Value Labs LLP , Hyderabad V. Asst. Commissioner of Income Tax, Circle-8(1), Hyderabad

ITA 1922/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6819 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 28-01-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 18-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SIBENDU MOHARANA
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Depreciation; Transfer pricing; Business expenditure; International transaction; Revenue expenditure
• Section: 13; 22; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1922/HYD/2018 ASSESSMENT YEAR: 2014-15 M/S.VALUELABS LLP, HYDERABAD [PAN: AAKFV2276K] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-8(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR FOR REVENUE : SHRI SIBENDU MOHARANA, DR DATE OF HEARING : 01-02-2021 DATE OF PRONOUNCEMENT : 09-04-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2014-15 ARISE AGAINST THE ACIT, CIRCLE-8(1), HYDERABAD, ASSESSMENT ORDER DATED 31-08- 2018 PASSED IN FURTHERANCE TO THE DISPUTE RESOLUTION PAN EL (DRP)-I, BANGALORES DIRECTIONS DT.27-06-2018 IN F.NO .59/DRP- 1/BNG/2018-19, INVOLVING PROCEEDINGS U/S.143(3) R.W .S.144C (13) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES FIRST AND FOREMOST SUBSTANTIVE GROUN D RAISED DURING THE COURSE OF HEARING BEFORE US CHALL ENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION ARMS L ENGTH PRICE (ALP) ADJUSTMENT OF RS.42,30,911/- TOWARDS INTE REST ON ITA NO. 1922/HYD/2018 :- 2 -: RECEIVABLES QUA ITS INTERNATIONAL TRANSACTIONS WITH OVERSEAS ASSOCIATED ENTERPRISE(S) (AES). SUFFICE TO SAY, IT TRA NSPIRES AT THE OUTSET THAT THIS TRIBUNALS CO-ORDINATE BENCHS DECISIO N INVOLVING AY.2013-14 ITA NO.475/HYD/2017, DT.15-12-2 017 HOLDS THAT SINCE NO INTEREST WAS CHARGED IN AES AND NON -AES, THE IMPUGNED INTEREST ON RECEIVABLES LEADING TO ALP AD JUSTED UNDER CHAPTER-X OF THE ACT IS NOT SUSTAINABLE. COUPLED WITH THIS, LEARNED CIT-DR FAILS TO DISPUTE THAT THE AUTHORITIE S HEREIN HAVE ADOPTED SBIS SHORT TERM DEPOSIT RATES FOR COMPUTIN G THE IMPUGNED ADJUSTMENT WHICH ARE NOT BASED ON ANY COMPA RABLE IN THE VERY SEGMENT. WE THUS FIND NO REASON TO SUSTAIN THE IMPUGNED ADJUSTMENT BOTH ON PRINCIPLES OF JUDICIAL CONSISTENCY AS WELL AS ON MERITS. THE SAME IS DIRECTE D TO BE DELETED. THE ASSESSEE SUCCEEDS IN THE FIRST AND FOREM OST SUBSTANTIVE GROUND. 3. NEXT COMES THE SECOND ISSUE OF DEPRECIATION DISALLO WANCE OF RS.18,63,27,778/- RELATING TO ASSESSEES CHILVERU SOLAR PLANT IN MAHABUBNAGAR DISTRICT. THE DRPS DETAILED DISC USSION TO THIS EFFECT READS AS UNDER: 2.3 GROUND OF OBJECTION NO.3: RELATING TO THE DISA LLOWANCE OF DEPRECIATION OF PLANT AND MACHINERY OF SOLAR POWER PLANT AT CHILVERU UNIT FOR RS.18,63,27,778/- :- OBJECTION NO:3.1: THE AO ERRED IN MAKING DISALLOWAN CE OF DEPRECIATION ON PLANT AND MACHINERY OF RS.18,63,27, 778/- . OBJECTION NO. 3.1.1: THE AO ERRED IN NOT APPRECIATI NG THE FACT THAT THE SOLAR POWER PLANT WAS 'READY TO USE' FROM 26.03.201 4 AND THE SAME WAS 'PUT TO USE' AS ON 29.03.2014 I.E. DURING THE A Y 2014-15. OBJECTION NO. 3.1.2: THE AO ERRED IN NOT APPRECIATI NG THE FACT THAT SOLAR POWER PLANT HAS GENERATED 65KWH AS ON 31.03.2 014 AND THE SAME WAS CONSUMED BY THE LOCAL OFFICE SET UP IN THE PREMISES OF THE PLANT WHICH IMPLIES THAT THE PLANT WAS PUT TO USE F ROM 31.03.2014. ITA NO. 1922/HYD/2018 :- 3 -: OBJECTION NO. 3.1.3: THE AO OUGHT TO HAVE APPRECIAT ED THE FACT THAT CPDCL OF AP LIMITED HAS TESTED AND ISSUED THE WORK COMPLETION CERTIFICATE ON 26.04.2014. OBJECTION NO. 3.1.4: THE AO OUGHT TO HAVE APPRECIAT ED THE FACT THAT ADMITTEDLY THE ELECTRICAL INSPECTORATE CARRIED OUT THE INSPECTION (UNDER REGULATION 32 OF THE CENTRAL ELECTRICITY AUT HORITY (MEASURES RELATING TO SAFETY AND ELECTRIC SUPPLY) REGULATIONS , 2010) OF THE SOLAR PLANT ON 29.03.2014 FOR WHICH PUTTING THE EQUIPMENT TO USE' WAS SINE QUA NON I.E. THE INSPECTION AND SUBSEQUENT APPROVAL OF THE SOLAR POWER PLANT COULD NOT HAVE BEEN CLONE WITHOUT THE A CTUAL GENERATION OF ELECTRICITY BY THE SOLAR POWER PLANT. OBJECTION NO. 3.1.5: THE AO OUGHT TO HAVE APPRECIAT ED THE FACT THAT THE FINAL APPROVAL OF THE ELECTRICAL INSPECTORATE U NDER CENTRAL ELECTRICITY AUTHORITY (MEASURES RELATING TO SAFETY AND ELECTRIC SUPPLY) REGULATIONS, 2010 WAS REQUIRED TO SUPPLY THE ELECTR ICITY GENERATED COMMERCIALLY AND NOT FOR 'PUTTING TO LISE' FOR THE INSPECTION AND TRIAL RUN ITSELF. OBJECTION NO. 3.1.6: THE AO ERRED IN NOT APPRECIATI NG THE FACT THAT THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS LAID DOWN U/S. 32 OF THE ACT AND IS ENTITLED TO CLAIM THE SAID DEPRECIAT ION SINCE THE ASSET IS USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSI NESS AS ON 31.03.2014. OBJECTION NO. 3.1.7: WITHOUT PREJUDICE TO ABOVE GRO UND, THE AO OUGHT TO HAVE ALLOWED THE CLAIM OF DEPRECIATION TO THE AS SESSEE SINCE THE ASSET IS READY FOR USE AS ON 26.03.2014 AND WAS ACT UALLY PUT TO USE ON 29.03.2014 DURING THE COURSE OF INSPECTION CARRI ED OUT BY THE ELECTRICAL INSPECTORATE. OBJECTION NO. 3.1.8: THE AO ERRED IN DRAWING ERRONE OUS CONCLUSIONS AGAINST THE ASSESSEE WHICH IS NOT CORRECT AND NOT I N ACCORDANCE WITH THE PROVISIONS OF ACT. 2.3.1 DURING THE ASSESSMENT PROCEEDINGS THE AO HAD CALLED UPON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF DEPRECIATION OVER SOLAR PLANT OF RS.34,53,67,922/- AND TO PROVE THAT THE POWER PLANT WAS PUT TO USE AS ON 31.03.2014. IN RESPONSE, THE ASSESSEE SUBMITT ED THAT DURING THE YEAR- IT INSTALLED SOLAR POWER PLANT IN CHILVER U VILLAGE AND ILL SUPPORT OF THE CLAIM THAT IT WAS PUT TO USE, FURNIS HED COPY OF A CERTIFICATE OF M/S.SCHNEIDER ELECTRIC INDIA PRIVATE LIMITED DATED 31.03.2014. AS PER THE SAID LETTER DATED 31.03.2014 , THE PLANT WAS READY IN ALL ASPECTS FOR POWER GENERATION AND ALL T HE MACHINERY AT SITE ARE RUN A TRIAL PRODUCTION AND PUT TO USE ON 3 1.03.2014; AND THAT 'THE PLANT HAS GENERATED 65KWH ON 31.03.2014 WHICH HAS BEEN CONSUMED BY THE LOCAL OFFICE SET UP IN THE PLANT PR EMISES AT CHILVERU VILLAGE'. THE AO NOTED THAT THE SAID LETTER ALSO R EFERRED TO INSPECTION ITA NO. 1922/HYD/2018 :- 4 -: BY THE CHIEF ELECTRICAL INSPECTOR OF GOVERNMENT OF ANDHRA PRADESH ON 29.03.2014, WHO HAD ACCORDED HIS APPROVAL FOR ENERG IZING VIDE HIS LETTER CEIG/TS/HV/MBNR-149/DNO.J.350, AND THE AO CA LLED UPON THE ASSESSEE TO PRODUCE THE SAID LETTER OF APPROVAL OF CHIEF ELECTRICAL INSPECTOR IN LETTER NO. CEIG/TS/HV/MBNR-149/DNO.135 0 AND ALSO TO PRODUCE EVIDENCE FOR PRODUCTION AND CONSUMPTION' OF ELECTRICITY GENERATED OF 65KWH ON 31.03.2014. THE 'AO, AFTER PE RUSAL, OF THE SAID APPROVAL LETTER IN CEIG/TS/HV/MBNR-149/D-NO.13 50 PRODUCED BEFORE HIM, NOTED THAT THE SAID LETTER WAS DATED 11 .04.2014; AND THEREFORE RAISED A QUERY AS TO HOW THE LETTER DARED 31.03.2014 OF M/S. SCHNEIDER ELECTRIC POWER COMPANY COULD REFER T O THE APPROVAL LETTER DATED 11.04.2014 AND FOR WHICH THE ASSESSEE COULD NOT GIVE ANY CLARIFICATION. THEREFORE, THE AO INFERRED THAT THE CONTENTS OF THE LETTER DATED 31.03.2014 OF M/S. SCHNEIDER ELECTRIC POWER COMPANY IS FALSE AND NOT RELIABLE, AND CONCLUDED THAT THE ASSE T WAS PUT TO USE ONLY AFTER THE STATUTORY APPROVAL ACCORDED VIDE LET TER ELATED 11.04.2014, AND WAS NOT PUT TO USE DURING THE F.Y 2 013-14 AND HENCE DISALLOWED THE DEPRECIATION CLAIMED FOR THE S UBJECT YEAR, AND PROPOSED AN ADDITION OF RS.18,63,27,778/- . 2.3.2 DURING THE DRP PROCEEDINGS, IT WAS CONTENDED THAT THE ASSET WAS 'READY TO USE' FROM 26.03.2014 AND THE SAME WAS 'PUT TO USE' AS ON 29.03.2014; AND THAT THE POWER GENERATED 65KWH A S ON 31.03.2014 WAS CONSUMED BY THE LOCAL OFFICE AND THA T WOULD IMPLY THAT ME-PLANT WAS PUT TO USE FROM 31.03.2014. IT WA S CONTENDED THAT TILE ELECTRICAL INSPECTORATE CARRIED OUT THE INSPEC TION ON 29.03.2014 FOR WHICH PUTTING THE EQUIPMENT TO USE WAS SINE QUA NON AND THAT THE SUBSEQUENT APPROVAL COULD NOT HAVE BEEN GRANTED WIT HOUT THE ACTUAL GENERATION OF ELECTRICITY. IT WAS FURTHER CONTENDED THAT THE FINAL APPROVAL OF THE ELECTRICAL INSPECTORATE WAS REQUIRE D TO SUPPLY ELECTRICITY GENERATED COMMERCIALLY AND NOT FOR PUTT ING TO USE [01- INSPECTION AND TRIAL RUN. THUS IT WAS ARGUED THAT A S THE ASSET WAS 'READY TO USE' ON 26.03.2014 AND ACTUALLY 'PUT TO U SE' ON 29.03.2014 DURING THE COURSE OF INSPECTION BY ELECTRICAL INSPE CTORATE, THE ASSESSEE WAS ENTITLED TO ITS CLAIM OF DEPRECIATION AND THE SAME SHOULD BE-ALLOWED. THE ASSESSEE RELIED ON THE DECIS ION OF GUJARAT HIGH COURT IN THE CASE OF ACIT VS. ASHIMA SYNTEX (2 51 ITR 133), AND CONTENDED THAT EVEN TRIAL PRODUCTION OF A MACHINERY WOULD FALL WITHIN THE AMBIT OF USE; AND THE DECISION OF ITAT HYDERABA D IN THE CASE OF SPR PUBLICATION PRIVATE LIMITED AND CONTENDED THAT 'READY TO USE' WOULD BE SUFFICIENT TO CLAIM DEPRECIATION. 2.3.3 FROM THE SUBMISSIONS MADE. IT COULD BE SEEN T HAT THE ASSESSEE'S CONTENTIONS ARE:- A) THAT THE ASSETS WERE READY TO USE ON 26.03.2014 ITA NO. 1922/HYD/2018 :- 5 -: B) THAT THE ASSETS WERE PUT TO USE ON 29.03.2014 WH EN THE INSPECTION WAS CARRIED OUT BY ELECTRICAL INSPECTORATE C) THAT THERE WAS ACTUAL GENERATION OF POWER OF 65K LWV AND CONSUMED AS ON 31.03.2014 2.3.4 IN SUPPORT OF THESE CONTENTIONS THE ASSESSEE PRIMARILY RELIED ON THE FOLLOWING DOCUMENTS BEFORE THE AO:- 1. LETTER DATED 31.03.2014 ISSUED BY M/S. SCHNEIDER ELECTRIC COMPANY LIMITED 2. APPROVAL LETTER DATED 11.04.2014 ISSUED BY THE E LECTRICAL INSPECTORATE 2.3.5 DURING THE DRP PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT THE COMPLETE CORRESPONDENCE RELATING TO THE OBTAINI NG OF STATUTORY APPROVAL FROM THE ELECTRICAL INSPECTORATE; AND IN R ESPONSE TO THE ASSESSEE VIDE LETTER DATED 13.C13.201B.ENCLOSED COP IES OF ASSESSEE'S LETTER DATED 29.03.2014 TO CHIEF ELECTRI CAL INSPECTOR NOTICE FROM CHIEF ELECTORAL INSPECTOR DATED 29.03.2014 AND 11.04.2014, LETTER DATED 18.03.2014 TO CHIEF ELECTORAL INSPECTO R AND NOTICE FROM CHIEF ELECTORAL INSPECTOR-DATED 18.03.2014. ON PERU SAL OF THESE LETTERS, IT IS SEEN THAT THE ASSESSEE VIDE LETTER D ATED 18.03.2014 SUBMITTED DRAWINGS FOR APPROVAL WHICH WAS PROVISION ALLY APPROVED FOR ERECTION BY THE CHIEF ELECTRICAL INSPECTOR VIDE LETTER IN CEIG/TS/HT/MBNR-149/J.NO/1095/14 DATED 18.03.2014; WHICH IS VALID UPTO 18.03.2015; ARID THE DEFECTS / OMISSIONS POINTED IN THE DRAWINGS WILL BE SPECIFICALLY INSPECTED AT THE TIME OF INSPECTION OF CHIEF ELECTRICAL INSPECTOR; AND THAT THE INSTALLATI ON SHALL CONFORM TO THE RELEVANT PROVISIONS OF CENTRAL ELECTRICITY AUTH ORITY (MEASURES RELATING TO SAFETY AND ELECTRIC SUPPLY) REGULATION 2010. SUBSEQUENTLY, THE ASSESSEE HAD SUBMITTED LETTER DAT ED 29.03.2014 STATING THAT THE INSTALLATION AS PER APPROVED DRAWI NGS WERE COMPLETED AND REQUESTED TO CONDUCT INSPECTION AT TH E PLANT AT THE EARLIEST. FROM THE PERUSAL OF LETTER NO. CEIG/TS/HV /MBNR-149/D- NO-/CAMP 14 DATED 29.03.2014, (PAGE 427 OF PAPER BO OK) IT APPEARS THAT INSPECTION WAS CONDUCTED ON 29.03.2014 AND A T ENTATIVE APPROVAL. WHICH IS VALID UPTO 15.04.2014 WAS GRANTE D REQUIRING THE ASSESSEE TO SUBMIT COMPLIANCE REPORT ITEM WISE AND GET IT REGULARIZED. SUBSEQUENTLY, THE ASSESSEE VIDE LETTER DATED 11.04.2014 (PAGE 432 OF PAPER BOOK) HAS SUBMITTED COMPLIANCE R EPORT AND REQUESTED TO ISSUE NECESSARY APPROVAL AT THE EARLIE ST. THE ITEM WISE COMPLIANCE REFERRED IN THE SAID LETTER WAS AS UNDER :- DESIGNATED PERSON (ELECTRICAL ENGINEER) WHO IS HAVI NG 33KV PERMIT HOLDER WILL BE APPOINTED SHORTLY IN MEAN TIME. ITA NO. 1922/HYD/2018 :- 6 -: A GRADE ELECTRICAL CONTRACTORS (SCHNEIDER INFRASTRU CTURE) PERSONS FOR OPERATION AND MAINTAINED OF OUR H T INSTALLATION TO FREE FROM DANGER. 2. MR. M.SIVA RAM KUMAR, WHO APPOINTED AS A SAFETY OFFICER 3. AJB BOX HAS BEEN EARTHED WITH 50 SQ. MM COPPER C ABLE AND CONNECTED TO SEPARATE EARTH ELECTRODE 4. INVERTER PANEL BODY EARTHED MULTI STAND INSULATE D CABLE REPLACED WITH 50 X 10MM G 1 FLAT 5. PROVIDED THE: SUFFICIENT COOLING FACILITY FOR TR ANSFORMER WITH CROSS VENTILATION AND EXHAUST SYSTEMS HEATING AND COOLING CALCULATION SHEET IS ENCLOSED W ITH THIS LETTER FOR YOUR KIND INFORMATION AND 'NC WILL TAKE CARE ABOUT UNITIZED SUBSTATION OIL TRANSFORMER IN FUTURE PROJECTS. 6. 12MM X 1.2 MTRS ROD EARTH ELECTRODES REPLACED WI TH 100M DIA WITH 3 MTRS LENGTH C I PIPE AT CENTRALIZED SUB-STATION A ND 33KV VC PANEL 7. 33KV VCB PANEL DOUBLE EARTHED WITH 100X10MM G 1 FLAT 8. TRANSFORMERS BODY DOUBLE EARTHED WITH 100X10MM G I FLAT 9. PROVIDED EARTH SPIKE ON THE 33KV STRUCTURE AT ME TERING YARD AND SYNCHRONIZING SUB SUB-STATION 10. 60MM HG METAL HAS BEEN SPREADED UNIFORMLY IN TH E YARD 11. PROVIDED EARTH SWITCH FOR ISOLATORS AT GENERATI ON AND SYNCHRONIZING 12. 33KVOH LINE METAL CLAMPS HAS BEEN EARTHED WITH 25X3MM G I FLAT AND CONNECTED TO 1' INCH DIA ELECTRODE 13. PROVIDED METAL CLAMP SUPPORT FOR- V CROSS ARMS OF TRANSMISSION LINE 14. PROVIDED FIRST AID BOX 15. PROVIDED FIRE EXTINGUISHERS AT ALL THE CONSPICU OUS PLACES. THEREAFTER, STATUTORY APPROVAL WAS GRANTED VIDE LET TER NO. CEIG/TS/HT/MBNR-149/D.NO/1350/14 DATED 11.04.2014. 2.3.6 IN THE LIGHT OF ABOVE CORRESPONDENCE, WE ARE UNABLE TO ACCEPT THE ASSESSEE'S CONTENTIONS THAT THE ASSETS WERE REA DY TO USE ON 26.03.2014 AND WERE PUT TO USE ON 7.9.03.2014. THE LETTER DATED ITA NO. 1922/HYD/2018 :- 7 -: 29.03.2014 OF THE ELECTRICAL INSPECTORATE REQUIRING THE ASSESSEE TO COMPLY WITH CERTAIN STATUTORY REQUIREMENTS CLEARLY SHOW THAT THE PLANT WAS NOT READY TO USE. THE ITEMS OF COMPLIANCE REFERRED IN THE ASSESSEES LETTER ELATED 11.04.2014 CLEARLY SHOW TH AT SOME OF THE MACHINERIES / EQUIPMENTS WERE NOT INSTALLED / ERECT ED AS PER THE REQUIREMENTS SPECIFIED IN THE CENTRAL ELECTRICITY A UTHORITY (MEASURES RELATING TO SAFETY AND ELECTRIC SUPPLY) REGULATION 2010, AND THAT THE PLANT WAS NOT SAFE FOR OPERATION AND THAT THE ASSES SEE COULD RECTIFY THOSE DEFICIENCIES AND COMPLIED WITH TILE STATUTORY REQUIREMENTS ONLY AS ON 11.04.2014. THUS THE PLANT WAS NOT SAFE TO US E AND NOT READY TO USE' PRIOR TO 11.04.2014. A PERUSAL OF THE CENTR AL ELECTRICITY AUTHORITY (MEASURES RELATING TO SAFETY AND ELECTRIC SUPPLY) REGULATION 2010 WOULD SHOW THAT THESE REGULATIONS HAVE LAID DO WN ELABORATE MEASURES TO BE COMPLIED WITH IN THE INSTALLATION, E RECTION. CONNECTION AND SUPPLY OF ELECTRICAL EQUIPMENTS TO ENSURE SAFET Y IO HUMAN LIFE AND TO PREVENT DANGER. THE OBJECTIVE OF THESE REGUL ATIONS ARE TO ENSURE THAT THE. PRESCRIBED SAFETY MEASURES ARE FOL LOWED SO AS TO PREVENT DANGER TO LIFE. THE ASSESSEE COULD COMPLY W ITH THESE MEASURES ONLY AS ON 11.04.2014. THEREFORE, IT CAN B E INFERRED THAT THE ASSETS WERE 'READY TO USE' ONLY AS ON 11.04.201 4. FURTHER, WITHOUT COMPLYING WITH THE SAFETY REQUIREMENTS PRES CRIBED IN A STATUTORY REGULATION, THESE ELECTRICAL EQUIPMENTS C ANNOT BE SAID TO HAVE ATTAINED THE 'READY TO USE' CONDITION. TAKING SUCH A VIEW WOULD NOT ONLY BE ILLOGICAL BUT ALSO AGAINST PUBLIC POLIC Y; AS THESE SAFETY MEASURES ARE PRESCRIBED FOR PUBLIC SAFETY UNCI TO P REVENT DANGER TO LIFE. WITHOUT COMPLYING WITH THE SAFETY MEASURES PR ESCRIBED IN A STATUTORY REGULATION, THE ASSESSEE COULD NOT BE ALL OWED TO CLAIM BENEFITS UNDER ANOTHER STATUTE; WHICH WOULD AMOUNT TO DEFEATING THE PURPOSE OF THE ELECTRICITY REGULATION 2010. 2.3.7 THE ASSESSEE ALSO PLACED RELIANCE ON THE CERT IFICATE OF M/S SCHNEIDER' ELECTRIC COMPANY VIDE LETTER DATED 31.03 .2014 STATING THAT ALL THE REQUIRED MACHINERY & INFRASTRUCTURE WERE IN STALLED AND TESTED AT SITE BY 26TH MARCH 2014, IN SUPPORT OF ITS PLEA THAT THE PLANT WAS 'READY TO USE' ON 26.03.2014. WE NOTE THAT THE ASSE SSEE HAS NOT CLARIFIED EVEN BEFORE US, AS TO HOW THE SAID LETTER DATED 31.03.2014 COULD MAKE REFERENCE TO ELECTRICITY AUTHORITIES' AP PROVAL LETTER DATED 11.04.2014. THEREFORE, WE ARE OF THE VIEW THAT THE AO HAD RIGHTLY DOUBTED THE VERACITY OF ITS CONTENTS AND ITS CREDIB ILITY AND CANNOT BE RELIED AS EVIDENCE. EVEN OTHERWISE, AS ALREADY DISC USSED, THE DEFICIENCIES IN THE SAFETY MEASURES POINTED IN THE INSPECTION REPORT GO TO SHOW THAT THE PLANT WAS NOT 'READY TO USE' AS ON 29.03.2014, AND WAS READY TO USE ONLY ON 11.04.2014. IT IS ALSO RELEVANT TO NOTE THAT THIS READY TO USE THEORY WAS REJECTED BY THE HON'BLE KARNATAKA HIGH COURT IN JCIT VS. YELLAMA DASAPPA HOSPITAL (29 0 ITR 353), AND THE BOMBAY HIGH COURT IN DINESH KURMAR GULABCHANCD AGGARWAL VS. ACIT (267 ITR 768). ITA NO. 1922/HYD/2018 :- 8 -: 2.3.8 THE AR VEHEMENTLY ARGUED THAT AT THE TIME OF INSPECTION ON 29.03.2014 THE ASSETS HAVE BEEN PUT TO USE, AND THA T WITHOUT PUTTING THE ASSETS TO USE, THE INSPECTION COULD NOT HAVE BE EN CARRIED ON. IN SUPPORT, THE AR RELIED ON THE DECISION OF THE GUJAR AT HIGH COURT IN THE CASE OF ASHIMA SYNTEX LIMITED AND THE DECISION OF I TAT HYDERABAD IN THE CASE OF SPR PUBLICATIONS PRIVATE LIMITED. IT WAS SUBMITTED THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ACIT VS. ASHIMA SYNTEX HELD THAT EVEN TRIAL PRODUCTION OF A MACHINERY WOUL D FALL WITHIN THE AMBIT OF 'USED FOR THE PURPOSE OF BUSINESS'; AND PL ACING RELIANCE ON THE SAME, IT WAS ARGUED THAT IT HAS TO BE IMPLIED T HAT THE PLANT WAS PUT TO USE ON 29.03.2014 AS WITHOUT PUTTING TO USE INSPECTION COULD NOT HAVE BEEN DONE. WITHOUT PREJUDICE, IT WAS ARGUE D THAT EVEN IF THE ASSET WAS READY TO USE, DEPRECIATION COULD BE ALLOW ED AND IN THIS REGARD RELIANCE WAS PLACED ON THE DECISION OF HON'B LE ITAT HYDERABAD IN THE CASE OF SPR PUBLICATIONS PVT LTD V S. ACIT. 2.3.9 HAVING CONSIDERED THE SUBMISSIONS, WE ARE UNA BLE TO ACCEPT THE ARGUMENT THAT AS INSPECTION WAS CARRIED OUT ON 29.03.2014, IT WOULD IMPLY THAT THE ASSET WAS PUT INTO USE ON 29.0 3.2014. WE ARE UNABLE TO APPRECIATE HOW THE RATIO OF HON'BLE GUJAR AT IN THE CASE OF ASHIMA SYNTEX LIMITED WOULD BE APPLICABLE TO SUPPOR T SUCH ARGUMENT. THE BRIEF FACTS BEFORE THE GUJARAT HIGH C OURT WAS THAT THE ASSESSEE PURCHASED SOME POWER LOOMS AND COMMENCED T RIAL PRODUCTION, BEFORE THE END OF ACCOUNTING YEAR, THOU GH COMMERCIAL PRODUCTION COMMENCED MUCH LATER. SOME FABRICS PRODU CED DURING THE TRIAL PRODUCTION WAS SHOWN AS CLOSING STOCK. AS THE RE WAS CLEAR EVIDENCE OF PRODUCTION, THE COURT HELD THAT DEPRECI ATION CANNOT BE DENIED MERELY FOR THE REASON THAT THE MACHINERY WAS USED FOR A SHORT DURATION FOR TRIAL RUN: AND THAT EVEN TRIAL PRODUCT ION WOULD FAIL WITHIN THE AMBIT OF 'USED FOR THE PURPOSE OF BUSINESS'. TH E FACTS IN THE INSTANT CASE ARE TOTALLY DIFFERENT. THERE WAS ONLY AN INSPECTION ON 29.03.2014, BY THE ELECTRICAL INSPECTORATE, WHOSE P URPOSE WAS TO VERIFY WHETHER THE MACHINERY & ELECTRICAL EQUIPMENT S HAVE BEEN INSTALLED/ERECTED AS PER THE APPROVED DRAWINGS OF T HE ELECTRICITY DEPARTMENT AND TO VERIFY WHETHER THE SAFETY MEASURE S STIPULATED IN THE CENTRAL ELECTRICITY AUTHORITY (MEASURES RELATIN G TO SAFETY & ELECTRIC SUPPLY) REGULATIONS 2010 HAVE BEEN COMPLIE D WITH TO PREVENT DANGER. THE PURPOSE OF INSPECTION WAS NOT TO SEE WH ETHER THE PLANT IS FIT FOR COMMERCIAL PRODUCTION OR COULD GENERATE THE ELECTRICITY AS PER ITS CAPACITY. THE INSPECTION CARRIED OUT ON 29.03.2 014 REVEALED DEFICIENCIES IN THE SAFETY MEASURES UNCI THEREFORE THE ASSESSEE WAS REQUIRED TO COMPLY WITH THE ELECTRICITY REGULATIONS 2010 WITHIN A STIPULATED TIME. THE IMPLICATION OF THE INSPECTION REPORT IS THAT THE SAFETY MEASURES PRESCRIBED IN THE STATUTE HAVE NOT BEEN ADHERED TO, AND THEREFORE THE PLANT IS NOT FIT FOR OPERATION UN LESS THE DEFICIENCIES ARE RECTIFIED AND THE REQUIREMENTS IN THE REGULATIO N ARE COMPLIED WITH. FOR THAT REASON APPROVAL WAS NOT GIVEN ALL 29 .03.2014. ONLY ITA NO. 1922/HYD/2018 :- 9 -: AFTER RECTIFICATION OF DEFECTS AND COMPLIANCE TO TH E PRESCRIBED MEASURES. THE APPROVAL WAS GIVEN ALL 11.04.2014. TH US, THERE IS NO BASIS TO INFER THAT THE PLANT WAS 'READY TO USE' OR 'PUT TO USE' ON 29.03.2014. ON THE OTHER HAND, THERE IS EVERY REASO N TO INFER THAT THE PLANT WAS NOT READY TO USE AND HENCE NOT PUT TO USE ALSO, UNTIL 11.04.2014 WHEN THE STATUTORY APPROVAL WAS GIVEN AF TER RECTIFICATION OF DEFECTS. BESIDES, THERE WAS NOT EVEN A CLAIM THA T THERE WAS TRIAL PRODUCTION ON 29.03.2014; AND THERE WAS NO DOCUMENT ATION TO TAKE SUCH A VIEW. WE ARE OF THE CONSIDERED VIEW THAT THE INSPECTION CARRIED OUT BY A REGULATORY AUTHORITY CANNOT FOR AN Y REASON BE EQUATED TO TEST RUN OR TRIAL PRODUCTION; AND THEREF ORE IT CANNOT BE IMPLIED THAT THE PLANT WAS ALREADY PUT TO USE BECAU SE IT WAS INSPECTED. HENCE, THE PLEAS RAISED IN THIS REGARD A RE REJECTED. 2.3.10 THE ASSESSEE HAD ALSO RAISED A PLEA THAT THE RE WAS GENERATION OF ELECTRICITY ON 31.03.2014. NO SUPPORT ING EVIDENCE WAS PRODUCED BEFORE THE AO OR BEFORE US TO SUBSTANTIATE SUCH PLEA, EXPECT THE LETTER OF M/S SCHNEIDER ELECTRIC COMPANY LTD. A S ALREADY DISCUSSED THE SAID LETTER CANNOT BE RELIED ON AS EV IDENCE AS ITS VERACITY IS IN DOUBT, BESIDES IT IS ALSO SELF-SERVI NG DOCUMENT, AS THE SAID COMPANY WAS THE ASSESSEE'S CONTRACTOR. THERE I S NO OTHER MATERIAL ON RECORD TO SUGGEST GENERATION OF ELECTRI CITY AS ON 31.03.2014. HENCE WE REGARD THIS PLEA ALSO. 2.3.11 THUS WE FIND THAT THE CLAIM OF TILE ASSESSEE THAT THE ASSETS WERE 'READY TO USE' ON 26.03.2014 AND 'PUT TO USE' ON 29.03.2014 WERE NOT JUSTIFIED, IN VIEW OF THE ABOVE DISCUSSION S. WE ALSO' NOTE THAT THE ASSESSEE FAILED TO ADDUCE ANY EVIDENCE TO SUPPORT ITS CLAIM THAT THERE WAS GENERATION OF ELECTRICITY TO THE TUN E OF 65 KHW. THEREFORE, WE REJECT THE PLEAS RAISED AND ACCORDING LY, THE AO IS DIRECTED TO MAKE THE PROPOSED ADDITION. 4. WE ARE INFORMED DURING THE COURSE OF HEARING THAT T HE DEPARTMENTAL AUTHORITIES HAVE ALREADY ALLOWED ASSESSEE S DEPRECIATION CLAIM REGARDING THE VERY FIXED ASSET IN N EXT FINANCIAL YEAR. THE ASSESSEES CASE ON THE OTHER HAN D, IS THAT IT IS VERY MUCH ENTITLED FOR THE IMPUGNED DEPRECIATION IN THIS FINANCIAL YEAR SINCE IT HAD DULY SET UP AND PUT TO USE THE SOLAR POWER PLANT IN ISSUE. WE THEREFORE PROCEED TO THE ASSE SSEES CASE ON THE BASIS OF THE EVIDENCE/SUPPORTIVE MATERIAL A VAILABLE IN THE CASE FILE. ITA NO. 1922/HYD/2018 :- 10 -: 4.1. IT EMERGES FROM A PERUSAL OF THE ABOVE RECORDS TH AT THE ASSESSEES POWER PLANT HAD WITNESSED THE STATE GOVERNM ENTS AUTHORITIES ON SITE INSPECTION VISIT ON 29-03-2014 AS IT IS CLEAR FROM A PERUSAL OF PG.427 IN THE PAPER BOOK WHEREIN I T WAS DIRECTED TO ENERGISE THE CORRESPONDING EQUIPMENT ON PU RELY TEMPORARY BASIS. THIS FOLLOWED THE TAXPAYERS COMPLIA NCE REPORT OF THE VERY DATE. THE LAST CORRESPONDENCE BETWE EN THE ASSESSEE AND THE ELECTRICITY INSPECTORATE IS LETTER NO.1350/2014 DT.11-04-2014. THE ASSESSEES STAND ALL ALONG HAS CLAIMED TO HAVE COMMENCED ITS SOLAR POWER PLANT O N TEST CHECK PRODUCTION WELL BEFORE THE LAST DAY OF THE RELEV ANT ACCOUNTING PERIOD I.E., 31-03-2014 AND THEREFORE ENTITL ED FOR THE IMPUGNED DEPRECIATION. IT HAS FURTHER STATED THAT THE ENERGISATIONS OF THE CIRCUIT WAS A CONDITION PRECED ENT WHICH NEVER TOOK PLACE AFTER 31 ST OF MARCH, 2014. 5. LEARNED CIT-DR AT THIS STAGE INVITED OUR ATTENTION TO TH E DRPS FINDINGS RAISING SERIOUS DOUBTS ON ASSESSEES TRIAL PRODUCTION CLAIM. AND THAT M/S.SCHNEIDER ELECTRIC INDI A PRIVATE LIMITED (SUPRA)S LETTER COULD ALSO NOT BE ACCEPTED AS CORRECT BEING A PRIMA FACIE CASE OF ANTI-DATING THE STATE GOVERNMENTS CORRESPONDENCE. THE FACTS SPEAK OTHERWISE IN OUR CONSIDERED OPINION. THIS IS FOR THE REASON THAT M/S.SCHNEIDER ELECTRIC INDIA PRIVATE LIMITED HAD MERELY CLARIFIED THE LETTER NUMBER AS 1350 WHICH WAS ULTIMATE LY ISSUED ON 11-04-2014. IT THEREFORE APPEARS AN INSTAN CE WHEREIN THE SAID NUMBER WAS ALLOTTED TO THE LATTER FOLLOWE D BY SCHNEIDERS CERTIFICATE AND THE ULTIMATE SANCTION COMING ON 11-04-2015. WE MAKE IT CLEAR THAT THE REVENUES STAND OTHERWISE ALSO WOULD NOT RESULT IN ANY DEVIATION OF FAC TS AS TO ITA NO. 1922/HYD/2018 :- 11 -: WHEN THE ASSESSEE HAD INSTALLED THE POWER PLANT AND COMMENCED ITS TRIAL PRODUCTION. WE NOTICE THE SAME IN LI GHT OF THE REGULATION 43(3) OF THE CENTRAL ELECTRICITY AUTHORI TY (MEASURES RELATING TO SAFETY AND ELECTRICAL SUPPLY) REGULATIONS, 2010 MAKES IT MANDATORY THAT THE OWNER OF ANY POWER INSTALLATION SHALL ITSELF TEST CHECK EVERY CIRCUIT OF V OLTAGE FOLLOWED BY RECORDING OF THE CORRESPONDING RESULTS TO BE FORWARDED TO THE INSPECTING AUTHORITY. IT IS THIS REGULATI ONS PRIOR TEST RESULTS CONDITION THAT THE ASSESSEE HAD ENSUR ED COMPLIANCE IN MARCH, 2014 ITSELF WHICH ULTIMATELY CULM INATED IN ITS APPROVAL. WE THUS QUOTE THE CASE LAW DISCUSSE D AT ASSESSEES BEHEST BEFORE THE DRP (SUPRA) AND ACCEPT TH E ASSESSEES DEPRECIATION CLAIM ON THE GROUND THAT IT HAD VERY WELL INSTALLED AND PUT TO USE THE SOLAR PLANT IN ISSUE WHICH FURTHER UNDERWENT ALL THE MANDATORY INSPECTIONS IN THE MO NTH OF MARCH, 2014 ONLY. THE IMPUGNED DEPRECIATION DISAL LOWANCE OF RS.18,63,27,778/- IS DELETED. THIS SECOND SUBSTAN TIVE GROUND ALSO SUCCEEDS. 6. NEXT COMES THE THIRD ISSUE OF FORWARD CONTRACTS LOSS DISALLOWANCE OF RS.27,70,201/-. WE NOTICE THAT THIS I SSUE HAS ARISEN BETWEEN THE PARTIES FOR THE FIRST TIME IN THE IMPU GNED ASSESSMENT YEAR SINCE THE ASSESSING OFFICER HAS HIMSE LF BEEN ALLOWING THE SAME U/S.37(1) OF THE ACT. THE DRPS DI RECTIONS AFFIRMING THE IMPUGNED DISALLOWANCE READS AS UNDER: 2.5.1 HAVING CONSIDERED THE SUBMISSIONS, WE NOTE T HAT AT PAGE 417 TO 421 OF THE PAPER BOOK, THE ASSESSEE HAS GIVEN SO ME BASIC INFORMATION IN THE FORM OF MTM AND PFE REPORT RELAT ING TO LOSS CLAIMED ON FORWARD CONTRACT PROVISION THE ASSESSEE HAS NOT FURNISHED THE CONTRACT NOTES RELATING TO THE ALLEGE D FORWARD CONTRACT TRANSACTIONS. FROM THE PERUSAL OF THE FORWARD MTM A ND PFE REPORT FOR ITA NO. 1922/HYD/2018 :- 12 -: THE YEAR ENDED 31.032013 AND 31.03.2.014, IT IS REP ORTED AS FOLLOWS:- POSITIVE MTM EXPOSURE NEGATIVE MTM EXPOSURE 31.03.2013 2,05,13,857 21,54,223 31.03.2014 5,54,72,903 49,24,424 2.5.2 THE ASSESSEE WAS ASKED TO CLARIFY WHETHER THE POSITIVE MTM EXPOSURE IN THE FORM OF GAIN HAS BEEN ADMITTED AND OFFERED TO TAX IN THE SUBJECT YEAR AND EARLIER YEAR. THE ASSESSEE WAS ALSO ASKED TO CLARIFY THAT AS THE NEGATIVE EXPOSURE AMOUNTED TO R S.70,78,647/- (RS.21,54,223 + RS.49,24,424/-), WHERE IS THE QUEST ION OF DOUBLE DISALLOWANCE AS CONTENDED DURING THE YEAR. IN RESPO NSE THE ASSESSEE FILED SUBMISSION VIDE LETTER DATED 20TH JUNE 2018, AND WHEREIN IT WAS CONTENDED THAT THE ASSESSEE HAD NEGATIVE EXPOSU RE DURING THE YEAR OF RS.49,24,424/- AND WHICH WAS ADJUSTED AGAIN ST REVERSAL OF PROVISION OF RS.21,54,223/- RELATING TO THE EARLIER F.Y. 2012-13, AND THUS THE NET LOSS CLAIMED WAS ONLY RS.27,70,201/-. THE ASSESSEE HAS NOT FURNISHED ANY CLARIFICATION AS TO WHETHER THE P OSITIVE GAIN / EXPOSURE HAVE BEEN ADMITTED AND OFFERED TO TAX. FUR THER ON PERUSAL OF PAQE 418 OF PAPER BOOK, IT IS SEEN THAT THE POSI TIVE GAIN OF RS.5,54,72,903/- HAS BEEN REVERSED IN THE SAME YEAR . THE AR HAS NO EXPLANATION TO OFFER AS TO WHY THE NEGATIVE EXPOSUR E WAS NOT REVERSED IN SIMILAR MANNER AS TO POSITIVE EXPOSURE IN THE SAME YEAR. THUS IT IS EVIDENT THAT THE ASSESSEE HAS NOT BEEN O FFERING TO TAX THE GAINS ON MTM, WHILE CLAIMING DEDUCTION FOR THE NOTI ONAL LOSS ARISING ON ACCOUNT OF MTM. 2.5.3. THE ASSESSEE IN ITS WRITTEN SUBMISSION HAS C LAIMED THAT THE ACCOUNTING EXCHANGE DIFFERENCE ARISING ON SETTLEMEN T OF TRANSACTIONS AND TRANSLATION OF MONETARY ITEMS ARC RECOGNIZED AS INCOME OR EXPENSE IN THE YEAR IN WHICH THEY ARISE. BUT IT IS EVIDENT THAT THE INCOME / GAIN HAS NOT BEEN OFFERED TO TAX. THUS IT IS ALSO NOT FOLLOWING TILE RATIO LAID CLOWN IN CIT VS. WOODWARD GOVERNOR INDIA PRIVATE LIMITED. (312 ITR 223 SC) WHICH THE ASSESSEE RELIED UPON. IT IS ALSO NOTED FROM THE WRITTEN SUBMISSION THAT THE LOSSES A ROSE ON ACCOUNT OF CONVERSION OF RUPEE TERM LOAN INTO FOREIGN CURRENCY LOAN AT THE CONTRACTED FORWARD EXCHANGE RATE. THUS IT IS CLEAR THAT THESE TRANSACTIONS ARE ON CAPITAL ACCOUNT AND ANY LOSS AR ISING ON THE CAPITAL ACCOUNT IS NOT ALLOWABLE AS REVENUE EXPENDI TURE, THUS THE DISALLOWANCE IS JUSTIFIED ON THIS COUNT ALONE. 2.5.4 IT IS EVIDENT TO NOTE THAT THE CBDT INSTRUCTI ON NO. 3/2010 DATED 23.03.2010, DEALS WITH ALLOWABILITY OF LOSS UNDER F ORWARD CONTRACT, WHICH IS EXTRACTED AS UNDER:- ITA NO. 1922/HYD/2018 :- 13 -: 2. 'MARKED TO MARKET' IS IN SUBSTANCE A METHODOLOGY OF ASSIGNING VALUE TO A POSITION HELD IN A FINANCIAL INSTRUMENT BASED ON ITS MARKET PRICE ON THE CLOSING DAY OF THE ACCOUNTING OR REPOR TING RECORD. ESSENTIALLY, 'MARKED TO MARKET' IS A CONCEPT UNDER WHICH FINANCIAL INSTRUMENTS ARE VALUED AT MARKET RATE SO AS TO REPO RT THEIR ACTUAL VALUE ON THE REPORTING DATE. THIS IS REQUIRED FROM THE POINT OF VIEW OF TRANSPARENT ACCOUNTING PRACTICES FOR THE BENEFIT OF TILE SHAREHOLDERS OF THE COMPANY AND ITS OTHER STAKEHOLDERS. WHERE COMPA NIES MAKE SUCH AN ADJUSTMENT THROUGH THEIR TRADING OR PROFIT/ LOSS ACCOUNT, THEY BOOK A CORRESPONDING LOSS (I.E THE DIFFERENCE BETWEEN THE PURCHASE PRICE AND THE VALUE AS ON THE VALUATION DA TE) IN THEIR ACCOUNTS. THIS LOSS IS A NOTIONAL LOSS AS NO SALE/CONCLUSION/SETTLEMENT OF CONTRACT HAS TAKEN PL ACE AND THE ASSET CONTINUES TO BE OWNED BY THE COMPANY. A MARKED TO MARKET LOSS MAY BE GIVEN DIFFERENT AC COUNTING TREATMENT BY DIFFERENT ASSESSEE. SOME MAY REFLECT SUCH LOSS AS A BALANCE SHEET ITEM WITHOUT MAKING ANY CORRESPONDING ADJUSTMENT IN THE PROFIT AND LOSS ACCOUNT. OTHER MAY BOOK THE LOS S IN THE PROFIT AND LOSS ACCOUNT WHICH MAY RESULT IN THE REDUCTION OF B OOK PROFIT. IN CASES WHERE NO SALE OR SETTLEMENT HAS ACTUALLY TAKE N PLACE AND THE LOSS ON MARKED TO MARKET BASIS HAS RESULTED IN REDU CTION OF BOOK PROFITS, SUCH A NOTIONAL LOSS WOULD BE CONTINGENT I N NATURE AND CANNOT BE ALLOWED TO BE SET OFF AGAINST THE TAXABLE INCOME . THE SAME SHOULD THEREFORE BE ADDED BACK FOR THE PURPOSE OF COMPUTIN G THE TAXABLE INCOME OF AN ASSESSEE. 2.5.5. THUS, FROM THE PERUSAL OF DETAILS IT IS EVID ENT THAT THE 1) LOSS CLAIMED IS ADMITTEDLY NOTIONAL IN NATURE AND WAS BE FORE THE SETTLEMENT OF THE FORWARD CONTRACT 2) THAT THE LOSS ON THE CAPITAL ACCOUNT-AS THE FORWARD CONTRACTS WERE SAID TO BE EN TERED FOR CAPITAL TRANSACTION 3) THAT THE ASSESSEE DID NOT ADOPT CONS ISTENT METHOD OF ACCOUNTING BOTH THE NOTIONAL PROFITS AND LOSSES WHI CH IS IMPERMISSIBLE IN VIEW OF THE RATIO LAID DOWN IN CIT VS. WOODWARD GOVERNOR (312 ITR 254 SC), DCIT VS. CYIENT LIMITED (ITA HYD. IN ITA NO. 474 & 475/2015 AND 597/2016). THE MAD HC IN IND IAN OVERSEAS BANK VS. CIT 183 ITR 200 HELD THAT TILL CO NTRACTS ARE SETTLED, THERE IS NO TAXABLE GAIN NOR ALLOWABLE LOS S. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY INFIRMITY IN TH E AO'S ACTION IN DISALLOWING THE CLAIM OF LOSS OF RS.27,70,201/- DEB ITED IN THE P & L ACCOUNT. ACCORDINGLY THE AO IS DIRECTED TO RESTRICT THE ADDITION / DISALLOWANCE TO RS.27,70,201/-. 2.5.6 IT WAS ALSO PLEADED THAT THE ASSESSEE HAS TO BE ALLOWED BENEFIT U/S 10A IN RESPECT OF ADDITION TO TOTAL INCOME AND PLACED RELIANCE ON THE CBDT CIRCULAR NO.37/2016 DATED 02.11.2016. 2.5.7 HAVING CONSIDERED THE SUBMISSIONS, WE NOTE TH AT THE CBDT CIRCULAR NO. 37/2016 DEALS WITH ALLOWABILITY OF DED UCTION UNDER ITA NO. 1922/HYD/2018 :- 14 -: CHAPTER VI A ON ENHANCED PROFITS, AND THE CIRCULAR WOULD NOT BE APPLICABLE WHERE EXEMPTION WAS CLAIMED U/S 10A. ACC ORDINGLY THIS PLEA IS DISMISSED. 7. THE ASSESSEE IS ADMITTEDLY ENGAGED IN SOFTWARE DEVELOPMENT SERVICES CARRYING OUT INTERNATIONAL TRANSAC TIONS IN FOREIGN CURRENCY (PREDOMINANTLY IN US DOLLARS). PAGES 453 TO 460 REVEAL THAT IT HAD ENTERED INTO FOREIGN EXCHANGE CONTRACTS FOLLOWED BY THE REGULAR SYSTEM OF ACCOUNTING WHEREIN IT TRANSFERS THE LOSSES FROM THESE CONTRACTS BY DEBITING IN THE P&L A/C UNDER THE ACCOUNT HEAD FOREIGN CURRENCY TRANSACTIONS ON ACCOUNT OF DIFFERENCE IN CURRENCY RATE ON THE LAST DATE OF THE YEAR AND CONTRACTED DATE. THE SAID LOSS RECOGNISED IS THEN TRANSFERRED TO PROVISION FOR LOSS O N FORWARD CONTRACTS. 8. CONTINUING WITH THE ASSESSEES REGULAR SYSTEM OF ACCOUNTING, ITS CORRESPONDING FIGURES OF THE AMOUNT IS REVERSED AND OFFERED TO INCOME OR ADJUSTED AGAINST FORWARD CONTR ACT LOSS AS IT HAS DONE IN AY.2013-14. CASE FILE SUGGESTS THA T THE IMPUGNED LOSS OF RS.27,70,201/- PERTAINS TO FOUR VOUC HERS FOR THE YEARS 2012-13 AND 2013-14 WHICH HAD BEEN DULY AC CEPTED BY THE ASSESSING OFFICER IN REVENUE. 9. COMING TO GAIN ON SUCH FORWARDS CONTRACTS; IF ANY, THE LEARNED LOWER AUTHORITIES HAVE FAILED TO INDICATE ANY DEFICIENCY ON ASSESSEES PART IN RECOGNISING THE SAME. SO FAR AS ITS STAND IS THAT THESE TRANSACTIONS RELATING TO CAPITAL ACCOUNT, THE ASSESSEES TREATMENT OF THESE FORWARD CONTRACTS IN REVENU E ACCOUNT IN THE SAID EARLIER ASSESSMENT YEARS HAS ADMI TTEDLY GONE UN-REBUTTED. THE FACT ALSO REMAINS THAT THE ASSE SSEES TREATMENT GIVEN TO THESE FORWARD CONTRACTS IN EARLIER AND LATTER ITA NO. 1922/HYD/2018 :- 15 -: ASSESSMENT YEARS HAVE BEEN DULY ACCEPTED BY THE ASSESS ING OFFICER WHICH HAS ALSO NOT BEEN REBUTTED IN THE LOWER PROCEEDINGS. WE THEREFORE ALLOW THE ASSESSEES CLAIM IN PRINCIPLE AND LEAVE IT OPEN FOR THE ASSESSING OFFICER TO FINALIZE FACTUAL VERIFICATION AS PER LAW. THE THIRD SUBSTANTIV E GRIEVANCE IS TAKEN AS ALLOWED FOR STATISTICAL PURPOSES. 10. THE ASSESSEES FOURTH SUBSTANTIVE GRIEVANCE SEEKS TO REVERSE THE LEARNED LOWER AUTHORITIES ACTION DISALLOWI NG CULTIVATION, LEASE AND DEPRECIATION TOWARDS BIOMASS P LANT OF RS.3,58,99,242/-; COMPRISING OF RS.1,44,45,495/-, RS.1,05,84,500/- AND RS.1,14,77,247/-; RESPECTIVELY . THE DRPS DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER : 2.6.3 FROM THE PERUSAL OF THE WRITTEN SUBMISSIONS IT IS SEEN THAT THE ASSESSEE CLAIMS THAT IT HELD INCURRED CULTIVATION E XPENSES TO THE TUNE OF RS.1,44,45,495/- AND LEASE EXPENSES TO THE TUNE OF RS.1,05,84,500/- FOR THE MANUFACTURE OF BRIQUETTES IN ITS BIOMASS PLANT. IT WAS STATED THAT THE CULTIVATION EXPENDITU RE WAS INCURRED FOR PRODUCTION OF CERTAIN KIND OF GRASS CALLED NAPIER G RASS USED FOR MANUFACTURING BRIQUETTES AND THAT THE LEASE EXPENSE S REPRESENT THE EXPENSES INCURRED TOWARDS LEASING OF LAND FOR CULTI VATION OF THE SAID GRASS, IT WAS CONTENDED THAT THE BUSINESS OF THE AS SESSEE COMMENCED WITH THE COMMENCEMENT OF CULTIVATION OF G RASS, AND AS SOON AS THE MACHINERY AND EQUIPMENT WAS INSTALLED I N THE BIOMASS PLANT. WITHOUT PREJUDICE IT WAS CONTENDED THAT THE BUSINESS OF THE ASSESSEE COMMENCED AS SOON AS MANUFACTURE OF BRIQUE TTES BEGAN IN THE FINANCIAL YEAR IN QUESTION: AND THAT DUE TO THE REASON THAT THE BRIQUETTES PRODUCED WERE NOT OF SUFFICIENT CALORIFI C VALUE THE ASSESSEE COULD NOT AFFECT SALE OF THE SAME; AND THEREFORE IT WAS CONTENDED THAT THE SUBSEQUENT LEASE AND CULTIVATION EXPENSES ARE A LLOWABLE AS REVENUE EXPENDITURE. IT WAS ALSO CONTENDED THAT THE ACTIVITY OF CULTIVATION OF GRASS, SETTING OF PLANT & MACHINERY AND MANUFACTURE OF BRIQUETTES HAVE TAKEN PLACE IN SAME FINANCIAL YEAR AND THEREFORE THE CULTIVATION AND LEASE EXPENDITURE ARE REVENUE IN NA TURE AND ALLOWABLE U/S 37 OF THE IT ACT. BREAK UP DETAILS OF EXPENSES GIVEN AT PAQE 403-408 OF PAPER BOOK WAS RELIED IN SUPPORT. 2.6.4 IN REGARD TO CLAIM OF DEPRECIATION ON BIOMASS EQUIPMENT, IT WAS STATED THAT THE ASSESSEE INSTALLED THE EQUIPMENT DU RING THE FINANCIAL ITA NO. 1922/HYD/2018 :- 16 -: YEAR; AND THAT THE BIOMASS PLANT. WAS PUT TO USE DU RING THE YEAR AND WAS USED FOR GENERATION OF ELECTRICITY, WHICH WAS U SED BY THE ASSESSEE AND AS WELL FOR THE PRODUCTION OF SAMPLE B RIQUETTES AND THEREFORE THE CLAIM OF DEPRECIATION SHOULD BE ALLOW ED. WITHOUT PREJUDICE. IT WAS CONTENDED THAT THE MACHINERY AND EQUIPMENT FOR BIOMASS PLANT WAS COMPLETELY SET UP AND READY FOR U SE AND THAT DEPRECIATION IS ALLOWABLE EVEN WHEN THE ASSET IS RE ADY TO USE. ACCORDINGLY IT WAS PLEADED TO ALLOW THE DEPRECIATIO N CLAIM OF RS.1,14,77,247/-. 2.6.5 FROM THE PERUSAL OF THE INFORMATION FILED AT PAGE 402 TO 407, IT IS NOTICED THAT THERE WAS NO INFORMATION AS TO WHEN THE PLANT & MACHINERY WAS SET UP AND AT WHICH LOCATION, AS TO W HEN THE PLANT & MACHINERY WERE PURCHASED, AND AS TO WHEN APPROVAL F OR THE BIOMASS PLANT WAS OBTAINED. THEREFORE, THE ASSESSEE WAS AFF ORDED AN OPPORTUNITY TO FURNISH COMPLETE DETAILS AS TO WHEN THE BIOMASS PLANT WAS INSTALLED WHEN IT WAS READY TO USE, WHAT WAS IT S CAPACITY AND DETAILS OF APPROVAL OBTAINED FROM REGULATING AUTHOR ITIES, ETC. IN RESPONSE, THE ASSESSEE FILED CERTAIN INFORMATION VI DE LETTER DATED 20.06.2018 IN PAGES 28 TO 47. ALL THESE INFORMATION ARE CONSIDERED IN ANSWERING THE OBJECTIONS RAISED. 2.6.6. AS PER THE NOTE FURNISHED AT P.28 (LETTER DA TED 20.6.2018) THE ASSESSEE COMMENCED BIOMASS UNIT FROM 28 JAN 2013, A FTER TAKING NECESSARY APPROVALS THE ACTIVITY COMMENCED AT SL.NO S 564/A1, 563/AAZ, 564/AAZ, 548/1, 562/2, 563/1, 564/1A GONDH ARI (V & M) NIZAMABAD DISTRICT. IT WAS STATED THAT APPROVAL WAS TAKEN FROM LOCAL AUTHORITIES, WATER, FIRE AND POLLUTION DEPARTMENT T O COMMENCE PRODUCTION. IT WAS FURTHER STATED THAT THE ASSESSEE TAKEN LAND ON LEASE TO SET UP PLANT & INSTALL NECESSARY EQUIPMENT FOR PRODUCTION OF BRIQUETTES WHICH ARE USED FOR GENERATING ELECTRICIT Y. IT IS SEEN THAT PAGE 31 OF THE INFORMATION FILED WAS LETTER DATED 3 0.07.2014 OF THE GRAM PANCHAYAT OFFICE GONDHARI GIVING NOC TO CONSTR UCT FACTORY FOR BIOMASS PLANT. PAGE 29 IS LETTER DATED 02.07.2014 F ROM THE COMMISSIONER OF INDUSTRIES, TELANGANA COMMUNICATING FACTORY APPROVED PLANS. THIS WAS ISSUED ALTER THE CONDITION AL APPROVAL GRANTED IN LETTER NO. D DIS. C2/NZB/6744/2014 DATED 20.05.2014. PAGE 32 IS THE LETTER DATED 29.05.2014 ISSUED BY TH E A.P.POLLUTION BOARD AFTER INSPECTION OF THE SITE ON 24.05.2014 AN D AFTER CLARIFICATION SUBMITTED BY THE ASSESSEE ON 28.05.2014, GRANTING C ONSENT FOR ESTABLISHMENT OF INDUSTRY FOR MANUFACTURE OF BIOMAS S BRIQUETTE IN THE SITE UNDER SECTION 25 OF WATER (PREVENTION AND CONT ROL OF POLLUTION) ACT 1974 AND UNDER SECTION 21 OF AIR (PREVENTION AND CO NTROL OF POLLUTION) ACT 1981; CLAUSE 10, SCHEDULE A OF THE SAID ORDER R EQUIRES THAT THE CONSENT FOR OPERATION (CFO) SHALL BE OBTAINED BEFOR E STARTING TRIAL PRODUCTION. THE ASSESSEE HAS NOT FILED THE ORDER GR ANTING CONSENT FOR OPERATION CFO. PAGE 37 IS LETTER DATED 10.09.2014 O F AP STATE ITA NO. 1922/HYD/2018 :- 17 -: DISASTER RESPONSE AND FIRE SERVICES DEPARTMENT GRAN TING NO OBJECTION CERTIFICATE TO THE PROPOSED INDUSTRY. IT IS ALSO STATED IN THE SAID LETTER THAT THE BUILDING SHOULD NOT BE OCCUPIE D WITHOUT OBTAINING ANY NO OBJECTION CERTIFICATE FOR OCCUPANCY FROM THE FIRE DEPARTMENT. PERUSAL OF ALL THESE INFORMATION CLEARLY SHOW THAT THE APPROVAL FOR THE PLANT FROM THE POLLUTION DEPARTMENT, FIRE DEPARTMEN T, GRAM PANCHAYAT WERE GIVEN ONLY AFTER MAY 2014. IT IS AL SO SEEN THAT CONSENT FOR OPERATION ORDER IS REQUIRED EVEN FOR TR IAL PRODUCTION, AND THAT THE ASSESSEE FAILED TO PRODUCE THE CONSENT FOR OPERATION ORDER SUGGESTING THAT CFO ORDER WAS NOT GRANTED AT ALL. FURTHER, IT IS SEEN THAT THE INSPECTION OF THE SITE TOOK PLACE ONLY ON 24.05.2014, AND THUS, NO APPROVAL COULD HAVE BEEN GIVEN PRIOR TO 24 .05.2014. THEREFORE THE CLAIM OF THE ASSESSEE THAT THE BIOMAS S PLANT WAS SET UP AND READY TO USE AS ON 31.03.2014 IS NOT FACTUALLY CORRECT. WE ALSO NOTE THAT THE ASSESSEE HAD NOT FURNISHED ANY INFORM ATION OR DOCUMENTATION BEFORE THE AO OR BEFORE US TO SUBSTAN TIATE ITS CONTENTION THAT THE BIOMASS PLANT WAS INSTALLED AND PUT INTO USE AS ON 31.03.2014. THOUGH IT WAS CONTENDED THAT THE ASS ESSEE PUT TO USE THE BIOMASS PLANT AND MANUFACTURED SAMPLE BRIQUETTE S DURING THE SUBJECT YEAR, NO EVIDENCE WAS FILED TO SUPPORT SUCH CONTENTION. WE ALSO FIND SUCH A CLAIM TO BE ILLOGICAL, AS THE APPR OVALS FROM REGULATORY AUTHORITIES WERE GRANTED ONLY AFTER MAY 2014. 2.6.7 THE ONUS IS ON THE ASSESSEE TO SUBSTANTIATE T HAT THE BUSINESS OF GENERATION OF POWER THROUGH BIOMASS PLANT OR MANUFA CTURE OF BRIQUETTE WAS SET UP AND THAT THE EXPENDITURE INCUR RED BY WAY OF LEASE AND CULTIVATION EXPENSES WERE INCURRED FOR TH E PURPOSE OF SUCH BUSINESS AND WERE INCURRED AFTER THE SETTING OF SUC H BUSINESS FOR ALLOWANCE U/S 37 OF THE IT ACT. THE EXPRESSION 'SET TING UP' MEANS, 'TO PLACE ON FOOT OR TO ESTABLISH'. A BUSINESS IS SAID TO BE ESTABLISHED WHEN IT IS READY TO COMMENCE. IN THE INSTANT CASE, NO EVIDENCE WAS FURNISHED TO PROVE THAT THE BUSINESS WAS SET UP OR COMMENCED OR READY TO COMMENCE AS ON 31.03.2014. NO NEXUS WAS SH OWN FOR THE LEASE EXPENSES WITH THE BIOMASS PLANT. AS THE BIOMA SS PLANT WAS SET UP AS ON 31.03.2014, AND THE BUSINESS NOT COMMENCED BY THAT TIME, THE EXPENDITURE CLAIMED TOWARDS LEASE AND CULTIVATI ON ARE NOT ALLOWABLE AS BUSINESS EXPENDITURE FOR THE SUBJECT Y EAR. WE DO NOT FIND ANY INFIRMITY IN THE AO'S ACTION IN DISALLOWIN G THE CLAIM OF DEDUCTION TOWARDS LEASE AND CULTIVATION EXPENSES AN D THE DEPRECIATION ALLOWANCE. ACCORDINGLY, THE PROPOSED D ISALLOWANCES ON THESE THREE COUNTS ARE UPHELD. 2.6.8 A PERUSAL OF THE LEASE EXPENSES SHOW THAT LEA SE EXPENSES WERE CLAIMED FOR LEASE OF LAND AT GOURARAM, GANDIVET VIL LAGE, SARAVAPUR, MATSANG VILLAGES, AND IT IS NOTED THAT W.R.T. ENTRY DATED 13.05.2013, THERE WAS PURCHASE OF LAND AT POTHANGAL FOR RS.4,68 ,750/- AGAINST ENTRY DATED 16.05.2013, THERE WAS PURCHASE OF LAND FOR RS.52,500/- AND AGAINST ENTRY DATED 23.01.2014 THERE WAS PURCHA SE OF LAND FOR ITA NO. 1922/HYD/2018 :- 18 -: RS.3,94,500/-. APPARENTLY THESE PURCHASE EXPENSES C ANNOT BE ALLOWED AS REVENUE EXPENDITURE AND ARE LIABLE TO BE DISALLOWED ON THIS COUNT ALSO. 2.6.9 A PERUSAL OF THE CULTIVATION EXPENSES GIVEN A T PAGE 403 OF PAPER BOOK SHOW THAT THE FOLLOWING ADVANCES WERE MA DE FOR SUPPLY OF NAPIER STRIPS. DATE NAME AMOUNT IN RS. 08.07.2013 B.VENKATESHWAR REDDY 2 LAKHS 08.07.2013 M.VIJAYANDER REDDY 4 LAKHS 23.07.2013 M.VIJAYANDER REDDY 5 LAKHS 23.07.2013 N.VIDYASAGA REDDY 5 LAKHS 01.08.2013 M.VIJAYANDER REDDY 5 LAKHS 20.08.2013 N.VDYASAGA REDDY 1 LAKH TOTAL 22 LAKHS BEING ADVANCES, THESE AMOUNTS ARE NOT PRIMA FACIE A LLOWABLE AS REVENUE EXPENSE. FURTHER IT IS NOTICED THAT AMOUNTS TO THE TUNE OF RS.26,88,550/- WERE DEBITED TOWARDS LEASE EXPENSES IN THE MONTH OF MARCH 2014 (OF WHICH RS.4,05,000/- ON 31.03.2014), AND THE LEASE WAS STATED TO BE FOR A PERIOD OF ONE YEAR. THEREFOR E THEY WOULD NOT TAKE THE CHARACTERISTIC OF REVENUE EXPENSES FOR THI S YEAR. FOR THESE REASONS ALSO, THESE EXPENDITURE ARE NOT ALLOWABLE. AS A RESULT THESE OBJECTIONS ARE REJECTED. 11. WE HAVE HEARD RIVAL SUBMISSIONS. IT IS NOTICED TH AT ALL THE THREE INSTANT CLAIMS ARE INTERCONNECTED. THE ASSES SEES CASE IS THAT SINCE IT HAD SET UP A BIOMASS PLANT, IT GOT TH E LAND(S) ON LEASE AND GREW NEPIAR GROSS THEREUPON TO B E CONSUMED IN THE BRIQUETTES PRODUCED THEREFORE IN BIOMAS S POWER PRODUCTION. PAPER BOOK PAGES 402 TO 480 INTER ALIA CONTAIN THE NECESSARY DOCUMENTS I.E., BREAKUP OF THE IMPUGNED CULTIVATION EXPENSES (COW DUNG, GROSS TESTIN G, LABOUR CHARGES, NAPIER GROSS BRICKS AND PLOUGHING C HARGES LEDGER ACCOUNTS, LEDGER OF LEASE EXPENSES OF RS.1,05 ,84,500/- NOTE(S) ON BIOMASS THAT IT HAD COMMENCED ACTIVITY FROM 28-01- 2013 AFTER SETTING UP THE PLANT AND MACHINERY, UNITS APPROVAL(S) FROM COMMISSIONERATE OF INDUSTRIES, TELAN GANA ITA NO. 1922/HYD/2018 :- 19 -: GOVERNMENT DT.02-07-2014, PANCHAYAT RAJ DEPARTMENT NOC, STATE POLLUTION CONTROL BOARD CONSENT, STATE DISASTER RESPONSE AND FIRE SERVICES NOCS, STATE GOVERNMENTS GR OUND WATER DEPARTMENTS PERMISSION TO DRAW THE SPECIFIED UND ER GROUND WATER CAPACITY BY PUMPING, DEPRECIATION LEDGE R OF BIOMASS PLANT AND MACHINERY AND VEHICLES AND ALL PAR TICULARS OF LEASE MONEY(IES), PAID TO LANDOWNERS; RESPECTIVELY . ALL THIS OVERWHELMING EVIDENCE DULY PROVES THE ASSESSEES CA SE THAT IT HAD VERY MUCH ESTABLISHED ITS BIOMASS PLANT BY INVESTIN G ITS CAPITAL. ALL THESE APPROVALS AND PERMISSIONS ALSO PRO VE THE STAND ADOPTED THROUGH OUT IN SUPPORT OF THE IMPUGNED EXPENSES. CASE LAW SPR PUBLICATIONS PVT. LTD. [63 TAXMANN.COM 161] AND CHEMPLAST SANMAR LTD. [97 TAXMANN.COM 347] (MADRAS) HOLDS THAT SUCH A PLANT AND MACHINERY WHICH IS READY TO USE IS VERY MUCH ENTITLED FOR DEPRECIATION. WE THUS ALLOW ASSESSEES DEPRECIATION C LAIM ON PLANT AND MACHINERY OF RS.1,08,49,065/- AND RS.6,28, 182/- ON VEHICLES; RESPECTIVELY TOTALLING TO RS.1,14,77,247/- IN ISSUE. 12. COMING TO THE REMAINING TWIN COMPONENTS OF LEASE AMOUNT AND CULTIVATION CHARGES AND THE REASONING THAT NO INCOME HAD BEEN GENERATED FROM ALL THIS ACTIVITY THEREB Y RAISING SERIOUS DOUBTS ON ASSESSEES CLAIM, WE ARE U NABLE TO LOSE SIGHT OF THE FACT THAT LEARNED LOWER AUTHORITIES EV EN TOOK PAINS TO SUMMON THE REVENUE RECORDS OF THE CONCERNED E STATE TO ASCERTAIN THE ACTUAL FACT IT IS VERY MUCH EVIDENT NOT ON LY FROM THE LIST OF PAYEES BUT ALSO FORMING PART OF THE ENTI RE PROJECT DETAILS. COUPLED WITH THIS, WE FIND THAT ASSESSE ES TRAVELLING/CONVEYANCE, REPAIRS/MAINTENANCE CLAIMS QUA THE SAME STAND ACCEPTED BY THE ASSESSING OFFICER HIMSELF. THEIR ITA NO. 1922/HYD/2018 :- 20 -: LORDSHIPS HON'BLE APEX COURT IN S.A. BUILDERS LTD. VS . CIT [288 ITR 1] (SC) HELD LONG BACK THAT THE ELEMENT OF COMMERCI AL EXPEDIENCY HAS TO BE ADJUDGED NOT FROM THE DEPARTMENTS VIEW BUT FROM THAT OF THE TAXPAYER. CASE LAW 118 ITR 261 (SC) SASSOON J. DAVID & CO. P. LTD. VS. CIT ALSO HELD THAT THE CLINCHING EXPRESSING WHOLLY AND EXCLUSIVELY EMPLO YED IN SECTION 37 OF THE ACT DOES NOT MEAN NECESSARILY AND EV EN A VOLUNTARY PAYMENT COULD BE ALLOWED SO LONG AS IT IS I NCURRED FOR THE PURPOSE OF BUSINESS. WE WISH TO OBSERVE HERE THAT THE LEARNER LOWER AUTHORITIES HAVE FURTHER NOT QUESTIONED AS ASSESSEES SIMILAR EXPENSES IN SUCCEEDING AY.2015-1 6. WE THUS CONCLUDE THAT ALL THE THREE HEADS OF DISALLOWANCE( S) WE HEREIN TOTALLING TO RS.3.58 CRORES (SUPRA) DESERVE TO BE REVERSED. ORDER ACCORDINGLY. 13. LASTLY COMES ASSESSEES SIXTH SUBSTANTIVE GROUND S EEKING TO REVERSE 10% ESTIMATED DISALLOWANCE OF RS.6,61,380/ - OUT OF THE TOTAL CLAIM WHICH IS NOT PRESSED BEFORE US KEEPING IN MIND THE SMALLNESS THEREOF. ORDERED ACCORDINGLY. NECESSARY COMPUTATION SHALL FOLLOW AS PER LAW. 14. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH APRIL, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 09-04-2021 TNMM ITA NO. 1922/HYD/2018 :- 21 -: COPY TO : 1.M/S.VALUELABS LLP, C/O. P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2.THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-8(1) , HYDERABAD. 3. DISPUTE RESOLUTION PANEL (DRP), BENGALURU. 4. DIRECTOR OF INCOME TAX (IT & TP), HYDERABAD. 5. ADDL.COMMISSIONER OF INCOME TAX (TRANSFER PRICIN G), HYDERABAD. 6.D.R. ITAT, HYDERABAD. 7.GUARD FILE.