M/s. Nandan Exim Ltd., Ahmedabad V. The Dy.CIT.,Circle-5, Ahmedabad

CO 283/AHD/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9019 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY RANJAN
• Assessee Lawyers: J P JHANGID
• Keywords: Depreciation; Proportionate interest
• Section: 143(3); 14A; 32

Judgement Text

ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NOS. 601 & 225/AHD/2011 & 2419/AHD/2010 (ASSESSMENT YEAR: 2005-06 ,06-07 & 07-08) THE D.C.I.T, CIRCLE-5, AHMEDABAD V/S M/S NANDAN EXIM LTD.,AHMEDABAD (APPELLANT) (RESPONDENT) C.O. NO. 283/A HD/2010 (ASSESSMENT YEAR: 2 007-08) M/S NANDAN EXIM LTD.,AHMEDABAD V/S THE D.C.I.T, CIRCLE-5, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACN5327L APPELLANT BY : SHRI J.P. JHANGID, SR. D.R . RESPONDENT BY : SHRI VIJAY RANJAN ( )/ ORDER DATE OF HEARING : 18-11- 2 013 DATE OF PRONOUNCEMENT : 29 -11-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 3 APPEALS ARE FILED BY THE REVENUE AGAINST TH E ORDER OF CIT(A)- XXI, AHMEDABAD FOR A.YS. 2005-06 (ORDER DATED 30.12 .2010), 2006- 07(ORDER DATED 24.11.2010) & 2007-08 (ORDER DATED 3 1.05.2010) AND ASSESSEE HAS ALSO FILED CO FOR A.Y. 2007-08. ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 2 2. AT THE OUTSET THE LD. A.R. INFORMED THAT IN ALL THE APPEALS THE ISSUES ARE IDENTICAL EXCEPT FOR THE AMOUNT AND THEREFORE THE S UBMISSIONS MADE BY THEM IN CASE OF ONE APPEAL WOULD BE EQUALLY APPLICA BLE TO THE OTHER CASES AND THEREFORE ALL THE APPEALS CAN BE HEARD TOGETHER . WE THEREFORE PROCEED TO DISPOSE OF ALL THE APPEALS BY A CONSOLIDATED ORD ER FOR THE SAKE OF CONVENIENCE AND THUS PROCEED WITH THE FACTS OF A.Y. 2007-08 IN ITA NO. 2419/AHD/2010. 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MA NUFACTURING OF GREY FABRICS AND ALSO IN ITS TRADING. ASSESSEE FILED IT S RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING TOTAL INCOME O F RS. 4,45,86,670/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER T HE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 30.11. 2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 4,67,98,910/-. AGGRIE VED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CI T(A) VIDE ORDER DATED 31.05.2010 GRANTED PARTIAL RELIEF TO THE ASSE SSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) THE REVENUE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS. 13,11,030/- ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S. 14A. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 4,44,218/- ON ACCOUNT OF DEPREC IATION ON CAR. 1 ST GROUND IS WITH RESPECT TO DISALLOWANCE U/S. 14A:- ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 3 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PER USING THE BALANCE SHEET A.O. NOTICED THAT ASSESSEE HAD INVESTMENTS OF RS. 6,23,03,240/- IN THE SHARES AND SECURITIES OF ITS GROUP COMPANIES. H E ALSO NOTICED THAT ASSESSEE HAD OBTAINED INTEREST BEARING SECURED LOAN S OF RS. 19.25 CRORES AND UNSECURED LOAN OF RS. 81.29 CRORES AND HAD PAID INTEREST AND FINANCIAL CHARGES OF RS. 10.10 CRORES. A.O. WAS THEREFORE OF THE VIEW THAT INTEREST BEARING BUSINESS FUNDS HAS BEEN DIVERTED AND UTILIZ ED FOR THE PURPOSE OF PURCHASE OF SHARES. THE ASSESSEE WAS ASKED TO EXPL AIN AS TO WHY PROPORTIONATE DISALLOWANCE OF FINANCIAL EXPENSES NO T BE MADE UNDER SECTION 14A OF THE ACT. ASSESSEE INTERALIA SUBMITTE D THAT INVESTMENTS WERE MADE IN THE YEAR 2001-02 & 2002-03 AND AT THAT TIME IT WAS HAVING RESERVES AND SURPLUS FAR IN EXCESS OF INVESTMENTS. IT WAS FURTHER INFORMED THAT THE EXPORT CREDIT FACILITY OBTAINED F ROM THE BANK WAS EXCLUSIVELY USED FOR THE PURPOSE OF EXPORTS. IT WAS FURTHER SUBMITTED THAT DISALLOWANCE OF RS. 13,11,030/- UNDER SECTION 14A MADE WHILE FINALIZING THE ASSESSMENT FOR A.Y. 06-07 WAS DELETED BY CIT(A) AND THEREFORE NO DISALLOWANCE U/S. 14A NEEDS TO BE MADE. THE SUBMIS SIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. HE WO RKED OUT PROPORTIONATE INTEREST EXPENDITURE OF THE INVESTMEN TS MADE IN SHARES AT RS. 13,11,030/- UNDER SECTION 14A AND DISALLOWED TH E SAME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER B EFORE CIT(A). CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- 6. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE A BOVE SUBMISSIONS. I HAVE ALSO FOUND THAT ON SIMILAR ISSUE THE CIT(APPEALS) HAS IN APPELLANT'S O WN CASE IN A.Y. 2005-06 HELD AS UNDER. '2.2 THE SUBMISSIONS MADE BY THE A.R. HAVE BEEN TAK EN INTO CONSIDERATION. THE OBSERVATIONS OF THE A.O. ARE ALSO PERUSED. IT IS SEEN THAT THE APPELLAN T IS HAVING SURPLUS FUNDS, THEREFORE, IT CAN VERY W ELL BE'SAID THAT THE INVESTMENTS MADE IN SHARES ARE OUT OF ITS OWN FUNDS. HENCE, IT CANNOT BE PRESUMED ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 4 THAT THE APPELLANT HAS UTILIZED ONLY BORROWED FUNDS . THEREFORE, THE DISALLOWANCE MADE BY THE A.O. CANNOT BE SUSTAINED. HENCE, THIS GROUND OF APPEAL I S ALLOWED.' 6.1 APART FROM ABOVE, AS STATED BY THE APPELLANT I N THE F.Y. 2001-02 THE INVESTMENTS WERE MADE OUT OF THE FUNDS RECEIVED FROM THE ASSOCIATED CONCERNS WHI CH DID NOT CARRY INTEREST AS ALSO THE APPELLANT'S OWN FUNDS. SIMILARLY IN F.Y. 2002-03 ALSO THE INVES TMENT WAS MADE FROM SUCH INTEREST FREE FUNDS RECEIVED FROM ASSOCIATED CONCERNS. THE INVESTMENT I N F.Y. 2004-05 WAS ALSO MADE OUT OF INTEREST FREE FUNDS SUBSTANTIALLY AVAILABLE WITH THE APPELLANT. C ONSIDERING THIS FACT THERE WAS NO JUSTIFICATION FOR PRESUMING THAT ANY PART OF LOAN AMOUNT BORROWED CAR RYING INTEREST WAS UTILIZED FOR SUCH INVESTMENT PARTICULARLY WHEN THE LOAN WAS REPRESENTING EXPORT CREDIT FACILITY AS STATED BY THE A.O. HIMSELF WHICH IS CONSIDERED BY HIM. IT IS THE NORMAL PRACTICE THA T SUCH EXPORT CREDIT FACILITY IS BEING GIVEN AGAINS T THE EXPORT AND IT CANNOT BE UTILIZED ANYWHERE ELSE. THIS ASPECT HAS ALSO BEEN IGNORED BY THE A.O. THE A.O. WAS, THEREFORE, NOT JUSTIFIED IN CONSIDERING A NY PART OF THE INTEREST EXPENDITURE AGAINST THE INVESTMENT IN SHARES. THE APPELLANT HAS FURTHER EST ABLISHED THAT IT IS HAVING SUBSTANTIAL CAPITAL AND RESERVES OF RS.66 CRORES AS AGAINST THE INVESTMENT OF RS.6 CRORES WHICH ALSO SHOWS THAT THERE CANNOT BE ANY PRESUMPTION OF USE OF BORROWED FUNDS FOR SUC H INVESTMENT. HAVING REGARD TO THE ABOVE POSITION THE DISALLOWANCE OF RS. 13.11 LAKH MADE AS ABOVE IS DELETED. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US. 7. BEFORE US, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT ESTABLISHED NEXUS OR PROVED THAT INTEREST BEARING FUNDS HAVE NO T BEEN USED FOR THE PURPOSE OF MAKING INVESTMENTS. HE FURTHER SUBMITTED THAT IN VIEW OF THE PROVISIONS OF SECTION 14A, THE A.O. HAS CORRECTLY M ADE DISALLOWANCE AND THEREFORE THE SAME NEEDS TO BE UPHELD. 8. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE I NVESTMENTS OF RS. 6.23 CRORES WERE MADE IN EARLIER YEARS WHICH INCLUDES IN VESTMENTS OF RS. 4.59 CRORES MADE IN F.Y. 2001-02, RS. 1.59 CRORES IN F.Y . 2002-03 AND IT WERE MADE FROM INTEREST FREE UNSECURED LOAN FROM ASSOCIA TE CONCERNS. THE INVESTMENTS IN UCO BANK AND SHANTI PROCESSORS AGGRE GATING TO RS. 5.3 LACS WERE MADE IN THE YEAR WHERE THE FREE RESERVES AND SURPLUS OF ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 5 ASSESSEE WERE FAR IN EXCESS OF THE INVESTMENTS. HE THEREFORE SUBMITTED THAT NO INTEREST BEARING BORROWED FUNDS HAVE BEEN U SED FOR MAKING INVESTMENTS AND THEREFORE NO DISALLOWANCE U/S 14A W AS CALLED FOR. HE THUS SUPPORTED THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT THE ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS AND THEREFORE THERE WAS NO JUSTIFICATION FOR PRESUMING THAT ANY PART OF INT EREST BEARING LOAN HAS BEEN UTILIZED FOR THE PURPOSE OF MAKING INVESTMENTS . HE HAS FURTHER NOTED THAT THE CAPITAL AND RESERVES OF THE ASSESSEE WAS T O THE EXTENT OF RS.66 CRORES AS AGAINST THE INVESTMENT OF RS. 6 CRORES WH ICH ALSO SHOWS THAT THERE CANNOT BE ANY PRESUMPTION OF USE OF BORROWED FUNDS FOR SUCH INVESTMENTS. THE ASSESSEE HAS SUBMITTED THAT MAJOR INVESTMENTS MADE IN EARLIER YEARS WERE OUT OF INTEREST FREE UNSECURED L OANS. THIS SUBMISSION OF ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE BY BR INGING ANY CONTRARY MATERIAL ON RECORD. BEFORE US, THE REVENUE HAS NOT CONTROVERTED THE FINDINGS OF CIT(A) BY BRINGING ANY CONTRARY MATERIA L ON RECORD. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERF ERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED . GROUND NO. 2 IS WITH RESPECT TO DISALLOWANCE OF DEP RECIATION ON CAR. 10. A.O. NOTICED THAT ASSESSEE HAS CLAIMED DEPRECIATION ON CAR AT RS. 4,44,218/-. HE FURTHER NOTICED THAT THE CARS WERE BROUGHT AND REGISTERED IN THE NAME OF DIRECTORS. THE ASSESSEE WAS ASKED T O JUSTIFY ITS CLAIM OF ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 6 DEPRECIATION. ASSESSEE INTERALIA SUBMITTED THAT THO UGH THE CAR WAS REGISTERED IN THE NAME OF DIRECTORS BUT THE PAYMENT FOR THE SAME WAS MADE BY THE ASSESSEE AND IS BEING EXCLUSIVELY USED FOR ITS BUSINESS PURPOSE AND ACCORDINGLY THE ASSESSEE WAS ENTITLED T O DEPRECIATION ON CARS. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. AS HE WAS OF THE VIEW THAT SINCE THE CAR WAS N OT REGISTERED IN THE NAME OF THE ASSESSEE, IT HAS FAILED TO QUALIFY ONE OF THE BASIC CRITERIA TO CLAIM DEPRECIATION STIPULATED UNDER SECTION 32 AND THEREFORE THE CLAIM OF DEPRECIATION OF RS. 4,44,218/- WAS DISALLOWED. AGGR IEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CI T(A) DELETED THE ADDITION BY HOLDING AS UNDER:- 7.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. THE DISALLOWANCE HAS BEEN MADE ONLY ON THE GROUND THAT THE VEHICLE IS REGISTE RED IN THE NAME OF THE DIRECTORS AND NOT IN THE NAM E OF THE APPELLANT COMPANY. ON THE OTHER HAND THE APP ELLANT HAS STATED THAT THE VEHICLE WAS PURCHASED BY MAKING PAYMENT BY THE COMPANY THOUGH IT WAS IN T HE NAME OF THE DIRECTORS. IT IS ALSO STATED THAT IT WAS USED FOR THE BUSINESS PURPOSE OF THE COMPANY. THESE TWO ASPECTS ARE NOT DENIED BY THE A.O. IN THE CIRCUMSTANCES FOLLOWING THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF DHAVANI TEXTILE PVT. LTD. BATED 11-9-2009 RELIED UPON BY THE APPELL ANT, THE DISALLOWANCE MADE IS DIRECTED TO BE DELETED. 11. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US. 12. BEFORE US, THE LD. D.R. SUPPORTED THE ORDER OF A.O. AND RELIED ON HIS ORDER. THE LD. A.R. ON THE OTHER HAND SUBMITTED THA T THE ENTIRE PAYMENT FOR PURCHASE OF VEHICLE WAS MADE BY THE COMPANY FRO M ITS OWN FUNDS AND WAS INCLUDED IN ITS BLOCK OF ASSETS AS THE SAME WAS USED FOR THE PURPOSE OF ASSESSEES BUSINESS. HE FURTHER SUBMITTE D THAT ALL THE EXPENSES RELATING TO REPAIRS AND MAINTENANCE OF CAR S ARE PAID BY THE ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 7 ASSESSEE AND THE SAME HAS BEEN ALLOWED BY THE A.O W HICH ALSO SUPPORTS THE CONTENTION THAT THE CAR IS USED FOR THE PURPOSE OF BUSINESS. ON A QUERY RAISED BY THE BENCH, THE LD. A.R. INFORMED TH AT NO CLAIM FOR DEPRECIATION FOR THE SAME ASSESSMENT YEAR HAS BEEN MADE OF THE DIRECTORS IN THEIR PERSONAL RETURNS. HE THUS SUPPORTED THE O RDER OF CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O. HAS ONLY DISALLOWED THE CLAIM OF DEPRECIATION FOR THE REASON THAT THE VEHICLE WAS IN THE NAME OF THE DIRE CTOR AND NOT IN THE NAME OF THE ASSESSEE. BEFORE US, THE REVENUE HAS NO T BROUGHT ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE PURCHASE OF VEHICLE WAS NOT OUT OF THE FUNDS OF THE ASSESSEE AND FURTHER THE VE HICLE WAS NOT USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE SUBMIS SION OF THE A.R. THAT NO DEPRECIATION HAS BEEN CLAIMED BY THE DIRECTORS W ITH RESPECT TO THE AFORESAID VEHICLE IN THEIR INDIVIDUAL RETURN HAS AL SO NOT BEEN CONTROVERTED BY REVENUE. BEFORE US, THE REVENUE COULD NOT CONTRO VERT THE FINDINGS OF CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WIT H THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. C.O. NO. 283/AHD/2010 FOR A.Y. 2007-08 (ASSESSEES APPEAL) 15. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. N OTICED THAT OVER HEAD EXPENSES ON OCTORI, CARRIAGE INWARD AND CLEARI NG AND FORWARDING ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 8 CHARGES ON PURCHASE OF RAW MATERIALS WAS NOT CONSID ERED FOR VALUATION OF CLOSING STOCK OF RAW MATERIAL. THE ASSESSEE WAS AS KED TO JUSTIFY ITS STOCK VALUATION. ASSESSEE INTERALIA SUBMITTED THAT THE M ETHOD OF VALUATION OF CLOSING STOCK OF RAW MATERIALS WAS FOLLOWED BY THE ASSESSEE IN EARLIER YEARS ALSO AND THE SAME HAS BEEN ACCEPTED BY THE DE PARTMENT. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABL E TO THE A.O. THE A.O. WAS OF THE VIEW THAT OVERHEAD EXPENSES AMOUNTI NG TO RS. 4,56,996/- SHOULD HAVE BEEN INCLUDED FOR THE VALUATION OF CLOS ING STOCK AND HE THEREFORE MADE AN ADDITION OF THE AFORESAID AMOUNT ON ACCOUNT OF UNDER VALUATION OF STOCK. ASSESSEE CARRIED THE MATTER BEF ORE CIT(A) CIT(A) DECIDED THE ISSUE BY HOLDING AS UNDER:- 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. IN VIEW OF SECTION 145A AND THE RATIO OF DIFFERENT DECISIONS, I AM OF THE VIEW THAT THE A.O. WAS JUSTIFIED IN CONSIDERING THE PROPORTIONATE EXPENSES IN RESPECT OF PURCHASE OF RA W MATERIAL IN THE VALUE OF INVENTORY OF RAW MATERIA L AS ON THE CLOSE OF THE YEAR. THE APPELLANT HAS REFE RRED TO DIFFERENT DECISION TO STATE THAT THE CONSIS TENCY SHOULD BE FOLLOWED WHEN THE OPENING STOCK VALUATION AND CLOSING STOCK VALUATION IS ON THE SAME BASIS. THESE DECISIONS IN MY VIEW ARE NOT RELEVANT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 145A(B) OF T HE ACT, HOWEVER, I FIND FORCE IN THE SUBMISSIONS OF TH E APPELLANT THAT THE SAME METHOD SHOULD BE CONSIDERED FOR THE PURPOSE OF VALUATION OF OPENING STOCK FOR THE YEAR. THE APPELLANT HAS NOT FURNISHED ANY DATA REGARDING SUCH EXPENDITURE RELATING TO OPE NING STOCK ITS EFFECT ON VALUATION OF OPENING STOCK FOR THE YEAR UNDER CONSIDERATION. HENCE THIS ASPECT IS NOT CONSIDERED HERE. HOWEVER, THE OTHER ARGUMENT OF THE APPELLANT THAT THE INCREASE IN THE CLOSING STOCK VALUE SHOULD BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT OF SUBSEQUENT YEAR IN THE VALUE OF OPENING STOCK, IS FOUND TO BE JUSTIFIABLE WHICH IS ALSO THE DECISION OF THE BOMBAY HIGH COURT IN TH E ABOVE REFERRED CASE OF MAHALAXMI GLASS WORKS PVT. LTD. ACCORDINGLY, THE A.O. IS DIRECTED TO CONS IDER THE INCREASED VALUE IN THE CLOSING STOCK FOR T HIS YEAR AS PART OF THE VALUE OF OPENING STOCK FOR THE YEAR 2008-09 AND GIVE ADJUSTMENT AS SUCH FOR THAT YEAR. 16. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED A CROSS OBJECTION. BEFORE US, THE LD. A.R. REITERATED THE S UBMISSIONS MADE BEFORE CIT(A). ON THE OTHER HAND, THE LD. D.R. SUPPORTED T HE ORDER OF A.O. ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 9 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) BY PLACING RELIANCE ON THE DECI SION OF BOMBAY HIGH COURT IN THE CASE OF MAHALAXMI GLASS WORKS PVT. LTD . HAD DIRECTED THE A.O. TO CONSIDER THE INCREASED VALUE IN CLOSING STO CK FOR THE YEAR UNDER APPEAL AS PART OF VALUE OF OPENING STOCK FOR A.Y. 2 008-09. WE FIND NO ERROR IN THE ORDER OF CIT(A) AND THUS THIS GROUND O F ASSESSEE IS DISMISSED. 18. IN THE RESULT, C.O. OF THE ASSESSEE IS DISMISSED. ITA NO. 601/AHD/2011 FOR A.Y. 2005-06 & ITA NO. 225/AHD/2011 FOR A.Y. 2006-07(REVENUES APPEAL) 19. THE ONLY ISSUE IN BOTH THE APPEALS ARE WITH RESPECT TO DISALLOWANCE UNDER SECTION 14A. BEFORE US, BOTH THE PARTIES HAVE SUBMI TTED THAT FACTS OF THE CASE IN THE YEARS UNDER APPEAL ARE IDENTICAL TO THA T OF A.Y. 07-08. WHILE DECIDING THE ISSUE FOR A.Y. 2007-08 WITH RESPECT TO DISALLOWANCE U/S 14A, HEREINABOVE THE GROUND OF THE REVENUE WAS DISM ISSED. SINCE THE FACTS IN THE PRESENT APPEALS ARE IDENTICAL TO THAT OF 07-08, WE FOR SIMILAR REASONS ALSO DISMISS THE GROUNDS OF REVENUE. 20. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ITA NOS 601 & 225/A/ 2011 & 2419/A/2010 CO. NO. 283/A/2010 . A.Y.2005-06, 2006-0 7 & 2007- 08 10 21. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AND C O OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 11 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T,AHMEDABAD