Sujag Fine Chemicals Pvt.Ltd., Baroda V. The Income tax Officer,Ward-4(3), Baroda

ITA 2508/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9169 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Audit objection; Corroborative evidences; Notional interest; Revised return
• Section: 43B; 32; 147; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER (1). ./ I.T.A. NO.2508/AHD/2012 FOR THE A.Y.2004-05 (2). ./ I.T.A. NO.2509/AHD/2012 FOR THE A.Y.2005-06 (3). ./ I.T.A. NO.2510/AHD/2012 FOR THE A.Y.2006-07 (4). ./ I.T.A. NO.2533/AHD/2012 FOR THE A.Y.2004-05 (5). ./ I.T.A. NO.2534/AHD/2012 FOR THE A.Y.2005-06 (6). ./ I.T.A. NO.2603/AHD/2012 FOR THE A.Y.2007-08 (1-3). SUJAG FINE CHEMICALS PVT. LTD. DIST. BARODA -391 340. (4-6). THE INCOME-TAX OFFICER,WARD-4(3)BARODA. / VS. (1-3). THE INCOME-TAX OFFICER,WARD-4(3)BARODA. (1-3). SUJAG FINE CHEMICALS PVT. LTD. DIST. BARODA -391 340. ./ ./ PAN/GIR NO. : AADCS 2989 J ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE : SHRI SUNIL TALATI, A.R. REVENUE : SHRI JAMES KURIAN, SR. D.R. / DATE OF HEARING 02/02/2017 / DATE OF PRONOUNCEMENT 16/02/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : OUT OF THESE SIX APPEALS, THREE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE OTHER ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III, BARODA, ALL ARE IDENTICAL DATED 21/08/2012 FOR THE ASSESSMENT YEARS (AYS) 2004-05, 2005-06, 2006-07 & 2004-05, 2005-06 & 2007-08. ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 2 - 2. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL IN ITA NO.2508/AHD/2012 FOR THE ASSESSMENT YEAR 2004-05:- I. THE ORDER PASSED BY THE HONBLE COMMISSIONER OF INCOME-TAX (A)-III, BARODA IS BAD IN LAW AND CONTRARY TO LEGAL PRONOUNCEMENT. THE ADDITIONS/DISALLOWANCES MADE BY THE AO ARE UNJUSTIFIED AND UNWARRANTED. IT BE HELD SO NOW. II. YOUR APPELLANT SUBMITS THAT THE PROVISIONS OF SECTION 147 R.W.S. 148 ARE NOT APPLICABLE IN THE CASE OF YOUR APPELLANT SINCE THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT ARE DEBATABLE. IT IS FURTHER SUBMITTED THAT THE RE-OPENING BASED AN AUDIT OBJECTION IS UNJUST AND UNCALLED FOR AND HENCE, THE ORDER PASSED BY THE AO BE QUASHED. III. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF NON-GRANTING THE DEPRECIATION OF RS.1,95,217/- AS CLAIMED BY YOUR APPELLANT ON GOODWILL. YOUR APPELLANT SUBMITS THAT GOODWILL IS AN INTANGIBLE ASSET AND IS ELIGIBLE FOR DEPRECIATION AS PER PROVISIONS OF SECTION 32(1)(II) OF THE ACT. IT IS SUBMITTED THAT THE AO BE DIRECTED TO ALLOW THE CLAIM OF DEPRECIATION ON GOODWILL. IV. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN NOT DELETING THE ADDITION MADE BY AO OF RS.2,09,268/-BEING NOTIONAL INTEREST CALCULATED @ 12% ON ADVANCES OF RS.17.44 LACS MADE TO A SISTER CONCERN WITHOUT APPRECIATING THE FACT THAT SUCH ADVANCES WERE MADE OUT OF SELF-GENERATED FUNDS WHICH WERE ADVANCE FOR THE PURPOSE OF BUSINESS. IT IS ALSO SUBMITTED THAT THERE IS NO PROVISION IN THE INCOME-TAX ACT TO MAKE SUCH ADDITION FOR NOTIONAL INCOME. IT BE HELD SO NOW AND ADDITION MADE BY THE AO BE DELETED. WITHOUT PREJUDICE TO THE ABOVE, YOUR APPELLANT SUBMITS THAT THE RATE OF INTEREST CHARGED @ 12% PA IS VERY HARSH AND SAME BE CONSIDERED @ BANK RATE OF 9% RECEIVED BY YOUR APPELLANT ON FD FROM UNION BANK OF INDIA. V. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY AO BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT OF RS.6,98,598/-[OUT OF RS.30,65,348/-] AND RS.2,60,000/- BEING DEPOSITS RECEIVED FROM SURESH B SHETH & KHOKHANI INVESTMENT RESPECTIVELY. YOUR APPELLANT SUBMITS THAT THE NECESSARY DETAILS ARE FILED ON RECORD AND ALL THE CONDITIONS LAID DOWN U/S. 68 OF THE ACT FULFILLED, THERE IS NO JUSTIFICATION IN CONFIRMING SUCH DISALLOWANCE MADE BY AO. ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 3 - VI. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.12,795/- BEING PRIOR PERIOD EXPENSES WITHOUT APPRECIATING THE FACT THAT THE LIABILITY FOR SUCH EXPENSES HAVE BEEN CRYSTALLIZED DURING THE YEAR. YOUR APPELLANT SUBMITS THAT SINCE THE LIABILITY WAR CRYSTALLIZED DURING THE YEAR AND SAME WAS RIGHTLY CLAIMED AND THEREFORE THE AO BE DIRECTED TO ALLOW THE SAME. VII. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.13,295/- SHOWN IN SCHEDULE H OF THE ACCOUNTS. [INCLUDES RS.12,795/-, DISALLOWED IN GROUND NO.6 ABOVE AS PER TAX AUDIT REPORT] YOUR APPELLANT SUBMITS THAT THE CLAIM WAS RIGHTLY MADE SINCE THE SAME WAS CRYSTALLIZED DURING THE YEAR. IT IS FURTHER SUBMITTED THAT THE DISALLOWANCE OF RS.12,795/- AMOUNTS TO DOUBLE ADDITION VIZ. ONE BASED ON TAX AUDIT REPORT AND SECOND BASED ON SCHEDULE H OF ACCOUNTS. BASED ON THE ABOVE FACTS, THE ADDITION MADE BY AO BE DIRECTED TO BE DELETED. VIII. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,81,359/- BEING DIFFERENCE IN ACCOUNTING FOR JOB WORK INCOME AS PER BOOKS OF ACCOUNTS AND AS PER TDS CERTIFICATES. IT IS SUBMITTED THAT THE INCOME HAS BEEN RIGHTLY SHOWN IN THE BOOKS AND ADDITION MADE IN THIS BEHALF BE DELETED. 3. THE FACTS OF THE CASES ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF CHEMICALS AND CHEMICAL JOB WORK. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUESTED TO FILE REVISED RETURN OF INCOME BY NOTICES AND LETTERS REQUESTING TO FILE REVISED RETURN OF INCOME AND MADE COMPLIANCE TO THE SAME. IN RESPONSE TO THE NOTICES ASSESSEES REPRESENTATIVE APPEARED FROM TIME TO TIME BUT DID NOT FILE ANY DOCUMENT. THEREFORE, E X-PARTE ASSESSMENT WAS MADE BY THE LD. A.O. WITH THE FOLLOWING ADDITION DEPRECIATION ON GOODWILL ON PERUSAL OF WORKING OF STATEMENT OF DEPRECIATION, IT WAS SEEN THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 4 - RS.1,95,217/- @ 25% ON GOOD WILL. THEREAFTER, ASSESSEE WAS ASKED BY THE NOTICE THAT AS TO WHY THE DEPRECIATION ON GOODWILL SHOULD NOT BE DISALLOWED AS THE SAME IS NOT ALLOWABLE AS PER INCOME TAX LAW. WHEREAS ASSESSEE CLAIM THE SAME IS JUSTIFIED IN VIEW OF THE SECTION 32 OF THE INCOME-TAX ACT, 1961. ASSET MEANS 1. .. 2. INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. 5. THE LD. ASSESSING OFFICER HELD THAT AS PER SECTION 32(1) OF THE I.T. ACT ALLOWS DEPRECIATION IN RESPECT OF 1. BUILDINGS, MACHINERY, PLANT OR FURNITURE BEING TANGIBLE ASSETS: 2. KNOW-HOW, PATENTS, COPY RIGHTS, TRADE MARKS, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL, 1998. OWNED WHOLLY OR PARTLY, BY THE ASSESSEE AND USED FOR THE PURPOSE OF THE BUSINESS OR PROFESSION. 5.1 IN VIEW OF THE ABOVE DEPRECIATION OF RS.1,95,217/- CLAIMED ON GOODWILL IS DISALLOWED AND ADDED TO THE TOTAL INCOME. 6. LD. AO NOTICED THAT IN SCRUTINY OF BALANCE SHEET IT WAS REVEALS THAT THE ASSESSEE HAS GIVEN ADVANCE OF RS.17,43,904/- TO THE SISTER CONCERNS AND HAS NOT CHARGED INTEREST OF RS.7,43,603/- ON SECURED AND UNSECURED LOANS. VIDE SHOW-CAUSE NOTICES WERE ISSUED TO THE ASSESSEE AS TO WHY INTEREST @ 12% ON ADVANCES GIVEN TO SISTER CONCERNS SHOULD NOT BE CHARGED. IN COMPLIANCE IT IS STATED THAT THE TRANSACTION DONE WITH THE SISTER CONCERN IS FOR THE PURPOSE OF BUSINESS. HENCE COMPANY HAS ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 5 - NOT CHARGED ANY INTEREST. THEREAFTER LD. A.O. RAISED ISSUE OF ADDITION OF RS.32,30,348/- AS ASSESSEE FILED TO PROVING IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE DEPOSITOR OF THE TRANSACTION. 7. ON VERIFICATION OF LEDGER ACCOUNT SUBMITTED BY THE ASSESSEE, IT WAS NOTED THAT LOAN OF RS.1,65,000/- WAS INTRODUCED. NO CONFIRMATION, PAN & ADDRESSES WERE SUBMITTED. IN THE ABSENCE OF CONFIRMATION, ASSESSMENT DETAILS, MADE OF PAYMENT RECEIVED, IDENTITY AND CREDIT WORTHINESS OF THE DEPOSITORS AND GENUINENESS OF TRANSACTION HAVE NOT BEEN PROVED. THEREFORE, UNSECURED LOAN OF RS.1,65,000/- U/S. 68 OF THE IT ACT. 8. IT WAS FURTHER NOTED BY THE LD. A.O. THAT THE DEPOSITORS MAINTAINS TWO ACCOUNTS I.E. DEPOSIT & PROMOTER ACCOUNT. ON VERIFICATION OF LEDGER ACCOUNT(DEPOSIT), IT WAS SEEN THAT THE UNSECURED LOANS OF RS.60,000/- HAS BEEN INTRODUCED AND THE AUDIT REPORT REVEALS THAT THE ASSESSEE HAS ALSO INTRODUCED LOAN OF RS.30,05,348/- IN THE PROMOTER DEPOSIT ACCOUNT. THE ASSESSEE HAS NOT SUBMITTED LEDGER ACCOUNT OF PROMOTER DEPOSIT ACCOUNT FROM ITS BOOKS OF ACCOUNTS AND THE ASSESSEE HAS ALSO FAILED TO FURNISH A CONFIRMATION PROVING IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE DEPOSIT. THEREFORE RS. 30,05,348/- AND RS. 60,000/- WAS TREATED AS UNEXPLAINED UNDER SECTION 68 OF THE IT ACT. THE LD. A.O. HAS CONSIDERED THE ADDITION OF RS.30, 65,348/- AS INGENUINE DEPOSITS MADE BY SURESH B SHETH AS PER ANNEXURE-B OF TAX AUDIT REPORT. WHILE GOING THROUGH THE DETAILS OF PROMOTER/DEPOSIT ACCOUNT, IT IS OBSERVED THAT THROUGH OVERSIGHT THE FIGURE OF THE RE-PAYMENT OF DEPOSITS OF RS.30,05,348/- HAS ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 6 - BEEN WRONGLY SHOWN AS DEPOSITS RECEIVED DURING THE YEAR AND VICE A VERSA (THE CORRECT AMOUNT OF DEPOSITS MADE DURING THE YEAR IS RS.24,14,410/-). IN SUPPORT OF THIS MISTAKE, WE FILED A COPY OF PROMOTER A/C/DEPOSITS A/C. 9. COMING BACK TO THE CORRECT FIGURE OF ADDITION OF DEPOSITS OF RS.2,69,056/- IN DEPOSIT ACCOUNT AGGREGATING TO RS.24,14,410/- MADE DURING THE YEAR BY SURESH B SHETH, THE SAME INCLUDES INTEREST CREDITED DURING THE YEAR OF RS.1,76,755/-. THUS, NET INCREASE IN THE DEPOSITS MADE DURING THE YEAR IS RS.22,37,655/- . (PROMOTERS ACCOUNT OF RS.19,68,598 AND DEPOSITS ACCOUNT OF RS. 2,69,057/-). 10. REGARDING DEPOSIT OF RS.19,68,598/- MADE IN PROMOTER ACCOUNT, IT WAS SUBMITTED THAT THE SAME WERE DEPOSITED OUT OF WITHDRAWALS MADE BY SURESH B SHETH FROM HIS BANK ACCOUNT WITH CO-OPERATIVE BANK OF BARODA. 11. REGARDING ADDITION OF RS. 2,69,057/- MADE IN DEPOSIT A/C , IT WAS SUBMITTED THAT RS. 2,60,000/- HAS BEEN CREDITED TO DEPOSIT ACCOUNT BY TRANSFER OF AMOUNT FROM VOPL. IN SUPPORT OF THIS ASSESSEE FILED A COPY OF DEPOSIT A/C OF SURESH B SHETH ALONGWITH COPY OF A/C WITH VOPL DULY CONFIRMED BY THE COMPANY. 12. LD. A.O. FURTHER TREATED RS.60,000/- AS INGENUINE DEPOSIT AND MADE THE ADDITION AS PER ASSESSEE IT WAS MADE THE ADDITION WITHOUT ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 7 - ASSIGNING ANY REASON IN THIS BEHALF. IN FACTS, AS IS EVIDENT, FROM THE COPY OF THE DEPOSITS ACCOUNT OF SURESH B SHETH THERE IS NO CREDIT OF 60,000/- IN THE ACCOUNT AND HENCE THE ADDITION OF RS.60,000/- IS WRONGLY TREATED AS IN GENUINE DEPOSIT. 13. WITH REGARD TO KHOKHANI INVESTMENT OF RS.1,65,000/- IS CONCERNED. IT WAS STATED BY THE ASSESSEE THAT THE KHOKHANI INVESTMENT IS MADE PAYMENT OF RS.40,000/- AND RS.1,25,000/- TO MADHU SHIPPING ON BEHALF OF ASSESSEE. THE SAID AMOUNT WAS SUBSEQUENTLY PAID BY THE ASSESSEE VIDE A CHEQUE TO KHOKHANI. SO FAR SURESH B SHETH IS CONCERNED THE DEPOSIT MAINTAIN TWO ACCOUNT I.E. DEPOSIT AND PROMOTER A/C BUT ON VERIFICATION OF LEDGER A/C, IT IS SEEM THAT UNSECURED LOAN OF 60,000/- HAS BEEN INTRODUCED AND THE AUDIT REPORT REVEAL LOAN OF RS.30,05,348/- IN PROMOTER DEPOSIT A/C. THE ASSESSEE HAS A PROMOTER DEPOSITED FROM ITS BOOKS OF A/C, ASSESSEE HAS ALSO FAILED TO FURNISH PROVING WORTHINESS GENUINENESS OF THE DEPOSIT. THEREFORE, A TOTAL ADDITION OF RS. 32,30,348/- MADE U/S. 68 OF THE IT ACT. 14. THE ASSESSEE HAS ACCEPTED THAT THE DISALLOWANCE WAS RIGHTLY MADE IN RESPECT OF PREVIOUS YEAR EXPENSES OF RS.13,295/-. HOWEVER, IN RESPECT TO PRIOR PERIOD EXPENSES OF RS.12,975/-, ASSESSEE SUBMITTED THAT IT WOULD AMOUNT TO DOUBLE ADDITION. THE ASSESSEE HAS NOT SUBMITTED ANY LOGIC BEFORE THE AUTHORITIES THAT PROVES THAT DOUBLE ADDITION HAS BEEN MADE. THEREAFTER, FINALLY INCOME OF RS.45,81,659/- WAS ASSESSED BY THE LD. A.O. ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 8 - 15. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 16. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER, LD. A.R. FILED VALUATION PAPER BOOK AND GROUND NOS. 1 AND 2 ARE NOT PRESSED BY THE ASSESSEE, THEREFORE, THESE GROUNDS DO NOT REQUIRE ANY ADJUDICATION. SO FAR GROUND NO.3 IS CONCERNED IN OUR OPINION, THE SAME IS COVERED BY ASSESSEES OWN CASE DECIDED BY THE ITAT ORDER IN ITA NO.2497/AHD/2011. 17. IN THIS CASE, THE ASSESSING OFFICER HELD THAT GOODWILL WAS NOT AN ASSET FALLING UNDER EXPLANATION 3 TO SECTION 32(1) OF THE INCOME TAX ACT,1961(THE ACT, FOR SHORT). IN THE ORDER HONBLE MEMBERS HELD THAT WE QUOTE HEREIN BELOW EXPLANATION 3 OF SECTION 32(1) OF THE ACT: EXPLANATION 3 FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSIONS ASSETS AND BLOCK OF ASSETS SHALL MEAN (A) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLANT OR FURNITURE; (B) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADE-MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE: EXPLANATION 3 STATES THAT THE EXPRESSION ASSET SHALL MEAN AN INTANGIBLE ASSET, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. A READING THE WORDS ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE IN CLAUSE (B) OF EXPLANATION 3 INDICATES THAT GOODWILL WOULD FALL UNDER THE EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE:. THE PRINCIPLE OF EJUSDEM GENERIC WOULD STRICTLY APPLY WHILE INTERPRETING THE SAID EXPRESSION WHICH FINDS PLACE IN EXPLANATION 3(B). ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 9 - IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT GOODWILL IS AN ASSET UNDER EXPLANATION 3(B) TO SECTION 32(1) OF THE ACT. 18 . APPEAL OF THE ASSESSEE WAS ALLOWED BY THE LD. ITAT. 19. SO FAR AS GROUND NO. 4 IS CONCERNED AGAINST THE ASSESSEE AS PER THE LAW AND JUDGMENT AND LD. A.R. FAIRLY CONCEDED THAT THIS GROUND MAY BE DECIDED AGAINST THE ASSESSEE. SO FAR AS GROUND NO. 5 IS CONCERNED, CREDITED OF A/C WAS A GENERAL ENTRY IT IS TO BE CONFIRMED AS A.R. COULD NOT EXPLAIN SATISFACTORY. 20. GROUND NO.6 IS NOT PRESSED AND SO FAR AS GROUND NO.7 IS CONCERNED IN THE SAME DOUBLE ADDITION HAS BEEN MADE THEREFORE GROUND NO.7 IS ALLOWED. 21. GROUND NO.8 IS CONCERNED THAT IS TO BE REGARDING ADDITION OF RS.1,81,359/- BEING DIFFERENCE IN ACCOUNTING AS PER TDS CERTIFICATES. IT WAS SUBMITTED BY THE LD. A.R. THAT ALL DOCUMENTS IN RESPECT OF ITS CONTENTION WERE FILED WITH THE LOWER AUTHORITIES AND SAME DOCUMENTS HAVE ALSO FILED BEFORE US. THERE IS A DIFFERENCE OF AMOUNT, WE ARE THEREFORE ALLOWED 20% OF THE ADDITION REMAINING 80 % IS DELETED. 22. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO.2508/AHD/2012 FOR THE ASSESSMENT YEAR2004-05 IS PARTLY ALLOWED. ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 10 - 23. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.2509AHD/2012 FOR THE A.Y.2005-06. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- I. THE ORDER PASSED BY THE HONBLE COMMISSIONER OF INCOME-TAX (A)-III, BARODA IS BAD IN LAW AND CONTRARY TO LEGAL PRONOUNCEMENT. THE ADDITIONS/DISALLOWANCE MADE BY THE AO IS UNJUSTIFIED AND UNWARRANTED. IT BE HELD SO NOW. II. YOUR APPELLANT SUBMITS THAT THE PROVISIONS OF SECTION 147 R.W.S 148 ARE NOT APPLICABLE IN THE CASE OF YOUR APPELLANT SINCE THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT ARE DEBATABLE. IT IS FURTHER SUBMITTED THAT THE RE-OPENING BASED ON AUDIT OBJECTION IS UNJUST AND UNCALLED FOR AND HENCE, THE ORDER PASSED BY THE AO BE QUASHED. III. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF NON-GRANTING THE DEPRECIATION OF RS.1,46,413/- AS CLAIMED BY YOUR APPELLANT ON GOODWILL. YOUR APPELLANT SUBMITS THAT GOODWILL IS AN INTANGIBLE ASSET AND IS ELIGIBLE FOR DEPRECIATION AS PER PROVISIONS OF SECTION 32(1)(II) OF THE ACT. IT IS SUBMITTED THAT THE AO BE DIRECTED TO ALLOW THE CLAIM OF DEPRECIATION ON GOODWILL. IV. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN NOT DELETING THE ADDITION MADE BY AO OF RS.1,50,811/- BEING NOTIONAL INTEREST CALCULATED @ 12% ON ADVANCES MADE TO A SISTER CONCERN WITHOUT APPRECIATING THE FACT THAT THE SUCH ADVANCES WERE MADE OUT OF SELF-GENERATED FUNDS WHICH WERE ADVANCE FOR THE PURPOSE OF BUSINESS. IT IS ALSO SUBMITTED THAT THERE IS NO PROVISION IN THE INCOME-TAX ACT TO MAKE SUCH ADDITION FOR NOTIONAL INCOME. IT BE HELD SO NOW AND ADDITION MADE BY THE AO BE DELETED. WITHOUT PREJUDICE TO THE ABOVE, YOUR APPELLANT SUBMITS THAT THE RATE OF INTEREST CHARGED @ 12% PA IS VERY HARSH AND SAME BE CONSIDERED @ BANK RATE OF 9% RECEIVED BY YOUR APPELLANT ON FD FROM UNION BANK OF INDIA. V. THE HONBLE CIT(A)-II, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.6,162/- BEING PREVIOUS YEAR EXPENSES WITHOUT APPRECIATING THE FACT THAT THE SAME IS ALLOWABLE AS PER PROVISIONS OF SECTION 43B OF THE ACT AS CLAIMED, THE AO BE DIRECTED TO ALLOW THE SAME. VI. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,94,848/- OUT OF RS.2,03,324/- ON THE GROUND ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 11 - THAT THE SUPPORTING EVIDENCES FOR TDS DEPOSITS ARE NOT FILED ON RECORD. YOUR APPELLANT SUBMITS THAT THE CIT(A)-III FAILED TO APPRECIATE OTHER EVIDENCE FILED ON RECORD FOR ALLOWABILITY OF SAID EXPENSES. 24. GROUND NO. 1 AND 2 ARE NOT PRESSED BY THE LD. A.R. SO FAR AS GROUND NO. 3 IS CONCERNED, THIS ISSUE HAS BEEN DISALLOWED BY THE HONBLE ITAT IN FAVOUR OF ASSESSEE IN ITA NO. 2087, 2296/AHD/2012 FOR THE ASSESSMENT YEAR 2003-04. GROUND NO. 4 IS CONCERNED, IN THIS REGARD ASSESSEE HAS FILED TDS STATEMENT FOR THE A.Y. 2004-05 BUT ASSESSEE COULD NOT GIVE ANY SUBSTANTIATE EVIDENCE WHICH COULD GIVE RELIEF TO THE ASSESSEE, HOWEVER THE ISSUE DECIDED AGAINST THE ASSESSEE IN ITA NO. 2087 AND 2296/AHD/2012 AS WELL, THEREFORE, THIS GROUND IS AGAINST THE ASSESSEE. GROUND NO. 5 IS NOT PRESSED BY THE LD. AR SO FAR AS GROUND NO. 6 IS CONCERNED, LD. AR HAS FILED THE DETAILED SUBMISSION WITH REGARD TO TDS CERTIFICATE, AND THEREFORE THIS GROUND IS ALLOWED. 25. IN THE RESULT, APPEAL IS ALSO PARTLY ALLOWED. 26. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.2510/AHD/2012 FOR THE A.Y.2006-07. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- I. THE ORDER PASSED BY THE HONBLE COMMISSIONER OF INCOME-TAX (A)-III, BARODA IS BAD IN LAW AND CONTRARY TO LEGAL PRONOUNCEMENT. THE ADDITIONS/DISALLOWANCES MADE BY THE AO ARE UNJUSTIFIED AND UNWARRANTED. IT BE HELD SO NOW. II. YOUR APPELLANT SUBMITS THAT THE PROVISIONS OF SECTION 147 R.W.S. 148 ARE NOT APPLICABLE IN THE CASE OF YOUR APPELLANT SINCE THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT ARE DEBATABLE. IT IS FURTHER SUBMITTED THAT THE RE-OPENING BASED AN AUDIT OBJECTION ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 12 - IS UNJUST AND UNCALLED FOR AND HENCE, THE ORDER PASSED BY THE AO BE QUASHED. III. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF NON-GRANTING THE DEPRECIATION OF RS. 82,357/- AS CLAIMED BY YOUR APPELLANT ON GOODWILL. YOUR APPELLANT SUBMITS THAT GOODWILL IS AN INTANGIBLE ASSET AND IS ELIGIBLE FOR DEPRECIATION AS PER PROVISIONS OF SECTION 32(1)(II) OF THE ACT. IT IS SUBMITTED THAT THE AO BE DIRECTED TO ALLOW THE CLAIM OF DEPRECIATION ON GOODWILL. IV. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN MAKING/CONFIRMING THE ADDITIONS OF RS.21,10,044/- DEPOSITS FROM SURESH B SHETH & RS. 1,00,000/- DEPOSIT FROM HEMABEN S SHETH, AGGREGATING TO RS.22,10,044/- TREATING THE SAID DEPOSITS OF DIRECTOR/SHARE HOLDER AS INGENUINE. YOUR APPELLANT SUBMITS THAT NO NEW DEPOSITS HAVE BEEN TAKEN FROM THE SAID PERSONS. YOUR APPELLANT SUBMITTED THE NECESSARY DETAILS AND DOCUMENTS DURING THE ASSESSMENT/REMAND PROCEEDINGS IN THIS REGARD AND HENCE, THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. V. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.8,601/- OUT OF RS.1,03,353/-. YOUR APPELLANT SUBMITS THAT THE CIT(A) HAS NOT APPRECIATED THE FACTS AND RELYING UPON THE REMAND REPORT, MADE THE ADDITION. YOUR APPELLANT SUBMITS THAT SUCH ADDITION IS UNCALLED FOR THE UNJUST. VI. THE HONBLE CIT(A)-III, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.9,85,074/- BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B) WITHOUT APPRECIATING THE FACTS SUBMITTED BEFORE THE AO AS WELL AS BEFORE THE HONBLE CIT(A)-III, BARODA. YOUR APPELLANT SUBMITS THAT JOB CHARGE RATES ARE SIMILAR AS IN THE A.Y. 2006-07 AND HONBLE ITAT, AHMEDABAD HAD DECIDED THE ISSUE IN ASSESSEES FAVOUR IN A.Y. 2006-07. IT IS THEREFORE SUBMITTED THAT THE ADDITION MADE BY AO IS UNCALLED FOR AND UNJUSTIFIED. 27. GROUND NO. 1, 2 & 3 ARE NOT PRESSED SO FAR AS GROUND NO.4 IS CONCERNED. PAYMENT WAS MADE THROUGH GENERAL ENTRY AND SAME IS SUBSTANTIATED TWO DOCUMENTS REPORT. GROUND NO.5 IS NOT PRESSED BECAUSE OF SMALLNESS OF AMOUNT. GROUND NO.6 IS WITH REGARD TO DISALLOWANCE OF ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 13 - RS.985044 BY INVOKING PROVISIONS OF SECTION 40(2)(B) REGARDING JOB CHARGES. THIS ISSUE HAS BEEN DECIDED BY THE HONBLE ITAT IN FAVOUR OF THE APPELLANT IN ITA NO.1621/AHD/2010 IN A.Y. 2006-07 IN PARA 30 AT PAGE NOS. 8 TO 10 OF THE ORDER. LD. AR HAS ENCLOSED A COPY OF THE SAID ORDER THEREFORE RESPECTIVELY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH, WE ALLOW THIS GROUND IN FAVOUR OF THE ASSESSEE. 28. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 29. REVENUES APPEAL IN ITA NO. 2533, 2534, 2603/AHD/2012 :- DEPARTMENT/REVENUE HAS TAKEN FOLLOWING COMMON GROUNDS OF APPEAL IN ITA NO.2533/AHD/2012 FOR THE ASSESSMENT YEAR 2004-05:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.23,66,750/- (A.Y.2004-05), RS.27,37,657/-(A.Y.2005-06) BEING UNSECURED LOAN RECEIVED FROM SHRI SURESH SHETH, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE TRANSACTION. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.18,93,941/- (A.Y.2004-05), RS.24,04,043/-(A.Y.2005-06), RS.34,19,068/-(2007-08) BEING 20% OF VARIOUS EXPENSES VIZ WAGES, ADMINISTRATIVE EXPENSES, INTEREST & MISC. EXPENSES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE ITS CLAIM WITH SUPPORTING DOCUMENTARY EVIDENCES AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDINGS. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IV. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. ITA NO.2508, 2509, 2510, 2533, 2534, 2603/AHD/2012 SUJAG FINE CHEMICALS PVT. LTD. VS. ITO - 14 - 30. SINCE THIS MATTER HAS BEEN ALREADY DECIDED AND PART RELIEF HAS BEEN GIVEN TO THE ASSESSEE AND THIS APPEAL IS CONSEQUENTIAL IN NATURE, SO DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 31. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16/02/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16/02/2017 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, BARODA. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 09/02/2017 (DICTATION-PAD 12 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/02/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S16/02/2017 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DISPATCH OF THE ORDER