Kothari Products Limited, Kanpur V. Dy. Commissioner of Income Tax, Kanpur

ITA 210/LKW/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92127 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PUNEET KUMAR
• Keywords: Gift; Business income; Business expenditure; Opportunity of being heard; Rule of consistency; Earning of tax free income; Commercial expediency; Revenue expenditure; Reassessment proceedings
• Section: 14A; 115JB; 80IB; 10B; 263; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.210/LKW/2012 ASSESSMENT YEAR:2007 - 08 DY.C.I.T., CENTRAL CIRCLE - V, KANPUR. VS M/S KOTHARI PRODUCTS LTD., 24/19, THE MALL, KANPUR. PAN:AAACK5571F (RESPONDENT) (APPELLANT) ITA NO.306/LKW/2012 ASSESSMENT YEAR:2007 - 08 M/S KOTHARI PRODUCTS LTD., 24/19, THE MALL, KANPUR. PAN:AAACK5571F VS A.C.I.T., CENTRAL CIRCLE - 1, KANPUR. (RESPONDENT) (APPELLANT) ITA NO.348/LKW/2012 ASSESSMENT YEAR:2008 - 09 DY.C.I.T., CENTRAL CIRCLE - V, KANPUR. VS M/S KOTHARI PRODUCTS LTD., 24/19, THE MALL, KANPUR. PAN:AAACK5571F (RESPONDENT) (APPELLANT) ITA NO.408/LKW/2012 ASSESSMENT YEAR:2008 - 09 M/S KOTHARI PRODUCTS LTD., 24/19, THE MALL, KANPUR. PAN:AAACK5571F VS A.C.I.T., CENTRAL CIRCLE - 1, KANPUR. (RESPONDENT) (APPELLANT) 2 SHRI S. K. GARG, ADVOCATE SHRI P. K. KAPOOR, C.A. ASSESSEE BY SHRI PUNEET KUMAR, D. R. REVENUE BY 13/02/2015 DATE OF HEARING 24 /04/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE FOR TWO ASSESSMENT YEARS I.E. ASSESSMENT YEAR 2007 - 08 AND 2008 - 09, WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A) - I, KANPUR DATED 02/02/2012 FOR ASSESSMENT YEAR 2007 - 08 AND DATED 14/03/201 2 FOR ASSESSMENT YEAR 2008 - 09. ALL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2007 - 08. IN THE WRITTEN SUBMISSIONS FILED BY LEARNED A.R. OF THE ASSESSEE, IT IS SUBMITTED THAT IN BOTH THESE APPEALS, ONLY THREE ISSUES ARE INVOLVED. ISSUE NO. 1 IS REGARDING REDUCTION IN THE CLAIM OF THE ASSESSEE U/S 80IB IN RELATION TO JORHAT UNIT AND PART RELIEF WAS ALLOWED BY CIT(A) AGAINST THE REDUCTION MADE BY THE ASSESSING OFFICER. THE SECOND ISSUE IS REGARDING DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES AND THIRD ISSUE IS REGARDING ENHANCEMENT OF BOOK PROFIT U/S 115JB. THE REVENUES APPEAL IS IN CONNECTION WITH ISSUE NO. 1 & 3 RAISED B Y THE ASSESSEE IN ITS APPEAL BECAUSE PART RELIEF WAS ALLOWED BY CIT(A) ON THESE TWO ISSUES. 3. REGARDING THE FIRST ISSUE I.E. REGARDING REDUCTION IN THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB OF THE ACT OF JORHAT UNIT , WRITTEN SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE ARE AS PER PARA NO. 4.1 TO 13, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 3 4.1 AS PER THE INFORMATION ALREADY ON RECORD, THE ASSESSEE COMPANY HAS BEEN CARRYING OUT MANUFACTURING FROM ITS INDUSTRIAL UNDERTAKING SITU ATED AT KANPUR SINCE LONG. IT WAS ONLY W.E.F. 12.9.2000 THAT IT HAD SET UP AN INDUSTRIAL UNDERTAKING AT JORHAT; THE FIRST ASSESSMENT YEAR BEING 2001 - 02. IT IS UNDISPUTED THAT THE SAID UNIT QUALIFIED FOR DEDUCTION UNDER SECTION 80IB(4) OF THE ACT FROM THE ASSESSMENT YEAR 2001 - 02 ONWARD. IN THE FIRST ASSESSMENT YEAR, THE ASSESSING OFFICER HAD ALLOWED THE RELIEF UNDER SECTION 80IB(4) AS CLAIMED BY THE ASSESSEE. HOWEVER, SUCH ASSESSMENT ORDER WAS REVISED UNDER SECTION 263 AND IN APPEAL UNDER SECTION 263, TH E HONBLE TRIBUNAL HAD RESTORED THE MATTER BEFORE THE ASSESSING OFFICER WITH SPECIFIC DIRECTIONS. 4.2 IN THE REGULAR ASSESSMENT FOR THE ASSESSMENT YEAR 2002 - 03, THE ASSESSING OFFICER HIMSELF, WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3), RESORTE D TO FURTHER ALLOCATION OF EXPENSES, FROM HEAD OFFICE TO JORHAT UNIT, WITH THE RESULT THAT INCOME OF JORHAT UNIT GOT REDUCED AND THERE WAS CONSEQUENT REDUCTION IN THE QUESTION OF EXEMPTION ADMISSIBLE UNDER SECTION 80 - IB. THE MATTER WAS CONTESTED IN APPE AL BEFORE THE HONBLE ITAT BEING ITA NO.1003/LUC/2006 WHICH ALONG WITH THE APPEAL FOR THE ASSESSMENT YEAR 2004 - 05 WAS DECIDED BY THE TRIBUNAL, VIDE A COMMON ORDER DATED 28.09.2007 . A COPY OF THE SAID ORDER HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 100 TO 121 THEREOF. 4.3. IN THE SAID ORDER THE ISSUE OF DEDUCTION FOR CLAIM UNDER SECTION 80IB BY VIRTUE OF ALLOCATION OF EXPENSES FROM HEAD OFFICE TO JORHAT UNIT WAS DEALT WITH AND DECIDED BY THE HONBLE ITAT IN THE FOLLOWING MANNER: - ITA NO.1003/LUC/2006 FOR THE ASSESSMENT YEAR 2002 - 03 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW, PROFITS OF ELIGIBLE UNITS, AS PER AUDITED ACCOUNTS COULD NOT BE SAID TO BE SACROSANCT SO AS TO PROHIBIT THE ASSESSING OF FICER FROM MAKING ADJUSTMENT THEREIN. THE CLAIM OF THE ASSESSEE IS THAT SINCE BOOKS OF JORHAT UNIT ARE AUDITED, THE ASSESSING OFFICER COULD NOT HAVE MADE ANY ADJUSTMENT BY ALLOCATING A PORTION OF HEAD OFFICE EXPENSES INCURRED ON ADVERTISEMENT AND PUBLICIT Y. WE HOWEVER DO NOT AGREE. IF PROFIT OF THE ELIGIBLE UNIT HAS TO BE WORKED OUT TREATING IT AS INDEPENDENT SOURCE OF INCOME, THEN SUCH 4 PROFITS HAVE TO BE ADJUSTED BY VALUE OF COMMON GOODS AND SERVICES PROVIDED TO IT BY OTHER UNIT BY HEAD OFFICE. THERE C ANNOT BE A CLAIM OF THE ASSESSEE THAT EXPENDITURE INCURRED ON ADVERTISEMENT AND PUBLICITY DID NOT AFFECT THE TURNOVER OF THE JORHAT UNIT OR IT WAS IMMUNE FROM SUCH EXPENDITURE. ONCE TURNOVER OF THE JORHAT UNIT IS AUGMENTED BY EXPENDITURE ON ADVERTISEMENT AND PUBLICITY AND OTHER EXPENSES THOUGH ACCOUNTED FOR IN HEAD OFFICE AT KANPUR, THEN A PORTION OF IT HAS TO BE ALLOCATED TO THE JORHAT UNIT TO ARRIVE AT CORRECT PROFIT WHICH IS REASONABLY DEEMED TO HAVE BEEN DERIVED BY THE ASSESSEE FROM THAT UNIT. SIMILAR POWER FOR ADJUSTMENT IS AVAILABLE TO THE ASSESSING OFFICER BY VIRTUE OF SUCH SECTION (8) AND (10) OF SECTION 80 - IA WHICH ARE SO FAR AS MAY BE, APPLICABLE TO THE LEGIBLE BUSINESS U/S 80 - IB. WE, THEREFORE REJECT THE ARGUMENT OF LD. A.R. OF THE ASSESSEE THA T SUCH ADJUSTMENT IS NOT POSSIBLE MERELY BECAUSE ACCOUNTS OF THE JORHAT UNIT ARE AUDITED. IN FACT AUDITING OF THE ACCOUNTS IS ONE OF THE CONDITIONS FOR ALLOWABILITY OF DEDUCTION U/S 80 - IB BY VIRTUE OF SUB SECTION (7) OF SECTION 80 - IA AND IN SPITE OF THAT SUB SECTION (8) AND SUB SECTION (10) OF SECTION 80 - IA ARE MADE APPLICABLE TO SECTION 80 - IB AS WELL WHICH, EMPOWERS THE ASSESSING OFFICER TO ADJUST PROFIT OF ELIGIBLE UNIT UNDER THE CIRCUMSTANCES MENTIONED THEREIN. IN OUR CONSIDERED VIEW, THE CASE OF THE A SSESSEE WOULD FALL IN SUB SECTION (8) OF SECTION 80 - IA IN AS MUCH AS THE SERVICES ARE PROVIDED TO THE JORHAT UNIT BY THE KANPUR HEAD OFFICE BY WAY OF ADVERTISEMENT AND PUBLICITY AND OTHER EXPENSES AND THEREFORE, THEY ARE REQUIRED TO BE ADJUSTED IN THE JORH AT UNIT FOR COMPUTING PROFITS OF THAT UNIT WHICH IS ELIGIBLE FOR DEDUCTION U/S 80 - IB. ACCORDINGLY THIS ARGUMENT OF THE ASSESSEE IS REJECTED. HOWEVER, WE NOTE THAT TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002 - 2003 IN ITA NO.385/LUC/05 REFERRED TO ABOVE, HAS HELD IN PARA 29 AND ELSEWHERE IN THAT ORDER THAT DISTRIBUTION OF PRO RATA EXPENSES OF JORHAT UNITS WOULD BE UNFAIR. WE, THEREFORE, RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE TO FIND OUT A SUITABLE METHOD FOR ALLOCATION OF EXPENSES INCURRED BY HEAD OFFICE AND WHICH ARE AFFECTING THE PROFITS OF JORHAT UNIT. AS A RESULT, THIS GROUND OF THE ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES AND ASSESSING OFFICER WILL DECID E THE ISSUE IN THE LIGHT OF THE DISCUSSION MADE HEREIN 5 ABOVE AND OFFER AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.1147/LUC/2006 FOR THE ASSESSMENT YEAR 2004 - 05 4.4 IN THIS YEAR, THE HONBLE ITAT HAS AFFIRMED THE VIEW THAT HAD BEEN TAKEN BY IT IN THE ASSESSMENT YEAR 2002 - 03 (SUPRA). THE FINDINGS ARE GIVEN IN PARAS 20 AND 21 WHICH ARE REPRODUCED HEREUNDER: - 20. IN THIS CASE THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES: ( I ) ALLOCATION OF PART OF HEAD OFFICE EXPENSES TO JORHAT UNIT ( II ) NOTWITHSTANDING THE METHOD OF ALLOCATION BEING ON TURNOVER BASIS WAS NOT JUSTIFIED. ( III ) DEDUCTION U/S 80 - IB IS NOT REQUIRED TO BE EXCLUDED WHILE COMPUTING DEDUCTION U/S 80 - HHC ( IV ) NOT TREATING INTEREST RECEIVED FROM THE BANK AND ON RENT AS ELIGIBLE FOR DEDUCTION U /S 80 - HHC. ( V ) DISALLOWING AN EXPENDITURE OF RS.14,86,565/ - OUT OF FOREIGN TRAVEL EXPENSES. 21. ISSUE FROM (I) TO (IV) ARE COVERED IN ITA NO.1003 AND ITA NO.1062. THE ISSUE NO.(I), (II) AND (III) ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AF RESH AND IN ACCORDANCE WITH THE DIRECTIONS GIVEN IN THOSE APPEALS AND AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4.5. COMING TO THE YEAR UNDER APPEAL , THE ASSESSEE HAD SUBMITTED THAT NO SUCH ALLOCATION WAS CALLED FOR, FOR THE REASONS THAT J ORHAT UNIT WAS LIABLE TO BE TREATED AS THE INDEPENDENT ASSESSEE FOR WHICH BOOKS OF ACCOUNT HAD BEEN SEPARATELY MAINTAINED IN REGULAR COURSE. THE EXPENSES INCURRED AT HEAD OFFICE AS WERE ATTRIBUTABLE TO THE JORHAT UNIT HAD ALREADY BEEN ACCOUNTED FOR IN ITS BOOKS OF ACCOUNT, BY MAKING APPROPRIATE ALLOCATION AND NO FURTHER APPORTIONMENT (OUT OF EXPENSES CLAIMED IN HEAD OFFICE). NOTWITHSTANDING THIS ADJUSTMENT IS CALLED FOR ONLY WHEN THERE WAS AN ARRANGEMENT BETWEEN THE ASSESSEE AND THE OTHER PERSON[WHICH A LSO MEANS ANOTHER ASSESSEE AS PER SPECIFIC PROVISION CONTAINED IN SECTION 2(31) OF THE ACT].IN THE INSTANT CASE, THERE IS NO ANOTHER ASSESSEE, BUT A 6 UNIT OF THE ASSESSEE WHEREIN EXPENSES INCURRED AT HEAD OFFICE ALREADY STOOD ALLOCATED. THE ASSESSEES REPL Y AS HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN PAGES 9, 10 AND 11 OF THE ASSESSMENT ORDER IS AS UNDER (QUOTE FROM THE ASSESSMENT ORDER): - ANOTHER REPLY WAS FILED, RELEVANT PART OF WHICH IS BEING REPRODUCED AS UNDER: - A ) YOURS HONOUR HAS, LIKE IN EAR LIER YEARS REQUIRED US TO SHOW CAUSE AS TO WHY PART OF THE EXPENSES OF KANPUR UNIT MAY NOT BE ALLOCATED TO THE JORHAT UNIT ON THE BASIS OF SALES. AS REGARDS THE SAME A DETAILED REPLY EXPENSE - WISE HAS ALREADY BEEN SUBMITTED TO YOUR HONOUR DURING THE EARLIE R YEARS WHEREIN IT HAS CATEGORICALLY BEEN EXPLAINED WHY THE EXPENSES SHOULD NOT BE ALLOCATED. IN ADDITION TO THE ABOVE IT IS FURTHER SUBMITTED THAT AS YOU ARE AWARE THAT THE ASSESSEE COMPANY HAS MANUFACTURING UNITS AT KANPUR AND JORHAT. THE UNIT AT JORHAT IS ENTITLED TO DEDUCTION U/S.80 - IB OF THE INCOME TAX ACT. SEPARATE BOOKS OF ACCOUNT ARE BEING DULY MAINTAINED AT EACH OF THESE AND THAT ALL EXPENSES INCURRED AT SUCH UNITS WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THAT UNIT THUS PROPOSED ALLOCAT ION OF EXPENSES OF THE KANPUR UNIT TO THE JORHAT UNIT, TERMING THEM AS COMMON EXPENSES, THEREBY REDUCING THE PROFITS ELIGIBLE FOR DEDUCTION U/S. 80 - IB INCORRECT. IN THIS REGARD IT IS FURTHER SUBMITTED THAT: I ) THE APPELLANT STARTED ITS JORHAT UNIT IN SEPTEMBER, 2000, TO CATER TO THE MARKET IN HYDERABAD & TRICHI. II) THAT THE UNIT IN KANPUR IS VERY VERY OLD AND THESE EXPENSES WERE BEING INCURRED THEREIN MUCH BEFORE THE JORHAT UNIT WAS PUT UP IMPLYING THEREFORE THAT THESE EXPENSES WERE IRRESPECTIVE OF THE FACT THAT THERE WERE ANY OTHER UNIT. III) THE ADMINISTRATIVE EXPENSES OF KANPUR E.G. SECURITY, ROC ETC. WERE ALL BEING INCURRED MUCH BEFORE THE JORHAT UNIT AND THUS AGAIN THESE EXPENSES CAN BE ATTRIBUTABLE TO JORHT UNIT. IV) THAT SEPARATE BOOKS OF ACCO UNT ARE BEING DULY MAINTAINED AT THE UNITS OF THE COMPANY, AND EXPENDITURE ACTUALLY INCURRED THEREAT/WITH RESPECT THERETO WAS FULLY RECORDED IN THE CONCERNED UNIT. 7 V) THAT IN RESPECT OF COMMON EXPENDITURE, THE ASSESSEE, SUO - MOTO APPORTIONS THE SAME AMONGST THE UNITS THE DETAILS OF WHICH HAVE ALREADY BEEN BROUGHT TO YOUR HONOURS NOTICE. VI) THEREFORE, ALL EXPENDITURE ATTRIBUTABLE TO THE JORHAT UNIT, WHETHER IT BE ON ACCOUNT OF ADVERTISEMENT, AUDIT FEES, FREIGHT ETC. WAS FULLY TAKEN IN TO ACCOUNT IN ARRIVI NG AT THE PROFIT AT THE UNIT. VII) THAT SEPARATE FINANCIAL STATEMENTS FOR EACH UNIT WERE PREPARED AND ALSO SUBMITTED ALONG WITH THE RETURN OF INCOME AND WERE DULY AUDITED. THE FINANCIAL STATEMENTS OF THE JORHAT UNIT WERE ALSO AUDITED IN TERMS OF SECTION 8 0 - IB OF THE I.T.ACT. VIII)YOUR HONOUR HAS PROPOSED TO ALLOCATE THE EXPENSES ON THE BASIS OF TURNOVER. IN THIS REGARD, IT IS MOST HUMBLY SUBMITTED THAT THE NEED FOR ALLOCATION OF THE EXPENSES ON THE BASIS OF TURNOVER OR ANY OTHER SIMILAR YARDSTICK ARISES O NLY WHEN THE SAME CANNOT BE IDENTIFIED WITH REGARD TO ANY SPECIFIC UNIT. IN THE ASSESSEES CASE ALL EXPENDITURE, INCURRED IN RELATION TO THE JORHAT UNIT WAS DULY ACCOUNTED FOR IN ITS BOOKS. IX) IT IS FURTHER SUBMITTED THAT THERE IS GEOGRAPHICAL BIFURCAT ION OF ACTIVITIES, WHICH IMPLIES THAT EXPENSES OF AN ADMINISTRATIVE NATURE, AS WELL, ARE INCURRED AND ALSO RECORDED SEPARATELY. X) THE ABOVE BASIS IS ONLY A PRESUMPTION AND NOT IN FACT ANY SPECIFIC FINDING. XI) IT IS ALSO MOST RESPECTFULLY SUBMITTED THAT CERTAIN EXPENDITURE IN THE NATURE OF ROC EXPENSES, KANPUR OFFICE REPAIR EXPENSES, MOTOR VEHICLE EXPENSES ETC. A.G.M. EXPENSES, SECURITY GUARD IS ESSENTIAL EXPENDITURE WHICH WAS BEING INCURRED BY THE COMPANY EVEN BEFORE THE UNIT AT JORHAT WAS SET UP AND MER ELY BECAUSE A NEW UNIT WAS SET UP THERE, IT DOES NOT SUO - MOTO GIVE RISE TO THE SITUATION THAT THE EXPENSES MUST BE ALLOCATED. XII) IT IS FURTHER SUBMITTED THAT THE STATUTE CONTEMPLATES TO ALLOW DEDUCTION U/S.80IB IN RESPECT OF THE INCOME OF AN INDUSTRIAL UNDERTAKING AND NOT THAT OF ANASSESSEE. AND THEREFORE, IT CANNOT BE THE INTENTION OF THE STATUTE TO ALLOCATE ALL THE EXPENDITURE INCURRED BY THE ASSESSEE TO SUCH INDUSTRIAL UNDERTAKING UNLESS THE SAME RELATES TO IT. 8 IN VIEW OF THE ABOVE IT IS SUBMITTE D THAT NO ALLOCATION OF EXPENSES BE MADE. 4.6. THE ASSESSING OFFICER, AFTER DISCUSSING THE MATTER IN PARAS 4 AND 4.1 OF THE ASSESSMENT ORDER, WHICH READ AS UNDER: DEDUCTION U/S.80 - IB 4. IT IS SEEN THAT ASSESSEE COMPANY HAS CLAIMED DEDUCTION UNDER SECTION 80 - IB OF I.T.ACT AT RS.20,63,46,403/ - IN RESPECT OF NET PROFIT OF JORHAT UNIT WHICH IS CLAIMED TO BE INDUSTRIAL UNDERTAKING IN BACKWARD AREA AS MENTIONED IN EIGHTH SCHEDULE. THE ASSESSEE HAS SET UP A UNIT A JORHAT ON 12.09.2000, WHOSE PROFITS QUAL IFY FOR 100% DEDUCTION UNDER SECTION 80 - IB OF THE INCOME TAX ACT, 1961. IN THE RETURN OF INCOME THE ASSESSEE HAS CLAIMED 100% DEDUCTION ON PROFITS OF THIS UNIT. AS PER CERTIFICATE OF THE CHARTERED ACCOUNTANT, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION OF RS. 25,93,92,056/ - HOWEVER, SINCE THE BUSINESS INCOME WAS RS.20,63,46,403/ - THE DEDUCTION U/S.80 - IB WAS RESTRICTED TO THE EXTENT OF RS.20,63,46,403/ - IT IS PROVIDED IN SUB - SECTION (13) OF SECTION 80 - IB THAT PROVISIONS CONTAINED IN SUB - SECTION(5) AND SUB - SECT ION (7) TO (12) OF SECTION 80 - IA SHALL, SO FAR AS MAY BE, APPLY TO THE ELIGIBLE BUSINESS UNDER THIS SECTION. THE PROVISIONS OF SUB - SECTION (5) OF SECTION 80 - IA AS IT STOOD IN THE RELEVANT ASSESSMENT YEAR IN THE CASE OF ASSESSEE ARE REPRODUCED AS UNDER: - NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB - SECTION(1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB - SECTION (5) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YE AR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UNDISCLOSED PROFIT TO AND INCLUDING THE 9 ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. IT IS FURTHER SEEN THAT THIS UNIT STARTED PRODUCTION ON 12.09.2000. THUS IT IS SEEN THAT IN VIEW OF PROVISIONS OF SECTION 80 - IA(5) OF THE INCOME TAX ACT, 1961, PROFITS & GAINS OF AND ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME DURING THE PREVIOUS YEAR. HERE, ASSESSEE MEANS INDUSTRIAL UNDERTAKING WHICH IS ELIGIBL E FOR DEDUCTION UNDER SECTION 80 - IA. ASSESSEE HAS MAINTAINED AND PRODUCED SEPARATE ACCOUNTS FOR VARIOUS UNITS. THE ACCOUNTS OF SO CALLED KANPUR UNITS ALSO INCLUDES HEAD OFFICE EXPENSES (PART OF WHICH HAVE BEEN ALLOCATED BY ASSESSEE ITSELF TO OTHER UNITS) . THE PROFIT & LOSS ACCOUNT OF VARIOUS UNITS WERE EXAMINED. DURING THE RELEVANT YEAR, DEDUCTION U/S.80 - IB WAS CLAIMED ONLY IN RESPECT OF JORHAT UNIT. THE BUSINESS PROFIT OF THIS UNIT HAVE TO BE COMPUTED AS INDEPENDENT BUSINESS. IT IS PERTINENT TO REPRO DUCE RELEVANT PROVISIONS OF SUB - SECTION (10) OF SECTION 80 - IA AS UNDER: - WHERE IT APPEARS TO ASSESSING OFFICER THAT, OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON, OR FOR ANY OTHER REASONS, THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PROFITS WHICH MIGHT EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS, THE ASSESSING OFFICER SH ALL, IN COMPUTING THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION UNDER THIS SECTION, TAKE THE AMOUNT OF PROFIT AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED THEREFROM. 4.1 IN VIEW OF THE ABOVE DISCUSSION, IT IS APPARENT T HAT THE ASSESSEE HAS BEEN CLAIMING LESSER EXPENSES IN THE JORHAT UNIT, PROFIT OF WHICH IS EXEMPT U/S 80 - B AS COMPARED TO KANPUR UNIT WHICH IS ANOTHER MAJOR UNIT AND WHERE ENTIRE PROFIT IS TAXABLE. EVEN IN THE EARLIER YEARS, THE ASSESSEE WAS ENGAGED IN THE SAME PRACTICE. IN VIEW OF THESE FACTS AND IN VIEW OF THE SUB - SECTION (10) OF THE SECTION 80 - IA, TO WORK OUT THE REASONABLE PROFIT, IT IS JUSTIFIABLE TO ALLOCATE EXPENSES OF HEAD OFFICE OF THE 10 ASSESSEE COMPANY TO JORHAT UNIT ON APPROPRIATE BASIS. THE EXP ENSES WAS SPECIFICALLY ASKED TO EXPLAIN THIS POSITION AND AS TO WHY THESE EXPENSES IN THE RATIO AS DISCUSSED IN THE CHART FURNISHED TO IT, MAY NOT BE DISTRIBUTED IN KANPUR UNIT, JORHAT UNIT AND BEVERAGE DIVISION, WHILE COMPUTING THE NET PROFIT OF JORHAT UN IT AND DEDUCTION U/S 80 - IB THEREAFTER. IT WAS VERBALLY STATED THAT THESE EXPENSES WOULD HAVE TO BE INCURRED EVEN IF JORHAT UNIT DID NOT EXIST. THE EXPLANATION FURNISHED BY ASSESSEE APPEARS TO BE INSUFFICIENT. IT IS SIMPLY INDISPUTABLE THAT JORHAT UNIT W OULD NOT FUNCTION WITHOUT ADMINISTRATIVE CONTROL, SALES MONITORING, POLICY DECISIONS AND OTHER RELATED MATTERS BEING PERFORMED BY HEAD OFFICE. IT IS SEEN THAT THE ASSESSEE HAS NOT FURNISHED ANY CONVINCING EXPLANATION ON THE ISSUE OF COMPUTATION OF NET PRO FIT OF JORHAT UNIT BY WAY OF CONSIDERING EXPENSES ATTRIBUTABLE TO HEAD OFFICE. HAD MADE FURTHER ALLOCATION OUT OF HEAD OFFICE EXPENSES, TO THE JORHAT UNIT. AS A RESULT OF SUCH ALLOCATION OF EXPENSES, THE PROFIT OF JORHAT UNIT GOT REDUCED BY SUMS AGG REGATING RS. 1,31,28,476 / - AND THERE WAS CONSEQUENT REDUCTION IN THE CLAIM UNDER SECTION 80 - IB. 5. IN THE 1 ST APPEAL, THE LD. CIT(A) HAS DISCUSSED THE ISSUE IN PARAS 4.2, 4.3, 4.3.1 AND 4.3.2 WHICH ARE REPRODUCED HEREUNDER FOR THE SAKE OF INSTANT REFERENCE: - 4.2 IN THIS REGARD, IT HAS BEEN SUBMITTED AND ARGUED BY THE LD. A.R. THAT: IN THIS REGARD IT IS MOST HUMBLY SUBMITTED THAT: A ) THAT THE APPELLANT HIMSELF IS MAINTAINING SEPARATE ACCOUNTS FOR ITS JORHAT UNIT. B) NO DEFECT OR DISCREPANCY HAS BEEN FOUND BY THE LD.A.O. IN THE BOOKS AND THE SAME WERE ACCEPTED FOR THE PURPOSES OF ASSESSMENT U/S.143(3). C) THAT NO FINDING HAS BEEN GIVEN THAT THE PROFITS HAVE BEEN NOT BEEN WORKED OUT CORRECTLY. D) THAT FOR APPLICATION OF PROVISIONS OF SUB - SECTION (10) OF SECTION 80IB THE KANPUR UNIT OF THE APPELLANT IS 11 NEITHER ANY OTHER PERSON NOR THERE IS ANY COURSE OF BUSINE SS ARRANGED BETWEEN THEM. E) THAT THE APPELLANT HAS SUMOTO, WHILE FINALIZING THE ACCOUNTS OF JORHAT UNIT TRANSFERRED THE FOLLOWING HEAD OFFICE EXPENSES TO JORHAT BEFORE ARRIVING AT THE CORRECT PROFIT OF THE JORHAT UNIT. PARTICULARS TOTAL EXPENSES INCURRED AT H.O. AMOUNT ALLOCATED TO JORHAT UNIT BASIS ADVERTISEMENT EXPENSES 113338041.49 70515502.00 AMOUNT ALLOCATED IN THE RATIO OF TURNOVER DIRECTORS REMUNERATION 3180000.00 1950058.75 AMOUNT ALLOCATED IN THE RATIO OF PROFIT OF THE UNITS DIRECTORS SITTING FEES 10000.00 6132.26 AMOUNT ALLOCATED IN THE RATIO OF THE PROFIT OF THE UNITS DIRECTORS COMMISSION 19386420.00 14515596.00 AMOUNT ALLOCATED IN THE RATIO OF PROFIT OF THE UNITS SALARY, BONUS, P.F., E.S.I AND GRATUITY OF SALES STAFF 3072334.95 5126225.22 50% ALLOCATED TO JORHAT UNIT SALARY, BONUS, P.F., E.S.I., AND GRATUITY OF OFFICE STAFF 434423.00 237600.00 50% ALLOCATED TO JORHAT UNIT SALARY, BONUS, P.F., E.S.I, AND GRATUITY OF OTHER STAFF. 170898.00 174240.00 100% ALLOCATED TO JORHAT UNIT 139592117.44 92525354.23 (EMPHASIS PROVIDED ) 4.3 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSIONS AND ARGUMENTS OF THE LD. AR WHICH HAVE BEEN BRIEFLY SUMMARISED ABOVE. THE ISSUE OF ALLOCATION OF THE EXPENSES WAS SUBJECT MATTER OF APPEAL IN EARLIER YEARS AND THE HONBLE TRIBUNAL IN ITA NO.1003/LUC/2006 VIDE ITS ORDER DATED 28.9.2007 IN THE 12 CASE OF THE APPELLANT ITSELF FOR A.Y.2004 - 05 HAS DECIDED THIS ISSUE IN THE FOLLOWING MANNER: - WE NOTE THAT TRIBUNAL IN THE CASE ASSESSEE FOR THE ASSESSMENT YEAR 2002 - 03 IN ITA NO.385 REFERRED TO ABOVE, HAS HELD IN PARA 29 AND ELSEWHERE IN THAT ORDER THAT DISTRIBUTION OF PRO RATE EXPENSES OF JORHAT UNIT WOULD BE UNFAIR. WE, THEREFORE, RESTORE THAT MATTER TO THE FILE OF THE ASSESSING OFFICER FOR GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE TO FI ND OUT A SUITABLE METHOD FOR ALLOCATION OF EXPENSES INCURRED BY HEAD OFFICE AND WHICH ARE AFFECTING THE PROFITS OF JORHAT UNIT. AS A RESULT, THIS GROUND OF THE ASSESSEE IS ALLOWED BUT STATISTICAL PURPOSES AND ASSESSING OFFICER WILL DECIDE THE ISSUE IN THE LIGHT OF THE DISCUSSION MADE HEREIN ABOVE AND OFFER AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE 4.3.1 PURSUANCE TO THE SAID DECISION OF THE HONBLE TRIBUNAL, THE DEPARTMENT HAS PASSED AN ORDER U/S 143(3)/251/254 DATED 31.12.2008 WHEREIN THE AO HAS EX AMINED THIS ISSUE AS PER THE DIRECTION OF THE HONBLE TRIBUNAL AND PASSED THE ORDER BY HOLDING THAT I HAVE CAREFULLY CONSIDERED THE CHART OF ALLOCATION SUBMITTED BY THE ASSESSEE AND ALSO DETAILED SUBMISSION WITH REGARD TO EACH OF THE ABOVE EXPENSES IN T HE LIGHT OF THE ALLOCATION MADE U/S 143(3). THOUGH THE ASSESSEE HAS COVERED MOST OF THE EXPENSES AND A SUBSTANTIAL AMOUNT HAVE ALREADY BEEN ALLOCATED SUO MOTO BUT IT IS ALSO NOTED THAT THE ASSESSEE HAS ALLOCATED THE DIRECTORS COMMISSION TO JORHAT UNIT IN THE RATIO OF PROFIT OF THE UNIT I.E. RS.1,13,05,963/ - LIKE OTHER EXPENSES, IT IS WORKED OUT AT RS.1,14,03,232/ - . THE DIFFERENCE OF THESE TWO I.E. RS.97,269/ - [11403232 11305963] IS FURTHER ALLOCATED TO JORHAT UNIT. 4.3.2 THE CHART SUBMITTED BY THE A PPELLANT DURING THE REASSESSMENT PROCEEDINGS (FOR A.Y. 2004 - 05) WHICH WAS ACCEPTED BY THE AO ON THIS ISSUE (AS MENTIONED IN THE SAID ASSESSMENT ORDER) SHOWS THAT THE EXPENSES ON ACCOUNT OF ADVERTISEMENT, DIRECTORS TRAVELLING AND DEALERS 13 CONFERENCE HAVE BE EN ALLOCATED TO JORHAT UNIT IN THE RATIO OF TURNOVER. DIRECTOR REMUNERATION, DIRECTORS SITTING FEES AND COMMISSION IS ALLOCATED TO JORHAT UNIT IN THE RATIO OF PROFIT OF THE UNITS. THE APPELLANT HAS NOT CONTESTED THE METHOD ADOPTED BY THE AO IN THAT ORDER I.E. ORDER FOR ASSESSMENT YEAR 2004 - 05. FURTHER, IN THE APPELLANTS OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2006 - 07, THE LD. CIT(A) - I, KANPUR VIDE ORDER DATED 14.09.2010, HAS ACCEPTED THE AFORESAID BASIS OF ALLOCATION. IN VIEW OF THIS POSIT ION, KEEPING IN MIND THE PRINCIPLE OF CONSISTENCY, I HEREBY DIRECT THE A.O. TO FOLLOW THE SAME METHOD AS ADOPTED IN A.Y. 2004 - 05 & A.Y. 2006 - 07 (AFTER THE CIT(A)S ORDER). THIS GROUND OF APPEAL IS DISPOSED OFF ACCORDINGLY. FROM WHERE IT IS SEEN THAT TH E CIT(A) HAS SIMPLY FOLLOWED THE TRIBUNALS ORDER DATED 28.09.2007 PASSED IN ITA NO.1003/LUC/2006 FOR THE ASSESSMENT YEAR 2002 - 03, SUPRA AND DID NOT APPRECIATE THE FACTS OF THE CASE AND PERCEPTION OF LAW AS HAD BEEN PLEADED BEFORE HIM. 10. IN THE BACKGROU ND THE ASSESSEES SUBMISSIONS ARE THAT EVEN THOUGH THE CIT(A) HAS FOLLOWED THE ORDER OF THE HONBLE TRIBUNAL IN THE ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS, THE MATTER REQUIRES RECONSIDERATION FOR THE REASONS GIVEN HEREUNDER. (I) THE ASSESSEES CASE HAS ALSO BEEN THAT, AT THE TIME OF FINALIZATION OF ACCOUNTS JORHAT UNIT, HAD ALREADY TAKEN INTO CONSIDERATION THE EXPENSES THAT HAD BEEN ALLOCATED FROM THE HEAD OFFICE. TO SUCH ALLOCATION THERE WAS NO DISPUTE WHATSOEVER. KIND ATTENTION IS INVITED TO THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, AS FIND REPRODUCTION IN PARA 4.2 OF THE CIT(A)S ORDER WHICH HAS BEEN REPRODUCED IN PARA 5 [4.2 (E)] HEREINFORE. (II) THE JORHAT UNIT WAS LIABLE TO BE TREATED AS IF IT WAS AN ASSESSEE AS PER THE SUBMIS SIONS MADE BEFORE THE ASSESSING OFFICER, WHICH FINDS REPRODUCTION IN PARA 4.6 HEREINFORE. IT IS A MATTER OF RECORD, UNDISPUTED AS THE SAME IS, THAT FOR JORHAT UNIT SEPARATE BOOKS OF ACCOUNT HAD BEEN MAINTAINED. IN ORDER TO INCREASE THE EXPENSES IN THE SAID UNIT (SO AS TO REDUCE ITS PROFITS ELIGIBLE FOR 14 DEDUCTION UNDER SECTION 80 - IB) BY FURTHER ALLOCATION FROM THE HEAD OFFICE, IT WAS IMPERATIVE THAT BOOKS OF THE SAID UNIT SHOULD HAVE BEEN REJECTED. IN THE INSTANT CASE THERE IS NO SUCH REJECTION AND THE REFORE, THE INCOME DETERMINED FOR THE SAID UNIT ON THE BASIS OF SEPARATE BOOKS OF ACCOUNT COULD NOT HAVE BEEN LINKED WITH. (III) IN THE AFORESAID CONTEXT SUB - SECTION (5) AND (10) OF SECTION 80 IA AS HAVE BEEN MADE APPLICABLE TO SECTION 80 - IB ALSO ARE REPRODUCED HEREUNDER: - (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB - SECTION(1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTIO N THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEA R UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. XXXX XXXX XXXX (10) WHERE IT APPEARS TO THE ASSESSING OFFICER THAT, OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON, OR FOR ANY OTHER REASON, THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PROFITS WHICH MIGHT BE EXPECTED TO ARISE IN SU CH ELIGIBLE BUSINESS, THE ASSESSING OFFICER SHALL, IN COMPUTING THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED THEREFROM (I V) FURTHER THE JORHAT UNIT IS NOT ANOTHER PERSON AS ENVISAGED IN SUB - SECTION (5) OF SECTION 80IA AS HAS BEEN REPRODUCED IN SUB - PARA (III) ABOVE. THEREFORE, NEITHER SUB - SECTION (5) NOR SUB - SECTION (10) ARE 15 APPLICABLE HERE WHICH MEANS AN ASSESSABLE ENTITY UNDER SECTION 2(31) OF THE ACT. (V) DURING THE ASSESSMENT YEARS 2002 - 03 AND 2004 - 05 THERE EXISTED NEITHER ANY SUCH ALLOCATION AS HAS BEEN MADE IN THE ASSESSMENT YEAR UNDER REFERENCE HERE, NOR THE PLEA TO THE EFFECT THAT THERE WAS ABSENCE OF BUSINESS A RRANGEMENT BETWEEN THE ASSESSEE AND ANY OTHER PERSON, HAD NOT BEEN TAKEN BEFORE THE HONBLE ITAT. (VI) THE REQUIREMENT TO ALLOCATE EXPENSES, AS PER THE EXPRESS PROVISION OF LAW COMES INTO THE PICTURE ONLY WHEN THERE ARE TWO ASSESSEES. THIS PLEASE HAD A LSO NOT BEEN RAISED BEFORE THE TRIBUNAL IN THE ASSESSMENT YEARS 2002 - 03 AND 2004 - 05 FOR WHICH APPEALS HAVE BEEN DECIDED VIDE ORDER DATED 28.09.2007. 11. ALTHOUGH DECISION OF A COORDINATE BENCH NEEDS TO BE FOLLOWED AND IT IS MORE SO IN A CASE WHERE SUCH A DECISION HAS BEEN RENDERED IN THE ASSESSEES OWN CASE, BUT THERE IS AN EXCEPTION TO THIS PRINCIPLE. IN CASE NEW FACTS OR PROVISION OF LAW WHICH HAD NOT BEEN CONSIDERED IN AN EARLIER DECISION, ARE BROUGHT ON RECORD, A DEPARTURE IS CALLED FOR. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. BRIJ LAL LOHIA & MAHABIR PRASAD KHEMKA REPORTED IN (1972) 84 ITR 273 , WHEREIN THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - THE FACT THAT IN THE EARLIER PROCEEDINGS T HE TRIBUNAL TOOK A DIFFERENT VIEW OF THOSE DEEDS IS NOT A CONCLUSIVE CIRCUMSTANCE. THE DECISION OF THE TRIBUNAL REACHED DURING THOSE PROCEEDINGS DOES NOT OPERATE AS RES JUDICATA. AS SEEN EARLIER THERE WAS A GREAT DEAL MORE EVIDENCE BEFORE THE TRIBUNAL DURI NG THE PRESENT PROCEEDINGS, RELATING TO THOSE GIFT DEEDS. (277) AND IN VIEW OF THE SAID PROPOSITION OF LAW, IT IS RESPECTFULLY PRAYED THAT YOUR HONOURS BE PLEASED TO ACCEPT THE ASSESSEES CONTENTION AND ALLOW THE ISSUE NO.I IN ITS FAVOUR. 12. IT IS FURTHER SUBMITTED THAT IN THE INCOME TAX ACT ONLY EXPRESS PROVISION OF LAW IS TO BE CONSIDERED AND RULE OF STRICT 16 INTERPRETATION THEREOF HAS TO BE APPLIED AS HAS BEEN HELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SAHARA INDIA SAVING S AND INVESTMENT CORPN. LTD. REPORTED IN (2003) 264 ITR 646 , WHEREIN THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - IN A TAXING STATUTE ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE MUST ONLY LOOK FAIRLY AT THE LANGUAGE USED. XXXXX XXXXX XXXXX HENCE THERE IS NO QUESTION OF LOOKING INTO THE LEGISLATIVE INTENT OR SPIRIT OF T HE LAW IN A TAXING STATUTE. WE HAVE ONLY TO SEE THE ACTUAL WORDS USED. IN OTHER WORDS, IN A TAXING STATUTE WE HAVE TO GO BY THE LETTER OF THE LAW, AND NOT ITS SPIRIT OR INTENT. THE SAID PRINCIPLE OF LAW HAS SINCE BEEN UPHELD BY THE HONBLE SUPREME COURT ALSO IN THE CASE OF CIT VS. SAHARA INDIA SAVINGS AND INVESTMENT CORPORATION LTD. REPORTED IN (2010)321 ITR 371(SC). 13. A PPLYING THE SAID RULE IN THE INSTANT CASE, IT IS SUBMITTED THAT ADJUSTMENT/ALLOCATION IS CALLED NOT FOR ONLY WHERE THERE IS ARRANGEMEN T WITH ANY OTHER PERSON I.E. WITH ANY OTHER ASSESSEE. IN THE INSTANT CASE, NEITHER THERE IS ANY ARRANGEMENT NOR ANY OTHER PERSON INVOLVED. THEREFORE, NO ADJUSTMENT /ALLOCATION IS CALLED FOR OVER AND ABOVE WHAT WAS ALREADY BEEN MADE BY THE ASSESSEE, AS HAS BEEN NOTED BY THE LD. CIT(A) ALSO. 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSES SMENT ORDER ON THIS ISSUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 4.3, 4.3.1 AND 4.3.2 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 17 4.3 DECISION: I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSION AND ARGUMENTS OF THE LD. AR WHICH HAVE BEEN BRIEFLY SUMMARIZED ABOVE. THE ISSUE OF ALLOCATION OF THE EXPENSES WAS SUBJECT MATTER OF APPEAL IN EARLIER YEARS AND THE HON'BLE TRIBUNAL IN ITA NO . 1 003/ L UC/2006 VIDE ITS ORDER DATED 28.9.2007 IN THE CASE OF THE APPELLANT ITSELF FOR A.Y. 2004 - 05 HAS DECIDED THIS ISSUE IN THE FOLLOWING MANNER : - ' WE NOTE THAT TRIBUNAL IN THE CASE ASSESSEE FOR THE ASSESSMENT YEAR 2001 - 2003 IN ITA NO. 385 REFERRED TO AB OVE, HAS HELD IN PARA 29 AND ELSEWHERE IN THAT ORDER THAT DISTRIBUTION OF PRO RATA EXPENSES OF JORHAT UNIT WOULD BE UNFAIR. WE, THEREFORE, RESTORE THAT MATTER TO THE FILE OF THE ASSESSING OFFICER FOR GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE TO FIND OUT A SUITABLE METHOD FOR ALLOCATION OF EXPENSES INCURRED BY HEAD OFFICER AND WHICH ARE AFFECTING THE PROFITS OF JORHAT UNIT. AS A RESULT, THIS GROUND OF THE ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES AND ASSESSING OFFICER WILL DECIDE THE ISSUE IN T HE LIGHT OF THE DISCUSSION MADE HEREIN ABOVE AND OFFER AN OPPORTUNITY OF BEING HEART TO THE ASSESSEE'. 4.3.1 PURSUANT TO THE SAID DECISION OF THE HON'BLE TRIBUNAL, THE DEPARTMENT HAS PASSED AN ORDER U/S 143(3)/251/254 DATED 31.12.2008 WHEREIN THE AO HAS E XAMINED THIS ISSUE AS PER THE DIRECTION OF THE HON'BLE TRIBUNAL AND PASSED THE ORDER BY HOLDING THAT 'I HAVE CAREFULLY CONSIDERED THE CHART OF ALLOCATION SUBMITTED BY THE ASSESSEE AND ALSO DETAILED SUBMISSION WITH REGARD TO EACH OF THE ABOVE EXPENSES IN THE LIGHT OF THE ALLOCATION MADE U/S 143(3), THOUGH THE ASSESSEE HAS COVERED MOST OF THE EXPENSES AND A SUBSTANTIAL AMOUNT HAVE ALREADY BEEN ALLOCATED SUO MOTO BUT IT IS ALSO NOTED THAT THE ASSESSEE HAS ALLOCATED THE DIRECTOR'S COMMISSION TO JORHAT UNIT IN THE RATIO OF PROFIT OF THE UNIT I.E. RS.1,13,05,963/ - LIKE OTHER EXPENSES, IT IS WORKED OUT AT RS.1,14,03,232/ - . THE DIFFERENCE OF THESE TWO I. E. RS.97,269/ - [11403232 - 11305963] IS FURTHER ALLOCATED TO JORHAT UNIT. 18 4.3.2 THE CHART SUBMITTED BY THE APP ELLANT DURING THE REASSESSMENT PROCEEDINGS (FOR A.Y. 2004 - 05) WHICH WAS ACCEPTED BY THE AO ON THIS ISSUE (AS MENTIONED IN THE SAID ASSESSMENT ORDER) SHOWS THAT THE EXPENSES ON ACCOUNT OF ADVERTISEMENT, DIRECTORS' TRAVELLING AND DEALERS CONFERENCE HAVE BEEN ALLOCATED TO JORHAT UNIT IN THE RATIO OF TURNOVER. DIRECTOR REMUNERATION, DIRECTORS SITTING FEES AND COMMISSION IS ALLOCATED TO JORHAT UNIT IN THE RATIO OF PROFIT OF THE UNITS. THE APPELLANT HAS NOT CONTESTED THE METHOD ADOPTED BY THE AO IN THAT ORDER I.E . ORDER FOR ASSESSMENT YEAR 2004 - 05. FURTHER, IN THE APPELLANT'S OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR I.E. A.YR. 2006 - 07, THE LD.CIT(A) - I, KANPUR VIDE ORDER DATED 14.09.2010, HAS ACCEPTED THE AFORESAID BASIS OF ALLOCATION. IN VIEW OF THIS POSITION, KEEPING IN MIND THE PRINCIPLE OF CONSISTENCY, I HEREBY DIRECT THE A.O. TO FOLLOW THE SAME METHOD AS ADOPTED IN A.Y. 2004 - 05 & A.Y. 2006 - 07 (AFTER THE CIT(A)'S ORDER. THIS GROUND OF APPEAL IS DISPOSED OFF ACCORDINGLY. 5.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT CIT(A) HAS NOTED DOWN THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 AND SUBSEQUENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3)/251/254 ON 31/12/2008 AND THEREAFTER , IT IS HELD BY CIT(A) T HAT HE IS DECIDING THE ISSUE ON THE BASIS OF THE ORDER PASSED BY THE ASSESSING OFFICER DURING REASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2004 - 05 AND THE ASSESSEE HAS NOT CONTESTED THE METHOD ADOPTED BY THE ASSESSING OFFICER IN THAT YEAR I.E. ORDER FOR AS SESSMENT YEAR 2004 - 05. HE HAS ALSO NOTED THAT IN ASSESSEES OWN CASE I.E. FOR IMMEDIATELY PRECEDING YEAR 2006 - 07, CIT(A) HAS ACCEPTED THE AFORESAID BASIS OF ALLOCATION. HENCE, IT IS SEEN THAT THE ORDER OF CIT(A) IS IN LINE WITH THE TRIBUNAL DECISION IN A SSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 AND CONSEQUENT ORDER PASSED BY THE ASSESSING OFFICER AS PER THE DIRECTION OF THE TRIBUNAL IN THAT YEAR. NOW THIS IS CLAIMED BY LEARNED A.R. OF THE ASSESSEE BEFORE US THAT THE MATTER REQUIRES RECONSIDERATION F OR THE REASON THAT IN THE PRESENT YEAR, THE ASSESSEE HAS TAKEN INTO CONSIDERATION THE EXPENSES THAT HAVE BEEN ALLOTTED FROM THE HEAD OFFICE. THE SECOND REASONING GIVEN BY THE LEARNED 19 A.R. OF THE ASSESSEE IS THAT THE PLEA TO THE EFFECT THAT THERE WAS ABSEN CE OF BUSINESS ARRANGEMENT BETWEEN THE ASSESSEE AND OTHER PERSON, HAD NOT BEEN TAKEN BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2004 - 05. WE DO NOT FIND ANY MERIT IN THESE CONTENTIONS BECAUSE EVEN IF THE ASSESSEE HAS MADE SOME ALLOCATION IN THE PRESENT YEAR, I T HAS TO BE SEEN THAT SUCH ALLOCATION IS IN LINE WITH THE ALLOCATION MADE IN EARLIER YEARS AS PER THE DIRECTION OF THE TRIBUNAL. REGARDING THIS CONTENTION THAT PLEA WAS NOT TAKEN BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2004 - 05 TO THE EFFECT THAT THERE WAS ABSENCE OF BUSINESS ARRANGEMENT BETWEEN THE ASSESSEE AND ANY OTHER PERSON, WE FIND THAT THERE IS NO MERIT IN THIS CONTENTION ALSO BECAUSE IT IS NOTED BY THE TRIBUNAL IN THE ORDER FOR ASSESSMENT YEAR 2004 - 05 THAT POWER FOR ADJUSTMENT IS AVAILABLE TO THE ASS ESSING OFFICER BY VIRTUE OF SUB SECTION (8) AND (10) OF SECTION 80IA. AS PER SUB SECTION (10) OF SECTION 80IA, IF IT APPEARS TO THE ASSESSING OFFICER THAT OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON, OR FOR ANY OTHER REASON, THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PROFITS WHICH MIGHT BE EXPECTED TO ARISE IN SUCH ELI GIBLE BUSINESS, THE ASSESSING OFFICER SHALL, IN COMPUTING THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED THEREFROM. HENCE, I N OUR CONSIDERED OPINION, THE SCOPE OF SUB SECTION (10) OF SECTION 80IA IS VERY VIDE BECAUSE IT PRESCRIBES THE SITUATION AS FOR ANY OTHER REASON AND SINCE THE TRIBUNAL HAS DULY CONSIDERED SUB SECTION (10) OF SECTION 80IA, WE FIND NO MERIT IN THIS CONTENT ION THAT THE DEPARTURE SHOULD BE MADE FROM THE TRIBUNAL ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05. SINCE THE ORDER OF CIT(A) ON THIS ISSUE IS IN LINE WITH THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2004 - 05 AND AS PER THE CONSEQUENTIAL O RDER PASSED BY THE ASSESSING 20 OFFICER IN THAT YEAR, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE AND AS A RESULT, THE GROUND RAISED BY THE ASSESSEE AS WELL AS GROUND RAISED BY THE REVENUE IN THIS R EGARD ARE LIABLE TO BE REJECTED. WE ORDER ACCORDINGLY. 6. THE SECOND ISSUE IS REGARDING DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES. THIS ISSUE IS RAISED BY THE ASSESSEE ONLY AND THERE IS NO ISSUE RAISED BY THE REVENUE IN THIS REGARD BECAUSE NO RELIEF WAS ALLOWED BY THE CIT(A) ON THIS ISSUE. THE WRITTEN SUBMISS IONS OF THE ASSESSEE ON THIS ISSUE ARE CONTAINED IN PARA 14 TO 17 OF THE WRITTEN SUBMISSIONS, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 14. THE DISCUSSION APPEARS IN PARA 5 OF THE ASSESSMENT ORDER. THE FACTS IN BRIEF ARE THAT THE DIR ECTORS OF THE COMPANY UNDERTOOK FOREIGN TRIPS AND IT IS NOT IN DISPUTE THAT SUCH FOREIGN TRIPS HAS BEEN UNDERTAKEN FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE COMPANY, AS EXPENSES ATTRIBUTABLE TO THE DIRECTORS OWN TRAVELLING HAVE DULY BEEN ALLOWED AND DIS ALLOWANCE AS RESTRICTED TO THE EXPENSES ATTRIBUTABLE TO THEIR COMPANIONS, ON THE GROUND THAT NONE OF THEM IS EITHER DIRECTORS AND/OR EMPLOYEES/CONSULTANTS TO THE ASSESSEE COMPANY. 15. THE CIT(A) HAS UPHELD THE DISALLOWANCE OF RS.8,64,228/ - BY SIMPLY SAYIN G THAT THE APPELLANT COMPANY HAS NOT BEEN DEMONSTRATED AS TO WHAT MANNER FOREIGN TRAVEL BY THE SPOUSE OF THE DIRECTORS OF THE COMPANY COULD WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT IS SUBMITTED THAT IN THE MODERN AGE, IT IS A MATTER OF CUS TOM AND USAGE THAT DIRECTORS/SENIOR EXECUTIVES OF A COMPANY ARE ACCOMPANIED BY THEIR SPOUSE(S) BECAUSE IT HAS GOT AN ESSENTIAL SOCIAL ASPECT ALSO, AS IT HELPS IN MAKING A REPORT WITH THE COUNTER PARTS IN THE OVERSEAS MARKET. THUS, IT BECOMES A MATTER OF NECESSITY THAT SENIOR EXECUTIVES OR DIRECTORS ARE ACCOMPANIED BY HIS/HER/ THEIR SPOUSE (S) WHILE ON FOREIGN TOUR. THIS ASPECT OF THE MATTER WAS DULY RECOGNIZED BY THE TRIBUNAL IN THE CASE OF GLAXO LABORATORIES (INDIA) LTD. VS. SECOND ITO (1986) 18 ITD 226 , WHEREIN IT WAS HELD THAT : - 21 IN THE MODERN AGE, MORE SO IN THE WESTERN COUNTRIES, THE SENIOR EXECUTIVES AS A MATTER OF SOCIAL CUSTOMS ARE ACCOMPANIED BY THEIR WIVES. SUCH VISITS, THOUGH ARE FOR BUSINESS PURPOSE, YET HAVE SOME SOCIAL ASPECTS ALSO. IN THE CIRCUMSTANCES, THE ENTIRE EXPENDITURE WHICH INCLUDED AIR FARE AND PURCHASE OF SOME FOREIGN EXCHANGE WAS AN ALLOWABLE EXPENDITURE. A COPY OF THE SAID JUDGMENT IS ENCLOSED AS ANNEXURE - I HERETO. 16. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE DECISIO N OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CLAYTON LTD. REPORTED IN (1999) 240 ITR 271 WHEREIN IT HAS BEEN HELD THAT VISIT OF DIRECTORS OF THE COMPANY TO A FOREIGN COUNTRY IS TO FACILITATE THE CARRYING ON AND IMPROVING THE BUSINESS OF THE ASSESS EE. ACCORDINGLY THE EXPENDITURE INCURRED ON FOREIGN TRAVEL OF THEIR WIVES SHOULD BE HELD TO BE GOVERNED BY COMMERCIAL EXPEDIENCY AND THEREFORE ALLOWABLE AS SUCH. 17. IT IS ALSO A SETTLED LAW THAT CONSIDERATION OF COMMERCIAL EXPEDIENCY ARE TO BE GOVERNE D FROM THE POINT OF VIEW OF A BUSINESSMAN. THIS IS AMPLY ESTABLISHED BY A DECISION OF HONBLE APEX COURT IN THE CASE OF S.A. BUILDERS LTD.REPORTED IN (2007) 288 ITR 1 WHEREIN THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - THE EXPRESSION COMMERCIAL E XPEDIENCY IS AN EXPRESSION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LEGAL OBLIGATION, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE I F IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. NO DOUBT, AS HELD IN MADHAV PRASAD JATIA V. CIT (1979) 118 ITR 200 (SC), IF THE BORROWED AMOUNT WAS DONATED FOR SOME SENTIMENTAL OR PERSONAL REASONS AND NOT ON THE GROUND OF COMMERCIAL EXPEDIENCY, THE INTEREST THEREON COULD NOT HAVE BEEN ALLOWED UNDER SECT ION 36(1)(III) OF THE ACT. IN MADHAV PRASADS CASE (1979) 118 ITR 200 (SC), THE BORROWED AMOUNT WAS DONATED TO A COLLEGE WITH A VIEW TO COMMEMORATE THE MEMORY OF THE ASSESSEE DECEASED HUSBAND AFTER WHOM THE COLLEGE WAS TO BE 22 NAMED. IT WAS HELD BY THIS COU RT THAT THE INTEREST ON THE BORROWED FUND IN SUCH A CASE COULD NOT BE ALLOWED, AS IT COULD NOT BE SAID THAT IT WAS FOR COMMERCIAL EXPEDIENCY. THUS, THE RATIO OF MADHAV PRASAD JATIAS CASE (1979) 118 ITR 200 (SC) IS THAT THE BORROWED FUND ADVANCED TO A THI RD PARTY SHOULD BE FOR COMMERCIAL EXPEDIENCY IF IT IS SOUGHT TO BE ALLOWED UNDER SECTION 36(1)(III) OF THE ACT. PAGE 8 XXX XXX XXX XXX XXX XXX XXX XXX XXX WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COURT IN CIT V. DALMIA CEMENT (B.) LTD. (2002) 254 ITR 377 THAT ONCE IT IS ESTABLISHED THAT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSINESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF), THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM - CHAIR OF THE BUSINESSMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. NO BUSINESSMAN CAN BE COMPELLED TO MAXIMIZE HIS PROFIT. THE INCOME - TAX AUTHORITIE S MUST PUT THEMSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SEE THE TRANSFER OF THE BORROWED FUNDS TO A SISTER CONCERN FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS. PAGE 9 7. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BEL OW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF THE EXPENSES INCURRED ON THE SPOUSE OF THE CHAIRMAN AND MANAGING DIRECTOR OF THE COMPANY. A CLEAR FINDING HAS BEEN GIVEN BY C IT(A) THAT THE ASSESSEE COMPANY HAS NOT DEMONSTRATED AS TO IN WHAT MANNER FOREIGN TRAVELLING OF 23 THE SPOUSE OF THE CHAIRMAN AND MANAGING DIRECTOR WAS FOR THE BUSINESS OF THE ASSESSEE COMPANY. IN THE LIGHT OF THESE FINDINGS OF THE AUTHORITIES BELOW, WE EXAM INE THE APPLICABILITY OF VARIOUS CONTENTIONS RAISED BY LEARNED A.R. OF THE ASSESSEE IN THE WRITTEN SUBMISSIONS. IN THIS REGARD, RELIANCE HAS BEEN PLACED ON A TRIBUNAL DECISION RENDERED IN THE CASE OF GLAXO LABORATORIES (INDIA) LTD. VS. SECOND INCOME - TAX O FFICER [1986] 18 ITD 226 (ITAT[BOM]). WE FIND THAT IN THAT CASE , IT WAS NOTED BY THE TRIBUNAL IN PARA 17 THAT C HAIRMAN AND C HIEF E XECUTIVE OF GLAXO HAD EXTENDED INVITATION TO MR. & MRS. BHOOTHALINGAM AND THAT THE WIFE WAS ACCOMPANYING HER HUSBAND AS A NUMBER OF SOCIAL ENGAGEMENTS WERE INCLUDED IN THE PROGRAMME. IN THE PRESENT CASE, NO SUCH EVIDENCE WAS BROUGHT ON RECORD BY THE LEARNED A.R. OF THE ASSESSEE THAT SPOUSE OF THE DIRECTORS OF THE ASSESSEE COMPANY WERE ALSO INVITED AND WERE SUPPOSE D TO PARTIC IPATE IN VARIOUS SOCIAL ENGAGEMENTS AS IN THAT CASE AND THEREFORE, BECAUSE OF DIFFERENCE IN FACTS, THIS TRIBUNAL DECISION IS NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. RELIANCE IS PLACED ON VARIOUS OTHER JUDGMENTS, SUCH AS JUDGMENT OF HON 'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF CIT VS. SUNDRAM CLAYTON LTD. [1999] 240 ITR 271 (MAD) AND THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF S. A. BUILDERS LTD. CIT(A) & ANOTHER [2007] 288 ITR 1 (SC) IN SUPPORT OF THE CONTENTION THAT THE EXPENSES INCURRED ON FOREIGN TRAVEL OF THE WIFE OF THE DIRECTORS IS COVERED BY COMMERCIAL EXPEDIENCY AND THEREFORE, ALLOWABLE AS REVENUE EXPENDITURE BUT IN THE ABSENCE OF ANY EVIDENCE IN THIS REGARD THAT THE SPOUSE OF THE DIRECTORS OF THE ASSESSEE COM PANY WERE ALSO INVITED AND WERE ALSO PARTICIPATING IN SOCIAL ENGAGEMENTS IN THE FOREIGN COUNTRY, THESE JUDGMENTS ALSO DO NOT HELP THE ASSESSEE IN THE PRESENT CASE BECAUSE BUSINESS EXPEDIENCY IS NOT ESTABLISHED . 9. AS PER ABOVE DISCUSSION, WE HAVE SEEN THA T IN THE ABSENCE OF ANY EVIDENCE REGARDING INVITATION TO THE SPOUSE OF THE DIRECTORS OF THE COMPANY 24 OR THEIR PARTICIPATION IN ANY SOCIAL ENGAGEMENTS IN THE FOREIGN COUNTRY VISITED BY THEM ALONG WITH THE DIRECTORS OF THE ASSESSEE COMPANY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 10. THE THIRD ISSUE IS REGARDING ENHANCEMENT OF BOOK PROFIT. THE WRITTEN SUBMISSIONS SUBMITTED BY THE ASSESSEE ON THIS ISSUE ARE CONTAINED IN PARA 18 TO 24, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 18. IN THE PRESENT CASE RETURN OF INCOME WAS FILED DECLARING AN INCOME OF RS.35,51,71,770/ - . HOWEVER, THE BOOK PROFIT WAS RS.81,91,99,448/ - AS WAS DECLARED TAXABLE UNDER SECTION 115JB AND TAXES WERE ALSO PAID ON THAT BASIS. AS THE INCOME ASSESSED AS PER NO RMAL PROVISION OF LAW (AFTER INCORPORATION VARIOUS DISALLOWANCES WORKED OUT TO RS.35,55,45,000/ - THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AS PER BOOK PROFIT UNDER SECTION 115JB. TO THE DECLARED INCOME OF RS.81,91,99,448/ - UNDER SECTION 115 JB THE AS SESSING OFFICER HAS MADE AN ADJUSTMENT OF RS.48,71,190/ - ON ACCOUNT OF PROPORTIONATE EXPENSES RELATABLE TO THE EXEMPT INCOME ON ACCOUNT OF DIVIDEND . THE ISSUE HAS BEEN DISCUSSED BY THE ASSESSING OFFICER IN PARA 7 OF THE ASSESSMENT ORDER WHICH IS REPRODU CED HEREUNDER: - 7. COMPUTATION OF BOOK PROFIT AS PER SECTION 115JB OF I.T. ACT, 1961 IT WAS OBSERVED THAT ASSESSEE HAS DECLARED A DIVIDEND OF RS.11,82,21,258/ - WHICH WAS CLAIMED EXEMPT AND THE SAME WAS EXCLUDED WHILE COMPUTING THE BOOK PROFIT. AS PER EXPLANATION F TO SECTION 115JB, THE EXPENDITURE RELATABLE TO EXEMPT INCOME IS TO BE ADDED TO THE BOOK PROFIT. VIDE ORDER SHEET ENTRY DATED 18.06.2008, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PROPORTIONATE EXPENDITURE AMOUNTING TO RS.48,71,190/ - MAY NOT BE ADDED TO THE PROFIT WHILE COMPUTING BOOK PROFIT U/S 115JB. THE RELEVANT PART OF ORDER SHEET ENTRY DATED 18.06.2008 IS BEING REPRODUCED AS UNDER: - 25 AS PER COMPUTATION OF MAT U/S 115JB, DIVIDEND OF RS.11,82,21,258/ - IS DEDUCTED WHILE COMPUTING BOOK PROFIT U/S 115JB AS DIVIDEND WAS CREDITED IN P&L A/C. AS PER EXPLANATION F TO SECTION 115JB, THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WITH SECTION 190 (OTHER THAN PROVISION CONTAINED IN CLAUSE - 38 THEREOF) OR SECTION 10A OR S ECTION 10B OR SECTION 11 OR SECTION 12 APPLY) OR TO BE ADDED BACK IN COMPUTING BOOK PROFIT. IT IS SEEN THAT AN AMOUNT OF RS.37083608/ - WAS INCURRED AS EXPS. ON PMS. TOTAL AMOUNT GIVEN FOR PMS WAS RS.90 CRORES. ACCORDINGLY, PROPORTIONATE EXPENDITURE AMOUN TING TO RS.48,71,190/ - (RS.3,70,83,608 X 11,82,21,258/ 90,00,00,000/ - ) IS PROPOSED TO BE DISALLOWED/ADDED WHILE COMPUTING BOOK PROFIT. NO CONVINCING REPLY WAS FILED BY THE ASSESSEE. ACCORDINGLY, AN AMOUNT OF RS.48,71,190/ - IS BEING ADDED IN THE COMPUTATI ON OF BOOK PROFIT AS PER EXPLANATION - F TO SECTION 115JB OF I.T. ACT, 1961. AND THE LD. CIT(A) HAS DEALT WITH THIS ISSUE IN PARAS 6, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 AND 6.7 WHICH ARE REPRODUCED HEREUNDER: - 6. GROUNDS NO.10.1. AND 10.2 OF THE MEMORANDUM OF APPEAL RELATE TO AN ADDITION OF RS.48,71,190.00 IN ARRIVING AT THE BOOK PROFIT U/S. 115JB OF THE ACT. 6.1 ON PERUSAL OF THE APPELLANTS RECORDS, IT HAS BEEN OBSERVED THAT THE APPELLANT HAS EARNED DIVIDEND INCOME OF RS.11,82,21,258.00 DURING THE YEAR UN DER APPEAL. THE AOS REMARKS IN THE ASSESSMENT ORDER ARE BEING REPRODUCED HEREUNDER: - IT IS SEEN THAT AN AMOUNT OF RS.37083608/ - WAS INCURRED AS EXPENSES ON PMS. THE TOTAL AMOUNT GIVEN ON PMS WAS RS.90 CRORES. ACCORDINGLY, PROPORTIONATE EXPENDITURE AM OUNTING TO RS.48,71,190 (RS.3,70,83,608 X 11,82,21,258/ 26 90,00,00,000) IS PROPOSED TO BE DISALLOWED/ADDED WHILE COMPUTING THE BOOK PROFIT 6.2 THE LD. AR HAS VEHEMENTLY ARGUED THAT THE AO WAS NOT EMPOWERED TO MAKE ANY ADJUSTMENTS TO THE PROFIT AS PER THE P ROFIT & LOSS ACCOUNT. REFERENCE HAS BEEN MADE TO THE HONBLE APEX COURTS RULING IN THE CASE OF MALYALA MANORAMA CO. LTD. [2008] 169 TAXMAN 471. I DO NOT HOWEVER AGREE WITH THE LD.A.R. SINCE THE ADJUSTMENTS, AS SPECIFICALLY GIVEN IN SECTION 115JB ARE NEC ESSARILY TO BE CONSIDERED IN WORKING OUT THE BOOK PROFITS UNDER THAT SECTION. IT IS FOR THIS VERY REASON THAT THE DIVIDEND INCOME OF RS.11.82 CRORES HAS BEEN EXCLUDED IN WORKING OUT THE BOOK PROFIT. CLAUSE (F) TO THE EXPLANATION 1 OF THE SECTION IS VER Y CLEAR ON THIS AND READS AS UNDER: - (F)THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10(OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (38) THEREOF) OR SECTION 11 OR SECTION 12 APPLY; OR] 6.3 THEREFORE, ONCE THE DIVIDEND INCOME IS EXCLUDED, ANY EXPENDITURE RELATED TO THE SAME OUGHT TO BE EXCLUDED. AS REGARDS THE QUANTUM OF THE DISALLOWANCES, THE APPELLANT HAS STATED AS UNDER: - WITHOUT PREJUDICE IT MAY BE SUBMITTED THAT: 1 . THAT WHILE WORKING OUT THE DISALLOWANCE, THE ENTIRE DIVIDEND OF RS.11.82 CRORES HAS BEEN CONSIDERED BY THE LD.A.O. AGAINST THE PMS INVESTMENT OF RS.90 CRORES, WHICH IS TOTALLY AGAINST THE FACTS OF THE APPELLANTS CASE. 2 . THAT THE APPELLANT HAS EARNED DIVIDEND INCOME OF ONLY RS.1,69,35,903/ - ON ITS INVESTMENTS THROUGH THE PMS, THE BALANCE BEING ON INVESTMENTS MADE DIRECTLY BY THE APPELLANT. 3 . THAT IF AT ALL SUCH A DISALLOWANCE WAS TO BE MADE, THE SAME OUGHT TO BE MADE BY CONSIDERING THE DIVIDEND EARNED BY THE APPELLANT ONLY ON INVESTMENT THROUGH THE P MS, I.E. RS.1,69,35,903/ - 27 6.4 ON PERUSAL OF DETAILS, IT IS SEEN THAT OUT OF TOTAL DIVIDEND OF RS.11.82 CRORES EARNED BY THE APPELLANT, IT HAS EARNED DIVIDEND OF ONLY RS.1,69,35,903/ - THROUGH THE PMS AND THE BALANCE AMOUNT OF DIVIDEND HAS BEEN EARNED ON IN VESTMENTS WHICH HAD BEEN MADE BY THE COMPANY DIRECTLY. IT IS ALSO SEEN THAT THE ASSESSEE COMPANY HAS PAID CONSIDERABLE PMS CHARGES ON ITS PORTFOLIO OF INVESTMENT MANAGED BY PMS. SUCH PMS CHARGES HAVE BEEN ALLOCATED TO THE CAPITAL GAINS EARNED (UNDER THE PMS) BUT NO AMOUNT OF PMS CHARGES HAS BEEN ALLOCATED TO THE EARNING OF DIVIDEND INCOME IN THE PMS. PMS CHARGES PAID SHOULD HAVE ALSO BEEN SPREAD OVER THE DIVIDEND INCOME OF RS.1,69,35,903/ - EARNED BY THE PMS. THE METHOD OF APPORTION OF SUCH PMS CHARGES T O THE EARNING OF DIVIDEND WOULD BE AS UNDER: - DIVIDEND INCOME (RS.1,69,39,903) ------------------------------------------- X TOTAL PMS CHARGES (RS. .) = TOTAL INCOME (CAPITAL GAIN + DIVIDEND) 6.5 THE A.O IS DIRECTED TO COMPUTE THIS AMOUNT. 6 .6. AS REGARDS DIVIDEND INCOME GENERATED THROUGH SELF INVESTMENT, IT IS SEEN THAT SUCH EARNING OF DIVIDEND INCOME IS MORE THAN RS.10 CRORES. THE NUMBER OF TRANSACTIONS THAT HAVE CONTRIBUTED TO THE EARNING OF SUCH DIVIDENDS ARE LARGE. THIS MEANS THAT CONS IDERABLE TIME, EFFORT AND EXPENDITURE WAS REQUIRED ON PART OF THE MANAGEMENT AND SUPPORTING STAFF OF THE HQ TO CARRY OUT SUCH TRANSACTION WHICH RESULTED IN EARNING OF SUCH HUGE DIVIDENDS. I ESTIMATE SUCH EXPENDITURE TO BE RS.10,00,000/ - PER ANNUM WHICH CO MES 1% OF THE DIVIDEND EARNED. IN THIS REGARD, I RELY ON THE DECISION OF THE HONBLE TRIBUNAL IN THE CASE OF SOUTHERN PETRO CHEMICALS VS. DCIT (93 TTJ CHENNAI 161). 6.7 THE AO WOULD ADD RS.10,00,000/ - + PROPORTIONATE PMS CHARGES (AS REFERRED IN PARA 6.4 & 6.5) TO THE BOOK PROFIT FOR COMPUTATION OF TAX LIABILITY U/S.115JB OF THE ACT. IN RESULT, GROUND NO.10 PARTLY ALLOWED. 19. FROM THE AFORESAID DISCUSSION, IT IS SEEN THAT THE AUTHORITIES BELOW HAVE APPLIED EXPLANATION (1), CLAUSE (F) AN SUB - CLAUSE (II) APPEARING BELOW CLAUSE (I) OF EXPLANATION (1). IT IS SUBMITTED THAT ON THE FACTS OF THE PRESENT CASE WHERE THE 28 INVESTMENT IN S HARES EITHER DIRECTLY OR THROUGH PMS HAS YIELDED HUGE INCOME IN THE FORM OF SHORT TERM CAPITAL GAIN WHICH IS TAXABLE, IT CANNOT BE SAID THAT THERE WAS ANY EXPENDITURE THAT COULD BE IDENTIFIED AND SAID TO BE RELATED TO THE EXEMPTED INCOME. THE EXPENDITURE WAS ESSENTIALLY BEEN INCURRED FOR THE PURPOSES OF EARNING INCOME WHICH IS TAXABLE AND IN CASE, BY VIRTUE OF THE SHARE HOLDING BEING HOLD BEYOND A SPECIFIED PERIOD ANY INCIDENTAL INCOME HAS BEEN EARNED, IT CANNOT BE SAID THAT THE EXPENDITURE WAS RELATABLE TO ANY EXEMPT INCOME. THEREFORE, NO PART OF THE EXPENSES COULD HAVE BEEN CONSIDERED TO BE DISALLOWABLE, SO AS TO CALL FOR ADJUSTMENT IN BOOK PROFIT COMPUTED UNDER SECTION 115JB. 20. WHOLLY WITHOUT PREJUDICE TO THE SAID SUBMISSIONS, IT IS STATED THAT EST IMATE OF RS.10,00,000/ - IN RELATION TO THE INCOME EARNED THROUGH DIRECT INVESTMENT (OTHER THAN PMS) IS MUCH TOO HIGH AND EXCESSIVE. THE DIVIDEND INCOME, APART FROM INCIDENTAL TO THE INVESTMENT IN SHARES, THE DECISION MAKING PROCESS CANNOT BE SAID TO BE EN TAILING SUCH A HUGE EXPENDITURE. 21. IN THIS VIEW OF THE MATTER THE ASSESSEES SUBMISSION IS THAT FIRST OF ALL NO DISALLOWANCE SHOULD HAVE BEEN MADE (WHICH MAY AFFECT THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB) AND IN ANY CASE AND WITHOUT PREJUDIC E TO THE SAID SUBMISSION THE ESTIMATE OF EXPENDITURE AT RS.10,00,000/ - IS MUCH TOO HIGH AND EXCESSIVE. B REVENUES APPEAL (ITA NO.306/LKW/2012) 22. IN ITS APPEAL THE REVENUE HAS TAKEN AS MANY AS FIVE GROUNDS, ESSENTIALLY THE SAME RELATE TO TWO ISSUES, V IZ. I - RELIEF ALLOWED BY CIT(A) IN THE MATTER OF QUANTUM OF EXPENSES ALLOCATED BY THE ASSESSING OFFICER TO JORHAT UNIT AND CONSEQUENTIAL ENHANCEMENT IN THE RELIEF UNDER SECTION 80 - IB II - RELIEF ALLOWED OUT OF OVERALL ADJUSTMENT ON ACCOUNT OF EXPENDITURE RELATED TO DIVIDEND INCOME 23. SO FAR AS 1 ST ISSUE IS CONCERNED, THIS IS AN ISSUE INVOLVED IN THE ASSESSEES APPEAL ALSO. WHEREAS , THE ASSESSEE IS AGGRIEVED BY THE QUANTUM OF ALLOCATION AS HAD BEEN SUSTAINED BY THE CIT(A) FOLLOWING THE DECISION OF THE HONBLE ITAT IN THE 29 ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002 - 03 AND 2004 - 05. THE IS AGGRIEVED BY THE RELIEF GIVEN BY THE 1 ST APPELLATE AUTHORITY, BY FOLLOWING THE DECISION OF THE HONBLE ITAT FOR THE SAID VERY ASSESSMENT YEARS. ASSESSEES CONTENTION AS RAISED BY IT IN ITS APPEAL, TO THE EFFECT THAT (I) SUCH ALLOCATION AS WAS CALLED FOR HAD ALREADY BEEN MADE BY THE ASSESSEE VO LUNTARILY AND NO FURTHER ADJUSTMENT WAS CALLED FOR; AND (II) LOOKING TO THE DISSIMILARITY OF THE FACT, PARTICULARLY THAT IN THE YEARS DEALT WITH BY THE TRIBUNAL, NO SUCH ALLOCATION HAS BEEN MADE BY THE ASSESSEE AT ITS END. IN ANY CASE LOOKING TO THE EXPRE SS PROVISION OF LAW NO SUCH ALLOCATION WAS CALLED FOR. FULLY COVERS THE REVENUES APPEAL ALSO ON THIS ISSUE. 24. AS FOR IIND ISSUE IS CONCERNED, THIS IS ALSO A CROSS APPEAL ON WHICH ASSESSEE AS WELL AS REVENUE HAVE COME IN APPEALS BEFORE YOUR HONOURS. THE SUBMISSIONS MADE BY THE ASSESSEE, IN ITS APPEAL FULLY COVER THE ISSUE RAISED BY THE REVENUE. IT IS WORTHY OF MENTION HERE THAT THE CIT(A), OVER AND ABOVE THE FORMULA LAID DOWN BY HIM FOR DISALLOWANCE OF EXPENSES ON PMS, HAS FURTHER HELD THAT A SUM OF RS.10,00,000/ - SHOULD BE DISALLOWED OUT OF EXPENSES INCURRED ON DIRECT INVESTMENT (OTHER THAN PMS CHARGES). NO SUCH DISALLOWANCE HAD BEEN MADE BY THE ASSESSING OFFICER AND HE HAD RESTRICTED HIMSELF ONLY TO THE DISALLOWANCE OUT OF EXPENSES PAID FOR PMS. TH EREFORE DISALLOWANCE RESORTED TO BY THE LD.CIT(A) WAS WHOLLY UNCALLED FOR. 11. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 6.1 TO 6.7 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 6.1 ON PERUSAL OF THE APPELLANT'S RECORDS, IT HAS BEEN OBSERVED THAT THE APPELLANT HAS EARNED DIVIDEND INCOME OF RS.11,82,21,258.00 DURING THE YEAR UNDER APPEAL. THE AO'S REMARKS IN THE ASSESSMENT ORDER ARE BEING REPRODUCED HERE UNDER: 30 'IT IS SEEN THAT AN AMOUNT OF RS.37083608/ - WAS INCURRED AS EXPENSES ON PMS. THE TOTAL AMOUNT GIVEN ON PMS'WAS RS.90 CRORES. ACCORDINGLY, PROPORTIONATE EXPENDITURE AMOUNTING TO RS.48,7 1,190 (RS.3,70,83,608 X 11,82,21,258/ 90,00,00,000) IS PROPOSED TO BE DISALLOWED/ ADDED WHILE COMPUTING THE BOOK PROFIT.' 6.2 THE LD.AR HAS VEHEMENTLY ARGUED THAT THE AO WAS NOT EMPOWERED TO MAKE ANY ADJUSTMENTS TO THE PROFIT AS PER THE PROFIT & LOSS ACCO UNT. REFERENCE HAS BEEN MADE TO THE HON'BLE APEX COURT'S RULING IN THE CASE OF MALYALA MANORAMA CO. LTD. [2008] 169 TAXMAN 471. I DO NOT HOWEVER AGREE WITH THE LD.A.R. SINCE THE ADJUSTMENTS, AS SPECIFICALLY GIVEN IN SECTION 115JB ARE NECESSARILY TO BE CONS IDERED IN WORKING OUT THE 'BOOK PROFITS' UNDER THAT SECTION. IT IS FOR THIS VERY REASON THAT THE DIVIDEND INCOME OF RS.11.82 CRORES HAS BEEN EXCLUDED IN WORKING OUT THE BOOK PROFITS. CLAUSE (F) TO THE EXPLANATION 1 OF THE SECTION IS VERY CLEAR ON THIS AND READS AS UNDER: (F) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 (OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (38) THEREOF) OR SECTION 11 OR SECTION 12 APPLY; OR] 6.3 THEREFORE, ONCE THE DIVIDEND INCOME IS EXCLUDED, ANY EXPENDITURE RELATED TO THE SAME OUGHT TO BE EXCLUDED. AS REGARDS THE QUANTUM OF THE DISALLOWANCE, THE APPELLANT HAS STATED AS UNDER: 'WITHOUT PREJUDICE IT MAY BE SUBMITTED THAT: 1. THAT WHILE WORKING OUT THE DISALLOWANCE, THE ENTIRE DI VIDEND OF RS.11.82 CRORES HAS BEEN CONSIDERED BY THE LD. A.O. AGAINST THE PMS INVESTMENT OF RS.90 CRORES, WHICH IS TOTALLY AGAINST THE FACTS OF THE APPELLANT'S CASE. 2. THAT THE APPELLANT HAS EARNED DIVIDEND INCOME OF ONLY RS.1,69,35,903/ - ON ITS INVESTME NTS THROUGH THE PMS, THE BALANCE BEING ON INVESTMENTS MADE DIRECTLY BY THE APPELLANT. 31 3. THAT IF AT ALL SUCH A DISALLOWANCE WAS TO BE MADE, THE SAME OUGHT TO BE MADE BY CONSIDERING THE DIVIDEND EARNED BY THE APPELLANT ONLY ON INVESTMENTS THROUGH THE PMS, I.E RS.1,69,35,903/ - .' 6.4 ON PERUSAL OF DETAILS, IT IS SEEN THAT OUT OF TOTAL DIVIDEND OF RS.11.82 CRORES EARNED BY THE APPELLANT, IT HAS EARNED DIVIDEND OF ONLY RS.1,69,35,903/ - THROUGH THE PMS AND THE BALANCE AMOUNT OF DIVIDEND HAS BEEN EARNED ON INVESTMENTS WHICH HAD BEEN MADE B Y THE COMPANY DIRECTLY. IT IS ALSO SEEN THAT THE ASSESSEE COMPANY HAS PAID CONSIDERABLE PMS CHARGES ON ITS PORTFOLIO OF INVESTMENT MANAGED BY PMS. SUCH PMS CHARGES HAVE BEEN ALLOCATED TO THE CAPITAL GAINS EARNED (UNDER THE PMS) BUT NO AMOUNT OF PMS CHARGES HAS BEEN ALLOCATED TO THE EARNING OF DIVIDEND INCOME IN THE PMS. PMS CHARGES PAID SHOULD HAVE ALSO BEEN SPREAD OVER THE DIVIDEND INCOME OF RS.1,69,35,903/ - EARNED BY THE PMS. THE METHOD OF APPORTION OF SUCH PMS CHARGES TO THE EARNING OF DIVIDEND WOULD BE AS UNDER: DIVIDEND INCOME (RS.1,69,39,903) --------------------------------------- X TOTAL PMS CHARGES (RS....) = TOTAL INCOME ( CAPITAL GAIN+ DIVIDEND) 6.5 THE A.O IS DIRECTED TO COMPUTE THIS AMOUNT. 6.6 AS REGARDS DIVIDEND INCOME GENERATED THROUGH SELF INVESTMENT, IT IS SEEN THAT SUCH EARNING OF DIVIDEND INCOME IS MORE THAN RS, 10 CRORES. THE NUMBER OF TRANSACTIONS THAT HAVE CONTRIBUTED TO THE EARNING OF SUCH DIVIDENDS ARE LARGE. THIS MEANS THAT CONSI DERABLE TIME, EFFORT AND EXPENDITURE WAS REQUIRED ON PART OF THE MANAGEMENT AND SUPPORTING STAFF OF THE HQ TO CARRY OUT SUCH TRANSACTION WHICH RESULTED IN EARNING OF SUCH HUGE DIVIDENDS. I ESTIMATE SUCH EXPENDITURE TO 'BE RS.10,00,000/ - PER ANNUM WHICH COM ES TO 1% OF THE DIVIDEND EARNED. IN THIS REGARD, I RELY ON THE DECISION OF THE HON'BLE TRIBUNAL IN THE CASE OF SOUTHERN PETRO CHEMICALS VS DCIT (93 TTJ CHENNAI 161). 6.7 THE AO WOULD ADD RS.10,00,000/ - + PROPORTIONATE PMS CHARGES (AS REFERRED IN PARA 6.4 & 6.5) TO THE BOOK PROFIT FOR COMPUTATION OF TAX LIABILITY U/S 115JB OF THE ACT. IN RESULT, GROUND NOS. 10 IS PARTLY ALLOWED. 32 12.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT CIT(A) HAS REPRODUCED CLAUSE (F) TO THE EXPLANATION 1 OF SECTION 115JB AND AS PER THIS CLAUSE (F), ANY EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 IS APPLICABLE, IS TO BE ADDED BACK. THE CIT(A) HAS DIRECTED THE A.O. TO COMPUTE THE AMOUNT OF EXPENDITURE INCURRED FOR EARNING DIVIDEND INCOME IN PROPORTION TO DIVIDEND INCOME TO TOTAL INCOME I.E. CAPITAL GAIN + DIVIDEND, AS NOTED BY CIT(A) IN PARA 6.1 REPRODUCED ABOVE. CONSIDERING THE PROV ISIONS OF CLAUSE (F) OF SUB SECTION (1) OF SECTION 115JB, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. 12.2 IN ADDITION TO THIS, IT IS NOTED BY CIT(A) THAT OUT OF TOTAL DIVIDEND INCOME OF RS.11.2 CRORES EARNED BY THE ASSESSEE, THE EA RNING OF DIVIDEND INCOME THROUGH PMS IS RS.169.35 LAC AND THEREFORE, EARNING OF DIVIDEND INCOME FROM SELF - INVESTMENT IS MORE THAN RS.10 CRORE. HE HAS ALSO NOTED THAT THE NUMBER OF TRANSACTIONS THAT HA VE CONTRIBUTED TO SUCH EARNING ARE LARGE AND THEREFORE, IN THE OPINION OF CIT(A), CONSIDERABLE TIME, EFFORT AND EXPENDITURE WAS REQUIRED ON THE PART OF THE MANAGEMENT AND SUPPORTING STAFF OF THE ASSESSEE TO CARRY OUT SUCH TRANSACTION, WHICH RESULTED IN EARNING OF SUCH HUGE DIVIDENDS. THE CIT(A) HAS ESTIMATED SUCH EXPENDITURE AT RS.10 CRORE PER ANNUM WHICH IS AROUND 1% OF THE DIVIDEND INCOME SO EARNED. REGARDING THE QUANTUM OF EXPENSES, WE FIND THAT PMS EXPENSES WERE INCURRED TO THE EXTENT OF RS.370.83 LAC WHEREAS THE DIVIDEND INCOME ON PMS SCHEME IS TO THE E XTENT OF RS.169.39 LAC AND SHORT TERM CAPITAL GAIN EARNED BY THE ASSESSEE WERE TO THE EXTENT OF RS.3556 . 02 LAC, TOTAL RS.3725.41 LAC AND IT IS SEEN THAT SUCH EXPENSES ON PMS IS AROUND 10% OF INCOME FROM PMS IN THE FORM OF DIVIDEND AND SHORT TERM CAPITAL GA IN. AS AGAINST THIS, THE ESTIMATION OF CIT(A) REGARDING EXPENSES FOR EARNING DIVIDEND INCOME OUT OF DIRECT INVESTMENT IS AROUND 1% OF SUCH INCOME AND THEREFORE, THE ESTIMATION OF CIT(A) IS NOT EXCESSIVE AND UNREASONABLE. REGARDING THIS CONTENTION THAT N O DISALLOWANCE WAS MADE BY THE ASSESSING 33 OFFICER IN RELATION TO SUCH DIVIDEND INCOME ON DIRECT INVESTMENT, WE FIND THAT IT IS NOTED BY CIT(A) IN PARA 6.1 OF HIS ORDER, AS REPRODUCED ABOVE, THAT FOR WORKING OUT THE DISALLOWANCE IN RESPECT OF PMS EXPENDITURE , THE ASSESSING OFFICER HAS CONSIDERED THE TOTAL DIVIDEND INCOME OF RS.1182.21 LAC AND THEREFORE, IT IS SEEN THAT DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER FOR EXPENSES INCURRED IN RELATION TO TOTAL DIVIDEND INCOME WHEREAS AS PER THE DECISION OF CIT(A ), HE HAS BIFURCATED SUCH DISALLOWANCE IN TWO PARTS BECAUSE THE DIVIDEND INCOME EARNED BY THE ASSESSEE OF RS.1182.21 LAC IS IN TWO CATEGORIES I.E. PARTLY FROM PMS INVESTMENT TO THE EXTENT OF RS.169.39 LAC AND THE BALANCE IN EXCESS OF RS.10 CRORE IS ON ACCO UNT OF DIRECT INVESTMENT. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE BECAUSE WHEN DIVIDEND INCOME FROM PMS IS ONLY RS.169.35 LAC, THE ENTIRE DIVIDEND INCOME OF RS.1182.21 LAC CANNOT BE CONSIDER ED FOR MAKING DISALLOWANCE OUT OF EXPENSES INCURRED ON PMS AND THEREFORE, PART RELIEF ALLOWED BY CIT(A) IS JUSTIFIED. AT THE SAME TIME, CIT(A) HAS COVERED UP TH IS ASPECT OF EARNING DIVIDEND INCOME OF MORE THAN RS.10 CRORES OUT OF DIRECT INVESTMENT BY DIRE CTING THE ASSESSING OFFICER TO DISALLOW RS.10 CRORE ON LUMP SUM BASIS. HENCE, ON THIS ISSUE , WE CONFIRM THE ORDER OF CIT(A) AND ACCORDINGLY, GROUND S RAISED BY THE REVENUE AND ASSESSEE IN THIS REGARD ARE REJECTED. 13. IN THE RESULT, THE APPEAL OF THE ASSE SSEE AND REVENUE ARE DISMISSED. 14. NOW WE TAKE UP THE CROSS APPEALS FOR ASSESSMENT YEAR 2008 - 09. AS PER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE IN THIS YEAR, THE ISSUE INVOLVED ARE THREE I.E. REDUCTION IN CLAIM U/S 80IB IN JORHAT UNIT ON ACCOUNT O F FURTHER ALLOCATION OF EXPENSES TO THAT UNIT, DISALLOWANCE OUT OF FOREIGN TRAVELLING EXPENSES AND DISALLOWANCE U/S 14A READ WITH RULE 8D(2) IN ASSESSEES APPEAL WHEREAS THERE IS ONLY ONE ISSUE RAISED BY THE REVENUE REGARDING PART RELIEF ALLOWED BY CIT(A) IN RESPECT OF REDUCTION IN THE 34 DISALLOWANCE U/S 80IB IN RESPECT OF JORHAT UNIT. BOTH THE SIDES AGREED THAT THESE ISSUES ARE IDENTICAL TO ISSUES RAISED IN ASSESSMENT YEAR 2007 - 08 EXCEPT DISALLOWANCE U/S 14A READ WITH RULE 8D BECAUSE RULE 8D HAS BEEN MADE APPLICABLE FROM THIS YEAR. BOTH THE SIDES AGREED THAT EXCEPT THE DISALLOWANCE U/S 14A, THE REMAINING ISSUES CAN BE DECIDED ON SIMILAR LINE AS IN ASSESSMENT YEAR 2007 - 08. REGARDI NG THE DISALLOWANCE U/S 14A, THE WRITTEN SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE ARE CONTAINED IN PARA 4 TO 7 OF THE WRITTEN SUBMISSIONS SUBMITTED FOR ASSESSMENT YEAR 2008 - 09, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 4. AS FAR AS THE ISSUE OF DISALLOWANCE UNDER SECTION 14A IS CONCERNED, WHICH IS THE IIIRD ISSUE , THE ASSESSEE BEGS TO SUBMIT THAT WHILE FILING THE RETURN, IT ITSELF HAD WORKED OUT SUCH A DISALLOWANCE OF RS.37,44,169/ - AS HAS BEEN NOTED BY THE ASSESSING OFFICER ALS O ON PAGE 19 OF THE ASSESSMENT ORDER, RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER: - DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS MADE INVESTMENT THROUGH PORTFOLIO MANAGEMENT SCHEME (PMS) AND PAID PMS FEE AMOUNTING TO RS.37,44,169/. SUBSEQUENTLY, ASSESSEE COMPANY HAS PROPORTIONED THESE EXPENSES IN THE FOLLOWING MANNER: - IN SHORT TERM CAPITAL GAINST (TAXABLE) RS. 3,09,974/ - IN LONG TERM CAPITAL GAINS (EXEMPTED U/S 10(38) RS. 31,05,654/ - IN DIVIDEND INCOME RS. 3,28,541/ - TOTAL RS. 37,44,169/ - AND HAD ADDED BACK TO THE INCOME SHOWN. 5. AGAINST THIS, THE ASSESSING OFFICER HAS WORKED THE DISALLOWANCE AT RS.68,23,681/ - , FINDING GIVEN BY HIM ON PAGE 21 OF THE ASSESSMENT ORDER. THE ASSESSES GRIEVANCE IS THAT THE ASSESSING OFFICER HAS MECHANICALLY APPLIED RULE 8D(II) WITHOUT ADVERTING TO THE REQUIREMENT OF LAW AS CONTAINED IN SUB - SECTION (1) OF SECTION 14A. IT IS A LAW WELL SETTLED BY LONG LINE OF DECISIONS THAT IN THE ABSENCE OF ANY FINDING, AS ENVISAGED IN S UB - SECTION (1) OF SECTION 14A, BEING RECORDED BY THE ASSESSING OFFICER, HE CANNOT INVOKE THE PROVISION OF SUB - SECTION (2) OF SECTION 14A AND RULE 8D(II). 35 6. IN APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE HAD MADE EXTENSIVE SUBMISSIONS, COPY OF WHICH APPEAR AT PAGES 54 TO 59 AND ADDITIONAL SUBMISSION, COPY OF WHICH APPEARS AT PAGES 62 TO 63. RELIANCE IS SPECIFICALLY PLACED ON THE DECISION REFERRED TO THEREIN (PAGE 58) READING AS UNDER: - (A) DCIT VS. JINDAL PHOTO LIMTIED (DELHI) (TRIB.) ITA NO.4539/DEL/201 0 IN THIS CASE IT WAS HELD THAT IT IS A PRE - REQUISITE THAT BEFORE INVOKING RULE 8D, THE AO MUST RECORD HIS SATISFACTION ON HOW THE ASSESSEES CALCULATION IS INCORRECT. THE AO CANNOT APPLY RULE 8D WITHOUT POINTING OUT ANY INACCURACY IN THE METHOD OF APPORT IONMENT OR ALLOCATION OF EXPENSES. FURTHER, THE ONUS IS ON THE AO TO SHOW THAT EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FOR EARNING TAX= - FREE INCOME. WITHOUT DISCHARGING THE ONUS, THE AO IS NOT ENTITLED TO MAKE AN ADHOC DISALLOWANCE. A CLEAR FINDI NG OF INCURRING OF EXPENDITURE IS NECESSARY. NO DISALLOWANCE CAN BE MADE ON THE BASIS OF PRESUMPTIONS. THE CASE ALSO DRAWS REFERENCE FROM SEVERAL EARLIER DECISIONS INCLUDING ( A ) CIT VS. HERO CYCLES 323 ITR 158 (PH) ( B ) ACIT VS. EICHER LTD., 101 TTJ (DEL) 369 ( C ) VIDYUT INVESTMENT LTD., 10 SOT 284 (DEL) ( D ) D.J. MEHTA VS. ITO, 290 ITR 238 (MUM)(AT) (B) MAXOPP INVESTMENT LTD. V. CIT, NEW DELHI (HIGH COURT - DELHI): PARA 31OF THE JUDGMENT REDA 31. IT IS, THEREFORE, CLEAR THAT DETERMINATION OF THE AMOUNT OF EXPENDITURE IN RELATION TO EXEMPT INCOME UNDER RULE 8D WOULD ONLY COME INTO PLAY WHEN THE ASSESSING OFFICER REJECTS THE CLAIM OF THE ASSESSEE IN THIS REGARD 41. SUB - SECTION (2) OF SECTION 14A, AS WE HAVE SEEN, STIPULATES THAT THE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED. OF COURSE, THIS DETERMINATION CAN ONLY BE UNDERTAKEN IF THE ASSESSING OFFICER IS NOT SATISFIED WITH T HE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE. THIS PART OF SECTION 14A(2) WHICH EXPLICITLY REQUIRES THE 36 FULFILLMENT OF A CONDITION PRECEDENT IS ALSO IMPLICIT IN SECTION 14A(1) [AS IT NOW STANDS] AS ALSO IN ITS INITIAL AVATAR AS SECTION 14A. IT IS ONLY THE PRESCRIPTION WITH REGARD TO THE METHOD OF DETERMINING SUCH EXPENDITURE WHICH IS NEW AND WHICH WILL OPERATE PROSPECTIVELY. IN OTHER WORDS, SECTION 14A, EVEN PRIOR TO THE INTRODUCTION OF SUB - SECTION (2) AND (3) WOULD REQUIRE THE ASSESSING OFFICER TO FIRST REJECT THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EXTENT OF SUCH EXPENDITURE AND SUCH REJECTION MUST BE FOR DISCLOSED COGENT REASONS. IT IS THEN THAT THE QUESTION DETERMINATION OF SUCH EXPENDITURE BY THE ASSESSING OFFICER WOULD ARISE THEREFORE NO FURTHER DISALLOWANCE U/S 14A IS CALLED FOR. AND THE FACTUAL MATRIX AS CONTAINED ON PAGES 60 AND 61 THEREOF. 7. IN VIEW OF THE CASE LAWS AND OTHER MATERIAL REFERRED TO ABOVE, IT IS SUBMITTED THAT THE ENHANCEMENT IN DISALLOWANCE UNDER SECTION 14A WAS WHOLLY UNCALLED FOR AND THE CIT(A) HAS ERRED IN SUSTAINING THE SAME. 15. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 1 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDING THE REMAINING ISSUES, EXCEPT THE DISALLOWANCE U/S 14A READ WITH RULE 8D, WE FIND THAT THESE ISSUES WERE DECIDED BY US WHILE DECIDING THE CROSS APPEALS FOR ASSESSMENT YEAR 2007 - 08 BY WAY OF CONFIRMING THE ORDER OF CIT(A) ON TH ESE ISSUE S AND THE GROUNDS RAISED BY BOTH THE SIDES ON THESE ISS UES WERE REJECTED IN THAT YEAR. SIMILARLY IN THE PRESENT YEAR ALSO, THE GROUNDS RAISED BY BOTH THE SIDES ARE REJECTED ON SIMILAR LINE. 1 7 . REGARDING THE DISALLOWANCE U/S 14A READ WITH RULE 8D, WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 6.2.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 6.2.2 DECISION 37 THE AO HAS CORRECTLY APPRECIATED THE FACTS OF THE CASE. NO DOUBT, THE APPELLANT COMPANY HAS USED THE SERVICES OF PMS FOR MANAGING ITS INVESTMENTS. BUT AS THE RECORDS SHOW, CONSIDERABLE AMOUNT OF INVESTMENT HAS ALSO BEEN MANAGED BY THE COMPANY BY ITSELF AND WHICH HAS RESULTED INTO CONSIDERABLE INCOME (RUNNING INTO CRORES) THROUGH DIVIDEND AND CAPITAL GAINS. VERY LITTLE EXPENDITURE (RS.2,27,000/ - ON/Y) HAD BEEN SHOWN BY THE APPELLANT COMPANY ON EARNING INCOME ON ACCOUNT OF DIVIDEND AND LONG TERM CAPITAL GAINS ON INVESTMENTS MANAGED BY ITSELF WHICH IS IN SHARP CONTRAST TO RS.34,34,195/ - THAT WAS PAID TO THE PMS MANAGERS. THE APPELLANT COMPANY HAS STATED TH AT THIS COMPUTATION HAS BEEN DONE BASED ON ACTUAL FACTS. HOWEVER, THE AO WAS NOT CONVINCED. IT IS SEEN THAT IN ITS COMPUTATION (OF EXPENSES INCURRED) NO COST PERTAINING TO THE TOP - EXECUTIVE(S) OF THE COMPANY HAD BEEN CONSIDERED BY THE ASSESSEE COMPANY . IT IS A COMMON KNOWLEDGE THAT MANAGING AND DECISION MAKING FOR SUCH A LARGE PORTFOLIO OF INVESTMENT (WHICH CAN RESULT INTO PROFITS/LOANS RUNNING INTO CRORES), TOP - EXECUTIVE(S) OF THE COMPANY ARE ALWAYS INVOLVED [REFER TO THE DECISION OF SOUTHERN PETRO CH EMICALS VS. DCIT (93 TTJ CHENNAI 161) IN THIS REGARD. ONCE THE COMPUTATION DONE BY THE ASSESSEE IN THIS REGARD IS NOT ACCEPTABLE, THE AO HAS NO CHOICE BUT TO INVOKE THE PROVISIONS OF RULE 8D OF THE I.T. RULES. THE LD. A.R. HAS NOT POINTED ANY MISTAKE IN CA LCULATION OF DISALLOWANCE (UNDER RULE 8D) MADE BY THE A.O. ACCORDINGLY, THE DISALLOWANCE MADE BY THE A.O U/S 14A STANDS CONFIRMED. 1 7 .1 AS PER THE ASSESSMENT ORDER, WE FIND THAT NO DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER OUT OF INTEREST EXPEN DITURE BUT DISALLOWANCE OF RS.70,50,757/ - WAS MADE TO THE EXTENT OF 0.5% ON AVERAGE INVESTMENT OF RS.141.01 CRORES. THIS INVESTMENT IS IN ADDITION TO THE INVESTMENT BY WAY OF PMS AND THEREFORE, RULE 8D IS APPLICABLE. THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER IS JUSTIFIED BECAUSE IT IS AS PER RULE 8D. IN THE LIGHT OF ABOVE FACTS, WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE, AS REPRODUCED ABOVE. 38 1 7 .2 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS A TRIBUNAL DECISION IN THE CASE OF DCIT VS. JINDAL PHOTO LIMTIED IN I.T.A. NO.4539/DEL/10, COPY OF THE TRIBUNAL DECISION IS NOT MADE AVAILABLE BUT THIS FACT ALONE THAT THE APPEAL WAS FILED BEFORE DELHI BENCH OF THE TRIBUNAL IN THE YEAR 2010, IT CAN BE STATED VERY SAFELY THAT THE ASSESSMENT YEAR INVOLVED IS NOT ASSESSMENT YEAR 2008 - 09 OR A SUBSEQUENT ASSESSMENT YEAR AND THEREFORE, RULE 8D WAS NOT APPLICABLE IN THE YEAR, WHICH I S INVOLVED BEFORE THE TRIBUNAL IN TH E PRESENT CASE. IN THE PRESENT CASE, THE ASSESSMENT YEAR INVOLVED IS 2008 - 09 AND THEREFORE, RULE 8D IS APPLICABLE AND FOR THIS REASON, TH IS TRIBUNAL DECISION IS NOT APPLICABLE. 1 7 .3 THE SECOND JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE PUNJAB & HARYANA RENDERED IN THE CASE OF CIT VS. HERO CYCLES 323 ITR 518. WE FIND THAT IN THIS CASE ALSO, THE ASSESSMENT YEAR INVOLVED WAS 2004 - 05 WHEN RULE 8D WAS NOT APPLICABLE AND THEREFORE, THIS JUDGMENT IS NOT RELEVANT. 1 7 .4 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION RENDERED IN THE CASE OF D.J. MEHTA VS. ITO, 290 ITR 238 (MUM)(AT) . IN THIS CASE ALSO, THE ASSESSMENT YEAR INVOLVED IS 1998 - 99 AND THEREFORE, THIS TRIBUNAL DECISION IS ALS O NOT APPLICABLE IN THE PRESENT CASE. 1 7 .5 RELIANCE HAS BEEN PLACED ON ONE MORE TRIBUNAL DECISION IN THE CASE OF V IDYUT INVESTMENT LTD., 10 SOT 284 (DEL) . IN THIS CASE ALSO, THE ASSESSMENT YEAR INVOLVED IS 199 - 2000 AND 2001 - 2002 AND DURING THIS PERIOD AL SO, RULE 8D WAS NOT APPLICABLE AND THEREFORE, NOT APPLICABLE. 1 7 .6 RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT DECISION RENDERED IN THE CASE OF 247 CTR 162. IN THIS CASE ALSO , THE ASSESSMENT YEARS WERE 1998 - 99, 2005 - 06 AND DURING THIS PERIOD ALSO , RULE 39 8D WAS NOT APPLICABLE AND THEREFORE, THIS JUDGMENT IS NOT RELEVANT IN THE DISPUTE IN THE PRESENT CASE. 1 8 . AS PER THE ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY ASSESSEE IS APPLICABLE BECAUSE IN ALL THESE JU DGMENTS, THE ASSESSMENT YEAR IS PRIOR TO ASSESSMENT YEAR 2008 - 09 WHEN RULE 8D WAS NOT APPLICABLE WHEREAS IN THE PRESENT CASE, RULE 8D IS APPLICABLE AND THEREFORE, IN THE FACTS OF THE PRESENT CASE, WE FIND NO INFIRMITY IN THE ORDER OF AUTHORITIES BELOW AND DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 1 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE AND REVENUE ARE DISMISSED. 20 . IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE AND BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 /04/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR