DCIT, Pune V. Autoline Industries Ltd., Pune

ITA 1711/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0817 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: DR SUNIL PATHAK
• Keywords: Capital asset; Proportionate interest; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 1 711 /PN/201 2 / ASSESSMENT YEAR : 200 8 - 0 9 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) , PUNE . / APPELLANT VS. VS. AUTOLINE INDUSTRIES LTD., S.NO.313, 314, 320 - 323, NANEKARWADI, DHAKAN, TAL. KHED, DI ST. PUNE - 410501 . / RESPONDENT PAN: AABCA4534D / APPELLANT BY : SHRI B.C. MALAKAR / RESPONDENT BY : DR. SUNIL PATHAK / DATE OF HEARING : 26 .0 8 .2015 / DATE OF PRONOUNCEMENT: 26 . 1 1 .2015 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - I , PUNE , DATED 31 . 0 1 .201 2 RELATING TO ASSESSMENT YEAR 200 8 - 0 9 AGAINST ORDER PASSED U NDER SECTION 143(3) OF THE INCOME - TA X ACT, 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND I N LAW, THE LEARNED CIT(A) - I , PUNE HA S GROSSLY ERRED IN DELETING THE ADDITION MADE BY THE A . O . ON ACCOUN T OF DISALLOWANCE OF RESEARCH AND DE V ELOPMENT EXPENSES WHICH IS OF CAP I TAL IN NATURE . EXPENSES WHICH IS OF CAP I TAL IN NATURE . ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 2 2 ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LA W, TH E L E ARNED CIT(A) - I, PUNE HAS GROSSL Y ERRED IN DELETIN G THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DI SALLO W ANCE OF PREMIUM PAID ON CANCELLATION OF FOREIGN CURRENCY COVER UNDER SECTION 37 OF THE ACT. 3 FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIM E OF HEARING , THE ORDER OF THE LD . COMMISSIONER OF INCOME - TAX(APPEALS) MAY BE VACATED A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 4 THE A PPELLANT CRAVES TO ADD , AM END, ALTER OR DELETE ANY OF THE ABOVE GROUND OF APPEAL DURING THE COURSE OF APPELLATE PROC E EDINGS BEFORE THE HON'BLE TRIBUNAL . 3. THE ISSUE IN GROUND OF APPEAL NO.1 RAISED BY THE RE VENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF RESEARCH AND DEVELOPMENT EXPENSES AMOUNTING TO RS.11,15,01,210/ - . 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF AUTO ANCILLARY UNIT AND MA NUFACTURED THE PARTS NEEDED FOR THE VEHICLES OF DIFFERENT MAKE S . IN OTHER WORDS, THE ASSESSEE WAS A VENDOR FOR AUTOMOBILE MANUFACTURES. THE MAJOR CUSTOMERS OF THE ASSESSEE WERE TATA MOTORS LTD., BAJAJ AUTO LTD., KINETIC ENGINEERING LTD., MAHINDRA & MAHIN DRA LTD., ETC. THE CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT IN THE PROCESS OF MANUFACTURING A VEHICLE, SUCH AUTOMOBILE MANUFACTURERS FIRST ASSESS THE MARKETABILITY OF THE VEHICLE THAT IS IN PIPE LINE OF DESIGNING. THEN, THE DESIGN OF V EHICLE WAS MADE AND THE SPECIFICATION ABOUT THE AUTO PARTS ARE PROVIDED TO VENDORS, THAT IS, THE ASSESSEE, TO MANUFACTURE AND SUPPLY THE SAME. WHERE THE VENDOR TAKES THE INITIATIVE OF DESIGNING A SPECIALLY USEFUL PRODUCT THEN THE SAME HAS TO BE APPROVED B Y THE AUTOMOBILE MANUFACTURER, WHO IS A CUSTOMER FOR ASSESSEE AND WITHOUT THIS APPROVAL, THE DESIGN/PRODUCT DEVELOPED BY VENDOR WOULD BE RENDERED USELESS. FURTHER THE PLEA OF THE ASSESSEE WAS THAT IT HAD DEVELOPED THE DESIGNS PRINCIPALLY FOR DEVELOPMENT O F LOAD BODY ASSEMBLY AND REDUCTION IN WEIGHT OF ASSEMBLY. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEVELOPED THE SAID DESIGNS FOR THE PARTS OF THE VEHICLE MANUFACTURED BY HAD DEVELOPED THE SAID DESIGNS FOR THE PARTS OF THE VEHICLE MANUFACTURED BY ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 3 M/S. TATA MOTORS LTD. IN TURN, THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.4 .20 CRORES IN THE YEAR 2009 - 10 BEING SHARING BENEFIT S DUE TO REDUCTION IN WEIGHT FOR THE FIRST 1,20,000 VEHICLES. THUS, THE DESIGNS WERE UTILIZED FOR THE PARTS OF VEHICLES MANUFACTURED BY M/S. TATA MOTORS LTD. THE ASSESSEE ALSO INCURRED CERTAIN EXPENDITU RE IN THE DEVELOPMENT OF NEW DESIGNS, BREAK ASSEMBLY AND RELATED PARTS WHICH IN TURN, WERE USED IN THE VEHICLES. THE ASSESSEE HAD CAPITALIZED THE SAID EXPENDITURE IN ITS BOOKS OF ACCOUNT , BUT CLAIMED THE SAME AS DEDUCTION IN THE COMPUTATION OF TOTAL INCOM E . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENDITURE HAD BROUGHT ENDURING BENEFIT TO THE ASSESSEE AS WELL AS A NEW ASSET IN THE FORM OF NOVEL DESIGNS FOR THE ASSESSEE. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN ORDER TO CLAIM THE DEDUCTION U NDER SECTION 35(1) OF THE ACT, IT WAS NECESSARY THAT THE EXPENDITURE CLAIMED MUST BE OF REVENUE IN NATURE. THE PLEA OF THE ASSESSEE IN THIS REGARD WAS THAT THE EXPENDITURE QUALIFIED AS REVENUE IN NATURE FOR THE REASON THAT SUCH EXPENDITURE WAS IN THE NATU RE OF SALARY, LABOUR CHARGES AND WAGES AND PURCHASES. THE ASSESSING NATU RE OF SALARY, LABOUR CHARGES AND WAGES AND PURCHASES. THE ASSESSING OFFICER ON THE OTHER HAND WAS OF THE VIEW THAT THE EXPENDITURE UNDER CONSIDERATION WAS CAPITAL IN NATURE AND THE DEDUCTION UNDER SECTION 35(1) OF THE ACT COULD NOT BE ALLOWED. THE ALTERN ATE PLEA OF THE ASSESSEE WAS THAT THE EXPENDITURE SHOULD BE ALLOWED AS DEDUCTION UNDER SECTION 37(1) OF THE ACT , WAS ALSO REJECTED BY THE ASSESSING OFFICER . 5 . THE CIT(A) NOTED THAT THERE WAS NO DISPUTE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER THAT THE EXPENDITURE OF RS.11.15 CRORES HAD BEEN INCURRED IN THIS YEAR FOR THE PURPOSE OF RESEARCH AND DEVELOPMENT RELATING TO THE ASSESSEES BUSINESS. FURTHER NOTED THAT THERE WAS NO DISPUTE BETWEEN THE RIVAL PARTIES ON THE FACT THAT THE EXPENSES PER - SE WERE FOR PURCHASE OF MATERIALS, CONSUMABLES AND SPARES, SALARY AND WAGES AND OTHER REVENUE EXPENSES USED ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 4 FOR THE DEVELOPMENT OF PROCESSES AND DESIGNS. THE CIT(A) OBSERVED THAT THE EXPENDITURE WAS INCURRED FOR BRING ING IMPROVEMENT IN THE DESIGNS AND PROCESS GIV EN BY THE VENDOR COMPANIES AND THEREFORE, PER - SE THESE WERE APPARENTLY OF THE NATURE OF REVENUE EXPENDITURE, WHERE THE EXPENDITURE HAD NOT BEEN INCURRED FOR THE PURCHASE OF LAND OR BUILDING OR MACHINERY ETC., BUT IT HAD BEEN STATED BY THE ASSESSING OFFICER THAT THE AFORESAID EXPENSES HAD RESULTED INTO COMING INTO BEING OF PROCESSES AND DESIGNS, WHICH HAD ENDURING BENEFIT AND THEREFORE WAS CAPITAL IN NATURE. THE NECESSARY EVIDENCE WAS FILED BEFORE THE CIT(A) TO SHOW THAT THE PATENTS HAD NOT BEEN REGISTERED ON TECHNICAL GROUND. THE CLAIM OF THE ASSESSEE WAS THAT THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE DECISION OF CIT VS. MADRAS AUTO SERVICES PVT. LTD., 233 ITR 468 (SC) WAS NOT IN PROPER APPRECIATION OF FACTS AND LAW. THE AFORESAID EXPENSES WERE IN THE NATURE OF REVENUE EXPENDITURE AND THE CIT(A) WAS OF THE VIEW THAT THE EXPLANATION OF THE ASSESSEE WAS MORE PLAUSIBLE AS THE RESEARCH AND DEVELOPMENT WAS NOT FOR A NEW PRODUCT OR A LINE OF PRODUCT. SINCE THE ASSESSEE DEVELOPMENT WAS NOT FOR A NEW PRODUCT OR A LINE OF PRODUCT. SINCE THE ASSESSEE WAS ONLY A VENDOR AND HAD TO MAN UFACTURE THE PRODUCTS AS PER THE REQUIREMENT OF THE PRINCIPAL AND EVEN IF A DEVELOPMENT WAS MADE, THE SAME ACTUALLY BELONGS TO THE PRINCIPAL AND COULD BE IMPLEMENTED ONLY ON THEIR APPROVAL. THE MONETARY BENEFIT RECEIVED BY THE ASSESSEE ALSO REFLECTED THAT THE SAME WAS ISSUED AS PER THE WISH AND CONSIDERATION OF THE PRINCIPAL. THE CIT(A) OBSERVED THAT THE MAIN BENEFIT ACCRUING TO THE ASSESSEE WAS IN RESPECT OF BUILDING A REPUTATION IN THE MARKET OF OEM MANUFACTURERS, WHICH COULD BRING MORE BUSINESS TO THE ASSESSEE. THE CIT(A) HELD THAT THOUGH THE EXPENDITURE WAS FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE AND WAS RELATING TO RESEARCH AND DEVELOPMENT, THE SAME WAS NOT RESULTING INTO ANY CAPITAL ASSET OR A BENEFIT OF ENDURING NATURE. THE CIT(A) HELD THA T THE EXPENDITURE WAS DEFINITELY OF THE NATURE OF REVENUE, WHETHER TO BE ALLOWED UNDER SECTION 35(1)(I) OR SECTION 37(1) OF THE ACT. ON ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 5 DELIBERATING OF THE ISSUE THE CIT(A) FURTHER HELD THAT THE DEDUCTION UNDER SECTION 35(1)(I) COULD ONLY BE DENIED WHEN T HE SAME WAS IN RESPECT OF CAPITAL IN NATURE. SINCE, THE EXPENDITURE INCURRED BY THE ASSESSEE WAS REVENUE IN NATURE HENCE, THE SAME WAS HELD TO ALLOWABLE UNDER SECTION 35(1)(I) OF THE ACT. 6 . THE REVENUE IS IN APPEAL AGAINST THE SAID OBSERVATIONS OF THE CIT(A). 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FOR THE REVENUE POINTED OUT THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE ON RESEARCH AND DEVELOPMENT WAS BECAUSE OF THE OWN R&D EXPENSES CARRIED ON BY THE ASSESSEE. THE ASSESSEE HAD AP PLIED FOR THE PATENTS OF THE SAID ITEM BUT NO REGISTRATION WAS GRANTED BECAUSE OF TECHNICAL DIFFICULTY. THE ASSESSEE ON THE ONE SIDE SAYS THAT OWN DEVELOPMENT WAS FOR THEIR BUSINESS AND ON THE OTHER HAND THE ASSESSEE CLAIMED THAT THE DESIGN WAS APPROVED B Y THE OEM HENCE, THE SAID EXPENDITURE WAS REVENUE IN NATURE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER POINTED OUT THAT THE ISSUE WAS WHETHER IN - HOUSE RESEARCH WAS NECESSARY TO BE CARRIED ON BY THE ASSESSEE WHERE THE VENDORS WERE GIV ING THE ORDERS AND WERE GIVING SPECIFICATIONS, THERE WAS NO QUESTION OF R & D EXPENSES. HE FURTHER POINTED OUT THAT THE ASSESSEE HAD SHOWN THE SAID AMOUNT AS CURRENT ASSETS AND NO CLAIM WAS MADE IN THE PROFIT & LOSS ACCOUNT AND HENCE, THERE WAS NO QUESTIO N OF ALLOWING OF SAID EXPENDITURE. HE STRESSED THAT SINCE THE DESIGN HAS BEEN MADE BY THE ASSESSEE, THE EXPENDITURE WAS CAPITAL IN NATURE AND HENCE, NOT ALLOWABLE. 8 . THE LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO THE DETAILS OF THE R&D EXPENSES PLACE D AT PAGE 163 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE ASSESSEE WAS IN LINE OF AUTO PARTS AND ANCILLARY UNIT FOR THE PAST SEVERAL YEARS. IT WAS POINTED OUT BY THE LD. AR THAT THE MAIN CUSTOMER OF THE ASSESSEE WAS ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 6 TATA MOTORS , WHICH WAS MANUFACTUR ING BODY PARTS . F OR THE SAID CONCERN , BECAUSE OF THE R&D EXPENSES CARRIED ON BY THE ASSESSEE, IT REDUCED THE COST OF THE LOAD AND AGAINST WHICH THE ASSESSEE ALSO RECEIVED CERTAIN COMPENSATION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTE D OUT THAT THE SAID EXPENDITURE WAS ALLOWED BY THE CIT(A) UNDER SECTION 35(1) (I) OF THE ACT, BUT IT IS CLEAR THAT THE NATURE OF EXPENSES WAS NOT CAPITAL IN NATURE. OUR ATTENTION WAS DRAWN TO THE NOTES AND ACTIVITIES OF THE ASSESSEE PLACED AT PAGE 159 OF T HE PAPER BOOK AND LETTER OF TATA MOTORS AT PAGE 173 OF THE PAPER BOOK. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN OPUS SOFTWARE SOLUTIONS (P.) LTD. VS. ACIT, (2012) 139 ITD 427 (PUNE) FOR THE PROPOSITION THAT EVEN IF THE R&D EXPENSES WERE OF ENDURING BENEFIT, BUT THE SAME WERE IN REVENUE FIELD. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD IN ITS COMPUTATION OF INCOME CLAIMED EXPENDITURE OF RS.11,15,01, 210/ - . THE EXPENDI TURE WAS CLAIMED FOR INITIATING, DESIGNING PRODUCT WHICH IN TURN WA S TO BE UTILIZED BY THE CUSTOMER OF THE ASSESSEE. HOWEVER, THE SAID PRODUCT CAN BE USED BY THE ASSESSEE FOR CARRYING OUT THE MANUFACTURING ACTIVITIES ONLY IF THE DESIGN IS APPROVED BY THE AUTOMOBILE MANUFACTURER, WHO IS THE CUSTOMER OF THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN - HOUSE SCIENTIFIC RESEARCH FOR DEVELOPMENT OF NEW PROCESS OF MANUFACTURE, BETTER TECHNIQUE FOR UTILIZATION OF RESOURCES, IMPROVEMENT OF PROCESS OF MANUFACTURE AND ALSO DEVELOPMENT OF NEW / IMPROVED AUTO PARTS. THE ASSESSEE THOUGH HAD CAPITALIZED THE SAID EXPENSES IN ITS BOOKS OF ACCOUNT AS R&D, BUT WERE CLAIMED TO BE AN EXPENDITURE INCURRED FOR GETTING MORE BUSINESS AND HAD CLAIMED THE EXPENDITURE U NDER SECTION 35(1)(I) OF THE ACT IN THE COMPUTATION OF INCOME . A N ALTERNATE PLEA WAS ALSO RAISED FOR ALLOWING THE ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 7 EXPENDITURE UNDER SECTION 37 (1) OF THE ACT . THE BREAK - UP OF THE EXPENSES REFLECT THAT MAJOR EXPENSES WERE OF PURCHASE OF RAW MATERIAL I.E. S TEEL AND LABOUR / SALARIES. THE ISSUE ARISING BEFORE US IS WHETHER THE SAID EXPENDITURE IS ALLOWABLE IN THE HANDS OF THE ASSESSEE AS REVENUE EXPENDITURE. 10. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD DEVELOPED A TECHNIQUE FOR REDUCING THE WEIGH T OF MACHINERY, WHICH IN TURN WAS APPROVED BY M/S. TATA MOTORS FOR MANUFACTURING AND WAS USED BY THE ASSESSEE FOR MANUFACTURING THE BODY PARTS FOR THE SAID CONCERN. IT IS AN ADMITTED FACT THAT BECAUSE OF THE AFORESAID EXPENDITURE INCURRED BY THE ASSESSEE, THERE WAS REVENUE OF RS.4.20 CRORES RECEIVED BY THE ASSESSEE IN THE YEAR 2009 - 10 BEING THE SHARING BENEFIT ON ACCOUNT OF REDUCTION IN WEIGHT FOR THE FIRST 1,20,000 VEHICLES. THE FIRST ASPECT OF THE ISSUE IS THAT WHER E THE ASSESSEE HAD CAPITALIZED THE EXP ENDITURE IN ITS BOOKS OF ACCOUNT, CAN THE ASSESSEE IN TURN CLAIM THE SAID EXPENDITURE BY WAY OF DEDUCTION IN ITS COMPUTATION OF INCOME? T HE LAW ON THIS ACCOUNT IS ESTABLISHED THAT THE ACCOUNTING ENTRIES IN THE BOOKS OF ACCOUNT OF ANY PERSON OR HOW IT IS R EFLECTED IN THE BALANCE SHEET AND / OR THE PROFIT & LOSS ACCOUNT IS OF NO CONSEQUENCE, IN DETERMINING WHETHER THE SAID EXPENDITURE IS AN ALLOWABLE DEDUCTION OR NOT. THE LAW ON THE ISSUE IS THAT THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE IN ITS BOOKS O F ACCOUNT IS NOT DETERMINATIVE WHETHER OR NOT THE EXPENDITURE IS ALLOWABLE AS A DEDUCTION. IN ORDER TO BE ELIGIBL E FOR DEDUCTION, IT HAS TO BE SEEN WHETHER THE EXPENDITURE IS REVENUE IN NATURE. WHERE ANY EXPENDITURE HAS BEEN INCURRED WHICH IS CAPITAL IN NATURE, THEN IN SUCH CIRCUMSTANCES, THE SAID EXPENDITURE IS TO BE CAPITALIZED IN THE HANDS OF THE ASSESSEE. LOOKING AT THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE SAME IS REVENUE EXPENDITURE ALLOWABLE AS DEDUCTION IN TH E HANDS OF ASSESSEE EITHER UNDER THE PROVISIONS OF SECTION ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 8 35(1)(I) OR 37(1) OF THE ACT. THE EXPENDITURE HAVING BEEN INCURRED BY THE ASSESSEE BY WAY OF RESEARCH, WHICH RESULTED IN REDUCTION IN THE WEIGHT OF BODY PARTS AND ALSO GENERATION OF REVENUE IN THE HANDS OF ASSESSEE TO THE EXTENT OF RS. 4.20 CRORES CANNOT BE SAID TO BE CAPITAL EXPENDITURE. EVEN IF THE EXPENDITURE IS OF ENDURING BENEFIT, BUT HAVING NOT BEEN INCURRED IN THE CAPITAL FIELD, IS TO BE ALLOWED AS DEDUCTION IN VIEW OF THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN OPUS SOFTWARE SOLUTIONS (P.) LTD. VS. ACIT (SUPRA) . AS REFERRED BY US IN THE PARAS HEREINABOVE, THE NATURE OF EXPENDITURE IS NOT SUCH THAT IT CAN BE SAID TO BE CAPITAL EXPENDITURE AND IN THE ABSENCE OF PRODUCT DEVELOPED BY THE A SSESSEE HAVING BEEN PATENT ED , WE FIND NO MERIT IN THE ORDER OF ASSESSING OFFICER IN THIS REGARD. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE. 11 . THE ISSUE IN GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS AG AINST THE DELETION MADE BY THE CIT(A) ON ACCOUNT OF DISALLOWANCE OF PREMIUM PAID ON CANCELLATION OF FOREIGN CURRENCY COVER. 1 2 . BRIEFLY, IN THE FACTS OF THE ISSUE RAISED BY THE REVENUE BY WAY OF GROUND OF APPEAL NO.2, THE ASSESSEE HAD RAISED LOAN FROM CIT I BANK IN SEPTEMBER, 2007 OF $ 10 MILLION ECB ( RS. 39.75 CR. INR) . THE SAID LOAN WAS RAISED FOR ACQUISITION OF DEP AUTOLINE LLC, USA, AUTO LINE INDUSTRIES, USA, INC. AND PURCHASE OF FIXED ASSETS AT ITS CHAKAN PLANT. IN ORDER TO MITIGATE THE RISK INVOLVED I N POSSIBLE HIGHER PAYMENT DUE TO FLUCTUATIONS IN RATE OF EXCHANGE, THE ASSESSEE ENTERED INTO FORWARD COVER WITH DBS BANK AT 7% P.A., ALL INCLUSIVE OF INTEREST AND FORWARD COVER. AFTERWARDS, CITI BANK BEING THE PRINCIPAL LEND E R OFFERED THE ASSESSEE , THE FO RWARD COVER AT THE RATE OF 6.75% P.A. ON THE SAME TERMS AS OF DBS BANK. THE PLEA OF THE ASSESSEE IN THIS REGARD WAS THAT CITI BANK BEING PRINCIPAL LEND E R TO THE ASSESSEE, IT HAD NO OTHER OPTION EXCEPT TO ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 9 CANCEL ITS CONTRACT WITH DBS BANK AND EXECUTE A NEW CONTRACT WITH CITI BANK ACCEPTING THE LOWER RATE OF INTEREST OF 6.75%. IN ORDER TO CANCEL THE CONTRACT WITH DBS BANK, THE ASSESSEE HAD TO PAY COMMITMENT CHARGES OF RS. 1,10,44,5 7 5/ - FOR CANCELLATION OF FORWARD CONTRACT. THE INTEREST OF RS.74,65,795/ - WAS PAID TO CITI BANK AND OUT OF THIS, RS.49,35,896/ - WAS CAPITALIZED BY THE ASSESSEE, WHICH INCLUDES INTEREST ON LOAN FOR ACQUISITION OF FOREIGN SUBSIDIARY AND THE BALANCE FOR ACQUISITION OF FIXED ASSETS AND THE REMAINING SUM OF RS.25,29,899/ - WAS CHARGED TO PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE AS TO WHY THE PREMIUM PAID ON CANCELLATION OF FOREIGN CURRENCY COVER SHOULD NOT BE DISALLOWED UNDER SECTION 37(1) OF THE ACT AS THE SAME RELATED T O THE LOAN TAKEN FOR ACQUISITION OF FIXED ASSETS AND ACQUISITION OF FOREIGN SUBSIDIARY. THE ASSESSEE IN REPLY, CONTENTED THAT THE PREMIUM PAID WAS IN THE NATURE OF COMMITMENT CHARGES OR LIQUIDATED DAMAGES AND WAS BUSINESS LOSS TO THE ASSESSEE AND WAS EXPE NDED SOLELY FOR THE PURPOSE OF BUSINESS. THE THE ASSESSEE AND WAS EXPE NDED SOLELY FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE LOAN FROM CITI BANK WAS OBTAINED FOR ACQUIRING FIXED ASSETS AND FOR ACQUISITION OF FOREIGN ENTITY AND WHERE THE ASSESSEE H AD OBTAINED LOAN FROM CITI BANK, THEN T HERE WAS NO OCCASION TO GO FOR CONTRACT WITH DBS BANK FOR FOREIGN EXCHANG E FLUCTU ATION COVER. WHERE THE FOREIGN EXCHANGE FLUCTUATION COVER WAS TAKEN IN RELATION TO LOAN ACQUIRED FOR PURCHASING FIXED ASSETS AND FOREIGN ACQUISITION, THE EXPENDITURE WAS CONN ECTED WITH FIXED ASSETS AND WAS CAPITAL IN NATURE AND NOT REVENUE EXPENDITURE. THE ASSESSING OFFICER THUS, HELD THAT THE CLAIM OF THE ASSESSEE THAT THESE WERE LIQUIDATED DAMAGES FOR BREACH OF CONTRACT AND WERE ALLOWABLE WAS MIS - PLACED SINCE THE EXPENDITUR E WAS NOT IN CONNECTION WITH THE BREACH OF CONTRACT IN RESPECT OF SALE OF MATERIAL OR REVENUE ACTIVITIES, HENCE, THE PROPORTIONATE AMOUNT OF RS.67,51,549/ - WAS DISALLOWED AS REVENUE EXPENDITURE. ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 10 1 3 . THE CIT(A) WAS OF THE VIEW THAT THE AFORESAID EXPENDIT URE RELATED TO PAYMENT OF COMMITMENT CHARGES FOR CANCELING AGREEMENT ENTERED INTO BY THE ASSESSEE FOR FOREX C OVER , PURCHASE D FOR DOLLAR FLUCTUATION RELATING TO REPAYMENT OF ECB LOAN AND INTEREST , T HEREFORE, THE SAME WAS NOT IN THE NATURE OF INTEREST. IN V IEW THEREOF, THE CIT(A) HELD THAT IT COULD NOT BE SAID THAT THE IMPUGNED EXPENDITURE WAS IN THE N ATURE DESCRIBED IN SECTION 36( 1 ) (III) OF THE ACT. THE CIT(A) FURTHER OBSERVED THAT THE CLAIM OF THE ASSESSEE HAD TO BE CONSIDERED UNDER SECTION 37(1) OF THE A CT. THE CASE OF THE ASSESSING OFFICER WAS THAT THE EXPENDITURE WAS OF CAPITAL IN NATURE BECAUSE OF ITS LINKAGE TO THE LOAN PARTLY USED FOR PURCHASE OF SHARES OF SUBSIDIARIES AND FOR ACQUISITION OF FOREIGN COMPANY AND FO R ACQUISITION OF CHAKAN PLANT . S INC E THE CHAKAN PLAN HAD ALREADY BEEN PUT TO USE, THEREFORE, THE ASSESSING OFFICER ALLOWED THE EXPENDITURE ON COMMITMENT CHARGES RELATABLE TO THE SAID PLAN T AS ALLOWABLE UNDER SECTION 37(1) OF THE ACT, BUT THE COMMITMENT CHARGES RELATABLE TO ACQUISITION OF SH ARES OF FOREIGN SUBSIDIARIES HAD TO BE TREATED AS CAPITAL EXPENDITURE NOT ALLOWABLE UNDER SECTION 37(1) OF THE ACT. THE CIT(A) AFTER DELIBERATING UPON VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE INCLUDING THE DECISION OF HONBLE BOMBAY HIGH COURT AT GOA IN CIT VS. PHIL CORPORATION LTD. AND ANR. (2011) 202 TAXMAN 368 (BOM) HELD THAT WHERE THE SHARES IN THE SUBSIDIARY COMPANIES HAD BEEN PURCHASED , TO HAVE CONTROL RIGHT S ON THEM FOR CARRYING ON OF THE BUSINESS RELATING TO THE ASSESSEES ACTIVITY, THE COMMIT MENT CHARGES OF THE BANK GUARANTEE FEES RELATING TO LOAN FOR CAPITAL ASSETS AND WHERE PAYMENT HAD BEEN MADE FOR ITS EARLY TERMINATION, IS AN EXPENDITURE INCURRED IN THE COURSE OF CARRYING ON THE BUSINESS AND HAS TO BE ALLOWED AS EXPENDITURE UNDER SECTION 3 7(1) OF THE ACT . 1 4 . THE REVENUE IS IN APPEAL AGAINST THE FINDINGS OF CIT(A). ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 11 1 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE REFERRING TO THE ORDER OF ASSESSING OFFICER FROM PARAS 5 TO 5.3 AND POINTED OUT THAT WHERE THE FOREIGN EXCHANGE CO VER WAS TAKEN FOR ACQUIRING SHARES OF FOREIGN COMPANY AND FOR FIXED ASSETS, THEN THE SAME IS NOT TO BE ALLOWED AS REVENUE EXPENDITURE. 1 6 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND, POINTED OUT THAT THE COMMITMENT CHARGES PA ID TO DBS BANK FOR SHIFTIN G THE FORWARD CONTRACT COVER FROM DBS BANK TO CITI BANK, WHICH WAS THE PRINCIPAL LENDER OF THE ASSESSEE WAS PAID NEITHER FOR ACQUISITION OF ASSETS NOR FOR ANY CAPITAL FIELD AND HENCE, WAS AN ALLOWABLE EXPENDIT URE. THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER REFERRED TO THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND DBS BANK PLACED AT PAGES 257 TO 267 OF THE PAPER BOOK AND POINTED OUT THAT THE TERM OF AGREEMENT WAS UP TO 25.09.2012 . HE FURTHER POINTED OUT T O THE EARLY TERMINATION LETTER OF DBS PLACED AT PAGES 283 AND 285, UNDER WHICH THE AGREEMENT WAS TERMINATED W.E.F. 04.03.2008 SUBJECT TO PAYMENT OF COMMITMENT CHARGES. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN DCIT VS. GUJARAT ALKALIES & CHEMICALS LTD., (2008) 299 ITR 85 (SC) AND ADDL.CIT VS. AKKAMBA TEXTILES LTD. (1997) 227 ITR 464 (SC) . IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN MAHINDRA & MAHINDRA LTD. VS. DCIT (2006) 5 SOT 217 (MUM) IS MIS - PLACED AS THE FACTS OF THE SAID CASE ARE AT VARIANCE. 1 7 . WE HAVE HEARD THE RIVAL CONTENTIO NS AND PERUSED THE RECORD. THE ISSUE ARISING BY WAY OF GROUND OF APPEAL NO.2 IS IN RELATION TO THE EXPENDITURE OF RS.67,51,549/ - BEING THE PROPORTIONATE COMMITMENT CHARGES PAID BY THE ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 12 ASSESSEE FOR EARLY TERMINATION OF FOREIGN EXCHANGE COVER TAKEN FROM DBS BANK. IN THE FACTS OF THE PRESENT ISSUE RAISED BEFORE US, THE ASSESSEE HAD TAKEN LOAN FROM CITI BANK OF $ 10 MILLION ECB ( RS. 39.75 CR. INR) , WHICH IN TURN WAS UTILIZED FOR THE ACQUISI TION OF DEP AUTOLINE LLC, USA, AUTOLINE INDUSTRIES, USA, INC. AND PURCH ASE OF FIXED ASSETS AT ITS CHAKAN PLANT . THE SAID LOAN WAS TO BE REPAID IN STIPULATED INSTALLMENTS AND IN ORDER TO MITIGATE THE RISK OF POSSIBLE HIGHER PAYMENT DUE TO FLUCTUATION IN RATE OF EXCHANGE IN FUTURE, THE ASSESSEE ENTERED INTO AN OTHER AGREEMENT W ITH SEPARATE BANK I.E. DBS BANK AT 7% P.A., ALL INCLUSIVE OF INTEREST AND FORWARD COVER. THE PRINCIPAL LENDER TO THE ASSESSEE I.E. CITI BANK ON A LATER DATE OFFERED THE ASSESSEE SIMILAR FORWARD CONTRACT AT A RATE OF 6.75% P.A. ON THE SAME TERMS AS OF DBS BANK. THE ASSESSEE HAD NO OTHER OPTION EXCEPT TO EXECUTE A NEW CONTRACT WITH CITI BANK AND TO CANCEL ITS EARLIER CONTRACT WITH DBS BANK ACCEPTING THE OFFER AT 6.75% P.A. BECAUSE OF THIS SWAPPING OF THE CONTRACT, THE ASSESSEE HAD TO INCUR AN EXPENDITURE O N ACCOUNT OF COMMITMENT CHARGES OF RS. 1,10,44,575/ - FOR CANCELLATION OF FORWARD CONTRACT. OF COMMITMENT CHARGES OF RS. 1,10,44,575/ - FOR CANCELLATION OF FORWARD CONTRACT. THE ASSESSEE ALSO PAID INTEREST OF RS.74,65,795/ - TO CITI BANK FOR THE PERIOD 29.01.2008 TO 31.03.2008. OUT OF THIS INTEREST, SUM OF RS.49,35,896/ - WAS CAPITALIZED BY THE ASSESSEE, WHICH INCLUDED INTEREST FOR ACQUISITION OF FOREIGN SUBSIDIARY AND BALANCE FOR ACQUISITION OF FIXED ASSETS AND REMAINING SUM OF RS.25,29,899/ - FOR ACQUISITION OF ASSETS OF CHAKAN PLANT , WAS CHARGED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSI NG OFFICER WAS OF THE VIEW THAT WHERE THE LOAN TAKEN FROM CITI BANK FOR ACQUISITION OF FIXED ASSETS AND ALSO FOR ACQUISITION OF FOREIGN ENTITY, THUS THE FOREIGN EXCHANGE FLUCTUATION COVER TAKEN BY THE ASSESSEE WAS IN RELATION TO THE SAID LOAN FOR ACQUIRING FIXED ASSETS AND FOREIGN ACQUISITION, HENCE, THE SAME WAS AN EXPENDITURE IN CAPITAL FIELD. THE CLAIM OF THE ASSESSEE THAT THESE WERE LIQUIDATED DAMAGES FOR BREACH OF CONTRACT AND WERE ALLOWABLE AS REVENUE EXPENDITURE WAS REJECTED BY THE ASSESSING OFFICER . ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 13 IN VIEW OF THE PROPORTIONATE DISALLOWANCE OF INTEREST PAID TO CITI BANK, THE ASSESSING OFFICER WORKED OUT THE PROPORTIONATE AMOUNT OF RS.67,51,549/ - AND DISALLOWED THE SAME. 18. THE FIRST ASPECT CONSIDERED BY THE CIT(A) WAS WHETHER THE SAID EXPENDITU RE WAS HIT BY THE PROVISIONS OF SECTION 36(1)(III) OR 37(1) OF THE ACT, SINCE THE EXPENDITURE WAS NOT IN THE NATURE OF INTEREST. THE FINDING OF THE CIT(A) IN THIS REGARD IS THAT IT IS NOT DEDUCTABLE UNDER SECTION 36(1)(III) OF THE ACT, WHICH SPECIFICALLY DEALT WITH ALLOWABILITY OF INTEREST ON BORROWED CAPITAL F OR THE PURPOSES OF BUSINESS OR PROFESSION AS REVENUE EXPENDITURE. THE CIT(A) WAS OF THE VIEW THAT THE CASE OF THE ASSESSEE HAD TO BE SEEN IN PURVIEW OF THE PROVISIONS OF SECTION 37(1) OF THE ACT, WH ICH ALLOWS ANY EXPENDITURE EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS , WHERE THE SAME WAS NOT IN THE NATURE DESCRIBED IN SECTIONS 30 TO 36 OF THE ACT AND WAS NOT IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENDITURE. ADMITTEDLY, TH E EXPENDITURE IS NOT IN THE NATURE DESCRIBED IN SECTIONS 30 TO 36 OF THE ACT, BUT THE QUESTION WHICH ARISES FOR ADJUDICATION BEFORE US IS WHETHER THE EXPENDITURE EXPENDED BY THE ASSESSEE WAS IN THE NATURE OF CAPITAL EXPENDITURE. LOOKING TO THE FACTS OF TH E PRESENT CASE, LOAN TAKEN BY THE ASSESSEE WAS FOR THE PURPOSE OF ACQUISITION OF SHARES OF FOREIGN COMPANIES OR THE FOREIGN ASSETS AND PARTLY FOR ACQUISITION OF ASSETS OF CHAKAN PLANT. THE EXPENDITURE RELATABLE TO CHAKAN PLANT HAS BEEN ALLOWED BY THE ASSE SSING OFFICER ITSELF AND ONLY PROPORTIONATE EXPENDITURE OF RS.67,51,549/ - OUT OF TOTAL COMMITMENT CHARGES PAID BY THE ASSESSEE OF RS.1,10,44,575/ - , HAD BEEN DISALLOWED BEING RELATABLE TO THE PURCHASE OF SHARES OF SUBSIDIARY. THERE IS NO DISPUTE ABOUT THE ACQUISITION OF SHARES IN SUBSIDIARY COMPANIES AND FOREIGN ACQUISITION, BUT THE CONSIDERATION FOR THE SAME IS OUT OF THE LOAN RAISED FROM CITI BANK. THE ASSESSEE ON ITS OWN MOTION HAD DISALLOWED ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 14 THE PROPORTIONATE INTEREST PAID TO CITI BANK, WHICH IN TURN, WAS RELATABLE FOR THE ACQUISITION OF SHARES OF ITS SUBSIDIARIES AND ALSO FOR FOREIGN ASSETS. 19. THE ISSUE ARISING BEFORE US IS RELATABLE TO PRE - PAYMENT CHARGES I.E. COMMITMENT CHARGES RELATING TO CANCELLATION OF FOREX COVER WHICH WAS EARLIER TAKEN FROM DBS BANK. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH DBS BANK FOR PROVIDING FOREIGN EXCHANGE COVER ON ITS LOAN TAKEN FROM CITI BANK. HOWEVER, THE LENDER OF THE PRINCIPAL LOAN TO THE ASSESSEE OFFERED THE FOREIGN EXCHANGE COVER ON SAME TERMS AS OFFER ED BY DBS BANK AND ON A LOWER RATE OF INTEREST I.E. 6.75% P.A. AS AGAINST 7% P.A. OFFERED BY THE DBS BANK. THE SAID FOREIGN EXCHANGE COVER WAS TAKEN BY THE ASSESSEE IN ORDER TO MITIGATE FUTURE RISKS ON ACCOUNT OF FLUCTUATION IN INTEREST RATES. THE ASSESS EE WAS COMPELLED TO ACCEPT THE TERMS OF CITI BANK AS IT WAS THE PRINCIPAL LENDER TO THE ASSESSEE OF THE LOAN OF $ 10 MILLION ECB ( RS. 39.75 CR. INR) . IN ORDER TO AVAIL THE FOREIGN EXCHANGE COVER OFFERED BY CITI BANK, IT HAD TO CLOSE ITS AGREEMENT WITH DBS BANK AND FOR PRE - MATURE CLOSURE OF THE OFFER MADE BY DBS BANK, THE PRE - PAYMENT CHARGES / COMMITMENT CHARGES RELATING TO THE CANCELLATION OF THE SAID FOREIGN EXCHANGE COVER W AS PAID BY THE ASSESSEE. THE SAID COMMITMENT CHARGES ARE NOT RELATABLE TO THE ACQU ISITION OF ANY FOREIGN ASSETS, BUT ARE ON ACCOUNT OF BUSINESS AGREEMENT ENTERED INTO BY THE ASSESSEE, WHICH BECAUSE OF ITS BUSINESS EXIGENCIES, HAD TO BE FORECLOSED, IN VIEW OF THE OFFER MADE BY THE PRINCIPAL LENDER I.E. CITI BANK. SUCH COMMITMENT CHARGES PAID BY THE ASSESSEE HAVING BEEN PAID DURING THE COURSE OF CARRYING ON ITS BUSINESS ARE ALLOWABLE AS REVENUE EXPENDITURE IN THE HANDS OF THE ASSESSEE. THE SAME ARE NOT RELATABLE TO LOAN TAKEN BY THE ASSESSEE FROM CITI BANK FOR ACQUISITION OF ASSETS. HOW EVER, THE FOREIGN EXCHANGE COVER WAS TAKEN BY THE ASSESSEE IN ORDER TO PREVENT ITSELF FROM F UTURE CURRENCY RATE FLUCTUATIONS. THE EXPENSES HAVE BEEN INCURRED FOR THE ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 15 PURPOSE OF BUSINESS ARE INCIDENTAL TO CARRYING ON OF THE BUSINESS BY THE ASSESSEE, ARE AL LOWABLE AS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN DCIT VS. GUJARAT ALKALIES & CHEMICALS LTD., ( SUPRA ) AND ADDL.CIT VS. AKKAMBA TEXTILES LTD. ( SUPRA ) FOR THE SAID PROPOSITION. W E UPHOLD THE ORDER OF CIT(A) IN THIS REGARD . 20 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HA S PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN MAHINDRA & MAHINDRA LTD. VS. DCIT (SUPRA). IN THE FACTS OF THE SAID CASE, THE ASSE SSEE HAD TAKEN LOAN IN US DOLLARS FOR INVESTMENT IN NEW PROJECT AND WAS TO BE UTILIZED FOR THE ACQUISITION OF CAPITAL ASSETS. HOWEVER, EVENTUALLY, THE ASSESSEE DID NOT STRICTLY UTILIZE US DOLLARS FOR ACQUIRING CAPITAL ASSETS, BUT ITS RUPEE EQUIVALENT OF S WAPPING WAS UTILIZED FOR SUCH PURPOSE. WHERE THE GAIN AROSE TO THE ASSESSEE ON CANCELLATION OF FORWARD COVER CONTRACT, THE TRIBUNAL HELD THAT THE SAME WAS IN THE NATURE OF CAPITAL ASSET. THE FACTS OF THE SAID CASE ARE AT VARIANCE TO THE FACTS BEFORE US. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE HAD TAKEN FORWARD COVER CONTRACT FROM DBS BANK, WHICH HAS NOT MATURED DURING THE YEAR UNDER CONSIDERATION BUT THE SAME WAS PRE - MATURELY CANCELLED AND THE DAMAGES PAID ON ACCOUNT OF COMMITMENT CHARGE S ARE NOT AKIN TO THE GAIN ARISING FROM MATURITY OF FORWARD CONTRACT. HENCE, THE RATIO LAID DOWN BY THE MUMBAI BENCH OF TRIBUNAL IN MAHINDRA & MAHINDRA LTD. VS. DCIT (SUPRA) IS NOT APPLICABLE TO THE FACTS OF PRESENT CASE. 2 1. THE LEARNED AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE DURING THE COURSE OF HEARING HAD RELIED ON VARIOUS OTHER CASE LAWS OF VARIOUS BENCHES OF THE TRIBUNAL. HOWEVER, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN DCIT VS. GUJARAT ALKALIES & CHEMICALS LTD., (SUPRA) AND ADDL.CIT VS. ITA NO. 1 711 /PN/201 2 AUTOLINE INDUSTRIES LTD 16 AKKAMBA TEXTILES LTD. (SUPRA) , WE DO NOT COMMENT ON THE SAME. T HE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THUS, DISMISSED. 22 . THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE BEING GENERAL, IS ALSO DISMISSED. 23 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER P RONOUNCED ON THIS 26 TH DAY OF NOVEMBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 26 TH NOVEMBER , 2015 . GCVSR / / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I, PUNE ; 4. / THE CIT - I , PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY O RDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE