M/s. Planet EDU Pvt. Ltd., Gurgaon V. DCIT, Gurgaon

ITA 3473/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7097 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR SENIOR
• Keywords: Gift; Depreciation; Business expenditure; Rule of consistency; Unabsorbed depreciation; Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 37(1); 13; 145(3); 22; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.3472/DEL./2015 (ASSESSMENT YEAR : 2009-10) M/S. PLANET EDU PVT. LTD., VS. JCIT, RANGE II, 304, 3 RD FLOOR, PARK CENTRA, GURGAON. SECTOR 30, NH 8, GURGAON 122 001 (HARYANA) (PAN : AACCP3937A) ITA NO.3473/DEL./2015 (ASSESSMENT YEAR : 2010-11) M/S. PLANET EDU PVT. LTD., VS. DCIT, CIRCLE 2, 304, 3 RD FLOOR, PARK CENTRA, GURGAON. SECTOR 30, NH 8, GURGAON 122 001 (HARYANA) (PAN : AACCP3937A) ITA NO.3702/DEL./2015 (ASSESSMENT YEAR : 2009-10) JCIT, RANGE II, VS. M/S. PLANET EDU PVT. LTD., GURGAON. 304, 3 RD FLOOR, PARK CENTRA, SECTOR 30, NH 8, GURGAON 122 001 (HARYANA) (PAN : AACCP3937A ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 2 ITA NO.3574/DEL./2015 (ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 2, VS. M/S. PLANET EDU PVT. LTD., GURGAON. 304, 3 RD FLOOR, PARK CENTRA, SECTOR 30, NH 8, GURGAON 122 001 (HARYANA) (PAN : AACCP3937A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY SOOD, CA REVENUE BY : SHRI SARAS KUMAR, SENIOR DR DATE OF HEARING : 23.01.2020 DATE OF ORDER : 31.01.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER PRESENT CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, M/S. PLANET EDU PVT. LTD. (HEREINAFTE R REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEALS SO UGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 31.03.2015 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, GURGAON QUA THE ASSESSMENT YEARS 2009-10 & 2010-11 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.3472/DEL./2015 FOR AY: 2009-10 (ASSESSEES APPEAL) 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) UPHOLD THE ADDITION MADE BY A.O. THAT RENT P AID WAS EXCESSIVE ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 3 TO THE EXTENT OF RS.6,17,580/- AND DISALLOWABLE U/S 40A(2)(B) OF THE INCOME TAX ACT. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. , AND IN CONFIRMING DISALLOWANCE OF EXPENDITURE ON GIFTS TO THE EXTENT OF RS.5,47,622/-. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. , AND CONFIRMING THE DISALLOWANCE MADE BY A.O. OF OUTSTANDING BALANCE OF SUNDRY CREDITORS - PHONE. IN BARODA OF RS.3,53,626/-. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. , AND CONFIRMING THE DISALLOWANCE MADE BY A.O. OF OUTSTANDING BALANCE OF SUNDRY CREDITORS - INDOOR & EXTERIORS OF RS.4,88,497/-. 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. WHO ER RED IN CORRECTLY COMPUTING THE 'CARRIED FORWARD LOSS AND UNABSORBED DEPRECIATION. 6. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. WHO ER RED IN NOT ALLOWING MAT CREDIT PAID IN THE EARLIER YEARS. ITA NO.3473/DEL./2015 FOR AY : 2010-11 (ASSESSEES APPEAL) 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) UPHOLD THE ADDITION MADE BY A.O. THAT RENT P AID WAS EXCESSIVE TO THE EXTENT OF RS.6,17,580/- AND DISALLOWABLE U/S 40A(2)(B) OF THE INCOME TAX ACT. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. WHO ER RED IN MAKING AN ADDITION ON ACCOUNT OF DEPRECIATION ON CAR OF RS.10 ,04,258/-. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE ON ACCO UNT OF INTEREST PAID TO NBFC, M/S KOTAK MAHINDRA PRIMUS LTD. OF RS. 3,97,817/-. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. WHO ER RED IN NOT ADJUSTING THE BROUGHT FORWARD LOSSES/UNABSORBED DEP RECIATION FROM EARLIER YEARS. 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. WHO ER RED IN CORRECTLY COMPUTING THE CARRIED FORWARD LOSS AND UNABSORBED D EPRECIATION. 6. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF A.O. WHO ER RED IN NOT ALLOWING MAT CREDIT PAID IN THE EARLIER YEARS. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 4 3. APPELLANTS, JCIT, RANGE II, GURGAON AND DCIT, CI RCLE 3, GURGAON (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED OR DERS BOTH DATED 31.03.2015 PASSED BY THE COMMISSIONER OF INCOME - T AX (APPEALS)-1, GURGAON QUA THE ASSESSMENT YEARS 2009- 10 & 2010- 11 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.3702/DEL./2015 FOR AY : 2009-10 (REVENUES A PPEAL) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C!T(A) HAS ERRED ON FACTS AND IN LAW, IN NOT UPHOLDING THE DEC ISION OF AO REJECTING THE BOOK RESULTS U/S 145(3) OF THE INCOME TAX ACT I N SPITE OF THE FACT THAT THE BOOKS OF ACCOUNTS ARE NOT COMPLETE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C!T(A) HAS ERRED ON FACTS AND IN LAW, IN NOT UPHOLDING THE DEC ISION OF AO REJECTING THE BOOK RESULTS U/S 145(3) OF THE INCOME TAX ACT I NSPITE OF THE FACT THAT THERE WERE UNVERIFIABLE SUNDRY CREDITORS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C!T(A) HAS ERRED ON FACTS AND IN LAW, IN NOT UPHOLDING THE DEC ISION OF AO REJECTING THE BOOKS RESULTS U/S 145(3) OF THE INCOME TACT ACT INSPITE OF THE FACT THAT VARIOUS EXPENSES HAVE BEEN DEBITED WHICH ARE N OT GENUINE OR EXCESSIVE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C!T(A) HAS ERRED ON FACTS AND IN LAW, IN HOLDING THAT THE EXPE NDITURE OF RS.2,26,14,880/- ON PROJECT EDEXCEL, UK IS REVENUE IN NATURE AND THAT NO NEW ASSET HAS COME INTO EXISTENCE IGNORING THE F ACTS THAT THE ASSESSEE ITSELF HAS TREATED THE SAME AS FIXED ASSET BEING EXPENDITURE INCURRED FOR EXPANSION OF BUSINESS IN ITS ORIGINAL RETURN AND IN SCHEDULE 'C' OF BALANCE SHEET. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C!T(A) HAS ERRED ON FACTS AND IN LAW, IN DELETING THE ADDITION OF RS.2,26,14,880/- BY TREATING IT AS REVENUE EXPENDITURE, IN DOING SO, LD. CIT(A) HAS IGNORED THE FACT THAT THE EXPENDITURE WAS INCURRED FOR RENDERING SERVICES TO PROJECT EDEXCEL, UK. THE ASSESSEE MUST HAVE CHARGED FOR SUCH SERVICES FROM THEM BUT THE ASSESSEE HAS NOT FU RNISHED ANY DETAILS/EVIDENCES TO PROVE THAT ANY SUCH AMOUNT WAS CHARGED FROM EDEXCEL, UK. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE EXPEN DITURE OF ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 5 RS.2,26,14,880/- ALLOCATED TO PROJECT EDEXCEL, UK I S REVENUE IN NATURE IGNORING THE FACT THAT WHEN THE AMOUNT SO ALLOCATED WAS CAPITALIZED AS PER COMPANIES ACT, 1956, IT IS NOT ALLOWABLE AS REV ENUE EXPENDITURE UNDER INCOME TAX ACT, 1961. ITA NO.3574/KOL./2015 AY: 2010-11 (REVENUES APPEAL ) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON F ACTS AND IN LAW, IN NOT UPHOLDING THE DECISION OF AO REJECTING THE B OOK RESULTS U/S 145(3) OF THE I.T. ACT IN SPITE OF THE FACT THAT TH E BOOKS OF ACCOUNTS ARE NOT COMPLETE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON F ACTS AND IN LAW, IN NOT UPHOLDING THE DECISION OF AO REJECTING THE B OOK RESULTS U/S 145(3) OF THE I.T. ACT IN SPITE OF THE FACT THAT TH ERE WERE UNVERIFIABLE SUNDRY CREDITORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON F ACTS AND IN LAW, IN NOT UPHOLDING THE DECISION OF AO REJECTING THE B OOK RESULTS U/S 145(3) OF THE I.T. ACT IN SPITE OF THE FACT THAT VA RIOUS EXPENSES HAVE BEEN DEBITED WHICH ARE NOT GENUINE OR EXCESSIVE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED, IN FACTS AND IN LAW, IN DELETING THE ADDITIO N MADE BY THE AO AFTER REJECTING THE BOOKS OF ACCOUNTS DESPITE THE ASSESSE E NOT BEING ABLE TO SUBSTANTIATE HIS BOOKS EVEN AFTER REPEATED OPPORTUN ITIES GIVEN BY THE AO. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF PROVIDING LOGISTICS SUPPORT SERVICES IN CONDUCTING TESTS/EXAM ETC. AND DURING THE YEAR UNDER ASSESSMENT, SUCH TESTS WE RE MAINLY CONDUCTED ALL OVER INDIA FOR IELTS AUSTRALIA. ASSE SSING OFFICER (AO) AFTER REJECTING THE BOOKS OF ACCOUNT OF THE AS SESSEE UNDER SECTION 145 (3) OF THE INCOME-TAX ACT, 1961 (FOR SH ORT THE ACT) IN AYS 2009-10 & 2010-11 MADE ADDITION OF RS.6,17,580/ - EACH BEING THE RENT PAID ON THE EXCESSIVE SIDE U/S 40A(2 )(B) OF THE ACT. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 6 AO IN AYS 2009-10 & 2010-11 HAS ALSO NOT ALLOWED MA T CREDIT CLAIMED BY THE ASSESSEE HAVING BEEN PAID IN THE EAR LIER YEARS. 5. IN AY 2009-10, AO MADE DISALLOWANCE OF RS.5,47,6 22/- RS.3,53,626/- AND RS.4,88,497/- ON ACCOUNT OF GIFTS , OUTSTANDING BALANCE OF SUNDRY CREDITOR VIZ. PHONE.IN BARODA AND OUTSTANDING BALANCE OF SUNDRY CREDITOR VIZ. INDOOR & EXTERIORS RESPECTIVELY. AO HAS ALSO REPORTEDLY NOT COMPUTED THE CARRIED FOR WARD LOSSES AND UNABSORBED DEPRECIATION CORRECTLY. 6. IN AY 2009-10, AO DISALLOWED THE EXPENDITURE TO THE TUNE OF RS.2,26,14,880/- INCURRED BY THE ASSESSEE ON HOU SE, RENTAL, TRAVEL, BUSINESS PROMOTION, ADVERTISEMENT, PRINTING & STATIONERY, PROFESSIONAL CHARGES, ETC. CLAIMED BY THE ASSESSEE AS CAPITAL IN BALANCE SHEET AND THEN TREATED THE SAME AS REVENUE IN COMPUTATION, RESULTING IN LOSS TO THE REVENUE. 6. IN AY 2010-11, AO MADE ADDITION BY WAY OF DISALL OWANCE ON DEPRECIATION OF CAR TO THE TUNE OF RS.10,04,258/ -. AO ALSO MADE DISALLOWANCE OF RS.3,97,817/- ON ACCOUNT OF INTERES T PAID TO NBFC, M/S. KOTAK MAHINDRA PRIMUS LTD. AO ALSO REPORTEDLY NOT ADJUSTED BROUGHT FORWARD LOSSES/UNABSORBED DEPRECIATION FROM EARLIER YEARS NOR HAS HE CORRECTLY COMPUTED THE CARRIED FORWARD L OSSES AND UNABSORBED DEPRECIATION. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 7 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEALS WHO HAS PARTLY ALLOWED THE APPEA LS FOR AYS 2009-10 & 2010-11. FEELING AGGRIEVED BY THE ORDERS PASSED BY THE LD. CIT (A), BOTH THE ASSESSEE AS WELL AS THE REVEN UE HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT CR OSS APPEALS. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. UNDISPUTEDLY, THE LD. CIT (A) HAS ANNULLED THE O RDER OF THE AO REJECTING THE BOOKS OF ACCOUNT U/S 145 (3) OF TH E ACT AND ESTIMATING THE PROFIT @ 5% OF THE GROSS RECEIPTS, W HICH ACTION OF THE LD. CIT (A) HAS BEEN CHALLENGED BY THE REVENUE FOR BOTH THE AYS 2009-10 & 2010-11. GROUNDS NO.1, 2 & 3 OF REVENUES APPEAL FOR AY 2009-10 GROUNDS NO.1, 2, 3 & 4 OF REVENUES APPEAL FOR AY 2010-11 10. PERUSAL OF PARA 3.2 OF THE ASSESSMENT ORDER GOE S TO SHOW THAT THE AO PROCEEDED TO REJECT THE BOOKS OF ACCOUNT U/ S 145 (3) OF THE ACT ON THE GROUND THAT DESPITE REPEATED OPPORTUNITI ES, ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND SUPPORT ING EVIDENCE. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 8 HOWEVER, AT THE VERY OUTSET, IN PARA 1 OF THE ASSES SMENT ORDER, AO SPECIFICALLY RECORDED THE FACT THAT, BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS WERE CALLED FOR EXAMINATION ON T EST CHECK BASIS. 11. WHEN WE EXAMINE IMPUGNED ORDER PASSED BY THE LD . CIT (A) PARTICULARLY PARAS 4.2 TO 4.5, IT HAS COME ON RECOR D THAT LD. CIT (A) HAS EXAMINED THREADBARE EVERY REASON RECORDED BY TH E AO FOR REJECTING THE BOOKS OF ACCOUNT IN THE LIGHT OF THE SETTLED PRINCIPLES OF LAW, THE OPERATIVE PART OF WHICH IS EXTRACTED FO R READY PERUSAL AS UNDER :- ON AN A CAREFUL EXAMINATION OF THE FACTS OF THE C ASE, I FIND THAT THE A.O. HAD, IN ARRIVING AT THIS DECISIO N, BEEN MAINLY GUIDED BY THE UNEXPLAINED POINTS LISTED IN THE ASSE SSMENT ORDER, AND THE ABSENCE OF THE DETAILS OF MAJOR EXPENSES. T HE APPELLANT HAD EXHIBITED THAT DETAILS OF MAJOR EXPENSES HAD BE EN FILED BEFORE THE A.O. THE VOUCHERS FOR JULY 2008 AND DECEMBER 20 08 TOO HAVE BEEN EXAMINED BY THE A.O. IT IS ONLY AFTER SUC H EXAMINATION COULD THE A.O. RECORD OBSERVATION THAT EXPENSES ON VENUE/PROFESSIONAL EXPENSES ARE SELF MADE. THE APPE LLANT HAS MAINTAINED RECORDS OF EXPENDITURE FOR EACH TEST CON DUCTED AT LOCATIONS ALL OVER THE COUNTRY FOR SUCH TESTS, VENU E IS SELECTED AT LEADING HOTELS, WHERE PAYMENTS HAVE BEEN MADE BY CH EQUE. IN SUPPORT OF ITS CLAIM, APPELLANT REPRODUCED BEFORE M E THE PAYMENT DETAILS FOR THE MONTH OF APRIL 2008. FURTHER AT SUC H VENUE INVIGILATORS ETC HAVE TO BE ENGAGED WHO ARE ESSENTI AL TO OVERSEE THE TESTS. THE TEST, IT WAS EXPLAINED, ALSO HAS A V ERBAL PART, WHEREIN KNOWLEDGE THROUGH ANNOUNCEMENTS ETC IN ENGL ISH ARE ALSO EXAMINED. SOME EXPENDITURE HAS BEEN INCURRED A T SUCH VENUES ON LOCAL CONVEYANCE, HIRING OF COOLIES REFRE SHMENTS ETC. EXAMINATION OF VOUCHERS OF JULY 2008 AND DECEMBER 2 008, PRODUCED FOR MY VERIFICATION, REVEALED THAT WHERE T HE EXPENDITURE WAS IN CASH IT WAS VOUCHED AND IS NOT SIGNIFICANT I N COMPARISON TO THE TOTAL EXPENDITURE. AFTER VERIFYING EXPENSES ON ACCOUNT OF VENUE AND PROFESSIONAL EXPENSES, I HOLD THAT THE AO, WITHOUT POINTING OUT A ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 9 SPECIFIC DEFICIENCY IN CERTAIN BILLS/VOUCHERS, SHOU LD NOT HAVE REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT ON T HIS BASIS. FURTHERMORE, NO OPPORTUNITY WAS PROVIDED TO THE APP ELLANT TO REBUT THE MATERIALS SO GATHERED. THE DIVISION BENCH IN THE CASE OF ADDL ITO V PONKUNNAM TRADERS (1976) 102 ITR 366 (KER), CONFIRMED THE ORDER OF THE SINGLE JUDGE, WHO HAD QU ASHED SUCH ADDITIONS ,WHERE OPPORTUNITY NOT BEEN PROVIDED TO T HE APPELLANT. .. 4.5 IN THE PRESENT CASE THE A.O REJECTED THE BOOKS OF ACCOUNT WITHOUT SPECIFYING AS TO WHETHER ANY OF THE ABOVE T HREE CONDITIONS WAS SATISFIED. FURTHERMORE, INSTEAD OF P ASSING ORDER U/S 144 OF THE INCOME TAX ACT, THE A.O, EVEN AFTER REJECTING THE BOOKS OF ACCOUNT, PASSED THE ORDER U/S 143(3) WHICH IS FALLACIOUS. IF THE A.O WANTED TO REJECT THE BOOKS OF ACCOUNT HE SHOULD HAVE GIVEN CERTAIN SPECIFIC INSTANCES WHICH COULD HAVE P ROVED THAT THE ACCOUNTS OF THE APPELLANT ARE INCORRECT/INCOMPLETE. BESIDES, SINCE THE APPELLANT COMPANY HAS BEEN REGULARLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, IT HAS NOT VIOLATED PROVISION OF SECTION 145(1) OF THE INCOME TAX ACT. AS NONE OF THE CONDIT IONS FOR REJECTION OF BOOKS, MENTIONED IN SECTION 145 WERE S ATISFIED, I HOLD THAT A.O SHOULD NOT HAVE REJECTED THE BOOKS OF ACCO UNT IN THE APPELLANT'S CASE BY MAKING SWEEPING REMARKS AND WIT HOUT EXAMINING VOLUMINOUS DOCUMENTS SUBMITTED BY THE APP ELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 12. SO, THE AFORESAID REASONS RECORDED BY THE LD. C IT (A) FOR ACCEPTING THE BOOKS OF ACCOUNT/DOCUMENTS BROUGHT ON RECORD BY THE ASSESSEE GO TO PROVE INTER ALIA THAT THE DETAIL S OF MAJOR EXPENSES INCURRED BY THE ASSESSEE ALONG WITH VOUCHERS HAVE B EEN FURNISHED BEFORE THE AO AND HAVE BEEN SO EXAMINED BY THE AO; THAT RECORD HAS BEEN MAINTAINED BY THE ASSESSEE QUA THE EXPENDI TURE INCURRED FOR EACH TEST CONDUCTED AT VARIOUS LOCATIONS ACROSS THE COUNTRY; THAT PAYMENT DETAILS OF ALL THE EXPENDITURE INCURRED BY THE ASSESSEE HAVE BEEN DULY PRODUCED BEFORE THE LD. CIT (A) WHO HAS VERIFIED THE SAME; THAT EXPENSES FOR HIRING THE INVIGILATORS AND EXAMINERS ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 10 FOR CONDUCTING THE ORAL TEST, FOR LOCAL CONVEYANCE, HIRING OF POLICE, ETC. ALONG WITH VOUCHERS HAVE BEEN DULY BROUGHT ON RECORD AND VERIFIED AS SUCH BY THE LD. CIT (A); THAT AO WITHOU T POINTING OUT ANY SPECIFIC/CLEAR DEFICIENCY IN BILLS/VOUCHERS PRO CEEDED TO REJECT THE BOOKS OF ACCOUNT ON THE BASIS OF SURMISES FOR W HICH ASSESSEE HAS NOT BEEN PROVIDED ANY OPPORTUNITY TO REBUT THE SAME; THAT WHEN THERE WAS NO VALID GROUND FOR AO TO REJECT THE BOOK S OF ACCOUNT U/S 145 (3), THE QUESTION OF ESTIMATING THE GROSS PROFI T @ 5% OF THE GROSS RECEIPTS DOES NOT ARISE. 13. EVEN OTHERWISE, AO HAS NOT RECORDED ANY CATEGOR IC FINDING THAT THE ACCOUNTS PRODUCED BY THE ASSESSEE WERE DEF ECTIVE OR INCOMPLETE RATHER REJECTED THE SAME EON THE HYPER-T ECHNICAL GROUND THAT CERTAIN DETAILS HAVE NOT BEEN BROUGHT ON RECOR D. 14. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. PARADISE HOLIDAYS (2010) 325 ITR 13 (DEL.) DECIDED THE IDENTICAL ISSUE ON REJECTION OF BOOKS OF ACCOUNT U/S 145 (3) BY RETURN ING FOLLOWING FINDINGS :- THE ACCOUNTS WHICH ARE REGULARLY MAINTAINED IN THE COURSE OF BUSINESS AND ARE DULY AUDITED, FREE FROM ANY QUALIF ICATION BY THE AUDITORS, SHOULD NORMALLY BE TAKEN AS CORRECT UNLES S THERE ARE ADEQUATE REASONS TO INDICATE THAT THEY ARE INCORREC T OR UNRELIABLE. THE ONUS IS UPON THE REVENUE TO SHOW THAT EITHER TH E BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WERE INCORRECT O R INCOMPLETE OR THAT THE METHOD OF ACCOUNTING ADOPTED BY HIM WAS SUCH THAT TRUE PROFITS OF THE ASSESSEE CANNOT BE DEDUCED THER EFROM. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 11 15. ONE GLARING ASPECT HAS COME ON RECORD IN THIS C ASE IS THAT AO BY RECKLESSLY REJECTING THE BOOKS OF ACCOUNT PRO CEEDED TO ESTIMATE THE INCOME BY APPLYING PROFIT @ 5% OF THE GROSS RECEIPT AT RS.76,94,395/- WHEREAS ASSESSEE COMPANY HAS ALREADY ASSESSED ITS INCOME FROM BUSINESS AT RS.1,03,37,625/- (BEFORE DE PRECIATION). SO, AO FOR THE REASON BEST KNOWN TO HIM HAS ASSESSE D THE INCOME OF THE ASSESSEE SUBSTANTIALLY LESS THAN THE RETURNE D INCOME. 16. SO, IN THESE CIRCUMSTANCES, WE ARE OF THE CONSI DERED VIEW THAT LD. CIT (A) HAS RIGHTLY AND VALIDLY ACCEPTED T HE BOOKS OF ACCOUNT AND SET ASIDE THE ESTIMATION OF GROSS PROFI T @ 5% AND PROCEEDED TO EXAMINE THE SUSTAINABILITY OF THE VARI OUS ALLOWANCES CLAIMED BY THE ASSESSEE INDEPENDENTLY. SO, GROUNDS NO.1, 2 & 3 OF REVENUES APPEAL FOR AY 2009-10 AND GROUNDS NO.1 , 2, 3 & 4 OF REVENUES APPEAL FOR AY 2010-11 ARE DETERMINED A GAINST THE REVENUE. GROUNDS NO.4, 5 & 6 OF REVENUES APPEAL FOR AY 2009-10 17. THE ASSESSEE CLAIMED AN AMOUNT OF RS.2,26,14,88 0/- BEING EXPENDITURE ON ITS NEW PROJECT (PROJECT EDEXCEL). AO AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE DISALLO WED THE EXPENSES OF RS.2,26,14,880/- U/S 37 (1) OF THE ACT ON THE GR OUND THAT THE ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 12 ASSESSEE HAS FAILED TO PROVE INCURRING OF SUCH EXPE NSES. HOWEVER, LD. CIT (A) DELETED THESE EXPENSES. 18. FOR PROCEEDING FURTHER, WE WOULD LIKE TO EXTRAC T THE EXPENDITURE FOR PROJECT EDEXCEL CLAIMED BY THE ASSE SSEE FOR READY PERUSAL AS UNDER :- SR. NO. PARTICULARS ALLOCATION OF EXPENDITURE TO EDEXCEL 1. SALARY 10,222,952 2. RENT AMRITSAR 2,67,894 3 RENT-BAB TOWER 249,489 4 RENT BARODA OFFICE 536,692 5 RENT BPTP 3RA FLOOR 3,579,585 6 RENT CHENNAI OFFICE 712,271 7 RENT KOLKATA OFFICE 778,273 8 RENT LUDHIANA 306,039 9 RENT PUNE 721,304 10 TRAVELING FOREIGN 998,955 11 TOUR AND TRAVELING 1,864,206 12 BUSINESS PROMOTION 1,552,106 13 ADVERTISEMENT EXP 227,781 14 PRINTING AND STATIONERY 87,469 15 PROFESSIONAL CHARGES` 512,865 TOTAL 22,614,880 19. PERUSAL OF THE AFORESAID EXPENDITURE CLAIMED BY THE ASSESSEE SHOWS THAT THE SAME ARE ON ACCOUNT OF SALARY, RENT PAID FOR HIRING OFFICE PREMISES AT DIFFERENCE PLACES, FOREIGN TRAVE LLING EXPENSES, TOUR AND TRAVELLING EXPENSES, BUSINESS PROMOTION EX PENSES, ADVERTISEMENT EXPENSES, PRINTING & STATIONERY EXPEN SES AND PROFESSIONAL EXPENSES. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 13 20. AO HAS NOT ONLY DISALLOWED THE AMOUNT OF RS.2,2 6,14,880/- CLAIMED BY THE ASSESSEE IN COMPUTATION OF INCOME BU T ALSO THE AMOUNT WHICH HAD BEEN CAPITALIZED IN THE BOOKS OF A CCOUNT. 21. LD. AR FOR THE ASSESSEE CONTENDED THAT THE AO H AS NOT ONLY DISALLOWED THE AMOUNT IN COMPUTATION OF INCOME BUT ALSO MADE SEPARATE ADDITION OF THIS AMOUNT OF RS.2,26,14,880/ - WHICH AMOUNTS TO DOUBLE DISALLOWANCE. LD. DR FOR THE RE VENUE, HOWEVER, RELIED UPON THE ORDER PASSED BY THE AO. 22. AO HAS PRIMARILY DISALLOWED THESE EXPENSES ON T HE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE INCURRING OF SUCH EXPENSES WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS U/S 37(1) OF THE ACT AND ALSO OBSERVED THAT IT IS NOT ADMISSIBLE TO THE ASSESSEE AS IT HAS CLAIMED SUCH EXPENDITURE AS CAPITAL EXPENDITURE FOR ITS NEW PROJECT. 23. WHEN IT IS AN UNDISPUTED FACT THAT ASSESSEE IS INTO PROVIDING LOGISTIC SERVICES FOR TESTING ESTABLISHMENTS HOLDIN G TESTS IN INDIA AND ITS MAJOR CLIENT IS IELTS AUSTRALIA RENDERING S ERVICES TO PROJECT EDEXCEL FOR HOLDING TESTS ON THEIR BEHALF I N INDIA BY SPREADING ITS INFRASTRUCTURE AT DIFFERENT RENTED LO CATIONS AND BY HAVING EXTRA STAFF, IT IS CERTAINLY A BUSINESS EXPE NDITURE. MOREOVER, ASSESSEE HAS BROUGHT ON RECORD THE FACT THAT :- ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 14 EDEXCEL IS A ORGANIZATION BASED IN THE UK AND HAS BEEN ACCREDITED TO AWARD O AND A LEVEL CERTIFIC ATES OF CAMBRIDGE UNIVERSITY. SEVERAL SCHOOLS IN INDIA HAV E A SYSTEM TO TEST THEIR STUDENTS IN THE AFORESAID O AND A LE VEL IN ADDITION TO REGULAR EXAMS OF INDIAN BOARDS. THIS IS A GROWING BUSINESS IN INDIA AND PLANT EDU. (P) LTD., HAS BEEN APPOINTED B Y EDEXCEL TO PROMOTE AND CONDUCT SUCH TESTS IN INDIA. THE ASSESSEE COMPANY HAD IN AN EFFORT TO SHOW IMPR OVED RESULTS TO ITS SHAREHOLDERS/POTENTIAL INVESTORS/PES ETC. ALLOCATED VARIOUS COSTS TO SUCH EDEXCEL PROJECT AND INCLUDED THE SAME AS PART OF FIXED ASSETS IN THE BALANCE SHEET UNDER COMPANY LAW. TREATMENT BY THE ASSESSEE, FOR COMPANY LAW PURPOSE, AN ASSET, CANNOT BE CHANGE THE EXPENDITURE. 24. WHEN WE EXAMINE THE FUNCTIONS BEING PERFORMED B Y EDEXCEL ORGANISATION OF UK HAVING BEEN ACCREDITED T O AWARD O AND A LEVEL CERTIFICATE ISSUED BY CAMBRIDGE U NIVERSITY AGAIN IT IS PART AND PARCEL OF THE BUSINESS CARRIED OUT B Y THE ASSESSEE COMPANY, THUS HAS BEEN PROVED ON RECORD THAT EDEXCE L HAS BEEN HIRED BY THE ASSESSEE TO PROMOTE AND CONDUCT SUCH T ESTS IN INDIA. 25. BARE PERUSAL OF THE ASSESSMENT ORDER GOES TO PR OVE THAT EXCEPT FOR REPEATING THE LANGUAGE OF SECTION 37(1) OF THE ACT, AO HAS NOT WRITTEN A WORD AS TO HOW THESE EXPENDITURE CLAIMED BY THE ASSESSEE ARE NOT BUSINESS EXPENDITURE. 26. IN AY 2008-09, REVENUE ITSELF VIDE ORDER DATED 22.02.2012 PASSED BY THE LD. CIT (A) IN APPEAL NO.76/GGN/2010- 11 THOROUGHLY EXAMINED THESE EXPENDITURE INCURRED ON P ROJECT EDEXCEL AND HELD THE SAME OF REVENUE IN NATURE FOLL OWING THE DECISIONS OF THE HONBLE SUPREME COURT IN CASES OF KEDARNATH ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 15 JUTE MANUFACTURING CO. VS. CIT 82 ITR 363 AND CIT V S. INDIAN DISCOUNTS CO. LTD. 75 ITR 91 . ORDER PASSED BY THE LD. CIT (A) WAS CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL W HO HAS REMANDED THE MATTER BACK TO AO AND AO VIDE ASSESSME NT ORDER DATED 11.05.2016, AVAILABLE AT PAGES 57 TO 59 OF TH E PAPER BOOK, ACCEPTED THE CLAIM OF THE ASSESSEE QUA PROJECT EDEX CEL EXPENSES, THUS THE ISSUE HAS ATTAINED FINALITY. 27. HONBLE SUPREME COURT IN CASE OF SUTLEJ COTTON MILLS LTD. VS. CIT 116 ITR 1 HELD THAT :- THE WAY IN WHICH ENTRIES ARE MADE BY AN ASSESSEE I N HIS BOOKS OF ACCOUNT IS NOT DETERMINATIVE OF THE QUESTION WHETHE R THE ASSESSEE HAS EARNED ANY PROFIT OR SUFFERED ANY LOSS. THE ASS ESSEE MAY, BY MAKING ENTRIES WHICH ARE NOT IN CONFORMITY WITH THE PROPER ACCOUNTANCY PRINCIPLES, CONCEAL PROFIT OR SHOW LOSS AND THE ENTRIES MADE BY HIM CANNOT, THEREFORE, BE REGARDED AS CONCLUSIVE ONE WAY OR THE OTHER. WHAT IS NECESSARY TO BE CONSI DERED IS THE TRUE NATURE OF THE TRANSACTION AND WHETHER IN FACT IT HAS RESULTED IN PROFIT OR LOSS TO THE ASSESSEE. 28. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSID ERED VIEW THAT WHEN IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY TH E REVENUE IN FAVOUR OF THE ASSESSEE IN 2008-09 AND SUCH EXPENSES HAVE BEEN ACCEPTED AS REVENUE EXPENSES IN AY 2010-11 ALSO, TH E RULE OF CONSISTENCY HAS TO BE FOLLOWED BY THE REVENUE PARTI CULARLY WHEN THERE IS NO CHANGE IN THE BUSINESS MODEL AND FACTS AND CIRCUMSTANCES OF THE CASE. SO, AFORESAID EXPENDITU RE INCURRED ON ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 16 SALARY, HIRING PREMISES ON RENT, BUSINESS PROMOTION EXPENSES, ETC. HAVE BEEN RIGHTLY TREATED AS REVENUE IN NATURE BY T HE LD. CIT (A) WITH WHICH NO NEW ASSETS HAVE CAME INTO EXISTENCE, HENCE NO GROUND IS MADE OUT TO INTERFERE IN THE FINDINGS RET URNED BY THE LD. CIT (A), CONSEQUENTLY GROUNDS NO.4, 5 & 6 OF REVENU ES APPEAL FOR AY 2009-10 ARE DETERMINED AGAINST THE REVENUE. GROUND NO.1 OF ASSESSEES APPEAL FOR AYS 2009-10 & 2010-11 29. AO MADE ADDITION OF RS.55,58,220/- EACH FOR AYS 2009- 10 & 2010-11 QUA RENTAL PAID BY THE ASSESSEE REGARD ING PREMISES NO.304, 3 RD FLOOR, PARK CENTRE, SECTOR 30, GURGAON HAVING COVE RED AREA OF 10293 SQ.FT. BY ASSESSING ITS RENT @ RS.5 P ER SQ.FT. AS AGAINST RS.90 PER SQ.FT. STATED TO HAVE BEEN PAID B Y THE ASSESSEE ON THE GROUND THAT THE RENT PAID BY THE ASSESSEE QUA T HIS PREMISES TO ITS DIRECTOR IS HIGHLY EXCESSIVE. 30. LD. CIT (A), ON THE OTHER HAND, AFTER EXAMINING THE LEASE DEED OF THE PREMISES IN QUESTION AND PREMISES RENTE D OUT BY MRS. BAWEJA OF GREENWOOD PLAZA OF THE ADJOINING PREMISES FOR AY 2011-12 WHICH WAS AT THE RENT OF RS.85 PER SQ.FT., ASSESSED THE RENT OF THE PREMISES IN QUESTION @ RS.85 PER SQ.FT. AND RESTRICTED THE ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 17 ADDITION TO THE EXTENT OF RS.6,17,580/- EACH U/S 40 A(2)(B) OF THE ACT FOR AYS 2009-10 AND 2010-11. 31. EXCEPT FOR THE FACTS THAT THE PREMISES AT GREEN WOOD PLAZA HAD COVERED AREA OF 1858 SQ.FT. AND OPEN TERRACE OF 462 SQ.FT AND THE FACT THAT NEW PREMISES IS IN BETTER LOCATION, N O NEW FACTS HAVE BEEN BROUGHT ON RECORD BY THE ASSESSEE. SO, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS DETERMINED THE RENT IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE BY EXAMINING THE LEASE DEED OF TWO PREMISES TAKEN ON RENT BY THE ASS ESSEE COMPANY ITSELF, WHICH IS CARRYING OUT THE SAME BUSINESS IN THE TWO PREMISES. SO, WE FIND NO SCOPE TO INTERFERE INTO THE FINDINGS RETURNED BY THE LD. CIT (A). SO, GROUND NO.1 IN ASSESSEES APPEAL FOR AYS 2009-10 & 2010-11 IS DETERMINED AGAINST THE ASSESSEE. GROUND NO.2 OF ASSESSEES APPEAL FOR AY 2009-10 32. AO MADE ADDITION OF RS.16,42,866/- CLAIMED BY T HE ASSESSEE COMPANY ON ACCOUNT OF GIFT OF SILVER ITEMS ON THE G ROUND THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS CALLED FOR B Y THE AO NOR IT IS PROVED THAT SUCH GIFTS ARE GIVEN FOR THE PURPOSE OF BUSINESS. HOWEVER, LD. CIT (A) DISALLOWED 1/3 RD OF SUCH EXPENSES U/S 37(1) OF THE ACT BEING ON EXCESSIVE SIDE. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 18 33. WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS DECIDED THE ISSUE SUMMARILY WITHOUT LOOKING INTO THE FACTS OF THIS CASE ON ESTIMATION BASIS. ON THE ONE HAND, LD. CIT (A) HAS CATEGORICALLY RETURNED THE FINDING THAT, THE ENTIRE PAYMENT HAS BEEN MADE BY CHEQUE WHICH IS SUPPORTED BY RELEVANT EVIDENCE AND ALSO CONSIDERED THE BUSINESS EXIGENCY BUT IN THE SAME BR EATH OBSERVED THAT GIFT ITEMS WERE EXCESSIVE. LD. AR FOR THE ASSESSEE CONTENDED THAT GIFT GIVEN IN AY 2009-10 WERE HIT BY THE PROVI SIONS OF FBT U/S 115WV(2)(O) APPLICABLE TO AY 2009-10 AND DISALL OWANCE HAS BEEN MADE IN FBT RETURN WHICH HAD BEEN ACCEPTED BY THE AO AND AS SUCH NO ADDITION CAN BE MADE WHICH WOULD AMOUNT TO DOUBLE DISALLOWANCE. WHEN THE DISALLOWANCE HAS ALREADY BE EN MADE BY THE ASSESSEE COMPANY IN FBT RETURN WHICH HAS BEEN A CCEPTED BY THE AO NO SEPARATE ADDITION CAN BE MADE WHICH WOULD AMOUNT TO DOUBLE DISALLOWANCE. SO, WE HEREBY DELETE THIS ADD ITION OF RS.5,47,622/- SUSTAINED BY THE LD. CIT (A) FOR AY 2 009-10, HOWEVER SUBJECT TO VERIFICATION BY THE AO QUA THE F ACTS BROUGHT ON RECORD BY THE ASSESSEE. HENCE, GROUND NO.2 IN ASSE SSEES APPEAL FOR AY 2009-10 IS DETERMINED IN FAVOUR OF THE ASSES SEE. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 19 GROUNDS NO.3 & 4 OF ASSESSEES APPEAL FOR AY 2009-10 34. LD. CIT (A) CONFIRMED THE DISALLOWANCE OF RS.3, 53,626/- AND RS.4,88,497/- MADE BY THE AO ON ACCOUNT OF OUTS TANDING BALANCE OF SUNDRY CREDITORS, NAMELY, INDOOR & EXTER IORS AND PHONE.IN BARODA RESPECTIVELY. LD. AR FOR THE ASSES SEE CONTENDED THAT BOTH THESE CREDITORS RELATE TO CAPITAL EXPENDI TURE QUA WHICH DEPRECIATION HAS BEEN DULY CLAIMED. IT IS ALSO CON TENDED BY THE LD. AR FOR THE ASSESSEE THAT IN CASE OF ADDITION OF RS. 3,53,626/- QUA PHONE.IN BARODA DISPUTE ARISEN AND ULTIMATELY OUTST ANDING BALANCE HAS BEEN ADDED BACK IN THE ACCOUNTS OF AY 2013-14 W HICH HAS BEEN OFFERED TO TAX. ASSESSEE HAS BROUGHT ON RECOR D THE ACCOUNTS IN THIS REGARD. SO, WHEN THE OUTSTANDING BALANCE H AS BEEN ADDED BACK IN THE ACCOUNTS FOR AY 2013-14 ITSELF AND HAS BEEN OFFERED TO TAX, ADDITION THEREOF CANNOT BE MADE DURING THE YEA R UNDER ASSESSMENT. SO, IT IS ORDERED TO BE DELETED SUBJEC T TO VERIFICATION BY THE AO. 35. HOWEVER, SO FAR AS DISALLOWANCE OF RS.4,88,497/ - ON ACCOUNT OF SUNDRY CREDITORS, NAMELY INDOOR & EXTERIOR IS CO NCERNED, LD. AR FOR THE ASSESSEE CONTENDED THAT SUPPLIER HAD MOVED TO AUSTRALIA AND THE AMOUNT WAS NOT PAID TO HIM AND AS SUCH, AMO UNT CAPITALIZED COULD BE REDUCED AS EXPENDITURE INCURRE D LEADING TO ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 20 REDUCTION IN COST OF THE SAME. WHEN THE REVENUE HA S NOT DISPUTED THE FACT THAT SUPPLIER HAS NOT SUPPLIED THE GOODS W HICH IS APPARENT FROM THE COPY OF ACCOUNT OF SUPPLIER TO WHOM PAYMEN T HAD OTHERWISE BEEN MADE THROUGH BANKING CHANNEL, NO ADD ITION CAN BE MADE ON THIS ACCOUNT. SO, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS.4,88,497/- IS NOT SUSTAINABLE AND OR DERED TO BE DELETED, HOWEVER SUBJECT TO VERIFICATION BY THE AO. CONSEQUENTLY, GROUNDS NO.3 & 4 OF ASSESSEES APPEAL FOR AY 2009-1 0 ARE DETERMINED IN FAVOUR OF THE ASSESSEE. GROUND NO.5 OF ASSESSEES APPEAL FOR AY 2009-10 GROUNDS NO.4 & 5 OF ASSESSEES APPEAL FOR AY 2010-11 36. ASSESSEE HAS CHALLENGED THE COMPUTATION OF CARR Y FORWARD LOSSES AND UNABSORBED DEPRECIATION QUA THE YEAR UND ER ASSESSMENTS BY THE AO AND CONFIRMED BY THE LD. CIT (A) ON THE G ROUND THAT THE SAME HAS NOT BEEN CORRECTLY COMPUTED. SINCE IT IS A FACTUAL MISTAKE POINTED OUT BY THE LD. AR FOR THE ASSESSEE, AO IS D IRECTED TO CORRECTLY COMPUTE THE CARRY FORWARD LOSSES AND UNAB SORBED DEPRECIATION TO ARRIVE AT THE LOGICAL ASSESSMENT. HENCE, GROUND ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 21 NO.5 OF AY 2009-10 AND GROUNDS NO.4 & 5 OF AY 2010- 11 OF ASSESSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPO SES. GROUND NO.6 OF ASSESSEES APPEAL FOR AYS 2009-10 & 2010-11 37. LD. AR FOR THE ASSESSEE CONTENDED THAT THE AO H AS NOT ALLOWED MAT CREDIT PAID IN EARLIER YEARS IN BOTH TH E AYS 2009-10 AND 2010-11 AND POINTED OUT THE FACTS FROM THE FINA NCIALS. SINCE THIS IS A FACTUAL MISTAKE COMMITTED BY THE AO/CIT(A ), AO IS DIRECTED TO ALLOW THE MAT CREDIT PAID BY THE ASSESS EE IN THE EARLIER YEARS AFTER DUE VERIFICATION. HENCE, GROUND NO.6 O F AYS 2009-10 AND 2010-11 OF ASSESSEES APPEAL ARE ALLOWED FOR ST ATISTICAL PURPOSES. GROUND NO.2 OF ASSESSEES APPEAL FOR AY 2010-11 38. LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE A O ON ACCOUNT OF DEPRECIATION ON INNOVA CAR TO THE TUNE O F RS.10,04,258. UNDISPUTEDLY, ASSESSEE COMPANY HAS PURCHASED 8 SEAT ER INNOVA CAR FROM THE COMPANY FUNDS BUT REGISTERED IN THE NAME O F ITS DIRECTOR, SHRI SANJAY MALAVIYA. AO AS WELL AS CIT(A) HAVE DI SALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE COMPANY ON THE GROUND THAT ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 22 ASSESSEE COMPANY HAS FAILED TO PROVE THAT CAR REGIS TERED IN THE NAME OF DIRECTOR OF THE COMPANY WAS ACTUALLY USED I N THE COMPANYS BUSINESS. 39. THESE FINDINGS WHEN ATTRIBUTED TO AO ARE CORREC T TO THE EXTENT THAT THE AO HAS REJECTED THE BOOKS OF ACCOUN T. HOWEVER, WHEN THE BOOKS OF ACCOUNT HAVE BEEN ACCEPTED BY THE LD. CIT (A) AND ORDER OF LD. CIT (A) HAS HELD TO HAVE BEEN SUST AINABLE BY THE BENCH AS PER FINDINGS IN THE PRECEDING PARAS, DEPRE CIATION CANNOT BE DISALLOWED BECAUSE VEHICLE RUNNING AND ITS MAINT ENANCE EXPENSES HAVE BEEN DULY CHARGED TO THE ACCOUNTS. M OREOVER, WHEN VEHICLE IS PROVED TO BE PURCHASED FROM THE COMPANY S FUNDS, DEPRECIATION CANNOT BE DISALLOWED MERELY ON THE BAS IS OF SURMISES THAT IT WAS NOT USED FOR THE BUSINESS OF THE ASSESS EE. SO, CAR HAVING BEEN PURCHASED FROM THE COMPANYS FUND THOUGH IN TH E NAME OF THE DIRECTOR AND EXPENSES AS TO ITS MAINTENANCE AND RUN NING HAVE BEEN DULY CHARGED TO THE ACCOUNT WHICH ARE AUDITED ONE A ND HAVE BEEN DULY ACCEPTED, DISALLOWANCE MADE BY THE AO AND CONF IRMED BY THE LD. CIT (A) IS NOT SUSTAINABLE, HENCE ORDERED TO BE DELETED. GROUND NO.2 OF ASSESSEES APPEAL FOR AY 2010-11 IS DETERMI NED IN FAVOUR OF THE ASSESSEE. ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 23 GROUND NO.3 OF ASSESSEES APPEAL FOR AY 2010-11 40. GROUND NO.3 OF ASSESSEES APPEAL FOR AY 2010-11 IS NOT PRESSED DURING THE COURSE OF HEARING, HENCE DISMISS ED. 41. RESULTANTLY, THE APPEALS FILED BY THE ASSESSEE FOR AYS 2009- 10 AND 2010-11 ARE PARTLY ALLOWED AND APPEALS FILED BY THE REVENUE FOR AYS 2009-10 & 2010-11 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF JANUARY, 2020. SD/- SD/- (DR. B.R.R. KUMAR) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF JANUARY , 2020 TS ITA NOS.3472 & 3473/DEL./2015 ITA NOS.3702 & 3574/DEL./2015 24 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.