Graphite India Ltd., Kolkata V. Addi. Commissioner of Incime Tax, Range - 11, Kolkata

ITA 397/KOL/2008

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3307 (ITAT-KOLKATA)
• Duration Of Justice: 7 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 26-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: RUCHIRA KHERIA ACA
• Keywords: Gift; Depreciation; Opportunity of being heard; Speculation loss; Revised return
• Section: 244A; 80HHC; 37(1)

Judgement Text

I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 1 OF 13 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 397/KOL/ 2008 ASSESSMENT YEAR: 1998-1999 GRAPHITE INDIA LIMITED,............................ ................................APPELLANT 31, CHOWRINGHEE ROAD, KOLKATA-700 016 [PAN : AAACC 0457 C] -VS.- ADDITIONAL COMMISSIONER OF INCOME TAX,............. ...................RESPONDENT RANGE-II, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI VIJAY SHAH, FCA AND MS. RUCHIRA KHERIA, ACA , FOR THE ASSESSEE SHRI NIRAJ KUMAR, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DECEMBER 01, 2015 DATE OF PRONOUNCING THE ORDER : JANUARY 15, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XI, KOLKAT A DATED 25.01.2008. 2. IN GROUNDS NO. 1 TO 3 OF THIS APPEAL, THE ASSESS EE HAS DISPUTED THE FOLLOWING DISALLOWANCES MADE BY THE ASSESSING OFFIC ER AND CONFIRMED BY THE LD. CIT(APPEALS):- GROUND NO. 1- TRAVELLING EXPENSES..............RS. 52,902/-; GROUND NO. 2- ENTERTAINMENT EXPENSES.......RS.50,0 00/- & GROUND NO. 3- GIFT & PRESENTATION................R S.50,000/- 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF GRAPHITE ELECTRODES AND OTHER GRAPHITE I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 2 OF 13 PRODUCTS. THE RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION WAS FILED BY IT ON 27.11.2000 DECLARING A LOSS OF RS.3,31,60, 605/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR VARIOUS EXPENSES WAS EXAMINED BY THE ASSESSING OFFICER, AND ON SUCH EXAMINATION HE MADE A DISALLOWANCE OF RS.52,902/- OUT OF TRAVEL LING EXPENSES AND RS.50,000/- EACH OUT OF ENTERTAINING EXPENSES AND G IFT AND PRESENTATION FOR THE FOLLOWING REASONS GIVEN IN THE ASSESSMENT O RDER:- TRAVELLING: (A) S. TAKITA THE ASSESSEE HAS DEBIT ED A SUM OF RS.18,817/- ON ACCOUNT OF FOREIGN TRAVEL (TOKYO/CCU ) OF SRI S. TAKITA. THE ASSESSEE SUBMITTED A STATEMENT GIVING N AMES OF THE PERSONS WHO UNDERTOOK FOREIGN TRAVEL. THE ANNEXURE- 2 OF TAX AUDIT REPORT, WHICH GIVES SUCH DETAILS IS SILENT REGARDIN G THE FOREIGN TRAVEL OF SHRI TAKITA. HENCE THIS TRAVEL IS NOT CON SIDERED FOR THE PURPOSE OF PROMOTING THE BUSINESS INTEREST OF THE A SSESESE. THEREFORE, THE AMOUNT OF RS.18,817/- DEBITED FOR FO REIGN TRAVEL OF SHRI TAKITA IS DISALLOWED. (B) K.K. BANGUR- FROM THE DETAILS OF TRAVELLING SUB MITTED IT IS FOUND THAT THE ENTRIES ARE IN THE FOLLOWING NATURE:- CCU/DEL 17.11.1997 RS.7,972/- CCU/DEL/CCU 16 TO 18.11.97 RS.200/- CCU/DEL/CCU 16 TO 18.11.97 RS.8,072/- WHICH MEANS IN THE SAME DATE ASSESSEE DEBITED DIFFE RENT AMOUNTS AGAINST THE TRAVELLING OF SANE PERSON. IT APPEARS T HAT CLAIM FOR TRAVELLING EXPENSES WAS MADE TWICE IN THE TOUR OF T HE SAME PERSON. THE VISIT OF SRI K.K. BANGUR TO CCU/DEL/CCU FROM 16 .18.97 ATRS.8,072/- APPEARS TO HAVE BEEN CORRECTLY DEBITED . THE OTHER TWO ENTRIES FOR THE TRAVELLING OF THE SAME PERSON DOES NOT CORROBORATED WITH THE FACTS OF THE CASE. THEREFORE, THE EXPENSES CLAIMED AT RS.8,172/- IS ADDED TO THE INCOME OF THE ASSESSEE. (C) K.S. NAGESH FROM THE DETAILS OF TRAVELLING SU BMITTED IT IS FOUND THAT THE ENTRIES ARE IN THE FOLLOWING NATURE:- HYD. SIRPUR, VIZAG- MADRAS 18.8 TO 25.8.97 RS.6,716/- BIR-HYD & VIZ-MAA 18.8 TO 25.8.97 RS.5,142/- FROM THE ABOVE PARTICULARS IT APPEARS THAT SRI NAGE SH HAS MADE TWO DIFFERENT TOURS DURING THE SAME PERIOD AGAINST WHIC H THE ABOVE AMOUNTS WERE DEBITED. IN THE CIRCUMSTANCES OF THE C ASE ONLY 1 EXPENSE I.E. 1 ST ENTRY FOR RS.6,716/- IS CONSIDERED FOR ALLOWANCE O F EXPENDITURE. THE OTHER AMOUNT OF RS.5,142/- CLAIMED BY THE ASSESSEE FOR THE SAME PERIOD AND TO THE SMAE PLACE IS NOT CO NSIDERED TO HAVE BEEN INCURRED GENUINELY AND THEREFORE DISALLOWED. (D) O.P. MISHRA- FROM THE DETAILS OF TRAVELLING SUB MITTED IT IS FOUND THAT THE ENTRIES ARE IN THE FOLLOWING NATURE:- I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 3 OF 13 CALCUTTA 23.4 TO 25.4.97 RS.5,612/- CALCUTTA 23.4 TO 25.4.97 RS.1,435/- CALCUTTA 23.4 TO 25.4.97 RS.1,530/- FROM THE ABOVE PARTICULARS IT IS EVIDENT THAT EXPEN SES WAS CLAIMED FOR THE TOUR OF SHRI O.P. MISHRA OF 3 DIFFERENT AMO UNTS FOR THE SAME TOUR. THE DISCREPANCY IN CLAIM OF EXPENSES IS VERY MUCH APPARENT AND ABNORMAL. CONSIDERING THE AMOUNT OF EXPENDITURE CLAIMED ON DIFFERENT EXPENSES THE SUM OF RS.5,612/- IS ONLY CO NSIDERED TO HAVE BEEN INCURRED FOR THE PURPOSE OF THE BUSINESS. THE OTHER 2 ENTRIES FOR RS.2,965/- IS THEREFORE CONSIDERED NOT TO HAVE BEEN RELATED TO BUSINESS ACTIVITIES OF THE ASSESSEE AND WRONGLY DEB ITED. THE AMOUNT THEREFORE ADDED TO THE INCOME OF THE ASSESSEE. (E) O.P. MISHRA:- FROM THE DETAILS OF TRAVELLING SU BMITTED IT IS FOUND THAT THE ENTRIES ARE IN THE FOLLOWING NATURE:- BOM.-NAG 18.12.97 RS.3,402/- NAG.-BOM. 19.12.97 RS.3,403/- NAGPUR & WARDHA 18 TO 19.12.97 RS.640/- NAGPUR 18 TO 19.12.97 RS.4,408/- HERE AGAIN, THE STATEMENT SHOWS THAT SHRI O.P. MISH RA CLAIMED EXPENDITURE FOR DIFFERENT TOURS DURING THE SAME PER IOD AND EVIDENTLY ALL THESE EXPENDITURES ARE NOT RELATED TO THE BUSIN ESS ACTIVITIES OF THE ASSESSEE. THE CLAIM OF EXPENDITURE FROM BOMBAY TO NAGPUR AND NAGPUR TO BOMBAY ON 19.12.97 AND 19.12.97 APPEARS T O BE REASONABLE. THE OTHER EXPENDITURE OF RS.4,408/- CLA IMED AS TOUR EXPENSE TO NAGPUR HAS NOT BEEN EXPLAINED. THE SUM O F RS.4,408/- IS THEREFORE, DISALLOWED. (F) S. MITRA :- FROM THE DETAILS OF TRAVELLING SUBM ITTED IT IS FOUND THAT THE ENTRIES ARE IN THE FOLLOWING NATURE:- S. MITRA & PARTY DELHI 20.8. TO 21.8.97 RS.3,085/- DELHI 21.8 TO 29.8.97 RS.39,895/- S. MITRA DELHI-CCU 29.8.97 RS.4,857/- S. MITRA & PARTY DELHI 20.8 TO 29.8.97 RS.8,541/- IT IS APPARENT FROM THE ABOVE STATEMENT THAT S. MIT RA & PARTY VISITED THE SAME PLACE FOR WHICH 4 DIFFERENT AMOUNT S WERE CLAIMED FOR THE SAME PERIOD. THE DETAILS OF SUCH EXPENDITUR E ARE NOT AVAILABLE. THE NATURE OF EXPENDITURE INCURRED AND W HY THERE ARE 4 DIFFERENT CLAIMS FOR THE SAME PERIOD IS ALSO NOT FU RNISHED. CONSIDERING THE CIRCUMSTANCES OF THE CASE FIRST 2 E NTRIES APPEARS TO BE IN ORDER WHILE THE OTHER 2 ENTRIES OF RS.4,857/- AND RS.8,541/- HAS NOT BEEN JUSTIFIED. THE ABOVE 2 AMOUNTS OF RS.4 ,857/- & RS.8,541/- ARE DISALLOWED. IN FINE, THE EXPENSES UNDER TRAVELLING DISALLOWED I S AGGREGATE AT RS.52,902/-. ENTERTAINMENT EXPENSE: IN THE P&L A/C. THE ASSESSEE CLAIMED AN EXPENDITURE OF RS.5,43,558/-. DETAILS OF ENTERTAINM ENT EXPENSES I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 4 OF 13 GIVING PARTICULAR OF PERSONS TO WHOM ENTERTAINMENT WAS OFFERED AND HOW THE SAME ARE RELATED BUSINESS ACTIVITIES OF THE ASSESSEE HAS NOT BEEN FURNISHED. THE ASSESSEE CLAIMED THAT AS THE PR OVISION UNDER SECTION 37(2) OF THE I.T. ACT, 1961 HAS BEEN DELETE D, NO EXPENDITURE UNDER ENTERTAINMENT SHOULD BE DISALLOWED. I HAVE CONSIDERED THE TAR AND THE CONTENTION OF TH E ASSESSEE. THE FACT REMAINS THAT BONAFIDE OF THE EXPENDITURE T OWARDS ENTERTAINMENT IS TO BE ESTABLISHED TO CLAIM DEDUCTI ON OF EXPENDITURE IN FULL. BUT THE NATURE OF EXPENDITURE AND ENTERTAI NMENT OFFERED ARE NOT AVAILABLE. A SUM OF RS.50,000/- IS DISALLOWED O N THIS ACCOUNT. GIFT AND PRESENTATION : A SUM OF RS.6,83,468/- WAS DEBITED UNDER THE HEAD. NO DETAILS OF GIFT AND PRESENTATION GIVING PA RTICULARS OF GIFTS AND THE PERSONS TO WHOM THIS GIFT AND PRESENTATION WAS OFFERED AND HOW THEY RELATE TO THE BUSINESS ACTIVITIES OF THE A SSESSEE HAS BEEN FURNISHED. THE CLAIM OF THE ASSESSEE THAT THE RULE 6B HAS BEEN OMITTED DOES NOT GIVE THE ASSESSEE ANY IMMUNITY FRO M ESTABLISHING THT THE EXPENDITURE WAS INCURRED FUTTY AND EXCLUSIV ELY FOR THE PURPOSE OF THE BUSINESS ACTIVITIES OF THE ASSESSEE. AS THE NATURE OF EXPENDITURE HAS NOT BEEN ESTABLISHED A SUM OF RS.50 ,000/- IS DISALLOWED. 4. THE ABOVE DISALLOWANCES MADE BY THE ASSESSING OF FICER WERE CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND ALTHOUGH A DETAILED SUBMISSION WAS MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE THAT THE DISALLOWANCES SO MADE BY THE A SSESSING OFFICER WERE NOT SUSTAINABLE, THE LD. CIT(APPEALS) DECLINED TO I NTERFERE WITH THE ACTION OF THE ASSESSING OFFICER MAKING THE SAID DISALLOWAN CES ON THE GROUND THAT THE AMOUNTS DISALLOWED WERE PETTY. 5. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE HAS RAISED A LIMITED CONTENTION THAT THE LD. CIT(APPEAL S) HAVING NOT GIVEN ANY DECISION ON MERIT OF THESE ISSUES, THE MATTER MAY B E REMITTED BACK TO HIM FOR DECIDING THESE ISSUES ON MERIT. ALTHOUGH THE LD . D.R. HAS RAISED OBJECTION IN THIS REGARD BY POINTING OUT THAT THESE ISSUES HAVE ALREADY BEEN EXAMINED BY THE ASSESSING OFFICER ON MERIT, TH E FACT REMAINS THAT THERE IS NO DECISION RENDERED BY THE LD. CIT(APPEAL S) ON MERIT OF THESE ISSUES INSPITE OF THE FACT THAT A DETAILED SUBMISSI ON WAS MADE BY THE ASSESSEE BEFORE HIM. WE, THEREFORE, CONSIDER IT FAI R AND PROPER AND IN THE INTEREST OF JUSTICE TO REMIT THE ISSUES RELATING TO THESE THREE DISALLOWANCES BACK TO THE LD. CIT(APPEALS) FOR DECI DING THE SAME ON MERIT I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 5 OF 13 AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPP ORTUNITY OF BEING HEARD. 6. THE ISSUE RAISED IN GROUND NO. 4 RELATES TO THE ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF EXPENDITURE OF RS.56,274/- INCURRED ON DEFENCE RESEARCH DEVELOPMENT LABORATORY UNDER SECTION 35(1) (I). 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A L ETTER WAS FILED BY THE ASSESSEE CLAIMING DEDUCTION OF RS.56,274/- UNDE R SECTION 35(1)(I) ON ACCOUNT OF EXPENDITURE INCURRED ON DEFENCE RESEARCH DEVELOPMENT LABORATORY. SINCE THE SAID CLAIM WAS NOT MADE BY TH E ASSESSEE EITHER IN THE ORIGINAL RETURN OR BY FILING A REVISED RETURN, THE ASSESSING OFFICER DID NOT ENTERTAIN THE SAME. ON APPEAL, THE LD. CIT(APPE ALS) ALSO DID NOT ALLOW THE CLAIM OF THE ASSESSEE ON THIS ISSUE OBSERVING T HAT THE RELEVANT EXPENSES WERE NOT CLAIMED BY THE ASSESSEE IN THE BO OKS OF ACCOUNT AND THE REQUIRED PARTICULARS IN RESPECT OF THE SAME WER E NOT FURNISHED BY THE ASSESSEE. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, EVEN IF THE CLAIM ON THIS ISSUE WAS NOT MADE BY THE ASSESSEE BY FILING A REVI SED RETURN, THE APPELLATE AUTHORITIES INCLUDING THE LD. CIT(APPEALS ) ARE EMPOWERED TO CONSIDER THE SAME ON MERIT AS HELD, INTER ALIA, BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS.- PRUTHVI BROKERS & SHAREHOLDERS PVT. LIMITED REPORTED IN 349 ITR 336. MOREOVER, THE ENTR IES IN THE BOOKS OF ACCOUNT ARE NOT CONCLUSIVE FOR DECIDING THE CLAIM O F THE ASSESSEE FOR ANY DEDUCTION AS HELD BY THE HONBLE SUPREME COURT IN T HE CASE OF KEDARNATH JUTE MANUFACTURING CO. LIMITED VS.- CIT REPORTED I N 82 ITR 363 AND SINCE THE RELEVANT DETAILS WERE FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LD. CIT(APPEALS) IN S UPPORT OF ITS CLAIM ON THIS ISSUE AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THE LD. CIT(APPEALS) OUGHT TO HAVE DECIDE D THIS ISSUE ON MERIT. I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 6 OF 13 WE, THEREFORE, REMIT THIS ISSUE TO THE LD. CIT(APPE ALS) FOR DECIDING THE SAME ON MERIT AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. 9. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 5 RE LATING TO THE ASSESSEES CLAIM FOR DEPRECIATION ON THE BASIS OF M ODIFIED WRITTEN DOWN VALUE OF ASSETS AS PER THE LATEST ORDER FOR THE IMM EDIATELY PRECEDING YEAR, IT IS OBSERVED THAT THE LD. CIT(APPEALS) HAS ALREAD Y GIVEN A DIRECTION TO THE ASSESSING OFFICER VIDE HIS IMPUGNED ORDER TO VE RIFY AND ALLOW THE CLAIM OF THE ASSESSEE ON THIS ISSUE. THE ASSESSEE, IN OUR OPINION, THEREFORE, CANNOT BE SAID TO HAVE ANY GRIEVANCE ON THIS ISSUE AND ACCORDINGLY, GROUND NO. 5, RAISED BY IT, IS LIABLE TO BE DISMISSED. 10. GROUND NO. 6 RAISED IN THE APPEAL OF THE ASSESS EE IS NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING BEFORE US. THE SAME IS, ACCORDINGLY, DISMISSED AS NOT PRESSED. 11. GROUNDS NO. 7(A) AND 7(B) INVOLVE A COMMON ISSU E RELATING TO THE ALLOCATION OF INTEREST IN COMPUTING PROFIT OF THE P OWER GENERATING UNIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. 12. IN THE COMPUTATION OF INCOME UNDER SECTION 115J A OF THE ACT, THE ASSESSEE HAD CLAIMED DEDUCTION OF A SUM OF RS.4,57, 61,320/- UNDER SECTION 80IA BEING THE PROFIT DERIVED FROM THE NEW INDUSTRIAL UNDERTAKING ENGAGED IN GENERATION OF POWER. SEPARAT E FINANCIAL STATEMENTS WERE MAINTAINED BY THE ASSESSEE FOR THE POWER GENERATING UNIT AND FROM THE PERUSAL OF THE SAME, THE ASSESSIN G OFFICER FOUND THAT OUT OF THE TOTAL LOANS OF RS.15,00,00,000/- AVAILED BY THE ASSESSEE FROM EXIM BANK, A SUM OF RS.12,70,99,300/- WAS UTILIZED FOR THE PURPOSE OF POWER UNIT, WHILE THE REMAINING AMOUNT WAS UTILIZED BY THE ASSESSEE FOR OTHER UNITS. HE WAS ALSO OF THE VIEW THAT OUT OF TH E TOTAL COST OF POWER PLANT OF RS.14,69,67,446/-, A SUM OF RS.1,98,68,146 /- WAS INVESTED BY THE ASSESSEE FROM THE FUNDS RECEIVED FROM THE PARENT CO MPANY. HE, THEREFORE, I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 7 OF 13 HELD THAT INTEREST ON LOAN TAKEN FROM EXIM BANK ONL Y TO THE EXTENT IT IS ATTRIBUTABLE TO THE AMOUNT OF RS.12,70,99,300/- WAS ALLOWABLE AS DEDUCTION WHILE COMPUTING THE PROFIT OF THE POWER G ENERATING UNIT AND ACCORDINGLY THE BALANCE AMOUNT OF RS.14,48,719/- ON ACCOUNT OF INTEREST ATTRIBUTABLE TO THE LOAN AMOUNT UTILIZED FOR OTHER UNIT WAS DISALLOWED BY THE ASSESSING OFFICER WHILE COMPUTING THE PROFIT OF POWER GENERATION UNIT. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE OBSERVING THAT WHEN OWN FUNDS ARE MIXED WITH BORROWED FUNDS, IT IS QUITE LEGITIMATE T O APPORTION THE INTEREST EXPENSES. 13. THE LD. COUNSEL FOR THE ASSESSEE TOOK US THROUG H THE COPIES OF WRITTEN SUBMISSION MADE ON THIS ISSUE BEFORE THE AS SESSING OFFICER AS PLACED AT PAGES NO. 11, 12, 15 & 19 TO SHOW THAT TH E ENTIRE AMOUNT OF LOAN TAKEN FROM EXIM BANK WAS MEANT FOR THE PURPOSE OF P OWER GENERATING UNIT AND THE SAME WAS ACCORDINGLY UTILIZED FOR THE SAME UNIT. 14. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIE D ON THE ORDERS OF AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE AND SUBMITTED THAT IT IS BEING A CASE OF MIXED FUNDS, O NUS WAS ON THE ASSESSEE TO ESTABLISH THE NEXUS BETWEEN THE BORROWED FUNDS A ND THEIR UTILIZATION BY FILING FUND FLOW STATEMENT AND/OR UTILIZATION CE RTIFICATE FROM BANK. HE CONTENDED THAT THE ASSESSEE, HOWEVER, HAS FAILED TO DISCHARGE THIS ONUS AND THE AUTHORITIES BELOW, THEREFORE, WERE FUL LY JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR INTEREST ONLY ON PROP ORTIONATE BASIS. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE WRITTEN SUBMISSION FILED BY THE ASSESSEE ON THIS ISSUE BEFORE THE AUTH ORITIES BELOW (COPIES PLACED IN THE PAPER BOOK AT PAGES 15 TO 26) SHOWS T HAT THE ENTIRE LOAN FROM EXIM BANK WAS AVAILED BY THE ASSESSEE FOR THE PURPOSE OF POWER GENERATING UNIT. HOWEVER, IN ORDER TO ESTABLISH THA T THE SAID LOAN WAS INDEED ENTIRELY USED FOR THE PURPOSE OF POWER GENER ATING UNIT, THE I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 8 OF 13 ASSESSEE, IN OUR OPINION, SHOULD FURNISH A FUND FLO W STATEMENT AS WELL AS LOAN UTILIZATION CERTIFICATE FROM BANK TO PROVE THE POINT BEYOND DOUBT ESPECIALLY WHEN THE FUNDS OF POWER GENERATING UNIT WERE NOT MAINTAINED SEPARATELY AND IT WAS A CASE OF MIXED FUNDS. WE, TH EREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO RESTOR E THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR GIVING THE ASSESSEE ONE M ORE OPPORTUNITY TO ESTABLISH ITS CASE REGARDING UTILIZATION OF THE ENT IRE LOAN TAKEN FROM EXIM BANK FOR POWER GENERATING UNIT. GROUNDS NO. 7(A) & 7(B) ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 16. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 7(C ) RELATING TO INCREASE IN ALLOCATION OF INTEREST TO POWER GENERAT ING UNIT BY RS.10,20,004/-, IT IS OBSERVED THAT THIS ISSUE HAS ARISEN AS A RESULT OF A DISPUTE REGARDING THE METHOD APPLIED FOR CALCULATIN G THE INTEREST ON LOAN. WHILE THE ASSESSING OFFICER, ACCORDING TO THE LD. C OUNSEL FOR THE ASSESSEE, HAS WORKED OUT THE INTEREST ON DAILY BASIS, THE ASS ESSEE HAS COMPUTED THE SAME ON MONTHLY BASIS AS DONE BY THE BANK. IN THIS REGARD, THE CONTENTION RAISED BY THE LD. D.R. BEFORE US IS THAT THERE IS N OTHING BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT INTEREST WAS BEING CHA RGED BY THE BANK ON MONTHLY BASIS. IN THIS REGARD, BOTH THE SIDES HAVE AGREED THAT WHATEVER METHOD IS FOLLOWED BY THE BANK, THE SAME NEEDS TO B E ADOPTED FOR THE PURPOSE OF COMPUTING INTEREST ALLOCABLE TO THE POWE R GENERATING UNIT. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER WITH A DIRECTION TO COMPUTE THE INTEREST ALLOCABLE TO THE POWER GENERATING UNIT ON THE SAME BASIS AS ADOPTED BY THE CONCERNED BANK. 17. THE ISSUE INVOLVED IN GROUND NO. 8 RELATES TO T HE ASSESSEES CLAIM FOR INTEREST UNDER SECTION 244A OF THE ACT ON REFUN D OF SELF-ASSESSMENT TAX PAID. 18. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT T HE CLAIM OF THE ASSESSEE FOR INTEREST UNDER SECTION 244A ON REFUND OF SELF-A SSESSMENT TAX PAID WAS DENIED BY THE LD. CIT(APPEALS) RELYING ON THE ORDER OF HIS PREDECESSOR IN I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 9 OF 13 ASSESSEES OWN CASE FOR A.Y. 1993-94. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE DECISION OF THE LD. CIT(APPEALS) RENDERED IN ASSESSEES OWN CASE FOR A.Y. 1993-94 HAS BEEN REVERSED BY THE TRIBUNAL VIDE ITS ORDER DATED 14.03.2008 PASSED IN ITA NO. 2264/KOL/2 007 AND C.O. NO. 112/KOL/2007. A COPY OF THE SAID ORDER IS PLACED ON RECORD AT PAGES NO. 28 TO 30 OF THE PAPER BOOK AND PERUSAL OF THE SAME SHOWS THAT THE SIMILAR CLAIM OF THE ASSESSEE FOR INTEREST UNDER SECTION 24 4A ON THE REFUND OF SELF-ASSESSMENT TAX PAID HAS BEEN ALLOWED BY THE TR IBUNAL. AS FURTHER SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF ADDITIONAL CIT VS.- ROYAL BANK OF SCOTLAND N.V. [55 DTR 307], WHEREIN IT WAS HELD THAT THE ASSESSEE IS ENTITLED TO INTEREST UNDER SECTION 244A ON THE REFUND GRANTED TO IT ON T HE EXCESS TAX PAID ON SELF-ASSESSMENT. RESPECTFULLY FOLLOWING THESE DECIS IONS OF THE COORDINATE BENCH OF THIS TRIBUNAL, WE DIRECT THE ASSESSING OFF ICER TO GRANT INTEREST UNDER SECTION 244A TO THE ASSESSEE ON THE REFUND OF EXCESS SELF- ASSESSMENT TAX PAID. GROUND NO. 8 IS ACCORDINGLY AL LOWED. 19. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 9 R ELATING TO THE ASSESSEES CLAIM FOR INTEREST ON DELAYED PAYMENT, T HE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LIMITED VS.- CIT (2006) 2 SCC 508. THE LD. D.R., ON THE OTHER HAND, HAS RELIED ON THE SUBSEQUENT DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- GUJARAT FLUO RO CHEMICALS REPORTED IN 358 ITR 291, WHEREIN IT WAS HELD BY THE HONBLE APEX COURT, AFTER TAKING INTO CONSIDERATION ITS EARLIER DECISION REND ERED IN THE CASE OF SANDVIK ASIA LIMITED (SUPRA), THAT THE ASSESSEE IS ENTITLED TO CLAIM ONLY THAT INTEREST FROM REVENUE, WHICH IS PROVIDED FOR U NDER STATUTE AND NO OTHER INTEREST ON SUCH STATUTORY INTEREST. SINCE TH ERE IS NO PROVISION IN THE STATUTE FOR PAYMENT OF INTEREST ON INTEREST AS CLAIMED BY THE ASSESSEE, WE RESPECTFULLY FOLLOW THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GUJARAT FLUORO CHEMICALS (SUPRA) AND UPHOLD THE IMPUGNED ORDER I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 10 OF 13 OF THE LD. CIT(APPEALS) DENYING THE CLAIM OF THE AS SESSEE FOR INTEREST ON INTEREST. GROUND NO. 9 IS ACCORDINGLY DISMISSED. 20. IN GROUND NO. 10, THE ASSESSEE HAS CHALLENGED T HE ACTION OF THE LD. CIT(APPEALS) IN REDUCING ITS CLAIM FOR DEDUCTION UN DER SECTION 80IA BY RS.37,61,801/-. 21. WHILE COMPUTING DEDUCTION UNDER SECTION 80IA IN RESPECT OF A NEW POWER PLANT INSTALLED AT BANGALORE, THE REALISABLE MARKET VALUE OF POWER WAS TAKEN BY THE ASSESSEE ON THE BASIS OF THE RATE OF KARNATAKA ELECTRICITY BOARD. THE RATE SO TAKEN WAS INCLUSIVE OF DUTY/TAX ELEMENT OF RS.0.20 PER UNIT. AS PER THE DECISION RENDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 1999-2000 AND 2001-2002, THE RATE CHARGED BY THE STATE ELECTRICITY BOARD EXCLUDING THE DUTY/TAX ELEMENT WA S REQUIRED TO BE CONSIDERED AS REALISABLE MARKET VALUE. A NOTICE OF ENHANCEMENT, THEREFORE, WAS ISSUED BY THE LD. CIT(APPEALS) TO TH E ASSESSEE AND SINCE HE DID NOT FIND MERIT IN THE EXPLANATION OFFERED BY TH E ASSESSEE IN RESPONSE TO THE SAID NOTICE, THE LD. CIT(APPEALS) FOLLOWED T HE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR A.YS. 1999-2000 AND 2001- 2002 AND DIRECTED THE ASSESSING OFFICER TO REDUCE T HE AMOUNT OF RS.37,61,801/- FROM THE AMOUNT OF VALUE OF ELECTRIC ITY FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80IA. 22. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. ALTHO UGH THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE UNREPORTED DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS.- SHAH ALLOYS LIM ITED (TAX APPEAL NO. 2092 OF 2010 DATED 22/11/2011) IN SUPPORT OF THE AS SESSEES CASE, IT IS OBSERVED FROM THE COPY OF THE ORDER OF THE HONBLE GUJARAT HIGH COURT PLACED ON RECORD THAT THIS ISSUE IS NOT CONSIDERED ON MERIT BY THEIR LORDSHIPS. THE LD. COUNSEL FOR THE ASSESSEE HAS ALS O RELIED ON THE DECISION OF THE MUMBAI BENCH OF ITAT IN THE CASE OF DCW LIMI TED VS.- ADDL. CIT REPORTED IN 37 SOT 322 (MUM.) AND THE DECISION OF T HE AHMEDABAD BENCH OF ITAT IN THE CASE OF GARDEN SILK MILLS LIMITED V S.- ADDL. CIT (ITA NO. I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 11 OF 13 220/AHD./2008 DATED 15.02.2013) IN SUPPORT OF THE A SSESSEES CASE ON THIS ISSUE. HOWEVER, KEEPING IN VIEW THAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARL IER YEARS, I.E. A.YS. 1999-2000 AND 2001-02 AND THE FACTS INVOLVED IN THE YEAR UNDER CONSIDERATION ARE ADMITTEDLY SIMILAR TO A.YS. 1999- 2000 AND 2001-02, WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL FOR A.Y. 1999-2000 AND 2001-02 AND UPHOLD THE IMPUG NED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE. GROUND NO. 10 IS ACCORD INGLY DISMISSED. 23. THE ISSUE INVOLVED IN GROUND NO. 11 RELATES TO THE DISALLOWANCE OF RS.66,72,385/- MADE BY THE LD. CIT(APPEALS) ON ACCO UNT OF ASSESSEES CLAIM FOR FOREIGN EXCHANGE LOSS TREATING THE SAME A S SPECULATIVE LOSS. 24. IN THE PROFIT & LOSS ACCOUNT, A SUM OF RS.1,90, 39,518/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF EXCHANGE LOSS. THE SA ID LOSS WAS INCLUSIVE OF A LOSS OF RS.66,72,385/- ARISING AS A RESULT OF CHANGE ON ACCOUNT OF RUPEE LIABILITY DUE TO EXCHANGE DIFFERENCE AS ON TH E LAST DAY OF THE ACCOUNTING YEAR. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3), THE CLAIM OF THE ASSESSEE FOR ENTIRE LOSS WAS ALLOWED B Y THE ASSESSING OFFICER. THE LD. CIT(APPEALS), HOWEVER, ISSUED AN ENHANCEMEN T NOTICE ON THIS ISSUE AND SINCE THE EXPLANATION OFFERED BY THE ASSE SSEE IN REPLY TO THE SAID NOTICE WAS NOT FOUND ACCEPTABLE BY HIM, THE LD . CIT(APPEALS) ENHANCED THE INCOME OF THE ASSESSEE BY RS.66,72,385 /- BY DISALLOWING THE CLAIM OF THE ASSESSEE FOR LOSS TO THAT EXTENT TREAT ING THE SAME AS SPECULATIVE LOSS. 25. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- WOODWARD GOVERNOR (P ) LIMITED REPORTED IN 312 ITR 254, WHEREIN IT WAS HELD THAT THE LOSS SUFF ERED BY THE ASSESSEE ON ACCOUNT OF EXCHANGE DIFFERENCE AS ON THE DATE OF TH E BALANCE-SHEET IS I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 12 OF 13 ALLOWABLE UNDER SECTION 37(1) OF THE ACT. RESPECTFU LLY FOLLOWING THE SAID DECISION OF THE HONBLE SUPREME COURT, WE DELETE TH E DISALLOWANCE MADE BY THE LD. CIT(APPEALS) ON THIS ISSUE AND ALLOW GRO UND NO. 11. 26. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE THE TRIBUNAL, THE ASSESSEE HAS MOVED AN APPLICATION FOR ADMISSION OF THE ADDITIONAL GROUND AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, NECESSARY DIRECTIONS MAY BE GIVEN TO THE A.O. TO CO MPUTE DEDUCTION U/S. 80HHC ON THE BASIS OF BOOK PROFITS F OR THE PURPOSE OF SECTION 115JA OF THE ACT. 27. AS THE ISSUE RAISED BY THE ASSESSEE IN THE ADDI TIONAL GROUND IS PURELY A LEGAL ONE AND ALL THE MATERIAL FACTS RELEV ANT THERETO ARE ON RECORD AS ADMITTED EVEN BY THE LD. D.R., WE HAVE AD MITTED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BY RELYING ON THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LIMITED VS.- CIT REPORTED IN 229 ITR 383. 28. AS REGARDS THE MERIT, THE LD REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- BHARI INFORM ATION TECHNOLOGY SYSTEMS (P) LIMITED REPORTED IN 340 ITR 593, WHEREI N IT WAS HELD THAT WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JA, DE DUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80HHC HAS TO BE WORKED O UT ON THE BASIS OF ADJUSTED BOOK PROFIT UNDER SECTION 115JA AND NOT ON THE BASIS OF THE PROFITS COMPUTED UNDER REGULAR PROVISIONS OF LAW AP PLICABLE TO COMPUTATION OF PROFITS AND GAINS OF BUSINESS. THE L D. D.R., HOWEVER, HAS CONTENDED THAT THIS ISSUE MAY BE RESTORED TO THE FI LE OF THE ASSESSING OFFICER FOR WORKING OUT THE DEDUCTION UNDER SECTION 80HHC ON THE BASIS OF ADJUSTED BOOK PROFIT IN THE LIGHT OF THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF BHARI INFORMATION TECHNOLOGY S YSTEMS (P) LIMITED AS WELL AS THE RELEVANT OBSERVATIONS RECORDED BY THE L D. CIT(APPEALS) AT I.T.A. NO. 397/KOL./2008 ASSESSMENT YEAR: 1998-1999 PAGE 13 OF 13 PAGE 24 OF HIS IMPUGNED ORDER. WE FIND MERIT IN THI S CONTENTION OF THE LD. D.R. AND SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY OBJECTION IN THIS REGARD, WE DIRECT THE ASSESSING O FFICER TO CONSIDER THIS ISSUE ON MERIT AND DECIDE THE SAME IN ACCORDANCE WI TH LAW AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ADDITIONAL GROUND IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 15, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 15 TH DAY OF JANUARY, 2016 COPIES TO : (1) GRAPHITE INDIA LIMITED, 31, CHOWRINGHEE ROAD, KOLKATA-700 016 (2) ADDL. COMMISSIONER OF INCOME TAX, RANGE-II, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XI, KOLKA TA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.