M/s Transpek Industry Ltd, Baroda V. The Addl.RAnge-4, Baroda

ITA 1838/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0796 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Retrospective amendment; Additional evidence; Tax effect
• Section: 143(3); 14A; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, & SHRI MANISH BORA D, AM. ITA NO.1838/AHD/2011 ASST. YEAR: 2007-08 TRANSPEK INDUSTRY LTD., 6 TH FLOOR, MARBLE ARCH, RACE COURSE CIRCLE, BARODA. VS. ADDL.CIT, RANGE-4, BARODA. APPELLANT RESPONDENT PAN AAACT 8639B AND ITA NO.1840/AHD/2011 ASST. YEAR: 2007-08 ADDL.CIT, RANGE-4, BARODA. VS. TRANSPEK INDUSTRY LTD., 6 TH FLOOR, MARBLE ARCH, RACE COURSE CIRCLE, BARODA. APPELLANT RESPONDENT APPELLANT BY SHRI SANJAY R. SHAH, AR RESPONDENT BY SHRI SANJAY KUMAR, SR. DR DATE OF HEARING: 9/8/2016 DATE OF PRONOUNCEMENT: 11/8/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE CROSS APPEALS BY ASSESSEE AND REVENUE FOR AS ST. YEAR 2007-08 ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A ) III, BARODA DATED 27.12.2010 IN APPEAL NO.CAB/III-97/09-10 PASS ED AGAINST ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 2 ORDER FRAMED U/S 143(3) OF THE IT ACT, 1961 (IN SHO RT THE ACT) ON 29.12.2009 BY ADDL. CIT, RANGE-4, BARODA. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACT URING OF CHEMICALS. RETURN OF INCOME WAS E-FILED ON 30.10.20 07 SHOWING INCOME OF RS.4,41,02,472/- AND VALUE OF FRING BENE FIT AT RS.48,33,390/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT. NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 21.07.20 08. NOTICE U/S 115WE(2) WAS ALSO ISSUED ON THE SAME DATE. INCOME W AS ASSESSED AT RS.6,96,68,760/- AFTER MAKING ADDITION OF RS.2,5 5,66,286/-. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) AND GOT SUBSTANTIAL RELIEF. 4. NOW BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. 5. ASSESSEE IS IN APPEAL IN ITA NO.1838/AHD/2011 WH EREIN FOLLOWING GROUNDS HAVE BEEN RAISED :- THE APPELLANT BEING AGGRIEVED BY THE ORDER DATED 27 .12.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - III, BARODA [CIT(A)] PREFERS AN APPEAL AGAINST THE SAME ON THE FOLLOWING AMONGST OTHER GROUNDS, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. 1. THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE D ISALLOWANCE OF EARNEST MONEY DEPOSIT (HMD) WRITTEN OFF OF RS. 1,00,000 BY HOLDING THAT T HE SAME DOES NOT QUALIFY AS A BAD DEBT ALLOWABLE U/S. 36(L)(VII) OF THE ACT. 1.1 THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATIN G THE TRUE NATURE OF THE AMOUNT (EMD) WRITTEN OFF WHICH WAS EVEN OTHERWISE ALLOWABL E AS BUSINESS LOSS TO THE APPELLANT. ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 3 2. THE LEARNED CIT(A) HAS ERRED IN MAKING AN AD HO C DISALLOWANCE OF RS. 2.13,671, BEING 5% OF THE AMOUNT OF EXEMPT INCOME OF RS. 42,7 3.418, BY INVOKING THE PROVISIONS OF SECTION !4AOFTHEACT. 2.1 THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO MA KE AN AD HOC DISALLOWANCE AS ABOVE DESPITE HAVING APPRECIATED THAT - (A) FRESH INVESTMENT DURING THE YEAR WAS OF RS. 1 4,65,438 ONLY WHEREAS DISINVESTMENT OF SHARES DURING THE YEAR LED TO CASH INFLOW OF- RS. 3,91,72,910; (B) INVESTMENTS IN SHARES IN THE EARLIER YEAR S WERE MADE WHEN THERE WAS SUFFICIENT INFLOW/ GENERATION OF CASH TO MAKE THE INVESTMENT I N SHARES OUT OF OWN FUNDS; (C) THE BUSINESS CONSIDERATION FOR MAKING THE INVES TMENT IN SHARES COULD NOT BE OVERLOOKED. 3. THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE D ISALLOWANCE OF DEPRECIATION CLAIMED OF RS. 16,58,437 ON THE WRITTEN DOWN VALUE BROUGHT FORWARD IN RESPECT OF TECHNICAL KNOW-HOW ACQUIRED IN THE EARLIER YEARS. 3.1 THE LEARNED CIT(A) HAS ERRED IN SIMPLY FOLLOWIN G HIS PREDECESSOR'S ORDER FOR ASSESSMENT YEAR 2006-07 TO DISALLOW THE APPELLANT'S CLAIM OF DEPRECIATION WITHOUT APPRECIATING/CONTROVERTING THE MATERIAL PLACED BEFO RE HIM TO SUBSTANTIATE THE CLAIM OF DEPRECIATION ON TECHNICAL KNOW-HOW. YOUR APPELLANT PRAYS FOR LEAVE TO ADD, ALTER AND / OR AMEND / WITHDRAW ANY / ALL OF THE GROUNDS OF APPEAL ADDUCED ABOVE. 6. GROUND NO.2 HAS NOT BEEN PRESSED, HENCE THE SAM E IS DISMISSED AS NOT PRESSED. 7. GROUND NO.1 ASSESSEE HAS RAISED THIS GROUND AG AINST THE ACTION OF LD. CIT(A) FOR SUSTAINING DISALLOWANCE OF EARNEST MONEY WRITTEN OFF OF RS.1,00,000/- AS NOT ALLOWABLE AS BA D DEBT U/S 36(1)(VII) OF THE ACT. LD. AR SUBMITTED THAT THE EARNEST MONEY DEPOSIT OF RS.1,00,000/- WAS WRITTEN OFF AND CLAIMED AS BAD DE BT U/S 36(1)(VII) OF THE ACT BUT THE SAME WAS ADDED BACK TO THE INCOME B Y LD. ASSESSING ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 4 OFFICER AND SUSTAINED BY LD. CIT(A). LD. AR FURTHER SUBMITTED THAT WRITE OFF OF EARNEST MONEY AS BAD DEBT U/S 36(1)(VI I) OF THE ACT HAS BEEN HELD TO BE CORRECT AS PER THE JUDGMENTS OF HON . SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT 323 ITR 397 (SC ), HON. GUJARAT HIGH COURT IN THE CASE OF GUJARAT MINERAL DEVELOPME NT CORPORATION LTD. 314 ITR 322 (GUJ) AND THAT OF ABDUL RAZAQ & CO . (1981) 6 TAXMAN 346. 8. ON THE OTHER HAND, LD. DR COULD NOT CONTROVERT T HE SUBMISSIONS OF LD. AR AND SUPPORTED THE ORDERS OF LOWER AUTHORI TIES. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND FIND THAT WRITING OFF OF EARNEST MONE Y DEPOSIT OF RS.1,00,000/- QUALIFIES TO BE ALLOWABLE U/S 36(1)(V II) IN THE LIGHT OF JUDGMENT OF HON. SUPREME COURT IN THE CASE OF TRF L TD. VS. CIT (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER :- 4. THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1-4 -1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS B ECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER THE DEBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBITED AND THE CUSTOMER'S ACCOUNT IS CR EDITED, THUS, CLOSING THE ACCOUNT OF THE CUSTOMER. IN THE CASE OF COMPANIES, THE PROVISI ON IS DEDUCTED FROM SUNDRY DEBTORS. AS STATED ABOVE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER, IN FACT, THE BAD DEBT OR PART THEREOF IS WRITTEN OFF IN THE ACCO UNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE ASSESSING OFFICER. H ENCE, THE MATTER IS REMITTED TO THE ASSESSING OFFICER FOR DE NOVA CONSIDERATION OF THE ABOVE-MENTIONED ASPECT ONLY AN D THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. 10. HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. (SUPRA) HAS HELD AS UN DER :- ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 5 2. SO FAR AS THE FIRST QUESTION IS CONCERNED, ADMIT TEDLY THE AMOUNT WAS GIVEN BY THE ASSESSEE TO THE GUJARAT MARITIME BOARD FOR CONSTRUCTION OF J ETTY AND PLATFORM AND ULTIMATELY WHEN THE CONSTRUCTION HAS NOT BEEN MADE AND THE AMOUNT HAS N OT BEEN RETURNED, CAN IT BE SAID THAT IT IS A TRADING LOSS. THE TRIBUNAL HAS CONSIDERED THIS AS PECT IN PARA 12 OF ITS ORDER, WHICH IS REPRODUCED BELOW : 'WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE P ARTIES, PERUSED THE RECORD AND GONE THROUGH DECISIONS CITED. THE DECISIONS CITED B Y THE LEARNED DEPARTMENTAL REPRESENTATIVE ARE DISTINGUISHABLE ON FACTS. IN BOT H THE CASES OF CIT V. AMBICA MILLS LTD. [1999] 236 1TR921 (GUJ) AND CIT V. SHRI DIGVIJAY CEMENT CO. LTD. [1986] 159 1TR 253 (GUJ) THE FACTS WERE RELATED TO FEASIBILITY REPORT FOR A NEW PROJECT AND NOT FOR THE EXISTING BUSINESS. IN THE CASE UNDER CONSIDERAT ION, THE ASSESSEE ADVANCED RS. 35 LAKHS TO THE GUJARAT MARITIME BOARD FOR DEVELOPMENT OF KOTESWAR PORT FOR TRANSPORT OF LIGNITE BY SEA ROUTE IN PLACE OF ROAD TRANSPORTA TION. THE PORT WAS NOT COMPLETED. THE ASSESSEE COULD NOT GET THE MONEY BACK. WE FIND THAT THERE IS A DIRECT AND PROMINENT NEXUS BETWEEN THE BUSINESS OPERATION AND THE LOSS OR IT IS INCIDENTAL TO IT. UNDER THE CIRCUMSTANCES AND THAT FROM COMMERCIAL ST ANDARD, SUCH LOSS IS CONSIDERED TO BE A TRADING LOSS AND BECOME DEDUCTIBLE FROM THE TOTAL INCOME. THE RISK IS INHERENT IN THE CARRYING ON THE BUSINESS AND IS EITHER DIREC TLY CONNECTED WITH IT OR INCIDENTAL TO IT, LOSS IS ALLOWABLE. WE ACCORDINGLY ALLOW THE CLA IM OF THE ASSESSEE AND DELETE THE IMPUGNED ADDITION. HOWEVER, IT IS PERTINENT TO MENT ION THAT IF ANY AMOUNT RECEIVED SUBSEQUENTLY IT IS SUBJECT TO TAX AS PER LAW. THE A SSESSING OFFICER IS DIRECTED ACCORDINGLY.' 11. HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. ABDUL RAZAK & CO. (SUPRA) HAS HELD AS UNDER :- IT APPEARED THAT THE TRIBUNAL APPROACHED THE PROBLEM POSED BEFORE IT AS IF THE BUSINESS OF MONEY-LENDING AND THE BUSINESS OF COMM ISSION AGENCY WERE TWO DISTINCT AND MUTUALLY EXCLUSIVE COMPARTMENTS. IN VIEW OF WELL-SE TTLED LEGAL PRINCIPLES, THE SHORT-TERM FINANCING OR LONG-TERM FINANCING IS, BY IMPLICATION , AN INTEGRAL PART OF THE COMMISSION AGENCY BUSINESS ; A COMMISSION AGENT HAS GOT TO ADVANCE AMOUNTS FROM TIME TO TIME ACCORDING TO THE NATURE OF HIS BUSINESS. IT WAS NO DOUBT TRUE THAT THE BAD DEBT CLAIMED BY T HE ASSESSEE-FIRM WAS IN RESPECT OF THE ADVANCE MADE BY IT TO ITS PRINCIPAL FIRM MPM FOR PA YING OFF THE LATTER'S DEBT TO GVS WITH WHOM MPM HAD INDEPENDENT DEALINGS. IT WAS ALSO AN A DMITTED POSITION THAT THE TRADING ACCOUNT OF MPM IN THE BOOKS OF THE ASSESSEE-FIRM WA S SETTLED AND THERE WAS NO OUTSTANDING WHICH HAD BEEN CARRIED TO THE SARQFI AC COUNT OF THE PARTY. THESE FACTS, HOWEVER, WERE NOT SUFFICIENT FOR NECESSARILY REACHI NG THE CONCLUSION, AS HAD BEEN DONE BY THE TRIBUNAL, THAT THE LENDING WAS NOT APART OF THE GENERAL COMMISSION AGENCY BUSINESS. THE TRIBUNAL HAD OVERLOOKED STATEMENTS OF THE ASSES SEE AND THE DEBTOR-FIRM ON RECORD, WHEREIN IT HAD BEEN CLEARLY STATED THAT THESE ADVAN CES WERE ASKED FOR AND MADE IN FACT HAVING REGARD TO THE COMMERCIAL RELATION BETWEEN TH E PARTIES EXTENDING OVER MORE THAN 30 YEARS WHICH WERE ADMITTEDLY RELATIONS OF PRINCIP AL AND COMMISSION AGENTS. ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 6 ON THE FACTS OF THE CASE, THE DEBT OWED BY MPM TO T HE ASSESSEE WAS ONE WHICH SPRANG DIRECTLY FROM THE BUSINESS OF THE ASSESSEE AND WAS ALLOWABLE AS A BAD DEBT AND, CONSEQUENTLY, AS A TRADING LOSS UNDER SECTION 28(\) . THEREFORE, ALTHOUGH THE TRIBUNAL WAS NOT RIGHT IN HOLDING THAT THE ADVANCE MADE BY THE A SSESSEE TO MPM WAS NOT IN THE ORDINARY COURSE OF BUSINESS OF THE ASSESSEE-FIRM BU T MERELY INCIDENTAL TO IT, YET IT WAS RIGHT IN ALLOWING THE IMPUGNED LOSS OF RS. 78,824 A S A DEDUCTION UNDER SECTION 28 (I). 12. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. SUP REME COURT IN THE CASE OF TRF LTD. VS. CIT (SUPRA) AND THOSE OF H ON. JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. (SUPRA) & CIT VS. ABDUL RAZAK & CO . (SUPRA), WE ARE OF THE VIEW THAT ASSESSEE IS ELIGIBLE TO CLAIM WRIT ING OFF OF EARNEST MONEY AS BAD DEBT. ACCORDINGLY, THIS GROUND OF ASSE SSEE IS ALLOWED. 13. AS REGARDS GROUND NO.3 LD. AR SUBMITTED THAT THIS GROUND RELATES TO DISALLOWANCE OF DEPRECIATION OF RS.16,58 ,437/- ON W.D.V. OF THE TECHNICAL KNOW-HOW ACQUIRED IN EARLIER YEARS AN D THIS ISSUE IS DECIDED BY THE DECISION OF THE CO-ORDINATE BENCH IN ITA NO.2161/AHD/2010 FOR ASST. YEAR 2006-07 VIDE ITS OR DER DATED 8/8/2014 WHEREIN THE MATTER WAS SET ASIDE AND REMAN DED TO THE FILE OF ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF DECISION OF THE TRIBUNAL FOR ASST. YEAR 2004-05 IN ITA NOS.135 & 716/AHD/2009. 14. LD. DR COULD NOT CONTROVERT THE SUBMISSIONS OF LD. AR AND HE HAD NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF LD. ASSESSING OFFICER. ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 7 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE JUDGEMENTS AND DECISION REFERRED TO ABOVE. THROUGH THIS GROUND ASSESSEE IS AGGRIEVED WITH THE ORDER OF LD. CIT(A) IN SUSTAINING THE DISALLOWA NCE TOWARDS W.D.V. OF TECHNICAL KNOW-HOW ACQUIRED IN EARLIER YEARS. W E FIND THAT THIS ISSUE CAME UP BEFORE THE TRIBUNAL IN ASST. YEAR 200 4-05 AND 2006- 07. THE TRIBUNAL HAS ADJUDICATED THE ISSUE BY OBSER VING AS UNDER :- 5. WE FIND THAT THE TRIBUNAL IN THE ASSESSMENT YEAR 2004-05 VIDE CONSOLIDATED ORDER PASSED IN ITA NOS. 135 & 716/AHD/2009 AT PARA 14 ON PAGE NO. 13 OF THE ORDER HAS HELD AS UNDER: '14. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE M ATERIAL PLACED ON RECORD. AT THE OUTSET, IT IS NECESSARY TO DECIDE WH ETHER THE ADDITIONAL EVIDENCES ARE TO BE ADMITTED OR NOT. CONSIDERING TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES OF LHE CASE, WE ARE OF THE CONSID ERED VIEW THAT THE EVIDENCES WHICH ARE NOW PLACED ON RECORD SHOULD HAV E BEEN FILED BEFORE THE AO. THE EVIDENCES HAVE A DIRECT BEARING ON THE ISSUE IN HAND. HAD THOSE EVIDENCES WERE FILED BEFORE THE AO, THE RESUL T COULD BE DIFFERENT. ALTHOUGH AT THIS STAGE OF APPEAL, IN THE ABSENCE OF ANY INVESTIGATION, IT IS IMPOSSIBLE TO COMMENT IN EITHER WAY. WE, THEREFORE, HOLD THAT THE ADDITIONAL EVIDENCES ARE REQUIRED TO BE ADMITTED FO R CORRECT DISPOSAL OF THE ISSUE. NOW WE HAVE TO DECIDE THAT WHETHER THE ASSES SEE HAS IN FACT PROCURED 'TECHNICAL KNOW-HOW' FROM THESE PARTIES. T HE EVIDENCES WHICH ARE NOW SUPPORTING THE SAID CLAIM REQUIRES THOROUGH INVESTIGATION ON THE PART OF THE YEAR. WE HAVE ALSO TO DECIDE WHETHER AS SESSEE WAS IN FACT REQUIRING SUCH 'TECHNICAL KNOW-HOW', AND IF IT WAS SO, THEN HOW AND WHY THOSE EVIDENCES WERE NOT PLACED BEFORE THE LOWER AU THORITIES. FOR THE PURPOSE OF ALLOWING 'TECHNICAL KNOW-HOW', IT IS NEC ESSARY ON THE PART OF THE ASSESSEE TO ESTABLISH THE DETAILS OF THE PROCUREMEN T AND THE BUSINESS NECESSITY AS A/SO THE NATURE OF THE 'TECHNICAL KNOW -HOW' PROCURED. WHILE DECIDING SUCH TYPE C-' ISSUE, ONE HAS TO KEEP IN MI ND THE DISTINCTION BETWEEN THE PURCHASE/TRANSFER OF TECHNICAL KNOW-HOW WITH THE MERE AVAILING OF' SERVICE OF A TECHNICAL PERSON WHO HAS THE KNOWLEDGE OF SAID TECHNICAL KNOW-HOW. IF 3 TECHNICIAN IS ON PAY-ROLL, THEN HE CANNOT BE SAID TO BE TRANSFERRING THE TECHNICAL KNOW-HOW UNLESS AN D UNTIL HE IS ENGAGED TO 'TRANSFER' THE TECHNICAL KNOW-HOW. RENDERING OF SERVICE BY A TECHNICAL PERSON CANNOT BE EQUATED WITH TRANSFERRING OF KNOWL EDGE. SINCE THE EVIDENCES NOW PLACED IN THE COMPILATION, WERE NOT B EFORE THE AO, THEREFORE WE CONSIDER IT PROPER TO RESTORE THIS ISS UE BACK TO THE STAGE OF THE AO TO INVESTIGATE PROPERLY THE GENUINENESS OF T HE' PROCUREMENT OF ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 8 'TECHNICAL KNOW-HOW' AS ALSO THE USE OF 'TECHNICAL KNOW-HOW' IN THE MANUFACTURING PROCESS ANTF WHETHER AN INTANGIBLE AS SET WAS CREATED BY MAKING THE IMPUGNED PAYMENT. WE THEREFORE DIRECT TH E ASSESSES TO FULLY CO-OPERATE WITH THE AO AND FURNISH THE REQUISITE DE TAILS. AS FAR AS THE DIRECTIONS OF THE ID, CIT(A) ARE CONCERNED, THE EXI STENCE OR CREATION OF AN INTANGIBLE ASSET. WITH THESE DIRECTIONS, THIS GROUND OF THE ASSESSES MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES ONLY. ' WE, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHOR ITIES AND REMAND THE MATTER BACK TO THE FIFE OF THE ASSESSING OFFICER TO ADJUDI CATE THE ISSUE AFRESH IN THE LIGHT OF THE VERY SAME DIRECTIONS AS GIVEN BY TRIBUNAL IN ASSESSMENT YEAR 2004-05 AS QUOTED ABOVE, THUS, THIS GROUND OF APPEAL OF ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSE. 16. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-O RDINATE BENCH IN ASSESSEES OWN CASE FOR ASST. YEAR 2006-07 WE SET A SIDE THE ISSUE RELATING TO THIS GROUND TO THE FILE OF LD. ASSESSIN G OFFICER TO ADJUDICATE THE ISSUE AFRESH AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE, IN THE LIGHT OF DIRECTIONS GIVEN B Y THE CO-ORDINATE BENCH IN ITS DECISION FOR ASST.YEAR 2004-05 AS INCO RPORATED IN THE DECISION FOR ASST. YEAR 2006-07. THIS GROUND OF APP EAL IS ALLOWED FOR STATISTICAL PURPOSES. 17. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 18. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.1840/ AHD/2011. GRIEVANCES OF THE REVENUE, IN THIS APPEAL ARE AS U NDER :- 1. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) ERRED IN ALLOWING RELIEF OF RS.11,33,329/- OUT OF RS.13,47,0 00/- [RS.13,47,000/-LESS RS. 2,13,671/- BEING 5 % OF EXEMPT INCOME] BEING EXPEND ITURE INCURRED IN RELATION TO EXEMPTED DIVIDEND INCOME OF RS.42,73,418/-, WHICH W AS DISALLOWED BY THE ASSESSING OFFICER U7S 14A OF THE ACT. ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 9 (II) THE ID. C1T(A) COMPLETELY IGNORED THE FAC T THAT THE ASSESSING OFFICER HAD ADOPTED A RELIABLE AND SCIENTIFIC METHOD TO ARRIVE AT THE A BOVE DISALLOWANCE OF EXPENSES OF RS.13,47,000/- U/S 14A OF THE ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND OR ALTE R THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN THE AFORESAID GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 19. THIS APPEAL WAS PRESENTED ON 21/07/2011. ON 10 .12.2015 THE CBDT HAS ISSUED INSTRUCTIONS BEARING NO. 21/2015 PR OHIBITING ITS SUBORDINATE AUTHORITIES FROM FILING OF THE APPEAL T O THE TRIBUNAL AGAINST THE ORDER OF THE CIT(A) WHERE THE TAX EFFEC T BY VIRTUE OF THE RELIEF GIVEN BY THE CIT(A) IS LESS THAN RS.10 LAKHS . THE INSTRUCTIONS HAVE BEEN MADE APPLICABLE WITH RETROSPECTIVE EFFECT , MEANING THEREBY, THESE INSTRUCTIONS ARE APPLICABLE ON PENDI NG APPEAL ALSO. THE TAX EFFECT ON DELETION OF THE TOTAL ADDITION IN THIS APPEAL WOULD BE LESS THAN RS.10 LAKHS. THE PRESENT APPEAL DESERVES TO BE DISMISSED BEING TREATED TO BE FILED IN VIOLATION OF CBDT INST RUCTIONS. THE CASE DOES NOT FALL WITHIN THE AMBIT OF EXCEPTIONS PROVID ED IN THE INSTRUCTIONS. IT IS FURTHER OBSERVED THAT SINCE, WH ILE HEARING THE APPEAL, SUCH FACTORS WERE NOT CONSIDERED, THEREFORE , IN CASE, ON RE- VERIFICATION AT THE END OF THE AO, IT CAME TO THE N OTICE THAT THE TAX EFFECT IS MORE OR THEY FALL WITHIN THE AMBIT OF EXC EPTIONS PROVIDED IN THE INSTRUCTION, THEN THE DEPARTMENT WILL BE AT LIB ERTY TO APPROACH THE TRIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLICATIO N SHOULD BE FILED WITHIN LIMITATION PROVIDED IN LAW. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED. THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1838 & 1840/AHD/2011 ASST. YEAR 2007-08 10 20. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 AUGUST, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 11/8/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 09/08/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 11/08/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 11/8/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: