Deputy Commissioner of Income-tax, V. Hindustan Antibiotics Ltd., Pune

ITA 1120/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1936 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: ASHOK KOTHARI
• Keywords: Business expenditure; Deemed to accrue or arise in india
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1120/PN/2014 ASSESSMENT YEAR : 2006-07 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. . APPELLANT VS. HINDUSTAN ANTIBIOTICS LTD., MUMBAI PUNE ROAD, PIMPRI, PUNE 411 018. PAN : AAACH5155L . RESPONDENT / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI ASHOK KOTHARI / DATE OF HEARING : 05.04.2016 / DATE OF PRONOUNCEMENT: 15.04.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A)-V, PUNE DATED 18.02.2014 RELATING TO ASSESSM ENT YEAR 2006-07 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.2, 02,38,082/- BEING INTEREST ON LOAN ACCRUED TO SUBSIDIARY COMPANIES BY NOT APPRECIATING THE FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND HENCE INCOME HAS TO BE RECOGNIZED ON ACCRUAL BASIS? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANC E OF RS.80,10,000/- BEING EXPENSES ON ACCOUNT OF POWER AND FUEL EXPENSES WHEN THE SAID EXPENSES HAS 2 ITA NO.1120/PN/2014 OCCURRED FOR RESIDENTIAL COLONIES OF THE STAFF OF A SSESSEE COMPANY AND THUS HAS NO BUSINESS CONNECTION OR MEANT FOR BUSINESS EXPEDIENC Y? 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE FIRST GROUND CONCERNS THE ADDITION ON ACCOUN T OF INTEREST ON LOAN ACCRUED TO SUBSIDIARY COMPANIES AT RS.2,02,38,082/- . 3.1 THE FACTS CONCERNING THE ISSUE IN BRIEF ARE THA T THE ASSESSEE IS A PUBLIC SECTOR ENTERPRISE ENGAGED IN THE BUSINESS OF PHARMA CEUTICALS WHICH HAS GOT TWO SUBSIDIARIES VIZ. MAHARASHTRA ANTIBIOTICS AND PHARM ACEUTICALS LTD. (MAPL) AND MANIPUR STATE DRUGS & PHARMACEUTICALS LTD. (MSD PL). THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT ACCOUNTED FOR INTEREST INCOME FROM THE TWO COMPANIES ON THE LOANS AND ADVANCES GIVEN B Y IT. THE ASSESSING OFFICER CONFRONTED THE ASSESSEE COMPANY ON THIS ISS UE. IT WAS REPLIED BY THE ASSESSEE THAT INTEREST INCOME ON SUCH LOANS WAS NOT ACCOUNTED FOR AS THE TWO SUBSIDIARY COMPANIES WERE SICK INDUSTRIAL UNITS AND WERE REFERRED TO BIFR. IT WAS FURTHER STATED THAT BOTH THE SUBSIDIARY COMPANI ES HAD STOPPED MANUFACTURING OPERATIONS SINCE LONG AND THERE WAS N O HOPE FOR RECOVERY OR INTEREST. THE ASSESSEE ALSO SUBMITTED THAT IT IS F OLLOWING ACCOUNTING STANDARDS (AS 9) ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS ON REVENUE RECOGNITION AND NO INTEREST INCOME WAS ACCOUNTED FOR AS THERE W AS UNCERTAINTY OF RECOVERY. WITH REGARDS TO THE TRANSACTIONS WITH ONE OF THE SU BSIDIARIES VIZ. MAPL, IT WAS EXPLAINED THAT THE SUBSIDIARY HAD AVAILED LOAN FROM SICOM AND THE ASSESSEE COMPANY WAS GUARANTOR OF THE LOAN. THERE WAS A TRI PARTITE AGREEMENT WITH THE ASSESSEE, SICOM AND MAPL FOR THE SAID LOANS IN TERM S OF WHICH, THE MAPL WAS LIABLE TO REPAY THE LOAN AS WELL AS INTEREST TO SICOM. SINCE, ASSESSEE WAS A GUARANTOR OF THE LOAN, INTEREST CHARGED BY SICOM WAS ROUTED THROUGH BOOKS OF ACCOUNT OF THE ASSESSEE WITHOUT AFFECTING THE PR OFIT & LOSS ACCOUNT. THE ACCOUNTING TRANSACTION WAS THAT INTEREST PAYABLE TO SICOM WAS SHOWN AS UNSECURED LOAN AND CORRESPONDING AMOUNT RECEIVABLE FROM MAPL WAS SHOWN AS CURRENT ASSET IN THE BALANCE SHEET WITHOUT ANY E FFECT ON PROFIT & LOSS 3 ITA NO.1120/PN/2014 ACCOUNT. THEREFORE, IT WAS SUBMITTED THAT INTEREST IN RESPECT OF MAPL LOAN CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE COMPAN Y. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE HOLD ING THAT SINCE LOAN WAS ROUTED THROUGH BOOKS OF ASSESSEE COMPANY, INTEREST SHOULD HAVE BEEN ROUTED THROUGH PROFIT & LOSS ACCOUNT. THE ASSESSING OFFIC ER AFTER DISCUSSING THE ISSUE MADE ADDITION OF RS.2,02,38,082/-. AGAINST T HE SAID ACTION OF THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A). 3.2 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FILED BEFORE HIM AND FOLLOWING THE EARLIER DECISION OF TH E PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.737/PN/20 08, 878 TO 880/PN/2008 & 306/PN/2009 RELATING TO ASSESSMENT YEARS 2001-02 TO 2005-06, ORDER DATED 31.01.2013 DIRECTED THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF RS.2,02,38,082/- MADE ON ACCOUNT OF INTEREST ON LOA N ACCRUED TO SUBSIDIARY COMPANIES. 3.3 AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE US. 3.4 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE PLACED RELIANCE ON THE ORDER OF THE CIT(A) AND ALSO RELIED UPON THE OR DER OF THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.737/PN/20 08, 878 TO 880/PN/2008 & 306/PN/2009 RELATING TO ASSESSMENT YEARS 2001-02 TO 2005-06 RESPECTIVELY, ORDER DATED 31.01.2013 WHEREIN THE TRIBUNAL DECIDED IMPUGNED ISSUE IN FAVOUR OF ASSESSEE. 3.5 THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELI ANCE ON THE ORDER OF THE ASSESSING OFFICER. 3.6 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ON. WE FIND THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE PUNE BENCH OF THE TRIBUNAL IN 4 ITA NO.1120/PN/2014 ASSESSEES OWN CASE VIDE ITA NO.737/PN/2008, 878 TO 880/PN/2008 & 306/PN/2009 RELATING TO ASSESSMENT YEARS 2001-02 TO 2005-06 RESPECTIVELY, ORDER DATED 31.01.2013. THE RELEVANT PORTION OF TH E ORDER OF THE TRIBUNAL DATED 31.01.2013 (SUPRA) IS REPRODUCED FOR READY REFERENC E :- 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THE PRESENT CASE, THE CRUX OF THE ISSUE RELATES TO THE INTEREST INCOME WI TH RESPECT TO THE LOANS MADE TO TWO SUBSIDIARIES OF THE APPELLANT COMPANY, VIZ. MAPL AN D MSDPL. THE LOANS IN QUESTION WERE ADVANCED IN THE EARLIER ASSESSMENT YE ARS AND AS PER THE TABULATION AT PAGE 1 OF THE PAPER BOOK, IT IS SEEN THAT UPTO THE PRECEDING ASSESSMENT YEAR I.E. UPTO A.Y. 2000-01, ASSESSEE HAD RECORDED INTEREST INCOME ON SUCH LOANS IN ITS BOOKS OF ACCOUNT. FOR THE ASSESSMENT YEAR 2001-02 AND THE SU BSEQUENT YEARS, ASSESSEE DID NOT RECORD IN ITS BOOKS OF ACCOUNT SUCH INTEREST IN COME THE ASSESSEE CONTENDED THAT THERE WAS NO REAL ACCRUAL OF SUCH INTEREST. WITH R EGARD TO MAPL IT WAS POINTED OUT THAT VIDE ORDER DATED 14-1-1997 OF THE BIFR, SUCH C OMPANY WAS DECLARED TO BE A SICK INDUSTRIAL COMPANY WITHIN THE MEANING OF SEC. 3(1)(O) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985, A COPY OF SUCH ORDER HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 5. IN TERMS THEREOF, IT EME RGES THAT THE NET-WORTH OF THE SAID SUBSIDIARY WAS FULLY WIPED OUT ON ACCOUNT OF ACCUMU LATED LOSSES AS ON 31-3-1996. IT WAS THEREFORE, CONTENDED BY THE ASSESSEE THAT THERE WAS NO HOPE OF RECOVERY OF INTEREST FROM THE SUBSIDIARY AND THEREFORE, NO INTE REST WAS ACCOUNTED FOR AS IT CANNOT BE SAID TO HAVE ACCRUED. SIMILARLY, WITH REGARD TO MSDPL IT WAS ALSO EXPLAINED THAT THE SAID SUBSIDIARY HAD BECOME SICK UNDER THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985. AS PER NOTE NO. 12( X) OF SCHEDULE 24, BEING THE NOTES ON ACCOUNTS ANNEXED TO AND FORMING PART OF TH E AUDITED FINANCIAL STATEMENTS FOR THE YEAR UNDER CONSIDERATION, A COPY OF WHICH H AS ALSO BEEN PLACED IN THE PAPER BOOK, THE SAID SUBSIDIARY COMPANY WAS A SICK COMPAN Y AS PER BIFR. THE ASSESSEE HAS ALSO EXPLAINED THAT MSDPL WAS NOT OPERATING SIN CE 1995 AND IN ITS BOARD MEETING HELD ON 27-3-2003 IT WAS RESOLVED THAT THE COMPANY BE WOUND UP. THE SAID CONCERN ALSO WAS CONSISTENTLY INCURRING LOSSES AND THEREFORE, UNDER THESE CIRCUMSTANCES, INTEREST INCOME WAS NOT ACCOUNTED FO R AS IT COULD NOT BE SAID TO HAVE BEEN ACCRUED HAVING REGARD TO THE RELEVANT FACTS AN D CIRCUMSTANCES. 8. THE ASSESSING OFFICER AS WELL AS THE CIT(A) ON T HE OTHER HAND, CONCLUDED THAT THE INTEREST INCOME WAS ASSESSABLE FOR THE REA SON THAT ASSESSEE WAS MAINTAINING ITS ACCOUNTS ON MERCANTILE BASIS AND THE LOAN AGREE MENT WITH THE TWO SUBSIDIARIES CONTINUED TO EXIST AND THEREFORE, THE INTEREST INCO ME CONTINUED TO ACCRUE TO THE ASSESSEE, NOTWITHSTANDING THE FACTS AND CIRCUMSTANC ES BROUGHT OUT BY THE ASSESSEE. 9. OSTENSIBLY, THE POINT TO BE SEEN IN THE PRESENT APPEAL IS AS TO WHETHER THE INCOME ON ACCOUNT OF IMPUGNED INTEREST CAN BE SAID TO HAVE REALLY ACCRUED TO THE ASSESSEE. IN THIS CONTEXT, WE MAY REFER TO THE JUD GMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GODHRA ELECTRICITY CO. LTD. (SUPRA) . IN THE CASE BEFORE THE HONBLE SUPREME COURT, THE ASSESSEE WAS IN THE BUSINESS OF GENERATION AND SUPPLY OF ELECTRICITY TO CONSUMERS IN GODHRA AREA. THE ELECT RICITY COMPANY ENHANCED THE RATES OF SUPPLY BUT SUCH ENHANCED RATES COULD NOT B E ACTUALLY RECOVERED DUE TO LITIGATION AND ITS SUBSEQUENT TAKE-OVER BY THE GOVE RNMENT. THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, AND WHI LE COMPUTING ITS INCOME IT DEDUCTED CERTAIN SUMS FROM ITS TOTAL INCOME IN RESP ECT OF SALE OF ELECTRICAL ENERGY ON THE GROUND THAT THE SAID AMOUNT WAS NOT ACTUALLY RE COVERED BY IT FROM CONSUMERS DUE TO LITIGATION. THE REVENUE SOUGHT TO TAX SUCH AMOUNT ON THE GROUND THAT SUCH AMOUNT ACTUALLY ACCRUED TO THE ASSESSEE AND THE ASS ESSEE HAD A LEGAL RIGHT TO 5 ITA NO.1120/PN/2014 RECOVER SUCH DUES. AS PER THE REVENUE, ASSESSEE-CO MPANY WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THUS THE INCOME ACCRUED TO THE ASSESSEE. THE HONBLE SUPREME COURT OBSERVED THAT UNDER THE ACT INCOME CH ARGEABLE TO TAX IS THE INCOME THAT IS RECEIVED OR IS DEEMED TO BE RECEIVED IN IND IA IN THE PREVIOUS YEAR RELEVANT TO THE YEAR FOR WHICH THE ASSESSMENT IS MADE OR THE I NCOME THAT ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE IN INDIA DURING SUCH YEAR . THE COMPUTATION OF SUCH INCOME IS TO BE MADE IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE, WHICH MAY EITHER BE CASH SYSTEM OR THE MERCANTILE SYSTEM. IT REFERRED TO THE FOLLOWING PASSAGE FROM ITS EARLI ER DECISION IN THE CASE OF CIT VS. SHOORJI VALLABHDAS AND CO. (1962) 46 ITR 144 (SC) W HEREIN IT HAD BEEN STATED AS UNDER: INCOME-TAX IS A LEVY ON INCOME. NO DOUBT, THE INC OME-TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS RECEIPT; BUT THE SUBSTANCE OF THE MAT TER IS THE INCOME. IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOU GH IN BOOK KEEPING; AN ENTRY IS MADE ABOUT A HYPOTHETICAL INCOME, WHICH DOES NOT MA TERIALIZE. 10. THE HONBLE SUPREME COURT NOTICED THAT THE AFOR ESAID PRINCIPLE WAS APPLICABLE EVEN IF THE ACCOUNTS ARE MAINTAINED ON M ERCANTILE SYSTEM OF ACCOUNTING. IN FACT, THE HONBLE SUPREME COURT APPLIED THE PRIN CIPLE THAT EVEN IF THE ACCOUNTS ARE MAINTAINED ON MERCANTILE SYSTEM, WHAT IS TO BE SEEN IS WHETHER INCOME CAN BE SAID TO HAVE REALLY ACCRUED TO THE ASSESSEE OR NOT. IN COMING TO SUCH CONCLUSION, THE HONBLE SUPREME COURT REFERRED TO ITS EARLIER JUDGM ENT IN THE CASE OF CIT VS. BIRLA GWALIOR (P) LTD. (1973) 89 ITR 266, WHEREIN REFEREN CE WAS MADE TO THE JUDGMENT IN THE CASE OF MORVI INDUSTRIES LTD. VS. CIT (1971) 82 ITR 835 (SC). PERTINENTLY, WHAT THE HONBLE SUPREME COURT HAS EMPHASIZED IS THAT IR RESPECTIVE OF MERCANTILE SYSTEM OF ACCOUNTING BEING FOLLOWED, THE QUESTION TO BE DE CIDED IS AS TO WHETHER ANY INCOME HAD REALLY ACCRUED OR NOT, HAVING REGARD TO THE FA CTS AND CIRCUMSTANCES OF A CASE. IT IS ALSO PERTINENT TO NOTE THAT THE HONBLE SUPRE ME COURT QUOTED ITS EARLIER JUDGMENT IN THE CASE OF POONA ELECTRIC SUPPLY CO. L TD. VS. CIT (1965) 57 ITR 521, AND ENDORSED THE PROPOSITION THAT INCOME-TAX IS A T AX ON THE REAL INCOME I.E. THE PROFITS ARRIVED AT ON COMMERCIAL PRINCIPLE SUBJECT TO THE PROVISIONS OF THE ACT. IN OTHER WORDS, THE HONBLE SUPREME COURT HAS AFFIRMED THAT IT IS NOT A HYPOTHETICAL ACCRUAL OF INCOME THAT IS TO BE TAKEN INTO CONSIDER ATION BUT THE REAL ACCRUAL OF INCOME. IN CONCLUSION, THE HONBLE SUPREME COURT H ELD AS FOLLOWS:- THE QUESTION WHETHER THERE WAS REAL ACCRUAL OF INC OME TO THE ASSESSEE COMPANY IN RESPECT OF THE ENHANCED CHARGES FOR SUPP LY OF ELECTRICITY HAS TO BE CONSIDERED BY TAKING THE PROBABILITY OR IMPROBAB ILITY OF REALIZATION IN A REALISTIC MANNER. IF THE MATTER IS CONSIDERED IN T HIS LIGHT, IT IS NOT POSSIBLE TO HOLD THAT THERE WAS REAL ACCRUAL OF INCOME TO THE A SSESSEE-COMPANY IN RESPECT OF THE ENHANCED CHARGES FOR SUPPLY OF ELECT RICITY WHICH WERE ADDED BY THE INCOME-TAX OFFICER WHILE PASSING THE ASSESSM ENT ORDERS IN RESPECT OF THE ASSESSMENT YEARS UNDER CONSIDERATION. THE APPE LLATE ASSTT. COMMISSIONER WAS RIGHT IN DELETING THE SAID ADDITIO N MADE BY THE ITO AND THE TRIBUNAL HAD RIGHTLY HELD THAT THE CLAIM AT THE INCREASED RATES AS MADE BY THE ASSESSEE-COMPANY ON THE BASIS OF WHICH NECESSAR Y ENTRIES WERE MADE REPRESENTED ONLY HYPOTHETICAL INCOME AND THE IMPUGN ED AS BROUGHT TO TAX BY THE ITO DID NOT REPRESENT THE INCOME WHICH HAD REAL LY ACCRUED TO THE ASSESSEE-COMPANY DURING THE RELEVANT PREVIOUS YEARS . THE HIGH COURT IN OUR OPINION, WAS IN ERROR IN UPSETTING THE SAID VIEW OF THE TRIBUNAL. 11. ON THE BASIS OF THE AFORESAID JUDGMENT OF HONB LE SUPREME COURT, IT IS CLEAR THAT EVEN THE MERCANTILE SYSTEM OF ACCOUNTING, DOES NOT ENVISAGE A HYPOTHETICAL ACCRUAL OF INCOME, BUT WHAT IS TO BE SEEN IS WHETHE R INCOME CAN BE SAID TO HAVE 6 ITA NO.1120/PN/2014 REALLY ACCRUED TO THE ASSESSEE. IN EXAMINING WHETH ER ANY INCOME HAD ACCRUED IN A GIVEN SITUATION, IT IS NECESSARY TO HAVE REGARD TO THE REALITY AND SPECIALITY OF THE SITUATION RATHER THAN PURELY THEORETICAL ASPECT OF THE MATTER. KEEPING THE AFORESAID IN MIND, IN OUR CONSIDERED OPINION, THE STAND OF TH E REVENUE TO THE EFFECT THAT INTEREST ACCRUED TO THE ASSESSEE CANNOT BE UPHELD M ERELY BECAUSE THE LOAN AGREEMENT WITH THE SUBSIDIARY COMPANIES CONTINUED T O EXIST. IT IS IMPERATIVE THAT ALL THE ATTENDANT FACTS, CIRCUMSTANCES AND REALITIES OF THE SITUATION HAVE TO BE CONSIDERED IN THEIR PROPER COMMERCIAL PERSPECTIVE B EFORE IT CAN BE EVALUATED AS TO WHETHER INTEREST INCOME REALLY ACCRUED IN THE HANDS OF THE ASSESSEE. THE FACTS NOTED BY US IN PARA 7 ABOVE, ARE NOT IN DISPUTE. IT IS AL SO NOT IN DISPUTE THAT THE ASSESSEE COMPANY HAS NOT RECOVERED ANY DUES FROM THE TWO SUB SIDIARIES TILL NOW, AS ASSERTED BY THE LEARNED REPRESENTATIVE BEFORE US. AFTER CONS IDERING THE ENTIRE GAMUT OF FACTS AND CIRCUMSTANCES, IT IS AN INESCAPABLE CONCLUSION THAT THE REALIZATION OF THE INTEREST INCOME IN QUESTION IS HIGHLY SUSPECT AND THEREFORE , THERE CANNOT BE SAID TO BE ANY REAL ACCRUAL OF INCOME. THUS, HAVING REGARD TO THE LEGAL POSITION AND THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE LOWER AUTHORITIES HAVE FAULTED IN CONCLUDING THAT INTEREST INCOME TO THE E XTENT OF RS. 197.13 LAKHS ACCRUED TO THE ASSESSEE-COMPANY DURING THE YEAR UNDER CONSI DERATION. THUS, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OF FICER TO DELETE THE ADDITION OF RS. 197.13 LAKHS. 3.7 IN VIEW OF THE EARLIER DECISION OF CO-ORDINATE BENCH OF ITAT ON THE IDENTICAL ISSUE, WE FIND NO MERIT IN THE GRIEVANCE OF THE REVENUE RAISED. IN THE RESULT, GROUND NO.1 OF THE REVENUES APPEAL IS DISM ISSED. 4. THE SECOND AND LAST GROUND OF THE REVENUES APPE AL CONCERNS THE DISALLOWANCE OF RS.80,10,000/- BEING EXPENSES ON AC COUNT OF POWER AND FUEL EXPENSES. 4.1 THE FACTS CONCERNING THE ISSUE ARE THAT THE ASS ESSEE CLAIMED AN AMOUNT OF RS.370.79 LACS TOWARDS POWER AND FUEL EXPENSES. THE ASSESSING OFFICER OBSERVED THAT THIS AMOUNT WAS INCLUSIVE OF EXPENDIT URE PERTAINING TO THE RESIDENTIAL COLONY TO THE EXTENT OF RS.80,10,000/-. AS PER ASSESSING OFFICER, THIS AMOUNT OF RS.80,10,000/- WAS INCURRED BY THE A SSESSEE WHICH IS NOT DIRECTLY RELATED TO THE BUSINESS ACTIVITIES. IT WA S FURTHER OBSERVED THAT SUCH FACILITY IS ALSO NOT BEING TAXED IN THE HANDS OF TH E BENEFICIARIES IN THE FORM OF PERKS ETC.. THE ASSESSING OFFICER ACCORDINGLY DISA LLOWED THE EXPENDITURE INCURRED IN RESPECT OF RESIDENTIAL COLONY OF STAFF AND NON-BUSINESS EXPENDITURE. 7 ITA NO.1120/PN/2014 4.2 THE CIT(A) GRANTED RELIEF TO THE ASSESSEE FOLLO WING ITS EARLIER ORDER FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06. 4.3 AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE US. 4.4 THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELI ANCE ON THE ORDER OF THE ASSESSING OFFICER. 4.5 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE PLACED RELIANCE ON THE ORDER OF THE CIT(A) AND ALSO RELIED UPON THE RE CENT DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE I TA NO.751/PN/2008 RELATING TO ASSESSMENT YEAR 2002-03 AND ORS., ORDER DATED 10.03.2016 WHEREIN THE TRIBUNAL DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. 4.6 WE NOTICE THAT THE IDENTICAL ISSUE HAS BEEN DEC IDED IN FAVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN ASSES SEES OWN CASE VIDE ITA NO.751/PN/2008 RELATING TO ASSESSMENT YEAR 2002-03 AND ORS., ORDER DATED 10.03.2016. THE RELEVANT PARA OF THE ORDER OF THE TRIBUNAL DATED 10.03.2016 (SUPRA) IS REPRODUCED HEREUNDER FOR REFERENCE :- 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE FIRST ASPECT OF THE ISSUE IS THE DETERMINATION OF LOSS IN THE HA NDS OF ASSESSEE, WHICH IN TURN, HAS BEEN ADJUSTED AGAINST THE BROUGHT FORWARD LOSSES, W HICH AT THE CLOSE OF THE YEAR ARE ALSO FURTHER AVAILABLE TO THE ASSESSEE FOR ADJUSTME NT. SECONDLY, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE VIS--VIS THE DEDUCTION ON AC COUNT OF POWER EXPENSES. THE RESIDENTIAL COLONY ESTABLISHED BY THE ASSESSEE COMP ANY HAS BEEN PROVIDED TO ITS EMPLOYEES AND IT IS INCUMBENT UPON THE ASSESSEE TO PROVIDE POWER FACILITIES TO THE SAID AREA. ON ONE HAND, THE RESIDENTIAL COLONY COM PRISES FIRST THE RESIDENTIAL ACCOMMODATION PROVIDED TO THE EMPLOYEES AND IT IS T HE CASE OF ASSESSEE BEFORE US THAT IN CASE ANY EXPENDITURE IS INCURRED VIS--VIS RESIDENTIAL QUARTERS OF THE EMPLOYEES, THE SAME IS RECOVERED FROM THEM. EVEN I N CASE THE SAME IS NOT RECOVERED FROM THEM, DOES NOT MERIT THE DISALLOWANCE MADE IN THE HANDS OF ASSESSEE. FURTHER, PART OF POWER AND FUEL EXPENSES WERE INCURRED ON PR OVIDING LIGHTS TO THE RESIDENTIAL COLONY AND ALSO TO THE COMMON FACILITIES PROVIDED B Y THE ASSESSEE TO ITS EMPLOYEES, WHICH WAS THE OBLIGATION OF THE ASSESSEE COMPANY AN D HENCE, EXPENDITURE INCURRED TOWARDS DISCHARGE OF SAID OBLIGATION IS BUSINESS EX PENDITURE OF THE ASSESSEE COMPANY AND IS DULY ALLOWABLE IN THE HANDS OF ASSES SEE. FURTHER, THE EXPENDITURE RELATABLE TO RESIDENTIAL QUARTERS IS NO DOUBT TO BE RECOVERED FROM THE EMPLOYEES OR IS 8 ITA NO.1120/PN/2014 TO BE INCLUDED AS PERK IN THE HANDS OF EMPLOYEES OF THE ASSESSEE COMPANY, BUT MERELY BECAUSE NO SUCH EXERCISE WAS CARRIED ON, DOE S NOT MERIT THE DISALLOWANCE OF EXPENDITURE IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD AND DISMISS THE GROUND OF APPEAL RELATI NG TO POWER AND FUEL EXPENSES RAISED BY THE REVENUE. 4.7 IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL ON THE IDENTICAL ISSUE IN ASSESSEES OWN CASE, WE DECL INE TO INTERFERE WITH THE ORDER OF THE CIT(A). IN THE RESULT, GROUND NO.2 OF THE R EVENUES APPEAL IS DISMISSED. 5. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED ON THIS 15 TH DAY OF APRIL, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 15 TH APRIL, 2016. & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE