DCIT, Coimbatore V. Elgi Equipments Limited, Coimbatore

ITA 2943/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9030 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: N V BALAJI
• Keywords: Capital asset; Depreciation; Business expenditure; Opportunity of being heard; Additional depreciation; Assessment record; Revised return; Revenue expenditure; Capital expenditure
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.2769/MDS/2014 ' $ %$ / ASSESSMENT YEAR : 2010-2011 M/S. ELGI EQUIPMENTS LIMITED, ELGI INDUSTRIAL COMPLEX, TRICHY ROAD, SINGANLLUR, COIMBATORE 641 005 . VS. THE JOINT COMMISSIONER OF INCOME TAX, RANGE I, COIMBATORE ./ I.T.A. NO.2943/MDS/2014 ' $ %$ / ASSESSMENT YEAR : 2010-2011 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -2, COIMBATORE PAN AAACE 4784E ) ( / APPELLANT) VS. M/S. ELGI EQUIPMENTS LIMITED, ELGI INDUSTRIAL COMPLEX, TRICHY ROAD, SINGANLLUR, COIMBATORE 641 005. ( /RESPONDENT) ASSESSEE BY : SHRI. N.V. BALAJI, ADVOCATE D EPARTMENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. 2 3 / DATE OF HEARING : 13-04-2016 45% 2 3 / DATE OF PRONOUNCEMENT : 28-06-2016 ITA NOS.2769 & 2943/MDS/14 :- 2 -: / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THESE CROSS-APPEALS FILED BY THE ASSESSEE AND REV ENUE RESPECTIVELY, IS DIRECTED AGAINST ORDER OF THE COM MISSIONER OF INCOME- TAX (APPEALS)-I, COIMBATORE IN APPEAL NO.84/13-14, DT 04.09.2014 FOR THE ASSESSMENT YEAR 2010-2011 PASSED U/S.143(3) AN D 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. FIRST, WE TAKE UP ASSESSEE APPEAL IN ITA NO.2769/MD S/2014 OF ASSESSMENT YEAR 2010-2011 FOR ADJUDICATION :- T HE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUNDS ON DISALLOWANCE (I ) FOREIGN TRAVEL EXPENSES (II) PAYMENT OF FEE TO THE BOMBAY STOCK EX CHANGE AND (III) DISALLOWANCE OF LEGAL AND PROFESSIONAL EXPENDITURE IN CONNECTION WITH ACQUISITION. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF AIR COMPRESSORS AND EN GINES AND FILED RETURN OF INCOME ON 14.10.2010 WITH TOTAL INCOME OF ?88,06,76,132/- AND RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT DATED 26.08.2011 WAS ISSUED. IN COMPLIANCE TO NOTICES, T HE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TI ME AND FILED DETAILS AND EXPLANATION. THE LD. ASSESSING OFFICE R ON PERUSAL OF PROFIT ITA NOS.2769 & 2943/MDS/14 :- 3 -: AND LOSS ACCOUNT FOUND THAT ASSESSEE HAS CLAIMED AN EXPENDITURE OF ?1,76,97,063/- AS FOREIGN TRAVEL EXPENSES INCURRED IN THE FINANCIAL YEAR 2009-2010 AND THE LD. ASSESSING OFFICER ISSUED OFFICE LETTER DATED 10.10.2012 TO FURNISH THE DETAILS OF FOREIGN TRAVEL EXPENSES WITH NAME OF THE EMPLOYEES, DESIGNATION IN THE COMPANY AND PU RPOSE OF VISIT AND THE SAME WAS FURNISHED BY THE ASSESSEE. THE LD. ASS ESSING OFFICER VERIFIED THAT THE ASSESSEE COMPANY HAS SUBSIDIARIE S AT FRANCE AND CHINA AND THE MIDDLE AND SENIOR LEVEL MANAGEMENT PE RSONNEL WERE SENT TO THESE COUNTRIES FOR EXECUTING THE WORK REL ATING TO SUBSIDIARIES IN THE NATURE OF ERP FINANCE MODULE IMPLEMENTATION FOR INTEGRATION OF ACCOUNTS OF SUBSIDIARY WITH THE HOLDING COMPANY, B USINESS REVIEW MEETINGS, VENDOR DEVELOPMENT, PRODUCT INSPECTION A ND OTHER BUSINESS STRATEGIES. THE ASSESSEE COMPANY DEBITED ?7,45,016/ - EXPENDITURE INCURRED FOR THE BUSINESS VISITS OF THE MANAGING D IRECTOR TO THESE SUBSIDIARY COMPANIES AND THE LD. ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE INCURRED RELATING TO THE SUBSIDIARY COM PANY SHOULD BE DISALLOWED AS THEY ARE NOT RELATED TO THE EARNING INCOME FOR THE ASSESSEE COMPANY AND THE LD. AUTHORISED REPRESENTA TIVE COULD NOT SUBSTANTIATE HOW THE EXPENSES ARE RELATED TO EARNIN G INCOME AND DISALLOWED FOREIGN TRAVEL EXPENSES ON THE SUBSIDIAR Y COMPANY ?46,34,383/-. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). ITA NOS.2769 & 2943/MDS/14 :- 4 -: 3.1 IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISE D REPRESENTATIVE EXPLAINED THAT THE EXPENDITURE OF FO REIGN TRAVEL ARE TO COMPLY THE VARIOUS BUSINESS FUNCTIONAL ACTIVITIES OF THE COMPANY IN FOREIGN COUNTRIES ON ASSIGNMENTS AND ALSO INCLUDES THE EXPENDITURE ON VISITS TO THE SUBSIDIARIES COMPANIES. THE BOARD O F DIRECTORS AND TOP MANAGEMENT PROFESSIONAL TRAVELLING ABROAD FOR UNDER TAKING ASSIGNMENTS FOR THE BENEFIT OF THE ASSESSEE COMPANY BEING HOLDING COMPANY. FURTHER, THE ASSESSEE SUBMITTED PAPER BOO K EXPLAINING THE DETAILS OF TRAVELS MADE BY THE EMPLOYEES AND THE EXPENSES ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSEE COMPANY HAS SUBSIDIARY IN CHINA AND THE MANAGING DI RECTOR TRAVELS FOR THE BUSINESS DEVELOPMENTS WHICH ARE WITHIN THE MAIN OBJECTS OF THE ASSESSEE COMPANY. THE EXPENDITURE INCURRED RELATING TO THE FOREIGN SUBSIDIARY AS UNDER:- (I) ERP FINANCE MODULE IMPLEMENTATION FOR INTEGR ATION OF ACCOUNTS. (II) BUSINESS REVIEW MEETING. (III) VENDOR DEVELOPMENT AND PRODUCTION INSPECTIO N. (IV) MARKET STUDY AND STRATEGY (V) IMPLEMENTATION OF COMPRESSOR ASSEMBLY PROCESS . THE LD. ASSESSING OFFICER HAS DISALLOWED THE EXPEND ITURE WITHOUT APPRECIATING THE NATURE OF EXPENSES INCURRED ON FOR EIGN TRAVEL TO CHINA WHICH THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DISCUSSED ELABORATELY AT PAGE 8 TO 10 OF HIS ORDER AND CONC LUDED CONSIDERING ITA NOS.2769 & 2943/MDS/14 :- 5 -: THE BRAND IMAGE OF THE COMPANY AND PARTIALLY ALLOWE D THE EXPENDITURE RELYING ON THE ASSESSEE SUBMISSIONS OBSERVED AT PAR A 11 AT PAGE 10 OF HIS ORDER AS UNDER:- I HAVE GONE THROUGH THE DETAILED SUBMISSIONS MADE B Y THE APPELLANT AND ALSO ANALYZED THE NATURE OF BUSINESS EXPENDITURE INCURRED. AS SEEN FROM THE DETAILS OF T HE INDIVIDUAL EXPENDITURE, STATEMENTS ETC. THE VENDOR DEVELOPMENT RELATED TRAVEL IS DEFINITELY IN THE INT EREST OF THE HOLDING COMPANY SINCE PROCUREMENT OF THE COMPONENTS FOR THE HOLDING COMPANY WAS ALSO DONE FROM CHINA. SINCE THE BRAND NAME OF THE COMPANY ' ELGI' HAS TO BE MAINTAINED, THE VENDOR DEVELOPMENT AND PRODUCT INSPECTION DO PLAY A N IMPORTANT ROLE IN THE DAILY BUSINESS ACTIVITY OF TH E APPELLANT COMPANY. DURING THE FINANCIAL YEAR 2009-10, M/S. EL GI INDIA IMPORTED TO THE TUNE OF RS.20 CRORES FROM CHINA, WH EREAS, THE TOTAL TURNOVER OF CHINA SUBSIDIARY ITSELF WAS A BOUT 1CRORE ONLY. CONSIDERING THESE FACTS, IT IS CLEAR T HAT THE VENDOR DEVELOPMENT AND PRODUCT INSPECTION HAS TO BE CONSIDERED AS THE BUSINESS EXPENDITURE OF THE APPEL LANT COMPANY. AS SUBMITTED BY THE APPELLANT, THE FOREIGN TRAVEL .EXPENDITURE RELATING TO VENDOR DEVELOPMENT AND PRO DUCT INSPECTION AMOUNTING TO 11,80,255/- IS TO BE ALLOWED. THE OTHER HEAD IS REGARDING THE SUBMISSIONS MADE FOR IM PORT PURCHASE, PRODUCTION AND GEAR SOURCING FOR ELGI IND IA, IS IN THE INTEREST OF THE APPELLANT COMPANY, HENCE IT HAS TO BE TREATED AS EXPENDITURE INCURRED FOR THE BUSINESS OF THE APPELLANT COMPANY AMOUNTING TO 15,04,203/-. REGARDING THE OTHER EXPENDITURE INCURRED BY THE APPELLANT AM OUNTING TO 17,42,595/- CANNOT BE STATED AS EXCLUSIVELY AND WHO LLY FOR THE BUSINESS OF THE APPELLANT. IT IS MORE IN THE IN TEREST OF THE SUBSIDIARY AND THE APPELLANT COMPANY SHOULD HAVE APPORTIONED THE MAJOR EXPENDITURE OF FOREIGN TRAVEL TO THE SUBSIDIARY. AFTER CONSIDERING THE ABOVE FACTS, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE EXPENDITURE OF RS. 26,84,458/- AND THE BALANCE EXPENDITURE OF 17,42,595/- IS TO BE DISALLOWED. THIS GROUND OF APPEAL IS PARTLY ALLOWED . AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ORDER, THE ASSESSEE ASSAILED AN APPEAL BEFORE TRIBUNAL. 3.2 BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITE RATED THE SUBMISSIONS MADE BEFORE ASSESSMENT AND APPELLATE PR OCEEDINGS AND ITA NOS.2769 & 2943/MDS/14 :- 6 -: SUBSTANTIATED HIS ARGUMENTS WITH INFORMATION FILED IN APPELLATE HEARING ALONGWITH SUPPORTING JUDICIAL DECISIONS WERE THE LD . COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALL OWANCE OF FOREIGN TRAVEL EXPENSES TO THE EXTENT OF ?17,42,595/- WITH OUT APPRECIATING THE BUSINESS REVIEWS AND FOREIGN TRAVEL IS EXCLUSI VELY FOR THE PURPOSE OF BUSINESS, THE INVESTMENTS IN SUBSIDIARY COMPANY ARE ON BUSINESS MODULE FOR GLOBAL OPERATIONS AND SUCH TRAVEL IS SOL ELY FOR THE BENEFIT OF BUSINESS OF THE ASSESSEE AND NOT TO SUBSIDIARY A ND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT ADJUDI CATED THE DIFFERENCE AMOUNT OF FOREIGN TRAVEL EXPENSES DISALL OWANCE OF ?2,07,330/- AND SUPPORTED THE ARGUMENTS BY SUBMITTI NG INFORMATION ON FOREIGN TRAVEL EXPENSES AND JUDICIAL DECISIONS. 3.3 CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND VEHEMENTLY OPPO SED TO THE GROUNDS. 3.4 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. AUTHOR ISED REPRESENTATIVE ARGUED THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) HAS PARTIALLY ALLOWED THE APPEAL CONSIDERING THE MATERIAL SUBMITT ED IN THE APPELLATE PROCEEDINGS. BUT ON A REMAINING AMOUNT OF 17,45,595/-., THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RESERVED H IS OBJECTIONS ITA NOS.2769 & 2943/MDS/14 :- 7 -: THOUGH CONSIDERED ELABORATELY IN HIS ORDER ON VARIO US DEVELOPMENT PRODUCTS PROMOTED BY THE COMPANY. THE FINDINGS O F THE LD.CIT(A) THAT THE AMOUNT OF TRAVEL EXPENDITURE TO SUBSIDIA RY COMPANY SHOULD BE APPORTIONED AND OBSERVED THAT THE EXPENDITURE OF FOREIGN TRAVEL IS INCURRED EXCLUSIVELY FOR CONDUCTING THE BUSINESS GL OBALLY AND THERE IS NOTHING ON RECORD OR VALID REASONS THAT THIS EXPEND ITURE IS INCURRED FOR THE BENEFIT OF THE HOLDING COMPANY. THE LD. AUTHOR ISED REPRESENTATIVE SUBMITTED ANNUAL REPORT AND DREW ATTENTION TO PAGE NOS.41 TO 45 AND ACCOUNTING STANDARD 18 ON RELATED PARTY DISCLOSURES TRIED TO EXPLAIN THE REASONS OF GRADUAL INCREASE IN SALES COMPARED T O EARLIER YEARS DUE TO SUBSIDIARY COMPANY. BUT WE ARE NOT CONVINCED W ITH THE INDIRECT BENEFICIARY CONTRIBUTION BY THE SUBSIDIARY COMPANY IN THE PROGRESS OF THE ASSESSEE COMPANY ON GLOBAL BUSINESS ACTIVITIES . WE ARE OF THE OPINION THAT EXPENDITURE OF FOREIGN TRAVEL TO SUBSI DIARY COMPANIES SHALL BE SEPARATELY ALLOCATED TO COST OF PROJECT OF SUBS IDIARY COMPANY AND HOLDING COMPANY AND UPHELD THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) ON THIS GROUND AS THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) DISCUSSED THE ISSUE AND GAVE F INDING ON SUBSIDIARY COMPANY AND RESTRICTED THE DISALLOWANCE TO ?17,45,595/-. AS THE BALANCE AMOUNT OF ?2,07,330/- WAS NOT ADJUDI CATED, WE REMIT THE ISSUE TO THE FILE OF ASSESSING OFFICER TO VERIF Y THE GENUINENESS OF ITA NOS.2769 & 2943/MDS/14 :- 8 -: TRANSACTION AND ALLOW THE CLAIM. THE GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 4 THE SECOND GROUND RAISED BY THE ASSESSEE THAT THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS SUSTAINED THE ADDITION OF ?55,150/- PAID BY THE ASSESSEE TO BOMBAY STOCK EXCH ANGE IN CONNECTION TO THE AMALGAMATION OF BUSINESS. 4.1 IN THE ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OF FICER FOUND THAT AN AMOUNT OF ?2,28,40,000/- WAS INCURRED TOWARDS LEGAL AND PROFESSIONAL CHARGES IN THE PREVIOUS YEAR 2009- 2010 AND THE ASSESSEE FILED DETAILS WITH BREAKUP OF EXPENDITURE INCURRED DURING THE YEAR ALONGWITH NAME, DESCRIPTION AND AMOUNT. OUT OF THE ABOVE AMOUNT, THE LD. ASSESSING OFFICER FOUND ?55,150/- AND ?1,17,069/- BOTH AGGREGATING TO ?1,72,219/- ARE THE PAYMENTS M ADE TO BOMBAY STOCK EXCHANGE AS AMALGAMATION CHARGES BEING INCIDE NTAL TO THE BUSINESS ON ACQUISITION AMALGAMATION OF ANOTHER C OMPANY. THE LD. ASSESSING OFFICER NOT SATISFIED WITH EXPLANATIONS ON THE ISSUE AND TREATED ?1,72,219/- AS CAPITAL EXPENDITURE. AGGRIEV ED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INC OME TAX (APPEALS). 4.2 IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE EXPLAINED THE NATURE OF EXPENDITURE WHICH INCLUDES ITA NOS.2769 & 2943/MDS/14 :- 9 -: PROFESSIONAL CHARGES PAID TO COMPANY SECRETARIES AN D PRODUCED THE BILLS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) CONSIDERING THE GROUNDS AND FINDINGS OF THE LD. ASSESSING OFFICER A ND JUDICIAL DECISIONS RELIED BY THE LD. ASSESSING OFFICER FOUND THAT THE EXPENDITURE IS INCURRED IN CONNECTION WITH THE AMALGAMATION OF TH E COMPANY INTIMATING TO THE BOMBAY STOCK EXCHANGE. THE ABOV E EXPENDITURE WAS INCURRED BY THE ASSESSEE COMPANY TO MERGE M/S. ELGI INDUSTRIAL PRODUCTS LIMITED CARRYING ON COMPLEMENTARY BUSINESS AND THE AMALGAMATION WAS NECESSARY FOR THE SMOOTH CONDUCT O F THE BUSINESS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSID ERING DECISION OF THE APEX COURT AND BILLS OF LEGAL AND PROFESSIONAL CHARGES FOUND THAT ?55,150/- WAS PAID TO BOMBAY STOCK EXCHANGE AND BAL ANCE AMOUNT ?1,17,069/- PROFESSIONAL CHARGES PAID TO COMPANY S ECRETARIES FOR PREPARING SECRETARIAL AUDIT REPORT AND AUDITING IS REVENUE EXPENSES AND ALLOWED U/S.37(1) OF THE ACT BUT CONFIRMED THE ADDITION OF AMALGAMATION FEES OF ?55,150/- BEING CAPITAL EXPEN DITURE. AGAINST THIS, THE ASSESSEE ASSAILED AN APPEAL BEFORE TRIBUN AL. 4.3 BEFORE US, THE LD. AUTHORISED REPRESENTATIVE EXPLAI NED THE AMALGAMATION OF THE COMPANY AND THE LEGAL AND PROFE SSIONAL CHARGES INCURRED IN CONNECTION WITH AMALGAMATION AND SUPPOR TED HIS ARGUMENTS THAT BOMBAY STOCK EXCHANGE FEES OF ?55,1 50/- IS REVENUE EXPENDITURE AND LD. COMMISSIONER OF INCOME TAX (APPEALS) ITA NOS.2769 & 2943/MDS/14 :- 10 -: HAS PARTLY ALLOWED THE CLAIM AND SUSTAINED THE ADDI TION AS CAPITAL EXPENDITURE AND PRAYED FOR ALLOWING THE CLAIM. 4.4 CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND OPPOSED TO THE GROUNDS. 4.5 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD. THE LD. AUTHORISED REPRESENTATIVE CONTENTI ON THAT THE AMALGAMATION FEES IS IN THE NATURE OF REVENUE EXPEN SES AND THE FACTS ARE THAT THE AMOUNT OF ?55,150/- WAS PAID TO BOMBA Y STOCK EXCHANGE IS NOT DISPUTED AND WAS PAID IN THE PROCESS OF A MALGAMATION. THE ASSESSEE COMPANY INCURRED THIS EXPENDITURE TO MERGE M/S. ELGI INDUSTRIAL PRODUCTS LTD FOR THE SMOOTH CONDUCT OF B USINESS AND PRIME FACE THIS FEES IS PAID ONCE IN LIFE TIME FOR AMALGA MATION OF THE COMPANY WITH ENDURING BENEFITS WE ARE OF THE OPINIO N THE EXPENDITURE HAS TO BE APPORTIONED AND TRANSFERRED TO PROFIT AND LOSS ACCOUNT AS PER THE PROVISIONS OF SEC. 35DD OF THE ACT AND WE DIREC T THE LD. ASSESSING OFFICER TO ALLOW APPORTIONED CLAIM IN THE PREVIOUS YEAR BEING THE FIRST YEAR AND THIS GROUND OF THE ASSESSEE IS PARTLY AL LOWED. 5 THE LAST GROUND RAISED BY THE ASSESSEE IS RESPECT O F DISALLOWANCE OF EXPENDITURE OF ?21,33,539/- AS LEG AL AND PROFESSIONAL CHARGES PAID TO OVERSEAS PARTIES. ITA NOS.2769 & 2943/MDS/14 :- 11 -: 5.1 IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED BREAKUP OF EXPENDITURE ALONGWITH NAME, DESCRIPTION AND AMOU NT. ON VERIFICATION, THE LD. ASSESSING OFFICER FOUND ?19,5 5,555/- WAS PAID AS FEES TO M/S. STEHLIN AND ASSOCIATES AT PARIS TOWARD S SERVICES RENDERED IN CONNECTION WITH ACQUISITION OF FRANCE COMPANY M /S. BELAIR SA AT PARIS AND THE SERVICES INCLUDES TRANSLATION, DOCUME NTATION, CORPORATE MATTERS AND ASSOCIATED FILING AND BALANCE ?1,77,984 /- FOR OTHER OVERSEAS CONSULTANTS. THE LD. ASSESSING OFFICER IS OF THE OPINION THAT THE EXPENDITURE INCURRED TOWARDS ACQUISITION OF FRA NCE COMPANY IS NOT RELATED TO ASSESSEE BUSINESS EARNINGS AND INCOME. S UCH EXPENDITURE WAS INCURRED IN CONNECTION WITH A NEW UNIT FEASIBIL ITY AND ACQUISITION OF A CAPITAL ASSET AND NOT ALLOWABLE U/S.37(1) OF THE ACT. THE LD. ASSESSING OFFICER RELIED ON THE JUDICIAL DECISIONS AND PROVISIONS OF LAW AND ALSO ACCOUNTING STANDARD OF THE INSTITUTE OF C HARTERED ACCOUNTANTS OF INDIA (ICAI). THE LD. ASSESSING OFFI CER HEARD THE EXPLANATIONS AND WAS NOT CONVINCED WITH THE SUBMISS IONS AND ACTIVITIES OF THE COMPANY AND DISCUSSED ELABORATELY AT PAGE 18 TO 20 OF HIS ORDER AND ALSO DISTINGUISHED THE DECISION RELI ED BY THE ASSESSEE AND TREATED THE EXPENDITURE AS NOT RELATED TO THE B USINESS AND DISALLOWED ?21,33,539/. AGGRIEVED BY THE ORDER, TH E ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). ITA NOS.2769 & 2943/MDS/14 :- 12 -: 5.2 IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE ASSESSEE COMPANY PAID FEES TO OVERSEAS CONSULTANCY FIRM TOWARDS THE SERVICES AND MARKET SURVEY IN ASIA AND SOUTH AFRICA INCURRED BY THE PARENT COMPAN Y IN INDIA. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE GROUNDS AND SUBMISSIONS AND BIFURCATION OF LEGAL AND PROFESSION AL CHARGES PAID TO THREE OVERSEAS PARTIES AND SUBMISSIONS ON PAYMENT OF FEES TO M/S. STEHLIN & ASSOCIATES WHOSE SERVICES HAVE BEEN UTIL IZED AND EXPENDITURE INCURRED BEING PART OF REGULAR BUSINE SS EXPENSES TO UNDERSTAND THE ACQUISITION AND SMOOTH CONDUCT OF BU SINESS IN EUROPE AND HAS TO BE TREATED AS REVENUE EXPENDITURE AND R ELIED ON THE APEX COURT DECISIONS. THE LD. COMMISSIONER OF INCOME TA X (APPEALS) HAS EXAMINED THE INVOICE OF M/S. STEHIN AND ASSOCIATES AND ALSO BREAKUP OF AMOUNT AND CAME TO A UNILATERAL CONCLUSION THAT THE EXPENDITURE IS NOTHING TO DO WITH REGULAR BUSINESS AND EXPENDITURE IS INCURRED FOR ACQUISITION OF SHARES OF M/S. BELAIR, FRANCE AND TH E ASSESSEE COULD NOT FURNISH EVIDENCE TO PROVE THAT THE SAID ACQUISITI ON WAS IN THE COURSE OF CARRYING ON OF THE ASSESSEE BUSINESS AND DELETED THE ADDITION OF ?1,77,984/- AND SUSTAINED EXPENDITURE OF ?19,55,555 /- PAID TO M/S. STEHIN AND ASSOCIATES. AGAINST THE ORDER OF COMMIS SIONER OF INCOME TAX (APPEALS), THE ASSESSEE ASSAILED AN APPEAL BEFO RE TRIBUNAL. ITA NOS.2769 & 2943/MDS/14 :- 13 -: 5.3 BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITER ATED THE SUBMISSIONS ON ACQUISITION MADE BEFORE ASSESSMENT A ND APPELLATE PROCEEDINGS AND THIS PROFESSIONAL EXPENDITURE OF ? 19,55,555/- WAS INCURRED IN CONNECTION OF ACQUISITION OF M/S. BELAI R, FRANCE TOWARDS EXPANSION OF ASSESSEE BUSINESS IN EUROPE AND INCUR RED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH BUSINESS AND RELIED ON THE JUDICIAL DECISIONS. FURTHER, THE ASSESSEE COMPANY IS A MULT INATIONAL COMPANY WITH FOREIGN SUBSIDIARIES AND PRAYED FOR DELETION O F ADDITION. 5.4 CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND OPPOSED TO THE GROUNDS. 5.5 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE LD. AUTHORISED REPRESENTATIVE SUBMISSI ONS BEING THE ASSESSEE COMPANY HAS FOREIGN SUBSIDIARIES AND IT IS NECESSARY FOR SMOOTH RUNNING OF BUSINESS AND EXPAND GLOBAL OPERAT IONS IT BECOME MANDATORY TO ACQUIRE FOREIGN COMPANIES AND ACQUISIT ION OF M/S. BELAIR SA AT PARIS IS IN THE INTEREST OF THE COMPANY. THE EXPENDITURE IS IN THE NATURE OF LEGAL AND PROFESSIONAL FEE PAID FOR SERVI CES OF TRANSLATION, DOCUMENTATION, CORPORATE MATTERS AND ASSOCIATED FIL ING AND SUCH EXPENDITURE IS WHOLLY AND EXCLUSIVELY FOR THE BUSIN ESS PURPOSE AND EXPENDITURE IS GENUINE AND RELIED ON THE DECISION O F APEX COURT. WE ITA NOS.2769 & 2943/MDS/14 :- 14 -: FOUND THAT THE ASSESSEE COMPANY ACQUIRED OF SHARE S OF M/S. BELAIR SA AT PARIS IS FOR CONDUCTING BUSINESS IN EUROPE RE GION AND ACTIVITY DOES RELATE TO INVESTMENT FOR ENDURING VALUE AND THE EXPENSES ON ACQUISITION OF SHARES OF FOREIGN COMPANY DIRECTLY O R INDIRECTLY TAKES THE CHARACTER OF CAPITAL IN NATURE AND SHALL BE PART OF BUSINESS ACQUISITION. THEREFORE, CONSIDERING THE APPARENT FACTS, NECESSIT Y OF EXPENDITURE AND OVERSEAS PAYMENT, WE ARE OF THE OPINION THAT TH E PROFESSIONAL CHARGES PAID TO M/S. STEHLIN & ASSOCIATES, PARIS IN CONNECTION WITH ACQUISITION IS CAPITAL EXPENDITURE AND WE UPHELD TH E ORDER OF CIT() ON THIS GROUND AND THE GROUND OF THE ASSESSEE IS DISMI SSED.. 6 IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.2769/MDS/2014 OF ASSESSMENT YEAR 2010-2011 IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE . . 7 NOW, WE TAKE UP DEPARTMENT APPEAL IN ITA NO. 2943/MDS/2014 OF ASSESSMENT YEAR 2010-11 FOR ADJUDI CATION. 7.1 THE FIRST GROUND RAISED BY THE DEPARTMENT IS THAT COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CALLED FOR A REMAND REPORT AS LAID OUT UNDER RULE 46A OF INCOME TAX RULES, 1962 WHILE ADJUDICATING THE ISSUE OF FOREIGN TRAVEL EXPE NSES. ITA NOS.2769 & 2943/MDS/14 :- 15 -: 7.2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS PA RTLY ALLOWED THE APPEAL OF THE ASSESSEE BASED ON THE SUB MISSIONS IN THE APPELLATE PROCEEDINGS. THE LD. DEPARTMENTAL REPRESE NTATIVE ALLEGED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS N OT CALLED FOR THE REMAND REPORT WHILE ADJUDICATING ON THE DISPUTED IS SUE. THE LD. AUTHORISED REPRESENTATIVE AGITATED THE GROUNDS OF T HE REVENUE AS NO FRESH MATERIAL WAS BROUGHT BEFORE COMMISSIONER OF I NCOME TAX (APPEALS) AND THE EXPLANATIONS FILED BEFORE COMMISS IONER OF INCOME TAX (APPEALS) ARE PART OF THE ASSESSMENT RECORD. TH E ASSESSEE COMPANY HAS INCURRED THE EXPENDITURE FOR BUSINESS R EVIEWS OF SUBSIDIARY COMPANIES IN FOREIGN COUNTRIES AND NO FR ESH MATERIAL WAS FILED BEFORE COMMISSIONER OF INCOME TAX (APPEALS) A ND PRAYED FOR DISMISSING THE APPEAL. 7.3 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD. THE LD. AUTHORISED REPRESENTATIVE SUBMISSIO NS THAT NO FRESH MATERIAL WAS BROUGHT BEFORE COMMISSIONER OF INCOME TAX (APPEALS). WE PERUSED THE ASSESSMENT ORDER PARA 5 AT PAGE 7 T HE LD. ASSESSING OFFICER ISSUED LETTER DATED 10.10.2010 TO FURNISH C OMPLETE DETAILS OF FOREIGN TRAVEL EXPENSES INCLUDING NAME OF EMPLOYEES , DESIGNATION IN THE COMPANY, COUNTRY VISITED, PURPOSE OF VISIT AND AMOUNT SPENT. IN COMPLIANCE, THE LD. AUTHORISED REPRESENTATIVE HAS PROVIDED THE DETAILS OF THE EXPENDITURE INCURRED AND THE LD. ASSESSING OFFICER HAS ITA NOS.2769 & 2943/MDS/14 :- 16 -: EXAMINED THE INFORMATION AND DISCUSSED AT PARA 5 ON ERP FINANCE MODULE IMPLEMENTATION FOR INTEGRATION OF ACCOUNTS O F SUBSIDIARY ALONGWITH THE HOLDING COMPANY. FURTHER, ON VERIFYI NG THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER AT PAGE 6 IN PARA 9, WE FOUND THAT THE ASSESSEE HAS SUBMITTED PAPER BOOK W ITH EXPLANATIONS ON BREAKUP OF EXPENDITURE AND OTHER RELATED INFORMA TION. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ELABORATEL Y DISCUSSED ON BREAKUP OF EXPENDITURE AND BUSINESS ACTIVITIES AND GRANTED PARTIAL RELIEF. CONSIDERING THE APPARENT FACTS, WE ARE OF THE OPINION THAT THE ASSESSEE HAS SUBMITTED INFORMATION BEFORE COMMISSIO NER OF INCOME TAX (APPEALS) WHICH THE LD. AO COULD NOT VERIFY AND LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CALLED FOR COMMENTS OR REMAND REPORT AND NOT COMPLIED THE PROVISIONS OF RULE 46A. WE THEREFORE, SET ASIDE THE DISPUTED ISSUE TO THE FILE OF THE LD. ASS ESSING OFFICER FOR LIMITED PURPOSE TO VERIFY THE GENUINENESS OF STATEM ENTS FILED IN THE APPELLATE PROCEEDINGS AND THE LD. ASSESSING OFFICER SHALL PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE BEFORE PASSING THE ORDERS AND THE GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 8 THE SECOND GROUND RAISED BY THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONCL UDING THAT HOLYROYD MACHINERY REPLACED COMES UNDER REPAIRS A ND MAINTENANCE ITA NOS.2769 & 2943/MDS/14 :- 17 -: AND HENCE ALLOWABLE U/S.37 OF THE ACT, WHICH IS FAC TUALLY INCORRECT, SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE INDIC ATE THAT IT IS CLEARLY A NEW MACHINERY INSTALLED. 8.1 THE ASSESSEE COMPANY HAS INCURRED EXPENDITURE UNDER THE HEAD REPAIRS AND MAINTENANCE. OUT OF THE ABOVE AMO UNT, THE COMPANY HAS INCURRED EXPENDITURE UNDER THE HEAD HOL YROYD PRECISION LIMITED HAVING PURCHASED A NEW DUAL TYPE PC TECHNOL OGY BASED CONTROLLING SYSTEM WITH CAN (CONTROL AREAS NETWORK) FITTED BY REPLACING THE EXISTING CNC (COMPUTER NUMERICAL CONT ROL) DRIVE SYSTEM. THE LD. ASSESSING OFFICER OBSERVED AND CONSIDERED T HE SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE AND IS OF THE OPI NION THAT EXPENDITURE IS CAPITAL IN NATURE AND DISCUSSED ELA BORATELY AT PAGE 11 TO 14 OF HIS ORDER AND THE SUBMISSIONS OF THE ASSE SSEE COMPANY ON 27.02.2013 AND CAME TO A FINAL CONCLUSION THAT TH E EXPENDITURE INCURRED FOR IMPORTING AND ERECTING HOLYROYD DUAL T YPE PC TECHNOLOGY BEING INDEPENDENT CONTROLLING SYSTEM AND TREATED TH E EXPENDITURE AS CAPITAL EXPENDITURE. AGGRIEVED BY THE ORDER, THE AS SESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 8.2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSID ERED THE FINDINGS OF THE LD. ASSESSING OFFICER AND DISCU SSED ELABORATELY CONSIDERING THE JUDICIAL DECISIONS AND NATURE OF T ECHNOLOGY AT PAGE 11 ITA NOS.2769 & 2943/MDS/14 :- 18 -: TO 14 AND EXAMINED THE PHOTOGRAPHS OF VARIOUS PARTS AND DETAILS OF WORKING OF HOLYROID MACHINE AND DISCUSSED IN RECOND ITIONING FOR SPARES OBSERVED AT PARA 16 AS UNDER:- I HAD GONE THROUGH THE ORIGINAL PURCHASE ORDER PL ACED BY THE APPELLANT COMPANY WITH M/S. HOLROYD MACHINE TOOLS ON 09.03.1996. AS SEEN FROM THE PLACEMENT ORDER ALONG WITH THE QUOTATION GIVEN BY M /S. HOLROYD, IT IS VERY CLEAR THAT THE CNC SYSTEM CONTR OL WAS A PART OF THE MACHINE AND THIS TECHNOLOGY BECOM ING OBSOLETE, IT WAS REPLACED BY MODIFIED ELECTRONIC SY STEM. THE CNC UPGRADATION HELPED THE APPELLANT COMPANY TO MINIMIZE THE FAILURES OR TO ACHIEVE THE ZERO FAILUR E RELATED TO ELECTRICAL AND ELECTRONICS CIRCUITS. AS SEEN FROM THE PHOTOS SUBMITTED BY THE APPELLANT, THE PAR TS IN THE ELECTRICAL PANEL WERE REPLACED WITH THE UPDATED ELECTRICAL PANEL AND DISPLAY UNIT. AS STATED BY THE ASSESSING OFFICER IN HIS ORDER, IT IS NOT A QUESTIO N OF REPLACEMENT OF AN EXISTING MACHINE WITH A NEW MACHI NE. THE OPERATING SYSTEM OF THE MACHINE WAS ONLY REPLACED, WHICH IS A REVENUE EXPENDITURE ALLOWABLE U/S 37 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFIC ER IS ACCORDINGLY DIRECTED TO ALLOW THE SAME. THIS GRO UND OF APPEAL IS ALLOWED. AND ALLOWED THE EXPENDITURE AS REVENUE. AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE H AS ASSAILED AN APPEAL BEFORE US. 8.3 BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARG UED THAT THE CLAIM OF THE ASSESSEE THAT HOLYROID MACHINE IS ONLY REPLACEMENT IS NOT CORRECT AND IT IS CLEAR CASE OF NEW INSTALL ATION OF MACHINERY AND PRAYED FOR ALLOWING THE APPEAL. 8.4 CONTRA, THE LD. AUTHORISED REPRESENTATIVE FILED PHO TOGRAPHS OF MACHINERY BEING REPLACED AND ALSO THE WORKING OF HOLYROID MACHINE ITA NOS.2769 & 2943/MDS/14 :- 19 -: WITH UPGRADE PROPOSAL AND PRAYED THE EXPENDITURE IS IN THE NATURE OF REPAIRS AND MAINTENANCE AS THE COMPANY IS IN ENGIN EERING INDUSTRY AND THE VALUE OF REPLACEMENT DOES INCREASE ITS CAPA CITY AND CONSISTS OF ELECTRICAL PANEL AND SHALL CANNOT FUNCTION INDEPEND ENTLY AND THE COMPONENTS FORMING PART OF LARGER MACHINES AND PRA YED FOR DISMISSING THE APPEAL. 8.5 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS. THE CONTENTION OF T HE LD. DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE HAS INSTALLED NEW MACHINERY AND COULD NOT SUBSTANTIATE WITH MATERIAL EVIDENCE BEING REVENUE EXPENDITURE EXCEPT RELYING ON THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) WERE IT WAS DEALT BASED ON THE OPERATION AND TECHNICAL FEASIBILITY OF THE MACHINE AND ON UPGRAD ATION OF HOLYROID MACHINERY. THE LD. DEPARTMENTAL REPRESENTATIVE FU RTHER EXPLAINED THAT THE REPLACEMENT OF PARTS PLAY A IMPORTANT ROLE IN MACHINERY AND CAN WORK INDEPENDENTLY AND SHALL PROVIDE PERPETUA L ENDURING BENEFIT AND INCREASE THE LIFE OF EXISTING MACHINE. THE L D. AUTHORISED REPRESENTATIVE SUBSTANTIATED HIS ARGUMENTS WITH EVI DENCE OF PHOTOGRAPHS OF UNITS AND ALSO UPGRADE PROPOSAL OF THE COMPANY AND RELIED ON JUDICIAL DECISION OF APEX COURT. WE CONS IDERING THE APPARENT FACTS, FUNCTIONAL TEST, SUBMISSIONS AND JUDICIAL DE CISIONS SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND R EMIT THE ENTIRE ITA NOS.2769 & 2943/MDS/14 :- 20 -: DISPUTED ISSUE TO THE FILE OF ASSESSING OFFICER AS THE ASSESSEE HAS SUBMITTED PHOTOGRAPHS AND MATERIAL BEFORE US AND W HICH NEED TO BE EXAMINED WITH TECHNICAL REPORT AND PASS THE ORDER O N MERITS AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE AND THE GROUND OF THE REVENUE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSE. 9. THE LAST GROUND RAISED BY THE REVENUE WITH REGAR D TO ALLOWANCE OF CARRY FORWARD DEPRECIATION LOSS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT DECIDING THE ISSU E AND REMITTING IT BACK TO THE LD. ASSESSING OFFICER IN VIOLATION OF T HE PROVISIONS OF SEC. 251(1)(A) OF THE ACT AND LD. COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE LD. ASS ESSING OFFICER HAD ALREADY DECIDED THE ISSUE ON THE BASIS OF VERY SAME EVIDENCES PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX (APP EALS) AND CANNOT THEREFORE, REVIEW THE DECISION OF THE ASSESS ING OFFICER. 9.1 THE ASSESSEE COMPANY IN COMPUTATION OF INCOME F OR THE ASSESSMENT YEAR 2010-2011 CLAIMED DEDUCTION OF CARR Y FORWARD LOSS TO THE EXTENT OF ?1,03,27,094/- AND FILED DETAILS EXPL AINING THE ADDITIONAL BROUGHT FORWARD DEPRECIATION OF AMALGAMATING COMPA NY M/S. EGLI INDUSTRIAL PRODUCTS LIMITED MERGED IN FINANCIAL YEA R 2009-2010 AMOUNTING TO ?60,13,991/-. THE LD. ASSESSING OFFICE R FOUND THAT ADDITIONAL DEPRECIATION OF AMALGAMATED COMPANY CLA IMED FOR THE ITA NOS.2769 & 2943/MDS/14 :- 21 -: ASSESSMENT YEAR 1999-2000 CANNOT BE ALLOWABLE TO TH E TRANSFERRED COMPANY AND RELIED ON THE DECISION OF APEX COURT. A GGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSI ONER OF INCOME TAX (APPEALS). 9.2 IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISE D REPRESENTATIVE ARGUED THAT CLAIM MADE AT THE TIME O F SCRUTINY ASSESSMENT FOR ADJUSTMENT OF CARRYING FORWARD LOSS WAS NOT CONSIDERED. THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) FOUND THAT ASSESSEE COMPANY HAS FILED REVISED RETURN FOR THE A SSESSMENT YEAR 2010-2011 WITHDRAWING THE WEIGHTED DEDUCTION CLAIM ED U/S. 35(2AB) OF THE ACT ALONGWITH BENEFIT OF CARRY FORWARD LOSS NOT ORIGINALLY CLAIMED. THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) RELIED ON THE DECISION OF CIT VS. SAM GLOBAL SECURITIES LTD (2013) 38 TAXMANN .COM 129 (DEL ) OBSERVED AT PARA 23 OF HIS ORDER AND ALLOWED THE GROUND OF THE ASSESSEE BY DIRECTING THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF ADDITIONAL BROUGHT FORWARD DEPRECIATION OF THE AMAL GAMATING COMPANY AND ALLOW IN ACCORDANCE WITH LAW. AGGRIEVED BY THE ORDER, THE REVENUE ASSAILED AN APPEAL BEFORE TRIBUNAL. 9.3 BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARGUED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DOES N OT HAVE POWER TO ITA NOS.2769 & 2943/MDS/14 :- 22 -: REMIT THE ISSUE TO THE LD. ASSESSING OFFICER AS PER PROVISIONS OF SEC. 251(1)(A) OF THE ACT AND PRAYED FOR ALLOWING THE AP PEAL. 9.4 ON THE OTHER HAND, THE LD. AUTHORISED REPRESENT ATIVE RELIED ON THE ORDER OF CIT(A) IN DIRECTING LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE BASED ON THE APEX COURT D ECISION AND VEHEMENTLY OPPOSED TO THE GROUNDS OF REVENUE. 9.5 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL ON RECORD. THE CONTENTION OF THE LD. DEPARTMENTAL REP RESENTATIVE THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REMITT ING THE ISSUE TO THE FILE OF LD. ASSESSING OFFICER IS IN VIOLATION O F PROVISIONS OF SEC. 251 (1)(A) OF THE ACT. WE CONSIDERED THE FINDINGS OF T HE LD.CIT(A) ON THE JUDICIAL DECISIONS OF HONBLE HIGH COURT AND SUPREM E COURT AND LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ONLY DIREC TED THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM AND ALLOW AS PER LAW. WE FOUND LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ONLY DIRECTED THE LD. ASSESSING OFFICER WITH A CONDITION TO VERIFY AN D THE POWER OF COMMISSIONER OF INCOME TAX (APPEALS) ARE CO-TERMINU S WITH ASSESSING OFFICER AND WE CONSIDERING THE FACTS ARE OF THE OPINION THAT THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED AND WE DISMISS THE GROUND OF THE REVENUE. ITA NOS.2769 & 2943/MDS/14 :- 23 -: 10. THE APPEAL OF THE DEPARTMENT IN ITA NO.2943 /MDS/2014 OF ASSESSMENT YEAR 2010-2011 IS PARTLY ALLOWED. 11. IN THE RESULT, THE ASSESSEE APPEAL IN ITA NO.2769/MDS/2014 AND DEPARTMENT APPEAL IN ITA NO.2943/MDS/2014 ARE P ARTLY ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 28TH DAY OF JUN E, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 7 / DATED: 28.06.2016 KV 8 2 9'3:; <;%3 / COPY TO: 1. => / APPELLANT 3. ?3 () / CIT(A) 5. ;BC 9'3' / DR 2. 9D=> / RESPONDENT 4. ?3 / CIT 6. CE$ F / GF