LMJ International Ltd., Kolkata V. D.C.I.T Cir - 8,kolkata, Kolkata

ITA 230/KOL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1265 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: ARTI DEBNATH
• Keywords: Depreciation; Opportunity of being heard; Rule of consistency; Corroborative evidences
• Section: 115JB; 80IB; 194C

Judgement Text

I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 16 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 230/KOL/ 2013 ASSESSMENT YEAR: 2009-2010 LMJ INTERNATIONAL LIMITED,......................... .................................APPELLANT 15B, HEMANTA BASU SARANI, 5 TH FLOOR KOLKATA-700 001 [PAN: AAACL 4483 H] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .......................RESPONDENT CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 & I.T.A. NO. 340/KOL/ 2013 ASSESSMENT YEAR: 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX,................. .........................APPELLANT CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- LMJ INTERNATIONAL LIMITED,......................... .................................RESPONDENT 15B, HEMANTA BASU SARANI, 5 TH FLOOR KOLKATA-700 001 [PAN: AAACL 4483 H] APPEARANCES BY: SHRI ARTI DEBNATH, FCA, FOR THE ASSESSEE SHRI S. DASGUPTA, ADDL. CIT, D.R.., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JANUARY 05, 2018 DATE OF PRONOUNCING THE ORDER : MARCH 21, 2018 O R D E R PER SHRI P.M. JAGTAP, A.M.:- THESE TWO APPEALS, ONE FILED BY THE ASSESSEE BEING ITA NO. 230/KOL/2013 AND THE OTHER FILED BY THE REVENUE BEING ITA NO. 340/KO L/2013 ARE CROSS APPEALS, WHICH ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 08.11.2012. I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 16 2. IN THE REVENUES APPEAL, THE ISSUES RELATING TO DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANCES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTIONS 80IA AND 80IB OF THE INCOM E TAX ACT, 1961 ARE RAISED IN GROUNDS NO. 1 & 2, WHICH READ AS UNDER:- (1) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN ALLOWING DEDUCTION IN RESPECT OF PROFITS DERIVED FROM STAND ALONE WAREHOUSE AS ELIGIBLE DEDUCTION U/S 80IA OF THE INCOME TAX ACT, 1961, WHEREAS THE DEFINITION OF INFR ASTRUCTURAL FACILITIES PROVIDED IN EXPLANATION TO SECTION 80IA OF THE INCOME TAX ACT, 1961 DOES NOT INCLUDE MAINTENANCE OF STAND ALO NE WAREHOUSES. (2) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE COMPANY W AS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 F OR THE PROFIT DERIVED FROM THE BUSINESS OF HANDLING, STORAGE AND TR ANSPORTATION OF FOOD GRAINS, WHEREAS, NO SUCH BUSINESS WAS CARRIE D ON WITH ANY OUTSIDE OR THIRD PARTY AND, THEREFORE, ASSESSEE-COMPA NY WAS NOT ELIGIBLE FOR DEDUCTION ON NOTIONAL PROFIT CLAIMED TO HAVE DERIVED. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF IMPORT OF EDIBLE OIL AND PULSES AND EXPORT OF AG RO COMMODITIES, IRON ORE ETC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY THE ASSSSEE-COMPANY ON 26.09.2009 DECLARING TOTAL INCOME OF RS.2,93,51,430 /-, WHICH WAS SUBSEQUENTLY REVISED ON 01.06.2010 DECLARING TOTAL INCOME OF RS.2,96,16, 994/-. IN THE SAID RETURN, DEDUCTIONS OF RS.3,68,38,770/- AND RS.5,04,44,366/- WERE CLAIM ED BY THE ASSESSEE UNDER SECTIONS 80IA AND 80IB OF THE ACT RESPECTIVELY. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR THE SAID DEDUCTIONS WAS E XAMINED BY THE ASSESSING OFFICER AND ON SUCH EXAMINATION, HE FOUND THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA IN RESPECT OF PROFITS DERIVED FROM ITS STAND-A LONE WAREHOUSES. ACCORDING TO HIM, WAREHOUSE PER SE WAS NOT AN INFRASTRUCTURE FACILITY AS DEFINED IN E XPLANATION BELOW SECTION 80IA(4), INASMUCH AS, THE LEGISLATURE IN IT S WISDOM HAD INCLUDED A PORT AND NOT A STAND-ALONE WAREHOUSE IN THE DEFINITION OF THE INF RASTRUCTURE FACILITY. HE ALSO REFERRED IN THIS REGARD TO THE DEFINITION OF WAREHOUSE GIV EN IN THE CUSTOMS ACT AS A BUILDING OR PART OF A BUILDING USED FOR THE STORAGE OF MERCHAND ISE. HE HELD THAT THE STAND-ALONE WAREHOUSE THUS WAS NEITHER A CUSTOMS FREIGHT STATIO N (CFS) NOR AN INLAND CONTAINER DEPOT (ICD) AND THE SAME, THEREFORE, COULD NOT BE T REATED AS A PORT INFRASTRUCTURE I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 16 WITHIN THE MEANING OF EXPLANATION BELOW TO SECTION 80IA. HE ACCORDINGLY DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80I A(4) IN RESPECT OF PROFITS DERIVED FROM ITS WAREHOUSES. 4. AS REGARDS THE CLAIM OF THE ASSESSEE FOR DEDUCTI ON UNDER SECTION 80IB(11A), THE ASSESSING OFFICER FOUND THAT THE SAME WAS CLAIMED B Y THE ASSESSEE IN RESPECT OF ONE DIVISION SITUATED UNDER VISAKHAPATNAM PORT TRUST AN D THE OTHER DIVISION SITUATED UNDER KOLKATA PORT TRUST. HE ALSO FOUND THAT IN BOT H THESE DIVISIONS, THE ASSESSEE HAD USED ITS OWN WAREHOUSES FOR STORAGE OF ITS OWN FOOD GRAINS AND THERE WERE NO SUCH SERVICES PROVIDED BY THE ASSESSEE TO ANY THIRD PART Y OR OUTSIDE PARTY. HE ALSO FOUND THAT SIMILAR WAS THE CASE IN RESPECT OF HANDLING AND TRA NSPORTATION SERVICES RENDERED BY THE ASSESSEE-COMPANY. ACCORDING TO HIM, THE ASSESSEE-CO MPANY THUS HAD COMPUTED ONLY THE NOTIONAL PROFIT IN RESPECT OF THESE TWO DIVISIO NS FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80IB(11A), WHICH WAS NOT CO RRECT. IN THIS REGARD, HE REJECTED THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE BY RELYING ON SUB-SECTION (8) OF SECTION 80IA BY OBSERVING THAT THE ASSESSEE COULD NOT PRODU CE ANY SUPPORTING EVIDENCE TO PROVE THAT IT WAS ENGAGED IN AN INTEGRATED BUSINES S AS CONTEMPLATED IN SECTION 80IB(11A). HE ALSO OBSERVED THAT SUB-SECTION (8) OF SECTION 80IA ENVISAGED TRANSFER OF GOODS OR SERVICES FROM AN ELIGIBLE BUSINESS TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE. HE HELD THAT THE ASSESSEE COULD NOT PROVE ANY SUCH TRANSFER AND, THEREFORE, THE PROVISION OF SECTION 80IA(8) COULD NOT BE PRESSED I NTO SERVICE IN THE ASSESSEES CASE. HE ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE FO R DEDUCTION UNDER SECTION 80IB(11A). 5. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O N ACCOUNT OF ITS CLAIM FOR DEDUCTION UNDER SECTIONS 80IA & 80IB WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF A PPELLATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), FURTHER DETAILS AND DOCUMENTS WERE FU RNISHED BY THE ASSESSEE-COMPANY IN SUPPORT OF ITS CLAIM FOR DEDUCTIONS UNDER SECTIO NS 80IA AND 80IB. THE SAME WERE FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER SEEKING HIS COMMENTS. IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(APPEALS), TH E ASSESSING OFFICER OFFERED HIS COMMENTS AND WHEN THE SAME WERE CONFRONTED TO THE A SSESSEE-COMPANY, IT ALSO FILED ITS I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 16 COUNTER-COMMENTS. AFTER TAKING INTO CONSIDERATION T HIS ENTIRE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) FOUND MERIT IN THE CAS E OF THE ASSESSEE AND DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF ASSESSEES CLAIM FOR DEDUCTIONS UNDER SECTIONS 80IA AND 80IB AFTER RECOR DING THE FOLLOWING FINDINGS/OBSERVATIONS IN HIS IMPUGNED ORDER:- (I) THE APPELLANT HAS STAND ALONE WARE HOUSE AT VISHAK HAPATNAM PORT. IN RESPECT OF VISHAKHAPATNAM PORT THE APPELLANT HAS PRODUCED A CERTIFICATE ISSUED BY VISHAKHAPATNAM PORT TRUST STATI NG THAT THE WAREHOUSE STRUCTURE OF THE APPELLANT IS A PART THE POR T. ACCORDINGLY, IN VIEW OF CBDT CIRCULAR NO. 10, DATED 16.1.2005, I AM OF THE OPINION THAT THE APPELLANT IS ENTITLED FOR BENEFIT OF DEDUCTION U NDER SECTION 80LA OF THE ACT IN RESPECT OF THIS WAREHOUSE. (II) THAT THE APPELLANT IS ENGAGED IN BUSINESS OF EXP ORT OF AGRO COMMODITIES, IRON, ORE, ETC. AND IMPORT OF EDIBLE O IL AND PULSES. THE LOGISTIC DIVISION OF THE APPELLANT, WHICH INCLUDES THE WAREHOUSE ETC. OWNED BY THE APPELLANT COMPANY IS PROVIDING SERVICES TO ITS EXPORT & IMPORT DIVISION. (III) SINCE THE LOGISTIC DIVISION OF THE APPELLANT IS PROVIDING SERVICE TO EXPORT & IMPORT DIVISION HENCE, AS PER PROVISION OF SECTION 80IA(8) THE APPELLANT IS ENTITLED TO DEDUCTION UNDER SECTION 80 IA ON THE NOTIONAL PROFIT EARNED BY LOGISTIC DIVISION FOR THE SERVICES RENDERED TO EXPORT & IMPORT DIVISION. SINCE IT IS NOT THE CASE OF AO THAT LOGISTIC DIVISION HAS CHARGED EXCESSIVE CHARGES FOR ITS SERVICES HENCE, THE APPELLANT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80LA/801B ON T HE INCOME OF LOGISTIC DIVISION. THE JUDGEMENTS OF THE CASES OF TAM ILNADU PETROPRODUCTS LTD. V ACIT 238 CTR 454 AND WEST COAST PAPER MILLS LTD. V ACIT 105 TTJ 344 SUPPORT THIS VIEW OF MINE. (IV) IN ADDITION TO MY ABOVE FINDING, THE SUBMISSION MADE BY THE LD AR THAT THE APPELLANT COMPANY WAS ALLOWED DEDUCTION UND ER THESE SECTIONS IN THE ASSESSMENT YEAR 2006-07 HENCE, IN VIE W OF HON'BLE GUJRAT HIGH COURT'S DECISION IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. V CIT 11 CTR 139 AND HON'BLE SUPREME COURT'S DECISION IN THE CASE OF RADHA SAOMI SATSANG V CIT 193 IR 321, DEDUCTION UNDER THESE SECTIONS HAS TO BE ALLOWED TO THE APPELLANT IN THE ASSESSMENT YEAR 2009-10 ALSO. (V) HAVING REGARD TO THE TOTALITY OF FACTS AND CIRC UMSTANCES OF THE CASE, AND THE LEGAL POSITION, I AM OF THE CONSIDERED VIEW T HAT THE APPELLANT IS ENTITLED FOR THE CONTINUED CLAIM OF DEDUCTION UNDER SECTION 80-IA OF THE ACT FOR THE YEAR UNDER CONSIDERATION AS WELL. (VI) CONSIDERED THE FACTS OF THE CASE, THE MATERIAL PL ACED ON RECORD AND THE ARGUMENTS AS WELL AS SUBMISSIONS PUT FORTH ON BEHA LF OF THE APPELLANT. FROM THE FACTS STATED, IT IS CLEAR THAT T HE APPELLANT IS AN I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 16 INDUSTRIAL UNDERTAKING, OTHER THAN INFRASTRUCTURE DEV ELOPMENT UNDERTAKING, ENGAGED IN THE BUSINESS OF INTEGRATED HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS UNITS. THUS, THE BA SIC REQUIREMENT FOR CLAIMING DEDUCTION UNDER SEC. 80-IB HAS BEEN FU LFILLED. . (VII) THE WORKING OF ELIGIBLE PROFIT FOR DEDUCTION U NDER SECTION 80-IB HAS ALSO BEARING ON THE WORKING OF ELIGIBLE PROFITS U NDER SECTION 80-1A OF THE ACT. THEREFORE, FOLLOWING THE RATIO LAID DOWN I N THE REPORTED CASES, I AM OF THE VIEW THAT THE APPELLANT COMPANY IS ENTITLED FOR DEDUCTION UNDER SECTION 80-1B OF THE ACT ON THE ELIG IBLE PROFIT OF THE INDUSTRIAL UNDERTAKING. (VIII) IT MAY BE FURTHER MENTIONED THAT SUCH DEDUCTI ON HAS BEEN ALLOWED IN THE EARLIER YEARS. IN CIT VS. ARTS & CRAF TS EXPORTS (2012) 246 CTR (BORN) 463, IT HAS BEEN HELD THAT DECISION OF THE TR IBUNAL IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS HOLDING THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING ACTIVITY AND THUS ENTITLED TO DEDUCTION UNDER SECTION 80-IB HAVING BEEN ACCEPTED BY THE REVEN UE, QUESTION RAISED BY THE REVENUE CONTESTING THE ORDER OF THE TRIB UNAL HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SEC. 80- IB CANNOT BE ENTERTAINED. 6. THE LD. CIT (D.R.) CONTENDED THAT SPECIFIC REASO NS WERE GIVEN BY THE ASSESSING OFFICER WHILE DISALLOWING THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTIONS 80IA AND 80IB OF THE ACT IN THE ASSESSMENT ORDER. HE CONTEND ED THAT THE LD. CIT(APPEALS), HOWEVER, NEITHER CONSIDERED NOR APPRECIATED THE ADV ERSE FINDINGS RECORDED BY THE ASSESSING OFFICER IN THIS REGARD AND GAVE RELIEF TO THE ASSESSEE ON IRRELEVANT GROUND WITHOUT CONSIDERING THE CASE MADE OUT BY THE ASSESS ING OFFICER. HE ALSO CONTENDED THAT SINCE THE CLAIM OF THE ASSESSEE FOR DEDUCTIONS UNDE R SECTIONS 80IA AND 80IB WAS DISALLOWED BY THE ASSESSING OFFICER, HE NEVER HAD A N OCCASION TO EXAMINE THE CORRECTNESS OF THE QUANTUM OF SAID DEDUCTIONS CLAIM ED BY THE ASSESSEE. HE CONTENDED THAT THE LD. CIT(APPEALS) ALSO FAILED TO VERIFY THE CORRECTNESS OF THE QUANTUM OF DEDUCTION CLAIMED BY THE ASSESSEE AND EVEN DID NOT GIVE ANY OPPORTUNITY TO THE ASSESSING OFFICER TO DO THE SAME. HE CONTENDED THAT SINCE THERE WAS NO GROSS TOTAL INCOME DECLARED BY THE ASSESSEE, IT WAS NOT ENTITLE D FOR ANY DEDUCTION UNDER SECTIONS 80IA OR 80IB AS PER THE SPECIFIC PROVISION CONTAINE D IN SECTION 80AB. I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 6 OF 16 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, REFERRED TO THE GROUNDS RAISED BY THE REVENUE ON THE ISSUES OF DEDUCTIONS U NDER SECTIONS 80IA AND 80IB TO POINT OUT THAT THE RELIEF GIVEN BY THE LD. CIT(APPEALS) O N THESE ISSUES IS CHALLENGED BY THE REVENUE ON SPECIFIC POINTS AND THE LD. D.R. CANNOT RAISE ANY NEW ISSUE, WHICH IS NOT RAISED BY THE REVENUE IN ITS GROUNDS. IN SUPPORT OF THE LD. CIT(APPEALS)S DECISION TO TREAT ITS STAND ALONE GODOWN AS PORT INFRASTRUCTURE FOR THE PURPOSE OF ALLOWING DEDUCTION UNDER SECTION 80IA, HE RELIED ON THE CBDT CIRCULAR NO. 10 OF 2005 ISSUED ON 16.12.2005 (COPY AT PAGE NO. 8 OF THE PAPER BOOK), WHEREIN IT WAS CLARIFIED THAT STRUCTURES AT THE PORTS FOR STORAGE, LOADING AND UN LOADING, ETC. WILL BE INCLUDED IN THE DEFINITION OF PORT FOR THE PURPOSE OF SECTION 80I A, IF THE CONCERNED PORT AUTHORITY HAS ISSUED A CERTIFICATE THAT THE SAID STRUCTURE FORMED PART OF THE PORT. HE SUBMITTED THAT SUCH CERTIFICATE HAS BEEN ISSUED BY THE VISAKHAPATN AM PORT TRUST ON 09.12.2011 CERTIFYING THAT THE STORAGE SHEDS CONSTRUCTED BY TH E ASSESSEE ON THE LEASE LAND ARE PART AND PARCEL OF THE PORT INFRASTRUCTURE FACILITY AT V ISAKHAPATNAM. HE CONTENDED THAT THERE WAS NO ADVERSE COMMENTS OFFERED BY THE ASSESSING OF FICER IN HIS REMAND REPORT ON THE SAID CERTIFICATE FORWARDED BY THE LD. CIT(APPEALS) FOR HIS VERIFICATION. HE ALSO CONTENDED THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTIONS UNDER SECTIONS 80IA AND 80IB WAS ALLOWED BY THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENTS COMPLETED FOR A.YS. 2006-07 AND 2011-12 AND THE LD. CIT(APPEALS), THEREFORE, WAS FU LLY JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR THE SAID DEDUCTIONS EVEN FOR THE Y EAR UNDER CONSIDERATION BY FOLLOWING THE RULE OF CONSISTENCY. 8. AS REGARDS THE CLAIM OF THE ASSESSEE FOR DEDUCTI ON UNDER SECTION 80IB(11A), HE CONTENDED THAT EVEN IF THERE ARE NO TRANSACTIONS WI TH THE THIRD PARTY, ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. IN SUPPORT OF THI S CONTENTION, HE RELIED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF C IT VS.- ITC LIMITED [236 TAXMAN 612], WHEREIN IT WAS HELD THAT DEDUCTION UNDER SECTION 80 IA CANNOT BE DENIED TO THE ASSESSEE MERELY BECAUSE POWER GENERATED BY THE ASSESSEE IN I TS ENTIRETY WAS CONSUMED BY OTHER BUSINESS OF THE ASSESSEE AND WAS NOT SOLD TO OUTSID ERS. I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 7 OF 16 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE FROM THE RELEVANT GROUNDS RAISED BY THE REVENUE IN ITS APPEA L RELATING TO THE ISSUE OF DEDUCTIONS UNDER SECTIONS 80IA AND 80IB, THE RELIEF ALLOWED BY THE LD. CIT(APPEALS) ON THESE TWO ISSUES TO THE ASSESSEE IS CHALLENGED BY THE REVENUE ON SPECIFIC GROUNDS AS IS CLEARLY EVIDENT FROM THE SAID GROUNDS. IN GROUND NO. 1, THE REVENUE HAS CHALLENGED THE DECISION OF THE LD. CIT(APPEALS) IN ALLOWING THE CLAIM OF TH E ASSESSEE FOR DEDUCTION UNDER SECTION 80IA IN RESPECT OF THE PROFITS DERIVED FROM STAND A LONE WAREHOUSES ON THE SPECIFIC GROUND THAT THE DEFINITION OF INFRASTRUCTURAL FACIL ITY PROVIDED IN EXPLANATION TO SECTION 80IA DOES NOT INCLUDE STAND ALONE WAREHOUSES. THE S AID DEFINITION OF INFRASTRUCTURE FACILITY, HOWEVER, INCLUDES PORT AND AS CLARIFIE D BY THE CBDT IN ITS CIRCULAR NO. 10 OF 2005 ISSUED ON 16.12.2005, STRUCTURES AT THE PORT F OR STORAGE, LOADING AND UNLOADING, ETC. WILL BE INCLUDED IN THE DEFINITION OF PORT F OR THE PURPOSE OF SECTION 80IA, IF THE CONCERNED PORT AUTHORITY HAS ISSUED A CERTIFICATE T HAT THE SAID STRUCTURES FORMED PART OF THE PORT. IN THE ASSESSEES CASE, SUCH CERTIFICATE HAS BEEN ISSUED BY THE VISAKHAPATNAM PORT TRUST ON 09.12.2011 CERTIFYING THAT THIS STORA GE SHEDS CONSTRUCTED BY THE ASSESSEE- COMPANY ON THE LEASE LAND WERE PART AND PARCEL OF T HE PORT FOR THE INFRASTRUCTURE FACILITY AT VISAKHAPATNAM. KEEPING IN VIEW THE SAID CERTIFIC ATE AS WELL AS THE CIRCULAR NO. 10 OF 2005 ISSUED BY THE CBDT, WE ARE OF THE VIEW THAT TH E PROFIT DERIVED BY THE ASSESSEE- COMPANY FROM ITS STAND ALONE WAREHOUSES WAS ENTITLED FOR DEDUCTION UNDER SECTION 80IA AND THE LD. CIT(APPEALS) WAS FULLY JUSTIFIED I N DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR THE SAID DEDUCT ION. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSU E AND DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. 10. AS REGARDS THE RELIEF ALLOWED BY THE LD. CIT(AP PEALS) BY DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDU CTION UNDER SECTION 80IB IN RESPECT OF PROFIT DERIVED FROM THE BUSINESS OF HANDLING, STORA GE AND TRANSPORTATION OF FOODGRAINS, IT IS OBSERVED THAT THE SAME IS CHALLENGED BY THE REVE NUE ON THE GROUND THAT SUCH BUSINESS WAS NOT CARRIED ON BY THE ASSESSEE-COMPANY WITH ANY OUTSIDE OR THIRD PARTY AND IT WAS, THEREFORE, NOT ELIGIBLE FOR DEDUCTION O N NOTIONAL PROFIT CLAIMED TO HAVE BEEN DERIVED FROM THE SAID BUSINESS. AS RIGHTLY CONTENDE D BY THE LD. COUNSEL FOR THE ASSESSEE, I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 8 OF 16 THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF ITC LIMITED (SUP RA), WHEREIN IT WAS HELD THAT THE CLAIM MADE BY THE ASSESSEE FOR DEDUCTION UNDER SECT ION 80IA IN RESPECT OF PROFIT DERIVED FROM THE BUSINESS OF GENERATION OF POWER COULD NOT BE DENIED MERELY BECAUSE POWER GENERATED BY THE ASSESSEE WAS IN ITS ENTIRETY CONSU MED BY OTHER BUSINESS OF THE ASSESSEE AND WAS NOT SOLD TO OUTSIDERS. RESPECTFULL Y FOLLOWING THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE IM PUGNED ORDER OF THE LD. CIT(APPEALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UN DER SECTION 80IB AND DISMISS GROUND NO. 2 OF THE REVENUES APPEAL. 11. THE ISSUE RAISED IN GROUND NO. 3 OF THE REVENUE S APPEAL RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) ON ACCOUNT OF PAYMENT MADE BY THE ASSESSE E-COMPANY OF OCEAN FREIGHT TO SUB- AGENTS AND INDIAN BENEFICIARIES. 12. AS NOTED BY THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE-COMPANY HAD NOT DEDUCTED TAX AT SOURCE FROM THE PAYMENTS MADE TO VARIOUS PARTIES ON ACCOUNT OF OCEAN FREIGHT AGGREGA TING TO RS.29.64 CRORES. IN THIS REGARD, RELIANCE WAS PLACED ON BEHALF OF THE ASSESS EE ON THE CBDT CIRCULAR NO. 723 DATED 19.09.1995 TO CONTEND THAT THE SAID PAYMENTS ON ACCOUNT OF OCEAN FREIGHT HAVING BEEN MADE TO THE SHIPPING AGENTS OF NON-RESIDENT SH IP OWNERS, TAX WAS NOT REQUIRED TO BE DEDUCTED. THIS CONTENTION RAISED ON BEHALF OF TH E ASSESESE-COMPANY WAS NOT FOUND TENABLE BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY SUPPORTING EVIDENCE PRODUCED BY THE ASSESSEE TO PROVE THAT THE PARTIES TO WHOM THE SAID PAYMENTS HAD BEEN MADE WERE ALL AGENTS OF NON-RESIDENT SHIP OWNERS. HE HELD THA T THE ONUS THAT LAY ON THE ASSESSEE WAS NOT DISCHARGED AND THE AMOUNT OF OCEAN FREIGHT WAS DISALLOWED BY HIM BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) FOR THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. 13. THE DISALLOWANCE OF RS.29.64 CRORES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OCEAN FREIGHT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APP EALS). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), DETAILS AN D DOCUMENTS WERE FILED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CASE THAT THE AMOUNT OF OCEAN FREIGHT WAS PAID EITHER TO NRI SHIPPING OWNERS OR THEIR RESIDENT SUB -AGENTS. THE SAID DETAILS AND I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 9 OF 16 DOCUMENTS WERE FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR VERIFICATION. ON VERIFICATION, THE ASSESSING OFFICE R ACCEPTED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.28.24 CRORES AND KEEPING IN VIEW T HE SAME, THE LD. CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 40(A)(IA) ON ACCOUNT OF OCEAN FREIGHT TO THE EXTENT OF RS.28.24 CRORES BY R ELYING ON THE CBDT CIRCULAR NO. 723 DATED 19.09.1995. AS REGARDS THE BALANCE DISALLOWAN CE OF RS.1.40 CRORES PAID TO INDIAN BENEFICIARIES, THE LD. CIT(APPEALS) FOUND MERIT IN THE ALTERNATIVE CONTENTION RAISED ON BEHALF OF THE ASSESSEE-COMPANY THAT THE SAID AMOUNT HAVING BEEN PAID DURING THE YEAR UNDER CONSIDERATION, NO DISALLOWANCE COULD BE MADE UNDER SECTION 40(A)(IA) IN VIEW OF THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE O F MERLIN SHIPPING & TRANSPORTERS. HE ACCORDINGLY DELETED THE AMOUNT OF BALANCE DISALLOWA NCE ALSO THEREBY ALLOWING ENTIRE RELIEF TO THE ASSESSEE ON THIS ISSUE. 14. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER TO THE LD . CIT(APPEALS) AT PAGE NO. 4 OF THE PAPER BOOK TO POINT OUT THAT THE CLAIM OF THE ASSES SEE TO THE EXTENT OF RS.28.24 CRORES WAS ACCEPTED BY THE ASSESSING OFFICER HIMSELF IN TH E REMAND REPORT. HE, HOWEVER, FAIRLY AND FRANKLY POINTED OUT THAT THE SAID AMOUNT TO THE EXTENT OF RS.3.56 CRORES WAS PAID BY THE ASSESSEE ON ACCOUNT OF OCEAN FREIGHT TO RESIDEN T SUB-AGENTS OF NRI SHIP OWNERS, WHICH ARE NOT COVERED BY THE CBDT CIRCULAR NO. 723 DATED 19.09.1995. HE, HOWEVER, CONTENDED THAT THIS ISSUE IS COVERED BY THE DECISIO N OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.- CONTINENTAL CARRIERS (PVT. LT D.) [163 TAXMAN 479], WHEREIN IT WAS HELD THAT PAYMENTS MADE TO RESIDENT AGENTS OR SUB-A GENTS OF THE FOREIGN SHIPPING COMPANIES DO NOT ATTRACT TDS UNDER SECTION 194C OF THE ACT. HE ALSO RELIED ON THE DECISION OF THE BANGALORE BENCH OF THIS TRIBUNAL IN THE CASE OF ASCENT CIRCUITS PVT. LTD. VS.- ACIT RENDERED VIDE ITS ORDER DATED 22.08.2014 IN ITA NO. 659/BANG./2011, WHEREIN A SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE BY THE TRIBUNAL BY RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CONTINENTAL CARRIERS (PVT. LTD). AS REGARDS THE BALANCE DISALLOWANCE OF RS.1.40 CRORES, WHICH IS DELETED BY THE LD. CIT(APPEALS) BY RELYING ON THE DECISION OF THE SPEC IAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERLIN SHIPPING & TRANSPORTERS (SUPRA), THE LD. COUNSEL FOR THE ASSESSEE AGREED THAT I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 10 OF 16 THE SAID DECISION OF THIS SPECIAL BENCH HAS BEEN SU BSEQUENTLY OVERRULED BY THE HONBLE CALCUTTA HIGH COURT. HE, HOWEVER, CONTENDED THAT TH E ASSESSEE WANTS TO RAISE ALTERNATIVE CONTENTION IN SUPPORT OF ITS CASE ON THIS ISSUE AND URGED THAT ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO PUT FORTH ITS CASE BY S ENDING THE MATTER BACK TO ASSESSING OFFICER. 15. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT OUT OF THE TOTAL DISALLOWANCE OF RS.29.06 CRORES ON ACCOUNT OF OCEAN FREIGHT BY INVOKING THE PROVISI ONS OF SECTION 40(A)(IA), THE CLAIM OF THE ASSESSEE THAT OCEAN FREIGHT HAVING PAID TO THE NRI SHIP OWNERS OR AGENTS OF THE NRI SHIP OWNERS, THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE AS PER THE CBDT CIRCULAR NO. 723 DATED 19.09.1995 WAS ACCEPTED BY T HE ASSESSING OFFICER HIMSELF TO THE EXTENT OF RS.28.24 CRORES IN THE REMAND REPORT SUBM ITTED TO THE LD. CIT(APPEALS) AFTER VERIFYING THE RELEVANT DETAILS AND DOCUMENTS FILED BY THE ASSESSEE. IN VIEW OF THE SAID REMAND REPORT, THE LD. CIT(APPEALS) DELETED THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE TO THE EXTENT OF RS.28.24 CRO RES. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE AMOUNT OF RS.28.24 CRORES, HO WEVER, WAS INCLUSIVE OF AN AMOUNT OF RS.3.56 CRORES PAID BY THE ASSESSEE ON ACCOUNT OF O CEAN FREIGHT TO RESIDENT SUB-AGENTS OF NRI SHIP OWNERS AND, THEREFORE, THE SAME IS NOT COV ERED BY THE CBDT CIRCULAR NO. 723 DATED 19.09.1995. THE SAID AMOUNT STILL CANNOT BE D ISALLOWED UNDER SECTION 40(A)(IA) IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COUR T IN THE CASE OF CONTINENTAL CARRIERS (PVT.) LIMITED (SUPRA), WHEREIN IT WAS HELD THAT PA YMENTS MADE TO RESIDENT AGENTS OR SUB-AGENTS OF THE FOREIGN SHIPPING COMPANIES DO NOT ATTRACT TDS UNDER SECTION 194C OF THE ACT. WE, THEREFORE, FIND NO INFIRMITY IN THE IM PUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER UNDER SECTION 40(A)(A) ON ACCOUNT OF OCEAN FREIGHT TO THE EXTENT OF RS.28.24 CRORES. THE DELETION OF DISALLOWANCE BY THE LD. CIT(APPEALS) TO THE EXTENT OF BALANCE AMOUN T OF RS.1.40 CRORES GOING TO INDIAN BENEFICIARIES BY RELYING ON THE DECISION OF THE SPE CIAL BENCH OF ITAT IN THE CASE OF MERLIN SHIPPING & TRANSPORTERS (SUPRA), HOWEVER, IS NOT JUSTIFIED AS THE SAID DECISION OF THIS SPECIAL BENCH OF ITAT HAS BEEN SUBSEQUENTLY OV ERRULED BY THE HONBLE CALCUTTA HIGH COURT. AS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD, THE ASSESSEE COULD NOT RAISE ITS ALTERNATIVE CONTENTION ON THIS ISSUE KEEPING IN VIEW THAT THE ISSUE WAS COVERED BY THE SPECIAL BENCH OF ITAT IN THE CASE OF MERLIN SHIPPING & TRANSPORTERS. IN I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 11 OF 16 ORDER TO GIVE SUCH OPPORTUNITY TO THE ASSESSEE AS S OUGHT BY ITS LD. COUNSEL, WE RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER FO R DECIDING THE SAME AFRESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. GROUND NO. 3 OF THE REVENUES APPEAL IS THUS TREATED AS PARTLY ALLOWED FOR STATISTICAL P URPOSES. 16. IN GROUND NO. 4, THE REVENUE HAS CHALLENGED TH E ACTION OF THE LD. CIT(APPEALS) IN DELETING THE DISALLOWANCE OF RS.5 CRORES MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR LOAN REDEMPTION RESERVE WHILE COMPUTI NG THE BOOK PROFIT OF THE ASSESSEE UNDER SECTION 115JB OF THE ACT. 17. WHILE COMPUTING ITS BOOK PROFIT UNDER SECTION 1 15JB, THE ASSESSEE-COMPANY HAD DEDUCTED THE PROVISION OF RS.5 CRORES MADE FOR LOAN REDEMPTION RESERVE. THE ASSESSING OFFICER FOUND THAT NO SUCH RESERVE, HOWEVER, WAS DE DUCTED BY THE ASSESSEE-COMPANY IN ITS PROFIT & LOSS ACCOUNT AND THE SAME WAS SHOWN ON LY IN THE APPROPRIATION ACCOUNT BELOW THE LINE IN THE PROFIT & LOSS ACCOUNT. AS THE SAID AMOUNT WAS NOT DEBITED BY THE ASSESSEE-COMPANY WHILE COMPUTING ITS NET PROFIT AS PER THE PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER HELD THAT THE SAME COULD NOT BE A LLOWED WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB. HE ACCORDINGLY DISALLOW ED THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF LOAN REDEMPTION RESERVE WHIL E COMPUTING ITS BOOK PROFIT UNDER SECTION 115JB. 18. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ITS CLAIM FOR DEDUCTION FOR LOAN REDEMPTION RESERVE WHILE COMPUTI NG THE BOOK PROFIT UNDER SECTION 115JB WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESS EE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE SAID DI SALLOWANCE FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- I HAVE CONSIDERED THE FACTS. I HAVE ALSO GONE THROUGH THE SUBMISSIONS PUT FORTH ON BEHALF OF THE APPELLANT AS ALSO THE RATI O LAID DOWN IN THE REPORTED CASES RELIED UPON BY THE APPELLANT. THE ASSE SSING OFFICER WHILE COMPUTING THE INCOME UNDER SECTION 115JB HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT AS HAVING BEEN PROPERLY MAIN TAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OFFI CER HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS (I ) IF PROFIT AND LOSS ACCOUNT IS NOT PREPARED ACCORDING TO THE COMPANIES ACT AND (II) IF ACCOUNTING POLICIES, ACCOUNTING STANDARDS OR RATES OR METHOD OF I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 12 OF 16 DEPRECIATION ARE DIFFERENT. THE POSITIVE ADJUSTMENTS POSSIBLE IN THE BOOK PROFIT DO NOT INCLUDE THE LOAN REDEMPTION RESERVE F UND OR SUCH OTHER RESERVES. THEREFORE, IN VIEW OF THE FACTS OF THE CASE AND THE RATIO LAID DOWN IN THE REPORTED CASES, IN MY VIEW, NO ADJUSTMEN T WAS CALLED FOR UNDER SEC. 115JB IN RESPECT OF THE LOAN REDEMPTION R ESERVE OF RS. 5,00,00,000/-. THE FACT THAT THE LOAN REDEMPTION RESER VE HAS NOT BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT, BUT SHOWN IN THE PROFIT APPROPRIATION ACCOUNT DID NOT ALTER THE POSITION. IN VIEW OF THE ABOVE DISCUSSION AND AFTER PERUSING T HE ENTIRE FACTS OF THE CASE, THIS GROUND OF APPEAL OF THE APPEL LANT REGARDING DISALLOWANCE OF PROVISION OF LOAN REDEMPTION RESERV E OF RS.5 CRORE WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB IS DECIDE D IN FAVOUR OF THE APPELLANT AS BECAUSE THIS PROVISION HAS BEEN MADE FO R MEETING OUT AN ASCERTAINED LIABILITY. MY THIS VIEW IS IN ACCORDANCE WITH THE HONBLE ITAT KOLKATA BENCH IN THE CASE OF IOL LTD. V DCIT 81 TTJ 525. IN THAT CASE IT WAS HELD THAT TRANSFER FROM PROFIT & LOSS A CCOUNT TO DEBENTURE REDEMPTION ACCOUNT HAS TO BE CONSIDER FOR WORKING O UT BOOK PROFIT UNDER SECTION 115J(1) OF THE ACT. ACCORDINGLY, THE AO IS DIRECTED TO CONSIDER PROVISION OF LOAN REDEMPTION RESERVE RS. 5 CRORES WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE AC T. 19. THE LD. D.R. INVITED OUR ATTENTION TO THE PROFI T & LOSS ACCOUNT OF THE ASSESSEE- COMPANY FOR THE YEAR UNDER CONSIDERATION PLACED AT PAGE NO. 11 OF THE PAPER BOOK TO SHOW THAT THE LOAN REDEMPTION RESERVE OF RS. 5 CROR ES WAS NOT DEBITED BY THE ASSESSEE TO ITS PROFIT & LOSS ACCOUNT AND THE SAME WAS SHOWN ONLY AS APPROPRIATION BELOW THE LINE IN THE SAID PROFIT & LOSS ACCOUNT. HE CONTENDE D THAT THIS RELEVANT ASPECT CONSIDERED BY THE ASSESSING OFFICER WHILE DISALLOWING THE CLAI M OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF LOAN REDEMPTION RESERVE, HOWEVER, WAS NO T APPRECIATED BY THE LD. CIT(APPEALS) WHILE GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE. 20. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT THE PROFIT & LOSS APPROPRIATION ACCOUNT IS REQUIRED TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF COMPUTING BOOK PROFIT UNDER SECTION 115JB. IN SUPPO RT OF THIS CONTENTION, HE RELIED ON THE DECISION OF MUMBAI BENCH OF THIS TRIBUNAL IN TH E CASE OF DUKE OFFSHORE LIMITED VS.- DCIT [45 SOT 399] AS WELL AS THE DECISION OF THE HY DERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF GULF OIL CORPORATION LIMITED VS.- ACIT [11 1 ITD 124]. HE ALSO CONTENDED THAT THE NATURE OF LOAN REDEMPTION RESERVE IS SIMILAR TO THE DEBENTURE REDEMPTION RESERVE AND THE SAME, THEREFORE, IS ALLOWABLE AS DEDUCTION WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB AS PER CLAUSE (B) OF EXPLANATION 1 TO SECTION 115JB. IN SUPPORT OF THIS I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 13 OF 16 CONTENTION, HE RELIED ON THE DECISION DATED 02.06.2 017 OF THIS TRIBUNAL IN THE CASE OF DCIT VS.- LMJ LOGISTICS LIMITED IN ITA NO. 1800/KO L/2010. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THI S ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED FROM THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE-COMPANY FOR THE YEAR UNDER CONSIDERATION P LACED AT PAGE NO. 11 OF THE PAPER BOOK THAT PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS WAS SHOWN AT RS.1393.87 LAKHS, WHILE THE AMOUNT OF LOAN REDEMPTION RESERVE OF RS.500 LAK HS WAS SHOWN IN THE APPROPRIATION ACCOUNT. WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB, THE PROFIT OF RS.1393.87 LAKHS WAS TAKEN BY THE ASSESSEE-COMPANY AS THE STAR TING POINT AND THE SAME WAS REDUCED BY RS.500 LAKHS BEING THE AMOUNT OF LOAN RE DEMPTION RESERVE. SINCE THE SAID AMOUNT OF LOAN REDEMPTION RESERVE WAS NOT DEBITED B Y THE ASSESSEE-COMPANY IN ITS PROFIT & LOSS ACCOUNT AND WAS SHOWN AS APPROPRIATIO N BELOW THE LINE, THE ASSESSING OFFICER ADDED BACK THE SAME WHILE COMPUTING THE BOO K PROFIT OF THE ASSESSEE-COMPANY UNDER SECTION 115JB. AS HELD BY THE HONBLE MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF DUKE OFFSHORE LIMITED VS.- DCIT [45 SOT 0399] C ITED BY THE LD. COUNSEL FOR THE ASSESSEE, LANGUAGE OF SECTION 115JB IS VERY CLEAR T O INDICATE THAT STARTING POINT OF THE PROFIT AND LOSS SHOULD BE THE FIGURE AFTER THE APPR OPRIATION AS WELL AS ANY EXTRAORDINARY ITEM MADE OR PRIOR YEAR EXPENSES WHICH THE COMPANY MAY FOR THE PURPOSE OF PRESENTATION SHOW BELOW THE LINE. IT WAS HELD THA T THE AMOUNTS CREDITED OR DEBITED TO THE PROFIT & LOSS ACCOUNT BELOW THE LINE, THEREFORE , CANNOT BE IGNORED FOR THE PURPOSE OF COMPUTING BOOK PROFIT UNDER SECTION 115JB. A SIMILA R VIEW HAS BEEN EXPRESSED BY THE HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF GUL F OIL CORPORATION LIMITED VS.- ACIT [111 ITD 124] CITED BY THE LD. COUNSEL FOR THE ASSE SSEE, WHEREIN IT WAS HELD THAT SCHEDULE VI OF THE COMPANIES ACT, 1956 IN ACCORDANC E WITH WHICH PROFIT & LOSS ACCOUNT OF THE COMPANY HAS TO BE PREPARED FOR PURPOSES OF S ECTION 115JB DOES NOT MAKE ANY DISTINCTION BETWEEN PROFIT & LOSS ACCOUNT AND PROFI T & LOSS APPROPRIATION ACCOUNT. IT WAS HELD THAT ALL THE ITEMS WHICH ARE GENERALLY CLASSIF IED IN THE APPROPRIATION ACCOUNT ARE IN FACT TO BE INCLUDED IN THE PROFIT & LOSS ACCOUNT PR EPARED AS PER PARTS II AND III OF SCHEDULE VI. MOREOVER, THE LOAN REDEMPTION RESERVE IS ALIKE A DEBENTURE REDEMPTION RESERVE AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE AND AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS.- RAYMOND LIMITED [209 TAXMAN 65] THE AMOUNT, WHICH WAS SET APART AS A DEBENTURE REDE MPTION RESERVE IS NOT A RESERVE I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 14 OF 16 WITHIN THE MEANING OF EXPLANATION BELOW TO SECTION 115JA OF THE INCOME TAX ACT, 1961. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED OR DER OF THE LD. CIT(APPEALS) DELETING THE ADDITION OF RS.500 LAKHS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOAN REDEMPTION RESERVE WHILE COMPUTING THE BOOK PROFIT OF THE ASSESSEE-COMPANY UNDER SECTION 115JB OF THE ACT AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 4 OF THE REVENUES APPEAL. 22. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE BEING ITA NO. 230/KOL/2013, IN WHICH THE FOLLOWING GROUNDS ARE RAISED:- (1) FOR THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING T HE DISALLOWANCE OF RS.2,53,227/- ON ACCOUNT OF FREIGHT PAYMENT TO THE SUPPLIER OF THE GOODS WITHOUT APPRECIATING THE FACT THAT IT IS REIMBUR SEMENT OF FREIGHT COST AND THUS NOT SUBJECT TO TDS. (2) FOR THAT THE LD. CIT(A) HAS ERRED IN ASKING THE AO TO ALLOW THE COMMISSION EXPENSES OF RS.37,39,560/- ONLY IF PAYME NTS ARE MADE BEFORE THE END OF THE 31.03.2009 COMPLETELY IGNORING THE FACT THAT IT WAS PAID TO NON-RESIDENTS AGENTS FOR SERVICES RENDE RED OUTSIDE INDIA AND THUS NOT SUBJECT TO TDS. (3) FOR THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF SALE OF DEPB LICENCE AMOUNTING TO RS.39, 17,711/- WITHOUT APPRECIATING THE FACT THAT THE SAID INCOME ON SALE OF DEPB LICENCE WAS OFFERED FOR TAXATION IN THE ASSESSMENT YEAR 2010-11 THEREBY AMOUNTING TO DOUBLE TAXATION. (4) FOR THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING REIMBURSEMENT OF FREIGHT CHARGES AMOUNTING TO RS.10,27,480/- AS PER GR OUND 4(VI). 23. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED GROUNDS NO. 1 AND 3 OF THE ASSESSEES A PPEAL. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 24. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 2 O F THE ASSESSEES APPEAL RELATING TO THE DISALLOWANCE OF RS.37,39,560/- MADE BY THE ASSE SSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40(A)(IA) ON ACCOUNT OF COMMISSION EXPENSES, IT IS OBSERVED THAT PAYMENTS OF COMMISSION AND BROKERAGE EXCEEDING RS.2,500/- WERE MADE BY THE ASSESSEE-COMPANY TO VARIOUS PARTIES TOTALLIN G TO RS.37,39,560/-. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE-COMPANY WAS LIABLE TO DEDUCT TAX AT SOURCE FROM THE SAID I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 15 OF 16 PAYMENTS AS PER SECTION 194H OF THE ACT AND SINCE T HERE WAS FAILURE ON THE PART OF THE ASSESSEE-COMPANY TO DO SO, HE DISALLOWED THE COMMIS SION EXPENSES TO THE TUNE OF RS.37,39,560/- BY INVOKING THE PROVISIONS OF SECTIO N 40(A)(IA). BEFORE THE LD. CIT(APPEALS), IT WAS CONTENDED ON BEHALF OF THE ASS ESSEE-COMPANY THAT THE AMOUNT IN QUESTION TOWARDS COMMISSION AND BROKERAGE WAS SUBST ANTIALLY PAID DURING THE YEAR UNDER CONSIDERATION ITSELF. THE LD. CIT(APPEALS) AC CORDINGLY DIRECTED THE ASSESSING OFFICER TO VERIFY THIS CLAIM OF THE ASSESSEE AND AL LOW THE COMMISSION AND BROKERAGE EXPENSES TO THE EXTENT TO WHICH THEY WERE PAID BEFO RE 31 ST MARCH, 2009. 25. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT T HIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(APPEALS) VIDE HIS IMPUGNED ORDER BY RELYING ON THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERLIN SHIPPING CORPORATION LIMITED, WHICH HAS BEEN SUBSEQUENTLY OVERRULED BY THE HONBLE CALCUTTA HIGH COURT. THE LIMITED CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ON THIS ISSUE BEFORE US IS THAT THE ASSESSEE COULD NOT RAISE ITS ALTERNATIVE CONTENTION ON THIS ISSUE AS THE SAME THEN WAS COVERED BY THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE O F MERLIN SHIPPING CORPORATION LIMITED. HE HAS CONTENDED THAT AN OPPORTUNITY MAY, THEREFORE, BE GIVEN TO THE ASSESSEE TO RAISE ITS ALTERNATIVE CONTENTION BY SENDING THE MATTER BACK TO THE ASSESSING OFFICER. WE FIND MERIT IN THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE AND SINCE THE LD. D.R. HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, W E SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATT ER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER GIVING THE ASSES SEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. GROUND NO. 2 OF THE ASSESSEES APPE AL IS THUS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 26. AS REGARDS THE ISSUE RAISED IN GROUND NO. 4 OF THE ASSESSEES APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SAM E HAS NOT BEEN DECIDED BY THE LD. CIT(APPEALS) VIDE HIS IMPUGNED ORDER INSPITE OF FAC T THAT SPECIFIC SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE-COMPANY BEFORE HIM IN SUP PORT OF ITS CASE ON THIS ISSUE. HE HAS CONTENDED THAT THIS ISSUE MAY ALSO BE SENT BACK TO THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER GIVING THE ASSESSEE AN OPPORTUNIT Y OF BEING HEARD. SINCE THE LD. D.R. HAS NOT RAISED ANY OBJECTION IN THIS REGARD, WE RES TORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTE R GIVING THE ASSESSEE AN OPPORTUNITY I.T.A. NOS. 230 & 340/KOL/2013 ASSESSMENT YEAR: 2009-2010 PAGE 16 OF 16 OF BEING HEARD. GROUND NO. 4 OF THE ASSESSEES APPE AL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 27. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED, WHILE THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF MARCH, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEM BER KOLKATA, THE 21 ST DAY OF MARCH, 2018 COPIES TO : (1) M/S. LMJ INTERNATIONAL LIMITED, 15B, HEMANTA BASU SARANI, 5 TH FLOOR KOLKATA-700 001 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX(APPEALS)-VIII, KOLK ATA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.