RDS Construction Company., Kolhapur V. DCIT, Kolhapur

ITA 2580/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0881 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Depreciation; Business expenditure; Income from undisclosed sources; Search and seizure; Additional depreciation; Period of limitation; Additional evidence; Fair market value; Wrong claim; Difference of opinion; Valuation report; Capital receipt; Onus to prove; Reason to believe; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 153A; 147; 148; 132; 144; 139

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.377 TO 383/PN/2013 !$ $ / ASSESSMENT YEARS : 2004-05 TO 2010-11 ACIT, CENTRAL CIRCLE, KOLHAPUR . / APPELLANT V/S RDS CONSTRUCTION PVT. LTD., S-1, MALATI TOWERS, 223/3, 2 ND FLOOR, E-WARD, TARABAI PARK, KOLHAPUR PAN NO.AABFR4457M . / RESPONDENT . / ITA NOS.2578 TO 2581/PN/2012 !$ $ / ASSESSMENT YEARS : 2007-08 TO 2010-11 RDS CONSTRUCTION PVT. LTD., S-1, MALATI TOWERS, 223/3, 2 ND FLOOR, E-WARD, TARABAI PARK, KOLHAPUR PAN NO.AABFR4457M . / APPELLANT V/S DCIT, CENTRAL CIRCLE, KOLHAPUR . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : MRS. M.S. VERMA, CIT / DATE OF HEARING :11.09.2015 / DATE OF PRONOUNCEMENT:06.11.2015 2 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 / ORDER PER R.K. PANDA, AM : ITA NOS. 377 TO 383/PN/2013 FILED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER DATED 01-11-2012 OF THE CIT(A), KOLHAPUR RELATING TO ASSESSMENT YEARS 2004-05 TO 2010- 11 RESPECTIVELY. THE ASSESSEE HAS ALSO FILED APPEALS FOR A.YRS . 2007-08 TO 2010-11 VIDE ITA NOS. 2578 TO 2581/PN/2012 AGAINST THE SAID ORDER OF THE CIT(A). FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.377/PN/2013 (BY REVENUE) (A.Y. 2004-05) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. IT FILED ITS OR IGINAL RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 01- 11-2004 DECLARING TOTAL INCOME OF RS.72,07,240/-. A SEARCH U/S.132 O F THE I.T. ACT WAS CARRIED OUT ON 23-09-2009 IN THE GROUP OF CASES. IN RESPONSE TO NOTICE U/S.153A THE ASSESSEE FILED ITS RETURN OF INCOME ON 20-07-2010 DECLARING TOTAL INCOME OF RS.78,14,980/-. THE AO COMPLETED THE ASSESSMENT U/S.153A R.W.S. 143(3) FOR THE IM PUGNED ASSESSMENT YEAR ON A TOTAL INCOME OF RS.80,54,157/- BY M AKING THE FOLLOWING ADDITIONS : A. DISALLOWANCE U/S.40A(3) RS.4,060/- B. ADDITION ON ACCOUNT OF BOGUS CLAIM OF EXPENSES IN THE NAME OF LABOUR CONTRACTORS RS.2,35, 117/- 3. SO FAR AS ADDITION MADE U/S.40A(3) IS CONCERNED THE A O NOTED THAT DURING TEST CHECK OF CERTAIN EXPENSES, CERTA IN CASH PAYMENTS EXCEEDING RS.20,000/- WERE FOUND. ACCORDINGLY, THE AO 3 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 DISALLOWED AN AMOUNT OF RS.4,060/- BEING 20% OF SUCH CASH PAYMENT OF RS.20,300/- MADE IN A.Y. 2004-05. 4. SIMILAR ADDITIONS HAVE BEEN MADE FOR OTHER ASSESSMENT YEARS, THE DETAILS OF WHICH ARE AS UNDER : A.Y. AMOUNT OF EXPENSES SPENT IN EXCESS OF RS.20,000/- IN CASH DISALLOWANCE U/S.40A(3) OF THE I.T. ACT 2005 - 06 213941 42788 2006 - 07 361069 72214 2007 - 08 317566 63513 2008 - 09 609305 609305 2009 - 10 184068 69384 2010 - 11 80499 NIL 5. SO FAR AS ADDITION OF RS.2,35,117/- IS CONCERNED THE AO NOTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE A SSESSEE COMPANY HAS SHOWN HUGE AMOUNT OUTSTANDING IN THE NAME S OF SUB-CONTRACTORS AND LABOUR CONTRACTORS. FROM THE VA RIOUS DETAILS FURNISHED BY THE ASSESSEE THE AO NOTED THAT CERTAIN CR EDITORS ARE OUTSTANDING FOR MORE THAN 3 YEARS AND CERTAIN CREDITORS ARE EVEN OUTSTANDING FOR MORE THAN 10 YEARS. HE, THEREFORE, ASKED THE ASSESSEE TO SHORTLIST THE NAMES OF CREDITORS WHO ARE OU TSTANDING FOR MORE THAN 3 YEARS AND SINCE WHEN THEY HAVE REMAINED U NPAID. THE AO NOTED THAT INVESTIGATION DURING THE COURSE OF SE ARCH AND ASSESSMENT PROCEEDINGS REVEALED THAT ASSESSEE IS GENER ATING UNACCOUNTED INCOME BY INFLATING ITS EXPENDITURE. SINCE ASSE SSEE IS DOING GOVERNMENT CONTRACT WORK IT CANNOT SUPPRESS THE RECEIPTS. WHEN AN EXPENDITURE IS DEBITED IN THE BOOKS, THE PAYMENT IS MADE THROUGH CASH FROM ITS UNACCOUNTED INCOME. HOWEVER, THE LIABILITY IS CONTINUED TILL SUCH TIME THE CASH BOOK HAS SUFFICIENT CASH BALANCE. WHENEVER THERE IS SUFFICIENT CASH BALANCE THE PAY MENTS IS 4 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 SHOWN IN THE BOOKS AND LIABILITY IS LIQUIDATED. ACCORDING TO T HE AO SINCE THE LABOURERS ARE POOR AND THEY LEAD HAND TO MOU TH EXISTENCE, THEREFORE, IT IS VERY UNLIKELY THAT THEY WILL WAIT FO R SUCH A LONG TIME FOR THE LABOUR WORK DONE BY THEM. THE OTHER M ETHOD IS THAT THE BOGUS EXPENDITURE IS DEBITED IN THE BOOKS OF AC COUNT. SINCE THE EXPENDITURE IS BOGUS NO PAYMENT IS MADE AND THE LIABILITY IS CONTINUED FOR A LONG TIME. IN VIEW OF THE ABOVE, THE AO DISALLOWED THE OUTSTANDING LIABILITY FOR MORE THAN 3 YEARS AMOUNTING TO RS.2,35,117/- FOR A.Y. 2004-05. 6. SIMILAR ADDITIONS HAVE BEEN MADE FOR OTHER ASSESSMENT YEARS, THE DETAILS OF WHICH ARE AS UNDER : A.Y. AMOUNT 2005 - 06 1,03,230/ - 2006 - 07 1,94,223/ - 2007 - 08 3,12,525/ - 2008 - 09 25,23,585/ - 7. BEFORE CIT(A) IT WAS SUBMITTED THAT ORIGINAL ASSESSMENTS WERE COMPLETED U/S.143(3) FOR THE A.Y. 2004-05 TO 2006-07 AN D VARIOUS ADDITIONS WERE MADE AFTER VERIFYING THE BOOKS OF ACCOUNT AND OTHER DETAILS FURNISHED BY THE ASSESSEE. IT WAS SUBMITTED THAT THESE ADDITIONS COULD NOT HAVE BEEN MADE IN THE ORDER PASSED U/S.143(3) R.W.S. 153A AS NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOUND IN THE COURSE OF SEARCH. IT WAS POINTED OUT THAT THE AD DITIONS MADE IN RESPECT OF THE ABOVE ITEMS WERE AS A RESULT OF CHANGE OF OPINION ON THE SAME SET OF FACTS CONSIDERED IN THE ORIGINAL ASSES SMENTS. RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNA L IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT VIDE ITA NO.5 018 TO 5022 & 5059/MUM/2010 FOR A.YRS. 2004-05 TO 2009-10 IT W AS SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT IN 5 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 CASES WHERE ASSESSMENT ORDERS HAVE ALREADY BEEN PASS ED, ASSESSMENT U/S.153A WILL BE MADE ON THE BASIS OF INCRIMINAT ING MATERIAL, I.E. THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOU ND DURING THE SEARCH BUT NOT PRODUCED DURING THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERE D IN THE COURSE OF SEARCH. IT WAS ACCORDINGLY ARGUED THAT NO ADDITION IS WARRANTED EITHER U/S.40A(3) OR U/S.41(1) OF THE I.T. ACT, 1961. 8. SO FAR AS DISALLOWANCE U/S.40A(3) IS CONCERNED THE LD.CIT (A) CONFIRMED THE ADDITION FOR ALL THE YEARS IN ABSENCE OF ANY EXAMINATION BY THE AO DURING THE FIRST ROUND OF ASSESSME NT PROCEEDINGS AND IN ABSENCE OF THE ASSESSEE TO SHOW THA T THE EXPENSES MADE IN EXCESS OF RS.20,000/- WERE INCORRECT DU E TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. 9. SO FAR AS DISALLOWANCE U/S.41(1) IS CONCERNED THE LD.CIT(A ) DELETED THE ADDITION HOLDING THAT THE AO IN THE ORDER PAS SED U.S,143(3) WHICH WAS COMPLETED PRIOR TO THE SEARCH, HAD VERIFIED THE ISSUE OF OUTSTANDING CREDITORS AND NO INCRIMINATING DOCUMEN TS WERE FOUND AS A RESULT OF SEARCH. HE ACCORDINGLY DELETED THE ADDITION. 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.2,3 5,117/- MADE ON ACCOUNT OF CREDITORS OUTSTANDING STATING THAT THE ISSUE OF OUTSTANDING CREDITORS WAS ALREADY SUBJECT TO SCRUTINY DURING ORIGIN AL ASSESSMENT AND THE ASSESSING OFFICER CANNOT RE-ASSESS THE INCOME U/S.15 3A? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, WHETHER THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT T HE ORIGINAL ASSESSMENT MADE U/S.143(3) HAD REACHED FINALITY AND THE SAME COULD NOT BE AGITATED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS 6 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 U/S.143(3) R.W.S.153A OF THE ACT IN THE ABSENCE OF INC RIMINATING MATERIAL FOUND DURING THE SEARCH. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT( A) BE VACATED AND THAT OF THE ASSESSING OFFICERS ORDER MAY BE RESTORED . 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY ANY OF THE ABOVE GROUNDS RAISED, ANY OTHER GROUNDS AT THE TIM E OF PROCEEDINGS BEFORE THE HONBLE TRIBUNAL WHICH MAY PL EASE BE GRANTED. 11. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOS ED THE ORDER OF THE CIT(A). SHE SUBMITTED THAT THE LD.CIT(A) WA S NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO AMOUNTING TO RS.2,35,117/- MADE ON ACCOUNT OF SUNDRY CREDITORS OUTSTA NDING FOR MORE THAN 3 YEARS. SHE ALSO RELIED ON THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEV ELOPMENT COMPANY VS. DCIT VIDE ITA NO.38/2014 ORDER DATED 25-07 -2014 TO THE PROPOSITION THAT THE AO HAS POWER TO RE-ASSESS TH E INCOME U/S.153A EVEN IN CASE OF A COMPLETED ASSESSMENT, THE ORD ER OF WHICH WAS PASSED U/S.143(3). 12. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT NO INCRIMINATING EVIDENCE WAS FOUND AS A R ESULT OF SEARCH U/S.132 OR DURING THE ASSESSMENT PROCEEDINGS U/ S.153A. THEREFORE, NO ADDITION COULD HAVE BEEN MADE. REFERRING TO THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE O F ALL CARGO GLOBAL LOGISTICS LTD.(SUPRA) HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS ALREADY CONSIDERED THIS ISSUE. FUR THER, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION VIDE ITA NO.523 OF 2013 AND 196 9 OF 2013 ORDER DATED 21-04-2015 AFTER CONSIDERING THE DECIS ION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUS ING (SUPRA) HAS HELD THAT THE SCOPE OF ENQUIRY U/S.153A IS TO BE 7 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 CONFINED ONLY TO THE UNDISCLOSED INCOME UNEARTHED DURING THE SEARCH OR PROCEEDINGS U/S.153A. HE SUBMITTED THAT MERE LY BECAUSE CREDITORS WERE OUTSTANDING FOR SOME YEARS IT DID NOT MEAN THAT THE LIABILITY HAS CEASED IN THE HANDS OF THE ASSESSEE . REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS PVT. LTD. REPORTED IN 236 ITR 518 H E SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DE CISION HAS HELD THAT THE MERE FACT THAT THE ASSESSEE HAS MADE AN ENTRY OF TRANSFER IN HIS ACCOUNTS UNILATERALLY WILL NOT ENABLE THE DE PARTMENT TO SAY THAT SECTION 41(1) IS APPLIED AND THE AMOUNT SHOULD BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THUS, EVEN W HEN THE ASSESSEE HAS CREDITED SUCH AMOUNT TO ITS PROFIT AND LOSS ACCOUNT STILL PROVISIONS OF SECTION 41(1) ARE NOT APPLICABLE IN VIEW OF TH E ABOVE DECISION. THEREFORE, WHEN THE ASSESSEE IN THE INSTA NT CASE IS STILL SHOWING THE CREDITORS IN ITS BALANCE SHEET, THEREFORE, THERE IS NO QUESTION OF MAKING THE ADDITION U/S.41(1). REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HRISHIKESH L. JOSHI VIDE ITA NO.702/PN/2007 HE SUBMITTED TH AT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT SIMPLY BECA USE THE LIABILITY IS UNPAID FOR MORE THAN 3 YEARS IT CANNOT BE TAXED AS CESSATION OF LIABILITY U/S.41(1). HE ACCORDINGLY SUBMITTED THAT NO ADDITION COULD HAVE BEEN MADE. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO MADE AD DITION OF RS.2,35,117/- U/S.41(1) OF THE I.T. ACT ON THE GROUND THAT THE LIABILITY APPEARING IN THE BALANCE SHEET ON ACCOUNT OF CREDIT ORS HAS 8 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 CEASED TO EXIST. WE FIND THE LD.CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED U/S.143(3) PRIOR TO THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL/EVIDENCE WAS UNEARTHED DURING THE CO URSE OF SEARCH AND THEREFORE NO ADDITION U/S.41(1) COULD HAVE BE EN MADE. IT IS THE SUBMISSION OF THE LD. DEPARTMENTAL REPRE SENTATIVE THAT IN VIEW OF THE DECISION OF HONBLE KARNATAKA HIGH COUR T IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY (SUPRA) THE A O CAN MAKE ADDITION IN AN ASSESSMENT U/S.153A EVEN THOUGH THE ASSESSMENT HAS BEEN COMPLETED U/S.143(3) PRIOR TO THE DA TE OF SEARCH. 13.1 WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (SUPRA) AFTER CONSIDER ING THE DECISION OF HONBLE KARNATAK HIGH COURT IN THE CASE OF CAN ARA HOUSING DEVELOPMENT COMPANY (SUPRA) HAS HELD THAT THE AO WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER U/S.153A R.W.S . 143(3) OF THE ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/RE- ASSESSMENT ORDER WHICH HAS ATTAINED FINALITY UNLESS THE MATERIALS GATHE RED IN THE COURSE OF SEARCH OR THE PROCEEDINGS U/S.153A OF THE I.T. ACT ESTABLISH THAT THE RELIEFS GRANTED IN THE FINALIZED ASSESSMEN T/RE- ASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURIN G THE COURSE OF 153A PROCEEDINGS. SINCE IN THE INSTANT CASE, THERE IS N OTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DUR ING THE SEARCH OR IN 153A PROCEEDING WHICH WOULD SHOW THAT NON- DISALLOWANCE U/S.41(1) WAS ERRONEOUS, THEREFORE, WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE AO. 9 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 13.2 EVEN ON MERIT ALSO, WE FIND THE ISSUE STANDS COVERED IN FAOVUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF SUGAULI SUGAR WORKS PVT. LTD. (SUPRA). WE FIND THE HONBLE SUPREME COURT IN THE SAID DECISION WHILE DE CIDING ON THE ISSUE OF CESSATION OF LIABILITY U/S.41(1) OF THE I.T. ACT HAS OBSERVED AS UNDER: THE RESPONDENT-ASSESSEE IS A PRIVATE LIMITED COMPANY. I N THE PROCEEDINGS FOR ASSESSMENT OF TAX FOR THE YEAR ENDING 30 .6.1964 RELEVANT TO THE ASSESSMENT YEAR 1965-66, THE ASSESSEE TRAN SFERRED A SUM OF RS. 3,45,000 OUT OF THE SUSPENSE ACCOUNT RUNNING FROM 1946-47 TO 1948-49 TO THE CAPITAL RESERVE ACCOUNT. THE INCOM E TAX OFFICER FOUND THAT AN AMOUNT OF RS. 1,29,.000 WAS WITH REFER ENCE TO THE DEPOSITS AND ADVANCES WHICH HAD BEEN PAID BACK AND HE INCLUDED A SUM OF RS. 2,56,529 UNDER SECTION 41 OF THE INCOME TA X ACT IN THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE WENT ON APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER AND THE ORDER OF THE I. T.O. WAS CONFIRMED. THE ASSESSEE CARRIED THE MATTER TO THE TRIB UNAL. THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE AND H ELD THAT ITS UNILATERAL ENTRY IN THE ACCOUNTS TRANSFERRING THE AMO UNT TO THE CAPITAL RESERVE ACCOUNT WOULD NOT BRING THE MATTER WITHIN TH E SCOPE OF SECTION 41 OF THE INCOME TAX ACT AND CONSEQUENTLY HELD IN FA VOUR OF THE ASSESSEE. THE DECISION OF THE TRIBUNAL WAS CHALLENGED BEF ORE THE HIGH COURT. THE HIGH COURT OBSERVED : 'THE TRANSFER OF AN ENTRY IS A UNILATERAL ACT OF THE ASSESSEE, WHO IS A DEBTOR TO ITS EMPLOYEES. WE FAIL TO SEE HOW A DEBTOR, BY HIS OWN UNILATERAL ACT, CAN BRING ABOUT THE CESSATION OR REMI SSION OF HIS LIABILITY. REVISION HAS TO BE GRANTED BY THE CREDITOR . IT IS NOT IN DISPUTE AND IT INDEED CANNOT BE DISPUTED THAT IT IS NOT A CASE OF REMISSION OF LIABILITY. SIMILARLY A UNILATERAL ACT ON THE PART O F THE DEBTOR CANNOT BRING ABOUT A CESSATION OF HIS LIABILITY. THE CESSATION OF THE LIABILITY MAY OCCUR EITHER BY REASON OF THE OPERATION OF LAW, THAT IS, ON THE LIABILITY BECOMING UNENFORCEABLE AT LAW BY THE CRED ITOR AND THE DEBTOR DECLARING UNEQUIVOCALLY HIS INTENTION NOT TO HONOUR HIS LIABILITY WHEN PAYMENT IS DEMANDED BY THE CREDITOR OR A CONTRACT BE TWEEN THE PARTIES, OR BY DISCHARGE OF THE DEBT THE DEBTOR MAKIN G PAYMENT THEREOF TO HIS CREDITOR. TRANSFER OF AN ENTRY IS NEITHER AN AG REEMENT BETWEEN THE PARTIES NOR PAYMENT OF THE LIABILITY.' ON THAT REASONING, THE HIGH COURT ANSWERED THE QUESTIO N IN REFER-ENCE IN FAVOUR OF THE ASSESSEE. AGGRIEVED THEREBY, THE COMMI SSIONER OF INCOME TAX HAS PREFERRED THIS APPEAL. 2. LEARNED COUNSEL FOR THE APPELLANT CONTENDS THAT I N THE FACTS OF THE PRESENT CASE, THE LIABILITY HAS COME TO AN END AS A PER IOD OF MORE THAN 20 YEARS HAD ELAPSED AND THE CREDITOR HAD NOT TAKEN ANY STEP TO RECOVER THE AMOUNT. CONSEQUENTLY, ACCORDING TO HIM, THERE IS A CESSATION OF THE DEBT AND THE MATTER WOULD FALL WITHI N THE SCOPE OF SECTION 41 OF THE ACT. SECTION 41 READS AS FOLLOWS : 10 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 'WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN TH E ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADIN G LIABILITY INCURRED BY THE ASSESSEE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, THE ASSESSEE HAS OBTAINED, WHETHER IN CASH OR IN ANY OTHER MA NNER WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPEND ITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY W AY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY HIM, SHALL B E DEEMED TO BE PROFITS AND GAIN OF BUSINESS OR PROFESSION AND ACCORDINGL Y CHARGEABLE TO INCOME TAX AS THE INCOME OF THAT PREVIOUS YEAR, WH ETHER THE BUSINESS OR PROFESSION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IN EXISTENCE IN THAT YEAR OR NOT.' 3. IT WILL BE SEEN THAT THE FOLLOWING WORDS IN THE SE CTION ARE IMPOR- TANT: 'THE ASSESSEE HAD OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY B Y WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY HIM'. TH US, THE SECTION CONTEMPLATES THE OBTAINING BY THE ASSESSEE OF AN AMOUNT EITHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER OR A BENEFIT B Y WAY OF REMISSION OR CESSATION AND IT SHOULD BE OF A PARTICULAR AMOUNT OBTAINED BY HIM. THUS, THE OBTAINING BY THE ASSESSEE OF A BENEFIT BY VIRTUE OF REMISSION OR CESSATION IS SINE QUA NON FOR THE APPLICATION OF THIS SECTION. THE MERE FACT THAT THE ASSESS HAS MADE AN E NTRY OF TRANSFER IN HIS ACCOUNTS UNILATERALLY WILL NOT ENABLE THE DEPART-MENT TO SAY THAT SECTION 41 WOULD APPLY AND THE AMOUNT SHOULD BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THE REASONING OF THE H IGH COURT IS CORRECT AND WE ARE IN AGREEMENT WITH THE SAME. 4. LEARNED COUNSEL FOR THE APPELLANT DRAWS OUR ATTENT ION TO THE JUDGMENT OF THE CALCUTTA HIGH COURT IN COMMISSIONER O F INCOME TAX V. GENERAL INDUSTRIAL SOCIETY LTD., (1994) 207 ITR 169. THE DIVISION BENCH OF THE CALCUTTA HIGH COURT HAS TAKEN CARE TO SE T OUT THE TWO IMPORTANT FACTORS IN THAT CASE WHICH WEIGHED WITH THE M TO COME TO THE PARTICULAR CONCLUSION. THE BENCH SAID : 'IT APPEARS FROM THE ASSESSMENT ORDER THAT THERE IS ONE PECULIAR ASPECT IN THE PRESENT CASE. IT IS THE PRACTICE OF THE ASSESSEE TO WRITE BACK SUCH UNCLAIMED AND UNSPENT LIABILITIES FROM YEAR TO YEAR O N GROUNDS OF BAR LIMITATION OF THE LIABILITY AND TO GET AWAY WITHOUT PAYING TAX ON SUCH AMOUNT WRITTEN BACK TO PROFIT ON THE SAME PLEA. THIS HAS BEEN HAPPENING SINCE THE ASSESSMENT YEAR 1977-78. THIS FACT, TO OUR MIND, IS VERY SIGNIFICANT. ONE MORE NOTABLE FEATURE IS THAT THE ASSESSEE NEVER DIVULGED TO THE ASSESSING OFFICER THE DETAILS AND PART ICULARS OF THE CLAIMS DEQAITE SPECIFIC ENQUIRY. THESE TWO FACTORS COMB INE TO LEND TO THE CASE A COLOUR DIFFERENT FROM THE CASE RELIED UPON ON BEHALF OF THE ASSESSEE.' (AT PAGES 172-73) THE BENCH DISTINGUISHED THE O THER DECISIONS REFERRED TO BEFORE IT BY POINTING OUT THAT THE FACTS WERE ENTIRELY DIFFERENT IN THOSE CASES. HENCE, THE RULING O F THE CALCUTTA HIGH COURT IN THE CASE CITED WILL NOT HELP THE APPELLANT AS IT TURNED ON THE PECULIAR FACTS OF THE CASE AS STATED IN THE PASSAGE EXTRA CTED. 5. LEARNED COUNSEL SUBMITS THAT THE SAID JUDGMENT HAS BE EN FOLLOWED BY THE CALCUTTA HIGH COURT IN COMMISSIONER OF INCOME- TAX, V. JIAJEE RAO COTTON MILLS LTD., (1997) 227 ITR 860. THERE IS N O SEPARATE REASONING IN THE SAID JUDGMENT AND DOES NOT TAKE THE M ATTER ANY FURTHER. 11 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 6. LEARNED COUNSEL ALSO REFERRED TO THE JUDGMENT OF T HE BOMBAY HIGH COURT IN COMMISSIONER OF INCOME-TAX V. BENNETT COLEMA N AND CO. LTD., (1993) 201 ITR 1021. THE BENCH HELD THAT IT WAS DIFF ICULT TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT CESSATION OF LIABILITY CA N TAKE PLACE ONLY AS A RESULT OF A BILATERAL ACT, BUT IT WILL DEPEND UP ON THE FACTS OF EACH CASE. THE BENCH POINTED OUT THAT THERE MAY BE CASES WH ERE THE LIABILITY IS NOT BARRED BY OPERATION OF LAW, BUT IN SUCH CASES BI LATERAL ACT OF THE PARTIES WILL BE NECESSARY TO BRING ABOUT CESSATION OF LI ABILITY. ACCORDING TO THE BENCH, IF THE RECOVERY HAD BECOME BARRED BY LIMITATION BY OPERATION OF LAW, UNILATERAL EXPRESSION OF INTENTION OF THE DEBTOR NOT TO TREAT THE AMOUNT ANY MORE AS LIABILITY MIGHT BE SUFFI CIENT TO BRING ABOUT A CESSATION OF THE LIABILITY. THE BENCH ALSO ACC EPTED THE ALTERNATIVE ARGUMENT THAT WHERE AN ASSESSEE HAD WRITTEN OFF HIS TIME BARRED LIABILITY FROM HIS ACCOUNTS AND TRANSFERRED THE AMOUNT TO HIS PROFIT AND LOSS ACCOUNT THEREBY TREATING IT AS HIS INCO ME, HE COULD NOT BE PERMITTED TO TURN ROUND WHEN THE QUESTION OF INCL USION OF SUCH AMOUNT IN HIS INCOME UNDER SECTION 41(1) OF THE ACT AROSE. THE BENCH DISTINGUISHED THE JUDGMENT IN KOHINOOR MILLS CO. LTD. V. CIT, (1963) 49 ITR 578, BY OBSERVING THAT THERE WAS NO CESSATION OF LI ABILITY IN THAT CASE DESPITE THE EXPIRY OF PERIOD OF LIMITATION TO EN FORCE THE SAME. THE BENCH SAID THAT THE ASSESSEE COULD NOT GET RID OF HIS LIA BILITY WHEN CALLED UPON TO MEET EITHER BY THE EMPLOYEES UNDER TH E INDUSTRIAL DISPUTES ACT OR BY THE GOVERNMENT UNDER THE BOMBAY WE LFARE FUND ACT ON ACCOUNT OF THE SPECIAL PROVISIONS OF THOSE ACTS. WE ARE UNABLE TO ACCEPT THE REASONING OF THE BOMBAY HIGH COURT IN THA T CASE. JUST BECAUSE AN ASSESSEE MAKES AN ENTRY IN HIS BOOKS OF ACCOUNTS UNILATERALLY, HE CANNOT GET RID OF HIS LIABILITY. TH E QUESTION WHETHER THE LIABILITY IS ACTUALLY BARRED BY LIMITATION IS NOT A M ATTER WHICH CAN BE DECIDED BY CONSIDERING THE ASSESSEE'S CASE ALONE BUT IT I S A MATTER WHICH HAS TO BE DECIDED ONLY IF THE CREDITOR IS BEFOR E THE CONCERNED AUTHORITY. IN THE ABSENCE OF THE CREDITOR, IT IS NOT POSSIBLE FOR THE AUTHORITY TO COME TO A CONCLUSION THAT THE DEBT IS BA RRED AND HAS BECOME UNENFORCEABLE. THERE MAY BE CIRCUMSTANCES WHIC H MAY ENABLE THE CREDITOR TO COME WITH A PROCEEDING FOR ENFORCEM ENT OF THE DEBT EVEN AFTER EXPIRY OF THE NORMAL PERIOD OF LIMITATIO N AS PROVIDED IN THELIMITATION ACT. 7. ONE ASPECT OF THE MATTER HAS BEEN COMPLETELY IGNOR ED BY THE JUDGMENT OF THE DIVISION BENCH OF THE BOMBAY HIGH CO URT. AS POINTED OUT ALREADY, THE CRUCIAL WORDS IN THE SECTION REQUIR E THAT THE ASSESSEE HAS TO OBTAIN IN CASH OR IN ANY OTHER MANNER SOME BENE FIT. THAT PART OF THE SECTION HAS BEEN OMITTED TO BE CONSIDERED BY THE DIVISION BENCH OF THE BOMBAY HIGH COURT. THE SAID WORDS HAVE BEEN CONSID ERED BY A FULL BENCH OF GUJARAT HIGH COURT IN DETAIL IN THE COMMISSI ONER OF INCOME- TAX, GUJARAT-II, AHMEDABAD V. M/S. BHARAT IRON & STE EL INDUSTRIES, BHAVNAGAR, (1993) TAX L R 188. THE FOLLOWING PASSAGES IN THE JUDGMENT BRINGS OUT OF THE REASONING OF THE FULL BENC H SUCCINCTLY : '11. IN OUR OPINION, FOR CONSIDERING THE TAXABILITY OF AMOUNT COMING WITHIN THE MISCHIEF OF S. 41(1)OF THE ACT, THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS OF NO RELEVANCE OR CONSE-QUEN CE. WE HAVE TO GO BY THE LANGUAGE USED IN S. 41(1) TO FIND OUT WH ETHER OR NOT THE AMOUNT WAS OBTAINED BY THE ASSESSEE OR WHETHER OR NOT SOM E BENEFIT IN RESPECT OF TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF WAS OBTAINED BY THE ASSESSEE AND IT IS IN THE PREVIOUS YE AR IN WHICH THE AMOUNT OR BENEFIT, AS THE CASE MAY BE, HAS BEEN OBTAIN ED THAT THE 12 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 AMOUNT OR THE VALUE OF THE BENEFIT WOULD BECOME CHA RGEABLE TO INCOME TAX AS INCOME OF THAT PREVIOUS YEAR. 12. WE FULLY AGREE WITH THE VIEW TAKEN BY THE DIVISI ON BENCH IN C.I.T. V. RASHMI TRADING (1977) TAX LR 520 GUJARAT (SUPRA) THA T THE ONLY MEANING THAT CAN BE ATTACHED TO THE WORDS 'OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESP ECT OF SUCH LOSS OR EXPENDITURE' INCURRED IN ANY PREVIOUS YEAR CLEARL Y REFER TO THE ACTUAL RECEIVING OF THE CASH OF THAT AMOUNT. THE AMO UNT MAY BE ACTUALLY RECEIVED OR IT MAY BE ADJUSTED BY WAY OF AN ADJUSTMENT ENTRY OR A CREDIT NOTE OR IN ANY OTHER FORM WHEN THE CASH OR THE EQUIVALENT OF THE CASH CAN BE SAID TO HAVE BEEN RECEIVED BY THE ASSESSE E. BUT IT MUST BE THE OBTAINING OF THE ACTUAL AMOUNT WHICH IS CONTE MPLATED BY THE LEGISLATURE WHEN IT USED THE WORDS 'HAS OBTAINED; WHET HER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE IN THE PAST'. AS RIGHTLY OBSERVED BY THE DIVISION BENCH IN THE CONTEXT IN WHICH THESE WORDS OCCUR, NO OTHER MEA NING IS POSSIBLE.' WE ARE IN AGREEMENT WITH THE SAID REASONING. 8. THERE IS ANOTHER JUDGMENT OF THE BOMBAY HIGH COUR T WHICH WAS RENDERED MUCH EARLIER IN J.K. CHEMICALS LTD. V. COMM ISSIONER OF INCOME-TAX, BOMBAY CITY II, (1966) 62 ITR 34. THE B ENCH OBSERVED : '........THE TRANSFER OF AN ENTRY IS A UNILATERAL ACT OF THE ASSESSEE, WHO IS A DEBTOR TO ITS EMPLOYEES. WE FAIL TO SEE HOW A DEBTOR, BY HIS OWN UNILATERAL ACT, CAN BRING ABOUT THE CESSATION OR REMI SSION OF HIS LIABILITY. REMISSION HAS TO BE GRANTED BY THE CREDITO R. IT IS NOT IN DISPUTE, AND IT INDEED CANNOT BE DISPUTED, THAT IT IS NOT A CASE OR REMISSION OF LIABILITY. SIMILARLY, A UNILATERAL ACT O N THE PART OF THE DEBTOR CANNOT BRING ABOUT A CESSATION OF HIS LIABILITY . THE CESSATION OF THE LIABILITY MAY OCCUR EITHER BY REASON OF THE OPER A-TION OF LAW, I.E., ON THE LIABILITY BECOMING UNENFORCEABLE AT LAW BY THE CREDITOR AND THE DEBTOR DECLARING UNEQUIVOCALLY HIS INTENTION NOT TO HONOUR HIS LIABILITY WHEN PAYMENT IS DEMANDED BY THE CREDITOR, OR A CONTR ACT BETWEEN THE PARTIES OR BY DISCHARGE OF THE DEBT - THE DEBTOR MAKI NG PAYMENT THEREOF TO HIS CREDITOR. TRANSFER OF AN ENTRY IS NEITH ER AN AGREEMENT BETWEEN THE PARTIES NOR PAYMENT OF THE LIABILITY.... ...'(AT PAGE 41) 9. THIS JUDGMENT HAS BEEN QUOTED BY THE HIGH COURT IN THE PRESENT CASE AND FOLLOWED. WE HAVE NO HESITATION TO SAY THAT THE R EASONING IS CORRECT AND WE AGREE WITH THE SAME. 10. THE PRINCIPLE THAT EXPIRY OF PERIOD OF LIMITATI ON PRESCRIBED UNDER THE LIMITATION ACT COULD NOT EXTINGUISH THE DEBT BUT IT WOULD ONLY PREVENT THE CREDITOR FROM ENFORCING THE DEBT, HAS BE EN WELL SETTLED. IT IS ENOUGH TO REFER TO THE DECISION OF COURT IN BOMBAY DYEING & MANUFACTURING CO. LTD. V. THE STATE OF BOMBAY AND O THERS, [1958] SCR 1122, IF THAT PRINCIPLE IS APPLIED, IT IS CLEAR THAT MERE ENTRY IN THE BOOKS OF ACCOUNTS OF THE DEBTOR MADE UNILATERALLY WITHOUT ANY ACT ON THE PART OF THE CREDITOR WILL NOT ENABLE THE DEBTOR TO SAY TH AT THE LIABILITY HAS COME TO AN END. APART FROM THAT, THAT WILL NOT BY I TSELF CONFER ANY BENEFIT ON THE DEBTOR AS CONTEMPLATED BY THE SECTIO N. 11. IN THE CIRCUMSTANCES, WE FIND NO MERIT IN THIS APP EAL AND IT IS DISMISSED. THERE WILL BE NO ORDER AS TO COSTS. 13 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 13.3 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HRISHIKESH L. JOSHI (SUPRA) WHILE DELETING THE ADDITION U/S.41(1) O F THE ACT, FOLLOWING THE ABOVE DECISION AND VARIOUS OTHER DEC ISIONS HAS OBSERVED AS UNDER : 12. AGGRIEVED WITH THE ABOVE DECISION OF THE CIT(A ), THE ASSESSEE FILED GROUND 3 OF THE APPEAL BEFORE US. FURTHER, AGG RIEVED WITH THE RELIEF GIVEN TO THE ASSESSEE THE REVENUE IS IN APPEAL VIDE THE GROUND 7 OF THE APPEAL. DURING THE PROCEEDINGS, THE ASSESSEE FILE D A WRITTEN NOTE STATING THAT THE AO INVOKED THE PROVISIONS OF SECTION 4 1(1) OF THE ACT AND ACCORDING TO THE SAID PROVISIONS, THE AO CANNOT T REAT THE SAID AMOUNTS AS INCOME OF THE ASSESSEE OR DEEM THEM AS CASE OF R EMISSION OR CESSATION OF LIABILITIES, WHERE THE SAID AMOUNTS WERE NOT WRITTEN OF BY THE ASSESSEE IN THE BOOKS OF THE ASSESSEE. DURING THE PRO CEEDINGS BEFORE US, THE ASSESSEE FILED CASE LAWS TO SUPPORT VIEW IN CLUDING THE PUNE BENCH DECISION IN THE CASE OF M/S ATIDAB CONCRETE PIPES AND PRODUCTS PUNE VIDE ITA NO 1017/PN/2002 TO SUPPORT THE ABOVE. FURTHER, COUNSEL STATED THAT THE SAID AMOUNTS WERE WRIT TEN OFF AS THE INCOME OF THE ASSESSEE IN THE YEAR RELEVANT TO THE AY 2 006-07 AND THEREFORE, THERE IS NO NEED FOR ANY ADDITION DURING THE YEAR UNDER CONSIDERATION. FURTHER, WE FIND THE JUDGMENTS IN THE CASES OF DSE ENGINEERS (30 SOT 31) (MUM), SUGAOLI SUGAR WORKS P LT D (236 ITR 518) HOLDS THAT THE LIABILITIES DO NOT CEASE TO EXISTS M ERELY BY EFFLUX OF TIME. CONSIDERING THE ABOVE SETTLED PRINCIPLES ON THE ISSUE, WE FIND THAT THE FINDING OF THE CIT(A) HAS TO BE REVERSED ON THIS ISSUE. ACCORDINGLY, THE RELEVANT GROUND OF THE ASSESSEE ARE AL LOWED. FURTHER, THE GROUNDS OF THE REVENUE ARE DISMISSED. 13.4 FOLLOWING THE ABOVE PRECEDENTS WE HOLD THAT THE CIT (A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION OF RS.2,35,117/-. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.378/PN/2013 (BY REVENUE) (A.Y. 2005-06) : 14. GROUNDS OF APPEAL NO.1 AND 2 BY THE REVENUE READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.1,0 3,230/- MADE ON ACCOUNT OF CREDITORS OUTSTANDING STATING THAT THE ISSUE OF OUTSTANDING CREDITORS WAS ALREADY SUBJECT TO SCRUTINY DURING ORIGIN AL ASSESSMENT AND THE ASSESSING OFFICER CANNOT RE-ASSESS THE INCOME U/S.15 3A? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, WHETHER THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT TH E ORIGINAL ASSESSMENT MADE U/S.143(3) HAD REACHED FINALITY AND THE SAME COULD NOT BE AGITATED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS 14 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 U/S.143(3) R.W.S. 153A OF THE ACT IN THE ABSENCE OF IN CRIMINATING MATERIAL FOUND DURING THE SEARCH. 15. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUND S ARE IDENTICAL TO GROUNDS OF APPEAL NO.1 AND 2 IN ITA NO.377/PN/ 2013. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISE D BY THE REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME REASONING , THE ABOVE GROUNDS BY THE REVENUE ARE DISMISSED. 16. GROUND OF APPEAL NO.3 BY THE REVENUE READS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DELETING ADDITION OF RS.22,04,250 /- U/S.69B OF THE ACT STATING THAT THE ASSESSING OFFICER HAS INCORRECTLY ASSU MED JURISDICTION OVER THIS ITEM WHEN ASSESSMENT PROCEEDINGS WE RE COMPLETED U/S.143 OF THE ACT AND BY HOLDING THAT THE LAND WAS NOT UNDERVALUED AS DVO HAS TAKEN COMPARABLE SALES INSTANCE O F THE YEAR 2005, WHEREAS THE ASSESSING OFFICER WAS SUPPOSED TO TAKE CO MPARABLE INSTANCE OF 1996 AND 2002. HOWEVER, THERE IS NOTHING IN THE PURCHASE DEED TO SUGGEST THAT THE ASSESSEE HAD MADE PAYMENT IN THE YEAR 1996 AND 2002? 17. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS ACQUIRED THE FOLLOWING PROPERTIES DURING A.Y. 2005-06 : 1 LAND AT S.NO.22/1 (PART) BAVDHAN (BUDRUK), TAL MULSH I, DIST. PUNE 2 LAND AT S.NO.22/1 (PART) BAVDHAN (BUDRUK), TAL MULSHI, DIST. PUNE 3 LAND AT S.NO.22/1 (PART) BAVDHAN (BUDRUK), TAL MULSH I, DIST. PUNE 4 LAND AT S.NO.22/1 (PART) BAVDHAN (BUDRUK), TAL MULSHI, DIST. PUNE THE TOTAL VALUE OF THE ABOVE PROPERTIES ACQUIRED ARE RS.41,95,750/-. TO KNOW THE INVESTMENT IN THE SAID PROPERTIES THE AO MA DE A REFERENCE TO THE DVO U/S.142A OF THE I.T. ACT TO DETERM INE THE COST OF THE PROPERTIES IN THE HANDS OF THE ASSESSEE AS ON TH E DATE OF ACQUISITION. 15 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 18. THE DVO VALUED THE PROPERTIES AT RS.64,00,000/-. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DIFFERENCE OF RS.22,04,250/- SHALL NOT BE ADDED U/S.69B OF THE I.T. ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE DIFFERENCE BETWEEN T HE INVESTMENT SHOWN BY THE ASSESSEE AND THE VALUE DETERM INED BY THE DVO IS DUE TO THE SUDDEN INCREASE IN PRICE BY MORE THAN 60% TO 70%. FURTHER, THE DVO HAS NOT CONSIDERED THE FACT THAT ONE OF THE PROPERTIES, I.E. PLOT NO.22/1 AT BAVDHAN WAS AGREED TO BE PURCHASED IN 2002 AND PLOT NO.21/1 AT BAVDHAN WAS AGRE ED TO BE PURCHASED IN 1996. THE DVO HAS NOT CONSIDERED THE ABO VE FACT AND HAS CONSIDERED THE FAIR MARKET VALUE OF PROPERTIES ON THE DATE OF PURCHASE. THE FAIR MARKET VALUE ON THE DATE OF FIRST P AYMENT, I.E. 2002 AND 1996 SHOULD HAVE BEEN CONSIDERED BY THE AO. HOWEVER, THE AO DID NOT ACCEPT THE ARGUMENTS ADVANCED BY THE ASSESSEE AND MADE THE ADDITION OF RS.22,04,250/- BEING THE DIFFERENCE BET WEEN THE COST ARRIVED AT BY THE DVO AND SHOWN BY THE ASSE SSEE U/S.69B OF THE I.T. ACT. 19. BEFORE CIT(A) IT WAS SUBMITTED THAT THE STAMP DUTY REGISTRATION CHARGES ARE ACCOUNTED FOR IN ITS BOOKS AT THE TIME OF PURCHASE DEED. RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PUNEET SABHARWAL REPORTED IN 338 ITR 485 IT WAS SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DE CISION HAS HELD THAT ADDITION CANNOT BE MADE ONLY ON THE BASIS OF REPORT OF THE DVO AND THAT THE PRIMARY BURDEN TO PROVE UNDERSTATEM ENT OR CONCEALMENT OF INCOME IS ON THE REVENUE. 16 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 20. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 20. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT WITH REFERENCE TO THE FACTS ON RECORD. I FIND THAT FOR ASSE SSMENT YEAR 2006- 07, THE ASSESSING OFFICER HAD ISSUED A QUESTIONNAIRE ON 10 /12/2007 WHEREBY VIDE ITEM NO. 13 THE APPELLANT WAS REQUIRED TO GIVE THE DETAILS OF LAND PURCHASED AT BAVDHAN AND DHARMBE. THE APPELL ANT HAD, VIDE LETTER DATED 11/01/2008 AT ITEM NO. 13 PROVIDED THE PURCHASE DEED AND DETAILS OF PAYMENTS MADE BY PROVIDING THE EXTRAC T OF LAND ACCOUNT. THESE DETAILS COMPRISED OF BOTH LANDS PURCHASED AT BAVDH AN I.E. DETAILS WERE GIVEN IN RESPECT OF SURVEY NO. 22/1 AND 2 1/1. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS POI NTED OUT THAT POSSESSION OF BOTH THE PIECES OF LAND WAS TAKEN IN EARLIE R YEARS. FOR THIS PURPOSE, IT HAS PROVIDED WITH THE ACCOUNT EXTRACT OF CONSTRUCTION AND MATERIAL PURCHASED ACCOUNT FROM 01/04/2003 TO 31 /03/2004. THESE ACCOUNT EXTRACTS SHOW THAT CONSTRUCTION WAS UNDERT AKEN EVEN PRIOR TO 01/04/2003 BECAUSE THE OPENING BALANCE OF B AVDHAN BUILDING IS SHOWN AT RS.6,72,951/-. DURING THE FINANCIAL YEAR 2003-04, FURTHER CONSTRUCTION WORTH RS.16,91,602/- WAS ALSO UNDERTAKEN. THIS GOES TO PROVE THAT THE POSSESSION OF LAND WAS TAKEN PRIOR TO 200 4-05. THE APPELLANT HAD ALSO MADE PAYMENT IN RESPECT OF SURVEY N O.21/1 AS EARLY AS 1996 (RS.7.20 LAKHS) AND IN RESPECT OF SURVEY NO.22/ 1, THE PAYMENTS WERE MADE IN THE FINANCIAL YEAR 2002-03 ITSE LF. THESE FATS INDICATE THAT THE TRANSACTION FOR TRANSFER AND PURCH ASE OF LAND WAS COMPLETED BEFORE THE DATE OF REGISTRY FOR SALE, WHICH WERE EXECUTED IN THE FINANCIAL YEAR 2004-05. THE TRANSFER OF LAND WA S COMPLETED IN ACCORDANCE WITH SECTION 53A OF THE TRANSFER OF PROPER TY ACT. NOW, THESE FACTS WERE ALREADY BEFORE THE ASSESSING OFFICER DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2006-07. HENCE , IN ACCORDANCE WITH THE PRINCIPLES FOR EXAMINATION OF IT EMS OF ADDITION IN A REASSESSMENT PROCEEDING UNDER SECTION L53A (SUPRA), I HOLD THAT THE ASSESSING OFFICER WAS NOT ENTITLED TO REVISIT THE SAME ISSUE S WHICH WERE ALREADY CONCLUDED IN AN ASSESSMENT PROCEEDING COMPLETED UNDER SECTION 143(3). IT IS ALSO NOT THE CASE OF THE ASSESSING O FFICER THAT INCRIMINATING DOCUMENTS INDICATING CASH DEALING IN LA ND PURCHASE WERE DISCOVERED DURING THE COURSE OF SEARCH AND SEIZURE . UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER HAS INCORRECTLY ASSUMED JURISDICTION OVER THIS ITEM AND MADE THE ADDITION OF RS.15.90 LAKHS IN ASSESSMENT YEAR 2006-07 AND RS.22.40 LAKHS IN ASSESSMENT YEA R 2005- 06. 21. EVEN ON MERITS, THERE IS NO CASE FOR AN ADDITION B ECAUSE THE DVO HAS TAKEN COMPARABLE SALES INSTANCE OF THE YEAR 2005 WH EREAS HE WAS SUPPOSED TO TAKE THE COMPARABLE SALES INSTANCE OF THE YE AR 1996 AND 2002. THERE IS NOTHING ON RECORD TO INDICATE THAT LA ND WAS UNDERVALUED WHILE MAKING THE PURCHASES M THESE TWO YEA RS. THEREFORE, THE ADDITIONS MADE ARE DELETED. 21. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 17 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 22. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE AO. 23. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT NO INCR IMINATING EVIDENCE WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH THAT THE ASSESSEE HAS MADE ANY UNACCOUNTED INVESTMENT OR UNAC COUNTED PAYMENT. THE ASSESSMENTS WERE COMPLETED U/S.143(3) PRIOR TO THE DATE OF SEARCH. THE AGREEMENTS FOR PURCHASES WERE ENT ERED INTO IN THE YEAR 1996 AND 2002 AND THE POSSESSION OF THE SAID LANDS WERE ALSO TAKEN PRIOR TO 2004-05. THE DVO INSTEAD OF TAKING COMPARABLE SALE INSTANCES IN THE YEAR 1996 TO 2002 WHEN THE AGREE MENTS WERE MADE HAD TAKEN COMPARABLE SALE INSTANCES OF 2005. THERE FORE, THE LD.CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION. 24. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSMENT IN THE INSTANT CASE WAS COMPLETED U/S.143(3) PRIOR TO THE DATE OF SEARCH AND THE INVESTMENT IN PURCH ASE OF LANDS WERE ALREADY DECLARED IN SUCH RETURN. NO INCRIMINATING MAT ERIAL WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH TO SU BSTANTIATE THAT UNACCOUNTED INVESTMENT HAS BEEN MADE BY THE ASS ESSEE TOWARDS PURCHASE OF THE LANDS. THE ADDITION WAS MAINLY B ASED ON THE VALUATION REPORT OF THE DVO. THE HONBLE DELHI HIGH CO URT IN THE CASE OF PUNEET SABHARWAL (SUPRA) HAS HELD THAT ADDITIO N TO INCOME BASED SOLELY ON REPORT OF DVO IS NOT VALID IN ABSEN CE OF ANY EVIDENCE OF UNDERSTATEMENT OF CONSIDERATION. FURTHER, THE 18 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 CONTENTION OF THE ASSESSEE BEFORE THE AO AS WELL AS THE CIT(A) THAT THE AGREEMENTS FOR PURCHASE OF LANDS WERE ENTERED IN TH E YEAR 1996 AND 2002 AND THE POSSESSION WAS ALSO TAKEN PRIOR TO 2004- 05 COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. UNDER THESE CIRCUMSTANCES, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE D VO HAS ERRED IN TAKING THE SALE INSTANCES OF THE YEAR 2005 INST EAD OF TAKING COMPARABLE SALE INSTANCES OF 1996 AND 2002. THERE IS ALSO NOTHING ON RECORD TO INDICATE THAT LAND WAS UNDERVALUED. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE AO U/S.69B OF THE I.T. ACT. GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 25. GROUNDS OF APPEAL NO.4 AND 5 BEING GENERAL IN NATURE A RE DISMISSED. ITA NO.379/PN/2013 (BY REVENUE) (A.Y. 2006-07) 26. GROUNDS OF APPEAL NO.1 AND 2 BY THE REVENUE READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.1,9 4,223/- MADE ON ACCOUNT OF CREDITORS OUTSTANDING STATING THAT THE ISSUE OF OUTSTANDING CREDITORS WAS ALREADY SUBJECT TO SCRUTINY DURING ORIGIN AL ASSESSMENT AND THE ASSESSING OFFICER CANNOT RE-ASSESS THE INCOME U/S.15 3A? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, WHETHER THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT TH E ORIGINAL ASSESSMENT MADE U/S.143(3) HAD REACHED FINALITY AND THE SAME COULD NOT BE AGITATED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS U/S.143(3) R.W.S. 153A OF THE ACT IN THE ABSENCE OF IN CRIMINATING MATERIAL FOUND DURING THE SEARCH. 27. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUND S ARE IDENTICAL TO GROUNDS OF APPEAL NO.1 AND 2 IN ITA NO.377/PN/ 2013. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISE D BY THE 19 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME REASONING , THE ABOVE GROUNDS BY THE REVENUE ARE DISMISSED. 28. GROUND OF APPEAL NO.3 BY THE REVENUE READS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DELETING ADDITION OF RS.15,90,000 /- U/S.69B OF THE ACT STATING THAT THE ASSESSING OFFICER HAS INCORRECTLY ASSU MED JURISDICTION OVER THIS ITEM WHEN ASSESSMENT PROCEEDINGS WE RE COMPLETED U/S.143 OF THE ACT AND BY HOLDING THAT THE LAND WAS NOT UNDERVALUED AS DVO HAS TAKEN COMPARABLE SALES INSTANCE O F THE YEAR 2005, WHEREAS THE ASSESSING OFFICER WAS SUPPOSED TO TAKE CO MPARABLE INSTANCE OF 1996 AND 2002. HOWEVER, THERE IS NOTHING IN THE PURCHASE DEED TO SUGGEST THAT THE ASSESSEE HAD MADE PAYMENT IN THE YEAR 1996 AND 2002? 29. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS ACQUIRED LAND AT SY.NO.21/1 (PART) BAVDHAN (BUDRUK), TAL MULSHI, DIST. PUNE FOR RS.22,50,000/- AS PER PURCHASE DEED AS ON 12-04-200 5. HE MADE A REFERENCE TO THE DVO U/S.142A TO DETERMINE THE COST OF THE PROPERTY IN THE HANDS OF THE ASSESSEE AS ON THE DATE OF ACQUISITION. THE DVO VALUED THE VALUE OF THE PROPERTY AT RS.38,40,000 /-. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE AO MADE ADDITION OF RS.15,90,000/- U/S.69B OF THE I.T. ACT. 30. IN APPEAL THE LD.CIT(A) DELETED THE ADDITION. THE RELEVAN T OBSERVATION OF LD.CIT(A) HAS ALREADY BEEN REPRODUCED AT P ARA 20 OF THIS ORDER WHILE ADJUDICATING GROUND OF APPEAL NO.3 IN ITA NO.378/PN/2013. 31. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 32. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUND IS IDENTICAL TO GROUND OF APPEAL NO.3 IN ITA NO.378/PN/2013. WE 20 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. SINCE IN THE INSTANT CASE AL SO, THE ASSESSMENT WAS COMPLETED PRIOR TO THE DATE OF SEARCH A ND NO INCRIMINATING MATERIAL WHATSOEVER WAS FOUND TO SUBSTANTIATE D THAT ANY UNACCOUNTED INVESTMENT HAS BEEN MADE, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF PUNEET SABHARWAL (SUPRA) IS SQUA RELY APPLICABLE TO THE FACTS OF THE CASE ACCORDING TO WHICH AD DITION CANNOT BE MADE SOLELY ON THE BASIS OF THE REPORT OF T HE DVO IN ABSENCE OF ANY EVIDENCE OF UNDERSTATEMENT OF CONSIDERATI ON. WE THEREFORE UPHOLD THE ORDER OF LD.CIT(A) ON THIS ISSUE. GRO UND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 33. GROUND OF APPEAL NO.4 BY THE REVENUE READS AS UNDER : 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING THE DEPRECIATION ON WIN DMILL OF RS.17,50,000/- AND MEDA CHARGES HOLDING THAT THIS ISSUE IS ALREADY BEEN LOOKED INTO DURING THE COURSE OF ORIGINAL ASSESSMEN T U/S.143(3) AND AN OPINION WAS FORMED THAT DEPRECIATION IS ALLOW ABLE ON FOUNDATION OF WINDMILL AT THE RATES APPLICABLE TO WT GS AND MEDA CHARGES WERE AN ALLOWABLE BUSINESS EXPENDITURES. HENCE, IT IS NOT POSSIBLE FOR THE ASSESSING OFFICER IN THE ABSENCE OF ANY M ATERIAL FOUND DURING THE COURSE OF SEARCH TO MAKE THE DISALLOWANCE AS THE SAME TANTAMOUNT TO A CHANGE OF OPINION WHICH IS NOT PERMI TTED IN THE COURSE OF ASSESSMENT U/S.153A. 34. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE DUR ING THE IMPUGNED ASSESSMENT YEAR HAS INSTALLED NEW WINDMILLS. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE THE AO NOTED T HAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE ENTIRE EXPENDIT URE INCLUDING PURCHASE AND INSTALLATION OF THE WINDMILL. HE, THEREFO RE, ASKED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM MADE ON TH E ASSETS OTHER THAN WINDMILL. 21 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 35. THE ASSESSEE SUBMITTED THAT THERE WAS NO CIVIL WORK INVOLVED FOR ERECTION OF THE WIND TURBINE AS PARTS LIKE CONTROL PANE LS AND DISPLAY METERS WERE HOUSED WITHIN THE TOWER ITSELF. IT WAS SUBMITTED THAT THE CIVIL WORK DONE IN THE FORM OF FOUNDATIO N WORK COULD NOT BE SEPARATED FROM THE WIND TURBINE AND THEREFO RE IT WAS ENTITLED FOR DEPRECIATION ON THE ENTIRE COST OF THE WIND TU RBINE. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVE N BY THE ASSESSEE. AFTER PERUSING VARIOUS BILLS IN CONNECTION WITH E XPENSES INCURRED ON WIND TURBINE, THE AO HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR DEPRECIATION ON CIVIL WORK AND PAYMENT TOWARDS MEDA CHARGES. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DEC ISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA FINWES T & AGRO PVT. LTD. VS. ACIT REPORTED IN 118 TTJ 68 (PUNE). TH E AO HAS ALSO REFERRED TO RULE 32(1) OF THE I.T. ACT RULES, 1962, APP ENDIX-I, PART A, ITEM III(3) (XIII)(I). BASED ON THE ABOVE, ADDITIONS ON T HIS COUNT WERE MADE TO THE TOTAL INCOME OF THE ASSESSEE B Y REWORKING DEPRECIATION ON WINDMILLS. 36. BEFORE CIT(A) IT WAS SUBMITTED THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS DURING A.Y. 2006-07 THE AO HAD A LLOWED DEPRECIATION @80% ON THE ENTIRE COST OF WINDMILL WHICH INCLUDE D EXPENSES FOR CIVIL WORK, FOUNDATION, ERECTION AND COMMISSIONING AND TESTING. IT WAS ARGUED THAT ADDITION COULD NOT HAVE BEEN MADE IN THE ORDER PASSED U/S.143(3) R.W.S. 153A FOR THE REASON THAT THE ISSUE OF DEPRECIATION FOR A.Y. 2006-07 WAS ALREADY CONCLUDED IN THE ORIGINAL ASSESSMENT PASSED U/S.143(3) AND ALSO NO INCRIMINAT ING DOCUMENTS IN THIS RESPECT WERE FOUND DURING THE COURSE OF THE SEARCH. THE ASSESSEE WITHOUT PREJUDICE TO THE ABOVE C ONTENTIONS FURTHER SUBMITTED THAT THE WINDMILL REQUIRES SPECIFIC TYPE OF CIVIL 22 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 FOUNDATION AND WAS NOT IN THE NATURE OF GENERAL CIVIL CONST RUCTION. REFERRING TO VARIOUS DECISIONS IT WAS SUBMITTED THAT FOUNDA TION EXPENSES OF PLANT AND MACHINERY/WINDMILL IS PART OF COST OF P LANT AND MACHINERY/WINDMILL AND THEREFORE DEPRECIATION @80% HAS TO BE ALLOWED TO IT ON CIVIL WORK AND ALSO MEDA CHARGES. 37. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) ALLOWED THE CLAIM OF EXCESS DEPRECIATION ON WINDMILL BY OBSERVING AS UNDER : 33. IN RESPECT OF ASSESSMENT YEAR 2006-07, THE ASSESSING OF FICER HAD, VIDE QUESTIONNAIRE DATED 10/12/2007 ISSUED ALONG WITH NOTICE UNDER SECTION 142(1), HAD SOUGHT THE DETAILS OF AN ADDITION OF FIXED ASSETS VIDE ITEM NO. 14 OF THE QUESTIONNAIRE AND SPECIFICALL Y ASKED FOR THE DETAILS PERTAINING TO WINDMILL I.E. PURCHASE DETAILS E TC., VIDE ITEM NO. 21. THE APPELLANT HAD PROVIDED DETAILS VIDE LETTER D ATED 11/01/2008 VIDE ITEM NO. 17 OF THE ANSWER AND HAD PROVIDED THE BILLS ETC. SHOWING THE ADDITION OF FIXED ASSETS. THIS BILL GIVEN BY M/S E NERCON LTD. CLEARLY SHOWS THAT AN AMOUNT OF RS.25 LAKHS WAS BILLED TOWARDS E ARTH WORK AND FOUNDATION, INCLUDING APPROACH AND INTERNAL ROA DS AND CONSTRUCTION OF THE DP STRUCTURE POST. THE DETAILS ALSO SHOW THAT FURTHER SUM OF RS.10 LAKHS WAS CHARGED TOWARDS ERECTION AND COMMISSIONING OF THE WINDMILL. APPLYING THE PRINCIPLE S FOR ASSESSMENT AS ABOVE IN THE FOREGOING PARAGRAPHS, I HOLD THAT THE SE ISSUES WERE ALREADY LOOKED INTO DURING THE COURSE OF ORIGINAL ASSE SSMENT AND AN OPINION WAS FORMED THAT DEPRECIATION IS ALLOWABLE ON FOUNDATION OF THE WINDMILL AT THE RATES APPLICABLE TO WTGS AND THAT ME DA CHARGES WERE AN ALLOWABLE BUSINESS EXPENSE. HENCE, IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER, IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH TO MAKE THE AFORESAID DISALLOWANCE AS T HE SAME TANTAMOUNT TO A CHANGE OF OPINION WHICH IS NOT PERMI TTED IN THE COURSE OF REASSESSMENT U/S.153A. THE APPEAL ON THIS GROUND IS AL LOWED FOR A.Y. 2006-07. 38. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 39. AFTER HEARING BOTH THE SIDES, WE FIND THERE IS NO DISCUS SION ON THIS ISSUE BY THE AO IN THE ORIGINAL ASSESSMENT ORDER, A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 78 TO 80. WE FIND TH E ISSUE STANDS DECIDED AGAINST THE ASSESSEE BY THE DECISION OF T HE TRIBUNAL IN THE CASE OF J-SONS FOUNDRY PVT. LTD. VIDE ITA NO.2349/ PN/2012. 23 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 IN SUBSEQUENT YEARS ALSO THE LD. COUNSEL FOR THE ASSESS EE HAS CONCEDED ON THIS ISSUE. ACCORDINGLY, THE ORDER OF LD.CIT(A ) ON THIS ISSUE IS REVERSED AND THE GROUND RAISED BY THE REVENUE IS ALLOWED. 40. GROUND OF APPEAL NO. 5 AND 6 BEING GENERAL NATURE AR E DISMISSED. ITA NO.2578/PN/2012 (BY ASSESSEE) (A.Y. 2007-08) : 41. GROUNDS OF APPEAL NO.1 AND 7 BY THE ASSESSEE BEING GENERAL IN NATURE ARE DISMISSED. 42. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GRO UND OF APPEAL NO.4 FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE SAME IS DISMISSED. 43. GROUNDS OF APPEAL NO. 2 TO 2.2 BY THE ASSESSEE RE AD AS UNDER: 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS.3,12,525/- MADE BY THE LEARNED A.O. ON ACCOUNT OF CESSATION OF LIABILITY U/S. 41(1) IN RESPECT OF CREDITORS OUTSTANDIN G FOR A PERIOD OF MORE THAN THREE YEARS WITHOUT APPRECIATING THAT AS PE R LAW, THE ADDITION IS NOT JUSTIFIED. 2.1 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE CR EDITORS HAD ABANDONED THEIR RIGHT TO ENFORCE RECOVERY AS NO ACTI ON WAS TAKEN BY THEM AND HENCE, THE LIABILITY HAD CEASED TO EXIST ONC E THE RECOVERY BECAME LEGALLY TIME BARRED AND THEREFORE, THE ADDIT ION WAS RIGHTLY MADE BY THE LEARNED A.O. U/S. 41(1). 2.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT- A. THERE WAS NO EVIDENCE THAT THE LIABILITY IN RESPEC T OF THE CREDITORS HAD CEASED DURING THIS YEAR AND HENCE, THE I NCOME U/S 41 (1) COULD NOT BE ASSESSED IN THIS YEAR. B. JUST BECAUSE, THE PERIOD OF THREE YEARS WAS OVER, IT DID NOT MEAN THAT THE LIABILITY HAD CEASED IN THIS YEAR AS PER THE RATIO OF SUPREME COURT DECISION IN THE CASE OF SUGAULI SUGAR WORKS [236 ITR 518] AND THUS, THERE WAS NO REASON WARRANTING THE ADDITION U/S 4 1 (1) IN THIS YEAR. 24 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 44. AFTER HEARING BOTH THE SIDES WE FIND THE AO MADE ADD ITION OF RS.3,12,515/- FROM THE OUTSTANDING SUNDRY CREDITORS ON TH E GROUND THAT THE SOME OF THE TRADE CREDITORS ARE OUTSTANDING FO R FEW YEAR AND THE LIABILITY HAS CEASED TO EXIST. THE LD.CIT(A) CONFIRME D THE ADDITION FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF CIT VS. T.V. SUNDARAM IYENGER AND SONS LTD. REP ORTED IN 222 ITR 344. 45. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 46. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT M ERELY BECAUSE THE CREDITORS WERE OUTSTANDING FOR A PERIOD OF 3 YEARS IT DOES NOT MEAN THAT THE LIABILITY HAS CEASED IN THE HANDS OF THE ASSESSEE. HE REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUGAULI SUGAR WORKS PVT. LTD. (SUPRA) AND THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HRISHIKESH L. JOSHI VIDE ITA NO.702/PN/2007 ORDER DATED 13-08-2010 FOR A.Y. 2003-04 AND SUBMITTED THAT THE TRIBUNAL FOLLOWING VARIOUS OTHER DE CISIONS HAS DELETED SIMILAR ADDITION MADE BY THE AO AND UPHELD BY THE CIT(A). HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE B Y THE AO AND UPHELD BY THE CIT(A) SHOULD BE DELETED. 47. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 48. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT 25 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 CASE MADE ADDITION OF RS.3,12,525/- ON ACCOUNT OF OUTSTAND ING SUNDRY CREDITORS HOLDING THAT THESE TRADE CREDITORS ARE OUTSTANDING FOR A FEW YEARS AND THE LIABILITY OF THE ASSESSEE HAS CEA SED. WE FIND IN APPEAL THE LD. CIT(A) FOLLOWING THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. T.V. SUNDARAM IYENG ER & SONG LTD. (SUPRA) HELD THAT THE PROVISIONS OF SECTION 41(1) HAS BEEN CORRECTLY INVOKED AND THE AMOUNTS OF OUTSTANDING CREDIT ORS HAVE RIGHTLY BEEN BROUGHT TO TAX U/S.41(1) AS CESSATION OF LI ABILITY. ACCORDING TO HIM, THE PRINCIPLE IS PARTICULARLY APPLICABLE IN CA SE OF SUB-CONTRACTORS AND LABOUR SUPPLIERS SINCE IT IS WELL KNOWN THAT THESE CATEGORIES OF SERVICE PROVIDERS DO NOT WORK IF PAYM ENT IS NOT MADE TO THEM IMMEDIATELY ON PERFORMANCE OF THEIR PART OF CONTRACTED WORK. THEREFORE, THE PROBABILITY THAT THE AMO UNTS SHOULD BE OUTSTANDING AGAINST SUB-CONTRACTORS AND LABOU RERS IS CONTRARY TO NORMAL HUMAN AND BUSINESS CONDUCT. HE AC CORDINGLY UPHELD THE ADDITION MADE BY THE AO. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN VIEW OF THE SUBSEQUE NT DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUGALI SUG AR WORKS PVT. LTD. (SUPRA) THERE IS NO REASON TO HOLD THAT THE LIABILITY HAS CEASED IN THE HANDS OF THE ASSESSEE AND SUCH AMOU NT OF OLD CREDITORS CONSTITUTE INCOME U/S.41(1). 49. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF SUGALI SUGAR WORKS PVT. LTD. (SUPRA) HAS DECIDED THE ISSUE OF CE SSATION OF LIABILITY U/S.41(1) OF THE I.T. ACT. THE RELEVANT OBSERVATIONS OF HONBLE SUPREME COURT ARE ALREADY REPRODUCED AT PARA 13.2 OF THIS ORDER. THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN T HE CASE OF HRISHIKESH L. JOSHI HAS ALSO BEEN REPRODUCED WHILE DECIDING THE 26 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 GROUNDS OF APPEAL NO.1 TO 3 IN ITA NO.377/PN/2013 FOR A.Y. 2004- 05. SINCE FACTS ARE IDENTICAL, THEREFORE, FOLLOWING THE SAME REASONINGS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 50. GROUNDS OF APPEAL NO.3 TO 3.1 BY THE ASSESSEE REA D AS UNDER: 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE CO MPENSATION RECEIVED OF RS.40 LAKHS FROM SUZLON ENERGY LTD. WAS TA XABLE AS A REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE. 3.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E COMPENSATION RECEIVED FROM SUZLON ENERGY LTD. WAS BEFORE THE WIND MILL WAS PUT TO USE AND HENCE, THE SAID COMPENSATION WAS A CAPITAL RECE IPT WHICH WAS TO BE REDUCED FROM THE COST OF THE ASSET. 51. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HA S RECEIVED 2 CREDIT NOTES AGGREGATING RS. 40 LAKHS GIVEN BY M/S. SUZLO N ENERGY LTD. IT WAS EXPLAINED BEFORE THE AO THAT THE CREDIT NOT ES IN RESPECT OF COMPENSATION WERE RECEIVED FROM M/S. SUZLON ENERGY LTD . FOR DELAY IN COMPLETION OF WINDMILL PROJECT WITHIN THE STIPULATED TIM E LIMIT. IT WAS FURTHER EXPLAINED THAT THESE CREDIT NOTES WE RE RECEIVED FOR THE PERIOD BEFORE THE ASSET WAS PUT TO USE AND WAS TREATED AS CAPITAL RECEIPTS AND DEDUCTED FROM THE INVOICE OF THE VALUE OF THE WINDMILL PURCHASED. HOWEVER, THE AO REJECTED THE ABOVE CONTENTION OF THE ASSESSEE THAT THESE WERE CAPITAL RECE IPTS AND ACCORDINGLY BROUGHT TO TAX THE SUM OF RS. 40 LAKHS AS IN COME FROM OTHER SOURCES. 52. BEFORE CIT(A) THE ASSESSEE REITERATED THE SAME SUBM ISSIONS AS MADE BEFORE THE AO. IT WAS SUBMITTED THAT THE COMP ENSATION RECEIPT OF RS.40 LAKHS WAS TAXED AS REVENUE RECEIPT IN A.Y . 2006-07 27 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 AND WHILE WORKING OUT DEPRECIATION IN A.Y. 2007-08, THE CO ST OF THE WINDMILL WAS INCREASED TO THAT EXTENT. IT WAS URGED THAT SINCE THE ABOVE SUM WAS RECEIVED BEFORE THE ASSET WAS PUT TO US E, THE SAME SHOULD BE TREATED AS CAPITAL RECEIPT AND ACCORDINGLY BE REDUCED FROM THE COST OF WINDMILL. 53. HOWEVER, THE LD.CIT(A) WAS NOT SATISFIED WITH THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE AND HELD THAT THE SAM E IS REVENUE IN NATURE. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 54. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 120 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE LETT ER ADDRESSED BY M/S. SUZLON ENERGY LTD. TO THE ASSESSEE ACCORDING TO WHICH AN AMOUNT OF RS.22.54 LAKHS HAS BEEN OFFERED BY THEM AS COMPENSATION FOR DELAY CAUSED IN COMPLETION OF 600 KW PRO JECT AT DHALGAON. REFERRING TO PAGE 121 OF THE PAPER BOOK HE DR EW THE ATTENTION OF THE BENCH TO THE LETTER WRITTEN BY M/S. SUZ LON ENERGY LTD. ACCORDING TO WHICH AN AMOUNT OF RS.17.5 LAKHS HAS BEE N GIVEN AS COMPENSATION TOWARDS DELAY IN COMPLETION OF THE PROJEC T. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SAURASHTRA CEMENT LTD. REPORTED IN 325 ITR 422 HE SUBMITTED THAT SUCH COMPENSATION IS CAPITAL IN NATURE. 55. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 56. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO MADE AN AD DITION OF 28 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 RS.40 LAKHS BEING COMPENSATION RECEIVED FROM M/S. SUZLON EN ERGY LTD. AS REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE. W E FIND THE LD.CIT(A) UPHELD THE SAME. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE AMOUNT WAS RECEIVED AS COMPENSATION FOR DELAY IN EXECUTING THE PROJECT, THEREFORE , THE SAME IS CAPITAL IN NATURE. FROM PAGE 120 OF THE PAPER BOOK, WE FIND M/S. SUZLON ENERGY LTD. VIDE LETTER DATED 03-08-2006 TO THE ASSESSEE HAS WRITTEN AS UNDER : REF : SEL/MKTG/MS/06-07/43 DATE AUGUST 3, 2006 TO R.D.S. CONSTRUCTION COMPANY, 363/11, BALAJI NIWAS, DEEP BUNGLOW CHOWK, SHIVAJI NAGAR, PUNE 411016. KIND ATTN : MR. M.S. DANDAVATE SUBJECT : YOUR PROPOSED WIND POWER PROJECT OF 600 KW AT DHALGAON DEAR SIR, WITH REFERENCE TO THE ABOVE SUBJECT AND YOUR LETTER DATED 14 TH MARCH 06, WE SINCERELY REGRET THE DELAY CAUSED IN COMPLETIO N OF YOUR PROPOSED WIND POWER OF 600 KW PROJECT TO BE INSTALLED IN DHALGAON, MAHARASHTRA. AS DISCUSSED WE WOULD LIKE TO OFFER FOLLOW ING : ENCLOSED DRAFTS OF REVISED PURCHASE ORDERS TO BE PLACED ON US ALONG WITH DETAILED WORKING. WE ALSO REQUEST YOU TO COMPLE TE THE ADVANCE PAYMENT AS PER PO DRAFTS. THE PROPOSED PROJECT WILL BE COMPLETED ON OR BEFORE 30 TH SEPTEMBER 2006 AT DHULE/NANDURBAR, MAHARASHTRA. RS.22.5 LACS AS COMPENSATION FOR DELAY CAUSED IN COMPLET ION OF PROJECT PAYABLE ON RECEIPT OF REVISED PURCHASED ORDER AND COM PLETION OF ADVANCE. WE REQUEST FOR YOUR KIND ACCEPTANCE OF THE ABOVE AND WOULD LIKE TO ASSURE YOU OF YOUR BEST ENDEAVOURS TO STRENGTHEN BUSINESS R ELATIONS WITH YOUR GROUP. THANKING YOU, WITH BEST REGARDS, SD/- ANJALI LOTHE (SR. MANAGER-MARKETING) 29 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 57. SIMILARLY, VIDE LETTER DATED 02-11-2006 ANOTHER LETTER HAS BEEN ADDRESSED BY M/S. SUZLON ENERGY LTD. TO THE ASSE SSEE AGREEING TO PAY ANOTHER RS.17.50 LAKHS AS COMPENSATION T OWARDS THE SAID DELAY. 58. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF SAU RASHTRA CEMENT LTD. (SUPRA) WHILE DECIDING AN IDENTICAL ISSUE HAD AN OCCASION TO CONSIDER THE NATURE OF SUCH RECEIPT AND HELD SUCH TYPE OF RECEIPT AS CAPITAL IN NATURE. THE RELEVANT OBSERVATION OF HONBLE SUPREME COURT READS AS UNDER : 10.THUS, THE SHORT QUESTION FOR DETERMINATION IS WHETH ER THE LIQUIDATED DAMAGES RECEIVED BY THE ASSESSEE FROM THE SUPP LIER OF THE PLANT AND MACHINERY ON ACCOUNT OF DELAY IN THE SUPPL Y OF PLANT IS A CAPITAL OR A REVENUE RECEIPT? 11.THE QUESTION WHETHER A PARTICULAR RECEIPT IS CAPIT AL OR REVENUE HAS FREQUENTLY ENGAGED THE ATTENTION OF THE COURTS BUT I T HAS NOT BEEN POSSIBLE TO LAY DOWN ANY SINGLE CRITERION AS DECISIVE IN THE DETERMINATION OF THE QUESTION. TIME AND AGAIN, IT HA S BEEN REITERATED THAT ANSWER TO THE QUESTION MUST ULTIMATELY DEPEND ON THE FACTS OF A PARTICULAR CASE, AND THE AUTHORITIES BEARING ON THE Q UESTION ARE VALUABLE ONLY AS INDICATING THE MATTERS THAT HAVE TO BE TAKEN INTO ACCOUNT IN REACHING A CONCLUSION. IN RAI BAHADUR JAI RAM VALJI (SUPRA), IT WAS OBSERVED THUS: 'THE QUESTION WHETHER A RECEIPT IS CAPITAL OR INCOME HAS FREQUENTLY COME UP FOR DETERMINATION BEFORE THE COURTS. VARIOUS RULES HAVE BEEN ENUNCIATED AS FURNISHING A KEY TO THE SOLUTION OF THE QUESTION, BUT AS OFTEN OBSERVED BY THE HIGHEST AUTHORITIES, IT IS NOT P OSSIBLE TO LAY DOWN ANY SINGLE TEST AS INFALLIBLE OR ANY SINGLE CRITERION A S DECISIVE IN THE DETERMINATION OF THE QUESTION, WHICH MUST ULTIMATELY DEPEND ON THE FACTS OF THE PARTICULAR CASE, AND THE AUTHORITIES BEAR ING ON THE QUESTION ARE VALUABLE ONLY AS INDICATING THE MATTERS THAT HAV E TO BE TAKEN INTO ACCOUNT IN REACHING A DECISION. VIDE VAN DEN BERGHS L TD. V. CLARK5. THAT, HOWEVER, IS NOT TO SAY THAT THE QUESTION IS ONE O F FACT, FOR, AS OBSERVED IN DAVIES (H.M. INSPECTOR OF TAXES) V. SHELL COMPANY OF CHINA LTD.6, 'THESE QUESTIONS BETWEEN CAPITAL AND INCO ME, TRADING PROFIT OR NO TRADING PROFIT, ARE QUESTIONS WHICH, THO UGH THEY MAY DEPEND NO DOUBT TO A VERY GREAT EXTENT ON THE PARTI CULAR FACTS OF EACH CASE, DO INVOLVE A CONCLUSION OF LAW TO BE DRAWN FROM THOSE FACTS.' 12.IN KETTLEWELL BULLEN AND CO. LTD. (SUPRA), DEALIN G WITH THE QUESTION WHETHER COMPENSATION RECEIVED BY AN AGENT FOR PREMAT URE DETERMINATION OF THE CONTRACT OF AGENCY IS A CAPITAL OR A REVENUE RECEIPT, ECHOING THE VIEWS EXPRESSED IN RAI BAHADUR JA IRAM VALJI 30 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 (SUPRA) AND ANALYSING NUMEROUS JUDGMENTS ON THE POINT, THIS COURT LAID DOWN THE FOLLOWING BROAD PRINCIPLE, WHICH MAY BE TAKEN INTO ACCOUNT IN REACHING A DECISION ON THE ISSUE : 'WHERE ON A CONSIDERATION OF THE CIRCUMSTANCES, PAYMEN T IS MADE TO COMPENSATE A PERSON FOR CANCELLATION OF A CONTRACT WH ICH DOES NOT AFFECT THE TRADING STRUCTURE OF HIS BUSINESS, NOR DEPRI VE HIM OF WHAT IN SUBSTANCE IS HIS SOURCE OF INCOME, TERMINATION OF THE CO NTRACT BEING A NORMAL INCIDENT OF THE BUSINESS, AND SUCH CANCELLATION LEAVES HIM FREE TO CARRY ON HIS TRADE (FREED FROM THE CONTRACT TERMI NATED) THE RECEIPT IS REVENUE : WHERE BY THE CANCELLATION OF AN AGENCY TH E TRADING STRUCTURE OF THE ASSESSEE IS IMPAIRED, OR SUCH CANCELLATION RESULTS I N LOSS OF WHAT MAY BE REGARDED AS THE SOURCE OF THE ASSESSEE'S INCOME, T HE PAYMENT MADE TO COMPENSATE FOR CANCELLATION OF THE AGENCY AG REEMENT IS NORMALLY A CAPITAL RECEIPT.' 13.WE HAVE CONSIDERED THE MATTER IN THE LIGHT OF THE AFORE- NOTED BROAD PRINCIPLE. IT IS CLEAR FROM CLAUSE NO.6 OF THE AGREEMENT DATED 1ST SEPTEMBER 1967, EXTRACTED ABOVE, THAT THE LIQUIDATE D DAMAGES WERE TO BE CALCULATED AT 0.5% OF THE PRICE OF THE RESPECTIVE MACHINERY AND EQUIPMENT TO WHICH THE ITEMS WERE DELIVERED LATE, FO R EACH MONTH OF DELAY IN DELIVERY COMPLETION, WITHOUT PROOF OF THE ACTUAL DAMAGES THE ASSESSEE WOULD HAVE SUFFERED ON ACCOUNT OF THE DELAY. T HE DELAY IN SUPPLY COULD BE OF THE WHOLE PLANT OR A PART THEREOF BUT THE DETERMINATION OF DAMAGES WAS NOT BASED UPON THE CALCUL ATION MADE IN RESPECT OF LOSS OF PROFIT ON ACCOUNT OF SUPPLY OF A PAR TICULAR PART OF THE PLANT. IT IS EVIDENT THAT THE DAMAGES TO THE ASSESSEE WA S DIRECTLY AND INTIMATELY LINKED WITH THE PROCUREMENT OF A CAPITAL ASSET I.E. THE CEMENT PLANT, WHICH WOULD OBVIOUSLY LEAD TO DELAY IN COMING INTO EXISTENCE OF THE PROFIT MAKING APPARATUS, RATHER THAN A RECEIPT IN THE COURSE OF PROFIT EARNING PROCESS. COMPENSATION PAID FOR THE DELAY IN PROCUREMENT OF CAPITAL ASSET AMOUNTED TO STERILIZATIO N OF THE CAPITAL ASSET OF THE ASSESSEE AS SUPPLIER HAD FAILED TO SUPPLY THE PLANT WITHIN TIME AS STIPULATED IN THE AGREEMENT AND CLAUSE NO.6 TH EREOF CAME INTO PLAY. THE AFORE-STATED AMOUNT RECEIVED BY THE ASSESSEE T OWARDS COMPENSATION FOR STERILIZATION OF THE PROFIT EARNING SOURCE, NOT IN THE ORDINARY COURSE OF THEIR BUSINESS, IN OUR OPINION, WAS A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. WE ARE, THEREFORE, IN AGR EEMENT WITH THE OPINION RECORDED BY THE HIGH COURT ON QUESTION NOS. ( I) AND (II) EXTRACTED IN PARA 1 (SUPRA) AND HOLD THAT THE AMOUNT OF RS.8,50,000/- RECEIVED BY THE ASSESSEE FROM THE SUPPLIERS OF THE PLANT WAS IN THE NATURE OF A CAPITAL RECEIPT. 14.WE, THEREFORE, DISMISS THE APPEAL WITH NO ORDER AS T O COSTS. 59. SINCE THE COMPENSATION OF RS.40 LAKHS RECEIVED BY THE ASSESSEE FROM M/S. SUZLON ENERGY LTD. WAS FOR DELAY IN EXE CUTING THE PROJECT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT CITED (SUPRA), WE HOLD THAT THE AMOUNT OF RS. 40 LAKHS RECEIVED BY THE ASSESSEE IS CAPITAL IN NATURE. WE ACCORDINGLY 31 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO D ELETE THE ADDITION. 60. GROUNDS OF APPEAL NO. 5 TO 7 READ AS UNDER : 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT 60% OF THE COST OF POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WOULD BE ENTITLED TO DEPRECIATION AT THE RATE APPLICABLE TO BUILDING AND NOT AT THE RATE APPLICABLE TO WINDMILL. 5.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E EXPENDITURE ON POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WAS PART AND PARCEL OF WINDMILL AND HENCE, THE ENTIRE EXPENDITURE WAS EN TITLED TO DEPRECIATION AT A HIGHER RATE WHICH WAS AVAILABLE TO WINDMILL. 6. THE LEARNED CIT(A) ERRED IN DIRECTING TO APPORTI ON THE OTHER MISC. EXPENSES BETWEEN WINDMILL COST AND INFRASTRUCTURE COST WITHOUT APPRECIATING THAT ALL THE EXPENSES INCURRED BY THE A SSESSEE WERE RELATING TO WINDMILL AND THEREFORE, ALL SUCH MISC. E XPENSES SHOULD HAVE BEEN ALLOWED DEPRECIATION AT THE RATE APPLICABLE TO WINDMILL. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 61. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THE ABOVE GROUNDS ARE DECIDED AGAINST THE ASSESSEE BY VARIOUS DECISIONS OF THE TRIBUNAL. IN VIEW OF THE SAME, THE GROUN DS RAISED BY THE ASSESSEE ARE DISMISSED. ITA NO.380/PN/2013 (BY REVENUE) (A.Y. 2007-08) : 62. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE REA DS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL DEPRECIATION OF RS.92,32,906/- AT HIGHER RATE OF 80% FOR CIVIL WORK FOUNDATION AND RELATED LABOUR COST OF THE WINDMILL. 63. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO IN THE A SSESSMENT ORDER HAS NOTED THAT THE ASSESSEE HAS INVESTED IN WIND MILLS AT 32 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 RS.3,80,00,000/- WHICH INCLUDES INVESTMENT OF RS.25 LAKHS TOWARDS EARTH WORK FOUNDATION, I.E. CIVIL WORKS AND INTERNAL ROAD ETC. WHICH IS NOT ENTITLED FOR HIGHER RATE OF DEPRECIATION. H E OBSERVED THAT THOUGH THE FOUNDATION IS PART OF WINDMILL ELIGIB LE FOR HIGHER RATE OF DEPRECIATION IN VIEW OF THE DECISION OF MADRAS CEMENT COMPANY, HOWEVER FROM THE TOTAL BILL RAISED TOWARDS CIVIL CONSTRUCTION INCLUDING ROADS ETC. CANNOT BE SEPARATED. H E NOTED THAT THE DEPRECIATION HAS BEEN CLAIMED ON ENTIRE EXPENDIT URE OF RS.3,80,00,000/- AT THE HIGHER RATE, I.E. 80% OF THE ABOVE A SSETS EXCLUDING THE LAND. HE NOTED THAT THE DEPRECIATION ON T HE CIVIL WORK, PAYMENT TOWARDS MEDA CHARGES ETC. DOES NOT CON STITUTE WINDMILL. THEREFORE, THE CLAIM OF DEPRECIATION AT HIGHER RATE TO THAT EXTENT IS WRONG. HE ACCORDINGLY DISALLOWED RS.92,32,906/- B EING EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. 64. IN APPEAL THE LD.CIT(A) FOLLOWING HIS DECISION IN THE CASE OF CHAPPALKAR BROTHERS FOR A.Y. 2008-09 DIRECTED THE AO TO RE- COMPUTE THE DEPRECIATION ON THE BASIS OF THE GUIDELINES G IVEN THEREIN. ACCORDING TO LD.CIT(A) THE VARIOUS COMPONENTS WHIC H GO ON TO MAKE UP THE CASE OF THE WINDMILL ARE AS UNDER : SR.NO. PARTICULARS 1. COST OF WIND TURBINE GENERATOR 2. A) COST OF COMPONENT & ACCESSORY (COPPER WOUND WITH ACCESSO RIES ) B) COST OF COMPONENT FOR GENERATION OF ELECTRICITY SUPPLY OF ROTOR BLADES C) ELECTRICAL ITEMS, COMPONENTS OF RE DEVICE 3. COST OF TUBULAR TOWER 4. COST OF WORK INCLUDING FOUNDATION WORK 5. LABOUR RELATED COST A) INSTALLATION OF WINDMILL B) INSTALLATION OF ELECTRICAL LINE FOR POWER TRANSMISSION AND METER C) FINAL TESTING AND COMMISSIONING 6. REIMBURSEMENT OF POWER EVACUATION FACILITY AND CREAT ION OF INFRASTRUCTURE 33 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 65. HE HAD ACCORDINGLY DIRECTED THE AO TO RE-COMPUTE THE DEPRECIATION ALLOWANCE ACCORDING TO THE FOLLOWING : I) COST OF NEW WINDMILL WILL BE INCLUSIVE OF ALL ITE MS MENTIONED AT 1 TO 5 ABOVE. II) COST OF POWER EVACUATION FACILITY AND INFRASTRUC TURE WILL BE APPORTIONED BETWEEN THE RATES APPLICABLE TO BUILDING /ROADS AND WINDMILL IN 60 : 40 RATIO. III) COST OF OTHER MISCELLANEOUS EXPENSES WILL BE APPO RTIONED ON PRORATA BASIS BETWEEN WINDMILL AND INFRASTRUCTURE FACI LITIES. 66. THE FOLLOWING OBSERVATION OF LD.CIT(A) IS ALSO RELEVANT : 43. IT WAS SUBMITTED BY THE APPELLANT THAT THE DETA ILS OF SEPARATE COST OF FOUNDATION WERE NOT AVAILABLE WITH THEM IN R ESPECT OF WTGS SUPPLIED BY ENERCON. THEY HAVE PROVIDED ME WITH COP IES OF TAX INVOICES FOR SUPPLY OF TOWER INCLUDING WIND TURBINE G ENERATING SYSTEM, COMPONENT AND ACCESSORIES, CIVIL WORK FOR FOUNDATION A ND ALLIED WORK, ELECTRICAL ITEMS, INSTALLATION AND COMMISSION CHARGES, L ABOUR CHARGES ETC. PROVIDED BY SUZLON. THE ASSESSING OFFICER IS DIRE CTED TO FIND OUT THE COST OF ITEMS AT SR.NOS. 4, 5, 6 AND 7 OF THE ABOV E TABLE IN RESPECT OF WTGS SUPPLIED BY ENERCON. THE APPELLANT IS DIRECTED TO PROVIDE THE COST ATTRIBUTABLE TO THESE ITEMS FOR THE PURPOSE OF AL LOCATION. IN CASE THE APPELLANT IS UNABLE TO PROVIDE THESE DETAILS IN RE SPECT OF SUPPLY OF WINDMILL BY ENERCON, THE ASSESSING OFFICER WILL APPLY T HE SAME RATIO AS THESE ITEMS BEAR TO TOTAL COST OF A SUZLON WINDMILL. T HE APPEAL ON THIS GROUND IS PARTIALLY ALLOWED. 67. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 68. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPO RTED THE ORDER OF THE AO. 69. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAN D REFERRING TO THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. J-S ONS 7. MISCELLANEOUS A) PROCESSING CHARGES B) INTEREST OF LOAN CAPITALIZED UPTO 17/01/2008 C) PROFESSIONAL FEES D) REGISTRATION FEES E) SUBSTATION CHARGES F) FRANKING CHARGES G) MEDA OR EQUIVALENT CHARGES 34 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 FOUNDRY PVT. LTD. VIDE ITA NO.2349/PN/2012 ORDER DATED 28-01- 2014 SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANC ES THE DIRECTIONS GIVEN BY THE CIT(A) FOR COMPUTING THE DEPRECIATI ON ON WINDMILL HAS BEEN UPHELD AND THE GROUNDS RAISED BY THE RE VENUE HAVE BEEN DISMISSED. HE ACCORDINGLY SUBMITTED THAT THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 70. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES. WE FIND IN THE CASE OF J-SONS FOUNDRY PVT. LTD. (SUP RA) THE CIT(A) FOLLOWING HIS DECISION IN THE CASE OF M/S. CHAPHALKAR BROTHERS HAD GIVEN IDENTICAL DIRECTION TO THE AO FOR COMPU TATION OF DEPRECIATION OF VARIOUS COMPONENTS OF WINDMILL WHEREIN HIGHER RATE OF DEPRECIATION AT 80% WAS ALLOWED ON THE COST OF FOUNDATIO N AS WELL AS COST INCURRED ON ERECTION OF THE WINDMILL. THE RELEVA NT OBSERVATION OF THE TRIBUNAL AT PARA 5 OF THE ORDER READS AS UNDER : 5. IN SUM AND SUBSTANCE THE TRIBUNAL UPHELD THE ACTI ON OF THE ASSESSING OFFICER TO RESTRICT THE DEPRECIATION @ 10% ON SOME ITEMS BUT ALLOWED THE DEPRECIATION @ 80% ON THE COST OF FO UNDATION AS WELL AS COST INCURRED ON ERECTION AND COMMISSIONING OF THE W IND MILL. THE TRIBUNAL ALSO HELD THAT COST INCURRED ON INSTALLATION OF WIND MILL IS AN INTEGRAL PART OF THE WIND MILL AND THE ASSESSEE SHOULD BE ALLOWED DEPRECIATION @ 80% ON THE COST OF FOUNDATION AS WELL AS ON ERECTION AND COMMISSIONING. AS THE ISSUE IS CONSEQUENTIAL IN THIS YEAR VIS--VIS THE ALLOCATION MADE BY THE LD. CIT(A), WE FIND NO R EASON TO TAKE DIFFERENT VIEW. ACCORDINGLY, CONFIRM THE ORDER OF T HE LD. CIT(A) TO THE EXTENT OF ALLOCATION OF THE EXPENDITURE AND RATE OF DEPRECIATION ON FOUNDATION, ERECTION AND COMMISSIONING EXPENDITURE. G ROUND NOS. 1 & 2 ARE DISMISSED. 71. IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF J-SONS FOUNDRY PVT. LTD. (SUPRA) WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ALLOWING HIGHER DEPRECIATION @80% ON CIVIL WORK FOUNDATIO N AND RELATED LABOUR COST OF WINDMILL. GROUND RAISED BY THE R EVENUE IS ACCORDINGLY DISMISSED. 35 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ITA NO.2579/PN/2012 (BY ASSESSEE) (A.Y. 2008-09) : 72. GROUND OF APPEAL NO.1 BY THE ASSESSEE READS AS UNDER : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE VARI OUS ADDITIONS MADE BY THE LEARNED A.O. WITHOUT APPRECIATING THAT THE VARIOUS ADDITIONS MADE WERE NOT BASED ON ANY INCRIMINATING MA TERIAL AND HENCE, SUCH ADDITIONS WERE NOT WARRANTED IN THE ASSTS. C OMPLETED U/S 153A. 73. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THIS GROUND IS AGAINST THE ASSESSEE BY VARIOUS DECISIONS OF THE TRIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OB JECTION. ACCORDINGLY, THIS GROUND BY THE ASSESSEE IS DISMISSED. 74. GROUND OF APPEAL NO.2 WAS NOT PRESSED BY THE LD . COUNSEL FOR THE ASSESSEE FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS NO T PRESSED. 75. GROUNDS OF APPEAL NO. 3 AND 4 BY THE ASSESSEE REA D AS UNDER: 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT 60% OF THE COST OF POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WOU LD BE ENTITLED TO DEPRECIATION AT THE RATE APPLICABLE TO BUILDING AND NOT AT THE RATE APPLICABLE TO WINDMILL. 3.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E EXPENDITURE ON POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WAS PART AND PARCEL OF WINDMILL AND HENCE, THE ENTIRE EXPENDITURE WAS EN TITLED TO DEPRECIATION AT A HIGHER RATE WHICH WAS AVAILABLE TO WINDMILL. 4. THE LEARNED CIT(A) ERRED IN DIRECTING TO APPORT ION THE OTHER MISC. EXPENSES BETWEEN WINDMILL COST AND INFRASTRUCTURE COST WITHOUT APPRECIATING THAT ALL THE EXPENSES INCURRED BY THE ASSE SSEE WERE RELATING TO WINDMILL AND THEREFORE, ALL SUCH MISC. EX PENSES SHOULD HAVE BEEN ALLOWED DEPRECIATION AT THE RATE APPLICABLE TO WINDMILL. 76. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED TH AT THE ABOVE GROUNDS ARE DECIDED AGAINST THE ASSESSEE BY VAR IOUS 36 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 DECISIONS OF THE TRIBUNAL. IN VIEW OF THE ABOVE, THE ABOVE GROUNDS ARE DISMISSED. ITA NO.381/PN/2013 (BY REVENUE) (A.Y. 2008-09) : 77. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE REA DS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL DEPRECIATION OF RS.1,10,70,063/- AT HIGHER RATE OF 80% FOR CIVIL WORK FOUNDATION AND RELATED LABOUR COST OF THE WINDMILL. 78. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUN D IS IDENTICAL TO GROUND OF APPEAL NO.1 IN ITA NO.380/PN/2013 FILED BY THE REVENUE FOR A.Y. 2007-08. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSE D. FOLLOWING THE SAME REASONING, THIS GROUND BY THE REVENUE IS DISMISSED. ITA NO.2580/PN/2012 (BY ASSESSEE) (A.Y. 2009-10) : 79. GROUNDS OF APPEAL NO.1 AND 7 BY THE ASSESSEE BEING GENERAL IN NATURE ARE DISMISSED. GROUND OF APPEAL NO.2 BY THE ASS ESSEE WAS NOT PRESSED BY THE LD. AUTHORISED REPRESENTATIVE FO R WHICH LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDING LY, THIS GROUND BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 80. GROUNDS OF APPEAL NO.3 AND 4 BY THE ASSESSEE READ AS UNDER: 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT 60% O F THE COST OF POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WOU LD BE ENTITLED TO DEPRECIATION AT THE RATE APPLICABLE TO BUILDING AND NOT AT THE RATE APPLICABLE TO WINDMILL. 3.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE EXPENDITURE ON POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WAS PART AND PARCEL OF WINDMILL AND HENCE, THE ENTIRE EXPENDITURE WAS EN TITLED TO 37 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 DEPRECIATION AT A HIGHER RATE WHICH WAS AVAILABLE TO WINDMILL. 4. THE LEARNED CIT(A) ERRED IN DIRECTING TO APPORT ION THE OTHER MISC. EXPENSES BETWEEN WINDMILL COST AND INFRASTRUCTURE COST WITHOUT APPRECIATING THAT ALL THE EXPENSES INCURRED BY THE A SSESSEE WERE RELATING TO WINDMILL AND THEREFORE, ALL SUCH MISC. E XPENSES SHOULD HAVE BEEN ALLOWED DEPRECIATION AT THE RATE APPLICABLE TO WINDMILL. 81. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THE ABOVE GROUNDS ARE DECIDED AGAINST THE ASSESSEE B Y VARIOUS DECISION OF THE COORDINATE BENCHES OF THE TRIBUNAL. IN VIE W OF THE ABOVE, THE ABOVE GROUNDS BY THE ASSESSEE ARE DISMISSED. 82. GROUND OF APPEAL NO.5 BY THE ASSESSEE READS AS UNDER : 5. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INT EREST U/S 234A WAS LEVIABLE FOR THE PERIOD FROM 31.10.2009 TO 20.07 .2010 WITHOUT APPRECIATING THAT AS PER LAW, NO INTEREST WAS LEVIABLE FOR THAT PERIOD. 83. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE D URING APPEAL PROCEEDINGS BEFORE THE CIT(A) CHALLENGED LEVY OF INTER EST U/S.234A FOR THE PERIOD FROM 31-10-2009 ON 20-07-2010. IT WAS SUBMITTED THAT THE SEARCH ACTION WAS CONDUCTED ON 23- 09-2009 AND AS ON THE DATE OF SEARCH, THE DUE DATE FOR FILING THE RETURN FOR A.Y. 2009-10 U/S.139(1) DID NOT EXPIRE. FURTHER, THE ASSESS EE HAD FILED ITS RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A ON 20-07- 2010. IT WAS ARGUED THAT AS PER PROVISIONS OF SECTION 153A(1)(A) A RETURN FILED IN RESPONSE TO NOTICE U/S.153A IS TO BE TREAT ED AS RETURN FILED U/S.139(1) AND THAT THE DUE DATE OF FILING RETURN U/S.139(1) GETS SHIFTED TO THE DATE PRESCRIBED IN THE NOTIC E U/S.153A. 84. HOWEVER, THE CIT(A) WAS NOT CONVINCED WITH THE ARGUM ENTS ADVANCED BY THE ASSESSEE. HE OBSERVED THAT THERE IS NOTHING IN SECTION 153A OR 139 WHICH ALLOWS THE AO TO EXTEND THE T IME LIMIT 38 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 FOR FILING OF INCOME-TAX RETURNS DURING THE REGULAR COURSE. ACCORDING TO THE CIT(A), IF THE CONTENTION OF THE ASSESSEE IS ACCEPTED, THEN EVEN IF THE ASSESSEE DID NOT FILE THE RETUR N OF INCOME FOR ANY OF THE 6 YEARS CONTEMPLATED U/S.153A OR 153C, TH E TIME LIMIT FOR FILING OF RETURN OF INCOME FOR ALL THOSE YEARS WOULD BE AUTOMATICALLY EXTENDED AND THE SAME WOULD HAVE TO BE C ONSIDERED AS RETURN FILED U/S.139 AND THEREFORE ALL NATURAL CONSEQUEN CES UNDER THE ACT INCLUDING THE PROVISIONS OF CARRY FORWARD AN D SET OFF OF VARIOUS TYPES OF LOSSES AND COMPUTATION OF INTEREST PAY ABLE U/S.234A, 234B, 234C AND 234D WOULD BECOME APPLICABLE. IT WOULD LEAVE NO DISTINCTION BETWEEN THE NON-FILER AND A REG ULAR FILER OF RETURN AND WOULD RESULT IN ALLOWING PRESCRIBED BENEFITS TO A DELINQUENT ASSESSEE. HE ACCORDINGLY HELD THAT IN RESPEC T OF THE A.Y. 2009-10 THE ASSESSEE SHOULD HAVE FILED THE RETURN OF INCO ME ON OR BEFORE 31-10-2009. SINCE THIS WAS NOT DONE THE ASSESSEE WAS LIABLE TO PAY INTEREST U/S.234A. HE ACCORDINGLY DISMISSED THE G ROUNDS RAISED BY THE ASSESSEE. 85. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 86. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHE N THE SEARCH TOOK PLACE ON 23-09-2009 THE DUE DATE FOR FILING O F THE RETURN U/S.139(1) HAD NOT EXPIRED. THE ASSESSEE IN RESPO NSE TO NOTICE U/S.153A FILED HIS RETURN OF INCOME ON 21-07-2010. HE SUBMITTED THAT AFTER THE SEARCH THE ASSESSEE IS REQUIRE D TO FILE RETURN U/S.153A ONLY. HENCE, THERE IS NO QUESTION OF FILING ANY RETURN U/S.139(1). THEREFORE, THERE IS NO DELAY IN FILING THE R ETURN AND THEREFORE LEVY OF INTEREST U/S.234A IS NOT JUSTIFIED AT ALL. HE 39 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 SUBMITTED THAT AS PER THE PROVISIONS OF SUB-SECTION (3) O F SECTION 234A THE INTEREST CAN BE LEVIED FOR THE DEFAULT IN NOT FILING THE RETURN U/S.153A WITHIN THE TIME LIMIT PRESCRIBED IN THE SEC TION. THEREFORE, WHEN THE NOTICE U/S.153A WAS SERVED ON THE A SSESSEE ON 24-06-2010 ASKING THE ASSESSEE TO FURNISH THE RETURN O F INCOME WITHIN 30 DAYS FROM THE RECEIPT OF NOTICE AND WHEN THE AS SESSEE HAS FILED ITS RETURN OF INCOME ON 21-07-2010, I.E. WITHIN THE PRESCRIBED PERIOD OF 30 DAYS, THEREFORE, THERE IS NO JUST IFICATION FOR LEVY OF INTEREST U/S.234A. 87. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE AO AND CIT(A). 88. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE IN THE INSTANT CASE IS LEVY OF INTEREST U/S.234A OF THE I.T. ACT FOR THE PERIOD FROM 31-10-2009 TO 20-07-2010 BY THE AO WHICH HAS BEEN UP HELD BY THE CIT(A). IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ON THE DATE OF THE SEARCH ON 23-09-2009 THE DUE DATE FOR FILING OF THE RETURN U/S.139(1) HAS NOT EXPIRED. SINCE THE SEARC H HAS TAKEN PLACE THE ASSESSEE WAS PRECLUDED FROM FILING RETURN U/S.139(1). THE ASSESSEE IN RESPONSE TO NOTICE U/S.153A S ERVED ON HIM ON 24-06-2010 HAS FILED THE RETURN ON 21-07-2010 WH ICH IS WITHIN THE PERIOD OF 30 DAYS WHICH IS GRANTED BY THE AO. THEREFORE, THERE IS NO QUESTION OF LEVY OF ANY INTEREST U/S.234A. 40 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 89. WE FIND THE PROVISIONS OF SECTION 153A READ AS UNDER : 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATE D UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY O F MAY, 2003, THE ASSESSING OFFICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH W ITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMEN T YEARS REFERRED TO IN CLAUSE ( B ), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICU LARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR A S MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO T HE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION I S MADE. . . . . . . . . . . . . . . . . 90. WE FIND THE PROVISIONS OF SECTION 234A (3) READ AS UNDER : (3) WHERE THE RETURN OF INCOME FOR ANY ASSESSMENT YEA R, REQUIRED BY A NOTICE UNDER SECTION 148 [OR SECTION 153A] ISSUED [AF TER THE DETERMINATION OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 143 OR] AFTER THE COMPLETION OF AN ASSESSMENT UNDER SUB- SECTION (3) O F SECTION 143 OR SECTION 144 OR SECTION 147, IS FURNISHED AFTER THE E XPIRY OF THE TIME ALLOWED UNDER SUCH NOTICE, OR IS NOT FURNISHED, THE A SSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE] PE R CENT, FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COM MENCING ON THE DAY IMMEDIATELY FOLLOWING THE EXPIRY OF THE TIME AL LOWED AS AFORESAID, AND,- (A) WHERE THE RETURN IS FURNISHED AFTER THE EXPIRY OF THE TIME AFORESAID, ENDING ON THE DATE OF FURNISHING THE RETURN; OR (B) WHERE NO RETURN HAS BEEN FURNISHED, ENDING ON THE DATE OF COMPLETION OF THE RE-ASSESSMENT OR RE- COMPUTATION UNDE R SECTION 147[ OR REASSESSMENT UNDER SECTION 153A], ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERMINED ON THE BASIS OF SUCH RE-ASSESSMENT OR RE-COMPUTATION EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED [UNDER SUB- SECTION (1) OF SEC TION 143 OR] ON THE BASIS OF THE EARLIER ASSESSMENT AFORESAID. 91. WE FURTHER FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION REPORTED IN (2 015) 93 41 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 CCH 0048 (MUMBAI HC) AT PARA 22 OF THE ORDER HAS OBSERV ED AS UNDER : 22. A BARE PERUSAL THEREOF WOULD INDICATE AS TO HOW A NON OBSTANTE CLAUSE HAS BEEN INSERTED AND WITH A DEFINED INTENT. ON E WOULD FIND THAT IN SECTION 139 OF THE IT ACT, THE RETURN OF INCOME I S CONTEMPLATED. THESE PROVISIONS FALL IN CHAPTER XIV ENTITLED 'PROCEDU RE FOR ASSESSMENT'. SECTION 139 DEALS WITH RETURN OF INCOME WHE REAS SECTION 140 STATES THAT SUCH RETURN HAS TO BE VERIFIED. SECTION 147 WHICH ALSO FALLS WITHIN THIS CHAPTER DEALS WITH INCOME ESCAPING ASSE SSMENT AND SECTION 148 PROVIDES FOR ISSUANCE OF NOTICE WHERE I NCOME HAS ESCAPED ASSESSMENT. SECTION 149 SETS OUT A TIME LIMIT FOR NOTICE. THEN, APPEAR SECTIONS 149, 151 AND 153 WHICH, INTER-ALIA, D EAL WITH TIME LIMIT, SANCTION FOR ISSUE AND TIME LIMIT FOR COMPLETIO N OF ASSESSMENTS AND REASSESSMENTS. ALL THESE ARE BROUGHT IN SECTION 153A A ND SPECIFICALLY MENTIONED WITH AN INTENT TO BRING THEM WITHIN THE NON OBSTANTE CLAUSE. NOTWITHSTANDING ANYTHING CONTAINED IN THESE PROVISIONS WHERE SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER 31ST DAY OF MAY, 2003, THAT THE ASSESSING OFFICER IS IN A POSITION TO AND MANDATED TO ISSUE NOTIC E WITHIN THE MEANING OF SUB-SECTION (1) OF SECTION 153A. THAT IS BEC AUSE THE PRECEDING CHAPTER, NAMELY, CHAPTER XIII WITHIN WHIC H THE POWERS OF SEARCH AND SEIZURE AND POWERS TO REQUISITION BOOKS OF AC COUNT ARE SPELT OUT ENABLE THE REVENUE TO TAKE CARE OF CASES WHE RE IT EFFECTS A SEARCH AND SEIZURE. THAT SEARCH AND SEIZURE IS EFFECTED AND AFTER THE SAME IS EFFECTED BOOKS OF ACCOUNT, OTHER DOCUMENTS, MON EY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING IS FOUN D AS A RESULT THEREOF THAT NOTWITHSTANDING ANYTHING AND WITHIN THE MEANING OF THE ABOVE PROVISIONS HAVING BEEN CONCLUDED, IT IS OPEN FOR THE R EVENUE TO MAKE AN ASSESSMENT. IT IS ALSO OPEN TO THE REVENUE TO MAKE A REASSESSMENT IN CASES WHERE IT EXERCISES THE POWERS TO REQUISITION BOO KS OF ACCOUNT ETC. THIS IS BECAUSE IT IS OF THE VIEW THAT THE BOOKS OF ACCOUNT ARE REQUIRED TO BE SUMMONED OR TAKEN INTO CUSTODY. IT, TH EREFORE, ISSUES A SUMMONS IN THAT REGARD. IT MAY ALSO REQUISITION THE BOO KS OF ACCOUNT OR OTHER DOCUMENTS FOR THAT MIGHT BE USEFUL AND OR AN Y ASSETS REPRESENTING WITHHOLDING OR PART INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THE INDIAN INCOME TAX ACT, 1922 OR THE INCOME TAX ACT OF 1961 BY ANY PERSON FROM WHOSE POSSESSION OR CONTROL THEY HAVE BEEN TAKEN IN TO CUSTODY. THIS IS WHEN THE AUTHORITIES HAVE REASON TO BELIEVE THA T SUCH POWERS NEED TO BE EXERCISED. THEREFORE, THE FETTERS AND WHIC H ARE TO BE FOUND IN OTHER PROVISIONS ARE REMOVED AND A NOTICE OF ASSESSMEN T IN SUCH CASES IS THEN ISSUED. THAT IS MANDATED BY SUB-SECTION (1) OF SECTION 153A. IT IS NOT ONLY THE ISSUANCE OF THE NOTICE BUT ASS ESSMENT OR REASSESSMENT OF TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIAT ELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION HAS TO BE MADE. 92. A COMBINED READING OF THE ABOVE PROVISIONS AS WELL AS THE DECISION CITED (SUPRA) INDICATES THAT A NON-OBSTANTE CLAUSE HAS 42 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 BEEN INSERTED AND WITH A DEFINED INTENT. IN OUR OPINION, O NCE THE SEARCH TAKES PLACE ON A PERSON AND THE DUE DATE FOR FILIN G OF THE RETURN U/S.139(1) HAS NOT EXPIRED HE CAN FILE THE RETURN O NLY AFTER THE ISSUE OF NOTICE U/S.153A. HE IS NOT REQUIRED TO FILE TH E RETURN U/S.139(1). THEREFORE, THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN LEVYING INTEREST U/S.234A OF THE I.T. ACT FOR A PERIOD FROM 31-10-2009 TO 20-07-2010. THE GROUND RAISED BY THE A SSESSEE IS ACCORDINGLY ALLOWED. 93. GROUND OF APPEAL NO.6 BY THE ASSESSEE READS AS UNDER : 6. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE C ASH SEIZED OF RS.1,14,60,500/- SHOULD BE APPROPRIATED TOWARDS THE TA X LIABILITY OF THE ASSESSEE FROM 30.03.2010, I.E. THE DATE OF LETTER SUBMIT TED BY THE ASSESSEE FOR ADJUSTING THE SEIZED CASH AND NOT FROM THE DA TE OF SEIZURE OF CASH, I.E. 12-10-2009 FOR THE PURPOSES OF DETERMINI NG THE INTEREST PAYABLE U/S.234B. 94. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DUR ING THE COURSE OF APPEAL PROCEEDINGS BEFORE THE CIT(A) RAISED A GR OUND DISPUTING THE CHARGING OF INTEREST U/S.234B AND 234C ON CASH SEIZED ON RS.1,14,60,500/- FROM THE RESIDENCE OF SHRI R.D. SH INDE. IT WAS SUBMITTED THAT THE AO HAD NOT TAKEN COGNIZANCE OF THE ASSESSEES LETTER DATED 30-03-2010 REQUESTING TO ADJU ST THE SEIZED CASH AGAINST SELF-ASSESSMENT TAX FOR THE YEAR UNDER CO NSIDERATION. THE CASH SO SEIZED WAS ADJUSTED AGAINST TAX LIABILITY IN TH E MONTH OF MARCH AND INTEREST U/S.234B WAS CHARGED FROM THE DAT E OF SEIZURE OF CASH TO MARCH 2011. 95. HOWEVER, THE CIT(A) WAS NOT IMPRESSED BY THE ARGUMEN TS ADVANCED BY THE ASSESSEE. ACCORDING TO HIM THE AO HAS CHARGED INTEREST U/S.234B CORRECTLY. AS REGARDS THE CONTENTION OF THE 43 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ASSESSEE THAT THE SEIZED CASH WOULD HAVE BEEN CONSIDER ED AS SELF- ASSESSMENT TAX FOR THE YEAR UNDER CONSIDERATION SINCE T HE SAME WAS SEIZED ON 13-10-2009 HE HELD THAT CREDIT CANNOT BE GIVEN FROM THE DATE OF SEIZURE OF THE CASH. ACCORDING TO THE CIT(A) UNTIL AND UNLESS THE QUANTUM OF TAX PAYABLE IS DETERMINED AND THE ASSESSEE SPECIFICALLY REQUESTS THE DEPARTMENT TO APPROPRIATE THE CASH SEIZED TOWARDS MEETING OF SUCH INCOME TAX LIABILITY IT CANNOT BE SA ID THAT THE CASH WAS AVAILABLE WITH THE DEPARTMENT FOR APPROPRIA TION TOWARDS TAXES DUE. 96. AS REGARDS THE LETTER DATED 30-03-2010 ADDRESSED TO THE ACIT, CENTRAL CIRCLE, KOLHAPUR WHEREIN IT WAS SPECIFICALLY REQU ESTED THAT THE CASH SEIZED FROM THE OFFICE AND RESIDENCE OF SHRI R.D. SHINDE BE UTILISED FOR PAYING TAXES IN RESPECT OF A.Y. 2007 -08 AND 2009-10 IS CONCERNED HE NOTED THAT THE AO HAS APPROP RIATED THE SEIZED CASH FROM ADJUSTING AGAINST THE TAX LIABILITY IN THE M ONTH OF MARCH 2011. HOWEVER, SINCE THE ASSESSEE VIDE LETTER DAT ED 30-03- 2010 HAD SPECIFICALLY REQUESTED TO APPROPRIATE CASH SEIZE D TOWARDS SELF ASSESSMENT TAX, HE DIRECTED THE AO TO REWORK THE IN TEREST CHARGEABLE U/S.234B AND 234C ON THE BALANCE TAX LIABILITY. 97. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 98. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE DE CISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PUSHPHEND RA SUBASH CHANDRA VS. ACIT REPORTED IN (2013) 37 CCH 127 SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT SECTION 13 2B(1)(I) DOES NOT PROHIBIT UTILIZATION OF THE AMOUNT SEIZED DURING T HE COURSE OF SEARCH TOWARDS ADVANCE TAX PAYABLE ON THE AMOUNT O F 44 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 UNDISCLOSED INCOME DECLARED DURING THE COURSE OF SEARCH. REFER RING TO PAGE 169 OF THE PAPER BOOK THE LD. COUNSEL FOR THE A SSESSEE DREW THE ATTENTION OF THE BENCH TO THE LETTER ADDRESSE D ON 30-03- 2010 TO THE AO REQUESTING THE ADJUSTMENT OF SEIZED CAS H AGAINST THE ASSESSMENT OF TAX FOR A.Y. 2009-10. HE ACCORDINGLY REQUESTED THAT APPROPRIATE DIRECTION MAY BE GIVEN. 99. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 100. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT C ASE CASH AMOUNTING TO RS.1,14,00,000/- WAS SEIZED FROM THE RESIDENCE AND OFFICE PREMISES OF THE DIRECTOR OF THE ASSESSEE COMPANY. W E FIND THE ASSESSEE VIDE LETTER DATED 30-03-2010 ADDRESSED T O THE AO HAD REQUESTED TO ADJUST SUCH CASH SEIZED DURING THE COURS E OF SEARCH AS SELF-ASSESSMENT TAX FOR A.Y. 2009-10. WE FIND THE AO APPROPRIATED THE SEIZED CASH FOR ADJUSTMENT AGAINST TAX LIABILITY IN THE MONTH OF MARCH 2011. WE FIND THE CIT(A) DIRECTED THE AO TO GIVE CREDIT FOR SUCH CASH SEIZED W.E.F. 30-03-2010. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) SINCE THE ASSESSEE VIDE LETTER DATED 30-03-2010 HAD REQUESTED THE AO ADJUST SUCH S EIZED CASH AS SELF ASSESSMENT TAX. UNTIL AND UNLESS THE ASSESSEE MAKES A SPECIFIC REQUEST, THE AO IS NOT DUTY BOUND TO APPROPRIATE SUCH TAX EITHER TOWARDS ADVANCE TAX OR TOWARDS SELF ASSESSMENT TAX. HE CAN ONLY ADJUST SUCH SEIZED CASH FROM THE TAX DETERMINED A FTER COMPLETION OF ASSESSMENT. SINCE IN THE INSTANT CASE, THE ASSESSEE 45 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 VIDE LETTER DATED 30-03-2010 ONLY HAS REQUESTED THE A O TO ADJUST SUCH SEIZED CASH TOWARDS SELF ASSESSMENT TAX FOR A.Y. 20 09-10 AND SINCE THE CIT(A) HAS ACCEPTED THIS PLEA OF THE ASSES SEE, THEREFORE, WE FIND THERE SHOULD NOT BE ANY GRIEVANCE ON T HE PART OF THE ASSESSEE. ACCORDINGLY, THIS GROUND BY THE ASSESSEE IS DISMISSED. ITA NO.382/PN/2013 (BY REVENUE) (A.Y. 2009-10) : 101. GROUND OF APPEAL NO.1 BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL DEPRECIATION OF RS.27,08,083/- AT HIGHER RATE OF 80% FOR CIVIL WORK FOUNDATION AND RELATED LABOUR COST OF THE WINDMILL. 102. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUN D BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.1 IN ITA NO.380/PN/2013 FOR A.Y. 2007-08. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 103. GROUND OF APPEAL NO.2 BY THE REVENUE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE UNEXPLAINED BUSINESS E XPENSES OF RS.1,50,00,000/- IN RESPECT OF GHODZARI PROJECT. 104. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS DECLARED AN AMOUNT OF RS.5,83,00,000/- AS ITS UNDISCLOSED INCOME WHICH INCLUDES RS.1.50 CRORES ON ACCOUNT OF UNEXPLAINED BUSINESS EXPENSES IN RESPECT OF GHODZARI PROJECT, WHICH ARE CLAIMED AGAINST THE SOURCES IN THE HANDS OF THE ASSESSEE. THE AO NOTE D THAT THE 46 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 APPLICATION OF UNDISCLOSED EXPENSES OF GHODZARI PROJECT PER TAINS TO THE SISTER CONCERNS M/S. MAHALAXMI INFRAPROJECTS LTD. T HUS, THE UNACCOUNTED EXPENDITURE PERTAINS TO THE SISTER CONCER NS M/S. MAHALAXMI INFRAPROJECTS LTD. AND IT DOES NOT BELONG TO TH E ASESSEE. HE THEREFORE HELD THAT TELESCOPING ADJUSTMENT AGAINST DE CLARATION MADE ON THE BASIS OF SOURCES IN THE HANDS OF THE ASSESS EE CANNOT BE GIVEN FOR THE UNACCOUNTED EXPENSES OF THE SISTER CON CERNS. HE NOTED THAT IN THE CASE OF M/S. MAHALAXMI INFRAPROJECTS LT D. DECLARATION HAS BEEN MADE ON ACCOUNT OF APPLICATION BASIS WHEREAS IN THE CASE OF THE ASSESSEE DECLARATION HAS BEEN MADE O N SOURCE BASIS. HE THEREFORE HELD THAT SHIFTING OF APPLICATION ON UND ISCLOSED FUND PERTAINING TO THE SISTER CONCERN M/S. MAHALAXMI INFRAP ROJECTS LTD. DOES NOT HAVE ANY IMPACT ON THE UNDISCLOSED INCOME OF THE ASSESSE. 105 BEFORE CIT(A) THE ASSESSEE CHALLENGED THE ACTION OF TH E AO IN REJECTING THE CLAIM MADE FOR REDUCING RS.1.50 CRORES SURRE NDERED AS INCOME ON ACCOUNT OF UNEXPLAINED BUSINESS EXPENSES IN RESPECT OF GHODZARI PROJECT STATING IT TO BE ON SOURCE BASIS. IT WAS SUBMITTED THAT THE SOURCE BASED INCOME AS PER SMS CAS H RECEIPTS IS RS.4,35,65,000/- AS AGAINST UNDISCLOSED INCOME DECLARED OF RS.5.83 CRORES AND THE BALANCE OF RS.1,47,35,000/- WAS APPLIC ATION BASED INCOME. IT WAS POINTED OUT THAT THE SAID AMOUNT WAS SUBJECT TO TAX TWICE, I.E. IN THE HANDS OF THE ASSESSEE AS WELL AS IN THE CASE OF M/S. MAHALAXMI INFRAPROJECTS LTD. IT WAS ACCORDINGLY ARGUED TO REDUCE THE INCOME TO THIS EXTENT AS IT AMOUNTS DOUBLE TAXATION. 106. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER : 47 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 46. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT. THE APPELLANT IS A SISTER CONCERN OF MAHALAXMI INFRAPROJE CTS LTD. SHRI R D SHINDE, DIRECTOR IN MAHALAXMI INFRAPROJECTS LTD. HAD MADE A TOTAL DECLARATION OF RS. 31 CRORES OUT OF WHICH RS.24.71 CRO RES PERTAINED TO MAHALAXMI INFRAPROJECTS AND RS. 6.29 CRORES PERTAINED TO THE APPELLANT FIRM. OUT OF THE TOTAL DECLARATION OF RS.31 CRORES,RS. 21.91 CRORES PERTAINED TO GHODZHARI PROJECT. ALTHOUGH THE YEAR W ISE BREAKUP OF DECLARATION ON ACCOUNT OF GHODZHARI PROJECT IS NOT G IVEN IN THE STATEMENT MADE UNDER SECTION 132(4) ON 12/10/2009, IT IS EVIDENT THAT THE AMOUNT OF RS. 21.9182 CRORES WAS MADE BY THE APPELLANT FOR THE PREVIOUS YEAR 2007-08, 2008-09 AND 2009-10. PERU SAL OF ASSESSMENT ORDERS IN THE CASE OF MAHALAXMI INFRAPROJECTS L TD. SHOWS THAT THE ENTIRE AMOUNT OF RS.21.9182 CRORES WAS CONSIDE RED AS UNEXPLAINED BUSINESS EXPENSES, ON ACCOUNT OF GHODZHARI PROJECT, OF MAHALAXMI INFRAPROJECTS LTD. ITSELF. NOW, THE BIFURCA TION OF THIS RS. 21. 9182 CRORES IN THE HANDS OF MAHALAXMI INFRAPROJECTS LT D. AND THE APPELLANT WAS DONE IN THE COURSE OF FILING OF RETURNS UNDER SECTION 153A. THE COMPARATIVE POSITION OF THE DECLARATION AN D ITS TREATMENT BY THE DEPARTMENT IN VARIOUS ASSESSMENT YEARS IN RESPECT OF G HODZHARI PROJECT IS GIVEN IN THE TABLE BELOW: PREVIOUS YEARS RELEVANT TO ASST. YEAR ASSESSEE DEPARTMENT 2007 - 08 -- MIL 2,75,17,500 2008 - 09 35,63,000 MIL 14,90,67,500 2009 - 10 MIL 7,46,12,030 MIL 4,25,97,000 RDS 1,50,00,000 2010 - 11 10,55,06,970 -- (CASH) 2,05,00,000 -- TOTAL 21,91,82,000 21,91,82,000 47. IN ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE APPE LLANT HAD DECLARED AN AMOUNT OF RS.5.83 CRORES AS UNDISCLOSED INC OME OF ASSESSMENT YEAR 2009-10 WHICH INCLUDED RS.1.50 CRORES ON ACCOUNT OF UNEXPLAINED BUSINESS EXPENSE IN RESPECT OF GHODZARI PROJ ECT. THE ASSESSING OFFICER NOTED THAT THE DECLARATION IS MADE ON APPLICATION BASIS IN THE CASE OF MAHALAXMI INFRAPROJECTS LTD. AND O N SOURCE BASIS IN THE CASE OF THE APPELLANT. HENCE, HE DID NOT ALLOW T HE SHIFTING OF RS.1.50 CRORES ON APPLICATION BASIS TO MAHALAXMI INFRAPROJECTS LTD. THERE IS NO CONFUSION IN RESPECT OF THE AMOUNT OF RS.5.83 CRORES MA DE IN THE HANDS OF THE APPELLANT BY SHRI R D SHINDE IN THE STATEMENT MADE UNDER SECTION 132(4). IT IS THE APPELLANT'S CONTENTION THAT OUT OF THIS RS. 5.83 CRORES, A SUM OF RS.4.3665 CRORES WAS ON ACCOUNT OF KICK BACK FROM CONTRACTORS I.E. ON SOURCE BASIS. THE BALANCE AMOUNT OF RS.1.4735 CRORES WAS ON ACCOUNT OF EXPENSES INCURRED BY THE APPEL LANT. THE APPELLANT HAS PROVIDED A COPY OF THE DETAILS OF CASH R ECEIPTS AND PAYMENTS TO SUB-CONTRACTORS AS PER SMSS RETRIEVED FROM T HE MOBILE BELONGING TO SHRI R D SHINDE, WHICH IS REPRODUCED BE LOW: 48 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 DATE OF SMS RECEIVED AMT. PAID AMOUNT 22/09/2009 1,32,00,000 - 19/09/2009 74,00,000 - 15/09/2009 13,00,000 - 10/09/2009 27,00,000 - 08/09/2009 18,00,000 - 07/09/2009 20,00,000 - 05/09/2009 - 85,00,000 03/09/2009 35,00,000 - 29/08/2009 - 31,00,000 29/08/2009 23,00,000 - 27/08/2009 31,00,000 - 27/08/2009 6,65,000 - 18/08/2009 56,00,000 - 14/08/2009 - - 30/07/2009 - - 03/07/2009 - 34,00,000 24/06/2009 - 6,50,000 23/06/2009 - 15,00,000 01/06/2009 - - TOTAL 4,35,65,000 1,71,50,000 A TABULATION OF THE VARIOUS AMOUNTS AS PER THE SMSS SHOW S THAT RS.4.3565 CRORES WAS RECEIVED FROM THE SUB-CONTRACTOR S AND AN AMOUNT OF RS.1.7510 CRORES WAS BIFURCATED INTO SUMS OF R S.86.50 LAKHS AND RS.85 LAKHS WHICH WERE DECLARED ON APPLICATION B ASIS IN THE HANDS OF MAHALAXMI INFRAPROJECTS LTD. AND THE APPELLANT, R ESPECTIVELY (REFER TO QUESTION NO.17) OF THE STATEMENT U/S.132(4) DATED 1 2/10/2009). IT IS APPARENT THEREFORE, THAT THE ENTIRE DECLARATION O F RS.5.83 CRORES WAS NOT MADE ON SOURCE BASIS. IT IS EVIDENT FROM THE REPLI ES GIVEN DURING THE COURSE OF STATEMENT MADE U/S.132(4) THAT A SUM OF R S. 4.3565 CRORES WAS DECLARED ON SOURCE BASIS AND AT LEAST RS.85 LAK HS WAS DECLARED ON APPLICATION BASIS. THIS LEAVES ONLY A BALAN CE OF RS. 62 LAKHS TO BE EXPLAINED. IN ORDER TO EXPLAIN THIS AMOUNT, TH E APPELLANT HAS GIVEN A SOURCE AND APPLICATION STATEMENT OF ADDITIONA L INCOME FOR THE FINANCIAL YEARS 2008-09 AND 2009-10. THIS STATEMENT C LEARLY SHOWS THAT AS AGAINST APPLICATION OF RS.2,96,38,338/-, THE A PPELLANT HAD A SURPLUS OF RS.77,20,872/- WHICH WAS SUFFICIENT TO COVER THE BALANCE OF RS.62 LAKHS. THE APPELLANT HAS ALSO DEMONSTRATED THAT TH IS AMOUNT WILL BE AVAILABLE WITH IT EVEN IF THE AMOUNT OF RS. 1.47 35 CRORES IS REDUCED FROM THE DECLARATION OF RS.5.83 CRORES. 48. IN MY OPINION, GIVEN THE FACTS IN PARAGRAPH 46 ( SUPRA) THE CONTENTION OF THE APPELLANT DESERVES TO BE ACCEPTED. THERE IS NO DOUBT ABOUT THE FACT THAT THE TOTAL QUANTUM OF DECLARATIO N ON ACCOUNT OF UNEXPLAINED EXPENSES ON GHODZHARI PROJECT CANNOT EXCE ED RS.21.9182 CRORES. THE APPELLANT HAD DECLARED IT AS INCOME IN TH E HANDS OF MAHALAXMI INFRAPROJECTS LTD. AND THE APPELLANT IN TH E PREVIOUS YEAR RELEVANT TO ASSESSMENT YEARS 2008-09 TO 2010-11. WHILE M AKING THE ASSESSMENT OF MAHALAXMI INFRAPROJECTS LTD., THE ASSESSING OF FICER HAS TREATED THE ENTIRE SUM OF RS. 21.9182 CRORES BEING THE AMOUNT OF UNEXPLAINED EXPENSES GHODZHARI PROJECT IN THE CASE OF MAHALAXMI INFRAPROJECTS LTD. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEARS 2007-08 TO 2009-10. THE ASSESSING OFFICER ALSO ADMI TS THAT THE 49 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 AMOUNT OF RS.1.50 CRORES (IT SHOULD BE RS.1.4735 CRORE S) PERTAINS TO GHODZHARI PROJECT DECLARED IN THE HANDS OF THE APPEL LANT. NOW, IF THE ENTIRE AMOUNT OF RS.21.9182 CRORES IS CONSIDERED IN THE HANDS OF MAHALAXMI INFRAPROJECTS LTD. THEN, THERE IS NO SCOPE FOR TREATING ANY AMOUNT OVER AND ABOVE THIS AMOUNT AS UNEXPLAINED EXPE NSES IN THE HANDS OF THE APPELLANT. IT IS ALSO CLEAR THAT THE ENT IRE DECLARATION OF RS.5.83 CRORES WAS NOT ON ACCOUNT OF SOURCE ONLY. A PAR T OF IT PERTAINED TO APPLICATION AS WELL. FINALLY, THERE WERE SUFFICIEN T FUNDS AVAILABLE IN THE HANDS OF THE APPELLANT TO COVER UP FOR ANY EVENT UAL DISCREPANCIES SUCH AS THIS. HENCE, CREDIT FOR RS.1.4735 CRORES HAS TO B E GIVEN TO THE APPELLANT AND THE ASSESSING OFFICER IS DIRECTED TO DO SO ACCORDINGLY. THE APPELLANT SUCCEEDS ON THIS GROUND. 107. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 108. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPO SED THE ORDER OF THE CIT(A). SHE SUBMITTED THAT THE STATEMENT G IVEN U/S.132(4) LEGALLY STANDS AND IT WAS NEVER RETRACTED. NOT HING PREVENTED THE ASSESSEE NOT TO PRESENT THE ABOVE TAB LE BEFORE THE AO. ONLY AFTER THE ASSESSMENT WAS COMPLETED IT WAS BRO UGHT BEFORE THE CIT(A). IF THE ORDERS PASSED BY THE CIT(A) GIV ING TELESCOPING BENEFIT IS ACCEPTED, THEN THE ASSESSED INCOME BECOMES BELOW THE RETURNED INCOME. 109. RELYING ON VARIOUS DECISIONS SHE SUBMITTED THAT THE ASSESSED INCOME CANNOT GO BELOW THE RETURNED INCOME. FOR THE AB OVE PROPOSITION, SHE RELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. SHELLY PRODUCTS REPORTED IN 129 TAXMANN 271 2. SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LIMITED. VS. ITO REPORTED IN 194 ITR 659 3. PHILIP JOSEPH (E.) VS. ITO REPORTED IN 234 ITR 846 4. CHANDRA MOHAN VS. UOI REPORTED IN 241 ITR 434 110. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAN D HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE CIT(A) AT PARA 46 OF THE ORDER HAD GIVEN A CATEGORICAL FINDING THAT THE DIRECT OR OF THE ASSESSEE COMPANY SHRI R.D. SHINDE, WHO IS ALSO THE D IRECTOR 50 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 OF ANOTHER SISTER CONCERN M/S. MAHALAXMI INFRAPROJECTS LT D. HAD MADE A TOTAL DECLARATION OF RS.31 CRORES OUT OF WHICH RS.24 .71 CRORES PERTAIN TO M/S. MAHALAXMI INFRAPROJECTS LTD. AND R S.6.29 CRORES PERTAINS TO THE ASSESSEE FIRM. SIMILARLY OUT OF TOT AL DECLARATION OF RS.31 CRORES RS.21.91 CRORES PERTAIN TO GHO DZARI PROJECT. THE BREAK-UP OF RS.21.91 CRORES IN DIFFERENT ASSES SMENT YEARS BOTH BY THE ASSESSEE AS WELL AS BY THE DEPARTME NT WAS ALSO CONSIDERED BY THE CIT(A). HE SUBMITTED THAT THE AO HAS MADE ADDITION OF RS.21.92 CRORES IN M/S. MAHALAXMI INFRAPROJECTS L TD. AND M/S. MAHALAXMI INFRAPROJECTS LTD. HAS NOT DISPUTED TH E SAME. REFERRING TO THE ASSESSMENT ORDER OF M/S. MAHALAXMI INFRA PROJECTS LTD. FOR A.Y. 2009-10 AT PARA 28 PAGE 9 HE DREW THE ATT ENTION OF THE BENCH TO THE FOLLOWING OBSERVATION : 9. EVIDENCES OF KICK BACKS FROM SUB-CONTRACTORS : BUNDLE NO.1 SEIZED FROM THE RESIDENCE OF SHRI R.D. S HINDE, MANAGING DIRECTOR OF ASSESSEE COMPANY CONTAINS DETAILS OF RECEIPT OF KICK BACK FROM VARIOUS SUB-CONTRACTORS. THE SEIZED DOC UMENTS ARE SMSS OF AMOUNTS RECEIVED FROM SUB-CONTRACTORS BY SHRI R.D. SHINDE FROM HIS ACCOUNTANT. AMOUNT IS PAID THROUGH CHEQUE T O THE SUB- CONTRACTORS AND SAME IS RECEIVED BACK IN CASH. EVIDENC ES ARE FOUND FOR RS.4,35,65,000/-. THIS AMOUNT WAS ADMITTED BY THE ASSESSE E GROUP AS ADDITIONAL INCOME IN THE HANDS OF RDS CONSTRUCTION CO MPANY, SISTER CONCERN OF ASSESSEE COMPANY. THEREFORE, WHEN THE AO IS SAME FOR THE ASSESSEE AS WELL A S M/S. MAHALAXMI INFRAPROJECTS LTD., THEREFORE, THERE IS NO ADDITION AL EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A). HOWEVER, THE AO DID NOT CHOOSE TO DISCUSS THE SAME IN THE ASSESSMENT ORDER OF RDS CONSTRUCTION PVT. LTD. FOR REASONS BEST KNOWN TO HIM. HE SUBMITTED THAT AN AMOUNT OF 4.35 CRORES IS SOURCE BASED AND RS.1.48 CRORES IS EXPENSES BASED. HE SUBMITTED THAT IN T HE HANDS OF M/S. MAHALAXMI INFRAPROJECTS LTD. AN AMOUNT OF RS.21.90 C RORES HAS BEEN ACCEPTED. REFERRING TO THE DECISION OF THE PUNE BENCH OF 51 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 THE TRIBUNAL IN THE CASE OF JYOTICHAND BHAICHAND SARAF AND SONS REPORTED IN 139 ITD 10 HE SUBMITTED THAT ADDITION HAS T O BE MADE ON THE BASIS OF EVIDENCE AND NOT ON THE BASIS OF ANY STATEMENT. 111. AS REGARDS THE VARIOUS CASE DECISIONS RELIED ON BY THE LD. DEPARTMENTAL REPRESENTATION TO THE PROPOSITION THAT ASS ESSED INCOME CANNOT GO BELOW THE RETURNED INCOME ARE CONCERN ED, HE SUBMITTED THAT THE SAME CAN GO BELOW THE RETURNED INC OME. REFERRING TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT GAS COMPANY VS. JCIT REPORTED IN 245 ITR 84 HE SUBMITTED THAT THE HONBLE GUJARAT HIGH COURT IN THE SA ID DECISION HAS HELD THAT THE DIRECTION OF THE CBDT TO ISSUE INSTRUCT IONS TO SUBORDINATE AUTHORITIES DIRECTING THAT SCRUTINY ASSESSME NTS NOT TO BE MADE AT FIGURE LOWER THAN THAT RETURNED IS ULTRA VIRES . THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENC H TO THE HELD PORTION OF THE ORDER WHICH READS AS UNDER : HELD, THAT THE CIRCULAR IN QUESTION REFERS TO ASSESSMEN TS WHICH ARE TO BE MADE U/S.143(3) OF THE ACT. THE CIRCULAR DIRECTS THAT IN A PARTICULAR TYPE OF CASES, I.E. IN SCRUTINY CASES U/S.14(3) OF THE AC T, THE INCOME CAN NEITHER BE ASSESSED AT A FIGURE LOWER THAN THE RETURNED INCOME NOR THE LOSS ASSESSED AT A FIGURE HIGHER THAN THE LOSS NOR FURTHER REFUND GIVEN EXCEPT WHAT WAS DUE ON THE BASIS OF THE RETURNED INCOM E. THUS, BY ISSUANCE OF THE CIRCULAR, THE QUASI-JUDICIAL OFFICER I S DIRECTED TO ASSESS CASES OF PARTICULAR NATURE IN A PARTICULAR MANNER. T HE ASSESSING OFFICER BEING BOUND BY IT HAD ABDICATED HIS FUNCTION AND DID NOT ACT INDEPENDENTLY AND, THEREFORE, THERE WAS NO QUESTION O F ALTERNATIVE REMEDY WHICH WAS A FUTILE REMEDY. IN FACT, THE JURI SDICTION HAD BEEN EXERCISED BY THE CENTRAL BOARD OF DIRECT TAXES BY ISSUI NG THE CIRCULAR AND, THEREFORE, THE ORDER OF THE ASSESSING OFFICER WAS W ITHOUT JURISDICTION. THE COURT HAD TO EXERCISE ITS JURISDICTI ON UNDER ARTICLE 226. THE ORDER OF THE ASSESSING OFFICER TO THE EXTENT IT STATED THAT THE TOTAL INCOME WOULD BE THE RETURNED INCOME, WAS TO BE SET ASIDE, WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE ASSESSMENT WITHO UT KEEPING IN MIND THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR D ATED OCTOBER 31, 1989. 112. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PV T. LTD. 52 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 REPORTED IN 349 ITR 336 HE SUBMITTED THAT THE CIT(A) HA S POWER TO CONSIDER THE CLAIM NOT MADE IN THE RETURN. 113. AS REGARDS THE DECISION RELIED ON BY THE LD. DEPAR TMENTAL REPRESENTATIVE IN THE CASE OF SHELLY PRODUCTS (SUPRA) IS CONCERNED HE SUBMITTED THAT THE SAID DECISION IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CAS E THE RESPONDENT ASSESSEE AFTER HAVING PAID THE ADVANCE TAX AND SELF ASSESSMENT TAX FILED HIS RETURN FOR THE RELEVANT ASSESSME NT YEAR. THE AO FRAMED ASSESSMENT U/S.143(3) R.W.S. 144B. CIT(A) PA RTLY ALLOWED THE APPEAL AND REJECTED ASSESSEES CONTENTION T HAT THE AO WAS ACTING WITHOUT JURISDICTION. ON FURTHER APPEAL, THE TRIB UNAL HELD THAT THE ASSESSMENT ORDERS WERE VOID AB-INITIO AS T HE AO LACKED JURISDICTION. REFERENCE AGAINST THE SAID ORDER OF TH E TRIBUNAL WAS PENDING BEFORE THE HIGH COURT AND THE ASSES SEE IN THE MEANTIME, PURSUANT TO ORDER OF THE TRIBUNAL, APPLIED TO THE AO FOR REFUND OF THE TAX PAID BY THEM. SINCE THE TAXES WERE NOT REFUNDED, A DIRECTOR PREFERRED AN APPEAL BEFORE THE AAC WHICH WAS ALLOWED AND THE AO WAS DIRECTED TO REFUND THE ASSESSEE THE ADVANCE TAX AND SELF ASSESSMENT TAX. THE TRIBUNAL AFFIRMED THE ORDER OF THE AAC AND ON A REFERENCE THE HIGH COURT ALSO AFFIRMED THE ORDER OF THE TRIBUNAL. UNDER THESE CIRCUMSTANCES T HE HONBLE SUPREME COURT SET ASIDE THE ORDER OF THE HIGH COURT AN D HELD THAT IF AN ASSESSING AUTHORITY CANNOT MAKE A FRESH ASSESSMENT IN ACCORDANCE WITH PROVISIONS OF THE ACT, IT AMOUNTS TO DEEM ED ACCEPTANCE OF THE RETURN OF INCOME FURNISHED BY THE ASSE SSEE. IT CANNOT RAISE A DEMAND FOR FURTHER PAYMENT OF TAXES AND THE TAX PAID BY THE ASSESSEE MUST BE ACCEPTED AS IT IS. IN THE EVENT OF THE TAX PAID BEING IN EXCESS OF THE TAX LIABILITY DULY COMPUTED ON THE 53 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 BASIS OF RETURN FURNISHED AND THE RATES APPLICABLE, THE EX CESS SHALL BE REFUNDED TO THE ASSESSEE SINCE ITS RETENTION MAY OFFEN D ARTICLE 265 OF THE CONSTITUTION. HOWEVER, IF THE TAX PAID IS FOUND T O BE LESS THAN THAT PAYABLE NO FURTHER DEMAND CAN BE MADE FOR RE COVERY OF THE BALANCE AMOUNT SINCE A FRESH ASSESSMENT IS BARRED. THEREFORE, THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 114. AS REGARDS THE OBJECTION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT WHY THE ASSESSEE DID NOT MAKE ANY SUBMISSION BEFORE THE AO THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CAME TO KNOW ONLY AFTER THE ASSESSMENT WAS COMPLETED SINCE IN THE CASE OF MAHALAXMI INFRAPROJECTS LTD. THE SAID INCOME HAS BEEN ADDED. THEREFORE, IT HAS TO BE REDUCED FROM TH E INCOME OF RDS CONSTRUCTION COMPANY. 115. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE REVENUE HAS CHALLENGED THE ORDER OF THE CIT(A) IN DELETING THE UNEXPLA INED BUSINESS EXPENSES OF RS.1.50 CRORES IN RESPECT OF GHODZAR I PROJECT. WE FIND THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS REJECTED THE CLAIM OF THE ASSESSEE TO REDUCE RS.1.50 CRO RES BY GIVING TELESCOPING EFFECT WHICH WAS SURRENDERED AS INCOME O N ACCOUNT OF UNEXPLAINED BUSINESS EXPENSES IN RESPECT OF GH ODZARI PROJECT SOURCE BASIS. THE RELEVANT OBSERVATION OF THE AO AT PARA 9 OF THE ORDER READ AS UNDER : 54 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 9. THE ASSESSEE HAS DECLARED AN AMOUNT OF RS.5,83,00,0 00/- AS ITS UNDISCLOSED INCOME, WHICH INCLUDES RS.1.50 CROES ON ACC OUNT OF UNEXPLAINED BUSINESS EXPENSES IN RESPECT OF GHODZARI PROJ ECT, WHICH ARE CLAIMED AGAINST THE SOURCES IN THE HANDS OF ASSESSEE. IT IS SEEN THAT THE APPLICATION OF UNDISCLOSED EXPENSES OF GHODZAR I PROJECT IS PERTAINS TO THE SISTER CONCERNS M/S. MAHALAXMI INFRAPROJ ECT LTD. THUS, THE UNACCOUNTED EXPENDITURE PERTAINS TO THE SISTER CON CERNS M/S. MAHALAXMI INFRAPROJECT LTD. AND NOT BELONGS TO THE ASSESSEE. A TELESCOPIC ADJUSTMENT AGAINST DECLARATION MADE ON THE BASIS OF SOURCE IN THE HANDS OF THE ASSESSEE CANNOT BE GIVEN FOR THE UN ACCOUNTED EXPENSES OF THE SISTER CONCERNS. IN THE CASE OF M/S. MALAXAXMI INFRAPROJECT LTD. DECL ARATION IS MADE ON ACCOUNT OF APPLICATION BASIS, WHEREAS, IN THE CASE OF ASSESSEE DECLARATION IS MADE ON SOURCE BASIS. THEREFORE, SHIFTIN G OF APPLICATION OF UNDISCLOSED FUND PERTAINS TO THE SISTER CONCERNS. M/S. MAHALAXMI INFRAPROJECT LTD. DOES NOT HAVE ANY IMPACT ON UNDISCL OSED INCOME OF THE ASSESSEE. 116. WE FIND BEFORE CIT(A) IT WAS SUBMITTED THAT THE SOURC E BASED INCOME AS PER SMS CASH RECEIPT IS OF RS.4,35,65,000/- AS A GAINST UNDISCLOSED INCOME DECLARED OF RS.5,83,00,000/- AND THE BALA NCE OF RS.1,47,35,000/- WAS APPLICATION BASED INCOME. THE ASSESS EE ALSO PROVIDED A COPY OF THE DETAILS OF CASH RECEIPTS AND P AYMENTS OF SUB-CONTRACTORS AS PER SMS RETRIEVED FROM THE MOBILE BE LONGING TO SHRI R.D. SHINDE, THE DIRECTOR OF THE FIRM. WE FIND THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT AN AMOUNT OF RS.21.92 CRORES HAS ALREADY BEEN CONSIDERED IN THE HANDS OF MAHALAXMI INFRAPROJECTS LTD. ON ACCOUNT OF GHODZARI PROJ ECT WHICH INCLUDES THE AMOUNT OF RS.1.4735 CRORES (NOT RS.1.50 CRORES ). THEREFORE, MAKING ADDITION OF THIS AMOUNT IN THE HANDS OF TH E ASSESSEE WILL AMOUNT TO DOUBLE TAXATION. WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A). THE FINDING OF THE LD.CIT(A ) THAT WHILE MAKING THE ASSESSMENT OF MAHALAXMI INFRAPROJECT S LTD. THE AO TREATED THE ENTIRE SUM OF RS.21.9182 CRORES BEI NG THE AMOUNT OF UNEXPLAINED EXPENSES OF GHODZARI PROJECT IN THE CASE OF MAHALAXMI INFRAPROJECTS LTD. ITSELF DURING THE PREVIOUS YE AR 55 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 RELEVANT TO ASSESSMENT YEARS 2007-08 AND 2009-10 COU LD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. T HEREFORE, WE FIND MERIT IN THE OBSERVATION GIVEN BY THE CIT(A) THAT IF THE ENTIRE AMOUNT OF RS.21.9182 CRORES IS CONSIDERED IN THE HA NDS OF MAHALAXMI INFRAPROJECTS LTD., THEN THERE IS NO SCOPE OF TREATING ANY AMOUNT OVER AND ABOVE THIS AMOUNT AS UNEXPLAINED EXPEN SES IN THE HANDS OF THE ASSESSEE. FURTHER, THE ENTIRE DECLARA TION OF RS.5.83 CROES WAS BOTH ON ACCOUNT OF SOURCE BASED AND APPLICATION BASED. SINCE MAHALAXMI INFRAPROJECTS LTD. HAS ALREADY ADM ITTED THE AMOUNT OF RS.21.90 CRORES IN THEIR HANDS WHICH INCLUDES RS.1.4735 CRORES (NOT RS.1.50 CRORES), THEREFORE, THE ADDITIO N OF THE SAME IN THE HANDS OF THE ASSESSEE WILL AMOUNT TO DOUBLE TAXATION. THEREFORE, IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD. 117. SO FAR AS OBJECTION OF THE LD. DEPARTMENTAL REPRESE NTATIVE THAT CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE, WE FIND THE SAM E IS WITHOUT ANY BASIS. THE AO HAS DISCUSSED THE EVIDENCE SE IZED FROM THE RESIDENCE OF THE DIRECTOR OF RDS CONSTRUCTION COMPAN Y IN THE HANDS OF MAHALAXMI INFRAPROJECTS LTD. AT PARA 28 OF PAGE 9. HOWEVER, THE AO CHOSE NOT TO DISCUSS THE SAME IN THE B ODY OF THE ASSESSMENT ORDER OF THE ASSESSEE. THEREFORE, WE FIND NO FORCE IN THE SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE THA T THE LD. CIT(A) HAS ACCEPTED ANY ADDITIONAL EVIDENCE. 118. AS REGARDS THE OBJECTION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE DID NOT MAKE ANY SUB MISSION BEFORE THE AO ON THIS ISSUE, WE FIND FORCE IN THE ARGUMENT OF THE 56 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE CAME TO KNOW ONLY AFTER THE ASSESSMENT WAS COMPLETED IN THE CASE OF MAHALA XMI INFRAPROJECTS LTD. SINCE IT HAS BEEN ADDED IN THE HAN DS OF MAHALAXMI INFRAPROJECTS LTD., THEREFORE, ADDITION OF THE AMOU NT IN THE HANDS OF THE ASSESSEE WILL AMOUNT TO DOUBLE TAXATION. 119. AS REGARDS THE OBJECTION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSED INCOME CANNOT GO BELO W THE RETURNED INCOME IF THE CONTENTION OF THE ASSESSEE IS ACCE PTED, WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (SUPRA) HAS HELD AS UNDER (SHORT NOTES): AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL L EGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT M ERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOUN T OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS WHIC H WERE AVAILABLE WHEN THE RETURN WAS FILED. THE WORDS COUL D NOT HAVE BEEN RAISED MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE MUST BE CONSIDERED AS ITS OWN FACTS. 120. AS REGARDS RELIANCE ON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF SHELLY PRODUCTS (SUPRA) BY LD. DEPA RTMENTAL REPRESENTATIVE IS CONCERNED, WE FIND THE FACTS OF THAT CAS E ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. IN THAT CA SE, THE ASSESSEE AFTER HAVING PAID THE ADVANCE TAX AND SELF ASSE SSMENT TAX FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEA R. THE AO FRAMED THE ASSESSMENT U/S.143(3) R.W.S. 144B. CIT(A) PARTLY ALLOWED THE APPEAL AND REJECTED THE CONTENTION OF THE AS SESSEE THAT THE AO WAS ACTING WITHOUT JURISDICTION. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THE ASSESSMENT ORDER WAS VOID AB-INITIO AS THE 57 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 AO LACKED JURISDICTION. WHILE THE APPEAL WAS PENDING BEFORE THE HONBLE HIGH COURT THE ASSESSEE APPLIED TO THE AO FOR RE FUND OF THE TAX PAID BY THEM. SINCE THE TAXES WERE NOT REFUNDED, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE AAC WHO ALLOWED THE APPEA L FILED BY THE ASSESSEE AND DIRECTED THE AO TO REFUND THE AMOUNT PAID BY THE ASSESSEE TOWARDS ADVANCE TAX AND SELF ASSESSMENT TAX. THE TRIBUNAL AFFIRMED THE ORDER OF THE AAC AND THE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL. UNDER THESE CIRCUMSTANCES T HE HONBLE SUPREME COURT SET ASIDE THE ORDER OF THE HIGH COURT HO LDING THAT IF THE ASSESSING AUTHORITY CANNOT MAKE THE ASSESSMENT IN ACCORDANCE WITH PROVISIONS OF THE ACT, IT AMOUNTS TO DEEMED ACCEPTA NCE OF THE RETURN OF INCOME FILED BY THE ASSESSEE. IN SUCH CASE THE ASSESSING AUTHORITY IS DENUDED OF ITS AUTHORITY TO VERIFY THE CORR ECTNESS AND COMPLETENESS OF THE RETURN, WHICH AUTHORITY IT HAS WHILE FRA MING A REGULAR ASSESSMENT. IT MUST ACCEPT THE RETURN AS FURNIS HED AND SHALL NOT IN ANY EVENT RAISE A DEMAND FOR PAYMENT OF FURT HER TAXES. ACCEPTING THE INCOME AS DISCLOSED IN THE RETURN OF INCOM E FURNISHED BY THE ASSESSEE, IT MUST REFUND TO THE ASSESSE E ANY TAX PAID IN EXCESS OF THE LIABILITY INCURRED BY HIM ON THE BASIS O F INCOME DISCLOSED. EVEN IF THE TAX PAID IS FOUND TO BE LESS TH AN THAT PAYABLE, NO FURTHER DEMAND CAN BE MADE FOR RECOVERY OF T HE BALANCE AMOUNT SINCE A FRESH ASSESSMENT IS BARRED. HOW EVER, IF THE ASSESSEE HAS PAID MORE TAX THEN THE INCOME THAT WAS RETURNED THEN THE EXCESS TAX TO BE REFUNDED. WE THEREFORE, ARE OF THE CONSIDERED OPINION THAT THE SAID DECISION IS DISTINGUISHABLE A ND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFOR E, THIS 58 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE IS ALSO W ITHOUT ANY FORCE. IN THIS VIEW OF THE MATTER THE GROUND RAISED BY THE REVENUE IS DISMISSED. 121. GROUNDS OF APPEAL NO.3 & 4 BY THE REVENUE BEING GE NERAL IN NATURE ARE DISMISSED. ITA NO.2581/PN/2012 (BY ASSESSEE) (A.Y. 2010-11) : 122. GROUND OF APPEAL NO.1 WAS NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE FOR WHICH THE LD. DEPARTMENTAL REPRESEN TATIVE HAS NOT OBJECTION. ACCORDINGLY, GROUND OF APPEAL NO.1 IS DISMISSED. 123. GROUNDS OF APPEAL NO.2 TO 2.2 BY THE ASSESSEE READ AS UNDER: 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS.25,23,585/- MADE BY THE LEARNED A.O. ON ACCOUNT OF CESSATION OF LIABILITY U/S 41(1) IN RESPECT OF CREDITORS OUTSTANDIN G FOR A PERIOD OF MORE THAN THREE YEARS WITHOUT APPRECIATING THAT AS PE R LAW, THE ADDITION IS NOT JUSTIFIED. 2.1 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE C REDITORS HAD ABANDONED THEIR RIGHT TO ENFORCE RECOVERY AS NO ACTI ON WAS TAKEN BY THEM AND HENCE, THE LIABILITY HAD CEASED TO EXIST ONC E THE RECOVERY BECAME LEGALLY TIME BARRED AND THEREFORE, THE ADDIT ION WAS RIGHTLY MADE BY THE LEARNED A.O. U/S 41(1). 2.2 THE LD.CIT(A) FAILED TO APPRECIATE THAT : A. THERE WAS NO EVIDENCE THAT THE LIABILITY IN RESPE CT OF THE CREDITORS HAD CEASED DURING THIS YEAR AND HENCE, THE I NCOME U/S 41 (1) COULD NOT BE ASSESSED IN THIS YEAR. B. JUST BECAUSE, THE PERIOD OF THREE YEARS WAS OVER, I T DID NOT MEAN THAT THE LIABILITY HAD CEASED IN THIS YEAR AS PER THE RATIO OF SUPREME COURT DECISION IN THE CASE OF SUGAULI SUGAR WORKS [236 ITR 518] AND THUS, THERE WAS NO REASON WARRANTING THE ADDITION U/S. 41 (1) IN THIS YEAR. 124. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROU NDS ARE IDENTICAL TO GROUNDS OF APPEAL NO. 2 TO 2.2 IN ITA NO.2578/PN/2012 FOR A.Y. 2007-08 FILED BY THE ASSESSEE. WE HAVE ALREADY DEC IDED THE 59 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEE N ALLOWED. FOLLOWING THE SAME RATIO, THE ABOVE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 125. GROUNDS OF APPEAL NO. 3 AND 4 BY THE ASSESSEE RE AD AS UNDER: 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT 60% O F THE COST OF POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WOU LD BE ENTITLED TO DEPRECIATION AT THE RATE APPLICABLE TO BUILDING AND NOT AT THE RATE APPLICABLE TO WINDMILL. 3.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE EXPENDITURE ON POWER EVACUATION FACILITY AND INFRASTRUCTURE COST WAS PART AND PARCEL OF WINDMILL AND HENCE, THE ENTIRE EXPENDITURE WAS EN TITLED TO DEPRECIATION AT A HIGHER RATE WHICH WAS AVAILABLE TO WINDMILL. 4. THE LEARNED CIT(A) ERRED IN DIRECTING TO APPORT ION THE OTHER MISC. EXPENSES BETWEEN WINDMILL COST AND INFRASTRUCTURE COST WITHOUT APPRECIATING THAT ALL THE EXPENSES INCURRED BY THE A SSESSEE WERE RELATING TO WINDMILL AND THEREFORE, ALL SUCH MISC. E XPENSES SHOULD HAVE BEEN ALLOWED DEPRECIATION AT THE RATE APPLICABLE TO WINDMILL. 126. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED TH AT THE ABOVE GROUNDS ARE DECIDED AGAINST THE ASSESSEE BY VAR IOUS DECISIONS OF THE TRIBUNAL. IN VIEW OF THE ABOVE, THE ABOVE GROUNDS ARE DISMISSED. 127. GROUND OF APPEAL NO.5 BEING GENERAL IN NATURE IS DISMISSED. ITA NO.383/PN/2013 (BY REVENUE) (A.Y. 2010-11) : 128. GROUND OF APPEAL NO.1 BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL DEPRECIATION OF RS.8,14,920/- AT HIGHER RATE OF 80% FOR CIVIL WORK FOUNDATION AND RE LATED LABOUR COST OF THE WINDMILL. 129. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROU ND IS IDENTICAL TO GROUND OF APPEAL IN ITA NO.380/PN/2013. WE HA VE 60 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. FOLLOWING THE SAME RATIO, THIS GROUND B Y THE REVENUE IS DISMISSED. 130. GROUND OF APPEAL NO.2 BY THE REVENUE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION U/S.80IA(4)(IV ) OF RS.74,26,459/-. 131. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO IN HIS OR DER REJECTED THE CLAIM OF DEDUCTION U/S.80IA(4)(IV). WHILE DOING SO THE AO OBSERVED THAT WHILE MAKING THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4)(IV), THE ASSESSEE HAD IGNORED THE PROVISIONS OF 80IA(5) WHICH PROVIDED THAT THE PROFIT AND GAIN OF ELIGIBLE BU SINESS SHOULD BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE O NLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YE AR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH T HE DETERMINATION IS TO BE MADE. THE AO OBSERVED THAT THE A SSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTION AND IN THE YEAR OF IN STALLATION OF WIND MILL THE UNABSORBED DEPRECIATION OF WINDMILL WAS CLAIMED AND ALLOWED AGAINST PROFIT OF SUCH OTHER BUSINESS. FURTHER THE ASSESSEE HAD SHOWN PROFIT FROM WINDMILL FOR SUBSEQUENT YEAR S. THE ASSESSING OFFICER REWORKED THE MANUFACTURING AND PROFIT AND LOSS ACCOUNT IN RESPECT OF WINDMILL AS PER PROVISIONS OF SECTION 8 0IA(5). HE OBSERVED THAT AS PER THIS WORKING EVEN AT THE END OF THE ASSESSMENT YEAR UNDER CONSIDERATION, THERE WAS UNABSOR BED DEPRECIATION OF RS.4,64,79,412/-. BASED ON THE ABOVE OBSERV ATION, THE CLAIM OF DEDUCTION U/A. 80IA(4) WAS REJECTED AND TH E SUM OF RS. 74,26,459/- WAS BROUGHT TO TAX. 61 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 132. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT IT HAD INS TALLED TWO WINDMILLS IN A.Y. 2006-07 AND ONE IN A.Y. 2007-08 WHICH WAS ENTITLED FOR DEDUCTION U/S.80IA(4)(IV) FROM A.Y. 2006-07, WHICH WA S THE FIRST YEAR OF GENERATION OF POWER. IT HAD SET OFF LOSS FROM WINDMILL AGAINST THE PROFIT OF CONSTRUCTION ACTIVITY FOR FOUR YE ARS TILL ASSESSMENT YEAR 2009-10. WHEN THE OPERATION OF WINDMILL AC TIVITY RESULTED IN PROFIT OF RS.1,07,72,594/- FOR THE FIRST TIME, IT HA D CLAIMED DEDUCTION U/S.80IA(4) IN ASSESSMENT YEAR 2010-11. IT WAS SUBMITTED THAT THE YEAR-WISE DETAILS OF PROFIT / LOSS FROM W INDMILL ACTIVITY PRODUCED DURING ASSESSMENT PROCEEDINGS WERE NO T CONSIDERED BY THE ASSESSING OFFICER. THE INITIAL ASSESSMENT YEAR IN THE CASE OF ELIGIBLE UNDERTAKING IS THE FIRST YEAR OF CLAIM O F DEDUCTION AND NOT THE FIRST YEAR OF OPERATION OF THE UNDE RTAKING. THE FICTION OF NOTIONAL CARRY FORWARD OF LOSSES UNDER SECT ION 80IA(5) DOES EXIST BUT OPERATES ONLY FROM INITIAL ASSESSMENT YE AR I.E. THE FIRST YEAR OF CLAIM AND THEREAFTER AND IS NOT APPLICABLE FROM EARLIER YEARS. THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CA SE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD. VS. ACIT REPORTED IN 38 DTR 57 AND THE DECISION OF THE PUNE BENCH OF THE TRIBUNA L IN THE CASE OF POONAWALLA ESTATE STUD & AGRO FARM PVT. LTD. VS . ACIT REPORTED IN 136 TTJ 236 WERE BROUGHT TO THE NOTICE OF THE CIT(A). 133. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER : 52. I HAVE GIVEN CAREFUL CONSIDERATION TO THE CONTE NTIONS OF THE APPELLANT. A SIMILAR ISSUE HAD COME UP IN APPEAL BEFO RE ME IN THE CASE OF M/S PREETAM ENTERPRISES WHEREIN THE DECISION OF THE HONOURABLE ITAT, PUNE BENCH 'A', PUNE IN ITA NO. 544, 545 AND 613/PN/2009 DATED 29/04/2011 IN ITS CASE FOR ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07, ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4)(IV)(A) WAS CONSIDERED. THE RELEVANT PORTION O F THE ITAT'S ORDER IS REPRODUCED BELOW- 62 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 2.1 WE ALSO FIND THAT IN THE CASE OF VELAYUDHASWAMY SP INNING MILLS (P) LTD., VS ACIT (2010) 231 CTR (MAD) 368 HONBLE M ADRAS HIGH COURT HAS HELD THAT LOSSES AND DEPRECIATION OF THE YEA RS EARLIER TO THE INITIAL ASSESSMENT YEAR WHICH HAVE ALREADY BEEN ABSORBED AGAINST THE PROFITS OF OTHER BUSINESS CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS FOR COMPUTING THE DEDUCTION UNDER SECTION 80 IA. FOLLOWING THIS JUDGMEN T OF HONBLE MADRAS HIGH COURT, THIS ISSUE IS DECIDED IN FAVOUR OF TH E ASSESSEE. THE ASSESSEE IS ENTITLED TO CLAIM FOR DEDUCTION U/S 80IA(4)(I V)(A) OF THE ACT. 53. THUS, IN VIEW OF THE IDENTICAL FACTS AND CIRCUM STANCES, DECISION OF THE HONOURABLE ITAT REPRODUCED ABOVE IS APPLICABL E TO THE INSTANT CASE ALSO. THE DISALLOWANCES MADE FOR THE ASSESSMENT YEARS U NDER APPEAL ARE THEREFORE, DELETED. THIS GROUND OF APPEAL IS ALLOWED. 134. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 135. AFTER HEARING BOTH THE SIDES, WE FIND THE ISSUE AS TO WHETHER INITIAL ASSESSMENT YEAR U/S.80IA(5) MEANS YEAR OF INSTALLATION OF WINDMILL OR YEAR IN WHICH THE CLAIM OF DEDUCTION U/S.80IA IS FIRS T MADE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALLA E STATE STUD & AGRO FARM PVT. LTD.(SUPRA) WHEREIN IT HAS BEEN H ELD AS UNDER : 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE F ACTUAL MATRIX OF THE CASE AND ORDERS OF THE REVENUE AND THE PAPER B OOK. WE HAVE ALSO EXAMINED THE LEGAL POSITION ON THE MATTER. BEFOR E ADJUDICATING THE ISSUE IN QUESTION, IT IS NECESSARY TO EXAMINE THE SCOPE OF THE PROVISIONS RELATING TO THE INITIAL ASSESSMENT YEAR : '80-IA. DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE D EVELOPMENT, ETC.(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCL UDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS OF AN INDUSTR IAL UNDERTAKING OR AN ENTERPRISE REFERRED TO IN SUB-S. (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS) , THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SE CTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO HUND RED PER CENT OF PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR THE FIRST FIVE ASSESSMENT YEARS COMMENCING AT ANY TIME DURING THE PERIO DS AS SPECIFIED IN SUB-S. (2) AND THEREAFTER, TWENTY-FIVE PE R CENT OF THE PROFITS AND GAINS FOR FURTHER FIVE ASSESSMENT YEARS : 63 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY, THE PROVI SIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS TWENT Y-FIVE PER CENT; THE WORDS THIRTY PER CENT HAD BEEN SUBSTITUTED. (2) THE DEDUCTION SPECIFIED IN SUB-S. (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSME NT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHIC H THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY I NFRASTRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVIC E OR DEVELOPS AN INDUSTRIAL PARK OR GENERATES POWER OR COMMENCES TRANSMI SSION OR DISTRIBUTION OF POWER : PROVIDED THAT WHERE THE ASSESSEE BEGINS OPERATING AND MA INTAINING ANY INFRASTRUCTURE FACILITY REFERRED TO IN CL. (B) O F EXPLANATION TO CL. (I) OF SUB-S. (4), THE PROVISIONS OF THIS SUB-SECTION SHALL HAV E EFFECT AS IF FOR THE WORDS FIFTEEN YEARS, THE WORDS TWENTY YEARS HAD BEEN SUBSTITUTED...............' 14. FROM THE ABOVE PROVISIONS OF SUB-S. (2) OF S. 80-IA OF THE ACT, IT IS EVIDENT THAT THE ASSESSEE IS GRANTED THE OPTION TO SELE CT INITIAL ASSESSMENT YEAR I.E., FIRST ASSESSMENT YEAR OF THE ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS. STARTING ASSESSMENT Y EAR FOR COUNTING THE DURATION OF FIFTEEN YEARS IS ALSO PROVID ED IN THE SAID SUB- SECTION. AS PER THESE PROVISIONS, THE ASSESSEE IS NOT ALLOWED TO JUMP THE ASSESSMENT YEAR ONCE AN INITIAL ASSESSMENT YEAR IS OPTE D. THEREFORE, WE FIND NO FAULT WITH THE ASSESSEE IN SELECTI NG THE ASST. YR. 2004-05 AS THE INITIAL ASSESSMENT YEAR. IN THIS REGARD I.E., ON THE ISSUE OF ASSESSEES OPTION TO SELECT THE INITIAL ASSESSMENT YEAR, WE HAVE PERUSED THE CITATIONS RELIED UPON BY THE ASSESSEES COUNSE L. THE CONCLUSION BY THE TRIBUNAL MUMBAI BENCH DECISION IN I TA NO. 4620/MUM/2007 (ASST. YR. 2004-05) IN THE CASE OF DY. CIT VS. USHDEV INTERNATIONAL LTD., IS STRAIGHT ON THIS ISSUE OF INITIAL ASSESSMENT YEAR AND THE OPTION TO THE ASSESSEE AND THE HELD PORTION OF THE DECISION READS AS UNDER : 'IN VIEW OF THE ABOVE LEARNED CIT(A)S ORDER TO THE EXTENT OF HOLDING THAT INITIAL ASSESSMENT YEAR AND SUBSEQUENT SUCCEEDING ASSE SSMENT YEARS CAN ONLY BE CONSIDERED FOR THE PURPOSE OF COMPUT ING DEDUCTION UNDER S. 80-IA. COMING TO THE FACTS OF THE CASE, HOWEV ER, AS SEEN FROM THE SCHEDULE OF DETAILS AVAILABLE IN THE LEARNED CIT( A)S ORDER THE ASSESSEE HAS INCURRED LOSSES IN THE ASST. YRS. 1997-98 AND 199 8-99 ONLY. SUBSEQUENTLY IN ALL THE YEARS THERE WERE PROFIT S TILL ASST. YR. 2004- 05. IT IS NOT CLEAR WHETHER THE ASSESSEE HAS CLAIMED ANY DEDUCTION IN EARLIER YEARS UNDER S. 80-IA. THIS BEING THE 8TH YEAR OF STARTING THE PROJECT, ASSESSEE WOULD BE LEFT WITH ONLY ANOTHER 7 YEA RS OF CLAIM OUT OF THE 10 YEARS AVAILABLE TO THE ASSESSEE. CONSIDERING T HIS WE ARE OF THE OPINION THAT THE INITIAL ASSESSMENT YEAR IS TO BE DETERM INED ON THE BASIS OF THE YEAR THE ASSESSEE CHOOSE TO CLAIM THE DEDUCTI ON FOR THE FIRST TIME........' 15. WHEN THE STATUTE HAVE GRANTED THE OPTION TO CHOO SE THE INITIAL ASSESSMENT YEAR AND WHEN THE ASSESSEE HAS SO CHOSEN THE CURRE NT ASSESSMENT YEAR AS THE INITIAL ASSESSMENT YEAR AND WHEN THE ASSESSEE ACCORDINGLY PAID THE TAXES ON THE PROFITS OF THE WIND MILL ACTIVITY IN THE EARLIER YEARS AS PER THE STATUTE, THE AOS DECISION TO T HRUST THE INITIAL 64 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ASSESSMENT YEAR ON THE ASSESSEE IS NOT IN TUNE WITH THE PROV ISIONS OF S. 80-IA(2) OF THE ACT. ACCORDINGLY, WE ARE OF THE OPI NION, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INITIAL ASSESSMENT YE AR FOR THE PURPOSES OF S. 80-IA(2) R/W S. 80-IA(5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING THE ELECTRICITY. THEREFORE, THE ORDER OF THE CIT(A) HAS TO BE REVERSED ON THIS ISSUE. IT IS CLEAR THAT THE INITIAL ASSESSMENT YEAR FOR THE ABOVE PURPOSES WAS THE FIRST YEAR IN WHICH THE ASSESSEE CLAIMED THE DEDUCTION UNDER S. 80-IA(1) AFT ER EXERCISING HIS OPTION AS PER THE PROVISIONS OF S. 80-IA(2) OF THE A CT. CONSEQUENTLY, THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION OF RS. 25 ,44,326 UNDER S. 80-IA IN RESPECT OF THE PROFITS FROM THE WINDMILL ACT IVITY. ACCORDINGLY, THE CLARIFICATORY GROUND RAISED IS ALLOWED. IN THE RE SULT, ADJUDICATION OF THE GROUNDS 3 AND 4 RAISED IN THE APPEAL IS MERE ACADE MIC AND HENCE THEY ARE DISMISSED AS INFRUCTUOUS. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 136. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BE NCH OF THE TRIBUNAL CITED (SUPRA) AND IN ABSENCE OF ANY CONTRAR Y MATERIAL BROUGHT TO OUR NOTICE WE HOLD THAT THE PROVISIONS OF SEC TION 80IA(5) ARE APPLICABLE ONLY FROM THE INITIAL ASSESSMENT YEAR, I.E. THE ASSESSMENT YEAR IN WHICH DEDUCTION U/S.80IA(4) WAS FIRST CLAIMED BY THE ASSESSEE AFTER EXERCISING ITS OPTION AS PER THE P ROVISIONS OF SECTION 80IA(2) OF THE ACT. THE ORDER OF LD.CIT(A) IS ACCORD INGLY UPHELD AND THE GROUND RAISED BY THE REVENUE IS ACCORDIN GLY DISMISSED. 137. GROUNDS OF APPEAL NO. 3 AND 4 BY THE REVENUE BEING GENERAL IN NATURE ARE DISMISSED. 138 IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE AR E PARTLY ALLOWED AND ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06-11-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 06 TH NOVEMBER, 2015. LRH'K 65 ITA NOS.377 TO 383/PN/2013 & ITA NOS.2578 TO 2581/PN/2012 ' (!* + / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . CIT A) , KOLHAPUR 4 . 5. 6. CIT , KOLHAPUR ' *, *, , IQ.KS IQ.KSIQ.KS IQ.KS DR, ITAT, A PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE