JSL Industries Ltd, V. The ACIT., Anand Circle, Anand

ITA 4017/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5691 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 05-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: J P SHAH
• Keywords: Business income; Deemed to accrue or arise in india; Commercial expediency; Set aside
• Section: 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' [BEFORE S/SHRI T K SHARMA,JM & A N PAHUJA,AM) ITA NO.4017/AHD/2007 (ASSESSMENT YEAR:-2004-05) M/S JSL INDUSTRIES LIMITED, NATIONAL HIGHWAY NO.8, MOGAR, DISTRICT: ANAND [PAN: AAACJ 4986 F] V/S ASSISTANT COMMISSIONER OF INCOME-TAX, ANAND CIRCLE, ANAND [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI J P SHAH, AR REVENUE BY:- SHRI K M MAHESH, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 22- 08-2007 OF THE LD. CIT APPEALS)-IV, BARODA, RAISES THE FOLLOWING GROUNDS :- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A)-IV, BARODA, HAS ERRED IN CONFIRMING AN ADDITION OF RS.45,61,466/- BEING GENUINE INTEREST PAYMENT OF YO UR APPELLANT. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-IV, BARODA, HAS ERRED IN CONFIRMING AN ADDITION OF RS.1,20,000/- BEING RENT PAID BY THE COMPANY. 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOM E OF RS.36,58,940/- FILED ON 27-10-2004 BY THE ASSESSEE- COMPANY, MANUFACTURING SWITCH GEARS INSTRUMENT TRANSFORMERS , LT AIR CIRCUIT BREAKERS & LT CUBICLE TYPE MODULAR SWITCHBOARDS, AF TER BEING PROCESSED ON 15-02-2005 U/S 143(1) OF THE INCOME-TA X ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 28.2.2 005. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER[AO IN SHORT] NOTICED THAT FOLLOWING DEBIT BALANCES WERE OUTSTANDING FROM THE ASSOCIATE CONCERNS: ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 2 SR. NO. NAME OF THE ASSOCIATE CONCERN AMOUNT OF DEBIT BALANCE (RS.) 1 2 3 1 JYOTI LTD., GROUP-I, BARODA 87,83,617 2 JYOTI LTD., GROUP-II, BARODA 2,28,24,044 3 JYOTI LTD., MUMBAI 11,74,426 4 JYOTI LTD., JAIPUR 65,99,224 5 JYOTI PUMPS & ELECTRICALS LTD., MOGAR 1,42,56,944 6 JYOTI PUMPS & ELECTRICALS LTD., SECUNDERABAD 22,76,114 TOTAL 5,59,14,369 2.1 TO A QUERY BY THE AO, THE ASSESSEE REPLI ED VIDE LETTER DATED 12/07/2006 THAT IT MADE SALES TO M/S JYOTI L TD. AND ALSO PAID CHARGES FOR USE OF TRADE MARK 'JYOTI'. THE TOTAL OU TSTANDING AMOUNT RECOVERABLE FROM JYOTI LTD. WAS RS.3,93,81,311/- AS ON 31/03/2004. AS REGARDS TRANSACTIONS WITH JYOTI PUMPS & ELECTRIC ALS LTD., IT WAS SUBMITTED THAT THE SAID COMPANY HAD A SUBSTANTIAL M ARKETING DEALER NET WORK, WHICH WAS UTILISED FOR MAKING SALES AND THE TOTAL OUTSTANDING RECOVERABLE FROM THEM WAS RS.1,65,33,05 8/- AS ON 31/03/2004. THE AO NOTICED THAT THE ASSESSEE COMPAN Y HAD PAID SALES COMMISSION OF RS.48,60,208/- TO JYOTI PUMPS & ELECTRICALS LTD. IN TERMS OF SELLING AGENCY AGREEMENT MADE ON 01/08 /2000. THE COMMISSION WAS @7.5% OF THE NET BILL AMOUNT EXCLUSI VE OF SALES TAX OR SUCH OTHER GOVT. LEVY, IF ANY. SINCE THE AGGREG ATE OUTSTANDING DEBIT BALANCES WITH ASSOCIATE CONCERNS WERE OF THE ORDER OF RS.559.14 LACS, WHICH WAS MORE THAN 36% OF THE TURN OVER WHILE THE ASSESSEE WAS BEARING INTEREST BURDEN OF RS.50,42,64 1/- ON ITS BORROWINGS IN THE FORM OF SECURED AND UNSECURED LOA NS , THE AO WAS OF THE OPINION THAT THE DEDUCTION FOR INTEREST ON BORROWED FUNDS WAS ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 3 NOT JUSTIFIED WHEN THE ASSESSEE WAS NOT RECOVERING ITS DUES FROM ASSOCIATE CONCERNS. THUS, THE BENEFIT ACCRUED TO TH E ASSOCIATE CONCERNS AT THE COST OF ASSESSEE COMPANY AND THE NO N- PAYMENT OF DUES BY ASSOCIATE CONCERNS RESULTED INTO INTEREST B URDEN OF RS.50,42,641/- ON THE ASSESSEE, THE AO FURTHER OBSE RVED. SINCE THE INTEREST RELATING TO THE OUTSTANDING DEBIT BALANCE S @ 13.5% PER ANNUM WORKED OUT TO RS.72,68,868/-, RELYING UPON OR DER DATED ORDER 11/11/2005 OF THE LD. CIT(A) FOR THE AY 2002-03 , T HE AO DISALLOWED THE CLAIM FOR DEDUCTION OF ENTIRE INTEREST OF RS.50,42,641 /-. 3. ON APPEAL, THE LEARNED CIT(A) WHILE RELYING UP ON ORDER OF HER PREDECESSOR FOR THE AY 2002-03 UPHELD THE DISALLOW ANCE TO THE EXTENT OF RS.45,61,466/-, WITH THE FOLLOWING OBSERV ATIONS:- 2.3. THE APPELLANT BASED HIS SUBMISSIONS ON THE DE CISION OF THE HON. SUPREME COURT IN THE CASE OF S. A. BUILDERS LTD. VS . C.I.T.(APPEALS) (2007) 288 IR 1 (SC) WHEREIN, IT WAS HELD THAT IT W AS REQUIRED TO BE ENQUIRED INTO WHETHER THE INTEREST FREE LOAN WAS GI VEN TO A SISTER CONCERN AS A MEASURE OF COMMERCIAL EXPEDIENCY. THE APPELLAN T ALSO SUBMITTED THAT IN THE CASE OF TORRENT FINANCIERS VS. ACIT, IT HAS BEEN HELD THAT SO LONG AS THE ASSESSEE HAS ADEQUATE OWN FUNDS, THERE CAN BE NO CASE OF DISALLOWANCE OF INTEREST. THE OWN FUNDS OF THE APPE LLANT WAS TO THE EXTENT OF RS.4.55 CRORES WHEREAS THE AMOUNT RECOVERABLE FR OM SISTER CONCERNS IS ONLY RS.4.39 CRORES. THE DECISION OF THE POONA ELEC TRIC SUPPLY CO. LTD. VS. C.I.T. 57 ITR 521 (SC) WHEREIN, THE SUPREME COU RT HAS HELD THAT THE SCHEME OF INCOME TAX IS TO TAX THE REAL INCOME AND NOT THE NOTIONAL/ARTIFICIAL/DEEMED INCOME WAS ALSO RELIED U PON. 2.4. I HAVE CAREFULLY GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENT ATIVES. THERE IS NO DISPUTE ON THE FACTS. THE TOTAL SALES MADE TO THE S ISTER CONCERNS IS RS.4.12. CRORES WHICH CONSTITUTES 26.77 PERCENTAGE OF THE TOTAL SALES. THE TOTAL RECEIVABLES ARE RS.4.39 CRORES WHICH CONSTITU TE 57.60% OF THE TOTAL RECEIVABLES OF THE APPELLANT. THE INTEREST AND BANK CHARGES DEBITED BY THE APPELLANT TO THE PROFIT & LOSS ACCOUNT IS RS.50,42, 641/-. 2.5. THIS ISSUE CAME UP BEFORE MY PREDECESSOR IN TH E APPEAL FOR THE A.Y.2002-03. THE MATTER HAS BEEN DEALT AT LENGTH VI DE HIS ORDER ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 4 NO.CAB/IV-A-80/05-06 DATED 11.11.2005. MY PREDECESS OR HELD THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS JUSTI FIED. THE ISSUE WAS ALSO DEALT WITH THE I.T.A.T. AHMEDBAD BENCH 'A' VID E ORDER ITA N0.85/A/2006 DATED 8.09.2006 WHEREIN, THE HONOURABL E I.T.A.T. HELD THAT - 'THE DEBIT BALANCE OF THE SAID PARTY AS APPEARING I N THE ASSESSEE'S BOOKS, AS GATHERED FROM THE MATERIAL ON RECORD, COM PRISES OF BOTH, THE TRADE RECEIVABLES AGAINST SALES MADE TO IT, AS WELL AS ADVANCES (FUND) MADE TO IT. THE QUESTION OF ANY DISALLOWANCE OF INTEREST WITH REFERENCE TO A TRADE RECEIVABLE, WHETHER DUE OR NOT , WOULD NOT NORMALLY ARISE, THE SAME BEING ONLY APPLIED TOWARDS A BUSINESS PURPOSE. THIS IS, HOWEVER, SUBJECT TO A RIDER, I.E. THAT THE OUTSTANDING IS GENUINE, AND NOT A PART OF A COLLUSI VE UNDERSTANDING TO ALLOW SAID DEBTOR TO RETAIN THE FUNDS BY IT, SO THAT THE SAME CAN BE UTILIZED FOR ITS PURPOSES, I.E. BY DESIGN. THE R EVENUE THOUGH HAS SOUGHT TO BUILD ITS CASE ON THAT BASIS, HAS NOT BEE N ABLE TO ESTABLISH ITS CASE IN THIS REGARD, EVEN THOUGH IT HAS RAISED SUFFICIENT DOUBTS AS TO IT. THE ASSESSEE CLAIMS ITS TURNOVER WITH THE SA ID PARTY, VARIOUSLY AT 16%, 20% AND 20% TO 25% OF ITS TOTAL TURNOVER, I N ITS DIFFERENT REPRESENTATIONS. IF THE SAME ARE AT 20% (SAY), AND THE ASSESSEE'S BALANCE PORTFOLIO OF DEBTORS AGGREGATES TO ABOUT 4 TO 5 TIMES THAT FROM THIS PARTY, NO CASE OF THE REVENUE IS MADE OUT , AND WHICH COULD ONLY BE IF OUTSTANDING OF THE SAID PARTY IS F AR AND EXCESS FROM THE AVERAGE AS OBTAINING FOR THE BALANCE PARTIES, S O AS TO RAISE SUBSTANTIAL DOUBTS AS TO ITS GENUINENESS. HOWEVER, IF EXCESSIVE, IS GENUINE/EXPLAINED, OR SO ESTABLISHED, FOR ANY OTHER REASON, THE REVENUE'S CASE FAILS. AS REGARDS THE 'ADVANCE' COMPONENT OF THE OUTSTANDI NG OF RS.409.43 LACS, THE ASSESSEE'S CLAIM THAT IT HAD RE CEIVED FUNDS FROM THE SAID PARTY IN THE PRECEDING YEAR(S), OR THAT IT HAD HELPED IT WITH DESIGNS, DRAWINGS, ETC., ARE, APART FROM BEING UNSU BSTANTIATED, OF NO MOMENT, AS THE SAME HAS NO BEARING OR RELATION WITH THE ADVANCES. IN VIEW OF THE FOREGOING, WE ONLY CONSIDER IT FIT I N THE INTEREST OF JUSTICE; THE MATTER BEING, DEFICIT ON FACTUAL FINDI NGS, TO REMIT THE SAME BACK TO THE FILE OF THE ASSESSING OFFICER TO D ECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING PROPE R OPPORTUNITY TO THE ASSESSEE TO REPRESENT ITS CASE, PER A SPEAKING ORDER. WE DECIDE ACCORDINGLY.' 2.6. AS PER DETAILS FILED BY THE APPELLANT, THE TOT AL RECEIVABLES ARE RS.7.62 CRORES. OUT OF THIS RS.4.39 CRORES ARE DUE FROM ASSOCIATE CONCERNS. DESPITE OPPORTUNITY, BEING GIVEN TO THE A PPELLANT, THE AUTHORIZED REPRESENTATIVES COULD NOT SUBMIT ANY REASON FOR NOT ENFORCING 'COLLECTION. ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 5 THIS IS NOT UNDERSTANDABLE ESPECIALLY WHEN THE TOTA L SALES FOR THE CURRENT YEAR IS RS.4.12 CRORES APPROXIMATELY TO THE ASSOCIA TE CONCERNS, AND THE OUTSTANDINGS, ARE OVER AND ABOVE THIS AMOUNT. WHAT WAS THE COMMERCIAL EXPEDIENCY TO JUSTIFY THESE RECEIVABLES REMAINS UNE XPLAINED. IF THE APPELLANT CAN ENFORCE COLLECTION FROM OTHER PARTIES TO WHOM IT HAS MADE THE SALES, THEN WHY NOT FROM ITS SISTER CONCERNS. N O EXPLANATION WAS FORTHCOMING FOR THIS QUESTION. 2.7. THE APPELLANT'S PLEA THAT BANK CHARGES OF RS.9 ,62,350/-SHOULD BE ALLOWED HAS SOME MERIT IN IT. PART OF THE BANK CHAR GES WOULD-HAVE BEEN INCURRED FOR THE DAY TO DAY FUNCTIONING OF THE BUSI NESS. HOWEVER, IT WOULD BE DIFFICULT TO BIFURCATE THE AMOUNTS RELATED TO BO RROWINGS AND DEDUCTION ON OTHER ACCOUNTS. HENCE WHILE CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST CLAIM OF T HE APPELLANT, 50% OF THE BANK CHARGES I.E. RS.4,81,175/- IS HELD TO BE NOT R ELATED TO THE BORROWINGS AND IS ALLOWED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE REFERRING TO DECISION IN THE CASE OF CIT VS . BOMBAY SMACHAR LTD.,74 ITR 723(BOM.) AND ORDER DATED 08-09-2006 OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY 2002-03 IN ITA NO.85/AHD/2006,CONTENDED THAT THE MATTER MAY BE RE STORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN THE LI GHT OF DIRECTIONS OF THE ITAT IN THE AY 2002-03 . THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE IMPUGNED ORDERS, BEFORE THE AO OR THE LD. CIT(A), THE ASSESSEE DID NOT PLACE ANY EVIDENCE AS TO HOW THE F UNDS BORROWED BY IT HAD BEEN UTILIZED AND WHAT WAS THE COMMERCIAL EXPEDIENC Y IN SUCH BORROWINGS. IN THIS CONNECTION, THE RELEVANT PROVISIONS OF SECTION 36(1)(III) OF THE ACT PROVIDE FOR DEDUCTION OF INTEREST ON THE BORROWED FUNDS RAISED FOR BUSINESS PURPOSES. ONCE THE ASSESSEE CLAIMS ANY SUCH DEDUCTION, THE ONUS IS ON THE ASSESSEE TO SATISFY THE AO THAT LOANS RAISED BY THE ASSESSEE WERE USE D FOR BUSINESS PURPOSES. IF IN THE PROCESS OF EXAMINATION OF CLAIM FOR SUCH A DEDU CTION, IT TRANSPIRES THAT THE ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 6 ASSESSEE HAD DIVERTED CERTAIN FUNDS TO ASSOCIATE OR SISTER CONCERNS WITHOUT ANY INTEREST, THERE WOULD BE A VERY HEAVY ONUS ON THE ASSESSEE TO BE DISCHARGED BEFORE THE AO TO THE EFFECT THAT IN SPITE OF PENDIN G LOANS ON WHICH THE ASSESSEE WAS INCURRING THE LIABILITY TO PAY INTEREST, STILL THERE WAS JUSTIFICATION FOR DIVERSION OF FUNDS TO ASSOCIATE OR SISTER CONCERNS FOR NON-B USINESS PURPOSES . IN MADHAV PRASAD JATIA V. CIT [1979] 118 ITR 200 (SC) HONBLE SUPREME COURT OBSERVED THAT UNDER S. 10(2)(III) OF THE 1922 ACT( NOW SEC. 36(1)(III) OF THE 1961 ACT), THREE CONDITIONS WERE REQUIRED TO BE SATISFIED IN ORDER T O ENABLE THE ASSESSEE TO CLAIM A DEDUCTION IN RESPECT OF INTEREST ON BORROWED CAPITA L, NAMELY, (A) THAT MONEY (CAPITAL) MUST HAVE BEEN BORROWED BY THE ASSESSEE, (B) THAT IT MUST HAVE BEEN BORROWED FOR THE PURPOSE OF BUSINESS, AND (C) THAT THE ASSESSEE MUST HAVE PAID INTEREST ON THE SAID AMOUNT AND CLAIMED IT AS A DED UCTION. IT WAS ALSO HELD THAT THE EXPRESSION 'FOR THE PURPOSE OF BUSINESS' OCCURR ING UNDER THE PROVISION IS WIDER IN SCOPE THAN THE EXPRESSION 'FOR THE PURPOSE OF EARNING INCOME, PROFITS OR GAINS'. IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING IN THE ORDER OF LOWER AUTHORITIES TO SUGGEST THAT THE ASSESSEE DISCHARGED THE ONUS LAID DOWN UPON THEM THAT BORROWED FUNDS HAD INDEED BEEN UTILIZED F OR THE PURPOSE OF ITS BUSINESS SO AS TO ENTITLE IT TO CLAIM DEDUCTION U/S 36(1)(II I) OF THE ACT. IN CASE THE ASSESSEE HAD SOME SURPLUS AMOUNT WHICH, ACCORDING TO HIM, CO ULD NOT BE REPAID PREMATURELY TO ITS CREDITORS, STILL THE SAME WERE E ITHER REQUIRED TO BE CIRCULATED AND UTILISED FOR THE PURPOSE OF BUSINESS OR TO BE I NVESTED IN A MANNER IN WHICH IT GENERATES INCOME AND NOT THAT THESE WERE DIVERTED TOWARDS ASSOCIATE OR SISTER CONCERNS FREE OF INTEREST . THIS WOULD RESULT IN N OT PRESENTING THE TRUE AND CORRECT PICTURE OF THE ACCOUNTS OF THE ASSESSEE AS AT THE C OST BEING INCURRED BY THE ASSESSEE, THE ASSOCIATE OR SISTER CONCERNS WOULD BE ENJOYING THE BENEFITS THEREOF. IT CANNOT BE HELD THAT THE FUNDS TO THE E XTENT DIVERTED TO ASSOCIATE CONCERNS WITHOUT CHARGING ANY INTEREST, WERE REQUIR ED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND LOANS TO THAT EXTENT WE RE REQUIRED TO BE RAISED. WE FIND THAT IN THE INSTANT CASE, A SIMILAR ISSUE HAD BEEN RESTORED BACK TO THE FILE OF THE AO IN THE AY 2002-03 BY THE ITAT FOR A FRESH DE CISION IN ACCORDANCE WITH LAW IN THE LIGHT OF OBSERVATIONS OF THE ITAT IN THEIR ORDER DATED 8.9.2006 IN ITA ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 7 NO.85/AHD./2006. NEITHER THE LD. AR NOR THE LD. DR CLARIFIED AS TO WHAT WAS THE FINAL OUTCOME OF THE DIRECTIONS OF THE ITAT IN THE AY 2002-03.SINCE BOTH THE PARTIES HAVE AGREED BEFORE US THAT ISSUE REQUIRES RECONSIDERATION BY THE AO IN THE LIGHT OF THE SAID DECISION OF THE ITAT FOR THE AY 2002-03, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. C IT(A) AND RESTORE THE ISSUE RAISED IN THIS GROUND TO THE FILE OF THE AO FOR DE CIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPO RTUNITY TO THE ASSESSEE AND KEEPING IN VIEW THE FINDINGS IN THE AY 2002-03 IN T HE LIGHT OF DIRECTIONS OF THE ITAT IN THAT YEAR AS ALSO VARIOUS JUDICIAL PRONOUNC EMENTS, INCLUDING THE DECISION IN BOMBAY SAMACHAR LTD.(SUPRA) REFERRED TO ABOVE. WITH THESE OBSERVATIONS, GROUND NO. 1 IS DISPOSED OF. 6. GROUND NO.2 RELATES TO AN ADDITION OF RS.1,20,00 0/- ON ACCOUNT OF RENT. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS,THE AO NOTICED THAT THE ASSESSEE CLAIMED EXPENSES FOR RENT PAID OF RS.1,20,000/- (@ RS 10,000/- PER MONTH) TO SHRI RAH UL AMIN, CHAIRMAN OF THE COMPANY FOR USE OF OPEN LAND AT VA TADARA, DIST, ANAND. SINCE THE ASSESSEE COULD NOT ESTABLISH THE G ENUINENESS AND EXPEDIENCY OF THE EXPENDITURE, RELYING UPON HIS FIN DINGS IN THE AY 2002-03, THE AO DISALLOWED THESE EXPENSES. 7. ON APPEAL, THE LEARNED CIT(A) FOLLOWING THE ORDE R DATED 08- 09-2006 OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY 2002-03 IN ITA NO.85/AHD/2006 UPHELD THE DISALLOWANCE. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). BOTH THE PARTIES AGREED THAT THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON DATED 08-09- 2006 OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY 2002-03 IN ITA NO.85/AHD/2006. ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 8 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISION RELIED UPON. WE FIND THAT WHILE ADJUDICATING A SIMILAR CLAIM IN THE ASSESSEES OWN CASE FOR AY 2002- 03 IN ITA NO.85/AHD/2006, THE TRIBUNAL VIDE THEIR O RDER DATED 08-09- 2006 CONCLUDED AS UNDER:- 10.1 WE ARE IN AGREEMENT WITH THE STAND OF THE REV ENUE, THE SAID EXPENSE STANDS CLAIMED IN RESPECT OF A PERIOD THAT GOES BEYOND THE PREVIOUS YEAR WHICH COMMENCES ONLY ON 01.04.2001, S O THAT THE CLAIM FOR RS.60,000/- DESERVES TO BE REJECTED AT THE THRESHOL D. 10.2 THE ASSESSEE HAS CLAIMED TO HAVE A GOOD PRESEN CE IN NORTHERN INDIA, AND THAT AS IT DID NOT HAVE THE ORGANIZATION AL CAPACITY, OR RESOURCES, AT NEW DELHI, IT HIRED THE SERVICES OF SSMPL FOR AR RANGING THE SEMINAR(S) THEREAT, THOUGH THE DETAILS IN RESPECT THERE OF, AND THEREFORE, OF THE SERVICES ACTUALLY RENDERED BY THE SAID FIRM, WERE MISSING. IT NOW CLAIMS TO HAVE HIRED / RENTED AN OPEN PLOT OF LAND FOR THE SAID PURPOSE AT VILLAGE VATADARA. THE TWO CLAIMS ARE CONTRADICTORY. FURTHER, HOW THE LAND WAS FOUND SUITABLE FOR THE PURPOSE FOR WHICH IT WAS RENTED, AND HOW THE SAME WOULD ACTUALLY BE UTILIZED FOR THE PURPOSE OF CONDUCTING CONFERENCES, GIVEN THAT THERE IS NO ST RUCTURE THEREON, LEAVE ALONE PROPER INFRASTRUCTURAL FACILITIES, WHICH ORGANIZING OF SUCH A BUSINESS MEETING NECESSARILY ENTAILS, BESIDES TH E BOARDING AND LODGING OF THE OUT-STATION PARTICIPANTS, ETC., ARE QUESTION S/ASPECTS WE FIND AS TOTALLY UNADDRESSED BY IT, EVEN AS THE ANSWER THERETO PROVI DE THE BASIS ON WHICH ITS CLAIM RESTS. STILL FURTHER, HOW AND WHY NO CONF ERENCE COULD ACTUALLY BE HELD EVEN AS THE ASSESSEE WOULD ONLY, REASONABLY SP EAKING, ENTER INTO SUCH AN ARRANGEMENT WHERE THE HOLDING OF SUCH CON FERENCE(S) IS NOT ONLY EMINENT, BUT ALSO VISUALIZED AS A RECURRING FE ATURE, SO THAT IT SHALL NOT HAVE TO UNDERGO THE PROCESS OF HIRING A SUITABLE PR OPERTY EVERY TIME A CONFERENCE IS TO BE HELD. ALSO, EVEN IF, CONSIDERIN G THAT IT HAD CONTEMPLATED, ENVISAGING A REGULAR USER OF THE SAID PROPERLY FOR THE PURPOSE, CONSTRUCTING A STRUCTURE THEREON, IT WOULD ONLY HAVE ENTERED INTO A LONG-TERM AGREEMENT, AS ALSO PROCEEDED TO TAKE REQU ISITE STEPS FOR THE PURPOSE. THE CLAIM, HOWSOEVER VIEWED, APPEARS UN-GE NUINE. IT IS ITS GENUINENESS THAT THE REVENUE ASSAILS, SO THAT THE C LAIM OF THE ID. AR THAT THE SAME HAS NOT BEEN DOUBTED BY IT IS MISPLACED. T HE CASE LAW, AS RELIED UPON IN UPHOLDING THE DISALLOWANCE AGITATED VIDE GR OUND NO.1 (REFER PARA 4.3 ) OF THE PRESENT APPEAL WOULD ALSO BE FULLY APP LICABLE FOR THIS GROUND AS WELL. WE, ACCORDINGLY, DISMISS THIS GROUND. 10. SINCE UNDISPUTEDLY FACTS AND CIRCUMSTANCES IN T HE YEAR UNDER CONSIDERATION ARE SIMILAR TO THE FACTS AND CIRCUMST ANCES OBTAINING IN THE AY 2002-03,FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL IN THE ITA NO.4017/AHD/2007 FOR AY 2004-05 JSL INDUSTRIES LIMITED 9 ASSESSEES OWN CASE FOR AY 2002-03, WE UPHOLD THE F INDINGS OF THE LD. CIT(A). THUS, GROUND NO.2 IS DISMISSED. 11. IN THE RESULT APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 2-7-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 2-7-2010 COPY OF THE ORDER FORWARDED TO: 1. JSL INDUSTRIES LIMITED, NATIONAL HIGHWAY NO.8, M OGAR, DISTRICT: ANAND 2. THE ACIT, ANAND CIRCLE, ANAND 3. CIT CONCERNED 4. CIT(A)-IV, BARODA 5. THE DR, BENCH-C, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD