M/s. Gujarat Urja Vikas Nigam Board., Baroda V. The ACIT.,Circle-1(1), Baroda

ITA 1090/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9671 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-02-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 13-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Business income; Depreciation; Bad and doubtful debts; Revised return; Unabsorbed depreciation; Capital expenditure
• Section: 43B; 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CH ATURVEDI, A.M.) I.T. A. NOS.1087 TO 1091 /AHD/2011 & 1109 & 1110/AH D/2011 (ASSESSMENT YEAR: 1999-20 00 TO 2005-06) GUJARAT URJA VIKAS NIGAM, LTD., SARDAR PATEL VIDYUT BHAVAN, RACE COURSE CIRCLE, BARODA V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1(1), BARODA (APPELLANT) (RESPONDENT) PAN: AAACG8540N APPELLANT BY : SHRI J.P. SHAH, A.R. RESPONDENT BY : SHRI SUBHASH BAINS, CIT-DR ( )/ ORDER DATE OF HEARING : 11-02-2015 DATE OF PRONOUNCEMENT : 17 -04-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE APPEALS FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF CIT(A)-I, BARODA DATED 16.02.2011, 18.02.2011, 23.02.2011, 24 .02.2011, 28.02.2011 & 08.03.2011 FOR A.YS. 1999-2000 TO 2005-06 RESPECT IVELY. 2. BEFORE US, LD. A.R. SUBMITTED THAT THOUGH THE APPEA LS OF THE ASSESSEE RELATES TO DIFFERENT ASSESSMENT YEARS BUT FACTS AND CIRCUMS TANCES OF ALL THE CASES ARE SIMILAR EXCEPT FOR THE ASSESSMENT YEARS AND THE AMO UNTS AND FURTHER MOST OF THE GROUNDS IN THE APPEALS ARE IDENTICAL AND THEREF ORE THE SUBMISSIONS ARE ALSO COMMON FOR ALL THE APPEALS AND THEREFORE ALL T HE APPEALS CAN BE HEARD TOGETHER. THE LD. D.R. DID NOT OBJECT TO THE AFORES AID SUBMISSION OF LD. A.R. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 2 WE THEREFORE PROCEED TO DISPOSE OF ALL THE APPEALS TOGETHER FOR THE SAKE OF CONVENIENCE AND THUS PROCEED BY REFERRING TO THE FA CTS FOR A.Y. 1999-2000 IN ITA NO. 1087/AHD/2011. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 1999-2000 ON 28.12.1999 DECLARING TOTAL INCOME AT RS. NIL AFTER SETTING OFF OF UNABSORBED DEPRECIATION OF EARLIER YEARS. SU BSEQUENTLY, A REVISED RETURN WAS FILED ON 01.09.2000 AND THE LOSS WAS REV ISED AT RS. 340,36,33,232/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORD ER DATED 28.03.2002 AND THE TOTAL LOSS WAS DETERMINED RS. 246,31,70,566 /-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO VIDE ORDER DATED 16.02.2011 GRANTED PARTIAL RELIEF TO THE ASS ESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A) ASSESSEE IS NOW IN AP PEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS HAS CONFIRMED THE DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 51,04,89,092/- WITHOUT APPRECIATING THE FACT THAT THE ENTIRE EXPEN DITURE WAS CRYSTALLIZED DURING THE YEAR. 1.1 THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAV E APPRECIATED THAT ON EXACTLY IDENTICAL FACT THE HON'BLE ITAT IN THE APPELLANT'S OWN CASE FOR THE ASST. YEAR 1997-98 HAS SET ASIDE THE ISSUE FOR RE-VERIFICATION. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF BAD DEBTS OF R S 3,81,76,827/- DESPITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF EXTRA-ORDINARY ITEMS AMOUNTING TO RS. 21,91,00,234/- BEING THE EXPENDITURE INCURRED ON RE HABILITATION AND RESTORATION WORK AS A RESULT OF CYCLONE. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 3 THE LEARNED COMMISSIONER (APPEALS) HAS FURTHER ERRE D IN LAW/AND ON FACTS IN NOT GIVING ANY FINDINGS ON THE ADDITIONS OF RS. 10.00 C RORES MADE UNDER THE SAME HEAD BEING THE GRANT RECEIVED FROM THE GOVERNMENT OF GUJ ARAT. THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPREC IATE THAT THE APPELLANT HAS RIGHTLY OFFERED THE AMOUNT OF RS. 11,91,00,234/- AS NET EXPENDITURE ON ACCOUNT OF LOSS DUE TO FLOODS, CYCLONES ETC. AND HENCE THE DISALLOW ANCE OF EXPENDITURE OF RS. 21,91,00,234/- AS WELL AS THE ADDITION OF RS. 10.00 CRORES AS INCOME IS TOTALLY ARBITRARY AND UNJUSTIFIABLE AND DESERVE TO BE DELET ED. 4.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 50,07,138/ - ON ACCOUNT OF MISCELLANEOUS LOSSES AND WRITE OFFS ON THE GROUND THAT ONLY REVEN UE LOSS SHALL BE ALLOWED AS BUSINESS LOSS. 5.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIONS OF RS.9,28,00,000/- ON ACCOUNT OF THE ALLEGED UNDERSTATEMENT OF INCOME WHICH WAS REPORTED BY THE C&AG IN ITS REPORT WITHOUT APPRECIATING THE FACT THAT THE C&AG HAD ALSO REPORT ED OVERSTATEMENT OF INCOME IN ITS REPORT. 6.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 10,05,543/ - ON ACCOUNT OF UNPAID BONUS UNDER SECTION 43B OF THE I T ACT DESPITE THE FACT THAT AL L THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL. 5. SUBSEQUENTLY, VIDE LETTER DATED 3 RD JULY, 2014, ASSESSEE HAS RAISED AN ADDITIONAL GROUND WHICH READS AS UNDER:- THE EMPLOYEES' COST OF RS.4,75,22,871/- OUGHT TO BE ALLOWED IN ASST. YEAR 1999-2000 IN VIEW OF THE FOLLOWING FINDING OF THE ASSESSING OFFI CER IN HIS ASSESSMENT ORDER FOR THE ASST. YEAR 1998-99:- 'AS REGARDS, THE EMPLOYEES COST OF RS.4,75,22,871/- , ON PERUSAL OF THE GENERAL STANDING ORDER NO. 325 DATED 3.6.1998, IT IS NOTED THAT THE ORDER IS ISSUED BEYOND THE PERIOD OF THE PREVIOUS YEAR AND THE PAYMENT OF ARREARS W.E.F. 1.1 .1996 TO THE DATE OF ISSUE OF THE ORDER WILL BE PAID BY JULY, 1998, THAT TOO BEYOND THE PER IOD OF THE PREVIOUS YEAR AND THUS, IF AT ALL THE CONTENTION OF THE ASSESSEE IS CONSIDERED, T HE LIABILITY IS CRYSTALLIZED IN THE SUBSEQUENT YEAR, I.E. IN ASSESSMENT YEAR 1999-2000. AS SUCH, THE CLAIM OF THE ASSESSEE CANNOT BE ENTERTAINED AND THUS ACCORDINGLY REJECTED .' 6. THE REASON FOR TAKING UP ADDITIONAL GROUND WAS STAT ED THAT THE AO WHILE FRAMING THE ASSESSMENT FOR A.Y. 1998-99 HAD DISALLO WED THE CLAIM OF EXPENSES FOR THE REASON THAT ACCORDING TO HIM THE C LAIM ARISES IN A.Y. 1999- 2000. THE LD. AR THEREFORE SUBMITTED THAT THE ADDI TIONAL GROUND NOW RAISED BE ADMITTED. LD. D.R. ON THE OTHER HAND DID NOT SE RIOUSLY OBJECT TO THE ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 4 SUBMISSION OF LD. AR. IN VIEW OF THE AFORESAID FAC TS, THE ADDITIONAL GROUND RAISED BY ASSESSEE IS ADMITTED FOR ADJUDICATION. 1 ST GROUND IS WITH RESPECT TO DISALLOWANCE OF PRIOR PE RIOD EXPENDITURE. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE PROFIT AND LOSS ACCOUNT, A.O NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION OF RS. 100,77,79,806/- UNDER THE HEAD NET PRIOR PERIOD CR EDIT WHICH COMPRISED OF SEVERAL ITEMS OF INCOME AND EXPENDITURE WHICH THOUG H PERTAINED TO PRIOR PERIOD, BUT WERE CLAIMED IN THE YEAR UNDER CONSIDER ATION. THE ASSESSEE WAS THEREFORE ASKED TO JUSTIFY ITS CLAIM AND ALSO PROVE THE CRYSTALLIZATION OF THE EXPENSES IN THE YEAR UNDER CONSIDERATION. A.O HAS N OTED THAT ASSESSEE DID NOT FURNISH THE REQUIRED DETAILS. HE ALSO NOTICED THAT THOUGH THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 132,66,70,955/- UNDE R THE HEAD PROVISION FOR POWER PURCHASE BUT EVIDENCE OF EXPENSES WAS PR ODUCED ONLY TO THE EXTENT OF RS. 132,42,44,728/-. HE THEREFORE DISALLO WED THE DIFFERENCE AMOUNT OF RS.24,26,277/- ON ACCOUNT OF POWER PURCHASE AND THE PRIOR PERIOD EXPENDITURE OF RS. 50,80,62,865/- AND THUS MADE AN AGGREGATE DISALLOWANCE OF RS. 51,04,89,092/-. AGGRIEVED BY THE ORDER A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO UPHELD THE ORDER OF A. O BY HOLDING AS UNDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS, OF THE APPELLANT AND THE ASSESSMENT ORDER. IN RESPECT TO PRIOR PERIOD IT EMS, THE ONUS IS UPON THE APPELLANT TO JUSTIFY WITH PROOF THAT THE EXPENSES INDEED PERTAIN TO EARLIER YEARS AND THAT THESE COULD NOT BE CLAIMED FOR GENUINE REASONS AND THAT LIABILI TY IN RESPECT OF THESE EXPENSES CRYSTALLIZED DURING THE YEAR. HOWEVER NEITHER BEFOR E AO NOR IN APPELLATE PROCEEDINGS SUCH DETAILS COULD BE FURNISHED. THE AO WAS JUSTIFI ED IN REJECTING THE CLAIM OF PRIOR PERIOD EXPENSES. GROUND NO.2 IS DISMISSED. 8. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 5 9. BEFORE US, AT THE OUTSET LD. A.R. SUBMITTED THAT ON IDENTICAL FACTS IN THE CASE OF ASSESSEE FOR A.Y. 1997-98 SIMILAR DISALLOWANCES WAS MADE BY A.O. AGAINST WHICH THE MATTER WAS CARRIED BEFORE TRIBUNA L. HONBLE ITAT IN ITS ORDER DATED 26.06.2009 RESTORED THE ISSUE TO THE FI LE OF A.O. HE THEREFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE Y EAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF A.Y. 97-98, FOLLOWING THE ORDE R OF HONBLE TRIBUNAL FOR A.Y. 1997-98, THE ISSUE MAY BE REMITTED TO THE FILE OF A.O. HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL VS. CIT (1995) 213 ITR 523 (GUJ.) LD. D.R. ON OTHER HAN D POINTED TO THE FINDINGS OF A.O AND SUBMITTED THAT THE ONUS LIES ON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM AND IN THE ABSENCE OF DETAIL S FILED BY THE ASSESSEE, A.O WAS FULLY JUSTIFIED IN MAKING A DISALLOWANCE. HE TH US SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, THE EXPENSES WERE DISALLOWED BY T HE AO FOR THE REASON THAT ASSESSEE DID NOT FURNISH THE REQUIRED DETAILS AND J USTIFY THE CLAIM OF EXPENSES. WE FIND THAT IN A.Y. 97-98 SIMILAR ISSUE OF DISALLOWANCE OF PRIOR PERIOD EXPENSES WAS BEFORE THE CO-ORDINATE BENCH OF TRIBUNAL. THE CO- ORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 26.06.2 009 HAD SET ASIDE THE ISSUE TO AO BY HOLDING AS UNDER:- 2. THE FIRST GROUND IS AGAINST THE DISALLOWANCE OF THE PRIOR PERIOD EXPENSES OF RS.91,70,76,125. THE DISALLOWANCE HAS BEEN MADE ON THE GROUND THAT THE EXPENSES, UNDER VARIOUS HEADS AND DISCUSSED IN DETAIL IN THE ASSESS MENT ORDER, PERTAIN TO THE EARLIER YEARS AND THE ASSESSEE WHICH IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD HAVE MADE PROVISION FOR THE EXPENSES IN THOSE YEARS AND CLAIMED THEM AS DEDUCTION. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER STATES THA T THE LIABILITY IN RESPECT OF MOST OF THE EXPENSES GOT CRYSTALLIZED IN THE ACCOUNTING YEAR RE LEVANT, TO THE YEAR UNDER APPEAL AND THE ASSESSEE WOULD BE IN A POSITION TO PROVE THE SA ME IF OPPORTUNITY IS GIVEN. WE HAVE CONSIDERED THE PRAYER AND ARE INCLINED TO GRANT THE SAME. THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING AND THEREFORE IT CANNOT BE P OSTULATED THAT THERE WAS ANY ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 6 DELIBERATENESS IN NOT FURNISHING THE RELEVANT DETAI LS BEFORE THE DEPARTMENTAL AUTHORITIES. SOME DETAILS FILED IN PAGES 22 TO 37 OF THE PAPER B OOK FILED BEFORE US SHOWS THAT SOME BILLS WERE RECEIVED ONLY IN AUGUST 1996 BUT THEY RE LATE TO SEPTEMBER TO DECEMBER 1994 AND MARCH 1995. WE THEREFORE SET ASIDE THIS ISSUE T O THE FILE OF THE ASSESSING OFFICER WHO SHALL TAKE A FRESH DECISION IN ACCORDANCE WITH LAW AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE, ITS CLAIM. WE DIRECT ACCO RDINGLY. THE GROUND IS DISPOSED OF ACCORDINGLY. 11. BEFORE US, SINCE BOTH THE PARTIES HAVE ADMITTED THA T THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 97-98 AND THEREFORE IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT FOLLOW ING THE ORDER OF CO- ORDINATE BENCH OF TRIBUNAL FOR A.Y. 1997-98 AND WIT H SIMILAR DIRECTIONS, IT WOULD BE APPROPRIATE TO RESTORE THE MATTER BACK TO THE AO FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW AND AFTER CONS IDERING THE MATERIAL PRODUCED BY THE ASSESSEE AND AFTER GIVING A REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 2 IS WITH RESPECT TO DISALLOWANCE O F BAD DEBTS. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD CLAIMED BAD AND DOUBTFUL DEBTS OF RS. 3,81,76,827/- . HE ALSO NOTICED THAT THE AFORESAID DEBTS HAVE NOT ACTUALLY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT BUT ASSESSEE HAD MERELY MADE A PROVISION. A.O WAS OF TH E VIEW THAT UNLESS THE DEBT IS WRITTEN OFF AS BAD AND DOUBTFUL DEBTS IN TH E ACCOUNTS OF THE ASSESSEE, THE CLAIM OF THE ASSESSEE OF BAD DEBTS CANNOT BE AL LOWED. HE ACCORDINGLY DISALLOWED THE CLAIM OF BAD DEBTS OF RS. 3,81,76,82 7/-. AGGRIEVED BY THE ORDER A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. C IT(A) WHO DECIDED THE ISSUE BY HOLDING AS UNDER:- ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 7 6. THE THIRD GROUND OF APPEAL IS AGAINST DISALLOWANCE OF RS.3,81,76,827 /- BEING BAD DEBTS. 6.1 AO MENTIONS THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS. 2,71,31,732/- AS ACTUAL BAD AND DOUBTFUL DEBTS WRITTEN OFF WHEREAS ACTUAL WRITE OFF WORKS OUT TO RS 23,31,40,205/-. FURTHER PROVISION AMOUNTING TO RS. 3,81,76,827/- WA S NOT ADDED TO THE COMPUTATION OF INCOME AND NEITHER WRITTEN OFF WHICH WAS THUS ADDED AS DISALLOWABLE PROVISION. 6.2 IN APPEAL, IT IS SUBMITTED THAT THE ACTUAL BAD DEBTS WRITTEN OFF DURING THE YEAR WAS RS. 30.94 CRORES (27.13+3.82). THE OPENING PROVISION WA S 97.17 CRORE AND THE CLOSING PROVISION WAS RS. 93.36 CRORE AND THE PROVISION DUR ING THE YEAR CHARGED TO P&L WAS RS. 27.13 CRORE. 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. PRIMA FACIE THE CONTENTION OF APPELLANT SEEMS TO BE CORRECT. THE AO MAY VERIFY THE FIGURES FROM THE SCHEDULES AND AL LOW THE LOSS ACTUALLY WRITTEN OFF IN THE BOOKS. GROUND NO.3 IS ALLOWED SUBJECT TO VERIFICATI ON BY AO. 13. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 14. BEFORE US, LD. A.R. SUBMITTED THAT ALL THE FACTS NE CESSARY FOR DECIDING THE ISSUE WAS SUBMITTED BEFORE LD. CIT(A) AND THEREFORE HE SHOULD HAVE DECIDED THE ISSUE INSTEAD OF SETTING ASIDE THE ISSUE TO THE FILE OF A.O. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CLAIM OF BAD DEBTS WAS DISALLOWED BY THE A.O AS HE WAS OF THE VIEW THAT THE BAD DEBTS CAN ONLY BE ALLOWED AS DEDU CTION WHEN THE SAME ARE WRITTEN OFF IN THE ACCOUNTS. BEFORE US, ASSESSEE HA S NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT ALL THE NECESSARY EVI DENCE WAS PRODUCED BEFORE LD CIT(A). WE FURTHER FIND THAT LD. CIT(A) D ECIDED THE GROUND OF ASSESSEE IN ITS FAVOUR SUBJECT TO VERIFICATION BY A O AND FURTHER THE DECISION OF LD. CIT(A) ON THE ISSUE TO BE CRYPTIC. WE ALSO F IND THAT LD. CIT(A) HAD DIRECTED THE A.O TO VERIFY THE FIGURES AND THEREAFT ER ALLOW THE LOSS OF THE AMOUNT ACTUALLY WRITTEN OFF IN THE BOOKS. ON THE I SSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT THE FINANCE ACT, 200 1 HAS W.E.F. 1 ST JUNE, 2001 ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 8 WITHDRAWN THE POWER OF CIT(A) TO SET ASIDE THE ASSE SSMENT AND REFER THE CASE BACK TO THE AO FOR MAKING A FRESH ASSESSMENT I N ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF THE AFORESA ID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT LD. CIT(A ) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO NOT APPROVE THE ACTIO N OF LD. CIT(A) IN REMITTING THE ISSUE TO THE FILE OF A.O. HOWEVER A T THE SAME TIME, IT IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE BAD DEBTS CL AIMED HAVE BEEN FILED BY THE ASSESSEE AND THEREFORE WE ARE ALSO UNABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE AFORESAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL ASPECT NEEDS RE-EXAMINATION AT THE END OF A.O. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHA LL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIR ECT THE ASSESSEE TO CO- OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FI LING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM. IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSU E BASED ON THE MATERIAL ON RECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 IS WITH RESPECT TO DISALLOWANCE OF EXP ENDITURE INCURRED ON REHABILITATION AND RESTORATION WORK AS A RESULT OF CYCLONE. 16. ON PERUSING SCHEDULE 16 OF THE ANNUAL STATEMENT OF ACCOUNTS, A.O NOTICED THAT ASSESSEE HAD CLAIMED LOSS OF RS. 21,91,00,234/ - ON ACCOUNT OF FLOOD, CYCLONE, FIRE ETC AND EXTRAORDINARY CREDIT OF RS. 1 0 CRORE UNDER THE HEAD SUBSIDY AGAINST LOSSES. A.O ALSO NOTED THAT BEFOR E HIM IT WAS ADMITTED THAT THE LOSSES CLAIMED WERE BASED ON THE ESTIMATE AND T HAT GOVERNMENT OF ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 9 GUJARAT HAD GRANTED AN AMOUNT OF RS. 10 CRORE AGAIN ST THE LOSSES. A.O IN THE ORDER HAS NOTED THAT THE ASSESSEE DID NOT PRODUCE A NYTHING TO ESTABLISH THAT THE LOSS CLAIMED BY THE ASSESSEE WERE ACTUAL LOSSES AND WERE NOT MERELY AN ESTIMATE AND WAS THEREFORE OF THE VIEW THAT THE LOS SES ON THE BASIS OF PROVISION ARE NOT ALLOWABLE. HE ACCORDINGLY DISALLO WED THE CLAIM OF LOSS. WITH RESPECT TO THE GRANT OF RS. 10 CRORE RECEIVED FROM GOVERNMENT, A.O WAS OF THE VIEW THAT IT WAS GRANTED BY THE GOVERNME NT BY WAY OF ADJUSTMENT OF ELECTRICITY DUTY PAYABLE BY THE ASSESSEE TO GOVE RNMENT OF GUJARAT AND ACCORDINGLY THE ELECTRICITY DUTY PAYABLE HAS BEEN W AIVED AND THUS IT WAS CESSATION OF TRADING LIABILITY. HE THEREFORE CONSID ERED RS. 10 CRORE AS INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER A.O, ASSESS EE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DECIDED THE ISSUE BY HOLDING AS UNDER:- 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. ALTHOUGH IT IS CLAIMED BEFORE ME THAT THE ENTIRE EXPENDITURE WAS REVENUE IN NATURE COMPLETE ITEM-WISE DETAILS WAS NO T FURNISHED. IT IS LIKELY THAT THE DAMAGE DURING NATURAL CALAMITIES WOULD AFFECT THE C APITAL STOCK AS WELL AS THE REVENUE ITEMS. WITH A SYSTEM OF BLOCK OF ASSETS ANY LOSS ON CAPITAL ITEM IS ALLOWED WITH REFERENCE TO THE OPENING WDV AND THE ASSET LOST/DISCARDED IS NOT REDUCED FROM THE OPENING WDV. IN EFFECT THE APPELLANT IS ENTITLED TO HIGHER CLAIM OF DEPRECIATION INSTEAD OF LOSS ON ASSETS. ANY NOTIONAL OR ACTUAL SCRAP VALUE OR SALE OF ASSET S IS TO BE REDUCED FROM THE OPENING WDV FOR PURPOSES OF DEPRECIATION. FURTHER ANY SUBSI DY RECEIVED IS ALSO TO BE REDUCED FROM W.D.V. OF BLOCKS. IT IS ALSO TO BE APPRECIATED THAT IN CASE A BLOCK IS EMPTY OR HAS NO WDV, NO DEPRECIATION IS ADMISSIBLE. ALTHOUGH IT IS EMPHASIZED BEFORE ME THAT ALL THE ITEMS ARE REVENUE IN NATURE BUT IN THE ABSENCE OF D ETAILS, THIS FACT COULD NOT BE VERIFIED. THE APPELLANT IS DIRECTED TO PROVIDE NECESSARY DETA ILS TO THE AO AND ELABORATE THAT NONE OF THE CAPITAL OF THE LOSS CLAIMED AND THAT THE CAP ITAL ITEM HAS BEEN SUITABLY CONSIDERED IN THE DEPRECIATION CALCULATION AND IS NOT PART OF THE LOSS CLAIMED. HOWEVER IF THERE ARE CAPITAL ITEMS WHICH ARE CLAIMED AS LOSS THESE WOUL D STAND DISALLOWED WITH CORRESPONDING HIGHER DEPRECIATION AS PER PROVISIO NS OF SEC. 32, 2(11), 43(1) AND 43(6). THE GROUND IS ALLOWED SUBJECT TO VERIFICATION AND A FORESAID DIRECTIONS. 17. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. 18. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES. WITH RESPECT TO THE ADDITION OF RS. 10 CRORE ON ACC OUNT OF GRANT RECEIVED ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 10 FROM GOVERNMENT OF GUJARAT, HE SUBMITTED THAT THERE IS NO FINDING OF LD. CIT(A) AND THEREFORE THE MATTER MAY BE REMITTED BAC K TO LD. CIT(A). THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF AO. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE GRANT OF RS. 10 CRORE RECEIVED BY THE ASSESSEE FROM GOVERNMENT OF GUJARAT WAS CONSIDERED BY THE A.O TO BE CESSATION OF TRADING LIABILITY AND THEREFORE TAXABLE UNDER HEADS OF PRO FIT AND GAINS OF BUSINESS. WE FIND THAT THIS ISSUE HAS NOT BEEN DECIDED BY LD. CIT(A). WITH RESPECT TO THE DISALLOWANCE OF RS. 21,91,00,234/- ON ACCOUNT O F FLOOD, CYCLONE ETC, WE FIND THAT CIT(A) HAS REMITTED THE ISSUE TO BE FILE OF AO AND FURTHER THE DECISION OF LD. CIT(A) ON THE ISSUE TO BE CRYPTIC. ON THE ISSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT THE FINANC E ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASI DE THE ASSESSMENT AND REFER THE CASE BACK TO THE AO FOR MAKING A FRESH AS SESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF TH E AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT L D. CIT(A) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO NOT APPROV E THE ACTION OF LD. CIT(A) IN REMITTING THE ISSUE TO THE FILE OF A.O. HOWEVER AT THE SAME TIME, IT IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE LOSS CLAIMED HAVE BEEN FILED BY THE ASSESSEE AND THEREFORE WE ARE ALSO UNABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE AFORE SAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FA CTUAL ASPECT NEEDS RE- EXAMINATION AT THE END OF A.O. WE THEREFORE SET ASI DE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEEDLESS TO ST ATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 11 TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMP TLY FILING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM . IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSU E BASED ON THE MATERIAL ON RECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. GROUND NO. 4 IS WITH RESPECT TO DISALLOWANCE ON A CCOUNT OF MISCELLANEOUS LOSSES. 20. A.O NOTICED THAT ASSESSEE HAS CLAIMED RS. 5,00,71,3 80/- AS MISCELLANEOUS LOSSES AND WRITE OFF AND FOR WHICH, WHEN THE ASSE SSEE WAS ASKED TO FURNISH THE BREAK UP, AO HAS NOTED THAT THE DETAIL S WERE NOT FURNISHED BY ASSESSEE AND THEREFORE IN THE ABSENCE OF DETAILS, T HE EXACT NATURE AND LIABILITY OF THE EXPENDITURE COULD NOT BE DETERMINE D. HE THEREFORE CONSIDERED 1/10 TH OF THE EXPENDITURE AS NOT ALLOWABLE AND ACCORDINGL Y DISALLOWED RS. 50,07,138/-. AGGRIEVED BY THE ORDER A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DECIDED THE ISSUE BY HOLDING AS UNDE R:- 8.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. I AM IN AGREEMENT WITH APPELL ANT THAT LOSS OF STOCK, CONSUMABLES ETC IS REVENUE IN NATURE. THE APPELLANT IS DIRECTED TO PROVIDE COMPLETE DETAILS OF SUCH REVENUE ITEMS. THE REST OF LOSS ON CAPITAL ITEMS IS TO BE ADJUSTED THROUGH THE BLOCK OF ASSETS. THE GROUND IS ALLOWED SUBJECT TO VERIFICATI ON AND AFORESAID DIRECTIONS. 21. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. 22. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND SUBMITTED THAT THE ENTIRE LOSS CLAIMED BY THE ASSES SEE SHOULD HAVE BEEN ALLOWED. THE LD. D.R. ON THE OTHER HAND SUPPORTED T HE ORDER OF A.O. IN VIEW OF THE FACT THAT THE DETAILS WERE NOT FURNISHED BY THE ASSESSEE. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 12 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O WHILE DISALLOWING THE CLAIM HAS NOTED THAT IN THE ABSENCE OF DETAILS, THE NATURE AND LIABILITY OF THE EXPENSES C OULD NOT BE ASCERTAINED AND DETERMINED AND THEREFORE HE DISALLOWED 10% OF THE E XPENSES. WE ALSO FIND THAT THE DECISION OF LD. CIT(A) ON THE ISSUE TO BE CRYPTIC AND FURTHER THE MATTER WAS ALLOWED SUBJECT TO VERIFICATION BY A.O. ON THE ISSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT THE FINANC E ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASI DE THE ASSESSMENT AND REFER THE CASE BACK TO THE AO FOR MAKING A FRESH AS SESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF TH E AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT L D. CIT(A) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO NOT APPROV E THE ACTION OF LD. CIT(A) IN REMITTING THE ISSUE TO THE FILE OF A.O. HOWEVER AT THE SAME TIME, IT IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE LOSSES AND ITS NATURE HAVE BEEN FILED BY THE ASSESSEE AND THEREFORE WE ARE ALS O UNABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERI NG THE AFORESAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL NEEDS RE- EXAMINATION AT THE END OF A.O. WE THEREFORE SET ASI DE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEEDLESS TO ST ATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMP TLY FILING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM . WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FILING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM . IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSUE BASED ON THE MATERIAL ON RECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 13 GROUND NO. 5 IS WITH RESPECT TO ADDITION OF RS. 9,2 8,00,000/- ON ACCOUNT OF UNDER STATEMENT OF INCOME DETERMINED BY C & AG. 24. A.O ON PERUSING THE ANNUAL ACCOUNTS OF THE ASSESSEE NOTED THAT WHILE AUDITING THE ACCOUNTS OF THE ASSESSEE, PRINCIPAL AC COUNTANT GENERAL (C &AG) IN THE AUDIT REPORT HAS POINTED INSTANCES OF U NDER STATEMENT OF INCOME AS WELL AS EXPENDITURE. ASSESSEE WAS ASKED TO FURNI SH EXPLANATION ON THE OBSERVATIONS MADE BY THE AUDITOR BUT THE SUBMISSION AND EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. HE T HEREFORE CONSIDERED AGGREGATE AMOUNT OF RS. 9,28,00,000/- UNDER THE VAR IOUS HEADS LISTED AT PAGE 11 OF HIS ORDER, AS INCOME OF THE ASSESSEE. AGGRIE VED BY THE ORDER A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO D ECIDED THE ISSUE BY HOLDING AS UNDER:- 9. THE SIXTH GROUND OF APPEAL IS AGAINST THE DISALLOWANCE OF RS.9,28,00 ,000/- ON ACCOUNT OF UNDERSTATEMENT OF INCOME DUE TO VARIATION IN ACC OUNTING POLICIES. 9.1 THE A.O. HAS MENTIONED THAT IN THE C & A G AUDI T OF THE ASSESSEE CERTAIN INSTANCES OF UNDERSTATEMENT OF INCOMES WERE POINTED OUT. THE FIR ST RELATED TO UNDER RECOVERY OF REVENUE OF RS. 0.58 CRORES FROM MANSA AND VIZAPUR N AGARPALIKA. THE ASSESSEE STATED THAT AS PER ELECTRICITY SUPPLY RULES 1985 THE AMOUN T WOULD BE RECOGNIZED ON CASH BASIS. THE A.O WAS OF THE VIEW THAT SECTION 145 OF THE ACT DOES NOT ALLOW HYBRID SYSTEM OF ACCOUNTS AND THAT INCOME OF RS. 0.58 CRORE HAD ACCR UED. FURTHER THE EXPENDITURE OF RS. 0.29 CRORES WAS IN RELATION TO EMPLOYEES OF GSECL A ND IS THUS DOES NOT ALLOWABLE. IN ADDITION THE PROVISION OF DOUBTFUL DEBT OF RS.0.25 CRORE IS MERELY A PROVISION AND CANNOT BE ALLOWED. THE A.O. ALSO MENTIONED THAT RS. 8.16 C RORES OF MISCELLANEOUS RECEIPTS WAS NOT ACCOUNTED FOR THOUGH SERVICES WERE RENDERED IN EXECUTION OF WORKS. THUS RS. 9.28 CRORE WAS ADDED TO THE TOTAL INCOME. 9.2 IN APPEAL IT IS SUBMITTED THAT ALLEGED UNDERSTA TEMENT OF PROFIT IS ONLY DUE TO THE ACCOUNTING ENTRIES MADE IN THE BOOKS OF ACCOUNTS AN D THAT THERE IS NO QUESTION OF ADDING BACK THE AMOUNT TO THE PROFIT. IT IS ALSO CONTENDED THAT NECESSARY EFF ECT OF THE UNDERSTATEMENT OF ENTRIES HAVE BEEN GIVEN IN ASSESS MENT YEAR 2000-01 AND THAT IF THE ADDITION IS CONFIRMED IN THE INSTANT YEAR THE SAME SHOULD BE DELETED IN A.Y. 2000-01. 9.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. THE RATIONALE AND THE BASIS F OR VARIOUS ADDITIONS/DISALLOWANCES BY A.O. ON ISSUES RAISED BY C & A G IS PERFECTLY IN ORDER AS THE ASSE SSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. ADDITION OF RS. 9. 28 CRORE IS THUS CONFIRMED. HOWEVER, THE ALTERNATE PLEA OF THE APPELLANT IS ACCEPTABLE A ND THE A.O. MAY DELETE THE SAME AMOUNT, IF IT IS SHOWN TO BE OFFERED FOR TAX IN ASS ESSMENT YEAR 2000-01. GROUND NO. 6 IS DISMISSED. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 14 25. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 26. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MAD E BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT C & AG HAD IN FAC T ALSO REPORTED OVER STATEMENT OF INCOME BUT THE AO HAS ONLY CONSIDERED A PART OF THE REPORT. LD. A.R. ALSO POINTED TO PAGE 77 OF THE PAPER BOOK WHIC H CONTAINED THE FINANCIAL IMPACT OF THE VARIOUS COMMENTS MADE BY THE AUDITOR OF C & AG. HE THEREFORE SUBMITTED THAT THE ADDITION MADE ON THE B ASIS OF REPORT OF C & AG IS UNCALLED FOR. LD. A.R. FURTHER SUBMITTED THAT IN A.Y. 01-02 SIMILAR ADDITIONS/DISALLOWANCES WERE MADE AND THE ISSUE WAS REMITTED BACK BY LD. CIT(A). HE ALSO PLACED ON RECORD THE COPY OF THE AF ORESAID ORDER. HE THEREFORE SUBMITTED THE MATTER MAY BE SET ASIDE. LD . D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O HAD MADE DISALLOWANCE ON THE BASIS OF OBSERVATIONS MADE BY AUDITORS OF C & AG. WE FURTHER FIND THAT LD. CIT(A) BY CRYPTIC ORDER DECIDED THE ISSUE. ON PERUSING PAGE 77 OF THE PAPE R BOOK WHICH IS A PART OF THE ANNUAL ACCOUNTS OF THE ASSESSEE, WE FIND THAT T HE IMPACT OF VARIOUS OBSERVATIONS OF C & AG HAVE BEEN LISTED OUT. BEFOR E US, NEITHER OF THE PARTIES COULD RECONCILE THE IMPACT AS SHOWN BY C & AG & THAT CONSIDERED BY AO FOR DISALLOWANCE. ON THE ISSUE OF SETTING ASI DE BY CIT(A), IT IS TO BE NOTED THAT THE FINANCE ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASIDE THE ASSESSMENT AND RE FER THE CASE BACK TO THE AO FOR MAKING A FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF THE AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT LD. CIT(A) DOES NOT HAVE PO WER TO REMAND AND ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 15 THEREFORE WE DO NOT APPROVE THE ACTION OF LD. CIT(A ) IN REMITTING THE ISSUE TO THE FILE OF A.O. CONSIDERING THE AFORESAID FACTS A ND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL ASPECT NEEDS RE -EXAMINATION AT THE END OF A.O. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE O F A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT AD EQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSE E TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FILING AND SUBMITTI NG ALL THE DETAILS CALLED FOR BY THEM. IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSUE BASED ON THE MATERIAL O N RECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . GROUND NO. 6 IS WITH RESPECT TO DISALLOWANCE U/S. 4 3B. 28. A.O NOTICED THAT ASSESSEE HAS CLAIMED PAYMENT OF BO NUS AS AN EXPENSE. HE ALSO NOTICED THAT COMPANY HAD PAID BONUS OF RS. 1,1 8,18,588/- BUT IN THE COMPUTATION OF INCOME HAD CLAIMED DEDUCTION OF RS. 1,28,24,131/-. THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCE IN RESPE CT OF EXCESS AMOUNT CLAIMED IN THE COMPUTATION OF INCOME ON ACCOUNT OF BONUS PAYMENT. A.O NOTED THAT SINCE THE ASSESSEE DID NOT FURNISH ANY E VIDENCE, THE EXCESS PAYMENT OF RS. 10,05,543/- WAS DISALLOWED U/S. 43B OF THE ACT. AGGRIEVED BY THE ORDER A.O, ASSESSEE CARRIED THE MATTER BEFOR E LD. CIT(A) WHO DECIDED THE ISSUE BY HOLDING AS UNDER:- 10.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER, THE APPELLANT IS DIRECTED TO SUBMIT ALL DETAILS TO AO AND AO IS DIRECTED TO VERIFY THE FIGURES VIS A VIS LAST YE AR DETAILS AND ALLOW THE CLAIM IN TERMS OF SECTION 43B. THE GROUND IS ALLOWED SUBJECT TO VERIF ICATION AND AFORESAID DIRECTIONS. 29. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 16 30. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A). ON THE OTHER HAND LD. D.R. SUPPORTED THE OR DER OF A.O. 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE DISALLOWING THE EXPENSES A.O HAS NO TED THAT IN THE ABSENCE OF DETAILS, THE EXCESS PAYMENT WAS DISALLOWED. WE ALSO FIND THAT THE DECISION OF LD. CIT(A) ON THE ISSUE TO BE CRYPTIC APART FROM T HE FACT THAT HE HAD SET ASIDE THE ISSUE TO THE FILE OF A.O FOR VERIFICATION AND D ECIDING IT. ON THE ISSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT TH E FINANCE ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET AS IDE THE ASSESSMENT AND REFER THE CASE BACK TO THE AO FOR M AKING A FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF THE AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE V IEW THAT LD. CIT(A) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO N OT APPROVE THE ACTION OF LD. CIT(A) IN REMITTING THE ISSUE TO THE FILE OF A.O. AT THE SAME TIME IT IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE EXCES S AMOUNT PAID OR THE RECONCILIATION BETWEEN THE AMOUNT CLAIMED AND ACCOU NTED FOR IN THE ACCOUNTS HAVE BEEN FILED BY THE ASSESSEE AND THERE FORE WE ARE ALSO UNABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE AFORESAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL ASPECT NEEDS RE-EXAMINATION AT THE END OF A.O. WE THEREFOR E SET ASIDE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEEDLES S TO STATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESS EE. WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FILING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM . IN CASE THE DETAILS ARE NOT ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 17 FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DE CIDE THE ISSUE BASED ON THE MATERIAL ON RECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 32. THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE READS AS UNDER:- THE EMPLOYEES' COST OF RS.4,75,22,871/- OUGHT TO BE ALLOWED IN ASST. YEAR 1999-2000 IN VIEW OF THE FOLLOWING FINDING OF THE ASSESSING OFFI CER IN HIS ASSESSMENT ORDER FOR THE ASST. YEAR 1998-99:- 'AS REGARDS, THE EMPLOYEES COST OF RS.4,75,22,871/- , ON PERUSAL OF THE GENERAL STANDING ORDER NO. 325 DATED 3.6.1998, IT IS NOTED THAT THE ORDER IS ISSUED BEYOND THE PERIOD OF THE PREVIOUS YEAR AND THE PAYMENT OF ARREARS W.E.F. 1.1 .1996 TO THE DATE OF ISSUE OF THE ORDER WILL BE PAID BY JULY, 1998, THAT TOO BEYOND THE PER IOD OF THE PREVIOUS YEAR AND THUS, IF AT ALL THE CONTENTION OF THE ASSESSEE IS CONSIDERED, T HE LIABILITY IS CRYSTALLIZED IN THE SUBSEQUENT YEAR, I.E. IN ASSESSMENT YEAR 1999-2000. AS SUCH, THE CLAIM OF THE ASSESSEE CANNOT BE ENTERTAINED AND THUS ACCORDINGLY REJECTED .' 33. BEFORE US, LD. A.R. HAS SUBMITTED THAT THE ADDITION AL GROUND BE ADJUDICATED, IN VIEW OF THE FACT THAT ITS CLAIM IN EARLIER YEAR 98-99 CAME TO BE DISALLOWED ONLY FOR THE REASON THAT ACCORDING TO A.O IT AROSE IN A.Y. 1999-2000. BEFORE US, LD. A.R. HAS ALSO GIVEN AN UNDERTAKING THAT THE ASSESSEE WILL NOT PRESS THE ADDITIONAL GROUND NOW TAKEN IN ASSESSMENT YEAR 1998-99. 34. WE FIND THAT A.O WHILE DECIDING THE ISSUE IN A.Y. 1 998-99 HAS HELD AS UNDER:- 'AS REGARDS, THE EMPLOYEES COST OF RS.4,75,22,871/- , ON PERUSAL OF THE GENERAL STANDING ORDER NO. 325 DATED 3.6.1998, IT IS NOTED THAT THE ORDER IS ISSUED BEYOND THE PERIOD OF THE PREVIOUS YEAR AND THE PAYMENT OF ARREARS W.E.F. 1.1 .1996 TO THE DATE OF ISSUE OF THE ORDER WILL BE PAID BY JULY, 1998, THAT TOO BEYOND THE PER IOD OF THE PREVIOUS YEAR AND THUS, IF AT ALL THE CONTENTION OF THE ASSESSEE IS CONSIDERED, T HE LIABILITY IS CRYSTALLIZED IN THE SUBSEQUENT YEAR, I.E. IN ASSESSMENT YEAR 1999-2000. AS SUCH, THE CLAIM OF THE ASSESSEE CANNOT BE ENTERTAINED AND THUS ACCORDINGLY REJECTED .' 35. WE FIND THAT THIS GROUND WAS NOT TAKEN BY THE ASSES SEE BEFORE LD. CIT(A) BUT IT ARISES OUT OF THE ORDER OF A.O FOR A.Y. 98-9 9. CONSIDERING THE FACT THAT ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 18 A.O HAS DISALLOWED THE CLAIM IN A.Y. 1998-99 FOR TH E REASON THAT LIABILITY HAS CRYSTALLIZED IN A.Y. 1999-2000, WE ARE OF THE V IEW THAT THE ISSUE NEEDS TO BE RE-EXAMINED AT THE END OF A.O. WE THEREFORE S ET ASIDE THIS GROUND TO THE FILE OF A.O TO DECIDE IT AFRESH AND IN ACCORDAN CE WITH LAW AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, I T IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE EMPLOYEES COST HAVE BE EN FILED BY THE ASSESSEE AND THEREFORE WE ARE ALSO UNABLE TO PERUSE THE DETA ILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE AFORESAID FACTS AND IN TH E INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL ASPECT NEEDS RE-EXAMIN ATION AT THE END OF A.O. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUAT E OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO- OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FILING AND SUBMITTING ALL T HE DETAILS CALLED FOR BY THEM . IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSUE BASED ON THE MATERIAL ON R ECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SES. 36. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO 108 7/A/2011 FOR AY 1999-2000 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1088, 1089, 1090, 1091, 1109 & 1110/AHD/20 11( FOR A.YS.2000- 01 TO 2005-06). 37. THE GROUNDS RAISED BY ASSESSEE IN A.Y. 2000-01 (ITA NO. 1088/AHD/2011) READS AS UNDER:- ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 19 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF BAD DEBTS OF RS.14,95,34,791/- DESP ITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HE ARING OF THE APPEAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF RS.1,34,882/- BEING PURCHASE OF SMALL AND LOW VALUE ITEMS BELOW RS. 500/-WITHOUT ASSIGNING ANY COGENT REASONS WHATS OEVER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF RS. 49,04,039 /- BEING AMOUNT OF SHORTAGES ON PHYSICAL VERIFICATION OF STOCK AND PILFERAGE OF STOCK ON THE GROUND THAT DETAILS JUSTIFYING THAT THE SAME ARE REVENUE IN NATURE MAY BE FILED BEFORE THE ASSESSING OFFICER. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 4,44,69,750/- BEING LOSS ON ACC OUNT OF FIXED ASSETS DESTRUCTED DUE TO FLOODS, CYCLONE ETC., ON THE GROUND THAT THE NECESSARY DETA ILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIONS OF RS. 9,96,00,000/- ON ACCOUNT OF THE AL LEGED UNDERSTATEMENT OF INCOME WHICH WAS REPORTED BY THE C&AG IN ITS REPORT WITHOUT APPRECIATING THE FACT THAT THE C&AG HAD ALSO REPORTED OVERSTATEMENT OF INCOME TO THE EXTENT OF RS. 1044.2 8 CRORES IN ITS REPORT AND HAS THEREBY IGNORED THE NET OVERSTATEMENT OF INCOME (OR UNDERSTATEMENT OF D EFICIT) OF RS.1027.79 CRORES. 38. THE GROUNDS RAISED BY ASSESSEE IN A.Y. 2001-02 (IT A NO. 1089/AHD/2011) READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF BAD DEBTS OF RS.10,32,21,009/- DESP ITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HE ARING OF THE APPEAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF RS.1,27,263/- BEING PURCHASE OF SMALL AND LOW VALUE ITEMS BELOW RS. 500/-WITHOUT ASSIGNING ANY COGENT REASONS WHATS OEVER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF RS. 1,10,28,6 21/- BEING AMOUNT OF SHORTAGES ON PHYSICAL VERIFICATION OF STOCK AND PILFERAGE OF STOCK ON THE GROUND THAT DETAILS JUSTIFYING THAT THE SAME ARE REVENUE IN NATURE MAY BE FILED BEFORE THE ASSESSING OFFICER. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 11,62,82,783/- BEING LOSS ON AC COUNT OF FIXED ASSETS DESTRUCTED DUE TO FLOODS, CYCLONE ETC., ON THE GROUND THAT THE NECESSARY DETA ILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF AN AMOUNT OF RS.15,81,825/- BEING THE CAPITAL EXPENDITURE WRITTE N OFF AND LOSS ON OBSOLESCENCE OF FIXED ASSETS AND ST ORES AGGREGATING TO RS. 1,20,765/- ON THE GROUND TH AT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESS ING OFFICER. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF AN AMOUNT OF RS. 75,96,145/- BEING THE LOSS ON SALE OF FIXED ASS ETS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PRO VIDED TO THE ASSESSING OFFICER. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 20 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE ADDITIONS OF RS. 104,97,00,00 0/- ON ACCOUNT OF THE ALLEGED UNDERSTATEMENT OF INCOME WHICH WAS REPORTED BY THE C&AG IN ITS REPORT DESPITE THE FACT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED BEFORE THE LEARNE D COMMISSIONER (APPEALS). 39. THE GROUNDS RAISED BY ASSESSEE IN A.Y. 2002-03 (ITA NO. 1090/AHD/2011) READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF BAD DEBTS OF RS.8,,44,02,003/- DESP ITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECID ING THE ISSUE WERE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 8,85,75,392/- BEING LOSS ON ACC OUNT OF LOSS OF FIXED ASSETS DESTRUCTED DUE TO FLOO DS, CYCLONES ETC., DEBITED UNDER THE HEAD EXTRA-ORDINAR Y ITEMS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF LOSS ON EXCHANGE RATE VARIATION AMO UNTING TO RS.3,00,64,200/- TREATING THE SAME AS CAPITAL LOSS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF AN AMOUNT OF RS. 54,74,000/- BEING THE LOSS ON SALE OF SCRAP ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVID ED TO THE ASSESSING OFFICER. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE ADDITIONS OF RS. 158,90,00,00 0/- ON ACCOUNT OF THE ALLEGED UNDERSTATEMENT OF INCOME WHICH WAS REPORTED BY THE C&AG IN ITS REPORT DESPITE THE FACT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED BEFORE THE LEARNE D COMMISSIONER (APPEALS). 40. THE GROUNDS RAISED BY ASSESSEE IN A.Y 2003-04 (ITA NO. 1091/AHD/2011) READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 2,94,24,149/- BEING LOSS ON ACC OUNT OF FIXED ASSETS DESTRUCTED DUE TO FLOODS, CYCLONES ETC., DEBITED UNDER THE HEAD EXTRA-ORDINAR Y ITEMS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF LOSS ON OBSOLESCENCE OF FIXED ASSET S AMOUNTING TO RS. 84,428/- TREATING THE SAME AS CAPITAL LOSS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF AN AMOUNT OF RS. 54,41,000/- BEING THE LOSS ON SALE OF SCRAP ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVID ED TO THE ASSESSING OFFICER ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 21 41. THE GROUNDS RAISED BY ASSESSEE IN A.Y. 2004-05 (ITA NO.1109/AHD/2011) READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 5,25,95,389/- BEING L OSS ON ACCOUNT OF FIXED ASSETS DESTRUCTED DUE TO FLOODS, CYCLONES ETC., DEBITED UNDER THE HEA D EXTRA-ORDINARY ITEMS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESS ING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF LOSS ON OBSOLESCENCE OF FIXED ASSETS AMOUNTING TO RS. 70,344/- TREATING THE SAME AS CAPITAL LOSS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF COS T OF RAISING FINANCE AMOUNTING TO RS. 2,12,86,344/- ON THE GROUND THAT THE APPELLANT MAY FURNISH DETAILS TO THE ASSESSING OFFICER AS TO WHETHER THE EXPENDITURE WAS OF CAPITAL NATURE OR REVENUE NATURE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF AN AMOUNT OF RS.38,28,000/- BEING THE LOSS ON SALE OF SCRAP ON THE GROUND THAT THE NECESSARY DETA ILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS HAS CONFIRMED THE DISALLOWANCE OF RS.22,56,000/- BEING THE WAIVER OF HBA LOANS ALLOWED TO THE EMPLOYEES ON THE DEATH OF THE EMPLOYEES WHILE IN SERVICE ON T HE GROUND THAT THE SAME IS A CAPITAL LOSS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 5,95,48,269/- BEING L OSS ON SALE OF FIXED ASSETS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE A SSESSING OFFICER. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF RS. 4,38,24,995/- BEING AMOUNT OF SHORTAGES ON PHYSICAL VERIFICATION OF STOCK AND PILFERAGE OF STO CK ON THE GROUND THAT DETAILS JUSTIFYING THAT THE SAME ARE REVENUE IN NATURE MAY BE FILED BEFORE THE ASSESSING OFFICER. 42. THE GROUNDS RAISED BY ASSESSEE IN A.Y 2005-06 (ITA N0. 1110/AHD/2011) READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS.1,42,49,043/- BEING LOSS ON ACCOUNT OF FIXED ASSETS DESTRUCTED DUE TO FLOODS, CYCLONES ETC., DEBITED UNDER THE HEAD EXTRA-ORDINAR Y ITEMS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF LOSS ON OBSOLESCENCE OF FIXED A SSETS AMOUNTING TO RS. 1,54,158/- ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED T O THE ASSESSING OFFICER. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 22 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF AN AMOUNT OF RS. 10,08,000/- BEING THE LOSS ON SALE OF SCRAP ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF RS. 4,04,451/- BEING LOSS ON SA LE OF FIXED ASSETS ON THE GROUND THAT THE NECESSARY DETAILS MAY BE PROVIDED TO THE ASSESSING OFFICER. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS HAS CONFIRMED THE DISALLOWANCE OF RS. 33,77,206/- BEING THE WAIVAL OF HBA LOANS ALLOWED TO THE EMPLOYEES ON THE DEATH OF THE EMPLOYEES WHILE IN SERVICE ON THE GROU ND THAT THE SAME IS A CAPITAL LOSS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF COST OF R AISING FINANCE AMOUNTING TO RS. 3,82,56,286/- ON THE GROUND THAT THE APPELLANT MAY FURNISH DETAILS T O THE ASSESSING OFFICER AS TO WHETHER THE EXPENDITURE WAS OF CAPITAL NATURE OR REVENUE NATURE . 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE RELATING TO THE DISALLOWANCE OF RS.6,70,0 9,792/- BEING AMOUNT OF SHORTAGES ON PHYSICAL VERIFICATION OF STOCK AND PILFERAGE OF STOCK ON THE GROUND THAT DETAILS JUSTIFYING THAT THE SAME ARE REVENUE IN NATURE MAY BE FILED BEFORE THE ASSESSING OFFICER. 43. BEFORE US, LD. A.R. SUBMITTED THAT GROUNDS NO. 1, 4 & 5 IN ITA NO. 1088/AHD/2011 FOR A.Y. 2000-01, GROUNDS NO. 1, 4, & 7 IN ITA NO 1089/AHD/2011. FOR A.Y 2001-02, GROUNDS NO. 1, 2 & 5 IN ITA NO. 1090/AHD/2011 FOR A.Y. 2002-03, GROUNDS NO. 1 IN IT A NO. 1091/AHD/2011 FOR AY 2003-04, GROUND NO 1 IN ITA NO 1109/AHD/2011 FOR AY 2004-05 AND GROUND NO. 1 IN ITA NO. 1110/AHD /2011 FOR AY 2005-06 ARE IDENTICAL AND SIMILAR TO THE GROUNDS RA ISED IN ITA NO. 1087/AHD/2011 FOR A.Y. 1999-2000 EXCEPT FOR THE AMO UNTS AND THEREFORE THE SUBMISSIONS MADE BY HIM ARE ALSO APPLICABLE TO THE AFORESAID GROUNDS. THE AFORESAID SUBMISSIONS OF LD. A.R. WERE NOT OBJE CTED TO BY LD. D.R. IN VIEW OF THE AFORESAID FACTS, AND FOR THE REASONS GI VEN WHILE DISPOSING THE APPEAL FOR A.Y. 1999-2000 HEREINABOVE AND FOR SIMIL AR REASONS AND WITH SIMILAR DIRECTIONS, WE ALLOW THE AFORESAID GROUNDS RAISED IN DIFFERENT ASSESSMENT YEARS FOR STATISTICAL PURPOSES . NOW WE TAKE UP REMAINING GROUNDS IN ITA NO. 1088/A/ 2011 FOR A.Y. 2000-01. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 23 GROUND NO. 2 IS WITH RESPECT TO DISALLOWANCE OF SMA LL ITEMS AND GROUND NO. 3 IS WITH RESPECT TO WRITE OFF OF SHORTAGE ON ACCOUNT OF STOCK AND ITS PILFERAGE LOSS. 44. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF PURCHASE OF SMALL A ND LOW VALUE ITEMS BELOW RS. 500/- AGGREGATING TO RS. 1,34,882/-. ASSE SSEE WAS ASKED TO JUSTIFY ITS CLAIM TO WHICH ASSESSEE INTERALIA SUBMITTED THA T IT HAS WRITTEN OFF THE COST OF SMALL AND LOW VALUE ASSETS EACH COSTING RS. 500/ - AND NOT INCLUDED THE SAME IN FIXED ASSETS NOR CLAIMED DEPRECIATION ON IT . THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O AS HE WAS OF THE VIEW THAT IN THE ABSENCE OF ANY PROVISION IN SECTION 32, THE WRI TING OFF OF THE ASSETS OF SMALL VALUE CANNOT BE ALLOWED AND HE ACCORDINGLY DI SALLOWED THE EXPENSES. AO ALSO NOTICED THAT ASSESSEE HAD CLAIMED SHORTAGE OF PHYSICAL VERIFICATION OF MATERIALS (RS 30,50,883/-) AND LOSS OF MATERIAL BY PILFERAGE (RS 18,53,156/-). AO NOTED THAT ASSESSEE DID NOT ADDUCE ANY EVIDENCE TO JUSTIFY THE AFORESAID CLAIMS AND THEREFORE THE CLAIM OF ASS ESSEE WAS DISALLOWED. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DECIDED THE ISSUE BY HOLDING AS UNDER:- 6.5 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. I AM IN AGREEMENT WITH AP PELLANT THAT LOSS OF STOCK, CONSUMABLES ETC IS REVENUE IN NATURE. THE APPELLANT IS DIRECTED TO PROVIDE COMPLETE DETAILS OF SUCH REVENUE ITEMS. THE REST OF LOSS ON CAPITAL ITEMS IS TO BE ADJUSTED THROUGH THE BLOCK OF ASSETS. IT IS A FACT THAT IN T HE P & L A/C., THE LOSS OUT OF EXTRAORDINARY ITEMS, LOSS ON PILFERAGE, LOSS OF SMA LL ITEMS ETC. ARE CLAIMED. THE APPELLANT WAS SPECIFICALLY REQUESTED TO EXPLAIN THE VARIOUS JOURNAL ENTRIES IN THIS REGARD AND ALSO TREATMENT OF SUCH LOSS FOR PURPOSES OF INCOME-TAX BUT THESE WERE NOT FURNISHED. FURTHER IT IS LIKELY THAT MISCELLANEOUS LOSSES AND WRITE OFFS LOSS DUE TO NATURAL CALAMITIES ETC. WOULD AFFECT THE CAPITAL ST OCK AS WELL AS THE REVENUE ITEMS. WITH A SYSTEM OF BLOCK OF ASSETS ANY LOSS ON CAPITA L ITEM IS ALLOWED WITH REFERENCE TO THE OPENING WDV AND THE ASSET LOST/DISCARDED IS NOT REDUCED FROM THE OPENING WDV. IN EFFECT THE APPELLANT IS ENTITLED TO HIGHER CLAIM OF DEPRECIATION INSTEAD OF LOSS ON ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 24 ASSETS. ANY NOTIONAL OR ACTUAL SCRAP VALUE OR SALE OF ASSETS IS TO BE REDUCED FROM THE OPENING WDV FOR PURPOSES OF DEPRECIATION. IT IS ALS O TO BE APPRECIATED THAT IN CASE A BLOCK IS EMPTY OR HAS NO WDV, NO DEPRECIATION IS AD MISSIBLE. ALTHOUGH IT IS EMPHASIZED BEFORE ME THAT ALL THE ITEMS ARE REVENUE IN NATURE BUT IN THE ABSENCE OF DETAILS, THIS FACT COULD NOT BE VERIFIED. THE APPEL LANT IS DIRECTED TO PROVIDE NECESSARY DETAILS TO THE AO AND ELABORATE THAT NONE OF THE CA PITAL ITEMS IS PART OF THE LOSS CLAIMED AND THAT THE CAPITAL ITEMS HAVE BEEN SUITAB LY CONSIDERED IN THE DEPRECIATION CALCULATION AND IS NOT PART OF THE LOSS CLAIMED. HO WEVER IF THERE ARE CAPITAL ITEMS WHICH ARE CLAIMED AS LOSS THESE WOULD STAND DISALLO WED WITH CORRESPONDING HIGHER DEPRECIATION AS PER PROVISIONS OF SEC.32, 2(11), 43 (1) AND 43(6). THE GROUND IS ALLOWED SUBJECT TO VERIFICATION AND AFORESAID DIREC TIONS. GROUNDS NO. 3, 4 AND 5 ARE ALLOWED SUBJECT TO VERIFICATION AND AFORESAID DIREC TIONS. 45. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 46. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). LD. D.R. ON THE OTHER HAND SUBMITTED THAT IN THE AB SENCE OF DETAILS, A.O WAS JUSTIFIED IN DISALLOWING THE EXPENSES. HE THUS SUPP ORTED THE ORDER OF A.O. 47. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O HAS NOTED THAT THE DETAILS WERE NOT S UBMITTED BEFORE HIM NOR WERE THE DETAILS AVAILABLE BEFORE CIT(A). WE ALSO F IND THAT CIT(A) HAS REMITTED THE MATTER TO A.O. ON THE ISSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT THE FINANCE ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASIDE THE ASSESSMENT AND RE FER THE CASE BACK TO THE AO FOR MAKING A FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF THE AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT LD. CIT(A) DOES NOT HAVE PO WER TO REMAND AND THEREFORE WE DO NOT APPROVE THE ACTION OF LD. CIT(A ) IN REMITTING THE ISSUE TO THE FILE OF A.O. HOWEVER AT THE SAME TIME, IT IS AL SO A FACT THAT, NO DETAILS OF THE EXPENSES CLAIMED HAVE BEEN FILED BY THE ASSESSE E EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE US AND THEREFORE WE ARE ALSO UNABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE A FORESAID FACTS AND IN THE ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 25 INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FA CTUAL ASPECT NEEDS RE- EXAMINATION AT THE END OF A.O. WE THEREFORE SET ASI DE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEEDLESS TO ST ATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMP TLY FILING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM . IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSU E BASED ON THE MATERIAL ON RECORD. IN THE RESULT, THESE GROUNDS OF ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. 48. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO 108 8/A/2011 FOR AY 2000-01 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1089/AHD/2011 ( FOR A.Y. 2001-02) NOW WE TAKE UP REMAINING GROUNDS OF A.Y. 01-02 BEIN G GROUND NO. 2 & 3, 5 & 6. 49. BEFORE US, BOTH THE PARTIES SUBMITTED THAT GROUND N O. 2 & 3 OF THE PRESENT APPEAL ARE IDENTICAL TO GROUND NO. 2 & 3 RAISED BY ASSESSEE IN A.Y. 2000-01 AND THE SUBMISSIONS MADE BY THEM WHILE ARGUING THE CASE FOR A.Y. 2000-01 ARE ALSO APPLICABLE TO THE PRESENT GROUNDS. 50. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, SINCE BOTH THE PARTIES HAVE SUBMITTED TH AT THE ISSUE RAISED IN THE PRESENT GROUNDS BEING IDENTICAL TO THE GROUNDS RAIS ED IN A.Y. 2000-01, WE THEREFORE FOR THE REASONS STATED HEREIN WHILE DISPO SING OF GROUND NO. 2 AND 3 FOR A.Y. 2000-01 AND FOR SIMILAR REASONS AND DIRECT IONS ALLOW THE GROUNDS FOR STATISTICAL PURPOSES. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 26 NOW WE TAKE UP GROUND NO 5 & 6 WHICH ARE CONSIDERED TOGETHER. 51. A.O NOTICED THAT ASSESSEE HAS CLAIMED INFRUCTUOUS CAPITAL EXPENSES WRITTEN OFF OF RS. 15,81,825/- AND LOSS OF OBSOLESCE OF FIX ED ASSETS OF RS. 1,20,965/-. A.O WAS OF THE VIEW THAT THE EXPENSES BEING CAPITAL IN NATURE WAS NOT ALLOWABLE AND ACCORDINGLY DISALLOWED THE SAME. A.O ALSO NOTED THAT ASSESSEE HAD CLAIMED LOSS ON SALE OF FIXED ASSETS O F RS. 75,96,145/-. A.O WAS OF THE VIEW THAT THE SAME WAS ALSO NOT ALLOWABL E AS BEING CAPITAL IN NATURE AND ACCORDINGLY DISALLOWED THE CLAIM. AGGRIE VED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO UPHEL D THE ORDER OF A.O BY HOLDING AS UNDER:- 6.6 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. I ARM IN AGREEMENT WITH APPEL LANT THAT LOSS OF STOCK, CONSUMABLES ETC. IS REVENUE IN NATURE. THE APPELLANT IS DIRECTE D TO PROVIDE COMPLETE DETAILS OF SUCH REVENUE ITEMS. THE REST OF LOSS ON CAPITAL ITEMS IS TO BE ADJUSTED THROUGH THE BLOCK OF ASSETS. IT IS A FACT THAT IN THE P & L A/C., THE LO SS ON OBSOLESCENCE, LOSS ON SALE AND LOSS ON SALE OF SCRAP OF FIXED ASSETS, LOSS ON PILFERAGE , LOSS OF SMALL ITEMS ETC. ARE CLAIMED. THE APPELLANT WAS SPECIFICALLY REQUESTED TO EXPLAIN THE VARIOUS JOURNAL ENTRIES IN THIS REGARD AND ALSO TREATMENT OF SUCH LOSS FOR PURPOSES OF INC OME-TAX BUT THESE WERE NOT FURNISHED. FURTHER IT IS LIKELY THAT MISCELLANEOUS LOSSES AND WRITE OFF, LOSS DUE TO NATURAL CALAMITIES ETC. WOULD AFFECT THE CAPITAL STOCK AS WELL AS THE REVENUE ITEMS. WITH A SYSTEM OF BLOCK OF ASSETS ANY LOSS ON CAPITAL ITEM IS ALLOWED WITH REF ERENCE TO THE OPENING WDV AND THE ASSET LOST/DISCARDED IS NOT REDUCED FROM THE OPENIN G WDV. IN EFFECT THE APPELLANT IS ENTITLED TO HIGHER CLAIM OF DEPRECIATION INSTEAD OF LOSS ON ASSETS. ANY NOTIONAL OR ACTUAL SCRAP VALUE OR SALE OF ASSETS IS TO BE REDUCED FROM THE OPENING WDV FOR PURPOSES OF DEPRECIATION. IT IS ALSO TO BE APPRECIATED THAT IN CASE A BLOCK IS EMPTY OR HAS NO WDV, NO DEPRECIATION IS ADMISSIBLE. ALTHOUGH IT IS EMPHASIZ ED BEFORE ME THAT ALL THE ITEMS ARE REVENUE IN NATURE BUT IN THE ABSENCE OF DETAILS, TH IS FACT COULD NOT BE VERIFIED. THE APPELLANT IS DIRECTED TO PROVIDE NECESSARY DETAILS TO THE AO AND ELABORATE THAT NONE OF THE CAPITAL ITEMS IS PART OF THE LOSS CLAIMED AND T HAT THE CAPITAL ITEMS HAVE BEEN SUITABLY CONSIDERED IN THE DEPRECIATION CALCULATION AND IS N OT PART OF THE LOSS CLAIMED. HOWEVER IF THERE ARE CAPITAL ITEMS WHICH ARE CLAIMED AS LOSS T HESE WOULD STAND DISALLOWED WITH CORRESPONDING HIGHER DEPRECIATION AS PER PROVISIONS OF SEC.32, 2(11), 43(1) AND 43(6). THE GROUND IS ALLOWED SUBJECT TO VERIFICATION AND A FORESAID DIRECTIONS. GROUNDS NO. 3,4,5,7 & 8 ARE ALLOWED SUBJECT TO VERIFICATION AND AFORESAID DIRECTIONS. 52. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 27 53. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A) AND ON THE OTHER HAND LD. D.R. SUPPORTED THE ORDER OF CIT(A). 54. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CLAIM OF EXPENSES WAS DISALLOWED BY T HE A.O AS HE WAS OF THE VIEW THAT THE EXPENSES WERE OF CAPITAL IN NATURE. W E ALSO FIND THAT LD. CIT(A) DECIDED THE GROUND OF ASSESSEE IN ITS FAVOUR SUBJECT TO VERIFICATION BY AO. WE ALSO FIND THAT THE DECISION OF LD. CIT(A) ON THE ISSUE TO BE CRYPTIC AND HE HAD DIRECTED THE A.O TO VERIFY THE F IGURES AND THEREAFTER ALLOW THE CLAIM OF LOSS. ON THE ISSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT THE FINANCE ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASIDE THE ASSESSMENT AND REFER THE CA SE BACK TO THE AO FOR MAKING A FRESH ASSESSMENT IN ACCORDANCE WITH THE DI RECTIONS GIVEN BY CIT(A). IN VIEW OF THE AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT LD. CIT(A) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO NOT APPROVE THE ACTION OF LD. CIT(A ) IN REMITTING THE ISSUE TO THE FILE OF A.O. HOWEVER AT THE SAME TIME, IT IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE EXPENSES CLAIMED HAVE BEEN FILED BY THE ASSESSEE AND THEREFORE WE ARE ALSO UNABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE AFORESAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL ASPECT NEEDS RE-EXAMINATION A T THE END OF A.O. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUAT E OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO- OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FILING AND SUBMITTING ALL T HE DETAILS CALLED FOR BY THEM. IN CASE THE DETAILS ARE NOT FURNISHED BY ASSE SSEE, THEN A.O SHALL BE ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 28 FREE TO DECIDE THE ISSUE BASED ON THE MATERIAL ON R ECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SES. 55. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO 108 9/A/2011 FOR AY 2001-02 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1090/AHD/2011 ( FOR A.Y. 2002-03) NOW WE TAKE UP REMAINING GROUNDS OF ITA NO. 1090/AH D/2011 FOR A.Y. 2002-03. GROUND NO. 3 IS WITH RESPECT TO DISALLOWANCE OF LOS S ON EXCHANGE RATE VARIATION. 56. A.O NOTICED THAT ASSESSEE HAS CLAIMED AS REVENUE EX PENSE THE LOSS ON EXCHANGE RATE VARIATION TOWARDS CREDIT FACILITY IN FOREIGN EXCHANGE GIVEN BY A SUPPLIER FOR K.L.T.P.S PROJECT. A.O WAS OF THE VI EW THAT THE EXPENSES BEING CAPITAL IN NATURE, NOT ALLOWABLE AND ACCORDIN GLY DISALLOWED THE EXPENSES. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE C ARRIED THE MATTER BEFORE LD. CIT(A) WHO UPHELD THE ORDER OF A.O BY HOLDING A S UNDER:- 8.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. THE FINANCES HAVE BEEN RAISED BY THE APPELLANT AND FINANCE CHARGES/FEES, DISCOUNTING CHARGES, TRUSTEES' FEES A ND HAVE BEEN PAID IN CONNECTION WITH GARNERING THE FUNDS. IT IS IMMATERIAL WHETHER THE F UNDS ARE BORROWED FOR CAPITAL OR REVENUE PURPOSES AND AS LONG AS THESE ARE NOT FOR EXPANSION OF BUSINESS FOR WHICH THE EXPENSES NEED TO BE CAPITALIZED AND ALLOWABLE AS PA RT OF DEPRECIATION AFTER COMMENCEMENT OF BUSINESS, THE EXPENDITURE OTHERWISE IS IN REVENUE FOLD. SUCH WAS RATIO OF JUDGMENT IN THE CASE OF DCIT VS CORE HEALTH CARE LTD. 298 ITR 194 (SC). THE HON'BLE APEX COURT HAVE ALSO MENTIONED THAT PROVISO TO SECT ION-36(1)(III) RELATING TO CAPITALIZATION OF INTEREST FOR PRE-COMMENCEMENT PER IOD IN THE CASE OF EXPANSION OF BUSINESS IS PROSPECTIVE I.E. APPLICABLE FROM ASSESS MENT YEAR 04-05 ONWARDS THOUGH IT IS CLAIMED BEFORE ME THAT THE FUNDS WERE RAISED FOR EX ISTING BUSINESS, NO DETAILS COULD BE FURNISHED TO ESTABLISH THIS FACT. THE APPELLANT IS DIRECTED TO PROVIDE DETAILS IN THIS REGARD TO A.O AND IF FOUND TRUE, GROUND WOULD STAND ALLOWE D OTHERWISE THE EXPENSES RELATED TO EXPANSION OF BUSINESS WOULD NEED TO BE CAPITALIZED AND ALLOWED AS DEPRECIATION FROM THE ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 29 YEAR IN WHICH ASSETS WERE FIRST PUT TO USE. GROUND NO. 8 IS ALLOWED SUBJECT TO VERIFICATION AND AFORESAID DIRECTIONS. 57. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NO W IN APPEAL BEFORE US. 58. BEFORE US, AT THE OUTSET, LD. A.R. FAIRLY CONCEDED THAT THE ISSUE IS NOW COVERED AGAINST ASSESSEE BY THE DECISION OF APEX CO URT IN THE CASE OF ACIT VS. ELECON ENGG. CO. LTD. 322 ITR 20 (SC) AND THERE FORE THE ISSUE HAS TO BE DECIDED AGAINST THE ASSESSEE. 59. WE HAVE HEARD LD. A.R. IN VIEW OF THE SUBMISSION OF LD. A.R. THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HBLE APEX COURT. IN VIEW OF THE AFORESAID FACTS, WE DISMISS THE GROUND OF AS SESSEE AND THUS THIS GROUND IS DISMISSED. GROUND NO. 4 IS WITH RESPECT TO DISALLOWANCE OF LOS S OF SALE OF SCRAP. 60. A.O NOTICED THAT ASSESSEE HAS CLAIMED LOSS OF RS. 5 4.74 LACS ON ACCOUNT OF LOSS OF SALE OF SCRAP. HE WAS OF THE VIEW THAT THER E CANNOT BE LOSS ON SALE OF SCRAP IN VIEW OF THE FACT THAT THE INITIAL VALUE OF SCRAP IS RS. NIL. IN RESPONSE TO THE QUERY OF A.O, ASSESSEE SUBMITTED THAT IT HAD THE PRACTICE OF TRANSFERRING RESIDUAL VALUE OF 10% OF TOTAL COST OF ASSETS TO SCRAP AND FURTHER THE MATERIALS DECLARED AS SCRAP BY STORES DEPARTMEN T ARE BOOKED AT STANDARD RATE AFTER REDUCING THE REPAIRS AND MAINTENANCE COS T TO THAT EXTENT. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABL E AND ACCORDINGLY A.O DISALLOWED THE LOSS. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DECIDED THE ISSUE BY HOLDI NG AS UNDER:- 9.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. THE APPELLANT IS DIRECTED TO PROVIDE COMPLETE DETAILS TO THE AO TO EXPLAIN THAT THE SALE PRICE/SCRAP VALUE AS PER BOOK S/WDV OF ASSETS DISCARDED ARE REDUCED FROM THE OPENING WDV OF THE RELEVANT BLOCK FOR PURP OSES OF DEPRECIATION. IF THESE ENTRIES ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 30 ARE ACCOUNTED FOR AS STIPULATED ABOVE, THE GROUND W OULD STAND ALLOWED OTHERWISE TO THE EXTENT THE APPELLANT IS NOT ABLE TO ESTABLISH WITH DOCUMENTS THE ADDITION WOULD STAND CONFIRMED. GROUND NO.6 IS ALLOWED SUBJECT TO VERIFI CATION AND AFORESAID DIRECTIONS. 61. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 62. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES AND ON THE OTHER HAND LD. D.R. SUPPORTED THE ORDER OF A.O. 63. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DECISION OF LD. CIT(A) ON THE ISSUE T O BE CRYPTIC APART FROM THE FACT THAT HE HAD SET ASIDE THE ISSUE TO THE FILE OF A.O FOR VERIFICATION AND DECIDING IT. ON THE ISSUE OF SETTING ASIDE BY CIT( A), IT IS TO BE NOTED THAT THE FINANCE ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASIDE THE ASSESSMENT AND REFER THE C ASE BACK TO THE AO FOR MAKING A FRESH ASSESSMENT IN ACCORDANCE WITH THE DI RECTIONS GIVEN BY CIT(A). IN VIEW OF THE AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT LD. CIT(A) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO NOT APPROVE THE ACTION OF LD. CIT(A ) IN REMITTING THE ISSUE TO THE FILE OF A.O. AT THE SAME TIME IT IS ALSO A FA CT THAT BEFORE US, APART FROM ORAL SUBMISSIONS, NO DETAILS HAVE BEEN FILED BY THE ASSESSEE AND THEREFORE WE ARE ALSO UNABLE TO PERUSE THE DETAILS AND DECIDE TH E ISSUE AT OUR END. CONSIDERING THE AFORESAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FACTUAL ASPECT NEEDS RE-EXAMINATION A T THE END OF A.O. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUAT E OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO- OPERATE WITH THE REVENUE AUTHORITIES BY PROMPTLY FILING AND SUBMITTING ALL T HE DETAILS CALLED FOR BY ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 31 THEM . IN CASE THE DETAILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSUE BASED ON THE MATERIAL ON R ECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SES. 64. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO 109 0/A/2011 FOR AY 2002-03 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1109/AHD/2011 ( FOR A.Y. 2004-05) NOW WE TAKE UP REMAINING GROUNDS OF ITA NO. 1109/AH D/2011 FOR A.Y. 2004-05 65. BEFORE US, BOTH THE PARTIES SUBMITTED THAT GROUND N O. 2 TO 6 FOR THE YEAR UNDER APPEAL ARE SIMILAR TO GROUNDS FOR A.Y. 05-06 AND THEREFORE THE SUBMISSIONS MADE BY THEM IN AY 05-06 WOULD BE APPLI CABLE TO THE PRESENT GROUNDS. 66. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, SINCE BOTH THE PARTIES HAVE SUBMITTED TH AT THE ISSUE BEING IDENTICAL TO THE GROUND RAISED IN A.Y. 2005-06, WE THEREFORE FOR THE REASONS STATED WHILE DISPOSING OF GROUNDS IN AY 05-06 HEREIN-BELOW AND FOR SIMILAR REASONS AND DIRECTIONS ALLOW THE GROUNDS FOR STATISTICAL PURPOSES . NOW WE TAKE UP REMAINING GROUNDS OF ITA NO. 1091/AH D/2011 (A.Y. 03- 04) & ITA NO. 1110/AHD/ FOR A.Y. 2005-06. 67. BEFORE US, BOTH THE PARTIES SUBMITTED THAT GROUND N O. 2 & 3 FOR A.Y. 2003-04 AND GROUND NO. 2 TO 4 & 7 FOR A.Y. 2004-05 ARE SIMI LAR TO GROUNDS FOR A.Y. 01-02 AND A.Y. 02-03 AND THEREFORE THE SUBMISSIONS MADE BY THEM IN AY 01-02 & AY 02-03 WOULD BE APPLICABLE TO THE PRESENT GROUNDS. ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 32 68. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, SINCE BOTH THE PARTIES HAVE SUBMITTED TH AT THE ISSUE BEING IDENTICAL TO THE GROUND RAISED IN A.Y. 2000-01 AND AY 2002-03 , WE THEREFORE FOR THE REASONS STATED WHILE DISPOSING OF GROUNDS IN AY 01- 02 AND 02-03 HEREINABOVE AND FOR SIMILAR REASONS AND DIRECTIONS ALLOW THE GROUNDS FOR STATISTICAL PURPOSES . NOW WE TAKE UP REMAINING GROUNDS NO. 5 & 6 IN ITA N O. 1110/AHD/2011 FOR A.Y. 2005-06. GROUND NO. 5 IS WITH RESPECT DISALLOWANCE OF WAIVER OF HBA LOANS 69. ASSESSEE HAD CLAIMED RS. 33,77,206/- ON ACCOUNT OF WAIVER OF HBA LOAN AND INTEREST. A.O WAS OF THE VIEW THAT THE SAME IS NOT ALLOWABLE AND ACCORDINGLY DISALLOWED THE CLAIM OF ASSESSEE. AGGRI EVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO UPHELD THE ORDER OF A.O BY HOLDING AS UNDER:- 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. THE FACTS STATED BY THE A PPELLANT ARE NOT DISPUTED. THE PRINCIPLES FOR ALLOWING THE CLAIM FOR DEDUCTION OF SUCH CAPITAL AMOUNTS IN COMPUTING BUSINESS INCOME ARE WELL SETTLED. IT WAS HELD BY THE SUPREME COURT IN BADRIDAS DAGA V. CIT [1958] 34 ITR 10: 'WHEN A CLAIM IS MADE FOR DEDUCTION FOR WHICH THERE IS NO SPECIFIC PROVISION UNDER SECTION 10(2), WHETHER IT IS ADMISSIBLE OR NO T WILL DEPEND ON WHETHER, HAVING REGARD TO THE ACCEPTED COMMERCIAL PRACTICE A ND TRADING PRINCIPLES, IT CAN BE SAID TO ARISE OUT OF THE CARRYING ON OF THE BUSI NESS AND BE INCIDENTAL TO IT. THE LOSS FOR WHICH A DEDUCTION IS CLAIMED MUST BE ONE T HAT SPRINGS DIRECTLY FROM THE CARRYING ON OF THE BUSINESS AND IS INCIDENTAL TO IT , AND NOT ANY LOSS SUSTAINED BY THE ASSESSEE EVEN IF IT HAS SOME CONNECTION WITH HI S BUSINESS. IF THAT IS ESTABLISHED, THEN THE DEDUCTION MUST BE ALLOWED, PR OVIDED THAT THERE IS NO PROVISION AGAINST IT, EXPRESS OR IMPLIED, IN THE AC T.' 7.3.1 THIS PRINCIPLE WAS FOLLOWED BY THE SUPREME CO URT IN THE CASE OF INDORE MALWA UNITED MILLS LTD. THE KEY ISSUE IS WHETHER TH E LOSS CLAIMED ARISES DIRECTLY FROM THE CARRYING ON THE BUSINESS OR IT HAS SOME CO NNECTION WITH THE BUSINESS. IT ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 33 IS SUBMITTED BEFORE ME THAT THE HOUSING LOANS ARE D ISBURSED TO THE EMPLOYEES AT INTEREST AS A FACILITY AND TO EARN THEIR LOYALTIES AND THUS THE EXPENDITURE IS FOR BUSINESS PURPOSES. THE APPELLANT IS IN THE BUSINESS OF GENERATION AND IN DISTRIBUTION OF POWER AND THE ADVANCES ARE NOT IN T HE COURSE OF THE CARRYING ON OF THE BUSINESS BUT THESE ARE ONLY HAVING SOME CONNECT ION WITH OPERATIONAL EFFICIENCY OF THE BUSINESS. IN MY HUMBLE OPINION TH E LOSS CLAIMED IS PLAIN AND SIMPLE CAPITAL LOSS WHICH IS NOT ALLOWABLE. GROUND NO. 7 IS DISMISSED. 70. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 71. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A) AND SUBMITTED THAT THE CLAIM OF ASSESSEE BE ALLOWED . ON THE OTHER HAND, LD. D.R. SUPPORTED THE ORDER OF A.O AND CIT(A). 72. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE UPHOLDING THE ORDER OF A.O H AD RELIED ON THE DECISION OF APEX COURT IN THE CASE OF BADRIDAS VS. CIT (1958 ) 34 ITR 10 (SC). BEFORE US, LD. A.R. HAS NOT BROUGHT ANY CONTRARY BI NDING DECISION IN ITS SUPPORT. WE THEREFORE FIND NO REASON TO INTERFERE W ITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF IS DISMISSED . GROUND NO. 6. IS WITH RESPECT TO DISALLOWANCE OF CO ST OF RAISING FINANCE. 73. A.O NOTICED THAT ASSESSEE HAS CLAIMED RS. 3,82,56,2 86/- BEING ON ACCOUNT OF EXPENSES INCURRED TOWARDS RAISING FINANCE. A.O NOTE D THAT SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEARS AND ACCORDIN GLY DISALLOWED THE EXPENSES. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE C ARRIED THE MATTER BEFORE CIT(A) WHO UPHELD THE ORDER OF CIT(A) BY HOLDING AS UNDER:- 8.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. THE FINANCES HAVE BEEN RAISED BY THE APPELLANT AND FINANCE CHARGES/FEES, DISCOUNTING CHARGES, TRUSTEES' FEES A ND HAVE BEEN PAID IN CONNECTION WITH GARNERING THE FUNDS. IT IS IMMATERIAL WHETHER THE F UNDS ARE BORROWED FOR CAPITAL OR REVENUE PURPOSES AND AS LONG AS THESE ARE NOT FOR E XPANSION OF BUSINESS FOR WHICH THE EXPENSES NEED TO BE CAPITALIZED AND ALLOWABLE AS PA RT OF DEPRECIATION AFTER ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 34 COMMENCEMENT OF BUSINESS, THE EXPENDITURE OTHERWISE IS IN REVENUE FOLD. SUCH WAS RATIO OF JUDGMENT IN THE CASE OF DCIT VS CORE HEALTH CARE LTD. 298 ITR 194 (SC). THE HON'BLE APEX COURT HAVE ALSO MENTIONED THAT PROVISO TO SECT ION-36(1)(III) RELATING TO CAPITALIZATION OF INTEREST FOR PRE-COMMENCEMENT PER IOD IN THE CASE OF EXPANSION OF BUSINESS IS PROSPECTIVE I.E. APPLICABLE FROM ASSESS MENT YEAR 04-05 ONWARDS THOUGH IT IS CLAIMED BEFORE ME THAT THE FUNDS WERE RAISED FOR EX ISTING BUSINESS, NO DETAILS COULD BE FURNISHED TO ESTABLISH THIS FACT. THE APPELLANT IS DIRECTED TO PROVIDE DETAILS IN THIS REGARD TO A.O AND IF FOUND TRUE, GROUND WOULD STAND ALLOWE D OTHERWISE THE EXPENSES RELATED TO EXPANSION OF BUSINESS WOULD NEED TO BE CAPITALIZED AND ALLOWED AS DEPRECIATION FROM THE YEAR IN WHICH ASSETS WERE FIRST PUT TO USE. GROUND NO. 8 IS ALLOWED SUBJECT TO VERIFICATION AND AFORESAID DIRECTIONS. 74. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 75. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CLAIM OF EXPENSES INCURRED FOR RAISIN G FINANCE WAS DISALLOWED BY THE A.O AS HE WAS OF THE VIEW THAT THE EXPENSES WERE CAPITAL IN NATURE. WE ALSO FIND THAT LD. CIT(A) DECIDED THE GROUND OF ASSESSEE IN ITS FAVOUR SUBJECT TO VERIFICATION BY AO. WE ALSO FIND THAT T HE DECISION OF LD. CIT(A) ON THE ISSUE TO BE CRYPTIC. WE ALSO FIND THAT LD. CIT(A) HAD DIRECTED THE A.O TO VERIFY THE DETAILS AND THEREAFTER DECIDE THE ISS UE. ON THE ISSUE OF SETTING ASIDE BY CIT(A), IT IS TO BE NOTED THAT THE FINANCE ACT, 2001 HAS W.E.F. 1 ST JUNE, 2001 WITHDRAWN THE POWER OF CIT(A) TO SET ASI DE THE ASSESSMENT AND REFER THE CASE BACK TO THE AO FOR MAKING A FRESH AS SESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY CIT(A). IN VIEW OF TH E AFORESAID AMENDMENT MADE BY FINANCE ACT 2001, WE ARE OF THE VIEW THAT L D. CIT(A) DOES NOT HAVE POWER TO REMAND AND THEREFORE WE DO NOT APPROV E THE ACTION OF LD. CIT(A) IN REMITTING THE ISSUE TO THE FILE OF A.O. HOWEVER AT THE SAME TIME, IT IS ALSO A FACT THAT BEFORE US, NO DETAILS OF THE EXPENSES HAVE BEEN FILED BY THE ASSESSEE BEFORE US AND THEREFORE WE ARE ALSO UN ABLE TO PERUSE THE DETAILS AND DECIDE THE ISSUE AT OUR END. CONSIDERING THE A FORESAID FACTS AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE FA CTUAL ASPECT NEEDS RE- ITA NOS. 1087 TO 1091/ A/11 1109&1110/A/11 . A.YS. 1999-2 000 TO 2005-06 35 EXAMINATION AT THE END OF A.O. WE THEREFORE SET ASI DE THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. NEEDLESS TO ST ATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REVENUE AUTHORITIES BY PROMP TLY FILING AND SUBMITTING ALL THE DETAILS CALLED FOR BY THEM. IN CASE THE DET AILS ARE NOT FURNISHED BY ASSESSEE, THEN A.O SHALL BE FREE TO DECIDE THE ISSU E BASED ON THE MATERIAL ON RECORD. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 76. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. 77. IN THE RESULT, THE APPEALS OF ITA NOS. 1087, 1088, 1089 & 1109/AHD/2011 ARE ALLOWED FOR STATISTICAL PURPOSES AND ITA NOS. 1 090 & 1110/AHD/2011 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 17 - 04 - 2015. SD/ SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD