DCIT, New Delhi V. M/s Gujrat Guardian Ltd., New Delhi

ITA 3686/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81612 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERAJ JAIN MS SHAILY GUPTA
• Assessee Lawyers: SATPAL SINGH
• Keywords: Capital asset; Depreciation; Business expenditure; Rule of consistency; Earning of tax free income; Onus to prove; Revenue expenditure; Capital expenditure
• Section: 14A; 37

Judgement Text

ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3214/DEL/2013 & I.T.A.NO.3215/DEL/2013 ASSESSMENT YEARS : 2008-09 & 2007-08 GUJARAT GUARDIAN LTD., VS DY.COMMISSIONER OF INCOME TAX, 4-7/C, DDA SHOPPING CENTRE, CIRCLE-12(1 ), NEW DELHI. NEW FRIENDS COLONY, NEW DELHI-110065 I.T.A.NO.3684/D/2013, I.T.A.NO.3686/D/2013, I.T.A.N O.3694/DEL/2013, ASSESSMENT YEARS : 2007-08, 2008-09, 2008-09 DY.COMMISSIONER OF INCOME TAX, VS GUJARAT GUAR DIAN LTD., CIRCLE-12(1), NEW DELHI. 4-7/C, DDA SHOPPING CENTRE, NEW FRIENDS COLONY, NEW DELHI-110065 (AAACG1622K) (APPELLANT) (RESPONDENT) APPELLANT BY: SH RI NEERAJ JAIN, MS SHAILY GUPTA RESPONDENT BY : SHRI SATPAL SINGH, SR. DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER ASSESSEES APPEAL IN ITA NO. 3215/D/20143 FOR AY 20 07-08 AT THE OUTSET, LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 1, 2 AND 2.1, THE REFORE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 2. GROUND NO. 3 OF THE ASSESSEE READS AS UNDER:- ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 2 3. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN H OLDING ANNUAL WEB HOSTING CHARGES TO BE PRIOR PERIOD EXPEN SES. 3. APROPOS GROUND NO.3, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON R ECORD. LD. COUNSEL OF THE ASSESSEE PLACED A COPY OF THE BILL DATED 17.4.2006 ISSUED BY SAMPATTI.COM LIMITED WHEREIN ANNUAL CHARGES FOR WEBSITE HOSTING, DATA BASE CONNECTIVITY, EMAIL ACCOUNTS AND E-MAIL FACILITY HAS BEEN BILLED AT RS. 3 LAKH + SERVICE TAX OF RS.30,000 AND CESS OF RS. 600/-. LD. COUNSEL FU RTHER SUBMITTED THAT AS PER DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTR A CEMENT & CHEMICALS LTD. VS CIT (1995) 213 ITR 523 ( GUJ) WHEN THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNTS AS PER ME RCANTILE SYSTEM OF ACCOUNTING, THEN IF LIABILITY ARISING IN RELEVANT P REVIOUS YEAR RELATING TO THE EXPENDITURE OF EARLIER YEARS, THEN EXPENDITURE IS A LLOWABLE AND DEDUCTIBLE AS BUSINESS EXPENDITURE U/S 37 OF THE INCOME TAX ACT, 1961. IT WAS ALSO SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE AUTHOR ITIES BELOW IGNORED THE RATIO OF THE ABOVE JUDGMENT OF HONBLE GUJARAT HIGH COURT WHEREIN IT HAS BEEN HELD THUS:- IN EACH CASE WHERE THE ACCOUNTS ARE MAINTAINED ON THE MERCANTILE BASIS IT HAS TO BE FOUND IN RESPECT OF A NY CLAIM, WHETHER SUCH LIABILITY WAS CRYSTALLIZED AND QUANTIF IED DURING THE PREVIOUS YEAR SO AS TO BE REQUIRED TO BE ADJUSTED IN THE BOOKS OF ACCOUNT OF THAT PREVIOUS Y EAR. IF ANY LIABILITY, THOUGH RELATING TO THE EARLIER YEAR, DEPENDS ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 3 UPON MAKING A DEMAND AND ITS ACCEPTANCE BY THE ASSE SSEE AND SUCH LIABILITY HAS BEEN ACTUALLY CLAIMED AND PA ID IN THE LATER PREVIOUS YEARS IT CANNOT BE DISALLOWED AS DEDUCTION MERELY ON THE BASIS THE ACCOUNTS ARE MAIN TAINED ON MERCANTILE BASIS AND THAT IT RELATED TO A TRANSA CTION OF THE PREVIOUS YEAR. THE TRUE PROFITS AND GAINS OF A PREVIOUS YEAR ARE REQUIRED TO BE COMPUTED FOR THE PURPOSE OF DETERMINING TAX LIABILITY. THE BASIS OF TAXING INCO ME IS ACCRUAL OF INCOME AS WELL AS ACTUAL RECEIPT. IF FOR WANT OF NECESSARY MATERIAL CRYSTALLIZING THE EXPENDITURE IS NOT IN EXISTENCE IN RESPECT OF WHICH SUCH INCOME OR EXPENS ES RELATE, THE MERCANTILE SYSTEM DOES NOT CALL FOR ADJ USTMENT IN THE BOOKS OF ACCOUNT ON ESTIMATE BASIS. IT IS AC TUALLY KNOWN INCOME OR EXPENSES, THE RIGHT TO RECEIVE OR T HE LIABILITY TO PAY WHICH HAS COME TO BE CRYSTALLIZED, WHICH IS TO BE TAKEN INTO ACCOUNT UNDER THE MERCANTILE SYSTE M OF MAINTAINING BOOKS OF ACCOUNT. AN ESTIMATED INCOME O R LIABILITY, WHICH IS YET TO BE CRYSTALLIZED, CAN ONL Y BE ADJUSTED AS A CONTINGENCY ITEM BUT NOT AS AN ACCRUE D INCOME OR LIABILITY OF THAT YEAR. 4. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT IT WAS NOTICED BY THE REVENUE AUTHORITIES THAT AN AMOUNT OF RS. 3 LAKH WA S CLAIMED IN RESPECT OF ANNUAL CHARGES FOR WEB SITE HOSTING FOR AY 2005-06. SINCE THE AMOUNT PAID TOWARDS ANNUAL CHARGES FOR WEB HOSTING FOR AY 2005- 06 WAS IN THE NATURE OF PRIOR PERIOD EXPENSES, THEN THE SAME WAS RIGHTLY DI SALLOWED BY THE AO AND IMPUGNED ORDER IS JUSTIFIED IN THIS REGARD. 5. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E OBSERVE THAT THE MAIN CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE IS THAT THE BILL WAS RAISED ON 17.4.2006, THEREFORE, THE LIABILITY OF PRIOR PER IOD WAS CRYSTALLIZED DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 4 THEREFORE, AS PER MERCANTILE SYSTEM OF ACCOUNTING, THE CLAIM OF EXPENDITURE WAS ALLOWABLE AND THE AUTHORITIES BELOW GROSSLY ERR ED IN MAKING DISALLOWANCE AND ADDITION ON THIS ISSUE. 6. AS PER RATIO OF THE DECISION OF THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICALS LTD. VS CIT ( SUPRA), WE NOTE THAT THEIR LORDSHIPS HELD THAT IF ANY LIABILITY, THOUGH RELATING TO EARLIER YEAR DEPENDS UPON MAKING A DEMAND AND ITS ACCEPTANCE BY THE ASSESSEE AND SUCH LIABILITY HAS BEEN ACTUALLY CLAIMED AND PAID IN THE LATER PREVIOUS YEAR, IT CANNOT DISALLOWED AS DEDUCTION MERELY ON THE BASIS THAT THE ACCOUNTS ARE MAINTAINED ON MERCANTILE BASIS AND THAT IT IS RELAT ED TO A TRANSACTION OF PREVIOUS YEARS. IN VIEW OF ABOVE, WE COME TO A CON CLUSION THAT THE REVENUE AUTHORITIES GROSSLY ERRED IN DISALLOWING THE CLAIM OF EXPENDITURE INCURRED BY THE ASSESSEE DURING RELEVANT PREVIOUS YEAR PERTAINI NG TO THE LIABILITY RELATING TO EARLIER YEAR. WE FURTHER HOLD THAT THE ISSUE OF PRIOR PERIOD EXPENDITURE DESERVES TO BE ADJUDICATED IN THE LIGHT OF ABOVE DE CISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMI CALS LTD. VS CIT (SUPRA) AND THE AO IS DIRECTED TO VERIFY AND EXAMIN E THE CLAIM OF THE ASSESSEE IN THE LIGHT OF DISCUSSION MADE HEREINABOV E. ACCORDINGLY, GROUND NO. 3 OF THE ASSESSEE IS DEEMED TO BE ALLOWED FOR S TATISTICAL PURPOSES. ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 5 ASSESSEES APPEAL IN ITA NO. 3214/DEL/2013 7. LD. COUNSEL OF THE ASSESSEE SUBMITTED AN APPLICA TION AND REQUESTED THAT THE CAPTIONED APPEAL WAS MISTAKENLY FILED, THE REFORE, THE ASSESSEE MAY BE ALLOWED TO WITHDRAW THIS APPEAL. THE DR HAS NO OBJECTION IN ALLOWING THE ASSESSEE TO WITHDRAW ITS APPEAL. ACCORDINGLY, THE APPEAL OF THE ASSESSEE FOR AY 2008-09 BEARING ITA NO. 3214/D/2013 IS DISMI SSED AS NOT PRESSED. DEPARTMENTAL APPEAL IN ITA NO. 3684/D/2013 FOR AY 2 007-08 8. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AG AINST THE ORDER OF THE CIT(A)-XV FOR AY 2007-08. 9. THE REVENUE HAS RAISED MAINLY TWO GROUNDS WHICH READ AS UNDER:- 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION OF RS.14,59,612/- MADE BY THE AO U/S 14A R .W.R. 8D? 2. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION OF RS.1,52,25,588/- MADE BY THE AO ON ACCO UNT OF CAPITALIZATION OF THE ADVERTISEMENT EXPENSES? 10. APROPOS GROUND NO. 1, LD. DR SUBMITTED THAT THE AO RIGHTLY INVOKED PROVISIONS OF SECTION 14A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES 1962 AND THE CIT(A) DELETED THE DISALLOWANCE OF RS. 14,59,612/- WITHOUT ANY BASIS AND COGENT REASONS. THE DR FURTHER CONTE NDED THAT EVEN PRIOR TO THE INTRODUCTION OF RULE 8D, THE AO HAS TO SATISFY HIMSELF WITH THE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 6 CORRECTNESS OF CLAIM OF THE ASSESSEE AND IF AO IS N OT SATISFIED ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE, THEN HE S HALL HAVE TO REJECT THE CLAIM AND STATE THE REASONS FOR DOING SO AND IN THIS SITU ATION, THE AO IS REQUIRED TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED NOT RE LATED TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE AC T ON THE BASIS OF REASONABLE AND ACCEPTABLE METHOD OF APPORTIONMENT. 11. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSES SEE SUBMITTED THAT RULE 8D IS NOT APPLICABLE TO AY 2007-08 RETROSPECTIVELY. LD. COUNSEL FURTHER CONTENDED THAT IN THE CASE OF MAXOPP INVESTMENT LTD. VS CIT 347 ITR 272 , THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI, A FTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS WALFORT SHARE & STOCK BROKERS 326 ITR 1 (SC) THE HONBLE HIGH COURT HAS ANALYZED THE SCOPE OF PROVISIONS OF SECTION 14A AND POWERS VESTE D WITH THE AO BEFORE INVOKING THE SAME. LD. COUNSEL OF THE ASSESSEE FUR THER SUBMITTED THAT WHEN AO HAS NOT RECORDED HIS DISSATISFACTION ABOUT THE C ORRECTNESS OF THE CLAIM OF THE ASSESSEE OR IN OTHER WORDS, THE AO HAS TO SATIS FY HIMSELF ABOUT THE INCORRECTNESS OF THE CLAIM OF THE ASSESSEE, THEN ON LY THE AO MAY PROCEED TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN REL ATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME ON THE BASIS OF A PROPER METHOD OF APPORTIONMENT. LD. COUNSEL SUPPORTED THE IMPUGNED ORDER AND SUBMITTED ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 7 THAT THE DISALLOWANCE AND ADDITION MADE BY THE AO W AS NOT SUSTAINABLE AND IT WAS RIGHTLY DELETED BY THE CIT(A). 12. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS, SUBMISSIONS AND CAREFUL PERUSAL OF THE RELEVANT MATERIAL ON RECORD AS WELL AS RATIO OF THE DECISIONS RELIED BY BOTH THE PARTIES, AT THE OUTSET , WE NOTE THAT AS PER DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MANUFACTURING CO. LTD. VS DCIT (2010) 328 ITR 81 (B OMBAY) , RULE 8D IS APPLICABLE FROM AY 2008-09 ONWARDS PROSPECTIVELY . THE CASE IN HAND IS RELATED TO AY 2007-08. HENCE, RULE 8D IS NOT APPLI CABLE TO THE PRESENT CASE. 13. TURNING TO THE DECISION OF HONBLE JURISDICTION AL HIGH COURT OF DELHI IN THE CASE OF MAXOPP INVESTMENT (SUPRA), WE OBSERV E THAT THEIR LORDSHIPS HAVE ALSO ENLIGHTENED THE SITUATION WHEN THE PROVIS IONS OF SECTION 14A OF THE ACT IS TO BE INVOKED AND DISALLOWANCE TO BE WORKED OUT FOR THE PERIOD PRIOR TO THE INTRODUCTION OF RULE 8D. THE RELEVANT OPERA TIVE PART OF THE DECISION READS AS UNDER:- HOW IS SECTION 14A TO BE WORKED FOR THE PERIOD PRIOR TO THE INTRODUCTION OF RULE 8D? SUB-SECTION (2) OF SECTION 14A, AS WE HAVE SEEN, STIPULATES THAT THE ASSESSING OFFICER SHALL DETERMI NE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO INCOM E WHICH DOES NOT FORM PART OF THE TOTAL INCOME IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED. OF COURSE, THIS DETERMINATION CAN ONLY BE UNDERTAKEN I F THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECT NESS OF ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 8 THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPEND ITURE. THIS PART OF SECTION 14A(2) WHICH EXPLICITLY REQUIR ES THE FULFILLMENT OF A CONDITION PRECEDENT IS ALSO IMPLIC IT IN SECTION 14A(1) [AS IT NOW STANDS] AS ALSO IN ITS INITIAL AVATAR AS SECTION 14A. IT IS ONLY THE PRESCRIPTION WITH REGARD TO THE METHOD OF DETERMINING SUCH EXPENDITUR E WHICH IS NEW AND WHICH WILL OPERATE PROSPECTIVELY. IN OTHER WORDS, SECTION 14A, EVEN PRIOR TO THE INTRODU CTION OF SUB-SECTIONS (2) & (3) WOULD REQUIRE THE ASSESSING OFFICER TO FIRST REJECT THE CLAIM OF THE ASSESSEE WITH REGA RD TO THE EXTENT OF SUCH EXPENDITURE AND SUCH REJECTION MUST BE FOR DISCLOSED COGENT REASONS. IT IS THEN THAT THE QUEST ION OF DETERMINATION OF SUCH EXPENDITURE BY THE ASSESSING OFFICER WOULD ARISE. THE REQUIREMENT OF ADOPTING A SPECIFIC METHOD OF DETERMINING SUCH EXPENDITURE HAS BEEN INTRODUCED BY VIRTUE OF SUB-SECTION (2) OF SECTION 14A. PRIOR TO THAT, THE ASSESSING WAS FREE TO ADOPT ANY REASONABLE AND ACCEPTABLE METHOD. THUS, THE FACT THAT WE HAVE HELD THAT SUB-SECTIONS (2) & (3) OF SECTION 14A AND RULE 8D WOULD OPERATE PROSPECTIVELY (AND, NOT RETROSPECTIVELY) DOES NOT M EAN THAT THE ASSESSING OFFICER IS NOT TO SATISFY HIMSELF WIT H THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE WITH REGAR D TO SUCH EXPENDITURE. IF HE IS SATISFIED THAT THE ASSESSEE H AS CORRECTLY REFLECTED THE AMOUNT OF SUCH EXPENDITURE, HE HAS TO DO NOTHING FURTHER. ON THE OTHER HAND, IF HE IS SATISFIED ON AN OBJECTIVE ANALYSIS AND FOR COGENT REASONS THA T THE AMOUNT OF SUCH EXPENDITURE AS CLAIMED BY THE ASSESS EE IS NOT CORRECT, HE IS REQUIRED TO DETERMINE THE AMOUNT OF SUCH EXPENDITURE ON THE BASIS OF A REASONABLE AND ACCEPT ABLE METHOD OF APPORTIONMENT. IT WOULD BE APPROPRIATE TO RECALL THE WORDS OF THE SUPREME COURT IN WALFORT (SUPRA) TO THE FOLLOWING EFFECT:- THE THEORY OF APPORTIONMENT OF EXPENDITURE BETWEEN TAXABLE AND NON-TAXABLE HAS, IN PRINCIPLE, BEEN NOW WIDENED UNDER SECTION 14A. SO, EVEN FOR THE PRE-RULE8D PERIOD, WHENEVER THE IS SUE OF SECTION 14A ARISES BEFORE AN ASSESSING OFFICER, HE HAS, ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 9 FIRST OF ALL, TO ASCERTAIN THE CORRECTNESS OF THE C LAIM OF THE ASSESSEE IN RESPECT OF THE EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THE SAID ACT. EVEN WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME, THE ASSESSING O FFICER WILL HAVE TO VERIFY THE CORRECTNESS OF SUCH CLAIM. IN CASE, THE ASSESSING OFFICER IS SATISFIED WITH THE CLAIM O F THE ASSESSEE WITH REGARD TO THE EXPENDITURE OR NO EXPEN DITURE, AS THE CASE MAY BE, THE ASSESSING OFFICER IS TO ACC EPT THE CLAIM OF THE ASSESSEE INSOFAR AS THE QUANTUM OF DISALLOWANCE UNDER SECTION 14A IS CONCERNED. IN SUC H EVENTUALITY, THE ASSESSING OFFICER CANNOT EMBARK UP ON A DETERMINATION OF THE AMOUNT OF EXPENDITURE FOR THE PURPOSES OF SECTION 14A(1). IN CASE, THE ASSESSING OFFICER IS NOT, ON THE BASIS OF OBJECTIVE CRITERIA AND AFTER G IVING THE ASSESSEE A REASONABLE OPPORTUNITY, SATISFIED WITH T HE CORRECTNESS OF THE CLAIM OF THE ASSESSEE, HE SHALL HAVE TO REJECT THE CLAIM AND STATE THE REASONS FOR DOING SO . HAVING DONE SO, THE ASSESSING OFFICER WILL HAVE TO DETERMI NE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO INCOM E WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SAID ACT. HE IS REQUIRED TO DO SO ON THE BASIS OF A REAS ONABLE AND ACCEPTABLE METHOD OF APPORTIONMENT. AT THIS JUNCTURE, WE MUST MAKE IT CLEAR THAT DR RAKESH GUPTAS ARGUMENTS THAT RULE 8D OF THE SAID R ULES EXCEEDS THE MANDATE OF SECTION 14A, HAVE NOT BEEN CONSIDERED BY US BECAUSE THE APPEALS BEFORE US ARE IN RESPECT OF ASSESSMENT YEARS PRIOR TO THE INTRODUCTI ON OF RULE 8D. WE THEREFORE REFRAIN FROM EXPRESSING ANY O PINION ON THE ISSUE AS TO WHETHER RULE 8D (AND, TO WHAT EX TENT, IF AT ALL) IS ULTRA VIRES SECTION 14A OF THE SAID ACT. ANSWERS TO THE QUESTIONS IN VIEW OF THE FOREGOING, QUESTION 1 IS ANSWE RED IN THE AFFIRMATIVE AND QUESTIONS 2 & 3, IN THE NEGATIVE. ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 10 14. IN THE CASE IN HAND, THE AO MADE DISALLOWANCE A ND ADDITION BY INVOKING SECTION 14A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES, 1962 WHICH IS NOT SUSTAINABLE AS RULE 8D IS NOT APPLICAB LE TO THE PRESENT CASE WHICH IS RELATED TO AY 2007-08. FROM BARE READING OF THE IMPUGNED ORDER, WE OBSERVE THAT THE CIT(A) DELETED THE ADDITION WIT H FOLLOWING OBSERVATIONS AND CONCLUSION:- 6.3 REGARDING GROUND NO.2.2 TO 2.9 OF THE APPEAL RELATING TO DISALLOWANCE UNDER SECTION 14A BY INVOK ING THE PROVISIONS OF RULE 8D, I HOLD THAT FOR A.Y.2007 -08, THE PROVISION OF RULE 8D CANNOT BE APPLIED AS THESE PROVISIONS CAME INTO EFFECT FROM 24.03.2008 ONLY AN D CANNOT BE APPLIED TO INCOME EARNED DURING THE F.Y.2 006- 07. SINCE THE PROVISIONS OF RULE 8D DETERMINE THE T AXABLE INCOME OF THE APPELLANT AND HENCE CANNOT BE TREATED AS PROCEDURAL RULES WHICH COULD BE APPLIED TO PENDING PROCEEDINGS AS ON THE DATE OF THEIR COMMENCEMENT OF OPERATION. ACCORDINGLY, THE SAME ARE CONSIDERED AS SUBSTANTIVE PROVISIONS, WHICH CANNOT BE APPLIED, IN THE ABSENCE OF CLEAR LEGISLATIVE MANDATE, WITH A RETROS PECTIVE EFFECT. WITHOUT PREJUDICE TO THE OTHER, EVEN FOR TH E A.Y. FOR WHICH SUCH PROVISIONS ARE APPLICABLE, THE PROVISION S OF RULE 8D ARE NOT APPLICABLE FOR EACH AND EVERY CASE AND ARE TO BE APPLIED ONLY WHERE THE A.D. IS NOT SATISF IED WITH THE CLAIM OF THE APPELLANT, HAVING REGARD TO THE AC COUNT OF THE APPELLANT IN RESPECT OF SUCH EXPENSES WHICH WERE ACTUALLY INCURRED FOR EARNING TAX EXEMPT INCOME. TH E HON'BLE DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. (SUPRA) HAS HELD THAT THE LACK OF SATISFACTION OF THE AO SHOULD BE ON COGENT REASONS. IN THE CASE OF THE APPELLANT, THE APPELLANT HAD ALREADY DISALLOWED AN AMOUNT OF RS.L LAKH IN THE RETURN OF INCOME. THEREFORE, BEFORE INVOKING RULE 8D, IF IT W ERE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 11 APPLICABLE, THE AO OUGHT TO HAVE POINTED OUT ANY DISCREPANCY IN THE CLAIM MADE BY THE APPELLANT, HAV ING REGARD TO ITS ACCOUNTS. IN THE ABSENCE OF ANY COGEN T FINDING, THE LAW DOES NOT ALLOW THE AD TO USE THE PROVISIONS OF RULE 8D IN AN AUTOMATIC MANNER. MOREOVER, DURING THE COURSE OF APPELLATE PROCEEDING S, I WAS INFORMED THAT THE DIVIDEND INCOME EARNED BY THE APPELLANT WAS WITH RESPECT TO CERTAIN INVESTMENT OF ITS SURPLUS FUNDS IN MUTUAL FUNDS IN RESPECT OF WHICH T HE CONCERNED MUTUAL FUNDS IN RESPECT OF WHICH THE CONCERNED MUTUAL FUNDS CHARGE FUND MANAGEMENT CHARGES AS PERMITTED BY THE SEBI. IT WAS INFORMED T HAT IN THE CASE OF THE APPELLANT, AN AMOUNT OF RS.55 LA KH WAS CHARGED BY THE MUTUAL FUNDS WHICH WERE EFFECTIVELY IN THE NATURE OF DIRECTLY RELATED ADMINISTRATIVE EXPENSES IN RESPECT OF SUCH INVESTMENT. THE APPELLANT HAS SHOWN NET DIVIDEND INCOME HENCE SUCH EXPENSES WHICH WERE DIRECTLY RELATED WERE ALREADY DISALLOWED. THE APPE LLANT INFORMED THAT OTHER THAN THIS, IT HAD ONLY TO FILL UP MUTUAL FUNDS STANDARD PRINTED REQUISITION FORM AND ISSUE CHEQUES. IT WAS INFORMED THAT THE APPELLANT COMPANY DOES NOT HAVE PARTICULAR PERSONS EXCLUSIVELY ENGAGE D IN THE INVESTMENT ACTIVITY AND PERSONNEL FROM THE ACCO UNTS DEPARTMENT DO THE SAME AS INTEGRAL PART OF THE DAY- TO- DAY ACCOUNTING WORK. THE LD. AO ALSO INFORMED THAT THE MUTUAL FUNDS ARE REQUIRED TO PAY DIVIDEND DISTRIBUT ION TAX AND ONLY NET INCOME AFTER PAYMENTS OF DDT PAID BY THE FUND IS PAID TO THE INVESTOR. ON CAREFUL CONSIDERATION OF THE ABOVE FACTS AND ON OBSERVING THAT PROVISION OF RULE 8D WERE NOT APPLIC ABLE DURING THE YEAR, THE ADDITION MADE UNDER SECTION 14 A IS DELETED. 15. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE AO HAS NOT RAISED ANY DOUBT ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASS ESSEE PERTAINING TO THE INTEREST EXPENSES. LD. COUNSEL FURTHER SUBMITTED T HAT ASSESSEE COMPANY ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 12 MADE INVESTMENT OUT OF ITS OWN FUNDS AND THE ASSESS EE HAS NOT USED BORROWED FUNDS FOR THE PURPOSE OF INVESTMENT, THERE FORE, THERE IS NO NEXUS WITH THE BORROWED FUNDS AND INTEREST PAID THEREON. LD. COUNSEL FURTHER POINTED OUT THAT DISALLOWANCE U/S 14A OF THE ACT CA N ONLY BE MADE IN RESPECT OF ACTUAL EXPENDITURE INCURRED, WHICH IS FOUND TO H AVE SOME NEXUS WITH THE EXEMPT INCOME AND THE ONUS TO PROVE THAT THE EXPEN DITURE INCURRED WAS IN RELATION TO EXEMPT INCOME EARNED IS ON THE REVENUE AND NOT ON THE ASSESSEE. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE AO IS NOT EMPOWERED TO MAKE DISALLOWANCE ON AD HOC BASIS WITHOUT BRINGING OUT O N RECORD EVIDENCE OF INCORRECTNESS OF CLAIM OF EXPENDITURE TOWARDS EARNI NG EXEMPT DIVIDEND INCOME AND SINCE ASSESSEE HAD SURPLUS FUNDS TO MAKE INVESTMENT, THE DISALLOWANCE U/S 14A OF THE ACT IS NOT PERMITTED IN ABSENCE OF ANY FINDING OF THE ASSESSEE IN REGARD TO INCORRECTNESS OF THE C LAIM OF THE ASSESSEE AS WELL AS WITHOUT BRINGING OUT ANY DIRECT NEXUS OF BORROWE D FUNDS WITH INVESTMENT. 16. FROM PARA 6.3 OF CIT(A)S ORDER AS REPRODUCED H EREINABOVE, WE NOTE THAT THE CIT(A) HAS SIMPLY DELETED THE ADDITION WIT H A BOTTOM LINE CONCLUSION THAT THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES, 1962 WERE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION AND THE CIT(A) DELETED THE IMPUGNED ADDITION. THIS IS NOT A CORRECT APPROACH BECAUSE THE PERIOD PRIOR TO INTRODUCTION OF RULE 8D OF THE RULES, FOR MAKING DISALLOWANCE U/S 14A OF THE AC T, THE AO SHALL HAVE TO REJECT THE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 13 CLAIM OF THE ASSESSEE PERTAINING TO THE EXPENDITURE OF INTEREST AND OTHER MANAGERIAL AND ADMINISTRATIVE EXPENSES AND ALSO HAV E TO STATE THE REASONS FOR DOING SO. FURTHER, THE AO WILL HAVE TO DETERMI NE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT AND TH E AO IS REQUIRED TO DO SO ON THE BASIS OF AN ACCEPTABLE AND REASONABLE LEVY O F APPORTIONMENT OF EXPENDITURE CLAIMED BY THE ASSESSEE. HENCE, THE AO WRONGLY TOOK AID OF RULE 8D AND THE CIT(A) DELETED THE IMPUGNED ADDITIO N ONLY ON THIS BASIS WITHOUT ANALYZING THE SITUATION AND FACTUAL MATRIX OF THE CASE AND TOTALLY IGNORING THE DECISION OF HONBLE JURISDICTIONAL HIG H COURT OF DELHI IN THE CASE OF MAXOPP INVESTMENT (SUPRA). 17. IN VIEW OF ABOVE, WE COME TO A CONCLUSION THAT THE AUTHORITIES BELOW HAVE NOT DEALT WITH THE ISSUE OF DISALLOWANCE U/S 1 4A OF THE ACT AS PER LETTER AND SPIRIT OF THE RELEVANT STATUTORY PROVISIONS AND AS PER DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF M AXOPP INVESTMENT (SUPRA) AND OTHER RELEVANT DECISIONS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF DISALLOWANCE U/S 14A OF THE ACT REQUIR ES THOROUGH VERIFICATION AND EXAMINATION AT THE END OF AO AND HENCE ASSESSME NT ORDER AS WELL AS IMPUGNED ORDER, ONLY UP TO THIS EXTENT, IS SET ASID E AND THE ISSUE IS RESTORED TO THE FILE OF AO WITH A DIRECTION THAT THE AO SHAL L ADJUDICATE THE ISSUE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 14 AFRESH BY AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE WITHOUT BEING PREJUDICED WITH THE OBSERVATIONS AND FINDINGS OF TH E ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO.2 18. APROPOS GROUND NO.2, LD. DR SUBMITTED THAT THE AO NOTICED THAT THE ASSESSEE HAS INCURRED SUBSTANTIAL AMOUNT ON GLOW SI GN BOARDS AND ON HOARDINGS WHICH WAS CAPITAL IN NATURE AS THIS EXPEN DITURE BRINGS ENDURING BENEFIT FOR THE ASSESSEE AND THE ASSESSEE COULD NOT SUBSTANTIATE THAT THE EXPENDITURE WAS REVENUE IN NATURE WHICH WAS A PART OF DAY-TO-DAY BUSINESS EXPENDITURE INCURRED IN THE NORMAL COURSE OF BUSINE SS. THE DR FURTHER CONTENDED THAT THE CIT(A) DELETED THE ADDITION WITH OUT ANY COGENT AND REASONABLE BASIS, THEREFORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 19. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSES SEE POINTED OUT PARA NO. 6.5 OF THE IMPUGNED ORDER AND SUBMITTED THAT AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD. 1 24 ITR 1 (SC), CIT VS ASSOCIATED CEMENT CO. LTD. 172 ITR 257 (SC) AND IN THE CASE OF ALEMBIC CHEMICAL WORKS LTD. 177 ITR 377 (SC) , IT HAS BEEN HELD THAT IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE A SSESSEES TRADING OPERATIONS ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 15 OR ENABLING THE MANAGEMENT AND CONDUCT OF THE ASSES SEES BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABLY, WHI LE LEAVING THE FIXED CAPITAL UNTOUCHED, THE EXPENDITURE WOULD BE ON REVE NUE ACCOUNT, EVEN THOUGH THE ADVANTAGE MAY BE FOR AN INDEFINITE FUTUR E. LD. COUNSEL SUPPORTING THE IMPUGNED ORDER SUBMITTED THAT THE AO MADE DISALLOWANCE WITHOUT ANY BASIS WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS THE EXPENDITURE WAS INCURRED FOR DAY-TO-DAY BUSINESS OF THE ASSESSEE AND THE EXPENDITURE DID NOT BRING ANY BENEFIT OF ENDURING N ATURE TO THE ASSESSEE COMPANY. 20. THE OPERATIVE RELEVANT PART OF THE IMPUGNED ORD ER WHICH DELETED THE IMPUGNED ADDITION READS AS UNDER:- 6.5 REGARDING GROUND NO.4 OF THE APPEAL KEEPING IN VIEW THE DECISION IN THE CASE OF CIT VS LIBERTY GRO UP MARKETING DIVISION (SUPRA), MOHAN MEAKIN BREWERIES LTD. VS CIT (SUPRA) AND OF THE HON'BLE DELHI ITAT I N THE CASE OF SONY INDIA LTD. VS DCIT, THE EXPENSES FOR L AYING HOARDINGS AND GLOW SIGNBOARDS ARE HELD AS REVENUE EXPENDITURE SINCE NEITHER ANY ENDURING BENEFIT HAS BEEN ACQUIRED BY THE APPELLANT NOR ANY CAPITAL ASSET HAS BEEN PUT IN PLACE. ACCORDINGLY, THE ADDITION MADE ON THI S GROUND IS DELETED. 21. IN VIEW OF ABOVE, WE NOTE THAT THE AO HAS NOT D OUBTED THE GENUINENESS AND TRUTHFULNESS OF THE CLAIM OF THE AS SESSEE PERTAINING TO THE EXPENSES FOR GLOW SIGN BOARD AND HOARDINGS IN VIEW OF DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS LIBERTY GROUP MARKETING ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 16 DIVISION 315 ITR 125 (P&H) AND DECISION OF HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF MOHAN MEAKIN BREWERIES L TD. VS CIT 118 ITR 101(HP) , WE ARE OF THE CONSIDERED OPINION THAT THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE AND ADDITION A ND ON THE OTHER HAND, CIT(A) RIGHTLY DELETED THE ADDITION BY HOLDING THAT THE EXPENSES FOR HOARDINGS AND GLOW SINGS ARE EXPENDITURE OF REVENUE IN NATURE BECAUSE THE SAME NEITHER BRING ANY ENDURING BENEFIT FOR THE ASS ESSEE AND THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE ASSESSEES TRAD ING OPERATIONS, SUPPORTING THE MANAGEMENT AND CONDUCT OF ASSESSEES BUSINESS T O BE CARRIED OUT ON MORE EFFICIENTLY OR MORE PROFITABLY LEAVING FIXED C APITAL OF THE ASSESSEE UNTOUCHED. WE ARE UNABLE TO SEE ANY AMBIGUITY OR P ERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER O N THIS ISSUE AND WE UPHOLD THE SAME. ACCORDINGLY, GROUND NO. 2 OF THE REVENUE IN ITA NO. 3684 IS ALSO DISMISSED. ITA NO. 3686/D/2013 & 3694/DEL/2013 22. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITA NO. 3686/DEL/2013:- 1. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION OF RS.15, 71,149/- MADE BY THE AO U/S 14A R.W.R. 8D? 2. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 17 CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION OF RS.L,92,80,942/- MADE BY THE AO ON ACCO UNT OF CAPITALIZATION OF THE ADVERTISEMENT EXPENSES? 3. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION OF RS.68,40,900/- MADE BY THE AO UNDER THE HEAD OF MISC. EXPENSES? 23. THE REVENUE HAS RAISED FOLLOWING SOLE GROUND IN ITA NO. 3694/DEL/2013 IN PURSUANCE TO THE ORDER OF THE CIT( A) PASSED U/S 154/143(3) OF THE ACT DATED 18.3.2013:- 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION OF RS.1,15,32,425/- MADE BY THE AO U/S 14A R.W.R. 8D? GROUND NO. 1 IN ITA 3683 AND GROUND NO. 1 IN 3694/D EL/2013 24. LD. DR SUBMITTED THAT THE AO RIGHTLY INVOKED TH E PROVISIONS OF SECTION 14A R/W RULE 8D OF THE RULES WHICH WAS APPL ICABLE FOR AY 2008- 09. LD. DR FURTHER POINTED OUT THAT THE AO MADE DI SALLOWANCE AND ADDITION OF RS. 15,71,149/- IN ORIGINAL ASSESSMENT ORDER DAT ED 24.12.2002 PASSED U/S 143(2) OF THE ACT AND SUBSEQUENTLY, THE AO PASSED A NOTHER ORDER DATED 25.8.2011 U/S 154/143(3) OF THE ACT. THE AO RIGHTL Y DISALLOWED ADDITIONAL AMOUNT OF RS.1,15,32,425/- U/S 14A OF THE ACT. LD. DR VEHEMENTLY CONTENDED THAT THE CIT(A) DELETED THE ADDITION WITH OUT ANY JUSTIFIED AND ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 18 COGENT REASON AND THE CIT(A) ALSO QUASHED THE ORDER OF THE AO DATED 25.8.2011 PASSED U/S 154/143(3) OF THE ACT WITHOUT ANY JUSTIFIED BASIS AND COGENT FINDINGS. 25. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 14A OF THE ACT ARE APPLICABLE ONLY WHEN AN EXPENDIT URE IS ACTUALLY INCURRED IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND NO EXPENSES WERE ACTUALLY INCURRED BY THE ASSESSEE IN RELATION TO THE DIVIDEND INCOME. LD. COUNSEL FOR THE ASSESSEE FURTHER POINT ED OUT THAT THE AO HAD APPLIED THE PROVISIONS OF RULE 8D OF THE I.T. RULES WHICH IS NOT APPLICABLE AUTOMATICALLY WITHOUT RECORDING ANY ADVERSE SATISFA CTION AGAINST THE ASSESSEE IN THIS REGARD. LD. COUNSEL FURTHER POINTED OUT TH AT THE AO PASSED ORDER DATED 25.08.2011 U/S 154/143(3) OF THE ACT WITHOUT AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND THERE W AS NO MISTAKE APPARENT FROM THE RECORD IN THE ORIGINAL ASSESSMENT ORDER DA TED 24.12.2010, THEREFORE, THE CIT(A) WAS RIGHT IN DELETING THE BASELESS AND U NSUSTAINABLE HUGE ADDITION OF RS. 1.15 CRORE. 26. IT WAS ALSO PRAYED BY BOTH THE PARTIES THAT SIN CE THE ISSUE OF DISALLOWANCE AND ADDITION U/S 14A OF THE ACT PERTAI NING TO AY 2007-08 HAS BEEN RESTORED TO THE FILE OF AO FOR FRESH ADJUDICAT ION AS PER PROVISIONS OF THE ACT AND AS PER RATIO OF THE DECISION OF JURISDICTIO NAL HIGH COURT OF DELHI IN ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 19 THE CASE OF MAXOPP INVESTMENT (SUPRA), THEREFORE, S IMILAR ISSUE FOR AY 2008-09 MAY ALSO BE RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION. 27. ON CAREFUL CONSIDERATION OF ABOVE, AT THE OUTSE T, WE HOLD THAT RULE 8D OF THE INCOME TAX RULES 1962 IS APPLICABLE TO THE P RESENT CASE ASSESSMENT YEAR I.E. 2008-09 AS PER DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (SUPRA). HOWEVER, THE CIT(A) HAS HELD THAT THE AO WAS NOT EMPOWERED TO AUTOMATIC ALLY INVOKE THE PROVISIONS OF RULE 8D OF THE RULES AND THE ADDITION IS NOT SUSTAINABLE WHICH IS NOT BASED ON APPROPRIATE AND LEGAL APPROACH AS P ER PROVISIONS OF SECTION 14A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES 1962 AND THE CIT(A) HAS ALSO IGNORED THE RATIO OF THE DECISION OF HONB LE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF MAXOPP INVESTMENT (SU PRA). 28. SINCE THE ISSUE OF DISALLOWANCE U/S 14A OF THE ACT HAS BEEN RESTORED TO THE FILE OF AO FOR AY 2007-08 IN THE LIGHT OF DE CISION OF JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF MAXOPP INVESTMEN T (SUPRA). THEREFORE, WE ALSO FIND IT APPROPRIATE THAT THE ISSUE OF DISAL LOWANCE U/S 14A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES, 1962 (WHICH IS APPLICABLE FORM AY 2008-09 PROSPECTIVELY) IS ALSO RESTORED TO THE FILE OF AO WITH A DIRECTION THAT THE AO SHALL EXAMINE AND VERIFY THE ISSUE AFRESH BY AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND WITHOUT BEING PREJUDICED WITH ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 20 THE EARLIER ASSESSMENT, RECTIFICATION AND IMPUGNED ORDERS. THE AO SHALL KEEP IN MIND THIS VERY FACT AND LEGAL POSITION THAT RULE 8D OF INCOME TAX RULES IS APPLICABLE TO THE ASSESSMENT YEAR UNDER CO NSIDERATION I.E. 2008-09 AND THE AO SHALL DECIDE THE CONTROVERSY AS DIRECTED ABOVE AND TO ADJUDICATE THE ISSUE AS PER RATIO OF THE DECISION OF HONBLE H IGH COURT OF DELHI IN THE CASE OF MAXOPP INVESTMENT (SUPRA). ACCORDINGLY, GR OUND NO. 1 IN BOTH THE APPEALS OF THE REVENUE IS ALSO RESTORED TO THE FILE OF AO WITH AFOREMENTIONED DIRECTIONS AND DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 2 IN ITA NO. 3686/DEL/2013 29. SINCE SIMILAR DELETION OF ADDITION ON ACCOUNT O F CAPITALIZATION OF ADVERTISEMENT EXPENSES MADE BY THE AO AND DELETED B Y THE CIT(A) HAS BEEN UPHELD BY US BY THE EARLIER PART OF THIS ORDER FOR AY 2007-08 BY DISALLOWING GROUND NO. 2 OF THE REVENUE IN ITA NO. 3684/DEL/201 3., THEREFORE, RESPECTFULLY FOLLOWING THE SAME, GROUND NO. 2 OF TH E REVENUE IN ITA 3686/DEL/2013 IS HELD TO BE SQUARELY COVERED IN FAV OUR OF THE ASSESSEE AND THEREFORE, FOLLOWING OUR DECISION IN THE EARLIER PA RT OF THIS ORDER ON THIS ISSUE, GROUND NO. 2 OF THE REVENUE FOR AY 2008-09 IS ALSO DISALLOWED AND ORDER OF THE CIT(A) IS UPHELD. GROUND NO. 3 IN ITA 3686/DEL/2013 30. APROPOS GROUND NO.3, WE HAVE HEARD RIVAL ARGUME NTS OF BOTH THE SIDES ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 21 AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. 31. BRIEFLY STATED, THE FACTS PERTAINING TO GROUND NO. 3 OF THE REVENUE FOR AY 2008-09 ARE THAT THE AO MADE DISALLOWANCE IN REG ARD TO HORTICULTURE EXPENSES (FOR PLANT AND STAFF COLONY), SECURITY SER VICES EXPENSES (FOR STAFF COLONY), COMPUTER SUPPLY (PERIPHERALS) AND SOFTWARE PURCHASE EXPENSES TOTAL AMOUNTING TO RS.68,40,814 WHICH WERE DELETED BY THE CIT(A) BY ALLOWING GROUND NOS. 4, 5, 5.1, 6, 6.1, 7 & 8 OF ASSESSEE RA ISED BEFORE HIM I.E. CIT(A) IN THE IMPUGNED ORDER. NOW, THE REVENUE RE-AGITATE D THE ABOVE ISSUE IN GROUND NO. 3 AS REPRODUCED HEREINABOVE. 32. APROPOS THESE FIVE ISSUES FROM THE IMPUGNED ORD ER WE OBSERVE THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOL LOWING OBSERVATIONS AND CONCLUSION:- 6.4 REGARDING GROUND NO.3 OF THE APPEAL, KEEPING I N VIEW THE DECISION IN THE CASE OF (IT VS LIBERTY GRO UP MARKETING DIVISION (SUPRA), MOHAN MEAKIN BREWERIES LTD. VS CIT (SUPRA) AND OF THE HON'BLE DELHI ITAT I N THE CASE OF SONY INDIA LTD. VS DCIT (SUPRA), THE EXPENS ES FOR LAYING HOARDINGS AND GLOW SIGNBOARDS ARE HELD AS REVENUE EXPENDITURE SINCE NEITHER ANY ENDURING BENE FIT HAS BEEN ACQUIRED BY THE APPELLANT NOR ANY CAPITAL ASSET HAS BEEN PUT IN PLACE. ACCORDINGLY, THE ADDITION MA DE ON THIS GROUND IS DELETED. 6.5 REGARDING THE GROUND NO.4 RELATING TO HORTICULT URE EXPENSES FOR THE PLANT, THE DISALLOWANCE WAS MADE B Y THE AO BY HOLDING THE SAME AS NOT FOR BUSINESS PURPOSE. THE APPELLANT HAS SET UP THE PLANT IN A REMOTE AREA IN GUJARAT WHICH IS A SEMI DESERT STATE. IT IS, THEREFORE, REQ UIRED TO ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 22 HAVE DUST FREE ENVIRONMENT FOR THE PROPER MANUFACTU RING OF THE PRODUCT OF THE APPELLANT I.E. GLASS. IN ANY CASE, SUCH EXPENSES WERE INCURRED WITHIN THE FACTORY PREM ISES IN ORDER TO PROVIDE NECESSARY LANDSCAPE AND MAKING THE ENVIRONMENT GREEN. THERE ARE SEVERAL OTHER EXPENSES , WHICH ARE INCURRED FOR DECORATING THE BUILDING AND PLANT AND FOR PROVIDING GENERAL SECURITY. HOWEVER, ALL SU CH EXPENSES DO NOT NECESSARILY RESULT IN AUGMENTING TH E PRODUCTION, HOWEVER, SINCE NO OTHER PURPOSE IS ACHI EVED OTHER THAN THE MAIN PURPOSE I.E. MANUFACTURING AND SUCH EXPENSES CERTAINLY FACILITATE THE OPERATIONS BY PRO VIDING BETTER ENVIRONMENT, SUCH EXPENSES ARE CLEARLY HELD AS REVENUE IN NATURE. THERE ARE A NUMBER OF INCENTIVE PROVISIONS WITHIN THE I.T. ACT FOR ENVIRONMENT PROT ECTION, THEREFORE, THE AO COULD HAVE BEEN LITTLE MORE ENVIRONMENT FRIENDLY IN THIS REGARD. IN VIEW OF THE SAME, ADDITION MADE ON ACCOUNT OF THE DISALLOWANCE IS DEL ETED. 6.6 ON THE SAME GROUND, THE DISALLOWANCE MADE BY T HE AO IN RESPECT OF HORTICULTURE EXPENSES FOR THE STAF F COLONY WHICH IS IN THE IMMEDIATE VICINITY OF PLANT AND THE SECURITY THEREOF ARE ALSO HELD TO BE OF SAME NATURE . THE APPELLANT'S PLANT IS AWAY IN A REMOTE AREA IN GUJAR AT AND IT IS IN THE BUSINESS INTEREST OF THE APPELLANT TO HAVE A STAFF COLONY IN THE VICINITY OF THE PLANT THAT SAVE S THE TIME AND COST INCURRED FOR TRANSPORTATION OF THE EMPLOYE ES TO THE PLANT. THE APPELLANT HAD SET UP A STAFF COLONY IN THE NEIGHBOURHOOD OF THE PLANT FOR THIS PURPOSE AND ALL OTHER EXPENSES IN RESPECT OF SUCH STAFF COLONY, WHETHER C APITAL OR REVENUE, HAVE BEEN ALLOWED BY THE AO, BY PROVIDI NG DEPRECIATION ALLOWANCE OR BY HOLDING THEM AS REVENU E EXPENSES. SINCE THE STAFF COLONY IS A BUSINESS ASSE T OF THE APPELLANT, SECURITY OF SUCH ASSETS WHICH ARE BUSINE SS IN NATURE MAY BE HELD AS BUSINESS EXPENDITURE. REPAIRS , MAINTENANCE SECURITY AND LAYING PROPER LIGHTS AND HORTICULTURE FOR THE STAFF COLONY MAY BE JUSTIFIED, AS BUSINESS PURPOSE OR THE SAME COULD ALTERNATIVELY BE ALLOWED AS STAFF WELFARE. THE APPELLANT HAS CLAIMED TO HAVE PAID FBT ON THE SAME. IT IS UNDISPUTED THAT NO OTHER NON- BUSINESS BENEFIT WAS DERIVED FROM THE APPELLAN T ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 23 COMPANY BY CLAIMING SUCH EXPENSES. IN VIEW THEREOF, SUCH EXPENSES ARE ALLOWED AND THE ADDITION MADE IN THIS REGARD IS DELETED. 6.7 REGARDING GROUND NO.6 REGARDING DISALLOWANCE OU T OF COMPUTER SUPPLIES, ON PERUSAL OF THE DETAILS FUR NISHED BEFORE ME, I FIND THAT THESE EXPENSES ARE ROUTINE E XPENSES IN THE NATURE OF PRINTER CARTRIDGES, COMPUTER PERIP HERALS LIKE CD DISKS, PEN DRIVE ETC. WHICH ARE ROUTINE CONSUMABLE ITEMS FOR THE USE OF COMPUTER. EACH ITEM IS A SMALL VALUE ITEM. ON CAREFUL CONSIDERATION OF THE D ETAILS, ON HOLDING THE SAME REVENUE IN NATURE, ADDITION MAD E ON THIS GROUND IS DELETED. 6.8 REGARDING GROUND NO.7 OF THE APPEAL RELATING T O SOFTWARE LICENCE FEE, ON CAREFUL EXAMINATION, I FIN D THAT THE SAME ARE IN THE NATURE OF E-MAIL TO FAX SERVICE S, SMS CHARGES ETC. IN VIEW OF THIS, I DO NOT AGREE WITH T HE CONTENTION OF THE AO THAT SUCH EXPENSES WERE CAPITA L IN NATURE AND HOLD THEM ARE ROUTINE REVENUE EXPENDITUR E. THEREFORE, THE ADDITION MADE IN THIS REGARD IS DELE TED. 33. ON THE ISSUE OF HORTICULTURE EXPENSES AT PLANT AND COLONY, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE MANUFACTURING PL ANT OF THE ASSESSEE COMPANY IS SITUATED AT A REMOTE DESERT AREA AND IN ORDER TO HAVE DUST FREE ENVIRONMENT, IT IS REQUIRED TO HAVE GREEN ENVIRONME NT, LANDSCAPING AND TREES, HENCE, THE ASSESSEE INCURRED EXPENDITURE ON HORTICULTURE AND THE SAME WAS INCURRED FOR BUSINESS PURPOSES TO ENHANCE EFFIC IENCY IN THE DAY TO DAY WORKING OF THE COMPANY WHICH DID NOT RESULT IN CREA TION OF CAPITAL ASSETS OR ENDURING BENEFIT FOR THE ASSESSEE AND THE LD. COUNS EL FURTHER CONTENDED THAT THE CIT(A) RIGHTLY DELETED THE ADDITION. ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 24 34. LD. COUNSEL STRENUOUSLY CONTENDED THAT THE HORT ICULTURE EXPENSES FOR PLANT AREA AND STAFF COLONY WERE INCURRED TOWARD MA INTENANCE OF GREEN LANDSCAPE IN THE FACTORY PREMISES AND RESIDENTIAL A CCOMMODATION PROVIDED TO THE EMPLOYEES AND THEY WERE ESSENTIAL FOR BUSINE SS PURPOSE AND THEREFORE THE DISALLOWANCE HAS RIGHTLY BEEN DELETED BY THE CI T(A). 35. LD. DR REPLIED THAT THE IMPUGNED EXPENDITURE ON HORTICULTURE OF PLANT AND EMPLOYEES COLONY CAN NOT BE SAID TO BE INCURRED FOR BUSINESS PURPOSE AND NEITHER IT WAS EXPENDITURE OF CAPITAL NATURE, H ENCE, THE SAME WAS RIGHTLY DISALLOWED BY THE AO BUT THE CIT(A) ERRED IN DELETI NG THE ADDITIONAL ON A WRONG PRINCIPLE. 36. ON CAREFUL CONSIDERATION OF ABOVE, WE ARE OF TH E CONSIDERED OPINION THAT WE ARE IN AGREEMENT WITH THE REASONING AND CON CLUSION OF THE CIT(A) IN PARA 6.5 OF THE IMPUGNED ORDER AS THE MAIN PURPOSE OF EXPENDITURE ON HORTICULTURE WAS TO FACILITATE THE OPERATIONS BY PR OVIDING BETTER ENVIRONMENT WHICH IS OF REVENUE IN NATURE, HENCE, THE SAME IS A LLOWABLE U/S 37 OF THE ACT. WE ALSO OBSERVE THAT THERE ARE OTHER SEVERAL EXPENS ES WHICH ARE INCURRED FOR DECORATING THE BUILDING AND FOR PROVIDING GENERAL S ECURITY, BEAUTIFICATION AND REQUIRED ENVIRONMENT FOR DAY TO DAY ACTIVITIES OF M ANUFACTURING UNIT OF THE ASSESSEE, THEREFORE, THESE KIND OF EXPENSES ARE INC URRED FOR THE PURPOSE OF BUSINESS AND THE SAME CANNOT BE DISALLOWED. ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 25 37. IN REGARD TO ISSUE OF SECURITY SERVICES AT THE STAFF COLONY IS CONCERNED LD. DR SUBMITTED THAT THE EXPENSES CANNOT BE SAID F OR BUSINESS PURPOSE AS THE SAME WAS INCURRED FOR NON-BUSINESS PURPOSE, HEN CE, THE AO RIGHTLY MADE AN ADDITION IN THIS REGARD WHICH WAS DELETED BY THE CIT(A) WITHOUT ANY JUSTIFIED REASONING. 38. THE AR REPLIED THAT IN THE APPEAL FOR PRECEDING ASSESSMENT YEAR 2007- 08 OF THE DEPARTMENT HAS ACCEPTED THE STAND OF THE ASSESSEE AND NOT FILED ANY APPEAL BEFORE THE TRIBUNAL ON THE AFORESAID ISSUE O F SECURITY EXPENSES ON STAFF COLONY, WHICH WAS SIMILARLY DECIDED IN FAVOUR OF THE ASSESSEE BY THE CIT(A) BY FOLLOWING EARLIER ORDER. THEREFORE, CONS IDERING THE RULE OF CONSISTENCY TOO, THERE OUGHT TO BE UNIFORMITY IN TH E TREATMENT AND CONSISTENCY IN THE APPROACH ADOPTED BY THE DEPARTME NT. 39. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS A ND PERUSAL OF THE ORDER OF THE CIT(A) FOR PRECEDING AY 2007-08 AND RE SPECTFULLY FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF EMPIRE JUTE CO. L TD. VS CIT 124 ITR 1(SC) , WHEREIN IT WAS HELD THAT THE EXPENDITURE INCURRED FOR WELFARE OF EMPLOYEES AND EVEN GENERAL PUBLIC IN TEREST IS ALLOWABLE AS REVENUE DEDUCTION, WE REACH TO A CONCLUSION THAT TH E EXPENDITURE OF SECURITY FOR STAFF COLONY IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE EARLIER/PRECEDING AY 2007-08 ORDER OF CIT(A) AND IN THE PRESENT CASE, THE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 26 CIT(A) WAS RIGHT IN DELETING THE ADDITION. HENCE, WE ARE UNABLE TO SEE ANY AMBIGUITY OR PERVERSITY IN THE IMPUGNED ORDER OR AN Y OTHER VALID REASON TO INTERFERE WITH THE SAME. 40. ON THE ISSUE OF COMPUTER PERIPHERALS SUPPLY EXP ENSES, LD. DR SUBMITTED THAT AS PER CLAIM OF THE ASSESSEE, THE AS SESSEE INCURRED EXPENDITURE OF RS.18,24,903 TOWARDS PURCHASE OF PRINTER CARTRID GES, COMPUTER PERIPHERALS LIKE CD DISKS ETC. AND OTHER CONSUMABLES FOR MAINTE NANCE OF COMPUTERS AND PRINTERS BUT THE ASSESSEE HAS NOT FURNISHED ANY DET AILS/EVIDENCE TO SUPPORT THIS CLAIM. THEREFORE, THE AO RIGHTLY TREATED THE SAME AS CAPITAL NATURE EXPENDITURE AND ALLOWED DEPRECIATION @15% AND DISAL LOWED THE REMAINING BALANCE OF RS.15,51,168. THE DR FURTHER CONTENDED THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE ON WRONG BASIS, HENCE THE I MPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 41. LD. COUNSEL OF THE ASSESSEE REPLIED THAT (I) THE NATURE OF AFORESAID EXPENSES INCURRED ON CONSUMABLES ARE ROUTINE IN NAT URE (II) SUCH EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND DID NOT BRING ANY BENEFIT OF ENDURING NATURE FOR THE ASSESS EE, THEREFORE, SUCH EXPENDITURE SHOULD NOT BE TREATED AS CAPITAL EXPEND ITURE AS HAS BEEN DONE IN THE PRECEDING ASSESSMENT YEAR. LD. COUNSEL FURTHER SUBMITTED THAT THE EXPENDITURE INCURRED ON CONSUMABLES OF COMPUTER SUP PLIES SHOULD BE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 27 ALLOWED AS DEDUCTIBLE REVENUE EXPENDITURE, THE LD. COUNSEL ALTERNATIVELY SUBMITTED THAT DEPRECIATION ON SUCH COMPUTER SUPPLI ES SHOULD BE ALLOWED @60%. 42. ON CAREFUL PERUSAL OF ASSESSMENT ORDER, WE OBSE RVE THAT THE AO TREATED THE EXPENDITURE AS CAPITAL IN NATURE AND MA DE AN ADDITION, AFTER ALLOWING DEPRECIATION @15%, BY HOLDING THAT THE ASS ESSEE HAS NOT FURNISHED DETAILS/EVIDENCE TO SUPPORT THE CLAIM. FROM PARA 6 .7 OF IMPUGNED ORDER, AS REPRODUCED ABOVE, WE OBSERVE THAT THE CIT(A) GRANTE D RELIEF FOR THE ASSESSEE ON PERUSAL OF THE DETAILS FURNISHED BEFORE HIM BUT THE CIT(A) HAS NOT GIVEN ANY FINDING ABOUT THE NATURE OF EXPENDITU RE AND FACTS EMERGING FROM DETAILS/EVIDENCE SUBMITTED BEFORE HIM, NEITHER AND REMAND REPORT HAS BEEN CALLED FROM THE AO. HENCE, WE FIND IT APPROPR IATE TO RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION THAT THE AO SHAL L EXAMINE THE DETAILS/EVIDENCE OF THE ASSESSEE ABOUT THIS CLAIM O F THE ASSESSEE AND ADJUDICATE THE ISSUE AFRESH WITHOUT BEING PREJUDICE D FROM EARLIER ASSESSMENT AND IMPUGNED ORDER. 43. APROPOS SOFTWARE PURCHASE AND DEVELOPMENT EXPEN DITURE THE LD. DR SUBMITTED THAT THE NATURE OF EXPENDITURE CLEARLY SH OWS THAT IT IS OF CAPITAL NATURE SUBJECT TO ADMISSIBLE DEPRECIATION @60% AND THE AO RIGHTLY DISALLOWED BALANCE AMOUNT OF RS.5,86,967/-. LD. CO UNSEL OF THE ASSESSEE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 28 REPLIED THAT EXPENSES ON COMPUTER SOFTWARE ARE TO B E REGARDED TO BE INCURRED AS REVENUE EXPENDITURE AS PER TEST LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF AMWAY INDIA ENTERPRISE 111 ITD 112 (DEL) (SB) INASMUCH AS (I) SUCH COMPUTER SOFTWARE DOES NOT HAV E UTILITY FOR LONG DURATION AND HENCE DOES NOT RESULT IN ENDURING BENE FIT AND (II) SUCH SOFTWARE DOES NOT CONSTITUTE PROFIT EARNING APPARATUS AND ME RELY ENABLE THE ASSESSEE TO EFFICIENTLY CONDUCT ITS BUSINESS. LD COUNSEL AL SO PLACED RELIANCE ON THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI ION THE CASE OF ASHA INDIA SAFETY GLASS LTD., 346 ITR 329 (DELHI) AND CIT VS AMWAY INDIA ENTERPRISE 346 ITR 341 (DELHI) WHEREIN IT HAS BEEN HELD THAT SOFTWARE EXPENSES NOT TO CREATE NEW ASSETS OR A NEW SOURCE OF INCOME BUT UPGRADE SYSTEM, HENCE, SOFTWARE EXPENDITURE IS REVE NUE EXPENDITURE WHICH IS ALLOWABLE U/S 37 OF THE ACT. 44. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS O F BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS NOT DOUB TED ABOUT THE GENUINENESS OF THE CLAIM OF THE ASSESSEE BUT THE AO TREATED THE SAME AS CAPITAL EXPENDITURE. PER CONTRA, THE CIT(A) RIGHTL Y HELD THAT THE EXPENDITURE INCURRED ON SOFTWARE LICENCE FEE, PURCHASE/DEVELOPM ENT OF MISCELLANEOUS SOFTWARE AND HOSTING AND MAINTENANCE OF WEBSITE AND CHARGES FOR INTERNET BAND WITH CONNECTIVITY ARE EXPENDITURE REVENUE IN N ATURE AND WE ARE UNABLE ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 29 TO SEE ANY VALID REASON TO INTERFERE WITH THE SAME, HENCE, ORDER OF CIT(A) IS UPHELD AND CONTENTIONS OF THE DR ARE REJECTED. TO SUM UP, ON GROUND NO. 3 OF THE REVENUE IN AY 2008-09 THE ISSUE OF HORTICULT URE EXPENSES IN PLANT AND STAFF COLONY, SECURITY, CHARGE FOR STAFF COLONY AND SOFTWARE DEVELOPMENT EXPENSES IS DECIDED IN FAVOUR OF THE ASSESSEE AND T HE SAME IS PARTLY DISMISSED ON ABOVE FOUR ISSUES AND ON THE ISSUE OF COMPUTER SUPPLIES PART GROUND OF THE REVENUE IS DEEMED TO BE ALLOWED BY RE STORING THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTIONS AS INDICATED ABO VE. 45. FINALLY, IN THE RESULT, ABOVE CAPTIONED APPEALS ARE DISPOSED OF WITH THE SUMMARIZED RESULT AS UNDER:- (I) ITA NO. 3214/D/2013 OF THE ASSESSEE IS DISMISS ED AS WITHDRAWN. (II) ITA NO. 3215/DEL/2013 OF THE ASSESSEE IS PART LY ALLOWED ON GROUND NO. 3 AND THE SAME IS DEEMED TO BE ALLOWED F OR STATISTICAL PURPOSES. (III) ITA NO.3684/DEL/2013 OF THE REVENUE IS DISMISSED ON GROUND NO. 2 AND DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES ON GROUND NO. 1. (IV) ITA NO. 3686/DEL/2013 IS PARTLY DISMISSED ON GROUND NO. 2 AND ON FOUR ISSUES AS INDICATED ABOVE OF GROUND NO. 3 AND PARTLY DEEMED TO BE ALLOWED ON GROUND NO. 1 AND ON THE ISSUE OF C OMPUTER ITA NO. 3214, 3215/D/2013 & ORS. AYS: 2008-09, 2007-08 & ORS 30 SUPPLIES A PART OF GROUND NO.3. (V) IN ITA NO. 3694/DEL/2013 OF THE REVENUE THE SO LE GROUND IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/08/2014. SD/- SD/- (S.V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 22 ND AUGUST 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. C.I.T. 5 DR BY ORDER ASSTT.REGISTRAR