Sandvik Asia P. Ltd, Pune V. Jt. CIT, Pune

ITA 2448/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0805 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 11-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SNEHA PAI
• Keywords: Business income; Depreciation; Rule of consistency; Corroborative evidences; Reason to believe; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 43B; 143(3); 80HHC; 80G; 10B; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 2448 /PN/201 2 / ASSESSMENT YEAR : 200 4 - 0 5 SANDVIK ASIA PVT. LTD., MUMBAI PUNE ROAD, DAPODI, PUNE 41 1012 . / APPELLANT PAN: AA CCS6638K VS. THE JT . COMMISSIONER OF INCOME TAX, RANGE 10 , PUNE . / RESPONDENT . / . / ITA NO. 2469 /PN/201 2 / ASSESSMENT YEAR : 200 4 - 0 5 THE JT. COMMISSIONER OF INCOME TAX, RANGE 10, PUNE . / APPELLANT VS. SANDVIK ASIA PVT. LTD., MUMBAI PUNE ROAD, DAPODI, PUNE 411012 . / RESPONDENT PAN: AA CCS6638K ASSESSEE BY : SHRI DHANESH BAFNA AND MS SNEHA PAI DEPARTMENT BY : SHRI RAJESH DAMOR / DATE OF HEARING : 0 7 .0 9 .2015 / DATE OF PRONOUNCEMENT: 04 . 1 2 .2015 2 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. / ORDER PER SUSHMA CHOWLA, JM : THE CROSS - APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE ORDER OF CIT(A) - V , PUNE , DATED 20 .0 9 .201 2 RELATING TO ASSESSMENT YEAR 20 0 4 - 0 5 PASSED AGAINST ORDER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . THE ACT) . 2. THE CROSS - APPEALS FILED BY THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3 . THE ASSESSEE IN ITA NO. 2448 /PN/201 2 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - APPEAL : - GROUND 1 : DISA L LOWANCE OF REIM BUR SE MENT OF EXPENSE S TO A B SAND V IK C O ROMANT ('ABSC') THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE {LD. 'CIT(A) } ERRED IN DISALLOWING REIMBURSEMENT OF EXPENSES TO ABSC AMOUNTING TO INR 2,095,635 ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE. THE - APPELLANT PRAYS THAT THE REIMBURSEMENT OF EXPENSES TO ABSC AMOUNTING TO INR 2,095,635, SHOULD BE ALLOWED WHILE COMPUTING THE TAXABLE INCOME. GROUND 2 : DISALLO WANCE OF PROVISION FOR EXCISE DUTY PERTAINING TO OBSOLETE INVENTORY UNDER SECTION THE LD. CIT(A) ERRED IN DISALLOWING A SUM OF INR 1,006,000 BEING EXCISE DUTY PERTAINING TO OBSOLETE INVENTORY. THE APPELLANT PRAYS THAT THE PROVISION FOR EXCISE DUTY OF INR 1,006,000 ON OBSOLETE STOCK OF GOODS BE ALLOWABLE AS A DEDUCTION WHILE COMPUTING THE TAXABLE INCOME. 3 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. GROUND 3: DISALLOWANCE OF SALES COMMISSION THE LD. CIT(A) HAS ERRED IN DISALLOWING A SUM OF INR 2,762,000 BEING SALES COMMISSION PAID TO SALES AGENTS. THE APPELLANT PRAYS THAT THE SALES COMMISSION OF INR 2,762,000 PAID TO THE SALES AGENTS SHOULD BE ALLOWABLE AS A DEDUCTION WHILE COMPUTING THE TAXABLE INCOME. 4. THE REVENUE IN ITA NO. 2469 /PN/201 2 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THAT SOFTWARE EXPENDITURE OF RS.41,85,871/ - BE TREATED AS REVENUE EXPENDITURE, BY MERELY RELYING ON ASSESSEE'S SUBMISSION AND WITHOUT VERIFYING THE ENDURING N ATURE OF THE SAID SOFTWARE 2A. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.90,91,000/ - TO CLOSING STOCK BEING PROVISION FOR OBSOLETE INVENTORY WHEN THE PROVISION HAS BEEN MADE ON THE BASIS OF INTERNAL GUIDELINES AND NOT AS PER PROVISIONS OF INCOME TAX ACT WHICH PROVIDES FOR VALUATION OF CLOSING STOCK EITHER AT COST OR AT MARKET PRICE, WHICHEVER IS LESS. 2B. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.90,91,000/ - TO CLOSING STOCK BEING PROVISION FOR OBSOLETE INVENTORY BY HOLDING THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS LTD [314 ITR 62] IS APPLICABLE HERE, WHEN THE S AME RELATES TO PROVISION FOR WARRANTY AND HENCE MISPLACED. 3A. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN ALLOWING THE LOSSES SUFFERED BY NEWLY SET UP EOU AGAINST ITS OTHER BUSINESS INCOME. 3B. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 10B FROM THE A.Y. RELEVANT TO P.Y. IN WHICH IT CO MM ENCES ITS BUSINESS AND NOT WHEN THE PLANT AND MACHINERY WERE PU T TO USE FOR THE PURPOSE OF BUSINESS BY WAY OF TRIAL RUN DURING THE LAST QUARTER OF F.Y. 2003 - 04 RELEVANT TO A.Y. 2004 - 05. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS LTD [314 ITR 62] IS APPLICABLE IN THIS CASE WHEN SCIENTIFIC BASIS OF THE PROVISION OF WARRANTY IS NOT CONCLUSIVELY ESTABLISHED. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT( A) WAS JUSTIFIED IN NOT REDUCING 90% OF CREDITORS WRITTEN BACK FROM THE ELIGIBLE PROFIT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC AND WHEN THE SAME ISSUE WAS UPHELD IN THE CASE OF THERMAX LIMITED (A.Y. 2004 - 05) . 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 4 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. 5. THE ISSUE VIDE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF REIMBURSEMENT OF EXPENSES TO M/S. A.B. SANDVIK COROMANT AT RS.20,95,635/ - . 6. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF VARIOUS ITEMS AND HAD DECLARED GROSS TOTAL INCOME OF RS.49.36 CRORES COMPRISING OF BUSINESS INCOME OF RS.48.30 CRORES, INCOME FROM OTHER SOU RCES OF RS.1.06 CRORES. AGAINST THIS, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80HHC OF THE ACT AT RS. 3.18 CRORES , UNDER SECTION 80HHE OF THE ACT AT RS.2,22,022/ - AND UNDER SECTION 80G OF THE ACT AT RS.38,500/ - . THE ENTIRE BALANCE INCOME OF RS.46 .15 CRORES WAS SET OFF AGAINST BROUGHT FORWARD BUSINESS LOSS ES AND BROUGHT FORWARD DEPRECIATION AND FILED RETURN OF INCOME AT RS.NIL. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE CLAIMED TO HAVE MADE PAYMENT OF RS. 20,95,635/ - TO M/S. A.B. SANDVIK COROMANT (BRIEFLY MABSC), SUPPOSEDLY FOR REIMBURSEMENT OF CERTAIN EXPENSES. IN THE COURSE OF ASSESSMENT PROCEEDINGS OF THE SAID CONCERN FOR THE CORRESPONDING YEAR, THE ASSESSING OFFICER HAD EXAMINED THE NATURE OF EXPEN SES AND HAD INFORMED THAT THE NATURE OF PAYMENT MADE BY THE ASSESSEE WAS IN THE NATURE OF ROYALTY, ON WHICH TDS HAD NOT BEEN DEDUCTED. THE ASSESSEE IN VIEW OF THE SAID INFORMATION, WAS ASKED TO FURNISH THE NECESSARY CLARIFICATIONS. THE REPLY OF THE ASSES SEE IS INCORPORATED IN THE ASSESSMENT ORDER , CLAIMING THAT THE AMOUNT WAS REIMBURSEMENT OF EXPENSES ON ACCOUNT OF TRAVEL AND HOTEL COSTS AND WAS ON PROGRAMMES AND SEMINARS. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE ARGUMENTS OF THE ASSESSEE AND MADE ADDITION OF RS. 20,95,635/ - UNDER SECTION 40(A) OF THE ACT. 5 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. 7. BEFORE THE CIT(A), THE PLEA OF THE ASSESSEE WAS THAT IT WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM OF REIMBURSEMENT OF EXPENSES AS THE VOUCHERS WERE LOST DURING THE FLOODS IN PUNE IN JULY, 200 5. THE PAYMENT WAS MADE TO ITS FOREIGN AFFILIATE AND THE CIT(A) OBSERVED THAT THE COPY OF SAME COULD HAVE BEEN PRESERVED BY THE SAID FOREIGN AFFILIATE. HOWEVER, THE ASSESSEE FAILED TO PRODUCE ANY OF THE SAID DOCUMENTS. IN VIEW THEREOF, THE CLAIM OF THE ASSESSEE OF REIMBURSEMENT OF EXPENDITURE REMAINED UNSUBSTANTIATED AND THE ORDER OF ASSESSING OFFICER IN THIS REGARD WAS UPHELD. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE BREAK - UP OF EXPENDITURE. HOWEVER, HE POINTED OUT THAT IT COULD NOT FURNISH THE DETAILS BEFORE THE AUTHORITIES BELOW AS THE SAME HAD BEEN LOST IN FLOODS. EVEN BEFORE US, THE ASSESSEE FAILED TO FURNISH ANY DOCUMENT OR INFORMATION THOUGH BEFORE US, THE ASSESSEE FAILED TO FURNISH ANY DOCUMENT OR INFORMATION THOUGH P RESSED THAT WHETHER THE PAYMENT WAS TO THE FOREIGN AFFILIATE OR IT WAS REIMBURSEMENT WAS A FACTUAL ISSUE. 10. WE FIND NO MERIT IN THE STAND OF THE ASSESSEE IN THIS REGARD IN THE ABSENCE OF BASIC DETAILS TO SUBSTANTIATE ITS CLAIM, THE AMOUNT IN QUESTION IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. UPHOLDING THE ORDER OF CIT(A), WE UPH O LD THE ADDITION OF RS. 20,95,635/ - . THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 11. THE ISSUE IN GROUND OF APPEAL NO.2 IS AGAINST THE DISALLOWANCE OF EX CISE DUTY ON CLOSING STOCK OF OBSOLETE INVENTORY. 12. BRIEFLY, IN THE FACTS OF THE PRESENT ISSUE, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IN THE CLOSING INVENTORY HAD INCLUDED SUM OF RS.10,06,000/ - RELATING 6 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. TO EXCISE DUTY ON THE CLOSING STOCK OF OBSOLETE INVENTORY. THE STOCK OF OBSOLETE INVENTORY WAS NOT REMOVED TILL THE DATE OF FILING OF THE RETURN OF INCOME FOR THE RELEVANT YEAR. THE ASSESSEE WAS THUS, SHOW CAUSED TO CLARIFY AS TO WHY THE SAID AMOUNT SHOU LD NOT BE ADDED AS PER PROVISIONS OF SECTION 145A OF THE ACT. IN RESPONSE, THE ASSESSEE FILED AN EXPLANATION WHICH IS INCORPORATED UNDER PARA 10.2 AT PAGES 19 AND 20 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER WAS OF THE VIEW THAT IN VIEW OF THE PROVI SIONS OF SECTION 145A OF THE ACT, THE COMPONENT OF EXCISE DUTY RELATING TO OBSOLETE INVENTORY WAS REQUIRED TO BE INCLUDED IN THE CLOSING INVENTORY. AGAINST THIS, THE DEDUCTION UNDER SECTION 43B FOR EXCISE DUTY WAS ALLOWABLE, PROVIDED THE SAID OBSOLETE STO CK WAS CLEARED ON PAYMENT OF EXCISE DUTY PRIOR TO THE DATE OF FILING OF THE RETURN OF INCOME. THE ASSESSING OFFICER HOWEVER, NOTED THAT TILL THE DATE OF FILING THE RETURN OF INCOME FOR THE RELEVANT YEAR, NO OBSOLETE INVENTORY WAS REMOVED FROM THE FACTORY AND THEREFORE, THE QUESTION OF PAYMENT BY THE ASSESSEE FOR THE CORRESPONDING EXCISE DUTY DOES NOT ARISE AND HENCE, NO DEDUCTION UNDER SECTION 43B OF THE ACT WAS ALLOWABLE TO THE ASSESSEE IN THIS REGARD. CONSEQUENTLY, SUM OF RS.10,06,000/ - RELATING TO EXCI SE DUTY COMPONENT ON CLOSING STOCK OF OBSOLETE INVENTORY WAS ADDED BACK TO THE TOTAL INCOME UNDER SECTION 145A OF THE ACT. 13. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN THIS REGARD ON THE SURMISE THAT OBSOLETE ITEMS WERE SCRAPPED IN ASSESSMENT YEAR 2006 - 07 AND THUS, IT COULD NOT BE SAID THAT EXCISE DUTY IN RESPECT OF OBSOLETE STOCK WAS PAID BY DUE DATE OF FILING THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004 - 05 . THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE ASSESSEE HAD PAID EXCISE D UTY TILL THE DUE DATE OF FILING THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004 - 05 AND THEREFORE THE CLAIM UNDER SECTION 43B OF THE ACT WAS ALLOWABLE. 7 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. 14. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 15. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE TOTAL EXCISE DUTY FOR THE RELEVANT ASSESSMENT YEAR WAS RS.1.8 6 CRORES AND OUT OF THIS, RS.10,06,000/ - PERTAINS TO CLOSING STOCK OF OBSOLETE INVENTORY. IT WAS FURTHER POINTED OUT B Y THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ALLOWANCE ON PAYMENT BASIS IS THE SPIRIT OF SECTION 43B OF THE ACT, WHEREIN THE SECT ION PROVIDES THAT IF THE AMOUNT IS PAID, THEN THE SAME IS TO BE ALLOWED AND IN SUCH CIRCUMSTANCES, EVEN AD VANCE PAYMENT OF EXCISE DUTY IS ALLOWABLE. HE FURTHER ADMITTED THAT THE OBSOLETE INVENTORY WAS CLEARED IN ASSESSMENT YEAR 2006 - 07, BUT THERE WAS NO HINDRANCE IN ALLOWING THE CLAIM UNDER SECTION 43B OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RA TIO LAID DOWN BY CHANDIGARH SPECIAL BENCH OF TRIBUNAL IN DCIT VS. GLAXO SMITHKLINE CONSUMER HEALTHCARE LTD. (2007) 107 ITD 343 (CHD) (SB) . 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND POINTED OUT THAT THE EXCISE DUTY WAS A TTRIBUTABLE TO GOODS CLEARED FROM THE FACTORY AND THERE WAS NO MERIT IN THE CLAIM OF THE ASSESSEE THAT IT WAS PAID IN ADVANCE. RELIANCE WAS PLACED ON THE OBSERVATIONS OF CIT(A), IN THIS REGARD. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECO RD. THE ISSUE ARISING BEFORE US IS IN RESPECT OF QUANTUM OF EXCISE DUTY, WHICH WAS RELATABLE TO THE VALUE OF CLOSING STOCK OF OBSOLETE INVENTORY. THE ASSESSEE HAD MADE A PROVISION FOR EXCISE DUTY AS ON 31.03.2004 AT RS.1,86,44,474/ - . THE ENTIRE PROVISIO N WAS ACTUALLY PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND THE DEDUCTION UNDER SECTION 43B OF THE ACT WAS CLAIMED BY THE ASSESSEE . THE CLOSING INVENTORY OF THE STOCK AS ON 31.03.2004 INCLUDED SUM OF RS.10,06,000/ - RELATING TO EXCISE DUTY ON THE CLOSING STOCK OF OBSOLETE INVENTORY. INITIALLY, THE ASSESSING OFFICER SHOW 8 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. CAUSED THE ASSESSEE AS TO WHY THE SAME SHOULD NOT BE ADDED AS PER SECTION 145A OF THE ACT. HOWEVER, THE SAME WAS DISALLOWED ON THE SURMISE THAT SINCE THE OBSOLETE INVENTORY WAS ACTUALLY SCRAPPED IN ASSESSMENT YEAR 2006 - 07, THE CORRESPONDING EXCISE DUTY WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 43B OF THE ACT. THE SA ID ORDER OF THE ASSESSING OFFICER HAS BEEN UPHELD BY THE CIT(A). 18. LOOKING AT THE PROVISIONS OF SECTION 43B OF THE ACT, IT IS PROVIDED THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THE ACT, DEDUCTION OTHERWISE ALLOWABLE UNDER THE AC T, IN RESPECT OF ANY SUM PAYABLE BY WAY OF TAX, DUTY, CESS OR FEES, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE OR OTHER PROVISIONS PROVIDED IN OTHER SUB CLAUSES, SHALL BE ALLOWED, IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABI LITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE, ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM, ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THE ACT OF THAT PREVIOUS YEAR, IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. AFTER T HE INTRODUCTION OF SECTION 43B OF THE ACT, IT HAS BEEN CATEGORICALLY LAID DOWN THAT THE S UM BY WAY OF TAX, DUTY, CESS OR FEES, WHICH IS LEVIED ON THE ASSESSEE IS TO BE ALLOWED AS DEDUCTION IN THE YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM, IRRESPECTIVE OF THE PREVIOUS YEAR TO WHICH SUCH LIABILITY RELATES, IN VIEW OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE FACTUM OF PAYMENT WAS RECOGNIZED BY THE ACT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THE ACT AND CONSEQUENTLY, TH E SAME IS TO BE ALLOWED IN THE HANDS OF THE ASSESSEE WHEN SUCH SUM IS PAID BY THE PERSON. IT IS FURTHER PROVIDED UNDER THE SECTION THAT SUM PAID BEFORE THE DUE DATE OF FILING RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, SHALL BE ELIGIBLE FOR DEDUCTIO N. 19. NOW, COMING TO THE FACTS OF THE PRESENT CASE, BOTH THE AUTHORITIES BELOW HAVE ADMITTED THAT THE ASSESSEE HAD MADE A PROVISION ON ACCOUNT OF EXCISE DUTY OF RS.1.86 CRORES, WHICH WAS ACTUALLY PAID BEFORE THE DUE DATE OF FILING THE RETURN OF 9 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. INCOME UNDER SECTION 139(1) OF THE ACT . ONCE THE AMOUNT HAS BEEN PAID WHETHER IT RELATES TO A ITEM WHICH HAS BEEN CLEARED FROM THE PREMISES OF THE ASSESSEE OR NOT CLEARED, THE AMOUNT OF EXCISE DUTY PAID IN THE INSTANT ASSESSMENT YEAR IS ALLOWABLE IN THE HANDS O F THE ASSESSEE. CONSEQUENTLY, WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN HOLDING THAT SINCE THE OBSOLETE INVENTORY WAS SCRAPPED IN ASSESSMENT YEAR 2006 - 07 , NO DEDUCTION UNDER SECTION 43B OF THE ACT COULD BE ALLOWED IN ASSESSMENT YEAR 2004 - 05 . 20. WE FIND SIMILAR ISSUE OF ADVANCE PAYMENT OF EXCISE DUTY IN AN ACCOUNTING YEAR, WHICH IS TO BE ADJUSTED AS AND WHEN GOODS WERE LIFTED BY THE ASSESSEE FROM ITS FACTORY, WAS HELD AS ALLOWABLE AS DEDUCTION UNDER SECTION 43B OF THE ACT, SINCE THE SAID SECT ION RECOGNIZED THE DEDUCTION FOR PAYMENT OF TAX, DUTY, ETC. AS ALLOWABLE ON PAYMENT BASIS. THE SAID RATIO WAS LAID DOWN BY THE CHANDIGARH SPECIAL BENCH OF TRIBUNAL IN DCIT VS. GLAXO SMITHKLINE CONSUMER HEALTHCARE LTD. (SUPRA). FOLLOWING THE SAME PARITY O F REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION OF RS. 10,06,000/ - UNDER SECTION 43B OF THE ACT AS THE AFORESAID AMOUNT ADMITTEDLY, WAS PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE INSTANT ASSESSMENT YEAR, AS CERTIFIED BY THE AUDITOR IN THE AUDIT REPORT IN ANNEXURE 7 ATTACHED TO THE FORM NO.3CD, WHEREIN IT HAS BEEN CERTIFIED THAT THE AMOUNT OF EXCISE DUTY PAID UP TO DATE OF FILING THE RETURN OF INCOME, EXCE EDED SU M OF RS.1.86 CRORES. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 21. THE ISSUE IN GROUND OF APPEAL NO.3 IS AGAINST THE DISALLOWANCE OF SALES COMMISSION PAID TO SALES AGENTS OF RS.27,62,303/ - . 22. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED COMMISSION PAYMENT O F RS.7,19,806/ - TO M/S. BOMBAY TOOLS CENTRE, MUMBAI AND 10 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. RS.20,42,497/ - TO JAI BALAJI SPONGE LTD., KOLKATA. THE CLAIM OF THE ASSESSEE WAS THAT THE SAID PAYMENTS WERE MADE FOR THE SERVICES RENDERED BY THE SAID TWO CONCERNS FOR AWARD OF CERTAIN CONTRACTS TO THE ASSESSEE AND ALSO FOR FOLLOW UP RELATED TO RELEASE OF PAYMENTS. THE SAID PARTIES WERE ASKED TO FURNISH SUPPORTING DOCUMENTARY EVIDENCE TO SHOW THAT THEY WERE IN CONSTANT TOUCH WITH THE RELEVANT CLIENTS OF THE ASSESSEE TO ENSURE THAT THE CONTRACT WAS AWARDED AND ALSO FOR THE RELEASE OF THE PAYMENT. THE ASSESSING OFFICER FURTHER CARRIED THE ENQUIRIES THROUGH THE DEPARTMENT AT MUMBAI AND KOLKATA. THE TWO PARTIES DESPITE SEVERAL OPPORTUNITIES DID NOT FURNISH ANY REQUISITE DO CUMENTARY EVIDENCE TO SHOW THAT THE SERVICES WERE ACTUALLY RENDERED BY THEM. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY SAID COMMISSION PAYMENT SHOULD NOT BE DISALLOWED SINCE NO SERVICES HAVE ACTUALLY BEEN RENDERED. IN REPLY, THE ASSESSEE EXPLAINED THAT THE TWO CONCERNS WERE ITS SALES AGENTS FOR CANVASSING ORDERS AND COLLECTION OF PAYMENT FROM ITS CUSTOMERS. THEY WERE TO PROVIDE SERVICES FOR SECURING ORDERS AND ALSO FOR TIMELY COLLECTION OF PAYMENTS. THE ASSESSING OFFICER ON THE OTHER HAND, OBSERVED TH AT THE TWO PARTIES HAD FAILED TO FURNISH REQUISITE EVIDENCE IN THIS REGARD AND THEY HAVE ALSO NOT FURNISHED THE DETAILS OF EXPENSES INCURRED ALONG WITH SUPPORTING EVIDENCE IN RESPECT OF CORRESPONDING COMMISSION INCOME EARNED BY THEM. THE ASSESSEE ALSO FAI LED TO FURNISH INFORMATION AND ONLY ON 29.12.2006, IT REQUESTED FOR CROSS - EXAMINATION OF THE SAID SALES AGENTS, WHICH COULD NOT BE ENTERTAINED BY THE ASSESSING OFFICER. IN VIEW THEREOF, THE SAID COMMISSION PAYMENT OF RS. 7,19,806/ - AND RS.20,42,497/ - WAS D ISALLOWED BY THE ASSESSING OFFICER. 23. THE CIT(A) NOTED THAT THE ASSESSEE WAS CLAIMING THE COMMISSION ON THE BASIS OF AGREEMENTS AND PAYMENTS WITHOUT PROVING ANY SERVICES BEING RENDERED BY THE SAID COMPANIES. SINCE THE ONUS WAS UPON THE ASSESSEE TO PR OVE THAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS AND THE ONUS HAVING NOT BEEN 11 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. DISCHARGED AND ALSO NON - RESPONSE OF THE PARTIES DURING THE ASSESSMENT PROCEEDINGS, THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. WITH REGARD TO THE CROSS - EXAMINATION ASKED FOR BY THE ASSESSEE VIS - - VIS INFORMATION COLLECTED BY THE ASSESSING OFFICER, THE CIT(A) HELD THAT WHERE THE ASSESSING OFFICER HAD TRIED TO OBTAIN THE DETAILS FROM THE PARTIES, BUT THERE WAS NO COMPLIANCE AND WHEN NO DETAILS WERE AV AILABLE TO THE ASSESSING OFFICER, THERE WAS NO QUESTION OF CROSS - EXAMINATION. 24. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 25. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PERUSAL OF AGREEMENTS PLACED AT PAGES 96 AND 100 OF THE PAPER BOOK REFLECT THAT THE FIRST AGREEMENT WAS FOR A SPECIFIC PARTY FOR COLLECTION OF PAYMENTS AND THE SECOND AGREEMENT WAS FOR SECURING THE ORDERS AND HENCE, THE SAME WAS ALLOWABLE AS EXPENDITURE. AS EXPENDITURE. 26. THE LEARNED DEPARTMENTAL REPRESEN TATIVE FOR THE REVENUE PLACING RELIANCE ON THE ORDERS OF AUTHORITIES BELOW POINTED OUT THAT IN VIEW OF THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER AND NON - COMPLIANCE BY THE RELATED PARTIES, THE SAID EXPENDITURE WAS NOT ALLOWABLE IN THE HANDS OF THE AS SESSEE. 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.3 BEFORE US IS IN RELATION TO THE COMMISSION PAYMENT TOTALING RS.27,62,303/ - . THE ASSESSEE CLAIMS TO HAVE PAID SUM OF RS.7,19,806/ - TO M/S. BOMBAY TOOLS CENTRE , MUMBAI AND RS.20,42,497/ - TO M/S. JAI BALAJI SPONGE LTD., KOLKATA. THE CLAIM OF THE ASSESSEE WAS THAT BOTH THE PARTIES WERE APPOINTED FOR OBTAINING ORDERS AND ALSO FOR FOLLOWING UP THE PAYMENTS AGAINST SUCH ORDERS. THE ASSESSEE CLAI MS TO HAVE ENTERED INTO AGREEMENTS WITH SUCH 12 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. AGENTS. HOWEVER, NO SUPPORTING EVIDENCE IN THIS REGARD WAS FURNISHED BY THE ASSESSEE EXCEPT THE COPY OF AGREEMENT. IN ORDER TO BE ELIGIBLE FOR CLAIM OF DEDUCTION ON ACCOUNT OF ANY EXPENDITURE, THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE SAID EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF CARRYING ON ITS BUSINESS ACTIVITIES. MERELY BECAUSE THE EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE, DOES NOT ENTITLE THE ASSESSEE TO THE SAID CLAIM WITHOUT DISCHARGING HIS ONUS. IN THE FACTS OF THE CASE , THE ASSESSING OFFICER MADE ENQUIRIES FROM THE RESPECTIVE PARTIES THROUGH REVENUE DEPARTMENT AT MUMBAI AND KOLKATA RESPECTIVELY. HOWEVER, NO EVIDENCE WHATSO EVER WAS FURNISHED BY EITHER OF THE TWO PARTIES IN SUPPORT OF SERVICES PROVIDED BY THEM TO THE ASSESSEE AND THE EXPENDITURE INCURRED BY THEM VIS - - VIS THE SAID INCOME EARNED BY THEM. THE ASSESSEE ALSO DID NOT FURNISH COMPLETE DETAILS IN THIS REGARD AND IN THE ABSENCE OF ANY EVIDENCE AND THE ONUS NOT HAVING BEEN DISCHARGED BY THE ASSESSEE, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE. THUS, THE APPEAL OF THE ASSES SEE IS PARTLY ALLOWED. 28. NOW, COMING TO THE APPEAL OF THE REVENUE. THE ISSUE VIDE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF SOFTWARE EXPENSES. 29. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 . 30. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE OF ENDURING 13 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. NATURE AND HENCE, WERE TO BE TREATED AS CAPITAL EXPENDITURE IN THE HANDS OF THE ASSESSEE. 31. BRIEFLY, THE FACTS RELATING TO THE ISSUE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD INCURRED EXPENDITURE OF RS.41,85,871/ - FOR LICENCE TO USE COMPUTER SOFTWARE FOR ITS OPERATIONS. THE ASSESSEE HAD CLAIMED EXPENDITURE AS REVENUE EXPENDITURE SINCE THE AMOUNT WAS USED FOR THE PURCHASE OF VARIOUS APPLICATIONS SOFTWARE. THE ASSESSING OFFICER WAS OF T HE VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE RESULTED IN ENDURING BENEFIT AND LUMP SUM PAYMENT WAS MADE AND HENCE, THE SAME WAS EXPENDITURE OF CAPITAL IN NATURE. THE ASSESSING OFFICER FURTHER HELD THAT THERE WAS NO MERIT IN THE CASE LAWS RELIED UPON BY THE ASSESSEE AS THE SAME RELATED TO PERIOD PRIOR TO ASSESSMENT YEAR 2003 - 04 AND FROM THE ASSESSMENT YEAR 2003 - 04, DEPRECIATION @ 60% WAS SPECIFICALLY PROVIDED FOR COMPUTER SOFTWARE. ACCORDINGLY, THE ASSESSING OFFICER ALLOWED DEPRECIATION @ 60% ON THE AFORESAID EXPENDITURE RESULTING AN ADDITION OF RS.16,74,348/ - . 32. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE, IN VIEW OF THE APPELLATE ORDER RELATING TO ASSESSMENT YEAR 2002 - 03 . 33. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 34. WE FIND THAT SIMILAR ISSUE OF DISALLOWANCE OF SOFTWARE EXPENSES BEING OF ENDURING NATURE, AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 2053 & 2054/PN/2012 IN REVENUES APPEAL AGAINST THE ASSESSEE. THE TRIBUNAL VIDE ORDER DATED 31.12.2014 WITH LEAD ORDER IN ASSESSEES APPEAL IN ITA NOS.1841 & 1842/PN/2012 ALONG WITH CROSS APPEALS IN ITA NOS.2053 & 2054/PN/2012 VIDE PARS 19 TO 2 1 CONSIDERED THE IDENTICAL ISSUE OF ALLOWABILITY OF EXPENDITURE INCURRED ON 14 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. APPLICATIONS SOFTWARE AND ALLOWED THE CLAIM OF THE ASSESSEE. THE RELEVANT FINDING S OF THE TRIBUNAL VIDE PARAS 22 AND 22.1 ARE AS UNDER: - 22. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. WE FIND THE ISSUE STANDS SQUARELY DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LUBRIZOL INDIA LTD. REPORTED IN 37 TAXMANN.COM 294 (BOM.) WHERE IT HAS BEEN HELD THAT EXPENSES INCURRED TO OBTAIN THE APPLICATION SOFTWARE WHICH HAS TO BE UPGRADED FROM TIME TO TIME DUE TO CHANGE IN TECHNOLOG Y HAS TO BE ALLOWED AS REVENUE EXPENDITURE. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT AT PARA 3 OF THE ORDER READS AS UNDER : 3. SO FAR AS QUESTION B IS CONCERNED, THE TRIBUNAL HAS HELD THAT THE COMPUTER SOFTWARE EXPENSES INCURRED BY THE RESPONDENT - ASSESSEE WAS REVENUE IN NATURE. THE EXPENSES WERE INCURRED TO OBTAIN THE APPLICATION SOFTWARE WHICH GETS UPGRADED FROM TIME TO TIME DUE TO CHANGE IN TECHNOLOGY. THIS LICENCE BEING FOR LIMITED PERIOD WOULD HAVE TO BE RENEWED FROM TIME TO TIME. IN THE AFORESAID CIRCUMSTANCES, THE TRIBUNAL HELD THAT CONSIDERING THE NATURE OF THE SOFTWARE LICENCE I.E. APPLICATION SOFTWARE, THE SAME HAS TO BE ALLOWED AS A REVENUE EXPENDITURE. IN VIEW OF THE FINDING OF FACT ARRIVED AT FURTHER BY THE TRIBUNAL THAT THE E XPENSES HAVE BEEN INCURRED ON APPLICATION SOFTWARE WHICH IS FOR A LIMITED TIME FRAME AND HAS TO BE RENEWED FROM TIME TO TIME, WE SEE NO REASON TO ENTERTAIN QUESTION B AS FRAMED BY THE REVENUE. 22.1 RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONA L HIGH COURT CITED (SUPRA), THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 35. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD ALSO CLAIMED TO HAVE INCURRED THE EXPENDITURE ON APPLICATION SOFTWARE. H OWEVER, THE CLAIM OF THE ASSESSEE WAS REJECTED BEING OF ENDURING NATURE. WE FIND NO MERIT IN THE AFORESAID DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE CASE OF ASSESSEE IN VIEW OF THE NATURE OF EXPENDITURE INCURRED AND ALSO IN VIEW OF RATIO LAID DOWN IN ASSESSEES OWN CASE IN EARLIER YEARS. WE UPHOLD THE ORDER OF CIT(A) IN ALLOWING EXPENDITURE INCURRED BY THE ASSESSEE ON APPLICATION SOFTWARE. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS DISMISSED. 36. THE ISSUE IN GROUNDS OF APPEAL NO.2 AND 4 ARE LINKED I.E. AGAINST DELETION OF ADDITION MADE TO THE CLOSING STOCK BEING PROVISION FOR OBSOLETE INVENTORY . 37. IN THE FACTS OF THE PRESENT GROUNDS OF APPEAL, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE PROVISION FOR OBSOLETE INVENTORY AM OUNTING TO 15 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. RS.79,84,000/ - . THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE CLOSING STOCK HAD TO BE VALUED EITHER AT COST OR MARKET VALUE, WHICHEVER WAS LOWER, THE METHOD ADOPTED BY THE ASSESSEE COMPANY WAS NOT CORRECT. THE EXPLANATION OF THE ASSESSE E THAT THE PROVISIONS WERE MADE AS PER INTERNAL GUIDELINES OF THE ASSESSEE COMPANY AT RS.NIL OR HALF THE COST PRICE DETERMINED UPON THE MOVEMENT OF GOODS, WAS REJECTED AND DISALLOWANCE OF PROVISION MADE FOR OBSOLETE INVENTORY AMOUNTING TO RS.90,91,00 0 / - , WHICH WAS THE AGGREGATE PROVISIONS AS ON 31.03.2004, WAS MADE BY THE ASSESSING OFFICER. 38. BEFORE THE CIT(A) , THE CLAIM OF THE ASSESSEE WAS THAT IT WAS FOLLOWING THIS METHOD CONSISTENTLY FROM YEAR TO YEAR AND SUCH CLAIM WAS ALLOWED IN EARLIER YEARS AS WE LL AS IN SUBSEQUENT YEARS AND IT WAS ONLY IN THIS YEAR, THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. THE CIT(A) NOTED THE INTERNAL GUIDELINES OF THE ASSESSEE COMPANY VIDE PARA 22, WHICH READS AS UNDER: - 22. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, IT IS SEEN THAT THE APPELLANT COMPANY HAD MADE PROVISION FOR OBSOLESCENCE OF STOCK ON THE BASIS OF INTERNAL GUIDELINES WHICH IS BROADLY AS UNDER: ( I ) STOCK ITEMS WHICH HAVE HAD NO MOVEMENT DURING THE LAST 12 MONTHS ARE TO BE WRITTEN DOWN BY 50%. ( II ) STOCK ITEMS WHICH HAVE HAD NO MOVEMENT DURING THE LAST 24 MONTHS ARE TO BE WRITTEN DOWN TO ZERO SCRAP VALUE. 39. THE CIT(A) THEREAFTER, HELD AS UNDER: - 23. THUS, IT IS SEEN THAT THE APPELLANT HAS MADE PROVISION FOR OBSOLETE STOCK ON THE BASIS OF MOVEMENT OF GOODS ON THE BASIS OF ITS INTERNAL CIRCULAR, WITHOUT ACTUALLY ASCERTAINING THE MARKET VALUE OF THE STOCK. THIS TYPE OF PROVISION HAS SOME BASIS. THE APPELLANT HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA (P) LTD. VS. CIT (314 ITR 62). IT IS SEEN THAT THE ABOVE DECISION RELATES TO PROVISION FOR WARRANTY AND ITS ADMISSIBILITY PROVIDED IT IS CALCULATED ON SCIENTIFIC BASIS. IN THIS CASE IT IS SE EN THAT THE PROVISION HAS BEEN MADE ON THE BASIS OF INTERNAL GUIDELINES WHICH CAN BE SAID TO BE ON SCIENTIFIC BASIS AND INSTEAD OF DIRECTLY REDUCED THE VALUE OF CLOSING STOCK, PROVISION HAS BEEN CREATED WHICH HAS THE SAME EFFECT. IT IS ALSO SEEN THAT WHEN EVER THE SALES ARE REALIZED ON SUCH ITEMS, THE SAME IS OFFERED TO TAX. THEREFORE, I DO NOT FIND ANY INFIRMITY IN THE METHOD ADOPTED BY THE APPELLANT. IT IS ALSO IMPORTANT THAT THE METHOD ADOPTED BY THE APPELLANT HAS BEEN ACCEPTED IN EARLIER YEARS AS WELL AS IN SUBSEQUENT YEARS AND THE ASSESSING OFFICER HAS TWEAKED THE ISSUE IN THIS YEAR. IT IS TRUE THAT THE PRINCIPLES OF REJUDICATA IS NOT APPLICABLE TO THE INCOME - TAX 16 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. ASSESSMENT PROCEEDINGS, BUT PRINCIPLES OF CONSISTENCY CANNOT BE IGNORED WITHOUT SUFFICIE NT REASONS. THEREFORE, IN VIEW OF THE ABOVE POSITION, ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE PROVISION FOR OBSOLETE STOCK AMOUNTING TO RS.90,91,000/ - CANNOT BE UPHELD AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION. THE GROUND IS THUS ALLOWED. 40. THE REVENUE IS IN APPEAL AGAINST THE ABOVE FINDING OF THE CIT(A). 41. THE CASE OF THE REVENUE BEFORE US IS THAT IN THE ABSENCE OF ANY EVIDENCE TO DEMONSTRATE THAT THE MARKET VALUE OF THE SAID GOODS HAD REDUCED, THERE WAS NO MERIT IN THE METHOD OF RECOGNIZING THE INVENTORY FOLLOWED BY THE ASSESSEE. 4 2 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND , PLACED RELIANCE ON THE ORDER OF CIT(A). 43. WE HAVE HEARD THE RIVAL CONTENTION S AND PERUSED THE RECORD. THE ASSESSEE WAS CONSISTENTLY FOLLOWING THE METHOD OF ACCOUNTING OF ITS OBSOLETE INVENTORY WHICH HAS BEEN CONSISTENTLY FOLLOWED FROM YEAR TO YEAR. WHERE THERE IS RECOGNITION OF THE VALUE OF OBSOLETE STOCK ON A SCIENTIFIC BASIS, THEN PROVISION MADE ON THAT BASIS CANNOT BE OBJECTED TO BY THE ASSESSING OFFICER AS THE DEPARTMENT HAS BEEN ACCEPTING THE CONSISTEN T METHOD FOLLOWED BY THE ASSESSEE BOTH IN THE EARLIER AND SUBSEQUENT YEARS. IN VIEW OF THE PRINCIPLE OF CONSISTENCY AND IN T HE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD TO DIS - BELIE VE THE METHOD FOLLO WED BY THE ASSESSEE, WE FIND NO MERIT IN THE ORDER OF ASSESSING OFFICER IN THIS REGARD. FURTHER, EVEN THE HONBLE SUPREME COURT IN ROTORK CONTROLS INDIA (P) LTD. VS. CIT REPORTED IN 314 ITR 62 (SC) HAD UPHELD THE PROVISION FOR WARRANTY MADE BY THE SAID ASSESSEE IN ITS BOOKS OF ACCOUNT AND ITS ADMISSIBILITY BEING ON SCIENTIFIC BASIS. FOLLOWING THE SAME SIMILI OF REASONING, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD AND DISMISS TH E GROUNDS OF APPEAL NO.2 AND 4 RAISED BY THE REVENUE. 17 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. 44. THE ISSUE IN GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLO WING THE LOSSES SUFFERED BY NEWLY SET UP EOU AGAINST ITS OTHER BUSINESS INCOME. THE REVENUE IS ALSO AGGRIEVED BY THE ORDER OF CIT(A) IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 10B OF THE ACT FROM THE ASSESSMENT YEAR IN WHICH IT COMMENCED ITS BUSINESS AND NOT WHEN THE PLANT AND MACHINERY WAS PUT TO USE F OR THE PURPOSE OF BUSINESS BY WAY OF TRIAL RUN DURING T HE LAST QUARTER OF ASSESSMENT YEAR 2004 - 05 . 45. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTED THAT DURING THE RELEVANT YEAR THE ASSESSEE HAD COMMENCED TRIAL PRODUCTION IN RESPECT OF NE WLY SET UP EOU ENGAGED IN PRODUCTION OF TOOLING CATRIDGES. THE ASSESSING OFFICER FURTHER NOTED THAT CERTAIN EXPENSES / DEDUCTIONS AS ENUMERATED UNDER PARA 13.1 AT PAGES 23 AND 24 OF THE ASSESSMENT ORDER HAVE BEEN INCURRED BY THE ASSESSEE. THE ASSESSING O FFICER AGGREGATED THE EXPENDITURE OF RS.1,99,04,715/ - INCLUDING THE DEPRECIATION ON PLANT AND MACHINERY OF RS.99,52,517/ - + DEPRECIATION ON BUILDING OF DEPRECIATION ON PLANT AND MACHINERY OF RS.99,52,517/ - + DEPRECIATION ON BUILDING OF RS. 1,59,440/ - + REPAIRS AND MAINTENANCE OF RS.94,19,758/ - + INTEREST OF RS.90,000/ - + DEDUCTION UNDER SECTION 35D OF RS.2,83,000/ - . SINCE THE SAID EOU HAD NOT EARNED ANY INCOME AS THE COMMERCIAL PRODUCTION WAS YET TO COMMENCE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID LOSS OF NEWLY SET UP EOU COULD NOT BE ADJUSTED AGAINST OTHE R BUSINESS INCOME. THE SAID CLAIM OF THE ASSESSEE WAS DENIED TO THE ASSESSEE AS THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10A / B OF THE ACT. FURTHER, REFERENCE WAS MADE TO THE SECTION 80IB(6) AND 80IB(8) OF THE ACT FOR DENYING TH E SET OFF OF THE SAID LOSSES AGAINST OTHER BUSINESS INCOME OF THE ASSESSEE. 46. BEFORE THE CIT(A), THE ASSESSEE EXPLAINED THAT IT HAD OBTAINED APPROVAL FOR SETTING UP OF EOU AND COMMERCIAL PRODUCTION HAD COMMENCED ON 20.04.2004. HOWEVER, TRIAL PRODUCTION WAS CARRIED OUT DURING THE LAST QUARTER OF FINANCIAL YEAR 18 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. 2003 - 04. THE ASSESSEE THU S, CLAIMED THAT THE TAX HOL I D AY PERIOD COMMENCED FROM FINANCIAL YEAR 2004 - 05 RELEVANT TO ASSESSMENT YEAR 2005 - 06. IN VIEW THEREOF, THE CLAIM OF THE ASSESSEE THAT THE LOSS INCURRED BY THE ASSESSEE IS TO BE ADJUSTED AGAINST THE OTHER BUSINESS INCOME OF THE ASSESSEE FOR INSTANT ASSESSMENT YEAR. THE CIT(A) IN VIEW OF THE PROVISIONS OF SECTION 10B(1) OF THE ACT OBSERVED THAT THE SAID SECTION WAS APPLICABLE FROM ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGAN TO MANUFACTURE ARTICLE O R THING AND DEDUCTION WAS ALLOWABLE. THE CIT(A) FURTHER OBSERVED THAT THE SECTION DENOTES THE COMMERCIAL PRODUCTION AND NOT TRIAL RUN OF THE MACHINERY. THE SECOND OBSERVATION OF CIT(A) WAS THAT THE DEPRECIATION COULD BE CLAIMED ON THE BASIS OF TRIAL RUN OF THE MACHINERY, BUT MANUFACTURING PROCESS BEGINS FROM C OMMERCIAL PRODUCTION. THE CIT(A) VIDE PARA 34 HELD THAT SINCE THE COMMERCIAL PRODUCTION HAD STARTED IN ASSESSMENT YEAR 2005 - 06, THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT FROM THE SAID YEAR. SO FAR AS THE DISALLOWANCE OF LOSS PERTAINING TO UNIT, WHEREIN THE ASSESSING OFFICER HAD DISALLOWED THE SAME TO BE SET OFF FROM THE OTHER BUSINESS INCOME ON THE GROUND THAT SECTION 10A/B OF THE ACT ARE EXEMPTION SECTIONS AND THEREFORE, THE LOSS OF THE UNDERTAKING WILL NOT FORM PART OF THE GROSS TOTAL INCOME. THE CIT(A) HELD THAT IN VIEW OF THE PROVISION S OF SECTION 10B OF THE ACT AS SUBSTITUTED BY THE FINANCE ACT, 2000 W.E.F. 01.04.20 0 1, THE DEDUCTION HAS TO BE ALLOWED FROM THE GROSS TOTAL INCOME. RELIANCE IN THIS REGARD WAS PLACED O N THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN HINDUSTAN UNILIVER LTD. VS. DCIT AND ANR. (2010) 38 DTR 91 (BOM) AND CONSEQUENTLY, THE ASSESSING OFFICER WAS DIRECTED TO SET OFF THE LOSS OF RS.1.99 CRORES AGAINST THE OTHER BUSINESS INCOME. 47. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 48. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER AND POINTED OUT THAT THE ASSESSING OFFICER HAD 19 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. DENIED THE SET OFF OF BROUGHT FORWARD LOSSES, IN VIEW OF THE ASSESSEES UNIT BEING ELIGIBLE FOR EXEMPTION UNDER SECTION 10B OF THE ACT. 49. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED VIDE GROUND OF APPEAL NO .3A WOULD BECOME ACADEMIC, IF THE DECISION LAID DOWN IN HINDUSTAN UNILIVER LTD. VS. DCIT AND ANR. (SUPRA) WOULD APPLY, IF SECTION 10B OF THE ACT IS TO BE GRANTED FROM THE INSTANT YEAR. HE FURTHER STATED THAT THE ISSUE IN GROUND OF APPEAL NO.3B IS ALREADY SETTLED IN FAVOUR OF THE ASSESSEE, IN VIEW OF THE RATIOS LAID DOWN IN HINDUSTAN UNILIVER LTD. VS. DCIT AND ANR. (SUPRA) AND CIT VS. BLACK & VEATCH CONSULTING (P.) LTD. (2012) 348 ITR 72 (BOM) . 50. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECO RD. THE ISSUE ARISING IN GROUND OF APPEAL NO.3A IS IN RELATION TO THE EXPORT ORIENTED UNIT SET UP BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ITSELF. ADMITTEDLY, THE ASSESSEE HAD CARRIED OUT TRIAL PRODUCTION IN THE INSTANT ASSESSMENT YEAR AND COMMERC IAL CARRIED OUT TRIAL PRODUCTION IN THE INSTANT ASSESSMENT YEAR AND COMMERC IAL PRODUCTION HAD STARTED FROM ASSESSMENT YEAR 2005 - 06 I.E. THE SUCCEEDING YEAR. THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 10B OF THE ACT AND THE SAME WAS CLAIMED BY THE ASSESSEE IN ASSESSMENT YEAR 2005 - 06 AND NO SUCH DEDUCTION WAS CLAIM ED IN THE YEAR UNDER CONSIDERATION BECAUSE OF THE LOSSES INCURRED BY THE ASSESSEE IN THE AFORESAID EOU UNIT. IN VIEW OF THE LOSSES , ADMITTEDLY, THE ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION UNDER SECTION 10B OF THE ACT IN THE ABSENCE OF ANY POSITIVE PROFI TS. FURTHER, THE COURTS HAVE HELD THAT THE ASSESSEE IS AT LIBERTY TO CLAIM THE AFORESAID DEDUCTION UNDER SECTION 10B OF THE ACT FROM ANY OF THE YEAR OF HIS CHOICE. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED THE SAID DEDUCTION FROM ASSESSMENT YEAR 2005 - 06 . WHERE THE OPTION IS AVAILABLE WITH THE ASSESSEE TO CLAIM THE DEDUCTION UNDER SECTION 10B OF THE ACT FROM ASSESSMENT YEAR IN WHICH IT COMMENCES THE BUSINESS AND NOT WHEN THE PLANT AND MACHINERY IS FIRST PUT IN USE, WE FIND NO MERIT IN THE GROUND OF AP PEAL NO.3B RAISED 20 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. BY THE REVENUE IN THIS REGARD. WE FIND SUPPORT FROM THE RATIO LAID DOWN IN CIT VS. NESTOR PHARMACEUTICALS LTD. (2010) 322 ITR 631 (DEL). 51. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE RAISED BY THE REVENUE I.E. THE LOSSES SUFFERED BY NEWLY SET UP EOU UNIT, WHETHER CAN BE ADJUSTED AGAINST OTHER BUSINESS INCOME OF THE ASSESSEE. UNDER THE PROVISIONS OF SECTION 71 OF THE ACT, WHERE THE ASSESSEE HAS INCURRED LOSSES UNDER ONE PARTICULAR HEAD OF INCOME, THE SAME CAN BE SET OFF AGAINST THE INCOME UNDER ANY OTHER HEAD OF INCOME I.E. INTER - HEAD SET OFF OF PROFIT AND LOSS IS RECOGNIZED BY THE ACT. 52. THE HON'BLE BOMBAY HIGH COURT IN HINDUSTAN UNILE VER LTD. VS. DCIT & ANR. (SUPRA) IN AN APPEAL RELATING TO ASSESSMENT YEAR 2004 - 05 WHERE REASSESSMENT PROCEEDINGS WERE INITIATED UNDER SECTION 147/148 OF THE ACT ON SEVERAL ISSUES, CONSIDERED THE REASON TO BELIEVE RECORDED BY THE ASSESSING OFFICER WITH REGA RD TO SET OFF OF LOSS INCURRED BY UNIT ELIGIBLE FOR DEDUCTION U/S. 10B OF THE ACT. THE SET OFF OF LOSS INCURRED BY UNIT ELIGIBLE FOR DEDUCTION U/S. 10B OF THE ACT. THE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT ON THE SURMISE THAT SINCE THE INCOME OF THE CRAB STICK UNIT WAS EXEMPTED FROM TAX UNDER SECTION 10B, THE LOSS OF THAT UNIT WAS WRONGLY SET OFF AGAINST THE NORMAL BUSINESS INCOME. THE HON'BLE HIGH COURT NOTED THAT AFTER THE SUBSTITUTION OF SECTION 10B OF THE ACT BY THE FINANCE ACT OF 2000, THE PROVISIONS PROVIDED FOR DEDUCTION OF SUCH PROFIT OR GAINS AS WERE DERIVED BY 100% E OU FOR THE PERIOD PRESCRIBED UNDER THAT SECTION. THE HON'BLE HIGH COURT THUS HELD THAT THE BASIS ON WHICH THE ASSESSMENT WAS SOUGHT TO BE REOPENED WAS BELIED BY A PLAIN READING OF THE PROVISIONS AND THE ASSESSING OFFICER WAS IN ERROR IN PROCEEDING ON THE BASIS THAT BECAUSE THE INCOME WAS EXEMPTED, THE LOSS WAS NOT ALLOWABLE. THE HON'BLE HIGH COURT FURTHER CONSIDERED THAT ALL THE FOUR UNITS OF THE ASSESSEE WERE ELIGIBLE UNDER SECTION 10B, OUT OF WHICH THREE UNITS HAD RETURNED PROFITS DURING THE COURSE OF T HE ASSESSMENT YEAR, WHILE THE CRAB STICK UNIT HAD RETURNED A LOSS. THE HIGH COURT FURTHER HELD THAT THE ASSESSEE WAS ENTITLED TO 21 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. A DEDUCTION IN RESPECT OF THE PROFITS OF THE THREE ELIGIBLE UNITS WHILE THE LOSS SUSTAINED BY THE FOURTH UNIT COULD BE SET OF F AGAINST THE NORMAL BUSINESS INCOME. IN THESE CIRCUMSTANCES, THE HON'BLE HIGH COURT HELD THAT THE BASIS ON WHICH THE ASSESSMENT WAS SOUGHT TO BE REOPENED W A S CONTRARY TO THE PLA I N LANGUAGE OF SECTION 10B OF THE ACT . 53. THE LEARNED AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE HAS FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. BLACK & VEATCH CONSULTING (P.) LTD. (SUPRA), WHICH WAS IN CONNECTION WITH THE DEDUCTION ALLOWABLE UNDER SECTION 10A OF THE ACT. THE HON' BLE BOMBAY HIGH COURT IN CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) ALSO OBSERVED THAT SECTION 10A WAS A PROVISION WHICH WAS IN THE NATURE OF A DEDUCTION AND NOT AN EXEMPTION. THE HON'BLE HIGH COURT FURTHER HELD THAT THE DEDUCTION UNDER SECTION 10A, IN OUR VIEW, WAS TO BE GIVEN EFFECT TO AT THE STAGE OF COMPUTING THE PROFITS AND GAINS OF BUSINESS. THIS IS ANTERIOR TO THE APPLICATION OF THE PROVISIONS OF SECTION 72 WHICH DEALS WITH THE CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. THE HON'BLE HI GH COURT HELD THAT THE DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. THE ISSUE BEFORE THE HON'BLE HIGH COURT WAS WITH REGARD TO THE ADJUSTMENT OF BROUGHT FORWARD UNABSOR BED DEPRECIATION AND LOSS OF THE UNIT, WHICH WERE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT AND IT WAS HELD THAT THE SAME COULD NOT BE SET OFF AGAINST THE CURRENT PROFIT OF THE ELIGIBLE UNITS WHILE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT. 5 4 . FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE ASSESSEE IS ENTITLED TO SET OFF OF LOSSES OF EOU UNIT AGAINST THE OTHER BUSINESS INCOME, IF ANY, ASSESSED IN THE HANDS OF ASSESSEE FOR THE CAPTIONED ASSESSMENT YEAR. BALANCE LOSS, IF ANY, WOULD BE CARRIED FORWAR D TO THE 22 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. SUCCEEDING YEARS TO BE ADJUSTED AS PER THE PROVISIONS OF THE ACT. ACCORDINGLY, THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS ALSO DISMISSED. 5 5 . NOW, COMING TO THE ISSUE IN GROUND OF APPEAL NO.5 RAISED BY THE REVENUE I.E. COMPUTATION OF DED UCTION UNDER SECTION 80HHC OF THE ACT. 5 6 . BRIEFLY, IN THE FACTS OF THE ISSUE RAISED, THE ASSESSEE HAD WRITTEN BACK CREDITORS BALANCE OF RS.89,000/ - TO THE PROFIT & LOSS ACCOUNT. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE S AID CREDITORS BALANCE WRITTEN BACK PERTAINED TO RAW MATERIAL PURCHASES MADE FOR EOU UNIT. THE ASSESSEE HAD INCLUDED THE AFORESAID AMOUNT IN THE ELIGIBLE PROFITS WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE ASSESSING OFFICER EXCLUDED 90% OF THE SAID AMOUNT AS PER CLAUSE (1) OF EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. 5 7 . THE CIT(A), IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. K. RAVINDRANATHAN NAIR (2007) 295 ITR 228 (SC) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. DRESSER RAND INDIA PVT. LTD. IN ITA NO.2 186 OF 2009, DATED 08.04.2010 HELD THAT WHILE WRITE BACK OF THE CREDITORS WAS CONCERNED, THE SAME HAD TO BE TREATED AS BUSINE SS PROFIT AND THEREFORE, 90% OF THE SAME SHOULD NOT BE EXCLUDED. 5 8 . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 5 9 . THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, WHERE THE CREDIT BALANCE WRITTEN BACK , IN TURN RELATING TO PURCHASES MADE BY THE ASSESSEE. THE HONBLE MADRAS HIGH COURT IN CIT VS. ABDUL RAHMAN INUSTRIES (2007) 293 ITR 475 (MAD) HAD HELD THAT THE SAID WRITE BACK OF THE CREDITORS IS TO BE INCLUDED AS BUSINESS INCOME ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE 23 ITA NO. 2448 /PN/201 2 ITA NO. 2469 /PN/201 2 M/S. SANDVIK ASIA PVT. LTD. LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE BEFORE US HAD MADE AN ALTERNATE PLEA THAT ONCE THE SAME IS INCLUDED IN THE BUSINESS PROFITS, IT SHOULD ALSO BE INCLUDED IN TH E TOTAL TURNOVER OF THE UNIT. THE ASSESSEE ON THE OTHER HAND, SUBMITS THAT THE ASSESSING OFFICER HAD RESTRICTED HIMSELF IN INCLUDING THE SAME IN THE BUSINESS PROFIT ONLY. WE FIND MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD AND THE SAID ITEM RELATES TO PURCHASES AND IS NOT TO BE INCLUDED IN THE TOTAL TURNOVER OF THE ELIGIBLE UNIT, WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE GROUND OF APPEAL NO.5 RAISED BY THE REVENUE IS THUS, DISMISSED . THE GROUNDS OF APPEAL RAISED BY THE REVENUE A RE THUS, DISMISSED . 60 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AN D THE APPEAL OF RE VENUE IS DISMISSED . ORDER PRONOUNCED ON THIS 4 TH DAY OF DECEMBER , 2015. SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 4 TH DECEMBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - V , PUNE ; 4. / THE CIT - V , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE