Kuwer Industries Ltd., V. DCIT, Circle-5(1),

ITA 428/DEL/2005

• Counselvise Citation: 42820114 RSA 2005
• Duration Of Justice: 6 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 31-01-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S NEGI SENIOR
• Keywords: Business income; Depreciation; Business expenditure; Additional evidence; Capital receipt
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.428/DEL./2005 (ASSESSMENT YEAR : 2001-02) M/S. KUWER INDUSTRIES LTD., VS. DCIT, CIRCLE 5 ( 1), A 71 72, SECTOR 58, NEW DELHI. NOIDA. (PAN : AAACK1887E) ITA NO.1031/DEL./2005 (ASSESSMENT YEAR : 2001-02) DCIT, CIRCLE 5 (1), VS. M/S. KUWER INDUSTRIES LT D., NEW DELHI. A 71 72, SECTOR 58, NOIDA. (PAN : AAACK1887E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAMOD KAPUR, CA REVENUE BY : SHRI R.S. NEGI, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE CROSS APPEALS ARISE OUT OF THE ORDER OF THE CIT (APPEALS)- VIII, NEW DELHI DATED 07.12.2004. THE GROUNDS IN A SSESSEES APPEAL READ AS UNDER :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED BOTH ON FACTS AND IN LAW TO UPHOLD AND CO NFIRM THE ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 2 ADDITION OF RS.2,38,120/- MADE BY THE LEARNED DEPUT Y COMMISSIONER OF INCOME TAX ON ACCOUNT OF DISALLOWAN CE OUT OF JOB CHARGES/EXPENSES PAID TO M/S ELLORA MECHANICAL PRODUCTS PVT. LTD. BY THE ASSESSEE COMPANY. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH ON FACTS AND IN LAW TO UPHOLD AND CO NFIRM THE ADDITION OF RS.2,06,980/- MADE BY THE LEARNED DCIT ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF THE D IRECTOR INCURRED BY THE ASSESSEE COMPANY. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH ON FACTS AND IN LAW TO UPHOLD AND CO NFIRM THE ADDITION OF RS.1,07,970/- MADE OUT OF THE ELECTRICI TY EXPENSES CLAIMED BY THE ASSESSEE COMPANY. 4. THAT THE APPELLANT CRAVES TO LEAVE, ADD, DELETE OR MODIFY ANY GROUNDS OF APPEAL AT THAT TIME OF HEARING. THE GROUNDS OF APPEAL IN REVENUES APPEAL READ AS U NDER :- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.1080000/- PAID TO THE DIRECTORS AS R EMUNERATION IN VIOLATION OF SECTION 74(1)(G) OR THE COMPANIES A CT, WITHOUT APPRECIATING :- I) THAT THE ADDITIONAL EVIDENCE CANNOT BE ADMITTED IN VIOLATION OF RULE 46A WHEN THE ASSESSEE WAS AFFORDED OPPORTUNITY BY THE AO; II) THAT THE ADDITIONAL EVIDENCE WHICH IS POST DATE D TO THE ASSESSMENT ORDER, CANNOT BE CONSIDERED; III) THAT THE ADDITIONAL EVIDENCE IS DATED 6.2.2004 WHILE THE ASSESSMENT ORDER WAS PASSED ON 30.1.2004 AND NO REASONABLE EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE OR THE LD. CIT (A) AS TO WHY SUCH AN EVIDENCE WAS NOT FILED FROM THE DATE OF AUDIT ON 1.9.2001 TO 30.1.2004 WHEN THE ASSESSMENT WAS FRAMED; ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 3 IV) THAT ANY PAYMENT MADE AND CLAIMED AS EXPENDITUR E CANNOT BE LEGALLY ALLOWABLE EXPENDITURE IF IT VIOLATES ANY ACT OF THE LAND. 2. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS.1002699/- MADE ON ACCOUNT OF INSURAN CE CLAIM RECEIVED TOWARDS CUSTOM DUTY IN RESPECT OF IMPORTED PLANT AND MACHINERY DAMAGED DURING TRANSIT, WITHOUT APPRECIAT ING :- I) THAT THE ADDITIONAL EVIDENCE CANNOT BE ADMITTED IN VIOLATION OF RULE 46A WHEN THE ASSESSEE WAS AFFORDED OPPORTUNITY BY THE AO; II) THAT THE ADDITIONAL EVIDENCE WHICH IS POST DATE D TO THE ASSESSMENT ORDER, CANNOT BE CONSIDERED; III) THAT THE ADDITIONAL EVIDENCE IS DATED 15.3.200 4 WHILE THE ASSESSMENT ORDER WAS PASSED ON 30.1.2004 AND NO REASONABLE EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE OR THE LD. CIT (A) AS TO WHY SUCH AN EVIDENCE WAS NOT FILED FROM THE DATE OF AUDIT ON 1.9.2001 TO 30.1.2004 WHEN THE ASSESSMENT WAS FRAMED; IV) THAT ANY CLAIM RECEIVED IN THE COURSE OF BUSINE SS IS A BUSINESS RECEIPT SPECIALLY WHEN THE ASSESSEE SUBMITTED AT THE TIME OF ASSESSMENT THAT THE CLAIM RELATED TO PAYMENT OF CUSTOM DUTY AND THAT DEPRECIATION WAS CLAIMED ON THE SAID MACHINERY. 3. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS.446795/- MADE FOR LOW RATES CHARGED FROM SISTER CONCERN M/S. ELLORA MECHANICAL PRODUCTS PVT. LTD. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND OR DELETE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING . ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 4 2. THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF METALISED AND EMBOSSED POLYESTER. THE RETURN OF INCOME WAS FILED ON 31.10.2001. 3. IN THE FIRST GROUND OF ASSESSEES APPEAL, THE IS SUE INVOLVED IS THE CONFIRMATION OF ADDITION OF RS.2,38,120/- OUT OF TH E JOB CHARGES/EXPENSES PAID TO SISTER CONCERN, M/S. ELLORA MECHANICAL PRODUCTS PVT. LTD. THE TOTAL JOB CHARGES PAID TO THIS CONCERN WAS OF RS.1,03,93,102/ - THE ASSESSING OFFICER DISALLOWED 10% OF THE SAME UNDER SECTION 40(A)(2)(B ) OF INCOME-TAX ACT. THE ASSESSING OFFICER HAS FAILED TO JUSTIFY THE REA SONABLENESS OF THE RATES PAID TO THE SISTER CONCERN. THE SISTER CONCERN WAS CARR YING OUT THE PROCESS OF COATING EXCLUSIVELY FOR THE ASSESSEE. THE ASSESSIN G OFFICER ALSO NOTICED THAT THE RATES WERE INCREASED DURING THE YEAR FROM RS.50 TO RS.55 PER KG. AND NO JUSTIFICATION WAS SUBMITTED. THE CIT (A) GRANTED T HE PART RELIEF BY HOLDING AS UNDER :- 4.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A R AND HAVE PERUSED THE MATERIAL ON RECORD. THE MERE FACT THAT NO DISALLOWANCE WAS MADE IN THE EARLIER YEAR DOES NOT MEAN THAT NO ADDITION COULD BE MADE IN THE CURRENT YEAR BECAUSE THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY TO THE INCOME TAX PR OCEEDINGS. HOWEVER, AT THE SAME TIME THE ESTIMATE OF DISALLOWA NCE OF JOB CHARGES MADE BY THE AO @ 10% OF RS.1,03,93,102/- IS NOT IN ORDER. IN THE FIRST PLACE, THE JOB CHARGES @ RS. 55 /- PER KG WERE NOT PAID THROUGHOUT THE YEAR. IN FACT, FROM THE SAM PLE COPIES OF THE JOB CHARGES BILLS PLACED ON PAGE NO. 143 TO 146 OF THE PAPER BOOK, IT IS NOTICED THAT IN THE MONTH OF JUNE, THE JOB CHARGES WERE @ RS.50/- PER KG WHEREAS FROM OCTOBER ONWARDS, THESE WERE @ RS. 55/- PER KG. THE AR HAS GIVEN THE FIGURE OF JOB CHARGES @ RS. 55 AT RS.65,48,307/-. THEREFORE, IF A T ALL ANY ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 5 DISALLOWANCE ON ACCOUNT OF EXCESS JOB CHARGES TO EL LORA WAS CALLED FOR, IT SHOULD HAVE BEEN OUT OF RS. 65,48,30 7/-. FURTHER, THE JOB CHARGES HAD INCREASED BY 10% FROM RS. 50 TO RS. 55. HOWEVER, THE AO HAS COMPUTED THE DISALLOWANCE BY AP PLYING 10% ON THE GROSS JOB CHARGES PAID. IN OTHER WORDS, HE APPLIED 10% ON RS.55/- WHICH MEANS THAT HE HAS ALLOWED JOB CHARGES @ RS.49.50 WHICH IS EVEN LESS THAN RS. 50/- PER KG. F URTHER, IT IS FOUND THAT THE GP RATE OF ELLORA HAD ALMOST REMAINE D THE SAME VIS-A-VIS LAST YEAR WHEREAS THE GP RATE OF THE ASSE SSEE CO. HAD GONE UP VIS-A-VIS LAST YEAR. THE EXPENSES IN THE CA SE OF ELLORA UNDER THE VARIOUS HEADS LIKE CONSUMABLES, ELECTRICI TY AND POWER HAD INCREASED VIS-A-VIS LAST YEAR. THEREFORE, TO SO ME EXTENT THE INCREASE IN THE RATE OF JOB CHARGES PAID TO ELLORA WAS JUSTIFIED. IN THE TOTALITY OF THE CIRCUMSTANCES, I AM OF THE CONS IDERED VIEW THAT IT WOULD BE FAIR AND REASONABLE IF THE JOB CHA RGES PAID TO ELLORA @ RS. 55/- ARE CONSIDERED EXCESSIVE TO THE E XTENT OF 4% OF RS. 50/-. THUS THE DISALLOWANCE TO THE EXTENT OF RS. 2/- PER KG OF JOB CHARGES OUT OF THE JOB CHARGES PAID @ RS. 55 /- PER KG IS UPHELD. THE DISALLOWANCE IN THIS REGARD IS COMPUTED AS UNDER: TOTAL JOB CHARGES PAID @ RS. 55/- PER KG X 2 = 65,48,307X2 55 55 = 2,38,120/- THUS THE DISALLOWANCE OF RS 2,38,120/- IS UPHELD. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE LEARNED AR SUBMITTED THAT THE GROSS PROFIT RATE OF THE ASSESSEE WAS BETT ER IN COMPARISON TO THE PRECEDING YEAR. THE RATE WAS INCREASED IN THE MIDD LE OF THE YEAR RATHER THAN THE BEGINNING OF THE YEAR. FURTHER, THE PERCENTAGE OF CONSUMABLES WAS INCREASED FROM 1.54% IN THE EARLIER YEAR TO 2.04% A ND THE POWER CHARGES WAS ALSO INCREASED FROM 2.44% TO 3.48%. FURTHER, HE AL SO PLEADED THAT GROSS PROFIT RATE OF ELLORA MECHANICAL PRODUCTS PVT. LTD. (SISTER CONCERN) IS ALSO CONSTANT. THEREFORE, IT CAN BE CLEARLY SEEN THAT N O EXCESS PAYMENT IS MADE TO ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 6 THE SISTER CONCERN AND HE PLEADED TO DELETE THE ADD ITION. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW AND PLEADED THAT THE RATE WAS ENHANCED DURING THE YEAR FROM RS.50 TO RS.55 PER KG. WITHOUT ANY BASIS. HE ALSO PLEADED THAT THE CIT (A) HAS RI GHTLY UPHELD THE ADDITION OF RS.2,38,120/-. 5. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THERE WAS AN INCREASE IN THE RATE OF JOB CHARGES PAID TO THE SIS TER CONCERN. THE ASSESSEE HAS FAILED TO JUSTIFY THE ENHANCEMENT. FURTHER, TH E CIT (A) HAS CONSIDERED THE PLEADINGS OF THE ASSESSEE AND ALSO CONSIDERED THE E NHANCEMENT IN THE PERCENTAGE OF THE EXPENSES UNDER THE HEAD CONSUMABL ES AND ELECTRICITY AND POWER IN COMPARISON TO THE EARLIER YEARS. THEREFOR E, IN OUR CONSIDERED VIEW, THE CIT (A) WAS JUSTIFIED IN SUSTAINING THE DISALLO WANCE UP TO RS.2,38,120/-. IN VIEW OF THESE FACTS, WE FIND NO FAULT IN THE ORD ER OF THE CIT (A) AND DISMISS THIS GROUND OF ASSESSEES APPEAL. 6. IN GROUND NO.2 OF THE ASSESSEES APPEAL, THE ISS UE INVOLVED IS SUSTAINING THE ADDITION OF RS.2,06,980/- ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. DURING THE YEAR, ONE OF THE DIRECTORS, SHRI CHIRAG AGGARWAL TRAVELLED TO TAIWAN. BEFORE THE ASSESSING OFFICER, NO SUPPORTIN G EVIDENCE WAS FILED INCLUDING THE AIR TICKETS OR ANY OTHER DETAILS IN R ESPECT OF THE EXPENSES DEBITED. THE LEARNED AR SUBMITTED THAT THEY ARE NOT ABLE TO FILE ANY FURTHER DETAILS IN ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 7 THIS REGARD ALTHOUGH THE VISIT WAS FOR THE BUSINESS PURPOSE OF THE ASSESSEE FOR GETTING THE MASTERS DEVELOPMENT FOR EMBOSSING MACHI NES. 7. LEARNED DR SUBMITTED THAT THE ASSESSEE HAS FAIL ED TO FILE ANY EVIDENCE WHATSOEVER WITH REGARD TO THE ACTUAL FOREIGN VISIT UNDERTAKEN AND THE BUSINESS TRANSACTED, PARTIES CONTRACTED ETC. DURING THE TRAV EL. THE LEARNED DR ALSO SUBMITTED THAT ASSESSEE FAILED TO FURNISH EVEN THE EXACT DATE OF TRAVEL OF SHRI CHIRAG AGGRWAL. IT WAS ONLY STATED THAT IT WAS IN SEPTEMBER, 2000. THE PASSPORT OF THE DIRECTOR WAS ALSO NOT PRODUCED TO V ERIFY THE CLAIM. THE ASSESSEE WAS COMPLETELY FAILED TO JUSTIFIED THAT TH E TRAVEL WAS FOR THE BUSINESS PURPOSES. MERE STATING THAT THE FOREIGN TRIP WAS F OR BUSINESS PURPOSES CANNOT BE ACCEPTED AT THE FACE OF IT. THUS, THE ASSESSEE IS FAILED TO DISCHARGE THE ONUS TO JUSTIFY THAT THE EXPENSES WERE INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 8. WE HAVE HEARD BOTH THE SIDES AND AFTER HEARING, WE FIND THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS FOR CLAIM ING FOREIGN TRAVEL EXPENSES. THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE FOREI GN TRAVEL MADE BY THE DIRECTOR WAS FOR WHOLLY AND EXCLUSIVELY FOR BUSINES S PURPOSES. THE ASSESSEE HAS ALSO FAILED TO SUBMIT ANY EVIDENCE WHICH JUSTIF Y OR PROVE THE FOREIGN TOUR WAS ACTUALLY MADE FOR THE BUSINESS OF THE ASSESSEE. SINCE THE ASSESSEE FAILED COMPLETELY TO DISCHARGE THE ONUS, WE FIND NO FAULT IN THE ORDER OF THE CIT (A). THE SAME IS UPHELD. THE GROUND OF ASSESSEES APPEA L IS DISMISSED. ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 8 9. THE GROUND NO.3 OF THE ASSESSEES APPEAL IS REGA RDING THE CONFIRMATION OF ADDITION OF RS.1,07,970/- MADE OUT OF THE ELECTR ICITY EXPENSES CLAIMED BY THE ASSESSEE. 10. LEARNED AR DID NOT PLEAD ON THIS GROUND AND HE SUBMITTED THAT THEY ARE NOT ABLE TO FILE ANY DETAILS IN THIS REGARD. ON TH E OTHER HAND, THE LEARNED DR SUBMITTED THAT THESE CHARGES WERE BELONGING TO THE ELECTRICITY METER INSTALLED AT THE RESIDENTIAL PREMISES OF THE DIRECTOR AT D-10 04, NEW FRIENDS COLONY WHICH HAS BEEN WRONGLY CLAIMED AS BUSINESS PURPOSES . THESE EXPENSES ARE PERSONAL EXPENSES OF THE DIRECTOR. MOREOVER, THE A SSESSING OFFICER HAS DISALLOWED ONLY 50% OF THE ELECTRICITY EXPENSES EVE N THOUGH METER INSTALLED AT THE RESIDENTIAL PREMISES OF THE DIRECTOR. 11. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE ASSESSEE HAS FAILED TO FILE ANY EXPLANATION IN RESPECT OF THE CLAIM OF THI S EXPENSE NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE CIT (A) AND EVEN F OR THAT MATTER, THE LEARNED AR HAS CONCEDED BEFORE US HIS INABILITY TO SUPPORT THE CLAIM. IN OUR CONSIDERED VIEW, THESE EXPENSES WERE PERSONAL IN NA TURE AND CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. IN VIEW OF THIS M ATTER, WE FIND NO FAULT IN THE ORDER OF THE CIT (A) AND WE DISMISS THIS GROUND OF ASSESSEES APPEAL. 12. GROUND NO.4 IS GENERAL IN NATURE AND DOES NOT R EQUIRE ANY ADJUDICATION. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 9 14. IN THE REVENUES APPEAL, GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.10,80,000/- PAID TO THE DIRECTORS AS REMUNER ATION. 15. THE LEARNED DR SUBMITTED THAT ADDITIONAL EVIDEN CE WAS ADMITTED IN VIOLATION OF RULE 46A WHEN THE ASSESSING OFFICER HA S AFFORDED ADEQUATE OPPORTUNITY TO THE ASSESSEE. HE ALSO SUBMITTED THA T THE ADDITIONAL EVIDENCE ACCEPTED BY THE CIT (A) FOR GRANTING THE RELIEF WAS POST ASSESSMENT ORDER EVIDENCE, HENCE THE SAME CANNOT BE ENTERTAINED. HE ALSO PLEADED THAT THE ASSESSMENT ORDER WAS PASSED ON 30.01.2004 AND THE A DDITIONAL EVIDENCE IS 06.02.2004. THE ASSESSEE HAS ALSO FAILED TO FILE R EASONABLE EXPLANATION WHY THE ASSESSEE FAILED TO FILE THE EVIDENCE BEFORE THE ASSESSING OFFICER. FINALLY, LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER . 16. ON THE OTHER HAND, THE LEARNED AR RELIED ON THE ORDER OF CIT (A). 17. WE HAVE HEARD BOTH THE SIDES. THE CIT (A) HAS GRANTED THE RELIEF BY HOLDING AS UNDER :- 2.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A R AND HAVE PERUSED THE MATERIAL ON RECORD. THE ADDITIONAL EVIDENCE FILED BY THE AR WAS SENT TO THE AO FOR HIS OBJECTIO NS AS WELL AS HIS COMMENTS ON THE MERITS OF THE ADDITIONAL EVI DENCE. IN HIS REPORT DATED 01.09.2004, THE AO SUBMITTED THAT THE ASSESSEE WAS GIVEN VARIOUS OPPORTUNITIES ON 30.07.0 3, 09.09.03, 12.09.03, 18.09.03, 09.10.03, 28.10.03, 1 2.11.03, 25.11.03, 03.12.03, 16.12.03, 29.12.3 AND 20.01.04. SINCE INSPITE OF A NUMBER OF OPPORTUNITIES GIVEN TO THE A SSESSEE IT FAILED TO FILE THIS EVIDENCE BEFORE THE AO, IT WAS SUBMITTED THAT THE ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED. ON MERIT ALSO, IT WAS SUBMITTED THAT THE AUDITOR HAD REVISED THE C ERTIFICATE AND IT WAS NOT UNDERSTOOD AS TO WHAT MADE THE SAME AUDI TOR CHANGE HIS OPINION. I HAVE GONE THROUGH THE RELEVANT ASSES SMENT ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 10 FOLDER. IT IS NOTICED THAT THE ISSUE WAS RAISED BY THE AO FOR THE FIRST TIME VIDE ORDER SHEET ENTRY DATED 16.12.2003 (POINT NO.11). IN RESPONSE TO THIS QUERY, THE ASSESSEE F ILED ITS REPLY VIDE LETTER DATED 29.12.2003. THE RELEVANT PORTION OF THE ASSESSEE'S REPLY IS REPRODUCED AS UNDER : 'IT IS SUBMITTED THAT THIS PARTICULAR CLAUSE WAS I NSERTED PRIMARILY TO BRING ABOUT DISCIPLINE IN THE CORPORAT E SECTOR AND THE AUDITORS WERE ENJOINED WITH A DUTY TO REPORT ON THIS MATTER. BY VIRTUE OF SECTION 290 OF THE COMPANIES ACT THE A CTS DONE BY A PERSON OR A DIRECTOR SHALL BE VALID NOT WITHST ANDING THAT IT MAY AFTER WORDS BE DISCOVERED THAT HIS APPOINTMENT WAS INVALID BY REASON OF ANY DEFECT OR DISQUALIFICATION OR HAD TERMINATED BY VIRTUE OF ANY PROVISIONS CONTAINED IN THIS ACT OR IN THE ARTICLES. SIR, THESE DIRECTORS WERE APPOINTE D IN THE YEAR 1994-95 AND HAVE BEEN ASSOCIATED IN THE OPERATIONS OF THE COMPANY SINCE THEN AND ALSO A FACT THAT THEY WILL N OT GET ABSOLVED OF THEIR DUTIES AND RESPONSIBILITIES OR AN Y ACTION AGAINST THEM UNDER THE COMPANIES ACT, INCOME TAX AC T, EXCISE AND SALES TAX LAWS, LABOUR /FACTORY LAWS OR ANY OTH ER STATUTE GOVERNING OR APPLICABLE TO THE COMPANY, YOUR KIND H ONOUR WILL APPRECIATE THAT THE REMUNERATION PAID FOR THEIR SER VICES WHICH THEY HAVE RENDERED TO THE COMPANY DOES NOT CALL FOR ANY DISALLOWANCE MERELY BECAUSE OF DISQUALIFICATION AS REPORTED U/S 274(1)(G) OF THE COMPANIES ACT. MOREOVER SO FOR AS THE COMPANY IS CONCERNED THEIR ACTS ARE VALID AND BINDI NG ON THE COMPANY FOR ANY CAUSE OF ACTION BY A THIRD PARTY OR A GOVERNMENT AUTHORITY/ AGENCY, SO THE EXPENSES INCUR RED ON REMUNERATION PAID TO THE DIRECTORS WHO HAVE ACTUALL Y WORKED FOR AND RENDERED SERVICES TO THE COMPANY SHALL BE A N ALLOWABLE EXPENSE UNDER SECTION 37(1) OF THE INCOME TAX ACT. THIS IS AN EXPENDITURE NOT BEING IN THE NATURE OF CAPITAL EXPE NDITURE OR PERSONAL EXPENSES OF THE ASSESSEE COMPANY, LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE COMPANY AND SHALL BE ALLOW ED IN COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GAI NS OF BUSINESS OR PROFESSION. THE ONLY EXCEPTION IS OF AN EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW AND YOUR KIND HONOUR WIL L OBSERVED THAT THIS IS NOT HIT BY THIS EXCEPTION ALSO AND ACC ORDINGLY, YOU WILL BE KIND ENOUGH TO ALLOW THIS EXPENSE IN THE HA NDS OF THE COMPANY A GENUINE EXPENSE INCURRED FOR THE PURPOSE OF ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 11 CARRYING ON THE BUSINESS BY THE COMPANY. SHOULD YOU HOWEVER NEED ANY FURTHER INFORMATION OR DETAIL OR A JUSTIFI CATION IN THIS CONNECTION WE SHALL SUBMIT THE SAME AS MAY BE REQUI RED BY YOU.' THEREAFTER, ONLY ONE HEARING TOOK PLACE ON 20.01.0 4 AND ON THIS DATE ALSO THE ASSESSEE'S AR REITERATED HIS SUBMISSIONS MADE VIDE LETTER DATED 29.12.2003. ULTIMATELY, THE ASSESSMENT WAS COMPLETED ON 30.01.2004. THUS IT IS NOTICED THA T THE ASSESSEE WAS GIVEN ONLY TWO OPPORTUNITIES ON 29.12. 2003 AND 20.01.2004 ON THE ISSUE. THEREFORE, THE AO'S CONTEN TION THAT A NUMBER OF OPPORTUNITIES WERE GIVEN TO THE ASSESSEE IS NOT CORRECT. THEREFORE, IN THE INTEREST OF NATURAL JUST ICE I ADMIT THE ADDITIONAL EVIDENCE U/R 46A. THE CLARIFICATION ON T HE AUDIT REPORT GIVEN BY THE AUDITORS VIDE THEIR LETTER DATE D 06.02.2004 IS REPRODUCED AS UNDER: 'THIS HAS REFERENCE TO OUR AUDIT REPORT FOR THE FY 2000- 01 IN WHICH WE HAD REPORTED IN POINT N. 2(V) AS UND ER: ON THE BASIS OF RECORDS SHOWN TO US AND EXPLANATION GIVEN BY THE DIRECTORS AND TAKEN ON RECORD BY THE DIRECTORS, WE REPORT THAT THE DIRECTORS ARE DISQUALIFIED AS ON 31ST MARC H, 2001 FRO BEING APPOINTED AS A DIRECTOR IN TERMS OF CLAUSE (G ) OF SUB- SECTION (1) OF SECTION 274, OF THE COMPANIES ACT, 1 956. THIS WAS DONE ON THE INTERPRETATION THAT THE SECTION 274 (1)(G) REFERRED TO NON FILING OF ANNUAL RETURN S AND ACCOU NTS AFTER 01.04.1999 FOR ANY THREE CONSECUTIVE FINANCIAL YEAR S INCLUDING FINANCIAL YEARS PRIOR TO 01.04.1999. HOWEVER, AS PE R SECTION 274(1)(G) OF THE COMPANIES ACT, INSERTED BY THE COM PANIES (AMENDMENT) ACT, 2000 W.E.F. 13.12.2000. 'A PERSON SHALL NOT BE CAPABLE OF BEING APPOINTED D IRECTOR OF A COMPANY IF SUCH A PERSON IS ALREADY A DIRECTOR OF A PUBLIC COMPANY WHICH- (A) HAS NOT FILED THE ANNUAL ACCOUNTS AND ANNUAL RETURNS FOR ANY CONTINUOUS THREE FINANCIAL YEARS COMMENCING ON AND AFTER THE FIRST DAY OF APRIL, 1999. ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 12 EXPLANATION : NON FILING OF ANNUAL ACCOUNTS AS WELL AS ANNUAL RETURNS FOR ANY THREE CONTINUOUS FINANCIAL YEARS CO MMENCING FROM 01.04.1999. A BREAK IN THE CONSECUTIVENESS OR NON FILING FOR LESS THAN THREE FINANCIAL YEARS BEGINNING 01.04 .1999 WOULD NOT ATTRACT THE DISQUALIFICATION. IN LIGHT OF THE ABOVE EXPLANATIONS, SINCE M/S. KUWE R INDUSTRIES LTD. HAD NOT FILED THE ANNUAL RETURNS AND ACCOUNTS FOR THE FY 1999-00, 2000-01, THIS BEING ONLY TWO YEARS COMMENC ING AFTER 01.04.1999, THE DIRECTORS DO NOT ATTRACT DISQUALIFI CATION UNDER THIS SECTION. HENCE IN THE LIGHT OF THE ABOVE EXPLANATION AND LEG AL OPINION OUR QUALIFYING POINT NO. 2(V) IN OUR AUDIT REPORT F OR THE FY 2000-01 CAN BE CONSIDERED AS WITHDRAWN.' THUS IT IS NOTICED THAT THE AUDITORS HAD GIVEN DET AILED REASONS FOR REVISING THE QUALIFYING REMARK GIVEN BY THEM IN THEIR AUDIT REPORT. THUS IN VIEW OF THE CLARIFICATI ON GIVEN BY THE AUDITORS IT CAN NOT BE SAID THAT DURING THE YEAR TH E DIRECTORS WERE NOT DISQUALIFIED UNDER SECTION 274(1)(G) OF TH E COMPANIES ACT, 1956. WITHOUT PREJUDICE TO THIS IT IS NOT THE AO'S CASE THAT THE PAYMENT OF REMUNERATION TO THE D IRECTORS WAS NOT MADE. IT IS ALSO NOT HIS CASE THAT NO SERVI CES WERE RENDERED BY THE DIRECTORS. THE NATURE OF DUTIES OF EACH OF THE DIRECTORS WAS GIVEN BY THE ASSESSEE VIDE ITS LETTER DATED 12.09.2003 DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. FOR EXAMPLE, SH. J.B.AGGARWAL WAS SHOWN AS CHAIRMAN AND MANAGING DIRECTOR, SH.R.K.AGGARWAL WAS LOOKING AFTE R COMMERCIAL, ADMINISTRATION AND FINANCE FUNCTIONS. S H. VIKAS AGGARWAL WAS LOOKING AFTER PRODUCTION ACTIVITIES AN D SH. CHIRAG AGGARWAL WAS INCHARGE OF MARKETING AND EXPOR T ACTIVITIES. ALL THE DIRECTORS WERE INCOME TAX ASSES SEES AND THEIR GIR/ PAN WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, EVEN OTHERWISE THE REMUNERA TION PAID TO THEM FOR THE SERVICES RENDERED BY THEM WAS AN AL LOWABLE DEDUCTION UNDER SECTION 37(1) OF THE I.T. ACT. THER EFORE, CONSIDERING ALL THESE FACTS I AM OF THE CONSIDERED VIEW THAT THE AD WAS NOT JUSTIFIED IN DISALLOWING REMUNERATION OF RS.10,80,000/- PAID TO THE DIRECTORS. ACCORDINGLY, THE ADDITION IS DELETED. ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 13 AFTER HEARING BOTH THE SIDES AND ON CAREFUL PERUSAL OF THE MATERIAL ON RECORD, WE HOLD THAT GRANT OF RELIEF TO THE ASSESSEE BY CIT (A) IS JUSTIFIED. IN VIEW OF THIS, WE FIND NO FAULT IN THE ORDER OF THE CIT (A). ACCORDINGLY, WE DISMISS THIS GROUND OF REVENUES APPEAL. 18. IN THE GROUND NO.2 OF REVENUES APPEAL, THE ISS UE INVOLVED IS DELETING THE ADDITION OF RS.10,02,699/- MADE ON ACCOUNT OF I NSURANCE CLAIM RECEIVED TOWARDS CUSTOM DUTY IN RESPECT OF IMPORTED PLANT AN D MACHINERY DAMAGED DURING TRANSIT. LEARNED DR SUBMITTED THAT CIT (A) HAS ADMITTED ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A WHEN THE ASSESSEE WAS AFFORDED ADEQUATE OPPORTUNITY BY THE ASSESSING OFFICER. THE ADDITION AL EVIDENCE ADMITTED BY THE CIT (A) WAS POST ASSESSMENT ORDER. THE EVIDENC ES CANNOT BE CONSIDERED AS SAME IS DATED 15.03.2004 WHILE THE ASSESSMENT WA S PASSED ON 30.01.2004. HE ALSO PLEADED THAT THE ASSESSEE HAS FAILED TO GIV E ANY REASONABLE EXPLANATION BEFORE THE CIT (A) THAT WHY THESE EVIDE NCES WERE NOT FILED BEFORE THE ASSESSING OFFICER. 19. THE LEARNED AR RELIEF ON THE ORDER OF THE CIT ( A). 20. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ASSESSEE IMPORTED MACHINERY FROM ITALY. IT WAS IN TRANSIT FROM MUMBA I PORT TO NOIDA FACTORY. A SEPARATE INSURANCE COVER FOR THE PASSAGE FROM MUM BAI TO NOIDA FACTORY WAS TAKEN WITH AN INSURANCE COMPANY IN INDIA. TH E CIT (A) HAS GRANTED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 14 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A R AND HAVE PERUSED THE MATERIAL ON RECORD. THE ADDITIONAL EVID ENCE WAS CONFRONTED TO THE AO VIDE THIS OFFICE LETTER DATED 10.8.04. IN HIS REPORT DATED 01.09.2004 THE AO OBJECTED TO THE ADMI SSION OF THE ADDITIONAL EVIDENCE ON THE GROUND THAT THE ASSESSEE FAILED TO FILE THIS EVIDENCE INSPITE OF A NUMBER OF OPPORTUNITIES GIVEN TO IT AS MENTIONED IN PARA 2.1 ABOVE. FROM THE PERUSAL OF THE ASSESSME NT FOLDER, IT IS NOTICED THAT THE ISSUE WAS RAISED BY THE AO FOR THE FIRST TIME ONLY ON 29.12.2003 VIDE ORDER SHEET ENTRY DATED 29.12.2003. THEREAFTER, ONLY ONE HEARING TOOK PLACE ON 20.01.2004. ON THIS DAT E, THE ASSESSEE FILED THE DETAILS OF INSURANCE CLAIM RECEIVED FORM NATIONAL INSURANCE CO. LTD. AGAINST DAMAGE OF MACHINERY. THIS CLAIM WA S SHOWN TO HAVE BEEN RECEIVED FROM NATIONAL INSURANCE CO. LTD. VIDE CHEQUE NO. 441101 DATED 11.01.2001. IT WAS CLARIFIED THAT THIS AMOUNT WAS RECEIVED FROM THE INSURANCE CO. AGAINST THE CLAIM O F CUSTOM DUTY ON IMPORTED MACHINERY. THEREAFTER, NO FURTHER HEARING TOOK PLACE AND ULTIMATELY THE ASSESSMENT WAS COMPLETED ON 30,1.200 4. THEREFORE, I AM OF THE VIEW THAT THE ASSESSEE WAS NOT GIVEN SUFF ICIENT OPPORTUNITY TO FURNISH EVIDENCE ON THIS ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, TO BE FAIR AND REASONABLE I ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. THE CERT IFICATE ISSUED BY NATIONAL INSURANCE CO. LTD., MUMBAI READS AS UNDER: 'THIS IS TO CERTIFY THAT M/S. KUWER INDUSTRIES LTD ., NOIDA HAD OBTAINED A TRANSIT INSURANCE POLICY BEARING NO. 250800/21/94/4501754 COVERING TRANSIT RISK OF THEIR PLANT AND MACHINERY EX-MUMBAI TO NOIDA-DELHI. THE SAID CONSIG NMENT GOT DAMAGED DURING TRANSIT AND THE CLAIM IN RESPECT OF THE SAME AMOUNTING TO RS.10,02,699/- WAS SETTLED BY US ON 11 .01.2001 IN FAVOUR OF THE INSURED VIDE CLAIM NO. 01/94-95/45/02 776. THIS CERTIFICATE HAS BEEN ISSUED AT THE REQUEST OF M/S. KUWER INDUSTRIES LTD.' IN THIS CERTIFICATE IT HAS BEEN CLARIFIED THAT THE CO. HAD TAKEN TRANSIT INSURANCE POLICY COVERING THE TRANSIT RISK OF THEIR PLANT AND MACHINERY FROM MUMBAI TO NOIDA. IT HAS ALSO BEEN CL ARIFIED IN THE CERTIFICATE THAT THE CONSIGNMENT GOT DAMAGED DURING TRANSIT AND THE CLAIM IN THIS REGARD AMOUNTING TO RS.10,02,699/- WA S SETTLED ON 11.01.2001. I HAVE ALSO SEEN THE ASSESSMENT ORDER F OR THE AY 1999- 2000 IN WHICH THE INSURANCE CLAIM OF RS.50,24,620/- RECEIVED BY THE ASSESSEE CO. FROM THE FOREIGN INSURANCE CO. ON ACCO UNT OF DAMAGE TO THE PLANT AND MACHINERY WAS TREATED AS CAPITAL RECE IPT. I HAVE ALSO GONE THROUGH THE CASE LAWS CITED BY E ASSESSEE. IN VIEW OF THE EVIDENCE PLACED ON RECORD AND IN VIEW OF THE FACT T HAT THE INSURANCE ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 15 CLAIM WAS RECEIVED IN RESPECT TO DAMAGE TO PLANT AN D MACHINERY BEFORE IT WAS INSTALLED, THE SAME WAS A CAPITAL REC EIPT AND THE AO WAS NOT JUSTIFIED IN TREATING THE SAME AS INCOME FROM O THER SOURCES. ACCORDINGLY, THE ADDITION OF RS.10,02,699/- IS DELE TED. AFTER HEARING BOTH THE SIDES AND PERUSAL OF THE REC ORD, WE FIND THAT THE CIT (A) HAS GRANTED THE RELIEF ON THE BASIS OF ADDITION AL EVIDENCE WHICH WAS CONFRONTED TO THE ASSESSING OFFICER. THE QUERY WIT H REGARD TO INSURANCE CLAIM WAS MADE ON 29.12.2003AND THEREAFTER ONLY ONE HEARING TOOK PLACE ON 20.01.2004. ON THAT DATE, ASSESSEE HAS FIELD THE I NSURANCE CLAIM RECEIVED FROM NATIONAL INSURANCE CO. LTD. AGAINST THE DAMAGE S OF THE MACHINERY. THIS AMOUNT WAS RECEIVED AGAINST THE CUSTOM DUTY ON IMPO RTED MACHINERY. ASSESSMENT WAS COMPLETED ON 30.01.2004 WHICH SHOWS THAT ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY TO FURNISH EVIDENCE IN THIS REGARD. IN OUR CONSIDERED VIEW, THE CIT (A) HAS FAIRLY ADMITTED TH E ADDITIONAL EVIDENCE IN THE FORM OF CERTIFICATE ISSUED BY NATIONAL INSURANC E COMPANY LTD., MUMBAI. IN THE CERTIFICATE, THE INSURANCE COMPANY HAS CLARI FIED THAT ASSESSEE HAS TAKEN TRANSIT INSURANCE POLICY COVERING THE TRANSIT RISK OF PLANT AND MACHINERY IMPORTED AND TRANSFERRED FROM MUMBAI TO NOIDA BUT T HE CONSIGNMENT GOT DAMAGED DURING THE TRANSIT. THE CLAIM WAS SETTLED ONLY ON 11.02.2001. THE ASSESSEE HAS ALSO RECEIVED THE CLAIM OF ASSESSMENT IN ASSESSMENT YEAR 1999- 00 FROM THE FOREIGN INSURANCE COMPANY AND THE SAME WAS TREATED AS CAPITAL RECEIPT. THE INSURANCE CLAIM WAS RECEIVED IN RESPE CT TO THE DAMAGE TO PLANT ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 16 AND MACHINERY PRIOR TO THE INSTALMENT. THEREFORE, THE SAME IS A CAPITAL RECEIPT. CIT (A) HAS RIGHTLY ALLOWED THE RELIEF T O THE ASSESSEE BY DELETING THE ADDITION. THEREFORE, WE SUSTAIN THE ORDER OF THE C IT (A) ON THIS ISSUE ALSO. 21. IN THE GROUND NO.3 OF REVENUES APPEAL, THE ISS UE IS RELATING TO THE DELETION OF ADDITION OF RS.4,46,795/- MADE FOR LOW RATES CHARGED FROM SISTER CONCERN, M/S. ELLORA MECHANICAL PRODUCTS PVT. LTD. 22. THE LEARNED DR RELIEF ON THE ORDER OF THE ASSES SING OFFICER WHEREAS LEARNED AR RELIED ON THE ORDER OF THE CIT (A). 23. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. THE CIT (A) GRANTED THE RELIEF BY HOLDING AS UNDER :- 5.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. A R AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS CORRECT THAT THE WORK DONE BY THE ASSESSEE FOR ELLORA WAS ON A LARGER SCALE THAN THE WORK DONE FOR OTHER PARTIES. IT IS ALSO NOTICED THAT THE PROPERTIES OF M/S ELLORA WERE MORTGAGED WITH IDBI IN ORDER TO OBTAIN SECURED LOAN S FOR THE ASSESSEE CO. AS APPARENT FROM NOTE 1 TO THE SCHEDULE 3 OF TH E BALANCE SHEET, A COPY OF WHICH WAS FILED AT PAGE 12 OF THE PAPER BOO K. FOR THIS FACILITY, NO PAYMENT WAS MADE BY THE ASSESSEE CO. T O M/S ELLORA. FURTHER, THE RATE OF TAX IN THE CASE OF ASSESSEE CO AS WELL AS ELLORA WAS THE SAME. THE GP RATE OF ELLORA HAD ALMOST REMAINED THE SAME VIS-A- VIS LAST YEAR WHEREAS THE GP RATE OF THE ASSESSEE C O. HAD GONE UP TO 15.19% THIS YEAR AS COMPARED TO 13.61% IN THE LAST YEAR. FROM ALL THESE FACTS IT CAN BE SAID THAT NO UNDUE ADVANTAGE WAS GIVEN TO ELLORA BY THE ASSESSEE CO. MOREOVER, SEC. 40A(2)(B) WHICH DEALS WITH THE TRANSACTIONS WITH THE RELATED PARTIES IS IN RESPECT OF THE EXPENSES OR PAYMENTS MADE TO A CONNECTED PARTY. THE PRESENT CAS E IS NOT THE CASE OF MAKING PAYMENT T.9-L-HE GROUP CO. ON THE OTHER H AND, IT IS THE CASE OF RECEIVING INCOME FROM THE GROUP CO. THEREFORE, SEC 40A(2)(B) IS NOT ATTRACTED IN THIS CASE. MOREOVER, AN ASSESSEE C ANNOT BE COMPELLED TO CHARGE A PARTICULAR RATE FOR THE GOODS OR SERVIC ES SUPPLIED TO A CONNECTED PARTY PARTICULARLY WHEN IT CANNOT BE ESTA BLISHED THAT IT WAS A COLORABLE DEVICE TO EVADE THE TAXES. IN THIS REGA RD THE DECISION IN THE CASE OF VARINDRA AGRO CHEMICALS LTD. CITED BY THE I D. AR IS ALSO RELEVANT. IN VIEW OF ALL THESE FACTS, I AM OF THE C ONSIDERED VIEW THAT ITA NO.428/DEL./2005 ITA NO.1031/DEL/2005 17 THE AD WAS NOT JUSTIFIED IN TAKING ON A NOTIONAL BA SIS THE RATE OF JOB CHARGES @ RS. 25 IN THE CASE OF ELLORA. ACCORDINGLY , THE DISALLOWANCE OF RS.4,46,795/- IS DELETED. CONSIDERING ALL THE RELEVANT FACTS, WE FIND THAT TH E CIT (A) HAS RIGHTLY GRANTED THE RELIEF. THE SCALE OF WORK FOR SISTER CONCERN W AS OF LARGE SCALE. FURTHER THE PROPERTY OF SISTER CONCERN WAS MORTGAGED WITH IDBI TO OBTAIN SECURED LOANS FOR THE ASSESSEE. ASSESSEE G.P. IS BETTER AND G.P . OF SISTER CONCERN REMAINS THE SAME. THEREFORE, WE FIND NO FAULT IN THE ORDER OF CIT (A), HENCE SUSTAIN THE SAME. 24. GROUND NO.4 OF THE REVENUES APPEAL IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 25. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 26. TO SUM UP : BOTH THE APPEALS, I.E. OF THE REVEN UE AND ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 23 RD DAY OF DECEMBER, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.