ASSTT CIT 17(2), MUMBAI V. PRESTRESS WIRE INDUSTRIES, MUMBAI

ITA 3923/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8007 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 09-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SINGH LD
• Assessee Lawyers: DAMODAR KABRA LD ARS
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Deemed dividend; Capital receipt; Revised return
• Section: 143(3); 2(22)(e); 80IB

Judgement Text

ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3923/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) ASST. COMMISSIONER OF INCOME TAX -17(2) ROOM NO.134 AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. / VS. PRESSTRESS WIRE INDUSTRIES 303, ELPHINSTONE HOUSE MURZBHAN ROAD, FORT MUMBAI-400 023. ! ./ ./PAN/GIR NO. AAAFP-5807-C ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & C.O. NO.01/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) PRESSTRESS WIRE INDUSTRIES RELIABLE CITADEL, OFFICE NO. 202 2 ND FLOOR, BUILDING NO. 17 GOLA LANE, D.N.ROAD FORT, MUMBAI 400 001 / VS. ASST. COMMISSIONER OF INCOME TAX -17(2) ROOM N0134, AAYKAR BHAWAN M.K.MARG, MUMBAI-400 020. ! ./ ./PAN/GIR NO. AAAFP-5807-C ( !# /APPELLANT ) : ( $ %!# / RESPONDENT ) ASSES SEE BY : NITESH JOSHI & DAMODAR KABRA- LD. ARS REVENUE BY : MANOJ KUMAR SINGH - LD.DR / DATE OF HEARING : 16/11/2018 / DATE OF PRONOUNCEMENT : 08/01/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-28, ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 2 MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-28/JCIT-12(1)/IT-79/2014-15 DATED 30/03/2016 ON FOLLOWING EFFECTIVE GROUNDS: - 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING THE A.O.TO DELETE THE ADDITI ON OF RS.22074697/- ON ACCOUNT OF UNREPORTED PROFIT ON SALE OF OUT OF BOOK S PRODUCTION WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS UTTERLY FAILED TO DISCHARGE ITS ONUS OF DISPROVING THE FINDINGS GIVEN BY THE ASSESSING O FFICER ARRIVED AT PURSUANT TO DETAILED ANALYSIS OF PRODUCTION VIS-A VIS THE PO WER CONSUMPTION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE A.O.TO DELETE THE DISALL OWANCE OF DEDUCTION U/S.80IB OF THE ACT IN RESPECT OF UNIT-ILL AND FALA NDI UNIT OF THE ASSESSEE, AS THE ISSUE THAT THESE UNITS ARE NOT ESTABLISHED IN C ONSEQUENCE TO RESTRUCTURING OF OTHER UNITS OF THE ASSESSEE HAS NOT BEEN CONCLUS IVELY ESTABLISHED IN ASSESSMENT AND APPELLATE PROCEEDINGS' 3A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE A.O. TO DELETE THE ADDIT ION OF RS.1,61,87,146/-AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT, RELYING UP ON CERTAIN DECISIONS, WHICH IN PRINCIPLE HAVE NOT BEEN ACCEPTED BY THE RE VENUE' 3B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE A.O.TO DELETE THE ADDITI ON OF RS.1,61,87,146/- AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT, WITHOUT AP PRECIATING THE FACT THAT THE ISSUE IN AKIN CIRCUMSTANCES HAS BEEN DECIDED IN FAV OUR OF REVENUE BY THE HON'BLE MUMBAI ITAT IN THE CASE OF ITO VS. SAHIR SA MI KHATIB, AS REPORTED IN 57 TAXMANN.COM 13' THE ASSESSEE HAS FILED CROSS OBJECTION ON THE FOLLO WING EFFECTIVE GROUNDS: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -28, MUMBAI, HEREINAFTER REFERRED TO AS THE 'CIT(APPEALS)', ERRED IN DISMISS ING THE GROUND OF APPEAL NO. 1 BEFORE HIM THAT THE SALES TAX OF RS.2,14,83,178/- E MBEDDED IN THE SALES AMOUNT COLLECTED FROM CUSTOMERS IS A CAPITAL RECEIPT. YOUR RESPONDENTS SUBMIT THAT, ON THE FACTS AND IN T HE CIRCUMSTANCES OF THEIR CASE, THE SALES TAX AMOUNT OF RS.2,14,83,178/- INCL UDED IN THE SALES IS A CAPITAL RECEIPT AND ACCORDINGLY NOT INCLUDIBLE IN THE TOTAL INCOME ASSESSABLE UNDER THE IT ACT. 2. THE 'CIT(APPEALS)' ERRED IN NOT AGREEING WITH TH E CONTENTION OF THE APPELLANT THAT THE INTEREST RECEIVED FROM ASSOCIATE AND OTHER CONC ERNS ON TEMPORARY DEPLOYMENT OF FUNDS HAS TO BE NETTED OFF AGAINST IN TEREST EXPENSE FOR COMPUTING INCOME FROM INTEREST ASSESSABLE UNDER THE HEAD 'INC OME FROM OTHER SOURCES'. YOUR RESPONDENTS SUBMIT THAT, ON THE FACTS AND IN T HE CIRCUMSTANCES OF THEIR CASE, RELATED INTEREST PAID ON CASH CREDIT ACCOUNT OUGHT TO HAVE BEEN ALLOWED AS ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 3 A DEDUCTION IN COMPUTING THE NET INCOME FROM INTERE ST ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. JOINT COMMISSIONER OF INCOME TAX-RANGE 12(1), MUMBAI [AO] IN SCRUTINY ASSESSMENT U/S 143(3) ON 25/03/2014 WHEREIN THE TOT AL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1051.43 LACS AFTER CE RTAIN ADDITIONS /DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.547 .35 LACS E-FILED BY THE ASSESSEE ON 28/09/2011 WHICH WAS LATER REVISED TO RS.384.36 LACS ON 31/03/2012. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY WAS STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING & TRADING OF PRESTRESSED WIRES, STANDARD WIRES & ALLIED PRODUCTS. THE ASSESSEE HAS SIX UNITS NAMELY PW-I, PW-II, PW-III AT SILVASSA, UNIT AT FALANDI, U NIT AT VIKRAMPUR AND UNIT AT UDWADA . DURING IMPUGNED AY, THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB IN RESPECT OF UNIT-III AT SILVASSA & FALANDI UNIT. 2.1 IN THE REVISED RETURN OF INCOME, THE ASSESSEE R EDUCED ITS INCOME BY RS.214.83 LACS, BEING NOTIONAL CENTRAL SALES TAX EMBEDDED IN THE SALES TRANSACTIONS, TREATING THE SAME TO BE CAPITAL IN NATURE IN VIEW OF THE FACT THAT IT ENJOYED CERTAIN SALES TAX EXEMPTION AS GRANTED BY THE STATE GOVERNMENT. IT WAS SUBMITTED THAT AS PER THE POLICY FOR MICRO, SMALL AND MEDIUM ENTERPRISES ANNOUNCED FOR DADRA & NAGAR HAVELI , CONCESSIONS INCLUDING SALES TAX FACILITIES WERE GRANTED TO AID, ASSIST, FINANCE, PROMOTE, EXPEDITE AND ACCELERATE THE ECONOMIC DEVELOPMENT OF THE REGION AND THEREFORE, THE NOTIONAL CENTRAL SALES TAX EMBEDDED IN SALE TRANSACTIONS WAS CAPITAL RECEIPT IN NATURE AND HENCE NOT TAXABLE . THE LD. AO DENIED ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 4 THE SAME TO THE ASSESSEE CITING MULTIPLE REASONS AS STATED IN PARA 6.2 OF THE QUANTUM ASSESSMENT ORDER. THE STAND OF LD. AO, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY IS UNDER CHALLENGE IN ASSESSEES CROSS- OBJECTIONS. THE LD. AUTHORIZED REPRESENTATIVE FOR A SSESSEE [AR], SHRI NITESH JOSHI, AT THE OUTSET, SUBMITTED THAT THE IDENTICAL MATTER FOR AY 2009-10 HAS ALREADY BEEN RESTORED BY THE TRIBUNAL T O FIRST APPELLATE AUTHORITY VIDE ITA NO.6467/MUM/2013 AND THEREFORE, THE MATTER FOR THIS YEAR MAY ALSO BE RESTORED ON SIMILAR LINES. KEEPING IN VIEW THE SUBMISSIONS, THE MATTER STAND REMITTED BACK TO THE FILE OF LD. AO ON SIMILAR LINES SO AS TO ENABLE THE REVENUE TO TAKE U NIFORM STAND IN THE MATTER. THE LD. AO IS DIRECTED TO RE-ADJUDICATE THE SAME KEEPING IN VIEW THE DIRECTIONS OF THE TRIBUNAL FOR AY 2009-10. GROU ND NUMBER-1 OF CROSS-OBJECTIONS STANDS ALLOWED FOR STATISTICAL PUR POSES. 2.2 THE SECOND ADDITION PERTAIN TO TREATMENT OF CER TAIN INTEREST INCOME EARNED BY THE ASSESSEE. DURING ASSESSMENT PROCEEDIN GS, IT TRANSPIRED THAT THE ASSESSEE EARNED AGGREGATE INTEREST INCOME OF RS.171.78 LACS ON LOANS, INVESTMENTS & DEPOSITS WHEREAS IT INCURRED INTEREST EXPENDITURE OF RS.558.11 LACS ON BORROWINGS AND ACC ORDINGLY DEBITED NET INTEREST OF RS.386.32 LACS IN THE PROFIT & LOSS ACCOUNT WHICH EFFECTIVELY MEANT THAT INTEREST INCOME EARNED BY TH E ASSESSEE WAS TREATED AS BUSINESS INCOME AND DEDUCTION U/S 80IB W AS CLAIMED ON SUCH INCOME. THE LD. AO, RELYING UPON ASSESSMENT ORDER F OR AY 2007-08, ASSESSED INTEREST INCOME OF RS.171.78 LACS UNDER TH E HEAD INCOME FROM OTHER SOURCES WHICH REDUCED ASSESSEES BUSINESS PROFITS AVAILABL E FOR CLAIMING DEDUCTION U/S 80IB. THE LD. CIT, AFTER APPRECIATING THE ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 5 BREAK-UP OF INTEREST AMOUNT & RELYING UPON THE DECI SION OF HONBLE BOMBAY HIGH COURT RENDERED IN VIDYUT CORPORATION [324 ITR 221] AS WELL AS THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR 2007-08 & 2008-09 CONCLUDED THAT INTEREST TO THE EXTENT OF RS .77.84 LACS REPRESENTING INTEREST ON TEMPORARY DEPLOYMENT OF FUNDS WAS TO BE TREATED AS INCOME FROM OTHER SOURCES . AGGRIEVED, THE ASSESSEE IS UNDER APPEAL BY WAY OF GROUND NUMBER-2 IN THE CROSS-OBJEC TIONS. THE LD. AR SUBMITTED THAT CORRESPONDING INTEREST EXPENDITURE S HOULD BE ALLOWED TO THE ASSESSEE WHILE COMPUTING INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. OUR ATTENTION HAS BEEN DRAWN TO THE ORDER OF THE TR IBUNAL FOR AY 2007-08 & 2009-10. AFTER GOING THROUGH THE SAME, WE FIND THAT RELYING UPON MATTER FOR AY 2007-08, THE ISSUE IN AY 2009-10 HAS BEEN RESTORED TO THE FILE OF LD. AO. THE RELEVANT FINDIN GS OF THE TRIBUNAL COULD BE EXTRACTED IN THE FOLLOWING MANNER: - 6.2.DURING THE COURSE OF HEARING BEFORE US REPRESEN TATIVES OF BOTH THE SIDES CONCEDED THAT THE ISSUE HAD BEEN SENT BACK TO THE FILE OF AO BY T HE TRIBUNAL WHILE DECIDING THE C.O.138/MUM/2012 (A.Y. 2007-08, DT.31.01.14). WE FI ND THAT THE FACTS FOR CONSIDERATION ARE SIMILAR TO THE EARLIER YEAR WE WOULD LIKE TO REPROD UCE PARAGRAPHS 14-17 OF THE IMPUGNED ORDER OF THE TRIBUNAL, RELIED UPON BY THE AR AND SA ME READS AS UNDER :- 14. REGARDING THE ISSUE OF INTEREST RECEIVED FROM FIXED DEPOSITS KEPT AS MARGIN MONEY FOR BANK GUARANTEES, LD COUNSEL FOR THE ASSES SEE MENTIONED THAT THE TEMPORARY DEPLOYMENT OF FUNDS SHOULD BE ASSESSED AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES AS TREATED BY THE ASSESSING OFFICER. IN THIS REGAR D, LD COUNSEL RELIED ON THE FOLLOWING DECISIONS. I) CIT VS. VIDYUT STEEL LTD. 219 ITR 30 (AP) II) CIT VS. KOSHIKA TELECOM LTD 287 ITR 479 (DEL) III) CIT VS. KARNAL COOPERATIVE SUGAR MILLS LTD 243 ITR 2 (SC) IV) CIT VS. INDO SWISS JEWELLS LTD 284 ITR 389 (BOM ) 15. ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON TH E ORDER OF THE AO. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS CITATIONS QUOTED BY THE LD C OUNSEL ALONG WITH THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CITED JUDGMENTS OF THE HIGHER JUDICIARY, WE FIND THAT THEY ARE RELEVANT FOR THE PROPOSITION THAT THE THERE IS NO QUESTION OF ISOLATING THE INTEREST RECEIVED ON MARGIN MONEY PAI D FOR OBTAINING BANK GUARANTEE AND ASSESSING IT AS SEPARATE INCOME UNDER SECTION 5 6. THEREFORE, AGREE WITH THE VIEW OF THE TRIBUNAL THAT THE INCOME DERIVED ON THE MARGIN MONEY FOR OBTAINING BANK GUARANTEE CANNOT BE SEPARATELY ASSESSED UNDER SECTI ON 56. CONSIDERING THE BINDING ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 6 JUDGMENTS GIVEN BY THE HONBLE HIGH COURTS AS WELL AS THE HONBLE SUPREME COURT, WE ARE OF THE OPINION THAT THE INTEREST DERIVED ON MARGIN MONEY FOR THE PURPOSE OF OBTAINING BANK GUARANTEE SHOULD BE ASSESSED AS BUSI NESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES. ACCORDINGLY, WE DECIDE THIS PART OF THE GROUND IN FAVOUR OF THE ASSESSEE. 17. REGARDING THE ISSUE RAISED IN GROUND NO.3 WITH REGARD TO BENEFIT OF NETTING OFF OF INTEREST INCOME AGAINST THE EXPENDITURE AND THE SAM E WAS RAISED WITHOUT PREJUDICE. IN THIS REGARD, IT WAS ARGUED BY THE LD COUNSEL THA T WHETHER THE IMPUGNED INTEREST IS ASSESSED UNDER THE HEAD BUSINESS INCOME OR INCOME F ROM OTHER SOURCES, IF IT IS HELD THAT THE SAID RECEIPTS DO NOT QUALIFY FOR DEDUCTION U/S 80IB OF THE ACT, THEN THE EXCLUSION FOR THE PURPOSES OF ASCERTAINING THE INCO ME QUALIFYING FOR DEDUCTION HAS TO BE THE NET INTEREST INCOME AND NOT THE GROSS INTERE ST RECEIPT. IN SUPPORT OF HIS CONTENTION, LD COUNSEL RELIED ON THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P. LTD VS. CIT (343 ITR 89). IN THIS CONNECTION, BOTH THE PARTIES STATED THAT THE SAID CLAIM OF THE ASSESSEE NEEDS TO BE CONSIDERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE BINDING JUDGM ENT OF THE HONBLE APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P. LTD VS. CIT (SUPRA). ACCORDINGLY, WE DIRECT THE AO TO APPLY THE SAID JUDGMENT ON CONSIDERING TH E FACTS OF THE PRESENT CASE AFTER REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AS PER THE PRINCIPLES OF THE NATURAL JUSTICE. IN SUBSTANCE, GROUND NO.3 IS TREAT ED AS ALLOWED IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ABOVE, SOLE GROUND OF AP PEAL RAISED BY THE ASSESSEE IN ITS C.O., IS RESTORED BACK TO FILE OF A.O. FOR FRESH ADJUDICA TION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. C.O. FILED BY A.O. IS DECIDED IN PART. KEEPING IN VIEW THE UNIFORM STAND OF THE TRIBUNAL A ND SUBMISSIONS MADE BY LD. AR, THE ISSUE STANDS RESTORED BACK TO THE FI LE OF LD. AO FOR RE- ADJUDICATION ON SIMILAR LINES AFTER PROVIDING REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF THE INTEREST INCOME OF RS.77.84 LACS IS ASSESSED AS INCOME FROM OTHER SOURCES, THE INTEREST EXPENDITURE, TO THE EXTENT IT HAS NEXUS WITH EARNING OF THE STATED INTE REST INCOME, SHALL BE ALLOWED AGAINST THE SAME AND ACCORDINGLY, THE INTER EST EXPENDITURE, TO THAT EXTENT, AS CLAIMED UNDER THE HEAD BUSINESS INCOME SHALL STAND DISALLOWED. THIS GROUND AS WELL AS ASSESSEES CROSS -OBJECTION STAND ALLOWED FOR STATISTICAL PURPOSES. 3.1 THE LD. AO, RELYING UPON ORDER FOR 2009-10, HAS MADE ANOTHER ADDITION ON ACCOUNT OF UNREPORTED PRODUCTION AND SU PPRESSION OF INCOME AS COMPUTED ON THE BASIS OF POWER UNITS CONSUMED IN UNIT-III . THE LD. ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 7 AO, ON THE BASIS OF POWER CONSUMPTION DURING IMPUGN ED AY, ARRIVED AT A CONCLUSION THAT ASSESSEES UNREPORTED PRODUCTION IN UNIT-III WAS 6792 MT WHICH COULD PRODUCE FINISHED GOODS TO THE EXTENT OF 6705 MT VALUED AT RS.27.08 CRORES. THUS, BY APPLYING GROSS PROFIT RATE OF 8.15%, THE IMPUGNED ADDITIONS HAVE BEEN WORKED OUT TO BE RS.22 0.74 LACS. THE LD. CIT(A), RELYING UPON THE ORDER OF ITS PREDECESS OR FOR AY 2009-10, DELETED THE SAME. AGGRIEVED, THE REVENUE IS IN FURT HER APPEAL BEFORE US. BOTH REPRESENTATIVES CONVERGE ON THE POINT THAT THI S ISSUE STOOD COVERED IN ASSESSEES FAVOR BY THE ORDER OF THE TRIBUNAL FO R AY 2009-10 AS WELL AS FOR AY 2010-11, THE COPIES OF WHICH HAVE BEEN PL ACED ON RECORD. UPON DUE CONSIDERATION, WE FIND THAT THE MATTER, FO R AY 2009-10 HAS BEEN CONCLUDED IN ASSESSEES FAVOR, IN THE FOLLOWIN G MANNER: - 6.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL BEFORE US. WE FIND THAT THE AO HAD MADE THE ADDITIONS AS HE WAS OF THE OPINION THAT THERE WAS SOME DISCREPANCY IN CONSUMPTION OF ELECTRICITY IN ONE OF THE UNITS. IN OUR, OPINION IT WAS A GOOD STARTING POINT TO MAKE FURTHER INVESTIGATION, BUT IT IN ITSELF IS NOT THE CLINCHING EVIDENCE FOR MAKING ADDITION. ANY ABNORMALITY FOUND IN THE RETURN HAS TO INVESTIG ATED TO ARRIVE AT THE CORRECT TAXABILITY, BUT THERE IS MARKED DIFFERENCE BETWEEN A LEAD AND AN EV IDENCE. IT IS DUTY OF THE AO TO CALL FOR EXPLANATION OF THE ASSESSEE ABOUT DISCREPANCIES NOT ED BY HIM BEFORE FASTENING TAX LIABILITY TO IT. THERE CAN BE SEVERAL REASONS FOR ABNORMAL RE SULTS AND THEY COULD BE PERFECTLY VALID. SO, WITHOUT CONSIDERING THE SAME NO DECISION SHOULD BE TAKEN. BUSINESS WORLD DOES NOT RUN AS PER THE ARITHMETIC RULES IT HAS MANY A NUANCES A ND EACH FACTOR PLAY ROLE ON TAXABLE INCOME OF AN ASSESSEE. IT IS NOT APPROPRIATE TO APP LY MATHEMATICAL FORMULAS AND DETERMINE TAX LIABILITY. IN THE CASE BEFORE US, THE ASSESSEE HAD FILED A LETTER ADDRESSED TO THE STATE ELECTRICITY AUTHORITIES INFORMING THEM OF MALFUNCTI ONING OF METER FOR TWO-THREE MONTHS. IT IS QUITE COMMON FEATURE THAT ELECTRICITY METERS IN SOM E CASES DO NOT FUNCTION PROPERLY AND ELECTRICITY BOARDS TAKES TIME TO RECTIFY THE DEFECT S. THUS, A PLAUSIBLE AND REASONABLE EXPLANATION WAS FILED BY THE ASSESSEE ABOUT THE DIS CREPANCY IN ELECTRICITY BILL. BU THE AO WITHOUT MAKING ANY INQUIRY IN THAT REGARD, JUMPED O N A FINAL CONCLUSION. BESIDES EVEN IF THERE WAS NO MALFUNCTIONING OF THE METERS, THERE CA N BE MANY A REASON FOR MISMATCH IN CONSUMPTION OF ELECTRICITY AND PRODUCTION OF GOODS. THE ASSESSEE IS NOT MANUFACTURING ONLY ONE TYPE OF WIRES OR NOT USING ONE KIND OF RAW MATE RIAL. THE VARIATION IN THE FINAL PRODUCT AND THE RAW MATERIAL WILL AFFECT THE CONSUMPTION OF ELE CTRICITY. OTHER FACTORS MENTIONED BY THE ASSESSEE FOR VARIATION IN POWER CONSUMPTION BEFORE THE FAA, WERE ALSO NOT CONSIDERED BY THE AO. IT IS PERTINENT TO NOTE THAT THE AO HAS NOT COMMENTED UPON THE DOCUMENTS MAINTAINED BY THE ASSESSEE FOR THE PURPOSES OF EXCI SE DUTY OR SALES TAX DEPARTMENT. NO EVIDENCE HAS BEEN BROUGHT ON RECORD ABOUT UNRECORDE D PURCHASES OF RAW MATERIAL. IT IS NOT UNDERSTOOD AS HOW WITHOUT PURCHASES GOODS WERE MANU FACTURED AND SOLD AS ALLEGED BY THE AO. WE ARE OF THE OPINION THAT THE FAA HAS RIGHTLY HELD THAT THE ADDITION MADE BY THE AO ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 8 WAS BASED ON SURMISES AND CONJECTURES AND ON ANY RE LIABLE EVIDENCE. SO, CONFIRMING HIS ORDER, WE DECIDE THE LAST GROUND AGAINST THE AO. MATERIAL FACTS & CIRCUMSTANCES BEING THE SAME, RESP ECTFULLY FOLLOWING THE CONSISTENT STAND OF TRIBUNAL, WE CONFIRM THE STAND OF FIRST APPELLATE AUTHORITY AND DISMISS THIS GROUND OF REVENUES APPE AL. 3.2 THE SECOND GROUND OF REVENUES APPEAL IS RELATE D WITH ASSESSEES ELIGIBILITY TO CLAIM DEDUCTION U/S 80IB AGAINST UNIT-III AT SILVASSA & FALANDI UNIT. THE LD. AO OPINED THAT THESE UNITS WERE NOT NEWLY C REATED BUT ARRANGEMENT BY WAY OF TRANSFER FROM UNIT-I AND UNIT-II SINCE THESE UNITS EXHAUSTED ELIGIBILITY TO CLAIM THE AFORESAID DEDUCTION. IT WAS FURTHER CONCLUDED THAT IT WAS A DELIBERATE PLOY BY ASSESSEE TO CONVERT UNIT-I & UNIT-II FROM STAND-ALONE INDEPENDENT UNIT INTO THAT OF JOB WORK UNITS FOR THE BENEFIT OF UNIT-III WITH THE SOLE OBJECTIVE OF MAXIMIZING THE DEDUCTIO N U/S 80IB. SINCE THE DEDUCTION AGAINST UNIT-III & FALANDI UNIT WAS DENIED TO THE ASSESSEE IN AYS 2008-09 & 2009-10, THE SAME WAS DISALLOWED IN THE IMPUGNED AY ALSO. THE SAME, UPON CONFIRMATION B Y LD. CIT (A) IS UNDER APPEAL BEFORE US. THE FIRST APPELLATE AUTHORI TY HAS NOTED THAT UNIT- III WAS ELIGIBLE TO CLAIM THE DEDUCTION U/S 80IB FROM A Y 2003-04 ONWARDS WHICH WAS ALREADY BEEN UPHELD BY THE TRIBUNAL AND T HE REVENUES APPEAL AGAINST THE TRIBUNAL ORDER WAS ALSO DISMISSE D BY HONBLE BOMBAY HIGH COURT. THE LD. CIT(A) OBSERVED THAT BOT H THE ASPECTS VIZ. WHETHER THE UNIT WAS ENGAGED IN CARRYING OUT MANUFA CTURING ACTIVITY AS WELL AS WHETHER THE UNIT WAS FORMED BY SPLITTING UP OR RECONSTRUCTION OF A BUSINESS WERE ALREADY CONSIDERED IN THE AFORESAID D ECISIONS. REGARDING FALANDI UNIT, IT WAS NOTED THAT THE UNIT WAS LOCATED AT DIFFERENT LOCATION ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 9 AND INDEPENDENTLY ENGAGED IN CARRYING OUT MANUFACTU RING ACTIVITIES AND THEREFORE IT WAS ELIGIBLE TO CLAIM THE SAID DEDUCTI ON AS ALREADY UPHELD BY THE TRIBUNAL UP-TO AY 2008-09. AGGRIEVED, THE REVEN UE IS IN FURTHER APPEAL BEFORE US. 3.3 ALTHOUGH LD. DR SUPPORTED THE STAND OF LD. AO, HOWEVER, NOTHING COULD BE BROUGHT ON RECORD TO REBUT THE OBSERVATION S MADE BY FIRST APPELLATE AUTHORITY AND THE UNDISPUTED POSITION THA T EMERGES IS THAT FACT THAT THE STATED ISSUE STOOD COVERED IN ASSESSEES F AVOR IN EARLIER YEARS. RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDE NTS, THIS GROUND STANDS DISMISSED. 4.1 THE LAST ISSUE IN ASSESSEES APPEAL IS DEEMED DIVIDEND U/S 2(22)(E) . IT TRANSPIRED THAT THE ASSESSEE TOOK LOAN OF RS. 11.46 CRORES FROM A SISTER CONCERN NAMELY SHANKARLAL GILADA & SONS PVT LTD. IN WHICH ONE OF THE PARTNERS OF ASSESSEES FIRM NAMELY SANGEETA GILADA HAD SUBSTANTIAL SHAREHOLDING OF 18%. SINCE THE SAID ENT ITY HAD ACCUMULATED RESERVED OF RS.161.87 LACS, THE LOAN TO THAT EXTENT WAS ADDED TO THE INCOME OF THE RECIPIENT ASSESSEE AS DEEMED DIVIDEND U/S 2(22)(E). THE SAME, UPON CONFIRMATION BY FIRST APPELLATE AUTHORIT Y, IS UNDER APPEAL BEFORE US. THE LD. CIT(A) HAS PROVIDED RELIEF TO TH E ASSESSEE BY FOLLOWING THE BINDING JUDICIAL PRECEDENT IN THE SHA PE OF DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN BHAUMIK COLOR & UNIVERSAL MEDICARE. FURTHER, SIMILAR ADDITION MADE IN AY 2009-10 WAS DE LETED BY THE FIRST APPELLATE AUTHORITY IN THAT AY. AGGRIEVED , THE REVENUE IS IN FURTHER APPEAL BEFORE US. ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 10 4.2 WE FIND THAT IT IS UNDISPUTED FACT THAT THE ASS ESSEE IS NOT HOLDING ANY BENEFICIAL SHAREHOLDING IN AFORESAID LENDER AND THE RECIPIENT OF LOAN IS THE ASSESSEE AND NOT THE BENEFICIAL SHAREHOLDER. THE IDENTICAL ISSUE FOR AY 2009-10 WAS CONTESTED BY REVENUE BEFORE THIS TRIBUNAL VIDE ITA NO. 6569/MUM/2013 WHEREIN THE STAND OF FIRST APPELL ATE AUTHORITY WAS CONFIRMED BY PLACING RELIANCE ON THE DECISION OF HO NBLE BOMBAY HIGH COURT RENDERED IN UNIVERSAL MEDICARE [324 ITR 263]. DURING IMPUGNED AY, THE LD. CIT(A) HAS ALSO FOLLOWED THE SAME JUDIC IAL PRECEDENT. THIS BEING THE POSITION, WE FIND NO INFIRMITY IN THE IMP UGNED ORDER ON THIS ISSUE. BY CONFIRMING THE SAME, WE DISMISS THIS GROU ND OF APPEAL. 4.3 FINALLY, THE REVENUES APPEAL STANDS DISMISSED. CONCLUSION 5. THE REVENUES APPEAL STANDS DISMISSED WHEREAS AS SESSEES CROSS OBJECTIONS STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH JANUARY, 2019. SD/- SD/- (PAWAN SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08/01/2019 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT ITA NO.3923/MUM/2016 M/S. PRESSTRESS WIRE INDUSTRIES ASSESSMENT YEAR :2011-12 11 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. -.$'/ , / , / DR, ITAT, MUMBAI 6. .012 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.