Indian Metals and Ferro Alloys Ltd., Bhubaneswar V. Addl.CIT, Range-2, Bhubaneswar

ITA 230/CTK/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4027 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Keywords: Bogus purchase; Unexplained cash credit; Gift; Question of law
• Section: 43B; 142(1); 194C; 68; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PA V AN KUMAR GADALE, JM . / ITA NO S . 41 2 & 342 /CTK/201 6 AND ITA NO.220/CTK/2017 ( [ [ / ASSESSMENT YEAR S : 2 013 - 14, 2012 - 13 & 2007 - 08 ) DCIT, CORPORATE CIRCLE - 1(1), BHUBANESWAR VS. M/S INDIAN METALS & FERRO ALLOYS LTD., IMFA HOUSE, BOMIKHAL, BHUBANESWAR - 751010 ./ ./ PAN/GIR NO. : A A ACI 4818 F ( / APPELLANT ) .. ( / RESPONDE NT ) AND . / ITA NOS.405 & 312/CTK/2016 AND ITA NO.230/CTK/2017 ( [ [ / ASSESSMENT YEARS :2013 - 14, 2012 - 13 & 2007 - 08) M/S INDIAN METALS & FERRO ALLOYS LTD., IMFA HOUSE, BOMIKHAL, BHUBANESWAR - 751010 VS. DCIT, CORPORATE CIRCLE - 1(1), BHUBA NESWAR ./ ./ PAN/GIR NO. : AAACI 4818 F ( / APPELLANT ) .. ( / RESPONDENT ) AND . / ITA NOS.411/CTK/2016 ( [ [ / ASSESSMENT YEARS :2013 - 20 14) DCIT, CORPORATE CIRCLE - 1(1), BHUBANESWAR VS. M/S IMFA ALLOYS & FINLEASE LTD. IMFA HOUSE, BOMIKHAL, BHUBANESWAR - 751010 ./ ./ PAN/GIR NO. : AA C CI 2640 D ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI SAAD KIDWAI, CITDR [ /A S SESSEE BY : SHRI SACHIT JOLLY , AR / DATE OF HEARING : 0 7 / 0 8 /201 8 / DATE OF PRONOUNCEMENT 10 / 0 8 /201 8 ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 2 / O R D E R PER SHRI PA V AN KUMAR GADALE, JM : TH ESE ARE THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSE E FOR THE ASSESSMENT YEARS 2007 - 2008, 2012 - 2013 & 2013 - 2014 AGAINST THE SEPARATE ORDER S OF CIT(A) , BHUBANESWAR . 2. SINCE, THE ISSUES IN APPEALS ARE COMMON AND IDENTICAL , THEREFORE, ALL THE APPEALS ARE CLUBBED AND HEARD ALTOGETHER AND DISPOSED OFF BY THIS C ONSOLIDATED ORDER. FIRST WE SHALL TAKE UP APPEAL OF THE REVENUE AND FACTS NARRATED FOR THE ASSESSMENT YEAR 2013 - 2014 (I.E ITA NO.412/CTK/2016, WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS IN FACTS IN DELETING THE ADDITION OF RS.33,28,47,561 / - MADE BY THE AO U/S 68 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WE LL AS IN FACTS IN DELETING THE ADDITION OF RS.49,01,411 / - MADE BY THE AO ON ACCOUNT OF BOGUS LEASE RENTAL EXPENSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN NOT ACCEPTING THE EXAMINATION OF FINDINGS MADE BY THE AO ON THE ISSUES. 4 . THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDING. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFAC TURE AND SALE OF FERRO ALLOYS LIKE CHARGE CHROME/HIGH CARBON FERRO CHROME AND FERRO SILICON AND FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE ASSESSMENT YEAR 2013 - 2014 ON 29.11.2013 DISCLOSING TOTAL INCOME AT RS. 37,23,24,370/ - . SUBSEQUENTLY, THE CASE W AS ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 3 SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S.143(2) & 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE, LD. AR OF THE ASSESSEE APPEARED AND FILED THE REQUIRED/RELEVANT DETAILS/DOCUMENTS AND THE CASE WAS DISCUSSED . THEREAFTER THE AO COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT MAKING ADDITION AND PASSED ORDER DATED 03.03.2016. 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, LD. AR OF THE ASSESSEE REIT ERATED THE SUBMISSIONS AS WAS MADE BEFORE THE AO AND THE CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE AND FINDINGS OF AO, HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGAINST THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. LD. D R BEFO RE US SUBMITTED THAT THE CIT(A) ERRED IN DELETING THE ADDITION MADE U/S.68 OF THE ACT AND THE ADDITION MADE ON ACCOUNT OF BOGUS LEASE RENTAL EXPENSES, THEREFORE, PRAYED FOR ALLOWING THE APPEAL OF REVENUE. 7. ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT(A). 8. WE HAVE HEARD RIVAL SUBMISSION S AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, WITH REGARD TO ADDITION MADE U/S.68 OF THE ACT AND ADDITION MADE ON ACCOUNT OF LEASE RENT , THE CIT(A) OBSERVED THAT THE ASSESSEE HAS EXPLAINED ALL THE POINTS RAISE D BY THE AO QUITE SATISFACTORILY IN ITS WRITTEN SUBMISSION FILED IN THE COURSE OF ASSESSMENT PROCEEDING, HOWEVER, THE AO HAS NOT MENTIONED AS TO WHY THE EXPLANATION S OF THE ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 4 ASSESSEE ARE NOT SATISFACTORY, THEREFORE, THE CIT(A) DELETED BOTH THE ADDITIONS AF TER OBSERVING AS UNDER : - 3.2 I HAVE CONSIDERED THE MATTER CAREFULLY AND GONE THROUGH THE FACTS ON RECORD. I HAVE ALSO PERUSED THE REASONS GIVEN BY THE AO TO CONSIDER THE IMPUGNED TRANSACTION AS A SHAM TRANSACTION, AND THE EXPLANATION/REPLY OF THE ASSESSE E TO THE POINTS RAISED BY THE AO IN THE ASSESSMENT ORDER. THE AO HAS MADE THE ADDITION U/S.68 OF THE ACT. AS HAS BEEN RIGHTLY POINTED OUT BY THE ASSESSEE AN ADDITION U/S.68 FOR UNEXPLAINED CASH CREDIT CAN BE MADE ONLY IF THE ASSESSEE FAILS TO PROVE THE FOL LOWING THREE INGREDIENTS, NAMELY, I) IDENTITY OF THE CREDITOR, II) CREDITWORTHINESS OF THE CREDITOR AND III) GENUINENESS OF THE TRANSACTION. IN THE CASE OF THE ASSESSEE, A SUM OF RS.33,28,47,561/ - WAS CREDITED IN THE ACCOUNTS TOWARDS SALE OF ONE 30MVA FURN ACE TO IAFL. OUT OF THIS AMOUNT, THE MAJOR PART (RS.29.80 CRORES) WAS PAID BY IAFL THROUGH BANKING CHANNEL AT THE TIME OF SALE AND THE BALANCE (RS.3,48,47,561) WAS PAID SUBSEQUENTLY. THE AO HAS RAISED SOME DOUBTS ABOUT THE NON - PAYMENT OF THE ENTIRE SALE PR OCEEDS AT THE TIME OF SALE BUT THAT IS NOT MUCH RELEVANT SO FAR AS THE GENUINENESS OF THE SALE IS CONCERNED SINCE A CREDIT SALE IS ALSO A LEGALLY VALID SALE. THE SALE AND LEASE - BACK ARRANGEMENT MADE BETWEEN THE ASSESSEE AND ITS SUBSIDIARY IAFL WAS IN PURS UANCE TO THE JOINT VENTURE AGREEMENT BETWEEN THE ASSESSEE AND M/S. POSCO, A SOUTH KOREAN COMPANY WHICH IS ONE OF THE LARGEST PRODUCERS OF STEEL IN THE WORLD. THE SALE AND LEASE - BACK ARRANGEMENT ENTERED INTO BY THE ASSESSEE AND IAFL IS A'VALID FINANCIAL TRA NSACTION WHICH IS RECOGNIZED AS SUCH BY WELL RECOGNIZED ACCOUNTING STANDARDS. IT IS ALSO QUITE CLEAR FROM THE FACTS OF THE CASE THAT ALL THE THREE INGREDIENTS OF SECTION 68 HAVE BEEN PROVED BY THE ASSESSEE. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT BEFO RE MAKING THE IMPUGNED ADDITION U/S.68, THE AO HAS NOT MENTIONED ANYWHERE ABOUT THE FAILURE OF THE ASSESSEE TO PROVE ANY OF THE THREE INGREDIENTS OF THE SO - CALLED CREDITS. THE CASE LAWS RELIED UPON BY THE AO APPEAR TO HAVE NO RELEVANCE TO THE FACTS OF THE ASSESSEE'S CASE. 3.2.1 THE AO HAS RAISED CERTAIN POINTS IN THE ASSESSMENT ORDER WHICH HAVE CREATED SUSPICION IN HIS MIND ABOUT THE GENUINENESS OF THE ARRANGEMENT OF SALE AND LEASE - BACK MADE BETWEEN THE ASSESSEE AND IAFL. HOWEVER, EACH AND EVERY POINT SO R AISED BY THE AO IN THE ASSESSMENT ORDER HAS BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE IN ITS WRITTEN SUBMISSION, FIRST FILED BEFORE THE AO AT THE TIME OF ASSESSMENT AND SUBSEQUENTLY FILED IN THE COURSE OF APPEAL HEARING. FOR INSTANCE, THE AO HAS OBSERV ED IN THE ASSESSMENT ORDER THAT THE SHARES OF IAFL WERE PURCHASED BY POSCO AT A HIGH PREMIUM AND THE SAME WAS NOT COMPUTED AS PER THE PROVISIONS OF RULES 11U & 11UA OF THE I. T. RULES. THE ASSESSEE IN ITS WRITTEN SUBMISSION HAS POINTED OUT, AND RIGHTLY SO, THAT SINCE THE SUBSCRIPTION TO SHARES OF IAFL, A COMPANY IN WHICH ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 5 THE PUBLIC ARE SUBSTANTIALLY INTERESTED, WAS MADE BY A NON - RESIDENT, I.E. POSCO, THE PROVISIONS OF SECTION 56(2)(VIIB) ARE NOT APPLICABLE AND, THEREFORE, THE QUESTION OF VALUATION UNDER RUL ES 11U AND 11UA DOES NOT ARISE. MOREOVER, THE AO HAS NO AUTHORITY TO QUESTION THE COMMERCIAL WISDOM OF THE ASSESSEE SO FAR AS FINANCIAL TRANSACTIONS ARE CONCERNED. IT IS THE ASSESSEE WHOSE - COMMERCIAL PRUDENCE WILL GOVERN ITS BUSINESS AND THE AO CANNOT SUB STITUTE HIS OWN WISDOM FOR THE SAME. THIS POSITION IS QUITE WELL SETTLED AND CANNOT BE QUESTIONED. 3.2.2 THE AO HAS ALSO QUESTIONED THE PAYMENT OF SALES - TAX BY THE ASSESSEE COMPANY AND NOT BY IAFL ON THE SALE OF THE 30MVA FURNACE AND OBSERVED THAT THIS IS QUITE UNUSUAL AS THE SALES - TAX IS USUALLY PAID BY THE BUYER. OF COURSE, IT IS TRUE THAT THE SALES - TAX IS USUALLY BORNE BY THE BUYER. HOWEVER, THERE IS NO BAR IN LAW FOR THE SELLER TO BEAR THE SALES - TAX ON THE GOODS SOLD BY IT IF THE AGREEMENT FOR SALE SO PROVIDES. ANOTHER POINT RAISED BY THE AO RELATES TO THE MEMORANDUM OF TRANSFER DT.4.2.2013. THE AO RAISES SUSPICION ON THE FACT THAT THOUGH THE TRANSFER OF THE 30MVA FURNACE OCCURRED ON 1.2.2013, THE MAJOR PART OF THE PAYMENT OF RS.29.80 CRORES WAS PAID ON LY ON THE DATE OF AGREEMENT, I.E. 4.2.2013. I DO NOT SEE ANYTHING FISHY OR ABNORMAL ABOUT THE AFORESAID TRANSACTION. A SALE CAN VERY WELL TAKE PLACE ON CREDIT BASIS AS PER LAW AND THE CONSIDERATION COULD BE PAID LATER. THE MEMORANDUM OF TRANSFER IN THE CAS E OF THE ASSESSEE SPECIFICALLY RECORDS THAT THE TRANSFER HAD HAPPENED ON 1.2.2013 BY WAY OF HANDING OVER POSSESSION AND THE MEMORANDUM DT.4.2.2013 WAS EXECUTED ONLY TO RECORD THE SAID TRANSFER. THIS HAS BEEN FURTHER CLARIFIED IN CLAUSE - E(L) OF THE MEMORAND UM OF TRANSFER. THE TRANSFER OF AN ASSET CAN TAKE PLACE BY TAKING OVER POSSESSION AND IT IS NOT NECESSARY THAT THE TRANSFER SHOULD BE PRECEDED BY A WRITTEN INSTRUMENT. ORAL CONTRACTS FOR TRANSFER ARE ALSO WELL RECOGNIZED BY LAW. A SUBSEQUENT INSTRUMENT RECORDING AN EARLIER TRANSFER BY HANDING OVER POSSESSION IS EQUALLY ENFORCEABLE IN LAW AND CANNOT BE CONSIDERED AS BOGUS. 3.2.3 THE AO HAS ALSO POINTED OUT IN THE ASSESSMENT ORDER THAT THERE WAS NO PHYSICAL TRANSFER OF THE ASSET SOLD TO IAFL A ND THE ASSET CONTINUED AT THE SAME PLACE WHERE IT WAS INSTALLED PRIOR TO SALE. PERHAPS THIS IS ANOTHER POINT WHICH HAS CREATED SUSPICION IN THE MIND OF THE AO ABOUT THE GENUINENESS OF THE TRANSACTION. A SIMILAR QUESTION AROSE BEFORE THE HON'BLE ITAT, DELHI BENCH 'C IN THE CASE OF CONSORTIUM FINANCE LTD. V. JCIT WHERE THERE WAS SALE - CUM - LEASE - BACK TRANSACTION WITHOUT PHYSICAL DELIVERY OF THE MACHINERY AND THE AO CONSIDERED THE TRANSACTION AS A SHAM TRANSACTION. THE HON'BLE ITAT VIDE THEIR ORDER DT.30.4.2002 [2002] 82 ITD 808 (DELHI)/ 77 TTJ 795 (DELHI) HELD THAT IN SALE - CUM - LEASE - BACK TRANSACTION DULY SUPPORTED BY DOCUMENTARY EVIDENCE, PHYSICAL DELIVERY OF MACHINERY IS NOT ESSENTIAL AS CONSTRUCTIVE DELIVERY WILL SUFFICE AS FAR AS LEGAL REQUIREMENT OF TRANSFER IS CONCERNED. IN THE CASE OF FIRST LEASING CO. OF INDIA LTD. V, ACIT (2013) 356 ITR 128 (MAD.) THE HON'BLE MADRAS HIGH COURT WHILE APPROVING OF SALE AND ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 6 LEASEBACK TRANSACTION AS VALID TRANSACTION IN THE EYES OF LAW HAS HELD THAT SUCH TRANSACTIONS WHEN NOT AGAINST LAW CANNOT BE QUESTIONED BY THE AO. 3.2.4 THE AO HAS ALSO MENTIONED THAT THE ASSESSEE HAS NOT BOTHERED AT ALL ABOUT PROPERLY EXECUTING THE PROCESS OF TRANSFER AND IN FACT IT HAS THROWN THE PRINCIPLES OF TRANSFER IN AIR AND WENT AHEAD OF DOING SOM ETHING WHICH IT FELT LIKE DOING, WHICH IS ILLEGAL AND NOT TENABLE IN THE EYES OF LAW'. THIS OBSERVATION OF THE AO APPEARS TO BE HIGHLY PREJUDICED AND BIASED. IT IS FOUND THAT THERE WAS NO ILLEGALITY INVOLVED IN THE PROCESS OF TRANSFER AND PROPER DOCUMENTAT IONS WERE MADE. ALL NECESSARY APPROVALS ARE FOUND TO HAVE BEEN TAKEN FROM VARIOUS AUTHORITIES INCLUDING THE RBI. 3.2.5 IN MY OPINION, ALL THE POINTS RAISED BY THE AO IN THE ASSESSMENT ORDER MAY BE RELEVANT AT THE INITIAL STAGE FOR RAISING A VALID SUSPICIO N IN HIS MIND ABOUT THE GENUINENESS OF THE SALE AND LEASE - BACK ARRANGEMENT IN QUESTION. BUT SUSPICION, HOWEVER, STRONG CANNOT BE A SUBSTITUTE FOR EVIDENCE. IT APPEARS CLEARLY THAT THE ASSESSEE HAS EXPLAINED ALL THE POINTS RAISED BY THE AO QUITE SATISFACTOR ILY IN ITS WRITTEN SUBMISSION FILED IN THE COURSE OF ASSESSMENT PROCEEDING. THE AO, HOWEVER, HAS REJECTED THE SAME SUMMARILY BY OBSERVING 'IN THIS REGARD, I HEREBY STATE THAT THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE CREDIT OF THE SUM OF RS.33,28,4 7,561/ - IN THEIR BOOKS, AS ABOVE, HAS NOT AT AIL BEEN FOUND SATISFACTORY BY ME'. WHY THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND SATISFACTORY HAS NOWHERE BEEN DISCUSSED BY THE AO. KEEPING IN VIEW THE FACTS STATED ABOVE, IT IS HELD THAT THE ADDITION MADE BY THE AO OF RS.33,28,47,561/ - U/S.68 IS HIGHLY UNJUSTIFIED AND UNREASONABLE. THE ADDITION OF RS.33,28,47,561/ - IS, THEREFORE, DELETED. SIMILARLY, SINCE THE SALE AND LEASE - BACK TRANSACTION IS A LEGALLY VALID AND COMMERCIALLY ACCEPTABLE TRANSACTION, THE LEA SE RENT OF RS.49,01,411/ - PAID/PAYABLE BY IAFL CANNOT BE DISALLOWED. ACCORDINGLY, THE DISALLOWANCE OF RS.49,01,411/ - IS DELETED. LD. DR COULD NOT BRING ANY NEW FACT S TO CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). ACCORDINGLY, WE DO NOT SEE ANY REASON T O INTERFERE WITH THE ORDER OF CIT(A) AND THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. THUS, APPEAL OF THE REVENUE I.E. ITA NO.412/CTK/2016 FOR ASSESSMENT YEAR 2013 - 2014 IS DISMISSED. 10 . IN APPEAL FOR ASSESSMENT YEAR 2007 - 200 8 IN ITA NO.220/CTK/2017, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 7 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING ADDITION OF RS. 7,77,82,376/ - ON ACCOUNT OF TRANSMISSION CHARGES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING ADDITION OF RS. 6,00,434/ - OUT OF TOTAL ADDITION OF RS. 8,00,576/ - ON ACCOUNT OF TRAVELLING EXPENSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING ADDITION OF RS. 1,60,00,000/ - ON ACCOUNT OF DIRECTOR'S REMUNERATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING ADDITION OF RS. 3,59,48,117/ - U/S 40(A) (I) OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING R S. 8,70,167/ - OUT OF TOTAL ADDITION OF RS. 13,59,500/ - ON ACCOUNT OF PRIOR PERIOD EXPENSES. 6. THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDING. 11 . WITH REGARD TO GROUND NO .1 , LD. DR SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF TRANSMISSION CHARGES. 12 . ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT(A). 13 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PR IMA FACIE WE FIND THAT THE ISSUE OF TRANSMISSION CHARGES HAS ALREADY BEEN CONSIDERED AND DECIDED BY THIS BENCH OF THE TRIBUNAL IN CASE OF GRIDCO LTD. VS. ACIT, [2011] 15 TAXMANN.COM 354 (CUTTACK - TRIB.), WHEREIN THE TRIBUNAL HAS HELD THAT SECTION 194 - I IS N OT APPLICABLE IN RESPECT OF TRANSMISSION CHARGES AND CONSEQUENTLY, NO DISALLOWANCE CAN ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 8 BE MADE U/S.40( A )( IA ) IN RESPECT OF TRANSMISSION CHARGES AFTER OBSERVING AS UNDER : - 25. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS AND CONTENTS OF THE PAPER BO OK AND THE CASE LAWS RELIED ON BY BOTH THE PARTIES, IT IS NOTICED THAT THE ASSESSEE IN ITS GROUND NOS.2 AND 3 HAS RAISED THE ISSUE OF PAYMENT OF RS. 367.06 CRORES MADE TO DISCOMS WAS NOT IN ITS OWN ACCOUNT BUT ON ACCOUNT OF THE DISCOMS. IN GROUND NOS.4,6 A ND 8, IT HAS RAISED THE ISSUE THAT IN ANY CASE THERE WERE PAYMENTS AND THE PAYMENTS MADE BY IT TO OPTCL OF RS. 45.38 CRORES ARE NOT COVERED BY THE PROVISIONS OF SECTION 194 - I AND AS SUCH, THE ASSESSING OFFICER HAS GONE WRONG IN MAKING THE DISALLOWANCE U/S. 40( A )( IA ) OF THE I.T. ACT. THEREFORE, HERE THE PROVISIONS OF SECTION 194 - I ARE TO BE CONSIDERED IN ORDER TO ASCERTAIN WHETHER THEY ARE APPLICABLE IN RESPECT OF PAYMENTS MADE ON ACCOUNT OF TRANSMISSION CHARGES OF POWER. IN THE VIEW OF THE ASSESSING OFFICER , AS CAN BE SEEN FROM THE ASSESSMENT ORDER, IS THAT THE TRANSMISSION/WHEELING CHARGES ARE FOR THE USE OF EQUIPMENTS AND AS SUCH LIABLE FOR DEDUCTION U/S.194 - I. THE ASSESSING OFFICER HAS ALLEGED WHEELING CHARGES ARE LEFT BY THE TRANSMISSION UNITS FOR USE OF THEIR NETWORK AND AS SUCH PAYMENT OF TRANSMISSION CHARGES AND WHEELING CHARGES ARE PAYMENTS IN THE NATURE OF 'RENT' AND THE ASSESSEE WAS DUTY BOUND TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS. THE LEARNED CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFIC ER ON THIS ISSUE BY REJECTING THE CONTENTIONS OF THE ASSESSEE ON THE PRINCIPLES OF EJUSDEM GENERIS. THE LEARNED CIT(A) HAS ALSO HELD THAT FOR APPLYING THE PROVISIONS OF SECTION 194 - I THERE IS NO NEED TO RESTRICT THE MEANING OF TERM 'PHYSICAL USE'. 26. THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE IS THAT THE MEANING OF THE WORD 'RENT' CANNOT BE GIVEN SUCH WIDE MEANING TO INCLUDE EVERY TYPE OF PAYMENTS DE HORS THE MEANING OF THE WORDS LEASE, SUB - LEASE OR TENANCY. THE LEARNED AR OF THE ASSESSEE HAS TRIED T O MAKE OUT A CASE ON THE BASIS OF THE REASONING GIVEN BY SOME OF THE CIRCULARS ISSUED BY CBDT BUT WE DO NOTICE THAT WHILE INTERPRETING THE MEANING OF THE WORD 'RENT' IN THE CASE OF PAYMENT OF HOTEL IN CIRCULAR NO. 5 DT. 30.7.2002, FOR PAYMENTS MADE BY FILM DISTRIBUTOR TO A FILM EXHIBITOR OWNING A CINEMA THEATRE IN CIRCULAR NO. 736 DT.17.2.1996 RESTRICTED MEANING HAS BEEN GIVEN TO THE WORD 'RENT'. HOWEVER, IN VIEW OF THE JUDGMENTS REFERRED TO BY THE LEARNED DR IN THE CASE OF UNITED AIRLINES ( SUPRA ), JAPAN AI RLINES CO. LTD. ( SUPRA ) AND VODAFONE ESSAR LTD ( SUPRA ), WE ARE OF THE CONSIDERED VIEW THAT THE WORD 'RENT' WILL HAVE WIDER MEANING AND ACCORDINGLY, THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE ON THIS ASPECT IS REJECTED. 27. HOWEVER, AFTER HEARING THE ARGUMENT OF THE LEARNED AR OF THE ASSESSEE ON THE ISSUE OF USE OF EQUIPMENTS OF OPTCL AND NOT BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE HAS NOT ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 9 BEEN UNDERSTOOD IN THE RIGHT PERSPECTIVE BY THE REVENUE. A QUESTION TO BE DECIDED AS TO WH ETHER THE PAYMENT MADE BY THE ASSESSEE, IF ANY, AS HAS BEEN ALLEGED TOWARDS TRANSMISSION AND WHEELING CHARGES TO OPTCL IS FOR THE USE OF SUCH EQUIPMENTS, THE ASSESSEE PURCHASES POWER IN BULK AND SELLS THE SAME TO THE DISTRIBUTING COMPANIES. THIS SUPPLY IS AFFECTED THROUGH THE TRANSMISSION LINES OF OPTCL. IN OUR CONSIDERED VIEW, THE ASSESSEE MERELY OBTAINS A SERVICE FROM OPTCL WHICH HAS GOT THE INFRASTRUCTURE IN THE FORM OF EQUIPMENTS AND TRANSMISSION LINES. IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE A SSESSEE IS USING THE EQUIPMENTS INVOLVED ITSELF IN TRANSMITTING THE POWERS. THE OPTCL WAS CREATED AS AN INDEPENDENT COMPANY TO CARRY OUT THE WORK OF TRANSMISSION AND WHEELING OF POWER. IN FACT, AFTER THE NOTIFICATION DT.9.6.2005 THE ASSESSEE HAS TRANSFERRE D ASSETS TO THE OPTCL AND OPTCL IS CARRYING OUT THE TRANSMISSION AND WHEELING BY USING ITS EQUIPMENTS FOR THE SAME. IT GETS PRICE FOR THE SAME IN TERMS OF UNIT TRANSMITTED BY THE DISCOMS AND THE NUMBER OF UNITS TRANSMITTED AT THE RATE AS DETERMINED BY THE OERC. THE PAYMENT IS FOR SERVICE OF TRANSMISSION OF POWER AND NOT FOR USE OF PLANT AND/OR EQUIPMENTS. TRANSMISSION OF POWER IS THE MAIN BUSINESS OF THE OPTCL. FOR USE OF ITS INFRASTRUCTURE INCLUDING EQUIPMENT AND TRANSMISSION LINES OWNED BY IT, IT IS IMMAT ERIAL IN DISCHARGING ITS FUNCTION OPTCL USING ITS EQUIPMENTS. ALL THE COST OF MAINTENANCE OF TRANSMISSION LINES, EQUIPMENT, EMPLOYEES COST AND OTHER COST RISK IS ON ACCOUNT OF OPTCL. 28. THE WORDS USED IN RELATION TO 'ANY EQUIPMENT' IF UNDERSTOOD IN THE BR OAD SENSE OF AVAILING OF THE BENEFIT OF AN EQUIPMENT BUT IT INDICATE THAT THERE MUST BE SOME POSITIVE ACT OF UTILISATION, APPLICATION OR EMPLOYMENT OF THE EQUIPMENT FOR THE DESIRED PURPOSES. THE ADVANTAGE TAKEN FROM SOPHISTICATED EQUIPMENT INSTALLED AND PR OVIDED BY ANOTHER CANNOT BE SAID THAT THE CUSTOMER USES THE EQUIPMENT. IT WOULD BE A CASE OF A CUSTOMER MERELY MAKING USE OF THE FACILITY WITHOUT HIMSELF USING THE EQUIPMENT. IF THE CUSTOMERS DID NOTHING TO ADD FOR THE EQUIPMENT DID NOT EXERCISE ANY POSSES SORY RIGHT IN RELATION THERETO IT CAN ONLY BE SAID THAT HE MADE USE OF THE FACILITY CREATED BY SERVICE PROVIDER WHO WAS THE OWNER OF THE ENTIRE NETWORK AND RELATED EQUIPMENTS. THIS PRINCIPLE WILL ALSO ADDRESS THE ISSUE AND EXAMPLES GIVEN BY THE LEARNED AR OF THE ASSESSEE IN RESPECT OF USE OF BOOKS BY AN ADVOCATE WHILE PROVIDING CONSULTATION SERVICE TO THE CLIENTS. WHEN A CLIENT WALKS INTO THE ROOM OF AN ADVOCATE AND THE ADVOCATE CONSULTING THE BOOKS AND PROVIDES THE ADVICE AND CHARGES THE CLIENT FOR THE SER VICES RENDERED BY HIM, IT CANNOT BE SAID THAT THE CLIENT HAD MADE PAYMENT FOR USE OF THE BOOKS. IT IS THE ADVOCATE WHO HAS USED THE BOOKS AND NOT THE CLIENT. SIMILAR IS THE CASE WHERE A DOCTOR CARRYING OUT OPERATION. IN THAT CASE THE DOCTOR HAS USED THE EQ UIPMENT BUT NOT THE PATIENT. THE SITUATION WOULD HAVE BEEN DIFFERENT HAD A PERSON WALKS INTO THE ROOM OF AN ADVOCATE AND SEEKS PERMISSION OF THE ADVOCATE TO ALLOW HIM TO USE HIS BOOKS FOR CONSIDERATION AND THE PERSON READS THE BOOKS AND MAKES PAYMENT ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 10 FOR T HE SAME, IN THAT SITUATION IT CAN BE SAID THAT THE PAYMENT HAS BEEN MADE FOR USE OF THE BOOKS. IN THE PRESENT CASE ON HAND IT IS CLEAR THAT OPTCL IS PROVIDING POWER TRANSMISSION SERVICES AND ACCORDINGLY OPTCL IS USING ITS EQUIPMENTS AND MACHINERIES AND IT CANNOT BE SAID THAT THE ASSESSEE COMPANY HAS USED THE EQUIPMENT AND MACHINERIES OF OPTCL. THE PERSON AVAILING FACILITY I.E., THE ASSESSEE OR THE DISCOMS HAVE MADE THE PAYMENT FOR THE SERVICES MADE BY THE OPTCL. THE EQUIPMENTS HAVE BEEN USED BY THE OPTCL FO R PROVIDING SERVICE OF TRANSMISSION. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT SECTION 194 - I OF THE I.T. ACT IS NOT APPLICABLE IN RESPECT OF THE TRANSMISSION AND WHEELING CHARGES. SIMILARLY IN THE CASE OF POWER GRID CORPORATION OF INDIA LT D AND THE NTPC VIDHYUT NIGAM LTD, WHO ARE USING THE EQUIPMENTS AND MACHINERY AND IT CANNOT BE SAID THAT THE ASSESSEE COMPANY HAS USED THE EQUIPMENTS AND MACHINERIES. THE ASSESSEE HAS MADE THE PAYMENT FOR THE SERVICES PROVIDED BY THEM. THIS VIEW IS FORTIFIE D BY THE JUDGMENT OF ITAT, MUMBAI BENCH RENDERED IN THE CASE OF VODAFONE ESSAR LTD. ( SUPRA ), WHEREIN SOMEWHAT SIMILAR ISSUE HAS ARISEN AND IT WAS HELD THEREIN PARAGRAPH 10 OF THE ORDER, AS FOLLOWS : '10. THE QUESTION IS WHETHER THE PAYMENT MADE BY THE ASS ESSEE AS NATIONAL ROAMING CHARGES TO THE OTHER SERVICE PROVIDERS IS FOR THE USE OF SUCH EQUIPMENT. WE MAY REFER TO AN ANALOGOUS SITUATION. LET US TAKE FOR EXAMPLE A LATHE. IF A PERSON TAKES A PIECE OF STEEL ROD FOR TURNING OR GRINDING BY A LATHE, HE WOULD APPROACH THE OWNER OF THE LATHE TO CARRY OUT THE WORK. IT IS THE OWNER OF THE LATHE WHO, WHILE CARRYING OUT THE TURNING OR GRINDING JOB, WOULD USE THE LATHE AND THE PERSON WHO REQUIRES THE LATHE OWNER TO DO THE JOB IS NOT THE PERSON WHO CAN BE DESCRIBED AS THE USER OF THE LATHE. THE SERVICE OF TURNING OR GRINDING THE STEEL ROD IS RENDERED BY THE LATHE OWNER BY USING THE LATHE FOR WHICH CHARGES ARE PAID BY THE PERSON WHO WANTED THE STEEL ROD TO BE TURNED OR GROUND. IT IS NOT POSSIBLE TO SAY THAT IT IS THIS P ERSON WHO 'USED' THE LATHE. ALL THAT HE PAID FOR WAS FOR THE SERVICE RENDERED BY THE LATHE OWNER. A SIMILAR SITUATION ARISES IN A VERY COMMON EXAMPLE OF THE 'ATTA CHAKKI'. THE PERSON WHO BRINGS THE WHEAT CANNOT BE SAID TO BE THE PERSON WHO USED THE CHAKKI. WHAT HE PAID TO THE OWNER OF THE CHAKKI WAS FOR THE SERVICE OF GRINDING THE WHEAT INTO ATTA. THESE MAY BE COMMONPLACE EXAMPLES BUT THEY DO NOT PUT THE POINT LESS EFFECTIVELY FOR THAT REASON. THE SUBSCRIBER OF THE ASSESSEE WHO IS ENTITLED TO USE THE ROAMIN G SERVICE MERELY OBTAINS A SERVICE FROM THE OTHER SERVICE PROVIDER, SAY IDEA OR AIRTEL, WITH WHOM THE ASSESSEE HAS A GSM ROAMING AGREEMENT. HE HAS NEITHER SEEN THE EQUIPMENT NOR HAS ANY DIRECT CONTACT WITH THE SAME. ALL THAT HE KNOWS IS THAT BECAUSE HE HAS THE ROAMING FACILITY IN HIS CELLPHONE, HE CAN MAKE A CALL FROM DELHI TO ANY OTHER PLACE EVEN THOUGH HE IS REGISTERED WITH THE ASSESSEE ONLY IN MUMBAI. HE IS THE PERSON WHO IS ENTITLED TO THE ROAMING SERVICE WHICH IS PROVIDED ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 11 BY THE OTHER SERVICE PROVIDER WITH WHOM THE ASSESSEE HAS A WORKING ARRANGEMENT AND FOR THAT REASON HE CANNOT BE SAID TO USE THE EQUIPMENT INVOLVED IN PROVIDING THE ROAMING FACILITY. EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE SUBSCRIBER IS THE PERSON WHO MAKES USE OF THE EQUIPM ENT, THE LIABILITY TO DEDUCT TAX WOULD BE ON HIM AND NOT ON THE ASSESSEE.' 29. THIS VIEW ALSO GETS SUPPORT FROM VARIOUS CBDT CIRCULARS ON APPLICABILITY OF SECTION 194 - I WHICH HAVE BEEN REFERRED TO SUPRA . WE ALSO RELY ON THE JUDGMENT OF AAR IN THE CASE OF D ELL INTERNATIONAL SERVICES (P.) LTD. ( SUPRA ). IT WAS HELD BY THE AAR THAT THE WORD USED 'IN RELATION TO THE EQUIPMENT' IS NOT TO BE UNDERSTOOD IN THE BROAD SENSE OF AVAILING THE BENEFIT OF EQUIPMENT, BUT IT INDICATED THAT THERE MUST BE SOME POSITIVE ACT OF UTILISATION, APPLICATION, OR EMPLOYMENT OF THE EQUIPMENT FOR THE DESIRED PURPOSES. IT HAS FURTHER HELD THAT AN ADVANTAGE TAKEN FROM A SOPHISTICATED INSTRUMENT INSTALLED AND PROVIDED BY ANOTHER, IT CANNOT BE SAID THAT THE CUSTOMERS USE THE EQUIPMENT. IT WO ULD BE A CASE A CUSTOMER MAKING USE OF FACILITIES WITHOUT HIMSELF USING THE EQUIPMENT. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THE PROVISIONS OF SECTION 194 - I ARE NOT APPLICABLE TO PAYMENTS OF TRANSMISSION AND WHEELING CHARGES AND TH E ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 40( A )( IA ) OF THE I.T. ACT FOR DISALLOWANCE OF THE TRANSMISSION AND WHEELING CHARGES. 30. THE STAND OF THE DEPARTMENT THAT THIS TRIBUNAL HAS HELD IN THE CASE OF DISCOMS IN ITA NOS. 191, 192, 193, 194, 283, 282 AND 284/CTK/2010, WHEREIN IN PARAGRAPH 7 OF THE ORDER, THE ITAT OBSERVED THAT DISCOMS HAVE NOT USED THE EQUIPMENTS OF OPTCL. GRIDCO HAS USED THE EQUIPMENT FOR DELIVERY OF THE ELECTRICITY TO DISCOMS. THE DISCOMS PAID CHARGES ON LY TO GRIDCO AS PER THEIR AGREEMENT WITH GRIDCO AND GRIDCO HAS PAID TO OPTCL AS PER THE RATE FIXED. BILLS ARE RAISED BY THE OPTCL IN THE NAME OF DISCOMS. BASING ON THESE OBSERVATIONS, THE ITAT CONCLUDED THAT THE TRANSMISSION AND WHEELING CHARGES PAID TO TH E OPTCL TOWARDS USE OF EQUIPMENTS FOR TRANSMISSION OF POWER FROM THE GENERATORS TO DISCOMS AND THEREBY COMES WITHIN THE PURVIEW OF SECTION 194 - I OF THE I.T. ACT. THIS OBSERVATION OF THE TRIBUNAL WILL HAVE NO IMPACT IN THE CASE OF THE ASSESSEE BECAUSE THE A SSESSEE HAS NOT PARTICIPATED IN THOSE PROCEEDINGS. HENCE, THE MERE OBITER REGARDING THAT BY THE TRIBUNAL CANNOT BE USED AGAINST THE ASSESSEE. SINCE WE HAVE CATEGORICALLY STATED SUPRA THAT THE ASSESSEE HAS NEVER USED THE EQUIPMENTS OF TRANSMISSION LINES OF OPTCL BUT IT HAS ONLY ASKED THE OPTCL TO TRANSMIT POWER FROM GENERATOR TO DISCOMS BY USING THE SERVICES OF OPTCL, THE ASSESSEE HAS NOT USED THE TRANSMISSION LINES WHICH ARE THE ASSETS OF OPTCL AS PER ITS FORM NOTIFIED IN THE GAZETTE STATED SUPRA . 31. THE LEARNED AR OF THE ASSESSEE HAS ALSO ARGUED ON THE ISSUE OF APPLICABILITY OF SECTION 194J AND 194C ON THE TRANSMISSION CHARGES. BUT THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 194 - I ONLY FOR MAKING THE DISPUTED DISALLOWANCE AND ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 12 THEREFORE, WE HAVE NOT ADVERTED TO THE ISSUE OF APPLICABILITY OF SECTION194J OR SECTION 194C. 31.1 SINCE WE HAVE HELD THAT SECTION 194 - I IS NOT APPLICABLE IN RESPECT OF TRANSMISSION CHARGES AND CONSEQUENTLY, NO DISALLOWANCE CAN BE MADE U/S.40( A )( IA ) IN RESPECT OF TRAN SMISSION CHARGES, THE OTHER GROUNDS RAISED BY THE ASSESSEE INCLUDING GROUND NO.2 TO THE EFFECT THAT IT HAS NOT AVAILED ANY SERVICES FROM THE OPTCL AND ON THE GROUND IT IS A MERELY DEBIT AND CREDIT ENTRY WITHOUT ANY CLAIM OF EXPENDITURE AND GROUND NO.10 REG ARDING OPTCL BEING A LOSS MAKING COMPANY AND AS SUCH, HAVING NO TAX IMPLICATION, IS ONLY ACADEMIC AND HENCE, THEY ARE NOT ADVERTED TO. 32. FOR THE REASONS DISCUSSED IN THE FOREGOING PARAGRAPHS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS N OT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 40( A )( IA ) OF THE I.T. ACT FOR DISALLOWANCE OF THE TRANSMISSION AND WHEELING CHARGES. HENCE, WE DIRECT DELETION OF THE SAID DISALLOWANCE. 33. IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOWED. RESPECTFULL Y FOLLOWING THE JUDICIAL PRECEDENCE, WE HAVE NO HESITATION BUT TO UPHOLD THE FINDINGS OF THE CIT(A) IN THIS REGARD AND ACCORDINGLY, WE DISMISS THIS GROUND OF APPEAL OF REVENUE. 14 . GROUND NO. 4 IS WITH REGARD TO DELETING THE ADDITION MADE U/S.40(A)(IA) OF T HE ACT. LD. DR BEFORE US SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE U/S.40(A)(IA) OF THE ACT, WHEREAS LD. AR RELIED ON THE ORDER OF CIT(A). 15 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE IS COVERED BY THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF PARADEEP PHOSPHATES LIMITED, ITA NO.289/CTK/2014 & ITA NO.264/CTK/2015, ORDER DATED 04.08.2017, WHEREIN THE TRIBUNAL RELYING ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD., 358 ITR 295 (SC) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : - ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 13 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT IN THE INSTANT CASE, T HE ASSESSE HAS MADE IMPORT OF MATERIALS AMOUNTING TO RS.2180,04,41,000/ - . THE ASSESSING OFFICER DISALLOWED THE DEDUCTION FOR THE SAME ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS U/S.195(1) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 8. ON APPEAL, THE CIT(A) ALLOWED THE DEDUCTION BY FOLLOWING HIS ORDER FOR THE ASSESSMENT YEAR 2009 - 2010. 9. BEFORE US NO SPECIFIC ERROR IN THE ORDER OF THE CIT(A) COULD BE POINTED OUT BY LD D.R. FURTHER, LD D.R. COULD NOT POINT OUT WHETHER THE ORDER OF THE CIT(A) PASSED IN ASSESSMENT YEAR 2009 - 2010 WAS VARIED IN APPEAL BY ANY HIGHER FORUM. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD, 358 ITR 295(SC) HAS HELD THAT WHERE A CONSISTENT VIEW HAD BEEN TAKEN IN FAVOUR OF T HE ASSESSEE ON THE QUESTION RAISED, THERE WAS NO REASON FOR THE COURT TO TAKE A DIFFERENT VIEW UNLESS THERE WERE VERY CONVINCING REASONS, WHICH THERE WERE NOT. 10. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBLE SUPREME COURT AND KEEPING IN VIEW THE FACT NO CHANGE IN FACTS HAS BEEN BROUGHT ON RECORD BY THE REVENUE DURING THE YEAR UNDER APPEAL, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. WE ALSO RELY ON THE DECISION OF HONBLE DELHI HIGH COURT IN TH E CASE OF CIT VS. EON TECHNOLOGY P. LTD., 343 ITR 366 (DELHI). WE R ESPECTFULLY FOLLOW THE ORDER OF TRIBUNAL AND THE DECISION OF HONBLE DELHI HIGH COURT AND UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS TH E GROUND OF APPEAL OF REVENUE. 16 . IN REGARD TO GRO UND NOS.2, 3 & 5, THE LD. DR OF THE REVENUE SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF TRAVELLING EXPENSES, DIRECTORS REMUNERA TION AND PRIOR PERIOD EXPENSES, WHEREAS LD. AR RELIED ON THE ORDER OF CIT(A). 17 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) WITH REGARD TO TRAVELLING EXPENSES, HAS ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 14 RESTRICTED THE DISALLOWANCE TO 20% AND WITH REGARD TO DIRECTORS REMUNERATION, THE CIT(A) DELETED THE ADDITION OBSERVING THA T THE ADDITION MADE BY THE AO IS NOT BASED ON ANY EVIDENCE OR LEGAL PROPOSITION. SIMILARLY THE CIT(A) DELETED THE ADDITION PARTLY ON ACCOUNT OF PRIOR PERIOD EXPENSES OBSERVING THAT THE EXPLANATION OF THE ASSESSEE IN THIS REGARD IS REASONABLE AND LOGICAL. BEFORE US LD. DR COULD NOT BRING OUT ANY NEW MATERIAL /COGENT FACT S TO CONTROVERT THE ABOVE OBSERVATIONS OF THE CIT(A). ACCORDINGLY, WE UPHOLD THE FINDINGS GIVEN BY THE CIT(A) IN REGARD TO ADDITION MADE ON TRAVELLING EXPENSES, DIRECTORS REMUNERATION AND PRI OR PERIOD EXPENSES AND DISMISS THE GROUND S NO.2,3&5 OF THE REVENUE S APPEAL . 18 . THUS, THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2007 - 2008 IN ITA NO.220/CTK/2017 IS DISMISSED. 19 . IN ITA NO. 411/CTK/2016 ( M/S IMFA ALLOYS & FINLEASE LTD) FOR THE ASS ESSMENT YEAR 2013 - 2014, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE PROTECTIVE ADDITION OF RS.33,28,47,561/ - MA DE BY THE AO ON ACCOUNT OF BOGUS PURCHASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW IN NOT ACCEPTING THE EXAMINATION OF FINDINGS MADE BY THE AO ON THE ISSUES. 20 . LD. DR BEFORE US SUBMITTED THAT WHILE DELETIN G THE ADDITION ON ACCOUNT OF BOGUS PURCHASE, THE CIT(A) HAS NOT CONSIDERED THE FINDINGS OF ASSESSING OFFICER, THEREFORE, HE PRAYED THAT THE ADDITION DELETED BY THE ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 15 CIT(A) IS NOT JUSTIFIED. ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT(A). 21 . WE HAV E HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) WHILE DEALING WITH THE DISPUTE IS S U E HAS OBSERVED THAT THE SALE AND LEASEBACK TRANSACTION ENTERED INTO BETWEEN IMFA AND THE ASSESSEE COMPANY IAFL WAS A VALID FINANCIAL T RANSACTION AND CANNOT BE CALLED A SHAM TRANSACTION HELD BY THE AO. THE RELEVANT OBSERVATION OF THE CIT(A) IS AS UNDER : - 4.2 I HAVE CONSIDERED THE MATTER. IN MY ORDER DT.10.8.2016 IN THE CASE OF IMFA FOR THE AY 2013 - 14, IT HAS BEEN HELD THAT THE SALE AND LEASEBACK TRANSACTION ENTERED INTO BETWEEN IMFA AND THE ASSESSEE COMPANY IAFL WAS A VALID FINANCIAL TRANSACTION AND CANNOT BE CALLED A SHAM TRANSACTION AS WAS HELD BY THE AO . IN THAT ORDER, THE ADDITION OF RS.33,28,47,561/ - MADE IN THE CASE OF IMFA HAS BEE N DIRECTED TO BE DELETED. FOR THE SAME REASONS AS MENTIONED IN MY ORDER IN THE CASE OF IMFA(SUPRA) THE PROTECTIVE ADDITION OF RS.33,28,47,561/ - IN THE HANDS OF THE ASSESSEE COMPANY IS DELETED. BEFORE US LD. DR COULD NOT BRING OUT ANY NEW MATERIAL/COGENT FACT TO CONTROVERT THE ABOVE OBSERVATIONS OF THE CIT(A). ACCORDINGLY, WE CONFIRM THE FINDINGS GIVEN BY THE CIT(A) IN THIS REGARD AND DISMISS THE GROUND RAISED BY THE REVENUE IN ITS APPEAL. 22 . THUS, APPEAL OF REVENUE IN ITA NO.411/CTK/2016 FOR THE ASSESSME NT YEAR 2013 - 2014 IS DISMISSED. 23 . IN APPEAL I.E. ITA NO. 342/CTK/2016 FOR ASSESSMENT YEAR 2012 - 2013, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE A DDITION OF RS.197,45,90,832/ - WHICH WAS ADDED BY WAY OF DISALLOWANCE MADE U/S.40(A)(I) READ WITH RELEVANT PROVISIONS OF SECTION 195 OF THE I.T.ACT. ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 16 24 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL OF THE REVENUE HAS ALREADY BEEN DECIDED BY US IN APPEAL OF REVENUE IN ITA NO. 411 /CTK/2016 FOR THE ASSESSMENT YEAR 2013 - 2014 , WHEREIN WE HAVE UPH E LD THE FINDINGS OF THE CIT(A) AS THE ISSUE IS COVERED BY THE ORDER OF THIS BENCH OF THE TRI BUNAL IN THE CASE OF PARADEEP PHOSPHATES LIMITED, ITA NO.289/CTK/2014 & ITA NO.264/CTK/2015, ORDER DATED 04.08.2017 AND IN THE CASE OF CIT VS. EON TECHNOLOGY P. LTD., 343 ITR 366 (DELHI). ACCORDINGLY, WE CONFIRM THE FINDINGS GIVEN BY THE CIT(A) IN THIS REG ARD AND DISMISS THE GROUND RAISED BY THE REVENUE IN ITS APPEAL. 25 . THUS, APPEAL OF REVENUE IN ITA NO. 342/CTK/2016 IS DISMISSED. 26 . NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 230/CTK/2017 FOR ASSESSMENT YEAR 2007 - 2008, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) ['CIT(A)'] ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER ('AO') IN DISALLOWING DEDUCTION OF RS. 9,10,34,665/ - BY INVOKING SECTION 43B OF THE ACT, WITHOUT APPRECIATING THAT THE SAID SUM REPRESENTED DEPOSIT OF ELECTRICITY DUTY IN A DESIGNATED ACCOUNT AS PER THE DIRECTIONS OF THE HON'BLE ODISHA HIGH COURT. 1.1 THAT IN HOLDING AS AFORESAID, THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE LIABILITY HAVING CRYSTALLIZED AND DISCHARGED BY THE APPELLANT, SECTION 43B OF THE ACT COULD NOT HAVE BEEN INVOKED. 1.2 THAT IN SUSTAINING THE AFORESAID RELIANCE, THE CIT(A) ERRED IN PLACING RELIANCE UPON THE ORDER PASSED BY THIS HON'BLE TRIBUNAL IN ITA NO.521/CTK/2013 PASSED IN THE APPELLANT'S CASE FOR AY 2009 - 10, WITHOUT APPRECIATING THAT AFORESAID ORDER OF THE TRIBUNAL HAS BEEN STAYED BY THE HON'BLE HIGH COURT. ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 17 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS. 19,80,334/ - , INCURRED ON ACCOUNT OF EXPORT PROMOTION (FOREIGN TRAVEL OF DIRECTORS), ON AN ADHOC BASIS WITHOUT ASSIGNING ANY REASONS THEREFOR. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS.4,51,976/ - , INCURRED TOWARDS FOREIGN TRAVEL OF CONSULTANTS, ON AN ADHOC BASIS WITHOUT ASSIGNING ANY REASONS THEREFOR. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN PARTLY CONFIRMING THE AC TION OF THE AO IN DISALLOWING DEDUCTION OF RS.2,00,145/ - , INCURRED TOWARDS TRAVEL COST OF BANKERS, RETAINERS, AUDITORS, GUESTS, ETC., ON AN ADHOC BASIS WITHOUT ASSIGNING ANY REASONS 5. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION FOR ENTERTAINMENT EXPENSES OF RS. 11,12,200/ - , ON AN ADHOC BASIS WITHOUT ASSIGNING ANY REASONS THEREFOR. 6. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN PARTLY CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUC TION OF RS.9,71,082/ - INCURRED UNDER THE HEAD 'MISCELLANEOUS', ON AN ADHOC BASIS WITHOUT ASSIGNING ANY REASONS THEREFOR. 7. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS.97,285/ - BEING PETT Y BALANCES WRITTEN OFF, WITHOUT ASSIGNING ANY REASONS THEREFOR. 8. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN PARTLY CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS.4,89,333/ - ALLEGED TO BE 'PRIOR PERIOD EXPENSES', WITHOUT APPRECIAT ING THAT THE SAID EXPENSES HAD CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. THAT THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. THAT THE APPELLANT SEEKS LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OF APPEAL BEFORE OR AT THE T IME OF HEARING OF THIS APPEAL. 27 . IN GROUND NO.1, THE ASSESSEE HAS AGITATED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION BY INVOKING 43B OF THE ACT. LD. AR BEFORE US FILED FORM NO.8 REGARDING DECLARATION UNDER SECTION ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 18 158A(1) OF THE ACT, 1961 TO BE MADE BY AN ASSESSEE CLAIMING THAT IDENTICAL QUESTION OF LAW IS PENDING BEFORE THE HIGH COURT OR THE SUPREME COURT. THE SUBSTANTIAL QUESTIONS OF LAW FRAMED BY THE HONBLE HIGH COURT ARE AS UNDER : - 08.02.2016 MR. S.JOLLY, LEARNED COUNSE L & HIS ASSOCIATE HAVE ENTERED APPEARANCE ON BEHALF OF THE PETITIONER BY FILING A VAKALATNAMA IN COURT TODAY. THE SAME IS ACCEPTED AND TAKEN ON RECORD. HEARD LEARNED COUNSEL FOR THE PETITIONER. THIS INCOME TAX APPEAL IS ADMITTED ON THE FOLLOWING SUBSTA NTIAL QUESTIONS OF LAW : B) WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS RIGHT IN CONFIRMING THE ACTION OF THE AO AND CIT(A) IN DISALLOWING DEDUCTION OF PAYMENT OF ELECTRICITY DUTY BY ERRONEOUSLY INVOKING SECTION 43B OF THE ACT WITHOUT APPRECIATING THAT THE SAID SUM IS A CRYSTALLIZED LIABILITY AND DEPOSITED IN A NO LIEN ACCOUNT PURSUANT TO THE DIRECTIONS OF THE HONBLE ORISSA HIGH COURT? D) WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT ERRED IN CONFIRMING THE ACTION OF THE AO AND THE CIT(A) IN DISALLOWING EXPENDITURE INCURRED ON FOREIGN TRAVEL OF DIRECTORS OF THE APPELLANT WITHOUT APPRECIATING THAT THE SAME HAS BEEN UNDERTAKEN WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF APPELLANT COMPANY? ISSUE NOTICE TO THE RESPONDENT BY SPEED POST WITH A.D. MAKING IT RETURNABLE WITHIN FOUR WEEKS. REQUISITES FOR ISSUE OF NOTICE BE FILED WITHIN ONE WEEK. LIST THIS MATTER FOUR WEEKS AFTER. THE REGISTRY IS DIRECTED TO CALL FOR THE L.C.R. FROM THE TRIBUNAL IN THE MEANTIME . WE CONSIDERING THE DECLARATION FILED BY THE ASSESSEE IN FORM NO.8 AND THE OBSERVATIONS OF THE HON BLE HIGH COURT AND THE PROVISIONS OF LAW, RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO CONSIDER BASED ON THE FINAL OUTCOME OF THE ASSESSEE S APPEAL IN IDENTICAL ISSUE PENDING BEFORE THE HON BLE HIGH COURT FOR THE ASSESSMENT EAR 2009 - 2010 AS MENTIONED IN THE FORM NO.8. ACCOR DINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 19 28 . IN REGAR D TO GROUND NOS.2,3,4,5,6,7 & 8 IN THE APPEAL OF THE ASSESSEE, WE FIND THAT THE CIT(A) HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND GRANTED PARTLY RELIEF TO THE ASSESSEE. THOUGH THE ASSESSEE HAS COME IN APPEAL AGAINST THE PART RELIEF GRANTED BY THE CIT(A), HOWEVER, THE LD. AR OF THE AS SESSEE COULD NOT FILED ANY DETAILS BEFORE US TO CONTROVERT THE FINDINGS THE CIT(A) IN THIS REGARD. ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THE GROUNDS NO.2,3,4,5,6,7&8 OF THE APPEAL OF THE ASSESSEE. 29 . THUS, APPEAL OF THE ASSESSEE IN ITA NO. 230/CTK/2017 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 30 . NOW, WE SHALL TAKE UP APPEAL OF THE ASSESSEE IN ITA NO. 312/CTK/2016 FOR THE ASSESSMENT YEAR 2012 - 2013, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT ON FAC TS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) ['CIT(A)'] ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER ('AO') IN DISALLOWING DEDUCTION OF RS.10,72,68,829/ - BY INVOKING SECTION 43B OF THE ACT WITHOUT APPRECIATING THAT THE SAID SUM REPRESENTED DEPOSIT OF ELECTRICITY DUTY IN A DESIGNATED NON - LIEN BANK ACCOUNT, IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BLE SUPREME COURT OF INDIA. 1.1 THAT IN CONFIRMING THE DISALLOWANCE, THE CIT(A) ERRED IN RELYING UPON THE DECISION O F THIS HON'BLE TRIBUNAL IN ITA NO.521/CTK/2013 PASSED IN THE APPELLANT'S OWN CASE FOR AY 2009 - 10 WITHOUT APPRECIATING THAT THE DECISION OF THE HON'BLE TRIBUNAL HAS BEEN STAYED BY THE HON'BLE ODISHA HIGH COURT VIDE ORDER DATED 08.02.2016 PASSED IN ITANO.20/ 2014. 1.2 THAT CIT(A) ERRED IN NOT APPRECIATING THAT THE SAID AMOUNT WAS DEPOSITED ON SPECIFIC DIRECTIONS OF THE HON'BLE SUPREME COURT OF INDIA AND THERE WAS ACTUAL OUTFLOW OF CASH FROM THE APPELLANT, WHICH TANTAMOUNTS TO ACTUAL PAYMENT FOR THE PURPOSE S OF SECTION 43BOFTHEACT. ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 20 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN PARTLY CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS.25,87,387/ - , BEING 10% OF EXPENDITURE INCURRED ON FOREIGN TRAVEL OF DIRECTORS ON THE GROUND THAT THE APPELL ANT HAD NOT SUBMITTED COMPLETE DETAILS OF THE EXPENSES INCURRED ON FOREIGN TRAVEL OF DIRECTORS AND THAT THE SAME WAS NOT RELATED TO THE BUSINESS OF THE APPELLANT. 2. 1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT HAD FAILED TO P RODUCE THE ITINERARIES OF THE FOREIGN TOURS UNDERTAKEN BY THE DIRECTORS TO JUSTIFY THAT THE SAME HAD BEEN UNDERTAKEN WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE APPELLANT COMPANY. 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN CONF IRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS.4,91,78,071/ - REGARDING EXPENDITURE IN FOREIGN CURRENCY VIZ. ADVISORY SERVICES, EXPORT COMMISSION, VMI SERVICES ETC. 3.1 THAT THE CIT(A) AND AO ERRED ON FACTS AND IN LAW IN DISALLOWING DEDUCTION OF RS. 1,55,67,394/ - WITHOUT APPRECIATING THAT THE SAID SUM WAS PAID IN FOREIGN CURRENCY TOWARDS ADVISORY ACTIVITIES/SERVICES WHICH WERE RENDERED OUTSIDE INDIA AND THEREFORE, NOT CHARGEABLE TO TAX INDIA AND THUS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON SUCH AMOUNT. 3 .2 THAT THE CIT(A) AND AO ERRED ON FACTS AND IN LAW IN DISALLOWING DEDUCTION OF RS.82,02,523/ - WITHOUT APPRECIATING THAT THE SAID SUM WAS PAID IN FOREIGN CURRENCY TOWARDS EXPORT COMMISSION AND THEREFORE, NOT CHARGEABLE TO TAX INDIA AND THUS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON SUCH AMOUNT. 3.3 THAT THE CIT(A) AND AO ERRED ON FACTS AND IN LAW IN DISALLOWING DEDUCTION OF RS.2,51,79,863/ - WITHOUT APPRECIATING THAT THE SAID SUM WAS PAID IN FOREIGN CURRENCY TOW ARDS VMI CHARGES AND THEREFORE, NOT CHARGEABLE TO TAX INDIA AND THUS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON SUCH AMOUNT. 3.4 THAT THE CIT(A) AND AO ERRED ON FACTS AND IN LAW IN DISALLOWING DEDUCTION OF RS.2,28,291/ - WITHOUT APPRECIATING THAT THE SAID SUM WAS PAID IN FOREIGN CURRENCY TOWARDS OTHER EXPORT SERVICES AND THEREFORE, NOT CHARGEABLE TO TAX INDIA AND THUS THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON SUCH AMOUNT. 4. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN CON FIRMING THE LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 21 THAT THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 31 . IN GROUND NO.1, THE ASSESSEE HAS AGITATED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION BY INV OKING 43B OF THE ACT. LD. AR BEFORE US FILED FORM NO.8 REGARDING DECLARATION UNDER SECTION 158A(1) OF THE ACT, 1961 TO BE MADE BY AN ASSESSEE CLAIMING THAT IDENTICAL QUESTION OF LAW IS PENDING BEFORE THE HIGH COURT OR THE SUPREME COURT. WE HAVE ALREADY RESTORED THE ISSUE IN ITA NO.230/CTK/2017 TO THE FILE OF ASSESSING OFFICER TO CONSIDER BASED ON THE FINAL OUTCOME OF THE ASSESSEE S APPEAL IN IDENTICAL ISSUE PENDING BEFORE THE HON BLE HIGH COURT FOR THE ASSESSMENT EAR 2009 - 2010 AS MENTIONED IN THE FORM NO.8. ACCOR DINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 32 . IN REGARD TO GROUND NO. 2, THE LD. AR OF THE ASSESSE E BEFORE US COULD NOT PRODUCE ANY NEW MATERIAL TO CONTROVERT THE FINDINGS OF THE CIT(A). ON PERUSAL OF THE ORDER OF CIT(A), WE FIND THAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE ASS ESSING OFFICER. THEREFORE, WE DO NOT SEE ANY GOOD REASON TO INTERFERE IN THE FINDINGS OF THE CIT(A) IN THIS REGARD AND WE UPHOLD THE SAME. 33 . IN REGARD TO GROUND NO.3 TO 3.4, WE FIND THAT THE ISSUES INVOLVED IN THE PRESENT APPEAL OF THE ASSESSEE ARE COVER ED BY THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF PARADEEP PHOSPHATES LIMITED, ITA NO.289/CTK/2014 & ITA NO.264/CTK/2015, ORDER DATED 04.08.2017 AND IN THE CASE OF CIT VS. EON TECHNOLOGY P. LTD., 343 ITR 366 (DELHI). ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 22 ACCORDINGLY, WE DELETE THE ADDITION CONFIRMED BY THE CIT(A) ON ACCOUNT OF ADVISORY SERVICES, EXPORT COMMISSION, VMI CHARGES AND OTHER EXPORT SERVICES AND ALLOW THE GROUND S RAISED BY THE ASSESSEE IN ITS APPEAL. 34 . THUS, APPEAL OF THE ASSESSEE IN ITA NO.312/CTK/2016 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 35 . NOW, WE SHALL TAKE UP APPEAL OF THE ASSESSEE IN ITA NO.405/CTK/2016 FOR THE ASSESSMENT YEAR 2013 - 2014, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) ['CIT(A)'] ERRED IN PARTLY CONFIRMING THE ACTION OF THE ASSESSING OFFICER ('AO') IN DISALLOWING A SUM OF RS. 17,28,737/ - (AO HAD DISALLOWED RS.25,28,737/) AND ADDING BACK THE SAME TO THE INCOME OF THE APPEL LANT BY TREATING DONATIONS AND SUBSCRIPTION EXPENSES HAVING NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE APPELLANT. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN PARTLY CONFIRMING THE ACTION OF THE AO IN DISALLOWING A SUM OF RS.21,12,823/ - (AO HAD DISALLOWED RS.42,25,647/ - ), BEING 25% OF EXPENDITURE INCURRED ON 'DIWALI & NEW YEAR GIFTS, CORPORATE DINNERS AND OTHER ENTERTAINMENT EXPENSES' ON THE ERRONEOUS GROUND THAT THE APPELLANT HAD NOT SUBMITTED COMPLETE DETAILS OF SUCH EXPENSES AND THAT THE EXPENDITURE WAS NOT RELATED TO THE BUSINESS OF THE APPELLANT. 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN PARTLY CONFIRMING THE ACTION OF THE AO IN DISALLOWIN G A SUM OF RS.60,70,282/ - (AO HAD DISALLOWED RS.91,05,422/ - ), BEING 20% OF EXPENDITURE INCURRED ON FOREIGN TRAVEL OF DIRECTORS & STAFF ON THE ERRONEOUS GROUND THAT THE APPELLANT HAD NOT SUBMITTED COMPLETE DETAILS OF THE EXPENSES INCURRED ON FOREIGN TRAVELS OF DIRECTORS AND THAT THE SAID EXPENDITURE WAS NOT RELATED TO THE BUSINESS OF THE APPELLANT. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING DEDUCTION OF RS. 10,64,00,911/ - BY INVOKIN G SECTION 43 B OF THE ACT WITHOUT APPRECIATING THAT THE SAID SUM REPRESENTED ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 23 DEPOSIT OF ELECTRICITY DUTY IN A DESIGNATED NON - LIEN BANK ACCOUNT, IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BLE SUPREME COURT OF INDIA. 4.1 THAT IN CONFIRMING THE DISALLOWANC E, THE CIT(A) ERRED IN RELYING UPON THE DECISION OF THIS HON'BLE TRIBUNAL IN ITA NO.521/CTK/2013 PASSED IN THE APPELLANT'S OWN CASE FOR AY 2009 - 10 WITHOUT APPRECIATING THAT THE DECISION OF THE HON'BLE TRIBUNAL HAS BEEN STAYED BY THE HON'BLE ODISHA HIGH COU RT VIDE ORDER DATED 08.02.2016 PASSED IN ITA NO.20/2014. 5. THAT THE CIT(A) ERRED IN NOT ADJUDICATING GROUND OF APPEAL RAISED BY THE APPELLANT CHALLENGING LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD/AMEND/ALTER THE AFORESAID GROUNDS OF APPEAL. 36 . IN REGARD TO GROUND S NO. 1 TO 3 OF THE APPEAL OF THE ASSESSEE, THE LD. AR OF THE ASSESSEE BEFORE US COULD NOT PRODUCE ANY NEW MATERIAL TO CONTROVERT THE FINDINGS OF THE CIT(A). ON PERUSAL OF THE ORDER OF CIT(A), WE FIND T HAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE ASSESSING OFFICER. THEREFORE, WE DO NOT SEE ANY GOOD REASON TO INTERFERE IN THE FINDINGS OF THE CIT(A) IN THIS REGARD AND WE UPHOLD THE SAME. ACCORDINGLY, THE GROUNDS NO. 1 TO 3 OF THE APPEAL OF ASSESSEE ARE DISMISSED. 37 . IN GROUND NO. 4 , THE ASSESSEE HAS AGITATED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION BY INVOKING 43B OF THE ACT. LD. AR BEFORE US FILED FORM NO .8 REGARDING DECLARATION UNDER SECTION 158A(1) OF THE ACT, 1961 TO BE MADE BY AN ASSESSEE CLAIMING THAT IDENTICAL QUESTION OF LAW IS PENDING BEFORE THE HIGH COURT OR THE SUPREME COURT. WE HAVE ALREADY RESTORED THE ISSUE IN ITA NO.230/CTK/2017 TO THE FILE OF ASSESSING OFFICER TO CONSIDER BASED ON THE FINAL OUTCOME OF THE ASSESSEE S APPEAL IN IDENTICAL ISSUE PENDING BEFORE THE HON BLE HIGH ITA NO S . 411, 412,342,405&312 /CTK/201 6 AND ITA NOS. 220&230/CTK/20 17 24 COURT FOR THE ASSESSMENT EAR 2009 - 2010 AS MENTIONED IN THE FORM NO.8. ACCOR DINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 38 . THUS, APPEAL OF THE ASSESSEE IN ITA NO. 405 /CTK/2016 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 39 . IN T HE RESULT, APPEAL OF THE REVENUE IN ITA NOS.412/CTK/2016 , ITA NO.220/CTK/2017, ITA NO.411/CTK/2016 AND ITA NO.342/CTK/2016 ARE DISMISSED AND APPEAL OF THE ASSESSEE IN ITA NO.230/CTK/2017, ITA NO.312/CTK/2016 AND ITA NO.405/CTK/2016 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10 / 0 8 / 201 8 . SD/ - ( N.S.SAINI ) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT M EMBER / JUDICIAL MEMBER CUTTACK ; DATED 10 / 0 8 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A) 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY//