DCIT, Circle-16(3), Hyderabad V. M/s Quality Care India Ltd., Hyderabad

ITA 316/HYD/2014

• Counselvise Citation: 31622514 RSA 2014
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Reopening of assessment; Capital asset; Depreciation; Business expenditure; Search and seizure; Question of law; Tangible material; Difference of opinion; Validity of assessment; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 153A; 147; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 316, 317 & 318/HYD/2014 ASSESSMENT YEARS : 2004-05, 2005-06 & 2006- 07 DY COMMISSIONER OF INCOME-TAX, CIRCLE 16(3), HYDERABAD M/S QUALITY CARE INDIA LTD., HYDERABAD. PAN AABCA7624C (APPELLANT) (RESPONDENT) REVENUE BY SHRI SOLGY JOSE T. KOTTARAM ASSESSEE BY SHRI A.V. RAGHURAM DATE OF HEARING 12-06-2014 DATE OF PRONOUNCEMENT 27-06-2014 O R D E R PER BENCH.: THESE THREE APPEALS BY THE DEPARTMENT ARE AGAINST SEPARATE ORDERS OF CIT(A) PERTAINING TO ASSESSMENT YEARS 200 4-05, 2005-06 AND 2006-07. SINCE ISSUES ARE COMMON, THESE APPEALS ARE CLUBBED AND HEARD TOGETHER AND, THEREFORE, A COMMON ORDER I S PASSED FOR THE SAKE OF CONVENIENCE. ITA NO. 316/HYD/2014 FOR AY 2004-05 2. GROUNDS RAISED BY THE DEPARTMENT ARE AS FOLLOWS: I. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH IN LAW AND IN FACTS OF THE CASE. II. THE CIT(A) IS NOT CORRECT IN IGNORING THE PROVI SIONS OF SECTION 147, 149 & 151 WITH REGARD TO THE TENABILITY OF THE REASSESSMENT U/S 147 OF THE IT ACT. 2 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. III. THE CIT(A) IS NOT CORRECT IN HOLDING THAT THE AO CANNOT REOPEN THE ASSESSMENT U/S 147 RELYING ON THE SAME B OOKS WHICH WERE SUBJECTED TO MAKE SPECIFIC DISALLOWANCES . IV. THE CIT(A) IGNORED THE FACT THAT THE NOTICE WAS ISSUED AFTER OBTAINING THE PRIOR APPROVAL OF HONBLE CIT IV, H YDERABAD AND DULY SERVED ON THE ASSESSEE ON 31/03/2011. V. THE CIT(A) IGNORED THE DECISIONS MADE IN THE CAS E OF RAYMOND WOOLEN MILLS LTD., VS. ITO [1999] 236 ITR 3 4 (SC) WHEREIN, IT WAS HELD THAT IN DETERMINING WHERE COMM ENCEMENT OF RE-ASSESSMENT PROCEEDINGS WAS VALID, IT HAS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. VI. THE CIT(A)-V, HYDERABAD IS NOT CORRECT ON THE G ROUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAS GIVEN A STATEMENT SHOWING THAT THE TOTAL AMOUNT OF INTEREST PAID TO THE INVESTOR, I.E., INDIA VALUE FUND TRUST AT RS. 6,99,75,456/- ON THE INVESTMENT OF RS. 15 CRORES F ROM 20/08/2001 TO THE DATE OF ALLOTMENT I.E. 08/02/2004 . VII. THE CIT(A) HAS IGNORED THE FACT THAT THE INTER EST AT RS. 6,99,76,000/- IS CALCULATED ON THE TOTAL INVESTMENT OF RS. 15 CRORES INSTEAD OF TOTAL AMOUNT OF SHARE APPLICATION MONEY REFUNDED I.E. 13,59,25,224/- WHICH WORKS OUT TO RS. 5,51,98,930/-. THE ASSESSEE HAS DEDUCTED THE ENTIRE INTEREST AMOUNT OF RS. 6,99,76,000/-. 3. AS CAN BE SEEN FROM THE GROUNDS RAISED, THE DEPA RTMENT HAS BASICALLY CHALLENGED THE ORDER OF THE CIT(A) ON THE FOLLOWING TWO ISSUES: 1. VALIDITY OF ASSESSMENT U/S 147 OF THE ACT 2. DELETING THE ADDITION OF RS. 6,21,52,070/- ON AC COUNT OF EXCESS INTEREST CLAIM 4. BRIEFLY THE FACTS ARE, THE ASSESSEE COMPANY IS A SUPER SPECIALITY HOSPITAL. FOR THE AY UNDER CONSIDERATION ASSESSEE FILED ITS RETURN OF INCOME ON 29/10/2014 DECLARING LOSS OF RS . 8,01,95,180/-. THE RETURN FILED WAS PROCESSED U/S 143(1) OF THE AC T. SUBSEQUENTLY, CONSEQUENT UPON A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, PROCEEDING WAS INITIATED U/S 153A OF THE ACT AND AS SESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 153A OF THE ACT DETERMINING LOSS AT RS. 8,63,37,605/-. AFTER COMPLETION OF THE ASSESSMENT AS AFORESAID, AO REOPENED ASSESSMENT U/S 147 OF THE AC T BY ISSUING A NOTICE U/S 148 ON 31/03/2011. THE REASON FOR REOPEN ING OF 3 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. ASSESSMENT AS RECORDED BY THE AO WHILE INITIATING P ROCEEDING U/S 147 OF THE ACT IS AS PER THE DIRECTORS ANNUAL REPORT F OR PREVIOUS YEAR 2003-04, OUT OF TOTAL INTEREST OF RS. 6,99,76,000/- PAID TO M/S INDIA VALUE FUND TRUSTEE COMPANY PVT. LTD., AN AMOUNT OF RS. 4,73,75,000/- WAS IDENTIFIED TO THE ASSETS ACQUIRED AND THE SAME HAS BEEN CAPITALIZED AND THE BALANCE AMOUNT OF RS. 2,26 ,01,000/- HAS BEEN CHARGED TO P&L A/C AS AN EXTRAORDINARY ITEM. H OWEVER, IN THE COMPUTATION OF INCOME STATEMENT, ENTIRE AMOUNT OF I NTEREST OF RS. 6,99,76,000/- WAS DEDUCTED IN STEAD OF ALLOWABLE IN TEREST OF RS. 2,26,01,000/- WHICH RESULTED IN EXCESS CLAIM OF INT EREST OF RS. 4,73,75,000/-, WHICH IS REQUIRED TO BE BROUGHT TO T AX. THE AO, THEREFORE, CAME TO A CONCLUSION THAT INCORRECT COMP UTATION OF INCOME BY THE ASSESSEE COMPANY HAS RESULTED IN UNDER ASSES SMENT OF INCOME OF RS. 4,73,75,000/- AND ALSO EXCESS CARRY F ORWARD OF LOSS OF RS. 4,73,75,000/-. DURING THE ASSESSMENT PROCEEDING , ASSESSEE THOUGH OBJECTED TO THE INITIATION OF PROCEEDING U/S 147 OF THE ACT, BUT, THE AO DID NOT ENTERTAIN THE SAME. DURING THE COURS E OF ASSESSMENT PROCEEDING, WHEN THE AO PROPOSED TO DISALLOW CARRY FORWARD LOSS OF RS. 4,73,75,000/-, THE ASSESSEE SUBMITTED THAT IT H AS OBTAINED A LOAN OF RS. 15 CRORES IN THREE PHASES OF RS. 5 CRORES EA CH FROM M/S INDIA VALUE FUND TRUSTEE COMPANY PVT. LTD., DURING THE PR EVIOUS YEAR, WHICH WAS KEPT AS SHARE APPLICATION MONEY. HOWEVER, SUBSEQUENTLY, THE INVESTOR SINCE OPTED TO CONVERT THE SHARE APPLI CATION MONEY TO AN EXTENT OF RS. 1,40,76,000/- BY PICKING UP 11,50,000 /- EQUITY SHARES, THE BALANCE SHARE APPLICATION OF MONEY OF RS. 13,59 ,24,000/- TOGETHER WITH INTEREST OF RS. 6,99,76,000/- WAS PAID BACK TO THE INVESTOR COMPANY. IT WAS SUBMITTED BY THE ASSESSEE THAT THE INFERENCE DRAWN BY THE AO THAT DEDUCTION CLAIMED OF RS. 6,99,76,000 /- BY THE ASSESSEE IN COMPUTATION OF STATEMENT AS AGAINST CHA RGED TO P&L A/C OF RS. 2,26,01,000/- IS INCORRECT AS THE AO IS ONLY MAKING A MERE COMPARISON OF THE FIGURES STATED IN THE COMPUTATION OF STATEMENT AND P&L A/C. THE AO, HOWEVER, DID NOT ACCEPT THE CONTE NTIONS OF THE ASSESSEE. HE WAS OF THE VIEW THAT THE ASSESSEE THO UGH HAS DEBITED 4 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. THE AMOUNT OF RS. 2,26,01,000/- TO THE P&L A/C AFTE R CAPITALIZING INTEREST OF RS. 4,73,75,000/-, BUT, IN THE COMPUTAT ION OF INCOME, THE ASSESSEE HAS CLAIMED DEDUCTION OF AN AMOUNT OF RS. 6,99,76,000/-. FURTHER, THE AO WAS ALSO OF THE VIEW THAT THE INTER EST CLAIMED COMPUTED BY THE ASSESSEE AT RS. 6,99,76,000/- IS NO T CORRECT AS THE ACTUAL INTEREST AMOUNT WORKED OUT TO RS. 5,51,98,93 0/-. THEREFORE, AFTER CAPITALIZATION OF INTEREST OF RS. 4,73,75,000 /- AN AMOUNT OF RS. 78,23,930/- TO BE TREATED AS REVENUE EXPENDITURE AS AGAINST RS. 2,26,01,000/-. ACCORDINGLY, THE AO CONCLUDED THAT T HE EXCESS AMOUNT OF INTEREST OF RS. 6,21,52,070/- IS REQUIRED TO BE DISALLOWED AND ADDED BACK TO THE TOTAL LOSS. ACCORDINGLY, THE AO COMPLET ED THE ASSESSMENT VIDE ORDER DATED 26/12/2011 PASSED U/S 143(3) OF TH E ACT READ WITH SECTION 147 OF THE ACT. BEING AGGRIEVED OF THE ASSE SSMENT, SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) . 5. BEFORE THE CIT(A) ASSESSEE CHALLENGED THE ASSESS MENT ORDER BOTH ON THE VALIDITY OF INITIATION OF PROCEEDING U/ S 147 OF THE ACT AS WELL AS ON THE MERITS OF THE DISALLOWANCE OF INTERE ST. 6. SO FAR AS THE VALIDITY OF PROCEEDING U/S 147 OF THE ACT IS CONCERNED, IT WAS CONTENDED BY THE ASSESSEE THAT AS PER THE PROVISO TO SECTION 147 REOPENING OF ASSESSMENT AFTER EXPI RY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR WHERE AN ASSESSMENT IS ALREADY MADE U/S 143(3) CAN ONLY BE MADE IN SPECIAL CIRCUMS TANCES WHERE THERE IS A FAILURE ON THE PART OF THE ASSESSEE IN D ISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT. IT WAS SUBMITTED BY THE ASSESSEE THAT NOT ONLY IN THE RETURN OF INCO ME BUT ALSO DURING THE COURSE OF ASSESSMENT PROCEEDING INITIATED U/S 1 53A OF THE ACT, THE ASSESSEE HAS FURNISHED ALL INFORMATIONS WITH RE GARD TO PAYMENT OF INTEREST AND THE AO AFTER CONSIDERING ALL ASPECTS OF THE ISSUE HAVING COMPLETED THE ASSESSME NT U/S 143(3) READ WITH SECTION 153A OF THE ACT, REOPENING OF ASS ESSMENT ON REAPPRECIATION OF THE VERY SAME FACTS AND MATERIAL AND ON THE SAME 5 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. ISSUE WOULD AMOUNT TO MERE CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE UNDER THE ACT. FURTHER, THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING TRULY AND FULLY ALL M ATERIAL FACTS NECESSARY FOR ASSESSMENT, REOPENING OF ASSESSMENT A FTER 4 YEARS FROM THE END OF THE ASSESSMENT YEAR IS INVALID IN L AW. IN SUPPORT OF SUCH CONTENTION, THE ASSESSEE RELIED UPON VARIOUS D ECISIONS OF THE HONBLE APEX COURT AS WELL AS DIFFERENT HIGH COURTS . 7. SO FAR AS THE MERITS OF DISALLOWANCE IS CONCERNE D, THE ASSESSEE SUBMITTED THAT THE ISSUE OF ALLOWABILITY OF THE INT EREST PAID TO M/S INDIA VALUE FUND TRUSTEE COMPANY PVT. LTD., WAS AL SO THE SUBJECT MATTER OF QUERY RAISED BY THE AG AUDIT AND WHICH WA S THOROUGHLY EXPLAINED BY THE ASSESSEE APART FROM THE FACT THAT IT WAS ALSO EXAMINED BY THE AO IN COURSE OF ASSESSMENT PROCEEDI NG INITIATED U/S 153A OF THE ACT. FURTHER EXPLAINING, IT WAS SUBMITT ED BY THE ASSESSEE THAT THE FUNDS RAISED FROM M/S INDIA VALUE FUND TRU STEE COMPANY PVT. LTD., WERE ENTIRELY DEPLOYED IN THE BUSINESS O F THE ASSESSEE COMPANY PARTLY FOR WORKING CAPITAL AND PARTLY FOR E XPANDING THE EXISTING BUSINESS OF HEALTH CARE. THE AMOUNT PAID B Y M/S INDIA VALUE FUND TRUSTEE COMPANY PVT. LTD., AS PER THE TERMS OF AGREEMENT ENTERED BETWEEN THEM DATED 05/09/2001 WILL ATTRACT INTEREST @ 15% TO 18%. THEREFORE, INTEREST CALCULATED AT YEAR-WISE ON LY COMPOUNDED RATE OF 18% FOR THE FY 2001-02 TO 2003-04 OF RS. 6, 99,76,000/-. IT WAS SUBMITTED BY THE ASSESSEE IN ACCORDANCE WITH AC CEPTED ACCOUNTING PRINCIPLES AS-16, THE ASSESSEE HAS CAPIT ALIZED PORTION OF INTEREST TO THE EXTENT ADVANCED FROM M/S INDIA VALU E FUND TRUSTEE COMPANY PVT. LTD., ARE UTILIZED FOR PURCHASE OF CAP ITAL EQUIPMENT AND LEASEHOLD IMPROVEMENTS FOR EXPANDING EXISTING LINE OF BUSINESS. IT WAS SUBMITTED THAT AFTER DEDUCTING INTEREST PORTION TO CAPITAL ASSET AMOUNTING TO RS. 34,730,012/- AND NETTING OF DEFERR ED TAX ASSET OF RS. 1,26,44,498/-. THE BALANCE INTEREST OF RS. 2,26 ,01,490/- WAS DEBITED TO THE P&L A/C. 6 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. 8. THE ASSESSEE RELYING UPON A NUMBER OF DECISIONS, CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSE OF BUSINESS IS ALL OWABLE DEDUCTION. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF MATERIALS ON RECORD NOTED THE FACT THAT IN ITIATION OF PROCEEDING U/S 147 OF THE ACT WAS AFTER EXPIRY OF 4 YEARS. THE REFORE, THE AO IS EMPOWERED UNDER THE ACT TO REOPEN THE ASSESSMENT U/ S 147 OF THE ACT AFTER EXPIRY OF 4 YEARS ONLY IN A CASE WHERE TH E INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 O R IN RESPONSE TO NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. THE CIT(A) ON CONSIDERING THE FACT THAT THERE IS NO FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND FURTHER ON C ONSIDERING THE FACT THAT THE ASSESSMENT HAS BEEN REOPENED NOT ON THE BA SIS OF ANY NEW MATERIAL OR INFORMATION, BUT, ON THE BASIS OF MATER IAL, WHICH ARE ALREADY ON RECORD AT THE TIME OF ORIGINAL ASSESSMEN T HELD THAT REOPENING OF THE ASSESSMENT BEYOND THE PERIOD 4 YEA RS IS UNTENABLE AND ACCORDINGLY NOT SUSTAINABLE. THE F INDING OF THE CIT(A) IN THIS REGARD IS EXTRACTED HEREUNDER: 9.4 ON THE BASIS OF THE REASONS FOR REOPENING THE ASSESSMENT BY THE AO, AND ON THE SUBMISSIONS MADE BY THE APPELLANT, I T IS APPARENT THAT THE REVENUE COULD NOT CONTEND THAT THE REASSESSMENT IS FRAMED ON SUBMISSION OF NEW MATERIAL OR INFORMATION. ADMITTED LY, THE REASSESSMENT PROCEEDINGS ARE INITIATED AFTER FOUR YEARS AS PROVI DED UNDER THE PROVISO TO SECTION 147 OF THE ACT. THERE IS NO CHARGE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED FROM ASSESSMENT, BY REASON OF THE F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL F ACTS NECESSARY FOR ASSESSMENT. THE AO HAS NOT ESTABLISHED ANY NEW FACT S DURING THE COURSE OF ASSESSMENT PROCEEDING U/S 147 TO SUBSTANT IATE, THAT THE ASSESSEE HAS NOT FURNISHED FULL PARTICULARS DURING THE COURSE OF THE EARLIER ASSESSMENT PROCEEDING U/S 143(3) RWS 153A, AS ALL THE MATERIAL FACTS WERE AVAILABLE AT THE TIME OF MAKING ORIGINAL ASSESSMENT. THEREFORE THE AO'S STAND OF 'SUFFICIENCY OF REASONS RECORDED' AND ITS EXAMINATION DURING THE COURSE OF ASSESSMENT PROCEED INGS STANDS VITIATED. 7 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. 9.5 THE HON'BLE APEX COURT IN THE CASE OF CIT V. FO RAMER FRANCE (2003) REPORTED IN 264 ITR 566 HAS CLEARLY LAID DOWN THE P RINCIPLE, THAT WHERE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, THE REASSESSMENT PROCEEDINGS AFTER THE EXPIRY OF FO UR YEARS IS NOT POSSIBLE IN VIEW OF THE PROVISIONS OF SEC.147 OF TH E ACT. 9.6 THE HON'BLE APEX COURT IN THE CASE OF CIT V KEL VINATOR OF INDIA LTD (2010) 320 ITR 561 ( SC) HAS CLEARLY LAID DOWN THAT THE ASSESSING OFFICER HAS TO HAVE A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BUT THIS DOES NOT IMPLY THAT THE ASSESSI NG OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF 'CHANGE OF OPINION' MUST BE TREATED AS AN INBUILT T EST TO CHECK THE ABUSE OF POWER. THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO TH E CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MU ST HAVE LINK WITH THE FORMATION OF THE BELIEF. 9.7 APPLYING THE ABOVE RATIONALE OF THE HON'BLE APE X COURT, I AM OF THE OPINION THAT THE AO IN THIS CASE HAS FAILED TO ESTA BLISH EITHER AT THE TIME OF ISSUE OF NOTICE OR DURING THE COURSE OF ASSESSME NT ANY MATERIAL FACTS TO ESTABLISH THAT THE APPELLANT HAS FAILED TO DISCL OSE MATERIAL FACTS IMPACTING THE ASSESSMENT U/S 143(3) R.W.S. 153A WHI CH WAS COMPLETED ON 31/12/2007, MORE SPECIFICALLY KEEPING IN VIEW TH AT THE SAME ISSUE WAS ALSO THE SUBJECT MATTER OF AUDIT, AND HAS BEEN CLARIFIED TO THE SATISFACTION OF THE DEPARTMENT IN JULY, 2009 BY THE APPELLANT. 9.8 IN LIGHT OF THE ABOVE CIRCUMSTANCES, THE GROUND OF APPEAL RAISED ON THE SUBSTANTIAL QUESTION OF LAW, WHETHER THE ASS ESSING OFFICER IS EMPOWERED TO REOPEN THE ASSESSMENT, I AM INCLINED T O OPINE THAT THE RATIONALE BEHIND THE ISSUE OF NOTICE U/S 148 AND TH E BASIS FOR REOPENING THE ASSESSMENT IS NOT TENABLE, AND THEREFORE, THE R EASSESSMENT U/S 147 IS NOT SUSTAINABLE.' WITHOUT PREJUDICE TO THE AFORESAID FINDING ON THE V ALIDITY OF THE ASSESSMENT U/S 147, THE CIT(A) ALSO HELD THAT THE A DDITION MADE BY THE AO IS NOT SUSTAINABLE ON MERITS ALSO. THE FINDI NG OF THE CIT(A) IN THIS REGARD IS EXTRACTED HEREUNDER: 10.2 I HAVE CAREFULLY EXAMINED THE ABOVE SUBMISSION , AND IT IS APPARENT THAT THE AO WHILE ARRIVING AT THE INTEREST PAYABLE AS RS.5,51,98,930 APPEARS TO HAVE ASSUMED SIMPLE INTEREST RATE OF 18% ON RS.13,59,24,000/- AND HAS NOT ACCEPTED THE FACT THA T THE PAYMENT WAS MADE IN ACCORDANCE WITH THE AGREEMENT WITH IVF. FUR THER IT IS APPARENT FROM THE AGREEMENT DATED 23.3.2004, THAT THE ASSESS EE HAS INCURRED THE SAID INTEREST COST AND THE SAME CANNOT BE DISPUTED BASED ON THE FACTS. 10.3 HENCE I AM OF THE OPINION THAT THE COMPUTATION OF INTEREST ON THE 8 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. TOTAL ADVANCE SHARE APPLICATION MONEY OF RS. 15 CR ORES OR ON THE ADJUSTED SHARE APPLICATION MONEY OF RS.13.59 CRORES IS NO LONGER RELEVANT, AS THE ASSESSEE HAS APPARENTLY PAID OUT T HE INTEREST OF RS.6,99,76,000/- TO THE INVESTOR AND HENCE THE SAME SHOULD BE TREATED AS INTEREST COST INCURRED BY THE APPELLANT. 11. ON THE DISALLOWANCE OF RSA,73,75,000/- THE AO H AS DISALLOWED THE INTEREST EXPENDITURE BASED ON THE NOTE IN THE FINAN CIAL STATEMENTS THAT INTEREST COST HAS BEEN CAPITALIZED. THE AO APPARENT LY SEEMS TO HAVE APPLIED THE PROVISIONS OF SECTION 36 WHICH WAS AMEN DED W.E.F. 1 ST APRIL, 2004 BY ADDING A PROVISO EFFECTIVE FROM 1 ST APRIL, 2004 TO BE APPLIED IN RELATION TO THE ASST. YR. 2004-05 AND SUBSEQUENT YE ARS, CLARIFYING THAT THE INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR AC QUISITION OF AN ASSET FOR EXTENSION OF EXISTING BUSINESS OR PROFESSION (WHETH ER CAPITALIZED IN THE BOOKS OF ACCOUNT OR NOT); FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BORROWED FOR ACQUISITION OF T HE ASSET TILL THE DATE ON WHICH SUCH ASSET WAS FIRST PUT TO USE, SHALL NOT BE ALLOWED AS DEDUCTION. 11.1 THE AR ARGUED THAT THE APPELLANT WAS ALREADY C ARRYING ON BUSINESS OF HEATH CARE AND FOR THIS PURPOSE HAS ESTABLISHED REPUTED HOSPITALS AT NAMPALLY, BANJARA HILLS AND SECUNDERABAD IN THE COU RSE OF EXPANSION OF ITS BUSINESS. IT IS NOT THAT THE BUSINESS HAD NOT C OMMENCED. IN ORDER TO EXTEND STATE OF THE ART HEALTH SERVICES TO THE RESI DENTS OF HYDERABAD AND IMPROVE ITS STANDING AS ONE OF THE BEST CARDIOLOGY HOSPITALS IN THE COUNTRY, THE ASSESSEE COMPANY EXPANDED ITS EXISTING BUSINESS OPERATIONS BY PURCHASING LATEST MEDICAL EQUIPMENT, AUGMENTING THE NUMBER OF BEDS AND FACILITIES BY IMPROVING THE LEAS EHOLD STRUCTURES. 11.1.1 THEREFORE, AN ASSET ACQUIRED BY THE ASSESSEE IN COURSE OF HIS BUSINESS, WHEN THE BUSINESS HAS ALREADY COMMENCED A ND SUCH ASSET WAS ACQUIRED FOR THE EXPANSION OF THE EXISTING UNIT , WOULD NOT BE A CAPITAL EXPENDITURE BUT A REVENUE EXPENDITURE SO FA R AS IT RELATES TO THE INTEREST PAID ON THE ADVANCE SHARE APPLICATION MONE Y WHICH WAS USED FOR THE PURPOSE OF FINANCING THE ASSETS. THOUGH IT HAS BEEN SHOWN IN THE ACCOUNT TO HAVE BEEN CAPITALIZED, BUT NO DEPRECIATI ON HAVING BEEN CLAIMED, THE ASSESSEE WAS AT LIBERTY TO CLAIM BENEF IT AS BUSINESS EXPENDITURE SINCE THE ACCOUNT WAS MAINTAINED FOR TH E PURPOSE OF THE AUDIT UNDER THE COMPANIES ACT, WHICH WOULD NOT DEBA R THE ASSESSEE FROM SHOWING THE ACCOUNT DIFFERENTLY FOR THE PURPOS E OF IT ACT, 1961. 11.1.2 THE AR ALSO ARGUED THAT THE APPELLANT HAS PU T TO USE THE SAID ASSETS AND THEREBY HAS CLAIMED THE INTEREST COST TH EREOF ON THE BORROWED FUNDS AND THEREFORE THE AMENDED PROVISIONS OF SEC.36(1) (III) ARE NOT APPLICABLE AND THAT THE APPELLANT IS ELIGIB LE FOR DEDUCTION BY VIRTUE OF EXPLANATION 8 TO SEC.43(1) WHICH STATES AS FOLLO WS: 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT WHERE ANY AMOUNT IS PAID OR IS PAYABLE AS INTEREST IN CONNECT ION WITH THE ACQUISITION OF AN ASSET, SO MUCH OF SUCH AMOUNT AS IS RELATABLE TO 9 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. ANY PERIOD AFTER SUCH ASSET IS FIRST PUT TO USE SHA LL NOT BE INCLUDED, AND SHALL BE DEEMED NEVER TO HAVE BEEN INCLUDED, IN THE ACTUAL COST OF SUCH ASSET'. 11.1.3 THE AR ARGUED THAT THE INTEREST COST HAS BEE N CAPITALIZED IN THE FINANCIAL STATEMENTS BASED ON THE ACCEPTED ACCOUNTI NG PRINCIPLES (ACCOUNTING STANDARD 16 ISSUED BY INSTITUTE OF CHAR TERED ACCOUNTS OF INDIA), AND WHETHER THE SAME IS DEDUCTIBLE AS AN EX PENDITURE OR NOT HAS TO BE DECIDED BASED ON THE PRINCIPLES OF LAW AND NO T IN ACCORDANCE WITH THE ACCOUNTING PRACTICE AS HELD BY THE APEX COURT I N THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD V CI T (1997)(227 ITR 172), THE AR FURTHER ARGUED THAT THE APEX COURT IN THE CA SE OF DCIT V CORE HEALTHCARE LTD. (2008)(298 ITR 194) HAS HELD THAT T HE INTEREST IS AN ALLOWABLE DEDUCTION WHETHER THE MONIES ARE BORROWED FOR CAPITAL EXPENDITURE OR REVENUE EXPENDITURE, 11,2 I HAVE CAREFULLY CONSIDERED THE BASIS OF DISAL LOWANCE MADE BY THE AO AND ALSO THE ARGUMENT OF THE APPELLANT ON THE CL AIM OF THE INTEREST EXPENDITURE IN THE CONTEXT OF THE ASSETS HAVING BEE N PUT TO USE BY THE APPELLANT. THE AO HAS IGNORED THE FACT THAT THE APP ELLANT HAS OBTAINED THE ADVANCE SHARE APPLICATION MONEY IN THE YEAR 200 1-02 AMOUNTING TO RS.15 CRORES WHICH WERE DEPLOYED IN THE ASSETS OF T HE COMPANY, AND BY THE TIME THE LIABILITY FOR PAYMENT OF INTEREST HAS CRYSTALLIZED IN THE FINANCIAL YEAR 2003-04, THE ASSETS HAVE BEEN PUT TO USE. 11.2.1 THE AO APPARENTLY MUST HAVE ASSUMED THAT SIN CE THE INTEREST COST HAS BEEN CAPITALIZED AS PER THE FINANCIAL STAT EMENTS, THE ASSETS MAY HAVE NOT BEEN PUT TO USE AND HAS APPLIED THE PR OVISIONS OF SEC. 36(1) (III) AND HAS DISALLOWED THE AMOUNT OF INTERE ST CLAIMED BY THE APPELLANT. 11.2.2 EXPLANATION 8 TO SEC.43(1) IS CLEAR AND UNAM BIGUOUS. THE ASSET ACQUIRED BY AN ASSESSEE FOR EXPANSION OF ITS EXISTI NG BUSINESS OR INDUSTRY, BY REASON OF EXPLANATION. 8 WILL NOT STAN D IN A DIFFERENT FOOTING. IT IS THE ACTUAL COST OF THE ASSET THAT HAS TO BE A SCERTAINED ON THE CUTOFF DATE AS TO WHEN SUCH ASSET IS FIRST PUT TO USE. THE INTEREST PAID IN CONNECTION WITH ACQUISITION OF ASSET WITH THE BORRO WED CAPITAL UNTIL THE ASSET IS FIRST PUT TO USE IS TO BE TREATED DIFFEREN TLY FROM THE INTEREST PAID AFTER THE ASSET IS FIRST PUT TO USE. EXPLANATION 8 MAKES IT CLEAR THAT SUCH INTEREST PAID AFTER THE ASSET IS FIRST PUT TO USE S HALL NOT BE ADDED TO THE ACTUAL COST OF SUCH ASSET. THEREFORE, THIS INTEREST PAID ON THE BORROWED CAPITAL AFTER THE MACHINERY IS FIRST PUT TO USE WOU LD BE A REVENUE EXPENDITURE, SINCE IT COULD NOT BE TREATED TO BE TH E ACTUAL COST OF SUCH ASSET FOR BEING CAPITALIZED FOR THE PURPOSE OF CLAI MING DEPRECIATION. 11.2.3 HAVING REGARD TO THE SCHEME AND THE LAW ALRE ADY ESTABLISHED, I AM OF THE OPINION THAT THE PRINCIPLE IS CLEAR AND SINCE THE APPELLANT HAS PUT TO USE THE ASSETS D URING THE FINANCIAL YEAR RELEVANT TO THE ASST YEAR 2004-05, T HE 10 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. APPELLANT IS ELIGIBLE TO CLAIM INTEREST UNDER SEC.3 6(1) (III). IN THE CASE OF KEDARNATH JUTE MFG. CO LTD. V CIT (1971)(82 ITR 363)(SUPREME COURT), THE HONBLE APEX COURT ALLOWED DEDUCTION IN RESPECT OF EXPENDITURE NOT DEBITED IN THE BOOKS OF ACCOUNT BY HOLDING THAT IN ORDER FOR AN EXPENDIT URE TO BE ALLOWED AS A DEDUCTION, THE PROVISIONS OF THE INCOM E TAX ACT HAVE TO BE APPLIED AND NOT THE TREATMENT GIVEN IN T HE BOOKS BY THE ASSESSEE. THEREFORE, THE A.O. IS DIRECTED TO RECOMPUTE THE CARRY FORWARD LOSSES AS PER THE RELIE F GRANTED IN THIS ORDER. 9. THE LEARNED DR SUBMITTED BEFORE US THAT THE CIT( A) WAS NOT JUSTIFIED IN HOLDING THAT THE PROCEEDING INITIATED U/S 147 OF THE ACT IS NOT SUSTAINABLE. IT WAS SUBMITTED BY THE LEARNED DR THAT WHILE COMPLETING THE ASSESSMENT U/S 143(3) READ WITH SECT ION 153A OF THE ACT, THE AO HAVING NOT CONSIDERED THIS PARTICULAR I SSUE AND THEREBY HAVING NOT FORMED ANY OPINION WITH REGARD TO LIABIL ITY OF INTEREST AS EXPENDITURE, REOPENING OF ASSESSMENT U/S 147 IS JUS TIFIED. SO FAR AS THE MERITS OF THE ISSUE IS CONCERNED, THE LEARNED D R SUBMITTED THAT THE ASSESSEE HAVING ITSELF CAPITALIZED INTEREST TO THE TUNE OF RS. 4,73,75,000/- THERE IS ESCAPEMENT OF INCOME TO THAT EXTENT AS THE ASSESSEE HAS CLAIMED DEDUCTION OF THE ENTIRE INTERE ST EXPENDITURE OF RS. 6,99,76,000/-. IT WAS THEREFORE SUBMITTED BY TH E LEARNED DR THAT THE ORDER OF THE CIT(A) BOTH THE ON THE ISSUE OF VA LIDITY OF PROCEEDING U/S 147 AS WELL AS MERITS OF THE ADDITION IS NOT CO RRECT. 10. THE LEARNED AR ON THE OTHER HAND STRONGLY SUPPO RTING THE ORDER OF THE CIT(A) SUBMITTED THAT THERE BEING NO FRESH/T ANGIBLE MATERIAL BEFORE THE AO TO INITIATE PROCEEDING U/S 147 OF THE ACT, REOPENING OF ASSESSMENT IS MERELY ON CHANGE OF OPINION. DRAWING OUR ATTENTION TO THE REASONS RECORDED, THE LEARNED AR SUBMITTED THAT THE AO ON CONSIDERATION OF THE SELF-SAME MATERIAL, WHICH IS A VAILABLE ON RECORD AT THE TIME OF COMPLETION OF ASSESSMENT U/S 143(3) READ WITH SECTION 153A OF THE ACT, INITIATION OF PROCEEDING AFTER EXP IRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR IS INVALID IN LAW AS NEITHER THERE IS ALLEGATION BY THE AO THAT ASSESSEE HAS FAILED TO DI SCLOSE TRULY AND 11 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. FULLY ALL MATERIAL FACTS NOR THERE IS ACTUALLY ANY SUCH NON-DISCLOSURE OF FACTS BY THE ASSESSEE. IT WAS, THEREFORE, SUBMITTED THAT ACTION OF THE CIT(A) IN HOLDING THAT INITIATION OF PROCEEDING U/S 147 LEGALLY UNSUSTAINABLE IS CORRECT. 10.1 SO FAR AS THE FINDING OF THE CIT(A) ON MERITS OF THE ISSUE IS CONCERNED, THE LEARNED AR SUBMITTED THAT CIT(A) HAV ING EXHAUSTIVELY DEALT WITH THE ISSUE AND COME TO A REASONABLE CONCL USION THERE IS NO NEED TO INTERFERE WITH HIS FINDING. IN SUPPORT OF H IS CONTENTION, THE LEARNED AR RELIED UPON FOLLOWING DECISIONS: 1. CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 ( SC) 2. CIT VS. USHA INTERNATIONAL LTD., 348 ITR 485 (D EL.) (FB) 11. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE RE VENUE AUTHORITIES. UNDISPUTEDLY, IT IS A FACT ON RECORD THAT NOTICE U/ S 148 OF THE ACT WAS ISSUED ON 31/03/2011, WHICH IS BEYOND 4 YEARS FROM THE END OF THE AY UNDER DISPUTE. AS CAN BE SEEN, SECTION 147 OF THE A CT EMPOWERS AO TO ASSESS INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT FOR ANY ASSESSMENT YEAR. HOWEVER, THE FIRST PROVISO TO SECTION 147 OF THE ACT MAKES IT CLEAR THAT IN A CASE WHERE AN ASSE SSMENT U/S 143(3) OR SECTION 147 HAS BEEN MADE NO ACTION CAN BE TAKEN AFTER EXPIRY OF 4 YEARS FROM THEN END OF THE AY UNLESS THE ESCAPEMENT OF INCOME IS ATTRIBUTABLE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THE LIGHT OF THE AFORESAID STATUTORY PROVISIONS, IT NEEDS TO BE EXAM INED WHETHER IN THE PRESENT CASE THERE IS ANY FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT. ON EXAMINATION OF THE REASONS RECORDED, WHICH ARE E XTRACTED IN THE BODY OF THE IMPUGNED ASSESSMENT ORDER, IT BECOMES A BSOLUTELY CLEAR THAT THE AO HAS REOPENED ASSESSMENT ONLY ON THE BAS IS OF THE DIRECTORS REPORT FOR THE PREVIOUS YEAR 2003-04 AND THE COMPUTATION OF INCOME AS WELL AS P&L A/C OF THE ASSESSEE, WHICH WE RE FURNISHED 12 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. ALONG WITH THE RETURN OF INCOME AND FORMED PART OF THE RECORD WHEN THE ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 1 53A WAS PASSED BY THE AO ON 31/12/2007. THEREFORE, IT IS PATENT AN D OBVIOUS THAT THERE ARE NO FRESH/TANGIBLE MATERIAL AVAILABLE BEFO RE THE AO FOR REOPENING OF ASSESSMENT. THE AO ON REAPPRECIATION OF THE SAME MATERIAL, WHICH IS ALREADY AVAILABLE ON RECORD AT T HE TIME OF ORIGINAL ASSESSMENT HAS FORMED HIS BELIEF FOR REOPENING ASSE SSMENT, WHICH IN OUR VIEW, IS NOT PERMISSIBLE AS IT DOES NOT AMOUNT TO NON-DISCLOSURE OF ANY MATERIAL FACTS TRULY AND FULLY BY THE ASSESSEE. EVEN NEITHER IN THE REASONS RECORDED NOR ANYWHERE IN THE ASSESSMENT ORD ER THERE IS ANY ALLEGATION BY THE AO THAT THE ASSESSEE HAS NOT DISC LOSED TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT. THE HONBLE SUPREME COURT IN THE CASE OF PARASHURAM POTTERY WOR KS CO. LTD., VS. ITO (106 ITR PAGE 1) HELD THAT THE DUTY OF THE ASSE SSEE IN ANY CASE DOES NOT EXTEND BEYOND MAKING A TRUE AND FULL DISCL OSURE OF PRIMARY FACT. IT IS FOR THE AO TO DRAW CORRECT INFERENCE FR OM THE PRIMARY FACTS. IT IS NOT THE RESPONSIBILITY OF THE ASSESSEE TO ADV ISE THE AO WITH REGARD TO INFERENCE WHICH HE SHOULD DRAW FROM THE P RIMARY FACT. IF THE AO DRAWS AN INFERENCE WHICH APPEARS TO BE ERRONEOUS , SUBSEQUENTLY MERE CHANGE OF OPINION WITH REGARD TO THAT INFERENC E WOULD NOT JUSTIFY INITIATION OF ACTION FOR REOPENING ASSESSMENT. IT I S VERY MUCH EVIDENT THAT ENTIRE REASSESSMENT IS ON THE BASIS OF THE MAT ERIALS DISCLOSED BY ASSESSEE, WHICH FORMED PART OF THE RECORD AT THE TI ME OF COMPLETION OF THE ORIGINAL ASSESSMENT U/S 143(3) READ WITH SECTIO N 153A OF THE ACT. THEREFORE, THE AO HAVING COMPLETED ORIGINAL ASSESSM ENT ON VERIFYING ALL THESE FACTS AND MATERIALS, REOPENING OF ASSESSM ENT ON SELF-SAME FACTS AND MATERIAL ON A MERE CHANGE OF OPINION, THA T TOO AFTER EXPIRY OF FOUR YEARS FROM THE ASSESSMENT YEAR IS NOT PERMI SSIBLE IN LAW. IN THESE CIRCUMSTANCES, THE ACTION OF THE AO U/S 147 O F THE ACT IS CLEARLY WITHOUT JURISDICTION IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF KELVINATOR OF INDIA LTD AN D HONBLE DELHI HIGH COURT IN CASE OF USHA INTERNATIONAL LTD. (SUPR A). IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF CIT(A) IN 13 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. HOLDING THAT THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT IN THE PRESENT CASE IS UNSUSTAINABLE IN LAW. ACCORDINGLY, WE UPHOLD THE SAME. IN VIEW OF OUR AFORESAID FINDING, THE ISSUE R EGARDING MERITS OF THE DISALLOWANCE BECOMES PURELY ACADEMIC. HOWEVER, ON GOING THROUGH THE FINDINGS OF THE CIT(A) ON MERITS OF THE ISSUE, WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO WILL ALSO NOT BE SUSTAINABLE IN VIEW OF THE REASONING GIVEN BY THE C IT(A), WHICH IS NOT ONLY REASONABLE, BUT, IN ACCORDANCE WITH THE STATUT ORY PROVISIONS. FURTHER, IT IS ALSO A FACT ON RECORD THAT THE ASSES SEE HAS NOT CLAIMED ANY DEPRECIATION ON THE INTEREST CAPITALIZED AGAINS T ASSETS. IN THESE CIRCUMSTANCES, THE CONCLUSION DRAWN BY THE CIT(A) O N THE ISSUE OF DISALLOWANCE OF INTEREST, IN OUR VIEW, IS ALSO JUST AND PROPER AND DESERVES TO BE UPHELD. IN THE AFORESAID VIEW OF TH E MATTER, WE UPHOLD THE DECISION OF THE CIT(A) BOTH ON THE ISSUE OF VAL IDITY OF PROCEEDING U/S 147 OF THE ACT AS WELL AS ON THE MERITS OF DISA LLOWANCE MADE BY THE AO. GROUNDS RAISED BY THE DEPARTMENT ARE, THERE FORE, DISMISSED. 12. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. ITA NOS. 317 & 318/HYD/2014 FOR AY 2005-06 AND 2006 -07 13. ASSESSMENTS FOR THE IMPUGNED ASSESSMENT YEARS W ERE REOPENED BY THE AO U/S 147 OF THE ACT CONSEQUENT U PON AND TO GIVE EFFECT TO THE LOSS DETERMINED IN THE ASSESSMENT OR DER PASSED FOR THE AY 2004-05. AO FOLLOWING THE COMPUTATION OF LOSS MA DE BY HIM IN THE ASSESSMENT YEAR 2004-05 ALSO MADE NECESSARY MODIFIC ATION WHILE COMPUTING INCOME OF THE ASSESSEE IN THE IMPUGNED AS SESSMENT YEARS. IN APPEAL PROCEEDING, THE CIT(A) FOLLOWING H IS ORDER PASSED FOR THE AY 2004-05 DIRECTED THE AO TO RECOMPUTE CARRY F ORWARD OF LOSS IN TERMS WITH THE ORDER PASSED BY HIM FOR THE AY 2004- 05. 14. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. ASSESSMENTS FOR THE IMPUGNED ASSESSMENT YEARS HAVE BEEN MADE TO 14 ITA NO. 316 TO 318/H/14 M/S QUALITY CARE INDIA LTD. GIVE EFFECT TO THE ORDER PASSED FOR AY 2004-05 DETE RMINING THE LOSS AT RS. 2,41,85,535/- AS AGAINST RS. 8,63,37,005/- DECL ARED BY THE ASSESSEE. FOR THESE ASSESSMENT YEARS ALSO REOPENING OF ASSESSMENT IS AFTER EXPIRY OF FOUR YEARS FROM END OF RESPECTIV E ASSESSMENT YEARS. THEREFORE, FOR THE REASONS STATED IN PARA 11 OF THI S ORDER, THE IMPUGNED ASSESSMENT ORDERS ARE WITHOUT JURISDICTION . THAT APART, CONSIDERING THE FACT THAT THE ORDER PASSED BY THE C IT(A) FOR THE AY 2004-05 HAS BEEN UPHELD, PRESENT ASSESSMENTS BEING IN CONSEQUENCE TO THE ASSESSMENT ORDER PASSED FOR AY 2 004-05, DIRECTION OF THE CIT(A) FOR THE IMPUGNED ASSESSMENT YEARS ALSO NEEDS TO BE UPHELD. ACCORDINGLY, APPEALS FILED BY THE DEP ARTMENT ARE DISMISSED. 15. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE CO NSIDERED TO BE DISMISSED. 16. TO SUM UP ALL THE APPEALS OF THE REVENUE ARE DI SMISSED. PRONOUNCED IN THE OPEN COURT ON 27/06/2014 SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 27 TH JUNE, 2014 KV COPY TO:- 1) DCIT, CIRCLE 16(3), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2) M/S QUALITY CARE INDIA LTD., 6-3-248/1, ROAD NO. 1, BANJARA HILLS, HYDERABAD. 3) CIT(A)-V, HYDERABAD 4) CIT-IV, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.