JCIT(OSD), Circle - 4, Kolkata, Kolkata V. M/s. Keventer Agro Ltd., Kolkata

ITA 1663/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78358 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 05-12-2011
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Capital asset; Business income; Business expenditure; Proportionate interest; Capital receipt; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1663 /KOL/2011 #$ %&/ ASSESSMENT YEAR: 2000-01 & ' / I.T.A NO.1664/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2003-04 & ' / I.T.A NO.1665/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2005-06 JOINT COMMISSIONER OF INCOME-TAX (OSD), VS. M/S. K EVENTER AGRO LTD. CIRCLE-4, KOLKATA. (PAN: AABCK1716D) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 18.06.2014 DATE OF PRONOUNCEMENT: 30.06.2014 FOR THE APPELLANT: SHRI D. J. MEHTA, JCIT, SR. DR FOR THE RESPONDENT: SHRI S. K. TULSIYAN, ADVOCAT E / ORDER PER SHRI MAHAVIR SINGH, JM : ALL THESE APPEALS BY REVENUE ARE ARISING OUT OF SEP ARATE ORDERS OF CIT(A)-XIX, KOLKATA IN APPEAL NOS 508,509,510/CIT(A)-XIX/ITO,WD4(4)/KOL /08-09 DATED 01.09.2011, 02.09.2011 AND 05.09.2011. ASSESSMENTS WERE FRAMED BY ITO, WA RD-4(4), KOLKATA U/S. 147/ 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) FOR ASSESSMENT YEARS 2000-01, 2003-04 AND 2005-06 VIDE HIS SEPARATE ORDERS DATED 31.03.2006 (FOR AY 2000-01 & 2003-04) AND 26.12.2007 (FOR AY 2005-06). 2. THE FIRST ISSUE IN THE APPEAL OF REVENUE BEING I TA NO. 1663/KOL/2011 FOR AY 2000-01 IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITIO N MADE BY AO ON ACCOUNT OF UNACCOUNTED RECEIPT FROM NATIONAL DAIRY DEVELOPMENT BOARD (IN S HORT NDDB). FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) ERRED IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS.12,32,996/- ON AC COUNT OF UNACCOUNTED RECEIPTS FROM NATIONAL DAIRY DEVELOPMENT BOARD WITHOUT APPRECIATI NG THE FACT THAT THE AO MADE SUCH 2 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 ADDITION ON THE BASIS OF MATERIALS ON RECORD AND EX PLANATION OFFERED BY THE ASSESSEE COMPANY. 3 . BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF FRUIT JUICE UNDER THE TRADE NAME OF FROOTI AND ALSO MINERAL WATER UNDER THE TRADE NAME OF BAILLEY BOTH AS LICENCEE/ FRANCHISEE OF PARLE AGRO (P) LTD., MUMBAI. THE ASSESSEE COMPANY ALSO CARRIES OUT PACKING OF DH ARA OIL AT ITS FACTORY PREMISES SITUATED AT FATEABAD, P.O. BARASAT, NORTH 24 PARGANAS, WEST BEN GAL ON BEHALF OF DHARA VEGETABLE OIL & FOOD CO. LTD. BARASAT. THE ASSESSEE COMPANY IS ALS O RUNNING A MILK DAIRY AT BARASAT, KOLKATA UNDER THE NAME AND STYLE OF METRO DAIRY LTD. IN TER M OF JOINT VENTURE WITH W.B. STATE COOPERATIVE MILK PRODUCERS FEDERATION LTD. (IN SHOR T WBSCMPFL). IN THE RELEVANT ASSESSMENT YEAR, ASSESSMENT WAS FRAMED BY THE AO U/ S. 143(3) OF THE ACT AFTER VERIFYING THE BOOKS OF ACCOUNT, BANK STATEMENTS AND OTHER DOCUMEN TS. SUBSEQUENTLY, THE AO ISSUED NOTICE U/S. 148 OF THE ACT AND ASSESSMENT WAS FRAMED U/S. 147 READ WITH SECTION 143(3) OF THE ACT. AS REGARDS TO THIS ISSUE OF UNACCOUNTED RECEIPTS ADDED BY AO, THE FACTS ARE THAT THE ASSESSEE COMPANY CARRIES ON ACTIVITIES OF PACKAGING OF DHARA OIL ON BEHALF OF DHARA VEGETABLE OIL & FOOD CO. LTD. THE ASSESSEE DURING THE RELEVANT ASS ESSMENT YEAR CREDITED ITS P&L ACCOUNT WITH A SUM OF RS.1,20,27,912/- BY WAY OF PACKAGING CHARG ES AS PER SCHEDULE 11 OF THE AUDITED ACCOUNTS RECEIVED/RECEIVABLE FROM NDDB IN RESPECT O F PACKAGING ACTIVITY CARRIED ON BY THEM ON THEIR BEHALF. THE ASSESSEE CLAIMED TDS AND FILE D TDS CERTIFICATES, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREIN TH FIGURE OF RECEIP TS IS AT RS.1,32,60,908/-. THE ASSESSEE BEFORE THE AO CLAIMED THAT THE ASSESSEE COMPANY HAS CREDITED A SUM OF RS.1,20,27,912/- IN ITS AUDITED P&L ACCOUNT UNDER THE HEAD PACKAGING CHARGE S. AFTER CONSIDERING THE PACKAGING CHARGES RELATING TO OPENING AND CLOSING STOCK OF PA CKAGED MILK, WHICH PRACTISE WAS CONSISTENTLY FOLLOWED BY ASSESSEE, IT WAS EXPLAINED THAT THE FOL LOWING TWO AMOUNTS DO NOT FORM PART OF PACKAGING CHARGES RECEIPT IN THE SUM OF RS.1,20,27, 912/- AS CREDITED IN THE P&L ACCOUNT UNDER SCHEDULE 11 DUE TO THE REASONS AS UNDER: I) A SUM OF RS.7,22,107/- BEING THE AMOUNT OF PACKA GING CHARGES ALREADY BOOKED AND OFFERED FOR TAXATION IN THE YEAR ENDING 31.03.1999 RELEVANT TO AY 1999- 2000. THE ASSESSEE ALSO FILED EVIDENCE IN THE SHAP E OF STATEMENT FORMING PART OF PAPER BOOK. EVEN THE STATEMENT WAS FILED BEFORE US AT PAGE 27 AND AT PAGE 28 OF ASSESSEES PAPER BOOK. THE ASSESSEE HAS RECONCILED THE FIGURE OF RS.7,22,171/-. II) THE ASSESSEE ALSO EXPLAINED THE SUM OF RS.4,62, 597/- BEING THE AMOUNT RECEIVED FROM NDDB BUT REFLECTED THE SAME IN ITS AU DITED ACCOUNT FOR THE YEAR UNDER APPEAL AS PART OF OTHER INCOME AS IS EVIDENT FROM THE STATEMENT FORMING PART 3 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 OF PAPER BOOK AT PAGES 27 TO 31. BUT THE AO WAS NO T CONVINCED BY THE DETAILS AND HE MADE ADDITION. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT (A). BEFORE CIT(A) ASSESSEE MADE SAME SUBMISSIONS AS MAD BEFORE THE AO. THE CIT(A) AFTER GOING THROUGH THE SUBMISSIONS DECIDED THE ISSUE VIDE PARA 12 OF HIS ORDER ON THE BASIS OF THE ABOVE SUBMISSIONS AND THE RELEVANT PARA READS AS UNDER: (12) I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE P & L A/C, STAT EMENT OF DETAILS OF TDS CERTIFICATES AND CORRESPONDNG INCOME SUBMITTED BEFORE THE AO, D ETAILS OF MONTH-WISE PACKING CHARGES FOR F.Y. 1998-99 AND 1999-2000 AND DETAILS OF OTHER INCOME/MISELLANEOUS INCOME. ALL THESE DETAILS AND DOCUMENTS WERE ALSO P RODUCED BEFORE THE AO. AS MENTIONED ABOVE, DURING THE ASSESSMENT PROCEEDINGS IT WAS OBS ERVED BY THE AO THAT THERE WAS DIFFERENCE OF RS.12,32,996/- BETWEEN THE RECEIPTS F ROM NDDB AS PER TDS CERTIFICATES VIS- A-VIS THE P & L A/C. ON BEING QUESTIONED, THE APPEL LANT COMPANY FILED EXPLANATON BEFORE THE AO ALONG WITH VARIOUS STATEMENT AND DETAILS IN SUPPORT OF ITS EXPLANATION. HOWEVER, IT IS OBSERVED THAT THE AO REJECTED THE EXPLANATION OF THE APPELLANT COMPANY BY MERELY STATING THAT AS PER TDS CERTIFICATES ISSUED BY NDD B IT IS SEEN THAT TOTAL OF RS.1,32,60,998/- HAS BEEN CREDITED IN THE ACCOUNTS OF THE ASSESSEE FOR THE CONTRACT JOB UNDERTAKEN (PACKING CHARGES) DURING THE PERIOD FROM 1/4/99 TO 31/3/2000 AGAINST WHICH TDS OF RS.2,91,739/- HAD BEEN DEDUCTED. ASSESSEES REPLY IS NOT CONVINCING. ASSESSEE FOLLOWED THE MERCANTILE ACCOUNTING SYSTEM. SO TOTAL CREDIT OF CONTRACT CHARGES SHOULD BE TAKEN INTO ACCOUNT THIS YEAR UNDE CONSIDERATION. HE NCE, THE DIFFERENCE OF RECEIPTS OF RS.12,32,996/- IS ADDED TO THE INCOME. ON CAREFUL CONSIDERATION OF THE FACTS AND PERUSAL OF THE STATEMENT AND DETAILS FURNISHED BEFORE THE A O, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.12,32,996/-. IT APPEARS THAT ETHER THE AO DID NOT UNDERSTAND THE SUBMISSION AND DETAILS FILED BY THE APPELLANT COMPANY OR DID NOT TRY TO UNDERSTAND THE SAME. I AM OF THE OPINION THAT AN AD DITION TO THE TOTAL INCOME CANNOT BE MADE BY SIMPLY STATING THAT THE REPLY OF THE ASSESS EE IS NOT CONVINCING. THE A0 HAS NOT GIVEN ANY REASON IN SUPPORT OF HIS AFORESAID STATEM ENT/CONCLUSION. ONCE, AN EXPLANATON AND SUPPORTING STATEMENTS/DETAILS WERE FILED BEFORE THE AO, THE ONUS WAS ON THE AO TO STATE AS TO WHY THE EXPLANATION FURNISHED BY THE AP PELLANT WAS NOT CORRECT OR COULD NOT BE ACCEPTED. HOWEVER, THE AO HAS NOT DONE SO. ON THE O THER HAND ON VERIFICATION OF DETAILS AND STATEMENT ALONG WITH EXPLANATION OF THE APPELLA NT, ITS CONTENTION IS FOUND TO BE CORRECT THAT SUM OF RS.7,22,171/- ON ACCOUNT OF PAC KING CHARGES WAS ATREADY BOOKED AND OFFERED FOR TAXATION IN A.Y. 1999-2000 AS THE BILL OF THE SAD AMOUNT WAS RAISED IN THE MONTH OF MARCH, 1999 AND AS ON 31/3/1999 THAT SUM W AS RECEIVABLE. THE AMOUNT WAS RECEIVED IN AY. 2000-01 ON WHICH TAX WAS ALSO DEDUC TED BUT IT WAS ALREADY OFFERED BY THE APPELLANT FOR TAX IN A.Y. 1999-2000. THE CONTENTION OF THE APPELLANT THAT SUM OF RS.4,62,597/- RECEIVED FROM NDDB IS CREDITED AS PAR T OF OTHER INCOME/ MISCELLANEOUS INCOME IS ALSO FOUND TO BE CORRECT. ON PERUSAL OF DETAILS OF MISCELLANEOUS NCOME IT IS OBSERVED THAT THE RECEIPTS FROM NDDB WERE SHOWN AS DECAPPING PACKING CHARGES, DECAPPING FINISHED GOODS, AND DIFFERENTIAL AMOUNT FOR RATE REVISION. FURTHER, THERE WAS ADJUSTMENT OF RS.48,222/- ON ACCOUNT OF CLOSING STOCK AS EXPLAINED BY THE APPELLANT. THUS, IF ALL THE THREE AMOUNTS ARE TAKEN TOGETHER I .E. RS.7,22,171/-, RS.4,62,597/- AND RS.48,222/-, THERE WAS NO UNDERSTATEMENT OF RECEIPT S OF RS.12,32,996/- FROM NDDB AS OBSERVED BY THE AO. IN VIEW OF ABOVE, THE AO IS DIR ECTED TO DELETE THE ADDITION OF RS.12,32,996/-. THE GROUND NO. 5 IS ALLOWED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS ABLE TO EXPLAIN BY FILING DETAILS OF PACKAGING CHARGES RECEIVED TO THE SUM OF RS.1,20,27,912/- AND WHY THE DIFFERENCE KEPT IN. THE ASSESSEE HAS RECONCILED THE FIGURE OF RS.7,22,171/- BEING THE AM OUNT OF PACKAGING CHARGES ALREADY BOOKED IN THE AY 1999-2000 AND IT HAS BEEN VERIFIED BY THE AO AS WELL AS CIT(A). THE SECOND FIGURE OF RS.4,62,597/- BEING THE AMOUNT REC EIVED FROM NDDB WAS REFLECTED UNDER THE HEAD OTHER INCOMES AS IS EVIDENT FROM T HE STATEMENT FORMING PART OF ASSESSEES PAPER BOOK APPEARING AT PAGES 27 TO 31. FROM THE ABOVE RECONCILIATION IT IS CLEAR THAT THE ASSESSEE IS ABLE TO EXPLAIN WHY DIFF ERENCE BETWEEN THE RECEIPTS AS NOTED IN TDS CERTIFICATE AND RECEIPT DECLARED BY ASSESSEE AR OSE. ACCORDINGLY, THIS AMOUNT OF RS.12,32,996/- HAS RIGHTLY BEEN DELETED BY CIT(A) AND WE CONFIRM THE SAME. THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 6. THE NEXT ISSUE IN THE APPEALS OF REVENUE I.E. GR OUND NO.2 FOR AY 2000-01 AND GROUND NO. 6 FOR AY 2003-04 AS AGAINST THE ORDER OF CIT(A) DIRECTING THE AO TO DELETE THE ADDITION MADE BY AO ON ACCOUNT OF DISALLOWANCE OF INTEREST O N BORROWED MONEY. SINCE GROUNDS ARE IDENTICAL, EXCEPT VARIANCE IN AMOUNT, AND FACTS ARE COMMON, WE DISPOSE OF THIS GROUND OF APPEALS FOR BOTH THE YEARS TOGETHER BY REPRODUCING FOLLOWING GROUND NO. 2 FROM AY 2000-01 AND ALSO BY TAKING FACTS FROM THIS ASSESSMENT YEAR. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.34,13,652/- ON ACCOUNT OF INTEREST ON BORROWED MONEY WITHOUT CONSIDERING THE RACT THAT THE ASSESSEE COMP ANY IS SUBSTANTIALLY INTERESTED IN METRO DAIRY LTD. HOLDING 34.55% OF TOTAL SHARE CAPITAL OF METRO DAIRY LTD., SECONDLY THE ASSESSEE COMPANY WAS INCURRING HUGE LOSSES FOR THE LAST SEVERAL YEARS AND THIRDLY IT IS NOT ESTABLISHED THAT THE ASSESED INVESTED THE SUM IN ME TRO DAIRY OUT OF OWN FUND WHERE IT ITSELF A SICK COMPANY WITH BORROWED CAPITAL OF RS.9 ,84,20,725/-. 7. BRIEFLY STATED FACTS ARE THAT THE AO, DURING THE COURSE OF REASSESSMENT PROCEEDINGS, NOTICED FROM SCHEDULE 5 OF THE BALANCE SHEET THAT THE ASSESEE HAS INVESTED A SUM OF RS.2,10,48,250/- IN SHARES OF METRO DAIRY LT D. WHEREIN ASSESSEE HOLDS 34.55% OF SHARE CAPITAL IN METRO DAIRY LTD. ACCORDING TO AO, THE ASSESSEE IS SUBSTANTIALLY INTERESTED IN METRO DAIRY LTD. BUT NO INTEREST INC OME FROM SUCH HUGE INVESTMENT WAS DECLARED IN THE RETURN OF INCOME. AS AGAINST THIS INVESTMENT, ASSESSEE MADE LARGE BORROWINGS ON WHICH INTEREST OF RS.1,59,62,095/- HA S BEEN PAID . ACCORDING TO AO, THE LOAN FUNDS HAVE BEEN INVESTED IN THE SHARES OF METR O DAIRY LTD. AND ACCORDINGLY, HE DISALLOWED THE PROPORTIONATE INTEREST BY OBSERVING AS UNDER: TOTAL AMOUNT OF BORROWED CAPITAL WAS RS.9,84,20,72 5/-. INVESTMENT MADE IN METRO DIARY RS.2,10,48,250/- AND TOTAL INTEREST PAI D ON BORROWED CAPITAL WAS 5 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 RS.1,59,62,095/-. SO PROPORTIONATE INTEREST PAID F OR NON BUSINESS PURPOSE IS RS.1,59,62,095/- X 2,10,48,250/9,84,20,725/- = RS.3 4,13,652/-. THIS IS DISALLOWED. AGGRIEVED, ASSESSEE PREFERRD APPEAL BEFORE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION VI DE PARA 15 AND 15.3 AS UNDER: (15) I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE JOINT VENTURE A GREEMENT AS WELL AS VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT COMPANY . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT THE APPE LLANT COMPANY HAD MADE INVESTMENT IN METRO DAIRY LTD., IN WHICH IT IS HAVING SUBSTANT IAL INTEREST. THAT, THE INVESTMENT WAS MADE FROM THE BORROWED CAPITAL AND THE APPELLANT HA D NOT SHOWN ANY RETURN FROM ITS INVESTMENT IN THE SAID COMPANY. THAT, THE LINE OF B USINESS OF THE APPELLANT COMPANY AND OTHER COMPANY WERE DIFFERENT. UNDER THE CIRCUMSTANC ES, THE AO DISALLOWED PROPORTIONATE AMOUNT OF INTEREST PAID BY THE APPELLAN WHICH COMES TO RS.34,13,652/-. ON THE OTHER HAND IT WAS CLAIMED BY THE APPELLANT THAT IT HAD IN VESTED THE MONEY IN METRO DAIRY LTD. AS PER JOINT VENTURE AGREEMENT AMONGST APPELLANT, W .B. STATE CO-OPERATIVE MILK PRODUCERS FEDERATION LTD AND NATIONAL DAIRY DEVELOP MENT BOARD. IT IS CONTENDED BY THE APPELLANT THAT THE INVESTMENT WAS MADE BY THE APPEL LANT COMPANY FOR BUSINESS PURPOSE AND HENCE, NO DISALLOWANCE OF INTEREST WAS CAILED F OR. IN EARLIER YEARS NO SUCH DISALLOWANCE WAS MADE BY THE AO AND THAT THE APPELL ANT COMPANY WAS HAVING ITS OWN FUNDS MORE THAN THE AMOUNT OF INVESTMENT IN METRO D AIRY LTD. ON PERUSAL OF THE JOINT VENTURE AGREEMENT IT IS OBSERVED THAT NATIONAL DAIR Y DEVELOPMENT BOARD, W.B. CO- OPERATIVE MILK PRODUCER FEDERATION LTD AND THE APP ELLANT I.E. KEVENTER AGRO LTD., ENTERED INTO AN AGREEMENT, AS PROMOTERS TO SET UP J OINTLY A NEW DAIRY IN WEST BENGAL AS THIRD METRO DAIRY UNDER A JOINT SECTOR COMPANY. ACC ORDINGLY, THE PERCENTAGE OF CAPITAL WAS AGREED AMONGST THE THREE VENTURERS AND APPELLAN T COMPANY MADE INVESTMENT OF RS.2.10 CRORES IN F.Y.1993-94 RELEVANT TO A.Y.1994- 95. ON CAREFUL CONSIDERATION OF FACTS AND IN LAW, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING PAYMENT OF INTEREST ON PROPORTIONATE BASIS MERELY FOR THE REAS ON THAT THE APPETLANT COMPANY HAD NOT SHOWN RETURNS FROM THE INVESTMENT OR THAT THE APPEL LANT COMPANY WAS MAKING LOSSES. THE AO HAS HELD THAT THE NVESTMENT IN METRO DAIRY LTD. HAD BEEN MADE OUT OF THE BORROWED CAPITAL. HOWEVER, HE HAS NOT BROUGHT ANY MATERIAL O N RECORD TO SUPPORT HIS STATEMENT/CONCLUSION, SPECIFICALLY, WHEN THE INVEST MENT WAS MADE BY THE APPELLANT COMPANY IN THE F.Y.1993-94 RELEVANT TO A.Y.1994-95 AND FROM A.Y.1994-95 TO A.Y.1999- 2000, NO SUCH DISALLOWANCE OF INTERESTWAS MADE BY T HE AO. THE AO HAS NOT CONSIDERED THAT THE APPELLANT COMPANY WAS HAVING TS OWN NON-I NTEREST BEARING FUNDS, MORE THAITAMOUNT INVESTED IN METRO DAIRY LTD. 15.3. IN THE CASE OF APPELLANT, THE FACTS ARE SIMIL AR AND THAT IT LHAD ENTERED INTO AN AGREEMENT WITH NATIONAL DAIRY DEVELOPMENT BOARD AND WEST BENGAL COOPERATIVE MILK PRODUCERS FEDERATION LTD. TO SET UP A JOINT VENTURE COMPANY FOR THE PRODUCTION OF MILK. THAT, THE COMPANY CONTRIBUTED THE CAPITAL AS PER AG REEMENT AND IT WAS FOR THE APPELLANTS BUSINESS. IN VIEW OF THE FACTS OF THE CASE AND THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF RAJIVA LO CHAN KANORIA AND KEJRIWAL ENTERPRISES (SUPRA), IT IS TO BE HELD THAT THE AO W AS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF PROPORTIONATE AMOUNT OF INTEREST ON ACCOUNT OF APPELLANTS MAKING INVESTMENT IN JOINT VENTURE COMPANY, METRO DAIRY LT D. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 6 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE TOTAL BORROWED FUNDS OF THE ASSESSEE WAS AT RS.9,84,20,725/- OUT OF WHICH IT MADE INVESTMENT OF RS.2,10,48,250/- IN ACQ UIRING SHARES OF METRO DAIRY LTD. THE AO MADE DISALLOANCE OF PROPORTIONATE INTEREST O N THE ABOVE INVESTMENT FOR THE REASON THAT THE ASSESSEES TOTAL SHAREHOLDING IN ME TRO DAIRY LTD. WAS 34.35% OF THE TOTAL SHARE CAPITAL. HE FOUND THAT THE ASSESSEE HAS NOT DERIVED ANY INCOME ON SUCH INVESTMENT IN METRO DAIRY LTD. HE, THEREFORE, DISALLOWED PROP ORTIONATE INTEREST AMOUNTING TO RS.34,13,652/-. ON THE OTHER HAND, IT WAS ARGUED T HAT THE INVESTMENT MADE IN METRO DAIRY LTD. WAS NOT IN CONNECTION WITH ASSESSEES BU SINESS AND, THEREFORE, INTEREST WAS NOT ADMISSIBLE U/S. 36(1)(III) OF THE ACT. BEFORE US LD . COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE ITSELF WAS ENGAGED IN MANUFACTURI NG AND TRADING OF FRUIT JOICE, PACKAGING OF EDIBLE OILS BUT METRO DAIRY LTD. WAS ENGAGED IN DIFFERENT LINE OF BUSINESS I.E. IN MANUFACTURING OF MILK PRODUCTS FROM MILK POWDER. I T WAS EXPLAINED BY THE ASSESSEE THAT THE INVESTMENT IN SHARES OF METRO DAIRY LTD. WAS MA DE BY THE ASSESSEE DURING FY 1993- 94 RELEVANT TO AY 1994-95. BUT REVENUE FROM AY 1994 -95 TO 1999-2000 HAS NOT QUESTIONED THE INVESTMENT OF THAT WHICH WAS FOR BUS INESS PURPOSE AND NO DISALLOWANCE OF INTEREST WAS MADE IN THOSE YEARS. THE ASSESSEE ALS O CLAIMED THAT ITS OWN FUNDS WERE SUFFICIENT TO COVER THE INVESTMENT MADE BY IT IN ME TRO DAIRY LTD. LD. COUNSEL FOR THE ASSESSEE STATED THAT INTEREST FREE FUNDS AVAILABLE IN THE SHAPE OF CAPITAL RESERVES AND LOANS ARE MORE THAT THE INTEREST PAID ON THIS INVESTMENT. WE FIND THAT THE ASSESSEE COMPANY CONTRIBUTED A SUM OF RS.2,10,48,250/- BY WAY OF ITS SHARES IN THE JOINT VENTURE. THE ASSESSEE COMPANY UNDER THE NAME OF METRO DAIRY LTD. PRODUCES MILK IN JOINT VENTURE WITH WBSCMPFL AND NDDB. THE JOINT VENTURE IS A BU SINESS ENTERPRISE AND INVESTMENT BY ASSESSEE IN THE SAME IS WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF BUSINESS. THE ASSESSEE COMPANY FILED COPY OF JOINT VENTURE AGREEM ENT AMONGST ASSESSEE, WBSCMPFL AND NDDB BEFORE THE AO, BEFORE CIT(A) AND EVEN NOW BEFORE US. ONCE THE INVESTMENT IS MADE IN A JOINT VENTURE AND ALL THE MONIES BORRO WED WERE USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, NO INTEREST CAN BE DIS ALLOWED. THIS ISSUE IS COVERED BY THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. RAJIB LOCHAN KANORIA 208 ITR 616 (CAL). EVEN THIS ISSUE IS COVERED BY T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & P OWERS LTD. 313 ITR 340 (BOM.) WHEREIN IT IS HELD THAT IF THERE IS INTEREST FREE F UNDS AVAILABLE TO ASSESSEE TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAS R AISED LOANS IT CAN BE PRESUMED THAT INVESTMENTS WERE FROM INTEREST FREE FUNDS AVAILABLE . EVEN OTHERWISE, FOR THE PURPOSE OF CONSISTENCY, THE ASSESSEE HAS MADE THIS INVESTMENT FROM AY 1994-95 TO 1999-2000 NO 7 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 SUCH INTEREST WAS ALLOWED BY AO AND ACCEPTED THIS F ACT. IN TERM OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAS RIGHTLY DEL ETED THE DISALLOWANCE AND WE CONFIRM THE SAME. THE GROUND OF REVENUES APPEAL IN BOTH T HE YEARS IS DISMISSED. 9. THE FIRST ISSUE IN THE APPEAL OF REVENUE IN ITA NO.1664/K/2011 FOR AY2003-04 IS AGAINST THE ORDER OF CIT(A) DELETING THE EXPENSES U NDER THE HEAD SCOOBI DOO PROMOTION EXPENSES ADED BY AO. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO. 1: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.49,44 ,199/- UNDER THE HEAD SCOOBY DOO PROMOTION EXPENSES WITHOUT APPRECIATING THE FA CT THAT NO SERVICES IN EXCHANGE OF PAYMENT OF SUCH AMOUNT MADE TO PARLEY A GRO PVT. LTD. WAS RECEIVED BY THE ASSESSEE COMPANY. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF FRUIT JUICE AND MINERAL WATER AS A LICEN CEE OF PARLEY AGRO PVT. LTD., MUMBAI, WHO IS BRAND OWNER OF THE TRADEMARK FROOTI UNDER THE NAM E OF FROOTI & BAILLEY. PARLEY AGRO LTD. INTRODUCED THE CONSUMER PROMOTION SCHEME UNDER THE NAME OF SCOOBI DOO, WHICH IS A DEVICE OF TRADEMARK OF CARTOON NET WORK OF WARNER BROTHERS , USA. THE PURPOSE OF THE SCHEME WAS TO PROMOTE SALES TO FROOTI IN INDIAN MARKET. UNDER THIS SCHEME THE LICENSEES/FRANCHISEES WERE REQUIRED TO PROVIDE FREE STICKER AND TATOOS TO BUY ERS OF FROOTI INVITING THEM TO ENTER INTO A LUCKY DRAW SCHEME WITH PRIZES LIKE T.V. WATCHES ETC . INCLUDING A FAMILY TRIP TO AUSTRALIA. IN VIEW OF THIS SCHEME, PARLEY AGRO LTD. INCURRED EXPE NSES, WHICH WERE REQUIRED TO BE SHARED BY LICENSEES/FRANCHISEES. UNDER THE SCHEME, ASSESSEE INCURRED EXPENSES OF RS.49,44,199/-. THE AO DISALLOWED THE EXPENDITURE ON THE BASIS THAT THE ASSESSEE COMPANY DID NOT FURNISH COPY OF ANY AGREEMENT ENTERED INTO BY IT WITH PARLEY AGRO P VT. LTD. IN RELATION TO PROMOTIONAL SCHEME. IT WAS ALLEGED THAT NO BILLS EVIDENCING SUCH EXPEND ITURE OR ANY OTHER EXPENSES WERE PRODUCED. NO EVIDENCE OF ADVERTISEMENT IN TV OR PRINT MEDIA I N RESPECT OF ASSESSEES PROMOTION OF CONTRIBUTION WAS FURNISHED. IT WAS FURTHER ALLEGED THAT NO SERVICES WERE RENDERED BY THE ASSESSEE COMPANY TO PARLEY AGRO PVT. LTD. IN EXCHAN GE OF THIS PAYMENT. ACCORDINGLY, EXPENDITURE WAS DISALLOWED. AGGRIEVED, ASSESSEE PRE FERRED APPEAL BEFORE CIT(A), WHO ALLOWED THE CLAIM OF ASSESSEE VIDE PARA 6 OF THE APPELLATE ORDER, WHICH READS AS UNDER: (6) I HAVE CONSIDERED THE SUBMISSION OF THE APPETL ANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE TETTER DT. 15/11/2002 SSUED BY PARLE AGRO (P) LTD SENT TO APPELLANT BEING NOTE ON SCOOBY DOO, COPY OF LETTER DT. 24/9/2002 ISSUED BY PARLE TO ITS FRANCHISEES ON MODALITIES OF CONSUMER OFFER ON FROO TI 200 ML., DETAILS OF EXPENSES MADE ON ACCOUNT OF SCOOBY DOO, DETAILS OF SALES DURING T HE SCOOBY DOO PERIOD AND CALCULATION OF SCOOBI DOO PROMOTION AND DETAILS OF PAYMENTS OF RS.49,44,199/- TO PARLE AGRO PVT. LTD. ON CAREFUL CONSIDERATION OF THE FACTS AND ON P ERUSAL OF SEVERAL DOCUMENTS AND 8 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 DETAILS AS PRODUCED BEFORE THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFED IN DISALLOWIN G SUM OF RS.49,44,199/-. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT IT IS NOT THE CASE O F THE AO THAT THE EXPENDITURE INCURRED BY THE APPELLANT COMPANY WAS NOT GENUINE OR IT WAS NOT INCURRED FOR THE PURPOSE OF TS BUSINESS. THE AOS CONTENTION, THAT THE APPELLANT C OULD NOT PRODUCE ANY AGREEMENT TO EXPLAIN DETAL TERMS AND CONDITION OF SCOOBY DOO SC HEME, IS NOT CORRECT, BECAUSE IN THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT FILE D COPIES OF LETTER DT. 24/9/2002 AND 15/11/2002 ISSUED BY PARLE TO ITS FRANCHISEES. IT I S OBSERVED THAT THE NAME OF THE APPELLANT COMPANY IS APPEARING IN THE SAID LETTERS AS ONE OF THE FRANCHISEES. FURTHER, THE TERMS AND CONDITIONS OF THE SCHEME AND THE BASIS OF PAYMENT TO BE MADE BY EACH FRANCHISEES, INCLUDING THE APPELLANT, TO PARLE AGRO IS CLEARLY RNENTIONED IN THESE LETTERS. THERE WAS NO INDEPENDENT AND SEPARATE AGREERMENTS B ETWEEN PARLE AGRO PVT. LTD AND ITS FRANCHISEES, INCLUDING THE APPELLANT FOR SCOOBY DOO SCHEME. THE AGREEMENT WAS BETWEEN THE PRINCIPAL I.E., PARLE GRO PVT. LTD. AND TIME WA RNER ENTERTAINMENT CO. USA FOR PROMOTION SCHEME OF FROOTI AND THAT TOTAL EXPENDITU RE WAS TO BE BORNE BY THE EACH FRANCHISEES PROPORTIONATELY. IT APPEARS THAT THE AO HAD NOT GONE THROUGH THE SCHEME AND BASIS OF PAYMENT. IN THE COURSE OF ASSESSMENT PROCE EDINGS THE APPELLANT COMPANY ALSO FILED THE DETAILS OF SALES MADE DURNG SCOOBY DOO P ROMOTION PEROD AND THE CALCULATION OF PAYMENT MADE TO THE PARLE. AS PER LETTER ISSUED BY PARLE TO THE APPELLANT IT WAS REQUIRED TO MAKE PAYMENT FOR SCHEME @ RS.19/- PER C ASE HAVING 27 PACKS OF 200 ML. FROOTI JUICE. DURING THE YEAR UNDER APPEAL, THE APP ELLANT DISPATCHED 287156 CASES OF 200 ML. FROOTI-MANGO DRINK, OUT OF THAT 26935 CASES REM AINED IN CLOSING STOCK. THUS, NET DISPATCH TO THE DISTRBUTORS WAS 260221 CASES. AT T HE RATE OF RS.19/- PER CASE, THE APPELLANT- PAID SUM OF RS.49,44,199/- TO PARLE UNDE R SCOOBY DOO PROMOTION SCHEME. THE APPELLANT COMPANY PAID SUM OF RS.14,73,734/- IN THE YEAR UNDER APPEAL AND THE BALANCE AMOUNT OF RS.34,70,465/- WAS PAID TO PARLE IN THE NEXT FNANCIAL YEAR. THUS, IT CANNOT BE SAID THAT THE DETAILS WERE NOT FURNISHED BY THE APPELLANT. THE AO HAS ALSO MENTIONED IN THE ORDER THAT PARLE AGRO HAS NOT REND ERED ANY SERVICES THE APPELLANT IN EXCHANGE OF PAYMENT MADE BY THE APPELLANT. I FIND N O MERIT IN THE SAID OBSERVATION OF THE AO, BECAUSE THERE WAS NO AGREEMENT WITH PARLE FOR R ENDERING ANY SERVICES TO THE APPELLANT UNDER SCOOBY DOO SCHEME. THE WHOLE SCHEME WAS TO PROMOTE SALE OF FROOTI- MANGO JUICE AND APPELLANT HAD MADE PAYMENT TO PARLE AS PER AGREEMENT BETWEEN PARLE AND TIME WARNER, USA. PARLE ALSO PROVIDED THE PROMO TIONAL MATERIAL TO THE APPELLANT. IN THE ASSESSMENT ORDER THE AO HAS FURTHER MENTIONED I N THE LEDGER ACCOUNT THERE IS NO MENTION OF SUPPLY OF STICKERS AND TATTOOS ETC. BY P ARLE TO THE APPELLANT. I DO NOT AGREE WITH THE OBSERVATION OF THE AO BECAUSE IT IS NOT KN OWN AS TO HOW THERE WOULD BE MENTION OF SUPPLY OF STICKERS AND TATTOOS TO THE APPELLANT IN THE LEDGER ACCOUNT. IT IS A COMMON PHENOMENON THAT IN TODAYS CORPORATE WORLD, A LOT IM PORTANCE IS GIVEN ON ADVERTISEMENT TO PROMOTE SALE OF THEIR BRANDS AND PRODUCTS. THE E XPENDITURE ON SUCH ADVERTISEMENT IS EITHER BORNE BY THE PRINCIPAI IN ITS BOOKS OF ACCOU NT AND IN TURN THE PRINCPAL RECOVERS THE EXPENDITURE FROM ITS FRANCHISEES BY INCREASING COST OF ITS BRAND AND PRODUCT AS IN THE CASE OF COCA-COLA OR THE PRINCIPAL RECOVERED THE EX PENDITURE DIRECTLY FROM ITS FRANCHISEES ON PROPORTIONATE BASIS AS DONE IN THE CASE OF APPEL LANT. IN VIEW OF ABOVE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT COMPANY HAD M ADE PAYMENT OF RS.49,44,199/- TO PARLE ON ACCOUNT OF SCOOBY DOO PROMOTION SCHEME, WH OLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS AND THAT THE CLAIM MADE BY THE APPELLANT IS GENUINE AND ALLOWABIE TO HIM IN THE YEAR UNDER APPEAL. THE AO IS DIRECTED TO DELETE DISALLOWANCE OF RS.49,44,199/-. THE GROUND NOS. 2, 3 AND 4 ARE ALLO WED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 11. WE FIND THAT THE ASSESSEE HAS SUBMITTD THE BROC HURE OF PROMOTIONAL SCHEME BROUGHT OUT BY PARLEY AGRO PVT. LTD. AND ASSESSEE PARTICIPATED IN THE PROMOTIONAL SCHEME AND INCURRED ITS SHARE OF EXPENSES AS ALLOTTED TO IT. IT WAS EXPLAI NED BY THE ASSESSEE BEFORE THE AO THAT IT DID 9 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 NOT RECEIVE ANY BILL FROM PARLEY AGRO PVT. LTD. BUT REMITTD RS.19/- PER TRAY OF FROOTI MANGO DRINK CONTAINING 27 TETRAPACKS OF THE SAID JUICE. THE ASSESSEE SUBMITTED COMPLETE BREAKUP OF RS.49,44,199/- PAID/PAYABLE TO PARLEY AGRO PVT LTD. IT WAS CLAIMED BY THE ASSESSEE THAT IT WAS UNDER COMPULSION TO PARTICIPATE IN THE SCHEME AS A PRUDENT BUSINESSMAN AND ACCORDINGLY, PAID ITS SHARE OF EXPENSES. IT WAS THE OBJECTION OF THE REVENUE THAT NO SERVICES IN EXCHANGE OF PAYMENT TO PARLEY AGRO PVT. LTD. WAS RECEIVED BY TH E ASSESSEE COMPANY BUT IT SEEMS THAT THE OBJECTION OF THE REVENUE IS UNJUSTIFIED IN VIEW OF THE FACT THAT THE ADVERTISEMENT IN THE FORM OF SCOOBI DOO ANIMATION FILM WAS SHOWN IN TELEVISION A ND ALL INDIA DISPLAY OF SUCH FILM WAS INTENDED FOR INCREASE OF THE SALE OF FROOTI. THIS BEING A PROMOTIONAL SCHEME ASSESSEE RECEIVED HUGE SUCCESS IN BUSINESS AND THIS BEING A BUSINESS ITSELF, ASSESSEES EXPENSES ARE ALSO BUSINESS EXPENSES. WE ARE OF THE VIEW THAT THE CIT (A) HAS RIGHTLY DELETED THE DISALLOWANCE AND WE CONFIRM THE SAME. THIS GROUND OF REVENUES APPEA L IS DISMISSED. 12. THE NEXT ISSUE I.E. GROUND NO.2 IN THE APPEAL O F REVENUE FOR AY 2003-04 IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF INCREASE IN CLOSING STOCK OF STORES AND SPARES. FOR THIS, REVENUE HAS RAISED FO LLOWING GROUND NO.2: 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.17,7 72/- ON ACCOUNT OF INCREASE IN CLOSING STOCK OF STORES & SPARES ETC. WITHOUT CONSI DERING THE FACT THAT THE AO HAS MADE SUCH ADDITION AFTER PROPR VERIFICATION. 13. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT AO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS MADE ADDITION OF RS.17,772/- ON ACCOUNT OF INCREASE IN CLOSING STOCK OF STORES AND SPARES. THE AO OBSERVED AS UNDER: AS PER SCHEDULE-6 ATTACHED TO THE BALANCE SHEET IT IS SEEN THAT CLOSING STOCK OF STORES, SPARES ETC. HAS BEEN INCREASED THAN OPENING STOCK OF IT BY AN AMOUNT OF RS.17,772/- BUT SUCH INCREASE HAS NOT BEEN REFLECTE D IN THE P/L A/C AND AS A RESULT, INCOME OF RS.17,772/- HAS NOT BEEN SHOWN DURING THI S YEAR. SO THIS IS ADDED TO THE INCOME OF THIS YEAR. THE ASSESSEE FILED RECONCILIATION STATEMENT BEFORE CIT(A) WHO AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION. THE RELEVANT RECONCILIATION READS AS UNDER: OPENING STOCK OF STORES AS ON 01.04.2002 RS.48, 19,274 ADD: TOTAL PURCHASES DURING THE F.Y. 2002-03 RS. 45,12,396 RS.93,31,670 LESS: STORES CONSUMED DEBITED TO P&L A/C RS.44,94 ,623 CLOSING STOCK AS ON 31.03.03 RS.48,37,047 WE FIND FROM THE ABOVE RECONCILIATION THAT THE INCR EASE IN THE VALUE OF STOCK FROM RS.48,19,274/- TO RS.48,37,047/- I.E. RS.17,772/- W AS PROPERLY ACCOUNTED BY THE ASSESSEE AND IN 10 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 VIEW OF THIS, CIT(A) HAS RIGHTLY DELETED THE ADDITI ON AND WE CONFIRM THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 14. THE NEXT ISSUE I.E. GROUND NO. 3 IN THE APPEAL OF REVENUE FOR AY 2003-04 IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION ON UNACCOUNTE D RECEIPTS FROM DHARA VEGETABLE OIL & FOOD CO. LTD. FOR THIS, REVENUE HAS RAISED FOLLOWI NG GROUND NO.3: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, L D. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.1,00,883/- ON ACCOU NT OF UNACCOUNTED RECEIPTS FROM DHARA VEGETABLE OIL & FOOD CO. LTD. WITHOUT APPRECI ATING THE FACT THAT THE AO MADE SUCH ADDITION ON THE BASIS OF MATERIALS AVAILABLE O N RECORD AND EXPLANATION OFFERED BY THE ASSESSEE COMPANY BEFORE THE AO. 15. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTED THAT DURING THE FY 2002-03 THE ASSESSEE RAISED TOTAL PACKAGING BILL CHARGES OF RS.87,21,314/- ON DHARA VEGETABLE OIL & FOOD CO. LTD. AS PER INTIMATION FURNISHED BY HIM TO THE COMPANY. HOWEVER, THE AO FROM THE ASSESSEES P&L ACCOUNT NOTICED THAT THE PACKAGING C HARGES ARE SHOWN AS RS.86,20,511/- THUS THERE WAS A DIFFERENCE OF RS.1,00,883/-. THE ASSES SEE BEFORE THE AO FILED RECONCILIALTION OF DIFFERENCE AND EXPLAINED THE DISCREPANCY THAT THE D IFFERENCE WAS ON ACCOUNT OF ADJUSTMENT AND ITS OPENING AND CLOSING STOCK OF PACKAGING CHARGES. BUT THE AO WAS NOT CONVINCED AND HE MADE ADDITION. AGGRIEVED, ASSESSEE PREFERRED APPEA L BEFORE CIT(A) AND CIT(A) AFTER TAKING RECONCILIATION DELETED THE ADDITION. AGGRIEVED, RE VENUE IS NOW IN APPEAL BEFORE US. 16. WE FIND THAT AS PER TDS CERTIFICATE ISSUED TO A SSESSEE BY DHARA VEGETABLE OIL & FOOD CO. LTD. THE TOTAL BILL OF PACKAGING CHARGES AMOUNT ING TO RS.87,11,115/- AND NOT RS.87,21,394/- AS NOTED BY THE AO IN THE ASSESSMENT ORDER. THE ASS ESSEE EXPLAINED BEFORE US THAT THE GROSS BILL OF RS.87,11,115/-, IT REVERSED THE PACKAGING CHARGE S OF THE EARLIER YEARS ATTRIBUTABLE TO UNDER DESPATCH PACKING MATERIAL AND ADDED THE PACKAGING C HARGES RELATING TO UNDER DESPATCH ;ACKING MATERIAL AND THE CURRENT YEAR AND THERE WAS DISCREP ANCY. WE FIND THAT THE ASSESSEE HAS DETERMINED THE INCOME CHARGEABLE UNDER THE HEAD PRO FIT AND GAINS OF BUSINESS IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE AND ALSO RECONCILE THE DISCREPANCY IN THE PACKAGING CHARGES VIS--VIS CLOS ING STOCK. ONCE THE ASSESSEE EXPLAINED THE SAME, THE ADDITION CANNOT BE MADE. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION AND THIS ISSUE OF REVENUES APPEAL IS DISM ISSED. 17. THE NEXT ISSUE I.E. GROUND NO. 4 IN THE APPEAL OF REVENUE FOR AY 2003-04 IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION OF AMOUNT REC EIVED BY ASSESSEE FROM METRO DAIRY LTD. FOR CONSIDERING THE FACT THAT METRO DAIRY LTD. MAD E DEDUCTION ON ACCOUNT OF TDS AT RS.9722/- 11 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 ON THE BILL OF RS.4,62,911/- AND THE ASSESSEE HAS T AKEN CREDIT OF THE SAME. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.4: 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.4,26,576/- RECE IVED BY THE ASSESEE FROM METRO DAIRY WITHOUT CONSIDERING THE FACT THAT METRO DAIRY MADE TDS OF RS.9,722/- ON A BILL OF RS.4,62,911/- AND THE ASSESSEE HAS TAKEN CREDIT OF THE SAME. 18. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO NOTED THAT THE ASSESSEE RECEIVE D A TOTAL AMOUNT OF RS.4,62,911/- FROM METRO DAIRY LTD. AS CONTRACTUAL RECEIPT BUT ASSESSE E EXPLAINED THAT IT RECEIVED AN AMOUNT OF RS.4,53,030/- FROM METRO DAIRY LTD. DURING THE ASSE SSMENT YEAR UNDER CONSIDERATION ON ACCOUNT OF REIMBURSEMENT OF EXPENSES INCURRED BY IT ON THEIR BEHALF. IN ADDITION TO THE ABOVE, IT HAS RECEIVED A SUM OF RS.36,335/- FROM METRO DAI RY LTD., WHICH WAS INCLUDED IN THE MISCELLANEOUS INCOME. THE AO FOUND THAT OUT OF THE TOTAL CONTRACTUAL RECEIPT OF RS.4,62,911/-, METRO DAIRY LTD. DEDUCTED TDS OF RS.9722/-, ACCORDI NGLY, HE ADDED A SUM OF RS.4,26,576/-. AGGRIEVED, ASSESEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING THAT THE ASSESSEE WAS RUNNING AND MANAGING METRO DAIRY L TD. AS A JOINT VENTURE PROJECT. AS SEVERAL EMPLOYEES OF THE ASSESSEE RENDERED SERVICES TO METR O DAIRY LTD. THE REMUNERATION PAID TO SUCH EMPLOYEES WAS REIMBURSED BY THE SAID COMPANY. THE ASSESSEE FURTHER EXPLAINED THAT IT WAS INCURRING EXPENSES FOR RUNNING A COMMON CANTENE AS WELL AS RENDERING SECURITY SERVICES ON BEHALF OF METRO DAIRY LTD. ON THIS ACCOUNT IT HAS I NCURRED EXPENSES WHICH WAS REIMBURSED BY METRO DAIRY LTD. TO THE TUNE OF RS.4,62,911/- AND A SUM OF RS.36,335/- REPRESENTED AMOUNT ON ACCOUNT OF PF AND ESI OF THE EMPLOYEES. ACCORDINGL Y, ASSESSEE FILED STATEMENT AND FILED EVIDENCE BEFORE THE CIT(A). IN VIEW OF THE ABOVE F ACTS, CIT(A) DELETED THE ADDITION. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 19. WE FIND THAT THE AO FAILED TO CORRECTLY APPRECI ATE THE SUBMISSIONS MADE BY ASSESSEE IN REGARD TO REAL NATURE OF RECEIPT OF THE ASSESSEE. IT IS A FACT THAT ASSESSEE HAS RECEIVED A SUM OF RS.4,62,911/- ON ACCOUNT OF REIMBURSEMENT OF EXPENS ES INCURRED BY ASSESSEE ON A JOINT VENTURE PROJECT CARRIED ON WITH METRO DAIRY LTD. SINCE THI S AMOUNT REPRESENTED REIMBURSEMENT OF EXPENSES IT WAS NOT IN THE NATURE OF INCOME IN THE HANDS OF THE ASSESSEE. CIT(A) HAS RIGHTLY DELETED THE SAME AND WE CONFIRM THE SAME. THIS ISS UE OF REVENUES APPEAL IS ALSO DISMISSED. 20. THE NEXT ISSUE I.E. GROUND NO. 5 IN THE APPEAL OF REVENUE FOR AY 2003-04 AND GROUND NO. 1 FOR AY 2005-06 IS AS REGARDS TO THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF OBSOLETE STORES. SINCE GROUNDS ARE I DENTICAL, EXCEPT VARIANCE IN AMOUNT, AND FACTS 12 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 ARE COMMON, WE DISPOSE OF THIS GROUND OF APPEALS FO R BOTH THE YEARS TOGETHER BY REPRODUCING FOLLOWING GROUND NO. 5 FROM AY 2003-04 AND ALSO BY TAKING FACTS FROM THIS ASSESSMENT YEAR. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.2,95,705/- ON A CCOUNT OF OBSOLETE STORES WITHOUT CONSIDERING THE FACT THAT IT IS THE PRACTICE OF THE ASSESSEE TO CREATE A PROVISION FOR OBSOLETE STORES AND DEDUCT THE SAME FROM CLOSING ST OCK IN ORDER TO REDUCE THE INCOME. 21. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED FROM THE DETAILS OF CLOSING STOCK OF STORES AND SPARES THAT PROVISION FOR OBSOLETE SPARE S AND STORES HAVE BEEN MADE AT RS.2,95,705/- AS ON 31.03.2003. ACCORDING TO HIM, BY MAKING THE PROVISION THE VALUE OF STOCK AS WELL AS INCOME OF THE ASSESSEE HAS BEEN REDUCED BY THIS AMO UNT. ACCORDINGLY, HE ADDED BACK THE SUM OF RS.2,95,705/- UNDER THE HEAD CLOSING STOCK OF ST ORES AND SPARES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADD ITION BY STATING THAT AO WRONGLY PICKED UP THE FIGURE OF RS.2,95,705/- AND THE CORRECT FIGURE SHOULD HAVE BEEN AT RS.1,47,853/-. BEFORE CIT(A) ASSESSEE CLAIMED THAT WRITING OFF OF OBSOLET E STORES AND SPARES IS A REGULAR AND ADMISSIBLE PRACTICE IN THE MANUFACTURING CONCERN AN D IT IS A BUSINESS EXPENDITURE. CIT(A) DELETED ON THIS PREMISE. AGGRIEVED, REVENUE CAME I N APPEAL BEFORE US. 22. WE FIND THAT THE ASSESSEE FILED A LETTER BEFORE AO DATED 27.03.2006, WHICH WAS REFERRED TO BY THE AO IN THE ASSESSMENT ORDER ALONG WITH EN CLOSURES SHOWN CONSUMPTION OF STORES AND SPARES. IT APPEARS FROM THIS LETTER THAT THE CORRE CT FIGURE OF STORES AND SPARES WRITTEN OFF IS RS.2,95,705/- AS TAKEN BY THE AO IN THE ASSESSMENT ORDER. FROM THE DETAILS OF CLOSING STOCK AS ON 31.03.2003 HAS SHOWN IN THE STATEMENT ENCLOSED W ITH THE ASSESSEES LETTER IT IS NOTICED THAT THE TOTAL OF THE VARIOUS ITEMS OF CLOSING STOCK OF STORES AND SPARES WAS AT RS.51,32,752/- FROM WHICH OBSOLENCE AMOUNTING TO RS.2,5,705/- WAS DEDUC TED. FROM THE STATEMENT IT IS CLEAR THAT THIS AMOUNT SHOWN BY THE ASSESSEE AS PROVISION FOR OBSOLENCE RATHER IT IS A DEDUCTION CLAIMED ON ACCOUNT OF OBSOLETE STORES AND SPARES WRITTEN OF F. THIS BEING AN USUAL PRACTICE IN THE MANUFACTURING INDUSTRY TO WRITE OFF OBSOLETE STORES ANNUALLY AND THEREFORE, CLAIM AS DEDUCTION FROM THE CLOSING STOCK IS FULLY JUSTIFIED. WE CONF IRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEALS FOR BOTH THE YEARS IS DISMISSED. 23. THE NEXT ISSUE I.E. GROUND NO. 7 IN THE APPEAL OF REVENUE FOR AY 2003-04 AND GROUND NO. 2 FOR AY 2005-06 IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF REMISSION OF SALES TAX. SINCE GROUNDS AR E IDENTICAL, EXCEPT VARIANCE IN AMOUNT, AND FACTS ARE COMMON, WE DISPOSE OF THIS GROUND OF APPE ALS FOR BOTH THE YEARS TOGETHER BY 13 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 REPRODUCING FOLLOWING GROUND NO. 7 FROM AY 2003-04 AND ALSO BY TAKING FACTS FROM THIS ASSESSMENT YEAR. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.31,32 ,665/- ON ACCOUNT OF REMISSION OF SALES TAX SINCE THE SUPREME COURT IN THE CASE OF SA HANEY STEEL & PRESS WORKS LTD. VS. CIT PRONOUNCED THAT REMISSION OF SALES TAX IS REVEN UE RECEIPT. 24. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE CLAI MED OUT OF TOTAL SALES TAX PAYABLE OF RS.79,36,913/- A SUM OF RS.31,32,665/- AS SALES TAX REMISSION. THE ASSESSEE CLAIMED ON THE BASIS OF SALES TAX ASSESSMENT ORDER GRANTING REMISS ION. THE AO NOTED FROM THE WEST BENGAL SALES TAX ASSESSMENT ORDER DATED 30.06.2005 FOR THE YEAR ENDING 31.03.2003 THAT ON A TOTAL OF WEST BENGAL SALES TAX AT RS.58,73,206/-, A SUM OF R S.29,14,838/- WAS ALLOWED AS REMISSION. SIMILARLY, AGAINST CENTRAL SALES TAX ASSESSMENT ORD ER DATED 30.06.2005 A FURTHER REMISSION OF RS.2,17,827/- WAS CLAIMED. THE ASSESSEE FILED NECE SSARY ELIGIBILITY CERTIFICATE FOR REMISSION OF SALES TAX U/S. 41 OF THE WEST BENGAL SALES TAX ACT, 1994 ALONG WITH TERMS AND CONDITIONS FOR SUCH INCENTIVE UNDER THE WEST BENGAL INCENTIVE SCHE ME, 1993 VIDE LETTER DATED 30.01.2006. ACCORDING TO AO, THIS REMISSION OF SALES TAX ON SAL E OF FINISHED GOODS FOR A PERIOD OF 9 YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION IS NOTH ING BUT OPERATIONAL SUBSIDIES AND SUPPLEMENTARY TRADE RECEIPTS. ACCORDINGLY, ASSESSE E PREFERRED APPEAL BEFORE CIT(A), WHO AFTER CONSIDERING THE SCHEME OF WEST BENGAL INCENTIVE SCH EME, 1993 AND 1999 TREATED THE REMISSION AS CAPITAL RECEIPT BY OBSERVING IN PARA 33 AS UNDER : (33) I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE WEST BENGAL INC ENTIVE SCHEME, 1993/1999. THE RELEVANT PROVISIONS OF THESE SCHEMES ALONG WITH THE RELEVANT PROVISIONS OF WEST BENGAL SALES TAX HAVE ALREADY BEEN DISCUSSED ABOVE. IN THE ASSESSMENT ORDER, THE AO HAD MADE AN ADDITION OF RS.31,32,665/- ON ACCOUNT OF SA LES TAX REMISSION ENJOYED BY THE APPELLANT- COMPANY UNDER THE WEST BENGAL INCENTIVE SCHEME, 1993/1999. THE AO TREATED THE RECEIPT OF RS.31,32,665/- AS REVENUE RE CEIPT RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. VS. CIT REPORTED IN 228 ITR 253 (SC). IN THE YEAR UNDER APP EAL, IT IS CONTENDED BY THE APPELLANT THAT THE SUM OF RS.31,32,665/- WAS ALREAD Y INCLUDED IN THE SALES CREDTED BY THE APPELLANT COMPANY IN ITS PROFIT & LOSS A/C AND HENCE, THE ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION (GROUND NO.12). WITHO UT PREJUDICE TO THE ABOVE CONTENTION, THROUGH ADDITIONAL GROUNDS OF APPEAL, I T WAS CONTENDED BY THE APPELLANT COMPANY THAT THOUGH THE AMOUNT ENJOYED BY IT ON ACC OUNT OF SALES-TAX REMISSTON, HAS BEEN ERRONEOUSLY CREDITED IN THE P & L A/C FOR THE YEAR UNDER APPEAL, BUT THE AO SHOULD HAVE DEDUCTED THE AMOUNT OF SALES-TAX REMISS ION FROM THE TOTAL RECEIPTS OF THE APPELLANT COMPANY, BECAUSE, THE SALES-TAX REMISSION ENJOYED BY THE APPELLANT COMPANY WAS A CAPTAL RECEIPT AND NOT THE REVENUE RECEIPT. IT IS ARGUED BY THE APPELLANT THAT THE GOVERNMENT OF WEST BENGAL FORMULATED THE INCENTIVE SCHEME OF THE YEAR 1993 AND 1999 WITH THE INTENTION TO ALLOW INCENTIVE FOR THE PROMOTION OF INDUSTRIES IN THE STATE OF WEST BENGAL. THE SAID INCENTIVES WERE ALLOWED BY TH E STATE GOVERNMENT IN VARIOUS FORMS INCLUDING BY WAY OF SALES- TAX REMISSTON. IN THE CASE OF APPELLANT COMPANY IT ENJOYED THE SALES-TAX REMISSION UNDER THE WEST BENG AL INCENTVE SCHEME, 1993/1999 N RELATION TO ITS EXPANSION PROJECTS OF FRUIT JUICES, LOCATED AT BARASAT IN NORTH 24- 14 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 PRGANAS IN THE STATE OF WEST BENGAL AS WELL AS SETT ING UP OF NEW INDUSTRIAL PROJECT I.E., MINERAL WATER PROJECT ETC. THE APPELLANT COMPANY HA D MADE SUBSTANTIAL INVESTMENT IN FIXED CAPITAL ASSETS AS PER THE SCHEMES AND ALSO OB TAINED REGISTRATION AS WELL AS THE ELIGIBILITY CERTIFICATES. IT WAS ALSO ARGUED BY THE APPELLANT THAT TS INDUSTRIAL UNITS ARE LOCATED IN BARASAT IN NORTH 24-PARGANAS, WEST BENGA L, WHICH, AS PER THE NCENTVE SCHEME FALLS UNDER LOCATIONS CLASSIFED UNDER GROUP B. HENCE, THE APPELLANT COMPANY HAD RECEIVED INCENTIVE/SUBSDY IN THE FORM OF SALES -TAX REMISSON AS PER THE SCHEME NOTIFIED FOR GROUP-B LOCATIONS. THAT, THE NCENTIVE WAS NOT ALLOWED TO CARRY OUT TRADE OR BUSINESS ACTIVITY AND HENCE EVEN AS PER THE PRINCIP LES LAID DOWN BY THE HONBLE SUPRERNE COURT N THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. (SUPRA), THE RECEIPT ON ACCOUNT OF SALES-TAX REMISSION WOULD BE A CAPITAL R ECEIPT. ON CAREFUL CONSIDERATION OF THE FACTS AND ON GOING THROUGH THE RELEVANT PROVISI ONS OF WEST BENGAL INENTIVE SCHEME, THE CONTENTION OF THE APPELLANT COMPANY IS FOUND TO BE CORRECT THAT THE SUBSIDY/INCENTIVE ALLOWED BY THE WEST BENGAL GOVERN MENT IN THE FORM OF SALES-TAX REMISSION WAS NOT FOR SPECIFIC PURPOSE OF CARRYING OUT ITS BUSINESS ACTIVITIES OR TRADE AFTER COMMENCEMENT OF PRODUCTION. IN THE CASE OF SA HNEY STEEL & PRESS WORKS LTD. (SUPTRA), IT IS HELD BY THE HONBLE SUPREME COURT T HAT IF PAYMENTS IN THE NATURE OF SUBSIDY FROM PUBLIC FUNDS ARE MADE TO THE ASSESSEE TO ASSIST HIM IN CARRYING ON ITS TRADE OR BUSINESS, THEY ARE TRADE RECEIPTS. THE CHA RACTER OF THE SUBSIDY IN THE HANDS OF RECIPIENT WHETHER REVENUE OR CAPITAL WILL HAVE TO BE DETERMINED, HAVING REGARD TO THE PURPOSE FOR WHICH THE SUBSIDY IS GIVEN. THE SOU RCE OF THE FUND IS QUITE IMMATERIAL. HOWEVER, IF THE PURPOSE IS TO HELP THE ASSESSEE TO SET UP ITS BUSINESS OR COMPLETE A PROJECT, THE MONEYS MUST BE TREATED AS HAVING BEEN RECEIVED FOR CAPITAL PURPOSES. BUT, IF MONEYS ARE GIVEN TO THE ASSESSEE FOR ASSISTING H IM IN CARRYING OUT THE BUSINESS OPERATION AND THE MONEY IS GIVEN ONLY AFTER AND CON DITIONAL UPON COMMENCEMENT OF PRODUCTION, SUCH SUBSIDIES MUST BE TREATED AS ASSIS TANCE FOR THE PURPOSE OF THE TRADE. IN THE CASE OF APPELLANT, IT HAD RECEIVED SUBSIDY/INCE NTIVE UNDER THE WEST BENGAL INCENTIVE SCHEME, 1993/1999 IN THE FORM OF SALE-TAX REMISSION . ON PERUSAL OF SCHEME, IT IS APPARENT THAT THE INCENTIVE WAS ALLOWED TO THE APPE LLANT COMPANY FOR EXPANSION OF ITS EXISTING UNIT OF ITS FRUIT JUICES AND SETTING UP OF NEW UNIT OF MINERAL WATER. THE SOLE OBJECTIVE OF THE SCHEME FORMULATED BY THE STATE GOV ERNMENT WAS TO ALLOW INCENTIVE TO THE ENTREPRENEURS TO ESTABLISH THE NEW INDUSTRIES O R EXPAND THE EXISTING INDUSTRIES IN BACKWARD AREAS FOR OVERALL ECONOMIC DEVELOPMENT OF THE STATE OF WEST BENGAL. ON GOING THROUGH THE WEST BENGAL INCENTIVE SCHEME, IT IS OBSERVED THAT THE SUBSIDY WAS NOT ALLOWED TO ASSIST THE APPELLANT COMPANY IN CARR YING ON ITS TRADE OR BUSINESS OR CARRYING OUT THE BUSINESS OPERATION. THE UNIT WHICH WAS EXPANDED BY THE APPELLANT AS WELL AS THE NEW INDUSTRY SET UP BY THE APPELLANT CO MPANY, BOTH ARE LOCATED IN VILL. FATEABAD, P.O. BARASAT, NORTH 24-PARGANAS IN THE ST ATE OF WEST BENGAL. AS PER THE INCENTIVE SCHEME, 1993/1999, THE APPELLANTS UNITS FALL UNDER GROUP-B OF CLASSIFICATION OF AREAS. ACCORDINGLY, THE APPELLANT COMPANY HAD RE CEIVED INCENTIVE IN THE FORM OF SALES-TAX REMISSION SPECIFIED FOR GROUP-B LOCATION. SINCE, THE INCENTIVE HAS NOT BEEN ALLOWED TO THE APPELLANT-COMPANY FOR ITS BUSINESS O R TRADE, HENCE, EVEN AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SA HANEY STEEL & PRESS WORKS LTD., THE AMOUNT ENJOYED BY THE APPELLANT ON ACCOUNT OF S ALES TAX REMISSION, WOULD BE CAPITAL IN NATURE. AGGRIEVED, REVENUE CAME IN APPEALS BEFORE US. 25. BEFORE US LD. SR. DR REITERATED ONLY ONE ARGUME NT THAT THIS REMISSION OF SALES TAX IS ONLY A TRADING RECEIPT BEING LINKED TO PRODUCTION/O PERATIONAL SUBSIDIES. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 15 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 26. WE HAVE HEARD RIVAL SUBMISSIOBNS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS CONSIDERED THE L EGAL ASPECT AS TO WHETHER THE SALES TAX REMISSION WAS A REVENUE OR CAPITAL RECEIPT IN THE H ANDS OF THE ASSESSEE. HE FOUND THAT THE SALEX TAX REMISSION GIVEN UNDER WEST BENGAL INCENTIVE SCH EME 1993 AND 1999 WAS NOT FOR ASSISTING THE ASSESSEE IN CARRYING OUT ITS BUSINESS OPERATION BUT INCURRED THE PROMOTION OF INDUSTRIES IN THE STATE OF WEST BENGAL AND CONSEQUENTLY, FOLLOWIN G THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SAHANEY STEEL & PRESS WORKS LTD. VS. CIT 228 ITR 253 HOLDING THE SALES TAX REMISSION AS CAPITAL RECEIPT. LD. COUNSEL ALSO DREW OUR ATTENTION TO THE FACT THAT THE SALES TAX REMISSION UNDER WEST BENGAL INCENTIVE SCHEME, 1993/ 1999 WAS REVENUE OR CAPITAL HAS ALREADY BEEN EXAMINED AND DECIDED BY ITAT, KOLKATA BENCH IN THE FOLLOWING APPEALS: 1. IN THE CASE OF ITO, WARD-1(3) KOL VS. M/S. DUR O PLAST INDIA PVT. LTD. IN ITA NO. 1983, 1984, 1985/KOL/2008 DATED 16.01.2009 FOR ASST T. YEARS 1999-2000 TO 2001-02. 2. IN THE CASE OF DCIT, CIR-12, KOL VS. M/S. TEESTA AGRO INDUSTRIES LTD. IN ITA NO. 1237/KOL/2010, ITA NO. 1053/KOL/2010 & ITA NO. 1753 /KOL/2010 DATED 07.01.2011 FOR ASSTT. YEARS 2003-04, 2006-07 & 2007-08 RESPECTIVEL Y. WE FIND THAT THE WEST BENGAL INCENTIVE SCHEME 1993 AND 1999 CATEGORICALLY ENCOURAGED THE PROMOTION OF INDUSTRIES IN THE STATE OF WEST BENGAL AND IN SUCH CIRCUMSTANCES THE ISSUE IS CLEARLY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SAHANEY STEEL & PRESS WORKS LTD., SUPRA. THE ISSUE IS ALSO COVERED BY TH E TRIBUNALS DECISION AS NOTED ABOVE. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND THI S ISSUE OF REVENUES APPEALS FOR BOTH THE YEARS IS DISMISSED. 27. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE D ISMISSED. 28. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.06. 2014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30TH JUNE, 2014 -. #/0 1 JD.(SR.P.S.) 16 ITA NOS.1663 TO 1665/K/2011 M/S. KEVENTER AGRO LTD. AY 2000-01, 2003-04 & 200 5-06 2 *3 4 3%5- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT JCIT(OSD), CIRCLE-4, KOLKATA. 2 *+() / RESPONDENT M/S. KEVENTER AGRO LTD., 2, CLIVE GHA T STREET, 4 TH FLOOR, KOLKATA-700 001.. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:; *# / DR, KOLKATA BENCHES, KOLKATA +3 */ TRUE COPY, #