Prabhdas Kishordas Tobacco Products Pvt.Ltd., Ahmedabad V. The CIT.,Ahmedabad-III, Ahmedabad

ITA 1492/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9015 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Principle of natural justice; Set aside
• Section: 234B; 205; 201; 64; 263; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 17.09.09 DRAFTED ON: 17.09.0 9 ITA NO.1492/AHD/2009 ASSESSMENT YEAR : 2005-06 PARBHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. 659/1, GULBAI TEKRA, PANCHVATI, AHMEDABAD. VS. COMMISSIONER OF INCOME TAX, AHMEDABAD-III, AHMEDABAD. PAN/GIR NO. : AABCP 1495 Q (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.N.SOPARKAR RESPONDENT BY: SHRI SHELLEY JINDAL CIT D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD.CIT(APPEALS)-III, AHMEDABAD, DATED 16.03.2009. 2. GROUND NO.1 AND 3 OF THE APPEAL ARE DIRECTED AGA INST ORDER OF CIT HOLDING THAT PENALTY OF RS.24.40 LACS CHARGED BY RE GIONAL PROVIDENT FUND COMMISSIONER AS DAMAGES UNDER SECTION 14B OF THE EM PLOYEES PROVIDENT FUNDS ACT IS PARTLY DAMAGES AND PARTLY COMPENSATORY AND DIRECTING THE LEARNED ASSESSING OFFICER TO DISALLOW TO 50% OF THE SAID AMOUNT OF DAMAGES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE CIT HAS OBSERVED AS UNDER:- II. PENALTY OF RS.24,40 LACS ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 2 - IT HAS BEEN STATED BY THE ASSESSEE THAT THE AMOUNT OF RS.24,40,539/- HAS BEEN CHARGED BY THE REGIONAL PROVIDENT FUND COM MISSIONER AS DAMAGES U/S. 14B OF THE EMPLOYEES PROVIDENT FUND AC T. THIS HAS BEEN DONE TO COMPENSATE FOR DELAY IN MAKING PAYMENT OF T HE CONTRIBUTION IN TO THE OFFICE OF THE GOVERNMENT. THE ASSESSEE HAS D RAWN MY ATTENTION TO THE ORDER OF THE REGIONAL PROVIDENT FUND COMMISS IONER DATED 30-6- 2004 U/S. 14B OF THE ACT. SPECIAL ATTENTION HAS BEE N DRAWN TO PAGE 5 OF THE ORDER IN WHICH THE R.P.F.C., JABALPUR HAS STATE D AS UNDER: 'THUS, HAVING APPLIED MY MIND TO THE FACTS AND CIRC UMSTANCES OF THE ABOVE MATTER AND TAKING INTO CONSIDERATION AND DEFA ULTS TO BE COMMITTED BY THE EMPLOYER (SIC) AND THE LENGTH OF DEFAULT AND FREQUENCY THE LOSS OF INTEREST SUFFERED BY THE EMPLOYEES' PROVIDENT FUND ORGANIZATION BY NOT BEING ABLE TO INVEST THE AMOUNT IN GOVERNMENT SECUR ITIES DUE TO DELAY IN REMITTANCES AND CONSEQUENT ADMINISTRATION THE AMOUN T OF PROFIT THE EMPLOYER MIGHT HAVE EARNED BY INVESTING THE AMOUNT OF CONTRIBUTIONS AND ADMINISTRATIVE CHARGES ELSEWHERE AND THE DETERR ENT ELEMENT, INHERENT IN DAMAGES, I CONSIDER THE LEVY A TOTAL AM OUNT OF RS.2440539/- (RUPEES TWENTY-FOUR LACS FORTY THOUSAND FIVE HUNDRE D THIRTY-NINE ONLY) AS DETAILED BELOW AS DAMAGES ON BELATED REMITTANCES DURING THE PERIOD FROM NOV., 90 TO APRIL, 95, 5/95 TO 6/96 AND 4/2001 WHICH WILL END NATURAL JUSTICE.' IT HAS BEEN CONTENDED THAT THE COPY OF THE ORDER OF THE REGIONAL PROVIDENT FUND COMMISSIONER AND RELEVANT CASE LAWS THEREON HAVE BEEN DULY SUPPLIED TO THE ASSESSING OFFICER ON HIS REQUEST AND THE SAME HAD OBVIOUSLY BEEN CONSIDERED BEFORE FRAMING T HE ASSESSMENT ORDER. HENCE THERE WAS NO ERROR IN THE ASSESSMENT O RDER SO PASSED. I HAVE CONSIDERED THE REPLY FILED BY THE ASSESSEE A ND THE DOCUMENTS HE HAS RELIED UPON. IT MAY BE STATED THAT DAMAGES TAKE N BY GOVERNMENT ORGANIZATION ARE BOTH IN THE NATURE OF COMPENSATION FOR LOSS OF REVENUE AND PENAL IN NATURE. THE VERY USE OF THE WORD 'DAMA GES' MEANS THAT THERE IS A COMPONENT OF PENALTY IN IT. EXPLANATION TO SECTION 73 OF THE CONTRACT ACT ALSO STATES THAT A STIPULATION FOR INC REASED INTEREST FROM THE DATE OF DEFAULT MAY BE STIPULATION BY WAY OF PENALT Y. IT IS SEEN THAT WHEREVER THERE IS NO PENALTY INVOLVED, THE WORD 'CO MPENSATION' IS USED INSTEAD OF 'DAMAGES'. THEREFORE, FACTS OF THE CASE HAD TO BE EXAMINED BY THE ASSESSING OFFICER IN ORDER TO DETERMINE WHET HER THE DAMAGES PAID BY THE ASSESSEE WERE COMPENSATORY AND/ OR PENA L. AS THE WORDS THEMSELVES INDICATE A COMPENSATORY CHARGE IS ONE IN WHICH THE PERSON LEVYING THE COMPENSATION CALCULATES THE SAME ON THE BASIS OF MONETARY LOSS SUFFERED BY HIM. THERE IS A CLEAR CUT CALCULAT ION OF THE PERIOD AND THE PERCENTAGE OF COMPENSATION FOR EACH MONTH OF DE FAULT BEFORE THE ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 3 - FINAL FIGURE IS COMPUTED. I NEED ONLY TO TAKE THE E XAMPLE OF SECTION 234A, 234B AND 234C WHERE IN A SPECIFIC RATE OF INT EREST IS CHARGED FOR THE PERIOD OF DELAY ON A SPECIFIC AMOUNT. ON THE OT HER HAND THE AMOUNT OF PENALTY TO BE CHARGED DOES NOT HAVE A DIRECT LIN K WITH THE LOSS OF INTEREST. IT IS NORMALLY MANY TIMES THE MONETARY LO SS SUFFERED BECAUSE IT HAS TO ACT AS A DETERRENT AGAINST FUTURE INFRINGEME NTS OR VIOLATIONS OF LAW. A CLASSIC EXAMPLE IS THAT OF PENALTY UNDER SEC TION 271(L)(C) IN WHICH THE PENALTY IS AT LEAST EQUAL TO THE TAX SOUGHT TO BE EVADED. IN VIEW OF THIS POSITION IT WAS IMPORTANT FOR THE A SSESSING OFFICER TO HAVE GONE THROUGH THE ORDER OF THE REGIONAL PROVIDENT FU ND COMMISSIONER MINUTELY IN ORDER TO DETERMINE THE NATURE OF THE DA MAGES CLAIMED. IF WE GO THROUGH THE ORDER WE FIND THAT THERE IS NO COMPU TATION GIVEN TO SHOW AS TO HOW THE AMOUNT OF RS.24,40,539/- HAS BEEN ARR IVED AT. THE ORDER OF THE REGIONAL PROVIDENT FUND COMMISSIONER ARRIVES AT A FIGURE OF RS. 24,40,539/-MORE AS A LUMP SUM AMOUNT THAN ANY DETAI LED CALCULATION OF LOSS OF INTEREST. SECONDLY IN THE CONCLUDING PARA O F HIS ORDER WHICH HAS BEEN REPRODUCED ABOVE, THE PROVIDENT FUND COMMISSIO NER SAYS THAT THE AMOUNT OF RS.24,40,539/- IS ON ACCOUNT OF I. DEFAULT COMMITTED BY THE EMPLOYER II. LEVEL OF DEFAULT AND FREQUENCY III. LOSS OF INTEREST. IV. DETERRENT ELEMENT THEREFORE, I AM UNABLE TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF DAMAGES IS ONLY ON ACCOUNT OF LOSS OF INTEREST SUFFERED. THIS FACT SHOULD ALSO HAS BEEN EXAMINED BY THE ASSE SSING OFFICER AND BROUGHT ON RECORD. THIRDLY, EVEN IN THE SUBJECT OF THE SAID ORDER DATED 30-6-2004 ON THE FIRST PAGE I.E. PHRASE 'LEVY OF DA MAGES AND INTEREST U/S.146' IS USED. THE USE OF THE WORD 'AND' SHOWS T HAT THE AMOUNT OF RS.24,40,539/- IS ON ACCOUNT OF PENALTY AS WELL AS LOSS OF INTEREST. THE ASSESSEE HAS RELIED ON THE CASE OF PRAKASH COTTON M ILLS BOTH AT THE STAGE OF ASSESSMENT PROCEEDINGS AND AT MY STAGE. TH IS CASE ONLY LAYS DOWN THE GENERAL PROPOSITION THAT WHILE COMPENSATIO N IN THE NATURE OF LOSS OF INTEREST IS AN ALLOWABLE EXPENDITURE, PAYME NT ON ACCOUNT OF PENALTY IS NOT. THERE IS NO CONTROVERSY ON THIS PRI NCIPAL OF LAW LAID DOWN BY THE HONOURABLE SUPREME COURT. THE ONLY THING WHI CH IS TO BE STATED HERE IS THAT EVEN IF WE APPLY THE RATIO OF THE DECI SION IN THE CASE OF PRAKASH COTTON MILLS VS. CIT, THE DAMAGES CLAIMED A S PENALTY CANNOT BE ALLOWED TO THE ASSESSEE. THE ASSESSEE HAS AT MY STAGE PLACED ON RECORD A DEC ISION OF THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF H.P. AG RO INDUSTRIES ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 4 - CORPORATION LTD. VS. DCIT, 240 ITR P. 62 (AT) WHERE IN IT HAS BEEN HELD BY THE TRIBUNAL THAT DAMAGES CLAIMED U/S.14B ARE CO MPENSATORY IN NATURE. IT MAY BE STATED HERE THAT THIS DECISION IS BASED ON THE MINUTE READING OF THE ORDER PASSED BY THE REGIONAL PROVIDE NT FUND COMMISSIONER IN THAT CASE. IN THE PRESENT CASE AN E QUALLY MINUTE READING OF THE ORDER OR THE REGIONAL PROVIDENT FUND COMMISSIONER REVEALS THAT THE AMOUNT OF RS.24,40,539/- IS NOT ON LY ON ACCOUNT OF LOSS OF INTEREST BUT IS ALSO ON ACCOUNT OF PENALTY SOUGH T TO BE LEVIED BY THE REGIONAL PROVIDENT FUND COMMISSIONER. SINCE THIS IS A COMPOSITE AMOUNT, IT WILL BE FAIR, IN THE ABSENCE OF ANY CALC ULATION IN THE ORDER, THAT AT LEAST HALF OF THE SAME SHOULD HAVE BEEN DISALLOW ED BY THE ASSESSING OFFICER AS BEING PENAL IN NATURE. IT IS CLEAR FROM THE ABOVE FACTS THAT THE ASSESSING OFFICER HAS MISERABLY FAILED IN THE CORRECT APPRECIATION OF THE FACTS. IT APPEARS THAT HE HAS NOT GONE THROUGH THE ORDER OF THE REGIONAL PROVIDENT FU ND COMMISSIONER OTHERWISE HE WOULD NOT HAVE ALLOWED THE TOTAL AMOUN T OF RS. 24,40,539/- AS AN ALLOWABLE EXPENDITURE U/S.37 OF THE ACT. PROPER AND DETAILED INQUIRY ON THIS ISSUE WAS TO BE DONE BY THE ASSESSING OFFICER WHICH HE HAS NOT DONE MAKING THE ORIGINAL ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJU DICIAL TO THE INTEREST OF REVENUE. IT HAS BEEN HELD IN A NUMBER OF JUDICIAL P RONOUNCEMENTS THAT IN CASE FULL INQUIRIES HAVE NOT BEEN MADE ON A PARTICU LAR ISSUE, THE ASSESSMENT CAN BE HELD TO BE ERRONEOUS BEING PREJUD ICIAL TO THE INTEREST OF REVENUE. COURTS HAVE GONE ON TO EVEN SAY THAT DE BATABLE ISSUES CAN BE TAKEN UP IN PROCEEDINGS U/S. 263. SOME OF THE . LAWS RELEVANT TO THIS ISSUE ARE AS UNDER : I. TARAJAN TEA CO. PVT. LIMITED VS. C.I.T., 205 ITR 843 (GAU.) II. C.I.T. VS. EMERY STONE MANUFACTURING COMPANY, 2 13 ITR (RAJ.) III. C.I.T. VS. M.M. KHAMBHATWALA, 198 ITR 144 (GUJ /) IV. K.A. RAMASWAMY CHETTAIR VS. C.I.T., 220 ITR 657 (MAD.) V. DUGGAL & CO. VS. C.I.T., 220 ITR 456 (DELHI) IN VIEW OF THE ABOVE, I HOLD THAT 50% OF THE AMOUNT OF RS. 24,40,539/-IS ON ACCOUNT OF PENALTY LEVIED BY THE REGIONAL PROVID ENT FUND COMMISSIONER ON ACCOUNT OF DELAY IN DEPOSIT OF P.P. AMOUNT WHICH IS NOT AN ALLOWABLE EXPENDITURE UNDER THE INCOME-TAX A CT. THIS HAS BEEN DONE AFTER THE MINUTE READING OF THE ORDER OF THE R EGIONAL PROVIDENT ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 5 - FUND COMMISSIONER. RELEVANT PORTIONS OF WHICH HAVE BEEN REPRODUCED ABOVE. I THEREFORE, DIRECT THE ASSESSING OFFICER TO DISALLOW 50% OF THE SAID AMOUNT OF DAMAGES WHEN HE PASSES THE FINAL ORD ER CONSEQUENT TO MY ORDER U/S.263 AFTER CONSIDERING THE ISSUE OF SUB SIDY ON WHICH GROUND I HAVE SET ASIDE THE ASSESSMENT ORDER DATED 20-12-2 007. 4. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE RELIED ON THE DECISION H.P. AGRO INDUSTRIES CORPORATION LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX ITAT, CHANDIGARH THIRD MEMBER BENCH R.M. MEHTA, VICE PRESIDENT; R. K. BALI, A.M. & U.B.S. BEDI, J. M. MI SC. PETN. NO. 10/CHD/1997 IN ITA NO. 153/CHD/1991; ASST. YR. 1980-81 17TH MARCH, 1999 (1999) 64 TTJ (CHD)(TM) 850 : 69 ITD 89 (TM), HELD THAT IT IS NOT ICED FROM THE ORDER OF THE REGIONAL PROVIDENT FUND COMMISSIONER THAT THE 'DEFA ULT' COMMITTED WAS THE DELAY IN MAKING THE PAYMENT OF DUES ON ACCOUNT OF P ROVIDENT FUND CONTRIBUTIONS AS ALSO THE DELAY ON ACCOUNT OF PAYME NT OF ADMINISTRATIVE CHARGES. THIS WAS NOT THE CASE OF A HABITUAL DEFAUL TER OR AN EMPLOYER WHO HAD BEEN PURPOSELY KEEPING BACK THE PROVIDENT FUND CONT RIBUTIONS OF ITS EMPLOYEES OR INTENTIONALLY VIOLATING THE PROVISIONS OF LAW. I N THE PRESENT CASE, THE ENTIRE PAYMENT IS TO BE TREATED AS COMPENSATORY IN NATURE AND NO PENAL CHARACTER EITHER PARTLY OR FULLY EMERGES AFTER A MINUTE READI NG OF THE ORDER PASSED BY THE REGIONAL PROVIDENT FUND COMMISSIONER. HENCE, IT IS ALLOWABLE UNDER S. 37(1). MAHALAKSHMI SUGAR MILLS CO. VS. CIT (1980) 16 CTR ( SC) 198 : (1980) 123 ITR 429 (SC), PRAKASH COTTON MILLS (P.) LTD. VS. CIT (1993) 111 CTR (SC) 389 : (1993) 201 ITR 684 (SC) AND ORGANO CHEMICAL INDUSTRIES VS. UNI ON OF INDIA AIR 1979 SC 1803 FOLLOWED. 6. RESPECTFULLY FOLLOWING THE SAME, THE GROUND OF A PPEAL OF ASSESSEE SHOULD BE ALLOWED. ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 6 - 7. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON TH E ORDER OF THE CIT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE ASSESSEE CLAIMED DEDUCTION FOR DAMAGES UNDER SECTIO N 14B OF THE PROVIDENT FUND ACT OF RS.24,40,539/- FOR DELAY IN DEPOSITING THE PROVIDENT FUND CONTRIBUTION. THE LEARNED ASSESSING OFFICER ALLOWED DEDUCTION FOR THE SAME AND THE CIT IN AN ORDER PASSED UNDER SECTION 263 OF THE ACT TREATED 50% OF THE AMOUNT PAID OF DAMAGES AS PENALTY AND DISALLOWED DE DUCTION FOR THE SAME TO THE ASSESSEE. BEING AGGRIEVED THE ASSESSEE IS IN AP PEAL BEFORE US. WE FIND THAT THE TRIBUNAL IN THE CASE OF H.P. AGRO INDUSTRIES C ORPORATION LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX ITAT, CHANDIGARH THIRD M EMBER BENCH R.M. MEHTA, VICE PRESIDENT; R. K. BALI, A.M. & U.B.S. BE DI, J. M. MISC. PETN. NO. 10/CHD/1997 IN ITA NO. 153/CHD/1991; ASST. YR. 1980 -81 17TH MARCH, 1999 (1999) 64 TTJ (CHD)(TM) 850 : 69 ITD 89 (TM) HAS HE LD THAT 7. COMING BACK TO THE AFORESAID DECISION ONCE AGA IN I. E. SARAYA SUGAR MILLS (P.) LTD. S CASE (1979)116 ITR 387 (ALL)(FB), THE IR LORDSHIPS INITIALLY DEALT WITH THE QUESTION OF INTEREST UNDER S. 3(3) OF THE U.P S UGARCANE PURCHASE TAX ACT, 1961 AND HELD THAT IT WAS NOT AN ALLOWABLE DEDUCTIO N AND APPLIED THIS DECISION TO THE QUESTION OF DAMAGES PAID UNDER S. 14B OF THE EMPLOYEES PROVIDENT FUND ACT AS FOLLOWS : 'IN RESPECT OF THE THIRD QUES TION, S. 14B OF THE EMPLOYEES PROVIDENT FUNDS ACT PROVIDES : WHERE AN EMPLOYER MAKES DEFAULT IN THE PAYMENT OF A NY CONTRIBUTION TO THE FUND OR IN THE TRANSFER OF ACCUMULATIONS REQUIRED T O BE TRANSFERRED BY HIM UNDER SUB-S. (2) OF S. 15 OR IN THE PAYMENT OF ANY CHARGES PAYABLE UNDER ANY OTHER PROVISION OF THIS ACT OR OF ANY SCHEME OR UND ER ANY OF THE CONDITIONS SPECIFIED UNDER S. 17, THE APPROPRIATE GOVERNMENT M AY RECOVER FROM THE EMPLOYER SUCH DAMAGES, NOT EXCEEDING TWENTY-FIVE PE R CENT OF THE AMOUNT OF ARREARS, AS IT MAY THINK FIT TO IMPOSE. THE ACT G OES ON TO MAKE PROVISION FOR ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 7 - IMPOSITION OF PENALTY FOR CONTINUED DELAY AS WELL A S FOR PROSECUTION RESULTING IN FINE AND/ OR IMPRISONMENT. SEC. 14B CALLS THE IMPOS ITION DAMAGES . IT STANDS ON THE SAME FOOTING AS INTEREST UNDER THE SUGARCANE PURCHASE TAX ACT QUA PENALTY. UNDER S. 14B THE APPROPRIATE GOVERNMENT IS ENTITLED TO RECOVER DAMAGES. THE PROVIDENT FUND COMMISSIONER DEMANDED PAYMENT OF DAMAGES ON BEHALF OF THE GOVERNMENT. THE DAMAGES AS WELL AS PENALTY ARE CIVIL SANCTIONS, AS OPPOSED TO PROSECUTION RESULTING IN F INE OR IMPRISONMENT, WHICH IS A CRIMINAL SANCTION. DAMAGES AS WELL AS PENALTY ARE INTRINSICALLY OF THE SAME NATURE AND CHARACTER. IN VIEW OF THE LEGAL POSITION DISCUSSED ABOVE, PAYMENTS MADE AS DAMAGES FOR DELAY IN PAYING THE CONTRIBUTIO N TO THE PROVIDENT FUND STANDS ON THE SAME FOOTING AS INTEREST PAYABLE FOR NON-PAYMENT OF PURCHASE TAX. THE THIRD QUESTION IS ANSWERED IN THE AFFIRMAT IVE, IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE.' 9. THUS IT IS OBSERVED THAT DAMAGES PAYABLE UNDER SECT ION 14B IS SEPARATE AND DISTINCT FROM THE PENALTY IMPOSABLE UNDER THE P ROVIDENT FUND ACT AND FROM FINE IMPOSABLE ON PROSECUTION UNDER THE PROVID ENT FUND ACT. FURTHER THE DAMAGES ARE AKIN TO THE INTEREST PAYABLE UNDER S. 3 (3) OF THE U.P SUGARCANE PURCHASE TAX ACT, 1961 AND IS IN THE NATURE OF INTE REST. WE THEREFORE SET ASIDE THE ORDER OF THE CIT AND DIRECT THE LEARNED ASSESSI NG OFFICER TO ALLOW DEDUCTION FOR THE ENTIRE AMOUNT OF DAMAGES OF RS.24,40,539/- PAID BY THE ASSESSEE UNDER SECTION 14B OF THE PROVIDENT FUND ACT. THUS THIS GR OUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. GROUND NO.2 OF THE APPEAL RELATES TO SETTING AS IDE TO THE FILE OF THE LEARNED ASSESSING OFFICER OF SUBSIDY OF RS.48,375/- . 11. AT THE TIME OF THE HEARING, LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT SINCE THE ISSUE HAS BEEN RE STORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR RE-ADJUDICATION O F THE SAME, THEREFORE THIS ITA NO .1492/AHD/2009 M/S.PARBHUDAS KISHORDAS TOBACCO PRODUCT PVT. LTD. ASST.YEAR -2005-06 - 8 - GROUND OF APPEAL IS NOT PRESSED. HENCE, THIS GROUND OF ASSESSEE IS DISMISSED AS NOT PRESSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 18/09/2009. SD/- SD/- ( H.L. KARWA ) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED / / 2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-III, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD