DCIT, Patiala V. M/s Groz Beckert Asia Pvt. Ltd., Chandigarh

ITA 125/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77177 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: B M KHANNA
• Keywords: Capital asset; Business expenditure; Rule of consistency; Notional interest; Tax effect; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.125 /CHD/2014 ASSESSMENT YEAR : 2009-10 THE D.C.I.T., VS. M/S GROZ BECKERT ASIA PVT. L TD., CIRCLE PATIALA. CHANDIGARH. PAN: ABUPJ0709Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI B.M.KHANNA DATE OF HEARING : 25.06.2014 DATE OF PRONOUNCEMENT : 15.07.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS), PATIALA DATED 27.11.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL : 1) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS.1,61,797/- ON ACCOUNT OF CORPORATE MEMBERSHIP FEE/ANNUAL SUBSCRIPTION PAID TO CHANDIGARH GOLF CLU B AS A CAPITAL EXPENDITURE, IGNORING THE FACT THAT JUDGEMENT DATED 24.01.2013 O F HON'BLE HIGH COURT ON THIS ISSUE WAS NOT CONTESTED FURTHER ONLY ON ACCOUN T OF TAX EFFECT. 2) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS.15,08,370/- MADE U/S 36(L)(III) ON ACCOUNT OF LENDING LOAN OUT OF BUSINESS FUNDS AT A LOWER RATE OF INTEREST TO THE PRESIDENT, VICE PRESIDENT AND EMPLOYEES, WHILE THE ASSESSEE HA D BORROWED FUNDS AT A HIGHER RATE, PARTICULARLY WHEN THE DEPARTMENT IS AL READY IN APPEAL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FO R EARLIER YEARS. 3) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS.37,17,395/- ON ACCOUN T OF THE TRAVELLING EXPENSES 2 WHEN THE ASSESSEE FAILED TO PROVE THAT THE EXPENDIT URE IN QUESTION WAS IN FACT LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS CARRIED OUT BY IT, PARTICULARLY WHEN THE DEPARTMENT IS ALREADY IN APPE AL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR EARLI ER YEARS. 4) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS.9,83,599/- ON ACCOUNT OF LEGAL & PROFESSIONAL EXPENSES AS A CAPITAL EXPENDITURE, PARTICULARLY WHE N THE DEPARTMENT IS ALREADY IN APPEAL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR EARLIER YEARS. 5) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS.79,89,542/- ON ACCOU NT OF INFORMATION & TECHNOLOGY EXPENSES AS A CAPITAL EXPENDITU RE, PARTICULARLY WHEN THE DEPARTMENT IS ALREADY IN APPEAL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR EARLIER YEARS. 6) IN. THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD . CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS.46,95,872/- ON ACCOUN T OF SCRAP SALES, PARTICULARLY WHEN THE DEPARTMENT IS ALREADY IN APPEAL ON THE ISS UE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR EARLIER YEARS. 7) IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE AO RESTORED. 8) THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DISPOSED OF. 3. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT ALL THE ISSUES RAISED IN THE PRESENT APPEAL ARE COVERED BY DIFFERENT ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASS ESSMENT YEARS 2001-02 TO 2008-09. THE LEARNED A.R. FOR THE ASSESSEE HAS PLACED ON RECORD THE COPIES OF THE DIFFERENT ORDERS OF THE TRIBUNAL. I T IS ALSO POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE ADDITION IN THE HANDS OF THE ASSESSEE HAD BEEN CONFIRMED BY THE ASSESSING OFFICE R SINCE THE DEPARTMENT WAS IN APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AGAINST THE SAID ISSUES. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUES RAISED IN THE PRESENT APPEAL ARE ON ACCOUNT OF THE FOLLOWING ADDITIONS: AMOUNT NATURE GROUND NO.1. RS.1,61,797/- CORPORATE MEMBERSHIP PA ID TO CLUBS GROUND NO.2 RS.15,08,370/- DISALLOWANCE U/S 36(1)( III) GROUND NO.3 RS.37,17,395/- TRAVELING EXPENSES OF DIRECTORS GROUND NO.4 RS.9,83,599/- LEGAL & PROFESSIONAL EXPENSES GROUND NO.5 RS.79,89,542/- INFORMATION & TECHNOLOG Y EXPENSES GROUND NO.6 RS.46,95,872/- SCRAP SALES. 6. THE SAID ISSUES RAISED IN THE PRESENT APPEAL WER E BEFORE THE TRIBUNAL IN ITA NO.175/CHD/2006 RELATING TO ASSESSMENT YEAR 2001-02 ORDER DATED 24.8.2007, IN ITA NO.942/CHD/2006 RELATING TO ASSESSMENT YEAR 2003-04 ORDER DATED 26.11.2007, IN ITA NO.782/CHD /2007 RELATING TO ASSESSMENT YEAR 2004-05 ORDER DATED 27.3.2008, IN ITA NO.885/CHD/2009 RELATING TO ASSESSMENT YEAR 2005-06 ORDER DATED 21.12.2009, IN ITA NO.336/CHD/2011 RELATING TO ASSE SSMENT YEAR 2006-07 ORDER DATED 16.3.2012, IN ITA NO.718/CHD/2012 REL ATING TO ASSESSMENT YEAR 2007-08 ORDER DATED 12.9.2012 AND IN ITA NO .1281/CHD/2012 RELATING TO ASSESSMENT YEAR 2008-09 ORDER DATED 2 7.2.2013. THE COPIES OF THE SAID ORDERS HAVE BEEN PLACED ON RECORD. 7. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT HAD ALSO ACKNOWLEDGED THAT SIMILAR ADDITION WERE MADE IN THE PRECEDING YEAR AND THOUGH THE ADDITION HAD BEEN DELETED BY THE TRIBUN AL BUT ISSUES WERE PENDING BEFORE THE HON'BLE HIGH COURT AND CONSEQUEN TLY THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. THE CIT (APPEA LS) DELETED THE ADDITION FOLLOWING THE ORDERS OF THE TRIBUNAL IN AS SESSEES OWN CASE. THE 4 REVENUE IS IN APPEAL AGAINST THE ORDER OF THE CIT ( APPEALS) AND HAS RAISED VARIOUS GROUNDS OF APPEAL. 8. NOW COMING TO THE ISSUE RAISED BY THE REVENUE. T HE GROUND NO.1 RAISED BY THE REVENUE IS IN RELATION TO DEDUCTION O N ACCOUNT OF GOLF CLUB MEMBERSHIP FEE. THE ASSESSEE CLAIMED THAT THE ISS UE IS SETTLED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES O WN CASE. THE ASSESSEE HAS PLACED ON RECORD THE COPY OF JUDGMENT OF LARGER BENCH OF HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO.366 O F 2008, DATE OF DECISION 24.5.2013. THE ISSUE BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT WAS IN RELATION TO THE DEDUCTION CLAIMED ON A CCOUNT OF CORPORATE MEMBERSHIP PAID TO GOLF CLUB OF RS.6,16,945/-. TH E HON'BLE HIGH COURT AFTER CONSIDERING THE DECISIONS OF VARIOUS HIGH COU RTS AND ALSO THE DECISION OF JURISDICTIONAL HIGH COURT HELD AS UNDER : IN THE PRESENT CASE, THE CORPORATE MEMBERSHIP OF R S.6 LACS WAS FOR A- LIMITED PERIOD OF 5 YEARS. THE CORPORATE MEMBERSHIP WAS OBT AINED FOR RUNNING THE BUSINESS WITH A VIEW TO PRODUCE PROFIT. SUCH MEMBERSHIP DOES NOT BR ING INTO EXISTENCE AN ASSET OR AN ADVANTAGE FOR THE ENDURING BENEFIT OF THE BUSINESS. IT IS AN EXPENDITURE INCURRED FOR THE PERIOD OF MEMBERSHIP AND IS NOT LONG .LASTING. BY SUBSCRIB ING TO THE MEMBERSHIP OF A CLUB, NO CAPITAL ASSET IS CREATED OR COMES INTO EXISTENCE. BY SUCH M EMBERSHIP, A PRIVILEGE TO USE FACILITIES OF A CLUB ALONE, ARE CONFERRED ON THE ASSESSEE AND THAT TOO FOR A LIMITED PERIOD. SUCH EXPENSES ARE FOR TUNNING THE BUSINESS WITH A VIEW TO PRODUCE THE BENEFITS TO THE ASSESSEE. CONSEQUENTLY, IT CANNOT BE TREATED AS CAPITAL ASSET. THEREFORE, T HE REASONING GIVEN BY DELHI, BOMBAY AND GUJARAT HIGH COURTS IN RESPECT OF MEMBERS OF CLUBS IS BASED UPON CORRECT ENUNCIATIONS OF THE PRINCIPLES OF LAW AS DELINEATED ABOVE IN THE JU DGMENTS OF THE SUPREME COURT. 17. IN VIEW OF THE ABOVE, WE FIND THAT THE JUDGMENT OF THIS COURT IN M/S MAJESTIC AUTO LIMITEDS CASE (SUPRA) IS NOT A CORRECT INTERPRETATION OF EXPRESSION CAPI TAL EXPENDITURE. CONSEQUENTLY, THE SAID JUDGMENT IS OVERRULED. 9. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE PU NJAB & HARYANA HIGH COURT AND THE FACTS BEING IDENTICAL, WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN ALLOWING THE DEDUCTION ON ACCOUNT OF G OLF CLUB MEMBERSHIP AT RS.1,61,797/-. THE GROUND OF APPEAL NO.1 RAISE D BY THE REVENUE IS DISMISSED. 5 10. THE ISSUE IN GROUND NO.2 RAISED BY THE REVENUE IS IN RELATION TO DISALLOWANCE OF INTEREST ONLENDING OF LOANS OUT OF BUSINESS FUNDS AT LOWER RATE OF INTEREST TO THE PRESIDENT, VICE PRESIDENT A ND EMPLOYEES. THE ASSESSEE HAD BORROWED FUNDS AT HIGHER RATE OF INTER EST AND HAD ADVANCED LOANS TO ITS PRESIDENT, VICE PRESIDENT AND EMPLOYEE S AT LOWER RATE AND THE ASSESSING OFFICER HAD WORKED OUT THE DISALLOWANCE U NDER SECTION 36(1)(III) OF THE ACT. WE FIND THAT THE TRIBUNAL IN ASSESSMENT YEAR 2004- 05 IN ITA NO.782/CHD/2007 VIDE ORDER DATED 27.3.200 8 HAD DELIBERATED UPON THE SAID ISSUE AND THE RELEVANT PORTION READS AS UNDER: 5. THE SECOND GROUND OF APPEAL OF THE REVENUE READS AS UNDER:- (I) IN DELETING THE DISALLOWANCE OF RS.17,70,003/- MADE UNDER THE PROVISIONS OF SECTION 36(1)(III) OF THE I. T. A CT,1961 ON A/C OF NOTIONAL INTEREST ON THE LOANS GIVEN TO ITS EMPLOYEES/DIRECTORS. THE FACTUAL POSITION IS THAT THE ASSESSEE HAD ADVAN CED LOANS TO ITS EMPLOYEES AT A CONCESSIONAL RATE OF INTEREST, WHICH WAS LOWER THAN THE RATE AT WHICH THE ASSESSEE WAS BORROWING F UNDS FROM THE BANKS. THE ASSESSING OFFICER MADE A DISALLOWANCE OF RS.17,70,003/- UNDER SECTION 36(1)(III) OF THE INCO ME TAX ACT,1961 (IN SHORT THE ACT ) ON THE GROUND THAT A PART OF THE INTEREST BEARING FUNDS BORROWED BY THE ASSESSEE WAS NOT UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS SIN CE ADVANCES MADE TO THE EMPLOYEES WERE AT NIL/CONCESSIONAL RATE OF INTERESTS. A SIMILAR DISALLOWANCE WAS MADE IN ASSESSMENT YEAR 2001-02 WHICH WAS DELETED BY THE CIT(A). THE TRIBUNAL VIDE PARA 6 TO 9 OF ITS ORDER FOR THE ASSESSMENT YEAR 2001-02 (SUPRA) H AS AFFIRMED THE ORDER OF THE CIT(A) FOR THAT YEAR. FOR THE YEAR UND ER APPEAL, BOTH PARTIES STATED THAT THERE WAS NO DIFFERENCE OF FACT S, WE THEREFORE ADOPT THE REASONING ADVANCED BY THE TRIBUNAL FOR TH E ASSESSMENT YEAR 2001-02 (SUPRA) TO DECIDE THIS GROUND OF APPEA L. THE OPERATIVE PORTION OF THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 IS REPRODUCED HEREINAFTER TO FACILITAT E THE APPRECIATION OF THE REASONING LAID DOWN BY THE TRIB UNAL TO DELETE THE ADDITION:- ON THIS ISSUE WE HAVE CONSIDERED THE RIVAL SUBMISS IONS. SECTION 36(1)(III) PERMITS DEDUCTION FOR INTEREST EXPENDITU RE IF THE BORROWED FUNDS ARE UTILIZED FOR THE PURPOSES OF BUS INESS. IN THE INSTANT CASE THE ASSESSEE HAS RAISED BORROWINGS FRO M BANK ON WHICH IT WAS PAYING INTEREST. ON THE OTHER HAND THE ASSESSEE HAD ADVANCED LOANS TO ITS EXECUTIVES AND EMPLOYEES WHIC H CARRIED INTEREST LOWER THAN THE INTEREST CHARGED BY THE BA NK ON THE AMOUNTS LENT TO THE ASSESSEE. ACCORDING TO THE ASS ESSING OFFICER THE ASSESSEE HAD DIVERT ITS INTEREST BEARING FUNDS FOR PURPOSES 6 OTHER THAN BUSINESS. IN OUR VIEW THE PRACTICE OF A DVANCING LOANS TO THE EMPLOYEES CANNOT BE CONSTRUED AS DIVERSION O F FUNDS FOR NON-BUSINESS PURPOSE. THE GRANT OF SUCH FACILITIES TO THE EMPLOYEES IS PART AND PARCEL OF THE CARRYING ON OF BUSINESS OPERATIONS OF AN ASSESSEE. THE BUSINESS ACTIVITIES OF AN ORGANIZATION CANNOT BE VIEWED AS CONFINED TO ITS AC TIVITY OF SELLING THE FINAL PRODUCT. A HOST OF ACTIVITIES WHICH GO T O SUPPLEMENT THE MAIN ACTIVITY OF AN ORGANIZATION ARE ALSO ACTIVITIE S WHICH ARE CONSTRUED AS INCIDENTAL TO THE CARRYING ON OF BUSIN ESS. FOR INSTANCE, ACTIVITY OF ACCOUNTING, RECORDING OF TRAN SACTIONS ETC. ARE NOT THE FRONT LINE ACTIVITIES OF AN ORGANIZATION BU T ARE CERTAINLY ACTIVITIES CARRIED OUT IN FURTHERANCE OF MAIN BUSIN ESS OBJECTIVES. IT CANNOT BE SAID THAT EXPENDITURE INCURRED ON SUCH ACTIVITIES ARE FOR NON-BUSINESS PURPOSES IN THE INSTANT CASE THE I MPUGNED EXPENDITURE THOUGH NOTIONAL, HAS BEEN INCURRED BY T HE ASSESSEE TO RETAIN AND MOTIVATE ITS EXECUTIVES AND EMPLOYEES WH O ARE ENGAGED IN VARIOUS ACTIVITIES OF THE ASSESSEE COMPANY. THE EXPENDITURE IS LIABLE TO BE VIEWED AS HAVING BEEN INCURRED IN THE COURSE OF ACTIVITIES WHICH ARE INCIDENTAL TO THE CARRYING ON OF BUSINESS BY THE ASSESSEE. THE PURPOSE OF THE EXPENDITURE THERE FORE CANNOT BE CONSTRUED AS NON-BUSINESS. IN THE RESULT, IN OUR V IEW, THE EXPENDITURE CAN BE SAID TO HAVE BEEN INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. UNDER SU CH CIRCUMSTANCES INVOKING OF SECTION 36(1)(III) BY THE ASSESSING OFFICER WAS MISPLACED. THEREFORE WE SUSTAIN THE CON CLUSION OF THE CIT(APPEALS) IN DELETING THE ADDITION ALBEIT ON A D IFFERENT GROUND. WE ALSO FIND THAT THE REASONING WHICH PREVAILED WIT H THE CIT(APPEALS) TO DELETE THE ADDITION IS SUPPORTED BY THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SRIDEV ENTERPRISES (SUPRA). ON THIS BASIS TOO, THE ORDER OF THE CIT(APPEALS) DESERVES TO BE UPHELD. WE HOLD SO, O N THIS GROUND, THUS, THE REVENUE FAILS. 6. FROM THE AFORESAID IT IS EVIDENT THAT THE DECISI ON OF THE CIT(A) DESERVE TO BE UPHELD AS IT IS IN ACCORD WITH THE DE CISION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 (SUPRA) ON IDENTICAL SITUATION. THUS ON THIS GROUND THE REVENUE FAILS. 11. IN THE FACTS OF THE PRESENT CASE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 AND FOLLOWING THE SAME PARITY OF REASO NING WE ALLOW THE CLAIM OF THE ASSESSEE. IT MAY BE BROUGHT ON RECOR D THAT THE RATIO LAID DOWN BY THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 HAS BEEN FOLLOWED IN ASSESSMENT YEARS 2005-06 TO 2008-09 IN ASSESSEES O WN CASE. THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 12. THE ISSUE IN GROUND NO.3 RAISED BY THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE MADE OUT OF TRAVELING EXPE NSES AT RS.37,17,395/- 7 . THE SAID ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 WHEREIN IT WAS HELD AS UNDE R: 7. THE THIRD GROUND OF THE APPEAL OF THE REVENUE RE ADS AS UNDER:- (II) IN REDUCING THE DISALLOWANCE OF RS.19,31,168/- TO RS.4,82,792/- I.E. 25% MADE ON ACCOUNT OF T. A. EXP ENSES, WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE FA ILED TO PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAI M AT THE ASSESSMENT STAGE. IN THE APPEAL OF THE ASSESSEE GROUND NO. 1 IS A CRO SS-GROUND WHICH READS AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W BY SUSTAINING AN ADDITION OF RS.4,82,792/- ON ADHOC BA SIS OUT OF TRAVELING EXPENSES OF RS.19,31,168/- DISALLOWED BY THE LEARNED ASSESSING OFFICER ON ADHOC BASIS. NO ADHOC ADDITION IS PERMISSIBLE IN LAW. 8. WE TAKE UP FOR CONSIDERATION BOTH THE GROUNDS OF APPEAL TOGETHER AS THEY RELATE TO THE SAME DISALLOWANCE MA DE BY THE ASSESSING OFFICER. THE STAND OF THE ASSESSEE IS THA T NO DISALLOWANCE IS MERITED AS THE NECESSARY DETAILS WE RE PLACED BEFORE THE ASSESSING OFFICER, WHICH IS A MATTER OF RECORD. REFERENCE HAS ALSO BEEN MADE TO THE COPY OF WRITTEN SUBMISSIONS MADE BEFORE THE CIT(A) IN THIS REGARD. FURTHER RELI ANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL FOR ASSESSME NT YEAR 2001- 02 (SUPRA) WHEREIN ADDITION MADE OUT OF TRAVELING E XPENSES ON SIMILAR GROUND HAS BEEN DELETED BY THE TRIBUNAL. ON THIS ASPECT THE LD. D. R., WHILE NOT DISPUTING THE AFORESAID FA CTUAL MATRIX, HAS HOWEVER PLACED RELIANCE ON THE ORDER OF THE ASSESSI NG OFFICER. 9. ON THIS GROUND WE FIND THAT THE ASSESSING OFFICE R NOTES IN HIS ORDER THAT THE DISALLOWANCE HAS BEEN MADE IN OR DER TO KEEP THE ISSUE ALIVE SINCE SIMILAR DISALLOWANCE OF THE PAST YEARS WAS PENDING ADJUDICATION BY THE TRIBUNAL. IN THIS CONNE CTION WE FIND THAT THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 A ND ALSO FOR THE ASSESSMENT YEAR 2003-04 (VIDE ORDER IN ITA NO.942/C HANDI/06 AND 50/CHANDI/07 DATED 26.11.07) HAS DELETED THE ENTIRE ADDITION. IN THIS YEAR WE FIND THAT THE FACT SITUATION PREVAILIN G WITH THE ASSESSING OFFICER TO MAKE THE ADDITION IS IDENTICAL TO THAT IN THE ASSESSMENT YEARS 2001-02 AND 2003-04. FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEE OWN CASE FOR THE ASSES SMENT YEARS 2001-02 (SUPRA) 2003-04 (SUPRA) THE ADDITION OF RS. 4,82,792/- SUSTAINED BY THE CIT(A) IS ALSO DELETED. IN THE RES ULT WHEREAS THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED AND TH AT OF THE ASSESSEE IS ALLOWED. 13. IN THE PRESENT CASE ALSO THE DISALLOWANCE WAS M ADE IN ORDER TO KEEP THE ISSUE ALIVE AS THE APPEAL BEFORE THE HON'BLE HI GH COURT IN ASSESSEES OWN CASE FOR EARLIER YEAR WAS PENDING. THE FACTS AN D CIRCUMSTANCES IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS AND CIRCUMS TANCES BEFORE THE 8 TRIBUNAL AND FOLLOWING THE SAME PARITY OF REASONING WE DISMISS THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE. 14. THE ISSUE IN GROUND NO.4 RAISED BY THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE OF LEGAL AND PROFESSIONAL CHARGES AT RS.9,83,599/-. SIMILAR DISALLOWANCE WAS MADE IN T HE EARLIER YEAR ALSO AND THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 HAD HEL D AS UNDER: 10. GROUND NO. (IV) IN APPEAL OF THE REVENUE READS AS UNDER:- (III) IN DELETING THE DISALLOWANCE OF RS.14,32,771/- INCU RRED ON LEGAL & PROFESSIONAL EXPENSES, BY HOLDING THE SAME AS REVENUE EXPENDITURE IN NATURE INSTEAD OF CAPITAL EXPENDITURE. IN THIS REGARD THE FACTS ARE THAT THE ASSESSING OFF ICE MADE AN ADHOC DISALLOWANCE OF RS.14, 32,771/- OUT OF THE EXPENSES UNDER THE HEAD LEGAL & PROFESSIONAL CHARGES TREATING THE SAME TO B E CAPITAL IN NATURE. SIMILAR DISALLOWANCE WAS MADE BY THE ASSESS ING OFFICER DURING THE ASSESSMENT YEAR 2003-04 BUT WAS DELETED BY THE CIT (A). THE ASSESSING OFFICER OBSERVED THAT SINCE THE APPEA L OF THE DEPARTMENT AGAINST THE ORDER OF THE CIT (A) WAS PEN DING IN THE TRIBUNAL, THE IMPUGNED DISALLOWANCE WAS MADE. 11. WE FIND THAT THE TRIBUNAL IN THE ASSESSMENT YEA R 2003-04 (SUPRA) HAS AFFIRMED THE DECISION OF THE CIT(A) BY MAKING THE FOLLOWING DISCUSSION:- 16. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT ASSESSING OFFICE HAS MADE A DISALLOWANCE ON THE GROUND THAT THE EXPE NDITURE INCURRED BY THE ASSESSEE WITH REFERENCE TO SAP SOFTWARE EXPE NSES AS WELL AS PROFESSIONAL CHARGED ARE IN THE NATURE OF CAPITAL E XPENDITURE. THE COMMISSIONER OF INCOME TAX (A) ON PERUSAL OF THE AC COUNT OF LEGAL AND PROFESSIONAL EXPENSE FOUND THAT THE EXPENDITURE RELATED TO THE PAYMENT OF PROFESSIONAL CHARGES FOR VARIOUS SERVICE S RENDERED. THE COMMISSIONER OF INCOME-TAX (A) HAS RECORDED A FINDI NG OF FACT THAT EXPENSES INCURRED BY THE ASSESSEE ARE ON RECURRING BASIS AND DO NOT RESULT IN ANY BENEFIT OF ENDURING NATURE. THE COMMI SSIONER OF INCOME-TAX (A) HAS FURTHER RECORDED THAT SUCH EXPEN SES HAVE BEEN ALLOWED IN FULL IN EARLIER YEARS. THE COMMISSIONER OF INCOMETAX (A) HAS FURTHER POINTED OUT THAT THE PAYMENTS MADE TO P ROFESSIONALS FOR RUNNING OF SAP SOFTWARE WAS NOT FOR ACQUISITION OF ANY HARDWARE OR SOFTWARE AND THEREFORE, THE EXPENDITURE WAS OF REVE NUE NATURE AND RIGHTLY ALLOWED BY THE CIT(A). 17. WE HAVE ALSO GONE THROUGH THE DETAILS OF LEGAL AND PROFESSIONAL CHARGES AND FIND THAT NO EXPENDITURE IS RELATING TO ACQUISITION OF ANY CAPITAL ASSETS. WE, THEREFORE, FIND NO JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) IN HAVING DELETED THE DISALLOWANCE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 (SUPRA), WE DISMISS THIS GROUND OF THE APPEAL OF THE REVENUE. 9 15. THE ASSESSEE IN REPLY BEFORE THE ASSESSING OFFI CER AT PAGE 11 HAD ENLISTED THE DETAILS OF THE EXPENDITURE INCURRED AN D PERUSAL OF THE SAME AND THE FACTS AND CIRCUMSTANCES BEFORE THE TRIBUNAL IN EARLIER YEAR REFLECT THAT THE EXPENDITURE IS SIMILAR TO THE EXPENDITURE CONSIDERED BY THE TRIBUNAL IN EARLIER YEARS AND FOLLOWING THE SAME PA RITY OF REASONING WE UPHOLD THE ORDER OF THE CIT (APPEALS). THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS DISMISSED. 16. THE ISSUE IN GROUND NO.5 RAISED BY THE REVENUE IS IN RELATION TO THE EXPENDITURE INCURRED ON INFORMATION TECHNOLOGY AMOU NTING TO RS.79,89,542/-. THE ASSESSEE CLAIMED THAT THE SAID EXPENDITURE WAS ON ACCOUNT OF ANNUAL MAINTENANCE CHARGES FOR MAINTENAN CE OF COMPUTERS, PRINTERS, SOFTWARE LICENCES, ATTENDANCE SYSTEM, FAX MACHINES, ETC. AND ALSO INTERNET CONNECTIVITY CHARGES AND CERTAIN EXPENDITU RE WAS INCURRED TO PURCHASE COMPUTER CONSUMABLE SUCH AS DATA BACKUP CA RTRIDGES, BATTERIES, ETC. SUCH EXPENDITURE WAS CLAIMED AS REVENUE IN NATURE. THE ASSESSING OFFICER NOTED THAT OUT OF RS.79,89,542/- THE ASSESS EE HAD INCURRED RS.54,08,583/- ON ACCOUNT OF ANNUAL MAINTENANCE CHA RGES, RS.15,13,951/- ON PURCHASE OF CONSUMABLES AND RS.10,67,007/- AS SO FTWARE EXPENSES, CONNECTIVITY AND OTHERS. 17. FROM THE PERUSAL OF THE RECORD, THE ASSESSING O FFICER FURTHER NOTED THAT SIMILAR EXPENDITURE ON ACCOUNT OF LASER, TONER AND DATA BACKUP CARTRIDGES HAD BEEN BOOKED UNDER THE HEAD PRINTING AND STATIONERY AT RS.30,10,566/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD BOOKED SIMILAR EXPENDITURE UNDER TWO HEADS AND ACCORDINGLY EXPENDITURE BOOKED UNDER THE HEAD INFORMATION AND T ECHNOLOGY IN RESPECT OF LASER, TONER AND DATA BACKUP COULD NOT BE ALLOWE D AS AN EXPENDITURE. THE ADDITION OF RS.15,13,951/- WAS MADE ON THIS ACC OUNT. THE BALANCE 10 EXPENDITURE OF RS.64,75,691/- WAS TREATED AS CAPITA L EXPENDITURE AS HELD IN THE PREVIOUS YEAR AND DISALLOWANCE OF RS.79,89,5 42/- WAS MADE. 18. THE CIT (APPEALS) DELETED THE SAID ADDITION IN VIEW OF THE ORDER PASSED BY THE TRIBUNAL IN EARLIER YEARS. 19. ON THE PERUSAL OF THE RECORD WE FIND THAT IN EA RLIER YEARS ALSO THE EXPENDITURE INCURRED ON INFORMATION AND TECHNOLOGY OF SIMILAR NATURE WAS HELD TO BE CAPITAL EXPENDITURE BY ASSESSING OFFICER . THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 (SUPRA) HELD AS UNDER: 12. GROUND NO. (V) IN APPEAL OF THE REVENUE READS A S UNDER:- (IV) IN DELETING THE DISALLOWANCE OF RS.75,16,894/- INCU RRED ON INFORMATION TECHNOLOGY EXPENSES, BY HOLDING THE SAM E AS REVENUE EXPENDITURE IN NATURE INSTEAD OF CAPITAL EXPENDITURE. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT SIM ILAR DISALLOWANCE HAS BEEN SUBJECT MATTER OF CONSIDERATI ON BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2001-02 (SUPRA) AND 2003-04 (SUPRA). THE TRIBUNAL I N THE ASSESSMENT YEAR 2003-04 HAS FOUND IT EXPEDIENT TO D ELETE THE ADDITION BY MAKING THE FOLLOWING DISCUSSION:- 19. THE FACTS RELATING TO THIS GROUND OF APPEAL A RE THAT THE ASSESSING OFFICER HAD NOTICED INFORMATION TECHNOLOG Y EXPENSES OF RS.11012932/- HAVING BEEN DEBITED BY THE ASSESSE E AS AGAINST A SUM OF RS.19989273/- IN THE PRECEDING YEAR. THE A SSESSEE HAD BEEN ASKED TO GIVE THE EXPLANATION ABOUT THE NATURE OF THE EXPENDITURE. IT WAS EXPLAINED THAT THE EXPENDITURE HAD BEEN INCURRED ON ANNUAL MAINTENANCE CONTRACTS FOR COMPUT ER HARDWARE/SOFTWARE, INTERNET CONNECTIVITY, PURCHASE OF SOFTWARE CONSUMABLE SUCH AS INK CARTRIDGES ETC. THE ASSESSIN G OFFICER MADE THE DISALLOWANCE ON THE GROUND THAT THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE WAS OF ON DURING VALUE WHI CH INCREASES THE EFFICIENCY OF THE BUSINESS OF THE ASSESSEE AND, THEREFORE, IS OF CAPITAL NATURE. HE ACCORDINGLY MADE THE DISALLOW ANCE. THE COMMISSIONER OF INCOME-TAX (A) HAS DELETED THE ADDI TION. 20. WE FIND THAT SIMILAR DISALLOWANCE WAS MADE FOR ASSESSMENT YEAR 2001-02 AND THE TRIBUNAL VIDE PARA NO. 18 OF I TS ORDER (SUPRA) UPHELD THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) IN DELETING THE DISALLOWANCE. 21. IT IS FOUND FROM THE EVIDENCE ON RECORD THAT THE EXPENDITURE RELATING TO AMC OF COMPUTER, HARDWARE/SOFTWARE ETC. HAS BEEN INCURRED BY THE ASSESSEE FOR THE RUNNING AND MAINTE NANCE OF CAPITAL ASSETS. SUCH AN EXPENDITURE QUALIFIES FOR DEDUCTION AS A REVENUE EXPENDITURE. NO EXPENDITURE HAS BEEN INCURRED BY TH E ASSESSEE FOR 11 ACQUISITION OF ANY CAPITAL ASSETS, NOT IS ANY EXPEN DITURE INCURRED IN CONNECTION WITH THE ACQUISITION OF CAPITAL ASSETS. WE ARE, THEREFORE, IN AGREEMENT WITH THE COMMISSIONER OF INCOME-TAX (A ) THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT J USTIFIED IN SO FAR AS THE ENTIRE EXPENDITURE IS OF REVENUE NATURE. WE, THEREFORE, DECLINE TO INTERFERE WITH THE ORDER OF CIT(A). THE GROUND O F APPEAL RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 13. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF T HE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 (SUPRA). WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 20. AS THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES IN THE EARLIER YEAR, TH E EXPENDITURE OF RS.64,75,691/- WAS DULY ALLOWABLE AS REVENUE EXPEND ITURE. 21. NOW COMING TO THE SECOND PART OF THE DISALLOWAN CE MADE UNDER THE INFORMATION AND TECHNOLOGY I.E. THE EXPENDITURE INC URRED ON LASER, TONER AND DATA BACKUP. THE ASSESSEE HAD BOOKED THE EXPEND ITURE UNDER TWO HEADS I.E. INFORMATION TECHNOLOGY AND ALSO UNDER TH E HEAD PRINTING AND STATIONERY. MERELY BOOKING THE EXPENDITURE UNDER T WO SEPARATE HEADS CANNOT BE THE BASIS FOR DISALLOWANCE OF THE EXPENDI TURE. WE FIND NO MERIT IN THE ORDER OF THE ASSESSING OFFICER IN THIS REGAR D AND HOLD THAT THE EXPENDITURE INCURRED IN THE COURSE OF CARRYING ON T HE BUSINESS EVEN IF BOOKED UNDER TWO SEPARATE HEADS IS TO BE ALLOWED AS BUSINESS EXPENDITURE. THE GROUND OF APPEAL NO.5 RAISED BY THE REVENUE IS DISMISSED. 22. THE ISSUE IN GROUND NO.6 RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF SCRAP SALES . THE ASSESSING OFFICER AT PAGES 16 AND 17 OF THE ASSESSMENT ORDER HAD COMPUTED THE ADDITION AT RS.46,95,872/- ON ACCOUNT OF TREATMENT OF SCRAP. THE ASSESSING OFFICER FURTHER NOTED THAT SIMILAR ADDITI ON WAS MADE IN ASSESSMENT YEAR 2008-09 AND IN ORDER TO KEEP THE IS SUE ALIVE THE ADDITION WAS BEING MADE IN THE YEAR UNDER CONSIDERATION ALSO . 12 23. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRI BUNAL IN ASSESSMENT YEAR 2004-05 AND IN THE YEARS THEREAFTER ALSO AND T HE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2004-0 5 IS AS UNDER: 14. GROUND NO. (VI) IN APPEAL OF THE REVENUE READS AS UNDER:- (V) IN ALLOWING RELIEF OF RS.30,90,199/- OUT OF TOTAL D ISALLOWANCE OF RS.68,23,481/- MADE ON A/C OF SCRAP SALES, WITHO UT ASSIGNING ANY COGENT REASONS. THE CROSS-GROUND NO. 2 OF THE APPEAL OF THE ASSESSE E READS AS UNDER:- 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING THE ADDITION OF RS.37,33,282/- OUT OF TO TAL ADDITION OF RS.68,23,481/- MADE BY THE LD. ASSESSING OFFICER ON ADHOC BASIS ON ACCOUNT OF WRITE DOWN OF STOCK OF STORE AN D SPARES. 15. SINCE THE CROSS-GROUNDS RELATE TO THE SAME ISSU E, THE TWO ARE CONSIDERED AND DISPOSED OFF TOGETHER. THE FACTUAL B ACKGROUND IS THAT THE ASSESSEE HAD WRITTEN OFF A SUM OF RS.74,66,564/ - REPRESENTING OBSOLETE STOCK OF STORES AND SPARES. ON BEING ASKED TO JUSTIFY, THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T THE ITEMS OF STORE AND SPARES WHICH HAD BECOME OBSOLETE, WERE ID ENTIFIED ON THE BASIS OF AN EVALUATION BY THE TECHNICAL STAFF OF TH E ASSESSEE AND ACCORDINGLY WRITTEN OFF IN THE BOOKS OF ACCOUNT. TH E ASSESSEE FURTHER EXPLAINED THAT IT HAS A SYSTEM OF REVIEWING ITS INV ENTORY OF STORES AND SPARES AND OTHER ITEMS FROM TIME TO TIME AND WR ITING OFF THE OBSOLETE/DAMAGED ITEMS. PARTICULARLY, IT WAS POINTE D OUT BY THE ASSESSEE THAT SIMILAR QUERY WAS MADE BY THE ASSESSI NG AUTHORITY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEARS 2001-02, 2001-02 AND 2003-04 AND THE THEN ASS ESSING OFFICERS WERE SATISFIED IN AS MUCH AS NO ADDITION ON THIS C OUNT HAS BEEN MADE IN THE PAST. IT WAS THEREFORE SUBMITTED THAT T HE IMPUGNED WRITE OFF DOES NOT CALL FOR ANY DISALLOWANCE. THE ASSESSI NG OFFICER HOWEVER WAS NOT SATISFIED WITH THE EXPLANATION OFFE RED AND MADE AN ADDITION OF RS.68,23,481/- BY ADOPTING A BASIS WHIC H CAN BE UNDERSTOOD AS FOLLOWS:- SCRAP VALUE OF STOCK OF STORES AND SPARES RS.37,3 3,282/- WRITTEN OFF AS OBSOLETE AT 50% OF THE VALUE WRITTEN OFF 0.5% OF VALUE OF RAW MATERIAL CONSUMED RS. 9,33, 847/- 2% OF VALUE OF STORES AND SPARES CONSUMED RS.27,88 ,762/- 2% OF EXPENDITURE ON REPAIRS & MAINTENANCE RS. 3, 30,404/- RS.77,86,295/- LESS VALUE OF SCRAP SALES BOOKED BY THE ASSESSEE COMPANY (AS PER SCHEDULE 15 OF THE AUDITED ACCOUNTS) RS. 9,62,814/- ADDITION MADE BY THE LD. ASSESSING OFFICER RS.68, 23,481/- 16. THE ADDITION HAS SINCE BEEN SCALED DOWN BY THE CIT (A) TO RS.37,33,282/-. ACCORDING TO THE CIT(A) THE OBSOLET E ITEMS OF STOCK CAN AT BEST WE VALUED AT 50% OF THEIR BOOK VALUES A ND THEREFORE HE HAS ESTIMATED THE VALUE OF OBSOLETE STOCK AT RS.37, 33,282/-, THUS RESULTING IN AN ADDITION OF SAID AMOUNT TO THE TOTA L INCOME OF THE 13 ASSESSEE. THE REVENUE IS IN APPEAL AGAINST THE RELI EF ALLOWED BY THE CIT(A) WHEREAS THE ASSESSEE IS IN APPEAL AGAINST TH E PART SUSTENANCE OF THE ADDITION BY THE CIT(A). 17. BEFORE US, THE COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ADDITION PARTLY SUSTAINED BY THE CIT (APPEALS) ALSO DESERVES TO BE DELETED. LEARNED COUNSEL POINTED OUT THAT IN THE P AST, THERE WAS NO SUCH DISALLOWANCE MADE BY THE ASSESSING OFFICER ALT HOUGH THE ASSESSEE HAS BEEN FOLLOWING THE CONSISTENT POLICY O F IDENTIFYING ITS OBSOLETE/DAMAGED STOCK OF STORES AND SPARES ON THE BASIS OF TECHNICAL EVALUATIONS BY THE COMPANY PERSONNEL. THAT IN ANY C ASE, NO INFIRMITY HAS BEEN FOUND BY EITHER OF THE LOWER AUTHORITIES W ITH THE CLAIM OF THE ASSESSEE, IN PRINCIPLE. IT WAS POINTED OUT THAT THE CIT (APPEALS) HAS MERELY SUBSTITUTED HIS OWN ESTIMATION IN PREFER ENCE TO THE STAND OF THE ASSESSEE THAT THE OBSOLETE STOCKS DO NOT HAV E ANY VALUE. LEARNED COUNSEL POINTED OUT THAT IN CASE THE ASSESS EE RECOVERS ANY AMOUNT SUBSEQUENTLY WITH RESPECT TO SUCH ITEMS OF S TORES AND SPARES, THE SAME WOULD BE INCLUDIBLE IN THE INCOME OF THE A SSESSEE AND THEREFORE THERE IS NO JUSTIFICATION FOR THE ADHOC D ISALLOWANCE MADE BY THE LOWER AUTHORITIES. 18. ON THE OTHER HAND, THE LEARNED DR HAS DEFENDED THE ORDER OF THE ASSESSING OFFICER. ACCORDING TO THE LEARNED DR , THE ASSESSING OFFICER HAS POINTED OUT THAT THE AMOUNT WRITTEN OFF BY THE ASSESSEE AS DAMAGED/OBSOLETE STOCKS WAS NOT ACCOUNTED FOR BY TH E ASSESSEE IN THE SCRAP ACCOUNT AND THEREFORE THE POLICY OF THE ASSES SEE WAS WRONG. THE LEARNED DR, THEREFORE, SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS UNJUSTIFIED. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY. AT THE OUTSET, WE MAY OBSERVE THAT THE ASSESSEE PLEADED BE FORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT (APPEAL S) THAT THE CLAIM IN QUESTION WAS NOT PECULIAR TO THE YEAR UNDER CONS IDERATION. IN FACT THE ASSESSEE POINTED OUT THAT IT HAS A POLICY OF ID ENTIFYING OBSOLETE/DAMAGED ITEMS OF THE STOCK OF STORES AND S PARES. SUCH IDENTIFICATION WAS DONE BY THE TECHNICAL STAFF OF T HE ASSESSEE COMPANY. SUCH ITEMS OF STORES AND SPARES ARE WRITT EN OFF IN THE ACCOUNTS FROM TIME TO TIME. IT WAS FURTHER POINTED OUT, AS EVIDENT FROM PARA 7 OF THE ASSESSMENT ORDER, THAT SIMILAR Q UERIES WERE RAISED BY THE ASSESSING OFFICER FOR THE EARLIER ASSESSMENT YEARS. NO SUCH DISALLOWANCE HAS BEEN MADE IN THE PAST. TO THESE P LEADINGS OF THE ASSESSEE, THERE IS NO NEGATION AT ANY STAGE. EVEN BEFORE US IT IS NOT THE STAND OF THE REVENUE THAT THE CLAIM OF THE ASSE SSEE IN THIS YEAR IS NOT IN LINE WITH THE CLAIMS MADE IN THE EARLIER YEA RS. THEREFORE, ON THE RULE OF CONSISTENCY ITSELF, WE DO NOT FIND ANY JUSTIFICATION IN THE STAND OF THE REVENUE TO MAKE ANY DISALLOWANCE IN TH IS YEAR. MORE SO, WHEN NO FACTUAL DIFFERENCE OR CHANGE IN LAW HAS BEE N BROUGHT ON RECORD BY THE INCOME TAX AUTHORITIES. ALTHOUGH EACH ASSESSMENT YEAR IS AN INDEPENDENT YEAR, YET AN ISSUE OF PRINCIPLE W HICH PERMEATES DURING THE DIFFERENT ASSESSMENT YEARS HAS BEEN DECI DED ONE WAY OR THE OTHER AND THE PARTIES HAVE ALLOWED THAT POSITIO N TO BE SUSTAINED, THEN IT WOULD BE UNJUSTIFIED FOR THE REVENUE TO TUR N AROUND AND TAKE A DIFFERENT VIEW SUBSEQUENTLY AND THAT TOO, WITHOUT BRINGING ON RECORD ANY MATERIAL DIFFERENCE. THE AFORESAID PROPO SITION IS WELL SUPPORTED BY THE JUDGEMENT OF THE HON'BLE SUPREME C OURT IN THE CASE OF RADHASOAMI SATSANG V CIT, 193 ITR 321. ON THIS COUNT ITSELF, IN OUR CONSIDERED OPINION, THE SAID ADDITION MADE BY T HE ASSESSING OFFICER DESERVES TO BE DELETED. IN ANY CASE, IF TH E CLAIM OF THE 14 ASSESSEE IS EXAMINED, IT REVEALS THAT THE WRITE-OFF OF THE STOCKS HAVE BEEN CARRIED OUT ON ACCOUNT OF OBSOLESCENCE /DAMAGE . THE CIT (APPEALS), IN THE COURSE OF PROCEEDINGS BEFORE HIM, MADE FURTHER VERIFICATION AND EXAMINED THE CLAIMS OF THE ASSESSE E MADE IN THE EARLIER ASSESSMENT YEARS. WE FIND THAT WITHOUT POI NTING OUT ANY INFIRMITY IN THE DECISION OF THE ASSESSEE TO WRITE OFF THE IMPUGNED STOCKS, THE CIT (APPEALS), ON THE OTHER HAND, HAD M ADE A SUBJECTIVE DECISION BY ESTIMATING VALUE OF THE STOCK AT 50%. WE FIND NO REASONS ATTRIBUTED BY THE CIT (APPEALS) FOR SUCH PROPOSITIO N. IN THE SCENARIO OF THE ASSESSEE HAVING FOLLOWED A CONSISTENT POLICY AND WHICH WAS ACCEPTED BY THE REVENUE IN THE PAST, THE ONUS WAS C LEARLY ON THE REVENUE TO ESTABLISH THAT THE SYSTEM FOLLOWED BY TH E ASSESSEE DID NOT RESULT IN SHOWING OF TRUE AND PROPER INCOME. WE FIN D THAT SUCH ONUS HAS NOT BEEN DISCHARGED BY THE REVENUE IN THE PRESE NT ISSUE. THEREFORE, NO ADDITION IS WARRANTED ON THIS COUNT. IN THE RESULT, WE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE AND DISM ISS THE GROUND PREFERRED BY THE REVENUE IN RELATION TO THE RELIEF ALLOWED BY THE CIT (APPEALS). 24. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES BEFORE THE TRIBUNAL AND FOL LOWING THE SAME PARITY OF REASONING WE UPHOLD THE ORDER OF THE CIT (APPEAL S) IN THIS REGARD. THE GROUND OF APPEAL NO.6 RAISED BY THE REVENUE IS DISMISSED. 25. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH JULY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH