Joint. Commissioner of Income tax (OSD)/, Kanpur V. M/s. Shivam Motors (P) LTD., Kanpur

ITA 17/LKW/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70561 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Earning of tax free income; Difference of opinion
• Section: 14A; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI SAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO.17/LKW/2012 ASSESSMENT YEAR:2008 - 09 JT. C.I.T. (OSD)/ VS. M/S SHIVAM MOTORS (P) LTD. DY. C.I.T. - 6, 84/105, G. T. ROAD, KANPUR. KANPUR. PAN:AABCS9330D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK MITRA, D.R. RESPONDENT BY : SHRI RAKESH GARG, ADVOCATE DATE OF HEARING :16/09/2013 DATE OF PRONOUNCEMENT : 1 2 / 1 1 / 2 0 1 3 ORDER PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF CIT(A), INTER ALIA, ON FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) KANPUR, HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,03,752/ - MADE U/S 14A OF I . T. ACT, 1961 IGNORING THE FACTS THAT THERE IS DIFFERENCE OF OPINION ON THIS ISSUE AS THE SPECIAL BENCH OF ITAT IN THE CASE OF CHEM INVESTMENT LTD. VS. ITO (2009) 121 ITD 318 (DELHI) (SB) HA S HELD THAT DISALLOWANC E U/S 14 A CAN BE MADE IN A YEAR IN WHICH NO EXEMPT INCOME 2 HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE WHERE THE ASSESSEE HAS INCURRED THE EXPENSES FOR EARNING EXEMPT INCOME. 2. THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,72,78,000/ - BEING INTEREST PAID TO NISHKALP ENER G Y LIMITED AND TATA MOTORS LTD. B Y IGNORING THE FOLLOWING FACTS : (I) THE LIABILITY TO PAY INTEREST WAS DUE ON YEAR TO YEAR BASIS AS PER AGREEMENT BETWEEN ASSESSEE AND TATA MOTORS LTD. THE ACCOUNTING ME THOD WAS MERCANTILE AND THE SAME HAS BEEN MAINTAINED REGULARLY ON YEAR TO YEAR BASIS. (II) AS PER AGREEMENT THE ASSESSEE WAS LIABLE TO PAY INTEREST ON YEAR TO YEAR BASIS. (III) ASSESSEE HAS NEVER OBJECTED TO PAY INTEREST AND WAS DOING BUSINESS I.E. PURCHASE AND SALE OF TATA VEHICLE. AS SUCH, THERE WAS NO DISPUTE. (IV) THERE WAS A CLAUSE FOR ARBITRATION, IN THE CASE OF ANY DISPUTE ARISED. THE PARTIES HAD TO APPROACH TO THE AR BITRATOR WHEN THERE WAS A DISPUTE. (V) ALTHOUGH IT WAS CONTRACTUAL LIABILIT Y BUT IT WAS DUE FOR PAYMENT ON YEAR TO YEAR BASIS AS PER AGREEMENT HELD IN 2000 BECAUSE THERE WAS NO DISPUTE BETWEEN THE PARTIES AND METHOD OF ACCOUNTING WAS ADOPTED MERCANTILE. IN FACT ASSESSEE ITSELF MADE DEFAULT IN MAKING PROVISION ON PAYMENT OF INTERE ST/INSTALLMENTS. (VI) NO SUIT HAS BEEN LODGED BEFORE THE JUDICIAL AUTHORITY FOR THE SETTLEMENT OF DISPUTE, IF ANY ARISED. (VII) THEREFORE, T HE LIABILITY TO PAY INTEREST RELATING TO EARLIER YEARS WAS NOT ACCRUED IN THE PREVIOUS YEAR. HE N CE THE CLAIM WAS N OT ALLOWABLE. 3 (VIII) THE CASES RELIED BY THE CIT(A) ARE NOT APPLICABLE IN THE CASE OF ASSESSEE SINCE THE FACTS AR E QUITE DIFFERENT. 3. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF THE APPEA L GI VEN ABOVE AND OR ADD ANY FRESH GROUNDS AS AND WHEN IT IS CONSIDERED TO DO SO. 2. WITH REGARD TO FIRST GROUND, THE BRIEF FACTS, BORNE OUT FROM THE RECORD, ARE THAT THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.2,03,752/ - AFTER INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT (HEREINAFTER REFERRED TO AS THE ACT) , AGAINST WHICH AN APPEAL WAS FILED BEFORE THE CIT(A ) WITH THE SUBMISSIONS THAT THE ASSESSEE HAS NOT MADE ANY INVESTMENT FOR THE PURPOSE OF EARNING TAX FREE INCOME IN THE IMPUGNED ASSESSMENT YEAR. MOREOVER, NO TAXABLE INCOME WAS EARNED BY THE ASSESSEE, THEREFORE, THE DISALLOWANCE U/A 14A OF THE ACT IS NOT CALLED FOR. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT THE ASSESSEE COMPANY HAS SUFFICIENT SURPLUS FUND AND NO PART OF BORROWED FUNDS HAVE BEEN UTILIZED FOR MAKING ANY INVESTMENT IN EARLIER YEARS. IN SUPPORT THEREOF HE HAS FILED THE DETAILS OF TOTAL S HARE CAPITAL AND RESERVE OVER LAST SEVERAL YEARS AND THE INVESTMENTS MADE IN ORDER TO DEMONSTRATE THAT ITS OWN FUNDS ARE MORE THAN THE BORROWED FUNDS UTILIZED FOR THE BUSINESS PURPOSE , THEREFORE, THE INVESTMENTS WOULD COME OUT FROM OWN FUNDS ONLY. BESIDES , IT WAS ALSO CONTENDED THAT INVESTMENT IN THE SHARES OF M/S KAILASH AUTO FINANCE LIMITED, WHICH IS A FINANCE COMPANY, WITH WHOM THE ASSESSEE 4 COMPANY HAS BUSINESS RELATIONS, ARE MADE FOR THE BUSINESS PURPOSE. IN SUPPORT OF ITS CONTENTION THAT THE PROVISIO NS OF SECTION 14A WOULD BE APPLICABLE ONLY IF THE TOTAL INCOME INCLUDES AN INCOME, WHICH DOES NOT FORM PART OF TOTAL INCOME AND IS EXEMPT U/S 10 OF THE ACT, THE ASSESSEE HAS PLACED THE RELIANCE UPON THE JUDGMENT OF CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF SIVA INDUSTRIES & HOLDINGS LTD. (FORMERLY KNOWN AS STERLING INFOTECH LTD.) VS. ACIT, COMPANY CIRCLE - VI(9) IN I.T.A.NO.2148/MAD/2010. 3. THE CIT(A) EXAMINED THE ISSUE AND FINDING FORCE IN THE CONTENTION OF THE ASSESSEE HAS DELETED THE ADDITION. 4. AGG RIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSIONS THAT AFTER THE ASSESSMENT YEAR 2008 - 2009 THE DISALLOWANCES U/S 14A ARE TO BE COMPUTED AS PER THE PROVISIONS OF RULE 8D OF THE I.T. RULES. THE ASSESSEE HAS MADE THE INVEST MENT IN SHARES AND THE DIVIDEND INCOME IS EXEMPT FROM TAX, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY MADE THE CORRESPONDING DISALLOWANCE OF EXPENDITURE TO BE INCURRED IN EARNING THE INTEREST FREE INCOME. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF CIT(A), HAS SUBMITTED THAT THE PROVISIONS OF SECTION 14A CAN ONLY BE INVOKED WHEN THE INTEREST FREE INCOME IS INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. IN THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS NOT EARNED ANY TAX FREE INCOME, THEREFORE, THE CORRESPONDING DISALLOWANCE OF THE EXPENDITURES INCURRED IN EARNING THE TAX FREE INCOME CANNOT BE MADE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR 5 ATTENTION TO THE FINANCIAL POSITION OF THE ASSESSEE COMPANY WI TH THE SUBMISSION THAT HE HAD SUFFICIENT FUNDS TO MAKE THE INVESTMENT IN SHARES , THEREFORE, NO BORROWED FUNDS WERE INVESTED IN SHARES TO EARN THE DIVIDEND INCOME. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE ACT, WE FIND THAT AS PER THE PROVISIONS OF SECTION 14A, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT . M EANING THEREBY THE BASIC CONDITION PRECEDENT FOR INVOKING THE PROVISIONS OF SECTION 14A IS THAT THERE SHOULD BE INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT . THUS, WHEREVER THE ASSESSEE EARNED THE INTEREST FREE INCOME, THE CORRESPO NDING EXPENDITURE INCURRED IN EARNING THAT INCOME IS TO BE DISALLOWED. IN THE ABSENCE OF ANY INTEREST FREE INCOME, THERE CANNOT BE ANY DISALLOWANCE AS NO CORRESPONDING EXPENDITURES WERE INCURRED TO EARN A PARTICULAR TAX FREE INCOME. FOR THE SAKE OF REFERENCE, WE EXTRACT THE PROVISIONS OF SECTION 14A OF THE ACT AS UNDER: 14A. [(1)] FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT.] [(2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED , IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RE SPECT OF SUCH 6 EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. (3) THE PROVISIONS OF SUB - SECTION (2) SHALL ALSO APPLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. 6.1 TURNING TO THE FACTS OF THE CASE, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS MADE THE INVESTMENT IN THE SHARES OF M/S KAILASH AUTO FINANCE LTD. I N EARLIER YEARS AND IN THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS NOT EARNED ANY TAX FREE INCOME, WHICH CAN FORM PART OF TOTAL INCOME OF THE ASSESSEE. IN THE ABSENCE OF TAX FREE INCOME, THE CORRESPONDING EXPENDITURE TO EARN THAT INCOME CANNOT BE WORKED OUT FOR ITS DISALLOWANCE. THEREFORE, IN A SITUATION WHERE THERE IS NO TAX FREE INCOME, NO DISALLOWANCE U/S 14A IS POSSIBLE. 6.2 THE SIMILAR VIEW WAS ALSO EXPRESSED BY THE TRIBUNAL IN THE CASE OF SIVA INDUSTRIES & HOLDINGS LTD. (FORMERLY KNOWN AS STERLING INFOTECH LTD.) VS. ACIT, COMPANY CIRCLE - VI(9) (SUPRA). THEREFORE, THE CIT(A) HAS RIGHTLY HELD THAT IN THE ABSENCE OF TAX FREE INCOME, NO DISALLOWANCE U/S 14A IS PERMISSIBLE. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) , WE CONFIRM HIS ORDER. 7. APROPOS GROUND NO. 2, THE FACTS IN BRIEF, BORNE OUT FROM THE RECORD, ARE THAT THE ASSESSING OFFICER HAS NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAS CLAIMED INTEREST OF RS.1,72,78 ,000/ - UNDER THE HEAD INTEREST IN SCHEDULE - 1 7 FORMING PART OF PROFIT & LOSS ACCOUNT. IT WAS ALSO NOTICED THAT AS PER NOTES ON ACCOUNTS OF THE ANNUAL 7 REPORT, THE ASSESSEE COMPANY HAS PROVIDED INTEREST OF RS.1,64,51,000/ - TOWARDS INTEREST ON LOAN FROM M/S NISKALP INVESTMENT AND TRADING COMPANY LIMITED, NOW KNOWN AS M/S NISKALP ENERGY LIMITED (NEL). ON THE BASIS OF THE FINAL SETTLEMENT. THE ASSESSEE WAS ASKED TO EXPLAIN THE DETAILS OF INTEREST AND ALSO TO JUSTIFY ITS CLAIM. IN RESPONSE THERETO, THE DETAIL ED REPLY WAS FILED ALONG WITH THE RELEVANT DOCUMENTS STATING THEREIN THAT THE ASSESSEE COMPANY IS A DEALER OF M/S TATA MOTORS LIMITED (TML) IN THE TERRITORY OF BILASPUR (CHHATISHGARH) AND ITS SURROUNDING DISTRICTS. THE MODUS OPERANDI OF THE BUSINESS IS SE LLING OF COMMERCIAL VEHICLES SUPPLIED BY THE TATA MOTORS LIMITED. THE VEHICLES WERE BEING SUPPLIED TO THE ASSESSEE ON 45 DAYS CREDIT AND AS AND WHEN THE SALE PROCEEDS WERE REALIZED THE ASSESSEE COMPANY MADE PAYMENT TO TATA MOTORS LIMITED. DUE TO LACK OF DEMAND AND DECLINE IN SALES, THE CREDIT BALANCE IN THE NAME OF TML INCREASED CONSIDERABLY. 7.1 IN THE YEAR 2000 AN ARRANGEMENT WAS MADE WITH TML THROUGH ITS GROUP CONCERN M/S NISKALP INVESTMENT AND TRADING CO. LTD. T O PROVIDE A LOAN OF RS.4,80,76,000/ - TO THE ASSESSEE COMPANY VIDE AGREEMENT DATED 13/03/2000 @12% INTEREST PER ANNUM. THE SAID LOAN WAS IMMEDIATELY UTILIZED BY TML FOR SQUARING UP ITS OUTSTANDING DUES RECOVERABLE FROM THE ASSESSEE COMPANY. SINCE THE ASSESSEE WAS DEALER OF TML, IT COULD NOT RESIST THE CONVERSION OF CREDIT BALANCE INTO LOAN ACCOUNT BY T ML BUT NO INTEREST HAS EVER BEEN PAID OR PROVIDED ON LOAN PROVIDED BY NEL. A NOTE TO THE THIS EFFECT WAS MADE BY THE AUDITORS IN THE NOTES TO THE ACCOUNTS ATTACHED TO THE BALANCE SHEET EACH YE AR. THE MATTER BECAME DISPUTED AND THE ASSESSEE COMPANY DID NOT EITHER PROVIDE OR PAY THE INTEREST 8 DURING ANY OF THE LAST SEVERAL YEARS THOUGH THERE WAS CONSTANT PRESSURE BY NEL / TML THAT THE INTEREST BE PAID. FINALLY, IN THE IMPUGNED ASSESSMENT YEAR I. E. 2008 - 2009, A FRESH AGREEMENT WAS DRAWN WHEREIN THE MIDWAY WAS WORKED OUT AND THE RATE OF INTEREST WAS REDUCED FROM 12% TO 6% PER ANNUM. THE LIABILITY TO PAY INTEREST WAS CRYSTALLIZED AND FROZEN AND THAT TOO WITH A RIDER THAT FIRST WHATEVER AMOUNT HAD B EEN RETAINED BY TML ARE PAID BY THE ASSESSEE WAS FIRST TO BE ADJUSTED TOWARDS THE PRINCIPAL AND THEREAFTER WHATEVER BALANCE WAS LEFT OUTSTANDING AS ON 31/03/2007 WOULD BE CRYSTALLIZED AS PRINCIPAL AMOUNT PAYABLE. INTEREST ON THE SAME @6% WOULD BE PAYABLE FROM 2001 ONWARDS TILL 31/03/2007. THE SAID AMOUNT I.E. PRINCIPAL AND INTEREST WAS DETERMINED AS TOTAL OUTSTANDING AS ON 31/03/2007 AND THE 36 EQUAL INSTALLMENTS WERE GRANTED. SINCE FACTUM OF PAYMENT OF INTEREST WAS SETTLED DURING THE YEAR UNDER CONSIDER ATION, THE LIABILITY TO PAY INTEREST WAS CRYSTALLIZED IN THE PREVIOUS YEAR RELEVANT TO THE YEAR UNDER CONSIDERATION AND THE INTEREST FOR THE PERIOD 30/03/2000 TO 31/03/2007 WAS DEBITED , TDS WAS DEDUCTED AND PAYMENTS WERE MADE. ON THE BASIS OF THIS AGREEMENT, THE ASSESSEE HAS DEBITED THE PAYMENT OF INTEREST TO THE PROFIT & LOSS ACCOUNT. 7. 2 THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND MADE A DISALLOWANCE OF CLAIM OF INTEREST OF RS.1,72,78,000/ - HAVING OBSERVED THA T THE ASSESSEE HAD FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING FROM YEAR TO YEAR INCLUDING PREVIOUS YEAR, THEREFORE, THE LIABILITY OF PAYMENT OF INTEREST CAN BE QUANTIFIED AND MADE IN THE CORRESPONDING ASSESSMENT YEARS. 9 8. THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT(A) AND REITERATED ITS CONTENTIONS . HE HAS ALSO PLACED HEAVY RELIANCE UPON THE JUDGMENT IN THE CASE OF CIT VS. ORIENTAL MOTOR CAR CO. PVT. LTD. 124 ITR 74 (ALL), CIT VS. NATHMAL TOLARAM [1973] 88 ITR 234 (GUJ), SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. VS. CIT [1995] 213 ITR 523 AND CIT VS. NAGRI MILLS CO. LTD. [1958] 33 ITR 684 IN SUPPORT OF ITS CONTENTION THAT WHERE LIABILITY IS CONTRACTUAL IN NATURE, IT WOULD BE ALLOWED ON ITS CRYSTALLIZATION ONLY AND NOT IN EARLIER YEARS. THE LEARNE D COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT UNDISPUTEDLY THE ASSESSEE WAS A DEALER OF TML AND THE FINANCIAL ARRANGEMENT WITH M/S NISKALP INVESTMENT AND TRADING COMPANY LIMITED, LATER CHANGED TO M/S NISKALP ENERGY LIMITED, WAS MADE AT THE BEHEST OF TM L AND THE ENTIRE LOAN WAS IMMEDIATELY UTILIZED BY TML FOR SQUARING UP ITS OUTSTANDING DUES RECOVERABLE FROM THE ASSESSEE COMPANY. SINCE THE ASSESSEE COMPANY WAS DEALER OF TML, IT COULD NOT RESIST THE CONVERSION OF CREDIT BALANCE INTO THE LOAN ACCOUNT BUT NO INTEREST WAS EVER PAID OR PROVIDED ON A LOAN PROVIDED BY NEL. IN SUPPORT OF ITS CONTENTION, ATTENTION OF CIT(A) WAS ALSO INVITED TO THE AGREEMENT AND OTHER DOCUMENTS. FINDING FORCE IN THE CONTENTION OF THE ASSESSEE THE CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE AND DELETED THE DISALLOWANCE. THE RELEVANT OBSERVATIONS OF THE CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 6.1 THE 1 ST IMPORTANT DOCUMENT IN THE INSTANT DISPUTE IS THE LOAN AGREEMENT DATED 30/03/2000 BETWEEN THE APPELLANT COMPANY AND THE TATA GROUP. AS PER THIS AGREEMENT, THE APPELLANT COMPANY WAS REQUIRED TO PAY INTEREST @ 12% ON THE LOAN AMOUNT AND ALSO TO MAKE PAYMEN T OF PRINCIPAL & INTEREST 10 AMOUNT WITHIN THE STIPULATED TI ME FRAME. HOWEVER, FACTS ON RECORDS SUGGEST THAT THE APPELLANT COMPANY FOLLOWED THE SAID AGREEMENT MORE IN ITS BREACH THAN IN ITS COMPLIANCE. THE LD. A.R HAS SUBMITTED VIZ WRITTEN SUBMISSION AND ALSO ORAL ARGUMENTS THAT THE APPELLANT COMPANY HAD NO INTENTI ON TO HONOUR THIS AGREEMENT AS THE SAME HAD BEEN AN ALMOST A 'FORCED DOWN' AGREEMENT BY THE TATA GROUP ON THE APPELLANT COMPANY. THE LD. A.R ALSO STATED THAT INTEREST PAYMENT UNDER THE IMPUGNED AGREEMENT WAS NOT A STATUTORY LIABILITY BUT MERELY A CONTRACTU AL LIABILITY AND; THE RECORDS SHOW, THE APPELLANT COMPANY HAD NO INTENTION TO HONOUR THE SAID AGREEMENT, SINCE THE LEDGER ACCOUNT OF THE APPELLANT COMPANY IN THE BOOKS OF TATA GROUP OF C OMPANIES (WHICH IS P ART OF RECORDS), SHOWS THAT NO PAYMENT AT ALL ON ACCOUNT OF INTEREST HAD BEEN MADE BY THE APPELLANT COMPANY. THE LD. A.R HAS ALSO STATED THAT THE APPELLANT COMPANY HAD VOICED ITS SERIOUS DISAGREEMENT OVER THE TERM OF THE SAID AGREEMENT, A MEETING WAS HELD ON 10 TH MAY, 2002 WHICH WAS ATTENDED BY THE DIREC TORS OF THE COMPANY A ND ALSO THE TOP BRASS OF THE TATA GROUP. A COPY OF THE MINUTES OF THE SAID MEETING IS ON RECORD. THE LD. A.R. FURTHER SUBMITTED THAT THE APPELLANT COMPANY'S OBJECTION/DISPUTE/CONCERNS WERE NOT ALLAYED EVEN IN THIS MEETING/AND THUS, IT HAD NO INTENTION TO COMPLY WITH THE DECISION MADE IN THAT MEETING TOO, WHICH IS EVIDENT FROM THE FACT THAT NO PAYMENTS ON ACCOUNT OF INTEREST WERE MADE BY THE APPELLANT COMPANY EVEN AFTER THAT MEETING. THIS IMPASSE CONTINUED TILL 2007 WHEN A FRESH AGREEMEN T, DATED 12/04/2007 WAS SIGNED (BETWEEN THE APPELLANT COMPANY & THE TATA GROUP) WHEREIN VARIOUS CONCESSIONS WERE ALLOWED TO THE APPELLANT COMPANY WHICH INC L U D ED REDUCTION OF INTEREST RATE TO 6% P.A. IN ACCORDANCE WITH THIS AGREEMENT, THE APPELLANT COMPANY MADE PAYMENT OF INTEREST OF RS.1,64,51,896/ - ON A N D FROM APRIL 2007 TO JULY 2007 AND CLAIMED IT AS AN EXPENDITURE DURING THE F.Y. 2007 - 08. 6.1.1 AFTER GOING THR O UGH THE ENTIRE CHRONOLOGY OF EVENTS, WHICH I HAVE TRIED TO SU MMARISE AS ABOVE, AM OF THE CONSIDERED VIEW THAT THE SAID INTEREST LIABILITY (EVEN THOUGH PERTAINING TO E ARLIER YEARS) NEVER CRYSTALLIZED IN THE HANDS OF THE APPELLANT COMPANY SINCE IT H A D NO INTENTION TO PAY SUCH INTEREST AS IT HAD S ERIOUS OBJECTIONS/DISPUTE WITH THE TERMS OF TH E AGREEMENT. SUCH INTEREST PAYMENT WAS NOT A STATUTORY LIABILITY BUT ON L Y A CONTRACTUAL LIABILITY AND IF ONE OF THE PARTIES TO THE CONTRACT (I.E. THE APPELLANT COMPANY) DID NOT WISH TO HONOUR THE CONTRACT OR PRACTICALLY 11 RENEGES ON THE CONTRACT, SUCH CONTRA CTUAL LIABILITY HAD NO MEANING. EVEN IN MERCANTILE SYSTEM OF ACCOUNTING, ONLY THAT LIABILITY IS REQUIRED TO BE ACCOUNTED WHICH GET CRYSTALLIZED DURING THE YEAR. IN THIS CASE, THE APPELLANT COMPANY EVEN THOUGH HAD SIGNED THE AGREEMENT WHICH FASTENED THE LIA BILITY OF INTEREST PAYMENT ON THE APPELLANT COMPANY BUT IN PRACTICAL/COMMERCIAL WORLD, NO SUCH LIABILITY, COULD BE SAID TO HAVE CRYSTALLIZED SINCE FACTS ON RECORD (DISCUSSED ABOVE) CLEARLY DEMONSTRATE THAT THE APPELLANT NEVER HAD ANY INTENTION TO COMPLY WI TH T HE TERMS OF THAT AGREEMENT AS IT HAD SERIOUS DISPUTE/OBJECTIONS WITH THE RATE OF INTEREST PAYMENT AND OTHER CONDITIONS SET OUT IN THE IMPUGNED AGREEMENT. UNDER THES E CIRCUMSTANCES, EVEN THOUGH SUCH INTEREST PAYMENT REFER TO EARLIER YEARS, THE LIABILITY TO PAY GOT CRYSTALLIZED ONLY DURING THE YEAR UNDER REFERENCE WHEN THE APPELLANT COMPANY HAD NO DISPUTE/OBJECTION WITH TERMS OF THE FRESH AGREEMENT ON 12/0 4 /2007. THERE IS AN O L D SAYING THAT 'THE PROOF OF PUDDING IS IN ITS EATING ; THE PRESENT BASE IS A GO OD EXAMPLE OF THIS SAYING - WHAT BETTER PROOF IS REQUIRED OF NON - ACCEPTANCE/ DISPUTE/ OBJECTIONS BY THE APPELLANT COMPANY WITH REGARD TO THE TERMS OF THE EARLIER AGREEMENT(S) WHEN THE FINAL AGREEMENT GIVES SUBSTANTIAL RELIEF/CONCESSION TO THE APPELLANT COM PANY. 6.1.2 MY AFORESAID VIEW IS ALSO FORTIFIED BY THE DECISION OF HON'BLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS. RA J MOTORS [204 ITR 489 (ALL)] WHEREIN THE QUESTION BEFORE THE HON'BLE HIGH COURT WAS: 'THE SHORT QUESTION FOR CONSIDERATION IS WHEN THE LIABILITY ACCRUES WHETHER LIABILITY TO PAYMENT ACCRUED IN THE YEAR 1971 WHEN AFTER THE DECISION OF THE APEX COURT THE DEMAND HAS BE E N RAISE D BY M/S PREMIER AUTOMOBILES LTD FOR RS.339571/ - OR THE DATE WHEN THE SETTLEMENT HAD ARRIVED BETWEEN THE PARTIES ON 20 TH SEPTEMBER, 1981 . ' 6.1.3 THEIR LORDSHIPS WHILE ADJUDICATING THE AFORESAID QUESTION HELD AS UNDER: - 'THE AFORESAID CORRESPONDENCE CLEARLY SHOWS THAT IT IS THE CLAIM OF THE PREMIER AUTOMOBILES LTD . THAT THE ASSESSES WAS RESPONSIBLE FOR MAKING THE PAYMENT OF THE DIFFERENTIAL AMOUNT AND THE ASSESSEE HAS NOT ACCEPTED SUCH LIABILITY. IN ANY VIEW OF THE MATTER, THE NATURE OF THE LIABILITY WAS A 12 CONTRACTUAL LIABILITY, WHICH WAS FINALLY SETTLED, VIDE AGREEM ENT/LETTER DATED 2 0 TH SEPTEMBER, 1981 AND, THEREFORE, THE LIABILITY TO PAYMENT ACCRUED ONLY WHEN IT HAS BEEN FINALLY SETTLED ON 20 TH SEPTEMBER, 1981. THE VARIOUS DECISIONS OF COURT REFERRED HEREINABOVE, CLEARLY HELD THAT THE LIABILITY OF A CONTRACTUAL IN NATURE ACCRUES WHEN IT IS FINALLY SETTLED. THE FACTS OF THE PRESENT CASE IS ALMOST SIMILAR TO THE FACTS IN THE DECISION OF THIS COURT IN THE CASE OF CIT V. ORIENTAL MOTORS CAR CO. (P) LTD (SUPRA), WHI CH HAS BEEN REFERRED HEREINABOVE. IN THE SAID CASE, THE DECISION OF THE SUPREME COURT I N THE CASE OF KEDAR NATH JUTE MANUFACTURIN G CO. LTD V. CIT REPORTED IN 82 ITR 363 HAS ALSO BEEN CONSIDERED AND DISTINGUISHED ON THE GROUND THAT IN THE SA I D CASE, LIABILITY OF SALES TAX AROSE BY VIRTUE OF THE STATUTE AS SOON AS THE SALE WAS EFFECTED. THE DIVISION BENCH OF THIS COURT CLEARLY HELD THAT THE CONTRACTUAL LIABILITY ACCRUES WHEN IT IS FINALLY SETTLED. FROM THE FACT STATED HEREINABOVE, IT IS CLEAR THAT IN THE PRESENT CASE THE LIABILITY WAS NOT IN THE NATURE OF STATUTO RY LIABILITY. THE DEMAND RAISED BY AUTOMOBILES LTD WAS DISPUTED, BY THE ASSESSEE WHICH WAS IN THE NATURE OF CONTRACTUAL LIABILITY WHICH WAS FINALLY SETTLED ONLY ON 2 0 TH SEPTEMBER, 1981 AND THUS , LIABILITY TO PAY ACCRUED ONLY ON 20 TH SEPTEMBER, 1981 RELATIN G T O THE YEAR UNDER CONSIDERATION AND HAS BEEN RIGHTLY HELD AS ALLOWABLE DEDUCTION BY THE TRIBUNAL IN THE YEAR UNDER CONSIDERATION.' 6.1.4 IN THIS VIEW OF THE MATTER, THE DISALLOWANCE MADE BY THE A.O . WAS UNCALLED FOR AND THE SAME IS HEREBY DELETED. 9. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSIONS THAT THE ASSESSEE HAS BEEN FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE, THE CORRESPONDING PROVISIONS FOR THE PAYMENT OF INTEREST ARE REQUIRED TO BE MADE IN THE RELEVANT ASSESSMENT YEARS. HE HAS ALSO INVITED OUR ATTENTION TO THE TERMS OF AGREEMENT WITH THE SUBMISSIONS THAT IN CASE OF DISPUTE THE ASSESSEE SHOULD HAVE APPROACHED ARBITRATOR FOR THE RESOLUTION OF DISPUTE BUT INSTEAD OF DO ING SO 13 HE DID NOT PAY TH E INTEREST IN THE RELEVANT ASSESSMENT YEAR AND NOW THE ENTIRE INTEREST LIABILITY IS CLAIMED IN THE IMPUGNED ASSESSMENT YEAR ON THE BASIS OF AGREEMENT WHICH IS NOT PERMISSIBLE IN THE EYES OF LAW. 10. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE B ESIDES PLACING HEAVY RELIANCE UPON THE ORDER OF CIT(A) HAS SUBMITTED THAT THOUGH THE FINANCIAL ARRANGEMENT WAS MADE AT THE BEHEST OF THE TML AT A HIGHER RATE OF INTEREST AT 12% PER ANNUM BUT NO INTEREST HAS EVER BEEN PAID OR PROVIDED ON LOAN PROVIDED BY NE L . M EANING THEREBY THE ASSESSEE HAS NEVER HAD AN INTENTION TO PAY HIGHER RATE OF INTEREST ON THE LOAN. HE HAS ALSO INVITED OUR ATTENTION TO DIFFERENT CORRESPONDENCE EXCHANGED BETWEEN THE ASSESSEE AND THE NEL RAISING DISPUTE WITH REGARD TO THE RATE OF INT EREST. FINALLY, THE DISPUTE WAS RESOLVED THROUGH AN AGREEMENT DATED 12/04/2007 ACCORDING TO WHICH THE RATE OF INTEREST WAS REDUCED FROM 12% TO 6% PER ANNUM ON REDUCING BALANCE METHOD WITH EFFECT FROM 01/04/2000. THE LEARNED COUNSEL FOR THE ASSESSEE CONTE NDED THAT SINCE THE LIABILITY OF PAYMENT OF INTEREST HAS BEEN CRYSTALLIZED IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS RIGHTLY DEBITED THE SAME BY MAKING CORRESPONDING ENTRIES IN THE BOOKS OF ACCOUNT. THEREFORE, THE CIT(A) HAS CORRECTLY APPRECIATED THE CLAIM OF THE ASSESSEE . 11. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFULLY PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES AND JUDGMENTS REFERRED TO BY THE PARTIES, WE FIND THAT UNDISPUTEDLY THE ASSESSEE WAS A DEALER OF TML FOR SALE OF ITS COMMER CIAL VEHICLES AND AT THE RELEVANT POINT OF TIME THERE WAS SUBSTANTIAL OUTSTANDING CREDIT BALANCE DUE TO TML WITHOUT ANY LIABILITY OF INTEREST. AT THE BEHEST OF TML, FINANCIAL 14 ARRANGEMENTS WERE MADE BETWEEN THE ASSESSEE AND NEL, A SUBSIDIARY OF TATA GROUP, AND A LOAN OF RS.4,80,76,000/ - WAS PROVIDED TO THE ASSESSEE COMPANY @12% PER ANNUM. IT IS ALSO UNDISPUTED FACT THAT THE ENTIRE LOAN WAS IMMEDIATELY UTILIZED BY TML FOR SQUARING UP ITS OUTSTANDING DUES RECOVERABLE FROM THE ASSESSEE COMPANY. THOUGH THE FI NANCIAL ARRANGEMENT WAS MADE @12% PER ANNUM BUT THE ASSESSEE HAS NEVER PAID OR PROVIDE D ANY INTEREST ON LOAN PROVIDED BY NEL AND SINCE BEGINNING THE ASSESSEE HAS BEEN DISPUTING THE RATE OF INTEREST WITH THE LENDER I.E. NEL. A NOTE TO THIS EFFECT WAS ALSO MADE BY THE AUDITORS IN THE NOTES TO THE ACCOUNTS ATTACHED WITH THE BALANCE SHEET EACH YEAR. 11.1 WE HAVE ALSO CAREFULLY EXAMINED THE NOTES OF AUDITORS ATTACHED TO THE BALANCE SHEET SINCE BEGINNING. FROM THE NOTES ATTACHED TO THE BALANCE SHEET AS ON 31/0 3/2011, IN THE FIRST BALANCE SHEET THE AUDITOR HAS GIVEN A NOTE AT ITEM NO. 10 THAT NO PROVISION HAS BEEN MADE IN THE ACCOUNT IN RESPECT OF INTEREST ON DUES RELATING TO SUPPLY OF VEHICLES CONVERTED TO TERM LOAN FROM M/S NISKALP INVESTMENT & TRADING CO. LTD . THE CONTENTS OF NOTES IS AS UNDER FOR THE SAKE OF REFERENCE: NO PROVISION HAS BEEN MADE IN THE ACCOUNT IN RESPECT OF INTEREST ON DUES RELATING TO SUPPLY OF VEHICLES CONVERTED TO TERM LOAN FROM M/S NISKALP INVESTMENT & TRADING CO. LTD. DURING THE YEAR AMOUNTING RS.62,82,841/ - (RUPEES SIXTY TWO LAC EIGHTY TWO THOUSAND EIGHT HUNDRED FORTY ONE ONLY). THIS HAS RESULTEDIN UNDERSTATING THE LOSS BY THE SAME AMOUNT. 11.2 SIMILARLY, IN OTHER YEARS ALSO THE AUDITOR HAS GIVEN A NOTE ON ACCOUNT TO THIS EFFECT WI TH THE SAME NARRATION. THE COPIES OF BALANCE SHEETS OF 15 DIFFERENT ASSESSMENT YEARS ALONG WITH THE NOTES ON ACCOUNT ARE PLACED BEFORE US. BESIDES THE ASSESSEE HAS ALSO AGITATED THE HIGHER RATE OF INTEREST THROUGH VARIOUS CORRESPONDENCES , THEREFORE, THE DIS PUTE OF HIGHER RATE OF INTEREST WAS UNDER CONSIDERATION. THE CORRESPONDENCES EXCHANGED BETWEEN THE ASSESSEE AND THE NEL ARE ALSO PLACED ON RECORD. FINALLY, THE CONTROVERSY WAS RESOLVED VIDE SUPPLEMENTARY AGREEMENT DATED 12/04/2007. THROUGH THIS AGREEMEN T, THE RATE OF INTEREST WAS REDUCED FROM 12% TO 6% PER ANNUM ON REDUCING BALANCE METHOD WITH EFFECT FROM 01/04/2000. BESIDES THE MODALITIES OF PAYMENTS WERE ALSO WORKED OUT. THE DETAILS OF MODALITIES OF PAYMENTS ARE GIVEN IN CLAUSE G OF THE AGREEMENT, W HICH ARE EXTRACTED AS UNDER FOR THE SAKE OF REFERENCE: G. IN OR ABOUT MARCH 2007, THE BORROWER APPROACHED THE LENDER AND REQUESTED THE LENDER TO GRANT ADDITIONAL CONCESSIONS AND RELIEFS IN RESPECT OF THE AMOUNTS PAYABLE IN RESPECT OF THE LOAN AGREEMENT. ACCORDINGLY, THE BORROWER HAS REQUESTED THE LENDER TO GRANT RELIEF AND CONCESSIONS AS SET OUT HEREINUNDER: (I) TO REDUCE INTEREST RATE @6% PER ANNUM ON REDUCING BALANCE METHOD WITH EFFECT FROM 1 ST APRIL, 2000. (II) ALL THE PAYMENTS MADE AFTER 1 ST APRIL 2000 AGAINST THE FINANCE FACILITIES TO ADJUST AGAINST PRINCIPAL AMOUNT. (III) TO WAIVE PENAL / ADDITIONAL INTEREST. (IV) TO ACCEPT THE REPAYMENT IN REVISED MONTHLY INSTALLMENTS ('RMIS') TOWARDS REPAYMENT OF THE OUTSTANDING DUES IN 36 MONTHLY INSTALLMENTS OF RS.10,94,000/ - EACH WITH EFFECT FROM APRIL 2007 TILL MARCH 2010, AND (V) THE LIABILITY IN RESPECT OF THE ACCRUED INTEREST @6% P.A. DUE AND PAYABLE ON THE REVISED PRINCIPAL AMOUNT OF RS.229.32 LACS FOR THE PERIOD STARTING FROM 1 ST APRIL, 2007 TILL 16 REPAYMENT OF THE PRINCIPAL AMOUNT WILL BE PAID BY THE BORROWER IN THREE EQUAL INSTALLMENTS COMMENCING FROM APRIL 2010 TO JUNE 2010. THE REVISED MONTHLY INSTALLMENT (RMI) INCLUDE THE PART OF AMOUNT TO BE ADJUSTED AGAINST INTEREST PAYMEN T. ACCORDINGLY, THE DIFFERENTIAL AMOUNT OF INTEREST LIABILITY ARISING OUT OF COMPUTATION OF RECOVERY OF PRINCIPAL AMOUNT FIRST AGAINST RMI DETERMINED ON THE BASIS OF PART PAYMENT OF PRINCIPAL AMOUNT AND INTEREST WILL BE COMPUTED AT THE END OF TENURE OR IN OR ABOUT APRIL 2010 WHEN THE APPROPRIATE AMOUNT OF REBATE MAY BE CONSIDERED ON THE BASIS OF TRACT RECORD OF PAYMENT OF RMI ON STIPULATED DATES TILL MARCH 2010. 11.3 ON THE BASIS OF THIS AGREEMENT THROUGH WHICH THE LIABILITY HAS BEEN CRYSTALLIZED, THE ASSESSEE HAS DEBITED THE INTEREST OF RS.1,72,80,000/ - UNDER THE HEAD INTEREST IN SCHEDULE - 17 FORMING PART OF PROFIT & LOSS ACCOUNT AND CORRESPONDING ENTRIES WERE PASSED I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. WE HAVE ALSO CAREFULLY EXAMINED VARIOUS JUDGMENTS REFERRED TO BY THE PARTIES. IN THE CASE OF CIT VS. RAJ MOTORS [2006] 284 ITR 489 (ALL) , THEIR LORDSHIPS OF JURISDICTIONAL HIGH COURT HAVE HELD HAVING EXAMINED VARIO US JUDICIAL PRONOUNCEMENTS RENDERED ON THE SUBJECT THAT LIABILITY TO PAYMENT ACCRUED ONLY WHEN THE CONTRACTUAL LIABILITY IS FINALLY SETTLED IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 11.4 IN THE CASE OF PARAMJIT SINGH VS. ITO [2010] 236 CTR )P&H) 466, THEIR LORDSHIPS HAVE OBSERVED THAT ACCORDING TO PROVISIONS OF THE INDIAN EVIDENCE ACT, 1972 WHEN TERMS OF A CONTRACT, GRANT OR OTHER DISPOSITION OF PROPERTY HAVE BEEN REDUCED TO THE FORM OF A DOCUMENT THEN N O EVIDENCE IS PERMISSIBLE TO BE GIVEN IN PROOF OF ANY SUCH TERM OR SUCH GRANT OR DISPOSITION OF THE PROPERTY EXCEPT THE DOCUMENT ITSELF OR THE SECONDARY 17 EVIDENCE THEREOF AND NO ORAL AGREEMENT CONTRADICTING/VARYING THE TERMS OF A DOCUMENT COULD BE OFFERED. 11.5 IN THE CASE OF CIT VS. MOTORS & GENERAL STORES (P.) LTD. 66 ITR 692, THEIR LORDSHIPS HAVE OBSERVED THAT WHEN THE TRANSACTION IS EMBODIED IN A DOCUMENT THE LIABILITY TO TAX DEPENDS UPON THE MEANING AND CONTENT OF THE LANGUAGE USED IN ACCORDANCE WITH T HE ORDINARY RULES OF CONSTRUCTION. 11.6 HAVING CAREFULLY EXAMINED THE VARIOUS JUDICIAL PRONOUNCEMENTS, WE ARE OF THE CONSIDERED VIEW THAT WHEREVER NATURE OF LIABILITY IS OF A CONTRACTUAL LIABILITY, THE LIABILITY OF PAYMENT ALWAYS ACCRUES O N ITS CRYSTALLIZ ATION O R FINAL SETTLEMENT OF THE DISPUTE, IF ANY. 12. TURNING TO THE FACTS OF THE CASE , WE FIND THAT IN THE INSTANT CASE THE LIABILITY WAS NOT STATUT ORY LIABILITY . A DMITTEDLY IT WAS A CONTRACTUAL LIABILITY . T HOUGH IT ACCRUED AT THE TIME OF EXECUTION OF F IRST AGREEMENT THROUGH WHICH LOAN WAS OBTAINED BY THE ASSESSEE BUT THAT LIABILITY WAS DISPUTED BY THE ASSESSEE BY RAISING A DISPUTE WITH REGARD TO RATE OF INTEREST THROUGH VARIOUS CORRESPONDENCES AND AUDITORS NOTES ATTACHED TO THE BALANCE SHEET. FINAL LY THE DISPUTE WAS RESOLVED IN THE IMPUGNED ASSESSMENT YEAR THROUGH A SUPPLEMENTARY AGREEMENT THROUGH WHICH THE RATE OF INTEREST WAS REDUCED FROM 12% TO 6% PER ANNUM BESIDES OTHER TERMS OF PAYMENTS. THEREFORE, THE CONTRACTUAL LIABILITY IS FINALLY ACCRUED ON ITS CRYSTALLIZATION IN THE IMPUGNED ASSESSMENT YEAR , AND ON THE BASIS OF THE SAID AGREEMENT THE ASSESSEE HAS MADE DEBIT ENTRY TO THE PROFIT & LOSS ACCOUNT. SINCE THE CONTRACTUAL LIABILITY HAS BEEN CRYSTALLIZED IN THE IMPUGNED ASSESSMENT YEAR, THE ENTRI ES PASSED BY THE ASSESSEE IN ITS ACCOUNTS IS IN ACCORDANCE WITH 18 LAW AND NO DISALLOWANCE CAN BE MADE ON THE GROUND THAT THE ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THE DEBIT ENTRIES ARE TO MADE IN CORRESPONDING ASSESSMENT YEAR S . WE HAVE CAREFULLY EXAMINED THE ORDER OF CIT(A) AND WE FIND THAT HE HAS ADJUDICATED THE ISSUE IN RIGHT PERSPECTIVE FOLLOWING THE JUDICIAL PRONOUNCEMENTS RENDERED ON THE SUBJECT. SINCE WE FIND NO INFIRMITY IN HIS ORDER, WE CONFIRM THE ORDER OF CIT(A). 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 1 2 / 1 1 / 2 0 1 3 ) SD/. SD/. (SAMIM YAHYA) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 2 / 1 1 / 2 0 1 3 * SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR