ACIT, UDAIPUR V. M/s. Bohra Industries Limited, UDAIPUR

ITA 346/JODH/2009

• Counselvise Citation: 34623314 RSA 2009
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation; Business expenditure; Valuation report; Capital expenditure

Judgement Text

1 ITA 346(2)-09 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 346/JODH/2009 ASSTT. YEAR : 2005-06. THE ACIT, CIRCLE-2, VS. M/S. BOHRA INDUSTRIES LT D., UDAIPUR. 301, ANAND PLAZA, UNIVERSITY ROAD, UDAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 42/JODH/2009 ( ARISING OUT OF ITA NO. 346/JODH/2009 ) ASSTT. YEAR : 2005-06. M/S. BOHRA INDUSTRIES LTD. VS. THE ACIT, CIRCLE-2 , UDAIPUR. UDAIPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI G.R. KOKANI RESPONDENT BY : SHRI AMIT KOTHARI DATE OF HEARING : 08.12.2011. DATE OF PRONOUNCEMENT : ORDER DATED : /12/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AND CROSS OBJECTIO N BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2. CROSS OBJECTION WAS NOT PRESSED BY THE LD. A/R, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 2 3. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 8,73,445/- OUT OF DEPRECIATION ON BUILDING, AND DELETING THE DISALLOW ANCE OF RS. 20,96,267/- OUT OF INTEREST PAID TO BANK. 4. THE BRIEF FACTS OF THE CASE HAVE BEEN RECORDED B Y LD. CIT (A) IN PARA 7 TO 9 OF HIS ORDER ARE AS UNDER :- DURING THE YEAR, ADDITION TO THE FACTORY BUILDIN G HAS BEEN SHOWN BY THE ASSESSEE AT RS. 2,50,08,048/-. THIS A DDITION HAS BEEN CAPITALIZED AFTER 30.09.2004. THE AO HAD ISSUED SUM MONS U/S. 131 OF THE ACT DATED 25.10.2007 TO THE FOLLOWING ELEVEN PART IES/SUPPLIERS:- 1. M/S. RAHUL ENTERPRISES, JHAMAR KOTRA ROAD, UDAIP UR 2. M/S. NEW MODERN STONE SUPPLY, NB COMPLEX, PRATAP NAGAR, BYPASS, UDAIPUR. 3. M/S. MATESHWARI GITTI SUPPLIER, TITARDI, JAISARN AND ROAD, UDAIPUR. 4. M/S. MAHAVEER MATERIAL SUPPLIER, PRATAPNAGAR CHO URAHA, SUKHER HIGHWAY, UDAIPUR. 5. M/S. BHARAT ENTERPRISES, DABOK CHORAYA, AIRPORT ROAD, UDAIPUR. 6. M/S. SHIVAM ENTERPRISES, DABOK MAIN, AIRPORT ROA D, UDAIPUR. 7. M/S. TIRUPATI BUILDING MATERIAL SUPPLIERS, DABOK CHOURAHA, AIRPORT ROAD, UDAIPUR. 8. M/S. SHREEJI BUILDING MATERIAL, AIRPORT ROAD, BU S STAND, BEDWAAS, PO: ZINC SMELTER, DEBARI. 9. M/S. PUJA WELDING WORK, E-CLASS, PRATAPNAGAR, UD AIPUR 10. M/S. SHREE HINGRAJ FABRICATORS, VILLAGE ODWADIA , P.O. GUDLI, TEH. MAVLI, DISTT. UDAIPUR. 11. M/S. JAI LAXMI CONSTRUCTION, VILL. NAMRI, BEDWA S, PRATAPNAGAR ROAD, UDAIPUR. 3 THE AO HAS MENTIONED THE NAME OF THE SUPPLIERS, BIL L NUMBERS AND DATES AS UNDER:- 1. PUJA WELDING WORK BILL NO. 423 DATED 15TH JULY. 2. PUJA WELDING WORK BILL NO. 465 DATED 18TH AUG. 3. M/S. RAHUL ENTERPRISES BILL NO. 2024 DATED 27TH AUG. THE AO HAS ALSO DISCUSSED CONSTRUCTION LABOUR CHARG ES IN THE ASSESSMENT ORDER FROM PAGE NOS. 9 TO 17. THE MONTH-WISE PAYMENT OF V ARIOUS CIVIL WORKS IS AS UNDER:- MONTH AMOUNT (RS.) ARIL, 2004 1,1 1,030/- MAY, 2004 1,22,165/- JUNE, 2004 1,08,841/- JULY, 2004 1,84,300/- AUGUST, 2004 1,81,680/- SEPTEMBER, 2004 1,70,420/- OCTOBER, 2004 81,545/- NOVEMBER, 2004 1,30,000/- DECEMBER, 2004 10,04,996/- JANUARY, 2005 9,31,112/- FEBRUARY, 2005 8,21,552/- MARCH, 2005 8,33,445/- TOTAL 46,81,086/- THE AO HAS POINTED OUT THE FOLLOWING DEFICIENCIES:- I) TOTAL 888 ENTRIES ARE WRITTEN IN THIS. II) ALL THESE ENTRIES WERE SIGNED EXCEPT ENTRY OF Z AHID FOR THE MONTH OF DECEMBER, 2004 FOR RS. 4,500/-. III) ALL 888 ENTRIES SEEM TO BE WRITTEN BY SAME PER SON. IV) ALL ENTRIES APPEAR TO BE DONE ON THE SAME DATE BY SAME PERSON. V) ALL THE SERVICES ARE DONE BY THE SAME PERSON WHO HAD WRITTEN 888 NAMES IN THESE SHEETS. VI) HANDWRITTEN IN ALL THESE ENTRIES APPEARS ALMOST SAME. VII) THE SIGNATURE IS TO BE AS ' JI'. NO PERSON WRI TES 'JI'. IN HIS NAME WHILE PUTTING HIS/HER SIGNATURE. VIII) SIMILARLY, THE NAMES OF THE SAME PERSONS HAVE BEEN WRITTEN WRONGLY E.G. X) ALL WORKERS/LABOURS EVEN LADY WORKERS HAVE PUT T HEIR SIGNATURES, NOT EVEN A SINGLE PERSON HIS/HER GIVEN THUMB IMPRES SION. IT IS NOT POSSIBLE THAT ALL LABOURS ARE LITERATE. 4 XI) NO REVENUE STAMP AFFIXED EVEN ON A SINGLE CASE WHER EAS MONTHLY PAYMENTS ARE MORE THAN RS. 5,000/- THE AO HAS PREPARED A RATIO OF MISTRI + KARIGARS AN D LABOURS AS UNDER:- MONTH MISTRI KARIGARS TOTAL LABOUR RATIO RATE 250 & 200 RATE 200 & 150 MISTRIES & KARIGARS RATE 70 & 80 MASON LABOUR DEC. 04 109 60 169 24 100:14 JAN.05 78 52 130 3 100:02 FEB. 05 78 39 117 26 100:22 MARCH 05 78 31 109 4 100:22 525 57 THE AO HAS CONCLUDED THAT 130 MISTRY/KARIGARS ARE D OING WORK WITH THE HELP OF 3 LABOURS ONLY AND 101 KARIGARS WITH THE HE LP OF 4 WORKERS. IN GENERAL, OUT OF 260 LABOURS ARE REQUIRED FOR 130 MISTRIES/KARIGA RS. IT IS IMAGINE THAT HOW DURING FOUR MONTHS, 525 KARIGARS HAVE DONE THE WORK WITH T HE HELP OF 57 LABOURS ONLY. ONE LABOUR HIMSELF MIXING THE CEMENT WITH SAND HAD SUPPLIED THE SAME TO DIFFERENT 10 KARIGARS WHICH IS NOT POSSIBLE. THE ASSESSEE HAS ALSO SHOWN PAYMENT OF PART PERIOD OF THE DAY EVEN TO THE EXTENT OF 1/4`X' OF THE DAY. THE LABOUR PAYMENTS ARE SHOWN TILL 3 1ST MARCH, THE LAST DAY OF THE FINANCIAL YEAR. ACCORDING TO THIS L IST, THE CONSTRUCTION WORK WERE CARRIED ON CONTINUOUSLY FOR 365 DAYS IN THE YEAR AN D DID NOT STOP ON THE FESTIVALS AS DIWALI, HOLI, IDD, RAKSHA BANDHAN AND NATIONAL H OLIDAYS. THE ASSESSEE HAS ALSO WRITTEN ANY NAME HE REMEMBERS SUCH AS: BHAGWAN LAL, BHERU LAL, BHURI LAL MUKUT BEHARI, RAM BIHAR YAMUNA DAS, GANGA DAS. DURING DECEMBER, 2004 AND JANUARY, FEBRUARY AND MAR CH, 2005, THE ASSESSEE HAD. NOT PURCHASED THE SAND, BRICKS, GITTI ETC. THE AO HAS QUESTIONED THE GENUINENESS AS TO WHAT 125 KARIGARS/MISTRIES WERE D OING CONTINUOUSLY FOR FOUR MONTHS WITHOUT TAKING A BREAK IN SINGLE DAY OR WITH OUT ANY MATERIAL. THE ASSESSEE HAS SHOWN THE PAYMENT TO THE FOLLOWING PERSONS WITH A NARRATION 'AS PAID TO MR. TOWARDS CIVIL WORK.' 5 APRIL 2004 NAME PRATAP VENI RAM LEHRI RAM SHABBI R GOPI LAL NAND LAL 12240 AMOU NT 15400 12960 18720 16400 18920 16390 TOTAL 11103 0 MAY 2004 NAME HEMJI POKHAR DHAN NA GAMET I KESHAV CHANDAN MAL KANHIYA BHURA AMOU NT 16020 17035 18065 18500 16500 19665 16380 TOTAL 12216 5 JUNE 2004 NAME BHOLA RAM VARDICHA ND HOMA HENSRA J KESHUJI PRABHUL AL AMOU NT 18885 19345 14435 18165 18611 19400 TOTAL 10884 1 JULY 2004 NAME DEVI LAL MEENA UDAI LAL MEENA GANES H RAGAV MEENA DALACHA ND RATAN NARAIN AMOU NT 16800 19200 17300 19945 19555 17500 18000 NAME BHERA DANGI PITHAJI PYARE JI AMOU NT 17800 19285 18915 TOTAL 18430 0 AUGUST 2004 NAME DHULJI DALCHAN D PRATA P LAKHIN A RADHEY MANGILA L NANDL AL AMOU NT 18960 18700 18040 17840 17760 18400 18700 NAME NANA LAL MAHENDR A CHEGA M SINGH AMOU NT 17800 16580 18900 TOTAL 18168 0 SEPTEMBER 04 NAME MAHEND RA LAXMAN SINGH GOPAL SINGH SONNA KALU NIRBHAN SINGH KALU S/O VENI AMOU NT 18420 18050 14975 18880 17120 14975 15000 NAME GANGA RAM DURGESH KAILA SH AMOU NT 19000 16000 18000 TOTAL 17042 6 0 OCTOBER 04 NAME HAKRA BHERU SHYAN LAL SHAKIR MITTHU LAL AMOU NT 17935 16569 17041 15800 14200 TOTAL 81545 NOVENBER 04 NAME RAJU BABU BHAI RAM LAL BHANW AR PRAKASH TULSI RAM CHAMA N LAL AMOU NT 19000 19000 18580 18500 19500 18400 17020 TOTAL 13000 0 DECENBER 04 NAME KANAJI VARIOUS CIVIL WORKS AMOU NT 19720 18770 ALL VARIOUS CIVIL WORKS 17000 16080 16050 19800 19000 19000 19150 18000 19950 19500 18700 19725 18005 19520 19740 18575 19010 15650 16000 19000 18560 19250 16630 16500 18750 18561 14500 17000 17500 16500 19650 19700 16850 19900 16990 19970 18500 15500 16600 19000 16090 19450 18400 16700 16350 16350 19900 16040 19750 18000 17500 15000 16000 17000 TOTAL 10049 96 JAN,05 SAME AS ABOVE BELOW RS. 20000 FEB,05 SAME AS ABOVE BELOW RS. 20000 MAR,05 SAME AS ABOVE BELOW RS. 20000 THE PAYMENTS ARE MADE TO ABOUT 60 DIFFERENT PERSONS . THE NAME HAS CHANGED IN 3-4 DAYS.'THESE NAMES ARE DIFFERENT FROM NAMES SHOWN IN THE SO-CALLED LABOUR. PAYMENT BILL CONTAINING MORE THAN 500 NAMES. THE AO HAS FINALLY TREATED THESE PAYMENTS AS NON GENUIN E AND PREPARED FOR TAKING BOGUS CONSTRUCTION EXPENSES. 8. AS REGARDS THE BALANCE EXPENDITURE I.E.1,50,78,3 02/- RS. 2,50,08,048/- [46,81,086/- + 52,48,660/-] SHOWN BY ASSESSEE THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN ADDITION TO TH E FIXED ASSETS ARE ALSO NOT FULLY RELIABLE BECAUSE SINCE THE BILLS OF LABOU R PAYMENT FOR GITTI, PAYMENT FOR BRICKS. ETC. ARE FOUND NOT ACCEPTABLE A ND REALISTIC AND PAYMENT FOR OTHER MATERIALS ETC. ARE NOT FULLY ACCE PTABLE BECAUSE IN CONSTRUCTION THE WORK DEPENDS ON EACH OTHER MATERIA L I.E. ONLY CEMENT CANNOT USE WITHOUT SAND OR GITTI SAME AS ONLY STEEL CANNOT BE USED WITHOUT CEMENT AND SAND . HENCE IN THESE CIRCUMSTANCES THE AO HELD THAT BALANCE EXPENDITURE OF RS.1,50,78,302/- WEREOT FULLY VOUCHE D BY ACCEPTABLE VOUCHERS/BILLS. THE AO, THEEFORE, DISALLOWED 50% OF THE EXPENDITURE. 7 9. THE ASSESSEE HAS SHOWN TOTAL ADDITION IN FACT ORY BUILDING DURING THE YEAR AFTER 1-9-2004 AT RS.2,50,08,048/- OUT OF WHIC H RS.1,74,68,897/- FOR LABOUR, MATERIAL SUPPLY. RS. 1,74,68,897/- WERE EXC LUDED FOR CALCULATION OF DEPRECIATION ALLOWABLE. THE AO, THEREFORE, DISALLO WED DEPRECIATION @ 5% BEING 1/2OF 10% AT RS. 8,73,445/-. 5. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT ( A) WHICH HAS BEEN TABULATED IN THE ORDER OF LD. CIT (A) IN PARA 10 AND 11 AT PAGES 15 TO 22 ARE AS UNDER :- THE AR HAS SUBMITTED IN THIS REGARD THAT THE AO H AS TREATED THE ENTIRE LABOUR PAYMENT OF RS. 46,81,086/- AS BOGUS. HE HAS TAKEN GENUINE ADDITION TO BUILDING AT RS.75,39,151/- ONLY. THE AO HAS NOT CLARIFIED AS TO HOW THE BUILDING CAN BE CONSTRUCTED WITHOUT SPENDIN G SINGLE RUPEE ON LABOUR. THE AO HAS RESORTED TO MANY ASSUMPTIONS, OU R REPLIES THERETO AS UNDER:- A) SAME EMPLOYEE WAS ENTRUSTED THE RESPONSIBILITIE S OF PREPARING WAGE SHEET THROUGHOUT THE YEAR. THERE IS NOTHING BO GUS ABOUT IT B) PEOPLE IN RURAL AREAS SOMETIMES WRITE JIAFTER THEIR SIGNATURES. AO CANNOT ASSUME THAT PEOPLE MERELY WRITING 'JI'ALONGW ITH SIGNATURE MAKES SIGNATURE BOGUS. C) THE AO HAS NOT BROUGHT ANY SUCH INSTANCE ON REC ORD WHEREIN NAME IS REPEATED IN THE NEXT MONTH AND SIGNATURES ARE N OT TALLIED. D) THE AO HAS NO BASIS TO CONCLUDE THAT BOGUS WAGE S SHEET HAVE BEEN PREPARED BY TAKING HELP OF NAMES DIRECTORY. ON .THE CONTRARY, NAMES DIRECTORY DO NOT CONTAIN SUCH NAMES AS BHAGWA NLAL, BHERULAL, BHURI LAL ETC.IN PRESENT TIMES WHEN WOMEN LITERACY IS RISING THE A.O. HAS CITED NO REASONS AS TO WHY HE A SSUMES THAT THE LADY WORKERS ARE SO ILLITERATE & BACKWARD THAT THEY CANNOT PUT THEIR SIGNATURE ON WAGES SHEET AND HAVE TO NECESSARILY PU T THEIR THUMB IMPRESSION FOR THE WAGE SHEETS TO BE TREATED AS GEN UINE. THE FACTORY IS NOT SITUATED IN THE MOST BACKWARD AREA A ND NEITHER THE LITERACY RATE IS LESS THAN 50%. THE A.O. HAS NOT BR OUGHT ON RECORDS HIS SOURCE OF LITERACY RATE OF THE BELT. WE WOULD L IKE TO ADD THAT THESE DAYS EVEN ILLITERATE PERSONS KNOW HOW TO PUT THEIR SIGNATURES. MOREOVER THERE IS NO NEED TO PUT THUMB IMPRESSION I N SPITE OF PUTTING SIGNATURE. THIS IS AGAIN SUSPICION OF THAT THE WAGE SHEETS MAY BE NOT SIGNED BY THE PERSONS WHO HAD RECEIVED PAYMENTS WHICH IS INCORRECT. BY DISALLOWING THE ENTIRE LABOUR PAYMENT, WILL IT BE POSSIBLE TO CONCLUDE THAT 8 BUILDING WAS CONSTRUCTED WITHOUT ANY LABOUR PAYMENT . EVEN IF THERE WERE NO WAGE SHEETS THE EXPENDITURE ON LABOUR WOULD HAVE BEEN THERE, AND IT WOULD HAVE TO BE ESTIMATED ON THE BASIS OF CONSTRUC TION WORK CARRIED OUT. THE A.O. HAS ALSO TREATED PAYMENT AS BOGUS BECAUSE REVENUE STAMP HAS NOT BEEN AFFIXED. REVENUE STAMP IS A STATE DUTY AND NON-AFFIXING REVENUE STAMP DOES NOT MAKE THE PAYMENT BOGUS. THE A.O. PERHAPS IS NOT AWARE OF THE BASICS OF CONS TRUCTION ACTIVITY. THERE ARE 3 TYPES OF CONSTRUCTION PERSONS UNDER A MISTRI (WHO IS THE HEAD) VIZ., KARIGAR, VELDAR AND MAZDOOR. HE HAS ADDED UP KARIGAR AND VELDAR AND TAKEN THEM AS MISTRI & KARIGAR AND CALCU LATED DISTORTED MISTRI/KARIGAR VS VELDAR/MAZDOOR RATIO TO PROVE CON STRUCTION AS BOGUS. THE A.O. HAS HELD THE PAYMENT TO THE SUPPLIERS BOGU S BY ASSUMPTIONS. OUR DETAILED POINT-WISE REPLY TO THE V ARIOUS OTHER OBSERVATIONS OF A.O.'S ARE PLACED AT PAGE NO E- 11 TO E- 16 TO THIS LETTER. WE ARE PRODUCING BELOW SOME.OF THE ASSUMPTIONS OF A .O. WHICH ARE GROSSLY INCORRECT: OBSERVATION OF A.O. OUR REPLY A}BILLS OF 12 CONCERNS WHOSE NAMES ARE GIVEN ON PAGE NO.8 OF A.O.S ORDER ARE PREPARED BY ONE OR TWO PERSONS.HANDWRITING ON THESE BILLS ALSO SEEMS TO BE SAME. THE BILS ARE PLACED AT PAGE B-1 TO B-35 OF A.O.S ORDER .YOUR GOODSELF WILL OBSERVE UPON PERUSAL OF THE BILLS THAT NEITHER THEY HAVE BEEN PREPARED BY ONE OR TWO PERSONS NOR THE HANDWRITING IS THE SAME. B) FORMAT OF THESE BILLS IS APPROXIAMATELY COMMON.(PAGE NO. 8 OF AO ORDER) ON PERUSAL OF BILLS YOUR GOODSELF WILL OBSERVE THAT FORMAT IS NOT COMMON. AT THE SAME TIME WE WOULD LIKE TO ADD THAT THROUGHOUT THE COUNTRY THE BILL CONTAIN INFORMATION,LIKE NAME OF THE BUYER,BILL NO,QUANTITY RATE AMOUNT ,TOTAL AND THERE IS NOTHING WHICH CAN LEAD THEA.O. TO CONCLUDE THAT ALL BILLS ARE BOGUS. WITHOUT PREJUDICE TO OUR ABOVE CONTENTION WE SUBMIT THAT MOST SUPPLIER ARE FROM SAME AREA AND IT IS QUITE POSSIBLE THE BILL COULD HAVE BEEN PRINTED AT THE SAME PRINRING PRESS. C) RATES OF BRICK ARE SAME DURING 4 MONTHS.(AO, ORDER AT PAGE 20) THESE ARE GOVERNED BY THE VARIOUS FACTORS AND MERELY PRICES 9 REMAINING SAME DO NOT MAKE BILL BOGUS. D) THERE ARE SPELLING MISTAKES ON BILLS IS WRITTEN AS (PAGE- 21),MATERIAL IS WRITTEN AS MATERIEL IN CASE OF 2 DIFFERENT PARTIES.(PAGE -22 OF AOS ORDER) SUCH MISTAKES CAN OCCUR ,BUT SUCH GENUINE MISTAKES CANNOT BE THE BASIS FOR THE TREATING THE EXPENDITURE AS BOGUS. E) BILLS ARE NOT GENUINE AND SEEMS TO BE PREPARED BY THE ASSESSEE HIMSELF FOR BOOKING BOGUS CAPITAL EXPENDITURE ( PAGE 20,21,22,23,25) THE AO DOES NOT HAVING ANY MATERIAL IN HIS POSSESSION AND HAS RELIED UPON HIS ASSUMPTION ONLY. WHILE TREATING CAPITAL EXPENDITURE TO THE TUNE OF R S. 1.74 CRORES AS BOGUS THE AO STATED ON PAGE 15 OF THE ASSESSMENT OR DER AS UNDER:- 'I AGAIN REJECT THAT ANY CONSTRUCTION WORK WAS CARR IED OUT AND HOLD THAT WITHDRAWALS FROM CASH BOOK FOR THIS PURPOSE WE RE USED BY THE ASSESSEE FOR HIS UNDISCLOSED USE. ' THE AO, HAS, HOWEVER, NOT BROUGHT ANY MATERIAL ON R ECORD REGARDING UTILIZATION OF ALLEGED CASH WITHDRAWN FRO M CASH BOOKS TO THE TUNE OF RS. 1.74 CRORES BY SHOWING BOGUS CAPITAL EX PENDITURE. THE AO PERHAPS IS NOT AWARE OF THE, BASIC OF CONSTR UCTION ACTIVITY. THERE ARE 3 TYPES OF CONSTRUCTION PERSONS UNDER A M ISTRI (WHO IS THE HEAD) VIZ. KARIGAR, VELDAR AND MAZDOOR. HE HAS ADDED UP K ARIGAR AND VELDAR AND TAKEN. THEM AS MISTRI & KARIGAR AND CALCULATED DISTORTED MISTRI/KARIGAR AS VELDAR/MAZDOOR RATIO TO PROVE CON STRUCTION AS BOGUS. THE REPLIES TO THE OBSERVATIONS OF THE AO WHICH HAV E NOT BEEN DEALT WITH IN MAIN REPLY DATED 20.03.2008 AND OUR R EPLIES THERETO ARE AS UNDER:- I) THIS IS GENUINE MISTAKE WHICH CAN BE COMMITTED BY ANYBODY.- WHEN DEALING IN MANY 100 BILLS, MISTAKE ON 3 BILLS IS NOT MATERIAL FACTOR. IT IS NECESSARY TO SEE WHETHER EXPENDITURE HAS BEEN INCURRED RATHER THAN FINDING SMALL ERRORS IN THE BILLS, VOUCHERS ETC. EV EN IF THERE IS SOME OVERWRITING IN THE BILLS IT CANNOT BE PRESUMED THAT SUCH EXPENDITURE HAS NOT BEEN INCURRED. II) THE OBSERVATION OF THE AO IS WRONG THAT ALL ENT RIES APPEAR TO BE DONE ON SAME DAY. THE WAGE SHEETS HAVE BEEN REGULAR LY MAINTAINED. III) THE AO HAS ERRED IN OBSERVING THAT SIGNATURES HAVE BEEN DONE BY SAME PERSON WHICH HAS WRITTEN THE NAME ON THE SHEET S. AO HAS GENERALLY USED THE WORD 'APPEAR', 'SEEMS', 'ALMOST SAME', BUT HE HAS NOT BROUGHT 10 ON RECORD ANYTHING TO BE PROVE THOSE ASSUMPTIONS. IV) THE AR POINTED OUT THAT CONSTRUCTION PROCESS I NVOLVES 4 TYPES OF PEOPLE, MISTRI,KARIGAR, VELDAR AND MAZDOOR. IN ANY CONSTRUCTION SITE THERE ARE KARIGARS, VELDARS AND MAZDOORS. THE AO HAS TREA TED KARIGAR AS MISTRI, VELDAR AS KARIGAR AND MAZDOOR AS VELDAR AND ACCORDINGLY CALCULATED THE RATIO BY ADDING UP KARIGAR AND MISTR I AND CALCULATING VELDAR AGAINST THEM. HAD HE TREATED KARIGAR AS KARI GAR, VELDAR AS VELDAR AND MAZDOOR AS MAZDOOR THEN THERE WOULD NOT HAVE BE EN ANY DISTORTION. V) AT ALL CONSTRUCTION SITES CONSTRUCTIONS WORKERS WORK FOR PART OF THE DAY AS PER THEIR NEEDS AND THERE IS NOTHING UNUSUAL OF THEIR WORK FOR HALF DAY, 1/4`X' DAY IN THAT. VI) ALTHOUGH CONSTRUCTION WORKERS ARE CASUAL WORKE RS, WHO WORK FOR SOME DAYS, LEAVE, REJOIN AND SO ON AND THERE IS NO LEGAL BAR THAT MORE THAN 100 CONSTRUCTION WORKERS CAN BE CHANGED EVERY MONTH . AO HAS FURTHER OBSERVED THAT ATTRITION RATE SHOULD BE NIL, BECAUSE ASSESSEE HAS SHOWN AS RS. 250/- PER DAY PER MISTRY WHICH IS JUST DOUBLE O F THE MARKET RATE. THIS IS ALSO NOT CORRECT, BECAUSE EVEN THE VELDAR IS NOT AVAILABLE AT RS. 125/- PER DAY. THE MARKET RATE OF MISTRI/KARIGAR IS AT LE AST RS. 250/- PER DAY. AO HAS NOT DISCLOSED HIS SOURCE OF INFORMATION OF THE RATE OF MISTRI/KARIGAR BEING AT RS.125/-. VII) FROM THE BILLS AT PAGES B-1 TO B-35, IT WOULD BE OBSERVED THAT THE BILLS HAVE BEEN PREPARED BY DIFFERENT PERSONS AND S IGN OF DIFFERENT PERSONS. THIS CAN BE FURTHER VERIFIED FROM THE WAY THE AMOUN T HAS BEEN WRITTEN IN FIGURES ON THE BILLS. THE AO HAS GROSSLY ERRED IN CONCLUDING THAT BILLS H AVE BEEN ARRANGED/ PREPARED BY ASSESSEE HIMSELF WITHOUT BRIN GING ANY EVIDENCE ON RECORD. THE AO IN HIS ORDER HAS HEAVILY RELIED ON THE FACTS THAT SUMMONS ISSUED TO 11 PARTIES WERE RETURNED BACK. IN THIS CO NNECTION REFERENCE OF DECISION OF HON'BLE SUPREME IS INVITED IN THE CASE OF ANIS AHMAD AND SONS V. CIT(A) (2008) 297 ITR 441 (SC) 'THE SUPREME COURT HELD THAT THE APPELLANT-ASSESSEE COULD NOT BE HELD RESPONSIBLE FOR NON-APPEARANCE OF THOSE FIVE T RADERS TO WHOM THE SUMMONS WAS ISSUED BY THE ASSESSING AUTHORITY, AS THEY ARE RESIDING OUTSIDE THE STATE OF U.P. FOR NON-APPEARAN CE OF THOSE TRADERS, NO ADVERSE INFERENCE OUGHT TO HAVE BEEN DR AWN BY THE AUTHORITIES BELOW AND THE APPELLANT-ASSESSEE HAS LED SATISFACTORY EVIDENCE THAT ITS BUSINESS IS ONLY THAT OF A COMMIS SION AGENT AND NOT `A TRADER' DEALING IN THE GOODS. ' 11 THE AR AT POINT NO. 4 OF HIS SUBMISSION DATED 19.1. 2009 SUBMITTED THAT: IN ALL 65 PARTIES WERE INVOLVED IN THE CONSTRUCTION WORK (OTHER THAN THE LABORERS), AND OUT OF THIS THE POSITION U/S 131 IS AS FOLLOWS: 1) TOTAL NO. OF PARTIES : 65 2) SUMMONS ISSUED TO TOTAL PARTIES : 16 3) SUMMONS SERVED ON PARTIES : 05 4) PARTIES APPEARED BEFORE A.O.& : 05 STATEMENT RECORDED U/S 131. 5) SUMMONS COULD NOT BE SERVED ON PARTIES : 11 THE A.O. HAS ENCLOSED STATEMENTS OF TWO PARTIES VIZ ., M/S JAI LAXMI CONSTRUCTION AND M/S SHREENATH MATERIAL SUPPL IERS IN HIS ORDER. OTHER THAN THESE TWO PARTIES THE AO ALSO RECORDED T HE STATEMENT OF M/S RAJ BUILDERS, M/S BHARAT ENTERPRISES AND M/S TECHNO CREATIONS. A) JAI LAXMI CONSTRUCTION M/S JAI LAXMI, CONSTRUCTION HAS CLEARLY STATED THAT WORK HAS BEEN DONE BY THEM AND MERELY BECAUSE THEY STATED THAT TH EIR WORK WAS OVER BY 31.05.04 THE AO CONCLUDED THAT THE ENTIRE CONSTRUCT ION WORK WAS OVER BY 31.05.2004. THERE IS NO DISPUTE REGARDING THE WORK DONE OR PAYMENT RECEIVED BY JAI LAXMI CONSTRUCTION. B) SHREENATH MATERIAL SUPPLIERS SHREENATH MATERIAL SUPPLIERS HAVE ALSO STATED THAT THEY HAVE SUPPLIED THE STONES FOR A SUM OF RS. 3.00 LAKHS. C & D) RAI BUILDERS AND BHARAT ENTERPRISES SHRI RAHUL SHARMA APPEARED ON 7.11.2007 ON BEHALF OF RAJ BUILDERS AND BHARAT ENTERPRISES AND HIS STATEMENTS WERE DULY RECORDED U/S 131. SHRI RAHUL SHARMA CONFIRMED THAT BOTH THE PART IES HAD SUPPLIED CEMENT AND ALSO FURNISHED COPY OF ACCOUNT OF BOBRA INDUSTRIES LTD. IN THE BOOKS OF RAJ BUILDERS AND BHARAT ENTERPRISES. E) TECHNO CREATIONS SHRI AJAY SABLA PROPRIETOR OF TECHNO ENTERPRISES GO T HIS STATEMENT RECORDED U/S 131 AND CONFIRMED THAT HE HAD DONE DES IGNING AND SUPERVISION WORK HE ALSO CONFIRMED HAVING RECEIVED A PAYMENT OF RS 135000/-. 12 THE APPELLANT COMPANY IS ENGAGED IN MANUFACTURING O F SINGLE SUPER PHOSPHATE FERTILIZER FOR LAST TEN YEARS. DURI NG THE YEAR UNDER CONSIDERATION, THE APPELLANT HAS MADE ADDITION OF R S. 2,15,79,771/- TO THE FACTORY BUILDING. THE BREAK UP OF THIS EXPENDITURE IS AS UNDER:- A) LABOUR PAYMENT - RS. 46,81,086/- B) MATERIALS PURCHASED (GITTI, SAND, BRICKS)- RS. 5 2,48,660/- C) OTHER MATERIALS PURCHASED. RS. 1,50,78,302/- (WHICH INCLUDES OPENING WORK-IN-PROGRESS OF RS.34,2 8,277/-) D) 50% OF THIS EXPENDITURE IN `C' ABOVE - RS. 75,39 ,151/- TREATED AS BOGUS. THE BREAK UP OF OTHER MATERIALS PURCHASED AS UNDER: - I) OPENING ASSESSED WORK-IN-PROGRESS ON 1.4.04 -RS. 34,28,277/- II) PAYMENTS TO JAI LAXMI CONSTRUCTION - RS. 28,38 ,563/- (TREATED AS GENUINE BY AO). III) PAYMENT TO PARTIES FROM WHOM AC SHEETS/MS -RS. 37,26,823/- PIPES/ALLOYS ETC. PURCHASED AGAINST C FORM (ALL THE BILLS, COPIES OF `C' FORMS ETC, HAVE BEEN PRODUCED BEFORE THE A.O.) IV) PURCHASED FROM LOCAL PARTIES LIKE AC SHEETS, - RS. 42,54,337/- MS PIPES, ALLOYS, CEMENT ETC. V) OTHER ITEMS LIKE DESIGNING CHARGES, ELECTRICAL- RS. 8,30,302/- FITTINGS, PAINTS, FREIGHT ETC. (ALL THE BILLS HAVE BEEN PRODUCED BEFORE AO) TOTAL - RS. 1,50,78,302/- IN THE ABOVE CONNECTION THE LD. A/R SUBMITTED THAT THE AO HAS RELIED ON PRESUMPTION I REJECTING THE BILLS OF LABOUR PAYMENT S, SAND, GITTI ETC. AND, THEREFORE, WITHOUT BRINGING ANY MATERIAL ON RECORD, THE AO HAS TREATED 50% OF OTHER MATERIAL PURCHASED FOR RS. 1,51 CRORE TO BE BOGUS. THE PUR CHASE OF MATERIAL CAN BE VERIFIED FROM THE CHART PREPARED BY THE AO HIMSELF. ALL THE BILLS/VOUCHERS HAVE BEEN PRODUCED BEFORE THE AO AND HE HAS NOT PROVED T HAT THE PRICE OR THE QUANTITY MENTIONED IN THE ORIGINAL INVOICES IS NOT GENUINE. THE AO ALSO NOT POINTED OUT AY OTHER DEFECTS IN THE BILLS/VOUCHERS. THE BOOKS OF A CCOUNT ARE PROPERLY MAINTAINED AND THE EXPENDITURE IS RECORDED THEREIN WITH FULL D ETAILS AND SUPPORTED BY BILLS, VOUCHERS. FURTHER, THE BOOKS OF ACCOUNTS HAVE BEEN DULY AUDITED AND, THEREFORE, 13 THE VALUATION AS PER BOOKS OF ACCOUNTS OUGHT TO HAV E BEEN TAKEN. 6. THEREAFTER THE LD. CIT (A) ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE RECORDING HIS FINDING IN PARA 12 TO 15 AT PGES 22 TO 25 ARE A S UNDER :- 12. I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSION OF THE ID. AR AND FOUND THAT THE AO MADE THE DISALLOWANCE OF D EPRECIATION ON THE GROUND OF UNVERIFIABLE NATURE OF EXPENSES INCURRED ON CONSTRUCTION OF BUILDING. THE AR PRODUCED LEDGER, CASH BOOK, WAGE S HEETS, BILLS FOR PURCHASE OF CONSTRUCTION MATERIALS, 'C' FORM, CONTR ACTORS BILL, VOUCHERS, GATE REGISTER/INWARD REGISTER IN TWO VOLUMES, GATE REGISTER FOR GITTI, RETI, STONES AND BRICKS IN TWO VOLUMES. 13. THE LEDGER CONTAINS ALL THE ACCOUNTS OF THE SU PPLIERS OF RAW MATERIAL, AC SHEETS, STEEL, MS PIPES, ELECTRICAL FI TTINGS, WELDING MATERIALS, PAINTS, ALLOYS AND CEMENT, RETI, GITTI, AND BRICKS ETC. ON GOING THROUGH THE CASH BOOK, IT IS FOUND THAT SUFFICIENT CASH BALANCE IS AVAILABLE FOR PAYMENT TO LABOURS AND FOR PURCHASE OF MATERIALS. THE BILLS AND 'C' FORMS ARE ALSO PROPERLY MAINTAINED AND THE BILLS ARE ENTERED IN TH E LEDGER. THE INWARD REGISTER CONTAINS THE DETAILS AS ENTRY NUMBER AND D ATE, SUPPLIER'S NAME, ITEMS AND RATE, QUANTITY AND VEHICLE NUMBER ALSO FO R THE WHOLE YEAR. NO DEFICIENCY HAS BEEN FOUND IN ALL THE REGISTERS MENT IONED ABOVE. AS FAR AS PROCEDURAL IRREGULARITIES/LACUNA/LAPSES ' ARE CONC ERNED I.E. ENTRIES MADE BY THE SAME PERSON ON THE SAME DATE, SIGNATURE OF THE LABOURS AFFIXING AND NAMES WRONGLY WRITTEN, NO LABOUR THUMB IMPRESSION ( SIGNATURE IN ALL CASES) AND NO REVENUE STAMP AFFIXED ON THE BILLS OF PAYMENT MORE THAN RS. 5,000/-, NO DOUBT THERE ARE SOME IRREGULARITIES BUT THE MOOT POINT THAT CONSTRUCTION OF FACTORY BUILDING HAS. BEEN DONE OR, HAS NOT BEEN DEALT WITH BY THE AO. HE HAS NOWHERE. MENTIONED ABOUT THE CONS TRUCTION OF THE FACTORY BUILDING WHETHER INCOMPLETE OR COMPLETE. HE HAS ALSO NOT MADE ANY PHYSICAL INQUIRY ON THE SPOT TO VERIFY ABOUT TH E EXACT CONDITION.OF THE, FACTORY BUILDING. INSTEAD THE AO HAS OPTED FOR THEO RY PART AND DEVOTED HIS PRECIOUS TIME BY COLLECTING BILLS AND VOUCHERS, WAG E SHEETS AND ANALYZING THEM IN VARIOUS MANNERS AND EVEN ARRIVED AT A RATIO OF CEMENT, BRICKS, GITTI, RETI AND MISTRIES AND LABOURERS. IN THE CASE OF M/S. SHREE NATH MATERIAL SUPPLIER( PROPRIETOR SHRI DEVI LAL), THE A O TREATED RS. 1,97,930/- AS BOGUS. THE AO TREATED 50% OF THE BALANCE OF RS. 3 LACS AS BOGUS ON THE BASIS OF THE STATEMENT OF SHRI DEVI LAL THAT HE REC EIVED RS. 3 LACS AS PAYMENT FOR SUPPLY OF STONE. IN THIS RESPECT, THE A PPELLANT SUBMITTED BILL NOS. 206 & 207 FOR RS. 4,97,930/-AND ALSO SUBMITTED CONFIRMED COPY OF 14 THE ACCOUNT. THE ID. AR SUBMITTED THAT THE AO TREAT ED PAYMENT OF RS. 1,97,390/-(OUT OF PAYMENT OF RS.4,97,930/-) TO SHRE E NATH MATERIAL SUPPLIER AS BOGUS MERELY ON THE BASIS OF HIS STATEM ENT, PARTICULARLY WHEN STATEMENT OF ACCOUNT DULY SIGNED BY THE PARTY CONFI RMING THE BALANCE OF RS. 4,97,930/- ALONGWITH CASH VOUCHERS DULY SIGNED BY THE PARTY WERE SUBMITTED TO THE AO. THE AR ALSO STATED THAT THE AM OUNT OF RS. 3 LACS INCLUDED IN OTHER ITEMS OF RS. 8,30,302/-. ON GOING THROUGH THESE FACTS, IT IS HELD THAT IT IS WRONG ON THE PART OF THE AO TO D ISALLOW THE AMOUNTS BY TREATING IT AS BOGUS PAYMENT. EVEN IN CASE OF SHRI DALI CHAND DANGI, PARTNER OF M/S. JAI LAXMI CONSTRUCTION, HE INTERPRE TED THE STATEMENT TO SUIT HIS BEST WAY AS SHRI DALI CHAND DANGI STATED THAT H E HAD COMPLETED THE WORK OF FOUNDATION, SET COLUMNS, 'PLATFORMS, CUTTIN G OF RODS, TANKS AND MACHINERY HOPPER BY THE END OF JUNE, 2004. HE INTER PRETED THAT THE CONSTRUCTION WORK WAS COMPLETED BY JUNE END AND IN THE REST OF THE MONTHS OF THE YEAR CONSTRUCTION OF FACTORY BUILDING WAS NOT CONTINUED BY OTHER CONTRACTORS. IF HIS JOB WAS OVER IN JUNE END, IT DOES NOT MEAN THAT ALL OTHER WORKS WERE COMPLETED BY THE END OF JUNE. IN S OME CASES, THE SUMMONS U/S. 131 OF THE ACT ISSUED BY THE AO CAME U NSERVED WITH THE REMARK FROM POSTAL AUTHORITIES THAT NO SHOP BY THIS NAME, LEFT OR INCOMPLETE ADDRESS. OUT OF 16 SUMMONSES ISSUED TO T HE SUPPLIERS, ONLY 5 HAD TURNED UP, 2 SUMMONSES WERE SENT TO THE WRONG A DDRESS, 9 WERE LEFT. THE AR SUBMISSION IN THIS REGARD THAT THE SUPPLIERS ARE UNREGISTERED DEALERS, THEIR WHEREABOUTS IS NOT KNOWN. AFTER THRE E YEARS BUT IT IS ALSO A FACT THAT EVERY ITEM OF PURCHASE, PAYMENT, TRANSPOR TATION, RECEIPT, MODE OF TRANSPORT IS RECORDED PROPERLY IN THE BOOKS OF ACCO UNT. THE AO HAS NOWHERE IN THE ASSESSMENT ORDER POINTED OUT ANY DEF ECT IN THE BOOKS OF ACCOUNT. THE DISALLOWANCE OF MATERIALS PURCHASED, L ABOUR PAYMENT AND NOT ACCEPTING CONSTRUCTION OF FACTORY BUILDING ON SOME PROCEDURAL IRREGULARITIES AND PRESUMPTION IS NOT JUSTIFIED. IT IS TO BE MENTIONED HERE THAT THE AO HAS DISALLOWED TOTAL LABOUR PAYMENT OF RS. 46,81,086/-WHICH MEANS THAT THE CONSTRUCTION OF FACTORY BUILDING EVE N IN PART WAS COMPLETED WITHOUT ANY LABOUR PAYMENT. THE AO ALSO MADE DISALL OWANCE OF RS.52,48,660/- CLAIMED FOR MATERIAL SUPPLY, GITTI, CEMENT SAND ETC AND RS.75,39,151/- AS OTHER MATERIAL SUPPLY. HERE ALSO THE POSITION IS SAME AS DISCUSSED ON THE POINT OF LABOUR PAYMENT. THE AO HA S BROUGHT NOTHING ON RECORD-TO SHOW THAT THE APPELLANT HAS NOT INCURRED EXPENDITURE ON LABOUR PAYMENT AND. FOR PURCHASE OF MATERIAL. THEREFORE, THE AO WAS NOT JUSTIFIED IN DISALLOWING DEPRECIATION ON BUILDING. THE DISALLOWANCE IS DELETED. 14. THE SIXTH GROUND OF APPEAL RELATES TO DISALLOWA NCE OF RS.20,96,267/- OUT OF INTEREST PAID TO BANK. 15 15. THIS GROUND IS CONSEQUENTIAL TO GROUND NO.5 AB OVE. FOLLOWING THE DISCUSSION MADE FOR DISALLOWANCE OF DEPRECIATION ON BUILDING, THE AO DISALLOWED THE BANK INTEREST ON THE AMOUNT NOT UTIL IZED FOR CONSTRUCTION. AS THE DISALLOWANCE OUT OF DEPRECIATION ON BUILDING HAS ALREADY BEEN DELETED, HERE ALSO THE SAME FACTS INVOLVED, THE DIS ALLOWANCE OF INTEREST IS ALSO DELETED. 7. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS NOT CLAIMED ANY SUBSIDY AND HAS ALSO OBTAINED THE VALUATION REPORT FROM GOVERNMENT APPROVED VALUER WHICH WAS FILED BEFORE THE BANK FOR OBTAINING LOAN AND, THIS FACT H AS BEEN DISCLOSED BY THE ASSESSEE BEFORE LD. CIT (A). ATTENTION OF THE BENCH WAS DRAWN ON T HE WRITTEN SUBMISSIONS FILED BEFORE LD. CIT (A) PLACED IN THE PAPER BOOK. IT WAS FURTH ER SUBMITTED THAT ASSESSEE HAS MAINTAINED DAY TO DAY BOOKS OF ACCOUNT AND NO DEFEC T WHATSOEVER WAS FOUND BY THE ASSESSING OFFICER. HE SIMPLY REJECTED THE ENTIRE L ABOUR EXPENSES AND EXPENSES INCURRED ON TILES ETC. FOR CONSTRUCTING THE ADDITIONAL PART OF THE BUILDING USED FOR BUSINESS PURPOSES. THE ASSESSING OFFICER ON ADHOC BASIS MAD E DISALLOWANCE @ 50% AND REDUCED THIS DEPRECIATION ON THIS ACCOUNT AS ASSESSEE HAS A LREADY CAPITALIZED THE AMOUNT. NO MATERIAL WAS BEFORE THE ASSESSING OFFICER TO DRAW A NY ADVERSE INFERENCE BY HOLDING THAT EXPENSES INCURRED ON LABOUR AND OTHER RAW MATERIAL WAS BOGUS. ONLY THERE ARE TECHNICAL ERROR AND WHICH HAS BEEN EXPLAINED BEFORE LD. CIT ( A) WHO WAS FAIR IN ACCEPTING THOSE ERRORS AS TECHNICAL ERROR. ACCORDINGLY, IT WAS SUB MITTED THAT THE ORDER OF LD. CIT (A) IS LIABLE TO BE SUSTAINED ON THIS ISSUE. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THE M CAREFULLY. WE HAVE GONE THROUGH THE ORDERS OF ASSESSING OFFICER AND LD. CIT (A) AND THE SUBMISSIONS OF LD. A/R 16 AND FOUND THAT LD. CIT (A) HAS EXAMINED THE ISSUE T HREAD BEAR AS ALL THE ASPECTS HAVE BEEN TAKEN INTO CONSIDERATION. THE ASSESSEE HAS MAINTAI NED COMPLETE PURCHASE VOUCHERS AND VOUCHERS OF PAYMENT TO THE LABOURERS. THERE WERE C ERTAIN TECHNICAL MISTAKES OR ERROR IN WRITING THE NAME AS IN ONE CASE THE NAME OF RAMLAL WAS WRITTEN AS RAMLALA, AND IN ONE CASE WHILE MAKING THE SIGNATURE ON THE VOUCHERS J I WORD WAS USED AFTER THE NAME OF THE PARTY. THIS IS A ROUTINE MISTAKE AND IF SOMEBO DY WRITES JI AFTER HIS NAME, IT DOES NOT CHANGE THE CHARACTER OF TRANSACTION. THE LD. CIT ( A) HAS CONSIDERED THIS ASPECT MINUTELY AND THEN ONLY HAS ACCEPTED THE CLAIM OF THE ASSESSE E. FINDINGS OF LD. CIT (A) HAVE BEEN REPRODUCED SOMEWHERE ABOVE IN THIS ORDER WHICH REMA INED UNCONTROVERTED. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF L D. CIT (A). THIS IS ALSO NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE HAS SHOWN EXCESSIVE VA LUATION OF THE FACTORY BUILDING AS ASSESSEE IS NOT CLAIMING ANY SUBSIDY. THE BANK LOA N HAS BEEN OBTAINED FOR THE PURPOSE OF ERECTING ADDITIONAL PART OF THE BUILDING OR PURCHAS ING MACHINERY. THE SAME HAS BEEN PURCHASED AND COMPLETE VOUCHERS HAVE BEEN FURNISHED BEFORE THE BANK FOR SATISFYING THE BANK FOR TAKING LOAN. VALUATION HAS ALSO BEEN OBTA INED BY THE ASSESSEE. THERE WAS NO MAJOR DIFFERENCE BETWEEN THE VALUE ADOPTED BY THE V ALUER OR THE EXPENDITURE SHOWN BY ASSESSEE IN ITS BOOKS OF ACCOUNT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 9. INTEREST IS A CONSEQUENTIAL TO THE MAIN GROUND A S INTEREST PAID BY ASSESSEE WAS PAID ON BORROWED AMOUNT FROM BANK WHICH IS ALLOWABL E AS BUSINESS EXPENDITURE. THE CIT (A) HAS ALLOWED THE SAME. ACCORDINGLY WE CONFI RM THE ORDER OF LD. CIT (A) ON THIS ISSUE ALSO. 17 10. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- THE ACIT, CIRCLE-2, UDAIPUR. M/S. BOHRA INDUSTRIES LTD., UDAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 346(2)/JODH/2009) BY ORDER, AR ITAT JODHPUR.