The ACIT,(OSD)Range-1, Ahmedabad V. Cera Sanitaryware Ltd., Ahmedabad

ITA 2877/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9567 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Business expenditure; Additional depreciation; Fair market value; Capital receipt
• Section: 142(1); 56(2); 234B; 32; 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE S/SHRI G. D. AGARWAL, VP & RAJPAL YADAV, JM ITA NO. 2817/AHD/2011 ASST. YEAR 2008-09 .CERA SANITARYWARE LTD., MADHUSUDAN HOUSE, OPP. NAVRANGPURA TEL. EXCHANGE, NAVRANGPURA, AHMEDABAD-380009 VS DY. CIT (OSD), RANGE-1, AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO. AABCM9244 N ITA NO. 2877/AHD/2011 ASST. YEAR 2008-09 ASSTT. CIT (OSD), RANGE-1, AHMEDABAD. VS .CERA SANITARYWARE LTD., MADHUSUDAN HOUSE, OPP. NAVRANGPURA TEL. EXCHANGE, NAVRANGPURA, AHMEDABAD- 380009 (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S. N. SOPARKAR, AR REVENUE BY SHRI ROOP CHAND, SR. DR DATE OF HEARING: 23/4/2015 DATE OF PRONOUNCEMENT: 29/5/15 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE ASSESSEE AND REVENUE ARE IN CROSS APPEALS AGAI NST THE ORDER OF LD. CIT(A) DATED 7/9/2011 PASSED FOR AY 20 08-09. ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 2 2. FIRST WE TAKE THE APPEAL OF REVENUE. IN THE SOLI TARY SUBSTANTIAL GROUND OF APPEAL REVENUE HAS PLEADED THAT LD. CIT(A ) HAS ERRED IN DELETING THE ADDITION OF RS.1,29,17,418/- WHICH WAS ADDED BY THE AO BY MAKING DISALLOWANCE OUT OF CLAIM OF ADDITIONAL D EPRECIATION. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A C OMPANY ENGAGED IN MANUFACTURING AND TRADING OF CERAMICS. IT HAS FI LED ITS RETURN OF INCOME ON 24/9/2008 DECLARING TOTAL INCOME AT RS.4, 99,85,297/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND A NOTICE UNDER SECTION 143(2) OF THE I.T. ACT, 1961 W AS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUN TS IT REVEALED TO THE AO THAT ASSESSEE HAD PURCHASED A WIND-MILL FOR A CONSIDERATION OF RS.6,55,87,091/- DURING THE YEAR. IT HAD CLAIMED ADDITIONAL DEPRECIATION ON WIND-MILL AT RS.1,29,17,418/-. THE AO HAD ISSUED A QUESTIONNAIRE ON 11/10/2010 UNDER SECTION 142(1) AN D ASKED THE EXPLANATION OF THE ASSESSEE, AS TO WHY ADDITIONAL D EPRECIATION SHOULD NOT BE DISALLOWED BECAUSE ASSESSEE HAS NOT BEEN MAN UFACTURING ANY ARTICLE OR THINGS OUT OF THE WIND-MILL. ACCORDING T O THE AO THE WIND-MILL ESSENTIALLY GENERATE POWER BUT NO MANUFACTURING ACT IVITY CAN BE CONSTRUED FROM THE WIND-MILL AND, THEREFORE, ADDITI ONAL DEPRECIATION IS ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 3 NOT ADMISSIBLE TO THE ASSESSEE. IN RESPONSE TO THE QUERY OF AO THE ASSESSEE FILED A WRITTEN SUBMISSION BUT THE LD. AO WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDING TO THE AO SECTION 32(1)(IIA) PROVIDES THAT IF ANY NEW MACHINERY OR PL ANT WHICH HAS BEEN ACQUIRED AND INSTALLED AFTER 31 ST MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTIO N OF ANY ARTICLE OR THINGS, A FURTHER SUM EQUAL TO 25% OF THE ACTUAL COST OF SUCH MACHINERY OR PLANT SHALL BE ALLOWED AS A DEDUCTION UNDER CLAUSE (II). ACCORDING TO THE AO GENERATION OF ELECTRICITY THROU GH A WINDMILL IS NOT A MANUFACTURING ACTIVITY WHICH GIVES RISE TO PRODUC TION OF ANY ARTICLE OR THINGS IDENTIFIABLE, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR ADDITIONAL DEPRECIATION. HE DISALLOWED THE CLAIM OF ASSESSEE AND MADE THE ADDITION. 4. ON APPEAL LD. FIRST APPELLATE AUTHORITY HAS ALLO WED THE CLAIM OF ASSESSEE BY PUTTING RELIANCE UPON THE DECISIONS OF HONBLE MADRAS HIGH COURT IN THE CASE OF HI-TECH ARAI LTD. 321 ITR 477 (MAD), CIT VS. TEXMO PRECISION CASTINGS 321 ITR 481 (MAD) & CI T VS. VIM LTD. 229 CTR 70 (MAD). THE RELEVANT FINDING OF THE LD. F IRST APPELLATE AUTHORITY READS AS UNDER :- ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 4 I HAVE GONE THROUGH THESE THREE DECISIONS AND IT IS CLEAR THAT ASSESSES IN THESE CASES WERE INVOLVED IN DIFFERENT ITEMS OF MANUFACTURING AND PURCHASED WINDMILLS. ON THE IDENT ICAL ISSUE, HONBLE MADRAS HIGH COURT HELD THAT ASSESSES ARE EN TITLED TO ADDITIONAL DEPRECIATION ON COST OF WINDMILL ACQUIRE D. IT IS ALSO HELD THAT THE PLANT AND MACHINERY PURCHASED NEED NOT BE OPERATIONALLY USED FOR MANUFACTURING ARTICLES OR THINGS. SINCE TH E ONLY OBJECTION OF THE ASSESSING OFFICER WAS THAT WINDMILLS GENERATED ELECTRICITY WHICH IS NOT ARTICLES OR THING IS NO LONGER A RELEVANT ISSUE IN THE LIGHT OF THESE DECISIONS. FROM THE FACTS NARRATED IN THE ASSESSMEN T ORDER AND IN THE APPELLANTS SUBMISSION, IT IS CLEAR THAT APPELLANT FULFILLED ALL THE CONDITIONS REQUIRED FOR CLAIM OF ADDITIONAL DEPRECI ATION ON WINDMILL PURCHASED BY IT. THE ADDITION OF WINDMILL WAS AFTER 31 ST OF MARCH 2005. APPELLANT WAS ALREADY IN THE BUSINESS OF MANU FACTURING ARTICLES OR THINGS. THE WINDMILL IS NOT COVERED BY ANY CLAUS E OF PROVISO TO THIS SECTION. THE WINDMILL WAS NOT USED BY ANY PERSON BE FORE INSTALLATION. IT IS NOT INSTALLED IN OFFICE OR RESIDENTIAL PREMIS ES. THIS IS NOT OFFICE APPLIANCE OR ROAD TRANSPORT VEHICLE. WINDMILLS ARE ALSO NOT ELIGIBLE FOR 100 PERCENT DEPRECIATION IN ONE YEAR. CONSIDERING T HIS APPELLANT FULFILLS ALL THE CONDITIONS REQUIRED FOR CLAIM OF A DDITIONAL DEPRECIATION. RESPECTFULLY FOLLOWING THE DECISION OF MADRAS HIGH COURT RELIED UPON BY THE APPELLANT, ASSESSING OFFICER IS DIRECTED TO ALLOW ADDITIONAL DEPRECIATION ON WINDMILL. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COUR T RENDERED IN THE CASE OF CIT VS.DIAMINES & CHEMICALS LTD. REPORTED AT (2014) 42 TAXMANN.COM 193 (GUJARAT). HE PLACED ON RECORD A CO PY OF THE DECISION. WE FIND THAT HONBLE GUJARAT HIGH COURT H AS CONSIDERED THE FOLLOWING QUESTION :- ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 5 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN LAW IN DELETING THE ADDITIO N OF RS.1,17,98,030/- ON ACCOUNT OF DISALLOWANCE OF ADDITIONAL DEPRECIATION ON WIND ELECTRIC GENERATOR WITHOUT APPRECIATING THAT THE WIND ELECTR IC GENERATOR DOES NOT RESULT INTO MANUFACTURE OR PRODUCTION OR ARTICLE OR THING, BUT IT IS USED TO GENERATE ELECTRICITY AND THAT THE BASIC CRITERIA TO GET ADDITIONAL DEPRECIATION UNDER CLAUSE (IIA) OF SECTION 32(1) OF THE ACT IS T HAT THE PLANT AND MACHINERY SHOULD BE COVERED UNDER CLAUSE (II) OF SE CTION 32(1) OF THE ACT, WHEREAS WIND ELECTRIC GENERATOR IS CLASSIFIED AS PE R CLAUSE (I) OF SECTION 32(1) OF THE ACT. AFTER MAKING A REFERENCE TO THE DECISIONS OF HONBL E MADRAS HIGH COURT AS REFERRED TO BY THE CIT(A) IN THE CASE OF C IT VS. VTM LTD. (SUPRA) AND CIT VS. HI TECH ARAI LTD., THE HONBLE HIGH COURT HAS HELD THAT ADDITIONAL DEPRECIATION ON WINDMILL WILL BE ADMISSIBLE TO THE ASSESSEE. ACCORDING TO THE HONBLE HIGH COURT THE S ETTING UP OF WINDMILL FOR THE PURPOSE OF POWER INDUSTRY HAS NOTH ING TO DO FOR GRANT OF ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) IF ASSESSEE IS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE AND PRODUCTION OF ARTICLE OR THING AND INSTALLED A WINDMILL THEN DEPR ECIATION WILL BE ADMISSIBLE TO SUCH AN ASSESSEE. THE OTHER CONDITION S PROVIDED UNDER SECTION 32 OUGHT TO BE FULFILLED. ON DUE CONSIDERAT ION OF THE ORDER OF CIT(A) EXTRACTED (SUPRA) IN THE LIGHT OF DECISION O F HONBLE GUJARAT HIGH COURT, WE ARE OF THE VIEW THAT LD. FIRST APPEL LATE AUTHORITY HAS APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE IN RIGHT ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 6 PERSPECTIVE AND THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE GUJARAT HIGH CO URT. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THIS GROUND OF REVENUES APPEAL IS REJECTED. ACCORDINGLY THE APPEAL OF REVENUE IS DISMISSED. 6. NOW WE TAKE THE APPEAL OF ASSESSEE. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RU LE-8 OF ITAT RULES. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NA TURE. IN BRIEF ITS FIRST GRIEVANCE IS THAT LD. CIT(A) HAS ERRED IN CON FIRMING THE ACTION OF AO IN RESTRICTING THE CLAIM OF DEPRECIATION ON FANS , ELECTRICAL INSTALLATIONS AT 10% INSTEAD OF 15% ADMISSIBLE TO P LANT AND MACHINERY. IN BRIEF LD. CIT(A) HAS ERRED IN CONFIRM ING THE DISALLOWANCE OF RS.9,55,810/- WHICH REPRESENTS DISA LLOWANCE OF RS.1,17,151/- ON FAN; RS.1,13,124/- ON ELECTRIC INS TALLATION; AND RS.7,25,535/- AS AN ADDITIONAL DEPRECIATION. THE LD . AO HAS VERIFIED THE CLAIM OF ASSESSEE AND OBSERVED THAT IN THE SCHE DULE OF DEPRECIATION, RATES OF DEPRECIATION ARE PRESCRIBED SEPARATELY FOR EACH ITEM. FOR ELECTRICAL FITTINGS SUCH AS ELECTRICAL W IRING, SWITCH AND FANS ETC. THE PRESCRIBED RATE IS 10% AS AGAINST 15% FOR PLANT. HE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 7 ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE. S IMILARLY HE OBSERVED THAT SINCE ADDITIONAL DEPRECIATION IS ADMI SSIBLE ON PLANT AND NOT ON ELECTRICAL FITTINGS WHICH IS AN INDEPENDENT ITEM, THEREFORE, IT IS NOT ADMISSIBLE TO THE ASSESSEE. 7. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF I.T.A.T. IN THE CASE OF MADHU INDUSTRIES LTD. VS. I NCOME-TAX OFFICER, REPORTED IN 132 TTJ 233 (AHD). HE ALSO RELIED UPON THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASES REPORTED AT 256 ITR 322 (GUJ) AND 151 ITR 75 (GUJ). THE QUESTION IS, WHETHE R ELECTRICAL FITTINGS, FANS IN THE CASE OF ASSESSEE ARE INTEGRAL PART OF PLANT OR MACHINERY OR THEY ARE INDEPENDENT ITEMS. IF THEY CA N FUNCTION INDEPENDENTLY OF PLANT AND MACHINERY THEN PROBABLY THE AO WOULD BE RIGHT IN RESTRICTING THE CLAIM OF DEPRECIATION AT 1 0%. THE REASON BEING THE RATES OF DEPRECIATION ARE PRESCRIBED VISUALIZIN G THE WEARING AND TEARING OF THE MACHINERY IN ITS USER FOR THE PURPOS E OF BUSINESS. THE ITAT IN THE CASE OF MADHU INDUSTRIES LTD. (SUPRA) H AS OBSERVED THAT AS ELECTRICAL ITEMS CANNOT FUNCTION INDEPENDENTLY O F PLANT AND ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 8 MACHINERY, THE SAME CANNOT BE CLASSIFIED INDEPENDEN TLY. THEY BECOME PART OF PLANT AND MACHINERY AND DEPRECIATION WILL BE ADMISSIBLE AT THE SAME RATE WHICH IS APPLICABLE IN THE CASE OF PLANT AND MACHINERY. THE AO IN THE IMPUGNED ORDER HAS NOW HERE OBSERVED THAT THESE ARE NOT PART AND PARCEL OF THE PLANT AND MACHINERY. THE ASSESSEE HAS PLEADED THAT ELECTRIC C ABLES AND FANS ARE BEING INSTALLED IN CASTING DEPARTMENT WHERE ADD ITIONAL LOAD OF ELECTRICITY IS REQUIRED. THESE FITTINGS AT THE LOCA TION ATTACH MOULDING AND CASTING AT THREE PLACES. THEREFORE, THEY ARE IN TEGRAL PART OF THE MACHINERY. WE ALLOW THIS GROUND OF APPEAL AND DELET E THE DISALLOWANCE. THE LD. AO SHALL COMPUTE THE DEPRECIA TION ADMISSIBLE TO THE ASSESSEE @ 15% ON THESE ELECTRICAL FITTINGS AND FANS. THE MOMENT THEY ARE TREATED AS A PART OF PLANT THE ASSE SSEE WILL GET ADDITIONAL DEPRECIATION ALSO. THIS GROUND OF APPEAL IS ALLOWED. 9. IN THE NEXT GROUND OF APPEAL THE GRIEVANCE OF TH E ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DIS ALLOWANCE OF RS.92,10,249/-. 10. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OU TSET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 9 BY THE ORDER OF THE TRIBUNAL PASSED IN AY 2007-08 W HEREIN SIMILAR DISALLOWANCE WAS DELETED. THE LD. COUNSEL OF THE AS SESSEE FURTHER CONTENDED THAT THE ITAT IN AY 2007-08 HAS ALLOWED T HE CLAIM OF ASSESSEE BY FOLLOWING THE ORDER OF ITAT (SPL. BENC H) IN THE CASE OF BIOCON LTD. VS. DY. CIT 25 ITR (TRIB) 602. 11. THE LD. DR ON THE OTHER HAND WAS UNABLE TO CONT ROVERT THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE. 12. BEFORE THE EMBARK UPON THE ENQUIRY ON THE FACTS OF THE PRESENT CASE IT IS PERTINENT TO NOTE THE QUESTION BEFORE TH E SPECIAL BENCH IN THE CASE OF BIOCON LTD. (SUPRA) AND HOW THE SPECIAL BENCH HAS ANALYSED THE ISSUE. THE QUESTION BEFORE THE SPECIAL BENCH WAS WHETHER DISCOUNT ON ISSUE OF EMPLOYEESSTOCK OPTI ON IS ALLOWABLE AS A DEDUCTION IN COMPUTING THE INCOME UNDER THE HEAD PR OFITS AND GAINS OF BUSINESS? THE SPECIAL BENCH HAS EXPLAINED THE CONCEPT OF EMPL OYEES STOCK OPTION. IT IS WORTH TO NOTE 9.2.4. IN ORDER TO APPRECIATE THE RIVAL SUBMISSIO NS, IT IS OF THE UTMOST IMPORTANCE TO UNDERSTAND THE CONCEPT OF ESOP. SECTI ON 2(15A) OF THE INDIAN COMPANIES ACT, 1956 DEFINES EMPLOYEE STOCK OPTION TO MEAN `THE OPTION GIVEN TO THE WHOLE-TIME DIRECTORS, OFFI CERS OR EMPLOYEES OF A COMPANY, WHICH GIVES SUCH DIRECTORS, OFFICERS OR EMPLOYEES, THE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 10 BENEFIT OR RIGHT TO PURCHASE OR SUBSCRIBE AT A FUTU RE DATE, THE SECURITIES OFFERED BY THE COMPANY AT A PREDETERMINED PRICE. I N AN ESOP, THE GIVEN COMPANY UNDERTAKES TO ISSUE SHARES TO ITS EMP LOYEES AT A FUTURE DATE AT A PRICE LOWER THAN THE CURRENT MARKET PRICE . THIS IS ACHIEVED BY GRANTING STOCK OPTIONS TO ITS EMPLOYEES AT DISCOUNT . THE AMOUNT OF DISCOUNT REPRESENTS THE DIFFERENCE BETWEEN MARKET P RICE OF THE SHARES AT THE TIME OF THE GRANT OF OPTION AND THE OFFER PR ICE. IN ORDER TO BE ELIGIBLE FOR ACQUIRING THE SHARES UNDER THE ESOP, T HE CONCERNED EMPLOYEES ARE OBLIGED TO RENDER SERVICES TO THE COM PANY DURING THE VESTING PERIOD AS GIVEN IN THE SCHEME. ON THE COMPL ETION OF THE VESTING PERIOD IN THE SERVICE OF THE COMPANY, SUCH OPTIONS VEST WITH THE EMPLOYEES. THE OPTIONS ARE THEN EXERCISED BY TH E EMPLOYEES BY MAKING APPLICATION TO THE EMPLOYER FOR THE ISSUE OF SHARES AGAINST THE OPTIONS VESTED IN THEM. THE GAP BETWEEN THE COMPLET ION OF VESTING PERIOD AND THE TIME FOR EXERCISING THE OPTIONS IS U SUALLY NEGLIGIBLE. THE COMPANY, ON THE EXERCISE OF OPTION BY THE EMPLOYEES , ALLOTS SHARES TO THEM WHO CAN THEN FREELY SELL SUCH SHARES IN THE OP EN MARKET SUBJECT TO THE TERMS OF THE ESOP. THUS IT CAN BE SEEN THAT IT IS DURING THE VESTING PERIOD THAT THE OPTIONS GRANTED TO THE EMPL OYEES VEST WITH THEM. THIS PERIOD COMMENCES WITH THE GRANT OF OPTIO N AND TERMINATES WHEN THE OPTIONS SO GRANTED VEST IN THE EMPLOYEES A FTER SERVING THE COMPANY FOR THE AGREED PERIOD. BY GRANTING THE OPTI ONS, THE COMPANY GETS A SORT OF ASSURANCE FROM ITS EMPLOYEE FOR REND ERING UNINTERRUPTED SERVICES DURING THE VESTING PERIOD AND AS A QUID PR O QUO IT UNDERTAKES TO COMPENSATE THE EMPLOYEES WITH A CERTAIN AMOUNT G IVEN IN THE SHAPE OF DISCOUNTED PREMIUM ON THE ISSUE OF SHARES. 9.2.5. THE CORE OF THE ARGUMENTS OF THE LD. DR IN T HIS REGARD IS TWO- FOLD. FIRST, THAT IT IS NOT AN EXPENDITURE IN ITSEL F AND SECONDLY, IT IS A SHORT CAPITAL RECEIPT OR AT THE MOST A SORT OF CAPI TAL EXPENDITURE. IN OUR CONSIDERED OPINION BOTH THE LEGS OF THIS CONTENTION ARE LEGALLY UNSUSTAINABLE. 9.2.6. THERE IS NO DOUBT THAT THE AMOUNT OF SHARE P REMIUM IS OTHERWISE A CAPITAL RECEIPT AND HENCE NOT CHARGEABL E TO TAX IN THE HANDS OF COMPANY. THE FINANCE ACT, 2012 HAS INSERTE D CLAUSE (VIIB) OF SECTION 56(2) W.E.F. 1.4.2013 PROVIDING THAT: `WHER E A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIAL LY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEI NG A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SU CH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES, THEN SUCH EXCESS SHARE PREMIUM SHALL BE CHARGED TO TAX UNDER THE HEAD `INC OME FROM OTHER SOURCES. BUT FOR THAT, THE AMOUNT OF SHARE PREMIUM HAS ALWAYS BEEN ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 11 UNDERSTOOD AND ACCEPTED AS A CAPITAL RECEIPT. IF A COMPANY ISSUES SHARES TO THE PUBLIC OR THE EXISTING SHAREHOLDERS A T LESS THAN THE OTHERWISE PREVAILING PREMIUM DUE TO MARKET SENTIMEN T OR OTHERWISE, SUCH SHORT RECEIPT OF PREMIUM WOULD BE A CASE OF A RECEIPT OF A LOWER AMOUNT ON CAPITAL ACCOUNT. IT IS SO BECAUSE THE OBJ ECT OF ISSUING SUCH SHARES AT A LOWER PRICE IS NOWHERE DIRECTLY CONNECT ED WITH THE EARNING OF INCOME. IT IS IN SUCH LIKE SITUATION THAT THE CO NTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE WOULD PROPERLY FIT IN, THEREBY DEBARRING THE COMPANY FROM CLAIMING ANY DEDUCTION TOWARDS DIS COUNTED PREMIUM. IT IS QUITE BASIC THAT THE OBJECT OF ISSUI NG SHARES CAN NEVER BE LOST SIGHT OF. HAVING SEEN THE RATIONALE AND MOD US OPERANDI OF THE ESOP, IT BECOMES OUT-AND-OUT CLEAR THAT WHEN A COMP ANY UNDERTAKES TO ISSUE SHARES TO ITS EMPLOYEES AT A DISCOUNTED PR EMIUM ON A FUTURE DATE, THE PRIMARY OBJECT OF THIS EXERCISE IS NOT TO RAISE SHARE CAPITAL BUT TO EARN PROFIT BY SECURING THE CONSISTENT AND C ONCENTRATED EFFORTS OF ITS DEDICATED EMPLOYEES DURING THE VESTING PERIO D. SUCH DISCOUNT IS CONSTRUED, BOTH BY THE EMPLOYEES AND COMPANY, AS NO THING BUT A PART OF PACKAGE OF REMUNERATION. IN OTHER WORDS, SUCH DI SCOUNTED PREMIUM ON SHARES IS A SUBSTITUTE TO GIVING DIRECT INCENTIV E IN CASH FOR AVAILING THE SERVICES OF THE EMPLOYEES. THERE IS NO DIFFEREN CE IN TWO SITUATIONS VIZ., ONE, WHEN THE COMPANY ISSUES SHARES TO PUBLIC AT MARKET PRICE AND A PART OF THE PREMIUM IS GIVEN TO THE EMPLOYEES IN LIEU OF THEIR SERVICES AND TWO, WHEN THE SHARES ARE DIRECTLY ISSU ED TO EMPLOYEES AT A REDUCED RATE. IN BOTH THE SITUATIONS, THE EMPLOYE ES STAND COMPENSATED FOR THEIR EFFORT. IF UNDER THE FIRST SI TUATION, THE COMPANY, SAY, ON RECEIPT OF PREMIUM AMOUNTING TO RS.100 FROM ISSUE OF SHARES TO PUBLIC, GIVES RS.60 AS INCENTIVE TO ITS EMPLOYEE S, SUCH INCENTIVE OF RS.60 WOULD BE REMUNERATION TO EMPLOYEES AND HENCE DEDUCTIBLE. IN THE SAME WAY, IF THE COMPANY, INSTEAD, ISSUES SHARE S TO ITS EMPLOYEES AT A PREMIUM OF RS.40, THE DISCOUNTED PREMIUM OF RS .60, BEING THE DIFFERENCE BETWEEN RS.100 AND RS.40, IS AGAIN NOTHI NG BUT A DIFFERENT MODE OF AWARDING REMUNERATION TO EMPLOYEES FOR THEI R CONTINUED SERVICES. IN BOTH THE CASES, THE OBJECT IS TO COMPE NSATE EMPLOYEES TO THE TUNE OF RS.60. IT FOLLOWS THAT THE DISCOUNT ON PREMIUM UNDER ESOP IS SIMPLY ONE OF THE MODES OF COMPENSATING THE EMPL OYEES FOR THEIR SERVICES AND IS A PART OF THEIR REMUNERATION. THUS, THE CONTENTION OF THE LD. DR THAT BY ISSUING SHARES TO EMPLOYEES AT A DISCOUNTED PREMIUM, THE COMPANY GOT A LOWER CAPITAL RECEIPT, I S BEREFT OF AN FORCE. THE SOLE OBJECT OF ISSUING SHARES TO EMPLOYE ES AT A DISCOUNTED PREMIUM IS TO COMPENSATE THEM FOR THE CONTINUITY OF THEIR SERVICES TO THE COMPANY. BY NO STRETCH OF IMAGINATION, WE CAN D ESCRIBE SUCH DISCOUNT AS EITHER A SHORT CAPITAL RECEIPT OR A CAP ITAL EXPENDITURE. IT IS NOTHING BUT THE EMPLOYEES COST INCURRED BY THE COMP ANY. THE SUBSTANCE OF THIS TRANSACTION IS DISBURSING COMPENS ATION TO THE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 12 EMPLOYEES FOR THEIR SERVICES, FOR WHICH THE FORM OF ISSUING SHARES AT A DISCOUNTED PREMIUM IS ADOPTED. AFTER MAKING A DETAILED ANALYSIS THE ITAT HAS HELD THAT IT IS AN ALLOWABLE DEDUCTION. THE CONCLUSION OF THE SPECIAL BENCH READS AS UNDER :- 11.3. WE, THEREFORE, SUM UP THE POSITION THAT THE DISCOUNT UNDER ESOP IS IN THE NATURE OF EMPLOYEES COST AND IS HENC E DEDUCTIBLE DURING THE VESTING PERIOD W.R.T. THE MARKET PRICE OF SHARE S AT THE TIME OF GRANT OF OPTIONS TO THE EMPLOYEES. THE AMOUNT OF DI SCOUNT CLAIMED AS DEDUCTION DURING THE VESTING PERIOD IS REQUIRED TO BE REVERSED IN RELATION TO THE UNVESTING/LAPSING OPTIONS AT THE AP PROPRIATE TIME. HOWEVER, AN ADJUSTMENT TO THE INCOME IS CALLED FOR AT THE TIME OF EXERCISE OF OPTION BY THE AMOUNT OF DIFFERENCE IN T HE AMOUNT OF DISCOUNT CALCULATED WITH REFERENCE THE MARKET PRICE AT THE TIME OF GRANT OF OPTION AND THE MARKET PRICE AT THE TIME OF EXERCISE OF OPTION. NO ACCOUNTING PRINCIPLE CAN BE DETERMINATIVE IN THE MATTER OF COMPUTATION OF TOTAL INCOME UNDER THE ACT. THE QUES TION BEFORE THE SPECIAL BENCH IS THUS ANSWERED IN AFFIRMATIVE BY HO LDING THAT DISCOUNT ON ISSUE OF EMPLOYEE STOCK OPTIONS IS ALLOWABLE AS DEDUCTION IN COMPUTING THE INCOME UNDER THE HEAD `PROFITS AND GA INS OF BUSINESS OR PROFESSION. 13. NOW LET US REVERT TO THE FACTS OF THE PRESENT C ASE. FACE VALUE OF THE SHARE OF THE ASSESSEE COMPANY WAS RS.5/-. AS PE R THE ASSESSEE THE MARKET VALUE IS RS.140.80. THUS THERE WAS A PRE MIUM ON EACH SHARE OF THE ASSESSEE COMPANY AT RS.135.80. THE ASS ESSEE HAS IMPLEMENTED THE EMPLOYEES STOCK OPTION SCHEME OF G IVING SHARES TO THE EMPLOYEES AT A PRICE FIXED BY THE COMPANY, LESS ER THAN THE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 13 AVERAGE MARKET VALUE. IT HAS OFFERED THE SHARES AT RS.61/- PER SHARE (I.E. FACE VALUE OF RS.5/- AND PREMIUM OF RS.56/- P ER SHARE). THUS THE ASSESSEE HAS A LOSS OF THE DIFFERENCE IN PREMIUM AT RS.79.80 (RS.135.80 RS.56). THIS AMOUNT HAS BEEN CLAIMED A S A REVENUE LOSS BY THE ASSESSEE. THE AO HAS NOT INDEPENDENTLY MADE DETAILED DISCUSSION IN THE PRESENT YEAR RATHER HE RELIED UPO N THE FINDING OF HIS PREDECESSOR IN AY 2007-08. HE REPRODUCED THE FINDIN G OF THE AO RECORDED IN AY 2007-08 ON PAGES 4 TO 8 OF THE ASSES SMENT ORDER. IN AY 2007-08 ASSESSEE HAD CLAIM OF LOSS OF RS.24,30,5 54/- WHICH WAS AMORTIZED BY THE ASSESSEE. THE LOSS RELATABLE TO TH IS YEAR HAS BEEN COMPUTED BY THE ASSESSEE AT RS.92,10,249/-. THE REA SONINGS GIVEN BY THE ASSESSEE IN AY 2007-08 HAVE BEEN CONSIDERED BY THE SPECIAL BENCH OF THE TRIBUNAL. THE DISCUSSION MADE BY THE T RIBUNAL IN AY 2007-08 ON THIS ISSUE READS AS UNDER :- 5. NOW, WE TAKE UP GROUND NOS.5 & 6 OF ASSESSEES APPEAL WHICH ARE INTER-CONNECTED AND, THEREFORE, THE SAME ARE DECIDE D TOGETHER. 5.1. THE LD.SR.COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF EM PLOYEES STOCK OPTION SCHEME (ESOP) AMOUNTING TO RS.24,30,554/- MADE U/S. 28 R.W.S. 37 OF THE ACT. THE LD.SR.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE ISSUES ARE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 14 SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE SPECIAL BENCH OF THE TRIBUNAL (ITAT BANGALORE BENCH SPECIAL BENCH) RENDERED IN THE CASE OF BIOCON LTD. VS. DY.CIT REPO RTED AT (2013) 155 TTJ 649:: 35 TAXMANN.COM 335 (BANGALORE-TRIB.)(SB).. 5.2. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN MAKING THE DISALLOWANCE. 6. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) IN PARA-7.3. OF HIS ORDER HAS HELD AS UNDER:- 7.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ASSE SSMENT ORDER AND APPELLANTS SUBMISSION. APPELLANT HAS CLAIMED THE ESOP EXPENSE WITHOUT INCURRING A SINGLE PENNY EXPENSE ON EMPLOYE ES. NOT A SINGLE RUPEE HAS GONE OUT OF THE ASSESSEES BOOKS FOR THE PURPOSE OF ESOP BUT STILL THE DIFFERENCE BETWEEN MARKET PRICE OF SH ARE AND ESOP OFFER PRICE WAS CONSIDERED AS LOSS/EXPENSE AND THE SAME W AS CLAIMED. ALL THE ARGUMENTS RAISED BY THE APPELLANT HAVE BEEN ANS WERED CLEARLY BY THE ASSESSING OFFICER WHICH IS QUOTED IN PARA-7.1 A BOVE. I COMPLETELY AGREE WITH THE ASSESSING OFFICERS ORDER REBUTTING APPELLANTS CONTENTIONS. SINCE ELABORATE DISCUSSION HAS BEEN G IVEN IN THAT PART, THE SAME IS NOT REPEATED HERE. THE APPELLANTS CLA IM IS FOUND TO BE FRIVOLOUS AND TOTALLY UNSUSTAINABLE IN VIEW OF THE FOLLOWING FACTS:- 1-ESOP IS A SCHEME FOR EMPLOYEES BY WHICH THEY ARE ALLOTTED COMPANYS SHARES AT DISCOUNT TO MARKET PRICE. ISSU E OF SHARES OF PREMIUM OR DISCOUNT IS CAPITAL IN NATURE AND HENCE BALANCE SHEET ITEM. THERE IS NO REVENUE LOSS OR GAIN IN ISSUE OF EQUITY SHARES. IF SHARES ARE ISSUED AT PREMIUM THEN SHARE PREMIUM ACC OUNT IN BALANCE SHEET INCREASES. IF THE SHARES ARE ISSUE AT DISCOU NT EITHER SHARE PREMIUM ACCOUNT IS REDUCED OR SHARES DISCOUNT ACCOU NT IS INCREASED. IN EITHER EVENT, PROFIT OR INCOME OF THE COMPANY IS NOT AT ALL AFFECTED. ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 15 THEREFORE CLAIMING ANY LOSS ON ACCOUNT OF GIVING OP TION TO EMPLOYEE TO SUBSCRIBE SHARES AT LOWER VALUE IS WITHOUT ANY B ASIS AND FRIVOLOUS. 2-WHEN SHARES ARE ISSUED AT PREMIUM, SAID PREMIUM I S NOT OFFERED AS INCOME FOR TAX, THEREFORE ANY REDUCTION IN SHARES PREMIUM CANNOT RESULT IN LOSS WHICH CAN BE CLAIMED IN P&L A CCOUNT. 3-DISCLOSURE NORMS FOR LIMITED COMPANIES CAN BE THE RE AS PER SEBI OR ICAI GUIDELINES BUT THE ACCOUNTING WILL NOT MAKE THE CLAIM AS ALLOWABLE EXPENSE OR LOSS. FOR BEING AN ALLOWABLE EXPENSE OR LOSS, THE FIRST CONDITION IS THAT EXPENSE CANNOT BE CAPIT AL IN NATURE. SHARE PREMIUM OR LOSS ON PREMIUM IS UNDOUBTEDLY CAPITAL I N NATURE AND THEREFORE CLEARLY OUTSIDE THE PURVIEW OF SECTION 37 AND 28 WHICH DEALS WITH REVENUE EXPENSES OR LOSSES. THEREFORE MAKING SUCH CLAIM JUST ON THE BASIS OF ACCOUNTING ENTRIES FOR CERTAIN DISCLOS URE PURPOSES AND COMPLETELY IGNORING THE PROVISIONS OF IT ACT IS NOT HING BUT FURNISHING INACCURATE PARTICULARS OF INCOME. CONSIDERING THE ABOVE AND THE DISCUSSION IN ASSESSM ENT ORDER, I FIND THIS CLAIM FRIVOLOUS, UNSUSTAINABLE AND NOT AS PER THE PROVISIONS OF LAW. ACCORDINGLY THE ADDITION MADE BY THE ASSES SING OFFICER IS CONFIRMED. 6.1. IT IS NOT DISPUTED THAT THE ASSESSEE HAS CLAIM ED BUSINESS EXPENDITURE ON ESPO. THE SIMILAR ISSUE WAS BEFORE THE HONBLE SPECIAL BENCH OF ITAT BANGALORE RENDERED IN THE CASE OF BIOCON LTD. VS. D Y.CIT(SUPRA), WHEREIN THE HONBLE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE BY OBSERVING AS UNDER:- IN THE PRESENT CASE, THE ASSESSEE-COMPANY WAS A CL OSELY HELD COMPANY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESS MENT YEAR 2003-04 AND AS SUCH THERE WAS NO QUESTION OF LISTING OF ITS SHARES AND HAVING SOME MARKET PRICE AT THE TIME OF GRANT OF OPTIONS. ORDINARILY, THE AMOUNT OF DISCOUNT ON PREMIUM WHICH IS WRITTEN OFF OVER THE VESTING PERIOD REPRESENTS THE MARKET PRICE OF THE SHARES LI STED ON THE STOCK EXCHANGE ON THE DATE OF GRANT OF OPTION AS REDUCED BY THE PRICE AT WHICH OPTION IS GIVEN TO THE EMPLOYEES. HOWEVER, S INCE THERE WAS NO AVAILABILITY OF ANY MARKET PRICE OF SUCH SHARES ON THE DATE OF GRANT OF ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 16 OPTION AS THE COMPANY CAME TO BE LISTED ON A STOCK EXCHANGE IN A SUBSEQUENT YEAR, THE ASSESSEE-COMPANY TOOK THE MARK ET PRICE OF THE SHARE ON THE DATE OF GRANT OF OPTION AT RS.919. NO MATERIAL WORTH THE NAME WAS PLACED ON RECORD TO INDICATE AS TO HOW A S HARE WITH FACE VALUE OF RS.10 HAD BEEN VALUED AT RS.919 FOR CLAIMI NG DEDUCTION TOWARDS DISCOUNT AT RS.909 PER SHARE. THIS ASPECT OF VALUATION OF SHARES AT RS.919 PER SHARE NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER [PARA 12.2]. 6.2. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF SPECIAL BENCH OF ITAT BANGALORE RENDERED IN THE CASE OF BIOCON LTD.( SUPRA), WE ALLOW THE GROUND NOS. 5 & OF ASSESSEES APPEAL. 14. ON DUE CONSIDERATION OF THE DETAILS, WE ARE OF THE VIEW THAT THERE IS NO DISPARITY ON THE FACTS. THE AO HAS BASE D HIS ORDER EXCLUSIVELY ON THE FINDINGS OF ASSESSMENT ORDER PAS SED IN AY 2007- 08. THE CONTRIBUTION OF THE AO IN THIS AY IS OF FOU R LINES RECORDED ON PAGE 8. WE HAVE EXAMINED THE SUBMISSIONS OF THE ASS ESSEE GIVEN IN AY 2007-08 AND REPRODUCED IN THE ASSESSMENT ORDER I MPUGNED HEREUNDER VIS--VIS THE FINDING OF THE AO. WE FIND THAT BASICALLY THE AO WAS OF THE VIEW THAT IT IS A CAPITAL LOSS. IT IS NOT MATERIALIZED IN THIS YEAR. IT WOULD HAPPEN ONLY WHEN OPTION IS EXERCISED BY THE EMPLOYEES. ALL THESE ASPECTS HAVE BEEN CONSIDERED B Y THE SPECIAL BENCH OF THE TRIBUNAL WHEREIN IT HAS BEEN EXPLAINED THAT SHARE PREMIUM IS A CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX IN THE HANDS OF ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 17 THE COMPANY. IF A COMPANY ISSUES SHARES TO THE PUBL IC OR TO THE EXISTING SHAREHOLDERS AT LESSER THAN OTHERWISE PREV AILING PREMIUM DUE TO MARKET SENTIMENTS OR OTHERWISE SUCH SHARE RE CEIPTS OF A PREMIUM WOULD BE A CASE OF RECEIPT OF LOWER AMOUNT ON CAPITAL AMOUNT. BECAUSE THE OBJECT OF ISSUING SUCH SHARE AT A LOWER PRICE IS NOWHERE DIRECTLY CONNECTED WITH THE EARNING OF INCO ME BUT, WHEN THE COMPANY UNDERTAKES TO ISSUE SHARES TO ITS EMPLOYEES AT A DISCOUNTED PREMIUM AT A FUTURE DATE THE PRIMARY OBJECT OF THIS EXERCISE IS NOT TO RAISE SHARE CAPITAL BUT TO EARN PROFIT BY SECURING THE CONSISTENT AND CONCENTRATED EFFORTS OF DEDICATED EMPLOYEES DURING THE VESTING PERIOD, SUCH DISCOUNT IS CONSTRUED, BOTH BY THE EMP LOYEES AND THE COMPANY, AS NOTHING BUT A PART OF PACKAGE OF REMUNE RATION, A SUBSTITUTE TO GIVING DIRECT INCENTIVE IN CASH FOR A VAILING THE SERVICES OF THE EMPLOYEES. THEREFORE, IN OUR OPINION LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED WHILE UPHOLDING THE DISALLOWANCE OF T HE ASSESSEES CLAIM. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH AS WELL AS THAT OF THE SPECIAL BENCH WE DELETE THE DISALLOWANC E. THIS GROUND OF APPEAL IS ALLOWED. ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 18 15. IN THE NEXT GROUND GRIEVANCE OF THE ASSESSEE IS THAT IN AY 2007-08 THE CLAIM FOR ADDITIONAL DEPRECIATION ON MU MBAI DISPLAY CENTRE WAS DISALLOWED AND, THEREFORE, WRITTEN DOWN VALUE WOULD INCREASE. THE AO HAS TO COMPUTE THE TRUE WRITTEN DO WN VALUE IN THIS YEAR IN VIEW OF CONFIRMATION OF ADDITIONAL DEPRECIA TION IN EARLIER YEAR. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. IF CLAIM OF DEPRECIATION IN ONE Y EAR IS BEING DISALLOWED THEN THAT WOULD ENHANCE THE WRITTEN DOWN VALUE OF THE ASSET BY THE DISALLOWED AMOUNT IN THE SUBSEQUENT YE AR, THE DEPRECIATION IS TO BE COMPUTED ON THIS ENHANCED WRI TTEN DOWN VALUE. THE CONFIRMATION OF DISALLOWANCE IN AY 2007-08 UPTO THE TRIBUNAL HAS MATERIALIZED AFTER PASSING OF THE ASSESSMENT ORDER IN THE PRESENT ASST. YEAR. THEREFORE, IN OUR OPINION THIS ISSUE RE QUIRES RECONSIDERATION AT THE LEVEL OF AO. WE SET ASIDE TH IS ISSUE TO THE FILE OF AO FOR RE-EXAMINATION AND READJUDICATION. 16. IN THE NEXT GROUND OF APPEAL THE GRIEVANCE OF T HE ASSESSEE RELATES TO CHARGING OF INTEREST UNDER SECTIONS 234B & 234C OF THE ACT. THIS GROUND OF APPEAL IS CONSEQUENTIAL AND NO ARGUM ENTS WERE ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 19 ADDRESSED AT THE TIME OF HEARING. HENCE THIS GROUND OF APPEAL IS REJECTED. 17. IN THE NEXT GROUND OF APPEAL ASSESSEE CHALLENGE S INITIATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. TO OUR MIND IT IS A PREMATURE GROUND OF APPEAL. THE ASSESSEE WILL GET A N OPPORTUNITY TO PUT ITS DEFENCE WHEN PENALTY PROCEEDINGS WOULD BE S TARTED BY ISSUANCE OF A SHOW CAUSE NOTICE. AT THIS STAGE IT H AS NO GRIEVANCE. HENCE THIS GROUND OF APPEAL IS REJECTED BEING PREMA TURE. 18. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED A ND THAT OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 29/5/2015 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER DATED 29/5/15 MAHATA/- ITA NOS.2817 & 2877/AHD/2011 ASST. YEAR 2008-09 20 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 27/5/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 28/5/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 29/5/15 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: