Haldia Petrochemicals Limited, Kolkata V. ITO, Ward - 12(4), Kolkata, Kolkata

ITA 2114/KOL/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4495 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 07-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2009
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Business expenditure; Opportunity of being heard; Earning of tax free income; Retrospective amendment; Question of law; Cost of acquisition; Bad and doubtful debts; Revised return; Revenue expenditure
• Section: 143(3); 234B; 14A; 115JB; 32; 263; 154; 139

Judgement Text

I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 22 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2114/KOL/ 2009 ASSESSMENT YEAR: 2006-2007 HALDIA PETROCHEMICALS LIMITED,..................... .............................APPELLANT 1, AUCLAND PLACE, KOLKATA-700 017 [PAN: AAACH 7360 R] -VS.- INCOME TAX OFFICER,................................ ......................................RESPONDENT WARD-12(4), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -A N D I.T.A. NO. 278/KOL/ 2011 ASSESSMENT YEAR: 2007-2008 HALDIA PETROCHEMICALS LIMITED,..................... ...............................APPELLANT 1, AUCLAND PLACE, KOLKATA-700 017 [PAN: AAACH 7360 R] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ..........................RESPONDENT CIRCLE-12, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -A N D I.T.A. NOS. 47/KOL/ 2010 ASSESSMENT YEAR: 2006-2007 & I.T.A. NOS. 450/KOL/ 2011 ASSESSMENT YEAR: 2007-2008 DEPUTY COMMISSIONER OF INCOME TAX,................. ..........................APPELLANT CIRCLE-12, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 22 -VS.- M/S. HALDIA PETROCHEMICALS LIMITED,................ ..........................RESPONDENT 1, AUCLAND PLACE, KOLKATA-700 017 [PAN: AAACH 7360 R] APPEARANCES BY: SHRI HARKAMAL CHAKRAVORTY, G.M. (FIN.), FCA, FOR TH E ASSESSEE SHRI RAJAT SUBHRA BISWAS, CIT, D.R.., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 06, 2016 DATE OF PRONOUNCING THE ORDER : JULY 29, 2016 O R D E R PER SHRI P.M. JAGTAP :- THESE FOUR APPEALS, TWO FILED BY THE ASSESSEE BEING ITA NOS. 2114/KOL/2009 AND 278/KOL/2011 AND TWO FILED BY THE REVENUE BEING ITA NOS. 47/KOL/2010 AND 450/KOL/2011 ARE CROSS APP EALS FOR ASSESSMENT YEARS 2006-07 AND 2007-08. SINCE THE ISS UES INVOLVED THEREIN ARE COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND A RE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF C ONVENIENCE. 2. FIRST WE SHALL TAKE UP THE CROSS APPEALS FOR A.Y . 2006-07, WHICH ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA DATED 29.09.2009. 3. AT THE TIME OF HEARING BEFORE US, GROUND NO. 1 R AISED IN THE APPEAL OF THE ASSESSEE FOR A.Y. 2006-07 RELATING TO THE AP PLICABILITY OF MAT PROVISIONS OF SECTION 115JB HAS NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 4. THE NEXT ISSUE INVOLVED IN GROUNDS NO. 2 & 3 IN ASSESSEES APPEAL FOR A.Y. 2006-07 RELATES TO THE ASSESSEES CLAIM FO R DEDUCTION ON ACCOUNT I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 22 OF DEFERRED REVENUE EXPENSES AND THE SAME IS RAISED BY WAY OF THE FOLLOWING GROUNDS:- (2) FOR THAT THE CIT(A) ERRED IN HOLDING THAT DEFE RRED REVENUE EXPENSES AMOUNTING TO RS.15,46,30,000/- WERE NOT DEDUCTIBLE IN COMPUTING INCOME UNDER THE INCOME TAX ACT. (3) FOR THAT THE CIT(A) ERRED IN DISMISSING THE ALTERNATIVE GROUND THAT THE DEFERRED REVENUE EXPENSES AMOUNTING TO RS.15,46,30,000/- WERE REQUIRED TO BE INCLUDED IN THE ACTUAL COST OF THE ASSETS FOR ALLOWING DEPRECIATION UNDER SECTION 32 O F THE INCOME TAX ACT. 5. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF POLYMERS AND OTHER PETROCHEMICAL PRODUCTS. THE RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION, I.E. A.Y. 2006-07 WAS FILED BY IT ON 17.11.2006 DECLARING TOTAL INCOME AT NIL. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS.160.67 MILLIONS WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF AMORTIZATION OF MISCELLANEOUS EXPENDITUR E. IN SUPPORT OF ITS CLAIM FOR THE SAID DEDUCTION, IT WAS EXPLAINED BY T HE ASSESSEE THAT INDIRECT EXPENDITURE OF RS.805.65 MILLIONS WAS INCU RRED BY IT BEFORE THE COMMENCEMENT OF COMMERCIAL PRODUCTION ON 01.08.2001 AND THE SAME WAS WRITTEN OFF OVER A PERIOD OF FIVE YEARS BEGINNI NG FROM ASSESSMENT YEAR 2002-03. IT WAS CLAIMED THAT THE EXPENDITURE S O INCURRED WAS IN THE NATURE OF REVENUE AND THE SAME, THEREFORE, WAS ALLO WABLE AS DEDUCTION BEING DEFERRED REVENUE EXPENDITURE. THE ASSESSING O FFICER DID NOT FIND MERIT IN THE CLAIM MADE BY THE ASSESSEE ON THIS COU NT AND DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF DEF ERRED REVENUE EXPENDITURE HOLDING THAT THERE WAS NO PROVISION IN THE ACT FOR ALLOWING SUCH DEDUCTION. ON APPEAL, THE LD. CIT(APPEALS) CON FIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 22 6. AT THE TIME OF HEARING BEFORE US, THE LD. REPRES ENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR A.Y. 2005-06 VIDE ITS ORDER DATED 13.04.2016 PA SSED IN ITA NOS. 581 & 587/KOL/2009, WHEREIN THE ALTERNATIVE CLAIM OF THE ASSESSEE AS RAISED IN GROUND NO. 3 OF THE PRESENT APPEAL TO INCLUDE THE D EFERRED REVENUE EXPENDITURE IN THE ACTUAL COST OF THE ASSETS FOR AL LOWING DEPRECIATION UNDER SECTION 32 OF THE ACT WAS ALLOWED BY THE TRIB UNAL FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 17 OF ITS ORDER:- 17. FROM THE AFORESAID DISCUSSION, WE FIND THAT TH E ASSESSEE HAS INCURRED EXPENSES PRIOR TO THE COMMENCEMENT OF BUSI NESS AND CLASSIFIED AS DEFERRED REVENUE EXPENDITURE. THE ASSESSEE START ED CLAIMING THOSE EXPENSES AFTER THE COMMENCEMENT OF BUSINESS 1/5TH O VER THE PERIOD OF 5 YEARS. HOWEVER, THE LOWER AUTHORITIES DISALLOWED TH E SAME ON THE GROUND THAT THERE IS NO PROVISION UNDER THE ACT TO CLAIM T HE DEFERRED REVENUE EXPENSES. FROM THE FACTS OF THE CASE WE OBSERVE THA T THE AO IS NOT SKEPTICAL ABOUT THE GENUINENESS OF THE EXPENSES INC URRED. THE WHOLE AMOUNT OF RS. 154.64 MILLION HAS BEEN INCURRED IN C ONNECTION OF BUSINESS PRIOR TO THE COMMENCEMENT OF COMMERCIAL PRODUCTION. ANY EXPENSE INCURRED IN CONNECTION TO THE BUSINESS IS AN ALLOWA BLE EXPENDITURE. FROM THE ABOVE EXPLAINED CITATIONS OF THE CASES DENYING THE NON EXISTENCE OF DEFERRED REVENUE EXPENDITURE TERM IN THE ACT IS NOT REASONABLE AND TENABLE. IN OUR CONSIDERED VIEW, ALL THE EXPENSES I NCURRED PRIOR TO THE COMMENCEMENT OF PRODUCTION SHOULD BE CAPITALIZED WI TH THE FIXED ASSETS OF THE ASSESSEE AND DEPRECIATION SHOULD BE ALLOWED THEREON ACCORDINGLY AS PER LAW. IN THIS CONNECTION, WE ARE RELYING IN T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CHALLAPALLI SUGARS LTD V. CIT (1975) 98 ITR 167 (SC) WHERE THE HEAD NOTES IS AS REPRODUCED:- AS THE EXPRESSION ACTUAL COST HAS NOT BEEN DEFINED, IT SHOULD BE CONSTRUED IN THE SENSE WHICH NO COMMERCIA L MAN WOULD MISUNDERSTAND. FOR THIS PURPOSE IT WOULD BE N ECESSARY TO ASCERTAIN THE CONNOTATION OF THE EXPRESSION IN A CCORDANCE WITH THE NORMAL RULES OF ACCOUNTANCY PREVAILING IN COMMERCE AND INDUSTRY. THE ACCEPTED ACCOUNTANCY RULE FOR DET ERMINING COST OF FIXED ASSETS IS TO INCLUDE ALL EXPENDITURE NECESSARY TO BRING SUCH ASSETS INTO EXISTENCE AND TO PUT THEM IN WORKING CONDITION. IN CASE MONEY IS BORROWED BY A NEWLY STA RTED COMPANY WHICH IS IN THE PROCESS OF CONSTRUCTING AND ERECTING ITS PLAN, THE INTEREST INCURRED BEFORE THE COMMENCE MENT OF PRODUCTION ON SUCH BORROWED MONEY CAN BE CAPITALIZE D AND I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 5 OF 22 ADDED TO THE COST OF THE FIXED ASSETS CREATED AS A RESULT OF SUCH EXPENDITURE. WE ARE ALSO RELYING IN THE GUIDANCE NOTE ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA ON TREATMENT OF EXPEN DITURE DURING CONSTRUCTION PERIOD WHERE IT WAS RECOMMENDED THAT T HE INDIRECT EXPENDITURE INCURRED DURING THE CONSTRUCTION PERIOD SHOULD BE CAPITALIZED AS PART OF INDIRECT CONSTRUCTION COST TO THE EXTENT TO WHICH THE EXPENDITURE IS INDIRECTLY RELATED TO CONSTRUCTION OR IF INCIDEN TAL THERETO. AN ILLUSTRATIVE LIST OF SUCH POSSIBLE ITEMS OF EXPENDITURE WHICH WO ULD QUALIFY FOR INCLUSION FOR THE PURPOSE OF CAPITALIZATION HAS BEEN PROVIDED INCLUDING THE FOLLOWING:- (A) EXPENDITURE ON EMPLOYEES WHO ARE EITHER ASSIGN ED TO CONSTRUCTION WORK OR TO SUPERVISION OVER CONSTRUCTI ON WORK INCLUDING SALARIES, PROVIDENT FUND AND OTHER BENEFI TS, STAFF WELFARE EXPENSES, ETC. (B) EXPENDITURE ON TECHNICAL AND OTHER CONSULTANTS. (C) GENERAL ADMINISTRATIVE AND OFFICE EXPENDITURE W HICH IS INDIRECTLY RELATED OR INCIDENTAL TO CONSTRUCTION, I NCLUDING, AS MAY BE APPROPRIATE, STATIONERY AND PRINTING, RENT, RATE S AND TAXES, POSTAGE AND TELEGRAMS, TRAVEL AND CONVEYANCE ETC. (D) APPROPRIATE INSURANCE CHARGES. (E) APPROPRIATE EXPENDITURES ON MAINTENANCE AND OPE RATION OF VEHICLES. (F) APPROPRIATE EXPENDITURES IN CONNECTION WITH TEM PORARY STRUCTURES AND SERVICE FACILITIES BUILT OR ACQUIRED SPECIALLY FOR THE PURPOSE OF CONSTRUCTION (SEE PARAGRAPHS 9.4 AND 9.5 OF THIS NO TE). (G) PRELIMINARY PROJECT EXPENDITURE TO THE EXTENT T O WHICH IT IS CAPITALIZED AS PART OF THE CONSTRUCTION COST (SEE P ARAGRAPH 3 OF THIS NOTE). (H) FINANCIAL EXPENSES INCLUDING INTEREST AND OTHER SIMILAR CHARGES (SEE PARAGRAPH 4 OF THE NOTE). (I) DEPRECIATION ON FIXED ASSETS AS WELL AS ON TEMP ORARY STRUCTURE AND OTHER FACILITIES USED DURING THE PERIOD OF CONSTRUC TION (SEE PARAGRAPH 9.4 AND 9.5 OF THIS NOTE). (J) EXPENSES ON TEST RUNS (SEE PARAGRAPH 11 OF THIS NOTE). (K) EXPENSES ON LAND GRADING AND LEVELING (SEE PARA GRAPH 96 OF THIS NOTE). TAKING A CONSISTENT VIEW BY THE DECISION OF HONBLE SUPREME COURT AND RELIANCE IN THE AFORESAID GUIDANCE NOTE WE REVERSE THE ORDERS OF AUTHORITIES BELOW. HENCE, THIS GROUND OF THE ASSESSEE IS ALLOWE D. I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 6 OF 22 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DA TED 13.04.2016 (SUPRA) IN ASSESSEES OWN CASE ON A SIMILAR ISSUE FOR A.Y. 2005-06, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND ALLOW GROUND NO . 3 OF ITS APPEAL. 7. THE ISSUE INVOLVED IN GROUND NO. 4 OF THE ASSESS EES APPEAL FOR A.Y. 2006-07 RELATES TO THE DISALLOWANCE OF RS.4,83,40,0 00/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D O F THE INCOME TAX RULES, 1962. 8. IN ITS RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2006-07, DIVIDEND INCOME EARNED BY THE ASSESSE E AMOUNTING TO RS.39.30 CRORES WAS CLAIMED TO BE EXEMPT UNDER SECT ION 10(34) OF THE ACT. NO DISALLOWANCE ON ACCOUNT OF EXPENDITURE INCU RRED IN RELATION TO THE SAID EXEMPT INCOME, HOWEVER, WAS OFFERED BY THE ASS ESSEE AS REQUIRED BY THE PROVISIONS OF SECTION 14A ON THE GROUND THAT NO SUCH EXPENDITURE WAS ACTUALLY INCURRED BY IT. THE ASSESSING OFFICER DID NOT ACCEPT THE STAND OF THE ASSESSEE AND COMPUTED THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE EXEMPT DIVIDEND INCOME BY APPLYING RULE 8D AT RS.48.34 MILLION AND MADE A DISALLOWANCE TO THAT EXTENT UNDE R SECTION 14A. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. 9. AT THE TIME OF HEARING BEFORE US, THE LD. REPRES ENTATIVES OF BOTH THE SIDES HAVE AGREED THAT A SIMILAR ISSUE RELATING TO THE DISALLOWANCE MADE UNDER SECTION 14A HAS ALREADY BEEN DECIDED BY THE T RIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 VIDE PARAGRAPH NO. 25 OF ITS ORDER DATED 13.04.2016 (SUPRA), WHICH READS AS UNDER:- 25. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. BEFORE US LD. AR SUBMITTED THAT UNDER SECTION 14A(1 ) DISALLOWANCE CAN BE MADE ONLY I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 7 OF 22 IN RESPECT OF EXPENDITURE INCURRED . HERE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN RELATION TO DIVIDEND INCOME. HENCE P ROVISION OF SECTION 14A DO NOT APPLY AT ALL. ASSESSEE HAS RELIED ON CITATION OF TH E FOLLOWING CASES: 1.CIT VS. HERO CYCLES LTD [ 323 ITR 518]- P&H HIGH COURT 2. MAXOPP INVESTMENT LIMITED VS. CIT [(2012)347 ITR 272 (DELHI HIGH COURT)] 3. CIT VS. TORRENT POWER LTD. [2014] 363 ITR 474 (G UJARAT HIGH COURT) IT WAS HELD THAT RULE 8D WAS NOT APPLICABLE IN THE AY 2005-06 TO 2007- 08.RULE 8D CAME INTO EXISTENCE FROM 24.03.2008 AND HENCE IT WA S NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THIS SUPPOR T LD.AR HAS RELIED ON THE JUDGEMENT OF BOMBAY HIGH COURT IN CASE OF GODREJ & BOYCE MFG. CO. LTD., MUMBAI VS. DCIT [(2010) 328 ITR 81 (BOM). ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. ON PERUSAL OF APPELLATE ORDER, WE FIND THAT DIRECTION HAS BEEN ISSUED TO ASSESSING OFFICER FOR MAKING DISALLOWANCE IN TERMS OF PROVISION OF SE C. 14A R.W.S. 8D OF THE IT RULES, 1962. HOWEVER WE UNDERSTAND THAT THE RULE 8D OF THE IT RULES CAME INTO EFFECT FROM 24.03.2008 AND THE INSTANT CASE BEFORE US IS FOR AY 2005-06. THEREFORE, THE PROVISIONS OF RULE 8D OF THE IT RULES IS NOT APPLICABLE IN ASS ESSEES PRESENT CASE. WE FURTHER FIND THAT PRIOR TO INSERTION OF RULE 8D OF THE IT RULES VARIOUS COURTS HAVE HELD THAT THE DISALLOWANCE IN TERMS OF PROVISION OF SEC. 14A OF T HE ACT SHOULD BE RESTRICTED @ 1% OF DIVIDEND INCOME. ON THE OTHER HAND THE LD. DR VEHEM ENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. HOWEVER WE DISAGREE WITH THE ORD ER OF THE LOWER AUTHORITIES AND PUT OUR RELIANCE IN GA NO. 3019 OF 2012 IN ITAT NO. 243 OF 2012 OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. M/S R.R.SEN & BROTHERS (P) LTD., WHERE THE HON'BLE COURT HAS HELD: THE ASSESSEE DID NOT SHOW ANY EXPENDITURE INCURRED BY HIM FOR THE PURPOSE OF EARNING THE MONEY WHICH IS EXEMPTED UNDE R THE INCOME TAX. THE TRIBUNAL HAS COMPUTED EXPENDITURE AT 1 PER CENT OF SUCH DIVIDEND INCOME WHICH, ACCORDING TO THEM, IS THE TH UMB RULE APPLIED CONSISTENTLY. WE FIND NO REASON TO INTERFER E. THE APPEAL IS DISMISSED. IN THIS VIEW OF THE MATTER, WE REVERSE THE ORDERS O F AUTHORITIES BELOW AND DIRECTED THE ASSESSING OFFICER TO MAKE DISALLOWANCE @ 1% OF DIVI DEND INCOME. ACCORDINGLY, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED IN PART. 10. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDE RATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2005-06, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A .Y. 2005-06 AND DIRECT I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 8 OF 22 THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A TO 1% OF THE EXEMPT DIVIDEND INCOME. GROUND NO. 4 OF T HE ASSESSEES APPEAL FOR A.Y. 2006-07 IS THUS PARTLY ALLOWED. 11. GROUND NO. 5 RAISED IN THE APPEAL OF THE ASSESS EE FOR A.Y. 2006-07 IS AN ADDITIONAL GROUND, WHICH INVOLVES THE ISSUE R ELATING TO THE LEVY OF INTEREST UNDER SECTION 234D OF THE ACT ON THE GROUN D THAT THE PROVISIONS OF SECTION 234D HAVE NO APPLICATION WHEN THE REFUND ALREADY PAID IS SUBSEQUENTLY REDUCED DUE TO RETROSPECTIVE AMENDMENT MADE IN THE INCOME TAX ACT. 12. SINCE THE ISSUE SOUGHT TO BE RAISED BY THE ASSE SSEE IN THE ADDITIONAL GROUND INVOLVES PURELY A QUESTION OF LAW AND THE AD JUDICATION OF THE SAME DOES NOT INVOLVE INVESTIGATION INTO NEW FACTS, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE HAS BEEN ADMITTED BY US RELY ING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL T HERMAL POWER CORPORATION VS.- CIT REPORTED IN 229 ITR 383. 13. IN SUPPORT OF THE ASSESSEES CASE ON THE ISSUE RAISED IN THE ADDITIONAL GROUND CHALLENGING THE LEVY OF INTEREST UNDER SECTION 234D, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE-COMPANY HAD DECLARED BOOK PROFIT OF RS.285.01 CRORES UNDER SECT ION 115JB FOR A.Y. 2006-07 AND THE TAX PAYABLE THEREON AT RS.23.98 CRO RES. AS THE ASSESSEE- COMPANY HAD PAID ADVANCE TAX AND TDS OF RS.26.75 CR ORES, REFUND OF THE EXCESS TAX ALONG WITH INTEREST AGGREGATING TO RS.3. 07 CRORES WAS GRANTED TO THE ASSESSEE AS PER INTIMATION ISSUED UNDER SECT ION 143(1) ON 31.01.2008. SUBSEQUENTLY, IN THE ASSESSMENT COMPLET ED UNDER SECTION 143(3) VIDE AN ORDER DATED 30.12.2008, THE ASSESSIN G OFFICER ADDED BACK PROVISION FOR DEFERRED TAX LIABILITY, PROVISION FOR DOUBTFUL ADVANCE AND PROVISION FOR DOUBTFUL DEBTS AGGREGATING TO RS.163. 18 CRORES TO THE BOOK I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 9 OF 22 PROFIT AS PER THE AMENDMENT MADE BY THE FINANCE ACT , 2008 AND 2009 UNDER SECTION 115JB WITH RETROSPECTIVE EFFECT FROM 01.04.2001 AND RAISED A DEMAND FOR ADDITIONAL MAT OF RS.13.73 CRORES. HE ALSO LEVIED INTEREST OF RS.20.25 LAKHS UNDER SECTION 234D ON THE REFUND THA T HAD BEEN GRANTED TO THE ASSESSEE UNDER SECTION 143(1). 14. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BOOK PROFIT OF THE ASSESSEE-COMPANY UNDER SECTION 115JB WAS WORKED OUT AND ACCEPTED UNDER SECTION 143(1) AS PER THE LAW PREVALENT AT TH E RELEVANT TIME AS SETTLED BY THE DECISION OF THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF BALRAMPUR CHINI MILLS [214 CTR 684(CAL.) AND THE HO NBLE SUPREME COURT IN THE CASE OF HCL CONMET [305 ITR 409 (SC)]. HE SU BMITTED THAT WHEN THE REFUND WAS GRANTED TO THE ASSESSEE VIDE INTIMAT ION ISSUED UNDER SECTION 143(1) ON 31.01.2008, RETROSPECTIVE AMENDME NTS MADE BY THE FINANCE ACT, 2008 & 2009 WERE NOT IN THE STATUTE AN D THE SAID REFUND THUS WAS GRANTED IN ACCORDANCE WITH LAW AS PREVALENT AT THE RELEVANT TIME. HE CONTENDED THAT THE REFUND SO GRANTED, THEREFORE, CO ULD NOT BE TREATED AS EXCESS REFUND AND INTEREST UNDER SECTION 234D, WHIC H IS PAYABLE ON EXCESS REFUND, COULD NOT BE CHARGED IN ASSESSEES C ASE. IN SUPPORT OF THIS CONTENTION, HE RELIED ON THE DECISION OF THE HONBL E CALCUTTA HIGH COURT IN THE CASE OF EMAMI LIMITED VS.- CIT REPORTED IN 337 ITR 470, WHEREIN INTEREST CHARGED UNDER SECTIONS 234B AND 234C IN TH E SIMILAR SITUATION WAS CANCELLED. 15. ON THE OTHER HAND, THE LD. D.R. DID NOT RAISE A NY MATERIAL CONTENTION AND LEFT THE MATTER TO BE DECIDED BY THE TRIBUNAL I N ACCORDANCE WITH LAW. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE REFUND GRANTED TO THE ASSESSEE AS PER THE INTIMATION ISSUE D UNDER SECTION 143(1) I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 10 OF 22 ON 31.01.2008 WAS IN ACCORDANCE WITH LAW AS PREVALE NT AT THE RELEVANT TIME. THE ADDITIONAL TAX LIABILITY, HOWEVER, WAS RA ISED AGAINST THE ASSESSEE IN THE ASSESSMENT COMPLETED BY THE ASSESSI NG OFFICER UNDER SECTION 143(3) AS A RESULT OF AMENDMENT MADE IN SEC TION 115JB BY THE FINANCE ACT, 2008 AND 2009 WITH RETROSPECTIVE EFFEC T FROM 01.04.2001 AND THE REFUND GRANTED BY THE ASSESSEE AS PER THE I NTIMATION ISSUED UNDER SECTION 143(1) BECAME PAYABLE BY THE ASSESSEE. THE REFUND GRANTED TO THE ASSESSEE ACCORDINGLY WAS TREATED BY THE ASSESSING O FFICER AS EXCESS REFUND AND INTEREST UNDER SECTION 234D WAS LEVIED B Y HIM ON SUCH EXCESS REFUND. IN THE CASE OF EMAMI LIMITED VS.- CIT (SUP RA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR ISSUE SITUATION HAD ARISEN IN THE CONTEXT OF LEVY OF INTEREST UNDER SECTIONS 234B AND 234C AND THE INTEREST CHARGED BY THE ASSESSING OFFICER UNDER SECTIONS 234 B AND 234C WAS CANCELLED BY THE HONBLE JURISDICTIONAL HIGH COURT FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPHS NO. 9 TO 11 OF ITS ORDE R:- 9. IN THE CASE BEFORE US, THE LAST DATE OF THE REL EVANT FINANCIAL YEAR WAS 31ST MARCH, 2001 AND ON THAT DAY, ADMITTEDLY, THE APPELL ANT HAD NO LIABILITY TO PAY ANY AMOUNT OF ADVANCE TAX IN ACCORDANCE WITH THE THEN L AW PREVAILING IN THE COUNTRY. CONSEQUENTLY, THE APPELLANT PAID NO ADVANCE TAX AND SUBMITTED ITS REGULAR RETURN ON 31ST OCT., 2001 WITHIN THE TIME FIXED BY LAW WHE REIN IT DECLARED ITS TOTAL INCOME AND THE BOOK PROFIT BOTH AS NIL. HOWEVER, CO NSEQUENT TO THE AMENDMENT OF THE PROVISIONS CONTAINED IN S. 115JB OF THE ACT BY VIRTUE OF FINANCE ACT, 2002 WHICH WAS PUBLISHED IN THE OFFICIAL GAZETTE ON 11TH MAY, 2002 GIVING RETROSPECTIVE EFFECT TO THE AMENDMENT FROM 1ST APRIL, 2001, THE A PPELLANT FIRST VOLUNTARILY PAID A SUM OF RS. 1,55,62,511 ON ACCOUNT OF THE TAX PAYABL E ON BOOK PROFIT AS PROVIDED IN AMENDED PROVISION OF S. 115JB AND THEN FILED ITS REVISED RETURN OF 31 ST MARCH, 2003 DECLARING ITS BUSINESS INCOME AS NIL BUT THE B OOK PROFIT UNDER S. 115JB AS RS. 20,63,65,711. THE AO ACCEPTED SUCH RETURN OF IN COME BUT IMPOSED INTEREST UNDER SS. 234B AND 234C OF THE ACT AMOUNTING TO RS. 44,00,937 AND RS. 11,78,960 RESPECTIVELY. 10. IN OUR OPINION, THE AMENDED PROVISION OF S. 115 JB HAVING COME INTO FORCE W.E.F. 1ST APRIL, 2001, THE APPELLANT CANNOT BE HEL D DEFAULTER OF PAYMENT OF ADVANCE TAX. AS POINTED OUT EARLIER, ON THE LAST DA TE OF THE FINANCIAL YEAR PRECEDING THE RELEVANT ASSESSMENT YEAR, AS THE BOOK PROFIT OF THE APPELLANT IN ACCORDANCE WITH THE THEN PROVISION OF LAW WAS NIL, WE CANNOT CONCEIVE OF ANY 'ADVANCE TAX' WHICH IN ESSENCE IS PAYABLE WITHIN TH E LAST DAY OF THE FINANCIAL YEAR I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 11 OF 22 PRECEDING THE RELEVANT ASSESSMENT YEAR AS PROVIDED IN SS. 207 AND 208 OR WITHIN THE DATES INDICATED IN S. 211 OF THE ACT WHICH INEV ITABLY FALLS WITHIN THE LAST DATE OF FINANCIAL YEAR PRECEDING THE RELEVANT ASSESSMENT YE AR. CONSEQUENTLY, THE ASSESSEE CANNOT BE BRANDED AS A DEFAULTER IN PAYMENT OF ADVA NCE TAX AS MENTIONED ABOVE. 11. AT THIS STAGE, WE MAY PROFITABLY RELY UPON THE OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF STAR INDIA (P) LTD. VS. CCE (2 006) 201 CTR (SC) 63 : (2006) 280 ITR 321 (SC) STRONGLY RELIED UPON BY MR. BAJORI A, WHERE THE APEX COURT IN THE CONTEXT OF IMPOSITION OF SERVICE TAX BY THE FIN ANCE ACT, 2002 WITH RETROSPECTIVE EFFECT HELD THAT THE LIABILITY TO PAY INTEREST WOULD ARISE ONLY ON DEFAULT AND IS REALLY IN THE NATURE OF QUASI-PUNISH MENT AND THUS, ALTHOUGH THE LIABILITY TO PAY TAX AROSE DUE TO RETROSPECTIVE EFF ECT OF LAW, SAME SHOULD NOT ENTAIL THE PUNISHMENT OF PAYMENT OF INTEREST. 17. ALTHOUGH THE AFORESAID DECISION IN THE CASE OF EMAMI LIMITED WAS RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CONTEXT OF LEVY OF INTEREST UNDER SECTIONS 234B AND 234C, WE ARE OF TH E VIEW THAT THE RATIO AND SPIRIT OF THE SAID DECISION IS EQUALLY APPLICAB LE IN THE PRESENT CASE INVOLVING LEVY OF INTEREST UNDER SECTION 234D IN TH E IDENTICAL FACTS SITUATION. WE, THEREFORE, APPLY THE RATIO OF THE SA ID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND DIRECT THE AS SESSING OFFICER TO CANCEL THE INTEREST CHARGED UNDER SECTION 234D. 18. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR A. Y. 2006-07, WHICH INVOLVES THE FOLLOWING GROUNDS:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCES OF RS.15,57,70,000/- ON ACCOUNT OF FREIGHT EXPENSES, B EING RECEIVABLES OF THE APPELLANT AND IN THE NATURE OF B ALANCE SHEET ITEM. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES MADE U/S 2(24)(X) READ WITH SEC. 36(1)(VA) OF THE I.T. ACT O N ACCOUNT OF DELAYED DEPOSIT OF EMPLOYEES CONTRIBUTION TOWARD S ESI. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN DELETING ADDITION OF RS.31,70,000/- ON I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 12 OF 22 ACCOUNT OF PROVISION FOR DOUBTFUL ADVANCES WHICH WA S ADDED FOR COMPUTATION OF BOOK PROFIT U/S 115JB OF THE I.T . ACT SINCE THE DEBTS OF THE ADVANCES WERE UNASCERTAINED. 19. AS AGREED BY THE LD. REPRESENTATIVE OF BOTH THE SIDES, THE ISSUE INVOLVED IN GROUND NO.1 OF THE REVENUES APPEAL FOR A.Y. 2006-07 IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 RE NDERED VIDE ITS ORDER DATED 13.04.2016 (SUPRA), WHEREIN A SIMILAR ISSUE W AS DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH NO. 35, WHICH READS AS UNDER:- 35. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. BEFORE US LD. DR VEHEMENTLY SUPPORTED TH E ORDER OF AO AND LEFT THE ISSUE TO THE DISCRETION OF THE BENCH WHEREAS LD AR RELIED THE ORDER OF LD CIT(A). FROM THE AFORESAID RIVAL MATERIALS, WE F IND THAT THE AO HAS DISALLOWED THE FREIGHT EXPENSES ON THE GROUND THAT ASSESSEE HAS MADE SHORT RECOVERY FROM THE CUSTOMERS AND SIMILAR ADDIT ION WAS MADE IN THE EARLIER ASSESSMENT YEAR. HOWEVER, THE AO HAS NOT DI SPUTED THE QUANTUM OF EXPENSES INCURRED BY THE ASSESSEE ON FREIGHT. FROM THE SUBMISSION OF LD. AR WE FIND THAT OUT OF THE TOTAL DISALLOWANCE MADE BY THE AO TOWARDS FREIGHT EXPENSES, A SUM OF RS.86,59,000/- WAS INCUR RED ON THE STOCK TRANSFER BY THE ASSESSEE FROM THE FACTORY TO THE DE POTS. IN OUR VIEW, THE QUESTION OF DISALLOWANCE OF FREIGHT EXPENSES IN CON NECTION WITH THE STOCK TRANSFER DOES NOT ARISE. THIS FREIGHT EXPENSE HAS D IRECT CONNECTION WITH THE BUSINESS OF THE ASSESSEE. FOR OTHER FREIGHT EXPENSE S, THE REASON GIVEN BY THE AO FOR THE DISALLOWANCE IS NOT TENABLE AS THE A O HAS NOT POINTED OUT ANY REASONABLE REASONS FOR THE SAME. THERE IS NO DO UBT THAT THE ASSESSEE HAD MADE SHORT RECOVERY FROM THE CUSTOMERS BUT THE REASONS FOR THE SAME WERE DULY EXPLAINED BY THE ASSESSEE. ACCORDINGLY TH E LD. CIT(A) HAS GIVEN THE RELIEF TO THE ASSESSEE AND ON THIS POINT OF VIE W LD. DR HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDINGS OF THE LD CIT(A). IN VIEW OF ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF LD CIT( A) AND WE UPHOLD THE SAME. HENCE, THIS GROUND OF REVENUES APPEAL IS DIS MISSED. 20. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDE RATION, I.E. A.Y. 2006-07 AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE A.Y. 2005-06, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A.Y. 2005-06 AND UPHOLD THE IMPUGNED ORDER OF THE LD. CI T(APPEALS) DELETING THE DISALLOWANCE OF RS.15,57,70,000/- MADE BY THE A SSESSING OFFICER ON I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 13 OF 22 ACCOUNT OF FREIGHT. GROUND NO. 1 OF THE REVENUES A PPEAL IS ACCORDINGLY DISMISSED. 21. THE ISSUE RAISED IN GROUND NO. 2 OF THE REVENUE S APPEAL FOR A.Y. 2006-07 RELATING TO THE DELETION BY THE LD. CIT(APP EALS) OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF DELAYED DEPOSIT OF EMPLOYEES CONTRIBUTION TOWARDS ESI HAS NOT BEEN PRESSED BY THE LD. D.R. AT THE TIME OF HEARING BEFORE US. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 22. AS REGARDS GROUND NO. 3 OF THE REVENUES APPEAL FOR A.Y. 2006-07, THE LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGRE ED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE DELETION BY THE LD . CIT(APPEALS) OF THE ADDITION OF RS.31,70,000/- ON ACCOUNT OF PROVISION FOR DOUBTFUL ADVANCES WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB IS SQUARELY COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY T HE DECISION OF THIS TRIBUNAL RENDERED VIDE ITS ORDER DATED 13.04.2016 I N ASSESSEES OWN CASE FOR A.Y. 2005-06, WHEREIN A SIMILAR ISSUE WAS DECID ED AGAINST THE ASSESSEE VIDE PARAGRAPH NO. 45, WHICH READS AS UNDE R:- 45. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIALS AVAILABLE ON RECORD. BEFORE US LD. DR SUPPORTED THE ORDER OF AO WHEREAS LD AR SUPPORTED THE ORDER OF LEARNED CIT(A). FROM THE AFORESAID DISCUSS ION, WE FIND THAT AO HAS TREATED THE PROVISION CREATED AGAINST THE DOUBTFUL DEBTS AN D ADVANCES AS THE PROVISION FOR UNASCERTAINED LIABILITY. THEREFORE FOR COMPUTING TH E BOOK PROFIT UNDER THE PROVISIONS OF MAT DEDUCTION FOR SUCH PROVISIONS WAS DISALLOWED AND ADDED TO THE BOOK PROFIT. HOWEVER IN OUR CONSIDERED VIEW THE PROVISION FOR SE C. 115JB SPEAKS FOR THE PROVISIONS CREATED FOR UNASCERTAINED LIABILITIES THEREFORE WE DISAGREE WITH THE VIEW OF THE AO. IN THIS CONNECTION, WE ARE PUTTING OUR RELIANCE IN THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. HCL COMNET SYSTEMS AND SERVICES LTD (2007) 305 ITR 409 WHERE IT WAS HELD AS UNDER:- AS STATED ABOVE, THE SAID EXPLANATION HAS PROVIDE SIX ITEMS, I.E., ITEM NOS (A) TO (F) WHICH IF DEBITED TO THE PROFIT AND LOSS ACCOUNT CAN BE ADDED BACK TO THE NET PROFIT FOR COMPUTING THE BOOK PROFIT. IN THIS CASE, WE ARE CONCERNED WITH ITEM NO. (C) WHICH REFERS TO THE PROVISION FOR BAD AND DOUBTFUL DEBT. THE PROVISION FOR BAD AND DOUBTF UL DEBT CAN BE ADDED BACK TO THE NET PROFIT ONLY IF ITEM (C) STANDS ATTR ACTED. ITEM (C) DEALS I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 14 OF 22 WITH AMOUNT(S) SET ASIDE AS PROVISION MADE FOR MEET ING LIABILITIES, OTHER THAN ASCERTAIN LIABILITIES. THE ASSESSEES CASE WOU LD, THEREFORE, FALL WITHIN THE AMBIT OF ITEM (C) ONLY IF THE AMOUNT IS SET ASI DE AS PROVISION; THE PROVISION IS MADE FOR MEETING A LIABILITY; AND THE PROVISION SHOULD BE FOR OTHER THAN ASCERTAINED LIABILITY, I.E., IT SHOULD B E FOR AN UNASCERTAINED LIABILITY. IN OTHER WORDS, ALL THE INGREDIENTS SHOU LD BE SATISFIED TO ATTRACT ITEM (C) OF THE EXPLANATION TO SEC. 115JA. IN OUR V IEW, ITEM (C) IS NOT ATTRACTED. THERE ARE TWO TYPES OF DEBT . A DEBT IS PAYABLE BY THE ASSESSEE IS WHERE THE ASSESSEE HAS TO PAY THE AMOUN T TO OTHERS WHEREAS THE DEBT RECEIVABLE BY THE ASSESSEE IS AN AMOUNT WH ICH THE ASSESSEE HAS TO RECEIVE FROM OTHERS. IN THE PRESENT CASE DEBT UNDER CONSIDERATION IS DEBT RECEIVABLE BY THE ASSESSEE. THE PROVISION FOR BAD AND DOUBTF UL DEBT, THEREFORE, IS MADE TO COVER UP THE PROBABLE D IMINUTION IN THE VALUE OF ASSET, I.E., DEBT WHICH IS AN AMOUNT RECEIVABLE BY THE ASSESSEE. THEREFORE, SUCH A PROVISION CANNOT BE SAID TO BE A PROVISION FOR LIABILITY, BECAUSE EVEN IF A DEBT IS NOT RECOVERABLE NO LIABIL ITY COULD BE FASTENED UPON THE ASSESSEE. IN THE RESENT CASE, THE DEBT IS THE AMOUNT RECEIVABLE BY THE ASSESSEE AND NOT ANY LIABILITY PAYABLE BY TH E ASSESSEE AND, THEREFORE, ANY PROVISION MADE TOWARDS IRRECOVERABIL ITY OF THE DEBT CANNOT BE SAID TO BE A PROVISION FOR LIABILITY. THE REFORE, IN OUR VIEW ITEM (C) OF THE EXPLANATION IS NOT ATTRACTED TO THE FACT S OF THE PRESENT CASE. IN THE CIRCUMSTANCES, THE AO WAS NOT JUSTIFIED IN ADDI NG BACK THE PROVISION FOR DOUBTFUL DEBTS OF RS.92,5,187/- UNDER CLAUSE (C ) OF THE EXPLANATION TO SECTION 115JA OF THE 1961 ACT. IN VIEW OF ABOVE, WE HAVE NO HESITATION TO UPHOLD T HE ORDER OF LD CIT(A). HENCE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 23. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L FOR A.Y. 2005-06 ON A SIMILAR ISSUE, WE REVERSE THE IMPUGNED ORDER OF T HE LD. CIT(APPEALS) ON THIS ISSUE AND CONFIRM THE ADDITION MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF PROVISION OF DOUBTFUL ADVANCES FOR THE P URPOSE OF COMPUTING BOOK PROFIT OF THE ASSESSEE-COMPANY UNDER SECTION 1 15JB. GROUND NO. 3 OF REVENUES APPAL FOR AY 2006-07 IS ACCORDINGLY ALLOW ED. 24. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE THE TRIBUNAL, THE REVENUE HAS RAISED AN ADDITIONAL GROUND FOR A.Y. 20 06-07 CHALLENGING THE DELETION BY THE LD. CIT(APPEALS) OF THE INTEREST CH ARGED BY THE ASSESSING OFFICER UNDER SECTION 234B ON THE TAX PAYABLE BY TH E ASSESSEE AS PER COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB. SIN CE THE ISSUE RAISED BY I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 15 OF 22 THE REVENUE IN THE ADDITIONAL GROUND IS PURELY A LE GAL ONE AND THE ADJUDICATION OF THE SAME DOES NOT REQUIRE INVESTIGA TION INTO NEW FACTS, THE ADDITIONAL GROUND RAISED BY THE REVENUE HAS BEE N ADMITTED BY US. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES , THE ISSUE RAISED BY THE REVENUE IN THE ADDITIONAL GROUND RELATING TO LEVY O F INTEREST UNDER SECTION 234B IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06, WHEREIN A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE. FOLLOWING THE ORDER OF THE TRIBUNAL IN AS SESSEES OWN CASE FOR A.Y. 2005-06, WE REVERSE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CANCELLING THE INTEREST CHARGED BY THE ASSESSING OF FICER UNDER SECTION 234B AND RESTORE THAT OF THE ASSESSING OFFICER ON T HIS ISSUE. THE ADDITIONAL GROUND RAISED BY THE REVENUE IS ACCORDIN GLY ALLOWED. 25. NOW WE TAKE UP THE CROSS APPEALS FOR A.Y. 2007- 08, WHICH ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(APPEALS)- XII, KOLKATA DATED 14.12.2010. 26. GROUND NO. 1 RAISED BY THE ASSESSEE IN A.Y. 200 7-08 CHALLENGING TO APPLICABILITY OF MAT PROVISIONS OF SECTION 115JB HA S NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING BEFORE US. THE SAME IS ACCORDINGLY DISMISSED. 27. IN GROUND NO. 2 OF ITS APPEAL FOR A.Y. 2007-08, THE ASSESSEE- COMPANY HAS CHALLENGED THE LEVY OF INTEREST UNDER S ECTIONS 234B AND 234C ON ADDITIONAL TAX LIABILITY ARISING AS A RESUL T OF AMENDMENTS MADE IN THE INCOME TAX ACT WITH RETROSPECTIVE EFFECT. 28. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH TH E SIDES, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THIS TRIBUNAL I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 16 OF 22 DATED 13.04.2016 IN ASSESSEES OWN CASE FOR A.Y. 20 05-06, WHEREIN A SIMILAR ISSUE WAS DECIDED VIDE PARAGRAPH NO. 12 AS UNDER:- 12. AT THE OUTSET, WE FIND THAT THE ISSUE IS SQUAR ELY COVERED IN FAVOUR OF THE ASSESSEE IN TERMS OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF EMAMI LTD. VS. CIT (2011) 337 ITR 470 (CAL). THE HEAD NOTE OF THE ORDER READS AS UNDER : INTEREST UNDER SS. 234B AND 234C CHARGEABILITY RETROSPECTIVE AMENDMENT OF LAW- THERE WAS NO LIABILITY OF THE ASS ESSEE TO MAKE PAYMENT OF THE ADVANCE TAX ON THE LAST DAY OF THE F INANCIAL YEAR I.E. 31ST MARCH, 2001 WHEN ITS BOOK PROFIT WAS NIL ACCOR DING TO S. 115JB PROVISION OF S. 115JB HAVING BEEN AMENDED BY THE FI NANCE ACT, 2002, WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2001, THE ASSESSEE CANNOT BE HELD DEFAULTER OF PAYMENT OF ADVANCE TAX WHERE ON THE LAST DATE OF THE FINANCIAL YEAR PRECEDING THE RELEVANT ASSESSMEN T YEAR, THE ASSESSEE HAD NO LIABILITY TO ASSESSMENT YEAR ADVANC E TAX, HE CANNOT BE ASKED TO PAY INTEREST IN TERM OF S. 234B AND S. 234C FOR DEFAULT IN MAKING PAYMENT OF TAX IN ADVANCE WHICH WAS PHYSICAL LY IMPOSSIBLE. AS THE ISSUE IS ALREADY COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN FAVOUR OF ASSESSEE, WE ACCORDINGLY DIRECT THE AO NOT TO CHARGE ANY INTEREST UNDER SECTION 234B & 234C OF THE ACT ON AC COUNT OF RETROSPECTIVE AMENDMENT IN CLAUSE (H) & (I) TO EXPLANATION 1 OF S ECTION 115JB OF THE ACT. HENCE WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSE E. 29. RESPECTFULLY FOLLOWING THE ORDER OF THIS TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 AS WELL AS THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF EMAMI LIMITED (SUPRA), WE CANCEL THE INTEREST IMPOSED UNDER SECTIONS 234B AND 234C AND ALLOW GROU ND NO. 2 OF THE ASSESSEES APPEAL FOR A.Y. 2007-08. 30. AS REGARDS GROUNDS NO. 3 & 4 OF THE ASSESSEES APPEAL FOR A.Y. 2007- 08, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF DEFERR ED REVENUE EXPENDITURE IS SIMILAR TO THE ONE INVOLVED IN GROUN DS NO. 2 & 3 OF THE ASSESSEES APPEAL FOR A.Y. 2006-07, WHICH HAS ALREA DY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING O UR CONCLUSION DRAWN IN A.Y. 2006-07, WE DIRECT THE ASSESSING OFFICER TO IN CLUDE THE DEFERRED REVENUE EXPENDITURE INCURRED BY THE ASSESSEE IN THE COST OF ACQUISITION OF I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 17 OF 22 RESPECTIVE ASSETS FOR THE PURPOSE OF ALLOWING DEPRE CIATION UNDER SECTION 32. GROUND NO. 4 OF THE ASSESSEES APPEAL FOR A.Y. 2007-08 IS ACCORDINGLY ALLOWED. 31. AS REGARDS GROUND NO. 5 OF THE ASSESSEES APPEA L FOR A.Y. 2007-08, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELA TING TO THE DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 4 OF THE ASSESSEES APPEAL FOR A.Y. 2 006-07, WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 2006-07, WE RESTRICT THE DISALLOWANCE MADE UNDER SECTION 14A TO 1% OF THE EX EMPT INCOME. GROUND NO. 5 OF THE ASSESSEES APPEAL FOR A.Y. 2007 -08 IS THUS PARTLY ALLOWED. 32. AS REGARDS GROUND NO. 1 OF THE REVENUES APPEAL FOR A.Y. 2007-08, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATIN G TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANCE OF RS.16,20,20 ,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF FREIGHT IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 1 OF THE REVENUES APPEAL FOR A.Y. 2006- 07, WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 2006-07, WE UPHOLD THE IMP UGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON T HIS ISSUE. GROUND NO. 1 OF THE REVENUES APPEAL FOR A.Y. 2007-08 IS ACCORDI NGLY DISMISSED. 33. IN GROUND NO. 2 OF ITS APPEAL FOR A.Y. 2007-08, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN AL LOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PRIOR PERIOD E XPENSES. 34. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2007-08, A LETTER DATED 16 .12.2009 WAS FILED BY THE I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 18 OF 22 ASSESSEE STATING THAT THE EXPENSES OF RS.10,68,92,5 51/- CLAIMED IN A.Y. 2008-09 ACTUALLY PERTAINED TO A.YS. 2006-07 AND 200 7-08. A REQUEST, THEREFORE, WAS MADE BY THE ASSESSEE TO THE ASSESSIN G OFFICER TO DISALLOW THE SAID EXPENSES IN A.Y. 2008-09 AND ALLOW THE SAM E TO THE EXTENT OF RS.6,86,59,021/- IN THE YEAR UNDER CONSIDERATION, I .E. A.Y. 2007-08 AND THE BALANCE AMOUNT IN A.Y. 2006-07. THE ASSESSING O FFICER, HOWEVER, DID NOT ACCEPT THIS CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT MADE BY THE ASSESSEE IN THE RETURN OF INCOME. 35. ON APPEAL, THE LD. CIT(APPEALS), HOWEVER, DIREC TED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESESE ON THIS ISSUE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 17 TO 22 OF HIS IMPU GNED ORDER:- 17. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THRO UGH THE LETTER DATED 16.12.2009 FILED BY THE APPELLANT BEFORE THE AO AND THE JUDICIAL PRONOUNCEMENT RELIED UPON BY THE APPELLANT , VIDE LETTER DATED 16.12.2009 THE APPELLANT HAD SUBMITTED BEFORE THE A.O. AS UNDER:- SUB.(1) RETURN U/S. 139 OF THE INCOME TAX ACT, 1961 (ACT); AY. 2008-09 (2) RECTIFICATION U/S. 154 OF THE ACT- AY. 2006-0 7 (3) CORRECTION OF INCOME UNDER ASSESSMENT; AY. 2007 -08 1. WE HAVE FILED RETURN U/S. 139 OF THE ACT FOR THE CAPTIONED ASSESSMENT YEAR AND CLAIMED DEDUCTION OF RS.21,06,5 2,404/- IN COMPUTATION OF INCOME AS VAT ADJUSTMENTS. HOWEVER, OUT OF THE ABOVE SUM RS.3,82,33,530/- AND RS.6,8659,021/- PERT AIN TO F.Y. 2005-06 (AY. 2006-07) AND F.Y. 2006-07(A.Y. 2007-08 ) RESPECTIVELY TOTALLING RS.10,68,92,551/-. 2. THEREFORE, DUE TO OUR MISTAKE THE PRIOR YEAR EXP ENSES AMOUNTING TO RS.10,68,92,551/- HAVE NOT BEEN ADDED BACK TO THE COMPUTATION OF INCOME IN AY. 2008-09. THEREFORE , WE REQUEST THAT THE SAME MAY BE CORRECTED DURING THE A SSESSMENT PROCEEDINGS FOR THE AY. 2008-09. NO TAX IMPLICATION ARISES DUE TO THIS INADVERTENT ERROR. I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 19 OF 22 3. IN THE MEANTIME, IT IS REQUESTED THAT THE DEDUCT ION OF RS.3,82,33,530/- AND RS.6,86,59,021/- BE ALLOWED IN THE COMPUTATION OF OUR INCOME FOR AY 2006-07 AND AY 200 7-08 RESPECTIVELY. 4. AS THE ASSESSMENT PROCEEDINGS OF AY. 2006-07 HAS BEEN COMPLETED WE REQUEST THAT THE DEDUCTION OF RS.3,82, 33,530/- BE ALLOWED U/S. 154 OF THE ACT AND FOR A. Y. 2007-08, AS THE ASSESSMENT PROCEEDINGS ARE IN PROGRESS, THE DEDUCTI ON OF RS. 6,86,59,021/- MAY BE ALLOWED IN THE ASSESSMENT ORDE R U/S. 143(3) OF THE ACT. WE PLACE RELIANCE ON THE DECISIO N OF THE HON'BLE TRIBUNAL REPORTED IN [2008] 301 ITR 304 (DE LHI) AND [1998] 234 ITR 541 (MAD) IN THIS CONNECTION. 5. THIS LETTER IS SUBMITTED IN TRIPLICATE FOR PLACI NG SEPARATELY IN YOUR FILES FOR AY 2006-07 TO AY. 2008-09.' 18. FROM THE LETTER DATED 16-12-2009 IT IS APPARENT THAT THE APPELLANT HAS REQUESTED THE A.O. TO MAKE THE ADDITION OF RS.10,68 ,92,551/- IN A.Y. 2008- 09 WHILE COMPLETING THE ASSESSMENT FOR THAT YEAR BE CAUSE THE AFORESAID EXPENSES PERTAINS TO AY 2006-07 AND AY 2007-08. IT WAS FURTHER SUBMITTED BEFORE THE AO THAT OUT OF THE AFORESAID AMOUNT, CLA IM TO THE EXTENT OF RS. 6,86,59,021/- SHOULD BE ALLOWED IN THE ASSESSMENT F OR AY 2007-08 AS THE SAID AMOUNT RELATES TO THIS ASSESSMENT YEAR. HOWEVE R AS MENTIONED ABOVE, THE AO HAS REJECTED THE CLAIM FOR DEDUCTION OF RS.6 ,86,59,021/- FOR THE REASON THAT SOME WAS NOT CLAIMED IN THE RETURN OF I NCOME. ON CAREFUL CONSIDERATION OF THE FACTS AND IN LAW, I AM OF THE OPINION THAT THE A.O WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE APPELLA NT. FIRST OF ALL THE APPELLANT HAD REQUESTED TO ADD THE SAID AMOUNT IN A .Y. 2008-09 AND ALLOW THE CLAIM IN THE YEAR UNDER APPEAL. THUS, WHEN THE SAID AMOUNT IS BEING ADDED IN ONE ASSESSMENT YEAR AND THE CLAIM HAS BEEN MADE FOR DEDUCTION IN THE ASSESSMENT YEAR IN WHICH IT IS ACTUALLY ALLO WABLE AS PER LAW. SECONDLY, IT IS NOT THE CASE OF THE A.O. THAT THE C LAIM MADE BY THE APPELLANT THROUGH ABOVE REFERRED LETTER WAS NOT AT ALL ALLOWA BLE TO THE APPELLANT UNDER THE PROVISIONS OF ACT. IN THE CASE OF NATIONA L THERMAL POWER CORPORATION VS, CIT REPORTED IN 229 ITR 383 (SC), T HE HON'BLE SUPREME COURT HAS HELD THAT U/S. 254 OF THE ACT THE TRIBUNA L MAY, AFTER GIVING BOTH THE PARTIES TO APPEAL AN OPPORTUNITY OF BEING HEARD , PASS SUCH ORDERS THEREIN AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH APPEALS IS, THUS, EXPRESSED IN THE WIDEST POSSIBLE TERMS. T HE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TA XED OR A PERMISSIBLE DEDUCTION DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 20 OF 22 PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRI BUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESP ECT OF THAT ITEM. WHILE DECIDING THE ISSUE AS ABOVE, THE HON'BLE SUPREME CO URT HAS CONSIDERED ITS EARLIER DECISION IN THE CASE OF JUTE CORPORATION OF INDIA LTD.. VS. CIT REPORTED IN 187 ITR 688 (SC). 19. IN THE CASE OF EMERSON NETWORK POWER INDIA LTD. VS. ACIT REPORTED IN 27 SOT 593 (BOM), THE HON'BLE BOMBAY ITAT HAS HELD AS UNDER: 'BUSINESS EXPENDITURE'- ALLOWABILITY - CLAIM MADE A T THE TIME OF ASSESSMENT - CLAIM NOT MADE IN ORIGINAL RETURN N OR MADE BY WAY OF VALID REVISED RETURN BUT MADE IN THE COURSE OF ASSESSMENT - A.O WAS OBLIGED TO GIVE DUE RELIEF TO ASSESSEE OR ENTERTAIN ITS CLAIMS IF ADMISSIBLE AS PER LAW EVEN THROUGH THE ASSESSEE HAD NOT FILED REVISED RETURN - LEGITIMATE CLAIM OF ASSESSEE SHOULD NOT BE REJECTED ON TECHNICAL GROUND - CHINCAGO PNEUMATIC INDIA LTD. VS. DY. CIT (2007) 15 SOT 252 (MUMBAI) FOLLOWED'. 20. IN THE CASE OF FRANCO INDIAN PHARMACEUTICALS PV T. LTD. VS. ITO REPORT IN 3 ITR (TRIB.) 754 (MUM), THE HON'BLE ITAT, MUMBAI H AS HELD AS UNDER: 'BUSINESS EXPENDITURE - ALLOWABILITY - ASSESSEE MAD E ADDITIONAL CLAIM OF DEDUCTION OF BAD DEBTS ON THE GROUND THAT A CLERICAL/ARITHMETICAL ERROR OCCURRED IN THE RETURN - CLAIM NOT MADE IN ORIGINAL RETURN NOR MADE BY WAY OF A REVISED RET URN BUT MADE IN THE COURSE OF ASSESSMENT- AO AND CIT(A) REJECTED TH E CLAIM FOLLOWING THE DECISION OF THE SUPREME COURT IN GOET ZE (LNDIA) LTD. VS. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 32 3 (SC) ON THE GROUND THAT NO REVISED RETURN WAS FILED FOR MAKING SUCH ADDITIONAL CLAIM - POWERS OF THE TRIBUNAL TO ADMIT ADDITIONAL GROUND OR CLAIM ARE NOT AFFECTED - FACTS ARE ON RECORD BY WAY OF LE TTER OF THE ASSESSEE BEFORE THE AO HENCE CLAIM IS ADMITTED - AS NEITHER AO NOR THE CIT(A) HAS CONSIDERED THE ISSUE ON MERITS, THE ISSUE IS SET ASIDE TO THE FILE OF AO FOR FRESH ADJUDICATION. ' 21. IN THE CASE OF CIT VS. JINDAL DRILLING & INDUST RIES LTD. REPORTED IN 301 ITR 304 (DELHI) IT WAS HELD BY THE HON'BLE DELHI HI GH COURT THAT SINCE, THE REVENUE ITSELF HAS CONCLUDED THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE EXPENDITURE IN THE AY. 1990-91 BUT ONLY IN AN EARLI ER ASSESSMENT YEAR, AND THAT CLAIM WAS MADE BY THE ASSESSEE FOR THE AY. 198 9-90, AS A RESULT OF A DIRECTION GIVEN BY THE COMMISSIONER U/S. 263 OF THE ACT TO RECOMPUTED THE INCOME OF THE ASSESSEE, NO ERROR WAS COMMITTED BOTH BY THE CIT(APPEAL} AND THE TRIBUNAL IN CONCLUDING THAT THE AO OUGHT TO HAVE TAKEN THESE FACTS INTO CONSIDERATION FOR THE PURPOSES OF COMPUTING TH E CORRECT INCOME OF THE ASSESSEE. I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 21 OF 22 22. IN THE CASE OF APPELLANT COMPANY IT HAS SPECIFI CALLY SUBMITTED BEFORE THE AO THAT THE EXPENDITURE TO THE EXTENT OF RS.10, 68,92,551/- CLAIMED IN AY. 2008-09, IS REQUIRED TO BE ADDED BACK IN THAT A SSESSMENT YEAR BECAUSE SAME PERTAINED TO AY 2006-07 & 2007-08. THE APPELLA NT CLAIMED THAT THE DEDUCTION OF RS.6.86,59,021/- SHOULD BE ALLOWED AS DEDUCTION IN THE YEAR UNDER APPEAL I.E. IN AY. 200,7-08. IN VIEW OF ABOVE FACTS, AND THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT COMPANY , I AM OF THE OPINION THAT THE CLAIM OF RS.6,86,59,021/- IS ALLOWABLE TO THE APPELLANT COMPANY. THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE APPELL ANT WHICH WAS MADE BEFORE HIM VIDE LETTER DATED 16.12.2009. NEEDLESS T O MENTION THAT THE AFORESAID AMOUNT OF RS.6,86,59,021/- WILL BE ADDED BACK IN THE TOTAL INCOME OF THE APPELLANT COMPANY IN AY 2008-09 AS AD MITTED BY THE APPELLANT ITSELF. THE GROUND NO. 4 IS ALLOWED. 36. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE EXPENDITURE IN QUESTION CLAIMED BY THE ASSESSEE IN A.Y. 2008-09 ACTUALLY PERTAINED TO THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2007-08 AS FOUND BY THE LD. CIT(APPEALS) AND THERE IS NOTHING BROUGHT ON RECORD BY THE LD. D.R. TO DISPUTE THIS POSITION. MOREOVER, THE GENUINENESS OF THE SAID EXPENDITURE WAS NEVER DISPUTED EVEN BY THE ASSESSING OFFICER AN D A REASONABLE REQUEST MADE BY THE ASSESSEE TO ALLOW THE SAID EXPE NDITURE IN THE YEAR TO WHICH IT PERTAINED, I.E. A.Y. 2007-08 AND NOT IN A. Y. 2008-09 WAS NOT ACCEPTED BY THE ASSESSING OFFICER MERELY ON THE GRO UND THAT NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INC OME. AS RIGHTLY OBSERVED BY THE LD. CIT(APPEALS), THE PURPOSE OF TH E ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASS ESS CORRECTLY THE TAX LIABILITY OF THE ASSESSEE IN ACCORDANCE WITH LAW AN D THE ASSESSING OFFICER, THEREFORE, WAS DUTY BOUND TO CONSIDER THE REQUEST M ADE BY THE ASSESSEE FOR ALLOWING THE EXPENDITURE IN QUESTION IN THE YEA R TO WHICH IT PERTAINED. THE LD. CIT(APPEALS), IN OUR OPINION, THEREFORE, WA S FULLY JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR THE EXPENDIT URE IN QUESTION WITH A FURTHER DIRECTION TO THE ASSESSING OFFICER TO DISAL LOW THE SAME IN A.Y. 2008-09. WE, THEREFORE, FIND NO INFIRMITY IN THE IM PUGNED ORDER OF THE LD. I.T.A. NO. 47/KOL./2010 ASSESSMENT YEAR: 2006-2007 ITA NO. 450/KOL/2011 ASSESSMENT YEAR: 2007-2008, ITA NO. 2114/KOL/2009 ASSESSMENT YEAR: 2006-2007 & ITA NO. 278/KOL/2011 ASSESSMENT YEAR: 2007-2008 PAGE 22 OF 22 CIT(APPEALS) ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 2 OF THE REVENUES APPEAL FOR A.Y. 2007-08. 37. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR A.Y. 2006-07 AND 2007-08 AND THE REVENUES APPEAL FOR A.Y. 2006-07 A RE PARTLY ALLOWED, WHEREAS THE APPEAL OF THE REVENUE FOR A.Y. 2007-08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 29, 2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 29 TH DAY OF JULY, 2016 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) INCOME TAX OFFICER, WARD-12(4), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) M/S. HALDIA PETROCHEMICALS LIMITED, 1, AUCLAND PLACE, KOLKATA-700 017 (4) COMMISSIONER OF INCOME-TAX (APPEALS)-XII, KOLK ATA, (5) COMMISSIONER OF INCOME TAX, KOLKATA (6) THE DEPARTMENTAL REPRESENTATIVE (7) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.