THE WEST COAST PAPER MILLS LTD, MUMBAI V. DCIT (OSD) 1(2), MUMBAI

ITA 3788/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2923 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 08-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Section: 43B; 14A; 2

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER /. ITA/3788/MUM/2013 , /ASSESSMENT YEAR: 2009-10 THE WEST COAST PAPER MILLS LTD. SHREENIWAS HOUSE, HAZARIMAL SOMANI MARG, FORT,MUMBAI-400 001. PAN:AAACT 4179 N VS. DCIT-(OSD)-1(2) AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. /. ITA/3565/MUM/2013 , /ASSESSMENT YEAR: 2009-10 DCIT-(OSD)-1(2) AAYAKAR BHAVAN,MUMBAI- 400 020. VS. THE WEST COAST PAPER MILLS LTD. MUMBAI-400 001. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: MS. VIDISHA KALRA CIT- (DR) ASSESSEE BY: SHRI VIJAY MEHTA- (AR) / DATE OF HEARING: 17.08.2016 / DATE OF PRONOUNCEMENT:14.09.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS OF CIT(A),DATED THE ASSES SEE AND THE ASSESSING OFFICER (AO) HAVE FILED CROSS-APPEALS FOR THE ABOVE MENTIONED ASSESSM ENT YEAR(AY.)ASSESSEE-COMPNAY, ENGAGED IN THE MANUFACTURING OF PAPER AND PAPER BOA RDS, JELLY FILLED CABLE AND GENERATION OF POWER,FILED ITS RETURN OF INCOME ON 30.09.2009,DECL ARING TOTAL INCOME AT RS.NIL.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT U/S.1 43(3) OF THE ACT,ON 29.12.2011, DETERMINING ITS INCOME AT RS.102.28CRORES. 2. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE (AR) DID NOT PRESS GROUND NO. 4 AND 8 HENCE, SAME STANDS DISMISSED AS NOT PRESSED. ITA/3788/MUM/2013-ASSESSES APPEAL: 3. GROUND NO.1 READS AS UNDER :- THE HONBLE CIT(A) WAS NOT JUSTIFIED IN HOLDING T HAT THE EXTRANEOUS CHARGES SUCH AS ELECTRICITY DUTY SHOULD BE EXCLUDED FOR CALCULATIN G TRANSFER PRICE OF ELECTRICITY FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80IA IN RES PECT OF POWER GENERATING UNITS. 3.1. REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE I SSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDERS FOR THE AY.S.2002-0 3, 2005-06 AND 2007-08(ITA/ 2993/ MUM/2011 & ITA/3843/MUM/2011).WE ARE REPRODUCING TH E RELEVANT PORTION OF THE ORDER AND IT READS AS UNDER: 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 2 5. SO FAR AS THE ISSUE RAISED VIDE GROUND NO.1, WH ETHER ELECTRICITY DUTY SHOULD BE EXCLUDED WHILE CALCULATING THE TRANSFER PRICE OF ELECTRICITY DUTY FOR COMPUTING THE DEDUCTION U/S 80IA. 6. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASS ESSEE BY THE TRIBUNAL VIDE ORDER DATED 30.05.2014 IN ASSESSEES OWN CASE FOR AYS 2002-03 T O 2005-06. THE RELEVANT CONCLUSION AND FINDING OF THE TRIBUNAL AS GIVEN IN PARA 32 AND 33 READS AS UNDER:- 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON REC ORD. THE ASSESSEE HAS WORKED OUT THE NOTIONAL SALE OF POWER SUPPLIED BY ITS POWER UNIT T O ITS PAPER DIVISION @ RS. 5.80 PER UNIT. THIS WAS ON THE BASIS OF AVERAGE ACTUAL GRID CHARGE S CHARGED BY KARNATAKA ELECTRICITY BOARD FOR SUPPLYING THE ELECTRICITY TO THE ASSESSEE . THIS WAS SHOWN FROM THE AMOUNT OF THE BILL AND THE TOTAL NUMBER OF UNITS CONSUMED. FROM T HE SAID BILLS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IS PAYING FUEL EXCAVATION CHARGES , TAXES, ETC., WHICH SHOULD BE REDUCED FOR WORKING OUT THE AVERAGE PRICE PER UNIT FOR WORKING OUT THE SALE PRICE OF THE ELECTRICITY SUPPLIED BY ITS POWER UNIT TO THE PAPER DIVISION. B ESIDES THIS, HE HAS ALSO APPORTIONED INDIRECT EXPENSES ON THE BASIS OF THE TOTAL TURNOVE R FOR QUANTIFYING THE DEDUCTION UNDER SECTION 80IA CLAIMED BY THE ASSESSEE IN RESPECT OF POWER UNITS NO.3, 4 AND 5. THIS APPORTIONMENT OF INDIRECT EXPENSES IS A SEPARATE GR OUND WHICH IS GROUND NO.9 AND THE SAME SHALL BE DISCUSSED SUBSEQUENTLY. THE BASIC ISSUE IN GROUND NO.8 IS WHAT SHOULD BE THE TRANSFER PRICE FOR THE PURPOSE OF COMPUTING THE DED UCTION UNDER SECTION 80IA WITHIN THE AMBIT AND PARAMETER OF SUBSECTION (8) OF SECTION 8 0IA. SECTION 80IA(8), PROVIDES THAT, WHERE ANY GOODS OR SERVICES HELD FOR THE PURPOSES O F ELIGIBLE BUSINESS ARE TRANSFERRED TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE, THE CONS IDERATION IF ANY, FOR TRANSFER, DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS OR SER VICES AS ON THE DATE OF TRANSFER, THEN THE ASSESSING OFFICER CAN MAKE ADJUSTMENTS IN THE PROFI TS AFTER DETERMINING THE MARKET VALUE OF SUCH TRANSFER. THE SAID SECTION IN OTHER WORDS, EMP OWERS THE ASSESSING OFFICER WHERE THE TRANSFER OF GOODS AND SERVICES AS RECORDED IN THE A CCOUNTS OF THE ELIGIBLE BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE, THEN THE PROFITS DE CLARED FOR THE ELIGIBLE BUSINESS CAN BE ADJUSTED BY THE ASSESSING OFFICER ON SUCH BASIS SO AS TO ENSURE THAT THE GOODS AND SERVICES ARE TRANSFERRED TO ITS OWN UNIT AT THE MARKET VALUE OF SUCH GOODS AND SERVICES. IN THE EXPLANATION TO SECTION 80IA(8), THE MARKET VALUE HAS BEEN DEFINED AS A PRICE THAT SUCH GOODS OR SERVICES WOULD ORDINARILY FETCH IN THE OPE N MARKET. FETCHING OF THE PRICE IN THE OPEN MARKET HAS TO BE SEEN FROM THE FACTORS WHICH ARE DE TERMINED THROUGH NEGOTIATION BETWEEN THE PARTIES AND MUTUAL AGREEMENT AS ARRIVED AT A PR ICE WHICH IS ACCEPTABLE BETWEEN THE BUYER AND THE SELLER IN THE OPEN MARKET CONDITIONS I.E., IN AN UNRELATED AND UNCONTROLLED TRANSACTIONS. OPEN MARKET CONDITIONS REFER TO THE C ONDITIONS AND PRICE AVAILABLE FOR THE PUBLIC AT LARGE. IN THE 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 3 PRESENT CASE, THE MARKET VALUE OF SUPPLY OF ELECTR ICITY BY POWER UNIT OF THE ASSESSEE TO THE PAPER DIVISION OF THE ASSESSEE HAS TO BE SEEN FROM THE ANGLE, IF THE PAPER UNIT HAS TO PURCHASE THE ELECTRICITY DIRECTLY FROM THE KARNATAKA ELECTRI CITY BOARD (AS BOTH THE POWER UNITS AS WELL AS THE PAPER UNITS ARE SITUATED IN KARNATAKA), THEN WHAT IS THE PRICE WHICH WOULD BE PAID BY THE PAPER UNIT TO THE KARNATAKA ELECTRICITY BOARD. THE TRANSFER OF THE PRICE AS CONTEMPLATED IN SECTION 80IA(8) HAS TO BE SEEN HAVING REGARD TO THE ARMS LENGTH CONDITION I.E., WHAT WOULD BE THE PRICE UNDER UNCONTROLLED TRANSACTIONS IN THE OPEN MARKET. IF THE PAPER DIVISION HAS BEEN PURCHASING THE ELECTRICITY FROM THE KARNAT AKA ELECTRICITY BOARD AT AN AVERAGE COST OF RS.5.80, WHICH FACT IS NOT IN DISPUTE, THEN THE SAME PRICE SHOULD BE CONSIDERED AS MARKET VALUE FOR BENCH MARKING THE PRICE AT WHICH POWER UN ITS ARE SUPPLYING THE ELECTRICITY TO THE PAPER DIVISION. IF THE TAXES AND DUTIES ARE PART OF THE PRICE AT WHICH THE POWER / ELECTRICITY IS SUPPLIED BY THE KARNATAKA ELECTRICITY BOARD TO THE PAPER DIVISION, THEN THE SAME PRICE IS THE INDICATOR OF THE MARKET VALUE WHICH IS FETCHABLE IN THE OPEN MARKET. WE DO NOT FIND ANY REASON FOR EXCLUDING THE ELEMENT OF TAX AND DUTY WH ILE DETERMINING THE MARKET VALUE OF THE ELECTRICITY PRICE PER UNIT SUPPLIED BY THE POWER UN IT TO THE ASSESSEE AS CONTEMPLATED IN SUB SECTION (8) OF SECTION 80IA. 33. COMING TO THE ARGU MENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE, WHICH IS MOSTLY BASED ON THE FINDIN GS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 200506, T HE SAME CANNOT BE ACCEPTED FOR THE REASON THAT FIRSTLY, THE PRICE OF ELECTRICITY PER U NIT SUPPLIED BY THE TAMIL NADU AND PRIVATE PARTIES TO THE MAHARASHTRA GOVERNMENT, CANNOT BE HE LD TO BE APPLICABLE IN KARNATAKA AND, SECONDLY, THE RATE AT WHICH PRIVATE PARTIES ARE SEL LING THE POWER TO KARNATAKA ELECTRICITY BOARD CANNOT BE THE BENCH MARK FOR DETERMINING THE MARKET PRICE BECAUSE THE TERMS AND CONDITIONS IN WHICH THE KARNATAKA ELECTRICITY BOARD IS PROCURING THE ELECTRICITY FROM SUCH PARTIES IS NOT KNOWN. FURTHER THE MARKET PRICE HAS TO BE SEEN AS A PRICE AT WHICH THE CUSTOMERS ARE GETTING THE ELECTRICITY IN THE OPEN M ARKET. THAT SHOULD BE THE CRITERIA FOR BENCH MARKING THE MARKET PRICE UNDER SECTION 80IA(8). A S POINTED OUT BY THE LEARNED COUNSEL THAT IN THE EARLIER YEARS, THERE ARE TWO DIFFERENT OPINIONS AND CONCLUSIONS DRAWN BY THE TRIBUNAL. FIRST, IN THE ASSESSMENT YEAR 1997 98 AN D 199899 WHICH ARE IN FAVOUR OF THE ASSESSEE AND HAS ATTAINED FINALITY AS NO FURTHER AP PEAL HAS BEEN FILED BY THE DEPARTMENT AND OTHER IN THE ASSESSMENT YEAR 19992000 AND 200001. IN THE SUBSEQUENT ORDERS, THE TRIBUNAL HAS NOT TAKEN NOTE OF THE DECISION OF THE EARLIER O RDERS. FURTHER, THE PROVISIONS OF SECTION 80IA(8) HAS ALSO NOT BEEN CONSIDERED FOR ARRIVING A T A DIFFERENT CONCLUSION. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE RENDERING OUR DECISION PU RELY ON THE BASIS OF OUR INTERPRETATION OF STATUTORY PROVISIONS, SANS GOING BY ANY EARLIER YEA R PRECEDENCE. THUS, IN OUR OPINION, WE HAVE TO FOLLOW THE PROVISIONS AS CONTAINED IN SECTI ON 80IA(8) FOR DETERMINING THE MARKET PRICE, WHICH CANNOT BE ARRIVED BY REDUCING THE PRIC E BY ANY OTHER FACTORS LIKE TAXES, DUTIES, ETC., AS THE SAME ARE EMBEDDED IN THE PRICE. THUS, WE SET ASIDE THE IMPUGNED ORDER PASSED BY 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 4 THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE AN D ALLOW THE GROUND NO.8, IS TREATED AS ALLOWED. 7. THUS, RESPECTFULLY FOLLOWING THE PRECEDENCE OF E ARLIER YEARS, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. FOLLOWING THE ABOVE,GROUND NO.1 DECIDED AGAINST THE ASSESSEE. 4. SECOND GROUND DEALS WITH PRORATE INDIRECT EXPENSES WITH REGARD TO DEDUCTION U/S.80IA. THE AR FAIRLY CONCEDED THAT THE ISSUE WAS DECIDED AGAIN ST THE ASSESSEE BY TRIBUNAL WHILE ADJUDI - CATING APPEAL FOR AY 2007-08(SUPRA).THE ORDER OF TH E TRIBUNAL READS AS UNDER: 8. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E CALCULATION OF DEDUCTION U/S 80IA FOR REDUCING THE PRO-RATED INDIRECT EXPENSES OF THE COM PANY FROM THE PROFIT OF THE POWER UNITS. 9. THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEARS IN THE FOLLOWING MANNER:- 34. GROUND NO.9 READS AS UNDER: 9. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN HOLDING THAT FOR COMPUTING DEDUCTI ON U/S 80IA, THE PRORATED INDIRECT EXPENSES OF THE COMPANY SHOULD BE REDUCED FROM THE PROFIT OF THE POWER UNIT. 35. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E PRESENT ISSUE HAS BEEN DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE RIGHT FROM THE ASSESS MENT YEAR 19992000 TO 200102. THE ASSESSING OFFICER HAS APPORTIONED INDIRECT EXPENSES WHICH ARE TO BE REDUCED FROM THE PROFITS OF THE POWER UNIT AS WORKED OUT IN DETAIL AT PAGE2 0 OF THE ASSESSMENT ORDER. THIS ALLOCATION OF INDIRECT EXPENSES TO ARRIVE AT THE PROFIT OF POW ER UNIT HAS BEEN DECIDED BY THE TRIBUNAL IN THE EARLIER YEARS AND, THEREFORE, CONSISTENT WITH T HE VIEW TAKEN THEREIN, WE FIND NO REASON TO DISTURB THE ORDER PASSED BY THE LEARNED COMMISSIONE R (APPEALS) AND, ACCORDINGLY, THE SAME IS AFFIRMED ON THIS ISSUE. THUS, THE GROUND NO.9, R AISED BY THE ASSESSEE IS DISMISSED. 10. THUS, CONSISTENT WITH THE VIEW TAKEN IN EARLIER YEARS, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. CONSIDERING THE ABOVE,WE DECIDE GROUND NO.2 AGAINST THE ASSESSEE. 5. NEXT GROUND IS ALTERNATIVE CLAIM FOR DEDUCTION U/S. 80IA IN RESPECT TO INTEGRATED POWER NO.6. WE FIND THAT THE TRIBUNAL, IN ITS ORDER FOR A SSESSMENT YEAR 2007-08 HAS HELD THAT THE GROUND RAISED BY THE ASSESSEE WAS INFRUCTUOUS. 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 5 11. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED T HE ALTERNATIVE CLAIM OF DEDUCTION U/S 80IA IN RESPECT OF INTEGRATED POWER UNIT IN CASE THE CLAIM FOR DEDUCTION FOR POWER UNIT NO. 6A & 6B ARE NOT ALLOWED. 12. THIS ISSUE HAS BEEN TREATED AS INFRUCTUOUS BY T HE TRIBUNAL IN THE EARLIER YEARS ON THE GROUND THAT IT IS PURELY AN ALTERNATIVE CLAIM AS THE CLAIM FOR DEDUCTION U/S 80IA WITH REGARD TO UNIT NO. 6 H AS BEEN ALLOWED, THEREFORE, NO SEPARATE ADJUDICATION I S REQUIRED AS ADMITTED BY THE ASSESSEE. ACCORDINGLY, IN THIS YEAR ALSO THIS ALTERNATIVE CLA IM OF THE ASSESSEE IS TREATED AS DISMISSED, BEING INFRUCTUOUS. RESPECTFULLY FOLLOWING THE SAME GROUND NO.3 IS TRE ATED INFRUCTUOUS. 6. GROUND NO. 5 PERTAINS TO DISALLOWANCE OF PRORATED I NDIRECT EXPENDITURE UNDER RULE 8D (2) (III) R.W.S. 14A OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD RECEIVED DIVIDEND INCOME OF RS.3.06 LAKHS, THA T IT HAD MADE NO DISALLOWANCE ON ITS OWN. THE AO WAS NOT SATISFIED ABOUT THE CORRECTNESS OF T HE CALCULATION MADE BY THE ASSESSEE. THEREFORE, HE CALLED FOR AN EXPLANATION.THE ASSESSE E VIDE ITS LETTERS,DT.8.12.11 AND 15.12.11 STATED THAT ASSESSEE HAD SUFFICIENT INTEREST FREE F UNDS,THAT THE LOANS TAKEN FROM TIME TO TIME WERE FOR SPECIFIC PURPOSES AND WAS USED FOR THOSE P URPOSES ONLY. IT RELIED UPON THE CASE OF HERO CYCLES LTD. AND FURTHER ARGUED THAT ALL INVEST MENTS WERE MADE IN ASSOCIATE AND GROUP COMPANIES, THAT THE INVESTMENTS WERE STRATEGIC INVE STMENT, THAT NO DISALLOWANCE U/S. 14A WAS CALLED FOR.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE AO COMPUTED THE DISALLOWANCE U/S.14A R.W. RULE 8D AT RS.46.23 LAKHS (INTEREST EXPENDITURE RS.20.96 LAKHS + AVERAGE VALUE OF INVESTMENT-0.5% OF AVERAGE VALUE- RS.25.27 LAKHS). HE ALSO ADDED THAT SAME WOULD BE ADDED IN COMPUTATION OF BOOK PROFIT U/S. 1 15JB. 6.1. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE AND ASSESSMENT ORDER HE DELETED THE INTEREST EXPENDITURE OF RS.2 0.96 LAKHS, HOWEVER,HE UPHELD THE ADDITION OF RS.25.27 LAKHS.HE HELD THAT ADMINISTRATIVE EXPEN SES @0.5% WERE REQUIRED TO BE MADE AS PER SUB CLAUSE OF (III) TO THE RULE 8D(2) OF THE R ULES,THAT THE DISALLOWANCE WAS TO BE MADE IRRESPECTIVE OF THE FACT THAT THE INVESTMENTS MADE WERE STRATEGIC OR NOT. 6.2. BEFORE US,THE AR STATED THAT MAJORITY INVESTMENTS W ERE IN SUBSIDIARY/GROUP COMPANIES INVESTMENT IN RAMA NEWSPRINT AND PAPER LTD. WAS UPT O RS.45.41 CRORES, THAT IT WAS HAVING 36% HOLDING IN RAMA NEWSPRINT AND PAPER LTD., THAT THE INVESTMENT MADE IN THE GROUP 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 6 COMPANY COMPRISED APPROXIMATELY 99% OF TOTAL INVEST MENT MADE BY THE ASSESSEE, THAT THE RESULTANT DISALLOWANCE WOULD BE RS.31,570/-, THAT D ISALLOWANCE OF RS.50,000/-COULD BE MADE THAT WOULD BE CONSISTENT WITH THE DISALLOWANCE MADE BY TRIBUNAL BY ITS OWN CASE FOR AY 2007-08 AND AY 2004-05.HE REFERRED TO THE CASE OF G ARWARE WALLROPOES LTD. (ITA/ 5408/ MUM/2012 ) AND JM FINANCIAL LTD.(ITA/ 4521/MUM/2012 ). THE DR SUPPORTED THE ORDER OF THE FAA. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD MADE STRATEGIC INVESTMENT IN ASSOCIATE D AND GROUP COMPANIES,THAT OTHER INVESTMENTS WERE NOT VERY LARGE.THEREFORE,WE ARE OF THE OPINION THAT DISALLOWANCE SHOULD BE RESTRICTED TO RS.50,000/-,AS PROPOSED BY THE ASSESS EE.GROUND NO.5 IS PARTLY ALLOWED. 7. DISALLOWANCE OF LEAVE ENCASHMENT IS THE SUBJECT MAT TER OF GROUND NO.6. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE P&L AC COUNT OF THE ASSESSEE SHOWED A DEBIT OF RS.22.68 LAKHS TOWARDS PROVISION FOR LEAVE ENCAS HMENT. HE DIRECTED THE ASSESSEE TO FILE EXPLANATION IN THIS REGARD. VIDE ITS LETTER DT.8.12 .11 THE ASSESSEE SUBMITTED THAT THE AFORESAID CLAIM HAD BEEN MADE IN VIEW OF THE DECISION OF EXID E INDUSTRIES LTD. (292ITR470), WHEREIN IT WAS HELD THAT INSERTION OF CLAUSES IN SECTION 43 B AND RESTRICTING THE DEDUCTION IN LEAVE ENCASHMENT, WHICH WAS OTHERWISE A TRADING LIABILITY WAS ARBITRARY AND DE HORS. HON'BLE SUPREME COURT JUDGMENT IN THE CASE BHARAT EARTH MOV ERS ( 245 ITR 428 ) 7.1 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE AO HELD THAT THE EXPENDITURE WAS IN THE NATURE OF PROVISIONS, THAT THE SAME COULD NOT B E ALLOWED, THAT HIS PREDECESSORS HAD TAKEN IDENTICAL VIEW IN EARLIER YEARS.FINALLY, HE DISALLO WED AN AMOUNT OF RS.22,68,117/-, INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. 7.2 DURING THE APPELLATE PROCEEDINGS BEFORE THE FAA THE ASSESSEE MADE ELABORATE SUBMISSION AND HELD THAT THE PROVISIONS FOR LEAVE ENCAHMENT WA S SPECIFICALLY COVERED BY CLAUSE (F) OF SECTION 43B, THAT THE DEDUCTION FOR SAME COULD BE A LLOWED ON PAYMENT BASIS , THAT THE HON'BLE APEX COURT COURT HAD ALLOWED THE OPERATION OF SECTI ON.43B(F) TO CONTINUE UNTIL FURTHER ORDER IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA).HE DIS MISSED THE GROUND RAISED BY THE ASSESSEE . 7.3 BEFORE US,THE AR STATED THAT THE ISSUE MAY BE DECID ED IN LIGHT OF THE ORDER OF THE TRIBUNAL PRONOUNCED IN THE CASE OF BIRLA SUN LIFE ASSET MANA GEMENT COMPANY LIMITED (ITA/ 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 7 5457/M/2013,AY.2010-11, DTD.30.06.2015).THE DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL BEFORE US.WE WOULD LIKE TO REFER TO THE RELEVANT PORTION OF THE ORDER OF THE BIRLA SUN LIFE ASSET MANAGEMENT COMPANY LIMITED(SUPRA)AND IT READS AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS CORRECT THAT THE DECISION OF THE HONBLE KOLKATA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA) HAS BEEN STAYED BY THE HONBLE SUPREME COURT VIDE ORDER DATED 08.09.08 PAS SED IN SLP TO APPEAL (CIVIL) CC 12060/2008 WHEREIN THE HONBLE SUPREME COURT HAS MA DE THE FOLLOWING OBSERVATIONS: UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING ORDER ISSUE NOTICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNED JUDGMENT, UNTIL FURTHER ORDER. 7. WE FURTHER FIND THAT THE HONBLE SUPREME COURT V IDE ORDER DATED 08.05.2009, PASSED IN SLP (CIVIL NO.22889/2008) WHILE GRANTING THE LEAVE TO FILE APPEAL, HAS MADE THE FOLLOWING OBSERVATIONS: ORDER DELAY CONDONED. LEAVE GRANTED. PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL APPEAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHICH HAS ACCRUED TILL DATE. IT IS MADE CLEAR ITA NO.5457/M/2 013 M/S. BIRLA SUN LIFE ASSET MANAGEMENT COMPANY LIMITED 5 THAT AS FAR AS THE OUT STANDING INTEREST DEMAND AS OF DATE IS CONCERNED, IT WOULD BE OPEN TO THE DEPARTMENT TO RE COVER THAT AMOUNT IN CASE CIVIL APPEAL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, DURING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTIO N 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN I TS RETURNS. 8. A PERUSAL OF THE ABOVE OBSERVATIONS REVEALS THAT WHILE ACCEPTING THE PETITION FOR LEAVE TO FILE THE APPEAL VIDE ORDER DATED 08.05.2009, THE HO NBLE SUPREME COURT HAS DIRECTED THAT PENDING THE HEARING AND DISPOSAL OF THE CIVIL APPEA L, THE DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHICH HAS ACCRUED T ILL DATE. IT HAS ALSO BEEN MADE CLEAR THAT IT WOULD BE OPEN TO DEPARTMENT TO RECOVER THE AMOUNT O F OUTSTANDING INTEREST DEMAND IN CASE THE APPEAL OF THE DEPARTMENT IS ALLOWED. IT HAS ALS O BEEN DIRECTED THAT DURING THE PENDENCY OF THE CIVIL APPEAL, THE ASSESSEE WILL PAY TAX AS IF S ECTION 43B(F) IS ON STATUTE BOOK BUT AT THE SAME TIME THE ASSESSEE WOULD BE ENTITLED TO MAKE A CLAIM IN THIS RESPECT IN ITS RETURNS. 9. IN VIEW OF THE OBSERVATIONS OF THE HONBLE SUPRE ME COURT, IN OUR VIEW, IT WILL BE PROPER TO DISPOSE OF THIS APPEAL IN THE LIGHT OF THE ORDER OF THE HONBLE SUPREME COURT DATED 08.05.2009 PASSED IN THE CASE OF CIT VS. EXIDE IND USTRIES LTD. (SUPRA). WE THEREFORE DISPOSE OF THE PRESENT APPEAL WITH A DIRECTION THAT THE ASSESSEE WILL PAY THE TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK, HOWEVER, TILL THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXIDE INDUSTRIES LTD. (SUPRA), TH E REVENUE WILL NOT RECOVER THE PENALTY AND INTEREST WHICH MAY ACCRUE TILL THE DECISION OF THE APPEAL BY THE HONBLE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LTD. IT WOULD BE OPEN TO THE DEPARTMENT TO RECOVER THE OUTSTANDING INTEREST DEMAND IN CASE THE CIVIL APPEA L OF THE DEPARTMENT IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA) IS ALLOWED BY THE HONBLE SUPREME COURT. SUBJECT TO OUR ABOVE OBSERVATIONS, THE MATTER IS RESTORED TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F EXIDE INDUSTRIES LTD. (SUPRA). 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TH EREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. RESPECTFULLY,FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL,WE PARTLY ALLOW THE GROUND RAISED BY THE ASSESSEE HOLDING THAT THE ASSESSEE WILL PAY THE TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK, HOWEVER, TILL THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF CIT VS. EXIDE INDUSTRIES LTD. (SUPRA), THE REVENUE WILL NOT RECO VER THE PENALTY AND INTEREST WHICH MAY 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 8 ACCRUE TILL THE DECISION OF THE APPEAL BY THE HONB LE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LTD. WE FURTHER HOLD THAT IT WOULD BE O PEN TO THE DEPARTMENT TO RECOVER THE OUTSTANDING INTEREST DEMAND IN CASE THE CIVIL APPEA L OF THE DEPARTMENT IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA) IS ALLOWED BY THE HONBLE SUPREME COURT. 8. GROUND NO.7 PERTAINS TO ADHOC ALLOCATION OF NOTIONA L EXPENSES @20.5%OF AGRICULTURAL INCOME CLAIMED EXEMPT U/S.10(1)OF THE ACT. 8.1. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1.69 CRORES. IT WAS CONTENDED BEFORE H IM THAT AGRICULTURAL INCOME AROSE OF TREES GROWN IN LEASE LAND TAKEN BY IT, THAT AGRICULTURAL PRODUCE FROM TREES WAS USED AS RAW MATERIAL FOR MANUFACTURING PAPER, THAT IT HAD TAKEN AVERAGE VALUE OF PURCHASE PRICE OF SAME PRODUCTS WHICH IT GOT FROM THIRD PARTIES AS MARKET VALUE OF AGRICULTURAL PRODUCE AS PER RULE 7 OF INCOME TAX RULES 1962 (RULES). THE ASSESSEE ALSO P RODUCED EVIDENCE OF RECEIPT AND EXPENSES OF AGRICULTURAL ACTIVITIES.THE AO OBSERVED THAT AGA INST THE TOTAL MARKET VALUE OF AGRICULTURAL PRODUCE OF RS.2.01 CRORES THE ASSESSEE HAD SHOWN EXPENDITURE OF RS.32.16 LAKHS ONLY (16%), THAT EXPENSES WERE NOT VERIFIABLE, THAT THE QUANTITY OF PRODUCE EXTRACTED FROM FIELD COULD NOT BE INDEPENDENTLY VERIFIED, HE REWORKED AG RICULTURAL INCOME AND MADE ADDITION OF RS.25 LAKHS TO THE INCOMEE OF THE ASSESSEE. 8.2. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE FAA. BEFORE HIM,IT WAS ARGUED THAT THE ASSESSEE HAD INC URRED EXPENSES IN FORM OF EXTRACTION CHARGES AND TRANSPORT CHARGES OF RAW MATERIAL FROM THE RESPECTIVE PLANTATIONS TO THE FACTORY YARD.THE ASSESSEE SUBMITTED A COMPARATIVE CHART OF AGRICULTURAL INCOME VIS A-VIS AGRICULTURAL EXPENSES. THE ASSESSEE REFERRED TO THE CASE OF VIN AYKUMAR MODI (272ITR91) AND MADURA KNITTING CO. (30 ITR 764) . AFTER CONSIDERING THE A SSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE, THE FAA HELD THAT THE ASSESSEE HAD SH OWN EXPENDITURE OF RS.32,16,326/- FOR EARNING NET AGRICULTURAL INCOME OF RS.1.96 CRORES. HE REFERRED TO ORDER OF AY 2008-09 AND HELD THAT THE EXPENSES CLAIMED IN THAT YEAR WERE AL MOST IN THE SAME RATIO OF AY 2007-08, THAT HE HAD ALLOWED THE APPEAL FOR THAT YEAR, THAT DURIN G THE YEAR UNDER APPEAL THE ASSESSEE HAD SHOWN EXPENSES @15.95% ONLY, THAT THE EXPENDITURE S HOWN BY IT WAS QUITE LOW, THAT ASSESSEE WAS NOT MAINTAINING SEPARATE BOOKS FOR AGRICULTURAL INCOME/EXPENSES,THAT IT WAS NOT POSSIBLE TO FIND CORRECT AMOUNT OF EXPENSES.FINALLY, HE HELD THAT AGRICULTURAL EXPENSES SHOULD BE TAKEN @20.5% OF THE AGRICULTURAL INCOME AND UPHELD THE AD DITION OF RS.9.18 LAKHS. 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 9 8.3. BEFORE US,THE AR SUBMITTED THAT ASSESSEE HAD SUBMI TTED ALL THE DETAILS CALLED FOR BY AO WITH REGARD TO AGRICULTURAL INCOME AND EXPENDITURE, THAT EVERY YEAR WAS A DIFFERENT YEAR , THAT IN EARLIER YEARS THE EXPENDITURE WAS ON HIGHER SIDE , THAT SAME COULD NOT BE THE BASE FOR MAKING ADDITION. THE DR SUPPORTED THE ORDER OF THE FAA. 8.4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT T HE ASSESSEE HAD NOT MAINTAINED ANY SEPARATE BOOKS FOR AGRICULTURAL EXPENDITURE, THAT I T HAD NOT EXPLAINED THE REASON WHICH CAUSED THE LESSER EXPENDITURE FOR THE YEAR UNDER CONSIDERA TION AS AGAINST 20.9% TO 15.95%. UNTIL AND UNLESS SPECIFIC REASONS FOR A PARTICULAR YEAR ARE G IVEN BY AO/ASSESSEE THE STAND TAKEN IN THE PREVIOUS YEARS HAS TO BE ENDORSED. FOLLOWING THE RU LE OF CONSISTENCY, AS THE EXPENDITURE SHOWN BY THE ASSESSEE WAS ON LOWER SIDE AND NO SPEC IFIC REASON WAS GIVEN FOR DECLINE IN THE EXPENDITURE, SO, WE ARE OF THE OPINION THAT THE ORD ER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. UPHOLDING HIS ORDER,WE DECIDE GROU ND.NO.7 AGAINST THE ASSESSEE. 8.5. LAST GROUND OF APPEAL DEALS WITH PROFIT ON SALE OF INVESTMENT AND FIXED ASSETS IN COMPUTING BOOK PROFIT U/S.115JB OF THE ACT.DURING T HE COURSE OF HEARING BEFORE US,THE AR FAIRLY CONCEDED THAT THE ISSUE STANDS DECIDED AGAIN ST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL OF THE AY.2007 -08.FOLLOWING THE SAME,GROUND NO.9 I S DISMISSED. ITA /3565/M/13(AY :2009-10) 9. IT WAS BROUGHT TO OUR NOTICE THAT GROUNDS NO.1-4 HA VE BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE AND AGAINST THE AO BY THE ORDER OF THE TR IBUNAL FOR THE AY/2007-08(SUPRA). 32. SIMILARLY, THE ISSUE RAISED IN GROUND NO. 1.2, WHETHER THE CONDITIONS OF PROVISION OF SECTION 80IA(3)(II) ARE SATISFIED IN RESPECT OF DG SETS OR NOT. 33. THIS ISSUE TOO HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE RIGHT FROM ASSESSMENT YEAR 1997-98 ONWARDS UP TILL 2005-06. THUS, CONSISTENT WITH THE VIEW TAKEN IN THE EARLIER YEARS, THIS ISSUE TOO IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. 4. BRIEF FACTS, QUA THE ISSUE INVOLVED ARE THAT, THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF PAPER AND PAPER BO ARDS, OPTIC FIBER CABLES, JELLY FILLED CABLES, FROM ITS UNITS SITUATED AT DANDELI, UTTARA KANNADA, MYSO RE, KARNATAKA. IT IS ALSO ENGAGED IN OPERATION OF WIND MILL AT TAMIL NADU. THE ASSESSEE HAS ALSO SET UP VARIOUS UNITS OF POWER GENERATION VIZ. 4 D.G. 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 10 SETS OF POWER IN UNIT NO.1 IN THE ASSESSMENT YEAR 1 99697; 4 D.G. SETS OF POWER IN UNIT NO.2 IN ASSESSMENT YEAR 199798; 2 MULTIFUEL POWER BASED P LANT OF 3.8 MW AND 4 MW CAPACITY IN POWER UNIT NO.3 AND 4 RESPECTIVELY WHICH STARTED IN ASSES SMENT YEAR 19992000. ONE MORE MULTIFUEL BASED POWER PLANT OF 4.04 MW CAPACITY IN POWER UNIT NO.5 DURING THE ASSESSMENT YEAR 200001. ALL THESE UNITS WERE INSTALLED AT DANDELI IN THE STATE OF KAR NATAKA. BESIDES THIS, IN THE ASSESSMENT YEAR UNDER CONSIDERATION I.E., ASSESSMENT YEAR 200203, THE AS SESSEE HAS INSTALLED CHEMICAL RECOVERY BOILER WHICH WAS POWER UNIT NO.6. THE SAID UNIT WAS ENGAGED IN T HE GENERATION OF POWER IN THE FORM OF STEAM AND ELECTRICITY. THE POWER GENERATION FROM ALL THE SIX UNITS WAS TRANSFERRED AND CONSUMED MOSTLY BY THE PAPER DIVISION OF THE ASSESSEE. THE ASSESSEE HAS CL AIMED DEDUCTION UNDER SECTION 80IA IN RESPECT OF POWER UNIT NO.3 AT RS.4,69,97,342; POWER UNIT NO.4 AT RS. 7,51,92,287; POWER UNIT NO.5 AT RS. 6,51,73,746; POWER UNIT NO.6 AT RS.17,60,91,098. TH US, THE ENTIRE CLAIM UNDER SECTION 80IA AGGREGATED TORS. 36,34,54,473. IN RESPECT OF POWER GENERATED IN UNIT NO.1 AND UNIT NO.2, NO DEDUCTION UNDER SECTION 80IA WAS CLAIMED SINCE THERE WAS A LO SS. AS REGARDS THE CLAIM OF DEDUCTION UNDER SECTION 80IA, IN RESPECT TO UNIT NO.1 TO 4, THE ASS ESSING OFFICER FOLLOWED EARLIER YEARS ASSESSMENT ORDER FOR DENYING THE CLAIM. THE SUM AND SUBSTANCE OF THE CONCLUSION DRAWN BY THE ASSESSING OFFICER BASED ON THE EARLIER ASSESSMENTS WAS THAT; (I) THES E ARE CAPTIVE POWER CONSUMPTION UNITS, HENCE, NOT ENTITLED FOR DEDUCTION UNDER SECTION 80IA; (II) IN UNITS NO.2, 3 AND 4, THE ASSETS WERE TAKEN ON LEASE FROM IFCI, THEREFORE, IT IS NOT THE OWNER OF THE AS SET AND, CONSEQUENTLY, NO CLAIM OF DEDUCTION UNDER SECTION 80IA CAN BE ALLOWED; (III) REGARDING POWER UNITS NO.3, 4 AND 5, THE ASSESSEE CANNOT CLAIM DEDUCTION UNDER SECTION 80IA SINCE THE CONTRACT FOR THE OPERATION AND MAINTENANCE SERVICES WERE GIVEN TO POWERICA AND WARTSILA; AND IT WAS NOT RUN BY THE ASSESSEE; AND (IV) THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR INDIVIDUAL UNITS. 5. THE LEARNED COMMISSIONER (APPEALS), FOLLOWING TH E EARLIER YEAR ORDER OF THE LEARNED COMMISSIONER (APPEALS) FOR THE ASSESSMENT YEAR 200102, DECIDED THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IA, WHEREIN ONLY RELIEF FOR CLAIM OF DEDUCTION UN DER SECTION 80IA WAS GIVEN WITH RESPECT TO UNIT NO.1, ONLY AND FOR OTHER UNITS, IT WAS DENIED. 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 11 6. BEFORE US, THE LEARNED COUNSEL, MR. VIJAY MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT RIGHT FROM THE ASSESSMENT YEAR 199798 TO 200102, THE TR IBUNAL, IN ASSESSEES OWN CASE, HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE WHEREIN THE CLAIM F OR DEDUCTION UNDER SECTION 80IA, IN RESPECT OF THE POWER UNITS NO.1 TO 5, HAVE BEEN RESPECTIVELY ALLOW ED. THE COMPILATION OF THE TRIBUNAL DECISIONS HAS BEEN PLACED IN THE PAPER BOOK FROM PAGE567 TO 607. HE POINTED OUT THAT IN THE TRIBUNAL ORDER DATED 31ST JANUARY 2007, FOR THE ASSESSMENT YEAR 200102 IN ITA NO.8275/MUM./2005, THIS CLAIM FOR DEDUCTION NU/S 80IA, HAS BEEN CONSIDERED IN RESPECT OF ALL THE UNITS INCLUDING UNIT NO.5, WHICH WAS INSTALLED IN THE ASSESSMENT YEAR 200102. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, ADMITTED THAT INSOFAR AS THE CLAIM FOR DEDUCTION UNDER SECTION 80IA FOR UNIT NO.1 TO 5 IS CONCERNED, THE SAME ARE COVERED BY THE DECISION OF THE EARLIER YEARS OF THE TRIBUNAL, HOWEVER, HE REI TERATED THE FINDING AND THE CONCLUSION DRAWN BY THE ASSESSING OFFICER IN THE ASSESSMENT THE WEST COAST PAPER MILLS LTD. 8 ORDER I.E., THESE ASSETS WERE TAKEN ON LEASE AND WERE OUT SOURCED TO DIFFERENT AG ENCY AND NO SEPARATE BOOKS OF ACCOUNT WERE MAINTAINED IN RESPECT OF THESE UNITS. THEREFORE, TH E CLAIM HAS RIGHTLY BEEN DENIED BY THE ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER (APPEALS). 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUSE D THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AN D THE TRIBUNAL DECISIONS OF EARLIER YEARS. AS REGARDS THE CLAIM OF DEDUCTION FOR UNITS NO.2, 3, 4 AND 5 ARE CONCERNED, WE FIND THAT THE SAME IS SQUARELY COVERE D BY THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE RIGHT FROM THE ASSESSMENT YEAR 199798 TO 200102 RESPECTIVELY. IN THIS YEAR, THE CLAIM FOR DEDUCTION IS MAINLY WITH REGARD TO UNIT N O.3, 4 AND 5 WHICH HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL ON SIMILAR SET OF FACTS AND SIMILAR RE ASONS GIVEN BY THE ASSESSING OFFICER AND THE LEARNE D COMMISSIONER (APPEALS) IN THE EARLIER YEARS. FOR TH E SAKE OF READY REFERENCE, THE RELEVANT FINDINGS OF THE TRIBUNAL, WHICH IN TURN IS BASED ON THE EARLIER ORDER OF THE TRIBUNAL, IS REPRODUCED HEREIN BELOW: 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FI ND THAT THE ISSUE HAS BEEN ELABORATELY DISCUSSED IN PARA6 OF THE TRIBUNAL ORDER FOR THE A SSESSMENT YEAR 19992000, WHICH FOR THE SAKE OF COMPLETENESS IS REPRODUCED BELOW: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO N AND HAVE GONE THROUGH RECORDS INCLUDING THE VOLUMINOUS PAPER BOOK FILED BY THE AS SESSEE. THE ASSESSEE ALTHOUGH ENGAGED IN THE MANUFACTURE AND SALE OF PAPER AND PAPERBOARD S, MULTI LAYER BOARDS, ETC., WAS ALSO INTO THE BUSINESS OF POWER GENERATION RIGHT FROM TH E ASSESSMENT YEAR 199697. THE FINDINGS IN THE IMPUGNED ORDER ARE CLEARLY UNASSAILABLE. THE ASSESSEE HAS FROM TIME TO TIME RIGHT 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 12 FROM THE ASSESSMENT YEAR 199697 SET UP FOUR SUCH U NITS TO FACILITATE ITS POWER REQUIREMENT IN THE PAPER PLANT AT DANDELI IN KARNATAKA STATE. T HE ASSESSEE, AS THE RECORDS SHOW, MADE SUBSTANTIAL CAPITAL OUTLAYS FOR THIS P0URPOSE. THIS ONLY CONFIRMS THAT ASSESSEE WAS IN THE BUSINESS OF GENERATION OF POWER. HNOW THE QUESTION IS WHETHER THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA OF THE ACT COULD BE DE NIED MERELY O NTHE GROUND THAT THESE D.G. UNITS WERE CATERING TO THE CAPTIVE POWER REQUI REMENT. AS THE ASSESSING OFFICER PUT IT IF THE ASSESSEE HAS NOT REALIZED ANY REVENUE BY SELLIN G THE POWER TO OUTSIDERS, CAN THE ASSESSEE BE HELD TO BE ENTITLED FOR DEDUCTION UNDER SECTION 80IA OF THE ACT? THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS ONLY AN INTERDIVISION TRANS FER AND THERE WAS NO REVENUE REALIZED BY IT AND CONSEQUENTLY THERE WAS NO DERIVATION OF PROFIT OR INCOME IN THE BUSINESS OF INDUSTRIAL UNDERTAKING. THE QUESTIONS RAISED BY THE ASSESSING OFFICER HAVE ALL BEEN ANSWERED BY THE SUPREME COURT IN THE CASE OF ORIENT PAPER MILLS LTD ., 176 ITR 110. THIS DECISION OF THE SUPREME COURT DOES NOT BRING OUT THE FACTS. IT HAS ONLY AFFIRMED THE DECISION OF THE CALCUTTA HIGH COURT IN CIT V/S ORIENT PAPER MILLS LTD., 94 I TR 73. THE FACTS COULD ONLY BE FOUND IN THE JUDGMENT OF THE CALCUTTA HIGH COURT. THE ASSESS EE IN THAT CASE OWNED A PAPER MILL. IT SET UP A PLAT FOR THE MANUFACTURE OF CAUSTIC SODA, AN ESSENTIAL CHEMICAL FOR USE IN THE PROCESS OF MANUFACTURE OF PAPER. THE ASSESSEE OBTAI NED A SEPARATE LICENSE FOR THE MANUFACTURE OF CAUSTIC SODA AND THE PLANT WAS HOUSE D IN A SEPARATE BUILDING. THE INCOME TAX OFFICERS IN THAT CASE HELD THAT THE CAUSTIC SOD A PLANT WAS ANCILIARY TO THE MAIN MANUFACTURING UNIT AND NO PART OF CAUSTIC SOLD WAS SOLD TO ANY OUTSIDER AND, THEREFORE, NO RELIEF COULD BE CLAIMED BY THE ASSESSEE UNDER SECTI ON 15C OF THE 1922 ACT. THE MATERIAL PRODUCED IN THE PLANT WAS USED FOR CAPTIVE CONSUMPT ION. BEFORE THE TRIBUNAL, IT WAS CONTENDED BY THE REVENUE THAT THE LANGUAGE USED IN SECTION 15C WAS PROFIT AND GAIN DERIVED FROM AN INDUSTRIAL UNDERTAKING. UNLESS THE PROFITS AROSE BY THE SALE OF THE PRODUCT OF THE NEW PLANT, NO PROFIT COULD BE SAID TO HAVE B EEN DERIVED. THE ARGUMENT WAS THAT PROFIT SHOULD BE DIRECTLY DERIVED AND NOT INDIRECTLY OR DE EMED TO BE DERIVED. THE TRIBUNAL DID NOT ACCEPT THESE SUBMISSIONS OF THE REVENUE AND PROCEED ED TO GRANT THE RELIEF. THE HON'BLE CALCUTTA HIGH COURT CONFIRMED THE ORDER OF THE TRIB UNAL AND THE APEX COURT HAS DISMISSED THE APPEAL OF THE REVENUE BY TAKING SUPPORT FROM IT S OWN DECISION IN TEXTILE MACHINERY CORPORATION LTD. V/S CIT, 107 ITR 195 AND CIT V/S I NDIAN ALUMINIUM COMPANY LTD. V/S CIT, 107 ITR 195 AND CIT V/S INDIAN ALUMINIUM COMPA NY LTD., 108 ITR 367. THEREFORE, THE STAND OF THE ASSESSING OFFICER CANNOT BE ACCEPT ED. AGAIN THE CALCUTTA HIGH COURT WAS FACED WITH THE SAME SET OF FACTS IN THE CASE OF CIT V/S HINDUSTAN MOTORS LTD., 127 ITR 210. THE ASSESSEE IN THAT CASE WAS ENGAGED INT EH MANUFA CTURING OF MOTOR CARS. IT ESTABLISHED CERTAIN ANCILLARY UNITS. THE ASSESSING OFFICER REPE ATED HIS FINDINGS ON THE SAME LINE AS HE DID IN THE CASE OF ORIENT PAPER MILLS LTD. (SUPRA) AND DENIED THE RELIEF UNDER SECTION 80E OF THE 1961 ACT. THE CALCUTTA HIGH COURT HELD THAT ASS ESSEE IS ENTITLED TO SUCH RELIEF IRRESPECTIVE OF WHETHER THE ANCILLARIES MANUFACTURE D WERE SOLD BY THE ASSESSEE TO OUTSIDERS OR WERE USED BY ITS FOR ITS OWN MANUFACTURER OF CAR S. SIMILARLY, THE BOMBAY HIGH COURT IN CIT V/S SAHNEY STEEL AND PRESS WORKS LTD., 117 ITR 354, THE ASSESSING OFFICER DENIED SIMILAR CLAIM UNDER SECTION 80J OF THE ACT ON THE G ROUND THAT THE NEW UNIT WAS MANUFACTURING ARTICLES TO BE USED AS RAW MATERIAL F OR THE EXISTING BUSINESS OF THE ASSESSEE. THE BOMBAY HIGH COURT HELD THAT THE NEW UNIT MANUFA CTURED ARTICLES USED IN THE EXISTING BUSINESS OF THE ASSESSEE WAS NOT RELEVANT AND THE A SSESSEE WAS HELD TO BE ENTITLED FOR RELIED UNDER SECTION 80J OF THE ACT. IN THE LIGHT OF THESE DECISIONS, WE ARE OF THE OPINION THAT THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ONLY ON THE GROUND THAT THE DG SET MANUFACTURED THE POWER ONLY FOR THE CAPTIVE CONSUMPTION OF THE ASSES SEE. IT MAY BE STATED THAT THE TRIBUNAL IN THE ASSESSMENT YEAR 199798 AND 199899 HAS ALREADY GRANTED RELIEF IN RESPECT OF UNIT NO.I AND II WHICH WERE ESTABLISHED FOR THE PURPOSE CAPTI VE CONSUMPTION. MOREOVER, THE PROVISION OF SECTION 80IA(8) ITSELF SAYS THAT WHERE ANY GOODS OR SERVICES OF THE ELIGIBLE BUSINESS ARE TRANSFERRED TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE AND THE CONSIDERATION, IF ANY, FOR SUCH TRANSFER IS RECORDED IN THE ACCOUNTS OF TH E ELIGIBLE BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS OR SERVICES AS ON TH E PROFIT AND GAIN FOR SUCH TRANSFERRED BUSINESS SHALL BE COMPUTED AS IF THE TRANSFER HAS B EEN MADE AT MARKET VALUE AS ON THAT DATE. IN OTHER WORDS, THE PROVISIONS OF SECTION 80IA THEM SELVES PROVIDE AN ANSWER AND GIVE A 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 13 SOLUTION WHERE THERE IS A CAPTIVE CONSUMPTION FO TH E FINISHED GOODS OF THE ELIGIBLE UNITS. IN THE LIGHT OF THESE DISCUSSION, THE ORDER OF THE LEA RNED CIT(A) GRANTING 80IA RELIEF IN RESPECT OF DG UNITS I, II, III AND IV CANNOT BE FOUND FAULT WITH. THE OTHER CONSIDERATION THAT THE ASSESSEE HAS NOT OPERATED THESE UNITS BY ITSELF BUT GOT THEM OPERATED THROUGH OUTSIDERS AND, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR 80IA RE LIEF IN OUR VIEW, IS NOT A RIGHT APPROACH. SUCH CONSIDERATION IN OUR OPINION, IS NOT A RELEVAN T CONSIDERATION. KEEPING IN VIEW THE PURPOSE AND INTENT OF RELIEF UNDER SECTION 80IA, SU CH CONSIDERATION IN OUR OPINION IS NOT GERMANE FROM THE PROVISION OF SECTION 80IA OF THE A CT. IN THE LIGHT OF THE ABOVE, DISALLOWING THE ASSESSEE S CLAIM FOR DEDUCTION UNDER SECTION 80IA ON THE GROUND MADE OUT BY THE REVENUE CANNOT STAND. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 9. THUS, THERE BEING NO DEVIATION OF FACTS AND MAT ERIAL ON RECORD WE, THEREFORE, RESPECTFULLY FOLLOWING THE EARLIER YEARS PRECEDENCE, HOLD THAT THE CLAIM FOR DEDUCTION UNDER SECTION 80IA WITH RESPECT TO POWER UNITS NO.2, 3, 4 AND 5 WILL C ONTINUE TO BE ALLOWABLE AS DEDUCTION. THUS, GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. CONSIDERING THE ABOVE,WE DECIDE FIRST FOUR GROUNDS AGAINST THE AO. 10. GROUND NO.5 DEALS WITH THE ADOPTION OF RATE OF RS .3.50 PER UNIT TO BE TRANSFER PRICE FOR COMPUTING DEDUCTION U/S.80IA. REPRESENTATIVES OF BO TH THE SIDES AGREED THAT THE TRIBUNAL IN ITS ORDER FOR 2007-08 (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE (PARA 5-7, PG-4-6 PB142-145). 5. SO FAR AS THE ISSUE RAISED VIDE GROUND NO.1, WH ETHER ELECTRICITY DUTY SHOULD BE EXCLUDED WHILE CALCULATING THE TRANSFER PRICE OF ELECTRICITY DUTY FOR COMPUTING THE DEDUCTION U/S 80IA. 6. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASS ESSEE BY THE TRIBUNAL VIDE ORDER DATED 30.05.2014 IN ASSESSEES OWN CASE FOR AYS 2002-03 T O 2005-06. THE RELEVANT CONCLUSION AND FINDING OF THE TRIBUNAL AS GIVEN IN PARA 32 AND 33 READS AS UNDER:- 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. THE ASS ESSEE HAS WORKED OUT THE NOTIONAL SALE OF POWER SUPPLIED BY ITS POWER UNIT TO ITS PAPER DIVISION @ RS. 5.80 PER UNIT. THIS WAS ON THE BASIS OF AVERAGE ACTUAL GRID CHARGES CHARGED BY KARNATAKA ELECTRICIT Y BOARD FOR SUPPLYING THE ELECTRICITY TO THE ASSESSEE. THIS WAS SHOWN FROM THE AMOUNT OF THE BIL L AND THE TOTAL NUMBER OF UNITS CONSUMED. FROM THE SAID BILLS, THE ASSESSING OFFICER NOTED THAT TH E ASSESSEE IS PAYING FUEL EXCAVATION CHARGES, TAXES , ETC., WHICH SHOULD BE REDUCED FOR WORKING OUT THE A VERAGE PRICE PER UNIT FOR WORKING OUT THE SALE PRIC E OF THE ELECTRICITY SUPPLIED BY ITS POWER UNIT TO TH E PAPER DIVISION. BESIDES THIS, HE HAS ALSO APPORTI ONED INDIRECT EXPENSES ON THE BASIS OF THE TOTAL TURNOVE R FOR QUANTIFYING THE DEDUCTION UNDER SECTION 80IA CLAIMED BY THE ASSESSEE IN RESPECT OF POWER UNITS N O.3, 4 AND 5. THIS APPORTIONMENT OF INDIRECT EXPENSES IS A SEPARATE GROUND WHICH IS GROUND NO.9 AND THE SAME SHALL BE DISCUSSED SUBSEQUENTLY. THE BASIC ISSUE IN GROUND NO.8 IS WHAT SHOULD BE THE TR ANSFER PRICE FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER SECTION 80IA WITHIN THE AMBIT AND P ARAMETER OF SUBSECTION (8) OF SECTION 80IA. 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 14 SECTION 80IA(8), PROVIDES THAT, WHERE ANY GOODS OR SERVICES HELD FOR THE PURPOSES OF ELIGIBLE BUSINESS ARE TRANSFERRED TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE, THE CONSIDERATION IF ANY, FOR TRANSF ER, DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOO DS OR SERVICES AS ON THE DATE OF TRANSFER, THEN THE ASSESSING OFFICER CAN MAKE ADJUSTMENTS IN THE PROFI TS AFTER DETERMINING THE MARKET VALUE OF SUCH TRANSFER. THE SAID SECTION IN OTHER WORDS, EMPOWERS THE ASSESSING OFFICER WHERE THE TRANSFER OF GOODS AND SERVICES AS RECORDED IN THE ACCOUNTS OF THE ELI GIBLE BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE, THEN THE PROFITS DECLARED FOR THE ELIGIBLE B USINESS CAN BE ADJUSTED BY THE ASSESSING OFFICER ON SUCH BASIS SO AS TO ENSURE THAT THE GOODS AND SERVI CES ARE TRANSFERRED TO ITS OWN UNIT AT THE MARKET VALUE OF SUCH GOODS AND SERVICES. IN THE EXPLANATIO N TO SECTION 80IA(8), THE MARKET VALUE HAS BEEN DEFINED AS A PRICE THAT SUCH GOODS OR SERVICES WOUL D ORDINARILY FETCH IN THE OPEN MARKET. FETCHING OF THE PRICE IN THE OPEN MARKET HAS TO BE SEEN FROM TH E FACTORS WHICH ARE DETERMINED THROUGH NEGOTIATION BETWEEN THE PARTIES AND MUTUAL AGREEMENT AS ARRIVED AT A PRICE WHICH IS ACCEPTABLE BETWEEN THE BUYER AND THE SELLER IN THE OPEN MARKET CONDITIONS I.E., IN AN UNRELATED AND UNCONTROLLED TRANSACTIONS. OPEN MARKET CONDITIONS REFER TO THE CONDITIONS AND PRICE AVAILABLE FOR THE PUBLIC AT LARGE. IN THE PRESENT CASE, THE MARKET VALUE OF SUPPLY OF ELECTRICITY BY POWER UNIT OF THE ASSESSEE TO THE PAPER DIVISION OF THE ASSESSEE HAS TO BE SEEN FROM THE ANGLE, IF THE PAPE R UNIT HAS TO PURCHASE THE ELECTRICITY DIRECTLY FRO M THE KARNATAKA ELECTRICITY BOARD (AS BOTH THE POWER UNITS AS WELL AS THE PAPER UNITS ARE SITUATED IN KARNATAKA), THEN WHAT IS THE PRICE WHICH WOULD BE P AID BY THE PAPER UNIT TO THE KARNATAKA ELECTRICITY BOARD. THE TRANSFER OF THE PRICE AS CONTEMPLATED IN SECTION 80IA(8) HAS TO BE SEEN HAVING REGARD TO THE ARMS LENGTH CONDITION I.E., WHAT WOULD BE THE PRICE UNDER UNCONTROLLED TRANSACTIONS IN THE OPEN MARKET. IF THE PAPER DIVISION HAS BEEN PURCHASING T HE ELECTRICITY FROM THE KARNATAKA ELECTRICITY BOARD AT AN AVERAGE COST OF RS.5.80, WHICH FACT IS NOT IN DISPUTE, THEN THE SAME PRICE SHOULD BE CONSIDERED AS MARKET VALUE FOR BENCH MARKING THE PRICE AT WHICH P OWER UNITS ARE SUPPLYING THE ELECTRICITY TO THE PAPER DIVISION. IF THE TAXES AND DUTIES ARE PART OF THE PRICE AT WHICH THE POWER / ELECTRICITY IS SUPP LIED BY THE KARNATAKA ELECTRICITY BOARD TO THE PAPER DIV ISION, THEN THE SAME PRICE IS THE INDICATOR OF THE MARKET VALUE WHICH IS FETCHABLE IN THE OPEN MARKET. WE DO NOT FIND ANY REASON FOR EXCLUDING THE ELEMENT OF TAX AND DUTY WHILE DETERMINING THE MARK ET VALUE OF THE ELECTRICITY PRICE PER UNIT SUPPLIE D BY THE POWER UNIT TO THE ASSESSEE AS CONTEMPLATED I N SUBSECTION (8) OF SECTION 80IA. 33. COMING TO THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENT ATIVE, WHICH IS MOSTLY BASED ON THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR T HE ASSESSMENT YEAR 200506, THE SAME CANNOT BE ACCEPTED FOR THE REASON THAT FIRSTLY, THE PRICE OF ELECTRICITY PER UNIT SUPPLIED BY THE TAMIL NADU AND PRIVATE PARTIES TO THE MAHARASHTRA GOVERNMENT, CANN OT BE HELD TO BE APPLICABLE IN KARNATAKA AND, SECONDLY, THE RATE AT WHICH PRIVATE PARTIES ARE SEL LING THE POWER TO KARNATAKA ELECTRICITY BOARD CANNOT BE THE BENCH MARK FOR DETERMINING THE MARKET PRICE BECAUSE THE TERMS AND CONDITIONS IN WHICH THE KARNATAKA ELECTRICITY BOARD IS PROCURING THE EL ECTRICITY FROM SUCH PARTIES IS NOT KNOWN. FURTHER THE MARKET PRICE HAS TO BE SEEN AS A PRICE AT WHICH THE CUSTOMERS ARE GETTING THE ELECTRICITY IN THE O PEN MARKET. THAT SHOULD BE THE CRITERIA FOR BENCH MARKI NG THE MARKET PRICE UNDER SECTION 80IA(8). AS POINTED OUT BY THE LEARNED COUNSEL THAT IN THE EARL IER YEARS, THERE ARE TWO DIFFERENT OPINIONS AND CONCLUSIONS DRAWN BY THE TRIBUNAL. FIRST, IN THE AS SESSMENT YEAR 1997 98 AND 199899 WHICH ARE IN FAVOUR OF THE ASSESSEE AND HAS ATTAINED FINALITY AS NO FURTHER APPEAL HAS BEEN FILED BY THE DEPARTMENT 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 15 AND OTHER IN THE ASSESSMENT YEAR 19992000 AND 2000 01. IN THE SUBSEQUENT ORDERS, THE TRIBUNAL HAS NOT TAKEN NOTE OF THE DECISION OF THE EARLIER ORDER S. FURTHER, THE PROVISIONS OF SECTION 80IA(8) HAS A LSO NOT BEEN CONSIDERED FOR ARRIVING AT A DIFFERENT CON CLUSION. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE RENDERING OUR DECISION PURELY ON THE BASIS OF O UR INTERPRETATION OF STATUTORY PROVISIONS, SANS GOI NG BY ANY EARLIER YEAR PRECEDENCE. THUS, IN OUR OPINIO N, WE HAVE TO FOLLOW THE PROVISIONS AS CONTAINED IN SECTION 80IA(8) FOR DETERMINING THE MARKET PRICE, W HICH CANNOT BE ARRIVED BY REDUCING THE PRICE BY ANY OTHER FACTORS LIKE TAXES, DUTIES, ETC., AS THE SAME ARE EMBEDDED IN THE PRICE. THUS, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER ( APPEALS) ON THIS ISSUE AND ALLOW THE GROUND NO.8, IS TREATED AS ALLOWED. 7. THUS, RESPECTFULLY FOLLOWING THE PRECEDENCE OF E ARLIER YEARS, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. FOLLOWING THE ABOVE,WE DECIDE GROUND NO.5 AGAINST T HE AO. 11. SIXTH GROUND OF THE AO PERTAINS TO CLAIM FOR DEDUCT ION U/S.80IA IN RESPECT OF REVENUE FROM TRANSFER OF STEAM BY THE ASSESSEES POWER UNIT 6B AND 7. IT WAS BROUGHT TO OUR NOTICE THAT THIS ISSUE WAS DECIDED BY THE TRIBUNAL IN AY 2007-08.WE ARE REPRODUCING THE RELEVANT PORTION OF THE ORDER AND IT READS AS UNDER: 34. IN GROUND NO. 1.3, THE REVENUE HAS CHALLENGED WHETHER THE GENERATION OF STEAM AMOUNTS TO FORMATION OF POWER OR NOT SO AS TO BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IA FOR UNIT NO. 6A AND 6B. 35. THE TRIBUNAL IN THE EARLIER YEARS HAS BEEN DECI DING THE IMPUGNED ISSUE BY OBSERVING AND HOLDING AS UNDER:- 20. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED TH E FINDINGS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THE ASSES SEES CLAIM UNDER SECTION 80IA, WITH REGARD TO UNIT NO.6 IS THAT IT HAS INSTALLED A POWE R UNIT IN THE FORM OF CHEMICAL RECOVERY BOILER FOR THE GENERATION OF STEAM. THIS STEAM IS U SED FIRSTLY, TO ROTATE THE TURBINE WHICH GENERATES ELECTRICAL POWER FOR THE ASSESSEE WHICH I S USED IN THE PAPER MANUFACTURING PROCESS AND SECONDLY, FOR DRYING OF THE PULP. FOR THE FIRST USE, THE STEAM SO GENERATED BY THE CHEMICAL RECOVERY BOILER HAS A HIGH TEMPERATURE AND PRESSURE WHICH IS THEN TRANSFERRED THROUGH THE INLET TO RUN THE TURBINES. THIS TRANSFORMS TO ELECT RICAL ENERGY WHICH IS SUPPLIED TO PAPER DIVISION FOR RUNNING OF THE MACHINES. THE SECOND US E OF STEAM IS INDEPENDENTLY USING IT FOR EVAPORATING THE MOISTURE FROM THE PAPER PRODUCT OR FOR DRYING PULP BY THE ASSESSEE. ON THESE FACTS, WHETHER IT CAN BE HELD THAT THE SAID UNDERTA KING ON A STANDALONE BASIS HAS BEEN SETUP FOR GENERATION OF POWER OR NOT WITHIN THE MEANING O F SECTION 80IA(4)(IV). THE RELEVANT CLAUSE (IV)(A) OF SECTION 80IA(4), READS AS UNDER: (A) S ET UP IN ANY PART OF INDIA FOR THE GENERATION AND DISTRIBUTION OF POWER IF IT BEGINS T O GENERATE POWER AT ANY TIME DURING THE PERIOD BEGINNING ON FIRST DAY OF APRIL 1993 AND END ING ON 31ST DAY OF MARCH 2006. 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 16 21. THUS, THE STATUTE CONTEMPLATES GENERATION OF P OWER OR GENERATION AND DISTRIBUTION OF POWER. THE MOOT QUESTION BEFORE US IS, WHETHER THE STEAM GENERATED BY THE ASSESSEE, WHICH ROTATES THE TURBINE FOR RUNNING OF MACHINES USED FO R ITS MANUFACTURING PROCESS AND ALSO STEAM ALONE, IS A FORM OF POWER OR NOT. THE CASE OF THE LEARNED COMMISSIONER (APPEALS) IS THAT THE MEANING OF POWER AS CONTEMPLATED IN THE ST ATUTE IS GENERATION OF ELECTRICITY ALONE, WHEREAS THE CASE OF THE LEARNED COUNSEL BEFORE US I S THAT THE POWER IS A FORM OF ENERGY WHICH CAN BE ELECTRICAL, MECHANICAL, THERMAL OR ANY OTHER FORM OF ENERGY. THE INCOME TAX ACT, 1961, DOES NOT DEFINE THE WORD POWER. THE NEW OXF ORD DICTIONARY OF ENGLISH DEFINES THE WORD POWER AS ENERGY THAT IS PRODUCED BY MECHAN ICAL, ELECTRICAL OR OTHER MEANS WHICH IS USED FOR OPERATING DEVICE. OTHERWISE ALSO, GENER ATION OF STEAM IS A KIND OF ENERGY WHICH CAN BE CONVERTED INTO MECHANICAL OR ELECTRICAL ENER GY FROM WHICH POWER IS GENERATED. TO SAY THAT THE GENERATION OF POWER IS ONLY RESTRICTED TO GENERATION OF ELECTRICITY ALONE, IS TOO NARROW A VIEW. THE TERM POWER ENCOMPASSES A WHOLE RANGE OF ENERGY GENERATED IN VARIOUS FORMS TO RUN MACHINES, DEVICES, ETC. THIS P RECISE ISSUE HAD ALSO COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN SEVERAL CASES CITED SUPRA. THE TRIBUNAL IN SIAL SBEC BIO ENERGY LTD. (SUPRA), WHILE DECIDING THE ISSUE W HETHER GENERATION OF STEAM AMOUNTS TO GENERATION OF POWER OR NOT FOR THE PURPOSE OF DEDUC TION UNDER SECTION 80IA, HAS REFERRED CATENA OF DECISIONS AND ALSO THE DICTIONARY MEANING ON THE MEANING AND TERM OF POWER AND THEREAFTER, OBSERVED AND CONCLUDED AS UNDER: THE WORD 'POWER' USED IN S. 80-IA(LV) HAS NOT BEEN DEFINED IN THE STATUTE, THEN THE COMMON PARLANCE MEANING AS PER THE DICTIONARY IS NO RMALLY TAKEN INTO ACCOUNT. THE WORD 'POWER' HAS TO BE GIVEN A MEANING WHICH IS IN COMMON PARLANCE AND IN COMMON PARLANCE THE WORD 'POWER' SHALL MEAN THE ENE RGY ONLY. THE ENERGY CAN BE OF ANY FORM, BE IT MECHANICAL, BE IT ELECTRICAL, BE IT WIND OR BE IT THERMAL. THE STEAM PRODUCED BY THE ASSESSEE ON THE PRINCIPLE OF INTERP RETATION OF STATUTE SHALL ONLY BE TERMED AS POWER AND SHALL QUALITY FOR THE BENEFITS AVAILABLE UNDER S. 80-IA(IV). THE ASSESSEE IS INTO THE BUSINESS OF GENERATION OF POWE R. THE GENERATION OF POWER TAKES PLACE WHEN BIOGAS IS BURNT IN A BOILER AND HEAT GEN ERATED IS USED TO HEAT UP THE WATER IN THE BOILER AND GENERATES STEAM. THE STEAM SO GENERATED IS AT HIGH TEMPERATURE AND PRESSURE. THIS STEAM IS THEN TRANSF ERRED INTO AN INLET OF STEAM TURBINE THROUGH PIPES. THE ENERGY AVAILABLE IN STEA M IS USED TO ROTATE THE TURBINE, THE TURBINE THEN ROTATES THE ALTERNATAR WHICH GENER ATES ELECTRICAL ENERGY. THE STEAM AFTER BEING USED TO ROTATE TURBINE IS DRAWN FROM TH E TURBINE OUTLET AND THEN FINALLY USED. IN THIS BACKGROUND, THE STEAM SO GENERATED IS GENERATED BY THE INDUSTRIAL UNDERTAKING AND THE RECEIPT WOULD BE THE RECEIPT FR OM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING WITHIN THE MEANING OF S. 80-IA WHICH WO ULD QUALIFY FOR THIS BENEFIT. THE ASSESSEE, THEREFORE, SUCCEEDS ON THIS ACCOUNT ALSO. THE 'OBSERVATIONS OF THE 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 17 AUTHORITIES BELOW THAT IT IS ONLY THE ELECTRICAL FO RM OF ENERGY WHICH QUALIFIES FOR DEDUCTION UNDER S. 80-IA, WITH REFERENCE TO THE PRO VISIONS OF ELECTRICITY ACT, WAS NOT CORRECT. 22. SIMILARLY, IN THE DECISION OF DCIT V/S MAHARAJA SHRI UMED MILLS LTD., THE TRIBUNAL HELD THAT LIKE ELECTRICITY, STEAM IS ALSO A FORM OF POWE R WHICH IS ELIGIBLE FOR RELIEF UNDER SECTION 80IA(4). THE RELEVANT OBSERVATION AND THE CONCLUSIO N DRAWN BY THE TRIBUNAL IS REPRODUCED BELOW: 5. CONSIDERING THE ABOVE SUBMISSIONS, WE F IND SUBSTANCE IN THE ARGUMENTS OF THE LEARNED AUTHORISED REPRESENTATIVE THAT LIKE ELECTRI CITY, STEAM IS ALSO A FORM OF POWER AS PER THE DICTIONARY MEANING REPRODUCED BY THE LEARNED CI T(A) AT PP. 5 AND 5 (SIC) OF THE FIRST APPELLATE ORDER. WE ALSO CONCUR WITH THE VIEW OF TH E LEARNED AUTHORISED REPRESENTATIVE THAT THERE IS LITTLE ROOM FOR ANY DOUBT THAT SCIENTIFICA LLY OR IN GENERAL PARLANCE, 'PRODUCTION OF STEAM' AND 'GENERATION OF STEAM'; OR FOR THAT MATTE R, 'PRODUCTION OF ELECTRICITY' AND 'GENERATION OF ELECTRICITY', SHALL HAVE THE SAME ME ANING WHICHEVER OF THE TWO BE THE ITEM UNDER CONSIDERATION. IN THIS REGARD THE LEARNED AUT HORISED REPRESENTATIVE HAS ALSO REFERRED THE DEFINITION OF WORD 'GENERATE' UNDER S. 2(29) OF THE ELECTRICITY ACT, 2003 AS PER WHICH 'GENERATE' MEANS TO PRODUCE ELECTRICITY FROM A GENE RATING STATION FOR THE PURPOSE OF GIVING SUPPLY TO ITS ANY PREMISES OR ENABLING A SUPPLIER T O BE SO GIVEN. THE AO HAS TRIED TO POINT OUT THE INTENTION OF THE LEGISLATURES BY REFERRING TO S. 80IA(4)(IV)(B) TO INFER THAT INTENTION IS TO PROVIDE BENEFIT TO THE GENERATION OF ELECTRICITY ONLY, SINCE IN THE SUB-CL. (B) TRANSMISSION AND DISTRIBUTION LINES ARE MENTIONED WHICH CAN BE O F ELECTRICITY ONLY. SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE IN THIS REGARD TO WHICH WE ALSO AGREE REMAINED THAT SUB- CLS. (A), (B) AND (C) OF S. 80IA(4)(IV) PROVIDE FOR DEDUCTION IN THE CASES OF THREE TYPES OF UNDERTAKING VIZ. THE ONE WHICH IS ENGAGED IN GENERA TION OR GENERATION AND DISTRIBUTION OF POWER; SECOND, WHICH START TRANSMISSION OR DISTRIBU TION LINES; AND THE THIRD, WHICH UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIZATION OF THE EXISTING NETWORK OF TRANSMISSION OR DISTRIBUTION LINES. ALL THESE THREE CLAUSES DEAL WITH THE THREE DIFFERENT CATEGORIES OF THE UNDERTAKING. THESE THREE TYPES OF UNDERTAKINGS REFE RRED TO IN THE SAID SUB-CLS. (A), (B) AND (C) ARE DIFFERENT AND INDEPENDENT OF EACH OTHER. THUS W HILE DEALING (WITH) ONE SUB-CLAUSE, INFERENCE NEED NOT AND CANNOT BE DRAWN FROM THE OTH ER SUBCLAUSE. ON PERUSAL OF THESE PROVISIONS, WE AGREE WITH THE PLEA OF THE LEARNED A UTHORISED REPRESENTATIVE THAT CASE OF THE ASSESSEE FALLS IN SUB-CL. (A) ITSELF AND THE LEGISL ATIVE INTENT INFERRED BY THE AO WITH REFERENCE TO SUB-CL. (B) IS SUPERFLUOUS, JUST LIKE THERE IS T RANSMISSION OR DISTRIBUTION LINES FOR ELECTRICITY THERE ARE TRANSMISSION AND DISTRIBUTION LINES FOR S TEAM TOO. THEREFORE, THERE IS NO BASIS WHATSOEVER FOR DRAWING DISTINCTION BETWEEN THE TWO OR A ROOM FOR ANY CONFUSION BETWEEN THE TWO PROPOSITIONS. THE 'POWER' AND 'ENERGY' ARE SYNO NYMOUS, WHICH CAN BE IN SEVERAL TYPES AND FORMS, BE IT HEAT, WHICH IS STEAM OR MECHANICAL OR ELECTRICAL, WIND OR BE IT THERMAL. WE 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 18 ALSO AGREE WITH THIS PLEA OF THE LEARNED AUTHORISED REPRESENTATIVE THAT IF THE INTENT OF THE LEGISLATURE REMAINED TO RESTORE THE APPLICATION OF THE BENEFIT OF DEDUCTION UNDER S. 80-IA TO GENERATION OF ELECTRICITY ONLY, IT WOULD HAVE BEEN SPECIFICALLY SO WORDED BY USING THE CONNOTATION 'ELECTRICAL POWER' ONLY RATHER THAN THE CONNOTATION 'POWER' OMNIBUS. AS PER CHAMBERS TWENTIETH CENTURY DICTIONARY, STEAM-POWER; IS A SPELL OF TRAVEL BY STEAM POWER; ENERGY, FORCE, SPIRIT FOR, USING, WORKED BY STEAM; TO RISE OR PASS OFF IN STEAM OR VAPOUR, OR SMELL; TO BECOME DIMMED WITH CONDENSED VAPOUR (O FTEN WITH UP); TO MOVE BY MEANS OF STEAM. AS PER THE CAMBRIDGE INTER NATIONAL DICTIONARY OF ENGLISH, THE STEAM IS THE HOT GAS THAT IS PRODUCED WHEN WATER BO ILS; STEAM CAN BE USED TO PROVIDE POWER, STEAM TURBINES OF A STEAM ENGINE/LOCOMOTIVE OF THE AGE OF STEAM. THUS THERE IS NO DOUBT, LIKE ELECTRICITY, STEAM IS ALSO A FORM OF POWER. THE ARG UMENTS ADVANCED ON BEHALF OF THE ASSESSEE ALSO FIND SUPPORT FROM THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SIAL SBEC BIOENERGY LTD. VS. DY. CIT (SUPRA) ON AN IDENTICAL ISSUE WHEREIN DEALING WITH THE MATTER IN DETAIL, IT HAS BEEN HELD THAT THE WORD 'POWER' HAS TO BE GIVEN A MEANING WHICH IS IN COMMON PARLANCE AND IN COMMON PARLANCE THE WORD 'POWER' SH ALL MEAN THE ENERGY ONLY. THE ENERGY CAN BE OF ANY FORM, BE IT MECHANICAL, BE IT ELECTRI CAL, BE IT WIND OR BE IT THERMAL. THE STEAM PRODUCED BY THE ASSESSEE ON THE PRINCIPLE OF INTERP RETATION OF STATUTE SHALL ONLY BE TERMED AS POWER AND SHALL QUALIFY FOR THE BENEFITS AVAILABLE UNDER S. 80-IA(IV), HELD THE TRIBUNAL. UNDER THESE CIRCUMSTANCES, WE FULLY CONCUR WITH THE DECISION ON THE ISSUE ARRIVED AT BY LEARNED CIT(A) THAT ASSESSEE IS IN THE BUSINESS OF GENERATION OF POWER AND THAT THE STEAM SO GENERATED BY THE INDUSTRIAL UNDERTAKING AND RECEIPT FROM THE BUSINESS OF INDUSTRIAL UNDERTAKING IS WITHIN THE MEANING OF S. 80-IA WHICH WOULD QUALIFY FOR THIS BENEFIT. THE FIRST APPELLATE ORDER IS THUS UPHELD. THE GROUND IS THUS REJECTED. 23. FROM THE AFORESAID DECISIONS, IT CAN BE INFERR ED THAT THE GENERATION / PRODUCTION OF STEAM IS ALSO A FORM OF POWER AND THE UNIT 6 WHICH IS AN UNDERTAKING SETUP FOR GENERATION OF STEAM FOR ITS MANUFACTURING PROCESS CAN BE SAID TO BE FOR GENERATION OF POWER. THE BASIS ON WHICH THE LEARNED COMMISSIONER (APPEALS) HAS TRI ED TO DISTINGUISH THE DECISION OF SIAL SBEC BIO ENERGY LTD. (SUPRA) IS VERY SUPERFICIAL. W HAT NEEDS TO BE SEEN IS, WHETHER GENERATION OF STEAM CAN BE SAID TO BE GENERATION OF POWER OR NOT, THEN, THE FINDING AND THE CONCLUSION DRAWN BY THE TRIBUNAL IN THE AFORESAID DECISION AFTER REFERRING TO THE CA TENA OF DECISIONS AND VARIOUS OTHER PROVISIONS CLEARLY CLINCHES THE POINT. NOW COMING T O THE OTHER OBSERVATION OF THE LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE HAS NOT UN DERTAKEN THE GENERATION OF POWER IN THIS YEAR ALSO, WE FIND THAT THE SAME IS INCORRECT ON FA CTS BECAUSE THE ASSESSEE HAS ALREADY FILED A CERTIFICATE FROM THE KARNATAKA STATE BOILER INSPECT ION DEPARTMENT THAT THE ASSESSEE HAS GENERATED STEAM DURING THE PERIOD FROM 3RD MAY 2001 TO 6 TH MAY 2002 WHICH MOSTLY FALLS IN 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 19 THIS YEAR ONLY AND THE RATE OF QUANTITY GENERATED H AS ALSO BEEN MENTIONED. THIS GENERATION OF STEAM HAS BEEN EVALUATED AT A REALISABLE MARKET VAL UE BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AND THE ASSESSEE HAS ALSO DEBITED EXPENDITURE INCUR RED FOR THE GENERATION OF POWER. THUS, ON THESE FACTS ITSELF, IT CANNOT BE HELD THAT THE ASSE SSEE HAS NOT UNDERTAKEN THE GENERATION OF POWER IN THIS YEAR. THE SECTION PROVIDES THAT THE A SSESSEE MUST BEGIN TO GENERATE POWER DURING THE PERIOD DEFINED UNDER THE STATUE AND THE IMPUGNED ASSESSMENT YEAR DEFINITELY FALLS WITHIN THAT PERIOD. LASTLY, INSOFAR AS THE OBSERVAT ION AND THE CONCLUSION OF THE ASSESSING OFFICER, WHICH ARE BASED ON SIMILAR REASONS AS GIVE N FOR UNIT1 TO 5, THE SAME IS ALSO NOT SUSTAINABLE AS THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE ON THESE REASONING IN FAVOUR OF THE ASSESSEE. THUS, WE SET ASIDE THE IMPUGNED ORDER PAS SED BY THE LEARNED COMMISSIONER (APPEALS) ON THIS SCORE AND HOLD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA WITH REGARD TO UNIT6 ALSO AS A STAND ALONE PO WER GENERATING UNDERTAKING. GROUND NO.5 RAISED BY THE ASSESSEE IS THUS TREATED AS ALLO WED. 37. THUS, RESPECTFULLY FOLLOWING THE SAME, WE DECID ED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE ABOVE GROUND NO.6 IS D ECIDED AGAINST THE AO. 12. NEXT GROUND IS ABOUT DELETING THE DISALLOWANCE U/S. 8D(2)(II) OF THE RULES R.W.S. 14A OF THE ACT. IT WAS STATED BY THE AR THAT ASSESSEE HAD SUFFICIENT OWN FUNDS, THAT THE TRIBUNAL, WHILE DECIDING THE APPEAL FOR AYS 2002-03 TO 2005-0 6 HAD DECIDED THE ISSUE AGAINST THE ISSUE AGAINST AO,AS FOLLOW: 218. GROUND NO.4, 4.1 AND 4.2, READ AS UNDER: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE MADE U/ S 14A. 4.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE FINDINGS OF THE CIT(A) THAT THE ASSESSEE HAD SUFFICIENT FUND AVAILA BLE AS INTEREST FREE FROM SALES TAX DEFERRAL LOAN TO MEET THE INVESTMENT IN SECURITIES IS ERRONEOUS AND WITHOUT ANY MATERIAL ON RECORD. 4.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE FINDINGS OF THE CIT(A) IS CONTRARY TO THE ESTABLISHED LAW INASMUCH AS THE ASSESSEE FAILED TO ESTABLISH THE NEXUS BETWEEN AVAILABILITY OF INTEREST FREE FUN DS FOR INVESTMENTS IN THE SECURITIES FROM WHICH THE DIVIDEND WAS EARNED. 219.BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT IN THIS YEAR, THE ASSESSING OFFICER HAS ONLY DISALLOWED INTEREST AND NO ADMINISTRATIVE EXPENSES HAS BEEN DISALLOWED UNLIKE THE APPEAL FOR THE ASSESSMENT YEAR 200405 IN ITA NO.5708/ MUM./20 08. HE SUBMITTED THAT LIKE IN THE EARLIER YEARS ALSO, THE ASSESSEE HAD HUGE SURPLUS F UNDS IN THE FORM OF SHARE CAPITAL, RESERVE 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 20 SURPLUS AGGREGATING TO RS. 164,66,62,800, AS ON 3 1ST MARCH 2005, WHEREAS INVESTMENT STOOD AT RS. 44,74,99,000. THUS, THE DECISION OF THE HO N'BLE JURISDICTIONAL HIGH COURT IN RELIANCE UTILITIES AND POWER PVT. LTD. (SUPRA) WILL APPLY TO THE FACTS OF THE PRESENT CASE. 220. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON TH E OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 221.AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THIS ISSUE HAS ALREADY BEEN ADJUDICATED BY US IN THE APPEAL FOR THE ASSESSMENT YEAR 200203 AND 200405. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS HUGE INTEREST FREE AND SURPLUS FUNDS IN THIS YEAR ALSO AS COMPARED TO THE INVESTMENT WHICH STOOD AS ON 31ST M ARCH 2005. IN SUCH A SITUATION, THERE CANNOT BE A NOTIONAL DISALLOWANCE OF INTEREST UNDER SECTION 14A. THE PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN RELIANCE UTILITIES AND POWER PVT. LTD. (SUPRA) WILL BE SQUARELY APPLICABLE. THUS, THE GROUND NO.4, 4.1 AND 4.2 ARE TREATED AS ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE ORDER SEVENTH GROU ND IS DECIDED AGAINST THE AO. 13. GROUND NO.8 DEALS WITH DELETING THE ADDITION OF UNU TILISED MODVAT CREDIT FROM CLOSING STOCK OF RAW MATERIAL U/S. 145A OF THE ACT. WE FIND THE IDENTICAL ISSUE IS DECIDED BY THE TRIBUNAL AGAINST THE AO IN THE APPEAL FOR THE AY.20 07-08(SUPRA)AS UNDER: 43. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED TH E DELETION OF ADDITION ON ACCOUNT OF UNUTILIZED MODVAT CREDIT TO THE VALUE OF CLOSING STOCK OF RAW MATERIAL IN VIEW OF PROVISIONS OF SECTION 145A. 44. THIS ISSUE IS AGAIN HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING MANNER :- 230. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSING OFFICER HAS HELD THAT THE UNUTILISED MODVAT CREDIT HAS TO BE ADDED IN THE CLO SING STOCK IN VIEW OF THE PROVISIONS OF SECTION 145A. THE ASSESSING OFFICER HAS INCREASED T HE VALUE OF CLOSING STOCK, HOWEVER, HE DID NOT MAKE ANY CORRESPONDING ADJUSTMENT IN THE OPENIN G STOCK. BEFORE THE LEARNED COMMISSIONER (APPEALS), IT WAS SUBMITTED THAT IN TH E COMPUTATION, THE ASSESSEE HAS DULLY MADE THE ADJUSTMENT IN THE OPENING AND CLOSING STOC K AND ALSO THE OTHER ADJUSTMENT IN PURCHASES AND SALE. BASED ON THIS FACTUM, THE LEARN ED COMMISSIONER (APPEALS) DELETED THE SAID ADDITION AS THE NET EFFECT WAS NIL. HE ALSO SUBMITTED A COPY OF THE TRIBUNAL ORDER IN MIRC LTD., IN ITA NO.849/MUM./2010, ORDER DATED 13T H MARCH 2013, IN SUPPORT OF HIS CONTENTION. 231. THE LEARNED DEPARTMENTAL REPRESENT ATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 232. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW. WE AGREE IN PRINCIPLE THAT CORRESPONDING ADJ USTMENT HAS TO BE MADE IN THE OPENING STOCK AS HELD BY THE JURISDICTIONAL HIGH COURT IN C IT V/S MAHALAXMI GLASS WORKS PVT. LTD., [2009] 318 ITR 116 (BOM.). THE FINDING OF FACT AS R ECORDED BY THE LEARNED COMMISSIONER (APPEALS) THAT AFTER MAKING THE ADJUSTMENTS MADE BY THE ASSESSEE IN THE OPENING STOCK AND 3788/M/13&3565/M/13-WESTCOAST PAPER MILL 21 PURCHASE AND SALE, THE NET EFFECT IS NIL APPEARS TO BE BASED ON FACT. THUS, WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH FINDINGS OF FACT WHICH HAS NOT BEEN REBUTTED AND, HENCE, THE GROUND NO.6(I) AND 6(II) RAISED BY THE REVENUE STAN D DISMISSED. 45. THUS, ON SIMILAR LINES, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE. FOLLOWING THE ABOVE,WE DECIDE THE GROUND NO.13 AGAI NST THE AO. 14. LAST GROUND PERTAINS TO DELETING DISALLOWANCE U/S. 14A OF THE ACT IN COMPUTING BOOK PROFIT U/S. 116JB. 14.1. THE AR AND DR STATED THAT THE TRIBUNAL HAD DECIDED THE ISSUE AGAINST THE ASSESSEE, WHILE DECIDING THE APPEAL FOR AY 2007-08(SUPRA),AS FOLLOW: 25. GROUND NO. 8 IS WITH REGARDS TO DISALLOWANCE O F EXPENSES INCURRED FOR EARNING OF EXEMPT DIVIDEND INCOME I.E. DISALLOWANCE U/S 14A WHETHER T O BE INCLUDED WHILE COMPUTING THE BOOK PROFIT. 26. THIS ISSUE WOULD BE DECIDED AGAINST THE ASSESSE E IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GOETZE INDIA LTD. IN ITA NO. 1179 OF 2010, WHEREIN HONBLE HIGH COURT HAS HELD THAT DISALLOWANCE MADE U/S 14A WOULD BE IN CLUDED WHILE COMPUTING THE BOOK PROFIT. SINCE WE HAVE ALREADY CONFIRMED THE DISALLOWANCE OF RS. 5 0,000/-, THEREFORE, THE SAME SHALL ALSO BE INCLUDED IN THE BOOK PROFIT. ACCORDINGLY, GROUND NO . 8 AS RAISED BY THE ASSESSEE IS DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE ORDER, LAST GROUND IS DECIDED IN FAVOUR OF THE AO. AS A RESULT,APPEALS FILED BY THE ASSESSEE AND THE A O STAND PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH , SEPTEMBER,2016. 2016 SD/- SD/- ( / R.L.NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14.09.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.