The ACIT,(OSD)Circle-8, Ahmedabad V. Techno Industries Ltd., Ahmedabad

ITA 1726/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0054 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Capital asset; Deemed dividend; Revenue expenditure
• Section: 37

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NO. 1726/AHD/2012 / ASSESSMENT YEAR : 2009-10 THE ACIT (OSD), CIRCLE-8, AHMEDABAD VS M/S. TECHNO INDUSTRIES LTD., 5002, PHASE-IV, GIDC, NR. INDO GERMAN TOOL ROOM, VATVA, AHMEDABAD PAN : AABCT 6416 B / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI MUDIT NAGPAL, SR. DR ASSESSEE BY : SHRI S.N. DIVATIA, AR / DATE OF HEARING : 24/10/2016 / DATE OF PRONOUNCEMENT: 11/11/2016 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:- THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD DATED 11.05.2012 FOR ASSESSMENT YEAR 2009-10. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENU E:- 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE U/S 2(22)(E) OF THE ACT. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE MADE OF R&D EXPENSES AMOUNTING TO RS.64,42,216/- U/S 37 OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XVI, AHMEDABAD OUGHT TO HAV E UPHELD THE ORDER OF THE ASSESSING OFFICER. ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 2 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE-COMP ANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ELEVATORS AND SUBMERSI BLE PUMPS. DURING THE YEAR UNDER CONSIDERATION, IT WAS NOTICED THAT T HE ASSESSEE HAD TAKEN LOAN OF RS.69,45,630/- (CLOSING BALANCE RS.65,92,183/-) FROM ANOTHER GROUP CONCERN NAMELY BARA MACHINES PVT LTD. THE SHAREHOL DING PATTERN OF THE COMPANIES IS AS UNDER:- NAME TECHNO INDUSTRIES PVT LTD BARA MACHINES PVT L TD BHARATBHAI J PATEL 79% 96% 3.1 THE SAID TRANSACTION FELL WITHIN THE PURVIEW OF THE DEEMING PROVISION OF SECTION 2(22)(E) OF THE ACT. ACCORDINGLY, THE A SSESSEE VIDE ORDER SHEET ENTRY SHEET DATED 18.10.2011 WAS ASKED TO SHOW CAUS E AS TO WHY THE AMOUNTS TAKEN FROM BARA MACHINES SHOULD NOT BE TREA TED AS DEEMED DIVIDEND IN THE HANDS OF TECHNO INDUSTRIES LTD. THE ASSESSEE VIDE SUBMISSION DATED 31.10.2011 HAS FURNISHED ITS REPLY WHICH IS REPRODUCED FOR READY REFERENCE: 'DURING THE COURSE OF HEARING OF OUR CASE ON 18-10- 2011, YOUR GOOD-SELF HAS OBSERVED THAT THE TECHNO INDUSTRIES LTD. HAS RECD. INTER CORPORATE DEPOSIT FROM THE BARA MACHINES PVT. LTD. AND SINCE THERE WE RE COMMON HOLDING OF THE SHAREHOLDER YOUR GOODSELF HAS GIVEN A SHOW CAUS E AS TO WHY THE SAID AMOUNT SHOULD NOT BE CONSIDERED AS DEEMED DIVIDEND IN THE HANDS OF THE COMPANY. IN RESPONSE TO THIS, PLEASE NOTE THAT THE INTER COR PORATE DEPOSIT (ICD) RECEIVED BY US CANNOT BE TREATED AS LOANS OR ADVANC ES. ALL THE TERMS HAVE DIFFERENT MEANING AND DIFFERENT INTERPRETATIONS IN THE EYES OF LAW. CHARACTERISTICS OF LOAN:- 1. IN CASE OF LOAN, THE NEEDY PERSON APPROACHES T HE LENDER LO GIVE THE LOAN. 2. LOAN IS GIVEN BY THE LENDER ON THE BASIS OF HI S TERMS. 3. IN CASE LOAN THE PERSON APPROACHES THE LENDER W HILE HE IS IN REQUIREMENT OF FUNDS. ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 3 4. LOAN IS GIVEN ON THE TERMS OF THE LENDER AND NO T ON THE TERMS OF BORROWER. 5. FURTHER, THE LOAN WAS ALWAYS PAYABLE IN INSTALL MENTS AND WITH THE INTEREST PORTION ON EACH INSTALLMENT. CHARACTERISTICS OF DEPOSITS:- 1. HE DEPOSITOR GOES TO THE PERSON ACCEPTING DEPOS ITS FOR INVESTING HIS SURPLUS MONEY. 2. GENERALLY THE DEPOSITS WILL BE FOR A SHORTER PE RIOD OF TIME AND IS PAYABLE ON DEMAND OF THE DEPOSITOR. 3. FURTHER, THE DEPOSIT CAN NEVER BE PAYABLE IN IN STALLMENTS. 4. DEPOSITOR PUTS A DEPOSIT ONLY WHEN HE HAS SURPL US MONEY. 5. DEPOSITS ARC ACCEPTED BY THE PERSON ALWAYS AT HI S OWN TERMS AND CONDITIONS WHICH MUST BE ACCEPTED BY THE DEPOSITOR. THE DEPOSITOR HAS NO CHOICE BUT TO ACCEPT THE SAME. 6. DEPOSITOR NEVER ASKS ABOUT ANY SECURITY OR MORT GAGES INCLUDING PERSONAL GUARANTEE BEFORE PUTTING ANY DEPOSIT UNLIKE IN CASE OF LOAN. HENCE, IN CASE OF DEPOSIT THERE IS NO BORROWER - LE NDER RELATIONSHIP DUE TO ABOVE REFERRED REASONS. FURTHER, THE INCOME TAX ACT, 1961 ITSELF DISTINGUIS H THESE TWO TERMS. THE ACT ITSELF HAS THE INTENTION OF NOT TO COVER THE 'D EPOSIT' FOR THE PURPOSE OF SECTION 2(22)(E). THE INFERENCE OF THE INTENTION OF THE MAKER OF LEGISLATURE CAN BE CLEARLY SEEN FROM THE PROVISIONS OF SECTION 269S S AND 269T VIS A VIS READ WITH THE PROVISIONS OF SECTION 2(22)(C). PROVISION OF SECTION 2(22)(E) COVERS ONLY LOANS OR ADVANCE GIVEN BY THE COMPANY ......... TO THE BENEFICIAL SHARE HOLDERS. THE WORD 'DEPOSIT' HAS NOT BEEN SPECIFICALLY COVERED U/S 2(22)(E). WHILE SECTION 269SS AND 269T COVERS ONLY LOANS AND DEPOSITS GIVEN BY ANY PERSON TO THE ASSESSEE. THE WORD 'ADVANCES' HAS NOT BEEN SPECIFICALLY COVERED U/S 269SS AND 269T. THIS CLEARLY SHOWS THAT THE INTENTION OF LAW IS TO COVER ONLY LOAN AND OR ADVANCES GIVEN BY THE COMPANY TO THE BENEFICIAL SHA RE HOLDER AND NOT THE DEPOSIT GIVEN BY THE COMPANY. IF THE GOVERNMENT HAS THE INTENTION TO TREAT THE DEPOSIT AS DEEMED DIVIDEND U/S. 2(22)(E), IT WO ULD HAVE CLEARLY MENTIONED THE TERM DEPOSIT IN THE PROVISIONS OF SECTION 2(22) (E). FROM THE ABOVE REFER SECTION IT IS CLEARLY ESTABLIS HED THAT THE LEGISLATURE ALSO RECOGNIZES THE LOANS AND DEPOSIT US DIFFERENT TERMS HAVING DIFFERENT MEANINGS, DIFFERENT PURPOSES AND DIFFERENT USES. ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 4 IN OUR CASE, THE BARA MACHINES PRIVATE LIMITED (DEP OSITOR) HAD DEPOSITED THEIR SURPLUS FUNDS WITH US. THE EARN MACHINES PRIV ATE LIMITED (DEPOSITOR) DID NOT CARRYOUT OTHER BUSINESS EXCEPT WITTING OF P ROPERTY. SO FROM FACTS OF OUR CASE IT IS VERY DEARLY OBSERVE D THAT AMOUNT GIVEN BY BARA MACHINES PRIVATE LIMITED IS AN INTER CORPORATE DEPOSIT ICD ONLY BECAUSE 1. IT IS PAYABLE ON DEMAND OF THE DEPOSITOR 2. WE HAVE ACCEPTED THE DEPOSITS AT OUR OWN TERM S AND CONDITIONS 3 WE HAVE NOT BORROWED ANYTHING FROM THEM NOR WE H AVE OFFERED ANY SECURITY AGAINST THE SAID DEPOSIT. 4. ON DEMAND WE HAVE REPAID THE SAME. HENCE, THE AMOUNT ACCEPTED FROM THE BARA MACHINES P RIVATE LIMITED IS AN IN INCORPORATE DEPOSIT (ICD) ONLY AND BE HELD SO. SINC E SEC. 2(22)(E) OF THE IT ACT,L961 DOES NOT COVER THE WORD DEPOSIT AS PROVED IN EARLIER PARA, THE DEPOSIT AMOUNT SHOULD NEVER HE CONSIDERED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE IT ACT, 1961. FURTHER, YOUR ASSESSEE COMPANY HAS ALSO SHOWN THIS INTER CORPORATE DEPOSIT SEPARATELY UNDER THE AUDITED FINANCIAL STATEMENT. FURTHER, SINCE THE ICD DOESN'T COVER UNDER THE DEFI NITION OF SEC. 58A AND RULES MADE THERE UNDER, THE AUDITOR HAVE REPORTED U NDER THE REPORTING OF CARO THAT:- 'IN OUR OPINION AND ACCORDING TO THE INFORMATION AN D EXPLANATIONS GIVEN TO US, THE COMPANY HAS NOT ACCEPTED ANY DEPOSITS FROM THE PUBLIC WITHIN THE MEANING OF SECTIONS 58A AND 58AA OF THE COMPANIES A CT,1956, AND THE RULES FRAMED THERE UNDER'. THIS IS BECAUSE AS PER THE DEFINITION OF THE COMPAN Y DEPOSIT RULES, DEPOSITS MEANS DEPOSIT OF MONEY WITH, AND INCLUDES ANY AMOUN T BORROWED BY A COMPANY, BUT DOES NOT INCLUDE CERTAIN TYPES OF BORR OWINGS; VIZ AMOUNT RECEIVED: (A) ........ (B) ....... (C) ........ (D) FROM ANY OTHER COMPANY. (E) TO(K) .... HENCE, FROM THE DEFINITION OF THE DEPOSITS, IT IS C LEARLY OBSERVED THAT EVEN THE NO. OF TRANSACTIONS BETWEEN THE COMPANIES IS NOT CO NSIDERED AS BORROWING / ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 5 DEPOSITS WITHIN THE MEANING OF SEC. 58A OF THE COMP ANY ACT. REFER ANNEXURE - A FAR COMPANY DEPOSIT RULES. FURTHER, THE CARDINAL PRINCIPLE OF INTERPRETATION O F FISCAL LAW IS THAT IT SHOULD BE CONSIDERED STRICTLY. ICD CAN NEITHER BE A LOAN N OR AN ADVANCE. SECTION 2 (22)(E) ENACTS A DEEMING FICTION WHEREBY THE SCOPE AND AMBIT OF THE WORD DIVIDEND HAS BEEN ENLARGED TO BRING WITHIN ITS SWEE P CERTAIN PAYMENTS MADE BY A COMPANY AS PER THE SITUATIONS ENUMERATED IN TH E SECTION. SUCH A DEEMING FICTION WOULD NOT BE GIVEN A WIDER MEANING THAN WHAT IT PURPORTS TO DO. THE PROVISIONS WOULD NECESSARILY BE ACCORDED STRICT INTERPRETATION AND THE AMBIT OF THE FICTION WOULD NOT BE PRESSED BEYON D ITS TRUE LIMITS. THE REQUISITE, CONDITION FOR INVOKING S. 2(22)(E) OF TH E ACT IS THAT PAYMENT MUST BE BY WAY OF LOAN OR ADVANCES. SINCE THERE IS A CLE AR DISTINCTION BETWEEN THE ICDS VIS--VIS LOANS/ADVANCES, THE SAME SHOULD NOT BE CONSIDERED AS DEEMED DIVIDEND UNDER S.2(22)(E) OF THE ACT. THE REPLY OF THE ASSESSEE DID NOT FIND ANY FAVOUR W ITH THE AO WHO TREATED THE TRANSACTION BETWEEN BARA MACHINES AND T ECHNO INDUSTRIES AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT AND ACCORDI NGLY MADE ADDITION OF RS.29,92,000/- TO THE INCOME OF THE ASSESSEE-COMPAN Y AS DEEMED DIVIDEND. 3.1 IT WAS ALSO NOTICED BY THE AO DURING THE ASSESS MENT PROCEEDINGS THAT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.64,44 ,216 U/S 37 OF THE ACT AS RESEARCH & DEVELOPMENT EXPENSES IN P/L ACCOUNT. TH E ASSESSEE WAS GIVEN A SHOW CAUSE NOTICE AS TO WHY THE R&D EXPENDITURE C LAIMED U/S 37 OF RS.64,44,216/- SHOULD NOT BE DISALLOWED AS IT IS NO T IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE ASSESSEE GAVE ITS SUBMI SSION DATED 31.10.2011 WHICH HAS BEEN FOUND NOT ACCEPTABLE TO THE AO AND H E ACCORDINGLY DISALLOWED THE ENTIRE EXPENDITURE OF RS.64,44,216/- . THUS, THE AO COMPUTED THE ASSESSEE-COMPANYS TOTAL INCOME AT RS. 1,90,25,300/-, AFTER TAKEN INTO ACCOUNT THE RETURNED INCOME OF RS.95,89, 080/-. 4. AGGRIEVED BY THE AFORESAID ORDER OF THE AO, THE ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) AND TH E LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE, BY FOLLOWING OBSERVATIONS:- ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 6 I. ADDITION U/S 2(22)(E) I HAVE CAREFULLY PERUSED THE FINDINGS OF THE ASSES SING OFFICER AND SUBMISSIONS MADE BY THE LD.AR. THE FACTS OF THE PRE SENT YEAR ARE SIMILAR TO THE FACTS OF A. Y. 2008-09 WHEREIN UNDER SIMILAR CI RCUMSTANCES AN ADDITION U/S. 2(22)(E) WAS MADE IN THE CASE OF THE APPELLANT . WHILE DECIDING THE APPEAL FOR THAT YEAR, I HAVE ALLOWED THE APPEAL OF THE APP ELLANT VIDE APPEAL NO.CIT(A)XIV/AC. CIR. 8/262/10-11 DATED 04/09/2011. SINCE THE FACTS ARE SAME, THE REASONING AND FINDINGS GIVEN BY ME IN THA T YEAR ARE ALSO APPLICABLE TO THE CURRENT YEAR. FOLLOWING THE DECISION OF EARL IER YEAR THE ADDITION MADE BY THE A. O. U/S. 2(22)(E) OF THE ACT IS DIRECTED T O BE DELETED. II. DISALLOWANCE OF RS.64,44,216 AS R&D EXPENSES I HAVE CAREFULLY PERUSED THE FINDINGS OF THE ASSES SING OFFICER AND SUBMISSIONS MADE BY THE ID.AR. THE APPELLANT HAD CL AIMED AN EXPENDITURE OF RS.64,44,2167- AS R & D EXPENSES. THE A. O. NOTED T HAT THE ENTIRE EXPENDITURE PERTAINED TO THE PERIOD 30/04/2006 TO 3 1/03/2008. HE DISALLOWED THE CLAIM OF THE APPELLANT BY HOLDING THAT THE APPE LLANT WAS FOLLOWING A MERCANTILE METHOD OF ACCOUNTING AND, THEREFORE, THE EXPENDITURE SHOULD HAVE BEEN CLAIMED IN THE YEAR IN WHICH IT HAD BEEN INCUR RED. THE APPELLANT HAS SUBMITTED THAT THE R & D EXPENSES HAVE BEEN INCURRED FOR IN-HOUSE DEVELOPMENT OF ELECTRICAL PANEL BOARD TO R UN PERMANENT MAGNET SYNCHRONIZED MOTOR FOR ELEVATOR AND EXPELLER APPLIC ATION (SUITABLE FOR OIL MILLS) WITH AC INVERTERS AND MAGNETS DURING F. Y. 2 006-07 TO 2008-09. FOR THAT PURPOSE, CERTAIN MATERIALS LIKE MAGNET, MS AND SS SHEET ETC. WERE PURCHASED, NEW DESIGNS WERE PREPARED AND THE PRODUC T WAS READIED FOR FINAL TESTING. THE DETAILS OF ALL THE WORK DONE WERE ALRE ADY SUBMITTED TO THE A. O. HOWEVER, WHEN THE PRODUCT WAS TESTED DURING THE ACC OUNTING YEAR 2008-09, IT WAS OBSERVED THAT THE PRODUCT WAS CONSUMING HIGH POWER AND WAS NOT EFFECTIVELY OPERATING. THE PRODUCT WAS, THEREFORE , A FAILURE. SINCE THE DEVELOPMENT OF THE PRODUCT FAILED, NO LONG TIME BEN EFIT WAS OBTAINED AND THE ENTIRE EXPENDITURE WAS WRITTEN OFF IN THE YEAR IN W HICH THE R & D WORK WAS TESTED AND CONCLUDED THAT IT HAS FAILED. SOME OF TH E MATERIAL FROM THAT PROJECT WAS UTILIZED IN OTHER ACTIVITIES. THE APPELLANT TRE ATED THE EXPENDITURE INCURRED DURING EARLIER YEAR AS R & D WORK IN PROGR ESS. IT WAS NOT CLAIMED AS REVENUE EXPENDITURE AND IN CASE THE PRODUCT BECAME SUCCESSFUL, THE EXPENDITURE WOULD HAVE BEEN CAPITALIZED. BUT SI NCE THE DEVELOPMENT FAILED AND NO NEW CAPITAL ASSET WAS CREATED, THE EX PENDITURE WAS WRITTEN OFF AND TREATED AS THE EXPENDITURE OF THE CURRENT YEAR. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES, I AM INCLINED TO ACCEPT THE SUBMISSION MADE BY THE APPELLANT. THE APPELLANT WAS DEVELOPING A PRODUCT THROUGH IN-HOUSE RESEARCH AND ALL THE EXPENDITURE W ERE DEBITED TO THE R & D ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 7 HEAD AS WORK IN PROGRESS AND WAS SHOWN ON THE ASSET SIDE OF THE BALANCE SHEET. HOWEVER, SINCE THE PRODUCT WAS NOT SUCCESSFU L AND IT WAS ABANDONED, ALL THE EXPENDITURE THAT WAS INCURRED ON THE DEVELO PMENT WAS CLAIMED BY THE APPELLANT IN THE YEAR IN WHICH IT WAS FINALLY DECID ED THAT THE PRODUCT IS NOT COMMERCIALLY AND SCIENTIFICALLY VIABLE. THIS EXPEND ITURE CANNOT BE CONSIDERED AS S PRIOR PERIOD EXPENDITURE AS AT THE TIME WHEN T HE EXPENDITURE WAS INCURRED, THE APPELLANT WAS NOT AWARE THAT THE PROD UCT WILL NOT BECOME SUCCESSFUL. HOWEVER, ONLY AFTER TESTING IT WAS DETE RMINED THAT THE PRODUCT IS NOT SUCCESSFUL, AND THEREFORE, THE EXPENDITURE HAD TO BE WRITTEN OFF. THIS CANNOT BE TERMED AS CORRECTION OF ERROR. BUT IT IS DUE TO THE OUTCOME OF A CONTINGENCY WHICH COULD ESTIMATE EARLIER. THE ACCOU NTING STANDARDS MENTIONED IN THE INCOME TAX ACT WHICH IS FURTHER NO TIFIED BY NOTIFICATION NO. S.O 69(E) DATED 25/01 /1996 ALSO SUPPORTS THE M ETHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT. THE APPELLANT HAD DISCLO SED THE NATURE AND AMOUNT OF THE EXPENDITURE INCURRED IN EARLIER YEAR IN. THE BALANCE SHEET AND THERE IS NO CHANGE IN ACCOUNTING POLICY. IT FURTHER PROVIDES THAT THE CHARGE OF CREDIT ARISING ON THE OUTCOME OF A CONTINGENCY WHICH AT TH E TIME OF OCCURRENCE COULD NOT BE ESTIMATED ACCURATELY SHALL NOT CONSTIT UTE THE CORRECTION OF AN ERROR BUT IT CHANGE IN ESTIMATE AND SUCH ITEM SHALL NOT BE TREATED AS PRIOR PERIOD ITEM. IT IS FURTHER NOTED THAT ALL THE EXPENDITURE SHOWN BY THE APPELLANT ARE GENUINE AND NONE OF THE EXPENDITURE HAVE BEEN DOUBT ED BY THE A. O. AS BOGUS OR INFLATED. THE APPELLANT HAS RIGHTLY RELIED ON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF HARIG CRANK SHAFTS LIMITE D [325 ITR 304] WHEREIN THE EXPENDITURE INCURRED TOWARDS PRODUCT DE VELOPMENT WAS HELD TO BE ALLOWABLE ON A DEFERRED REVENUE BASIS. SIMILARLY . DELHI HIGH COURT IN THE CASE OF INDO RAMA SYNTHETICS INDIA LTD. [333 ITR 18 ], HAS HELD THAT IHE EXPENDITURE INCURRED ON ENGAGING SERVICES OF CONSUL TANT FOR IMPROVING OPERATIONAL EFFICIENCIES OF THE BUSINESS WAS HELD T O BE ALLOWABLE EVEN AFTER THE PROJECT WAS ABANDONED AND NO ASSET WAS CREATED. IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED OPINION THAT THE ENTIRE EXPENDITURE IS ALLOWABLE IN THE CURRENT ASSESSMENT YEAR AND THE APPELLANT HAS MADE THE CORRECT CLAIM. THE DISALLOWANCE MADE BY TH E AO IS, THEREFORE, DIRECTED TO BE DELETED AND THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RE ITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES. ITA NO. 1726/AHD/2012 ACIT VS. TECHNO INDUSTRIES LTD AY : 2009-10 8 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. C IT(A). WE ALSO FIND THAT THE ASSESSEES CASE IS ALSO COVERED BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 26.02.2016 IN THE CA SE OF ACIT VS. SHRI BHARAT J. PATEL AND ASSESSEES OWN CASE FOR AY 2008-09 IN ITA NOS. 1371 & 3140/AHD/2011 AND COPY OF THE SAME IS PLACED ON REC ORD. IN CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A)S ORDER DOES NOT REQUIRE ANY INTERF ERENCE OF THE BENCH. 8. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 11 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (MAHAVIR PRASAD) JUDICIAL MEMBER AHMEDABAD; DATED 11/11/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD