMICAL MANUFACTURING UNDERTAKING. THEREFORE IT W AS POINTED BY THE LEARNED DR THAT THE FACTS OF THE CASE ARE DIFFERENT FROM THE FACTS OF THE RELEVANT CASE BEFORE THE BENCH FOR CONSIDERATIO N AND HENCE DO NOT HAVE ANY PRECEDENT VALUE. (V) TAMILNADU PETROPRODUCTS LTD. VS ACIT 13 TAXMANN.COM 139 (MAD. HC):- IN THIS CASE CITED BY THE LEARNED AR LEARNED DR S TOUTLY ARGUED STATING THAT THE ISSUE WAS NOT AS TO WHETHER STEAM COULD BE CONSIDERED AS POWER BUT THE ISSUE WAS WHETHER THE NOTIONAL PROFITS ON ACCOUNT OF POWER GENERATED FROM THE ASSESSEES O WN CAPTIVE POWER PLANT AND UTILIZED FOR ITS OWN BUSINESS ARE E NTITLED FOR DEDUCTION U/S 80 IA OF THE ACT WHEREIN THE HONBLE MADRAS HI GH COURT HELD THAT IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 31 THE CAPTIVE POWER PLANTS ARE ENTITLED FOR SUCH DED UCTION. THE LEARNED AR COULD NOT CONTROVERT TO THE SUBMISSION O F THE LEARNED DR AND FURTHER THE DECISION OF THE CASE WAS NOT PRODUC ED BEFORE US. 22. FROM THE ABOVE IT IS EVIDENT THAT IN ALL THE ABOVE MENTIONED CASES THE TRIBUNAL ALLOWED THE BENEFIT OF SECTION 8 0 IA OF THE ACT WITH RESPECT TO THE RESIDUE BY-PRODUCT OF STEAM GENERATE D BY THE CO- GENERATION PLANT IN THE PROCESS OF GENERATING ELECT RICITY. MOREOVER THE FACTUAL ASPECT IS THAT THE CO-GENERATION PLANTS ARE INSTALLED IN ANY INDUSTRY AS PER THE REQUIRED SPECIFICATION OF THE C ONCERNED INDUSTRY. THE OPERATIONAL PROCESS OF THE CO-GENERATION PLANT IS BY HEATING THE WATER STORED IN THE BOILERS USING FUEL WHEREBY STE AM IS PRODUCED WHICH IS CONDENSED AT HIGH PRESSURE AND WHEN THE SA ME IS INJECTED INTO THE TURBINES FITTED WITH THE DYNAMO ROTATES T HE TURBINES RESULTING IN GENERATION OF ELECTRICITY. THERE ARE VARIOUS TYP ES OF CO-GENERATION PLANTS AVAILABLE WHICH CAN EITHER PRODUCE ELECTRICI TY OR BOTH ELECTRICITY AS WELL AS STEAM. WHEN THE INDUSTRY REQUIRES ONLY E LECTRICITY THEN SUCH CO-GENERATION PLANTS ARE INSTALLED WHEREIN THE WASTAGE BY WAY OF LOW PRESSURE STEAM IS EITHER NIL OR MINIMAL. WHE N THE INDUSTRY DEMANDS STEAM AS ITS RAW MATERIAL FOR OTHER PROCESS THEN THE CO- GENERATION PLANT IS DESIGNED IN SUCH A MANNER SO AS TO PRODUCE ELECTRICITY AS WELL AS THE REQUISITE QUANTITY OF ST EAM. THUS THE CO- GENERATION PLANT ENDS UP PRODUCING TWO PRODUCTS I. E. ELECTRICITY AND LOW PRESSURE STEAM. CONSIDERING THE ABOVE FACTS AND THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US IT IS EVIDENT THAT THE CO- GENERATION PLANT INSTALLED IN THE ASSESSEES FACTOR Y PRODUCES TWO IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 32 PRODUCTS VIZ. 60% LOW PRESSURE STEAM AND 40% HIGH P RESSURE STEAM GENERATING ELECTRICITY. WHEN STEAM HELD UNDER PRESS URE IS RELEASED IT CONTAINS FORCE WHICH IS CAPABLE OF ROTATING THE TUR BINE AS DISCUSSED HEREIN ABOVE. IN THE ASSESSEES CASE BY USING COAL AS FUEL TWO TYPES OF STEAMS ARE GENERATED ONE BEING HIGH PRESSURE STE AM AT 495 DEGREE CENTIGRADE HAVING STEAM ENTHALPY OF 815.95 K . CAL/KG. WHICH IS THE INPUT FOR ELECTRICITY GENERATION AND T HE OTHER BEING LOW PRESSURE STEAM OF 270 DECREE CENTIGRADE HAVING STEA M ENTHALPY OF 718.4 K. CAL/KG DRAWN FROM THE PLANT FOR UTILIZING IN THE PAPER DRYING MACHINE FOR PRODUCING PAPER. THESE ARGUMENTS TAKEN UP BY THE LEARNED DR BEFORE US WERE NOT BEFORE THE LEARNED CI T(A) FOR CONSIDERATION WHICH HAS TO BE ADJUDICATED ON MERITS AND REQUIRE THROUGH EXAMINATION INCLUDING THE BUDGET SPEECH OF THE HONBLE FINANCE MINISTER. THEREFORE WE REMIT THIS I SSUE BACK TO THE FILE OF THE LEARNED CIT(A) TO CONSIDER THE MATT ER AFRESH KEEPING IN VIEW OF THE ADDITIONAL ARGUMENTS TAKEN U P BY THE LEARNED DR BEFORE US AND DECIDE AFTER ALLOWING DUE HEARING TO BOTH THE PARTIES. 23. GROUND NO. 4(A):- SINCE WE HAVE REMITTED BACK THE ISSUE WHETHER STEAM COULD BE CONSIDERED AS POWER FOR THE BENEFIT OF SECTION 80 IA OF THE ACT; THIS ISSUE OF ALLOCATION OF COST IS PRE-MATURE AT THIS STAGE FOR ADJUDICATION. HOWEVER FROM THE F ACTS OF THE CASE IF SUCH ALLOCATION IS WARRANTED THEN AS AGREED BY TH E LEARNED AR THE SAME CAN BE DONE SO BY DRAWING INFORMATION FROM TH E SPECIFICATIONS OF THE CO-GENERATION PLANT AND THE RELEVANT METER R ECORDINGS EMBEDDED IN THE PLANT AND WITH THE VARIOUS OTHER RE CORDS AND DATA IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 33 MAINTAINED BY THE ASSESSEE MANUALLY AND AS WELL AS BY SAP NEEDLESS TO MENTION THAT THE ADAPTABILITY OF THE DA TA CONTAINED IN THE SAP/ERP WILL FURTHER DEPEND ON THE RELIABILITY OF T HE SYSTEMS/SOFTWARE AUDIT CONDUCTED. 24. GROUND NO.4 (B) TO (D):- THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) FOR ADOPTING THE RATE O F ELECTRICITY PRODUCED BY THE ASSESSEE AT RS.5.32 PER UNIT AS AGA INST RS.2.62 PER UNIT ADOPTED BY THE LEARNED AO. THOUGH VARIOUS CONTENTIONS WERE RAISED BY THE LEARNED DR ON THIS ISSUE AS POIN TED OUT BY THE LEARNED AR THIS ISSUE IS SQUARELY COVERED BY THE D ECISION OF THE JURISDICTIONAL HONBLE GUJARAT HIGH COURT IN THE CA SE GODAVARI POWER & ISPAT LTD. REPORTED IN 133 ITD 502 WHICH THE LEA RNED CIT(A) HAS RESPECTFULLY FOLLOWED. THEREFORE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) ON T HIS ISSUE. THIS GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMI SSED. 25. AFTER HEARING BOTH THE SIDES WE HEREBY ADMIT THE TWO ADDITIONAL GROUNDS RAISED BY THE REVENUE FOR THE AS SESSMENT YEAR 2010-11 IN IT(SS)A NO.393/AHD/2012 IN THE INTEREST OF JUSTICE AND TAKEN UP FOR ADJUDICATION HEREIN BELOW. 26. GROUND NO.1:- IN THIS GROUND THE REVENUE IS AGG RIEVED BY THE ORDER OF THE LEARNED CIT(A) FOR ALLOWING INTEREST E XPENSE OF RS.6 00 000/- AGAINST THE UNACCOUNTED DISCLOSED INC OME OF RS.50 00 000/- USED FOR RENOVATION OF THE BUNGALOW . DURING THE COURSE OF SEARCH IT WAS REVEALED THAT THE ASSESSEE HAD RENOVATED THE BUNGALOW OWNED BY THE MANAGING DIRECTOR OF THE COMPANY MR. IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 34 RAJENDRA AGARWAL INCURRING AN EXPENDITURE OF RS.50 LACS. THIS AMOUNT WAS ADDED AS UNACCOUNTED EXPENDITURE IN THE HANDS OF THE ASSESSEE. PRESUMING THAT THIS AMOUNT WAS UTILIZED B Y THE ASSESSEE COMPANY FROM ITS INTEREST BEARING FUNDS; THE LEARNE D AO DISALLOWED THE INTEREST EXPENSE OF RS.6.00 LACS BEING 12% ON R S.50.00 LACS. WHEN THE MATTER CROPPED UP BEFORE THE LEARNED CIT(A ) THE LEARNED CIT(A) MADE A CLEAR FINDING THAT NO BORROWED FUNDS WERE USED BY THE ASSESSEE COMPANY FOR INCURRING SUCH EXPENDITURE SIN CE THE ENTIRE AMOUNT WAS ADMITTED AS UNACCOUNTED INCOME. ACCORDIN GLY THE LEARNED CIT(A) DELETED THE ADDITION OF RS.6.00 LACS . WE FULLY SUBSCRIBE TO THE FINDING OF THE LEARNED CIT(A) AND DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS FINDINGS. THUS THI S GROUND OF THE REVENUE IS DISMISSED. 27. GROUND NO.2:- ADDITION BASED ON SHORTAGE OF STO CK FOR RS.86 19 041/-. DURING THE COURSE OF SEARCH IT WAS NOTICED BY THE LEARNED AO THAT THERE WAS A SHORTAGE OF STOCK TO TH E TUNE OF RS.86 19 041/- AS COMPARED TO THE BOOKS OF ACCOUNTS WHICH LED TO THE PRESUMPTION THAT GOODS HAVE BEEN SOLD CLANDESTI NELY AND NOT ACCOUNTED FOR WHILE AS THE ENTIRE EXPENDITURE RELAT ED TO THESE SALES HAVE BEEN CHARGED TO PROFIT & LOSS ACCOUNT. THEREFO RE THE LEARNED AO MADE AN ADDITION OF RS.86 19 041/- TO THE INCOME OF THE ASSESSEE COMPANY. WHEN THE MATTER REACHED THE LEARN ED CIT(A) THE LEARNED CIT(A) AFTER EXAMINATION HELD THAT THIS AM OUNT WAS DISCLOSED IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 35 AS A PART OF TOTAL DISCLOSURE OF RS.7 61 80 000/- B Y THE ASSESSEE COMPANY. 28. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIALS ON RECORD ON THIS ISSUE. THOUGH BOTH THE PARTIES ADVAN CED VARIOUS ARGUMENTS IN SUPPORT OF THE RESPECTIVE CLAIM NO MA TERIAL WAS BROUGHT ON RECORD BEFORE US TO ARRIVE AT A LOGICAL CONCLUSI ON. THEREFORE WE REMIT THIS ISSUE ALSO BACK TO THE FILE OF THE LEARN ED CIT(A) AND DIRECT HIM TO PASS APPROPRIATE ORDER ON MERITS AND LAW AF TER OBTAINING REMAND REPORT FROM THE LEARNED AO. ACCORDINGLY THI S GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 29. IN THE RESULT THE ASSESSEES APPEALS AS WELL A S THE REVENUES APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 26-07-2013 SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT LAKSHMIKANT LAKSHMIKANT LAKSHMIKANTA AA A DEKA/ DEKA/ DEKA/ DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER ASSTT. REGISTRAR ITAT AHMEDABAD IT (SS) A NO.341 342 343 AND 344/AHD/2012 (AY: 20 07-08 TO 2010-11) M/S. N. R. AGARWAL INDUSTRIES LTD. VS DCIT CC-3 S URAT IT (SS) A NO.390 391 392 AND 393/AHD/2012 (AY: 20 07-08 TO 2010-11) DCIT CC-3 SURAT VS M/S. N. R. AGARWAL INDUSTRIES LTD. 36 1. DATE OF DICTATION: DIRECT ON COMPUTER 01-07-1 3/09-07-13/11-07-13/15-07-13/19-07-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15-07-2013/19-07-136 OTHER MEMBE R: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: