ACIT, Faridabad V. M/s NHPC Ltd., Faridabad

ITA 3681/DEL/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81783 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 27-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL BAJPAI
• Assessee Lawyers: RANO JAIN CAS
• Keywords: Depreciation; Retrospective amendment; Advance ruling; Bad and doubtful debts; Revised return
• Section: 143(3); 234B; 115JB; 147; 148; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.2509/DEL./2008 (ASSESSMENT YEAR : 2005-06) M/S. NHPC LIMITED, VS. ACIT, RANGE II, (FORMERLY KNOWN AS FARIDABAD. NATIONAL HYDROELETRIC POWER CORPORATION LTD., SECTOR 33, FARIDABAD. (PAN : AAACN0149C) ITA NO.2618/DEL./2008 (ASSESSMENT YEAR : 2005-06) ITA NO.3681/DEL./2008 (ASSESSMENT YEAR : 2005-06) ACIT, RANGE II, VS. M/S. NHPC LIMITED, FARIDABAD. SECTOR 33, NHPC COMPLEX, FARIDABAD. (PAN : AAACN0149C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN & MS. RANO JAIN, CAS REVENUE BY : SHRI SUNIL BAJPAI, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : IN THE APPEAL FILED BY THE ASSESSEE BEING ITA NO.25 09/DEL/2008 AGAINST THE ORDER OF THE CIT (APPEALS), FARIDABAD D ATED 28.05.2008 FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS :- ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW & ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF A.O. IN MAKING AN ADDITION OF RS.1,31,75,00,000/- ON ACCOUNT OF ADVAN CE AGAINST DEPRECIATION WHILE COMPUTING REGULAR INCOME OF THE APPELLANT. (II) THAT THE ABOVE SAID ADDITION HAS BEEN MADE DES PITE THE FACT THAT THERE IS NO SUCH RULING GIVEN BY THE AUTH ORITY FOR ADVANCE RULING. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. THE ONLY EFFECTIVE GROUND TAKEN BY THE ASSESSEE IS AGAINST CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.1,31,7 5,00,000/- ON ACCOUNT OF ADVANCE AGAINST DEPRECIATION WHILE COMPUTING REGULA R INCOME OF THE ASSESSEE. 1.1 A SIMILAR ISSUE HAS COME UP IN THE PRECEDING AS SESSMENT YEAR I.E. 2000-01, 2001-02 AND 2003-04 BEING ITA NOS. 3013, 3 014, 3015/DEL/2010 WHEREIN WE HAVE HELD AS UNDER:- 5. AFTER HEARING BOTH THE SIDES ON THE ISSUE AND CONSIDERING THE DECISIONS OF HON'BLE SUPREME COURT, WE DECIDE THE ISSUE AS UNDER. HON'BLE SUPREME COURT H AS GIVEN FINDING AFTER CONSIDERING THE OBSERVATION OF THE AU THORITY FOR ADVANCE RULING IN PARA 11 WHICH IS REPRODUCED AS UN DER :- 11. SINCE THE AMOUNT OF ADVANCE AGAINST DEPRECIATION (AAD) IS REDUCED FROM SALES, THERE IS NO DEBIT IN THE PROFIT AND LOSS ACCOUNT. THE AMOUNT DI D NOT ENTER THE STREAM OF INCOME FOR THE PURPOSES OF DETERMINATION OF NET PROFIT AT ALL, , HENCE CLAUSE (B) OF EXPLANATION-I WAS NOT APPLICABLE. FURTHER, 'RESERVE ' AS CONTEMPLATED BY CLAUSE (B) OF THE EXPLANATION-I TO SECTION 115JB OF THE 1961 ACT IS REQUIRED TO BE CAR RIED THROUGH THE PROFIT AND LOSS ACCOUNT. AT THIS STAGE IT ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 3 MAY BE STATED THAT THERE ARE BROADLY TWO TYPES OF RESERVES, VIZ, THOSE THAT ARE ROUTED THROUGH PROFIT AND LOSS ACCOUNT AND THOSE WHICH ARE NOT CARRIED VIA PR OFIT AND LOSS ACCOUNT, FOR EXAMPLE, A CAPITAL RESERVE SU CH AS SHARE RESERVE. IT IS NOT APPROPRIATION OF PROFIT S. AAD IS NOT MEANT FOR AN UNCERTAIN PURPOSE. AAD IS A N AMOUNT THAT IS UNDER OBLIGATION, RIGHT FROM THE INCEPTION, TO GET ADJUSTED IN THE FUTURE, HENCE, CA NNOT BE DESIGNATED AS A RESERVE. AAD IS NOTHING BUT AN ADJUSTMENT BY REDUCING THE NORMAL DEPRECIATION INCLUDIBLE IN THE FUTURE YEARS IN SUCH A MANNER THA T AT THE END OF USEFUL LIFE OF THE PLANT (WHICH IS NORMA LLY 30 YEARS) THE SAME WOULD BE REDUCED TO NIL. THEREFORE , THE ASSESSEE CANNOT USE THE AAD FOR ANY OTHER PURPO SE (WHICH IS POSSIBLE IN THE CASE OF A RESERVE) EXCEPT TO ADJUST THE SAME AGAINST FUTURE DEPRECIATION SO AS T O REDUCE THE TARIFF IN THE FUTURE YEARS. AS STATED A BOVE, AT THE END OF THE LIFE OF THE PLANT, AAD WILL BE REDUC ED TO NIL. IN FACT, SCHEDULE XII-A TO THE BALANCE SHEET F OR THE YEARS 2004-05 ONWARDS INDICATES RECOUPING. IN OUR VIEW, AAD IS INCOME RECEIVED IN ADVANCE. IT IS A TIMING DIFFERENCE. IT REPRESENTS ADJUSTMENT IN FUT URE WHICH IS IN-BUILT IN THE MECHANISM NOTIFIED ON 26.5.1997. THIS ADJUSTMENT MAY TAKE PLACE OVER A LO NG PERIOD OF TIME. HENCE, WE ARE OF THE VIEW THAT AAD IS NOT A RESERVE. IN THIS PARA, HON'BLE SUPREME COURT HAS HELD THAT A DVANCE AGAINST DEPRECIATION IS NOT MEANT FOR UNCERTAIN PUR POSES. ADVANCE AGAINST DEPRECIATION IS AN AMOUNT THAT IS U NDER OBLIGATION RIGHT FROM THE INCEPTION AS THE SAME SH ALL BE ADJUSTED IN FUTURE, HENCE, CANNOT BE DESIGNATED AS RESERVE. HON'BLE SUPREME COURT HAS ALSO HELD THAT ADVANCE AG AINST DEPRECIATION IS NOTHING BUT AN ADJUSTMENT BY REDUCI NG THE NORMAL DEPRECIATION INCLUDING IN THE FUTURE YEARS I N SUCH A MANNER THAT AT THE END OF THE USEFUL LIFE OF THE PL ANT THE SAME SHALL BE REDUCED TO NIL. THE HONBLE SUPREME COURT HAS ALSO HELD THAT ASSESSEE CANNOT USE THE ADVANCE AGAINST DEPRECIATION FOR ANY OTHER PURPOSES EXCEPT TO ADJUS T THE SAME AGAINST FUTURE DEPRECIATION SO AS TO REDUCE THE TAR IFF IN FUTURE YEARS. FOR THIS, THE RELEVANT OBSERVATION OF THE HO N'BLE SUPREME COURT IS THAT THERE ARE BROADLY TWO TYPES O F RESERVES, ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 4 VIZ., THOSE THAT ARE ROUTED THROUGH PROFIT AND LOSS ACCOUNT AND THOSE WHICH ARE NOT CARRIED VIDE PROFIT AND LOSS AC COUNT, FOR EXAMPLE, A CAPITAL RESERVE SUCH AS SHARE PREMIUM AC COUNT, ADVANCE AGAINST DEPRECIATION IS NOT A RESERVE AND I T IS NOT APPROPRIATION OF PROFITS. THE ABOVE FINDINGS BY TH E SUPREME COURT ARE CLEAR AND DECIDE THE ISSUE. IT HAS BEEN HELD THAT AAD IS NOT APPROPRIATION OF PROFIT MEANING THEREBY AAD IS NOT TAKEN OUT OF PROFIT. THAT IT IS NOT A DEDUCTIO N OUT OF PROFIT. THE SUPREME COURT HAS FURTHER HELD THAT AA D IS AN AMOUNT THAT IS UNDER OBLIGATION, RIGHT FROM THE INC EPTION. THUS IT IS A LIABILITY AND HENCE NOT INCOME. WHEN AN AMOUNT IS RECEIVED BY A PERSON FROM ANOTHER PERSON, IT CAN HAVE TWO NATURE. IT CAN BE INCOME. IF SO IT HAS TO BE TAKE N TO THE PROFIT AND LOSS ACCOUNT AND FROM PROFIT AND LOSS ACCOUNT I T GOES TO THE BALANCE SHEET AS RESERVE. ALTERNATIVELY IT IS A LIABILITY AND STRAIGHT AWAY GOES TO THE BALANCE SHEET UNDER THE H EAD LIABILITY NOT UNDER THE HEAD RESERVE. THE SUPR EME COURT HAS CATEGORICALLY HELD THAT IT IS AN AMOUNT THAT IS UNDER OBLIGATION RIGHT FROM THE INCEPTION. THE SUPREME CO URT HAS FURTHER GONE TO ANALYSE THE NATURE OF RESERVE. I T HAS HELD THAT THERE ARE TWO TYPES OF RESERVES. ONE WHICH IS CREATED OUT OF PROFIT AND ANOTHER WHICH ARE CAPITAL RESERVE SUC H AS SHARE PREMIUM ACCOUNT. IT HAS HELD THAT AAD IS NOT A RES ERVE CREATED OUT OF PROFIT SINCE AAD IS NOT INCOME BUT A LIABILITY. IF THE CONTENTION OF THE REVENUE AS IS BEING ARGUED IS TAKEN TO THE LOGICAL CONCLUSION, THEN AAD WILL BE INCOME AND HENCE PART OF PROFIT AND LOSS ACCOUNT. THE LIABILITY CRE ATED WILL BE A RESERVE BY DEBIT TO THE PROFIT AND LOSS ACCOUNT . THE SUPREME COURT HAS CATEGORICALLY HELD THAT AAD IS NO T A RESERVE. ONCE AAD IS CONSIDERED AS INCOME AS IS BEING ALLEGED BY REVENUE THE OBVIOUS IMPLICATION WILL BE THAT SUCH INCOME IN THE BALANCE SHEET IS A RESERVE. IT CANT BE THAT AAD IS AN INCOME AND THEN IT VANISHES. INCOME HAS TO BE CARRIED TO THE BALANCE SHEET AND SUCH INCOME CARRIE D TO BALANCE SHEET WILL FORM PART OF THE RESERVE. SIN CE AAD HAS BEEN HELD BY SUPREME COURT IS NOT A RESERVE, TH IS CONTENTION OF THE REVENUE CANT BE ACCEPTED. IT IS TO BE FURTHER NOTED THAT SUPREME COURT HAS NOT STOPPED BY JUST SAYING THAT AAD IS NOT A RESERVE. IT HAS GONE FURT HER TO DEFINE THE NATURE OF AAD AND HELD THAT IT IS A LIAB ILITY AND IS TO BE DISCHARGED IN FUTURE AS CAN BE SEEN FROM THE FOLLOWING OBSERVATIONS: ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 5 AAD IS NOT MEANT FOR AN UNCERTAIN PURPOSE. AAD IS AN AMOUNT THAT IS UNDER OBLIGATION, RIGHT FROM THE INCEPTION, TO GET ADJUSTED IN THE FUTURE, HENCE, CANNOT BE DESIGNATED AS A RESERVE. AAD IS NOTHING BUT AN ADJUSTMENT BY REDUCING THE NORMAL DEPRECIATION INCLUDIBLE IN THE FUTURE YEARS IN SUCH A MANNER THA T AT THE END OF USEFUL LIFE OF THE PLANT (WHICH IS NORMA LLY 30 YEARS) THE SAME WOULD BE REDUCED TO NIL. THEREFORE , THE ASSESSEE CANNOT USE THE AAD FOR ANY OTHER PURPO SE (WHICH IS POSSIBLE IN THE CASE OF A RESERVE) EXCEPT TO ADJUST THE SAME AGAINST FUTURE DEPRECIATION SO AS T O REDUCE THE TARIFF IN THE FUTURE YEARS. IN VIEW OF THE CATEGORICAL FINDING OF THE SUPREME C OURT WE HOLD THAT THE CIT(A) WAS CORRECT IN HOLDING THAT AD VANCE AGAINST DEPRECIATION CANNOT BE ADDED UNDER THE COMP UTATION OF THE NORMAL INCOME. THE ORDER OF CIT(A) IS UPHEL D AND THE APPEALS OF THE REVENUE ARE DISMISSED. 1.2 SINCE THE ISSUE INVOLVED HERE IS THE SAME, ADOPTING THE AFORESAID REASONING AND FOLLOWING OUR JUDGMENT IN THE ABOVE S AID YEARS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 2. IN ITA NO. 2618/DEL/2008 FILED BY THE DEPARTMENT , FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING T HE ADDITION OF RS.86,54,00,000/- MADE BY THE ASSESSING OFFICER IN NORMAL INCOME AS WELL AS BOOK PROFIT COMPUTED U/S 115JB ON ACCOUNT OF TARIFF ADJUSTMENTS BY HOLDING THE LIABILITY WAS AN ASCERTAINED LIABILITY DISREGARDING THE FACT THAT LATER ON, THE CERC ACTUALLY APPROVED THE TARIFF RATES WHICH WERE DIFFERENT FROM THE RATES PROPOSED BY THE ASSESSEE AND THE QUANTIFICATION OF ADJUSTMENT OF TARIFF RATES WAS MADE BY THE ASSESSEE ON THE BASIS OF TARIFF RATES PROPOSED BY IT, AND AS SUCH THE LIABILITY WAS EVIDE NTLY NOT AN ASCERTAINED LIABILITY DURING THE YEAR UNDER CONSIDE RATION? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING T HE ADDITION OF RS.26,94,93,951/- MADE BY THE ASSESSING OFFICER IN COMPUTING ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 6 THE BOOK PROFIT U/S 115JB IN RESPECT OF PROVISION M ADE FOR GRATUITY, LEAVE ENCASHMENT AND POST RETIREMENT BENE FITS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING THE ADDITIO N OF RS.16,38,38,700/- MADE BY THE ASSESSING OFFICER IN COMPUTING THE BOOK PROFIT U/S 115JB IN RESPECT OF PROVISIONS MADE FOR DOUBTFUL DEBTS, D OUBTFUL CLAIMS AND ADVANCES CLAIMED BY THE ASSESSEE? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN DELETING T HE ADDITION OF RS. 97,65,000/- MADE BY THE ASSESSING OFFICER IN CO MPUTING THE BOOK PROFIT U/S 115JB IN RESPECT OF DEPRECIATION CL AIMED ON LAND AND AMORTIZATION OF LAND BY THE ASSESSEE DISREGARDI NG THE FACT THAT THERE IS NOT DEPRECIATION ALLOWABLE ON LAND UN DER COMPANIES ACT AND NO RATE OF DEPRECIATION IS PROVIDED IN SCHE DULE XIV OF COMPANIES ACT? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN LAW IN JUSTIFYING THE CONTENTION OF THE ASSESSEE REGARDING APPLICABILITY OF PROVISIO NS OF INCOME TAX ACT VIZ. SECTION 234-B(2)(II) READ WITH SECTION 140A DISREGARDING THE FACT THAT THE INTEREST WAS RIGHTLY CALCULATED AS PER THE PROVISION OF SECTION 234B OF THE INCOME TAX ACT? 6. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIM E OF HEARING OF APPEAL. 3. GROUND NO.1 IS REGARDING DELETING ADDITION OF RS .86,54,00,000/- MADE BY THE AO IN THE BOOK PROFIT WHILE COMPUTING MINIMU M ALTERNATE TAX LIABILITY UNDER SECTION 115JB ON ACCOUNT OF THE TARIFF ADJUST MENTS. 3.1 THE ASSESSING OFFICER HAS MADE THIS ADDITION TO THE BOOK PROFIT AS WELL AS NORMAL INCOME BY HOLDING AS UNDER:- A PERUSAL OF THE FINAL ACCOUNT OF THE ASSESSEE COM PANY SHOWS THAT THE TARIFF ADJUSTMENT OF RS. 86.54 CRORE HAS B EEN MADE OUT OF THE SALE OF RS.1668.27 CRORE FOR THE YEAR. THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF THIS ADJUSTMENT. TH E ASSESSEE SUBMITTED VIDE LETTER DATED 17.12.2007 AS UNDER:- TARIFF IN RESPECT OF POWER GENERATING COMPANIES IS FIXED BY REGULAR I.E. CERC. FURTHER TARIFF IS FIXED FOR THE BLOCK OF YEARS. EARLIER, TARIFF WAS FIXED FOR THE PERIOD 01.04.2004 TO 31.3.2004 AND THE CURRENT TARIFF PERIOD IS 01.04.2004 TO 31.3 .2009. ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 7 AS PER THE CERC ORDER NO. L-7/25(7)/2004 LEGAL DA TED 01.10.2004, PENDING FINALIZATION OF TARIFF FOR THE PERIOD 2004-09, TARIFF APPLICABLE FOR THE FINANCIAL YEAR 2003-04 WA S TO BE CONSIDERED FOR BILLING FOR THE PERIOD STARTING FROM 01.04.2004. PROPOSED TARIFF (FOR 2004-09) WAS LOWER THAN THE EA RLIER ONE. CONSEQUENTLY REQUISITE TARIFF ADJUSTMENT WAS MADE I N THE BOOKS OF ACCOUNTS DURING F.Y. 2004-05. THE ASSESSEE COMP ANY FILED WITH CERC TARIFF TO THE APPLICATION FOR THE PERIOD 2004-09 FOR THEIR NECESSARY ORDER. PROPOSED TARIFF APPLICABLE FOR F/Y 2004-05 WAS LOWE R THAN TARIFF FOR F/Y 2003-04 WHEREAS ASSESSEE CLAIMED/BILL POWER SOLD AT THE TARIFF APPLICABLE FOR FY 2003-04. SINCE LOWER TARIFF RATES WAS PROPOSED FOR F.Y. 2004 -05, NECESSARY TARIFF ADJUSTMENT WAS MADE IN THE ANNUAL SALES PROJECT-WISE AMOUNT OF TARIFF ADJUSTMENT IS AS UNDE R: THE ASSESSEE COMPANY FILED THE PETITION FOR TARIFF ADJUSTMENT ON 25.4.2005 WITH CERC FOR F/Y 2004-05 AS PER WHICH TH E TARIFF ADJUSTMENT HAS BEEN QUANTIFIED AT RS. 86.54 CRORE. THIS QUANTIFICATION HAS BEEN MADE BY APPLYING A TARIFF R ATE WHICH THE ASSESSEE COMPANY HAS RECOMMENDED TO CERC. HOWEVER, THE CERC HAS TO TAKE ITS OWN DECISION IN RESPECT OF THE TARIFF RATE. THE CERC APPROVED THE TARIFF RATES VIDE ITS ORDER D ATED 29.05.2006 & 31.5.2006 (COPY PLACED ON THE FILE) IN RESPECT OF TARIFF ADJUSTMENT WHICH ARE DIFFERENT FROM THE TARI FF RATES PROPOSED BY THE ASSESSEE COMPANY. SO, THIS LIABILI TY IS NOT ASCERTAIN ONE AS IT IS CONTINGENT ON THE EVENT OF O RDER OF CERC IN THIS REGARD. THE CERC MAY HAVE KEPT THE TARIFF AT THE SAME LEVEL OR HAVE REDUCED BY A FACTOR WHICH IS NOT CERT AIN ON THE DATE OF PROVISIONING AND THEREFORE, THE LIABILITY C ANNOT BE ASCERTAINED. ACCORDINGLY, AS PER THE PROVISIONS OF SEC. 115JB OF I.T. ACT, THE PROVISION OF RS.86.54 CRORE IS TO BE ADDED BACK TO THE BOOK PROFIT. 3.2 THE CIT(A) HAS DELETED THE ADDITION BY HOLDING AS UNDER:- S. NO. PROJECTS RS. IN LACS 1. URI 6845.20 2. CHAMERA-I 139.75 3. RANGIT 1668.99 TOTAL 8653.94 ====== ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 8 5.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. ARS AND THOSE FILED BEFORE THE AO DT. 19.12.2007 AN D PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE ASSESSEES PETITION FILED BEFORE CERC FOR TARIFF RATES FOR YEA R 2004-05 TO 2008-09 ALONG WITH CERC ORDERS DT. 29.5.2006 AND 31 .5.2006 WITH RELEVANT CALCULATION OF FURTHER REDUCTION TO B E ALLOWED TOWARDS TARIFF ADJUSTMENT (BASED ON CERC ORDERS). I FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE APPELLANT THA T AS PER THE COMPANIES ACT, 1956, SCHEDULE VI, AND ACCOUNTING ST ANDARD 1, ALL THIS ASCERTAINED LIABILITIES HAVE TO BE ACCOUN TED FOR, AS THE APPELLANT IS FOLLOWING THE MERCANTILE SYSTEM OF ACC OUNTING. 5.3 THE LD. ARS HAVE SUFFICIENTLY EXPLAINED VARIOUS FACTORS LEADING TO TARIFF ADJUSTMENT OF RS.86.54 CRORES MAD E IN THE BOOKS OF ACCOUNTS OF THE CO. IT IS FOUND THAT THE APPELL ANT IS ENGAGED IN GENERATION AND SALE OF POWER AND THAT RULES/GUIDELINES/ORDERS OF CERC A STATUTORY BODY, ARE BINDING ON IT, AND THEREFORE, ANY ADJUSTMENT MADE BY THE AP PELLANT TO ADHERE TO THOSE RULES/GUIDELINES/ORDERS ARE DULY VA LID. IT IS NOT A CONTINGENT LIABILITY, AS IT IS CALCULATED AS PER TH E CERC GUIDELINES AT CERTAIN RATES AS ABOVE, NO LUMP SUM AMOUNT THIS BEING ACCOUNTED FOR, AND THEREFORE, IT IS AN ACCRUED LIAB ILITY BY VIRTUE OF MERCANTILE SYSTEM OF ACCOUNTING BEING FOLLOWED BY T HE APPELLANT. THE DOCUMENTS SUPPLIED BY IT DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS VIDE LETTER DATED 19.12.2007 , AS WELL AS IN THE APPELLATE PROCEEDINGS AS PER ANNEXURE A EV IDENCING THE DOCUMENTS REGARDING CERC PETITION, CERC TARIFF ORDE R AND CALCULATION SHEET OF TARIFF ON THE BASIS OF WHICH F URTHER REDUCTION IS THERE. ON THE BASIS OF ABOVE FACTS AND REASONS DISCUSSED ABOVE, I DELETE THE ADDITION OF RS.86.54 CRORES, IT BEING AN ASCERTAINED LIABILITY. 3.3 BEFORE US IT WAS CONTENDED BY THE LD. DR THAT T HE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION ON THE GROUND TH AT THIS IS AN ASCERTAINED LIABILITY. THE ASSESSEE HAS REDUCED SALES ON THE B ASIS OF THE ESTIMATED RATES AND ACCORDINGLY THE SAME CANNOT BE ALLOWED AS DEDUC TION WHILE COMPUTING INCOME. 3.4 AS AGAINST, THE LD. AR HAS CONTENDED THAT ONLY THE REAL INCOME CAN BE ASSESSED TO TAX. IT IS AN ADMITTED FACT THAT THE T ARIFF RATE APPLICATION SUBMITTED BY THE ASSESSEE HAS PROPOSED RATE LOWER THAN THE RA TES IN THE PRECEDING BLOCK. CONSEQUENTLY THE APPELLANT COMPANY WAS JUST IFIED IN RECOGNIZING ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 9 INCOME ON THE BASIS OF THE TARIFF RATE AS PROPOSED BY IT IN THE APPLICATION BEFORE THE CERC SINCE IN ANY CASE IT CANNOT GET ANY TARIFF RATE OVER AND ABOVE THE RATE WHICH IT HAD PROPOSED BEFORE THE CERC. IN THIS REGARD HE INVITED OUR ATTENTION TO THE FACT THAT CERC TARIFF RATES ULTIMA TELY APPROVED WERE LOWER THAN THE DEMAND BY THE APPELLANT COMPANY IN THE APPLICAT ION AND A FURTHER DEDUCTION OF RS.18.74 CRORE WAS ALLOWED OVER AND AB OVE WHAT HAS BEEN COMPUTED BY THE APPELLANT COMPANY. IT WAS FURTHER SUBMITTED THAT THE ACCOUNTS OF THE APPELLANT COMPANY HAVE BEEN AUDITED BY THE STATUTORY AUDITORS AS WELL AS C&AG AND THERE HAS BEEN NO ADVE RSE COMMENT ABOUT THE ACCOUNTING OF THE INCOME BY THESE AUDITORS. 3.5 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD ALSO. THE ASSESSEE COMPANY IS ENGAGED IN THE GENERATION AND S ALE OF HYDRO ELECTRIC POWER. THE SALE OF POWER IS COVERED BY THE TARIFF APPROVED BY THE CENTRAL ELECTRICITY REGULATORY COMMISSION. IT HAS BEEN RAI SING BILLS ON THE VARIOUS STATE ELECTRICITY BOARDS DURING THE PERIOD FROM 1 ST APRIL, 2001 TO 31 ST MARCH, 2004 AS PER THE TARIFF FIXED BY THE CERC. THE TARI FF DETERMINED BY THE CERC WAS APPLICABLE FOR THE BLOCK PERIOD 2001-2004. THI S TARIFF WAS DUE FOR REVISION FOR THE NEXT BLOCK PERIOD 2004-2009. PENDING THIS APPLICATION THE PROVISIONAL BILLS WERE RAISED ON THE ELECTRICITY COMPANIES. ME ANWHILE APPLICATION WAS MOVED BY THE APPELLANT COMPANY BEFORE THE CERC FOR DETERMINATION OF THE TARIFF. THIS TARIFF IS DETERMINED ON THE BASIS OF THE COST INCURRED BY THE APPELLANT COMPANY WHICH INCLUDES INTEREST, DEPRECIA TION, OVERHEAD, ETC. AS PER THIS APPLICATION SUBMITTED BY THE APPELLANT COM PANY, TARIFF PROPOSED BEFORE CERC WAS LOWER THAN THE TARIFF IN THE EARLIE R PERIOD OF 2001-2004. SINCE THE NEW TARIFF AS PROPOSED BY THE APPELLANT C OMPANY FOR THE PERIOD ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 10 UNDER CONSIDERATION I.E. FINANCIAL YEAR 2004-05 WAS LESS THAN THE PREVIOUS TARIFF, THE APPELLANT COMPANY ACCORDINGLY REDUCED T HE SALE AMOUNT BY THE DIFFERENCE IN THE RATES AS APPLICABLE IN THE BLOCK PERIOD 2001-2004 AND THE RATE AS PROPOSED IN THE BLOCK PERIOD 2004-2009. TH IS DIFFERENCE IS THE ISSUE IN DISPUTE. THE AO HAS ADDED THIS AMOUNT CONSIDERI NG THE SAME AS UNASCERTAINED LIABILITY. IN OUR CONSIDERED VIEW, T HIS CONTENTION OF THE AO IS NOT CORRECT. IN FACT IT IS NOT A LIABILITY AT ALL. IT IS A REDUCTION IN THE SALE CONSEQUENT TO THE RATE BEING DETERMINED BY THE CERC WHICH BY T HE CALCULATION DONE BY THE APPELLANT COMPANY ITSELF WAS REQUIRED TO BE DON E. THIS VIEW OF OURS GETS FURTHER STRENGTHENED FROM THE FACT THAT THE CERC AP PROVED TARIFF RATES VIDE ORDER DATED 29 TH MAY, 2006 AND 31 ST MAY, 2006 WHICH RESULTED INTO FURTHER REDUCTION BY RS.18.74 CRORES. THUS IT CANNOT BE SA ID THAT THE ADJUSTMENT MADE BY THE APPELLANT COMPANY WAS NOT CORRECT OR NO T BONAFIDE. IT IS NOT THE CASE OF THE AO THAT THE RATE PROPOSED BY THE APPELL ANT COMPANY WAS DIFFERENT AS COMPARED TO THE RATE WHICH IT HAS APPLIED FOR TH E TARIFF ADJUSTMENT. THE CONTENTION OF THE AO THAT THIS LIABILITY HAS NOT CR YSTALLIZED IS ALSO NOT CORRECT. THE AO HAS NOT APPRECIATED THE FACTS IN THE RIGHT P ERSPECTIVE WHILE THE CIT(A) HAS RIGHTLY APPRECIATED THE FACTS OF THIS ISSUE, TH EREFORE, WE SUSTAIN THE ORDER OF CIT (A). 4. GROUND NO.2 IS REGARDING DELETING ADDITION TO BO OK PROFIT OF RS.26,94,93,951/- ON ACCOUNT OF PROVISION MADE FOR GRATUITY, LEAVE ENCASHMENT AND POST RETIREMENT BENEFITS. ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 11 4.1 IN THIS REGARD IT HAS BEEN SUBMITTED BY THE LD. AR THAT THE ISSUE IS COVERED BY THE JUDGMENT OF THE ITAT IN ASSESSEES O WN CASE FOR ASSESSMENT YEAR 2002-03 IN ITA NO. 1105/DEL/2006. 4.2 FURTHER THE LD. AR HAS PLACED RELIANCE ON THE F OLLOWING JUDGMENTS:- (I) BHARAT EARTH MOVERS VS. CIT (2000) 245 ITR 428 (SC) (II) DCIT VS. LUMAX IND. LTD. (DEL-TRIB) (III) ACIT VS. JAIPRAKASH HYDRO POWER LTD. (CHD-TRI B) ITA NO. 592/CHD/2012 DT. 11.6.2013 (IV) GUJARAT STATE FERTILIZER & CHEMICAL LTD. VS. D CIT (AHM), ITA NO. 401/AHD/2010, DT. 21.6.2013 (V) RELYING ON THE JUDGMENT OF METAL BOX COMPANY OF INDIA LTD. (1969) 73 ITR 53 (SC) 4.3 WE NOTICE THAT IN ASSESSEES OWN CASE IN ASSESS MENT YEAR 2002-03 IN ITA NO. 1105/DEL/2006, THE ITAT HAS HELD AS UNDER:- 24. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE THE ASSESSEE HAS MADE PROVISION ON ACCOUNT OF GRATUITY, LEAVE ENCASHMENT AND POST RETIREMENT MEDICAL BENEFIT ON ACTUARIAL BASIS. UND ER SECTION 115- JB OF THE ACT WHERE IN THE CASE OF AN ASSESSEE, BEI NG A COMPANY, INCOME-TAX, PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR IN R ELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER 1 ST APRIL, 2001 IS LESS THAN SEVEN AND ONE HALF PER CENT OF ITS BOOK PROFIT , THE TAX PAYABLE FOR THE RELEVANT PREVIOUS YEAR SHALL BE DEE MED TO BE SEVEN AND ONE HALF PER CENT OF SUCH BOOK PROFIT. E XPLANATION TO SECTION 115-JB OF THE ACT DEFINES THE TERM BOOK PR OFIT AND MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOS S ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED IN ACCORDANCE W ITH THE PROVISIONS OF PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956, AS INCREASED BY THE AMOUNTS MENTIONED IN CLAU SE (A) TO (G), IF ANY SUCH AMOUNT REFERRED TO IN CLAUSES (A) TO (G) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND REDUCED BY THE A MOUNT ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 12 SPECIFIED IN CLAUSE (I) TO (VII) OF THE EXPLANATION . CLAUSE (C) OF THE EXPLANATION TALKS ABOUT THE AMOUNT OR AMOUNTS SET A SIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES. THE ASSESSEE HAD MADE PROVISIONS IN R ESPECT OF GRATUITY, LEAVE ENCASHMENT AND POST RETIREMENT MEDI CAL BENEFITS BASED ON ACTUARIAL VALUATION. HONBLE SUPREME COUR T IN THE CASE OF BHARAT EARTH MOVERS (SUPRA) HAS HELD THAT IF A B USINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE D EDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE TO BE QU ANTIFIED AND DISCHARGED AT A FUTURE DATE. WHAT SHOULD BE CERTAI N IS THE INCURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPA BLE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTU AL QUANTIFICATION MAY NOT BE POSSIBLE. IF THESE REQUI REMENTS ARE SATISFIED THE LIABILITY IS NOT A CONTINGENT ONE. T HE LIABILITY IS IN PRAESENTI THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN. IN THE CASE BEFORE US THE LIABILITY ON ACCOUNT OF GRATUITY, LEAVE ENCASHM ENT POST RETIREMENT MEDICAL BENEFIT HAVE BEEN ESTIMATED ON A CTUARIAL BASIS. THEREFORE, THE LIABILITY SO ESTIMATED CAN B E SAID TO HAVE BEEN ESTIMATED WITH REASONABLE CERTAINTY AND, THERE FORE, SUCH AN ESTIMATE IS NOT A CONTINGENT ONE. 25. HONBLE BOMBAY HIGH COURT IN THE CASE OF ECHJAY FORGINGS P. LTD. (SUPRA) HAS HELD THAT WHERE THE AS SESSEE HAS MADE A PROVISION FOR GRATUITY ON THE BASIS OF ACTUA RIAL CALCULATIONS, IT CANNOT BE SAID THAT PROVISION FOR GRATUITY WAS NOT ASCERTAINED LIABILITY. LIKEWISE IN THE CASE OF VIN ITECH CORP. P. LTD. (SUPRA) HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT WHERE A LIABILITY WHICH WAS CAPABLE OF BEING CONSTRUED IN DEFINITE TERMS, WHICH HAD ARISEN IN THE ACCOUNTING YEAR, ALTHOUGH I TS ACTUAL QUANTIFICATION AND DISCHARGE MIGHT BE DEFERRED TO A FUTURE DATE. ONCE THE ASSESSEE IS MAINTAINING HIS ACCOUNTS ON ME RCANTILE SYSTEM, A LIABILITY ACCRUED THOUGH TO BE DISCHARGED AT A FUTURE DATE WOULD BE A PROPER DEDUCTION WHILE WORKING OUT THE PROFITS AND GAINS OF BUSINESS, REGARD BEING HAD TO BE ACCEP TED PRINCIPLES OF COMMERCIAL PRACTICE AND ACCOUNTANCY. IF THE FACTS OF THE CASE ARE VIEWED IN THE LIGHT OF THE DECISIONS R EFERRED TO ABOVE, WE FIND THAT THE PROVISION MADE BY THE ASSES SEE IN RESPECT OF GRATUITY, LEAVE ENCASHMENT AND POST RETI REMENT MEDICAL BENEFIT ON ACTUARIAL BASIS CANNOT BE SAID P ROVISIONS FOR UNASCERTAINED LIABILITY SO AS TO FALL IN CLAUSE (C) OF THE EXPLANATION TO SECTION 115-JB (2) OF THE ACT. ACCORDINGLY THE LD. CIT (APPEALS) AND THE ASSESSING OFFICER ERRED IN HOLDIN G THE PROVISIONS MADE BY THE ASSESSEE WERE ON ACCOUNT OF UN- ASCERTAINED LIABILITY TO BE ADDED BACK UNDER CLAUSE (C) OF THE EXPLANATION TO SECTION 115-JB (2) OF THE ACT. ACCO RDINGLY, WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 13 4.4 FACTS BEING SIMILAR, THEREFORE, RESPECTFULLY FO LLOWING THE ORDER OF ITAT IN EARLIER YEAR, WE DISMISS THIS GROUND OF REVENUES A PPEAL. 5. GROUND NO.3 IS REGARDING DELETING ADDITION OF RS .16,38,38,700/- MADE BY THE AO ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBT S. THE LD. AR WAS FAIR ENOUGH TO CONCEDE THAT THIS ISSUE IS COVERED AGAINS T THE ASSESSEE IN VIEW OF THE RETROSPECTIVE AMENDMENT MADE BY THE FINANCE (NO .2) ACT, 2009. ACCORDINGLY THIS GROUND OF THE DEPARTMENT IS ALLOWE D. 6. GROUND NO.4 IS REGARDING DELETION OF ADDITION OF RS.97,65,000/- ON ACCOUNT OF AMORTIZATION OF LAND BY ADDITION TO THE BOOK PROFIT. A SIMILAR ISSUE HAS COME UP IN ASSESSEES OWN CASE FOR ASSESSMENT Y EAR 2004-05 WHERE WE HAVE HELD AS UNDER:- WE HAVE HEARD BOTH THE PARTIES. FROM THE FACTS WE NOTICE, AS POINTED OUT BY THE LD. AR THAT THIS LAND IS NOT A L AND WHICH IS OWNED BY THE ASSESSEE COMPANY. THIS IS A LAND TAKE N FOR USE FROM THE STATE GOVERNMENT WITHOUT TRANSFERRING THE TITLE FOR RELIEF AND REHABILITATION FOR LAND EVACUEES BECAUSE OF SUB MERGES AND WHERE CONSTRUCTION OF SUCH ALTERNATIVE FACILITY IS A CONDITION FOR SETTING UP A PROJECT. THE COST SO INCURRED BY THE ASSESSEE COMPANY IS AMORTIZED OVER USEFUL LIFE OF THE PROJEC T. THE ABOVE POLICIES HAVE BEEN APPROVED BY THE AUDITORS OF THE COMPANY AS WELL AS THE C&AG. THE ACCOUNTS OF THE ASSESSEE COM PANY ARE SUBJECT TO AUDIT NOT ONLY BY THE STATUTORY AUDITORS BUT ALSO BY THE C&AG ALSO. FURTHER THE ACCOUNTS SO PREPARED HAS BE EN APPROVED AND ADOPTED BY THE COMPANY IN THE ANNUAL G ENERAL MEETING AND FILED WITH THE REGISTRAR OF COMPANIES. THE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. (SUPRA) HAS HELD THAT THE AO UNDER THE INCOME-TAX ACT HAS TO AC CEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE COMPANIES ACT WHICH OBLIGATES THE COMPANY TO MA INTAIN ITS ACCOUNT IN A MANNER PROVIDED BY THE COMPANIES ACT A ND THE SAME TO BE SCRUTINISED AND CERTIFIED BY THE STATUTO RY AUDITORS AND WILL HAVE TO BE APPROVED BY THE COMPANY IN ITS GENE RAL MEETING AND THEREAFTER TO BE FILED BEFORE THE REGISTRAR OF COMPANIES WHO HAS A STATUTORY OBLIGATION ALSO TO EXAMINE AND SATI SFY THAT THE ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANC E WITH THE ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 14 REQUIREMENTS OF THE COMPANIES ACT. THE SUPREME COU RT HAS FURTHER HELD THAT THE AO WHILE COMPUTING THE INCOME UNDER SECTION 115J HAS ONLY THE POWER OF EXAMINING WHETHE R THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER T HE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANC E WITH THE COMPANIES ACT. THE ASSESSING OFFICER THEREAFTER HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDE D FOR IN THE EXPLANATION TO THE SAID SECTION (115J). THE SUPREME COURT HAS FURTHER WENT ON TO HOLD TO PUT IT DIFFERENTLY, THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PR OVIDED IN THE EXPLANATION TO SECTION 115J. IT IS NOT THE CASE OF THE REVENUE HERE THAT THE AD JUSTMENT MADE BY THE AO IS UNDER EXPLANATION TO SECTION 115J. TH E CONTENTION OF THE REVENUE HERE IS THAT LAND IS NOT A DEPRECIAB LE ASSET AND DEPRECIATION CHARGED IN THE PROFIT AND LOSS ACCOUNT WHICH IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT READ WITH ACCOUNTING STANDARD 6. AS STATED HEREINABOVE, THE CONTENTION OF THE REVENUE THAT THE LAND IN QUESTION OF THE ASSESS EE COMPANY IS NOT A DEPRECIABLE ASSET IS FACTUALLY INCORRECT A ND FURTHER AS HELD BY THE SUPREME COURT NO ADJUSTMENT CAN BE MADE TO NET PROFIT AS CERTIFIED BY THE STATUTORY AUDITORS. ACCORDINGLY WE UPHOLD THE ORDER OF CIT(A) DELETING THIS ADDITION AND THIS GROUND OF APPEAL OF THE REVENUE IS REJECTE D. 6.1 FACTS BEING SAME, THEREFORE, IN VIEW OF THE ABO VE FINDING THIS GROUND OF THE REVENUE IS DISMISSED. 7. GROUND NO.5 IS REGARDING APPLICABILITY OF PROVIS IONS OF SECTION 234B(2)(II) READ WITH SECTION 140A OF THE INCOME TA X ACT. 7.1 IN THIS REGARD IT WAS CONTENDED BY THE LD. DR T HAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE ADJUSTMENT OF THE SELF AS SESSMENT TAX BEFORE DEDUCTING THE SAME IN RESPECT OF THE INTEREST LIABI LITY ARISING UNDER SECTION 234B OF THE ACT. 7.2 THE LD. AR ON THE OTHER HAND SUPPORTED THE ORDE R OF THE CIT(A) AND IT WAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF THE ITAT IN THE CASE OF PATSON TRANSFORMERS LTD. VS. CIT 103 TTJ 735 (DEL). ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 15 7.3 WE HAVE HEARD BOTH THE PARTIES. THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- THAT INTEREST U/S 234B OF INCOME TAX HAS BEEN CHAR GED AT RS. 4,02,65,082/- WHEREAS THE SAME WORKS OUT AT RS. 3,7 0,58,281/-. THAT IN TERMS OF ORDER U/S 143(3) DT. 27.12.2007 AD DITIONAL DEMAND OF RS. 19,48,96,327/- WAS CREATED AND INTERE ST U/S 234B IS PAYABLE THEREON. THE ASSESSEE HAS DEPOSITED FOLLOWING AMOUNT AFTER A PRIL, 2005 INCLUDING INTEREST AMOUNT DEPOSITED U/S 140A AND TH E SAME NEED TO BE CONSIDERED FOR CALCULATION OF INTEREST U /S 234B OF INCOME TAX ACT. DATE AMOUNT(RS.) 31.5.2005 7,65,00,000 30.8.2005 1,24,40,000 3.11.2006 (AT THE TIME OF FILING REVISED RETURN) 1,57,00,000/- LESS: FIRST ADJUSTMENT TOWARDS INT. U/S 234B 21,71,019/- INT. U/S 234C 1,32,93,242/- 2,27,73 9/- 1,54,72,261/- BALANCE AMOUNT PAYABLE AS ON 30.11.2006 10,56,38, 588/- TOTAL 19,48,06,327/- INTEREST ON BALANCE AMOUNT OF RS. 10,56,38,588/- REMAINED UNPAID DURIN G THE PERIOD DECEMBER, 2006 TO DECEMBER, 2007 I.E. FOR 13 MONT HS ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 16 CALCULATION OF INTEREST U/S 234B IS ENCLOSED COPY OF CASE LAW OF M/S PATSON TRANSFORMERS LTD. V S. DEPUTY COMMISSIONER OF INCOME-TAX, SPECIAL RANGE VIII (2 006) 6 SOT 673 (AHD) IS ALSO ENCLOSED IN SUPPORT OF OUR CL AIM. FROM THE ABOVE YOUR GOODSELF WILL KINDLY CONCLUDE T HAT INTEREST U/S 234B HAS BEEN EXCESS CHARGED BY RS. 32,06,801/- (RS. 4,02,65,082/- - 3,70,58,281/-). IT IS FURTHER SUBMITTED THAT IN THE SIMILAR FACTS, IT HAS BEEN HELD IN THE CASE OF M/S PATSON TRANSFORMERS LTD. VS. DCIT ( 2006) 6 SOT 673 (AHB) THE ADJUSTMENT TOWARDS INTEREST PAYABLE UNDER SECT ION 234B(21) IS TO BE CONSIDERED ONLY AT THE TIME OF FILING RETU RN OF INCOME, I.E. WHEN PAYMENT OF SELF-ASSESSMENT TAX UNDER SECTION 1 40A IS REQUIRED TO BE MADE. BEFORE THAT, INTEREST UNDER S ECTION 234B IS INDEPENDENTLY REQUIRED TO BE CALCULATED ONLY IN ACC ORDANCE WITH THE PROVISIONS PROVIDED IN SECTION 234B(2)(I). IF AT THE TIME OF FILING RETURN IT IS FOUND SHORT AFTER ADJUSTMENT OF INTEREST OUT OF TAX PAID UNDER SECTION 140A, FURTHER INTEREST IS REQUIR ED TO BE CALCULATED IN ACCORDANCE WITH SECTION 234B(2)(II), ON BALANCE AMOUNT WHICH IS ASSESSED TAX MINUS ADVANCE TAX AND AD HOC PAYMENT. IN VIEW OF ABOVE, IT IS REQUESTED THAT INTEREST CHA RGED U/S 234B BE REDUCED BY RS.32,06,801/-. 15.2 I HAVE CAREFULLY CONSIDERED THE ARGUMENT OF LD . ARS AND INTEREST CHARGED BY THE AO IN THE ORIGINAL ORDER AS WELL AS IN ORDER U/S 154 OF I. TAX ACT. THERE IS FORCE IN THE ARGUMENTS PUT FORTH BY THE APPELLANT REGARDING APPLICABILITY OF P ROVISIONS OF I. TAX ACT VIZ; SECTION 234 B(2)(II) READ WITH SECTION 140A AND THE SAME HAVE BEEN DISCUSSED WITH EXAMPLES IN THE CASE OF M/S PATSON TRANSFORMERS LTD. VS. DCIT (2006) 6 SOT 673 (AHB). 15.3 IN VIEW OF ABOVE DISCUSSION I HOLD THAT APPEL LANTS CONTENTION IS CORRECT AND JUSTIFIED. 7.4 THIS ISSUE IS ALSO COVERED BY THE JUDGMENT OF I TAT IN THE CASE OF PATSON TRANSFORMERS LTD. VS. DCIT. THE RELEVANT PA RA READ AS UNDER : - 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORD. THE CONTROVERSY UNDER CONSIDERA TION ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 17 RELATES TO INTERPRETATION OF EXPLANATION TO SUB-SEC TION (1) TO SECTION 140A WHICH PROVIDES THAT WHERE THE ASSESSEE PAYS ONLY PART OF THE AMOUNT DUE AT THE TIME OF FILING THE RE TURN, SUCH PAYMENT SHALL FIRST BE ADJUSTED TOWARDS INTEREST PA YABLE, AND BALANCE IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX P AYABLE. NOW THE CRUX OF THE MATTER IS, THIS ADJUSTMENT IS TO BE MADE, WHETHER AT THE TIME OF MAKING AD HOC PAYMENT OR AT THE TIME OF FILING THE RETURN OF INCOME. THE REVENUE IS OF THE VIEW THAT I T SHOULD BE ADJUSTED AT THE TIME OF AD HOC PAYMENT, AND THE ASS ESSEES CASE THAT IT SHOULD BE ADJUSTED AT THE TIME OF FILI NG RETURN I.E., WHEN PAYMENT UNDER SECTION 140A IS DUE. FOR THIS PU RPOSE WE HAVE TO SEE RELEVANT PROVISIONS OF INCOME-TAX ACT W HICH ARE AS UNDER : '140A. SELF-ASSESSMENT. (1) WHERE ANY TAX IS PAYAB LE ON THE BASIS OF ANY RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 OR SECTION 142 OR SECTION 148 OR SECTION 153A, AS T HE CASE MAY BE, SECTION 158BC, AFTER TAKING INTO ACCOUNT THE AM OUNT OF TAX, IF ANY, ALREADY PAID UNDER ANY PROVISION OF THIS AC T, THE ASSESSEE SHALL BE LIABLE TO PAY SUCH TAX TOGETHER W ITH INTEREST PAYABLE UNDER ANY PROVISION OF THIS ACT FOR ANY DEL AY IN FURNISHING THE RETURN OR ANY DEFAULT OR DELAY IN PA YMENT OF ADVANCE TAX, BEFORE FURNISHING THE RETURN AND THE R ETURN SHALL BE ACCOMPANIED BY PROOF OF PAYMENT OF SUCH TAX AND INT EREST. EXPLANATION.WHERE THE AMOUNT PAID BY THE ASSESSEE UNDER THIS SUB-SECTION FALLS SHORT OF THE AGGREGATE OF TH E TAX AND INTEREST AS AFORESAID, THE AMOUNT SO PAID SHALL FIR ST BE ADJUSTED TOWARDS THE INTEREST PAYABLE AS AFORESAID AND THE B ALANCE, IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE. 234B. INTEREST FOR DEFAULTS IN PAYMENT OF ADVANCE T AX.(1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION, WH ERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PAY AD VANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX, OR WH ERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISI ONS OF SECTION 210 IS LESS THAN NINETY PER CENT OF THE ASS ESSED TAX, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE AND ONE-FOURTH PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL N EXT FOLLOWING SUCH FINANCIAL YEAR TO THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB-SECTION (1) OF SECTION 143 AND WHERE A RE GULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASS ESSMENT, ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR, AS THE C ASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID FALLS SHORT OF THE ASSESSED TAX. EXPLANATION 1.IN THIS SECTION, 'ASSESSED TAX' MEAN S THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUB-SECTION (1 ) OF SECTION ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 18 143 OR ON REGULAR ASSESSMENT AS REDUCED BY THE AMOU NT OF TAX DEDUCTED OR COLLECTED AT SOURCE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII ON ANY INCOME WHICH IS S UBJECT TO SUCH DEDUCTION OR COLLECTION AND WHICH IS TAKEN INT O ACCOUNT IN COMPUTING SUCH TOTAL INCOME. EXPLANATION 2.WHERE, IN RELATION TO AN ASSESSMENT YEAR, AN ASSESSMENT IS MADE FOR THE FIRST TIME UNDER SECTION 147 OR SECTION 153A, THE ASSESSMENT SO MADE SHALL BE REGAR DED AS A REGULAR ASSESSMENT FOR THE PURPOSES OF THIS SECTION . EXPLANATION 3.IN EXPLANATION 1 AND IN SUB-SECTION (3) 'TAX ON THE TOTAL INCOME DETERMINED UNDER SUB-SECTION (1) O F SECTION 143' SHALL NOT INCLUDE THE ADDITIONAL INCOME-TAX, I F ANY, PAYABLE UNDER SECTION 143. (2) WHERE, BEFORE THE DATE OF DETERMINATION OF TOTA L INCOME UNDER SUB-SECTION (1) OF SECTION 143 OR COMPLETION OF A REGULAR ASSESSMENT, TAX IS PAID BY THE ASSESSEE UNDER SECTI ON 140A OR OTHERWISE, (I )INTEREST SHALL BE CALCULATED IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THE SECTION UP TO THE DATE ON WHICH T HE TAX IS SO PAID, AND REDUCED BY THE INTEREST, IF ANY, PAID UND ER SECTION 140A TOWARDS THE INTEREST CHARGEABLE UNDER THIS SEC TION; (II)THEREAFTER, INTEREST SHALL BE CALCULATED AT THE RATE AFORESAID ON THE AMOUNT BY WHICH THE TAX SO PAID TOGETHER WITH T HE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. 9. UNDER THE OLD PROVISIONS OF SUB-SECTION (1) OF S ECTION 140A, THE ASSESSEE WAS REQUIRED TO PAY TAX ON THE BASIS O F THE RETURN, AFTER TAKING INTO ACCOUNT TAXES ALREADY PAID AT THE TIME OF FILING THE RETURN. SUCH TAX, KNOWN AS THE SELF-ASSESSMENT TAX, WAS TO BE PAID BEFORE FILING THE RETURN AND PROOF OF PAYME NT THEREOF WAS TO BE ATTACHED WITH THE RETURN. THE OLD PROVISI ONS COVERED THE LIMITED ASPECT TO PAYING, AT THE TIME OF FILING THE RETURN, THE TAX ONLY AND NOT THE 'INTEREST' PAYABLE BY THE ASSE SSEE FOR LATE FILING OF RETURN OR FOR DEFAULT OR DELAY IN PAYMENT OF ADVANCE TAX. 10. FOR DELAY IN FILING THE RETURN OF INCOME AND FO R DELAY OR DEFAULT IN PAYMENT OF ADVANCE TAX, MANDATORY INTERE ST IS NOW PAYABLE UNDER THE PROVISIONS OF NEW SECTIONS 234A T O 234C INSERTED BY THE AMENDING ACT, 1987. FURTHER, UNDER THE NEW SCHEME OF ASSESSMENT ALSO BEING INTRODUCED BY THE A MENDING ACT, 1987 (REFER PARA 5.2 OF THESE EXPLANATORY NOTE S), IF THE TAX AND INTEREST DUE ON THE BASIS OF RETURNED INCOME HA VE BEEN CORRECTLY PAID, THE RETURN WILL BE ACCEPTED AS SUCH AND NO FURTHER ACTION IN THIS BEHALF WILL BE NECESSARY. FO R PROPER ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 19 IMPLEMENTATION OF THE NEW SCHEME OF ASSESSMENT, IT IS NECESSARY THAT THE ASSESSEES SHOULD ALSO PAY INTERE ST DUE UNDER THE PROVISIONS OF THE NEW SECTIONS 234A TO 23 4C ALONG WITH THE SELF-ASSESSMENT TAX BEFORE FILING THE RETU RN OF INCOME. THE AMENDING ACT, 1987, HAS, THEREFORE, AMENDED SUB -SECTION (1) OF SECTION 140A TO MAKE IT MANDATORY FOR A PERS ON TO PAY BEFORE FURNISHING THE RETURN, TAX TOGETHER WITH INT EREST PAYABLE UNDER ANY PROVISIONS OF THE ACT FOR DELAY IN FURNIS HING THE RETURN OR ANY DEFAULT OR DELAY IN PAYMENT OF ADVANCE TAX. PROOF OF PAYMENT OF SUCH TAX AND INTEREST IS TO BE ATTACHED WITH THE RETURN. FURTHER, AN EXPLANATION HAS BEEN INSERTED I N THE SAID SUB-SECTION (1) TO CLARIFY THAT WHERE THE ASSESSEE PAYS ONLY PART OF THE AMOUNT DUE AT THE TIME OF FILING THE RETURN, SUCH PAYMENT SHALL FIRST BE ADJUSTED TOWARDS THE INTEREST PAYABL E, AND BALANCE, IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE. 11. SECTION 234B AND SECTION 140A BOTH ARE SEPARATE AND INDEPENDENT SECTIONS OF THE ACT, SECTION 234B(1) PR OVIDES GENERAL SITUATION OF CALCULATION OF INTEREST. THE P ERIOD FOR WHICH INTEREST UNDER THIS SECTION LEVIABLE IS FROM THE 1S T DAY OF APRIL NEXT FOLLOWING FINANCIAL YEAR TO THE DATE OF DETERM INATION OF TOTAL INCOME UNDER SECTION 143(1)/REGULAR ASSESSMENT. THE AMOUNT ON WHICH INTEREST PAYABLE IS EQUAL TO THE ASSESSED TAX OR THE AMOUNT BY WHICH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. THE FACTS OF CONTROVERSY UNDER CONSID ERATION IS NOT RELATED TO THE ABOVE GENERAL CALCULATION OF INT EREST BUT FALLS UNDER SECTION 234B(2). THIS SUB-SECTION (2) OF SECT ION 234B PROVIDES THE CALCULATION OF INTEREST WHERE TAX IS P AID BY THE ASSESSEE UNDER SECTION 140A OR OTHERWISE BEFORE THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SECTION 143(1)/ COMPLETION OF A REGULAR ASSESSMENT. THE INTEREST SHALL BE CALC ULATED AS PROVIDED GENERAL CALCULATION IN SECTION 234B(1). TH E IMPORTANT THING PROVIDES IS THAT SIMPLE INTEREST UNDER SECTIO N 234B(1) IS TO BE CALCULATED AT THE PRESCRIBED RATE. THE DIFFERENC E IN CALCULATION INTEREST IN THAT SECTION 234B(1) AND IN SECTION 234B(2) IS THAT IN SECTION 234B(2) THE SIMPLE INTER EST IS TO BE CALCULATED UP TO THE DATE ON WHICH THE TAX IS SO PA ID. ACCORDINGLY INTEREST CALCULATION IN THE CASE UNDER CONSIDERATION SHOULD BE AS UNDER : TOTAL AMOUNT OF TAX PAYABLE U/S 140A AMOUNT PAID AMOUNT ON WHICH INT. PAYABLE PERIOD RATE OF INTEREST P.M. AMOUNT INT. 33,39,956 33,00,000 33,39,956 APRIL, 92 TO 2% 4,00,794 DT. 29-9- SEPT., 92 ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 20 1992 39,956 39,956 39,956 OCT., 92 TO 2% 2,446 DT. 29-12- 1992 DEC., 92 INT. U/S 234B TOTAL II RS. 4,03,240 12. NOW WE SHALL EXAMINE SECTION 140A, WHICH IS TO BE TAKEN INTO CONSIDERATION WHILE FILING THE RETURN. IN ACCO RDANCE WITH SECTION 140A, AN ASSESSEE IS REQUIRED TO PAY TAX UN DER SECTION 140A WHERE ANY TAX IS PAYABLE ON THE BASIS OF ANY R ETURN REQUIRED TO BE FURNISHED (SECTION 139 OR SECTION 14 2 OR AS THE CASE MAY BE, SECTION 158BC) AFTER TAKING INTO ACCOU NT THE AMOUNT OF TAX, IF ANY, ALREADY PAID UNDER ANY PROVI SION OF THIS ACT. THUS, AT THE TIME OF FILING RETURN THE TAX PAY ABLE UNDER SECTION 140A IS DUE AND REQUIRED TO CALCULATE TAX P AYABLE ON THE BASIS OF THE RETURN TO BE FURNISHED AS UNDER : SECTION 139 OR (WITH EFFECT FROM 27-9-1991) SECTION 142 OR SECTION 148 OR (WITH EFFECT FROM 1-6-1999) SECTION 158BC. AFTER TAKING INTO ACCOUNT THE AMOUNT OF TAX, IF ANY , ALREADY PAID UNDER ANY PROVISION OF THIS ACT. IN THE CASE UNDER CONSIDERATION RETURN IS FILED ON 30-12-1992. ACCORDING TO THE RET URN OF INCOME, THE CALCULATION OF TAX PAYABLE UNDER SECTION 140A C OMES TO RS. 33,39,956 OF WHICH DETAILS IS REPRODUCED IN PARA NO S. 5 AND 5.1. THE ASSESSEE DEPOSITED FOLLOWING AD HOC AMOUNT BEFO RE FILING THE RETURN : DATE AMOUNT 29-9-1992 RS. 33,00,000 29-9-1992 RS. 39,956 RS. 33,39,956 13. AT THE TIME OF FILING RETURN OF INCOME, EXPLANA TION TO SECTION 140A IS REQUIRED TO CONSIDER. THE NEWLY INSERTED (W ITH EFFECT FROM 1-4-1989) EXPLANATION TO SECTION 140A(1) TAKES CARE OF A SITUATION WHERE THE AMOUNT PAID BY THE ASSESSEE UND ER SECTION 140A(1) FALLS SHORT OF THE AGGREGATE OF THE TAX AND INTEREST AS MENTIONED THEREIN. IN SUCH A SITUATION, THE AMOUNT, SO PAID IS FIRST TO BE ADJUSTED TOWARDS THE INTEREST PAYABLE A ND THE BALANCE, IF ANY, IS TO BE ADJUSTED TOWARDS THE TAX PAYABLE. IN THE INSTANT CASE, ADJUSTMENT IS REQUIRED TO BE MADE IS AS UNDER : ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 21 THE TOTAL AMOUNT DEPOSITED BY THE ASSESSEE RS. 33,39,956 LESS : FIRST ADJUSTMENT TOWARDS INTEREST UNDER SECTION 234B RS. 4,03,240 UNDER SECTION 234C RS. 1,78,280 (UNDISPUTED) RS. 5,81,520 BALANCE ADJUSTABLE AGAINST TAX AMOUNT RS. 27,58,436 AMOUNT OF TAX PAYABLE UNDER SECTION 140A RS. 33,39,956 SHORT PAYMENT OF TAX UNDER SECTION 140A RS. 5,81,520 SINCE THE ASSESSEE HAS MADE SHORT PAYMENT, THEREFOR E, INTEREST IS LEVIABLE ON RS. 5,81,520 IN ACCORDANCE WITH SECT ION 234B(2)(II). THIS PROVISION IS REPRODUCED AS ABOVE. THUS, THIS PROVISION REQUIRED TO CALCULATE INTEREST BY THE PRE SCRIBED RATE ON THE BALANCE AMOUNT BY WHICH THE TAX SO PAID TOGETHE R WITH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. 14. IN THE LIGHT OF ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT ADJUSTMENT TOWARDS INTEREST PAYABLE UNDER SECTION 234B IS TO BE CONSIDERED ONLY AT THE TIME OF FILING RETURN OF INCOME I.E., WHEN PAYMENT OF SELF-ASSESSMENT UNDER SECTION 140A IS REQUIRED TO BE MADE. BEFORE THAT INTEREST U NDER SECTION 234B IS INDEPENDENTLY REQUIRED TO BE CALCULATED ONL Y IN ACCORDANCE WITH THE PROVISIONS PROVIDED IN SECTION 234B(I). IF AT THE TIME OF FILING RETURN IT IS FOUND SHORT PAYMENT AFTER ADJUSTMENT OF INTEREST OUT OF TAX PAID UNDER SECTIO N 140A, FURTHER INTEREST IS REQUIRED TO CALCULATE IN ACCORD ANCE WITH SECTION 234B(2)(II), ON BALANCE AMOUNT WHICH IS ASS ESSED TAX MINUS ADVANCE TAX AND AD HOC PAYMENT. 15. THUS, WE FIND THAT APPROACH OF REVENUE FOR CALC ULATION OF INTEREST UNDER SECTION 234B IS NOT CORRECT, THEREFO RE, THE ORDERS OF LOWER AUTHORITIES ARE SET-ASIDE AND THE CLAIM OF THE ASSESSEE IS ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO CA LCULATE INTEREST UNDER SECTION 234B AS PER ABOVE DISCUSSION . 7.5 AFTER HEARING BOTH SIDES, WE HOLD THAT THE JUDG MENT OF ITAT IS APPLICABLE TO THE FACTS OF THE ASSESSEES CASE, THE REFORE, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THIS GROUND OF REVENUES APPEA L. ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 22 8. GROUND NO.6 IN REVENUES APPEAL IS GENERAL IN NA TURE AND THE SAME IS DISMISSED. 9. IN ITA NO. 3681/DEL/2008, THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW THE CONTENTION OF THE ASSESSEE COMPANY FOR CH ARGING THE INTEREST U/S 234-B AT RS. 3,70,58,281/- INSTEAD OF RS. 4,02,65,082/- AND IN JUSTIFYING THE CONTENTION OF T HE ASSESSEE REGARDING APPLICABILITY OF PROVISIONS OF INCOME TAX ACT VIZ., SECTION 234B(2)(II) READ WITH SECTION 140A DISREGAR DING THE FACT THAT THE INTEREST WAS RIGHTLY CALCULATED AS PER THE PROVISIONS OF SECTION 234B OF THE INCOME TAX ACT AND THAT THE ISS UE IS HIGHLY DEBATABLE AS STATED BY THE ASSESSING OFFICER IN THE LAST PARA OF THE IMPUGNED ORDER? 8.1 THE ABOVE ISSUE IS THE SAME AS IN GROUND NO.5 O F THE DEPARTMENTS APPEAL IN ITA NO. 2681/DEL/2008 WHEREBY WE HAVE UPH ELD THE ORDER OF THE CIT(A). 8.2 IN VIEW OF THE ABOVE, THIS GROUND OF THE REVENU ES APPEAL IS NOT SUSTAINABLE AND ACCORDINGLY THE SAME IS DISMISSED. 9. IN THE RESULT, THE APPEAL IN ITA NO.2509/DEL/200 8 IS ALLOWED; ITA NO. 2618/DEL/2008 IS PARTLY ALLOWED AND ITA NO. 3681/DE L/2008 IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF SEPTEMBER, 2014 TS ITA NO.2509/DEL/2008 ITA NO.2618/DEL/2008 ITA NO.3681/DEL/2008 23 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), FARIDABAD. 5.CIT(ITAT), NEW DELHI. AR/ITAT