Unifrax India Ltd.,(Formerly Orient Cerlane Ltd.), Ahmedabad V. The Addl.CIT., Range-8, Ahmedabad

ITA 1201/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7772 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 11-05-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: FALE E H BILIMORIA
• Keywords: Bad and doubtful debts; Capital Gains
• Section: 80HHC; 80HH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND N.S. SAINI, ACCOUNTANT MEMBER) ITA.NO.1201/AHD/2006 [ASSTT.YEAR : 2003-2004] AND ITA NO.1016/AHD/2007 [ASSTT.YEAR : 2004-2005] UNIFRAX INDIA LTD. 30, OMKAR HOUSE C.G. ROAD,AHMEDABAD 380 009. VS. ACIT, CIR.8 AHMEDABAD. ITA.NO.1736/AHD/2006 [ASSTT.YEAR : 2003-2004] AND ITA NO.1913/AHD/2007 [ASSTT.YEAR : 2004-2005 ACIT, CIR.8 AHMEDABAD. VS. UNIFRAX INDIA LTD. 30, OMKAR HOUSE C.G. ROAD, AHMEDABAD 380 009. ASSESSEE BY : MR.FALEE H. BILIMORIA REVENUE BY : MR.GOVIND SINGHAL O R D E R PER BENCH : THESE ARE CROSS-APPEALS RELATING TO THE ASSESSMENT YEARS 2003-04 AND 2004-05. THE ASSESSEE IS A PUBLIC LIMI TED COMPANY MANUFACTURING CERAMIC FIBRES AND ALLIED PRODUCTS, SUCH AS BULK WO OL, BLANKETS, BRAWLS, MODULES ETC. USED IN HIGH TEMPERATURE REFRACTORY AN D INSULATION APPLICATIONS SUCH AS KILNS, OVENS, FURNACES AND HEATERS USED IN MAJOR INDUSTRIAL UNITS. 2. SINCE THE APPEALS INVOLVE CERTAIN COMMON POINTS AND WERE ALSO HEARD TOGETHER, THEY ARE DISPOSED OF BY A SINGLE ORDER FO R THE SAKE OF CONVENIENCE. PAGE - 2 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -2- ASSESSEES APPEALS 3. THE FIRST GROUND IN THE ASSESSEES APPEALS FOR B OTH THE YEARS IS COMMON. IT RELATES TO THE DEDUCTION UNDER SECTION 80HHC. I T IS AGAINST THE ACTION OF THE DEPARTMENTAL AUTHORITIES TO EXCLUDE 90% OF THE FOLL OWING RECEIPTS FROM THE PROFITS OF THE BUSINESS BY INVOKING EXPLANATION -( BAA ) BELOW SECTION 80HHC: A.Y.2003-04 A.Y.2004-05 I) LINING, APPLICATION AND ALLIED RS.13,60,081/- R S.33,93,586/- RECEIPTS II) INSPECTION FEES RS. 34,428/- RS. 22,880/ - III) INSURANCE CLAIM - RS.1,50,000/- THE LEARNED REPRESENTATIVE FOR THE ASSESSE HAS FILE D A CHART CONTAINING THE BRIEF PARTICULARS ABOUT THE DISPUTE AS ALSO PAPER BOOKS T O EXPLAIN THE GROUNDS AND THESE HAVE BEEN TAKEN INTO ACCOUNT, IN ADDITION TO THE RIVAL SUBMISSIONS, IN DISPOSING OF THE GROUNDS. IN RESPECT OF THE ABOVE GROUNDS IT HAS BEEN REPRESENTED THAT THEY ARE COVERED IN FAVOUR OF THE DEPARTMENT BY THE ORDER OF THE TRIBUNAL, AHMEDABAD BENCH IN THE ASSESEES OWN CASE FOR THE A.Y.2002- 2003 AND COPY OF THE SAID ORDER HAS BEEN FILED. T HIS ORDER IS DATED 6-2-2009 IN ITA NOS.2385/AHD/2005 AND 2538/AHD/2005 (CROSS APPE ALS). IN THIS ORDER, THE TRIBUNAL HAS CONSIDERED THE CORRECTNESS OF THE ACTION OF THE INCOME-TAX AUTHORITIES IN EXCLUDING 90% OF THE FIRST TWO RECEI PTS FROM THE PROFITS OF THE BUSINESS BY INVOKING EXPLANATION-(BAA) . THE ISSUE HAS BEEN CONSIDERED AT LENGTH IN THE AFORESAID ORDER AND ULTIMATELY IT WAS HELD IN PARAGRAPH-8.9 THAT THESE ITEMS OF RECEIPTS WERE INDEPENDENT INCOME NOT IN ANY MANNER RELATED TO THE EXPORT ACTIVITIES OF THE ASSESSEE AND THEREFORE THEY HAVE TO BE EXCLUDED TO THE EXTENT OF 90% FROM THE PROFITS OF THE BUSINESS AS MANDATED BY THE AFORESAID EXPLANATION . SINCE THE CONTROVERSY AND THE FACTS RELATING TO THE SAME ARE THE SAME FOR THE YEARS UNDER APPEAL, RESPECTFULLY FOLLO WING THE ORDER OF THE PAGE - 3 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -3- TRIBUNAL, WE UPHOLD THE ACTION OF THE DEPARTMENTAL AUTHORITIES IN RESPECT OF THE FIRST TWO ITEMS OF RECEIPTS. 3. SO FAR AS THE INSURANCE CLAIM OF RS.1,50,000/- I S CONCERNED, FOR THE A.Y.2004-2005, AFTER HEARING BOTH THE SIDES WE ARE OF THE VIEW THAT THE SAME REASONING WOULD HOLD GOOD AND ACCORDINGLY, APPLYING THE REASONING ADOPTED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN THE ORDE R CITED SUPRA, WE CONFIRM THE EXCLUSION OF 90% OF THE SAME FROM THE PROFITS OF TH E BUSINESS UNDER EXPLANATION -( BAA ). THUS, THE FIRST GROUND FOR BOTH THE YEARS IS DI SMISSED. 4. THE SECOND GROUND WHICH IS COMMON TO BOTH THE YE ARS HAS BEEN TAKEN WITHOUT PREJUDICE AND IT IS TO THE EFFECT THAT EVEN ASSUMING THAT THE AFORESAID THREE ITEMS OF RECEIPTS ARE TO BE EXCLUDED FROM THE PROFITS OF THE BUSINESS TO THE EXTENT OF 90% FOR COMPUTING THE DEDUCTION UNDER SEC TION 80HHC, IT IS ONLY THE NET RECEIPTS AND NOT THE GROSS RECEIPTS THAT HAVE T O BE SO EXCLUDED. IN OTHER WORDS, THE ASSESSEE INVOKES THE PRINCIPLE OF NETTIN G AND HAS RELIED ON THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF LALSONS VS. DCIT, 89 ITD 25 (SB). WE HOWEVER FIND THAT THIS ISSUE HAS NOT B EEN DECIDED BY THE CIT(A). WE ARE OF THE VIEW THAT THIS ISSUE HAS TO BE RESTOR ED TO THE FILE OF THE AO WHO SHALL EXAMINE THE ASSESSEES CLAIM FOR NETTING AND TAKE A DECISION IN ACCORDANCE WITH LAW AND AFTER GIVING ADEQUATE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. THE ISSUE IS THUS RESTORED TO THE AO AND THE GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES FOR BOTH THE YEARS. 5. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. DEPARTMENTS APPEALS 6. THERE ARE CERTAIN GROUNDS WHICH ARE COMMON TO BO TH THE YEARS. GROUND NO.1 FOR BOTH THE YEARS RELATES TO THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHC. IT SAYS THAT THE CIT(A) ERRED IN DIRECTING THE AO TO RECOMPUTE THE DEDUCTION AFTER EXCLUDING EXCISE DUTY AND SALES-TAX FROM THE TOTAL TURNOVER. THIS ISSUE IS NOW CONCLUDED IN FAVOUR OF THE ASSESS EE BY THE JUDGMENTS OF THE PAGE - 4 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -4- SUPREME COURT IN CIT VS. LAXMI MACHINE WORKS, 290 I TR 667 AND CIT VS. CATAPHARMA (INDIA) PVT. LTD., 292 ITR 641. IN THES E JUDGMENTS IT HAS BEEN HELD THAT THESE TWO ITEMS OF RECEIPTS CANNOT BE INCLUDED IN THE TOTAL TURNOVER SINCE (A) THEY HAVE NO ELEMENT OF PROFIT EMBEDDED IN THEM AND (B) THEY ARE NOT INCLUDIBLE IN THE EXPORT TURNOVER WHICH IS THE NUME RATOR IN THE FORMULA AND PARITY SHOULD BE MAINTAINED BETWEEN THE NUMERATOR A ND DENOMINATOR. THE ISSUE HAS ALSO BEEN CONSIDERED IN THE ASSESSEES OW N CASE FOR THE A.Y.2001- 2002 IN ITA NO.3535/AHD/2004 DATED 11-2-2005 AND FO R THE A.Y.2002-2003 IN ITA NO.2385 AND 2532/AHD/2005 DATED 6-2-2009, BY TH E TRIBUNAL. FOLLOWING THE JUDGMENTS OF THE SUPREME COURT THE ISSUE HAS BE EN RECEIVED IN FAVOUR OF THE ASSESSEE. RESPECTFULLY THE JUDGMENTS AND THE ORDERS OF THE TRIBUNALS IN THE ASSESSEES OWN CASE WE CONFIRM THE DECISION OF THE CIT(A) FOR BOTH THE YEARS AND DISMISS THE GROUND. 7. THE SECOND GROUND FOR THE A.Y.2003-2004 IS THAT THE CIT(A) ERRED IN DIRECTING THE AO TO RECOMPUTE THE DEDUCTION UNDER S ECTION 80HHC BY TAKING THE CROSS TOTAL INCOME OF THE BUSINESS AS ASSESSED. THE CONTENTION IS THAT THE AO HAS THE POWER TO VARY THE FIGURE OF THE PROFITS OF THE BUSINESS WHILE APPLYING THE FORMULA PRESCRIBED BY THE SECTION 80HH C AND IS NOT BOUND TO TAKE THE FIGURE OF THE PROFITS OF THE BUSINESS AS ASSESS ED IN THE ASSESSMENT ORDER. THE CONTENTION HAS NOT FOUND FAVOUR WITH THE TRIBUN AL IN THE ASSESSEES OWN CASE FOR A.Y.2002-2003 (ORDER CITED SUPRA). IN PAR A-4 IT HAS BEEN HELD THAT THE ONLY THE PROFITS OF THE BUSINESS HAVE TO BE CONSIDE RED WHILE APPLYING THE FORMULA AND NOT THE GROSS TOTAL INCOME WHICH INCLUD ED SHORT TERM AND LONG TERM CAPITAL GAINS. IN OUR OPINION, THE DEFINITIO N OF PROFITS OF THE BUSINESS IN EXPLANATION-(BAA) IS CLEAR. IT SAYS THAT THE PROFITS OF THE BUSINES S MEANS PROFITS OF THE BUSINESSS AS COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND REDUCED BY 90% OF SPECI FIED RECEIPTS. SINCE THE STATUTORY PROVISION IS CLEAR, WHILE APPLYING THE FO RMULA THE AO HAS TO TAKE THE PROFITS OF THE BUSINESS AS ASSESSED BY HIM IN THE A SSESSMENT ORDER. THUS FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE AS ALSO FOLLOWING PAGE - 5 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -5- THE STATUTORY PROVISION, WE CONFIRM THE DIRECTION O F THE CIT(A) AND DISMISS THE GROUND. 8. GROUND NO.3 FOR THE A.Y.2003-2004 AND GROUND NO. 2 FOR A.Y.2004- 2005 ALSO RELATE TO THE COMPUTATION OF THE DEDUCTIO N UNDER SECTION 80HHC. THE AO EXCLUDED 90% OF CERTAIN RECEIPTS FROM THE PR OFITS OF THE BUSINESS. THE CIT(A) HELD THAT CERTAIN RECEIPTS CANNOT BE EXCLUDE D FROM THE PROFITS OF THE BUSINESS AND THE DEPARTMENT IS IN APPEAL IN RESPECT OF THESE ITEMS OF RECEIPTS. THESE GROUNDS ARE DISCUSSED BELOW: 9. THE FIRST ITEM OF RECEIPTS IS THE GAINS RECEIVED BY THE ASSESSEE ON EXCHANGE RATE FLUCTUATION. SO FAR AS THIS RECEIPT S ARE CONCERNED, THE SAME HAS BEEN DISCUSSED IN PARA-5.2 AND 5.3 OF THE ORDER OF THE TRIBUNAL FOR THE A.Y.2002-2003 (SUPRA). THE GAINS ARE RS.1,85,438/ - FOR A.Y.2003-2004 AND RS.3,52,439/- FOR THE A.Y.2004-2005. THE TRIBUNAL HAS SENT BACK THE MATTER TO THE FILE OF THE AO TO ASCERTAIN WHETHER OR NOT THE AFORESAID GAINS ARE ATTRIBUTABLE TO FOREIGN EXCHANGE IN RELATION TO EXP ORTS MADE DURING THE YEAR AND WERE RECEIVED BEFORE THE DATE STIPULATED UNDER THE RELEVANT PROVISIONS OF THE ACT AND THEREAFTER RECOMPUTE THE DEDUCTION IN ACCOR DANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. PARTIES ARE AGREED BEFORE US THAT THE SAME COURSE MAY BE ADOPTED FOR THE YEARS U NDER APPEAL ALSO. ACCORDINGLY, FOLLOWING THE DIRECTION OF THE TRIBUNA L FOR THE A.Y.2002-2003, WE RESTORE THE ISSUE TO THE FILE OF THE AO FOR BOTH THE YEARS WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE TRIBUNAL. 10. THE NEXT ITEM OF RECEIPT IS THE SALES-TAX REFUN D OF RS.21,35,566/- FOR THE A.Y.2003-2004. THIS ISSUE DOES NOT ARISE IN THE AP PEAL FOR THE A.Y.2004-2005. IT IS AGREED BEFORE US ON BEHALF OF THE ASSESSEE TH AT THE SALES TAX REFUND IS IN SUBSTANCE OF THE SAME NATURE AS THE SALES-TAX SET O FF. SO FAR AS SALES-TAX SET OFF IS CONCERNED, THE TRIBUNAL DECIDED THE SAME AGAINST THE ASSESSEE IN ITS ORDER FOR A.Y.2002-2003. THE ISSUE HAS BEEN DECIDED FINALLY IN PARA-8.9 OF THE ORDER. IT PAGE - 6 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -6- HAS BEEN HELD THAT SALES-TAX SET OFF BEING INDEPEND ENT INCOME AND NOT IN ANY MANNER RELATED TO EXPORT ACTIVITIES OF THE ASSESSEE , WILL HAVE TO BE EXCLUDED TO THE EXTENT OF 90% FROM THE PROFITS OF THE BUSINESS WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC. THE TRIBUNAL IN COM ING TO THIS CONCLUSION HAS APPLIED THE JUDGMENT OF THE SUPREME COURT IN TH E CASE OF CIT VS. K. RAVINDRANADAN NAIR, 295 ITR 228. RESPECTFULLY FOLL OWING THE ORDER OF THE TRIBUNAL WE HOLD THAT THE SALES-TAX REFUND HAS TO B E EXCLUDED TO THE EXTENT OF 90% FROM THE PROFITS OF THE BUSINESS. 11. THE NEXT ITEM OF RECEIPT IS THE SALES-TAX SET O FF WHICH ALSO ARISES ONLY IN THE ASSESSMENT YEAR 2003-2004. FOR THE REASONS GIV EN IN THE PRECEDING PARAGRAPH WE HOLD THAT 90% OF THE SALES-TAX SET OFF HAS TO BE EXCLUDED FROM THE PROFITS OF THE BUSINESS. 12. THE NEXT ITEM OF RECEIPT IS THE SUNDRY CREDIT B ALANCES WRITTEN BACK TO THE ACCOUNT OF THE ASSESSEE. THIS CAN BE CONSIDERED WI TH THE BAD DEBTS RECOVERED AND ENTERED IN THE ASSESSEES ACCOUNT. THE SUNDRY CREDIT BALANCES WRITTEN BACK ARE RS.2,27,307/- AND RS.1,98,284/- FOR THE A.Y.200 3-2004 AND 2004-2005 RESPECTIVELY. THE BAD DEBTS RECOVERED ARE RS.2,78 ,118/- AND RS.49,339/- FOR THE A.YRS.2003-04 AND 2004-05 RESPECTIVELY. THESE TWO ITEMS OF RECEIPTS HAVE BEEN RIGHTLY EXCLUDED TO THE EXTENT OF 90% BY THE A O FROM THE PROFITS OF THE BUSINESS AS HELD BY THE ORDER OF THE TRIBUNAL FOR T HE A.Y.2002-2003. THESE RECEIPTS HAVE ALSO BEEN CONSIDERED BY THE TRIBUNAL IN PARA-8.9 OF ITS ORDER FOR THAT YEAR. SINCE THE FACTS AND CONTROVERSIES ARE THE SAME FOR THE YEARS UNDER APPEAL, RESPECTFULLY FOLLOWING THE SAID ORDER, WE U PHOLD THE ACTION OF THE AO. 13. THE NEXT ITEM OF RECEIPTS IS THE PROVISION FOR DOUBTFUL DEBTS WRITTEN BACK AND THIS COMMON TO BOTH THE YEARS. FOR THE A.Y.200 3-2004 THE AMOUNT IS RS.37,804/- AND FOR THE A.Y.2004-2005 THE AMOUNT IS RS.1,24,479/-. THE CIT(A) HAS ACCEPTED THE ASSESSEES CLAIM THAT THESE AMOUNTS SHOULD NOT BE EXCLUDED FROM THE PROFITS OF THE BUSINESS TO THE EX TENT OF 90% BECAUSE THE PAGE - 7 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -7- ASSESSEE ITSELF HAS EXCLUDED FROM THE PROFITS OF TH E BUSINESS IN THE COMPUTATION OF THE INCOME. WE FIND THAT THE DECISION OF THE C IT(A) IS IN CONFORMITY WITH THE COMPUTATION OF TOTAL INCOME FILED AT PAGE-1 OF THE PAPER BOOKS FOR BOTH THE YEARS. THE ASSESSEE HAS REDUCED THE PROFITS OF THE BUSINESS BY THE AFORESAID AMOUNTS IN THE COMPUTATION OF THE INCOME. THE FUR THER EXCLUSION MADE BY THE AO THEREFORE AMOUNTED TO DOUBLE EXCLUSION WHICH HAS BEEN SET RIGHT BY THE CIT(A). THERE IS NO INFIRMITY IN HIS DIRECTION. W E UPHOLD THE SAME. 14. IN THE A.Y.2004-2005 THERE ARE CERTAIN OTHER RE CEIPTS, MENTIONED IN GROUND NO.2, WHICH WERE EXCLUDED BY THE AO TO THE E XTENT OF 90% FROM THE PROFITS OF THE BUSINESS. HIS ACTION WAS FOUND TO B E INCORRECT BY THE CIT(A) AND THE DEPARTMENT IS IN APPEAL WITH REFERENCE TO THOSE RECEIPTS. THESE ARE THE EXCISE CLAIM REFUND OF RS.6,03,000/-. SO FAR AS TH IS IS CONCERNED, IT HAS BEEN DECIDED AGAINST THE ASSESSEE IN THE ORDER FOR THE A .Y.2002-03 AS STATED BY THE ASSESSEE IN THE CHART FILED BY IT BEFORE US. ACCOR DINGLY, THE ACTION OF THE AO IS UPHELD AND THE DECISION OF CIT(A) IS REVERSED. 15. AS REGARDS MISCELLANEOUS RECEIPTS, SUCH AS INSP ECTION CHARGES OF RS.22,880/- AND SCRAP SALES OF RS.29,053/-, FOR THE A.Y.2004-05, THEY ARE CONNECTED TO THE BUSINESS OF THE ASSESSEE AND THERE FORE IN OUR OPINION CANNOT BE EXCLUDED FROM THE PROFITS OF THE BUSINESS. THE INS PECTION CHARGES ARE INCIDENTAL TO THE SUPPLY AND INSTALLATION OF THE AS SESSEES PRODUCTS AND HENCE CONNECTED TO THE BUSINESS AND THE SCRAP IS GENERATE D DURING PRODUCTION. THUS, BOTH THE ITEMS OF RECEIPTS ARE CONNECTED TO THE BUS INESS. WE THEREFORE UPHOLD THE DECISION OF THE CIT(A) IN RESPECT OF THESE TWO ITEMS. AS REGARDS SUNDRY RECEIPTS OF RS.35,656/-, AFTER HEARING THE RIVAL SU BMISSIONS WE HOLD THAT THE AO WAS RIGHT IN EXCLUDING THE SAME FROM THE PROFITS OF THE BUSINESS. 16. THAT LEAVES THREE ITEMS OF RECEIPTS WHICH WERE EXCLUDED FROM THE PROFITS OF THE BUSINESS AND THEY ARE DIVIDEND OF RS.20,72,9 52/-, PROFIT OF RS.13,41,289/- ON SALE OF INVESTMENT AND PROFIT OF RS.13,962/- ON SALE OF FIXED PAGE - 8 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -8- ASSETS FOR THE A.Y.2004-2005. IN RESPECT OF THESE THREE RECEIPTS THE SAME WERE DIRECTED TO BE EXCLUDED BY THE CIT(A) ONLY ON THE G ROUND THAT THE ASSESSEE ITSELF HAS EXCLUDED THE SAME FROM THE PROFITS OF TH E BUSINESS IN THE COMPUTATION OF THE INCOME FOR THE YEAR ENDED 31-3-2004 FILED AT PAGE-1 OF THE PAPER BOOK FOR THAT YEAR. WE HAVE VERIFIED THE STATEMENT AND HAVE FOUND THAT THE CIT(A) IS RIGHT. WHEN THE ASSESSEE ITSELF HAS EXCLUDED THESE RECEIPTS FROM THE PROFITS OF THE BUSINESS, THE FURTHER EXCLUSION MADE BY THE AO TO THE EXTENT OF 90% THEREOF HAS BEEN RIGHTLY HELD BY THE CIT(A) TO AMOUNT TO DO UBLE EXCLUSION. ACCORDINGLY HIS DECISION IS CONFIRMED. 17. THUS GROUND NO.2 FOR THE A.Y.2004-05 IS PARTLY ALLOWED. 18. COMING BACK TO THE APPEAL FOR THE A.Y.2003-2004 AND TO THE LAST GROUND (GROUND NO.4) TAKEN THEREIN IT IS THE DEPARTMENTS CONTENTION THAT THE PROVISION FOR DOUBTFUL DEBTS AMOUNTING TO RS.8,26,007/-, WHIC H WAS SUO MOTU DISALLOWED BY THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS, SH OULD BE ADDED TO THE INCOME FOR THE YEAR UNDER APPEAL SINCE IT HAS BEEN WRITTEN BACK. THE ASSESSEE HAS FILED WRITTEN SUBMISSION BEFORE THE AO ON 25-11-2005 AND A COPY THEREOF IS AT PAGES 25 TO 27 OF THE PAPER BOOK FOR THAT YEAR. IN PARA-2 OF THE WRITTEN SUBMISSION THE ASSESSEE HAS EXPLAINED THAT IN THE YEAR IN WHICH TH E PROVISION WAS MADE, IT WAS NOT ALLOWED AS DEDUCTION AND THEREFORE WHEN IT IS W RITTEN BACK, IT CANNOT BE ASSESSED TO TAX. THE SUBMISSIONS WERE NOT ACCEPTED BY THE AO BUT THEY WERE ACCEPTED BY THE CIT(A). THE POSITION IS THAT THE P ROVISION MADE BY THE ASSESSEE WAS NOT ALLOWED AS DEDUCTION IN THE YEAR I N WHICH IT WAS MADE; CONSEQUENTLY THE WRITE BACK OF THE PROVISION CANNOT ALSO BE TAXED IN THE YEAR OF WRITE BACK. THIS IS THE LOGIC WHICH HAS APPEALED T O THE CIT(A). IN OUR VIEW THE DECISION OF THE CIT(A) IS CORRECT. THE ASSESSE E HAS ALSO FILED BEFORE THE COPY OF THE JUDGMENT DATED 20-7-2006 DELIVERED BY T HE HONBLE GUJARAT HIGH COURT IN ASSESSEES OWN CASE IN TAX APPEAL NO.1743/ 2005 (A.Y.2001-2002) WHEREIN THE ORDER OF THE TRIBUNAL HOLDING THAT IF T HE PROVISION IS NOT ALLOWED AS A DEDUCTION, THE WRITE BACK OF THIS PROVISION CANNO T BE TAXED, HAS BEEN UPHELD. PAGE - 9 UNIFRAX INDIA LTD. VS. ACIT, AHMEDABAD. -9- RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT WE UP HOLD THE DECISION OF THE CIT(A) AND DISMISS THE GROUND. 19. IN THE APPEAL FOR THE A.Y.2004-2005, IN GROUND NOS.3 AND 4, THE DEPARTMENT HAS OBJECTED TO THE DIRECTIONS OF THE CI T(A) TO THE AO - (A) TO REDUCE THE DOUBLE DEDUCTION OF THE PROFITS FROM EXP ORT OF TRADING GOODS AND (B) TO CONSIDER THE TOTAL TURNOVER OF THE BUSINESS INST EAD OF THE ADJUSTED TOTAL TURNOVER. A PERUSAL OF THE ORDER OF THE CIT(A) SH OWS THAT HE HAS ONLY DIRECTED THE AO TO VERIFY THE CORRECTNESS OF THE ASSESEES C LAIM AND CARRY OUT THE CORRECTION AS PER LAW. HE HAS NOT ALLOWED ANY RELI EF TO THE ASSESSEE. THE DEPARTMENT CANNOT AT THIS STAGE HAVE ANY GRIEVANCE AGAINST THE DIRECTIONS OF THE CIT(A) AS HE HAS ORDERED ONLY A VERIFICATION OF THE ASSESSEES CLAIMS. THE DIRECTIONS ARE CONFIRMED AND THE GROUNDS ARE DISMIS SED. 20. IN THE RESULT, THE ASSESSEES APPEALS AND THE D EPARTMENTS APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT THIS 24 TH OF JULY, 2009. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 24-07-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD