ACIT, Patiala V. M/s Groz Beckert Asia Pvt., Chandigarh

ITA 336/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57751 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: C S AGGARWAL; B M KHANNA
• Keywords: Capital asset; Rule of consistency; Notional interest; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 336/CHD/11 ASSESSMENT YEAR: 2006-07 THE ACIT, VS M/S GROZ BECKERT ASIA PVT LTD., CIRCLE, CHANDIGARH PATIALA PAN NO. AAACG5236F (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI KUMARI, CIT DR RESPONDENT BY : S/SHRI C.S.AGGARWAL & B.M.KHANNA DATE OF HEARING : 15.03.2012 DATE OF PRONOUNCEMENT : 16.03.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A), PATIALA DATED 10.2.2011 RELATING TO ASSESSM ENT YEAR 2006-07. 2. GROUND OF 1 OF THE APPEAL READS AS UNDER:- 1. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CITA) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS. 1,27,900/- ON ACCOUNT OF CORPORATE MEMBERSHIP F EE PAID TO GOLF CLUB AS A CAPITAL EXPENDITURE, PARTICU LARLY WHEN THE DEPARTMENT IS ALREADY IN APPEAL ON THE ISS UE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FO R EARLIER YEARS. 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND DERIVES INCOME FROM MANUFACTURI NG & TRADING OF NEEDLES FOR TEXTILE AND HOSIERY INDUSTRY. THE ASSES SING OFFICER MADE ADDITION OF RS. 1,27,900/- TREATING THE SAME AS CAPITAL EXPE NDITURE. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 3 OF THE A SSESSMENT ORDER. ON A PERUSAL OF THE AUDITORS REPORT IN FORM NO. 3CD AT S. NO. 17(D), HE NOTICED THAT A SUM OF RS. 1,27,900/- WAS DEBITED IN THE PRO FIT AND LOSS ACCOUNT ON ACCOUNT OF CORPORATE MEMBERSHIP FEE PAID TO GOLF CL UB, CHANDIGARH. ACCORDING TO ASSESSING OFFICER, THE SAID EXPENDITUR E WAS CAPITAL IN NATURE AND WERE PERSONAL EXPENSES OF THE M.D. AND OTHER EM PLOYEES OF THE COMPANY. THUS, THE ASSESSING OFFICER MADE ADDITION OF RS. 1, 27,900/-. 4. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE FOR THE REASONS STATED IN PARA 4.3 OF THE IMPUGNED ORDER. WHILE DO ING SO, THE CIT(A) HAS FOLLOWED THE ORDERS OF THE TRIBUNAL PASSED IN ASSES SEES CASE FOR EARLIER YEARS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SMT. JYOTI KUMARI, CIT DR RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF PU NJAB & HARYANA IN THE CASE OF CIT-I LUDHIANA VS M/S MAJESTIC AUTO LTD I N ITA NO. 448 OF 2007 ORDER DATED 11.9.2008 AND SUBMITTED THAT EXPENDITUR E OF SUM OF RS. 1,27,900/- DEBITED IN THE PROFIT AND LOSS ACCOUNT O F CORPORATE MEMBERSHIP FEE PAID TO GOLD CLUB, CHANDIGARH WAS CAPITAL IN NATURE AND WERE PERSONAL EXPENSES OF M.D. AND OTHER EMPLOYEES OF THE COMPANY . ON THE OTHER HAND, SHRI C.S.AGGARWAL LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE SAID 3 DECISION IS ENTIRELY DISTINGUISHABLE ON FACT OF THE INSTANT CASE AND HAS NO APPLICATION TO THE FACTS OF THE INSTANT CASE. ACCO RDING TO SHRI C.S. AGGARWAL, LD. COUNSEL FOR THE ASSESSEE, IN THE ABOVE CASE, TH E ENTRANCE FEE WAS PAID FOR ONE OF THE DIRECTORS ONCE FOR ALL, WHEREAS IN THE I NSTANT CASE, IT IS TO BE PAID IN ADVANCE EVERY FIVE YEARS. THE ENTRANCE FEE WAS FIRST PAID IN THE FINANCIAL YEAR 1995-96 IN ADVANCE FOR FIVE YEARS, WHEN THE DE DUCTION SOUGHT WAS CLAIMED AND ALLOWED. IT WAS ALSO SUBMITTED BY SHR I C.S. AGGARWAL, LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE BEING TH E SUBSIDIARY OF THE GROZ- BECKERT KG OF GERMANY, IMPORTANT BUSINESS ASSOCIATE S FROM GERMANY AND OTHER FOREIGN COUNTRIES VISIT THE ASSESSEE COMPANY FOR THE BUSINESS PURPOSE THROUGHOUT THE YEAR AND, THE RESPONDENT ORGANIZES B USINESS MEETING WITH SUCH PERSONNEL. IT WAS ALSO SUBMITTED THAT TO BE COST E FFECTIVE, ASSESSEE COMPANY IN THE YEAR 1995, TOOK A DECISION TO OBTAIN A CORPO RATE MEMBERSHIP OF CHANDIGARH GOLF CLUB, APPRECIATING THE OBJECTIVES A ND BUSINESS ADVANTAGES, THE BOARD OF DIRECTORS OF THE COMPANY ACCORDED ITS APPROVAL TO THE CORPORATE MEMBERSHIP IN ITS MEETING HELD ON 27.3.1995. THE ASSESSEE TOOK THE MEMBERSHIP OF THE CLUB AND NOMINATED ITS FOUR SENIO R EMPLOYEES. AS PER THE TERMS OF THE MEMBERSHIP GRANTED BY THE CLUB, THE AS SESSEE WAS REQUIRED TO DEPOSIT A SUM AS ENTRANCE FEE TO BE PAID ONCE IN FI VE YEARS AND A FURTHER SUM PER MEMBER PER YEAR. THIS EXPENDITURE WAS FIRST TI ME INCURRED IN THE ASSESSMENT YEAR 1996-97 AND SUCH EXPENDITURE WAS BE ING INCURRED BY THE ASSESSEE YEAR AFTER YEAR AND TILL THE ASSESSMENT YE AR 2000-2001, NO DISALLOWANCE HAS BEEN MADE. AGAIN WHEN THE SAME WA S PAID IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2001-02 AND THEREAF TER IT WAS DISALLOWED. SHRI C.S. AGGARWAL, LD. COUNSEL FOR THE ASSESSEE FU RTHER SUBMITTED THAT SUCH EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSES OF T HE BUSINESS, AS IS EVIDENT 4 FROM THE FACT THAT CORPORATE MEMBERSHIP ITSELF MEAN S IT WAS FOR THE BENEFIT OF THE ASSESSEE AND NOT FOR ANY PARTICULAR EMPLOYEE, A S IT HAD A RIGHT TO NOMINATE AND SUBSTITUTE AN EMPLOYEE AT ANY POINT OF TIME. A CCORDING TO SHRI C.S. AGGARWAL, LD. COUNSEL FOR THE ASSESSEE, ENTRANCE FE E PAID TOWARDS CORPORATE MEMBERSHIP IS AN EXPENDITURE INCURRED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS AND NOT TOWARDS CAPITAL ACCOUNT AS IT ONLY FACILITATES SMOOTH AND EFFICIENT RUNNING OF A BUSINESS ENTERPRI SE AND DOES NOT ADD TO THE PROFIT EARNING APPARATUS OF A BUSINESS ENTERPRISES. FURTHER, IT IS NOT A PAYMENT ONCE FOR ALL, BUT IS PAYABLE AFTER EVERY FI VE YEARS. SHRI C.S. AGGARWAL, VEHEMENTLY ARGUED THAT ASSESSEE HAS NOT A CQUIRED ANY ENDURING BENEFIT AS SUCH, PAYMENT IS NOT A CAPITAL EXPENDITU RE. 6. IN OUR VIEW THERE IS A MERIT IN THE ABOVE SUBMIS SIONS OF SHRI C.S. AGGARWAL, LD. COUNSEL FOR THE ASSESSEE AND WE HOLD THAT THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT REFERRED TO ABOVE IS DISTINGUISHABLE ON FACTS AND HENCE NOT APPLICABLE. WE ALSO OBSERVE T HAT IN EARLIER YEARS, THE TRIBUNAL HAS ALLOWED SUCH EXPENDITURE. TAKING INTO CONSIDERATION THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE B Y THE DECISION OF THIS BENCH OF THE TRIBUNAL DATED 27.3.2008 IN ASSESSEES CASE IN ITA NO. 808/CHD/2007 RELATING TO ASSESSMENT YEAR 2004-05. WHILE DECIDING A SIMILAR ISSUE IN ASSESSMENT YEAR 2004-05, THE TRIBUNAL HELD AS UNDER:- 4. IN THIS BACKGROUND WE FIND NO ERROR IN THE APPR OACH OF THE CIT(A) IN DELETING THE ADDITION SINCE THE TRIBU NAL IN THE ASSESSMENT YEAR 2001-02 VIDE ORDER IN ITA NO. 175/CHANDI/2006 DATED 24.08.2007 DISMISSED THE APPE AL OF THE REVENUE ON THIS ISSUE. THE OPERATIVE PORTION OF THE ORDER 5 OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 REA DS AS UNDER :- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. OSTENSIBLY, THE MEMBERSHIP OF THE CLUB HAS BEEN ACQUIRED BY THE ASSESSEE FOR THE USE OF ITS PERSONNEL. THE CIT(APPEALS) HAS ACCEPTED THE PLEA OF THE ASSESSEE THAT THE MEMBERSHIP OF CLUB WAS OBTAINED FOR BUSINESS PURPOSES IN AS MUCH AS IT FACILITATED INTERACTION WITH THE BUSINESS ASSOCIATE S ETC. THE DECISION OF THE CIT(APPEALS), IN OUR VIEW IS IN CONSONANCE WITH THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF OTIS ELEVATOR COMPANY (I) LIMITED (SUPRA). THE PLEA OF THE REVENUE THAT THE MEMBERSHIP OF THE CLUB PROVIDES AN ENDURING BENEFIT AND THEREFORE THE EXPENDITURE INCURRED IS OF CAPITAL NATURE, IN OUR VIEW, IS UNSUSTAINABLE. NO DOUBT, PAYMENT OF MEMBERSHIP FEE RESULTS IN OBTAINING OF CLUB MEMBERSHIP FOR A PERIOD BEYOND THE YEAR OF PAYMENT BUT THE BENEFIT REMAINS IN THE REVENUE FIELD AND NOT IN THE CAPITAL FIELD. RESULTANTLY, THE EXPENDITURE INCURRED ON ACQUIRING AN ENDURING BENEFIT IN THE REVENUE FIELD IS LIABLE TO BE TREATED AS A REVENUE EXPENDITURE. A GAINFUL REFERENCE CAN BE MADE TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF EMPIRE JUTE CO. LTD. 124 ITR 1 (SC) IN THIS REGARD. FURTHER, THE HON'BL E HIGH COURT OF GUJRAT IN THE CASE OF GUJRAT STATE EXPORT CORPORATION (SUPRA) HAS HELD THAT THE ACQUISITION OF CLUB MEMBERSHIP RESULTS IN AN ADVANTAGE IN THE COMMERCIAL SENSE AND NOT IN THE CAPITAL FIELD. ON THE BASIS OF THE AFORESAID DISCUSSION, WE DO NOT FIND ANY JUSTIFIABLE REASON T O INTERFERE WITH THE DECISION OF THE CIT(APPEALS) ON THIS ISSUE. ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN THE ASSESSEE OWN CASE FOR THE ASSESSMEN T YEAR 2001-02 (SUPRA) WE DISMISS THIS GROUND OF APPE AL OF THE REVENUE . 7. THERE IS NO MATERIAL CHANGE IN THE FACTS AS COMP ARED WITH THE FACTS OF THE CASE FOR ASSESSMENT YEAR 2004-05. RESPECTFULLY , FOLLOWING THE ORDER OF 6 THE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05, WE DO NOT SEE ANY MERIT IN THIS GROUND OF APPEAL AND ACCORDINGLY WE DISMISS THE SAM E. 8. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS. 11,98,032/- MADE U/S 36(1)(III) ON ACCOUNT LENDING LOAN OUT OF BUSINESS FUNDS AT A LOWER RATE OF INTEREST T O THE PRESIDENT, VICE PRESIDENT AND EMPLOYEES, WHILE THE ASSESSEE HAD BORROWED FUNDS AT A HIGHER RATE, PARTICULARLY WHEN DEPARTMENT IS ALREADY IN APPEAL O N THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S O WN CASE FOR EARLIER YEARS. 9. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFI CER DISALLOWED RS. 11,98,032/- U/S 36(1)(III) OF THE INCOME TAX ACT, 1 961 (IN SHORT 'THE ACT'). THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN P ARA 4 OF THE ASSESSMENT ORDER. DURING THE ASSESSMENT PROCEEDINGS, THE ASSE SSING OFFICER NOTICED THAT THE INTEREST RECEIVABLE CALCULATED BY TAKING THE AV ERAGE IN THE ACCOUNT OF ADVANCES GIVEN TO VICE PRESIDENT / MANAGER AND EMPL OYEES OF THE COMPANY, WHERE THE OPENING BALANCE WAS RS. 1,51,19,550/- AND THE CLOSING BALANCE OF RS. 1,52,59,994/- WORKED OUT TO RS. 15,18,977/-. T HE ASSESSEE HAD RECEIVED ONLY RS. 3,20,945/-, THUS THE DIFFERENCE OF RS. 11, 98,032/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 10. ON APPEAL, THE CIT(A) DELETED THE ADDITION FOLL OWING THE ORDERS OF THE TRIBUNAL FOR EARLIER YEARS IN ITA NOS. 175/CHD/2006 , 942/CHD/2006, 782/CHD/2007 AND 885/CHD/2009 DATED 24.8.2007, 26.1 1.2007, 27.3.2008 AND 21.12.2009 RESPECTIVELY. 7 11. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND T HAT A SIMILAR ISSUE CAME UP FOR CONSIDERATION IN ASSESSEES CASE FOR THE ASS ESSMENT YEAR 2004-05 IN ITA NO. 808/CHD/2007 BEFORE THIS BENCH OF THE TRIB UNAL. 12. THE TRIBUNAL VIDE ITS ORDER DATED 27.3.2008, HE LD AS UNDER:- 5. THE SECOND GROUND OF APPEAL OF THE REVENUE READ S AS UNDER:- (I) IN DELETING THE DISALLOWANCE OF RS.17,70,003/- MADE UNDER THE PROVISIONS OF SECTION 36(1)(III) OF THE I. T. ACT,1961 ON A/C OF NOTIONAL INTEREST ON THE LOANS GIVEN TO ITS EMPLOYEES/DIRECTORS. THE FACTUAL POSITION IS THAT THE ASSESSEE HAD ADVAN CED LOANS TO ITS EMPLOYEES AT A CONCESSIONAL RATE OF INTEREST , WHICH WAS LOWER THAN THE RATE AT WHICH THE ASSESSEE WAS BORRO WING FUNDS FROM THE BANKS. THE ASSESSING OFFICER MADE A DISALLOWANCE OF RS.17,70,003/- UNDER SECTION 36(1)( III) OF THE INCOME TAX ACT,1961 (IN SHORT THE ACT ) ON TH E GROUND THAT A PART OF THE INTEREST BEARING FUNDS BORROWED BY THE ASSESSEE WAS NOT UTILIZED BY THE ASSESSEE FOR THE P URPOSE OF ITS BUSINESS SINCE ADVANCES MADE TO THE EMPLOYEES W ERE AT NIL/CONCESSIONAL RATE OF INTERESTS. A SIMILAR DISAL LOWANCE WAS MADE IN ASSESSMENT YEAR 2001-02 WHICH WAS DELET ED BY THE CIT(A). THE TRIBUNAL VIDE PARA 6 TO 9 OF ITS OR DER FOR THE ASSESSMENT YEAR 2001-02 (SUPRA) HAS AFFIRMED THE OR DER OF THE CIT(A) FOR THAT YEAR. FOR THE YEAR UNDER APPEAL , BOTH PARTIES STATED THAT THERE WAS NO DIFFERENCE OF FACT S, WE THEREFORE ADOPT THE REASONING ADVANCED BY THE TRIBU NAL FOR THE ASSESSMENT YEAR 2001-02 (SUPRA) TO DECIDE THIS GROUND OF APPEAL. THE OPERATIVE PORTION OF THE ORDER OF THE T RIBUNAL FOR THE ASSESSMENT YEAR 2001-02 IS REPRODUCED HEREI NAFTER TO FACILITATE THE APPRECIATION OF THE REASONING LAID D OWN BY THE TRIBUNAL TO DELETE THE ADDITION:- ON THIS ISSUE WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SECTION 36(1)(III) PERMITS DEDUCTION F OR INTEREST EXPENDITURE IF THE BORROWED FUNDS ARE UTIL IZED FOR THE PURPOSES OF BUSINESS. IN THE INSTANT CASE THE ASSESSEE HAS RAISED BORROWINGS FROM BANK ON WHICH I T WAS PAYING INTEREST. ON THE OTHER HAND THE ASSESSEE 8 HAD ADVANCED LOANS TO ITS EXECUTIVES AND EMPLOYEES WHICH CARRIED INTEREST LOWER THAN THE INTEREST CHA RGED BY THE BANK ON THE AMOUNTS LENT TO THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAD DIVERT ITS INTEREST BEARING FUNDS FOR PURPOSES OTHE R THAN BUSINESS. IN OUR VIEW THE PRACTICE OF ADVANCI NG LOANS TO THE EMPLOYEES CANNOT BE CONSTRUED AS DIVERSION OF FUNDS FOR NON-BUSINESS PURPOSE. THE GR ANT OF SUCH FACILITIES TO THE EMPLOYEES IS PART AND PAR CEL OF THE CARRYING ON OF BUSINESS OPERATIONS OF AN ASSESS EE. THE BUSINESS ACTIVITIES OF AN ORGANIZATION CANNOT B E VIEWED AS CONFINED TO ITS ACTIVITY OF SELLING THE F INAL PRODUCT. A HOST OF ACTIVITIES WHICH GO TO SUPPLEME NT THE MAIN ACTIVITY OF AN ORGANIZATION ARE ALSO ACTIV ITIES WHICH ARE CONSTRUED AS INCIDENTAL TO THE CARRYING O N OF BUSINESS. FOR INSTANCE, ACTIVITY OF ACCOUNTING, RECORDING OF TRANSACTIONS ETC. ARE NOT THE FRONT LI NE ACTIVITIES OF AN ORGANIZATION BUT ARE CERTAINLY ACTIVITIES CARRIED OUT IN FURTHERANCE OF MAIN BUSIN ESS OBJECTIVES. IT CANNOT BE SAID THAT EXPENDITURE INC URRED ON SUCH ACTIVITIES ARE FOR NON-BUSINESS PURPOSES IN THE INSTANT CASE THE IMPUGNED EXPENDITURE THOUGH NOTION AL, HAS BEEN INCURRED BY THE ASSESSEE TO RETAIN AND MOTIVATE ITS EXECUTIVES AND EMPLOYEES WHO ARE ENGAG ED IN VARIOUS ACTIVITIES OF THE ASSESSEE COMPANY. THE EXPENDITURE IS LIABLE TO BE VIEWED AS HAVING BEEN INCURRED IN THE COURSE OF ACTIVITIES WHICH ARE INCIDENTAL TO THE CARRYING ON OF BUSINESS BY THE ASSESSEE. THE PURPOSE OF THE EXPENDITURE THEREFORE CANNOT BE CONSTRUED AS NON-BUSINESS. IN THE RESULT , IN OUR VIEW, THE EXPENDITURE CAN BE SAID TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. UNDER SUCH CIRCUMSTANCES INVOKING OF SECTION 36(1)(III) BY THE ASSESSING OFFICER WAS MISPLACED. THEREFORE WE SUSTAIN THE CONCLUSION OF T HE CIT(APPEALS) IN DELETING THE ADDITION ALBEIT ON A DIFFERENT GROUND. WE ALSO FIND THAT THE REASONING WHICH PREVAILED WITH THE CIT(APPEALS) TO DELETE THE ADDITION IS SUPPORTED BY THE JUDGMENT OF THE HON'BL E KARNATAKA HIGH COURT IN THE CASE OF SRIDEV ENTERPRISES (SUPRA). ON THIS BASIS TOO, THE ORDER OF THE CIT(APPEALS) DESERVES TO BE UPHELD. WE HOLD SO , ON THIS GROUND, THUS, THE REVENUE FAILS. 6. FROM THE AFORESAID IT IS EVIDENT THAT THE DECISI ON OF THE CIT(A) DESERVE TO BE UPHELD AS IT IS IN ACCORD WITH THE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 20 01-02 (SUPRA) ON IDENTICAL SITUATION. THUS ON THIS GROUND THE REVENUE FAILS. 9 13. THE FACTS OF THIS YEAR ARE SIMILAR TO THAT OF A SSESSMENT YEAR 2004-05. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (S UPRA), WE DISMISS GROUND NO.2 OF THE APPEAL. 14. GROUND NO.3 OF THE APPEAL READS AS UNDER:- 3. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS. 14,95,397/- ON ACCOUNT OF THE TRAVELLING EXPENS ES WHEN THE ASSESSEE FAILED TO PROVE THAT THE EXPENDIT URE IN QUESTION WAS IN FACT LAID OUT WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF BUSINESS CARRIED OUT BY IT, PARTICULARLY WHEN THE DEPARTMENT IS ALREADY IN APPE AL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE' S OWN CASE FOR EARLIER YEARS. 15. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFF ICER MADE DISALLOWANCE OF RS. 14,95,397/- MADE ON ACCOUNT OF TRAVELING EXPENSES. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 5 OF THE ASSESSMENT ORDER. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT ASSESSEE HAD DEBITED RS. 44,86,192/- AS TRAVELING E XPENSES IN PROFIT AND LOSS ACCOUNT. IN THE EARLIER YEARS, THE ASSESSEE HAD CL AIMED SUCH EXPENSES AT RS. 55,56,668/- WHICH INCLUDED DIRECTORS TRAVELING EXP ENSES OF RS. 8,12,445/-. ON SCRUTINY OF THE VOUCHERS AND DETAILS, THE ASSESS ING OFFICER NOTICED THAT MOST OF THE EXPENDITURE RELATED TO THE STAY IN THE HOTEL OF THE DIRECTORS AND EXECUTORS IN INDIA AND ABROAD. THIS ALSO INCLUDED BILLS RELATING TO STAY CHARGES, BEVERAGES, FOOD AND ATTENDING CONFERENCES ETC. THE ASSESSING OFFICER HELD THAT MANY OF THESE EXPENSES WERE NOT I NCIDENTAL TO BUSINESS AND COULD NOT BE SAID TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HE MADE THE DISALLOWANCE @ 1/ 3 RD OF RS. 44,86,192/- MAKING AN IMPUGNED ADDITION OF RS. 14,95,397/-. 10 16. ON APPEAL, THE CIT(A) DELETED THE ADDITION FOLL OWING THE ORDERS OF THE TRIBUNAL RELATING TO ASSESSMENT YEARS 2001-02, 2003 -04, 2004-05 AND 2005-06 IN ITA NOS. 175/CHANDI/206, 942/CHANDI/2006, 782/CH ANDI/2007 AND 885/CHANDI/2009, ORDER DATED 24.8.2007, 26.11.2007, 27.3.2008 AND 21.12.2009 RESPECTIVELY. 17. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH T HE PARTIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE BY THE DECISION OF THIS BENCH OF THE TRIBUN AL DATED 27.3.3008 IN ASSESSEES OWN CASE IN ITA NO. 782/CHD/2007 RELATIN G TO ASSESSMENT YEAR 2004-05. WHILE DECIDING A SIMILAR ISSUE, THE TRIBU NAL OBSERVED AS UNDER:- 8. WE TAKE UP FOR CONSIDERATION BOTH THE GROUNDS O F APPEAL TOGETHER AS THEY RELATE TO THE SAME DISALLOW ANCE MADE BY THE ASSESSING OFFICER. THE STAND OF THE ASSESSEE IS THAT NO DISALLOWANCE IS MERITED AS THE NECESSARY DETAILS WERE PLACED BEFORE THE ASSESSING OFFICER, WHICH IS A MATTER OF RECORD. REFERENCE HAS ALSO BEEN MADE TO THE COPY OF WRITTEN SUBMISSIONS MADE BEFORE THE CIT(A) IN THIS REGARD. FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL FOR ASSESSME NT YEAR 2001-02 (SUPRA) WHEREIN ADDITION MADE OUT OF TRAVELING EXPENSES ON SIMILAR GROUND HAS BEEN DELET ED BY THE TRIBUNAL. ON THIS ASPECT THE LD. D. R., WHIL E NOT DISPUTING THE AFORESAID FACTUAL MATRIX, HAS HOWEVER PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFIC ER. 9. ON THIS GROUND WE FIND THAT THE ASSESSING OFFICE R NOTES IN HIS ORDER THAT THE DISALLOWANCE HAS BEEN M ADE IN ORDER TO KEEP THE ISSUE ALIVE SINCE SIMILAR DISALLOWANCE OF THE PAST YEARS WAS PENDING ADJUDICA TION BY THE TRIBUNAL. IN THIS CONNECTION WE FIND THAT TH E TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 AND ALSO F OR THE ASSESSMENT YEAR 2003-04 (VIDE ORDER IN ITA NO.942/CHANDI/06 AND 50/CHANDI/07 DATED 26.11.07) H AS DELETED THE ENTIRE ADDITION. IN THIS YEAR WE FIND T HAT THE FACT SITUATION PREVAILING WITH THE ASSESSING OFFICE R TO MAKE THE ADDITION IS IDENTICAL TO THAT IN THE ASSES SMENT YEARS 2001-02 AND 2003-04. FOLLOWING THE DECISION O F THE TRIBUNAL IN THE ASSESSEE OWN CASE FOR THE ASSES SMENT 11 YEARS 2001-02 (SUPRA) 2003-04 (SUPRA) THE ADDITION OF RS.4,82,792/- SUSTAINED BY THE CIT(A) IS ALSO DELET ED. IN THE RESULT WHEREAS THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED AND THAT OF THE ASSESSEE IS ALLOWED. 18. RESPECTFULLY, FOLLOWING THE ORDER OF THE TRIBUN AL (SUPRA), WE DISMISS GROUND NO.3 OF THE APPEAL. 19. GROUND NO.4 OF THE APPEAL READS AS UNDER:- 4. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS. 6,27,754/- ON ACCOUNT OF LEGAL & PROFESSIONAL EXPENSES AS A CAPITAL EXPENDITURE, PARTICULARLY WHE N THE DEPARTMENT IS IN APPEAL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR EARLI ER YEARS. 20. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFF ICER DISALLOWED LEGAL AND PROFESSIONAL EXPENSES OF RS. 6,27,754/- BY TREA TING THE SAME AS CAPITAL EXPENDITURE. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 6 OF THE ASSESSMENT ORDER. ACCORDING TO HIM, THE ENTIRE EXP ENDITURE OF RS. 6,27,554/- INCURRED BY THE ASSESSEE UNDER THE HEAD LEGAL AND P ROFESSIONAL CHARGES IS IN THE NATURE OF CAPITAL EXPENDITURE. HE, THEREFORE, DISALLOWED RS. 6,27,954/-. 21. ON APPEAL, THE CIT(A) HELD AS UNDER:- 7.5 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RIVAL SUBMISSIONS OF BOTH THE ASSESSING OFFICER AND THE C OUNSEL FOR THE APPELLANT IT IS SEEN THAT A SIMILAR DISALLO WANCE MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEA RS 2003-04, 2004-05 & 2005-06 WAS DELETED BY MY PREDECESSOR VIDE ORDERS DATED 15.11.2006, 11.7.2007 & 20.6.2009 RESPECTIVELY. THE SAID ORDERS HAVE BEEN U PHELD BY THE HON'BLE ITAT, CHANDIGARH IN ITA NOS 942/CHANDI/2006, 782/CHANDI/2007 & 885/CHANDI/2009 12 VIDE ORDERS DATED 26.11.2007, 27.3.2008 & 21.12.200 9 RESPECTIVELY. 7.6 IN VIEW OF THE ABOVE, THE DISALLOWANCE ON ACCOUNT O F LEGAL AND PROFESSIONAL EXPENSES OF RS. 6,27,754/- DEBITED TO THE P&L ACCOUNT CAN NOT BE SUSTAINED AND DIRECTED TO BE DELETED. 22. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND TH AT THE ISSUE IS SQUARELY COVERED IN FAOVUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES CASE IN IT A NO. 808/CHANDI/2007 RELATING TO ASSESSMENT YEAR 2004-05, ORDER DATED 27 .3.2008. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER:- 10. GROUND NO. (IV) IN APPEAL OF THE REVENUE READS AS UNDER:- (II) IN DELETING THE DISALLOWANCE OF RS.14,32,771/- INCURRED ON LEGAL & PROFESSIONAL EXPENSES, BY HOLDING THE SAME AS REVENUE EXPENDITURE IN NATURE INSTEAD OF CAPITAL EXPENDITURE. IN THIS REGARD THE FACTS ARE THAT THE ASSESSING OFF ICE MADE AN ADHOC DISALLOWANCE OF RS.14,32,771/- OUT OF THE EXPENSES UNDER THE HEAD LEGAL & PROFESSIONAL CHARGE S TREATING THE SAME TO BE CAPITAL IN NATURE. SIMILAR DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER DURI NG THE ASSESSMENT YEAR 2003-04 BUT WAS DELETED BY THE CIT(A). THE ASSESSING OFFICER OBSERVED THAT SINCE T HE APPEAL OF THE DEPARTMENT AGAINST THE ORDER OF THE C IT(A) WAS PENDING IN THE TRIBUNAL, THE IMPUGNED DISALLOWA NCE WAS MADE. 11. WE FIND THAT THE TRIBUNAL IN THE ASSESSMENT YEA R 2003-04 (SUPRA) HAS AFFIRMED THE DECISION OF THE CI T(A) BY MAKING THE FOLLOWING DISCUSSION:- 16. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT ASSESSING OFFICE HAS MADE A DISALLOWANCE ON THE GROUND THAT THE EXPENDITURE INCURRED BY THE ASSESSE E WITH REFERENCE TO SAP SOFTWARE EXPENSES AS WELL AS PROFESSIONAL CHARGED ARE IN THE NATURE OF CAPITAL EXPENDITURE. THE COMMISSIONER OF INCOME TAX (A) ON PERUSAL OF THE ACCOUNT OF LEGAL AND PROFESSIONAL EXPENSE FOUND THAT THE EXPENDITURE RELATED TO THE 13 PAYMENT OF PROFESSIONAL CHARGES FOR VARIOUS SERVICE S RENDERED. THE COMMISSIONER OF INCOME-TAX (A) HAS RECORDED A FINDING OF FACT THAT EXPENSES INCURRED B Y THE ASSESSEE ARE ON RECURRING BASIS AND DO NOT RESU LT IN ANY BENEFIT OF ENDURING NATURE. THE COMMISSIONER OF INCOME-TAX (A) HAS FURTHER RECORDED THAT SUCH EXPEN SES HAVE BEEN ALLOWED IN FULL IN EARLIER YEARS. THE COMMISSIONER OF INCOMETAX (A) HAS FURTHER POINTED OUT THAT THE PAYMENTS MADE TO PROFESSIONALS FOR RUNNING OF SAP SOFTWARE WAS NOT FOR ACQUISITION OF ANY HARDWARE OR SOFTWARE AND THEREFORE, THE EXPENDITURE WAS OF REVENUE NATURE AND RIGHTLY ALLOWED BY THE CIT(A). 17. WE HAVE ALSO GONE THROUGH THE DETAILS OF LEGAL AND PROFESSIONAL CHARGES AND FIND THAT NO EXPENDITU RE IS RELATING TO ACQUISITION OF ANY CAPITAL ASSETS. W E, THEREFORE, FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) IN HAVI NG DELETED THE DISALLOWANCE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003- 04 (SUPRA), WE DISMISS THIS GROUND OF THE APPEAL OF THE REVENUE. 23. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L (SUPRA), WE DISMISS THIS GROUND OF APPEAL. 24. GROUND NO.5 OF THE APPEAL READS AS UNDER:- 5. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS. 71,08,808/- ON ACCOUNT OF INFORMATION & TECHNOLOGY EXPENSES AS A CAPITAL EXPENDITURE, PARTICULARLY WHE N THE DEPARTMENT IS ALREADY IN APPEAL BEFORE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR EARLIER YEARS . 25. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFF ICER DISALLOWED INFORMATION TECHNOLOGY EXPENSES OF RS. 71,08,808/- BY TREATING THE SAME AS CAPITAL IN NATURE. THE ASSESSING OFFICER HAS DISCU SSED THIS ISSUE IN PARA 7 OF 14 THE ASSESSMENT ORDER. ACCORDING TO HIM, THE EXPEND ITURE OF RS. 71,08,808/- WAS CLAIMED BY THE ASSESSEE IN SCHEDULE 20 OF THE R ETURN AS INFORMATION TECHNOLOGY EXPENSES. IN THE IMMEDIATELY PRECEDING YEAR, SIMILAR EXPENSES WERE CLAIMED AT RS. 62,68,741/-. THE ASSESSING OFF ICER HELD THESE EXPENSES WERE OF ENDURING VALUE WHICH INCREASED THE EFFICIEN CY OF THE ASSESSEE COMPANYS BUSINESS AND WAS REQUIRED TO BE CAPITALIZ ED. OUT OF THE TOTAL EXPENDITURE OF RS. 71,08,808/-, AN AMOUNT OF RS. 49 ,11,771/- WAS ON ACCOUNT OF ANNUAL MAINTENANCE CHARGES (AMC) AND RS. 2,60,70 0/- WAS ON ACCOUNT OF PURCHASE OF CONSUMABLES LIKE LASER, TONNER, INKJET CARTRIDGES, STATIONERY ITEMS ETC AND RS. 19,36,237/- WAS FOR SOFTWARE EXPENSE LI KE CONNECTIVITY ETC. ACCORDINGLY, HE PROCEEDED TO MAKE DISALLOWANCE OF T HE ENTIRE EXPENDITURE OF RS. 71,08,808/-. 26. ON APPEAL, THE CIT(A) DELETED THE ADDITION, FOL LOWING THE ORDERS OF THE TRIBUNAL PASSED IN ASSESSEES CASE RELATING TO ASS ESSMENT YEARS 2001-02, 2003-04, 2004-05 AND 2005-06 IN ITA NO. 175/CHANDI/ 2006, 942/CHANDI/2006, 782/CHANDI/2007 AND 885/CHANDI/200 9 AND, HENCE, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 27. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THE TRIBUNAL DATED 27.3.2008 IN ITA NO. 808/CHANDI/ 2007 (IN ASSESSEES CASE) RELATING TO ASSESSMENT YEAR 2004-05. WHILE D ECIDING A SIMILAR ISSUE IN ASSESSMENT YEAR 2004-05 (SUPRA), THE TRIBUNAL HELD AS UNDER:- 15 12. GROUND NO. (V) IN APPEAL OF THE REVENUE READS AS UNDER:- (III) IN DELETING THE DISALLOWANCE OF RS.75,16,894/- INCURRED ON INFORMATION TECHNOLOGY EXPENSES, BY HOLDING THE SAME AS REVENUE EXPENDITURE IN NATURE INSTEAD OF CAPITAL EXPENDITURE. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT SIM ILAR DISALLOWANCE HAS BEEN SUBJECT MATTER OF CONSIDERATI ON BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2001-02 (SUPRA) AND 2003-04 (SUPRA). THE TRIBU NAL IN THE ASSESSMENT YEAR 2003-04 HAS FOUND IT EXPEDIE NT TO DELETE THE ADDITION BY MAKING THE FOLLOWING DISCUSS ION:- 19. THE FACTS RELATING TO THIS GROUND OF APPEAL A RE THAT THE ASSESSING OFFICER HAD NOTICED INFORMATION TECHNOLOGY EXPENSES OF RS.11012932/- HAVING BEEN DEBITED BY THE ASSESSEE AS AGAINST A SUM OF RS.19989273/- IN THE PRECEDING YEAR. THE ASSESSEE H AD BEEN ASKED TO GIVE THE EXPLANATION ABOUT THE NATURE OF THE EXPENDITURE. IT WAS EXPLAINED THAT THE EXPENDIT URE HAD BEEN INCURRED ON ANNUAL MAINTENANCE CONTRACTS FOR COMPUTER HARDWARE/SOFTWARE, INTERNET CONNECTIVITY, PURCHASE OF SOFTWARE CONSUMABLE SUCH AS INK CARTRIDGES ETC. THE ASSESSING OFFICER MADE THE DISALLOWANCE ON THE GROUND THAT THE ENTIRE EXPENDIT URE INCURRED BY THE ASSESSEE WAS OF ON DURING VALUE WHI CH INCREASES THE EFFICIENCY OF THE BUSINESS OF THE ASS ESSEE AND, THEREFORE, IS OF CAPITAL NATURE. HE ACCORDINGL Y MADE THE DISALLOWANCE. THE COMMISSIONER OF INCOME- TAX (A) HAS DELETED THE ADDITION. 20. WE FIND THAT SIMILAR DISALLOWANCE WAS MADE FOR ASSESSMENT YEAR 2001-02 AND THE TRIBUNAL VIDE PARA NO. 18 OF ITS ORDER (SUPRA) UPHELD THE ORDER O F THE COMMISSIONER OF INCOME-TAX (A) IN DELETING THE DISALLOWANCE. 21. IT IS FOUND FROM THE EVIDENCE ON RECORD THAT THE EXPENDITURE RELATING TO AMC OF COMPUTER, HARDWARE/SOFTWARE ETC. HAS BEEN INCURRED BY THE ASSESSEE FOR THE RUNNING AND MAINTENANCE OF CAPITAL ASSETS. SUCH AN EXPENDITURE QUALIFIES FOR DEDUCTION AS A REVENUE EXPENDITURE. NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FOR ACQUISITION OF ANY CAP ITAL ASSETS, NOT IS ANY EXPENDITURE INCURRED IN CONNECTI ON WITH THE ACQUISITION OF CAPITAL ASSETS. WE ARE, THEREFORE, IN AGREEMENT WITH THE COMMISSIONER OF INCOME-TAX (A) THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED IN SO FAR AS THE ENTIRE 16 EXPENDITURE IS OF REVENUE NATURE. WE, THEREFORE, DECLINE TO INTERFERE WITH THE ORDER OF CIT(A). THE GROUND OF APPEAL RAISED BY THE REVENUE IS ACCORDING LY DISMISSED. 13. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF TH E TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2003-04 (SUPRA). WE DISMISS THIS GROUND OF APP EAL OF THE REVENUE. 28. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO TH AT OF ASSESSMENT YEAR 2004-05. RESPECTFULLY FOLLOWING THE ORDER OF THE TR IBUNAL, RELATING TO ASSESSMENT YEAR 2004-05 (SUPRA), WE DISMISS GROUND NO.5 OF REVENUES APPEAL. 29. GROUND NO.6 OF THE APPEAL READS AS UNDER:- 6. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD. C1T(A) HAS ERRED IN NOT SUSTAINING THE ADDITION OF RS. 2,92,03,938/- ON ACCOUNT OF SCRAP SALES, PARTICULARLY WHEN THE DEPARTMENT IS ALREADY IN APPE AL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE' S OWN CASE FOR EARLIER YEARS. 30. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFF ICER MADE AN ADDITION OF RS. 2,92,03,938/- ON ACCOUNT OF TREATMENT OF SCR AP. THE ASSESSING OFFICER NOTICED THAT A SUM OF RS. 5,20,19,678/- WAS WRITTEN OFF IN THE LIST OF STORES AND SPARES DUE TO OBSOLENCE WHICH HAD NOT BEEN ACCO UNTED FOR IN THE SCRAP ACCOUNT. IN THE ABSENCE OF SATISFACTORY EXPLANATIO N FROM THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS. 2,60,09,839/ - BEING 50% OF THE USABLE ITEMS WORTH RS. 5,20,19,678/-. HE HELD THAT BY CON SIDERING THE MODERN TECHNOLOGY METHODS OLD MACHINERY GETS WORN OUT THER EFORE, 0.5% OF THE VALUE OF RAW MATERIAL I.E. RS. 17,26,83,067/- SHOULD BE C ONSIDERED AS SCRAP WHICH COMES TO RS. 8,63,415/-. SIMILARLY, OUT OF THE ST ORES AND SPARES CONSUMED, 17 THE ASSESSING OFFICER ESTIMATED THE SCRAP VALUE AT RS. 37,20,285/- BEING 2% OF RS. 18,60,14,273/-. SIMILARLY, FOR WANT OF DETA ILS AND VERIFICATION, HE ESTIMATED SCRAP GENERATION OUT OF REPAIRS AND MAINT ENANCE AT RS. 3,24,526/- BEING 2% OF THE TOTAL OF RS. 1,62,26,318/- HENCE, AN ADDITION OF RS. 2,92,03,938/- WAS MADE TO THE RETURNED INCOME OF TH E ASSESSEE. 31. ON APPEAL, THE CIT(A) DELETED THE ADDITION FOLL OWING THE ORDERS OF THE TRIBUNAL RELATING TO EARLIER YEARS AND HENCE THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. 32. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND TH AT THE ISSUE IS SQUARELY COVERED IN FAOVUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL DATED 27.3.2008 IN ITA N OS. 782/CHD/2007 & ITA NO. 808/CHD/2007 IN ASSESSEES CASE RELATING TO ASS ESSMENT YEAR 2004-05. WHILE DECIDING A SIMILAR ISSUE IN ASSESSMENT YEAR 2 004-05, THE TRIBUNAL HELD AS UNDER:- 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. AT THE OUTSET, WE MAY OBSERVE THAT THE ASSESSEE PLEADED BEFORE THE ASSESSING OFFICER AS WE LL AS BEFORE THE CIT(APPEALS) THAT THE CLAIM IN QUESTI ON WAS NOT PECULIAR TO THE YEAR UNDER CONSIDERATION. I N FACT THE ASSESSEE POINTED OUT THAT IT HAS A POLICY OF IDENTIFYING OBSOLETE/DAMAGED ITEMS OF THE STOCK OF STORES AND SPARES. SUCH IDENTIFICATION WAS DONE BY THE TECHNICAL STAFF OF THE ASSESSEE COMPANY. SUCH ITEMS OF STORES AND SPARES ARE WRITTEN OFF IN THE ACCOUNTS FROM TIME TO TIME. IT WAS FURTHER POINTED OUT, AS EVIDENT FROM PARA 7 OF THE ASSESSMENT ORDER , THAT SIMILAR QUERIES WERE RAISED BY THE ASSESSING OFFICER FOR THE EARLIER ASSESSMENT YEARS. NO SUCH DISALLOWANCE HAS BEEN MADE IN THE PAST. TO THESE PLEADINGS OF THE ASSESSEE, THERE IS NO NEGATION AT ANY STAGE. EVEN BEFORE US IT IS NOT THE STAND OF THE REVENUE THAT THE CLAIM OF THE ASSESSEE IN THIS YEAR IS 18 NOT IN LINE WITH THE CLAIMS MADE IN THE EARLIER YEA RS. THEREFORE, ON THE RULE OF CONSISTENCY ITSELF, WE DO NOT FIND ANY JUSTIFICATION IN THE STAND OF THE REVE NUE TO MAKE ANY DISALLOWANCE IN THIS YEAR. MORE SO, WHEN NO FACTUAL DIFFERENCE OR CHANGE IN LAW HAS BEE N BROUGHT ON RECORD BY THE INCOME TAX AUTHORITIES. ALTHOUGH EACH ASSESSMENT YEAR IS AN INDEPENDENT YEAR, YET AN ISSUE OF PRINCIPLE WHICH PERMEATES DURING THE DIFFERENT ASSESSMENT YEARS HAS BEEN DECIDED ONE WAY OR THE OTHER AND THE PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED, THEN IT WOUL D BE UNJUSTIFIED FOR THE REVENUE TO TURN AROUND AND TAKE A DIFFERENT VIEW SUBSEQUENTLY AND THAT TOO, WITHOUT BRINGING ON RECORD ANY MATERIAL DIFFERENCE. THE AFORESAID PROPOSITION IS WELL SUPPORTED BY THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG V CIT, 193 ITR 321. ON THIS COUNT ITSELF, IN OUR CONSIDERED OPINION, THE SAID ADDITION MADE BY THE ASSESSING OFFICER DESERVES TO BE DELETED. IN ANY CASE, IF THE CLAIM OF THE ASSES SEE IS EXAMINED, IT REVEALS THAT THE WRITE-OFF OF THE S TOCKS HAVE BEEN CARRIED OUT ON ACCOUNT OF OBSOLESCENCE /DAMAGE. THE CIT(APPEALS), IN THE COURSE OF PROCEEDINGS BEFORE HIM, MADE FURTHER VERIFICATION AND EXAMINED THE CLAIMS OF THE ASSESSEE MADE IN THE EARLIER ASSESSMENT YEARS. WE FIND THAT WITHOUT POINTING OUT ANY INFIRMITY IN THE DECISION OF THE ASSESSEE TO WRITE OFF THE IMPUGNED STOCKS, THE CIT(APPEALS), ON THE OTHER HAND, HAD MADE A SUBJECTIVE DECISION BY ESTIMATING VALUE OF THE STOC K AT 50%. WE FIND NO REASONS ATTRIBUTED BY THE CIT(APPEALS) FOR SUCH PROPOSITION. IN THE SCENARIO OF THE ASSESSEE HAVING FOLLOWED A CONSISTENT POLICY AN D WHICH WAS ACCEPTED BY THE REVENUE IN THE PAST, THE ONUS WAS CLEARLY ON THE REVENUE TO ESTABLISH THAT T HE SYSTEM FOLLOWED BY THE ASSESSEE DID NOT RESULT IN SHOWING OF TRUE AND PROPER INCOME . WE FIND THAT SUCH ONUS HAS NOT BEEN DISCHARGED BY THE REVENUE IN THE PRESENT ISSUE. THEREFORE, NO ADDITION IS WARRANTED ON THIS COUNT. IN THE RESULT, WE ALLOW T HE GROUND OF APPEAL OF THE ASSESSEE AND DISMISS THE GROUND PREFERRED BY THE REVENUE IN RELATION TO THE RELIEF ALLOWED BY THE CIT(APPEALS). 33. IT IS COMMON CONTENTION OF THE PARTIES THAT THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT OF ASSESSMENT YEAR 2004-05. RE SPECTFULLY, FOLLOWING THE 19 ORDER OF THE TRIBUNAL, RELATING TO ASSESSMENT YEAR 2004-05 (SUPRA), WE DO NOT SEE ANY MERIT IN THIS GROUND OF APPEAL AND ACCORDI NGLY WE DISMISS THE SAME. 34. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 16 TH MARCH, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR 20