M/s. Modipon Ltd., Ghaziabad V. ITO, New Delhi

ITA 3825/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3091 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 02-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANTOSH AGGARWAL
• Keywords: Depreciation; Business expenditure; Earning of tax free income; Additional evidence
• Section: 43B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 3825 /DEL/201 4 A.Y.: 2009 - 10 M/S MODIPON LTD. MODINAGAR 201 204 GHAZIABAD (UP) PAN: AAACM2069E VS . ITO, WARD 5 ( 4 ) CENTRAL REVENUE BUILDING NEW DELHI 110 002 ITA NO. 3954 /DEL/201 4 A.Y.: 2009 - 10 ITO, WARD 5 ( 4 ) CENTRAL REVENUE BUILDING NEW DELHI 110 002 VS . M/S MODIPON LTD. MODINAGAR 201 204 GHAZIABAD (UP ) (APPELLANT) (RESP ONDENT ) A SSESSEE BY SH. SANTOSH AGGARWAL, AD V. DEPARTMENT BY SH. ATIQ AHMED, SR.DR DATE OF HEARING 27.02.2018 DATE OF PRONOUNCEMENT 15.03.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER THESE CROSS APPEALS ARE FILED BY REVENUE AS WELL AS ASSESSEE AGAINST THE ORDER DATED 30/04/14 PASSED BY LD.CIT(A) - 8, NEW DELHI FOR ASSESSMENT YEAR 2009 - 10, ON THE FOLLOWING GROUNDS. ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 2 ITA 3954/DEL/14 A.Y. 2009 - 10 (REVENUE) 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, LD.CI T(A) ERRED IN DELETING ADDITION OF CENVAT CREDIT EXPENDITURE RS.2,35,86,612/ - MADE BY THE A.O. WITHOUT FINALITY IN THE MATTER. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, LD.CIT(A) ERRED IN DELETING ADDITION OF PRIOR PERIOD EXPENSES RS.1,92,84,814/ - MADE BY THE A.O. 3. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, LD.CIT(A) ERRED IN DELETING ADDITION OF SALE OF FIXED ASSETS RS.7,75,00,000/ - MADE BY THE A.O. WITHOUT CALLING FOR REMAND REPORT BEF ORE ACCEPTING ADDITIONAL EVIDENCES. 4. THAT THE ORDER OF LD.CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. ITA 3825/DEL/14 A.Y. 2009 - 10 (ASSESSEE) 1. THAT THE ORDER OF LD.CIT(A) - VIII, NEW DELHI, DT. 30.4.2014 IS WRONG ON FACTS AND BAD IN LAW. 2. THAT THE CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF RS.25,003/ - U/S 14A OF THE ACT. HE FAILED TO APPRECIATE THAT NO EXPENDITURE WAS INCURRED IN RELATION TO INCOME BY WAY OF DIVIDEND AND AS SUCH NO EXPENDITURE WAS TO BE DEDUCTED U/S 14A OF THE ACT. 3. THAT THE CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF CLOSU RE AND VRS RS.2,51,49,364/ - . 4. THAT THE CONCLUSIONS AND INFERENCES OF A.O./OR CIT(A) ARE BASED ON SUSPICIONS, CONJECTURES, SURMISES, EXTRANEOUS AND IRRELEVANT CONSIDERATIONS, ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 3 5. THAT THE AFORESAID GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 6. THAT THE RELIEFS PRAYED FOR MAY KINDLY BE ALLOWED AND ORDER OF A.O./CIT(A) MAY KINDLY BE QUASHED, SET ASIDE, ANNULLED OR MODIFIED. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF A PPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCOME AT NIL . LD.AO OBSERVED DURING THE ASSESSMENT PROCEEDINGS THAT ASSESSEE CLAIMED EXPENDITURE OF RS.2,35,86,612/ - AS UNUTILISED BALANC E OF CENVAT CREDIT. FURTHER LD. AO OBSERVED THAT ASSESSEE INCURRED AND CLAIMED PRIOR PERIOD EXPENSES AMOUNTING TO RS.10,65,08,814/ - , OUT OF WHICH RS.8,72,24,000/ - HAS BEEN SUO MOTO DISALLOWED BY ASSESSEE UNDER SECTION 43B OF THE INCOME TAX ACT, 1961 (THE ACT) AND THE BALANCE HAS BEEN CLAIMED AS BUSINESS EXPENDITURE. LD.AO ALSO OBSERVED THAT ASSESSEE RECEIVED A SUM OF RS.7,75,00,000/ - WHICH WAS SHOWN AS ADVANCE AGAINST SALE OF FIXED ASSETS IN THE BALANCE SHEET FROM M/S SAINI AND STEELS PVT. LTD. , AS THE S ALE HAS NOT BEEN EFFECTUATE D . VARIOUS SUBMISSIONS MADE BY ASSESSEE IN VIEW OF THE QUERY RAISED IN RESPECT OF THE EXPENDITURE CLAIMED BY ASSESSEE WHICH WAS NOT ACCEPTABLE TO LD.AO . LD.AO MADE FOLLOWING ADDITION IN THE HANDS OF ASSESSEE: INCOME AS RETURNE D (AS PER REVISED COMPUTATION) ( - ) RS.10,49,17,858/ - ADDITION DISALLOWANCE U/S 14A RS. 25,003/ - ADDITION ON ACCOUNT OF CLOSURE RS.2,51,49,364/ - ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 4 OF VRS COMPENSATION ADDITION ON ACCOUNT OF CENVAT CREDIT RS. 2,35,86,612/ - ADDITION ON ACCOUNT OF PRIOR PERIOD EXPENSES RS. 1,92,84,814/ - ADDITION ON ACCOUNT OF SALE OF FIXED ASSETS TOTAL INCOME LESS: BROUGHT FORWARD BUSINESS LOSS/DEPRECIATION INCOME ASSESSED RS.7,75,00,000/ - (+) RS. 4,06,27,935/ - ( - ) RS. 4,06,27,935/ - N I L 2.1. AGGRIEVED BY THE ORDER OF LD.AO, ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). LD.CIT(A) DELETED ADDITIONS MADE BY LD.AO BUT CONFIRMED THE COMPUTATION OF DISALLOWANCE UNDER SECTION 14 A OF THE ACT. 2.2. AGGRIEVED BY THE ORDER OF LD.CIT (A) REVENUE AS WELL AS ASSESSEE ARE IN APPEAL BEFORE US NOW. 3. WE SHALL FIRST TAKE UP THE APPEAL FILED BY REVENUE IN ITA NO. 3954/DEL/14. 3.1. GROUND NO.1 RAISED BY REVENUE IS AGAINST THE DELETING OF ADDITION OF CENVAT CREDIT EXPENDITURE AMOUNTING TO RS.2,35,86,612/ - . LD.DR SUBMITTED THAT AS SESSEE CLAIMED EXPENDITURE OF RS.2,35,86,612 / - , AS UNUTILISED BALANCE OF CENVAT CREDIT. LD. AO OBSERVED THAT AN APPLICATION WAS MADE BY ASSESSEE TO THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE FOR REFUND OF THE CLAIM WHICH WAS REJECTED VIDE ORDER DATED 3 0/12/08. AGAINST THE SAID ORDER OF COMMISSIONER APPEALS (CENTRAL EXCISE), ASSESSEE FILED APPEAL BEFORE CESTAT TRIBUNAL, WHICH WAS PENDING. LD.D.R. THUS SUBMITTED THAT LD.AO RIGHTLY DIS ALLOWED THE CLAIMS. ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 5 3.2. LD. COUNSEL ON THE CONTRARY SUBMITTED THAT MANUFACTURING UNIT MADE THE CLAIM FOR REFUND OF UNUTILISED CREDIT BALANCE OF CENVAT AGAINST THE ORDER OF CESTAT WHICH IS PENDING BEFORE HON BLE ALLAHABAD HIGH COURT. LD.COUNSEL SUBMITTED THAT ASSESSEE BY WAY OF AN AFFIDAVIT HAS ADMITTED THAT IN THE EVENT HON BLE HIGH COURT ALLOWS THE CREDIT TO ASSESSEE THE SAME SHALL BE OFFERED TO TAX IN THE VERY SAME YEAR. 3.3. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 3.4. LD. COUNSEL R ELIED UPON THE AFFIDAVIT PLACED AT PAGE 63 - 64 OF PAPER BOOK, WHEREIN IT HAS BEEN SUBMITTED THAT AFTER THE ORDER OF THE CESTAT , THERE IS NO HOPE WITH ASSESSEE OF ANY RECOVERY AGAINST THE SAID REFUND OF RS.2,35,86,612/ - . HOWEVER IT HAS BEEN STATED IN PARAGR APH 6 OF THE AFFIDAVIT AT PAGE 64 OF PAPER BOOK AS UNDER: 6. THAT IF IT ANY STAGE IN THE FURTHER APPELLATE PROCEEDINGS, THE COMPANY IS FOUND TO BE ELIGIBLE FOR REFUND AND SUCH REFUND IS GRANTED TO THE COMPANY, THE SAME SHALL BE ACCOUNTED FOR AS TAXABLE IN COME OF THE COMPANY AS PER PROVISIONS OF THE INCOME TAX ACT, PROVIDED THAT THE CLAIM FOR ITS RIGHT OFF WAS ALLOWED TO THE COMPANY IN THE ASSESSMENT YEAR 2009 - 10 AS HAS BEEN CLAIMED BY IT. 3.5. IT IS ALSO OBSERVED THAT LD. CIT (A) DECIDED THE ISSUE BY OBS ERVING AS UNDER: 14. I HAVE CAREFULLY GONE THROUGH THE FACTS OF THIS MATTER AND AM OF THE CONSIDERED OPINION THAT THE UNUTILIZED CREDIT BALANCE IN THE CENVAT REPRESENTED MAINLY A BOOK DEBT. THE AMOUNT COULD HAVE BEEN UTILISED BY THE APPELLANT AGAINST TH E PAYMENT OF EXCISE DUTY ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 6 IF THE APPELLANT WAS CONTINUING ANY PRODUCTION. THE UNDISPUTED FACT IS THAT THERE WAS AN UNUTILIZED BALANCE, THAT THE SAID BALANCE HAD BEEN ACTUALLY WRITTEN OFF BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS AND THAT THE ORDER OF COMMIS SIONER (APPEALS) EXCISE IS VERY DETAILED AND THE APPELLANT HAS REALIZED THAT THE AMOUNT OF UNUTILIZED BALANCE CANNOT BE RECOVERED UNDER THE RULES AND THE ORDER BY THE COMMISSIONER (APPEALS) EXCISE IS VERY DETAILED AND REASONED. MOREOVER, AN AFFIDAVIT HAS B EEN OBTAINED FROM THE APPELLANT THAT IF IN THE FURTHER APPEAL, THE AMOUNT IS REFUNDED TO THE APPELLANT, THE SAME SHALL BE ACCOUNTED FOR AS AN INCOME. CONSIDERING THESE PECULIAR FACTS, I AM OF THE CONSIDERED OPINION THAT THE CLAIM OF THE APPELLANT IS ALLOWA BLE AS A REASONABLE CERTAINTY HAS APPEARED ABOUT THE NON - RECOVERY OF THIS AMOUNT AND THE APPELLANT HAS ACTUALLY WRITTEN OFF THIS AMOUNT IN ITS BOOKS OF ACCOUNTS. THIS GROUND NO. 5 OF APPEAL OF THE APPELLANT IS, THEREFORE, ALLOWED AND THE AO IS DIRECTED TO DELETE THIS ADDITION MADE BY HIM. 3.6. IN THE LIGHT OF THE ABOVE DISCUSSIONS WE DO NOT FIND ANY INFIRMITY IN THE OBSERVATIONS OF LD.CIT(A) IN ALLOWING THE CLAIM TO WRITE OFF THIS AMOUNT IN THE BOOKS OF ACCOUNTS. IN THE EVENT ASSESSEE RECEIVES THE SAID AMOUNT AS A REFUND, THE SAME SHALL BE TAXABLE IN THE YEAR OF RECEIPT . 3.7. THIS GROUND THEREFORE RAISED BY REVENUE STANDS DISMISSED. 4. GROUND NO. 2 RAISED BY REVENUE IS AGAINST ADDITION OF PRIOR PERIOD EXPENSES AMOUNTING TO RS.1,92,84,814/ - BEING DE LETED BY LD.CIT (A). ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 7 4.1. DURING THE YEAR UNDER CONSIDERATION LD. AO OBSERVED THAT ASSESSEE INCURRED AND CLAIMED A SUM OF RS.10,65,08,814/ - AS PRIOR PERIOD EXPENSES , OUT OF WHICH HE HIMSELF DISALLOWED A SUM OF RS.8,72,24,000/ - UNDER SECTION 43B OF THE ACT. ASSESSEE CLAIMED A SUM OF RS.1,81,719/ - ON ACCOUNT OF SALES TAX EXPENSES AND A SUM OF RS.1,92,84,814/ - ON ACCOUNT OF NON - ADMISSIBILITY OF QUALITY REBATE ON SUPPLY OF RAW MATERIALS BY THE SUPPLIERS WERE CLAIMED. LD. AO DISALLOWED THE CLAIM OF EXPENSES SIMPLY ON THE REASON THAT THEY DID NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. ON AN APPEAL BEFORE LD.CIT(A), LD.CIT(A) DECIDED THE ISSUE VIDE PARA 18 PAGES 13 - 14 BY OBS ERVING AS UNDER: 18. I HAVE CAREFULLY CONSIDERED THE REASONING OF THE AO AS ALSO THE WRITTEN SUBMISSIONS AND ARGUMENTS RAISED BEFORE ME. IT IS OBSERVED THAT THE APPELLANT HAS RAISED VARIOUS CLAIMS ON ITS SUPPLIER MAINLY GUJARAT STATE FERTILIZER CORPORATI ON (GSFC). SUCH CLAIMS HAVE BEEN ON ACCOUNT OF CASH DISCOUNT NOT ALLOWED BY THE GSFC, QUALITY DIFFERENCE CLAIMED, DEFECTS IN THE MATERIAL SUPPLIED, ETC. THE MAJOR AMOUNT OF THE AMOUNT WRITTEN OFF REPRESENTS THESE CLAIMS ON THE SUPPLIER WHICH CLAIMS WERE MA DE IN 1998 - 99, 1999 - 2000, 2000 - 01. SINCE THESE CLAIMS WERE NOT BEING ACCEPTED, THE SAME HAVE BEEN REVERSED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION ON REALIZING THAT THE SUPPLIED IS NOT ACCEPTING THE SAME. THEREFORE, A TAXABLE EVENT HAS TAKEN P LACE DURING THE YEAR UNDER CONSIDERATION WHEREBY THE APPELLANT HAS REVERSED THESE CLAIMS AND THE SAME HAD BEEN IDENTIFIED AS PRIOR PERIOD EXPENSES IN ITS BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF THE COMPANIES ACT. A SIMILAR ISSUE HAD BEEN DECIDED BY THE HON'BLE DELHI HIGH COURT IN APPELLANT'S OWN CASE PERTAINING TO ASSESSMENT YEAR 2004 - 05 ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 8 WHEREBY THE HON'BLE DELHI HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT ON IDENTICAL FACTS. MOREOVER, IT IS A MATTER OF RECORD THAT FOR THE LAST FEW YEARS THE APPELLANT HAD BEEN CONTINUOUSLY FILING THE RETURN OF LOSS AND THESE LOSSES ARE ACCUMULATING YEAR AFTER YEAR. SO IT CANNOT BE EVEN ALLEGED THAT BY CLAIMING THESE EXPENSES FROM ONE YEAR TO ANOTHER YEAR, THERE IS ANY TAX EVASION PLAN BEING ADOPTED BY THE APPELLANT. IN FACT, THE AR OF THE APPELLANT HAS CLAIMED THAT IN THE YEARS TO WHICH THESE CLAIMS PERTAIN, THE APPELLANT HAD RETURNED TAXABLE INCOME AND HAD PAID TAXES THEREON. THEREFORE, IN THE LINE OF THINKING OF THE HON'BLE DELHI HIGH COURT IN APPELLANT'S OWN CASE IN ITA NO.L924/2010, IT IS HELD THAT THE CLAIM OF THE APPELLANT NEEDS TO BE ALLOWED, ESPECIALLY WHEN THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE CLAIM OF THE APPELLANT AND THE ACTUAL DISPUTE IS REGARDING THE YEAR OF ALLOWABILITY AND ALSO THE FACT THAT IT IS A REGULAR SYSTEM OF ACCOUNTING BEING FOLLOWED YEAR AFTER YEAR WHERE CERTAIN ISSUES ARE SETTLED AND ACCOUNTED FOR ON ITS CRYSTALLIZATION. 4.2. LD. DR PLACED RELIANCE UPON THE ORDER OF LD. AO. 4.3. LD.COUNSEL PLACES RELIANCE UPON THE OB SERVATIONS MADE BY LD. CIT (A). 4.4. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 4.5. IT IS OBSERVED THAT LD.CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT IN ASSESSEE S OWN CASE VIDE ORDER DATED 07/12/10 IN ITA NO. 1924/2010 PLACED AT PAGE S 81 - 83 OF PAPER BOOK. IT IS OBSERVED FROM THE ORDER THAT HON BLE HIGH COURT DECIDED THE ISSUE RELATING TO ALLOWABILITY ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 9 OF PRIOR PERIOD EXPENSES IN ASSESSMENT YEAR 2004 - 0 5 WHICH DID NOT PERTAIN TO THAT ASSESSMENT YEAR. HON BLE HIGH COURT HAS OBSERVED THAT ASSESSEE HAS BEEN FOLLOWING CONSISTENT SYSTEM OF ACCOUNTING , WHEREIN SIMILAR EXPENSES ARE CONSISTENTLY INCURRED IN THE PRECEDING ASSESSMENT YEARS AND THERE IS NO TAX E FFECT EQUATION BEING ADOPTED BY ASSESSEE AS REVENUE IS NOT AT LOSS AT ALL. FURTHER IT IS OBSERVED BY LD. CIT (A) THAT THE GENUINENESS OF THE EXPENSES HAS NOT BEEN IN DISPUTE BY LD.AO AND THE ONLY ISSUE IS REGARDING THE YEAR OF ALLOWABILITY. 4.6. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE OBSERVATIONS OF LD. CIT (A) IN ALLOWING THE CLAIM AS IT IS BASED ON A CONSISTENT APPROACH BY ASSESSEE WHICH HAS ALSO BEEN UPHELD BY HON BLE DELHI HIGH COURT IN ASSESSEE S OWN CASE (SUPRA). RESPECTFULLY FOLLOWING THE SAM E WE UPHOLD THE DECISION OF LD. CIT (A) ON THIS ISSUE. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS DISMISSED. 5. GROUND NO. 3 RAISED BY REVENUE IS AGAINST THE ADDITION ON SALE OF FIXED ASSETS AMOUNTING TO RS.7,75,00,000/ - BEING DELETED BY LD.CIT (A). 5.1. LD.AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS RECEIVED A SUM OF RS.7.75 CRORES WHICH HAS BEEN SHOWN AS ADVANCE AGAINST SALE OF FIXED ASSETS. IT WAS OBSERVED BY LD.AO THAT THE SAID AMOUNT WAS RECEIVED FROM M/S. SION STEELS PVT. LTD. LD. AO WAS OF THE OPINION THAT SINCE NO ASSETS WERE SOLD TO M/S. SION STEELS PVT. LTD. AND THE COMPANY HAD NOT FULFILLED THE CONDITIONS SPECIFIED IN THE AGREEMENT TO SELL , THE QUESTION OF ISSUE OF SALE DOES NOT ARISE. HE THUS DISALLOWED THE SAID S UM IN THE HANDS OF ASSESSEE. ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 10 5.2. AGGRIEVED BY THE ADDITION MADE BY LD. AO ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A). 5.3. LD.CIT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AS ASSESSEE DECLARED DURING THE A SSESSMENT Y EAR 2010 - 11 SHORT TERM CAPITAL GAIN AGAINST SALE OF PLANT AND MACHINERY. IT WAS OBSERVED BY LD.CIT(A) THAT THE NEW PURCHASER M/S ASOKA MERCANTILE LTD., SQUARED UP THE ACCOUNT OF M/S SION STEELS PVT. LTD,. AND THEREFORE THE ADDITION MADE BY LD.AO TREATING ADVANCE RECEIVED AS IN COME FOR THE YEAR UNDER CONSIDERATION WAS BOTH FACTUALLY AS WELL AS LEGALLY ERRONEOUS. 5.4. BEFORE US LD. DR PLACED RELIANCE UPON THE ORDER PASSED BY ASSESSING OFFICER. 5.5. LD.COUNSEL SUBMITTED THAT THE SAID AMOUNT WAS RECEIVED BY ASSESSEE FROM M/S SIO N STEELS PVT. LTD, AS ADVANCE DURING THE YEAR , WHICH WAS SHOWN AS PAYABLE TILL THE FINAL DISPOSAL OF ASSETS AS PER THE DIRECTIONS OF DRT THROUGH PUNJAB NATIONAL BANK. IT WAS SUBMITTED THAT M/S SION STEELS PVT. LTD SUBSEQUENTLY BACKED OFF FROM THE TRANS ACTION AND THE SALE COULD NOT BE CONCLUDED. THEREAFTER SUBSEQUENTLY TRI - PARTY AGREEMENT WAS ENTERED INTO BETWEEN M/S ASOKA MERCANTILE LTD WITH THE CONSENT OF PUNJAB NATIONAL BANK , DRT - II IN ACQUIRING THE REMAINING ASSETS AS M/S SION STEELS PVT. LTD HAD BA CKED OFF. M/S ASOKA MERCANTILE LTD. AGREED TO SETTLE THE DUES WITH M/S SION STEELS PVT. LTD VIDE AGREEMENT DATED 06/12/09 AND THE SALE OF ASSETS WAS FINALLY MADE TO M/S ASOKA MERCANTILE LTD WHEN THE TOTAL CONSIDERATION FOR SAME INCLUDING AMOUNT RECEIVED AS ADVANCE WAS FINALLY ACCOUNTED FOR. LD. COUNSEL PLACES RELIANCE UPON PAGE 172 OF PAPER BOOK WHEREIN THE DETAILS OF AMOUNT RECEIVED ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 11 AGAINST SALE OF OLD PLANT AND MACHINERY HAS BEEN CLEARLY DEMARCATED. HE THUS SUBMITTED THAT THE SAID SUM WAS ACTUALLY AN ADVANCE RECEIVED BY ASSESSEE TOWARDS THE SALE OF PLANT AND MACHINERY. 5.6. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 5.7. LD. CIT (A) CATEGORICALLY OBSERVED FROM THE TAX RETURNS FOR ASSESSM ENT YEAR 2010 - 11 THAT ASSESSEE HAS DECLARED A SHORT TERM CAPITAL GAIN OF RS. 33.39 CRORES AGAINST THE SALE OF PLANT AND MACHINERY. FURTHER FROM PAGE 172 OF PAPER BOOK WE AGREE WITH THE OBSERVATION OF LD. CIT (A) THAT THE NEW PURCHASER M/S ASOKA MERCANTILE LTD. SQUARED UP THE ACCOUNT OF M/S SION STEELS PVT. LTD. IN THE SUBSEQUENT ASSESSMENT YEAR, AND THEREFORE, THE ADDITION IN THE HANDS OF ASSESSEE IN RESPECT OF THE AMOUNT RECEIVED AS ADVANCE CANNOT LEGALLY SUSTAIN. 5.8. WE THEREFORE DO NOT FIND ANY INFI RMITY WITH THE OBSERVATIONS OF LD. CIT (A) AND THE SAME IS UPHELD. 5.9. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMISSED. 6. ITA NO. 3825/DEL/2014 (ASSESSEE S APPEAL ) LD. COUNSEL SUBMITS THAT GROUND NO. 3, 4, 5 ARE NOT PRESSED. ACCORDINGLY THESE G ROUNDS RAISED BY ASSESSEE STAND DISMISSED. GROUND NOS. 1, 6 & 7 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. THE ONLY GROUND THAT REMAINS FOR ADJUDICATION IS GROUND NO. 2. 6.1. GROUND NO. 2 RAISED BY ASSESSEE IS IN RESPECT OF THE DISAL LOWANCE OF RS. 25, 003/ - MADE BY LD.AO UNDER SECTION 14 A OF THE ACT. 6.2. IT HAS BEEN SUBMITTED BY LD. COUNSEL THAT FOR THE YEAR UNDER CONSIDERATION THERE WAS NO EXEMPT INCOME RECEIVED BY ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 12 ASSESSEE AND THEREFORE NO DISALLOWANCE COULD BE MADE UNDER SECTION 14 A OF THE ACT. LD. COUNSEL REFERRED TO PAGE 6 OF THE PAPER BOOK WHEREIN REPLY HAS BEEN GIVEN BY ASSESSEE AGAINST THE SPECIFIC QUERY RAISED BY LD.AO REGARDING EXEMPT INCOME EARNED DURING THE YEAR. 6.3. HE THUS PLACED RELIANCE UPON THE DECISION OF HON BL E DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS.CIT REPORTED IN 378 ITR 33 . ON THE CONTRARY LD.DR PLACED RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW. 6.4. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 6.5. IT IS OBSERVED FROM THE ORDER OF LD. CIT (A) THAT TH E ISSUE RAISED HAS BEEN NOT PRESSED DUE TO THE SMALLNESS OF THE AMOUNT INVOLVED. HOWEVER GROUND HAS BEEN RAISED BEFORE US REGARDING THE SAME. IT IS OBSERVED THAT THE ISSUE RAISED IS LEGAL IN NATURE AND THEREFORE MERELY BECAUSE ASSESSEE HAD NOT PRESSED UPON THIS ISSUE BEFORE LD. CIT (A) DOES NOT DEBAR HIM FROM ALLEGING THE SAME ISSUE BEFORE THIS TRIBUNAL. 6.6. TAKING INTO CONSIDERATION THE FACT THAT ASSESSEE HAS NOT RECEIVED ANY E XEMPT INCOME DURING THE YEAR AND NO CONTRARY OBSERVATION HAS BEEN MADE BY LD.AO IN RESPECT OF THE SAME, IN OUR CONSIDERED OPINION, RESPECTFULLY FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS. CIT (SUPRA ) NO DISALLOWANCE COULD BE MADE IN THE HANDS OF ASSESSEE UNDER SECTION 14 A OF THE ACT. ACCORDINGLY THIS GROUND IS ALLOWED. 7. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE O PEN C OURT ON 1 5 . 0 3 . 2 0 1 8 . S D / - S D / - (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 5 T H MARCH, 2018. *MV ITA 3825/DEL/2014 A.Y. 2009 - 10 MOD IPON LTD. VS. ITO, WARD 5(4) ITA 3954/DEL/2014 A.Y. 2009 - 10 ITO, WARD 5(4) VS. MODIPON LTD. 13 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI