NIRMA LTD, V. THE ACIT CEN CIR.1(1),

CO 62/AHD/2002

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8613 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 year(s) 11 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-07-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 05-08-2002
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Reopening of assessment; Gift; Depreciation; Initiation of penalty proceedings; Capital receipt; Revenue expenditure
• Section: 143(3); 80HHC; 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO. 2087/AHD/2004, 670 & 806/AHD/2002 A.YS: 1997-98 AND 1998-99 ACIT, CENTRAL CIRCLE- 1(1), AHMEDABAD VS NIRMA LTD. NIRMA HOUSE ASHRAM ROAD, AHMEDABAD PAN: AAACN535ON (REVENUE) (ASSESSEE) CO NO.62/AHD/2002 (IN ITA NO.806/A/2002) A.Y: 1998-99 ACIT, CENTRAL CIRCLE- 1(1), AHMEDABAD VS NIRMA LTD. NIRMA HOUSE ASHRAM ROAD, AHMEDABAD PAN: AAACN535ON (REVENUE) (ASSESSEE) REVENUE BY : SHRI SUBHASH BAINS, CIT- D.R. ASSESSEE(S) BY : SHRI S.N. SOPARKAR, A.R. / // / DATE OF HEARING : 02/07/2013 / DATE OF PRONOUNCEMENT: 31/07/2013 / O R D E R PER SHRI A.K. GARODIA: THERE ARE THREE APPEALS AND ONE C.O. ONE APPEAL FO R A.Y. 1997-98 IS FILED BY THE REVENUE WHICH IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XII, AHMEDABAD DATED 29.03.2004. REMAINING TWO APPEALS A RE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE WHICH ARE DIRECTED AGAI NST THE ORDER OF LEARNED CIT(A)-XI, DATED 17.1.2002 FOR A.Y. 1998-99. THE CO IS FILED BY THE ASSESSEE FOR A.Y. 1998-99. ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 2 - 2. SINCE, SOME COMMON ISSUES ARE INVOLVED ALL THESE APPEALS AND CO WERE HEARD TOGETHER AND ARE BEING DISPOSED BY THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE THE APPEAL BEING ITA NO.2807/AHD/2004 FOR A.Y. 1997-98 . 3. THE GROUNDS RAISED BY THE REVENUE IN ITA NO.280 7/AHD/2004 ARE AS UNDER: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO ANNUL THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF TH E IT ACT, 1961 IN THE CASE OF THE AFORESAID ASSESSEE BY HOLDING THAT THE RE-OPENING OF THE ASSESSMENT MADE EARLIER U/S 147 OF THE ACT WAS NOT IN ORDER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. THE BRIEF FACTS ARE NOTED BY LEARNED CIT(A) IN P ARAGRAPH 2.1 OF HIS ORDER ARE REPRODUCED BELOW: WITH REGARD TO THE REOPENING OF THE ASSESSMENT, THE AO IN HIS ORDER STATED THAT RETURN OF INCOME FOR HIS ASSESSMENT YEA R WAS FILED ON 28.11.1997 SHOWING TOTAL INCOME OF RS.43,69,63,930. ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 12.01.2000 AT RS .87,23,30,800. THE FIRST APPEAL WAS DECIDED BY LD. CIT(A) BY HIS ORDER DATED 05.09.2000 AND THE INCOME WAS DETERMINED WHILE GIVING DIRECTIO N TO THE ORDER OF CIT(A) AT RS.43,99,22,892. THEREAFTER, NOTICE U/S. 148 WAS ISSUED AND SERVED TO THE ASSESSEE COMPANY ON 28.03.2002. IN RE SPONSE TO THE NOTICE U/S. 148, THE ASSESSEE COMPANY SUBMITTED THAT THE O RIGINAL RETURN FILED ON 28.11.1997 BE CONSIDERED AS RETURN FILED IN RESP ONSE TO NOTICE U/S. 148 OF THE IT ACT. THEREAFTER, NOTHING HAS BEEN MEN TIONED BY THE AO IN HIS ASSESSMENT ORDER WITH REGARD TO REASONS FOR THE REOPENING OF THE ASSESSMENT, BUT CONSIDERED VARIOUS ISSUES AND FRAME D THE ASSESSMENT U/S. 143(3) R.W.S 147 OF THE IT ACT. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNED CIT(A) AND IT WAS HELD BY THE LEARNED CIT(A ) THAT THE ENTIRE PROCEEDINGS OF REOPENING THE ASSESSMENT IN ASSESSEE S OWN CASE ARE BAD IN LAW AND THE SAME WAS ANNULLED. NOW THE REVENUE IS BEFOR E US. LEARNED DR OF THE ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 3 - REVENUE HAS SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LEARNED AR HAS SUPPORTED THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, WE FIN D THAT ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARAGRAPH NO.3 AND 3.1 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 3. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSION OF THE APPELLANT AND THE REMAND REPORTS OF THE AO. I HAVE GONE THROUGH THE PROVISIONS OF SECTION 148 OF THE IT ACT CAREFULLY A ND ALSO GONE THROUGH THE REASONS RECORDED BY THE AO AS REPRODUCED BY THE APPELLANT IN THEIR SUBMISSIONS BY LETTER DATED 12.03.2004 AND THE SUBM ISSIONS OF THE APPELLANT THAT THERE HAS BEEN NO ESCAPEMENT OF INCO ME. I HAVE ALSO GONE THROUGH THE RECORDS AND I AGREE WITH THE APPEL LANTS SUBMISSION ON THE QUANTUM OF INCOME ALLEGED TO HAVE BEEN ESCAP ED AS UNDER:- VIDE PARA 8 OF THE ASSESSMENT ORDER U/S 143(3) OUR CLAIM OF PROJECT EXPENSES OF RS.21,62,45,670/- OF SODA ASH AND LAB H AS BEEN AFTER THE DELIBERATION FROM PG 10 TO 17 OF ASSESSMENT ORDER H AS BEEN REJECTED, WHICH INCLUDE SPN INTEREST OF RS.5,37,10,639/-. THE SAME AMOUNT HAS AGAIN BEEN CONSIDERED IN 147 ORDER BY MAKING ADDITI ON OF SAME SPN INTEREST AT RS.5,37,10,639/-. 3.1 THE QUANTUM OF INCOME PROPOSED TO BE BROUGHT TO TAX AS PER THE REASONS RECORDED BY THE AO IS EXACTLY THE SAME INCO ME, WHICH WAS ORIGINALLY TAXED BY THE AO IN HIS ORDER U/S. 143(3) DATED 12.01.2000. THIS FACT IS ALSO NOT DISPUTED BY THE AO. I FIND TH AT THE FIRST AND FOREMOST CONDITION FOR REOPENING OF ASSESSMENT U/S. 147 OF T HE IT ACT IS ESCAPEMENT OF INCOME AND AN INCOME ALREADY TAXED IN THE ASSESSMENT CANNOT BY ANY MEANS BE CONSIDERED A INCOME ESCAPED. THIS THE PRIMARY CONDITION FOR THE REOPENING THE ASSESSMENT IS NOT A T ALL SATISFIED. THE ARGUMENTS OF THE APPELLANT THAT THE ACTION OF AO BY ISSUING NOTICE U/S. 147 FOR TAXING THE SAME INCOME AGAIN BY GIVING DIFF ERENT REASONING AMOUNTS TO REVISION OF HIS OWN ORDER A POWER WHICH IS ONLY VESTED WITH THE COMMISSIONER OF INCOME-TAX. AS FAR AS THE QUEST ION OF ESCAPEMENT OF INCOME OF RS.5,37,10,639/- IS CONCERNED AS CONSI DERED BY THE AO, THE SAME HAS ALREADY BEEN TAXED BY THE AO IN THE ORDER U/S. 143(3) AND HENCE I HAVE NO HESITATION IN CONCLUDING THAT THERE WAS NO ESCAPEMENT OF INCOME AND HENCE PROVISION OF SECTION 147 COULD NOT HAVE BEEN RESTORED TO BY THE AO TO TAX THE ALREADY TAXED INCO ME AS THERE WAS NO ESCAPEMENT OF ANY INCOME. THE APPELLANT HAS RIGHTLY POINTED OUT THAT THE POWERS THAT ARE AVAILABLE TO THE AO FOR CHANGIN G HIS ORDER WITH A VIEW TO PROTECT THE INTEREST OF REVENUE ARE EITHER BY WAYS OF ACTION U/S. ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 4 - 151 OF THE IT ACT AND IN CASE OF ESCAPEMENT OF INCO ME, RESORTING TO PROVISION OF SECTION 147 OF THE IT ACT AND NO REVIS IONARY POWERS ARE VESTED WITH THE AO. ACCORDINGLY, I FULLY AGREE WITH THE ARGUMENTS OF THE APPELLANT THAT THERE IS NO ESCAPEMENT OF INCOME AND THAT THE ENTIRE PROCEEDINGS OF REOPENING THE ASSESSMENT IN APPELLAN TS CASE ARE BAD IN LAW. ACCORDINGLY, THE REOPENING DONE BY THE AO DESE RVES TO BE SET ASIDE AND THE SAME IS ANNULLED. THE APPELLANTS APPEAL AG AINST THE REOPENING OF THE ASSESSMENT IS, THEREFORE, ALLOWED. 7. FROM THE ABOVE PARAGRAPHS OF THE ORDER OF LEARNE D CIT(A), WE FIND THAT THE CLEAR FINDING IS GIVEN BY THE LEARNED CIT(A) TH AT AS FAR AS THE QUESTION OF ESCAPEMENT OF INCOME OF RS.5,37,10,639/- IS CONCERN ED, AS CONSIDERED BY THE AO, THE SAME HAS ALREADY BEEN TAXED BY THE AO IN TH E ORDER UNDER SECTION 143. THIS FINDING OF LEARNED CIT(A) COULD NOT BE CO NTROVERTED BY LEARNED D.R. OF THE REVENUE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A) BECAUSE IF THE INCOME WHICH IS ALLEG ED TO HAVE BEEN ESCAPED THE ASSESSMENT, HAD ALREADY BEEN TAXED BY THE AO IN THE ORIGINAL ASSESSMENT ORDER, IT CANNOT BE SAID THAT ANY INCOME HAD ESCAPE D ASSESSMENT AND THAT SITUATION THE VERY BASE OF REOPENING DOES NOT SURVI VE AS IN THE PRESENT CASE. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER OF LEARNED CIT(A). 8. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DIS MISSED. 9. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 1998-99 IN ITA NO.670/AHD/200 2. 10. GROUND NO.1 IS GENERAL IN NATURE. GROUND NO.2 I S REGARDING NOT ALLOWING DEDUCTION UNDER SECTION 80I AND 80HH ON ACCOUNT OF VARIOUS INCOMES OF VARIOUS DIVISIONS. IT WAS SUBMITTED BY LEARNED AR O F THE ASSESSEE THAT FOR ALL THESE DIVISIONS AND FOR ALL THESE INCOMES, IN THE E ARLIER YEARS, THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR GRANTING THE BENEFIT OF NETTING ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 5 - ONLY AND HENCE, IN THE PRESENT YEAR ALSO THIS GROUN D MAY BE DECIDED BY RESTORING THE MATTER BACK TO THE FILE OF THE AO FOR ALLOWING THE BENEFIT OF NETTING ONLY. LEARNED DR OF THE REVENUE HAS SUPPORT ED THE ORDER OF THE AUTHORITIES BELOW. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE DISPUTE IS REGARDING ALLOWABILITY OF DEDUCTION UNDER SECTIONS 80I AND 80HH IN RESPECT OF FD INTEREST, SERVICE CHARGES, RENT INCOME OF MANDAL I DIVISION. SIMILAR DISPUTE IS THERE FOR ALLOWABILITY OF THIS DEDUCTION IN RESP ECT OF INTEREST INCOME, TRUCK HIRE CHARGES OF TRIKAMPURA DIVISION. SIMILAR DISPUT E IS THERE IN RESPECT OF F.D. INTEREST, OTHER INTEREST, MISC. INCOME, TRUCK HIRE CHARGES, RENTAL INCOME OF KANPUR DIVISION. SIMILAR DISPUTE IS THERE IN RESPEC T OF F.D. INTEREST, TRANSPORT INCOME AND MISC. INCOME OF INDORE DIVISION. THE ONL Y ARGUMENT OF LEARNED AR OF THE ASSESSEE IS THIS THAT THE MATTER MAY BE R ESTORED BACK TO THE FILE OF THE AO FOR GRANTING THE BENEFIT OF NETTING HAS BEEN DON E BY THE TRIBUNAL IN EARLIER YEARS AS PER COPIES OF TRIBUNAL ORDERS FOR EARLIER YEARS AVAILABLE IN PAPER BOOK. NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LEARNED DR OF THE REVENUE AND HENCE, WE SET ASIDE THE ORDER OF LEARNED CIT(A) IN THIS ISSUE IN RESPECT OF THIS DIVISION AND RESTORE THE ENTIRE MATTER BACK ON THIS ISSUE TO THE FILE OF THE AO FOR ALLOWING THE BENEFIT OF NETTING TO THE ASSES SEE AND IF THE ASSESSEE IS IN A POSITION TO ESTABLISH THE NEXUS, THE EXPENDITURE IN CURRED AND THE RELATED INCOME BY SHOWING THAT THE EXPENDITURE WAS INCURRED FOR AR ISING SUCH INCOME THEN NETTING SHOULD BE ALLOWED AND ONLY NET INCOME SHOUL D BE EXCLUDED FOR THE BUSINESS PROFIT FOR THE PURPOSE OF COMPUTING DEDUCT ION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80I AND 80HH. THE AO SHOULD PASS ORDER AS PER LAWS, AS PER DISCUSSION AS DIRECT .. BE HEARD TO THE AS SESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE IN THE TERMS INDICA TED ABOVE. 12. GROUND NO.3 IS AS UNDER: ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 6 - IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, DEDUCTION U/S. 80HHC IN RESPECT OF EXPORTS SHOULD B E ALLOWED AFTER CONSIDERING TOTAL TURNOVER AS REDUCED BY FOLLOWING : (RS.) IN LACS (I) INTER DIVISION TRANSFER 7,588.09 (II) SALES-TAX 2,427.37 (III) EXCISE 17,693.21 13. IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THE TOTAL TURNOVER SHOULD BE REDUCED BY INTER DIVISION TRANSFER, SALES TAX AND EXCISE DUTY FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASS ESSEE UNDER SECTION 80HHC. HE ALSO SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNALS DECISION IN ASSESSEES OWN CASE F OR A.Y. 1992-93 AND A.Y. 2002-03. HE ALSO SUBMITTED THAT BOTH THESE TRIBUNAL S ORDER ARE AVAILABLE IN THE PAPER BOOK. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT EXCLUSION OF SALES TAX AND EXCISE DUTY FROM TOTAL TURN OVER FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 8 0HHC IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS JUDGMENTS OF H ONBLE APEX COURT. REGARDING INTERDIVISION TRANSFER ALSO, WE FIND FORC E IN THE CLAIM OF THE ASSESSEE THAT THERE CANNOT BE ANY SALE TO THE SELF AND HENCE INTERDIVISION TRANSFER IS A TRANSFER BY THE ASSESSEE TO ITSELF AND HENCE IT CAN NOT BE CONSIDERED AS A TURNOVER AND, THEREFORE, THE SAME HAS TO BE EXCLUDE D FROM TOTAL TURN OVER FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80HHC. A TRIBUNALS ORDER IN ASSESSEES OWN CASE FO R EARLIER TWO YEARS ARE ALSO SUPPORTING THE CASE OF THE ASSESSEE WE THEREFO RE HOLD THAT THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80HHC SHOUL D BE COMPUTED BY REDUCING THE AMOUNT OF INTER DIVISION TRANSFER, SAL ES TAX AND EXCISE DUTY FROM TOTAL TURN OVER. THIS GROUND OF THE ASSESSEE IS ALL OWED. ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 7 - 15. GROUND NO.4 IS GENERAL IN NATURE. ONE ADDITIONA L GROUND HAS BEEN RAISED BY THE ASSESSEE, WHICH IS AS UNDER: IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPEL LANTS CASE, THE SALES-TAX BENEFIT RS.1,17,45,309/- SHOULD BE HELD T O BE CAPITAL RECEIPT, NOT CHARGEABLE TO TAX. 16. IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS TRIBUNALS DEC ISION IN ASSESSEES OWN CASE. HE SUBMITTED A COPY OF TRIBUNALS DECISIONS IN ASSE SSEES OWN CASE FOR A.Y.2000-01, 2002-03 AND 2004-05. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ORDER OF THE AUTHORITIES BELOW: 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, WE FI ND THAT IN A.Y. 2004-05 IN ITA NO.3725/AHD/2008, SIMILAR ISSUES WERE RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL BY WAY OF GROUND NO.7 AS TO WHETHER LE ARNED CIT(A) HAS ERRED IN HOLDING THAT BENEFIT OF SALES TAX IS A REVENUE CHAR GEABLE TO TAX. ON THIS ISSUE, IT WAS HELD BY THE TRIBUNAL IN THAT YEAR THAT THIS ISS UE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2002-03 HENCE, WE EXAMINE THE TRIBUNALS DECISION IN A.Y. 2 002-03. IN THAT YEAR, THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE AS SESSEE BY FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF DCIT VS. RELIANCE INDUSTRIES LIMITED 88 ITD 273 (SB) . NO CONTRARY DECISION OF ANY LARGER BENCH OF THE TRIBUNAL, OF ANY HIGH COURT OR OF HONBLE APEX COURT WAS BROUGHT TO OUR NOTICE BY LEARNED DR OF THE REVENUE AND HENCE WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT C ASE, THEREFORE, RESPECTFULLY FOLLOWING THE TRIBUNALS DECISION IN THE ASSESSEES OWN CASE FOR A.Y. 2002-03 WHICH ENTERED BY FOLLOWING THE DECISION OF THE SPEC IAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF DCIT VS. RELIANCE INDUSTRIE S LIMITED (SUPRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE COMPANY. THIS GR OUND IS ALLOWED. ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 8 - 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED IN THE TERMS INDICATED ABOVE. 19. NOW, WE TAKE UP THE REVENUES APPEAL FOR A.Y. 1998-99 (IN ITA NO.806/AHD/2002 . GROUND NO.1 IS AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS OF TH E CASE IN DIRECTING TO ALLOW DEDUCTION U/S. 80HH ON THE INCOME FORM THE AO S UNDERTAKING. 20. IT WAS SQUARELY CONCEDED BY THE LEARNED AR OF T HE ASSESSEE THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE T RIBUNAL DECISION IN ASSESSEES OWN CASE FOR A.Y. 1993-94 AND 1996-97 AC CORDINGLY IN THE PRESENT CASE ALSO, THIS ISSUE IS DECIDED AGAINST TH E ASSESSEE AND GROUND NO.1 OF THE REVENUES APPEAL IS ALLOWED. 21. GROUND NO.2 IS AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS OF THE CASE IN DIRECTING TO ALLOW DEDUCTION U/S 80I ON GROSS PROFIT FROM THE IN DUSTRIAL UNDERTAKING WITHOUT REDUCING THE DEDUCTION U/S 80HH. 22. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS LEARNED AR OF THE ASSESSEE HAS SUPPORTED TH E ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THIS ISSUE IS COVERE D IN FAVOUR OF THE ASSESSEE BY VARIOUS TRIBUNALS ORDERS IN ASSESSEES OWN CASE FOR A.Y. 1992-93 TO 1996-97. HE ALSO SUBMITTED THAT JUDGMENT OF HONBLE GUJARAT HIGH RENDERED IN THE CASE OF CIT V. AMOD STAMPING AS REPORTED IN (2005) 274 ITR 176 (GUJ) IS ALSO IN FAVOUR OF THE ASSESSEE. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND SI NCE THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIO US TRIBUNALS DECISIONS IN ASSESSEES OWN CASE FOR EARLIER FOUR Y EAR AND NO DIFFERENCE IN ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 9 - FACTS COULD BE POINTED OUT BY THE LEARNED DR OF THE REVENUE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRES ENT YEAR. ACCORDINGLY THIS GROUND IS REJECTED. 24. REGARDING GROUND NO.3, 4, 5 AND 6, IT WAS SUBMI TTED THAT AS PER THESE GROUNDS, THE DISPUTE IS REGARDING ALLOWING OF DEDUCTION BY LEARNED CIT(A) UNDER SECTION 80I, 80IA AND 80HH IN RESPECT OF VARIOUS INCOMES OF MANDALI DIVISION, TRIKAMPURA DIVISION, KANPUR DI VISION AND INDORE DIVISION. IT WAS ALSO SUBMITTED THAT INCOME CONCERN ED ARE JOB CHARGES, INTEREST ON LC, TRUCK HIRE CHARGES, OTHER SALES (IN CLUDING SALE OF WASTE MATERIALS), INTEREST ON LOAN GIVEN TO STAFF, EXCHAN GE RATE DIFFERENCE, INSURANCE CLAIM AND INTEREST FROM DEBTORS. IT WAS S UBMITTED THAT THE ISSUE REGARDING JOB CHARGES WAS DECIDED BY THE TRIBUNAL I N FAVOUR OF THE ASSESSEE FOR A.Y. 1994-95. REGARDING THE ISSUE IN R ESPECT OF INTEREST ON LC, IT WAS SUBMITTED THAT THIS ISSUE WAS DECIDED BY THE TRIBUNAL FOR A.Y. 1994-95 AND 1995-96 AGAINST THE ISSUE BUT THE MATTE R WAS RESTORED BACK TO THE FILE OF THE AO FOR ALLOWING THE BENEFIT OF N ETTING BY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF TRIBUNAL RENDERED IN THE CASE OF LALSONS VS. DCIT , (DELHI) (SPECIAL BENCH) . REGARDING TRUCK HIRE CHARGES, IT WAS SUBMITTED THAT IT IS ONLY REIMBURSEMENT OF EXPENDIT URE AND HENCE THERE IS NO IMPACT ON PROFIT AND THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN EARLIER YEARS, I.E. , A.Y. 1995-96. REGARDING THE ISSUE IN RESPECT OF OTHER SALES, IT W AS SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VARIO US TRIBUNALS DECISION IN ASSESSEES OWN CASE FOR A.Y. 1993-94, 1994-95 AN D 1995-96. REGARDING THE ISSUE IN RESPECT OF INTEREST ON LOANS GIVEN TO STAFF, IT WAS SUBMITTED THAT ON THIS ISSUE THE MATTER WAS RESTORE D BACK TO THE TRIBUNAL ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 10 - IN A.Y. 1993-94 TO THE AO FOR ALLOWING THE BENEFIT OF NETTING TO THE ASSESSEE. REGARDING THE ISSUE IN RESPECT OF INTERES T RATE ITSELF, IT WAS SUBMITTED THAT IN THIS ISSUE ALSO IN A.Y. 1999-2000 , THE MATTER WAS RESTORED BACK TO THE FILED OF THE AO TO RE-EXAMINE THE ISSUE IN THE LIGHT OF THE TRIBUNAL DECISION IN THE CASE OF PRIYANKA GEMS VS . ASSTT. CIT (2005) 94 TTJ (AHD) 557 . REGARDING THE ISSUE IN RESPECT OF INSURANCE CLAI M, IT WAS SUBMITTED THAT ON THIS ISSUE, THE MATTER WAS RE STORED BACK TO THE FILE OF THE AO BY THE TRIBUNAL IN EARLIER YEARS IN A.Y. 1992-93 TO 1995-96 AND THE AO WAS DIRECTED TO ALLOW THE BENEFIT OF NET TING. REGARDING THE ISSUE IN RESPECT OF INTEREST FROM DEBTORS, IT WAS S UBMITTED THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER TR IBUNALS ORDERS IN ASSESSEES OWN CASE FOR A.Y. 1994-95 AND 1995-96 AN D ALSO BY THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN ASSESSEE S OWN CASE AS REPORTED IN 283 ITR 402. LEARNED D.R. OF THE REVENU E HAS SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT ALL THESE ISSUES ARE COVERED BY EARLIER TRIBUNALS ORDE RS EITHER THIS WAS OR THAT WAY AND SINCE NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LEARNED DR OF THE REVENUE IN THE PRESENT YEAR. WE D ECIDED THE ISSUE IN LINE WITH EARLIER TRIBUNALS DECISION. ACCORDINGLY, WE HOLD THAT THE ISSUE REGARDING JOB CHARGES IS ALLOWED IN FAVOUR OF THE A SSESSEE. IN RESPECT OF ISSUE OF INTEREST ON LC, THE MATTER IS RESTORED BAC K TO THE FILE OF THE AO TO ALLOW THE BENEFIT OF NETTING TO THE ASSESSEE AS PER THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF LALSONS ENTERPRISES LTD. (SUPRA ). REGARDING THE ISSUE IN RESPECT OF OTHER SALES, T HE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. REGARDING THE ISSUE IN R ESPECT OF INTEREST ON ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 11 - LOAN GIVEN TO STAFF, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR ALLOWING THE BENEFIT OF NETTING IN THE LIGHT OF DEC ISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF LAL SONS ENTER PRISES (SUPRA). REGARDING THE ISSUE IN RESPECT OF INTEREST RATE DIF FERENCE, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR A FRESH DEC ISION IN THE LIGHT OF TRIBUNALS DECISION IN THE CASE OF PRIYANKA GEMS VS . ASSTT. CIT (SUPRA). IN RESPECT OF ISSUE OF INSURANCE CLAIM, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR ALLOWING THE BENEFIT OF NETTING IN THE LIGHT OF SPECIAL BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE AS REP ORTED IN 95 195. REGARDING THE ISSUE IN INTEREST FROM DEBTORS, IT IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THIS MANNER, GROUND NOS.3, 4, 5 AND 6 STANDS ALLOWED IN THE TERMS INDICATED ABOVE. 26. GROUND NO.7 IS AS UNDER: TO ALLOW THE DEDUCTION U/S 80I/80IA/80HH ON THE SA LES OF POTATO OF RS.3,73,800/- AND ONLY EXCLUDE THE PROFIT OF SAL ES OF RS.25,512/- . 27. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS THE LEARNED AR OF THE ASSESSEE SUPPORTED TH E ORDER OF THE LEARNED CIT(A). HE ALSO SUBMITTED THAT ONLY NET PROFIT SHOU LD BE EXCLUDED AND THE SAME WAS EXCLUDED BY THE ASSESSEE ALSO AND, THE REFORE, IT SHOULD NOT BE EXCLUDED AGAIN. 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CO NSIDERING THE FACTS OF THE PRESENT CASE, WE DO NOT FIND ANY REASO N TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) IN THIS ISSUE BECAUSE A DMITTEDLY, THE ENTIRE TURN OVER CANNOT BE EXCLUDED AND ONLY PROFIT HAS BE EN EXCLUDED FROM THE ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 12 - BUSINESS PROFIT FOR THE PURPOSES OF COMPUTING DEDUC TION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80I, 80IA, 80HH IN RESPECT O F SALE OF POTATO, THIS GROUND IS REJECTED. 29. GROUND NO.8 IS AS UNDER:- TO EXCLUDE THE FOLLOWING INTEREST EXPENDITURE AGAI NST PART OF THE INTEREST INCOME HELD AS NOT ELIGIBLE FOR DEDUCTION U/S 80I/80IA/80HH AND TO EXCLUDE NET INTEREST INCOME FROM THE DEDUCTION. RS. 1. MANDALI DIV. 70749788 2. TRIKAMPURA DIV. 411004 3. KANPUR DIV. 139902 4. INDORE DIV. 37795 30. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSES SMENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED AR OF THE ASSESS EE THAT IN A.Y. 1994- 98 AND EARLIER YEARS THIS ISSUE WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE BUT THE MATTER WAS RESTORED BACK TO THE FI LE OF THE AO FOR ALLOWING THE BENEFIT OF NETTING. ACCORDINGLY, IN TH E PRESENT CASE ALSO, WE SET ASIDE THE ORDER OF LEARNED CIT(A) IN THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE AO AND DIRECTED TO ALLOW ON LY THE BENEFIT OF NETTING TO THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF LALSONS ENTERPRISES (SUPRA ). THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES. 31. GROUND NO.9 IS AS UNDER: TO NOT TO EXCLUDE THE SALE OF DIESEL OF RS.1,10,24, 937/- WHILE WORKING OUT THE DEDUCTION U/S 80I AND 80HH . 32. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED AR OF THE ASSESS EE THAT THIS ISSUE IS ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 13 - COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISI ON IN ASSESSEES OWN CASE FOR EARLIER YEARS, I.E., A.Y. 1995-96, 1996-97 , 1997-98. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND SINCE LEARNED DR OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT YEAR AS COMPARED TO EARLIER THREE YEARS, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. ACCORDINGLY, THI S GROUND OF THE REVENUE IS REJECTED. 33. GROUND NO.10 IS AS UNDER: X) TO DELETE THE FOLLOWING EXPENSES DISALLOWED BY THE A.O. MANDALI DIV. 1. PAYMENT TO HOTEL :RS.1,25,787 2. OUT OF DISTRIBUTION EXPENSE :RS. 80,478 3. GIFT EXPENSE :RS.1,36,513 4. OUT OF REPAIR & MAINTENANCE :RS.1,00,000 5. OUT OF MISC. :RS.2,60,207 6. STATUTORY PENALTY :RS. 20,000 7. SALES TAX PENALTY :RS. 78,000 CHATTRAL DIV. 1. DIWALI EXPENSES :RS. 15,712 2. OUT OF MISC. EXPENSES :RS. 12,808 TRIKAMPURA DIV. 1. HOTEL EXPENSES :RS. 1,000 2. OUT OF MISC. EXPENSES :RS.14,484 3. GIFT EXPENSES :RS. 500 KANPUR DIVISION 1. OUT OF MISC. EXPENSES :RS. 10,000 2. HOUSE MAINTENANCE EXPENSE :RS.1,06,225 3. OUT OF GIFT EXPENSE :RS. 13,039 INDORE DIVISION 1. OUT OF DIWALI EXPENSE :RS. 5,000 2. OUT OF MISC. EXPENSES :RS. 10,000 3. HOUSE MAINTENANCE EXP. :RS. 15,351 4. OUT OF GIFT EXPENSE :RS. 8,477 5. LAND & SITE DEVELOPMENT :RS. 34,898 ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 14 - 6. LOSS ON THEFT :RS.20,000 34. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED AR OF THE ASSESS EE THAT ALL THESE ISSUES OF THE TRIBUNALS DECISION IN EARLIER YEARS IS IN F AVOUR OF THE ASSESSEE AND THEREFORE, IN THE PRESENT YEAR ALSO, THIS ISSUE SHO ULD BE DECIDED IN FAVOUR OF THE ASSESSEE. 35. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT AS PER THE LEARNED AR OF THE ASSESSEE, ALL THESE ISSUES AS PER VARIOUS TRIBUNALS DECISION IN ASSESSEES OWN CASE IN EARLIER YEARS, I .E., 1992-93, 1996-97 AND 1997-98, THESE ISSUES WERE DECIDED BY THE TRIBU NAL IN FAVOUR OF THE ASSESSEE AND NO DIFFERENCE IN FACTS COULD BE POINTE D OUT BY THE LEARNED DR OF THE REVENUE AND HENCE WE DO NOT FIND ANY REAS ON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. ACCORDINGLY, THI S GROUND OF THE REVENUE IS REJECTED. 36. GROUND NO.11 IS AS UNDER:- XI) TO DELETE THE DISALLOWANCE OF CLAIM OF SODA AS H INTEREST EXPENSES OF RS.8,08,21,6587- AND LAB PROJECT RS.27,35,94,647 /-. 37. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED AR OF THE ASSESS EE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY TRIBUNALS DEC ISION IN ASSESSEES OWN CASE FOR A.Y. 1996-97 AND 1997-98. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE IN THE PRESENT YE AR ALSO SINCE DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LEARNED DR OF THE REVENUE. THIS GROUND OF THE REVENUE IS REJECTED. ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 15 - 38. GROUND NO.12 IS AS UNDER:- XII) TO DELETE THE DISALLOWANCE OF CLAIM OF SODA ASH OTHER EXPENSES OF RS,1,33,31,447/- AND LAB PROJECT RS.3,46,83,2097- 39. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED AR OF THE ASSESS EE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNALS DECISION IN THE ASSESSEES OWN CASE FOR A.Y. 1997-98 AND THE RELEVA NT PARAGRAPH OF TRIBUNAL ORDER IS PARAGRAPH NO.13 AND 14, WHICH IS AVAILABLE AT PAGES 153 AND 154 OF THE PAPER BOOK. ACCORDINGLY, IN THE PRES ENT YEAR ALSO THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLO WING THE EARLIER TRIBUNAL ORDER. 40. GROUND NO.13 IS AS UNDER:- XIII) TO ALLOW THE DEPRECIATION ON THE PROJECT EXP ENSES ON THE SODA ASH PROJECT AND THE LAB PROJECT. 41. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS THE LEARNED AR OF THE ASSESSEE HAS SUBMITTE D THAT THIS AN ALTERNATIVE CLAIM OF THE ASSESSEE IF THE ISSUE INVO LVED IN GROUND NO.12 WE DECIDE AGAINST THE ASSESSEE SINCE THE GROUND NO.12 OF THE ASSESSEE IS REJECTED, THIS GROUND OF THE REVENUE HAS BECOME RED UNDANT BECAUSE ONCE THE EXPENSES ARE ALLOWED AS REVENUE EXPENDITURE THE RE IS NO QUESTION OF ALLOWING ANY DEPRECIATION IN RESPECT OF THOSE EXPEN SES. 42. GROUND NO.14 IS AS UNDER:- XIV) TO DELETE DISALLOWANCE OF THE DEDUCTION U/S 3 5AB AND ENHANCING THE SAME FROM RS. 1530 LACS TO RS. 16,78,93,4267- 44. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS LEARNED AR HAS SUPPORTED THE ORDER OF THE L EARNED CIT(A) IN ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 16 - A.Y. 1997-98 THIS ISSUE WAS RESTORED BACK TO THE FI LE OF THE AO FOR A FRESH DECISION AFTER CHECKING THE FULFILLMENT OF TH E REQUIREMENT OF SECTION 35AB. ACCORDINGLY, IN THE PRESENT YEAR, THE ORDER O F THE LEARNED CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTOR ED BACK TO THE FILE OF THE AO FOR A FRESH DECISION WITH THE SAME DIRECTION AS HAS BEEN GIVEN BY THE TRIBUNAL IN A.Y. 1997-98. THIS GROUND OF THE REVENU E IS ALLOWED FOR STATISTICAL PURPOSE. 45. GROUND NO.15 IS AS UNDER: XV) TO DELETE THE ADDITION MADE U/S 40A(2) (B) OF RS. 3,88,122/-. 46. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED AR OF THE ASSESS EE THAT THIS ADDITION IS PERTAINING TO AY 1997-98 BUT THE SAME IS DISALLOWED IN THE PRESENT YEAR, THERE IS NO SUCH PURCHASE AND IT IS A MISTAKE APPAR ENT FROM RECORD. LEARNED DR OF THE REVENUE DID NOT CONTROVERT THE SU BMISSION OF LEARNED AR OF THE ASSESSEE AND HENCE WE DO NOT FIND ANY REA SON TO INTERFERE IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE HENCE, TH IS GROUND IS REJECTED. 47. GROUND NO.16 IS AS UNDER:- XVI) TO DELETE THE ADDITION OF RS. 20,16,03,778/- FOR THE SODA ASH PROJECT UNDER THE HEAD 'INCOME FORM OTHER SOURCES. 48. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS IT IS SUBMITTED BY THE LEARNED AR OF THE AS SESSEE THAT IN A.Y. 1997-98, THE TRIBUNAL HAS RESTORED THIS ISSUE BACK TO THE FILE OF THE AO FOR VERIFICATION AND FRESH DECISION. ACCORDINGLY, I N THE PRESENT YEAR ALSO, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS IS SUE AND RESTORE THE ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 17 - MATTER BACK TO THE FILE OF THE AO FOR A FRESH DECIS ION AS SAME DIRECTION AS HAS BEEN GIVEN BY THE TRIBUNAL IN A.Y. 1997-98. THI S GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 49. GROUND NO.17 IS AS UNDER: TO DELETE THE PUBLIC ISSUE EXPENSES OF RS.56,69,350 RELATING TO THE SODA ASH PROJECT. 50. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS IT IS SUBMITTED BY THE LEARNED AR OF THE AS SESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT O F HONBLE BOMBAY HIGH RENDERED IN THE CASE OF CIT VS. NIMBUS COMMUNI CATION LTD. IN ITA NO.4244 OF 2010. HE SUBMITTED A COPY OF THE JUD GMENT OF HONBLE BOMBAY HIGH COURT, WE DECLINE TO INTERFERE IN THE O RDER OF LEARNED CIT(A) ON THIS ISSUE. THIS GROUND OF THE REVENUE IS REJECTED. 51. GROUND NO.18 IS AS UNDER: TO TAKE THE ASSESSED INCOME FOR THE PURPOSES OF THE CALCULATION OF THE DEDUCTION U/S 80HHC . 52. LEARNED DR OF THE REVENUE HAS SUPPORTED THE ASS ESSMENT ORDER WHEREAS IT IS SUBMITTED BY THE LEARNED AR OF THE AS SESSEE THAT THE AO HAS CALCULATED THE DEDUCTION UNDER SECTION 80HHC ON THE BASIS OF RETURNED INCOME INSTEAD OF ASSESSED INCOME AND THEREFORE LEA RNED CIT(A) HAS DIRECTED THE AO TO CALCULATE THE DEDUCTION BASED ON ASSESSED INCOME. HE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND BY NOW IT IS A SETTLED POSITION OF LAW THAT DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 18 - SECTION 80HHC HAS TO BE CALCULATED ON THE BASIS OF ASSESSED INCOME AND NOT ON THE BASIS OF RETURNED INCOME, WE THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. THIS GRO UND IS REJECTED. 54. GROUND NO.19 IS AS UNDER:- NOT TO CHARGE INTEREST U/S 234B AND 234C OF THE IT ACT, 1963. 55. LEARNED DR OF THE REVENUE HAS SUBMITTED THAT TH E ISSUE REGARDING CHARGING OF INTEREST UNDER SECTION 234B AND 234C IS CONSEQUENTIAL. AS AGAINST THIS, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THERE IS NO SPECIFIC DIRECTION FOR LEVY OF INTEREST IN THE A SSESSMENT ORDER. 56. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND BY NOW IT IS A SETTLED POSITION OF LAW THAT CHARGING OF INTEREST U NDER SECTION 234B AND 234C IS CONSEQUENTIAL, WE HOLD ACCORDINGLY THIS GRO UND OF THE REVENUE IS ALLOWED. 57. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 58. NOW, WE TAKE UP THE CO FILED BY THE ASSESSEE FO R AY 1998-99, I.E., C.O. NO.62/AHD/2002 . 59. IT IS SUBMITTED BY LEARNED AR OF THE ASSESSEE T HAT GROUND NO.1 IS GENERAL IN NATURE. REGARDING GROUND NO.2 AND 3 OF T HE CO, IT IS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT THIS ISSUE I S CONSEQUENTIAL TO GROUND NOS.11 AND 12 OF THE REVENUES APPEAL IN ITA ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 19 - NO.806/AHD/2002 . SINCE ON THIS ISSUE, IT IS ALREADY HELD BY US WHI LE DECIDING THE APPEAL OF THE REVENUE THAT THIS EXPENS ES ARE ALLOWABLE AS REVENUE EXPENDITURE, THERE IS NO QUESTION OF CAPITA LIZING THE SAME AND ALLOWING THE DEPRECIATION THEREON, THEREFORE, GROUN D NOS.2 AND 3 OF THE CO ARE REJECTED. 60. GROUND NO.4 IS AS UNDER: IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, IF THE DISALLOWANCE OF PUBLIC ISSUE EXPENSES RS.56,69,350 IS CONFIRMED, ALTERNATIVELY THE SAME MAY BE ALLOWED U/S. 35D OF I .T. ACT. 61. IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT IF DISALLOWANCE OF PUBLIC ISSUE EXPENSES OF RS.56,69,350/- IS CONCE RNED, THE SAME SHOULD BE ALLOWED UNDER SECTION 35D OF THE IT ACT. LEARNED AR OF THE ASSESSEE SUBMITTED THAT THESE EXPENSES SHOULD BE CONSIDERED FOR ALLOWING DEDUCTION U/S. 35D. LEARNED DR OF THE REVENUE SUBMI TTED THE ASSESSMENT ORDER. 62. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THIS ISSUE HAS BEEN RAISED BY THE REVENUE AS PER GROUND NO.17 AND WHILE DECIDING THAT GROUND, WE DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE AND THEREFORE, THIS GROUND OF THE ASSESSEES CO DOES NO T SURVIVE AND THEREFORE, REJECTED. 63. GROUND NO.5 IS REGARDING INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE IT ACT. THIS GROUND IS REJECTE D AS PREMATURE. GROUND NO.6 IS GENERAL IN NATURE. ITA NO.2087/AHD /04,670 & 806/AHD/02 AND CO 62/AHD/02 ACIT VS. NIRMA LTD. A.YS.1997-98 & 1998-99 - 20 - 64. IN THE RESULT, THE ASSESSEES CO IS DISMISSED . 65. IN THE COMBINED RESULT, THE REVENUES APPEAL FO R A.Y. 1997-98 IS DISMISSED, THE ASSESSEES APPEAL FOR A.Y. 1998-99 I S ALLOWED, THE REVENUES APPEAL FOR A.Y. 1998-99 IS PARTLY ALLOWED AND C.O. FILED BY THE ASSESSEE FOR A.Y. 1998-99 IS DISMISSED. SD/- SD/- (D.K. TYAGI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTA NT MEMBER PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 56. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD