HLS Asia Ltd., New Delhi V. CIT, New Delhi

ITA 3708/DEL/2012

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3913 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 17-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR SENIOR
• Keywords: Business income; Depreciation; Opportunity of being heard; Additional depreciation; Earning of tax free income; Additional evidence; Question of law; Right to appeal; Condonation of delay; Reassessment proceedings; TDS; Rule 8D; Set aside
• Section: 143(3); 14A; 80IB; 32(1)(iia); 43; 48; 13; 22; 263; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1712/DEL./2010 (ASSESSMENT YEAR : 2004-05) ITA NO.4144/DEL./2014 (ASSESSMENT YEAR : 2007-08) ITA NO.2208/DEL./2014 (ASSESSMENT YEAR : 2008-09) M/S. HLS ASIA LTD., VS. DCIT, CIRCLE 12 (1), 109, AUROBINDO PLACE MARKET, NEW DELHI. HAUZ KHAS, NEW DELHI. (PAN : AAACH0627H) ITA NO.3708/DEL./2012 (ASSESSMENT YEAR : 2006-07) ITA NO.5511/DEL./2012 (ASSESSMENT YEAR : 2007-08) M/S. HLS ASIA LTD., VS. ADDL.CIT, RANGE 12, 109, AUROBINDO PLACE MARKET, NEW DELHI. HAUZ KHAS, NEW DELHI. (PAN : AAACH0627H) ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 2 ITA NO.323/DEL./2012 (ASSESSMENT YEAR : 2005-06) ITA NO.5855/DEL./2011 (ASSESSMENT YEAR : 2006-07) ITA NO.2241/DEL./2014 (ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 12 (1), VS. M/S. HLS ASIA LTD., NEW DELHI. 109, AUROBINDO PLACE MARKET, HAUZ KHAS, NEW DELHI. (PAN : AAACH0627H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY MALIK, ADVOCATE REVENUE BY : SHRI SARAS KUMAR, SENIOR DR DATE OF HEARING : 06.02.2020 DATE OF ORDER : 24.02.2020 O R D E R PER BENCH : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN THE AFORESAID CROSS APPEALS FILED BY THE ASSESSE E AND THE REVENUE, THE SAME ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, M/S. HLS ASIA LTD. (HEREINAFTER REFER RED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEALS SOUGH T TO SET ASIDE THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 3 IMPUGNED ORDERS DATED 04.01.2010, 30.05.2014, 31.10 .2011 & 20.01.2014 PASSED BY THE CIT (APPEALS)-XII, NEW DEL HI, CIT (APPEALS)-V, NEW DELHI, CIT (APPEALS)-IV, NEW DELHI & CIT (APPEALS) - XI, NEW DELHI QUA THE ASSESSMENT YEARS 2004-05, 2007-08, 2007-08 & 2008-09 RESPECTIVELY ON THE GROU NDS INTER ALIA THAT :- ASSESSEES APPEALS ITA NO.1712/DEL./2010 (AY : 2004-05) 1. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DENYING THE DEDUCTION UNDER SECTION 80-18 OF THE IN RESPECT OF ITS UNDERTAKINGS ENGAGED IN WIRE LINE LOGGING PERFORATION ACTIVITY FOR MINERAL OIL CONCER N ALLEGEDLY HOLDING THAT (I) THE APPELLANT WAS NOT ENGAGED IN MANUFACTU RE AND PRODUCTION OF ARTICLES OR THINGS, (II) THE INDUSTRIAL UNDERTAK ING OF THE APPELLANT IS CREATED BY SPLITTING UP, OR RESTRUCTURING OF BUSINE SS ALREADY IN EXISTENCE. 2. THAT THE CIT(APPEALS) ERRED ON FACTS AND IN LAW IN HOLDING THAT WIRE LINE LOGGING UNDERTAKINGS OF THE APPELLAN T WERE NOT ENGAGED IN MANUFACTURE AND PRODUCTION OF ARTICLES OR THINGS ON THE GROUND THAT (I) GATHERING OF INFORMATION OR PUTTING DOWN INFORM ATION COLLECTED COULD NOT BE REGARDED AS PROCESSING OR MANUFACTURIN G ACTIVITIES AND (II) MERELY DESCRIBING FACTUAL POSITION CANNOT BE T ERMED AS MANUFACTURE AND PRODUCTION OF ARTICLES OR THINGS. 3. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT WAS ONLY ASSISTING IN COLLECTION DATA REQUIRED FOR PRODUCTION OF OIL. 4. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT IS ENGAGED IN MANUF ACTURE AND PRODUCTION OF ARTICLES OR THINGS AND ARE ELIGIBLE F OR DEDUCTION UNDER SECTION 80-18 OF THE ACT. 5. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT MERELY FOR THE REASON THAT THE MO BILE UNITS / UNDERTAKINGS OF THE APPELLANT ARE SHIFTED FROM ONE SITE TO OTHER, DOES ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 4 NOT AMOUNT TO SPLITTING UP OR RESTRUCTURING OF BUSI NESS SO AS TO DENY DEDUCTION UNDER SECTION 80-18 OF THE ACT. 6. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT IN RESPECT OF EACH BOREWELL MADE AT DIFFERENT LOCATIONS, WIRE LINE LOGGING ACTIVITY IS UNDERTAKIN G AND HENCE THERE COULD NOT BE ANY ALLEGATION AS TO SPLITTING UP OR R ESTRUCTURING OF BUSINESS ALREADY IN EXISTENCE. 7. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT EACH GEOGRAPHICAL SITE OF THE APP ELLANT WAS A SEPARATE UNDERTAKING ALLEGEDLY HOLDING THAT NUMBER OF EMPLOY EES SPREADING OVER GEOGRAPHICAL AREA SERVICED BY MOBILE VAN IS EX TREMELY LOW. 8. WITHOUT PREJUDICE, THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF ASSESSING OFFICER I N DENYING DEDUCTION IN RESPECT OF ACTIVITIES OTHER THAN LOGGING AND DAT A PROCESSING. 9. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ALLOWANCE OF DEPRECIATION @ 25% AS AGAINST 80% CLAIMED BY THE APPELLANT IN RESPECT OF THE PLANT AND MACHINERY OWN ED AND USED BELOW THE GROUND IN FIELD OPERATIONS IN MINERAL OIL CONCE RNS HOLDING THAT- (A) THE APPELLANT DID NOT EXTRACT, PRODUCE MINERAL OILS AND, THEREFORE, IT COULD NOT CLAIM THE STATUS OF A MINER AL OIL CONCERN (B) THE APPELLANT WAS NOT A MINERAL OIL CONCERN, AN D IS MERELY PROVIDING SUPPORT SERVICES WITH RESPECT TO THE ACTI VITY OF WIRELINE LOGGING AND PERFORATION, WHICH WAS A SMALL FRACTION OF SERIES OF ACTIVITIES UNDERTAKING BY MINERAL OIL CONCERNS. (C) NATURE OF OPERATIONS OF MINERAL OIL CONCERNS W ERE SIGNIFICANTLY DIFFERENT FROM THAT OF THE APPELLANT AS REGARDS ITS FUNCTIONS AND USE OF PLANT AND MACHINERY. 10. WITHOUT PREJUDICE, THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN NOT ALLOWING DEPRECIATION ON ADDITIONS/DISAL LOWANCES MADE IN THE EARLIER YEARS WHILE COMPUTING REVISED WRITTEN D OWN VALUE OF FIXED ASSETS. 11. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LA W IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE AMOUNTING TO RS.7,5 6,940/- BY APPLYING AD HOC PERCENTAGE OF 15% OF THE GROSS DIVI DEND UNDER SECTION 14A OF THE ACT, HOLDING THE SAME TO BE EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. (A) THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN HOLDING THAT RULE 80 OF THE INCOME TAX RULES, 1962 ('THE RU LES') READ WITH SECTION 14A IS MANDATORY AND RETROSPECTIVE. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 5 (B) THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN NOT APPRECIATING THAT NO EXPENSES HAD, IN FACT, BEEN IN CURRED BY THE APPELLANT FOR EARNING SUCH DIVIDEND INCOME. (C) THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN NOT APPRECIATING THERE WAS NO NEXUS BETWEEN THE EXPENDI TURE INCURRED AND EXEMPTED DIVIDEND INCOME. ITA NO.3708/DEL./2012 (AY : 2006-07) 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX, (CIT) UNDER SECTION 263 OR THE INCOME-TAX ACT, 1961 ('THE ACT') IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB INITIO. 1.1 THAT THE CIT ERRED ON FACTS AND IN LAW IN EXER CISING REVERSIONARY POWERS UNDER SECTION 263 OF THE ACT WI THOUT APPRECIATING THAT THE TWIN CONDITIONS OF THAT SECTI ON VIZ., ASSESSMENT ORDER BEING ERRONEOUS AS WELL AS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE, WERE NOT SATISFIED IN THE APPELLANT'S CASE. 1.2 THAT THE CIT ERRED ON FACTS AND IN LAW IN SETT ING ASIDE THE ASSESSMENT ORDER. WITHOUT ARRIVING AT ANY CONCLUSIV E FINDING ON MERITS AS TO HOW THE ASSESSMENT ORDER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN RESPECT OF THE ISSUE OF DEPRECIATION AND COMMISSION PAID TO DIRECTOR. 2. THAT THE CIT ERRED ON FACTS AND IN LAW IN HOLDIN G THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OR THE REVENUE ON ACCOU NT OF THE FOLLOWING: (I) ALLOWING ADDITIONAL DEPRECIATION OF RS.3,46,41 .428 DESPITE FINDINGS / THAT THE APPELLANT WAS NOT ENGAGED IN MANUFACTURE AND PRODUCTION OF ARTICLES OR THINGS. (II) ALLOWING DEPRECIATION IN RESPECT OR PLANT AND MACHINERY @ 25% AS AGAINST THE APPLICABLE RATE OF 15% . (III) NOT DISALLOWING COMMISSION PAID TO THE A MAN AGING DIRECTOR OF AMOUNTING TO RS.33,51,000 IN TERMS OF S ECTION 36(1)(II) OF THE ACT. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 6 3. THAT THE CIT ERRED ON FACTS AND IN LAW IN NOT AP PRECIATING THAT THERE WAS NO ERROR IN THE ASSESSMENT ORDER PAS SED UNDER SECTION 143(3) OF THE ACT AND WAS NOT ERRONEOUS AND PREJUDICIAL LO THE INTEREST OF THE REVENUE ON ACCOUNT OF THE FO LLOWING: (I) THE HON'BLE DELHI HIGH COURT IN THE APPELLANT' S OWN CASE FOR ASSESSMENT YEARS 1989-90 TO 2003-04 HAS HE LD THE APPELLANT TO BE ENGAGED IN MANUFACTURE OR PRODUCTIO N OF ARTICLES AND THINGS. (II) THE APPELLANT WAS ALLOWED DEPRECIATION ONLY @ 15%. (III) THE COMMISSION OF RS.33,51,000 AS PAID TO TH E MANAGING DIRECTOR WHO WAS NOT SHAREHOLDER AND, THEREFORE, WA S NOT LIABLE TO BE DISALLOWED IN TERMS OF SECTION 36(1)(I I) OF THE ACT. ITA NO.4144/DEL./2014 (AY : 2007-08) 1. THAT THE CIT(A) ERRED ON FACTS OF THE CASE AND IN LAW IN RESTRICTING THE APPELLANT'S CLAIM OF DEDUCTION UNDE R SECTION 80-IB OF THE INCOME-TAX ACT, 1961 ('THE ACT') , IN RESPEC T OF PROFITS OF AGARTALA UNIT TO 30% AS AGAINST THE DEDUCTION OF 10 0% IN RESPECT OF SAID UNIT CLAIMED BY THE APPELLANT. 1.1 THAT THE CIT(A) ERRED ON FACTS OF THE CASE AND IN LAW IN NOT APPRECIATING THAT AGARTALA UNIT OF THE APPELLAN T BEING SET UP IN NORTH-EASTERN REGION, WAS ELIGIBLE DEDUCTION @ 1 00% OF THE PROFIT OF THE BUSINESS, IN TERMS OF THE SECOND PROV ISO TO SUB- SECTION (4) OF SECTION 80-IB OF THE ACT READ WITH N OTIFICATION NO. SO 627 (E) DATED 04.08.1999. ITA NO.5511/DEL./2012 (AY : 2007-08) 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX, ('CIT') UNDER SECTION 263 OF THE INCOME-TAX ACT, 19 61 ('THE ACT') IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB INIT IO. 1.1 THAT THE CIT ERRED ON FACTS AND IN LAW IN EXER CISING REVERSIONARY POWERS UNDER SECTION 263 OF THE ACT WI THOUT APPRECIATING THAT THE TWIN CONDITIONS OF THAT SECTI ON VIZ., ASSESSMENT ORDER BEING ERRONEOUS AS WELL AS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE, WERE NOT SATISFIED IN THE APPELLANT'S CASE. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 7 1.2 THAT THE CIT ERRED ON FACTS AND IN LAW IN SETT ING ASIDE THE ASSESSMENT ORDER, WITHOUT ARRIVING AT ANY CONCLUSIV E FINDING ON MERITS AS TO HOW THE ASSESSMENT ORDER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THAT THE CIT ERRED ON FACTS AND IN LAW IN HOLDIN G THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOU NT OF THE FOLLOWING: (I) ALLOWING ADDITIONAL DEPRECIATION OF RS.1,62,45, 285 DESPITE FINDINGS THAT THE APPELLANT WAS NOT ENGAGED IN MANUFACTURE AND PRODUCTION OF ARTICLES OR THINGS. (II) ALLOWING DEPRECIATION IN RESPECT OF PLANT AND MACHINERY @ 25% AS AGAINST THE APPLICABLE RATE OF 15%. 3. THAT THE CIT ERRED ON FACTS AND IN LAW IN EXERCI SING REVERSIONARY POWERS UNDER SECTION 263 OF THE ACT IN RESPECT OF THE ISSUE OF EXCESS CLAIM OF DEPRECIATION, OVERRIDING T HE PRINCIPLE OF MERGER APPLICABLE TO PARALLEL AUTHORITIES, AS THE S AID ISSUE WAS ALREADY UNDER CONSIDERATION BEFORE CIT(A)-XV VIDE A PPEAL FILED ON 19.01.2010. 4. THAT THE CIT ERRED ON FACTS AND IN LAW IN NOT AP PRECIATING THAT THERE WAS NO ERROR IN THE ASSESSMENT ORDER PAS SED UNDER SECTION 143(3) OF THE ACT AND WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOUNT OF THE FO LLOWING: (I) THE HON'BLE DELHI HIGH COURT IN THE APPELLANT' S OWN CASE FOR ASSESSMENT YEARS 1989-90 TO 2003-04 HAS HE LD THE APPELLANT TO BE ENGAGED IN MANUFACTURE OR PRODUCTIO N OF ARTICLES AND THINGS. (II) THE HON'BLE DELHI HIGH COURT IN THE APPELLANT 'S OWN CASE FOR ASSESSMENT YEARS 1989-90 TO 2003-04 HAS HE LD THE APPELLANT IS ELIGIBLE FOR DEPRECIATION AT A HIGHER RATE OF 60%. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 8 ITA NO.2208/DEL./2014 (AY : 2008-09) 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS OF THE CASE AND IN LAW IN RESTRICTING THE APP ELLANT'S CLAIM OF DEDUCTION UNDER SECTION 80-IB OF THE INCOME-TAX ACT , 1961 ('THE ACT'), IN RESPECT OF PROFITS OF AGARTALA UNIT TO 30 % AS AGAINST THE DEDUCTION OF 100% IN RESPECT OF SAID UNIT CLAIMED B Y THE APPELLANT. 1.1 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED ON FACTS OF THE CASE AND IN LAW IN NOT APPRECIATING TH AT AGARTALA UNIT OF THE APPELLANT BEING SET UP IN NORTH-EASTERN REGI ON, WAS ELIGIBLE DEDUCTION @ 100% OF THE PROFIT OF THE BUSINESS, IN TERMS OF THE SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80-1S OF THE ACT READ WITH NOTIFICATION NO. SO 627 (E) DATED 04-08-1999. 1.2 WITHOUT PREJUDICE THAT THE COMMISSIONER OF INC OME-TAX (APPEALS) ERRED ON FACTS AND IN LAW IN MAKING EXTRA NEOUS OBSERVATIONS THAT 'FOR DECIDING THE MANUFACTURING A CTIVITY, IT IS A VITAL FACTOR HOW THE DEPARTMENT OF CENTRAL EXCISE H AS TREATED THE PROCESS UNDERTAKEN BY THE APPELLANT AND WHETHER THE PRODUCT ('LOG') WAS AN EXCISABLE GOODS OR THE APPELLANT'S W ORK WAS SIMPLY LIKE A SERVICE PROVIDER. IT APPEARS THAT THE APPELL ANT'S CASE WAS NOT EXAMINED FROM THIS ANGLE AND PERHAPS THESE FACT S WERE NOT BROUGHT TO THE NOTICE OF THE HON'BLE COURT. IT IS W ITHOUT PREJUDICE TO THE DECISIONS OF THE HON'BLE COURTS ON THE ISSUE . HOWEVER, THE AO MAY EXAMINE THE ISSUE FROM THIS ANGLE AND TAKE N ECESSARY PERMISSION FROM THE HON'BLE COURT TO HAVE A RELOOK ON ITS OWN DECISION'. 1.3. WITHOUT PREJUDICE THAT THE AFORESAID OBSERVAT IONS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) BEING EXTRANEO US AND IN CONTRADICTION OF THE BINDING DECISION OF THE HON'BL E DELHI HIGH COURT AND, THEREFORE, CALLS FOR BEING EXPUNGED. 2. THAT THE CIT(A) ERRED ON FACTS OF THE CASE AND I N LAW IN NOT ADMITTING THE ADDITIONAL GROUND OF APPEAL RAISE D' BY APPELLANT QUA CLAIM OF DEDUCTION UNDER SECTION 8018 OF THE ACT IN RESPECT OF 100% PROFITS OF THE DULIAJAN UNIT IN TER MS. OF THE PROVISIONS OF SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80-1B OF THE ACT READ WITH NOTIFICATION NO. SO 627 (E) DA TED 04-08- 1999. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 9 3. APPELLANT, DCIT, CIRCLE 12 (1), NEW DELHI (HEREI NAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 19.10.2011, 10. 10.2011 & 29.01.2014 PASSED BY THE CIT (APPEALS)-XXVII, NEW D ELHI, CIT (APPEALS)-XXVIII, NEW DELHI & CIT (APPEALS)-XI, NEW DELHI QUA THE ASSESSMENT YEARS 2005-06, 2006-07 & 2008-09 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.323/DEL./2012 (AY : 2005-06) 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW IN DELETING THE DISALLOWANCE OF RS. 89,141/- MADE BY THE AO U/S 14A. 2. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW IN DELETING THE DISALLOWANCE OF RS. 3,03,21,859/- MADE BY THE AO ON ACCOUNT OF DEDUCTION U/S 80-IB. 3. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW IN DELETING THE DISALLOWANCE OF DISALLOWANCE OF RS.4,22,67,278/- MADE BY THE AO ON ACCOUNT OF EXCES S DEPRECIATION ON PLANT AND MACHINERY. 4. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS. 51,43,856/-MADE BY THE AO TREATING THE SERVICE TAX RECEIVED AS TRADING RECEIPTS. ITA NO.5855/DEL./2011 (AY : 2006-07) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .3,58,77,077/- MADE BY THE AO ON ACCOUNT OF 80IB OF THE IT ACT. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 10 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .6,84,02,958/-MADE BY THE AO ON ACCOUNT OF DEPRECIATION OUT-OF TOTAL D EPRECIATION OF RS.9,12,03,944/- CLAIMED IN RESPECT OF PLANT AND MA CHINERY USED BELOW THE GROUND. ITA NO.2241/DEL./2014 (AY : 2008-09) 1. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CI RCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS. 1,94,36,126/- ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB CLAIM ED @ 30% DESPITE THE FACT THAT THE ASSESSEE COMPANY IS NOT MANUFACTU RING CONCERN AND IS ONLY A SERVICES PROVIDER? 2. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS. 1,94,36,126/- ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB CLAIM ED @ 30% DESPITE THE FACT THAT THE ASSESSEE COMPANY IS NOT REGISTERE D FOR EXCISE DUTY & ONLY SERVICE PROVIDER AND THIS FACT WAS NOT BROUGHT TO NOTICE OF HON'BLE DELHI HIGH COURT; AND THAT THE CIT (A) WAS NOT CORR ECT IN ALLOWING THE DEDUCTION AFTER NOTING THE FACT AS THE DECISION OF THE HON'BLE COURT WAS BASED ON DIFFERENT FACTS? 3. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW IN HOLDING THAT THE ASSESSEE CO MPANY IS MANUFACTURING UNIT IGNORING THE FACT THAT THE ASSES SEE COMPANY IS PAYING SERVICE TAX; THEREFORE SERVICE PROVIDER & NO T REGISTERED FOR EXCISE DUTY AND ALSO NOT COMPLYING THE CONDITION OF SECTION 80IB(2)(IV) OF THE ACT THAT WHERE INDUSTRIAL UNDERTAKING MANUFA CTURES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOY TEN OR M ORE WORKERS IN MANUFACTURING PROCESS? 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. HLS ASIA LTD., THE A SSESSEE IS ENGAGED IN WIRELINE LOGGING PERFORATION AND RELATED OIL FIELDS ACTIVITIES FOR VARIOUS NATIONAL AND INTERNATIONAL M INERAL OIL COMPANIES I.E. OIL INDIA LTD. AND OIL & NATURAL GAS CORPORATION LTD. IN THE GEOGRAPHICAL MINERAL OIL OPERATIONAL AR EAS AND THE SAID ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 11 CONCERN IN DULIAJAN, AGARTALA, NAZIRA, BANGALDESH E TC. UNDER CONTRACTS ENTERED WITH THEM. 5. ASSESSEE COMPANY IN AYS 2004-05, 2005-06, 2006-0 7, 2007-08 & 2008-09 CLAIMED DEDUCTION U/S 80IB OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA ITS TWO UNITS, NAMELY, UNIT 2 DULIAJAN AND UNIT 3 AGARTALA. DECLINING THE CONTEN TIONS RAISED BY THE ASSESSEE COMPANY, ASSESSING OFFICER (AO) PROCEE DED TO HOLD THAT THE ASSESSEE COMPANY IS ONLY PROVIDING SERVICE S TO MINERAL OIL CONCERNS AND GENERATION OF LOGS DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF ARTICLE OR THING AND AS SUCH DEDUCTIO N OF RS.3,36,16,295/-, RS.3,03,21,859/-, RS.3,58,77,077/ -, RS.1,30,65,731/- & RS.1,94,36,126/- FOR AYS 2004-05 , 2005-06, 2006-07, 2007-08 & 2008-09 RESPECTIVELY CLAIMED Y T HE ASSESSEE COMPANY IS NOT ALLOWABLE AS THE ASSESSEE HAS FAILED TO VERIFY THE NECESSARY CONDITIONS REQUIRED U/S 80IB OF THE ACT. 6. IN AYS, 2004-05, 2005-06 & 2006-07, ASSESSEE COM PANY CLAIMED DEPRECIATION ON PLANT AND MACHINERY USED BE LOW THE GROUNDS @ 80% AMOUNTING TO RS.3,05,10,460/-, RS.5,2 8,34,097/- & RS.9,12,03,944/- FOR AYS 2004-05, 2005-06 & 2006- 07 RESPECTIVELY. ASSESSEE COMPANY ALSO CLAIMED 80% ON LOGGING ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 12 TOOLS AS WELL AS MADE IN EARLIER YEARS. AO, FOLLOW ING THE ORDER PASSED IN EARLIER YEARS PROCEEDED TO HOLD THAT SINC E THE ASSESSEE COMPANY DID NOT EXTRACT OR PRODUCE MINERAL OILS, IT CANNOT CLAIM STATUS OF MINERAL OIL CONCERN. EVEN THE USE OF PLA NT AND MACHINERY BY THE ASSESSEE IS DIFFERENT FROM PLANT AND MACHINE RY BY MINERAL OIL CONCERNS AND THE ASSESSEE COMPANY IS MERELY PRO VIDING SUPPORT SERVICERS WITH REGARD TO ACTIVITIES OF WIRELINE LOG GING AND PERFORATION WHICH ARE VERY SMALL FRACTION OF SERIES OF OPERATION UNDERTAKEN BY MINERAL CONCERN AND THEREBY ALLOWED T HE DEPRECIATION IN RESPECT OF PLANT AND MACHINERY USED BELOW THE GROUND @ 25% AS AGAINST 80% CLAIMED BY THE ASSESSEE COMPANY AND DISALLOWED THE DEPRECIATION TO THE TUNE OF RS.3 ,05,10,460/-, RS.5,28,34,097/- & RS.9,12,03,944/- FOR AYS 2004-05 , 2005-06 & 2006-07 RESPECTIVELY. 7. IN AY 2004-05, AO MADE DISALLOWANCE OF EXPENDITU RE ON (AD-HOC) BASIS TO THE TUNE OF RS.7,56,940/- @ 15% O F THE GROSS DIVIDEND U/S 14A BY HOLDING THAT THESE WERE THE EX PENDITURE INCURRED BY THE ASSESSEE FOR EARNING EXEMPT INCOME. 8. IN AY 2005-06, ASSESSEE COMPANY SHOWN AN AMOUNT OF RS.51,43,856/- DURING YEARS ON ACCOUNT OF SERVICE T AX BUT ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 13 REMAINING UNPAID. THE ASSESSEE HAS ALSO NOT PASSED SERVICE TAX THROUGH PROFIT & LOSS ACCOUNT. ASSESSEE HAD RAISED PART BILLS WITH SERVICE TAX WITH CHARGE TO THE SAME. HOWEVER, AO A DDED THE AMOUNT OF RS.51,43,856/- TO THE INCOME OF THE ASSES SEE AS TRADING RECEIPTS SUBJECT TO ITS ENTITLEMENT TO DEDUCTION AS AND WHEN IT IS PAID TO THE GOVERNMENT OR WRITTEN OFF FROM CUSTOMER ACCOUNT. 9. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE SEPARATE APPEALS FOR AYS 2004-05, 2005-0 6, 2006-07, 2007-08 & 2008-09 WHO HAVE CONFIRMED THE DISALLOWAN CE OF DEDUCTIONS CLAIMED BY THE ASSESSEE U/S 80IB MADE BY THE AO IN AYS 2004-05, 2007-08 & 2008-08 HOWEVER LD. CIT (A) IN AYS 2005-06 & 2006-07 ALLOWED THE RELIEF TO THE ASSESSE E COMPANY. FEELING AGGRIEVED BY THE ORDERS PASSED BY THE LD. C IT (A), BOTH THE ASSESSEE AS WELL AS REVENUE HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT CROSS APPEALS. 10. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 14 GROUNDS NO.1 TO 8 OF ITA NO.1712/DEL/2010 AY : 2004-05 (ASSESSEES APPEAL) GROUND NO.2 OF ITA NO.323/DEL/2012 AY : 2005-06 (REVENUES APPEAL) GROUND NO.1 OF ITA NO.5855/DEL/2011 AY : 2006-07 (REVENUES APPEAL) GROUNDS NO.1 & 1.1 OF ITA NO.4144/DEL/2014 AY : 2007-08 (ASSESSEES APPEAL) GROUNDS NO.1 & 2 OF ITA NO.2241/DEL/2014 AY : 2008-09 (REVENUES APPEAL) 11. AO DENIED THE CLAIM OF DEDUCTION BY THE ASSESSE E U/S 80IB BY REACHING THE CONCLUSION THAT THE ASSESSEE COMPAN Y CANNOT BE SAID TO BE ENGAGED INTO ANY MANUFACTURE OR PRODUCTI ON OF AN ARTICLE OR THING RATHER IT IS ONLY PROVIDING SERVICES TO MI NERAL OIL CONCERNS AND AS SUCH, GENERATION OF LOGS DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. 12. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNE D ORDER PASSED BY THE LD. CIT (A) IN AYS 2004-05, 2007-08 & 2008-09 AND SUPPORTING THE ORDER PASSED BY THE LD. CIT (A) IN A YS 2005-06 & 2006-07 CONTENDED THAT NOW THE ISSUE AS TO, WHETHE R ASSESSEE COMPANY BEING ENGAGED IN WIRELINE LOGGING, PERFORAT ION AND RELATED OIL-FIELD ACTIVITIES FOR MINERAL OIL CONCER NS IS ACTUALLY ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 15 ENGAGED IN MANUFACTURE AND PRODUCTION OF ARTICLE O R THING, HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE COMPANY BY T HE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE IN AYS RANGING FROM 1989-90 TO 2003-04 VIDE ORDER DATED 11.05.2011 REPO RTED IN (2011) 335 ITR 292 (DEL.) . THIS FACTUAL AND LEGAL POSITION HAS NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE. 13. HONBLE DELHI HIGH COURT HAS FRAMED SUBSTANTIAL QUESTION OF LAW IN ASSESSEES OWN CASE PERTAINING TO AYS 1989-90 TO 20 03-04 (SUPRA) AS UNDER :- 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE PRESENT CASE, THE ASSESSEE CAN BE SAID TO BE AN INDUSTRIAL UNDERTAKING ENGAGED IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF AN ARTICLE OR A THING FOR THE PURPOSE OF SECTION 32A AND SECTION 80-IA/80-IB OF THE INCOME TAX ACT, 1961 ? 14. AFORESAID SUBSTANTIAL QUESTIONS OF LAW HAVE BEE N DECIDED BY THE HONBLE DELHI HIGH COURT IN FAVOUR OF THE ASSES SEE BY RETURNING FOLLOWING FINDINGS :- 26. IT IS CLEAR FROM THE AFORESAID JUDICIAL AUTHO RITIES THAT IN ORDER TO FIND OUT WHETHER ANY PARTICULAR BUSINESS A CTIVITY AMOUNTS TO MANUFACTURING OR PRODUCTION FOR THE PURPOSE OF VARIOUS TAX INCENTIVES UNDER IT ACT, EACH CASE IS R EQUIRED TO BE EXAMINED IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THAT VERY CASE. THE MOST IMPORTANT ASPECT OF THIS EXERCISE SH OULD BE THE ANALYSIS OF THE PROCESS INVOLVED IN THE IMPUGNED AC TIVITY AND AN ENQUIRY INTO THE NATURE OF TRANSFORMATION THAT THE PRODUCT HAS UNDERGONE TO FIND OUT WHETHER IT IS DISTINCT IN IDE NTITY FROM THE RAW COMMODITY INVOLVED IN ITS MANUFACTURE. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 16 27. IN THE INSTANT CASE, PRODUCTION OF LOG BY WAY OF WIRELINE LOGGING IS THE CONCERNED ACTIVITY. WE ARE GIVEN TO UNDERSTAND BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT WIRELINE LOGGING ASSISTS THE MINERAL OIL CONCERNS PRIMARILY TO ASCERTAIN AS TO WHETHER THERE IS ANY GAS OR OIL IN THE WELL, AND IF THERE I S SUCH PRESENCE, THEN ITS AVAILABILITY AT WHAT DEPTH AND THE QUANTIT Y OF SUCH RESERVES, AND WHETHER SUCH GAS OR OIL CAN BE EXTRAC TED. THIS IS USUALLY DONE THROUGH ELECTRICAL, ACOUSTIC RADIO-ACT IVE AND ELECTROMAGNETIC ANALYSIS OF THE PROPERTIES OF ROCKS . THE ASSESSEE HAS STATED THAT IT HAS CARRIED OUT WIRELINE LOGGING , PERFORATION AND RELATED OPERATION BY ENGAGING HIGHLY EXPERIENCE D ENGINEERS AND LOG ANALYSTS, USING HIGH-TECH EQUIPMENTS AND CO MPUTERS. THE LOGGING TOOLS ARE SENSITIVE SENSORS WITH ELECTR OMECHANICAL SYSTEMS WHICH CAN WORK IN EXTREME CONDITIONS OF PRE SSURE AND TEMPERATURE AS FOUND IN DOWN HOLE BELOW THE EARTH S URFACE. THERE, INSIDE THE HOLE, THESE EQUIPMENTS PERFORM QU ITE SOPHISTICATED MEASUREMENTS. THE PRIME TARGET IS THE MEASUREMENT OF VARIOUS GEOPHYSICAL PROPERTIES OF TH E SUBSURFACE ROCK FORMATIONS. OF PARTICULAR INTEREST ARE POROSIT Y, PERMEABILITY, AND FLUID CONTENT. POROSITY IS THE PROPORTION OF FL UID-FILLED SPACE FOUND WITHIN THE ROCK. IT IS THIS SPACE THAT CONTAI NS THE OIL AND GAS. PERMEABILITY IS THE ABILITY OF FLUIDS TO FLOW THROUGH THE ROCK. THE HIGHER THE POROSITY, THE HIGHER THE POSSIBLE OI L AND GAS CONTENT OF A ROCK RESERVOIR. THE HIGHER THE PERMEAB ILITY, THE EASIER FOR THE OIL AND GAS TO FLOW TOWARD THE WELLB ORE. LOGGING TOOLS PROVIDE MEASUREMENTS THAT ALLOW FOR THE MATHE MATICAL INTERPRETATION OF THESE QUANTITIES. 28. WE ARE EXPLAINED BY THE LEARNED COUNSEL THAT B EYOND JUST THE POROSITY AND PERMEABILITY, VARIOUS LOGGING MEAS UREMENTS ALLOW THE INTERPRETATION OF WHAT KINDS OF FLUIDS AR E IN THE PORES-- OIL, GAS, BRINE. IN ADDITION, THE LOGGING MEASUREME NTS ARE USED TO DETERMINE MECHANICAL PROPERTIES OF THE FORMATIONS. THESE MECHANICAL PROPERTIES DETERMINE WHAT KIND OF ENHANC ED RECOVERY METHODS MAY BE USED (TERTIARY RECOVERY) AND WHAT DA MAGE TO THE FORMATION (SUCH AS EROSION) IS TO BE EXPECTED DURIN G OIL AND GAS PRODUCTION. THE DATA COLLECTED BY THESE TOOLS IS TR ANSMITTED THROUGH AN ELECTRO MECHANICAL CABLE TO THE EARTH SU RFACE WHERE IT IS PROCESSED BY A SOPHISTICATED ACQUISITION SOFTWARE WHICH ACQUIRES AND PROCESSES THE DATA FROM THE LOGGING TO OLS. AFTER PROCESSING THE DATA THE COMPUTER GIVES AN OUTPUT CA LLED LOGS' WHICH ARE SAID TO BE VALUABLE PROCESSED DATA/ EVALU ATIVE INFORMATION/ INTERPRETATION IMPRINTED ON SPECIAL FI LM/ PAPERS ETC. AND RECORDED ON DIGITAL TAPES. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 17 29. THE LEARNED COUNSEL FOR ASSESSEE FURTHER SUBMI TTED THAT IN RESPECT OF EACH OF ITS CONTRACT THE ASSESSEE SETS U P A FULL-FLEDGED BASE AT A CENTRALIZED LOCATION AND MOBILIZES/ INSTA LLS EQUIPMENTS AND DEPUTES PERSONNEL AT EACH SUCH BASE. EACH SUCH BASE UNDER EACH CONTRACT IS CLAIMED AS A SEPARATE INDUSTRIAL U NDERTAKING. THE FACILITIES PROVIDED BY THE ASSESSEE FOR EACH SU CH BASE COMPRISE ESTABLISHMENT OF LABORATORY WORKSHOP, TOOL S CALIBRATION FACILITIES, ESTABLISHMENT OF COMPUTER CENTRE, ACCOU NTS ADMINISTRATION/ OPERATION OFFICE, GODOWN, STORES, C OMMUNICATION AND TRANSPORT FACILITIES, SPECIAL PROTECTIVE STORAG E FOR RADIO-ACTIVE MATERIAL AND RESIDENCE FOR PERSONNEL. 30. AFTER REFERRING TO VARIOUS ACTIVITIES UNDERTAK EN AT A SPECIFIC UNIT, MR. VOHRA, LEARNED COUNSEL FOR THE A SSESSEE PLEADED THAT THE LOGS GENERATED BY IT ARE AN ARTICLE OR A THING AND THE PROCESS OF GENERATING THE SAME AMOUNTS TO MANUFACTU RING/ PRODUCTION. TO COUNTER THE SUBMISSIONS OF THE ASSES SEE, MS. BANSAL, LEARNED SENIOR COUNSEL FOR THE REVENUE HAS SUBMITTED THAT GEO-PHYSICAL AND PETRO-CHEMICAL PROPERTIES OF THE ROCKS IS LIKE INFORMATION TAPED INTO ROCKS AND WHAT ASSESSEE IS DOING IS JUST RETRIEVING THE SAME AND PRINTING IT ON THE PAP ER OR ON OTHER FORMATS. MS. BANSAL, HOWEVER DID NOT CONTROVERT ALL THAT WAS SUBMITTED AND EXPLAINED BY MR. VOHRA AS NOTED BY US IN THE PRECEDING PARAGRAPHS (27, 28 & 29). 31. HAVING ANALYZED THE SUBMISSIONS OF LEARNED COU NSEL OF BOTH THE PARTIES AND THE MATERIAL AVAILABLE FOR OUR PERUSAL AND THE CITED CASE LAW, WE FIND FORCE IN THE SUBMISSION S OF MR. VOHRA, LEARNED COUNSEL FOR THE ASSESSEE. NO DOUBT, THE RAW MATERIAL I.E. THE PRIMARY INPUT IN THE IMPUGNED ACTIVITY IS THE INFORMATION BUT CAN WE EQUATE THIS INFORMATION WITH SOMETHING WHICH IS BEING COPIED FROM THERE IN TOTO. WHETHER THE CHARAC TERISTICS REGARDING WHICH THE INFORMATION IS BEING SENT BACK TO COMPUTERS ON SURFACE FROM LOGGING TOOLS WORKING INSIDE THE DO WN HOLE CAN BE COMPARED TO A CHARACTERISTIC WHICH IS AVAILABLE AND READABLE WITHOUT CONDUCTING HIGHLY TECHNICAL SCIENTIFIC TEST S AND CALCULATIONS DOWN INSIDE THE BOREHOLE. EVEN AFTER T HE GEO- PHYSICAL AND PETRO-CHEMICAL PROPERTIES OF THE ROCKS HAVE BEEN MEASURED, FURTHER SCIENTIFIC PROCESSING IS REQUIRED TO BE DONE BY DEDICATED SOFTWARES ON THE COMPUTERS. IT IS ONLY AF TER THE ABOVE SAID PROCESS, THE READABLE AND USABLE DATA IN THE F ORM OF LOGS IS PROVIDED TO TECHNICAL EXPERTS TO DETERMINE THE POTE NTIALITY AND OTHER TECHNICAL AND COMMERCIAL CHARACTERISTICS OF T HE OIL WELL. CAN WE SAY, WHEN A LATENT PHYSICAL PROPERTY OF THE ROCKS, WHICH WAS OTHERWISE UNREADABLE AND THUS UNUSABLE, HAS BEE N CHANGED ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 18 BY WAY OF SOPHISTICATED SCIENTIFIC TESTS AND CALCUL ATIONS INTO SCIENTIFIC DATA WHICH SUBSEQUENTLY HAS BEEN FURTHER CHANGED INTO LOGS PRINTED ON THE PAPERS OR RECORDED ON THE MAGNE TIC TAPES, THAT THE CHARACTER AND IDENTITY OF END PRODUCT AND FINAL PRODUCT IS NOT DISTINCT. WE ARE UNABLE TO UPHOLD SUCH A PRO POSITION. IT IS A CLEAR CASE WHERE THE LEGAL PROPOSITION THAT IF AN OPERATION/ PROCESS RENDERS A COMMODITY OR ARTICLE FIT FOR USE FOR WHICH IT IS OTHERWISE NOT FIT, THE OPERATION/ PROCESS FALLS WIT HIN THE MEANING OF THE WORD 'MANUFACTURE'' APPLIES. AT THIS JUNCTUR E, WE REEMPHASIZE ON THE OBSERVATIONS MADE BY HIS LORDSHI P S.H. KAPADIA, J. (AS HIS LORDSHIP WAS THEN) IN CIT VS. O RACLE SOFTWARE INDIA LTD. (SUPRA) THAT THE DEPARTMENT NEE DS TO TAKE INTO ACCOUNT THE GROUND REALITIES OF THE BUSINESS A ND SOMETIMES OVER-SIMPLIFIED TESTS CREATE CONFUSION, PARTICULARL Y, IN MODERN TIMES WHEN TECHNOLOGY GROWS EACH DAY. 32. EVEN FROM ANOTHER PERSPECTIVE, WHICH FORMS THE SECOND LIMB OF THE ASSESSEE'S ARGUMENT, THE CASE TILTS IN THE FAVOUR OF ASSESSEE. MR. VOHRA HAS TRIED TO DRAW AN ANALOGY BE TWEEN THE PRODUCTION OF LOGS BY USING WIRELINE LOGGING EQUIPM ENTS ON THE ONE HAND AND THE PRODUCTION OF X-RAY AND ULTRASOUND REPORT SHEETS USING X-RAY AND ULTRASOUND MACHINES ON THE O THER HAND WHICH HAVE BEEN HELD TO BE ELIGIBLE FOR INVESTMENT ALLOWANCE UNDER SECTION 32A IN VARIOUS JUDICIAL PRONOUNCEMENT S. AFORESAID SECOND LIMB OF THE ARGUMENT OF MR. VOHRA IS OF VITA L IMPORTANCE BECAUSE THE AO ITSELF, WHILE FRAMING THE ASSESSMENT ORDER DATED 23.03.1995 FOR THE ASSESSMENT YEAR 1992-93 HAD RELI ED UPON THE SAME ANALOGY TO COME TO SHARPLY OPPOSITE CONCLUSION S. THE SAME CAN BE REPRODUCED AS UNDER: CAN WE SAY X-RAY MACHINE IS MANUFACTURING X- RAY? OBVIOUSLY NO. BECAUSE IT IS ONLY TAKING THE INFORMA TION OF THE HUMAN BODY AND BY RADIATION HAVING A GRAPH ON A N X-RAY. BUT, IT IS NOT MANUFACTURING X-RAY. 33. VARIOUS HIGH COURTS OF INDIA HAVE HELD THAT X- RAY MACHINE IS QUALIFIED FOR INVESTMENT ALLOWANCE UNDER SECTION 32A. IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. DR. S . SURENDER REDDY [243 ITR 110 (AP)] THE ANDHRA PRADESH HIGH CO URT HAS CATEGORICALLY OBSERVED AS UNDER: 9. NEXT COMES THE EQUIPMENT USED FOR PURPOSES OF X -RAY. BY PUTTING THE X-RAY FILM IN TO THE X-RAY MACHINE A DIFFERENT ARTICLE IS PRODUCED. IT IS A DIFFERENT AR TICLE FROM THE FILM WHICH IS PRODUCED FROM THE X-RAY MACHINE A ND, ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 19 THEREFORE, IT IS A THING WITHIN THE MEANING OF SECT ION 32A(2)(B)(II). THEREFORE, THE TRIBUNAL IS RIGHT IN ITS VIEW THAT WHEN X-RAY FILMS ARE PRODUCED THE ASSESSEE PRO DUCES A THING AND, THEREFORE, HE IS ENTITLED FOR INVESTME NT ALLOWANCE. AS REGARDS THE EQUIPMENT USED FOR CONDUC TING THE PATHOLOGICAL TESTS THE ASSESSEE IS NOT QUALIFIE D TO CLAIM INVESTMENT ALLOWANCE UNDER SECTION 32A OF THE ACT. THE ASSESSEE IS ALSO ENTITLED FOR INVESTMENT ALLOWANCE ON STABILIZER, ELECTRIC FANS, SCANNER AND AIR- CONDITI ONER USED TO KEEP THE ANALYTICAL SYSTEMS, AS THEY ARE NECESSA RY FOR PURPOSES OF PRODUCTION OF AN ARTICLE OR A THING. 34. SIMILAR VIEW HAS BEEN EXPRESSED BY THE GUJARAT HIGH COURT IN CIT VS. DOWN TOWN HOSPITAL (P) LTD. [267 I TR 439 (GUJ)]; KARNATAKA HIGH COURT IN CIT VS. UPASANA HOS PITAL [225 ITR 845 (KAR)]. THE ISSUE, WHICH WE ARE CONCERNED W ITH, IS A FISCAL ISSUE WHICH IS CONCERNED WITH A CENTRAL STAT UTE. IT IS DESIRABLE THAT IN SUCH A MATTER THERE SHOULD BE UNI FORMITY OF THE JUDICIAL OPINION. EVEN ON MERITS, THE ANALOGY HAS S OME SUBSTANCE. WE, THEREFORE, IN THE LIGHT OF AFORESTAT ED, DECIDE THIS ISSUE IN THE FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15. SO, FOLLOWING THE DECISION RENDERED BY THE HON BLE HIGH COURT IN ASSESSEES OWN CASE (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT ASSESSEE COMPANY IS AN INDUSTRIAL UNDERTA KING ENGAGED IN THE BUSINESS OF MANUFACTURING OR PRODUCTION OF AN A RTICLE OR THING FOR THE PURPOSE OF SECTION 32A AND SECTION 80IB OF THE ACT. SO, AO AS WELL AS CIT (A) HAVE ERRED IN AYS 2004-05, 20 07-08 & 2008-09 IN DENYING THE DEDUCTION CLAIMED BY THE ASS ESSEE COMPANY U/S 80IB OF THE ACT ON THE GROUND THAT THE ASSESSEE COMPANY IS NOT A MANUFACTURING CONCERN. LD. CIT (A ) IN AYS 2005-06 & 2006-07 HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 20 ASSESSEE COMPANY. CONSEQUENTLY, GROUNDS NO.1 TO 8 OF ITA NO.1712/DEL./2010 (AY : 2004-05) & GROUNDS NO.1 & 2 OF ITA NO.4144/DEL./2014 (AY : 2007-08) OF ASSESSEES APPE AL ARE DETERMINED IN FAVOUR OF THE ASSESSEE AND GROUND NO .2 OF ITA NO.323/DEL/2012 (AY : 2005-06), GROUND NO.1 OF ITA NO.5855/DEL/2011 (AY : 2006-07) & GROUNDS NO.1 & 2 OF ITA NO.2241/DEL/2014 (AY : 2008-09) OF REVENUES APPEA L ARE DETERMINED AGAINST THE REVENUE. GROUNDS NO.9 & 10 OF ITA NO.1712/DEL/2010 AY : 2004-05 (ASSESSEES APPEAL) GROUND NO.3 OF ITA NO.323/DEL/2012 AY : 2005-06 (REVENUES APPEAL) GROUND NO.2 OF ITA NO.5855/DEL/2011 AY : 2006-07 (REVENUES APPEAL) 16. SO FAR AS ALLOWING THE DEPRECIATION @ 25% AS AG AINST 80% CLAIMED BY THE ASSESSEE IN RESPECT OF PLANT & MACHI NERY OWNED AND USED BELOW THE GROUND IN FIELD OPERATION IN MINERAL OIL CONCERN IS CONCERNED, THIS ISSUE HAS ALSO BEEN DECIDED IN FAVO UR OF THE ASSESSEE COMPANY BY THE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE (SUPRA) BY FRAMING THE SUBSTANTIVE QUESTION OF LAW AS UNDER:- ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 21 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE PRESENT CASE, THE ASSESSEE IS ENTITLED TO A HIGHER DEPRECIATION ALLOWANCE @ 100% UNDER RULE 5, APPENDIX I, PART 1, III (IX) OF THE INCOME TAX RULES, 1962? 17. HONBLE DELHI HIGH COURT DECIDED THE AFORESAID QUESTION OF LAW IN FAVOUR OF THE ASSESSEE COMPANY BY HOLDING TH AT ASSESSEES WIRELINE LOGGING AND PERFORATION EQUIPMENTS ARE ELI GIBLE FOR DEPRECATION @ 100% UNDER CLAUSE (II) OF SECTION 32( 1) OF THE ACT R/W ITEM III(3)(IX)(B) OF THE SCHEDULE OF RATES OF DEPRECIATION IN APPENDIX I TO THE INCOME-TAX RULES, 1962 BY RETURNI NG FOLLOWING FINDINGS :- 46. AFTER HEARING LEARNED COUNSELS FOR THE PARTIE S AT LENGTH ON THIS ISSUE, WE ARE OF THE OPINION THAT THE REVENUE' S STAND ON THIS ISSUE LACKS SUBSTANCE. SEC. 32(1) OF THE ACT PROVID ES FOR A DEDUCTION IN THE COMPUTATION OF BUSINESS INCOME, ON ACCOUNT OF DEPRECIATION OF BUILDINGS, MACHINERY, PLANT OR FURN ITURE OWNED BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BU SINESS OR PROFESSION. THIS PROVISION READS AS UNDER: DEPRECIATION. 32. (1)[IN RESPECT OF DEPRECIATION OF-- (I) BUILDINGS, MACHINERY , PLANT OR FURNITURE, BEI NG TANGIBLE ASSETS; (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OWNED , WHOLLY OR PARTLY, BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED--] [(I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTAGE ON THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 22 ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED ;] (II) [IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PER CENTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED:] 47. RULE 5 OF THE IT RULES, 1962 PROVIDES THAT THE DEPRECIATION ALLOWABLE UNDER S. 32(1)(II) OF THE AC T IN RESPECT OF ANY BLOCK OF ASSETS SHALL BE CALCULATED AT THE PERC ENTAGES SPECIFIED IN THE II COLUMN OF THE TABLE OF RATES OF DEPRECIATION IN APPENDIX I TO THE RULES, ON THE WRITTEN DOWN VALUE OF SUCH BLOCK OF ASSETS AS ARE USED FOR THE PURPOSE OF THE BUSINE SS OR PROFESSION OF THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEA R. THE CONCERNED ENTRY IN THE APPENDIX I IS PART 1, III (I X). THIS ENTRY READS AS UNDER: '(IX) MINERAL OIL CONCERNS: A. PLANT USED IN FIELD OPERATIONS (ABOVE GROUND) DISTRIBUTION RETURNABLE PACKAGES. B. PLANT USED IN FIELD OPERATIONS (BELOW GROUND), BUT NOT INCLUDING KERBSIDE PUMPS INCLUDING UNDER-GROUND TANKS AND FITTINGS USED IN FIELD OPERATIONS (DISTRIBUTION) BY MINERAL OIL CONCERNS.' COLUMN 2 CORRESPONDING TO THE ABOVE ENTRY PROVIDES DEPRECIATION @ 100% FOR THE ITEMS DESCRIBED IN THE SAID ENTRY. 48. THE TABLE OF RATES OF DEPRECIATION IN APPENDIX I TO THE RULES PRESCRIBES A SINGLE RATE OF DEPRECIATION FOR THE ASSETS FALLING WITHIN A PARTICULAR BLOCK OF ASSETS. IT DOE S NOT PRESCRIBE DIFFERENTIAL RATES OF DEPRECIATION WITH REFERENCE T O THE OWNERSHIP OF THE ASSET IT WOULD BE PERTINENT TO NOTE HERE THA T THE SPECIAL RATE OF DEPRECIATION FOR THE MAIN ITEM 'III- MACHINERY A ND PLANT' HAVE BEEN PRESCRIBED WITH REFERENCE TO THE NATURE O F THE PARTICULAR ASSET AND THE CHARACTER OF ITS USER INCL UDING THE TYPES OF BUSINESS AND THE ENVIRONMENTAL CONDITIONS IN WHI CH IT IS USED. WHEN THE OIL HAS CERTIFIED IN THIS REGARD, THAT THE WIRELINE LOGGING & PERFORATION EQUIPMENTS/TOOLS WHICH ARE US ED BY THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 23 ASSESSEE ARE SIMILAR TO THOSE EQUIPMENTS/ TOOLS OWN ED AND USED BY MINERAL OIL CONCERNS AND WHEN THERE IS NO SHADOW IS CASTED OVER THE FACT THAT THE SIMILAR ASSETS WOULD QUALIFY FOR A DEPRECIATION @ 100% UNDER THE SAID ENTRY IF THESE A RE OWNED BY A MINERAL OIL CONCERN LIKE OIL, WE DO NOT FIND ANY SU BSTANCE IN THE DEPARTMENT'S APPROACH TO DENY THE SAME TO THE ASSES SEE ON THE GROUND THAT THE OWNER OF THE SIMILAR ASSETS, WE ARE CONCERNED WITH, WILL NOT BE SO ENTITLED. MENTIONING OF THE FA CT, IN THE LETTER OF OIL DATED 13 NOV 1998 THAT THESE EQUIPMENTS/TOOL S ARE MEANT ONLY FOR USE IN UNDERGROUND OIL FIELD OPERATIONS FO R WIRELINE LOGGING & PERFORATION LEAVES NO IOTA OF DOUBT THAT THE NATURE OF ASSESSEE EQUIPMENTS AND ITS USER IS SIMILAR TO THO SE EQUIPMENTS WHICH ARE OWNED BY THE MINERAL OIL CONCERNS AND ELI GIBLE FOR DEPRECIATION UNDER THE AFORESAID ENTRY. THE ARTIFIC IAL DISTINCTION REGARDING THE MOBILE NATURE OF THE ASSESSEE EQUIPM ENTS, WHICH HAS BEEN CREATED AND RELIED UPON BY THE DEPARTMENT, IS OF NO USE BECAUSE EVEN IF SUCH A DISTINCTION EXISTS IT WOULD NEITHER ALTER THE NATURE OF THE ASSESSEE EQUIPMENTS NOR THE CHARACTE R OF ITS USER. WE, THEREFORE, ARE OF THE CONSIDERED OPINION THAT T HE ASSESSEES WIRELINE LOGGING AND PERFORATION EQUIPMENTS ARE ELI GIBLE FOR A HIGHER DEPRECIATION @ 100% UNDER CL. (II) OF S. 32( 1) OF THE ACT, R/W ITEM III(3)(IX)(B) OF THE SCHEDULE OF RATES OF DEPRECIATION IN APPENDIX I TO THE INCOME TAX RULES, 1962. 18. SO, FOLLOWING THE DECISION RENDERED BY THE HON BLE DELHI HIGH COURT IN ASSESSEES OWN CASE (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT AO/CIT(A) HAVE ERRED IN DISALL OWING THE CLAIM BY THE ASSESSEE COMPANY IN RESPECT OF PLANT A ND MACHINERY USED BELOW THE GROUND OF FIELD OPERATION IN MINERAL OIL CONCERN. SO, AO IS DIRECTED TO ALLOW THE DEDUCTIONS TO THE A SSESSEE AS HAS BEEN HELD BY THE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE (SUPRA). ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 24 GROUND NO.11 OF ITA NO.1712/DEL/2010 AY : 2004-05 (ASSESSEES APPEAL) GROUND NO.1 OF ITA NO.323/DEL/2012 AY : 2005-06 (REVENUES APPEAL) 19. AO BY INVOKING THE PROVISIONS CONTAINED U/S 14A OF THE ACT MADE DISALLOWANCE OF RS.7,56,940/- I.E. @ 15% OF TH E EXEMPTED INCOME OF RS.50,46,269/- EARNED BY THE ASSESSEE COM PANY DURING THE YEAR UNDER ASSESSMENT BEING THE REASONABLE EXPE NDITURE INCURRED TO EARN DIVIDEND INCOME BY THE ASSESSEE CO MPANY. LD. CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE AO. 20. UNDISPUTEDLY, IN THE YEAR UNDER ASSESSMENT I.E. 2004-05, RULE 8D WAS NOT APPLICABLE AND THE DISALLOWANCES, I F ANY, TO BE MADE BEING THE EXPENDITURE INCURRED TO EARN THE DIV IDEND INCOME WAS TO BE MADE ON THE BASIS OF REASONABLENESS. AO AS WELL AS CIT(A) HAVE MADE DISALLOWANCE BY APPLYING THE AD HO C PERCENTAGE OF 15% OF THE GROSS DIVIDEND U/S 14A OF THE ACT. 21. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNE D DISALLOWANCE CONTENDED THAT AS ON 31.03.2004 AND 31 .03.2003 YEAR UNDER ASSESSMENT, ASSESSEE COMPANY WAS HAVING SHARE CAPITAL AND RESERVES & SURPLUS OF RS.4,13,322/- & RS.4,37,229/- AND INVESTMENT WAS RS.1,88,224/- AND RS.69,300/- RESPEC TIVELY. SO, THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 25 ASSESSEE HAS EARNED THE DIVIDEND INCOME ON THE INVE STMENT MADE OUT OF SURPLUS FUNDS IN MUTUAL FUNDS. IT IS FURTHE R CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT NO EFFORT AND TIME WAS UTILIZED IN RECEIVING THE DIVIDEND INCOME FROM MUTUAL FUNDS WHI CH ARE GOVERNED BY SEBI GUIDELINES NOR THE ASSESSEE IS HAV ING ANY SEPARATE DEPARTMENT OR PERSONS EXCLUSIVELY ENGAGED IN LOOKING AFTER INVESTMENT ACTIVITIES AND THERE IS NO PROXIMA TE NEXUS BETWEEN THE EARNING OF THE SAID EXEMPT INCOME. IT IS ALSO THE CASE OF THE ASSESSEE COMPANY THAT DURING THE YEAR UNDER ASSESSM ENT, NET INCOME OF RS.0.50 CRORES WAS CREDITED BY THE ASSESS EE TO THE PROFIT & LOSS ACCOUNT AFTER DEDUCTION OF MUTUAL FUND CHARG ES. SUCH EXPENDITURE IS BEING DIRECTLY RELATED TO EXEMPT DIV IDEND INCOME HAS ALREADY BEEN DISALLOWED BY THE ASSESSEE. 22. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN THE ASSESSEE HAS STATED TO HAVE ALREADY DIS ALLOWED EXPENDITURE DIRECTLY RELATED TO EARNING EXEMPT DIVI DEND INCOME. WE ARE OF THE CONSIDERED VIEW THAT WHEN INVESTMENT IS MADE BY THE ASSESSEE COMPANY TIME AND MANPOWER NEED TO BE UTILI ZED TO STEER THE INVESTMENT IN RIGHT PLACES SO WE REASONABLY RES TRICT THE DISALLOWANCE MADE BY THE AO AND CIT (A) FROM 15% TO 5% OF THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 26 GROSS EXEMPT DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT. SO GROUND NO.11 OF ITA NO.1712/DEL/2010 (AY : 2004-05) OF ASSESSEES APPEA L IS PARTLY ALLOWED IN FAVOUR OF THE ASSESSEE. 23. LIKEWISE IN AY 2005-06, AO MADE DISALLOWANCE OF RS.1,56,276/- BEING 15% OF THE DIVIDEND INCOME OF R S.10,41,843/- WHICH THE LD. CIT (A) HAS RESTRICTED TO RS.89,141/- @ 6.5% OF THE TOTAL DIVIDEND INCOME EARNED. SINCE THE FACTS OF THE AY 2005-06 ARE IDENTICAL, WE RESTRICT THE DISALLOWANCE MADE BY THE LD. CIT (A) TO 5% OF THE TOTAL DIVIDEND INCOME EARNED WHICH IS REASONABLE DISALLOWANCE AS HAS BEEN HELD BY THE BENCH FOR AY 2 004-05. CONSEQUENTLY, GROUND NO.1 OF ITA NO.323/DEL/2012 (A Y : 2005- 06) OF REVENUES APPEAL IS PARTLY ALLOWED IN FAVOUR OF THE REVENUE. GROUND NO.4 OF ITA NO.323/DEL/2012 AY : 2005-06 (REVENUES APPEAL) GROUND NO.3 OF ITA NO.2241/DEL/2014 AY : 2008-09 (REVENUES APPEAL) 24. ASSESSEE COMPANY HAS SHOWN AN AMOUNT OF RS.51,4 3,856/- AS SERVICE TAX PAYABLE IN ANNEXURE VIII OF THE TAX AUDIT REPORT FILED BEFORE THE AO BY CLAIMING THAT THIS AMOUNT HA S NOT BEEN ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 27 PASSED THROUGH PROFIT & LOSS ACCOUNT. HOWEVER, AO HELD THE SERVICE-TAX PAYABLE AS A TRADING RECEIPT ON THE GRO UND THAT THE ASSESSEE HAS RAISED SALES BILLS AND CHARGED SERVICE -TAX ON THE SAME AND SERVICE-TAX IS IN THE NATURE OF REVENUE RECEIPT . 25. LD. CIT (A), BY FOLLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOBLE AND HEWITT (I) P. LTD. (2008) 305 ITR 324 (DELHI) , DELETED THE DISALLOWANCE ON ACCOUNT OF SERVICE-TAX REMAINING UNPAID. 26. WE ARE OF THE CONSIDERED VIEW THAT WHEN UNDISPU TEDLY AFORESAID AMOUNT OF RS.51,43,856/- AS SERVICE-TAX P AYABLE HAS NOT BEEN PASSED THROUGH P&L ACCOUNT DULY REPORTED IN TA X AUDIT REPORT NOR THE ASSESSEE HAS CLAIMED DEDUCTION OF SERVICE-T AX PAYABLE TO THE GOVERNMENT, THERE IS NO QUESTION OF DISALLOWANC E OF THE DEDUCTIONS NOT CLAIMED BY THE ASSESSEE. 27. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. NOBLE AND HEWITT (I) P. LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE BY DETERMINING THE FOLLOWING FINDINGS :- HELD, DISMISSING THE APPEAL, THAT SINCE THE ASSESS EE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXP ENDITURE NOR CLAIM ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CO NSIDERING THAT THE ASSESSEE WAS FOLLOWING THAT MERCANTILE SYS TEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDUCTI ON NOT CLAIMED WOULD NOT ARISE. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 28 28. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSID ERED VIEW THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION OF RS. 51,43,856/- MADE BY THE AO TREATING THE SERVICE-TAX RECEIPT AS TRADI NG RECEIPT, HENCE, GROUND NO.4 OF ITA NO.323/DEL/2012 (AY : 2005-06) OF REVENUES APPEAL IS HEREBY DELETED. ADDITIONAL GROUNDS ITA NO.1712/DEL/2010 - AY : 2004-05 (ASSESSEES APPEAL) ITA NO.4144/DEL/2014 - AY : 2007-08 (ASSESSEES APPEAL) 29. ASSESSEE COMPANY BY FILING SEPARATE APPLICATION S SOUGHT TO RAISE IDENTICAL ADDITIONAL GROUNDS UNDER RULE 11 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963 WHICH ARE AS UNDER :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) / ASSESSIN G OFFICER OUGHT TO HAVE ALLOWED DEDUCTION UNDER SECTION 80-IB OF TH E ACT @ 100% OF THE PROFIT OF THE UNDERTAKING AT DULIAJAN BEING A M INERAL BASED INDUSTRY, IN TERMS OF NOTIFICATION NO.SO 627 (E) DA TED 04.08.1999, READ WITH THE SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80-IB OF THE INCOME-TAX ACT, 1961 (THE ACT) AS AGAINST DEDUCTI ON @ 30% CLAIMED BY THE APPELLANT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS)/ ASSESSING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION UNDER SECTION 80-IB OF TH E ACT @ 100% OF PROFIT OF THE UNIT AT DULIAJAN AMOUNTING TO RS.1,67 ,46,153 AS AGAINST RS.31,89,691 FOR AY 2004-05 DETERMINED BY THE APPEL LANT AND ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 29 AMOUNT OF RS.6,20,85,869/- AS AGAINST NO DEDUCTION CLAIMED BY THE ASSESSEE IN RETURN OF INCOME IN AY 2007-08. ON THE GROUNDS INTER ALIA THAT AT THE TIME OF FILIN G THE RETURN OF INCOME ASSESSEE COMPANY BEING NOT AWARE OF THE CORR ECT LEGAL POSITION AND AS SUCH INADVERTENTLY CLAIMED DEDUCTIO N U/S 80IB OF THE ACT @ 30% OF THE PROFIT OF AFORESAID UNIT AT DU LIAJAN INSTEAD OF 100% OF THE PROFIT UNDER SECOND PROVISION TO SUB-SE CTION (5) OF SECTION 80IB FOR AY 2004-05 AND CLAIMED NO DEDUCTIO N QUA DULIAJAN UNIT IN AY 2007-08 ADMISSIBLE @ 100% OF TH E PROFIT; THAT ADDITIONAL GROUNDS SO RAISED BY THE ASSESSEE COMPAN Y ARE LEGAL GROUND AND NON-RAISING OF SUCH GROUNDS WERE NEITHER WILLFUL NOR DELIBERATE AND RELIED UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC) . 30. LD. CIT DR FOR THE REVENUE BY FILING THE WRITTE N SUBMISSIONS RUNNING INTO 15 PAGES WHICH HAVE BEEN M ADE PART OF THE JUDICIAL FILE OPPOSED RAISING OF ADDITIONAL GRO UNDS BY THE ASSESSEE; THAT ONCE A GROUND HAS NOT BEEN RAISED BE FORE THE LOWER AUTHORITIES, THERE IS NO QUESTION TO RAISE THE SAME AT THE SECOND APPELLATE STAGE WHICH IS BEYOND THE SCOPE OF PROVIS IONS CONTAINED ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 30 U/S 256(1) OF THE ACT; THAT THE ORDER WHICH IS SOUG HT TO BROUGHT UNDER THIS APPEAL BY RAISING ADDITIONAL GROUND IS N OT PART OF THE IMPUGNED ORDER; THAT THE NEW CLAIM NOW SOUGHT TO BE MADE BY WAY OF ADDITIONAL GROUND WAS NEVER PART OF THE RETURN O F INCOME NOR ANY SUCH GROUND WAS RAISED BEFORE THE AO/CIT(A); THAT N EW CLAIM OF 80IB IS NOT A PURE QUESTION OF LAW AS IT REQUIRES E LABORATE ENQUIRY BY THE AO AND THAT WHEN PRIMA FACIE IT IS NOT A MIN ERAL BASED INDUSTRY NO DEDUCTION IS ADMISSIBLE AND PRAYED FOR REJECTION OF THE APPLICATION. 31. BARE PERUSAL OF THE ADDITIONAL GROUNDS RAISED B Y THE ASSESSEE COMPANY IN AYS 2004-05 & 2007-08 GOES TO PROVE THAT THE ISSUE IS SOUGHT TO BE RAISED BY WAY OF ADDITIONAL GROUNDS IS QUA ADMISSIBILITY OF DEDUCTION U/S 80IB @ 100% OF THE P ROFIT OF UNDERTAKING BY DULIAJAN UNIT BEING A MINERAL BASED INDUSTRY IN TERMS OF NOTIFICATION NO.SO 627 (E) DATED 04.08.199 9 READ WITH SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80IB O F THE ACT. IN AY 2004-05, ASSESSEE CLAIMED DEDUCTION @ 30% WHEREA S IT WAS REQUIRED TO BE CLAIMED @ 100%. SIMILARLY, IN AY 20 07-08, ASSESSEE COMPANY FAILED TO CLAIM THE DEDUCTION. IT IS THE SETTLED PRINCIPLE OF LAW LAID DOWN BY HONBLE SUPREME COURT IN CASE OF ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 31 NATIONAL THERMAL POWER CO. LTD. (SUPRA) THAT IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE, THE TRIBUN AL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN ASSESSMENT PROCEEDINGS EVEN BY ENTERTAINI NG ADDITIONAL GROUND RAISED FIRST TIME BEFORE THE TRIBUNAL. OPER ATIVE PART OF THE LAW LAID DOWN BY HONBLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) IS AS UNDER :- UNDER SECTION 254 OF THE INCOME-TAX ACT, THE APPEL LATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREO N AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH APPE ALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCOR DANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON- TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITE M. THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). BOTH THE ASSE SSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CR OSS-OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PRE VENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRI BUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL B EFORE THE COMMISSIONER (APPEALS) IS TOO NARROW A VIEW TO TAKE OF THE POWERS OF THE TRIBUNAL. UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO AL LOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW AR ISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 32 WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN O RDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 32. SO, FOLLOWING THE LAW LAID DOWN BY HONBLE SUPR EME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE BY RAISING ADDITI ONAL GROUNDS HAS RAISED A PURE QUESTION OF LAW THOUGH BASED ON THE F ACTS REQUIRES TO BE VERIFIED BY THE ASSESSING AUTHORITY AS TO THE DE DUCTIONS CLAIMED BY THE ASSESSEE COMPANY U/S 80IB (4) OF THE ACT @ 1 00% IN THE LIGHT OF THE NOTIFICATION NO.SO 627 (E) (SUPRA). I N AY 2004-05, THIS QUESTION WAS THERE BEFORE THE AO WHEREIN THE A SSESSEE COMPANY HAS CLAIMED 30% DEDUCTION AS AGAINST ADMISS IBLE DEDUCTION OF 100%. HOWEVER, IN AY 2007-08, THIS DE DUCTION WAS NOT CLAIMED. 33. BUT SINCE IT IS A PURE QUESTION OF LAW GOING TO THE ROOTS OF THE CASE NECESSARY TO BE ADJUDICATED FOR CORRECT TAX LI ABILITY OF THE ASSESSEE, THE ADDITIONAL GROUNDS RAISED BY THE ASSE SSEE COMPANY IN AY 2004-05 & 2007-08 ARE ALLOWED. ARGUMENTS RAISED BY THE LD. CIT DR AND CASE LAWS RELIED UPON IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 33 34. NOW, WE WOULD PROCEED TO ADJUDICATE THE ADDITIO NAL GROUNDS RAISED BY THE ASSESSEE COMPANY IN AYS 2004-05 AND 2 007-08. 35. UNDISPUTEDLY, IN AY 2004-05, ASSESSEE COMPANY H AS CLAIMED DEDUCTION U/S 80IB (4) IN RESPECT OF UNIT A T DULIAJAN @ 30% OF THE PROFIT OF THE SAID ELIGIBLE UNIT. IT IS ALSO NOT IN DISPUTE THAT IN AY 2007-08, ASSESSEE COMPANY HAS NOT CLAIME D ANY SUCH DEDUCTION U/S 80IB (4) OF THE ACT QUA ITS DULIAJAN UNIT. KEEPING IN VIEW THE FINDINGS RETURNED BY THE BENCH IN PRECEDIN G PARAS THAT THE ASSESSEE COMPANY HAS BEEN HELD TO BE MINERAL BASED INDUSTRY BEING INTO THE BUSINESS OF WIRELINE LOGGING OPERATION FOR ONGC AND OIL INDIA CORPORATION IN THE MINERAL OIL OPERATIONAL AR EAS AT ANKLESHWAR, NAJIRA, DULIAJAN AND AGARTALA. 36. ASSESSEE COMPANY BY RELYING UPON THE NOTIFICATI ON NO.SO 627 (E) DATED 04.08.1999 READ WITH SECOND PROVISO T O SUB-SECTION (4) OF SECTION 80IB CONTENDED THAT IT IS ELIGIBLE F OR DEDUCTION @ 100% OF PROFIT. BARE PERUSAL OF THE NOTIFICATION ( SUPRA) GOES TO PROVE THAT INDUSTRIES RUNNING IN THE NORTH EASTERN REGION INCLUDING MINERAL BASED INDUSTRY ARE ELIGIBLE FOR DEDUCTION @ 100% OF PROFITS U/S 80IB(4). ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 34 37. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVE NUE CONTENDED THAT THE ASSESSEE HAS BROUGHT ON RECORD P LETHORA OF EVIDENCE INCLUDING LIST OF NEW PLANT AND MACHINERY VIZ. WIRELINE LOGGING UNITS FOR BOTH THE YEARS 2004-05 AND 2007-0 8 WHICH FACTS ARE REQUIRED TO BE VERIFIED BY THE ASSESSING AUTHOR ITIES. THE CONTENTION OF THE LD. DR IS SUSTAINABLE. 38. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE IS REQUIRED TO BE SENT BACK TO THE AO TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN TH E LIGHT OF THE NOTIFICATION (SUPRA) ON THE BASIS OF FINDING OF FAC T IF MACHINERY STATED TO HAVE BEEN APPLIED BY THE ASSESSEE COMPANY AT ITS DULIAJAN UNIT WAS NEW MACHINERY AND HAS ACTUALLY BEEN PUT TO USE SO AS TO MAKE IT ELIGIBLE FOR DEDUCTIONS CLAIMED. CONSEQUEN TLY, ADDITIONAL GROUNDS RAISED BY THE ASSESSEE IN AYS 2004-05 AND 2 007-08 ARE ALLOWED FOR STATISTICAL PURPOSES. GROUNDS NO.1, 1.1, 1.2, 1.3 & 2 OF ITA NO.2208/DEL/2014 AY : 2008-09 (ASSESSEES APPEAL) 37. ASSESSEE COMPANY BY FILING APPEAL BEARING ITA NO.2208/DEL/2014 FOR AY 2008-09 CHALLENGED THE IMPU GNED ORDER ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 35 PASSED BY THE LD. CIT (A) RESTRICTING ITS CLAIM FOR DEDUCTION U/S 80IB QUA AGARTALA UNIT BEING SITUATED IN THE NORTHE RN EASTERN REGION TO 30% AS AGAINST DEDUCTION OF 100% UNDER SE COND PROVISO TO SUB-SECTION (4) OF SECTION 80IB OF THE ACT READ WITH NOTIFICATION NO.SO 627 (E) DATED 04.08.1999. 39. LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO P ARAS 12 AND 12.5 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A ) SHOWING THAT THIS ISSUE OF CLAIMING 100% DEDUCTION UNDER SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80IB READ WITH NOTIFICAT ION NO. 627 (E) (SUPRA) BY WAY OF RAISING ADDITIONAL GROUND AND BY SEEKING TO LEAD ADDITIONAL EVIDENCE. 40. HOWEVER, LD. CIT (A) DISMISSED THE APPLICATION FOR RAISING ADDITIONAL GROUND AS WELL AS FOR LEADING ADDITIONAL EVIDENCE ON THE GROUNDS INTER ALIA THAT AO HAS NOT GIVEN HIS REPORT ON ADMISSIBILITY OF THE ADDITIONAL EVIDENCE DESPITE SEVERAL REMINDER S; THAT THE ADDITIONAL EVIDENCE GIVEN BY THE ASSESSEE IN THE SH APE OF CERTIFICATE IN THE FORM NO.10CCB ISSUED BY CHARTERED ACCOUNTANT AS WELL AS LONG LIST OF PURCHASES MADE BY IT IN MARCH 2004, AU GUST 2004 AND FEBRUARY 2005 FOR SETTING UP A NEW UNIT AT DULIAJAN WHICH CANNOT BE VERIFIED AT THIS STAGE AND THAT NO REASON FOR NO T PRODUCING THESE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 36 DETAILS IN THE PROCEEDING OF RESPECTIVE YEARS HAS B EEN GIVEN BY THE ASSESSEE. 41. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT THI S ISSUE BEING IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE COMPA NY IN AYS 2004-05 AND 2007-08 BY WAY OF ADDITIONAL GROUNDS HA VING BEEN DECIDED BY THE BENCH IN FAVOUR OF THE ASSESSEE AS P ER FINDINGS GIVEN IN PRECEDING PARAS, SO FOR THE SAME REASONING ADDITIONAL GROUNDS AS WELL AS ADDITIONAL EVIDENCE SOUGHT TO BE RAISED/LED BY ASSESSEE BEFORE THE LD. CIT (A) IS ALLOWED. SINCE THIS IDENTICAL ISSUE IN AYS 2004-05 AND 2007-08 HAS BEEN REMITTED BACK TO THE AO TO DECIDE AFRESH AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY EXAMINING THE EVIDENCE LED BY THE A SSESSEE IN THE LIGHT OF THE SECOND PROVISO TO SUB-SECTION (4) TO S ECTION 80IB READ WITH NOTIFICATION NO.627 (E) (SUPRA), GROUNDS NO.1, 1.1, 1.2, 1.3 & 2 OF ITA NO.2208/DEL/2014 FOR AY 2008-09 OF ASSESSE ES APPEAL ARE ALSO DETERMINED IN FAVOUR OF THE ASSESSEE FOR S TATISTICAL PURPOSES TO BE DECIDED BY THE AO AS PER FINDINGS RE TURNED BY THE BENCH IN PRECEDING PARA 36 FOR A.Y. 2004-05 & 2007- 08. ADDITIONAL GROUND ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 37 ITA NO.5855/DEL/2011 - AY 2006-07 (REVENUES APPEAL) 42. ADDITIONAL GROUNDS HAVE BEEN RAISED BY THE ASSE SSEE IN THE APPEAL BEARING ITA NO.5855/DEL/2011 FOR AY 2006-07 FILED BY THE REVENUE ARE AS UNDER :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) / ASS ESSING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION UNDER SECON D PROVISO TO SECTION 80-IB(4) OF THE ACT TO THE ASSESSEE @ L 00% OF THE PROFIT OF THE UNDERTAKING SET UP AT DULIAJAN, BEING A MINE RAL BASED INDUSTRY, IN TERMS OF NOTIFICATION NO. SO 627 (E) D ATED 04-08- 1999, READ WITH THE SECOND PROVISO TO SUB-SECTION ( 4) OF SECTION 80-LB OF THE INCOME-TAX ACT. 1961 ('THE ACT). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) / ASS ESSING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION UNDER SECTI ON 80-JB OF THE ACT @ 100% OF PROFIT OF THE UNIT AT DULIAJAN AM OUNTING TO RS.5,59,59,323 AS AGAINST NO DEDUCTION CLAIMED BY T HE APPELLANT IN THE RETURN OF INCOME. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) / ASS ESSING OFFICER OUGHT TO HAVE ALLOWED CREDIT FOR TAX WITHHE LD BY THE CUSTOMER IN BANGLADESH AMOUNTING TO RS.40,96,030, I N RESPECT OF INCOME EARNED FROM SUCH CUSTOMER IN BANGLADESH, WHI CH HAS ALREADY BEEN OFFERED TO TAX IN INDIA IN THE RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR. ON THE GROUNDS INTER ALIA THAT AT THE TIME OF FILIN G OF RETURN OF INCOME, ASSESSEE COMPANY DID NOT CLAIM DEDUCTION U/ S 80IB OF THE ACT ERRONEOUSLY AS THE ASSESSEE WAS NOT AWARE OF TH E CORRECT LEGAL POSITION; THAT BY VIRTUE OF THE SECOND PROVISO TO S ECTION 80IB (4), ASSESSEE COMPANY IS ENTITLED FOR DEDUCTION @ 100% O F THE PROFIT OF ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 38 ITS UNIT AT DULIAJAN; THAT OMISSION TO RAISE THE AF ORESAID GROUNDS WAS NEITHER WILLFUL NOR DELIBERATE; THAT ASSESSEE C OMPANY HAS ENTERED INTO A CONTRACT WITH BANGLADESH GAS FIELDS COMPANY LTD. (BGFCL) TO CARRY OUT WIRELINE LOGGING AND PERFORATI ON RELATED OPERATIONS IN BANGLADESH AND HAS ACCOUNTED FOR REVE NUE OF RS.4,37,30,170/- IN RESPECT OF THIS CONTRACT; THAT AS PER TERMS OF CONTRACT BETWEEN ASSESSEE COMPANY AND BGFCL, BGFCL WAS LIABLE TO MAKE PAYMENT TO THE ASSESSEE COMPANY ON N ET OF TAX BASIS AND TDS LIABILITY IN RESPECT OF PAYMENT TO ASSESSEE WAS TO BE GROSSED UP; THAT AT THE TIME OF FILING THE RETURN O F INCOME, IN ABSENCE OF TDS CERTIFICATE FROM BGFCL, THE ASSESSEE COMPANY DID NOT GET THE TAX DEDUCTED AND DEPOSITED WITH BANGLAD ESH GOVERNMENT TREASURY BY BGFCL AND ALSO NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT ON THE BASIS OF PRINCIPLE OF PRUDE NCE AS PER RELEVANT ACCOUNTING IN INDIA; THAT NOW IN VIEW OF T DS CERTIFICATE RECEIVED FROM BGFCL, ASSESSEE COMPANY IS ENTITLED F OR THE CLAIM AND SUCH TDS WITHHELD BY BGFCL IN RESPECT OF THE IN COME EARNED FROM BANGLADESH; THAT IN TERMS OF THE ARTICLE 25 OF INDO- BANGLADESH DOUBLE TAXATION AVOIDANCE AGREEMENT REA D WITH SECTION 90 (2) TAX PAID BY INDIAN RESIDENT IN BANGL ADESH IN RESPECT ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 39 OF INCOME EARNED THEREFROM, WHICH IS ALSO TAXPAYER IN INDIA IS ALLOWABLE AS AGREED AGAINST TAX LIABILITY IN INDIA. 43. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVE NUE OPPOSED THE PRESENT APPLICATION FILED BY THE ASSESSEE COMPA NY FOR RAISING ADDITIONAL GROUNDS ON THE GROUNDS INTER ALIA THAT T HIS APPLICATION IS NOT MAINTAINABLE AS THE ASSESSEE BEING NOT AGGRIEVE D WITH THE ORDER PASSED BY THE LD. CIT (A) IN ANY MANNER AS NEITHER IT FILED ANY APPEAL NOR ANY CROSS OBJECTION; THAT APPLICATION UN DER RULE 11 OF INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963 IS ONLY MAINTAINABLE IF FILED IN APPEAL OR CROSS OBJECTIONS BY THE ASSES SEE; THAT THIS IS A NEW ISSUE WHICH WAS NEITHER RAISED BEFORE AO NOR BE FORE THE LD. CIT (A) AND AS SUCH CANNOT BE ENTERTAINED AT THIS S TAGE; THAT THIS NEW CLAIM U/S 80IB IS ALSO NOT A PURE QUESTION OF L AW AS IT REQUIRES ELABORATE ENQUIRY TO VERIFY THE CLAIM MADE BY THE A SSESSEE; THAT WHEN THE ASSESSEE HAS CLAIMED TO BE A MINERAL BASED COMPANY IN TERMS OF NOTIFICATION NO.SO 627 (E) (SUPRA), THE AO WOULD REQUIRE TO CONDUCT COMPLETE ENQUIRY IF THE ASSESSEE COMPANY IS INTO MINERAL BASED INDUSTRY. LD. DR FILED WRITTEN SUBMI SSIONS RUNNING INTO 12 PAGES WHICH HAVE BEEN MADE PART OF THE JUDI CIAL RECORD. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 40 44. LD. AR FOR THE ASSESSEE TO SUPPORT THE MAINTAIN ABILITY OF ITS APPLICATION CONTENDED THAT SINCE THE GROUNDS RAISED BY WAY OF ADDITIONAL EVIDENCE ARE PURELY LEGAL GROUND EMANATE D FROM THE FACTS ALREADY ON RECORD, THE ASSESSEE COMPANY IS WI THIN ITS RIGHT TO CLAIM THE DEDUCTIONS U/S 80IB AND IT IS ALSO ENTITL ED TO CLAIM THE CREDIT OF TAX WITHHELD BY ITS CUSTOMER IN BANGLADES H AND RELIED UPON THE DECISION RENDERED BY HONBLE HIGH COURT OF GAUHATI CITED AS ASSAM CO. (INDIA) LTD. VS. CIT (2002) 256 ITR 423 ( GAUHATI) . 45. IDENTICAL ISSUE IN THE IDENTICAL SET OF FACTS A ND CIRCUMSTANCES OF THE CASE HAD COME UP BEFORE HONBLE HIGH COURT O F GAUHATI IN CASE OF ASSAM CO. (INDIA) LTD. (SUPRA), WHEREIN ASSESSEE HAD RAISED ADDITIONAL GROUND IN THE APPEAL FILED BY THE REVENUE WITHOUT FILING ANY APPEAL OR CROSS OBJECTION BEFORE THE TRI BUNAL AND THE TRIBUNAL HAD DECLINED TO ENTERTAIN ADDITIONAL GROUN DS RAISED BY THE ASSESSEE ON THE GROUND THAT SINCE THE ASSESSEE HAD NOT FILED ANY APPEAL OR CROSS OBJECTIONS THE SAME ARE NOT MAINTAI NABLE. 46. HOWEVER, HONBLE HIGH COURT, AFTER EXAMINING TH E PROVISIONS CONTAINED UNDER THE ACT AS WELL AS INCOM E-TAX (APPELLATE TRIBUNAL) RULES AND AFTER DISCUSSING THE DECISION RENDERED BY HONBLE APEX COURT CITED AS CIT VS. ASS AM FRONTIER ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 41 TEA LTD. (2002) 253 ITR 549 (SC), CIT VS. MAHALAKSH MI TEXTILE MILLS LTD. (1967) 66 ITR 710 (SC) AND NATIONAL THER MAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC), ON THE IS SUE OF POWER OF TRIBUNAL TO ENTERTAIN ADDITIONAL GROUNDS HELD TH AT, THE TRIBUNAL IS EMPOWERED TO ENTERTAIN A GROUND BEYOND THOSE INC ORPORATED IN MEMORANDUM OF APPEAL THOUGH THE PARTY URGING THE SA ID GROUND HAS NEITHER APPEALED BEFORE IT NOR HAS FILED A CROS S OBJECTION IN THE APPEAL FILED BY THE OTHER PARTY PROVIDED RELEVANT F ACTS ON WHICH SUCH GROUNDS ARE TO BE FOUNDED ARE AVAILABLE ON REC ORD, BY RETURNING FOLLOWING FINDINGS:- 30. AS ALREADY NOTICED BY US, THE FACTS AND THE SE QUENCE OF EVENTS NARRATED IN THE ORDERS OF THE COMMISSIONER O F INCOME-TAX (APPEALS) AND THE TRIBUNAL AND THOSE SET OUT IN THE STATEMENT OF THE CASE ARE NOT IN DISPUTE. THE CORE QUESTION IS W HETHER THE TRIBUNAL OUGHT TO HAVE- CONSIDERED THE PLEA OF THE APPLICANT- COMPANY THAT IT WAS ENTITLED TO THE BENEFIT OF WEIG HTED DEDUCTION UNDER SECTION 35B(1)(B)(IV) OF THE ACT IN THE ABSEN CE OF ANY APPEAL OR ANY CROSS-OBJECTION FILED BY IT AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). THE APPLICANT -COMPANY IN THE REASSESSMENT PROCEEDINGS HAD CLAIMED THE BEN EFIT OF WEIGHTED DEDUCTION IN RESPECT OF WAREHOUSE CHARGES ON THE BASIS OF SECTION 35B(1)(B)(IX) READ WITH RULE 6AA. THE PO INT REMAINS THAT THE HEAD OF EXPENDITURE ON ACCOUNT OF WHICH TH E WEIGHTED DEDUCTION IS CLAIMED BY THE APPLICANT-COMPANY IS 'W AREHOUSE CHARGES'. THE APEX COURT IN CIT V. ASSAM FRONTIER T EA LTD. [2002] 253 ITR 549, AS REFERRED TO ABOVE, HAD HELD THAT IN A CASE WHERE THE WAREHOUSE IN THE FOREIGN COUNTRY IS RUN B Y AN AGENT OF AN ASSESSEE BUT THE EXPENDITURE INCURRED THEREON IS REIMBURSED BY THE ASSESSEE TO THE SAID AGENT, IT AMOUNTED TO M AINTENANCE OF THE WAREHOUSE BY THE ASSESSEE FOR THE PROMOTION OF SALES OF ITS TEA OUTSIDE INDIA AND THAT THEREFORE THE ASSESSEE WAS E NTITLED TO THE BENEFIT OF THE ALLOWANCES UNDER SECTION 35B(1)(B)(I V) OF THE ACT. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 42 WE HAVE ALREADY OBSERVED THAT IN A GIVEN FACT SITUA TION AN ASSESSEE MAY BE ENTITLED TO THE BENEFIT OF WEIGHTED DEDUCTION UNDER MORE THAN ONE SUB-CLAUSE OF SECTION 35B(1)(B) OF THE ACT. IT WOULD, HOWEVER, DEPEND ON THE PRIMARY EVIDENTIAR Y FACTS AVAILABLE IN A GIVEN CASE. IT THEREFORE FOLLOWS THA T ONLY BECAUSE THE APPLICANT-COMPANY HAD OBJECTED TO THE WITHDRAWA L OF THE BENEFIT OF WEIGHTED DEDUCTION BY RELYING ON SUB-CLA USE (IX) OF SECTION 35B(1)(B) OF THE ACT IT COULD NOT BE DECISI VELY HELD, WITHOUT REFERENCE TO THE ENTIRE GAMUT OF FACTS ON R ECORD, THAT THE APPLICANT-COMPANY UNDER ALL CIRCUMSTANCES COULD BE PRECLUDED FROM RAISING A PLEA THAT IT WAS ENTITLED TO THE BEN EFIT OF SUCH DEDUCTION UNDER SECTION 35B(1)(B)(IV) OF THE ACT AS WELL. WHETHER OR NOT THE APPLICANT-COMPANY CAN BE PERMITT ED TO RAISE THAT PLEA ONLY ON THE GROUND THAT IT HAD NOT PREFER RED ANY APPEAL OR CROSS-OBJECTION AGAINST THE ORDER OF THE COMMISS IONER OF INCOME-TAX (APPEALS) IS THE QUESTION WHICH NOW ENGA GES THE ATTENTION OF THIS COURT. IT NEED NOT BE OVER-EMPHAS ISED THAT THE APPELLATE TRIBUNAL RULES FRAMED BY THE TRIBUNAL IN EXERCISE OF ITS POWER UNDER SECTION 255(5) OF THE ACT ARE WHOLL Y FOR THE PURPOSE OF REGULATING ITS OWN PROCEDURE AND THE PRO CEDURE OF THE BENCHES OF THE TRIBUNAL. THE RULES THEREFORE EMBODY THE PRINCIPLES OF PROCEDURE TO BE FOLLOWED BY THE TRIBU NAL AND ITS BENCHES FOR THE DISCHARGE OF ITS FUNCTIONS. THE SCH EME OF THE RULES READ AS A WHOLE DOES NOT SUGGEST THAT THE RUL ES IN ANY WAY HAVE THE EFFECT OF CURTAILING OR CIRCUMSCRIBING THE POWER, AUTHORITY AND JURISDICTION OF THE TRIBUNAL IN DEALI NG WITH MATTERS AT ITS DISPOSAL. WE HAVE NOT BEEN ABLE TO READ ANY PROHIBITION IN THE RULES TOTALLY PRECLUDING THE TRIBUNAL FROM CONS IDERING ANY GROUND BEYOND THOSE MENTIONED IN THE MEMORANDUM OF APPEAL FILED BY A PARTY, WHETHER THE ASSESSEE OR THE DEPAR TMENT, IN THE ABSENCE OF AN APPEAL OR CROSS-OBJECTION BY THE OTHE R SIDE PROJECTING THE NEW GROUND. IT IS A SETTLED PRINCIPL E OF LAW THAT PROCEDURAL LAW IS THE HAND MAID OF JUSTICE AND HAS TO BE SO INTERPRETED TO ADVANCE THE CAUSE OF JUSTICE AND NOT TO THWART IT. CONSIDERING THE LANGUAGE USED IN SECTION 254(1) OF THE ACT CONFERRING POWERS ON THE TRIBUNAL WHICH IS IN THE W IDEST POSSIBLE TERMS, WE FEEL GUIDED IN THIS REGARD BY THE EMPHATI C OBSERVATIONS OF THE APEX COURT CONTAINED IN ITS DECISION OF NATI ONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383. WE HAVE A LSO TAKEN NOTE OF THE OBSERVATIONS OF THE APEX COURT TO THE E FFECT THAT THE PURPOSE OF THE ASSESSMENT PROCEEDING BEFORE THE TAX ING AUTHORITY IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSE SSEE IN ACCORDANCE WITH LAW. WE CONSIDER IT TO BE A SOLEMN DUTY OF THE TAXING AUTHORITIES TO CORRECTLY ASSESS THE TAX LIABILITY O F AN ASSESSEE BY DULY FOLLOWING THE RELEVANT PROVISION OF LAW AND TH EREFORE DO NOT ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 43 COUNTENANCE AN INFLEXIBLE AND MECHANICAL ADHERENCE TO THE LAW OF PROCEDURE AND IN THE PROCESS DENY AN ASSESSEE A BENEFIT TO WHICH IT IS OTHERWISE ENTITLED IN LAW. IN OUR CONSI DERED OPINION, THAT COULD NOT HAVE BEEN THE PURPOSE OF FRAMING THE APPELLATE TRIBUNAL RULES. THERE CANNOT BE ANY ESTOPPEL AGAINS T LAW. IN THIS REGARD, WE ARE REINFORCED BY THE OBSERVATIONS OF TH E APEX COURT IN SANGRAM SINGH V. ELECTION TRIBUNAL, AIR 1955 SC 425 , WITH REFERENCE TO THE CODE OF CIVIL PROCEDURE AS UNDER ( PAGE 429) : 'NOW A CODE OF PROCEDURE MUST BE REGARDED AS SUCH. IT IS 'PROCEDURE', SOMETHING DESIGNED TO FACILITATE JUSTI CE AND FURTHER ITS ENDS : NOT A PENAL ENACTMENT FOR PUNISH MENT AND PENALTIES ; NOT A THING DESIGNED TO TRIP PEOPLE UP. TOO TECHNICAL A CONSTRUCTION OF SECTIONS THAT LEAVES NO ROOM FOR REASONABLE ELASTICITY OF INTERPRETATION SHOULD THEREFORE BE GUARDED AGAINST (PROVIDED ALWAYS THAT JUSTICE IS DONE TO 'BOTH' SIDES) LEST THE VERY MEANS DESIGNED FOR THE FURTHERANCE OF JUSTICE BE USED TO FRUSTRATE IT.' 31. WE ARE THEREFORE NOT IN FAVOUR OF GRANTING SUCH A PRIMACY TO THE RULES OF PROCEDURE SO AS TO WIPE OFF A SUBSTANTIAL RIGHT OTHERWISE AVAILABLE TO THE ASSESSEE IN LAW. W E FIND THIS VIEW OF OURS ALSO REINFORCED BY THE LANGUAGE OF RULE 11 WHICH DOES NOT REQUIRE THE TRIBUNAL TO BE CONFINED TO THE GROU NDS SET FORTH IN THE MEMORANDUM OF APPEAL OR TAKEN BY LEAVE OF TH E TRIBUNAL PROVIDED THE PARTY WHO MAY BE AFFECTED THEREBY HAD SUFFICIENT OPPORTUNITY OF BEING HEARD ON THAT GROUND. IN TAKIN G THIS VIEW, WE ARE CONSCIOUS ABOUT THE OBSERVATIONS OF THE MADR AS HIGH COURT AND THE CALCUTTA HIGH COURT MADE IN THE DECIS IONS RELIED UPON BY LEARNED COUNSEL FOR THE REVENUE BUT WE ARE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PERSUADED TO ACCEPT THE OBSERVATIONS OF THE APEX COURT MADE IN THIS REGARD IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. [1998] 229 ITR 383. WE ARE THEREFORE OF THE VIEW THAT IT IS PERMISSIBLE ON THE PART OF THE TRIBUNAL TO ENTERTAIN A GROUND BEYOND THOSE INCORPO RATED IN THE MEMORANDUM OF APPEAL THOUGH THE PARTY URGING THE SA ID GROUND HAD NEITHER APPEALED BEFORE IT NOR HAD FILED A CROS S-OBJECTION IN THE APPEAL FILED BY THE OTHER PARTY. WE MUST HOWEVE R HASTEN TO ADD THAT IN ORDER TO ENABLE EITHER THE ASSESSEE OR THE DEPARTMENT TO URGE A GROUND IN THE APPEAL FILED BY THE OTHER S IDE, THE RELEVANT FACTS ON WHICH SUCH GROUND IS TO BE FOUNDED SHOULD BE AVAILABLE ON RECORD. IN THE ABSENCE OF SUCH PRIMARY FACTS, IN OUR OPINION, NEITHER THE ASSESSEE NOR THE DEPARTMENT CAN BE PERM ITTED TO URGE ANY GROUND OTHER THAN THOSE WHICH ARE INCORPORATED IN THE MEMORANDUM OF APPEAL FILED BY THE OTHER PARTY. IN O THER WORDS, ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 44 IF THE ASSESSEE OR THE DEPARTMENT, WITHOUT FILING A NY APPEAL OR A CROSS-OBJECTION SEEKS TO URGE A GROUND OTHER THAN T HE GROUNDS INCORPORATED IN THE MEMORANDUM OF APPEAL FILED BY T HE OTHER SIDE, THE EVIDENTIARY FACTS IN SUPPORT OF NEW GROUN D MUST BE AVAILABLE ON RECORD. 32. FOR THE VIEW THAT WE HAVE TAKEN AS ABOVE, WE HO LD THAT THE TRIBUNAL ERRED IN NOT CONSIDERING THE CONTENTION OF THE ASSESSEE- APPLICANT COMPANY THAT THE WAREHOUSE CHARGES WAS CO VERED BY SUB-CLAUSE (IV) OF SECTION 35B(1)(B) OF THE ACT ONL Y ON THE GROUND THAT THE APPLICANT-COMPANY HAD NOT FILED ANY APPEAL OR CROSS-OBJECTION. WE THEREFORE ANSWER THE QUESTION R EFERRED, IN THE AFFIRMATIVE AND REMAND THE PROCEEDING TO THE TRIBUN AL FOR CONSIDERATION OF THE SAID CONTENTION OF THE APPLICA NT-ASSESSEE ON MERITS. WE HOWEVER MAKE IT ABSOLUTELY CLEAR THAT IN CASE THE BASIC FACTS RELATING TO THE CLAIM OF THE APPLICANT-COMPAN Y FOR WEIGHTED DEDUCTION UNDER SECTION 35B(1)(B)(IV) ARE NOT AVAIL ABLE ON RECORD, THE APPLICANT-COMPANY WOULD NOT BE PERMITTE D TO URGE THAT GROUND AND THE TRIBUNAL WOULD PASS APPROPRIATE ORDERS AS IT WOULD DEEM FIT IN ACCORDANCE WITH LAW. 47. FOLLOWING THE DECISION RENDERED IN THE CASE OF ASSAM CO. (INDIA) LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE APPLICATION FILED BY THE ASSESSEE IN THE APPEAL FIL ED BY THE REVENUE IS MAINTAINABLE, HOWEVER, SUBJECT TO THE CONDITION THAT THE RELEVANT FACTS ON WHICH ADDITIONAL GROUNDS ARE RAISED ARE AV AILABLE ON RECORD. WHEN WE EXAMINE THE ASSESSMENT ORDER AS WE LL AS ORDER PASSED BY THE LD. CIT (A), IT IS A MATTER OF RECORD THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB @ 100% TO THE TUNE O F RS.5,59,59,323/- AND AO AS WELL AS LD. CIT (A) AFTE R DULY DISCUSSING THE FACTS AND CASE LAWS REACHED THE CONC LUSION THAT WHEN ASSESSEE COMPANY IS NOT PROVED TO BE IN MANUFA CTURE OR ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 45 PRODUCTION OF ARTICLE OR THING BUT IS IN FACT PROVI DING SERVICES TO THE MINERAL OIL CONCERN, IT IS NOT ENTITLED FOR DEDUCTI ON U/S 80IB. SO, WE ARE OF THE CONSIDERED VIEW THAT FACTS QUA ADDITI ONAL GROUNDS NO.1 & 2 SOUGHT TO BE RAISED BY THE ASSESSEE ARE DU LY PLEADED AND DISCUSSED BY THE AO AS WELL AS LD. CIT (A). HOWEVE R, SO FAR AS ADDITIONAL GROUND NO.3 RAISED BY THE ASSESSEE SO AS TO CLAIM THE CREDIT FOR TAX WITHHELD BY THE CUSTOMER IN BANGLADE SH AMOUNTING TO RS.40,96,030/- IS CONCERNED, THERE IS NOT A WHISPER OF THESE FACTS BEFORE AO AS WELL AS LD. CIT (A) NOR ANY SUCH CLAIM HAS BEEN MADE BY THE ASSESSEE IN THE RETURN OF INCOME, SO WE ARE OF THE CONSIDERED VIEW THAT IN THESE CIRCUMSTANCES, ADDITI ONAL GROUND NO.3 IS NOT ALLOWABLE. 48. KEEPING IN VIEW THE FACTS INTER ALIA THAT THE A SSESSEE COMPANY HAS BEEN HELD TO BE MINERAL BASED INDUSTRY AS PER OUR FINDINGS RETURNED IN THE PRECEDING PARAS, IT IS PRI MA FACIE ENTITLED FOR DEDUCTION U/S 80IB; THAT ASSESSEE BY RAISING AD DITIONAL GROUNDS SOUGHT DEDUCTION UNDER SECOND PROVISO TO SECTION 80 IB(4) @ 100% PROFIT OF THE UNDERTAKING SET UP AT DULIAJAN IN TER MS OF NOTIFICATION NO. SO 627 (E) DATED 04.08.1999; THAT APPLYING THE RATIO OF JUDGMENT OF HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 46 POWER COMPANY (SUPRA), THE TAXMEN ARE REQUIRED TO CORRECTLY ASSESS THE TAX LIABILITY OF THE ASSESSEE WHICH INCL UDES ADMISSIBILITY OF THE DEDUCTIONS IF ANY; THAT RULE OR PROCEDURE AR E HAND-MAID OF JUSTICE AND MERELY ON THE GROUND THAT THE ASSESSEE HAS OMITTED TO FILE THE APPEAL OR CROSS OBJECTION, THE ADDITIONAL GROUNDS RAISED IN THE APPEAL FILED BY THE REVENUE ARE MAINTAINABLE BE CAUSE ULTIMATELY THE NET RESULT OF THE ASSESSMENT PROCEED INGS SHOULD BE CORRECT ASSESSMENT OF THE TAX LIABILITY OF THE ASSE SSEE COMPANY, THE APPLICATION FILED BY THE ASSESSEE COMPANY FOR ADDIT IONAL GROUNDS IS PARTLY ALLOWED QUA GROUNDS NO.1 & 2, WHEREAS PRESEN T APPLICATION QUA GROUND NO.3 IS DISMISSED. 49. IN VIEW OF OUR FINDINGS RETURNED ON THE ADDITIO NAL GROUNDS RAISED BY THE ASSESSEE COMPANY IN AYS 2004-05 AND 2 007-08 DECIDED IN PRECEDING PARAS, ADDITIONAL GROUNDS NO.1 & 2 RAISED IN AY 2006-07 BY THE ASSESSEE COMPANY BEING IDENTICAL IN NATURE ARE ALSO REQUIRED TO BE DECIDED BY THE AO BY EXAMINING THE PLANT AND MACHINERY VIZ. THE WIRELINE LOGGING UNIT SET UP AT DULIAJAN IN TERMS OF NOTIFICATION NO.SO 627 (E) DATED 04.08.1999 READ WITH SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80IB AND EXAM INE THE ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION @ 100%. SO, THIS ISSUE IS ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 47 REMITTED BACK TO THE AO TO DECIDE AFRESH AFTER PROV IDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.3708/DEL./2012 (AY : 2006-07) & ITA NO.5511/DEL./2012 (AY : 2007-08) CHALLENGING THE ORDERS PASSED BY THE LD. CIT (A) U/S 263 OF THE ACT 50. APPLICANT, M/S. HLS ASIA LIMITED (HEREINAFTER R EFERRED TO AS THE ASSESSEE), BY MOVING APPLICATIONS SUPPORTED W ITH AFFIDAVITS IN BOTH THE AFORESAID APPEALS SOUGHT TO CONDONE THE DE LAY OF 199 DAYS AND 303 DAYS FOR FILING APPEALS ON THE GROUNDS INTE R ALIA THAT IN BOTH THE AYS 2006-07 & 2007-08, ASSESSMENTS WERE AS SESSED U/S 143 (3) OF THE ACT BUT THE LD. CIT INITIATED PROC EEDINGS U/S 263 OF THE ACT ON THE GROUND THAT THE ASSESSMENT ORDERS DATED 29.12.2009 & 11.12.2009 FOR AYS 2006-07 & 2007-08 RESPECTIVELY ARE ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE AND CONSEQUENTLY ISSUED A NOTICE TO THE ASS ESSEE VIDE LETTER DATED 04.02.2001 & 24.08.2011 IN AYS 2006-07 & 2007-08 RESPECTIVELY; THAT CONSEQUENT TO THE PROCEEDINGS IN ITIATED U/S 263, LD. CIT SET ASIDE THE ASSESSMENT ORDERS WITH A DIRE CTION TO THE AO TO REFRAME THE ASSESSMENT AFTER FOLLOWING SPECIFIC DIRECTIONS CONTAINED IN THE ORDER; THAT ASSESSEE HAS FILED THE APPEALS ON ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 48 16.07.2012 AND 29.12.2012 CHALLENGING THE ORDERS PA SSED BY THE LD. CIT WITH A DELAY OF 199 DAYS AND 303 DAYS RESPECTIV ELY; THAT BOTH THESE CASES WERE BEING HANDLED BY M/S. SAMIT GROVER AND CO., A FIRM OF CHARTERED ACCOUNTANTS, WHO HAS RECEIVED THE IMPUGNED ORDERS PASSED BY THE LD. CIT DIRECTLY FROM THE LD. CIT OFFICE BUT THEY FAILED TO INTIMATE THE IMPUGNED ORDERS PASSED BY THE LD. CIT U/S 263 OF THE ACT TO THE ASSESSEE ENTAILING DELAY IN FILING THE APPEALS; THAT SUBSEQUENTLY ASSESSEE ENGAGED NEW CON SULTANT WHO OBTAINED THE NECESSARY DOCUMENTS FROM M/S. SAMIT GR OVER & CO. AFTER REPEATED REQUESTS ON 03.07.2012 & 04.09.2012 AND THEREAFTER FILED THE APPEALS ON 16.07.2012 & 29.102.2012 FOR A YS 2006-07 & 2007-08 RESPECTIVELY; THAT DELAY IN FILING THE AFOR ESAID APPEALS IS UNAVOIDABLE WHICH WAS NEITHER WILLFUL NOR DELIBERAT E. 51. LD. DR FOR THE REVENUE OPPOSED THE APPLICATIONS FILED BY THE ASSESSEE FOR CONDONATION OF DELAY ON THE GROUND THAT WHEN THE PROCEEDINGS U/S 263 OF THE ACT WERE BEING CONTINUOU SLY PURSUED BY THE CONSULTANT ENGAGED BY THE ASSESSEE, IT IS BEYON D COMPREHENSION AS TO HOW THEY HAVE NOT INTIMATED THE RESULTS OF TH E CASE TO THE ASSESSEE AND THAT NO DISCIPLINARY PROCEEDINGS SOUGH T TO HAVE BEEN ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 49 INITIATED BY THE ASSESSEE AGAINST ITS CONSULTANT FO R PROFESSIONAL MISCONDUCT AND PRAYED FOR DISMISSAL OF THE APPLICAT IONS. 52. KEEPING IN VIEW THE FACTS INTER ALIA THAT THE P ROCEEDINGS U/S 263 OF THE ACT HAVE BEEN PURSUED BY M/S. SAMIT GROV ER AND CO. AND NOW ENTIRE PROCEEDINGS BEFORE THE TRIBUNAL ARE BEING PURSUED BY M/S. VAISH ASSOCIATES, ADVOCATES AND THE APPLICA TIONS ARE SUPPORTED WITH AFFIDAVITS OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY STATING ON SOLEMN AFFIRMATION THAT THE DELA Y IN FILING THE APPEALS IS ENTIRELY ATTRIBUTED TO ITS CONSULTANT, M /S. SAMIT GROVER & CO.; THAT IN ORDER TO IMPART SUBSTANTIAL JUSTICE TO THE PARTIES AND TO STOP MULTIPLICITY OF THE PROCEEDINGS THE ISSUE IN C ONTROVERSY MUST BE DECIDED ONCE FOR ALL; THAT EXERCISING A LIBERAL APPROACH BY THE BENCH IN ORDER TO IMPART THE SUBSTANTIAL JUSTICE TO THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT DELAY OF 199 DAYS A ND 303 DAYS IN AYS 2006-07 & 2007-08 RESPECTIVELY IS REQUIRED TO B E CONDONED, HENCE CONDONED WHICH WOULD OTHERWISE NOT CAUSE ANY PREJUDICE TO THE RESPONDENT. SO, APPLICATIONS MOVED BY THE ASSE SSEE COMPANY FOR AYS 2006-07 & 2007-08 RESPECTIVELY FOR CONDONAT ION OF DELAY ARE ALLOWED, AND BOTH THE APPEALS ARE ORDERED TO BE TAKEN UP FOR HEARING ON MERITS. ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 50 53. BRIEFLY STATED, THE ASSESSEE IS INTO THE BUSINE SS OF WIRELINE, LOGGING, PERFORATION AND OTHER RELATED SERVICES TO OIL AND GAS SERVICES ENGAGED IN EXPLORATION AND/OR PRODUCTION O F OIL AND GAS. FOR AYS 2006-07 & 2007-08, ASSESSMENTS WERE FRAMED AT THE TOTAL INCOME OF RS.25,20,22,288/- AND RS.34,96,66,530/- RESPECTIVELY U/S 143(3) OF THE ACT. LD. CIT TREATING THE ORDERS PASSED BY THE AO U/S 143(3) OF THE ACT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE U/S 263 OF THE ACT AFTER CONSIDERING THE CONTENTIONS MADE BY THE ASSESSEE COMPANY, DIRECTED THE AO TO DI SALLOW THE ADDITIONAL DEPRECIATION OF RS.3,46,41,428/-; VERIFY THAT RATE OF DEPRECIATION AT PLANT & MACHINERY IS TO BE ALLOWED AT 15% AND NOT AT 25% AND VERIFY AS TO WHETHER PROVISIONS OF SECTI ON 33(1)(II) ARE APPLICABLE IN RESPECT OF COMMISSION OF RS.33,51,000 /- PAID TO MANAGING DIRECTOR AND THAT THE ASSESSEE COMPANY IS NOT ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE OF THING AND AS SUCH, IS NOT ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT AS C ONDITIONS LAID DOWN THEREUNDER ARE NOT FULFILLED. 54. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNE D ORDERS PASSED BY THE LD. CIT CONTENDED INTER ALIA THAT THE ASSESSMENT ORDERS PASSED BY THE AO ARE NOT ERRONEOUS; THAT THE ASSESSMENT ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 51 ORDERS PASSED BY THE AO ARE NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE; AND RELIED UPON THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE FOR AYS 1989-90 T O 2003-04 (SUPRA) WHICH HAS SINCE ATTAINED FINALITY AS THE SL P FIELD BY THE REVENUE AGAINST THE SAID ORDER HAS ALSO BEEN DISMIS SED BY THE HONBLE APEX COURT. 55. AS AGAINST THIS, LD. DR FOR THE REVENUE IN ORDE R TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. AR FOR THE ASSESSEE RELIED UPON THE EXPLANATION 2 TO SECTION 263 OF THE ACT INTRODUCED BY THE FINANCE ACT, 2015 W.E.F. 01.06.2015 AND ALSO RELIED UPON TH E DECISION RENDERED BY HONBLE SUPREME COURT IN CASES OF DENIEL MERCHANTS PVT. LTD. VS. ITO (APPEAL) NO.2396/2017), MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC), CIT VS. AMITABH BACHCHAN 384 ITR 200, RAJAMANDIR ESTATES (P .) LTD. VS. PCTI (2017) 77 TAXMANN.COM 285 (SC), SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS VS . CIT (1998) 231 ITR 53 (SC), HONBLE CALCUTTA HIGH COURT IN CASE OF RAJMANDIR ESTATES (P.) LTD. VS. PCIT Z(2016) 386 IT R 162 (CALCUTTA) AND COORDINATE BENCH OF THE TRIBUNAL IN CASE OF PTC IMPEX (INDIA) PVT. LTD. VS. CIT IN ITA NO.2860/DEL/ 2010 DATED ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 52 03.04.2018 AND ALSO RELIED ON OTHER DECISIONS BY FILING WRITT EN SUBMISSIONS WHICH HAVE BEEN MADE PART OF THE JUDICI AL RECORD. 56. UNDISPUTEDLY, IN ORDER TO INVOKE THE JURISDICTI ON OF SECTION 263 OF THE ACT BY THE LD. CIT, THE ASSESSMENT ORDER S PASSED BY THE AO MUST BE ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. WE WILL DISCUSS BOTH THE NECESSARY INGREDIENTS REQU IRE TO INVOKE THE JURISDICTION U/S 263 OF THE ACT WHICH ARE DISCU SSED ONE BY ONE HEREUNDER. 57. SO FAR AS QUESTION OF ASSESSMENT ORDERS BEING E RRONEOUS HAVING BEEN HELD BY THE LD. CIT IS CONCERNED, IN AS SESSEES OWN CASE FOR AYS 1989-90 TO 2003-04, THE ASSESSEE COMPA NY HAS BEEN HELD TO BE ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. THIS ISSUE HAS BEEN DEALT WITH BY THE BENCH IN DETAIL WHILE RETURNING FINDINGS IN PRECEDING PARAS 11 TO 15. SO , NOW THIS ISSUE HAS SINCE BEEN ATTAINED FINALITY AS SLP FILED BY TH E REVENUE BEFORE THE HONBLE SUPREME COURT HAS ALREADY BEEN DISMISSE D. WHEN WE EXAMINE THE IMPUGNED ORDER PASSED BY THE LD. CIT IN AYS 2006-07 & 2007-08 BY FOLLOWING AY 2004-05, LD. CI T HELD THE ASSESSMENT ORDERS ERRONEOUS ONLY ON THE GROUND THAT , ASSESSEE COMPANY IS NOT ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 53 OR THING . SO, NOW THIS ISSUE HAS BEEN SETTLED ONCE FOR ALL SO FAR AS FUNCTIONAL PROFILE OF THE ASSESSEE COMPANY IS CONCE RNED. 58. WHEN THE ASSESSEE COMPANY HAS BEEN HELD TO BE E NGAGED IN THE MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THIN G BY THE ORDER PASSED BY THE HONBLE DELHI HIGH COURT AFFIRMED BY HONBLE SUPREME COURT, THE ASSESSEE IS ENTITLED FOR ADDITIO NAL DEPRECIATION U/S 32(1)(IIA) OF THE ACT AND AS SUCH, THE AO HAS R IGHTLY ALLOWED THE ADDITIONAL DEPRECIATION TO THE ASSESSEE, HENCE ASSESSMENT ORDERS PASSED BY THE AO ARE NOT ERRONEOUS SUFFICIEN T TO EXERCISE REVISIONARY JURISDICTION U/S 263 OF THE ACT. 59. SO FAR AS QUESTION OF ASSESSMENT ORDER BEING PR EJUDICIAL TO THE INTEREST OF THE REVENUE AS HAS BEEN HELD BY THE LD. CIT IS CONCERNED, ALLOWING ADDITIONAL DEPRECIATION WHICH W OULD OTHERWISE HAVE BEEN AVAILABLE AS NORMAL DEPRECIATIO N DOES NOT LEAD TO ANY PREJUDICE TO THE REVENUE AS THE ASSESSEE WOU LD ONLY BE ENTITLED TO 100% OF THE COST OF THE ASSET BY WAY OF ADDITIONAL DEPRECIATION PLUS NORMAL DEPRECIATION OR IN THE ALT ERNATIVE AS NORMAL DEPRECIATION OVER THE YEARS. 60. LD. DR FOR THE REVENUE SUPPORTED THE ORDER PASS ED BY THE LD. CIT ON THE ONLY GROUND THAT THE ASSESSEE IS NOT ENGAGED IN THE ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 54 MANUFACTURE OF ANY ARTICLE OR THING, BUT THIS ISSUE IS NO LONGER RES INTEGRA AS ASSESSEE IN ITS OWN CASE HELD TO BE ENGA GED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. MOREOVER, SINCE THE LD. CIT ONLY MODIFIED THE ASSESSMENT DIRECTING THE AO TO WITHDRAW THE DEDUCTION FOR ADDITIONAL DEPRECIATION ALLOWED U/S 32(1)(IIA) BUT HAS NOT SET ASIDE THE ASSESSMENT TO BE FRAMED AFRESH, EXPLANATION 2 TO SECTION 263 OF THE ACT RELIED UPON BY THE LD. DR FOR THE REVENUE IS NOT ATTRACTED. SO, WE ARE OF TH E CONSIDERED VIEW THAT ARGUMENTS ADDRESSED BY THE LD. DR AND HIS RELI ANCE ON UMPTEEN NUMBER OF JUDGMENTS IS NOT APPLICABLE TO TH E FACTS AND CIRCUMSTANCES OF THE CASE. CONSEQUENTLY, IMPUGNED ORDERS PASSED BY THE LD. CIT U/S 263 OF THE ACT BOTH DATED 31.10. 2011 FOR AYS 2006-07 & 2007-08 ARE NOT SUSTAINABLE IN THE EYES O F LAW, HENCE ORDERED TO BE QUASHED. 61. RESULTANTLY, ASSESSEES APPEALS BEING ITA NO.1712/DEL/2010 FOR AY 2004-05 IS PARTLY ALLOWED A ND ITA NOS.4144/DEL/2014, 2208/DEL/2014, 3708/DEL/2012 & 5511/DEL/2012 FOR AYS 2007-08, 2008-09, 2006-07 & 2 007-08 RESPECTIVELY ARE ALLOWED WHEREAS REVENUES APPEALS BEING ITA NO.323/DEL/2012 FOR AY 2005-06 IS PARTLY ALLOWED AN D ITA ITA NO.1712/DEL./2010 ITA NO.4144/DEL./2014 ITA NO.2208/DEL./2014 ITA NO.3708/DEL./2012 ITA NO.5511/DEL./2012 ITA NO.323/DEL./2012 ITA NO.5855/DEL./2011 ITA NO.2241/DEL./2014 55 NOS.5855/DEL/2011 & 2241/DEL/2014 FOR AYS 2006-07 & 2008-09 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF FEBRUARY, 2020. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 24 TH DAY OF FEBRUARY , 2020 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-6, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.