DCIT, Bangalore V. M/s Jeans Knit Pvt. Ltd., Bangalore

ITA 1516/BANG/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89876 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Unexplained expenditure; Business income
• Section: 69C; 37(1); 10B; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1382/BANG/2012 (ASSESSMENT YEAR: 2007 - 08) M/S.JEANS K NIT PVT. LTD. NO. 21, E1, 2 ND PHASE, INDUSTRIAL AREA, PEEN Y A, BANGALORE - 560058. PAN: AABCJ 4513 B VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 11(5), BANGALORE. RESPONDENT AND ITA NO.1 516 /BANG/2012 (ASSESSMENT YEAR: 2007 - 08) DEPU TY COMMISSIONER OF INCOME - TAX, CIRCLE 11(5), BANGALORE. VS. APPELLANT M/S.JEANS KNIT PVT. LTD., BANGALORE. RESPONDENT A SSESSEE BY: SHRI NAGESHWAR RAO, ADVOCATE. REVENUE BY: SHRI T.S.N.MURTHY, CIT(DR). DATE OF HEARING : 13/04/2015 DATE OF PRONOUNCEMENT: 17 /04/2015 O R D E R PER SMT. P.MADHAVI DEVI, JM: THESE CROSS - APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - I, BANGALORE, DATED 24/8/2012 FOR THE ASSESSMENT YEAR 2007 - 08. IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 2 OF 11 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF READY - MADE GARMENTS AND ALSO DOING JOB WORKS, FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESS MENT YEAR DECLARING NIL INCOME AFTER CLAIMING THE DEDUCTION OF RS.51,04,29,7 15 / - U/S 10B OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFE RRED TO AS 'THE ACT' FOR SHORT] AS 100% EXPORT ORIENTED UNIT (EOU) . WHILE EXAMINING THE CLAIM OF DEDUCTION U/S 10B OF T HE ACT U/S 143(3), THE AO OBSERVED THAT THERE WAS A SURVEY ACTION CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 5/11/2009 AND ALSO IN THE BUSINESS PREMISES OF M/S.FIBRES AND FABRICS INTERNATIONAL PVT. LTD. ( FFIPL FOR SHORT) AND OBSERVED THAT BOTH THE CONCERNS WERE OPERATING FROM THE SAME PREMISES AT BANGALORE. IT WAS FURTHER OBSERVED THAT THE BUSINESS PREMISES OF BOTH ARE RELATED AND ALSO THAT BOTH THE CONCERNS WERE NOT DEMARCATED SEPARATELY AND WERE NOT DISTINGUISHABLE AND THAT THERE WAS NOTHING TO INDICATE THAT THE TWO CONCERNS WERE SEPARATE ENTITIES. IT WAS FURTHER OBSERVED THAT FFIP L HAD STARTED ITS BUSINESS IN 2002 AND THE ASSESSEE HAD STARTED ITS BUSINESS IN SEPTEMBER 2004 AND WHILE FFIPL WAS CLAIMING DEDUCTION U/S 80 - HHC, THE ASSESSEE WAS CLAIMING DEDUCTION U/S 10B OF THE ACT. WHILE CONSIDERING THE ASSESSEE S CLAIM OF DEDUCTION U/S 10B OF THE ACT, THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS GOT 5 UNITS AT BANGALORE AND THAT THE CORPORATE OFFICE OF BOTH THE COMPANIES WAS THE SAME WHILE UN IT NOS.4 & 5 OF THE ASSESSEE WERE EARLIER THE BUSINESS IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 3 OF 11 PREMISES OF FFIPL AND WERE RENTED TO THE ASSESSEE - COMPANY. THE STATEMENT S OF THE SENIOR MANAGER (MAINTENANCE OF PLANT AND MACHINERY) AS WELL AS THE GENERAL MANAGER OF THE ASSESSEE - COMPANY WERE RECORD ED ON THE DATE OF SURVEY BASED ON WHICH THE AO WAS OF THE OPINION THAT THE ASSESSEE COMPANY WAS FORMED BY RE - CONS TRUCTION OF THE EARLIER FFIPL. THEREFORE, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE DEDUCTION U/S 10B SHOULD NOT BE DISALLOW ED. THE ASSESSEE FILED A DETAILED SUBMISSION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AO CAME TO THE FOLLOWING CONCLUSIONS: I. THE APPROVAL OF THE EOU DOES NOT AUTOMATICALLY MAKE THE ASSESSEE ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT AND THE DEDUCTION IS AVAILABLE ONLY AFTER VERIFICATION. II. A SSESSEE HAS NOT CLAIMED DEDUCTION U/S 10B OF THE ACT FROM THE VERY SAME FIRST YEAR AS IT WAS ONLY DOING THE JOB WORK FOR FFIPL DURING THE INITIAL FINANCIAL YEAR 2004 - 05 AND THEREFORE THERE WAS NO QUESTION OF CLAIMING DEDUCTION U/S 10B OF THE ACT AND THAT THE CONTENTION OF THE ASSESSEE THAT THE ELIGIBILITY OF DEDUCTION U/S 10B HAS TO BE VERIFIED ONLY INITIALLY, IS ONLY PARTIALLY CORRECT. THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION U/S 10B FOR THE ASSESSMENT YE AR S 2005 - 06 AND FOR ASSESSMENT YEAR 2006 - 07 IT WAS ALLOWED WITHOUT VERIFICATION AND THE ASSESSMENT YEAR 2007 - 08 IS THE FIRST TIME THAT THE WHOLE DEDUCTION CLAIM IS BEING VERIFIED. III. THE CONTENTION OF THE ASSESSEE THAT THE OLD MACHINERY FROM FFIPL WAS TRANSFE RRED TO THE ASSESSEE ONLY IN APRIL, 2007 IS NOT ACCEPTABLE SINCE THE ASSESSEE HAD TAKEN OVER IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 4 OF 11 THE PREMISES OF FFIPL ALONG WITH OLD PLANT AND MACHINERY AVAILABLE IN IT AND THEY HAVE INSTALLED THE NEW MACHINERY OVER A PERIOD OF TIME AND THAT T HE ASSESSEE HAD STARTED ITS FIRST UNIT AT 26/A, II PHASE, PEENYA IN NOVEMBER 2004 AND THE SECOND UNIT AT NO.485/2, 4 TH STAGE, PEENA IN MARCH 2005 AND THEN IT TOOK OVER THE VACANT UNITS OF FFIPL AT 34/A, 2 0 /A, II PHASE, PEENYA IN MAY, JUNE AND SEPTEMBER 2005 AND THE REMAIN ING UNITS IN APRIL 2007 AND THE STATEMENTS OF THE OWNERS OF THE PREMISES AT NO.26/A AND 485/2 PROVE THAT THE 2 ND UNIT WAS HANDED OVER TO THE ASSESSEE IN JULY 2005 ONLY AS CONSTRUCTION WAS COMPLETED IN THE LAST WEEK OF JUNE 2005 AND BY THIS INFORMATION IT I S CLEAR THAT THE ASSESSEE - COMPANY STARTED THE BUSINESS OF STITCHING I.E. JOB WORK IN FINANCIAL YEAR 2004 - 05 AND THEN TOOK OVER THE WAREHOUSE AND THE CUTTING UNIT S OF FFIPL AND THEREAFTER TOOK A NEW PREMISES AS A FINISHING U NIT AND THAT IT HAS TAKEN OVER TH E PROCESSING UNIT AND STITCHING UNIT OF FFIPL WITHIN A SHORT SPAN OF TIME. IV. THE BUSINESS PROCEDURE OF THE ASSESSEE IS SUCH THAT ALL THE UNITS ARE DOING DIFFERENT JOB S AND ONLY AFTER GOING THROUGH ALL THE UNITS, THE END PRODUCT WHICH IS EX PORTABLE IS OBTAINE D. THEREFORE, ALL THE UNITS HAVE TO BE CONSIDERED TO HAVE STARTED AT THE SAME TIME. V. SINCE PURCHASE OF THE RAW MATERIALS HAD STARTED IN JUNE 2005 AND FIRST SALES HAD OCCURRED ONLY AFTER 20 TH JULY 2005, IT IS CLEAR THAT THE ASSESSEE RENTED NEW PREMISES IN T HE BEGINNING MAINLY TO SHOW ITSELF TO BE ELIGIBLE FOR 10B DEDUCTION BUT THAT IT HAD RECONSTRUCTED THE BUSINESS OF FFIPL BY TAKING OVER OF THE UNITS OF FFIPL AND ONLY THEN DID THE MANUFACTURING ACTIVITY START. SINCE THE ASSESSEE DID NOT HAVE INBUILT INFRAS TRUCTURE AND RESOURCES FOR EXPORT OF GARMENTS IT WAS COMPLETELY DEPENDENT ON FFIPL . IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 5 OF 11 2.1 THUS , THE AO CAME TO THE CONCLUSION THAT THE ALTHOUGH THE ASSESSEE HAD CLAIMED TO HAVE STAR T ED WITH THE NE W UNIT, IT HAD TO WAIT FOR OBTAINING THE FULL AND ALREAD Y ESTABLISHED INFRASTRUCTURE CONSISTING OF BUILDING AND PLANT AND MACHINERY OF FFIPL AND THE MAN - POWER RESOURCES OF FFIPL AND THEN IT STARTED THE ACTUAL MANUFACTURING ACTIVITY. HE FURTHER OBSERVED THAT THERE WAS A TRANSFER OF THE BUSINESS OF FFIPL TO THE ASSESSEE BY SHIFTING OF THE EMPLOYEES AS WELL AS THE CUSTOMERS OF FFIPL . THEREFORE, HE CAME TO THE CONCLUSION THAT IT IS THE RE - CONSTRUCTION OF THE BUSINESS OF FFIPL AND HENCE THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. 2.2 T HERE AFTER, HE PROCEEDED TO CONSIDER THE EXPENDITURE CLAIMED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. ON VERIFICATION OF THE P&L ACCOUNT OF THE ASSESSEE - COMPANY, HE NOTICED THAT THE ASSESSEE HAS CLAIMED TO HAVE INCURRED HUGE EXPENDITURE OF RS.14,75,07,2 55/ - TOWARDS INFO AND TRACKING OF DELIVERY CHARGES AND RS.5,62,54,364/ - AS SALES COMMISSION DURING THE RELEVANT FINANCIAL YEAR. AS REGARDS INFO AND TRACKING OF DELIVERY CHARGES THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS MADE PAYMENTS TO A NON - RE SIDENT COMPANY M/S.SHARP EAGLE INTERNATIONAL LTD., [SEIL] INCORPORATED IN HONGKONG WITHOUT DEDUCTION OF TAX AT SOURCE AND THAT THE DUTIES OF THE SAID NON - RESIDENT HAVE NOT BEEN CLEARLY SPELT OUT IN THE AGREEMENT. THE CORRESPONDENCE PRODUCED BY THE ASSESSEE ARE NOT BETWEEN THE ASSESSEE AND THE NON - RESIDENT BUT ARE IN THE NAMES OF FFIPL AND IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 6 OF 11 ONE MR.MANFRED WHO IS ALSO NO T A REPRESENTATIVE OF A NON - RESIDENT COMPANY SEIL. HE OBSERVED THAT T HE ASSESSEE HAS NOT FURNISHED ANY E - MAIL CORRESPONDENCE WITH REGARD TO T HE GOODS PURCHASED FROM HONGKONG WHERE M/S SHARP EAGLE INTERNATIONAL LTD . IS BASED. THAT THE E - MAIL CORRESPONDENCE FURNISHED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING IS NOTHING BUT A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO MISLEAD OR MISDIRECT THE AUTHORITIES SINCE SUCH CORRESPONDENCE DO ES NOT CONCERN THE DEALINGS BETWEEN THE ASSESSEE AND SEIL. THUS HOLDING THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE EXPENDITURE CLAIMED AND THAT THE SAME IS NOT ALLOWABLE , H E ACCORD INGLY, DISALLOWED IT U/S 69C OF THE ACT AS UNEXPLAINED EXPENDITURE. 2.3 WITHOUT PREJUDICE TO THE ABOVE, IT WAS ALSO DISALLOWED U/S 37(1) HOLDING IT TO BE NOT EXPENDED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE . 2.4 WITHOUT PREJUDICE TO THE ABOVE TWO FINDINGS, THE AO FURTHER HELD THAT THE SERVICES RENDERED BY SEIL FOR WHICH PAYMENTS HAVE BEEN MADE ARE IN THE NATURE OF FEES FOR TECHNICAL SERVICES WHICH REQUIRE TDS BEFORE PAYMENT. HE ACCORDINGLY DISALLOWED IT U/S 40A( IA) REA D WITH SEC195 READ WITH 9(1)(VII) OF THE ACT. 2.5 AS REGARDS THE PAYMENT OF SALES COMMISSION, THE AO OBSERVED THAT OUT OF THE TOTAL AMOUNT OF RS.5,62,54,364/ - , A IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 7 OF 11 SUM OF RS.4,83,88,732/ - HAS BEEN PAID TO SHRI ANUPAM KOTHARI , THE MD OF THE ASSESSEE COMPANY A ND AN AMOUNT OF RS.78,65,632/ - HAS BEEN PAID TO HONGKONG INC, USA. AFTER CONSIDERING THE STATEMENTS GIVEN BY SHRI ANUPAM KOTHARI DURING THE COURSE OF SEARCH AND AFTER GOING THROUGH THE DETAILS FILED BY THE ASSESSEE FOR PAYMENT OF COMMISSION, THE AO WAS OF THE OPINION THAT THE PAYMENT OF HUGE SUM OF RS.4.83 CRORES TO MD SHRI ANUPAM KOTHARI WAS UNDULY EXCESSIVE AND UNREASONABLE AS PER SECTION 40(A)(IA) OF THE ACT AND ALSO THAT THE MD HAS NOT SHOWN THIS INCOME IN HIS RETURN FILED FOR THE ASSESSMENT YEAR 2007 - 08 AND SINCE THE PAYEE HAD NOT PAID TAX THEREON, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION OF THE SUM. HE FURTHER OBSERVED THAT SINCE IT WAS AN OVERSEAS COMMISSION , TDS WAS TO BE MADE BEFORE PAYMENT AND AS NO TDS WAS MADE, IT IS NOT ALLOWABLE AS A DEDUCT ION. IN VIEW OF THE SAME, HE DISALLOWED THE COMMISSION PAID TO THE MD SHRI ANUPAM KOTHARI BOTH UNDER SECTIONS 40(A)(IA) AS WELL AS SECTION 37 OF THE ACT. AS REGARDS COMMISSION PAID TO HONKONG INC.USA, THE AO OBSERVED THAT THE ASSESSEE HAD FAILED TO PRODU CE ANY DETAILS PERTAINING TO THE SAID PAYMENT . T HEREFORE IN THE ABSENCE OF EVIDENCE, THE AMOUNT WAS DISALLOWED U/S 69C OF THE ACT. 3. AGGRIEVED BY THE DISALLOWANCE OF DEDUCTION U/S 10B AS WELL AS THE EXPENDITURE CLAIMED BY THE ASSESSEE, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A) BY FILING THE RELEVANT DETAILS BEFORE HIM. THE CIT(A) CALLED FOR A REMAND REPORT FROM IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 8 OF 11 THE AO AND AFTER CONSIDERING THE ISSUE IN DETAIL, HE ALLOWED DEDUCTION U/S 10B OF THE ACT BY SETTING ASIDE THE FINDING OF THE AO THAT THE ASSESSEE S BUSINESS IS RE - CONSTRUCTION OF THE BUSINESS OF FFIPL BUT AS REGARDS THE DISALLOWANCE OF THE EXPENDITURE, THE CIT(A) HELD THAT SET ASIDE OF THE DISALLOWANCE WOULD ONLY INCREASE THE PROFIT AND THEREBY ENHANCE THE ELIGIBLE BUSINESS INCOME AND ACCORDINGLY DEDUCTION U/S 10B AND THEREFORE THE DECISION ON THIS ISSUE WOULD BECOME ACADEMIC. HE, ACCORDINGLY REFRAINED FROM GIVING A DECISION ON THE ALLOWABILITY OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. 4. AGAINST THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US, WHILE AGAINST THE NON - GIVING OF THE DECISION ON THE DISALLOWANCE OF THE EXPENDITURE MADE BY THE AO, THE ASSESSEE IS IN APPEAL BEFORE US. 5. IN THE ASSESSEE S APPEAL, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE EXPENDITURE INCURRED BY THE ASSESSEE WAS FOR THE BUSINESS OF THE ASSESSEE AND THAT THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DETAILS BEFORE THE AO IN SUPPORT OF ITS CONTENTION. HE SUBMITTED THAT THE GENUINENESS OF THE EXPENDITURE HAS NOT BEEN DOUBTED B Y THE AUTHORITIES BELOW BUT THE AO HAS MADE THE DISALLOWANCE SOLELY ON THE GROUND THAT THE CONNECTION BETWEEN THE ASSESSEE AND THE NON - RESIDENT COMPANY HAS NOT BEEN PROVED. ACCORDING TO HIM, THE MATERIAL FILED BY THE ASSESSEE BEFORE THE AO CLEARLY PROVE T HAT THE IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 9 OF 11 ASSESSEE HAD AVAILED ALL THE SERVICES OF THE NON - RESIDENT COMPANY AND HAS BENEFITED FROM SUCH SERVICES AND THEREFORE THE ASSESSEE HAS MADE PAYMENT FOR ITS BUSINESS PURPOSES AND HAS TO BE ALLOWED. SIMILARLY, ARGUMENTS WERE ADVANCED IN RESPECT OF PA YMENT OF COMMISSION TO THE MD AS WELL AS HONGKONG INC.USA. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AO AS WELL AS THE CIT(A) AND SUBMITTED THAT THE BURDEN IS ON THE ASSESSEE TO PROVE THE GENUINENESS AS WEL L AS THE BUSINESS CONNECTION OF THE PAYMENT. COMING TO THE REVENUE S APPEAL, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 6. HAVING HEARD THE RI VAL CONTENTIONS AND HAVING CONSIDERED THE MATERIAL ON RECORD, WE FIND THAT THE CIT(A) HAS CONSIDERED THE ISSUE AT LENGTH AND HAS COME TO THE CONCLUSION THAT THERE WAS NO TRANSFER OF OLD PLANT AND MACHINERY DURING THE FINANCIAL YEAR 2004 - 05, 2005 - 06 AND 20 06 - 07 AND FURTHER THAT THE PLANT AND MACHINERY PURCHASED BY THE ASSESSEE FROM FFIPL IN THE FINANCIAL YEAR 2007 - 08 ALSO DID NOT EXCEED 20% OF THE TOTAL PLANT AND MACHINERY OF THE ASSESSEE DURING THE SAID FINANCIAL YEAR. HE FURTHER OBSERVED THAT SINCE THERE WAS NO PURCHASE OF OLD PLANT AND MACHINERY FROM FFIPL IN THE EARLIER ASSESSMENT YEAR EVEN AS PER CONTEMPORANEOUS RECORDS OF THE EOU/ CUSTOMS AUTHORITIES. THE RELEVANT DATE OF THE PLANT AND MACHINERY IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 10 OF 11 PURCHASED BY THE ASSESSEE OVER THE YEARS IS REPRODUCED A T PARA 1.2.3, PAGE 30 OF THE ORDER OF THE CIT(A). THUS, CIT(A) HELD THAT THE MANUFACTURING ACTIVITY CARRIED ON BY THE ASSESSEE IN THE ASSESSMENT YEARS EARLIER TO ASSESSMENT YEAR 2008 - 09 WAS BY USE OF NEW PLANT AND MACHINERY. AS REGARDS THE TRANSFER OF BU SINESS PREMISES, EMPLOYEES AND THE CUSTOMERS OF FFIPL TO THE ASSESSEE , THE CIT(A) OBSERVED THAT THERE WAS NO PROHIBITION IN THE USE OF THE BUSINESS PREMISES OF FFIPL BY THE ASSESSEE AND ALSO OF THE EMPLOYEES AND CUSTOMERS OF FFIPL AND FURTHER THAT THE TRA NSFER OF EMPLOYEES AND CUSTOMERS OF THE ASSESSEE WAS ONLY A SMALL PERCENTAGE OF THE TOTAL EMPLOYEES AND CUSTOMERS OF THE ASSESSEE RESPECTIVELY. THUS HOLDING, THE CIT(A) SET ASIDE THE FINDING OF THE AO AND ALLOWED THE DEDUCTION U/S 10B OF THE ACT. WE FI ND THAT THE CIT(A) HAS GIVEN ELABORATE REASONS FOR COMING TO THE CONCLUSION AND THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT BEEN ABLE TO REBUT ANY OF THE FINDINGS OF THE CIT(A) WITH ANY EVIDENCE TO THE CONTRARY. SINCE THE FINDINGS OF THE CIT(A) A RE BASED UPON THE EVIDENCE PRODUCED BY THE ASSESSEE WHICH HAS NOT BEEN REBUTTED BY THE REVENUE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). THUS, THE REVENUE S APPEAL IS DISMISSED. 7. CONSEQUENT TO THE DISMISSING OF THE REVENUE S AP PEAL, MERITS OF THE DISALLOWANCE OF THE EXPENDITURE CLAIMED BY THE ASSESSEE WOULD ONLY BECOME ACADEMIC AS RIGHTLY HELD BY THE CIT(A). DISALLOWANCE OF THE EXPENDITURE WOULD ONLY INCREASE THE IT A NO . 1382 &1516 /BANG/201 2 M/S.JEANS KNIT PVT. LTD PAGE 11 OF 11 CLAIM OF DEDUCTION /S 10B OF THE ACT AND THEREFORE DECISION ON TH E MERITS OF THE DISALLOWANCE IS ONLY ACADEMIC AT THIS STAGE. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO ADJUDICATE THESE ISSUES AT THIS STAGE. THE ASSESSEE S APPEAL IS ALSO DISMISSED. 8. IN THE RESULT, BOTH THE CROSS - APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2015. S D/ - S D/ - (PRAMOD KUMAR) (SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, I TAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE