D.C.I.T Cir - 5,kolkata, Kolkata V. M/s Essel Mining & Industries Ltd., Kolkata

ITA 2073/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9243 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: D S DAMLE; AKKAL DUDHWEWALA ACA
• Keywords: Capital asset; Depreciation; Rule of consistency; Retrospective amendment; Additional evidence; Capital receipt
• Section: 143(3); 14A; 32; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 786 & 2073 / KOL / 2013 ASSESSMENT YEAR :2008-09 ESSEL MINING & INDUSTRIES LTD., 18 TH FLOOR, 10, CAMAC STREET, KOLKATA-17 [ PAN NO.AAACE 6607 L ] DCIT, CIRCLE-5, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 V/S . V/S . DY. COMMISSIONER OF INCOME TAX, CIRCLE-5, INDUSTRY HOUSE, 18 TH FLOOR, 10, CAMAC STREET, KOLKATA-17 M/S ESSEL MINING & INDUSTRIES LTD., 18 TH FLOOR, 10, CAMAC STREET, KOLKATA-17 . /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI D.S. DAMLE, FCA & SHRI AKKAL DUDHWEWALA, ACA /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 16-01-2017 ! /DATE OF PRONOUNCEMENT 10-03-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THE CROSS-APPEALS FOR THE ASSESSMENT YEAR 2008-09 HAVE BEEN FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DA TED 01.02.2013. ASSESSMENT WAS FRAMED BY ADDL. CIT, RANGE-5, KOLKAT A U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 22.12.2010. ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 2 SHRI D.S. DAMLE AND SHRI AKKAL DUDHWEWALA, LD. AUTH ORIZED REPRESENTATIVES APPEARED ON BEHALF OF ASSESSEE AND SHRI RADHEY SHYA M, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. AT THE THRESHOLD IT IS NOTED THAT THERE IS A DEL AY OF 53 DAYS IN FILING THE APPEAL BY THE REVENUE. THE REVENUE HAS FILED CONDON ATION PETITION IN THIS REGARD STATING THE REASONS THAT THE DELAY IS OCCURR ED DUE TO HUGE PENDENCY OF WORK-LOAD AND ADDITIONAL CHARGES. LD. AR FOR ASSESS EE SUBMITTED THAT CONSIDERING DELAY HE SHOULD NOT BE HAVING ANY OBJEC TION TO THE BENCH IF CONSIDERING THE DELAY OF CONDONATION. THIS, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, I.E., IN THIS CASE DESERVES TO BE CONSIDERED AND SAME IS CONDONED. FIRST WE TAKE UP ASSESSEES GROUNDS OF APPEAL IN IT A NO.786/KOL/2013 . 3. THE ISSUE RAISED BY ASSESSEE IN GROUND NUMBER 1, 2,3 AND 4 IS THAT LD CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTA INING THE DISALLOWANCE OF RS.17,15,98,000.00 UNDER THE PROVISIONS OF SECTION 14A OF THE ACT. 4. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE MANUFACTURING BUSINESS O F RISING OF ORE, MANUFACTURING OF NITROGEN GAS AND FERRO ALLOYS, TRA DING OF IRON ORE AND FERRO ALLOYS, GENERATION OF ELECTRICITY (WIND POWER MILL) & RAILWAY SIDING FOR CAPTIVE USE. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION H AS EARNED DIVIDEND INCOME OF RS. 7.10 CRORES WHICH WAS CLAIMED AS EXEM PTED UNDER SECTION 10(34) OF THE ACT. ON QUESTION BY THE AO FOR INVOKI NG THE PROVISIONS OF SECTION 14A OF THE ACT WITH REGARD TO THE DIVIDEND INCOME, THE ASSESSEE SUBMITTED AS UNDER : 1. THERE WAS NO DIRECT EXPENDITURE INCURRED IN EARN ING THE AFORESAID DIVIDEND INCOME AS THE DIVIDEND WAS RECEIVED IN THE BANK DIRECTLY. 2. THERE WAS NO BORROWED FUND USED IN MAKING THE IN VESTMENT THEREFORE THE QUESTION OF INTEREST DISALLOWANCE DOE S NOT ARISE. 3. THE ASSESSEE FOR THE ADMINISTRATIVE EXPENSES HAS MADE THE DISALLOWANCE OF RS.5.97 LACS AND SUBMITTED THE DETA ILS OF THE SAME ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 3 IN ANNEXURE B AND STATED THAT 4 PERSONS SALARY HAS BEEN ALLOCATED TO THIS. HOWEVER THE AO REJECTED THE CONTENTION OF THE ASSES SEE BY OBSERVING THAT THE LAW DOES NOT MAKE ANY DISTINCTION FOR THE DISALLOWA NCE UNDER SECTION 14A OF THE ACT IN A CASE WHERE THE DIVIDEND WAS CREDITED T O THE BANK DIRECTLY. ACCORDINGLY THE AO INVOKED THE PROVISIONS OF RULE 8 D READ WITH SECTION 14A OF THE ACT AND HAS MADE THE DISALLOWANCE AS UNDER I. DIRECT EXPENSES NIL II. INTEREST EXPENSES RS. 1573.03 LACS III. ADMINISTRATIVE EXPENSES RS. 143.00 LACS 5 AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD CIT( A). THE ASSESSEE BEFORE THE LD. CIT-A SUBMITTED AS UNDER : I. THE ORDER OF THE AO IS SILENT FOR HIS DISSATISFA CTION ABOUT THE SUO-MOTU DISALLOWANCE MADE BY THE ASSESSEE. THUS TH E AO HAS INVOKED THE PROVISIONS OF RULE 8D READ WITH SECTION 14A OF THE ACT AGAINST THE PROVISIONS OF SECTION 14A(2) OF THE ACT . AS PER THE PROVISIONS OF SECTION THE AO HAS TO RECORD HIS SATI SFACTION AFTER HAVING REGARDS TO THE ACCOUNTS OF THE ASSESSEE. II. THE ASSESSEE FURTHER SUBMITTED THAT IN THE EARL IER YEARS ONLY 1% OF DIVIDEND INCOME WAS DISALLOWED THEREFORE THE SAM E SHOULD BE APPLIED IN THE YEAR UNDER CONSIDERATION ON THE BASI S OF PRINCIPLE OF CONSISTENCY III. THE ASSESSEE FURTHER SUBMITTED THAT NO BORROWE D FUND HAS BEEN UTILIZED IN MAKING THE IMPUGNED INVESTMENT. HENCE T HERE IS NO QUESTION OF DISALLOWING THE INTEREST EXPENSES. HOWEVER, THE LD CIT(A) DURING THE APPELLATE PROCEED INGS HAS OBSERVED THAT THE ASSESSEE HAS SHOWN THE LOAN OF RS. 20.06 CRORES IN ITS BALANCE SHEET AS ON 31 ST OF MARCH 2008 AND THE INTEREST INCURRED DURING THE YEAR IS OF RS. 208.31 CRORES. THE AVERAGE INVESTMENT DURING THE YE AR IS OF RS.285.99 CRORES. ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 4 THE PROVISIONS OF RULE 8D READ WITH SECTION 14A OF THE ACT ARE APPLICABLE WITH EFFECT FROM ASSESSMENT YEAR 2008-09 WHICH REQUIRES THE DISALLOWANCE IN A PARTICULAR MANNER WHERE THE AO IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE A FTER HAVING REGARD TO THE BOOKS OF ACCOUNTS. IN SUCH A SITUATION IT IS MANDATORY TO INVOKE THE PROVISIONS OF RULE 8D OF INCOME TAX RULES 1962. THE INVESTMENT HAS BEEN MADE OUT OF THE FUND USED I N THE COMMON KITTY. THERE IS NO DOCUMENTARY EVIDENCE SHOWING THA T THE INVESTMENT HAS BEEN MADE OUT OF THE EXCLUSIVE FUND OF THE ASSE SSEE AND NO BORROWED FUND HAS BEEN USED. BESIDES THE INTEREST EXPENSES THE ASSESSEE HAS INCU RRED VARIOUS INDIRECT EXPENSES WHICH ARE REQUIRED TO BE DISALLOW ED IN TERMS OF THE PROVISIONS OF RULE 8D READ WITH SECTION 14A OF THE ACT. THE DECISIONS OF THE MANAGEMENT FOR MAKING THE INVE STMENT ARE VERY COMPLEX IN NATURE. THEY REQUIRE DAY TO DAY MARKET I NFORMATION, RESEARCH OF THE INFORMATION, ANALYSIS OF MARKET TRE ND, THE APPROPRIATE TIME FOR INVESTMENT AND ITS DURATION ETC. THEREFORE THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED AS THE DI VIDEND WAS RECEIVED DIRECTLY IN THE BANK ACCOUNT IS NOT TENABL E. IN VIEW OF ABOVE, THE LD. CIT(A) HAS CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 30. THE APPELLANT HAS INCURRED AN AMOUNT OF RS.208, 31,77, AS INTEREST DURING THE YEAR AND THE AVERAGE OF INVESTMENTS AMOUNT TO R S.285,99,07,000/- WHILE THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF R S.17,16,03,000/- ONLY. THE TOTAL DISALLOWANCE AMOUNTS TO 6% OF THE AVERAGE INVESTMENTS. THEREFORE, IN THE FACTS & CIRCUMSTANCES AS DISCUSSED AND FOLLO WING THE JUDGMENTS OF THE HON'BLE APPELLATE AUTHORITIES INCLUDING THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ISG TRADERS LT. VS. CIT-III, KOLKATA & DHANUKA & SONS V. CIT (CENTRAL)-1; THE HON'BLE SPECIAL BENCH OF ITAT IN T HE CASE OF CHEMINVEST LTD. V. INCOME-TAX OFFICER, NEW DELHI AND THE HON'BLE IT AT DELHI BENCH H IN THE CASE OF TECHNOPAK ADVISORS (P) LTD. V. ADDITIONAL COMMISSIONER OF INCOME- TAX, RANGE-16, NEW DELHI, THE DISALLOWANCE OF RS.17 ,16,03,000/- AS PER RULE 8D READ WITH SECTION 14A IS UPHELD. THE ASSESSING O FFICER WAS RIGHT IN DISALLOWING EXPENDITURE OF RS.17,116,03,000/- U/S 1 4A IN RELATION TO THE APPELLANTS EXEMPTED INCOME OF RS.7,10,12,674/- N T HE NORMAL AS WELL AS IN THE COMPUTATION U/S. 115JB. THE ASSESSING OFFICER W AS RIGHT IN APPLYING RULE 8D FOR MAKING A DISALLOWANCE U/S. 14A AFTER STATING THAT HE IS NOT SATISFIED WITH ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 5 THE DISALLOWANCE MADE BY THE APPELLANT U/S. 14A. TH E ASSESSING OFFICER WILL VERIFY THE DISALLOWANCE FIGURE SHOWN BY THE APPELLA NT IN THE RETURN WHETHER IT WAS SHOWN AT RS.5,000/- OR RS.87,455/- AND GIVE THE DEDUCTION ACCORDINGLY FROM THE DISALLOWANCE CALCULATED AS PER RULE 8D R.W .S. 14A. THE ASSESSING OFFICER WILL ALSO ADD ANY DIRECT EXPENDITURE INCURR ED ON EARNING OF EXEMPTED INCOME ON ACCOUNT OF DEMAT, INTEREST, SPECIFIC EXPE NSES ETC AS PROVIDED IN RULE 8D(2)(I) IN ADDITION TO DISALLOWANCE OF RS.17, 16,03,000/- U/S. 14A BUT DEDUCTED ANY EXPENDITURE SHOWN ON AD HOC BASIS BY T HE APPELLANT OUT OF RS.17,16,03,000/-. THESE GROUNDS OF APPEAL ARE ACCO RDINGLY DECIDED. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. THE LD. AR BEFORE US SUBMITTED THAT THE AO CANNO T MAKE ANY DISALLOWANCE UNDER THE PROVISIONS OF RULE 8D READ W ITH SECTION 14 A OF THE ACT WITHOUT RECORDING HIS DISSATISFACTION ABOUT THE COR RECTNESS OF THE CLAIM MADE BY THE ASSESSEE. THE LD AR FURTHER SUBMITTED THAT I N THE EARLIER ASSESSMENT YEARS THE DISALLOWANCE WAS MADE AT THE RATE OF 1% O F THE DIVIDEND INCOME. THEREFORE, THE DISALLOWANCE FOR THE YEAR UNDER CONS IDERATION SHOULD BE LIMITED TO 1% ONLY. THE LD AR IN SUPPORT OF ASSESSEES CLAI M DREW OUR ATTENTION ON PAGE 61 OF THE PAPER BOOK WHERE THE DETAILS OF THE DISALLOWANCES MADE IN THE EARLIER YEARS WERE PLACED. THE LD AR ALSO DREW OUR ATTENTION ON PAGE 16 OF THE PAPER BOOK WHERE THE DETAILS OF THE DISALLOWANCES O FFERED BY THE ASSESSEE FOR RS. 5,97,043.00 WAS PLACED AND DEMONSTRATED THAT NO DEFECT IN THE AFORESAID DISALLOWANCES WAS POINTED OUT BY THE LOWER AUTHORIT IES. THE LD AR IN SUPPORT OF HIS CLAIM HAS ALSO RELIED IN THE FOLLOWING ORDER S. DECISIONS RELIED : 1) DCIT VS. REI AGRO LTD. (ITAT KOLKATA) ITA NO.181 1/KOL/2012 (PG 1 TO 12) 2) CIT VS. REI AGRO LTD. (CALCUTTA HIGH COURT) ITA T NO.161 OF 2013 (PG 13 & 14) 3) ACIT VS. AMITABH SONTHALIA (ITAT KOLKATA) ITA NO .1750/KOL/2010 & ITA NO. 1181/KOL/2011 (PG 15 TO 20) 4) JOINT INVESTMENTS ((P) LTD. VS. CIT (DELHI HIGH COURT) IA NO.117 OF 2015 (PG 21 TO 23) ALTERNATIVELY THE LD AR ALSO CLAIMED THAT THE DISAL LOWANCES U/S 14A OF THE ACT SHOULD BE WORKED OUT IN RESPECT OF THOSE INVESTMENT S WHICH HAVE YIELDED TAX ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 6 FREE DIVIDEND INCOME DURING THE YEAR UNDER CONSIDER ATION. FOR THIS PROPOSITION, THE LD AR HAS RELIED IN THE FOLLOWING CITED ORDERS. DECISIONS RELIED : A) REI AGRO LT.D VS. DCIT (ITAT KOLKATA) TA NO.1331 & 1423/KOL/2011 (PG 24 TO 34) B) UPHELD BY THE CALCUTTA HIGH COURT IN THE CASE OF CIT, C-II VS. M/S REI AGRO LTD. ITAT NO.220 OF 2013 (PG 35 TO 38) ON THE OTHER HAND, THE LD THE DR VEHEMENTLY SUPPORT ED THE ORDER OF AUTHORITIES BELOW. 7. WE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE DISALLOWANCE MADE BY THE AO UNDER SE CTION 14A OF THE ACT R.W.R 8D OF INCOME TAX RULES 1962. THE DISALLOWANCE WAS A LSO CONFIRMED BY THE LD CIT(A). 7.1 AT THE OUTSET, IT WAS OBSERVED THAT THE ASSESSE E OFFERED THE DISALLOWANCES U/S 14A OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR RS. 5,97,043.00. THE SAID DISALLOWA NCE WAS OFFERED FOR THE ADMINISTRATIVE EXPENSES UNDER THE PROVISIONS OF RUL E 8D(2)(III) OF INCOME TAX RULES. THE ASSESSEE DID NOT MAKE ANY DISALLOWANCES TOWARDS THE INTEREST AS REQUIRED UNDER THE PROVISIONS OF RULE 8D(2)(II) OF IT RULES. FROM THE ASSESSMENT, WE ALSO FIND THAT THE AO HAS RECORDED H IS DISSATISFACTION BY RAISING THE QUERY TO THE ASSESSEE FOR THE DISALLOWA NCE UNDER RULE 8D AND REJECTING THE CLAIM OF THE ASSESSEE BY OBSERVING TH AT THE PROVISIONS OF LAW DOES NOT DIFFERENTIATE BETWEEN THE FACTS THAT THAT THE DIVIDEND HAVE BEEN CREDIT TO THE BANK ACCOUNT DIRECTLY AND WHETHER THERE WAS NO EXPENSES DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO THE EARNING OF THE DIVID END. THERE WAS NO DOCUMENTARY EVIDENCE SUBMITTED TO PROVE THAT NO BOR ROWED FUND WAS USED IN THE IMPUGNED INVESTMENTS. THEREFORE, THE SUBMISSION MADE BY THE ASSESSEE WITH REGARD TO THE INTEREST EXPENSES. WE FIND THAT NO MATERIAL WAS FURNISHED BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS . IT WAS THE DUTY OF THE ASSESSEE TO PROVIDE NECESSARY INFORMATION TO JUSTIF Y THAT THERE IS NO BORROWED ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 7 FUND UTILIZED IN THE IMPUGNED INVESTMENTS. THUS, IN SUCH CIRCUMSTANCES THE AO HAD NO OPTION EXCEPT TO RESORT TO THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF INCOME TAX RULES. HOWEVER THE LD. AR BEFORE US HAS MADE AN ALTERNATIV E SUBMISSION THAT EVEN IF THE PROVISIONS OF SECTION 14A READ WITH RULE 8D ARE APPLICABLE IN THE INSTANT CASE, THEN ALSO AO MAY BE DIRECTED TO COMPUTE THE D ISALLOWANCE AS PER RULE 8D BY TAKING INTO CONSIDERATION ONLY THOSE SHARES W HICH HAVE YIELDED DIVIDEND INCOME IN THE YEAR UNDER CONSIDERATION. SINCE THIS ISSUE RAISED BY THE LD. COUNSEL FOR THE ASSESSEE AS AN ALTERNATIVE CONTENTI ON IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF REI AGRO LTD. V . DY. CIT [2013] 35 TAXMANN.COM 404/144 ITD 141 (KOL.) , WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DISALLOWANCE AS PER RULE 8D BY TAKING INTO CONSIDER ATION ONLY THOSE SHARES, WHICH HAVE YIELDED DIVIDEND INCOME IN THE YEAR UNDE R CONSIDERATION. THE ALTERNATIVE CONTENTION OF THE LD. COUNSEL FOR THE A SSESSEE IS ACCORDINGLY ACCEPTED. THUS, THE ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS PARTLY ALLOWED. 8. NEXT ISSUE RAISED BY THE ASSESSEE IN GROUND NO.4 , 5 & 6 IS THAT LD. CIT(A) ERRED IN DIRECTING THE AO TO REDUCE THE COMP ENSATION RECEIVED FROM THE ACTUAL COST OF THE PLANT & MACHINERY AND THEREAFTER ALLOWING DEPRECIATION THEREON THOUGH THE RECEIPT IS CAPITAL IN NATURE & C ONSEQUENTLY NOT CHARGEABLE TO TAX. 9. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS RECEIVED COMPENSATION FROM M/S SUZLON ENERGY LTD. (SEL FOR S HORT) AMOUNTING TO 1928.18 LAKH. THE COMPENSATION WAS RECEIVED BY THE ASSESSEE AS THE WIND TURBINE GENERATORS PURCHASED FROM SEL IN THE EARLIE R YEARS FAILED TO GENERATE THE POWER UNITS AS AGREED. AS A RESULT, ASSESSEE RE CEIVED COMPENSATION FOR NON-GENERATION OF POWER UNITS AS GUARANTEED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE COMPEN SATION RECEIVED WAS ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 8 ORIGINALLY OFFERED AS REVENUE RECEIPT IN THE INCOME TAX RETURN FILED FOR THE YEAR UNDER CONSIDERATION. BUT AT THE FAG-END OF ASSESSME NT PROCEEDINGS, ASSESSEE REQUESTED TO TREAT THE COMPENSATION AS CAPITAL RECE IPT NOT CHARGEABLE TO TAX. HOWEVER, THE AO HAS DISREGARDED THE CONTENTION OF A SSESSEE AND TREATED THE COMPENSATION SO RECEIVED AS REVENUE IN NATURE BECAU SE IT WAS WORKED OUT AT THE RATE AT WHICH MSEB IS PURCHASING THE POWER. THU S THE ASSESSEE WAS COMPENSATED THE LOSS OF REVENUE. MOREOVER, THE GUAR ANTEE WAS PROVIDED BY SEL ONLY FOR INITIAL TWO YEARS AND THEREFORE THE CO MPENSATION WAS NOT GIVEN TOWARDS THE IMPAIRMENT OF FIXED ASSETS. FINALLY, TH E AO TREATED THE COMPENSATION AS THE REVENUE IN NATURE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD.CIT(A). THE ASSESSEE BEFORE LD.CIT(A) SUBMITTED THAT COMPENSATI ON WAS RECEIVED IN PURSUANCE OF AN AGREEMENT WITH THE SUPPLIER OF THE MACHINES. AS PER THE AGREEMENT THE WIND TURBINE GENERATORS WILL GENERATE CERTAIN NUMBER OF POWER UNITS BUT THE MACHINES FAILED TO GENERATE THE DESIR ED POWER UNITS. THEREFORE, THE COMPENSATION WAS AWARDED BY THE MACHINE SUPPLIE R SEL. THEREFORE THE COMPENSATION SO RECEIVED IS NOT DIRECTLY CONNECTED WITH THE ACTUAL COST OF THE MACHINE PURCHASED BY ASSESSEE. SIMILARLY, THE COMPE NSATION RECEIVED DOES NOT FORM PART OF BUSINESS ACTIVITY OF THE ASSESSEE. THEREFORE, THE SAME CANNOT BE TREATED AS REVENUE RECEIPT IN THE HANDS OF ASSES SEE. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF ASSESSEE BY OBSERVING AS UNDER:- 50. THE APPELLANT HAS RECEIVED RS.19,28,18000/- AS COMPENSATION FOR SHORTFALL IN PRODUCTION OF ELECTRICITY. THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSING OFFICER AS WELL AS APPELLANT WERE DECIDED BEFORE THE INSERTION OF EXPLANATION 10 TO SECTION 43. THE EXPLANATION PROVI DES THAT ANY REIMBURSEMENT BYAR1Y PERSON BY WHATEVER NAMED CALLE D AND THE COST RELATABLE TO SUCH REIMBURSEMENT SHALL NOT BE INCLUD ED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE. THE RECEIPT OF RS.19,28,18,0 00/- AS COMPENSATION FOR SHORTFALL IN PRODUCTION OF ELECTRICITY HAS BEEN HEL D TO BE REVENUE IN NATURE VIS- A-VIS THE CLAIM OF THE APPELLANT TO BE CAPITAL IN N ATURE. 51. THE EXPLANATION 10 TO SECTION 43 HAS SPECIFICAL LY PROVIDED WITHOUT ANY EXCEPTION THAT ANY REIMBURSEMENT BY ANY PERSON BY W HATEVER NAMED CALLED AND THE COST RELATABLE TO SUCH REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 9 ACTUAL COST OF THE ASSET TO THE ASSESSEE. THEREFORE , IT IS HELD THAT ALTHOUGH THE RECEIPT IS REVENUE IN NATURE BUT IT IS ALSO REIMBUR SEMENT TO THE APPELLANT HENCE THE PROVISIONS OF EXPLANATION 10 TO SECTION 4 3 OVERRIDES THE NATURE OF RECEIPTS AND IT HAS TO BE ACCOUNTED AS PER THESE PR OVISIONS. THE APPELLANT HAS ALSO TAKEN IT AS AN ALTERNATE PLEA. IN THE FACTS AN D CIRCUMSTANCES IT IS HELD THAT THIS RECEIPT OF RS.19,28,18,00/- AS COMPENSATION FO R SHORTFALL IN PRODUCTION OF ELECTRICITY IS REIMBURSEMENT AS PER THE PROVISIONS OF EXPLANATION 10 TO SECTION 43. IN THIS CASE, THE SELLER I.E. SEL HAS REIMBURSE D RS.19,28,18,00/- AND AS PER THE PROVISION OF EXPLANATION TO SECTION 43 THIS AMOUNT WILL BE DEDUCTED FROM THE COST OF THE MACHINERY. THE COST WILL BE RE DUCED IN THE YEAR OF RECEIPT SINCE IT HAS CRYSTALLISED DURING THE CURRENT YEAR A ND HAS BEEN ALSO PAID IN THIS YEAR. THE ASSESSING OFFICER WILL REDUCE THE COST OF MACHINERY BY AN AMOUNT OF RS. 19,28,18,000/- AND CALCULATE THE DEPRECIATION U /S 32 ACCORDINGLY. 52. THEREFORE, IN THE FACTS AND CIRCUMSTANCES AND F OLLOWING EXPLANATION 10 TO SECTION 43 IT IS HELD TO BE A REIMBURSEMENT RECEIPT REDUCING THE COST OF THE MACHINERY AND THE CLAIM OF DEPRECIATION TO BE ALLOW ED ACCORDINGLY AFTER REDUCING IT FROM THE COST OF THE ASSETS. THIS GROUN D OF APPEAL IS ALLOWED AND THE AMOUNT OF RS.19,28, 18,000/- IS TO BE DEDUCTED FROM THE COST AND DEPRECIATION TO BE ALLOWED ON THE NET VALUE OF ASSE TS. BEING AGGRIEVED BY THIS, BOTH ASSESSEE AND REVENUE HAS COME UP IN APPEAL BEFORE US ON FOLLOWING GROUNDS:- ITA NO.786/KOL/2013 (ASSESSEES APPEAL) 4) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) WAS UNJUSTIFIED IN LAW AND ON FACTS IN NOT ACCEPTING TH E APPELLANTS CONTENTION THAT THE COMPENSATION RECEIVED BY THE APPELLANT FROM THE SUPPLIER OF WIND ELECTRIC GENERATORS WAS CAPITAL RECEIPT WHICH DID NOT RED UCE THE ACTUAL COST OF THE SAID PLANT & MACHINERY. 5) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE COMPENSATION RECEIVED FROM THE SUPPLIER OF THE WIND ELECTRIC GENERATORS NOT HAVING ANY CONNECTION WITH ACTUAL COST OF THE SAI D CAPITAL ASSET & THE SAID COMPENSATION HAVING BEEN PAID FOR BREACH OF PERFORM ANCE WARRANTIES, THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO RED UCE THE COMPENSATION AMOUNT FROM THE ACTUAL COST OF THE PLANT & MACHINER Y FOR THE PURPOSE OF ALLOWING DEPRECIATION. 6) FOR THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE AO BE DIRECTED TO TREAT THE COMPENSATION AMOUNT OF RS.19, 28,18,000/- AS PURE CAPITAL RECEIPT AND BE FURTHER DIRECTED NOT TO REDU CE THE SAID COMPENSATION FROM THE WDV OF THE BLOCK OF PLANT & MACHINERY FOR THE PURPOSE OF ALLOWING DEPRECIATION. REVENUES APPEAL IN ITA NO.2073/KOL/2013 ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 10 3. THAT THE LD. CIT(A) HAS ERRED IN ACCEPTING THE G ROUNDS OF ASSESSEE DURING THE APPELLATE STAGE REGARDING ADJUSTMENT OF COMPENS ATION RECEIVED THOUGH IT WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF IN COME. 4. THAT THE LD. CIT(A) HAS ERRED IN ACCEPTING THE C ONTENTION OF THE ASSESSEE REGARDING THE TREATMENT OF COMPENSATION RECEIVED FR OM THE SUPPLIER TOWARDS SHORTFALL OF ELECTRICITY GENERATION BY APPLYING EXP LANATION 10 TO SECTION 43. 5. THAT THE LD. CIT(A) HAS ERRED DIN ALLOWING DEDUC TION OF THE COMPENSATION AMOUNT FROM THE COST OF ASSET AS DEPRECIATION SINCE GUARANTEE TO PAY COMPENSATION ON ACCOUNT OF SHORTFALL IN PRODUCTION TANTAMOUNT TO REIMBURSEMENT OF LOSS OF REVENUE TO THE ASSESSEE AN D NOWHERE IT IS CONNECTED TO THE COST OF ASSET DIRECTLY OR INDIRECT LY. 11. THE LD. AR BEFORE US SUBMITTED THAT THE COMPENS ATION WAS NOT RECEIVED BY THE ASSESSEE FROM THE NORMAL BUSINESS ACTIVITIES BUT AS A RESULT OF NON- PERFORMANCE OF THE MACHINERIES AND THEREFORE THE SA ME CANNOT BE HELD AS INCOME OF THE ASSESSEE, CONSEQUENTLY NOT LIABLE TO TAX. ON THE OTHER HAND, THE LD. DR BEFORE US SUBMITTED T HAT THE ASSESSEE NEVER MADE THE CLAIM IN THE RETURN OF INCOME AND FOR SUCH CLAIM NO RETURN WAS REVISED. THE LD. DR ALSO SUBMITTED THAT THE INTENTI ON OF SEL WAS TO SAVE THE ASSESSEE FROM THE INCURRENCE OF THE LOSS DUE TO NON -PERFORMANCE OF THE MACHINERIES. THEREFORE THE SAME SHOULD BE HELD AS R EVENUE RECEIPT. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRE SENT GROUND OF APPEAL IS TO ASCERTAIN WHETHER THE COMPENSATION RECEIVED BY THE ASSESSEE FROM THE MACHINE SUPPLIER ON ACCOUNT OF NON-PERFORMANCE OF W IND ELECTRIC GENERATORS (FOR SHORT WEG) AS GUARANTEED. THE ASSESSEE HAS PUR CHASED 60 WEG FROM SEZ VIDE PURCHASE ORDERS DATED 02.12.2004 AND 01.06 .2005. THE SEZ PROVIDED GUARANTEE TO THE ASSESSEE THAT THESE MACHI NES WILL GENERATE MINIMUM AVERAGE ELECTRICITY UNITS FOR A PERIOD OF 2 YEARS COMMENCING FROM 61 ST DAY FROM THE DATE OF COMMISSIONING OF THESE MACHIN ES. IN THE EVENT OF ANY SHORTFALL IN THE GENERATION OF GUARANTEED UNITS THE ASSESSEE WOULD BE COMPENSATED BY SEZ. IT WAS AGREED THAT THE COMPENSA TION WOULD BE WORKED OUT AT THE RATE AT WHICH THE ASSESSEE SHALL BUY THE POWER FROM MAHARASHTRA ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 11 SUPPLY ELECTRICITY BOARD. THE ASSESSEE HAS SHOWN TH E COMPENSATION IN ITS PROFIT AND LOSS ACCOUNT AS INCOME BUT AT THE FAG-EN D OF ASSESSMENT CLAIMED THE SAME AS CAPITAL RECEIPT WHICH IS NOT LIABLE FOR TAX. HOWEVER, THE AO WAS OF THE VIEW THAT THE COMPENSATION GIVEN BY THE MACHINE SUPPLIER IS TO COMPENSATE THE ASSESSEE FOR THE LOSS OF REVENUE WHI CH THE ASSESSEE MIGHT HAVE INCURRED DUE TO SHORT FALL IN THE GENERATION O F UNITS. THEREFORE, THE COMPENSATION RECEIVED BY THE ASSESSEE IS REVENUE IN NATURE AND LIABLE TO BE TAXED. HOWEVER THE LD CIT(A) OBSERVED THAT THE COMPENSATIO N RECEIVED BY THE ASSESSEE IS CAPITAL IN NATURE AND THEREFORE LIABLE TO BE REDUCED FROM THE ACTUAL COST OF THE MACHINES IN TERMS OF SPECIFIC EXPLANATI ON 10 TO SECTION 43(1) OF THE ACT. 12.1 ON EXAMINATION OF THE ORDER OF LOWER AUTHO RITIES AND OTHER RELEVANT RECORDS, WE FIND THAT THE MACHINES WERE ORDERED IN THE FINANCIAL YEAR 2004-05 AND 2005-6. AT THE TIME OF PURCHASE, THE MACHINE SU PPLIER GUARANTEED FOR THE GENERATION OF MINIMUM AVERAGE UNITS IN 2 YEARS. IN THE EVENT OF ANY SHORTFALL IN THE GUARANTEED GENERATION OF UNITS THE COMPENSATION WILL BE PROVIDED TO THE ASSESSEE. IN THE CASE ON HAND THE MACHINES WERE FIR ST PURCHASED, INSTALLED AND THEREAFTER ACTUALLY USED FOR THE PRODUCTION OF UNITS. IN THE LATER YEARS THE PERFORMANCE OF THESE MACHINES WERE QUANTIFIED AND A CCORDINGLY PERFORMANCE OF THE MACHINES WAS ASCERTAINED. SO THE FACT IS THA T THE COMPENSATION WAS QUANTIFIED AND IS RECEIVED AFTER PUTTING THE MACHIN E IN ACTUAL USE. THUS, FROM THE ABOVE IT IS CLEAR THAT THE PURPOSE OF GIVING CO MPENSATION TO THE ASSESSEE WAS TO REDUCE THE LOSS WHICH THE ASSESSEE MIGHT HAV E INCURRED. THEREFORE, IT IS CRYSTAL CLEAR THAT THE COMPENSATION WAS GIVEN ON REVENUE ACCOUNT I.E. TO REDUCE THE RUNNING LOSS OF THE ASSESSEE AND THAT TO O IN THE COURSE OF THE BUSINESS. THUS THE IMPUGNED COMPENSATION HAS DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE. IN OUR CONSIDERED VIEW THE FACTS OF THE CASE I.E. CIT VS. SAURASHTRA CEMENT LIMITED REPORTED IN 325 ITR 422 ARE DIFFERENT FROM THE PRE SENT CASE. THE RELEVANT FACTS OF THE CASE ARE ENUMERATED BELOW. ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 12 13. WE HAVE CONSIDERED THE MATTER IN THE LIGHT OF THE AFORENOTED BROAD PRINCIPLE. IT IS CLEAR FROM CLAUSE NO. 6 OF THE AGR EEMENT DT. 1ST SEPT., 1967, EXTRACTED ABOVE, THAT THE LIQUIDATED DAMAGES WERE T O BE CALCULATED AT 0.5 PER CENT OF THE PRICE OF THE RESPECTIVE MACHINERY AND E QUIPMENT TO WHICH THE ITEMS WERE DELIVERED LATE, FOR EACH MONTH OF DELAY IN DELIVERY COMPLETION, WITHOUT PROOF OF THE ACTUAL DAMAGES THE ASSESSEE WO ULD HAVE SUFFERED ON ACCOUNT OF THE DELAY. THE DELAY IN SUPPLY COULD BE OF THE WHOLE PLANT OR A PART THEREOF BUT THE DETERMINATION OF DAMAGES WAS NOT BA SED UPON THE CALCULATION MADE IN RESPECT OF LOSS OF PROFIT ON ACCOUNT OF SUP PLY OF A PARTICULAR PART OF THE PLANT. IT IS EVIDENT THAT THE DAMAGES TO THE ASSESS EE WAS DIRECTLY AND INTIMATELY LINKED WITH THE PROCUREMENT OF A CAPITAL ASSET I.E. THE CEMENT PLANT, WHICH WOULD OBVIOUSLY LEAD TO DELAY IN COMING INTO EXISTENCE OF THE PROFIT MAKING APPARATUS, RATHER THAN A RECEIPT IN THE COUR SE OF PROFIT EARNING PROCESS. COMPENSATION PAID FOR THE DELAY IN PROCURE MENT OF CAPITAL ASSET AMOUNTED TO STERILIZATION OF THE CAPITAL ASSET OF T HE ASSESSEE AS SUPPLIER HAD FAILED TO SUPPLY THE PLANT WITHIN TIME AS STIPULATE D IN THE AGREEMENT AND CLAUSE NO. 6 THEREOF CAME INTO PLAY. THE AFORE-STATED AMOU NT RECEIVED BY THE ASSESSEE TOWARDS COMPENSATION FOR STERILIZATION OF THE PROFIT EARNING SOURCE, NOT IN THE ORDINARY COURSE OF THEIR BUSINESS, IN OU R OPINION, WAS A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. WE ARE, THERE FORE, IN AGREEMENT WITH THE OPINION RECORDED BY THE HIGH COURT ON QUESTION NOS. (I) AND (II) EXTRACTED IN PARA 1 (SUPRA) AND HOLD THAT THE AMOUNT OF RS. 8,50 ,000 RECEIVED BY THE ASSESSEE FROM THE SUPPLIERS OF THE PLANT WAS IN THE NATURE OF A CAPITAL RECEIPT. IN THE ABOVE CASE, THE COMPENSATION WAS GIVEN TO TH E ASSESSEE FOR LATE DELIVERY OF MACHINE BUT IN THE INSTANT CASE BEFORE US COMPENSATION WAS GIVEN DUE TO NON-PERFORMANCE OF THE MACHINERIES AT DESIRE D LEVEL. IN THE FORMER CASE THE MACHINES WERE NOT PUT INTO THE USE BUT IN THE LATER CASE THE MACHINES WERE ACTUALLY PUT INTO USE FOR THE PRODUCT ION OF UNITS. THEREFORE THE COMPENSATION IN THE INSTANT CASE BEFORE US CANNOT B E TREATED AS CAPITAL RECEIPTS. SIMILARLY THE CASES I.E. ACIT VS. RDS CONSTRUCTION PVT. LTD. ITA 377 TO 383/PN/2013 AND DCIT VS. XPRO INDIA LTD . ITA 214/KOL/2011 RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE FROM THE PRESEN T CASE SO FAR THE ISSUE WAS RAISED FOR THE DETERMINATION OF ACTUAL COST U/S 43(1) OF THE ACT. 12.2 SIMILARLY THE FINDING OF THE LD CIT(A) THAT THE COMPENSATION RECEIVED BY THE ASSESSEE SHOULD BE REDUCED FROM THE ACTUAL COST IS NOT BASED ON CORRECT LAW. IT IS BECAUSE THE COST OF THE MACHINE HAS NOT BEEN MET DIRECTLY OR INDIRECTLY BY THE GOVERNMENT OR ANY OTHER PERSON AS REQUIRED IN EXPLANATION 10 TO SECTION 43(1) OF THE ACT. IN FACT THE COMPENSATI ON WAS GIVEN WITH THE SOLE PURPOSE OF REDUCING THE LOSS WHICH MIGHT HAVE INCUR RED BY THE ASSESSEE DUE ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 13 TO NON-PERFORMANCE OF THE MACHINERIES AT DESIRED LE VEL. AT THE TIME OF PURCHASE OF MACHINERIES THERE WAS NO WHISPER ABOUT THE MEETING OF THE COST DIRECTLY OR INDIRECTLY BY THE MACHINE SUPPLIER. THE REFORE, IN OUR CONSIDERED VIEW THE QUESTION OF REDUCING THE ACTUAL COST OF MA CHINERY DOES NOT ARISE. HENCE THE GROUND OF APPEAL OF THE REVENUE IS ALLOWE D AND THAT OF ASSESSEES GROUND IS DISMISSED. 13. COMING TO OTHER ISSUE RAISED BY REVENUE IN GROU ND NO. 1 & 2. THE ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF 17,60,404/- ON THE BASIS OF ADDITIONAL EVIDENCE. 14. THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT HAS DEBITED PRIOR PERIOD EXPENSE FOR 3,86,365/- IN THE YEAR UNDER CONSIDERATION. THE ASS ESSEE ALSO FAILED TO JUSTIFY WHETHER THE EXPENSES WERE CRYSTAL LIZED IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER DIS ALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). BEFORE LD. CIT(A) ASSESSEE SUBMITTED THAT OUT OF TOTAL INCOME PRIOR PERIOD OF EXPENSE OF 3,86,365/- A SUM OF 17,60,404/- WAS CRYSTALLIZED IN THE YEAR UNDER CONSIDERATION AS DETAILED UNDER:- (I) RENT FOR THE MONTHS OF JANUARY, 2007 TO MARCH, 2007 , FOR WHICH THE CLAIM HAD BEEN MADE BY THE CONCERNED LANDLORD ON 19/07/20 07 (OUT OF RS.3,24,000 FOR THE SIX MONTHS PERIOD FROM JANUARY, 2007 TO JU NE, 2007) RS.1,62,000 (II) MAINTENANCE CHARGES FOR JANUARY, 2007 TO MARCH , 2007 IN RESPECT OF THE ABOVEMENTIONED FLAT FOR WHICH THE CLAIM WAS MADE ON 19/07/2007 (INCLUDED RS.10,000 OUT OF RS.18,000 CHARGED FOR SIX MONTHS P ERIOD FROM JANUARY, 2007 TO JUNE, 2007) RS. 9,000 (III) PAYMENT OF HOUSE RENT ON LOW COST HOUSING SCH EME AS PER THE DIRECTION OF THE MINISTRY OF LABOUR & EMPLOYMENT VIDE LETTER DAT ED 19/06/2007(OUT OF ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 14 RS.5,8800 FOR THE PERIOD FROM APRIL 2006 TO MAY, 20 07) RS. 5,040 RS.1,76,040 THE APPELLANT SUBMIT THAT SINCE THE RELEVANT DOCUME NTS FOR THE ABOVEMENTIONED EXPENSES AGGREGATING TO RS.1,76,040 (OUT OF RS.3,86,365) CLEARLY SHOW THAT THOSE GOT CRYSTALLIZED DURING THE FINANCIAL YEAR 2007-08 (ASSESSMENT YEAR 2008-09) THE ASSESSING OFFICER MAY KINDLY BE DIRECTED TO ALLOW RS.1,76,040 OUT OF THE PRIOR PERIOD EXPENSES AGGREGATING TO RS.3,86,365. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE HAS PARTLY ALLOWED RELIEF TO ASSESSEE BY OBSERVING AS UNDER:- 33. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSES SING OFFICER IN THE ASSESSMENT ORDER, AND SUBMISSIONS OF THE APPELLANT THE APPELLANT HAS SUBMITTED IN THE WRITTEN SUBMISSIONS THAT OUT OF RS .1,76,040/- GET CRYSTALLISED DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2008- 09 AND PRODUCED THE COPY OF THE AGREEMENT. THE PERUSAL OF THE AGREEMENT SHOWS THAT THE RENT HAS BEEN CHARGED WITH RETROSPECTIVE EFFECT AND SIMILARL Y THEN OTHER EXPENSES ALSO CRYSTALLIZED DURING THIS PERIOD. THEREFORE, IT IS H OLD THAT THE EXPENSES OF RS.1,76,040/- ALTHOUGH PERTAINS TO THE PRIOR PERIOD BUT THE LIABILITY AROSE ONLY DURING THE CURRENT YEAR DUE TO THE NATURE OF EXPENS ES AND IN THE GIVEN FACTS AND CIRCUMSTANCES. THEREFORE, THE APPELLANT IS ALLO WED PRIOR PERIOD EXPENDITURE OF RS.1,76,040/- OUT OF RS.3,86,365/-. THE ADDITION IS UPHELD FOR AN AMOUNT OF RS.2,10,325/- AND THE APPELLANT GETS R ELIEF OF RS.1,76,040/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. BEING AGGRIEVED BY THIS, REVENUE HAS COME UP IN APP EAL BEFORE US. 16. BOTH THE PARTIES RELIED IN THE ORDER OF AUTHORI TIES BELOW AS FAVOURABLE TO THEM. 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FI ND THAT THE NECESSARY DETAILS WERE FILED BY THE ASSESSEE AT THE TIME OF ASSESSMEN T AS EVIDENT FROM LETTER SUBMITTED TO THE AO WHICH IS PLACED AT PAGE 14 OF T HE PAPER BOOK ALONG WITH SAMPLE SUPPORTING DOCUMENTS. THEREFORE THE GROUND O F THE REVENUE THAT THE FRESH EVIDENCES WERE SUBMITTED IS NOT TENABLE. THUS WE ARE OF THE VIEW THAT NO FRESH EVIDENCES WERE SUBMITTED BEFORE THE LD. CI T(A). ACCORDINGLY WE FIND ITA NO.786 & 2073/KOL/2013 A.Y. 2008-09 ESEL MINING & INDS. LTD. VS. DCIT, CIR-5, KOL. PAGE 15 NO INFIRMITY IN THE ORDER OF LD. CIT(A). HENCE THE GROUND RAISED BY THE REVENUE IS HEREBY DISMISSED. 18. IN THE RESULT, APPEAL OF ASSESSEE AS WELL AS APPEAL OF REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 10/ 03/2017 SD/- SD/- (#$) () (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S &'(-/ 03 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S ESSEL MINING & INDUSTRIES LTD. INDUST RY HOUSE, 18 TH FLOOR, 10, CAMAC STREET, KOLKATA-17 2. /REVENUE-DCIT, CICLE-5, AAYAKAR BHAWAN, P-7, CHOWRI NGHEE SQUARE, KOL-69 3.'0'12 3 / CONCERNED CIT KOLKATA 4. 3- / CIT (A) KOLKATA 5.6 78$$12, 12!, / DR, ITAT, KOLKATA 6.8;<=> / GUARD FILE. BY ORDER/ , /TRUE COPY/ /' 12!,