Gujarat Apollo Equipments Ltd., Ahmedabad V. The ACIT., Circle-4, Ahmedabad

CO 141/AHD/2007

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5221 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 20-06-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: U S BHATI
• Keywords: Depreciation; Opportunity of being heard; Proportionate interest; Revenue expenditure; Capital expenditure
• Section: 80HHC; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABA D (BEFORE HON'BLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI N.S. SAINI, A.M.) I.T.A. NO. 1651/AHD./2007 ASSESSMENT YEAR : 2004-2005 ASSISTANT COMMISSIONER OF INCOME TAX, -VS.- M/S. GUJARAT APOLLO EQUIPMENTS LTD., CIRCLE-4, AHMEDABAD AHMEDABAD, (PAN : AAACG 7248 P) (APPELLANT) (RESPONDENT) & C.O. NO. 141/AHD/2007 (ARISING OUT OF ITA NO. 1651/AHD/2007) ASSESSMENT YEAR : 2004-2005 M/S. GUJARAT APOLLO EQUIPMENTS LTD., -VS.- A SSISTANT COMMISSIONER OF INCOME TAX, AHMEDABAD CIRCLE-4, AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI U.S. BHATI DEPARTMENT BY : SHRI R.K. DHANESTA, D. R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON BY THE ASSESSEE ARE AGAINST THE ORDER DATED 05.01.2007 OF LEARNED COMMISSIONER OF I NCOME TAX (APPEALS)-VIII, AHMEDABAD FOR THE ASSESSMENT YEAR 2004-05. 2. VARIOUS GROUNDS RAISED BY THE REVENUE IN ITS APP EAL READ AS UNDER :- 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO EXCLUDE EXCISE DUTY AND SALES TAX FROM THE TOTAL TURN OVER FOR COMPUTING DEDUCTION U/S. 80HHC OF THE I.T. ACT. 2. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO INCLUDE OTHER INCOME OF RS, 95,68 R 432/- CONSISTING OF SALES TAX REFUND RS, 23,06,686/-, HIRING/LEASE RENT RS.11,82,150/-, OPERATING CHARGES RS. 59,43,668/-, DISCOUNT/KASAR RS. 1,35,928/-, FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S. 80HHC OF THE I.T. ACT. 2 ITA NO. 1651 & CO-141/AHD/2007 3. THE LD. CIT(A.) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING ME A.O. TO DELETE THE DISALLOWANCE OF PROPORTIONATE IN TEREST EXPENSES OF RS. 6,94,483/-, FOR THE FUNDS DIVERTED FOR NON-BUSINESS PURPOSES. 4. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O. TO RESTRICT THE DISALLOWANCE OF RS.1,00,000/- OUT OF TOTAL ADMINISTRATIVE EXPENSES U/S. 14A TO RS.25,000/-. 5. THE LD. CIT(A.) ERRED IN LAW AND ON THE FACTS O F THE CASE IN DIRECTING TO DELETE THE DISALLOWANCE OF RS, 1,64,006/- OUT OF TO TAL FACTORY REPAIRS EXPENSES TREATING THE SAME AS CAPITAL IN NATURE. 2.2. GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OB JECTION ARE AS UNDER :- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AND IN FACTS IN CONFIRMING THE EXCLUSION OF RS.1,02,851/- FROM 'BU SINESS PROFITS' FOR THE PURPOSE OF WORKING OUT DEDUCTION U/S 80HHC OF THE INCOME TA X ACT, 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN LAW AND IN FACTS IN HOLDING THAT THE INTEREST INCOME AMOUNTING TO RS .1,47,46,058/- WOULD NOT FORM PART OF 'BUSINESS PROFITS' FOR THE PURPOSE OF DEDUC TION U/S. 80HHC OF THE INCOME TAX ACT, 1961. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FURTHER ERRED IN LAW AND IN FACTS IN HOLDING THAT THE INTEREST INCOME AMOUNTING TO RS.1,47,46,058/- WOULD BE TAXABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' RATHER THAN THE HEAD 'BUSINESS & PROFESSION'. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AND ON FACTS IN PARTLY CONFIRMING THE DISALLOWANCE TO THE DISALLOWA NCE TO THE EXTENT OF RS.25,000/- U/S. 14A OF THE INCOME TAX ACT, 1961. 3. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI U.S. BHATI, LD. COUNSEL APPEARED AND WITH REGARD TO CONTROVERSY INVOLVED IN GROUND NO. 1 OF REVENUES APPEAL CONTENDED THAT THE ISSUE INVOLVED IN THIS GROUND OF APPEAL IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- LAXMI MACHINE WORKS REPORTED IN 290 ITR 667 (SC), WHEREIN IT WAS HELD AS UNDER :- SECTION 80HHC OF THE INCOME TAX ACT, 1961 IS A BEN EFICIAL SECTION: IT WAS INTENDED TO PROVIDE INCENTIVE TO PROMOTE EXPORTS. T HE INTENTION WAS TO EXEMPT PROFITS RELATABLE TO EXPORTS. JUST AS COMMIS SION RECEIVED BY THE ASSESSEE IS RELATABLE TO EXPORTS AND YET IT CANNOT FORM PART OF TURNOVER FOR THE PURPOSES OF SECTION 80HHC, EXCISE DUTY AND SALE S TAX ALSO CANNOT FORM PART OF TURNOVER. JUST AS INTEREST, COMMISSION, ETC . DO NOT EMANATE FROM THE TURNOVER SO ALSO EXCISE DUTY AND SALES TAX DO NOT E MANATE FROM SUCH TURNOVER. SINCE EXCISE DUTY AND SALES TAX DID NOT I NVOLVE ANY SUCH TURNOVER SUCH TAXES HAD TO BE EXCLUDED. COMMISSION, INTEREST , RENT, ETC. DO YIELD 3 ITA NO. 1651 & CO-141/AHD/2007 PROFITS, BUT THEY DO NOT PARTAKE OF THE CHARACTER O F TURNOVER AND THEREFORE, THEY ARE NOT INCLUDIBLE IN THE TOTAL TURNOVER. IF S O, EXCISE DUTY AND SALES TAX ALSO CANNOT FORM PART OF THE TOTAL TURNOVER UNDER S ECTION 80HHC. ONE CANNOT INTERPRET THE WORDS TOTAL TURNOVER WIT H REFERENCE OF THE DEFINITION OF THE WORD TURNOVER IN OTHER LAWS LIK E THE CENTRAL SALES TAX OR AS DEFINED IN ACCOUNTING PRINCIPLES. EXCISE DUTY AND SALES TAX ARE INDIRECT TAXES. THEY ARE RECOVERED BY THE ASSESSEE ON BEHALF OF THE GOVERNMENT. BY THE COURT THE PRINCIPAL REASON FOR ENACTING A FORMULA IN SECTION 80HHC OF THE INCOME TAX ACT, 1961 IS TO DISALLOW A PART OF THE CONCESSION THERE UNDER WHEN THE ENTIRE DEDUCTION CLAIMED CANNO T BE REGARDED AS RELATING TO EXPORTS. THEREFORE, WHILE INTERPRETING THE WORDS TOTAL TURNOVER IN THE FORMULA IN SECTION 80HHC ONE HAS TO GIVE A S CHEMATIC INTERPRETATION. THE VARIOUS AMENDMENTS MADE THEREIN SHOW THAT RECEI PTS BY WAY OF BROKERAGE, COMMISSION, RENT, ETC. DO NOT FORM PART OF BUSINESS PROFITS AS THEY HAVE NO NEXUS WITH THE ACTIVITY OF EXPORT. AME NDMENTS MADE FROM TO TIME TO TIME INDICATE THAT THEY BECAME NECESSARY IN ORDER TO MAKE THE FORMULA WORKABLE. IF SO, EXCISE DUTY AND SALES TAX ALSO CANNOT FORM PART OF THE TOTAL TURNOVER UNDER SECTION 80HHC : OTHERWIS E THE FORMULA BECOMES UNWORKABLE. 4. ON THE OTHER HAND, SHRI R.K. DHANESTA, LD. D.R. APPEARING ON BEHALF OF THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS OF T HE LD. COUNSEL OF THE ASSESSEE. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF LEAR NED COMMISSIONER OF INCOME TAX (APPEALS). IT IS PERTINENT TO NOTE THAT IN THE IMPU GNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO EXCLUDE EXCISE DUTY AND SALES TAX FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION UNDER SE CTION 80HHC OF THE ACT. THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS INCONFORMITY WITH THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF LAXMI MACHINE WORKS (SUPRA). WE, THEREFORE, DECLINE TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). RESULTANTLY, GROUND NO. 1 OF REVENUES APPEAL IS DISMISSED. 6. WITH REGARD TO CONTROVERSY INVOLVED IN THE GROUN D NO. 2 OF REVENUES APPEAL, THE LD. COUNSEL OF THE ASSESSEE FAIRLY ADMITTED THAT ITAT, A BENCH, AHMEDABAD VIDE ORDER DATED 16.01.2009 IN ITA NOS. 1343/AHD/2006 AND 1503/AHD/2 006 FOR THE ASSESSMENT YEAR 2003-04 4 ITA NO. 1651 & CO-141/AHD/2007 IN ASSESSEES OWN CASE DECIDE THE ISSUE IN FAVOUR O F THE REVENUE. THE RELEVANT DISCUSSION IS CONTAINED IN PARA 10.4 AND 11, WHICH IS RE-PRODUCED HEREUNDER :- 10.4. AS IS EVIDENT FROM THE ORDER OF LOWER AUTHO RITIES, !HE OPERATING CHARGES THE NATURE OF JOB CHARGES AND HIRING CHARGE S ARE IN THE NATURE OF RENTAL INCOME AND THIS FACT HAVING NOT BEEN DENIED BY THE ID AR ON BEHALF OF THE TAXPAYER, APPARENTLY THESE ARE INDEPENDENT INCO MES. MOREOVER, NO EVIDENCE HAS BEEN REFERRED TO BEFORE US THAT THESE ARE IN ANY MANNER RELATED TO EXPORT ACTIVITIES OF THE .TAXPAYER. THESE AMOUNTS D O NOT HAVE ANY ELEMENT OF EXPORT TURNOVER. IN THE LIGHT OF AFORESAID DECISION S OF THE HON'BLE SUPREME COURT, HON'BLE GUJARAT HIGH COURT, HON'BLE PUNJAB A ND HARYANA HIGH COURT AND HON'BLE MADRAS HIGH COURT, RECEIPTS ON ACCOUNT OF HIRING CHARGES AND OPERATING CHARGES WOULD FALL WITHIN THE EXPLANATION (BAA) UNDER SECTION 80HHC OF THE ACT AND THUS 90% OF SAID RECEIPTS HAVE TO BE EXCLUDED WHILE COMPUTING DEDUCTION UNDER SECTION 8GHHC OF THE ACT, ALL THESE ITEMS BEING INDEPENDENT INCOME, WHICH HAVE NO ELEMENT OF EXPORT TURNOVER EVEN THOUGH THEY FORM PART OF INCOME IN NUTSHELL , WE UPHOLD TH E FINDINGS OF ID CIT(A) THEREFORE, GROUND NO. 2 OF APPEAL OF THE TAXPAYER I S DISMISSED. 11. AS REGARDS SALES LAX REFUND, THE AHMEDABAD BENC H OF THE TRIBUNAL IN THEIR AFORESAID DECISION IN THE CASE OF ARTI INDUST RIES LTD. (SUPRA) IN THE MATTER OF EXCISE DULY REFUND HELD AS UNDER:- WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT PROFIT BUSINESS DID NOT INCLUDE THE EXC ISE DUTY REFUND. AS THE ASSESSEE WAS NOT LIABLE TO PAY EXCISE DUTY O N THE GOODS WHICH WERE EXPORTED, AND HE WAS ONLY REQUIRED TO DE POSIT THE EXCISE DUTY, AT THE TIME OF PURCHASES PENDING EXPO RT OF THE SAME. AS AND WHEN THE EXPORT WAS MATERIALIZED THE CORRESP ONDING EXCISE DUTY DEPOSITED EARLIER WAS REFUNDED TO THE ASSESSEE -COMPANY. IN CASE OF AN EXPORTER HAVING FACILITY OF BOUNDED WARE HOUSE, IS NOT REQUIRED AT ALL TO DEPOSIT EXCISE DUTY IN THE FIRST INSTANCE AND THEN RECEIVE REFUND OF THE SAME. IF THE ASSESSES WAS HAV ING BONDED WAREHOUSE FACILITY, THESE PAYMENTS AND REFUNDS OF E XCISE DUTY WOULD NOT HAVE TAKEN PLACE. AS AND WHEN SUCH EXCISE DUTY WAS PAID BY THE ASSESSEE AS A TEMPORARY MEASURE, THE AM OUNT WAS DEBITED AND SIMILARLY, ON REFUND OF SUCH EXCISE DUT Y, THE SAME WAS CREDITED TO THE BOOKS OF ACCOUNT. THUS, WE FOUND TH AT ALLEGED AMOUNT OF EXCISE DUTY EITHER PAID OR REFUNDED DID N OT AFFECT THE BUSINESS PROFITS OF THE ASSESSEE AT ALL AND, THEREF ORE, THERE IS NO REASON FOR EXCLUDING 90 PER CENT OF THE EXCISE DUTY REFUND FROM THE PROFITS OF THE BUSINESS OF ASSESSES AS PER THE EXPL N. (BAA) TO SEC. 8OHHC. THE FINDINGS RECORDED BY THE CIT(A) TO THE E FFECT THAT PAYMENT OF EXCISE DULY HAS NOT REDUCED THE BUSINESS PROFIT OF THE ASSESSEE, THEREFORE, REFUND OF EXCISE DUTY PAID SHO ULD NOT BE EXCLUDED FROM THE BUSINESS PROFIT, HAD NOT BEEN CON TROVERTED BY THE DEPARTMENT. WE ARE, THEREFORE, INCLINED TO AGREE WI TH THE LEARNED AUTHORISED REPRESENTATIVE, THAT THESE IS NO INFINIT Y IN THE ORDER OF THE CIT(A.) IN DIRECTING THE A.O. NOT TO EXCLUDE 90 PERCENT OF SUCH 5 ITA NO. 1651 & CO-141/AHD/2007 EXCISE DUTY REFUND IN TERMS OF EXPLN. (BAA) FROM TH E PROFIT OF BUSINESS FOR COMPUTING DEDUCTION UNDER S. 80HHC. 7. IT IS PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO INC LUDE OTHER INCOME OF RS.95,68,432/- CONSISTING TO SALES TAX REFUND. WE FOLLOWING THE DE CISION DATED 16.01.2009 OF ITAT, A BENCH, AHMEDABAD IN ITA NOS. 1343/AHD/2006 AND 1503/AHD/20 06 FOR THE ASSESSMENT YEAR 2003-04 IN ASSESSEES OWN CASE (SUPRA) VACATE THE FINDING O F LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHEREBY HE DIRECTED THE ASSESSEE TO EX CLUDE THE OTHER INCOME OF RS.95,68,432/- FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80 HHC OF THE INCOME TAX ACT, 1961 AND RESTORE THE ORDER O ASSESSING OFFICER. THE GROUND N O. 2 OF REVENUES APPEAL IS ACCORDINGLY ALLOWED. 8. WITH REGARD TO CONTROVERSY INVOLVED IN GROUNDS N O. 3 & 4 OF REVENUES APPEAL FOR DELETING THE DISALLOWANCE OF PROPORTIONATE INTEREST EXPENSES OF RS.6,94,483/- FOR THE FUNDS DIVERTED FOR NON-BUSINESS PURPOSES; AND RESTRICTING THE DISALLOWANCE OF RS.1,00,000/- OUT OF TOTAL ADMINISTRATIVE EXPENSES UNDER SECTION 14A TO RS.25, 000/- RESPECTIVELY AND WITH REGARD TO CONTROVERSY INVOLVED IN GROUND NO. 4 OF ASSESSEES CROSS OBJECTION IN PARTLY CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.25,000/- UNDER SEC TION 14A OF THE INCOME TAX ACT, 1961, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT IN THE IMM EDIATELY PRECEDING ASSESSMENT YEAR, I.E. 2003- 04, ITAT, A BENCH, AHMEDABAD VIDE ORDER DATED 16. 01.2009 IN ITA NOS. 1343/AHD/2006 AND 1503/AHD/2006 FOR THE ASSESSMENT YEAR 2003-04 I N ASSESSEES OWN CASE RESTORED THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR WORKING OUT TH E DISALLOWANCE IN THE LIGHT OF PROVISIONS CONTAINED IN SUB-SECTIONS 2 & 3 OF SECTION 14A INSE RTED BY FINANCE ACT, 2006 READ WITH RULE 8 OF INCOME TAX RULES, 1962. THE LD. COUNSEL OF THE A SSESSEE SUBMITTED THAT RECENTLY HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE VS .- DCIT [43DTR 177] HELD THAT AS RULE 8D WAS INTRODUCED W.E.F. 24.03.2008, IT IS PROSPECT IVE AND APPLIES FOR ASSESSMENT YEAR 2008-09 AND ONWARDS, FOR THE ASSESSMENT YEAR WHERE RULE 8D IS NOT APPLICABLE, THE ASSESSING OFFICER HAS TO APPLY SECTION 14A ON A REASONABLE BASIS. IN THAT CASE, THE HON'BLE BOMBAY HIGH COURT REMANDED THE MATTER TO THE FILE OF ASSESSING OFFICE R FOR RECONSIDERATION IN THE LAW LAID DOWN IN THE SAID JUDGMENT. WE, THEREFORE, FOLLOWING THE SAI D JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE (SUPRA), SET AS IDE THE CONTROVERSY INVOLVED IN GROUNDS NO. 3 6 ITA NO. 1651 & CO-141/AHD/2007 & 4 OF REVENUES APPEAL AND GROUND NO. 4 OF ASSESSE ES CROSS OBJECTION TO THE FILE OF ASSESSING OFFICER, WHO WILL RE-ADJUDICATE THE SAME KEEPING IN VIEW THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE (SUPRA) AF TER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. RESULTANTLY, GROUNDS NO. 3 & 4 OF REVENU ES APPEAL AND GROUND NO. 4 OF ASSESSEES CROSS OBJECTION ARE ALLOWED FOR STATISTICAL PURPOSE S. 9. WITH REGARD TO CONTROVERSY INVOLVED IN GROUND NO 5 OF REVENUES APPEAL IN DELETING THE DISALLOWANCE OF RS.1,64,006/- OUT OF TOTAL FACTORY REPAIRS EXPENSES TREATING THE SAME AS CAPITAL IN NATURE, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DISALLOWED 25% OF FACTORY REPAIRS EXPENDITU RE TREATING AS CAPITAL. THESE ITEMS INCLUDE CEMENT, BRICKS, CONCRETE, ETC. THE ASSESSING OFFICE R AFTER TREATING THE SAME AS CAPITAL EXPENDITURE HAS ALLOWED THE DEPRECIATION @ 10%. ON APPEAL, IN T HE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS HELD THAT R EPAIRS IS VERY NOMINAL AND INCURRED ONLY DURING THE NORMAL COURSE OF BUSINESS ON ACCOUNT OF MAINTENANCE AND UPKEEP. NO NEW ASSET IS NOTED TO HAVE BEEN CREATED. THE LD. COUNSEL OF THE ASSESSEE ALSO SUBMITTED THAT SIMILAR DISALLOWANCE WAS MADE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, I.E. ASSESSMENT YEAR 2003-04, WHICH WAS DELETED BY THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS)-VIII, AHMEDABAD VIDE ORDER DATED 06.03.2006. AGAINST THE SAID DELETION, NO APPEAL HAS BEEN FILED BY THE REVENUE. THEREFORE, THE VIEW TAKEN BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) BE UPHELD. 10. ON THE OTHER HAND, SHRI R.K. DHANESTA, LD. D.R. RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER CONTENDED THAT TOTAL EXPENDITURE INCURRED WAS RS.6,90,551/-. IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE SAID EXP ENDITURE WAS CLAIMED AS RS.17,89,847/-. LOOKING TO THE ITEMS USED IN FACTORY REPAIRS LIKE M ETAL WORK, CEMENT, BRICKS, CONCRETE AND FURNITURE REPAIRS, ETC. THE DISALLOWANCE WAS RIGHTL Y MADE BY ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIF IED IN DELETING THE SAME. 11. WE HAVE CAREFULLY GONE THROUGH THE REASONING GI VEN BY THE ASSESSING OFFICER IN PARA 5.1 ON PAGE-9 OF THE ASSESSMENT ORDER. IT IS PERTINENT TO NOTE THAT FOR MAKING THE DISALLOWANCE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ME RELY FOLLOWED THE REASONING OF 7 ITA NO. 1651 & CO-141/AHD/2007 ASSESSING OFFICER GIVEN IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003-04. ADMITTEDLY, IN THE ASSESSMENT YEAR 2003-04, 25% OF REPAIRS EXPENSE S TREATED AS CAPITAL EXPENDITURE WERE DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . THE DECISION OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THAT YEAR HAS BEEN ACCEPT ED BY THE DEPARTMENT. WE ARE, THEREFORE, OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN DIRECTING THE ASSESSING OFFICER TO TREAT THE ENT IRE EXPENSES ON FACTORY REPAIRS AS REVENUE EXPENDITURE. RESULTANTLY, GROUND NO. 5 OF REVENUES APPEAL IS DISMISSED. 12. GROUND NO. 1 OF ASSESSEES CROSS OBJECTION WAS NOT PRESSED BY THE LD. COUNSEL OF THE ASSESSEE AT THE TIME OF HEARING THEREFORE THIS GROU ND OF CROSS OBJECTION IS BEING DISMISSED AS NOT PRESSED. 13. THE CONTROVERSY INVOLVED IN GROUNDS NO. 2 & 3 O F ASSESSEES CROSS OBJECTION IS COVERED AGAINST THE ASSESSEE BY THE DECISION DATED 16.01.20 09 OF ITAT, A BENCH, AHMEDABAD IN ITA NOS. 1343/AHD/2006 AND 1503/AHD/2006 FOR THE ASSESS MENT YEAR 2003-04 IN ASSESSEES OWN CASE. THE RELEVANT FINDING IS CONTAINED IN PARA 24 ON PAGE 24, WHICH IS AS UNDER :- 24. AS ALREADY MENTIONED, SINCE THE LD. CIT(A.) HA S RECORDED A FINDING THAT INTEREST INCOME EARNED FROM FIXED DEPO SITS AND OTHER DEPOSITS WITH VARIOUS PARTIES, WAS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, WHILE THE TAXPAYER HAS NOT PRODUCED BEFORE US ANY MATERIAL CONTRARY TO THESE FINDINGS OF THE LD. CIT(A.) EXCEPT PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF APPOLLO TYRES (SUPRA). IN THE LIGHT OF AFORESAID DE CISION OF HON'BLE DELHI HIGH COURT, SUCH INCOME ASSESSED UNDER THE HE AD OTHER SOURCES CANNOT BE RECKONED FOR THE PURPOSES OF SECTION 80HH C OF THE ACT. THEREFORE, WE UPHOLD THE FINDINGS OF THE LD. CIT(A. ). THERE IS NOTHING TO SUGGEST THAT THE EXPENDITURE ON ACCOUNT OF INTEREST CLAIMED AS DEDUCTION UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION, HAS BEEN INCURRED IN RELATION TO EARNING OF INCOME ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THESE CIRCUMST ANCES, GROUND NOS. 5 & 6 OF THE APPEAL OF THE TAXPAYER ARE DISMISSED. WE, THEREFORE, FOLLOWING THE DECISION OF TRIBUNAL I N ASSESSEES OWN CASE IN ITA NOS. 1343/AHD/2006 AND 1503/AHD/2006 FOR THE ASSESSMENT YEAR 2003-04 (SUPRA) UPHOLD THE VIEW 8 ITA NO. 1651 & CO-141/AHD/2007 TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS). RESULTANTLY, BOTH GROUNDS OF CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED . 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 08.10.201 0 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08/ 10 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT CONCERNED, (4) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR, ITAT, AHMEDABAD LAHA/SR.P.S.