Appeal Details
Counselvise Citation
[2016] 112 COUNSELVISE.COM (IT) 4039 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
22-06-2016
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
04-04-2016
Assessment Year
2010-2011
Appeal Filed On
09-11-2015
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.1864 TO 1867/MDS/2015 & C.O.NOS.125 TO 12 8/MDS/2015 ( / ASSESSMENT YEAS: 2008-09 TO 2011-12 ) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5(2), CHENNAI-600 034. VS M/S. R.K.POWERGEN PVT.LTD., 14/45, DR.GIRIAPPA ROAD, T.NAGAR, CHENNAI-600 017. PAN:AABCR8680H ( /APPELLANT) ( /RESPONDENT/CROSS OBJECTOR ) / APPELLANT BY : MS. H.KABILA, JCIT /RESPONDENT BY : MR. B.S.PURUSHOTHAM, C.A /DATE OF HEARING : 7 TH APRIL, 2016 /DATE OF PRONOUNCEMENT : 22 ND JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE FOUR APPEALS AND FOUR CROSS OBJECTIONS ARE F ILED BY THE REVENUE AND ASSESSEE RESPECTIVELY AGGRIEVED BY THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, CHENNAI DATED 30.03.2015 IN ITA NO.20 3 TO 205/14-15 & 819/13-14 PASSED UNDER SECTION 143(3) R.W.S 147 / 143(3) & 250(6) OF THE ACT. SINCE THE ISSUES IN ALL THESE APPEALS & CROSS OBJECTIONS ARE IDENTICAL, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 ITA NOS.1864 TO 1867 /MDS/2015 : (A.Y.2008-09 TO 2011-12) 2. THE REVENUE HAS RAISED SEVERAL COMMON GROUNDS IN ITS APPEALS, HOWEVER THE CRUXES OF THE ISSUES ARE AS FO LLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT FOR CASH PAYMENTS MADE BY THE ASSESSEE EXCEEDING ` 20,000/- PER DAY TO INDIVIDUALS. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO RE-COMPUTE THE DISALLOWANCE UNDER SECTION 14A R.W.R 8D BY REDUCING THE AMOUNTS INVESTED IN THE SUBSIDIARY COMPANIES. III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 68 OF THE ACT BEING UNEXPLAINED CASH CREDITS. C.O.NOS.125 TO 128/MDS/2015 (A.Y.2008-09 TO 2011-12 ): 3. THE ONLY COMMON GROUND RAISED BY THE ASSESSEE IN ITS CROSS OBJECTIONS IS THAT:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT DEDUCTION UNDER SECTION 80I A HAS TO BE GRANTED ON THE INCOME DERIVED FROM THE UNDERTAKING AFTER ALL DISALLOWANCES AND INCLUDING INTEREST FROM CUSTOMERS. 4. AT THE TIME OF HEARING, THE ASSESSEE RAISED AN ADDITIONAL GROUND IN ITS CROSS OBJECTION NO.126/MDS /2015 3 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 CHALLENGING THE REOPENING OF ASSESSMENT BY THE LEAR NED ASSESSING OFFICER UNDER SECTION 147 OF THE ACT. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF POWER GENERATION, FILED ITS RETURNS OF INCOME WITHIN THE DUE DATE FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12. SUBSEQUEN TLY, ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) R.W .S. 147 OF THE ACT ON 26 TH MARCH 2014 FOR THE ASSESSMENT YEARS 2008-09, 2009-10 & 2010-11, AND ON 28.03.2014 FOR T HE ASSESSMENT YEAR AND 2011-12. GROUND NO.1 : ADDITION MADE UNDER SECTION 40A(3) ACT FOR CASH PAYMENTS MADE EXCEEDING ` 20,000/- PER DAY: 6.1 AT THE OUTSET, WE FIND THAT FOR THE ASSESSMENT YEAR 2010-11, NO ADDITION IS MADE BY INVOKING THE PROVIS IONS OF SECTION 40A(3) OF THE ACT, THEREFORE, THIS GROUND R AISED FOR THE ASSESSMENT YEAR 2010-11 IS DISMISSED AND FOR THE OT HER ASSESSMENT YEARS, WE PROCEED TO ADJUDICATE THE ISSU E HEREIN BELOW:- 4 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 6.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAD MADE SEVERAL CASH PAYMENTS TO THREE SUPPLIERS OF RA W MATERIALS AMOUNTING TO RS.2,89,30,859/-, RS.63,43,0 39 AND RS.3,17,19,944 /- FOR THE ASSESSMENT YEARS 2008-09, 2009-10 & 2011-12 RESPECTIVELY. IT WAS EXPLAINED BY THE ASS ESSEE THAT THE ASSESSEE HAD MADE THE AFORESAID PAYMENT FO R THE PURCHASE OF BIOMASS / AGRICULTURAL WASTE FROM VARIO US FARMERS, CULTIVATORS AND PROCESSORS OF AGRICULTURAL WASTE FROM THREE PARTIES. IT WAS FURTHER SUBMITTED THAT THESE THREE INDIVIDUAL PARTIES ACQUIRED THE FARM WASTE, DRIED I T AND SUPPLIED THE SAME TO THE ASSESSEE BY TRANSPORTING I T TO THE ASSESSEES PREMISES. IT WAS FURTHER EXPLAINED THAT THE PAYMENT FOR ACQUIRING BIOMASS / AGRICULTURAL WASTE WAS PAID BY ACCOUNT PAYEE CHEQUES AND ONLY THE TRANSPORTATIO N CHARGES WERE PAID BY CASH BELOW RS.20,000/- TO A SI NGLE TRANSPORTER IN A DAY. FURTHER, IT WAS SUBMITTED THA T SINCE THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF 80IA OF THE ACT, EVEN IF ADDITIONS ARE MADE INVOKING THE PROVISIONS OF SECTI ON 40A(3) 5 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 OF THE ACT DEDUCTION HAS TO BE GRANTED UNDER SECTIO N 80IA OF THE ACT. HOWEVER, THE LEARNED ASSESSING OFFICER REJ ECTED THE SUBMISSION OF THE ASSESSEE BY STATING THAT THE BENE FIT UNDER SECTION 80IA OF THE ACT CANNOT BE EXTENDED FOR THE VIOLATION OF PROVISION 40A(3) OF THE ACT BECAUSE THE VERY PUR POSE OF INTRODUCING SECTION 40A(3) OF THE ACT WOULD BECOME REDUNDANT. FURTHER, THE LEARNED ASSESSING OFFICER O PINED THAT THE LEGISLATURE IN ITS WISDOM HAD ENACTED SECTION 4 0A(3) OF THE ACT TO DISCOURAGE CASH PAYMENT TO ANY SINGLE PE RSON EXCEEDING RS.20,000/- PER DAY TOWARDS EXPENDITURE. THEREFORE, INVOKING THE PROVISIONS OF SECTION 40A(3 ) OF THE ACT, THE LEARNED ASSESSING OFFICER MADE ADDITION IN THE CASE OF THE ASSESSEE FOR THE ALL THREE RELEVANT ASSESSME NT YEARS. 6.3 BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THE LEARNED AUTHORIZED REPRESENTATIVE EX PLAINED THAT THE TRANSPORTERS DELIVERED THE MATERIALS AT TH E GATE OF THE FACTORY AND COLLECT FREIGHT CHARGES BY CASH AND THI S CASH PAYMENT DID NOT EXCEED RS.20,000/- ON ANY DAY GIVEN TO A SINGLE TRANSPORTER. IT WAS FURTHER SUBMITTED THAT T HESE 6 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 PAYMENTS WERE MADE TO THE LORRY DRIVERS OF THE TRAN SPORTER. IT WAS ALSO EXPLAINED THAT PAYMENT TOWARDS THE SUPPLY OF RAW MATERIALS WERE MADE BY CHEQUE TO THE SUPPLIERS. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER CLARIFIED THAT AN AVERAGE OF 800 TO 1000 METRIC TONS OF BIOMASS WAS BROUGHT IN B Y THE LORRY DRIVERS FROM DIFFERENT PLACES AND DELIVERED A T THE GATE OF THE FACTORY. THERE WERE ABOUT 40 TO 60 TRUCKS DELIV ERING SUCH MATERIALS REGULARLY ON DAILY BASIS AND NONE OF THE PAYMENTS MADE TO SUCH INDIVIDUAL TRANSPORTERS EXCEEDED RS.20 ,000/- ON ANY DAY. THEREFORE, IT WAS CONTENDED THAT THE PA YMENTS MADE DIRECTLY TO THE LORRY DRIVERS WOULD NOT ATTRAC T THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 6.4 AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNE D AUTHORIZED REPRESENTATIVE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY INVOKI NG THE PROVISIONS OF SECTION 40A(3) BY OBSERVING AS UNDER: - 7.7 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS MADE DURING THE COURSE OF APPELLATE PROCEEDINGS AND PERUSED THE MATERIAL ON RECORD. 7 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 7.8 THERE IS SUBSTANTIAL MERIT IN THE ARGUMENT OF THE AR THAT IT WAS A ROUTINE TRADE PRACTICE THAT TH E LORRY DRIVERS COLLECTED MONEY AT THE GATE OF THE FACTORY FOR THE DELIVERY OF THE RAW MATERIAL NAMELY, BIO-MASS AND THAT THIS PRACTICE WAS MAINLY TO ENABLE THE TRUCKERS INCUR EXPENSES ON DIESEL, TOLL CHARGES, OTHER EXPENSES LIKE REFRESHMENT, MEALS, TRAFFIC VIOLATION CHARGES, ETC. ON REAL TIME BASIS WHICH COULD NOT OBVIOUSLY BE PAID TO THEM BY CHEQUE, PARTICULARLY BECAUSE THE FACTORY WAS LOCATED IN A REMOTE PLACE (IN HIRIYUR IN CHITRADURG A DISTRICT, KARNATAKA) WHICH IS 40 KMS FROM THE DISTRICT HEADQUARTERS AND 6 KMS FROM HIRIYUR TOWN IN AN UNBANKED AREA WHERE THE NEAREST BANK BRANCH WAS ONLY IN HIRIYUR TOWN, AND FURTHER SINCE THE TRUCKERS ALSO DID NOT HAVE ANY BANK ACCOUNTS, I T HAD TO BE NECESSARILY PAID TO THEM BY WAY OF CASH IN ORDER TO CARRY OUT THE TRANSPORTATION OPERATIONS ON A DAY TO DAY BASIS SMOOTHLY IN THE INTERESTS OF THE EFFICIENT RUNNING OF THE FACTORY. 7.9 ON GOING THROUGH THE OVERALL FACTS OF THE CASE AND THE RECORDS THE AR FURNISHED DURING APPEAL PROCEEDINGS AND IN THE CONTEXT OF THE CASE AND IN T HE BACKGROUND OF PRACTICAL BUSINESS EXPEDIENCY REALITI ES AND ROUTINE TRADE PRACTICES AS POINTED OUT ABOVE, I T DOES APPEAR THAT THE AO MADE THE IMPUGNED ADDITIONS ON A ERRONEOUS UNDERSTANDING OF SECTION 40A(3) WHICH STATES VERY CLEARLY THAT WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF PAYMENTS OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY OTHERWISE THAN BY AN AMOUNT BY CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS RS. 20,000/-, NO DEDUCTION SHALL BE ALLOWED IN RESP ECT OF SUCH EXPENDITURE. 7.10 A PLAIN READING OF THE AFORESAID SECTION INDICATES CLEARLY THAT THE EMPHASIS IS ON TWO ASPEC TS, NAMELY, THE PAYMENT OR AGGREGATE OF PAYMENTS MADE AND SECONDLY IT HAD TO BE TO A PERSON IN A DAY IN C ASH NOT EXCEEDING RS.20,000 /-. IN THE PRESENT CASE, TH E PAYMENT TOWARDS THE TRUCKERS BY WAY OF ROUTINE AND PREVAILING TRADE PRACTICE, WHICH WAS PAID DIRECTLY TO THE TRUCKERS SEPARATELY, AT THE GATE OF THE FACTORY WAS FOR THE DELIVERY OF RAW MATERIALS LIKE BIOMASS / AGRICU LTURAL WASTE AS STATED EARLIER, AND IN ORDER TO ENABLE THE 8 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 TRUCKERS TO INCUR THE EXPENSES ON DIESEL, TOLL CHAR GES OTHER OPERATIONAL EXPENSES LIKE REFRESHMENT, FINES/PENALTIES IMPOSED BY LOCAL POLICE FOR OVER SPEEDING, OVER LOADING, JUMPING RED LIGHTS, EXCISE / OCTROI TAXES / MEALS, ETC. ON REAL TIME BASIS ON AN AVERAGE OF 10 TO 60 TRUCKERS ON A DAILY BASIS AND N ONE OF THE INDIVIDUAL PAYMENTS MADE TO THESE TRUCKERS EXCEEDED RS.20,000 /- ON ANY GIVEN DAY, AS WAS SEEN FROM THE VOUCHERS AND TRIP SHEETS PRODUCED AT THE TIME OF APPELLATE PROCEEDINGS. THEREFORE IN THE FAC TS AND CONTEXT OF THE CASE EACH TRUCKER TO WHOM THE PAYMENT WAS MADE WOULD BE CONSTRUED AS 'A PERSON' IN TERMS OF SECTION 40A(3) AND SINCE CASH PAID DIRE CTLY TO THEM INDIVIDUALLY AT THE FACTORY GATES IN A DAY UNDISPUTEDLY DID NOT EXCEED RS. 20,000/-, THE CONDITIONS FOR ATTRACTING SECTION 40A(3) WERE NOT SATISFIED TO BRING THEM WITHIN ITS AMBIT. 7.11 IT HAS ALSO BEEN STATED BY THE AR, WHICH AGAIN , HAS NOT BEEN DISPUTED BY THE AO, THAT THE PAYMENT I N RESPECT OF THE BIO-MASS WAS ENTIRELY MADE BY WAY OF ACCOUNT PAYEE CHEQUES. THEREFORE THE CONTENTIOUS ISSUE IS ONLY RELATING TO THE PAYMENTS MADE TO THE TRUCKERS IN CASH, AS DISCUSSED ABOVE. 7.12 IT IS NOT THE CASE OF THE AO THAT THE SAME LOR RY / TRUCK MADE TWO TRIPS OR MORE TO THE FACTORY IN A DAY TO UNLOAD RAW MATERIALS AND PAYMENTS MADE DIRECTLY TO THE INDIVIDUAL TRUCKERS WERE IN EXCESS OF RS.20,000 /- ON ANY GIVEN DAY AND SINCE SUCH PAYMENTS OR AGGREGATE OF PAYMENTS MADE TO THE TRUCKERS IN A DAY, IN CASH, DID NOT EXCEED RS.20,000/- THE AMOUNTS PAID TO THEM, WOULD NOT BE CAUGHT WITHIN THE MISCHIEF OF SECTION 40A(3). 7.13 AT THIS JUNCTURE, IT IS ALSO WORTHWHILE TO NOT E, THAT ON THE CBDT CIRCULAR 220 DATED 31.05.1977, WHICH COULD BE CALLED A PRECURSOR GUIDE TO THE EXTANT 6DD CLAUSES, THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF GIRDHARILAL GOENKA V. CIT [1989] 179 ITR 122 (CA/.) HAD OBSERVED THUS: 'THE CIRCULAR OF THE BOARD IS NOT EXHAUSTIVE BUT ONLY ILLUSTRATIVE. THE INCOME-TAX OFFICER HAS TO TAKE A PRAGMATIC VIEW OF THE MATTER. THE 9 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 INCOME-TAX OFFICER SHOULD TAKE A PRACTICAL APPROACH TO PROBLEMS AND STRIKE A BALANCE BETWEEN THE DIRECTION OF LAW AND HARDSHIP TO THE ASSESSEE. HE SHOULD NOT ENMESH HIMSELF IN TECHNICALITIES. AFTER ALL, THE OBJECT IS NOT TO DEPRIVE THE ASSESSEE OF THE DEDUCTION WHICH HE IS OTHERWISE ENTITLED TO CLAIM. WHERE THE AMOUNT WAS PAID IN CASH OR RECEIVED IN CASH, THE ASSESSING OFFICER HAS TO FIND OUT WHETHER THE TRANSACTION IS GENUINE OR NOT AND IF HE FINDS THAT THE TRANSACTION IS GENUINE, HE SHOULD ALLOW THE DEDUCTION. THE CIRCULAR OF THE BOARD IS NOT EXHAUSTIVE; IT IS ONLY ILLUSTRATIVE AND THE ASSESSING OFFICER HAS TO TAKE INTO ACCOUNT THE SURROUNDING CIRCUMSTANCES, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND THE FACTS OF EACH PARTICULAR CASE IN EXERCISING HIS DISCRETION EITHER IN FAVOUR OR AGAINST THE ASSESSEE. THERE MAY BE AN ORAL AGREEMENT BETWEEN THE ASSESSEE AND THE SELLER FOR PAYMENT IN CASH. A SELLER MAY NOT BE WILLING TO ACCEPT CHEQUES; CASH PAYMENT MAY BE MADE AT THE REQUEST OF THE PAYEE WHO IS A/SO AN ASSESSEE AND A CERTIFICATE TO THAT EFFECT FILED; ABSENCE OF BANKING FACILITIES IN PLACES WHERE CASH PAYMENTS ARE MADE. ALL SUCH CASES- WOULD COME WITHIN THE PURVIEW OF EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES.' 7.14 AS CAN BE SEEN FROM THE ABOVE CITED OBSERVATIONS OF THE HON'BLE COURT, THE STRESS IS ON THE GENUINENESS OF THE TRANSACTIONS BETWEEN THE PARTIES WHICH THE AO HAS NOT DOUBTED OR DISPUTED IN THE INSTANT CASE, DULY TAKING INTO CONSIDERATION OF BUSINESS EXPEDIENCY EXPLAINED SUPRA AND WITHOUT ENMESHING IN TECHNICALITIES BUT STRIKING A BALANCE BETWEEN THE MANDATE OF THE LAW VIS-A-VIS HARDSHIP TO THE ASSESSEE. 7.15 IN VIEW OF THE ABOVE DISCUSSION PARTICULARLY S EEN IN THE BACKGROUND OF THE UNIQUE FACTS OBTAINING THE INSTANT CASE AS DETAILS ABOVE THE ADDITIONS MADE U/S.40A(3) IS DIRECTED TO BE DELETED. 10 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 6.5 THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED ASSES SING OFFICER BY REITERATING THE VIEWS OF THE LEARNED ASS ESSING OFFICER, WHILE AS THE LEARNED AUTHORIZED REPRESENTA TIVE RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 6.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE AND THE ARGUMENTS ADVANCED BY THE LEARNED AUTHORIZED REPRESENTATIVE, WE FIND MERIT IN THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IN TH E CASE OF THE ASSESSEE, IT IS APPARENT THAT EACH AND EVERY TRANSPORTER DELIVERS THE RAW MATERIALS FROM THE SUP PLIER IN THE FACTORY PREMISES OF THE ASSESSEE AND COLLECTS TRANS PORT CHARGES AT THE PLACE OF DELIVERY BY CASH. FURTHER, MOST OF THE EXPENSES RELATE TO TRANSPORTATION COST SUCH AS FUEL EXPENSE, DRIVER EXPENSE ETC., WHICH HAS TO BE SETTLED THEN A ND THERE IN CASH. THE LORRY DRIVERS WILL NOT BE ABLE TO REFUEL THE LORRY IF HE ACCEPTS CHEQUE WHICH WOULD TAKE SOME TIME FOR WITHD RAWAL 11 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 OF CASH. MOREOVER, MOST OF THE LORRY DRIVERS WOULD NOT BE HAVING BANK ACCOUNT TO EN-CASH CHEQUE. IN THESE CIRCUMSTANCES, PAYMENT BY CASH IS INEVITABLE. FURTH ER, THERE IS NOTHING ON RECORD TO ESTABLISH THAT THE TRANSPOR T CHARGES ARE PAID TO A SINGLE PERSON ABOVE RS.20,000/- IN CA SH IN THE CASE OF THE ASSESSEE. THE GENUINENESS OF THE PAYMEN T IS ALSO NOT IN DISPUTE. BASED ON THESE FACTS AND THE D ETAILED OBSERVATIONS MADE BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS), HE HAS DELETED THE ADDITIONS MADE UN DER SECTION 40A(3) OF THE ACT FOR ALL THE THREE ASSESSM ENT YEARS. THEREFORE, FROM THE FACTS AND CIRCUMSTANCE OF THE C ASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGL Y WE HEREBY CONFIRM HIS ORDER. GROUND NO.2 :DISALLOWANCE UNDER SECTION 14A R.W.R 8 D: 7.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAD MADE INVESTMENTS IN ITS SUBSIDIARY COMPANIES M/S. R KM POWERGEN PVT.LTD., AND M/S. RAMASAMY POWERGEN PVT.L TD. AS DETAILED HEREIN BELOW:- 12 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 A.Y. AS ON RKM POWERGEN P.LTD. RS. RAMASAMY POWERGEN P.LTD. RS. 2008-09 31.03.2008 9,07,60,770 95,46,250 2009-10 31.03.2009 26,15,70,270 95,46,250 2010-11 31.03.2011 95,53,70,270 95,46,250 2011-12 31.03.2012 95,62,38,405 - 7.2 THE LEARNED ASSESSING OFFICER WAS OF THE VIEW T HAT IN SUCH SITUATION PROVISIONS OF SECTION 14A OF THE ACT R.W.R.8D OF THE RULES WOULD BE ATTRACTED. ACCORDINGLY, HE MADE ADDITIONS IN THE HANDS OF THE ASSESSEE FOR RS.21,82,790/-, RS.64,98,064/- AND RS.1,57,14,532/- FOR THE ASSESSM ENT YEAR 2008-09, 2009-10 AND 2011-12 RESPECTIVELY. ON APPE AL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) PARTLY GAVE RELIEF TO THE ASSESSEE BY DIRECTING THE LEARNED ASS ESSING OFFICER TO RE-COMPUTE THE EXPENDITURE INCURRED FOR EARNING EXEMPT DIVIDEND UNDER RULE 8D OF THE RULES FOLLOWIN G THE RATIO LAID DOWN BY THE CHENNAI BENCH OF THE TRIBUNA L IN ITA NO.2083/MDS/2011. HOWEVER, AT THE OUTSET, WE FIND T HAT SUBSEQUENTLY THE CHENNAI BENCH OF THE TRIBUNAL HAS HELD THAT WHERE INVESTMENTS ARE MADE BY THE ASSESSEE IN ITS SISTER CONCERNS OR ASSOCIATE CONCERNS FOR STRATEGIC PURPOS ES OUT OF NON-INTEREST BEARING FUNDS, THEN THERE COULD BE NO PRESUMPTION OF ANY EXPENSES INCURRED BY THE ASSESSE E FOR 13 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 MAKING SUCH INVESTMENTS. THE GIST OF THE RELEVANT D ECISION IS REPRODUCED HEREIN BELOW FOR REFERENCE:- IN THE CASE OF RANE HOLDINGS LTD. VS. ACIT IN ITA NO.115/MDS/2015 VIDE ORDER DATED 06.01.2016, EXTRA CTED HEREIN BELOW, WE HAVE HELD THAT WHERE INVESTMENTS ARE MADE IN SISTER CONCERNS FOR STRATEGIC REASONS, NO EXPENSES CAN BE INFERRED TO HAVE BEEN INCURRED IF S UCH INVESTMENTS ARE MADE OUT OF NON-INTEREST BEARING FU NDS OF THE ASSESSEE. THE GIST OF THE RELEVANT ORDER IN ITA NO.115/MDS/2015 DATED 06.01.2016 OF THIS TRIBUNAL I S REPRODUCED HEREIN BELOW FOR REFERENCE:- 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. ON THE IDENTICAL ISSUE AS POIN TED OUT BY THE LD. A.R. THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.156/MDS /2013 VIDE ORDER DATED 20/08/13 FOR THE ASSESSMENT YEAR 2009-10 HAS REMITTED BACK THE MATTER TO THE LD. ASSESSING OFFICER TO DECIDE THE M ATTER ONCE AGAIN AFRESH BASED ON THE FINDINGS WHETHER THE ASSESSEE H AD ACTUALLY INCURRED ANY EXPENDITURE IN EARNING THE DIVIDEND INCOME. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREIN BELOW FOR REFERENCE:- FURTHER, ON THE IDENTICAL ISSUE VARIOUS BENCHES OF THE TRIBUNAL AND THE HONBLE BOMBAY HIGH COURT HAVE HELD AS FOLLOWS:- I) GARWARE WALL ROPES LTD., VS. ACIT REPORTED IN (2 014) 65 SOT 086 (MUM.) HELD AS FOLLOWS:- II) WHEN ASSESSEE HAS PRIMA FACIE BROUGHT OUT CASE THA T NO EXPENDITURE HAS BEEN INCURRED FOR EARNING INCOME, W HICH DOES NOT FORM PART OF TOTAL INCOME, THEN IN ABSENCE OF A NY FINDING THAT EXPENDITURE HAS BEEN INCURRED FOR EARNING EXEMPT IN COME PROVISIONS 14A CANNOT BE APPLIED.. III) INTEGLOBE ENTERPRISES LTD., VS. DCIT REPORTED IN (2014) 40 CCH 0022(DEL. TRIB.) HELD AS FOLLOWS:- NO DISALLOWANCE OF INTEREST IS REQUIRED TO BE MADE UNDER RULE 8D(I) & 8D(II) WHERE NO DIRECT OR INDIRECT INT EREST EXPENDITURE WAS INCURRED FOR MAKING INVESTMENTS.WHE RE THE ASSESSEE HAD UTILIZED INTEREST FREE FUNDS FOR M AKING FRESH INVESTMENTS AND THAT TOO INTO ITS SUBSIDIARIE S, WHICH WAS NOT FOR THE PURPOSE OF EARNING EXEMPT INCOME AN D WHICH WAS FOR STRATEGIC PURPOSES ONLY, NO DISALLOWA NCE OF INTEREST WAS REQUIRED TO BE MADE UNDER RULE 8D(I) & 8D(II) 14 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 AND STRATEGIC INVESTMENT HAS TO BE EXCLUDED FOR PUR POSE OF ARRIVING AT DISALLOWANCE UNDER RULE 8D(III). IV) M/S.JM FINANCIAL LTD., VS. ACIT REPORTED IN 2 014- TIOL-202-ITAT-MUM HELD AS FOLLOWS: THE DEPARTMENT HAS NOT DISPUTED THIS FACT OUT OF THE TOTAL INVESTMENT ABOUT 98% OF THE INVESTMENT ARE IN SUBSI DIARY COMPANIES OF THE ASSESSEE AND, THEREFORE, THE PURPO SE OF INVESTMENT IS NOT FOR EARNING THE DIVIDEND INCOME B UT HAVING CONTROL AND BUSINESS PURPOSE AND CONSIDERATION. THE ASSESSEE HAS BROUGHT OUT A CASE TO SHOW THAT NO EXPENDITURE HAS BEEN INCURRED FOR MAINTAINING THE 98% OF THE INVESTMENT MADE IN T HE SUBSIDIARY COMPANIES, THEREFORE, IN THE ABSENCE OF ANY FINDING THAT ANY EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMP T INCOME, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT J USTIFIED, ACCORDINGLY THE SAME IS DELETED. (V) CIT VS. BHARTI TELEVENTURE LTD. REPORTED IN (20 11) 331 ITR 0502. WHERE THE ASSESSEE WAS FOUND TO BE HAVING ADEQUATE NON- INTEREST BEARING FUND BY WAY OF SHARE CAPITAL AND R ESERVES AND THERE WAS NO NEXUS BETWEEN THE BORROWALS OF ASSESSE E AND THE ADVANCES GIVEN, NO DISALLOWANCE FOR INTEREST WAS CA LLED FOR . (VI) CIT VS. RELIANCE UTILITIES & POWER LTD., REPOR TED IN (2009) 313 ITR 0340(BOM.) HAS HELD AS FOLLOWS:- TRIBUNAL HAVING RECORDED A CLEAR FINDING THAT THE ASSESSEE POSSESSED SUFFICIENT INTEREST-FREE FUNDS OF ITS OWN WHICH WERE GENERATED IN THE COURSE OF THE RELEVANT FINANCIAL Y EAR, APART FROM SUBSTANTIAL SHAREHOLDERS FUND, PRESUMPTION STANDS E STABLISHED THAT THE INVESTMENTS IN SISTER CONCERNS WERE MADE B Y THE ASSESSEE OUT OF INTEREST FREE FUNDS AND THEREFORE NO PART OF INTEREST ON BORROWINGS CAN BE DISALLOWED ON THE BASIS THAT THE INVESTMENTS WERE MADE OUT OF INTEREST BEARING FUNDS. (VII) EIH ASSOCIATED HOTELS LTD VS. DCIT REPORTED I N 2013- TIOL-796-ITAT-MAD . THE INVESTMENTS MADE BY THE ASSESSEE IN THE SUB SIDIARY COMPANY ARE NOT ON ACCOUNT OF INVESTMENT FOR EARNIN G CAPITAL GAINS OR DIVIDEND INCOME. SUCH INVESTMENTS HAVE BEE N MADE BY THE ASSESSEE TO PROMOTE SUBSIDIARY COMPANY INTO THE HOTEL INDUSTRY. THE ASSESSEE IS NOT INTOTHE BUSINESS OF I NVESTMENT AND THE INVESTMENTS MADE BY THE ASSESSEE ARE ON ACCOUNT OF BUSINESS EXPEDIENCY. ANY DIVIDEND EARNED BY THE ASSESSEE FRO M INVESTMENT IN SUBSIDIARY COMPANY IS PURELY INCIDENTAL. THEREFO RE THE INVESTMENT MADE BY THE ASSESSEE IN ITS SUBSIDIARY I S NOT TO BE RECKONED FOR DISALLOWANCE U/S.14A R.W.R.8D. THE ASS ESSING OFFICER IS DIRECTED TO RE-COMPUTE THE AVERAGE VALUE OF INVESTMENT UNDER THE PROVISIONS OF RULE 8D AFTER DELETING INVE STMENTS MADE BY THE ASSESSEE IN SUBSIDIARY COMPANY. 15 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 TAKING NOTE OF THE ABOVE DECISIONS AND THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.156/MDS/13 CITED SUPRA, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD. ASSESSING OFFICER TO EXAMINE THE ISSUE INVOLVED IN THIS CASE AFRESH AND PASS APPROPRIATE ORDER AS PER LAW AND ME RITS AND IN THE LIGHT OF THE DECISIONS CITED HEREIN ABOV E. WHILE DOING SO, WE ALSO DIRECT THE LD. ASSESSING OFFICER TO CONSIDER THE DECISION OF THE TRIBUNAL IN THE CASE M /S AGILE ELECTRIC SUB ASSEMBLY PVT. LTD. CITED SUPRA WHEREIN IT WAS HELD AS FOLLOWS:- 7.2 IN REGARD TO APPLICABILITY OF SECTION 14A OF THE ACT READ WITH RULE 8D ALSO; THE ABOVE VIEW WILL BE APPLICABL E. MOREOVER IN THE CASE EIH ASSOCIATED HOTELS LTD V. D CIT REPORTED IN 2013 (9) TMI 604 IN ITA NO.1503, 1624/MDS/2012 DATED 17 TH JULY, 2013, IT HAS BEEN HELD BY THE CHENNAI BENCH OF THE TRIBUNAL AS FOLLOWS:- DISALLOWANCE U/S. 14A RW RULE 8D CIT UPHELD DISAL LOWANCE HELD THAT INVESTMENTS MADE BY THE ASSESSEE IN T HE SUBSIDIARY COMPANY ARE NOT ON ACCOUNT OF INVESTMENT FOR EARNING CAPITAL GAINS OR DIVIDEND INCOME. SUCH INVE STMENTS HAVE BEEN MADE BY THE ASSESSEE TO PROMOTE SUBSIDIAR Y COMPANY INTO THE HOTEL INDUSTRY. A PERUSAL OF THE ORDER OF THE CIT(APPEALS) SHOWS THAT OUT OF TOTAL INVESTMENT OF RS.64,18,19,775/-, RS.63,31,25,715/- IS INVESTED IN WHOLLY OWNED SUBSIDIARY. THIS FACT SUPPORTS THE CASE OF TH E ASSESSEE THAT THE ASSESSEE IS NOT INTO THE BUSINESS OF INVES TMENT AND THE INVESTMENTS MADE BY THE ASSESSEE ARE ON ACCOUNT OF BUSINESS EXPEDIENCY. ANY DIVIDEND EARNED BY THE ASSESSEE FRO M INVESTMENT IN SUBSIDIARY COMPANY IS PURELY INCIDENT AL. THEREFORE, THE INVESTMENTS MADE BY THE ASSESSEE IN ITS SUBSIDIARY ARE NOT TO BE RECKONED FOR DISALLOWANCE U/S. 14A R.W.R. 8D. THE ASSESSING OFFICER IS DIRECTED TO RE- COMPUTE THE AVERAGE VALUE OF INVESTMENT UNDER THE PROVISIONS OF RULE 8D AFTER DELETING INVESTMENTS MADE BY THE ASSESSEE IN SUBSIDIARY COMPANY DECIDED IN FAVOUR OF ASSESSEE. FOR THE ABOVE SAID REASONS, WE HEREBY HOLD THAT IN THE CASE OF THE ASSESSEE THE PROVISIONS OF SECTION 14A READ WITH RU LE 8D WILL NOT BE APPLICABLE IN REGARD TO INVESTMENTS MADE FOR ACQUIR ING THE SHARES OF THE ASSESSEES SISTER CONCERNS. ACCORDINGLY WE REST RAIN OURSELVES FROM INTERFERING WITH THE ORDER OF THE LD.CIT(A) ON THIS REGARD. THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WE HEREBY DIRECT THE LEARNED ASSESSING OF FICER TO DELETE THE ADDITION MADE BY INVOKING THE PROVISI ONS OF SECTION 14A R.W. RULE 8D OF THE ACT, SUBJECT TO VERIFICATION THAT INVESTMENTS ARE MADE BY THE ASSES SEE 16 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 IN ITS SISTER CONCERNS ONLY AND FROM ITS INTEREST F REE FUNDS. 7.3 FOLLOWING THE AFORESAID DECISION, WE HEREBY REM IT THE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFF ICER TO VERIFY AS TO WHETHER THE ASSESSEE HAD INVESTED OUT OF ITS NON- INTEREST BEARING FUNDS IN ITS SISTER CONCERNS OR AS SOCIATE CONCERNS FOR STRATEGIC REASONS AND IF FOUND SO DELE TE THE ADDITION MADE ON THAT REGARD, HOWEVER IF FOUND OTHE RWISE, PASS APPROPRIATE ORDERS AS PER MERIT & LAW, AFTER A FFORDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. IT IS ORDERED ACCORDINGLY FOR ALL THE RELEVANT ASSESSMENT YEARS. GROUND NO.3 : ADDITION U/S. 68 BEING UNEXPLAINED CA SH CREDITS: 8.1 THOUGH THE ASSESSEE HAS RAISED THIS GROUND IN A LL THE ABOVE MENTIONED ASSESSMENT YEARS, WE FIND THAT THE LEARNED ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SEC TION 68 OF THE ACT AND MADE ADDITION OF RS.60,60,000/- ONLY FO R THE ASSESSMENT YEAR 2010-11. HENCE THIS GROUND RAISED B Y THE ASSESSEE FOR ALL THOSE ASSESSMENT YEARS MENTIONED HEREINABOVE OTHER THAN 2010-11 ARE DISMISSED AND WE 17 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 HEREBY PROCEED TO ADJUDICATE THE ISSUE FOR THE ASSE SSMENT YEAR 2010-11 HEREIN BELOW:- 8.2 WHILE SCRUTINIZING THE BOOKS OF ACCOUNT OF THE ASSESSEE, IT WAS REVEALED THAT THE ASSESSEE HAD MAD E CASH DEPOSITS AMOUNTING TO RS.60,60,000/- IN ITS BANK AC COUNT. WHEN THE LEARNED ASSESSING OFFICER QUERIED, THE ASS ESSEE EXPLAINED THAT CASH WAS REFUNDED BY THE FRAGMENTED LAND OWNERS TO WHOM ADVANCES WERE PAID BY THE ASSESSEE F OR ACQUIRING THEIR LANDS IN CONNECTION WITH THE ASSESS EES SUGAR- CUM-COGENT-POWER PROJECT AT SHIMOGA IN THE STATE OF KARNATAKA. HOWEVER, SINCE THE ASSESSEE HAD NOT PRO VIDED THE DETAILS OF THE PERSONS FROM WHOM SUCH REFUND WA S RECEIVED, THE LEARNED ASSESSING OFFICER MADE ADDITI ON OF RS.60,60,000/- IN THE HANDS OF THE ASSESSEE. 8.3. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BECAUSE OF THE FOLLO WING REASONS:- 18 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 I) FROM THE BANK ACCOUNTS OF THE ASSESSEE, IT WAS EVIDENT THAT ON 17.11.2009, 21.08.2009 AND 01.12.20 09 CASH WERE WITHDRAWN FOR THE PURCHASE OF LAND. II) THERE WERE DISPUTES WITH RESPECT TO THE COST OF ACQUISITION OF LAND DUE TO WHICH THE PURCHASE TRANSACTIONS COULD NOT BE COMPLETED. III) THE AMOUNT PAID FOR ADVANCE OF LAND WAS REFLEC TED IN THE BALANCE SHEET OF THE ASSESSEE FOR THE FINANC IAL YEAR 2009-10 AS ADVANCES. IV) IT WAS ALSO EVIDENT FROM THE RECORDS THAT THE GOVERNMENT HAD FIXED HIGHER RATES FOR THE PURCHASE OF LAND AS AGAINST THE PRICE AGREED BY THE ASSESSEE. V) THUS, THE SOURCE OF ADVANCE AND RE-DEPOSIT IN TH E BANK IS PROVED TO BE GENUINE. VI) RELIANCE WAS PLACED IN THE DECISION OF CIT VS. KAMADENU STEEL & ALLOYS LTD. REPORTED IN 361 ITR 220(DEL), WHEREIN IT WAS HELD THAT THE INITIAL BURD EN IS UPON THE ASSESSEE TO PROVE THE SOURCE OF FUND THEREAFTER, THE ONUS SHIFTS TO THE REVENUE TO REFUT E THE SAME. 19 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 VII) THE ASSESSEE HAD GIVEN NAMES & ADDRESSES OF TH E COORDINATORS WHO ARE BASICALLY PANCHAYAT VILLAGE EL DERS THROUGH WHOM ADVANCES WERE PAID TO THE LAND OWNERS AND THEREFORE IT IS POSSIBLE FOR THE REVENUE TO MAK E ENQUIRIES FROM THEM TO FIND OUT THE GENUINESS OF TH E TRANSACTION WHICH THEY HAVE FAILED TO DO SO. VIII) THE AMOUNT PAID TO THE FARMERS WERE MEAGER, W HO ARE ILLITERATE AND DO NOT HAVE BANK ACCOUNTS OR PAN NO.. THESE FACTS COULD HAVE BEEN VERIFIED BY THE REVENUE BASED ON THE STATEMENTS FROM THE COORDINATORS. 8.4. WE FIND MERIT IN THESE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS. THE SOURCE OF ADVANCES IS ESTABLISHED IN THE CASE OF THE ASSESSEE . THE ADVANCES ARE MADE TO PETTY LAND OWNERS FOR PURCHASE OF LAND FROM THEM. SINCE THE ASSESSEE WAS NOT AGREEABLE TO THE PRICE DETERMINED BY THE STATE GOVT., FOR ACQUIRING THOSE LANDS, THE PROJECT WAS DROPPED AND THE ADVANCES MAD E WERE RETURNED AND THE SAME WAS RE-DEPOSITED IN THE ASSES SEES 20 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 BANK ACCOUNT. THE NAMES & ADDRESS OF THE INTERMEDIA RIES ARE ALSO FURNISHED BY THE ASSESSEE. ALL THESE FACTS COULD HAVE BEEN EASILY VERIFIED BY THE REVENUE BY EXAMINI NG THE COORDINATORS AND THE LAND OWNERS OF THAT AREA. THE REVENUE HAS MISERABLY FAILED TO MAKE ANY ENQUIRIES EVEN AT THE PRELIMINARY LEVEL. THUS, THE REVENUE HAS FAILED TO PROVE THE ONUS CASTE UPON IT FOR REBUTTING THE EXPLANATION MA DE BY THE ASSESSEE. IN THIS SITUATION, WE ARE OF THE CONSIDER ED VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S RIGHTLY GIVEN RELIEF TO THE ASSESSEE BY DIRECTING T HE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF RS.60,6 0,000/- MADE BY INVOKING THE PROVISIONS OF SECTION 68 OF TH E ACT. HENCE, WE HEREBY CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. C.O.NOS.125 TO 128/MDS/2015 (A.Y.2008-09 TO 2011-12 ): DEDUCTION UNDER SECTION 80IA HAD TO BE GRANTED ON T HE INCOME DERIVED FROM THE UNDERTAKING AFTER ALL DISAL LOWANCES MADE BY INVOKING THE PROVISION OF SECTION 40A(3), 1 4A & 68 OF THE ACT:- 9. THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED BEF ORE US BY STATING THAT BY VIRTUE OF DEDUCTION AVAILABLE TO THE 21 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 ASSESSEE UNDER SECTION 80IA OF THE ACT, THE INCREAS E IN PROFIT DUE TO THE DISALLOWANCES MADE UNDER SECTION 40A(3) ,14A AND 68 OF THE ACT CANNOT BE TAXED BECAUSE THE DEDUC TION HAS TO BE EXTENDED TO SUCH INCREASED PROFIT ALSO. WE DO NOT SUBSCRIBE TO THIS VIEW OF THE ASSESSEE. PROVISIONS OF SECTION 40A(3) & 14A OF THE ACT HAS A LEGAL FICTION BY WHIC H CERTAIN EXPENSES ARE DISALLOWED. PROVISION WITH LEGAL FICT ION CANNOT BE THRUST UPON ANOTHER SECTION WHICH HAS A LEGAL FI CTION. IT IS NEEDLESS TO MENTION THAT SECTION 80IA OF THE ACT IS ALSO A PROVISION WITH FICTION BY WHICH THE BENEFIT OF DEDU CTION IS GRANTED TOWARDS THE INCOME EARNED BY THE ASSESSEE. HENCE, FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTIO N 80IA OF THE ACT , SECTION 40A(3) AND 14A CANNOT BE GIVEN EFFECT. THEREFORE, TO THAT EXTENT THE DEDUCTION WILL NOT BE AVAILABLE TO THE ASSESSEE. FURTHER, SECTION 68 PROVIDES THAT ANY SUM WHICH IS CREDITED TO THE BOOKS OF THE ASSESSEE AGAI NST WHICH NO EXPLANATION IS SATISFACTORILY OFFERED, SUCH SUM SO CREDITED, WILL BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE. THUS THE STATUTE CLEARLY PROVIDES THAT IRRESPECTIVE OF ANY OTHER FACTORS THIS AMOUNT WILL BE BROUGHT INTO THE AMBIT OF TAX AS A 22 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 DISTINCT INCOME WHICH IS NOT DISCLOSED. FURTHER SEC TION 68 OF THE ACT IS ALSO PROVISION WITH LEGAL FICTION, WHERE IN THE UNEXPLAINED CREDIT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS DEEMED TO BE THE UNEXPLAINED INCOME OF THE ASSES SEE. THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE. ACCORDINGLY, THIS GROUND RAISED BY THE ASSESSEE IS HEREBY DISMISSED. ADDITIONAL GROUND IN C.O.NO.126/MDS/2015 (A.Y.2008- 2009 & 2009-10): CHALLENGING THE REOPENING OF ASSESSMENT BY THE LEARNED ASSESSING OFFICER UNDER SECTION 147 OF THE ACT. 10. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REO PENING ONLY FOR THE ASSESSMENT YEAR2008-09 & 2009-10. SIN CE THIS ISSUE IS RAISED FOR THE FIRST TIME WE HEREBY REMIT THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER T HEREBY PROVIDING AN OPPORTUNITY TO THE REVENUE TO CONSIDER THE ISSUE. 11. IN THE RESULT, APPEALS OF THE REVENUE ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS F ILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 & 2011-12 ARE 23 ITA NO.1864 TO 1867 /MDS/2015 & CO. NOS.125 TO 128/MDS/2015 DISMISSED AND FOR THE ASSESSMENT YEAR 2008-09 & 200 9-10 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE AS INDIC ATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 22 ND JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 22 ND JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3 . - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF
