DCIT, Rohtak V. Sh. Pankaj Sachdeva, Rohtak

ITA 3609/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1216 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 17-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: SANJAY NATH

Judgement Text

ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: B: NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 3609/DEL/2016 ( ASSESSMENT YEAR: 2012-13) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-ROHTAK. VS. SH. PANKAJ SACHDEVA, 214-R, MODEL TOWN, ROHTAK. PAN NO: AKYPS7647D APPELLANT RESPONDENT REVENUE BY : MS. ASHIMA NEB, SR. DR ASSESSEE BY : SHRI SANJAY NATH, CA ORDER PER ANADEE NATH MISSHRA, AM THIS APPEAL BY REVENUE IS FILED AGAINST THE ORDER O F LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ROHTAK, [LD. CIT(A), FOR SHORT] DA TED 11.04.2016 FOR ASSESSMENT YEAR 2012-13. THE GROUNDS OF APPEAL ARE AS UNDER: 1. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 1,51,74,535/- MADE ON THE GROUND OF DISALLOWANCE ON RESTRICTING THE DEDUCTION U/S 80IC AS THE ASSESSEE HAD SUBSTANTIALLY EXPANDED ITS NEW BUSINESS ALREADY CLAIMING DEDUCTION U/S 80IC SINCE A.Y. 2007-08 AND REFIXED ITS INITIAL A.Y . FOR CLAIMING DEDUCTION AT 100% INSTEAD OF 25% WHICH IS NOT PERMISSIBLE AS PER LAW AND THE LEGISLATIVE INTENT. THE CIT(A) RELIED ON ITAT DECISION OF M/S TIRUPATI LPG INDUSTRIES LTD. ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 2 OF 21 V/S DCIT (ITA NO. 991/DEL/2013) BY CITING THAT THE DEDUCTION ONCE GIVEN, CANNOT BE DISTURBED. CIT(A) HAD NOT CONSIDERED THE LATEST DECISION OF M/S HYCRON ELECTRONICS V/S ITO (ITA NO. 798/CHD/ 2012) PRONOUNCED BY JURISDICTIONAL ITAT DATED 27 MAY 2015 WHEREIN THE C ASE OF M/S TIRUPATI LPG INDUSTRIES LTD. VS. DCIT (ITA NO. 991/DEL/2013) DAT ED 29 JANUARY 2014 HAD ALREADY BEEN CONSIDERED. 2. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,57,931/- MADE ON ACCOUNT OF DISALLOWANCE OF TRAVEL EXPENSES OF TAXABLE UNIT AFT ER REALLOCATION WITHOUT CONSIDERING THE LOW TRAVEL EXPENSES DEBITED TO ITS TAXABLE UNIT AS COMPARED TO ITS EXEMPT ONCE . (2) VIDE ASSESSMENT ORDER DATED 16.03.2015 OF THE A SSESSING OFFICER (AO, FOR SHORT) FOLLOWING ADDITIONS WERE MADE TO THE INCOME RETURNED BY THE ASSESSEE. I. DISALLOWANCE OF ASSESSEES CLAIM U/S 80IC OF I.T . ACT : RS. 1,51,74,535/- II. DISALLOWANCE OUT OF TRAVEL EXPENSES : RS. 4,57,931/- THE RELEVANT PORTIONS OF THE ASSESSMENT ORDER ARE R EPRODUCED AS UNDER: 5.1 DEDUCTION U/S 80IC : RESTRICTION ON THE RATE OF DED UCTION FROM 100% TO 25% : THE ASSESSEE HAD SET UP ONE UNIT IN PARWANOODISTTS OLAN, HIMACHAL PARDESH AND BY CLAIMING INITIAL YEAR AS AY 2007-08 STARTED CLAIMING DEDUCTION U/S 80IC SINCE AY 2007-08 ONWARDS. IN THIS WAY, THE ASS ESSEE WAS ELIGIBLE FOR DEDUCTION FOR 10 CONSECUTIVE YEARS: 100% DEDUCTION FOR AY 2007-08 TO 2011-12 AND 25% FOR AY 2012-13 TO 2016-17. THE ASSE SSEE HAD CLAIMED DEDUCTION U/S 80IC @ 100% FROM AY 2007-08 TO 2011-1 2. THEREAFTER IN FY 2011-12, THE ASSESSEE CARRIED ON THE SUBSTANTIAL EX PANSION & RE-FIXED ITS INITIAL AY 2012-13& STARTED CLAIMING DEDUCTION @ 10 0%. HENCE, INSTEAD OF CLAIMING DEDUCTION AT THE RATE OF 25%, THE ASSESSEE STARTED CLAIMING DEDUCTION @100% AGAIN BY REFIXING ITS INITIAL AY AS 2012-13. IN THIS CONNECTION, THE ASSESSEE WAS SHOWCAUSED VIDE ORDER SHEET ENTRY DTL0.02.2015 AS TO WHY THE DEDUCTION U/S 80IC MAY N OT BE RESTRICTED TO 25% AS IT HAD CLAIMED AY 2006-07 AS INITIAL YEAR FI RSTLY. IN REPLY, THE ASSESSEE FURNISHED THE SUBMISSION ON 27.02.2015 AND SAME IS REPRODUCED AS BELOW : 'THAT REGARDING DEDUCTION CLAIMED U/S 80IC OF THE I T ACT 1961 @ 100% OF THE PROFIT & GAINS OF THE INDUSTRIAL UNDERTAKING WH EN THE INITIAL ASSESSMENT ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 3 OF 21 YEAR OF THE UNIT WAS A/Y 2006-07, IT IS SUBMITTED T HAT THE UNIT OF THE ASSESSEE TOOK SUBSTANTIAL EXPANSION DURING A/Y 2012 -13 AND AS PER SEC 80IC OF THE I T ACT 1961, THE UNIT IS ELIGIBLE FOR DEDUCTION @ 100% FOR ANOTHER FIVE YEARS FROM THE A/Y 2012-13. THAT AS PER SEC 80 IC (8) (V) 'INITIAL ASSESSMENT YEAR' MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING OR THE ENTERPRISE BEGINS TO MANUFACTURE OR PRODUCE ART ICLES OR THINS, OR COMMENCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION ' HENCE THE UNIT IS ELIGIBLE FOR DEDUCTION OF 100% OF ITS PROFIT & GAINS FROM THE INDUSTRIAL UNDERTAKING ESTABLISHED IN THE NOTIF IED SPECIFIED AREA.' THE SUBMISSION OF THE ASSESSEE IS CONSIDERED BUT IS NOT FOUND TENABLE ON THE FOLLOWING GROUNDS : 1. THE LEGISLATIVE INTENT BEHIND THE EXPLANATORY NOTES TO FINANCE ACT 2003 CONTAINED IN CIRCULAR 7 OF 2003 (CLAUSE 49.1) MAKES CLEAR THAT THE BENEFIT OF DEDUCTION SHALL BE GIVEN TO EITHER OF TH E TWO UNITS OF NEW UNITS OR THE EXISTING UNITS ' THE UNION CABINET HAS ANNOUNCED A PACKAGE OF FISCAL AND NON-FISCAL CONCESSIONS FOR THE SPECIAL CATEGORY STATES OF HIMACHAL PRADESH, UTTARANCHAL, SIKKIM AND NORTH-EASTERN STAT E, IN ORDER TO GIVE BOOST TO THE ECONOMY IN THESE STATES. WITH A VIEW T O GIVE EFFECT TO THESE NEW PACKAGES A NEW SECTION 80IC HAS BEEN INSERTED T O ALLOW A DEDUCTION FOR TEN YEARS FROM PROFITS OF NEW UNDERTAKINGS OR ENTERPRISES OR EXISTING UNDERTAKINGS OR ENTERPRISES ON THEIR SUBST ANTIAL EXPANSION , IN THE STATES OF HIMACHAL PRADESH, UTTARANCHAL, SIK KIM AND NORTH-EASTERN STATES. SAME WAY THE CIRCULAR 49/2003 OF CENTRAL EXCISE IS ALSO RELEVANT HERE AS THE NEW PACKAGE INT ERALIA INCLUDED TAX BENEFITS UNDER INCOME TAX AND CENTRAL EXERCISE 'THE EXEMPTION CONTAINED IN THIS NOTIFICATION SHALL APPLY ONLY TO THE FOLLOW ING KINDS OF UNITS, NAMELY:- NEW INDUSTRIAL UNITS WHICH HAVE COMMENCED THEIR COM MERCIAL PRODUCTION ON OR AFTER THE 7 TH DAY OF JANUARY, 2003; INDUSTRIAL UNITS EXISTING BE FORE THE 7 TH DAY OF JANUARY,2003, BUT WHICH HAVE UNDERTAKEN SUB STANTIAL EXPANSION BY WAY OF INCREASE IN INSTALLED CAPACITY.... ON OR AFTER THE 7 TH DAY OF JANUARY, 2003.' THUS IT IS CLEAR THAT THESE ARE TWO DISTINCT CATEGORIES WITH NO OVERLAPPING. 2. THE DEFINITION OF THE INITIAL YEAR AS PER THE SECT ION 80IC(8) OF THE ACT IS REPRODUCED AS BELOW : '(V) 'INITIAL ASSESSMENT YEAR'' MEANS THE ASSESSMEN T YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING OR THE ENTER PRISE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, OR COMME NCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION; ' THUS, THE DEFINITION OF THE INITIAL YEAR AS PER THE SECTION 80IC(8) OF THE ACT ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 4 OF 21 MAKES IT CLEAR THAT THE INITIAL YEAR IS TO BE TAKEN EITHER OF THE TWO : THE YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR I N WHICH COMPLETES SUBSTANTIAL EXPANSION. THUS 'INITIAL A.Y.' CAN BE F IXED ONLY ONCE. 3. AS PER CLAUSE 25 OF THE FORM 10CCB, FOR CLAIMING DEDUCTION U/S 80IC, IT IS CLEAR THAT THERE ARE SEPARATE COLUMNS FOR NEW BUSIN ESS AND THE EXISTING BUSINESS WHICH UNDERTAKES SUBSTANTIAL EXPANSION. THE EXISTING BUSINESS DOES NOT MEAN NEW BUSINESS EXISTING FOR 5 YEARS AN D THEN UNDERTAKING THE SUBSTANTIAL EXPANSION. TO SUM UP, IT IS NOTED THAT THE ASSESSEE HAD SUBSTA NTIALLY EXPANDED ITS NEW BUSINESS ALREADY CLAIMING DEDUCTION U/S 80IC SINCE AY 2007-08 AND REFIXED ITS INITIAL AY FOR CLAIMING DEDUCTION AT HIGHER RAT E WHICH IS NOT PERMISSIBLE AS PER LAW AND THE LEGISLATIVE INTENT. THUS, THE DE DUCTION CLAIMED BY THE ASSESSEE IS RESTRICTED TO 25% (RS2,02,32,714 @ 25% = RS50,58,179/-) AND ACCORDINGLY ADDITION OF RSL,51,74,535/- ( = RS2,02, 32,714 - RS50,58,179/-) IS BEING MADE TO THE TOTAL INCOME. PENALTY U/S 271(L)(C) IS BEING INITIATED SEPARATELY FOR CONCEALMENT OF INCOME AND FOR FURNISHING THE INACCURATE PARTICULARS OF TH E INCOME. [ADDITION: RS 1,51,74,535/-] 5.2 DISALLOWANCE UPON ALLOCATION OF TRAVEL EXPENSES DURING THE PREVIOUS YEAR, THE ASSESSEE HAD DEBITED TRAVEL EXPENSES WORTH RS2,477 IN PARWANOO UNIT( UNIT CLAIMNG EXEMPTION U/ S 80IC) AND :TRAVEL EXPENSES WORTH RS 5,09,088/- IN THE DELHI UNIT (TAX ABLE ..NIT).ON PERUSAL OF THE CASE RECORDS, IT WAS SEEN THAT THE TURN OVER IN TNE PARWANOO UNIT WAS RS 9,83,84,881 AND IN THE DELHI UNIT, IT WAS RSL,10 ,43,643. THUS THE UNIT HAVING HIGHER TURNOVER I.E. PARWANOO UNIT WAS DEBIT ING LESSER EXPENSES WORTH RS 2,477/- ONLY AS COMPARED TO UNIT AT DELHI CLAIMING THE EXPENSES WORTH RS 5,09,088/- WHICH SEEMS QUITE UNREASONABLE. VIDE ORDER SHEET ENTRY DT 10.02.2015, THE ASSESSEE WAS SHOWCAUSED AS TO WHY THE TRAVEL EXPENSES MAY NOT BE ALLOCATED ON THE BASIS OF THE T URNOVER OF BOTH THE UNITS. HOWEVER, NO REPLY IS FURNISHED BY THE ASSESS EE TILL DATE. HENCE, THE TRAVEL EXPENSES ARE REALLOCATED ON THE BASIS OF THE TURNOVER WHICH COMES OUT TO 90:10 AND THE TRAVEL EXPENSES ARE WORKED OUT TO RS 4,50,408/- AND RS 51,157/- IN THE PARWANOO UNIT AND DELHI UNIT RES PECTIVELY. HENCE, THE TRAVEL EXPENSES OF THE DELHI UNIT WORTH RS 4,57,931 /- ARE BEING DISALLOWED AND ARE ADDED TO THE TOTAL INCOME. PENALTY U/S 271(L)(C) IS BEING INITIATED SEPARATELY FOR CONCEALMENT OF INCOME ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 5 OF 21 AND FOR FURNISHING THE INACCURATE PARTICULARS OF TH E INCOME. [ADDITION :RS 4,57,931/-] (2.1) AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE T HE LD. CIT(A), WHO DELETED THE AFORESAID ADDITIONS VIDE IMPUGNED ORDER DATED 11.04 .2016. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 2. THE SUBMISSIONS MADE BY THE AR OF THE APPELLAN T ARE AS UNDER:- BRIEF FACTS OF THE CASE: THAT THE ASSESSEE IS A PROPRIETOR OF M/S ADIT INFOT ECH - PARWANOO AND M/S ADIT INFOTECH - DELHI ENGAGED IN THE BUSINESS OF MA NUFACTURING/ASSEMBLING AND TRADING IN BATTERIES AND OTHER ELECTRICAL EQUIP MENTS. THAT THE UNIT OF THE ASSESSEE FIRM IS ESTABLISHED A ND LOCATED IN A NOTIFIED SPECIFIED AREA PARWANOO DIST. SOLAN IN THE STATE OF HIMACHAL PARDESH AND PRODUCE ANY ARTICLE OR THING EXCEPT AN ARTICLE OR T HING MENTIONED IN SCHEDULE XIII. THAT THE UNIT HAS STARTED PRODUCTION W.E.F 02-02-20 06 RELEVANT TO A/Y 2007- 08 . AND UNDERTAKEN SUBSTANTIAL EXPANSION DURING F/ Y 2011-12. THAT THE ASSESSEE IS DOING ONLY TRADING ACTIVITY AT M/S ADIT INFOTECH DELHI. THAT RETURN OF INCOME FOR THE A/Y 2012-13 WAS FILED ON THE INCOME OF RS 18,49,911/- AFTER CLAIMING DEDUCTION UNDER CHAPTER VI A OF RS 2,03,47,714/- INCLUDING DEDUCTION OF RS 2,02,32,714/- BEING 100% OF THE PROFITS FROM THE ELIGIBLE UNIT U/S 80IC OF THE I T ACT, 1961. THAT THE LD AO RESTRICTED THE DEDUCTION CLAIMED U/S 80IC OF THE I T ACT 1961 FROM 100% TO 25% OF THE PROFITS FROM THE ELIGIBLE U NIT AND DISALLOWED TRAVELLING EXPENSES AT DELHI UNIT UPON ALLOCATION B ETWEEN EXEMPTED UNIT AND NON EXEMPTED UNIT, THUS MAKING TOTAL ADDITIONS OF R S 1,56,32,466/- ( 1,51,74,535/- + 4,57,931/-) TOWARDS THE INCOME OF T HE APPELLANT. THAT THE APPELLANT PREFERRED AN APPEAL AGAINST THE SAID ORDER ON THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE ASSESSING OFFICER IS BAD IN L AW AND FACTS OF THE PRESENT CASE. ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 6 OF 21 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD A.O. ERRED IN RESTRICTING THE DEDUCTION CLAIMED U/S 80 IC OF THE I T ACT 1961 FROM 100 % OF PROFITS FROM THE ELIGIBLE UNIT TO 25% OF PROFITS FROM THE ELIGIBLE UNIT, THUS MAKING ADDITIONS OF RS 1,51,74,535/- TOWARDS THE IN COME OF THE APPELLANT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD AO WRONGLY DISALLOWED TRAVELLING EXPENSES OF RS 4,57,931/- AT DELHI UNIT UPON ALLOCATION BETWEEN EXEMPTED UNIT AT PARWANOO AND NON EXEMPTED UNIT AT DELHI. 4. THAT THE APPELLANT CRAVES FOR PERMISSION TO ADD, DE LETE OR AMEND ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING O F THE APPEAL. GROUND NO 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD A.O. ERRED IN RESTRICTING THE DEDUCTION CLAIMED U/S 80 IC OF THE I T ACT 1961 FROM 100 % OF PROFITS FROM THE ELIGIBLE UNIT TO 25% OF PROFITS FROM THE ELIGIBLE UNIT, THUS MAKING ADDITIONS OF RS 1,51,74,535/- TOWARDS THE IN COME OF THE APPELLANT. (1) DURING ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BEFO RE THE LD AO AS UNDER: THAT REGARDING DEDUCTION CLAIMED U/S 80IC OF THE I T ACT 1961 @ 100% OF THE PROFIT & GAINS OF THE INDUSTRIAL UNDERTAKING WH EN THE INITIAL ASSESSMENT YEAR OF THE UNIT WAS A/Y 2006-07, IT IS SUBMITTED T HAT THE UNIT OF THE ASSESSEE TOOK SUBSTANTIAL EXPANSION DURING A/Y 2012 -13 AND AS PER SEC 80IC OF THE IT ACT 1961, THE UNIT IS ELIGIBLE FOR DEDUCT ION @ 100% FOR ANOTHER FIVE YEARS FROM THE A/Y 2012-13. THAT AS PER SEC 80 IC (8) (V) INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING OR THE ENTERPRISE BEGINS TO MANUFACTURE OR PRODUCE ART ICLES OR THINS, OR COMMENCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION HENCE THE UNIT IS ELIGIBLE FOR DEDUCTION OF 100% OF ITS PROFIT & GAINS FROM THE INDUSTRIAL UNDERTAKING ESTABLISHED IN THE NOTIFIED SPECIFIED AREA. (2) THAT THE LD AO DENIED THE DEDUCTION CLAIMED BEING 1 00% OF THE PROFITS FROM THE ELIGIBLE UNIT STATING THE FOLLOWING REASON: IT IS NOTED THAT THE ASSESSEE HAD SUBSTANTIALLY EXP ANDED ITS NEW BUSINESS ALREADY CLAIMING DEDUCTION U/S 80IC SINCE A/Y 2006- 07 AND REFIXED ITS INITIAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION AT HIGHER RA TE WHICH IS NOT PERMISSIBLE AS PER LAW AND THE LEGISLATIVE INTENT. THE EXISTING BUSINESS DOES NOT MEAN NEW BUSINESS E XISTING FOR 5 YEARS AND THEN UNDER TAKING THE SUBSTANTIAL EXPANSION. (3) SEC 80IC ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 7 OF 21 (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDE S ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHALL, IN ACCORDANCE WITH AN D SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTERPR ISE, (A)WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PROD UCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THI RTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANV ARTICLE OR TH ING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDU LE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BEFORE T HE 1ST DAY OF APRIL, 2012, IN ANV EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TECHNOLOGY PA RK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED 59 BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN THE S TATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL: OR SUBSTANTIAL EXPANSION, SEC 80 IC (8) (IX) SUBSTANTIAL EXPANSION MEANS INCREASE IN THE INVESTMENT IN THE PLANT AND MACHINERY BY AT LEAST F IFTY PER CENT ON THE BOOK VALUE OF PLANT AND MACHINERY (BEFORE TAKING DEPRECI ATION IN ANY YEAR), AS ON THE FIRST DAY OF THE PREVIOUS YEAR IN WHICH THE SUB STANTIAL EXPANSION IN UNDERTAKEN. INITIAL ASSESSMENT YEAR SEC 80 IC (8) (V) INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UND ERTAKING OR THE ENTERPRISE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS , OR COMMENCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION. (4) THAT IF WE GO THROUGH SEC 80IC ALONG WITH THE ABOVE DEFINITIONS OF INITIAL ASSESSMENT YEAR AND SUBSTANTIAL EXPANSION, THERE IS NO RESTRICTION OR BAR WHICH SUGGESTS THAT A UNIT ALREADY TAKING EXEMPTION U/S 8 0IC CANNOT MAKE SUBSTANTIAL EXPANSION. THE SECTION ONLY SAYS WHICH MANUFACTURES OR PRODUCES ANY ARTICLE OR THI NG, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE AND U NDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ON THE 7TH D AY OF JANUARY. 2003 AND ENDING BEFORE THE 1ST DAY OF APRIL. 2012, (5) IT WAS ALSO HELD IN THE CASE OF TIRUPATI LPG INDUST RIES LTD VS. ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 8 OF 21 D C I T ITAT DELHI TRIBUNAL - (2015) 167 TTJ 0713. HELD, BARE READING OF PROVISIONS OF 80IC(2) REVEAL THAT DEDUCTIONS UNDER TWO CATEGORIES WERE INDEPENDENTIN FIRST CATEGORY DEDUC TION WAS GIVEN TO UNDERTAKING WHICH HAD BEGUN OR BEGINS MANUFACTURING OR PRODUCTION OF ARTICLE AND THING DURING SPECIFIED PERIODUNDER FIR ST CATEGORY DEDUCTION AVAILABLE TO NEWLY SET-UP UNITS IN SECOND CATEGORY , DEDUCTION ALLOWED IN CASE OF EXPANSION BY EXISTING UNITS WHICH UNDERTAKE SUBSTANTIAL EXPANSION THERE WAS NOTHING TO SUGGEST THAT THERE COULD NOT B E SECOND INITIAL YEAR IF SECOND SUBSTANTIAL EXPANSION COMPLETED EVEN IF EXISTING UNIT WHICH CLAIMING 80 IC, UNDERTOOK FIRST SUBSTANTIAL EXPANSI ON THEN ALSO YEAR OF COMPLETION OF SUBSTANTIAL EXPANSION WOULD BE IN ITIAL YEAR SECTION IMPOSED RESTRICTION FOR TOTAL PERIOD OF 10 YEARS FOR CLAIMING DEDUCTION IN QUESTION THERE WAS NO EVER GREENING OF PROVISIONS ASSESSEE COULD NOT CLAIM SAID DEDUCTION FOR TOTAL P ERIOD EXCEEDING 10 YEARS DEDUCTION COULD BE ALLOWABLE ONLY FOR BALANCE PERIO D OF 5 YEARS INCLUDING A/Y 2009-10CLAIM OF ASSESSEE WAS ADMISSIBLEDEDUCTION COULD NOT BE EXTENDED BEYOND PERIOD OF 10 YEARS FROM A.Y. 2004-0 5ASSESSEES APPEAL ALLOWED. IT IS FURTHER SUBMITTED THAT A CONTRARY VIEW WAS TA KEN BY THE CHANDIGARH BENCH OF HOBBLE TRIBUNAL IN THE CASE O F HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 DATED 29.5.2015 THE HONBLE TR IBUNAL STATED IN PARA 29 OF THE ORDER STATED AS UNDER: 29. SUB SECTION (1) OF THE ABOVE PROVISION IS A GE NERAL PROVISION AND DOES NOT REQUIRE ANY INTERPRETATION. SUB SECTION [2] IS THE ENABLING PROVISION WHICH PROVIDES FOR THE TYPES OF UNDERTAKINGS AND CIRCUMST ANCES WHERE DEDUCTION UNDER SECTION 80IC WOULD BE ALLOWED. IT ALLOWS DEDU CTION TO VARIOUS UNDERTAKINGS WHICH HAVE EITHER BEGUN OR BEGINS MANU FACTURING OF ANY ARTICLE OR THINGS NOT BEING ANY ARTICLE OR THING SPECIFIED IN SCHEDULE XIII AND ALSO UNDERTAKES SUBSTANTIAL EXPANSION. THESE DEDUCTIONS WERE AVAILABLE IN DIFFERENT STATES DURING DIFFERENT WINDOW PERIODS WH ICH HAVE BEEN REFERRED TO IN CLAUSE (I), (II) & (III) OF THIS SUB SECTION. THE CONTENTION ON BEHALF OF THE ASSESSEE IS THAT SI NCE DEDUCTION IS AVAILABLE TO THE UNDERTAKING WHICH UNDERTAKES SUBSTANTIAL EXP ANSION AND SINCE THERE IS NO RESTRICTION IN THIS SUB SECTION ITSELF, THEREFOR E, THE DEDUCTION WAS AVAILABLE ON SUBSTANTIAL EXPANSION BY OLD UNDERTAKINGS AS WEL L AS NEW UNDERTAKINGS DURING THE WINDOW PERIOD. HOWEVER, THERE IS NO FORCE IN THIS INTERPRETATION. SUB SECTION (2) BEGINS WITH THE EXPRESSION THIS SECTION APPLIES TO ANY UNDERTA KING OR ENTERPRISE WHICH HAS BEGUN OR BEGINS THIS ITSELF SHOWS THAT PROVISI ON MADE EVEN THE EXISTING UNDERTAKINGS ENTITLED FOR THE DEDUCTION BECAUSE THE EXPRESSION BEGUN WOULD REFER TO THE UNDERTAKING WHICH WERE ALREADY EXISTIN G AND BEGAN THE MANUFACTURE BEFORE THE WINDOW PERIOD MENTIONED IN T HE SUB SECTION. THE LAST LINE OF THE SUB SECTION READS AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING . THIS WOULD NATURALLY REFER TO THE UNDERTAKING WHICH WERE ALREA DY EXISTING. IF IT IS READ THE WAY THE LD. COUNSEL OF THE ASSESSEE WOULD LIKE US TO READ THEN THE ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 9 OF 21 PROVISION WOULD BECOME UNWORKABLE BECAUSE IF THERE IS AN UNDERTAKING WHICH IS ESTABLISHED DURING THE WINDOW PERIOD THEN THE SA ME CANNOT POSSIBLY UNDERTAKES SUBSTANTIAL EXPANSION ALSO SIMULTANEOUSL Y. THE EXPRESSION AND WOULD REFER TO THE CUMULATIVE CONDITION THAT IS BOT H PARTS OF THE CONDITIONS NEED TO BE COMPLIED. THE EXPRESSION AND CAN BE JO INED ONLY WITH THE EXPRESSION BEGUN. THIS IS BECAUSE BEGUN REFERS TO SOMETHING WHICH HAS ALREADY STARTED IN THE PAST WHEREAS BEGINS CONNOT ES SOMETHING WHICH WOULD COMMENCE IN THE PRESENT. THEREFORE, THE EXPRESSION AND CAN BE CORRELATED ONLY WITH EXISTING UNIT BECAUSE AS WE HAVE ALREADY SEEN A NEW UNIT WHICH HAS BEEN SET UP AND BEGINS PRODUCTION CANNOT SIMULT ANEOUSLY UNDERGO SUBSTANTIAL EXPANSION ALSO SO AS TO BECOME ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. (6.1) IT WOULD BE NOTICED THAT HONBLE TRIBUNAL HAS MIXED THE TWO CATEGORIES NAMELY CATEGORY (I) AND CATEGORY (II) AS IT OVERLOO KS THE EXPRESSION OR BETWEEN THE TWO CATEGORIES. THUS ONCE THE LITERAL A ND STRICT READING OF THE PROVISION CLEARLY POINTS TO THE ELIGIBILITY OF THE CLAIM THAT NO OTHER RULE OF INTERPRETATION IS OTHERWISE WARRANTED. IT IS THUS S UBMITTED WITH GREAT RESPECT THAT DECISION OF CHANDIGARH BENCH OF HONBLE TRIBUN AL IN THE CASE OF HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 DATED 29 .5.2015 IS PER- INCURIAM AND IS THUS UNJUSTIFIED. PER-INCURIAM MEAN S AS UNDER: DICTIONARY OF LAW-L B CURZON PER INCURIAM: THOUGH WANT OF CARE; IN-ADVERTNELTY. A MISTAKEN DECISION OF A COURT. IT WAS HELD IN YOUNG V. BRISTOL AEROPLANE CO. LTD. (1946) 1 ALL ER 98 THAT THE COURT OF APPEAL (Q.V.) WAS NOT BOUND TO FOLLOW ONE OF ITS EARLIER DECISION S IF SATISFIED THAT IT WAS REACHED PER INCURIAM. APPLICATION OF THE DOCTRINE S HOULD BE MADE ONLY IN THE CASE OF DECISIONS GIVEN IN IGNORANCE OR FOR GETFUL NESS OF SOME INCONSISTENT STATUTORY PROVISION OR OF SOME AUTHORITY BINDING ON THE COURT CONCERNED (1955) 2 QB 379. THE LAW LEXICON 1997 PER INCURIAM:THROUGH INADVERTENCE OF THROUGH WANT O F CARE. THROUGH CARELESSNESS THROUGH INADVERTENCE (6.2) IT IS SUBMITTED THAT IN THE CASE OF MCD VS. GURNAM KAUR REPORTED IN AIR 1989 (SC) 38 , IT WAS HELD THAT IN IGNORANCE IN TERMS OF A STATU TE OR OF A RULE HAVING THE FORCE OF A STATUTE. IT IS ALSO SUBMITTED THAT JUSTICE SUBBA RAO J. (AS HE THEN WAS) IN DR. K C NAMBIAR V. STATE OF MAD RAS AIR 1953 MADRAS 351 (APPROVED BY A FULL BENCH OF HIGH COURT IN SUBBARAY UDU V. THE STATE, AIR 1955 AP 87 [FB] [1955] 11 ALT (CRL.) 53) HAS HELD A T PAGE 94 OF AIR 1955 (AP) AS UNDER: THE EFFECT OF BINDING PRECEDENTS IN INDIA IS THAT THE DECISIONS OF THE ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 10 OF 21 SUPREME COURT ARE BINDING ON ALL THE COURTS. INDEED , ARTICLE 141 OF THE CONSTITUTION EMBODIES THE RULE OF PRECEDENT. .................. IT MAY BE NOTICED THAT PRECEDEN T CEASES TO BE A BINDING PRECEDENT (I) IF IT IS REVERSED OR OVERRULE D BY A HIGHER COURT, (II) WHEN IT IS AFFIRMED OR REVERSED ON A DIFFERENT GRO UND, (III) WHEN IT IS INCONSISTENT WITH THE EARLIER DECISIONS OF THE SAME RANK, (IV) WHEN IT IS SUB SILENTIO, AND (V) WHEN IT IS RENDERED PER INCURIAM. IN PARAGRAPH 578 AT PAGE 297 OF HALSBURY'S LAWS OF ENGLAND, FOURTH EDITION, THE RULE OF PER INCURIAM IS STATED AS FOLLOWS: 'A DECISION IS GIVEN PER INCURIAM WHEN THE COURT HA S ACTED IN IGNORANCE OF A PREVIOUS DECISION OF ITS OWN OR OF A COURT OF CO-OR DINATE JURISDICTION WHICH COVERED THE CASE BEFORE IT, IN WHICH CASE IT MUST D ECIDE WHICH CASE TO FOLLOW; OR WHEN IT HAS ACTED IN IGNORANCE OF A HOUSE OF LOR DS DECISION, IN WHICH CASE IT MUST FOLLOW THAT DECISION ; OR WHEN THE DECISION IS GIVEN IN IGNORANCE OF THE TERMS OF A STATUTE OR RULE HAVING STATUTORY FORCE.' (6.3) IN PUNJAB LAND DEVELOPMENT AND RECLAMATION CO RPORATION LTD. V. PRESIDING OFFICER, LABOUR COURT [1990] 3 SCC 682 , THE APEX COURT EXPLAINED THE EXPRESSION ' PER INCURIAM AS UNDER: 'THE LATIN EXPRESSION PER INCURIAM MEANS THROUGH IN ADVERTENCE. A DECISION CAN BE SAID GENERALLY TO BE GIVEN PER INCURIAM WHEN THE SUPREME COURT HAS ACTED IN IGNORANCE OF A PREVIOUS DECISION OF ITS OW N OR WHEN A HIGH COURT HAS ACTED IN IGNORANCE OF A DECISION OF THE SUPREME COU RT. ' (6.4) THE HONBLE TRIBUNAL ALSO STATED IN PARA 33 OF THE ORDER STATED AS UNDER; 33. EVEN IF THE ABOVE CONTROVERSY IS IGNORED REGAR DING EXISTING UNIT, THE INTENTION OF THE LEGISLATURE BECOME ABSOLUTELY CLEA R WHEN SUB SECTION (2) IS READ ALONG WITH SUB-SECTION (3) OF SECTION 80IC. (6.5) THAT IF WE ARGUE ABOUT THE INTENTION OF THE LEGISL ATURE, THE LEGISLATURE HAD REDUCED THE PERIOD IN CASE OF CLAUSES (I) OF SUB SE CTION (2) FROM YEAR 2012 TO YEAR 2007 BY THE FINANCE ACT 2007, W.E.F 01-04-2008 , HOWEVER NOT REDUCED THE PERIOD IN THE CASE OF CLAUSE (II) OF SUB SECTIO N (2). BECAUSE THE LEGISLATURE WANTED TO EXTEND THE BENEFIT IN THE CAS E OF SUBSTANTIAL EXPANSION. ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 11 OF 21 (7) IN THE CAPTIONED APPEAL, THE APPELLANT MOST RESPECT FULLY SEEKS TO SUBMIT AS UNDER: THE DELHI BENCH OF HONBLE ITAT IS THE JURISDICTION AL BENCH OVER THE CASE OF THE APPELLANT AS PER JURISDICTION, DOWNLOADED FROM INTERNET, IS ATTACHED HERE WITH, AS PER THE SAID JURISDICTION ORDER THE JURISD ICTION OVER THE CASE OF THE APPELLANT LIES WITH THE HONBLE ITAT DELHI BENCH. T HE HEAD OFFICE OF THE APPELLANT IS AT ROHTAK AND JURISDICTION OVER THE CA SES OF ROHTAK LIES WITH ITAT DELHI BENCH. IT IS MOST RESPECTFULLY SUBMITTED THAT IT IS SETTLE D LAW THAT IF THERE ARE CONTRARY JUDGMENTS THEN A DECISION WHICH WAS FAVORABLE TO T HE ASSESSEE WAS TO BE FOLLOWED IN VIEW OF THE REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. REPORTED IN 88ITR 192 (SC). IT HAS ALSO BEEN HELD BY THE APEX COURT IN THE CASE OF CIT VS. BAJAJ TEMPO REPORTED IN 196 ITR 188 THAT PROVISION FOR INCENTIVE OR GROWTH AND DEVELOPMENT SHOULD BE INTERPRETED LIBERA LLY SO AS TO ACHIEVE THE OBJECT FOR WHICH, THE DEDUCTIONS ARE PROVIDED IN TH E ACT. IT IS SUBMITTED THAT IN THE INSTANT CASE, THE DEDUCTION HAS BEEN PROVIDE D FOR THE DEVELOPMENT OF THE STATE OF HIMACHAL PRADESH AND AS SUCH, SINCE TH E ASSESSEE HAS UNDERTAKEN EXPANSION FOR THE DEVELOPMENT OF HIMACHA L PRADESH, THE ASSESSEE BE HELD TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. (8) IN THE HIERARCHICAL SET UP OF JUDICIAL SYSTEM , THE ORDERS OF HIGHER JUDICIARY , INCLUDING ITAT; ARE BINDING ON THE LOWER AUTHORITIE S . THIS IS IMPERATIVE TO MAINTAIN THE JUDICIAL DISCIPLINE. THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL THE REVENUE AUTHORITIES FUNCTIONING UNDER TH E JURISDICTION OF THE TRIBUNAL. IT HAS BEEN LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA V. KAMALAKSHI FINANCE CORPORATION LIMITED AIR1992 SC 711; (1991) 53 ELT 433 THAT : 'JUDICIAL PROPRIETY DEMANDS THAT THE ORDER OF THE T RIBUNAL SHOULD NOT ONLY BE RESPECTED BUT IT SHOULD BE FOLLOWED BY A LOWER AUTH ORITY. IF THE AUTHORITY SUBORDINATE TO THE TRIBUNAL IS ALLOWED TO PICK UP H OLES GAPS OR SOME INFIRMITIES OR IS OF THE VIEW THAT DIFFERENT LINE O F THINKING IS POSSIBLE, THEN THERE WILL BE JUDICIAL CHAOS AND THERE WILL NOT BE ANY FINALITY TO LITIGATION. THIS PROCESS, IFPERMITTED, WILL LEAD TO UNNECESSARY HARA SSMENT TO THE TAXPAYER, WHICH IS NOT ENVISAGED BY THE STATUTE NOR PERMITTED BY LAW. THE CIT(A) IS DUTY BOUND TO FOLLOW THE DECISION OF THE TRIBUNAL. IT IS WELL SETTLED THAT THE DECISION OF THE HIGHER AUTHORITIES IS BINDING ON A LOWER AUTHORITY IN THE JUDICIAL HIERARCHY. ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 12 OF 21 THE RATIO OF THE HONBLE APEX COURT JUDGEMENT IN KA MALAXMI FINANCE CASE HAS BEEN UNRESERVEDLY FOLLOWED BY JUDICIARY IN ITS JUDGEMENTS/ORDERS .SOME NOTABLE INSTANCES ARE: (A) M/S AGGARWAL WAREHOUSING &LEASING VS CIT 257ITR235 (MP) (B) IN THE CASE OF NICCO CORPORATION VS CIT (251 ITR 7 91), THE CALCUTTA HIGH COURT HAS CONSIDERED THIS VITAL ASPECT AND HAS HELD THAT LOWER AUTHORITIES ARE BOUND TO ACCEPT THE DECISION OF APPELLATE AUTHORITI ES WITHOUT ANY RESERVATION. K.N. AGRAWAL VS COMMISSIONER OF INCOME-TAX 189 ITR 769 ( ALLAHABAD) SINCE, THE JUDGMENT DELIVERED BY THE HONBLE ITAT D ELHI BENCH IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD. VS. DCIT (2015) 167 TT J 0713 IS BINDING IN THE CASE OF THE APPELLANT AS JURISDICTION OVER T HE CASE OF THE APPELLANT LIES WITH HONBLE ITAT DELHI BENCH, IT IS PRAYED THAT RE STRICTING THE DEDUCTION CLAIMED FROM 100% OF PROFITS CLAIMED FROM ELIGIBLE UNIT TO 25% OF PROFITS WAS NOT IN ACCORDANCE WITH LAW AND THEREFORE DISALLOWAN CE MADE MAY KINDLY BE DELETED. I HAVE CONSIDERED THE ISSUE AND ALSO SUBMISSIONS MA DE BY THE APPELLANT. THE AO HAS RESTRICTED THE DEDUCTION BY R ELYING ON THE CIRCULAR NO 7 OF 2003 (CLAUSE 49.1). AS PER SUB-SECTION (2) OF SECTION 80 IC DEDUCTION U NDER THIS SECTION IS AVAILABLE TO ANY UNDERTAKING OR ENTERPRISES IN THE FOLLOWING TWO CATEGORIES:- I. THE UNDERTAKING OR ENTERPRISES HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING DURING THE PERIOD 7.1.2003 TO 1.4.2012; OR II. THE UNDERTAKING WHICH MANUFACTURE OR PRODUCE ANY A RTICLE OR THING AND UNDERTAKES SUBSTANTIAL EXPANSION DURING T HE PERIOD 7.1.2003 TO 1.4.2012. A BARE READING OF PROVISIONS OF SUB SECTION (2) WOU LD REVEAL THAT THE DEDUCTION UNDER THE AFORESAID TWO CATEGORIES ARE IN DEPENDENT. IN THE FIRST CATEGORY THE DEDUCTION IS BEING GIVEN TO THE UNDERT AKING WHICH HAS BEGUN OR BEGINS MANUFACTURING OR PRODUCTION OF ARTICLE AND T HING DURING THE SPECIFIED PERIOD OF 7.1.2003 TO 1.4.2012. THUS UNDER THE FIRS T CATEGORY THE DEDUCTION IS AVAILABLE TO NEWLY SET-UP UNITS. IN THE SECOND CATEGORY, THE DEDUCTION IS ALLOWED IN CASE OF EXPANSION BY THE EXISTING UNITS WHICH UNDERTAKE SUBSTANTIAL EXPANSIO N DURING THE SPECIFIED PERIOD OF 7.1.2003 TO 1.4.2012.' THE TERM 'SUBSTANTIAL EXPANSION' MAKES IT CLEAR THA T THERE IS NO RESTRICTION OR BAR ON MORE THAN ONE SUBSTANTIAL EXPANSION BEING UN DERTAKEN BY AN ASSESSEE. IN CLAUSES (I), (II) & (III) OF SUB SECTION 2(A) OF SEC 80IC, EACH CLAUSE HAS DIFFERENT PERIOD AS CLAUSE (I) HAS PERIOD ON THE 23 RD DAY OF DECEMBER, 2002 AND ENDING BEFORE 1ST DAY OF APRIL [2007] EARLIER I T WAS 2012 BUT SUBSTITUTED TO 2007 BY FINANCE ACT 2007 W.E.F 01-04-2008, CLAUS E (II) HAS PERIOD ON 7 TH ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 13 OF 21 DAY OF JANUARY 2003 AND ENDING BEFORE 1ST DAY OF AP RIL 2012, CLAUSE (III) HAS PERIOD ON 24 TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DA Y OF APRIL 2007. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE I S CLAIMING DEDUCTION U/S 80 IC SINCE A/Y 2006-07 AND SUBSTANTIALLY EXPANDED ITS BUSINESS DURING A/Y 2011-12. THE CASE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE DELHI ITAT IN TIRUPATI LPG INDUSTRIES LTD. VS DCIT IN ITA NO. 991 /D/2013 DATED 29.01.2014, WHICH IS ALSO THE JURISDICTIONAL BENCH OVER THE CASE OF THE APPELLANT AS PER JURISDICTION. IN VIEW OF THE FACTS POINTED OUT ABOVE, THE ADDITIO N OF RS 1,51,74,535/- BY RESTRICTING THE DEDUCTION FROM 100% OF PROFITS TO 2 5% OF PROFITS CANNOT BE SUSTAINED AND IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. GROUND NO 3 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD AO WRONGLY DISALLOWED TRAVELLING EXPENSES OF RS 4,57,931/- AT DELHI UNIT UPON ALLOCATION BETWEEN EXEMPTED UNIT AT PARWANOO AND NON EXEMPTED UNIT AT DELHI. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE W AS OPERATING TWO UNITS ONE TAXABLE UNIT AT DELHI AND OTHER EXEMPTED UNIT A T PARWANOO. THE BUSINESS OF THE ASSESSEE AT TAXABLE UNIT OF DEL HI WAS TRADING IN MOBILE BATTERIES FOR WHICH THE ASSESSEE PURCHASES FINISHED GOODS (NOT FROM EXEMPTED UNIT) IN THE SHAPE OF BATTERIES AND SOLD T O CUSTOMERS. THE BUSINESS OF THE ASSESSEE AT EXEMPTED UNIT AT PA RWANOO WAS MANUFACTURING AND ASSEMBLING OF MOBILE BATTERIES. DURING ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BEFO RE THE LD AO THAT THE ASSESSEE WAS MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR EACH UNIT AND ALSO SEPARATE PROFIT & LOSS ACCOUNT AND BALANCE SHEET WA S PREPARED WHICH WAS SUBMITTED DURING ASSESSMENT PROCEEDINGS. FURTHER LE DGER ACCOUNT OF TRAVELLING EXPENSES DULY NARRATED OF BOTH UNITS I.E EXEMPTED UNIT AS WELL AS NON EXEMPTED UNIT WAS FILED. THERE WAS NO COMMON EX PENSES AS WELL THERE WAS NO LINK BETWEEN THE EXEMPTED UNIT & TAXABLE UNI T. THAT THE LD AO HAS MADE THE DISALLOWANCE ON ACCOUNT OF EXPENDITURE WITHOUT BRINGING ANY FACTUAL EVIDENCE OF DISCREPANC Y ON RECORD. THE ADDITION HAS BEEN MADE MORE ON A CONJECTURAL BASIS WITHOUT P ROVING ANY FALSITY IN THE CLAIM MADE. IN SUPPORT OF HIS CONTENTION THE APPELLANT PLACES R ELIANCE ON THE FOLLOWING JUDGMENTS: M/S GODREJ HOUSEHOLD PRODUCTS LTD VS. ACIT ITA NO 7 369/MUM/2010 A/Y ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 14 OF 21 2006-07. WE ARE OF THE VIEW THAT THE BASIS OF TURNOVER ADOP TED BY THE ASSESSEE TO ALLOCATE THE SAID EXPENSES WAS MORE SCIENTIFIC AND REASONABLE. ON THE OTHER HAND, THE REALLOCATION OF THE SAID EXPENSES MADE BY THE AO ON ADHOC BASIS WAS NOT SUPPORTED OR SUBSTANTIATED BY HIM AND THE S AME, IN OUR OPINION, CANNOT BE ACCEPTED AS A REASONABLE BASIS. . IN THE CASE OF CONSOLIDATED COFFEE LTD. V. STATE OF KARNATAKA (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT WAS HELD BY THE HONBLE SUPREME COURT THAT WHEN A BIFURCATION OF EXPENSES IS NOT POSSIBLE, SOME REASONABLE TEST W ILL HAVE TO BE ADOPTED AND THAT ADOPTION OF THE METHOD OF APPORTIONING ON THE BASIS OF GROSS RECEIPTS COULD NOT BE SAID TO BE A PERVERSE METHOD TO APPLY. KEEPING IN VIEW THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F CONSOLIDATED COFFEE LTD. V. STATE OF KARNATAKA (SUPRA) AND HAVING REGAR D TO THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ALLOCATION OF EXPENSES MADE BY THE ASSESSEE BETWEEN ELIGIBLE BUSINESS AND NON-ELIGIBLE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB/80IC OF THE ACT WAS RE ASONABLE AND THERE WAS NO JUSTIFIABLE REASON FOR THE A.O. TO DISTURB THE S AME AND MAKE RE-ALLOCATION ON ADHOC BASIS. WE, THEREFORE, DELETE THE ADDITION MADE BY THE A.O. BY RESTRICTING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB/80IC OF THE ACT BY REALLOCATING THE COMMON INDIRECT EXPENSES AND AL LOW GROUND NO. 1 & 2 OF THE ASSESSEES APPEAL. UNDER THESE CIRCUMSTANCES IT IS PRAYED THAT THE ADD ITION MADE BY THE LD AO AMOUNTING TO RS 457931/- BY REALLOCATING THE TRAVEL LING EXPENSES BETWEEN EXEMPTED UNIT AND NON EXEMPTED UNIT MAY KINDLY BE D ELETED. I HAVE CONSIDERED THE ISSUE AND ALSO THE SUBMISSION S MADE BY THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE ON ACCO UNT OF EXPENDITURE WITHOUT BRINGING ANY FACTUAL EVIDENCE OF DISCREPANC Y ON RECORD. THE ADDITION HAS BEEN MADE MORE ON A CONJECTURAL BASIS WITHOUT P ROVING ANY FALSITY IN THE CLAIM MADE. HENCE, THE ADDITION MADE BY THE AO AMOU NTING TO RS 457931 /- BY REALLOCATING THE TRAVELLING EXPENSES BETWEEN EXE MPTED UNIT AND NON EXEMPTED UNIT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. (2.1.1.)THE PRESENT APPEAL BEFORE US HAS BEEN FILED BY REVENUE AGAINST THE AFORESAID IMPUGNED ORDER DATED 11.04.206 OF LD. CIT(A). (3) THE FIRST GROUND OF APPEAL RELATES TO ASSESSEE S CLAIM U/S 80IC OF INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT). AT THE TIME OF HEARING BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED AT THE OUT SET THAT THE ISSUE IN DISPUTE IS ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 15 OF 21 COVERED IN ASSESSEES FAVOUR BY ORDER DATED 20.02.2 019 OF HONBLE SUPREME COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX, SHIMLA, VS. M/S AARHAM SOFTRONICS IN CIVIL APPEAL NOS. 1784 OF 2019 (ARISING OUT OF SLP (C) NO . 23172 OF 2018). THE LD. SR. DEPARTMENTAL REPRESENTATIVE (DR, FOR SHORT) APPEA RING FOR REVENUE FAIRLY CONCEDED THAT THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF T HE ASSESSEE VIDE AFORESAID ORDER DATED 20.02.2019 OF HONBLE SUPREME COURT. SHE ALSO FAIR LY DREW OUR ATTENTION TO THE FACT THAT THE ISSUE IN DISPUTE IS ALSO COVERED IN ASSESS EES FAVOUR BY ANOTHER ORDER OF HONBLE SUPREME COURT OF INDIA, DATED 20 TH AUGUST, 2018; IN THE CASE OF COMMISSIONER OF INCOME TAX VS. M/S CLASSIC BINDING INDUSTRIES IN CIVIL APPEAL NOS.- 7208 OF 2018 WHEREIN ALSO IDENTICAL ISSUE HAS BEEN DECIDED IN AS SESSEES FAVOUR. IDENTICAL ISSUE HAS ALSO BEEN DECIDED IN A SEPARATE APPEAL, IN ITAT, D ELHI; IN FAVOUR OF THE ASSESSEE; VIDE ORDER DATED 07/03/2019 IN THE CASE OF DCIT VS. FINE CHEMICALS IN ITA NO. 3610/DEL/2016 PERTAINING TO ASSESSMENT YEAR 2012-13 ; THE RELEVANT PORTION OF WHICH IS REPRODUCED AS UNDER: 4. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE ASSESSING OFFICER CON SIDERING THE ASSESSEES CLAIMS OF HAVING CARRIED OUT SUBSTANTIAL EXPENSES RESTRICT ED THE DEDUCTION TO THE EXTENT OF 25% HOLDING AS UNDER:- TO SUM UP, IT IS NOTED THAT THE ASSESSEE HAD SUBST ANTIALLY EXPANDED ITS NEW BUSINESS ALREADY CLAIMING DEDUCTION U/S 80IC SINCE AY 2006-07 AND REFIXED ITS INITIAL AY FOR CLAIMING DEDUCTION AT HIGHER RATE WH ICH IS NOT PERMISSIBLE AS PER LAW AND THE LEGISLATIVE' INTENT. THUS, THE DEDUCTIO N CLAIMED BY THE ASSESSEE IS RESTRICTED TO 25% ( RS 1,54,92,945 @ 25% = RS 38,73 ,236/-)AND ACCORDINGLY ADDITION OF RS 1,16,19,709/- (= RS 1,54,92,945- RS 38,73,236/-) IS BEING MADE TO THE TOTAL INCOME. 5. THE CIT(A) CONSIDERING THE ISSUE RELYING UPON TH E DECISION OF THE ITAT IN THE CASE OF TRIPUATI LPG INDUSTRIES LTD. VS. DCIT G RANTED RELIEF TO THE ASSESSEE HOLDING AS UNDER:- ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 16 OF 21 I HAVE CONSIDERED THE ISSUE AND ALSO THE SUBMISSIO NS MADE BY THE APPELLANT. THE AO HAS RESTRICTED THE DEDUCTION BY RELYING ON T HE CIRCULAR NO 7 OF 2003 (CLAUSE 49.1). AS PER SUB-SECTION (2) OF SECTION 80 IC, DEDUCTION UNDER THIS SECTION IS AVAILABLE TO ANY UNDERTAKING OR ENTERPRISES IN THE FOLLOWING TWO CATEGORIES:- I. THE UNDERTAKING OR ENTERPRISES HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING DURING THE PERIOD 7.01 .2003 TO 1.4.2012; OR II. THE UNDERTAKING WHICH MANUFACTURE OR PRODUCE ANY A RTICLE OR THING AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD 7.01.2003 TO 1.4.2012. A BARE READING OF THE PROVISIONS OF SUB SECTION (2) WOULD REVEAL THAT THE DEDUCTION UNDER THE AFORESAID TWO CATEGORIES ARE IN DEPENDENT. IN THE FIRST CATEGORY, THE DEDUCTION IS GIVEN TO THE UNDERTAKING WHICH HAD BEGUN OR BEGAN MANUFACTURING OR PRODUCTION OF AN ARTICLE AND THING DURING THE SPECIFIED PERIOD OF 7.1.2003 TO 1.4.2012. THUS, UNDER THE FIRST CATE GORY, THE DEDUCTION IS AVAILABLE TO NEWLY SET-UP UNITS. IN THE SECOND CATEGORY, THE DEDUCTION IS ALLOWED IN CASE OF EXPANSION BY THE EXISTING UNITS WHICH UNDERTAKE SUBSTANTIAL EXPANSIO N DURING THE SPECIFIED PERIOD OF 7.1.2003 TO 1.4.2012.' THE TERM 'SUBSTANTIAL EXPANSION' MAKES IT CLEAR THA T THERE IS NO RESTRICTION OR BAR ON MORE THAN ONE SUBSTANTIAL EXPANSION BEING UN DERTAKEN BY AN ASSESSEE. IN CLAUSES (I), (II) 85 (III) OF SUB SECTION 2(A) O F SEC 80IC, EACH CLAUSE HAS DIFFERENT PERIOD AS CLAUSE (I) HAS PERIOD ON THE 23 RD DAY OF DECEMBER, 2002 AND ENDING BEFORE 1ST DAY OF APRIL [2007] EARL IER IT WAS 2012 BUT SUBSTITUTED TO 2007 BY FINANCE ACT 2007 W.E.F 01-04 -2008, CLAUSE (II) HAS PERIOD ON 7 TH DAY OF JANUARY 2003 AND ENDING BEFORE 1ST DAY OF A PRIL 2 12. CLAUSE (III) HAS PERIOD ON 24 TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DA Y OF APRIL 2007. THERE IS NO DISPUTE REGARDING THE FACT THSAT THE AS SESSEE IS CLAIMING DEDUCTION U/S 80 IC SINCE A/Y 2006-07 AND SUBSTANTIALLY EXPAN DED ITS BUSINESS DURING A/Y 2011-12. ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 17 OF 21 THE CASE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE DELHI ITAT IN TIRUPATI LPG INDUSTRIES LTD. VS DCIT IN ITA NO.991/ D/2013 DATED 29.01.2014, WHICH IS ALSO THE JURISDICTIONAL BENCH OVER THE CAS E OF THE APPELLANT AS PER JURISDICTION. IN VIEW OF THE FACTS POINTED OUT ABOVE, THE ADDITIO N OF RS 1,16,19,709/- BY RESTRICTING THE DEDUCTION FROM 100% OF PROFITS T O 25% OF PROFITS CANNOT BE SUSTAINED AND IS DELETED. 4. IN THE RESULT, THE APPEAL IS ALLOWED. 6. IT IS SEEN THAT THE APEX COURT IN VERY CATEGORIC TERMS HAS ATTEND THE POSITION OF LAW IN THE AFORESAID DECISIONS AS UNDER :- 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN P ARA 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THAT IF DEDUCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VI OLENCE TO THE LANGUAGE OF SUB- SECTION (6) OF SECTION 80-IC. HOWEVER, THIS OBSERV ATION CAME WITHOUT NOTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONTAIN ED IN THE SAME VERY PROVISION. 23. HAVING EXAMINED THE MATTER IN THE AFORESAID PER SPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONER OF INCOME TAX 2 WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DISTINCTION POINT ED OUT IN CLASSIC BINDING INDUSTRIES ELOPES THEREBY. TO RECAPITULATE, IN MAHABIR INDUST RIES, IT WAS HELD THAT IF AN ASSESSEE GET 100% EXEMPTION UNDER SECTIO N 80-1B OF THE ACT FOR FIVE YEARS AND THEREAFTER CARRIES OUT THE SUBSTANTIAL EX PANSION BECAUSE OF WHICH SAID ASSESSEE BECOMES ENTITLED TO EXEMPTION UNDER THE NE W PROVISION I.E. SECTION 80-IC OF THE ACT, THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDICATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOSE OF SE CTION 80-IB AND OTHER FOR THE PURPOSES OF SECTION 80-IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, EVEN AS PER THE DEFINITION THEREO F IN SECTION 80-IC ITSELF, THE LEGAL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUSSED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLO WING CONCLUSIONS: (A) JUDGMENT DATED 20 TH AUGUST, 2018 IN CLASSIC BINDING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASS ESSMENT YEAR CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSI ON ON THE DEFINITION CONTAINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CAS ES. THE DEFINITIONS OF INITIAL ASSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIALLY DIFFERENT. THE DEFINITION OF INITIAL AS SESSMENT YEAR UNDER SECTION 80- IC HAS MADE ALL THE DIFFERENCE. THEREFORE, WE ARE O F THE OPINION THAT THE AFORESAID JUDGMENT DOES NOT LAY DOWN THE CORRECT LA W. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET UP A NEW UNIT BETWEEN 7 TH JANUARY, 2003 AND 1 ST APRIL, 2012 IN STATE OF HIMACHAL PRADESH OF THE NA TURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECT ION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GA INS FOR FIVE ASSESSMENT YEARS ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 18 OF 21 COMMENCING WITH THE INITIAL ASSESSMENT YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRIED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 80-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID P REVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME I NITIAL ASSESSMENT YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN E NTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL PERI OD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EX PANSION IS CARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8 TH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION FOR TH E FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEA RS AND @ 100% AGAIN FROM 8 TH YEAR AS THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN. HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE Y EARS, I.E. 8 TH , 9 TH AND 10 TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMEN T OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEE ARE HEREBY ALLOWED. 7. ACCORDINGLY, IN THE LIGHT OF THE POSITION OF LAW AS AVAILABLE AND IN THE ABSENCE OF ANY INFIRMITY IN THE IMPUGNED ORDER BEIN G POINTED OUT WHERE THE CONTROVERSY HAS BEEN SET AT REST BY THE APEX COURT WE FIND THAT THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. ACCORDINGLY, C ONSIDERING THE POSITION OF LAW AS SET OUT HEREINABOVE WE DISMISS THE DEPARTMENTS APPEAL. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT. (3.1) IN VIEW OF THE AFORESAID JUDICIAL PRECEDENTS IN THE CASES OF PR. COMMISSIONER OF INCOME TAX, SHIMLA, VS. M/S AARHAM SOFTRONICS (SUPR A), COMMISSIONER OF INCOME TAX VS. M/S CLASSIC BINDING INDUSTRIES (SUPRA) AND DCIT VS. FINE CHEMICALS (SUPRA); AND FURTHER IN VIEW OF THE FACT THAT BOTH SIDES AGREE T HAT THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID BINDING JUD ICIAL PRECEDENTS IN THE CASES OF PR. COMMISSIONER OF INCOME TAX, SHIMLA VS. AARHAM SOFTR ONICS (SUPRA) AND COMMISSIONER ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 19 OF 21 OF INCOME TAX VS. CLASSIC BINDING INDUSTRIES (SUPRA ), WE ALSO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISS THE FIRST GROUND OF APPEAL. (3) THE SECOND GROUND OF APPEAL RELATES TO DISALLOW ANCE OF RS. 4,57,931/- OUT OF TRAVEL EXPENSES. THE RELEVANT PORTIONS OF THE ORDERS OF THE AO AND THE LD. CIT(A) HAVE ALREADY BEEN REPRODUCED IN FOREGOING PARAGRAPH NO. (2) OF THIS ORDER. THE LD. SR. DR APPEARING FOR REVENUE SUPPORTED THE DISALLOW ANCE MADE BY THE AO AND FOR THIS PURPOSE SHE RELIED ON THE ASSESSMENT ORDER. SHE FU RTHER HIGHLIGHTED THAT THE ALLOCATION OF TRAVEL EXPENSES WAS MADE BY THE AO ON THE BASIS OF RESPECTIVE TURNOVER OF THE ASSESSEES TWO UNITS AT PARWANOO AND DELHI W HICH WAS A REASONABLE BASIS OF ALLOCATION. THE LD. AUTHORIZED REPRESENTATIVE (AR , FOR SHORT) SUBMITTED THAT SEPARATE ACCOUNTS WERE REGULARLY MAINTAINED BY THE ASSESSEE FOR THE TWO SEPARATE UNITS AT PARWANOO AND DELHI RESPECTIVELY AND EXPENS ES PERTAINING TO THE TWO UNITS ARE ACCOUNTED FOR ON THE BASIS OF THE ACTUAL EXPENSES R ELATABLE TO THE SPECIFIC UNIT(S). SINCE SEPARATE ACCOUNTS ARE MAINTAINED FOR THE TWO UNITS, AND EXPENSES ARE ALLOCATED TO THE TWO UNITS ON THE BASIS OF ACTUAL EXPENSES RE LATABLE TO THE SPECIFIC UNIT(S); THE DISALLOWANCE MADE BY THE AO WAS CORRECTLY DELETED B Y THE LD. CIT(A); THE LD. AR OF THE ASSESSEE CONTENDED. HE FURTHER SUBMITTED THAT T HE AO HAD ACCEPTED THE BOOKS OF ACCOUNTS FOR THE TWO UNITS AND HAD ALLOWED THE EXPE NSES (OTHER THAN TRAVEL EXPENSES) OF THE DELHI UNIT; BUT ARBITRARILY SELECTED ONLY TR AVEL EXPENSES FOR DISALLOWANCE. WITHOUT PREJUDICE TO THIS SUBMISSION, THE LD. AR OF THE ASSESSEE CONTENDED, EVEN IF THE AFORESAID AMOUNT OF RS. 4,57,931/- IS ALLOCATED TO PARWANOO UNIT, THE AMOUNT SHOULD HAVE BEEN CONSIDERED FOR DEDUCTION IN PARWANOO UNIT IN ACCORDANCE WITH LAW AND THAT ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 20 OF 21 THE DISALLOWANCE OF THE ENTIRE AMOUNT OF RS. 4,57,9 31/- WAS INCORRECT. WE HAVE HEARD BOTH SIDES PATIENTLY. WE HAVE ALSO CONSIDERED THE MATERIAL AVAILABLE ON RECORD CAREFULLY. WE FIND THAT THE AO HAD FAILED TO BRING ANY SPECIFIC INSTANCES TO LIGHT WHEREIN TRAVEL EXPENSES OF PARWANOO UNIT WERE SHOWN BY THE A SSESSEE IN THE ACCOUNTS OF THE DELHI UNIT. WE FURTHER FIND THAT THE ASSESSEE HAS MAINTAINED SEPARATE ACCOUNT FOR PARWANOO UNIT AND DELHI UNIT WHICH HAVE BEEN ACCEPT ED BY THE AO EXCEPT IN THE MATTER OF TRAVEL EXPENSES. WE FIND THAT THE AO HAS N OT PROVIDED ANY REASONS FOR SELECTIVELY INTERFERING WITH THE TRAVEL EXPENSES AS PER ASSESSEES ACCOUNTS WHILE ACCEPTING ALL THE OTHER EXPENSES AS PER ASSESSEES ACCOUNTS. IN THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE AO WAS I N ERROR IN MAKING THE AFORESAID DISALLOWANCE AND THAT THE DISALLOWANCE MADE BY THE AO WAS ARBITRARY, UNREASONABLE, UNJUST AND WITHOUT ANY SOUND BASIS. THE LD. DR HAS FAILED TO MAKE A CASE TO WARRANT ANY INTERFERENCE BY US WITH THE ORDER OF THE LD. CI T(A) ON THIS ISSUE. THEREFORE, WE DISMISS THE SECOND GROUND OF APPEAL. (4) IN THE RESULT, APPEAL FILED BY REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF MARCH, 2019. SD/- SD/- (DIVA SINGH) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19.03.2019 (POOJA) ITA NO.-3609/DEL/2016. PANKAJ SACHDEVA. PAGE 21 OF 21 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DIRECT OF COMPUTER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8/3/19 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 9 / 3 / 1 9 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER