The DCIT, Vijayawada V. Kwality Feeds Ltd., Gudivada

ITA 26/VIZ/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5197 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBA KUMAR SONAWAL
• Assessee Lawyers: K SIVA RAM KUMAR
• Keywords: Depreciation
• Section: 143(3); 142(1); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 2 6 / VIZ /201 5 (ASST. YEAR : 20 11 - 12 ) DCIT, CIRCLE - 1(1), VIJAYAWADA. V S . M/S. KWALITY FEEDS LTD., NO.3/57, R AMANAPUDI, GUDIVADA RURAL MANDA L, KRISHNA DISTRICT. PAN NO. AAACK 9357 P (APPELLANT) (RESPONDENT) C.O.NO.17/VIZ/2015 ( ARISING OUT OF ITA NO. 26 / VIZ /201 5) (ASST. YEAR : 20 11 - 12 ) M/S. KWALITY FEEDS LTD., NO.3/57, RAMANAPUDI, GUDIVADA RURAL MANDAL, KRISHNA DISTRICT. VS. DCIT, CIRCLE - 1(1), VIJAYAWADA. PAN NO. AAACK 9357 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SIVA RAM KUMAR, C A. DEPARTMENT BY : SHRI DEBA KUMAR SONAWAL, CIT - DR DATE OF HEARING : 03 / 0 7 /201 8 . DATE OF PRONOUNCEMENT : 18 / 0 7 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF 2 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) INCOME TAX (APPEALS) , VIJAYAWADA , DATED 27 / 1 0/201 4 FOR THE ASSESSMENT YEAR 20 11 - 12 . SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . ITA NO. 26/VIZ/2015 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE - COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF FEEDS AND PROCESSING OF FEEDS ON HIRE BASIS , FILED ITS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 3,52,39,390/ - AND RS. 5,09,12,881/ - AS DEEMED TOTAL INCOME UNDER SECTION 115J OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') . RETURN F ILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . LATER ON, ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 143(2) AND ALSO 142(1) AND CALLED EXPLANATION AND ACCORDINGLY ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. 3 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS NOT IC ED THAT ASSESSEE CLAIMED EXPENDITURE OF RS.3,84 ,60,222/ - UNDER THE HEAD POWER AND FUEL IN THE PROFIT & LOSS ACCOUNT . HOWEVER, IN THE DIRECTORS REPORT (FORM - A) , IT WAS CLEARLY REPORTED THAT THE EXPENDITURE INCURRED UNDER THE POWER 3 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) AND FUEL CONSUMPTION WAS ONLY RS. 1,80,66,693/ - . THE ASSESSING OFFICER, VIDE LETTER DATED 16/09/2013 , ASKED THE ASSESSEE TO RECONCILE THE DIFFERENCE WITH NECESSARY EVIDENCE. BY LETTER DATED 03/10/2013, T HE ASSESSEE HAS GIVEN REPLY , WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. AGAIN , ASSESSING OFFICER BY ISSUING A LETTER DATED 28/10/2013 ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DIFFERENCE IN POWER CONSUMPTION SHOWN IN THE PROFIT & LOSS ACCOUNT AND THE DIRECTORS REPORT, AMOUNTING TO RS. 2,03 ,93,529/ - (RS. 3,84,60,222 RS. 1,80,66,693) SHOULD NOT BE DISALLOWED . THE RELEVANT PORTION OF THE LETTER IS REPRODUCED AS UNDER: - AS SEEN FROM THE DIRECTORS REPORT (FORM A) WITH RESPECT TO CONSERVATION OF ENERGY, THE DETAILS ARE SHOWN AS UNDER: - 1. ELECTRICITY : UNITS COST (RS.) (A) P URCHASED FROM APSPDCL 42,59,880 1,77,03,840 (B) DIESEL GENERATOR 44,613 3,63,153 (C) COAL NIL (D) OTHERS ____ NIL T OTAL 43,04,493 1,80,66,693 AS PER ANNEXURE D TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD MANUFACTURING SELLING & ADMINISTRATIVE EXPENSES, THE EXPENSES ARE CLAIMED AS UNDER: - POWER AND FUEL RS. 3,84,60,222/ - VIDE THIS OFFICE LETTER DATED 16/09/2013 YOU WERE ASKED TO RECONCILE THE DIFFERENCE OF EXPENSES CLAIMED AS SHOWN ABOVE. FOR THE ABOVE, YOU HAVE REPLIED VIDE YOUR LETTER DATED 03/10/2013 MAKING THE FOLLOWING SUBMISSIONS: - I. RECONCILIATION STATEMENT OF POWER & FUEL: 1. POWER PURCHASE FROM APSPDCL RS. 1,77,52,025 * 2. LEASED GODOWN ELECTRICITY CHARGES RS. 3,98,891 3. DIESEL CONSUMPTION BY GENERATOR RS. 3,63,153 4 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) 4. GENERATOR MAINTENANCE (SPARES) RS. 33,848 5. FIREWOOD CONSUMPTION BY BOILER RS. 6,84,779 6. PADDY HUSK CONSUMPTION BY BOILER RS. 1,92,27,526 TOTAL RS. 3,84,60,222 *POWER PURCHASE RS.1,77,03,840 AND INTEREST ON ELECTRICITY DEPOSIT RS. 48,185/ - HOWEVER, THIS REPLY CANNOT BE ACCEPTED BASED ON THE FACTS MENTIONED ABOVE. AS YOU HAVE FAILED TO DISCHARGE YOUR RESPONSIBILITY OF SUBMITTING THE EXPLANATION TO THE SATISFACTION OF THE ASSESSING OFFICER, IT IS DECIDED TO DISALLOW THE DIFFERENCE AMOUNT OF T HE EXPENDITURE CLAIMED UNDER THE HEAD POWER AND FUEL AS PER THE PROFIT & LOSS ACCOUNT AS AGAINST THE EXPENDITURE SHOWN UNDER THE SAME HEAD IN THE DIRECTORS ANNUAL REPORT WHICH WORKS OUT TO RS. 2,03,93,529/ - (RS. 3,84,60,222 RS. 1,80,66,693). YOU ARE HER EBY DIRECTED TO EXPLAIN WHY THE DIFFERENCE AMOUNT SHOULD NOT BE DISALLOWED. IF IT IS TO BE ALLOWED, YOU ARE HEREBY DIRECTED TO EXPLAIN WHY IT SHOULD ALLOWED AND UNDER WHICH SECTION IT SHOULD BE ALLOWED. YOU MAY FILE YOUR OBJECTIONS, IF ANY FOR THIS PROPO SAL WITH NECESSARY EVIDENCES ON OR BEFORE 08/11/2013. 4 . THE ASSESSEE HAD FILED A WRITTEN EXPLANATION ON 08/11/2013 , WHEREIN HE STATED THAT FORM - A IS REQUIRED AS AN ANNEXURE TO THE DIRECTORS REPORT UNDER THE DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS, RULE, 1988, WHICH IS MANDATORY UNDER THE PROVISIONS OF THE COMPANIES ACT , 1956. THE FORM - A IS AIMED TO DISCLOSE THE ENERGY CONSERVATION MEASURES TAKEN BY THE SPECIFIED INDUSTRIES WITH REGARD TO PETROLEUM PRODUCTS I.E. DIESEL OIL, F URNACE OIL AND OTHER OILS AND ELECTRICITY IN VIEW OF THEIR IMPACT ON ECONOMY , DUE TO THE REASON T H A T , CRUDE OIL IS IMPORTED FROM OTHER COUNTRIES AND ELECTRICITY IS BEING PURCHASED FROM OTHER STATES. TO INITIATE CONTROL MEASURES UPON SUCH RESOURCES, FORM - A 5 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) IS PRESCRIBED BY THE MINISTRY OF COMPANY AFFAIRS . WHEREAS , PADDY HUSK IS ONLY AGRO WASTE GENERATED BY RICE MILLING UNITS AND IT IS BULKY IN NATURE AND IT COULD BE USED LOCALLY, ITS TRANSPORTATION AND LABOUR CH ARGES ARE NORMALLY MORE THAN ITS COST. IN VIEW OF THIS, ASSESSEE SUBMITTED THAT ITS DIRECTORS DID NOT SPECIFICALLY DISCLOSE THESE ITEMS IN FORM - A. THE ASSESSEE FURTHER SUBMITTED THAT AFTER VERIFICATION OF ABOUT 1000 HUSK PURCHASE VOUCHERS ALONG WITH WEIGHMENT SLIPS , LEDGER ACCOUNT COPIES OF 31 HUSK SUPPLIER IN ITS BOOKS OF ACCOUNT AND ALSO VERIFICATION OF CASH/CHEQUE PAYMENTS TO THE SUPPLIES, THE NEED FOR THE BOILER IN THE MANUFACTURE PROCESS, ASSESSEE REQUESTED TO R ECONSIDER/REVIEW IN THE LIGHT /WEIGHT OF THE EVIDENCE. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE OBSERVED THAT THE DIRECTORS REPORT SIGNED BY THE EXECUTIVE CHAIRMAN & MANAGING DIRECTOR CLEARLY SHOWS THAT COAL AND OTHERS (HUS K) WERE NOT UTILIZED FOR THE PURPOSE OF POWER. THERE CAN BE NO OTHER STOCK AND NO CONCLUSION EVIDENCE THAN THE SIGNED REPORT OF THE EXECUTIVE CHAIRMAN & MANAGING DIRECTOR TO SAY THAT COAL AND HUSK WERE NOT UTILIZED FOR THE PURPOSE OF BUSINESS. HENCE, EVEN IF THE PURCHASE OF COAL AND HUSK IS GENUINE, THE SAME CANNOT BE ALLOWED AS THERE WERE NOT LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AS 6 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) CERTIFIED IN THE DIRECTORS REPORT. ACCORDINGLY, THE ASSESSING OFFICER BY RELYING UP ON THE DIRECTORS REPORT SIGNED BY THE EXECUTIVE CHAIRMAN & MANAGING DIRECTOR SAID THAT ELECTRICITY , PURCHASED FROM THE GRID AND THE ELECTRICITY GENERA T ED BY USING DIESEL ONLY , WERE USED AND COAL AND OTHERS WERE NOT USED FOR THE PURPOSE OF GENERATING ELECTRICITY SHOULD BE TAKEN AS A CONCLUSIVE PROOF. ACCORDINGLY, THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS. 2,03,93,529/ - (RS. 3,84,60,222 RS. 1,80,66,693) BY TREATING IT AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS UNDER SECTION 37(1) OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE HAS SU BMITTED BEFORE THE LD. CIT(A) THAT THE DIRECTORS REPORT (FORM - A) IS REQUIRED TO BE FILED UNDER THE C OMPANIES ACT, THEREFORE, EXPENSES INCURRED FOR POWER AND FUEL WAS ONLY RS. 1,80,66,693/ - . THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN DISALLOWING EXPENDITURE INCURRED IN RESPECT OF HUSK, COAL & DIESEL ETC . IT WAS FURTHER SUBMITTED THAT THE DIRECTORS REPORT NEVER SAID THAT THE COAL AND HUSK WERE NOT UTILIZED FOR THE PURPOSE OF BUSINESS. IT IS FURTHER SUBMITTED THAT THE ASSESSEE - COMPANY HAS NOT USE D COAL AND HUSK TO GENERATE 7 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) POWER IN ITS COMPANY . BUT THAT NON - MENTIONING OF COAL AND HUSK IN THE REPORT CANNOT LEAD TO THE INFERENCE THAT THEY WERE NOT LAID OUT FOR OUR BUSINESS. IT IS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS ALLOWED THE SAME IN TH E PRECEDING YEAR . IT WAS ALSO FURTHER SUBMITTED THAT ALL THE DETAILS IN RESPECT OF HUSK PURCHASE VOUCHERS ALONG WITH WEIGHMENT SLIPS, LEDGER COPIES OF HUSK SUPPLIERS IN ITS BOOKS OF ACCOUNT AND ALSO VERIFICATION OF CASH/ CHEQUE PAYMENTS TO THE SUPPLIES WERE PLACED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER WITHOUT EXAMINING THE SAME AND BY RELYING THE DIRECTORS REPORT DISALLOWED THE EXPENDITURE. THEREFORE, HE SUBMITTED THAT SAME MAY BE ALLOWED . 6 . THE LD. CIT(A) BASING ON THE SUBMISSIONS MADE BY THE ASSESSEE DIRECTED THE ASSESSING OFFICER TO ALLOW EXPENDITURE OF RS.2,03,93,529/ - . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 5.1.1. 1 HAVE GONE THROUGH THE DIRECTORS' REPORT AND THE AUDITED FINANCE STATEMENTS AND NOTICED THAT IN TH E DIRECTOR'S REPORT AT FORM - A, IT WAS MENTIONED THAT THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS POWER AND FUEL CONSUMPTION I.E. ELECTRICITY PURCHASES FROM APEPDCL AT RS.1 , 77 , 03 , 840/ - AND OWN GENERATION OF POWER THROUGH DIESEL GENERATOR AT RS.3 , 63 , 153/ - . HOWEVER, IT IS OBSERVED FROM THE PROFIT & LOSS ACCOUNT OF THE APPELLANT EXPENDITURE INCURRED UNDER THE H EAD POWER AND FUEL WAS SHOWN AT RS.3,84,60,222/ - . THE ASSESSING OFFICER HAS THEREFORE CONCLUDED THAT THERE IS A DIFFERENCE OF AMOUNT TO THE EXTEN T OF RS.20393529/ - TOWARDS POWER AN D FUEL EXPENDITURE AS SHOWN IN THE PROFIT & LOSS ACCOUNT AND AS 8 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) PER THE DIRECTORS' REPORT. IN THIS CONTEXT, IT IS NOTICED THAT IN THE DIRECT ORS REPORT , TH E EXPENDITURE INCURRED TOWARDS ELECTRICITY ONLY HAS BEEN SHOWN B Y THE APPE LLANT AS PART OF DISCLOSURE WITH RESPECT TO CONSERVATION OF ENERGY, WHEREAS IN THE PROFIT & LOSS ACCOUNT THERE WAS AN EXPENDITURE INCURRED TOWARDS LEASED SHED ELECTRICITY CHARGES AND BOILER MAINTENANCE OF RS. 3 , 98 , 891/ - AND RS. 1 , 99,12 , 30 5 RESPECTI VELY , WHICH WAS CLAIMED UNDER THE HEAD POWER AND FUEL EXPENDITURE. IN FACT, IT IS FURTHER NOTICED THAT THE APPELLANT HAS BEEN USING A LICENSED BOILER FOR MANY YEARS AND THE EXPENDITURE ON HUSK FOR FIRING THE SAID BOILER AND THE GENERATOR MAINTENANCE BY WAY OF DIESEL AND OTHER CONNECTED EXPENDITURE HAS BEEN ALLOWED ALL ALONG. IT IS ALSO OBSERVED THAT IN THE PRECEDING ASSESSMENT YEAR, SUCH EXPENDITURE HAS BEEN CLAIMED BY THE APPELLANT AND WAS NOT SUBJECTED TO ANY DISALLOWANCE BY THE ASSESSING OFFICER. THE APP ELLANT PRODUCED EVIDENCES IN RESPECT OF INSTALLATION OF A NEW HIGH CAPACITY BOILER DURING THE YEAR UNDER CONSIDERATION WITH APPROPRIATE LICENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPEAL PROCEEDINGS BEFORE ME. IT IS OBSERVED THAT THE ASSESSING OFFICER HAS ALLOWED THE DEPRECIATION CLAIMED BY THE APPELLANT ON THIS ASSET. FURTHER, IT IS ALSO OBSERVED FROM THE COMPARATIVE STATEMENT OF SALES, G.P. AND N.P. SUBMITTED BY THE APPELLANT THAT THE TURNOVER FOR THE YEAR UNDER CONSIDERATIO N WAS RS.83.65 CRORES AS AGAINST 30.82 CRORES IN THE PRECEDING YEAR. SIMILARLY, THE EXPENDITURE TOWARDS 'POWER AND FUEL' INCREASED FROM RS.1,31 , 44,144/ - TO RS.3,84,60,222/ - DURING THE YEAR ON ACCOUNT OF EXPANSION AND TO FUEL THE NEW BOILER AND THERE IS INCREASE IN TURNOVER ALSO. IN VIEW OF THE FOREGOING, I AM OF THE OPINION THAT THE ASSESSING OFFICER HAS ONLY RELIED UPON THE DIRECTORS REPORT IN MA KING THE DISALLOWANCE WITHOUT CONSIDERING THAT THERE IS INCREASE IN TURNOVER AS COMPARED TO THE PRECEDING YEAR VIS - A - VIS INCREASE IN THE EXPENDITURE DURING THE YEAR, INCREASE IN GROSS PROFIT AND NET PROFIT. THE APPELLANT HAS BEEN CLAIMING THE EXPENDITURE I N RESPECT OF BOILER MAINTENANCE DURING THE PRECEDING YEAR AND WAS ALLOWED, BY THE ASSESSING OFFICER AND ALSO THERE IN NO CHANGE IN THE NATURE OF THE BUSINESS OF THE APPELLANT. HENCE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING THE DIFFERENCE OF P OWER AND FUEL EXPENDITURE OF RS.20393529/ - . ACCORDINGLY , THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE IN THIS REGARD. 9 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) 7 . ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 8 . LD . DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT ASSESSEE HAS NOT ABLE TO SUBSTANTIATE THE EXPENDITURE INCURRED IN RESPECT OF HUSK AND COAL OF RS. 2,03,93,529/ - , HENCE ASSESSING OFFICER DISALLOWED THE SAME . HE FURTHER SUBMITTED THAT LD. CIT(A) WITHOUT EXAMI NING THE DET A ILS OF THE EXPENDITURE INCURRED IN RESPECT OF COAL AND HUSK, BASED ON THE SUBMISSIONS MADE BY THE ASSESSEE DIRECTED THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE , IS NOT CORRECT AND SUBMITTED THAT ISSUE MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION . 9. ON THE OTHER HAND, THE AUTHORISED REPRESENTATIVE FOR THE ASSESSEE STRONGLY RELIED ON THE ORDER PASSED BY THE LD. CIT(A). HE ALSO SUBMITTED THAT THE ASSESSING OFFICER DIS ALLOWED THE EXPENDITURE ONLY BASED ON THE DIRECTORS ANNUAL REPORT, WHICH IS FACTUALLY IN CORRECT AND THEREFORE, THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE ALLOWED AND SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) MAY BE UPHELD. 10 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. 10 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) 11 . THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 3,84,60,222/ - UND E R THE HEAD POWER AND FUEL IN THE PROFIT & LOSS ACCOUNT . THE ASSESSING OFFICER HAS NOTICED FROM T HE DIRECTORS REPORT (FORM - A) THAT THE EXPENDITURE INCURRED UNDER THE HEAD POWER & FUEL CONSUMPTION WAS ONLY OF RS. 1,80,66,693/ - . THEREFORE, ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTANTIATE THE ENTIRE EXPENDITURE CLAIMED IN THE PROFIT & LOSS ACCOUNT. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE DIRECTORS REPORT (FORM - A) IS AIMED TO DISCLOSE THE ENERGY CONSERVATION MEASURES TAKEN BY THE SPECIFIED INDUSTRIES WITH REGARD TO PETROLEUM PRODUCTS I.E. DIESEL OIL, FURNACE OIL AND OTHER O ILS AND ELECTRICITY IN VIEW OF THEIR IMPACT ON ECONOMY DUE TO THE REASON THAT CRUDE OIL IS IMPORTED FROM OTHER COUNTRIES. TO INITIATE CONTROL MEASURES UPON SUCH RESOURCES, FORM - A IS PRESCRIBED BY THE MINISTRY OF COMPANY AFFAIRS. WHEREAS, PADDY HUSK IS ON LY AGRO WASTE GENERATED BY RICE MILLING UNITS AND IT IS BULKY IN NATURE AND IT COULD BE USED LOCALLY, ITS TRANSPORTATION AND LABOUR CHARGES ARE NORMALLY MORE THAN ITS COST. IN VIEW OF THESE , DIRECTORS REPORT DID NOT SPECIFICALLY DISCLOSE THESE ITEMS IN F ORM - A . THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, CAME TO A CONCLUSION THAT THE ENTIRE AMOUNT OF RS. 3,84,60,222/ - IS NOT EXCLUSIVELY INCURRED FOR THE 11 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) PURPOSE OF BUSINESS AND ONLY EXPENDITURE INCURRED AS PER THE DIRECTORS REPORT (FORM - A) OF RS. 1,80,66,693/ - , IS ALLOWED BY TREATING IT AS EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. THE REMAINING BALANCE OF RS. 2,03,93,529/ - ( RS. 3,84,60,222 RS.1,80,66,693) WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASS ESSEE. ON APPEAL, LD. CIT(A) BY CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. WE FIND THAT LD. CIT(A) NOT AT ALL EXAMINED THE DETAILS IN RESPECT OF RS. 2,03,93,529/ - CLAIMED BY THE ASSESSEE. EVE N , THE ASSESSING OFFICER ALSO NOT EXAMINED THE DETAILS FILED BY THE ASSESSEE. THE ASSESSEE HAS NOT FILED THE DIRECTORS REPORT BEFORE US. UNDER THESE FACTS AND CIRCUMSTA N CES OF THE CASE, WE ARE OF THE OPINION THAT THE CLAIM OF THE ASSESSEE HAS TO BE EXAM INED WITH PROPER EVIDENCE. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE DENOVO BY CONSIDERING THE DETAILS IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL THE DETAILS IN RESPECT OF EXPENDITURE CLAIMED OF RS. 2,03,93,529/ - BEFORE THE ASSESSING OFFICER . 12 ITA NO. 26 /VIZ/2015 C.O.NO. 17/VIZ/2015 (M/S. KWALITY FEEDS LTD. ) C.O.NO. 17/VIZ/2015 12. AT THE TIME OF HEARING, LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT HE DOESNT WANT TO PRESS THIS CROSS O BJECTION. IN VIEW OF THE STATEMENT MADE BY THE AUTHORISED REPRESENTATIVE FOR THE ASSESSEE, THIS CROSS O BJECTION FILED BY THE ASSESSEE IS DISMISSED . 13 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUN CED IN OPEN COURT ON TH IS 1 8 T H DAY OF J U LY , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 8 T H JULY , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. KWALITY FEEDS LTD., NO.3/57, RAMANAPUDI, GUDIVADA RURAL MANDAKL, KRISHNA DIST. 2. THE REVENUE DCIT, CIRCLE - 1(1), VIJAYAWADA. 3. THE CIT, VIJAYAWADA. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.