PEDDINGTON LUBRIMETAL P. LTD, MUMBAI V. ITO 7(1)(3), MUMBAI

ITA 3207/MUM/2012

• Counselvise Citation: 320719914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: NITIN V KULKARNI
• Keywords: Business income
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 3206, 3207 / / 2012 A.YS. 2004-2005, 2005-06 ITAS NO. : 3206, 3207/MUM/2012 (ASSESSMENT YEARS: 2004-2005 & 2005-06) PEDDINGTON LUBRIMETAL PVT LTD., 206, SUMER KENDRA, BEHIND MAHINDRA TOWER, PANDURANG BUDHKAR ROAD, WORLI, MUMBAI -400 018 PAN: AAACP 7737 L VS ITO 7(1)(3), 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITIN V. KULKARNI RESPONDENT BY : SHRI SANJEEV JAIN /DATE OF HEARING : 28-11-2013 / DATE OF PRONOUNCEMENT : 06-12-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: ITAS NO. : 3206, 3207/MUM/2012: THE INSTANT APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFE RENT ORDERS OF CIT(A) 13, MUMBAI, COMMONLY DATED 18.05.2011, WHER EIN, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR AY 2004- 05. ISSUE WITH REGARD TO UNUTILIZED MODVAT CREDIT OUTSTAN DING IS COMMON IN THE TWO IMPUGNED YEARS. WE ARE DISPOSING OFF TH E TWO APPEALS, THROUGH THE COMMON AND CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE AND BREVITY. WE TAKE GROUNDS AS RAISED IN BY THE ASSESSEE FOR AY 2004-05 ONLY: 1. THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE AD-HOC DISALLOWANCE OF TELEPHONE EXPENSES OF RS. 20,000/- OUT OF THE TOTAL EXPENDITURE OF RS.1,92,583/- INCURRED BY THE APPELLANT FOR THE BUSINESS DURING THE RELEVANT PREVIOUS YEAR AND HAS FAILED TO APPRECIATE THAT THE ENTIRE EXPENDITURE HAS B EEN INCURRED FOR EXCLUSIVELY FOR THE BUSINESS OF THE APPELLANT. PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 2 2. THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE AD-HOC DISALLOWANCE OF STAFF WELFARE EXPENSES OF RS. 10,000/-; ENTERTAINMENT EXPEN SES OF RS. 15,000/-; AND GENERAL EXPENSES OF RS. 5,000/- BY COMING TO THE CONCLU SION THAT COMPLETE VERIFICATION OF BILLS/VOUCHERS WAS NOT POSSIBLE. 3. THE CIT (APPEALS) ERRED IN CONFIRMING THE COMPUTATIO N OF DEDUCTION UNDER SEC.8OHHC BY REDUCING THE ALLOWABLE DEDUCTION UNDER SEC. 801B FROM THE EXPORT PROFITS. 4. THE CIT (APPEALS) ERRED IN CONFIRMING THE CALCULATION OF PROFITS OF BUSINESS AS DEFINED IN CLAUSE (BAA) OF THE EXPLANATION TO SEC.8OHHC A ND CONFIRMED THE REDUCTION FROM BUSINESS INCOME THE PROFITS EARNED ON EE FC ACCOUNT. 5. THE CIT (APPEALS) ERRED IN CONFIRMING THE COMPUTATION OF DEDUCTION UNDER SEC.8OIB AFTER REDUCING THE INTEREST INCOME AND PROFIT ON EEFC ACCOUNT FROM THE PROFITS FOR INDUSTRIAL UNDERTAKING. 6. THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS. 1,56,182/- ON ACCOUNT OF UNUTILIZED MOD VAT CREDIT OUTSTANDING AS ON 3 L MARCH, 2004 AND WHILE DOING SO HE HAD NOT APPRECIATED THE FACT THAT MO D VAT COMPONENT HAS ALREADY BEEN ADDED BACK IN THE VALUATION OF THE CLOSING STOCK AS PER THE REQUIREMENT OF SEC.145A OF THE INCOME TAX ACT AND AS REPORTED IN TAX AUDIT REPORT FILED BEFORE HIM. 2. THE BASIC FACTS OF THE CASE ARE THAT THE ASSESSEE IS MANUFACTURE OF WIRE DRAWING POWDER. IN THE ASSESSMENT PROCEEDINGS, DE TAILS WERE CALLED FOR BY THE AO AND THE SAME WERE SUBMITTED BEFORE THE AO. FROM THE DETAILS FURNISHED THE AO NOTICED THAT TELEPHONE EXPEN SES WERE AT RS. 1,92,583/- AGAINST THE PRECEDING YEARS DEBIT AT RS. 95,192/-. IT WAS EXPLAINED BY THE ASSESSEE THAT IN THE PREMISES, SISTE R CONCERN ALSO HOSTS ITS OFFICE AND WHO HAVE INDEPENDENTLY TELEPHONE EXP ENSE AT RS. 1,85,643/- AND, THE ASSESSEE HAD UTILIZED THE TELEPHONE FAC ILITIES OF ITS SISTER CONCERN, M/S PEDDINGTON CHEMICALS (INDIA). THE AO ON THESE FACTS, OBSERVED, THAT THE ASSESSEE COMPANY COULD NOT BR ING ON RECORD TO SUBSTANTIATE THAT THE ENTIRE EXPENSES IN RESPECT OF TELEPHONES INSTALLED IN THE OFFICE PERTAINED TO THE ASSESSEE COMPANY. HE, THEREFOR E, MADE AN ADHOC DISALLOWANCE OF RS. 20,000/- ON THIS COUNT. 3. THE ASSESSEE TOOK THE ISSUE BEFORE THE CIT(A), BEFORE WHOM, THE ASSESSEE REITERATED ITS SUBMISSIONS, AS MADE BY IT BEFORE THE AO. THE CIT(A) ON THE SAME OBSERVATIONS, AS MADE BY THE AO, SUS TAINED THE DISALLOWANCE. 4. THE ASSESSEE IS NOW BEFORE THE ITAT. 5. BEFORE US, THE AR SUBMITTED THAT THE ENTIRE EXPENDITU RE IS FOR THE PURPOSES OF BUSINESS AND HENCE NO DISALLOWANCE IS CALLED FOR. PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 3 6. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORIT IES AND HAVE NOTED THE FACT THAT THE ASSESSEE HAD UTILIZED THE TELEP HONE FACILITIES OF ITS SISTER CONCERN AND PAID THE BILLS ON THOSE TELEPHONES AS WELL. SINCE THE REVENUE AUTHORITIES DID NOT CONFIRM, AS TO WHETHER, T HE ASSESSEE HAS INDEPENDENTLY UTILIZED THE TELEPHONE SERVICES OF ITS SIS TER CONCERN OR NOT AND WHETHER, THE USAGE OF FACILITY WAS BACKED UP BY THE ANY DOCUMENTATION, EVEN THE BASIC IN THE NATURE OF EXCHANGE OF LETTERS INFORMING AND CONFIRMING THE UTILIZATION OF THE FACILITY. THE REV ENUE AUTHORITIES HAVE ALSO NOT VERIFIED AS TO WHETHER THE BILLS OF THESE TELEPHONES HAVE BEEN DEBITED TO THE ACCOUNTS OF THE AS SESSEE ALONE AND THAT THE SISTER CONCERN HAS ACTUALLY SURRENDERED THE USAGE OF THOSE TELEPHONES IN FAVOUR OF THE ASSESSEE. 8. THESE ASPECTS NEED VERIFICATION. IN THESE CIRCUMSTANCE S, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO TAKE APPROPRIATE RECOURSE ON THE ISSUE AFTER VERIFYING THE ABOVE FACTS. 9. THE GROUND IS THUS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO. 2 PERTAINS TO DISALLOWANCE OF STAFF WELFARE EX PENSES AT RS. 10,000/-, ENTERTAINMENT EXPENSES AT RS. 15,000/- A ND GENERAL EXPENSES AT RS. 5,000/- FOR WANT OF VERIFICATION OF BILLS/VOUCHERS. 11. IN THE ASSESSMENT PROCEEDINGS, THE AO CALLED FOR DET AILS AND THE ASSESSEE PRODUCED THE BILLS/ VOUCHERS. THE AO NOTICED TH AT SOME OF THE VOUCHERS PERTAINING TO STAFF WELFARE, ENTERTAINMENT AN D GENERAL EXPENSES WERE SELF MADE VOUCHERS. THESE, THE AO DISALLOWE D AND SUBSEQUENTLY WERE CONFIRMED BY THE CIT(A). 12. THE ASSESSEE IS BEFORE THE ITAT. PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 4 13. BEFORE US, THE AR SUBMITTED THAT THE EXPENSES ARE PURELY FOR THE PROPOSES OF BUSINESS AND NONE OF THE EXPENSES OUT OF T HESE PERTAIN TO NON BUSINESS PURPOSE. 14. WE ALSO FIND THAT THE REVENUE AUTHORITIES HAVE NOT D EALT WITH THE ISSUE NOR HAVE THEY POINTED OUT THAT HOW CERTAIN EXPEN SES COULD BE TAKEN TO BE FOR NON BUSINESS PURPOSE ON WHICH ADHOC DIS ALLOWANCE COULD BE WORKED OUT. IN THESE CIRCUMSTANCES, WE SET ASID E THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADHOC DISALLOWANCE MADE ON STAFF WELFARE, ENTERTAINMENT EXPENSES AND GENERAL EXPENSE, KEEPING IN VIEW PLETHORA OF DECISIONS ON TH E ISSUE THAT IN THE CASE OF ASSESSEE COMPANY, SUCH EXPENSES C OULD NOT BE DISALLOWED, UNLESS IT IS PROVED BY THE AO THAT SUCH EXPENS ES ARE INCURRED FOR NON BUSINESS PURPOSES. GROUND NO. 2 IS THUS ALLOWED. 15. GROUND NO. 3 PERTAINS TO DEDUCTION U/S 80HHC AFTER DEDUCTION U/S 80IB. 16. IN THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE A SSESSEE AS TO WHY THE DEDUCTION U/S 80HHC SHOULD NOT BE RESTRICTED IN VIEW OF THE CLAIM OF DEDUCTIONS U/S 80IB. IN RESPONSE, THE ASSESSEE S UBMITTED THAT FOR THE PURPOSES OF COMPUTATION OF DEDUCTION U/S 8 0HHC, THERE IS NO NEED TO ARRIVE AT THE ADJUSTED PROFITS AND SECTION 8 0IA(9) DOES NOT BIND THE ASSESSEE AND THE DEPARTMENT TO APPROACH THE DEDUCTION THROUGH THE ADJUSTED PROFITS. THE ASSESSEE CITED THE CA SE OF MITTAL CLOTHING VS DCIT, REPORTED IN 4 SOT 626 (BANGALORE). 17. THIS ARGUMENT OF THE ASSESSEE WAS REJECTED BY TH E AO. HE, THEREFORE, RECOMPUTED THE DEDUCTION U/S 80HHC. 18. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), WHO S USTAINED THE VIEW TAKEN BY THE AR, FURTHER REDUCED THE DEDUCTION U/S 80HHC PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 5 BY RS. 88,148/- BEING THE PROFIT EARNED ON EEFC ACCOUNT . THE CIT(A) ALSO CITED CERTAIN DECISIONS, WHICH ARE ON THE EXPRESSION DERIVED FROM . 19. THE ASSESSEE IS NOW BEFORE THE ITAT. 20. BEFORE US, THE AR POINTED OUT THE ISSUE STANDS COVE RED BY THE DECISION OF ACG ASSOCIATED CAPSULES PVT LTD. VS CIT, REPO RTED IN 343 ITR 89, WHEREIN, ON A PERUSAL OF THE JUDGMENT OF THE HIGH COURT IN CIT V. ASIAN STAR CO. LTD. [2010] 326 ITR 56 (BOM), WE FIND THAT THE REASON WHIC H WEIGHED WITH THE HIGH COURT FOR TAKING A DIFFERENT VIEW, IS THAT RENT, COMMIS SION, INTEREST AND BROKERAGE DO NOT POSSESS ANY NEXUS WITH EXPORT TURN OVER AND, THEREFORE, THE INCLUSION OF SUCH ITEMS IN THE PROFITS OF THE BUSINESS WO ULD RESULT IN A DISTORTION OF THE FIGURE OF EXPORT PROFITS. THE HIGH COURT HAS R ELIED ON A DECISION OF THIS COURT IN CIT V. K. RAVINDRANATHAN NAIR [2007] 295 ITR 228 (SC) IN WHICH THE ISSUE RAISED BEFORE THIS COURT WAS ENTIRELY DIFFERENT F ROM THE ISSUE RAISED IN THIS CASE. IN THAT CASE, THE ASSESSEE OWNED A FACTORY IN WHICH HE PROCESSED CASHEW NUTS GROWN IN HIS FARM AND HE EXPORTED THE CASHEW NUT S AS AN EXPORTER. AT THE SAME TIME, THE ASSESSEE PROCESSED CASHEW NUTS WHICH WERE SUPPLIED TO HIM BY EXPORTERS ON JOB WORK BASIS AND HE COLLECTED PROCESSIN G CHARGES FOR THE SAME. HE, HOWEVER, DID NOT INCLUDE SUCH PROCESSING CHARGES CO LLECTED ON JOB WORK BASIS IN HIS TOTAL TURNOVER FOR THE PURPOSE OF COMPUTI NG THE DEDUCTION UNDER SECTION 80HHC(3) OF THE ACT AND AS A RESULT THIS TURNOV ER OF COLLECTION CHARGES WAS LEFT OUT IN THE COMPUTATION OF PROFITS AND GAINS O F BUSINESS OF THE ASSESSEE AND AS A RESULT NINETY PER CENT. OF THE PROFITS OF THE ASSESSEE ARISING OUT OF THE RECEIPT OF PROCESSING CHARGES WAS NOT DEDUCTED UNDER CLAUSES (1) OF EXPLANATION (BAA) TO SECTION 80HHC. THIS COURT HELD THAT THE PROCESSING CHARGES WAS INCLUDED IN THE GROSS TOTAL INCOME FROM CASHEW BUSIN ESS AND HENCE IN TERMS OF EXPLANATION (BAA), NINETY PER CENT. OF THE GRO SS TOTAL INCOME ARISING FROM PROCESSING CHARGES HAD TO BE DEDUCTED UNDER EX PLANATION (BAA) TO ARRIVE AT THE PROFITS OF THE BUSINESS. IN THIS CASE, THIS COU RT HELD THAT THE PROCESSING CHARGES RECEIVED BY THE ASSESSEE WERE PART OF THE BU SINESS TURNOVER AND ACCORDINGLY THE INCOME ARISING THEREFROM SHOULD HAVE BEE N INCLUDED IN THE PROFITS AND GAINS OF BUSINESS OF THE ASSESSEE AND NINE TY PER CENT OF THIS INCOME ALSO WOULD HAVE TO BE DEDUCTED UNDER EXPLANATION (BAA) UNDER SECTION 80HHC OF THE ACT. IN THIS CASE, THIS COURT WAS NOT DECIDING T HE ISSUE WHETHER NINETY PER CENT. DEDUCTION IS TO BE MADE FROM THE GROSS OR NET IN COME OF ANY OF THE RECEIPTS MENTIONED IN CLAUSE (1) OF EXPLANATION (BAA). THE BOMBAY HIGH COURT HAS ALSO RELIED ON THE MEMORANDUM EXPLAINING THE CLAUSES OF THE FINANCE BILL, 1991, CONTAINED IN THE CIRCULAR DATED DECEMBER 19, 1991, OF THE CENTRAL BOARD OF DIRECT TAXES TO COME TO THE CONCLUSION THAT PARLIAMENT INTENDED TO EXCLUDE ITEMS WHICH WERE UNRELATE D TO THE EXPORT TURNOVER FROM THE COMPUTATION OF DEDUCTION AND WHILE EXCLUDING SUCH ITEMS WHICH ARE UNRELATED TO EXPORT FOR THE PURPOSE OF SEC TION 80HHC, PARLIAMENT HAS TAKEN DUE NOTE OF THE FACT THAT THE EXPORTER ASSES SEE WOULD HAVE INCURRED SUCH EXPENDITURE IN EARNING THE PROFITS AND TO AVOID A DISTOR TED FIGURE OF EXPORT PROFITS, NINETY PER CENT. OF THE RECEIPTS LIKE BROKERAG E, COMMISSION, INTEREST, RENT, CHARGES ARE SOUGHT TO BE EXCLUDED FROM THE PROFITS O F THE BUSINESS. IN OUR CONSIDERED OPINION, IT WAS NOT NECESSARY TO REFER TO T HE EXPLANATORY MEMORANDUM WHEN THE LANGUAGE OF EXPLANATION (BAA) TO SE CTION 80HHC WAS CLEAR THAT ONLY NINETY PER CENT. OF RECEIPTS BY WAY O F BROKERAGE, COMMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIM ILAR NATURE INCLUDED IN SUCH PROFITS COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS' OF AN ASSESSEE COULD BE DEDUCTED UNDER CLAUSE (1) OF EXPLANATION (BAA) A ND NOT NINETY PER CENT. OF THE QUANTUM OF ANY OF THE AFORESAID RECEIPT S WHICH ARE ALLOWED AS PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 6 EXPENSES AND, THEREFORE, NOT INCLUDED IN THE PROFITS OF BUSINESS OF THE ASSESSEE. 21. THE DR RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES. 22. WE HAVE GONE THROUGH THE ORDERS OF THE REVENUE A UTHORITIES AND ALSO THE ARGUMENTS TAKEN BY THE AR AND THE RELIANCE ON THE DECISION OF ACG ASSOCIATED CAPSULES PVT. LTD. ( SUPRA ). 23. THE ISSUE IS COVERED SQUARELY IN FAVOUR OF THE ASSES SEE, AS POINTED OUT BY THE AR. RESPECTFULLY FOLLOWING THE DECISION I N THE CASE OF ASSOCIATED CAPSULES LTD. ( SUPRA ), WE SET ASIDE THE ORDER OF THE CIT(A) ON THE IMPUGNED ISSUE AND DIRECT THE AO TO ALLOW THE DED UCTION U/S 80HHC, AS CLAIMED BY THE ASSESSEE IN ITS SECTION. 24. GROUND NO. 3 IS THEREFORE ALLOWED. 25. GROUNDS NO. 4 & 5 ARE NOT PRESSED, HENCE REJECTED. 26. GROUND NO. 6 PERTAINS TO THE ADDITION OF RS. 1,56,182/- ON ACCOUNT OF UNUTILIZED MODVAT CREDIT OUTSTANDING ON 31.03.20 04, WHICH HAS BEEN ADDED BACK IN THE VALUATION OF CLOSING STO CK AS PER SECTION 145A. 27. THE ISSUE WAS TAKEN UP BY THE AO IN THE ASSESSMEN T PROCEEDINGS AND THE EXPLANATION WAS CALLED FOR. THE ASSESS EE IN RESPONSE SUBMITTED THAT DURING THE YEAR WE HAVE RECEIVED CREDIT OF RS. 10,67, 239/- WHICH HAS BEEN REDUCED FROM THE PURCHASES. THERE IS NO UNUTILIZED MODVAT OUT OF THE CREDIT OF 2003-04. THERE IS NO SUCH PROVISION U/S 145A OF THE ACT TO IN CLUED THE UNUTILIZED MODVAT IN THE INCOME. THE UNUTILIZED MODVAT IS REQUIRED TO BE SHOWN AS CLOSING B ALANCE IN THE BALANCE-SHEET TO UTILIZE FOR THE NEXT YEAR. THE BALANCE WHICH WE HAVE SH OWN AS UNUTILIZED IS UTILIZED IN THE SUBSEQUENT YEAR. 28. THIS SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND HELD THAT THE AMOUNT OF RS. 1,56 ,182/- HAD TO BE ADDED TO THE VALUE OF CLOSING STOCK, AS PER THE PROVIS IONS OF SECTION 145A. THE AO APPLYING THE RATIO LAID DOWN IN THE CASE OF CIT VS BRITISH PAINTS INDIA LTD. REPORTED IN 188 ITR 44 (SC), HELD THAT VA LUATION OF PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 7 CLOSING STOCK WAS REQUIRED TO BE TAKEN. HE THEREFORE, ADD ED BACK THE FIGURE STANDING AS UNUTILIZED MODVAT AS ON 31.03.2004 TO TH E INCOME OF THE ASSESSEE. 29. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), WHO S USTAINED THE VIEW TAKEN BY THE AO. 30. THE ASSESSEE IS NOW BEFORE THE ITAT. 31. BEFORE US, THE AR POINTED OUT THAT THE ISSUE IS SQU ARELY COVERED BY THE DECISION OF COORDINATE BENCH AT MUMBAI IN THE CASE OF HAWKINS COOKERS LTD. VS ITO, ITA NO. 505/MUM/2004 ON THE ISSUE OF ADJUSTMENT IN THE VALUATION OF INVENTORIES. HE ALSO PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH AT MUMBAI IN THE CAS E OF R R KABEL LTD VS ADD. CIT REPORTED IN 54 SOT 374, WHEREIN IT HAS BEEN HELD (HEAD NOTE) SEC. 145A WHICH IS APPLICABLE TO YEAR UNDER CONSIDERA TION, AMOUNT OF TAX, DUTY, CESS ETC., IS LIABLE TO BE INCLUDED IN VALUE OF PURC HASES, SALES, OPENING AND CLOSING STOCK AND IT IS NOT APPROPRIATE TO INCLUDE . 32. IT HAS BEEN POINTED OUT BY THE AR THAT IN ASSESSM ENT YEAR 2006- 07, SIMILAR ADDITION WAS MADE. THIS ADDITION HAS BEEN DELETED BY THE CIT(A). THE AR FURTHER POINTED OUT THAT THE DEPARTMENT IS NOT IN APPEAL ON THE ISSUE BEFORE THE ITAT. 33. SINCE THE ISSUE HAS BEEN OPINED BY THE COORDINATE B ENCHES, WE FEEL THAT IN FITNESS OF CIRCUMSTANCES, THE AO MUST GIVE COMP REHENSIVE FINDING. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON T HIS ISSUE AND DIRECT THE AO TO RE-COMPUTE THE ADJUSTMENT U/S 1 45A AS PER THE DECISIONS OF THE COORDINATE BENCHES, AS CITED BY THE AR AND IN THE LIGHT OF SUCH VERIFICATION DONE BY THE AO, THE AO SHALL ALLOW THE C REDIT LAYING IN THE MODVAT ACCOUNT IN THE END OF THE YEAR. 34. THE GROUND NO. 6 IS, THEREFORE ALLOWED FOR STATISTICAL PURPOSES. PEDDINGT ON LUBRIMETAL PVT LTD. ITAS 3206/ & 3207/MUM/2012 8 35. THIS IS THE SOLE ISSUE AGITATED, IN APPEAL IN ITA NO. 3207/MUM/2012 FOR ASSESSMENT YEAR 2005-06. THE SAME D IRECTION IS GIVEN TO THE AO FOR ASSESSMENT YEAR 2005-06 (AS IN PARA S 31 TO 34, ABOVE) 36. ACCORDINGLY GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 37. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ASS ESSMENT YEAR 2004-05 IS PARTLY ALLOWED AND ASSESSMENT YEAR 2005-06 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2013. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE : 6 TH DECEMBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) ! !' ( ) - 13, $%& / THE CIT (A)-13, MUMBAI. 4) '!( -7, $%& / THE CIT-7 MUMBAI, 5) )*+ , , ! , , $%& / THE D.R. C BENCH, MUMBAI. 6) +- . COPY TO GUARD FILE. !/01 / BY ORDER / / TRUE COPY / / 2 / 3 %4 ! , , $%& DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *673 . . * CHAVAN, SR. PS