DCIT, Chandigarh V. M/s Orbit Resorts (P) Ltd., Chandigarh

ITA 1142/CHANDI/2010

• Counselvise Citation: 114221514 RSA 2010
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Business expenditure; Tax effect; Commercial expediency; Revised return; Revenue expenditure; Capital expenditure
• Section: 28; 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: CHANDIGARH BENCH B BEFORE HONBLE MS SUSHMA CHOWLA, JM AND HONBLE SHRI MEHAR SINGH, AM ITA NO. 1142/CHANDI/2010 ASSESSMENT YEAR: 2006-07 D.C.I.T. C-1(1), CHANDIGARH V. ORBIT RESORTS (P) LTD # 256, SECTOR 9-C CHANDIGARH PAN: AAACO 4024 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. SAINI RESPONDET BY: SHRI VINEET KRISHAN DATE OF HEARING: 1.9.2011 DATE OF PRONOUNCEMENT: 19.9.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE, FOR ASSES SMENT YEAR 2006-07, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A ), CHANDIGARH, DATED 14.6.2009, U/S 250(6) OF THE INCOME-TAX ACT ( IN SHORT THE ACT). 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS GRAVELY ERRED IN DELETING THE A DDITION MADE BY THE AO BY TREATING EMPLOYEES CONTRIBUTION TOWARD S EPF AS INCOME AS PER PROVISIONS OF SECTION 2(24)(X) AND NO T ALLOWING DEDUCTION OF THE SAME AS PER SECTION 36(1)(VA) OF T HE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS GRAVELY ERRED IN DELETING THE A DDITION OF RS. 15,55,616/- MADE BY THE AO BY DISALLOWANCE THE INTE REST PAID. ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS GRAVELY ERRED IN DELETING THE A DDITION OF RS. 1,60,277/- ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT FOR USING TH E FUNDS FOR NON BUSINESS PURPOSE AND ALSO FOR THE PURPOSE ADVAN CES FOR THE PURCHASE OF FIXED ASSETS, MADE TO VIPUL LTD., A ND UNITECH LTD. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS GRAVELY ERRED IN DELETING THE A DDITION OF RS. 2,64,480/- BY DISALLOWING THE EXPENSES INCURRED ON THE MARKET SURVEY GOT CONDUCT FROM MDRA. 3. THE ASSESSEE FILED ITS RETURN OF INCOME, ON 9.2. 2007, DECLARING INCOME AT RS. 21,57,43,610/-. THE ASSESSE E IS IN THE BUSINESS OF RUNNING HOTEL. THE AO PASSED THE ASSES SMENT ORDER U/S 143(3) OF THE ACT, ON 26.12.2008, ASSESSING THE INC OME OF THE ASSESSEE AT RS. 21,65,07,307/-. THE AO TREATED A S UM OF RS. 1,45,547/-, AS INCOME OF THE ASSESSEE, AS IT FAILED TO DEPOSIT THE SAID SUM, ON OR BEFORE THE DUE DATE U/S 2(24)(X) R. W. SECTION 36(1)(VA) OF THE ACT. THE LD. CIT(A), DELETED THE IMPUGNED ADDITION. THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 4. THE DR PLACED RELIANCE ON THE IMPUGNED ASSESSM ENT ORDER PASSED BY THE AO IN RESPECT OF ISSUE CONTAINED IN G ROUND NO. 1. HOWEVER, THE DR CONTENDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT V. NUCHEM LTD IN ITA NO. 323 OF 200 9, FOLLOWING THE DECISIONS OF HON'BLE APEX COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD (2009) 227 CTR 417. THE LD. AR PLA CED RELIANCE ON THE ORDER OF THE LD. CIT(A). 5. ON A CAREFUL PERUSAL AND CONSIDERATION OF THE FA CTS OF THE CASE AND RELEVANT MATERIAL BROUGHT ON RECORD, IT IS EVID ENT THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BLE JURI SDICTIONAL HIGH COURT, IN THE CASE OF CIT V. M/S NUCHEM LTD, IN ITA NO. 323 OF 2009. IT WOULD BE PERTINENT TO PRODUCE THE RELELVANT AND OPERATIVE PART OF ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 3 THE FINDINGS OF LD. CIT(A), AS CONTAINED IN PARA 6 OF THE IMPUGNED APPEAL: 6 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND I FI ND THAT THIS CONTROVERSY HAS NOW BEEN SET TO REST BY THE DE CISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. M/S NUCHEM LTD. IN ITA NO. 323 OF 2009, FOLLOWING THE D ECISION OF HON'BLE APEX COURT IN THE CASE OF CIT V. ALOM EXTRU SIONS LTD (2009) 227 CTR 417 WHEREIN THE HON'BLE COURT HAS OB SERVED AS UNDER: SECTION 43B (MAIN SECTION) WHICH STOOD INSERTED BY THE FINANCE ACT, 1983 WITH EFFECT FROM APRIL 1, 1984 EX PRESSLY COMMENCES WITH A NON OBSTANTE CLAUSE, THE UNDERLYIN G OBJECT BEING TO DISALLOW DEDUCTIONS CLAIMED MERELY BY MAKI NG A BOOK ENTRY BASED ON THE MERCANTILE SYSTEM OF ACCOUNTING. AT THE SAME TIME, SECTION 43B (MAIN SECTION) MADE IT MANDA TORY FOR THE DEPARTMENT TO GRANT DEDUCTION IN COMPUTING THE INCOME UNDER SECTION 28 IN THE YEAR IN WHICH TAX, DUTY, CE SS, ETC., IS ACTUALLY PAID. HOWEVER, PARLIAMENT TOOK COGNIZANCE OF THE FACT THAT THE ACCOUNTING YEAR OF A COMPANY DID NOT ALWAYS TALLY WITH THE DUE DATES UNDER THE PROVIDENT FUND ACT, M UNICIPAL CORPORATION ACT (OCTROI) AND OTHER TAX LAWS. THERE FORE, BY WAY OF THE FIRST PROVISO, AN INCENTIVE / RELAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TAX, DUTY, CESS OR FEE BY EXPLI CITLY STATED THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER THE INCOME-TAX ACT (DUE DATE), THE ASSESSEE (S) THEN WOULD BE ENTITLED TO DEDUCTION. HOWEVER, THIS RELAXATION/INCENTIVE WAS RESTRICTED ONLY TO TA X, DUTY, CESS AND FEE. IT DID NOT APPLY TO CONTRIBUTIONS TO LABOU R WELFARE FUNDS. THE REASON APPEARS TO BE THAT THE EMPLOYER( S) SHOULD NOT SIT ON THE COLLECTED CONTRIBUTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFARE LEGIS LATIONS BY DELAYING PAYMENT OF CONTRIBUTIONS TO THE WELFARE FU NDS. HOWEVER, AS STATED ABOVE, THE SECOND PROVISO RESULT ED IN IMPLEMENTATION PROBLEMS, WHICH HAVE BEEN MENTIONED HEREINABOVE, AND WHICH RESULTED IN THE ENACTMENT OF THE FINANCE ACT, 2003, DELETING THE SECOND PROVISO AND BRINGING ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 4 ABOUT UNIFORMITY IN THE FIRST PROVISO BY EQUATING T AX, DUTY, CESS, AND FEE WITH CONTRIBUTIONS TO WELFARE FUNDS. ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO, T HEN, IN OUR VIEW, THE FINANCE ACT, 2003 WHICH IS MADE APPLICABL E BY PARLIAMENT ONLY WITH EFFECT FROM APRIL 1, 2004, WOU LD BECOME CURATIVE IN NATURE, HENCE, IT WOULD APPLY, RETROSPE CTIVELY, WITH EFFECT FROM APRIL 1, 1988. SECONDLY, IT MAY BE NOT ED THAT IN THE CASE OF ALLIED MOTORS P. LTD V CIT REPORTED IN (1997) 224 ITR 677 (S.C), THE SCHEME OF SECTION 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUESTION WHICH AROS E FOR DETERMINATION WAS, WHETHER SALES TAX COLLECTED BY T HE ASSESSEE AND PAID AFTER THE END OF THE RELEVANT PRE VIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE RELEVANT SALE S TAX LAW SHOULD BE DISALLOWED U/S 43B OF THE ACT WHILE COMPU TING THE BUSINESS INCOME OF THE PREVIOUS YEAR? THAT WAS A C ASE WHICH RELATED TO THE ASSESSMENT YEAR 1984-85. THE RELEVA NT ACCOUNTING PERIOD ENDED ON JUNE 30, 1983. THE INCO ME-TAX OFFICER DISALLOWED THE DEDUCTION CLAIMED BY THE ASS ESSEE WHICH WAS ON ACCOUNT OF SALES TAX COLLECTED BY THE ASSESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEA R. THE DEDUCTION WAS DISALLOWED U/S 43B WHICH AS STATED AB OVE WAS INSERTED WITH EFFECT FROM APRIL 1, 1984. IT IS ALS O RELEVANT TO NOTE THAT THE FIRST PROVISO WHICH CAME INTO FORCE W ITH EFFECT FROM APRIL 1, 1988, WAS NOT ON THE STATUTE BOOK WHE N THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED MOTORS P. LTD (1997) 224 ITR 677. HOWEVER, THE ASSESSEE CONTENDE D THAT EVEN THOUGH THE FIRST PROVISO CAME TO BE INSERTED W ITH EFFECT FROM APRIL 1, 1988, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RETROSPECTIVELY FROM APRIL 1, 1 984WHEN SECTION 43B STOOD INSERTED. THIS IS HOW THE QUESTI ON OF RETROSPECTIVELY AROSE IN ALLIED MOTORS P. LTD (1997 ) 224 ITR 677. THIS COURT, IN ALLIED MOTORS P. LTD. (1977) 2 24 ITR 677 HELD THAT WHEN A PROVISO IS INSERTED TO REMEDY UNIN TENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE A PRO VISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION A ND WHICH PROVISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION IT COULD BE REA D AS ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 5 RETROSPECTIVE IN OPERATION, PARTICULAR TO GIVE EFFE CT TO THE SECTION AS A WHOLE. ACCORDINGLY, THIS COURT, IN ALL IED MOTORS P. LTD (1997) 224 ITR 677, HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE, HENCE RETROSPECTIVE IN OPERATION WITH EF FECT FROM APRIL 1, 1988. IT IS IMPORTANT TO NOTE ONCE AGAIN THAT, BY THE FINANCE ACT, 2003, NOT ONLY THE SECOND PROVISO IS D ELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY B RINGING ABOUT UNIFORMITY. 7. IN THE INSTANT CASE, ALL THE DEPOSITS HAVE BEEN MADE WITHIN THE GRACE PERIOD (COVERED BY CIT V. LAKHANI INDIA LTD., ITA NO. 325 OF 2009, DATED 16.11.2009) EXCEPT ONCE OF RS. 30,828/- WHICH WAS A DAY LATER THAN GRACE PERIOD. T HE CAE OF NUCHEM LTD (SUPRA) SQUARELY COVERS THIS PAYMENT AS WELL. AS A RESULT, THE ADDITION OF RS. 1,45,547/- ON THIS GR OUND IS DELETED, ALLOWING ASSESSEES APPEAL. 6. THE LD. CIT(A) CATEGORICALLY HELD THAT ALL THE D EPOSITS HAVE BEEN MADE WITHIN GRACE PERIOD EXCEPT ONE OF RS. 30, 828/-, WHICH WAS A DAY LATER THAN THE GRACE PERIOD. AFTER DISCU SSION OF THE FACTUAL MATRIX OF THE CASE AND THE SUBMISSIONS FILE D BY THE ASSESSEE, THE LD. CIT(A), DELETED THE IMPUGNED ADDI TION. HAVING REGARD TO THE FACTS OF THE CASE AND RESPECTFULLY FO LLOWING THE BINDING DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V. NUCHEM LTD IN ITA NO. 323 OF 2009, WE DO NOT FIND A NY INFIRMITY IN THE FINDINGS OF LD. CIT(A). THEREFORE, THE FINDING S OF THE LD. CIT(A) ARE UPHELD. 7. IN GROUND NO. 2, THE REVENUE CONTENDED THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,55,616/-, M ADE BY THE AO, ON THE GROUND OF DISALLOWANCES OF INTEREST. 8. THE AO OBSERVED THAT THE ASSESSEE HAS IMPORTED N EW CARS AND INCURRED EXPENDITURE OF RS. 40,496/-, ON MARINE INSURANCE AND INTEREST EXPENDITURE OF RS. 1,31,646/-, DURING THE PERIOD PRIOR TO THE CAR BEING PUT TO USE IN INDIA. THE ASSESSEE WAS AF FORDED OPPORTUNITY TO AS TO WHY SUCH EXPENSES SHOULD NOT B E TREATED AS CAPITAL EXPENDITURE, IN RELATION TO PURCHASE NEW AS SETS. THE AO ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 6 AFTER APPRECIATING OF ASSESSEES REPLY HELD THAT TH E ASSESSEE HAD PURCHASED NEW ASSETS FOR ITS BUSINESS. IT WAS HELD BY THE AO THAT THE SAID EXPENDITURE WAS INCURRED TO BRING NEW ASSE TS INTO EXISTENCE AND BEFORE THE SAID ASSET WAS PUT TO USE. IN VIEW OF THIS, THE AO WAS OF THE OPINION THAT THE IMPUGNED EXPENDITURE IS TO BE CAPITALIZED. HOWEVER, THE AO ALLOWED DEPRECIATION THEREON AS ADMISSIBLE. THUS, THE AO DISALLOWED THE AMOUNT OF RS. 1,55,616/-. 9. THE LD. CIT(A) DELETED THE IMPUGNED ADDITION BY OBSERVING AS UNDER:- 11 THE DIFFERENCE THAT THE INSERTION OF PROVISIONS OF SECTION 36(1)(III) HAS MADE IS THAT IF THE BORROWED CAPITAL IS USED FOR EXTENSION OF EXISTING BUSINESS OR PROFESSION, IRRES PECTIVE OF THE ACCOUNTING TREATMENT CAPITALIZATION OR NOT, T HE INTEREST FOR THE PERIOD FROM THE DATE ON WHICH CAPITAL WAS B ORROWED TO THE DATE ON WHICH THE ASSET IS PUT TO USE WILL NOT BE ALLOWED AS A DEDUCTION. 12. THE CONFUSION HAS ARISEN FROM THE WORDS EXTENS ION OF EXISTING BUSINESS. TO MY MIND, THE AO IS OF THE V IEW THAT ANY ASSET BOUGHT FOR THE BUSINESS WILL HELP IN INCREASI NG THE PRODUCTIVITY AND EFFICIENCY OF A BUSINESS AND AS SU CH CAN BE CONSTRUED AS EXTENDING THE EXISTING BUSINESS. THOU GH HE HAS NOT PUT IT IN SO MANY WORDS, BUT I FEEL THAT THIS T HINKING HAS LED TO THIS ADDITION IN THIS CASE. 13. AFTER READING VARIOUS JUDGMENTS AND PROVISIONS OF LAW, I AM OF THE VIEW THAT SINCE THE TERM EXTENSION HAS NOT BEEN DEFINED, IT WILL COVER NORMAL CIRCUMSTANCES WHICH I N BUSINESS CIRCLES ARE REGARDED AS EXTENSION OF BUSINESS, FOR EXAMPLE, CREATION OF ADDITIONAL ROOMS, WINGS, FACILITIES, ET C. FURTHER, I AM OF THE VIEW THAT INCREASING EFFICIENCY AND PRODU CTIVITY BY ADDING A FEW ASSETS WILL NOT TANTAMOUNT TO EXTENSIO N OF BUSINESS. IF CAPITAL IS BORROWED TO ACQUIRE NEW AS SETS TO MEET DEFICIENCY OR TO HAVE MORE OF OWN ASSETS, IT CANNOT BE TAKEN AS A CASE OF EXTENSION OF BUSINESS. IN ANY EXISTIN G BUSINESS, SOME EXTENSION/EXPANSION IS A NORMAL FEATURE WHICH SHOULD ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 7 NOT BE CONFUSED WITH SUBSTANTIAL EXPANSION WHICH PR OBABLY THE WORLD EXTENSION HERE INTENDED TO IMPLY. MERELY S TATING THAT CARS BOUGHT OUT OF BORROWED CAPITAL FOR THE PURPOSE OF BUSINESS IF NOT PUT TO USE WOULD DISENTITLE THE APP ELLANT FROM DEDUCTION DOES NOT SEEM JUSTIFIED. IT IS, AS IF ON E PART OF THIS PROVISO TO SECTION 36(1)(III) REGARDING USE OF ASSE TS HAS BEEN CONSIDERED AND OTHER PART REGARDING EXTENSION OF BU SINESS HAS BEEN IGNORED. 14. IN VIEW OF THE ABOVE, I FIND THAT THERE IS FORC E IN LD. COUNSELS CONTENTION THAT THE CARS BOUGHT FROM THE BORROWED CAPITAL AND NOT PUT TO USE WERE NOT FOR EXTENSION O F EXISTING BUSINESS AND THEREFORE WILL NOT COME WITHIN THE AMB IT OF THE PROVISO TO SECTION 36(1)()III). FURTHERMORE, SINCE IT HAS NOT BEEN ESTABLISHED BY THE AO THAT THE ASSETS ACQUIRE D LED TO ANY SORT OF MAJOR CAPACITY ENHANCEMENT WHICH MAY BE CONSIDERED AN EXTENSION OF BUSINESS, THE ADDITION D OES NOT SEEM JUSTIFIED. EVEN IF SECTION 36(1)(III) IS READ IN CONJUNCTION WITH EXPLANATION 8 TO SECTION 43(1), THE RESULTS WO ULD NOT CHANGE. 15. THE ADDITION OF RS. 1,31,646/- IS THEREFORE DEL ETED, ALLOWING ASSESSEES PLEA ON THIS GROUND. 10. THE DR VEHEMENTLY CONTENDED THAT THE INTEREST PAID BEFORE THE ASSET WAS PUT TO USE IS REQUIRED TO BE CAPITALI ZED. THEREFORE, THE AO WAS LEGALLY JUSTIFIED IN DISALLOWING THE IMP UGNED INTEREST. HE REFERRED TO PROVISO TO SEC 36(1)((III) OF THE AC T. TO SUPPORT HIS CONTENTION, HE DREW OUR ATTENTION, TO PARA 3 OF THE ASSESSMENT ORDER AND PARA 9,11,13 OF THE ORDER OF LD. CIT(A). THE DR ALSO CONTENDED THAT THE APPROACH OF THE AO WAS JUDICIOUS AND FAIR ENOUGH AS IT ALLOWED THE DEPRECIATION ON THE SAID A SSET. 11. THE LD. AR FOR THE ASSESSEE CONTENDED THAT HA VING REGARD TO THE BUSINESS CARRIED ON, BY THE ASSESSEE, THE PURCH ASE OF NEW CARS IS MERELY AN EXPANSION OF BUSINESS. THEREFORE, THE IMPUGNED INTEREST CANNOT BE DISALLOWED. ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 8 12. WE HAVE PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND ORDERS PASSED BY THE LOWER AUTHORITIES. THE CONTEN TION OF THE LD. AR, FOR THE ASSESSEE IS THAT THE INTEREST PAID BE FORE THE ASSET WAS PUT TO USE IS ELIGIBLE FOR DEDUCTION U/S 36(1)(III) OF THE ACT, BEING MERELY EXPANSION OF THE EXISTING BUSINESS. THIS CO NTENTION OF THE LD AR FOR THE ASSESSEE RUNS CONTRARY TO THE EXPRESS PROVISIONS OF THE ACT REPRODUCED HERE UNDER: 36(1)(III) THE AMOUNT OF THE INTEREST PAID IN RE SPECT OF CAPITAL BORROWED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. (PROVIDED THAT ANY AMOUNT OF THE INTEREST PAID, IN RESPECT OF CAPITAL BORROWED FOR ACQUISITION OF AN ASSET FOR E XTENSION OF EXISTING BUSINESS OR PROFESSION (WHETHER CAPITALIZE D IN THE BOOKS OF ACCOUNT OR NOT); FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BORROWED FOR ACQUISIT ION OF THE ASSET TILL THE DATE ON WHICH SUCH ASSET WAS FIRST P UT TO USE, SHALL NOT BE ALLOWED AS DEDUCTION). A BARE PERUSAL OF THE TEXT OF THE PROVISO TO SEC 36 (1)(III) OF THE ACT CLEARLY REVEALS THAT THIS CASE IS COVERED BY THE PR OVISO TO SEC 36(1)(III). FURTHER, THE ISSUE IS ALSO COVERED BY THE DECISION DATED 14.7.11, OF HON'BLE JURISDICTIONAL HIGH COURT, IN T HE CASE OF M/S POWER DRUGS LTD., V. CIT & ANOTHER IN ITA NO. 194/2 011. RELEVANT PART OF THE DECISION IS REPRODUCED HEREUNDER: IV) WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE , THE AUTHORITIES BELOW HAVE ERRED IN APPLYING THE PROVIS O TO SEC 36(1)(III) OF THE ACT WHEN THE DISPUTED AMOUNT WAS SUBJECT MATTER OF LITIGATION? 7. ADVERTING TO THE SECOND ISSUE RELATING TO DISAL LOWANCES OF INTEREST UNDER PROVISO TO SECTION 36(1)(III) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD PAID THE AMOUNT OF INT EREST RELATING TO EXPANSION OF ITS BUSINESS PRIOR TO THE UTILIZATION OF THE MACHINERY, THE TRIBUNAL HAD CATEGORICALLY HELD THAT THE ASSESSEE HAD BORROWED THE LOANS WHICH WERE UTILIZED FOR ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 9 MAKING THE ADVANCES FOR ACQUISITION OF NEW ASSET. THE AMOUNT OF INTEREST WAS ATTRIBUTABLE TO THE CAPITAL BORROWED FOR ACQUISITION OF NEW ASSET FOR EXPANSION OF THE EXIST ING BUSINESS. THE FINDING RECORDED BY THE TRIBUNAL IN THIS RESPECT WOULD BE ADVANTAGEOUS TO BE NOTICED HERE WHICH READ S THUS:- ON HEARING THE RIVAL CONTENTIONS OF THE PARTIES, W E FIND THAT IT IS AN ADMITTED POSITION THAT THE AMOUNT WAS ADVANCE D FOR ACQUISITION OF NEW ASST WHICH WAS CLAIMED TO BE FOR THE FURTHERANCE OF THE BUSINESS ACTIVITY OF THE ASSESSE E BEFORE US. ADMITTEDLY, THE AMOUNT WAS NOT ADVANCED AS A LOAN A ND WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN APPLYING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF ABHISHEK INDUSTRIES, 286 ITR 1. HOWEVE R, ADMITTEDLY THE ASSESSEE HAD BORROWED THE LOANS WHIC H WERE UTILIZED FOR MAKING THE SAID ADVANCES. WE ARE IN C ONFORMITY WITH THE ORDERS OF AUTHORITIES BELOW THAT THE PROVI SO UNDER SEC 36(1)(III) OF THE ACT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE AMOUNT OF INTEREST ATTRIBUTABLE TO THE CAPITAL BORROWED FOR ACQUISITION OF NEW ASSET FOR EXPANSION OF THE EXISTING BUSINESS CANNOT BE ALLOWED AS DEDUCTIO N FOR THE PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BORROWED TILL THE DATE OF THE ASSET BEING PUT TO US E. ACCORDINGLY WE SUSTAIN THE DISALLOWANCES OF RS. 6.0 0 LACS AND DISMISS THE GROUND NO. 4 RAISED BY THE ASSESSEE. 13. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COU RT AS REPRODUCED ABOVE AND THE EXPRESS PROVISIONS OF SECT ION 36(1)(III) OF THE ACT AND PROVISO THEREUNDER, SQUARELY COVERS THE FACT-SITUATION OF THE PRESENT CASE. THE SAID PROVISO INSERTED BY THE FINANCE ACT, 2003, W.E.F. 1.4.2004, TERSELY CONTEMPLATES DISALLO WANCES OF SUCH INTEREST. IN VIEW OF THE ABOVE, THE FINDINGS OF TH E LD. CIT(A), ARE REVERSED AND THE GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 14. IN GROUND NO. 3, THE REVENUE CONTENDED THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,60,277/-, O N ACCOUNT OF DISALLOWANCES OF INTEREST EXPENSES CHARGED TO PROFI T AND LOSS ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 10 ACCOUNT FOR USING FUNDS FOR NON-BUSINESS PURPOSES A ND ALSO FOR THE PURPOSE OF ADVANCES FOR THE PURCHASE OF FIXED ASSET S MADE TO VIPUL LTD AND UNITECH LTD. 15. THE LD. DR CONTENDED THAT THE ADVANCES WERE NOT FOR COMMERCIAL EXPEDIENCY AND THE ISSUE IS COVERED BY T HE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF A BHISHEK INDUSTRIES LTD, 286 ITR 1 (P & H). THE ADVANCES WERE MADE FOR THE PURCHASE OF FLATS AND, HENCE, NOT FOR BUSINESS PURPOSES. HE REFERRED TO PARA 5.2 OF THE ASSESSMENT ORDER. THE LD. AR PLACED RE LIANCE ON THE ORDER OF THE LD. CIT(A). 16. THE AO HAS DEALT WITH THIS ISSUE IN PARA 5 OF T HE ASSESSMENT ORDER. IT IS OBSERVED BY THE AO THAT THE ADVANCES WERE GIVEN TO ASSOCIATE AND SISTER CONCERNS, FREE OF INTEREST. T HE AO AFTER PLACING RELIANCE ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD (SUPRA), DISALLOWED THE INTEREST. THE LD. CIT(A) DELETED THE ADDITION. 17. WE HAVE PERUSED AND CONSIDERED THE FACT-SITUATI ON OF THE CASE, RIVAL SUBMISSIONS AND THE ORDERS PASSED BY TH E LOWER AUTHORITIES. THE FINDINGS OF THE AO ARE BASED ON TH E FACTS OF THE CASE AND ALSO ON THE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD (SUPRA) CANNOT BE ASSAILED. THE DECISION OF THE HON'BLE SUPREME COURT IN THE MUNJAL SALES CORP V. CIT, 215 CTR (S.C) 105 IS BASED ON THE ENTIRELY DIF FERENT SET OF FACTS, AS IN THAT CASE INTEREST FREE ADVANCES WERE MADE OUT OF ASSESSEES OWN AVAILABLE SURPLUS FUNDS. IN THE PRE SENT CASE FACTS ARE MATERIAL DIFFERENT, HENCE, THIS DECISION IS NOT APPLICABLE. THE FACT SITUATION OF THE CASE IS SQUARELY COVERED BY T HE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT. THE RELEVANT PO RTION OF THE DECISION OF ABHISHEK INDUSTRIES LTD IS REPRODUCED H EREUNDER: BUSINESS EXPENDITURE INTEREST ON BORROWED CAPITA L CONDITION PRECEDENT FOR GRANT BORROWED CAPITAL MU ST BE USED FOR BUSINESS PURPOSES LOANS ADVANCED INTERES T-FREE TO SISTER CONCERNS WHILE PAYMENT OUTSTANDING ON BORROWINGS BY COMPANY INFERENCE THAT ADVANCES WER E FROM BORROWED FUNDS AND FOR NON-BUSINESS PURPOSES ONUS ON ASSESSEE TO SHOW BORROWINGS USED FOR BUSINE SS ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 11 PURPOSES NOT ON REVENUE TO SHOW NEXUS BETWEEN BORROWINGS AND ADVANCES THAT ADVANCES BY COMPANY WERE OUT OF ITS OWN FUNDS OF SHARE CAPITAL OR OUT O F MIXED FUNDS, NOT SUFFICIENT TO DISCHARGE ONUS INTEREST TO EXTENT RELATING TO SUMS ADVANCED INTEREST-FREE TO BE DISAL LOWED INCOME-TAX ACT, 1961, S. 36(1)(III). SECTION 36(1)(III) OF THE INCOME-TAX ACT PROVIDE FO R DEDUCTIONS OF INTEREST ON LOANS RAISED FOR BUSINESS PURPOSES. ONCE THE ASSESSEE CLAIMS ANY SUCH DEDUCTION IN THE BOOKS OF ACCOUNT, THE ONUS WILL BE ON THE ASSESSEE TO SATISFY THE AO THAT WHATEVER LOANS WERE RAISED BY THE ASSESSEE WERE USE D FOR BUSINESS PURPOSES. IF IN THE PROCESS OF EXAMINATIO N OF GENUINENESS OF SUCH A DEDUCTION, IT TRANSPIRES THA T THE ASSESSEE HAD ADVANCED CERTAIN FUNDS TO SISTER CONCE RNS OR ANY OTHER PERSON WITHOUT ANY INTEREST, THERE WOULD BE A VERY HEAVY ONUS ON THE ASSESSEE TO DISCHARGE BEFORE THE AO TO THE EFFECT THAT IN SPITE OF PENDING TERM LOANS AND WORK ING CAPITAL LOANS ON WHICH THE ASSESSEE IS INCURRING LIABILITY TO PAY INTEREST, THERE WAS JUSTIFICATION TO ADVANCE LOANS TO SISTER CONCERNS FOR NON-BUSINESS PURPOSES WITHOUT ANY INTE REST AND ACCORDINGLY THE ASSESSEE SHOULD BE ALLOWED DEDUCTIO N OF INTEREST BEING PAID ON THE LOANS RAISED BY IT TO TH AT EXTENT. THE ENTIRE MONEY IN A BUSINESS ENTITY COMES IN A CO MMON KITTY. MONIES RECEIVED AS SHARE CAPITAL OR AS TERM LOAN OR AS WORKING CAPITAL LOAN OR AS SALE PROCEEDS DO NOT HAV E A DIFFERENT COLOUR. WHATEVER ARE THE RECEIPTS IN THE BUSINESS HAVE THE COLOUR OF BUSINESS RECEIPTS AND HAVE NO SE PARATE IDENTIFICATION. THE ONLY THING SUFFICIENT TO DISAL LOW THE INTEREST PAID ON THE BORROWINGS TO THE EXTENT THE AMOUNT IS LENT TO A SISTER CONCERN WITHOUT CARRYING ANY INTEREST FOR NO N-BUSINESS PURPOSES WOULD BE THAT THE ASSESSEE HAS SOME LOANS OR OTHER INTEREST BEARING DEBTS TO BE REPAID. IN CASE THE A SSESSEE HAD A SURPLUS WHICH, ACCORDING TO IT, COULD NOT BE REPA ID PREMATURELY TO ANY FINANCIAL INSTITUTION, IT WOULD EITHER BE REQUIRED TO BE CIRCULATED AND UTILIZED FOR THE PURP OSE OF BUSINESS OR TO BE INVESTED IN A MANNER IN WHICH IT GENERATES ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 12 INCOME AND NOT DIVERTED TOWARDS SISTER CONCERNS FRE E OF INTEREST. THIS WOULD RESULT IN NOT PRESENTING THE TRUE AND CORRECT PICTURE OF THE ACCOUNTS OF THE ASSESSEE AS AT THE COST BEING INCURRED BY THE ASSESSEE, THE SISTER CONCERN WOULD BE ENJOYING THE BENEFITS THEREOF. THERE SHOULD BE NEX US BETWEEN THE USE OF BORROWED FUNDS FOR THE PURPOSE OF BUSINE SS TO CLAIM DEDUCTION U/S 36(1)(III) OF THE ACT. THAT BEING TH E POSITION, THERE IS NO ESCAPE FROM THE FINDING THAT INTEREST B EING PAID BY THE ASSESSEE TO THE EXTENT THE AMOUNTS ARE DIVERTED TO SISTER CONCERNS ON INTEREST FREE BASIS ARE TO BE DISALLOWE D. IF THE PLEA OF THE ASSESSEE IS ACCEPTED THAT THE I NTEREST FREE ADVANCES MADE TO THE SISTER CONCERNS FOR NON-B USINESS PURPOSES WERE OUT OF ITS OWN FUNDS IN THE FORM OF C APITAL INTRODUCED IN BUSINESS, THAT AGAIN WILL SHOW A CAMO UFLAGE BY THE ASSESSEE AS AT THE TIME OF RAISING OF LOAN, THE ASSESSEE WOULD SHOW THE FIGURES OF CAPITAL INTRODUCED BY IT AS A MARGIN FOR LOANS BEING RAISED AND AFTER THE LOANS ARE RAIS ED, WHEN SUBSTANTIAL AMOUNTS ARE DIVERTED TO SISTER CONCERNS FOR NON- BUSINESS PURPOSES WITHOUT INTEREST, A PLEA WOULD B E RAISED THAT THE AMOUNT ADVANCED WAS OUT OF ITS CAPITAL, WH ICH IN FACT STOOD EXHAUSTED IN SETTING UP OF THE UNIT. SUCH A PLEA MAY BE ACCEPTABLE AT A STAGE WHEN NO LOANS HAVE BEEN RAISE D BY THE ASSESSEE AT THE TIME OF DISBURSEMENT OF FUNDS. THI S WOULD DEPEND ON THE FACTS OF EACH CASE. THE VIEW THAT WHERE THE AMOUNT IS ADVANCED FROM A MIXED ACCOUNT OR SHARE CAPITAL OR SALE PROCEEDS OR PROFITS, IT WOULD NOT BE DEEMED DIVERSION OF BORROWED CAPITAL O R THAT THE REVENUE HAD NOT BEEN ABLE TO ESTABLISH NEXUS OF THE FUNDS ADVANCED TO THE SISTER CONCERNS WITH THE BORROWED F UNDS, IS NOT CORRECT. ONCE IT IS BORNE OUT FROM THE RECORD THAT THE ASSESSEE HAD BORROWED CERTAIN FUNDS ON WHICH LIABIL ITY TO PAY TAX IS BEING INCURRED AND ON THE OTHER HAND, CERTAI N AMOUNTS HAD BEEN ADVANCED TO SISTER CONCERNS OR OTHERS WITH OUT CARRYING ANY INTEREST AND WITHOUT ANY BUSINESS PURP OSE, THE INTEREST TO THE EXTENT THE ADVANCE HAD BEEN MADE WI THOUT ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 13 CARRYING ANY INTEREST IS TO BE DISALLOWED U/S 36(1) (III) OF THE ACT. CIT V. TIN BOX CO. (2003) 260 ITR 637 (DELHI), CIT V. ORISSA CEMENT LTD. (2001) 252 ITR 878 (DELHI), CIT V. RADICO KHAITAN LTD. (2005) 274 ITR 354 (ALL), CIT V. PREM HEAVY ENGINEERING WORKS P. LTD (2006) 285 ITR 554 (ALL), CIT V. BRITANNIA INDUSTRIES LTD. (2006) 280 ITR 525 (CAL) AND R.D. JOSHI AND CO. V. CIT (2001) 251 ITR 332 (MP) DISSEN TED FROM. THE ASSESSEE, A PUBLIC LIMITED COMPANY, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 1993-94 SHOWING I TS INCOME AS NIL. SUBSEQUENTLY, A REVISED RETURN WA S FILED DECLARING A LOSS OF RS. 4,53,07,410/-. THE ASSESSM ENT WAS COMPLETED ASSESSING THE LOSS AT RS. 96,81,213/-, IN TER ALIA, DISALLOWING INTEREST U/S 36(1)(III) OF THE ACT ON T HE GROUND OF INTEREST-FREE PURPOSES AND TREATING THE RECEIPT OF SALES TAX SUBSIDY BY THE ASSESSEE AS REVENUE RECEIPT, REJECTI NG THE ASSESSEES EXPLANATION THAT THE LOANS WERE GIVEN OU T OF THE COMPANYS OWN FUNDS REPRESENTED BY SHARE CAPITAL AN D THAT NO BORROWED FUNDS HAD BEEN UTILIZED IN GIVING THE INTE REST FREE LOANS, THAT THE INTEREST-FREE LOANS WERE ADVANCED TO THE SISTER CONCERNS BEFORE THE COMMENCEMENT OF PRODUCTION AND ALSO AFTER THE COMMENCEMENT OF PRODUCTION. THE TRIBUNAL HELD IN FAVOUR OF THE ASSESSEE. ON APPEAL CONTENDING, INTE R ALIA, THAT THE TAX EFFECT IN THE PRESENT CASE BEING NIL AS E VEN IF THE DEDUCTIONS IN QUESTION WERE DISALLOWED, NO TAX WOUL D BE PAYABLE AND SINCE BY CIRCULARS OF THE BOARD A LIMIT HAD BEEN PRESCRIBED FOR FILING APPEALS BEFORE THE COURT, THE APPEAL SHOULD NOT BE ENTERTAINED: HELD, (I) THAT THE SHARE CAPITAL IS MEANT TO BE US ED FOR PRODUCTIVE USE IN THE BUSINESS. IF THE SHARE CAPIT AL, ACCORDING TO THE ASSESSEE, WAS SURPLUS AND IT COULD PART WITH THE SAME TO ITS SISTER CONCERN FOR NON-BUSINESS PURPOSES WIT HOUT ANY INTEREST, THERE WAS NO NEED TO RAISE THE LOANS TO T HAT EXTENT ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 14 AND THE AMOUNT OF SUCH SHARE CAPITAL SHOULD HAVE BE EN UTILIZED FOR THE PROJECT ITSELF. IN CASE THE ASSESS EE HAD NOT ADVANCED LOANS TO ITS SISTER CONCERN ON INTEREST-FE E BASIS, EVEN IF THE ALLEGED SURPLUS AMOUNT COULD NOT BE REP AID TO THE FINANCIAL INSTITUTION BEFORE THE SCHEDULED DATE AS FAR AS THE TERM LOAN WAS CONCERNED, THE INTEREST BEING PAID BY THE AWE ON THE WORKING CAPITAL COULD HAVE CERTAINLY BEEN SA VED TO THAT EXTENT. THE BORROWING OF THE FUNDS BY THE COMPANY TO THAT EXTENT WAS NOT FOR THE PURPOSE OF BUSINESS AND THER E WAS NOTHING ON RECORD TO SUGGEST THAT AMOUNTS WERE ADVA NCED TO THE SISTER CONCERNS TO ADVANCE SOME BUSINESS OBJECT . ACCORDINGLY, THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION OF THE INTEREST ON THE BORROWINGS TO THE EXTENT THO SE WERE DIVERTED TO SISTER CONCERNS OR OTHER PERSONS WITHOU T INTEREST. 18. A BARE PERUSAL OF THE EXTRACT OF THE DECISION ( SUPRA) SHOWS THAT THE SUBJECT-MATTER OF THIS GROUND OF APPEAL IS COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT. CON SEQUENTLY, FINDINGS OF LD. CIT(A), CANNOT BE SUSTAINED. HENCE , THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE REVENUE. 19. IN GROUND NO. 4, THE REVENUE CONTENDED THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,64,480/-, I NCURRED ON MARKET SURVEY GOT CONDUCTED FROM MDRA. 20. THE DR REFERRED TO PARA 6 OF THE ASSESSMENT O RDER AS ALSO PARA 23 OF THE LD. CIT(A)S ORDER. IT WAS CONTENDE D BY THE DR THAT SURVEY REPORT WAS NOT PRODUCED. 21. THE AR FOR THE ASSESSEE, ON THE OTHER HAND, P LACED RELIANCE ON THE ORDER OF LD. CIT(A). 22. WE HAVE PERUSED THE FACT SITUATION OF THE CASE, RIVAL SUBMISSIONS AND THE ORDERS PASSED BY THE LOWER AUTH ORITIES. THE ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 15 RELEVANT PORTION OF THE FINDINGS OF LD. CIT(A) ARE REPRODUCED HEREUNDER:- 26 I HAVE CONSIDERED THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT AS W ELL AS COMMENTS IN THE REMAND REPORT. I HAVE PERUSED THE SURVEY REPORT AND I FIND THAT SURVEY WAS MAINLY CONDUCTED TO ACQUAINT THE HOTEL MANAGEMENT REGARDING THE TARIFFS FIXED BY OTHER HOTELS. ONE CAN SAY THAT THIS WAS BASICALLY TO IMPR OVE EXISTING BUSINESS AND TAKE ON THE COMPLETION. 27 IN THE CASE OF ALEMBIC CHEMICAL WORKS COMPANY LT D V. CIT, 77 CTR (S.C) 1, IT HAD BEEN HELD THAT EXPENSES INCURRED BY THE ASSESSEE ON TECHNICAL KNOWHOW FEE, EVEN IF M ADE IN LUMPSUM, WHICH PERTAINS TO THE EXISTING BUSINESS OF THE ASSESSEE AND IN RESPECT OF IMPROVEMENT IN THE EXIST ING PROCESS & TECHNIQUE IS A REVENUE EXPENDITURE AND AN ALLOWABLE DEDUCTION. 28 IT IS IMPORTANT TO CLARIFY HERE THAT IF A MARKET SURVEY IS CONDUCTED TO START A NEW BUSINESS, THE EXPENDITURE WILL NOT BE ALLOWABLE AS REVENUE EXPENDITURE. THIS ISSUE HAS AL SO BEEN DEALT WITH THE CASE OF CIT V. ZENITH STEEL PIPES & INDS. LTD. (2009) 315 ITR 95 (BOM) WHERE THE ASSESSEE MANUFACT URING STEEL ITEMS, CONDUCTED A MARKET SURVEY WHICH BY THE VERY PURPOSE & NATURE OF THE REPORT, PERTAINED TO A DIFF ERENT LINE OF BUSINESS. THE EXPENDITURE WAS HELD AS NON DEDUCTIB LE CAPITAL EXPENDITURE IN VIEW OF BOMBAY HIGH COURT DECISION I N THE CASE OF CIT V. J.K. CHEMICALS (1994) 207 ITR 985. 29. IN THE INSTANT CASE, THE APPELLANT HAD CONDUCTE D SURVEY ONLY TO IMPROVE EXISTING BUSINESS. THE EXPENDITURE IS THUS HELD TO BE REVENUE IN NATURE. THE ADDITION OF RS. 264,480/- ON THIS GROUND IS DELETED, ALLOWING ASSESSEES APPEAL. 23. THE EXPENSES CLAIMED BY THE APPELLANT ARE ADMIS SIBLE EXPENSES IN VIEW OF NATURE THEREOF. FURTHER A BARE PERUSAL OF THE ORDER OF THE LD. CIT(A), REVEALS THAT HIS DECISION IS WELL REASONED AND BASED ON THE LEGAL AND FACTUAL FOUNDATIONS. TH EREFORE, WE DO ITA NO. 1142/CHANDI/2010 D.C.I.T. V. ORBIT RESORTS (P) LTD 16 NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). HENCE, THE SAME ARE UPHELD. THIS GROUND OF APPEAL OF THE REVENUE IS DIS MISSED. 24.. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 19 .9.2011 SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNANT MEMBER CHANDIGARH, THE 19.9.2011 SURESH COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR