M/s Green Field Enterprises, Chandigarh V. Addl. CIT, Chandigarh

ITA 146/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0136 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Capital receipt
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.147/CHD/2013 (ASSESSMENT YEAR : 2009-10) THE D.C.I.T., VS. M/S GREEN FIELD ENTERPRISES, CIRCLE 5(1), SCO-36, SECTOR- 26, CHANDIGARH. CHANDIGARH. PAN: AAGFG6666C AND ITA NO.146/CHD/2013 (ASSESSMENT YEAR : 2009-10) M/S GREEN FIELD ENTERPRISES, VS. THE ADDL. CIT, SCO-36, SECTOR- 26, RANGE V, CHANDIGARH. CHANDIGARH. PAN: AAGFG6666C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.N. SINGLA DEPARTMENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 31.03.2016 DATE OF PRONOUNCEMENT : 06.04.2016 O R D E R PER RANO JAIN, A.M . : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S), CHANDIGARH DATED 5.11.2012 FOR ASSESSMENT YEAR 2009 -10. ITA NO.147/CHD/2013 (ASSESSEES APPEAL) : 2. THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE 2 APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND, IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE EXCISE DUTY REFUND OF RS. 1,54,36,258- RECEIVED BY THE ASSESSEE CONSTITUTED A CAPITAL RECEI PT NOT LIABLE TO TAX UNDER THE PROVISIONS OF INCOME-TAX ACT, 1961. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 3. THE ONLY ISSUE RAISED BY THE DEPARTMENT IN THIS APPEAL IS WITH REGARD TO ALLOWABILITY OF EXCISE DUT Y REFUND OF RS.1,54,36,258/- RECEIVED BY THE ASSESSEE, HELD BY THE CIT (APPEALS) AS CAPITAL RECEIPT NOT LIABLE TO TAX UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 (IN SHORT THE A CT). 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,54,36,258/- UNDER SECTION 80IB OF THE ACT ON EXCISE DUTY REFUND. THE ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE APPLYING THE RATIO OF THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF LIBERTY SHOES LTD. VS. CIT, 293 ITR 478. 5. BEFORE THE LEARNED CIT (APPEALS), APART FROM MAKING DETAILED SUBMISSIONS WITH REGARD TO MERITS O F THE 3 CASE, IT WAS SUBMITTED THAT DEDUCTION UNDER SECTION 80IB IS ALLOWABLE ON EXCISE DUTY REFUND IN VIEW OF THE D ECISION OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF M /S SHIVALIK AGRO CHEMICALS IN ITA NO.968/CHD/2010 DATE D 20.12.2011. AFTER CONSIDERING THE SUBMISSION OF TH E ASSESSEE, THE LEARNED CIT (APPEALS) ALLOWED THE APP EAL OF THE ASSESSEE ON THIS GROUND, RELYING ON THE ORDER O F THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF M/S SHIV ALIK AGRO CHEMICALS (SUPRA). 6. AGGRIEVED BY THIS, THE DEPARTMENT HAS COME UP IN APPEAL BEFORE US. THE LEARNED D.R. RELIED ON TH E ORDER OF THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT SINCE THE EXCISE DUTY REFUND HAS NO DIRECT NEXUS WITH THE PROFITS AND GAINS DERIVED FROM INDUSTRIAL ACTIVITY OF THE ASSESSEE, THE SAME SHOULD NOT BE ALLOWED FOR DEDUCT ION UNDER SECTION 80IB OF THE ACT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, APART FRO M RELYING ON THE JUDGMENT OF I.T.A.T., CHANDIGARH BEN CH IN THE CASE OF M/S SHIVALIK AGRO CHEMICALS (SUPRA), R ELIED ON A NUMBER OF JUDGMENTS OF VARIOUS BENCHES AND TRIBUNAL AND OF HIGH COURTS. IT WAS STATED BEFORE US THAT THE SAID ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSE E BY THE AMRITSAR SPECIAL BENCH OF I.T.A.T. IN THE CASE OF VINOD KUMAR JAIN VS. VS. ITO, 152 TTJ 445. HEAVY RELIANCE WAS PLACED ON THE JUDGMENT OF GAUHATI HIGH COURT IN THE CASE OF CIT VS. MEGHALAYA STEELS LTD. , (2011) 332 ITR 91. IT WAS ALSO STATED AT THE BAR THAT SLP FILED 4 BY THE DEPARTMENT AGAINST THIS ORDER OF THE GAUHATI HIGH COURT HAS BEEN DISMISSED BY THE HON'BLE SUPREME CO URT IN CIVIL APPEAL NO.7622 OF 2014 DATED 9.3.2016. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ISSUE TO BE DECIDED BY US IS WHETHER THE EXCISE DUTY REFUND CAN BE TREATED AS INCOME DERIVED FROM INDUST RIAL ACTIVITY FOR THE PURPOSES OF ALLOWING DEDUCTION UND ER SECTION 80IB OF THE ACT. ON PERUSAL OF THE JUDGMEN T OF THE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA), WE SEE THAT THE SAME ISSUE HAS BEEN DECIDE D BY THE HON'BLE HIGH COURT IN FAVOUR OF THE ASSESSEE IN FOLLOWING TERMS : 17. INSOFAR AS THE SECOND QUESTION IS CONCERNED, TH E CENTRAL EXCISE DUTY REFUND CLAIMED BY THE ASSESSEE IS ON THE BASIS OF EXEMPTION NOTIFICATIONS ISSUED BY THE MINISTRY OF F INANCE (DEPARTMENT OF REVENUE) BEING NOTIFICATION NO. 32 OF 1999 AND NOTIFICATION NO. 33 OF 1999, BOTH DT. 8TH JULY, 1999. IN TERMS OF THESE NOTIFICATIONS, A MANUFACTURER IS REQUIRED T O FIRST PAY THE CENTRAL EXCISE DUTY AND THEREAFTER CLAIM A REFUN D ON FULFILMENT OF CERTAIN CONDITIONS. IN THE NEXT MONTH, AFTER VERIFICATION OF THE CLAIM, THE CENTRAL EXCISE DUTY SO DEPOSITED IS REFUNDED TO THE ASSESSEE IF THE CONDITIONS LAID DOW N IN THE NOTIFICATIONS ARE FULFILLED. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE WAS ENTITLED TO THE CENTRALE XCISE DUTY REFUND. 18. THE CENTRAL BOARD OF EXCISE AND CUSTOMS IN ITS C IRCULAR DT. 19TH DEC., 2002 CLARIFIED THAT THE REFUND IS NOT O N ACCOUNT OF EXCESS PAYMENT OF EXCISE DUTY BUT IS BASICALLY DE SIGNED TO GIVE EFFECT TO THE EXEMPTION AND TO OPERATIONALISE THE 5 EXEMPTION GIVEN BY THE NOTIFICATIONS. IN THAT SENSE, THE CENTRAL EXCISE DUTY REFUND DOES NOT APPEAR TO BEAR THE CHAR ACTER OF INCOME SINCE WHAT IS REFUNDED TO THE ASSESSEE IS THE AMOUNT PAID UNDER THE MODALITIES PROVIDED BY THE DEPARTMENT OF REVENUE FOR GIVING EFFECT TO THE EXEMPTION NOTIFICA TIONS. THERE IS ALSO NOTHING TO SUGGEST THAT THE ASSESSEE HAS REC OVERED OR PASSED ON THE EXCISE DUTY ELEMENT TO ITS CUSTOMERS. EV EN ASSUMING THE REFUND DOES AMOUNT TO INCOME IN THE HA NDS OF THE ASSESSEE, IT IS A PROFIT OR GAIN DIRECTLY DERIVED BY THE ASSESSEE FROM ITS INDUSTRIAL ACTIVITY. THE PAYMENT OF CE NTRAL EXCISE DUTY HAS A DIRECT NEXUS WITH THE MANUFACTURIN G ACTIVITY AND SIMILARLY, THE REFUND OF THE CENTRAL EXCISE DUTY A LSO HAS A DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY. THE ISSU E OF PAYMENT OF CENTRAL EXCISE DUTY WOULD NOT ARISE IN THE ABSENCE OF ANY INDUSTRIAL ACTIVITY. THERE IS, THEREFORE, AN INEXT RICABLE LINK BETWEEN THE MANUFACTURING ACTIVITY, THE PAYMENT OF CENTRAL EXCISE DUTY AND ITS REFUND. IN THE CIRCUMSTAN CES, WE ARE OF THE OPINION THAT QUESTION NO. 2 MUST BE ANSW ERED IN THE AFFIRMATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE. 9. SINCE WE OBSERVE THAT THE ISSUE IN QUESTION BEFORE THE HON'BLE GAUHATI HIGH COURT WAS EXACTLY S AME, WHICH IS THERE IN THE PRESENT APPEAL, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE DEPARTMENT. 10. BEFORE PARTING, WE WANT TO ADD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. MEGHALAYA STEELS LTD. (SUPRA), COPY OF WHICH WA S PROVIDED TO US BY THE LEARNED COUNSEL FOR THE ASSES SEE DURING THE COURSE OF HEARING, STATING THAT THE ISSU E OF EXCISE DUTY REFUND HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE IN THIS JUDGMENT ARISING OUT OF THE JUDGME NT OF 6 GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA). WE OBSERVE THAT IN THIS CASE BEFORE THE H ON'BLE APEX COURT, THE ONLY ISSUE DECIDED WAS IN RESPECT O F THE ALLOWABILITY OF TRANSPORT SUBSIDY, INTEREST SUBSIDY AND POWER SUBSIDY FOR THE PURPOSES OF DEDUCTION UNDER S ECTION 80IB OF THE ACT AND NOT THAT OF EXCISE DUTY REFUND. THOUGH NO HELP OF THE SAID JUDGMENT CAN BE TAKEN IN THE PRESENT APPEAL, THIS ALSO GOES TO SHOW THAT THE DEC ISION OF THE GAUHATI HIGH COURT WITH REGARD TO THE EXCISE DU TY REFUND HAS BECOME FINAL. 11. THE APPEAL OF THE DEPARTMENT IS DISMISSED. ITA NO.146/CHD/2013 (REVENUES APPEAL) : 12. THE GROUND NOS.1 AND 5 RAISED BY THE ASSESSEE IN THIS APPEAL ARE GENERAL AND, HENCE NEED NO ADJUDICATION. 13. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS GROUND NO.4 AND, THEREFORE, THE SAME I S DISMISSED AS BEING NOT PRESSED. 14. THE GROUND NO.2 AND 3 RAISED BY THE ASSESSEE ARE AS UNDER : 2. THAT THE LEARNED CIT(A) HAS WRONGLY UPHELD THE ADDITION OF RS.25,00,000/- ON ACCOUNT OF ASSUMPTIONS OF LESS WAGES SHOWN IN PROFIT & LOSS ACCOUNT. 3. THAT THE LEARNED CIT (A) HAS WRONGLY DISALLOWED THE DEDUCTION U/S 80IC ON ACCOUNT OF NOTIONAL WAGES OF RS.25,00,000/-. 7 15. BRIEFLY, THE FACTS ARE THAT DURING THE ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT EITHE R VERY LITTLE OR NO EXPENDITURE HAS BEEN DEBITED UNDER VAR IOUS HEADS OF EXPENSES BY THE ASSESSEE. REJECTING THE B OOK RESULTS, THE ASSESSING OFFICER ESTIMATED VARIOUS EX PENSES INCLUDING THE WAGES WHICH WERE ESTIMATED AT RS.31,49,900/-. FURTHER, IT WAS HELD THAT THE BUSI NESS PROFITS OF THE ASSESSEE BE REDUCED BY THIS AMOUNT A ND HENCE, DEDUCTION UNDER SECTION 80IC OF THE ACT WAS ALSO REDUCED BY THE SAME. 16. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS ERRED IN COMPARING WAGES OF THE ASSESSEE FIRM WITH ITS SISTE R CONCERN I.E. M/S INDUSTRIAL EQUIPMENT COMPANY, PANCHKULA FOR THE PURPOSES OF WAGES WITHOUT APPRECI ATING THE FACT THAT THE NATURE OF BUSINESS ACTIVITY IS DI FFERENT AT M/S INDUSTRIAL EQUIPMENT COMPANY PANCHKULA AND M/S GREEN FIELD ENTERPRISES, KATHUA. IN M/S GREEN FIELD ENTERPRISES, KATHUA, LARGE NUMBER OF DG SETS ARE PRODUCED, WHERE IN PANCHKULA, DG SETS ARE NOT PRODU CED AT ALL. FURTHER, IT WAS SUBMITTED THAT SINCE THE P ARTNERS IN THE SAID FIRM ARE DIFFERENT FROM THE ASSESSEE, T HE COMPARISON OF EXPENSES ON THE BASIS OF THAT THEY AR E IN SAME BUSINESS AND CLAIMED SAME DEDUCTION, IS WRONG. M/S INDUSTRIAL EQUIPMENT COMPANY HAS FACTORIES IN CHANDIGARH, PUNJAB, HARYANA AND J&K, WHEREAS THE 8 ASSESSEE FIRM HAS ONLY ONE FACTORY IN J&K. THE PRODUCTION ACTIVITIES IN BOTH THE FIRMS ARE DIFFERE NT AS M/S INDUSTRIAL EQUIPMENT COMPANY DEALS IN TRADING A ND MANUFACTURING OF DG SETS AND OTHER ITEMS, WHEREAS T HE ASSESSEE HAS NOT MANUFACTURED ANY DG SETS DURING TH E YEAR. IT WAS SPECIFICALLY SUBMITTED THAT M/S GREEN FIELD ENTERPRISES IS MORE MECHANIZED, WHERE M/S INDUSTRIA L EQUIPMENT COMPANY IS LESS MECHANIZED. THE NATURE O F MACHINERY USED IN BOTH COMPANIES IS DIFFERENT. THE VALUE OF MACHINERY AS ON 1.4.2008 IN M/S INDUSTRIAL EQUIP MENT COMPANY WAS RS.6,43,465/- AND M/S GREEN FIELD ENTERPRISES WAS RS.83,86,189/-, WHICH IS MUCH HIGHE R THAN M/S INDUSTRIAL EQUIPMENT COMPANY. IT WAS STAT ED THAT THE ASSESSEE PRODUCES HI-TECH GENERATORS, WHIC H IS AN AUTOMATED INDUSTRY REQUIRING LESS LABOUR INPUT IN COMPARISON TO M/S INDUSTRIAL EQUIPMENT COMPANY, DUE TO DIFFERENCE IN MACHINERY IN BOTH THE UNITS. SINCE T HE ASSESSEE IS MAINTAINING PROPER BOOKS AND RECORDS AN D HAD ALSO FILED ESI AND PF RETURNS TIMELY, THERE HAS BEE N NO OCCASION OF UNDERSTATEMENT OF WAGES. 17. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE LEARNED CIT (APPEALS) OBSERVED THAT T HE ASSESSING OFFICER HAS ESTIMATED THE WAGES ON THE BA SIS OF SIMILAR EXPENSES INCURRED BY SISTER CONCERN, M/S INDUSTRIAL EQUIPMENT COMPANY. HE WAS OF THE VIEW T HAT EVEN IF THE FACTORS WHICH HAD BEEN CITED BY THE ASS ESSEE ARE TAKEN INTO CONSIDERATION, THE CLAIM OF WAGES MA DE BY 9 IT OF RS.8,37,260/- CANNOT BE ACCEPTABLE IN VIEW OF HUGE TURNOVER OF THE ASSESSEE BEING MORE THAN 65 CRORES. HOWEVER, HE PREFERRED TO ESTIMATE THE DIFFERENCE IN WAGES AT RS.25,00,000/-, I.E. HE SUSTAINED THE ADDITION T O THE EXTENT OF RS.25,00,000/-. 18. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT (APPEALS) AND ALSO FILED THE DETAILS OF WAGES PAID BY BOTH THE ASSESSEE AS WELL AS M/S INDUSTRIAL EQUIPMENT COMPANY AND ALSO DETAILS OF MACHINERY OF BOTH THE CONCERNS WERE FILED BEFORE US. THESE DETAILS WERE SHOWN TO US TO EMPHASIZE THE FACT THAT THE ASSESSEE IS IN TO MORE MECHANIZED BUSINESS THAN THAT OF M/S INDUSTRIAL EQUIPMENT COMPANY, WHICH IS MORE LABOUR INTENSIVE. MOST OF THE MACHINERY INSTALLED REQUIRE LESS LABOUR INPUT IN COMPARISON TO M/S INDUSTRIAL EQUIPMENT COMPANY. THE DETAILS OF ESI AND PF, ETC. PAID BY THE ASSESSE E WITH THE RETURNS OF RESPECTIVE FUNDS FILED, WERE SHOWN T O US TO EMPHASIZE THE FACT THAT THERE IS NO UNDERSTATEMENT OF WAGES IN THE BOOKS OF THE ASSESSEE. 19. THE LEARNED D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THAT OF THE LEARNED CI T (APPEALS). HE OPINED THAT THE ESTIMATION OF WAGES REDUCED TO RS.25 LACS IS QUITE A REASONABLE ESTIMATE MADE B Y THE LEARNED CIT (APPEALS). 10 20. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE OBSERVE THAT THE ASSESSING OFFICER GOT AN IMPRES SION FROM THE BOOKS OF THE ASSESSEE THAT IT IS SHOWING L ESSER WAGES AND IN ORDER TO QUANTIFY THE UNDERSTATEMENT O F WAGES HE COMPARED THE SAID EXPENSES OF THE ASSESSEE WITH THAT OF ITS SISTER CONCERN, M/S INDUSTRIAL EQUIPMEN T COMPANY. AFTER THIS EXERCISE, THE ASSESSING OFFICE R ESTIMATED THE WAGES TO BE 31,49,000/-. THE EXPLANA TION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WEL L AS THE LEARNED CIT (APPEALS) WAS THAT THE EXPENSES ON ACCO UNT OF WAGES INCURRED BY THE ASSESSEE CANNOT BE COMPARED W ITH M/S INDUSTRIAL EQUIPMENT COMPANY, EVEN IF IT IS A S ISTER CONCERN, SOME DIFFERENCE ON ACCOUNT OF DIFFERENT BU SINESS MODEL WAS BROUGHT TO THE NOTICE OF THE ASSESSING OF FICER AS WELL AS THE CIT (APPEALS). WITHOUT LOOKING INTO THIS EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT (APPEALS) PREFERRED TO THE ESTIM ATED OF WAGES INCURRED BY THE ASSESSEE WITHOUT THERE BEING ANY BASIS FOR THE SAME. THE ASSESSING OFFICER PREFERRE D NOT TO MAKE ANY FURTHER ENQUIRY OR INVESTIGATION WITH REGA RD TO THE EXPLANATION GIVEN BY THE ASSESSEE. WE DO NOT APPRECIATE THE WAY THE ISSUE HAS BEEN HANDLED BY TH E LOWER AUTHORITIES SINCE THE ASSESSING OFFICER AS WE LL THE CIT (APPEALS) BOTH HAVE NOT TAKEN INTO CONSIDERA TION THE 11 EXPLANATION GIVEN BY THE ASSESSEE, WHICH WAS QUITE PLAUSIBLE EXPLANATION, WHICH CANNOT BE JUST BRUSHED ASIDE. FROM THE DETAILS FILED BEFORE US, WE SEE T HAT THERE IS A VAST DIFFERENCE BETWEEN THE AMOUNT OF MACHINER Y INSTALLED BY THE ASSESSEE WITH THAT OF M/S INDUSTRI AL EQUIPMENT COMPANY. THE CONTENTION OF THE ASSESSEE THAT M/S INDUSTRIAL EQUIPMENT COMPANY IS MORE LABOUR INTENSIVE, THEREFORE, PAYS MORE WAGES AND SINCE THE OPERATION OF THE ASSESSEE ARE AUTOMATED WHICH REQUI RE LESSER LABOUR, SEEMS TO BE A CORRECT EXPLANATION. FURTHER, AT THE LOWER LEVEL, NOBODY PAINED TO QUANTIFY THE S AID DIFFERENCE BECAUSE OF THE DIFFERENCE IN THE MODEL O F THE BUSINESS CARRIED ON BY M/S INDUSTRIAL EQUIPMENT COMPANY AND THAT OF THE ASSESSEE. IF THE ASSESSING OFFICER HAD TO MAKE A COMPARISON, IT IS A TRITE LAW THAT THE APPLES ARE TO BE COMPARED WITH APPLES AND NOT WITH ORANGES. WE ARE NOT IN AGREEMENT WITH THE WAY THE ESTIMATION HAS BEEN MADE BY THE ASSESSING OFFICER O R EVEN BY THE CIT (APPEALS). THE BOOKS OF ACCOUNT HAVE N OT BEEN REJECTED, COMPARISON OF WAGES PAID WITH WAGES PAID IN EARLIER OR PRECEDING YEAR HAS ALSO NOT BEEN MADE. NO MATERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD TO REBUT THE EXPLANATION FILED BY THE ASSESSEE. THE CONTENT ION OF THE ASSESSEE THAT THE PROVISIONS OF ESI AND PF ACT ARE APPLICABLE TO IT WHICH HAVE BEEN COMPLIED WITH BY I T DILIGENTLY, HAS ALSO NOT BEEN VERIFIED. 12 21. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE BY HIM. TH E GROUNDS OF APPEAL NOS.2 AND 3 RAISED BY THE ASSESSE E ARE ALLOWED. 22. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 23. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF APRIL, 2016. SD/- SD/- (BHAVENESH SIANI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH APRIL, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH