ITO 8(3)(3), MUMBAI V. TAVOY APPARELS LTD, MUMBAI

ITA 1184/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3465 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V JHAVERI
• Assessee Lawyers: PRAVIN KUMAR
• Keywords: Capital asset; Business income; Depreciation; Bad and doubtful debts; Valuation report; Capital receipt; Unabsorbed depreciation
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.K.GUPTA, JM & SHRI P.M.JAGTAP , AM ITA NO. 1184 /MUM/20 1 0 ( ASSESSMENT YEAR : 200 6 - 0 7 ) ITO 8(3)(3), MUMBAI VS. M/S TAVOY APPARELS LIMITED, AGARWAL ESTATE, 139 G, S.V.ROAD, JOGESHWARI( W), MUMBAI - 400 056 . PAN NO. : A ACCT 6556 D ( APP ELLANT ) .. ( RESPONDENT ) AND ITA NO. 6662 /MUM/20 09 ( ASSESSMENT YEAR :200 6 - 0 7 ) M/S TAVOY APPARELS LIMITED, AGARWAL ESTATE, 139 G, S.V.ROAD, JOGESHWARI(W), MUMBAI - 400 056. VS. ITO 8(3)(3), MUMBAI PAN NO. : AACCT 6556 D ( APP ELLANT ) .. ( RESPONDENT ) REVENUE BY : MR. B.V.JHAVERI ASSESSEE BY : MR. PRAVIN KUMAR DATE OF HEARING : 1 5 TH APRIL , 2013 DATE OF PRONOUNCEMENT : 12 TH JUNE , 2013 O R D E R PER SHRI R.K.GUPTA, JM : TH ESE TWO APPEAL S HAVE BEEN PREFERRED BY THE DEPARTMENT AS WELL AS BY THE ASSESSEE AGAINST THE ORDER LEANED CIT (A) , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 6 - 0 7 . 2 . SINCE COMMON ISSUES ARE INVOLVED IN BOTH THE CASES, THEREFORE, FOR THE SAKE OF CO NVENIENCE, BOTH THESE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . FIRST WE WILL TAKE UP APPEAL OF THE DEPARTMENT (I.E. ITA NO. 1184/M/2010) , WHEREIN THE DEPARTMENT HAS RAISED GROUNDS NO. 1 TO 4 , WHICH RELATE TO DELETING THE ADDITION OF RS.3,57,61,782/ - BY ITA NO S . 1 1 8 4/10 & 6662 /20 09 2 ACCEPTING THE ADDITION AL EVIDENCE IN THE SHAPE OF STOCK VALU ATION BY BANK IN CONTRAVENTION OF RULE 46A OF IT RULES. 4 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE AMOUNT OF RS.4,17,17,450/ - IS CLAIMED AS VARIATION IN THE STOCK AND DEBITED TO P&L ACCOUNT. THIS FIGURE ARRIVED AT BY THE ASSESSEE AS UNDER : - OPENING STOCK RS.5,95,98,341/ - LESS : CLOSING STOCK RS.1,78,80,891/ - BALANCE RS.4,17,17,450/ - AFTER CONSIDERING THE SUBMISSION THE AO FOUND THAT THE AMOUNT O F RS.5,95,98,341/ - IS CARRIED FORWARD IN THE BALANCE SHEET AS STOCK IN TRADE RIGHT FROM 31 - 3 - 2000 TO 1 - 4 - 2005. THE AO ALSO NOTED THAT IN NONE OF THE INTERVENING YEARS, THE AUDITORS REPORT OR DIRECTORS REPORT, THERE IS NO MENTION OF THE STATUS OF THE STOC K AND ITS VALUE. THE CLAIM OF THE ASSESSEE THAT THE STOCK IS DAMAGED DUE TO EARTHQUAKE AND THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO AS IN HIS VIEW NO CREDENCE IN THE ABSENCE OF FIR FILED WITH THE POLICE/LOCAL AUTHORITY CAN BE GIVEN. TH E AO WAS OF THE VIEW THAT THE VALUATION OF CLOSING STOCK AT RS. 1,78,80,891/ - IS PURELY ARBITRARY AND TO SUIT THE ASSESSEES CONVENIENCE. THE AO ALSO NOTED THAT THERE IS NO BOARD RESOLUTION TO THE EFFECT OR ANY DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE DECISION TO REDUCE THE VALUATION OF STOCK. THE AO ALSO NOTED THAT THE ASSESSEE HAS MADE A SALE OF OLD STOCK AT RS.59,55,568/ - IS ALSO ARBITRARY AND HAS NO BASIS. THEREFORE, THE AO TREATED THE VARIATION OF STOCK AT RS. 53,28,755/ - ( 85% OF RS.59,55,56 8/ - ) ITA NO S . 1 1 8 4/10 & 6662 /20 09 3 AGAINST THE CLAIM MADE BY THE ASSESSEE OF RS. 4,17,17,450/ - AND THE DIFFERENCE OF RS. 3,63,88,695/ - WAS ADDED BACK TO THE RETURN OF INCOME. 5 . DETAILED SUBMISSION WAS FILED BEFORE THE CIT(A) . IT WAS EXPLAINED THAT THE ASSESSEE COMPANY WAS ENGAGED IN T HE BUSINESS OF EXPORT OF READYMADE INDUSTRIAL GARMENTS AND HAD FACTORY AT FREE TRADE ZONE AT KANDLA, GUJARAT. THE FACTORY WAS RUNNING SMOOTHLY TILL 1998. THERE WAS AN EARTHQUAKE ON 26 - 1 - 2000 DUE TO WHICH THE FACTORY WAS SERIOUSLY DAMAGED. ON ACCOUNT OF THI S, THE BUSINESS OF THE ASSESSEE WAS SERIOUSLY AFFECTED AND FOR NONPAYMENT OF BANK DUES THE BANK AUTHORITIES HAD KEPT THE PREMISES UNDER THEIR LOCK AND DID NOT ALLOW THE ASSESSEE TO CONTINUE THE BUSINESS. DURING THE YEAR UNDER CONSIDERATION, AFTER LOT OF PE RSUASION WITH THE BANK AUTHORITIES, ONE TIME SETTLEMENT WAS REACHED AND THE BANK WAIVED THE LOAN OF RS. 3,59,66,419/ - . THE STOCK AND MACHINERY WAS LYING IDLE FOR THE LAST 5 TO 6 YEARS AND HAS BECOME UN F IT FOR STITCHING THE GARMENTS. THE STOCK IS NOT THE TYP E WHICH CAN BE SOLD IN THE GENERAL MARKET, THIS CAN BE USED ONLY IN INDUSTRIAL UNITS. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) FOUND THAT THE BANK HAS VALUED THE STOCK AND AFTER VALUING THE STOCK A NEGOTIATION WA S ARRIVED AT BY WHICH THE BANK WAIVED LOAN OF RS. 3.5 9 CRORE OR ODD . ON THE BASIS OF VALUATION ADOPTED BY THE BANK, THE ASSESSEE ALSO MADE HIS OWN VALUATION WHICH WAS MADE ON THE BASIS OF VALUATION MADE BY THE BANK. THE CIT(A) ALSO NOTED THAT THERE IS NO DI SPUTE THAT THERE WAS AN EARTHQUAKE AND THE GOODS WERE DAMAGED. FACTORY WAS CLOSED FOR ITA NO S . 1 1 8 4/10 & 6662 /20 09 4 FEW YEARS AND THE SALE WAS AFFECTED TO THE SISTER CONCERN DURING THE YEAR UNDER CONSIDERATION BY WHICH THE STOCK LYING WITH THE ASSESSEE WAS SOLD. AFTER CONSIDERING THESE FACTUAL MATRIX, THE CIT(A) FOUND THAT THERE WAS NO BASIS IN NOT ACCEPTING THE CLOSING STOCK SHOWN BY THE ASSESSEE. THEREFORE, HE DELETED THE ADDITION MADE BY THE AO. 6 . LEARNED DR FIRSTLY PLACED RELIANCE ON THE ORDER OF AO. IT WAS FURTHER SUBMITTED THA T THE AO SHOULD HAVE BEEN ALLOWED OPPORTUNITY TO EXAMINE THE VALUATION DONE BY THE BANK, THEREFORE, THE ADDITION AL EVIDENCE ADMITTED BY THE CIT(A) IS IN VIOLATION OF RULE 46 A OF THE IT RULES. 7 . LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDE R OF CIT(A). FURTHER A COPY OF THE WRITTEN SUBMISSION WAS ALSO FILED. 8 . AFTER CONSIDERING THE ORDER OF THE AO, CIT(A) AND SUBMISSION OF BOTH THE PARTIES, WE FOUND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) . THE FINDINGS OF THE CIT(A) HAVE BEEN R ECORDED IN PARA 5 TO 5.1.3 AT PAGES 4 TO 7 , WHICH ARE AS UNDER : - 5 . I HAVE CAREFULLY CONSIDERED THE INFORMATION ON RECORD. IT WAS EXPLAINED BY THE APPELLANT THAT THERE WAS AN EARTHQUAKE ON 26.01.2000 WHICH HAD BADLY DAMAGED THE FACTORY PREMISES. IT WAS FURTHER EXPLAINED THAT DUE TO DISPUTE WITH THE MAIN PURCHASER NAMELY RG. HOLDING, THE APPELLANT HAD TO SUFFER SERIOUS SET BACK IN HIS BUSINESS. ADDED TO THIS DUE TO FAILURE TO PAY THE BANK LOAN, THE BANK AUTHORITIES HAD KEPT THE STOCK HYPOTHECATED TO THEM UNDER LOCK. AS THE STOCK WAS LYING FOR 5 TO 6 YEARS IT GOT SERIOUSLY DAMAGED. IT WAS FURTHER SUBMITTED BY THE APPELLANT THAT, IT IS ONLY AFTER VERIFICATION OF THE ST OCK BY THE BANK AUTHORITIES, THEY HAVE AGREED TO ONE TIME SETTLEMENT DURING THE RELEVANT PR EVIOUS YEAR. IT IS IMPORTANT TO REPRODUCE THE STOCK VALUATION REPORT GIVEN BY THE BANK AUTHORITIES ON 23.04.2005 WHICH READS AS UNDER: FINISHED GOODS: ITA NO S . 1 1 8 4/10 & 6662 /20 09 5 THE FINISHED GOODS WERE PACKED IN THE CARTOONS AND IT WAS EXPLAINED BY THE OFFICIAL OF THE COMPANY THA T THE SAID GOODS ARE LYING IN THE CARTOONS FOR LAST MORE T HAN 5 YEARS. THESE CARTOONS WERE DAMAGED TO GREAT EXTENT DUE TO LEAKAGE OF WATER FROM THE ROOF AND SIDE WALLS AND ALSO DUE TO EARTHQUAKE. ALL THESE CARTOONS WERE FULL OF DUST AND FUNGUS ETC. SOME OF THE CARTOONS WERE OPEN WITH THE HELP OF THE LABOUR PROVIDED BY THE COMPANY. THE SHADES OF COLOUR OF GARMENTS WERE CHANGED, THE GARMENTS WERE FULL OF FUNGUS AND THE J UNK WAS PICKED UP BY THE GARMENTS FROM THE METAL PART OF THE BUTTONS AND ZIPPERS. CONSID ERING THE NUMBER OF SAMPLES OF THE CARTOONS OPENED FROM THE VARIOUS PLACES, THE TOTAL STOCK WAS NOT USABLE AND CONSIDERED TO BE WORTHLESS. SEMI FINISHED GOODS. THESE SEMI FINISHED [FOODS WERE LYING IN THE CARTOONS AS WELL AS ON THE TABLES COVERED BY THE CLOTH. THE CONDITION OF THESE MATERIALS W AS EQUALLY BAD AS LIKE FINISHED GOODS. SIMILARLY, THE JUNK WAS THERE ON ALL THE ITEMS AND QUALITY OF GARMENT WAS SO BAD BY JUST STRETCHIN G OF THE GARMENTS IT WOULD TEAR OUT. THE SHEDS OF THE GARMENTS WERE TOTALLY C HANGED. WE TOOK NUMBER OF SAMPLES FROM THE VARIOUS LOTS A V AI L AB L E; HOWEVER, WE COULD NOT FIND ANY GARMENTS WHICH CAN BE SOLD IN THE MARKET. CONSIDERING THE NATURE OF THE CONDITION OF THE SEMI FINISHED GOODS, THERE IS TOTAL LOSS ON THESE ITEMS. RAW MATERI ALS: THE MOST OF THE RAW MATERIALS WERE OF GRAY FABRICS OR PROCESS MATERIALS I. E. FINISHED CLOTH. ALL THESE MATERIALS WERE LYING IN BUNDLES ROLLS ETC. THESE MATERIALS WERE LYING IN THREE DIFFERENT UNITS. OUT OF THESE THE TWO UNITS WERE HEAVILY DAMAGED AN D THERE WAS LEAKAGE EVERY WHERE FROM THE ROOF AS WELL AS SIDE WALLS. ACCORDING TO THE OFFICIAL OF THE COMPANY THESE UNITS WERE CLOSED FOR MOR E THAN 5 YEARS AND NO PURCHASE OR SALE HAS BEEN MADE FROM THESE UNITS. IN THE FIRST TWO UNITS, PRACTICALLY ALL CLOT HS WERE T O TALLY DAMAGED. DUE TO WATER SEEPAGE, CLIMATIC CONDITION, ABSORPTION OF MOISTURES FROM THE CLIMATE IN PARTICULARLY OF MONSOON SEASON AND DUE TO FUNGUS, THE STOCK LYING IN THESE UNITS WERE NOT USABLE. HOWEVER, WITH THE HELP OF THE LABOUR CERTAIN ST OCK WAS SEPARATED AND WAS INVENTORISED IN THE LIST GIVEN IN THE REPORT AT OTHER PLACE. OVER AND ABOVE, THERE WERE OTHER ACCESSORIES LIKE ZIPPERS; ELASTICS, BUCKLES, BUTTONS, LABELS ETC. WERE LYING IN THESE UNITS. DUE TO CLIMATE AND PASSAGE OF TIME, THESE A CCESSORIES WERE FADED AND THE COLOUR WAS TOTALLY CHANGED AND THE JUNK WAS PICKED UP BY MOST OF THEM. THEREFORE; THESE ACCESSORIES CANNOT BE UTILIZED FOR MANUFACTURING OF THE GARMENTS ARID NO VALUE CAN BE GIVEN TO THE SAME. IN RESPECT OF ONE UNIT WHICH WAS MORE OR LESS NOT DAMAGED AND WAS IN A VERY GOOD CONDITION, MOST OF THE STOCK WAS IN A GOOD CONDITION EXCEPT THE STOCK LYING ON THE TOP OF THE HIPS OF THE TOTAL STOCK: THE CONDITION OF THESE STOCK WAS VERY GOOD AND WERE EASILY USED FOR THE MANUFACTURING OF G ARMEN T S, ITA NO S . 1 1 8 4/10 & 6662 /20 09 6 CONSIDERING THE ABOVE FACTS, I GIVE MY FINDINGS ARE AS UNDER: A) FINISHED GOODS. AS PER THE STATEMENT GIVEN BY THE COMPANY THE FINISHED GOODS WERE OF RS. 173 LAKHS. THESE GOODS WERE LYING IN THE CARTOONS AS WELL AS LOOSE HAVE NO VALUE AND FOR WORKING OUT THE VALUATION OF THE SAME I PUT THE VALUE ONLY AT RS. 1,00,000/ - (RUPEES ONE LAKHS ONLY). B) SEMI FINISHED GOODS (WORK IN PROGRESS) AS PER THE STATEMENT GIVEN BY THE COMPANY THE VALUE OF THE SEMI FINISHED GOODS WERE OF RS. 38.9 LAKHS. FOR TH E REASONS STATED IN EARLIER PARAGRAPH, I VALUE THESE GOODS AT RS. 50.000/ - (RS. FIFTY THOUSANDS ONLY). C) RAW MATERIALS AND ACCESSORIES - AS STATED EARLIER. SOME OF THE STOCK F ROM TWO UNITS WAS USABLE AND IN RESPECT OF THE ONE UNIT MOST OF THE STOCK CAN BE USED FOR MANUFACTURING. AFTER DUE VERIFICATION OF THE TOTAL QUANTITY AS PER THE LIST SUPPLIED BY THE COMPANY. I FIND THAT ABOUT 50% OF THE STOCK MAY BE CONSIDERED TO BE OF USEFUL TYPE AND THE VALUATION IN RESPECT OF THE SAME CAN BE TAKEN AT 50% OF THE V ALUE SHOWN BY THE COMPANY. THE COMPANY HAS VALUED THE STOCK AS PER THE ACCOUNTS AT RS. 384 LAKHS. IN THE VALUE OF THE SAME NOT BE MORE THAN RS. 192 LAKHS (RUPEES ONE CRORES NINETY TWO LAKHS ONLY). D) SUMMARY :- I) FINISHED GOODS RS. 1,00,000/ - I I) SEMI FINISHED GOODS RS. 50,000/ - III) RAW MATERIALS RS. 1,92,00,000/- TOTAL - RS.1,93,50.000/ - OTHER OBSERVATION: - THE UNITS WERE BADLY DAMAGED AND REQUIRED EXTENSIVE REPAIR IN ORDER TO STAR T THE OPERATION OF THE ACTIVITY. THE MACHI NERIES OF THE COMPANY WERE REMAINED IDLE FOR MORE THAN 5 YEARS AND HENCE MOST OF THE MACHINERIES HAD PICKED UP THE JUNK DUE TO SPILLING OF WATER AND CLIMATIC CONDITION. NO MAINTENANCE SEEMS TO HAVE BEEN CARRIED OUT ON THE SAID MACHINERIES. ONE MORE ASPECT IS REQUIRED TO BE CONSIDERED THAT CONSIDERING THE MODERNIZATION IN THE GARMENT LINE, ONE WILL HAVE TO INFUSE HUGE CAPITAL IN ORDER TO REPLACE THESE MACHINERIES TO START THE ACTIVITY. THIS VALUATION WAS CARRIED OUT SPECIFICALLY ONLY FOR THE TIME SETTLEMEN T OF THE DUES OF THE COMPANY. THE SAME MAY BE READ KEEPING IN MIND SPECIFIC OBJECTS FOR WHICH IT WAS CARRIED OUT AND ONLY FOR UNION BANK OF INDIA. 5.1.1 THE SUMMARY OF THE STOCK VALUATION REPORT BY THE BANK AUTHORITY IS AS UNDER: - THE VALUATION OF STOC K AS PER BOOKS OF ACCOUNT RS.5,95,98,341 - VALUATION OF STOCK AS PER BANK AUTHORITY R S .1,93,50,000 AS ON 23.04.2005 ITA NO S . 1 1 8 4/10 & 6662 /20 09 7 - VALUATION OF STOCK BY ASSESSEE RS. 2,38,36,459 LESS: THE VALUE OF STOCK SOLD DURING THE YEAR TO SISTER CONCERN RS. 59,88 ,568 - BALANCE STOCK VALUE WITH ASSESSEE RS.4,17,17,450 (59598341 - (23836459 - 5955568) 5.1.2 IN SUMMARY THE BANK AUTHORITY VALUED THE STOCK AT RS.1,93,50,00/ - AGAINST THE VALUATION MADE BY THE APPELLANT AT RS.2,38,36,459 / - . IN FACT THE VALUATION MADE BY THE ASSESSEE IS MORE THAN THE VALUE ADOPTED BY THE BANK AUTHORITIES PRIOR TO ONE TIME SETTLEMENT. 5.1.3 THE REPORT OF BANK AUTHORITIES CLEARLY INDICATES THAT THE ENTIRE FINISHED AND SEMI FINISHED GOODS HAVE ONLY SCRAP VALUE. HE ALSO HELD THAT EXCEPT FOR THE RAW MATERIAL TO THE TUNE OF RS. 1 .92 CRORES, THE REST OF THE ITEM S, FINISHED GOODS AND SEMI FINISHED GOODS ARE INFECTED WITH FUNGUS, FADED IN COLOUR, THERE IS NO STRENGTH IN CLOTH AND ARE PRACTICALLY UNFIT FOR SALE. IT IS ALSO PERTINENT TO MENTION T HAT THE APPELLANT COULD NOT PREVENT THE DAMAGE TO THE STOCK AS THE SAME WAS IN THE CUSTODY OF THE BANK. IN VIEW OF THE ABOVE DISCUSSION THE ADDITION MADE BY THE AO ON THE GROUND THAT NOTHING IS MENTIONED IN THE AUDIT REPORT OR IN THE DIRECTOR'S REPORT AND NO POLICE COMPLAINT WAS GIVEN ARE MATERIALLY UNIMPORTANT. TAKING INTO ACCOUNT THE TOTALITY OF THE FACT THAT THERE WAS AN EARTHQUAKE IN 2000, THE STOCK WAS LYING IN THE GODOWN FOR 5 TO 6 YEARS AND MORE PARTICULARLY IN VIEW OF THE REPORT GIVEN BY THE BANK AU THORITIES AFTER PHYSICAL VERIFICATION OF THE STOCK, THE VARIATION OF STOCK MADE BY THE APPELLANT IS REASONABLE AND THE LOSSES. IN T ERMS OF REDUCTION IN STOCK HAS TO BE ALLOWED TO THE ASSESSEE, HENCE THE ADDITION MADE BY THE AO OFRS.3,57,61,782/ - IS DELETED . THE ABOVE FINDINGS OF THE CIT(A) ARE FINDINGS OF FACT WHICH ARE GIVEN AFTER EXAMINING ALL THE FACTS AND TAKING INTO CONSIDERATION THE VALUATION ADOPTED BY THE ASSESSEE AND VALUATION ADOPTED BY THE BANK ON 27 - 5 - 2005. AS PER THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, COPIES OF THIS VALUATION WERE ALSO FILED BEFORE THE AO. HOWEVER, THE SAME WAS NOT TAKEN INTO CONSIDERATION. WE FURTHER NOTED THAT THOUGH THE VALUATION OFFICER HAS GIVEN VALUATION AT RS. 1,93,50,000/ - , WHEREAS THE ASSESSEE HAS VALUED THE VA LUATION OF CLOSING STOCK AT RS. 2,38,36,459/ - . THE VALUATION ADOPTED BY THE ASSESSEE IS ON HIGHER SIDE, THEREFORE, IT ITA NO S . 1 1 8 4/10 & 6662 /20 09 8 CANNOT BE SAID THAT THE VALUATION ADOPTED BY THE ASSESSEE, WHICH IS ON HIGHER SIDE THAN THE VALUATION ADOPTED BY THE VALUATION OFFICER KFTZ , WHICH WAS OBTAINED BY THE BANK DIRECTLY. IT IS FURTHER NOTED THAT AFTER EARTHQUAKE BUSINESS OF THE ASSESSEE WAS CLOSED DOWN AND DUE TO DISPUTE BETWEEN BANK AND ASSESSEE, THE ENTIRE FACTORY WAS UNDER THE LOCK AND KEY OF THE BANK. AFTER SETTLEMENT BETWEEN THE ASSESSEE AND BANK THEN ONLY THE FACTORY WAS OPENED AND VALUATION REPORT WAS OBTAINED BY THE BANK. THEREAFTER AFTER NEGOTIATION CERTAIN AMOUNT WAS WAIVED OF BY THE BANK. IT IS FURTHER SEEN THAT WHATEVER THE RECEIPTS WERE RECEIVED ON ACCOUNT OF SALE OF S TOCKS TO THE SISTER CONCERN, THAT WAS TAKEN BY THE BANK. IT IS A MATTER OF FACT THAT THE STOCK WAS LYING IN THE PREMISES FROM ASSESSMENT YEAR 2001 - 02 TO ASSESSMENT YEAR 2005 - 06 AND THE SAID STOCK WAS LYING IN PREMISES WHICH WAS DAMAGED BY THE EARTHQUAKE. IT IS FURTHER SEEN THAT THE VALUATION REPORT OBTAINED WAS FILED BEFORE THE CIT(A) AND THE CIT(A) ASKED THE ASSESSEE COMPANY TO ASCERTAIN FROM THE BANK AS TO VALUATION OF STOCK DONE AT THE TIME OF SETTLEMENT. ON THE BASIS OF SAID DIRECTION, THE ASSESSEE COM PANY MADE ENQUIRY THAT ON 23 - 4 - 2005, THE VALUATION OFFICER, WHO HAD VALUED THE VALUATION STOCK AT RS. 1,93,50,000/ - AND ON THE DIRECTION OF THE CIT(A), COPY OF THE SAID VALUATION REPORT WAS FILED, WHICH WAS EXAMINED BY THE LEARNED CIT(A), WHO FOUND THAT THE VALUATION OFFICER HAS GIVEN VALUED AT RS. 1.93 CRORES OR ODD AGAINST WHICH THE VALUATION OF STOCK SHOWN BY THE ASSESSEE AT RS. 2.38 CRORES OR ODD, WAS MUCH HIGHER THAN THE VALUATION ADOPTED BY THE VALUATION OFFICER. THEREFORE, THE ITA NO S . 1 1 8 4/10 & 6662 /20 09 9 CIT(A) FOUND THAT DISTURBI NG THE VALUATION ADOPTED BY THE ASSESSEE AT THE END OF THE AO WAS NOT JUSTIFIED. IT WILL BE FUTILE EXERCISE IF THE MATTER IS SENT BACK TO THE FILE OF THE AO TO CONSIDERING THE VALUATION REPORT FILED BEFORE THE CIT(A) AS THE LEARNED CIT(A) HAS EXAMINED THE REPORT IN DETAIL, WHO HAS CO - TERMINUS POWER. 9 . WE FURTHER NOTED THAT THE FINDINGS OF THE LEARNED CIT(A) REMAINED UNCONTROVERTED EXCEPT THAT THAT HE HAS ACCEPTED THE VALUATION REPORT IN CONTRAVENTION OF RULE 46A. THE FINDINGS OF THE LEARNED CIT(A) ARE FI NDINGS OF FACT WHICH ARE GIVEN AFTER ASCERTAINING THE FACTUAL MATRIX OF THE CASE, THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDINGS OF THE LEARNED CIT(A) . ACCORDINGLY, WE CONFIRM THE FINDINGS OF THE LEARNED CIT(A) ON THE ISSUE INVOLVED. 10 . NEXT GR OUND I.E. GROUND NO.5 RELATES TO ALLOWING THE VALUATION OF STOCK AT RS. 59,55, 568/ - AS AGAINST DETERMINED BY THE AO TO RS. 53,28,755/ - . THE AO DID NOT ACCEPT THE COST OF GOODS SOLD BY THE ASSESSEE AT RS. 59 , 55 , 568/ - . HE ESTIMATED THE VALUATION OF COST OF MATE RIAL AT RS. 53,28,755/ - AND MADE AN ADDITION OF RS. 6,26,913/ - . NO REASON WAS GIVEN BY THE AO FOR VALUING THE STOCK AT RS. 53,28,755/ - . THEREFORE, THE CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AFTER EXAMINING ALL THE DETAILS. THE CIT(A) FOUND THAT THROUG H FOUR CHALLANS THE SALE WAS MADE FOR RS.62,69,094/ - AND ALL THESE PAYMENTS WERE RECEIVED BY THE BANK DIRECTLY FROM THE SISTER CONCERN OF THE ASSESSEE AS PER AGREEMENT ARRIVED AT BETWEEN THE ASSESSEE AND THE BANK. ACCORDINGLY, THE CIT(A) NOTED THAT THERE W AS NO REASON ASSIGNED BY ITA NO S . 1 1 8 4/10 & 6662 /20 09 10 THE AO AS TO WHY THE COST OF GOODS WAS REDUCED AND THE ADDITION WAS MADE. ACCORDINGLY, HE DELETED THE ADDITION. 1 1 . AFTER CONSIDERING THE ORDER OF THE AO AND CIT(A), WE ALSO DO NOT SEE ANY REASON TO INTERFERE IN THE FINDINGS OF T HE CIT(A), WHO HAS GIVEN HIS FINDING OF FACT. NO REASON WAS GIVEN BY THE AO TO TREAT THE COST OF GOODS AT RS.53,28,755/ - AGAINST ACTUAL COST AT RS.59,55,568/ - SHOWN BY THE ASSESSEE. THE CIT(A) HAS ALSO NOTED THAT THERE WAS NO REASON GIVEN BY THE AO AS TO WHY THE INCOME OUT OF SALE OF GOODS WAS TREATED AS INCOME FROM OTHER SOURCES AS THE PROFIT WAS GENERATED OUT OF SALE OF STOCK WHICH WAS ACCUMULATED STOCK OF THE ASSESSEE OUT OF BUSINESS ACTIVITY. THEREFORE, WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE INCOME OUT OF SALE OF STOCK AS BUSINESS INCOME AND REJECT ING THE CONTENTION OF THE AO IN REDUCING THE VALUE OF STOCK. THIS GROUND OF THE DEPARTMENT ALSO FAILS. 12 . NEXT GROUND OF THE DEPARTMENT IS AGAINST ALLOWING THE WAIVER OF INTEREST FROM THE BANK AND CREDITORS WRITTEN OFF AS INCOME FROM BUSINESS AND PROFESSION AS AGAINST INCOME FROM OTHER SOURCES. 13 . THE AO HAD NOTED THAT THE ASSESSEE HAD CREDITED IN THE PROFIT AND LOSS ACCOUNT LOAN WAIVED OF RS. 3,59,66,419/ - AND SUNDRY CREDITORS OF RS.1,8 7,91,414/ - . THE AO TREATED THIS INCOME AS INCOME FROM OTHER SOURCES AGAINST THE CLAIM MADE BY THE ASSESSEE AS BUSINESS INCOME. IT WAS SUBMITTED BEFORE CIT(A) THAT DURING THE INITIAL YEARS, THE ASSESSEE HAD TAKEN THE LOAN FROM THE BANK IN THE YEAR 1994 UNDE R THE HEAD CASH CREDIT, PACKING CREDIT, EBD LOAN, TERM LOAN ETC. THESE LOANS ITA NO S . 1 1 8 4/10 & 6662 /20 09 11 WERE TAKEN DIRECTLY FOR THE PURPOSE OF PURCHASING OF RAW MATERIAL, PACKING MATERIAL ETC. AND WAIVER OF SUCH LOANS HAS TO BE TREATED AS BUSINESS INCOME ONLY. SIMILARLY, CERTAIN AMO UNTS PAYABLE TO THE CREDITORS WAS WRITTEN OFF WHICH ALSO HAS ARISEN DUE TO THE BUSINESS TRANSACTIONS CARRIED OUT IN EARLIER YEARS. SINCE BOTH THE TRANSACTIONS ARE DIRECTLY RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE AND MOREOVER THESE AMOUNTS ARE OFFE RED TO TAX UNDER SECTION 41, WHICH IS A PART OF COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS, SUCH INCOME WRITTEN OFF/WAIVED, HAS TO BE CONSIDERED AS INCOME FROM BUSINESS ONLY AND NOT THE INCOME FROM OTHER SOURCES. 14 . LEARNED CIT (A) WAS IN AGREEMENT WITH THE EXPLANATION OF THE ASSESSEE. ACCORDINGLY, HE ALLOWED THE GROUND OF THE ASSESSEE BY HOLDING THAT THE WAIVER OF LOAN AND THE AMOUNT WRITTEN OFF BY ASSESSEE PAYABLE TO VARIOUS CREDITORS WAS ASSESSABLE UNDER THE HEAD BUSINESS INC OME. 15 . AFTER CONSIDERING THE SUBMISSION, WE FOUND NO INFIRMITY IN THE FINDING OF THE LEARNED CIT(A). WE ARE NOT UNDERSTANDABLE THAT HOW THE AMOUNT WHICH WAS WAIVED BY THE BANK WAS INCOME FROM OTHER SOURCES AS THE LOAN WAS TAKEN FOR THE PURPOSE OF BUSIN ESS ACTIVITY ONLY. THE AMOUNT PAYABLE TO VARIOUS CREDITOR WERE ALSO ON ACCOUNT OF BUSINESS ACTIVITY. THESE AMOUNTS WERE OFFERED UNDER SECTION 41 (1), THEREFORE, THERE WAS NO QUESTION OF TREATING THE SAME AS INCOME FROM OTHER SOURCES. LEARNED CIT(A) WAS RIGH T IN HOLDING THAT THESE RECEIPTS ARE BUSINESS RECEIPT AND ARE ASSESSABLE UNDER THE BUSINESS INCOME. ITA NO S . 1 1 8 4/10 & 6662 /20 09 12 ACCORDI NGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) IN RESPECT TO THESE GROUNDS ALSO. 16 . GROUNDS NO. 8 & 9 , RELATE TO DIRECTING THE AO TO ALLOW THE SET OFF OF INCOME OF THE YEAR AGAINST THE CARRY FORWARD LOSS OF EARLIER YEARS WHICH INCLUDE PROVISION FOR BAD DEBTS. 17 . THE AO DID NOT ALLOW THE SET OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED LOSSES FOR THE REASON THAT FROM THE ASSESSEES ACCOUNT, THERE I S NO BUSINESS FOR THE LAST 5 YEARS , NO DEPRECIATION WAS CLAIMED FOR ASSESSMENT YEARS 2001 - 02 TO 2005 - 06 AND ONLY SALE WAS MADE TO SISTER CONCERN WHICH WAS ONLY AN ADJUSTMENT ENTRY MADE IN BOOKS. LEARNED CIT(A) NOTED THAT THE PROFIT EARNED ON ACCOUNT OF SAL E TO SISTER CONCERN HAS BEEN TREATED AS INCOME FROM BUSINESS, THEREFORE, THE BROUGHT FORWARD LOSSES IS ALLOWABLE TO BE SET OFF AGAINST THE BUSINESS INCOME SHOWN DURING THE YEAR. LEARNED CIT(A) FURTHER NOTED THAT AS PER THE BALANCESHEET AND PROFIT AND LOSS ACCOUNT, THERE IS NO MANUFACTURING ACTIVITY AND NO SALES WERE MADE DURING THE EARLIER YEARS. HOWEVER, DURING THE YEAR, THE ASSESSEE HAD SETTLED THE LOAN ACCOUNT WITH THE BANK AND PART OF THE STOCK WAS SOLD TO SISTER CONCERN WHICH WAS ACCEPTED AS BUSINESS I NCOME. THEREFORE, THE CIT(A) HELD THAT THE SALE OF STOCK WHICH WAS GENERATED ON ACCOUNT OF BUSINESS ACTIVITY HAS TO BE TREATED AS INCOME FROM BUSINESS AND THE AO WAS DIRECTED TO ALLOW CARRY FORWARD LOSS AND UNABSORBED DEPRECIATION AS PER PROVISION OF LAW. ITA NO S . 1 1 8 4/10 & 6662 /20 09 13 18 . LEARNED DR PLACED RELIANCE ON THE ORDER OF AO. FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE CALCUTTA HIGH C O URT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS . ORIENTAL COAL CO. LTD. , REPORTED IN 206 ITR 682 AND IN THE CASE OF HINDUSTAN C HEMICAL WORKS LTD. VS . COMMISSIONER OF INCOME - TAX , REPORTED IN 124 ITR 561 (BOM) . 19 . ON THE OTHER HAND, LEARNED AR PLACED RELIANCE ON THE ORDER OF LEARNED CIT(A). 20 . WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUB MISSION, WE FOUND NO INFIRMITY IN THE FINDING OF THE LEARNED CIT(A), WHO DIRECTED THE AO TO ALLOW THE CARRY FORWARD LOSSES AND UNABSORBED DEPRECIATION AS PER LAW. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY THE LEARNED DR AND FOUND THEM DISTINGU ISHABLE ON FACTS. IN CASE OF HINDUSTAN CHEMICAL WORKS LTD. (SUPRA), WE NOTED THAT IN THAT CASE THE BUSINESS OF THAT ASSESSEE WAS CLOSED DOWN AND ASSESSEE LEASED OUT A PART OF BUSINESS PREMISES AS THE ENTIRE FACTORY WAS DISMANTLED AND THE FACTORY WAS CEASED TO EXIST AS SUCH. THEREAFTER AFTER CERTAIN YEARS, THE ASSESSEE TRIED TO START BUSINESS BY DEVELOPING THE PROPERTY. IN TH E S E CIRCUMSTANCE S , THE HON BLE HIGH COURT HELD THAT DEPRECIATION OR UNABSORBED DEPRECIATION CANNOT BE SET OFF AGAINST LEASE RENTAL AS THER E WAS NO BUSINESS ACTIVITY OF THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS SOLD ITS OLD STOCKS AND THE PROFIT HAS BEEN SHOWN AS BUSINESS INCOME. WE HAVE ACCEPTED TH E CONTENTION OF THE ASSESSEE THAT ON ACCOUNT OF OLD STOCK ITA NO S . 1 1 8 4/10 & 6662 /20 09 14 SOLD; THE INCOME HAS TO BE ASSESSED AS BUSINESS INCOME. NO DOUBT, THERE WAS NO USE OF MACHINERY ETC. IN THE YEAR UNDER CONSIDERATION AND, THEREFORE, THE DEPRECIATION OF THE YEAR UNDER CONSIDERATION IS NOT ALLOWABLE, HOWEVER, QUANTIFIED BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION CAN BE SET OFF AGAINST THE BUSINESS INCOME AS THE BUSINESS INCOME SHOWN BY THE ASSESSEE IS ON ACCOUNT OF S A ME BUSINESS ACTIVITY CARRIED OUT IN EARLIER YEARS. THEREFORE, WE ARE OF THE VIEW THAT THIS DECISION OF THE HON BLE BOMBAY HIGH COURT IS NOT APPLICABLE. SIMI LAR FACTS ARE IN OTHER CASE I.E. IN THE CASE OF ORIENTAL COAL CO. LTD (SUPRA) . THEREFORE, FOR THE SAME REASONING, WE HOLD THAT THE RATIO OF THIS CASE IS ALSO NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 21 . IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT LEARNED CIT(A) WAS JUSTIFIED IN DIRECTING TO ALLOW THE BUSINESS LOSS AND UNABSORBED DEPRECIATION AGAINST THE BUSINESS INCOME AS PER PROVISION OF LAW. THIS GROUND OF DEPAR T MENT ALSO FAILS. 22 . NOW, WE WILL TAKE UP THE APPEAL OF THE A SSESSEE I.E. ITA NO. 6662 /M/20 09 . 2 3 . GROUNDS NO.1 & 2 RELATE TO TREATING THE BANK LOAN WRITTEN OFF OF RS.3,59,66,419/ - AS INCOME INSTEAD OF TREATING THE SAME AS CAPITAL RECEIPTS NOT CHARGEABLE TO TAX AND NOT TREATING THE TERM LOAN FROM BANK OF RS. 21,83,77 3/ - TAKEN FOR PURCHASE OF ASSETS AS CAPITAL RECEIPTS INSTEAD OF INCOME OF THE YEAR . ITA NO S . 1 1 8 4/10 & 6662 /20 09 15 2 4 . NO SUCH ISSUE WAS INVOLVED BEFORE THE AO AS THE ASSESSEE HIMSELF OFFERED SUCH INCOME UNDER SECTION 41(1) OF THE ACT. BEFORE THE CIT(A), THE ASSESSEE HAS TAKEN ADDITION A L GROUND S THAT THE ASSESSEE BE ALLOWED TO RAISE ADDITIONAL GROUND IN RESPECT OF BANK LOAN WRITTEN OFF WHICH WAS WRONGLY CREDITED TO THE PROFIT AND LOSS ACCOUNT . THE AO WAS ERRED IN TREATING BANK LOAN WRITTEN OFF AS INCOME OF THE ASSESSEE. 2 5 . THE CIT(A) NOTED THAT THE ASSESSEE HIMSELF HAD CREDITED THE AMOUNT IN THE PROFIT AND LOSS ACCOUNT LOAN WAIVED OF RS. 3,59,66,419/ - AND TERM LOAN OF RS. 20,14,613/ - IN ITS BOOKS OF ACCOUNT. T HE LEARNED CIT(A) AFTER EXAMINING THE FACTS OF THE CASE FOUND THAT FIRSTLY THE ASSESSEE HIMSELF HAD SHOWN THE SAME AS INCOME IN VIEW OF THE PROVISION OF SECTION 41(1) AND THE ENTIRE LOAN WAS TAKEN FOR THE PURPOSE TO RUN THE BUSINESS AND NOT ACQUIRING ANY CAPITAL ASSET. FURTHER PLACING RELIANCE ON THE ORDER OF THE HON BLE JURISDICTION AL HIGH COURT IN THE CASE OF SOLID CONTAINER, REPORTED IN (2009) 308 ITR 417 , WHEREIN IT WAS HELD THAT LOAN TAKEN FOR TRADING ACTIVITY, UPON WAIVER IS ASSESSABLE TO TAX , A CCORDINGLY THE GROUNDS OF THE ASSESSEE WERE REJECTED. 2 6 . LEARNED AR REITERATED THE CONTENTION RAISED BEFORE LEARNED CIT(A). RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S KING PRAWNS LIMITED, DECIDED IN ITA NO.60/M/2010, VIDE ORDER DATED 14 - 12 - 2010 . FURTHER ATTENTION OF THE BENCH WAS DRAWN ON THE COPY OF WRITTEN S UBMISSION PLACED ON RECORD. ITA NO S . 1 1 8 4/10 & 6662 /20 09 16 2 7 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF LEARNED CIT(A). 2 8 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE DESERVES TO SUCCEED IN THESE GROUNDS IN PAR T. 2 9 . REGARDING THE TERM LOAN OF RS. 21,83,773/ - , WHICH WAS TAKEN FOR CAPITAL ASSESSEE, WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S KING PRAWNS LIMITED (SUPRA) . THE TRIBUNAL HAS DECIDED THE ISSUE FOLLOWING THE DECIS ION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. VS. CIT, REPORTED IN (2003) 261 ITR 501 (BOM) , BY WHICH IT WAS HELD THAT IF THE WAIVER OF LOAN IS ON ACCOUNT OF CAPITAL ASSET THEN THE AMOUNT OF LOAN, WHICH WAS WAIVED, WAS CAPITA L ASSET AND, THEREFORE, CANNOT BE BROUGHT TO TAX. ACCORDINGLY, WE DIRECT THE AO TO ALLOW THIS ISSUE IN FAVOUR OF THE ASSES SEE, I F THE AMOUNT OF TERM LOAN OF RS. 21,83,773/ - WAS TAKEN FOR THE PURCHASE OF CAPITAL ASSET. THE AO WILL VERIFY AND THEN RECTIFY HIS ORDER ACCORDINGLY. 30 . REGARDING THE REMAINING LOAN, WE FIND THAT THE DECISION OF THE TRIBUNAL IN CASE OF M/S KING PRAWNS LIMITED (SUPRA), DOES NOT HELP THE ASSESSEE. IN THIS CASE, THE TRIBUNAL ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE BY ASCERTAINING THE FACT THAT THE BANK LOAN WHICH WAS WAIVED, WAS CAPITAL IN NATURE AS THE LOAN WAS USED FOR THE PURPOSE OF CAPITAL ASSET. HOWEVER, IN THE PRESENT CASE, THE LOAN WAS USED FOR BUSINESS ACTIVITY. THIS FACT HAS NOT BEEN DISPUTED EVEN BY THE ITA NO S . 1 1 8 4/10 & 6662 /20 09 17 ASSESSEE. THEREFO RE, THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SOLID CONTAINER (SUPRA), WHICH HAS BEEN FOLLOWED BY THE CIT(A), SQUARELY APPLIES ON THE FACTS OF THE PRESENT CASE. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) ON THE AMOUNT WHICH WAS TAKEN BY THE ASSESSEE FROM THE BANK ON ACCOUNT OF CASH CREDIT, PACKING CREDIT ETC. FOR THE SAKE OF CLARIFICATION, THE AMOUNT OF RS. 3,59,66,419 21,83,773)= RS.3,37 , 82,646/ - IS HEREBY SUSTAINED . WE ORDER ACCORDINGLY. 31 . THE REMAINING ISSUE IN APPEAL OF THE ASSES SEE IS AGAINST CONFIRMING THE ADDITION OF RS.7,74,286/ - TOWARDS ADVANCE AGAINST PURCHASES WRITTEN OFF DURING THE YEAR AS THE SAME WERE NOT RECOVERABLE. 32 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSE E HAS SHOWN ADVANCE PAYMENTS TO LAB OUR CONTRACTOR, SUPPLIERS OF TILES, SUPPLIERS OF SAND AND CEMENT AND ELECTRICAL CONTRACTOR TOTALING TO RS. 7,74,286/ - . IT WAS SUBMITTED BEFORE THE AO THAT SOME OF THE WORK WAS CARRIED OUT, HOWEVER, THE FINAL BILLS WERE NOT RECEIVED FROM THE PARTIES DUE TO D ISPUTES. SINCE THERE WAS NO EVIDENCE ON RECORD, THEREFORE, THE AO DISALLOWED THE SAME. BEFORE THE CIT(A) ALSO , NO DETAILS WERE FILED. THE CIT(A) BY OBSERVING FURTHER THAT THE PAYMENTS ARE MADE IN ADVANCE FOR SUPPLY OF SAND, CEMENT, TILES, LABOUR ETC. WHIC H ARE CAPITAL IN NATURE AND IN ABSENCE OF ANY SUPPORTING DOCUMENTS, THE ADDITION MADE BY THE AO WAS CONFIRMED. ITA NO S . 1 1 8 4/10 & 6662 /20 09 18 33 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE ALSO DO NOT FIND ANY MERIT IN THE ARGUMENTS OF THE LEARNED AR AS N EITHER THERE IS ANY EVIDENCE ON RECORD TO SUPPORT THE CASE THAT THESE ADVANCES WERE GIVEN BY THE ASSESSEE FOR SUPPLY OF TILES, CEMENT, SAND, LABOUR ETC. NOR ANY DOCUMENTARY EVIDENCE WAS BROUGHT ON RECORD, NEITHER ANY OTHER EVIDENCE WAS BROUGHT ON RECORD. T HEREFORE, WE SEE NO MERIT IN THE ARGUMENT OF THE LEARNED AR. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 3 4 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JUNE 2013 . SD/ - SD/ - ( P.M.JAGTAP ) ( R.K.GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 12/06/ 2013 . PKM , PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - X, MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, ( ASSTT. REGIST RAR) ITAT, MUMBAI