The DCIT, Circle-4, Baroda V. ORG INFORMATICS LTD, Baroda

ITA 3857/AHD/2007

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73106 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 18-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 12-10-2007
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R SHAHAR
• Keywords: Capital asset; Business income; Cost of acquisition; Wholly owned subsidiary; Capital receipt; Revenue expenditure
• Section: 43B; 37(1); 37; 28

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , ,, , . .. . . . . . , , , , !' ! # !' ! # !' ! # !' ! # BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SH. N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 3754/AHD/2007 A.Y. 2003-04 ORG INFORMATICS LTD. BARODA. PAN: AACCS9395K VS DCIT, CIRCLE-4(1), BARODA (APPELLANT) (RESPONDENT) ITA NO. 3857/AHD/2007 A.Y. 2003-04 DCIT, CIRCLE-4(1), BARODA VS ORG INFORMATICS LTD. BARODA. PAN: AACCS9395K (APPELLANT) (RESPONDENT) REVENUE BY : SH. SUBHASH BAINS, SR.D.R. ASSESSEE(S) BY : SH. SANJAY R. SHAH, AR $ % &'/ // / DATE OF HEARING : 18/02/2014 ()* % &' / DATE OF PRONOUNCEMENT : 28/02/2014 !+ !+ !+ !+/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD. CIT(A)-III, BARODA DATED 04.06.200 7. 2. GROUND NO. 1 OF THE ASSESSEES APPEAL IS DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITION OF RS 2,60,0 0,000/- REPRESENTING CONSIDERATION FOR TRANSFER OF INTELLECTUAL PROPERTY OF THE ASSESSEES GIS LINE OF BUSINESS AS A REVENUE RECEIPT AS AGAINST CAPITAL RE CEIPT CLAIMED BY THE ASSESSEE. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 2 - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING IN COMPUTER AND TELECOM SYSTEM, DEVELOPMENT OF SOFTWARE AND GEOGRAPHICAL INFORMATION SYSTEM (GIS). THE ASS ESSING OFFICER OBSERVED THAT FOLLOWING NOTE WAS APPENDED AS NOTE NO. 4 TO T HE COMPUTATION OF INCOME. NOTE FOR TRANSFER OF INTELLECTUAL PROPERTY THE AS SESSEE COMPANY HAS WITH EFFECT FROM MARCH 1, 2003 TRANSFERRED THE EXPE RTISE AND KNOW-HOW IN THE BUSINESS RELATING TO GIS TO ITS WHOLLY OWNED SUBSID IARY VIZ. GLOBAL IP TECHNOLOGY PVT. LTD. (GIPL), A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFIC E IN NEW DELHI AT A CONSIDERATION OF RS 2,60,00,000/- PURSUANT TO THE M EMORANDUM OF UNDERTAKING EXECUTED ON MARCH 26, 2003 BETWEEN BOTH THE PARTIES. THE COMPANY CLAIMS THAT IT IS NOT LIABLE TO ANY CAPITAL GAINS TAX IN VIEW OF DECISION OF SUPREME COURT IN THE CASE OF CIT V. B.C. SRINIVA SAN SETTY (1981) 128 ITR 294 (SC). THE ASSESSING OFFICER ON EXAMINATION OF MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN THE ASSESSEE AND ITS SUBSIDIARY M/S GIPL FO UND THAT AS PER PARA 7 OF THE MOU, THE ASSESSEE COMPANY RETAINED THE RIGHT TO CARRY ON THE GIS RELATED BUSINESS AND EVEN THE TRADE NAME OF ORG HAD NOT BEE N COMPLETELY TRANSFERRED TO THE SUBSIDIARY COMPANY. ONLY THE RIGHT TO USE T HE TECHNOLOGY AND TRADE NAME ORG-GIS HAD BEEN CONFERRED ON THE TRANSFEREE . THEREFORE, HE CONCLUDED THAT THERE WAS NO TRANSFER OF CAPITAL ASS ET AND HENCE, THE RECEIPT OF RS 2,60,00,000/- WAS A REVENUE RECEIPT WHICH WAS TA XABLE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SU BMITTED AS UNDER: 'THE SUM OF RS. 260 LAKHS REPRESENTS THE CONSIDERAT ION FOR THE TRANSFER OF EXPERTISE RELATING TO GEOGRAPHIC INFORMATION SYS TEMS (GIS) TO GLOBAL IP TECHNOLOGY PVT. LTD - THE WHOLLY OWNED SUBSIDIAR Y OF THE APPELLANT. THE APPELLANT HAD CLAIMED EXEMPTION BY WAY OF A NOT E ATTACHED TO COMPUTATION OF INCOME RELYING ON THE DECISION OF TH E HONOURABLE SUPREME COURT IN THE CASE OF CIT VS B.C. SRINIVASA SETYY [ 128 ITR 294].' SECTION 55(2) (A) OF THE ACT LISTS THE ITEMS FOR TH E PURPOSE OF WORKING OF THE CAPITAL GAIN. THE FOLLOWING ITEMS ARE INCLUDED IN THE SAID SECTIO N. GOODWILL OF A BUSINESS TRADE MARK OR BRAND NAME ASSOCIATED WITH THE BUSINE SS RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICL E OR THING RIGHT TO CARRY ON BUSINESS ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 3 - YOUR HONOUR WOULD KINDLY SEE THAT THE ITEM UNDER RE FERENCE VIZ. 'INTELLECTUAL PROPERTY' DO NOT FIND ANY MENTION IN THE AFORESAID LIST AND HENCE IN OUR SUBMISSION, THE SAME IS NOT LIABLE TO BE TAXED AS CAPITAL GAIN. 2. WITHOUT PREJUDICE TO ABOVE, WE HAVE TO SUBMIT TH AT THE TRANSFER UNDER QUESTION IS OF ENDURING NATURE WITHOUT ANY RE STRICTIONS AND LIMITATIONS AS TO THE PERIOD USER. HENCE, THE PASSI NG ON OF INTELLECTUAL PROPERTY TANTAMOUNT TO A CAPITAL RECEIPT. WE HAVE T O SUBMIT THAT ONE HAS TO GO BY INTENTIONS OF THE PARTIES IN ENTERING INTO SUCH AGREEMENT AND SUBSEQUENT EVENTS RELATING THERETO. IN THIS CAS E IT MAY BE SUBMITTED THAT THE INTENTION OF THE PARTIES IN RESPECT OF THI S MOU WAS TO TRANSFER THE KNOW-HOW IN ENTIRETY FOR THEIR BUSINESS INTO TH IS LINE AND NO GIS TECHNOLOGY HAS BEEN USED BY THE COMPANY AS IS EVIDE NT FROM THE RECORDS. 3. WITHOUT PREJUDICE TO ABOVE, IN THE CASE UNDER RE FERENCE AT THE MOST, IT COULD BE CONSIDERED THAT THERE IS A TRANSF ER OF TWO THINGS I.E. TECHNICAL KNOW-HOW AND THE BRAND NAME HAVING NO COS TS. THE GOODWILL MAY BE BROUGHT UNDER TAX AS PER THE AMENDED PROVISI ON OF LAW UNDER SECTION 55(2) OF THE ACT AND SO FAR AS TECHNICAL KN OW-HOW IS CONCERNED, THE SAME IS NOT INCLUDED IN THE SAID SECTION AND TH E HON'BLE SUPREME COURT'S RULING IN THE CASE OF CIT VS B C SRINIVASA SETTY (SUPRA) MAY STILL STAND PRINCIPLE OF LAW AND ENFORCEABLE. 4. WHERE TECHNOLOGY GETS TRANSFERRED IN THE FORM OF A DOSSIER, IT MAY AMOUNT TO A TRANSFER OF A CAPITAL ASSET. THE CAPITA L ASSET MUST HAVE COST OR THE COST OF WHICH MUST BE CONCEIVABLE. THOUGH TH E DEFINITION OF CAPITAL ASSET INCLUDES ALL KIND OF PROPERTY, IT HAD BEEN HELD THAT THE LIABILITY TO TAX ON CAPITAL GAINS WOULD ARISE IN RE SPECT OF ONLY THOSE CAPITAL ASSETS IN THE ACQUISITION OF WHICH AN ELEME NT OF COST IS EITHER ACTUALLY PRESENT OR IS CAPABLE OF BEING RECKONED AN D NOT IN RESPECT OF THOSE ASSETS IN THE ACQUISITION OF WHICH THE ELEMEN T OF COST IS ALTOGETHER INCONCEIVABLE. IN VIEW OF ABOVE, WE HAVE TO REQUEST YOUR HONOUR TO KINDLY DELETE THE FINDING OF THE LEARNED AO NOT ACCEPTING THE APPELLA NTS CONTENTION CLAIMING EXEMPTION. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, HELD THAT THE ASSESSEES CLAIM WAS BASED ON THE PROVISIO NS OF SECTION 55(2) OF THE ACT. HE OBSERVED THAT IT IS CONTENDED THAT SINCE T HE ITEM UNDER QUESTION I.E. INTELLECTUAL PROPERTY DOES NOT FIND MENTION IN THE SECTION, THE SAME WAS NOT LIABLE TO TAX AS CAPITAL GAINS. THE LD. CIT(A) OBS ERVED THAT THE ASSESSING OFFICER HAS NOT MADE ADDITION ONLY ON THE BASIS OF PROVISIONS OF SECTION 55(2), RATHER THE ASSESSING OFFICER HAS EMPHASIZED THAT TH E RECEIPT WAS PRIMARILY A REVENUE RECEIPT CHARGEABLE TO TAX. HE ALSO OBSERVE D THAT EVEN U/S 55(2), THE AMOUNT WAS NOT EXEMPT, BUT TAXABLE AS CAPITAL GAINS . ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 4 - 6. THE LD. CIT(A) THEREAFTER OBSERVED THAT THE FIRS T QUESTION TO BE ADDRESSED WAS WHETHER THE RECEIPT IN QUESTION WAS A CAPITAL RECEIPT OR A REVENUE RECEIPT. HE NOTED THAT THE COURTS IN VARIO US DECISIONS HAVE LAID DOWN GUIDING PRINCIPLES FOR DETERMINING NATURE OF RECEIP TS. BROAD PROPOSITIONS HAVE BEEN LAID DOWN IN THIS REGARD AND THE MOST IMPORTAN T OF WHICH RELEVANT TO CATEGORIZATION OF THE SUBJECT MATTER OF TRANSFER AS CIRCULATING CAPITAL OR FIXED CAPITAL. HE OBSERVED THAT IN JOHN SMITH VS. MOORE 12 CC 266, THE HOUSE OF LORDS HELD THAT A RECEIPT ON ACCOUNT OF CIRCULATING CAPITAL WAS A REVENUE RECEIPT AND A RECEIPT ON ACCOUNT OF FIXED CAPITAL WAS A CAP ITAL RECEIPT. THE LD. CIT(A) FURTHER NOTED THAT THE HONBLE SUPREME COURT IN THE CASE OF KARAN CHAND THAPAR AND BROTHERS PRIVATE LIMITED VS. CIT 74 ITR 26 (SC) FURTHER HELD THAT WHERE A PERSON DISPOSES A PART OR TOTAL OF HIS ASSE TS, THE GENERAL RULE IS THAT THE MERE CHANGE OR REALIZATION OF AN INVESTMENT DOE S NOT ATTRACT LIABILITY TO INCOME TAX, BUT WHERE SUCH REALIZATION IS AN ACT WH ICH IN ITSELF IS A TRADING TRANSACTION, THE PROFITS EARNED BY CONVERSION IS TA XABLE. HE FURTHER OBSERVED THAT THE APEX COURT IN THE CASE OF A.K.T.K.M. VISHN UDATTA ANATTARJANAM VS. CIT 78 ITR 58 LAID DOWN THE PRINCIPLE THAT A RECEIP T IN LIEU OF SOURCE OF INCOME IS A CAPITAL RECEIPT AND A RECEIPT ON EXPLOITATION OF THE SOURCE OF PROFIT WAS A TAXABLE REVENUE RECEIPT. HE OBSERVED THAT ON PERUS AL OF THE MOU ENTERED INTO BY THE ASSESSEE COMPANY, IT IS SEEN THAT UNDER ARTI CLE C, THE ASSESSEE TRANSFERRED THE TECHNOLOGY AND KNOW-HOW RELATING TO GIS BUSINESS ON A NON- EXCLUSIVE BASIS. IN OTHER WORDS, THE ASSESSEE RET AINED THE RIGHT TO SIMILARLY TRANSFER THE SAME TECHNOLOGY AND KNOW-HOW TO OTHER PARTIES. HE FURTHER OBSERVED THAT THE SUBJECT MATTER OF TRANSFER WAS NO T THE SOURCE OF PROFIT BUT MERELY THE RIGHT TO COMMERCIALLY EXPLOIT THE SAID S OURCE OF PROFIT. HE NOTED THAT THIS VIEW WAS FURTHER STRENGTHENED FROM PARA 7 OF THE MOU WHERE IT HAS BEEN CLEARLY STATED THAT IT IS DISTINCTLY UNDERSTOO D BY AND BETWEEN GLOBAL AND ORG THAT DESPITE THESE ORG SHALL BE ENTITLED TO UN DERTAKE GIS RELATED BUSINESS. THUS, FROM THE MOU ITSELF, IT IS QUITE A PPARENT THAT THE ASSESSEE TRANSFERRED ONLY THE RIGHT TO COMMERCIALLY EXPLOIT THE TECHNOLOGY RELATING TO GIS AND THAT IT WAS NOT A TRANSFER OF SOURCE OF PRO FIT I.E. THE TECHNOLOGY PER SE. HE THEREFORE HELD THAT IN HIS VIEW, THE ASSESSING O FFICER WAS JUSTIFIED IN TREATING RS 2,60,00,000/- AS REVENUE RECEIPTS CHARG EABLE TO TAX AS BUSINESS INCOME AND CONFIRMED THE ACTION OF THE ASSESSING OF FICER. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 5 - 7. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAS DECIDED THE I SSUE OF TAXABILITY OF RS 2,60,00,000/- RECEIVED BY THE ASSESSEE ON TRANSFER OF EXPERTISE AND KNOW-HOW IN THE BUSINESS RELATING TO GIS TO ITS WHOLLY OWNED SUBSIDIARY VIZ. GLOBAL IP TECHNOLOGY PRIVATE LIMITED ON THE BASIS OF MOU ONL Y WHICH WAS EXECUTED ON 26.03.2003 BETWEEN BOTH THE PARTIES. HE ARGUED THA T ON THE BASIS OF THIS MEMORANDUM OF UNDERSTANDING, THE ASSESSEE WAS REQUI RED TO ENTER INTO TWO SEPARATE AGREEMENTS FOR GIVING EFFECT TO THE MEMORA NDUM OF UNDERSTANDING AND THAT THESE TWO AGREEMENTS WERE NOT CONSIDERED A T ALL BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A) WHILE ADJUDICATING TH E ISSUE. IT WAS HIS SUBMISSION THAT THE MATTER SHOULD BE RESTORED BACK TO THE ASSESSING OFFICER FOR ADJUDICATING THE ISSUE AFRESH AFTER TAKING INTO CON SIDERATION THE AGREEMENT FOR SALE OF TECHNICAL KNOW-HOW ENTERED INTO SUBSEQUENT TO THE MOU DATED 26.03.2003, COPY OF WHICH IS PLACED AT PAGE NOS. 32 TO 42 OF THE PAPER BOOK FILED BY THE ASSESSEE. 8. ON THE OTHER HAND, THE LD. DR VEHEMENTLY ARGUED IN SUPPORT OF ORDERS OF THE LOWER AUTHORITIES. HE SUBMITTED THAT THE SU BMISSION OF THE ASSESSEE THAT IN THE LIGHT OF THE MOU DATED 26.03.2003, AGRE EMENT FOR SALE OF TECHNICAL KNOW-HOW WAS TO BE ENTERED INTO BY THE ASSESSEE TO IMPLEMENT THE MOU IS NOT CORRECT. HE POINTED OUT FROM THE MOU, COPY OF WHIC H IS PLACED AT PAGE NOS. 27 TO 31 OF THE PAPER BOOK THAT ON EXAMINATION OF THE AGREEMENT OF SALE OF TECHNICAL KNOW-HOW DATED 08.08.2003, IT IS OBSERVED THAT THERE IS NO REFERENCE TO THE MEMORANDUM OF UNDERSTANDING DATED 26.03.2003 IN THE SAID AGREEMENT. FURTHER, THE ASSESSEE WAS TO RECEIVE TH E SALE CONSIDERATION OF RS 2,60,00,000/- FROM THE TRANSFEREE BY ISSUE AND ALLO TMENT OF FULLY PAID EQUITY SHARE OF GLOBAL IP TECHNOLOGY PRIVATE LIMITED TO THE ASSESSEE AT PAR VALUE AND THAT THE TRANSFEREE WAS TO COMPLY WITH THE FORM ALITIES OF THIS PAYMENT WITHIN THE PERIOD OF SIX MONTHS FROM THE DATE OF EX ECUTION OF MOU ON 26.03.2003. HE FURTHER SUBMITTED THAT AS PER THE S ALE OF TECHNICAL KNOW-HOW AGREEMENT, THE ASSESSEE WAS TO RECEIVE RS 2,60,00,0 00/- PAYABLE TO THE ASSESSEE ON OR BEFORE 30.01.2004. IT WAS ALSO SUBM ITTED THAT IN THE AGREEMENT OF SALE OF TECHNICAL KNOW-HOW, THERE IS N O MENTION ABOUT THE MOU DATED 26.03.2003. IT WAS THEREFORE HIS SUBMISSION THAT THE MOU AND THE SALE OF TECHNICAL KNOW-HOW AGREEMENT ARE TWO DIFFERENT U NRELATED DOCUMENTS. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 6 - 9. HE FURTHER ARGUED THAT THE CONTENTION OF THE ASS ESSEE THAT THE SOURCE OF PROFIT ITSELF WAS TRANSFERRED BY THE TRANSFER OF TE CHNICAL KNOW-HOW RELATING TO GIS WAS ALSO NOT CORRECT BECAUSE THE ASSESSEE RETAI NED THE RIGHT TO CARRY ON THE GIS RELATED BUSINESS AND EVEN THE TRADE NAME OF ORG WAS NOT COMPLETELY TRANSFERRED TO SUBSIDIARY COMPANY. ONLY THE RIGHT TO USE THE TECHNOLOGY AND TRADE NAME ORG-GIS WAS CONFERRED ON THE TRANSFERE E. THUS, THERE WAS NO TRANSFER OF CAPITAL ASSET AND THEREFORE, THE RECEIP T OF RS 2,60,00,000/- WAS REVENUE RECEIPT LIABLE TO TAX. HE FURTHER SUBMITTE D THAT AS PER CLAUSE NO. 4 OF THE MOU, IF THE TRANSFEREE M/S GLOBAL IP TECHNOLOGY PRIVATE LIMITED WERE TO EXERCISE THE RIGHT TO ASSIGN THE BENEFITS UNDER THE AGREEMENT TO A NOMINEE, THEN SUCH NOMINEE MUST BE ACCEPTABLE TO THE ASSESSE E AND THAT THE ASSESSEE RESERVED ITS RIGHTS TO RE-NEGOTIATE THE CONSIDERATI ON AND THE MANNER OF DISCHARGE OF CONSIDERATION. THE ASSESSEE WILL COMP LETE THE PROCESS OF EXECUTING FINAL DOCUMENTATION DIRECTLY WITH SUCH NO MINEE OF GLOBAL IP TECHNOLOGY PRIVATE LIMITED. IT WAS, THEREFORE, HIS SUBMISSION THAT AS THE NATURE OF BUSINESS OF GIS WAS NOT TRANSFERRED, THER EFORE THE RECEIPT OF RS 2,60,00,000/- WAS RIGHTLY TAXED AS REVENUE RECEIPT AND THE SAME ORDER SHOULD BE UPHELD. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE CLAIMED THAT CONSIDERATION OF RS 2,60,00,000/- RECEIVED BY IT UNDER MOU WITH M/S GLO BAL IP TECHNOLOGY PVT. LTD. WHICH IS A WHOLLY OWNED SUBSIDIARY COMPANY OF THE ASSESSEE IN RELATION TO TRANSFER OF TECHNOLOGY RELATING TO GIS SYSTEM IS CA PITAL RECEIPT NOT CHARGEABLE TO TAX ON THE GROUND THAT THE COST OF ACQUISITION O F SUCH CAPITAL ASSET IS NOT CONCEIVABLE. THE ASSESSING OFFICER AFTER GOING THR OUGH THE MOU ENTERED INTO BETWEEN THE ASSESSEE AND SAID GLOBAL IP TECHNOLOGY PVT. LTD. ON 26.03.2003, OBSERVED THAT THE CONSIDERATION OF RS 2,60,00,000/- WAS RECEIVED BY THE ASSESSEE FOR NON-EXCLUSIVE TRANSFER OF TECHNOLOGY R ELATING TO GIS AND CLAUSE NO. 7 OF MOU SPECIFICALLY PROVIDES THAT DESPITE THE SE PRESENTS, ORG SHALL BE ENTITLED TO UNDERTAKE GIS RELATED BUSINESS. IN VIE W OF THIS, THE ASSESSING OFFICER CONCLUDED THAT THE CONSIDERATION RECEIVED B Y THE ASSESSEE WAS NOT FOR TRANSFER OF SOURCE OF INCOME, BUT WAS FOR EXPLOITAT ION OF COMMERCIAL ASSET ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 7 - POSSESSED BY THE ASSESSEE AND THEREFORE, THE CONSID ERATION WAS REVENUE IN NATURE CHARGEABLE TO TAX. 11. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 12. BEFORE US, THE SOLE ARGUMENT OF THE LD. AR OF T HE ASSESSEE IS THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE SUBSEQUENT AGREEMENT DATED 08.08.2003 ENTERED INTO BY THE ASSESSEE AND M/S GLO BAL IP TECHNOLOGY PVT. LTD. AND THEREFORE, HE PRAYED THAT THE ISSUE BE RES TORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 13. WE FIND THAT ALREADY MORE THAN 13 YEARS HAVE EL APSED SINCE THE END OF THE RELEVANT ACCOUNTING YEAR AND THEREFORE, THE SET ASIDE OF ASSESSMENT CANNOT BE MADE LIGHTLY. WE FIND THAT NO SPECIFIC ERROR IN THE FINDINGS OF THE LOWER AUTHORITIES COULD BE POINTED OUT BY THE LD. AR OF T HE ASSESSEE. IT IS NOT THE GROUND OF THE ASSESSEE THAT THE INTERPRETATION MADE BY THE LOWER AUTHORITIES OF THE MOU DATED 26.03.2003 WAS NOT CORRECT. THE ASSE SSEE COULD NOT POINT OUT ANY PREJUDICE WHICH WAS CAUSED TO THE ASSESSEE BY N OT CONSIDERING THE AGREEMENT DATED 08.08.2003. THE LD. AR OF THE ASSE SSEE ALSO COULD NOT POINT OUT WHAT WAS THE EXPENDITURE WHICH WAS INCURRED BY THE ASSESSEE FOR ACQUIRING THE RELEVANT TECHNOLOGY RELATING TO GIS BUSINESS AN D WHETHER THE SAID EXPENDITURE WAS CLAIMED AS REVENUE EXPENDITURE OR C APITAL EXPENDITURE WHEN IT WAS INCURRED. THE ASSESSEE ALSO COULD NOT EXPLAIN HOW THE TECHNOLOGY IN QUESTION WAS USED BY IT IN ITS BUSINESS BEFORE AND OR AFTER THE MOU DATED 26.03.2003. IN ABSENCE OF ANY SPECIFIC DEFECT BEIN G POINTED OUT IN THE FINDINGS OF THE LOWER AUTHORITIES, WE DO NOT FIND ANY GOOD R EASON TO INTERFERE WITH THE ORDERS OF LOWER AUTHORITIES. THEREFORE, THIS GROUN D OF APPEAL OF THE ASSESSEE IS DISMISSED. 14. GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS D IRECTED AGAINST THE ORDER OF THE LD. CIT(A) SUSTAINING THE DISALLOWANCE IN RE SPECT OF DEDUCTION CLAIMED U/S 43B AND 36(1)(IV) OF THE ACT OF RS 48,08,961/- OUT OF THE TOTAL DISALLOWANCE OF RS 62,90,739/- IN RESPECT OF EMPLOY ERS AS WELL AS EMPLOYEES CONTRIBUTION TO PROVIDENT FUND ON THE GROUND THAT T HE SAME WAS PAID BEYOND THE DUE DATE PRESCRIBED IN THE PROVIDENT FUND ACT. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 8 - 15. THE BRIEF FACTS OF THE CASE ARE THAT EMPLOYEES CONTRIBUTION TO PROVIDENT FUND OF RS 29,37,287/- AND EMPLOYERS CONTRIBUTION TO PROVIDENT FUND OF RS 33,53,452/- WAS DISALLOWED U/S 43B BY THE ASSESSING OFFICER FOR THE REASON THAT THE PAYMENTS WERE MADE AFTER THE DUE DATE PRES CRIBED IN THE PROVIDENT FUND ACT. 16. ON APPEAL, THE LD. CIT(A) ON VERIFICATION OF DE TAILS FOUND THAT ONLY RS 15,71,090/- FROM OUT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND RS 7,80,688/- FROM OUT OF EMPLOYERS CONTRIBUTION TO P ROVIDENT FUND WAS PAID WITHIN THE EXTENDED DUE DATE PERMITTED BY THE PROVI DENT FUND ACT. THEREFORE, HE DELETED THE DISALLOWANCE OF RS 22,81,778/- (RS 1 5,71,090/- + RS 7,10,688/-) AND SUSTAINED DISALLOWANCE FOR THE REMAINING AMOUNT O RS 40,08,961/-. 17. BOTH THE PARTIES BEFORE US AGREED THAT THE ISSU E AT HAND WAS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (2014) 41 TAXMANN.COM 10 0 (GUJ.) WHEREIN IT WAS HELD THAT WHERE AN ASSESSEE DOES NOT DEPOSIT EMPLOY EES CONTRIBUTION TO EMPLOYEES ACCOUNT IN RELEVANT FUND AS PRESCRIBED I N EXPLANATION TO SECTION 36(1)(VA), DEDUCTION OF SUCH AMOUNT IN COMPUTING HI S INCOME U/S 28 IS NOT ADMISSIBLE EVEN IF HE DEPOSITS THE SAME BEFORE THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT. AS REGARDS THE EMPLOYERS CONTR IBUTION TO PROVIDENT FUND, IT WAS SUBMITTED THAT THE ISSUE STANDS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION S LTD. (2009) 319 ITR 306 (SC) WHEREIN IT WAS HELD THAT THE PAYMENT MADE BY T HE EMPLOYER TO CONTRIBUTION TO PROVIDENT FUND OR OTHER WELFARE FUN D WAS ALLOWABLE AS DEDUCTION, IF PAID BEFORE DUE DATE OF FILING OF RET URN OF INCOME U/S 139(1) OF THE ACT AND NECESSARY EVIDENCE OF SUCH PAYMENT WAS ENCLOSED WITH THE RETURN OF INCOME. THEREFORE, WE RESTORE THIS ISSUE BACK T O THE FILE OF THE ASSESSING OFFICER TO CONFIRM THE DISALLOWANCE FOR EMPLOYEES CONTRIBUTION TO PROVIDENT FUND FROM OUT OF DISALLOWANCE OF RS 40,08,961/- AND TO DELETE THE BALANCE AMOUNT OF DISALLOWANCE MADE ON ACCOUNT OF EMPLOYER S CONTRIBUTION TO PROVIDENT FUND AFTER VERIFICATION IF IT IS FOUND TH AT THE PAYMENT WAS MADE BEFORE THE DUE DATE OF FILING OF INCOME TAX RETURN U/S 139(1) OF THE ACT. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 9 - 18. GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS D IRECTED AGAINST LEVY OF INTEREST U/S 234A, 234B, 234C AND 234D OF THE ACT. 19. AT THE TIME OF HEARING, THE LD. AR OF THE ASSES SEE DID NOT MAKE ANY SUBMISSIONS ON THIS GROUND OF APPEAL TAKEN BY THE A SSESSEE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED FOR WANT OF PROSECUTI ON. 20. IN THE REVENUES APPEAL, GROUND NO. 1 IS DIRECT ED AGAINST THE ORDER OF LD. CIT(A) HOLDING THAT RESEARCH AND DEVELOPMENT EX PENDITURE OF SOFTWARE AT DEVELOPMENT STAGE CLAIMED AS DEFERRED REVENUE EXPEN DITURE AT RS 61,09,000/- IS ALLOWABLE THOUGH THERE ARE NO EXPRESS PROVISIONS FOR ALLOWANCE OF SUCH EXPENDITURE. 21. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IN NOTE NO. 3 ATTACHED TO THE COMPUTATION OF INCOME STATED AS UNDER: THE COMPANY HAS DEFERRED AN AMOUNT OF RS 61,09,000/ - ON ACCOUNT OF EXPENDITURE ON SOFTWARE PROJECT UNDER DEVELOPMENT S TAGE IN ACCORDANCE WITH ACCOUNTING STANDARD ON ACCOUNTING FOR RESEARCH AND DEVELOPMENT ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF IND IA, WHICH ARE TO BE AMORTIZED ON PROJECT COMPLETION OVER A PERIOD OF TH IRTY-SIX MONTHS. 22. THE ASSESSING OFFICER HELD THAT UNDER THE INCOM E TAX ACT, THERE WAS NO PROVISION FOR ALLOWING DEFERRED REVENUE EXPENDITURE AND DISALLOWED ENTIRE AMOUNT OF RS 61,09,000/-. 23. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE C ONTENDED THAT AS A MEASURE OF FULL DISCLOSURE ACCOUNTING POLICIES ADOP TED WERE INDICATED IN THE NOTES TO THE COMPUTATION OF INCOME. HOWEVER THE AS SESSEE HAD CLAIMED THE ENTIRE EXPENSES AS REVENUE AND NOT AMORTIZED THEM F OR INCOME TAX PURPOSE. IN ACCORDANCE WITH THE ACCOUNTING STANDARDS OF ICAI EXPENSES WERE FULLY REVENUE IN NATURE AND COMPRISED OF THE FOLLOWING: (I) SALARY OF PERSONNEL RS 33,88,000/- (II) TRAVELLING AND CONVEYANCE EXPENSES RS 6,77,0 00/- (III) OTHER ADMINISTRATIVE OVERHEADS RS 20,44,00 0/- (E.G. RENT, ELECTRICITY, TELEPHONE, SERVICE CHARGE S) ____________ TOTAL SOFTWARE DEVELOPMENT EXPENSES RS 61,09,000 /- ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 10 - 24. HENCE, IT WAS SUBMITTED THAT THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THIS EXPENSE WAS NOT JUSTIFIED. 25. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE HELD THAT IT IS TO BE SEEN WHETHER THE EXPENDITURE INCUR RED BY THE ASSESSEE IS CAPITAL OR REVENUE IN NATURE. HE OBSERVED THAT IF THE EXPENDITURE INCURRED WAS CAPITAL IN NATURE THEN IT CANNOT BE ALLOWED DEDUCTI ON U/S 37 OF THE ACT. HE, FURTHER OBSERVED THAT IF THE EXPENDITURE WAS REVENU E IN NATURE AND WAS INCURRED FOR THE PURPOSES OF THE BUSINESS, THE ENTI RE AMOUNT HAS TO BE ALLOWED WITHOUT AMORTIZING THE SAME ALTHOUGH FOR THE PURPOS E OF THE COMPANIES ACT AND ACCOUNTING STANDARDS PRESCRIBED BY THE ICAI PRO VIDES SO. HE OBSERVED THAT IN THE INSTANT CASE FROM THE NATURE OF EXPENSE S, IT IS SEEN THAT THE EXPENDITURE WAS INCURRED ON TRAVELLING, SALARY ETC. AND THEY ARE PURELY REVENUE ITEMS AND UNLESS SHOWN TO BE BOGUS OR INCURRED FOR NON-BUSINESS PURPOSES MUST BE ALLOWED FULLY AS REVENUE EXPENDITURE. HE F URTHER OBSERVED THAT IT HAS NOT BEEN BROUGHT OUT BY THE ASSESSING OFFICER THAT THE EXPENSES WERE EITHER BOGUS OR INCURRED FOR PURPOSES OTHER THAN THOSE REL ATING TO THE BUSINESS. ON THE CONTRARY, THE EXPENSES APPEAR TO BE ROUTINE BUS INESS EXPENSES. ACCORDINGLY, HE HELD THAT THE ACTION OF THE ASSESSI NG OFFICER IN DISALLOWING THE AMOUNT OF RS 61,09,000/- WAS NOT JUSTIFIED AND DIRE CTED TO DELETE THE SAME. 26. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A). 27. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. NO S PECIFIC ERROR IN THE ORDER OF THE LD. CIT(A) COULD BE POINTED OUT BY THE LD. DR. FURTHER, THE LD. DR COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE E XPENSES INCURRED OF RS 61,09,000/- WERE NOT INCURRED BY THE ASSESSEE FOR T HE PURPOSES OF ITS BUSINESS OR THAT THE EXPENSES CLAIMED WERE BOGUS OR INFLATED . FURTHER, IF THE EXPENSES INCURRED BY THE ASSESSEE ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ITS BUSINESS, THE SAME IS ALLOWABLE DEDUCTION U/S 37(1) OF THE ACT EVEN THOUGH FOR ACCOUNTING PURPOSES THE ASSESSEE HAS AMORTIZED THE SAME OVER A PERIOD OF TIME. WE, THEREFORE, DO NOT FIND ANY GOOD AND JUST IFIABLE REASON TO INTERFERE ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 11 - WITH THE ORDER OF THE LD. CIT(A) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 28. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS DI RECTED AGAINST THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE PAYMENT OF CO NSULTANCY CHARGES OF RS 21,60,000/- TO THE DIRECTOR COVERED U/S 40A (2)(B) IS ALLOWABLE THOUGH RESOLUTION OF SUCH CONSULTANCY CHARGES WAS NOT MADE BY THE COMPANY. 29. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED FROM EN CLOSURE-5 TO THE TAX AUDIT REPORT THAT THE ASSESSEE COMPANY HAD PAID RS 21,60, 000/- AS CONSULTANCY CHARGES TO SHRI A.R. MEHTA, A DIRECTOR OF THE COMPA NY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO PROVIDE COPY O F AGREEMENT UNDER THE TERMS OF WHICH CONSULTANCY CHARGES WERE PAID. HE A LSO OBSERVED THAT THE ASSESSEE COULD NOT EXPLAIN THE NATURE OF SERVICES R ENDERED BY SHRI A.R. MEHTA IN LIEU OF WHICH CONSULTANCY CHARGES WERE PAID TO H IM. ACCORDINGLY, HE DISALLOWED RS 21,60,000/- AS DEDUCTION WHILE COMPUT ING INCOME OF THE ASSESSEE. 30. ON APPEAL BEFORE THE LD. CIT(A), IT WAS CONTEND ED BY THE ASSESSEE THAT SHRI A.R. MEHTA WAS A HIGHLY QUALIFIED ENGINEER HOL DING 3 DEGREES IN INDUSTRIAL MECHANICAL AND ELECTRICAL ENGINEERING. HE WAS APPO INTED AS ADDITIONAL DIRECTOR AND WAS SUBSEQUENTLY ELECTED AS THE VICE-CHAIRMAN O F THE BOARD. SHRI A.R. MEHTA WAS NEITHER HOLDING ANY SHARE CAPITAL IN THE COMPANY NOR WAS HE RELATED TO ANY DIRECTOR. HE WAS APPOINTED AS ADDITIONAL DI RECTOR OF THE COMPANY AND CONSULTANCY CHARGES WERE PAID TO HIM FOR HIS SOUND TECHNICAL AND PROFESSIONAL KNOWLEDGE, QUALIFICATION, EXPERIENCE AND FOR BUSINE SS CONSIDERATION. IT WAS SUBMITTED THAT SHRI MEHTA WAS PAID CONSULTANCY CHAR GES OF RS 1,80,000/- PER MONTH FOR REGULAR INVOLVEMENT IN VARIOUS SOPHISTICA TED PROJECTS AND IN THE DEVELOPMENT OF TECHNOLOGY. UNDER HIS TECHNICAL GUI DANCE, THE COMPANY ACHIEVED INNUMERABLE LANDMARKS. HE WAS ALSO INSTRU MENTAL IN DEVELOPMENT OF GIS TECHNOLOGY. HIS CONTRIBUTION TO THE DAY-TO-DA Y FUNCTIONING OF THE COMPANY WAS COUNTLESS. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 12 - 31. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT THE ASSESSING OFFICER HAS MADE THE DI SALLOWANCE ON THE GROUND THAT THERE WAS NO FORMAL AGREEMENT UNDER WHICH THE PAYMENT WAS MADE. HE OBSERVED THAT THE ASSESSEE PRODUCED COPY OF BOARDS RESOLUTION BY WHICH SHRI A.R. MEHTA WAS APPOINTED AS A DIRECTOR AND SUBSEQUE NTLY THE VICE-CHAIRMAN OF THE COMPANY. RECORDS SHOWING HIS PARTICIPATION IN THE BOARDS MEETING WERE ALSO PRODUCED BEFORE HIM. THEREFORE, THE LD. CIT(A ) HELD THAT THE ASSESSEE HAD BROUGHT SUFFICIENT MATERIAL TO SHOW THAT SHRI M EHTA WAS CONTRIBUTING SIGNIFICANTLY IN THE DAY-TO-DAY RUNNING OF THE ENTE RPRISE AND REMUNERATION OF RS 1,80,000/- PER MONTH WAS PAID TO HIM. HE, HOWEV ER, OBSERVED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO S HOW THAT THE PAYMENT WAS IN ANY MANNER EXCESSIVE OR UNREASONABLE. HE OBSERV ED THAT ANY PORTION OF THE PAYMENT WHICH WAS EXCESSIVE COULD BE DISALLOWED AND NOT THE ENTIRE AMOUNT OF PAYMENT UNLESS IT WAS SHOWN WITH EVIDENCE THAT T HE ENTIRE AMOUNT WAS EXCESSIVE OR UNREASONABLE. HE RELIED ON THE DECISI ON OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF M& CO. VS. ITO 20 TTJ 246 W HERE IT WAS HELD THAT FOR MAKING DISALLOWANCE U/S 40A(2), THE TEST WAS THAT T HERE MUST BE A FINDING THAT THE EXPENDITURE WAS EXCESSIVE OR UNREASONABLE HAVIN G REGARD TO THE MARKET VALUE OF THE SERVICES, THE LEGITIMATE NEEDS OF THE BUSINESS AND THE BENEFIT DERIVED BY THE ASSESSEE THEREFROM. IN ABSENCE OF S UCH FINDING, NO DISALLOWANCE COULD BE SUSTAINED. THE LD. CIT(A), T HEREFORE, LOOKING TO THE ENTIRE FACTS OF THE CASE OF THE ASSESSEE OPINED THA T ADDITION OF RS 21,60,000/- WAS NOT JUSTIFIED AND DIRECTED THE ASSESSING OFFICE R TO DELETE THE SAME. 32. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. C IT(A). 33. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION FOR RS 21,60,000/- BEING CONSULTA NCY CHARGES PAID TO SHRI A.R. MEHTA WHO WAS A DIRECTOR OF THE COMPANY. THE ASSESSING OFFICER DISALLOWED THE SAME FOR THE REASON THAT COPY OF THE AGREEMENT WITH SHRI A.R. MEHTA OR EVIDENCE FOR THE NATURE OF SERVICES RENDER ED BY SHRI MEHTA COULD NOT BE PRODUCED BY THE ASSESSEE. ITA NOS. 3754 & 3857 OF 2007 ORG INFORMATICS LTD. VS. DCIT, CIRCLE-4(1), BARODA FOR A.Y. 2003-04 - 13 - 34. ON APPEAL, LD. CIT(A), ON VERIFICATION OF THE B OARD RESOLUTION PRODUCED BY THE ASSESSEE AND MINUTES OF THE MEETING ATTENDED BY SHRI A.R. MEHTA, ARRIVED AT THE CONCLUSION THAT SHRI A.R. MEHTA WAS ACTIVELY INVOLVED IN DAY-TO- DAY RUNNING OF THE BUSINESS OF THE ASSESSEE. HE AL SO OBSERVED THAT SHRI A.R. MEHTA WAS PAID RS 1,80,000/- PER MONTH AS CONSULTAN CY CHARGES AND THE ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT SUCH PAYMENT WAS UNREASONABLE OR EXCESSIVE HAVING REGARD TO THE MARKET VALUE OF SERVICES, LEGITIMATE NEEDS OF THE BUSINESS AND THE BENEFIT DERIVED BY THE ASSESSEE THEREFROM. IN ABSENCE OF SUCH A FINDING, THE LD. CIT(A) HELD THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT B E SUSTAINED. 35. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE L D. CIT(A). HE ALSO COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE FIND ING OF THE LD. CIT(A) THAT THE PAYMENT MADE BY THE ASSESSEE TO THE DIRECTOR SH RI A.R. MEHTA WAS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE MARK ET VALUE OF SERVICES AND THE BUSINESS NEEDS OF THE ASSESSEE AND THE BENEFITS DERIVED BY THE ASSESSEE THEREFROM. THE LD. DR ALSO COULD NOT BRING ANY MATE RIAL ON RECORD TO CONTROVERT THE FINDING OF THE LD. CIT(A) THAT THE P AYMENTS WERE IN ACCORDANCE WITH THE LEGITIMATE NEEDS OF THE BUSINESS AND THE B ENEFITS DERIVED BY THE ASSESSEE THEREFROM AND THAT SHRI A.R. MEHTA WAS ACT IVELY INVOLVED IN THE DAY- TO-DAY RUNNING OF THE BUSINESS OF THE ASSESSEE. WE , THEREFORE, DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE O RDER OF THE LD. CIT(A) WHICH IS CONFIRMED AND THIS GROUND OF APPEAL OF THE REVEN UE IS DISMISSED. 36. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 28 TH FEBRUARY, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 28/02/2014 GHANSHYAM MAURYA, SR. P.S.