PARLE AGRO PVT. LTD., MUMBAI V. A.C.I.T. CENT.CIR.25, MUMBAI

ITA 2444/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8267 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBEY
• Assessee Lawyers: FIROZE ANDHYARUJINA
• Keywords: Capital asset; Depreciation; Business expenditure; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 2444/MUM/2012 ASSESSMENT YEAR: 2008-09 M/S. PARLE AGRO PVT. LTD. WESTERN EXPRESS HIGHWAY, CHALKALA, ANDHERI, (EAST) MUMBAI 400 099 PAN:AAACP 8416 G VS. ACIT CENT. CIR. 25 MUMBAI (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI FIROZE ANDHYARUJINA REVENUE BY : SHRI SACHCHIDANAND DUBEY DATE OF HEARING : 18.11.2014 DATE OF ORDER : 12 . 12 .2014 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST ORDER DATED 19.01.2012, PASSED BY THE LD.CIT(A) -39 , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3), FOR THE A. Y. 2008-09, MAINLY ON THE FOLLOWING GROUNDS OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT T HE REUSABLE ART WORK EXPENSES AS CAPITAL EXPENSES. THE LD. CIT(A) H AD GIVEN THE DIRECTION TOT AO FOR CAPITALIZING ART WORK EXPENSES WHICH IS INCURRED ON ART WORK WHICH IS REUSABLE FOR THE MORE THAN ONE YEAR. THE LD. CIT(A) IGNORE THE LAW LAID DOWN BY JU RISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GEOFFERY MANNERS & CO. LTD. (BOM) 180 TAXMAN 87. ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN DISALLOWING FORE IGN TRAVEL EXPENDITURE OF RS.7,10,160/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN DISALLOWING MARK ET RESEARCH EXPENSES OF RS.19,50,234/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN DISALLOWING PROD UCT DEVELOPMENT EXPENSES OF RS.13,58,256/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DISALLOWING THE CLAIM FOR DEDUCTION MADE UNDER SECT ION 80IB BY GIVING REASON THE CLAIM IS ACADEMIC IN NATURE. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FRUIT JUICE BASED DRINK, NON ALCOH OLIC BEVERAGE BASE, PACKAGED DRINKING WATER, PET PREFORMS ETC, MANUFACT URING OF CONFECTIONERY, SNACK PRODUCTS AND TRADING IN CHEMIC ALS. 3. IN GROUND NO. 1 THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.34,22,131/- ON ACCOUNT OF ART WORK EXPENSES. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.34,22,131/- ON ART WORK CHARGES, U/S 37. IN RESPONSE TO THE SHO W CAUSE NOTICE AS TO WHY SIMILAR DISALLOWANCE SHOULD NOT BE MADE AS MADE IN THE EARLIER YEARS LIKE A.Y. 1999-2000, THE ASSESSEE SUBMITTED T HAT THE LIFE OF THE ART WORK IS LESS THAN SIX MONTHS AND IT IS MOSTLY FOR D ESIGNING, CONCEPTUALIZING THE IDEA FOR ADVERTISEMENT MATERIAL LIKE BANNERS, POSTERS, LABELS, HOARDINGS ETC. AND IT CANNOT BE CO NSIDERED AS EXPENDITURE GIVING ANY ENDURING BENEFIT TO THE ASSE SSEE IN THE CAPITAL ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 3 FIELD. HOWEVER, ASSESSING OFFICER HELD THAT THE ASS ESSEE WAS INCUMING SIMILAR EXPENSES AS WELL AS IN THE EARLIER YEARS, A CCORDINGLY HE DISALLOWED THE SAID EXPENSES AS CAPITAL EXPENDITURE . HOWEVER HE ALLOWED THE DEPRECIATION @ 25%. 4. BEFORE THE LD.CIT(A), THE ASSESSEE REITERATED TH E SAME EXPLANATION AND SUBMITTED THAT, THESE ART WORK ARE MAINLY FOR ADVERTISEMENT PURPOSE WHICH HAVE A VERY LESS LIFE. IT IS BASICALLY, FOR DESIGNING AND CONCEPTUALIZING THE IDEA WHICH IS USE D FOR PUTTING UP THE ADVERTISEMENT FOR THE PRODUCTS. THE ADVERTISEMENT M ATERIAL KEEPS ON CHANGING AND FOR THAT NEW ATTRACTIVE DESIGNS IS REQ UIRED TO BE DEVELOPED BY THE DESIGNERS TIME AND AGAIN. THESE ART WORK ARE DESIGNED ON THE THEME BASED ON DIWALI SEASON, SPORTS EVENTS, FESTIV ALS OR ANY OTHER EVENTS, WHICH CANNOT BE REUSED IN FUTURE. IT DOES N OT RESULT INTO ACQUISITION OF ANY CAPITAL ASSET. IT WAS FURTHER SU BMITTED THAT, THIS ISSUE IS SQUARELY COVERED BY THE ORDER OF THE LD.CIT(A) F OR THE A.YS. 2005-06 & 2006-07. THE LD.CIT(A) AFTER CONSIDERING THE ENTI RE FACTS AND THE DETAILS OF ART WORK EXPENSES WHICH HAVE BEEN REPROD UCED FROM PAGES 9 TO 11 OF THE APPELLATE ORDER, HELD THAT SOME OF THE ART WORK PREPARED IN ELECTRONIC FORM CAN BE REUSED, HOWEVER, IT IS ALSO POSSIBLE THAT CERTAIN ART WORK CAN BE USED FOR MANY YEARS. THUS HE AGREED THAT SOME OF THEM CANNOT BE REUSED AND THEREFORE, HE DIRECTED THE AO TO EXAMINE EACH ART WORK AND DECIDE, WHETHER THE ART IS REUSABLE FOR MO RE THAN A YEAR OR NOT. 5. BEFORE US LEARNED SENIOR COUNSEL, SHRI FIROZE AN DHYARUJINA SUBMITTED THAT THESE ART WORK ARE BASICALLY PREPARE D OR CONCEPTUALIZED FOR ADVERTISEMENT FOR A PARTICULAR PRODUCT FOR A PA RTICULAR PERIOD. THESE ADVERTISEMENT MATERIALS KEEPS ON CHANGING WITH THE NEED OF THE TIME ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 4 AND ARE BASED ON FESTIVALS SEASONS AND IMPORTANT EV ENTS HAPPENING IN THE COUNTRY. EVEN FROM THE DETAILS AS NOTED BY THE LD.CIT(A), IT CAN BE SEEN THAT THESE ARE MOSTLY FOR ADVERTISEMENT FOR TH E PRODUCTS FOR A PARTICULAR EVENT OR FESTIVE SEASON OR ANY ANNOUNCEM ENT OF SCHEME, WHICH IS TO BE ADVERTISED. HE FURTHER SUBMITTED THA T IN A.Y. 1998-99, THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE AS SESSEE, VIDE ORDER DATED 23.01.2013 PASSED IN ITA NO. 8637/MUM/2010. 6. ON THE OTHER HAND LD. DR STRONGLY RELIED UPON TH E ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT ORDERS. THE PAYMENT OF ART WORK REPRESENTS AMOUNT P AID FOR DESIGNING AND CONCEPTUALIZING THE ADVERTISEMENT IDEA ON PAPER OR ELECTRONIC MEDIA. THESE IDEAS ARE REFLECTED IN THE ADVERTISEME NT MATERIAL LIKE BANNERS, POSTERS, LABELS, HOARDINGS ETC. THESE ADVE RTISEMENT MATERIALS ARE BASICALLY USED FOR THE FMCG PRODUCTS WHICH ARE MANUFACTURED AND SOLD BY THE ASSESSEE. FROM THE LIST OF THE ART WORK EXPENSES AS INCORPORATED BY THE LD.CIT(A), IT IS SEEN THAT IT IS FOR VARIOUS OCCASIONS LIKE WOMENS DAY, WORLD CUP AND OTHER FESTIVALS AND IMPORTANT EVENTS. THE IDEAS OF ART WORK KEEPS ON CHANGING LOOKING TO THE MARKET TREND AND TO PUSH THE SALES ON CERTAIN EVENTS. THESE ART WORK ARE MAINLY FOR THE ADVERTISEMENT AND ARE FOR SHORT DURATION, WHICH COULD BE LESS THAN A YEAR. EVEN IF IN SOME CASES, THESE IDEAS ARE USED F OR SLIGHTLY MORE THAN A YEAR, THEN ALSO IT CANNOT BE HELD THAT SOME ENDUR ING BENEFIT HAS ACCRUED TO THE ASSESSEE ON CAPITAL FIELD. IT IS ALS O NOTED THAT IN THE EARLIER YEAR, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THAT SUCH AN EXPENSE IS TO BE ALLOWED AS REVENUE EX PENDITURE. THE ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 5 RELEVANT OBSERVATION AND FINDING OF THE TRIBUNAL IN A.Y. 1998-99 IS AS UNDER:- DURING THE PROCEEDINGS BEFORE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND M ENTIONED THAT THE ART WORKS DOES NOT HAVE ENDURING BENEFIT A S THE LIFE OF THE SAID ART WORK IS LESSER THAN SIX MONTHS AND HE BREAK-UP OF ART WORK AND OTHER EXPENSES. THE ERR (A) SEGREGATED THE SAID ART WORK FOR SPECIAL OCCASIONS WITH RE-USABLE VALUE AND , USABLE ONLY FOR A SHORT PERIOD. ON THIS BASIS, THE CIT(A) HELD CERTAIN ART WORKS ARE MADE FOR SPECIAL OCCASIONS WHICH CAN BE USED ON LY ONCE OR FOR A VERY SHORT PERIOD WORKED OUT TO RS. 4,58,425/ - AND REST OF THE AMOUNT IE (RS. 6,11,234- RS.4,58,425) RS.1,52,8 09/- IS CONFIRMED AND GRANTED DEPRECIATION ON THE CONFIRMED PORTION OF THE ADDITION BEFORE US, LD COUNSEL READ OUT THE RELEVANT FACTS A ND THE SUBMISSIONS OF THE ASSESSEE AND THE REASONING GIVEN BY THE AO FOR MAKING ADDITION AND FINALLY THE LOGIC BASING ON WHICH CIT (A) GRANTED SUBSTANTIAL RELIEF AND CONFIRMING THE AMOUN T OF RS.1,52,809/-, WHICH IS THE SUBJECT MATTER OF LITIG ATION NOW. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE CRITERIA ADOPTED BY THE' CIT (A) IE 'CERTAIN ART WORKS FOR SPECIAL OCCA SIONS WHICH CAN BE USED ONLY ONCE OR FOR A SHORT PERIOD' IS COMPLET ELY ARTIFICIAL IN NATURE. CIT (A) IGNORED THE FACT THAT THE MAXIMUM L IFE OF AN ART WORK MADE ON A CARD PAPER IS SIX MONTHS WHICH IS NO T DISPUTED BY THE REVENUE. IN SUCH CASE, THE LONGEST LIFE OF A N ART WORK IS LESS THAN 6 WEEKS. IN SUCH CASE, NO ART WORK CAN BE CONSIDERED CAPITAL IN NATURE. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF TH E AO AND THE CIT (A). WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDER OF THE REVENUE AUTHORITIES AND THE PAPERS FILED BEFORE US. IT IS AN ADMITTED FACT THAT SIMILAR CLAIM OF THE ASSESSEE WA S ALLOWED IN THE PAST BY THE REVENUE WITHOUT MAKING ADDITIONS. I T IS ONLY IN THIS YEAR, BASING' OF AN ARTIFICIAL CRITERIA, THIS EXPENDITURE WAS CONSIDERED AS CAPITAL IN NATURE. THE CRITERIA ADOPT ED BY THE ERR (A), IN OUR OPINION, IS NOT PROPER ARID ANY ART WOR K WHICH HAS A LIFE OF SIX MONTHS OR LESS,' BY NO REASONING, CAN B E CONSIDERED AS CAPITAL EXPENDITURE. CONSIDERING THE 'AVERAGE LIFE SPAN OF SUCH ART' WORK, WHICH IS ONLY LESS THAN SIX MONTHS, IT CANNOT BE INFERRED THAT ANY CAPITAL APPARATUS HAS COME INTO EXISTENCE WHICH CAN BE ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 6 THE SOURCE OF INCOME GENERATION FOR THE ASSESSEE. I T IS NOT JUSTIFIABLE THAT THE 'ART WORKS' FALL IN THE CAPITA L FIELD. ACCORDINGLY, WE DIRECT FOR DELETING THE ADDITION OF RS.1,52,809/ - AND ALLOW THE GROUND RAISED BY THE ASSESSEE. THUS FOLLOWING THE EARLIER YEARS, PRECEDENCE AND ON THE FACTS OF THE ASSESSEES CASE, WE HOLD THAT THE EXPENSES CLAIM UN DER THE HEAD ART WORK IS TO BE ALLOWED AS BUSINESS EXPENDITURE. ACCO RDINGLY GROUND NO. 1 RAISED BY THE ASSESSEE IS ALLOWED. 8. IN GROUND NO. 2 ASSESSEE HAS CHALLENGED THE DIS ALLOWANCES ON ACCOUNT OF FOREIGN TRAVEL EXPENSES OF RS.7,10,160/- . THE ASSESSEE HAD DEBITED FOREIGN TRAVEL EXPENDITURE OF RS.9,39,258/- . BEFORE THE AO, THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE FILED THE DETAILS OF FOREIGN TRAVEL EXPENDITURE AND ALSO THE PURPOSE FOR WHICH S UCH FOREIGN TRAVEL WERE UNDER TAKEN BY THE DIRECTORS. THE ASSESSING OF FICER HELD THAT ASSESSEE HAS ONLY PROVIDED SKETCHY DETAILS THAT THE BUSINESS OF THE ASSESSEE HAS BENEFITED BECAUSE OF THE FOREIGN TRAVE LS. IN ABSENCE OF ANY PROPER FACTS, HE HELD THAT SAID EXPENDITURE CANNOT BE ALLOWED. ACCORDINGLY HE DISALLOWED THE ENTIRE FOREIGN TRAVEL EXPENDITURE. 9. BEFORE THE LD.CIT(A) IT WAS SUBMITTED BY THE ASS ESSEE THAT, ALL THE RELEVANT DETAILS OF FOREIGN TRAVELLING AND ALSO THE REASONS FOR SUCH FOREIGN TRAVEL WAS DULY FILED AND EXPLAINED BEFORE THE AO. THE ASSESSEE HAD ALSO SUBMITTED COPY OF LETTERS AND COMMUNICATIO NS RELATING TO FOREIGN TRAVEL BY THE DIRECTORS AND OTHER RELATED D OCUMENTS. IT WAS FURTHER SUBMITTED THAT SIMILAR ADDITION MADE WAS DE LETED IN A.Y. 2007- 08. THE DETAILS OF SUCH FOREIGN TRAVEL HAS BEEN INC ORPORATED BY THE LD.CIT(A) AT PAGES 13 AND 14 OF THE APPELLATE ORDER IN RESPECT TO THE FIVE TRAVELS UNDERTAKEN BY THE DIRECTORS. OUT OF TH E SAID FIVE TRAVELS, THE LD.CIT(A) HAS DELETED EXPENSES IN RESPECT OF 3 TRAV ELS WHICH WERE LESS ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 7 THAN ONE LAKH AND WITH REGARD TO THE FOLLOWING TWO TRAVELS HE HAS CONFIRMED. MS. SCHAUNA CHAUHAN TOUR WAS UNDERTAKEN TO HAVE MEETING WITH TETRA PAK AT GERMANY AND TO SEE ANY PROSPECTIVE BUSINESS OPPORTUNITY FOR MAKING EXPORT OF PRODUCTS. RS.1,59,717 MR. PRAKASH J. CHAUHAN TOUR WAS UNDERTAKEN TO ATTEND TETRA PAK OFFICE AT SWITZERLAND AND UK AND TO SEE ANY PROSPECTIVE BUSINESS OPPORTUNITY FOR MAKING EXPORT OF PRODUCTS. RS.5,50,443 THE WRITTEN SUBMISSION OF THE ASSESSEE IN RESPECT O F AFORESAID TWO FOREIGN TRAVELS BEFORE THE LD. CIT(A) AS UNDER:- TOUR OF SCHAUNA CHAUHAN TO DUSSELDORT (GERMANY) : - THE TOUR WAS UNDERTAKEN TO VISIT TETRA PACK OFFICE AT GERMANY. MS. SCHAUNA CHAUHAN BEING DIRECTOR VISITED TO TETRA PAK OFFICE TO UNDERSTAND THE NATURE OF DEMAND FOR THEIR PRODUC TS SO THAT THE APPELLANT COMPANY CAN GET IDEA OF GERMANY MARKET CO NDITIONS. THE PURPOSE OF VISIT WAS TO FIND OUT WHETHER THE AP PELLANT COMPANY CAN GET ANY OPPORTUNITY OF DOING BUSINESS I N GERMANY. TOUR OF MR. PRAKASH CHAUHAN TO SWITZARLAND AND UK. :- THE TOUR WAS UNDERTAKEN TO VISIT TETRA PACK OFFICE AT SWITZERLAND AND UK .MR. PRAKASH CHAUHAN BEING CHAIRMAN - DIRECT OR VISITED TO TETRA PACK OFFICE TO UNDERSTAND THE NEW INVENTIO N IN MACHINERY SO THAT THE APPELLANT CAN GET IDEA OF LAT EST MACHINERY THAT CAN BE USED FOR PRODUCTION OF FROOTI WHICH CAN BE MARE COST EFFECTIVE. BEING TECHNICAL PERSON HIS OBJECT WAS TO UNDERSTAND WORKING OF MACHINERY AND EFFECTIVENESS OF THE SAME IN INDIAN MARKET CONATIONS. HE ALSO STUDIED THE NATURE OF PRODUCTS/BUSINESS CARRIED ON TETRA PACK IN UK. SO T HAT THE APPELLANT COMPANY CAN IMPROVE ON HIS PRODUCTS TO EN ABLE THEM TO SALE THE PRODUCTS IN UK. THE PURPOSE OF VISIT WA S TO FIND OUT WHETHER THE APPELLANT COMPANY CAN GET ANY OPPORTUNI TY OF DOING BUSINESS IN GERMANY AND UK. ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 8 WE LIKE TO SUBMIT THAT WE ARE USING PACKING MATERIA L AND MACHINERY OF TETRA PAK FOR PACKING OUR PRODUCTS. TH E TETRA PAK IS THE ONLY REPUTED COMPANY IN THE WORLD KNOWN FOR THE IR PACKING MATERIAL. THE APPELLANT COMPANY USE THEIR MACHINERY AND PACKING MATERIAL FOR ITS PRODUCTS LIKE FROOTI, APPY, LMN, S AINT JUICE ETC. THE VISITS DIRECTORS MENTIONED ABOVE WAS IN CONNECT ION WITH UNDERSTANDING PACKING OF DIFFERENT PRODUCTS IN THAT COUNTRIES AND GET IDEA OF ITS SO THAT THE SAME CAN BE IMPLEMENTED IN INDIA. IN INDIA WE ARE PURCHASING THE PACKING MATERIAL FROM T ETRA PAK THE SAMPLE BILLS WERE ENCLOSED ON PAGE 19-24 THE DIRECT OR HAVE VISITED TO THE ABOVE COUNTRIES WERE THE APPELLANT C OMPANY WAS EXPORTING ITS PRODUCTS TO SINGAPORE AND UK. BEFORE A. Y. 08-09 AND ALSO EXPORTED IN THE A, Y, 08-09. AS REGARDS GE RMANY AND SWITZERLAND THE APPELLANT STARTED ITS EXPORT IN THE FINANCIAL YEAR 2010-11 & 2011-12 . WE ARE ENCLOSING SAMPLE COPIES OF EXPORT INVOICES AND COPY OF SALES REGISTER FOR A. Y. 08-09 SHOWING EXPORT SALES ON PAGE 15-18. IN VIEW OF THE ABOVE FACTS THE FOREIGN TRAVEL EXPEN DITURE OF DIRECTORS WERE INCURRED FOR BUSINESS PURPOSE AS 'TH E ABOVE EXPLANATION PROVE THAT THERE WAS COMMERCIAL EXPEDIE NCY FOR INCURRING SUCH EXPENDITURE. HOWEVER, LD.CIT(A) HAS DISALLOWED THIS EXPENDITURE ON THE GROUND THAT ASSESSEE COULD NOT GIVE PROPER EXPLANATION WITH CON CRETE EVIDENCE. 10. BEFORE US, LEARNED SENIOR COUNSEL SUBMITTED THA T THE BUSINESS PURPOSE OF THE TRAVEL HAS BEEN DULY EXPLAINED AND ALSO THE EFFECT OF THESE FOREIGN TRAVEL IN THE SUBSEQUENT EXPORT MADE BY THE ASSESSEE. MOREOVER UP TILL 2006-07 FOREIGN TRAVEL HAS BEEN AL LOWED BY THE AO AND IN THE A.Y. 2007-08, THE LD.CIT(A) HAS DELETED SUCH ADDITION AND THE REVENUE HAS NOT PREFERRED ANY APPEAL ON THIS ISSUE. THUS NO DISALLOWANCE IS CALLED FOR. 11. ON THE OTHER HAND LD. DR STRONGLY RELIED UPON T HE ORDER OF THE AO AS WELL AS THE LD.CIT(A). ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 9 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ALS O ON THE PERUSAL OF THE RELEVANT SUBMISSIONS AND FINDING OF THE AO AS W ELL AS LD.CIT(A), WE FIND THAT OUT OF THE FIVE FOREIGN TRAVELS, THE LD.C IT(A) HAS DELETED THE DISALLOWANCE WHICH WERE ON ACCOUNT OF BUSINESS CONF ERENCE HELD IN SINGAPORE AND TRADE FAIR IN CHINA. HOWEVER, WITH RE GARD TO THE TOUR UNDER TAKEN FOR MEETING WITH TETRA PACK CO. AT GERM ANY AND SWITZERLAND FOR PROSPECTIVE BUSINESS OPPORTUNITY HA S BEEN CONFIRMED. THE ASSESSEES EXPLANATION HAD BEEN THAT COMPANY WA NTED TO UNDERSTAND THE NATURE AND DEMAND OF THE PRODUCTS AN D TO GET THE IDEA OF MARKET CONDITIONS IN THOSE COUNTRY TO PUSH FOR T HE EXPORTS AND THE SALES IN THESE COUNTRIES. THE TETRA PACK IS ONE OF THE MOST REPUTED COMPANY FOR THE PACKING MATERIAL WHICH IS BEING USE D BY THE ASSESSEE FOR ITS PRODUCTS LIKE FROOTI, APPY AND OTHER KIND O F JUICES. THE ASSESSEE HAS ALSO STATED THAT IN THE SUBSEQUENT YEARS, THE A SSESSEES EXPORT HAVE INCREASED. ALL THESE EXPLANATION ALONG WITH THE DET AILS OF FOREIGN TRAVEL CANNOT BE DOUBTED, FIRSTLY, AS NOTED IN THE FOLLOWING PARAGRAPH THE ASSESSEE HAS ADDUCED SUFFICIENT MATERIAL TO SHOW TH AT THE FOREIGN TRAVEL UNDER TAKEN BY THE AFORESAID DIRECTORS WERE WHOLLY FOR THE BUSINESS PURPOSE; AND SECONDLY, THE EVIDENCES REGARDING ACTUAL TRAVEL HAS NOT BEEN DOUBTED. THE BUSINESS AND COMMERCIAL EXPEDIENC Y HAS TO BE SEEN FROM THE BUSINESSMAN POINT OF VIEW AND IF PROPER EX PLANATION WITH THE SUPPORTING EVIDENCE HAS BEEN GIVEN, THEN DISALLOWAN CE CANNOT BE MADE ON SOME FLIMSY GROUND. THE ENTIRE EXPLANATION AND E VIDENCES HAVE BEEN NEGATED BY THE LD.CIT(A) ON THE GROUND THAT NO CONC RETE EVIDENCE HAS BEEN GIVEN. HOWEVER, WHAT EVIDENCES ARE LACKING HAV E NOT BEEN SPECIFIED. IT APPEARS THAT LD.CIT(A) HAS CONFIRMED THE EXPENSES MAINLY ON THE GROUND THAT TRAVEL EXPENSES WAS MORE THAN ON E LAKH. WHATEVER ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 10 EXPENDITURE WAS LESS THAN ONE LAKH HAS BEEN DELETED BY HIM HOLDING IT TO BE SO FOR BUSINESS PURPOSE AND OTHER FOR NON-BUS INESS PURPOSE, WITHOUT POINTING ANY PERSONAL USES. THUS WE DO NOT FIND ANY REASON TO AFFIRM SUCH A FINDING IN THE CONCLUSION OF THE LD.C IT(A) BASED ON SUCH A DICHOTOMY. ACCORDINGLY DISALLOWANCES MADE ON ACCOUN T OF FOREIGN TRAVEL EXPENSES FOR SUMS AGGREGATING RS.7,10,160/- IS DELE TED. 13. IN GROUND NO. 3 ASSESSEE HAS CHALLENGED THE DIS ALLOWANCE ON ACCOUNT OF MARKET RESEARCH EXPENSES OF RS.19,50,234 /-. THE ASSESSING OFFICER DISALLOWED THE SAID EXPENDITURE ON THE GROU ND THAT ASSESSEE COULD NOT BE EXPLAINED THE NATURE OF EXPENDITURE AN D THEREFORE, HE TREATED IT AS CAPITAL EXPENDITURE. 14. BEFORE THE LD.CIT(A), THE ASSESSEE MADE VERY DE TAILED SUBMISSIONS WITH REGARD TO THE NATURE OF THESE EXPE NDITURE AND WHY MARKET RESEARCH IS CARRIED OUT FOR DECIDING THE MAR KET STRATEGY FOR PROMOTING ITS GOODS, WHICH ARE FMCG PRODUCTS. THE A SSESSEES SUBMISSIONS HAVE BEEN INCORPORATED FROM PAGES 17 TO 19 OF THE APPELLATE ORDER. HOWEVER, LD.CIT(A), CONFIRM THE SA ID ADDITION WITHOUT ASSIGNING ANY PROPER REASON EXCEPT FOR STATING THAT ASSESSEE COULD NOT PRODUCE ANY COPY OF THE REPORT SUBMITTED BY THE MAR KET RESEARCH AGENCIES. 15. BEFORE US, LEARNED SENIOR COUNSEL SUBMITTED THA T, SIMILAR ISSUE WAS INVOLVED IN A.Y. 2007-08 ALSO, WHEREIN THIS ISSUE H AS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. HE SUBMITTED THAT THE MARKE T RESEARCH IS CARRIED TO STUDY THE MARKET OF ITS PRODUCT AND ABOUT THE MA RKET TRENDS AND CONSUMER PREFERENCES SO AS TO DECIDE THE FUTURE STR ATEGY WHILE DEALING WITH THE COMPETITORS IN THE SAME NATURE OF PRODUCTS AND TO PUSH THE SALES. THESE EXPENDITURES INCLUDE COLLECTION OF DAT A REQUIRED FROM THE ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 11 MARKET AND OTHER INCIDENTAL EXPENSES INCURRED FOR T HE MARKET STUDY. THESE MARKET RESEARCH ARE CARRIED OUT ONLY TO STREN GTHEN THE EXISTING BRANDS AND EXPANSION OF EXISTING BUSINESS ACTIVITIE S. THE EXPENDITURE AS SUCH HAS NOT BEEN DOUBTED, EXCEPT THAT IT HAS BEEN TREATED AS CAPITAL EXPENDITURE. 16. ON THE OTHER HAND LD. DR STRONGLY RELIED UPON T HE ORDER OF THE LD.CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS, AND THE PE RUSED THE RELEVANT FINDING OF THE AO AS WELL AS LD.CIT(A). THE ASSESSE E IS DEALING WITH THE FMCG PRODUCTS WHICH HAS A VOLATILE MARKET AS THERE IS LOT OF COMPETITION AMONG MANY SMALL AND BIG PLAYERS. TO PUSH THE SALES , LOT OF INPUTS REGARDING THE MARKET TRENDS, TASTES OF THE PEOPLE A ND THE PREFERENCES ARE REQUIRED. IT IS FOR THIS PURPOSE, MARKET RESEAR CH IS CARRIED OUT FROM TIME TO TIME AND SUCH AN EXPENDITURE IS INEVITABLE IN THIS KIND OF INDUSTRY. BEFORE THE LD.CIT(A), THE ASSESSEE HAS GI VEN VARIOUS INSTANCES ABOUT THE VARIOUS PRODUCTS FOR WHICH THERE IS CONST ANT ENDEAVOUR AND REQUIREMENT FOR CARRYING OUT FOR MARKET RESEARCH TO SURVIVE IN THE MARKET AND TO PROMOTE SALE OF ITS VARIOUS PRODUCTS. THE GENUINENESS OF THE EXPENDITURE HAS NOT BEEN DOUBTED EXCEPT FOR HOL DING IT AS A CAPITAL EXPENDITURE. IN OUR OPINION SUCH AN EXPENDITURE WHI CH ARE REGULARLY TO BE UNDER TAKEN FOR SUSTAINING THE MARKET AND TO PUS H THE SALES ARE NOT IN CAPITAL FIELD BUT ARE ESSENTIAL AND ARE INCURRED IN THE ORDINARY COURSE OF BUSINESS FOR PROMOTING THE EXISTING BRANDS. WE A LSO FIND THAT IN IMMEDIATELY PRECEDING ASSESSMENT YEAR, THAT IS, IN 2007-08, WHILE DECIDING THE REVENUES APPEAL IN ITA NO. 3614/MUM/2 011, THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY CONSISTENT WITH THE SAME PRECEDENCE ON SIMILAR FACTS WHICH ARE PERMEATI NG THROUGH IN THIS ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 12 YEAR ALSO, WE ALLOW THE SAID EXPENSES. ACCORDINGLY GROUND NO. 3 IS TREATED AS ALLOWED. 18. IN GROUND NO. 4 THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF PRODUCT DEVELOPMENT EXPENSES OF RS.13,58,256/- WH ICH INCLUDES DESIGN CHARGES. THE PRODUCT DEVELOPMENT EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE TO STUDY THE COMBINATION OF INGREDIENTS OF DIFFERENT PRODUCTS AND TO STUDY THE POSSIBLE NEW IDEA OF THE PRODUCT. THESE EXPENDITURES HAVE BEEN INCURRED FOR THE PURCHASE OF VARIOUS INGR EDIENTS OF THE PRODUCTS LIKE PULP JUICE, CONCENTRATE AND OTHER PRO DUCTS FOR IN HOUSE TESTING AND R&D. THE EXPENSES ALSO INCLUDE COLD ST ORAGE CHARGES TO PRESERVE THE PULP AND THE CONCENTRATE. THE ASSESSIN G OFFICER WITHOUT ASSIGNING ANY PROPER REASON, HELD IT TO BE CAPITAL EXPENDITURE. 19. BEFORE THE LD.CIT(A), THE ASSESSEE HAS FILED E XHAUSTIVE EXPLANATION WHICH HAS BEEN INCORPORATED FROM PAGES 20 TO 25 OF THE APPELLATE ORDER. THE LD.CIT(A) AFTER GOING THROUGH THE DETAILS OF THE PRODUCT DEVELOPMENT EXPENSES, HELD THAT OUT OF DISA LLOWANCES OF RS.21,20,897/- AS MADE BY THE AO, SUM OF RS.13,58,2 56/- HAS BEEN DEBITED BY THE ASSESSEE AS EXPENDITURE ON 31.03.200 8. MOREOVER THERE IS INCREASE IN THE EXPENSES UNDER THIS HEAD FROM TH E LAST YEAR. THUS, SAID AMOUNT DEBITED ON THE LAST DAY, REFLECTS ABNOR MALITY OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDINGLY HE HELD THAT 75% OF RS.13,58,256/- SHOULD BE DISALLOWED. 20. BEFORE US, THE LEARNED SENIOR COUNSEL SUBMITTED THAT THE EXPENDITURES WERE INCURRED DURING THE YEAR ONLY. FO R EXAMPLE, ASSESSEE HAS GIVEN ADVANCES OF THE PRODUCTS TO ITS MANUFACTU RING UNIT/FACTORY FOR TESTING PURPOSE AND R&D AND THE SAID ADVANCES AFTER CONSUMPTION HAS BEEN DEBITED ON THE LAST DATE. THE LIST OF ENTIRE E XPENSES WERE GIVEN ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 13 BEFORE THE AO AND ALSO BEFORE THE LD.CIT(A). FURTHE R THE LD.CIT(A) HAS ALSO DISALLOWED EXPENSES WHERE THE ASSESSEE HAS CAR RIED OUT EXPENSES ON DESIGN CHARGES ON VARIOUS PRODUCTS AS CAPITAL EXPENDITURE. SUCH EXPENSES INCURRED FOR DESIGN CHARGES HAS BEEN HELD TO BE ALLOWABLE AS BUSINESS EXPENDITURE BY THE TRIBUNAL IN A.Y. 2007-2 008. THUS NO DISALLOWANCE IS CALLED FOR. 21. LD. DR STRONGLY RELIED UPON THE ORDER OF THE LD .CIT(A) AND ALSO POINTED OUT THE RELEVANT REASON GIVEN BY THE LD.CIT (A). 22. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT, UNDER THIS HEAD, THE LD.CIT(A) HAS CONFIRMED CERTAIN EXPENSES WHICH WERE ON ACCOUNT OF DESIGN CHARGES OF CERTAIN PACKING MATERIAL OF THE PRODUCTS, ON THE GR OUND THAT THESE EXPENDITURE ARE ENDURING IN NATURE AND OTHERS FOR P RODUCT DEVELOPMENT. SO FAR AS THE EXPENSES INCURRED ON DESIGN CHARGES , THIS ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN A.Y. 20 07-08. THE TRIBUNAL AFTER DISCUSSING THE ENTIRE ISSUE ON ACCOUNT OF DEV ELOPMENT OF NEW PRODUCTS AND ALSO THE DESIGN CHARGES HAS DELETED TH E SAID DISALLOWANCE BY HOLDING IT TO BE REVENUE IN NATURE, AFTER OBSERV ING IT HOLDING IN NATURE. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE R ELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE BEFORE US IS ON ACCOUNT OF E XPENDITURE INCURRED FOR THE DESIGNING CHARGES OF PACKAGED DRIN KING WATER BOTTLE AND CHANGING OF COLOUR OF THE CAP OF THE BEV ERAGES BOTTLES. THE ASSESSEE'S CONTENTION IS THAT THE EXPENDITURE I NCURRED FOR DESIGNING OF PRODUCTS, ETC., IS REQUIRED TO BE MADE VERY FREQUENTLY I.E., IN ONE TO TWO YEARS TO STAY IN THE COMPETITIVE MARKET AND TO KEEP PACE WITH THE MARKET TRENDS. THE ASSESSEE IS INTO MANUFACTURING AND SALE OF FMCG PRODUCTS AND HA S VARIOUS COMPETITORS IN THE MARKET HAVING SIMILAR LINE OF PR ODUCTS. KEEPING ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 14 WITH THE MARKET TRENDS AND PACE OF CONSUMER PREFERE NCES, PROFIT. SUCH AN EXPENDITURE INCURRED FOR DESIGNING THE PROD UCT CANNOT THE CHANGES IN THE DESIGN OF THE PRODUCTS AND ALSO THE QUALITY OF THE PRODUCTS IS AN ESSENTIAL PART OF MARKET STRATEG Y TO AUGMENT SALE AND BE HELD TO BE OF ENDURING BENEFIT. EVEN OT HERWISE ALSO, IF THE ADVANTAGE OF SUCH EXPENDITURE IS MERELY FOR AUG MENTING THE ASSESSEE'S TRADING / BUSINESS OPERATIONS OR TO CARR Y ON THE BUSINESS MORE EFFICIENTLY FOR PROFITABILITY, LEAVIN G THE FIXED CAPITAL UNTOUCHED, HERE IN THIS CASE, THE ASSESSEE HAS CHAN GED THE DESIGN OF THE BOTTLE THE EXPENDITURE WOULD GENERALL Y BE ON THE REVENUE ACCOUNT, EVEN THOUGH THE ADVANTAGE MAY HAVE AN ENDURING BENEFIT FOR A BRIEF PERIOD AND THE COLOUR OF THE CAP AS IS A REGULAR PHENOMENON TO BE CARRIED OUT BETWEEN ONE TO TWO YEARS WHICH CANNOT BE HELD TO BE FOR AN ENDURING BE NEFIT OR MAJOR CHANGE IN THE PROFIT MAKING APPARATUS. SUCH, EXPENDITURES ARE REQUIRED FOR EITHER AUGMENTING THE SALE OR TO S URVIVE IN THE MARKET THE MARKET UNDER STIFF COMPETITION. THEREFOR E, SUCH EXPENDITURE HAS TO BE TREATED AS REVENUE EXPENDITUR E AND, ACCORDINGLY, THE DISALLOWANCE AS CONFIRMED BY THE L EARNED COMMISSIONER (APPEALS) UNDER THE HEAD PRODUCT DEVEL OPMENT EXPENDITURE IS ALLOWED. ACCORDINGLY, GROUND NO.2, I S ALLOWED. IN THIS YEAR ALSO SO FAR AS THE EXPENDITURE INCURRE D ON PRODUCT DEVELOPMENT AND DESIGN CHARGES, WE DELETE THE DISAL LOWANCE AS THESE ARE PURELY REVENUE EXPENDITURE. SO FAR AS THE FINDI NG OF THE LD.CIT(A) THAT CERTAIN EXPENDITURE HAS BEEN CLAIMED ON THE LA ST DATE OF THE ACCOUNTING YEAR, WE FIND THAT LEARNED SENIOR COUNSE L HAS POINTED OUT THAT, THE ASSESSEE WAS ISSUING VARIOUS PRODUCT INGR EDIENTS TO ITS MANUFACTURING UNIT/FACTORY FOR TESTING PURPOSE DUR ING THE YEAR AND SAME HAS BEEN ACCOUNTED FOR AFTER RECEIVING THE DET AILS OF CONSUMPTION. WHATEVER HAS BEEN CONSUMED, IS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND CLAIMED AS EXPENDITURE. CERTAIN ADVANCES OF PRO DUCTS GIVEN IN THE LATER HALF OF THE ACCOUNTING YEAR HAS BEEN DEBITED ON THE LAST DAY. SO FAR AS THE FACTUM OF INCURRING THE EXPENDITURE, THE SAM E HAS NOT BEEN DOUBTED. THE LD.CIT(A) HAS ONLY GONE BY THE PREMISE THAT SUBSTANTIAL ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 15 AMOUNT HAS BEEN DEBITED ON THE LAST DAY, THEREFORE, THESE EXPENSES CAN BE SAID TO BE OVER STATED. ACCORDINGLY, HE DISALLOW ED 75% OF THE EXPENSES WHICH WERE DEBITED ON 31.03.2008, STATING THAT IT DOES NOT RELATE TO THIS YEAR. SUCH A FINDING OF THE LD.CIT(A ) CANNOT BE UPHELD WITHOUT THERE BEING A CONCRETE FINDING THAT THESE E XPENSES PERTAINED TO SUBSEQUENT YEAR OR HAS NOT BEEN INCURRED DURING THE YEAR. THUS WE DO NOT FIND ANY REASON TO CONFIRM SUCH A DISALLOWANCE AS MADE BY THE LD.CIT(A). ACCORDINGLY THE SAME IS DELETED. GROUND NO. 4 IS TREATED AS DISALLOWED. 23. IN GROUND NO. 5 ASSESSEE HAS CHALLENGED THE DIS ALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB. THE LEARNED SENIOR COUNSEL S UBMITTED THAT IN THIS YEAR THE ASSESSEE HAS SHOWN INCOME ON BOOK PROFIT U /S 115JB. THE ASSESSING OFFICER HAS DISALLOWED THE LOSS OF THE EA RLIER YEARS. IN CASE IN THE FINAL OUTCOME OF THE EARLIER YEARS THE ASSESSEE S LOSS IS NOT ACCEPTED, THEN DIRECTION SHOULD BE GIVEN TO ALLOW THE CLAIM O F DEDUCTION U/S 80IB. HE SUBMITTED THAT THIS ISSUE HAD COME UP FOR CONSID ERATION BEFORE THE TRIBUNAL IN A.Y. 2007-08, WHEREIN THE TRIBUNAL HAS DIRECTED THE AO TO LOOK INTO THE MATTER. 24. AFTER CONSIDERING THE SUBMISSION MADE BY THE LE ARNED COUNSEL WE FIND THAT IN A.Y. 2007-08, THE TRIBUNAL HAS DISCUSS ED THIS ISSUE IN THE FOLLOWING MANNER. REGARDING ADDITIONAL GROUND, THE LEARNED SENIOR CO UNSEL SUBMITTED BEFORE US THAT THE RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2007-08, WAS FILED CLAIMING CARRIED FORWARD OF LOOSES, WHICH RESULTED INTO 'NIL' INCOME IN THE RETURN OF INCOME FILED. THEREFORE, THE CLAIM DEDUCTION UNDER SECTION 80IB, WAS NOT SHO WN IN THE COMPUTATION INCOME BEFORE THE ASSESSING OFFICER. DU RING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS BROUGH T TO THE NOTICE OF THE ASSESSING OFFICER THAT THE ASSESSEE I S OTHERWISE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB AND A NOT E WAS PUT IN ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 16 THE COMPUTATION OF INCOME FILED ALONG WITH THE RETU RN OF INCOME, DULY CERTIFIED BY THE CHARTERED ACCOUNTANT. THE ASS ESSING OFFICER WHILE PASSING THE ORDER UNDER SECTION 143(3), HAS A RRIVED AT POSITIVE INCOME, MAINLY DUE TO DISALLOWANCE OF SET- OFF OF CARRIED FORWARD LOSSES, HOWEVER, WHILE COMPUTING THE TAXABL E INCOME, HE IGNORED THE CLAIM OF DEDUCTION UNDER SECTION 80IB. THE REASON BEING THAT, THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2004-05, WHILE PASSING THE ORDER UNDER SECTION 143(3), HAS A LLOCATED THE BUSINESS/DEPRECIATION LOSSES TO THE DEMERGED COMPAN Y. SUCH AN ORDER WAS ALSO CONFIRMED BY THE LEARNED COMMISSION ER (APPEALS) ALSO, HOWEVER, THE TRIBUNAL, IN THAT YEAR HAS ALLO WED THE ASSESSEE'S CLAIM CARRIED FORWARD LOSSES WHICH WAS A PPORTIONED DUE TO DEMERGER. THIS ORDER OF THE TRIBUNAL IS NOW SUBJECT MATTER OF APPEAL BEFORE THE HON'BLE HIGH COURT. THE LEARNE D COUNSEL SUBMITTED THAT IF THE HON'BLE HIGH COURT REVERSES T HE ORDER OF THE TRIBUNAL, THEN, THERE WOULD BE NO CARRIED FORWARD O F LOSSES, HENCE, WILL RESULT INTO POSITIVE INCOME AND THEN DE DUCTION UNDER SECTION 80IB HAS TO BE ALLOWED. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT SUCH A PLEA IS TQ6 PROMPT, HOWEVER, BEING A LE GAL PLEA BASED ON STATUTORY PROVISION, WE DIRECT THE ASSESSING OFF ICER THAT IN CASE, AS A RESULT OF ANY ORDER PASSED BY THE HIGH C OURT, RESULTING INTO SETTING ASIDE OF THE TRIBUNAL ORDER OR DENYING THE CLAIM OF CARRIED FORWARD OF LOSSES, THEN THE ASSESSING OFFIC ER WHILE COMPUTING THE POSITIVE INCOME OF THE ASSESSEE FOR T HIS YEAR, SHALL EXAMINE THE CLAIM OF DEDUCTION UNDER SECTION 80IB. THUS, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AS PER THE OBSERVATIONS MADE A BOVE. ON SAME LINES WE DIRECT THE AO TO EXAMINE THIS ISSU E THAT IF BY THE RESULT OF COMPUTATION OF INCOME OF THE EARLIER YEA RS, WHILE GIVING EFFECT TO THE APPELLATE ORDER, IF POSITIVE INCOME IS ARRIV ED, THEN HE WILL EXAMINE THE CLAIM OF DEDUCTION U/S 80IB. THUS GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 2444/MUM/2012 M/S. PARLE AGRO PVT. LTD. ASSESSMENT YEAR: 2008-09 17 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY DECEMBER, 2014. SD/- SD/- (SANJAY ARORA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.12.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.