The DCITGNR Circle, Gandhinagar V. Gujarat Power Corporation Ltd., Gandhinagar

CO 164/AHD/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7568 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-06-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 06-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BKS
• Keywords: Depreciation; Business expenditure; Rule of consistency; Revenue expenditure; Capital expenditure
• Section: 143(3); 244A; 142(1); 234B; 37(1); 32; 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.2943AHD/2006, I.T.A.NO.1338/AHD/2007, I.T.A.NO. 3503/ AHD/2008 AND I.T.A.NO. 1286AHD/2009 (ASSESSMENT YEARS 2003-04, 2004-05, 2005-06 AND 2006-07) GUJARAT POWER CORPORATION LTD., BLOCK NO.8, 6 TH FLOOR, UDHYOG BHAVAN, SECTOR 11, GANDHINAGAR VS. ADDL. CIT, GANDHINAGAR RANGE, GANDHINAGAR PAN/GIR NO. : AAACG5596J I.T.A.NOS. 84, 1468/AHD/2007, I.T.A.NO. 3578/AHD/20 08 & I.T.A.NO. 1669/AHD/2009 (ASSESSMENT YEARS 2003-04, 2004-05, 2005-06 & 2006- 07) AND C.O. NO.164/AHD/2010 IN I.T.A.NO. 2943/AHD/2006 (ASSESSMENT YEAR 2003-04) ADDL. CIT, GANDHINAGAR RANGE, VS. GUJARAT POWER CO RPN. LTD., GANDHINAGAR BLOCK NO.8, 6 TH FLOOR, UDHYOG BHAVAN, SECTOR II, GANDHINAGAR (APPELLANT) .. (RESPONDENT) ASSESSEE BY: SHRI SANJAY R. SHAH, AR DEPARTMENT BY: SHRI BKS PANDYA, CIT DR DATE OF HEARING: 02.07.2012 DATE OF PRONOUNCEMENT: 31.08.2012 O R D E R PER SHRI A. K. GARODIA, AM:- OUT OF THIS BUNCH OF 9 APPEALS, THERE ARE 8 CROSS APPEALS OF THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEARS 2 003-04, 2004-05, I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 2 2005-06 & 2006-07 AND THERE IS ONE CROSS OBJECTION OF THE REVENUE FOR THE ASSESSMENT YEAR 2003-04. ALL THESE WERE HEARD TOGE THER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. THE ASSESSEE HAS FURNISHED A CHART SHOWING YEAR WIS E POSITION OF THE GROUNDS OF APPEALS FOR THE ASSESSMENT YEARS 2003-04 , 2004-05 AND 2005- 06. AS PER THIS CHART, FIRST ISSUE IS REGARDING DI SALLOWANCE OF CLAIM U/S 10(23G) OF THE INCOME TAX ACT, 1961 AND THIS ISSUE IS RAISED BY THE ASSESSEES AS GROUND NO.1 IN ASSESSMENT YEAR 2003-04 AND 2004-05. 2. THE 1 ST GROUND IN ASSESSMENT YEAR 2003-04 READS AS UNDER: 1) THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELL ANT IS NOT ELIGIBLE FOR THE EXEMPTION U/S10(23G) OF THE ACT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE APP ELLANT IS ELIGIBLE FOR EXEMPTION U/S 10(23G) OF THE ACT. I5T BE SO HE LD NOW. 1.1) THE LD. CIT(A) ERRED IN HOLDING THAT APPELLANT IS NOT AN INFRASTRUCTURE CAPITAL COMPANY. IT IS SUBMITTED THA T IN THE FACTS AND CIRCUMSTANCES OF THE CASE APPELLANT IS AN INFRASTRU CTURE CAPITAL COMPANY AS DEFINED IN SECTION 10(23G) OF THE ACT. I T IS SUBMITTED THAT IT BE SO HELD NOW. 3. BRIEF FACTS AS NOTED BY THE A.O. IN THE ASSESSME NT ORDER ARE THAT THE ASSESSEE HAS CLAIMED EXEMPTION OF INTEREST INCOME U /S 10(23G) IN RESPECT OF INTEREST RECEIVED FROM SSNNL AND GIPCL OF RS.68, 06,441/-. THE A.O. ASKED THE ASSESSEE TO FURNISH NECESSARY EVIDEN CE THAT THESE INSTITUTIONS ARE APPROVED BY THE CENTRAL GOVERNMENT WITHIN THE MEANING OF SECTION 10(23G) OF THE INCOME TAX ACT, 1961 AND TO SHOW THAT OTHER CONDITIONS LAID DOWN IN SECTION 10(23G) ARE F ULFILLED. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT BY VIRTUE OF INVESTMENT MADE IN THESE BONDS HAVING MATURITY PERI OD OF MORE THAN 5 I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 3 YEAS, THE ASSESSEE IS AN INFRASTRUCTURE CAPITAL COM PANY. REGARDING APPROVAL OF THE CENTRAL GOVERNMENT TO INVEST IN THE SE BONDS WITHIN THE MEANING OF SECTION 10(23G) OF THE INCOME TAX ACT, 1 961, THE ASSESSEE SUBMITTED A COPY OF THE NOTIFICATION DATED 25.05.19 99 ISSUED BY CBDT IN RESPECT OF GUJARAT INDUSTRIAL POWER CORPORATION LTD ., (GIPCL) AND IN RESPECT OF APPROVAL OF THE CENTRAL GOVERNMENT FOR S SNNL, THE ASSESSEE HAD NOT SUBMITTED EVIDENCE REGARDING APPROVAL OF CE NTRAL GOVERNMENT BUT IT WAS CONTENDED THAT BEFORE ITS AMENDMENT, GOV ERNMENT APPROVAL WAS NOT NECESSARY AND NO FURTHER APPROVAL IS REQUIR ED TO BE OBTAINED IN VIEW OF EXPLANATION (2) TO SECTION 10(23G) READ WIT H ACTUAL SECTION 10(23G) AS APPLICABLE PRIOR TO 01.04.1999 BECAUSE T HE INVESTMENT IN SSNNL BONDS WAS MADE PRIOR TO 01.04.1999 AND EXACT DATE OF INVESTMENT WAS 25.04.1995 AND 18.04.1996. THE A.O. HAS EXAMINED VARIOUS CONDITIONS REQUIRED TO BE FULFILLED BY THE ASSESSEE AS PER SECTION 10(23G) AND HE CAME TO THE CONCLUSION THAT THE ASSE SSEE IS NOT ELIGIBLE FOR EXEMPTION OF INTEREST INCOME RECEIVED FORM INVESTME NT IN BONDS OF SSNNL AND GIPCL AND HE MADE ADDITION OF RS.68,06,44 1/- IN THE INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION RENDERED I N THE ASSESSEES OWN CASE IN ASSESSMENT YEAR 2001-02 IN I.T.A.NO. 1663/A HD/2008 DATED 30.11.2010 AND HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 4 TRIBUNAL DECISION CITED BY THE LD. A.R. FOR THE ASS ESSMENT YEAR 2001-02 IN THE ASSESSEES OWN CASE. WE FIND THAT IN THAT Y EAR ALSO, THE DISPUTE WAS REGARDING INTEREST INCOME IN RESPECT OF AMOUNT INVE STED IN BONDS OF SSNNL AND GIPCL. IN THAT YEAR, THE TRIBUNAL HELD B Y FOLLOWING THE TRIBUNAL DECISION OF HYDERABAD BENCH RENDERED IN TH E CASE OF VBC FERRO ALLOY LTD. AS REPORTED IN107 ITD 367 (HYD.) THAT TH E ASSESSEE IS ENTITLED TO EXEMPTION U/S 10(23G) OF THE INCOME TAX ACT, 196 1. NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LD. D.R. AND HENC E, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. THEREFORE, RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02, WE DECIDE THIS ISSUE IN FA VOUR OF THE ASSESSEE. THIS GROUND IS ALLOWED IN ALL THREE YEARS. 6. THE 2 ND ISSUE AS PER THE CHART IS REGARDING DISALLOWANCE U /S 35E. THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE AS PER G ROUND NO.2 IN ASSESSMENT YEAR 2003-04 AND 2004-05 AND GROUND NO.1 IN ASSESSMENT YEAR 2005-06. 7. THE BRIEF FACTS ARE THAT IT IS NOTED BY THE A.O. IN PAGE 6 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003-04 TH AT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.35,37,800/- U/S 35E OF THE INCOME TAX ACT, 1961. THE A.O. ASKED THE ASSESSEE TO FURNISH NECESSARY EV IDENCE THAT THE COMPANY IS ENGAGED IN OPERATION RELATING TO EXTRACT ION AND PRODUCTION OF MINERAL AND SUBMIT DETAILS REGARDING DATE WISE EXPE NSES INCURRED, DATE/MONTH AND YEAR OF COMMERCIAL PRODUCTION ETC. T HE ASSESSEE SUBMITTED REPLY BEFORE THE A.O. VIDE LETTER DATED 2 2.12.2005, 18.01.2006 AND 30.01.2006. AFTER CONSIDERING THESE REPLIES OF THE ASSESSEE AND THE PROVISIONS OF SECTION 35E OF THE INCOME TAX ACT, 19 61, THE A.O. CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT COMPLIED W ITH THE REQUIREMENT OF I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 5 SECTION 35E OF THE INCOME TAX ACT, 1961 BECAUSE AS PER THE A.O., MINING WORK WAS CARRIED ON BY THE COMMISSIONER GEOLOGY AND MINING IN RESPECT OF LEASE GRANTED IN THE YEAR 1988 AND THE EXPENDITU RE INCURRED ON ACCOUNT OF PAYMENT TO THIS PARTY HAS BEEN SHOWN UNDER THE H EAD CONSULTANCY FEE TOWARDS PROJECT, PENDING ALLOCATION. HE HAS ALSO O BSERVED THAT THERE IS NO EVIDENCE OF COMMERCIAL PRODUCTION AND, THEREFORE, T HE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 35E OF THE ACT. BEING A GGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 8. IT WAS SUBMITTED BY THE LD. A.R. THAT EVEN IF TH IS CLAIM IS NOT ALLOWABLE U/S 35E, THE SAME SHOULD BE ALLOWED U/S 3 7 BECAUSE THE ASSESSEE PROPOSES TO SELL THE PROJECT AND RECOVER T HE EXPENSES FORM THE BUYER. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIE S BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT BEFORE US, NO SERIOUS ARGUMENT WAS MADE REGARD ING ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION U/S 35E AND A CLEAR FINDING IS GIVEN BY THE AUTHORITIES BELOW THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 35E BECAUSE THE ASSESSEE HAS NOT FULFILLED THE REQUIRED CONDITIONS. BEFORE US, LD. A.R. COULD NOT CONTROVERT THESE FINDINGS OF THE AUTHORITIES BELOW AND HENCE, THIS ASPECT IS DECIDED AGAINST THE ASSESSEE. BEFORE US, THE ONLY ARGUMENT RAISED IS THAT DEDUCTION SHOULD BE ALLOWED U/S 37(1) OF THE INCOME TAX ACT, 1961 THIS CONTENTION WAS ALSO RAISE D BEFORE LD. CIT(A) AND WAS DECIDED BY LD. CIT(A) AS PER PARA 4.3.2 OF HIS ORDER FOR THE ASSESSMENT YEAR 2003-04 WHICH IS REPRODUCED BELOW F OR THE SAKE OF READY REFERENCE: 4.3.2 THE ALTERNATE SUBMISSIONS AND CLAIM FOR DED UCING U/S 37(1) OF INCOME TAX ACT, 1961 HAVE ALSO BEEN CONSID ERED. IN THIS I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 6 CONNECTION, IT IS NOTICED THAT THE COMMISSIONER OF GEOLOGY AND MINING, GOVERNMENT OF GUJARAT HAD RAISED A DEMAND O F RS.7,78,31,600/- ON 7.11.2000. THIS IS RELEVANT TO ASSESSMENT YEAR 2001-02. THE DEMAND WAS DISPUTED AND SUBSEQUENTLY D EBITED IN BOOKS FOR THE YEAR ENDED ON 31.03.2002 UNDER THE HE AD CONSULTANCY FEES TOWARDS PROJECT. THIS IS RELEVANT TO ASSESSMENT YEAR 2002-03. PAYMENT OF RS.3,35,78,000/- WAS MADE ON 10.07.2002, RELEVANT TO THE PRESENT YEAR. IT IS F IRST OF AL SEEN THAT THE EXPENSES WERE NOT TREATED AS REVENUE EXPENSES B Y THE APPELLANT. THERE WAS ALSO NO CLAIM IN THE RETURN OF INCOME THA T THE ABOVE EXPENSES CONSTITUTED REVENUE EXPENSES. ON THE CONTR ARY, THE APPELLANT HAD CLAIMED THE EXPENSES AS ELIGIBLE FOR DEDUCTION U/S 35E WHICH WOULD SHOW THAT SUCH EXPENSES WERE NOT CO MING UNDER THE SCOPE OF SECTION 37(1) OF THE INCOME TAX ACT, 1 961. SUCH EXPENSES WERE PREOPERATIVE EXPENSES BEING CONSULTAN CY FEES TOWARDS PROJECT AND HENCE, CAPITAL IN NATURE AND NO T ALLOWABLE UNDER SECTION 37(1). I THE ABOVE CONTEXT, THE ALTE RNATE CLAIM OF EXPENSE U/S 37(1) IS NOT MAINTAINABLE. THE CLAIM I S THEREFORE, DISMISSED. 10. WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE. REGARDING THE ALTERNATIVE CLAIM U/S 37(1 ) ALSO, NO DEFECT COULD BE POINTED OUT BY THE LD. A.R. IN THE ORDER OF LD. CIT(A) ON THIS ASPECT ALSO. THE ASSESSEE HAS RAISED ONE ADDITIONAL GROUN D IN THIS REGARD THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 37 BECAUSE T HE ASSESSEE PROPOSES TO SELL THE PROJECT AND RECOVER THESE EXPENSES FROM TH E BUYER. NO EVIDENCE HAS BEEN PRODUCED BEFORE US IN SUPPORT OF THIS ARGU MENT THAT THE ASSESSEE HAS ULTIMATELY SOLD THE PROJECT IN A SUBSEQUENT YEA R AND RECOVERED THESE EXPENSES FROM THE BUYER. MOREOVER, EVEN IF THIS IS DONE, NO DEDUCTION IS ELIGIBLE IN THE PRESENT YEAR BECAUSE EVEN IF THE EX PENDITURE ARE TO BE DEBITED IN P & L ACCOUNT, THE SAME HAS TO BE CONSID ERED IN CREDIT SIDE OF THE P&L ACCOUNT ALSO AS CLOSING STOCK OF W.I.P. AND THERE WILL BE NO RESULTANT DEDUCTION IN THE PRESENT YEAR. THEREFORE , WE DO NOT FIND ANY I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 7 MERIT IN THIS GROUND OF THE ASSESSEE AND, THEREFORE , THE SAME IS REJECTED IN AL THE THREE YEARS. 11. AS PER THE CHART, THE 3 RD ISSUE IS REGARDING DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 35D. THIS IS SUE HAS BEEN RAISED BY THE REVENUE AS PER GROUND NO.1 IN ASSESSMENT YEAR 2 003-04, 2004-05 AND 2005-06. 12. BRIEF FACTS ARE THAT IT IS NOTED BY THE A.O. IN PARA 9 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003-04 TH AT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.28,20,192/- U/S 35D OF THE INCOME TAX ACT, 1961. THE A.O. ASKED THE ASSESSEE TO FURNISH NECES SARY EVIDENCE AND TO EXPLAIN VIDE NOTICE U/S 142(1) DATED 15.12.2005 FOL LOWED BY ANOTHER NOTICE U/S 142(3) DATED 20.01.2006. TWO REPLIES WE RE SUBMITTED BY THE ASSESSEE BEFORE THE A.O. BEING DATED 22.02.2005 AND 30.01.2006. THE A.O. HAS NOTED THAT TOTAL EXPENSES INCURRED FOR WHI CH DEDUCTION IS CLAIMED BY THE ASSESSEE U/S 35D CAN BE CATEGORIZED IN THREE CATEGORIES:- THE FIRST IS FEE TO ROC OF RS.1,51,06,000/-, 2 ND IS STAMP FEE OF RS.5,00,622/- AND THE 3 RD IS PRINTING CHARGES OF RS.12,858/-. THEREAFTER, THE A.O. HAS OBSERVED THAT THE AS PER THE REQUIREME NT OF SUB-SECTION (1) OF SECTION 35D, THE EXPENDITURE SHOULD BE INCURRED IN CONNECTION WITH THE EXTENSION OF THE INDUSTRIAL UNDERTAKING OR SETTING UP OF A NEW INDUSTRIAL UNDERTAKING. THEREAFTER, THE A.O. HAS NOTED THE NA TURE OF ELIGIBLE EXPENDITURE AS PER SUB-SECTION (2) OF SECTION 35D I N CONNECTION WITH EXTENSION OF INDUSTRIAL UNDERTAKING/SETTING UP OF N EW INDUSTRIAL UNIT. THE A.O. HAS FURTHER NOTED THAT FEE PAID TO ROC IS NOT FEE FOR EXTENSION OF THE COMPANY BUT FOR EXPANSION OF CAPITAL. THE A.O. HAS GIVEN A FINDING THAT THE ASSESSEE HAS NOT FULFILLED THE REQUIREMENT OF S UB-SECTION (1) AND (2) OF SECTION 35D THEREFORE, ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 35D. HE I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 8 HAS ALSO REFERRED TO THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORA TION VS CIT AS REPORTED IN 225 ITR 292 WHEREIN, IT WAS HELD THAT F EE PAID TO ROC FOR EXPANSION OF CAPITAL BASE OF THE COMPANY IS CAPITAL EXPENDITURE. HE REJECTED THE CLAIM OF THE ASSESSEE REGARDING DEDUCT ION U/S 35D BY MAKINGS THESE OBSERVATIONS. BEING AGGRIEVED, THE A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). LD. CIT(A) HAS NOTED IN PARA 5.3 OF HIS ORDER FOR ASSESSMENT YEAR 2003-04 THAT THE DEDU CTION U/S 35D CLAIMED IN THIS YEAR IS IN RESPECT OF EXPENSE INCURRED IN F INANCIAL YEAR 1994-95 AND 2000-01 AND THE ASSESSEE WAS CLAIMING AMORTIZATION OF THESE EXPENSES U/S 35D AND THE SAME WAS ALLOWED IN ASSESSMENT YEAR 199 5-96 AND 2002-03 AND, THEREFORE, IN THE PRESENT YEAR, THERE CANNOT B E ANY DISALLOWANCE ON THIS ACCOUNT. ON THIS BASIS, LD. CIT(A) DELETED TH IS DISALLOWANCE IN ALL THE THREE YEARS AND NOW, THE REVENUE IS IN APPEAL B EFORE US. 13. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SAURASHTSRA CEMENT & CHEMICAL INDUSTRIES LTD. VS CI T (GUJ.) AS REPORTED IN 123 ITR 669 AND THE JUDGEMENT OF HONBL E M.P. HIGH COURT RENDERED IN THE CASE OF CIT VS BHILAI ENGINEERING C ORPORATION AS REPORTED IN 133 ITR 687 (M.P.). HE ALSO SUBMITTED THAT SINCE THE SAME WAS ALLOWED IN EARLIER YEARS, IT CANNOT BE DISALLOW ED NOW. HE ALSO SUBMITTED THAT ON PAGE 99-102 OF THE PAPER BOOK, IS THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF ASSESSMENT YEAR 19 95-96 AND THERE IS NO DISALLOWANCE U/S 325D OF THE INCOME TAX ACT, 1961 W HEREAS THE COMPUTATION OF INCOME IS AVAILABLE ON PAGE 94 OF TH E PAPER BOOK WHERE, I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 9 THE ASSESSEE CLAIMED DEDUCTION OF RS.3,03,704/- U/S 35D OF THE INCOME TAX ACT, 1961. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS DISALLOWANCE IS MADE BY THE A.O. BY GIVIN G A SPECIFIC FINDING THAT THE ASSESSEE IS NOT FULFILLING THE CONDITIONS IMPOSED UNDER SUB-SECTION (1) AND (2) OF SECTION 35D AND THERE IS NO FINDING GIVEN BY LD. CIT(A) IN HIS ORDER THAT THE ASSESSEE IS FULFILLING THESE CON DITIONS. ORDER OF LD. CIT(A) IS ON THIS BASIS THAT SINCE THE DEDUCTION WA S ALLOWED IN EARLIER YEARS, THE SAME CANNOT BE DISALLOWED IN THE PRESENT YEAR. IT IS ALSO SEEN THAT ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 1995- 96 IS AVAILABLE IN THE PAPER BOOK AND WE FIND THAT THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER ON THIS ASPECT. REGARDING THE RULE OF CONSISTENCY FOLLOWED BY LD. CIT(A) IN DELETING THIS DISALLOWANCE, WE ARE OF THE CONSID ERED OPINION THAT IF THE VIEW TAKEN BY THE A.O. IN THE EARLIER YEAR IS A POS SIBLE VIEW THEN THERE MAY BE A CASE OF TAKING THE SAME VIEW IN THE PRESEN T YEAR AS PER THE RULE OF CONSISTENCY. BUT IF THE VIEW TAKEN IN THE EARLI ER YEAR IS NOT A POSSIBLE VIEW THEN A MISTAKE CANNOT BE PERPETUATED IN THE NA ME OF CONSISTENCY. - REGARDING THE JUDGEMENT OF HONBLE GUJARAT HIGH C OURT CITED BY THE LD. A.R. BEING RENDERED IN THE CASE OF SAURASHT RA CEMENT & CHEMICAL INDUSTRIES LTD. (SUPRA), WE FIND THAT IT WAS A CASE WHERE THE DISPUTE WAS REGARDING CLAIM OF DEDUCTION BY THE ASSESSEE U/S 80 J. IT WAS HELD BY HONBLE GUJARAT HIGH COURT IN THAT CASE THAT DEDUCT ION CANNOT BE DENIED IN THE SUCCEEDING YEAR WITHOUT DISTURBING RELIEF GR ANTED FOR THE INITIAL YEAR. IN THAT CASE, IT WAS NOT ESTABLISHED BY THE REVENUE THAT THE CLAIM WAS WRONGLY ALLOWED IN THE INITIAL YEAR BUT IN THE PRESENT CASE, AS IS SEEN THAT THE CLAIM ALLOWED IN THE EARLIER YEAR WAS NOT AS PER LAW BECAUSE IN I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 10 EARLIER YEAR ALSO, THE ASSESSEE WAS NOT FULFILLING THE REQUIRED CONDITIONS OF SECTION 35D AND HENCE, IN OUR CONSIDERED OPINION, T HIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. - THE 2 ND JUDGMENT CITED BY THE LD. A.R. IS THE JUDGEMENT OF HONBLE M.P. HIGH COURT RENDERED IN THE CASE OF CIT VS BHILAI ENGINEERING CORPORATION (SUPRA). IN THAT CASE ALSO , THE DISPUTE WAS REGARDING ALLOWABILITY OF DEDUCTION U/S 8J IN THE S UBSEQUENT YEAR WHEREAS IN THE EARLIER YEAR, IT WAS ALLOWED. IN THAT CASE, IT WAS OBSERVED BY HONBLE M.P. HIGH COURT THAT NO MATERIAL WAS BROUGH T BY THE ITO TO SHOW THAT FINDING REACHED FOR EARLIER YEAR WAS ERRO NEOUS WHEREAS, IN THE PRESENT CASE, WE FIND THAT THE A.O. HAS ESTABLISHED THAT THE ASSESSEE IS NOT FULFILLING THE CONDITIONS OF SUB-SECTION (1) & (2) OF SECTION 35D AND HENCE, THIS JUDGEMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. 15. FROM THE ABOVE DISCUSSION, WE FIND THAT NONE OF THE JUDGEMENTS CITED BY THE LD. A.R. IS HELPING THE CASE OF THE AS SESSEE AND THE FINDINGS OF THE A.O. ARE NOT CONTROVERTED BY CIT(A) OR BY LD . A.R. BY SHOWING THAT THE ASSESSEE IS FULFILLING THE REQUIREMENTS OF SUB-SECTIONS (1) AND (2) OF SECTION 35D OF THE ACT AND WE HAVE ALSO DISCUSSE D THAT IN THE NAME OF RULE OF CONSISTENCY, MISTAKE CANNOT BE PERPETUATED AND, THEREFORE, WE HOLD THAT LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE A.O. U/S 35D. WE, THEREFORE, REVERSE THE OR DER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE A.O. THIS GROUN D OF THE REVENUE IS ALLOWED IN ALL THE THREE YEARS. 16. THE 4 TH ISSUE AS PER THIS CHART IS REGARDING DISALLOWANCE OF DEPRECIATION ON LEASED ASSETS. THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 11 AS PER GROUND NO.3 IN ASSESSMENT YEAR 2003-04 AND 2 004-05 AND GROUND NO.2 IN ASSESSMENT YEAR 2005-06. THE REVENUE HAS A LSO RAISED THIS ISSUE AS PER GROUND NO.2 IN ASSESSMENT YEAR 2003-04 AND 2 004-05 AND GROUND NO.3 IN ASSESSMENT YEAR 2005-06. THE REVENUES GRI EVANCE IS REGARDING THE DIRECTION OF THE LD. CIT(A) THAT PRINCIPAL PORT ION OUT OF LEASE RENT IS TO BE EXCLUDED FORM THE INCOME OF THE ASSESSEE. 17. IT WAS SUBMITTED BY THE LD. A.R. THAT THIS ISSU E IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF SPECIAL B ENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BANK AS REPORTED I N I.T.A.NO. 6566/AHD/2002 OF 06.11.2003. IT WAS SUBMITTED THAT AS PER THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL, IT WAS HELD BY TH E SPECIAL BENCH OF THE TRIBUNAL THAT PRINCIPAL PORTION OF LEASE RENT HAS T O BE EXCLUDED FROM THE INCOME AND DEPRECIATION IS NOT ALLOWABLE TO THE LES SOR IN CASE OF FINANCIAL LEASE. LD. D.R. SUPPORTED THE ASSESSMENT ORDER. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDER OF AUTHORITI ES BELOW AND THE JUDGEMENT OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BANK (SUPRA). WE FIND THAT NO SERIOUS ARG UMENT WAS MADE BY THE ASSESSEE REGARDING THE ALLOWABILITY OF DEDUCTIO N ON ACCOUNT OF DEPRECIATION OF LEASED ASSETS AND HENCE, THIS GROUN D OF THE ASSESSEE IS REJECTED IN ALL THE THREE YEARS BY FOLLOWING THIS D ECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BA NK (SUPRA). 19. REGARDING THE GROUND RAISED BY THE REVENUE IN T HESE THREE YEAS IN RESPECT OF EXCLUDING THE PRINCIPAL PORTION OF LEASE RENT FORM THE INCOME OF THE ASSESSEE, WE FIND THAT THIS ISSUE IS ALSO NOW C OVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF SPECIAL BENCH OF THE TR IBUNAL RENDERED IN THE CASE OF INDUSIND BANK (SUPRA) AND HENCE, WE CONFIRM THE ORDER OF LD. I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 12 CIT(A) ON THIS ISSUE. ACCORDINGLY, THE GROUND RAIS ED BY THE ASSESSEE IS REJECTED IN ALL THE THREE YEARS AND GROUND RAISED B Y THE REVENUE IS ALSO REJECTED IN ALL THE THREE YEARS. 20. THE 5 TH ISSUE AS PER THIS CHART IS REGARDING DISALLOWANCE ON ACCOUNT OF RATES AND TAXES. THIS ISSUE IS RAISED BY THE RE VENUE IN ASSESSMENT YEAR 2005-06 AS PER GROUND NO.2 IN I.T.A.NO. 3578/AHD/20 08. THE GROUND READS AS UNDER: LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN THE CA SE IN DELETING THE ADDITION OF RS.2,72,81,590/- MADE BY THE A.O. O N ACCOUNT OF DISALLOWANCE OF EXPENSES UNDER RATES AND TAXES. 21. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTE D BY THE A.O. IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005-06 T HAT ASSESSEE HAS DEBITED IN HIS P & L ACCOUNT A SUM OF RS.2,72,81,58 9/- IN RESPECT OF RATES AND TAXES. THE A.O. ASKED THE ASSESSEE TO EXPLAIN THE NATURE OF THESE EXPENSES. IN REPLY, IT WAS SUBMITTED BY THE ASSESS EE BEFORE THE A.O. THAT LAND REVENUE AUTHORITIES HAVE LEVIED LAND REVENUE A ND EDUCATION CESS ON THE LAND SITUATED IN VARIOUS VILLAGES OF BHAVNAGAR AND AMRELI DISTRICTS. THE A.O. HAS GIVEN A FINDING THAT AS PER THE SUBMIS SION OF THE ASSESSEE, THE LAND HAS BEEN ACQUIRED FOR THE POWER PROJECT OF THE POWER CORPORATION. HE HAS ALSO NOTED THAT NONE OF SUCH P OWER PROJECT HAS COMMENCED BUSINESS. UNDER THESE FACTS, IT IS HELD BY THE A.O. THAT THIS EXPENDITURE IS A CAPITAL EXPENDITURE RELATING TO TH E LAND WHICH IS PURCHASED FOR THE PROPOSED JOINT VENTURE POWER PROJ ECT WHERE THE BUSINESS HAS NOT YET COMMENCED. HE DISALLOWED THIS CLAIM. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) WHO HAS DELETED THIS DISALLOWANCE AND NOW, THE REVE NUE IS IN APPEAL BEFORE US. I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 13 22. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITT ED THAT THIS IS ALLOWABLE U/S 37 OF THE INCOME TAX ACT, 1961. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS DISALLOWANCE WAS DELETED BY LD. CIT(A) ON THIS BASIS THAT THE PAYMENT OF TAXES OF ANY KIND WHETHER ONE TIME OR RE CURRING NATURE, NEVER ENHANCE THE VALUE OF THE ASSET BEING USED IN QUEST ION NOR BRINGS INTO EXISTENCE OF ANY ADVANTAGE OF ENDURING NATURE. IN THE PRESENT CASE, THE ASSESSEE IS CLAIMING DEDUCTION OF THIS EXPENDITURE U/S 37. AS PER THE PROVISION OF SECTION 37(1), BUSINESS EXPENDITURE NO T IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENDITURE IS ALLO WABLE. BUT BEFORE THIS, ONE MORE CONDITION IS TO BE FULFILLED THAT THE BUSI NESS FOR WHICH THE EXPENDITURE IS INCURRED HAS BEEN SET UP AND COMMENC ED. IN THE PRESENT CASE, THE LAND IS PURCHASED FOR THE PROPOSED JOINT VENTURE POWER PROJECT AND NONE OF THE POWER PROJECTS HAS COMMENCED BUSINE SS. IN THE PRESENT CASE, THE A.O. HAS GIVEN THIS FINDING THAT THE RATE S AND TAXES BEFORE COMMENCEMENT OF PRODUCTION IN A PROJECT IS A CAPITA L EXPENDITURE. THE BASIS OF THE ORDER OF LD. CIT(A) IS THIS THAT THIS EXPENDITURE DOES NOT ENHANCE THE VALUE OF THE ASSET I.E. THE LAND IN TH E PRESENT CASE. IN OUR CONSIDERED OPINION, EVEN IF IT DOES NOT ENHANCE THE VALUE OF THE LAND IN QUESTION THEN ALSO IT CANNOT BE ALLOWED AS REVENUE EXPENDITURE BECAUSE THE BUSINESS HAS NOT COMMENCED AND THEREFORE, IT IS A PREOPERATIONAL EXPENDITURE. THIS GROUND IS ALLOWED. I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 14 24. NOW, WE TAKE UP THE CROSS APPEAL FOR THE ASSESS MENT YEAR 2006-07. THE GROUNDS RAISED BY THE ASSESSEE IN THIS YEAR ARE AS UNDER: THE APPELLANT BEING DISSATISFIED WITH THE ORDER PA SSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - VI, AHMEDABA D (CIT(A)), PREFERS THIS APPEAL AGAINST THE SAME ON T HE FOLLOWING AMONGST OTHER GROUNDS, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. 1. THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS AND CONTRARY TO THE PROVISIO NS OF LAW & FACTS AND THEREFORE REQUIRES TO BE SUITABLY MODIFIE D. IT IS SUBMITTED THAT IT BE SO DONE NOW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING DISALLOWANCE MADE FOR RS. 77,83,160 U/S 35E OF THE ACT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMST ANCES OF THE CASE APPELLANT IS ELIGIBLE FOR THE DEDUCTION U/S 35E OF THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE STAND OF THE ASSESSING OFFICER THAT PRODUCTION MUST HAVE BEEN COMMENCED. IT IS SUBMITTED THAT OPERATION RELATES TO PROSPECTING IS SUFFICIENT FOR BEING ELIGIBLE FOR DE DUCTION U/S. 35E OF I.T. ACT AND THEREFORE, APPELLANT IS ELIGIBLE FOR S UCH DEDUCTION. IT BE SO HELD NOW. 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN NOT HOLDING THAT ENTIRE EXPENSES ARE ADMISSIBLE AS DEDUCTION U/S 28 / 37(1) OF THE ACT. IT IS SUBMITTED THAT IT BE SO H ELD NOW. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OFFICER ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATIO N ON LEASED ASSET FOR RS.50,62,500. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE ALL THE CONDITIONS OF SEC TION 32 ARE COMPLIED WITH AND THEREFORE, THE DEPRECIATION ON LE ASED ASSET IS ALLOWABLE AS DEDUCTION. IT IS SUITED THAT IT BE SO HELD NOW. 4. THE LD. CIT(A) ERRED IN HOLDING THAT INTEREST U/ S234D AND WITHDRAWING INTEREST U/S 244A IS CONSEQUENTIAL. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE INTEREST U/S 234D IS NOT CHARGEABLE AND INTEREST U/S 244A SHALL NOT BE WITHD RAWN. IT BE SO HELD NOW. 25. GROUND NO.1 IS GENERAL AND GROUND NO.2 IS REGAR DING ALLOWABILITY OF DEDUCTION U/S 35E OF THE INCOME TAX ACT, 1961 AN D THE SAME IS BEING I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 15 DECIDED ON SIMILAR LINES AS IN ASSESSMENT YEAR 2003 -04, 2004-05 & 2005- 06. IN THOSE YEARS, WE HAVE DECIDED THIS ISSUE AGA INST THE ASSESSEE AND ACCORDINGLY, IN THIS YEAR ALSO, GROUND NO.2 IS REJE CTED. 26. REGARDING GROUND NO.3, IT WAS SUBMITTED THAT GR OUND NO.1 OF THE REVENUES APPEAL IN THIS YEAR IS CONNECTED AS PER W HICH THE REVENUE IS DISPUTING THE ORDER OF LD. CIT(A) TO ALLOW REDUCTIO N OF PRINCIPAL PORTION OF LEASE RENT FROM TOTAL INCOME. BOTH THE SIDES AG REED THAT BOTH THESE GROUNDS OF THE ASSESSEE AND THE REVENUE ARE IDENTIC AL TO THE SIMILAR GROUND RAISED IN ASSESSMENT YEAR 2003-04, 2004-05 & 2005-06 AND THE SAME CAN BE DECIDED IN THE PRESENT YEAR ALSO ON SIM ILAR LINES. IN THOSE EARLIER YEARS, WE HAVE FOLLOWED THE DECISION OF SPE CIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BANK (SUP RA) AND WE HAVE REJECTED THE GROUND OF THE ASSESSEE REGARDING ALLOW ABILITY OF DEPRECIATION ON LEASED ASSET AND GROUND OF THE REVENUE ALSO REGA RDING DIRECTION OF LD. CIT(A) TO EXCLUDE PRINCIPAL PORTION OUT OF LEASE RE NT. ACCORDINGLY, IN THE PRESENT YEAR ALSO, GROUND NO.3 OF THE ASSESSEE AS W ELL AS GROUND NO.1 OF THE REVENUE IS REJECTED. 27. GROUND NO.4 OF THE ASSESSEES APPEAL IS REGARDI NG INTEREST CHARGEABILITY U/S 234B AND WITHDRAWAL OF INTEREST A LLOWED TO THE ASSESSEE EARLIER U/S 244A. THIS ISSUE IS CONSEQUENTIAL AND HENCE, NO SEPARATE ADJUDICATION IS CALLED FOR. 28. IN THE REVENUES APPEAL FOR THIS YEAR, ONE MORE GROUND IS RAISED BY THE REVENUE REGARDING DIRECTION OF LD. CIT(A) TO DE LETE THE DISALLOWANCE MADE BY THE A.O. FOR RATES AND TAXES PAID BY THE AS SESSEE ON LAND. BOTH THE SIDES AGREED THAT THIS ISSUE IS IDENTICAL TO GR OUND NO.2 RAISED BY THE REVENUE IN ASSESSMENT YEAR 2005-06. IN THAT YEAR, WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSE SSEE AS PER PARA NO.23 I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 16 ABOVE AND ACCORDINGLY, IN THE PRESENT YEAR ALSO, TH IS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE. THIS GROUND OF THE REVENUE IS ALLOWED. 29. NOW, WE TAKE UP THE C.O. FILED BY THE REVENUE F OR THE ASSESSMENT YEAR 2003-04 I.E. C.O. NO.164/AHD/2010. AS PER THI S C.O. OF THE REVENUE, WE FIND THAT NO SPECIFIC GROUNDS ARE AVAIL ABLE ON RECORD BUT AS PER THE BACKGROUND FACTS OF THE C.O., THE GRIEVANCE OF THE REVENUE IS THIS THAT THE CLAIM OF THE ASSESSEE REGARDING CLAIM U/S 10(23G) OF THE INCOME TAX ACT, 1961 AT RS.68,06,441/- ON ACCOUNT OF INTER EST FORM SSNNL AND INTEREST OF RS.65,45,970/- BEING INTEREST FORM GIPL IS NOT ELIGIBLE FOR CLAIM U/S 10(23G) OF THE INCOME TAX ACT, 1961. THI S ISSUE HAS BEEN DECIDED BY US WHILE DECIDING THE APPEAL OF THE ASSE SSEE, IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE TRIBUNAL DECISION FOR EAR LIER YEAR IN ASSESSEES OWN CASE. HENCE, THE C.O. FILED BY THE REVENUE IS LIABLE TO BE REJECTED AND WE ORDER ACCORDINGLY. 30. IN THE RESULT, C.O. FILED BY THE REVENUE IS DIS MISSED AND ALL THE FOUR APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED AND SIMILARLY, THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04, 20 04-05 ARE ALSO PARTLY ALLOWED AND THE REMAINING TWO APPEALS OF THE ASSESS EE FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 ARE DISMISSED. 31. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO.2943 /AHD/2006 I.T.A.NO. 84, 1338, 1468/AHD/2007 I.T.A.NO. 3503,3578/AHD/2008 I.T.A.NO. 1286,1669/AHD/2009 & C.O.NO.164/AHD/2010 17 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 26/08/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/08/2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31/08/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.31/8/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31/08/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .