M/s. Deepak Industries Ltd., Kolkata V. DCIT, Circle - 6, Kolkata, Kolkata

ITA 247/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3132 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 03-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 14-02-2012
• Court: TRIBUNAL
• Department Lawyers: K N JANASR
• Assessee Lawyers: S JHAJHARIA
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () . .. . . .. . , ,, , , ! ' #!' ' #!' ' #!' ' #!', ,, , ] ]] ] [BEFORE HONBLE SRI N.S.SAINI AM & HONBLE SRI M AHAVIR SINGH, JM] !% !% !% !% /ITA NO.247/KOL/2012 #& '(/ ASSESSMENT YEAR : 2008-09 (*+ / APPELLANT ) - - ( -.*+ /RESPONDENT) M/S.DEEPAK INDUSTRIES LTD.. D.C.I.T., CIRCLE-6, KOLKATA -VERSUS- KOLKATA (PAN:AAACD 8676 J) *+ / 0 / FOR THE APPELLANT: SHRI S.JHAJHARIA -.*+ / 0 / FOR THE RESPONDENT: SHRI K.N.JANA,SR.DR 1 2 / 3 /DATE OF HEARING : 11.06.2013 4' / 3 /DATE OF PRONOUNCEMENT : 18.06.2013. 5 / ORDER PER SHRI N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESEE AGAINST THE ORDER OF LD. CIT(A)-VI, KOLKATA DATED 30.12.2011. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN RESTRICTING THE DEDUCTION U /S 80IC TO ONLY AT RS.90,62,385/- IN PLACE OF RS.1,14,96,983/- CLAIMED BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBSE RVED THAT THE FINANCIAL CONDITION OF THE ASSESSEE COMPANY WAS NOT GOOD. THE RESERVES AND SURPLUS AS ON 01.04.2007 WAS (-)RS.3.10 CRORES. MOREOVER THE COMPANY WAS DECLARE D AS SICK INDUSTRIAL COMPANY BY THE BOARD OF INDUSTRIAL AND FINANCIAL RECONSTRUCTIO N. SO THE SUBMISSION OF THE ASSESSEE THAT THE ENTIRE FUNDING OF RUDRAPUR UNIT W AS MADE THROUGH INTERNAL ACCRUAL WAS NOT ACCEPTABLE. THE AO FURTHER OBSERVED THAT TH E ASSESSEE COMPANY HAS TAKEN SECURED LOANS AS WELL AS UNSECURED LOANS THROUGHOUT THE YEAR. THE LOAN FUND HAS BEEN UTILIZED TOWARDS INVESTMENT IN FIXED ASSETS, INVENT ORIES, SUNDRY DEBTORS AND CASH & ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 2 BANK BALANCES. THE ASSESSEE COMPANY HAS INFLATED PR OFIT OF RUDRAPUR UNIT FOR THE PURPOSE OF HIGHER DEDUCTION U/S 80IC. HE FURTHER OB SERVED THAT THE ACTUAL PROFIT OF RUDRAPUR UNIT CAN BE DETERMINED AFTER ALLOCATING FI NANCE CHARGES AND HEAD OFFICE EXPENSES TO THIS UNIT. HE OBSERVED THAT THE AVERAGE VALUE OF FIXED ASSETS AND CURRENT ASSETS INCLUDING LOANS AND ADVANCE FOR ALL THE THRE E UNITS IN CRORES ARE AS UNDER :- KOLKATA UNIT FARIDABAD UNIT RUDRAPUR UNIT AVERAGE VALUE OF FIXED ASSETS, CURRENT ASSETS, LOANS & ADVANCES IN CRORES (7.5 26.0+2.2+17.9) 2 = 26.8 (10.8+18.8+11.2+15.6 2 = 28.2 (9.1+3.2+4.2+1.3) 2 = 8.9 HE FURTHER OBSERVED THAT RATIO OF THE AVERAGE VALUE OF FIXED ASSETS, CURRENT ASSETS, LOANS AND ADVANCES IS EXPRESSED AS UNDER : 268 : 28 2 : 89. THE AO FURTHER OBSERVED THAT THE TOTAL FINANCIAL CHARGE EXCLUDING HIRE CHAR GES AND BILL DISCOUNT IS RS.1,53,25,937/-. THE SUM OF RATIO (268 + 282+ 89) IS 639. THE FINANCE CHARGE FOR RUDRAPUR UNIT IS ALLOCATED IN THE ABOVE RATIO AS UN DER :- 89 X 1,53,25,937 = RS.21,34,598/- 639 ACCORDINGLY THE FINANCE CHARGE OF RS.21,34,598/- WA S REDUCED FROM THE PROFIT OF THE RUDRAPUR UNIT. REGARDING THE ALLOCATION OF HEAD OFF ICE EXPENSES THE AO OBSERVED THAT THE ASSESSEE HAS INCURRED A SUM OF RS30,29,642/-. T HE HEAD OFFICE EXPENSES HAVE TO BE ALLOCATED AMONG ALL THE UNITS TO ARRIVE AT THE CORR ECT PROFITS EARNED BY THEM. THE AO OBSERVED THAT THE TURN OVERS OF THESE THREE UNITS W ERE AS UNDER :- KOLKATA : 58 CRORES FARIDABAD : 108 CRORES RUDRAPUR : 5 CRORES CONSIDERING THE TURN OVERS OF ALL THE THREE UNITS A SUM OF RS.3 LAKHS WAS ALLOCATED TO RUDRAPUR UNIT TO ARRIVE AT THE CORRECT PROFIT OF TH IS UNIT. THE AO THEN OBSERVED THAT THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION OF RS.1, 14,96,983/- U/S 80IC IN RESPECT OF PROFIT FROM RUDRAPUR UNIT. AS ABOVE FINANCE CHAR GE OF RS.21,34,598/- WAS ALLOCATED TO RUDRAPUR UNIT. HEAD OFFICE EXPENSES OF RS.3 LAKHS WAS ALLOCATED TO RUDRAPUR UNIT. AFTER REDUCING THE FINANCIAL CHARGE AND HEAD OFFICE EXPENSES, THE DEDUCTION OF RS.90,62,385/- (11496983 2134598 3 00000) IS ALLOWED U/S 80IC IN RESPECT OF RUDRAPUR UNIT. ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 3 4. BEING AGGRIEVED AGAINST SUCH ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTE D THAT COPY OF THE AUDITED ACCOUNT OF THE HEAD OFFICE EXPENSES IS ENCLOSED. FROM A PER USAL OF THE SAME IT WILL BE SEEN THAT NO LOAN HAD AT ALL BEEN BORROWED BY THE HEAD OFFICE AND AS WILL FURTHER APPEAR FROM THE BALANCE SHEET OF THE HEAD OFFICE, IT HAD NEITHE R BORROWED ANY LOAN NOR ADVANCED ANY LOAN TO EITHER FARIDABAD OR RUDRAPUR AND THE A MOUNT DUE FROM THESE TWO UNITS ONLY REPRESENTED THE PROFITS ACCRUING IN THESE TWO UNITS AND WHICH HAVE BEEN TRANSFERRED TO HEAD OFFICE FOR ACCOUNTING PURPOSES. IT WAS SUBMITTED THAT THEREFORE THE ACTION OF THE AO IN ALLOCATING PROPORTIONATE FINANC E CHARGES WAS WHOLLY BAD, ILLEGAL, UNJUSTIFIED AND UNCALLED FOR. THE AO HAS FAILED TO PROVE THE NEXUS BETWEEN BORROWALS AND ADVANCES TO RUDRAPUR UNIT BY FARIDABAD UNIT. RE GARDING ALLOCATION OF DIRECT AND INDIRECT EXPENSES INCURRED BY THE HEAD OFFICE OR FA RIDABAD UNIT IN RESPECT OF RUDRAPUR UNIT IT WAS SUBMITTED THAT THE HEAD OFFICE OR NEW A LLENBERRY WORKS, KOLKATA DID NOT DEPUTE ANY PERSON FOR SUPERVISING THE RUDRAPUR UNIT AND HENCE THE QUESTION OF ALLOCATION OF ANY EXPENDITURE FROM THE HEAD OFFICE OR NEW ALLENBERY WORKS, KOLKATA IS WHOLLY BAD, ILLEGAL, UNJUSTIFIED AND UNCALLED FO R. AS REGARDS FARIDABAD UNIT, IT WAS SUBMITTED THAT SOME PERSONS WERE DEPUTED FOR SUPERV ISING THE WORK OF RUDRAPUR UNIT AT THE INITIAL STAGE OF STARTING SUCH UNIT AND FOR THIS PURPOSE FARIDABAD UNIT HAS ALREADY DEBITED THE ACCOUNT OF RUDRAPUR UNIT BY RS.6,45,753 /- IN RESPECT OF SALARY AND OTHER ALLOWANCES OF THOSE EXECUTIVES AND OUT WHICH RS.85, 829/- HAS BEEN CAPITALIZED. HENCE IT WAS SUBMITTED THAT THE ACTION OF THE AO IN FURTH ER ALLOCATING RS.3,00,000/- TO RUDRAPUR UNIT REGARDING EXPENDITURE WAS WHOLLY BAD, ILLEGAL, UNJUSTIFIED AND UNCALLED FOR BECAUSE RS.6,45,753/- HAD ALREADY BEEN TRANSFER RED FORM FARIDABAD UNIT TO RUDRAPUR UNIT ON ACCOUNT OF SUCH EXPENDITURE. HENCE IT WAS SUBMITTED THAT THE ACTION OF THE AO IN RESTRICTING THE ADDITION ALLOWABLE U/S 80IC TO RS.90,62,385/- CLAIMED BY THE ASSESSEE SHOULD BE VACATED. THE LD. CIT(A) AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS HELD AS UNDER :- 6. I HAVE DULY CONSIDERED THE OBSERVATIONS OF THE ASSE SSING OFFICER AND SUBMISSIONS OF THE ASSESSEE . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ENGINEERING AND IS RUNNING TWO UNITS SEPARATELY LE. , ONE AT FARIDABAD AND THE OTHER AT RUDRAPUR IN UTTARANCHAL . BOTH THE UNITS ARE IN THE SAME LINE OF MANUFACTURING OF T R ACTOR GEARS AND AUTOMOBILE GEARS . THE ASSESSEE HAD SET UP THE RUDRAPUR UNIT ON 0 1. 12 . 2007 . THE ASSESSING OFFICER OBSERVED THAT SURPLUS ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 4 AND RESERVE ARE NEGATIVE AMOUNT AT RS . 3.10 CRARES AS ON 1 . 4.2007 AND IT HAS BEEN DECLARED AS A SICK I NDUSTRIAL COMPANY BY THE BOARD OF INDUSTRIAL FINANC E RECONCILIATION. THE ASSESSEE C OMPANY HAS NOT DEBITED ANY FINANCE CHARGES TO RUDRAPUR UNIT STATING THAT NO LOAN W AS TAKEN FOR RUDRAPUR UNIT AND THE ENTIRE FUNDING WAS MADE FRAM THE INTERNAL AC C R UAL BASIS FOR SETTING UP OF TH I S NEW UNIT . THE ASSESSEE-COMPANY HAS ALSO NOT D EB I TED ANY HEAD OFFICE EXPENSES TO RUDRAPUR UNIT FOR WHICH THERE IS NO REASONABLE E XP L ANATION GIVEN BY THE APPELLANT . THE ASSESSEE IS HAVING TOTAL ASSETS FOR RUDRAPUR UNIT AMOUNTING TO RS . 11.60 CRORES AND RS. 5 . 43 CRORES AS ON 31.3 . 08 AND 31 . 3 . 07 R ESPEC TI VELY . 1. 7 . THE ASSESSEE HAD TAKEN SECURED AND UNSECURED LOANS THROUGHOUT THE PERIOD BEFORE AND AFTER ESTABLISHING RUDRAPUR UNIT . THE HEAD OFFICE EXPENSES AMOUNTS TO RS . 30 , 29,642/- . THE ASSESSING OFFICER HAS ALLOCATED HEAD OFFICE EXPENSES ON THE BASIS OF TURNOVER WHILE THE EXPENSES FOR FINANCE CHARGES HAVE BEEN ALLOCATED ON THE BASIS OF AVERAGE VALUE OF FIXED AND CURRENT ASSETS INCLUDING LOANS AND ADVANCES. TH E PLEA OF THE ASSESSEE CANNOT BE ACCEPTED THAT NO FUNDS HAVE BEEN TAKEN ON LOAN FOR ESTABLISHING RUDRAPUR UNIT . THE ASSESSEE HAD TAKEN LOANS BEFORE SETTING UP OF RUDRAPUR UNIT . IT CANNOT BE ACCEPTED THAT ALL THE FUNDS OF THE ASS ESSEE IN THE FORM OF SHARE CAPITAL HAS GONE INTO THE SETTING UP OF RUDRAPUR UNIT WHILE THERE WAS A NEGATIVE RESERVE AND SURPLUS OF R S . 4 . 4 CRORES AT THE TIME WHEN THE RUDRAPUR UNIT WAS BEING ESTABLISHED. THE A SSESSEE DID NOT HAVE SUFFICIENT SPARE FUNDS TO ESTABLISH RUDRAPUR UNIT W ITHOUT TAKING EXTRA LOANS. THE MONEY HAS BEEN GIVEN FROM COMMON KITTY F OR ESTABLISHING RUDRAPUR UNIT . IT IS CLEAR THAT THE ASSESSEE IS TRYING TO SHOW MAX IMUM PROFIT BY NOT ALLOCATING THE EXPENSES TO TAX FREE U NIT OF RUDRAPUR UNIT . IN THIS WAY, THE ASSESSEE HAS SHOWN MORE EXPENSES IN T HE OTHER TAXABLE UNIT AND DEDUCTED THE EXPENSES FROM THE PROFITS THEREBY TO PAY LESSER AMOUNTS OF TAXES. THE PROVISIONS OF SECTION 14A ALTHOUGH AP PLIES TO EXEMPTED INCOME BUT THE BASIC PRINCIPLE THAT ANY EXPENSES IN CURRED FOR EARNING INCOME WHICH IS NOT TAXABLE HAS TO BE ALLOCATED EXP ENDITURE INCURRED FOR THE SAME. THE BASIC PRINCIPLE HAS TO BE FOLLOWED EV EN IN THE CASE OF WHERE THE DEDUCTION @ 100% IS BEING CLAIMED BY THE ASSESS EE FROM THE INCOME OF A UNIT . THE PROVISIONS OF SUB-SECTION 8 OF SECTION 80 1 A AS PER 8018 (13) ARE ALSO APPLICABLE AS THE SERVICES OF TAXABLE UNIT IN THE FO R M OF FINANCE CHARGES, INTEREST AND LOAN RAISED FUNDS ARE BEING U SED DIRECTLY BY A UNIT CLAIMING EXEMPTION U/S 8018 OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER HAS RIGHTLY USED THE REASONABLE METHOD {AS PROVIDED IN THE PROVISO TO SECTION 801A(8) OF I . T . ACT,1961} FOR ALLOCATION OF EXPENSES TO THE EXEMPTED UNIT . THERE IS A HUGE DIFFERENCE IN THE NET PROFIT SHOWN FROM BOTH THE UNITS WHICH SHOWS THAT THE ASSESSEE HAS ALLOCAT ED MORE EXPENSES TO THE OLDER UNIT FOR CLAIMING HIGHER DEDUCTION OF EXP ENSES TO SHOW LESSER INCOME AND THEREBY AVOIDING PAYMENT OF INCOME-TAX. THEREFORE, THE PLEA OF THE ASSESSEE IS NOT ACCEPTED. THE REASONS AND AL LOCATION BASIS ADOPTED BY THE ASSESSING OFFICER HAS BEEN FOUND TO BE FAIR AND REASONABLE AND IS ACCORDINGLY UPHELD THE ADDITION OF RS . 24,34,598/- . THE APPEAL OF THE ASSESSEE IS DISMISSED ON THIS GROUND. 5. THE LD. AR OF THE ASSESSEE REITERATED THE SUBMIS SIONS MADE BEFORE THE LD. CIT(A). 6. THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUT HORITIES. ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIALS AVAILABLE ON RECORD. IN THE INS TANT CASE THE ASSESSEE HAS THREE MANUFACTURING UNITS AT KOLKATA, FARIDABAD AND RUDRA PUR. THE INCOME OF THE RUDRAPUR UNIT QUALIFIES FOR DEDUCTION U/S 80IC OF THE ACT WH EREAS INCOME FROM FARIDABAD AND KOLKATA UNITS ARE FULLY TAXABLE. THE AO OBSERVED TH AT THE HEAD OFFICE EXPENDITURE OF THE ASSESSEE WAS RS.30,29,642/- AND THE ASSESSEE CL AIMED THE ENTIRE EXPENSES AS DEDUCTION FORM INCOME FROM KOLKATA AND FARIDABAD UN ITS AND NO PART OF THE EXPENSES WAS ALLOCATED TOWARDS INCOME OF RUDRAPUR UNIT. ACCO RDING TO THE AO THE HEAD OFFICE EXPENSE WAS INCURRED FOR ALL THE THREE UNITS AND TH EREFORE SHOULD HAVE BEEN ALLOCATED TO ALL THE THREE UNITS. THE AO ACCORDINGLY ALLOCATE D RS.3,00,000/- TOWARDS RUDRAPUR UNIT ON THE BASIS OF SALE RELATING TO THE THREE UNI TS. FURTHER THE AO OBSERVED THAT THE ASSESSEE HAS INCURRED INTEREST EXPENDITURE OF RS.1, 53,25,937/- AND THE ENTIRE EXPENSES WAS CLAIMED FROM INCOME OF KOLKATA AND FARIDABAD UN ITS. ACCORDING TO THE AO AS THE LOAN AMOUNT WAS ALSO UTILIZED FOR RUDRAPUR UNIT THE REFORE HE APPORTIONED THE INTEREST EXPENDITURE OF RS.24,34,598./- FOR RUDRAPUR UNIT ON THE BASIS OF TOTAL ASSETS OF THE THREE UNITS. THEREBY THE AO REDUCED THE INCOME OF T HE RUDRAPUR UNIT BY RS.24,34,598/- NET AND INCREASED THE INCOME OF THE OTHER TWO UNITS WITH THE SAME AMOUNT. AS A CONSEQUENCE TO THIS DEDUCTION U/S 80IC OF THE ACT WAS REDUCED BY RS.24,34,598/-. ON APPEAL THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 7.1. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED THAT NO EXPENSES IN THE HEAD OFFICE WAS INCURRED FOR THE RUDRAPUR UNIT. WE FIND THAT NO DETAILS OF THE HEAD OFFICE EXPENDITURE WAS FILED BEFORE US. NO MATERIAL WAS BR OUGHT BEFORE US TO SHOW THAT THE ENTIRE EXPENSES INCURRED BY THE HEAD OFFICE WERE ON LY FOR KOLKATA AND FARIDABAD UNITS AND NO EXPENSES WAS INCURRED FOR RUDRAPUR UNI T. IN ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RECORD BEFORE US WE DO NOT FIND AN Y ERROR IN THE ORDERS OF THE LOWER AUTHORITIES TO THE EFFECT THAT THE HEAD OFFICE EXPE NSES SHOULD BE ALLOCATED ON A REASONABLE BASIS IN RESPECT OF ALL THE THREE UNITS OF THE ASSESSEE COMPANY. FURTHER, THE ALLOCATION OF HEAD OFFICE EXPENSE WAS DONE BY THE A O IN THE RATIO OF SALES OF ALL THE THREE UNITS AND NO MISTAKE WAS BROUGHT BEFORE US TO SHOW THAT THE ALLOCATION OF EXPENDITURE ON THE BASIS OF THE SALES WAS NOT PROPE R IN THE INSTANT CASE AND THERE ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 6 SHOULD HAVE BEEN ANY OTHER BETTER METHOD FOR ALLOCA TION OF HEAD OFFICE EXPENSES TO THE UNITS. THEREFORE THIS PART OF THE GROUND OF APP EAL IS DISMISSED. 7.2. IN RESPECT OF INTEREST EXPENDITURE OF RS.1,53, 25,937/- THE LD. AR OF THE ASSESSEE CONTENDED THAT NO PART OF THE BORROWED FUNDS WERE U TILIZED FOR RUDRAPUR UNIT. THE LD. AR FILED BEFORE US A STATEMENT SHOWING LOAN BALANCE OF 31.03.2006, 31.03.2007 AND 31.03.2008 AND POINTED OUT THAT LOAN AMOUNT HAVE GR ADUALLY DECREASED EACH YEAR. FROM THIS HE ARGUED THAT IT SHOWS THAT NO LOAN AMO UNT WAS UTILIZED FOR SETTING UP OF RUDRAPUR UNIT. HE ALSO FILED A STATEMENT SHOWING IN TERNAL ACCRUALS OF THE COMPANY FOR THREE YEARS ENDED ON 31.03.2006, 31.03.2007 AND 31. 03.2008. THE SAID STATEMENT SHOWS THAT THE NET PROFIT OF THE COMPANY BEFORE DEP RECIATION FOR THE YEAR ENDED 31.03.2006 WAS RS..6,30,38,583/-, FOR 31.03.2007 WA S 5,10,88,326/- AND FOR 31.03.2008 WAS RS.19,98,67,950/-. FROM THE ABOVE ST ATEMENT IT WAS CONTENDED THAT THE INVESTMENT IN RUDRAPUR UNIT WAS MADE OUT OF INT ERNAL ACCRUALS ONLY. 7.3. ON THE OTHER HAND, THE LD. DR POINTED OUT FROM THE ASSESSMENT ORDER THAT THE NET PROFIT OF THE ASSESSEE COMPANY AS ON 01.04.2007 WAS (-)RS.3.10 CRORES, THEREFORE THE ASSESSEE COULD NOT HAVE INVESTED IN RUDRAPUR UN IT FROM INTERNAL ACCRUALS AS CLAIMED BY THE ASSESSEE. WE FIND NO FORCE IN THE AR GUMENT OF THE LD. DR. WE FIND THAT IT IS NOT IN DISPUTE THAT THE NET PROFIT OF THE ASS ESSEE COMPANY DURING THE PERIOD 31.03.2006 WAS RS,.6,30,38,583/- AND DURING THE PER IOD 31.03.200-7 WAS RS.5,10,88,326/-. THUS MERELY BECAUSE THERE WAS A N EGATIVE NET WORK OF THE COMPANY DOES NOT NECESSARILY MEAN THAT THE PROFIT GENERATED BY THE COMPANY DURING THE PERIOD 31.03.2006 AND 31.03.2007 COULD NOT HAVE BEEN INVES TED FOR THE PURPOSE OF INVESTMENT IN RUDRAPUR UNIT. HOWEVER, AT THE SAME T IME, WE ALSO FIND THAT MERELY BECAUSE THE LOAN AMOUNT HAS GRADUALLY REDUCED FROM 31.03.06 TO 31.03.2008 AND AS BECAUSE THERE WAS PROFIT EARNED BY THE COMPANY DURI NG THE YEARS ENDED 31.03.2006 TO 31.03.2008 IT CANNOT BE CONCLUDED THAT THE INVESTME NT IN THE RUDRAPUR UNIT WAS MADE FROM THE PROFITS SO GENERATED ONLY. WE FIND THAT TH E PARTY WISE DETAILS OF THE LOAN ON WHICH THE INTEREST EXPENDITURE OF RS.1,53,25,937/- WAS INCURRED BY THE ASSESSEE WAS NOT BROUGHT ON RECORD BEFORE US BY BOTH THE PARTIES . BOTH THE PARTIES BEFORE US HAS ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 7 BROUGHT NO MATERIAL TO SHOW THE PURPOSE FOR WHICH L OAN IN QUESTION WAS TAKEN BY THE ASSESSEE AND HOW THE LOAN AMOUNT FOR WHICH THE INTE REST EXPENDITURE WAS UTILIZED DURING THE PERIOD UNDER CONSIDERATION. THE YEAR-WIS E BREAKUP OF INVESTMENT MADE IN THE RUDRAPUR UNIT WAS ALSO NOT FILED BEFORE US BY B OTH THE PARTIES. IN ABSENCE OF COMPLETE DETAILS BEFORE US WE ARE NOT IN A POSITION TO ADJUDICATE THIS PART OF THE GROUND OF APPEAL COMPLETELY. IN THE ABOVE CIRCUMSTANCES, I N OUR CONSIDERED OPINION, IT SHALL BE FAIR AND IN THE INTEREST OF JUSTICE TO RESTORE T HIS PART OF THE GROUND OF APPEAL BACK TO THE FILE OF THE AO FOR PROPER VERIFICATION OF THE U TILIZATION OF THE LOAN AMOUNT IN RESPECT OF THE INTEREST EXPENDITURE OF RS.1,53,25,9 37/- WAS INCURRED BY THE ASSESSEE AND THEREAFTER TO DECIDE THE ISSUE AFRESH AS PER LA W AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THIS P ART OF THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS STATED ABOVE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURUPOSES. ORDER PRONOUNCED IN THE COURT ON 18.06.2013. SD/- SD/- [ .' #!' , ] [ .., ,, , ] [MAHAVIR SINGH ] [N.S.SAINI] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (3 3 3 3) )) ) DATE: 18.06.2013. R.G.(.P.S.) 5 / -##6 76'8- COPY OF THE ORDER FORWARDED TO: 1. M/S. DEEPAK INDUSTRIES LTD.., C/O SALARPURIA JAJODI A & CO., 7, C.R.AVENUE, KOLKATA-700072. 2 D.C.I.T., CIRCLE-6, KOLKATA 3 . CIT KOLKATA 4. CIT (A)-VI, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. .6 -#/ TRUE COPY, 51/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA.247/KOL/2012 M/S.DE EPAK INDUSTRIES LTD., KOLKATA VS DCIT.CIRCLE-6,KOL A.YR.2008-09 8