Applitech Solutions Ltd., Ahmedabad V. The ACIT.,(OSD) Range-1, Ahmedabad

ITA 1453/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1749 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-04-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: ANIL KSHATRIYA WITH M K PARM
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Bad and doubtful debts; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1600 & 1452/AHD/2014 & C.O. NO. 245/AHD/2014 (ASSESSMENT YEAR: 2000-01) DCIT, (OSD), RANGE-1, AHMEDABAD M/S. APPLITECH SOLUTIONS LTD., 503, PARITOSH, NR. DARPAN ACADEMY, USMANPURA, AHMEDABAD- 380014 V/S V/S M/S. APPLITECH SOLUTIONS LTD., 503, PARITOSH, NR. DARPAN ACADEMY, USMANPURA, AHMEDABAD- 380014 DCIT, (OSD), RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) M/S. APPLITECH SOLUTIONS LTD., 503, PARITOSH, NR. DARPAN ACADEMY, USMANPURA, AHMEDABAD- 380014 V/S ACIT, (OSD), RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) ITA. NO: 1453/AHD/2014 (ASSESSMENT YEAR: 2003-04) M/S. APPLITECH SOLUTIONS LTD., 503, PARITOSH, NR. DARPAN ACADEMY, USMANPURA, AHMEDABAD- V/S ACIT, (OSD), RANGE-1, AHMEDABAD ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 2 380014 (APPELLANT) (RESPONDENT) ITA. NO: 804/AHD/2011 (ASSESSMENT YEAR: 2004-05) M/S. APPLITECH SOLUTIONS LTD., 503, PARITOSH, NR. DARPAN ACADEMY, USMANPURA, AHMEDABAD- 380014 V/S DCIT, (OSD), RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCA8332P APPELLANT BY : SHRI ANIL KSHATRIYA WITH M.K. PARM AR RESPONDENT BY : SMT. VIBHA BHALLA, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 08 -04-20 16 DATE OF PRONOUNCEMENT : 19 -04-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 1600 & 1452/AHD/14 ARE CROSS APPEALS BY TH E REVENUE AND THE ASSESSEE AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-VI, AHMEDABAD DATED 20.03.2014 PERTAINING TO A.Y. 2000- 01, CO NO. 245/AHD/2014 IS CROSS OBJECTION BY THE ASSESSEE AGA INST THE APPEAL FILED BY THE REVENUE. ITA NO. 804/AHD/11 AND ITA NO .1453/AHD/14 ARE ASSESSEES APPEAL FOR A.Y. 2004-05 & 2003-04 RESPEC TIVELY. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 3 2. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPO SED OF BY THIS COMMON ORDER AS THEY INVOLVE COMMON ISSUES. THE GRI EVANCE OF THE REVENUE READ AS UNDER:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELETIN G THE DISALLOWANCE OF RS.20.10 LACS TOWARDS CONSULTING CHARGES PAID TO SATELLITE M GT. SERVICES LTD, EVEN WHEN THE ASSESSEE HAD NOT DISCHARGED THE ONUS OF ESTABLISHIN G THE BUSINESS PURPOSE OF SUCH EXPENDITURE. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELETIN G THE DISALLOWANCE OF RS.14.59 LACS TOWARDS MANAGEMENT CONSULTANCY FEES PAID TO CA S DESPITE THE FACT THAT THE ASSESSEE HAD NOT DISCHARGED THE ONUS OF ESTABLISHIN G THE BUSINESS PURPOSE OF SUCH EXPENDITURE. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELETIN G THE DISALLOWANCE OF RS.11.51 LACS TOWARDS COMMISSION PAYMENT TO JAYESH PARIKH EV EN WHEN THE ASSESSEE HAD NOT DISCHARGED THE ONUS OF ESTABLISHING THE BUSINESS PU RPOSE OF SUCH EXPENDITURE. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DELETIN G THE DISALLOWANCE OF DEDUCTION OF RS.2.73 CRORES U/S 80HHE DESPITE THE FACT THAT THE CONDITIONS LAID DOWN U/S 8OHHE FOR CLAIMING SUCH DEDUCTION WERE NOT FULFILLED. 3. THE GRIEVANCE OF THE ASSESSEE IS DEALT SEPARATELY. 4. AND THE CROSS OBJECTION ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, PARTICULARLY IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL H IGH COURT OF GUJARAT AND AS REPORTED IN 320 ITR 126, GROUND NO. 3 OF THE DEPART MENTAL APPEAL, ON THE ISSUE OF COMMISSION PAYMENT OF RS. 11.51, LACS IS LIABLE TO BE DISMISSED, BEING NOT MAINTENANCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, PARTICULARLY IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL H IGH COURT OF GUJARAT AND AS REPORTED IN 320 ITR 126, GROUND NO. 4 OF THE DEPART MENTAL APPEAL, UNDER ON THE ISSUE ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 4 OF DEDUCTION OF RS. 2.73 CRORES U/S. 80HHE OF THE A CT, IS LIABLE TO BE DISMISSED, BEING NOT MAINTAINABLE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN NOT GIVING HIS OWN INDEPENDENT FIN DING ON THE ISSUE OF ASSESSEES CLAIM OF DEDUCTION U/S. 80HHE, COVERED UNDER ITS SP ECIFIC GROUND NO. 11 RAISED BEFORE HIM, BY COMPLETELY BRUSHING ASIDE THE ORAL A S WELL AS WRITTEN SUBMISSIONS FILED BEFORE HIM. 5. THE ENTIRE DISPUTE DATES BACK TO 28.03.2003, WHEN T HE ORIGINAL ASSESSMENT ORDER WAS MADE BY THE A.O U/S. 143(3) OF THE ACT. THE ASSESSMENT ORDER TRAVELLED UP TO THE TRIBUNAL AND T HE TRIBUNAL VIDE ORDER DATED 15.10.2010 IN ITA NO. 1507/AHD/2005 & 1 681/AHD/2005 OBSERVED THAT SINCE THE ASSESSEE WAS GRANTED ONLY T WO DAYS TIME FOR SUBMISSION OF REPLIES ON VARIOUS ITEMS OF ADDITIONS PROPOSED BY THE A.O RUNNING INTO CRORES OF RUPEES AND SINCE THE ASS ESSEE WAS NOT ALLOWED TO CROSS EXAMINE THE STATEMENTS OF SHRI RAH UL PARIKH AND SMT. VANDANA PARIKH, THE APPEALS BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) WERE RESTORED TO THE FILES OF THE A.O FO R DECIDING AFRESH. THE RELEVANT FINDING OF THE TRIBUNAL READ AS UNDER: - WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ENTIRE ASSESSMENT IS REQUIRED T O BE REDONE BY THE A.O AS REASONABLE OPPORTUNITY OF BEING HEARD IS NOT PROVIDED TO THE A SSESSEE. IF LEGIBLE COPIES OF THE DOCUMENTS AND STATEMENTS WERE PROVIDED ON 25.03.200 2 THEN VERY LITTLE TIME IS LEFT FOR ASSESSEE TO SUBMIT HIS REPLY AND TO CARRY OUT CROSS -EXAMINATION OF THE TWO PERSONS WHO HAVE NOW DENIED TO HAVE MADE ANY SALES TO THE ASSES SEE COMPANY. NO DOUBT THE ASSESSEE HAS SHOWN PURCHASES FROM RIPL AND VCPL, THEREFORE, TO SUPPORT THESE PURCHASES ONUS IS ON THE ASSESSEE TO PRODUCE THESE PARTIES BEFORE THE A.O WHO HAS ALREADY RECORDED THE STATEMENT OF THESE TWO PERSONS AND WHO HAVE DENIED TO HAVE MADE ANY SALE TO THE ASSESSEE COMPANY. THUS PRIMARILY IT IS FOR THE ASSE SSEE TO PRODUCE THESE PERSONS BEFORE ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 5 THE A.O SO AS TO ENABLE HIM TO CONFRONT THESE TWO P ARTIES. IT WILL BE A STAGE OF RE- EXAMINATION. THE REVENUE AUTHORITIES SHOULD ALSO EX ERCISE THEIR POWERS TO ENFORCE THE PRESENCE OF THESE TWO PERSONS AND ASSESSEE IS REQUI RED TO GIVE FULL SUPPORT BY WAY OF PROVIDING THE ADDRESSES, MOBILE NUMBERS AND THEIR O THER WHEREABOUTS SO AS TO ENABLE THE A.O TO SERVE THE SUMMONS ON THEM. IT IS IN THE INTE REST OF THE ASSESSEE COMPANY TO EXTENT FULL SUPPORT TO THE A.O TO ENABLE HIM TO ENFORCE TH E ATTENDANCE OF THESE TWO PERSONS. MERELY PUTTING THE BURDEN ON THE A.O AND TO SIT QUI ETLY WILL NOT BE IN ITS INTEREST. IF NECESSARY THE A.O CAN ISSUE COMMISSION TO THE OTHER OFFICER OF THE DEPARTMENT WHERE THE ASSESSEE CAN ALSO GO AND CONFRONT THE TWO PERSONS. ACCORDINGLY, BOTH THE APPEALS ARE RESTORED TO THE FILE OF THE A.O FOR DECIDING AFRESH . 6. PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL FRESH AS SESSMENT PROCEEDINGS WERE STARTED, THE ASSESSEE WAS GIVEN OPPORTUNITY TO JUST IFY VARIOUS CLAIMS MADE BY IT. THE A.O COMPLETED THE ASSESSMENT VIDE ORDER DAT ED 30.10.2011 MADE U/S. 143(3) R.W.S. 254 OF THE ACT AS FOLLOWS. REGARDING PRODUCING THE TWO PERSONS BEFORE THE ASSE SSING OFFICER:- VIDE THIS OFFICE LETTER DATED 31.10.2011, THE ASSES SEE WAS REQUESTED TO PRODUCE THE TWO PERSONS MR. RAHUL PARIKH AND SMT VANDANA PARIKH BEF ORE UNDERSIGNED ON 04.11.2011 FOR THE CROSS EXAMINATION FOR THE PURCHASE OF COMPU TER HARDWARE OF THE COST OF RS. 2.21 CRORES FROM M/S. RAHUL INFOTECH PVT. LTD. AND M/S. VANDANA COMPUTERS (P) LTD. AO HAD ALREADY RECORDED THE STATEMENT OF THESE TWO PERSONS AND WHO HAVE DENIED TO HAVE MADE ANY SALE TO THE ASSESSEE COMPANY. IN RESPONSE TO THIS NOTICE, THE ASSESSEE VIDE LETTER DATED 03.11.2011 SUBMITTED THAT MR. RAHUL PARIKH AND SMT VANDANA PARIKH LEFT INDIA AND SETTLED IN KUWAIT. THEREAFTER, VIDE THIS OFFICE LETTER DATED 14 .11.2011, FINAL OPPORTUNITY GIVEN TO THE ASSESSEE TO PROVIDE THIS TWO PERSONS MR. RAHUL PARI KH AND SMT. VANDANA PARIKH. IN RESPONSE TO THIS NOTICE, THE ASSESSEE VIDE LETTER DATED 18.11.2011 SUBMITTED THAT MR. RAHUL PARIKH AND SMT. VANDANA PARIKH HAVE RESIG NED AS DIRECTORS OF THEIR RESPECTIVE COMPANIES W.E.F. 15 TH OCTOBER, 2001 AND LEFT INDIA FOR GOOD AND PRESENTL Y SETTLED IN ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 6 KUWAIT. HENCE THE ASSESSEE IS NOT IN A POSITION TO PRODUCE THEM BEFORE A.O. SECONDLY AS DESIRED THE ASSESSEE HAS PROVIDED DETAILS ABOUT THE IR WHEREABOUTS WITH THEIR COMPLETE ADDRESSES/MOBILE NUMBERS AND HAS DISCHARGED THE ONU S CAST UPON THE ASSESSEE, IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BLE TRIBU NAL IN THEIR ORDER DATED 15 TH OCTOBER, 2011. THE A.O. HAS REQUESTED TO THE ASSESSEE VIDE ORDER SHEET DATED 18.11.2011 FOR CROSS- EXAMINATION. THE A. R. OF THE ASSESSEE REQUESTED FO R THE ADJOURNMENT ON 23.11.2011. THE A.R. OF THE ASSESSEE VIDE ORDER SHEET DATE D 23.11.2011 FURTHER REQUESTED FOR THE ADJOURNMENT AND THE CASE WAS ADJOURNED ON 28.11.201 1. THE A.R. OF THE ASSESSEE FINALLY REQUESTED FOR ADJOURNMENT VIDE ORDER SHEET DATED 05.12.2011 AND THE CASE WAS ADJOURNED ON 09.12.2011 . THE ASSESSEE DID NOT PRODUCE TO MR. RAHUL PARI KH AND SMT. VANDANA PARIKH BEFORE THE A.O. FOR CROSS-EXAMINATION. 1.DISALLOWANCE OF DEPRECIATION AND INTEREST ON FIXE D ASSETS. CONTENTION OF THE ASSESSEE IS CONSIDERED BUT NOT AC CEPTABLE BECAUSE A.O. HAS GIVEN PROPER OPPORTUNITY TO THE ASSESSEE FOR CROSS EXAMIN ATION WITH MR. RAHUL PARIKH AND SMT. VANDANA PARIKH. THE ASSESSEE DID NOT PRODUCE THE TW O PERSONS BEFORE THE A.O. AFTER GIVING THE PROPER OPPORTUNITY TO THE ASSESSEE COMPA NY. THEREFORE, CLAIM OF THE ASSESSEE REGARDING DEPRECIATION AND INTEREST PAYMENT IS NOT TENABLE AND REJECTED. THE ADDITION WAS CONFIRMED BY THE LD.CIT (A). (DISALLOWANCE OF RS.1 6 , 11 , 32 , 180/-) 2.DISALLOWANCE OF EXPENSES REGARDING FOREIGN TRAVEL LING : CONTENTION OF THE ASSESSEE IS CONSIDERED. BUT THE L D. CIT (A) HAS CONFIRMED THE ADDITION MADE BY THE A.O. THEREFORE, FOLLOW THE DECISION OF THE LD. CIT(A) CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AND REJECTED. (DISALLOWANCE OF RS. 16,57,920/-) 3.DISALLOWANCE OF DEFERRED EXPENDITURE U/35D ; ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 7 CONTENTION OF THE ASSESSEE IS CONSIDERED. BUT THE L D. CIT (A) HAS CONFIRMED THE ADDITION MADE BY THE A.O. THEREFORE, FOLLOW THE DECISION OF THE ID. CIT (A) CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AND REJECTED. (DISALLOWANCE OF RS. 1,59,028/-) 4.DISALLOWANCE REGARDING CONSULTING CHARGES OF RS. 20,10,000/-- FOR SATELLITE MANAGEMENT SERVICE LTD. CONTENTION OF THE ASSESSEE IS CONSIDERED. BUT, FOLL OW THE ORIGINAL ORDER PASSED BY THE A.O. THEREFORE, CONTENTION OF THE ASSESSEE IS REJEC TED. (DISALLOWANCE OF RS. 20,10,000/-) 5.MANAGEMENT CONSULTING PAID TO M/S. SHAH MEHTA MAJ MUDAR, C.A. AMOUNTING RS. 14,59,000/-. CONTENTION OF THE ASSESSEE IS CONSIDERED. BUT, FOLL OW THE ORIGINAL ORDER PASSED BY THE A.O. THEREFORE, CONTENTION OF THE ASSESSEE IS REJEC TED. (DISALLOWANCE OF RS. 14,59,000/-) 6.DISALLOWANCE OF THE OCTROI PAYMENT OF RS. 1.71,00 0/- CONTENTION OF THE ASSESSEE IS CONSIDERED. BUT, FOLL OW THE ORIGINAL ORDER PASSED BY THE A.O. THEREFORE, CONTENTION OF THE ASSESSEE IS REJEC TED. (DISALLOWANCE OF RS . 1,71,000/-) 7.DISALLOWANCE OF COMMISSION TO SHRI JAVESH PAREKH RS. 11,51,263/- CONTENTION OF THE ASSESSEE IS CONSIDERED. BUT, FOLL OW THE ORIGINAL ORDER PASSED BY THE A.O. THEREFORE, CONTENTION OF THE ASSESSEE IS REJEC TED. (DISALLOWANCE OF RS. 11 ,51,263/-) 8.DISALLOWANCE OF DEDUCTION U/S. 80HHE THE ASSESSEE HAS CLAIMED DEDUCTION OF RS. 11,51,263 /-. THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE CLAIM. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 8 THEREAFTER, THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE CIT(A). VIDE ORDER DATED 24.03.2005, THE LD. CIT(A) HAS ALLOWED APPEAL OF TH E ASSESSEE IN PART. THE LD. CIT(A) HAS GRANTED RELIEF TO THE EXTENT OF RS. 2,40,28,712 /- U/S. 80HHE AND CONFIRMED THE DISALLOWANCE OF RS. 32,93,651/-. FOLLOWING TO THE ORIGINAL ORDER PASSED BY THE ASSES SING OFFICER ENTIRE CLAIM OF DEDUCTION U/S. 80HHE OF RS. 2,73,22,367/- IS HEREBY DISALLOWE D. (DISALLOWANCE OF RS. 2,73,22,367/-) 7. A PERUSAL OF THE AFOREMENTIONED FINDINGS OF THE A.O CLEARLY SHOWS THAT HE HAS SIMPLY MADE THE ADDITIONS BASED ON THE FINDI NGS GIVEN BY THE ASSESSING OFFICER, WHEN HE MADE THE ASSESSMENT ORDE R ON 28.03.2003 U/S. 143(3) OF THE ACT. 8. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM OF DEPRECIATION. IT WAS EXPLAINED THAT THE DE PRECIATION ON COMPUTER PERIPHERALS HAVE BEEN DISALLOWED BY THE A. O ON THE BASIS OF ASSUMPTION THAT PURCHASES OF COMPUTER HARDWARE WERE BOGUS AND COULD NOT BE FOUND AT THE TIME OF SURVEY. IT WAS AL SO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT SUBSTANTIAL PART OF C OMPUTERS AND SERVERS WERE INSTALLED AT THE OFFICE PREMISES OF THE ASSESS EE COMPANY LOCATED AT NIVRUTI NIWAS, ELLISBRIDGE AT AHMEDABAD AND ALSO AT DELHI AND MUMBAI. SINCE THESE PREMISES WERE NOT SURVEYED BY T HE DEPARTMENT THE COMPUTER HARDWARE INSTALLED AT THESE PREMISES W AS COMPLETELY IGNORED. IN SUPPORT OF ITS CLAIM OF PURCHASES OF CO MPUTER AND THE DEPRECIATION THEREON, THE ASSESSEE FILED NECESSARY INVOICES OF PURCHASES ALONG WITH COPIES OF LEDGER ACCOUNT AND B ANK STATEMENTS. 9. AFTER CONSIDERING THE FACTS AND THE SUBMISSI ONS, THE LD. CIT(A) OBSERVED THAT THE CLAIM OF THE ASSESSEE IS BASED ON THE SAME ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 9 REASONING AS WERE GIVEN AT THE TIME OF FIRST ROUND OF APPEAL AND SINCE THE REASONINGS GIVEN BY THE ASSESSEE WERE NOT ACCEP TED BY THE LD. CIT(A) THEN, THEREFORE, THE SAME ARE ALSO NOT ACCEP TED NOW. THE IMPUGNED DISALLOWANCE OF DEPRECIATION WAS UPHELD. 10. IN SO FAR AS THE CLAIM OF INTEREST EXPENSES OF RS. 1,06,89,996/- IS CONCERNED, IT WAS EXPLAINED BY THE ASSESSEE THAT THE LOAN WAS NOT USED FOR THE PURCHASE OF COMPUTER. IT WAS FURTHER B ROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT OUT OF TOTAL CLAIM OF INTEREST OF RS. 1,06,89,996/-, ONLY RS. 65,39,348/- WAS PAID TO THE BANK ON TERM LOAN AND REMAINING INTEREST PERTAINED TO OTHER PARTIES. NECESSARY DETAILS WERE FURNISHED. THE LD. CIT(A) AT PARA 6.2 OF HIS O RDER SIMPLY FOLLOWED THE FINDINGS GIVEN BY HIS PREDECESSOR IN THE FIRST ROUND OF APPEAL AND CONFIRMED THE DISALLOWANCE OF INTEREST. 11. REGARDING DISALLOWANCE OF FOREIGN TRAVEL EXPENSES O F RS. 16,56,920/- IS CONCERNED, IT WAS EXPLAINED THAT THE COMPANY HAD INCURRED TOTAL FOREIGN TRAVEL EXPENDITURE AT RS. 26 ,87,207/- WHICH WAS INCURRED ENTIRELY FOR THE BUSINESS PURPOSES AND WAS VERIFIABLE FROM THE BOOKS OF ACCOUNTS AND OTHER SUPPORTING EVIDENCE. IN ADVERTENTLY, AS CLAIMED BY THE ASSESSEE, A SUM OF RS. 16,56,920/- W AS TRANSFERRED TO PRE-OPERATIVE EXPENSES ACCOUNT AND THE BALANCE WAS DEBITED TO P & L ACCOUNT, THOUGH WHILE COMPUTING THE TAXABLE INCOME RS. 16,56,920/- WAS CLAIMED AS REVENUE EXPENDITURE FOR THE YEAR UND ER CONSIDERATION. THE A.O TREATED THE SAME AS A CAPITAL EXPENDITURE. IT WAS STRONGLY CONTENDED BY THE ASSESSEE THAT ACCOUNTING ENTRIES A RE NOT DECISIVE FOR THE CLAIM OF EXPENDITURE. THE LD. CIT(A) AT PARA 7. 2 OF HIS ORDER SIMPLY FOLLOWED THE FINDINGS OF HIS PREDECESSOR AND CONFIR MED THE DISALLOWANCE. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 10 12. IN SO FAR AS THE DISALLOWANCE OF RS. 1,59,028/- BEI NG CLAIM OF DEFERRED REVENUE EXPENDITURE IS CONCERNED, THE A.O DISALLOWED THE SAME BEING PERTAINING TO INCREASE IN SHARE CAPITAL AND, THEREFORE, INADMISSIBLE. IT WAS EXPLAINED BY THE ASSESSEE THAT OUT OF TOTAL EXPENSES OF RS. 6,36,112/- CERTAIN AMOUNT PERTAIN T O PAYMENT OF FEES TO REGISTRAR OF COMPANIES ETC. FOR VARIOUS COMPANY LAW RELATED MATTERS AND DO NOT ENTIRELY PERTAIN TO INCREASE IN SHARE CAPITAL, THE ASSESSEE CLAIMED THE SAME TO BE ALLOWABLE U/S. 35D OF THE ACT. THE LD. CIT(A) AT PARA 8.2 OF HIS ORDER SIMPLY REPRODUCED T HE FINDINGS OF HIS PREDECESSOR GIVEN IN THE FIRST ROUND OF APPEAL, THE DISALLOWANCE WAS UPHELD. 13. IN SO FAR AS THE DISALLOWANCE OF CONSULTING CHARGES OF RS. 20,10,000/-, MANAGEMENT CONSULTING CHARGES OF RS. 1 4,59,028/- AND COMMISSION OF RS. 11,51,263/- IS CONCERNED, THE LD. CIT(A) FOUND THAT THE A.O IN THE PRESENT ASSESSMENT ORDER HAS SIMPLY MADE THE ADDITIONS BASED ON THE FINDINGS GIVEN IN THE ASSESS MENT ORDER DATED 28.03.2003. THE LD. CIT(A) FURTHER FOUND THAT SINCE THE A.O HAS NOT BROUGHT ANY MATERIAL EVIDENCE ON RECORD TO JUSTIFY THE DISALLOWANCE, THE LD. CIT(A) FOLLOWED THE FINDINGS OF HIS PREDECE SSOR GIVEN IN THE FIRST ROUND OF APPEAL AND DELETED THESE DISALLOWANCES. WH ILE DELETING THE ADDITIONS ON ACCOUNT OF COMMISSION OF RS. 11,51,263 /-, THE LD. CIT(A) OBSERVED THAT WHEN THIS ADDITION WAS DELETED IN THE FIRST ROUND OF APPEAL, NO GROUND WAS TAKEN BY THE REVENUE BEFORE T HE TRIBUNAL. THEREFORE, A.OS ACTION IN DISALLOWING THE COMMISSI ON IS BEYOND THE MANDATE OF THE TRIBUNALS ORDER. 14. A SIMILAR OBSERVATION HAS BEEN MADE IN SO FAR AS TH E CLAIM OF DEDUCTION U/S. 80HHE IS CONCERNED, THE LD. CIT(A) O BSERVED THAT SINCE ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 11 IN THE FIRST ROUND OF LITIGATION, THE CLAIM OF DEDU CTION U/S. 80HHE WAS ALLOWED BY THE LD. CIT(A) AND SINCE THE REVENUE HAD NOT PREFERRED ANY APPEAL AGAINST THE SAID FINDINGS OF THE LD. CIT(A). THE A.O SHOULD NOT HAVE DISALLOWED THE CLAIM IN THE SECOND ROUND OF LI TIGATION. 15. THE ONLY OTHER ADDITION CONFIRMED BY THE LD. CIT(A) RELATES TO THE OCTROI DUTY PAYMENT OF RS. 1,71,000/-. 16. THE REVENUE IS IN APPEAL IN RESPECT OF THE ADDITION S DELETED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL AGAINST T HE ADDITIONS CONFIRMED BY THE LD. CIT(A) AND THE ASSESSEE HAS AL SO PREFERRED CROSS OBJECTION AGAINST THE APPEAL OF THE REVENUE STATING THAT THE TRIBUNAL HAS ONLY RESTORED THE MATTER RELATING TO THE CLAIM OF DEPRECIATION ON PURCHASES OF COMPUTERS, THEREFORE, ALL OTHER ADDITI ONS/DISALLOWANCES MADE BY THE A.O ARE BEYOND THE DIRECTIONS OF THE IT AT. 17. RIVAL CONTENTIONS WERE HEARD AT LENGTH. WE HAVE CAR EFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND HAV E GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE TRIBU NAL SETTING ASIDE THE ORDER OF THE LD. CIT(A) IN THE FIRST ROUND OF LITI GATION. 18. AT THE VERY OUTSET, WE WOULD LIKE TO STATE THAT THE CROSS OBJECTION RAISED BY THE ASSESSEE DO NOT HOLD ANY WA TER. WE HAVE EXTRACTED THE RELEVANT FINDINGS OF THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION. IT MAY BE TRUE THAT THE TRIBUNAL HAS DE VOTED ITS FINDINGS TO THE CLAIM OF DEPRECIATION ON THE PURCHASES OF COMPU TERS BUT THEN ULTIMATELY THE TRIBUNAL CONCLUDED BY RESTORING THE APPEALS BY THE ASSESSEE AND THE REVENUE TO THE FILES OF THE A.O FO R DECIDING AFRESH WHICH MEANS THAT THE ENTIRE LITIGATION WAS RESTORED TO THE FILES OF THE ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 12 A.O FOR FRESH ADJUDICATION. HENCE, CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 19. COMING TO THE REVENUES APPEAL WHICH RELATES TO THE DELETION OF ADDITION ON ACCOUNT OF CONSULTING CHARGES PAID TO S ATELLITE MANAGEMENT SERVICES, MANAGEMENT CONSULTING FEES PAI D TO CAS AND COMMISSION PAID TO SHRI JAYESH PARIKH. WE FIND THAT THE ASSESSING OFFICER HAS SIMPLY FOLLOWED THE FINDINGS OF HIS PRE DECESSOR GIVEN IN THE FIRST ROUND OF LITIGATION. NOTHING NEW HAS BEEN ADD ED WHICH COULD JUSTIFY THE DISALLOWANCES. SINCE IN THE FIRST ROUND OF LITIGATION, THE FIRST APPELLATE AUTHORITY WAS CONVINCED THAT THESE CHARGE S/EXPENSES WERE WELL SUPPORTED BY THE DOCUMENTARY EVIDENCES AND THE PAYEES HAVE RENDERED SERVICES FOR WHICH THEY HAVE BEEN REMUNERA TED BY THE ASSESSEE COMPANY, THE LD. CIT(A) WAS CONVINCED THAT THE CLAIM OF ALL THESE EXPENSES ARE WELL SUPPORTED BY THE DOCUMENTAR Y EVIDENCES, FOLLOWING THE FINDINGS OF HIS PREDECESSOR. THE LD. CIT(A) DELETED THE ADDITIONS. SINCE NO ADVERSE REMARK HAS BEEN MADE B Y THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION, WE DO NOT FIND IT NE CESSARY TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 1, 2 & 3 OF REVENUES APPEAL TAKEN TOGETHER ARE DISMISSED. 20. GROUND NO. 4 RELATES TO THE CLAIM OF DEDUCTION U/S. 80HHE. WE FIND THAT IN THE FIRST ROUND OF LITIGATION, THE LD. CIT(A) HAS RESTORED THIS ISSUE TO THE FILES OF THE A.O WITH SIMILAR DIRECTIO NS TO VERIFY THE CLAIM MADE BY THE ASSESSEE AND THE A.O WHILE GIVING APPEA L EFFECT TO THE ORDER OF THE LD. CIT(A) VIDE ORDER DATED 06.05.2014 ALLOWED THE CLAIM OF DEDUCTION U/S. 80HHE OF THE ACT AT RS. 27322363/ -. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE CLAIM OF THE REVENUE. FOR THE SAKE OF COMPLETENESS, THIS ISSUE WAS NOT RAISED BY THE REVE NUE IN ITS APPEAL IN ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 13 THE FIRST ROUND OF LITIGATION; THEREFORE, ANY DENIA L OF DEDUCTION BY THE A.O IN THE SECOND ROUND IS NOT TENABLE. GROUND NO. 4 IS ACCORDINGLY DISMISSED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. COMING TO THE ASSESSEES APPEAL IN ITA NO. 1452/AHD/2014 . 22. THE FIRST GRIEVANCE RELATES TO THE CLAIM OF DEPRECI ATION ON THE PURCHASES OF COMPUTERS. 23. THE FACTS RELATING TO THIS GRIEVANCE ARE THAT DURIN G THE COURSE OF THE ASSESSMENT PROCEEDINGS IN THE FIRST ROUND, THE A.O FOUND THAT THE CLAIM OF PURCHASE OF COMPUTERS BY THE ASSESSEE WAS BOGUS. NECESSARY ENQUIRES WERE MADE FROM CO-OP. BANK OF AHMEDABAD FR OM WHERE THE ASSESSEE HAS TAKEN LOAN OF APPROXIMATELY 6 CRORES. THE INFORMATION RECEIVED FROM THE BANK REVEALED THAT ALMOST THE ENT IRE PURCHASE OF COMPUTER HARDWARE WAS MADE FROM ONLY TWO COMPANIES BY THE NAME OF RAHUL INFOTECH PVT. LTD. AND VANDNA COMPUTERS PV T. LTD., THE A.O FOUND THAT THE ASSESSEE HAS PURCHASED APPROXIMATELY 500 COMPUTERS FROM THESE TWO COMPANIES. THE A.O OBSERVED THAT SIN CE THE GOODS WERE PURCHASED BY THE ASSESSEE FROM PLACES LOCATED OUTSIDE OCTROI LTD., THE ASSESSEE SHOULD HAVE PRODUCED THE RECEIPT S OF OCTROI PAID ON THE PURCHASE OF COMPUTER HARDWARE. ALTHOUGH ASSESSE E STATED THAT THE OCTROI HAS BEEN PAID BY THE VENDOR AND THE SAME WAS REIMBURSED BY THE ASSESSEE. BUT THE A.O WAS OF THE FIRM BELIEF THAT IN EITHER SITUATION THE ASSESSEE MUST BE HAVING RECEIPTS OF O CTROI PAYMENT. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 14 24. FOR VERIFYING THE GENUINENESS OF THE PURCHASES, STA TEMENT OF RAHUL PARIKH AND VANDANA PARIKH WERE RECORDED BY TH E A.O. IN THE RESPECTIVE STATEMENT, BOTH THE PERSONS DENIED OF AN Y SUCH TRANSACTION WITH THE ASSESSEE COMPANY. BASED ON THESE STATEMENT S, THE CLAIM OF DEPRECIATION WAS DISALLOWED. AS MENTIONED ELSEWHERE , THE ITAT RESTORED THE ISSUE TO THE FILES OF THE A.O FOR FRES H ADJUDICATION. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS BR OUGHT TO THE NOTICE OF THE A.O THAT THE PARIKH COUPLES HAVE LEFT INDIA AND ARE NOW RESIDING AT KUWAIT. IT WAS ALSO BROUGHT TO THE NOTICE OF THE A.O THAT RAHUL AND VANDANA HAD ALREADY RESIGNED AS DIRECTORS FROM THEI R RESPECTIVE COMPANIES WITH EFFECT FROM 15.10.2001. THEREFORE, T HERE WAS NO CREDIBILITY IN THEIR STATEMENTS RECORDED BY THE A.O . ON 21.02.2003. AN AFFIDAVIT OF PRESENT DIRECTORS NAMELY SAHID SAYED A ND KETAN PARIKH WERE FILED WITH THE A.O TO ESTABLISH THE GENUINENES S OF THE PURCHASE OF COMPUTERS. 25. IN THE DE NOVO PROCEEDINGS, WE FIND THAT THE A.O DI D NOTHING TO ENFORCE THE ATTENDANCE OF PARIKH COUPLE SO THAT THE ASSESSEE COULD CROSS EXAMINE THEM. WE ALSO FIND THAT NO EFFORTS WE RE MADE BY THE A.O TO DISMISS THE VERACITY OF THE CONTENTS OF THE AFFIDAVITS OF PRESENT DIRECTORS NAMELY SAHID SAYED AND KETAN PAREKH; WE A LSO FIND THAT THE PAYMENTS FOR THE PURCHASE OF COMPUTERS HAVE BEEN AC CEPTED BY THE A.O. WE ALSO FIND THAT PARTS OF THE COMPUTER HAVE B EEN FINANCED BY THE BANK AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE BANK WHILE FINANCING THE SAME. THE ALLEGATION OF THE REVENUE THAT DURING THE COURSE OF SURVEY PROCEEDINGS, THE COMPUTERS WERE NO T FOUND AT THE SURVEYED PREMISES DO NOT HOLD ANY GOOD SINCE IT IS A FACT THAT THE ENTIRE PREMISES OF THE ASSESSEE LOCATED AT VARIOUS PLACES HAVE NOT BEEN SURVEYED. THEREFORE, POSSIBILITY OF COMPUTER H ARDWARE INSTALLED ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 15 AT THESE PREMISES CANNOT BE RULED OUT. ONE MORE IMP ORTANT FACTOR WHICH HAS TO BE CONSIDERED AND WHICH GOES IN FAVOUR OF THE ASSESSEE IS THE CLAIM OF SHORT PAYMENT OF OCTROI BY THE OCTROI DEPARTMENT. THE ASSESSEE HAS BEEN FOUND TO HAVE MADE SHORT PAYMENT OF OCTROI BY RS. 1,71,000/- THERE IS NO ADVERSE REMARK BY THE REVENU E AUTHORITIES IN SO FAR AS THE INSURANCE POLICIES TAKEN TO INSURE TH E COMPUTERS. 26. CONSIDERING THE AFOREMENTIONED FACTS, IN OUR CONSID ERED OPINION, THE CIRCUMSTANTIAL EVIDENCES ARE IN FAVOUR OF THE A SSESSEE. THE REVENUES REJECTION OF THE CLAIM OF DEPRECIATION IS ONLY BASED ON THE STATEMENTS OF PARIKH COUPLE WHO WERE NOT ALLOWED TO BE CROSS EXAMINED BY THE ASSESSEE; THEREFORE, THEIR STATEMEN TS ARE IN COMPLETE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ON THE BASIS OF CIRCUMSTANTIAL EVIDENCES MENTIONED ELSEWHERE, WE ARE OF THE OPINIO N THAT THE ASSESSEE HAD PURCHASED COMPUTERS AND IS ELIGIBLE FO R THE CLAIM OF DEPRECIATION. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O TO ALLOW THE CLAIM OF DEPRECIATI ON. THIS GROUND IS ACCORDINGLY ALLOWED. 27. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO THE DISAL LOWANCE OF INTEREST EXPENSES OF RS. 1,06,89,996/-. 28. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT THE INTEREST PAID TO CO. OP. BANK OF AHMEDABAD WAS ON LOAN TAKEN FROM THIS BANK FOR THE PURPOSES OF BUSIN ESS AND THE AMOUNTS WERE USED FOR THE BUSINESS PURPOSES OF THE COMPANY. IT WAS EXPLAINED THAT OUT OF THE TOTAL LOAN OF RS. 5 CRORE S, RS. 1.75 CRORES ONLY HAS BEEN UTILIZED FOR THE PURCHASES OF HARDWAR E ETC. IN THE FIRST ROUND OF LITIGATION, THE A.O DID NOT ACCEPT THE CON TENTION OF THE ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 16 ASSESSEE BECAUSE THE PURCHASES OF COMPUTERS HAVE BE EN HELD TO BE BOGUS. SINCE NO GENUINE PURCHASES WERE MADE THE AMO UNT OF INTEREST PERTAINING TO THE PURCHASE OF COMPUTERS WAS DISALLO WED. IN THE SET ASIDE PROCEEDINGS, THE A.O SIMPLY BORROWED THE FIND INGS OF HIS PREDECESSOR GIVEN IN THE FIRST ROUND OF LITIGATION. WE HAVE CAREFULLY GONE THROUGH THE CONTENTS OF THE FACTS IN ISSUES, T HERE IS NO DISPUTE THAT THE DISALLOWANCE IS BASED UPON THE FINDINGS GI VEN IN THE FIRST ROUND OF LITIGATION. SINCE WE HAVE HELD THE PURCHAS E OF COMPUTERS TO BE GENUINE AS PER OUR DETAILED DECISION/DISCUSSION QUA FIRST GRIEVANCE OF THIS APPEAL. WE HAVE NO HESITATION TO HOLD THAT THE MONEY HAS BEEN BORROWED FOR THE PURPOSES OF BUSINESS AND, THEREFOR E, ANY INTEREST PAID THEREON HAS TO BE ALLOWED AS BUSINESS EXPENDIT URE. THE SECOND GRIEVANCE IS ACCORDINGLY ALLOWED. 29. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO THE D ISALLOWANCE OF FOREIGN TRAVELLING EXPENSES. 30. THE FACTS RELATING TO THIS GRIEVANCE SHOW THAT DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED TO HA VE INCURRED FOREIGN TRAVEL EXPENDITURE OF RS. 26,87,207/-. DURING THE A SSESSMENT PROCEEDINGS, IT WAS STRONGLY CONTENDED THAT THE ENT IRE EXPENDITURE WAS ONLY FOR BUSINESS PURPOSES AND WAS VERIFIABLE FROM THE BOOKS OF ACCOUNTS AND OTHER SUPPORTING EVIDENCE. HOWEVER, WH ILE MAKING THE ACCOUNTING ENTRIES, A SUM OF RS. 16,56,920/- WAS TR ANSFERRED TO PRE- OPERATIVE EXPENSES ACCOUNT. TAKING A LEAF OUT OF TH IS ACCOUNTING ENTRY, THE A.O DISALLOWED THE EXPENDITURE ON FINDING THAT NO DEMONSTRATIVE EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE IN SUPP ORT OF ITS CLAIM. THE A.O FURTHER OBSERVED THAT THE ASSESSEE DID NOT DEBIT THIS AMOUNT IN ITS PROFIT AND LOSS ACCOUNT BUT THE SAME HAS BEE N CLAIMED BY WAY OF ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 17 COMPUTATION OF INCOME. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE BASED UPON THE FINDINGS OF HIS PREDECESSOR GIVEN IN THE FIRST ROUND OF LITIGATION. 31. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FIN DINGS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASS ESSEE DID NOT FURNISH COMPLETE DETAILS OF THE CLAIM OF FOREIGN TRAVEL EXP ENDITURE WHICH IT CLAIMED THROUGH ITS COMPUTATION OF INCOME. EVEN BEF ORE US NO DEMONSTRATIVE EVIDENCES HAVE BEEN BROUGHT ON RECORD TO JUSTIFY THE CLAIM IN THE COMPUTATION OF INCOME. IN THE ABSENCE OF ANY DEMONSTRATIVE EVIDENCE, THE CLAIM OF THE ASSESSEE I S RIGHTLY DENIED BY THE REVENUE AUTHORITIES. THIS GRIEVANCE OF THE ASSE SSEE IS ACCORDINGLY DISMISSED. 32. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO THE D ISALLOWANCE OF RS. 1,59,028/- AS DEFFERED REVENUE EXPENDITURE. 33. THE DISALLOWANCE HAS BEEN MADE ON THE FINDING THAT THE ENTIRE EXPENDITURE HAS BEEN INCURRED FOR INCREASE IN SHARE OF CAPITAL. IT WAS EXPLAINED BEFORE THE REVENUE AUTHORITIES THAT THE T OTAL EXPENDITURE INCURRED AT RS. 6,36,112/- COMPRISES OF PAYMENT OF FEES TO REGISTRAR OF COMPANIES FOR VARIOUS MATTERS AND DOES NOT ENTIRELY PERTAIN TO INCREASE IN SHARE CAPITAL. THIS CLAIM OF THE ASSESS EE DID NOT FIND ANY FAVOUR WITH THE A.O. SINCE THE ADDITIONS WERE CONFI RMED BY THE LD. CIT(A) IN THE FIRST ROUND OF LITIGATION, IN THE PRE SENT PROCEEDINGS, BEFORE THE FIRST APPELLATE AUTHORITY, THE ADDITIONS HAVE BEEN CONFIRMED BY THE LD. CIT(A) FOLLOWING THE FINDINGS OF HIS PRE DECESSOR. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 18 34. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FIN DINGS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAS ST RONGLY CONTENDED THAT IT HAS NOT FLOATED ANY PUBLIC ISSUE NOR INVITE D ANY SHARE APPLICATION FROM ANYBODY, NEITHER DURING THE YEAR U NDER CONSIDERATION NOR IN THE SUBSEQUENT YEARS. THEREFORE, THERE IS NO QUESTION OF INCURRING EXPENDITURE ON INCREASE OF THE SHARE CAPI TAL. WE DO NOT FIND ANY ADVERSE INFERENCE/FINDINGS BY THE LOWER AUTHORI TIES IN SO FAR AS THIS CLAIM OF THE ASSESSEE IS CONCERNED. SINCE THE ASSES SEE IS A BODY CORPORATE IT HAS TO INCUR VARIOUS EXPENDITURES BEFO RE THE REGISTRAR OF COMPANIES. THERE IS NO ADVERSE FINDING BY THE LOWE R AUTHORITIES THAT THE EXPENDITURE WAS NOT INCURRED FOR THE PURPOSES O F BUSINESS. WE, THEREFORE, DO NOT FIND ANY REASON/BASIS FOR DISALLO WING THE SAME. WE ACCORDINGLY DIRECT THE A.O TO DELETE THE ADDITION O F RS. 1,59,028/-; THIS GRIEVANCE IS ACCORDINGLY ALLOWED. 35. THE NEXT GRIEVANCE RELATES TO THE DISALLOWANCE OF OCTROI PAYMENT F RS. 1,71,000/-. 36. THE A.O HAS MADE THE DISALLOWANCE SIMPLY BECAUSE IT WAS DISALLOWED IN THE FIRST ROUND OF LITIGATION. IN THE FIRST ROUND OF LITIGATION, IT WAS EXPLAINED THAT ADDITIONAL OCTROI DUTY OF RS. 1,71,000/- WAS REQUIRED TO BE PAID IN RESPECT OF THE ADDITIONS OF HARDWARE ETC. MADE TO THE CAPITAL BLOCK DURING THE YEAR UNDER CONSIDER ATION. THIS CLAIM OF THE ASSESSEE WAS DENIED BY THE A.O HOLDING THAT THE ASSESSEE ITSELF HAS ADMITTED THAT THE OCTROI PAYMENT OF RS. 1,71,00 0/- IS OF CAPITAL IN NATURE. FINDING THAT THE ASSESSEE HAS NOT FURNISHED ANY RECEIPTS OF SUCH PAYMENT RS. 1,71,000/- WAS DISALLOWED. IN THE PRESENT ASSESSMENT PROCEEDINGS, THE A.O SIMPLY FOLLOWED THE FINDINGS OF HIS ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 19 PREDECESSOR, THE DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT(A) FOLLOWING THE FINDINGS OF HIS PREDECESSOR. 37. WE HAVE CAREFULLY GONE THROUGH THE FINDINGS OF THE LOWER AUTHORITIES. THE UNDISPUTED FACT IS THAT THE OCTROI DEPARTMENT HAS VISITED THE PREMISES OF THE ASSESSEE COMPANY AND ON THE BASIS OF PHYSICAL VERIFICATION CARRIED OUT BY THEM, A DEMAN D OF RS. 1,71,000/- BEING ADDITIONAL OCTROI WAS RAISED AND PAID BY THE ASSESSEE. ALTHOUGH NECESSARY DETAILS WERE NOT FURNISHED BEFORE THE A.O . HOWEVER, THE PAYMENT WAS DULY SUPPORTED BY OTHER DOCUMENTARY AND SUBSTANTIAL EVIDENCES AND ON THE BASIS OF WHICH IN THE FIRST RO UND OF LITIGATION, THE LD. CIT(A) DIRECTED THE A.O TO ALLOW DEPRECIATION. 38. WE FAIL TO UNDERSTAND WHY THE AMOUNT HAS BEEN DISAL LOWED IN THE PRESENT LITIGATION. ONCE, IT HAS BEEN ACCEPTED THAT IT IS A CAPITAL EXPENDITURE FORMING PART OF THE COST OF THE HARDWAR E; THE A.O SHOULD HAVE ALLOWED DEPRECIATION ON IT. WE, ACCORDINGLY DI RECT THE A.O TO ALLOW DEPRECIATION ON THE ADDITIONAL OCTROI DUTY OF RS. 1,71,000/- BEING TREATED AS CAPITAL EXPENDITURE. THIS GROUND IS ALLO WED IN PART FOR STATISTICAL PURPOSE. 39. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ITA NO. 804/AHD/2011 ASSESSEES APPEAL FOR A.Y. 20 04-05. 40. THE GRIEVANCE OF THE ASSESSEE READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DISMISSING THE GROUND RAISED IN APPEAL THAT ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 20 DISALLOWANCE OF DEPRECIATION WAS BASED NOT ON FACTS BUT ONLY ON CONJECTURES AND SURMISES AND WAS NOT VALID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, THE LD. CIT(A) HAS ERRED IN CONFIRMING T HE DISALLOWANCE OF DEPRECIATION OF RS. 2,09,69,161/- SIMPLY FOLLOWING ORDERS OF HIS PREDECESSORS IN EARLIER YEARS WHEN THE SAME IS SET ASIDE AND RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER AS PER HONBLE I.T.A.TS ORDERS DATED 15 TH OCTOBER 2010 IN ITA NO. 1507 & 1681/AHD/2005. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CANNOT STAND AND DESERVES TO BE REVERSED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, THE CIT(A) HAS ERRED IN CONFIRMING DISAL LOWANCE OF INTEREST EXPENSES OF RS.21,12,514 SIMPLY FOLLOWING HIS PREDECESSORS' ORDERS WHEN THE SAME IS SET ASIDE AND RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER AS PER HON'BLE ITAT'S ORDERS DATED 15 TH OCTOBER, 2010 IN ITA NO. 1507 & 1681/AHD/2005. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN DISALLOWING DEFERRED REVENUE EXPENDITURE OF RS. 1,59,028 FOR THIS YEAR ONLY, WHEN NO SUCH DISAL LOWANCE IS CALLED FOR. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, THE CIT(A) HAS ERRED IN DISALLOWANCE OF BAD DEBTS OF RS. 3,08,76,140, WHEN HE OUGHT TO HAVE DELETED WHOLE OF THE ADDITION. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 21 CONFIRMING DISALLOWANCE OF PAYMENT OF PF/ESL AMOUNT ING TO RS. 37,440, WHEN NO SUCH DISALLOWANCE IS CALLED FOR. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, THE PROCEDURE ADOPTED BY THE CIT(A) AS D ESCRIBED HEREINABOVE HAS RESULTED IN VIOLATION OF THE PRINCI PLES OF NATURAL JUSTICE AND HAS IN TURN RESULTED ALSO IN DENIAL OF JUSTICE. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE, FOR THE POINT TAKEN IN THE PRECEDING GRO UNDS THE ORDER OF THE C1T(A) CANNOT STAND AND DESERVES TO BE REVERSED . 41. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E STATED THAT HE IS NOT PRESSING GROUND NOS. 1, 3, 8, 9 & 10. ALL THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 42. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF THE CLA IM OF DEPRECIATION OF RS. 2,09,69,161/-. 43. A SIMILAR ISSUE WAS CONSIDERED AND DECIDED BY US IN ITA NO. 1452/AHD/2014 QUA GROUND NO. 1 OF THAT APPEAL. FOR OUR DETAILED DISCUSSION THEREIN, WE DIRECT THE A.O TO ALLOW THE CLAIM OF DEPRECIATION. 44. GROUND NO. 4 RELATES TO THE DISALLOWANCE OF INTERES T EXPENSES. 45. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY US IN ITA NO. 1452/AHD/2014 QUA GROUND NO. 2 OF THAT APPEAL. FOR OUR DETAILED DISCUSSION THEREIN, WE DIRECT THE A.O TO DELETE THE ADDITION OF RS. 21,12,514/-. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 22 46. GROUND NO. 5 RELATES TO THE DISALLOWANCE OF RS. 1,5 9,028/- BEING TREATED AS DEFERRED REVENUE EXPENDITURE. 47. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN ITA NO. 1452/AHD/2014 QUA GROUND NO. 4 OF THAT APPEAL. FOR OUR DETAILED DISCUSSION THEREIN, WE DIRECT THE A.O TO DELETE THE ADDITION OF RS. 1,59,028/-. 48. GROUND NO. 6 RELATES TO THE DISALLOWANCE OF BAD DEB TS OF RS. 3,08,76,140/- IN ITS PROFIT AND LOSS ACCOUNT. THE A .O ASKED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS:- (1) NAME AND ADDRESS OF THE PARTIES IN RESPECT OF W HOM BAD DEBTS ARE WRITTEN OFF. (2) NATURE OF TRANSACTION AND DATA OF TRANSACTION. (3) COPY OF LEDGER OF THE PARTY RIGHT FROM THE BEGI NNING OF THE TRANSACTION (4) REASONS FOR NON-PAYMENT AND REASONS FOR WRITING OFF THE DEBTS. 49. ON RECEIVING NO PLAUSIBLE REPLY/DOCUMENTARY EVIDENC ES IN SUPPORT OF THE WRITE OFF, THE A.O DISALLOWED AND MA DE ADDITION OF RS. 3,08,76,140/-. 50. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED THAT THE COPIES OF LEDGER ACCOUN T AS REQUIRED WERE GIVEN WHICH GAVE THE DETAILS OF THE NATURE OF TRANS ACTIONS. IT WAS EXPLAINED THAT THE TRANSACTION WITH M/S. GLOBAL FIN ANCE WAS ON ACCOUNT OF SALE PROCEEDS TOWARDS SOFTWARE DEVELOPMENT CHARG ES. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) OBSERVED ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 23 THAT THE ASSESSEE HAS NOT DEMONSTRATED THAT IT HAS FULFILLED THE CONDITION OF SECTION 36(2)OF THE ACT. ACCORDINGLY D ISALLOWANCES WERE CONFIRMED. 51. BEFORE US, THE ASSESSEE STRONGLY RELIED UPON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. 230 C TR 14 WHEREIN IT HAS BEEN HELD THAT AFTER 1,04,1989 IT IS NOT NECESS ARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT HAS BECOME IRREC OVERABLE. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. WE HAVE CAREFULLY CONSIDERED THE FACTS IN ISSUES BEFOR E US. NO DOUBT THAT AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME C OURT, THE ASSESSEE NEED NOT GIVE THE REASONS FOR THE WRITE OFF BUT AT THE SAME TIME THE ASSESSEE HAS TO DEMONSTRATE THAT THE DEBT HAS BEEN TAKEN ON THE INCOME SIDE IN THE EARLIER YEARS AS PER THE PROVISI ONS OF SECTION 36(2) OF THE ACT, NO SUCH DEMONSTRATIVE EVIDENCE HAS BEEN FURNISHED, NEITHER BEFORE THE LOWER AUTHORITIES NOR BEFORE US. WE, THEREFORE, DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. C IT(A). GROUND NO. 6 IS ACCORDINGLY DISMISSED. 52. GROUND NO. 7 RELATES TO THE DISALLOWANCE OF PAYMENT OF PF/ESI AMOUNTING TO RS. 37,440/- . 53. BEFORE US, IT HAS BEEN BROUGHT TO THE NOTICE THAT I N ASSESSEES OWN CASE FOR A.Y. 2002-03, THE TRIBUNAL HAS DELETED SIMILAR DISALLOWANCES VIDE ORDER DATED 26.11.2010 IN ITA NO . 2856/AHD/2010. RESPECTFULLY, FOLLOWING THE FINDINGS OF THE CO-ORDI NATE BENCH, WE DIRECT THE A.O TO DELETE THE ADDITIONS AFTER VERIFYING THA T EMPLOYEES CONTRIBUTION WERE PAID BEFORE THE DUE DATE FOR FIL ING THE RETURN OF INCOME AS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) QUA ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 24 PARA 11 OF ITS ORDER. GROUND NO. 7 IS TREATED AS AL LOWED FOR STATISTICAL PURPOSE. 54. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 1453/AHD/2014 ASSESSEES APPEAL FOR A.Y. 20 03-04. 55. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT INDEPENDENTLY ADJUDICAT ING THE APPELLANTS GROUND NO. 3 RAISED BEFORE HIM FOR DISA LLOWANCE OF DEPRECIATION OF RS. 4,83,92,457/- FOR THE PURCHASES MADE FROM (1) RAHUL INFOTECH PVT. LTD. & (2) VANDANA COMPUTERS PV T. LTD. ON THE MERIT OF THE CASE. 2. IN THE EVENTUALITY IF GROUND NO. 1 ABOVE IS DECIDED IN FAVOUR OF THE APPELLANT THEN THE ISSUE OF CLAIM OF DEPRECIATION M AY KINDLY BE DECIDED ON ITS OWN MERITS CONSIDERING THE DEPOSITIO N OF OFFICIATING EXECUTIVE DIRECTORS OF THE COMPANY AGAINST THE DENI AL MADE BY NON- OFFICIATING & RETIRED DIRECTORS OF (I) RIPL AND (II ) VCPL RESPECTIVELY AND ALSO BY CONSIDERING ALL OTHER CLINCHING (I.E. D IRECT & CIRCUMSTANTIAL) EVIDENCES. 56. THE ONLY GRIEVANCE RELATES TO THE DISALLOWANCE OF D EPRECIATION OF RS. 4,83,92,457/- ON PURCHASES OF COMPUTERS. ITA NOS. 160 0 & 1452/AHD/14 & C.O. NO.245/AHD/ 2014, 1453/AHD/2014 & 804/AHD/20 11 . A.YS. 2000-0 1, 2003-04 & 2004-05 25 57. AN IDENTICAL ISSUE HAS BEEN DECIDED BY US IN ITA NO . 1452/AHD/2014 QUA GROUND NO. 1 OF THAT APPEAL. FOR OUR DETAILED DISCUSSION THEREIN, WE DIRECT THE A.O TO ALLOW THE CLAIM OF DEPRECIATION. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 19 - 04 - 2 016. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD