Dunlop India Limited, Kolkata V. ACIT, Central Circle - XXI, Kolkata, Kolkata

ITA 1411/KOL/1991

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0404 (ITAT-KOLKATA)
• Duration Of Justice: 28 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 10-03-2016
• Assessment Year: misc
• Appeal Filed On: 03-05-1991
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Capital asset; Depreciation; Additional depreciation; Retrospective amendment; Bad and doubtful debts; Assessment record; Revenue expenditure; Capital expenditure; Set aside; Liquidation
• Section: 43B; 80HH; 191; 139(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NO. 1411/CAL/1991 ASSESSMENT YEAR: 1985-86 M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] VS. ACIT, CENTRAL CIRCLE-XIX, KOLKATA............APPELLANT I.T.A. NO. 1434/CAL/1992 ASSESSMENT YEAR: 1987-88 M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] VS. ACIT, CENTRAL CIRCLE-XIX, KOLKATA............APPELLANT I.T.A. NO. 1559/CAL/1992 ASSESSMENT YEAR: 1987-88 ACIT, CENTRAL CIRCLE-XIX, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] I.T.A. NO. 1945/CAL/1994 ASSESSMENT YEAR: 1986-87 M/S. DUNLOP INDIA LTD.................APPELLANT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] VS. DCIT, SPECIAL RANGE-23, KOLKATA.........RESPONDENT 2 I.T.A. NO. 2292/CAL/1994 ASSESSMENT YEAR: 1986-87 DCIT, SPECIAL RANGE-23, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] I.T.A. NO. 2293/CAL/1994 ASSESSMENT YEAR: 1988-89 DCIT, SPECIAL RANGE-23, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] I.T.A. NO. 2419/CAL/1994 ASSESSMENT YEAR: 1989-90 DCIT, SPECIAL RANGE-23, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] I.T.A. NO. 29/CAL/1996 ASSESSMENT YEAR: 1987-88 DCIT, SPECIAL RANGE-23, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] 3 I.T.A. NO. 2233/CAL/1996 ASSESSMENT YEAR: 1993-94 DCIT, SPECIAL RANGE-23, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] C.O. NO. 105/CAL/1996 ASSESSMENT YEAR: 1985-86 DCIT, SPECIAL RANGE-23, KOLKATA............APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] I.T.A. NO. 621/CAL/1996 ASSESSMENT YEAR: 1992-93 M/S. DUNLOP INDIA LTD.................APPELLANT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] VS. DCIT, SPECIAL RANGE-23, KOLKATA.........RESPONDENT I.T.A. NO. 897/CAL/1996 ASSESSMENT YEAR: 1992-93 DCIT, SPECIAL RANGE-23, KOLKATA..........APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 [PAN : AFAPK 8653 C] 4 I.T.A. NO. 1272/CAL/2003 ASSESSMENT YEAR: 1997-98 JCIT-(OSD), CIRCLE-7, KOLKATA..........APPELLANT VS. M/S. DUNLOP INDIA LTD...................RESPONDENT KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA - 700071 [PAN : AABCD 0198 E] APPEARANCES BY: SHRI NONE, APPEARED ON BEHALF OF THE ASSESSEE. DR. P. K. SRIHARI, CIT, SR. D/R APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 24 TH , 2019 DATE OF PRONOUNCING THE ORDER : JULY 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- ALL THESE APPEALS ARE FILED BOTH BY THE ASSESSEE AND THE REVENUE AND PERTAIN TO THE ASSESSMENT YEARS 1985-86, 1986-87, 1987-88, 1988-89, 1989-90, 1992-93, 1993-94, 1997-98. THE CROSS-OBJECTION FOR ASSESSMENT YEAR 1985-86 IS FILED BY THE ASSESSEE. THESE ARE VERY OLD APPEALS AND HAVE BEEN FILED BEFORE THIS TRIBUNAL IN THE YEARS 1992 ONWARDS. REPEATED OPPORTUNITIES HAVE BEEN GIVEN TO THE ASSESSEE AND NOTICES HAVE BEEN SENT FOR THE LAST SEVERAL YEARS, BOTH TO THE ASSESSEE AND LATER TO THE OFFICIAL LIQUIDATORS TO REPRESENT THE CASES. THE COUNSELS ON RECORD HAD WITHDRAWN THEIR VAKALATS. NONE HAVE APPEARED FOR THE ASSESSEE FOR THE LAST SEVERAL DATES OF HEARING DESPITE SERVICE OF NOTICE. THERE IS NOT EVEN A PETITION SEEKING ADJOURNMENT DESPITE SERVICE OF NOTICE. UNDER THESE CIRCUMSTANCES, WE HAVE NO OTHER ALTERNATIVE BUT TO PROCEED TO DISPOSE OFF THE CASE EX-PARTE, QUA THE ASSESSEE, AFTER HEARING THE LD. CIT D/R, DR. P.K. SRIHARI, ON MERITS. 2. HEARD THE LD. CIT D/R AT LENGTH. WE DISPOSE OFF THESE APPEALS ISSUE WISE. 3. WE FIRST TAKE UP THE REVENUES APPEALS FOR ASSESSMENT YEARS 1986-87, 1987- 88, 1988-89, 1989-90, 1992-93, 1993-94 & 1997-98. 5 4. DISALLOWABILITY OF EXCISE LIABILITY U/S 43B OF THE ACT. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS THE ALLOWABILITY OF DEDUCTION OF EXCESS LIABILITY CLAIMED U/S 43B. THIS ARISES FOR ASSESSMENT YEAR 1986-87. WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED 196 LAKHS BEING THE VALUE OF EXCISE BOND AND THE LD. CIT(A) ALLOWED ONLY AN AMOUNT OF 115.72 LAKHS, WHICH WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT AS THE SAME WAS PAID. THUS THIS DEDUCTION WAS ALLOWED TO THE EXTENT IT WAS PAID BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE SAME. THUS, THIS GROUND IS DISMISSED. 5. DISALLOWABILITY OF SALES TAX LIABILITY U/S 43B OF THE ACT. THE NEXT ISSUE IS THE DISALLOWANCE OF SALES TAX LIABILITY U/S 43B OF THE ACT. THIS GROUND ARISES FOR THE ASSESSMENT YEAR 1986-87, 1987-88, 1988-89 AND 1989-90. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE PAYMENTS WERE MADE IN THE SUBSEQUENT YEARS. THE LD. CIT(A) APPLIED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS VS. CIT IN 224 ITR 677 , AND AS THE AMOUNT IN QUESTION WAS PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, HE ALLOWED THE DEDUCTION, EXCEPT FOR THE ASSESSMENT YEAR 1987-88. WE FIND NO INFIRMITY IN THE SAME. FOR THE ASSESSMENT YEAR 1987-88, THE ISSUE WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND FRESH ADJUDICATION AS PER THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SRI JAGANNATH STEEL CORPORATION 1991 191 ITR 676 CAL. WE FIND NO REASON TO INTERFERE IN THE SAME AND UPHOLD THE SAME AND DISMISS THIS GROUND OF THE REVENUE. 6. DISALLOWANCE OF PROVIDENT FUND PAYMENT U/S 43B OF THE ACT. THIS ARISES FOR THE ASSESSMENT YEAR 1986-87. THE LD. CIT(A) RELIED ON THE AUDITOR'S REPORT AND AFTER CONSIDERING THE ASSESSMENT RECORDS GRANTED RELIEF. WE FIND THAT THERE IS NO VIOLATION OF RULE 46A. HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 7. ALLOWABILITY OF EXPENSES INCURRED WITH RESPECT TO VOLUNTARY RETIREMENT SCHEME. THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1986-87, 1988-89 & 1989-90. WE FIND THAT THE ASSESSING OFFICER, HAD ALLOWED A SIMILAR CLAIM FOR THE ASSESSMENT 6 YEAR 1985-86 IN THE REMAND PROCEEDINGS AFTER VERIFICATION. THE LD. CIT(A) ALLOWED THIS CLAIM BY NOTING THAT THE ASSESSING OFFICER HAS VERIFIED THIS CLAIM ON FACTS AND ALLOWED THE CLAIM IN THE ASSESSMENT YEAR 1985-86. THE LD. D/R, COULD NOT POINT OUT ANY FACTUAL INACCURACY IN THE ORDER OF THE LD. CIT(A). THUS, WE UPHOLD THIS FINDING OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 8. ALLOWABILITY OF ROYALTY PAYMENT (ON A/C OF TECHNICAL PURCHASE) THIS ISSUE ARISES IN THE REVENUE'S APPEAL FOR THE ASSESSMENT YEAR 1986-87, 1987-88, 1988-89, 1989-90, 1992-93, 1993-94 AND 1997-98. THE ASSESSING OFFICER TREATED THE EXPENSES AS INCURRED IN THE CAPITAL FIELD. THE LD. CIT(A) WAS OF THE VIEW THAT THESE EXPENDITURE DOES NOT REPRESENT ANY PART OF THE LUMPSUM PAYMENT, BUT ARE PAYMENTS OF ROYALTY, BASED ON SALES, AND THUS THE EXPENDITURE IS IN THE REVENUE FIELD. HE DIRECTED THE ASSESSING OFFICER TO ALLOW THIS EXPENDITURE. WE DO NOT FIND ANY INFIRMITY IN THE SAME. WHEN ROYALTY PAYMENT IS BASED ON THE SALES REVENUES, IT IS A CHARGE ON PROFITS. HENCE THIS GROUND RAISED BY THE REVENUE FOR THE ASSESSMENT YEARS IN QUESTION ARE DISMISSED. 9. DISALLOWANCE OF TRAVEL EXPENSES /AND VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 (RULES). THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1986-87, 1988-89 AND 1989-90. THE ASSESSING OFFICER MADE ADDITION ON ADHOC BASIS. THE LD. CIT(A) REFERRED TO THE AUDITOR'S CERTIFICATE AND ASSESSEES DETAIL WORKINGS OF RULE 6D, AND GRANTED RELIEF. THE TRIBUNAL IN ITS ORDER FOR THE ASSESSMENT YEAR 1983-84 AND 1984-85 ON SIMILAR ISSUE RESTRICTED THE DISALLOWANCE ON THE BASIS OF THE AUDITOR CERTIFICATE. AS THE LD. CIT(A)'S ORDER WAS IN LINE WITH THE PROPOSITIONS OF LAW LAID DOWN BY THE ITAT IN THE ASSESSEE'S OWN CASE FOR THE EARLIER ASSESSMENT YEARS, ON THE SAME SET OF FACTS WE DO NOT INTERFERE IN THESE FINDINGS OF THE LD. CIT(A). FOR THE ASSESSMENT YEAR 1986-87, THE ASSESSING OFFICER MADE A ADHOC DISALLOWANCE OF RS.10 LAKHS WHICH WAS RESTRICTED BY THE LD. CIT(A) ON THE GROUND THAT ASSESSEE HAD PROVIDED ALL THE DETAILS OF TRAVELLING EXPENSES AND THAT NO ADHOC DISALLOWANCE CAN BE MADE 7 IN ABSENCE OF COGENT REASON. WE FIND NO INFIRMITY IN THE SAME. IN THE RESULT, THIS GROUND OF THE REVENUE IS DISMISSED. 9. COMMISSION PAYMENTS THIS ISSUE ARISES FOR THE ASSESSMENT YEARS 1987-88, 1988-89, 1989-90, 1992-93, 1993-94, 1997-98. THE LD. CIT(A) FOLLOWED THE RATIO OF THE DECISION OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 1985-86 IN ITA NO. 1498/KOL/1995, ORDER DT. 11/12/2000, AND ALLOWED THE CLAIM OF THE ASSESSEE. THE LD. D/R COULD NOT POINT OUT ANY INFIRMITY IN THE SAME. THUS, WE UPHOLD THESE FINDINGS AND DISMISS THESE GROUNDS OF THE REVENUE. 10. AMOUNT RECEIVABLE FROM DEBTOR COMPANIES THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1992-93, 1993-94 & 1997-98. THIS BENCH OF THE TRIBUNAL IN ITA NO. 544/KOL/1996 AND ITA NO. 986/KOL/1996 IN THE ASSESSEE OWN CASE FOR ASSESSMENT YEAR 1990-91 & 1991-92, ORDER DT. 21/06/2005, RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION ON THE LINES LAID DOWN BY THE ITAT IN THE ASSESSEE'S OWN CASE. HENCE THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11. AMOUNT OF INTEREST RECEIVED FROM SUBSIDIARY COMPANIES THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1992-93. THE TRIBUNAL IN ITS ORDER FOR THE ASSESSMENT YEAR 1990-91 & 1991-92 (SUPRA), IN THE ASSESSEES OWN CASE, RESTORED THIS MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. CONSISTENT WITH THE VIEW TAKEN THEREIN, AS THE FACTS ARE SIMILAR WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12. ADMITTING OF ADDITIONAL GROUNDS AND ALLOWING CLAIM OF DEDUCTION THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1993-94 AS GROUND NOS. 1 & 2. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ADMITTING THE ADDITIONAL GROUNDS AS ALL THE FACTS ARE ON RECORD. THE PROPERTY IN QUESTION WAS TRANSFERRED 8 TO THE SUBSIDIARY OF THE ASSESSEE COMPANY ON AMALGAMATION, IN COMPLIANCE WITH THE ORDER OF THE HON'BLE HIGH COURT. THIS IS EXEMPT U/S. 47(IV) OF THE ACT. THUS, WE DO NOT INTERFERE IN THIS FINDINGS OF THE LD. CIT(A). HENCE THIS GROUND IS DISMISSED. 13. THE NEXT ISSUE IS ADDITION MADE ON THE GROUND OF CHANGE IN ACCOUNTING SYSTEM FOR I.T. PURPOSES. THERE WAS AN INCREASE IN THE VALUE OF IMPORTED STOCK DUE TO CHANGE IN ACCOUNTING METHOD. THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1993-94. THE TRIBUNAL IN ITS ORDER FOR THE ASSESSMENT VIDE ITS CONSOLIDATED ORDER DT. 25/06/2005 IN THE ASSESSEE'S OWN CASE HAS RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. IN THE RESULT, THIS GROUND OF THE REVENUE IS CLAIMED FOR STATISTICAL PURPOSES. 14. REPAIRING CHARGES OF GUEST HOUSE ALLOWABLE U/S 30 OF THE ACT. THIS IS GROUND NO. 8 FOR THE ASSESSMENT YEAR 1993-94. THIS ISSUE IS NO MORE RES-INTEGRA IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD VS COMMISSIONER OF INCOME TAX [2005] 278 ITR 546 (SC). RESPECTFULLY FOLLOWING THE SAME, WE REVERSE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. HENCE, THIS GROUND OF THE REVENUE IS ALLOWED. 15. ADJUSTMENT OF DEFERRED REVENUE EXPENDITURE, WHILE COMPUTING BOOK PROFIT U/S 115JA OF THE ACT. THE LD. CIT(A) FOLLOWED THE RATIO OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT REPORTED IN 255 ITR 273 AND ALLOWED THE CLAIM OF THE ASSESSEE. HENCE WE SEE NO REASON TO INTERFERE IN THE SAME. THIS GROUND OF THE REVENUE IS DISMISSED. 16. ALLOWABILITY OF DEPRECIATION AND INVESTMENT ALLOWANCE ON WARSILA GENERATOR (2 NOS.) 9 THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1987-88. WE FIND THE LD. CIT(A) HAS SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND ADJUDICATION AS PER THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. UNION CARBIDE (I) LTD. REPORTED IN 254 ITR 488 . WE FIND NO REASON TO INTERFERE IN THESE DIRECTION OF THE LD. CIT(A). HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 17. ALLOWABILITY OF DEPRECIATION AND INVESTMENT ALLOWANCE. THESE GROUNDS ARE TAKEN FOR THE ASSESSMENT YEAR 1988-89, 1989-90 & 1992- 93. WE FIND THAT THE LD. CIT(A) HAS ALLOWED THE CLAIMS OF THE ASSESSEE, ONLY AFTER EXAMINING AS TO WHETHER THE ASSETS IN QUESTIONS WERE PUT TO USE. THE LD. D/R, COULD NOT FACTUALLY CONTROVERT THESE FINDINGS OF THE LD. CIT(A). HENCE, WE UPHOLD THESE FINDINGS OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 18. ALLOWABILITY OF DEPRECIATION ON ASSETS ON WHICH INVESTMENT ALLOWANCE ALLOWED BY THE ASSESSING OFFICER. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE AS PER SECTION 32A OF THE ACT. WE FIND NO INFIRMITY IN THESE DIRECTIONS. HENCE, WE DISMISS THIS GROUND OF THE REVENUE. 19. ALLOWABILITY OF 100% DEPRECIATION ON ASSETS WHICH WERE NOT ENERGY SAVING DEVICE. THIS ISSUE ARISES FOR THE ASSESSMENT YEARS 1987-88, 1988-89 & 1989-90. THE ASSESSEE CLAIMED 100% RATE OF DEPRECIATION ON THESE ENERGY SAVING DEVICES AND THE ASSESSING OFFICER ALLOWED ONLY 33.33% DEPRECIATION. THE LD. CIT(A) EXAMINED THE CERTIFICATE ISSUE BY THE CHARTERED ENGINEER ON THIS PLANT AND MACHINERY. HE CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER ON THE SAME. IN THIS REPORT, THE ASSESSING OFFICER CONCEDED THAT ALL THE FIVE (5) ITEMS OF PLANT AND MACHINERY ARE ENERGY SAVING DEVICE WHICH ARE ENTITLED TO 100% DEPRECIATION. ONCE THE ASSESSING OFFICER HAS ACCEPTED THE CERTIFICATE OF THE CHARTERED ENGINEER, AND THE LD. CIT(A) HAS DISPOSED OFF THE GROUND AS PER THE VIEWS OF THE ASSESSING OFFICER, THE SAME ISSUE CANNOT BE AGITATED BY THE ASSESSING OFFICER BEFORE US. THUS, WE DISMISS THIS GROUND OF THE REVENUE. 10 20. BAD DEBTS. THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1987-88. HERE ALSO THE LD. CIT(A) CALLED FOR COMMENTS OF THE ASSESSING OFFICER AND AFTER CONSIDERING THE SAME HAS ALLOWED THE CLAIM OF THE ASSESSEE AS THE DEBTOR SHREE BALLABH GLASS WORKS LTD., WAS A SICK COMPANY WHICH WAS UNDER BIFR AND THE CHANCES OF RECOVERY OF THE DEBT WAS REMOTE. WE FIND NO INFIRMITY IN THESE FINDINGS AND HENCE WE DISMISS THIS GROUND OF THE REVENUE. 21. DISALLOWANCE U/S 40A(5) OF THE ACT. THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1988-89. THE ASSESSING OFFICER MADE ADHOC DISALLOWANCE OF ALLEGED CASH PAYMENTS TO EMPLOYEES AND DIRECTORS. THE LD. CIT(A) FOLLOWED THE DECISION OF THE ITAT IN ITA NO. 2281/KOL/1984, ITA NO. 974/KOL/1985, FOR THE ASSESSMENT YEAR 1990-91 & 1991-92 AND DELETED THE ADHOC DISALLOWANCE. THESE PAYMENTS WERE UNDER THE SALARY COLUMN AND CASH ALLOWANCES WERE ADDED BACK. THESE FACTS ARE NOT CONTROVERTED BY THE LD. CIT(A). WE SEE NO REASON TO INTERFERE IN THIS DECISION OF THE LD. CIT(A) AND UPHOLD THE SAME. THIS GROUND OF THE REVENUE IS DISMISSED. 22. ADDITION ON ACCOUNT OF DISCREPANCY IN STOCK. THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1988-89. AS THE DISCREPANCY WAS VERY MINOR AND OF NOMINAL VALUE, CONSIDERING THE ASSESSEES VOLUMINOUS BUSINESS, THE LD. CIT(A) DELETED THE DISALLOWANCE. WE FIND NO INFIRMITY IN THIS FINDING OF THE LD. CIT(A) AND UPHOLD THE SAME. HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 23. INVESTMENT DEPOSIT U/S. 32AB THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1988-89 & 1989-90. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW INVESTMENT DEPOSITS AS PER THE AUDITORS CERTIFICATE BY THE APPLYING THE PROPOSITION OF LAW LAID DOWN BY VARIOUS COURTS ON THIS ISSUE. THE LD. D/R COULD NOT POINT OUT ANY INFIRMITY IN THIS ORDER OF THE LD. CIT(A). HENCE WE DISMISS THIS GROUND OF THE REVENUE. 11 24. DIRECTION FOR PROPER RELIEF U/S 80J AND 80HH THIS ISSUE ARISES FOR THE ASSESSMENT YEAR 1988-89 & 1989-90. THE LD. CIT(A) HAS APPLIED THE PROPOSITION OF LAW LAID DOWN BY THE ITAT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1983-84 IN ITA NO. 1917/KOL/1994 ORDER DT. 31/01/2008 AND DIRECTED THE ASSESSING OFFICER TO ALLOW PROPORTIONATE RELIEF. AS THE ASSESSEE FOLLOWED THE ORDER OF THE TRIBUNAL ON THIS ISSUE, WE FIND NO INFIRMITY IN THE SAME. THUS, THIS GROUND OF THE REVENUE IS DISMISSED. 25. WE WOULD NOW TAKE UP THE ASSESSEES APPEAL YEAR WISE. I.T.A. NO. 1411/KOL/1991; ASSESSMENT YEAR 1985-86 26. GROUND NO. 1 : INTEREST U/S 215 DUE TO STAY ORDER OF THE HONBLE CALCUTTA HIGH COURT FOR DISALLOWANCE U/S 43B. 27. THE ITAT IN ITS ORDER DT. 27/01/1992, FOR THE ASSESSMENT YEAR 1984-85, IN THE ASSESSEES OWN CASE, HAS DIRECTED THE ASSESSING OFFICER TO EXCLUDE THE AMOUNT ADDED U/S 43B OF THE ACT AND RECOMPUTE THE INTEREST U/S 215 OF THE ACT. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH COMPUTATION OF INTEREST U/S 215 OF THE ACT, AFTER EXCLUDING THE DISALLOWANCE U/S 43B OF THE ACT. IN THE RESULT THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 28. GROUND NO. 2 : DISALLOWANCE OF EXCISE DUTY BOND LIABILITY OF RS.559.99 LAKHS U/S 43B OF THE ACT. 29. THE ASSESSEE SUBMITS THAT THE CLAIM IN QUESTION WAS MADE ONLY FOR RS.115.99 LAKHS AND WHEREAS THE DISALLOWANCE WAS MADE OF RS.673.78 LAKHS. IT IS THE SUBMISSION OF THE ASSESSEE THAT RS.550.99 LAKHS, IS THE VALUE OF THE BOND EXECUTED AND WHICH WAS SUBSEQUENTLY CANCELLED TO THE EXTENT OF RS.435 LAKHS AND THAT NO DEDUCTION WAS CLAIMED IN THE P&L A/C OF THIS AMOUNT. WHEN NO DEDUCTION HAS BEEN CLAIMED, THE DISALLOWANCE U/S 43B OF THE ACT, DOES NOT ARISE. HENCE, WE RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER TO CHECK THE CLAIM OF THE ASSESSEE AS TO WHETHER THE DEDUCTION HAS BEEN CLAIMED OF RS.550.99 LAKHS, IN THE PROFIT AND LOSS ACCOUNT. IF NO SUCH DEDUCTION HAS BEEN CLAIMED, NO DISALLOWANCE 12 CAN BE MADE. IN THE RESULT, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 30. GROUND NO. 3: SALES TAX TO THE TUNE OF RS.379.40 LAKHS, PAID WITHIN DUE DATE AND ALSO WITHIN TIME OF FURNISHING THE RETURN U/S 43B OF THE ACT. 31. WE SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT, HE APPLIES THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS VS. CIT REPORTED IN 224 ITR 677. IF THE PAYMENTS IN QUESTION AS CLAIMED BY THE ASSESSEE, HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURNS, NO DISALLOWANCE CAN BE MADE. HENCE THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 32. GROUND NO. 4, 5 & 6 ARE DISMISSED AS WITHDRAWN AS THE ASSESSEE VIDE LETTER DT. 06/11/1996, HAS WITHDRAWN THESE GROUNDS. 33. GROUND NO. 7: DISALLOWANCE U/S 40(C) & 40A(5) TO THE TUNE OF RS.8,87,773/- INSTEAD OF RS.7,47,352/- 34. THIS GROUND IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER BY FOLLOWING THE ITATS ORDER IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1984-85, ON THE SAME ISSUE. THE ASSESSING OFFICER IS DIRECTED TO APPLY THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KANAN DEVAN MILLS PRODUCE CO. LTD. REPORTED IN 119 ITR 431 AND THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MAFATLAL GANGABHAI & CO. PVT. LTD. REPORTED IN 219 ITR 644 (SC) AND READJUDICATE THIS ISSUE AFRESH, IN ACCORDANCE WITH LAW . THIS GROUND OF THIS IS ALLOWED FOR STATISTICAL PURPOSES 35. GROUND NO. 8: DISALLOWANCE ON RS.35.36 LAKHS U/S 37(2A/37/(3A) ON ACCOUNT OF SALES PROMOTION ON NEW PRODUCTS MANUFACTURED. 36. THE FACT THAT THE EXPENDITURE IN QUESTION WAS INCURRED FOR THE PROMOTION OF A NEW PRODUCT IS NOT IN DISPUTE. THE QUESTION IS WHETHER THE SAME IS IN THE CAPITAL FIELD OR REVENUE FIELD. IN OUR VIEW, THE EXPENDITURE IN QUESTION IS IN THE REVENUE FIELD. IT IS SALES PROMOTION EXPENDITURE AND THIS EXPENDITURE DOES NOT RESULT IN THE CREATION OF A CAPITAL ASSET, WHICH GIVES ENDURING BENEFITS TO THE ASSESSEE. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. HYDERABAD BOTTLING 13 REPORTED IN243 ITR 476 (AP) , HAS HELD AS SUCH. IN THE CASE OF CIT VS. STATESMAN LTD. REPORTED IN198 ITR 582, A SIMILAR VIEW WAS TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THESE CASE LAW TO THE FACTS OF THIS CASE, WE DELETE THE DISALLOWANCE AND ALLOW THIS GROUND OF THE ASSESSEE. 37. GROUND NO. 9(A): ADHOC DISALLOWANCE OF RS.15 LAKHS OUT OF STAFF WELFARE EXPENSES. 38. THIS IS AN AD HOC DISALLOWANCE. THE ASSESSEE MAINTAINS REGULAR BOOKS OF ACCOUNTS AND THE SAME ARE AUDITED. NO COGENT REASONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER FOR MAKING THIS AD HOC DISALLOWANCE. IN OUR VIEW THE DISALLOWANCE IS BASED ON SURMISES AND CONJECTURES. HENCE WE DELETE THE SAME AND ALLOW THIS GROUND OF THE ASSESSEE. 39. GROUND NO. 9(B): DISALLOWANCE U/S 40A(9) TO THE TUNE OF RS.67006/- PAID TO BENEVOLENT FUND. 40. THE TRIBUNAL IN ITS ORDER, IN THE ASSESSEES OWN CASE, FOR THE ASSESSMENT YEAR 1984-85, HAS DELETED THIS DISALLOWANCE ON SIMILAR FACTS. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DELETE THE DISALLOWANCE AND ALLOW THIS GROUND OF THE ASSESSING 41. GROUND NO. 10(A)(B): ADDITIONAL DEPRECIATION AND INVESTMENT ALLOWANCE ON PLANT AND MACHINERY UNDER THE HEAD ALTERATION AND REARRANGEMENT. 42. THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1984-85. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DIRECT THE ASSESSING OFFICER TO ALLOW PROPORTIONATE ADDITIONAL DEPRECIATION AND INVESTMENT ALLOWANCE IN THIS YEAR ALSO. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART. 43. GROUND NO. 11(I): DISALLOWANCE OF EXPENDITURE OF ACTUAL HOTEL BILLS/DAILY ALLOWANCES UNDER RULE 6D. 44. THE SUBMISSION OF THE ASSESSEE ON THIS ISSUE IS THAT THE DISALLOWANCE MADE IS VERY HIGH AND THAT IN THE EARLIER ASSESSMENT YEAR 1984-85, NO SUCH DISALLOWANCE HAS BEEN MADE. THIS IS NO GROUND FOR DELETING THE DISALLOWANCE. THUS WE UPHOLD THE SAME AND DISMISS THIS GROUND OF THE ASSESSEE. 14 45. GROUND NO. 11(II): DISALLOWANCE ON ACCOUNT OF MOTOR CAR EXPENDITURE, TELEPHONE EXPENDITURE AND MISCELLANEOUS EXPENSES. 46. THE DISALLOWANCE IN QUESTION HAVE BEEN MADE ON THE GROUND THAT PERSONAL EXPENDITURE HAS BEEN DEBITED TO THE COMPANYS ACCOUNT. A COMPANY DOES NOT HAVE PERSONAL EXPENDITURE AS HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGG. CO. VS COMMISSIONER OF INCOME REPORTED IN [2002[ 253 ITR 749 (GUJ) THE EXPENDITURE BY A COMPANY IS FOR THE PURPOSE OF BUSINESS. THE AMOUNTS MAY BE TREATED AS PERQUISITES OF THE RESPECTIVE EMPLOYED DIRECTOR. THUS, THIS DISALLOWANCE IS DELETED AND GROUND OF THIS IS ALLOWED. 47. GROUND NO. 12: DISALLOWANCE OF BAD DEBTS TO THE TUNE OF RS.101.89 LAKHS. 48. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE DISALLOWED THIS AMOUNT ON THE GROUND THAT THE DEBTS HAVE NOT BECOME BAD DURING THE YEAR. BEFORE US THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM WITH EVIDENCE. THUS, WE SEE NO REASON TO INTERFERE IN THE ORDER OF THE ASSESSING OFFICER. IN THE RESULT WE DISMISS THIS GROUND OF THE ASSESSEE. 49. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1985-86, IS ALLOWED IN PART. I.T.A. NO. 1945/KOL/1994; ASSESSMENT YEAR 1986-87 50. GROUND NO. 1: DISALLOWANCE OF EXCISE DUTY/ACTUAL ADHOC PAYMENT. 51. THE ASSESSEE SUBMITTED THAT OUT OF THE TOTAL EXCISE DUTY, OUTSTANDING DEMAND OF RS.57,47,47,000/-, RS.2,00,00,000/- AD HOC AMOUNT WAS PAID. THE ASSESSEE HAS ALSO FILED EVIDENCE OF PAYMENT AND LETTER TO THE EXCISE DEPARTMENT TO THIS EFFECT. UNDER THE CIRCUMSTANCES, WE ALLOW THE AD HOC PAYMENT OF RUPEES TO CRORE ON PAYMENT BASIS. THE BALANCE DISALLOWANCE IS SUSTAINED. THE RESULT THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART. 52. GROUND NO. 2: DISALLOWANCE OF COMMISSION PAYMENT. 53. WE FIND THAT THE LD. CIT(A) HAS GRANTED RELIEF OF RS.43.61 LAKHS & SUSTAINED AN ADDITION OF RS.64.66 LAKHS UNDER THIS HEAD. THE TRIBUNAL IN ITS ORDER IN THE 15 ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1984-85 & 1985-86 HAS DELETED THE DISALLOWANCE ON SIMILAR FACTS AND CIRCUMSTANCES. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DELETE THE DISALLOWANCE TO THE EXTENT SUSTAINED BY THE LD. CIT(A) AND ALLOW THIS GROUND OF THE ASSESSEE. 54. GROUND NO. 3: DISALLOWANCE OF RS.48.17 LAKHS PAID TO INDIAN TYRES IN TERMS OF AGREEMENT AND MODIFIED LETTER AS CAPITAL EXPENDITURE. 55. THE LD. CIT(A) DELETED THE DISALLOWANCE HOLDING THAT THE PAYMENT WAS MADE IN PURSUANCE TO AN AGREEMENT IN ACCORDANCE WITH BUSINESS EXPEDIENCY, WHICH SHOULD BE TREATED AS REVENUE EXPENDITURE. WE FIND NO INFIRMITY IN THIS ORDER OF THE LD. CIT(A) AND UPHOLD THE SAME. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED. 56. GROUND NO. 4: DISALLOWANCE OF RS.8.93 LAKHS ON ACCOUNT OF PURCHASE OF COMPETITORS PRODUCT, CHEMICAL CONSUMPTION AND OTHER LABORATORY MATERIAL HELD TO BE CAPITAL EXPENSES. 57. WE FIND THAT THIS EXPENDITURE WAS INCURRED IN THE ASSESSEES LABORATORY IN THE FACTORY, TO EXAMINE THE COMPETITORS PRODUCT. THIS EXPENDITURE DOES NOT RESULT IN THE CREATION OF A CAPITAL ASSET, WHICH GIVES ENDURING BENEFITS TO THE ASSESSEE. IT IS A RECURRING EXPENDITURE AND HAS TO BE ALLOWED AS TRADING EXPENDITURE ON REVENUE ACCOUNT. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED. 58. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1986-87 IS ALLOWED IN PART. I.T.A. NO. 1945/KOL/1994; ASSESSMENT YEAR 1986-87 59. GROUND NO.1 & 2, ARE DISMISSED AS WITHDRAWN AS THE ISSUES AS PER THE ASSESSEE ARE SETTLED. 60. GROUND NO. 3: DISALLOWANCE OF RS.146.99 LAKHS IN RESPECT OF DISPUTED EXCISE DUTY U/S 43B OF THE ACT. 61. THE ASSESSING OFFICER DISALLOWED THIS AMOUNT AS IT WAS OUTSTANDING EXCISE DUTY DEBITED TO P&L A/C. THE LD. CIT(A) CONFIRMED THE SAME BY HOLDING THAT THIS AMOUNT REPRESENTS DIFFERENTIAL DUTY ON ACCOUNT OF POST-MANUFACTURING EXPENSES 16 RELATING TO DISPATCH MADE DURING 15 MONTHS ENDED 31.03.1987. THE ASSESSEE CLAIMS THAT THIS AMOUNT WAS NOT PAYABLE AND THAT THE DISPUTE WAS SETTLED AS THIS WAS A COMMERCIAL LIABILITY NOT PAYABLE TO THE EXCISE DEPARTMENT. IT WAS THE CASE OF THE ASSESSEE THAT IT FOLLOWS THE MERCANTILE METHOD OF ACCOUNTING AND HENCE THIS EXPENDITURE HAS TO BE ALLOWED. NO EVIDENCE IS SHOWN TO DEMONSTRATE THE FACTS AS CLAIMED BY THE ASSESSEE. THUS, WE DISMISS THIS GROUND. 62. GROUND NO. 4: DISALLOWANCE OF RS.593.43 LAKHS OUT OF TOTAL EXCISE DUTY PAYMENT OF RS.1131.41 LAKHS. 63. THE ASSESSING OFFICER TREATED THE AMOUNT IS WRITTEN BACK, BEING PROVISION OF EARLIER YEARS. IT IS WELL SETTLED BY THE JUDGEMENT OF VARIOUS COURTS THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE AMOUNT WAS ACTUALLY NOT CLAIMED OR ALLOWED IN THE EARLIER YEARS. IN THE CASE AT HAND THE ASSESSEE HAS FAILED TO DISCHARGE THIS ONUS. THUS WE CANNOT DIRECT THAT THE ACTUAL PAYMENT MADE OF RS.11031.43 LAKHS U/S 43B OF THE ACT, HAS TO BE ALLOWED. HENCE THIS GROUND OF THE ASSESSEE IS DISMISSED. 64. GROUND NO.5: DISALLOWANCE OF SALES TAX PAID BEFORE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. 65. WE SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT, HE APPLIES THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS VS. CIT REPORTED IN 224 ITR 677 TO THIS ISSUE AND ADJUDICATE AFRESH . IF THE PAYMENTS IN QUESTION AS CLAIMED BY THE ASSESSEE, HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURNS, NO DISALLOWANCE CAN BE MADE. HENCE THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 66. GROUND NO. 6: DISALLOWANCE OF CUSTOMS DUTY. 67. THE LD. CIT(A) HAS SET ASIDE THE MATTER TO THE ASSESSING OFFICER FOR FRESH VERIFICATION. WE FIND NO INFIRMITY IN THE SAME AS THE SETTING ASIDE OF THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION, IS IN ACCORDANCE WITH LAW. IN RESULT THIS GROUND OF THE ASSESSEE IS DISMISSED. 17 68. GROUND NO. 7 & 8: DISALLOWANCE OF THE DEPRECIATION AND INVESTMENT ALLOWED ON STEEL CORD BELTING LINE ON ALLEGED GROUND OF PRODUCTION AND MACHINERY BEING PUT TO USE. 69. THE CASE OF THE ASSESSEE IS THAT TRIAL RUN HAS COMMENCED ON 30/03/2017 AND THAT EVIDENCE TO THAT EFFECT HAS BEEN SUBMITTED BEFORE THE REVENUE AUTHORITIES. BEFORE US, NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE, HENCE THE QUESTION OF DIRECTING THE GRANT OF DEPRECIATION OF INVESTMENT ALLOWANCE FOR THIS YEAR DOES NOT ARISE. THE FACTS AS HELD BY THE LD. CIT(A) HAVE NOT BEEN CONTROVERTED BEFORE US. HENCE WE UPHOLD THESE FINDINGS OF THE ASSESSING OFFICER AND THE LD. CIT(A) AND DISMISS THIS GROUND OF THE ASSESSEE. 70. GROUND NOS. 9, 10 & 11 ARE ADDITIONAL GROUNDS AND HAVE BEEN TAKEN BY THE ASSESSEE IN VIEW OF THE RETROSPECTIVE AMENDMENT TO THE ACT, BY INSERTION OF EXPLANATION (A) TO SECTION 43(1) BY THE FINANCE ACT, 1986, W.R.E.F. 01/04/1974. IN VIEW OF THIS RETROSPECTIVE AMENDMENT, THE AMOUNTS DEBITED TO THE FIXED ASSETS OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS, TO THE TUNE OF RS.246 LAKHS, WERE DE- CAPITALISED AND DEBITED TO THE INTEREST ACCOUNT. CONSEQUENTLY THE DEPRECIATION INVESTMENT ALLOWANCE WERE ALSO REVERSED AND ADDED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEES CASE IS THAT, NO SUCH WITHDRAWAL CAN BE MADE OF INVESTMENT ALLOWANCE OR DEPRECIATION GRANTED IN THE EARLIER YEAR IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF J.K. COTTON SPINNING AND WEAVING VS UNION OF INDIA & ORS REPORTED IN 1988 SCR (1) 700. THE ASSESSEE SUBMITS THAT INTEREST AMOUNT CHARGED TO PROFIT AND LOSS ACCOUNT AS DEBITED IN DE- CAPITALISATION OF INTEREST AND CORRESPONDING CREDIT GIVEN FOR WRITE BACK OF DEPRECIATION AND INVESTMENT ALLOWANCE, HAS TO BE ALLOWED AS A DEDUCTION AS PER THE AMENDED LAW AND THAT INVESTMENT ALLOWANCE CANNOT BE WITHDRAWN. 70.1. WE FIND THAT THE LD. CIT(A) HAS NOT ACCEPTED THESE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE BEFORE HIM. THESE GROUNDS ARE LEGAL GROUNDS AND DO NOT REQUIRE INVESTIGATION INTO FACTS. THUS, THE LD. CIT(A) SHOULD HAVE ACCEPTED THEM IN LINE OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. REPORTED IN 1998 229 ITR 383 SC . HENCE WE SET ASIDE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADMIT THESE GROUNDS AND ADJUDICATE 18 THE SAME IN ACCORDANCE WITH LAW. IN THE RESULT THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 70. GROUND NO. 12 & 13: DISALLOWANCE OF GUEST HOUSE EXPENDITURE OF RS.69,318/-. 71. THE ASSESSEE CLAIMS THAT, THIS IS A CASE OF DOUBLE DISALLOWANCE AS AN ADDITION OF RS.8.10 LAKHS, WAS ALREADY MADE. HENCE WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. IF THIS IS A CASE OF DOUBLE DISALLOWANCE, THE SAME SHALL BE DELETED. IN THE RESULT THIS GROUND OF THE ASSESSEE IS A LOT FOR STATISTICAL PURPOSES. 72. GROUND NO. 14: DISALLOWANCE OF RS.48,902/- BEING COST OF OVERSEAS PACKAGE PAID TO CONSULTANT DEBITED TO LEGAL EXPENSE ACCOUNT. 73. THE ASSESSEE CLAIMS THAT THE EXPENSES WERE ON ACCOUNT OF COMPANYS AUDITORS AND GENERAL RETAINERS TRAVELLING ACCOUNT. BEFORE US THE ASSESSEE HAS NOT PRESENTED ANY EVIDENCE TO DEMONSTRATE THAT THE LD. CIT(A) WAS FACTUALLY INCORRECT IN HIS CONCLUSIONS. THUS, WE UPHOLD THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE LD. CIT(A) AND DISMISS THIS GROUND OF THE ASSESSEE. 74. GROUND NO. 15: ADHOC DISALLOWANCE UNDER RULE 6D ESTIMATED OF RS.1.30 CRORES. 75. THE ASSESSEE ARGUES THAT THE DISALLOWANCE IS VERY HIGH AND IN THE EARLIER YEARS, THE ITAT RESTRICTED THE DISALLOWANCE PROPORTIONATELY AND THAT FOR THE ASSESSMENT YEAR 1984-85, THERE WAS NO DISALLOWANCE. THESE ARGUMENTS CANNOT BE A GROUND FOR ALLOWING THE CLAIM. THE FACTUAL FINDINGS OF THE LD CIT(A) HAVE NOT BEEN CONTROVERTED BY THE ASSESSEE. THUS, WE UPHOLD THE CONCURRENT FINDINGS OF THE REVENUE AUTHORITIES AND DISMISS THIS GROUND OF THE ASSESSEE. 76. GROUND NO. 16(1) & 16(2): ADHOC DISALLOWANCE OF RS.2 LAKHS ON ALLEGED GROUND OF FOREIGN TRAVELLING/ TRAVELLING EXPENSES OF EMPLOYEES SPOUSE. 77. THE DISALLOWANCE IN QUESTION HAS TO BE SUSTAINED, AS NO EVIDENCE HAS BEEN FILED BEFORE US TO DISPROVE THE FACTUAL FINDINGS OF THE LD. CIT(A). THUS, WE UPHOLD THIS FACTUAL FINDING OF THE LOWER AUTHORITIES AND DISMISS THIS GROUND OF THE ASSESSEE. 78. GROUND NO. 17: LEVY OF INTEREST U/S 215 AMOUNTING TO RS.842.14 LAKHS. 19 79. LEVY OF INTEREST U/S 215 OF THE ACT MAY BE COMPUTED BY THE ASSESSING OFFICER AFTER EXCLUDING THE AMOUNT ADDED U/S 43B OF THE ACT AS DIRECTED BY THE ITAT IN ITS ORDER FOR THE ASSESSMENT YEAR 1984-85, IN THE ASSESSEES OWN CASE. HENCE THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 80. GROUND NO.18 IS AGAINST THE ADJUSTMENT OF REFUND WITH THE OUTSTANDING DEMAND OF TAXES WITHOUT INTIMATION U/S 245 OF THE ACT. THIS GROUND DOES NOT ARISE IN THIS APPEAL, RELIEF MAY BE SOUGHT ON THE ADMINISTRATIVE FRONT. HENCE THIS GROUND IS DISMISSED. C.O. NO. 105/KOL/1996; ASSESSMENT YEAR 1993-94 81. GROUND NO. 1 OF THE CROSS OBJECTION IS AGAINST THE DISALLOWANCE OF RS.5 LAKHS OUT OF REPAIR & MAINTENANCE EXPENDITURE CLAIMED BY THE ASSESSEE. AS NO SUBMISSIONS HAVE BEEN MADE BY THE ASSESSEE TO POINT OUT ANY ERROR IN THE FACTUAL FINDINGS OF THE LOWER AUTHORITIES, WE UPHOLD THE DISALLOWANCE AND DISMISS THIS GROUND OF CROSS-OBJECTION. 82. GROUND NO. 2, IS AGAINST THE DISALLOWANCE OF DEPRECIATION ON GUEST HOUSE. DISALLOWANCE OF DEPRECIATION ON GUEST HOUSE HAS TO BE CONFIRMED IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD VS COMMISSIONER OF INCOME TAX (SUPRA) . IN THE RESULT THIS GROUND IS DISMISSED. 83. GROUND NO. 3, IS AGAINST THE DISALLOWANCE OF DONATION OF RS.1.66 LACS. 84. THERE IS NO EVIDENCE PRODUCED BY THE ASSESSEE TO DEMONSTRATE THAT THE DONATION IN QUESTION HAS BEEN WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINESS. THUS, WE SEE NO REASON TO INTERFERE WITH THE FACTUAL FINDINGS OF THE LD. CIT(A). HENCE WE DISMISS THIS GROUND OF CROSS-OBJECTION. 85. IN THE RESULT THIS CROSS-OBJECTION BY THE ASSESSEE IS DISMISSED. 86. THOUGH WE HAVE ADJUDICATED ALL THE GROUNDS IN ALL THESE APPEAL ON MERITS WITH THE ASSISTANCE OF THE LD. CIT D/R, WE FIND THAT THE ASSESSEE HAS INCURRED HEAVY LOSSES YEAR AFTER YEAR. WE ARE INFORMED THAT DUE TO THESE HEAVY LOSSES, THE COMPANY IS UNDER LIQUIDATION. UNDER THESE CIRCUMSTANCES, INCREASE OR DECREASE OF 20 LOSS FOR THE IMPUGNED ASSESSMENT YEAR, WOULD NOT BE OF ANY USE TO THE ASSESSEE IN ANY MANNER, AS THE PERIOD ALLOWED FOR CARRY FORWARD AND SET OFF OF LOSSES AS UNDER THE ACT, HAS EXPIRED. IN OTHER WORDS, THE CARRY FORWARD AND SET OFF OF LOSSES FOR THE FUTURE YEARS IS HIT BY LIMITATION. AS THE COMPANY HAS HAD ONLY LOSSES IN ALL EARLIER YEARS, SUCH CARRY FORWARD IN OF NO USE. DEPRECIATION WOULD ANYWAY BE ALLOWED. THUS, THE ENTIRE EXERCISE OF PERUSING THESE APPEALS, IN OUR VIEW IS INFRUCTUOUS AND ACADEMIC IN NATURE. ANYHOW, KEEPING IN VIEW OUR AND OBLIGATIONS WE HAVE DISPOSED OFF ALL THE GROUNDS ON MERITS. 87. IN THE RESULT,:- THE REVENUE APPEALS FOR THE ASSESSMENT YEARS 1986-87, 1988-89, 1989-90 ARE DISMISSED. THE REVENUE APPEALS FOR THE ASSESSMENT YEAR 1987-88, 1992-93, 1997- 98 ARE ALLOWED FOR STATISTICAL PURPOSES. THE REVENUE APPEAL FOR THE ASSESSMENT YEAR 1993-94 IS ALLOWED IN PART. THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 1985-86 IS ALLOWED IN PART. THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 1986-87 IS ALLOWED FOR STATISTICAL PURPOSES. THE CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1993-94 IS DISMISSED. KOLKATA, THE 31 ST DAY OF JULY, 2019. SD/- SD/- [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.07.2019 {SC SPS} 21 COPY OF THE ORDER FORWARDED TO: 1. M/S. DUNLOP INDIA LTD KINGS COURT FLAT NO. 14&18 46B, CHOWRINGHEE ROAD KOLKATA 700 071 2. ACIT, CENTRAL CIRCLE-XIX, KOLKATA 3. DCIT, SPECIAL RANGE-23, KOLKATA 4. JCIT-(OSD), CIRCLE-7, KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES