M/s Padmawati Steels Ltd., Dirba V. ACIT, Sangrur

CO 7/CHANDI/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3547 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 08-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: N K GARG
• Keywords: Earning of tax free income; Question of law; Capital receipt
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS. 1083, 4 &5 /CHD/2017 (ASSESSMENT YEARS: 2011-12 TO 2013-14) ACIT, VS. M/S PADMAWATI STEELS LTD. CIRCLE, SANGRUR SANGRUR ROAD, DIRBA SANGRUR PAN: AACCP3844Q CROSS OBJECTION NOS. 7 & 8/2017 ( IN ITA NOS.4 & 5/CHD/2017) (ASSESSMENT YEARS: 2012-13 & 2013-14) M/S PADMAWATI STEELS LTD. VS. THE DCIT SANGRUR ROAD, DIRBA CIRCLE, SANGRUR SANGRUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.K. GARG & SHRI VIBHOR GARG REVENUE BY : SHRI MANJIT SINGH DATE OF HEARING : 08..02.2018 DATE OF PRONOUNCEMENT : 23.02.2018 ORDER PER ANNAPURNA GUPTA, A.M. : THE ABOVE CAPTIONED APPEALS FILED BY THE REVENUE PE RTAIN TO THE SAME ASSESSEE AND ARE AGAINST SEPARATE ORDERS PASSE D BY CIT(A) PATIALA DT. 27/04/2017, 26/10/2016 & 26/10/2016, RELATING TO AYS 2011-12, 2012-13 AND 2013-14 RESPECTIVELY. THE ASSESSEE HAS ALSO FI LED CROSS OBJECTIONS IN ITA NOS. 4 & 5/CHD/2017. THE LD. COUNSEL FOR ASSESSEE DID NOT PRESS THE CROS S OBJECTIONS. THE SAME ARE THEREFORE DISMISSED AS NOT PRESSED. WE SHALL NOW BE TAKING UP THE APPEALS OF THE REVENU E IN ITA NOS.4 & 5/CHD/2017. SINCE THE ISSUES INVOLVED IN BOTH TH E APPEALS WAS 2 COMMON THE APPEALS WERE HEARD TOGETHER AND ARE BEIN G DISPOSED BY WAY OF A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE SHALL FIRST BE TAKING UP THE REVENUES APPEAL IN ITA NO. 4/CHD/2017 FOR AY 2012-13 AND THE DECISION RENDERED THEREIN SHALL APPLY MUTATIS MUTANDIS TO OTHER APPEAL OF THE REVENUE IN ITA NO.5/CHD/2017. 3. GROUND NO. 1 RAISED BY THE REVENUE READS AS UND ER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHE THER THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 6,07,960/ - MADE BY THE AO ON ACCOUNT OF INTEREST FREE ADVANCES WITHOUT APPRECIAT ION THE JUDGMENT GIVEN BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S AVON CYCLES LTD., LUDHIANA VS. CIT LUDHIANA (ITA NO. 277 OF 2013) AND CIRCULAR NO. 5 OF 2014 ISSUED BY THE BOARD. 4. IN THE SAID GROUND THE REVENUE IS AGITATED AGAIN ST THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF EXPENSES MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS. 6 07960/-. BRIEFLY STATED THE ASSESSEE COMPANY HAD MADE INVESTMENTS OF RS. 26 ,86,000/- IN LAND AND SHARES OF GROUP COMPANIES AND HAD PAID INTEREST ON BORROWED FUNDS THE AO HELD THAT SINCE THE DIVIDEND INCOME FROM THE SAID INVESTMENTS WAS EXEMPT FROM TAX ,EXPENSES RELATABLE TO THE EARN ING OF THE SAID INCOME ,WERE LIABLE TO BE DISALLOWED AS PER THE PRO VISIONS OF THE SECTION 14A OF THE ACT. HE THEREAFTER WORKED OUT THE DISALL OWANCE AS PER RULE 8D OF THE INCOME TAX RULES 1962 AT RS. 607960/- AND AD DED THE SAME TO THE INCOME OF THE ASSESSEE. 5. THE LD. CIT(A) DELETED THE SAID DISALLOWANCE HOL DING THAT SINCE NO EXEMPT INCOME HAD BEEN EARNED BY THE ASSESSEE DURIN G THE YEAR, NO DISALLOWANCE OF EXPENSE UNDER SECTION 14A WAS WARRA NTED. THE LD. CIT(A) RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VS. LAKHANI MARKETING INC. (2014) 49 TAXMANN. COM 257 ( P&H) AND VARIOUS OTHER JUDGMENTS WHICH ARE REPRODUCED HEREUNDER: CIT VS. HERO CYCLES LIMITED (2010) 323 ITR 518 CIT VS. WINSOME TEXTILE INDUSTRIES LTD. (2009) 319 ITR 204 6. BEFORE US LD. DR RELIED ON THE ORDER OF THE AO W HILE LD. COUNSEL FOR THE ASSESSE RELIED ON THE ORDER OF THE CIT(A). 3 7. HAVING HEARD THE RIVAL CONTENTION WE FIND NO MER IT IN THE PRESENT GROUND RAISED BY THE REVENUE. THE POSITION OF LAW V IS A VIS DISALLOWANCE OF EXPENSES UNDER SECTION 14A WHEN NO EXEMPT INCOME HA S BEEN EARNED IS FAIRLY SETTLED WITH THE JURISDICTIONAL HIGH COURT I N THE CASE OF LAKHANI MARKETING(SUPRA) RULLING IN FAVOUR OF THE ASSESSEE AND ALSO VARIOUS OTHER HIGH COURTS DECISIONS AS CITED BY THE LD. CIT(A( IN HIS ORDER. CONSIDERING THE ADMITTED FACT IN THE PRESENT CASE THAT NO EXEMP T INCOME WAS EARNED BY THE ASSESSEE, THE RATIO LAID DOWN IN THE AFORESA ID DECISIONS SQUARELY APPLIES TO THE PRESENT CASE. THE LD. CIT(A), WE HOL D, THEREFORE HAS RIGHTLY DELETED THE DISALLOWANCE OF EXPENSES AMOUNTING TO R S. 6,07,960/- MADE UNDER SECTION 14A OF THE ACT. 8. GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS THE REFORE DISMISSED. 9. GROUND NO. 2 AND 3 RAISED BY THE REVENUE PERTAIN TO THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IC ON VAT DEFERM ENT REBATE AND INTEREST ON FDRS. SINCE THE ISSUE IS COMMON AND TH E ARGUMENTS ADVANCED WERE ALSO COMMON, BOTH THE GROUNDS ARE BEI NG TAKEN UP TOGETHER. GROUND NO. 2 AND 3 RAISED BY THE REVENUE READ AS UNDER: 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,22,57,905/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80 IC OF THE INCOME TAX ACT, 1961 IN RESPECT OF VAT DEFERMENT REBATE WI THOUT APPRECIATING THE JUDGMENT GIVEN BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S H.M. STEELS LTD., SANGRUR IN ITA NO. 352 OF 2013 DT. 04/08/2015. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,27,575/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80 IC OF THE INCOME TAX ACT, 1961 IN RESPECT OF INTEREST ON FDRS WITHOU T APPRECIATING THE JUDGMENT GIVEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S H.M. STEELS LTD. , SANGRUR IN ITA NO. 352 OF 2013 DT. 04/08/2015. 10. BRIEFLY STATED THE ASSESSEE HAD CLAIMED DEDUCTI ON UNDER SECTION 80IC OF THE INCOME TAX ACT (HEREINAFTER REFER TO AS THE ACT) ON INCOMES SHOWN UNDER THE HEAD OTHER INCOMES WHICH INCLUDED VAT DEFERMENT REBATE AMOUNTING TO RS. 1,22,57,905/- , AND INTERES T ON FDRS AMOUNTING TO RS. 1,27,575/- ,WHICH WAS DENIED BY THE AO FOR THE REASON THAT THERE WAS NO DIRECT NEXUS BETWEEN THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE AND THE SAID INCOMES, IN THE ABSENCE OF WHICH THE SAID INCOMES COULD NOT BE SAID TO BE DERIVED FROM THE INDUSTRIAL UNDERTAKING, WHICH WAS A PREREQUISITE FOR CLAIMING DEDUCTION UNDER THE SAID SECTION. THE AO 4 REFERRED TO THE JUDGMENT OF THE APEX COURT IN THE C ASE OF CIT VS. STERLING FOODS 237 ITR 579 IN THIS REGARD. 11. BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED TH AT THERE WAS DIRECT NEXUS BETWEEN THE AFORESAID INCOME AND THE INDUSTRI AL UNDERTAKING OF THE ASSESSEE. TO THIS EFFECT THE ASSESSEE EXPLAINED THA T VIS A VIS THE VAT DEFERMENT REBATE THE FACTS WERE THAT IT WAS LIABLE FOR PAYMENT OF VAT ON THE SALES MADE WITHIN THE STATE OF HIMACHAL PRADESH AND AS PER THE POLICY OF THE STATE GOVERNMENT THE LIABILITY OF VAT PAYMEN TS WAS DEFERRED AND WAS REQUIRED TO BE PAID AFTER THE DEFERMENT PERIOD IN EQUAL INSTALLMENTS. FURTHER IN CONTINUATION TO THE ABOVE POLICY THE STA TE GOVERNMENT HAD ISSUED A NOTIFICATION ON 28/08/2005 GIVING OPTION T O INDUSTRIAL UNITS AVAILING THE DEFERMENT OF TAX TO EITHER CONTINUE WITH SUCH F ACILITY FOR THE UNEXPIRED PERIOD OR OPT TO PAY 65% OF THE TAX LIABILITY AND U PON MAKING SUCH PAYMENTS THE UNIT WOULD BE DEEMED TO HAVE PAID THE FULL TAX DUE FROM THEM ACCORDINGLY. THE ASSESSEE HAVING EXERCISED THI S OPTION THE VAT DEFERMENT REBATE CREDITED IN ITS P&L ACCOUNT AMOUNT ING TO RS. 1,22,57,905/- RELATED TO THE 35% OF VAT, WHICH WAS RETAINED BY IT AS PER THE SAID POLICY OF THE GOVERNMENT . THE ASSESSEE CONTEN DED THAT VAT CHARGES ARE TRADING RECEIPTS WHICH HAD BEEN SETTLED BY THE APEX COURT IN A NUMBER OF DECISIONS AND THEREFORE THE VAT DEFEREN T REBATE EARNED BY THE ASSESSEE HAD A DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING AND WAS THUS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF T HE ACT. VIS A VIS THE CLAIM OF DEDUCTION UNDER SECTION 80IC ON THE INTEREST RECEIVED ON FDRS TO THE TUNE OF RS. 1,27,575/- THE ASSESSEE SUBMITTED THAT THE FDRS WERE TAKEN AS SECURITY FOR VAT DEFERMENT AND POWER CONNECTION AND THEREFORE THE INTEREST EARNED THEREO N WAS INTEGRAL PART OF THE ACTIVITY OF THE INDUSTRIAL UNDERTAKING ENTITLIN G IT TO CLAIM DEDUCTION UNDER SECTION 80IC OF THE ACT. 12. THE LD. CIT(A) ALLOWED BOTH THE AFORESAID CLAIM S OF THE ASSESSEE FOLLOWING THE DECISION OF THE ITAT CHANDIGARH BENCH IN CASE OF M/S H.M. STEEL LTD. VS. JCIT IN ITA NO. 643/CHD/2011 FOR AY 2007-08 DT. 17/06/2013. 13. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE A SSESSEE CONTENDED THAT THE DECISION RELIED UPON BY THE LD. CIT(A) ALL OWING THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IC ON VAT DEFERM ENT REBATE IN THE 5 CASE OF H.M STEEL (SUPRA) HAD BEEN UPHELD BY THE AP EX COURT. LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE APPEA L FILED BY THE ASSESSEE AGAINST THE JUDGMENT OF THE JURISDICTIONAL HIGH COU RT DENYING THE CLAIM OF THE ASSESSEE TO DEDUCTION U/S 80IC ON VAT DEFERMENT REBATE IN THE SAID CASE HAD BEEN ALLOWED FOLLOWING THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. PONNI SUGARS AND CHEMICALS LTD. AND CIT VS. MEGHALAYA STEELS LTD. COPY OF THE ORDER WAS FILED BEFORE US. LD. COUNSEL FOR THE ASSESSEE ALTERNATIVELY CONTENDED THAT THE SAID VAT SUBSIDY RECEIVED BY THE ASSESSEE WAS A CAPITAL RECEIPT IN ITS HAND AND THUS NOT LIABLE TO TAX AT ALL. IN THIS REGARD LD. COUNSEL FOR THE ASSESSEE DR EW OUR ATTENTION TO THE ORDER OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS. TALBROS ENGINEERING LTD. (2016) 386 ITR 154 (P&H) AND POINT ED OUT THEREFROM THAT IDENTICAL SALES TAX DEFERMENT SUBSIDY RECEIVED IN T HE SAID CASE WAS HELD TO BE CAPITAL IN NATURE BY THE ITAT WHICH ORDER WAS UPHELD BY THE HONBLE HIGH COURT. LD. COUNSEL FOR THE ASSESSEE ALSO RELIE D UPON THE ORDER OF THE APEX COURT IN THE CASE OF CIT VS PONNI SUGARS AND C HEMICALS LTD. REPORTED IN (2008) 306 ITR 392 WHICH WAS FOLLOWED B Y THE APEX COURT IN CIT VS. SHRI BALAJI ALLOYS (2016) 138 DTR 36 (SC). 14. LD. DR FAIRLY ADMITTED THAT THE APPEAL OF THE A SSESSEE AGAINST THE ORDER PASSED BY THE JURISDICTIONAL HIGH COURT HAD B EEN DISMISSED BY THE APEX COURT. 15. AS FOR THE DEDUCTION CLAIMED UNDER SECTION 80IC ON THE INTEREST EARNED ON FDRS ,WHILE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A), THE LD. DR STATED THAT THE CIT(A) HAD E RRED IN FOLLOWING THE DECISION OF THE ITAT IN THE CASE OF H.M. STEEL(SUPR A) SINCE THE FACTS OF THE SAID CASE WERE DISTINGUISHABLE WITH THE PRESENT CAS E. LD. DR POINTED OUT THAT WHILE IN THE CASE OF H.M. STEEL THE FINDING OF FACT ON RECORD WAS THAT THE FDRS WERE MADE ON ACCOUNT OF MARGIN MONEY FOR IN LAND LETTER OF CREDIT (ILC) FOREIGN LETTER OF CREDIT (FLC) FOR THE RAW MATERIALS WHICH WAS TREATED AS A COST TO ACQUIRE RAW MATERIAL AND HENCE HAVING DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING, IN THE PRESENT CAS E THE FDRS WERE TAKEN AS SECURITY FOR VAT DEFERMENT AND POWER CONNECTION WHICH HAD NO DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING AND THEREFORE LD. DR CONTENDED THAT 6 THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION UN DER SECTION 80IC ON THE SAME. LD. COUNSEL FOR ASSESSEE CONTENDED THAT FOLLOWING THE DECISION IN THE CASE OF H.M. STEELS (SUPRA), BENEFIT OF NETT ING BE ALLOWED. 16. WE HAVE HEARD THE CONTENTION OF BOTH THE PARTIE S AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND THE DECISIONS RELIED UPON BEFORE US. 17. TAKING UP FIRST THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IC ON VAT DEFERMENT REBATE WE ARE IN AGREEMENT WITH THE L D. COUNSEL FOR THE ASSESSEE THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE APEX COURT. THE DECISION OF THE ITAT RELIED UPON BY THE LD. CIT(A) IN THE CASE OF H.M. STEEL (SUPRA) FOR AY 2007-08, WE FIND HAD BEEN REVERSED BY THE JURISDICTIONAL HIGH COURT VIDE ORDER DT. 04/08/ 2015 IN ITA NO. 352/2013 AND SUBSEQUENTLY THE APEX COURT AFTER GRANTING LEAV E IN THE ASSESSEES SLP FILED AGAINST THE SAID DECISION IN SLP(C)NO.8110-8 111/2016 ALLOWED THE ASSESSEES APPEAL VIDE THEIR ORDER IN GROUP OF CAS ES WITH THE LEAD CASE BEING COMMISSIONER OF INCOME TAX VS M/S VIJAY STEEL INDUSTRIES IN CIVIL APPEAL NO.5107/2015 DT.21-09-2017. THE ORDER OF THE APEX COURT IS AS UNDER: AFTER HEARING THE LEARNED COUNSEL FOR THE PARTIES WE FIND THAT THE ISSUE RAISED IN THESE APPEALS IS COVERED AGAINST TH E REVENUE BY THE DECISION OF THIS COURT IN ' COMMISSIONER OF INCOME TAX, MADRAS VS. PONNI SUGARS AND CHEMICALS LTD.' REPORTED IN (2008) 9 SCC 337, OR IN THE ALTERNATE, IN 'COMMISSIONER OF INCOME TAX VS. M/S. MEGHALAYA STEELS LTD. ', REPORTED IN (2016) 3 SCALE 192. THEREFORE, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE APPEAL (S) OF THE ASSESSEE(S) IS ALLOWED. HOWEVER, IN A PARTICULAR CASE, IF IT IS FOUND THAT THE FACTS OR ISSUE IS DIFFERENT, LIBERTY IS GRANTED TO THE REVENUE TO MAK E AN APPROPRIATE APPLICATION. 18. THUS THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE. EVEN OTHERWISE WE ARE IN AGREEMENT WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAID SUBSIDY OF VAT DEFERMENT RECEIVED BY THE A SSESSEE QUALIFIES AS CAPITAL RECEIPT AS HELD BY THE APEX COURT IN PONNI SUGARS(SUPRA) AND BALAJI ALLOYS (SUPRA) AND BY THE JURISDICTIONAL HIG H COURT IN THE CASE OF TELBROS ENGINEERING (SUPRA). THE JURISDICTIONAL HIG H COURT HELD AS UNDER, 7 WHILE DEALING WITH THE NATURE OF SALES TAX DEFERME NT SUBSIDY RECEIVED IN THE CASE OF TALBROS ENGINEERING(SUPRA) AT PARA 6 OF ITS ORDER: 6. THE NEXT ISSUE WAS WITH REGARD TO ADDITION OF? 2 1,68,938 ON ACCOUNT OF CAPITAL SUBSIDY ON SALES TAX. THE ASSESSEE RECEIVED A SUBSIDY OF SALES TAX AMOUNTING TO ? 21,68,938/- WHICH WAS CLAIMED AS A C APITAL RECEIPT NOT CHARGEABLE TO TAX. ON BEING ASKED AS TO WHY THE SUB SIDY BE NOT TREATED AS REVENUE RECEIPT, THE ASSESSEE STATED THAT IT WAS GIVEN AS PER THE SCHEME OF THE STATE GOVERNMENT FOR ENCOURAGING THE INDUSTRIES TO SET UP THEIR UNITS IN RURAL AREAS AND FOR COMPENSATING FOR THE HARDSHIP IN SETTING UP SUCH INDUSTRIES IN REMOTE RURAL AREAS. THE ASSES SING OFFICER TREATED THIS AMOUNT AS REVENUE BY RELYING UPON JUDGMENT OF THE A PEX COURT IN SAHNEY STEEL AND PASS WORKS LIMITED VS. CIT, 228 IT R 253. THE CIT(A) TREATED THIS AMOUNT AS CAPITAL RECEIPT HOLDING THAT IF THE PURPOSE OF THE SUBSIDY WAS TO HELP THE ASSESSEE TO SET UP ITS BUSINESS OR COMPLETE A PROJECT, THE AMOUNTS MUST BE TREATED TO HAVE BEEN RECEIVED FOR C APITAL PURPOSE. THE TRIBUNAL AFTER CONSIDERING THE MATTER UPHELD THE DE LETION MADE BY THE CIT(A) OBSERVING THAT IF SOME SUBSIDY IS GIVEN FOR ENCOURAGING THE INDUSTRIES FOR SETTING UP UNITS IN THE REMOTE OR RU RAL AREAS ETC. THEN SUCH SUBSIDY ASSUMES THE CHARACTER OF A CAPITAL RECEIPT. IF SUBSIDY IS GIVEN FOR ENABLING AN ASSESSEE TO RUN ITS BUSINESS MORE PROFI TABLY, THEN IT WOULD AMOUNT TO AN OPERATIONAL SUBSIDY CHARGEABLE TO TAX. THE RELEVANT FINDINGS RECORDED BY THE TRIBUNAL READ THUS: 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. THE RELEVANT FACTOR FOR DECISION AS TO W HETHER SUBSIDY IS A CAPITAL OR A REVENUE RECEIPT, IS ITS NATURE AND OBJECT. IF SOME SUBSIDY IS GIVEN FOR ENCOURAGING THE INDUSTRIES FOR SETTING UP UNITS IN THE REMOTE OR RURAL AREAS ETC THEN SUCH SUBSIDY ASSUMES THE CHARACTER OF A CAPITA L RECEIPT. ON THEN OTHER HAND, IF SUBSIDY IS GIVEN FOR ENABLING AN ASSESSEE TO RUN ITS BUSINESS MORE PROFITABLY, THEN IT WOULD AMOUNT TO AN OPERATIONAL SUBSIDY CHARGEABLE TO TAX. IT IS CLEAR FROM THE ASSESSEE'S SUBMISSIONS REPRODU CED IN THE ASSESSMENT ORDER THAT THE SUBSIDY WAS GIVEN TO THE ASSESSEE AS A COM PENSATION FOR SETTING UP ITS UNIT IN REMOTE RURAL AREAS. THE NATURE OF SUCH SUBSIDY HAS NOT BEEN DISPUTED BY THE AO. AS THE NATURE OF SUBSIDY IN THE PRESENT FACTS AND CIRCUMSTANCES IS UNDISPUTED, BEING TOWARDS THE SETT ING UP OF UNIT IN REMOTE AND RURAL AREAS, THE NATURAL CONCLUSION WHICH THERE FORE FOLLOWS IS THAT THIS SUBSIDY IS A CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX. THE LEARNED DR CONTENDED THAT THE NATURE OF SUBSIDY HAS UNDERGONE CHANGE BECAUSE OF THE ASSESSEE ITSELF STATING THAT IT OPTED FOR THE H ALF OF THE AMOUNT OF THE DEFERRED SALES TAX BY MAKING PAYMENT FOR THE REMAIN ING HALF OF THE AMOUNT OF THE DEFERRED TAX UPFRONT. IN OUR CONSIDERED OPTI ON, THE EXERCISE OF OPTION BY THE ASSESSEE IN PAYING HALF OF THE AMOUNT OF DEF ERRED TAX UPFRONT THEREBY RETAINING THE REMAINING HALF AS SUBSIDY, CANNOT CON VERT THE OTHERWISE CAPITAL SUBSIDY INTO AN ITEM OF REVENUE. THE SPECIAL BENCH OF THE TRIBUNAL IN SULZER INDIA LIMITED VS. DCIT, (2010) 134 TTJ(MUM.) (SD) 3 85 HAS HELD THAT THE PAYMENT OF NET PRESENT VALUE AGAINST A DEFERRED SAL ES TAX LIABILITY CANNOT BE CONSIDERED AS INCOME UNDER SECTION 41(1) OF THE ACT . THIS VIEW OF THE SPECIAL BENCH HAS BEEN RECENTLY UPHELD BY THE HON'BLE BOMBA Y HIGH COURT VIDE ITS JUDGMENT DATED 5.12.2014, A COPY OF WHICH HAS BEEN MADE AVAILABLE BY THE LEARNED AR. IN VIEW OF THE ABOVE FORGOING DISCUSSIO NS, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS JUST IFIED IN TREATING SALES TAX SUBSIDY AS A CAPITAL RECEIPT. IN THE ABSENCE OF ANY MATERIAL TO ASSAIL THE FINDIN GS RECORDED BY THE TRIBUNAL ON THIS ISSUE, THE SAME ARE ALSO UPHELD. 7. THE VIEW ADOPTED BY THE TRIBUNAL IS A PLAUSIBLE VIEW BASED ON APPRECIATION OF MATERIAL ON RECORD AND THE RELEVANT CASE LAW ON THE POINT. LEARNED COUNSEL FOR THE APPELLANT-ASSESSEE HAS NOT BEEN ABLE TO SHOW ANY IL LEGALITY OR PERVERSITY IN THE FINDINGS RECORDED. THUS, NO SUBSTANTIAL QUESTION OF LAW ARIS ES. THE APPEAL STANDS DISMISSED. 8 IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF SUBSIDY OF VAT DEFE RMENT RECEIVED BY THE ASSESSEE. GROUND OF APPEAL NO. 2 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 19. AS FOR THE CLAIM OF THE ASSESSEE OF DEDUCTION U NDER SECTION 80IC ON THE INTEREST RECEIVED ON FDRS WE HOLD THAT THE ASS ESSEE IS NOT ENTITLED TO THE SAME. ADMITTEDLY THE SAID INTEREST HAS BEEN REC EIVED ON FDRS WHICH WERE TAKEN AS SECURITY FOR VAT DEFERMENT AND POWER CONNECTION. THIS IS A STEP REMOVED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE AND IS NOT DIRECTLY RELATED TO THE ACTIVITY OF THE INDUSTRIAL UNDERTAKING. IT THEREFORE CANNOT BE SAID TO BE DERIVED FROM THE INDUSTRIAL UN DERTAKING. THE HONBLE APEX COURT WHILE DEALING WITH A CLAIM OF DEDUCTION UNDER SECTION 80HH OF THE ACT IN THE CASE OF PANDIAN CHEMICAL LTD. VS. CI T 262 ITR 278 HAD THE QUESTION RAISED BEFORE IT AS TO WHETHER INTEREST EA RNED ON A DEPOSIT MADE WITH THE ELECTRICITY BOARD FOR THE SUPPLY OF ELECTR ICITY TO THE ASSESSEES INDUSTRIAL UNDERTAKING SHOULD BE TREATED AS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING UNDER SECTION 80HH. THE HONBLE COURT H ELD THAT ALTHOUGH ;ELECTRICITY MAY BE REQUIRED FOR THE PURPOSES OF TH E INDUSTRIAL UNDERTAKING THE DEPOSIT REQUIRED FOR ITS SUPPLY IS A STEP REMOV ED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING. IT WAS HELD THAT THE DE RIVATION OF PROFITS ON THE DEPOSIT MADE WITH THE ELECTRICITY BOARD COULD NOT B E SAID TO FLOW DIRECTLY FROM THE INDUSTRIAL UNDERTAKING ITSELF. ON THIS BAS IS THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80HH ON INTERE ST EARNED ON DEPOSIT MADE WITH ELECTRICITY BOARD WAS DENIED. THE ISSUE I N THE PRESENT CASE WE FIND IS IDENTICAL TO THAT IN PANDIAN CHEMICALS AND THE INTEREST ON FDRS TAKEN FOR VAT DEFERMENT AND ELECTRICITY BOARD CANNO T THEREFORE BE HELD TO BE DERIVED FROM THE INDUSTRIAL UNDERTAKING WHICH IS A PREREQUISITE FOR CLAIMING DEDUCTION UNDER SECTION 80IC OF THE ACT. BUT AT THE SAME TIME WE AGREE THAT THE ASSESSEE SHOULD BE ALLOWED BENEFI T OF NETTING OF INTEREST AS DONE IN THE CASE OF H.M. STEELS (SUPRA) WHICH WAS FOLLOWED BY THE CIT(APPEALS). 20. THE GROUND NO. 3 RAISED BY THE REVENUE IS THERE FORE DISPOSED OFF IN ABOVE TERM. IN EFFECT THE APPEAL OF THE REVENUE IS DISMISSED. 9 21. BOTH THE APPEALS OF THE REVENUE ARE THEREFORE D ISMISSED. ITA NO.1083/CHD/2017 22. GROUND NOS.1 & 2 OF APPEAL RAISED BY THE REVENU E READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) WAS RIGHT IN HOLDING THAT THE INCOME FROM VAT DEFER MENT REBATE RECEIVED BY THE ASSESSEE AMOUNTING TO RS.87,82,476/ - IS ALLOWED TO BE INCLUDED AS PROFITS DERIVED FROM INDUSTRIAL U NDERTAKING AND ELIGIBLE FOR DEDUCTION U/S 80IC OF THE INCOME TAX A CT, 1961 WHEN THE ASSESSEE RECEIVED IT FROM THE HIMACHAL GOVT. FOR TH E BENEFIT OF ANY INCENTIVE OF SALES TAX LEVIABLE ON THE SALES OF MAN UFACTURED GOODS UNDER HIMACHAL PRADESH GENERAL SALES TAX ACT, 1968 AND THE INCOME DERIVED FROM SUCH REBATE IS NOT AN INCOME DE RIVED FROM INDUSTRIAL UNDERTAKING. HOWEVER, THE IMMEDIATE SOUR CE OF THIS REBATE WAS THE SCHEME OF GOVT. TO GIVE SUCH REBATE AND NOT THE CONDUCT OF THE BUSINESS OF THE INDUSTRIAL UNDERTAKING. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF ON ACCOUNT OF DISA LLOWANCE OF INTEREST ON FDR AMOUNTING TO RS.97,484/- U/S 80IC O F THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE DE PARTMENT HAS NOT ACCEPTED THE DECISION OF HON'BLE ITAT, CHANDIGARH B ENCH, CHANDIGARH IN ITA NO. 643/CHD/2011 DATED 17/J6.2013 ON THE ISSUE OF GIVING RELIEF TO THE ASSESSEE REGARDING DE DUCTIONS U/S 80IC OF THE INCOME TAX ACT, 1961 AND THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE HON'BLE PUNJAB AND HARYANA HIGH C OURT, CHANDIGARH. 23. IT WAS COMMON GROUND BETWEEN BOTH THE PARTIES T HAT THE ISSUES RAISED IN THE ABOVE GROUNDS WERE IDENTIC AL TO THAT RAISED IN GROUND NOS.2 & 3 OF THE REVENUES APPEAL IN ITA NO.4/CHD/2017 DEALT WITH IN EARLIER PART OF OUR ORD ER. WE THEREFORE HOLD THAT THE DECISION RENDERED THEREIN A T PARAS 16 TO 20 WILL APPLY MUTATIS MUTANDIS TO THESE GROUN DS. FOLLOWING THE SAME, THE GROUND OF APPEAL NOS. 1 & 2 RAISED BY THE REVENUE ARE DISMISSED. 24. GROUND NO.3 RAISED BY THE REVENUE READS AS UNDE R: 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN ALLOWING THE RELIEF AMOUNTING TO RS.1, 88,610/- ON ACCOUNT OF INTEREST RECEIVED ON REFUND. 25. BRIEFLY STATED, THE ASSESSEE HAD CLAIMED DEDUCT ION U/S 80IC OF THE ACT ON INTEREST RECEIVED ON INCOME TAX REFUND WHICH WAS DENIED BY THE ASSESSING OFFICER HOLDING T HAT IT 10 COULD NOT BE SAID TO BE DERIVED FROM INDUSTRIAL UND ERTAKING OF THE ASSESSEE. THE LD.CIT(APPEALS) ALLOWED THE C LAIM OF DEDUCTION FOLLOWING THE DECISION OF THE HON'BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HARYANA STATE COO PERATIVE APEX BANK LTD., REPORTED IN 322 ITR 404. 26. BEFORE US, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER WHILE THE LD. COUNSEL FOR ASSESSE E RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 27. WE FIND MERIT IN THE CONTENTION OF THE LD. DR. THE INTEREST ON INCOME TAX REFUND HAVING BEEN EARNED ON EXCESS TAXES PAID BY THE ASSESSEE, THE FIRST DEGREE NEXUS OF THE SAID INCOME CANNOT BE SAID TO BE WITH THE BUSINESS ACTIV ITY OF THE ASSESSEE. THE SAID INTEREST, THEREFORE, CANNOT BE SAID TO HAVE BEEN DERIVED FROM THE UNDERTAKING OF THE ASSES SEE SO AS TO BE ELIGIBLE TO CLAIM DEDUCTION U/S 80IC OF TH E ACT. THE RELIANCE PLACED BY THE LD. COUNSEL FOR ASSES SEE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF HARYANA STATE COOPERATIVE APEX BANK LTD. (SUPRA) , WE FIND IS MISPLACED SINCE THE ISSUE IN THE SAID CASE RELATED DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT WHICH GRANTS DEDUCTION TO INCOME ATTRIBUTABLE TO BANKING AND C REDIT PROVIDING ACTIVITIES OF COOPERATIVE SOCIETIES. TH E HON'BLE HIGH COURT IN THE SAID CASE HAD HELD THE INCOME TAX EARNED ON REFUND TO BE ATTRIBUTABLE TO THE BUSINESS OF THE ASSESSEE. THE DEDUCTION U/S 80IC IS ALLOWED ON INCOMES WHICH ARE 11 DERIVED FROM THE UNDERTAKINGS OF THE ASSESSEE. THE RE IS CONSIDERABLE DIFFERENCE BETWEEN THE MEANINGS OF THE WORDS ATTRIBUTABLE AND DERIVED. THE WORD ATTRIBUTAB LE HAS WIDER CONNOTATION AS COMPARED TO THE WORD DERIVEDWHICH HAS A NARROWER MEANING. THE HON'BLE APEX COURT POINTED OUT THIS DISTINCTION IN THE CASE OF LIBERTY INDIA LTD. VS. CIT, REPORTED IN 317 ITR 218 WHILE DEALIN G WITH THE ISSUE OF ALLOWANCE OF DEDUCTION U/S 80IB, WHICH USE S THE TERM DERIVED, ON DEPB AT PARA 14 OF ITS ORDER AS U NDER : ANALYSING CHAPTER VI-A, WE FIND THAT S. 80-IB/80-IA ARE THE CODE BY THEMSELVES AS THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THEREFORE, WE NEED TO EXAMINE WHAT THES E PROVISIONS PRESCRIBE FOR 'COMPUTATION OF PROFITS OF THE ELIGIBLE BUSINES S'. IT IS EVIDENT THAT S. 80-IB PROVIDES FOR ALLOWING OF DEDUCTION IN RESPECT OF PR OFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. THE WORDS 'DERIVED FROM ' IS NARROWER IN CONNOTATION AS COMPARED TO THE WORDS 'ATTRIBUTABLE TO'. IN OTHER WORDS, BY USING THE EXPRESSION 'DERIVED FROM', PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. 28. IN VIEW OF THE SAME, WE HOLD THAT THE DECISION RENDERED IN THE CASE OF HARYANA STATE COOPERATIVE A PEX BANK LTD. (SUPRA) IS OF NO ASSISTANCE TO THE ASSESS EE. WE, THEREFORE, HOLD THAT THE ASSESSEE IS NOT ENTITLED T O CLAIM DEDUCTION U/S 80IC OF THE ACT ON THE INTEREST EARNE D ON INCOME TAX REFUND. THE GROUND OF APPEAL NO.3 RAISE D BY THE REVENUE IS, THEREFORE, ALLOWED. 29. GROUND NO.4 RAISED BY THE REVENUE READS AS UNDE R: 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF ON ADDITION OF RS. 45,890/- & US. 15,485/- ON ACCOUNT OF NON DISCLOSURE OF RECEIPTS A ND PAYMENTS. 30. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD RECEIVED CASH AMOUNTING TO RS.45,890/- AND ALSO MADE CASH PAYMENT OF 12 RS.15,485/- TO M/S PACIFIC COAL & COKE PVT. LTD., WHICH WERE NOT RECORDED IN THE BOOKS OF THE ASSESSEE. IN THE ABSENCE OF ANY EXPLANATION GIVEN BY THE ASSESSEE FOR THIS DISCREPANCY, THE ASSESSING OFFICER ADDED THE SAME T O THE INCOME OF THE ASSESSEE AND FURTHER DENIED DEDUCTION U/S 80IC ON THE SAME. 31. BEFORE THE LD.CIT(APPEALS) THE ASSESSEE CONTEND ED THAT IT HAD PURCHASED COAL FROM THE SAID COMPANY AN D HAD NEVER SOLD ANY GOODS TO IT AND HAD NEITHER RECEIVED OR PAID ANY AMOUNT IN CASH. THE LD. COUNSEL FOR ASSESSEE P OINTED OUT FROM THE COPY OF ACCOUNT SUBMITTED BY M/S PACIF IC COAL & COKE PVT. LTD. AND FROM ITS ACCOUNTS MAINTAINED I N THE BOOKS OF THE ASSESSEE THAT ALL THE TRANSACTIONS WER E DULY RECORDED BY BOTH OF THEM AND THERE WERE NO UNRECORD ED TRANSACTIONS. A DETAILED REPLY IN THIS REGARD WAS FILED BEFORE THE LD.CIT(APPEALS) WHICH IS REPRODUCED IN PARA 9.1 OF THE ORDER. THE SAME WAS SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS, WHO IN RESPONSE RELIED UPON THE ASSESSMEN T ORDER WITHOUT REBUTTING THE SUBMISSIONS OF THE ASSE SSEE. THE LD.CIT(APPEALS), THEREFORE, ON THE BASIS OF THE FAC TUAL SUBMISSIONS OF THE ASSESSEE WHICH REMAINED UNCONTRO VERTED DELETED THE ADDITION MADE. 32. BEFORE US, THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 13 33. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND N O MERIT IN THE PRESENT GROUND RAISED BY THE REVENUE. THE A SSESSEE, WE FIND, DURING APPELLATE PROCEEDINGS HAD GIVEN A D ETAILED EXPLANATION REGARDING THE UNACCOUNTED CASH RECEIPTS AND PAYMENTS STATING CATEGORICALLY THAT THERE WAS NO SU CH UNRECORDED TRANSACTIONS. THE DIFFERENCE IN THE ACC OUNT OF THE SAID PARTY WAS ALSO DULY EXPLAINED AS BEING ON ACCOUNT OF REFLECTION OF A DEBIT BALANCE AS CREDIT. THE RE LEVANT REPLY OF THE ASSESSEE AS REPRODUCED AT PARA 9.1 OF THE OR DER IS AS UNDER: 9.1 DURING APPELLATE PROCEEDINGS, THE APPELLANT RE ITERATED THE SUBMISSIONS MADE DURING THE ASSESSMENT PROCEEDINGS, WHICH ARE REPRODUCED AS UNDER: 'THE ADDITION OF RS.45890/- AND RS.15485/- HAVE BEE N WRONGLY AND INCORRECTLY MADE WITHOUT APPRECIATING THE COMPLETE FACTS. APPELLANT HAS EXPLAINED THE QUERIES RAISED BUT THE ADDITION WAS MADE ON THE DIFFERENT GROUND. LD. AO MADE QUERY VID E PARA 15 OF LETTER DATED 05.02.2014 WHICH HAS BEEN REPLIED VIDE OUR LETTER DATED 10.02.2014. THESE FACTS ARE ADMITTED IN ASSES SMENT ORDER. THERE WAS DIFFERENCE IN OPENING BALANCE WHICH HAS B EEN RECONCILED. HOWEVER THE LD. AO MADE ADDITION ON DIF FERENT ISSUE. IT IS SUBMITTED THAT LD. AO MADE ADDITION OF RS.458 90/- ON THE GROUND THAT M/S PACIFIC COAL & COKE P LTD HAS DEBIT ED RS.21225/- ON 01.04.2010, RS.6445/- ON 05.05.2010 AND RS.18220 /- ON 17.03.2010 IN CASH AND SAME IS NOT APPEARING OUR CO PY OF ACCOUNT BY TREATING THE SAME AS UNRECORDED RECEIPTS . SIMILARLY THERE WAS CREDIT OF RS.15485/-IN CASH. THE ADDITION IS WRONG AND ILLEGAL. ADMITTEDLY APPELLANT COMPANY HAS PURCHASED COAL FROM THE PACIFIC COAL & COKE P LTD AND NEVER SOLD ANY GO ODS. IT IS WRONG THAT APPELLANT HAS NOT REPLIED THE QUERY. IT IS STATED THAT WE HAVE NEVER PAID OR RECEIVED A NY AMOUNT IN CASH. SINCE WE MADE PURCHASES SO THERE IS NO OCCAS ION FOR SELLER TO PAY US ANY AMOUNT IN CASH. WE HAVE GONE THROUGH THE ACCOUNT AND IT IS DEAR THA T ALL ENTRIES RELATING TO INVOICES AND BANK TRANSFER TALLY WITH E ACH OTHER. A PERUSAL OF ACCOUNT FROM OUR BOOKS SHOWS THAT THERE IS NIL BALANCE AS ON 31.03.2011 AND NO AMOUNT IS EITHER CREDITED OR D EBITED IN THE ACCOUNT. ALL CREDIT ENTRIES AND DEBIT ENTRIES ARE T ALLIED WITH THE ACCOUNT OF SELLER. COPIES OF PURCHASE INVOICES ARE ENCLOSED. IT APPEARS THAT THERE WAS SOME ERROR IN THE COPY OF AC COUNT SENT BY THE SELLING PARTY WHICH IS DEAR FROM THE FACT THAT IT SHOWS RS.73178/- AS CREDIT WHERE AS IT SHOULD HAVE BEEN ON DEBUT SID E. BECAUSE OF THIS MISTAKE THE TOTAL OF BOTH SIDE IS WRONG BUT IF OPENING BALANCE OF RS.773 178/- IS PUT ON DEBIT SIDE THE TOTAL OF BOTH SIDE TALLIED. THEREFORE THE ACCOUNT RECEIVED FROM SELLING PARTY C ANNOT BE RELIED UPON TO MAKE ANY ADDITION IN THE PRESENT CASE. EVEN OTHERWISE ALSO NO ADDITION COULD BE MADE ON THE BASIS OF ANY ENTRY MADE IN THE BOOKS OF THIRD PART WITHOUT ANY LEGAL CORROBO RATION, INQUIRY AND 14 RAISING THE MATTER SPECIFICALLY PARTICULARLY WHEN T HE APPELLANT HAS EXPLAINED THE SPECIFIC QUERY. IT IS THEREFORE SUBMITTED THAT ADDITION OF RS.45890 /- AND RS.15485/- MAY KINDLY BE DELETED.' 34. IT IS EVIDENT FROM THE SAME THAT DUE AND PROPER EXPLANATION VIS--VIS THE UNRECORDED TRANSACTIONS H AD BEEN OFFERED BY THE ASSESSEE CATEGORICALLY POINTING OUT THAT THERE WERE NO UNRECORDED CASH TRANSACTIONS. THIS FACTUAL SUBMISSION WAS NOT CONTROVERTED BY THE ASSESSING OF FICER DURING THE REMAND PROCEEDINGS. EVEN BEFORE US, THE LD. DR HAS NOT BEEN ABLE TO POINT OUT ANY DISCREPANCY IN T HE FACTUAL SUBMISSIONS AND EXPLANATION OF THE ASSESSEE . WE, THEREFORE, HOLD THAT THERE IS NO INFIRMITY IN THE O RDER OF THE LD.CIT(APPEALS) HOLDING THAT SINCE NEITHER ANY INCO ME HAS ACCRUED NOR ANY INCOME HAS BEEN RECEIVED BY THE ASSESSEE, NO ADDITION IS WARRANTED. IN VIEW OF THE ABOVE, GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS DISM ISSED. 35. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.1083/CHD/2017 IS PARTLY ALLOWED AND THE APPEALS OF THE REVENUE IN ITA NOS.4 & 5/CHD/2017 AND C.O.NOS.7 & 8 /CHD/ 2017 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD FEBRUARY, 2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR 15 I.T.A.T., CHANDIGARH