Exide Industries Ltd., Kolkata V. ACIT, Rg-1,Kolkata, Kolkata

ITA 1508/KOL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1562 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 18-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUP SINHA LD
• Assessee Lawyers: R S BISWAS CIT LD
• Keywords: Depreciation; Additional evidence; Question of law; Valuation report; Revenue expenditure
• Section: 43B; 14A; 133(6)

Judgement Text

1 ITA NOS.1508 & 1665/KOL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA BEFORE: SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUD ICIAL MEMBER I.T.A NO. 1508/KOL /2012 A.Y: 2007-0 8 M/S. EXIDE INDUSTRIES LTD VS. ADDL.C.I.T, RANGE-1 , KOLKATA PAN:AAACE 6641E [APPELLANT] [RESPO NDENT] I.T.A NO. 1665/KOL /2012 A.Y: 200 7-08 ADDL.C.I.T, RANGE-1, KOLKATA VS. M/S. EXIDE INDUST RIES LTD. [APPELLANT/REVENUE] [RESPONDENT/ASSESSEE] FOR THE APPELLANT : SHRI R.S BISWAS, CIT, LD.D R FOR THE RESPONDENT : SHRI ANUP SINHA, ADVOCATE, LD.AR DATE OF HEARING : 06-06-2017 DATE OF PRONOUNCEMENT : 30-08-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THESE TWO CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA BOTH DT. 03-08-2012 FOR THE A .Y 2007-08. 2. FIRST, WE SHALL TAKE UP THE APPEAL (ITA NO. 150 8/KOL/2012 FOR THE A.Y 2007-08 BY THE ASSESSEE. ITA NO. 1508/KOL/2012 A.Y 2007-08 ( BY THE ASSESS EE). 3. GROUND NOS.1 (A), (B) AND ( C) ARE RELATING TO CONFIRMATION OF DISALLOWANCE MADE ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT BY THE CIT-A. 4. AT THE OUTSET, THE LD.AR SUBMITS THAT THE ISSUE IN HAND IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY AN ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE DT. 20-01-2016 IN ITA NOS. 189 & 2 ITA NOS.1508 & 1665/KOL/2012 1414/KOL/2007 FOR THE A.YS 2003-04 & 2004-05 AND P LACED ON RECORD OF SUCH ORDER IN ASSESSEES PAPER BOOK AND REFERRED TO PARAS 25-28 OF THE SAID ORDER AND IN VIEW OF THE SAME AND PRAYED T HE ISSUES INVOLVED MAY BE RESTORED TO THE AO. 5. ON THE OTHER HAND, THE LD.DR DID NOT CONTROVERT THE ABOVE SUBMISSIONS OF THE LD.AR OF THE ASSESSEE. 6. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OW N CASE SUPRA DECIDED THE ISSUE IN RESTORING THE MATTER TO THE FI LE OF THE AO WITH A DIRECTION TO AWAIT TILL THE FINAL DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF SUPRA BY OBSERVING AS UNDER:- 25. THE ISSUE RAISED IN GROUND NO. 8 RELATES TO THE DISALLOWANCE OF 1.51 CRORES MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF PROVISION MADE BY THE AS SESSEE FOR LEAVE ENCASHMENT. 26. THE ASSESSEE-COMPANY DURING THE YEAR UNDER CONS IDERATION HAD MADE A PROVISION OF RS.1.51 CRORES FOR LEAVE ENCASH MENT ON THE BASIS OF AN ACTURIAL VALUATION AND THE SAME WAS CLAIMED A S DEDUCTION BY RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIG H COURT IN ASSESSEES OWN CASE REPORTED IN 292 ITR 470 AND THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS RE PORTED IN 245 ITR 428. THE ASSESSING OFFICER, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE FOR PROVISION OF LEAVE ENCASHMENT RELYING ON THE CLAUSE (F) INSERTED IN SECTION 43B BY THE FINANCE ACT, 2001 W. E.F. 1 ST APRIL, 2002. THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANC E. THE ASSESSEE CHALLENGED THE CONSTITUTIONAL VALIDITY OF CLAUSE (F ) INSERTED IN SECTION 43B BEFORE THE HONBLE CALCUTTA HIGH COURT BY WAY O F A WRIT PETITION AND ALTHOUGH THE SAME WAS INITIALLY DISMISSED BY TH E SINGLE BENCH, IT WAS ADMITTED AND RULED IN FAVOUR OF THE ASSESSEE BY THE DIVISION BENCH OF THE HONBLE CALCUTTA HIGH COURT BY HOLDING THAT THE INTRODUCTION OF CLAUSE (F) TO SECTION 43B IS ULTRA VIRUS OF THE ACT IN THE ABSENCE OF DISCLOSURE OF THE OBJECTS AND BEING INCONSISTENT WI TH THE BASIC INTENT OF SECTION 43B. THEREAFTER THE DEPARTMENT FILED THE SL P AGAINST THE DECISION OF THE HONBLE CALCUTTA HIGH COURT AND WHI LE ADMITTING THE SAME, THE HONBLE SUPREME COURT VIDE ITS JUDGMENT D ATED 08.09.2008 STAYED THE JUDGMENT OF THE HONBLE CALCUTTA HIGH CO URT UNTIL FURTHER ORDERS. 27. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESSEE HAS CONTENDED THAT EVEN THOUGH THE DECISIO N OF THE HONBLE CALCUTTA HIGH COURT HOLDING CLAUSE (F) OF SECTION 4 3D AS ULTRA VIRUS IS STAYED BY THE HONBLE SUPREME COURT WHILE ADMITTING THE SLP FILED BY THE REVENUE, THE SAME HAS NOT BEEN REVERSED AND THI S TRIBUNAL, THEREFORE, IS BOUND TO FOLLOW THE SAME BEING A BIND ING PRECEDENT. HE HAS ALSO CONTENDED THAT THE DECISION OF THE HONBLE CALCUTTA HIGH COURT WAS STAYED BY THE HONBLE APEX COURT VIDE ITS JUDGM ENT DATED 08.09.2008 UNTIL FURTHER ORDERS AND THERE BEING ANO THER INTERIM ORDER PASSED BY THE HONBLE SUPREME COURT ON 08.05.2009, THE STAY GRANTED EARLIER STANDS AUTOMATICALLY VACATED. A COPY OF THE SAID INTERIM ORDER DATED 08.05.2009 IS PLACED ON RECORD BEFORE US, THE CONTENTS OF WHICH ARE EXTRACTED BELOW:- PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL AP PEAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AN D INTEREST WHICH HAS ACCRUED TILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDING INTEREST DEMAND AS OF DATE IS CONCERNED, IT WOULD B E OPEN TO THE 3 ITA NOS.1508 & 1665/KOL/2012 DEPARTMENT TO RECOVER THE AMOUNT IN CASE CIVIL APPE AL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD DU RING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTIO N 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTIT LED TO MAKE A CLAIM IN ITS RETURNS. 28. WE HAVE CAREFULLY PERUSED THE INTERIM ORDER DAT ED 8 TH MAY, 2009 PASSED BY THE HONBLE SUPREME COURT IN THE MAT TER. IT IS OBSERVED THAT THE HONBLE APEX COURT IN THE SAID OR DER HAS MADE IT CLEAR THAT THE ASSESSEE, DURING THE PENDENCY OF THE CIVIL APPEAL, WOULD PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK , BUT AT THE SAME TIME, IT WOULD BE ENTITLED TO MAKE CLAIM IN ITS RET URN. KEEPING IN VIEW ALL THESE DEVELOPMENTS, THE COORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF DY. CIT VS.- BLA INDUSTRIES PVT. LTD. (ITA NO. 1434/KOL/2012 DATED 16.01.2015) HAS RESTORED THE SIMILAR ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO AWAIT TILL TH E FINAL DECISION OF THE HONBLE SUPREME COURT ON THE ISSUE AND THEN TO DECI DE THE ISSUE ACCORDINGLY. FOLLOWING THE SAID DECISION OF THE COO RDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFF ICER WITH THE SIMILAR DIRECTION. GROUND NO. 8 IS ACCORDINGLY TREATED AS A LLOWED FOR STATISTICAL PURPOSES. 7. IN VIEW OF ABOVE DISCUSSION, WE REMAND THE ISSUE (S) TO THE FILE OF THE AO WITH THE SIMILAR DIRECTION. GROUND NOS.1( A), (B) & ( C ) RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 8. GROUND NOS. 2(A), (B) & ( C) ARE RELATING TO CON FIRMATION OF DISALLOWANCE OF RS.10,19,48,201/- MADE ON ACCOUNT OF PROVISION FOR WARRANTY EXPENSES. 9. THE LD.AR SUBMITS THAT THE ISSUE IN HAND IS SQUA RELY COVERED IN FAVOUR OF ASSESSEE BY AN ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE DT. 20-01-2016 IN ITA NOS. 189 & 1414/KOL/2007 FOR THE A.YS 2003- 04 & 2004-05 AND PLACED ON RECORD OF SUCH ORDER IN ASSESSEES PAPER BOOK AND REFERRED TO PARAS 7-10 OF THE SAID ORDER A ND IN VIEW OF THE SAME AND PRAYED THE ISSUE(S) INVOLVED MAY BE RESTOR ED TO THE FILE OF AO. HE ALSO SUBMITS THAT THE TRIBUNAL IN ASSESSEES OWN CASE RESTORED THE ISSUE TO THE FILE OF THE AO AND TO VERIFY AS TO WHETHER THE ASSESSEE SATISFIED THE CONDITIONS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA (PVT.) L IMITED REPORTED IN 314 ITR 62(SC). 10. ON THE OTHER HAND, THE LD.DR DID NOT CONTROVERT THE ABOVE SUBMISSIONS OF THE LD.AR OF THE ASSESSEE. 4 ITA NOS.1508 & 1665/KOL/2012 11. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OW N CASE SUPRA RESTORED THE ISSUE TO THE FILE OF THE AO FOR THE LI MITED PURPOSE OF SUCH VERIFICATION IN VIEW OF DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF ROTORK CONTROLS INDIA (PVT.) LIMITED SUPRA BY OBSERVING AS UNDER:- 7. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE DISALLOWANCE OF RS.17.65 CRORES MADE BY THE ASSESSING OFFICER AND C ONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF PROVISION MADE BY TH E ASSESSEE FOR WARRANTY. 8. THE BATTERIES MANUFACTURED AND SOLD BY THE ASSES SEE THROUGH ITS DEALERS CARRY CERTAIN GUARANTEED LIFE AND IN CA SE OF ANY FAILURE DURING SUCH GUARANTEED PERIOD, THE BATTERIES ARE RE PLACED FREE OF COST. KEEPING IN VIEW THE PERIOD OF GUARANTEE/WARRA NTY AND BASED ON THE PAST EXPERIENCE, A PROVISION FOR WARRANTY OF RS .17.65 CRORES WAS MADE BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATI ON. IT WAS CLAIMED THAT THE SAID PROVISION WAS MADE AS PER THE ACCOUNTING STANDARD AS-29 PRESCRIBED BY THE INSTITUTE OF CHART ERED ACCOUNTANTS OF INDIA. THE ASSESSING OFFICER, HOWEVER, REJECTED THIS CLAIM OF THE ASSESSEE-COMPANY ON THE GROUND THAT A PROVISION MAD E FOR WARRANTY BEING A NOTIONAL AND CONTINGENT LIABILITY WAS NOT A LLOWABLE AS PER THE MERCANTILE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASS ESSEE. ON APPEAL, THE LD. CIT(APPEALS) UPHELD THE ORDER OF THE ASSESS ING OFFICER ON THIS ISSUE BY OBSERVING THAT THE PROVISION FOR WARRANTY BEING IN THE NATURE OF AN UNCERTAIN LIABILITY WAS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THIS ISSUE IS COVERED IN PRINCIPLE IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA (PVT.) LIMITED VS.- CIT REPORTED IN 314 ITR 62, WHEREIN THE HONBL E APEX COURT HAS HELD THAT THE PROVISION OF WARRANTY IS ALLOWABLE AS DEDUCTION IF THE FOLLOWING CONDITIONS ARE SATISFIED:- (I) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RES ULT OF PAST EVENTS; (II) IT IS PROBABLE THAT AN OUT-FLOW OF RESOURCES W ILL BE REQUIRED TO SETTLE THE OBLIGATION; (III) A RELIABLE ESTIMATE BASED ON HISTORICAL TREND CAN BE MADE ON ACCOUNT OF OBLIGATION ON THE BASIS OF HISTORICAL TREND. 10. THE LD. D.R. HAS NOT RAISED ANY CONTENTION TO D ISPUTE THE PROPOSITION PROPOUNDED BY THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA (PVT.) LIMITED (SUPRA) ON THI S ISSUE. HE, HOWEVER, HAS CONTENDED THAT THE ISSUE AS TO WHETHER THE ASSESSEE IN THE PRESENT CASE HAS SATISFIED THE CONDITIONS LAID DOWN BY THE HONBLE SUPREME COURT FOR ALLOWING DEDUCTION ON ACCOUNT OF PROVISION FOR WARRANTY REQUIRES VERIFICATION AND SINCE THE SAME H AS NOT BEEN DONE EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(A PPEALS), THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICE R FOR THE LIMITED PURPOSE OF SUCH VERIFICATION. WE FIND MERIT IN THIS CONTENTION OF THE LD. D.R. AND SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SA ME IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF ROTORK CONTROLS INDIA (PVT.) LIMITED. GROUND NO 2 IS ACCOR DINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NOS.1508 & 1665/KOL/2012 12. IN VIEW OF ABOVE DISCUSSION, WE REMAND THE ISSU E TO THE FILE OF THE AO. THUS, GROUND NOS. 2(A), (B) & ( C ) RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 13. GROUND NOS. 3 (A) AND (B) ARE RELATING TO REST RICTION OF DISALLOWANCE OF EXPENDITURE AT 1% MADE ON ACCOUNT O F EXPENDITURE INCURRED FOR EARNING EXEMPTED INCOME US/ 14A OF THE ACT. 14. THE LD.AR SUBMITS THAT THE ACTUAL EXPENSES THAT HAS BEEN QUALIFIED BY THE ASSESSEE ON ITS OWN MAY BE HELD TO BE EXPENDITURE OF DISALLOWANCE U/S. 14A OF THE ACT AND SUBMITS THAT T HE ISSUE IN HAND IS SQUARELY COVERED BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE DT. 19-04-2013 IN ITA NO.1640/KOL/2012 FOR THE A.Y 2006-07 AND REFERRED TO PARA-5 OF THE SAID ORDER AND SUBMITS T HAT THE TRIBUNAL TAKING INTO CONSIDERATION THE DECISION OF THE HONB LE HIGH COURT OF BOMBAY IN THE CASE OF M/S. GODREJ & BOYCE MFG, CO. LTD VS. DCIT REPORTED IN 328 ITR 81 (MUM) HAS RESTRICTED THE DIS ALLOWANCE AT 1% MADE U/S. 14A OF THE ACT. HE FURTHER SUBMITS THAT THE SAID ORDER DT.19-04-2013 IN ITA NO.1640/KOL/2012 FOR THE A.Y 2 006-07 WAS CHALLENGED BY THE REVENUE BEFORE THE HONBLE JURISD ICTIONAL HIGH COURT IN GA NO. 3187 OF 2013/ITAT NO. 158 OF 2013 D T. 20-01-2014 AND PLACED ON RECORD THE COPY OF SUCH ORDER AND ARG UED THAT THE HONBLE JURISDICTIONAL HIGH COURT AT CALCUTTA VIDE ITS ORDER DT. 20-01- 2014 CONFIRMED THE ORDER DT. 19-04-2013 OF THE TRIB UNAL IN RESTRICTING THE SAME AT 1% MADE TOWARDS DIVIDEND INCOME U/S 14A OF THE ACT. 15. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OW N CASE IN ITA NO. 1640/KOL/2012 FOR THE A.Y 2006-07 SUPRA RESTRICTED THE DISALLOWANCE AT 1% MADE U/S. 14A OF THE ACT BY FOLL OWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF M/ S. GODREJ & BOYCE MFG. CO. LTD SUPRA BY OBSERVING AS UNDER:- 5. THE LD. CIT(A) HAS RIGHTLY CONSIDERED THE REASO N THEREIN, IN SO FAR AS, HE CONSIDERED THE DISALLOWANCE AT 1% U/S. 14A BY OBSER VING THE FOLLOWING: 6 ITA NOS.1508 & 1665/KOL/2012 I HAVE GONE THROUGH THE SUBMISSION AND THE MERITS OF THE ISSUE. SINCE THE ASSESSMENT YEAR IS 2006-07, RULE 8D IS NOT APPLICAB LE IN VIEW OF THE DECISION OF THE MUMBAI HIGH COURT IN THE CASE OF M/S. GODREJ & BOYC E MFG. CO. LTD VS. DCIT 328 ITR 81(MUM). THE ASSESSING OFFICER HAS DISALLOWED THE 2 % OF THE DIVIDEND INCOME U/S. 14A ON AN ADHOC BASIS. THE HONBLE KOLKATA TRIBUNAL ON THE OTHER HAND IN THE CASE OF SAGARIKA GOODS AND SERVICES PVT. LTD VS. ITO- 1278/ KOL/2010 DT. 24.09.2010 AND DCIT VS. EIH ASSOCIATED HOTELS LTD 126 TTJ 246(KOL) HAS RESTRICTED THE DISALLOWANCE U/S. 14A AT 1% FOR YEARS PRIOR TO ASSESSMENT YEARS 2008-09. IN VIEW OF THE ABOVE DECISION JURISDICTIONAL TRIBUNAL, I RESTRICT THE DISALLOWANC E AT 1% OF THE DIVIDEND INCOME. 5. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF TH E LD. CIT(A) WHICH REQUIRES NO FURTHER DELIBERATION ON BOTH COUNTS. IN THE LIGHT O F THE ABOVE WE DISMISS THE APPEAL FILED BY THE REVENUE. 16. WE FIND THAT THE REVENUE HAS CHALLENGED THE ORD ER DT. 19-04- 2013 OF THE TRIBUNAL BEFORE THE HONBLE JURISDICTIO NAL HIGH COURT AT CALCUTTA, WHEREIN THE HONBLE HIGH COURT OF CALCUTT A IN GA NO. 3187 OF 2013/ITAT NO. 158 OF 2013 DT. 20-01-2014 DISMISS ED THE SUBSTANTIAL QUESTION OF LAW RAISED BY THE REVENUE, THEREBY CONFIRMED THE ORDER DT. 19-04-2013 OF THE TRIBUNAL PASSED IN ITA NO.1640/KOL/2012 SUPRA. IN VIEW OF ABOVE, WE FIND THAT THE CIT-A WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE OF E XPENDITURE IN EARNING EXEMPTED INCOME AT 1% MADE U/S. 14A OF THE ACT. WE UPHOLD THE SAME. THUS, THE GROUND NOS. 3(A) AND(B) RAISED BY T HE ASSESSEE ARE DISMISSED. 17. THE APPEAL OF ASSESSEE IN ITA NO. 1508/KOL/12 F OR THE A.Y 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE A S STATED ABOVE. 18. NOW, WE SHALL TAKE UP THE APPEAL [ITA NO. 1665/ KOL/2012 FOR THE A.Y 2007-08] ( BY THE REVENUE). ITA NO. 1665/KOL/2012 FOR THE A.Y 2007-08 ( BY THE REVENUE) . 19. GROUND NO.1 IS RELATING TO DELETION OF ADDITIO N OF RS.11,22,79,764/- MADE U/S. 43B OF THE ACT ON ACCOU NT OF EXCISE DUTY ON CLOSING STOCK 20. THE LD. DR RELIED ON THE ORDER OF THE AO. 21. THE LD.AR SUBMITS THAT THE ISSUE IN HAND IS SQU ARELY COVERED IN FAVOUR OF ASSESSEE BY AN ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE DT. 19-04-2013 IN ITA NO. 1640/KOL/2012 FOR THE A.Y 2006-04 AND 7 ITA NOS.1508 & 1665/KOL/2012 PLACED ON RECORD OF SUCH ORDER IN ASSESSEES PAPER BOOK AND REFERRED TO PARA 4 OF THE SAID ORDER IN SUPPORT OF HIS ARGUM ENT. 22. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OW N CASE SUPRA HELD THAT THE LD.DR DID NOT POINT OUT ANY SPECIFIC DEFEC T IN THE ACCOUNTING AND VALUATION OF STOCK IS NOT PART OF THE CLAIM OF EXCISE DUTY REMAINING UNPAID. RELEVANT PORTION OF FINDING OF S UCH ORDER IS REPRODUCED HEREIN BELOW:- 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CAREFUL PERUSAL OF FACTS AND CIRCUMSTANC ES OF THE CASE LEADING TO DISALLOWANCE U/S 43B OF THE ACT BY HYPOTHETICALLY HOLDING A VIEW THAT THE CLAIM OF THE ASSESSEE BECOMES DOUBLE DEDUCTION HAS NOT BEEN INTERPRETED C ORRECTLY BY THE AO FOR THE IMPUGNED ASSESSMENT YEAR EVEN WHEN THE MATTER HAS B EEN ADJUDICATED UPON AND DELIBERATED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEARS BEGINNING FROM 1996-97. WE HAVE AL SO PERUSED THE COMPUTATION MADE AS CONTRADICTORY IN THE ORDER OF AO WHO HAS MISINTE RPRETED THE FINDING OF THE TRIBUNAL IN HIS OWN MANNER IN SO FAR AS HE HAS DISCUSSED THE DE CISION OF THE ITAT KOLKTA BENCH AT PAGE 4 OF HIS ORDER WHICH REQUIRED CONSIDERATION WA S FOR THE VALUATION OF STOCK SETTLES THE ISSUE AS PER THE REQUIREMENT OF LAW WHETHER COU LD BE CHALLENGED UNDER THE SAME LAW OF CLAIMING DEDUCTION FOR DISALLOWANCE U/S 43B OF T HE ACT. 23. IN VIEW OF ABOVE, WE FIND THAT THE CIT-A WAS JU STIFIED IN DELETING THE IMPUGNED ADDITION OF RS. 11,22,79,764/ - MADE U/S. 43B OF THE ACT ON ACCOUNT OF EXCISE DUTY ON CLOSING STO CK. WE UPHOLD THE SAME. THUS, THIS GROUND OF REVENUES APPEAL IS DISM ISSED. 24. GROUND NO. 2 IS RELATING TO RESTRICTION OF DI SALLOWANCE AT 1% MADE ON ACCOUNT OF EXPENDITURE INCURRED FOR EARNING EXEMPTED INCOME US/ 14A OF THE ACT. 25. WE FIND THAT THIS GROUND IS SIMILAR AND IDENTI CAL TO GROUND NO. 3(A) AND (B) OF ASSESSEES APPEAL IN ITA NO. 1508/K OL/2012 FOR THE A.Y 2007-08, WHICH WE HAVE ALREADY DISCUSSED IN PAR AS 14 TO 17 AS ABOVE BY UPHOLDING THE ORDER OF THE CIT-A IN RESTRI CTING THE SAME. THEREFORE, FOLLOWING THE SAME VIEW AS TAKEN IN GROU ND NOS. 3(A) & (B) OF ASSESSEES APPEAL IN ITA NO. 1508/KOL/2012 FOR T HE A.Y 2007-08 (BY THE ASSESSEE), GROUND NO. 2 RAISED BY THE REVEN UE IN THIS APPEAL IN ITA NO. 1665/KOL/2012 FOR THE A.Y 2007-08 IS DI SMISSED. 8 ITA NOS.1508 & 1665/KOL/2012 26. GROUND NO. 3 IS RELATING TO DELETION OF ADDITIO N BY THE CIT-A MADE ON ACCOUNT OF PROVISIONS ON MEDICAL BENEFITS O F RS. 2,12,35,000/-. 27. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE CLAIMED A DEDUCTION OF RS.2,12,35,000/ - ON ACCOUNT OF PROVISIONS OF MEDICAL BENEFITS FOR ITS EMPLOYEES AS CERTAINED BEING ACTUARIAL VALUATION IN VIEW OF DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS LTD REPORTED IN 245 ITR 428(SC). THE AO ASKED THE ASSESSEE WHY THE SAME SHOULD NOT B E DISALLOWED BEING PROVISION IN NATURE. IN EXPLANATION, THE ASSE SSEE SUBMITTED THAT THE ASSESSEE COMPANY PROVIDES TRANSITIONAL PROVISIO N WITH RESPECT O MEDICAL BENEFIT AND AS SUCH THE EMPLOYER, THE ASSES SEE COMPANY IS BOUND TO PAY TO THE EMPLOYEE(S) AT THE END OF THE E MPLOYMENT. BEFORE THE AO THE ASSESSEE SUBMITTED THAT THE SAID COMPUTATION WAS DONE AS PER AS (ACCOUNTING STANDARD) 15, WHICH ALLO WS THE COMPANY TO RECOGNIZE ALL SUCH BENEFITS WHICH WERE CONTRACTU ALLY PAYABLE ONLY ON RETIREMENT OF AN EMPLOYEE. THE COMPANY IS UNDER OBLIGATION TO GRANT MEDICAL BENEFITS TO EMPLOYEES, WHO HAVE RETI RED FROM SERVICES. THE AO BEING NOT SATISFIED WITH THE SUBMISSIONS OF ASSESSEE DISALLOWED AN AMOUNT OF RS.2,12,35,000/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 28. THE CIT-A BY PLACING HIS RELIANCE ON THE PRINC IPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. WO ODLAND GOVERNOR PVT. LTD REPORTED IN 312 ITR 254(SC) AND IN THE C ASE OF BHARAT EARTH MOVERS (SC) SUPRA ALLOWED DEDUCTION AND HELD AS UNDER:- I HAVE GONE THROUGH THE SUBMISSION PLACED BEFORE ME BY THE A/R. I AM OF THE VIEW THAT THE SAME IS AN ALLOWABLE DEDUCTION TAKING CONSIDERATION THAT CONSISTENT ACCOUNTING POLICY BEING FOLLOWED BY THE APPELLANT. MY VIEW IS ALSO SUPPORTED BY THE NOTIFICATION NO. SO 69(E) DATED 25 TH JANUARY 1996, WHERE THE TERM 'PRIOR PERIOD' EXPENSES HAVE BEEN DEFINED TO MEAN MATERIAL CHARGES OR CREDIT WHICH ARISE IN THE PREVIOUS YEAR AS A RESULT OF ERRORS OR OMISSIONS IN THE PREPARATION OF THE FINANCIAL STATEMENTS OF ONE OR MORE PREVIOUS YEARS. THE ADDIT IONAL PROVISION MADE IN THE ACCOUNTS IS ON ACCOUNT OF CHANGE IN AS 15 AND NOT DUE TO ANY ERRORS OR OMISSIONS IN THE PREPARATION OF FINANCIAL STATEMENTS. IN VIEW OF TH E ABOVE AND RELYING ON THE PRINCIPLE LAID DOWN BY THE SC IN THE CASE OF CIT VS WOODLAND GOVERNOR PVT LTD REPORTED IN 312 ITR 254 (SC) AND THE NOTIFICATION OF THE DEPARTMENT AND THAT THE LIABILITY IS ASCERTAINED AS PER ACTUARIAL VALUATION REPORT, I AM OF THE VIEW THAT THE SAID PROVISION IS NOT A PRIOR PERIOD ITEM AND SHOULD BE AN ALLOWABLE DEDUCTION. T HE PROVISION FOR THE MEDICAL BENEFITS 9 ITA NOS.1508 & 1665/KOL/2012 HAS BEEN PROVIDED BASED ON THE MERCANTILE SYSTEM OF ACCOUNTING BEING REGULARLY FOLLOWED BY THE APPELLANT. IT IS A SETTLED PRINCIPL E OF LAW THAT THE LIABILITY WHICH CAN BE REASONABLY ASCERTAINED BUT ONLY TO BE DISCHARGED AT A LATER DATE IS AN ALLOWABLE DEDUCTION. RELIANCE IN THIS CONNECTION CAN BE PLACE D ON THE DECISION OF THE APEX COURT IN BHARATH EARTH MOVERS (SUPRA). IN MY VIEW SUCH LIABI LITY BEING PROVIDED BY THE APPELLANT IS AN ASCERTAINED LIABILITY AND HENCE SHOULD BE ALL OWED AS DEDUCTION. 29. THE LD.DR RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD.AR SUBMITS THAT THE ASSESSEE COMPANY PROVIDED SU CH MEDICAL BENEFITS FOR ITS EMPLOYEES AND MAINTAINED ITS ACCOU NTS CHARGING CASH BASIS AS PER AS-15, WHICH CAME INTO EFFECT FROM 1-4 -06 IS APPLICABLE TO AY UNDER CONSIDERATION BEING ALLOWABLE DEDUCTION ON ACTUARIAL VALUATION AND IN SUPPORT OF HIS ARGUMENT RELIED ON THE IMPUGNED ORDER OF THE CIT-A. 30. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE MADE A PROVISION FOR MEDICAL BENEFITS TO ITS EMPLOYEES AMOUNTING TO RS.2,12,35,0 00/- ASCERTAINED AS PER THE ACTUARIAL VALUATION AS PER AS-15. WE FIN D THAT THE CIT-A EXAMINED THE AS-15 PRIOR TO 1-4-06. THEREAFTER, REV ISED AS-15 CAME INTO FORCE W.E.F 1-4-06, WHICH IS APPLICABLE TO A.Y UNDER CONSIDERATION. THE CIT-A FOUND THAT THERE IS NO ERR OR OR OMISSION IN THE FINANCIAL STATEMENTS PREPARED BY THE ASSESSEE. WE FIND THAT THE CIT-A PLACED HIS RELIANCE ON THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF WOODLAND GOVERNOR P.LTD AND IN THE CASE OF BHARAT EARTH MOVERS SUPRA AND ON THE NOTIFICATION OF THE DEPARTMENT. HE HELD THAT THE LIABILITY IS ASCERTAIN ED AS PER ACTUARIAL VALUATION REPORT AS PER AS-15. THE CIT-A ALSO HELD THAT THE LIABILITY WHICH CAN BE REASONABLY ASCERTAINED, BUT ONLY TO BE DISCHARGED AT A LATER DATE IS AN ALLOWABLE DEDUCTION. THEREFORE, WE ARE OF THE VIEW THAT THE CIT-A WAS JUSTIFIED IN ALLOWING THE SAME. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT-A. THUS, THIS GROU ND RAISED BY THE REVENUE IS DISMISSED. 31. GROUND NO. 4 IS RELATING TO DELETION OF ADDITI ON OF RS. 3,25,66,976/- MADE ON ACCOUNT OF SOFTWARE EXPENSES TREATING THE SAME AS REVENUE EXPENDITURE. 10 ITA NOS.1508 & 1665/KOL/2012 32. THE LD. DR RELIED ON THE ORDER OF THE AO. 33. THE LD.AR SUBMITS THAT THE ISSUE IN HAND IS SQU ARELY COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF THIS TRIBUNAL I N ASSESSEES OWN CASE DT. 20-01-2016 IN ITA NOS. 189 & 1414/KOL/200 7 FOR THE A.YS 2003-04 & 2004-05 AND PLACED ON RECORD OF SUCH ORD ER IN ASSESSEES PAPER BOOK AND REFERRED TO PARAS 21 TO 23 OF THE SA ID ORDER AND ARGUED THAT PAYMENT WAS MADE FOR UPGRADATION OF SOF TWARE TO ENSURE THAT THE BUSINESS IS CARRIED ON MORE EFFICIENTLY AN D EFFECTIVELY AND THE SAID EXPENDITURE IS REVENUE IN NATURE. 34. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IN HAND IS SQUARELY COVERED BY THE SAID ORDER DT. 20-01-2016 IN ASSESSEES OWN CASE SUPRA. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OWN CASE SUPRA HELD THAT THE EXPENDITURE INCURRED ON ACCOUNT OF UPGRADATION OF SOFTWARE IS T O BE TREATED AS REVENUE IN NATURE. RELEVANT PORTION OF FINDING OF S UCH ORDER IS REPRODUCED HEREIN BELOW:- 21. GROUNDS NOS. 5(C) & 6 INVOLVE THE ISSUE RELATIN G TO THE DISALLOWANCE OF RS.69.21 LAKHS AND RS.2.05 CRORES M ADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) ON ACCOUNT OF PAYMENT MADE BY THE ASSESSEE TO SONATA INFORMATION TECHNOLOGY AND ON ACCOUNT OF ERP EXPENSES RESPECTIVELY. 22. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD INCURRED EXPENDITURE OF RS.2.05 CRORES FOR UPGRADATION OF ER P. A SUM OF RS.69.21 LAKHS WAS ALSO PAID BY THE ASSESSEE TO M/S . SONATA INFORMATION TECHNOLOGY FOR SOFTWARE AND HARDWARE SU PPORT AS WELL AS CONSULTANCY SERVICES IN CONNECTION WITH THE IMPLEME NTATION OF THE UPGRADED ERP. THIS ENTIRE EXPENDITURE INCURRED BY T HE ASSESSEE FOR UPGRADATION OF ERP AS WELL AS IMPLEMENTATION THEREO F WAS CLAIMED AS DEDUCTION BEING REVENUE IN NATURE. THE ASSESSING OF FICER AS WELL AS THE LD. CIT(APPEALS), HOWEVER, TREATED THE SAME AS CAPITAL IN NATURE ON THE GROUND THAT THE SAME RESULTED IN THE ENDURIN G BENEFIT TO THE ASSESSEE AND ACCORDINGLY ALLOWED ONLY DEPRECIATION THEREON. 23. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ERP PACKAGE WAS ORIGINALLY PURCHASED AND I NSTALLED BY THE ASSESSEE IN THE EARLIER YEARS AND THE EXPENDITURE I NCURRED THEREON IN THE EARLIER YEARS WAS FINALLY TREATED AS CAPITAL IN NATURE. DURING THE YEAR UNDER CONSIDERATION, THE SAID ERP PACKAGE WAS UPGRADED BY THE ASSESSEE AND THE EXPENDITURE IN QUESTION THUS WAS I NCURRED BY THE ASSESSEE ON UPGRADATION OF ERP AS WELL AS IMPLEMENT ATION THEREON. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESS EE, THE EXPENSES INCURRED ON UPGRADATION OF ERP HAS ALREADY BEEN HEL D AS REVENUE EXPENDITURE ALLOWABLE AS DEDUCTION IN THE VARIOUS D ECISIONS RENDERED BY THE HONBLE HIGH COURTS AS WELL AS THE DIFFERENT BENCHES OF THIS TRIBUNAL. IN ONE OF SUCH DECISIONS RENDERED IN THE CASE OF CIT VS.- AMWAY INDIA ENTERPRISES, THIS ISSUE HAS BEEN ELABOR ATELY DEALT WITH BY THE SPECIAL BENCH OF THIS TRIBUNAL AND AFTER DIS CUSSING ALL THE RELEVANT ASPECTS, IT IS HELD THAT EXPENDITURE INCUR RED ON UPGRADATION 11 ITA NOS.1508 & 1665/KOL/2012 OF ERP MODULE WOULD BE ALLOWABLE AS DEDUCTION BEING REVENUE IN NATURE. AT THE TIME OF HEARING BEFORE US, THE LD. D .R. HAS CONTENDED THAT THE UPGRADATION OF ERP IS NOTHING BUT REPLACEM ENT OF ERP PACKAGE AS THE EARLIER VERSION OF ERP BECOMES COMPL ETELY USELESS AFTER UPGRADATION. WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE LD. D.R. IN OUR OPINION, THERE IS A DIFFERENCE BETW EEN UPGRADATION OF ERP SOFTWARE AND PURCHASE OF ERP SOFTWARE, INASMUCH AS THE BENEFIT OF UPGRADATION IS ONLY INCREMENTAL, WHICH IS TO THE EXTENT OF ADDITIONAL FEATURES PROVIDED IN THE NEW VERSION, WH ILE THE SAME IN THE CASE OF ACQUISITION OF NEW ERP PACKAGE IS FULL AND COMPLETELY NEW. EVEN THIS BENEFIT IS REFLECTED IN THE PRICE CHARGE, INASMUCH AS THE PRICE CHARGED FOR UPGRADATION IS ONLY MARGINAL EQUI VALENT TO THE INCREMENTAL BENEFIT AVAILABLE IN THE NEW VERSION WH ILE IT IS FULL IN CASE OF ACQUISITION OF NEW ERP PACKAGE. THE UPGRADATION OF ERP, IN OUR OPINION, THEREFORE, CANNOT BE EQUATED WITH REPLACEM ENT AS CONTENDED BY THE LD. D.R. AND THE ADVANTAGE BEING ONLY INCREM ENTAL TO THE EXTENT OF THE ADDITIONAL FEATURES IN THE NEW VERSIO N, THE SAME CANNOT BE TREATED AS THE REPLACEMENT OF THE ENTIRE ERP PAC KAGE SO AS TO TREAT THE EXPENDITURE INCURRED ON UPGRADATION AS CA PITAL EXPENDITURE. MOREOVER, THE USE OF ANY ERP PACKAGE IN THE CASE OF MANUFACTURER LIKE THE ASSESESE-COMPANY IS GENERALLY FOR COORDINA TING AND RATIONALIZING ITS FUNCTIONS AND BUSINESS PROCESS IN ORDER TO ENSURE THAT THE BUSINESS IS CARRIED ON MORE EFFICIENTLY AN D EFFECTIVELY AND BY APPLYING THE FUNCTIONAL TEST, THE EXPENDITURE INCUR RED ON ERP PACKAGE, IN OUR OPINION, CANNOT BE TREATED AS CAPIT AL EXPENDITURE AS IT DOES NOT RESULT IN CREATION OF ANY NEW ASSET OR ADV ANTAGE OF ENDURING NATURE IN THE CAPITAL FIELD. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE ON A CCOUNT OF EXPENDITURE INCURRED ON UPGRADATION OF ERP AND IMPL EMENTATION THEREOF TREATING THE SAME AS REVENUE IN NATURE. 35. IN VIEW OF ABOVE, WE FIND THAT THE CIT-A WAS J USTIFIED IN DELETING AND TREATING THE SAME AS REVENUE IN NATURE . WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT-A. WE UP HOLD THE SAME. GROUND NO. 4 RAISED BY THE REVENUE IS DISMISSED. 36. LAST EFFECTIVE GROUND NO. 5 IS RELATING TO DELE TION OF DISALLOWANCE OF COMMISSION PAYMENT MADE TO M/S. UNI TEL CORPORATION OF RS. 27,48,217/-. 37. DURING THE ASSESSMENT PROCEEDING THE AO ASKED T HE ASSESSEE TO FILE PARTY WISE BREAK UP OF COMMISSION PAYMENT. THE AO ISSUED NOTICE U/S. 133(6) OF THE ACT TO M/S. UNITEL CORPOR ATION, KOLKATA TO CROSS VERIFY THE TRANSACTION. HOWEVER, THE SAID NOT ICE WAS RETURNED BACK WITH POSTAL REMARK NOT KNOWN. IN VIEW OF THE SAME, THE AO ADDED THE AMOUNT OF RS. 27,48,217/- TREATING THE TR ANSACTION AS BOGUS. 38. BEFORE THE CIT-A THE ASSESSEE FILED A CONFIRMAT ION FROM THE PARTY ALONG WITH PAN CARD FOR VERIFICATION. CONSID ERING THE SAME, THE CIT-A DELETED THE IMPUGNED ADDITION BY OBSERVING AS UNDER:- 12 ITA NOS.1508 & 1665/KOL/2012 GROUND NO. 9 9. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ASSESSING OFFICER ERRED IN DISALLOWING COMMISSION PAID TO PARTY AMOUN TING TO RS. 27,48,217/- ON ADHOC BASIS TREATING SUCH PAYMENTS TO BE BOGUS IN NATURE WITHOUT BRINGING ANY MATERIAL ON RECORD REGARDING THE SAME. IN THIS GROUND. THE DISALLOWANCE HAD BEEN MADE ON ACCOUNT OF BOGUS EXPENSES INCURRED BY THE APPELLANT. THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDINGS HAD ISSUED NOTICE U/S 133(6) TO M/S UNITEL CORPORATION TO CROSS VERIFY PAYMENTS BEING MADE BY THE APPELLANT TO SUCH VENDOR. THE SAID LETTER WA S RETURNED UNDELIVERED. THE ASSESSING OFFICER DISALLOWED THE ENTIRE PAYMENT AMOUNTING TO RS. 27,48,217/- HOLDING THE SAME TO BE BOGUS EXPENSE. THE A/R OF THE APPELLANT IN THE PAPER BOOK HAS FILE D A CONFIRMATION FROM THE PARTY THAT IT HAS RECEIVED PAYMENT OF THE AFORESAID AMOUNT FROM THE APPELLANT ALONG WITH THE PAN CARD OF THE PROPRIETOR. IT WAS ALSO SUBMITT ED THAT THE PROPRIETOR HAS FILED THE RETURN FOR THE AY 2007-08 ON 26TH MARCH 2008 AT ITO WARD 40(4) DECLARING ALL SUCH INCOME. I HAVE GONE THROUGH THE SUBMISSION PUT FORTH BEFORE ME. I FIND THAT VENDOR HAS CONFIRMED TO HAVE RECEIVED THE PAYMENT FROM THE APP ELLANT WHICH HAS BEEN TREATED AS A BOGUS EXPENDITURE BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER. THE COPY OF THE PAN CARD HAS ALSO BEEN ENCLOSED. IN VIEW OF THE ABO VE, I DIRECT THE AO DELETE THE ADDITION ON THIS ACCOUNT AMOUNTING TO RS. 27,48,217 /-. ' 39. THE LD.DR RELIED ON THE ORDER OF THE AO AND SUB MITS THAT THE AO ISSUED NOTICE U/S. 133(6) OF THE ACT TO M/S. UNITEL CORPORATION AND THE SAID NOTICE WAS RETURNED BACK WITH POSTAL REMAR K NOT KNOWN. THE ASSESSEE COULD NOT PROVIDE ANY INFORMATION BEFO RE THE AO IN SUPPORT OF THE CLAIM. HE FURTHER SUBMITS THAT THE C IT-A HAS GIVEN RELIEF TO ASSESSEE BY ACCEPTING THE ADDITIONAL EVID ENCE FILED BY THE ASSESSEE WITHOUT GIVING AN OPPORTUNITY TO THE AO F OR VERIFICATION OF THE SAME AND AS SUCH PRAYED TO REMAND THE ISSUE TO THE FILE OF THE AO. 40. THE LD. AR SUBMITS THAT THE CIT-A HAS CO-TERMIN US POWER AS THAT OF AO. THE ASSESSEE ONLY SUBMITTED THE CONFIRM ATION OBTAINED FROM THE PARTY AND PAN CARD FOR VERIFICATION. THE C IT-A EXAMINING THE SAME HAVING CO-TERMINUS POWER DELETED THE IMPUG NED ADDITION. THE LD.AR OF THE ASSESSEE OPPOSED TO SUCH PROPOSITI ON OF THE LD.DR IN REMANDING THE MATTER TO THE AO FOR VERIFICATION. 41. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE CONFIRMATION AS FILED BY T HE ASSESSEE BEFORE THE CIT-A OBTAINED FROM THE SAID PARTY WAS NOT AVAI LABLE BEFORE THE AO FOR HIS CONSIDERATION AND VERIFICATION AND THE A DDITIONAL EVIDENCE 13 ITA NOS.1508 & 1665/KOL/2012 AS FILED BY THE ASSESSEE IN GETTING RELIEF, WHICH R EQUIRES VERIFICATION BY THE AO BY WAY OF REMANDING THE ISSUE. THEREFORE, WE FIND THAT THE LD.DR HAS RIGHTLY POINTED OUT THAT THE CIT-A HAS AD MITTED ADDITIONAL EVIDENCE IN GIVING RELIEF TO THE ASSESSEE WITHOUT G IVING AN OPPORTUNITY TO THE AO FOR HIS CONSIDERATION. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO FOR HIS V ERIFICATION AND TO DECIDE THE ISSUE AFRESH AS PER LAW. THEREFORE, GROU ND NO. 5 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 42. THE APPEAL OF THE REVENUE IN ITA NO. 1665/KOL/2 012 FOR THE A.Y 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 43. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO. 1508/KOL/2012 FOR THE A.Y 2007-08 AND THAT OF THE R EVENUE IN ITA NO. 1665/KOL/2012 FOR THE A.Y 2007-08 BOTH ARE PART LY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30-0 8-2017 SD/- SD/- P.M. JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :30-08-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE: M/S. EXIDE INDUSTRIES LIMITED 59E, CHOWRINGHEE ROAD, KOLKATA-20. 2 RESPONDENT/REVENUE: ADDL. CIT, RANGE-1, KOLKATA AAYKAR BHAVAN, 7 TH FLOOR, P-7 CHOWRINGHEE SQUARE, KOLKATA-69. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT KOLKATA 14 ITA NOS.1508 & 1665/KOL/2012