Dy. Commissioner of Income Tax (Exemption), Lucknow V. M/s U.P Forest Corporation, Lucknow

ITA 355/LKW/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9659 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IN
• Keywords: Question of law; Condonation of delay
• Section: 43B; 260A; 12A; 12AA; 11

Judgement Text

I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 DY.C.I.T. (EXEMPTIONS), LUCKNOW. VS. U.P. FOREST CORPORATION, 21/475, INDIRA NAGAR, LUCKNOW. PAN:AAATU 3944 K (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS A GROUP OF FIVE APPEALS FILED BY THE REVEN UE AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A)-IV, LUCKNOW ALL D ATED 30/03/2017. THE REVENUE HAS TAKEN SIMILAR GROUNDS OF APPEAL IN THES E APPEALS WHICH WERE HEARD TOGETHER THEREFORE, FOR THE SAKE OF CONVENIEN CE, A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. FOR THE SAKE O F CONVENIENCE, THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN I.T.A. NO .352 ARE REPRODUCED BELOW: 1. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY ALLOWING THE APPEAL OF THE ASSESSEE IGNORI NG THE FACT THAT THE ACTIVITIES OF THE ASSESSEE DO NOT FALL WIT HIN 'PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FOREST AND WILDLIFE]' AS INSERTED IN SECTION 2(15) OF THE ACT W.E.F. 01.04.2009; APPELLANT BY SHRI A. K. BAR, CIT, (D.R.) RESPONDENT BY S HRI D. D. CHOPRA, ADVOCATE DATE OF HEARING 07/12/2018 DATE OF PRONOUNCEMENT 13 / 1 2 /201 8 I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 2 2. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED I N LAW AND FACTS BY ALLOWING THE APPEAL OF THE ASSESSEE IGNORI NG THE FACT THAT THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL AND IN THE NATURE OF TRADE, COMMERCE OR BUSINESS WHICH QUALIFI ES UNDER THE ADVANCEMENT OF AN ACT OF GENERAL PUBLIC UTILITY , THEREFORE THE OBJECT OF THE ASSESSEE DOES NOT FALL WITHIN 'CH ARITABLE PURPOSE' AS DEFINED IN SECTION 2(15) OF THE ACT; 3. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED I N LAW AND FACTS BY ALLOWING THE APPEAL OF THE ASSESSEE IGNORI NG THE FACT THAT THE REGISTRATION U/S 12A OF THE I.T. ACT, 1961 TO THE ASSESSEE WAS GRANTED FOR 'PRESERVATION, SUPERVISION AND DEVELOPMENT OF FOREST' AND NOT FOR THE EXPLOITATION OF FOREST PRODUCE; 4. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY DELETING THE ADDITION/DISALLOWANCE MADE BY THE AO ON ACCOUNT OF PRIOR PERIOD EXPENSES AMOUNTING TO RS.6, 63,812/-. 5. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY ALLOWING EXEMPTION U/S 11 OF THE I.T. ACT IGNORING THE FACT THAT THE ASSESSEE IS INVOLVED IN THE ACTIVITIE S OF TRADE/COMMERCE/BUSINESS AND IS AS SUCH HIT BY THE P ROVISIONS OF THE FIRST PROVISO TO SECTION 2(15) OF THE I.T.ACT, 1961; 6. LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS BY HOLDING THAT THE EXPENSES ARE ALLOWED FOR THE REASON THAT THESE EXPENSES WERE DETERMINED AND CRYSTALLIZE D ONLY DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. 7. THE ORDER OF LD. CIT(A) BE CANCELLED AND THE ORDER OF THE A.O. RESTORED; 8. APPELLANT CRAVES LEAVE TO MODIFY/AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. LEARNED D. R., AT THE OUTSET, SUBMITTED THAT ASS ESSEE WAS INVOLVED IN THE ACTIVITIES WHICH DID NOT FELL WITHIN THE DEFINI TION OF PRESERVATION OF ENVIRONMENT AND FURTHER ARGUED THAT THE ACTIVITIES OF THE ASSESSEE INVOLVED CARRYING ON OF BUSINESS AND TRADE. LEARNED D. R. F URTHER SUBMITTED THAT THE REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEE ON LY FOR PRESERVATION, I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 3 SUPERVISION AND DEVELOPMENT OF FOREST AND NOT FOR D EVELOPMENT OF FOREST PRODUCE. IT WAS PRAYED THAT LEARNED CIT(A) HAS IGN ORED THESE FACTS AND HAS WRONGLY ALLOWED RELIEF TO THE ASSESSEE BY ALLOWING EXEMPTION U/S 11 OF THE ACT. LEARNED D. R. FURTHER SUBMITTED THAT THE ASSE SSEE HAD CLAIMED CERTAIN EXPENSES WHICH RELATED TO PRIOR PERIOD AND WERE NOT ALLOWABLE DURING THE RESPECTIVE FINANCIAL YEARS AS THE ASSESSEE WAS FOLL OWING MERCANTILE SYSTEM OF ACCOUNTING AND, THEREFORE, ON THIS ACCOUNT ALSO THE ORDER OF LEARNED CIT(A) NEEDS TO BE REVERSED. 3. LEARNED A. R., ON THE OTHER HAND, SUBMITTED THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A OF THE ACT AS THE ACTIVITIES OF THE ASSESSEE WERE HELD TO BE CHARITAB LE IN NATURE BY HON'BLE TRIBUNAL WHICH WAS UPHELD BY HON'BLE HIGH COURT AND HON'BLE SUPREME COURT AS THE APPEALS FILED BY THE REVENUE HAD BEEN DISMISSED. LEARNED A. R. IN THIS RESPECT INVITED OUR ATTENTION TO THE ORD ER OF LEARNED CIT(A) FROM PAGE 50 ONWARDS WHERE LEARNED CIT(A) HAS NOTED ALL THESE FACTS. AS REGARDS THE ARGUMENTS OF LEARNED D. R. THAT ASSESSE E WAS ENGAGED IN TRADE AND BUSINESS, LEARNED A. R. SUBMITTED THAT THE APPE ALS RELATE TO ASSESSMENT YEAR 2002-03, 2003-04, 2004-05, 2007-08 AND 2008-09 AND DURING THIS PERIOD THERE WAS NO BAR IN THE DEFINITION OF CHARIT ABLE ACTIVITIES IF THESE INVOLVED CARRYING ON OF TRADE OR COMMERCE AND IN TH IS RESPECT OUR ATTENTION WAS INVITED TO THE FINDINGS OF LEARNED CIT(A) RECOR DED AT PAGE 54 OF HIS ORDER. 4. AS REGARDS THE ISSUE IF DISALLOWANCE OF PRIOR PE RIOD EXPENSES, LEARNED A. R. SUBMITTED THAT ASSESSEE THOUGH WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT THE LIABILITY FOR CERTAIN EXPENSES H AD CRYSTALLIZED AFTER THE BALANCE SHEET DATE AND THAT IS WHY THE ASSESSEE HAD RECORDED THOSE EXPENSES IN THE SUBSEQUENT YEAR. IT WAS SUBMITTED THAT LEARNED CIT(A) HAS I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 4 RELIED ON A NUMBER OF CASE LAWS AND HAS RIGHTLY ALL OWED RELIEF TO THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE WAS INITI ALLY DENIED REGISTRATION U/S 12AA OF THE ACT AND LATER ON THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12A WAS GRANTED AS THE ASSESSEE WA S HELD TO BE DOING CHARITABLE ACTIVITY. THE MATTER REGARDING REGISTRA TION HAS ATTAINED FINALITY WHEN HON'BLE SUPREME COURT DISMISSED THE APPEAL OF REVENUE. THESE FACTS HAVE BEEN NOTED BY LEARNED CIT(A) IN HIS ORDER. FO R THE SAKE OF COMPLETENESS, WE REPRODUCE THESE FACTS FROM THE ORD ER OF LEARNED CIT(A) AS UNDER: (I) THE APPELLANT FURNISHED AN APPLICATION UNDER S ECTION 12AA OF THE ACT WITH THE OFFICE OF THE COMMISSIONER OF INCOME-TAX, LUCKNOW ON 11-07-1988 FOR SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT. THE REGI STRATION TO THE APPELLANT WAS DENIED VIDE ORDER DATED 18.03. 1997 PRIMARILY ON THE FINDINGS BY THE COMMISSIONER OF IN COME- TAX, LUCKNOW THAT THE APPELLANT HAS REQUESTED FOR G RANT OF REGISTRATION AFTER A GAP OF 14 YEARS AND THE APP LICATION WAS NOT IN PRESCRIBED FORM 10-A AS SPECIFIED IN THE RULES. (II) THE APPELLANT PREFERRED APPEAL AGAINST THE ORD ER OF THE CIT, LUCKNOW DATED 18.03.1997 REGARDING REFUSAL OF REGISTRATION BEFORE THE HON'BLE ALLAHABAD HIGH COUR T WHEREIN THE HON'BLE COURT VIDE ORDER DATED 26-11-20 02 IN CIVIL MISC WRIT PETITION NO 173 (MB) OF 1998 HAS QU ASHED THE ORDER OF THE CIT, LUCKNOW DATED 18.03.1997 WITH THE OBSERVATION THAT NECESSARY OPPORTUNITY OF BEING HEA RD WAS NOT AFFORDED TO THE APPELLANT AND THE CIT, LUCK NOW WAS DIRECTED TO DECIDE THE APPLICATION FOR GRANT OF REGISTRATION AFRESH ON MERITS. (III) THE CIT, LUCKNOW VIDE ITS ORDER 13-06-2007 IN COMPLIANCE TO THE TERMS OF THE DIRECTIONS OF THE HO N'BLE ALLAHABAD HIGH COURT IN CIVIL MISC WRIT PETITION NO 173 (MB) OF 1998 RECONSIDERED THE MERITS FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE CIT, I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 5 LUCKNOW PROCEEDED TO DENY REGISTRATION ON THE FINDI NGS THAT THE APPELLANTS ACTIVITIES DO NOT QUALIFY TO BE IN THE NATURE OF CHARITABLE ACTIVITIES AND RELIANCE WAS AL SO PLACED ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIG H COURT IN APPELLANTS OWN CASE REPORTED IN (129 TAXMA N 527) WHEREIN THE HON'BLE COURT HAS OBSERVED THAT TH E 'EXPLOITATION OF FOREST' IS A COMMERCIAL ACTIVITY. (IV) THE ORDER OF THE CIT LUCKNOW DATED 13-06-2007 DENYING REGISTRATION UNDER SECTION 12A OF TO THE ACT TO THE APPELLANT WAS AGAIN CHALLENGED BEFORE THE HON'BLE I TAT, LUCKNOW IN ITAT APPEAL NO I.T.A NO 512/LLIC/2007. (V) IN THE INTERIM, THE APPELLANT ALSO FILED A SPEC IAL LEAVE PETITION (SLP) BEFORE THE HON'BLE SUPREME COURT AGA INST THE ORDER DATED 26-11-2002 AS PASSED BY THE HON'BLE ALLAHABAD HIGH COURT, FOR REMANDING THE CASE BACK T O CIT, LUCKNOW TO DECIDE THE GRANT OF REGISTRATION AF RESH. WHILE DECIDING THE SAID SLP THE HON'BLE SUPREME COU RT VIDE ITS ORDER DATED 27-11-2007 REPORTED UNDER CITA TION NO (165 TAXMAN 533 ) HELD THAT THE PRIMARY CONDITIO N FOR GRANT OF EXEMPTION UNDER SECTION 11 IS TO HAVE A REGISTRATION UNDER SECTION 12A OF THE ACT AND THE S AME BEING PENDING FOR DISPOSAL BEFORE THE HON'BLE TRIBU NAL. THE HON'BLE TRIBUNAL WAS DIRECTED TO DECIDE THE GRA NT OF REGISTRATION AGAINST THE ORDER PASSED BY THE COMMISSIONER REJECTING THE APPLICATION FILED UNDER SECTION 12A OF THE ACT WITHOUT BEING INFLUENCED BY ANY OF T HE FINDINGS RECORDED BY THE HON'BLE HIGH COURT IN THE IMPUGNED ORDER. (VI) IN PURSUANCE OF THE DIRECTIONS OF THE HON'BLE SUPREME COURT IN CASE REPORTED UNDER CITATION NO 165 TAXMAN 533, THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL AT LUCKNOW IN I.T.A NO 512/LUC/2007 VIDE ORDER DATED 1 6- 01-2009 HAS PROCEEDED TO GRANT THE REGISTRATION UND ER SECTION 12A OF THE ACT WITH ITS FINDINGS THAT APPEL LANT IS DOING A CHARITABLE ACTIVITY WHICH ENCOMPASSES THE 'OBJECT OF GENERAL PUBLIC UTILITY. IT IS IMPORTANT TO POINT OUT HERE THAT THE SUBJECT ORDER / FINDING OF THE-HO N'BLE ITAT IS AFTER TAKING INTO ACCOUNT THAT THE HON'BLE TRIBUNAL IS NOT REQUIRED TO BE INFLUENCED BY THE FINDINGS OF THE HON'BLE HIGH COURT AT ALLAHABAD. THE ORDER OF THE H ON'BLE I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 6 ITAT GRANTING REGISTRATION HAS ATTAINED FINALITY PU RSUANT TO DISMISSAL OF THE APPEAL PREFERRED BY THE DEPARTM ENT BOTH AT HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT IN CASE NO ITA NO 70 OF 2009 BEARING DATE 12-05-2010 A ND HON'BLE SUPREME COURT IN SLP NO CC 2590/2011 BEARIN G DATE 12-05-2011. (VI) ACCORDINGLY AS ON DATE, THE REGISTRATION AS DU LY GRANTED BY THE HON'BLE ITAT LUCKNOW IN ITA NO 512/LUC/2007 AND AS DULY ATTAINED FINALITY PURSUANT TO DISMISSAL OF THE APPEAL PREFERRED BY THE DEPARTMENT BOTH BY AT HON'B LE JURISDICTIONAL ALLAHABAD HIGH COURT IN CASE NO ITA NO 70 OF 2009 BEARING DATE 12-05-2010 AND HON'BLE SUPREME COURT IN SLP NO CC 2590/2011 BEARING DATE 12-05-201 1 STANDS VALID. THE CIT, LUCKNOW VIDE ORDER DATED 17- 12- 2012 READ WITH ORDER DATED 18.04.2011 HAS DULY GRAN TED THE REGISTRATION UNDER SECTION 12A OF THE ACT HOLDI NG APPELLANT ELIGIBLE FOR CLAIMING EXEMPTION UNDER SEC TION 11 OF THE ACT. THE SAID REGISTRATION IS RETROSPECTIVE WITH EFFECT FROM 25-11-1974, BEING THE DATE WHEN APPELLA NT WAS INCORPORATED. 6. NOW COMING TO THE GROUNDS OF APPEAL TAKEN BY THE REVENUE, WE FIND THAT VIDE FIRST AND SECOND GROUND OF APPEAL THE REV ENUE HAS AGITATED THAT THE ACTIVITIES OF THE ASSESSEE DID NOT FALL WITHIN THE DEFINITION OF PRESERVATION OF ENVIRONMENT AS IT WAS INSERTED IN SECTION 2(15) OF THE ACT WITH EFFECT FROM 01/04/2009. THE REVENUE HAS FURTHER CONTENDED THA T THE ACTIVITIES CARRIED ON BY ASSESSEE INVOLVED CARRYING ON OF BUSINESS AND TRADE AND THEREFORE, LEARNED CIT(A) HAD WRONGLY ALLOWED EXEMPTION U/S 11 . AS REGARDS THE FIRST CONTENTION REGARDING CARRYING ON OF BUSINESS AND TR ADE, THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A FOR CARRYING OUT ITS A CTIVITIES AS THE OBJECTS WERE HELD TO BE OF GENERAL PUBLIC UTILITY AND BEFO RE 01/04/2009 THERE WAS NO BAR ON BUSINESS ACTIVITIES WHICH WERE CARRIED OU T IN ACHIEVING THE OBJECTS OF THE SOCIETY. THE CASES UNDER CONSIDERATION RELA TE TO THE PERIOD PRIOR TO 01/04/2009 THE LEARNED CIT(A) HAS DEALT THIS ARGUM ENT OF ASSESSING I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 7 OFFICER IN PARA 5.6 OF HIS ORDER. FOR THE SAKE OF COMPLETENESS THE SAID FINDINGS OF LEARNED CIT(A) ARE REPRODUCED BELOW: A) THIS GROUND RELATES TO THE OBSERVATIONS OF THE AO AND DENYING THE CLAIM OF THE APPELLANT BY IMPORTING THE PHRASE 'NOT INVOLVING ACTIVITIES FOR PROFIT', IN RELATION TO TH E ACTIVITIES WHICH ARE ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. BY WAY OF IMPORTING THE SAID CONCEPT THE AC HAS PROCEEDED TO HOLD THAT THE ACTIVITIES OF THE APPELLANT CLASSIFY TO BE COMM ERCIAL IN NATURE AS THE ACTIVITY OF EXPLOITATION OF FOREST PR ODUCE IS COMMERCIAL IN NATURE AND CANNOT BE CONSTRUED FOR NO PROFIT. B) IN THIS REGARD I HAVE GONE THROUGH THE SUBMISSIO NS OF THE APPELLANT AS WELL AS HE PROVISIONS OF THE ACT AS RE LEVANT FOR THE AY UNDER CONSIDERATIONS. ON PERUSAL OF THE PROVISIO NS OF SECTION 2(15) OF THE ACT FOR THE YEAR UNDER CONSIDERATION, I FIND THAT THE PHRASE 'NOT INVOLVING ACTIVITIES FOR PROFIT', WAS D ELETED BY WAY OF FINANCE ACT 1983 W.E.F 1 -4-1984 AND THE SAME WA S REINTRODUCED IN THE ACT BY WAY OF FINANCE ACT 2008 W.E.F 1-04- 2009. DURING THE PERIOD 1-4-1984 TO 31-3-2009 THERE WAS NO PROVISION IN THE ACT WHICH QUALIFIED THE CHARITABLE ACTIVITIES BY 'NOT INVOLVING ACTIVITIES FOR PROFIT'. HENCE I AM O F THE VIEW THAT THE AO HAS INTERPRETED A MEANING WHILE FRAMING THE ASSESSMENT OF A TERM WHICH WAS NOT PART OF THE ACT FOR THE PERIOD UNDER CONSIDERATION AND THEREFORE THE CONTEN TION OF THE APPELLANT THAT THE AO HAS TRAVELLED BEYOND THE SCOP E OF THE PROVISIONS OF THE ACT ARE TRUE. C) FURTHER, AO HAS ALSO POINTED OUT IN THE ASSESSME NT ORDER THAT THE ACTIVITIES OF THE APPELLANT ARE COVERED BY CBDT CIRCULAR NO. 11/2008, DATED 19-12-2008. IS ALSO INCORRECT IN THE FACTS IN HAND BECAUSE THE SUBJECT CIRCULAR RELATES TO THE AM ENDMENT BROUGHT TO THE ACT BY WAY OF FINANCE ACT 2008 AND T HE SAME NOT BEING RETROSPECTIVE IN NATURE DO NOT FIND APPLI CABILITY ON THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. D) IN LIGHT OF THE ABOVE, I FOUND NO MERIT IN THE A CTION OF AO TO DISALLOW THE EXEMPTION TO THE APPELLANT BY IMPORTIN G THE PHRASE 'NOT INVOLVING ACTIVITY FOR PROFIT' AND HOLDING THA T THE APPELLANT WAS UNDERTAKING COMMERCIAL ACTIVITIES FOR A PROFIT. ACCORDINGLY THE GROUND OF APPEAL IS ALLOWED. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 8 AS REGARDS THE CONTENTION OF REVENUE THAT ACTIVITIE S OF THE ASSESSEE DO NOT FALL WITHIN THE DEFINITION OF PRESERVATION OF ENVIR ONMENT, WE FIND THAT LEARNED CIT(A), AFTER RELYING ON THE DECISION OF HON'BLE I. T.A.T., AS UPHELD BY HON'BLE SUPREME COURT, HAS HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE. THE LEARNED CIT(A) HAS NOTED THESE FACTS IN HIS ORDER AND THE RELEVANT FINDINGS OF LEARNED CIT(A) ARE REP RODUCED BELOW: GROUND OF APPEAL NO. 5 & 6 (A) THIS GROUND OF APPEAL RELATES TO THE INFERENCE DRAWN BY THE AO BY PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT DECIDED ON 26.11.2002 AND REPORTED UNDER 129 TAXMAN 527 WHEREIN IT EXPLOITATION OF FOREST WAS HELD TO BE CO MMERCIAL ACTIVITY AND THE AO NOT OBSERVING THE DIRECTIONS OF THE HON' BLE SUPREME COURT AS GIVEN -IN JUDGMENT REPORTED IN (165 TAXMAN 533). (B) THE APPELLANT VIDE ITS SUBMISSIONS HAS ALSO RE BUTTED THE FINDING OF THE AO WHO RELIED ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN APPELLANTS CASE DATED 26-11-2002 CITED UND ER CITATION (129 TAXMAN 527) WHEREIN THE HON'BLE COURT HAS HELD THAT THE EXPLOITATION OF FOREST IS A COMMERCIAL ACTIVITY. (C) IN THIS REGARD, I HAVE GONE THROUGH THE SUBMIS SION OF THE APPELLANT AND THE BACKGROUND IN WHICH THE HON'BLE C OURT HAS PRONOUNCED ITS RULING DATED 26/11/2002 CITED UNDER CITATION (129 TAXMAN 527). THE SUBJECT RULING WAS PRONOUNCED BY T HE HON'BLE ALLAHABAD HIGH COURT WITH RESPECT TO THE APPELLANT S CONTENTION THAT ITS INCOME IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT IF THE BENEFIT OF SECTION 10(20) OF THE ACT IS NOT AVAILAB LE TO IT. IN THE COURSE OF DECIDING THE MATTER THE HON'BLE HIGH COURT HAS S TATED THAT THE EXPLOITATION OF FOREST IS TO BE SAID CONSIDERED AS A COMMERCIAL IN NATURE. IT IS UNDISPUTED FACT THAT FOR THE SAID YE AR IN APPEAL BEFORE THE HON'BLE HIGH COURT THE APPELLANT WAS NOT HAVING A REGISTRATION UNDER 12A OF THE ACT. IN APPEAL, THE HON'BLE SUPREM E COURT ALSO IN THE APPELLANTS OWN CASE REPORTED UNDER (165 TAXMAN 533) HAS THAT FOR AVAILING THE BENEFITS OF SECTION 11 OF THE ACT THAT THE REGISTRATION UNDER SECTION 12A IS THE PREREQUISITE. THIS APPEAL BEFORE THE HON'BLE SUPREME COURT WAS IN FORM OF AN SLP PREFERRED BY TH E APPELLANT AGAINST ORDER OF THE HON'BLE ALLAHABAD HIGH COURT D ATED 26.11.2002. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 9 SINCE THE APPEAL FOR DECIDING THE GRANT OF REGISTRA TION UNDER SECTION 12A OF THE ACT WAS PENDING BEFORE THE TRIBUNAL, THE HON'BLE SUPREME COURT HAS FURTHER HELD THAT TRIBUNAL IS REQUIRED TO CONSIDER APPEAL WITHOUT GETTING INFLUENCED BY THE DECISION OF THE H ON'BLE HIGH COURT. THE RELEVANT CLAUSE OF THE JUDGMENT IS REPRODUCED B ELOW: '14. IN VIEW OF THE DISMISSAL OF THESE APPEALS, THE APPEALS FILED BY THE REVENUE ALSO STAND DISMISSED. HOWEVER, IN OR DER TO PROTECT THE INTEREST OF THE ASSESSEE AS WELL AS THE REVENUE, WE DIRECT THE TRIBUNAL, BEFORE WHOM THE APPEALS ARE PE NDING AGAINST THE ORDER PASSED BY THE COMMISSIONER REJECT ING THE APPLICATION FILED UNDER SECTION 12A OF THE ACT, TO TAKE UP THE MATTER ON PRIORITY BASIS AND DECIDE THE SAME AS EXP EDITIOUSLY AS POSSIBLE WITHOUT BEING INFLUENCED BY ANY OF THE FIN DINGS RECORDED BY THE HIGH COURT IN THE IMPUGNED ORDER.' (D) IN THIS CONTEXT THE HON'BLE TRIBUNAL AT LUCKNOW VIDE ITS ORDER DATED 16.01.2003 WHILE GRANTING EXEMPTION TO THE AP PELLANT UNDER SECTION 12A HAS CATEGORICALLY GAVE ITS FINDINGS AS SUMMARISED AND REPRODUCED IN THE PARAGRAPH 5.1(D) OF THIS ORDER TH AT THE ACTIVITIES OF THE APPELLANT ARE CHARITABLE AND NOT BEING CONDUCTE D ON ANY COMMERCIAL LINES WITH RESPECT TO EXPLOITATION OF FO RESTS. THE SUBJECT FINDING OF THE HON'BLE ITAT VIDE ITS ORDER DATED 16 .01.2009 HAS ATTAINED FINALITY PURSUANT TO DISMISSAL OF THE APPE AL PREFERRED BY THE DEPARTMENT BOTH BY AT HON'BLE JURISDICTIONAL ALLAHA BAD HIGH COURT IN CASE NO ITA NO 70 OF 2009 BEARING DATE 12-05-2010 A ND HON'BLE SUPREME COURT IN SLP NO CC 2590/2011 BEARING DATE 1 2-05-2011 (REFER TO THE CONTENTS OF THE ORDERS AS REPRODUCED ABOVE IN PARA 5.1(E) OF THIS ORDER). THE AO CANNOT TRAVEL BEYOND HIS POWERS TO OPEN AN ISSUE WHICH HAS BEEN DULY DECIDED IN FAVOUR OF T HE APPELLANT AND WITH THE FACTS REMAINING IDENTICAL AT THE TIME OF P RONOUNCEMENT BY HON'BLE ITAT AS WELL AS THE TIME OF ASSESSMENT PROC EEDINGS. CONSEQUENT TO THE FINDINGS OF THE HON'BLE ITAT LUCK NOW AND ITS EXAMINATION OF THE FACT THAT THE APPELLANT IS NOT D OING COMMERCIAL ACTIVITY AND WHICH IS UPHELD BY THE HON'BLE HIGHER JUDICIARY AT A LATER DATE (IN THIS CASE AFTER THE HON'BLE HIGH COURTS OR DER DATED 26-11- 2002), THE SAID FINDINGS OF HON'BLE ITAT AS DULY AT TAINED FINALITY WOULD PREVAIL. (E) I FIND MERITS IN THE ARGUMENTS OF THE APPELLANT ON THE BASIS OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF MADRAS IN SESHASAYEE PAPER & BOARDS LTD. V. INSPECTING ASSISTANT COMMISS IONER (24 TAXMAN 604) AND THE DECISION OF THE HON'BLE MUMBAI HIGH COURT IN I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 10 THE CASE OF MURLIDHAR BHAGWANDAS V. COMMISSIONER OF INCOME-TAX (284 ITR 548). THE SAME HAS BEEN DISCUSSED IN DETAI L IN GROUND 3 ABOVE. (F) IN VIEW OF THE ABOVE DISCUSSION AND JUDGMENTS O F THE HON'BLE COURTS AS ELABORATED ABOVE, I HOLD THAT THE AO HAS ERRED IN NOT APPLYING THE FINDINGS OF ORDER OF HON'BLE SUPREME C OURT (REPORTED IN 165 TAX MANN533). THE AO HAS SIMPLY PROCEEDED TO RE LY UPON THE ORDER OF HON'BLE HIGH COURT DATED 26.11.2002 AND DE NIED THE EXEMPTION CLAIMED U/S 11 OF THE ACT. THE ORDER OF H ON'BLE ITAT IN APPELLANTS CASE WAS PASSED ON 16.01.2009 (I.E. MUC H AFTER THE HON'BLE HIGH COURTS ORDER DATED 26.11.2002). THE HO N'BLE ITAT VIDE THE SAID ORDER HELD THAT THE ACTIVITIES OF THE APPE LLANT ARE CHARITABLE IN NATURE. THE SAID ORDER WAS PASSED BY HON'BLE ITAT O N DIRECTION OF HON'BLE APEX COURT THAT APPLICATION FILED U/S 12A B E TAKEN UP ON PRIORITY AND BE DECIDED EXPEDITIOUSLY WITHOUT BEING INFLUENCED BY ANY OF THE FINDINGS RECORDED BY THE HON'BLE HIGH COURT IN THE IMPUGNED ORDER. IN VIEW OF THESE FACTS AND JUDGMENTS, THE GR OUNDS OF APPEAL NO. 5 AND 6 ARE ALLOWED. THE SAID FINDINGS OF LEARNED CIT(A) ARE CRYSTAL CLE AR AND DO NOT REQUIRE ANY INTERFERENCE. THEREFORE, GROUND NO. 1 & 2 OF THE R EVENUES APPEAL ARE DISMISSED. 7. NOW COMING TO GROUND NO. 3 & 5 OF THE APPEAL BY WHICH THE REVENUE HAS AGITATED THAT THE ASSESSEE WAS GRANTED 12A REGI STRATION FOR PRESERVATION, SUPERVISION AND DEVELOPMENT OF FOREST AND NOT FOR THE EXPLOITATION OF FOREST PRODUCE. WE FIND THAT LEARN ED CIT(A) HAS DEALT THIS ISSUE IN PARA 5.1 OF HIS ORDER AND HAS HELD AS UNDE R: 5.1 AFTER EXAMINING THE ASSESSMENT ORDER AND THE W RITTEN SUBMISSIONS OF THE APPELLANT THE GROUNDS OF APPEAL ARE DISCUSSED AND DECIDED AS UNDER:- GROUNDS OF APPEAL NO. 1 A) THE GROUND 1 RELATES TO FINDINGS OF THE AO THAT THE ACTIVITIES OF THE APPELLANT PARTLY CLASSIFY AS CHARITABLE AND PARTLY AS I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 11 COMMERCIAL AND DO NOT FALL WITHIN THE EXPRESSION 'C HARITABLE PURPOSE'. B) IN LIGHT OF THE FINDINGS OF THE AO, IT BECOMES IMPERATIVE TO UNDERSTAND THAT WORKING OF THE APPELLANT AND WHETHE R THE SAME CLASSIFIES TO BE CHARITABLE IN NATURE FOR THE PURPO SES OF SECTION 2(15) OF THE ACT. THE APPELLANT HAS PLACED BEFORE M E THE COPY OF THE ENACTMENT UNDER WHICH IT WAS INCORPORATED. S ECTION 14 OF THE SAID ENACTMENT PROVIDES THE FOLLOWING: 'SECTION 14.: FUNCTION OF THE CORPORATION SUBJECT TO THE PROVISIONS OF THIS ACT, -AND TO ANY GENERAL OR SPECIAL DIRECTIONS OF THE STATE GOVERNMENT, THE FUN CTIONS OF THE CORPORATION SHALL BE FOLLOWING, NAMELY: (A)TO UNDERTAKE REMOVAL AND DISPOSAL OF TREES AND EXPLOITATION OF FOREST RESOURCES ENTRUSTED TO IT BY THE STATE GOVERNMENT; (B)TO PREPARE PROJECTS RELATING TO FORESTRY WITHIN THE STATE; (C)TO UNDERTAKE RESEARCH PROGRAMMES RELATING TO FOR EST AND FOREST PRODUCTS AND RENDER TECHNICAL ADVICE TO STATE GOVERNMENT MATTERS RELATING TO FORESTRY; (D)TO MANAGE, MAINTAIN AND DEVELOP SUCH FORESTS AS ARE TRANSFERRED OR ENTRUSTED TO IT BY THE STATE GOVERNM ENT; (E)TO PERFORM SUCH FUNCTIONS AS THE STATE GOVERNMEN T MAY FROM TIME TO TIME REQUIRE. C) ON PERUSAL OF THE SECTION FOR WHICH THE APPEL LANT WAS INCORPORATED, IT IS SEEN THAT THE VERY PRIMARY PURP OSE FOR ITS INCORPORATION WAS 'TO UNDERTAKE REMOVAL AND DISPOSA L OF TREES AND EXPLOITATION OF FOREST RESOURCES ENTRUSTED TO I T BY THE STATE GOVERNMENT'. THE MODUS OPERANDI BEING ADOPTED FOR R EMOVAL TREES AND THE EXPLOITATION OF PRODUCE HAS BEEN DIAGRAMMATICALLY EXPLAINED BY THE APPELLANT IN HIS SUBMISSIONS PUT FORTH BEFORE ME. IT IS ALSO TO BE SEEN THAT THE ACTIVITIES OF THE APPELLANT ARE BEING DONE UNDER A DEFINED WORKIN G PLAN OF THE CENTRAL GOVERNMENT AND THE STATE GOVERNMENT WHI CH IS DULY MONITORED. THE ACTIVITIES UNDERTAKEN BY THE AP PELLANT ARE ALSO IN LINE WITH THE FINDINGS OF THE HON'BLE SUPRE ME COURT IN THE CASE OF VIJAY BAHADUR (2 SCC 365) DECIDED ON 23 -03-1982, (AS REPRODUCED ABOVE) AND THE SAME CANNOT BE SAID T O BE ON COMMERCIAL LINES AS THE SAME IS BANNED BY THE HON'B LE I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 12 SUPREME COURT. THE ACTIVITIES UNDER TAKEN BY THE AP PELLANT ARE MOREOVER GUIDED BY THE FOREST POLICY AND CAN BE SAI D TO BE FOR THE PRESERVATION OF THE ENVIRONMENT. THE BOOKS OF A CCOUNTS OF THE APPELLANT ARE PLACED BEFORE THE STATE LEGISLATU RE AS WELL AS AUDITED BY THE CAG WHERE IN NO SUCH QUALIFICATION H AS BEEN BROUGHT OUT THAT THE APPELLANT IS ENGAGED IN ANY SO RT OF ACTIVITY WHICH CAN BE CONSTRUED TO BE AGAINST ITS OBJECTS AS WELL AS CONDUCTED ON COMMERCIAL LINES D) I ALSO FIND MUCH FORCE IN THE ARGUMENTS PLACED BEFORE ME IN HOLDING OUT THAT THE ACTIVITIES AS UNDERTAKEN BY TH E APPELLANT PERTAINING TO REMOVAL AND DISPOSAL OF TREES AND EXP LOITATION OF FOREST RESOURCES HAS BEEN HELD TO BE IN THE NATURE OF PRESERVATION OF ENVIRONMENT BY THE HON'BLE ITAT LUC KNOW IN APPELLANTS OWN CASE VIDE FINDINGS CONTAINED UNDER P ARA NO 24 TO PARA 29 OF ITS ORDER IN I.T.A NO 512 /LUC/2007 D ECIDED ON 16-01.2009 IN THE COURSE OF GRANTING REGISTRATION U NDER 12A OF THE ACT. THE EXTRACTS OF THE SAID PARA'S ARE REPROD UCED BELOW : ' 24. HEARING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE APPEAL OF THE ASSESSEE IS TO BE ALLOWED. F ROM THE ARGUMENTS ADVANCED AND ALSO FROM THE OBJECTS OF THE ASSESSEE, IT IS CLEAR THAT CORPORATION WAS CONSTITU TED BY THE LEGISLATIVE MANDATE OF THE STATE OF BY U.P.FORE ST CORPORATION ACT 1974 AND THE STATE HAS ENTRUSTED FO REST RESOURCES TO U.P. FOREST CORPORATION AS PER SECTION 14(A) WITH REFERENCE TO THE OBJECTS ENSHRINED IN THE PREA MBLE 'FOR BETTER PRESERVATION, SUPERVISION AND DEVELOPME NT OF FORESTS AND BETTER EXPLOITATION OF FOREST PRODUCE W ITHIN THE STATE AND FOR MATTERS CONNECTED THEREWITH'. IN THE DECISION RELIED UPON BY THE ASSESSEE IN THE CASE OF M.C. MEHTA VS KAMA/ NATH (SUPRA), IT WAS HELD THAT STATE IS THE TRUSTEE OF ALL THE NATURAL RESOURCES WHICH ARE MEANT FOR PUBLIC USE AND ENJOYMENT. THE STATE AS A TRUSTE E IS A UNDER A LEGAL OBLIGATION TO PROTECT THE NATURAL RES OURCES WHICH INCLUDES FOREST. THE STATE IS NOT MERELY INTE RESTED IN REALIZING REVENUE BUT IS EQUALLY INTERESTED IN PRESERVATION AND DEVELOPMENT OF FORESTS. IT CANNOT KNOWINGLY ENTER INTO CONTRACTS WITH BIDDERS WHO MUS T HAVE AT THE BACK OF THEIR MINDS THE OPPORTUNITY OC GAMBLE OF ILLICIT FELLING OF TREES. IN THE SECOND P LACE, THE CORPORATION IS A WHOLLY GOVERNMENT OWNED CORPORATIO N DEDICATED TO THE BETTER PRESERVATION AND DEVELOPMEN T OF I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 13 FORESTS AND BETTER EXPLOITATION AFFOREST PRODUCE. T HE PROFITS OF THE CORPORATION ARE IN TRUTH THE PROFIT OF THE STATE ITSELF. THE STATE BY ESTABLISHING THIS CORPOR ATION DOES NOT INTEND TO ENTER INTO A COMMERCIAL ACTIVITY . THE ACTIVITY IS ONLY FURTHERANCE OF THE OBJECT OF THE ESTABLISHMENT OF THE CORPORATION ITSELF. THE PRIME AIM OF ESTABLISHMENT OF THE CORPORATION IS ENVIRONMENT STA BILITY AND MAINTENANCE OF ECOLOGICAL BALANCE. THE REVISION OF ECONOMICAL BENEFIT, IF ANY, IS ONLY SUPPORTING TO T HE PRINCIPLES OF THE ABOVE AIM. IT IS NOT THE PRIME OB JECT AND THEREFORE IT IS DIFFICULT TO HOLD THAT ASSESSEE'S A CTIVITIES ARE FOR COMMERCIAL EXPLOITATION OF FOREST WHICH WILL DI SENTITLE THE ASSESSEE TO OBTAIN REGISTRATION. ASSESSEE IS NO T TREATING FOREST JUST AS A SOURCE OF REVENUE. 25. THE SUBMISSION OF THE ASSESSE TO THE EFFEC T THAT NATIONAL COMMISSION ON AGRICULTURE BOUGHT OUT ITS I NTERIM REPORT ON PRODUCE OF VARIOUS TRESS IN AUGUST 1972 I N WHICH IT RECOMMENDED ESTABLISHMENT OF FOREST CORPORATION FOR THE PURPOSE OF ATTRACTING INSTITUTI ONAL FINANCE FOR THE DEVELOPMENT SCHEMES OF FORESTRY AND IN PURSUANCE OF THESE RECOMMENDATIONS 11 STATES FORMED FOREST CORPORATION AND IN PURSUANCE TO THE ABOVE RE PORT, U.P. FOREST CORPORATION WAS CONSTITUTED THROUGH ORDINANCE ON 25.11.1974 CANNOT BE OVERRULED. THIS CORPORATION IS ALMOST SIMILAR TO THE ONE ESTABLISHE D BY THE ANDHRA PRADESH FOREST DEVELOPMENT CORPORATION LIMITED. WE HAVE ALREADY NOTED HEREINABOVE THAT THE CORPORATION WAS ESTABLISHED FOR BETTER PRESERVATION , SUPERVISION AND DEVELOPMENT OF FORESTS AND BETTER EXPLOITATION OF FOREST PRODUCE WITHIN THE STATE AND FOR MATTERS WITH IT AND NOT FOR ANY COMMERCIAL ACTIVITY TRUE AND SIMPLE IF AT ALL. CLAUSE 17 DEALS WITH FINANCE, ACCOUNTS AND AUDIT OF THE CORPORATION READS AS UNDE R MAKES IT CLEAR THAT THE FUNDS COULD ONLY BE UTILISE D BY THE CORPORATION IN THE DISCHARGING OF ITS FUNCTION AND NOT FOR ANY OTHER PURPOSES: 17.(1). THE CORPORATION SHALL HAVE ITS OWN FUND WHICH SHALL BE A LOCAL FUND AND TO WHICH SHALL BE CREDITED ALL MONEY RECEIVED BY OR ON BEHALF OF THE CORPORATION. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 14 (2). THE FUND SHALL BE APPLIED TOWARDS MEETING EXPENSE INCURRED BY THE CORPORATION IN THE DISCHARGE OF ITS FUNCTIONS UNDER THIS ACT AND FOR N O OTHER PURPOSES. (3). THE MONEY OF THE FUND SHALL BE KEPT IN THE STATE BANK OF INDIA OR IN THE UTTAR PRADESH CO- OPERATIVE BANK OR NAY SCHEDULED BANK.' 26. THE ABOVE MAKES IT CLEAR THAT ONE OF THE OBJECT IONS OF THE C.I.T. THAT DISCRETION IS GIVEN TO UTILISE F UNDS FOR COMMERCIAL PURPOSE CANNOT BE HELD AS ENTIRELY CORRE CT. THE ACCOUNTS ARE TO BE AUDITED BY THE GOVT. AGENT A ND THE REPORTS ARE TO BE EACH YEAR TABLED BEFORE EACH HOUSE OF LEGISLATURE 27. IT IS ALSO CLEAR THAT THE CORPORATION WAS ASKED BY THE STATE GOVT. TO CHECK ILLEGAL FELLING OF THE TREES A ND PROVIDE GAINFUL EMPLOYMENT TO THE TRIBALS LIVING IN AND AROUND FOREST. THE EXPLOITATION OF THE FOREST WAS C ONFINED TO REMOVAL AND DISPOSAL OF FALLEN, DRIED AND DISEAS ED TREES. THE FELLING OF GROWING TREES, IT IS STATED I S STRICTLY PROHIBITED. 'COMMERCIAL EXPLOITATION' WHICH WAS ONE OF THE REASONS CITED BY THE C.I.T. NOT TO GRANT REGIST RATION, APPEARS TO BE SUPERFLUOUS. THE ROLE AND STATUS OF T HE CORPORATION IS GIVEN AT PAGE 6 OF THE PAPER BOOK-L, VIDE WHICH THE ASSESSEE EXPLAIN THE SYNOPSIS OF THE CHAR ITABLE PURPOSES OF THE CORPORATION. SI NO 8 AT PAGE 6 OF T HE PAPER BOOK-L MAKES IT CLEAR THAT THERE WAS A PROTRA CTED LITIGATION IN THE A CASE IN THE YEAR 1980 BETWEEN T HE STATE OF U.P. AND PRIVATE CONTRACTORS WHO WAS HIGHE ST BIDDER NOT GETTING THE AWARD OF CONTRACT DUE TO APPREHENSION OF THE WORK BEING DETRIMENTAL OF THE FORESTRY. ULTIMATELY THE ISSUES WAS DECIDED IN FAVO UR' OF THE GOVT BY THE HON'BLE SUPREME COURT OF INDIA. IT SAYS THAT THE CASE REPORTED IN 2 SCC 365 IN THE CASE OF STATE OF U.P. V VIJAY BAHADUR SINGH, THE HON'BLE SUPREME COURT OF INDIA HELD AS UNDER:- 'IN THE FIRST PLACE....... THE STATE IS NOT MERELY INTERESTED IN REALIZING REVENUE BUT IS EQUALLY INTERESTED IN THE PRESERVATION AND DEVELOPMENT OF FORESTS. IT CANNOT KNOWINGLY ENTER INTO CONTRACTS WITH BIDDERS WHO MUST HAVE, AT THE BACK OF THEIR I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 15 MINDS THE OPPORTUNITY OR THE GAMBLE OF ILLICIT FELL ING OF TREES. IN THE SECOND PLACE THE CORPORATION IS A WHOLLY GOVERNMENT OWNED CORPORATION DEDICATED TO THE BETTER PRESERVATION AND DEVELOPMENT AFFORESTS AND THE BETTER EXPLOITATION OF FOREST PRODUCE. THE PROFITS OF THE CORPORATION ARE IN TRUT H THE PROFITS OF THE SLATE ITSELF.' THE HON'BLE COURT UPHELD THE CONTENTION OF THE STATE FOR ALLOWING THE EXPLOITATION OF THE PRIVATE CONTRACTORS TO THE DETRIMENT OF NATIONAL INTEREST IN PRESERVATION OF FORESTS' 28 THE EXTRACT FROM THE ANNUAL REPORT FOR THE PERIO D 1.10.1975 TO 30.09.1976 RELEVANT FOR ASSESSMENT YEA R 1977-78 HAS BEEN RECORDED AT PAGE 7 OF THE PAPER BO OK-L WHICH READS AS UNDER: 'NOTE: '5. PROFIT, HOWEVER, IS NOT THE ONLY CRITERI ON BY WHICH THE PERFORMANCE OF A PUBLIC SECTOR UNDERTAKIN G HAS TO BE JUDGED. A VERY IMPORTANT YARDSTICK IS THE FUL FILLMENT OF THE SOCIAL OBLIGATIONS CAST UPON IT WITHIN THE B ROAD PERSPECTIVE OF THE COUNTRY'S PLANNING POLICY AND OBJECTIVES. THE CORPORATION IS ENGAGED IN TAKING OV ER PROGRESSIVELY THE FELLING AND TRANSPORT OPERATION O F TRESS FROM PRIVATE CONTRACTORS. THE LABOUR ENGAGED BY THE BIGGER CONTRACTORS, THE SO CALLED 'MALDARS', IN THE HILLS HAS BEEN HELD IN BONDAGE FOR YEARS AND GROSSLY EXPL OITED IN A VARIETY OF WAYS. THEY HAD A STRONGHOLD ON THEM AND IN THE INITIAL PHASES OF THE CORPORATION'S WORKING IN THE HILLS, IT WAS DIFFICULT TO LOOSEN THESE BONDS OF SL AVERY. IT IS TO THE CREDIT OF SOME OF THE DEDICATED SOCIAL WORKE RS OF THE AREAS AND THE STAFF OF THE CORPORATION THAT THE FETTERS ARE BREAKING DOWN AND FREED LABOUR ARE COMING OVER TO THE CORPORATION IN EVER INCREASING NUMBERS. THE CORPORATION HAS ENSURED MINIMUM WAGES, WHOLESOME RATIONS, MEDICAL FACILITIES, RECREATION AND ADULT L ITERACY CLASSES TO THE LABOUR ENGAGED BY IT. STRESS IS BEIN G LAID ON THE FORMATION OF LABOUR COOPERATIVES AND ENCOURA GING THEM IN EVERYWAY POSSIBLE. LOCAL YOUTH IS BEING REC RUITED AND TRAINED IN MODERN LOGGING METHODS, USE OF IMPRO VED HAND TOOLS, MECHANICAL HAND SAWS, SO THAT GRADUALLY A REVOLUTION COULD BE USHERED IN THE METHODS OF FELLI NG, EXTRACTION AND TRANSPORT, AS HAS BEEN PRACTICED BY THEIR I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 16 FATHERS AND FOREFATHERS FOR WELL OVER A CENTURY.' ( EXTRACTS FROM ANNUAL REPORT OF THE PERIOD 1.10.1975 -30.09.1 976 RELEVANT TO ASSESSMENT YEAR 1977-78)' 29. THE READING OF THE ABOVE MAKES IT CLEAR THAT EXPLOITATION OF THE FOREST IS NOT FOR ANY COMMERCIA L PURPOSE BUT FOR PRESERVATION. HENCE, WE ARE OF THE VIEW THAT THE OBJECTIONS GIVEN BY THE C.I.T. TO OVERLOOK THE CLAIM OF THE REGISTRATION IS INCORRECT' E) FURTHER THE OBSERVATIONS / DECISIONS OF THE ABOV E HON'BLE ITAT ORDER IN ITA 512/LUC/ 2007 HAS ATTAINED FINALI TY PURSUANT TO DISMISSAL OF THE APPEAL PREFERRED BY THE DEPARTM ENT BOTH BY HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT IN ITA NO 70 OF 2009 BEARING DATE 12-05-2010 AND HON'BLE SUPREME CO URT IN SLP NO CC 2590/2011 BEARING DATE 12-05-2011. THE OR DERS OF THE HIGHER JUDICIAL AUTHORITIES ARE REPRODUCED BELO W: HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT IN CASE NO ITA NO 70 OF 2009 BEARING DATE 12-05-2010 'PRESENT APPEAL UNDER SECTION 260A OF THE INCOME-TA X ACT HAS BEEN PREFERRED RAISING O QUESTION WHETHER U.P. FORE ST IS LIABLE FOR GRANT OF CERTIFICATE UNDER SECTION 12-A OF THE INCOME-TAX ACT 1961 ? IT IS HAS BEEN ADMITTED AT BAR THAT HON'BLE SUPREME COURT WHILE DEALING WITH THE SAME ISSUE IN A CASE REPORTED IN ( 2008) 297 ITR 1 U.P. FOREST CORPORATION VS. DEPUTY COMMISSION ER OF INCOME-LAX, SETTLED THAT U.P. FOREST CORPORATION IS ELIGIBLE FOR GRANT OF CERTIFICATE UNDER SECTION 12-A OF THE INCO ME-TAX ACT, 1961. IN VIEW OF THE LAW SETTLED BY THE HON'BLE SUPREME C OURT THERE APPEARS TO BE NO JUSTIFICATION TO ADMIT THE APPEAL ON THE SAME ISSUE. SO FAR AS CONDONATION OF DELAY IS CONCERNED ONCE DELAY HAS BEEN CONDONED THERE APPEARS TO BE MORE JUSTIFIC ATION TO ADMIT THE APPEAL ON THE SAME ISSUE, BEING CONCLUDED BY FINDING OF FACT NO SUBSTANTIAL QUESTION OF LAW INVOLVED TO ENTERTAIN THE APPEAL UNDER SECTION 260 A OF THE INCOME TAX ACT. ACCORDINGLY, APPEAL IS DISMISSED IN LIMINE.' I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 17 HON'BLE SUPREME COURT IN SLP NO CC 2590/2011 BEARIN G DATE 12-05-2011 'THIS PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL, THE COURT MADE THE FOLLOWING ORDER DELAY CONDONED. THE SPECIAL LEAVE PETITION IS DISMI SSED' F) FURTHER MY ATTENTION HAS ALSO BEEN DRAWN TOWAR DS THE FINDING OF THE HON'BLE ITAT, LUCKNOW IN APPELLANTS OWN CASE REPORTED UNDER ITA NO.785/LUC/05 AND DECIDED ON MAR CH 6, 2009 WHEREIN THE HON'BLE ITAT HAS ALLOWED THE EXEMP TION TO THE APPELLANT FOR AY 2002-03 AFTER RECORDING ITS FI NDINGS UNDER PARA 5 OF THE RULING. THE SAME IS REPRODUCED BELOW: 'AFTER HEARING THE LD. AR AND THE ID DR AND RESPECT FULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE HOLD THAT ASSESSEE IS A CHARITABLE INSTITUTE ENTITLED TO REGI STRATION U/S 12A AS WELL AS EXEMPTION IN ACCORDANCE WITH SEC TION 11 AND 13. THEREFORE, THIS ISSUE IS DECIDED IN FAVO UR OF THE ASSESSEE' G) IT WAS ALSO BROUGHT TO MY KNOWLEDGE THAT THE SUB JECT ORDER OF THE ITAT ON THIS FINDING HAS NOT BEEN CHALLENGED BEFORE THE HON'BLE ALLAHABAD HIGH COURT AND THE SAME THEREFORE HAS BEEN ACCEPTED BY THE DEPARTMENT AND ATTAINS FINALITY TO THIS EXTENT. H) IT WOULD BE RIGHT TO HOLD THAT THE ACTIVITIES UN DERTAKEN BY THE APPELLANT ARE IN THE NATURE OF PRESERVATION OF ENVIRONMENT. THE ABOVE STATED ORDER OF THE HON'BLE ITAT DATED 16 .01.2009 AS OUTLINED IN PARA 5.1(D) AS DULY UPHELD BY THE HI GHER JUDICIAL AUTHORITIES IS BINDING ON THE AUTHORITIES BELOW AS HELD BY THE HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE CASE OF N. N. AGARWAL V. CIT [1991] 189 ITR 769 WHEREIN IT HAS BE EN HELD THAT 'INDEED, THE ORDERS OF THE TRIBUNAL AND THE HI GH COURT ARE BINDING UPON THE ASSESSING OFFICER AND SINCE HE ACT S IN A QUASI JUDICIAL CAPACITY, THE DISCIPLINE OF SUCH FUNCTIONI NG DEMANDS THAT HE SHOULD FOLLOW THE DECISION OF THE TRIBUNAL OR THE HIGH COURT, AS THE CASE MAY BE. HE CANNOT IGNORE MERELY ON THE GROUND THAT THE TRIBUNAL'S ORDER IS THE SUBJECT MAT TER OF REVISION IN THE HIGH COURT OR THE HIGH COURT'S DECI SION IS UNDER APPEAL BEFORE THE SUPREME COURT. PERMITTING HIM TO TAKE SUCH A VIEW WOULD INTRODUCE JUDICIAL INDISCIPLINE, WHICH I S NOT CALLED FOR EVEN IN SUCH CASES. IT WOULD LEAD TO A CHAOTIC SITU ATION'. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 18 SIMILARLY THE ORDER OF HON'BLE ITAT DATED 06.03.200 9 FOR A.Y. 2002-03 IN APPELLANTS CASE TOO HAS ATTAINED FINALIT Y. I)ACCORDINGLY I HOLD THAT ONCE THE ACTIVITIES OF AP PELLANT ARE HELD TO BE IN THE NATURE OF 'PRESERVATION OF ENVIRONMENT ' THEREFORE THESE ACTIVITIES ARE HELD TO BE CHARITABLE IN NATUR E AND THE SAME CANNOT BE CATEGORIZED PARTLY AS CHARITABLE AND PARTLY AS NON-CHARITABLE AS THEY ARE COVERED WITHIN THE OBJEC TS FOR WHICH IT WAS INCORPORATED AND IS FUNCTIONING ON THOSE LIN ES. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNE D CIT(A), THEREFORE, GROUND NO. 3 & 5 ARE ALSO DISMISSED. 8. NOW COMING TO GROUND NO. 4 & 6 WHICH RELATE TO D ELETION OF ADDITION WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES. WE FIND THAT THIS ISSUE HAS ALSO BEEN DEALT BY LEAR NED CIT(A) EXHAUSTIVELY AND AFTER RELYING ON NUMBER OF CASE LAWS AND KEEPIN G IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS A LLOWED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 5.7 GROUND OF APPEAL NO. 8 (A)THIS GROUND OF APPEAL RELATES TO DISALLOWANCE OF EXPENSES AMOUNTING TO RS 6,63,812 BY THE AO FOR THE REASON THAT THESE EXPENSES PERTAIN TO PRIOR PERIOD AND WERE ACCORDING LY DISALLOWED AS PRIOR PERIOD EXPENSES. THE AO IN THE ASSESSMENT ORDER HAS PINPOINTED OUT THAT THE APPELLANT SHOULD HAVE MADE A PROVISION IN ITS ACCOUNTS FOR THAT YEAR IN WHICH TH E PURCHASE PRICE/ROYALTY WAS TO BE PAID. THE AO FURTHER STATED THAT THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE, THESE EXPENSES WERE DISALLOWED. (B) IN THIS REGARD THE APPELLANT HAS SUBMITTED THAT THE SAID AMOUNT OF RS 6,63,812 CANNOT BE CONSIDERED AS A PRI OR PERIOD EXPENSES IN LIGHT OF THE FACT THAT SUCH AMOUNT IS O NLY DETERMINABLE AND CRYSTALLISED AFTER THE CLOSE OF TH E FINANCIAL YEAR I.E. THE SAID EXPENSES HAD NOT CRYSTALLIZED AT THE CLOSE OF THE RELEVANT FINANCIAL YEAR. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 19 (C) DURING THE COURSE OF APPELLATE PROCEEDINGS IT W AS SUBMITTED THAT THE BASIS -OF DETERMINING THIS EXPEN SE IS A CERTAIN PERCENTAGE WHICH IS DECIDED IN THE COMMITTE E MEETING HELD AFTER CLOSE OF THE FINANCIAL YEAR. THEREFORE, THE SAID AMOUNT IS CRYSTALLIZED IN THE SUBSEQUENT F.Y. IN WH ICH IT IS DETERMINABLE. THE APPELLANT IN HIS REPLIES HAS GIVE N A THRUST ON THE TIME PERIOD WHEN THESE EXPENSE ARE CRYSTALLIZED AND THEREAFTER ONLY THE SAME CAN BE RECORDED IN THE BOO KS OF ACCOUNTS. THE APPELLANT CONTENDED THAT UNLESS AND U NTIL THESE EXPENSES ARE NOT KNOWN TO THE APPELLANT THE PROVISI ON OF THE SAID EXPENSES CANNOT BE MADE IN THE BOOKS OF ACCOUN TS. (D)IN THIS REGARD, THE APPELLANT HAS PLACED A STRON G RELIANCE THAT THE EXPENSES CAN ONLY BE BOOKED IN BOOKS OF AC COUNTS ONCE THEY ARE CRYSTALLISED. RELIANCE IN THIS REGARD WAS PLACED ON THE FOLLOWING JUDGMENTS OF HON'BLE HIGH COURTS INCL UDING HON'BLE JURISDICTIONAL HIGH COURT I)THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAU RASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. V. CIT (213 ITR 5 23) HELD THAT MERELY BECAUSE AN EXPENSE RELATED TO A TRANSAC TION OF AN EARLIER YEAR DOES NOT BECOME A LIABILITY PAYABLE IN THE EARLIER YEAR UNLESS IT CAN BE SAID THAT THE LIABILITY WAS D ETERMINED AND CRYSTALLIZED IN THE YEAR IN QUESTION. II) THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF ADDL. CIT V. FARASOL LTD.(163 ITR 364) HELD THAT THE ASSESSEE EN TERED INTO A CONTRACT WITH OIL AND NATURAL GAS COMMISSION IN FEB RUARY, 1964. THE OPERATION STARTED IN DECEMBER 1964. THE A SSESSEE CLAIMED DEDUCTION OF EXPENSES FOR THE PERIOD 10-9-1 964 TO 31- 12-1965 AFTER THE COMMUNICATION OF APPROVAL IN THE ASSESSMENT YEAR 1966-67. THE HON'BLE HIGH COURT HELD THAT THE EXPENDITURE INCURRED IN EARLIER YEARS CAN BE ALLOWED AS A DEDUC TION IN THE ASSESSMENT YEAR 1966-67 AS IT CRYSTALLIZED ONLY WHE N APPROVAL WAS RECEIVED. IV)THE HON'BLE HIGH COURT OF GUJRAT IN THE CASE OF COMMISSIONER OF INCOME-TAX STATE FOREST DEVELOPMENT (163 TAXMAN 547) WHEREIN THE HON'BLE HIGH COURT WHILE DECIDING A SIM ILAR ISSUE HELD THAT ROYALTY IS TO BE ALLOWED ON ACTUAL PAYMEN T AND SUCH DEDUCTION WOULD BE ALLOWED ONLY AFTER ITS PAYMENT. IN THE PRESENT MATTER, THOUGH THE LIABILITY TO PAY THE ROY ALTY WAS IN RELATION TO THE ASSESSMENT YEARS 1981-82 AND 1982-8 3, THE LIABILITY TO PAY THE ROYALTY WAS FINALISED ON 2-1-1 985, AND, I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 20 THEREFORE, SECTION 43B OF THE ACT WOULD APPLY WITH FULL FORCE IF THE ROYALTY IS PAID IN THE SAID ASSESSMENT YEAR. (V)THE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSI ONER OF INCOME-TAX V. AMRIT BANASPATI CO. LTD (59 ITR 388) WITH RESPECT TO PAYMENT OF DEARNESS ALLOWANCE WHEREIN TH E HON'BLE COURT HAS HELD THAT THE CLAIM TO DEDUCTION, THEREFO RE, WAS ONLY ADMISSIBLE IN THE YEAR WHEN THE LIABILITY UNDER THE AWARD WAS FINALLY DETERMINED. VI) SIMILAR FINDINGS HAVE ALSO BEEN GIVEN IN TH E FOLLOWING JUDGMENTS OF HON'BLE HIGH COURT: HON'BLE HIGH COURT OF DELHI IN THE CASE OF COM MISSIONER OF INCOME-TAX, NEW DELHI V. SHRI RAM PISTONS & RINGS L TD(174 TAXMAN 147) HON'BLE HIGH COURT OF DELHI IN THE CASE OF COM MISSIONER OF INCOME-TAX V. TRIVENI ENGG. & INDUSTRIES LTD. (196 TAXMAN 94) (E) THE UNDERSIGNED HAS GONE THROUGH THE WRITTEN SUBMISSIONS OF THE APPELLANT AND THE ABOVE CITED JU DGMENTS AND ON PERUSAL IT IS EVIDENT THAT THE EXPENSES CAN ONLY BE BOOKED WHEN THE SAME ARE KNOWN TO THE APPELLANT AND FOR THAT MATTER ITS CRYSTALLISATION AND DETERMINATION OF EXP ENSES IS NECESSARY. THE KEY WORDS ARE 'DETERMINED' AND 'CRYS TALLISED'. THE APPELLANT WAS CERTAIN OF THE EXPENSES TO BE PAI D ONLY WHEN IT WAS DECIDED/FINALISED BY THE COMMITTEE OF THE GO VERNMENT OF UTTAR PRADESH AFTER THE CLOSE OF THE EARLIER YEAR. THE CONTENTION OF THE APPELLANT IS SUPPORTED BY THE JUDGMENT OF TH E HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. V. CIT (213 ITR 523) WHERE IT HAS BEEN CATEGORICALLY HELD THAT MERELY BECAUSE AN EXPE NSE RELATED TO A TRANSACTION OF AN EARLIER YEAR DOES NOT BECOME A LIABILITY PAYABLE IN THE EARLIER YEAR UNLESS IT CAN BE SAID T HAT THE LIABILITY WAS DETERMINED AND CRYSTALLIZED IN THE YEAR IN QUES TION. (F)THE APPELLANTS CONTENTION IS DULY SUPPORTED BY J UDGMENTS OF HON'BLE HIGH COURTS AS OUTLINED IN PARA 5.7(D) ABOV E AND THE FACT THAT THE AMOUNT IN QUESTION WERE DETERMINED AN D CRYSTALLIZED ONLY AFTER THE CLOSE OF AN EARLIER FY. THE SAID AMOUNT CRYSTALLISED IN F.Y. 2001-02. THUS, THE ACTI ON OF THE AO IN HOLDING AND DISALLOWING THESE EXPENSES AS PRIOR PERIOD EXPENSES CANNOT BE UPHELD. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 21 (G)FURTHER, IT WAS ALSO CONTENDED THAT THE APPELLAN T IS A CORPORATION WHICH IS AN AOP(TRUST) AND THE TAX RATE S FOR THE APPELLANT REMAIN CONSTANT FOR THIS ASSESSMENT YEAR AND EARLIER/SUBSEQUENT AY'S. ACCORDINGLY, THE APPELLANT 'S CLAIM OF THESE ITEMS IN A SUBSEQUENT ASSESSMENT YEAR DUE TO CRYSTALLIZATION CAN BY NO MEANS REPRESENT A DEVICE TO EVADE OR MINIMIZE CORRESPONDING TAX LIABILITY. RELIANCE IN T HIS REGARD IS PLACED ON THE JUDGMENT OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF CIT VS. VISHNU INDUSTRIAL GASES ITR NO. 229 /1988) WHEREIN THE HON'BLE DELHI HIGH COURT FOLLOWED THE R ULING OF THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF NAGRI MILL S CO. LTD. [1958] 33 ITR 681. RELEVANT EXTRACTS OF THE JUDGMENT IN THE CASE OF NA GRI MILLS CO. LTD (SUPRA) ARE REPRODUCED BELOW: 'WE HAVE OFTEN WONDERED WHY THE INCOME TAX AUTHORITIES, IN A MATTER SUCH AS THIS WHERE THE DED UCTION IS OBVIOUSLY A PERMISSIBLE DEDUCTION UNDER THE INCO ME TAX ACT, RAISE DISPUTES AS TO THE YEAR IN WHICH THE DED UCTION SHOULD BE ALLOWED. THE QUESTION AS TO THE YEAR IN W HICH A DEDUCTION IS ALLOWABLE MAY BE MATERIAL WHEN THE RAT E OF TAX-CHARGEABLE ON THE ASSESSEE IN TWO DIFFERENT YEA RS IS DIFFERENT; BUT IN THE CASE OF INCOME OF A COMPANY, TAX IS ATTRACTED AT A UNIFORM RATE, AND WHETHER THE DEDUCT ION IN RESPECT OF BONUS WAS GRANTED IN THE ASSESSMENT YEAR 1952-53 OR IN THE ASSESSMENT YEAR CORRESPONDING TO THE ACCOUNTING YEAR 1952. THAT IS IN THE ASSESSMENT YEA R 1953-54, SHOULD BE A MATTER OF NO CONSEQUENCE TO TH E DEPARTMENT', AND ONE SHOULD HAVE THOUGHT THAT THE DEPARTMENT WOULD NOT FRITTER AWAY OUR ENERGIES IN FIGHTING MATTERS OF THIS KIND. BUT, OBVIOUSLY, JUDG ING FROM THE REFERENCES THAT COME UP TO US EVERY NOW AND THE N, THE DEPARTMENT APPEARS TO DELIGHT IN RAISING POINTS OF THIS CHARACTER WHICH DO NOT AFFECT THE TAXABILITY OF THE ASSESSEE OR THE TAX THAT THE DEPARTMENT IS LIKELY T O COLLECT FROM HIM WHETHER IN ONE YEAR OR THE OTHER.' (H) IN LIGHT OF THE WRITTEN SUBMISSIONS OF THE APPE LLANT AND JUDGMENTS CITED IT ; IS TO BE SEEN THAT THERE BEING NO CHANGE IN RATE OF TAXES, THE AMOUNT INCURRED UNDER THE SAID H EAD HAS TO BE ALLOWED IN THE AY UNDER CONSIDERATION AS THE SAI D EXPENSES WERE DETERMINED AND CRYSTALLIZED DURING THE AY UNDE R CONSIDERATION. I.T.A. NOS.352 TO 356/LKW/2017 ASSTT. YRS:2002-03 TO 04-05, 07-08 & 08-09 22 ACCORDINGLY, THE DISALLOWANCE MADE BY THE AO UNDER THE HEAD PRIOR PERIOD EXPENSES IS HEREBY DELETED. THE SAID E XPENSES ARE ALLOWED FOR THE REASON THAT THESE EXPENSES WERE DET ERMINED AND CRYSTALLIZED ONLY DURING THE AY UNDER CONSIDERA TION. GROUND OF APPEAL NO. 8 IS ALLOWED. FINDING NO INFIRMITY IN THE ORDER OF LEARNED CIT(A) , THESE GROUNDS OF APPEAL OF THE REVENUE ARE ALSO DISMISSED. 9. FOR OTHER ASSESSMENT YEARS, THE ISSUES INVOLVED AND FACTS ARE SIMILAR. THEREFORE, FOLLOWING OUR DECISION FOR ASSESSMENT YE AR 2002-03, WE DISMISS ALL THE APPEALS OF THE REVENUE. 10. IN THE RESULT, ALL THE APPEALS OF THE REVENUE STAND DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2018) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:13/12/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR