The ACIT, Circle -6, Surat V. M/s. Jivraj Tea Company, Surat

ITA 1526/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80471 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N SOPARKAR WITH PARIN SHAH
• Keywords: Recovery proceedings; Depreciation; Additional evidence; Fair market value; Capital receipt; Sham transactions; Unabsorbed depreciation
• Section: 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. I.T.A. NOS.1193 & 1194/AHD/2013 (ASSESSMENT YEARS:2008-09 & 2009-10) M/S. JIVRAJ TEA COMPANY, 5/258-259, JIVRAJ CHAMBERS, RUWALA TEKRA, BARANPURI BHAGAL, SURAT-395003. APPELLANT VS. DCIT.,(OSD-II), ROOM NO. 607, 6 TH FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT-395001. RESPONDENT AND I.T.A. NOS.1526 & 1527/AHD/2013 (ASSESSMENT YEARS:2008-09 & 2009-10) ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-6, SURAT ROOM NO. 612, AAYAKAR BHAVAN,MAJURA GATE, SURAT. AP PELLANT I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 2 VS. M/S. JIVRAJ TEA COMPANY, 5/258-259, JIVRAJ CHAMBERS, RUWALA TEKRA BHAGAL, SURAT-395003. RESPONDENT PAN: AACFJ2236R / BY REVENUE :SHRI B. L. YADAV, SR. D.R. / BY ASSESSEE :SHRI S. N. SOPARKAR WITH PARIN SHAH, A.R. / DATE OF HEARING : 15.10.2014 !'# / DATE OF PRONOUNCEMENT : 31.10.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: TWO SETS OF CROSS APPEALS BELONG TO SAME ASSESSEE A RISING OUT FORM THE ORDER OF LD. CIT(A)-I, SURAT, DATED 05 .03.2013 FOR THE ASSESSMENT YEAR 2008-09 & 07.03.2013 FOR A.Y. 2009- 10. SO, THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON OR DER FOR THE SAKE OF CONVENIENCE. 2. ITA NO. 1193/AHD/2013 FOR A.Y. 08-09 HAS BEEN FI LED BY ASSESSEE ON FOLLOWING GROUNDS: 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF COMPENSATION EXPENSES PAID OF I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 3 RS.6,35,824/- ON THE GROUND OF NON DEDUCTION OF TDS U/S. 40(A)(IA) OF THE ACT. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LD. A.O. OF EXCLUDING THE AMOUNT RECEIVED ON SA LES TAX ENTITLEMENTS OF RS.24,20,833/- FROM THE PROFIT DERIVED FROM ELIGIBLE UNIT BEING WIND MILL AT SATAR A, MAHARASHTRA. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF THE DEDUCTION CLAIMED U/S. 80IA FOR PROFITS DERIVED FROM ELECTRICITY GENERATION FROM WI ND MILL AT BHOGAT, GUJARAT OF RS.5,40,148/-. 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF THE DEDUCTION CLAIMED U/S. 80IA FOR PROFITS DERIVED FROM ELECTRICITY GENERATION FROM WI ND MILL AT SATARA, MAHARASHTRA OF RS.35,91,513/-. 5) IT IS, THEREFORE, PRAYED THAT THE AMOUNT RECEIVE D ON SALE OF SALES TAX ENTITLEMENTS BE CONSIDERED AS PAR T OF INCOME OF WIND MILL AT SATARA, MAHARASHTRA AND THE ABOVE DISALLOWANCES CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) MAY PLEASE BE DELETED. 6) THE APPELLANT PRAYS FOR GRANTING SUCH OTHER RELI EF AS MAY BE DEEMED JUST AND PROPER BY YOUR HONOURS CONSIDERING THE FACTUAL AND LEGAL ASPECTS OF THE CA SE OF THE APPELLANT. ADDITIONAL GROUNDS ARE AS UNDER: 1. THE APPELLANT PRAYS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AO & LD. CIT ( A) FAILED TO APPRECIATE THAT PAYEE SHRI SURESHCHANDRA SHAH HAS PAID DUE TAX CONSIDERING COMPENSATION PAYABLE AS PER THE AGREEMENT WITH THE APPELLANT AND I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 4 THERE WOULD BE NO DOUBLE RECOVERY OF TAX ON THE SAM E SUM AS PER THE AMENDED PROVISION OF SECTION 40(A)(I A) INSERTED BY FINANCE ACT, 2012 APPLICABLE RETROSPECTIVELY. 2. THE APPELLANT PRAYS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT (A) OU GHT TO HAVE TREATED THE AMOUNT RECEIVED ON SALE OF SALE S TAX ENTITLEMENT AS CAPITAL RECEIPT AND THEREFORE NOT LIABLE TO TAX AT ALL. HE HAS ERRED IN HOLDING THE SAME AS TAXABLE BY TREATING IT AS REVENUE RECEIPT INST EAD OF CAPITAL RECEIPT. 3. FIRST ISSUE IN ASSESSEES APPEAL IS WITH REGARD TO DISALLOWANCE OF COMPENSATION OF EXPENSES PAID OF RS .6,35,824/- MADE ON ACCOUNT OF NON DEDUCTION OF TDS U/S. 40(A)( IA) OF THE ACT. ASSESSING OFFICER MADE DISALLOWANCE U/S. 40(A )(IA) OF RS.6,35,824/- BEING PAYMENTS MADE TO SHRI SURESHCHA NDRA J. SHAH IN PURSUANCE OF AGREEMENT DATED 02.08.2004 FOR USE OF PROPERTY OF SHRI SURESH J. SHAH AT WARD NO.5, SHOP NO. 258-259 RUWALA TEKRA, SURAT ALONGWITH FURNITURE, WEIGHING S CALES ETC. ASSESSING OFFICER HELD THAT PAYMENT CONSTITUTES REN T AND THEREFORE, TDS WAS REQUIRED TO BE MADE U/S. 194I OF THE INCOME TAX ACT. A.O. NOTED THAT ON SAME ISSUE FOR A.Y. 20 0-08 CIT(A), AHMADABAD, VIDE HIS ORDER DATED 01.09.2010 HAS DECI DED ISSUE AGAINST ASSESSEE. SO FOLLOWING THE SAME ALONGWITH OTHER REASONING HAS DECIDED THE ISSUE AGAINST THE ASSESSE E, WHICH WAS CONFIRMED BY THE CONCERN CIT(A). 3.1. LD. A.R. HAS RAISED ADDITIONAL GROUND IN THIS REGARD AS MENTIONED ABOVE AND POINTED OUT THE SIMILAR ISSUE C AME BEFORE TRIBUNAL IN ITA NO. 3014/AHD/2010 FOR A.Y. 2007-08, WHEREIN I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 5 TRIBUNAL VIDE PARA 45 TO 51 HAD OCCASION TO DECIDE THE SIMILAR ISSUE AND ULTIMATELY MATTER WAS RESTORED TO A.O. BY OBSERVING AS UNDER: 51. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. IN THE INSTANT CASE THE ASSESSING OFFICER DISALLOWED DEDUCTION FOR RS.18,41,122/- PAID TO SHRI SURESHCHA NDRA SHAH AS RENT AS THE ASSESSEE FAILED TO DEDUCT TDS U /S 194I OF THE ACT AND THEREFORE, PROVISIONS OF SECTION 40( A)(IA) WERE APPLICABLE. ON APPEAL, CIT(A) HAS UPHELD THE DISAL LOWANCE MADE BY THE AO. THE AR OF THE ASSESSEE HAS FILED A DDITIONAL EVIDENCE EVIDENCING THE FACT THAT THE RECIPIENT OF THE AMOUNT SHRI SURESHCHANDRA SHAH HAS SHOWN THE AMOUNT RECEIV ED RS.18,41,122/- IN HIS RETURN OF INCOME FILED AND PA ID TAX THEREON. THEREFORE, IN VIEW OF THE SECOND PROVISO TO 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE (NO.2) ACT, 2004 , W.E.F. 01.04.2004, WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN EFFECT BY THE AGRA BENCH OF THE TRIBUNAL IN THE CAS E OF RAJEEV KUMAR AGARWAL (SUPRA), NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. THEREFORE, WE ACCEPT THE ADDITIONAL EVID ENCE FILED BY THE ASSESSEE SINCE THE DR HAS NOT OBJECTED TO TH E SAME AND RESTORE THE MATTER BACK TO THE FILE OF THE AO F OR RE- ADJUDICATION OF THE ISSUE AFRESH AFTER TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AS PER LAW. NEEDLESS TO MENTION THAT HE SHALL ALLO W REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE, BEFORE ADJUDICATING THE ISSUE AFRESH. TH US, THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE TREATED AS AL LOWED FOR STATISTICAL PURPOSES. IN THIS BACKGROUND, LD. AUTHORIZED REPRESENTATIVE ( HEREINAFTER REFERRED AS LD. A.R.) REQUESTED TO SET ASIDE THE MATTER TO ASSESSING OFFICER WITH SIMILAR DIRECTION. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE REVE NUE. MOREOVER, ASSESSEE HAS FILED ADDITIONAL EVIDENCE IN THE FACT THAT RECIPIENT OF THE AMOUNT SHRI SURESHCHANDRA J. SHAH HAS SHOWN I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 6 THE AMOUNT RECEIVED RS.6,35,824/- IN HIS RETURN OF INCOME AND PAID TAX THEREON. THEREFORE, IN VIEW OF SECOND PRO VISO TO 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE (NO.2) ACT, 200 4, W.E.F. 01.04.2004, WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN EFFECT BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF RAJEE V KUMAR AGARWAL VS. ACIT REPORTED IN (2014) 45 TAXMAN.COM 5 50 (AGRA TRIBUNAL), NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE OF THE EXPENDITURE CLAIMED BY THE ASSESSEE . THEREFORE, WE ACCEPT THE ADDITIONAL EVIDENCE FILED BY THE ASSE SSEE AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OF FICER FOR RE- ADJUDICATION OF THE ISSUE AFRESH AFTER TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AS P ER LAW. AS A RESULT, THIS GROUND OF APPEAL AS WELL AS ADDITIONAL GROUND IS ALLOWED FOR STATISTICAL PURPOSE. THIS TAKE CARE GR OUND NO.1 AND GROUND NO.1 OF ADDITIONAL GROUND. 4. NEXT ISSUE WITH REGARDS TO EXCLUDING AMOUNT RECE IVED ON SALE OF SALES TAX ENTITLEMENTS OF RS. 24,20,833/- F ROM THE PROFIT DERIVED FROM ELIGIBLE UNIT BEING WIND MILL AT SATAR A, MAHARASHTRA. ASSESSING OFFICER MADE ADDITION BY WAY OF EXCLUDING AMOUNT RECOVERED O SALE TAX ENTITLEMENT OF RS.24,20,833/- FROM THE PROFIT DERIVED FROM ELIGIBLE UNIT BEING WIND MILL AT SATAR A, MAHARASHTRA. CIT(A) FOLLOWING THE ORDER FOR A.Y. 2009-10 OF JIVR AJ TEA LTD. DECIDED THE ISSUE AGAINST THE ASSESSEE. AT THE TIM E OF HEARING LD. A.R. POINTED OUT THAT ITAT IN ITA NO. 1994/AHD/2012 FOR A.Y. 2009-10 TRIBUNAL FOLLOWING ASSESSEES OWN CASE FOR A.Y. 2007-08 HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 7 38. WE FIND THAT TRIBUNAL IN ASSESSEES OWN CASE F OR A.Y. 2007-08, VIDE ORDER DATED 19/12/2013, HAS HELD AS U NDER: 7 TO 16 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE LOWER AUTHORITIES AND MATERIAL AVAILAB LE ON RECORD. IN THE CASE OF JIVRAJ TEA LTD., THE ASSESSE E CLAIMED DEDUCTION U/S. 80IA(4) OF THE ACT ON 100% PROFIT DE RIVED FROM GENERATION OF ELECTRICITY FROM WINDMILL SITUAT ED AT AHMEDNAGAR MAHARASHTRA, JODHA RAJASTHAN AND CHITRADURGA KARNATAKA. THE ASSESSING OFFICER OBSERV ING THAT SINCE THE ASSESSEE HAD CARRIED FORWARD LOSSES OF EARLIER YEARS, THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S.80IA(4) AS AFTER THE ADJUSTMENT OF THE BROUGHT FORWARD LOSSES THERE WAS NO POSITIVE PROFIT FOR ALLOWING DE DUCTION U/S. 80IA. THE SAME WAS CONFIRMED IN APPEAL BY THE LEARNED CIT(A). THE CASE OF THE REVENUE IS THAT IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDE RED IN THE CASE OF GOLDMINE SHARES AND PRIVATE LIMITED (SU PRA) BROUGHT FORWARD LOSSES AND DEPRECIATION OF EARLIER YEARS HAS TO BE DEDUCTED FROM THE PROFITS OF THE YEARS UNDER CONSIDERATION BEFORE ALLOWING DEDUCTION U/S. 80IA O F THE ACT. ON THE OTHER HAND, THE CONTENTION OF THE AR OF THE ASSESSEE IS THAT AFTER THE AMENDMENT MADE BY THE FI NANCE ACT, 1999 IN SECTION 80IA WHEREBY U/S. 80IA(2) THE ASSESSEE HAS THE OPTION TO CHOOSE THE INITIAL YEAR FOR CLAIM ING THE DEDUCTION U/S. 80IA FOR 10 CONSECUTIVE YEARS WITHIN 15 CONSECUTIVE YEARS FROM THE DATE OF THE COMMENCEMENT OF THE ELIGIBLE UNIT. BY PLACING RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS PVT. LTD. (SUPRA) IT WAS THE SUBMISS ION OF THE LEARNED DR THAT ONCE THE ASSESSEE SELECTS THE INITI AL YEAR FOR CLAIMING DEDUCTION UNDER SECTION 80 IA (4) THEN THE EARLIER YEARS BROUGHT FORWARD LOSSES AND DEPRECIATIONS NEED NOT BE ADJUSTED AGAINST THE PROFITS OF INITIAL YEAR FROM T HE ELIGIBLE UNIT FOR ALLOWING DEDUCTION UNDER SECTION 80IA TO T HE ASSESSEE. THE PROVISIONS OF SECTION 80 IA (5) SHALL APPLY FOR THE YEARS AFTER THE INITIAL YEAR FOR COMPUTING THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80IA OF THE ACT. I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 8 18. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED AR OF THE ASSESSEE. WE ALSO FIND THAT IT IS AN UNDISPUTED FACT THAT IN ALL THE APPEALS UNDER CONSIDERATION THE INITIAL YEAR CHOSEN BY THE ASSESSEE FOR CLAIMING DEDUCTION IS AF TER 1-4- 2000 WHEN THE AMENDED PROVISION OF SECTION 80IA WAS APPLICABLE. 19. SECTION 80IA, WHICH HAS BEEN SUBSTITUTED W.E.F. 1 ST APRIL 2000, PROVIDES THAT WHERE THE GROSS TOTAL INC OME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM ANY ELIGIBLE BUSINESS REFERRED TO IN SUB- SECTION 4, THERE SHALL, IN ACCORDANCE WITH AND SUBJ ECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE DEDUCTION OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS. SUBSTITUTED SUB-SECTION (2) OF SECTION 80IA, PROVID ES THAT AN OPTION IS GIVEN TO THE ASSESSEE FOR CLAIMING ANY 10 CONSECUTIVE ASSESSMENT YEAR OUT OF 15 YEARS BEGINNI NG FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGIN TO OPERATE. THE 15 YEARS IS THE OUTER LIM IT WITHIN WHICH THE ASSESSEE CAN CHOOSE THE PERIOD OF CLAIMIN G THE DEDUCTION. SUB-SECTION (5) IS A NON-OBSTANTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE RELEVANT PROVISION OF SUB-SECTION (5) OF SECTION 80IA, READS AS UNDER:- (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCO ME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH T HE DETERMINATION IS TO BE MADE. 20. FROM A PLAIN READING OF THE ABOVE, IT CAN BE GA THERED THAT IT IS A NON- OBSTANTE CLAUSE WHICH OVERRIDES T HE OTHER PROVISIONS OF THE ACT AND IT IS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80IA, FOR TH E I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 9 ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR T O BE COMPUTED AS IF THE ELIGIBLE BUSINESS IS THE ONLY SO URCE OF INCOME. THUS, THE FICTION CREATED IS THAT THE ELIGI BLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THE DEDUC TION WOULD BE ALLOWED FROM THE INITIAL ASSESSMENT YEAR O R ANY SUBSEQUENT ASSESSMENT YEAR. IT NOWHERE DEFINES AS T O WHAT IS THE INITIAL ASSESSMENT YEAR. PRIOR TO 1 ST APRIL 2000, THE INITIAL ASSESSMENT YEAR WAS DEFINED FOR VARIOUS TYP ES OF ELIGIBLE ASSESSEES UNDER SECTION 80IA(12). HOWEVER, AFTER THE AMENDMENT BROUGHT IN STATUTE BY THE FINANCE ACT, 19 99, THE DEFINITION OF INITIAL ASSESSMENT YEAR HAS BEE N SPECIFICALLY TAKEN AWAY. NOW, WHEN THE ASSESSEE EXE RCISES THE OPTION OF CHOOSING THE INITIAL ASSESSMENT YEAR AS CULLED OUT IN SUB-SECTION (2) OF SECTION 80IA FROM WHICH I T CHOOSES ITS 10 YEARS OF DEDUCTION OUT OF 15 YEARS, THEN ONL Y THE LOSSES OF THE YEARS STARTING FROM THE INITIAL ASSES SMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AS STIPULATED IN SE CTION 80IA(5). THE LOSS PRIOR TO THE INITIAL ASSESSMENT Y EAR WHICH HAS ALREADY BEEN SET-OFF CANNOT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS FROM THE INIT IAL ASSESSMENT YEAR AS CONTEMPLATED OR CHOSEN BY THE ASSESSEE. IT IS ONLY WHEN THE LOSS HAVE BEEN INCURR ED FROM THE INITIAL ASSESSMENT YEAR, THEN THE ASSESSEE HAS TO ADJUST LOSS IN THE SUBSEQUENT ASSESSMENT YEARS AND IT HAS TO BE COMPUTED AS IF ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THEN ONLY DEDUCTION UNDER SECTION 80IA CAN BE DETERMINED. THIS IS THE TRUE IMPORT OF SECTION 80IA (5). 21. IN THE DECISION OF GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA), DECIDED BY THE SPECIAL BENCH OF THE T RIBUNAL, THE CLAIM OF DEDUCTION BY THE ASSESSEE HAD STARTED FROM ASSESSMENT YEAR 1996-97 ONWARDS AND THE ASSESSEE HA D CLAIMED DEDUCTION UNDER SECTION 80IA STARTING FROM THE FIRST YEAR ITSELF I.E., ASSESSMENT YEAR 1996-97. THUS, TH E SPECIAL BENCH WAS DEALING WITH THE OPERATION OF SECTION 80I A(5) WHERE THE ASSESSEE HAD FIRST CLAIMED THE DEDUCTION IN THE ASSESSMENT YEAR 1996-97 AND FOR SUBSEQUENT ASSESSME NT YEARS. THIS ASPECT OF THE MATTER HAS BEEN VERY WELL ELABORATED BY THE MADRAS HIGH COURT IN VELAYUDHASWA MY SPINNING MILLS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SPECIAL I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 10 BENCH DECISION OF THE TRIBUNAL IN GOLDMINE SHARES A ND FINANCE PVT. LTD. (SUPRA) AND RELEVANT PROVISIONS O F THE ACT I.E., PRE AMENDMENT AND POST AMENDMENT HAVE COME TO THE SAME CONCLUSION:- 'FROM READING OF THE ABOVE, IT IS CLEAR THAT THE EL IGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR A ND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXER CISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NOTI ONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINST OTHER INCOME O F THE ASSESSEE AND THE SET OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIO NALLY. FICTION CREATED IN SUB- SECTION DOES NOT CONTEMPLAT ES TO BRING SET OFF AMOUNT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 22. IN THE PRESENT CASES, THERE IS NO DISPUTE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND A DJUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING TH E RELEVANT ASSESSMENT YEAR, THE ASSESSEE EXERCISED THE OPTION UNDER S. 8O-IA(2). IN TAX CASE NOS. 909 OF 2009 AS WELL AS 9 40 OF 2009, THE ASSESSMENT YEAR WAS 2005-06 AND IN THE TA X CASE NO. 918 OF 2008 THE ASSESSMENT YEAR WAS 2004-0 5. DURING THE RELEVANT PERIOD, THERE WERE NO UNABSORBE D DEPRECIATION OR LOSS OF THE ELIGIBLE UNDERTAKINGS A ND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. TH ERE IS A POSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUD GMENT OF THIS COURT CITED SUPRA CONSIDERED THE SCOPE OF SUB- S. (6) OF S. 8O-I, WHICH IS THE CORRESPONDING PROVISION OF SU B-S. (5) OF S. 80- IA. BOTH ARE SIMILARLY WORDED AND THEREFORE WE AGREE ENTIRELY WITH THE DIVISION BENCH JUDGMENT OF THIS C OURT I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 11 CITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL &.GEN ERAL MILLS LTD. (2004) 186 CTR (RAJ) 141: (2004) 271ITR 311 (RAJ), THE RAJASTHAN HIGH COURT ALSO CONSIDERED THE SCOPE OF S . 80-I AND HELD AS FOLLOWS:- 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLL OW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT ON F INDING THE FACT THAT THERE WAS NO CARRY FORWARD LOSSES OF 1983 -84, WHICH COULD BE SET OFF AGAINST THE INCOME OF THE CU RRENT ASST. YR, 1984-85, THE RECOMPUTATION OF INCOME FROM THE NEW INDUSTRIAL UNDERTAKING BY SETTING OFF THE CARRY FORWARD OF UNABSORBED DEPRECIATION OR DEPRECIATION ALLOWANC E FROM PREVIOUS YEAR DID NOT SIMPLY ARISE AND ON THE FINDI NG OF FACT NOTICED BY THE CIT(A), WHICH HAS NOT BEEN DISTURBED BY THE TRIBUNAL AND CHALLENGED BEFORE US, THERE WAS NO ERR OR MUCH LESS ANY ERROR APPARENT ON THE FACE OF THE RECORD W HICH COULD BE RECTIFIED. THAT QUESTION WOULD HAVE BEEN G ERMANE ONLY IF THERE WOULD HAVE BEEN CARRY FORWARD OF UNAB SORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR A NY OTHER UNABSORBED LOSSES OF THE PREVIOUS YEAR ARISIN G OUT OF THE PRIORITY INDUSTRY AND WHETHER IT WAS REQUIRED T O BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. IT IS N OT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEA R SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER S.80-I FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDU CTIONS THEREUNDER. 23. IN VIEW THEREOF, WE ARE OF THE OPINION THAT THE TRIBUNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFIC ATION POSSIBLE UNDER S. 8O-I IN THE PRESENT CASE, ALBEIT, FOR REASONS SOMEWHAT DIFFERENT FROM THOSE WHICH PREVAILED WITH THE TRIBUNAL. THERE BEING NO CARRY FORWARD OF ALLOWABLE DEDUCTIONS UNDER THE HEAD DEPRECIATION OR DEVELOPME NT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCO ME OF THE CURRENT YEAR AND, THEREFORE, RECOMPUTATION OF I NCOME FOR THE PURPOSE OF COMPUTING PERMISSIBLE DEDUCTION UNDE R S. 8O-I FOR THE NEW INDUSTRIAL UNDERTAKING WAS NOT REQ UIRED IN THE PRESENT CASE. ACCORDINGLY, THIS APPEAL FAILS AN D IS HEREBY DISMISSED WITH NO ORDER AS TO COSTS. I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 12 24. FROM READING OF THE ABOVE, THE RAJASTHAN HIGH C OURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAI N FOR COMPUTATION OF CURRENT INCOME UNDER SECTION 80-1 FO R THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUND ER. WE ALSO AGREE WITH THE SAME. WE SEE NO REASON TO TA KE A DIFFERENT VIEW.' 25. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED BY THE SAME HIGH COURT IN CIT V/S EMERALD JEWEL INDUSTRY (P) LT D. [2011] 53 DTK 262 (MAD.). FROM THE ABOVE, RATIO OF THE HIGH COURT, IT IS AMPLY CLEAR THAT SUB-SECTION (5) OF SE CTION 8OIA WILL COME INTO OPERATION ONLY FROM THE INITIAL ASSE SSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. THE OPTION OF CHOOSING THE INITIAL ASSESSMENT YEAR IS WHOLLY UPON THE ASSESSEE IN THE POST AMENDMENT PERIOD I.E., AFTER 1 ST APRIL 2000 BY VIRTUE OF SECTION 80IA(2). 26. NOW COMING TO THE DECISION OF THE MUMBAI BENCH TRIBUNAL IN PIDILITE INDUSTRIES (SUPRA) AS RELIED U PON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THIS CASE, T HE TRIBUNAL WAS DEALING WITH REGARD TO TWO ELIGIBLE UN ITS ONE GUJARAT UNIT WHICH WAS SET-UP IN THE YEAR 1995-96 A ND SECOND MAHARASHTRA UNIT IN THE YEAR 2000-01. WITH R EGARD TO GUJARAT UNIT, THE TRIBUNAL HELD THAT PRE-AMENDME NT DEFINITION OF INITIAL ASSESSMENT YEAR WOULD BE APPL ICABLE I.E., PROVISIONS WHICH WERE PRIOR TO 1ST APRIL 1999 WILL APPLY BECAUSE THE ASSESSEE HAD STARTED COMMERCIAL PRODUCT ION IN THE FINANCIAL YEAR 1996-97. REGARDING SECOND UNIT, THE TRIBUNAL HELD THAT THE JUDGMENT OF MADRAS HIGH COUR T IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) WIL L NOT BE APPLICABLE BECAUSE THE INCOME FROM NON ELIGIBLE BUS INESS WAS SET-OFF FROM THE LOSS OF ELIGIBLE BUSINESS IN T HE YEAR OF COMMENCEMENT. IN THIS CASE, IT WAS NOT AN ISSUE AS TO WHETHER THE LOSSES PERTAINED TO PRIOR TO INITIAL AS SESSMENT YEAR OR AFTER THE INITIAL ASSESSMENT YEAR. IF THE L OSSES HAVE BEEN INCURRED IN THE ELIGIBLE UNIT AND HAS BEEN SET -OFF AGAINST THE NON- ELIGIBLE UNIT AFTER THE INITIAL AS SESSMENT YEAR, THEN THE RATIO LAID DOWN BY THE TRIBUNAL IS I N FULL CONSONANCE WITH THE LAW. HOWEVER, THIS IS NOT THE C ASE IN I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 13 THE INSTANT CASE BECAUSE THE LOSS PERTAINED TO PRIO R TO INITIAL ASSESSMENT YEAR WHICH HAVE BEEN SET-OFF AGAINST THE PROFITS OF NON-ELIGIBLE UNITS. THE BEGINNING OF THE INITIAL ASSESSMENT YEAR AS ADOPTED BY THE ASSESSEE IS ASSESSMENT YEAR 2008-09 ONLY AND, THEREFORE, THE LOSS OF ASSESSMENT YEAR 20 07-08 CANNOT BE NOTIONALLY CARRIED FORWARD WITHIN THE MEA NING OF SECTION 80IA(5). THUS, THE RELIANCE PLACED BY THE L EARNED DEPARTMENTAL REPRESENTATIVE ON THE DECISION OF PIDI LITE INDUSTRIES (SUPRA), WILL NOT BE APPLICABLE IN THE P RESENT CASE. 27. THE OTHER DECISION HEAVILY RELIED UPON BY THE L EARNED DEPARTMENTAL REPRESENTATIVE IN HYDERABAD CHEMICAL SUPPLIES LTD. (SUPRA) WILL ALSO NOT APPLY TO THE FA CTS OF THE PRESENT CASE, AS IN THAT CASE, THE WIND MILL STARTE D ITS OPERATION ON 3IST MARCH 1999 AND THE FIRST YEAR OF OPERATION WAS ASSESSMENT YEAR 1999-2000. THUS, IN THE ASSESSM ENT YEAR 1999-2000, THE DEFINITION OF 'INITIAL ASSESSME NT YEAR' WAS ALREADY THERE IN THE ACT AND THERE WAS NO PROVI SION THROUGH WHICH THE ASSESSEE COULD HAVE CHOSEN ITS IN ITIAL ASSESSMENT YEAR. THIS PROVISION WAS BROUGHT IN STAT UTE W.E.F. IST APRIL 2000, BY VIRTUE OF SECTION 8OIA. T HUS, THIS DECISION ALSO WILL NOT HELP THE CASE OF THE M/S. SH EVIE EXPORTS DEPARTMENT. IN ASSEESSEES CASE, AS SPECIF ICALLY STATED IN THE FOREGOING PARAGRAPHS, THE ASSESSEES CLAIM FOR INITIAL ASSESSMENT YEAR I.E., ASSESSMENT YEAR 2008- 09 AND ITS CLAIM FOR DEDUCTION UNDER SECTION 80A MADE FOR THE FIRST TIME FROM ASSESSMENT YEAR 2008-09, HAS NOT BEEN DIS PUTED. THUS, THE AFORESAID JUDGMENT RELIED UPON BY THE LEA RNED DEPARTMENTAL REPRESENTATIVE WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 28. WE REITERATE IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE INITIAL ASSESSMENT YEAR IN THE CASE OF JIV RAJ TEA & INDUSTRIES LTD. IS THE ASSESSMENT YEAR 2004-05 AND IN THE CASE OF JIVRAJ TEA LTD. IS ASSESSMENT YEAR 2007-08 AND IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT SUFFE RED ANY LOSS IN THE SAID YEAR, THEREFORE, IN OUR CONSIDERED OPINION NO BROUGHT FORWARD LOSS OR DEPRECIATION COULD BE REDUC ED FOR DETERMINING THE AMOUNT IN WHICH THE DEDUCTION IS TO BE ALLOWED U/S. 80IA OF THE ACT. WE, THEREFORE, SET AS IDE THE I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 14 ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND A LLOW THE GROUND OF APPEAL OF THE ASSESSEE. 39. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING T HE PRECEDENT, WE SET ASIDE THE ORDER OF LOWER AUTHORITIES ON THIS ISSUE AND ALLOW GROUND NOS.2, 3 & 4 OF THE APPEAL. 4.1. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWL EDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLL OWING THE SAME REASONING, WE SET ASIDE THE ORDER OF LOWER AUTHORIT IES ON THE ISSUE AND ALLOW THE GROUND IN FAVOUR OF THE ASSESSEE AS D ISCUSSED ABOVE. 5. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF DE DUCTION CLAIMED U/S. 80IA FOR PROFITS DERIVED FROM ELECTRIC ITY GENERATION FROM WIND MILL AT BHOGAT, GUJARAT OF RS.5,40,148/-. A.O. MADE DISALLOWANCE OF DEDUCTION U/S. 80IA FOR PROFITS DER IVED FROM ELECTRICITY GENERATION FROM WIND MILL AT BHOGAT, GUJARAT OF RS.5,40,148/-. CIT(A) FOLLOWING THE ORDER FOR A.Y. 2009-10 OF JIVRAJ TEA LTD., CONFIRMED THE ORDER OF A.O. 5.1. BEFORE US, IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT SIMILAR ISSUE HAS BEEN DECIDED IN ITA NO. 1994/AHD/ 2012 FOR A.Y. 2009-10. FOR THE REASONS DISCUSSED IN PARA 36 TO 39 OF THE SAID ORDER, SAME HAS BEEN REPRODUCED ABOVE. 5.2. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWL EDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLL OWING THE SAME REASONING, WE SET ASIDE THE ORDER OF LOWER AUTHORIT IES ON THE ISSUE AND ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE AS DI SCUSSED ABOVE. I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 15 6. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF DE DUCTION CLAIMED U/S. 80IA FOR PROFITS DERIVED FROM ELECTRIC ITY GENERATION FROM WIND MILL AT SATARA, MAHARASHTRA OF RS.35,91,5 13/-. A.O. MADE DISALLOWANCE OF DEDUCTION U/S. 80IA FOR PROFIT S DERIVED FROM ELECTRICITY GENERATION FROM WIND MILL AT BHOGAT, GUJARAT OF RS.35,91,513/-. CIT(A) FOLLOWING THE ORDER FOR A.Y . 2009-10 OF JIVRAJ TEA LTD., CONFIRMED THE ORDER OF A.O. THE DISALLOWANCE OF DEDUCTION U/S. 80IA ON PROFITS FROM ELECTRICITY GEN ERATION FROM WIND MILL AT SATAR, MAHARASHTRA. LD. A.R. POINTED OUT THAT THIS ISSUE HAS BEEN TAKEN CARE IN FAVOUR OF ASSESSEE IN ITA NO. 1994/AHD/2012 FOR A.Y. 2009-10, WHEREIN VIDE PARA 3 6 TO 39, ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE AS REP RODUCED ABOVE. 6.1. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWL EDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLL OWING THE SAME REASONING, WE SET ASIDE THE ORDER OF LOWER AUTHORIT IES ON THE ISSUE AND ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE AS DI SCUSSED ABOVE. 7. NEXT ISSUE RAISED BY WAY OF ADDITIONAL GROUND WI TH REGARDS TO TREATMENT OF THE AMOUNT RECEIVED ON SALES TAX EN TITLEMENT AS CAPITAL RECEIPT. LD. A.R. POINTED OUT THAT SIMILAR ISSUE AROSE IN ITA NO. 3014/AHD/2010 FOR A.Y. 2007-08, WHEREIN PAR A 52 TO 58, SIMILAR ISSUE RAISED BY WAY OF ADDITIONAL GROUND WA S SET ASIDE TO A.O. BY OBSERVING AS UNDER: 57. WE FIND THAT THE TRIBUNAL IN THE CASE OF SISTE R CONCERN OF THE ASSESSEE FOR AY 2007-08, VIDE A CONSOLIDATED ORDER DATED 19/12/2013, HAS HELD AS UNDER:- I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 16 29. THE OTHER ISSUE IN THIS APPEAL PERTAINS TO WHE THER DEDUCTION U/S. 80IA WILL BE ALLOWABLE TO THE ASSESS EE ON THE SALE PROCEEDS OF SALES TAX ENTITLEMENT RECEI VED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . 30. THE AO AS WELL AS THE LEARNED CIT(A) FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT, 317 ITR 128, WHEREIN IT HAS B EEN HELD THAT PROFIT ON SALE OF DEPB AND DUTY TRADE BAC K ARE NOT DERIVED FROM THE ELIGIBLE BUSINESS AND THER EFORE NOT ELIGIBLE FOR DEDUCTION U/S. 80IA OR 80IB OF THE ACT. 31. LEARNED AR FOR THE ASSESSEE DURING THE COURSE O F HEARING SUBMITTED THAT THE MAIN CONTENTION OF THE ASSESSEE BEFORE THE LEARNED CIT(A) WAS THAT THE SAL ES TAX INCENTIVE WAS A CAPITAL RECEIPT OF THE ASSESSEE AND HENCE NOT LIABLE TO TAX AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BIRLA VXL LTD. (SUPRA). HE CONTENDED THAT THE LEARNED CIT(A) HAS NOT ADJUDICAT ED UPON THIS CONTENTION OF THE ASSESSEE AND NEITHER HA S RECORDED THE SAME IN HIS ORDER WHICH WAS SUBMITTED TO HIM BY WAY OF A WRITTEN SUBMISSION. HE THEREFORE CONTENDED THAT IN VIEW OF THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT IT HAS TO BE HELD THAT TH E SALES TAX INCENTIVES ARE CAPITAL RECEIPT IN THE HAN DS OF THE ASSESSEE NOT LIABLE TO TAX. IN THE ALTERNATE SUBMISSION HE CONTENDED THAT IF IT IS SO HELD THAT ITS SALES TAX INCENTIVE WAS LIABLE TO TAX THAT IN VIEW OF THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE C ASE OF CIT V/S. MEGHALAYA STEEL LTD., (2013) 217 TAXMANN.COM 184 (GAU), THE ASSESSEE IS ENTITLED FOR DEDUCTION ON THE SALE OF SALES TAX ENTITLEMENT U/S. 80IA OF THE ACT BECAUSE IN THAT CASE THE HONBLE HIGH CO URT HAS HELD THAT TRANSPORT SUBSIDY, POWER SUBSIDY, INTEREST SUBSIDY AND INSURANCE SUBSIDY REDUCES THE COST OF PRODUCTION OF AN INDUSTRIAL UNDERTAKING AND THEREFORE THERE IS FIRST DEGREE NEXUS BETWEEN THE S AID SUBSIDIES AND PROFITS AND GAINS DERIVED BY INDUSTRI AL UNDERTAKING AND THE ASSESSEE WAS ENTITLED FOR I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 17 DEDUCTION U/S. 80IB IN RESPECT OF SUBSIDIES SO GRAN TED. WE FIND THAT NEITHER OF THE PARTIES HAVE FILED BEFO RE US COPY OF THE SALES TAX ENTITLEMENT SCHEME OF THE GOVERNMENT OF MAHARASHTRA UNDER WHICH THE ASSESSEE HAS RECEIVED THE SALES TAX ENTITLEMENT. WITHOUT GOI NG THROUGH THE SCHEME IT IS NOT POSSIBLE FOR US TO ADJUDICATE THE ISSUE COMPLETELY. IN OUR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF JUSTICE TO REMIT THIS MATTER BACK TO THE FILE OF THE AO FOR ADJUDICA TION AFRESH. 32. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BIRLA VXL LTD. HAS HELD AS UNDER: 11. FROM THE ABOVE PROVISIONS CONTAINED IN THE SAID SCHEME, IT CAN BE IMMEDIATELY NOTICED THAT THE SCHEME WAS FRAMED AS A PART OF GOVERNMENT'S INITIATIVE TO ENCOURAGE MODERNIZATION OF EXISTING INDUSTRIES IN UNDER-DEVELOPED AREAS. THE MAIN PURPOSE OF THE SCHEME WAS TO ACCELERATE THE INDUSTRIAL DEVELOPMENT AND TO DISPERSE INDUSTRIES TO UNDER-DEVELOPED AREAS AS WELL AS TO PROVIDE ADDITIONAL EMPLOYMENT. THE GOVERNMENT RESPONDED POSITIVELY TO THE REPRESENTATIONS THAT ON ACCOUNT OF RAPID CHANGES IN TECHNOLOGY, THERE WAS CONSTANT NEED FOR UPGRADATION OF TECHNOLOGY IN INDUSTRIES. IT WAS, THEREFORE, NECESSARY TO ENCOURAGE MODERNIZATION. AS PART OF SUCH A SCHEME, INCENTIVES WERE GIVEN TO INDUSTRIES EXISTING IN UNDER-DEVELOPED AREAS TO UNDERTAKE MODERNIZATION. THE SCHEME THUS WAS PRIMARILY CONCERNED WITH THE MODERNIZATION OF THE EXISTING INDUSTRIES. IT WAS NOT A SCHEME EITHER FOR DEVELOPMENT OF NEW INDUSTRIES IN SPECIFIED AREAS, OR FOR MERE EXPANSION OF THE EXISTING PRODUCTION CAPACITIES OF THE INDUSTRIES. THUS, THE MAIN PURPOSE OF THE RESOLUTION WAS TO MODERNIZE INDUSTRIES, WHICH ORDINARILY WOULD COME AT A CONSIDERABLE COST, PARTICULARLY WHEN SUCH INDUSTRIES WERE LOCATED IN UNDER-DEVELOPED AREAS. IT CAN BE IMAGINED THAT THE INDUSTRIES WILL FIND IT I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 18 DIFFICULT WITHOUT GOVERNMENT'S INCENTIVE TO UNDERTAKE LARGE-SCALE MODERNIZATION WITH THE USE OF MODERN TECHNOLOGY. IT WAS FOR THIS PURPOSE THAT THE SAID SCHEME WAS FRAMED GIVING BENEFIT OF THE SALES TAX WAIVER/DEFERMENT, AT THE OPTION OF THE INDUSTRY CONCERNED. SUCH BENEFIT HAD TO BE COMPUTED IN TERMS OF THE PERCENTAGE OF THE FIXED CAPITAL INVESTMENT. BENEFITS WERE TO LAST FOR SPECIFIED PERIODS AND UPTO EXHAUSTING MAXIMUM LIMIT COMPUTED IN TERMS OF THE PERCENTAGE OF THE FIXED CAPITAL INVESTMENT. 12. IT CAN THUS BE STRAIGHTAWAY SEEN THAT THE BENEFIT, THOUGH COMPUTED IN TERMS OF THE SALES TAX LIABILITY IN THE HANDS OF THE RECIPIENT, THE SAME WAS NOT MEAN TO GIVE ANY BENEFIT ON DAY-TO- DAY FUNCTIONING OF THE BUSINESS, OR FOR MAKING THE INDUSTRY MORE PROFITABLE. THE PRINCIPLE AIM OF THE SCHEME WAS TO COVER THE CAPITAL OUTLAY ALREADY MADE BY THE ASSESSEE IN UNDERTAKING SPECIAL MODERNIZATION OF ITS EXISTING INDUSTRY. 33. WE, THEREFORE, SET ASIDE THIS ISSUE BACK TO THE FILE OF THE AO TO RE-ADJUDICATE THE SAME AFTER CONSIDERI NG THE SCHEME OF SALES TAX ENTITLEMENT OF THE GOVERNME NT OF MAHARASTRA UNDER WHICH THE ASSESSEE HAS RECEIVED SALES TAX ENTITLEMENT AND ALSO AFTER TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF BIRLA VXL LTD. (SUPRA) QUOTED ABOVE. NEEDLESS TO MENTION THAT THE AO SHALL ALLOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE RE-ADJUDICATING THE ISSUE AFRESH. WE ORDER ACCORDINGLY THUS GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. 58. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING T HE PRECEDENT, WE SET ASIDE THE ORDER OF LOWER AUTHORIT IES AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATING THE ISSUE AFRESH AS PER THE DIR ECTIONS OF THE TRIBUNAL GIVEN IN THE CASE OF SISTER CONCERN OF THE ASSESSEE FOR AY 2007-08 AS QUOTED ABOVE. THUS, THE SE I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 19 GROUNDS OF APPEAL OF THE ASSESSEE ARE TREATED AS AL LOWED FOR STATISTICAL PURPOSES. 7.1 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLL OWING THE SAME REASONING, WE SET ASIDE THE ORDER OF LOWER AUTHORIT IES ON THE ISSUE AND REMIT THIS ISSUE TO THE FILE OF A.O. FOR RE-ADJ UDICATING THE ISSUE AS PER DIRECTION OF TRIBUNAL GIVEN IN ITA NO. 3014/AHD/2010. 8. AS A RESULT, APPEAL FILED BY ASSESSEE IN ITA NO. 1193/AHD/2013 FOR A.Y. 08-09 IS PARTLY ALLOWED AS I NDICATED ABOVE. 9. ITA NO. 1526/AHD/2013 FOR A.Y. 08-09 HAS BEEN FI LED BY REVENUE ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE AD DITION OF RS.2,62,32,096/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXCESSIVE EXPENDITURE CLAIMED U/S.4 0A(2)(B) OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A), SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICERS ORDER MAY BE RESTORED. 9.1 A.O. IN ASSESSMENT ORDER OBSERVED THAT ASSESSEE HAD PURCHASED TEA FROM ITS SISTER CONCERN, NAMELY, JIVR AJ TEA LTD. AT AN AVERAGE RATE OF RS.130.20 PER KG. IN THIS BACKG ROUND, A.O. HELD THAT PAYMENT MADE TO ITS SISTER CONCERN I.E. J IVRAJ TEA LTD. IS UNREASONABLE AND EXCESSIVE. CONSEQUENTLY, THE A.O. CONSIDERED THE AVERAGE RATE OF 106.20 PER KG IS REASONABLE AND MADE AN I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 20 ADDITION TO THE EXTENT OF RS.2,62,32,096/- @ RS.24 PER KG FOR 1093004 KGS TEA PURCHASED FROM M/S JIVRAJ TEA LTD. 9.2 IN APPEAL, CIT(A) HAS ALLOWED THE APPEAL IN FAV OUR OF THE ASSESSEE. LD. A.R. POINTED OUT THAT SIMILAR ISSUE AROSE IN A.Y. 06-07 IN ITA NO. 3005/AHD/2009, WHEREIN TRIBUNAL HA S DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY OBSE RVING AS UNDER: 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON . THE RELEVANT PROVISIONS OF SEC. 40A(2) OF THE ACT STIPU LATE THAT WHERE AN ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT HAS BEEN OR IS TO BE MADE TO ANY PERS ON REFERRED TO IN CLAUSE (B) OF THE SAID SUB-SECTION, AND THE ASSESSING OFFICER IS OF THE OPINION THAT SUCH EXPEN DITURE IS UNREASONABLE OR EXCESSIVE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS, SERVICES AND THE FACILITIES FOR WHICH THE PAYMENT IS MADE OR THE LEGITIMATE NEEDS OF THE BUSI NESS OR PROFESSION OF THE ASSESSEE OR THE BENEFIT DERIVED B Y OR ACCRUING TO HIM THEREFROM, SO MUCH OF THE EXPENDITU RE AS IS SO CONSIDERED BY HIM TO BE EXCESSIVE OR UNREASONABL E SHALL NOT BE ALLOWED AS A DEDUCTION. THE SCOPE OF THE SEC TION HAS BEEN EXPLAINED IN THE CIRCULAR OF CBDT NO. 6P(LXXXV I-66) OF 1968, DATED 6TH JULY, 1968 WHEREIN IN PARAS 72 A ND 74, IT WAS STATED THUS: 'PARA 72 : THE FINANCE ACT, 1968, HAS INTRODUCED A NEW S. 4OA IN THE IT ACT W.E.F. 1ST APRIL, 1968. UN DER SUB-S. (2) OF NEW S. 4OA, EXPENDITURE INCURRED IN A BUSINESS OR PROFESSION FOR WHICH PAYMENT HAS BEEN O R IS TO BE MADE TO THE TAXPAYER'S RELATIVES OR ASSOCI ATE CONCERNS IS LIABLE TO BE DISALLOWED IN COMPUTING TH E PROFITS OF THE BUSINESS OR PROFESSION TO THE EXTENT THE EXPENDITURE IS CONSIDERED TO BE EXCESSIVE OR UNREASONABLE. THE REASONABLENESS OF ANY EXPENDITURE IS TO BE JUDGED HAVING REGARD TO THE FAIR MARKET VA LUE OF THE GOODS, SERVICES OR FACILITIES FOR WHICH THE PAYMENT IS MADE OR THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSION OR THE BENEFIT DERIVED BY, O R I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 21 ACCRUING TO, THE TAXPAYER FROM THE EXPENDITURE. SUC H PORTION OF THE EXPENDITURE, WHICH, IN THE OPINION O F THE ITO, IS EXCESSIVE OR UNREASONABLE ACCORDING TO THES E CRITERIA IS TO BE DISALLOWED IN COMPUTING THE PROFI TS OF THE BUSINESS OR PROFESSION. PARA 74: IT MAY BE NOTED THAT THE NEW PROVISION IS APPLICABLE TO ALL CATEGORIES OF EXPENDITURE INCURRE D IN BUSINESSES AND PROFESSIONS, INCLUDING EXPENDITURE O N PURCHASE OF RAW MATERIALS, STORES OR GOODS, SALARIE S TO EMPLOYEES AND ALSO OTHER EXPENDITURE ON PROFESSIONA L SERVICES, OR BY WAY OF BROKERAGE, COMMISSION, INTER EST, ETC. WHERE PAYMENT FOR ANY EXPENDITURE IS FOUND TO HAVE BEEN MADE TO A RELATIVE OR AN ASSOCIATE CONCER N FALLING WITHIN THE SPECIFIED CATEGORIES, IT WILL BE NECESSARY FOR THE ITO TO SCRUTINIZE THE REASONABLEN ESS OF THE EXPENDITURE WITH REFERENCE TO THE CRITERIA MENTIONED IN THE SECTION. THE ITO IS EXPECTED TO EXERCISE HIS JUDGMENT IN A REASONABLE AND FAIR MANN ER. IT SHOULD BE BORNE IN MIND THAT THE PROVISION IS ME ANT TO CHECK EVASION OF TAX THROUGH EXCESSIVE OR UNREASONABLE PAYMENTS TO RELATIVES AND ASSOCIATE CONCERNS AND SHOULD NOT BE APPLIED IN A MANNER WHIC H WILL CAUSE HARDSHIP IN BONA FIDE CASES.' 10.1 IN THE INSTANT CASE, WE FIND THAT THE AO ANALY SED THE AVERAGE TEA PRICES ON PURCHASE OF TEA FROM OUTSIDE PARTIES VIS-A-VIS PURCHASE PRICE FROM THE SISTER CONCERNS L IKE JIVRAJ TEA INDUSTRIES LTD. & SURIN CORPORATION AND CONCLUD ED THAT THE ASSESSEE PAID EXCESSIVE PURCHASE PRICE TO SISTE R CONCERNS. THE YARD STICK ADOPTED BY THE AO IS AVERA GE PURCHASE PRICE OF TEA FROM THE OTHER PARTIES. NOW T HE TEA HAS LARGE VARIETIES AND ITS PRICE DEPENDS UPON A NU MBER OF FACTORS DEPENDING UPON IT AS AGAINST TEA GROWN AT L OWER ALTITUDES AND PLUCKED FROM OLD BUSHES. THE TEA FROM A GARDEN AT HIGHER ALTITUDES WILL FETCH HIGHER PRICE AS COMPARED TO TEA GROWN IN GARDENS AT LOWER ALTITUDES . FRESH TEA NORMALLY FETCHES HIGHER PRICES AS COMPARED TO O LD STOCK. TEA IS GENERALLY SOLD IN AUCTION BY VARIOUS GARDENS AND THE MARKET RATES OF A PARTICULAR QUALITY DEPENDS UPON T HE BEST BIDDING. THE PRICE OF DUST IS LOWER AS COMPARED TO THE PRICE I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 22 OF LEAF TEA. IN VIEW OF VARIETY OF FACTORS AFFECTI NG TEA TRADE, THERE CAN BE NO STANDARD FOR FIXING THE PRICE OF TE A. THE AO HAS COMPARED AVERAGE PRICE OF TEA PURCHASED FROM OU TSIDE PARTIES VIS--VIS PURCHASE FROM SISTER CONCERNS. NO ATTEMPT HAS BEEN MADE TO ASCERTAIN THE PRICE PREVAILING IN THE MARKET ON THE DAY WHEN PURCHASES ARE STATED TO HAVE BEEN MADE FROM THE SISTER CONCERNS, ESPECIALLY WHEN THE PRICE PREVAILING ON A PARTICULAR DAY FLUCTUATES EVEN IN R ESPECT OF TEA FROM THE SAME GARDEN AND OF THE SAME GRADE. NO FINDING HAS BEEN RECORDED BY THE LD.CIT(A) ON THE PLEA ON B EHALF OF THE ASSESSEE THAT PURCHASES OF TEA FROM SISTER CONC ERNS HAVE ALSO BEEN MADE AT LOWER RATES VIS--VIS PURCHA SES FROM OUTSIDE PARTIES. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MARGHABHAI KISHABHAI PATEL & CO. VS. CIT,108 ITR 54(GUJ) HELD THAT THE AVERAGE PRICE OF EARLIER PURC HASES CANNOT BE TAKEN AS THE BASIS OF DETERMINING COST OF SUBSEQUENT PURCHASES. BESIDES, THE AO/THE LD. CIT(A ) HAVE NOT ANALYSED THE IMPACT OF TRANSPORTATION COST ON P URCHASE OF TEA FROM OUTSIDE PARTIES AND HAVE ALTOGETHER IGN ORED THE PLEA ON BEHALF OF THE ASSESSEES THAT HEAVY TRANSPOR TATION COST WAS INCURRED ON PURCHASE OF TEA FROM THE OUTSI DE PARTIES. THE PROVISIONS OF SECTION 40A(2)(A) CANNOT HAVE ANY APPLICATION, UNLESS IT IS FIRST CONCLUDED THAT THE EXPENDITURE WAS EXCESSIVE OR UNREASONABLE, AS HELD IN THE CASE OF UPPER INDIA STEEL MANUFACTURING AND ENGINEERING CO. PRIVA TE LIMITED. VS COMMISSIONER OF INCOME-TAX, LUCKNOW, 11 7 ITR 569(SC). IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING TO SUGGEST THAT THE AO EVER BROUGHT ANY MAT ERIAL ON RECORD ON THIS ASPECT NOR EVEN CITED ANY COMPARABLE INSTANCES IN RESPECT OF THE FAIR MARKET VALUE OF TH E TEA PURCHASED FROM A PARTICULAR GARDEN AND OF A SPECIFI C GRADE ON THE DATE WHEN PURCHASES WERE MADE FROM SISTER CONCERNS FOR WHICH THE PAYMENT HAS BEEN MADE, BEFOR E CONCLUDING THAT EXPENDITURE WAS EXCESSIVE OR UNREAS ONABLE, ESPECIALLY WHEN IN THE PRECEDING YEARS NO SUCH DISA LLOWANCE HAS EVEN BEEN ATTEMPTED. IT IS THE SETTLED LEGAL PO SITION THAT COMPARISON HAS TO BE MADE AMONG EQUALS. THE ONUS IS ON THE ASSESSING OFFICER TO ESTABLISH THAT PAYMENTS MA DE BY ASSESSEE WERE EXCESSIVE OR UNREASONABLE. NO OTHER M ATERIAL HAS BEEN BROUGHT TO OUR NOTICE BY THE REVENUE TO ES TABLISH THE EXCESSIVE-NESS OF THE PAYMENTS. I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 23 10.2 MOREOVER, IT IS NOT THE QUANTUM ALONE THAT GOV ERNS IN SUCH CASES. FAIR MARKET VALUE OF THE GOODS, SERVICE S, LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSION OF T HE ASSESSEE, WOULD BE THE GUIDING FACTOR IN TERMS OF S ECTION 40A(2) OF THE ACT. IN THE CASE ON HAND, THE ASSESSE E IS PURCHASING FROM OUTSIDE PARTIES AND SISTER CONCERNS IN THE PRECEDING ASSESSMENT YEARS ALSO. AS ALREADY OBSERVE D, PRICE OF TEA DEPENDS UPON A NUMBER OF FACTORS EVEN IN RES PECT TEA FROM THE SAME SOURCE GARDEN AND SAME GRADE DEPENDIN G UPON THE BID PRICE DURING THE COURSE OF DAY. THERE IS NO MATERIAL ON RECORD AS TO WHAT WERE THE PRICES PREVA ILING ON A PARTICULAR DAY WHEN TEA OF A PARTICULAR VARIETY AND QUALITY WAS PURCHASED FROM SISTER CONCERN NOR ANY ATTEMPT S EEMS TO HAVE BEEN MADE TO COMPARE THE PRICE PAID TO SIST ER CONCERNS WITH THOSE PRICES. AS POINTED OUT IN THE C ASE OF INDO SAUDI TRAVEL SERVICES(P) LTD.(SUPRA), CBDT CIR CULAR NO. 6-P, DT. 6TH JULY,1968 STIPULATED THAT NO DISALLOWA NCE CAN BE MADE UNDER S. 40A(2) OF THE ACT IN RESPECT OF TH E PAYMENTS MADE TO THE RELATIVES AND SISTER CONCERNS WHERE THERE IS NO ATTEMPT TO EVADE TAX. THE ASSESSEES BEF ORE US ARE STATED TO BE PAYING TAX AT THE MAXIMUM PREVAILI NG RATES AND THERE IS NO EVIDENCE ON RECORD NOR THERE IS ANY ALLEGATION REGARDING EVASION OF TAX BY ANY OF THESE ASSESSEES. THE LD. DR DID NOT POINT OUT AS TO HOW T HE ASSESSEE EVADED PAYMENT OF TAX BY ALLEGED PAYMENT O F HIGHER PURCHASE PRICE TO ITS SISTER CONCERN SINCE S INCE THE SISTER CONCERNS WERE ALSO PAYING TAX AT HIGHER RATE S , AS ADMITTED BEFORE US BY THE LD. AR. 10.3 MOREOVER, IT IS NOBODY'S CASE THAT THE TRANSAC TIONS OF PURCHASE FROM THE SISTER CONCERNS WERE NOT BONA FID E TRANSACTIONS NOR IS IT THE CASE OF THE REVENUE THAT THESE WERE SHAM TRANSACTIONS OR THAT THE PRICE PAID IN RE SPECT OF EACH OF THESE TRANSACTIONS BY THE ASSESSEE WAS OTHE R THAN THE ONE SET OUT IN THE BOOKS OF ACCOUNT OF THE ASSE SSEE. UNDER THESE CIRCUMSTANCES IT APPEARS TO US THAT THE TAXING AUTHORITIES HAD NO RIGHT TO SUBSTITUTE THE AVERAGE PRICE IN PLACE OF THE PRICE OR VALUE AGREED TO BETWEEN THE P ARTIES TO THE TRANSACTION, SINCE THE TRANSACTION HAS NOT BEEN SHOWN I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 24 TO BE A SHAM ONE NOR HAS IT BEEN SHOWN THAT THE VAL UE WAS NOT THE VALUE IN THE BOOKS OF ACCOUNT. 10.4 IN VIEW OF THE FOREGOING, WE ARE NOT INCLINED TO AGREE WITH THE REASONS OF THE LD. CIT(A) AND THEREFORE, D ELETE THE DISALLOWANCE MADE BY THE AO. ACCORDINGLY, GROUND NO S. 1 TO 3 IN THESE TWO APPEALS ARE ALLOWED. 9.1 FACTS BEING SIMILAR, SO FOLLOWING THE SAME REAS ONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE ADDITION OF RS. 2,62,32,096/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXCESSIVE EXPENDITURE CLAIMED U/S. 40A(2)(B). THE SAME IS UPHELD. 10. AS A RESULT, APPEAL FILED BY REVENUE IN ITA NO. 1526/AHD/2013 FOR A.Y. 08-09 IS DISMISSED. 11. ITA NO. 1194/AHD/2013 FOR A.Y. 09-10HAS BEEN FI LED BY ASSESSEE ON FOLLOWING GROUNDS: 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF THE DEDUCTION CLAIMED U/S 80IA FOR PROFITS DERIVED FROM ELECTRICITY GENERATION FROM WI ND MILL AT BHOGAT, GUJARAT OF RS.2,37,129/-. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF THE DEDUCTION CLAIMED U/S 80IA FOR PROFITS DERIVED FROM ELECTRICITY GENERATION FROM WI ND MILL AT SATARA, MAHARASHTRA OF RS.16,08,779/-. 3) IT IS, THEREFORE, PRAYED THAT ABOVE DISALLOWANCE S CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) MAY PLEASE BE DELETED AND THE RETURNED INCOME BE ACCEPTED AS THE ASSESSED TOTAL INCOME OF THE APPELLANT. I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 25 4) THE APPELLANT PRAYS FOR GRANTING SUCH OTHER RELI EF AS MAY BE DEEMED JUST AND PROPER BY YOUR HONOURS CONSIDERING THE FACTUAL AND LEGAL ASPECTS OF THE CA SE OF THE APPELLANT. ADDITIONAL GROUND IS AS UNDER: 1. THE APPELLANT PRAYS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD CIT (A) OUG HT TO HAVE TREATED THE AMOUNT RECEIVED ON SALE OF SALE S TAX ENTITLEMENT AS CAPITAL RECEIPT AND THEREFORE NOT LIABLE TO TAX AT ALL. HE HAS ERRED IN HOLDING THE SAME AS TAXABLE BY TREATING IT AS REVENUE RECEIPT INST EAD OF CAPITAL RECEIPT. 12. FIRST ISSUE IS WITH REGARDS TO DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80IA FOR PROFITS DERIVED FROM ELECTRIC ITY GENERATION FROM WIND MILL AT BHOGAT, GUJARAT OF RS.2,37,129/-. A.O. MADE DISALLOWANCE OF DEDUCTION U/S. 80IA FOR PROFITS DER IVED FROM ELECTRICITY GENERATION FROM WIND MILL AT BHOGAT, GU JARAT OF RS.2,37,129/-, WHICH WAS CONFIRMED BY CIT(A) FOLLOW ING ASSESSEES OWN CASE FOR A.Y. 08-09. WE FIND THAT I N ITA NO. 1193/AHD/2013 ON SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE VIDE PARA 7 TO 9 OF THIS ORDER. 12.1 FACTS BEING SIMILAR, SO FOLLOWING THE SAME REA SONING, WE HEREBY DIRECT TO ALLOW THE DEDUCTION CLAIMED U/S. 8 0IA FOR PROFITS DERIVED FROM ELECTRICITY GENERATION FROM WIND MILL AT BHOGAT, GUJARAT OF RS.2,37,129/-. 13. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF T HE DEDUCTION CLAIMED U/S 80IA FOR PROFITS DERIVED FROM ELECTRICI TY GENERATION I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 26 FROM WIND MILL AT SATARA, MAHARASHTRA OF RS.16,08,7 79/-. CIT(A) FOLLOWING THE DECISION FOR A.Y. 08-09 HAS DECIDED T HE ISSUE AGAINST ASSESSEE. WE FIND THAT IN ITA NO. 1193/AHD /2013 ON SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSE E VIDE PARA 10 & 11 OF THIS ORDER. 13.1 FACTS BEING SIMILAR, SO FOLLOWING THE SAME REA SONING, THIS ISSUE IS DECIDED IN FAVOUR OF ASSESSEE, MEANING THE REBY, ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80IA FOR PROFITS DER IVED FROM ELECTRICITY GENERATION FROM WIND MILL AT SATARA, MA HARASHTRA OF RS.16,08,779/-. ADDITIONAL GROUND IS NOT PRESSED B Y LD. A.R. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 14. AS A RESULT, APPEAL FILED BY ASSESSEE IN ITA NO . 1194/AHD/2013 FOR A.Y. 09-10 IS PARTLY ALLOWED. 15. ITA NO. 1527/AHD/2013 FOR A.Y. 09-10 HAS BEEN F ILED BY REVENUE ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE AD DITION OF RS.2,38,06,502/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXCESSIVE EXPENDITURE CLAIMED U/S.4 0A(2)(B) OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A), SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICERS ORDER MAY BE RESTORED. 16. A.O. MADE ADDITION ON ACCOUNT OF DISALLOWANCE O F EXCESSIVE EXPENDITURE CLAIMED U/S. 40A(2)(B) OF ACT OF RS.2,3 8,06,502/-, I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 27 WHICH WAS DELETED BY THE CIT(A) FOLLOWING ITS PREDE CESSORS ORDER FOR A.Y. 08-09. 16.1 WE FIND THAT IN A.Y. 08-09, WE HAVE UPHELD THE ORDER OF CIT(A) WHO HAS DELETED THE SIMILAR ADDITION MADE BY A.O. ON ACCOUNT OF DISALLOWANCE OF EXCESS EXPENDITURE CLAIM ED UNDER 40A(2)(B) OF THE ACT. FACTS BEING SIMILAR, SO FOLL OWING THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDING OF CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE A.O . U/S. 40A(2)(B) OF ACT OF RS.2,38,06,502/-. SAME IS UPHE LD. 16.2 AS A RESULT, THIS APPEAL OF REVENUE IS DISMISS ED. 17. IN THE RESULT, ASSESSEES APPEALS FOR A.Y. 08-0 9 & 09-10 ARE PARTLY ALLOWED AND REVENUES APPEALS FOR A.Y. 08-09 & 09-10 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF OCTOBER, 2014. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEM BER TRUE COPY S.K.SINHA $ $ $ $ &' &' &' &' ('# ('# ('# ('# / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. -- . / CONCERNED CIT 4. .- / CIT (A) 5. '23 &, , / DR, ITAT, AHMEDABAD I.T.A. NOS. 1193, 1194, 1526 & 1527/AHD/2013 A.Y. 08-09 & 09-10 (M/S. JIVRAJ TEA CO. VS. DCIT) PAGE 28 6. 367 89 / GUARD FILE. BY ORDER / $ , :/ - , <