PARLE PET P. LTD ( NOW MERGED WITH PARLE AGRO P., LTD), MUMBAI V. DCIT 8(2), MUMBAI

ITA 4248/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3860 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 15-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 25-05-2010
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Assessee Lawyers: YOGESH THARAR
• Keywords: Business income; Depreciation; Rule of consistency; Earning of tax free income; Cost of acquisition; Deemed dividend; Assessment record
• Section: 143(3); 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI D.KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI PAWAN SING H , JUDICIAL MEMBER ITA NO.4248/MUM/2010 ASSESSMENT YEAR: 2005 - 06 PARLE PET PVT. LTD.(NOW MERGED WITH PARLE AGRO PVT. L TD.), WESTERN EXPRESS HIGHWAY, CHAKALA, ANDHERI (E), MUMBAI - 400099 PAN: AABCP9640D VS. DCIT 8(2), MUMBAI. (APPELLANT) (RESPONDENT) ASSE SSEE BY SHRI YOGESH THAR(AR) REVENUE BY : SHRI M.DAYASAGAR (DR) DATE OF HEARING : 15.02.2016 DATE OF PRONOUNCEMENT : 17 .02 .2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A) - 8, MUMBAI DATED 25.03.2010 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN TREATING THE ORDER PASSED BY AO WERE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AN D EXERCISE POWER UNDER SECTION 263 OF THE INCOME TAX ACT. WITHOUT PREJUDICIAL TO ABOVE : - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN NOT ACCEPTING THE LONG TERM CAPITAL GAIN OFFER TO TAX BY EXERC ISING THE SCRIPT WISE OPTION OF INDEXATION AND WITHOUT INDEXATION WHICHEVER IS BENEFICIAL TO 2 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. THE APPELLANT. THE APPELLANT SUBMIT THAT THE LONG TERM CAPITAL GAIN BE ASSESSED BY APPLYING THE PROVISION OF SECTION 112(1) OF THE INCOME TAX ACT 1961, AND ACCORDI NG THE LONG TERM CAPITAL GAIN OFFER TO TAX BY APPELLANT BE ACCEPTED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN DISALLOWING RS.3,07,600/ - WITHOUT CONSIDERING THE EXPLANATION I INFORMATION SUBMITTE D DURING THE COURSE OF PROCEEDING. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN DISALLOWING AMORTIZATION OF EXPENDITURE ON AMALGAMATION/DE - MERGER CLAIMED UNDER SECTION 35DD OF RS.17,17,462/ - THE APPELLANT SUBMIT THAT THE CLAIM MADE WERE DULY CERTIFIED BY THE TAX AUDITOR ,THE DISALLOWANCE WERE MADE WITHOUT ANY JUSTIFICATION AND THEREFORE IT IS PRAYED THAT THE ADDITION BE DELETED. 5. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIO NER OF INCOME - TAX ERRED IN DISALLOWING COST OF EMPLOYEE OF RS. 7,48,459/ - BY ESTIMATING 50 PERCENT OF EMPLOYEE COST WERE INCURRED FOR BUSINESS SERVICE CENTRE . SINCE THE INCOME FROM BUSINESS SERVICE CENTRE WERE ASSESSED AS INCOME FROM HOUSE PROPERTY THE DI SALLOWANCE WERE MADE ON ESTIMATED BASIS. AO HAD MADE DISALLOWANCE IN THE ORDER UNDER SECTION 143(3) AFTER MAKING PROPER ENQUIRY AND THEREFORE FURTHER ESTIMATED DISALLOWANCE MADE WHILE PASSING ORDER UNDER SECTION 263 IS WITHOUT ANY JUSTIFICATION. THEREFORE IT IS PRAYED THAT THE DISALLOWANCE MADE BE DELETED 6. ON THE FACTS AND M THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN DISALLOWING LEGAL AND PROFESSIONAL EXPENSES OF RS.1,80, 745/ - BY ESTIMATING 50 PERCENT OF EXPENSES OF RS . 3, 61,490/ - WERE INCURRED FOR BUSINESS SERVICE CENTRE. SINCE THE INCOME FROM BUSINESS SERVICE CENTRE WERE ASSESSED AS INCOME FROM HOUSE PROPERTY THE DISALLOWANCE WERE MADE ON ESTIMATED BASIS WITHOUT ANY JUSTIFICATION. THEREFORE IT IS PRAYED THAT THE DISAL LOWANCE MADE BE DELETED. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN DISALLOWING EXPENSES OF RS. 3,36, 862 / - BY ESTIMATING 50 PERCENT OF EXPENSES OF RS.6,73,725/- W ERE INCURRED FOR BUSINESS SERVICE CENTRE . SINCE THE INCOME FROM BUSINESS SERVICE CENTRE WERE ASSESSED AS INCOME FROM HOUSE PROPERTY THE DISALLOW ANCE WERE MADE ON ESTIMATED BASIS WITHOUT ANY JUSTIFICATION. THEREFORE IT IS PRAY ED THAT THE DISALLOWANCE MADE BE DELETED. 8. ON THE FACTS AND III THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX ERRED IN DISALLOWING EXPENSES OF RS.32,91,128/ - ON ESTIMATE BASIS WITHOUT ANY JUSTIFICATI ON . THE DISALLOWANCE WERE MADE MERELY BY GIVING REASON OF ALLOWING DEDUCTION UNDER SECTION 24 OF THE INCOME TAX ACT. THE APPELLANT SUBMIT THAT THE ADDITION MADE IS ON ESTIMATE BASIS WITHOUT ANY JUSTIFICATION AND THEREFORE IT IS PRAYED THAT THE ADDITION BE DELETED. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF I NCOME - TAX ERRED IN ASSESSING SHORT TERM CAPITAL GAIN OF RS.36,33,874/ - UNDER THE HEAD INCOME FROM BUSINESS. THE APPELLANT SUBMITS THAT THEY HAD NOT CARRIED OUT TRADING ACTIVITY IN SECURITIES AND THEREFORE THERE IS NO JUSTIFICATION FOR ASSESSING SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. IT IS PRAYS THAT THE DIRECTION GIVEN TO AO BY CIT BE CANCEL. 10 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, AND MODIFY THE GROUNDS AT OR BEFORE THE TIME OF HEARING. 2. T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME IN RESPECT OF ASSESSMENT YEAR (AY) 2005 - 06 ON 31.10.2005 DECLARING TOTAL INCOME AT RS. 27,1 1,46,846/ - 3 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. ALONG WITH AUDITED REPORT. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 05.04.2006. THEREAFTER, THIS CASE WAS SELECTED FOR SC RUTINY AND AFTER SERVING THE STATUTORY NOTICE AND GIVING THE OPPORTUNITY TO ASSESSEE , THE ASSESSING OFFICER (AO) PASSED THE ORDER U/S 143(3) OF THE ACT ON 18.12.2 007 AND ASSESSED THE INCOME UNDER VARIOUS HEADS BY MAKING THE FOLLOWING DISALLOWANCE : (I) IN COME FROM HOUSE PROPERTY, AFTER DEDUCTING THE EXPENSES AND DISALLOWING THE DEPRECIATION OF RS. 25,30,432/ - OUT OF TOTAL INCOME FROM HOUSE PROPERTY OF RS. 1,77,53,280/ - . (II) D ISALLOWED RS. 60,542/ - AS PRIOR PERIOD EXPENDITURE. (III) INTEREST EXPENDITURE OF RS. 1,58,470/ - @ 1% OF TOTAL EXEM PT INCOME OF RS. 1,58,46,982/ - U/S.14A. (IV) CAPITAL GAIN OF RS. 73,99,578/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN (LTCG). 3. THEREAFTER, THE CIT BY EXERCISING THE POWER U/S 263 OF THE ACT , REVISE /REOPEN THE ASSESSMENT ORDER PASSED BY THE AO/ACIT DATED 28.12.2007 BY DECLARING IT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE CIT WHILE REVISING CONCLUDED THAT AO IN ITS ORDER HAD COMPUTED LONG TERM PROFIT FROM SALE OF SHARE/INVESTMENT THROUGH MIXED ME THOD OF TAKING THE COST OF ACQUISITION AS ORIGINAL COST AND IN SOME OTHER CASES ON THE BASIS OF INDEXED COST DEPENDING UPON THE SITUATION WHICH IS SUITABLE TO THE ASSESSEE. THE AO HAS COMPUTED THE LTCG BY ADOPTING ACTUAL COST OF ACQUISITION ON WHICH RATE A PPLICABLE WAS 10% AND RE - COMPUTED THE LTCG WITHOUT INDEXATION AT RS. 42,38,37,098/ - THOUGH THE ASSESSEE CLAIMED THROUGH INDEXATION AMOUNTING TO RS. 2,32,73,457/ - , HOWEVER, THE AO INCREASED THE LTCG BY AN AMOUNT OF RS. 73,55,578/ - AND THUS WITHOUT INDEXATIO N THE LTCG WAS COMPUTED BY AN AMOUNT OF RS. 1,58,73,879/ - ON WHICH TAX PAYABLE IS RS. 15,87,387/ - AND AS SUCH THE ASSESSMENT MADE BY AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN RESPECT OF DISALLOWANCE U/S 14A, THE CIT OBSERVED THAT ON EX EMPT ED INCOME OF RS. 1 ,58, 46,982 / - THE AO DISALLOWED ONLY 1% OF THE EXEMPT INCOME WHICH IS NOT PROPER METHOD OF DISALLOWANCE. THE ASSESSEE - COMPANY HAS MADE INVESTMENT IN STOCK IN SHAR E AT RS. 127,58,04,731/ - AND IN THE INCOME FROM WHICH IS EXEMPTED, THEREF ORE, THE DISALLOWANCE MADE BY AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN RESPECT OF DISALLOWANCE OF OTHER EXPENSES ON INCOME FROM BUSINESS THE CIT CONCLUDED THAT THE AO TREATED COMPENSATION RECEIVED BY ASSESSEE AS INCOME UNDER T HE HEAD HOUSE PROPERTY AND ALLOWED 30% DEDUCTION AT RS. 92,38,831/ - ON THE BASIS OF DETAILED SUBMITTED BY ASSESSEE. THE TOTAL EXPENDITURE INCURRED BY ASSESSEE AS 4 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. DEBITED IN P&L A/C IS RS. 2,50,48,679/ - AND AO HAD NOT MADE ANY EFFORT TO ACTUALLY FIND OUT THE EXPENSES RELATED TO THE BUSINESS CENTRE AND SUMMARILY ACCEPTED THE CLAIM OF ASSESSEE AND TH US THE ORDER OF AO IS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF REVENUE. IN THE ORDER OF CIT FURTHER CONCLUDED THAT ASSESSEE HAS SHOWN LOAN TO M/S PARLE AGRO PVT. LTD. AT RS. 233199294/ - AGAINST THE OPENING BALANCE OF RS. 121587500/ - AND THERE IS AN INCREASE OF RS. 111611794/ - SIMILARLY LOAN TO M/S PARLE SALES SERVICES LTD. HAS BEEN SHOWN TO THE EXTENT OF RS. 75 , 17 , 000/ - , AND THE AO HAS NOT EXAMINED THE SHAREH OLDING PATTERN OF THESE TWO COMPANIES FROM THE ANGLE OF DEEMED DIVIDEND TO THE ASSESSEE - COMPANY, THEREFORE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE , AND FINALLY THE AO ACCEPTED STCG SHOWN BY ASSESSEE AT RS. 36,33,874/ - WITHOUT MAK ING ANY PROPER ENQUIRY AND APPLICATION OF MIND AND THE INCOME WAS ASSESSABLE UNDER THE HEAD BUSINESS INCOME AND THUS THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV E NUE. THE SHOW - CAUSE NOTICE DATED 23.10.2009 , WITH THE REASONS OF RE - OPENIN G/REVISING THE ASSESSMENT WAS SERVED UPON THE ASSESSEE. 5. AFTER THE ABOVE STATED OBSERVATION, THE CIT REVISED THE ORDER OF AO AND MODIFIED FINDING OF AO TO THE EXTENT THAT LTCG ARE ASSESSABLE AT RS. 43 , 88 , 94 , 291/ - COMPUTED WITHOUT INDEXATION AS AGAINST TH E ASSESSED FIGURE OF RS. 42 , 38 , 37 , 098/ - AND DIRECTED THE AO TO RE - COMPUTE THE TAX @ 10%. THE CIT DISALLOWED RS. 3,07,600/ - ON ACCOUNT OF DEPRECIATION, RS. 17,17,462/ - ON ACCOUNT OF EXPENDITURE ON AMALGAMATION/DEMERGER, RS. 7,48,558/ - ON ACCOU NT OF EMPLOYE ES COST INCURRED FROM BUSINESS SERVICE CENTRE, RS. 1,80,745/ - ON ACCOUNT OF LEGAL EXPENSE S, RS. 3,36,882/ - ON ACCOUNT OF COMMON EXPENSES FOR BUSINESS SERVICE CENTRE, RS. 32,91,128/ - U/S 24 OF THE ACT AND RS. 36,33,874/ - BY TREATING BUSINESS INCOME INSTEAD OF STCG. HOWEVER, IN RESPECT OF DISALLOWANCE U/S 14A R.W. RULE 8D THE PROCEEDING WAS DROPPED, AGAINST WHICH THE PRESENT APPEAL IS FILED BEFORE US. 6. WE HAVE HEARD AR OF THE ASSESSEE AND DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 7. FIRST GROUND FOR OUR CONSIDERATION IS IF THE CIT WHILE EXERCISING THE POWER U/S 263, ERRED IN TREATING THE ASSESSMENT ORDER PASSED BY AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . 8. AR OF THE ASSESSEE HAS ARGUED THAT GROUND NO.1 RAISE D IN THE PRESENT APPEAL IS IN RESPECT OF TREATING THE ORDER PASSED BY AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, GROUND NO. 2 TO 9 ARE IN RESPECT OF VARIOUS ADDITION MADE BY THE CIT WHILE EXERCISING ITS 5 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. POWER U/S. 263 AND GR OUND NO.10 IS G ENERAL IN NATURE. SINCE THE RESULT OF THIS GROUND WOULD BE ULTIMATE RESULT OF OTHER GROUNDS RAISED IN THE PRESENT APPEAL, SO INSTEAD OF GIVING OUR FINDING ON THIS ISSUE AT BEGINNING, WE SHALL GIVE OUR FINDING AFTER DISCUSSING THE OTHER GROUND RAISED IN THE PRESENT APPEAL. 9. SECOND GROUND FOR OUR CONSIDERATION IS IF THE CIT ERRED IN NOT ACCEPTING THE LTCG BY EXERCISING SCRIPT - WISE INDEXATION AND WITHOUT INDEXATION WHICH EVER IS BENEFICIAL TO THE APPEAL. THE AO WHILE DEALING WITH THE ISSUE HAS OBSERVED THAT LTCG WITH INDEXATION AMOUNTING TO RS. 23,95,132/ - SET OFF AGAINST THE LTCG WITHOUT INDEXATION IS NOT ALLOWABLE AND ACCORDINGLY THE LTCG WITHOUT INDEXATION WILL INCREASE BY RS. 23,95,132/ - AND ALLOWED THE ASSESSEE, THE STCG AGAINST STCL WITH INDEXATION. TH E ASSESSEE FURTHER HAS NOT TAKEN LTCG WITHOUT INDEXATION AMOUNTING TO RS. 50,04,446/ - IN RESPECT OF SALE OF PRUDENTIAL ICICI MUTUAL FUND, MIP ON THE GROUND THAT LTCG WITH INDEXATION IN THIS CASE IS LOSS AGAINST TREATMENT OF ASSESSEE WAS NOT ALLOWED IN ACCO RDANCE WITH PROVISION OF SECTION 112 AND LTCG WAS TOTALLY WORKS OUT TO RS. 50,04,446/ - + 23,95,132/ - = 73,99,578/ - . THE CIT WHILE DEALING WITH THIS GROUND HAS CONCLUDED THAT IN COMPUTING THE CAPITAL GAIN FROM SALES OF EQUITY SHARE AND MUTUAL FUND, THE ASSE SSEE HIMSELF FOLLOWED THE MINIMUM OF TAX PAYABLE EITHER ON ACCOUNT OF COMPUTATION AFTER AVAILING THE BENEFIT OF INDEXATION OR WITHOUT INDEXATION AND WHILE MAKING THE FINAL COMPUTATION, THE ASSESSEE COMMITTED AN ERROR IN MAKING THE TOTAL PROPERLY AND AS PER THE DETAILS PLACED IN THE ASSESSMENT RECORD THE SALE PROCEED PERTAINING TO THE LONG TERM HOLDING IS RS. 17,79,4,01,498/ - . THE INDEX COST OF LONG TERM SALE IS RS. 91,60,68,679/ - AND LTCG AFTER CLAIMING THE BENEFIT OF INDEXATION COMES TO RS. 26,93,32,814/ - WHICH FIGURES TALLIES WITH THE WORKING MADE BY ASSESSEE AND RIGHTLY GAINS INDEXATION WAS CALCULATED TO RS. 42,25,28,155/ - AND TOTAL SALES ( - ) TOTAL COST AND AFTER EXCLUDING STCG OF RS. 36,33,874/ - THE BALANCE LTCG WITHOUT INDEXATION CALCULATED TO RS. 43,88 ,94,281/ - WHICH WAS CALCULATED BY ASSESSEE AT RS. 41,64,37,520/ - AND CALCU LATED THE TAX WHICH WAS NOT FIGURED NOTICE BY AO AFTER MAKING ADJUSTMENT THE LTCG WITHOUT INDEXATION AT RS. 42,38,37,098/ - WHILE CORRECT FIGURE WAS CALCULATED AS RS. 43,88,94,281/ - A ND LTCG HAVING BEEN ASSESSED BY AO OF RS. 1,50,57,183/ - WAS HELD ERRONEOUS AND DIRECTED THE ASSESSEE TO MODIFY THE LTCG AT RS. 43,88,94,281/ - INSTEAD OF INDEXATION FIGURE OF RS. 42,38,37,098/ - . THE AR OF THE ASSESSEE HAS RELIED UPON THE JUDGMENT REPORTED V IDE (2008) 26 SOT 380 TITLED AS MOHANLAL N. SHAH VS. ACIT, (2006)151 TAXMAN 17 (DEL.) TITLE AS DEVINDER PRAKASH KALRA VS. ACIT (2010) 190 TAXMAN 330 (BOM) TITLED AS CIT VS. ANUJ A. SHAH AND (2012) 19 TAXMAN N .COM 359(MUM) TITLED AS DCIT VS. SAVLA MOTOR AGE NCIES (P.) LTD. , IN 6 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. MOHANLAL N. SHAH VS. ACIT THE CO - ORDINATE BENCH OF ITAT, MUMBAI WHILE RELYING THE JUDGMENT OF DEVINDER PRAKASH KALRA HAS HELD THAT SECTION 112 IS NOT ONLY A BENEFICIAL PROVISION BUT IS ALSO MANDATORY AND IF SEVERAL TRANSACTION HAVE TA KEN PLACE BY WAY OF SALE OF SHARE, THE ASSESSEE CAN AVAIL THE BENEFIT OF INDEXATION, IN A FEW TRANSACTION AND AVAIL 10% TAX RATE IN THE REMAINING TRANSACTION . FURTHER, THE DCIT VS. SAVLA MOTOR AGENCIES (P.) LTD. THE CO - ORDINATE BENCH OF MUMBAI TRIBUNAL HA S HELD THAT LTCG SHOULD BE WORKED OUT AS TRANSACTION - WISE AND TAX SHOULD BE CHARGED AT 10 % 20% (WITHOUT INDEXATION/WITH INDEXATION) WHICHEVER IS BENEFICIAL TO THE ASSESSEE/AT THE OPTION OF THE ASSESSEE. 10. WE HAVE CONSIDERED THE ORDER OF AUTHORITIES BEL OW AND FIND THAT AO WHILE MAKING THE ASSESSMENT HAS COMPUTED THE LTCG WITHOUT INDEXATION. WE HAVE CONSIDERED VARIOUS CITATIONS SUBMITTED BY AR OF THE ASSESSEE WHEREIN THE DCIT VS. SAVLA MOTOR AGENCIES (P.) LTD. REPORTED VIDE (2012) 19 TAXMANN.COM 359 (MUM) IN ITA NO. 3069/M/2010 CO - ORDINATE BENCH OF THIS TRIBUNAL HAS HELD THAT LTCG SHOULD BE WORKED OUT TRANSACTION WISE AND TAX SHOULD BE CHARGED AT 10% OR 20% (WITHOUT INDEXATION OR WITH INDEXATION) RESPECTIVELY WHICHEVER IS BENEFICIAL TO THE ASSESSEE AFTER C ONSIDERING THE JUDGMENT OF MOHANLAL N. SHAH WHICH HAS ALSO RELIED UPON BY THE ASSESSEE. HENCE, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY ORDER PASSED BY AO WHICH WAS CONSIDERED AS ERRONEOUS OR PREJUDICIAL TO THE INT EREST OF REVENUE BY CIT. 11. HENCE, THI S GROUND IS ALLOWED IN FAVOUR OF ASSESSEE. 12. THIRD GROUND FOR OUR CONSIDERATION IS DISALLOWANCE OF DEPRECIATION OF RS. 3,07,600/ - . THE CIT(A ) WHILE REVISING THE ASSESSMENT ORDER CONCLUDED THAT DEPRECIATION WAS ACTUALLY DISALLOWED IS RS. 25,30,432/ - AN D NOT RS. 28,38,032/ - AND CALCULATED A DIFFERENCE OF RS. 3,07,600/ - . AR OF THE ASSESSEE HAS ARGUED THAT CIT WHILE REVISING ASSESSMENT MISUNDER STOOD THE CALCULATION SUBMITTED BY THE ASSESSEE, THE AR OF THE ASSESSEE HAS DRAWN OUR ATTENTION AT PAGE NO. 28 & 2 9 OF THE PAPER BOOK . HE SUBMITTED THAT THE AO IN HIS ORDER COMPUTED THE INCOME TAKING STARTING FIGURE OF RS. 1,77,53,280/ - AND ADDED A SUM OF RS. 25,30,432/ - ON ACCOUNT OF DEPRECIATION. THE CONTENTION OF AR OF THE ASSESSEE IS THAT PAGE 28 & 29 OF THE PB I NDICATES CLEARLY THAT THE SUM OF RS. 28,58,032/ - IS ADDED TO THE NET PROFIT OF RS. 35.40 CRORE (ROUNDING OFF) BEFORE REDUCING REVISED DEPRECIATION RS. 41,48,246/ - . AS A RESULT, THERE IS NO ERRONEOUS IN THE ORDER OF AO. 13. WE HAVE HEARD B OTH THE PARTIES ON THIS IS S UE, PERUSED THE RELEVANT PAGE NO. 28 & 29 OF THE PB AND PARA 7 OF ASSESSMENT ORDER IN PARTICULAR AND FIND THAT CIT IGNORED THE RELEVANT POINT 7 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. IN THE COMPUTATION BEFORE COMING TO THE PREMATURE CALCULATION THAT THE ORDER OF AO ISER RONEOUS, THUS THIS GROUND IS ALLOWED IN FAVOUR OF ASSESSEE. 14. FOURTH GROUND FOR OUR CONSIDERATION IS THE DISALLOWANCE MADE BY CIT OF RS. 17,17,462/ - ON ACCOUNT OF AMALGAMATION/DEMERGER CLAIMED U/S 35DD, THE CIT WHILE MAKING THE ADDITION HAS O BSERVED THAT ASSESSEE CLAIMED AMALGAMATION/DEMERGER EXPENSES OF RS. 37,61,835/ - AND THE SAME WAS NOT CONSIDERED TO BE CORRECT AS EXPENSES OF RS. 17,17,462/ - HAS BEEN CLAIMED BACK OUT OF DISALLOWANCE, HENCE THERE WAS A DIFFERENCE OF SIMILAR AMOUNT WHICH WAS DISALLOWED BY THE CIT . THE AR OF THE ASSESSEE HAS DRAWN OUR ATTENTION THE PAGE NO. 28 OF PAPER BOOK WHICH IS P&L ACCOUNT OF THE ASSESSEE WHEREIN AMALGAMATION/DEMERGER CHAR GES OF RS. 37,61,835/ - IS SHOWN. THE CIT HAS NOT GIVEN ANY REASON AS TO HOW THE SAME IS NOT FOUND TO BE CORRECT OR IN WHICH MANNER THE EXPENSES OF RS. 17,17,462/ - HAS BEEN CLAIMED BACK, HENCE, WE DO NOT FIND THAT ORDER OF AO WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. 15 . FIFTH TO EIGHTH GROUND S FOR OUR CONSIDERATION ARE TH E ADDITION S OF EMPLOYEE S COST OF RS. 7,48,459/ - , LEGAL AND PROFESSI ONAL EXPENSES OF RS. 1,80,745/ - , AND FURTHER EXPENSES OF BUSINESS SERVICE CENTRE RS. 3,36,862/ - , DISALLOWANCE ALLEGEDLY U/S. 24 PERTAINING TO BUSINESS SERVICE CENT RE EXPENSES OF RS. 32,91,1 28/ - . 16. WE HAVE NOTICED THAT ALL THESE ADDITION WERE MADE BY CIT EITHER ON THE BASIS OF MERE ESTIMATION OR BY DISALLOWING 50% OF THE DISALLOWANCE CLAIMED WHICH IS BASED ON CONJECTURE AND SURMISES AND THE SAME ARE NOT SUSTAINABLE IN THE EYES OF LAW AND A RE LIABLE TO THE DELETED, RESULTANTLY WE DO NOT FIND THAT ORDER OF AO WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. 17. NINTH GROUND FOR OUR CONSIDERATION IS TREATING STCG OF RS. 36,33,874/ - AS A BUSINESS INCOME BY CIT. AR OF THE ASSESSEE HAS DR AWN OUR ATTENTION THAT ASSESSEE WAS ALLOWED STCG IN RESPECT OF AY - 2002 - 03, AY - 2003 - 04 & AY - 2004 - 05, COPIES OF ASSESSMENT ORDER IN RESPECT OF ALL AYS HAD BEEN PLACED ON RECORD AND WE HAVE NOTICED THAT THE ASSESSEE WAS CONSISTENTLY ALLOWED STCG IN ALL THREE CONSECUTIVE ASSESSMENTS YEARS , HENCE, KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY THE ASSESSEE IS ENTITLED FOR SIMILAR RELIEF IN THE YEAR UNDER CONSIDERATION, HENCE THIS GROUND OF APPEAL IS ALSO ALLOWED IN FAVOUR OF THE ASSESSEE. RESULTANTLY WE DO NOT FIN D THAT ORDER OF AO WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. 8 ITA NO. 4248 /MUM/2010 PARLE PET PVT. LTD. 18. NOW LET US, CONSIDER THE GROUND NO.1 IF THE ORDER PASSED BY AO IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. WE HAVE ALREADY GIVEN OUR OBSERVATION IN GROUND NO.2 TO 9 RAISED IN THE PRESENT APPEAL AND THE RESULT OF ALL THE GROUND ARE IN FAVOUR OF ASSESSEE, HENCE, THE GROUND N O.1 RAISED IN THE PRESENT APPEAL IS ALSO ALLOWED IN FAVOUR OF THE ASSESSEE AND WE HOLD THAT CIT ERRED IN HOLDING THE ORDER OF AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE LIABLE TO BE QUASHED. 19. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF FEBR UARY, 2016 . - SD - - SD - ( D.KARUNAKARA RAO ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17 .02 .2016 SHARWAN P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.