ZORA PHARMA LTD., V. THE DEPUTY CIT, COM. CIRCLE-7(4),

ITA 1586/AHD/2003

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7681 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-06-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 16-04-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M G PATEL
• Keywords: Depreciation; Additional evidence; Speculation loss; Assessment record; Set aside; Capital Gains
• Section: 68; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.1586/AHD/2003 (ASSESSMENT YEAR: 1998-99) ZORA PHARMA LIMITED, 604, ANIKET, C G ROAD, NAVRANGPURA, AHMEDABAD V/S THE DEPUTY COMMISSIONER OF INCOME-TAX, CO. CIRCLE- 7(4), AHMEDABAD (APPELLANT) (RESPONDENT) ITA NO.1476/AHD/2003 (ASSESSMENT YEAR: 1998-99) THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-8, AHMEDABAD V/S ZORA PHARMA LIMITED, 604, ANIKET, C G ROAD, NAVRANGPURA, AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI M G PATEL DEPARTMENT BY:- SHRI JAYANT JHAVERI, SR. DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER) : THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORDER OF THE CIT(A) DAT ED 30-01-2003 FOR ASSESSMENT YEAR (AY) 1998-99. ITA NO.1476/AHD/2003 BY THE REVENUE : 2 THE ONLY ISSUE INVOLVED IN THIS APPEAL FILED BY THE REVENUE RELATES TO DELETION OF THE ADDITION OF RS.1 8,44,856/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN U/S 68 OF THE INCOME-TAX ACT, 1961 [THE ACT FOR SHORT]. THE BRIEF 2 FACTS OF THE CASE ARE THAT THE AO ADDED THE DIFFERE NCE BETWEEN THE OPENING BALANCE AMOUNTING TO RS.41,55,144/- AND CLOSING BALANCE AMOUNTING TO RS.60,00,000/- U/S 68 OF THE A CT FOR THE INTER-CORPORATE DEPOSITS RECEIVED BY THE ASSESSEE, EVEN THOUGH THE ASSESSEE HAS DULY FURNISHED THE CONFIRMATIONS A LONG WITH THE COPIES OF ACCOUNTS AND ADDRESSES IN RESPECT OF ALL THE DEPOSITS ACCEPTED FROM THE MEMBERS AND PUBLIC. WHEN THE MATT ER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 6.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO AS WELL AS THE SUBMISSION OF THE APPELLANT. IN ORDE R TO VERIFY THE CORRECTNESS OF APPELLANTS CONTENTIONS T HAT NECESSARY DETAILS INCLUDING CONFIRMATION HAVE BEEN FURNISHED BEFORE THE AO IN RESPECT OF THE DEPOSITS, THE ASSESSMENT RECORDS HAVE BEEN CALLED FOR FROM THE PR ESENT AO AND ON SCRUTINY OF THE SAME, IT IS REVEALED THAT IN RESPECT OF THE DEPOSITS AMOUNTING TO RS.18,44,856/- , WHICH WERE RECEIVED FROM THREE PARTIES, I.E. VITRAG TRADE RS P. LTD., GOKUL METALIZERS P. LTD., AND ARMAN LEASE & F INANCE LTD., THE APPELLANT HAS FURNISHED NECESSARY CONFIRM ATION INCLUDING THE MODE OF PAYMENT, I.E. A/C PAYEE CHEQU E, COPY OF A/C OF THE PARTIES CONCERNED, PAN ETC. IN THIS CONNECTION, IT IS WORTHWHILE TO MENTION HERE THAT T HERE ARE VARIOUS JUDICIAL PRONOUNCEMENTS, WHICH PUT EMPHASIS THAT TO PROVE THE GENUINENESS OF THE CASH CREDIT, THREE BASIC CONDITIONS ARE TO BE FULFILLED BY THE APPELLANT, I. E. THE GENUINENESS OF TRANSACTION, IDENTITY OF CREDITORS A S WELL AS THE CAPACITY OF THE PARTIES WHO DEPOSIT THE AMOUNT WITH THE APPELLANT. SINCE THE APPELLANT HAS BEEN ABLE TO PRO VE THE GENUINENESS OF THE DEPOSITS AMOUNTING TO RS.18,44,8 56/- BY FURNISHING THE NECESSARY DETAILS, INCLUDING CONFIRM ATION FROM THE PARTIES CONCERNED, THE AO IS NOT JUSTIFIED IN MAKING THE SAID ADDITION U/S 68 AND THE SAME IS DIR ECTED TO BE DELETED. 3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW AND PERUSED THE MATERIAL ON R ECORD. WE 3 NOTED THAT THE ASSESSEE HAS RECEIVED THE DEPOSITS F ROM THREE PARTIES, VIZ., VITRAG TRADERS P. LTD., GOKUL METALI ZERS P. LTD., AND ARMAN LEASE & FINANCE LTD., AMOUNTING TO RS.18, 44,856/- THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE HAD DU LY FURNISHED THE CONFIRMATIONS INCLUDING THE AMOUNT OF PAYMENT, COPIES OF ACCOUNTS OF THE PARTIES CONCERNED, THEIR PA NUMBERS AND THUS PROVED THE GENUINENESS OF THE TRANSACTIONS , IDENTITY OF THE CREDITORS AND THE CAPACITY OF THE PARTIES. SIN CE THE ASSESSEE HAS COMPLIED WITH ALL THE THREE INGREDIENTS AS REQU IRED U/S 68, THEREFORE, IN OUR OPINION, NO ADDITION WAS REQUIRED TO BE MADE. THE CIT(A), IN OUR OPINION, HAS RIGHTLY DELETED THE ADDITION IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF CIT V ORISSA CORPORATION PVT. LTD. 159 ITR 78 (SC) . THE ASSESSEE IS NOT REQUIRED, IN OUR OPINION, TO PROVE THE SOURCE OF SOURCE IN VIEW OF THE DECISION OF THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF DCIT V ROHINI BUILDERS 256 ITR 360 (GUJ) . EVEN THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V PRAGATI CO-OP. BANK LTD. 278 ITR 170 (GUJ) ALSO SUPPORTS THE CASE OF THE ASSESSEE. WE, THEREFORE, DISMISS THE A PPEAL OF THE REVENUE, AS IN OUR OPINION, IT IS NOT A FIT CASE WH ICH WARRANT OUR INTERFERENCE. ITA NO.1586/AHD/2003 BY THE ASSESSEE : 4 THE FIRST GROUND RELATES TO DISALLOWANCE OF 1/6 TH OF TECHNICAL KNOW-HOW FEES OF RS.34,00,000/-. AFTER HE ARING THE RIVAL SUBMISSIONS, WE FIND THAT THIS GROUND IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF THE ASSESS EE IN ITA NO.1231/AHD/2003 FOR AY 1997-98 IN WHICH THIS TRIBU NAL VIDE ORDER DATED 04-01-2008 ALLOWED THE DEDUCTION TO THE ASSESSEE BY OBSERVING AS UNDER:- 4 3. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE FIND THAT THE ACIT AFTER THE ORDER OF THE TRIBUNAL AND THAT OF THE CIT(A) FOR AY S 1995-96 AND 1996-97 ON THE SAME ISSUE, HAS ALLOWED THE DEDUCTIO N TO THE ASSESSEE 1/6TH OF THE SUM OF RS.34 LACS IN EACH OF THE ASSES SMENT YEARS U/S 35AB BY OBSERVING VIDE ORDER DATED 27-11-2005, AS U NDER:- 4. THE ASSESSEE COMPANY IN SUPPORT OF ITS CLAIM HA S DURING THE PROCEEDINGS FOR AY 1996-97 PRODUCED COPY OF CON TACT WITH DR. C G KARANJGOAKAR, AFFIDAVIT OF DR. C G KARANJGO AKAR CONFIRMING THE RENDERING OF SERVICES AND ALSO THE P ROFILE OF DR. C G KARANJGOAKAR OUTLINING HIS TECHNICAL EXPERTISE FOR RENDERING SERVICES TO PHARMACEUTICAL INDUSTRIES. IN VIEW OF THESE AND IN VIEW OF THE ABOVE FINDING IN AY 1995-9 6 AND IN VIEW OF THE FACT THAT NO SPECIFIC EVIDENCES ESTABLI SHING THAT THE EXPENSES INCURRED IN AY 1995-96 ON ACCOUNT OF SERVI CES RENDERED BY DR. C G KARANJGOAKAR WERE NON-GENUINE, THE ASSESSEE IS ALLOWED 1/6TH OF THE SAID EXPENSES U/S 35AB. 5. HOWEVER, IT MAY BE MENTIONED THAT THE TOTAL INCO ME AFTER DEPRECIATION COMES TO RE. NIL AND THEREFORE THERE I S NO PROFIT AVAILABLE FOR SET OFF OF THE DEDUCTION U/S 35AB OF THE ACT. IN THE CIRCUMSTANCES THE INCOME ORIGINALLY ASSESSED AT RE. NIL STANDS UNALTERED. WE, THEREFORE, ACCORDINGLY DIRECT THE AO TO ALLOW T HE DEDUCTION TO THE ASSESSEE 1/6TH OF RS.34 LACS U/S 35AB OF THE ACT. T HUS, THIS GROUND IS ALLOWED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH IS TRIBUNAL, WE ALLOW THE DEDUCTION TO THE ASSESSEE OF1/6 TH OF RS.34,00,000/- U/S 35AB OF THE ACT. 5 GROUND NO.2 RELATES TO LOSS ON SALE OF SHARES AMOUNTING TO RS.54,942/-. AFTER HEARING THE RIVAL S UBMISSIONS, WE FIND THAT THIS GROUND IS ALSO DULY COVERED BY TH E DECISION OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO.1231/AHD/2003 FOR AY 1997-98 IN WHICH THIS TRIBU NAL VIDE 5 ORDER DATED 04-01-2008 SUSTAINED THE DISALLOWANCE B Y OBSERVING AS UNDER:- 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS, AND GONE THROUGH THE ORDER OF THE TAX AUTHORITIES. WE H AVE ALSO GONE THROUGH EXPLANATION TO SECTION 73 OF THE ACT, WHICH READS AS UNDER: EXPLANATION. WHERE ANY PART OF THE BUSINESS OF A COMPANY ( [OTHER THAN A COMPANY, WHOSE GROSS TOTAL INCOME CONSISTS M AINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SE CURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME F ROM OTHER SOURCES], OR A COMPANY THE PRINCIPAL BUSINESS OF W HICH IS THE BUSINESS OF BANKING OR THE GRANTING OF LOANS AND AD VANCES) CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUS INESS CONSISTS OF THE PURCHASE AND SALE OF SUCH SHARES.] ON GOING THROUGH THIS EXPLANATION, WE FIND THAT THI S EXPLANATION IS APPLICABLE IF ANY PART OF THE BUSINESS OF A COMPANY CONSISTS OF PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUC H COMPANY SHALL BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS FOR THE PURPOSE OF SECTION 73 TO THE EXTENT THE BUSINESS CONSISTS OF P URCHASE AND SALE OF SHARES. EXCEPTIONS ARE ALSO GIVEN UNDER THE EXPLANA TION. IT IS NOT THE CASE OF THE ASSESSEE THAT ITS CASE FALL WITHIN THE EXCEPTIONS. FROM PLAING READING OF THIS EXPLANATION, IT IS APPARENT THAT THE BUSINESS OF PURCHASE AND SALE OF SHARES BE REGARDED TO BE THE S PECULATION BUSINESS. THIS SECTION DOES NOT STATE THAT ONLY THE PROFITS / LOSS INCURRED ON PURCHASE AND SALE OF SHARES BE REGARDED TO BE THE S PECULATION PROFIT / LOSS. THUS THE PROFIT AND LOSS FROM THE PURCHASE AN D SALE OF SHARES WILL BE COMPUTED SEPARATELY AND WHILE COMPUTING THE PROF IT / LOSS ON THE PURCHASE AND SALE OF SHARES, NATURALLY THE OPENING STOCK AND CLOSING STOCK OF THE SHARES HAS TO BE ACCOUNTED FOR AND HAS TO BE VALUED IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE. IT IS NOT THE CASE OF THE ASSESSEE THAT T HE SHARES WERE HELD BY THE ASSESSEE AS AN INVESTMENT AND THE ASSESSEE HAS DEBITED THE FALL IN THE VALUE OF SHARES HELD AS AN INVESTMENT TO THE P& L A/C. THE ASSESSEE IN THIS CASE HAS VALUED THE SHARES AS PER THE METHO D OF VALUATION CONSISTENTLY FOLLOWED BY THE ASSESSEE, HELD AS STOC K-IN-TRADE. THE SHARES HAVE BEEN VALUED AT MARKET VALUE AS THE COST WAS HIGHER. WE THEREFORE DO NOT AGREE WITH THE CONTENTIONS OF THE LEARNED AR THAT THIS LOSS WHICH HAS ARISEN DUE TO THE VALUATION OF THE C LOSING STOCK WILL NOT BE COVERED UNDER EXPLANATION TO SECTION 73 OF THE A CT. WE THEREFORE 6 DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDE R OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE AND ALLOWING THE ASSESS EE TO CARRY FORWARD THIS LOSS AS SPECULATION LOSS. THUS, THIS G ROUND STANDS DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH IS TRIBUNAL, WE CONFIRM THE DISALLOWANCE AS SUSTAINED BY THE CIT (A) . 6 GROUND NO.3 RELATES TO SUSTENANCE OF RE-COMPUTAT ION OF BOOK PROFIT BY THE AO U/S 115JA AFTER DISALLOWIN G THE DIFFERENTIAL AMOUNT OF DEPRECIATION OF RS.28,56,067 /- PROVIDED IN THE BOOKS OF ACCOUNTS ON ACCOUNT OF CHANGE IN METHO D OF PROVIDING THE DEPRECIATION. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND THAT THIS ISSUE IS ALSO DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO.1231/AHD/2003 FOR AY 1997-98 IN WHICH THIS TRIBU NAL VIDE ORDER DATED 04-01-2008 UNDER PARA-8 HAS ALLOWED GRO UND NO.3 BY OBSERVING AS UNDER:- 6. THE THIRD GROUND RELATES TO THE DISALLOWANCE O F DIFFERENTIAL AMOUNT OF DEPRECIATION OF RS.71,28,151 /- WHILE COMPUTING THE BOOK PROFIT U/S 115JA OF THE ACT. THE BRIEF FAC TS RELATING TO THIS GROUND ARE THAT THE ASSESSEE HAS CALCULATED THE DEP RECIATION AT RS.1,64,27,961/- ON THE BASIS OF THE CHANGE IN THE METHOD OF DEPRECIATION FROM STRAIGHT LINE METHOD TO WRITTEN D OWN METHOD FOR TMBA AND TMP PLANTS. DUE TO CHANGE IN THE METHOD OF CALCULATION OF DEPRECIATION, THERE IS ADDITIONAL CHARGE OF RS.7 1,28,151/- INCLUDED IN THE DEPRECIATION DEBITED AMOUNTING TO RS.1,64,27 ,961/- RELATING TO ALL PREVIOUS YEARS SINCE THE EXISTENCE OF THESE PLA NTS. THE AO THEREFORE WAS OF THE VIEW THAT THE ASSESSEE HAS DEB ITED HIGHER DEPRECIATION DURING THE YEAR TO THE P&L A/C. AND AC CORDINGLY DISALLOWED THE DEPRECIATION A SUM OF RS.71,28,151/- RELATING TO THE EARLIER YEAR WHILE COMPUTING THE BOOK PROFIT U/S 11 5JA. 7. THE LEARNED AR BEFORE US CONTENDED THAT THE CAS E OF THE ASSESSEE IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. V CIT (2002) 255 ITR 273 (SC) AND THE 7 AO CAN NOT RE-WRITE THE PROFIT AND LOSS ACCOUNT AS HAS BEEN ADOPTED IN THE ANNUAL GENERAL MEETING. THE ADJUSTMENT CAN BE M ADE AS PERMISSIBLE UNDER THE EXPLANATION GIVEN U/S 115JA. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). ON A QUERY FROM THE BENCH WHETHER THE DEPRECIATION DEBITED BY THE ASSESSEE IN ITS P&L A/C. FALLS UNDER ANY OF THE CLAUSES OF THE EXPLANATION, THE LEARNED DR W AS FAIR ENOUGH TO CONCEDE THE POSITION THAT IT DOES NOT FALL UNDER AN Y OF THE CLAUSES GIVEN UNDER THE EXPLANATION TO SECTION 115JA. 8 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE FIND THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA), WHEREIN T HE HON'BLE SUPREME COURT HAS HELD AS UNDER: THE ASSESSING OFFICER, WHILE COMPUTING THE BOOK PR OFITS OF A COMPANY ' UNDER SECTION 115] OF THE INCOME-TAX ACT , 1961, HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS O F ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIE S ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OFFICER, THEREAFTER, H AS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO SECTION 115]. THE ASSESSI NG OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFITS SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION. THE USE OF THE WORDS 'IN ACCORDANC E WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI TO TH E COMPANIES ACT' IN SECTION 115J WAS MADE FOR THE LIMITED PURPO SE OF EMPOWERING THE ASSESSING OFFICER TO RELY UPON THE A UTHENTIC STATEMENT OF ACCOUNTS OF THE COMPANY. WHILE SO LOOK ING INTO THE ACCOUNTS OF THE COMPANY, THE ASSESSING OFFICER HAS TO ACCEPT -THE AUTHENTICITY OF THE ACCOUNTS WITH REFER ENCE TO THE PROVISIONS OF THE COMPANIES ACT, WHICH OBLIGATE THE COMPANY TO MAINTAIN ITS ACCOUNTS IN A MANNER PROVIDED BY TH AT ACT AND THE SAME TO BE SCRUTINIZED AND CERTIFIED BY STATUTO RY AUDITORS AND APPROVED BY THE COMPANY IN GENERAL MEETING AND THEREAFTER TO BE FILED BEFORE THE REGISTRAR OF COMPANIES WHO H AS A STATUTORY OBLIGATION ALSO TO EXAMINE AND BE SATISFI ED THAT THE ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANC E WITH THE REQUIREMENTS OF THE COMPANIES ACT. SUB-SECTION (1A) OF SECTION 115] DOES NOT EMPOWER THE ASSESSING OFFICER TO EMBARK UPON A FRESH ENQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY,' 8 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E HON'BLE SUPREME COURT, WE SET ASIDE THE ORDER OF THE CIT(A) AND ALL OW THE GROUND RAISED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THIS TRIBUNAL, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION MADE U/S 115JA AMOUNTING TO RS.28,56,067/- . 7 GROUND NO.4 RELATES TO THE DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSEE AT THE RATE OF 100% ON EFFLUENT TREATMENT PLANT AS WELL AS ON LABORATORY E QUIPMENT. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND THAT T HIS ISSUE IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN TH E CASE OF THE ASSESSEE IN ITA NO.1231/AHD/2003 FOR AY 1997-98 IN WHICH THIS TRIBUNAL VIDE ORDER DATED 04-01-2008 VIDE PARA-10 H AD ALLOWED THE DEPRECIATION TO THE ASSESSEE AT THE RATE OF 100 % ON EFFLUENT TREATMENT PLANT AND 25% ON LABORATORY EQUIPMENT, BY OBSERVING AS UNDER:- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE FIND THAT BEFORE THE CIT(A) THE ASSESSEE HAS SUBMITTED THAT IT WAS DULY EXPLAIN ED TO THE AO THAT DURING THE YEAR UNDER CONSIDERATION, DEPRECIATION H AS BEEN CLAIMED AT 100% ON EFFLUENT TREATMENT PLANT OF RS.12,13,394/- AND IT WAS ALSO EXPLAINED THAT THE SAME ALSO INCLUDED ITEMS OF REVE NUE EXPENDITURE WHICH HAVE BEEN CAPITALIZED AS BEING DIRECTLY RELAT ING TO THE SAID PLANT. FURTHER THE NECESSARY CERTIFICATE ABOUT THE PLANT AND MACHINERY UTILIZED FOR EFFLUENT TREATMENT WAS ALSO SUBMITTED. WE FIND THAT THE AO HAS RIGHTLY ALLOWED 100% DEPRECIATION ON EFFLUEN T TREATMENT PLANT AND 25% DEPRECIATION ON LABORATORY EQUIPMENT. BEFORE US ALSO NO COGENT EVIDENCE OR MATERIAL WAS BROUGHT TO OUR K NOWLEDGE TO PROVE THAT THE LABORATORY EQUIPMENTS ARE INSTALLED BY THE ASSESSEE COMPANY FOR THE PURPOSE OF EFFLUENT TREATMENT PLANT / RESEARCH AND DEVELOPMENT, WHICH ARE ENTITLED TO 100% DEPRECIATIO N. WE ACCORDINGLY DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(A). WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. THUS, THIS GROUND STANDS DISMISSED. 9 RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THIS TRIBUNAL, WE DIRECT THE AO TO ALLOW THE DEPRECIATION ON THE EFFL UENT TREATMENT PLANT AT THE RATE OF 100% WHILE ON THE LABORATORY E QUIPMENT TO BE ALLOWED AT THE RATE OF 25%. 8 THE LAST GROUND RELATES TO SUSTENANCE OF ADDITIO N OF RS.15,99,775/- U/S 68 OF THE ACT. THE ASSESSEE SUBM ITTED THE ADDITIONAL EVIDENCES BY MOVING AN APPLICATION U/ 29 OF THE ACT. AFTER HEARING THE RIVAL SUBMISSIONS, WE ADMIT THE A DDITIONAL EVIDENCES AS IN OUR OPINION IT IS A FIT CASE WHERE ADDITIONAL EVIDENCES ARE TO BE ADMITTED TO RENDER SUBSTANTIAL JUSTICE. WE NOTED THAT EXAMINATION OF THESE ADDITIONAL EVIDENCE S BY THE AO IS NECESSARY. IN THE INTEREST OF JUSTICE AND FAIR P LAY TO BOTH THE PARTIES, WE SET ASIDE THE ORDER OF THE CIT(A) AND R ESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL RE-EXAMINE THIS ISSUE AFRESH AFTER CONSIDERING THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE WHICH CONTAIN T HE DETAILS OF UNSECURED LOANS, COPIES OF CHEQUES DEPOSITED RETURN ED AS ON 31- 03-1998, COPY OF CERTIFICATE, COPY OF RESOLUTION PA SSED BY THE BOARD OF DIRECTORS OF THE COMPANY IN ITS MEETING HE LD ON 30-06- 1998 AND THE COPIES OF FIXED DEPOSIT APPLICATION FO RMS. THE ASSESSEE IS ALSO DIRECTED TO SUBMIT ALL OTHER EVIDE NCES ON WHICH HE MAY RELY SO THAT THE AO CAN GIVE A CLEAR-CUT FIN DING WHETHER THE PROVISIONS OF SECTION 68 ARE APPLICABLE SO FAR AS THIS ADDITION IS CONCERNED AND WHETHER THE ASSESSEE HAS DISCHARGE D HIS ONUS IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT V PRAGATI CO-OP. 278 ITR 170 AND THAT OF DCI T V ROHINI BUILDERS 256 ITR 360. THE AO IS FURTHER DIRECTED TO CONSIDER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F 159 ITR 780 AND GIVE A SPECIFIC FINDING HOW FAR THESE DECIS IONS ARE NOT 10 APPLICABLE IN THE CASE OF THE ASSESSEE BEFORE APPLY ING THE PROVISIONS OF SECTION 68, AS IN OUR OPINION, SECTIO N 68 LAYS DOWN THE RULE OF EVIDENCE THAT IF ANY CASH CREDIT IS FOU ND IN THE BOOKS OF THE ASSESSEE, THE ASSESSEE HAS TO EXPLAIN THE NA TURE AND SOURCE OF SUCH DEPOSITS TO THE SATISFACTION OF THE AO. THU S, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 9 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED WHILE THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-07-2009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 10-07-2009 COPY OF THE ORDER FORWARDED TO : 1. ZORA PHARMA LIMITED, 604, ANIKET, C G ROAD, NAVRANGPURA, AHMEDABAD 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CO. CIRCL E- 7(4), AHMEDABAD THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-8, AHMEDABAD 3. THE CIT CONCERNED 4. THE CIT(A)-XIV, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. R/AR, ITAT, AHMEDABAD