The ACIT,(OSD)Circle-8, Ahmedabad V. Sahajanand Laser Technology Limited, Gandhinagar

ITA 3342/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9156 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR SR DR
• Assessee Lawyers: VIJAY H PATEL
• Keywords: Depreciation; Business expenditure; Additional evidence; Competent authority; Benefit of exemption

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AN D SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 3342/AHD/2010 / ASSESSMENT YEAR: 2007-08 ACIT (OSD), CIRCLE-8, AHMEDABAD .. APPELLANT VS M/S. SAHJANAND LASER TECHNOLOGY LTD., E-30, GIDC ELECTRONIC ESTATE, SECTOR-28, GANDHINAGAR .. RESPONDENT PAN : AAGCS 1983 B REVENUE BY : SMT. SONIA KUMAR, SR-DR ASSESSEE(S) BY : SHRI VIJAY H. PATEL, AR / DATE OF HEARING 16/02/2016 /DATE OF PRONOUNCEMENT 22/03/2016 / O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMEDABAD DATED 30.09.2010 FOR ASSESSMENT YEAR 2007-08, ON THE FOLL OWING GROUNDS:- 1) THE LD. COMMISSIONER OF LNCOME-TAX(A)-XIV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE CLAIM OF THE ASSESSEE U/S.10A OF THE ACT AMOUNTING TO RS.5,30,76,095/-. 2) THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE CLAIM OF INTEREST EXPENSES OF RS. 15,21,790/-. 3) THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DISALLOWA NCE OF RS.1,00,000/- MADE OUT OF MISCELLANEOUS EXPENSES. ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 2 4) THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DISALLOWA NCE OF DEPRECIATION ON BUILDING AMOUNTING TO RS.3,37,157/- 5) THE LD. COMMISSIONER OF INCOME-TAX(A)-XIV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCES MADE U/S. 41(1) OF THE ACT AMOUNTING TO RS.13,34,951/-. 6) THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCES MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.1,12,368/- OUT OF STAFF WELFARE EXPENSES, RS.1,53,970/- OUT OF VEHICLE EXPENSES, AN D RS.13,05,162/- OUT OF TRAVELLING EXPANSES. 7) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)- XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. 8) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A)-XIV, AHMEDABAD MAY BE SET-ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURING OF LASER SYSTEM FOR MATERIAL PROCESSI NG AND OTHERS. THE ASSESSEE-COMPANY IS LOCATED WITHIN THE LIMITS OF SU RAT SPECIAL ECONOMIC ZONE. 2.1 THE FIRST ISSUE RAISED BY THE ASSESSEE-COMPANY, BEFORE US, IS WITH REGARD TO THE DISALLOWANCE OF RS.5,30,76,095/- MADE BY THE ASSESSING OFFICER U/S 10A OF THE INCOME-TAX ACT. THE BRIEF BA CKGROUND IN THIS REGARD, AS MENTIONED BY THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER, ARE AS UNDER:- 'THE APPELLANT FILED RETURN OF INCOME ON 30/10/2007 SHOWING TOTAL INCOME OF RS.1,47,41,231/-. THE APPELLANT COMPANY I S ENGAGED IN THE BUSINESS OF MANUFACTURING OF LASER SYSTEM FOR M ATERIAL PROCESSING AND OTHERS. IN RESPONSE TO NOTICE U/S.14 2(1) OF THE ACT ISSUED AND SERVED BY THE AO TO THE APPELLANT, CERTA IN DETAILS WERE FURNISHED BY THE APPELLANT. HAVING GONE THROUGH THE DETAILS, THE ASSESSING OFFICER HAS NOT ACCEPTED THE CLAIM OF THE APPELLANT U/S. 10A OF THE ACT ON THE FOLLOWING REASONS THAT ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 3 1. THE ASSESSEE HAS NOT FURNISHED AUDITOR'S CERTIFI CATE IN FORM NO. 56F FROM A CHARTERED ACCOUNTANT AS CONDITION STIPUL ATED IN SUB- SECTION (5) OF SECTION 10A OF THE IT ACT. THE RELEV ANT PART IS REPRODUCED HEREUNDER : '(5) THE DEDUCTION UNDER THIS SECTION SHALL NOT BE ADMISSIBLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR AFTER THE 1 ST DAY OF APRIL, 2001, UNLESS THE ASSESSEE FURNISHES IN THE P RESCRIBED FORM, ALONG WITH THE RETURN OF INCOME, THE REPORT O F AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB -SECTION (2) OF SECTION 288, CERTIFYING THAT THE DEDUCTION H AS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION.' 2. THE ASSESSEE HAS NOT FURNISHED ANY CERTIFICATE R EGARDING UNDERTAKING ESTABLISHED IN SPECIAL ECONOMIC ZONE FR OM COMPETENT AUTHORITY. 3. THE ASSESSEE HAS NOT STATED ABOUT THE USE OF OL D MACHINERIES AND WHETHER THE COMPANY WAS FORMED BY SPLITTING/ RECONS TRUCTION OF BUSINESS DESPITE OF GIVEN IT MANY OPPORTUNITIES OF BEING HEARD. 4. SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA SHOULD BE RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A P ERIOD OF SIX MONTHS FROM THE END OF PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. THE ASSESSEE VIDE VARIOUS ORDER SHEET ENTRIES AS NARRAT ED ABOVE WAS REQUESTED TO FURNISH BRCS IN THIS REGARD. THE ASSES SEE FURNISHED A CHART WHICH SHOWS THAT THERE WERE SALES IN VARIOUS CATEGORIES AS UNDER: (A) SALES AGAINST EPCG , RS. 26.6 5 CRORES (B) SALES WITHIN ZONE RS. 22.99 LACS (C) SALES TO EOU RS. 22.99 LACS (D)SALES (100% EXPORT) RS. 3.74 CRORES FURTHER THE ASSESSEE ON 24-12-2009, FURNISHED A COP Y OF FOUR BRCS ONLY. PERUSAL OF CHART AND BRCS REVEALS THAT THE ASSESSEE ITSELF EXPORTED TO THE EXTENT OF RS.26.65 CRORES ONLY. THE BALANCE SALES AS CLAIMED BY THE ASSESSEE FOR THE PURPOSE OF EXEMPTION U/S. 1 0A WERE NOT MADE BY THE ASSESSEE COMPANY. SUCH SALES WERE MADE BY OTHER PARTIES TO WHICH THE ASSESSEE COMPANY SOLD ARTICLES OR THINGS. THE ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 4 ASSESSEE COULD NOT EXPLAIN AS TO WHY SALES APART FR OM RS.26.65 CRORES WAS ELIGIBLE FOR EXEMPTION U/S. 10A OF THE A CT. FURTHER, FOR SALES OF RS.26.65 CRORES, IT WAS OBSERVED THAT TOTA L 119 INVOICES WERE RAISED WHICH COULD HAVE BEEN REALIZED WITHIN STIPUL ATED TIME LIMIT AS MENTIONED IN THE RELEVANT SECTION. HOWEVER, AGAI N SUCH 119 INVOICES, THE ASSESSEE COULD BE ABLE TO PRODUCE 4 B RCS ONLY. IN ABSENCE OF ANY EVIDENCES OF REALIZATION OF FOREIGN CONVERTIBLE EXCHANGE, THE CLAIM OF THE ASSESSEE CANNOT BE ACCEP TED. MOREOVER, THE ASSESSEE PRODUCED A BRC OF INVOICE NO.3 OF SALE S WHICH SHOWS THAT THE ASSESSEE HAD EXPORTED TO THE TUNE OF 13188 USD AND IN INDIAN CURRENCY THE AMOUNT WAS MENTIONED AS RS.1006 359 INSTEAD OF RS.572359 (13188 X 43.4). THUS, THE ASSESSEE HAS EXCESS CLAIMED TO THE TUNE OF RS.434000. FURTHER, THIS BRC SHOWS THAT RS.4 LACS ONLY WERE REALIZED AGAINST THIS INVOICE VIDE VARIOUS DAT ES FROM 26-6- 2006 TO 20-09-2006 AND DURING THE COURSE OF HEARING , THE AUTHORISED REPRESENTATIVE COULD NOT EXPLAIN THE BALANCE SUM WH ETHER THE SAME HAD BEEN REALIZED OR NOT. IN ABSENCE OF ANY EVIDENT IAL SUPPORT, THE CLAIM OF THE ASSESSEE IS NOT FOUND TENABLE . FURTHE R, INVOICE SHOWS THAT SALES OF RS.1061584 WERE MADE BUT RS.250000/- WERE REALIZED ONLY. LIKEWISE, INVOICE NO.13 REVEALS THAT AS AGAIN ST SALES OF RS.588610, THE SUM OF RS.5 LACS WERE RECEIVED ONLY. THIS ISSUE WAS 'DISCUSSED WITH THE AUTHORISED REPRESENTATIVE BUT H E WAS NOT ABLE TO EXPLAIN THE DISCREPANCIES FOUND DURING THE COURS E OF HEARING AS STATED ABOVE. THEREFORE, THE CLAIM OF THE ASSESSEE IS NOT FOUND TENABLE. 5. ON PERUSAL OF CHART OF 'SALES WITHIN ZONE' IT WA S FOUND THAT THE ASSESSEE HAD CLAIMED TO HAVE MADE SALES OF RS.22990 30. BUT OUT OF THESE SALES, A SUM OF RS.1499013 (199013+1300000) C OULD NOT BE REALIZED TILL DATE. AS PER SECTION 10A, THE, ASSESS EE CAN AVAIL THE BENEFIT OF EXEMPTION U/S. 10A IF SALE PROCEEDS ARE REALIZED WITHIN THE STIPULATED PERIOD. IN THIS CASE, SALES WERE NOT REALIZED TO THE TUNE OF RS.1499013/-. HOWEVER, THE ASSESSEE HAD CLA IMED EXEMPTION ON SUCH SALES FOR WHICH THE ASSESSEE WAS NOT ELIGIBLE. THEREFORE, THE CLAIM OF THE ASSESSES IS NOT ACCEPTA BLE. 6. FURTHER, ON PERUSAL OF CHART OF 'SALES TO EOU', IT WAS FOUND THAT THE ASSESSEE HAD CLAIMED TO HAVE MADE SALES OF RS.5 847405. BUT OUT OF THESE SALES, A SUM OF RS.4547200 COULD NOT BE RE ALIZED TILL DATE. AS STATED IN EARLIER PARA, THE ASSESSEE CANNOT CLAI M EXEMPTION ON SALES WHICH COULD NOT BE REALIZED. 7. AS PER SECTION 10A, EXPORT TURNOVER DOES NOT INC LUDE FREIGHT, TELECOMMUNICATION CHARGES, INSURANCE ATTRIBUTABLE T O THE DELIVERY ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 5 OF ARTICLES OR THINGS OUTSIDE INDIA. INVOICE NO. 6 DATED 9-9-2006 REVEALS THAT THE ASSESSEE HAD INCURRED USD 350 ON F REIGHT AMOUNT AND USD 250 ON INSURANCE. THUS, THE SUM OF RS.26883 (600 X 44.805) WAS INCURRED BY THE ASSESSEE. DURING THE COURSE OF HEARING, THE AUTHORISED REPRESENTATIVE STATED THAT NO SUCH EXPEN SES WERE EXCLUDED FROM EXPORT TURNOVER WHILE COMPUTING THE C LAIM OF EXEMPTION U/S. 10A OF THE ACT. THUS, IT IS VERY CLE AR THAT THE ASSESSEE DID NOT CONSIDER THIS ASPECT AS MENTIONED IN THIS SECTION ITSELF. SINCE THE ASSESSEE COULD PRODUCE ONLY 4 BRC S AS AGAINST AROUND 130 INVOICES, THEREFORE, THE QUANTUM OF DISC REPANCIES CANNOT BE IDENTIFIED. 8. THE ASSESSEE WAS REQUESTED TO PRODUCE PRODUCTION REGISTER OF THE UNIT, SALES OF WHICH WERE FALLING UNDER THE NET OF EXEMPTION U/S. 10A. BUT THE ASSESSEE DID NOT PRODUCE PRODUCTION RE GISTER DESPITE OF GIVEN IT MORE THAN REASONABLE OPPORTUNITIES. IN ABSENCE OF ANY VERIFICATION OF PRODUCTION DETAILS, THE CLAIM OF TH E ASSESSEE IS NOT ACCEPTED. 9. THE ASSESSEE HAS NOT FURNISHED THE WORKING OF EX EMPTION U/S. 10A. IN ABSENCE OF ANY WORKING, THE CLAIM OF THE AS SESSEE CANNOT BE VERIFIED. IN VIEW OF THE ABOVE NARRATED FACTS AND IN THE CIRC UMSTANCES, THE CLAIM OF EXEMPTION OF RS.58265233 IS DENIED. 2.2 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE AS SESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) GRANTED RELIEF TO T HE ASSESSEE AND THE SAME HAS BEEN OPPOSED ON BEHALF OF THE REVENUE, INTER ALIA , SUBMITTING THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWI NG THE CLAIM OF THE ASSESSEE U/S 10A OF THE ACT AMOUNTING TO RS.5,30,76 ,095. ACCORDINGLY, THE LD. DEPARTMENTAL REPRESENTATIVE PLEADED THAT TH E ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE SUPPORTED THE ORDER OF THE CIT(A). 3. AFTER GOING THROUGH THE RIVAL CONTENTIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD NOT FILED AUDITOR'S C ERTIFICATE IN FORM ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 6 NO.56F FROM A CHARTERED ACCOUNTANT AS CONDITION STI PULATED IN SUB- SECTION (5) OF SECTION 10A OF THE INCOME-TAX ACT. T HE CERTIFICATE REGARDING UNDERTAKING ESTABLISHED IN SPECIAL ECONOMIC ZONE FR OM COMPETENT AUTHORITY WAS ALSO NOT FURNISHED AT THE TIME OF ASS ESSMENT PROCEEDINGS. THE ASSESSEE HAD ALSO NOT FURNISHED ALL THE BANK RE ALIZATION CERTIFICATES (BRCS) FOR ALL THE EXPORTS. THE ASSESSEE HAS EXPORT ED THE ITEMS NOT DIRECTLY BUT THROUGH EPCG LICENSE HOLDERS. IN ANY C ASE, THE BRCS FOR EXPORTS MADE BY THE ASSESSEE WERE TO BE FURNISHED B EFORE THE INCOME-TAX AUTHORITIES FOR THE CLAIM OF EXEMPTION U/S. 10A OF THE ACT. THE ASSESSING OFFICER HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE COPY OF ONLY 4 BRCS WERE FURNISHED BY THE ASSESSEE ON 24.12.2009. THE CHART OF THE SALE OF THE EXPORTS HAS ALSO MENTIONED IN THE ASSESSMENT ORDER, WHICH READS AS UNDER (A) SALES AGAINST EPCG RS. 26.65 CRORES (B) SALES WITHIN ZONE RS. 22.99 LACS (C) SALES TO ECU RS. 22.99 LACS (D) SALES (100% EXPORT) RS. 3.74 CRORES 3.1 THE ASSESSING OFFICER HAS FURTHER MENTIONED THA T IN RESPECT OF SALE OF RS.26.65 CRORES, ONLY 119 INVOICES WERE RAISED W HICH WERE REALIZED WITHIN THE STIPULATED TIME. AS PER CIT(A), THE ASSE SSING OFFICER HAS MISTAKEN THE FACTS THAT THE NUMBER OF BRCS SHOULD B E THE SAME AS THE INVOICES RAISED BUT THE FACT IS OTHERWISE. IT IS NO T NECESSARY THAT WHATEVER THE NUMBER OF INVOICES HAS BEEN RAISED, THE BRCS SH OULD BE IN THE SAME NUMBER. MORE INVOICES CAN BE RAISED TO A SINGLE PARTY AND BRCS CAN BE ONLY ONE. THEREFORE, THE ASSESSING OFFICER HAS FUR THER RAISED THE QUESTION THAT SALES WITHIN ZONE, SALES TO EOU AND SALES (100 % EXPORT) DID NOT QUALIFY FOR EXEMPTION U/S. 10A OF THE ACT. THE CIT (A) WAS OF THE OPINION THAT THE ASSESSING OFFICER HAS MISTAKEN T HIS FACT ALSO THAT THE SALES MADE AS MENTIONED ABOVE IN CATEGORY B, C & D ARE DOMESTIC SALES ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 7 AND DO NOT QUALIFY FOR EXEMPTION U/S. 10A. IT IS UN DISPUTED FACT THAT THE UNIT OF THE ASSESSEE- COMPANY IS SITUATED IN THE SP ECIAL ECONOMIC ZONE AT SURAT AND, HENCE, ALL SALES AFFECTED FROM THE COMPA NY FROM THE SEZ IN ANY TERRITORY EVEN IN INDIA, QUALIFY AS EXPORT AND PROFITS EARNED BY SUCH ACTIVITY IS ELIGIBLE FOR EXEMPTION U/S. 10A OF THE ACT. AS PER PROVISIONS OF SUB-SECTION 1 OF SECTION 10A, THE DEDUCTION MENT IONED IN SUB-SECTION 1 IN COMPUTING THE TOTAL INCOME OF THE UNDERTAKING IN ANY SPECIAL ECONOMIC ZONE SHALL BE 100%. IN THE CASE OF ASSESSE E-COMPANY, THE SALES WITHIN ZONE, SALES OF EOU AND SALES (100% EXPORT) O F RS.22.99 LACS, RS.58.47 LACS AND RS.3.74 CRORES RESPECTIVELY, TOTA LING TO RS.4.55 CRORES WAS DEDUCTED FROM THE TOTAL INCOME OF THE ASSESSE E. 3.2 THE CIT(A) FURTHER FOUND THAT ALTHOUGH THE ASSE SSEE WAS HAVING ALL THE NECESSARY CERTIFICATES IN FORM NO.56F AND BRCS BUT WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER; THEREFORE, T HE ASSESSING OFFICER HAD NOT ALLOWED THE EXEMPTION U/S. 10A OF THE ACT C LAIMED BY THE ASSESSEE. THE ASSESSEE FILED ADDITIONAL EVIDENCE ON 02.03.2010 I.E. FORM- 56F AND FEW BANK REALIZATION CERTIFICATES BEFORE TH E CIT(A). BEFORE THE CIT(A), THE AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE TOOK A PLEA THAT THE MANAGING DIRECTOR OF THE COMPANY SHRI ARVINDBHA I PATEL SUFFERED A PARALYTIC STROKE AND WAS UNDER MEDICAL OBSERVATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER, THE CONCERNED OFFI CIAL OF THE COMPANY WAS LOOKING AFTER ITS BANKING OPERATIONS VIZ. SHRI RAJESH SUDDENLY FELL UNCONSCIOUS WHILE PERFORMING HIS DUTIES IN THE PREM ISES OF THE ASSESSEE- COMPANY. HE WAS ALSO ADMITTED TO THE HOSPITAL AND, THEREFORE, HE COULD NOT GATHER THE RELEVANT DOCUMENTS IN TIME AND AS A RESULT THE ASSESSEE- COMPANY WAS UNABLE TO PRODUCE THE SAME BEFORE THE C ONCERNED ASSESSING OFFICER. THE COPIES OF MEDICAL CERTIFICAT E OF SHRI ARVIND PATEL AND SHRI RAJESH WERE PRODUCED BEFORE THE CIT(A) AND HAVING CONSIDERED ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 8 THE SAME, THE CIT(A) FOUND MERITS IN THE ADDITIONAL EVIDENCE AND ACCEPTED THE SAME. SUBSEQUENTLY, THE SAME WERE SEN T TO THE ASSESSING OFFICER FOR HIS COMMENTS UNDER RULE 46A. THE CONCE RNED ASSESSING OFFICER FURNISHED THE REMAND REPORT VIDE LETTER DAT ED 07.05.2010. A COPY OF THE REMAND REPORT WAS PROVIDED TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE AUTHORIZED REPRESENTATIVE FURNISH ED THE COMMENTS ON REMAND REPORT VIDE LETTER DATED 28.05.2010 AND HE H AD ALSO FURNISHED CALCULATION OF EXEMPTED AMOUNT AND OTHER AMOUNT AS WELL. AN AMOUNT OF RS.1,75,93,582/- WAS NOT RECEIVED WITHIN THE PERIOD OF 6 MONTHS AS STIPULATED IN THE SECTION. FURTHER RS.91,75,435/- O N ACCOUNT OF SALES WITHIN ZONE, SALES TO EOU AND SALES 100% EXPORT WER E NOT RECEIVED IN TIME. THUS, THE TOTAL AMOUNT OF RS.2,67,68,997/- WA S NOT RECEIVED BY THE COMPANY WITHIN THE STATUTORY TIME LIMIT AS PRESCRIB ED UNDER THE ACT. THEREFORE, THE DEDUCTION CLAIMED BY THE ASSESSEE U/ S. 10A OF THE ACT WAS DIRECTED TO BE REVISED PROPORTIONATELY. BEFORE THE CIT(A), THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURNISHED THE WORKIN G VIDE LETTER DATED 03.06.2010. AS PER THE SAID WORKING, ON AN AMOUNT O F RS.30,05,70,495/-, IF THE CLAIM AMOUNT WAS RS.5,82,65,233/-, THEN ON RS.2 ,67,68,997/- THE PROPORTIONATE DISALLOWANCE CAME TO RS.51,89,138/-. THEREFORE, THE SAID AMOUNT OF RS.51,89,138/- WAS DIRECTED TO BE DEDUCTE D FROM THE TOTAL AMOUNT OF CLAIM OF RS.5,82,65,233/-. THUS, ALLOWABL E CLAIM U/S. 10A OF THE ACT WAS OF RS.5,30,76,095/-. THEREFORE, THE CLA IM U/S.10A OF THE ASSESSEE-COMPANY WAS RIGHTLY ALLOWED TO THE EXTENT OF RS.5,30,76,095/- AND REST WAS RIGHTLY DISALLOWED BY THE CIT(A). NO INTERFERENCE IS CALLED FOR AND WE UPHOLD THE ORDER OF THE CIT(A) IN THIS R EGARD. 4. NEXT ISSUE IS WITH REGARD TO THE DISALLOWANCE OF INTEREST EXPENSES OF RS.15,21,790/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE PAID INTEREST OF RS.68,94,829/- DURING THE YEAR UNDER CO NSIDERATION AS AGAINST ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 9 RS.69,88,315/- IN THE LAST YEAR. THE ASSESSING OFF ICER FURTHER FOUND THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOANS AND ADVA NCES TO VARIOUS PARTIES TO THE EXTENT OFRS.1,26,80,993/-. THE ASSESSING OF FICER, WITHOUT DISCUSSING THE FACTS OF THE ISSUE IN DETAILS, RELYI NG ON THE DECISION IN THE CASE OF CIT VS. ABISHEK INDUSTRIES LTD [2006] 156 T AXMAN 257 (P&H), DISALLOWED THE CLAIM OF INTEREST EXPENSES AMOUNTING TO RS.15,21,790/-. 4.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE AS SESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) DELETED THE DISALLO WANCE IN QUESTION, WHICH HAS BEEN OPPOSED ON BEHALF OF THE REVENUE, INTER ALIA , SUBMITTING THAT THE CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF INTEREST EXPENSES OF RS.15,21,790/-. ON THE OTHER HAND, LD. AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A) AND SUBM ITTED THAT THE ASSESSEE HAD SUFFICIENT SURPLUS FUND TO ADVANCE LOA NS WITHOUT INTEREST. HE FURTHER SUBMITTED THAT THE UNSECURED/SECURED LOA N AMOUNT ON WHICH INTEREST HAS BEEN PAID WAS LESS THAN THE FUND AVAIL ABLE WITH THE COMPANY IN THE FORM OF SHARE CAPITAL/RESERVE SURPLUS. THE BREAK-UP OF THE SAME HAS BEEN STATED AS UNDER:- SHARE CAPITAL RS.10,30,45,000/- RESERVE SURPLUS RS. 9,63,57,283/- SECURED LOANS RS. 2,20,80,792/- SHARE APPLICATION MONEY RS. 2,17,75,000/- ---------------------- TOTAL RS.24,32,58,075/- ============ 4.2 WE FIND THAT THAT ASSESSEE HAS PAID THE INTERES T ON THE BORROWED FUND AND HAS ALSO ADVANCED LOAN BUT DID NOT CHARGE ANY INTEREST ON THAT BECAUSE IT WAS THE BUSINESS/COMMERCIAL NECESSITY TO TAKE AND GIVE THE LOAN SIMULTANEOUSLY FOR BUSINESS PURPOSE. AS THE A SSESSEE WAS HAVING FUND MORE THAN THE AMOUNT OF ADVANCE GIVEN WITHOUT INTEREST, IT DID NOT ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 10 CAUSE ANY ADVERSE EFFECT ON THE BUSINESS PRUDENCE. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS RIGH TLY DELETED BY THE CIT(A) AND THESE REASONED FINDINGS OF THE CIT(A) DO NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. NEXT ISSUE IS WITH REGARD TO THE DISALLOWANCE OF MISCELLANEOUS EXPENSES OF RS.1 LAKH. THE ASSESSING OFFICER HAS D ISALLOWED RS.1 LAKH OUT OF TOTAL EXPENSES OF RS.9,44,247/- ON THE GROUN D OF POSSIBILITY OF NON- BUSINESS EXPENSES. 5.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED BY THE ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) DELETED THE DISALLOWANCE IN QU ESTION AMOUNTING TO RS.1 LAKH. REVENUE HAS OPPOSED THE ORDER OF THE C IT(A), INTER ALIA , SUBMITTING THAT THE CIT(A) ERRED IN ALLOWING THE DI SALLOWANCE OF RS.1 LAKH MADE OUT OF MISCELLANEOUS EXPENSES AND ACCORDI NGLY, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ORDE R OF THE CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED . ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF TH E CIT(A) AND SUBMITTED THAT THE EXPENSES INCURRED BY THE ASSESSE E-COMPANY ARE WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE BUSIN ESS OF THE ASSESSEE AND THERE WAS NO ELEMENT OF PERSONAL EXPENSES. HE F URTHER SUBMITTED THAT THE SAID DISALLOWANCE WAS MADE ON AD-HOC BASIS AND THE ORDER OF THE CIT(A) BE UPHELD. 5.2 WE FIND THAT THE ASSESSING OFFICER, WITHOUT PUT FORTH ANY COGENT REASONS, HAS MADE THE AD-HOC DISALLOWANCE IN QUESTI ON. THE ASSESSING OFFICER HAS ALSO NOT RECORDED ANY SPECIFIC REASONS OR EVIDENCES WHICH CAN BE CATEGORIZED AS THAT OF PERSONAL NATURE; THEREFOR E, THE CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO DELETE TH E DISALLOWANCE IN ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 11 QUESTION. THIS REASONED FINDING OF THE CIT(A) NEED S NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 6. NEXT ISSUE IS WITH REGARD TO THE DISALLOWANCE OF DEPRECIATION ON BUILDING AMOUNTING TO RS.3,37,157/-. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEPRECIATION AMOUNTING TO R S.3,37,157/- ON BUILDING SITUATED AT A/8, GANDHINAGAR WHICH WAS PUR CHASED ON 27.03.2007 BY EXECUTING DEED OF CONVEYANCE. THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAS FILED TO FURNISH ANY EVIDENCES IN SUPPORT OF ITS CLAIM WITH REGARD TO THE DEPRECIATION EXCEPT DE ED OF CONVEYANCE AND LIGHT BILL. IN LIMINIE, THE ASSESSING OFFICER DISAL LOWED CLAIM OF DEPRECIATION OF THE ASSESSEE. IN APPEAL BEFORE THE CIT(A), THE SAME WAS ALLOWED ON THE GROUND THAT THE ASSESSEE WAS FULLY E LIGIBLE FOR THE CLAIM OF DEPRECIATION AS THE EVIDENCES LIKE DEED OF CONVEYAN CE AND LIGHT BILL PRODUCED BY THE ASSESSEE SIGNIFIES THAT THE ASSESSE E HAD INFACT USED THE BUILDING IN THE YEAR UNDER CONSIDERATION. THE CIT( A) ALSO OBSERVED THAT THE WHEN THE BUILDING IS READY AND PUT TO USE BY TH E ASSESSEE, THERE IS NO GROUND OF DISALLOWANCE. THESE REASONING FINDINGS O F THE CIT(A) DO NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE; WE UPHOLD T HE SAME. 7. NEXT ISSUE IS WITH REGARD TO THE DISALLOWANCE U/ S 41(1) AMOUNTING TO RS.13,34,951/-. THE ASSESSING OFFICER IN THE A SSESSMENT ORDER HAS HELD THAT AS THE ASSESSEE HAS FAILED TO EXPLAIN WHY PAYMENTS WERE NOT MADE TO THE EIGHT PARTIES IN THE SUBSEQUENT YEARS W HEN PURCHASES WERE BOOKED LONG BACK, THE SAID LIABILITIES NEEDS TO BE DISALLOWED. THE ASSESSING OFFICER DID NOT FIND THE EXPLANATION OF T HE ASSESSEE TENABLE AND DISALLOWED THE SAID AMOUNT U/S. 41(1) OF THE ACT. 7.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY AND HAVING CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, THE CIT (A) GRANTED RELIEF TO ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 12 THE ASSESSEE. THE ORDER OF THE CIT(A) HAS BEEN OPP OSED BY THE REVENUE, INTER ALIA , SUBMITTING THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE U/S 41(1) OF THE ACT, AMOUNTING T O RS.13,34,951/-. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPO RTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT ALL THE LIABILITIES ARE S TILL IN EXISTENCE AND NEITHER THE ASSESSEE NOR THE CREDITORS HAVE WRITTEN OFF THE SAID LIABILITIES FROM THEIR RESPECTIVE BOOKS OF ACCOUNTS. HE FURTHER CONTENDED THAT THERE ARE TWO CONDITIONS STIPULATED U/S. 41(1) OF THE ACT WHICH NEEDS TO BE SATISFIED BEFORE DISALLOWANCE U/S. 41(1) AND THEREF ORE IN THE PRESENT CASE THE PROVISIONS OF THE SAID SECTION ARE NOT ATTRACTE D. MOREOVER, BEFORE THE CIT(A), THE AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE HAS PRODUCED CONFIRMATION OF SOME OF THE PARTIES IN CONSIDERATIO N OF ITS CLAIM. AGREEING TO THE CONTENTION OF THE ASSESSEE IN THIS REGARD, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION IN QUESTION. FO R ATTRACTING PROVISIONS OF SEC. 41(1) OF THE ACT, THE LIABILITY OF THE ASSESSE E MUST HAVE SEIZED AND THERE SHOULD NOT BE ANY POSSIBILITY OF REVIVAL IN F UTURE. THE ASSESSING OFFICER THOUGH HAS HELD THAT SEC. 41(1) OF THE ACT WAS ATTRACTED BUT HAS FAILED TO STATE ANY REASONS FOR THE SAME. MOREOVER WHEN THE CONFIRMATIONS OF CONCERNED PARTIES WERE PRODUCED BE FORE THE CIT(A), HE RIGHTLY OBSERVED THAT LIABILITY IS STILL IN EXISTEN CE. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION IN QUESTION AND WE UPHOLD THE SAME. 8. NEXT ISSUE IS WITH REGARD TO THE STAFF WELFARE E XPENSES OF RS.1,12,368/-, VEHICLE EXPENSES OF RS.1,53,970/- AN D TRAVELLING EXPENSES OF RS.13,05,162/-. THE ASSESSING OFFICER HAS DISA LLOWED THE AFORESAID EXPENSES. BEFORE THE CIT(A), THE ASSESSEE VIDE ITS SUBMISSIONS DATED 15.04.2010 PROVIDED A DETAILED WORKING OF THE FRING E BENEFIT TAX PAID BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. THE CIT(A), HAVING ITA NO. 3342/AHD/2010 ACIT VS. SAHJANAND LASER TECHNOLOGY LTD AY : 2007-08 13 CONSIDERED THE SAME, HELD THAT THE ASSESSEE HAD ALR EADY PAID FRINGE BENEFIT TAX ON THESE EXPENSES AND THEY COULD NOT BE BROUGHT TO TAX ONCE AGAIN. THUS, IN OUR OPINION, THE CIT(A) HAS RIGHTL Y DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THESE COUNTS AS THE ASSESSEE HAD ALREADY PAID FRINGE BENEFIT TAX ON THE SE EXPENSES. THESE REASONED AND FACTUAL FINDINGS OF THE CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 22 ND MARCH, 2016 AT AHMEDABAD. SD/- SD/- ANIL CHATURVEDI SHAILEND RA K. YADAV (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD; DATED 22/03/2016 BIJU T., PS !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / D R, ITAT, AHMEDABAD 6. (- . / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD