ADANI EXPORAT LTD, Ahmedabad V. THE DY,CIT SPI.SR.1, Ahmedabad

CO 73/AHD/2001

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9219 (ITAT-AHMEDABAD)
• Duration Of Justice: 12 year(s) 1 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-01-2014
• Assessment Year: 1994-1995
• Appeal Filed On: 04-12-2001
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Capital asset; Revised return; Revenue expenditure
• Section: 80HHC; 234B; 28

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 3403/AHD/1997 ASSESSMENT YEAR 1994-95 DCIT, SPECIAL RANGE-1 AHMEDABAD. VS ADANI EXPORTS LTD. AHMEDABAD. PAN: 31-069-CY-5043 (APPELLANT) (RESPONDENT) CO NO. 73/AHD/2001 ASSESSMENT YEAR 1994-95 ADANI EXPORTS LTD. AHMEDABAD. PAN: 31-069-CY-5043 VS DCIT, SPECIAL RANGE-1 AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. VAISHNAV, SR. D.R. ASSESSEE(S) BY : SH. S.N. SOPARKAR ALONGWITH SH. P.M. MEHTA, AR / // / DATE OF HEARING : 24/01/2014 !' /DATE OF PRONOUNCEMENT : 31/01/2014 #$ #$ #$ #$/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS-OB JECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 11.0 8.1997. 2. GROUND NO. 1 OF THE APPEAL OF THE REVENUE AND GR OUND NO. 2 OF THE CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINS T THE ORDER OF THE LD. ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 2 - CIT(A) ALLOWING 10% OF ADVERTISEMENT EXPENDITURE ON PERMANENT PAVILION SITE AS REVENUE EXPENSES AND DIRECTING TO SPREAD THE SAME OVER A PERIOD OF 10 YEARS EQUALLY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE COMPANY MADE PAYMENT OF RS 7,00,000/- TO GUJARAT CRICKET ASSOCIATION AND IN THE ORIGINAL RETURN OF INCOME FI LED BY THE ASSESSEE, IT WAS CLAIMED AS DEDUCTION. LATER ON, THE ASSESSEE C OMPANY VIDE NOTE NO. 2 ATTACHED TO THE REVISED RETURN OF INCOME FILED CL AIMED THE AMOUNT OF RS 7,00,000/- PAID TO GUJARAT CRICKET ASSOCIATION, AHMEDABAD AS ADVERTISEMENT AND DEDUCTION FOR THE SAME WAS CLAIME D AS THE SAME WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT. THE ASSESS ING OFFICER ALSO OBSERVED THAT AS PER COMMUNICATION FROM GUJARAT CRI CKET ASSOCIATION ADDRESSED TO THE ASSESSEE COMPANY, THE ASSESSEE WAS REQUIRED TO MAKE PAYMENT OF RS 25,00,000/-, OUT OF WHICH A SUM OF RS 7,00,000/- WAS PAID DURING THE YEAR UNDER CONSIDERATION. HE NOTED THAT THE ASSESSEE WAS ALLOTTED A PAVILION SITE IN THE SARDAR PATEL ST ADIUM, AHMEDABAD AND THE NAME OF THE PAVILION WAS QUOTED ADANI PAVILION . IT WAS THUS THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSES SEE WAS REQUIRED TO MAKE THE PAYMENT OF RS 25,00,000/- IN LIEU OF ALLOT MENT OF PERMANENT PAVILION SITE AT THE CRICKET STADIUM AND THE ASSESS EE COMPANY HAD PAID AN AMOUNT OF RS 7,00,000/- AS PER THE AGREEMENT. I T WAS ALSO OBSERVED BY THE ASSESSING OFFICER THAT AS PER THE AGREEMENT, THE TELEVISION AND RADIO WILL USE THE NAME OF THE PAVILION AS ADANI P AVILION AND THE NAME OF THE ASSESSEE COMPANY WILL REMAIN IN THE PAV ILION ON PERMANENT BASIS. THEREFORE, THE ASSESSING OFFICER HELD THAT PAYMENT OF RS 7,00,000/- WAS MADE BY THE ASSESSEE FOR ACQUIRING T HE CAPITAL ASSET AND ACCORDINGLY, THE EXPENDITURE INCURRED WAS CAPITAL I N NATURE. IN SUPPORT OF HIS FINDING, THE ASSESSING OFFICE REFERRED TO TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF J.K. COTTON MA NUFACTURING ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 3 - COMPANY LIMITED 101 ITR 221. THE ASSESSING OFFICER ALSO ST ATED THAT THE ADVANTAGE WAS OF A PERMANENT NATURE AND THE EXP ENDITURE WAS RELATABLE TO THE FIXED ASSET AND NOT TO A CIRCULATI NG ASSET. IN VIEW OF THE ABOVE FACTS, HE DISALLOWED THE EXPENDITURE OF RS 7, 00,000/- CLAIMED BY THE ASSESSEE. 4. THE ASSESSEE IN THE APPEAL BEFORE THE LD. CIT(A) SUBMITTED THAT THE ASSESSEE COMPANY HAD NOT ACQUIRED ANY FIXED ASSET A ND WAS NEITHER THE OWNER OF THE SITE NOR WAS HAVING ANY RIGHT ON THE P REMISES. THEREFORE, NO ENDURING BENEFIT HAD ACCRUED TO THE ASSESSEE COM PANY. IN VIEW OF THE PAYMENT MADE, THE NAME OF THE ASSESSEE COMPANY WAS DISPLAYED AT A PLACE MUTUALLY AGREED BETWEEN THE PARTIES AND THE NAME OF THE PAVILION WAS TO BE QUOTED AS ADANI PAVILION. THU S, THE ASSESSEE COMPANY ONLY HAD THE BENEFIT OF ADVERTISEMENT, LIKE ADVERTISEMENT THROUGH DISPLAY BOARD AT RAILWAY STATION OR LOCAL B US TERMINUS. THEREFORE, THE EXPENDITURE INCURRED WAS ALLOWABLE A S REVENUE EXPENDITURE. IT WAS ALSO SUBMITTED THAT THE JUDGEM ENT OF THE HONBLE SUPREME COURT RELIED UPON BY THE ASSESSING OFFICER WAS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. IT WAS SUBMIT TED THAT HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KAMAL & COMPANY 2017 ITR 1038 HELD THAT EXPENDITURE ON CONSTRUCTION OF A FOUNTAIN WAS DONE FOR THE BEAUTIFICATION OF A TRAFFIC ISLAND AND THER EFORE, WAS ALLOWABLE AS REVENUE EXPENDITURE BECAUSE THE OBJECT WAS TO IMPRO VE THE SALES AND IMAGE OF THE ASSESSEE BY PROPER PUBLICITY AND ADVER TISEMENT. THE ASSESSEE ALSO CITED THE FOLLOWING JUDGEMENTS IN SUP PORT OF HIS CONTENTION: (I) CIT VS. NAVSARI COTTON SILK MILLS, 135 ITR 546( GUJ. HC) (II) CIT VS. MEHTA TRANSPORT CO., 160 ITR 35 (GUJ. HC) (III) BOMBAY STEAM NAVIGATION CO. PVT. LTD. 56 ITR 52 (SC) ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 4 - 5. ALTERNATIVELY, THE ASSESSEE SUBMITTED THAT IF IT IS HELD THAT SINCE THE ASSESSEE WILL BE HAVING THE BENEFIT OF ADVERTISEMEN T FACILITY OVER A NUMBER OF YEARS, THE WHOLE AMOUNT OF RS 7,00,000/- PAID DURING THE YEAR WAS NOT ALLOWABLE AS A REVENUE EXPENDITURE, TH EN THE DEDUCTION OVER THE EXPENDITURE INCURRED SHOULD BE SPREAD OVER A PERIOD OF ESTIMATED LIFE OF THE BENEFIT. IN SUPPORT OF THE C ONTENTION, THE ASSESSEE RELIED ON THE JUDGEMENT OF THE HONBLE SUPREME COUR T IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LIMITED VS . CIT 91 TAXMANN.COM 340. 6. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE EXPENDITURE HAS BEEN INCURRED FOR ADVERTISEMENT OF THE COMPANIES NAMED AT THE PAVILION OF THE GUJARAT CRIC KET STADIUM, AHMEDABAD. THE ASSESSEE IS NEITHER THE OWNER OF TH E PAVILION NOR IS HAVING ANY RIGHT OVER THE PAVILION, THUS THE EXPEND ITURE INCURRED HAS NOT RESULTED IN ACQUISITION OF ANY FIXED ASSETS. THERE FORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE EXPENDITU RE OF RS 7,00,000/- AS CAPITAL IN NATURE AND DISALLOWING THE SAME. THE LD . CIT(A) FURTHER OBSERVED THAT THE EXPENDITURE OF RS 7,00,000/- HAS BEEN INCURRED FOR OBTAINING THE BENEFIT OF ADVERTISEMENT NOT ONLY FOR THIS YEAR, BUT IN SUBSEQUENT YEARS ALSO, AS THE PAVILION HAS BEEN NAM ED AS ADANI PAVILION. THEREFORE, THE WHOLE OF EXPENDITURE OF RS 7,00,000/- INCURRED THIS YEAR IS NOT ALLOWABLE AS A REVENUE EX PENDITURE. THEREFORE, CONSIDERING THE FACTS OF THE CASE AND IN VIEW OF TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTR IAL INVESTMENT CORPORATION LIMITED VS. CIT 91 TAXMANN.COM 340, THE EXPENDITURE SHOULD BE SPREAD OVER THE ESTIMATED LIFE OF THE EFF ECT OF ADVERTISEMENT. HE ESTIMATED THAT THE ASSESSEE WILL BE GETTING THE BENEFIT OF ADVERTISEMENT FOR A PERIOD OF 10 YEARS. ACCORDINGL Y, HE HELD THAT THE EXPENDITURE OF RS 7,00,000/- INCURRED BY THE ASSESS EE COMPANY SHOULD ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 5 - BE DEDUCTED EQUALLY OVER A PERIOD OF 10 YEARS AND D IRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION OF RS 70,000/- THIS YEAR AND RS 17,000/- EACH FOR THE NEXT 9 ASSESSMENT YEARS. THU S, HE RESTRICTED THE DISALLOWANCE OF RS 7,00,000/- MADE BY THE ASSESSING OFFICER THIS YEAR TO RS 70,000/- AND THE BALANCE DISALLOWANCE WAS DEL ETED. 7. BEING AGGRIEVED BY THE SAID ORDER OF THE LD. CIT (A), BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. 8. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 9. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SU BMITTED THAT THE ASSESSEE WAS NOT ALLOTTED ANY PAVILION SITE IN SARD AR PATEL STADIUM, AHMEDABAD. ACTUALLY, THE ASSESSEE WAS NOT ACQUIRIN G ANY CAPITAL ASSET OR DERIVING ANY BENEFIT OF ENDURING NATURE. NO PAR T OF THE PAVILION AND EVEN A FEW SQUARE FEET OF THE SURFACE AREA ON WHICH THAT NAME WOULD BE PAINTED WOULD NOT BELONG TO THE ASSESSEE. THE ASSE SSEE GETS THE BENEFIT OF USER FOR THE LIMITED PURPOSE OF DISPLAYING ITS N AME ON THAT SURFACE AREA. OBVIOUSLY, IT IS MERELY AN ADVERTISING VALUE . ADVERTISERS THROUGH DISPLAY BOARDS ETC. AT RAILWAY STATIONS OR THE LOCA L TRAINS OR MUNICIPAL BUSES DO NOT ACQUIRE OWNERSHIP OF ANY PART OF THOSE ASSETS, NOT EVEN OF THE DISPLAY AREAS. IT WAS SUBMITTED THAT THE ASSES SEES CASE IS QUITE A BIT SIMILAR. IT WAS SUBMITTED THAT IT MAY KINDLY BE AP PRECIATED THAT A COMPANY WITH TURNOVER OF HUNDREDS OF CRORES, BOOK P ROFITS OF TENS OF CRORES OF RUPEES MAY NATURALLY SEEK THIS SORT OF AD VERTISEMENT. THE EXPENDITURE IS ON REVENUE ACCOUNT. 10. THE AR OF THE ASSESSEE FURTHER SUBMITTED THAT I N THE CASE OF CIT VS. KAMAL & COMPANY (1993) 203 ITR 1038 (RAJ.) EXPENDIT URE ON CONSTRUCTION OF A FOUNTAIN WHICH WAS DONE FOR THE B EAUTIFICATION OF ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 6 - TRAFFIC ISLAND WAS HELD TO BE ALLOWABLE AS REVENUE EXPENDITURE AS THE OBJECT WAS FOR IMPROVING THE SALES AND IMAGE OF THE ASSESSEE BY PROPER PUBLICITY AND ADVERTISEMENT. IT WAS SUBMITTED THAT THE ASSESSEES CASE WAS MUCH STRONGER THAN THAT CASE. 11. IT WAS FURTHER SUBMITTED THAT THE EXPENDITURE W AS REVENUE EXPENDITURE AND THE LD. CIT(A) WAS NOT JUSTIFIED IN APPORTIONIN G IT AT THE RATE OF 10% OVER A PERIOD OF 10 YEARS. IT WAS CONTENDED TH AT THERE WAS NO BASIS FOR THE LD. CIT(A) TO ARRIVE AT A DECISION WITH THA T THE ASSESSEE WILL DERIVE BENEFIT OUT OF ADVERTISEMENT EXPENDITURE OVE R A PERIOD OF 10 YEARS. IT WAS SUBMITTED THAT THE ADVERTISEMENT OF THE ASSESSEES NAME AT THE SITE OF THE PAVILION WAS FOR EVER AND NOT LIMIT ED TO A PERIOD OF 10 YEARS AND THEREFORE THE EXPENDITURE WAS REVENUE EXP ENDITURE AND SHOULD BE ALLOWED IN ITS ENTIRETY. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, PERUSI NG THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, W E FIND THAT THE ASSESSEE INCURRED EXPENDITURE OF RS 25,00,000/- ON DISPLAY OF ITS NAME AT THE PAVILION OF SARDAR PATEL GUJARAT STADIUM. O UT OF THE SUM OF RS 25,00,000/-, A SUM OF RS 7,00,000/- WAS PAID IN THI S YEAR. THE ASSESSING OFFICER HELD THAT THE EXPENDITURE WAS INC URRED FOR ACQUIRING STADIUM SITE AND THEREFORE, TREATED THE SAME AS CAP ITAL EXPENDITURE AND DISALLOWED THE SAME. ON APPEAL, THE LD. CIT(A) HEL D THAT THE ASSESSEE HAS NOT ACQUIRED ANY STADIUM SITE BUT THE NAME OF T HE ASSESSEE WAS DISPLAYED AT THE STADIUM SITE FOR THE PURPOSE OF AD VERTISEMENT, AND THEREFORE, HELD THE SAME TO BE REVENUE IN NATURE. HOWEVER, HE HELD THAT THE ASSESSEE WOULD ACQUIRE ENDURING BENEFIT AND THE REFORE, ALLOWED 10% OF THE SAME DURING THE YEAR UNDER CONSIDERATION AND DIRECTED THE ASSESSING OFFICER TO SPREAD OVER THE BALANCE AMOUNT OF RS 6,30,000/- OVER NEXT 9 YEARS. ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 7 - 13. BEING AGGRIEVED BY THE SAID ORDER OF THE LD. CI T(A), THE REVENUE AS WELL ASSESSEE ARE IN APPEAL BEFORE US. THE REVENUE IS IN APPEAL AGAINST THE FINDING OF THE LD. CIT(A) THAT THE SUM OF RS 7, 00,000/- WAS A REVENUE EXPENDITURE AND THEREBY ALLOWING DEDUCTION OF 1/10 OF THE AMOUNT BEING RS 70,000/- DURING THE YEAR CONSIDERAT ION AND DIRECTING THE ASSESSING OFFICER TO ALLOW BALANCE AMOUNT IN EQ UAL INSTALMENTS IN THE FOLLOWING 9 YEARS. THE ASSESSEE HAS FILED CROS S OBJECTION AGAINST THE ORDER OF THE LD. CIT(A) ON THE GROUND THAT SINCE TH E EXPENDITURE IS REVENUE IN NATURE AND AS THERE IS NO BASIS FOR THE LD. CIT(A) TO ARRIVE AT THE CONCLUSION THAT THE ASSESSEE WILL DERIVE BENEFI T OVER A PERIOD OF 10 YEARS AND THEREBY APPORTIONING THE SAME OVER A PERI OD OF 10 YEARS. 14. THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFF ICER WHEREAS THE LD. AR OF THE ASSESSEE CONTENDED THAT THE NAME OF ADANI EXPORTS WILL BE DISPLAYED FOR EVER AND THEREFORE, THERE WAS NO BASI S FOR THE LD. CIT(A) TO ARRIVE AT A CONCLUSION THAT THE EXPENDITURE WOUL D BENEFIT THE ASSESSEE OVER A PERIOD OF 10 YEARS AND THEREBY ALLOWING 1/10 OF THE SAME AS DEDUCTION DURING THE YEAR UNDER CONSIDERATION. WE FIND THAT IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSE E DURING THE YEAR PAID RS 7,00,000/- TO GUJARAT CRICKET ASSOCIATION. AS PER AGREEMENT ENTERED INTO WITH GUJARAT CRICKET ASSOCIATION WHICH HAS BEE N QUOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR AS WELL AS COPY OF WHICH IS PLACED AT PAGE NUMBERS 44 TO 45 OF THE ASSESSEES P APER BOOK IT IS OBSERVED THAT AS PER THE SAID AGREEMENT, THE ASSESS EE AGREED TO MEET PAYMENT OF RS 25,00,000/- INCLUDING RS 7,00,000- IN QUESTION IN CONSIDERATION OF ONE OF THE STADIUM TO BE CALLED AS ADANI STADIUM OR ANY OTHER NAME AGREED BY THE ASSESSEE DURING THE CR ICKET MATCHES TO BE PLAYED IN THE SARDAR PATEL GUJARAT STADIUM AND A BO ARD DISPLAYING SUCH NAME WILL BE PUT UP IN THAT PAVILION. THUS, IT IS OBSERVED THAT PAYMENT WAS IN THE NATURE OF ADVERTISEMENT. THE CONCLUSION OF THE ASSESSING ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 8 - OFFICER THAT THE PAYMENT WAS MADE FOR ACQUIRING PER MANENT PAVILION SITE IS NOT CORRECT. WE FIND THAT NO PERMANENT SIT E WAS ACQUIRED BY THE ASSESSEE IN LIEU OF THE PAYMENT IN QUESTION AND THE ASSESSEE HAS NOT BECOME THE OWNER OF ANY SITE IN CONSIDERATION OF TH E SAID PAYMENT. THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. 15. FURTHER, WE FIND THAT THERE WAS NO BASIS ON WHI CH THE LD. CIT(A) COULD HAVE HELD THAT THE BENEFIT OF PAYMENT IN QUESTION W ILL BE AVAILABLE FOR 10 YEARS ONLY AND CONSEQUENTIAL DEDUCTION IS TO BE ALLOWED OVER A PERIOD OF 10 YEARS. IT IS OBSERVED THAT THE BENEFI T WAS NOT FOR ANY FIXED PERIOD. WE AGREE WITH THE LD. CIT(A) THAT THE EXPE NDITURE IN QUESTION IS REVENUE IN NATURE AND NO CAPITAL ASSET OF ENDURI NG NATURE WAS ACQUIRED BY THE ASSESSEE BY MAKING THE PAYMENT IN Q UESTION AND THEREFORE, THE ENTIRE PAYMENT IS ALLOWABLE AS DEDUC TION TO THE ASSESSEE IN THE YEAR ON INCURRING OF THE EXPENDITURE. WE, THER EFORE, MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OF FICER TO ALLOW DEDUCTION FOR ENTIRE RS 7,00,000/- DURING THE YEAR UNDER CONSIDERATION. THUS, RELEVANT GROUND OF APPEAL OF THE REVENUE IS D ISMISSED AND RELEVANT GROUND OF CROSS-OBJECTION OF THE ASSESSEE IS ALLOWED. 16. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS DI RECTED AGAINST THE ORDER OF THE LD. CIT(A) DIRECTING TO ALLOW 10% OF THE REC EIPTS FROM EXPORT INCENTIVES AS DEDUCTION FROM INDIRECT COST WHILE CO MPUTING DEDUCTION U/S 80HHC ON TRADING EXPORTS. 17. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE CLAIMED DEDUCTION U/S 80HHC FOR TRADING DIVISION OF RS 13,33,79,275/-. T HE ASSESSEE FILED WORKING OF INDIRECT COST OF EXPORTS BEFORE THE ASSE SSING OFFICER AMOUNTING TO RS 82,26,407/-. THE ASSESSEE CLAIMED THAT THIS INDIRECT ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 9 - COST IS TO BE REDUCED BY 10% OF EXPORT INCENTIVES O F RS 1,87,85,483/- RECEIVED BY THE ASSESSEE ON ACCOUNT OF COST OF EARN ING SUCH INCENTIVES. THUS, THE INDIRECT COST OF EXPORTS TO BE CONSIDERED FOR WORKING OUT DEDUCTION U/S 80HHC FOR THE TRADING DIVISION WAS DE TERMINED AS UNDER: INDIRECT EXPENSES RS 82,26,407/- LESS: 10% OF THE EXPORT INCENTIVES OF RS 1,87,85,483/- DEDUCTED FROM INDIRECT EXPENSES FOR THE COST OF EARNING THE EXPORT INCENTIVES RS 18,78,548/- ----------------- INDIRECT EXPENSES TO BE CONSIDERED FOR RS 63,47,8 59/- WORKING OUT DEDUCTION U/S 80HHC ---------------- - 18. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE ON THE GROUND THAT IN CASE OF TRADING TAXPAYERS, 10% OF TH E RECEIPTS BY WAY OF BROKERAGE OF THE COMMISSION, INTEREST, RENT CHARGES OR ANY OTHER RECEIPTS OF SIMILAR NATURE ARE NOT TO BE INCLUDED IN EXPORT PROFITS. HE, THEREFORE, HELD THAT THE QUESTION OF RELATING AD HOC EXPENSES FOR EXPORT INCENTIVES DOES NOT ARISE AND REJECTED ASSESSEES CLAIM IN THI S REGARD. THE ASSESSING OFFICER TOOK INDIRECT EXPENSES OF RS 82,2 6,407/- AS AGAINST INDIRECT EXPENSES OF RS 63,47,859/- SHOWN BY THE AS SESSEE AND ALLOWED THE DEDUCTION U/S 80HHC TO THE ASSESSEE OF RS 13,15 ,00,727/- AS AGAINST RS 13,33,79,275/- CLAIMED BY THE ASSESSEE FOR THE T RADING DIVISION AND DISALLOWED THE CLAIM TO THE EXTENT OF RS 18,78,548/ -. 19. IN APPEAL BEFORE THE LD. CIT(A), THE AR OF THE ASSESSEE SUBMITTED THAT CBDT IN CIRCULAR DATED 19.12.1991 HAS CLARIFIED IN PARA 32.11 THAT PROFITS OF THE BUSINESS FOR THE PURPOSE OF SECTIO N 80HHC WILL NOT INCLUDE RECEIPTS BY WAY OF BROKERAGE, COMMISSION, I NTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE. IT HAS BEEN MENTIONED ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 10 - IN THIS CIRCULAR THAT AS SOME EXPENDITURE MAY BE IN CURRED IN EARNING THESE INCOMES, WHICH IN THE GENERALITY OF CASE IS P ART OF COMMON EXPENSES, AD HOC 10% DEDUCTION FROM SUCH INCOME IS PROVIDED TO ACCOUNT FOR THESE EXPENSES. IT WAS THEREFORE SUBMI TTED THAT THE FOLLOWING EXPENSES WERE INCURRED FOR EARNING THE EX PORT INCENTIVES: (I) ADVANCE LICENCE APPLICATION FEES (II) MAINTENANCE OF STAFF FOR MAKING APPLICATIONS, COLLECTING INFORMATION FROM CUSTOM HOUSE, COURTS, MARKETING DE PARTMENTS ETC. (III) TELEPHONE EXPENSES. (IV) TRAVELLING EXPENSES (V) EXPENSES REGARDING CORRESPONDENCE & COMMUNICATION W ITH THE OFFICE OF THE DIRECTORATE GENERAL OF FOREIGN TRADE AT BOMBAY, DELHI & AHMEDABAD. (VI) PROPORTIONATE EXPENSES OF RENT AND OFFICE EXPENSES AT DELHI, BOMBAY AND AHMEDABAD. (VII) PROPORTIONATE EXPENDITURE ON TELEPHONE, FAX SERVICE CHARGES ETC. (VIII) PROFESSIONAL FEES TO BE PAID TO THE LEGAL EXPERTS F OR INTERPRETATION OF LAW REGARDING PERCENTAGE OF EXPORTS OF VARIOUS I TEMS AT WHICH EXPORT INCENTIVES ARE TO BE GRANTED. (IX) EXPENDITURE INCURRED FOR COMMUNICATION WITH THE VAR IOUS GOVERNMENT DEPARTMENTS THROUGH VARIOUS AGENCIES. 20. IT WAS SUBMITTED THAT THE ABOVE MENTIONED EXPEN SES ARE INCLUDED IN THE INDIRECT EXPENSES TOTALING TO RS 82,26,407/-. THER EFORE, IN VIEW OF THE CLARIFICATION GIVEN IN PARA 32.11 OF CBDT CIRCULAR NO. 621 DATED 19.12.1991 AND ON THE SAME FINDINGS, THE ASSESSEE E STIMATED THE EXPENSES INCURRED IN EARNING EXPORT INCENTIVES OF R S 1,87,85,483/- AT 10% OF THE EXPORT INCENTIVES RECEIVED I.E. RS 18,78 ,548/-. THEREFORE, ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 11 - THE ASSESSEE WAS JUSTIFIED IN DEDUCTING THE EXPENSE S OF RS 18,78,548/- FROM TOTAL INDIRECT EXPENSES OF RS 82,26,407/- AND TAKING INDIRECT EXPENSES OF RS 63,47,859/- FOR THE PURPOSES OF COMP UTING THE DEDUCTION U/S 80HHC FOR THE TRADING DIVISION. THE ASSESSEE S UBMITTED THAT THIS VIEW HAS ALSO BEEN TAKEN BY THE LD. CIT(A)-XXXII, B OMBAY IN HIS ORDER DATED 19.12.1994 IN PARA NO IN THE CASE OF SH RI V.C.J. ASSESSMENT YEAR 1992-93, A COPY OF THE CITS ORDER WAS FILED I N SUPPORT OF THE CONTENTION MADE. IT WAS THEREFORE SUBMITTED THAT I N VIEW OF THESE FACTS, THE ASSESSING OFFICER MAY BE DIRECTED TO ALLOW DEDU CTION U/S 80HHC AT RS 13,33,79,275/- AS CLAIMED BY THE ASSESSEE FOR TH E TRADING DIVISION. 21. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S MADE BY THE ASSESSEE OBSERVED THAT THE POINT IN DISPUTE RELATES TO THE D ETERMINATION OF INDIRECT COST ATTRIBUTABLE TO THE GOODS PURCHASED FOR THE EX PORT. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE DEDUCTED THE SUM OF RS 1 8,78,578/- EQUAL TO 10% OF THE EXPORT INCENTIVES OF RS 1,87,85,483/- FR OM THE TOTAL INDIRECT COST TO RS 82,26,407/- IN THE LIGHT OF CBDT CIRCULA R NO. 621 DATED 19.12.1991. HE NOTED THAT ON GOING THROUGH THE CBD T CIRCULAR REFERRED TO BY THE ASSESSEE, IT IS SEEN THAT WITH EFFECT FRO M 01.04.1992 I.E. FROM ASSESSMENT YEAR 1992-93, CERTAIN MODIFICATIONS HAVE BEEN MADE IN THE PROVISIONS RELATING TO THE EXEMPTION OF INCOME FROM EXPORTS. PARA 32.8(B) OF THE CIRCULAR DEALS WITH THE NEW FORMULA ACCORDING TO WHICH PROFIT FROM THE BUSINESS OF EXPORTS OF GOODS IS TO BE CALCULATED IN CASES WHERE THE EXPORT IN GOODS NOT MANUFACTURED BY THE T AXPAYERS BUT PURCHASED FROM A THIRD PARTY (THOSE TRADING GOODS) FURTHER PARA 32.11 OF THE SAID CIRCULAR READ AS UNDER: IT HAS, THEREFORE, BEEN CLARIFIED THAT PROFITS OF THE BUSINESS FOR THE PURPOSE OF SECTION 80HHC WILL NOT INCLUDE RECEI PTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT, CHARGES OF A NY OTHER ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 12 - RECEIPT OF A SIMILAR NATURE. AS SOME EXPENDITURE M IGHT BE INCURRED IN EARNING THESE INCOMES, WHICH IN THE GEN ERALITY OF CASES IS PART OF COMMON EXPENSES, ADHOC 10 PER CENT DEDUCTION FROM SUCH INCOME IS PROVIDED TO ACCOUNT FOR THESE E XPENSE. 22. THE ABOVE PARA OF THE CIRCULAR ALLOW AD HOC DED UCTION OF 10% ON CERTAIN RECEIPTS BECAUSE SOME EXPENDITURE MIGHT HAVE BEEN I NCURRED IN EARNING THOSE INCOMES WHICH IN THE GENERALITY OF CASES IS P ART OF COMMON EXPENSE. THE ASSESSEE HAS CLAIMED 10% DEDUCTION ON EXPORT INCENTIVES ON THE GROUND THAT SOME EXPENSES OF THE PROFIT AND LOSS ACCOUNT ARE ATTRIBUTABLE TO THE EARNING OF EXPORT INCENTIVES. THE ASSESSEE HAS GIVEN THE ITEMS OF EXPENSES UNDER WHICH EXPENDITURE IS IN CURRED FOR EARNING AND RECEIVING THE EXPORT INCENTIVES. THESE ARE MEN TIONED IN PARA 5.2 OF HIS ORDER. CONSIDERING THESE FACTS AND THE ORDER O F THE LD. CIT(A)- XXXII, BOMBAY IN THE CASE OF V.C.J. (SUPRA), HE AGREED WITH THE CONTENTION OF THE ASSESSEE THAT 10% OF THE RECEIPTS FROM EXPORT INCENTIVES IS TO BE CONSIDERED AS EXPENDITURE ATTRI BUTABLE TO EARNING SUCH INCOME IN LIGHT OF PARA 32.11 OF THE SAID CIRCULAR. THE LD. CIT(A) OBSERVED THAT PARA 32.11 OF THE SAID CIRCULAR READ WITH CLAUSE BAA OF THE EXPLANATION TO SECTION 80HHC ALSO CLAUSE IIIA, IIIB AND IIIC OF SECTION 28 MAKES IT CLEAR THAT 10% OF THE RECEIPTS FROM EXPORT INCENTIVES ARE ALLOWABLE AS DEDUCTION FROM THE INDIRECT COST. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION O F RS 18,78,548/- FROM THE INDIRECT COST ATTRIBUTABLE TO THE EARNING OF EXPORT INCENTIVES FROM THE INDIRECT EXPENSES OF RS 82,26,407/-. THUS , THE LD. CIT(A) OBSERVED THAT IN VIEW OF THIS DIRECTION, ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S 80HHC TO RS 33,79,275/- CLAIMED BY THE ASSESSEE AS AGAINST RS 13,15,07,727/- ALLOWED BY HIM FROM TH E TRADING DIVISION. 23. BEING AGGRIEVED BY THIS, THE REVENUE IS IN APPE AL BEFORE US. ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 13 - 24. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE H ONBLE SUPREME COURT IN THE CASE OF HERO EXPORTS VS. CIT (2007) 16 5 TAXMANN.COM 445 (SC) AND SUBMITTED THAT IT WAS HELD BY THE HONBLE SUPREME COURT THAT U/S 80HHC(3)(B), ONE HAS TO BALANCE THE PRINCIPLE OF ATTRIBUTION WITH THE CONCEPT OF ALLOCATION. THE CONCEPT OF ALLOCA TION IS MEANT TO REDUCE THE INCENTIVE. HOWEVER, WHEN ALLOCATION HAS TO B E BALANCED WITH THE PRINCIPLE OF ATTRIBUTION, THE OBJECT IS TO REDUCE T HE INCENTIVE AND NOT TO ELIMINATE IT. THEREFORE, THE ASSESSING OFFICER AND THE LD. CIT(A) WERE NOT RIGHT IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR ADJUSTMENT OF 10% OF OTHER INCOME AGAINST INDIRECT COST FOR TRADING G OODS WHILE ALLOWING DEDUCTION U/S 80HHC AS IT STOOD AT THE RELEVANT TIM E. 25. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE ASSESSEE IS ENGAGED IN EXPORT OF TRADING GOODS AND THEREFORE, IS ELIGIBLE FOR DEDUCTION U/S 80HHC IN RESPECT OF PROFIT DERIVE D FROM EXPORT OF TRADING GOODS. THE ASSESSEE CLAIMED DEDUCTION U/S 80HHC AT RS 13,33,39,275/- WHEREAS THE ASSESSING OFFICER ALLOW ED SUCH DEDUCTION ON RS 13,15,00,727/-. THUS, THE ASSESSING OFFICER GRANTED LESSER DEDUCTION OF RS 18,78,548/- U/S 80HHC THAN THE AMOU NT CLAIMED BY THE ASSESSEE. THE ABOVE DIFFERENCE AROSE BECAUSE THE A SSESSEE REDUCED ITS INDIRECT COST RELATABLE TO THE EXPORT OF TRADING GO ODS BY 10% OF EXPORT INCENTIVES OF RS 1,87,85,483/- WHICH WAS NOT ACCEPT ED BY THE ASSESSING OFFICER. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLA IM OF THE ASSESSEE BY FOLLOWING CBDT CIRCULAR NO. 621 DATED 19.12.1991 . WE FIND THAT THE ISSUE IS SQUARELY COVERED BY DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF HERO EXPORTS VS. CIT (SUPRA) IN FAVOUR OF THE ASSESSEE. THE HONBLE SUPREME COURT HAS HELD THAT FOR THE PURPOSE OF DETERMINING EXPORT PROFIT U/S 80HHC(3)(B) IN CASE OF TRADER EXP ORTER INDIRECT COST ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 14 - CAN BE REDUCED BY 10% OF EXPORT INCENTIVES ETC. TH EREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(A). THEREFO RE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 26. GROUND NO. 3 OF REVENUES APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) DIRECTING TO ALLOW DEDUCTION U/S 80HHC ON THE EXPEN DITURE FOR PURCHASE OF PAVILION SITE. 27. IN VIEW OF OUR FINDING IN GROUND NO. 1 ABOVE OF THIS APPEAL WHEREIN WE HELD ENTIRE RS 7,00,000/- IS ALLOWABLE AS REVENUE D EDUCTION TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THIS GROUND OF THE APPEAL OF THE REVENUE IS TO BE ALLOWED. 28. GROUND NO. 4 OF THE APPEAL OF THE REVENUE IS DI RECTED AGAINST THE ORDER OF LD. CIT(A) TO ALLOW DEDUCTION U/S 80HHC IN RESPE CT OF INCOME OF MARINE DIVISION. 29. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A RECOGNIZED EXPORT HOUSE. THE EXPORT TURNOVER (FOB) IN THE MARINE DIV ISION DURING THE YEAR WAS RS 3,07,51,05,859/- IN THE ASSESSMENT YEAR . THE ASSESSING OFFICER STATED THAT IN THE ORIGINAL RETURN OF INCOM E FILED, NO DEDUCTION U/S 80HHC WAS CLAIMED IN RESPECT OF EXPORTS IN THIS DIVISION. SUBSEQUENTLY, THE REVISED RETURN OF INCOME WAS FILE D BY THE ASSESSEE AND DEDUCTION U/S 80HHC WAS QUANTIFIED BY TAX AUDIT ORS IN THE REPORT IN FORM NO. 10CCAC FILED ALONG WITH RETURN OF INCOME. THE ASSESSING OFFICER HELD THAT SINCE THE TAX AUDIT REPORT IN FOR M NO. 10CCAC WAS NOT FILED ALONG WITH THE ORIGINAL RETURN OF INCOME AS PROVIDED IN SUBSECTION (4) OF SECTION 80HHC, DEDUCTION U/S 80HH C IN RESPECT OF MARINE DIVISION WAS NOT ADMISSIBLE. ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 15 - 30. FURTHER, THE ASSESSING OFFICER HELD THAT SINCE THERE IS A LOSS OF RS 13,50,71,719/- IN THE MARINE DIVISION QUESTION OF I NCREASING THE EXPORT PROFIT BY 90% OF EXPORT INCENTIVE OF RS 15,23,28,79 7/- I.E. RS 13,70,45,917 IN THE PROPORTION OF EXPORT TURNOVER T O THE TOTAL TURNOVER DOES NOT ARISE AS THE INCREMENT ON ACCOUNT OF EXPOR T INCENTIVE OF RS 13,70,95,917/- WILL GET ABSORBED IN THE LOSS OF THE MARINE DIVISION. THE ASSESSING OFFICER FURTHER STATED THAT THE ASSESSEE COMPANY HAS ALSO ISSUED A DISCLAIMER CERTIFICATE IN RESPECT OF EXPOR T OF MARINE DIVISION, HENCE DEDUCTION U/S 80HHC CANNOT BE ALLOWED EVEN ON THE BALANCE PROFIT OF RS 20,24,198/- (13,70,95,917 13,50,71,7 19). IN VIEW OF THE ABOVE FINDING, THE ASSESSING OFFICER DISALLOWED DED UCTION U/S 80HHC IN RESPECT OF MARINE DIVISION. 31. IN APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITT ED THAT IT HAS BEEN HELD IN VARIOUS DECISION THAT FILING OF AUDIT REPORT WIT H THE RETURN OF INCOME IS PROCEDURAL REQUIREMENT AND THE ASSESSING OFFICER SH OULD CONSIDER THE CLAIM OF THE ASSESSEE EVEN IF SUCH CLAIM IS MADE AT A LATER STAGE DURING THE ASSESSMENT PROCEEDING. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS WHICH WERE GIVEN WITH REGARD TO FILING OF AUDIT REPORT WHILE CLAIMING RELIEF U/S 80J AND U/S 11 OF THE INCOME TA X ACT. (I) JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE REPORTED IN 219 ITR 721. (II) DECISION OF LD. ITAT, BOMBAY BENCH IN THE CASE REPO RTED IN 47 TTJ 570. (III) DECISION OF LD. ITAT, DELHI BENCH IN THE CASE REPOR TED IN 46 TTJ 276. IT WAS THEREFORE SUBMITTED THAT IN VIEW OF THE ABO VE DECISIONS, THE ASSESSING OFFICER BE DIRECTED TO CONSIDER THE TAX A UDIT REPORT IN FORM ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 16 - NO. 10CCAC FILED ALONG WITH REVISED RETURN OF INCOM E WHILE WORKING OUT DEDUCTION U/S 80HHC ADMISSIBLE TO THE ASSESSEE REGARDING THE MARINE DIVISION. 32. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE HELD THAT IN VIEW OF THE ABOVE MENTIONED DECISIONS RELIE D ON BY THE ASSESSEE, THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE A UDIT REPORT IN FORM NO.10CCAC FILED ALONG WITH REVISED RETURN OF INCOME WHILE DETERMINING DEDUCTION U/S 80HHC ADMISSIBLE TO THE A SSESSEE REGARDING THE MARINE DIVISION. 33. WITH REGARD TO ADMISSIBILITY OF DEDUCTION U/S 8 0HHC, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE SUBMITTED FOB OF THE EXP ORT TURNOVER OF MARINE DIVISION IS RS 3,07,51,859/- AND AFTER DEDUC TING THE DIRECT COST AND INDIRECT COST TOTALING TO RS 3,21,01,72,578/-, THERE IS A BUSINESS LOSS OF RS 13,50,71,719/- WITHOUT CONSIDERING 90% OF THE EXPORT INCENTIVES OF RS 13,70,95,917/-. THE LD. CIT(A) OBSERVED THAT IT WAS SUBMITTED THAT SECTION 80HHC IS AN INCENTIVE PROVISION AND IT SHOULD BE INTERPRETED IN A LIBERAL WAY. THE WORDS FURTHER I NCREASE CLEARLY SHOW THAT THE BENEFIT AS PER PROVISO IS OVER AND ABOVE T HE BENEFIT AS PER CLAUSE (A) OF SUBSECTION (3) OF SECTION 80HHC IN THE CASE OF A NEGATIVE BALANCE AS PER CLAUSE (A) OF SUBSECTION (3), BENEFIT OF PRO VISO CANNOT BE ADJUSTED OR REDUCED. THE LD. CIT(A) FURTHER OBSERVED THAT I T WAS SUBMITTED THAT FURTHER INCREASE CONTEMPLATED AS PER PROVISO CANNOT BE REDUCED AND ADJUSTED AGAINST THE LOSS ARRIVED AT THE STAGE OF C OMPUTATION. THE ASSESSEE FILED COPY OF THE DECISION DATED 14.09.199 5 OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF A.M. MOOSA VS. ACIT (1996) 54 TTJ 193 AND SUBMITTED THAT IN THIS DECISION, IT HAS BEEN HELD THAT CONSTRUING THE PROVISO TO SUBSECTION (3) OF SECTION 80HHC AS AN INDEPENDENT PROVISION, THE ASSESSEE COULD BE ENTITL ED TO THE DEDUCTION IN ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 17 - AN AMOUNT EQUAL TO 90% OF THE SUMS REFERRED TO ANY CLAUSE (IIIA) (IIIB) AND CLAUSE (IIIC) OF SECTION 28, SAME PROPORTION AS THE EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. FROM ANOTHER POINT OF VIEW, EVEN IF THE PROVISO TO SUBSECTION 3 OF SECTION 80HHC IS VIEWED ONLY, STILL THE ASSESSEE CA NNOT BE DENIED THE DEDUCTION. THIS IS BECAUSE UNDER THE MAIN PROVISIO NS OF SUBSECTION (3) STATUTORY PROFIT OF BUSINESS IS TO BE TAKEN AS NIL THERE BEING NO PROFIT THIS SHOULD BE INCREASED BY THE AMOUNT SPECIFIED IN THE PROVISO TO SUBSECTION (3). AS A RESULT, THE POSITIVE FIGURE W ILL EMERGE. THUS, FROM ANY POINT OF VIEW, THE ASSESSEE SUCCEEDS. THE ASSE SSING OFFICER IS DIRECTED TO QUANTIFY AMOUNT OF DEDUCTION AND ALLOW THE SAME SUBJECT TO THE AVAILABILITY OF TOTAL INCOME. IT WAS ALSO SUBM ITTED BY THE ASSESSEE THAT THE DECISION OF THE COCHIN BENCH OF THE TRIBUN AL WAS FOLLOWED BY THE LD. CIT(A) IN HIS ORDER DATED 10.10.2006 IN APP EAL NO. DC(SR)- 1/161/95-96 FOR ASSESSMENT YEAR 1993-94 IN THE CASE OF AIA. MAGOTTAUX LIMITED. IT WAS ALSO SUBMITTED THAT SIMI LAR VIEW WAS ALSO TAKEN BY THE LD. CIT(A)-IV, BARODA VIDE ORDER DATED 17.10.1995 IN THE CASE OF PRATIBHA PROCESSORS LIMITED, SURAT IN APPEA L NO. CAB/IV-II/95- 96 FOR ASSESSMENT YEAR 1992-93. THEREFORE, IT WAS SUBMITTED THAT THE ASSESSING OFFICER BE DIRECTED TO ALLOW DEDUCTION U/ S 80HHC FOR MARINE DIVISION EQUAL TO 90% OF EXPORT INCENTIVES OF RS 13 ,70,95,970/- SUBJECT TO THE CONDITION THAT THE DEDUCTION SHOULD NOT EXCE ED GROSS TOTAL INCOME AS REDUCED BY THE DEDUCTION U/S 80HHC ALLOWED FOR T RADING DIVISION. THE LD. CIT(A) ACCORDINGLY HELD THAT THE ASSESSEE I S ENTITLED TO DEDUCTION U/S 80HHC FOR THE MARINE DIVISION EQUAL T O 90% EXPORT INCENTIVE IN THE SAME PROPORTION AS EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE ASSESSEE WHICH COMES TO RS 13,79,35 ,917/- AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION FOR THE SAME SUBJECT TO CONDITION THAT THE DEDUCTION SHOULD NOT EXCEED GROSS ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 18 - TOTAL INCOME AS REDUCED BY DEDUCTION U/S 80HHC ALLO WED FOR TRADING DIVISION. 34. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 35. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE D ELHI BENCH OF THE TRIBUNAL IN THE CASE OF MMTC LIMITED VS JCIT 112 TT J 15 (DELHI) HAS HELD THAT WHEN AN EXPORT HOUSE SURRENDERS PART OF I TS EXPORT TURNOVER IN FAVOUR OF SUPPORTING MANUFACTURER, IT IS REQUIRED T O ISSUE A CERTIFICATE AS REFERRED TO IN CLAUSE (B) OF SUBSECTION (4A) IN RES PECT OF THE AMOUNT OF TURNOVER SPECIFIED THEREIN, THEN THE AMOUNT OF DED UCTION IN THE CASE OF THE ASSESSEE BEING EXPORT HOUSE SHALL BE REDUCED BY SUCH AMOUNT WHICH BEARS TO THE TOTAL PROFIT DERIVED BY THE ASSESSEE F ROM EXPORT OF TRADING GOODS, SAME PROPORTION AS THE AMOUNT OF EXPORT TURN OVER SPECIFIED IN THE SAID CERTIFICATE BEARS TO THE TOTAL EXPORT TURN OVER OF THE ASSESSEE IN RESPECT OF SUCH TRADING GOODS. THUS, IN RESPECT OF THE INCOME WHICH THE ASSESSEE DID NOT DISCLAIM IN FAVOUR OF THE SUPPORTI NG MANUFACTURER WHICH PERTAINS TO AND IS ATTRIBUTABLE TO THE EXPORT INCENTIVE, THERE IS NO REASON TO REDUCE THE EXPORT INCENTIVE RELATABLE TO THE DISCLAIMED TURNOVER IN TERMS OF PROVISO TO SECTION 80HHC (1) O F THE ACT. HE ALSO SUBMITTED THAT THIS IS THE ONLY DECISION OF THE TRI BUNAL IN FAVOUR OF THE ASSESSEE. HE ALSO SUBMITTED THAT NO APPEAL HAS BEE N FILED AGAINST THIS ORDER BY THE DEPARTMENT MEANING THEREBY THAT THEY H AVE ACCEPTED THE DECISION. HE THEREFORE SUBMITTED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE UPHELD AND THE GROUND OF APPEAL OF THE RE VENUE BE DISMISSED. 36. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IN ITS MARINE DIVISION SUFFER ED LOSS OF RS 13,50,71,719/- ON EXPORT OF TRADING GOODS AND EARNE D EXPORT INCENTIVES ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 19 - OF RS 13,70,45,917/-. THE ASSESSEE CLAIMED DEDUCTI ON U/S 80HHC OF RS 13,70,45,917/- ON THE GROUND THAT IN RESPECT OF EXP ORT TURNOVER IT HAS CLAIMED DEDUCTION U/S 80HHC BY ISSUING CERTIFICATE TO THE SUPPORTING MANUFACTURER IN RESPECT OF ENTIRE EXPORT TURNOVER. THE ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM ON THE GROUND T HAT THERE WAS LOSS ON EXPORT OF TRADING GOODS AND ON THE GROUND THAT THE REQUIRED CERTIFICATE OF THE AUDITOR WAS NOT FURNISHED ALONG WITH RETURN OF INCOME. 37. ON APPEAL, THE LD. CIT(A) HELD THAT FURNISHING OF AUDITORS CERTIFICATE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS SUF FICIENT COMPLIANCE. 38. FURTHER, THE LD. CIT(A) HELD THAT WHILE COMPUTI NG EXPORT PROFIT, THE LOSS IS TO BE IGNORED AND AFTER IGNORING THE LOSS A S THE ASSESSEE HAD EXPORT INCENTIVES OF RS 13,70,95,917/-, THE ASSESSE E WAS ELIGIBLE FOR DEDUCTION U/S 80HHC SUBJECT TO THE CONDITION THAT S UCH DEDUCTION SHOULD NOT EXCEED THE GROSS TOTAL INCOME AS REDUCED BY DEDUCTION U/S 80HHC ALLOWED FOR TRADING DIVISION. 39. BEFORE US, THE LD. DR CONTENDED THAT AS THERE W AS LOSS ON EXPORT OF TRADING GOODS U/S 80HHC(3)(B), THE ASSESSEE WAS NOT ENTITLED TO ANY DEDUCTION U/S 80HHC IN RESPECT OF MARINE DIVISION. 40. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE S UPPORTED THE ORDER OF THE LD. CIT AND SUBMITTED THAT AS THE ASSESSEE ISSUED A DISCLAIMER CERTIFICATE IN RESPECT OF EXPORT TURNOVER AND THERE FORE, THE LOSS ON EXPORT OF TRADING GOODS IS TO BE IGNORED AND THE LD. CIT(A ) WAS JUSTIFIED IN GRANTING DEDUCTION U/S 80HHC IN RESPECT OF EXPORT I NCENTIVE. HE RELIED UPON THE DECISION OF THE DELHI BENCH OF THE TRIBUNA L IN THE CASE OF MMTC VS. JCIT (2007) 112 TTJ 15 (DELHI). ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 20 - 41. WE FIND THAT THE HONBLE SUPREME COURT IN THE C ASE OF IPCA LABORATORY LIMITED VS. DCIT (2004) 135 TAXMANN 594 (SC) HELD AS UNDER: 15. IT WAS NEXT SUBMITTED THAT EVEN WHEN THE PROFITS A RE TO BE REDUCED BY THE LOSSES IN CASES WHERE AN EXPORT HOUSE HAS DI SCLAIMED ITS TURNOVER IN FAVOUR OF A SUPPORTING MANUFACTURER, TH E TURNOVER OF THE EXPORTER GETS REDUCED TO THE EXTENT DISCLAIMED. IT IS SUBMITTED THAT AS THE TURNOVER, WHICH IS DISCLAIMED, IS REDUCED IT CA NNOT THEN BE TAKEN INTO CONSIDERATION FOR THE PURPOSES OF COMPUTING PR OFITS UNDER SUB- SECTION 3(C)( II). IN OUR VIEW THIS IS AN ARGUMENT WHICH MERELY NEEDS TO BE STATED TO BE REJECTED. IF SUCH AN ARGUMENT IS AC CEPTED IT WOULD LEAD TO AN ABSURD RESULT. IT WOULD MEAN WHEN IF THERE WA S NO DISCLAIMER THE EXPORT HOUSE WOULD NOT BE ENTITLED TO ANY DEDUCTION IN CASES WHERE THERE IS A LOSS BUT BECAUSE DISCLAIMER HAS BEEN MAD E BOTH THE EXPORT HOUSE AND THE SUPPORTING MANUFACTURER WOULD BECOME ENTITLED TO DEDUCTIONS. THE PROVISO TO SUB-SECTION (3) OF SECTI ON 80HHC ENABLES A DISCLAIMER ONLY TO ENABLE THE EXPORT HOUSE TO PASS ON DEDUCTIONS. IT IN NO WAY REDUCES THE TURNOVER OF THE EXPORT HOUSE. IN COMPUTING TOTAL INCOME, THE ENTIRE TURNOVER IS TAKEN INTO ACCOUNT E VEN THOUGH THERE IS A DISCLAIMER. THUS EVEN THOUGH THE DISCLAIMER IS MA DE THE TAXABLE INCOME OF RS. 4.39 CRORES HAS BEEN ARRIVED AT BY TH E APPELLANTS AFTER TAKING INTO ACCOUNT THE ENTIRE TURNOVER FROM EXPORT OF TRADING GOODS. IN ARRIVING AT THE FIGURE OF RS. 4.39 CRORES ADMITT EDLY THE LOSS OF RS. 6.86 CRORES HAS BEEN TAKEN INTO ACCOUNT. EVEN AFTER DISCLAIMER THE TURNOVER HAS REMAINED THE TURNOVER OF THE EXPORT HO USE, I.E., THE APPELLANTS. THE DISCLAIMER IS ONLY FOR PURPOSES OF ENABLING THE EXPORT HOUSE TO PASS ON THE DEDUCTION WHICH IT WOULD HAVE GOT TO THE SUPPORTING MANUFACTURER. IT FOLLOWS THAT IF NO DEDU CTION IS AVAILABLE, BECAUSE THERE IS A LOSS, THEN THE EXPORT HOUSE CANN OT PASS ON OR GIVE CREDIT OF SUCH NON-EXISTING DEDUCTION TO A SUPPORTI NG MANUFACTURER. ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 21 - THUS, IN OUR CONSIDERED VIEW, THE LOSS OF RS 13,50, 71,719/- SUFFERED ON EXPORT OF TRADING GOODS CANNOT BE IGNORED ON THE GR OUND THAT A DISCLAIMER CERTIFICATE WAS ISSUED IN RESPECT OF REL EVANT EXPORT TURNOVER TO THE SUPPORTING MANUFACTURER. 42. FURTHER, WE FIND THAT THE HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. MEREENA CREATIONS 189 TAXMANN 71 (DEL.) HELD AS UNDER: 15. AFTER READING THE JUDGMENT OF THE SUPREME COURT IN IPCA LABORATORY LTD.S CASE (SUPRA), IT CLEARLY EMERGES: NO DOUBT, UNLESS THERE IS A POSITIVE PROFIT, THE BENEFIT OF SECTIO N 80HHC WOULD NOT BE GIVEN. THE COURT INTERPRETED IT TO MEAN THAT IF THE RE IS A LOSS THEN NO DEDUCTION WOULD BE AVAILABLE. HOWEVER, HOW THE TEST FOR DETERMINING THE FIGURE OF POSITIVE PROFIT IS APPLIED IS STATED AS FOLLOWS: 'IN ARRIVING AT THE FIGURE OF POSITIVE PROFIT, BOTH THE PROFITS AND THE LOSSES WILL HAVE TO BE CONSIDERED. IF THE NET FIGUR E IS A POSITIVE PROFIT THEN THE ASSESSEE WILL BE ENTITLED TO A DEDUCTION. IF THE NET FIGURE IS A LOSS THEN THE ASSESSEE WILL NOT BE ENTITLED TO A DE DUCTION.' IT IS CLEAR FROM THE ABOVE THAT WHILE COMPUTING EXP ORT PROFIT THE RESULT OF TWO ACTIVITIES IS TO BE NETTED. WHILE DOING SO, EXPORT INCENTIVES ARE ALSO TO BE TAKEN INTO CONSIDERATION. 43. WE FIND THAT THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF MMTC (SUPRA) IS NOT APPLICABLE IN THE INSTANT CASE IN AS MUCH AS IN THE INSTANT CASE, THERE IS LOSS IN EXPORT OF TRADING GOODS WHIC H COULD NOT BE PASSED ON TO SUPPORTING MANUFACTURER BY ISSUING DISCLAIMER CERTIFICATE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF IPCA LABORATORY (SUPRA). IN VIEW OF THE ABOVE DECISION OF THE HONBLE DELHI HIGH COURT, WE FIND THAT AFTER TAKING INTO CONSIDER ATION 90% OF EXPORT INCENTIVE, THERE WAS A POSITIVE PROFIT OF RS 20,24, 198/- IN THE INSTANT ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 22 - CASE. THEREFORE, THE ASSESSEE WAS ENTITLED FOR DED UCTION U/S 80HHC IN RESPECT OF RS 20,24,198/- ONLY. WE, THEREFORE, MOD IFY THE ORDER OF THE LD. CIT(A) TO THE ABOVE EXTENT. THUS, THE GROUND O F APPEAL OF REVENUE IS PARTLY ALLOWED. 44. THE GROUND NO. 5 OF THE APPEAL OF THE REVENUE I S DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DIRECTING TO ALLOW DEDUCTIO N U/S 80HHC AS MENTIONED IN THE GROUNDS THEREBY RESULTING IN COMPU TATION OF INCOME LOWER THAN SHOWN BY THE ASSESSEE IN REVISED RETURN OF INCOME. 45. THE LD. AR OF THE ASSESSEE RELIED ON THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS AND OT HERS (2003) 261 ITR 367 (SC) AND SUBMITTED THAT AT PAGE 382 OF THE ORDE R IN PLACETUM C, D & E, HONBLE SUPREME COURT HAS OBSERVED THAT THE FA ILURE OF THE REVENUE TO FRAME A FRESH ASSESSMENT SHOULD NOT PLAC E THE ASSESSEE IN A MORE DISADVANTAGEOUS POSITION THAN IN WHAT HE WOULD HAVE BEEN IF A FRESH ASSESSMENT WAS MADE. IN A CASE WHERE AN ASSE SSEE CHOOSES TO DEPOSIT BY WAY OF INDEPENDENT ACTION ADVANCE TAX OR AS SELF ASSESSMENT TAX WHICH IS IN EXCESS OF HIS LIABILITY ON THE BASI S OF THE RETURN FURNISHED OR THERE IS ANY ARITHMETICAL ERROR OR INACCURACY, I T IS UP TO HIM TO CLAIM REFUND OF THE EXCESS TAX PAID AT THE TIME OF THE AS SESSMENT PROCEEDINGS. HE CAN CERTAINLY MAKE SUCH A CLAIM ALSO BEFORE THE CONCERNED AUTHORITY FOR REFUND. SIMILARLY, IF HE HAS BY MISTAKE OR INA DVERTENCE OR ON ACCOUNT OF IGNORANCE INCLUDED IN HIS INCOME ANY AMO UNT WHICH IS EXEMPT FROM PAYMENT OF INCOME TAX OR IS NOT INCOME WITHIN THE CONTEMPLATION OF LAW, HE CAN LIKEWISE BRING THIS TO THE NOTICE OF THE ASSESSING OFFICER WHO, IF SATISFIED, MAY GRANT HIM RELIEF AND REFUND THE TAX PAID IN EXCESS, IF ANY. SUCH MATTERS CAN BE BR OUGHT TO THE NOTICE OF THE CONCERNED AUTHORITY IN CASE WHEN REFUND IS DUE AND PAYABLE AND THE AUTHORITY CONCERNED ON BEING SATISFIED SHALL GRANT APPROPRIATE RELIEF. IT ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 23 - WAS THEREFORE HIS SUBMISSION THAT IN VIEW OF THE FI NDING OF THE HONBLE SUPREME COURT IN THE CASE OF SHELLY PRODUCTS (SUPRA ), GROUND OF APPEAL OF THE REVENUE SHOULD BE DISMISSED. 46. THE LD. DR SUBMITTED BEFORE US THAT THE ASSESSE E HAS DECLARED INCOME OF RS 28,00,000/- IN ITS RETURN OF INCOME. HOWEVER , IF EFFECT OF THE ORDER OF THE LD. CIT(A) IS GIVEN, THEN THE ASSESSED INCOME WILL BE LESSER THAN THE RETURNED INCOME. ACCORDING TO THE LD. DR, THIS IS NOT PERMITTED IN VIEW OF THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS AND OTHERS (SUPRA). 47, HOWEVER, LD. DR COULD NOT PRODUCE ANY COMPUTATI ON BEFORE US TO SHOW HOW THE ASSESSED INCOME ON THE BASIS OF THE ORDER O F THE LD. CIT(A) WILL BE LESSER THAN THE RETURNED INCOME. 48. BE THAT AS IT MAY. 49. THE LD. AR OF THE ASSESSEE IN OPPOSITION RELIED UPON THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF SHELLY PRODUCT S (SUPRA). 50. IN THE INSTANT CASE, WE FIND THAT ASSESSMENT WA S NOT QUASHED BY THE LD. CIT(A) AND FURTHER THE DECISION ON MERITS OF THE IS SUE OF LD. CIT(A) WHEREVER THE DEPARTMENT HAS ANY GRIEVANCE WAS AGITA TED IN APPEAL AND THE SAME HAVE BEEN DECIDED ON MERITS. WE ARE OF TH E CONSIDERED VIEW THAT THE INCOME OF THE ASSESSEE IS TO BE COMPUTED A S PER PROVISIONS OF THE LAW AND SIMPLY BECAUSE AN ASSESSEE HAS SUFFERED MORE AMOUNT ON TAX THAN WHAT IS LEGALLY DUE, THEN THE DEPARTMENT C AN NOT ASSESS THE INCOME AT A HIGHER FIGURE BUT SHOULD ASSESS THE INC OME AT CORRECT AMOUNT AS PER THE PROVISIONS OF LAW. WE, THEREFORE , DO NOT FIND ANY ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 24 - MERIT IN THIS GROUND OF APPEAL OF THE REVENUE AND H ENCE, THE SAME IS DISMISSED. 51. IN THE CROSS-OBJECTION OF THE ASSESSEE, THE GRO UND NO. 1 OF CROSS- OBJECTION IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) UPHOLDING THE DISALLOWANCE OF RS 1.5 LAKHS BEING REGISTRATION FEE AND STAMP CHARGES FOR INCREASING THE AUTHORIZED SHARE CAPITAL OF THE COMPANY. 52. AT THE TIME OF THE HEARING, THE LD. AR OF THE A SSESSEE FAIRLY CONCEDED THAT THIS GROUND OF CROSS-OBJECTION WAS REQUIRED TO BE DISMISSED IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED VS . CIT ((1997) 225 ITR 792 (SC) WHEREIN IT WAS HELD THAT AMOUNT PAID T O THE REGISTRAR OF COMPANIES AS FILING FEE FOR ENHANCEMENT OF CAPITAL IS CAPITAL IN NATURE. THEREFORE, THIS GROUND OF CROSS-OBJECTION OF THE AS SESSEE IS DISMISSED. 53. GROUND NO. 3 OF THE CROSS-OBJECTION OF THE ASSE SSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) IN NOT ALLOWING THE CLAIM O F ADVERTISEMENT EXPENSES HELD TO BE OTHERWISE, CONSEQUENTIAL RELIEF U/S 80HHC ON TRADING DIVISION IS TO BE GRANTED SINCE IT IS NOT I NDIRECT COST. 54. IN VIEW OF OUR DECISION IN GROUND NO. 1 OF THE APPEAL OF THE REVENUE WHEREIN WE HAVE HELD THAT ADVERTISEMENT EXPENSES AR E REVENUE IN NATURE AND ALLOWABLE DURING THE YEAR UNDER CONSIDERATION I N ENTIRETY, THIS GROUND OF CROSS-OBJECTION OF THE ASSESSEE DOES NOT ARISE AND IS, THEREFORE, DISMISSED. 55. GROUND NO. 4 OF CROSS-OBJECTION IS DIRECTED AGA INST THE ORDER OF LD. CIT(A) IN HOLDING THAT NO APPEAL LIES AGAINST INTER EST CHARGE U/S 234A, 234B AND 234C OF THE ACT. ITA NO.3403/AHD/1997 AND CO NO. 73/AHD/2001 ADANI EXPORTS LTD. VS. DCIT, SPL. RANGE-1, AHD. FOR A.Y. 1994-95 - 25 - 56. AT THE TIME OF THE HEARING, THE LD. AR OF THE A SSESSEE VERY FAIRLY SUBMITTED THAT CHARGING OF INTEREST IS CONSEQUENTIA L. THEREFORE, THIS GROUND OF CROSS-OBJECTION OF THE ASSESSEE IS DISMIS SED. 57. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND THE CROSS-OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 31 ST JANUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 31/01/2014 GHANSHYAM MAURYA, 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. &/0 % , , / DR, ITAT, AHMEDABAD 6. 012 3 / GUARD FILE. #$ #$ #$ #$ / BY ORDER, 4 44 4/ // / +5 +5 +5 +5 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION- 27.01.2014