Vimal Oil & Foods Ltd., Ahmedabad V. The DY.CIT., Cent.Circle-1(2), Ahmedabad

CO 187/AHD/2009

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9799 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 20-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASH BAINS SHRI V R CHOKSI
• Section: 143(3); 80HHC; 14A

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER APPEAL(S) /COS BY APPELLANT VS. RESPONDENT SL. NO(S) ITA NO(S) /CO NOS. ASSESSMENT YEAR(S) APPELLANT RESPONDENT 1. 2502/AHD/2007 2001-02 DCIT CENTRAL CIRCLE-1(2) AHMEDABAD VIMAL OIL & FOOD LTD. 1/2, NATIONAL CHAMBERS ASHRAM ROAD AHMEDABAD PAN:AABCV 0765H 2. 2503/AHD/2007 2002-03 -DO-REVENUE -DO-ASSESSEE 3. CO NO. 187/AHD/2009 (IN ITA NO.2502/AHD/07) 2001-02 ASSESSEE REVENUE 4. CO NO. 188/AHD/2009 (IN ITA NO.2503/AHD/07) 2002-03 ASSESSEE REVENUE REVENUE BY : SHRI SUBHASH BAINS, CIT-DR ASSESSEE BY : SHRI V.R. CHOKSI, A.R. ' % & $' / / / / DATE OF HEARING 21/08/2014 )*+ & $' / DATE OF PRONOUNCEMENT 12/09/2014 , / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS BY THE REVENUE AND TWO CROSS OB JECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD (CIT(A) IN SHORT) BOTH IDENTICALLY DATED 30/03/2007, PERTAINI NG TO ASSESSMENT YEARS I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 2 - (AYS) 2001-02 & 2002-03. SINCE COMMON ISSUES AND FA CTS ARE INVOLVED IN THESE APPEALS AND CROSS-OBJECTIONS, THESE WERE H EARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .2502/AHD/2007 FOR AY 2001-02. THE REVENUE HAS RAISED THE FOLLOWI NG GROUND(S) OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF RS.10,11,090/- MADE BY THE A.O. U/S .14A OF THE ACT. 2. THE CIT(A) HAS ERRED IN LAW AND O FACTS IN ALLO WING THE INCOME FROM INSURANCE COMMISSION AND POWER GENERATION FOR CALCU LATING DEDUCTION U/S.80IA OF THE ACT, WHICH DO NOT FORM PART OF INCO ME DERIVED FROM MANUFACTURING ACTIVITIES. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RED UCING THE AMOUNT OF DEDUCTION U/S.80IA/80IB OF THE ACT, BEFORE CALCULAT ING THE DEDUCTION ALLOWABLE U/S.80HHC OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2001-02 DECLARING THE INCOME AT RS.69,25,000 /- ON 16.11.05 IN RESPONSE TO THE NOTICE ISSUED U/S.153A OF THE INCOM E TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) AND SERVED O N 5.2.2005. THE ASSESSING OFFICER (AO IN SHORT) MADE ASSESSMENT U/S .153A R.W.S. 143(3) I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 3 - OF THE ACT, VIDE ORDER DATED 28.12.2006, THEREBY THE AO MADE DISALLOWANCE OF RS.10,11,090/- BY INVOKING THE PROV ISIONS OF SECTION 14A OF THE ACT, DISALLOWANCE OF RS.28,99,898/- DE DUCTION OF CLAIM MADE U/S.80IA/B OF THE ACT AND ALSO MADE DISALLOWAN CE OF THE EXCESS CLAIM OF RS.8,69,969/- U/S.80IA @ 30%. THE AO FUR THER REVISED THE COMPUTATION OF DEDUCTION MADE U/S.80HHC AMOUNTING T O RS.1,84,444/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REC ORDS PLACED BEFORE HIM, PARTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APPEAL BY THE LD.CIT(A), DELETED THE DISALLOWANCE U/S.14A OF THE ACT AND ALSO RESTRICTED THE DISALLOWANCE OF DEDUCTION U/S.80-IA OF THE ACT TO RS.3,91,821/- (I.E.KASAR&VATAV OF RS.2,41,139/-, DIVIDEND RECEIVE D OF RS.61,190/- AND PROFIT ON SALE OF SHARES OF RS.89,492/-). NOW, THE REVENUE AND THE ASSESSEE HAVE CHALLENGED THE ORDER OF THE LD.CIT(A ) BY WAY OF APPEAL AND CROSS-OBJECTION. 4. THE FIRST GROUND IS AGAINST THE DELETION OF DISA LLOWANCE OF RS.10,11,090/-. THE LD.CIT-DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN D ELETING THE DISALLOWANCE. HE SUBMITTED THAT THE LD.CIT(A) OUGH T TO HAVE CONFIRMED THE ORDER OF THE AO. 4.1. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSES SEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ASSES SEE HAS DEMONSTRATED THAT THE OPENING BALANCE OF INVESTMENTS FOR RS.65.6 8 LACS IS FROM INTEREST FREE FUNDS AVAILABLE WITH ASSESSEE-COMPANY. HE S UBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF THE HONBLE TRIBUN AL (ITAT A BENCH I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 4 - AHMEDABAD) IN ASSESSEES OWN CASE IN ITA NOS.2500 A ND 2501/AHD/2007 WITH CO NOS.185 & 186/AHD/2009) FOR A YS 1999-2000 AND 2000-01 VIDE ORDER DATED 22/03/2013. HE HAS D RAWN OUR ATTENTION TOWARDS PARA-8 OF THE SAID TRIBUNALS ORDER (ENCLOS ED AT PAGE NO.62 OF THE PAPER-BOOK). HE FURTHER DREW OUR ATTENTION TOW ARDS THE ANNUAL REPORTS AT PAGE NOS.57 TO 81 OF THE PAPER-BOOK IN S UPPORT OF THE CONTENTION THAT THE ASSESSEE WAS HAVING SUFFICIENT INTEREST- FREE FUNDS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING ON FACT IN HIS ORDER THAT THE INTEREST-FREE FUNDS AVAILABLE WITH THE ASSESSEE ARE FAR IN EXCESS IN COMPARISON OF SHARES ACQUIRED BY IT, AND THE RATIO OF THE DECISION OF TORRENT FINANCIERS VS. ACIT REPORT IN 73 TTJ 624 SQ UARELY APPLIES TO THE FACTS OF THE ASSESSEE AND NO DISALLOWANCE OF INTERE ST U/S.14A CAN BE MADE. THIS FINDING ON FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. MOREOVER, THE AS SESSEE HAS DEMONSTRATED FROM THE FINANCIAL STATEMENT THAT IT H AD INTEREST-FREE FUNDS AVAILABLE FAR IN EXCESS IN COMPARISON TO INVESTMENT MADE. UNDER THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUND NO.1 OF REVENUES APPEA L IS REJECTED. 6. GROUND NO.2 OF REVENUES APPEAL IS AGAINST THE D EDUCTION ALLOWED IN RESPECT OF THE INSURANCE COMMISSION AND POWER GE NERATION FOR CALCULATING DEDUCTION U/S.80IA OF THE ACT. THE LD. CIT-DR STRONGLY I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 5 - SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT TH E LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. HE SUBMITT ED THAT THE AO HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE ITSELF HAS SHOWN IN ITS AUDIT REPORT THE TOTAL INCOME OF RS.28,99,898/- REC EIVED UNDER THE HEAD OTHER INCOME. IT MEANS THAT THE INCOME WAS NOT D ERIVED FROM THE MANUFACTURING OR ANY OTHER REGULAR BUSINESS ACTIVIT Y CARRIED OUT BY THE ASSESSEE. 6.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S TRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE SO FA R AS THE DELETION OF DISALLOWANCE OF INSURANCE RECOVERY FROM CUSTOMERS IS CONCERNED, THE LD.CIT(A) HAS FOLLOWED THE JUDGEMENT OF HONBLE JUR ISDICTIONAL HIGH COURT RENDERED IN THE CASE OF NIRMA INDUSTRIES LTD. VS. DCIT REPORTED AT (2006)283 ITR 402 (GUJ.), JUDGEMENT RENDERED IN THE CASE OF CIT VS. INDO MATUSHITA CARBON CO.LTD. (286 ITR 201)[MAD.] A ND JUDGEMENT RENDERED IN THE CASE OF CIT VS. MADRAS MOTORS LTD. (257 ITR 60)[MAD.]. HE SUBMITTED THAT THE AO FAILED TO APPRECIATE THE F ACT THE ASSESSEE HAD TAKEN MARINE POLICY TO PROTECT THE GOODS SUPPLIED T O ITS CUSTOMERS AND IT CHARGED SAME AMOUNT AS INSURANCE RECOVERY IN THE BI LLS RAISED TO BUYER OF THE GOODS. AS SUCH INCOME IS DIRECTLY RELATABLE TO AMOUNT RECEIVABLE BY THE ASSESSEE DURING THE COURSE OF ITS BUSINESS AND IT IS PART OF THE SALES BILL, HENCE SUCH INCOME PARTAKES SAME CHARACTER. H E FURTHER SUBMITTED THAT THE DELETION OF DISALLOWANCE ON THE ISSUE OF P OWER GENERATION, THE LD.CIT(A) HAS RIGHTLY FOLLOWED THE DECISION RENDERE D IN THE CASE OF WESTCOAST PAPER MILLS LTD. VS. ACIT REPORTED AT 103 ITD 19 (MUMBAI). I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 6 - 6.2. IN THE REJOINDER, THE LD.CIT-DR POINTED OUT TH AT IN RESPECT OF POWER GENERATION, THE POWER GENERATION UNIT OF THE ASSESSEE IS AT JAMNAGAR WHICH IS AN INDEPENDENT UNIT. HE SUBMITTE D THAT THE PRODUCTION OF THE ENERGY OF THE ELECTRICITY WAS SOLD TO GUJARA T ELECTRICITY BOARD(GEB) AND THE GEB CHARGED FOR THE ELECTRICITY SUPPLIED TO THE ASSESSEE-COMPANY. THEREFORE, THERE IS NO NEXUS BET WEEN THE ELECTRICITY SUPPLIED BY THE GEB. 6.3. THE LD.CIT(A) HAS FOLLOWED THE DECISION OF MUM BAI TRIBUNAL RENDERED IN THE CASE OF WESTCOAST PAPER MILLS LTD. VS. ACIT(SUPRA). WHILE ALLOWING THE DEDUCTION, THE LD.CIT(A) HAS OBS ERVED THAT AS POWER AND FUEL EXPENDITURE AND INCOME GENERATION FROM WIN DMILL HAS A DIRECT NEXUS, HENCE NETTING OF EXPENDITURE AGAINST INCOME HAS TO BE DONE. 6.4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND FO LLOWING THE DECISION OF HONBLE COORDINATE BENCH IN THE CASE OF WESTCOAST P APER MILLS LTD. VS. ACIT REPORTED AT 103 ITD 19 (MUMBAI), WE DO NOT FI ND ANY REASON TO TAKE A DIFFERENT VIEW THAN TAKEN BY THE COORDINATE BENCH. THUS, THIS GROUND OF REVENUES APPEAL IS REJECTED. 7. GROUND NO.3 IS AGAINST IN REDUCING THE AMOUNT OF DEDUCTION U/S.80IA/80IB OF THE ACT, BEFORE CALCULATING THE DE DUCTION ALLOWABLE U/S.80HHC OF THE ACT. THE LD.CIT-DR SUBMITTED THA T THE LD.CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION MADE BY T HE AO. HE PLACED I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 7 - RELIANCE ON THE DECISION OF HONBLE DELHI TRIBUNAL (BENCH F) RENDERED IN THE CASE OF NODI EXPORTS VS. ASST.CIT REPORTED A T (208) 24 SOT 526 (DELHI). 7.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGEMENT OF HONB LE BOMBAY HIGH COURT RENDERED IN THE CASE OF ASSOCIATED CAPSULES P VT.LTD. VS. DY.CIT REPORTED AT 332 ITR 42 (BOM.) ::: (2011) 197 TAXMA N 84 (BOM.) AND THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT REND ERED IN THE CASE OF DY.CIT VS. BLUE BELL POLYMERS (P.) LTD. REPORTED AT (2008) 217 CTR 324 (GUJ.) :: (2010)327 ITR 259 (GUJ.). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE IS COVERED BY THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF ASSOCIATED CAPSU LES PVT.LTD.(SUPRA). WE FIND THAT THE HONBLE BOMBAY HIGH COURT AFTER EX AMINING THE ENTIRE LAW HAS HELD AS UNDER:- 39. IN THE RESULT, WE HOLD THAT SECTION 80-IA(9) DOES NOT AFFECT THE COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVISIONS UNDER HEADING 'C' OF CHAPTER VI-A. BUT IT AFFECTS THE ALLOWABILITY OF DE DUCTIONS COMPUTED UNDER VARIOUS PROVISIONS UNDER HEADING 'C' OF CHAPTER VI- A, SO THAT THE AGGREGATE DEDUCTION UNDER SECTION 80-IA AND OTHER P ROVISIONS UNDER HEADING 'C' OF CHAPTER VI-A DO NOT EXCEED 100 PER C ENT OF THE PROFITS OF THE BUSINESS OF THE ASSESSEE. OUR ABOVE VIEW IS ALSO SU PPORTED BY THE C.B.D.T. CIRCULAR NO. 772 DATED 23-12-1998, WHEREIN IT IS ST ATED THAT SECTION 80IA(9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT THE TAX-PAYERS FROM CLAIMING REPEATED DEDUCTIONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBLE INCOME AND THAT TOO IN EXCESS OF THE ELIGIBLE PROFI TS. THUS, THE OBJECT OF I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 8 - SECTION 80-IA(9) BEING NOT TO CURTAIL THE DEDUCTION S COMPUTABLE UNDER VARIOUS PROVISIONS UNDER HEADING 'C' OF CHAPTER, IT IS REASONABLE TO HOLD THAT SECTION 80-IA(9) AFFECTS ALLOWABILITY OF DEDUC TION AND NOT COMPUTATION OF DEDUCTION. TO ILLUSTRATE, IF RS. 100 IS THE PROF ITS OF THE BUSINESS OF THE UNDERTAKING, RS. 30 IS THE PROFITS ALLOWED AS DEDUC TION UNDER SECTION 80- IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80H HC IS RS. 80, THEN, IN VIEW OF SECTION 80-IA(9), THE DEDUCTION UNDER SECTI ON 80HHC WOULD BE RESTRICTED TO RS. 70, SO THAT THE AGGREGATE DEDUCTI ON DOES NOT EXCEED THE PROFITS OF THE BUSINESS. 8.1. MOREOVER, THE HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF BLUE BELL POLYMERS (P.) LTD.(SUPRA) IN PARA-5 HAS H ELD AS UNDER:- 5. THE ISSUE RAISED IS NO LONGER RES INTEGRA AND H ENCE, IT IS NOT NECESSARY TO SET OUT THE FACTS AND CONTENTIONS IN D ETAIL, IN THE CAST; OF CITVS. AMOD STAMPING (2005) 194 CTR (GUJ) 158 : (20 05) 274 ITR 176 (GUJ), THIS COURT HAS, WHILE DECIDING SIMILAR CONTR OVERSY IN RELATION TO PROVISIONS OF SECTION 80-1 OF THE ACT AND SECTION 8 0HH OF THE ACT FOLLOWED EARLIER DECISION OF THIS COURT IN THE CASE OF CIT VS. SIDHPUR ISABGUL PROCESSING CO. LTD, (2001) 171 CTR (GUJ) 10 6 : (2001) 252 ITR 777 (GUJ) WHEREUNDER SIMILAR ISSUE RELATING TO RELIEF UNDER SECTIONS 80HH AND 80J OF THE ACT WAS DECIDED BY THE COURT. 8.2. IN THE LIGHT OF THE CASE-LAWS AS RELIED UPON B Y THE LD.COUNSEL FOR THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENUES A PPEAL IS REJECTED. AS A RESULT, REVENUES APPEAL IN ITA NO.2502/AHD/2007 IS DISMISSED. 9. NOW, WE TAKE UP THE ASSESSEES CROSS OBJECTION NO.187/AHD/2009 FOR AY 2001-02 (IN ITA NO.2502/AHD/ 2009 FOR AY 2001-02). THE ASSESSEE HAS RAISED THE FOLLOWING CO MMON GROUNDS IN ITS CROSS-OBJECTION:- I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 9 - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN REJECTING THE RESPONDENTS GROUND O F APPEAL CHALLENGING THE PROCEEDINGS INITIATED U/S.153A OF T HE INCOME-TAX ACT AND THE CONSEQUENTIAL ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER U/S.153A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED CONFIRMING THE FINDING OF THE ASSESSIN G OFFICER THAT DEDUCTION U/S.8IA IS NOT ADMISSIBLE IN RESPECT OF K ASAR/VATAV WRITTEN BACK IN THE PROFIT AND LOSS ACCOUNT. 3. ON THE ACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) ERRED IN HOLDING THAT FOR THE PURPOSE OF CLAUSE (BA A) OF THE EXPLANATION TO SECTION 80HHC OF THE INCOME-TAX ACT NETTING OF INTEREST IS NOT TO BE DONE. 4. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AN D/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS-OBJECTIONS EITHER BE FORE OR AT THE TIME OF HEARING OF THE CROSS-OBJECIONS. 10. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1. THEREFORE, GROUND NO.1 OF THE CROSS- OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 11. GROUND NO.2 OF THE CROSS-OBJECTION IS AGAINST T HE CONFIRMATION OF THE DISALLOWANCE MADE IN RESPECT OF KASAR/VATAV. T HE LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS-CUM-SYNOPSIS. 11.1. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 10 - 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAS MADE THE SUBMISSIONS IN THE FORM OF STATEMENT-CUM-SYNOPSIS AND THE RELEVANT PORTION CON TAINED IN PARAS-7 TO 13 ARE AS UNDER:- 7. WITH REGARD TO GROUND NO.2, WHILE COMPUTING DED UCTION U/S. 80-IA OF THE INCOME-TAX ACT THE ASSESSING OFFICER DID NOT AL LOW DEDUCTION WITH REGARD TO THE FOLLOWING ITEMS OF INCOME: PARTICULARS AMOUNT RS. INSURANCE RECOVERY FROM CUSTOMERS 1603369 KASAR & VATAV 241139 POWER GENERATION 904708 DIVIDEND RECEIVED 61190 PROFIT ON SALE OF SHARES 89492 TOTAL 2899898 8. AGGRIEVED BY THE AFORESAID DISALLOWANCE THE ASS ESSEE COMPANY FILED APPEAL BEFORE THE CIT(A) WHO HELD THAT IN RESPECT O F INCOME FROM INSURANCE RECOVERY, POWER GENERATION AND PROFIT ON SALE OF SH ARES THE ASSESSEE IS ENTITLED TO THE DEDUCTION. IN RESPECT OF KASAR AND VATAV AND DIVIDEND INCOME, THE LEARNED CIT(A) UPHELD THE ASSESSING OFFICER'S O RDER. IN RESPECT OF THE INCOME FROM KASAR AND VATAV, IT IS RESPECTFULLY SUB MITTED THAT THESE ITEMS WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT YEARS A ND THE AMOUNTS WERE SHOWN AS PAYABLE IN THE BALANCE THUS, THESE ARE ITE MS OF EXPENDITURE WHICH WERE REFLECTED IN THE BALANCE SHEET AS SUNDRY CREDI TORS AND THESE EXPENSES WENT INTO THE BUSINESS PROFITS OF THE ASSESSEE ELIG IBLE FOR DEDUCTION U/S. 80-IA IN THE EARLIER YEARS. IN THE PRESENT YEAR THESE ITE MS WERE WRITTEN TO THE PROFIT AND LOSS ACCOUNT AS ACCORDING TO THE ASSESSEE THE C EASED AND THUS THE RELEVANT INCOME WAS CHARGEABLE TO TAX U/S.41(1) OF THE INCOME-TAX ACT. IT IS RESPECTFULLY SUBMITTED THAT THE INCOME HAS A DIRECT NEXUS WITH THE BUSINESS OF THE WHICH IS ELIGIBLE FOR DEDUCTION U/S. 80-IA OF T HE INCOME-TAX ACT. BEFORE THE LEARNED CIT(A) THE ASSESSEE RELIED ON THE HON'B LE ITAT DECISION IN THE CASE OF JCIT V. INFOCON INTERNATIONAL LTD. (2005) 2 SOT 444. THE LEARNED I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 11 - CIT(A) MERELY CONFIRMED THE POINTING OUT THAT SIMIL AR DISALLOWANCE WAS UPHELD IN THE EARLIER YEARS BY THE LEARNED CIT(A). IT IS RESPECTFULLY SUBMITTED THAT THIS ISSUE IS COVERED IN ASSESSEE'S FAVOUR BY VARIOUS DECISIONS IN ADDITION TO ABOVEMENTIONED BANGALORE ITAT DECISION. KIND REF ERENCE MAY BE TO THE HON'BLE MADRAS HIGH COURT DECISION IN THE CASE OF C IT V. ABDUL RAHMAN INDUSTRIES (293 ITR 475). IN THIS CASE, IN THE CONT EXT OF THE PROVISIONS OF SECTION 80HHC, THE HON'BLE COURT HELD THAT UNCLAIME D BALANCES WRITTEN BACK TO THE PROFIT AND LOSS ACCOUNT ARE PART OF THE BUSI NESS INCOME WHICH IS ENTITLED TO DEDUCTION. DEDUCTION U/S. 80HHC IS PERMISSIBLE IN RESPECT OF PROFITS DERIVED BY THE ASSESSEE FROM THE EXPORT OF GOODS OR MERCHANDISE . SIMILAR IS THE POSITION U/S. 80-IA. RELIANCE IS AL SO PLACED ON THE HON'BLE MADHYA PRADESH HIGH COURT DECISION IN THE CASE OF C IT V. SIDDHARTH TUBES LTD. (296 ITR 221). IN THIS CASE THE HON'BLE COURT HELD THAT REFUND OF EXCISE DUTY IS ELIGIBLE FOR DEDUCTION U/S. 80HH AND 80-I O F THE INCOME-TAX ACT. IT IS SUBMITTED THAT WHILE CONSIDERING THE PROVISIONS OF SECTION 80-IA, PHRASEOLOGY OF THIS SECTION HAS TO BE KEPT IN MIND VIS-A-VIS TH E PHRASEOLOGY OF SECTIONS 80HH AND 80-I OF THE INCOME-TAX ACT. IT MAY BE MENT IONED THAT THE PHRASEOLOGY OF SECTION 80-1A IS IDENTICAL WITH THE PHRASEOLOGY OF SECTION 80- IB. THE PROVISIONS OF SECTION 80-IB CAME UP FOR CON SIDERATION BEFORE THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ELT EK SGS P. LTD. 300 ITR 6. THE RELEVANT PART OF THE OBSERVATIONS OF THE HON'BL E DELHI HIGH COURT ARE REPRODUCED BELOW FROM PAGES 9 & 10 OF THE REPORT: 'THAT APART, SECTION 80-IB OF THE ACT DOES NOT USE THE EXPRESSION 'PROFITS AND GAINS DERIVED FROM AN INDUSTRIAL UNDER TAKING' AS USED IN SECTION 80HH OF THE ACT BUT USES THE EXPRESSION 'PR OFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB-SECTIO N'. SECTION 80-IB (1) OF THE ACT READS AS FOLLOWS : '80-IB.(1) WHERE THE GROSS TOTAL INCOME OF AN ASSES SEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRE D TO IN SUB-SECTIONS (3) TO (11), (11 A) AND (11B) SUCH BUSINESS BEING H EREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS, THERE SHALL, IN ACCORD ANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN C OMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFI TS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION.' A PERUSAL OF THE ABOVE WOULD SHOW THAT THERE IS A M ATERIAL DIFFERENCE BETWEEN THE LANGUAGE USED IN SECTION 80HH OF THE AC T AND SECTION 80- IB OF THE ACT. WHILE SECTION 80HH REQUIRES THAT THE PROFITS AND GAINS SHOULD BE DERIVED FROM THE INDUSTRIAL UNDERTAKING, SECTION 80-IB OF THE ACT REQUIRES THAT THE PROFITS AND GAINS SHOULD BE D ERIVED FROM ANY BUSINESS OF THE INDUSTRIAL UNDERTAKING. IN OTHER WO RDS, THERE NEED NOT I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 12 - NECESSARILY BE A DIRECT NEXUS BETWEEN THE ACTIVITY OF AN INDUSTRIAL UNDERTAKING AND THE PROFITS AND GAINS.' 9. THE HON'BLE DELHI HIGH COURT HAS BROUGHT OUT THE DIFFERENCE BETWEEN THE PHRASEOLOGY OF SECTION 80-HH AND SECTION 80-IB VERY CLEARLY. THE QUESTION OF INTERPRETATION OF THE PROVISIONS OF SEC TION 80-IA VIS-A-VIS PROVISIONS OF SECTION 80-1 AROSE BEFORE THE HON'BLE ITAT CUTTACK BENCH IN THE CASE OF ACIT VS. MAXCARE LABORATORIES LTD. 273 ITR (AT) 1. THE RELEVANT PORTION OF THE RATIO OF THIS CASE MAY BE REPRODUCED FROM THE HEADNOTE: 'IN SECTION 80-I OF THE INCOME-TAX ACT, 1961, THE S TATUTE HAS USED THE EXPRESSION 'DERIVED FROM' WITH A VIEW TO GIVE A RES TRICTED MEANING TO THE INCOME OF THE INDUSTRIAL UNDERTAKING. HOWEVER, IN SECTION 80-IA, THE EXPRESSION USED IS 'PROFITS AND GAINS DERIVED F ROM ANY BUSINESS OF AN 'INDUSTRIAL UNDERTAKING' WHICH SHOWS THAT THE IN TENTION OF THE LEGISLATURE WHILE INSERTING THE ADDITIONAL WORDS IN SECTION 80-IA, I.E., 'ANY BUSINESS OF WAS TO GIVE THE BENEFIT OF D EDUCTION NOT ONLY TO THE PROFITS AND GAINS DERIVED FROM TIE INDUSTRIAL U NDERTAKING BUT ALSO TO GIVE THE BENEFIT OF DEDUCTION IN RESPECT OF INCO ME HAVING A CLOSE AND DIRECT NEXUS WITH THE PROFITS AND GAINS OF THE INDUSTRIAL UNDERTAKING. WHENEVER THE LEGISLATURE HAD INTENDED TO GIVE THE BENEFIT OF DEDUCTIONS TO THE WIDER EXTENT OF INCOME AND NOT ONLY TO INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING, IT HAS USE D EXPRESSIONS LIKE 'PROFIT ATTRIBUTED TO'. TO GIVE AN EXTENDED BENEFIT , THE STATUTE HAS USED THE WORDS 'INCOME DERIVED FROM ANY BUSINESS OF AN I NDUSTRIAL UNDERTAKING'. THUS, ANY INCOME GENERATED OUT OF AN ACT WHICH IS REQUIRED TO BE UNDERTAKEN ESSENTIALLY FOR CARRYING ON THE BUSINESS OF INDUSTRIAL UNDERTAKING IS TO BE CONSIDERED FOR COMP UTING THE DEDUCTION UNDER SECTION 80-IA. 10 . FROM THE ABOVE MENTIONED TWO CASES, IT IS CLE AR THAT PROVISIONS OF N 80-IA ARE MATERIALLY DIFFERENT FROM THE PROVISIONS OF SECTIONS 80-HH AND 80- 1, AND THESE PROVISIONS HAVE TO BE CONSTRUED WIDE LY AND LIBERALLY. 11. EVEN IN THE CONTEXT OF SECTION 80-1, THE HON'B LE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. 283 ITR 402 HELD THAT DEDUCTION UFE.80-I IS ADMISSIBLE ON INTEREST RECEIVED ON DELAYED PAYMENT OF SALE PROCEEDS. THE RELEVANT PART OF THE RATIO OF THE JURISDICTIONAL HI GH COURT DECISION IS REPRODUCED BELOW FROM THE HEADNOTE : 'HELD, THAT WHEN ONE READS THE OPENING PORTION OF S ECTION 80-I OF THE ACT IT IS CLEAR THAT THE WORDS USED ARE 'GROSS TOTA L INCOME OF AN ASSESSEE INCLUDES ANY PROFIT AND GAINS DERIVED FROM AN INDUSTRIAL UNDERTAKING'. ONCE THIS IS THE POSITION THEN, IN CO MPUTING THE TOTAL I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 13 - INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFI TS AND GAINS OF AN AMOUNT EQUAL TO THE PRESCRIBED PERCENTAGE IS TO BE ALLOWED. THE SAME ITEM OF RECEIPT COULD NOT BE TREATED DIFFERENTLY, O NCE WHILE COMPUTING THE GROSS TOTAL INCOME AND SECONDLY, AT THE TIME OF COMPUTING DEDUCTION UNDER SECTION 80-I. WHEN THE ASSESSEE ENT ERS INTO A CONTRACT FOR SALE OF ITS PRODUCT IT COULD EITHER STIPULATE ( A) THAT INTEREST AT THE SPECIFIED RATE WOULD BE CHARGED ON THE UNPAID SALE PRICE AND ADDED TO THE OUTSTANDING TILL THE POINT OF TIME OF REALISATI ON, OR (B) THAT IN CASE OF DELAY THE PAYMENT FOR SALE OF PRODUCTS WORTH RS. 100 TO CARRY THE SALE PRICE OF RS. 102 FOR THE FIRST MONTH'S DELAY, RS. 104 FOR THE SECOND MONTH'S DELAY, RS. 106 FOR THE THIRD MONTH'S DELAY AND SO ON. IN SUM AND SUBSTANCE THESE ARE ONLY TWO MODES OF REALISING SALE CONSIDERATION, THE OBJECT BEING TO REALISE THE SALE PROCEEDS AT THE EARLIEST AND WITHOUT DELAY. THE PURCHASER PAYS A HI GHER SALE PRICE IF IT DELAYS PAYMENT OF THE SALE PROCEEDS. IN OTHER WORDS , THIS IS A CONVERSE SITUATION TO OFFERING A CASH DISCOUNT. THUS, IN PRI NCIPLE, IN REALITY, THE TRANSACTION REMAINS THE SAME AND THERE IS NO DISTIN CTION AS TO THE SOURCE. WHILE COMPUTING THE SPECIAL DEDUCTION UNDER SECTION 80-I, INTEREST RECEIVED FROM TRADE DEBTORS TOWARDS LATE P AYMENT OF SALE CONSIDERATION IS TO BE INCLUDED IN THE N PROFITS OF THE INDUSTRIAL UNDERTAKING.' 12. FT MAY BE MENTIONED HERE THAT INTEREST ON TH E LATE PAYMENT OF SALE CONSIDERATION, INTEREST ON SHORT TERM BUSINESS DEPO SITS ETC. HAVE BEEN HELD TO BE ELIGIBLE FOR DEDUCTION U/S. 80HH AND 80-1 IN THE FOLLOWING CASES: (1) CIT V. INDO SWISS JEWELS LTD. (284 ITR 389) (BOM) (2) CIT V. PRODUCIN P. LTD. (290 ITR 598) (KARNAT AKA) (3) PHATELA COTGIN INDUSTRIES P. LTD. V. CIT (303 ITR 411)(P&H) (4) CIT V. EASTERN TAR P. LTD. (301 ITR 427FTJHARK HAND) (5) CIT V. BHANSALI ENGINEERING POLYMARS LTD. (206 ITR 194) (BOM) 13. FROM THE ABOVE MENTIONED CASES IT IS CLEAR THA T SUCH ITEMS OF INCOME WHICH HAVE A NEXUS WITH THE FUNCTIONING OR THE BUS INESS OF THE ELIGIBLE UNDERTAKING, ARE ELIGIBLE FOR DEDUCTION U/S. 80HH A ND 80-I. AS DISCUSSED ABOVE THE PROVISIONS OF SECTION 80-IA ARE REQUIRED TO BE LIBERALLY CONSTRUED IN CONTRADISTINCTION TO THE PROVISIONS OF SECTION 80-I A. THUS EVEN THOUGH THE LEARNED CIT(A) HAS RIGHTLY HELD THAT INSURANCE RECO VERY AND INCOME FROM POWER GENERATION ARE ELIGIBLE FOR DEDUCTION, HE WAS NOT JUSTIFIED IN HOLDING THAT KASAR AND VATAV ARE NOT SO ELIGIBLE. IT IS REI TERATED THAT KASAR AND VATAV HAVE A DIRECT NEXUS WITH THE BUSINESS OF THE ELIGIB LE UNDERTAKING AND, THEREFORE, IT IS RESPECTFULLY SUBMITTED THAT DEDUCT ION MAY KINDLY BE DIRECTED TO BE ALLOWED. I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 14 - 12.1. AFTER CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF VIEW THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN MAKING CONFIRMATION SINCE THE ASSESSEE HAS DEMONSTRATED THAT THE AMOUNT IN RESPECT OF KASAR&VA TAV IS DIRECTLY RELATED TO BUSINESS ACTIVITY OF THE ASSESSEE, THERE FORE THE CLAIM SHOULD HAVE BEEN ALLOWED. ACCORDINGLY, WE HEREBY SET ASID E THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION. THUS, GROUND RAISED IN THE CROSS-OBJECTION IS ALLOWED. 13. GROUND NO.3 OF THE CROSS-OBJECTION IS AGAINST I N HOLDING THAT FOR THE PURPOSES OF CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC OF THE INCOME-TAX ACT NETTING OF INTEREST IS NOT TO BE DON E. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MAD E IN THE STATEMENT OF FACTS-CUM-SYNOPSIS, WHICH ARE IN THE FOLLOWING MANN ER:- 14. WITH REGARD TO GROUND NO.3 OF THE CROSS OBJEC TIONS, THE LEARNED CIT(A), FOLLOWING THE APPELLATE ORDER FOR T HE EARLIER YEAR, CONFIRMED THE FINDING OF THE ASSESSING OFFICER THAT FOR THE PURPOSES OF CLAUSE (BAA) INTEREST EXPENDITURE CANNOT BE NETT ED AGAINST HE INTEREST INCOME. IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSEE- COMPANY EARNED INTEREST INCOME OF RS.26,60,601/- AS AGAINST HUGE INTERST EXPENDITURE OF RS.1,93,41,074. IT IS, THER EFORE, LOGICAL AND NORMAL PRESUMPTION THAT THE INTEREST EXPENDITURE HA S A NEXUS WITH THE INTEREST INCOME. THEREFORE, HAVING REGARD O TH E ENTIRE FACTS, IT IS SUBMITTED THAT THE RESPONDENT COMPANY SHOULD BE ALLOWED THE BENEFIT OF NETTING. SUCH NETTING OF INTEREST HAS T O BE ALLOWED AS HELD BY THE HONBLE ITAT, DELHI, SPECIAL BENCH IN T HE CASE OF M/S.LALSONS ENTERPRISES V. DCIT (89 ITD 25). SIMIL AR VIEW HAS BEEN ADOPTED BY THE HONBLE ITAT, AHMEDABAD, SPECIA L BENCH IN THE CASE OF ACIT VS. ASHIMA SYNTEX LD. VIDE THE ORD ER DATED 17 TH OCTOBER, 2008 IN ITA NO.2001 & 2002/AD/2001. SIMIL AR VIEW HAS BEEN TAKEN IN THE FOLLOWING CASES:- (1) CIT V. PAWAN KUMAR JAIN (298 ITR 443) (DELHI) I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 15 - (2) TATA SPONGE LTD. VS. CIT (292 ITR 175) (ORISSA). 13.1. ON THE CONTRARY, THE LD.CIT-DR SUPPORTED THE ORDER OF THE LD.CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE LIGHT OF THE ABOVE CASE-LAWS AS RELIED BY TH E LD.COUNSEL FOR THE ASSESSEE, THE LD.CIT(A) OUGHT TO HAVE ALLOWED THE NETTING OF INTEREST. THEREFORE, GROUND RAISED IN THE CROSS-OBJECTION IS ALLOWED. 15. IN THE RESULT, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. 16. LASTLY, WE TAKE UP THE REVENUES APPEAL IN ITA NO.2503/AHD/2007 AND ASSESSEES CROSS OBJECTION NO. 188/AHD/2009 FOR AY 2002-03. 16.1. AFTER HEARING BOTH THE SIDES, WE FIND THAT TH E FACTS ARE IDENTICAL TO THE FACTS AS WERE IN REVENUES APPEAL BEARING ITA N O.2502/AHD/2007 FOR AY 2001-02(SUPRA), WHEREIN WE HAVE DISMISSED T HE REVENUES APPEAL AND PARTLY ALLOWED THE CROSS-OBJECTION FILED THEREOF BY THE ASSESSEE. SINCE THERE IS NO CHANGE IN THE FACTS AN D CIRCUMSTANCES OF THE CASE IN THIS YEAR, FOR THE SAME REASONING, WE DISM ISS THE REVENUES APPEAL IN ITA NO.2503/AHD/2007. I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 16 - 16.2. IN ASSESSEES CROSS OBJECTION NO.188/AHD/2009 THE ASSESSEE RAISED THE ADDITIONAL GROUND (IN ADDITION TO TWO CO MMON GROUNDS OF CROSS-OBJECTION), WHICH READS AS UNDER:- 1. ON THE ACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN CONFIRMING THE FINDING OF THE ASSESSING OF FICER THAT WHILE COMPUTING DEDUCTION U/S.80HHC OF THE I.T.ACT, 90% O F GROSS INTEREST RECEIPT HAS TO BE EXCLUDED FROM ELIGIBLE PROFIT UND ER CLAUSE (BAA) OF THE EXPLANATION, AS AGAINST THE CLAIM OF THE ASSESSEE T HAT FOR THIS PURPOSE ONLY NET INTEREST INCOME HAS TO BE CONSIDERED. 16.3. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SU BMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1. THE LD.CIT-DR HAS NO OB JECTION. THEREFORE, GROUND NO.1 OF THE CROSS-OBJECTION (NO.188/AHD/2009 FOR AY 2002-03) FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 16.4. IN RESPECT OF GROUND NO.2 OF THE CROSS-OBJECT ION, THE PARTIES REITERATED THEIR ARGUMENTS AS WERE MADE IN CROSS OB JECTION NO.187/AHD/2009(SUPRA) ON THIS ISSUE. THE IDENTICA L GROUND WAS RAISED IN CROSS OBJECTION NO.187/AHD/2009, FOR THE SAME RE ASONING, THE GROUND OF ASSESSEES CROSS OBJECTION FOR THIS YEAR (NO.188 /AHD/2009) ALSO IS ALLOWED. 16.5. IN RESPECT OF THE ADDITIONAL GROUND (AS REPRO DUCED ABOVE) OF THE CROSS-OBJECTION, THE FACTS ARE SIMILAR TO THE FACTS AS WERE RAISED IN GROUND NO.3 OF ASSESSEES OWN CROSS OBJECTION NO.187/AHD/2 009 FOR AY 2001- 02(SUPRA). WE HAVE DEALT WITH THIS ISSUE VIDE PARA S-13 TO 15 OF THIS ORDER. SINCE THERE IS NO CHANGE IN THE FACTS AND C IRCUMSTANCES OF THE CASE I TA NOS.2502 & 2503/AHD/2007 (BY REVENUE) AND CO NOS.187 & 188/AHD/2009 (BY ASSESSEE-RESPECTI VELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2001-02 & 2002-03 - 17 - IN THIS YEAR, FOR THE SAME REASONING, WE ALLOW THE ADDITIONAL GROUND RAISED IN THE CROSS-OBJECTION NO.188/AHD/2009 FOR A Y 2002-03. 17. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE, I.E. ITA NOS.2502 & 2503/AHD/2007 FOR AYS 2001-02 & 2002 -03 ARE DISMISSED, WHEREAS ASSESSEES CROSS OBJECTION NOS.1 87 & 188/AHD/2009 FOR AYS 2001-02 & 2002-03 ARE PARTLY A LLOWED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 12/ 09 /2014 /'.., .../ T.C. NAIR, SR. PS , & 0$1 21+$ , & 0$1 21+$ , & 0$1 21+$ , & 0$1 21+$/ COPY OF THE ORDER FORWARDED TO : 1. 34 / THE APPELLANT 2. 0534 / THE RESPONDENT. 3. !! $ '6 / CONCERNED CIT 4. '6() / THE CIT(A)-I, AHMEDABAD 5. 1 #7 0$ , , / DR, ITAT, AHMEDABAD 6. 789 :% / GUARD FILE. ,' ,' ,' ,' / BY ORDER, 51$ 0$ //TRUE COPY// ; ;; ;/ // / !< !< !< !< ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 4.9.14 (DICTATION-PAD 18-PAGE S ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..5/9.9.14 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S. 12.9.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 12.9.14 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