Asstt. Commissioner Of Income Tax, Bareilly V. M/s L.H Sugar Factory Pvt. Ltd., Pilibhit

ITA 417/LKW/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4761 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K GUPTA
• Keywords: Business income; Depreciation; Opportunity of being heard; Capital receipt; Unabsorbed depreciation; Capital expenditure
• Section: 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.417 & 418/LKW/2013 ASSESSMENT YEAR 2008-09 & 2009-10 M/S L.H. SUGAR FACTORY LTD., CIVIL LINES, PILIBHIT. PAN AAACL 4597 L VS ACIT, RANGE - 2, BAREILLY CO NO.26 & 27/LKW/2013 (IN ITA NO.417 & 418/LKW/2013 ASSESSMENT YEARS 2008-09 & 2009-10 ACIT, RANGE-2, BAREILLY VS M/S L.H. SUGAR FACTORY LTD., CIVIL LINES, PILIBHIT. PAN AAACL 4597 L ITA NO.339/LKW/2013 ASSESSMENT YEAR 2009-10 JCIT, RANGE - 2, BAREILLY VS M/S L.H. SUGAR FACTORY LTD., CIVIL LINES, PILIBHIT. PAN AAACL 4597 L 2 ITA NO.518 & 53/LKW/2015 ASSESSMENT YEARS 2010-11 & 2011-12 JCIT, RANGE-2, BAREILLY VS M/S L.H. SUGAR FACTORY LTD., CIVIL LINES, PILIBHIT. PAN AAACL 4597 L ITA NO.569/LKW/2015 ASSESSMENT YEAR 2011-12 M/S L.H. SUGAR FACTORY LTD., CIVIL LINES, PILIBHIT. PAN AAACL 4597 L VS DCIT, CIRCLE-2, BAREILLY (RESPONDENT) (APPELLANT) SHRI AJEET KUMAR, CIT DR APPELLANT BY SHRI A.K. GUPTA, CA RESPONDENT BY 15/12/2015 DATE OF HEARING 09/02/2016 DATE OF PRONOUNCEMENT O R D E R PER BENCH: OUT OF THIS BUNCH OF EIGHT APPEALS AND CROSS OBJECT IONS, THERE ARE THREE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 200 8-09, 2009-10 AND 2011-12 AND THERE ARE THREE APPEALS OF THE ASSESSEE FOR THE SAME THREE ASSESSMENT YEARS AND THERE ARE TWO CROSS OBJECTIONS OF THE ASSESSEE FOR AYS 2008-09 AND 2009-10. ALL THESE WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. 3 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR A Y 2008-09 I.E. ITA NO. 417/LKW/2013. 2.1 THE GROUND NO.1 OF THE REVENUE IS AS UNDER:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS IN LAW AND ON FACTS IN DELET ING THE ADDITION OF RS 96,30,992/- MADE BY A.O. ON ACCOUNT OF SALE O F CARBON CREDIT TREATING IT AS INCOME OF THE ASSESSEE. 3. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE L D. CIT(A). HE ALSO SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE ANDHRA PRADESH HIGH COU RT RENDERED IN THE CASE OF CIT VS. MY HOME POWER LTD. REPORTED IN 365 ITR 82. HE HAS SUBMITTED THAT COPY OF THIS JUDGMENT IS AVAILABLE O N PAGES 181 TO 182 OF THE PAPER BOOK. HE HAS ALSO SUBMITTED THAT THE TRIB UNALS ORDER IN THE SAME CASE IS ALSO AVAILABLE ON PAGES 183 TO 195 OF THE PAPER BOOK AND THE SAME WAS REPORTED IN 63 SOT 227. HE ALSO PLACED REL IANCE ON A TRIBUNALS ORDER RENDERED IN THE CASE OF AMBIKA COTTON MILLS L TD. VS. DCIT REPORTED IN 61 SOT 31 COPY AVAILABLE ON PAGES 196 TO 199 OF THE PAPER BOOK. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THE ISSUE IN DISPUTE AS PER GROUND NO. 1 OF APPEAL IS REGARDING NATURE OF RECEIPT ON ACCOUNT OF SALE OF CARBON CREDIT AND IN THE CASE OF CIT VS. MY HOME POWER LTD. (SUPRA) ALSO, THE DISPUTE BEFORE HONBLE ANDHR A PRADESH HIGH COURT WAS THIS AS TO WHETHER THE AMOUNT RECEIVED BY THE A SSESSEE ON TRANSFER OF CARBON CREDIT IS CAPITAL RECEIPT OR REVENUE RECEIPT . IT WAS HELD BY HONBLE ANDHRA PRADESH HIGH COURT IN THAT CASE THAT CARBON CREDIT IS NOT AN 4 OFFSHOOT OF BUSINESS BUT AN OFFSHOOT OF ENVIRONMENT AL CONCERNS AND NO ASSETS IS GENERATED IN THE COURSE OF BUSINESS BUT I T IS GENERATED DUE TO ENVIRONMENTAL CONCERNS AND THEREFORE, IT WAS HELD T HAT THE TRIBUNAL HAS CORRECTLY HELD THAT THIS IS A CAPITAL RECEIPT AND I T CANNOT BE BUSINESS RECEIPT OF INCOME AND IN THIS MANNER, HONBLE ANDHRA PRADES H HIGH COURT HAS UPHELD THE TRIBUNALS ORDER IN THAT CASE. THE DISPU TE IN THE PRESENT CASE IS ALSO REGARDING NATURE OF RECEIPT ON ACCOUNT OF TRAN SFER OF CARBON CREDIT. LD. DR OF THE REVENUE COULD NOT POINT OUT ANY DIFFE RENCE IN FACTS IN THE PRESENT CASE AND IN THE CASE OF CIT VS. MY HOME POW ER LTD. (SUPRA) AND THEREFORE, RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE ANDHRA PRADESH HIGH COURT, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.1 OF THE REVENUE IS REJECTED . 5. THE GROUND NOS. 2 AND 3 OF THE REVENUE ARE AS U NDER:- 2. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN RESTRICTING THE ADDITION TO RS 1,00,000/- INSTEAD O F RS.3,24,708/-/- MADE BY A.O, ON ACCOUNT OF MISCELLA NEOUS EXPENSES, 3. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN RESTRICTING THE ADDITION TO RS 1,00,000/- AND GRANT ING RELIEF OF RS 8,35,016/- MADE BY A.O. ON ACCOUNT OF BUILDING A ND MACHINERY REPAIRS. 6. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS IT IS SUBMITTED BY LD. AR OF THE ASSESSEE THAT BOTH THESE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNALS ORDER IN A SSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 IN ITA NO. 416/LKW/2013 DAT ED 16.09.2015. HE SUBMITTED A COPY OF THIS TRIBUNALS ORDER AND POINT ED OUT THAT SAME TWO 5 ISSUES WERE RAISED BY THE REVENUE IN THAT YEAR AS P ER GROUND NOS. 3 AND 4 AND THE TRIBUNAL REJECTED BOTH THESE GROUNDS OF THE REVENUE IN THAT ORDER AS PER PARAS 11 TO 16 OF THAT TRIBUNALS ORDER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT IN ASSESSMENT YEAR 2007-08, SIMILAR ISSUES WERE BEFORE THE TRIBUNAL IN THAT YEAR ALSO AND IN THAT YEAR, THE ASSESSING OFFICER M ADE THE DISALLOWANCE OF RS.3,11,522/- OUT OF THE EXPENSES CLAIMED AS MISCEL LANEOUS EXPENDITURE AND RS.6,78,700/- OUT OF THE EXPENSES CLAIMED AS RE PAIR AND MAINTENANCE EXPENSES. LD. CIT(A) RESTRICTED THESE TWO DISALLOWA NCES TO RS.1.00 LAKH UNDER EACH HEAD. AGAINST THE AFORESAID RELIEF ALLO WED BY THE CIT(A), REVENUE WAS BEFORE THE TRIBUNAL AND THE TRIBUNAL DE CLINED TO INTERFERE IN THE ORDER OF LD. CIT(A) IN THAT YEAR ON BOTH THESE ISSUES ON THIS BASIS THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECI FIC DEFECT IN THE MAINTENANCE OF ACCOUNT BUT AT THE SAME TIME, THE AS SESSEE HAS NOT PLACED ANY EVIDENCE ON RECORD TO JUSTIFY THAT ALL EXPENSES CLAIMED BY THE ASSESSEE ARE DULY VOUCHED AND OPEN FOR VERIFICATION. THE TRI BUNAL HELD IN THAT YEAR THAT UNDER THESE CIRCUMSTANCES, THERE IS NO INFIRMI TY IN THE ORDER OF LD. CIT(A) WHO HAS RESTRICTED THE ADDITION TO RS.1.00 L AKH UNDER EACH HEAD. IN THE PRESENT YEAR ALSO, THESE TWO DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER ON GENERAL BASIS WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND AT THE SAME TIME, THE ASSESSEE ALSO COULD NOT ESTABLISH THAT ALL THE EXPE NSES ARE DULY VOUCHED AND ARE OPEN FOR VERIFICATION. HENCE, IT IS SEEN TH AT THE FACTS IN THE PRESENT YEAR ARE SIMILAR TO THE FACTS IN ASSESSMENT YEAR 20 07-08 AND THEREFORE, WE 6 DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN T HE PRESENT YEAR. ACCORDINGLY, BOTH THESE GROUNDS OF THE REVENUE ARE ALSO REJECTED. 8. THE GROUND NO.4 OF THE REVENUE IS AS UNDER:- 4 THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS 1,85,43,165/- MADE BY A .O. ON ACCOUNT OF SUPPRESSED PRODUCTION AND SALE OF BAGASSE. 9. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS IT IS SUBMITTED BY LD. AR OF THE ASSESSEE THIS ISSUE WAS ALSO BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2007-08 AS PER GROUND N O.5 IN THAT YEAR AND IT WAS HELD BY THE TRIBUNAL IN THAT YEAR THAT THE A SSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE YIELD OF BAGASSE AT 34% BECAUSE THE ASSESSEE ITSELF HAS SHOWN YIELD OF BAGASSE AT 34.29% FOR ASS ESSMENT YEAR 2008-09. THEREAFTER, IT WAS SUBMITTED THAT IN THE PRESENT YE AR, THE ASSESSING OFFICER ESTIMATED THE YIELD OF BAGASSE AT 36% AS AGAINST YI ELD DISCLOSED BY THE ASSESSEE AT 34.27%. HE SUBMITTED THAT UNDER THESE F ACTS, NO ADDITION IS JUSTIFIED IN THE PRESENT YEAR. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN ASSESSMENT YEAR 2007-08, THE TRIBUNAL HAS CONSIDERE D THE WHOLE HISTORY OF YIELD OF BAGASSE FROM ASSESSMENT YEAR 2004-05 TO ASSESSMENT YEAR 2008-09 AND THEREAFTER, THE TRIBUNAL HELD THAT THE ASSESSING OFFICER IS JUSTIFIED IN ESTIMATING THE YIELD OF BAGASSE AT 34% . SINCE IN THE PRESENT YEAR, THE YIELD OF BAGASSE REPORTED BY THE ASSESSEE IS 34.27% WHICH IS MORE THAN 34% ESTIMATED BY THE TRIBUNAL IN ASSESSME NT YEAR 2007-08, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR OF T HE ASSESSEE THAT NO ADDITION IS CALLED FOR IN THE PRESENT YEAR ON THIS ISSUE UNDER THESE FACTS. 7 HENCE, BY RESPECTFULLY FOLLOWING THE TRIBUNALS ORD ER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, WE DECLINE TO INT ERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 4 OF THE REVENUE IS REJECTED. 11. THE GROUND NO.5 OF THE REVENUE IS AS UNDER:- 5. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS 5,94,01G/- MADE BY A.O. ON ACCOU NT OF EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE MADE UNDER THE HEAD MOLASSES TANK. 12. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. LD. AR OF THE ASSESSEE OF THE ASSESSEE SUPPORTED TH E ORDER OF LD. CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE DECISION OF LD. CIT(A) ON THIS ISSUE IS AS PER FOLLOWING PAR AS ON PAGES 18 AND 19 OF HIS ORDER WHICH ARE EXTRACTED AS UNDER:- I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS SEEN THAT THE ASSESSEE HAD CREATED THE FUND FOR CREATION OF TANK FOR MOLASSES. THIS WAS AS PER THE DIRECTIONS BY THE CENTRAL GOVERNMENT UNDER THE MOLASSES CONTROL (AMENDMENT) O RDER, ACCORDING TO WHICH THE ASSESSEE WAS DIRECTED TO KEE P THIS AMOUNT UNDER A SEPARATE ACCOUNT UNDER THE HEAD 'MOLASSES S TORAGE FUND'. THOUGH THE ASSESSEE COLLECTED THIS AMOUNT UN DER THE STATUTORY OBLIGATION, IT DID NOT BELONG TO THE ASSE SSEE, BUT TO THE MOLASSES STORAGE FUND. THE ASSESSEE COULD NOT UTILI ZE THE AMOUNT IN THE SAID FUND FOR ANY OTHER PURPOSE. THE FUND HA D TO BE UTILIZED FOR THE PURPOSE OF CONSTRUCTING A STORAGE TANK IN A CCORDANCE WITH THE SPECIFICATIONS GIVEN BY THE CENTRAL GOVERNMENT. THEREFORE, THERE WAS DIVERSION OF TITLE AT THE SOURCE OF THE I NCOME COLLECTED UNDER THE DIRECTIONS GIVEN UNDER THE MOLASSES CONTR OL (AMENDMENT) ORDER. THE SUM IN QUESTION WAS NOT INCL UDIBLE IN THE ASSESSEE'S TOTAL INCOME. THIS IS ALSO THE VIEW CONTAINED IN THE 8 ORDER OF MADRAS HIGH COURT IN SALEM COOP MILLS LTD REPORTED IN 229 ITR 285 (MAD). THIS VIEW IS ALSO SUPPORTED BY T HE JUDGMENTS OF THE HONORABLE SUPREME COURT IN CIT VS NEW HORIZO N SUGAR MILLS PVT LTD (2004) 269 ITR 397 (SC) AND CIT VS AM BUR COOP MILLS LTD (2004) 269 ITR 398. IN VIEW OF THE INCOME, I HAVE NO OPTION BUT TO DELE TE THE ADDITION MADE BY THE ASSESSING OFFICER ON THE ISSUE. THE ADD ITION MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. 14. FROM THE ABOVE PARAS FROM THE ORDER OF LD. CIT( A), WE FIND THAT LD. CIT(A) HAS FOLLOWED THE VARIOUS JUDGMENTS OF THE HO NBLE MADRAS HIGH COURT AND HONBLE SUPREME COURT AND LD. LD. DR OF T HE REVENUE COULD NOT SHOW US AS TO HOW THESE JUDGMENTS ARE NOT APPLICABL E IN THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER, WE DECLIN E TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. ACCORDINGLY , GROUND NO.5 IS ALSO REJECTED. 15. THE GROUND NO.6 OF THE REVENUE IS AS UNDER:- 6. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS 80,03,203/-MADE BY A.O. ON ACCOUNT OF LOW VALUE OF BAGASSE CLAIMED AND SOLD TH E SAME IN OPEN MARKET AT RS 80,03,203/-. 16. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. LD. AR OF THE ASSESSEE OF THE ASSESSEE SUPPORTED TH E ORDER OF LD. CIT(A). HE ALSO SUBMITTED THAT THE STATEMENT OF BAGASSE SAL ES DURING THE PRESENT YEAR IS AVAILABLE ON PAGE 55 OF THE PAPER BOOK. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER DETAILS REGARDING SALE OF BAGASSE IN THE PRESENT YE AR AVAILABLE ON PAGE 55 OF THE PAPER BOOK, THERE ARE DIFFERENT RATES IN THE RANGE OF RS. 40 PER.QTL. 9 TO RS. 150 PER QTL. AND THE AVERAGE OF ENTIRE SALES COMES TO RS.67.88 PER QTL. THE RATE OF RS.80 PER QTL. HAS BEEN ADOPTED BY THE ASSESSING OFFICER ON THIS BASIS THAT THIS RATE WAS DISCLOSED BY POORA NPUR AND MAJHOLA SAHKARI CHINI MILL FOR THE PRESENT YEAR. SINCE THE ASSESSEE HAS SHOWN SOME SALES AT RS.150 PER QTL., SOME AT RS.130 PER QTL. A ND SOME AT RS.120 PER QTL. ALSO, IT CANNOT BE SAID THAT LESSER SALES PROC EED OF BAGASSE HAS BEEN SHOWN BY THE ASSESSEE WITHOUT BRINGING SOME EVIDENC E ON RECORD, SUGGESTING SUCH REDUCTION IN SALES PROCEEDS ACCOUNT ED FOR BY THE ASSESSEE BY SHOWING LESSER AMOUNT OF SALE PROCEEDS AS AGAINS T ACTUAL REALIZATION OF HIGHER SALES PROCEEDS BECAUSE IF THE ASSESSEE IS DO ING SO, THEN THERE IS NO NEED TO SHOW SUCH HIGH SALE PRICE OF RS. 120 TO RS. 150 PER QUINTAL FOR ABOUT 51,500 QUINTALS OUT OF TOTAL SALE OF 615,631 QUINTALS. THIS HAS BEEN DELETED BY THE LD. CIT(A) ON THIS BASIS THAT THERE IS NO EVIDENCE IN THE POSSESSION OF THE ASSESSING OFFICER WHICH GOES TO P ROVE THAT THE ASSESSEE HAD ACTUALLY SOLD THE DECLARED BAGASSE AT RS.80 PER QTL. OR AT A HIGHER RATE THEN WHAT HAS BEEN DECLARED BY THE ASSESSEE AND IN THE ABSENCE OF SUCH INFORMATION OR EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN THE FACTS OF THE PRESENT CASE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THEREFORE, THIS GROUND IS REJECTED. 18. THE GROUND NO.7 OF THE REVENUE IS AS UNDER:- 7. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS 34,58,297/- MADE BY A.O. UNDER T HE HEAD PROVISION OF INTEREST ON EXTRA LEVY PRICE. 10 19. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. LD. AR OF THE ASSESSEE OF THE ASSESSEE SUPPORTED TH E ORDER OF THE LD. CIT(A). 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) BY WAY OF ON CRYPTIC ORDE R OF TWO LINES WHICH IS REPRODUCED BELOW FROM PAGE 17 OF THE ORDER OF THE L D. CIT(A):- PROVISION OF INTEREST I FIND SUBSTANCE IN A.R.S SU BMISSIONS. THE LIABILITY COULD BE TREATED AS AN ASCERTAINED LIABIL ITY. THE SAME IS DIRECTED TO BE ALLOWED. 21. SINCE THE ORDER OF LD. CIT(A) ON THIS ISSUE IS NOT A SPEAKING ORDER, WE FEEL IT PROPER THAT THIS MATTER SHOULD GO BACK T O THE FILE OF LD. CIT(A) FOR FRESH DECISION BY WAY OF SPEAKING ORDER. ACCORD INGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO HIS FILE FOR FRESH DECISION BY WAY OF SPEAKING AND REASONED ORDE R AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. ACCORDINGLY, GROUND NO. 7 IS ALLOWED FOR STATISTICAL PURPOSES. 22. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 23. NOW, WE TAKE UP THE CO OF THE ASSESSEE FOR ASSE SSMENT YEAR 2008- 09 I.E. CO NO. 26/LKW/2013. 24. THE GROUNDS OF THE ASSESSEE ARE AS UNDER:- A- GROUNDS TO SUPPORT ORDER OF CIT(A): 11 FOR THAT LEARNED CIT(A) HAS PASSED ORDER AND ALLOWE D RELIEF ON CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, APPLICABLE LAW, WRITTEN EXPLANATIONS FILED BY ASSES SEE, CASE LAWS AND PRECEDENCE RELIED ON BY ASSESSEE .THEREFOR E, RELIEF ALLOWED BY LEARNED CIT(A) ON VARIOUS ISSUES, MAY BE CONFIRMED AND THE GROUND NOS. 1-8 OF DEPARTMENTAL A PPEAL MAY BE DISMISSED. B. GROUNDS TO SEEK FURTHER RELIEF: 1. FOR THAT LEARNED CIT(A) WAS WRONG IN CONFIRMIN G DISALLOWANCE ON ESTIMATED AND ADHOCK BASIS TO THE E XTENT OF RS.ONE LAKH OUT OF MISCELLANEOUS EXPENSES AND RS. O NE LAKH OUT OF REPAIRS AND MAINTENANCE EXPENSES WITH HIS CO NTENTION FOR BOTH ITEMS THAT 'HOWEVER TO PLUG ANY POSSIBLE L ACUNAS, IT IS FAIR AND JUST TO SUSTAIN AN ADDITION OF RS.1,00, 000/- IN ORDER TO COVER UP FOR ANY DEFICIENCY' . 2. IN VIEW OF ASSESSEE BEING A COMPANY, ITS SIZE AN D NATURE OF ORGANIZATION, LOCATION OF SUGAR MILL, INTERNAL CHEC K AND CONTROL SYSTEM, AUDIT SYSTEM, FACT THAT MAJOR PAYME NTS ARE MADE THROUGH BANKING CHANNELS AND TAX HAS ALSO BEEN DEDUCTED WHEREVER APPLICABLE, AND ALSO PETTY NATURE OF SOME OF OTHER EXPENSES THE DISALLOWANCES OUT OF MISCELLANEOUS EXPENSES RS, ONE LAKH AND OUT OF REPA IR AND MAINTENANCE EXPENSES RS. ONE LAKH TOTALING RS. TWO LAKH, BEING ON PRESUMPTION OF LACUNAE, MAY KINDLY BE DELE TED FULLY, (THESE GROUNDS ARE RELATED WITH GROUND NOS. 2 AND 3 OF DEPARTMENTAL APPEAL). 25. IT WAS SUBMITTED THAT BY LD. AR OF THE ASSESSEE THAT THESE GROUNDS ARE INTERCONNECTED WITH GROUND NO. 2 AND 3 RAISED B Y THE REVENUE IN ITS APPEAL AND THESE ARE ALSO COVERED BY THE SAME TRIBU NALS ORDER IN ASSESSEE OWN CASE FOR ASSESSMENT YEAR 2007-08. 26 LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT O RDER. 12 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN ASSESSMENT YEAR 2007-08 ALSO, DISALLOWANCE OF RS. 1 .00 LAKH UNDER EACH OF THESE TWO HEADS WERE CONFIRMED BY THE LD. CIT(A) AND THE ORDER OF LD. CIT(A) IN THAT YEAR WAS ALSO CONFIRMED BY THE TRIBU NAL AND NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LD. LD. AR OF THE ASSESSEE AND THEREFORE, IN THE PRESENT YEAR, THESE TWO ISSUES AR E DECIDED AGAINST THE ASSESSEE AND ACCORDINGLY THESE GROUNDS OF THE CO AR E REJECTED. 28. IN THE RESULT, CO OF THE ASSESSEE IS DISMISSED. 29. NOW, WE TAKE UP THE APPEAL OF THE REVENUE FOR A SSESSMENT YEAR 2009-10 I.E. 418/LKW/2013. 30. THE GROUND NO.1 OF THE REVENUE IS AS UNDER:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) IS ERRONEOUS IN LAW AND ON FACTS IN DELET ING THE ADDITION OF RS 2,77,08,800/-MADE BY A.O. ON ACCOUNT OF SALE OF CARBON CREDIT TREATING IT AS INCOME OF THE ASSESSEE . 31. BOTH SIDES AGREE THAT THIS ISSUE IS IDENTICAL T O GROUND NO.1 IN REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 AND TH E SAME CAN BE DECIDED IN THE PRESENT YEAR ALSO ON SIMILAR LINE. I N ASSESSMENT YEAR 2008- 09, AS PER PARA NO. 4 ABOVE, THIS ISSUE HAS BEEN DE CIDED BY US IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY IN THE PRESENT YEAR AL SO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE ON SIMILAR LINE. ACCORDIN GLY, GROUND NO.1 IS REJECTED. 32. THE GROUNDS NO.2 AND 3 OF THE REVENUE ARE AS UN DER:- 13 2. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN RESTRICTING THE ADDITION TO RS 1,00,000/- INSTEAD O F RS 3,50,050/- MADE BY A.O. ON ACCOUNT OF MISCELLANEOUS EXPENSES. 3. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN RESTRICTING THE ADDITION TO RS 1,00,000V- AND GRANT ING RELIEF OF RS.8,25,190/- MADE BY A.O. ON ACCOUNT OF BUILDING A ND MACHINERY REPAIRS. 33. BOTH SIDES AGREE THAT THESE TWO GROUNDS ARE ALS O IDENTICAL TO GROUND NO. 2 AND 3 RAISED BY THE REVENUE IN ASSESSMENT YEA R 2008-09 AND THE SAME CAN BE DECIDED IN THE PRESENT YEAR ALSO ON SIM ILAR LINE. IN ASSESSMENT YEAR 2008-09, GROUND NOS. 2 AND 3 WERE A LSO DECIDED BY US IN FAVOUR OF THE ASSESSEE AS PER PARA NO. 7 AND THEREF ORE, ON SIMILAR LINE, IN THE PRESENT YEAR ALSO, BOTH THESE ISSUES ARE DECIDE D IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NOS 2 AND 3 OF THE RE VENUE ARE REJECTED. 34. THE GROUND NO.4 OF THE REVENUE IS AS UNDER:- 4. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS IN LAW AND FACTS IN DELETING THE ADDITION OF RS 1,29,29,258/- MADE BY A .O. ON ACCOUNT OF SUPPRESSED PRODUCTION AND SALE OF BAGASS E. 35. BOTH SIDES AGREED THAT THIS ISSUE IS IDENTICAL TO GROUND NO.4 IN REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09. IT WA S SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT IN THE PRESENT YEAR, AS SESSING OFFICER HAS NOTED IN PARA 5 OF THE ASSESSMENT ORDER THAT THE AS SESSEE HAS DISCLOSED YIELD OF BAGASSE AT 34.69% AND SINCE YIELD OF 34% B AGASSE IN ASSESSMENT YEAR 2007-08 IS APPROVED BY THE TRIBUNAL, NO ADDITI ON IS CALLED FOR IN THE PRESENT YEAR ON THIS ACCOUNT. 14 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER THE TRIBUNALS ORDER IN ASSESSEE OWN CASE FOR ASSESSMEN T YEAR 2007-08, YIELD OF BAGGASE AT 34% WAS APPROVED BY THE TRIBUNAL AND SINCE IN THE PRESENT YEAR, THE ASSESSEE DISCLOSED THE YIELD OF BAGASSE A T 34.69%, THE ADDITION MADE BY THE ASSESSING OFFICER BY ADOPTING YIELD OF BAGASSE AT 36% IS NOT JUSTIFIED. WE, THEREFORE, DECLINE TO INTERFERE IN T HE ORDER OF LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 4 OF THE REVENU E IS REJECTED. 37. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 38. NOW, WE TAKE UP THE CO FILED BY THE ASSESSEE FO R ASSESSMENT YEAR 2009-10 I.E. CO NO. 27/LKW/2013. 39. IT WAS SUBMITTED BY LD. AR OF THE ASSESSEE THAT THE CO IS WITHDRAWN AND ACCORDINGLY, THIS CO OF THE ASSESSEE IS DISMISS ED AS WITHDRAWN. 40. IN THE RESULT, CO OF THE ASSESSEE IS DISMISSED . 41. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 I.E. ITA NO. 339/LKW/2013. 42. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPE AL ARE AS UNDER:- 1. FOR THAT LEARNED AO WAS WRONG IN COMPLETELY IGN ORING THE FACTS THAT ASSESSEE HAS BUSINESS LOSS OF RS.24.97 C RORE AND RS.20.78 CRORE AS PER RETURN AND AS PER ASSESSMENT ORDER, RESPECTIVELY. THAT SUCH LOSS IS KEPT APART FOR CARR Y-FORWARD. THEREFORE, THERE WAS NO COMPUTATION OF 'GROSS TOTAL INCOME' FROM WHICH DEDUCTIONS UNDER CHAPTER VI-A CO ULD BE ALLOWED, TO MAKE A COMPUTATION OF 'TOTAL INCOME' AND THEN A COMPUTATION OF TAX PAYABLE' ON 'TOTAL INCOME ' COULD BE MADE. 15 2. FOR THAT ID. CIT(A) WAS WRONG IN DISMISSING THE GROUNDS NO. 6 AND 7 IN APPEAL BEFORE HIM, BY NOT FOLLOWING THE BINDING JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CASE OF VISHNU SUGAR MILLS LTD, APPROVING ORDER OF ITAT, AND OTHER DECISIONS RELIED ON BY ASSESSEE, IN WHICH IT HAS BE EN HELD THAT WHEN THERE IS NO COMPUTATION OF GROSS TOTAL IN COME, DEDUCTIONS UNDER CHAPTER VIA COULD NOT BE ALLOWED T O COMPUTE 'TOTAL INCOME' AND 'TAX PAYABLE' THEN S. 11 5JB WILL NOT BE APPLICABLE AS THE CHARGING SECTION AND COMPU TATION PROVISIONS ARE INTEGRAL CODE AND COMPUTATION FAILS WHEN THERE IS NO GROSS TOTAL INCOME SO THE CHARGE ALSO F AILS. 3. FOR THAT LEARNED CIT(A) WAS ALSO WRONG IN IGNO RING THE FACT THAT DECISIONS OF THE CALCUTTA HIGH COURT AND TRIBU NAL HAS ATTAINED FINALITY SINCE THE REVENUE HAS NOT CHALLEN GED JUDGMENTS OF CALCUTTA HIGH COURT BEFORE THE SUPREME COURT, AND MANY JUDGMENTS OF TRIBUNAL HAVE NOT BEEN CHALLENGED BEFORE THE CALCUTTA HIGH COURT. THEREFOR E, THE JUDGMENTS RELIED ON BY ASSESSEE, IN CASES OF VISHNU SUGAR MILLS LTD, SASAMUSA SUGAR WORKS LTD AND NEERAJ VANI JYA P. LTD ARE BINDING IN VIEW OF LAW LAID DOWN IN CASE OF BERGER PAINTS INDIA LTD. VS CIT [2004] 266 ITR 99 (SC). 4. FOR THAT LEARNED CIT(A) WAS WRONG IN APPLYING DECISION OF ITAT, KOLKATA, IN CASE OF BHATKWA TEA INDUSTRIES LT D, AND IMPLIEDLY APPLYING DECISION IN CASE OF DCW LTD OF B OMBAY TRIBUNAL, THOUGH IN THESE CASES NO GROUNDS WERE TAK EN AT ALL BY RESPECTIVE ASSESSEE ABOUT INTEGRALITY OF CHA RGING PROVISION AND COMPUTATION PROVISION AND NON APPLICA BILITY OF S. 115JB WHEN THERE WAS NO 'GROSS TOTAL INCOME* FRO M WHICH DEDUCTIONS COULD BE ALLOWED UNDER CHAPTER VI- A AND , WHEN THERE WAS NO COMPUTATION OF TOTAL INCOME' AND 'TAX PAYABLE' ON NORMALLY COMPUTED 'TOTAL INCOME'. 5. FOR THAT LD. ASSESSING OFFICER (AO) MAY KINDLY BE DIRECTED NOT TO APPLY SECTION 115JB SINCE THERE IS BUSINESS LOSS WHICH IS KEPT APART FOR CARRY FORWARD, THERE IS NO - COMPUTATION OF GROSS TOTAL INCOME' FROM WHICH DEDUC TIONS CAN BE ALLOWED TO COMPUTE 'TOTAL INCOME' AND A 16 COMPUTATION OF 'TAX PAYABLE' CAN BE MADE, AND THERE FORE, THE PRE-CONDITIONS TO APPLY SECTION 115JB ARE NOT S ATISFIED AND IN VIEW OF THE JUDGMENT OF THE CALCUTTA TRIBUNA L IN CASE OF VISHNU SUGAR MILLS LTD. WHICH HAS BEEN APPROVED BY THE CALCUTTA HIGH COURT, AND ATTAINED FINALITY, AND OTH ER JUDGMENTS OF CALCUTTA TRIBUNAL WHICH ALSO HAVE ATTA INED FINALITY, SECTION 115JB IS NOT APPLICABLE IN ASSESS EE'S CASE FOR THE YEAR UNDER CONSIDERATION. 6. FOR THAT LEARNED CIT(A) WAS WRONG IN CONFIRMING DISALLOWANCE ON ESTIMATED BASIS TO THE EXTENT OF RS .ONE LAKH OUT OF MISCELLANEOUS EXPENSES AND RS. ONE LAKH OUT OF REPAIRS AND MAINTENANCE EXPENSES WITH HIS CONTENTIO N FOR BOTH ITEMS THAT 'HOWEVER TO PLUG ANY POSSIBLE LAC UNAS, IT IS FAIR AND JUST TO SUSTAIN AN ADDITION OF RS. 1,00 ,000/- IN ORDER TO COVER UP FOR ANY DEFICIENCY' . 7. IN VIEW OF SIZE AND NATURE OF ORGANIZATION, LOC ATION OF SUGAR MILL, INTERNAL CHECK AND CONTROL SYSTEM, AUDIT SYST EM, FACT THAT MAJOR PAYMENTS ARE MADE THROUGH BANKING CHANNE LS AND TAX HAS ALSO BEEN DEDUCTED WHEREVER APPLICABLE, AND ALSO PETTY NATURE OF SOME OF OTHER EXPENSES THE DISALLOWANCES OUT OF MISCELLANEOUS EXPENSES RS, ONE LAKH AND OUT OF REPAIR AND MAINTENANCE EXPENSES RS. ONE LAKH TOTALING RS. TWO LAKH MAY KINDLY BE DELETED FULLY. 8. FOR THAT DURING PENDENCY OF THIS APPEAL, THE LE ARNED AO MAY BE DIRECTED NOT TO PRESS FOR DISPUTED DUES OF M AT U/S 115JB, WHICH HOPEFULLY WILL NOT SURVIVE, WHEN APPEA L IS DECIDED IN VIEW OF BINDING JUDGMENTS REFERRED TO IN GROUND NO.5. 9. THE APPELLANT SEEK PERMISSION TO RAISE NEW CONT ENTIONS AND NEW GROUNDS OF APPEAL IN THE INTEREST OF JUSTICE. 43. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND, WHICH IS AS UNDER:- 1. FOR THAT LEARNED CIT(A) MAY BE DIRECTED TO CONS IDER THE ADDITIONAL GROUND OF APPEAL TAKEN BY ASSESSEE, BEFO RE HIM, 17 WHICH HE SEEMS TO HAVE INADVERTENTLY IGNORED TO CON SIDER PARTICULARLY WHEN LEARNED CIT(A) HAS ALLOWED RELIEF ON SIMILAR GROUND OF APPEAL OF ASSESSMENT YEARS 2007-08 AND 20 08-09 HEARD AND DECIDED BY HIM AT THE SAME TIME . ALTERNA TIVELY THE LEARNED AO MAY BE DIRECTED TO ALLOW INITIAL DEPRECI ATION U/S 32(1) (IIA) AS AN INCENTIVE AND ONE TIME ALLOWANCE @ 20% OF COST OF NEW ELIGIBLE PLANT AND MACHINERY, AS ALLOWE D BY THE LEARNED CIT(A) IN ASSESSMENT YEARS 2007-08 AND 2008 -09. 44. AS PER GROUNDS NO. 1 TO 5 OF THE APPEAL, THE IS SUE INVOLVED IS REGARDING APPLICABILITY OF THE PROVISIONS OF SECTIO N 115JB IN THE PRESENT CASE WHEN THE ASSESSEE IS HAVING NO GROSS TOTAL INC OME. IN THIS REGARD, RELIANCE WAS PLACED BY THE LD. AR OF THE ASSESSEE O N THE TRIBUNALS ORDER RENDERED IN THE CASE OF DCIT VS. M/S VISHNU SUGAR M ILLS LTD. IN ITA NO. 2131 AND 2133/KOL/2004, 193 & 774/KOL/2005 AND 918/ KOL/2002 DATED 17.08.2005. HE SUBMITTED THAT THE COPY OF THIS TRIB UNALS ORDER IS AVAILABLE ON PAGES 65 TO 83 OF THE PAPER BOOK. HE ALSO PLACED RELIANCE ON ANOTHER TRIBUNALS ORDER RENDERED IN THE CASE OF NEERAJ VAN IJYA PVT. LTD. VS. ITO IN ITA NO.1504/KOL/2008 DATED 31.10.2008 COPY WHICH IS AVAILABLE ON PAGES 84 TO 87 OF THE PAPER BOOK AND ALSO ON ONE MORE TRI BUNALS ORDER RENDERED IN THE CASE OF SASAMUSA SUGAR WORK LTD. VS . DCIT IN ITA NO. 1024/KOL/2007 DATED 28.09.2007, COPY AVAILABLE ON P AGES 88 TO 89 OF THE PAPER BOOK. HE ALSO POINTED OUT ONE JUDGMENT OF HON BLE KOLKATA HIGH COURT RENDERED IN THE CASE OF CIT VS. M/S VISHNU SU GAR MILLS LTD. IN GA NO. 3015 OF 2006 IN ITA NO. 359 OF 2006 DATED 20.11.200 6 FOR ASSESSMENT YEAR 2002-03, COPY AVAILABLE ON PAGE 90 OF THE PAPE R BOOK. 45. LD. DR OF THE REVENUE SUBMITTED THAT ON THIS AS PECT, THESE JUDGMENTS OF THE KOLKATA TRIBUNAL AND THE HONBLE K OLKATA HIGH COURT ARE NOT APPLICABLE IN THE PRESENT CASE BECAUSE THESE JU DGMENTS ARE IN THE 18 CONTEXT OF SECTION 115JA OF THE ACT, WHEREAS IN THE PRESENT CASE, THE RELEVANT SECTION IS 115JB OF THE ACT. 46. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE CASE OF TRIBUNALS ORDER RENDERED IN THE CASE OF DCIT VS . VISHNU SUGAR MILLS LTD. (SUPRA), THE ASSESSMENT YEAR INVOLVED WAS ASSESSMEN T YEARS 1996-97 TO 2001-02. PROVISIONS OF SECTION 115JA ARE APPLICABLE IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMME NCING ON OR AFTER 1 ST APRIL, 1997 BUT BEFORE THE 1 ST APRIL, 2001. AS PER PROVISIONS OF SECTION 115JA OF THE ACT, IF THE TOTAL INCOME COMPUTED UNDE R THIS ACT IS LESS THAN 30% OF BOOK PROFIT THEN THE TOTAL INCOME OF SUCH AS SESSEE CHARGEABLE TO TAX FOR THE RELEVANT PREVIOUS YEAR SHALL DEEM TO BE THE AMOUNT EQUAL TO 30% OF SUCH BOOK PROFIT. SECTION 115JB HAS BEEN INS ERTED BY FINANCE ACT, 2000 W.E.F. 1.04.2001 AND AS PER THE PROVISIONS OF THIS SECTION 115JB, INSTEAD OF COMPARING THE TAXABLE INCOME AND BOOK PR OFIT AS PRESCRIBED IN SECTION 115JA, THE COMPARISON HAS TO BE MADE WITH R EGARD OF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS OF THE ACT WITH A PRESCRIBED RATE OF TAX ON BOOK PROFIT AND IF SUCH TAX PAYABLE UNDER NO RMAL PROVISIONS OF THE ACT IS LESS THAN SEVEN AND HALF PERCENT OF BOOK PRO FIT IN THE PRESENT YEAR, THEN THE ASSESSEE HAS TO PAY TAX AT THE RATE OF 7.5 % OF BOOK PROFIT. THIS RATE OF 7.5% HAS SINCE BEEN INCREASED FIRST TO 10% THEN TO 15% AND THEREAFTER TO 18% AND NOW THIS IS 18.5%. BUT THE RA TE IS NOT RELEVANT FOR THE PURPOSE OF DECIDING THE ISSUE IN DISPUTE FOR TH E PURPOSE OF EXAMINING AS TO WHETHER THE TRIBUNALS ORDER RENDERED IN THE CASE OF DCIT VS. VISHNU SUGAR MILLS LTD. (SUPRA), IS APPLICABLE IN THE PRES ENT CASE OR NOT. IN OUR CONSIDERED OPINION, AS PER THE PROVISIONS OF SECTIO N 115JA OF THE ACT, THE 19 COMPARISON WAS TO BE MADE BETWEEN TOTAL INCOME COMP UTED AS PER NORMAL PROVISIONS OF THE ACT AND 30% OF BOOK PROFIT AND BECAUSE OF THIS, IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT SINCE TH E ASSESSEE WAS HAVING LOSSES UNDER THE NORMAL PROVISIONS OF THE ACT AND F OR THE PURPOSE OF COMPUTING BOOK PROFIT ALSO, LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS IS ALSO REQUIRED TO BE REDUCED FROM THE AMOUNT OF BOOK PROFIT AS PER PROFIT AND LOSS ACCOUN T, IT WAS HELD THAT THE PROVISIONS OF SECTION 115JA ARE NOT APPLICABLE BUT IN THE PRESENT CASE, AFTER INSERTION OF SECTION 115JB OF THE ACT, THERE IS NO COMPARISON TO BE MADE BETWEEN 30% BOOK PROFIT AND TOTAL INCOME AS PE R NORMAL PROVISIONS OF ACT AND THEREFORE, THE VERY BASIS OF THIS TRIBUN AL DECISION IS NOT IN EXISTENCE. NOW AFTER INSERTION OF SECTION 115JB OF THE ACT, WHAT IS REQUIRED IS TO COMPARE THE TAX PAYABLE UNDER NORMAL PROVISIO NS OF THE ACT AND IF SUCH TAX PAYABLE IS LESS THAN THE SPECIFIED PERCENT AGE OF BOOK PROFIT THEN THE ASSESSEE HAS TO MAKE PAYMENT OF THE PRESCRIBED PERCENTAGE OF BOOK PROFIT AS MAT U/S 115JB OF THE ACT. THIS IS UNDISPU TEDLY ADMITTED POSITION THAT TAX PAYABLE BY THE ASSESSEE COMPANY UNDER NORM AL PROVISIONS OF THE ACT IS NIL AND THEREFORE, MAT IS PAYABLE BY THE ASS ESSEE U/S 115JB AT THE RATE OF 7.5% OF BOOK PROFIT AND THIS TRIBUNAL ORDER RELIED UPON BY THE LD. AR OF THE ASSESSEE HAVING RENDERED IN THE CASE OF D CIT VS. VISHNU SUGAR MILLS LTD. (SUPRA) IS NOT RENDERING ANY HELP OF THE ASSESSEE IN THE PRESENT CASE. THE JUDGMENT OF THE HONBLE KOLKATA HIGH COUR T RENDERED IN THE CASE OF DCIT VS. VISHNU SUGAR MILLS LTD. (SUPRA) IS IN RESPECT OF ASSESSMENT YEAR 2002-03, WHEN THE PROVISIONS OF SEC TION 115JB IS APPLICABLE AND THIS WAS THE QUESTION BEFORE THE HON BLE KOLKATA HIGH COURT AS TO WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT WHEN THERE IS NO 20 GROSS TOTAL INCOME ASSESSED IN THE ASSESSMENT ORDER , SECTION 115JB WILL NOT BE APPLICABLE AND IT WAS ALSO NOTED IN THE SAME QUESTION THAT AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT, IT IS C LEAR THAT IF TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE ACT IS LESS THAN 7.5% OF BOOK PROFIT THEN THE BOOK PROFIT SHALL BE DEEMED TO BE T OTAL INCOME OF THE ASSESSEE AND TAX PAYABLE BY THE ASSESSEE ON SUCH TO TAL INCOME SHALL BE AMOUNT OF INCOME TAX RATE OF 7.5%. BUT IN SPITE OF THIS SPECIFIC QUESTION, THE JUDGMENT OF THE HONBLE KOLKATA HIGH COURT IS N OT A SPEAKING JUDGMENT AND IT WAS HELD BY THE HONBLE KOLKATA HIG H COURT THAT FROM THE PERUSAL OF THE TRIBUNAL ORDER, IT APPEARS THAT THE TRIBUNAL HAS EXTENSIVELY DEALT WITH THE MATTER AND NO SUBSTANTIAL QUESTION O F LAW IS INVOLVED IN THAT CASE. UNDER THESE FACTS, IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HONBLE KOLKATA HIGH COURT DOES NOT LAY DOWN A BIND ING PRECEDENT THAT TOO OUT OF ITS OWN JURISDICTION. WE ALSO FIND THAT THE TRIBUNAL ORDER IN THE CASE OF DCIT VS. VISHNU SUGAR MILLS LTD. (SUPRA), FOR AS SESSMENT YEAR 2003-03 IS ALSO AVAILABLE ON PAGE 91 OF THE PAPER BOOK AND IN THIS TRIBUNAL ORDER, THERE IS NO DISCUSSION AND TRIBUNAL HAS SIMPLY HELD THAT THIS ISSUE IS COVERED BY THE TRIBUNALS ORDER IN ASSESSEES OWN C ASE IN A BUNCH OF APPEALS FILED BY THE REVENUE AND CO FILED BY THE RE SPONDENT WHEREIN THE TRIBUNAL HAS HELD THAT IF THERE IS NO GROSS TOTAL I NCOME OR TOTAL INCOME, THE PROVISIONS OF SECTION 115JB CANNOT BE INVOKED. THE ISSUE WAS DECIDED ON THE BASIS OF SECTION 115JA OF THE ACT. ALTHOUGH ONE OF THE YEAR BEFORE THE TRIBUNAL IN THAT ORDER ALSO WAS ASSESSMENT YEAR 200 1-02, WHEREIN THE PROVISIONS OF SECTION 115JB OF THE ACT WAS APPLICAB LE AND ALTHOUGH THE TRIBUNAL HAS NOTED IN PARA 42 OF THAT TRIBUNALS OR DER AVAILABLE ON PAGE 81 OF THE PAPER BOOK THAT IN THIS YEAR, THE PROVISIONS OF SECTION 115JB ARE 21 APPLICABLE BUT WHILE DECIDING THE ISSUE AS PER PARA 44 OF THE TRIBUNALS ORDER, THE TRIBUNAL HAS NOT TAKEN NOTE OF THE DIFFE RENCES IN THE PROVISIONS OF SECTION 115JA AND 115JB OF THE ACT AND THEREFORE , IN OUR CONSIDERED OPINION, THIS TRIBUNALS ORDER IS PER INQURIUM BECA USE IT HAS NOT CONSIDERED THE CHANGE IN LAW IN PROPER PROSPECTIVE AND THEREFO RE, THIS TRIBUNALS ORDER ALSO DOES NOT LAY DOWN A BINDING PRECEDENT. 47. SAME IS THE CASE WITH REGARD TO OTHER TRIBUNAL S ORDERS, ON WHICH RELIANCE HAS BEEN PLACED BY LD. AR OF THE ASSESSEE BECAUSE IN THESE CASES ALSO, THE TRIBUNAL SIMPLY FOLLOWED THE JUDGMENT OF THE HONBLE KOLKATA HIGH COURT RENDERED IN THE CASE OF DCIT VS. VISHNU SUGAR MILLS LTD. (SUPRA), AND WE HAVE ALREADY SEEN THAT THE JUDGMENT OF HONBLE KOLKATA HIGH COURT RENDERED IN THE CASE OF DCIT VS. VISHNU SUGAR MILLS LTD. (SUPRA) AND THE TRIBUNALS ORDER IN THAT CASE ARE N OT LAYING DOWN BINDING PRECEDENT AND THEREFORE, ANY TRIBUNALS ORDER BY BL INDLY FOLLOWING THESE JUDICIAL PRONOUNCEMENT ALSO ARE NOT LAYING DOWN A B INDING PRECEDENT. AS PER THE ABOVE DISCUSSION, WE FIND THAT NONE OF THE JUDICIAL PRONOUNCEMENTS CITED BY LD. AR OF THE ASSESSEE IS A PPLICABLE IN THE PRESENT CASE IN SUPPORT OF THIS CONTENTION THAT BEC AUSE OF LOSS, THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE. 48. THE SECOND CONTENTION RAISED BY LD. AR OF THE A SSESSEE IS THAT SINCE LD. CIT(A) HIMSELF HAS HELD THAT THE RECEIPT OF ACC OUNT OF TRANSFER OF CARBON CREDIT IS A CAPITAL RECEIPT NOT LIABLE TO TA X, THE SAME IS REQUIRED TO BE REDUCED FROM BOOK PROFIT BECAUSE CAPITAL RECEIPT CANNOT BE CONSIDERED AS A PART OF BOOK PROFIT LIABLE TO TAX. HE PLACED R ELIANCE ON A TRIBUNALS ORDER RENDERED IN THE CASE OF M/S SHREE CEMENT LTD. VS. THE ADDL. CIT IN 22 ITA NO.503/JP/2012 DATED 27.01.2014. HE SUBMITTED A COPY OF THIS TRIBUNALS ORDER. IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PARA 40 OF THIS TRIBUNALS ORDER. IT WAS SUBMITTED IN THAT CASE ALS O, SAME ISSUE WAS BEFORE THE TRIBUNAL AS TO WHETHER THE RECEIPT ON ACCOUNT O F CARBON CREDIT IS TO BE REDUCED FROM BOOK PROFIT U/S 115JB OF THE ACT OR NO T AND THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. HE AL SO PLACED RELIANCE ON ANOTHER TRIBUNALS ORDER RENDERED IN THE CASE OF AC IT VS. M/S SHREE CEMENT LTD. IN ITA NOS. 614, 615 & 635/JP/2010 DATE D 09.09.2011. HE SUBMITTED THAT THE COPY OF THIS TRIBUNALS ORDER IS AVAILABLE FROM PAGES 163 TO 180 OF THE PAPER BOOK. HE FURTHER POINTED OUT TH AT IN THIS TRIBUNALS ORDER, THE TRIBUNAL HAS DULY CONSIDERED THE JUDGMEN T OF THE HONBLE APEX COURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT REPO RTED IN 255 ITR 273 AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLL OWING ANOTHER JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF P ADMA SUNDARA RAO VS. STATE OF TAMIL NADU REPORTED IN 255 ITR 147 (SC), W HEREIN IT WAS HELD THAT THE COURT SHOULD NOT PLACE RELIANCE ON THE DEC ISIONS WITHOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FA CTS SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. IN THIS REGAR D, OUR ATTENTION WAS ALSO DRAWN TO PARA 13 TO 13.11 OF THIS TRIBUNALS ORDER. LD. DR OF THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS ASPECT HAS BEEN ALREADY DECIDED BY US AS TO WHETHER RECEIP T ON ACCOUNT OF TRANSFER OF CARBON CREDIT IS A CAPITAL RECEIPT NOT LIABLE TO TAX OR NOT. NOW, IN THE LIGHT OF THIS FACTUAL POSITION, WE EXAMINE THE APPLICABILITY OF THIS TRIBUNALS ORDER RENDERED IN THE CASE OF ACIT VS. M /S SHREE CEMENT LTD. 23 (SUPRA), FOR ASSESSMENT YEAR 2004-05 TO 2006-07. TH E RELEVANT PARAS OF THIS TRIBUNALS ORDER ARE PARA 13 TO 13.11 OF THIS TRIBUNALS ORDER AND THE SAME ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF RE ADY REFERENCE:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSID ERED THEM CAREFULLY. WE HAVE ALSO PERUSED THE ORDERS OF AUTHO RITIES BELOW AS WELL AS OTHER MATERIAL ON WHICH OUR ATTENTION HA S BEEN DRAWN. WE HAVE TAKEN INTO CONSIDERATION THE RATIO D ECIDENDI OF ALL THE DECISIONS RELIED UPON BY THE RIVAL PARTIES. 13.1 AT THE OUTSET, THE ISSUE IN HAND IS COVERED I N FAVOUR OF THE ASSESSEE IN ITS OWN CASE FOR A.Y. 2003-04 VIDE ORDER DATED 23-12-2009 IN ITA NO. 942/JP/08. THE ABOVE DECISION OF TRIBUNAL HAS BEEN APPEALED BEFORE THE HON'BLE JURIS DICTIONAL RAJASTHAN HIGH COURT AND HON'BLE JURISDICTIONAL HIG H COURT VIDE ORDER DATED 01-10-2010 HAS ADMITTED ONLY ONE GROUND WHICH IS REPRODUCED BELOW: 'WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE SALES TA X SUBSIDY RECEIVED BY THE ASSESSEE OF RS. 18,48,85,50 6 IN THE FORM OF SALES TAX EXEMPTION WAS A CAPITAL RECEI PT & NOT A REVENUE RECEIPT, IGNORING THE BASIC PURPOSE F OR WHICH THE SAME WAS GIVEN WHICH ITSELF PROVIDES THAT THE SUBSIDY WAS GIVEN TO THE ASSESSEE TO ENHANCE THE PRODUCTION, EMPLOYMENT & SALES IN THE STATE OF RAJASTHAN, WHICH ARE ALL POST OPERATIONAL ACTIVITIE S' FROM THE ABOVE, IT COULD BE CLEARLY SEEN THAT HON'B LE HIGH COURT ADMITTED ONLY THE GROUND AS TO WHETHER THE IM PUGNED SUBSIDY WAS A CAPITAL RECEIPT OR A REVENUE RECEIPT. HON'BLE HIGH COURT HAS NOT ADMITTED THE GROUND OF THE REVENUE AG AINST RELIEF GRANTED BY TRIBUNAL UNDER SECTION 115JB OF T HE ACT ON ABOVE CAPITAL RECEIPT. THEREFORE, RESPECTFULLY FOLL OWING THE DECISION OF JURISDICTIONAL HIGH COURT AND THE TRIBU NAL IN ASSESSEE'S OWN CASE FOR AY 2003-04 WE SEE NO REASON S TO TAKE ANY OTHER VIEW ON THE MATTER DIFFERENT FROM THE CON CLUSIONS ARRIVED AT BY THIS BENCH IN FAVOUR OF THE ASSESSEE, AS FAR AS EXCLUSION FROM BOOK PROFIT UNDER SECTION 115JB IS C ONCERNED, 24 THAT NOW STANDS AFFIRMED BY THE HON'BLE RAJASTHAN H IGH COURT AND WE ARE IN RESPECTFUL AGREEMENT WITH THE SAME. 13.2 OUR ABOVE VIEW ALSO FINDS SUPPORT FROM THE DEC ISION OF HON'BLE APEX COURT IN THE CASE OF PADMARAJE R. KADA MBANDE VS. CIT .(1992) 195 ITR 877 (SC), WHEREIN IT HAS BE EN HELD BY THE APEX COURT THAT CAPITAL RECEIPTS ARE NOT INCOME WITHIN THE DEFINITION OF SEC 2(24) OF THE ACT AND HENCE ARE NO T AT ALL CHARGEABLE UNDER THE I.T. ACT. A RECEIPT WHICH IS N EITHER 'PROFIT' NOR 'INCOME' AND WHICH DOES NOT HAVE ANY ELEMENT TH ERE-OF EMBEDDED THERE IN, CANNOT BE PART OF. 'PROFIT' AS P ER PROFIT & LOSS ACCOUNT PREPARED IN TERMS OF PART II OF SCHEDU LE VI TO COMPANIES ACT. 13.3 AS FAR AS THE DECISIONS RELIED UPON BY THE LD D/R ARE CONCERNED, WE ARE UNABLE TO FOLLOW THE SAME IN THE PRESENT CASE, AS THE FACTS OF THE SAID DECISIONS ARE CLEARL Y DIFFERENT FROM THE FACTS IN THE PRESENT CASE. IT IS A SETTLED PRIN CIPLE OF LAW AS LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF PADMASUNDRA RAO (DEED.) VS. STATE OF TAMIL NADU (20 02) 255 ITR 147 (SC) THAT COURTS SHOULD NOT PLACE RELIANCE ON THE DECISIONS WITHOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FACT SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. 13.4 FROM PERUSAL OF THE DECISIONS OF RAIN COMMODIT IES (SUPRA) AND GROWTH AVENUES (SUPRA), WE NOTICE THAT BOTH THE DECISIONS DEALT WITH THE ISSUE OF TAXABILITY OF CAPITAL GAINS IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THESE CAPITAL GAI NS WERE OTHERWISE INCOME U/S 2(24) OF THE ACT AND EXCLUSION WAS CLAIMED IN COMPUTING BOOK PROFIT U/S 115JB ON THE G ROUND THAT THE SAID CAPITAL GAINS WAS EXEMPT EITHER U/S 47(IV) OR U/S 54EC OF THE ACT, WHICH THE TRIBUNAL DID NOT AGREE. IN TH E PRESENT CASE, HOWEVER, WE ARE DEALING NOT WITH CAPITAL GAIN S BUT WITH PURE CAPITAL RECEIPT, WHICH DOES NOT EVEN HAVE ANY 'INCOME', 'PROFITS OR, GAINS' EMBEDDED THEREIN. THE IMPUGNED INCENTIVE GRANTED TO THE ASSESSEE IS PURE AND SIMPLE CAPITAL RECEIPT, IN TERMS OF OUR DECISION ON GROUND NO. 1 AT PARA 10 HE RE-IN-ABOVE, WHICH IN TURN IS SUPPORTED BY THE PRINCIPLES LAID D OWN BY THE APEX COURT, VARIOUS HIGH COURTS & SPECIAL BENCH OF THE 25 TRIBUNAL. THAT BEING THE CASE, IT DOES NOT HAVE ANY INCOME OR PROFIT ELEMENT EMBEDDED IN IT, SINCE THE INCENTIVE WAS GRANTED TO ENCOURAGE INDUSTRIAL GROWTH OF INDUSTRIALLY NON DEVELOPED AREA. NO ONE CAN MAKE PROFIT OUT OF THE SUBSIDY OR INCENTIVE GRANTED TO IT. HENCE, IT IS NOT CHARGEABLE TO TAX U NDER THE INCOME TAX ACT AS HELD BY THE APEX COURT IN THE CAS E OF PADMARAJE (SUPRA) AND IN THE LIGHT OF OUR FACT FIND ING -AS ABOVE, CLEARLY NOT INCLUDIBLE IN P&L ACCOUNT PREPARED UNDE R PART II &_PART III OF SCHEDULE VI TO THE COMPANIES ACT. 13.5. THE GENESIS OF SEC 115J, THEREAFTER SECTION 1 15JA AND NOW SECTION 115JB WAS TO ENSURE THAT THE ASSESSEE, WHILE MAKING PROFIT FROM OPERATIONS, SHOULD NOT ENJOY TAX FREE STATUS DUE TO VARIOUS DEDUCTIONS AVAILABLE UNDER THE INCOM E TAX ACT. THERE WAS NEVER ANY INTENTION OF THE LEGISLATURE TO TAX WHAT IS NOT INCOME AT ALL. IN A RECENT DECISION, THE HON'BL E APEX COURT IN THE CASE OF INDO RAMA SYNTHETICS (I) LTD -VS- CI T (2011) 330 ITR 363 (SC) HAS HELD THAT THE OBJECT OF MAT PROVIS IONS IS TO BRING OUT THE REAL PROFIT OF THE COMPANIES. THE THR UST IS TO FIND OUT THE REAL WORKING RESULTS OF THE COMPANY. INCLUS ION OF RECEIPT IN THE COMPUTATION OF MAT WOULD DEFEAT TWO FUNDAMENTAL PRINCIPLES, IT WOULD LEVY TAX ON RECEIP T WHICH IS NOT IN THE NATURE OF INCOME AT ALL AND SECONDLY IT WOUL D NOT RESULT IN ARRIVING AT REAL WORKING RESULTS OF THE COMPANY. TH E REAL WORKING RESULT CAN BE ARRIVED AT ONLY AFTER EXCLUDI NG THIS RECEIPT WHICH HAS BEEN CREDITED TO P&L A/C AND NOT OTHERWIS E. 13.6 FOR BETTER UNDERSTANDING OF THE ISSUE, LET US ALSO EXTRACT DOWN RELEVANT PROVISION OF SEC. 115JB AS UNDER. 'EVERY ASSESSEE, BEING A COMPANY, SHALL FOR THE PUR POSE OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUN T FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVI SIONS OF PART II AND PART III OF SCHEDULE VI TO THE COMPA NIES ACT, 1956 (1 OF J956).' 13.7 ON CONSIDERATION OF THE ABOVE, IT IS APPARENT THAT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB PROFIT A ND LOSS A/C SHALL BE PREPARED AS PER PART II AND III OF SCHEDUL E VI TO THE COMPANIES ACT. PART II OF SCHEDULE VI PRESCRIBES TH E REQUIREMENTS AS TO PROFIT AND LOSS A/C. CLAUSE 2{A) OF PART II 26 CLEARLY SPELLS THAT THE PROFIT AND LOSS A/C SHALL B E SO MADE OUT AS CLEARLY TO DISCLOSE THE RESULT OF THE WORKING OF THE COMPANY DURING THE PERIOD COVERED BY THE ACCOUNTS, HENCE, I N OUR VIEW, P&L ACCOUNTS DO NOT REFLECT THE TRUE RESULT OF THE WORKING OF THE COMPANY FOR THE YEAR, IT CANNOT BE SAID TO BE A S PER SCHEDULE VI, PART II & III OF THE COMPANIES ACT AND IT WOULD NECESSITATE CORRECTIVE ADJUSTMENT IN THAT SITUATION SO AS TO COMPLY WITH SCHEDULE VI, PART II & III. 13.8 WITH THE ABOVE DISCUSSIONS, THE ONLY ISSUE LEFT TO BE CONSIDERED IS WHETHER EXCLUSION OF THE ABOVE CAPITA L RECEIPT IS IN LINE WITH THE PRINCIPLES AS LAID DOWN BY HON'BLE APEX COURT IN THE CASE OF APOLLO TYRES (SUPRA). IN THE CASE OF AP OLLO TYRES (SUPRA), THE QUESTION BEFORE THE APEX COURT WAS WHE THER AN AO CAN, WHILE ASSESSING A COMPANY FOR INCOME TAX U/S 1 15J OF THE IT ACT, QUESTION THE CORRECTNESS OF THE P&L TIC PRE PARED IN ACCORDANCE WITH REQUIREMENTS OF PARTS II AND III OF SCH. VI TO THE COMPANIES ACT. FROM THE QUESTION AS FRAMED BEFO RE THE APEX COURT IT IS CLEAR THAT THE ISSUE BEFORE THE HO N'BLE COURT WAS WITH REGARD TO POWER OF THE AO TO RECAST AUDITE D ACCOUNTS PREPARED IN ACCORDANCE WITH PART II AND PART III OF THE SCH. VI TO THE COMPANIES ACT. THEREFORE, FOR APPLICABILITY OF THE DECISION OF THE APEX COURT THE PREREQUISITE IS THAT THE ACCOUNTS ARE PREPARED IN ACCORDANCE WITH PART II ARID PART I II TO SCH. VI OF THE COMPANIES ACT. IF HOWEVER THE P&L ACCOUNTS A RE NOT IN ACCORDANCE WITH PART II AND III OF SCH. VI TO THE C OMPANIES ACT, THE SAID DECISION CANNOT BE APPLIED AND IN THA T SITUATION IT DOES NOT PROHIBIT THE NEEDFUL ADJUSTMENT. 13.9 OUR VIEW AS ABOVE IS SUPPORTED BY THE DECISION OF-THE SPECIAL BENCH IN THE CASE OF RAIN COMMODITIES (SUPR A), WHICH INCIDENTALLY HAS BEEN RELIED UPON BY DR. ON EXAMINA TION OF THE SAID ORDER, WE FIND THAT AT PARA 17 (LAST SUB-PARA) & PARA 18, AFTER CONSIDERING THE DECISION OF SUPREME COURT IN APOLLO TYRES LTD (SUPRA), SPECIAL BENCH HAVE HELD THAT IF PROFIT & LOSS ACCOUNT IS NOT IN ACCORDANCE WITH PART II & PART II I OF SCHEDULE VI TO THE COMPANIES ACT, IT IS PERMISSIBLE TO ALTER THE NET PROFIT SO AS TO MAKE IT IN ACCORDANCE WITH PART II & III O F SCHEDULE VI, WHICH IS THE STARTING POINT FOR COMPUTATION OF 'BOO K PROFIT' IN TERMS OF SECTION 115JB. WE HAVE CONCLUDED IN PARA 1 3.4 ABOVE, 27 THAT INCLUSION OF SALES TAX SUBSIDY IN THE PROFIT A ND LOSS IS NOT IN ACCORDANCE WITH SCHEDULE VI, PART II & III. HENCE I T IMPLIES THAT NEEDFUL ADJUSTMENT TO EXCLUDE THE SAME IS NOT ONLY PERMISSIBLE, BUT IS MANDATORY SO AS TO MAKE THE PROFIT & LOSS AC COUNT COMPLIANT, WITH THE BASIC REQUIREMENT OF SECTION 11 5JB. 13.10 OUR VIEW PER PARA 13.8 ABOVE IS ALSO SUPPORTE D BY, THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF BOMBAY D IAMOND (SUPRA) & THAT OF BANGALORE TRIBUNAL IN THE CASE OF SYNDICATE BANK (SUPRA) [BOTH ANALYZED IN PARA 12.1 ABOVE], WH ERE ALSO TRIBUNAL, AFTER CONSIDERING THE DECISION OF SUPREME COURT IN THE CASE OF APOLLO TYRES (SUPRA) AND EXPLAINING THE SAM E, HAVE PERMITTED ADJUSTMENT TO THE PROFIT AS PER P&L ACCOU NT, SO AS TO COMPLY WITH SCHEDULE VI, PART II & PART III OF THE COMPANIES ACT, WHICH IS A PREREQUISITE FOR SECTION 115JB. 13.11 IN THE LIGHT OF THE AFORESAID, THE ADDITIONAL GROUND FILED BY THE DEPARTMENT IS REJECTED AND WE HOLD THAT CAPI TAL RECEIPT IN THE FORM OF SALES TAX INCENTIVE NEEDS TO BE EXCL UDED FROM PROFIT AS PER P&L ACCOUNT FOR THE YEAR IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THIS GROUND OF THE DEPARTMENT IS THUS DISMISSED. 50. FROM THE ABOVE PARAS, WE FIND THAT THE TRIBUNAL HAS DULY CONSIDERED THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF APOLLO TYRES LTD. ((SUPRA) AND THEREAFTER, IT WAS NOTED BY THE TRIBUNAL IN THIS CASE THAT AS PER THE DECISION OF SPECIAL BENCH OF T HE TRIBUNAL RENDERED IN THE CASE OF RAIN COMMODITIES LTD. VS. DCIT, 41 DTR 449, IF PROFIT AND LOSS ACCOUNT IS NOT IN ACCORDANCE WITH PART II & PART II I OF SCHEDULE VI TO THE COMPANIES ACT, 1956 BECAUSE IT IS PREREQUISITE FOR SECTION 115JB OF THE ACT. THE TRIBUNAL IN THIS CASE ALSO CONSIDERED TWO ANOTHER TRIBUNALS ORDERS RENDERED IN THE CASE OF DCIT VS. BOMBAY DIAM OND COMPANY LTD. 33 DTR 59 AND SYNDICATE BANK VS. ACIT, 7 SOT 51 BA NGALORE WHERE IT WAS HELD BY THE TRIBUNAL AFTER CONSIDERING THE DECI SION OF HONBLE APEX COURT RENDERED IN THE CASE OF APOLLO TYRES LTD. (SU PRA), AND AFTER 28 EXPLAINING THE SAME THAT ADJUSTMENT TO PROFIT AND L OSS ACCOUNT IS POSSIBLE TO MAKE IT COMPLIANT WITH SCHEDULE VI PART II AND P ART III OF THE COMPANIES ACT, 1956 WHICH IS PREREQUISITE OF SECTIO N 115JB OF THE ACT. ON THIS BASIS, THE TRIBUNAL IN THE CASE OF SHREE CEMEN T LTD. (SUPRA) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND IT WAS HEL D THAT CAPITAL RECEIPT IN THE FORM OF SALES TAX SUBSIDY NEEDS TO BE EXCLUDED FROM PROFIT AS PER P&L ACCOUNT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/ S 115JB OF THE ACT. BY RESPECTFULLY FOLLOWING THESE TRIBUNALS ORDERS, WE HOLD THAT IN THE PRESENT CASE ALSO, THE RECEIPT ON ACCOUNT OF TRANSFER OF CA RBON CREDIT WHICH IS HELD TO BE A CAPITAL RECEIPT NEEDS TO BE EXCLUDED FROM P ROFIT AS PER P&L ACCOUNT FOR THE PRESENT YEAR WHILE COMPUTING THE BOOK PROFI T U/S 115JB OF THE ACT. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY GROUND NOS.1 TO 5 ARE ALLOWED. THE ASSESSEE GETS RELIEF OF RS.27,70,880/- AND CONSEQUENT INTEREST BEING 10% OF AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF CARBON CREDIT OF RS.277,08,800/-. 51. NOW WE TAKE UP GROUNDS NOS.6 AND 7. BOTH SIDES AGREED THAT THIS ISSUE RAISED IN THESE GROUNDS IS SAME AS HAS BEEN R AISED BY THE ASSESSEE IN CO NO.26/LKW/2015 FOR ASSESSMENT YEAR 2008-09 AN D THE SAME CAN BE DECIDED ON SIMILAR LINE. IN ASSESSMENT YEAR 2008-09 , WE HAVE DECIDED THIS ISSUE AGAINST THE ASSESSEE AND THEREFORE, IN THE PR ESENT YEAR ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND ACCORDING LY GROUNDS NO. 6 AND 7 ARE REJECTED. 52. REGARDING ADDITIONAL GROUND, IT WAS SUBMITTED B Y LD. AR OF THE ASSESSEE THAT SINCE THIS ISSUE WAS NOT DECIDED BY T HE LD. CIT(A), THE 29 MATTER MAY BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR A DECISION ON THIS ISSUE. LD. DR OF THE REVENUE SUPPORTED THE ORD ER OF THE LD. CIT(A). 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS ISSUE REGARDING ALLOWING OF INITIAL DEPRECIATION U/S 32(I )(II)(A) WAS NOT RAISED BY THE ASSESSEE BEFORE LD. CIT(A) AS PER THE GROUNDS O F APPEAL RAISED BEFORE HIM AS AVAILABLE ON RECORD AS ANNEXURE 2 TO FORM-35 . THIS CONTENTION IS STATED TO HAVE RAISED BY THE ASSESSEE BEFORE LD. CI T(A) ALSO BY WAY OF ADDITIONAL GROUND. BUT THERE IS NO SUCH MENTION IN THE ORDER OF LD. CIT(A) THAT ANY ADDITIONAL GROUND WAS RAISED BY THE ASSESS EE BEFORE HIM. APART FROM THIS, NO SUPPORTING DOCUMENT HAS BEEN PRODUCED BEFORE US TO ESTABLISH THAT ANY ADDITIONAL GROUND WAS RAISED BY THE ASSESSEE BEFORE LD. CIT(A) WHICH HE DID NOT DECIDE. THERE IS NO DISCUSS ION OR DISALLOWANCE ON THIS ACCOUNT IN THE ASSESSMENT ORDER ALSO. HENCE, T HIS ADDITIONAL GROUND IS NOT ARISING OUT OF THE ORDERS OF THE LOWER AUTHORIT IES AND HENCE, THE RELEVANT FACTS ARE NOT AVAILABLE ON RECORD AND THER EFORE, THIS ISSUE CANNOT BE RAISED BY THE ASSESSEE BEFORE US BY WAY OF ADDIT IONAL GROUND. ACCORDINGLY, ADDITIONAL GROUND IS REJECTED AS UNADM ITTED. 54. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. 55. NOW, WE TAKE UP THE ASSESSEE APPEAL FOR ASSESSM ENT YEAR 2010-11 I.E. ITA NO. 53/LKW/2015. 56. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW A ND ON FACTS IN CONFIRMING THE DISALLOWANCE OUT OF MISCELLANEOUS EX PENSES OF RS. 50,000/-. 30 2. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OUT OF REPAIRS AND MAINTENANCE EXPENSES OF RS. 50,000/-. 3. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND O N FACTS IN CONFIRMING THE APPLICABILITY OF SECTION 11 5 JB OF THE INCOME 'TAX ACT. 1961 ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND CONFIRMING THE ASSESSMENT AL BOOK PROF IT OF RS. 38,06,07,184/- AND IMPOSING THE MINIMUM ALTERNA TE 'TAX OF RS.5,70,91,078/-. 4. SUCH OTHER RELIEF AS MAY CRAVE IN DURING THE C OURSE OF PROCEEDING OF THE APPEAL AND FOUND EQUITABLE OR JUS TIFIED BY THE HON'BLE TRIBUNAL. 57. BOTH SIDES AGREED THAT THE GROUNDS NO. 1 AND 2 IN THE PRESENT YEAR ARE SAME AS GROUNDS NO. 6 AND 7 IN ASSESSEES APPEA L FOR ASSESSMENT YEAR 2009-10 IN ITA NO. 339/LKW/2013 AND THE SAME M AY BE DECIDED IN SIMILAR LINE. REGARDING GROUND NO.3, IT WAS SUBMITT ED BY LD. AR OF THE ASSESSEE THAT SINCE THERE IS NO TAXABLE INCOME AFTE R ADJUSTMENT OF BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION, THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE. 58. LD. DR OF THE REVENUE SUPPORTED THE ORDER OF AU THORITIES BELOW. 59. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGAR DING GROUND NOS. 1 AND 2 WE FIND THAT THIS ISSUE IS SQUARELY COVERED A GAINST THE ASSESSEE BECAUSE IN ASSESSMENT YEAR 2008-09, DISALLOWANCE WA S MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) TO TH E EXTENT OF RS.1.00 LAKH UNDER EACH HEAD WHEREAS THE PRESENT YEAR, DISA LLOWANCE MADE AND CONFIRMED IS ONLY RS.50,000/- UNDER EACH HEAD AND T HEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER LD. CIT(A ) ON THIS ISSUE. GROUNDS NO. 1 AND 2 ARE REJECTED. 31 60. REGARDING GROUND NO.3, WE FIND THAT THIS ASPECT OF THE MATTER REGARDING NON APPLICABILITY OF THE PROVISIONS OF SE CTION 115JB IN THE EVENT OF ASSESSMENT OF LOSS UNDER NORMAL PROVISIONS HAS B EEN DECIDED BY US AGAINST THE ASSESSEE A PER PARA NO. 46 TO 47 ABOVE IN ASSESSMENT YEAR 2009-10 AND THEREFORE, IN THE PRESENT YEAR ALSO, TH IS ISSUE IS DECIDED AGAINST THE ASSESSEE AND GROUND NO.3 IS ALSO REJECT ED. 61. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. 62. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12 IN ITA NO. 518/LKW/2015. 63. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED' CIT (APPEALS) HAS ERRED IN LAW AN D ON FACTS IN CONFIRMING THE DISALLOWANCE OUT OF MISCELLANEOUS EX PENSES OF RS.50,000/-. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OUT OF REPAIRS AND MAIN TENANCE EXPENSES OF RS.50,000/-. 3. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE APPLICABILITY OF SECTION 115 JB OF T HE INCOME TAX ACT, 1961 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONFIRMING THE ASSESSMENT AT INCOME OF RS.19,75,97,090/- AND IMPOSING THE TAX OF RS.8,63,89,200/- WITHOUT ALLOWING DEDUCTION OF CARR IED FORWARD LOSSES AND UNABSORBED DEPRECIATION AND WITH OUT SEEKING THAT GROSS TOTAL INCOME IS NIL. AS THERE WI LL NOT BE GROSS TOTAL INCOME, THEREFORE SECTION 115 JB WILL N OT BE APPLICABLE.. 4. SUCH OTHER RELIEF AS MAY CRAVE IN DURING THE CO URSE OF PROCEEDING OF THE APPEAL AND FOUND EQUITABLE OR JUS TIFIED BY THE HON'BLE TRIBUNAL. 32 64. IT WAS AGREED BY BOTH SIDES THAT ALL THREE GROU NDS RAISED BY THE ASSESSEE IN THIS YEAR ARE IDENTICAL TO THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2010-11. THEREFORE I N THE PRESENT YEAR ALSO, ALL THE THREE GROUNDS CAN BE DECIDED ON SIMIL AR LINE AS PER THE TRIBUNALS ORDER IN ASSESSMENT YEAR 2010-11. IN THA T YEAR, ALL THE THREE GROUNDS OF THE ASSESSEE WERE REJECTED AS PER PARA NO 59 TO 60 ABOVE AND ACCORDINGLY, IN THE PRESENT YEAR ALSO, ALL THES E THREE GROUNDS ARE REJECTED ON SIMILAR LINE. 65. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. 66. NOW, WE TAKE UP THE APPEAL THE REVENUE FOR ASSE SSMENT YEAR 2010- 11 IN ITA NO. 569/LKW/2015. 67. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - (1) THAT THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS ) IS ERRONEOUS IN LAW AND ON FACTS IN DELE TING THE ADDITION RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF MISCELLANEOUS EXPENSES AT RS.2,98,238/-. (2) THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) IS ERRONEOUS IN LAW AND ON FACTS IN DELE TING THE ADDITION RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENSES AT RS. 6,29,228/-. (3) THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) IS ERRONEOUS IN LAW AND ON FACTS IN DELE TING THE ADDITION RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW PRODUCTION OF BAGASSE AT RS.3, 84,23,000/-. 33 (4) THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), BAREILLY IS ERRONEOUS IN LAW AND ON FACT S MAY BE CANCELLED AND THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. (5) ANY ME GROUND OF APPEAL MAY BE TAKEN AT TH E TIME OF HEARING OF APPEAL. 68. IT WAS AGREED BY BOTH SIDES THAT GROUNDS NO. 1 AND 2 ARE SIMILAR TO GROUNDS NO. 2 AND 3 IN REVENUES APPEAL FOR ASSESSM ENT YEAR 2008-09 IN ITA NO. 417/LKW/2013 AND THEREFORE, THESE GROUNDS C AN BE DECIDED ON SIMILAR LINE IN THE PRESENT YEAR ALSO. REGARDING GR OUND NO.3, IT WAS AGREED BY BOTH SIDES THAT THIS ISSUE IS IDENTICAL TO GROUN D NO.4 RAISED BY THE REVENUE IN ASSESSMENT YEAR 2008-09 AND THEREFORE, T HE SAME CAN BE DECIDED ON SIMILAR LINE. 69. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN ASSESSMENT YEAR 2008-09, THE ISSUE REGARDING DELETI ON OF PART DISALLOWANCE BY THE LD. CIT(A) IN RESPECT OF DISALL OWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD MISCELLANEOUS EXPE NSES AND REPAIRS AND MAINTENANCE HAVE BEEN DECIDED BY US IN FAVOUR OF TH E ASSESSEE AS PER PARA NO. 7 AND THEREFORE, IN THE PRESENT YEAR ALSO, THESE TWO ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE ON SIMILAR LINE. ACCORDINGLY, GROUND NO. 1 AND 2 ARE REJECTED. 70. REGARDING GROUND NO.3, WE FIND THAT IN ASSESSME NT YEAR 2008-09, WE FOLLOWED THE EARLIER TRIBUNALS ORDER IN ASSESSE ES OWN CASE FOR ASSESSMENT YEAR 2007-08 IN WHICH THE TRIBUNAL HAS A PPROVED THE ADOPTION OF YIELD OF BAGASSE AT 34 % WHEREAS THE ASSESSING O FFICER HAS ADOPTED THE SAME AT 36%. RESPECTFULLY FOLLOWING THE EARLIER TRI BUNALS ORDER FOR 34 ASSESSMENT YEAR 2007-08, WE HOLD THAT THE PRESENT Y EAR ALSO, ASSESSING OFFICER SHOULD ADOPT YIELD PERCENT OF 34% AS AGAINS T 36% ADOPTED BY HIM AND 32.80% REPORTED BY THE ASSESSEE. ACCORDINGLY TH IS GROUND NO.3 IS PARTLY ALLOWED. 71. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. 72. IN THE COMBINED RESULT, ITA NO. 417/LKW/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES, CO NO. 26 & 27/LKW/2013 AND I TA NOS. 418/LKW/2013, 53/LKW/2015 AND 518/LKW/2015 ARE DISM ISSED AND ITA NO.569/LKW/2015 AND 339/LKW/2013 ARE PARTLY ALLOWED . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GAR ODIA ) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED: 09/02/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR