M/s Kanoria Chemicals & Industries Ltd., Kolkata V. Addl C.I.T Rg - 10,kolkata, Kolkata

ITA 2232/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9525 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MALLIKERJULA
• Assessee Lawyers: S JHAJHARIA
• Keywords: Depreciation; Opportunity of being heard; Bad and doubtful debts
• Section: 143(3); 142(1); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2232 / KOL / 2013 ASSESSMENT YEAR :2008-09 M/S KNORIA CHEMICALS & INDUSTRIES LTD., PARK PLAZA BUILDING, 71 PARK STREET, 7 TH FLOOR, KOLKAATA-700 016 [ PAN NO.AABCK 1291 K ] V/S . ADDL. CIT RANGE-10, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S. JHAJHARIA, AR & SHRI SUJOY SEN, AR /BY RESPONDENT SHRI G. MALLIKERJULA, CIT-DR /DATE OF HEARING 08-11-2016 /DATE OF PRONOUNCEMENT 18-01-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA DATED 12.03.2013. ASSESSMENT WAS FRAMED BY ACIT, RANGE-10, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 27.09.2010 FOR ASSESSMENT YEAR 2008-09. SHRI S.JHAJHARIA & SHRI SUJOY SEN, LD. AUTHORIZED R EPRESENTATIVES APPEARED ON BEHALF OF ASSESSEE AND SHRI G. MALLIKERJUHA, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF CAUSTIC SODA, STALE BLEACHING POWER, LINDANE, ALUMINIUM CHLORIDE, POLY ALUMINIUM CHLORIDE, SALT, ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 2 PENTAERYTHRITOL, ACETALDEHYDE, FORMALDEHYDE, HEXAMI E, INDUSTRIAL ALCOHOL, ACETIC ACID, POWER CPW ETC., THE ASSESSEE FOR THE Y EAR UNDER CONSIDERATION HAS FILED ITS RETURN OF INCOME DATED 30.09.208 DECL ARING TOTAL INCOME OF RS.18,36,02,250/-. THEREAFTER CASE WAS SELECTED UND ER SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) / 142(1) WERE ISSUED UPON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AT A TOTAL INCOME OF RS.18,64,20,660/- UNDER THE INCOME TAX ACT. 3. FIRST ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LEARNED CIT(A) ERRED IN DISALLOWING THE AMOUNT OF BAD DEBTS WRITTE N OFF IN THE YEAR UNDER CONSIDERATION UNDER THE NORMAL PROVISIONS OF INCOME TAX ACT FOR RS.49,21,899.00. 4. AT THE OUTSET WE FIND THAT THE AO HAS DISALLOWED THE PROVISIONS FOR BAD & DOUBTFUL DEBTS FOR RS. 49,21,899.00 WHILE WORKING OUT THE BOOK PROFIT FOR THE COMPUTATION OF TAX UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. THE LD. CIT(A) HAS CONFIRMED THE SAME IN TERMS OF CLAUSE (I ) TO EXPLANATION 1 OF SECTION 115 JB OF THE ACT WHICH WAS BROUGHT TO TAX BY THE FINANCE ACT 2009. FROM THE PERUSAL OF THE RECORDS WE FIND THAT THE AO HAS NEVER DISALLOWED THE PROVISION FOR BAD AND DOUBTFUL DEBTS UNDER THE NORM AL PROVISIONS ACT. AS THE DISALLOWANCE OF BAD & DOUBTFUL DEBTS IS NOT ARISING FROM THE ORDER OF AO AND THE SAME HAS NOT BEEN DEALT BY THE LEARNED CIT(A) I N HIS APPELLATE ORDER. ACCORDINGLY WE HOLD THE ISSUE RAISED BY THE ASSESSE E AS INFRUCTUOUS. THUS THE GROUND RAISED BY ASSESSEE IS DISMISSED. 5. SECOND ISSUE RAISED BY ASSESSEE IN THIS APPEAL I S THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE DIS ALLOWANCE OF RS.28,11,410/- U/S 14A OF THE ACT R.W.S RULE 8D(II)&(III) OF THE I T RULES, 1962, (THE RULES FOR SHORT). 6. THE ASSESSEE, DURING THE YEAR HAS EARNED DIVIDEN D INCOME OF RS. 14,34,965/- WHICH WAS CLAIMED AS EXEMPTED INCOME U/ S 10(34) OF THE ACT. ON QUESTION BY THE AO ABOUT THE EXPENSES INCURRED IN C ONNECTION WITH THE AFORESAID INCOME, ASSESSEE SUBMITTED THAT NO EXPEND ITURE HAS BEEN INCURRED FOR THE EARNING OF AFORESAID DIVIDEND INCOME. HOWEV ER, AO DISREGARDED THE ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 3 CLAIM OF ASSESSEE AND WORKED OUT THE DISALLOWANCE U /S. 14A R.W.S. RULE 8D(II) & (III) OF THE IT RULES FOR RS.25,27,310/- AND RS. 2,84,100/- RESPECTIVELY. THE AFORESAID DISALLOWANCE WAS ADDED TO THE TOTAL INCOM E OF ASSESSEE. 7. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT SHARES HELD AS INVESTMENT W ERE ACQUIRED LONG BACK AND OUT OF OWN FUND. THERE WAS NO BORROWED FUND USE D BY ASSESSEE FOR MAKING SUCH INVESTMENT IN SHARES. THEREFORE, THE PR OVISION OF SEC. 14A R.W.S. RULE 8D ARE NOT APPLICABLE TO THE ASSESSEE. THE ASS ESSEE ALSO SUBMITTED THAT THE AO ALSO FAILED TO BRING ANYTHING ON RECORD TO P ROVE THE EXPENSES INCURRED IN CONNECTION WITH THE DIVIDEND INCOME. HOWEVER, LD . CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE ASSESSMENT ORDE R OF AO DISREGARDED THE PLEA OF ASSESSEE AND CONFIRMED THE ORDER OF AO BY O BSERVING AS UNDER:- 6. APPEAL ON GROUND NO. 3 IS AGAINST THE ADDITION O F RS.2811410/- U/S. 14A OF THE IT ACT, 1961 READ WITH RULE 8D. THE AR H AS SUBMITTED THAT AO'S ACTION OF CALCULATION OF EXPENSES FOR EARNING THE EXEMPTED INCOME UNDER RULE 8D IS NOT JUSTIFIED. I HAVE CONSIDERED T HE SUBMISSION OF THE AR AND THE AO'S CALCULATION. I FIND THAT AFTER THE AMENDMENT IN SEC. 14A THE IT ACT, 1961 THE WORD USED IS THE AO SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO .. . THUS, HERE IT IS MANDATORY FOR THE AO TO CALCULATE EXPENSES UNDER RU LE 8D FOR EARNING THE EXEMPTED INCOME W.E.F. 01-04-2007. ACCORDINGLY, ASSESSEES APPEAL ON GROUND NO. 3 IS DISMISSED. AGGRIEVED BY THIS, ASSESSEE HAS COME UP AN APPEAL B EFORE US. 8. BEFORE US LD. AR FOR THE ASSESSEE FILED PAPER BO OK WHICH IS RUNNING PAGES FROM 1 TO 133 AND REITERATED SAME SUBMISSIONS AS MADE BEFORE LD. CIT(A). HE PRAYED THAT THE ISSUE MAY BE DECIDED ON MERIT. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIE S BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INS TANT CASE RELATES TO THE DISALLOWANCE OF EXPENSES IN TERMS OF RULE 8D(II) AN D (III) OF INCOME TAX RULES 1962 BY THE AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD. CIT(A). FROM THE PERUSAL OF THE RECORDS, ADMITTEDLY , THE INVESTMENT WAS MADE BY THE ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 4 ASSESSEE IN THE EARLIER YEARS BUT THE LEARNED AR HA S NOT BROUGHT ANYTHING ON RECORD BEFORE US WHETHER THE INVESTMENT IN THE EARL IER YEARS WAS MADE OUT OF THE OWN FUNDS OF THE ASSESSEE. IN OUR CONSIDERED VI EW IT IS THE DUTY OF THE ASSESSEE TO JUSTIFY ON THE BASIS OF EVIDENCES THAT THE INVESTMENT WAS MADE OUT OF OWN FUNDS. IN THIS CONNECTION WE RELY IN THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF DHUNAKA & SONS R EPORTED IN 339 ITR 319. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELOW : IN OUR OPINION, THE MERE FACT THAT THOSE SHARES WE RE OLD ONES AND NOT ACQUIRED RECENTLY IS IMMATERIAL. IT IS FOR THE ASSE SSEE TO SHOW THE SOURCE OF ACQUISITION OF THOSE SHARES BY PRODUCTION OF MAT ERIALS THAT THOSE WERE ACQUIRED FROM THE FUNDS AVAILABLE IN THE HANDS OF T HE ASSESSEE AT THE RELEVANT POINT OF TIME WITHOUT TAKING BENEFIT OF AN Y LOAN. IF THOSE SHARES WERE PURCHASED FROM THE AMOUNT TAKEN IN LOAN, EVEN FOR INSTANCE, FIVE OR TEN YEARS AGO, IT IS FOR THE ASSESSEE TO SHOW BY THE PRODUCTION OF DOCUMENTARY EVIDENCE THAT SUCH LOANED AMOUNT HAD AL READY BEEN PAID BACK AND FOR THE RELEVANT ASSESSMENT YEAR, NO INTER EST IS PAYABLE BY THE ASSESSEE FOR ACQUIRING THOSE OLD SHARES. IN THE ABS ENCE OF ANY SUCH MATERIALS PLACED BY THE ASSESSEE, IN OUR OPINION, T HE AUTHORITIES BELOW RIGHTLY HELD THAT PROPORTIONATE AMOUNT SHOULD BE DI SALLOWED HAVING REGARD TO THE TOTAL INCOME AND THE INCOME FROM THE EXEMPT SOURCE. IN THE ABSENCE OF ANY MATERIAL DISCLOSING THE SOURCE O F ACQUISITION OF SHARES WHICH IS WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE, THE ASSESSING AUTHORITY TOOK A MOST REASONABLE APPROACH IN ASSESSMENT. SIMILARLY THE NEXT ISSUE ARISES WHETHER THE DISALLO WANCE TO BE MADE UNDER SECTION 14A R.W.S RULE 8D OF INCOME TAX RULES SHALL ALSO BE ADDED IN THE COMPUTATION OF BOOK PROFIT IN TERMS OF CLAUSE (F) O F EXPLANATION 1 TO SECTION 115JB OF THE ACT. FROM THE PROVISION OF SECTION IT IS CLEAR THAT THE EXPENSES INCURRED ON THE EARNING OF EXEMPTED INCOME ARE LIAB LE TO BE ADDED IN THE WORKING OF THE BOOK PROFIT. THEREFORE WE HOLD THAT THE EXPENSES TO BE DISALLOWED BY THE AO IN TERMS OF RULE 8D(II) AND (I II) OF INCOME TAX RULES 1962 WOULD BE ADDED TO THE BOOK PROFIT AS SPECIFIED UNDE R SECTION 115JB OF THE ACT. IN THIS CONNECTION WE ALSO RELY IN THE ORDER OF HON BLE ITAT IN THE CASE OF DCIT VS. SOBHA DEVELOPERS IN ITA 1410/BANG/2013 VID E ORDER DATED 9.1.2015. THE RELEVANT EXTRACT OF THE ORDER IS REPR ODUCED BELOW : IN OUR OPINION, THE QUESTION FORMULATED BY THE CIT (A) WHETHER SEC. 14A OF THE ACT READ WITH RULE 8D OF THE RULES CAN BE IM PORTED INTO THE ITA ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 5 NO. 1410/BANG/2013 PAGE 23 OF 25 PROVISIONS OF CLAU SE (F) TO EXPLANATION (1) TO SECTION 115JB OF THE ACT, IS ITS ELF ERRONEOUS. THE QUESTION TO BE ASKED IS AS TO HOW TO GIVE EFFECT TO THE PROVISIONS OF CLAUSE (F) TO EXPLANATION (1) TO SECTION 115JB OF T HE ACT. WE DO NOT THINK THAT THERE IS ANY PROHIBITION TO ADOPT THE DISALLOW ANCE MADE BY THE AO U/S.14A OF THE ACT READ WITH RULE 8D OF THE RULES, WHILE COMPUTING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT SECTION 14A O F THE ACT IS VERY SPECIFIC AND IS APPLICABLE ONLY FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER CHAPTER IV OF THE ACT AND THAT SECTION 115JB APPEARS IN CHAPTER XIIB OF THE ACT DEALING WITH SPECIFIC PROVISIONS RE LATING TO CERTAIN COMPANIES AND THEREFORE THE PROVISIONS OF SEC.14A R EAD WITH RULE 8D OF THE RULES CANNOT BE APPLIED WHILE MAKING ADDITIO N TO NET PROFIT AS PER PROFIT AND LOSS ACCOUNT U/S.115JB EXPLN.1 CLAUSE (F ) OF THE ACT, BECAUSE THE EXPRESSION EXPENDITURE RELATABLE IS USED IN S UB-CLAUSE (F) OF EXPLANATION (1) TO SECTION 115JB OF THE ACT WHEREAS EXPRESSION WITH THE EXPRESSION USED IN 14A OF THE ACT IS EXPENDITURE I NCURRED BY THE ASSESSEE IN RELATION TO AND THEREFORE ONLY DIRECT EXPENDITURE ATTRIBUTABLE TO EARNING OF INCOME WHICH DOES NOT FO RM PART OF THE TOTAL INCOME UNDER THE ACT CAN BE ADDED UNDER CLAUSE(F) O F EXPLN.1 BELOW SEC.115JB(2) OF THE ACT, CANNOT BE ACCEPTED. IN OUR VIEW, THERE IS NO DIFFERENCE BETWEEN THE EXPRESSION EXPENDITURE RELA TABLE AND THE EXPRESSION EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO. BOTH THE EXPRESSIONS MEAN THAT WHATEVER EXPENDITURE ARE INCURRED TO EARN INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER ITA NO. 1410/BANG/2013 PAGE 24 OF 25 THE ACT, BOTH DIRECT A ND INDIRECT EXPENDITURE, HAVE TO BE DISALLOWED. THERE IS NO BAS IS FOR THE ARGUMENT U/S. 115JB OF THE ACT, IT IS ONLY DIRECT EXPENSES T HAT ARE CONTEMPLATED AS CAPABLE OF BEING ADDED TO THE PROFITS AS PER P&L ACCOUNT UNDER CLAUSE (F) TO EXPLN.1 BELOW SEC.115JB(2) OF THE ACT . AS THE ISSUE OF DISALLOWANCE IN TERMS OF RULE 8D(II ) AND (III) OF INCOME TAX RULES 1962 HAS BEEN RESTORED TO THE AO FOR FRESH AD JUDICATION, THEREFORE WE ARE INCLINED TO RESTORE THIS ISSUE AS WELL TO THE A O FOR FRESH ADJUDICATION AS PER LAW WITH THE DIRECTION TO MAKE THE ADDITION OF THE EXPENSES IN THE BOOK PROFIT AS TO BE WORKED OUT IN TERMS OF GROUND NO. 2 OF THI S APPEAL. HENCE THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. 10. THIRD ISSUE RAISED IN THIS APPEAL OF ASSESSEE I S THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO BY SUSTAINING THE AD DITION OF RS. 10 LACS ON ACCOUNT OF EXCESS BOOK DEPRECIATION. ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 6 11. AT THE OUTSET THE LEARNED AR HAS SUBMITTED THAT THE DEPRECIATION HAS BEEN DISALLOWED FOR RS. 31,86,80,0254.00 FOR WORKIN G OUT THE BOOK PROFIT UNDER THE PROVISIONS OF MAT BUT THE ACTUAL AMOUNT O F DEPRECIATION DEBITED IN THE P&L ACCOUNT WAS OF RS. 31,76,80,025.00. THEREFO RE THE EXCESS AMOUNT OF DEPRECIATION OF RS.10 LACS HAS BEEN ADDED IN THE BO OK PROFIT. ACCORDINGLY THE LEARNED AR REQUESTED US TO DELETE THE SAME. HOWEVER FROM THE PERUSAL OF ASSESSMENT ORDER WE FIND THAT THE AO HAS ADDED THE AMOUNT OF THE DEPRECIATION FOR RS. 31,86,80,0254.00 FOR WORKING O UT THE PROFIT AS PER THE PROVISIONS OF SECTION 115 JB OF THE ACT. THE LEARNE D DR RAISED NO OBJECTION IF THE MATTER IS RESTORED TO THE LEARNED CIT(A) FOR FR ESH ADJUDICATION AS PER LAW & AFTER VERIFICATION OF THE DEPRECIATION AMOUNT. THU S IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AS PER LAW WITH THE DIRECTION TO ASCER TAIN THE ACTUAL AMOUNT OF DEPRECIATION. HENCE THIS GROUND OF APPEAL OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. FOURTH ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.49,21,899/- ON ACC OUNT OF BAD DEBT WHICH WERE ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOUNT W HILE WORKING OUT THE BOOK PROFIT U/S. 115JB OF THE ACT. 13. AT THE OUTSET WE FIND THAT THE LEARNED AR HAS N OT BROUGHT ANYTHING ON RECORD TO DEMONSTRATE THAT THE PROVISIONS FOR THE B AD AND DOUBTFUL DEBTS HAVE ACTUALLY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND IN THE LEDGERS OF RESPECTIVE PARTIES. AS PER THE PROVISIONS OF SECTIO N 115 JB OF THE ACT THE AMOUNT OF BOOK PROFIT WILL NOT BE INCREASED BY THE AMOUNT OF BAD DEBTS ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOUNTS. ACCO RDINGLY WE IN THE INTEREST OF JUSTICE & FAIR PLAY WE ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF LEARNED CIT(A) FOR FRESH ADJUDICATION AS PER LAW WITH THE D IRECTION TO THE ASSESSEE TO PRODUCE NECESSARY DOCUMENTS TO JUSTIFY THAT THE AM OUNT OF BAD AND DOUBTFUL DEBTS HAS ACTUALLY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HENCE THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 7 14. FIFTH ISSUE IN THIS APPEAL OF ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.14,34,965/- WHILE COM PUTING THE BOOK PROFIT U/S. 10(34) OF THE ACT. 15. THE AO AT THE TIME OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAS NOT REDUCED THE DIVIDEND INCOME WHILE COMPUTING BOO K PROFIT UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. THE LD. CIT (A), ON APPEAL HAS ALSO UPHELD THE ORDER OF AO. 16. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE FIN D THAT THE ASSESSEE IS ENTITLED FOR THE REDUCTION OF DIVIDEND INCOME WHILE COMPUTING THE BOOK PROFIT IN TERMS CLAUSE (II) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT IF SUCH AMOUNT IS CREDITED TO THE PROFIT AND LOSS ACCOUNT. HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 17. SIXTH ISSUE RAISED IN THIS APPEAL OF ASSESSEE I S THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE DISALL OWANCE OF RS.27.50 LAKH ON ACCOUNT OF FRINGE BENEFIT TAX. THE AO AT THE TIME OF ASSESSMENT UNDER SECTION 143( 3) OF THE ACT HAS NOT REDUCED THE FBT FOR RS. 27.50 LACS WHILE COMPUTING BOOK PROFIT UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. THE LD. CIT (A), ON APPEAL HAS ALSO UPHELD THE ORDER OF AO. 18. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET WE FIND THAT THE ASSESSEE IS ENTITLED FOR THE REDUCTION OF FBT WHILE COMPUTING THE BOOK P ROFIT IN TERMS OF CIRCULAR NO. 8/2005 ISSUED ON 29/8/2005 IF SUCH A AMOUNT IS DEBI TED TO THE PROFIT AND LOSS ACCOUNT. HENCE THIS GROUND OF APPEAL OF THE ASSESSE E IS ALLOWED. 19. SEVENTH GROUND NOT PRESSED BY LD. AR FOR THE AS SESSEE. HENCE, SAME IS DISMISSED AS NOT PRESSED. 20. EIGHTH ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN NOT ADJUDICATING THE GROUND NO.1 OF THE ADDITION AL GROUND OF APPEAL FILED BEFORE HIM ON 07.11.2012. ITA NO.2232/KOL/2013 A.Y. 2008-0 9 M/S KANORIA CHEMICALS & INDUSTRIES LTD. VS. ACIT RNG-10, KOL. PAGE 8 21. AT THE OUTSET, WE FIND THAT THE ADDITIONAL GROU ND WAS RAISED BY ASSESSEE BEFORE LD. CIT(A) WHICH HAS NOT BEEN ADJUDICATED BY THE LD. CIT(A) ON MERIT. ACCORDINGLY, LD. AR BEFORE US PRAISED FOR RESTORATI ON OF THIS ISSUE BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AFTER PRO VIDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. ON THE OTHER HAND, LD. DR RAISED NO OBJECTION IF THE ISSUE RESTORE BACK TO THE FILE OF LD. CIT(A). A CCORDINGLY IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE TH IS ISSUE BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AS PER LAW. HENCE, TH IS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 22. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 18 /01/2017 SD/- SD/- ( !') ( !') (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 18 / 01 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S KANORIA CHEMICALS & INDUSTRIES LTD. PARK PLAZA BLDG., 71. PARK STREET, 7 TH FLOOR, KOLKATA-700 016 2. /RESPONDENT-ADDL. CIT, RANG-10, AAYAKAR BHAWAN, P-7 , CHOWRINGHEE SQ.KOL-69 3. %.%/0 1 1 2 / CONCERNED CIT KOLKATA 4. 1 1 2- / CIT (A) KOLKATA 5. 567 /0, 1 /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,