The DCIT, Circle-4, Baroda V. M/s. Motrik Investment Pvt.Ltd., Baroda

ITA 1311/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1915 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 11-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Notional interest; Commercial expediency
• Section: 142(1); 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUL SHRAWAT,JM & SHRI A N PAHUJA,AM ITA NOS.1311, 1312 & 1313/AHD/2008 (ASSESSMENT YEARS:-2001-02, 2002-03 & 2005-06) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4, 4 TH FLOOR,AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S M/S MOTRIK INVESTMENT PVT. LTD., M-1, GR. FLOOR, VENUS APARTMENT, BPC ROAD, ALKAPURI, BARODA PAN: AABCM 4266 E [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI ANIL KUMAR, DR ASSESSEE BY:- NONE O R D E R A N PAHUJA: THESE THREE APPEALS BY THE REVENUE AGAINST A COMMO N ORDER DATED 24-01-2008 OF THE LD. CIT(APPEALS)-III, BARODA FOR THE ASSESSMENT YEARS (AY) 2001-02, 2002-03 AND 2005-06, RAISE THE FOLLOWING IDENTICAL GROUNDS :- 1 THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE INTEREST INCOME OF RS.7,81,152/- IN THE AY 2001-02,RS.9,01,1 52/- IN THE AY2002-03 & RS.10,44,163/- IN THE AY 2005-06 ON LOA N GIVEN TO M/S CHANDAN METAL PRODUCTS PVT. LTD. BROUGHT TO TAX BY THE ASSESSING OFFICER AS THE ASSESSEE WAS FOLLOWING MERCANTILE SY STEM OF ACCOUNTING RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF STATE BANK OF TRAVANCORE (158 ITR 102). 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3 THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR AL TER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL . THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN TH E AFORESAID GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. ITA NOS.1311 TO 1313/AHD/2008 2 SINCE SIMILAR ISSUES ARE INVOLVED , THESE APPEALS W ERE HEARD SIMULTANEOUSLY FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER . 2 NONE APPEARED ON BEHALF OF THE ASSESSEE. SINCE AN IDENTICAL ISSUE HAS ALREADY BEEN ADJUDICATED BY THE ITAT IN T HEIR ORDER DATED 25.9.2008 FOR THE AYS 2000-01,2003-04 & 2004-05 IN ITA NOS.597 TO 599/AHD./2007 IN THE CASE OF THIS VERY ASSESSEE,WE, THEREFORE, DECIDED TO DISPOSE OF THE APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3. FACTS, IN BRIEF, AS PER RELEVANT ORDERS FOR THE AY 2001-02 ARE THAT RETURN DECLARING LOSS OF RS.9,898/-FILED ON 2 9-11-2002 BY THE ASSESSEE, AN INVESTMENT COMPANY, WAS PROCESSED ON 2 9-11-2002 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U /S 147 OF THE ACT WITH THE SERVICE OF A NOTICE U/S 148 OF THE ACT ON 27-08-2006. IN RESPONSE, THE ASSESSEE FILED RETURN DECLARING LOSS OF RS.9,898/-ON 20-9-2006.DURING THE COURSE OF REASSESSMENT PROCEED INGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED FROM THE ACC OUNTS FILED ALONG WITH THE RETURN THAT THE ASSESSEE ADVANCED A LOAN OF RS.65,09,603/- TO M/S CHANDAN METAL PRODUCTS PVT. LTD. IT WAS ALSO NOTICED THAT THE INTEREST INCOME DERIVED ON THE SAID INVESTMENT WAS OFFERED FOR TAXATION UPTO ASSESSMENT YEAR 1999-2000. HOWEVER, I N THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT OFFER ANY INTEREST INCOME FOR TAXATION. ACCORDINGLY, VIDE NOTICE DATED 16-08- 2007 U/S 142(1) OF THE ACT, THE ASSESSEE WAS REQUESTED TO STATE AS TO WHY INTEREST AT BANK RATE SHOULD NOT BE BROUGHT TO TAX ON THE LOAN GIVEN TO CHANDAN METAL PRODUCTS (P) LTD., CONSIDERING THE MERCANTILE SYSTEM OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE. IN R ESPONSE, THE ASSESSEE VIDE ITS LETTER DATED 20.8.2007 SUBMITTED THAT THE ISSUE HAS DULY BEEN CONSIDERED BY THE CIT (APPEALS)-III, BARODA, IN THE ASSESSEE'S OWN CASE, VIDE HIS CONSOLIDATED ORDER DA TED 30-11-2006 ITA NOS.1311 TO 1313/AHD/2008 3 IN APPEAL NO. CAB/III-167/2006-2007, CAB/III-156/20 06-2007 AND CAB/III-280/2005-2006 FOR THE AYS 2000-2001, 2003-2 004 AND 2004- 2005 RESPECTIVELY AND THEREFORE, REQUESTED TO DROP THE PROCEEDINGS INITIATED U/S. 147 OF THE ACT. INTER ALIA, IT WAS P OINTED OUT THAT THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF S TATE BANK OF TRAVANCORE,158 ITR 102, 154) (SC) RELIED UPON BY TH E AO WAS VIRTUALLY REVERSED IN THE CASE OF UCO BANK LTD.,237 ITR 889(SC).HOWEVER, THE AO DID NOT ACCEPT THE SUBMISS IONS OF THE ASSESSEE AND ADDED AN AMOUNT OF RS.7,81,152/- AT TH E RATE OF 12% PA ON THE LOAN AMOUNTING TO RS.65,09,603/-,RELYING UP ON HIS FINDINGS IN THE AYS 2000-2001, 2003-2004 AND 2004-2005. 3.1 LIKEWISE AN AMOUNT OF RS.9,01,152/- IN THE A SSESSMENT YEAR 2002-03 AND RS.10,94,163/- IN THE ASSESSMENT YEAR 2005-06 WAS BROUGHT TO TAX. 4. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ONS IN THE YEARS UNDER CONSIDERATION I.E. ASSESSMENT YEARS 200 1-02, 2002-03 AND 2005-06 IN THE FOLLOWING TERMS:- 3. THE ONLY GROUND OF APPEAL RELATES TO THE ADDITI ON MADE BY THE A.O ON ACCOUNT OF NOTIONAL INTEREST ON LOAN ADVANCED TO M/S CHANDAN METAL PRODUCTS PVT. LTD. THE ASSESSEE COMPANY HAD ADVANCE D LOAN TO M/S CHANDAN METAL PRODUCTS PVT. LTD. IN VARIOUS YEARS I N THE PAST. DUE TO FINANCIAL DIFFICULTIES M/S CHANDAN METAL PRODUCTS P VT. LTD. NEVER REPAID EITHER THE PRINCIPAL AMOUNT OF LOAN OR THE INTEREST ACCRUED THEREON. UP TO A.Y 1999-2000 THE ASSESSEE COMPANY ACCOUNTED FOR TH E INTEREST ON THE OUTSTANDING LOAN ON ACCRUED BASIS AND OFFERED THE S AME FOR TAXATION. HOWEVER, FROM A.Y 2001-02 ONWARDS THE COMPANY TREAT ED THE OUTSTANDING LOAN AS NON-PERFORMING ASSET (NPA) AND HENCE DID NO T OFFER FOR TAXATION THE INTEREST ACCRUED ON SUCH STICKY ADVANCES. ASSES SMENT FOR A.YS 2000- 01, 2002-03, 2003-04 AND 2004-05 WERE REOPENED U/S 148 AND THE INCOME WAS REASSESSED AFTER INCLUDING THE ACCRUED INTEREST . THE ADDITIONS MADE ON THIS ACCOUNT FOR A.Y 2001-02, 2002-03 AND 2005-0 6 AMOUNTED TO RS.7,81,152/-, RS.9,01,152/- & RS.10,94,163/- RESPE CTIVELY. BEING AGGRIEVED BY SUCH ADDITIONS THE ASSESSEE HAS FILED THE PRESENT THREE APPEALS. ITA NOS.1311 TO 1313/AHD/2008 4 3.1 SHRI KALPESH PARMAR, THE ID. AR OF THE ASSESSEE POINTED OUT THAT THIS IDENTICAL ISSUE HAS BEEN DECIDED BY ME IN FAVO UR OF THE ASSESSEE IN APPEALS FOR A.Y 2000-01, 2003-04 AND 2004-05. IT WA S PRAYED THAT FOLLOWING THE SAID APPELLATE ORDER RELIEF MAY BE GR ANTED IN THE PRESENT APPEALS ALSO. 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A. R AND FIND THAT INDEED THE SAME ISSUE HAS BEEN CONSIDERED BY ME IN APPEAL NOS.CAB/III/167/06-07, CAB/III/156/2006-07 & CAB/II I/280/2005-06 VIDE COMMON ORDER DATED 30-11-2006. THE FACTS OF THE CAS E FOR THE THREE YEARS UNDER CONSIDERATION ARE IDENTICAL. THEREFORE, FOLLO WING THE REASONING OF MY APPELLATE ORDER DATED 30-11-2006, IT IS HELD THAT T HE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF NOTIONAL INTEREST AS MENTIONED A BOVE. ACCORDINGLY, THE ADDITIONS ARE DIRECTED TO BE DELETED. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR WHIL E INVITING RELYING UPON A DECISION DATED 25.9.2008 OF THE ITAT FOR THE AYS 2000- 01,2003-04 & 2004-05 IN ITA NOS.597 TO 599/AHD./200 7 SUPPORTED THE ORDERS OF THE AO. 6. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FINDINGS OF THE LD. CIT(A) , HE MERELY RELIED UPON HIS OWN DECISION IN THE AYS 2000-01, 2003-04 AND 2004-05. HOWEVER, THE ITAT REVERSED THE SAID FINDIN GS OF THE LD. CIT(A) IN THEIR DECISION DATED 25-09-2008 IN ITA NOS.597, 598 & 599 /AHD/2007 IN THE FOLLOWING TERMS: 5. THE LEARNED DR BEFORE US VEHEMENTLY CONTENDED T HAT THE AMOUNT WAS NOT DOUBTFUL. THE ASSESSEE WAS REGULARLY CHARGING T HE INTEREST FROM AY 1996- 97 TILL AY 1999-2000. IT IS ONLY IN AY 2000-01 AND SUBSEQUENT ASSESSMENT YEARS 2003-04 AND 2004-05 THE ASSESSEE HAS NOT CHAR GED THE INTEREST. HAD THE LOAN BEEN DOUBTFUL, THE ASSESSEE WOULD HAVE NOT GIVEN ANY FURTHER LOAN DURING THE AYS 2000-01, 2003-04 AND 2004-05. MERELY THE ASSESSEE HAS NOT CREDITED THE INTEREST IN HIS BOOKS OF ACCOUNT DOES NOT MEAN THAT THE INTEREST HAS NOT ACCRUED. THUS, THE AO HAS RIGHTLY ADDED THE INTEREST. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF STATE BANK OF TRAVANCORE VS CIT (1986) 158 ITR 102 (SC). THE LOAN HAS NOT BECOME STICKY AND EVEN NO SUCH PLEA HAS BEEN TAKEN BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. ITA NOS.1311 TO 1313/AHD/2008 5 6. THE LEARNED DR, ON THE OTHER HAND, VEHEMENTLY CO NTENDED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ACCEPTING LO ANS / LENDING / ADVANCING MONEY. THE ASSESSEE HAS GIVEN LOAN TO M/S CHANDAN M ETAL PRODUCTS PVT. LTD. INITIALLY THE ASSESSEE HAS CHARGED THE INTERES T BUT SUBSEQUENTLY DURING THE ASSESSMENT YEARS UNDER CONSIDERATION THE INTEREST H AS NOT ACCRUED TO THE ASSESSEE AS THE ASSESSEE WAS NOT HOPEFUL EVEN THOUG H THE RECOVERY OF BALANCE OUTSTANDING. THE ASSESSEE EVEN DID NOT PASS ANY ENTRY FOR THE ACCRUAL OF INTEREST, WHEN THE BENCH POINTED OUT WHY FURTHER LOAN WAS GIVEN TO THE PARTY BY THE ASSESSEE DURING THE YEAR WHEN THE AMOUNT WAS DOUBTFUL OF RECOVERY. ACCORDING TO HIM, THE INTEREST HAS NOT AC CRUED. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GODHRA ELECTRICITY COMPANY LTD. V CIT 225 ITR 746 FOR THE PROPOSITION THAT INCOME-TAX IS IMPOSABLE ON THE REAL INCOME AND UNTIL AND UNLESS T HE INCOME HAS NOT REALLY ACCRUED, IT CANNOT BE TAXED. RELIANCE WAS ALSO PLAC ED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UCO BANK V CIT 237 ITR 889. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAS ADVANCED THE LOAN TO CHANDAN METAL PRODUCTS PVT. LTD. ON INTEREST. THE INTEREST HAS BEEN DULY CREDITED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT FROM AY 1996-97 UP TO AY 1999-2000. THE DET AILS OF LOANS AND ADVANCES AND INTEREST ACCRUED ARE GIVEN AS UNDER: FY IN WHICH LOAN GIVEN AMOUNT INTEREST CHARGED TOTAL AMOUNT OUTSTANDING AT THE END OF THE FY 1995-96 5,00,000 986 5,00,986 1996-97 16,50,000 2,41,492 23,92,478 1997-98 23,25,000 4,19,196 51,36,674 1998-99 3,75,000 6,47,929 61,59,603 1999-00 3,50,000 - 65,09,603 THE LEARNED AR WAS FAIR ENOUGH TO CONCEDE THAT THE LOAN HAS BEEN RETURNED BY CHANDAN METAL PRODUCTS PVT. LTD. SUBSEQUENTLY BU T THE INTEREST WAS NOT RECOVERED. THE ASSESSEE WAS FOLLOWING MERCANTILE SY STEM OF ACCOUNTING. THE ASSESSEE HAS ADVANCED THE LOAN ON INTEREST. THERE I S NO EVIDENCE OR MATERIAL ON RECORD THAT SUBSEQUENT TO AY 1999-2000 THE ASSES SEE HAS ADVANCED FURTHER LOAN TO CHANDAN METAL PRODUCTS PVT. LTD. WI THOUT INTEREST. EVEN THERE IS NO EVIDENCE WHICH MAY PROVE THAT THE TERMS AND COND ITIONS ABOUT CHARGING OF INTEREST HAVE BEEN AMENDED SUBSEQUENTLY. THE CONTEN TION OF THE ASSESSEE IS ITA NOS.1311 TO 1313/AHD/2008 6 THAT THE INTEREST HAS NOT ACCRUED TO THE ASSESSEE A S THE AMOUNT ITSELF WAS DOUBTFUL OF RECOVERY. IN OUR OPINION, NO PRUDENT MA N WILL ADVANCE FURTHER LOAN TO A PARTY IF HE FEELS THAT THE LOAN COULD NOT BE R ECOVERED. IN THIS CASE IT HAS BEEN ADMITTED BY THE LEARNED AR THAT ULTIMATELY CHA NDAN METAL PRODUCTS PVT. LTD. HAS REPAID THE LOAN DURING AY 2008-09 BUT NO I NTEREST WAS RECEIVED. IN OUR OPINION, THE LOAN ADVANCED BY THE ASSESSEE WAS NOT STICKY. 8. WE HAVE GONE THROUGH THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GODHRA ELECTRICITY COMPANY LTD. V CIT 2 25 ITR 746. IN THIS CASE IT WAS HELD THAT INCOME-TAX IS A LEVY ON INCOME. NO DO UBT, THE INCOME-TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ. THE ACCRUAL OF THE INCOME OR ITS RECEIPT, BUT THE SUBSTANCE OF THE MATTER IS THE INCOME. IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOUGH IN BOOK KEEPING, THE ENTRY IS MADE ABOUT A HYPOTHET ICAL INCOME, WHICH DOES NOT MATERIALIZE. THE FACTS RELATING TO THIS CASE AR E THAT THE GOVERNMENT OF BOMBAY GRANTED A LICENCE TO LADY SULOCHANA CHINUBHA I & CO. AUTHORIZING IT TO GENERATE AND SUPPLY ELECTRICITY TO THE CONSUMERS IN GODHRA AREA. THE ASSESSEE-COMPANY BECAME THE SUCCESSOR OF THE SAID L ADY SULOCHANA CHINUBHAI & CO. THE STATE GOVERNMENT HAD FIXED THE CHARGES FOR SUPPLY OF ELECTRICITY AND MOTIVE POWER WITH EFFECT FROM 1-2-1 952. AFTER THE AMENDMENT OF THE ELECTRICITY (SUPPLY) ACT, 1948, THE ASSESSEE-CO MPANY INCREASED THE CHARGES FOR MOTIVE POWER FROM 1-1-1963 TO 35 NP PER UNIT WITH A MAXIMUM OF RS.7 PER MONTH FOR EVERY INSTALLATION AND SUBSEQUEN TLY WITH EFFECT FROM 1-7- 1963 THE RATES WERE INCREASED FOR ELECTRICITY SUPPL Y FOR LIGHTS AND FANS TO 70 NP PER UNIT WITH A MINIMUM OF RS.5 PER INSTALLATION . BOTH THE INCREASES WERE CHALLENGED BY THE CONSUMERS. THE SAID SUITS WERE DE CIDED BY THE TRIAL COURT IN FAVOUR OF THE CONSUMERS BUT THE HIGH COURT HELD THA T THE ASSESSEE IS ENTITLED TO ENHANCE THE CHARGES UNILATERALLY SUBJECT TO THE CONDITIONS PRESCRIBED IN THE SIXTH SCHEDULE TO THE SAID ACT. THE SUPREME COURT ALSO CONFIRMED THE SAME. THE ASSESSEE COULD NOT REALIZE THE ENHANCED CHARGES DUE TO THE PENDENCY OF THE SUITS. ON 26-2-1969 AFTER THE DECISION OF THE S UPREME COURT, SOME OF THE CITIZENS OF GODHRA MET THE MINISTER. THEREAFTER, TH E UNDER SECRETARY TO THE GOVERNMENT OF GUJARAT WRITTEN A LETTER DATED 19-3-1 969 TO THE ASSESSEE SUGGESTING THE COMPANY TO MAINTAIN THE STATUS QUO F OR THE RATES TO THE CONSUMERS. IN THE MEANTIME ANOTHER SUIT WAS FILED I N SUPREME COURT. IN THE SAID SUIT IT WAS CLAIMED THAT THE DECISION OF THIS COURT WAS ONLY OF ACADEMIC INTEREST, AS IN APRIL, 1965, THE ASSESSEE COMPANY B EGAN TO PURCHASE IN BULK ELECTRICAL ENERGY AT10 PAISE PER UNIT FROM THE GUJA RAT ELECTRICITY BOARD AND IT HAD TO WORK MERELY AS DISTRIBUTING AGENCY AND HAD T O COLLECT THE CHARGES AND NOT GENERATE ELECTRICAL ENERGY. AN INTERIM INJUNCTI ON WAS GRANTED BY THE TRIAL COURT IN THAT SUIT. THE SUIT WAS DECREED IN FAVOUR OF THE CONSUMERS BY THE CIVIL JUDGE BY THE JUDGMENT DATED 20-6-1974 AND A DECLARA TION WAS GRANTED TO THE EFFECT THAT THE ASSESSEE SHALL NOT RECOVER THE CHAR GES EXCEEDING 31 NP PER UNIT FOR LIGHTS AND FANS AND 20 NP PER UNIT FOR MOT IVE POWER. WHILE THE SAID SUIT WAS PENDING BEFORE THE TRIAL COURT THE GUJARAT STAT E ELECTRICITY BOARD, IN EXERCISE OF POWER CONFERRED ON IT BY SECTION 6(1) O F THE INDIAN ELECTRICITY ACT SOUGHT TO EXERCISE ITS OPTION TO PURCHASE THE ELECT RICAL UNDERTAKING OF THE ASSESSEE BY ISSUING A NOTICE DATED 8-11-1971. THE U NDERTAKING WAS TAKEN OVER BY THE STATE GOVERNMENT WITH EFFECT FROM 19-11 -1972. UP TO AY 1963-64 ITA NOS.1311 TO 1313/AHD/2008 7 THE ASSESSEE WAS ASSESSED ON THE BASIS OF THE ACCOU NTS MAINTAINED ON MERCANTILE SYSTEM. IN AYS 1964-65 TO 1967-68 THE AS SESSEE DEDUCTED TOTAL A AMOUNT OF RS.10,87,828/- FROM THE TOTAL EARNINGS IN RESPECT OF SALE OF ELECTRICAL ENERGY ON THE GROUND THAT THE SAID AMOUNT WAS NOT A CTUALLY RECOVERED BY IT FROM THE CONSUMERS. THE AO IN AY 1969-70 INCLUDED A SUM OF RS.7,33,676/- ON THE GROUND THAT THE SUIT FILED AGAINST THE ASSES SEE-COMPANY BY THE CONSUMERS WAS DECIDED IN FAVOUR OF THE ASSESSEE-COM PANY BY THE COURT DURING THE AY 1968-69 AND, THEREFORE, THE ASSESSEE HAS THE LEGAL RIGHT TO RECOVER THE SAID AMOUNT. THE SAID ADDITION WAS DELE TED BY THE AAC AND UPHELD BY THE TRIBUNAL. SIMILARLY, IN RESPECT OF AY S 1970-71 AND 1971-72 THE ADDITIONS MADE WERE DELETED BY THE TRIBUNAL. THE HI GH COURT TOOK THE VIEW THAT THE ASSESSEE-COMPANY HAD A LEGAL RIGHT TO RECO VERY THE ENHANCED RATES. WHEN THE MATTER WENT BEFORE THE SUPREME COURT, THE HON'BLE SUPREME COURT HAS HELD AS UNDER: 6 UNDER THE ACT INCOME CHARGED TO TAX IS THE INCOM E THAT IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN THE PREVIOU S YEAR RELEVANT TO THE YEAR FOR WHICH ASSESSMENT IS MADE OR ON THE INCOME THAT ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE IN INDIA DURING SUC H YEAR. THE COMPUTATION OF SUCH INCOME IS TO BE MADE IN ACCORDANCE WITH THE METHOD OR ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. IT MAY BE EITHE R THE CASH SYSTEM WHERE ENTRIES ARE MADE ON THE BASIS OF ACTUAL RECEIPTS AN D ACTUAL OUTGOINGS OR DISBURSEMENTS OR IT MAY BE THE MERCANTILE SYSTEM WH ERE ENTRIES ARE MADE ON ACCRUAL BASIS, I.E., ACCRUAL OF THE RIGHT TO REC EIVE PAYMENT AND THE ACCRUAL OF THE LIABILITY TO DISBURSE OR PAY. IN CIT V SHOORJI VALLABHDAS & CO. (SUPRA), IT HAS BEEN LAID DOWN: INCOME-TAX IS A LEVY ON INCOME. NO DOUBT, THE INCO ME-TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ. THE ACCRUAL OF THE INCOME OR ITS RECEIPT, BUT THE SUBSTANCE OF THE MATTER IS THE INCOME. IF I NCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOU GH IN BOOKING KEEPING, THE ENTRY IS MADE ABOUT A HYPOTHET ICAL INCOME, WHICH DOES NOT MATERIALIZE. THIS PRINCIPLE IS APPLICABLE WHETHER THE ACCOUNTS A RE MAINTAINED ON CASH SYSTEM OR UNDER THE MERCANTILE SYSTEM. IF THE ACCOUNTS ARE MA INTAINED UNDER THE MERCANTILE SYSTEM WHAT HAS TO BE SEEN IS WHETHER INCOME CAN BE SAID TO HAVE REALLY ACCRUED TO THE ASSESSEE-COMPANY. IN H M KASHIPAREKH & CO. LTD. V CIT (1960) 39 ITR 706 (BOM): TC 39R. 791, THE BOMBAY HIGH COURT HAD SAID: EVEN SO, (THE FAILURE TO PRODUCE ACCOUNT LOSSES) W E SHALL PROCEED ON THE FOOTING THAT THE ASSESSEE-COMPANY HA VING FOLLOWED THE MERCANTILE SYSTEM OF ACCOUNT, THERE MU ST HAVE BEEN ENTRIES MADE IN ITS BOOKS IN THE ACCOUNTING YE AR IN RESPECT OF THE AMOUNT OF COMMISSION. IN OUR JUDGMEN T, WE ITA NOS.1311 TO 1313/AHD/2008 8 WOULD NOT BE JUSTIFIED IN ATTACHING ANY PARTICULAR IMPORTANCE IN THIS CASE TO THE FACT THAT THE COMPANY FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. THEY WOULD NOT HAVE ANY PARTI CULAR BEARING IN APPLYING THE PRINCIPLE OF REAL INCOME IN THE FACTS OF THIS CASE. THE SAID VIEW WAS APPROVED BY THIS COURT IN CIT V B IRLA GWALIOR (P) LTD. (SUPRA) WHERE THE ASSESSEE MAINTAINED ITS ACCOUNTS ON THE M ERCANTILE SYSTEM. IN THAT CASE THIS COURT, AFTER REFERRING TO THE DECISION IN MORV I INDUSTRIES LTD. V CIT 1974 CTR (SC) 149: 1971) 82 ITR 835 (SC): TC 39R. 720, W HICH WAS ALSO A CASE WHERE THE ACCOUNTS WERE MAINTAINED ON MERCANTILE SYSTEM, HAS SAID: HENCE, IT IS CLEAR THAT THIS COURT IN MORVI INDUST RIES CASE DID EMPHASIZE THE FACT THAT THE REAL QUESTION FOR DECIS ION WAS WHETHER THE INCOME HAD REALLY ACCRUED OR NOT. IT IS NOT A HYPOTHETICAL ACCRUAL OF INCOME THAT HAS GOT TO BE T AKEN INTO CONSIDERATION BUT THE REAL ACCRUAL OF THE INCOME. IN POONA ELECTRIC SUPPLY CO. LTD. VS CIT (SUPRA), T HIS COURT HAS SAID: INCOME-TAX IS A TAX ON THE REAL INCOME, I.E., THE PROFITS ARRIVED AT ON COMMERCIAL PRINCIPLES SUBJECT TO THE PROVISIO NS OF THE IT ACT. IN THAT CASE THE COURT HAS APPROVED THE FOLLOWING P RINCIPLE LAID DOWN BY THE BOMBAY HIGH COURT IN H M KASHIPAREKH & CO. LTD. VS CIT (SUPRA): THE PRINCIPLE OF REAL INCOME IS NOT TO BE SUBORDIN ATED AS TO AMOUNT VIRTUALLY TO A NEGATION OF IT WHEN A SURREND ER OR CONCESSION OR REBATE IN RESPECT OF MANAGING AGENCY COMMISSION IS MADE, AGREED TO OR GIVEN ON GROUNDS O F COMMERCIAL EXPEDIENCY, SIMPLY BECAUSE IT TAKES PLAC E SOME TIME AFTER THE CLOSE OF AN ACCOUNTING YEAR. IN EXAM INING ANY TRANSACTION AND SITUATION OF THIS NATURE THE COURT WOULD HAVE MORE REGARD TO THE REALITY AND SPECIALITY OF THE SI TUATION RATHER THAN THE PURELY THEORETICAL OR DOCTRINAIRE ASPECT O F IT. IT WILL LAY GREATER EMPHASIS ON THE BUSINESS ASPECT OF THE MATT ER VIEWED AS A WHOLE WHEN THAT CAN BE DONE WITHOUT DISREGARDING STATUTORY LANGUAGE. IN STATE BANK OF TRAVANCORE VS CIT (SUPRA), AFTER C ONSIDERING THE VARIOUS DECISIONS OF THIS COURT, SABYASACHI MUKHARJI J. (AS THE LEARNED CHIEF JUSTICE THEN WAS) HAS SAID: AN ACCEPTABLE FORMULA OF CO-RELATING THE NOTION OF REAL INCOME IN CONJUNCTION WITH THE METHOD OF ACCOUNTING FOR THE ITA NOS.1311 TO 1313/AHD/2008 9 PURPOSE OF THE COMPUTATION OF INCOME FOR THE PURPOS E OF TAXATION IS DIFFICULT TO EVOLVE. BESIDES, ANY STRAI T-JACKET FORMULA IS BOUND TO CREATE PROBLEMS IN ITS APPLICATION TO E VERY SITUATION; IT MUST DEPEND UPON THE FACTS AND CIRCUM STANCES OF EACH CASE. WHEN AND HOW DOES AN INCOME ACCRUE AND WHAT ARE THE CONSEQUENCES THAT FOLLOW FROM ACCRUAL OF INCOME IS WELL-SETTLED. THE ACCRUAL MUST BE REAL TA KING INTO ACCOUNT THE ACTUALITY OF THE SITUATION. WHETHER AN ACCRUAL HAS TAKEN PLACE OR NOT MUST, IN APPROPRIATE CASES, BE JUDGED ON THE PRINCIPLES OF REAL INCOME THEORY. AFTER ACCR UAL, NON- CHARGING OF TAX ON THE SAME BECAUSE OF CERTAIN COND UCT BASED ON THE IPSE DIXIT OF A PARTICULAR ASSESSEE CA NNOT BE ACCEPTED. IN DETERMINING THE QUESTION WHETHER IT IS HYPOTHETICAL INCOME OR WHETHER REAL INCOME HAS MATE RIALIZED OR NOT, VARIOUS FACTORS WILL HAVE TO BE TAKEN INTO ACCOUNT. IT WOULD BE DIFFICULT AND IMPROPER TO EXTEND THE CONCE PT OF REAL INCOME TO ALL CASES DEPENDING UPON THE IPSE DIXIT O F THE ASSESSEE WHICH WOULD THEN BECOME A VALUE JUDGMENT O NLY. WHAT HAS REALLY ACCRUED TO THE ASSESSEE HAS TO BE F OUND OUT AND WHAT HAS ACCRUED MUST BE CONSIDERED FROM THE PO INT OF VIEW OF REAL INCOME TAKING THE PROBABILITY OR IMPRO BABILITY OF REALIZATION IN A REALISTIC MANNER AND DOVETAILING O F THESE FACTORS TOGETHER BUT ONCE THE ACCRUAL TAKES PLACE, ON THE CONDUCT OF THE PARTIES SUBSEQUENT TO THE YEAR OF CL OSING AN INCOME WHICH HAS ACCRUED CANNOT BE MADE NO INCOME . 7. IF THE MATTER IS EXAMINED IN THE LIGHT OF THE AF ORESAID PRINCIPLES LAID DOWN BY THIS COURT, IT MUST BE HELD THAT EVEN THOUGH THE ASSESSEE-COMPANY WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AND H AD MADE ENTRIES IN THE BOOKS REGARDING CHARGES FOR THE SUPPLY MADE TO THE CONSUM ERS, NO REAL INCOME HAD ACCRUED TO THE ASSESSEE-COMPANY IN RESPECT OF THOSE ENHANCED CHARGES IN VIEW OF THE FACT THAT SOON AFTER THE ASSESSEE-COMPANY DECID ED TO ENHANCE THE RATES IN 1963 REPRESENTATIVE SUITS (CIVIL SUITS NOS.152 OF 1963 A ND 50 OF 1964) WERE FILED BY THE CONSUMERS WHICH WERE DECREED BY THE TRIAL COURT AND WHICH DECREE WAS AFFIRMED BY THE APPELLATE COURT AND THE LEARNED SINGLE JUDGE OF THE HIGH COURT AND IT IS ONLY ON 8 TH DEC., 1968 THAT THE LETTERS PATENT APPEALS FILED B Y THE ASSESSEE- COMPANY WERE ALLOWED BY THE DIVISION BENCH OF THE H IGH COURT AND THE SAID SUITS WERE DISMISSED. BUT APPEALS WERE FILED AGAINST THE SAID JUDGMENT BY THE CONSUMERS IN THIS COURT AND THE SAME WERE DISMISSED BY THE JUDGMENT OF THIS COURT DT.26 TH FEB., 1969. SHORTLY THEREAFTER, ON 19 TH MARCH, 1969, THE UNDER SECRETARY TO THE GOVERNMENT OF GUJARAT WROTE A LETT ER ADVISING THE ASSESSEE- COMPANY TO MAINTAIN THE STATUS QUO FOR THE RATES TO THE CONSUMERS FOR AT LEAST SIX MONTHS AND THE CHIEF ELECTRICAL INSPECTOR WAS DIREC TED TO GO THROUGH THE ACCOUNTS OF THE ASSESSEE-COMPANY FROM YEAR TO YEAR AND TO RE PORT TO THE GOVERNMENT ABOUT ITA NOS.1311 TO 1313/AHD/2008 10 THE ACTUAL POSITION ABOUT THE REASONABLE RETURNS EA RNED BY THE ASSESSEE-COMPANY. ON 16 TH MAY, 1969 ANOTHER REPRESENTATIVE SUIT (SUIT NO.118 OF 1969) WAS FILED BY THE CONSUMERS WHEREIN INTERIM INJUNCTION WAS GRANTE D BY THE COURT AND WHICH WAS FINALLY DECREED IN FAVOUR OF THE CONSUMERS ON 2 3 RD JUNE, 1974. IT WOULD THUS APPEAR THAT AFTER THE DECISION WAS TAKEN BY THE ASS ESSEE-COMPANY TO ENHANCE THE CHARGES IT WAS NOT ABLE TO REALIZE THE ENHANCED CHA RGES ON ACCOUNT OF PENDENCY OF THE EARLIER REPRESENTATIVE SUITS OF THE CONSUMERS F OLLOWED BY THE LETTER OF THE UNDER SECRETARY TO THE GOVERNMENT OF GUJARAT AND THE SUBS EQUENT SUIT OF THE CONSUMERS AND DURING THE PENDENCY OF THE SUBSEQUENT SUIT THE MANAGEMENT OF THE UNDERTAKING OF THE ASSESSEE-COMPANY WAS TAKEN OVER BY THE GOVERNMENT OF GUJARAT UNDER THE DEFENCE OF INDIA RULES, 1971 AND THE UNDERTAKING WAS SUBSEQUENTLY TRANSFERRED TO THE GUJARAT STATE ELECT RICITY BOARD. IT IS NO DOUBT TRUE THAT THE LETTER ADDRESSED BY TH E UNDER SECRETARY TO THE GOVERNMENT OF GUJARAT TO THE ASSESSEE-COMPANY HAD N O LEGALLY BINDING EFFECT BUT ONE HAS TO LOOK AT THINGS FROM PRACTICAL POINT OF V IEW. [SEE: R B JODHA MAL KUTHIALA VS CIT (SUPRA)]. THE ASSESSEE-COMPANY, BE ING A LICENSEE, COULD NOT IGNORE THE DIRECTION OF THE STATE GOVERNMENT WHICH WAS COUCHED IN THE FORM OF AN ADVICE, WHEREBY THE ASSESSEE-COMPANY WAS ASKED TO M AINTAIN THE STATUS QUO FOR AT LEAST SIX MONTHS AND NOT TO TAKE STEPS TO RECOVER T HE DUES TOWARDS ENHANCED CHARGES FROM THE CONSUMERS DURING THIS PERIOD. BEFO RE THE EXPIRY OF THE PERIOD OF SIX MONTHS THE SUBSEQUENT SUIT HAD BEEN FILED BY TH E CONSUMERS AND DURING THE PENDENCY OF THE SAID SUIT THE UNDERTAKING OF THE AS SESSEE-COMPANY WAS TAKEN OVER BY THE GOVERNMENT OF GUJARAT UNDER THE DEFENCE OF I NDIA RULES, 1971 AND SUBSEQUENTLY IT WAS TRANSFERRED TO THE GUJARAT STAT E ELECTRICITY BOARD AND, AS A RESULT, THE ASSESSEE-COMPANY WAS NOT IN A POSITION TO TAKE STEPS TO RECOVER THE ENHANCED CHARGES. 8 THE HIGH COURT HAS OBSERVED THAT THE SUBSEQUENT S UIT THAT WAS FILED ON 16 TH MAY,1969 RELATED TO RECOVERY OF ENHANCED CHARGES F OR THE PERIOD SUBSEQUENT TO 31 ST MARCH, 1969 AND NOT PRIOR THERETO. WE HAVE, HOWEVE R, PERUSED THE JUDGMENT OF THE JOINT JUDGE (JUNIOR DIVISION), GODHRA DT.20 TH JUNE, 1974 IN THE SAID SUIT WHICH WAS ANNEXED AS ANNEXURE D TO THE STATEMENT OF THE CASE. THE SAID JUDGMENT DOES NOT SHOW THAT THE SUIT WAS CONFINED T O THE PERIOD SUBSEQUENT TO 31 ST MARCH, 1969. ON THE OTHER HAND, IT SHOWS THAT THE P LAINTIFFS IN THAT SUIT WERE CHALLENGING THE ENHANCEMENT IN CHARGES MADE IN 1963 AND HAD SOUGHT A DECLARATION THAT THE ASSESSEE-COMPANY WAS NOT ENTIT LED TO RECOVER MORE THAN 31 PAISE PER UNIT FOR LIGHT AND FANS AND 20 PAISE PER UNIT FOR MOTIVE POWER AND THE TRIAL COURT, WHILE DECREEING THE SAID SUIT HAD GIVE N A DECLARATION IN THESE TERMS. THE SAID DECLARATION IS NOT CONFINED TO THE PERIOD SUBSEQUENT TO 31 ST MARCH, 1969. ITA NOS.1311 TO 1313/AHD/2008 11 9. THE QUESTION WHETHER THERE WAS REAL ACCRUAL OF I NCOME TO THE ASSESSEE- COMPANY IN RESPECT OF THE ENHANCED CHARGES FOR SUPP LY OF ELECTRICITY HAS TO BE CONSIDERED BY TAKING THE PROBABILITY OR IMPROBABILI TY OF REALIZATION IN A REALISTIC MANNER. IF THE MATTER IS CONSIDERED IN THIS LIGHT, IT IS NOT POSSIBLE TO HOLD THAT THERE WAS REAL ACCRUAL OF INCOME TO THE ASSESSEE-COMPANY IN RESPECT OF THE ENHANCED CHARGES FOR SUPPLY OF ELECTRICITY WHICH WERE ADDED BY THE ITO WHILE PASSING THE ASSESSMENT ORDERS IN RESPECT OF THE ASSESSMENT YEAR S UNDER CONSIDERATION. THE AAC WAS RIGHT IN DELETING THE SAID ADDITION MADE BY THE ITO AND THE TRIBUNAL HAD RIGHTLY HELD THAT THE CLAIM AT THE INCREASED RA TES AS MADE BY THE ASSESSEE- COMPANY ON THE BASIS OF WHICH NECESSARY ENTRIES WER E MADE REPRESENTED ONLY HYPOTHETICAL INCOME AND THE IMPUGNED AMOUNTS AS BRO UGHT TO TAX BY THE ITO DID NOT REPRESENT THE INCOME WHICH HAD REALLY ACCRUED T O THE ASSESSEE-COMPANY DURING THE RELEVANT PREVIOUS YEARS. THE HIGH COURT, IN OUR OPINION WAS IN ERROR IN UPSETTING THE SAID VIEW OF THE TRIBUNAL. 10. IN THE RESULT, THE APPEALS ARE ALLOWED, THE IMP UGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE QUESTIONS REFERRED BY TH E TRIBUNAL FOR OPINION ARE ANSWERED IN FAVOUR OF THE ASSESSEE-COMPANY AND AGAI NST THE REVENUE. BUT IN THE CIRCUMSTANCES, THERE WILL BE NO ORDER AS TO COSTS. IN OUR OPINION, THE SAID JUDGMENT WILL NOT ASSIST T HE ASSESSEE AS IN THAT CASE THE INCOME HAS NOT ACCRUED TO THE ASSESSEE. THE DIR ECTIONS OF THE STATE GOVERNMENT WERE BINDING ON THE ASSESSEE AND BEFORE THE EXPIRY OF THE TIME DURING WHICH THE DIRECTIONS WERE ISSUED, THE SUIT W AS FILED AND THE REAL INCOME COULD NOT ACCRUE TO THE ASSESSEE. IN THE CASE BEFOR E US THERE IS NO EVIDENCE ON RECORD THAT THE ACCRUAL OF INTEREST WAS DISPUTAB LE OR THERE WAS DISPUTE BETWEEN THE ASSESSEE AND THE PARTY TO WHOM THE LOAN WAS ADVANCED. THE ASSESSEE FURTHER ADVANCED THE MONEY WHICH ALSO PROV ES THAT THE LOAN HAS NOT BECOME STICKY. 9. WE HAVE ALSO GONE THROUGH THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF (1999) UCO BANK V CIT 237 ITR 889 (S C). HEAD NOTE OF THIS CASE MENTION AS UNDER: INCOME ACCRUAL OF INCOME METHOD OF ACCOUNTING BANKS FINANCIAL INSTITUTIONS INTEREST ON STICK Y ADVANCES NOT BROUGHT TO PROFIT AND LOSS ACCOUNT B UT TAKEN TO SEPARATE SUSPENSE ACCOUNT ACCEPTED MODE OF TREATMENT OF NOTIONAL INCOME IN ACCOUNTING PRACTIC E IS FOR PROPER DETERMINATION OF INCOME IN TERMS OF SECTION 145 CIRCULAR OF CBDT PERMITTING SUCH INTE REST TO BE EXCLUDED FROM INCOME IF FOR THREE YEARS SUCH INTEREST IS NOT ACTUALLY RECEIVED THEREAFTER INTE REST WILL BE ADDED AS INCOME ONLY WHEN ACTUALLY RECEIVED INCOME-TAX ACT, 1961. SS. 119,145. ITA NOS.1311 TO 1313/AHD/2008 12 IN THIS CASE, THE ISSUE RELATES TO THE ACCRUAL OF I NTEREST ON THE STICKY ADVANCES. WE HAVE ALREADY HELD IN THE CASE OF THE ASSESSEE TH AT THE ADVANCES WERE NOT THE STICKY ONE. IN THAT CASE, THERE WAS A CIRCULAR OF THE CBDT PERMITTING THE INTEREST ON THE STICKY ADVANCES TO BE EXCLUDED FROM THE INCOME IF FOR THREE YEARS SUCH INTEREST IS NOT ACTUALLY RECEIVED. THE C ASE OF THE ASSESSEE IS NOT SO. IN THE CASE OF THE ASSESSEE, RATHER THE INTERES T HAS ACCRUED AS PER THE TERMS AND CONDITIONS FOLLOWED IN THE EARLIER YEAR. 10. WE HAVE ALSO GONE THROUGH THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF STATE BANK OF TRAVANCORE VS CIT (198 6) 158 ITR 102 (SC). AT PAGE 120, THE HON'BLE SUPREME COURT HAS HELD AS UND ER: WHERE INTEREST HAS NOT BEEN PAID, IT IS SOMETIMES LEFT OUT OF ACCOUNT ALTOGETHER. THIS PREVENTS THE POSSIBILITY OF IRRECO VERABLE INTEREST BEING CREDITED TO REVENUE, AND DISTRIBUTED AS PROFIT. ON THE OTHER HAND, THIS TREATMENT DOES NOT RECORD THE ACTUAL STATE OF THE L OAN ACCOUNT, AND IN THE CASE OF BANKS AND OTHER CONCERNS WHOSE BUSINESS IT IS TO ADVANCE MONEY, IT IS USEFUL TO FIND THE INTEREST IS REGULARLY CHARGED UP, BUT WHEN ITS RECOVERY IS DOUBTFUL, THE AMOUNT THEREOF IS EITHER FULLY PRO VIDED AGAINST OR TAKEN TO THE CREDIT OF AN INTEREST SUSPENSE ACCOUNT AND CARRIED FORWARD AND NOT TREATED AS PROFIT UNTIL ACTUALLY RECEIVED. THERE IS NO EVIDENCE ON RECORD THAT THE PRINCIPAL A MOUNT WAS DOUBTFUL OF THE RECOVERY AND, THEREFORE, WE ARE OF THE VIEW THAT TH E INTEREST HAS ACCRUED DURING THE YEAR IN ACCORDANCE WITH THE MERCANTILE S YSTEM OF ACCOUNTING AND ACCORDINGLY WE SET-ASIDE THE ORDER OF THE CIT(A). W E MAY MENTION FOR THE SAKE OF BREVITY THAT THE ASSESSEE IS FREE TO CLAIM THE INTEREST AS DEDUCTION U/S 36(1)(VII) IN THE YEAR IN WHICH IT HAS BECOME BAD P ROVIDED IT MAY COMPLY WITH ALL THE CONDITIONS STATED THEREIN, IN ACCORDANCE WI TH LAW. 11. IN THE RESULT, ALL THE THREE APPEALS STAND ALLO WED. 7. INDISPUTABLY, SINCE THE FACTS AND CIRCUMSTANCE S IN THE YEARS UNDER CONSIDERATION ARE IDENTICAL TO THOSE OBTAININ G IN THE AFORESAID YEARS, FOLLOWING THE AFORECITED DECISION DATED 25-0 9-2008 OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE AYS 2000-01 , 2003-04 AND 2004-05, WE HAVE NO HESITATION IN ALLOWING GROUND NO.1 IN THESE THREE APPEALS OF THE REVENUE. 8. GROUND NOS. 2 & 3 IN THESE THREE APPEA LS BEING GENERAL IN NATURE NOR ANY ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THER EFORE, DISMISSED. ITA NOS.1311 TO 1313/AHD/2008 13 9. IN THE RESULT, THESE THREE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 4-03-2011 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 4-03-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S MOTRIK INVESTMENT PVT. LTD., M-1, GR. FLOOR, VENUS APARTMENT, BPC ROAD, ALKAPURI, BARODA 2. DCIT, CIRCLE-4, BARODA 3. CIT CONCERNED 4. CIT(A)-III, BARODA 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD