The DCIT(A) Central Circle-(Inv) 1(2), Ahmedabad V. M/S Gujarat Ambuja Proteins Ltd, Ahmedabad

ITA 204/AHD/1999

• Counselvise Citation: 20420514 RSA 1999
• Duration Of Justice: 13 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-06-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 01-02-1999
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N SOPARKAR
• Keywords: Business income; Depreciation; Business expenditure; Opportunity of being heard; Retrospective amendment; Initiation of penalty proceedings; Speculation loss; Tax effect; Unabsorbed depreciation; Bonafide mistake; Revenue expenditure; Capital expenditure
• Section: 143(3); 80HHC; 234B; 37(1); 10B; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.113 / AHD/1999 (ASSESSMENT YEAR 1993-94) GUJARAT AMBUJA COTSPIN LTD., AMBUJA TOWER, OP. MEMNAGAR FIRE STATION, POST NAVJIVAN NAVRANGPURA, AHMEDABAD -14 VS. ACIT, CENTRAL CIRCLE 1(2), AHMEDABAD I.T.A.NO. 203/AHD/1999 (ASSESSMENT YEAR 1993-94) ACIT, CENTRAL CIRCLE 1(2), VS. GUJARAT AMBUJA COTSP IN LTD. AHMEDABAD AMBUJA TOWER, OPP. MEMNAGAR FIRE STATION, POST NAVJIVAN, NAVRANGPURA, AHMEDABAD I.T.A.NO.1944/AHD/2000(ASSESSMENT YEAR 1995-96) I.T.A.NO. 1964/AHD/2009 (ASSESSMENT YEAR 2004-05) I.T.A.NO. 202/AHD/1999 (ASSESSMENT YEAR 1993-94) I.T.A.NO. 1965/AHD/2009 (ASSESSMENT YEAR 2005-06) JCIT, SR-8, VS. GUJARAT AMBUJA EXPORTS LTD AHMEDABAD AMBUJA TOWER, OPP. MEMNAGAR FIRE STATION AHMEDABAD I.T.A.NO. 204/AHD/1999 (ASSESSMENT YEAR 1993-94) I.T.A.NO. 2003/AHD/2008 (ASSESSMENT YEAR 1993-94) DCIT, CENTRAL CIRCLE 1(2), VS. GUJARAT AMBUJA PROTE INS LTD. AHMEDABAD OPP. MEMBAGAR FIRE STATION, NAVRANGPURA, AHMEDABAD I.T.A.NO. 1860/AHD/2000 (ASSESSMENT YEAR 1995-96) I.T.A.NO. 1539/AHD/2009 (ASSESSMENT YEAR 2005-06) I.T.A.NO. 1538/AHD/2009 (ASSESSMENT YEAR 2004-05) I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 2 GUJARAT AMBUJA EXPORTS LTD., VS. ACIT, CENTRAL CIR CLE 1(2), AMBUJA TOWER, OPP. MEMNAGAR AHMEDABAD FIRE STATION, NAVRANGPURA, AHMEDABAD PAN/GIR NO. : (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S N SOPARKAR, AR RESPONDENT BY: SHRI ANIL KUMAR, DR DATE OF HEARING: 21.06.2012 DATE OF PRONOUNCEMENT: 20.07.2012 O R D E R PER SHRI A. K. GARODIA, AM:- OUT OF THIS BUNCH OF 11 APPEALS, SEVEN APPEALS ARE IN THE CASE OF GUJARAT AMBUJA EXPORTS LD. THIS INCLUDES ONE APPEA L OF THE REVENUE FOR THE ASSESSMENT YEAR 1993-94 AND CROSS APPEALS OF TH E ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEARS 1995-96, 2004-05 A ND 2005-06. THE REMAINING FOUR APPEALS INCLUDE TWO CROSS APPEALS OF THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEAR 1993-94 IN THE CASE S OF GUJARAT AMBUJA COTSPIN LTD. AND TWO APPEALS IN THE CASE OF GUJARAT AMBUJA PROTEINS LTD., ONE IN QUANTUM AND ONE IN PENALTY. ALL THESE APPEA LS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON OR DER FOR THE SAKE OF CONVENIENCE. 2. IT WAS AGREED BY BOTH THE SIDES THAT THE APPEAL OF THE REVENUE IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSM ENT YEAR 1993-94 IS THE LEAD MATTER AND THIS SHOULD BE DECIDED FIRST AN D THEREAFTER THE OTHER APPEALS CAN BE DECIDED AND ON RELATED ISSUES, THIS ORDER IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. CAN BE FOLLOWED IN OTHE R APPEALS. WE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 3 THEREFORE, TAKE UP THIS APPEAL OF THE DEPARTMENT I. E. I.T.A.NO. 202/AHD/1999. 3. GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE OF LOSS OF RS.45,60,792/- TOTALLY IGNO RING THE EVIDENCES RELIED UPON BY THE ASSESSEE. 2. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE OF LOSS OF RS.23,10,255/- MADE BY A.O. TOTALLY DISREGARDING THE FACTS AND CIRCUMSTANCES AS NARRATE D BY THE A.O. 3. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE OF RS.91.46 LACS ON ACCOUNT OF GODOWN HIRE CHARGES WITHOUT APPRAISING THE EVIDENCES DISCUSSED BY THE A .O. IN THE ORDER. 4. CIT(A) HAS ERRED ON FACTS AND IN LAW IN GIVING R ELIEF IN REGARD TO DEDUCTION U/S 80HHC OF RS.65,57,776/- WHI CH IS IN FACTS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE . 5. CIT(A) OUGHT TO HAVE APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SHOULD HAVE CONFIRMED THE ORDER OF THE A.O. IN DISALLOWING THE LOSS OF RS.95.55 LACS W HICH WAS NOTHING BUT SUBTERFUGE ADOPTED BY THE ASSESSEE FOR REDUCING HIS TAXABLE INCOME. 3.1 REGARDING GROUND NO.1, BRIEF FACTS TILL THE ASS ESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 4.2 OF HIS ORDER WHICH IS REPRODUCED BELOW: 4.2 THE FATS OF THE CASE ARE THAT THE APPELLANT AN D ITS GROUP CONCERNS HAVE CLAIMED /DECLARED BELOW MENTIONED LOS S/PROFIT IN THE TRANSACTION OF SALE & PURCHASES WITHIN THE GROUP CO MPANIES. GUJARAT AMBUJA EXPORTS LTD. RS.45,60,792/- (LOSS) GUJARAT AMBUJA PROTEINS LTD. RS.98,78,546/- (LOSS) GUJARAT AMBUJA COTSPIN LTD., RS.1,44,39,338/- (PROF IT) THE LOSS CLAIMED BY THE APPELLANT COMPANY AND GUJAR AT AMBUJA PROTEINS LTD. HAS BEEN DISALLOWED IN THE RESPECTIVE ASSESSMENTS ON THE GROUND THAT THE TRANSACTIONS WITHIN THE GROUP A RE' NON-GENUINE AND ON PAPER ONLY, FOR THE SAME REASONS THE INCOME DECLARED BY GUJARAT AMBUJA COTSPIN LTD. HAS BEEN HELD IN ITS AS SESSMENT ORDER TO BE NOT PROVED FROM THESE TRANSACTIONS HUT TAXED AS INCOME FROM OTHER SOURCES. IN THE APPELLANT'S CASE THE FACTS O F THE CASE AND THE REASONS FOR THE DISALLOWANCE HAVE BEEN DEALT WITH I N DETAIL BY THE ASSESSING OFFICER ON PAGES 3,4 AND 5 OF THE ASSESSM ENT ORDER. THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 4 ASSESSING OFFICER WHILE DISALLOWING THE LOSS IN RES PECT OF TRANSACTIONS IN SOYA DOC HAS FOLLOWED THE DIRECTION S OF THE DCIT U/S 144A GIVEN BY THE DCIT IN RESPECT OF TRANS ACTIONS IN WHEAT, LOSSES SUFFERED BY THE APPELLANT FROM WHICH ARE ALSO SUBJECT MATTER OF THIS APPEAL IN GROUND NO.5. THE LOSS ON TRANSACTIONS IN SOYA DOC HAS BEEN DISALLOWED FOR THE REASONS SUMMAR ILY MENTIONED BELOW :- (1) THE SALE& PURCHASE TRANSACTIONS ARE BETW EEN THE GROUP CONCERNS ONLY AND THEY ARE NON-GENUINE AND ON PAPER ONLY. (2) NO INCIDENTAL EXPENSE LIKE TRANSPORTATION ETC. IN RESPECT OF THESE TRANSACTIONS HAVE BEEN DEBITED IN THE BOOKS O F ACCOUNTS (3) ALTERNATIVELY, THE LOSS/PROFIT FROM THESE TRANSACTIONS IS REQUIRED TO BE CONSIDERED AS SPECULATIVE IN NATURE AS THE TRANSACTIONS ARE NOT SUPPORTED BY ACTUAL DELIVERY O F GOODS. (4) THE TRANSACTIONS HAVE SIMPLY BEEN SHOWN TO REDU CE TAX LIABILITY. 3.1.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS DISALLOWANCE AND NO W, THE REVENUE IS IN APPEAL BEFORE US. 3.1.2 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITT ED THAT THE DETAILS OF PURCHASE, SALES AND STOCKS ARE AVAILABLE IN THE PAP ER BOOK ON PAGES 62- 105, 106-128 AND 129-146 RESPECTIVELY. HE ALSO POI NTED OUT THAT THE DIRECTIONS OF ADDL. CIT U/S 144A IS AVAILABLE ON PA GE 208 OF THE PAPER BOOK. 3.1.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PA RA 4.5.1 TO 4.5.6 AND 4.6 OF HIS ORDER WHICH ARE REPRODUCED BELOW: 4.5.1 I HAVE CONSIDERED THE FACTS OF THE CASE , THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER AS WELL AS IN HIS REMAND REPORT AND THE SUBMISSIONS OF THE APPELLANT- COMPANY VERY CAREFULLY. IT IS TRUE THAT THE TRANSA CTIONS OF SOYA DOC ARE AMONGST THE GROUP COMPANIES ARID ON SUCH TR ANSACTIONS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 5 THE APPELLANT-COMPANY HAS SHOWN TO HAVE INCURRED A LOSS OF RS. 45,60,792/- AND GUJARAT AMBUJA COTSPIN LTD. HAS SHO WN A PROFIT ON SUCH TRANSACTIONS. IT IS ALSO TRUE THAT THE PRO FIT EARNED BY GUJARAT AMBUJA COTSPIN LTD. HAS BEEN SHOWN IN ITS B ALANCE SHEET AS WELL AS IN THE RETURN OF INCOME FOR THE VERY SAM E ASSESSMENT YEAR. ALL THESE THREE COMPANIES I.E. THE APPELLANT COMPANY, GUJARAT AMBUJA COTSPIN LTD. AND GUJARAT AMBUJA PROT EINS LTD. ARE ASSESSED BY THE SAME ASSESSING OFFICER. THE MA IN CONTENTION OF THE A.O. WHILE DISALLOWING THE LOSS IS THAT THES E TRANSACTIONS ARE FOUND TO BE NON-GENUINE AND ON PAPER ONLY. HE HAS FURTHER STATED THAT THE TRANSACTIONS ARE WITH A VIEW TO REDUCE THE TAXABLE INCOME. HE HAS PLACED HEAVY RELIANCE ON THE DIRECTIONS ISSU ED U/S 144A, PERTAINING TO TRADING IN WHEAT BY THE GROUP CONCERN S BECAUSE ACCORDING TO HIM THE IMPUGNED TRANSACTIONS IN SOYA DOC ARE IDENTICAL WITH THAT OF TRADING IN WHEAT IN ASSESSME NT YEAR 91-92 WHEREIN THE ISSUE HAS ALREADY BEEN DECIDED AGAINST THE COMPANY IN THE CASE OF GUJARAT VITA PHARMA LTD. 4.5.2 COMING TO THE IMPUGNED TRANSACTIONS AS IT IS, IT IS CLEAR THAT THE RESPECTIVE COMPANIES HOVE RECORDED IN THEIR BOO KS OF ACCOUNT, THE IMPUGNED TRANSACTIONS, THE SHAREHOLDERS OF THE COMPANIES HAVE APPROVED THE ACCOUNTS/ WHICH INCLUDE THE IMPUGNED T RANSACTIONS OF PURCHASE AND SALE OR EACH OF THE THREE COMPANIES AN D THE PAYMENTS FOR THE PURCHASE BY THE RESPECTIVE COMPANIES HAVE B EEN MADE BY ACCOUNT PAYEE CHEQUES AND RECORDED IN THEIR BOOKS O F ACCOUNTS. THIS IS SUPPORTED BY THE COPIES OF ACCOUNTS OF GUJA RAT AMBUJA PROTEINS LTD- AND AMBUJA AGRO INDUSTRIES LTD. WHICH WERE FILED AND ARE PLACED ON PAGE NOS. 153 TO 169 AND 203 TO 2 06 OF THE PAPER BOOK. THESE ARE THE TWO PARTIES FROM WHOM TH E IMPUGNED PURCHASES OF SOYA DOC WERE MADE BY THE APPELLANT CO MPANY. COPY OF ACCOUNTS OF GUJARAT AMBUJA COTSPIN LTD. WAS ALSO FILED, WHICH IS PLACED ON PAGE NOS. 179 TO202 OF THE PAPER BOOK, TO WHOM SOYA DOC WAS SOLD BY THE APPELLANT COMPANY. C OPY OF THE SALES TAX ASSESSMENT ORDER HAS ALSO BEEN MADE AVAIL ABLE AT PAGE NO.147 TO 152 OF THE PAPER BOOK. FROM THESE DOCUME NTS, IT IS ABSOLUTELY CLEAR THAT THE TRANSACTIONS ARE DUL Y RECORDED IN THE BOOKS OF ACCOUNTS OF THE RESPECTIVE COMPANI ES, THEY HAVE? 'BEEN FOLLOWED BY ACTUAL PAYMENTS AND THEY ARE ALSO SHOWN IN THE SALES TAX RETURNS FILED BY THE APPELLANT C OMPANY. SALES TAX RETURNS ALSO PROVIDE INDEPENDENT CONTEMPORARY EVI DENCE OF GENUINENESS OF THE TRANSACTIONS THUS IT. C AN NOT BE SAID THAT THE TRANSACTIONS WERE ONLY ON PAPER AS CLAIMED BY THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 6 ASSESSING OFFICER. NOT ONLY THIS, XEROX OF THE PURCHASE BOOK PERTAINING TO SOYA DOC SALES BOOK AS WELL AS STO CK REGISTER WERE ALSO MADE AVAILABLE, WHICH ARE PLACED ON PAGE S NOS. 62 TO 146 OF THE PAPER BOOK. FROM THE PERUSAL OF THE SAID DOCUMENTS, IT IS ABSOLUTELY CLEAR THAT THE TRANSACTI ONS ARE ALSO RECORDED IN THE SALES AND PURCHASES REGISTERS AS W ELL AS IN THE STOCK REGISTER. IN THE STOCK REGISTER THE DATE W ISE POSITION OF STOCK IN QUANTITY OF SOYA DOC IS ALSO INDICATED, FROM A PERUSAL OF WHICH IT IS CLEAR THAT ON THE DATE OF S ALE THERE WERE SUFFICIENT QUANTITIES AVAILABLE WITH THE APPEL LANT COMPANY. IT IS ALSO IMPORTANT TO NOTE HERE THAT ALL THESE DOCUMENTS WERE SENT TO THE A.O. BUT IN HIS REMAND - REPORT, HE HAS SIMPLY REITERATED HIS ARGUMENTS AS MADE IN THE ASSESSMENT ORDER THAT SUCH TRANSACTIONS ARE ONLY ON PAPER , WHICH IS NOT CORRECT IN VIEW OF ABOVE MENTIONED FACTS AND DOCUMENTARY EVIDENCES. 4.5.3 COMING TO THE DIRECTIONS OF THE DCIT U/S 144A OF THE ACT ON THE BASIS OF WHICH THE LOSS HAS BEEN DISALLOWED BY THE A.O. MY ATTENTION WAS DRAWN TO THE SAID DIRECTIONS, PLACED ON PAGE NOS. 208 TO 209 OF THE PAPER BOOK, FROM WHICH IT IS ABSOLUTE LY CLEAR THAT THE SAID DIRECTIONS WERE ISSUED BY THE DCIT, PERTAINING TO TRADING IN WHEAT BY THE CONCERNS OF THE GROUP AND THE SAME WAS NOT PERTAINING TO THE TRANSACTIONS IN SOYA DOC. MOREOV ER, THE AMOUNTS OF PROFIT AND LOSS MENTIONED IN THE SAID DI RECTIONS WERE ALSO PERTAINING TO WHEAT AND NOT PERTAINING TO SOYA DOC. SINCE THE DISALLOWANCE OF LOSS IN THE TRADING OF WHEAT HA S ALSO BEEN CHALLENGED BY THE APPELLANT IN THIS APPEAL, THIS IS SUE IS SEPARATELY CONSIDERED IN THIS APPELLATE ORDER, AND, HAS BEEN D ISCUSSED IN PARA 5.5 RELATING TO LOSS ON TRANSACTIONS IN WHEAT AS HA S BEEN HELD IN THIS PARA, EVEN IN RESPECT OF WHEAT, THE FACTS OF THE CA SE AND THE TRANSACTIONS IN ASSESSMENT YEAR 1993-94 ARE MATERIA LLY DIFFERENT FROM THE FACTS OF THE CASE AND THE TRANSACTIONS IN WHEAT IN ASSESSMENT YEAR 1991-92 IN GUJARAT VITA PHARMA LTD. IN FACT, I NAY 1993-94, THE FACTS OF THE CASE AND THE TRANSACTIONS ARE SIMILAR IN WHEAT AND SOYA DOC AS HAS ALSO BEEN HELD BY THE A.O .. THEREFORE, THE A.O. WAS WRONG IN RELYING UPON ASSES SMENT ORDER AND APPELLATE ORDER FOR ASSESSMENT YEAR 1991-92 IN THE CASE OF GUJARAT VITA PHARMA LTD., FOR DISALLOWING THE IMPUG NED LOSS. 4.5.4 ONE OF THE OBSERVATIONS OF THE A.O. WAS THAT SUCH TRANSACTIONS WERE DONE WITH A VIEW TO REDUCE THE TA XABLE INCOME. FOR THIS, A SPECIFIC QUERY WAS RAISED TO THE AUTHOR IZED I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 7 REPRESENTATIVE OF THE APPELLANT IN RESPONSE TO WHIC H MY ATTENTION WAS DRAWN TO THE SUBMISSION DATED 22 ND DECEMBER, 1997, WHICH HAS BEEN FILED DURING THE COURSE OF APPEAL HEARING. IT WAS THE CLAIM OF THE APPELLANT THAT THESE TRANSACTION WERE NOT WITH ANY INTENTION TO REDUCE THE TAXABLE INCOME AS IS CLEAR FROM THE FACT THAT EVEN BY IGNORING THE LOSS AND THE PROFIT IN SOYA DO C AND WHEAT, THE TAXABLE INCOME OF ALL THE FOUR GROUP COMPANIES TAKEN TOGETHER WILL BE INCREASED ONLY BY AN AMOUNT OF RS.25,979/-, WHICH WILL HAVE A TAX EFFECT OF ONLY RS.13,446/- @ 51.75%, INC LUDING SURCHARGE. THIS WAS BECAUSE THE RETURNED INCOME, W HICH WAS AFTER CONSIDERING THE TRANSACTIONS IN SOYA DOC AND WHEAT, WAS FOR THE POSITIVE INCOME AND EVEN IF THE PROFIT /LOSS ON SUC H TRANSACTIONS ARE IGNORED THERE REMAINS TAXABLE INCOME WITH A MINOR C HANGE OF RS.25,979/- DUE TO NEGATIVE OTHER INCOME IN THE CAS E OF GUJARAT VITA PHARMA LTD. THUS THE ARGUMENT OF THE A.O. THAT THESE TRANSACTIONS WERE WITH A VIEW TO REDUCE THE TAXABLE INCOME FINDS NO SUPPORT FROM THE FACTUAL POSITION. 4.5.5 THE APPELLANT COMPANY WHICH HAS SUFFERED LOSS OF RS.45,60,792/- AND GUJARAT AMBUJA PROTEINS LTD., WH ICH HAS SUFFERED LOSS OF RS.98,78,546/- ARE BOTH PUBLIC LIM ITED COMPANIES AS IS THE COMPANY GUJARAT AMBUJA COTSPIN LTD. WHICH HAS EARNED PROFIT OF RS.1,44,39,338/-. IT WOULD THEREFORE, HA VE NOT BEEN POSSIBLE FOR THE COMPANIES SUFFERING LOSSES TO HAVE BEEN A PARTY TO ANY NON-GENUINE TRANSACTION RESULTING INTO LOSS FOR THEIR SHARE HOLDERS. 4.5.6 COMING TO THE ALTERNATIVE FINDING OF THE A.O. THAT THE IMPUGNED LOSS OF RS.45,60,792/- IS A SPECULATIVE LO SS AS IT IS NOT SUPPORTED BY ACTUAL DELIVERY OF THE GOODS, THIS FIN DING IS ALSO NOT CORRECT, AS THE APPELLANT COMPANY HAS ALREADY FILED THE DOCUMENTARY EVIDENCES SHOWING DELIVERY OF THE STOCK , THE TRANSACTIONS BEING RECORDED IN THE STOCK REGISTER A ND THE IMPUGNED SALES AND PURCHASES HAVING BEEN SHOWN IN THE SALES TAX RETURN AND IT CANNOT BE SAID THAT SUCH TRANSACTIONS WERE WITHO UT ACTUAL DELIVERY AND, THEREFORE, THE IMPUGNED TRANSACTIONS CANNOT BE CONSIDERED AS SPECULATIVE IN NATURE. IT HAS ALSO B EEN BROUGHT TO MY NOTICE DURING THE COURSE OF APPEAL HEARING THAT THE TRANSACTIONS CANNOT BE SPECULATIVE IN NATURE IN VIEW OF THE FACT THAT THE PURCHASES AND SALE WERE FROM DIFFERENT COMPANIES AN D SINCE THE PURCHASES AND SALES WERE NOT TO THE SAME COMPANY IT IS NOT POSSIBLE TO TERM THE TRANSACTIONS AS SPECULATIVE IN NATURE AND WITHOUT ACTUAL DELIVERY. IN THE ABSENCE OF ACTUAL DELIVERY, THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 8 STOCK COULD NOT HAVE BEEN PASSED ON FROM ONE COMPAN Y TO THE OTHER COMPANY. RELIANCE PLACED BY THE A.O. ON CERT AIN CASE LAWS IN HIS REMAND REPORT ARE FOUND TO BE NOT RELEVANT T O THE ISSUE ON HAND AS THEY ARE DIFFERENT ON FACTS. 4.6 THUS, IN VIEW OF THE FACTS AND IN VIEW OF MY OB SERVATIONS AS DRAWN ABOVE, THE SAID TRANSACTIONS IN SOYA DOC ARE REQUIRED TO BE CONSIDERED AS GENUINE TRANSACTIONS, NOT ON PAPER ONLY AND NOT WITH A VIEW TO EVADE TAX AND THEY CANNOT BE CONSIDE RED AS SPECULATIVE IN NATURE. THEREFORE, THE LOSS INCURR ED BY THIS APPELLANT COMPANY OF RS.45,60,792/- ON SUCH TRANSAC TIONS OF SOYA DOC IS REQUIRED TO BE ALLOWED AS DEDUCTION AND THE ADDITION MADE BY THE A.O. IS HEREBY DIRECTED TO BE DELETED. SO THIS GROUND OF APPEAL IS ALLOWED. 3.1.4 FROM THE ABOVE PARAS OF THE ORDER OF LD. CIT( A), WE FIND THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) THAT THESE TRA NSACTIONS WERE NOT WITH THE INTENTION TO REDUCE TAXABLE INCOME BECAUSE EVEN IF THE LOSS AND PROFIT IN SOYA DOC AND WHEAT ARE IGNORED, THE TAXABLE INCO ME OF ALL THE FOUR GROUP COMPANIES TAKEN TOGETHER WILL INCREASE ONLY B Y AN AMOUNT OF RS.25,979/- WHICH WILL HAVE THE TAX EFFECT OF RS.13 ,446/- ONLY. THIS FINDING IS ALSO GIVEN BY LD. CIT(A) THAT THE COMPA NY GUJARAT AMBUJA EXPORT LTD. AND GUJARAT AMBUJA PROTEINS LTD. WHICH HAD SUFFERED LOSSES, ARE BOTH PUBLIC LIMITED COMPANIES AND HENCE, IT WOU LD HAVE NOT BEEN POSSIBLE FOR THESE COMPANIES TO BE A PARTY OF ANY N ON GENUINE TRANSACTION RESULTING INTO LOSS FOR THEIR SHAREHOLDERS. REGARD ING THE ALTERNATIVE FINDING OF THE A.O. THAT THIS IS A SPECULATIVE LOSS , A CLEAR FINDING IS GIVEN BY LD. CIT(A) THAT ASSESSEE HAS ALREADY FURNISHED D OCUMENTARY EVIDENCE SHOWING DELIVERY OF STOCKS AND THE TRANSACTIONS WER E RECORDED IN THE STOCK REGISTER AND THESE PURCHASES AND SALES WERE S HOWN IN THE SALES TAX RETURN. THESE FINDINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R. AND HENCE, WE DO NOT FIND ANY REASON TO IN TERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 9 3.1.5 IN THE RESULT, GROUND NO.1 IS REJECTED. 3.2 REGARDING GROUND NO.2 OF THE REVENUE, BRIEF FAC TS TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 5. 2 OF HIS ORDER WHICH IS REPRODUCED BELOW: 5.2 THE FACTS OF THE CASE ARE THAT THE APPELLA NT AND ITS GROUP CONCERNS HAVE CLAIMED/DECLARED BELOW MENTIONED LOSS /PROFIT IN THE TRANSACTIONS OF SALES AND PURCHASES WITHIN THE GROU P COMPANIES: GUJARAT AMBUJA EXPORTS LTD. RS. 23,10,255 (LOSS) GUJARAT AMBUJA COTSPIN LTD. RS. 1,09,726 (PROFIT) GUJARAT AMBUJA PROTEINS LTD. RS. 21,74,516 (PROFIT) GUJARAT VITA .PHARMA LTD. RS. 26,013 (PROFIT) THE LOSS CLAIMED BY THE APPELLANT HAS BEEN DISALLOW ED ON THE GROUND THAT THE TRANSACTIONS WITHIN THE GROUP ARE N ON-GENUINE AND ON PAPER ONLY. FOR THE SAME REASONS THE INCOME DEC LARED BY OTHER 3 CONCERNS MENTIONED ABOVE HAS BEEN HELD IN THEIR A SSESSMENT ORDER TO BE NOT PROVED FROM THESE TRANSACTIONS BUT TAXED AS INCOME FROM OTHER SOURCES- IT APPEARS FROM THE ASSESSMENT ORDER IN THE CASE OF THE APPELLANT' THAT IN MAKING THE ABOVE ADDITION THE ASSESSING OFF ICER HAS FOLLOWED THE ASSESSMENT ORDERS IN THIS GROUP OF CAS ES FOR THE EARLIER ASSESSMENT YEARS 91-92 AND 92-93 WHEREIN IT WAS HEL D THAT THE TRADING IN WHEAT AMONGST THE GROUP CONCERNS WAS NOT GENUINE AND WAS ONLY ON PAPER. IT ALSO APPEARS FROM THE ASSESS MENT ORDER THAT THE APPELLANT SOUGHT DIRECTIONS FROM THE DCIT U/S 1 44A AND LATTER ISSUED DIRECTIONS TO THE ASSESSING OFFICER IN ALL T HE CASES OF THE GROUP. PERUSAL OF THE DCIT'S ORDER U/S 144A DATED 7 .3.96 IN THE CASE OF THE APPELLANT PLACED AT PAGES 208 AND 209 O F THE PAPER BOOK SHOWS THAT THE DCIT HAS BASED HIS DECISION ON THE ASSESSMENT S IN THE CASE OF GUJARAT VITA PHARMA LTD . FOR THE ASSESSMENT YEAR 1991-92 AND GUJARAT AMBUJA COTSPIN LTD. FOR THE ASSESSMENT YEAR 1992-93 AND CONFIRMATION OF ALL THE SE ASSESSMENTS BY CIT(A) XII. IN THE LETTER IT IS MENTIONED THAT THE DETAILED DISCUSSION IS GIVEN IN THE ORDER U/S 144A FOR ASSESSMENT YEAR 93-94 IN THE CASE OF GUJARAT AMBUJA PROTEINS LTD- END! DIRECTED THE ASSESSING OFFICER TO DISALLOW LOSS IN WHEAT TRADING IN THE CASE OF THE APPELLANT COMPANY. THE PERUSAL OF THE ORDER U/S 144A IN THE CASE OF- GUJARAT A MBUJA PROTEINS LTD SHOWS THAT PARAS 9 AND 10 OF THE ORDER READ AS UNDER : I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 10 9. IN VIEW OF THE ABOVE DISCUSSION I DIRECT THAT SINCE THE CONCERNS OF GAPL GACL AND GUJARAT VITA PHARMA LTD. HAVE SHOWN PROFIT FROM WHEAT TRADING, THE SAME HAS TO BE BROUGHT TO TAX AS INCOME FROM UNDISCLOSED/ UNEXPLAINED SOURCES AS HELD BY THE ASSESSING OFFICER IN EARLIER ASSESSMENT ORDER I N THE CASE OF GAPL AND CONFIRMED BY THE CIT(A). 10. SIMILARLY THE LOSS SHOWN IN THE HANDS OF GAEL , IT IS AGREED BY THE ASSESSEE THAT THE TRANSACTIONS OF WHEAT TRAD ING ARE NOT GENUINE AND EXIST ON PAPER ONLY. HENCE, THE LOSS HAS TO BE DISALLOWED. FOLLOWING THE SAID DIRECTIONS, THE ASSESSING OFFICE R MADE ABOVE MENTIONED ADDITION. FOLLOWING THESE DIRECTION THE ASSESSING OFFICER DISALLOWED THE LOSS FROM TRANSACTIONS IN WH EAT IN THE CASE OF THE APPELLANT AND TREATED THE INCOMES FROM THESE TRANSACTIONS DECLARED BY THE OTHER 3 CONCERNS AS INCOME FROM OTH ER SOURCES. 3.2.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS DISALLOWANCE AND NO W, THE REVENUE IS IN APPEAL BEFORE US. 3.2.2 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITT ED THAT THE BASIS OF THE ORDER OF ADDL. CIT U/S 144A IS THIS THAT THE AS SESSMENT ORDER ON THIS ISSUE IN THE CASE OF GAPL WAS CONFIRMED BY LD. CIT( A). HE SUBMITTED THAT THE ORDER OF LD. CIT(A) IN THE CASE OF GAPL HA S BEEN SET ASIDE BY THE TRIBUNAL IN I.T.A.NO. 3740/AHD/1995 DATED 28.02 .2007 AND HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. HE FUR THER SUBMITTED THAT NOTHING IS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT AGAIN THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY LD. CIT(A) AND THE TRIBUNAL . HE ALSO SUBMITTED THAT LIKE THE FIRST GROUND, FOR THIS ISSUE ALSO, THE TAX EFFECT IS NEGLIGIBLE I.E. RS.13,446/- IF THESE TRANSACTION S ARE IGNORED IN ALL THE GROUP COMPANIES. 3.2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERU SED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. THIS ISSUE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 11 HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 5.5.9, W HICH IS REPRODUCED BELOW: 5.5.9 THUS, THE IMPUGNED TRANSACTIONS CANNOT BE CO NSIDERED AS NON-GENUINE AND WITH A VIEW TO REDUCE THE TAXABLE I NCOME. THE MODUS OPERANDI OF THE OTHER ASSESSEES IN OTHER ASSE SSMENTS CANNOT BE MADE APPLICABLE TO THE IMPUGNED TRANSACTIONS AS THE FINDINGS AND CIRCUMSTANCES OF THE TRANSACTIONS CARTE TOTALLY DIFFERENT AND THE TRANSACTION ARE FOLLOWED BY THE ACTUAL DELIVERY DUL Y CONFIRMED BY THE RESPECTIVE BUYERS AND SUPPLIERS WHICH ARE BEING DIFFERENT PARTIES. IN VIEW OF THE ABOVE FACTS, THE LOSS CLAI MED BY THE APPELLANT COMPANY OF RS.23,10,255/- ON THE TRANSACT IONS OF WHEAT IS REQUIRED TO BE ALLOWED AS DEDUCTION. THE A.O. I S DIRECTED TO ALLOW LOSS OF RS.23,10,255/-. THE OTHER OBSERVATIO NS OF THE A.O. THAT ALTERNATIVELY THE LOSS IS SPECULATIVE NATURE IS ALSO NOT CORRECT AS THE TRANSACTION ARE SUPPORTED BY ACTUAL DELIVERY IN VIEW OF THE EVIDENCES FURNISHED. 3.2.4 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ) WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT THE TRANSACTIONS ARE F OLLOWED BY ACTUAL DELIVERY CONFIRMED BY RESPECTIVE BUYERS AND SUPPLIE RS WHICH ARE DIFFERENT PARTIES AND THEREFORE, THE MODUS OPERANDI OF OTHER ASSESSEES IN OTHER ASSESSMENTS CANNOT BE MADE APPLICABLE IN THE PRESEN T CASE. THIS IS ALSO NOTED BY LD. CIT(A) IN HIS ORDER THAT IF THE TOTAL TRANSACTION OF 5 TH DECEMBER AND ONWARDS ARE IGNORED IN THE HANDS OF AL L THE FOUR GROUP COMPANIES, THE TAX EFFECT IS VERY SMALL OF RS.13,44 6/- ONLY. IF THE TRANSACTION IS HELD TO BE BOGUS IN THE HANDS OF THI S COMPANY WHICH HAS INCURRED LOSS ON ACCOUNT OF SUCH TRANSACTION, IT HA S TO BE HELD AS BOGUS IN THE HANDS OF OTHER COMPANIES ALSO WHICH IS SHOWING INCOME ON ACCOUNT OF THE SAME TRANSACTION AND HENCE, THE TOTAL IMPACT HAS TO BE SEEN WHICH IS VERY MARGINAL. SINCE EVIDENCE HAS BEEN FURNISHE D REGARDING DELIVERY DULY CONFIRMED BY RESPECTIVE BUYERS AND SUPPLIERS A ND SINCE THESE FINDINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY LD. D.R., WE ARE OF I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 12 THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.2 IS ALSO REJ ECTED. 3.3 REGARDING GROUND NO.3, THE FACTS TILL THE ASSES SMENT STAGE ARE NOTED BY LD. CIT(A) IN HIS ORDER IN PARA 7.1 & 7.2 WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 7.1 THE GROUND NO. 7 RELATES TO THE DISALLOW ANCE OF RS.91,46,000/- BEING PAYMENT OF GODOWN HIRE CHARGES . THE FACTS AS PER THE ASSESSMENT ORDER ARE THAT ON VERIFICATIO N OF THE P & L ACCOUNT, THE ASSESSING OFFICER NOTICED THAT THE APP ELLANT HAD DEBITED RS.91.46 LACS AS GODOWN RENT FOR THE FIRST TIME IN THIS ASSESSMENT YEAR, PAYABLE TO M/S. COASTAL ROADWAYS L TD., WHICH WAS HAVING ITS HEAD QUARTERS AT CALCUTTA AND REGION AL OFFICE AT MUMBAI. THE 'APPELLANT'S EXPLANATION WAN THAT THE GODOWN RENT WAG PAYABLE TO THE SAID CRL AS PER AGREEMENT DATED 22.6.1992. FOR A PERIOD OF 9 MONTHS FROM JULY, 1992 TO MARCH, 1993 FOR PROVIDING WARE-HOUSING FACILITIES/GODOWNS AT PORBANDAR, KANDA -LA, DWARKA AND AHMEDABAD. THE CHARGES PAYABLE BY THE APPELLAN T, AS PER THE SAID AGREEMENT WERE RS. 4/- PER SQ. FT. AS SERVICE CHARGES, WHICH INCLUDED PROVISION FOR GODOWNS/WAREHOUSES, SPACE, L OADING, UNLOADING, THAPPI, VERAI, AT STACKING OF BAGS, SUP ERVISION, NO- ORDINATION WITH LOCAL PARTIES, CLEANING & MAINTENAN CE ETC. IT WAS ALSO STATED THAT THE PAYMENT OF SERVICE CHARGES WAS COMPULSORY, IRRESPECTIVE OF THE UTILIZATION OF GODOWN SPACE AND ALLIED SERVICES. THE ASSESSING OFFICER EXAMINED THE SAID AGREEMENT I N DETAIL AND EXTRACTED SOME DETAILS ON PAGES 9& 10 OF THE ASSESS MENT ORDER. IT APPEARS THAT IN CONNECTION WITH THIS CLAIM OF THE A PPELLANT, THE STATEMENT OF ONE SHRI M.L.PAREEK, SR. REGIONAL MANA GER OF CRL WAS RECORDED U/S 131. THE DETAILS OF SUCH STATEMEN T ARE GIVEN ON PAGES 10 & 11 OF THE ASSESSMENT ORDER. ENQUIRIES S EEM TO HAVE BEEN MADE AT CALCUTTA OFFICE OF CRL ALSO, THE RESUL T OF WHICH IS NARRATED ON PAGE 14 OF THE ASSESSMENT ORDER. FROM T HE SAID ENQUIRIES, THE ASSESSING OFFICER FOUND THAT THE APP ELLANT HAS NOT BEEN ABLE TO ESTABLISH THE NECESSITY AND BUSINESS E XPEDIENCY OF HIRING OF LARGE SCALE GODOWNS, THAT THE GODOWNS ITS ELF WERE NOT EXISTENCE AND HENCE, THE AGREEMENT COULD NOT BE VAL IDLY ACCEPTED IN THE EYE OF LAW, THAT THIS WAS ONLY A PAPER TRANS ACTION THAT THIS WAS MERELY AN AFTER THOUGHT WITH A VIEW TO REDUCE THE TAX LIABILITY OF THE APPELLANT COMPANY AND, THER EFORE, THE CLAIM CANNOT BE ALLOWED AS GENUINE BUSINESS EXPEND ITURE AS NO I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 13 SERVICES WERE UTILIZED DURING THE COURSE OF BUSINESS* THE ASSESSES WAS ACCORDINGLY SERVED WITH A SHOW CAUSE NOTICE AS TO WHY CLAIM OF DEDUCTION OF GODOWN RENT & SE RVICE CHARGES AS MENTIONED IN THE AGREEMENT SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME. THE APPEL LANT FILED ITS REPLY VIDE LETTER DATED 20.3.96, THE MAIN CON TENTIONS OF WHICH HAVE BEEN REPRODUCED AT PAGE 13 OF THE ASSE SSMENT ORDER, WHICH IS REPRODUCED BELOW: (A) THERE IS NO QUESTION OF DISALLOW ANCE OF ABOVE EXPENDITURE OF RS. 91.46 LACS, AS THE SAME IS FULLY SUPPORTED WITH ALL THE NECESSARY DOCUMENTS. (B) SIMILAR QUESTION AROSE IN THE CASE OF GUJARAT AMBUJA PROTEINS LTD. IN A.Y, 1992-93 FOR PAYMENT MA DE TO COASTAL ROADWAYS LTD. ON IDENTICAL FACTS THE HO N'BLE C-I.T.(A) HAS REMOVED THE DISALLOWANCE ON THE GROUN D OF BUSINESS EXPEDIENCY. (C) THE AGREEMENT WAS ENTERED FOR HIRE OF GODOWN AS & WHEN REQUIRED. (D) M/S COASTAL ROADWAYS LTD. HAD EN OUGH CONTACT AND OPENINGS IN WESTERN REGIONS OF INDIA WHO COULD PROVIDE THE GODOWN FACILITY ANYWHERE IN GUJARAT & MAHARA SHTRA AS & WHEN REQUIRED. (E) M/S COASTAL ROADWAYS LTD. HAS B EEN PAID THE ABOVE AMOUNT WHICH IS NOT DISPUTED. YOU HAVE ALSO V ERIFIED ALL THE BILLS AND THEREFORE, THERE IS NO QUESTION OF ANY AFTER-THOUGHT IDEA. (F) THE COASTAL ROADWAYS LTD. HAD P ROVIDED SERVICES NARRATED IN THE ABOVE AGREEMENT, WHICH HAS BEEN CONFIRMED BY MR. M/S. PAREEK IN HIS STATEMENT. (G) AS REGARDS THE BUSINESS EXPEDIENCY TEST, IT HAS BEEN SUBMITTED THAT THE EXPORT TURNOVER OF THE ASSE SSEE ABOUT 25,000 TONNES IN AGGREGATE TO THE REQUIRED LARGE SCALE STORAGE SPACE AT THE FOUR PLACES, AND THEREFORE, THE AGREEMENT WAS MADE. 7.2 THE ASSESSING OFFICER REJECTED ALL THE ABOV E CONTENTIONS OF THE APPELLANT FOR THE DETAILED REASONS GIVEN ON PAG E 13 TO '16 AND CAME TO THE FOLLOWING CONCLUSION: IN THE FACTS FT CIRCUMSTANCES OF THE CASE DISCUSSED ABOVE/ IT IS HELD THAT THE ASSESSEE ENTERED INTO A SHAM AGREEMENT WIT H CRL WITH AN ONLY VIEW TO REDUCE THE TAX LIABILITY. THE ASSESSE S ALSO FAILED TO ESTABLISH THE NECESSITY OF HIRING LARGE SCALE GODOW N SPACE. THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 14 ASSESSEE ALSO FAILED TO ESTABLISH THE BUSINESS EXPE DIENCY FOR CLAIMING THE RENT PAYABLE AS BUSINESS EXPENDITURE. THEREFORE/ THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RENT PAYABLE OR PAID TO CRL AS PER THE AGREEMENT DATED 22.6.92 IS DISALLOWED AN D ADDED TO ITS TOTAL INCOME. IN CORNING TO THE ABOVE CONCLUSIONS/ THE ASSESSING OFFICER HAS RELIED ON SEVERAL HIGH COURTS' DECISIONS/ MORE SPEC IFICALLY THE DECISION OF THE GUJARAT HIGH COURT IN CIT VS- NARAY AN COTTON & SILK MILLS, 135 ITR 546. 3.3.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS DISALLOWANCE AND NO W, THE REVENUE IS IN APPEAL BEFORE US. 3.3.2 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE FURTHER SUBM ITTED THAT THE RENT WAS PAID FOR THE PERIOD FROM JULY 1992 TO MARCH 1993 AN D IT WAS PAID TO M/S. COSTAL ROADWAYS LTD. HE FURTHER SUBMITTED THAT AGRE EMENT IS ON PAGES 288 TO 292 OF THE PAPER BOOK. 3.3.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) IN PARA 7 .6 OF HIS ORDER WHICH IS REPRODUCED BELOW: 7.6 I HAVE CONSIDERED THE FACTS OF THE CASE OF THE RELEVANT ISSUE/ OBSERVATIONS OF THE ASSESSING OFFICER AS WELL AS TH E SUBMISSIONS OF THE APPELLANT COMPANY. AT THE OUTSET, THE FACTS OF THE PRESENT EXPENDITURE FOR GODOWN RENT OF RS.91.46 LACS ARE ID ENTICAL TO THAT OF SIMILAR PAYMENT OF GODOWN RENT OF RS.72.48 LACS BY GAPL FOR THE A.Y. 1992-93. THE SAID ADDITION HAS ALREADY B EEN DELETED, BY THE CIT (A) IN HIS ORDER DATED 25.7.95, APART FROM THIS/ IT HAS BEEN CLAIMED BY THE APPELLANT COMPANY THAT THE COMPANY W AS ENGAGED IN THE BUSINESS OF EXPORT OF SOYA DOC AND OIL EXTRA CTIONS AND THIS WAS THE FIRST YEAR OF EXPORT IN THE CASE OF AP PELLANT COMPANY. THUS IT HAS BEEN CLAIMED BY THE APPELLANT COMPANY T HAT IN VIEW OF THE NEED FOR WAREHOUSE AND GODOWNS WHICH COULD ARIS E IN FUTURE IN THE NORMAL COURSE OF THE BUSINESS AN AGREEMENT HAD BEEN EXECUTED I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 15 ON 22*06.92. IN THE ASSESSMENT PROCEEDINGS IT HAD NOT BEEN PROVED BY THE ASSESSING OFFICER THAT THE AGREEMENT WAS EITHER BOGUS OR NOT IN EXISTENCE. THE ASSESSING OFFICER'S FINDING THAT NO SERVICES WAS AVAILED BY THE APPELLANT UNDER SAID AG REEMENT COULD NOT TO BE ANY GROUND TO DECIDE THE BUSINESS EXPEDIE NCY. FOR THE ACTUAL EXPENDITURE, BILLS HAS BEEN RAISED GIVING TH E LOCATION, RATE AND THE MONTH. THESE BILLS HAVE BEEN RAISED ON THE BASIS OF AGREEMENT AND AS PER THE AGREEMENT THE APPELLANT CO MPANY WERE REQUIRED TO MAKE PAYMENT FOR EACH MONTH IRRESPECTIV E OF THE FACT THAT THE SERVICES HAVE NOT BEEN UTILIZED. THUS IT HAS BEEN CLAIMED THAT THERE WAS BUSINESS NECESSITY AND COMPANY HAS E NTERED INTO THE AGREEMENT FOR AVAILING WAREHOUSE FACILITY AND THUS THE PAYMENT WAS FOR THE BUSINESS EXPEDIENCY. IT HAS ALSO BEEN CLAIMED THAT THE TRANSACTION WAS GENUINE. RELIANCE HAS ALSO BEEN PL ACED ON THE VARIOUS COURT JUDGEMENT BY THE APPELLANT COMPANY. 3.3.4 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) THAT IT CANNOT BE PROVED BY THE A.O. THAT THE AGREEMENT WAS BOGUS OR NOT IN EXISTENCE. HE HAS ALSO GIVEN A FINDING THAT THE A.O.S FINDING THAT NO SERVICES WE RE AVAILED BY THE ASSESSEE UNDER THE SAID AGREEMENT CANNOT BE ANY GRO UND TO DECIDE THE BUSINESS EXPEDIENCY. REGARDING BUSINESS EXPEDIENCY , IT IS NOTED BY LD. CIT(A) THAT ASSESSEE COMPANY WAS ENGAGED IN THE BUS INESS OF EXPORT OF SOYA DOC AND OIL EXTRACTION AND THIS WAS THE FIRST YEAR OF EXPORT IN THE CASE OF THE ASSESSEE COMPANY. IT WAS CLAIMED BEFOR E LD. CIT(A) BY THE ASSESSEE COMPANY THAT IN VIEW OF THE NEED FOR WAREH OUSE AND GODOWNS, WHICH COULD ARISE IN FUTURE IN THE COURSE OF EXPORT BUSINESS, THE AGREEMENT HAS BEEN EXECUTED ON 22.06.1992. IF THAT BE SO THEN IT HAS TO BE ACCEPTED THAT HIRING OF GODOWN AND WAREHOUSE FOR THE PURPOSE OF EXPORT IS VERY MUCH FOR THE BUSINESS PURPOSE AND EV EN IF SUCH GODOWN WAS NOT ULTIMATELY REQUIRED TO BE USED FOR THE PURP OSE OF EXPORT, WHICH WERE KEPT READY FOR SUCH PURPOSE, EXPENDITURE INCUR RED ON SUCH HIRING OF GODOWN HAS TO BE ALLOWED AS BUSINESS EXPENDITURE ON THE BASIS OF I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 16 BUSINESS EXPEDIENCY. IN THE LIGHT OF THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). RE GARDING THE TRIBUNAL DECISION RENDERED IN THE CASE OF ACIT VS GUJARAT AM BUJA PROTEINS LTD IN I.T.A.NO. 4119/AHD/1995 ASSESSMENT YEAR 1992-93, DA TED 25.01.2012, WE FIND THAT THIS TRIBUNAL DECISION IS NOT APPLICAB LE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT BECAUSE IN THAT CAS E, THE TRIBUNAL DECISION IS ON THE BASIS THAT THE ASSESSEE HAS NOT BROUGHT A NY MATERIAL TO SHOW THE PROCUREMENT PLAN AND PLACES FROM WHERE THE PROCUREM ENT WAS TO BE MADE AND THE STORAGE PERIOD, VOLUME TO BE PROCURED AT A TIME AND QUANTITY TO BE KEPT AT A TIME ETC. IN THE PRESENT CASE, ON PAGE 3 71 384, ASSESSEE HAS FURNISHED THE COPY OF OUTWARD REGISTER SHOWING DETA ILS OF EXPORT WITH PARTIES NAMES, VESSELS NAME, ITEM, QUANTITY, WEIGH T ALONG WITH DESPATCH DATE AND NAME OF PORT BEING PORBANDAR, DWARKA, KAND LA, OKHA, JAMNAGAR ETC. AND THE SAME IS DURING SEP 1992 TO MARCH 1993 FOR EXPORT OF SOYA DOC ETC. SINCE THE FACTS ARE DIFFERENT, THIS TRIBU NAL DECISION IS NOT APPLICABLE IN THE PRESENT CASE. IN THE PRESENT CAS E, THE ASSESSEE HAS NOT ONLY GIVEN THE AGREEMENT FOR RENT AND EVIDENCE FOR PAYMENT OF RENT, EVIDENCE IS ALSO PLACED ON RECORD REGARDING ACTUAL EXPORT DURING RELEVANT PERIOD FROM DIFFERENT PLACES FOR WHICH WAREHOUSE AN D GODOWNS WERE HIRED AND HENCE, IN THE LIGHT OF THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.3 IS ALSO REJECTED. 3.4 REGARDING GROUND NO.4, THE FACTS ARE NOTED BY L D. CIT(A) IN PARA 9.1 OF HIS ORDER WHICH IS REPRODUCED BELOW: GROUND NO.9 IS TO THE EFFECT THAT THE A.O. ERRED IN NOT GRANTING DEDUCTION UNDER SECTION 80HHC OF RS.65,57,776/-. IN THE ASSESSMENT ORDER, THIS ISSUE IS DISCUSSED ON PAGE 2 0. AT THE OUTSET, THE A.O. HAD HELD THAT SINCE THE COMPUTATION UNDE R THE HEAD INCOME FROM BUSINESS OR PROFESSION IS A IONS/ THE A SSESSEE WILL NOT I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 17 GET THE DEDUCTION CLAIMED U/S BQ-HHC, IN VIEW OF TH E PROVISIONS OF SECTION 80AB OF THE ACT, IN ABSENCE OF BUSINESS PRO FITS. THE ASSESSING OFFICER, THEN WORKED OUT THE TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80--HHC ON THE SAME PAGE AND STATED THAT THE TOTAL TURNOVER OF THE BUSINESS SHOW N BY THE ASSESSEE AT RS.51,04,85,747/- WILL BE REDUCED BY THE AMOUNT OF RS. 20,67,56,623/- BEING TRADING WITH GROUP CONCERNS IN WHEAT AND SOYA DOC, TREATED AS NON-GENUINE AND ON PAPER ONLY AND, THEREFORE, THE REAL TURNOVER WILL BE ONLY TO. 30,37 ,29,124/-. HE THEN OBSERVED THAT IN VIEW OF THIS POSITION, THE INDIREC T COST ATTRIBUTABLE TO EXPORT SALES IN PROPORTION TO TOTAL SALES WOULD GO UP AND THEREBY THE FIGURE OR, EXPORT PROFIT WILL BE REDUCED TO RS.40,3 1,535/- AND THIS WOULD, AT THE MOST, BE THE DEDUCTION U/S 80 HHC TO WHICH THE APPELLANT WOULD HAVE BEEN ENTITLED INSTEAD OF RS.65 ,57,776/- CLAIMED BUT SINCE, ACCORDING TO HIM AS THE REPORT I N FORM NO. 10 CCAC IS FOR RS.65,57,776/- AS CLAIMED AND NOT FOR R S.40,3L,535/- AS MAXIMUM ALLOWABLE, THE DEDUCTION U/S 80-HHC WAS NOT GRANTED. 3.4.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) WHO HAS ALLOWED RELIEF TO THE ASSESSEE A ND NOW, THE REVENUE IS IN APPEAL BEFORE US. 3.4.2 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 3.4.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PA RA 9.4 OF HIS ORDER WHICH IS REPRODUCED BELOW: 9.4 I HAVE CONSIDERED THE FACTS OF THE CASE SUBMIT TED BY THE APPELLANT AS WELL AS OBSERVATIONS OF THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER AS WELL AS IN REMAND REPORT. THE A SSESSING OFFICER IN THE ASSESSMENT ORDER HAS CLEARLY MENTION ED THAT EVEN ON THE BASIS OF HIS CALCULATION, THE ASSESSEE IS ENTIT LED FOR DEDUCTION OF RS.40,31,535/- U/S 80-HHC AS AGAINST THE CLAIM MADE BY THE APPELLANT COMPANY OF RS.65,57,776/-. HOWEVER, EVEN THE SAID DEDUCTION AS WORKED OUT BY THE ASSESSING OFFICER AT RS.40,3L,535/- HAS NOT BEEN ALLOWED AS THE REPORT IN FORM NO. 10 C CAC IS TREATED AS NOT CORRECT AS THEREIN DEDUCTION CLAIMED WAS FOR RS.65,57,776/- I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 18 OPPOSING THIS THE APPELLANT HAS RELIED UPON THE JUD GEMENT OF DELHI I TAT IN THE CASE OF SHRIRAM PISTONS K RINGS VS. CI T, REPORTED IN 81 TAXMAN 164, WHEREIN IT HAS BEEN HELD THAT REPORT OF ACCOUNTANT, AS CONTEMPLATED IN SUB-SECTION (4), IS REQUIRED FOR LIMITED PURPOSE OF MAKING A VALID CLAIM FOR DEDUCTION AND, THEREFOR E, THE ASSESSES IS NOT REQUIRED TO FURNISH THE REVISED REPORT FOR A LLOWANCE OF DEDUCTION ON PROFITS FROM EXPORT BUSINESS 1 AS COMPUTED BY THE ASSESSING OFFICER. THE HON'BLE BOMBAY ITAT HAS ALSO MADE SIMILAR OBSERVATIONS AS REPORTED IN 35 TTJ 259. TH US, THE ASSESSING OFFICER WAS NOT CORRECT IN DISALLOWING TH E DEDUCTION U/S 80-HHC AS WORKED OUT BY HIM OF RS.40,31 ,535/-. THUS, AT THE OUTSET, THE APPELLANT COMPANY IS ENTIT LED TO A DEDUCTION OF RS.40,31,535/- U/S 80-HHC EVEN ON THE BASIS OF C ALCULATION OF THE ASSESSING OFFICER AS IS APPARENT FROM THE ASSES SMENT ORDER. THIS LEADS TO THE OTHER ARGUMENT OF THE APPELLANT C OMPANY THAT THE APPELLANT IS ENTITLED FOR A DEDUCTION OF RS.65,57,7 76/- U/S 80-HHC AS CLAIMED IN THE RETURN OF INCOME ON THE BASIS THAT TURNOVER PERTAINING TO WHEAT & SOYA EOC HAS WRONGLY BEEN EXCLUDED BY THE ASSESSING OFFICER FROM THE TOTAL TURNOVE R AS SUCH TRANSACTIONS WARE GENUINE. FURTHER IT HAG BEEN CLAIMED BY THE APPELLANT COMPANY THAT DEDUCTION U/E 80-HHC IS AV AILABLE UPTO THE PROFIT DERIVED FROM THE EXPORT BUSINESS AS CA LCULATED ON PRO- RATS BASIS AS PER FORMULA GIVEN IN SUB-SECTION (3 ) OF SECTION 80- HHC. I HAVE ALREADY HELD ABOVE IN PARA 4.6 TO 5.5 THAT THE TRANSACTIONS PERTAINING TO SOYA DOC AND WHO H AS UNDERTAKEN BY THE APPELLANT COMPANY WITH OTHER GRO UP COMPANIES/WERE GENUINE AND THEREFORE, THE FCO4W* L TURNOVER OF SUCH TRANSACTIONS CANNOT BE IGNORED FOR THE CO MPUTATION OF EXPORTS PROFITS WITHIN THE MEANING OF SECTION 80HHC/ THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO C ONSIDER SUCH TRANSACTIONS FOR THE PURPOSE OF WORKING THE AMO UNT OF TOTAL TURNOVER, 09 AGAINST EXCLUSION MADE BY HIM IN THE ASSESSMENT ORDER. COMING TO THE-ARGUMENT OF THE ASSESSEE THAT D EDUCTION U/S 8QHHC IS-TO BE GIVEN TO THE EXTENT OF EXPORT PR OFITS* WHICH ARE INCLUDED IN THE GROSS TOTAL INCOME SUBJECT T O MAXIMUM DEDUCTION UNDER CHAPTER VIA BEING NOT MORE THAN GRO SS TOTAL INCOME, I FIND MERIT IN THE ARGUMENT WHAT SE CTION 80 AB STIPULATES IN TO RESTRICT THE DEDUCTION-UNDER CH APTER VIA TO THE EXTENT OF THE NATURE OF INCOME STATED IN RELEVAN T SECTION VIZ. THE EXPORT PROFITS & NOT THE PARTICULAR HEAD OF INCO ME, VIZ. BUSINESS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 19 INCOME ETC. HENCE, I DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80-HHC TO THE EXTENT OF EXPORT PRO FITS AS CLAIMED SUBJECT TO TOTAL DEDUCTION UNDER CHAPTER VIA NOT EXCEEDING GROSS TOTAL INCOME MAY BE RECOMPUTED BY THE ASSESSING OFF ICER I N VIEW OF OTHER DIRECTIONS IN THIS ORDER. AS REGARDS INTEREST, NO DEDUCTION UNDER SECTION 80H HC WILL BE ALLOWABLE TO THE APPELLANT AS INTEREST INCOME HAS B EEN HELD AS INCOME FROM OTHER SOURCES. THE A.O. IS DIRECTED TO RECALCULATE THE DEDUCTION U /S 80HHC IN VIEW OF THE ABOVE DIRECTIONS AND DISCUSSIONS MADE A ND HENCE, THIS GROUND OF APPEAL IS DISPOSED OFF ACCORDINGLY. 3.4.4 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ) IT IS SEEN THAT IT WAS DECIDED BY LD. CIT(A) THAT EVEN THE A.O. HAS CA LCULATED THIS DEDUCTION AS ALLOWABLE TO THE ASSESSEE U/S 80HHC TO THE EXTENT OF RS.40,31,535/- BUT HE HAS NOT ALLOWED DEDUCTION EVE N FOR THIS AMOUNT ON THIS BASIS THAT THE REPORT IN FORM 10CCAC IS TREATE D AS NOT CORRECT BECAUSE IN THAT REPORT, DEDUCTION CLAIMED WAS RS.65 ,57,776/-. IT IS HELD BY LD. CIT(A) THAT UNDER THESE FACTS, THE DEDUCTION COMPUTED BY THE A.O. OF RS.40.31 LACS WAS CLEARLY ALLOWABLE AND IT CANNO T BE DISALLOWED IN ANY CASE. FOR THE BALANCE AMOUNT OF DEDUCTION CLAIMED BY THE ASSESSEE, LD. CIT(A) HAS DIRECTED THE A.O. TO RECALCULATE DEDUCTI ON U/S 80HHC WITHOUT IGNORING THE TRANSACTION OF THE ASSESSEE PERTAINING TO SOYA DOC AND WHEAT BECAUSE IT IS HELD BY LD. CIT(A) THAT THE SAM E ARE NOT BOGUS. THIS DIRECTION IS ALSO GIVEN BY LD. CIT(A) THAT A.O. SHO ULD ALLOW DEDUCTION U/S 80HHC TO THE EXTENT OF EXPORT PROFIT SUBJECT TO THIS THAT TOTAL DEDUCTION UNDER CHAPTER VIA SHOULD NOT EXCEED GROSS TOTAL INCOME AS TO BE RECOMPUTED BY THE A.O. IN VIEW OF HIS EARLIER DI RECTION IN THIS ORDER. CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND A NY GOOD REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. THIS GROUND OF THE REVENUE IS ALSO REJECTED. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 20 3.5 REGARDING GROUND NO.5, THE FACTS TILL THE ASSES SMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 11.2 TO 11.3 OF HIS ORD ER WHICH ARE REPRODUCED BELOW: 11.2 THE FACTS AS PER THE ASSESSMENT ORDER, WHERE THIS ISSUE IS DISCUSSED IN GREAT DETAILS AT PAGES 21 TO 27, ARE T HAT THE APPELLANT PURCHASED 19,809 M.T. OF SOYA DOC, (YELLOW) EXT. FOR RS.11.90 CRORES RS.6010/- PER M.T. FROM GUJARAT A MBUJA PROTEINS LTD., A GROUP CONCERN OF THE APPELLANT AND THESE VERY GOODS WERE SOLD TO UNIPLAS INDIA LTD. (UPL ) FOR TO. 10.05 CRORES @ RS.5,482/- PER M.T. IT WAS ALSO SEE N THAT GAPL FROM WHOM THE APPELLANT PURCHASED THESE GOODS PUR CHASED THE SAID GOODS FOR PS. 11.88 CRORES @ RS.6,000/- PE R M.T. THE SAID TRANSACTION OF PURCHASE FROM GAPL AND SALE T O UPL HAD RESULTED INTO A LOSS OF RS.1.05 CRORES TO THE AP PELLANT. THE A.O. ASKED THE APPELLANT TO EXPLAIN THE REASONS F OR THE LOSS BY PRODUCING SOME COGENT EVIDENCE IN SUPPORT OF SALE TO UPL ON REDUCED RATES. THE APPELLANT PRODUCED COPIES OF LETTER DATED 27.09.92 ALONG WITH PURCHASE ORDER DATED 24.09,92 AND CONFIRMATION DATED 26.03.96 FROM THE SAID UPL, ACCORDING TO WHICH THE APPELLANT AGREED TO SELL 20,000 M.T. SOYA DOC AS UNDER:- 1. 8,200 M.T. TO BE SUPPLIED DURING OCT .,1992 @ RS.5,900/- PER M.T. 2. BALANCE TO BE SUPPLIED BEFORE 31.03.1993 AT PRICES TO BE MUTUALLY AGREED AS PER MARKET PRICE. IT WAS S TATED BY THE APPELLANT THAT AS PER LETTER DATED 15.10.92 FROM TH E APPELLANT TO UPL, THE APPELLANT PROPOSED TO PREFIX THE PRICES FO R SUPPLIES IN ADVANCE INSTEAD OF FIXING THE PRICES FROM MONTH TO MONTH, FOR THE PERIOD NOV., 1992 TO FEB., 1993. ACCORDING TO THE APPELLANT, THE MONTH WISE PRICES WERE FIXED AS AGREED BY BOTH THE PARTIES AT RS.5,500/- PER M.T. FOR NOV., 1992, TO. 5,300/- FOR DEC., 1992, RS.5,000/- FOR JAN., 1993 AND RS.4,950/- FOR FEBRUA RY, 1993. THE SUBMISSION OF THE APPELLANT BEFORE THE A.O. WAS THA T SINCE, THE GOODS WERE SOLD TO UPL AS PER THE TERMS AND CONDITI ONS AGREED UPON IN THE PURCHASE ORDER AND AS PROPOSED IN THE L ETTER DATED 15.10.1992, THE LOSS INCURRED ON THE SALES SHOULD B E ALLOWED. THE ASSESSING OFFICER, FROM THE LETTER, PURCHASE ORDER AND CONFIRMATION OF UPL NOTICED THAT THE SALE WAS NOT IN ACCORDANCE WITH EITHER THE PURCHASE ORDER OR THE PREVAILING MARKET RATE. HE OBSERVED THAT THE ASSESSEE EARNED HUGE INTEREST INCOME EX CEEDING RS.3 I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 21 CRORES DURING THAT YEAR UNDER CONSIDERATION WHICH WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT AS SUCH AND BY SELLING THE GOODS TO UPL AT REDUCED RATES, THE ASSESSES ARRANGED TO INCUR THE SAID LOSS FOR GETTING ADJUSTMENT OF THE SAME AGAINST THE OTHER TAXABLE INCOME WITH A VIEW A TO REDUCE THE TAX LIABILITY. HE, THEREFORE, ISSUED SHOW CAUSE NOTICE TO THE-APPELLANT TO SHO W CAUSE AS TO WHY THE SAID LOSS SHOULD, NOT BE DISALLOWED. T HE APPELLANT VIDE LETTER DATED 27.3.96 EXPLAINED THE REASONS, W HICH ARE REPRODUCED BY THE A.O. ON PAGES 23 TO 24 OF T HE ASSESSMENT ORDER. IN BRIEF THE EXPLANATIONS WERE TO THE FOLLOWING EFFECT : (I) AS THE APPELLANT VAS A NOW ENTRANT, TO THE BUSINESS THEY WANTED TO PLAY SAFE AND, THEREFORE, THE PRICES WERE PREFIXED CONSIDERING THE TREND OF PRICES IN THE M ARKET FROM YEAR TO YEAR. (II) THE APPELLANT KNEW THAT THE PERSON WH O MAKES THE MOST OF THE MARKETING IN SOYA COC GOT HUGE BUSINE SS AND A. FIRM, FOOTING IN THE INDUSTRY AND, THEREFORE, TH EY WERE ON THE LOOK OUT FOR: ?. MAJOR PARTY LIKE UPL AND IT W AS CONSIDERED TO : BE PRESTIGIOUS TO BE ASSOCIATED WITH IT ; AND WHE N THE APPELLANT GOT THE ORDER OF SUPPLY OF 20,000 M.T., IT WAS CONSIDERED TO BE MAJOR ACHIEVEMENT FOR THE NEW ENTRANT I.E. THE APPELLANT. (III) THE APPELLANT DID NOT WANT TO TAKE THE RISK , OF FLUCTUATION IN THE MARKET PRICES LATER ON AND DID NOT WANT TO LOOSE ITS BUSINESS IF THE PRICES WERE NOT AGREEABLE LATER ON AND, THEREFORE, IT AGREED TO THE PRICES, AS AGREED IN ADVANCE. (IV) GENERALLY, THE NORMAL TREND IN THE MAR KET OF SOYA DOC WAS REDUCTION IN PRICE- BUT DUE TO TWO BIG CO-OP. SOCIETIES WHICH GRAFFE-D AND NAFED ENTERING TH E MARKET AND MAKING A BUYING SPREE, THERE WAS AN ARTIFICIAL SCARCITY WHICH DID NOT BRING DOWN THE PRICE. IN FACT, EVEN GRAFF ED & NAFED ALSO SUFFERED HUGE LOSSES IN SOYA TRADING. (V) IT IS NOT A GENERAL RULE THAT THE ASSESSEE SHOULD ALWAYS EARN PROFIT ONLY. IN THE YEAR UNDER CONSIDERATION DUE TO MARKET CONDITIONS, WHICH WERE BEYOND ITS C ONTROL AND WHICH IT HAD NOT EXPECTED WHILE FIXING THE SELL ING PRICES IN ADVANCE, THE ASSESSES HAD SUFFERED A LOSS END IN THIS BACKGROUND THERE CANNOT BE ANY SUSPICION THAT, T HE TRANSACTIONS HAVE BEEN ARRANGED TO REDUCE THE TAXABLE INCOME BY WAY OF ADJUSTMENT AGAINST OTHER INCOME. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 22 11.3 HOWEVER, IN THE OPINION OF. THE A.O., THE ABOVE CONTENTIONS WERE NOT, ACCEPTABLE BECAUSE ACCO RDING TO HIM THE COMPANY HAD ACTED AGAINST THE TERM AND COND ITIONS OF PURCHASE ORDER DATED 24.09.1992, WHICH A PRUDE NT BUSINESS- MAN WOULD NOT HAVE DONE, PARTICULARLY, WHEN THE GOODS WERE PURCHASED AT A HIGHER RATE FROM ITS OWN GROUP C OMPANY FROM MONTH TO MONTH AND THEY VERY GOODS WORN SOLD I T AT LOWER RATES TO UPL IN THE VERY SAME MONTH. THE A.O. AL SO OBSERVED THAT THE APPELLANT HAD CREDITED TO ITS PROFIT AND LO SS ACCOUNT A SIZEABLE INTEREST INCOME EXCEEDING RS.3 CRORES A ND IT WAS QUITE CLEAR THAT THE ASSESSEE HAD PURCHASED A BIG LOSS, SO THAT THE SAME CAN BE ADJUSTED AGAINST THE SAID INTERACT INC OME/ WITH A CLEAR INTENTION TO REDUCE THE TAXABLE INCOME. IN SUPPORT OF THIS VIEW, THE A.O. FURTHER OBSERVED THAT THE DELIV ERY OF GOODS WERE NEITHER TAKEN BY GUJARAT AMBUJA PROTEINS LTD. F ROM THE SUPPLIER NOR BY THE ASSESSES BUT WERE DIRECTLY (SUPPLIED BY THE SUPPLIER M/S. DWARKA CEMENT WORKS LTD. TO UPL AND HENCE , THERE WAS NO NECESSITY TO INVOLVE THE ASSESSEE GROUP IN T HESE TRANSACTIONS. IN FURTHER SUPPORT, THE A.O. ALSO RELIED UPON SALES OF SOYA DOC TO 3 OTHER PARTIES AT LESSER RATES , WHICH WAS EXPLAINED BY THE ASSESSES AS SUPPLIED AGAINST H FORM, WHICH ENTITLED THE ASSESSEE TO GET SOME BENEFITS IN COMPENSATION OF THE PRICE DIFFERENCE, WHICH AMOUNTED TO THE ASSESSEE GETTING THE MARKET VALUE ON THE SALE, WHEREAS THE GOODS SOLD TO UPL WAS AT LESS THAN MARKET PRICE AND WITHOUT GETTING ANY EXPO RT BENEFITS. THE A.O. ALSO NOTED THAT IN THE MONTH OF OCT., 1992, GO ODS TO THE EXTENT OF 8,200/- M.T. WAS AGREED TO BE SUPPLIED BY THE AS SESSEE IN THE INITIAL STAGE BUT THE ASSESSEE HAS ALSO SUPPLIED 82 312.500 M.T. @ 5,900/- AS PER THE TERMS AND CONDITION OF THE SAID PURCHASE ORDER. THE A.O., THEREFORE, CONSIDERED THAT AT THE MOST TH E LOSS INCURRED IN THIS PARTICULAR TRANSACTION CAN BE ALLOWED, WHICH W ORKED OUT TO RS.9,05,410/-. IN HIS OPINION, THE BALANCE OF RS.9 5,55,520/- COULD NOT BE ALLOWED AS THE SAME WAS NOT IN ACCORDANCE WI TH THE TERMS AND CONDITIONS O THE PURCHASE ORDER. HE THUS DISAL LOWED THE LOSS OF RS.95,55,520/-. 3.5.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS DISALLOWANCE AND NO W, THE REVENUE IS IN APPEAL BEFORE US. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 23 3.5.2 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 3.5.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW. WE FIND THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) THAT TH ERE IS NO DISPUTE ABOUT SALE RATES AND LOSS WERE MADE AT THE PRICE AGREED U PON IN ADVANCE. REGARDING PURCHASE PRICE, IT IS NOTED BY HIM THAT T HE DETAILS OF MARKET PRICE PREVAILING AT THE TIME OF SUCH TRANSACTIONS W ERE ALSO FURNISHED WHICH CANNOT BE PROVED TO BE WRONG BY THE A.O. IN T HE REMAND REPORT ALTHOUGH ALL THESE EVIDENCES WERE ALSO FORWARDED TO HIM. ON THIS BASIS, FINDING IS GIVEN BY CIT(A) THAT UNDER THIS SITUATIO N, IT CANNOT BE SAID THAT IT IS AN ARRANGED LOSS AND THAT THE TRANSACTIONS AR E NOT GENUINE. THESE FINDINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R. THIS FINDING IS ALSO GIVEN BY CIT(A) THAT HAD THE SALE O RDERS BEING NOT EXECUTED IN STIPULATED TIME, THE ASSESSEE COMPANY W OULD HAVE TO PAY DAMAGES FOR THE BREACH OF CONTRACT AND SUCH DAMAGE FOR BREACH OF CONTRACT IS AN ELIGIBLE DEDUCTION U/S 37(1) AND THE REFORE, SUCH LOSS IS ALSO A BUSINESS LOSS AND ALLOWABLE AS DEDUCTION. IN SUP PORT OF THIS CONTENTION, LD. CIT(A) HAS NOTED VARIOUS JUDGEMENTS OF VARIOUS HIGH COURTS AND ALSO OF HONBLE APEX COURT AND CONSIDERING ALL THES E FACTS, WE DO NOT FIND ANY GOOD REASON TO INTERFERE IN THE ORDER OF L D. CIT(A) ON THIS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 3.6 IN THE RESULT, THIS APPEAL OF THE REVENUE IS D ISMISSED. 4. NOW, WE TAKE UP CROSS APPEALS FOR THE ASSESSMENT YEAR 1993-94 IN THE CASE OF GUJARAT AMBUJA COTSPIN LTD., IN I.T.A.N O. 113 AND 203/AHD/1999. 4.1 FIRST WE TAKE UP THE ASSESSEES APPEAL IN I.T.A .NO. 113/AHD/1999. ALTHOUGH, THE ASSESSEE HAS RAISED AS MANY AS SIX GR OUNDS OF APPEAL BUT I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 24 THE GRIEVANCES OF THE ASSESSEE ARE ONLY TWO. THE F IRST GRIEVANCE IS REGARDING DISALLOWANCE OF INTEREST EXPENDITURE OF R S.6,99,954/- AND THE SECOND GRIEVANCE IS REGARDING DISALLOWANCE OF PRIOR YEAR EXPENDITURE OF RS.12,68,671/-. 4.1.1 REGARDING GROUND NO.1, IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS DECIDED BY LD. CIT(A) AS PER PARA 6 ON PAG E 9 OF HIS ORDER. HE SUBMITTED THAT THIS FINDING IS GIVEN BY LD. CIT(A) THAT INTEREST PERTAINING TO TERM LOAN FROM BANK OF BARODA ALTHOUGH IT IS PER TAINING TO 4 TH QUARTER OF FINANCIAL YEAR 1991-92 BUT THE SAME WAS REPORTED IN THE BOOKS OF ACCOUNT ONLY IN THE MONTH OF APRIL 1992 AS THE EXAC T AMOUNT OF INTEREST COULD BE QUANTIFIED ONLY AFTER FINALIZATION OF BOOK S OF ACCOUNT FOR THE FINANCIAL YEAR 1991-92 FOR THE REASON THAT THERE WA S A DISPUTE ABOUT THE RATE OF INTEREST. HE SUBMITTED THAT THE AMOUNT IN DISPUTE WAS PAID IN THE PRESENT YEAR AND, THEREFORE, EVEN IF IT IS PERTAINI NG TO THE PRECEDING YEAR, THE SAME IS ALLOWABLE IN THE PRESENT YEAR AS PER SE CTION 43B. 4.1.2 LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4.1.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS FINDING IS GIVEN BY LD. CIT(A) THAT THE A MOUNT OF INTEREST PERTAINING TO INTERESTS ON TERM LOAN FROM BANK OF B ARODA. THIS IS ALSO STATED BY THE A.O. ON PAGE 12 OF THE ASSESSMENT ORD ER THAT THE AMOUNT OF RS.6,99,954/- IS IN RESPECT OF TERM LOAN INTEREST. ON PAGE 110 OF THE PAPER BOOK IS THE COPY OF THE LEDGER ACCOUNT AS PER WHICH , 4 AMOUNTS EACH OF RS.5.05 LACS TOTALING RS.20.20 LACS WAS PAID DURING THIS YEAR AGAINST WHICH AN AMOUNT OF RS.6,99,954/- WAS ADJUSTED IN RE SPECT OF INTEREST FOR THE PRECEDING YEAR. HENCE, IT IS SEEN FROM THE REC ORDS THAT THE PAYMENT OF THIS INTEREST WAS MADE DURING THIS YEAR AND, THEREF ORE, DEDUCTION IS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 25 ALLOWABLE IN THE PRESENT YEAR U/S 43B. THEREFORE, THIS DISALLOWANCE IS DELETED. 4.2 REGARDING THE 2 ND ISSUE, IT IS SUBMITTED BY THE LD. A.R. THAT WHILE PASSING THE ASSESSMENT ORDER FOR THE ASSESSMENT YEA R 1994-95 U/S 143(3) ON 25.03.1997, THE A.O. DISALLOWED THIS EXPENDITURE OF RS.12,46,671/- ON THIS BASIS THAT IT PERTAINS TO ASSESSMENT YEAR 1993 -94 AND, THEREFORE, THIS GROUND HAS BEEN TAKEN IN THE PRESENT YEAR AS ADDITI ONAL GROUND. LD. CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE ON THIS BASIS THAT SINCE THESE EXPENSES WERE NOT CLAIMED IN THE RETURNED INC OME OR DURING ASSESSMENT PROCEEDINGS, THIS CANNOT BE ALLOWED IN T HE COURSE OF APPELLATE PROCEEDINGS. 4.2.1 LD. A.R. PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS SYMPHONY COMFO RT SYSTEMS LTD. IN TAX APPEAL NO.97/2010 DATED 29.11.2011. HE SUBMITT ED A COPY OF THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT. LD. D.R. S UPPORTED THE ORDERS OF AUTHORITIES BELOW. 4.2.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENT CITED BY THE LD. A.R. IN THIS JUDGEMENT, HONBLE GUJARAT HIGH COURT HAS CONSIDERED THE JUDGMENT OF HONBLE APEX C OURT RENDERED IN THE CASE OF GOETH INDIA LTD. VS CIT AS REPORTED IN 284 ITR 323 WHEREIN IT WAS HELD THAT THE RESTRICTION IS LIMITED TO THE POWERS OF THE A.O. AND IT DOE NOT IMPINGE UPON POWERS OF THE TRIBUNAL. UNDER THIS LEGAL POSITION, IT HAS TO BE ACCEPTED THAT WHEN THIS ISSUE IS RAISE D BY THE ASSESSEE IN THE PRESENT YEAR, THE SAME HAS TO BE DECIDED AS PER LAW . THIS IS NOT IN DISPUTE THAT THIS EXPENDITURE WAS DISALLOWED BY THE A.O. IN ASSESSMENT YEAR 1994-95 ON THIS BASIS THAT THE SAME PERTAINS TO THE EARLIER YEAR I.E. ASSESSMENT YEAR 1993-94. THEREFORE, THERE IS NO RE ASON FOR NOT ALLOWING I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 26 THIS DEDUCTION IN THE PRESENT YEAR. WE, THEREFORE, DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE IN THE PRESENT YEAR BUT THE SAME SHOULD NOT BE CLAIMED AND ALLOWED IN ASSESSMENT YEAR 1994-95 AND IF ANY GROUND IS RAISED BY THE ASSESSEE IN THAT YEAR, THE SAME SHOUL D BE WITHDRAWN. 4.3 IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED. 5. NOW, WE TAKE UP THE REVENUES APPEAL FOR THE SAM E ASSESSMENT YEAR IN THE SAME CASE OF GUJARAT AMBUJA COTSPIN LTD. IN I.T.A.NO. 203/AHD/1999. THE GROUNDS RAISED BY THE REVENUE IN THIS YEAR ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.109 LACS MADE BY THE A.O. IN RESPECT OF WHEAT TRANSACTIONS. 2) LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN RED UCING THE ADDITION MADE BY THE A.O. U/S 80HHC DESPITE THE ACT THAT THE CERTIFICATE OF THE C.A. WAS NOT RELIABLE. 3) LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DEL ETING THE PROFITS IN RESPECT OF TRANSACTIONS WITH GROUP CONCE RNS AMOUNTING TO RS.1,44,39,338/- IRRESPECTIVE OF THE FACT THAT IT W AS RIGHTLY DONE SO BY THE A.O. 4) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DIR ECTING THE A.O. TO GIVE DEDUCTION U/S 80-I WITHOUT DEDUCTION U /S 80HH FROM THE TOTAL INCOME. 5) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.14.45 LACS AND RS.5.34 LACS ON ACCOU NT OF PURCHASE PRICE OF WHEAT FROM GROUP CONCERNS. 5.1 REGARDING ALL THESE GROUNDS, LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF LD. C IT(A). REGARDING GROUND NO.4, HE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS AMOD ST AMPING AS REPORTED IN 274 ITR 176. 5.1.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 27 JUDGEMENT CITED BY THE LD. A.R. IN RESPECTS OF GROU ND NO.4. REGARDING GROUND NO.1 OF THE REVENUES APPEAL, WE FIND THAT L D. CIT(A) HAS DECIDED THIS ISSUE BY FOLLOWING HIS OWN ORDER IN TH E CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSMENT YEAR 1993-94 . AGAINST THIS ORDER OF THE CIT(A) ALSO, APPEAL WAS FILED BEFORE US AND THE SAME HAS BEEN DECIDED BY US IN ABOVE PARA. SIMILAR ISSUE WAS DEC IDED BY US IN THAT CASE IN FAVOUR OF THE ASSESSEE AND THE GROUND RAISED BY THE REVENUE IN THAT CASE WAS REJECTED. SINCE NO DIFFERENCE IN THE FACTS COU LD BE POINTED OUT BY THE LD. D.R., WE DO NOT FIND ANY REASON TO TAKE A CONTR ARY VIEW IN THE PRESENT CASE. HENCE, IN LINE WITH OUR DECISION IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSMENT YEAR 1993-94, GROUN D NO.1 OF THE REVENUES APPEAL IS REJECTED IN THIS CASE ALSO. 5.2 REGARDING GROUND NO.2 OF THE REVENUES APPEAL, THE SAME IS IDENTICAL TO GROUND NO.4 OF THE REVENUES APPEAL IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. IN ASSESSMENT YEAR 1993-94. IN THAT CASE, THIS ISSUE WAS DECIDED BY US IN FAVOUR OF THE ASSESSEE AND THE GROUND OF THE REVENUE WAS REJECTED. SINCE NO DIFFERENCE IN THE FACTS COU LD BE POINTED OUT BY THE LD. D.R. IN THE PRESENT CASE, THIS GROUND OF THE RE VENUE IS ALSO REJECTED. 5.3 REGARDING GROUND NO.3 OF THE REVENUES APPEAL, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) BY FOLLOWING HIS OW N ORDER IN ASSESSMENT YEAR 1993-94 IN THE CASE OF GUJARAT AMBU JA EXPORTS LTD. AND WHILE DECIDING THE APPEAL OF THE REVENUE IN THAT CA SE, THIS ISSUE WAS DECIDED BY US IN FAVOUR OF THE ASSESSEE. LD. D.R. COULD NOT POINT OUT ANY DIFFERENCE IN THE FACTS IN THE PRESENT CASE AND HEN CE, IN THE PRESENT CASE ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESS EE IN LINE WITH OUR DECISION IN THAT CASE. THIS GROUND IS ALSO REJECTE D. 5.4 REGARDING GROUND NO.4, WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE AS PER PARA 12.3 OF HIS ORDER WHEREIN HE HAS DIRECTED THE A.O. TO I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 28 VERIFY THE ASSESSEES WORKING AFTER MAKING ADDITION IN RESPECT OF DISALLOWANCE IF ANY RELATING TO NEW INDUSTRIAL UNIT AS CONFIRMED AND THEN WORK OUT THE DEDUCTION ALLOWABLE TO THE ASSESSEE U/ S 80HH AND 80-I. THE GROUND OF REVENUE IS NOT REGARDING THIS ASPECT. TH E GROUND OF THE REVENUE IS THAT LD. CIT(A) HAS ERRED IN GIVING DIRECTION TO ALLOW DEDUCTION U/S 80- I WITHOUT REDUCING THE DEDUCTION U/S 80HH FROM THE TOTAL INCOME. ON THIS ASPECT, THE MATTER IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT CITED BY LD . A.R. AND HENCE BY RESPECTFULLY FOLLOWING THE SAME, WE DECLINE TO INTE RFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. GROUND NO.4 IS REJECTED. 5.5 REGARDING GROUND NO.5, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 6.6 OF HIS ORDER, WHICH IS REPRO DUCED BELOW: I HAVE CONSIDERED THE FACTS OF THE CASE AND OBS ERVATIONS OF THE A.O. AS WELL AS THE SUBMISSIONS MADE BY THE APP ELLANT. AT THE OUTSET FROM THE NATURE OF TRANSACTIONS IT IS VERY C LEAR THAT THESE TRANSACTIONS OF PURCHASES FROM THE ASSOCIATE CONCER NS ARE NOT PERTAINING TO TRANSACTION OF PURCHASES AND SALES CO NSIDERED BY THE ASSESSING OFFICER SEPARATELY IN THE ASSESSMENT ORDE R, PERTAINING TO WHICH THE ASSESSING OFFICER DISALLOWED THE LOSS- I N THESE TRANSACTIONS THE LOSS AND CORRESPONDING PROFITS WER E SAME AMONGST THE ASSOCIATE CONCERNS. FURTHER, THERE WAS NO EVID ENCES WITH THE ASSESSING OFFICER TO INDICATE THAT IT WAS A PART OF THE SAME TRANSACTIONS- HAD IT BEEN A PART OF THE SAME TRANS ACTIONS THERE WOULD HAVE BEEN DIFFERENCE- TO THIN EXTENT BETWEEN THE PROFIT & LOSS OF THE GROUP CONCERN IN THE TOTAL WHEAT TRANSA CTIONS. FURTHER, IT IS POINTED OUT TO ME THAT CORRESPONDING SALES OF SUCH PURCHASES HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNT, A ND, THEREFORE, DEPARTMENT IS REQUIRED TO TAKE INTO ACCOUNT THE PUR CHASES AS IN ABSENCE? OF PURCHASE THERE CANNOT BE SALES. IT IS POINTED OUT TO ME THAT THERE WAS A BONAFIDE MISTAKE IN CONSIDERING TH E PURCHASE IN THE ORIGINAL RETURN OF INCOME WHICH WERE COVERED BY FILING THE RELEVANT RETURN OF INCOME. XEROX OF THE BILLS ETC. WERE FILED WHICH ARE PLACED IN THE PAPER-BOOK, PAPERS SHOWING STOCK STATEMENT POSITION WERE ALSO FILED. HOWEVER, THE ASSESSING O FFICER COULD NOT POINT OUT IN HIS REMAND REPORT COULD NOT POINT OUT IN HIS REMAND I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 29 REPORT HOW THE CLAIM OF THE APPELLANT ON THE BASIS OF THESE EVIDENCES WERE NOT CORRECT. THE A.O. SIMPLY ST ATED THAT SUBMISSION IS ACTUALLY INCORRECT. IT IS ALSO SEEN THAT THE ASSOCIATE CONCERNS WHO HAVE MADE SALES TO T HE APPELLANT HAVE RECORDED THEM IN THEIR BOOKS OF ACCOU NTS AND INCLUDED THE INCOME THEREFROM IN THE BOOKS OF ACCOUNTS AS WELL AS RETURNS FILED BY THEM. THEREFORE, THERE IS NO JUSTIFICATIO N FOR NOT ALLOWING DEDUCTION FOR THE CORRESPONDING PURCHASES IN THE HA NDS OF THE APPELLANT. THEREFORE, THE DEDUCTION CLAIMED BY THE APPELLANT FOR THE PURCHASES OF RS.19,79,940/- PERTAINING TO THE T WO PURCHASE BILLS IS REQUIRED TO BE ALLOWED FROM THE TOTAL INCOME OF THE APPELLANT. THIS ADDITION IS, THEREFORE, DELETED. SO THIS GROU ND OF APPEAL IS ALLOWED. 5.5.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) THAT THE A.O. COULD NOT POINT OUT IN HIS REMAND REPORT AS TO HOW THE CLAIM OF THE ASSESS EE ON THE BASIS OF THESE EVIDENCES WERE NOT CORRECT. THIS FINDING IS ALSO G IVEN BY LD. CIT(A) THAT THE ASSOCIATE CONCERN WHO HAD MADE SALES TO THE ASS ESSEE HAD RECORDED IT IN THE BOOKS AND RECORDED THE INCOME THEREFROM IN T HE BOOKS OF ACCOUNTS AS WELL AS IN THE RETURN FILED BY THEM. LD. D.R. C OULD NOT CONTROVERT THIS FINDING OF LD. CIT(A) AND THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 5.6 IN THE RESULT, THIS APPEAL OF THE REVENUE IS AL SO DISMISSED. 6. NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF GUJARAT AMBUJA PROTEINS LTD. FOR THE ASSESSMENT YEA R 1993-04 IN I.T.A.NO. 204/AHD/1999. WE WANT TO NOTE THAT THERE WAS CROSS APPEAL OF THE ASSESSEE ALSO FOR THIS VERY YEAR IN THE CASE O F THIS VERY ASSESSEE BUT IT WAS SUBMITTED BY BOTH THE SIDES BEFORE US THAT THE SAME WAS ALREADY DISPOSED OFF BY THE TRIBUNAL AS PER ORDER DATED 28. 11.2006 AND THE ISSUE INVOLVED IN THIS APPEAL WAS TOTALLY DIFFERENT. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 30 6.1 THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1 . 25 CRORES TOTALLY DISREGARDING THE EVIDENCES COLLECTED AND RELIED UPON BY THE ASSESSEE. 2. THE CIT(A) ON FACTS AND IN LAW- OUGHT NO T TO HAVE GIVEN RELIEF IN REGARD TO ADDITION MADE BY THE A 0 O S IN RESPECT OF DIVIDEND ON SHARES AND DEBENTURES AS ON; THE BASIS OF THE EVIDENCES COLLECTED BY THE A.O . THE SAME WAS REQUIRED TO BE TAX RD AS INCOME FROM OTHER SOURCES ONLY, 3. THE CIT(A), IN FACTS AND ON LAW HAS ERR ED IN GIVING THE RELIEF IN REGARD TO SPECULATION LOSS OF RS.1 . 25 CRORES IN TOTAL DIS- REGARD OF THE EVIDENCES AND FACTS AND CIRCUMSTA NCES OF THE CASE 4. THE C1T(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT DEDUCTION U/S 8O-I SHOULD BE GIVEN WITHOUT DEDUC TION U/S 80-HB OF THE ACT. 5. THE GIT (A) HAS ERRED IN FACTS AND ON LAW IN GIVING RELIEF TO THE ADDITION OF RS.2L.74 LAKHS WHICH HE OUGHT TO HAVE CONFIRMED IN VIEW OF THE FACTS AND THE CIRCUMSTAN CES AND THE EVIDENCES COLLECTED AND DISCUSSED BY THE A.O. IN THE ASSESSMENT ORDER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE EASE, THE ID. DCIT (A)/CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A .O. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE ID. DCIT (A ) / CIT (A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE A.O. BE R ESTORED TO .THE ABOVE EXTENT. 6.1.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE FURTHER SUBM ITTED THAT IN RESPECT OF GROUNDS 1, 3-5, LD. CIT(A) HAS FOLLOWED HIS OWN ORDER IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE AY1993-94 AND T HESE THREE ISSUES CAN BE DECIDED ON SIMILAR LINES AS PER THE DECISION IN THAT CASE. 6.1.2 REGARDING GROUND NO.2, HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS SPHERE STOCK HOLDINGS PVT. LTD. AS PER TAX APPEAL NO.2583/2009 D ATED 23.08.2011. HE SUBMITTED A COPY OF THIS JUDGMENT OF HONBLE GUJARA T HIGH COURT. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 31 REGARDING GROUND NO.4, HE PLACED RELIANCE ON THE JU DGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS A MOD STAMPING AS REPORTED IN 274 ITR 176. HE ALSO SUBMITTED THAT TH IS ISSUE AS PER GROUND NO.4 IN THIS CASE IS IDENTICAL TO GROUND NO.4 OF TH E REVENUES APPEAL IN THE CASE OF GUJARAT AMBUJA COTSPIN LTD. AND, THEREFORE, THE SAME CAN BE DECIDED ON SIMILAR LINES. 6.1.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. IN RESPECT OF GROU ND NO.2 AND GROUND NO.4. WE FIND THAT GROUNDS NO.1, 3 & 5 ARE IDENTIC AL TO VARIOUS GROUNDS RAISED BY THE REVENUE IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSMENT YEAR 1993-94 AND IN THE PRESENT CASE, LD . CIT(A) HAS FOLLOWED HIS OWN ORDER IN THAT CASE. LD. D.R. COUL D NOT POINT OUT ANY DIFFERENCE IN THE FACTS IN THE PRESENT CASE AND, TH EREFORE, THESE THREE GROUNDS OF THE REVENUE ARE REJECTED ON THE SAME LIN ES AS THE SAME WERE REJECTED WHILE DECIDING THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSMENT YEAR 1993-94. 6.2 REGARDING GROUND NO.2, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 5.5 OF HIS ORDER WHICH IS REPROD UCED BELOW: 5.5 I FIND FROM THE ASSESSMENT ORDER THAT THE APPE LLANT HAS HAD INCOME FORM CAPITAL GAINS. I ALSO FIND FROM ABOVE SUBMISSIONS OF THE APPELLANT THAT HE APPELLANT HAS LARGE OPENING/C LOSING STOCK IN ITS SHARE BUSINESS AND THERE HAVE BEEN LARGE SCALE PURC HSE4S AND SALES OF SHARES AS STOCK IN TRADE. THEREFORE, A PART OF THE INCOME FROM DIVIDEND ON SHARES AND INTEREST ON DEBENTURES WILL PERTAIN TO SHARES /DEBENTURES HELD BY THE APPELLANT AS INVESTMENT AND THE REMAINING PART OF THE DIVIDEND / INTEREST WILL PERTAIN TO THE SHARES/DEBENTURES HELD AS STOCK-IN-TRADE. IN VIEW OF THIS AND IN VIE W OF WHAT I HAVE HELD ABOVE IN PARA 5.5.1, THE A.O. IS DIRECTED TO O BTAIN THE REQUISITE DETAILS AND EVIDENCE FORM THE APPELLANT AND WORK OU T THE PART OF DIVIDEND/INTEREST INCOME TAXABLE AS INCOME FROM OTH ER SOURCES AND THE REMAINING PART TAXABLE AS PART OF SHARE BUSINES S INCOME OF THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 32 APPELLANT. THE APPELLANT IS EXPECTED TO FURNISH TH E REQUISITE DETAILS AND EVIDENCE BEFORE THE A.O.. THIS GROUND OF APPEA L IS, THEREFORE, TREATED AS DECIDED ACCORDINGLY. 6.2.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT THIS IS THE DECISION OF LD. CIT(A) THAT A PART OF INCOME FROM DIVIDEND ON SHARES AND INTEREST ON DEBENTURES WILL PERTAIN TO S HARES/DEBENTURES HELD BY THE ASSESSEE AS INVESTMENT AND THE REMAINING PAT OF DIVIDEND/INTEREST WILL PERTAIN TO THE SHARES/DEBENTURES HELD AS STOCK IN T RADE. LD. CIT(A) HAS DIRECTED THE A.O. TO OBTAIN THE REQUIRED DETAILS AN D EVIDENCE FROM THE ASSESSEE AND WORK OUT THE PART OF DIVIDEND/INTEREST INCOME TAXABLE AS INCOME FROM OTHER SOURCES IN RESPECT OF SHARES AN D DEBENTURES HELD BY THE ASSESSEE AS INVESTMENT AND THE REMAINING PART S HOULD BE TAXED AS BUSINESS INCOME OF THE ASSESSEE. AS PER THE JUDGME NT OF HONBLE GUJARAT HIGH COURT CITED BY THE LD. A.R. HAVING BEEN RENDER ED IN THE CASE OF SPHERE STOCK HOLDINGS PVT. LTD.(SUPRA), IT WAS HEL D THAT IF THE SHARES WERE HELD BY THE ASSESSEE AS STOCK IN TRADE, IT HAS TO BE ACCEPTED THAT DIVIDEND INCOME IS INCIDENTAL TO SHARES BUSINESS AN D, THEREFORE, IRRESPECTIVE OF THE PROVISIONS CONTAINED IN SECTION 56 OF THE INCOME TAX ACT, 1961 AND THE EXPLANATION TO SECTION 73, LOSS I N SHARES TRADING SHOULD BE ADJUSTED AGAINST SUCH BUSINESS INCOME ON ACCOUNT OF DIVIDEND FROM SHARES HELD AS STOCK IN TRADE. RESPECTFULLY FOLLOW ING THE JUDGMENT OF HONBLE GUJARAT HIGH COURT, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.2 OF THE REVE NUES APPEAL IS ALSO REJECTED. 6.3 REGARDING GROUND NO.4, OF THE REVENUES APPEAL, WE FIND THAT THE SAME IS IDENTICAL TO GROUND NO.4 RAISED IN THE REVE NUES APPEAL IN THE CASE OF GUJARAT AMBUJA COTSPIN LTD. AS PER GROUND N O.4 AND IN THAT CASE, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AN D THE GROUND OF THE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 33 REVENUE WAS REJECTED BY FOLLOWING THIS VERY JUDGEME NT OF HONBLE GUJARAT HIGH COURT CITED BEFORE US. ON THE SAME LI NES, IN THE PRESENT CASE ALSO, THIS GROUND OF THE REVENUE IS REJECTED. 6.4 IN THE RESULT, THIS APPEAL OF THE REVENUE IS AL SO DISMISSED. 7. NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF GUJARAT AMBUJA PROTEINS LTD. FOR THE ASSESSMENT YEAR 1993-9 4 IN RESPECT OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IN I.T .A.NO. 2003/AHD/2008. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE IN DELETING THE PENALTY OF RS.66,41,871/- LEVIED U/ S 271(1)(C). 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A) MAY BE CANCELLED AND THAT OF THE A.O. MAY BE RESTORED T O THE ABOVE EFFECT. 7.1 LD. D.R. SUPPORTED THE PENALTY ORDER WHEREAS TH E LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS SECURE METERS LTD. AS REPORTED IN 321 ITR 611 AND A LSO ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF RELIA NCE PETRO PRODUCTS PVT. LTD. AS REPORTED IN 322 ITR 158. 7.2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. WE FIND THAT IN T HE PRESENT CASE, PENALTY WAS IMPOSED BY THE A.O. U/S 271(1)(C) IN RE SPECT OF DISALLOWANCE OF RS.1,44,38,852/- U/S 35D INCURRED ON THE ISSUE O F DEBENTURES. THIS PENALTY WAS DELETED BY LD. CIT(A) AS PER PARAS 4, 4 ,1 AND 4.2 OF HIS ORDER WHICH ARE REPRODUCED BELOW: I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 34 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. CAREFULLY. I HAVE ALSO GONE THROUGH THE CASE LAWS CITED BY THE I D. A.R. I FIND THAT THE ISSUE OF CLAIM OF THE APPELLANT U/S.35D OF THE ACT IN RESPECT OF DEBENTURE ISSUE EXPENSES IS DEBATABLE. THE APPEL LANT HAD CLAIMED THE SAME AS REVENUE EXPENDITURE RELYING ON THE DECISION OF SUPREME COURT IN INDIA CEMENTS LTD. VS. CIT. HOWEVE R, THE HON'BLE TRIBUNAL HAS HELD THAT THE ISSUE EXPENSES O F CONVERTIBLE DEBENTURES ARE NOT ALLOWABLE U/S.37(1) OF THE ACT R ELYING ON THE DECISION OF I.T.A.T. AHMEDABAD BENCH IN THE CASE OF ASHIMA SYNTEX LTD VS. ACIT 100 ITD 247 (AHD)(SB) WHICH WAS RENDERED ON 24.3.2006 . THE FACT THAT THE TAX APPEAL OF THE APPELLANT HAS BEEN ADMITTED BEFORE THE HON'BLE GUJARAT HIGH COURT SHOWS THAT THE ISSUE IS DEBATABLE. 4.1 I HOWEVER DON'T AGREE WITH THE CONTENTION OF T HE A.R. THAT PROPER SATISFACTION HAS NOT BEEN RECORDED IN VIEW O F DECISION OF HON'BLE MADRAS HIGH COURT IN M. SAJJANRAJ NAHAR 283 ITR 230(MAD) WHEREIN IT HAS BEEN HELD THAT INDICATION I N THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS ARE INITI ATED SEPARATELY IS SUFFICIENT TO PROVE THAT THE A.O. HAS SATISFIED HIMSELF THAT THE ASSESSEE HAS CONCEALED HIS INCOME. 4.2 HOWEVER AS THE APPELLANT HAS DISCLOSED THE FAC TS REGARDING THE CLAIM OF THIS EXPENDITURE IN THE STATEMENT OF I NCOME FILED ALONG WITH RETURN OF INCOME AND PROFIT AND LOSS ACCOUNT , THERE IS NO NON- DISCLOSURE OF FACTS AND THERE IS NO QUESTION OF FUR NISHING INACCURATE PARTICULARS OF INCOME. IT IS BASICALLY A REJECTION OF CLAIM OF THE APPELLANT AND IT IS A DEBATABLE ISSUE AS THERE ARE CONFLICTING DECISIONS ON THE ISSUE , THEREFORE, IN VIEW OF THE VARIOUS DECISIONS RELIED UPON BY THE A.R., I HOLD THAT IT IS NOT A FI T CASE FOR LEVY OF CONCEALMENT OF PENALTY. ACCORDINGLY, THE PENALTY LE VIED U/S.271(1)(C) IS DIRECTED TO BE DELETED. 7.2.2 WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSU E ON THIS BASIS THAT THIS CLAIM WAS MADE BY THE ASSESSEE ON THE BASIS OF JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF INDIA CEMENTS LT D. VS CIT. HOWEVER, THE TRIBUNAL IN QUANTUM PROCEEDINGS HAS DE CIDED THIS ISSUE AGAINST THE ASSESSEE IN RESPECT OF CONVERTIBLE DEBE NTURES BY RELYING ON THE DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF AS HIMA SYNTEX LTD. VS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 35 ACIT 100 ITD 247 (AHD.)(SB) WHICH WAS RENDERED ON 2 4.03.2006. THE RETURN OF INCOME IN THE PRESENT CASE WAS FILED BY T HE ASSESSEE ON 27.09.94 AND, THEREFORE, AT THAT POINT OF TIME, THIS DECISIO N OF SPECIAL BENCH OF THE TRIBUNAL WAS NOT AVAILABLE. CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT EVEN AFTER CONFIRMING THE D ISALLOWANCE BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS, PENALTY IN THE PRESENT CASE IS NOT JUSTIFIED BECAUSE THE ISSUE WAS DEBATABLE AT THE TI ME OF FILING OF RETURN OF INCOME AND, THEREFORE, WE DECLINE TO INTERFERE IN T HE ORDER OF LD. CIT(A) ON THIS ISSUE. 7.3 IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. 8. NOW, WE TAKE UP THE CROSS APPEALS OF THE ASSESSE E AND THE REVENUE IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSMENT YEAR 1995- 96 IN I.T.A.NO. 1860 AND 1944/AHD/2000. 8.1 FIRST, WE TAKE UP THE REVENUES APPEAL. THE G ROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) /DY. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE FOLLOWING ADDITIONS: I) ON ACCOUNT OF LOSS IN INTER GROUP TRANSACTIONS RS.5 ,413/- II) ON ACCOUNT OF SHORT FORM CAPITAL LOSS THROUGH A CHHATARIA & CO. RS.20,38,500/- 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) /DY. CIT(A) OUGHT TO HAVE UPHELD THE ORDER O F THE A.O. 3) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) / DY. CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF TH E A.O. BE RESTORED TO THE ABOVE EXTENT. 8.1.1 LD. DR SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 8.1.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. REGARDING I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 36 GROUND NO.1, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 14 & 15 OF HIS ORDER WHICH ARE REPRODUCED BELO W: 14. AT THE APPELLATE STAGE, IT IS CLARIFIED THAT THE APPELLANT HAD ACTUALLY EARNED A PROFIT OF RS.5413/- ON INTER- GROUP SALES TRANSACTIONS AND IT WAS HELD TO BE NOT A REAL TRANS ACTION BY THE DEPARTMENT. IN VIEW OF THIS, THE APPELLANT HAD REDU CED THE BOOK PROFIT FROM THE COMPUTATION FROM THE TOTAL INCOME A S IN CASES WHERE LOSS HAD BEEN CLAIMED, THE RESPECTIVE ASSESSE E HAD OFFERED THAT LOSS TO TAX HAS NOT BEEN REAL. THE A.O. MIS-U NDERSTOOD THE WHOLE ISSUE AND HAS HELD THE ABOVE TO BE LOSS OF RS .5413/- AND HAS ADDED THE SAME TO ASSESSEES INCOME. THE A.O. IS W RONG IN DOING SO, PARTICULARLY IN VIEW OF THE FACT THAT IN HIS OR DER, HE HAS HELD THAT THE LOSS IS NOT REAL LOSS AND, THEREFORE, SAME ANAL OGY SHOULD BE APPLIED TO THE PROFITS AND HENCE, THE PROFITS SHOUL D BE REDUCED FROM THE BOOK PROFIT. 15. IN VIEW OF THE CLARIFICATION AS GIVEN ABOVE, IT IS HELD THAT TREATMENT GIVEN BY THE APPELLANT IN COMPUTATION OF STATEMENT OF INCOME, WAS CORRECT. THE A.O. HAD ERRED IN DISALLO WING SO CALLED LOSS WHICH AROSE ON ADMITTED UNREAL TRANSACTION, WH EN IN FACT THE APPELLANT HAD RECORDED PROFITS OF RS.5413/- IN THE GROUP TRADING TRANSACTION. HENCE, THE ADDITION AS MADE STANDS DE LETED. 8.1.3 FROM THE ABOVE PARAS OF THE ORDER OF LD. CIT( A), WE FIND THAT DISALLOWANCE WAS DELETED BY LD. CIT(A) ON THIS BASI S THAT THE A.O. HAS COMMITTED A MISTAKE IN MAKING ADDITION ON THIS BASI S THAT THE ASSESSEE HAS INCURRED A LOSS OF RS.5413/- IN RESPECT OF INTE R GROUP SALES TRANSACTIONS BUT THE FACT IS THIS THAT THE ASSESSEE HAD RECORDED PROFITS OF THIS AMOUNT IN RESPECT OF SUCH GROUP TRANSACTION. THIS FINDING OF FACT COULD NOT BE CONTROVERTED BY LD. D.R. AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON T HIS ISSUE. ACCORDINGLY, GROUND NO.1 OF THE REVENUES APPEAL IS REJECTED. 8.2 REGARDING GROUND NO.2, WE FIND THAT THIS ISSUE IS DECIDED BY LD. CIT(A) AS PER PARA 28 OF HIS ORDER WHICH IS REPRODU CED BELOW: 28. TO MY MIND HERE IS A CASE WHERE THE ASSESSING OFFICER HAS GONE BY SOME SUSPICIONS ALONE. IF THE A.O. HAD ANY GENUINE I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 37 DOUBT, HE COULD HAVE MADE PROPER ENTRIES FROM THE B ROKER. HOWEVER, NO SUCH ATTEMPT WAS MADE IN SPITE OF THE F ACT THAT IDENTITY, NAME AND ADDRESS OF THE BROKER WAS AVAILA BLE AND DELIVERY NUMBERS ETC. WERE ALSO ON RECORD. IN THIS CASE, TH E ASSESSING OFFICER HAS REACHED THE CONCLUSION WITHOUT CAUSING PROPER ENQUIRY AND IN A WAY HAS PROCEEDED ONE SIDEDLY. IN THE PRE SENT CASE, THE APPELLANT HAD ENTERED INTO DIFFERENT TRANSACTIONS A ND TO SUPPORT ITS CLAIM OF LOSS, THE APPELLANT HAD PRODUCED THE RELEV ANT DETAILS. TO INCUR THE LOSS, THE APPELLANT HAD DULY GIVEN AND TA KEN DELIVERY OF SHARES THROUGH THE BROKER WHICH FACT HAD BEEN DULY ACKNOWLEDGED BY THE BROKER. THE ASSESSING OFFICER COULD NOT PRO VE THAT NO DELIVERY WAS INVOLVED AND IT WAS A MERE ACCOMMODATI ON GIVEN TO THE ASSESSEE BY THE BROKER. SO MUCH SO THAT THE BR OKER THROUGH ALL TRANSACTIONS TOOK PLACE, WAS NEVER EXAMINED AND HIS SIDES OF THE STORY WAS NOT EVEN CONSIDERED. IN NUTSHELL, THE AS SESSING OFFICER JUST MADE THIS DISALLOWANCE ON THE BASIS OF INFEREN CES WHICH WERE NOT WELL PLACED AS DISCUSSED ABOVE. THERE IS NOTHIN G ON RECORD TO PROVE THAT THE LOSS WAS NOT GENUINE. ON THE RATES INVOLVED IN DIFFERENT TRANSACTIONS, THERE IS NO ADVERSE INFEREN CE DRAWN. SINE SUBSTANTIAL LOSS WAS CLAIMED, THE DISALLOWANCE W S PERHAPS RESTORED TO ON UNSUPPORTED INFERENCE. SINCE, THERE IS NOTHI NG TO PROVE THAT THE LOSS WAS NOT GENUINE, THE A.O. IS DIRECTED TO A LLOW THE SAME AS CLAIMED. THIS GROUND OF APPEAL IS THEREFORE DECIDE D IN FAVOUR OF THE ASSESSEE. 8.2.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) THAT THE ADDIT ION WAS MADE BY THE A.O. ON THE BASIS OF EXPENSES ALLOWED WITHOUT BRING ING ANY ADVERSE MATERIAL ON RECORD AND IN FACT, WITHOUT MAKING PROP ER INQUIRY. THIS FINDING IS ALSO GIVEN BY LD. CIT(A) THAT THERE IS N OTHING ON RECORD TO PROVE THAT THE LOSS WAS NOT GENUINE AND THE DISALLO WANCE WAS MADE BY THE A.O. ON UNSUPPORTED INFERENCE. LD. D.R. COULD NOT CONTROVERT THESE FINDINGS OF LD. CIT(A) AND HENCE, WE DO NOT FIND AN Y REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. 8.3 IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 38 9. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I. T.A.NO. 1860/AHD/2000. THE ASSESSEE HAS RAISED VARIOUS GRO UNDS BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT DEDUCTION WAS NOT ALLOWED TO THE ASSESSEE U/S 80HHC PROPERLY AND IT WAS CONTENDED BY THE LD. A.R. BEFORE US THAT THIS ISSUE HAS TO GO BACK TO THE FIL E OF THE A.O. FOR A FRESH DECISION AS PER THE AMENDED PROVISIONS OF SECTION 8 0HHC. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 9.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IN THE PRESENT CASE, THE ASSESSMENT ORDER WAS PASSED BY THE A.O. ON 312.03.1998 AND THE ORDER OF CIT(A) IS DATED 05.06. 2000 WHEREAS SUBSTANTIVE RETROSPECTIVE AMENDMENT HAS TAKEN PLACE IN SECTION 80HHC BY THE TAXATION LAW AMENDMENT ACT 2005 WITH RETROSP ECTIVE EFFECT FROM 01.04.1992. HENCE, WE FEEL THAT IN THE INTEREST OF JUSTICE, THIS ENTIRE ISSUE REGARDING ALLOWABILITY AND QUANTUM OF DEDUCTION ALL OWABLE TO THE ASSESSEE U/S 80HHC SHOULD GO BACK TO THE FILE OF TH E A.O. FOR A FRESH DECISION IN THE LIGHT OF THE AMENDED PROVISIONS OF SECTION 80HHC OF THE INCOME TAX ACT, 1961. ACCORDINGLY, WE SET ASIDE TH E ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS ENTIRE MATTER BACK TO T HE FILE OF THE A.O. FOR A FRESH DECISION REGARDING ALLOWABILITY OF DEDUCTION TO THE ASSESSEE U/S 80HHC AND ITS QUANTUM. THE A.O. SHOULD PASS NECESS ARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 9.2 IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. 10. NOW, WE TAKE UP THE CROSS APPEALS OF THE ASSESS EE AND THE REVENUE IN THE CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSESSMENT YEAR 2004- 05 IN I.T.A.NO. 1538 AND 1964/AHD/2009. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 39 10.1 FIRST, WE TAKE UP THE REVENUES APPEAL IN I.T. A.NO. 1964/AHD/2009. IN THIS CASE, ONLY GRIEVANCE OF THE REVENUE IS REGA RDING EXCLUSION OF EXCISE DUTY OF RS.1,21,18,095/- FROM TOTAL TURNOVER FOR COMPUTATION OF DEDUCTION U/S 10B. 10.1.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHER EAS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE PLACED RELIA NCE ON THE TRIBUNAL DECISION RENDERED IN ASSESSEES OWN CASE FOR THE AS SESSMENT YEAR 2003-04 IN I.T.A.NO. 2511/AHD/2007 DATED 24.12.2010. HE SU BMITTED A COPY OF THIS TRIBUNAL DECISION AND DRAWN OUR ATTENTION TO P ARA 28 OF THIS TRIBUNAL DECISION. 10.1.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE DECISION CITED BY THE LD. A.R. IN THE ASSESSEES OW N CASE FOR THE ASSESSMENT YEAR 2003-04. WE FIND THAT A SIMILAR IS SUE WAS RAISED BY THE REVENUE BEFORE THE TRIBUNAL IN THAT YEAR AND THE SA ME WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN PARA 28 OF TH E TRIBUNAL DECISION WHICH IS REPRODUCED BELOW: 28. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US . WE FIND HAT THE ISSUE IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT V S. LAKSHMI MACHINE WORKS, 290 ITR 667. IN -THIS CASE, THEN-LOR DSHIPS HELD AS UNDER: 'SECTION 80HHC OF THE INCOME-TAX ACT, 1961, IS A BE NEFICIAL SECTION : IT WAS INTENDED TO PROVIDE INCENTIVE TO P ROMOTE EXPORTS. THE INTENTION WAS TO EXEMPT PROFITS RELATA BLE TO EXPORTS. JUST AS COMMISSION RECEIVED BY THE ASSESSE E IS RELATABLE TO EXPORTS AND YET IT CANNOT FORM PART OF 'TURNOVER' FOR THE PURPOSES OF SECTION 80HHC, EXCISE DUTY AND SALES TAX ALSO CANNOT FORM PART OF 'TURNOVER'. JUST QS INTERE ST, COMMISSION, ETC., DO NOT EMANATE FROM THE 'TURNOVER ' SO ALSO EXCISE DUTY AND SALES TAX DO NOT EMANATE FROM SUCH TURNOVER. SINCE EXCISE DUTY AND SALES TAX DID NOT I NVOLVE ANY I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 40 SUCH TURNOVER SUCH TAXES HAD TO BE EXCLUDED. COMMIS SION, INTEREST, RENT, ETC., DO YIELD PROFITS, BUT THEY D O NOT PARTAKE OF THE CHARACTER OF TURNOVER AND THEREFORE THEY ARE NOT INCLUDIBLE IN THE 'TOTAL TURNOVER'. IF SO, EXCISE D UTY AND SALES TAX ALSO CANNOT FORM PART., OF THE TOTAL TURNOVER' UNDER SECTION 80HHC(3). RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE UPHOL D THE ORDER OF THE CIT(A) ON THIS POINT AND REJECT THE GROUND NO.2 OF THE REVENUE'S APPEAL. 10.1.3 SINCE THE ISSUE INVOLVED IN THE PRESENT CASE IS IDENTICAL, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRES ENT YEAR AND HENCE, BY RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION IN ASS ESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04, WE DECIDE THIS ISSUE IN FA VOUR OF THE ASSESSEE. 10.1.4 IN THE RESULT, THIS APPEAL OF THE REVENUE IS DISMISSED. 11. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I .T.A.NO. 1538/AHD/2009. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. A.O. IN DISALLOWING CL AIM OF DEDUCTION U/S. 35D OF THE ACT AMOUNTING TO RS. 857760/-. 2. THE LEARNED GIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID, AO IN HOLDING THAT WH ILE CALCULATING DEDUCTION / EXEMPTION U/S. 10B OF THE ACT, UNABSORB ED DEPRECIATION HAS TO BE REDUCED FROM THE ELIGIBLE PR OFITS. 3. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN HOLDING THAT WHI LE CALCULATING DEDUCTION U/S. 80HHC OF THE ACT, UNABSORBED DEPRECI ATION HAS TO BE REDUCED FROM ELIGIBLE PROFITS. 4. BOTH THE- LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FATS IN NOT PROPERLY APPRECIATING AND CONSIDERING VARIOUS S UBMISSION, EVIDENCES AND SUPPORTING PLACED ON RECORDS DURING T HE COURSE-OF THE PROCEEDINGS AND NOT PROPERLY APPRECIATING VARIO US FACTS AND LAW IN ITS PROPER PERSPECTIVE. 5. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN LEVYING INTEREST UNDER SECTION 234B / C OF THE ACT. 6. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN INITIATING PENAL TY PROCEEDINGS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 41 U/S. 271(L)(C) OF THE ACT WITHOUT RECORDINGS THE SA TISFACTION CONTEMPLATED UNDER THE SAID SECTION. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEA L AT THE TIME OF OR BEFORE THE HEARING OF THE APPEAL. 11.1 REGARDING GROUND NO.1, IT WAS SUBMITTED BY LD. A.R. THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE T RIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 2137/AHD/2007 DATED 24.12.2010. HE SUBMITTED A COP Y OF THIS TRIBUNAL DECISION AND DRAWN OUR ATTENTION TO PAGES 17-19 OF THIS TRIBUNAL ORDER. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 11.1.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE MATERIAL ON RECORD AND HAVE G ONE THROUGH THE ORDERS OF AUTHORI TIES BELOW. WE FIND THAT IN ASSESSMENT YEAR 2003-04, SIMILAR ISSUE WAS RAISED BEFORE THE TRIBUNAL AND IT WAS POINTED OUT BEFORE THE TRIBUNAL THAT THIS ISSUE OF DISALLOWANCE OF DEDUCTION U/S 35D AROSE FOR THE FIR ST TIME IN ASSESSMENT YEAR 1998-99 AND THE SAME IS PENDING IN APPEAL BEFO RE THE TRIBUNAL. THIS WAS SUBMITTED BY THE ASSESSEE BEFORE THE TRIBUNAL T HAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. WITH THE DIRE CTION TO FOLLOW THE FINDING OF THE TRIBUNAL IN ASSESSMENT YEAR 1998-99. THE ISSUE WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A .O. WITH THE SAME DIRECTIONS. ACCORDINGLY, IN THE PRESENT YEAR ALSO, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE BACK TO THE FILE OF THE A.O. WITH THE DIRECTION TO READJUDICATE THE SAME AS PER THE FINDING OF THE TRIBUNAL IN ASSESSMENT YEAR 1998-99. ACCORDINGLY, GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 11.2 REGARDING GROUND NO.2, IT WAS SUBMITTED BY LD. A.R. THAT THIS MATTER SHOULD ALSO GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION BECAUSE IT IS NOT CLEAR AS TO WHETHER THE BROUGHT F ORWARD DEPRECIATION IS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 42 FROM 10B BUSINESS OR SOME OTHER BUSINESS. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 11.2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS FACT IS NOT AVAILABLE ON RECORD AS TO WHE THER THE BROUGHT FORWARD UNABSORBED DEPRECIATION IS IN RESPECT OF 10B UNIT O R SOME OTHER UNIT. WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE REGAR DING SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION FROM BUSINESS INCOM E SHOULD BE DECIDED AFTER ASCERTAINING THE FACTUAL POSITION AS TO WHETHER THIS BROUGHT FORWARD UNABSORBED DEPRECIATION IS IN RESPECT OF 10 B INDUSTRIAL UNDERTAKING OR SOME OTHER UNIT BECAUSE AS PER SUB-S ECTION (4) OF SECTION 10B, PROFITS DERIVED FROM EXPORT SHOULD BE THE AMOU NT WHICH BEAR TO THE PROFITS OF BUSINESS OF UNDERTAKING, THE SAME PROPOR TION AS EXPORT TURNOVER BEAR TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. IN OUR CONSIDERED OPINION, FOR THE PURPOSE OF GIVIN G EFFECT TO THE SUB- SECTION (4) OF SECTION 10B, PROFIT OF 10B UNDERTAKI NG HAS TO BE WORKED OUT FIRST AND THEREAFTER, THE ALLOWABLE DEDUCTION HAS T O BE WORKED OUT IN PROPORTION TO EXPORT TURNOVER TO TOTAL TURNOVER. T O WORK OUT THE PROFIT OF 10B UNDERTAKING, ONLY THE BROUGHT FORWARD UNABSORBE D DEPRECATION OF 10B UNDERTAKING SHOULD BE CONSIDERED AND NOT BROUGH T FORWARD UNABSORBED DEPRECATION OF ANY OTHER UNIT. WE, THER EFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE M ATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11.3 REGARDING GROUND NO.3, IT WAS FAIRLY CONCEDED BY THE LD. A.R. THAT THIS IS COVERED AGAINST THE ASSESSEE BY THE TRIBUNA L ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 2137/ AHD/2007 DATED I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 43 29.12.2010. HE DRAWN OUR ATTENTION TO PARA 13 & 1 4 OF THIS TRIBUNAL DECISION. RESPECTFULLY FOLLOWING THE PRECEDENCE, I N THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. GROUND NO.3 OF THE ASSESSEE IS REJECTED. 11.4 GROUND NO.4 IS GENERAL. 11.5 GROUND NO.5 IS REGARDING LEVY OF INTEREST U/S 234B AND 234C WHICH IS CONSEQUENTIAL ISSUE AND GROUND NO.6 IS REG ARDING INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) WHICH IS PREMATUR E. 11.6 IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 12. NOW, WE TAKE UP THE CROSS APPEALS OF THE ASSESS EE AND THE REVENUE IN CASE OF GUJARAT AMBUJA EXPORTS LTD. FOR THE ASSE SSMENT YEAR 2005-06 IN I.T.A.NO. 1539 AND 1965/AHD/2009. 12.1 FIRST, WE TAKE UP THE REVENUES APPEAL IN I.T. A.NO. 1965/AHD/2009. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.L,54,96,6737- MADE ON ACCOUNT OF UTI LIZED CENVAT CREDIT BEING IN THE NATURE OF REVENUE RECEIPT IN VI EW OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CHORANGEE SALE S BUREAU PVT. LTD. 87 ITR 542 AND SINCLARE MURRAY T CO. PVT. LTD. 97 ITR 615. 2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION IN RESPECT OF UNUTILIZED CENVAT CREDIT WIT HOUT CONSIDERING THE AMENDMENT IN THE FORM SECTION 145A, WHICH MANDATES INCLUSION OF SALES TAX AND EXCISE DUTY IN PURCHASE AND SALE AND INVENTORIES FOR THE PURPOSE OF COMPUTATION OF INCOME. 3) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO TREAT EXPENSES OF RS,1.74.98,6 4U- AS REVENUE EXPENDITURE WITHOUT CONSIDERING THE FACTS BROUGHT O N RECORD THAT SUCH EXPENDITURE WAS CAPITAL IN NATURE AS ENTIRE TE CHNOLOGY OF THE D.G.SET WAS CHANGED FROM HSD BASED FURNACE OIL BASE D. 4) THE LD. CTT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 10B ON SU RPLUS FROM EXCHANGE RATE FLUCTUATION, WITHOUT CONSIDERING THE LEGAL POSITION THAT THE SAME IS NOT 'DERIVED FROM' EXPORT OF THE G OODS AND ALSO I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 44 WITHOUT VERIFICATION AS TO WHETHER THE SAME HAS BEE N RECEIVED BY THE ASSESSEE WITHIN THE PRESCRIBED TIME LIMIT UNDER THE ACT 5). ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE C1T (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 6) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 12.1.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE FURTHER SUBM ITTED THAT THE ISSUE RAISED BY THE REVENUE IN GROUNDS NO.1 & 2 IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX COURT REN DERED IN THE CASE OF CIT VS INDO NIPPON CHEMICALS CO. LTD. AS REPORTED I N 261 ITR 275 AND ALSO BY THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS UNIQUE INDUSTRIES AS REPORTED IN 307 ITR 350. REGARDING GROUND NO.3, HE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT & ANOTHER VS SAGAR TALKIES AS REPORTED IN 325 ITR 133 AND REGARDING GROUND NO.4, HE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT REND ERED IN THE CASE OF CIT VS AMBA IMPEX AS REPORT ED IN 282 ITR 144. 12.1.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. REGARDING GROUNDS NO.1 & 2, WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY BOTH THE JUDGEMENTS CITED BY THE LD. A.R. AND HENCE, BY RESPECTFULLY FO LLOWING THESE TWO JUDGEMENTS, WE DECIDE THIS ISSUE IN FAVOUR OF THE A SSESSEE AND ACCORDINGLY, THESE TWO GROUNDS OF THE REVENUES APP EAL ARE REJECTED. 12.2 REGARDING GROUND NO.3, WE FIND THAT THE ISSUE IN DISPUTE IS REGARDING EXPENSES INCURRED BY THE ASSESSEE ON RENO VATION OF D. G. SET WHICH WAS CONVERTED INTO FURNACE OIL FROM HSD. THI S ISSUE WAS DECIDED BY LD. CIT(A) IN FAVOUR OF THE ASSESSEE BY FOLLOWIN G VARIOUS JUDGEMENTS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 45 OF VARIOUS HIGH COURTS AND THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF EMPIRE JUTE CO. VS CIT AS R EPORTED IN 124 ITR 01. BEFORE US, RELIANCE WAS PLACED BY THE LD. A.R. ON THE JUDGEMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F SAGAR TALKIES (SUPRA). IN PARA 7.2 OF HIS ORDER, LD. CIT(A) HAS NOTED THESE SUBMISSIONS OF THE ASSESSEE THAT THE ASSESSEE HAS NOT PURCHASED ANY NEW GENSET AND NOT ENHANCED THE INSTALLED CAPACITY OF THE EXISTING GENSET. THE ASSESSEE HAS MERELY CHANGED THE INPUT REQUIREMENT OF DG SET FROM HSD TO FURNACE OIL BECAUSE OF BUSINESS EXPEDIENCY SINCE IMPORT PRI CE OF HSD SHOT UP FROM US$24 TO US$44-48/BARREL AND, THEREFORE IT WAS NOT ADVISABLE TO CONTINUE WITH HSD AS FUEL FOR GENERATION OF ELECTRI CITY AND FOR THIS REASON, THE GENSET WAS RENOVATED AND CONVERTED INTO GENSET RUNNING WITH FURNACE OIL AS INPUT. LD. CIT(A) HAS ALSO GIVEN HI S FINDING IN PARA 7.3 OF HIS ORDER THAT THE A.O. HAS NOT CONTROVERTED THE CL AIM OF THE ASSESSEE THAT AFTER CHANGE OF FUEL INPUT, THE CAPACITY OF GENSET DID NOT ALTER. LD. CIT(A) HAS QUESTIONED THE ASSESSEE AND NOTED THAT T HE ASSESSEE HAS NOT ACQUIRED NEW CAPITAL OR ENHANCED EXISTING CAPACITY AND, THEREFORE, EXPENSE INCURRED IS NOT CAPITAL EXPENDITURE. THIS FINDING OF CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R. VARIOUS JUDGEM ENTS FOLLOWED BY LD. CIT(A) ARE ALSO SUPPORTING THE CASE OF THE ASSESSEE . HENCE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE IN THE ORDER OF L D. CIT(A) ON THIS ISSUE. 12.2.1 GROUND NO.3 OF THE REVENUE IS ALSO REJECTED. 12.3 REGARDING GROUND NO.4, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 10.6 OF HIS ORDER BY FOLLOWING T HE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CA SE OF CIT VS AMBA IMPEX LTD. AS REPORTED IN 282 ITR 144. HE HAS ALSO CONSI DERED THE TRIBUNAL DECISION IN THE CASE OF ITO VS GYANI EXPORTS AS REP ORTED IN 94 TTJ 557 WHEREIN, IT WAS HELD THAT GAIN FROM FOREIGN EXCHANG E FLUCTUATION AS I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 46 ELIGIBLE FOR DEDUCTION U/S 80HHC. NO CONTRARY DECI SION WAS BROUGHT TO OUR NOTICE BY LD. D.R. AND HENCE, ON THIS ISSUE ALS O, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). GROUND NO.4 IS ALSO REJECTED. 12.4 GROUNDS N.5 & 6 ARE GENERAL. 12.5 IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. 13. NOW, WE TAKE UP THE ASSESSEES APPEAL IN I.T.A. NO. 1539/AHD/2009. 13.1 GROUND NO.1 IS AS UNDER: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AN D ON FACTS IN CONFIRMING THE ACTION OF ID. A.O. IN DISALLOWING DE DUCTION U/S. 10B OF THE ACT IN THE SUM OF RS. 2,23,09,295/- IN R ESPECT OF COTTON YARD DIVISION. 13.1.1 IT WAS FAIRLY CONCEDED BY THE LD. A.R. TH AT THIS ISSUE HAS TO BE DECIDED AGAINST THE ASSESSEE BECAUSE THE PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS FOR THE PURPOSE OF BENEFIT U/S 10B WAS OVER IN ASSESSMENT YEAR 2004-05. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS REJECTED. 13.2 GROUND NO.2 & 3 ARE AS UNDER: 2. THE LEARNED CIT (A) HAS ERRED IN LAW AND F ACTS IN CONFIRMING THE ACTION OF ID. AO IN NOT GRANTING DEDUCTION U/S. 10B OF THE ACT ON COTTON YARN DIVISION ON THE INCOME FROM COMMISSI ON ON OCEAN FREIGHT RS. 7,15,225/- MISC. INCOME RS. 6,57,491/-, INTEREST INCOME RS. 2,33,64,787/- AND EXCHANGE FLUCTUATION GAIN RS. 8,47,31,260/-. 3. ALTERNATIVELY AND WITHOUT PREJUDICE, ONLY THE N ET AND NOT GROSS INCOME FROM COMMISSION ON OCEAN FREIGHT, MISC. INCO ME, INTEREST INCOME AND EXCHANGE FLUCTUATION GAIN FROM COTTON YA RN DIVISION CAN BE REDUCED WHILE CALCULATING DEDUCTION / EXEMPT ION U/S. 1 OB OF THE ACT ON COTTON YARN DIVISION. 13.2.1 IT WAS SUBMITTED BY THE LD. A.R. THAT IF THE GROUND NO.1 OF THE ASSESSEE IS REJECTED, THEN THESE TWO GROUNDS BECOME OF ACADEMIC INTEREST. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 47 ACCORDINGLY, THESE TWO GROUNDS ARE ALSO REJECTED BE ING OF ACADEMIC INTEREST ONLY. 13.3 GROUND NO.4 IS AS UNDER: 4. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE ACTION OF ID. AO IN INCLUDING EXCISE DUTY AND SALES TAX TO THE TOTAL TURNOVER WHILE CALCULATING DEDUCTI ON / EXEMPTION U/S. 1 OB OF THE ACT ON COTTON YARN DIVISION. 13.3.1 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX CO URT RENDERED IN THE CASE OF CIT VS LAXMI MACHINE WORKS AS REPORTED IN 2 90 ITR 667 (S.C.). LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 13.3.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF HONBLE APE X COURT, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. IN EARLIER Y EAR I.E. ASSESSMENT YEAR 2003-04 IN ASSESSEES OWN CASE IN I.T.A.NO. 2511/AH D/2007 ALSO, SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. ACCOR DINGLY THIS GROUND OF THE ASSESSEE IS ALLOWED. 13.4 GROUND NO.5 IS AS UNDER: 5. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN HOLDING THAT WHI LE CALCULATING DEDUCTION / EXEMPTION U/S. 10B OF THE ACT ON COTTON YARN DIVISION, UNABSORBED DEPRECIATION HAS TO BE REDUCED FROM THE ELIGIBLE PROFITS. 13.4.1 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS I SSUE IS IDENTICAL AS GROUND NO.2 IN ASSESSEES OWN CASE FOR ASSESSMENT Y EAR 2004-05 AND THEREFORE, THIS ISSUE SHOULD GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION ON SIMILAR LINES. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 48 13.4.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT A SIMILAR ISSUE WAS RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2004-05 I.E. IN I.T.A.NO. 1538/AHD/2009 AS PER GROUND NO.2. WHILE DECIDING THIS APPEAL WE HAVE SET ASIDE THE ORDER OF LD. CIT(A) AN D RESTORED THE MATTER BACK TO THE FILE OF THE A.O. AS PER PARA 11.2.1 AB OVE. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THE ORDER OF LD. CIT(A) IS SET A SIDE AND THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH D ECISION WITH SIMILAR DIRECTION GIVEN BY US IN ASSESSMENT YEAR 2004-05. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 13.5 GROUNDS NO.6 & 7 ARE AS UNDER: 6. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN NOT GRANTING DED UCTION U/S. 10B OF THE ACT ON KADI DIVISION ON THE INCOME FROM COMM ISSION ON OCEAN FRIGHT RS. 50,062/-, MISC. INCOME RS. 3,15,25 6/- AND EXCHANGE FLUCTUATION GAIN RS. 7,94,732/- 7. ALTERNATIVELY AND WITHOUT PREJUDICE, ONLY THE NET AND NOT THE GROSS INCOME FROM COMMISSION ON OCEAN -.FREIGHT, MI SC. INCOME, AND EXCHANGE FLUCTUATION GAIN FROM KADI DIVISION CA N BE REDUCE WHILE CALCULATING DEDUCTION 7 EXEMPTION U/S. 10B OF THE ACT ON KADI DIVISION. 13.5.1 LD. A.R. SUBMITTED THAT THIS GROUND IS NOT P RESSED BECAUSE ONE PART I.E. REGARDING EXCHANGE FLUCTUATION GAIN WAS DECIDE D BY LD. CIT(A) IN FAVOUR OF THE ASSESSEE AND FOR THE REMAINING ASPECT I.E. COMMISSION FROM OCEAN FREIGHT AND MISCELLANEOUS INCOME, THERE IS NO MERIT IN THE ASSESSEES GROUND., ACCORDINGLY, THESE TWO GROUNDS I.E. GROUNDS NO.6 & 7 ARE REJECTED AS NOT PRESSED. 13.6 GROUND NO.8 IS AS UNDER: 8. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN HOLDING THAT WHI LE CALCULATING DEDUCTION / EXEMPTION U/S. 10B OF THE ACT ON KADI D IVISION, I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 49 UNABSORBED DEPRECIATION HAS TO BE REDUCED FROM THE ELIGIBLE PROFITS. 13.6.1 IT WAS SUBMITTED BY THE LD. A.R. THAT LD. CI T(A) HAS FOLLOWED HIS OWN ORDER FOR ASSESSMENT YEAR 2004-05. HE SUBMITTE D THAT IN THE PRESENT YEAR ALSO, THIS ISSUE SHOULD GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER FINDING AS TO WHETHER BROUGHT FORWAR D UNABSORBED DEPRECIATION BELONGING TO 10B UNIT OR NOT. IN ASSE SSMENT YEAR 2004-05, WE HAVE SET ASIDE THE ORDER OF LD. CIT(A) AND RESTO RED BACK THIS ISSUE TO THE FILE OF THE A.O. FOR A FRESH DECISION AS PER PA RA 11.2.1 ABOVE. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THE ORDER OF LD. CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION WITH SIMILAR DIRECTION GIVEN BY US IN ASSESSMENT YEAR 2004-05. THIS GROUND IS ALLOWED FOR STATISTICAL PU RPOSES. 13.7 GROUND NO.9 IS AS UNDER: 9. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF ID. AO IN DENYING SET OFF OF UNABSORBED DEPRECIATION OF RS.7,18,74,648/- OF EARLIER YEARS. 13.7.1 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS I SSUE SHOULD ALSO GO BACK TO THE FILE OF THE A.O. BECAUSE IT IS CONSEQUENTIAL TO THE FINAL DECISION IN ASSESSMENT YEAR 2004-05. IN ASSESSMENT YEAR 2004-0 5, WE HAVE RESTORED THIS MATER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER EXAMINING THIS ASPECT AS TO WHETHER THE BROUGHT FORWARD UNABS ORBED DEPRECIATION IS IN RESPECT OF 10B UNIT OR OTHER UNIT AND WE HAVE HE LD THAT ONLY BROUGHT FORWARD UNABSORBED DEPRECIATION OF 10B UNIT SHOULD BE ADJUSTED AGAINST THE BUSINESS PROFIT OF 10B UNDERTAKING. HENCE, IN THE PRESENT YEAR ALSO, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION I N THE LIGHT OF HIS FINAL I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 50 DECISION ON THIS ISSUE IN ASSESSMENT YEAR 2004-05. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 13.8 GROUND NO.10 IS GENERAL AND GROUND NO.11 IS RE GARDING LEVY OF INTEREST U/S 234B AND 234C WHICH IS CONSEQUENTIAL I SSUE. GROUND NO.12 IS REGARDING INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) WHICH IS PREMATURE. 13.9 IN THE RESULT, APPEAL OF THE ASSESSEE STANDS P ARTLY ALLOWED IN TERMS INDICATED ABOVE. 14. IN THE COMBINED RESULT, APPEAL OF THE ASSESSEE IN I.T.A.NO. 113/AHD/1999 IS ALLOWED, THE APPEALS OF THE REVENUE IN I.T.A. NOS. 202, 203 & 204/AHD/1999, 2003/AHD/2008, 1944/AHD/2000, 1 964 & 1965/AHD/2009 ARE DISMISSED AND I.T.A.NO.1860/AHD/2 000 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND I. T.A.NOS.1538 & 1539/AHD/2009 OF THE ASSESSEE ARE PARTLY ALLOWED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.113,202,203,204/AHD/1999 I.T.A.NO. 1860,1944/AHD/2000 I.T.A.NO.2003/AHD/2008 I.T.A.NO.1538,1539,1964,1965/AHD/2009 51 1. DATE OF DICTATION 6/7 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17/7. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20/7 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.20/7 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20/07/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .