JCIT, Hyderabad V. Kabsons Gas Euipments, Hyderabad

ITA 153/HYD/2000

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61909 (ITAT-HYDERABAD)
• Duration Of Justice: 12 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-12-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 28-02-2000
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAO
• Assessee Lawyers: S RAVI; A V RAGHURAM
• Keywords: Business income; Depreciation; Cost of acquisition
• Section: 80HHC; 32; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 262/HYD/2002 A.Y. 1993-94 ITA NO. 263/HYD/2002 A.Y. 1994-95 M/S. KABSONS GAS EQUIPMENT LTD. HYDERABAD VS. THE DY. COMMISSIONER OF INCOME-TAX, SPECIAL RANGE-2 HYDERABAD APPELLANT RESPONDENT ITA NO. 330/HYD/2002 A.Y. 1994-95 ITA NO. 318/HYD/2002 A.Y. 1993-94 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(4) HYDERABAD VS. M/S. KABSONS GAS EQUIPMENT LTD., HYDERABAD APPELLANT RESPONDENT ITA NO. 154/HYD/2000 A.Y. 1995-96 M/S. KABSONS GAS EQUIPMENT LTD. HYDERABAD VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4(5) HYDERABAD APPELLANT RESPONDENT ITA NO. 155/HYD/2000 A.Y. 1996-97 M/S. KABSONS GAS EQUIPMENT LTD. HYDERABAD VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-4(5) HYDERABAD APPELLANT RESPONDENT ITA NO. 288/HYD/2001 A.Y. 1997-98 M/S. KABSONS GAS EQUIPMENT LTD., HYDERABAD PAN: AAACK8310N VS. THE JT. COMMISSIONER OF INCOME-TAX, SPECIAL RANGE-2 HYDERABAD APPELLANT RESPONDENT ITA NO. 319/HYD/2001 A.Y. 1997-98 THE ADDL . COMMISSIONER OF INCOME-TAX, SPECIAL RANGE- 2, HYDERABAD VS. M/S. KABSONS GAS EQUIPMENT LTD., HYDERABAD APPELLANT RESPONDENT I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 2 ITA NO. 152/HYD/2000 A.Y. 1995-96 ITA NO. 153/HYD/2000 A.Y. 1996-97 THE JT . COMMISSIONER OF INCOME-TAX (ASSTS.), SPECIAL RANGE-2, HYDERABAD VS. M/S. KABSONS GAS EQUIPMENT LTD., HYDERABAD APPELLANT RESPONDENT ASSESSEE BY: SHRI S. RAVI AND SHRI A.V. RAGHURAM REVENUE BY: SHRI M.S. RAO DATE OF HEARING: 1 7. 0 4 .2012 DATE OF PRONOUNCEMENT: 08.06.2012 O R D E R PER CHANDRA POOJARI, AM: THESE TEN CROSS APPEALS FILED BY ASSESSEE AND REVEN UE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF CIT(A) FOR THE A.Y. 1993-94, 1994-95, 1995-96, 1996-97 AND 1997-98. SINCE ISSUE S INVOLVED IN ALL THESE APPEALS ARE COMMON IN NATURE, THEY ARE CLUBBED, HEARD AND BEING DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON ISSUE IN ASSESSEES APPEALS IN ITA NOS. 154/HYD/2000, 155/HYD/2000, 262/HYD/2002, 263/HYD/2 002, 288/HYD/2001 IS WITH REGARD TO ALLOWABILITY OF DEPR ECIATION ON GAS CYLINDER. THE ISSUE IN ASSESSEES APPEAL ITA NO. 15 4/HYD/2000 AND REVENUE APPEALS IN ITA NOS. 152/HYD/2000, 153/H YD/2001, 319/HYD/2001, 318/HYD/2002 AND 330/HYD/2002 IS WITH REGARD TO TREATMENT OF THE RECEIPTS OF SECURITY DEPOSITS O N LEASING OF GAS CYLINDER AS SALES RECEIPT AND CONSEQUENTLY TREATING THE DIFFERENCE BETWEEN SECURITY DEPOSIT AND PURCHASE COST OF CYLIN DERS AS BUSINESS INCOME OF THE ASSESSEE. SINCE THESE GROUN DS ARE INTER- RELATED, WE WILL ADJUDICATE THESE GROUNDS IN ASSESS EE AS WELL AS IN REVENUE APPEALS COLLECTIVELY. I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 3 3. FOR CLARITY, WE TAKE FACTS IN ITA NO. 154/HYD/2000 FOR THE ASSESSMENT YEAR 1995-96. BRIEF FACTS OF THE CASE ARE THAT FOR THE ASSESSMENT YEAR 1995-96, THE ASSESSEE HAD SHOWN PUR CHASE OF 96200 CYLINDERS OF CAPACITY OF 2.3 KG. LPG FROM ID EAL ENGINEERS HYDERABAD LIMITED FOR RS. 2,08,82,545. IT HAD ALSO SHOWN TO HAVE RECEIVED 800 CYLINDERS ON RETURN FROM PKL LIMITED O UT OF CYLINDERS LOANED OUT TO PKL LIMITED IN EARLIER YEARS. THE ENT IRE 97000 CYLINDERS WERE GIVEN TO PKL LIMITED ON LOAN BASIS. THE CYLINDERS WERE LOANED OUT BY TAKING SECURITY DEPOSIT @ RS. 24 0/- PER CYLINDER. THE ASSESSEE HAD SHOWN TO HAVE RECEIVED T OTAL SECURITY DEPOSIT OF RS. 2,32,80,000 FOR LOANING OUT 97000 CYLINDERS. THE ASSESSEE HAD CLAIMED THAT PURCHASE AND SALE OF LIQU IFIED PETROLEUM GAS IS ONE OF ITS BUSINESS AND SINCE GAS CANNOT BE SOLD WITHOUT A CONTAINER, IT HAD SOLD GAS TO PKL LIMITED IN THE AFORESAID 97000 CYLINDERS. THE ASSESSEE HAD ALSO STATED THAT EACH OF THE CYLINDERS WAS FILLED WITH 1/2 KG LPG. THE ASSESSEE HAD CLAIMED THAT THE CYLINDERS ARE 'PLANTS' FOR THE BUSINESS OF PURCHASE AND SALE OF LPG AND THE ASSESSEE IS ENTITLED TO 100% DE PRECIATION ON THE COST OF THE CYLINDERS. THE ASSESSEE CLAIMED DEP RECIATION ALLOWANCE OF RS. 2,08,82,545 ON THE CYLINDERS. THE ASSESSEE HAD ARGUED THAT ITS CLAIM OF 100% DEPRECIATION ON THE C YLINDERS IS SQUARELY COVERED IN ITS FAVOUR BY THE ORDER OF SPEC IAL BENCH OF TRIBUNAL IN THE CASE OF DETECTIVE DEVICES PRIVATE L IMITED VS. INCOME TAX OFFICER (22 ITD 9) (SB) (HYD). 4. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF T HE ASSESSEE. SHE FOUND THAT THERE WERE DISCREPANCIES IN THE VARIOUS PURCHASE DOCUMENTS MAINTAINED IN RESPECT OF GAS AND LOANING OF CYLINDERS. SHE FOUND DISCREPANCIES IN RECORDS RELA TING TO PURCHASE OF GAS BOTH IN TERMS OF DATES AND ALSO AMOUNTS. SHE FURTHER OBSERVED THAT THOUGH THE CYLINDERS WERE CLAIMED TO HAVE BEEN USED FOR SALE OF GAS, ON MANY OCCASIONS, THE DATE O F LOANING OF THE CYLINDERS PRECEDES OR SUCCEEDS THE DATE OF SALE OF GAS. THE I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 4 ASSESSING OFFICER HAD ALSO VISITED THE GAS FILLING PLANT OF IDEAL ENGINEERS HYDERABAD LIMITED AT BALANAGAR, HYDERABAD WHERE THE CYLINDERS OF THE ASSESSEE WERE CLAIMED TO HAVE BEEN FILLED WITH 1/2 KG LPG. SHE HAD EXAMINED SHRI ANIL AGATE. PLANT IN -CHARGE OF THE GAS FILLING PLANT. AT THE TIME OF HER VISIT, SHE HA D ALSO EXAMINED THE DAILY REPORT OF GAS FILLING FOR FINANCIAL YEAR 1997 -98 AND SHE FOUND THAT AT NO POINT OF TIME, ANY CYLINDER WAS FI LLED WITH 1/2 KG LPG AND SHE FOUND THAT THE CYLINDERS WERE FILLED IN SINGLE STEP. SHE HAD ASKED SHRI AGATE AND ALSO IDEAL ENGINEERS H YDERABAD LIMITED TO PRODUCE RECORDS FOR DAILY FILLING OF LPG FOR THE FINANCIAL YEARS 1994-95 TO 1997-98. THOUGH AT THE TIME OF TH E VISIT OF THE ASSESSING OFFICER SHRI AGATE HAD GIVEN THE UNDERTAK ING TO PRODUCE THE REQUIRED DOCUMENTS AFTER RETURN OF THE RECORD K EEPER FROM LEAVE; ONLY THE DOCUMENTS RELATING TO FINANCIAL YEA R 1997-98 WERE PRODUCED. A REPLY WAS HOWEVER FURNISHED BY SHRI AG ATE IN THIS REGARD. ON EXAMINATION OF THE RECORDS RELATING TO F INANCIAL YEAR 1997-98, THE ASSESSING OFFICER CAME TO THE CONCLUSI ON THAT THE DOCUMENTS WERE TAMPERED. SUBSEQUENTLY, SHE HAD AL SO EXAMINED SHRI G.K. KABRA. SHRI G.K. KABRA HAPPENS TO BE THE FATHER OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. SHRI KAB RA WAS DESCRIBED AS ADVISOR TO ALL THE THREE COMPANIES VIZ ., ASSESSEE, IDEAL ENGINEERS HYDERABAD LIMITED AND PKL LIMITED AND WAS AUTHORISED BY ALL THE THREE COMPANIES TO REPRESENT THEM BEFORE THE ASSESSING OFFICER IN RESPECT OF CYLINDER AND GAS BU SINESS. ON THE BASIS OF ENQUIRIES MADE BY HER AND THE DETAILS FILE D FROM THE ASSESSEE'S SIDE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT NO REAL SALE OF 1/2 KG LPG HAD TAKEN PLACE THROUGH THE CYLINDERS WHICH WERE LOANED OUT TO PKL LIMITED AND THE ENTIRE TRANSACTION WAS A COLOURABLE DEVICE SOLELY AIMED AT REDUCING TH E INCIDENCE OF TAXATION. SHE OBSERVED THAT WHEN THE CAPACITY OF T HE CYLINDERS WAS 2.3 KG THERE WAS ABSOLUTELY NO VALID BASIS TO F ILL THEM UP WITH 1/2 KG LPG. SHE FURTHER HELD THAT WHAT IS BEING SH OWN AS LOAN I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 5 TRANSACTION OF CYLINDERS IS ACTUALLY SALE OF THE CY LINDERS TO PKL LIMITED AND THE SECURITY DEPOSIT IS NOTHING BUT SAL E PROCEEDS OF THE CYLINDERS. IN SUPPORT OF HER FINDING THAT THE T RANSACTION OF SALE OF GAS AND LOANING OF CYLINDERS WAS A COLOURABLE DE VICE, THE ASSESSING OFFICER HAD RELIED UPON VARIOUS CASE-LAWS INCLUDING THAT OF SUPREME COURT IN THE CASE OF MCDOWELL & CO. LTD. 154 ITR 148. SHE ALSO HELD THAT THE ORDER OF TRIBUNAL IN THE CAS E OF DETECTIVE DEVICES PRIVATE LIMITED (CITED SUPRA) HAS NO APPLIC ATION TO THE FACTS OF THE PRESENT CASE. THE ASSESSING OFFICE HAD ALSO LOOKED INTO THE VARIOUS PROVISIONS OF GAS CYLINDER RULES, 1981 FRAMED UNDER THE EXPLOSIVES ACT. 1884 AND HAD COME TO THE CONCLU SION THAT THE ASSESSEE COMPANY HAD VIOLATED NUMBER OF RULES AND R EGULATIONS RELATING TO STORAGE OF LPG AND FILLING UP OF CYLIND ERS WITH LPG. SHE HELD THAT IF AT ALL IT IS ACCEPTED THAT THE ASSESSE E WAS IN THE BUSINESS OF PURCHASE AND SALE OF GAS, THAT BUSINESS WOULD BE AN ILLEGAL BUSINESS AND THE LOSS FROM THE SAME CANNOT BE SET OFF AGAINST THE PROFITS FROM MANUFACTURE AND SALE OF RE GULATORS AND VALVES IN VIEW OF THE DECISION OF SUPREME COURT IN THE CASE OF S.C. KOTHARI 82 ITR 794. THE ASSESSING OFFICER HAS SUMM ED UP HER VARIOUS FINDINGS AT PARA 24 OF HER ASSESSMENT ORDER AS UNDER : A) BECAUSE THE PERSON TAKING DECISION FOR GAS AND CYLI NDER BUSINESS OF M/S. IDEAL ENGINEERS HYDERABAD LIMITED M/S. P.K.L. LIMITED AND M/S KABSONS GAS EQUIPMENT LIMITE D ARE ONE AND THE SAME, I.E., SHRI G.K. KABRA. B) BECAUSE M/S. KABSONS GAS EQUIPMENT LIMITED IS A CLO SELY HELD COMPANY MANAGED BY SRI SATISH KABRA AND M/S. P .K.L. LIMITED IS CLOSELY HELD COMPANY MANAGED BY SHRI RAJ IV KABRA, THE BROTHER OF SHRI SATISH KABRA. C) BECAUSE IT IS PROVED BEYOND DOUBT THAT THE ASSESSEE - COMPANY NEVER SOLD 1/2 KG OF GAS IN CYLINDERS AS CL AIMED BY THE ASSESSEE. D) BECAUSE THE PRIMARY RECORD OF FILLING UP OF GAS HAS BEEN DESTROYED TO SUIT CONVENIENCE OF THE ASSESSEE. I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 6 E) BECAUSE THE ASSESSEE AND ITS SISTER CONCERNS ARE, T AMPERING WITH THE RECORDS. F) BECAUSE OF STATEMENT GIVEN BY SHRI ANIL AGATE THAT AT NO POINT OF TIME THE CYLINDERS WERE PARTLY FILLED-UP A ND AT NO POINT OF TIME PARTLY FILLED UP CYLINDERS WERE BROUG HT TO FILLING PLANT OF M/S. IDEAL ENGINEERS HYDERABAD LIMITED FOR REFILLING THEM. G) BECAUSE PURCHASE LEDGER OF THE ASSESSEE-COMPANY DOE S NOT TALLY WITH THE SUBSEQUENT DETAILS OF PURCHASES FILE D. H) BECAUSE THE CORRELATION OF INVOICE CUM DELIVERY CHA LLAN FOR THE SALE OF GAS AND THE SUBSCRIPTION VOUCHERS RAISE D FOR LOANING OF CYLINDER HAS PROVED BEYOND DOUBT THAT TH E SALE OF GAS AND LOANING OF CYLINDERS WERE NOT SIMULTANEOUS PROCESS. I) BECAUSE 800 CYLINDERS CLAIMED TO HAVE BEEN RETURNED BY M/S. P.K.L. LIMITED TO ASSESSEE-COMPANY WERE NEVER RETURNED TO IT. J) BECAUSE THE STATISTICS MENTIONED IN EARLIER PARAS S HOW THAT THE ASSESSEE WAS USING THIS DEVICE OF CLAIMING DEPR ECIATION ON CYLINDERS OVER THE YEARS IN CONNIVANCE WITH ITS SISTER CONCERNS. K) BECAUSE THE ASSESSEE HAS NOT OBTAINED ANY LICENCE/PERMISSION FOR POSSESSING/STORING GAS AND W ITHOUT THIS, IT CANNOT POSSESS AND STORE GAS IMPLYING THER EBY THAT THE ASSESSEE CANNOT SELL THE GAS IN CYLINDERS FOR I TS ALLEGED CLAIM OF 'PUTTING TO USE. L) BECAUSE OF THE DETAILED DISCUSSION OF STATISTICS IN THE FIRST FEW PARAS PROVING THAT THE VALUE OF ALLEGED SALE OF GAS IN CYLINDERS WAS A DEVICE ADOPTED BY THE ASSESSEE-COMP ANY OVER THE YEARS WHICH HAD NOTHING TO DO WITH THE COM MERCIAL OR BUSINESS VIABILITY. M) BECAUSE THE CONDITIONS MENTIONED ON BACK OF THE SUBSCRIPTION VOUCHERS ARE DONE TO SUIT THE CONVENIE NCE OF THE ASSESSEE AND ITS SISTER CONCERNS AND CANNOT BE RELIED UPON PROVING TO BE ONLY A PAPER TRANSACTION AS IN R EALITY 800 CYLINDERS WERE PROVED TO BE NEVER RETURNED BACK BY M/S. P.K.L. LIMITED TO ASSESSEE-COMPANY DURING THE ASST. YEAR 1995-96. N) BECAUSE OF ALL OTHER FACTORS DISCUSSED IN EARLIER P ARAGRAPHS, IN DETAILS, IT IS PROVED BEYOND DOUBT THAT IT WAS O NLY A SHAM I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 7 ARRANGEMENT BETWEEN SISTER CONCERNS OF CLOSE RELATI VE TO REDUCE THE BURDEN OF TAXATION. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE C LAIM OF DEPRECIATION OF RS. 2,08,82,545 ON CYLINDERS AND TO TREAT THE AMOUNT SHOWN TO BE RECEIVED AS A SECURITY DEPOSIT A MOUNTING TO RS. 2,32,80,000 AS A TRADING RECEIPT RECEIVED DURIN G THE COURSE OF SALE OF EMPTY CYLINDERS. 5. THUS, THE COMMON ISSUES EMERGED FROM THESE APPEALS ARE WHETHER THE SECURITY DEPOSITS COLLECTED FROM CUSTOM ERS ON LETTING OUT THE GAS CYLINDERS IS TRADING RECEIPT, WHETHER T HESE GAS CYLINDERS WOULD CONSTITUTE AS PLANT AS PER INCOME TAX ACT, IF SO, THE DEPRECIATION TO BE GRANTED AT 100% ON THESE CYLINDERS. 6. THE ASSESSEES AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ISSUE INVOLVED IN THE APPEAL STANDS COVERED BY THE ORDER OF THE TRIBUNAL, SPECIAL BENCH HYDERABAD, IN THE CASE OF D ETECTIVE DEVISES PVT LTD. (CITED SUPRA). HE FURTHER SUBMITTE D THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF LPG IN CYLINDERS TO CUSTOMERS HAS COLLECTED SECURITY DEPOSIT FROM ITS C USTOMERS. SINCE THE SECURITY DEPOSITS IS LIABILITY OF THE COMPANY AS SUCH IT WAS TREATED AS LIABILITY IN THE BALANCE SHEET. THE OWNE RSHIP OF THE LPG CYLINDERS IS WITH THE COMPANY AND COMPANY HAS GIVE N CYLINDERS TO ITS CUSTOMERS ON LEASE BASIS BY COLLECTING SECUR ITY DEPOSITS. THE LPG CYLINDERS ARE PROPERTY OF THE COMPANY AND THE N AME OF THE COMPANY HAS BEEN ENGRAVED ON THE FOOT OF THE CYLIND ERS WHICH ARE GIVEN TO CUSTOMERS. THE COMPANY HAS GIVEN CYLINDERS BY COLLECTING SECURITY DEPOSITS WHICH IS REFUNDABLE ON RETURN OF CYLINDERS BY THE CUSTOMERS. IT IS FURTHER SUBMITTED THAT THE ASSESS ING OFFICER HIMSELF EXAMINED WHERE THE COMPANY HAS RETURNED THE SECURITY DEPOSITS TO CUSTOMERS AS AND WHEN THEY RETURN THE C YLINDERS. IT IS SUBMITTED THAT THE ASSESSING OFFICER WAS WRONGLY HE LD THAT IT IS SALE TRANSACTION AND THE ASSESSEE IS SOLD CYLINDERS TO ITS I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 8 CUSTOMERS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS COLLECTED SECURITY DEPOSIT FROM ITS CUSTOMERS AND K EPT THE SAME UNDER LIABILITIES. IT WAS FURTHER SUBMITTED THAT IN FACT AS PER THE STATUTORY PROVISIONS OF INDIAN EXPLOSIVES ACT, 1884 AND GAS CYLINDERS RULES 1981 AND THE LPG (REGULATION AND SU PPLY AND DISTRIBUTION) ORDER 1993 CYLINDERS CANNOT BE SOLD A ND IT IS THE PROPERTY OF THE LICENSEE. 7. THE AR FURTHER SUBMITTED THAT DURING THE YEAR THE A SSESSEE HAS PURCHASED CYLINDERS AND TREATED AS IT AS PLANT AND CLAIMED DEPRECIATION AT 100% AS ADMISSIBLE UNDER THE ACT. SINCE THE CYLINDERS WERE PUT TO USE IN THE ASSESSEE OWN BUSIN ESS AND THE CYLINDERS ARE THE PROPERTY OF THE ASSESSEE THE DEPR ECIATION WAS CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF SECTIO N 32(I)(II) OF THE INCOME TAX ACT, 1961. THE AR HAS PLACED RELIANCE O N THE ORDER OF THE SPECIAL BENCH IN THE CASE OF DETECTIVE DEVISES PVT LTD. (CITED SUPRA). 8. THE DR ON THE OTHER HAND RELIED ON THE CIT (A) ORDE R AND SUBMITTED THAT, THE ASSESSEE WAS ACTUALLY SOLD THE CYLINDERS TO ITS CUSTOMERS AND COLLECTED TWICE THE AMOUNT OF COST WH AT IT HAS PAID FOR CYLINDERS. HE WAS OF THE VIEW THAT THERE WERE H ARDLY FEW INSTANCES OF REFUND OF DEPOSITS, ACCORDING TO HIM, ACTUALLY THERE WAS SALE OF CYLINDERS TO CUSTOMERS AND HENCE THE DE POSITS WERE IN FACT SALE PROCEEDS FOR CYLINDERS. THEREFORE, IT HAS TO BE TREATED AS SALE PROCEEDS AND CONSEQUENTLY THE DIFFERENCE BETWE EN THE COST PRICE AND SALE PRICE TO BE TREATED AS BUSINESS PROF IT OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE ASSESSE E IS NOT USED THE CYLINDERS FOR ITS OWN BUSINESS AS ENVISAGED IN THE ACT, SO AS TO CLAIM DEPRECIATION. THE ASSESSEE HAS PURCHASED THE CYLINDERS AND SOLD THEM FOR CUSTOMERS BY COLLECTING AMOUNT IN THE FORM OF SECURITY DEPOSITS. ACTUALLY THE AMOUNTS COLLECTED F ROM CUSTOMERS ARE NOTHING BUT RECOVERY OF COST OF CYLINDERS. IT W AS FURTHER I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 9 SUBMITTED THAT THE TRANSACTION HAS TAKEN PLACE BETW EEN TWO ASSOCIATED CONCERNS AND WHICH IS USED A DEVISE FOR EVADING TAX. HE RELIED ON THE ORDER OF DIVISIONAL BENCH IN THE C ASE OF G.K. KABRA VS. ACIT (87 ITD 249)(HYD) WHEREIN SIMILAR IS SUE WAS DECIDED AGAINST THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THE MATERIALS ON RECORD AND APPRAISED THE FACTS OF THE CASES. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SU PPLY OF LPG TO ITS CUSTOMERS. THE ASSESSEE SUPPLIED THE LPG CYLIND ERS TO ITS CUSTOMERS ON LEASE BASIS AND COLLECTED SECURITY DEP OSITS. THE CUSTOMERS CAN RETURN THE CYLINDERS AND TAKE BACK TH E SECURITY DEPOSITS. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE CUSTOMERS HAVE RETURNED THE CYLINDERS AND TAKEN BAC K THE SECURITY DEPOSITS. THE ASSESSEE HAS SEPARATELY COLL ECTED THE SECURITY DEPOSITS AND THE AMOUNT COLLECTED DOES NOT HAVE ANY RELATION TO THE PRICE FIXED FOR THE GOODS TO BE DEL IVERED I.E. LPG. THE AMOUNT WAS HELD BY THE ASSESSEE AS SECURITY TIL L THE CONSUMER RETURNING THE CYLINDER AND IT IS ALSO EVIDENT FROM OTHER TERMS AND CONDITIONS OF AGREEMENT ENTERED BY THE ASSESSEE WIT H THE CUSTOMERS THAT THE BUSINESS CONNECTION CAME TO END ONLY WHEN THE CONSUMER SURRENDERED THE CYLINDER. THE ASSESSEE REPAID THE DEPOSIT AS AND WHEN THE CUSTOMER RETURNED THE CYLIN DER. THUS THE CONTRACT HAS EVERY ELEMENT OF CONTRACT OF SUPPLY OF CYLINDERS ON LEASE BASIS AND AMOUNT OF DEPOSITS CONSTITUTES SECU RITY DEPOSITS JUST LIKE BORROWED FUNDS. AS FOR AS THE CONTENTION OF THE REVENUE IS CONCERNED THAT THERE WAS A TRANSFER OF OWNERSHIP I N CYLINDERS TO THE CUSTOMERS, IN OUR OPINION, THERE WAS ONLY LEAS ING OF CYLINDER TO USE THE SAME BY ASSESSEES CUSTOMERS DURING THE CURRENCY OF CONTRACT AND THERE IS NO ABSOLUTE SALE OF CYLINDER S. THE CONSUMER HAS NO RIGHT OVER THE CYLINDER AND THEY WERE PROHIB ITED FROM ALIENATING THE RIGHT OVER THE CYLINDERS. THE CYLIND ER IS TO BE RETURNED TO THE ASSESSEE COMPANY AND THE COMPANY HA S TO REFUND I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 10 THE SECURITY DEPOSIT ON ITS RETURN. FROM THE FACTS OF THE CASE, IT IS CLEAR THAT THE ASSESSEE SUPPLIED CYLINDERS AND THE CYLINDERS ARE THE PROPERTY OF THE ASSESSEE ITSELF AND THE CONSUME RS DOES NOT HAVE ANY RIGHT OR INTEREST OVER THE CYLINDERS. THE SECURITY DEPOSIT COLLECTED BY THE ASSESSEE FROM THE CUSTOMERS CANNOT BE TREATED AS RECEIVED BY THE ASSESSEE TOWARDS SALES CONSIDERATIO N BY ANY STRETCH OF IMAGINATION. THE LEARNED REPRESENTATIVES APPEARING FOR BOTH THE PARTIES STATED THAT THE ORDER OF THE TRIBU NAL IN THE CASE OF G.K. KABRA VS. ACIT (87 ITD 249) WAS SUSPENDED BY T HE HONBLE HIGH COURT IN CMP NO. 19922 OF 2002 IN ITTA NO. 86 OF 2002 DATED 3.4.2003. IT IS ALSO BROUGHT ON RECORD BY TH E PARTIES THAT SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN TH E CASE OF M/S. PRAKUN EQUIPMENTS PVT. LTD. IN ITA NO. 264/HYD/02 F OR THE ASSESSMENT YEAR 1997-98, THE TRIBUNAL VIDE ORDER DA TED 5.9.2007 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IT IS ALSO ON RECORD THAT THIS TRIBUNAL IN THE CASE OF IDEAL ENGINEERS ( HYDERABAD) PVT. LTD., HYDERABAD & ORS. IN ITA NO. 1759/HYD/1996 & O RS., VIDE ORDER DATED 20.12.2007 CONSIDERED SIMILAR FACTS AND HELD IN PARAS 6 TO 8 AS FOLLOWS: 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD. TO OUR DISMAY, WE FIND THAT THE CIT(A) HAS DISTINGUISHED THE DECISION IN THE CA SE OF DETECTIVE DEVICES (SUPRA) ON FLIMSY GROUNDS. THIS I S EVIDENT FROM THE EXPRESSION USED BY HIMSELF TO THE EFFECT THAT THE FACTS ORE 'NOT EXACTLY IDENTICAL'. ONE OF THE DIFFERENCES POINTED OUT BY HIM IS THAT THE ASSE SSEES ARE DIFFERENT. THERE CANNOT BE A FLIMSIER GROUND TH AN THIS TO DISTINGUISH ANY DECISION. ANOTHER DIFFERENC E POINTED OUT BY HIM IS THAT DETECTIVE DEVICES PVT. L TD. DEALT WITH DOMESTIC CYLINDERS WHEREAS THE ASSESSEE DEALS IN SMALLER CYLINDERS OF 2.3 KGS. EACH, IGNORI NG THE FACT THAT THE GAS CYLINDER RULES APPLY EQUALLY TO B OTH THE TYPES OF CYLINDERS. THE GAS CYLINDER RULES DEFINES 'GAS CYLINDER' TO BE A CLOSED METAL CONTAINER HAVING A VOLUME EXCEEDING 500 ML. BUT NOT EXCEEDING 1000 LTR S. INTENDED FOR THE STORAGE AND TRANSPORT OF COMPRESSE D GAS INCLUDING ~MY LIQUEFIED PETROLEUM GAS. FURTHER, WE HAVE NOT FOUND ANY PROVISION IN ANY OF THE RELEVANT I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 11 ENACTMENTS WHICH IS SPECIFICALLY APPLICABLE OR NOT APPLICABLE TO THE SMALLER CYLINDERS DEALT WITH BY T HE ASSESSEE. MOREOVER, THE ABSENCE OF WRITTEN CONTRACT ALSO DOES NOT MAKE ANY DIFFERENCE. THERE CAN BE AN ORAL CONTRACT AND UNDER THE RULES, WHEN THE ASSESSE E IS NOT ENTITLED TO SELL THE CYLINDER, THE TRANSACTION ENTERED INTO BY IT IS DEEMED TO BE PURSUANT TO SUCH ORAL CONTRACT. AS PER THE SAID CONTRACT, THE ASSESSEE IS LIABLE TO-REFUND THE DEPOSIT AS AND WHEN THE CUSTOMER SURRENDERS BACK THE CYLINDER. IT WAS IN THIS CONTEX T, THE SPECIAL BENCH HELD THAT THE BUSINESS CONNECTION CAM E TO AN END ONLY WHEN THE CONSUMERS DECIDED TO TERMINATE THE CONTRACT BY SURRENDERING THE GAS CONNECTION OR IT WOULD HOVE COME TO ON END IF NOTIC E HAD BEEN GIVEN BY EITHER PARTY. ON SUCH TERMINATION, T HE AMOUNT BECAME REPAYABLE. WE DO NOT SEE ANY MATERIAL DISTINCTION BETWEEN THE FACTS OF THE PRESENT CASE A ND THOSE IN THE CASE BEFORE THE SPECIAL BENCH. IT WAS ONLY THE AUDACITY OF THE CIT(A) NOT TO SUBMIT TO THE HIG HER WISDOM DESPITE THE FOLLOWING OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF UNION OF INDIA V. KAMLAKSHI FINANCE CORPORATION LTD., AIR 1992 SC 711 : 'IT CANNOT BE TOO VEHEMENTLY EMPHASISED THAT IT IS OF UTMOST IMPORTANCE THAT IN DISPOSING OF THE QUASI- JUDICIAL ISSUES BEFORE THEM REVENUE OFFICERS ARE BO UND BY THE DECISIONS OF THE APPELLATE AUTHORITIES. THE ORDER OF THE APPELLATE COLLECTOR IS BINDING ON THE ASSIST ANT COLLECTORS WORKING WITHIN HIS JURISDICTION AND THE ORDER OF THE TRIBUNAL IS BINDING UPON THE ASSISTANT COLLECTORS AND THE APPELLATE COLLECTORS WHO FUNCTIO N UNDER THE JURISDICTION OF THE TRIBUNAL. THE PRINCIP LES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVED LY BY THE SUBORDINATE AUTHORITIES. THE MERE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT 'ACCEPTABLE ' TO THE DEPARTMENT IN ITSELF AN OBJECTIONABLE PHRASE- A ND IS THE SUBJECT-MATTER OF AN APPEAL CAN FURNISH NO GROUND FOR NOT FOLLOWING IT UNLESS ITS OPERATION HA S BEEN SUSPENDED BY A COMPETENT COURT. IF THIS HEALT HY RULE IS NOT FOLLOWED, THE RESULT WILL ONLY BE UNDUE HARASSMENT TO ASSESSEES AND CHAOS IN ADMINISTRATION OF TAX LAWS.' THUS, RESPECTFULLY WE FOLLOW THE DECISION OF THE SP ECIAL BENCH TO HOLD THAT THE RECEIPTS OF RS. 52,06,650 AR E SECURITY DEPOSITS AND NOT THE INCOME OF THE ASSESSE E. THE JUDGMENT RELIED UPON BY THE LEARNED DEPARTMENTA L I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 12 REPRESENTATIVE IN 251 ITR 743 DOES NOT HELP THE REVENUE IN ANY MANNER. UNDOUBTEDLY, THE JUDGMENT IS IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 1980 - 81 BUT THE ISSUE BEFORE THE HIGH COURT WAS ENTIRELY DIFFERENT. FOR ASSESSMENT YEAR 1980-81, THE TRIBUNA L HAD UPHELD THE ACTION OF THE REVENUE AUTHORITIES TO TREAT THE DEPOSITS AS THE INCOME OF THE ASSESSEE. TWO MISCELLANEOUS APPLICATIONS WERE FILED BY THE ASSESS EE AGAINST THE ORDER OF THE TRIBUNAL AND THE SAME WERE DISMISSED. A THIRD MISCELLANEOUS APPLICATION WAS FI LED BY WHICH THE TRIBUNAL RECALLED ITS ORIGINAL ORDER O N THE GROUND THAT IT HAD OVERLOOKED THE PROVISIONS IN THE CONTRACT FOR RETURN OF CYLINDERS, ENTRIES IN THE BO OKS OF ACCOUNT BY WAY OF DEPRECIATION AND THE PROVISION REGARDING REFUND OF DEPOSITS. THE HIGH COURT OBSERV ED THAT A STATUTORY TRIBUNAL OR AN AUTHORITY CANNOT EX ERCISE REVIEW POWER UNLESS THE STATUTE WHICH CREATES SUCH TRIBUNAL OR AUTHORITY GRANTS SUCH POWER SPECIFICALL Y. HAVING REJECTED THE EARLIER TWO MISCELLANEOUS APPLICATIONS, NOT ON TECHNICAL GROUNDS, BUT ON MERI TS, THE ORDER MADE BY THE TRIBUNAL ON THE THIRD APPLICA TION WAS TANTAMOUNT TO REVIEW OF ITS EARLIER ORDER WHICH WAS NOT PERMISSIBLE. THUS, IN THIS CASE, THE HIGH C OURT DID NOT HAVE ANY OCCASION 10 EXPRESS ITS OPINION ON THE MERITS OF THE ADDITION AND HENCE CANNOT BE HELPFUL TO THE REVENUE. THEREFORE, IN THE LIGHT OF THE AFORESA ID DISCUSSION, WE DIRECT THE ASSESSING OFFICER TO DELE TE THE ADDITION OF RS. 52,06,650. 7. SINCE WE HAVE UPHELD THE CLAIM OF THE ASSESSEE , THE LATTER REMAINS THE OWNER OF THE CYLINDERS AND H ENCE WOULD BE ENTITLED TO DEPRECIATION AT 100% FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF PRAKUN EQUIPME NTS PVT. LTD. (SUPRA). THE ASSESSING OFFICER IS DIRECTE D TO GRANT DEPRECIATION OF RS. 33,28,534. . 8. LAST GROUND IN THE APPEAL IS WITHOUT PREJUDICE TO THE FIRST GROUND AND IS AGAINST THE ADDITION OF RS. 1,67,519 BEING THE DIFFERENCE BETWEEN THE COST OF CYLINDERS ON WHICH DEPRECIATION IS CLAIMED AND OUTGOING EXPENSES AMOUNTING TO RS. 31,61,015. SINCE WE HAVE HELD THE DEPOSITS NOT TO BE THE INCOME OF T HE ASSESSEE, THIS GROUND DOES NOT SURVIVE AND IS RENDE RED INFRUCTUOUS. 10. EVEN OTHERWISE, ASSESSABILITY OF SECURITY DEPOSITS STANDS SQUARELY COVERED BY THE ORDER OF THE SPECIAL BENCH IN THE CASE OF I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 13 DETECTIVE DEVISES LIMITED VS. INCOME TAX OFFICER ( 22 ITD 9)(HYD) WHEREIN HELD THAT: (I) IT IS OPEN TO EVERY PRUDENT BUSINESSMAN TO UTI LISE AMOUNTS WHICH COME INTO HIS COFFERS TO THE MAXIMUM ADVANTAGE. THEREFORE, THE MERE FACT THAT LARGE CASH BALANCES WERE NOT MAINTAINED DOES NOT SUPPORT THE DEPARTMENT'S STAND THAT THERE WAS NO IDEA OF RETURN ING THE DEPOSIT. THERE IS NO INSTANCE BROUGHT TO NOTICE THAT ANY CONSUMER HAD MADE A CLAIM FOR REFUND OF DEPOSIT AND THE ASSESSEE HAD BULKED SUCH PAYMENT. NOR CAN THE ASSESSEE BE EXPECTED TO KEEP LARGE CASH BALANCE S IN BOOKS UNINVITED AND FOR REASONS OF SECURITY. (II) IN THE PRESENT CASE, CERTAIN AMOUNTS WERE TAKE N AS DEPOSIT UNDER A CONTRACT, TOWARDS SECURITY OF THE CYLINDERS SUPPLIED. THE MOMENT THE SAID DEPOSITS WE RE PAID, THE CONSUMER BECAME ENTITLED TO THE SUPPLY OF GAS. GAS WAS THE COMMODITY WHICH WAS BEING SOLD. THE AMOUNT DEPOSITED DID NOT HAVE ANY RELATION TO THE P RICE FIXED FOR THE GOODS TO BE DELIVERED WHICH IN THE PR ESENT CASE WAS GAS NOR IS IT TO BE ADJUSTED OUT OF DEPOSI T. THE AMOUNT WAS HELD BY THE ASSESSEE AS SECURITY FOR THE CONSUMER RETURNING THE CYLINDER AND ALSO OBSERVING OTHER CONDITIONS OF THE CONTRACT. THE BUSINESS CONNECTION IN THE PRESENT CASE CAME TO AN END ONLY WHEN THE CONSUMERS DECIDED TO TERMINATE THE CONTRAC T BY SURRENDERING THE GAS CONNECTIONS OR IT WOULD HAV E COME TO AN END IF NOTICE HAD BEEN GIVEN BY EITHER P ARTY. ON SUCH TERMINATION, THE AMOUNT BECAME REPAYABLE. THE TRANSACTION OF DEPOSIT IN THE PRESENT CASE ALSO HAS ALL THE ESSENTIAL ELEMENTS OF A CONTRACT OF LOAN AN D THE DEPOSITS CONSTITUTE BORROWED MONEY. THE MERE FACT T HAT THE AMOUNT WAS TO BE ADJUSTED AGAINST CLAIM ARISING OUT OF POSSIBLE DEFAULT WOULD NOT ALTER THE CHARACT ER OF THE TRANSACTION. SUCH A DEPOSIT REMAINED A LOAN OF WHICH THE REPAYMENT IN FULL WAS CONDITIONED BY THE DUE FULFILMENT OF THE OBLIGATIONS UNDER THE COLLATERAL CONTRACT. THE ASSESSEE WAS FULLY SADDLED WITH THE LIABILITIES UNDER THE INDIAN EXPLOSIVE ACT AS WELL AS RULES RELATING TO GAS CYLINDERS. THE AMOUNTS RECEIV ED WERE DEPOSITS WHICH DID NOT PARTAKE THE NATURE OF TRADING RECEIPTS.- CIT VS PUNJAB DISTILLING INDUSTR IES LTD.(1964) 53 ITR 75 (SC), K,M.S. LAKSHMANIER & SON S VS. CIT (1953) 23 ITR 202 (SE) AND BADRI NARAYANAN BALKRISHAN VS. CIT (1965), 57 ITR 752 (AP) RELIED O N. I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 14 GOYAL GASES (P)LTD. VS. ITO (IT APPEAL NO. 2214 (DE L) OF 1984) APPROVED. IDEAL ENGINEERS, HYDERABAD (P) LTD. VS. ITO (IT APPEAL NO 551(HYD) OF 1985) OVERRULED. 11. FACTS AND CIRCUMSTANCES OF THE CASES BEFORE US BEIN G IDENTICAL, CONSISTENT WITH THE VIEW TAKEN IN THOSE MATTERS, IN THESE CASES ALSO THE PURCHASES OF THE CYLINDER AND LOANIN G OF THE SAME TO CUSTOMERS CAN NOT BE CONSIDERED AS DUBIOUS TRANSACT ION. IN OUR, OPINION, THE DEPOSIT RECEIVED ON LOANING OF CYLINDE RS CAN NOT BE TREATED AS SALES RECEIPT AND IT IS A LIABILITY ON T HE ASSESSEE WHICH IS REQUIRED TO BE RETURNED LIKE BORROWED MONEY AND THE REFORE AMOUNT COLLECTED AS DEPOSITS DURING RELEVANT ASSESS MENT YEARS COULD NOT BE TAXED AS TRADING RECEIPT. THUS, WE HOL D THAT THE RECEIPTS OF SECURITY DEPOSITS DO NOT CONSTITUTE SAL ES RECEIPTS AND CONSEQUENTLY THE DIFFERENCE BETWEEN THE COST PRICE OF THE CYLINDERS AND SECURITY DEPOSIT RECEIVED ON LEASING THE SAME D OES NOT CONSTITUTE AS INCOME OF THE ASSESSEE. THEREFORE, I N VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE COLLECTION OF SE CURITY DEPOSIT ON LOANING THE GAS CYLINDER COULD NOT BE TREATED AS A SALE TRANSACTION AND THE RESULTANT DIFFERENCE IS ALSO NOT BUSINESS P ROFIT OF THE ASSESSEE. ACCORDINGLY, WE DECIDE THE ISSUE IN FAVOU R OF THE ASSESSEE AND AGAINST THE REVENUE. 12. THE NEXT ISSUE BEFORE US IS WHETHER THE LPG CYLIND ERS WERE PROPERTY OF THE ASSESSEE OR NOT. IF SO, IS IT A P LANT AS DEFINED WITHIN THE MEANING OF SECTION 32 OF THE INCOME TAX ACT, 1961 AND ELIGIBLE FOR DEPRECIATION AT 100%. SO FAR AS THE D EPRECIATION ON CYLINDERS, THE CYLINDERS WERE USED BY THE ASSESSEE FOR SUPPLY OF LPG IN WHICH IT WAS DEALING. THE CYLINDERS CLEARLY CONSTITUTE PLANT HAVING REGARD TO THE DEFINITION OF TERM PLANT AS PE R THE PROVISIONS OF INCOME TAX ACT. AS THE CYLINDERS ARE PROPERTY O F THE ASSESSEE AND ALSO PLANTS USED IN THE COURSE OF ITS OWN BUSIN ESS. FURTHER THE CYLINDERS WERE USED BY THE ASSESSEE IN THE COUR SE OF ITS BUSINESS BY LEASING IT TO ITS CUSTOMERS. THE USER O F THE CYLINDERS I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 15 WERE CUSTOMERS OF THE ASSESSEE COMPANY AND LEASING OF THE CYLINDERS IS THE BUSINESS OF THE ASSESSEE AND USAGE OF CYLINDERS BY THE ASSESSEES CUSTOMERS IS TO BE CONSIDERED AS USA GE BY THE ASSESSEE ITSELF. THEREFORE, IT COULD NOT BE SAID TH AT THE CYLINDERS WERE NOT USED BY THE ASSESSEE IN ITS BUSINESS AND T HE DEPRECIATION CANNOT BE DISALLOWED. FOR THIS PROPOSITION, WE ARE SUPPORTED BY THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT V S. SHAAN FINANCE (P) LTD., (231 ITR 308) (SC) WHEREIN THE AP EX COURT HELD THAT ASSESSEE ENGAGED IN THE BUSINESS OF LEASING OU T MACHINERY IS ENTITLED TO INVESTMENT ALLOWANCES; MACHINES SO LEAS ED OUT ARE BEING USED FOR THE PURPOSE OF ASSESSEES BUSINESS A ND THERE IS NO EXPRESS REQUIREMENT IN SECTION 32A THAT THE ASSESSE E MUST ITSELF USE THE MACHINERY. 13. IN VIEW OF THE ABOVE DISCUSSION AND ALSO RELYING O N THE DECISION OF SPECIAL BENCH IN THE CASE OF DETECTIVE DEVISES LIMITED VS. INCOME TAX OFFICER (22 ITD 9) (SB) (HYD), WE D IRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION AT 100% ON CYLINDERS. ACCORDINGLY, WE DECIDE THE ISSUE IN FAVOUR OF ASSES SEE AND AGAINST THE REVENUE. 14. IN ITA NO. 155/HYD/2000 THE ASSESSEE RAISED THE GRO UND THAT ADDITION OF RS. 1,90,400 TOWARDS DIFFERENCE IN CLOSING STOCK IS UNJUSTIFIED. THOUGH THIS GROUND WAS RAISED IN THE GROUNDS OF APPEAL BY THE ASSESSEE, NO ARGUMENT WAS PUT BEFORE US. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT ARGUED BEFORE US. 15. IN ITA NO. 288/HYD/2001 (ASSESSEES APPEAL) THE A SSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN NOT ALLO WING DEDUCTION U/S. 80HHC OF THE ACT AT RS. 1,96,354 IN RESPECT OF INCOME EARNED ON THE EXPORT TURNOVER AS CLAIMED IN THE ADDITIONAL GROUND BEFORE THE CIT(A). THOUGH THIS GROUND WAS RAISED IN THE G ROUNDS OF I.T.A. NO. 288/HYD/2001 & ORS. M/S. KABSONS GAS EQUIPMENT LTD. ======================== 16 APPEAL BY THE ASSESSEE, NO ARGUMENT WAS PUT BEFORE US. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT ARGUED BEFORE US. 16. IN THE RESULT, ALL THE ASSESSEE APPEALS ARE ALLOWED EXCEPT ITA NO. 155/HYD/2000 AND 288/HYD/2001 WHICH ARE PARTLY ALLOWED. ALL THE REVENUE APPEALS IN ITA NOS. 152 & 153/HYD/2 000, 319/HYD/2001, 318 & 330/HYD/2002 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 8 TH JUNE, 2012 COPY FORWARDED TO: 1. M/S. KABSONS GAS EQUIPMENT LTD., 7-1-214/1/A, DH ARAM KARAM ROAD, AMEERPET, HYDERABAD. 2. THE JOINT COMMISSIONER OF INCOME-TAX (ASSTS.), S R-2, HYDERABAD. 3. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-4(5), HYDERABAD. 4. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2( 4), HYDERABAD. 5. THE DEPUTY COMMISSIONER OF INCOME-TAX, SPECIAL R ANGE-2, HYDERABAD. 6. THE ADDL. COMMISSIONER OF INCOME-TAX (ASSTS.), S R-2, HYDERABAD. 7. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4(5 ), HYDERABAD. 8. THE CIT(A)-III, HYDERABAD. 9. THE CIT(A)-IV, HYDERABAD. 10. THE CIT, AP-I, HYDERABAD 11. THE CIT-2, HYDERABAD 12. THE DR B BENCH, ITAT, HYDERABAD. TPRAO