The DCIT, Circle-5, Ahmedabad V. Nirma Limited, Ahmedabad

ITA 1388/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89660 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Capital receipt; Revenue expenditure
• Section: 143(3); 80HHC; 234B; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO.4135/AHD/2007 A.Y.2000-01 NIRMA INDUSTRIES LTD., NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. PAN:AAACN 5352M VS ACIT, CENTRAL CIRCLE-1(1), AHMEDABAD. (APPELLANT) (RESPONDENT) ITA NO.1173/AHD/2011 A.Y.2005-06 NIRMA INDUSTRIES LTD., NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. PAN:AAACN 5350 K VS CIT, AHMEDABAD III, AHMEDABAD. (APPELLANT) (RESPONDENT) ITA NO.1388 & 1441/AHD/2011 A.Y.1999-00 DY.CIT, CIRCLE-5, AHMEDABAD. NIRMA LTD., NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. PAN:AAACN 5350 K VS NIRMA LTD., 2 ND FLOOR, C.U. SHAH CHAMBERS ASHRAM ROAD, AHMEDABAD. DY.CIT, CIRCLE-5, AHMEDABAD. (APPELLANT) (RESPONDENT) ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 2 - ITA NO.1389 & 1442/AHD/2011 A.Y.1999-00 DY.CIT, CIRCLE-5, AHMEDABAD. NIRMA LTD., NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. PAN:AAACN 5350 K VS NIRMA LTD., 2 ND FLOOR, C.U. SHAH CHAMBERS ASHRAM ROAD, AHMEDABAD. DY.CIT, CIRCLE-5, AHMEDABAD. (APPELLANT) (RESPONDENT) ITA NO.1440/AHD/2011 A.Y.1998-99 NIRMA LTD. NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. PAN:AAACN 5350M VS DY.CIT, CIRCLE-5, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI, DINESH SINGH, SR.D.R., ASSESSEE(S) BY : SHRI S.N. SOPARKAR, A.R. / DATE OF HEARING : 12/06/2015 / DATE OF PRONOUNCEMENT: 30/06/2015 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS IS A BATCH OF 7 APPEALS. THE ASSESSEE HAS FILE D ITA NO.1440/AHD/2011 IN A.Y. 1998-99 AGAINST THE ORDER OF CIT (A)-II, ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 3 - AHMEDABAD DATED 1-3-2011IN PROCEEDINGS U/S. 143(3) R.W.S. 254 OF THE INCOME TAX ACT,1961 HEREAFTER THE ACT. THE ASSESSM ENT YEAR 1999-2000 INVOLVES TWO SETS OF CROSS APPEALS FILED BY THE REV ENUE AND ASSESSEE I.E. ITA NO.1388 & 1389/AHD/2011 AND 1441 & 1442/AHD/201 1AGAINST TWO SEPARATE ORDERS; BOTH DATED 1-3-2011OF THE CIT (APP EALS)-II, AHMEDABAD IN PROCEEDINGS U/S.143(3) R.W.S. 147 AND 143(3) R.W .S. 254 OF THE ACT; RESPECTIVELY. THE ASSESSEMENT YEAR 2000-01 INVOLVE S ASSESSEES APPEAL ITA NO.4135/AHD/2007 AGAINST ORDER OF THE CIT(A)-II , AHMEDABAD DATED 11-9-2007 IN PROCEEDINGS UNDER SEC. 143(3) R. W.S. 147 OF THE ACT. THE LAST ASSESSMENT YEAR 2004-05 INVOLVES ASSESSEE S YET ANOTHER APPEAL ITA 1173/AHD/2011 AGAINST THE ORDER OF CIT-III AHME DABAD DATED 28-3- 2011 IN PROCEEDINGS U/S.263 OF THE ACT. 2. WE PROCEED SERIAL-WISE IN ORDER OF APPEALS FOR THE SAKE OF CONVENIENCE AND BREVITY. ASSESSEES APPEAL ITA 4135/AHD/2007 ASSESSMENT YEAR 2000-01 3. THIS APPEAL RAISES FOLLOWING GROUNDS: 1. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE , THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ERRED IN POINTS OF LAW AND FACTS. 2. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING ISSUE OF NOTI CE U/S.148 OF I.T. ACT. 3.IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING RE-ASSESSME NT ORDER PASSED U/S. 147 OF I.T. ACT. 4. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE ID. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING VYAJ BADLA INCOME OF RS.41,43,543 AS INTEREST INCOME INSTEAD OF SHORT TERM CAPITAL GAIN. ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 4 - 5. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE ID. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN NOT APPRECIATING APPELLANT'S CONTENTION THAT AMOUNT OF RS.41,43,543 IS ALREADY ASSESSED UNDER THE HEAD CAPITA] GAIN AS WELL AS INTEREST INCOME, WHICH IS NOT PERMISSIBLE UNDER THE ACT. 6. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ERRED IN HOLDING THAT LEVY OF INTEREST U/SS. 234A, 234B AND 234C OF I.T. ACT I S CONSEQUENTIAL. 7. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GROSSLY ERR ED IN REJECTING APPELLANT'S GROUND REGARDING INITIATION OF PENALTY PROCEEDING U/S.271(1)(C) OF I.T. ACT. 8. YOUR APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AMEND ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AS MAY BE ADVISED FROM TIME TO TIME. 4. NOW WE COME TO ASSESSEES MAIN GROUNDS. ITS GROU NDS NO.1 AND 8 ARE FOUND TO BE GENERAL IN NATURE. GROUN DS NO.2 AND 3 CHALLENGE VALIDITY OF THE REOPENING IN QUESTION. TH E ASSESSEE DOES NOT PRESS FOR THE SAME. THE SAME ARE DISMISSED AS NOT PRESSED. 5. THE ASSESSEES GROUND NO.4 AND 5 CHALLENGE THE C IT(A) ORDER CONFIRMING THE ASSESSING OFFICERS ACTION IN TREATING VYAJ BADLA INCOME OF RS.41,43,543/- AS INTEREST INCOME I NSTEAD OF SHORT TERM CAPITAL GAINS. THERE IS NO DISPUTE ABOUT FACTS AND FIGURES. THE ASSESSEE HAD SET OFF THE AFORESAID AMO UNT OF SHORT TERM CAPITAL GAINS AGAINST CARRIED FORWARD CAPITAL LOSSES OF ASSESSMENT YEAR 1996-97. THE ASSESSING OFFICER ISSU ED A SECTION 148 NOTICE DATED 30.7.2004 SEEKING TO TREAT THE SAME AS INTEREST INCOME. THE ASSESSEE INTEALIA SUBMITTED TH AT THERE ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 5 - EXISTED NO ELEMENT OF PRICE AND NEGATIVE RISK IN IT S TRANSACTION, THE VYAJ BADLA IN QUESTION HAD BEEN CONSIDERED AS L ENDING AGAINST SECURITY OF SHARES AND ONLY CREDIT RISK WOU LD EXIST ETC. THE ASSESSING OFFICER FRAMED RE-ASSESSMENT REJECTIN G THESE PLEAS AND TREATED THE ASSESSEES SHORT TERM CAPITAL GAINS ARISING FROM VYAJ BADLA IN QUESTION AS INTEREST INCOME. 6. THE CIT(A) HAS RELIED UPON HIS IDENTICAL ORDER P ASSED IN THE CASE OF ASSESSEES GROUP CONCERN FOR REJECTING ITS CONTENTION AS UNDER: 4. GROUND NO.5 RELATES TO THE TAXING OF VYAJ BADALA INCOME OF RS.41,43,543/- AS INTEREST INCOME AND NOT AS CAPITAL GAIN AS SHOWN BY THE APPELLANT. THE REASONS GIVEN IN THE ASSESSMENT ORDER FOR THIS ISSUE AND THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT ARE SIMILAR TO THOSE ARISING IN OTHER APPEALS OF THE CASES OF THE SAME GROUP. IN ALL SUCH CASES THE MODUS OPERANDI IS ALMOST SIMILAR. IN ONE OF THE CASES NAMELY KISAN DISCRETIONARY FAMILY TRUST IN APPEAL NO.CIT(A) XII/CC 1(1)/87/03-04 THE CIT(APPEALS)-XII HAD VIDE APPELLATE ORDER DATED 17- 12-2003 FOR A.Y. 2000-01 CONSIDERED SIMILAR ISSUE. THE ARGUMENTS RAISED ON BEHALF OF THE ASSESSEE IN THAT CASE WERE SIMILAR TO THOSE ADVANCED IN THIS CASE. THE CIT (APPEALS) HAS IN THAT CASE CONFIRMED THE ORDER OF THE A.O. HOLDING THAT VYAJ BADALA TRANSACTIONS ARE FINANCE TRANSACTIONS AND INCOME ARISING THEREFROM IS TO BE TAXED AS INTEREST INCOME. FOLLOWING THE SAID APPELLATE ORDER, I ALSO CONFIRM THE ACTION OF THE A.O. ON THIS ISSUE. THIS GROUND OF APPEAL IS, THEREFORE, DISMISSED. 5. IN GROUND NO.6 IT IS SUBMITTED BY THE APPELLANT THAT THE INCOME OF RS.41,43,543/- IS ALREADY INCLUDED IN THE RETURNED INCOME AS SHORT TERM CAPITAL GAIN AND NOW IT IS BEING ASSESSED AS INTEREST INCOME AND THUS IT AMOUNTS TO TAXING THE SAME INCOME TWICE. ON CONSIDERATION OF THE FACTS OF THE APPELLANT'S CASE, I FIND THAT AS OBSERVED IN THE REASONS RECORDED FOR REASSESSMENT, THOUGH THE APPELLANT HAD SHOWN THIS INCOME AS SHORT TERM CAPITAL GAIN, THE SAME WAS ADJUSTED AGAINST CARRIED FORWARD LONG TERM CAPITAL LOSS AND THUS THIS INCOME WAS NOT REFLECTED IN THE INCOME SHOWN BY THE APPELLANT. THE ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 6 - ARGUMENT THAT THE ADDITION MADE RESULTS INTO DOUBLE TAXATION IS, THEREFORE, NOT CORRECT TO THIS EXTENT. HOWEVER, I MAY ALSO OBSER VE THAT THE ADJUSTMENT OF SUCH INCOME AGAINST LONG TERM CAPITAL LOSS BROUGHT FORWARD FOR EARLIER WAS NOT REQUIRED AS IT IS HELD THAT IT IS NOT SHOR T TERM CAPITAL GAIN. HENCE THE CARRIED FORWARD LONG TERM CAPITAL LOSS WILL NOT BE ADJUSTED AS SHOWN IN THE RETURN AND WILL BE CARRIED FORWARD FOR SUBSEQUENT YEAR. THE A.O. IS, THEREFORE, DIRECTED TO MODIFY HIS COMPUTATION TO THE ABOVE EXTENT. 7. HEARD RIVAL CONTENTIONS AND PERUSED THE CASE FILE. WE PUT A SPECIFIC QUERY TO THE ASSESSEE ABOUT THE FINAL OUTC OME OF THE ISSUE IN ITS GROUP CONCERNS CASE. IT REPLIES IN NEG ATIVE AND DOES NOT POINT OUT ANY DISTINCTION ON FACTS OR LAW. WE A FFIRM THE CIT(A) FINDING UNDER CHALLENGE IN THESE CIRCUMSTANC ES. THE ASSESSEES GROUND NO.4 IS DISMISSED AND GROUND NO.5 IS TREATED AS CONSEQUENTIAL TO THE SAME. 8. THE ASSESSEES GROUNDS NO.6 AND 7 CHALLENGE C HARGING OF INTEREST U/SS. 234A, 234B, 234C & INITIATION OF PEN ALTY U/S.271(1)(C) OF THE ACT; RESPECTIVELY. THE PARTIES ARE IN UNISON THAT THE SAME ARE CONSEQUENTIAL IN NATURE TO THE MA IN PROCEEDINGS. THESE GROUNDS ARE REJECTED ACCORDINGL Y. 9. THE CASE FILE FURTHER REVEALS THAT THE ASSESSEE HAS FILED A PETITION DATED 18.5.2009 SEEKING LEAVE TO RAISE AN ADDITIONAL GROUND CHALLENGING THE ASSESSING OFFICERS ACTION I N CHARGING INTEREST U/S.234D OF THE ACT. THE SAME IS REITERATE D IN THE COURSE OF HEARING AS WELL. CASE LAW OF (2014) 369 ITR 635 (ALL.) TITLED ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 7 - AS CIT VS. JAGAN AND CO. IS ALSO QUOTED IN SUPPORT. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION. THE ASSESSING O FFICERS ORDER IN QUESTION DATED 24.3.2006. ASSESSEES GROUN DS OF APPEAL BEFORE THE LOWER APPELLATE AUTHORITY, THE CIT(A) OR DER UNDER CHALLENGE AS WELL AS THE DEMAND NOTICE DATED 24.3.2 006 DO NOT CONTAIN ANY SUCH ISSUE OF INTEREST U/S.234D OF THE ACT. WE OBSERVE IN THESE FACTS THAT THE ASSESSEES ADDITION AL GROUND IS NOT FOUND TO REQUIRE OUR ADJUDICATION. THE ASSESSEE S ADDITIONAL GROUND PETITION DATED 18.5.2009 STANDS REJECTED ACC ORDINGLY. 10. ASSESSEES APPEAL ITA 4135/AHD/2007 IS DIS MISSED. ASSESSEES APPEAL ITA 1173/AHD/2011 ASSESSMENT YEAR 2005-06 11. THE ASSESSEE SUBMITS IN THE COURSE OF HEARING T HAT IN VIEW OF THE ASSESSING OFFICER CONSEQUENTIAL ORDER PASSED IN FURTHERANCE TO THE CITS SECTION 263 ORDER UNDER CH ALLENGE, IT DOES NOT WISH TO PRESS THE INSTANT APPEAL. THE REVE NUE DOES NOT RAISE ANY OBJECTION. WE ACCEPT THE ASSESSEES ABOVE STATED SUBMISSION AND DISMISS THE INSTANT APPEAL AS NOT PR ESSED. 12. ASSESSEES APPEAL ITA 1173/AHD/2011 IS D ISMISSED AS HAVING BEEN RENDERED INFRUCTUOUS. ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 8 - REVENUES APPEAL ITA 1388/AHD/2011 WITH ASSESSEES CROSS APPEAL NO.1441/AHD/2011 ASSESSMENT YEAR 1999-00 13. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE IN ITS APPEAL IS AGAINST CIT(A) ORDER DELETING DEPRECIATION DISALLOW ANCE OF RS.1,49,43,270/- ON SALES TAX INCENTIVE AS MADE BY THE ASSESSING OFFICER IN THE COURSE OF RE-ASSESSMENT FR AMED ON 31.12.2007. THE ASSESSEES GROUNDS CHALLENGE THE LO WER APPELLATE ORDER UPHOLDING VALIDITY OF THE REOPENING IN QUESTION. 14. THE ASSESSEE-COMPANY STARTED GETTING BENEFIT OF SALES TAX SUBSIDY FROM THE IMPUGNED ASSESSMENT YEAR ONWARDS I N RESPECT OF ITS DETERGENT COMPLEX, ALINDRA AND SODA S. PROJE CT (CHEMICAL COMPLEX) AT KALATALAV, BHAVNAGAR. THE STATE GOVERNM ENT ISSUED THE RELEVANT SUBSIDY SCHEMES DATED 26.7.1991 AND 11 .9.1995; RESPECTIVELY. THE FORMER ONE PROVIDED SALES TAX EXE MPTION TO THE TUNE OF 90% ON THE FIXED CAPITAL INVESTMENT IN LAND, NEW BUILDING, OTHER CONSTRUCTION ON PLANT/MACHINERY FOR A PERIOD OF 14 YEARS FROM THE DATE OF COMMENCEMENT OF THE COMME RCIAL PRODUCTION. THE LATTER ONE ENVISAGED THE SAME BENEF ITS TO THE TUNE OF 80% OF THE FIXED CAPITAL ASSETS. PER ASSESS ING OFFICER, THESE SCHEMES INDIRECTLY MET COST OF THE ASSETS AND THE SAME WAS LIABLE TO BE EXCLUDED FROM NET COST THEREOF AS PER SECTION 43(1) EXPLANATION (10) APPLICABLE W.E.F. 1.4.1999. HE ISS UED A SECTION ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 9 - 148 NOTICE AND FRAMED REASSESSMENT ON 31.12.2007 BY OBSERVING THAT SINCE THE ASSESSEE HAD FAILED TO EST ABLISH THAT THE SALES TAX LIABILITY WAS FOR CARRYING OUT CAPITAL IN VESTMENT, IT AMOUNTED TO A REVENUE RECEIPT TO BE ADDED IN THE TO TAL INCOME. HE TURNED DOWN ASSESSEES PLEA TREATING THE SUBSIDY TO BE A GRANT OR REIMBURSEMENT OF THE ASSETS COST BY REITER ATING THE ABOVE STATED STATUTORY PROVISION. THIS RESULTED IN THE IMPUGNED DISALLOWANCE OF RS.1,49,43,270/-. 15. THE ASSESSEE PREFERRED APPEAL. IT CHALLENGED VALIDITY OF THE REOPENING IN QUESTION AS WELL AS THE ASSESSING OFFI CERS ACTION ON MERITS. THE CIT(A) HAS FOLLOWED THE TRIBUNALS O RDER IN ITA 1425/AHD/2006 FOR ASSESSMENT YEAR 2002-03 HOLDING T HAT THE INCENTIVE PROVIDED IS IN THE FORM OF SALES TAX EXEM PTION AND NOT TOWARDS MEETING THE COST OF ANY PARTICULAR ASSET. A CO-ORDINATE BENCH HOLDS THAT THE REQUISITE CONDITIONS OF SEC. 4 3(1) EXPLANATION-10 ARE NOWHERE SATISFIED. IT HAS OBSERV ED THAT A SUBSIDY OR AN INCENTIVE IS IN CAPITAL FIELD, BUT AT THE SAME TIME IT MAY NOT BE ASSET SPECIFIC. IT HAS ACCORDINGLY BEEN HELD THAT THE IMPUGNED SUBSIDY OR INCENTIVE CANNOT BE TAKEN INTO ACCOUNT FOR REDUCING THE COST OF ASSETS. IT HAS BEEN FINALLY CO NCLUDED THAT SUCH A COST OF ASSET CAN ONLY BE REDUCED BY A SUBSI DY OR GRANT WHICH IS TO MEET DIRECTLY OR INDIRECTLY THE COST OF ASSETS IN QUESTION. ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 10 - 16. WE HAVE CONFRONTED THE REVENUE WITH THE ABOVE S AID FINDINGS. IT FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW. WE FIND THAT THE TRIBUNALS EARLIER ORDER RELATES TO T HE VERY SUBSIDY SCHEMES (SUPRA). IT HAS ALSO BEEN HELD THAT THE AUT HORITIES BELOW HAVE WRONGLY TREATED THE SAME TO BE REVENUE RECEIPT AS IN THE IMPUGNED ASSESSMENT YEAR AS WELL. WE ADOPT CONSISTE NCY IN THESE CIRCUMSTANCES AND AFFIRM THE CIT(A) FINDINGS UNDER CHALLENGE. THE REVENUES SOLE SUBSTANTIVE GROUND FA ILS. 17. THE REVENUES APPEAL ITA 1388/AHD/2011 IS D ISMISSED ON MERITS. THIS RENDERS THE ASSESSEES CROSS APPEAL NO.1441/AHD/2011 CHALLENGING VALIDITY OF THE REOPEN ING INFRUCTUOUS. REVENUES APPEAL ITA 1389/AHD/2011 & ASSESSEES APP EAL ITA 1442/AHD/2011 (ASSESSMENT YEAR 1999-00) 18. WE COME TO THE REVENUES APPEAL ITA 1389/AHD/2 011. ITS FIRST GROUND CHALLENGES THE CIT(A) ORDER DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S.80HH AND 80IA ON EXC HANGE RATE DIFFERENCE (MANDALI DIVISION) OF RS.1,56,350/-. WE DO NOT FIND ANY DISCUSSION MUCH LESS AN ELABORATE ONE IN THE AS SESSING OFFICERS ORDER DATED 28.12.2007. THE CIT(A) HOLDS THAT THE ASSESSEES PLEA OF IMPUGNED DEDUCTION IN RESPECT OF THIS ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 11 - EXCHANGE RATE DIFFERENCE IS COVERED BY THE TRIBUNAL S DECISION OF THE TRIBUNAL IN PRIYANKA GEMS VS. ACIT 94 TTJ 557 ( AHM.). THE HONBLE JURISDICTIONAL HIGH COURT HAS AFFIRMED THE SAID DECISION IN ITS JUDGMENT REPORTED AS (2014) 367 ITR 575 (GUJ.) CIT VS. PRIYANKA GEMS AND HOLDS THAT SUCH AN INCOME IS DIRECTLY RELATED TO ASSESSEES EXPORT BUSINESS AND IT COULD NOT BE BEEN REMOVED BEYOND THE FIRST DEGREE. THE REVENUE F AILS TO POINT OUT FROM THE CASE RECORD THAT THE ASSESSEES FORCE IN EXCHANGE GAINS FLUCTUATION ARE NOT CONNECTED TO ITS EXPORT ACTIVITIES. WE AFFIRM THE CIT(A) FINDINGS IN THESE FACTS AND REJECT THE REVENUES FIRST SUBSTANTIVE GROUND. 19. THE REVENUES SECOND SUBSTANTIVE GROUND ASSAILS CORRECTNESS OF THE LOWER APPELLATE ORDER DELETING D ISALLOWANCE OF SECTION 80HHC AND 80IA DEDUCTION REGARDING INTEREST ON DEBTORS (MANDALI DIVISION) OF RS. 12,96,576/-. THE CIT(A) HAS FOLLOWED DECISION OF HONBLE JURISDICTIONAL HIGH CO URT REPORTED AS (2006) 283 ITR 402 (GUJ.) NIRMA INDUSTRIES LTD. VS. DCIT IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 1992-93 H OLDING AS UNDER: HOWEVER, THE PARTIES HAVING MADE ELABORATE SUBMISSION, THE MATTER MAY BE EXAMINED FROM A SLIGHTLY DIFFERENT ANGLE. WHEN THE ASSES SEE ENTERS INTO A CONTRACT FOR SALE OF ITS PRODUCTS IT COULD EIT HER STIPULATE (A) THAT INTEREST AT THE SPECIFIED RATE WOULD BE CHARGED ON THE UNPAID SALE PRICE AND ADDED TO THE OUTSTANDING TILL THE POINT OF TIME OF REALIZATION, OR (B) THAT IN CASE OF DELAY THE PAYMENT FOR SALE OF PRODUCTS WORTH RS.100 TO CARRY THE SALE PRICE OF RS.102 FOR FIRST ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 12 - MONTH'S DELAY, RS. 104 FOR THE SECOND MONTH'S DELAY, RS. 106 FOR THE THIRD MONTH'S DELAY AND SO ON. IF THE CONTENTION OF THE REVENUE IS ACCEPTED, MERELY BECAUSE THE ASSESSEE HAS DESCRIBED THE ADDITION AL SALE PROCEEDS AS INTEREST IN THE CASE OF A CONTRACT AS PER ILLU STRATION (A) ABOVE, SUCH PAYMENT WOULD NOT BE PROFITS DERIVED FROM THE INDUSTRI AL UNDERTAKING, BUT IN THE CASE OF ILLUSTRATION (B) ABOVE, IF THE PAY MENT IS DESCRIBED AS SALE PRICE IT WOULD BE PROFITS DERIVED FROM THE INDUS TRIAL UNDERTAKING, THIS CAN NEVER BE BECAUSE IN SUM AND SUBSTANCE THE SE ARE ONLY TWO MODES OF REALISING SALE CONSIDERATION, THE OBJECT BEIN G TO REALISE THE SALE PROCEEDS AT THE EARLIEST AND WITHOUT DELAY. TH E PURCHASER PAYS A HIGHER SALE PRICE IF IT DELAYS PAYMENT OF THE SALE PROCEEDS. IN OTHER WORDS, THIS IS A CONVERSE SITUATION TO OFFER ING OF CASH DISCOUNT. THUS, IN PRINCIPLE, IN REALITY, THE TRANSACTION REMAINS THE SAME AND THERE IS NO DISTINCTION AS TO THE SOURCE. IT I S INCORRECT TO STATE THAT THE SOURCE FOR INTEREST IS THE OUTSTANDING SALE PR OCEEDS. IT IS NOT THE ASSESSEE'S BUSINESS TO LEND FUNDS AND EARN INTEREST. THE DISTINCTION DRAWN BY THE REVENUE IS ARTIFICIAL IN NATURE AND IS NEITHER IN CONSONANCE WITH LAW NOR COMMERCIAL PRACTICE. THE TRIBUNAL WAS, THEREFORE, NOT JUSTIFIED IN HOLDING THAT WH ILE COMPUTING DEDUCTION UNDER SECTION 80-1 OF THE ACT, INTEREST REC EIVED FROM TRADE DEBTORS TOWARDS LATE PAYMENT OF SALES CONSIDERATION IS REQUIRED TO BE EXCLUDED FROM THE PROFITS OF THE INDUSTRIAL UNDERT AKING AS THE SAME CANNOT BE STATED TO HAVE BEEN DERIVED FROM THE BUSINE SS OF THE INDUSTRIAL UNDER TAKING. 20. WE HAVE CONFRONTED THE REVENUE A SPECIFIC QUER Y TO PROVE THAT THE IMPUGNED SUMS OF RS.12,96,576/- HAVE NOT A RISEN FROM THE ASSESSEES TRADE DEBTS. IT REPLIES IN NEGATIVE. NOR ANY INFIRMITY IS POINTED OUT IN THE ASSESSEES BOOKS OF ACCOUNT. WE FOLLOW THE HONBLE JURISDICTIONAL HIGH COURT DECISI ON IN THESE FACTS AND HOLD THAT ONCE THE ASSESSEES INTEREST IN QUESTION HAS ARISEN FROM TRADE DEBTORS, THE SAME COULD NOT HAVE BEEN DISALLOWED FOR THE PURPOSE OF IMPUGNED DEDUCTION U/ SS. 80HHC AND 80IA OF THE ACT. THE REVENUES SECOND SUBSTANTI VE GROUND FAILS. ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 13 - 21. THE REVENUES NEXT GROUND IS AGAINST THE CIT( A) DIRECTIONS DIRECTING THE ASSESSING OFFICER TO EXCLU DED SALES TAX AND EXCISE DUTY WHILE WORKING OUT SECTION 80HHC DED UCTION. THE SAME IS STATED TO BE IN CONTRAVENTION OF SECTIO N 145A OF THE ACT. THE CASE FILE REVEALS THAT A CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES CASE FOR ASSESSMENT YEAR 200 2-03 HAS RELIED ON THE JUDGMENT OF HONBLE APEX COURT IN CIT VS. LAKSHMI MACHINE WORKS, 290 ITR 667 (SC) HOLDING THA T EXCISE DUTY AND SALES TAX DO NOT INVOLVE ANY ELEMENT OF TU RNOVER AND HENCE, THEY HAVE TO BE EXCLUDED. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS INVOLVED IN THE IMPUGNED A SSESSMENT YEAR VIS--VIS THOSE IN ASSESSMENT YEAR 2002-03. TH E ASSESSEE SUBMITS THAT THE REVENUE HAS NOT CHALLENGED THE SAI D FINDINGS IN ANY HIGHER FORUM. THIS PLEA IS ALSO NOT REBUTTED. W E FOLLOW DECISION OF THE CO-ORDINATE BENCH IN THESE FACTS AN D AFFIRM THE CIT(A) FINDINGS UNDER CHALLENGE. THE REVENUES THIR D GROUND IS REJECTED. 22. THIS LEAVES US WITH THE REVENUES FOURTH AND L AST GROUND SEEKING TO RESTORE THE ASSESSING OFFICERS ACTION T REATING SALES TAX SUBSIDY BENEFIT AS A CAPITAL RECEIPT. WE HAVE A LREADY HELD HEREINABOVE THAT A SALES TAX SUBSIDY IS A CAPITAL R ECEIPT ONLY ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 14 - (SUPRA).WE ADOPT THE VERY REASONING HEREIN AS WELL AND REJECT THE REVENUES ARGUMENTS. 23. THE REVENUES APPEAL ITA 1389/AHD/2011 IS DISM ISSED. 24. NOW WE COME TO THE ASSESSEES APPEAL ITA NO.1442/AHD/2011 RAISING FOLLOWING SUBSTANTIVE GROU NDS. 2. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE , THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION U/SS.80HH, 80IA & 80HHC OF INCOME-TAX ACT IN RESPECT OF THE FOLLOWING INCOMES: I) INTEREST ON FIXED DEPOSITS (MANDALI DIVISION) RS. 1,77,47,758 II) INTEREST ON LOAN (MANDALI DIVISION) RS.7,14,01,912 3) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S C ASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THAT INTERES T EXPENDITURE SHOULD NOT BE REDUCED FOR WORKING OUT DEDUCTION U/SS.80IA & 80HH OF INCOME-TAX ACT. 4) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THAT EXPENSES SHOULD NOT BE REDUCED FROM THE INSURANCE CLAIM INCOME FOR WORKING OUT DEDUCTION U/S. 80IA OF INCOME-TAX ACT. 5) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED C1T(A) HAS GROSSLY ERRED IN CONFIRMING DISALLOWANCE OF DEPRECIATION ON WOODEN STRUCTURE FOR RS. 13,70,603. 6) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING DISALLOWANCE OF EXPENDITURE RS.5,35,61,516 OF SODA ASH PROJECT AND RS.40,57,968 OF LAB PROJECT. 7) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING DISALLOWANCE OF ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 15 - DEPRECIATION RS.39,00,750 ON SODA ASH PROJECT AND RS.2,199 ON LAB END PROJECT. 8) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT CHARGING OF INT EREST U/SS.234B AND 234C IS CONSEQUENTIAL. 25. THE ASSESSEE SUBMITS AT THE VERY OUTSET THAT I TS GROUNDS NO.2 TO 4 RELATE TO INTEREST ON FIXED DEPOSITS, LOANS, I NTEREST EXPENDITURE AND REDUCTION OF EXPENSES FROM THE INSU RANCE CLAIM FOR THE PURPOSE OF DEDUCTIONS CLAIMED U/SS. 80HH, 8 0HHC AND 80IA OF THE ACT. IT QUOTES THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO.358 OF 2014 FOR A.Y.199 8-99 AND ALSO THE OTHER JUDGMENT REPORTED AS (2014) 367 ITR 12 (GUJ.) IN ITS OWN CASE DIRECTING THE AUTHORITIES BELOW TO ADO PT NETTING FORMULA I.E. THE TOTAL RECEIPTS MINUS THE EXPENDITU RE INCURRED IN RELATION THERETO FOR THE PURPOSE OF EXCLUDING IT FR OM THE DEDUCTION CLAIMED U/S.80HH OR 80I IN THE LIGHT OF T HE HONBLE APEX COURT DECISION REPORTED AS ACG ASSOCIATED CAPS ULES P. LTD. VS. CIT (2012) 343 ITR 89 (SC). THE SAME RELIE F IS PRAYED HEREIN AS WELL. THE REVENUE DOES NOT RAISE ANY SERI OUS OBJECTION TO THE SAME. WE FOLLOW THE AFORESAID CASE LAW IN THESE CIRCUMSTANCES AND DIRECT THE ASSESSING OFFICER TO A DOPT NETTING FORMULA QUA ASSESSEES GROUNDS NO.2 TO 4 RAISED IN THESE APPEAL. THESE GROUNDS ARE ACCEPTED FOR STATISTICAL PURPOSE. ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 16 - 26. THE ASSESSEES NEXT SUBSTANTIVE GROUND CHALLEN GES DISALLOWANCE OF DEPRECIATION ON WOODEN STRUCTURES O F RS.13,70,650/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT FURNISH ORIGINAL PURCHASE BILL AND INSTALLATION DETAILS OF THE STRUCTURE IN QUESTION. HE NOTICED TH AT THE BILLS PRODUCED IN SUPPORT OF THE CLAIM HAD BEEN RAISED IN ASSESSEES GROUP CONCERN NAMELY M/S. NIRMA MANAGEMENT SERVICES PVT. LTD. ONLY. THIS EXPENDITURE RELATED TO MODIFICATION WORK CARRIED ON IN THE FIFTH FLOOR OF THE NIRMA HOUSE, ASHRAM RO AD AHMEDABAD. THE ASSESSING OFFICER CITED ABOVE STATED REASONS FOR MAKING DISALLOWANCE OF RS.13,70,603/- PERTAININ G TO DEPRECIATION ON THE WOODEN STRUCTURE IN QUESTION. 27. THE CIT(A) HAS UPHELD THE ASSESSING OFFICERS FINDINGS. HE HOLDS THAT THE PURCHASE BILLS OF THE ITEMS IN QU ESTION ARE NOT IN THE ASSESSEES NAME AND NO INSTALLATION DETAILS ARE FORTHCOMING. 28. HEARD RIVAL CONTENTIONS. CASE FILE PERUSED. TH E ASSESSEE SUBMITS TO HAVE PAID ITS GROUP CONCERN FOR THE IMPU GNED WOODEN STRUCTURE INSTALLED IN THE OFFICE DURING JOB WORK ASSIGNMENT. IT STATES THAT THE RELEVANT INVOICES HA D BEEN RAISED IN THE NAME OF ITS SISTER CONCERN WHICH WERE LATER ON REIMBURSED. IT IS FURTHER CONTENDED THAT THIS GROUP CONCERN HAS ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 17 - NOT MADE ANY ADDITION TO THE BLOCK OF ASSETS IN THE IMPUGNED ASSESSMENT YEAR FOR CLAIMING THE VERY RELIEF. THE R EVENUE QUOTES THE CIT(A) FINDINGS IN SUPPORT. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE RELEVANT INVOICES STOO D ISSUED IN THE NAME OF ASSESSEES GROUP CONCERN. THE ASSESSEE FAIL S TO PROVE EXISTENCE OF ANY AGREEMENT WITH ITS GROUP CONCERN T O FIRST PURCHASE THE WOODEN STRUCTURE IN ITS NAME, INSTALL IT AND THEREAFTER GET THE SAME REIMBURSED. IT ALSO FAILS T O PROVIDE INSTALLATION DETAILS THEREOF DESPITE CLEAR FINDINGS OF BOTH THE LOWER AUTHORITIES. WE REITERATE THAT THE PRESENT IS SECOND ROUND OF PROCEEDINGS UPTO THE TRIBUNAL. THUS, WE HOLD THA T THE ASSESSEES CLAIM IN QUESTION AMOUNTING TO RS.13,70, 603/- HAS BEEN RIGHTLY DISALLOWED BY BOTH THE LOWER AUTHORIT IES FOR WANT OF NECESSARY FACTUAL EVIDENCE. THE ASSESSEES CORRE SPONDING GROUND IS ACCORDINGLY REJECTED. 29. THE ASSESSEES NEXT SUBSTANTIVE GROUND CHALLEN GES THE CIT(A) ORDER CONFIRMING DISALLOWANCE OF EXPENDITURE OF RS.5,35,61,516/- OF SODA ASH PROJECT AND RS.40,57,9 68/- OF THE LAB PROJECT. THE ASSESSING OFFICER REFERS TO THE TR IBUNALS DIRECTION IN THE EARLIER ROUND OF LITIGATION HOLDIN G THAT THE COMMON INDIRECT REVENUE EXPENDITURE PERTAINING TO E XISTING AS WELL AS NEW UNITS E.G. AUDITORS FEES, DIRECTORS R EMUNERATION IS ALLOWABLE. THE ASSESSING OFFICER NOTICED FROM DETAI LS OF BOTH ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 18 - SODA ASH AND LAB PROJECT AND OBSERVED THAT NO RELIE F WAS ALLOWABLE SINCE NONE OF THE EXPENDITURE WAS OF COMM ON INDIRECT REVENUE NATURE. THIS RESULTED IN THE IMPUG NED DISALLOWANCE OF EXPENDITURE OF RS.5,35,61,516/- REL ATING TO SODA ASH PROJECT AND RS.40,57,968/- RELATING TO LAB PROJ ECT. 30. THE CIT(A) HAS ALSO AFFIRMED THE ASSESSING OFF ICERS FINDINGS IN THE ORDER UNDER CHALLENGE. HE AGREED WI TH THE ASSESSEES SUBMISSION THAT IN A.Y. 1997-98 THE TRIB UNAL HAD HELD IDENTICAL EXPENSES TO BE REVENUE IN NATURE. HO WEVER, HE REFERS TO THE TRIBUNALS ORDER IN THE EARLIER ROUND OF LITIGATION DATED 30.8.2006 GIVING SPECIFIC FINDING THAT THERE IS NO SUBSTANCE IN ASSESSEES SUBMISSION THAT THE IMPUGNE D EXPENDITURE IS INCURRED FOR EXPANSION OF EXISTING B USINESS UNIT U/S.37(1) OF THE ACT. THE SAME APPEARS TO BE THE PR ECISE REASON THAT THE CIT(A) HAS INFERRED THAT THE DIRECT REVENU E EXPENDITURE IN QUESTION FOR NEW UNITS IS RELATED TO PURCHASE AN D INSTALLATION OF PLANT, MACHINERY, LAND AND BUILDING ETC TO BE CA PITALIZED. THE ASSESSING OFFICERS FINDINGS ACCORDINGLY STAND CONF IRMED IN THE LOWER APPELLATE ORDER. 31. HEARD RIVAL CONTENTIONS AND CASE RECORD PERUSE D. THE ASSESSEE REFERS TO THE HONBLE HIGH COURTS ORDER I N ASSESSMENT YEAR 1998-99 IN TAX APPEAL NO.385 OF 2014 AS WELL A S THE CASE ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 19 - LAW OF CIT VS. RANE (MADRAS) LTD. 215 ITR 250 TO AR GUE IN FAVOUR OF ITS CLAIM. IT HAS NOT PLACED ON RECORD TH E TRIBUNALS EARLIER ORDER (SUPRA) HOLDING THAT THE EXPENDITURE IN QUESTION HAS NOT BEEN INCURRED IN EXPANSION OF THE ALREADY EXIST ING UNITS OF BUSINESS. WE OBSERVE IN THESE FACTS THAT EARLIER OB SERVATIONS OF THE LD. CO-ORDINATE BENCH HAVE ATTAINED FINALITY. T HE ASSESSEES PAPER BOOK DOES NOT CONTAIN ANY COGENT EVIDENCE TO REBUT THE SAME. WE FIND NO REASON TO TAKE A DIFFERENT VIEW ON FACTS IN THIS CONSEQUENTIAL ROUND OF LITIGATION. THE ABOVE STATED CASE LAW STANDS DISTINGUISHED ON FACTS ACCORDINGLY. THE ASSE SSEES CORRESPONDING GROUND FAILS. HOWEVER, AN ALTERNATIVE CONTENTION AT THIS STAGE IS ALSO RAISED THAT IF THE IMPUGNED E XPENDITURE IS HELD TO BE CAPITAL IN NATURE, IT IS ENTITLED FOR CO NSEQUENTIAL DEPRECIATION RELIEF. WE FIND THAT THIS PLEA REQUIRE S EXAMINATION AT THE ASSESSING OFFICERS BEHEST IN FACTS OF THE C ASE. WE ENTERTAIN THIS ALTERNATIVE PLEA AND DIRECT THE ASSE SSING OFFICER TO PASS A FRESH ORDER AS PER LAW. THE ASSESSEES ALTER NATIVE CONTENTION IS ALLOWED FOR STATISTICAL PURPOSE. 32. THE ASSESSEES NEXT SUBSTANTIVE GROUND SEEKS D EPRECIATION RELIEF OF RS.39,00,750/- ON SODA ASH PROJECT AND RS .2,199/- ON LAB END PROJECT. THE ASSESSEE CLAIM TO HAVE USED TH ESE ASSETS IN ITS PLANT AT BHAVNAGAR. IT FURTHER STATED TO HAV E BEEN OWNING THEM FOR BEING USED IN BUSINESS PURPOSES. THE CIT(A ) HOLDS ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 20 - THAT EVEN IF THESE ASSETS WERE USED DURING CONSTRUC TION OF THE PROJECT, THE IMPUGNED DEPRECIATION CLAIM IS NOT ALL OWABLE BEFORE COMMENCEMENT OF THE PRODUCTION. AND ALSO THAT THE S AME HAVE TO BE CAPITALIZED TILL THE DATE OF SUCH COMMENCEMEN T. 33. WE HAVE HEARD RIVAL CONTENTIONS. THE LOWER A PPELLATE AUTHORITY DRAWS A PRESUMPTION THAT EVEN IF THE ASSE SSEES ASSETS ARE USED DURING THE CONSTRUCTION OF THE PROJECT, DE PRECIATION IN QUESTION CANNOT BE ALLOWED BEFORE COMMENCEMENT OF T HE PRODUCTION. IT DOES NOT GIVE ANY SPECIFIC AFTER EXA MINING THE ASSESSEES BOOKS AND OTHER RELEVANT SUPPORTIVE DETA ILS. THE ASSESSEE QUOTES HONBLE MADRAS HIGH COURT DECISION (SUPRA) AND THAT OF THE TRIBUNAL IN ASSESSMENT YEAR 1997-98 AND 1998-99 ALLOWING THE VERY RELIEF. WE FIND THAT THE HONBLE MADRAS HIGH COURT DEALT WITH A CASE OF REVENUE EXPENDITURE ARIS ING FROM EXPANSION OF EXISTING BUSINESS UNITS AND NOT THAT O F DEPRECIATION. SIMILAR IS THE FACTUAL POSITION IN AS SESSEES CASES DECIDED BY THE TRIBUNAL IN ASSESSMENT YEAR 1997-98 AND 1998-99 ALLOWING IDENTICAL CLAIMS OF REVENUE EXPENDITURE. T HEREFORE, WE PROCEED TO DECIDE THIS ISSUE INDEPENDENTLY. THE ASS ESSING OFFICERS ORDER IS SILENT ON THE IMPUGNED DEPRECIAT ION CLAIMED. THIS IS NOT THE REVENUES CASE IN APPELLATE ORDER T HAT THE ASSESSEE HAS NOT PUT ITS ASSETS IN QUESTION IN READ Y TO USE CONDITION EVEN IF ITS COMMERCIAL PRODUCTION HAS NOT ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 21 - COMMENCED. WE QUOTE THE CASE LAW OF HONBLE DELHI H IGH COURT IN CIT VS. INTEGRATED TECHNOLOGIES LTD. DATED 16.12 .2011 IN THESE FACTS HOLDING THAT IT IS NOT NECESSARY TO ACT UALLY PUT TO USE THE PLANT AND MACHINERY IN QUESTION BUT SUCH A DEPR ECIATION CLAIM IS ALLOWABLE EVEN IF THE ASSETS IN QUESTION A RE KEPT READY FOR BEING USED IN THE BUSINESS CONCERN. THE REVENUE FAILS TO POINT OUT ANY JUDICIAL PRECEDENT TO THE CONTRARY. W E ACCEPT THE ASSESSEES CORRESPONDING GROUND IN ITS FAVOUR. 34. THE ASSESSEES LAST SUBSTANTIVE GROUND OF IN TEREST U/SS. 234B AND 234C IS TREATED AS CONSEQUENTIAL. ASSESSEES APPEAL ITA 1442/AHD/2011 IS PARTLY ALLOWED. ASSESSEES APPEAL ITA 1440/AHD/2011 (ASSESSMENT YEA R 1998-99) 35. THE ASSESSEES FIRST GROUND PLEADS THAT THE C IT(A) HAS GROSSLY ERRED IN HOLDING THAT THE ASSESSING OFFICER HAD CORRECTLY CALCULATED DEDUCTION U/S.80HHC FOR RS.18,08,000/- B Y TAKING ADJUSTED BUSINESS PROFITS OF RS.7217.51 LACS INSTEA D OF RS.10,444.21 LACS. IT PLACES ON RECORD ANNEXURE-A C OMPRISING OF THE APPROPRIATE COMPUTATION OF DEDUCTION U/S.80H HC. IT IS FURTHER STATED THAT THE ASSESSING OFFICER WHILE PAS SING CONSEQUENTIAL ORDER DATED 27.3.2015 HAS ALLOWED ITS DEDUCTION ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 22 - CLAIMED BY TAKING INTO ACCOUNT CORRECT ADJUSTED BUS INESS PROFITS OF RS.10326.75 LACS. A COPY OF THIS ORDER IS PLACED ON RECORD. THE REVENUE DOES NOT RAISE ANY OBJECTION TO THIS FA CTUAL POSITION. WE OBSERVE IN THESE FACTS AND CIRCUMSTANC ES THAT THE ASSESSING OFFICERS CONSEQUENTIAL ORDER HEREINABOVE RENDERED THE ASSESSEES FIRST GROUND INFRUCTUOUS. ORDERED AC CORDINGLY. 36. THE ASSESSEES SECOND GROUND OF INTEREST SECT IONS 234B AND 234C IS TREATED AS CONSEQUENTIAL IN NATURE. 37. THE ASSESSEES THIRD SUBSTANTIVE GROUND CHALLE NGES INTERESTS CHARGED U/S.234D OF THE ACT AMOUNTING TO RS.7,34,97 4/-. THE ASSESSING OFFICERS ORDER DATED 28.12.2007 DOES NOT CONTAIN ANY SUCH DIRECTION OF INTEREST COMPUTATION U/S.234D OF THE ACT. THE ASSESSEE RAISED A CORRESPONDING GROUND BEFORE T HE CIT(A). THE SAME IS REJECTED AS UNDER: 5 THE GROUND NO.5 IS AGAINST THE CHARGING OF INTEREST U/S.234D OF THE I.T. ACT FOR RS.7,34,974/-. 5.1 THE APPELLANT HAS SUBMITTED THAT THE CIT(A) HAS ALREADY DELET ED THE SAID INTEREST VIDE ORDER DATED 05.09.2007 AND THE SAME SHOULD BE DELETED. IT WAS ALSO SUBMITTED THAT INTEREST U/S.234D IS NOT APPLI CABLE FOR A.Y.1998-99 AS THE PROVISION OF SECTION 234D WAS INTRODUCED BY THE FINANCE ACT, 2003 W.E.F. 01.06.2003 AND THUS, THE PROVISION WAS APPLICABLE ONLY FROM A.Y.2004-05 ONWARDS AND NOT PRIOR ASSESSMENT YEARS. 5.2 I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I DO NOT AGR EE WITH THE APPELLANT'S VIEWS. THE CIT(A) VIDE ORDER DATED 27.08.2004 AND 05.09.2007 HAS DELETED THE INTEREST CHARGED BY FOLLOWING THE HON'BLE ITAT AHMEDABAD BENCH DECISION IN THE CASE OF S.K. PATEL ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 23 - FAMILY TRUST WHERE IT WAS HELD THAT SECTION 234D WAS INTRODUC ED W.E.F. 01.06.2003 AND NOT APPLICABLE TO THE EARLIER ASSESSMENT YEARS AND ALSO INTEREST U/S.234B CANNOT BE CHARGED U/S.154 OF THE INCOME- TAX ACT. HOWEVER, THIS VIEW OF THE HON'BLE ITAT HAS NOT BEEN UPHELD BY THE HON'BLE HIGH COURT IN THE CASE OF CIT VS KERALA CHEMI CALS & PROTEINS LTD. (323 ITR 584), HAS HELD AS UNDER: 'INTEREST U/S.234D - CHARGEABILITY - APPLICABILITY OF SECTION 234D - TRIBUNAL HOLDING THAT INTEREST UNDER SECTION 234D WAS NOT CHARGEABLE AS THE PROVISION WAS APPLICABLE ONLY FROM A.Y.2004-05 - NOT JUSTIFIED - SECTION 234D WAS INTRODUCED W.E.F. 1 ST JUNE, 2003 AND NOT WITH REFERENCE TO ANY ASSESSMENT YEAR - INTEREST C HARGEABLE FOR THE PERIOD FROM 1 ST JUNE, 2003 TILL COMPLETION OF REGULAR ASSESSMENT.' FOLLOWING THIS DECISION OF THE HON'BLE KERALA HIGH COURT, IT I S HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN CHARGING THE INTE REST U/S.234D OF THE I.T. ACT WHICH IS UPHELD AND THE APPELLANT'S GROUND IS REJECTED. 38. HEARD BOTH SIDES AND RECORD PERUSED. THE ASSE SSEE REFERS TO THE EARLIER ORDER OF THE TRIBUNAL DELETING SIMILAR INTEREST THEREBY UPHOLDING THE CIT(A) ORDER DATED 5.9.2007. IT IS FU RTHER STATED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS ADMI TTED THE REVENUES APPEAL ON 10.12.2014 AGAINST THE SAID DEC ISION. HOWEVER, IT DOES NOT QUOTE ANY DECISION AGAINST THA T OF THE HONBLE KERALA HIGH COURT RELIED UPON IN THE LOWER APPELLATE ORDER EXTRACTED HEREINABOVE. WE UPHOLD THE CIT(A) F INDINGS IN THESE CIRCUMSTANCES AND REJECT THE ASSESSEES LAST GROUND. ASSESSEES APPEAL ITA NO.1440/AHD/2011 IS DISMISSED . 39. TO SUM UP, ASSESSEES APPEALS ITA NOS.4135/A/ 2007 AND 1440/AHD/2011 ARE DISMISSED, ITA NO. 1173/AHD/2011 & ITA NO.4135/AHD/2007, 1173, 1388, 1389, 1441, 1442, 1440/AHD/2011 NIRMA LTD. FOR A.YS. 1998-99, 1999-00, 2001-01, 2005-06 - 24 - 1441/AHD/2011 ARE DISMISSED AS HAVING BEEN RENDERED INFRUCTUOUS AND ITA NO. 1442/AHD/2011 IS PARTLY AL LOWED. THE REVENUES APPEALS ITA NOS.1388 & 1389/AHD/2011 ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 30 TH ,JUNE, 2015 AT AHMEDABAD . SD/- SD/- (G.D. AGRAWAL) (S.S. GODA RA) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 30 /06/2015 S.A.PATKI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! '# $ / CONCERNED CIT 4. $ () / THE CIT(A)-III, AHMEDABAD 5. '() **'# , '# , ,-! / DR, ITAT, AHMEDABAD 6. )./ 0 / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION- 22.06.15, 23.06.15, 25.06.15 & 26.06.15 DIRECT ON COMPUTER 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER- 26.06.2015 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S. 29-6-2015. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FO R PRONOUNCEMENT 30-6-2015 5. DATE ON WHICH THE FAIR ORDER COMES TO THE SR.P.S. 30-6-2015. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK- 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATUR E ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER