Gujarat Alkalies & Chemicals Ltd., Baroda V. The ACIT.,Circle-1, Baroda

ITA 4462/AHD/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0450 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-03-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 19-12-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMITABH SHUKLA
• Keywords: Capital asset; Depreciation; Business expenditure; Opportunity of being heard; Earning of tax free income; Retrospective amendment; Bad and doubtful debts; Revenue expenditure; Capital expenditure
• Section: 43B; 80HHC; 14A; 115JB; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ACIT/DCIT, CIRCLE 1(1), BARODA VS. GUJARAT ALKALIES & CHEMICALS LTD., P.O. PETROCHEMICALS, BARODA PAN/GIR NO. : AAACG8896M I.T.A.NO. 4556/AHD/2007 I.T.A.NOS. 179, 180 & 181/AHD/2010 (ASSESSMENT YEAR 2004-05, 2005-06, 2006-07 & 2007-0 8 RESPECTIVELY) GUJARAT ALKALIES & CHEMICALS LTD., VS. ACIT, CIRC LE 1(1), P.O. PETROCHEMICALS, BARODA BARODA (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI J P SHAH, AR SHRI SUNIL H TALATI, AR RESPONDENT BY: SHRI AMITABH SHUKLA, CIT DR DATE OF HEARING: 05.03.2013 DATE OF PRONOUNCEMENT: .03.2013 O R D E R PER SHRI A. K. GARODIA, AM:- OUT OF THESE EIGHT APPEALS, THERE ARE CROSS APPEAL S OF THE ASSESSEE AND THE REVENUE FOR FOUR ASSESSMENT YEARS 2004-05 TO 2007- 08. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO. 4462/ AHD/2007 I.T.A. NOS. 473, 474 & 475/AHD/2010 (ASSESSMENT YEAR 2004-05, 2005-06, 2006-07 & 2007-08 RESPECTIVELY) I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 2 2. FIRST, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004- 05 IN I.T.A.NO. 4562/AHD/2007, WHICH IS DIRECTED AG AINST THE ORDER OF LD. CIT (A) I, BARODA DATED 14.09.2007. 2.1 GROUND NO.1 IS GENERAL. 2.2 GROUND NO.2 IS AS UNDER: 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.2,07,74,100/- BEING CORPORATE DEBT RESTRUCTURING EXPENSES INCURRED DURING THE YEA R TREATING THE SAME IN NATURE OF CAPITAL EXPENDITURE. YOUR APPELLANT SUBMI TS THAT EXPENSES INCURRED REVENUE IN NATURE AND SAME BE ALLOWED AS C LAIMED. IT IS TO BE HELD SO AND DISALLOWANCE MADE BY THE AO BE DELETED. 2.2.1 BRIEF FACTS REGARDING THIS ISSUE TILL THE ASS ESSMENT STAGE ARE NOTED BY LD. CIT (A) IN PARA 4 OF HIS ORDER WHICH IS REPRODUCED BELOW: 4. AS REGARDS GROUND NO.(L), THE FACTS ARE THAT T HE APPELLANT IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACT URING THE CAUSTIC SODA, SODA ASH AND OTHER CHEMICAL AND, GENERATION O F POWER FOR CAPTIVE CONSUMPTION. DURING THE YEAR UNDER CONSIDERATION, I T UNDERTOOK CORPORATE DEBT RESTRUCTURING (CDR) AND CLAIMED VARI OUS EXPENSES. IT ALSO OBTAINED BENEFITS IN THE FORM OF RESTRUCTURING OF THE DEBT REPAYMENT, MORE CONVENIENT AND EASY RE-SCHEDULED TIME FRAME FO R REPAYMENTS AND REDUCTION IN INTEREST RATES FOR A PERIOD OF MORE .T HAN SIX YEARS IN RESPECT OF ALL THE DEBTS. THE ASSESSING OFFICER WAS OF THE VIEW THAT CDR HAD RESULTED INTO ADVANTAGE OF ENDURING NATURE TO THE A PPELLANT FOR WHICH HE RELIED ON THE SUPREME COURT DECISION IN THE CASE OF CIT V. COAL SHIPMENTS PVT. LTD. 82 ITR 902 AND DEVIDAS VITHALDA S & CO. V. CIT 84 ITR 277. THE APPELLANT EXPLAINED THAT THE CDR WAS A PPROVED BY THE CDR CELL OF THE COMPANY AS A CONSEQUENCE OF WHICH P ART OF THE INTEREST WAS PAID AND PART OF THE INTEREST WAS WAIVED AND TH E WAIVED INTEREST WAS WRITTEN OFF IN THE BOOKS OF ACCOUNT AND OFFERED FOR TAX. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENDITURE PERTAINING TO THE CDR OF RS.2,07,74,100/- AS CAPITAL EXPENDITURE. 2.2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2.2.3 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS IS SUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX COURT REN DERED IN THE CASE OF CIT VS I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 3 BIRLA CLOTHING SPINNING AND WEAVING MILLS LTD. AS R EPORTED IN 82 ITR 166. IT HAS ALSO BEEN SUBMITTED THAT AS PER THE JUDGEMENT O F PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS JCT ELECTRONIC S LTD. AS REPORTED IN 188 TAXMAN 291 ALSO, THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. HE SUBMITTED THAT BY WAY OF INCURRING THIS EXPENDITURE ON ACCOUN T OF CORPORATE DEBT RESTRUCTURING EXPENSES, HUGE SAVING IS MADE BY THE ASSESSEE IN THE INTEREST EXPENDITURE AND CONSIDERING THE FACTS OF THE PRESEN T CASE, IT CANNOT BE SAID THAT THIS EXPENDITURE INCURRED IS A CAPITAL EXPENDITURE AND THERE IS NO OTHER OBJECTION OF THE A.O. REGARDING ALLOWABILITY OF THIS EXPENDIT URE. AT THIS JUNCTURE, A QUERY WAS RAISED BY THE BENCH AS TO WHETHER THE ENTIRE EX PENDITURE INCURRED IS ALLOWABLE IN THE PRESENT YEAR ITSELF OR THE SAME HA S TO BE ALLOWED DURING THE ENTIRE PERIOD ON PROPORTIONATE BASIS FOR WHICH THE BENEFIT IS AVAILABLE TO THE ASSESSEE ON ACCOUNT OF RESTRUCTURING AS PER THE JUD GEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MADRAS INDUSTRIAL DEV ELOPMENT CORPORATION LTD. VS CIT AS REPORTED IN 225 ITR 802. IN REPLY, IT WA S SUBMITTED BY THE LD. A.R. THAT THERE WAS NO OBJECTION OF THE A.O. ON THIS ASP ECT AND THERE IS NO FINDING OF ANY AUTHORITIES BELOW ON THIS ASPECT AND HENCE, IF CONSIDERED APPROPRIATE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION ON THIS ASPECT IF IT IS FOUND THAT THE EXPENDITURE IS ALLOW ABLE AS REVENUE EXPENDITURE. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE ALSO SUBMITTED THAT THE A.O. HAS PLACED RELIANCE ON TWO JUDGEMENTS OF HONB LE APEX COURT RENDERED IN THE CASE OF CIT VS COAL SHIPPING PVT. LTD. AS REPOR TED IN 82 ITR 902 AND IN THE CASE OF DEVIDAS VITHALDAS AND CO. VS CIT AS REPORTE D IN 84 ITR 277. HE ALSO SUBMITTED THAT AS PER PAGE 15 OF THE PAPER BOOK FIL ED BY THE ASSESSEE, THE BENEFIT WAS AVAILABLE TO THE ASSESSEE FOR A PERIOD OF 10 YE ARS, WHICH IS A VERY LONG PERIOD AND, THEREFORE, IT HAS TO BE ACCEPTED THAT T HE ASSESSEE HAS RECEIVED ENDURING BENEFIT AND SO, THE EXPENDITURE IS CAPITAL EXPENDITURE AS PER THESE TWO JUDGEMENTS OF HONBLE APEX COURT. IN REJOINDER, IT WAS SUBMITTED BY THE LD. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 4 A.R. THAT IN FACT, BENEFIT FOR A PERIOD OF 10 YEARS WAS DEMANDED BY THE ASSESSEE BUT ACTUALLY NOT APPROVED. 2.2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW AND THE JUDGEMENTS CITED BY LD. A.R. AND ALSO THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MADRAS INDUSTRIAL DEVELOPMENT CORPORATION LTD. ( SUPRA). WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AGAINST THE ASSESSE E AS PER PARA 5 OF HIS ORDER AND FOR THE SAKE OF READY REFERENCE, THE SAME IS RE PRODUCED BELOW: I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS O BSERVED THAT THE EXPENDITURE IN QUESTION IS ON ACCOUNT OF THE PROFES SIONAL FEES ETC., PAID TO THE CONSULTANTS FOR THE RESTRUCTURING OF ITS DEBTS. IT IS OBSERVED THAT IT IS NOT ON ACCOUNT OF ANY EXPENDITURE INCUR RED FOR THE ARRANGEMENT OF FINANCE. IT IS FURTHER OBSERVED THAT THE RESTRUC TURING OF THE DEBT HAS CERTAINLY RESULTED IN AN ENDURING BENEFIT TO THE AP PELLANT SINCE ADMITTEDLY IT WILL NOW BE REQUIRED TO PAY MUCH SMALLER INTERES T AMOUNT TO THE FINANCIAL INSTITUTIONS OVER A LONG PERIOD. IT IS AL SO; OBSERVED THAT AN ENDURING BENEFIT NEED NOT NECESSARILY BE OF A PE RMANENT NATURE, THE RESTRUCTURING SHALL ALLOW MORE FLEXIBILITY AND FR EEDOM TO THE APPELLANT TO USE ITS CAPITAL FUND IN A MORE BENEFICIAL WAY SO TH AT THE CAPITAL APPARATUS GETS FURTHER STRENGTHENED. UNDER THE CIRCUMSTANCES, IT IS HELD THAT THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS THE R ESTRUCTURING THE DEBT IS A CAPITAL EXPENDITURE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF RS.2,07,74,100/- IS CONFIRMED. 2.2.5 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT THE DECISION OF LD. CIT(A) IS ON THIS BASIS THAT THE RESTRUCTURI NG WILL RESULT INTO ENDURING BENEFIT TO THE ASSESSEE TO USE ITS CAPITAL FUNDS IN A MORE BENEFICIAL WAY SO THAT THE CAPITAL APPARATUS GET FURTHER STRENGTHENED. T HE OBJECTION OF THE A.O. WAS THIS THAT THE EXPENSES INCURRED ON ACCOUNT OF RESTR UCTURING OF DEBT HAS RESULTED INTO ADVANTAGE AND BENEFIT OF ENDURING NATURE TO TH E ASSESSEE AND HE HAS PLACED RELIANCE ON THE JUDGEMENT OF HONBLE APEX COURT REN DERED IN THE CASE OF DEVIDAS VITHALDAS & CO. (SUPRA). THIS JUDGEMENT IS NOT AT ALL APPLICABLE IN THE PRESENT CASE BECAUSE IN THAT CASE, THE ISSUE IN DIS PUTE WAS AS TO WHETHER THE AMOUNT PAID BY THE PURCHASER OF GOODWILL TO THE RET IRING PARTNER FOR LIFE AND I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 5 THEREAFTER TO HIS WIDOW AND SON, WAS CAPITAL EXPEND ITURE OR REVENUE EXPENDITURE AND UNDER THESE FACTS, IT WAS HELD THAT ACQUISITION OF GOODWILL OF A BUSINESS IS ALSO POSSESSION OF A CAPITAL ASSET AND THUS, THE SA ME IS CAPITAL EXPENDITURE. IN THE PRESENT CASE, THERE IS NO ACQUISITION OF GOODWI LL AND HENCE, THIS JUDGEMENT IS NOT AT ALL APPLICABLE IN THE PRESENT CASE. 2.2.6 THE 2 ND JUDGEMENT ON WHICH RELIANCE WAS PLACED BY THE A.O. IS ANOTHER JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS COAL SHIPMENT PVT. LTD. (SUPRA). IN THAT CASE, THE ISSUE IN DISPU TE WAS AS TO WHETHER THE PAYMENT MADE TO WARD OF COMPETITION IN THE BUSINESS TO A RIVAL WOULD CONSTITUTE CAPITAL EXPENDITURE IF THE OBJECT OF MAKING THIS PA YMENT IS TO DERIVE ADVANTAGE BY ELIMINATING THE COMPETITION OVER SOME LENGTH OF TIME AND UNDER THESE FACTS, IT WAS HELD BY HONBLE APEX COURT THAT SUCH PAYMENT WILL BE OF CAPITAL NATURE IF IT WAS FOR ELIMINATING THE COMPETITION OVER SOME LE NGTH OF TIME BUT WHEN THERE IS NO RESTRAINT OF ADVANTAGE OR THE SAME CAN BE PUT TO END AT ANY TIME, IT WILL BE A REVENUE EXPENDITURE AND IT WILL DEPENDING ON THE CI RCUMSTANCES OF THE FACTS OF EACH CASE. IN OUR CONSIDERED OPINION, THIS JUDGEME NT IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THE PRESENT CASE, THERE IS NO PAYMENT FOR AVOIDING ANY COMPETITION WITH RIVAL AND , THEREFORE, IT CANNOT BE SAID THAT THIS JUDGMENT IS APPLICABLE IN THE PRESE NT CASE. 2.2.7 WE ARE ALL AWARE THAT AS PER THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF INDIA CEMENT AS REPORTED IN 60 ITR 52 (S.C.), ANY EXPENDITURE INCURRED FOR BORROWING IS REVENUE EXPEN DITURE. IN THE PRESENT CASE, THE IMPUGNED EXPENDITURE WAS INCURRED NOT FOR ANY N EW BORROWING BUT FOR RESTRUCTURING OF EXISTING BORROWINGS BUT THE ULTIMA TE EFFECT IS THE SAME BECAUSE PER THE RESTRUCTURING, THE REPAYMENT PERIOD HAS GON E UP AND INTEREST RATE HAS COME DOWN AND TO THE EXTENT OF REPAYMENT PERIOD GOI NG UP, IT MAY BE SAID THAT THERE IS FRESH BORROWING AND MOREOVER, THE REDUCTIO N IN THE INTEREST RATE IS RELATING TO BORROWING ONLY AND ALTHOUGH THE BENEFIT WILL BE FOR A UMBER OF YEARS BUT IT CANNOT BE SAID THAT ANY CAPITAL ASSET HAS BE EN ACQUIRED BY WAY OF THIS I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 6 RESTRUCTURING OF EXISTING DEBT AS PER THIS JUDGEMEN T OF HONBLE APEX COURT RENDERED IN THE CASE OF INDIA CEMENT (SUPRA). HOWE VER, WE ARE OF THE CONSIDERED OPINION THAT AS PER THE JUDGEMENT OF HON BLE APEX COURT RENDERED IN THE CASE OF MADRAS INDUSTRIAL DEVELOPMENT CORPOR ATION LTD. (SUPRA), THE EXPENDITURE INCURRED SHOULD BE ALLOWED PROPORTIONAT ELY DURING THE PERIOD DURING WHICH THE ASSESSEE WILL CONTINUE TO GET THE BENEFIT IN RESPECT OF REDUCTION IN INTEREST LIABILITY BECAUSE OF RESTRUCTURING. THERE FORE, WE HOLD THAT THE IMPUGNED EXPENDITURE IS NOT CAPITAL EXPENDITURE BUT REVENUE EXPENDITURE BUT THE SAME SHOULD BE ALLOWED PROPORTIONATELY DURING THE PERIOD DURING WHICH THE ASSESSEE WILL GET BENEFIT IN THE PRESENT YEAR AS WELL IN FUT URE IN THE LIGHT OF THIS JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MADRA S INDUSTRIAL DEVELOPMENT CORPORATION LTD. (SUPRA) AND HENCE, WE SET ASIDE TH E ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF TH E A.O. FOR A FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQU ATE OPPORTUNITY TO THE ASSESSEE. WE WANT TO MAKE IT CLEAR THAT THIS QUERY WAS ALSO RAISED BY THE BENCH AS TO WHETHER THE RESTRUCTURING HAS RESULTED INTO A NY CONVERSION OF ANY DEBT INTO EQUITY AND IN REPLY, IT WAS STATED BY THE LD. A.R. VERY STRONGLY THAT THE RESTRUCTURING IS ONLY FOR INCREASE IN THE PERIOD OF REPAYMENT OF EXISTING DEBT AND FOR REDUCTION OF INTEREST RATE AND THERE IS NO CONV ERSION OF DEBT INTO EQUITY. THERE IS NO SUCH FINDING OF AUTHORITIES BELOW ALSO THAT RESTRUCTURING OF DEBT HAS RESULTED INTO ANY CONVERSION OF ANY DEBT INTO EQUIT Y AND IN THE ABSENCE OF THIS, WE DO NOT FIND ANY BASIS FOR HOLDING THAT THE EXPEN DITURE INCURRED ON RESTRUCTURING OF EXISTING DEBT IS A CAPITAL EXPENDI TURE. 2.3 GROUND NO.3 IS AS UNDER: 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.3,05,17,835/- BEING P ROVISIONS FOR 'TAKE OR PAY RENTAL' CHARGES TO GCPTL ON THE GROUND THAT LIA BILITY IS OTHER THAN ASCERTAINED LIABILITY, NOT CRYSTALLIZED DURING THE YEAR AND SAME IS 'ADVANCE'. YOUR APPELLANT SUBMITS THAT DISALLOWANCE CONFIRMED BY HON'BLE CIT(A) IS UNJUST AND UNCALLED FOR. IT BE HELD SO NO W AND ADDITION BE DELETED. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 7 2.3.1 BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NOT ED BY LD. CIT(A) IN PARA 8 OF HIS ORDER AND THE RELEVANT PORTION OF WHICH IS REPR ODUCED BELOW: AS REGARDS GROUND NO.(3), THE ASSESSING OFFICER NO TED THAT THE APPELLANT HAD PAID TAKE OR PAY RENTAL CHARGES TO GC PTCL WHICH ARE NOT FOR ACTUAL MATERIAL HANDLING BUT FOR ANY SHORTFALL IN QUANTITY PAYMENT WHICH CAN BE OFF SET DURING FIVE FINANCIAL YEARS AG AINST EXCESS QUANTITY HANDLED BY GCPTCL AND WOULD BECOME FINAL ONLY AFTER A PERIOD OF FIVE YEARS. THE ASSESSING OFFICER, THEREFORE, TREATED IT AS ADVANCE. IT HAS ALSO BEEN OBSERVED THAT THE APPELLANT HAD DISPUTED THIS CLAIM OF GCPTCL AND FINALLY GCPTCL WAIVED THE LIABILITY BY AGREEMENT DA TED 30-9-2005. THE APPELLANT ALSO CLARIFIED THAT THE PROVISION MADE BY IT WAS WRITTEN BACK IN A.Y. 2005-06 IN VIEW OF THE CANCELLATION OF DEMAND BY GCPTCL AND OFFER FOR INCOME. HOWEVER, IT CLAIMED AS A BUSINESS EXPENDITURE. THE ASSESSING OFFICER, HOWEVER, HELD THAT AT THE END OF FIVE YEARS IF THE COMPANY FAILED TO SET OFF THE PAYMENT MADE DURING T HE YEAR THEN, THE LIABILITY WOULD CRYSTALLIZED IN THAT YEAR SO THAT T HE LIABILITY ITSELF HAD NOT CRYSTALLIZED IN THIS YEAR. HE, THEREFORE, HELD THAT IT WAS NOT AN ASCERTAINED LIABILITY AND HAD NOT CRYSTALLIZED DURING THE FINAN CIAL YEAR AND WAS, THEREFORE, IN THE NATURE OF ONLY AN ADVANCE. HE ALS O HELD THAT IT WAS ONLY A PROVISION MADE IN THE BOOKS IN RESPECT OF AN UNASCE RTAINED LIABILITY. HE DISALLOWED THE CLAIM OF RS.3,05,17,835/-. 2.3.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2.3.3 IT WAS SUBMITTED BY THE LD. A.R. BEFORE US TH AT THIS CLAIM WAS MADE BY THE ASSESSEE IN THE PRESENT YEAR ON MERCANTILE BASI S AND IN THE NEXT YEAR WHEN THE SAME WAS NOT REQUIRED, THE ASSESSEE HAS OFFERED THIS AS INCOME. IT WAS HIS SUBMISSION THAT THE CLAIM SHOULD BE ALLOWED IN THE PRESENT YEAR ITSELF BECAUSE IT IS AN ASCERTAINED LIABILITY AND, THEREFORE, ALLOWAB LE ON MERCANTILE BASIS. THIS WAS HIS ALTERNATIVE CONTENTION THAT IF IT IS HELD T HAT THIS CLAIM IS NOT ALLOWABLE IN THE PRESENT YEAR, THE A.O. SHOULD BE DIRECTED TO EX CLUDE THE INCOME DECLARED IN THE NEXT YEAR FOR REVERSAL OF THIS LIABILITY. 2.3.4 AS AGAINST THIS, LD. D.R. SUPPORTED THE ORDER S OF AUTHORITIES BELOW. HE ALSO SUBMITTED THAT IT IS NOTED BY THE AUTHORITIES BELOW THAT THE SHORTFALL CAN BE ADJUSTED IN FUTURE UP TO FIVE YEARS IF THERE IS ANY HIGHER LIFTING IN THE FIRST FIVE I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 8 YEARS AND, THEREFORE, LIABILITY WILL CRYSTALLIZE ON LY AFTER LAPSE OF FIVE YEARS AND NOT BEFORE THAT AND, THEREFORE, THIS DEDUCTION IS N OT ALLOWABLE IN THE PRESENT YEAR BECAUSE IT IS NOT AN ASCERTAINED LIABILITY AND MORE OVER, THE SAME WAS WAIVED BY GCPTCL IN THE NEXT YEAR AND THEREFORE, THIS IS NOT ALLOWABLE IN THE PRESENT YEAR. REGARDING ALTERNATIVE CLAIM, HE SUBMITTED THAT THE MATTER MAY BE DECIDED AS PER LAW. 2.3.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORDS AND HAVE GONE THROUGH THE ORDERS OF AUTHORI TIES BELOW. WE FIND THAT THIS IS AN ADMITTED POSITION OF FACTS THAT THE PAYMENT O N ACCOUNT OF SHORTFALL IN QUANTITY CAN BE OFFSET WITHIN ANY OF THE FIVE SUBSE QUENT YEARS AGAINST EXCESS QUANTITY WHICH MAY BE LIFTED BY GCPTCL AND, THEREFO RE, THE LIABILITY TO PAY IN RESPECT OF SHORTFALL IN QUANTITY WILL CRYSTALLIZE O NLY AFTER THE LAPSE OF FIVE YEARS AND TILL THEN, EVEN IF THIS AMOUNT IS PAID, IT IS I N THE NATURE OF ADVANCE PAYMENT ONLY AND NOT AN EXPENDITURE INCURRED. UNDER THIS F ACTUAL POSITION, WE DO NOT FIND ANY MERIT IN THE MAIN CONTENTION OF THE ASSESS EE AND THEREFORE, THE SAME IS REJECTED. REGARDING THE ALTERNATIVE CONTENTION, W E FIND FORCE IN THE SUBMISSION OF THE LD. A.R. BECAUSE ONCE THE LIABILITY IS DISAL LOWED IN THE PRESENT YEAR, NO INCOME IS TAXABLE IN THE SUBSEQUENT YEAR WHEN THE A MOUNT IS CREDITED IN THE P & L ACCOUNT BY WRITING BACK THE LIABILITY ALREADY DIS ALLOWED. HENCE, THE A.O. IS DIRECTED TO VERIFY THIS ASPECT IN THE NEXT YEAR AND IF IT IS FOUND THAT ON THE WRITE BACK OF THIS LIABILITY IN THE NEXT YEAR, ANY AMOUNT WAS TAXED THEN TO THIS EXTENT, INCOME SHOULD BE REDUCED IN SUCH NEXT YEAR. WITH T HESE OBSERVATIONS, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. 2.4 GROUND NO.4 IS AS UNDER: 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.1,52,92,991/- BEING P ROVISION FOR INTEREST TO UNIT TRUST OF INDIA TREATING THE SAME AS CONTING ENT LIABILITY NOT CRYSTALLIZED DURING THE YEAR. YOUR APPELLANT SUBMIT S THAT PROVISIONS FOR INTEREST TO UTI ARE MADE FOLLOWING MERCANTILE SYSTE M OF ACCOUNTING SINCE SAME IS ASCERTAINED LIABILITY. THE DISALLOWANCE CON FIRMED BY THE CIT (A) I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 9 IS UNJUST AND UNCALLED FOR. IT BE HELD NOW AND DISA LLOWANCE MADE BE DELETED. 2.4.1 BRIEF FACTS TILL THE ASSESSMENT STAGE ON THIS ISSUE ARE NOTED BY LD. CIT(A) IN PARA 6 OF HIS ORDER AND THE RELEVANT PORTION OF THE SAME IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: AS REGARDS GROUND NO.(2), THE ASSESSING OFFICER OB SERVED FROM THE DETAILS THAT UNDER THE CDR SCHEME AS REFERRED TO IN GROUND (1.) ABOVE, THE RATE OF INTEREST TO UTI ON DEBENTURES ISSUED WAS TO BE REDUCED FROM 14% AND 15% TO 8% BUT THE UTI DID NOT AGREE TO IT. THE COMPANY PAID INTEREST @ 8% ONLY TO THE UTI AND THE DIFFERENTIAL AMOUNT OF RS.1,52,92,991/- WAS PROVIDED IN THE BOOKS OF ACCOUNTS DUE TO THE DI SPUTE BY THE UTI. THE APPELLANT EXPLAINED THAT SINCE IT HAD ADOPTED THE M ERCANTILE SYSTEM OF ACCOUNTING, THE INTEREST PAYABLE TO UTI HAD TO BE P ROVIDED IN THE BOOKS. IT FURTHER STATED THAT THE SAID AMOUNT WAS ACTUALLY PAID IN THE NEXT FINANCIAL YEAR ON 30-6-2004. THE ASSESSING OFFICER HELD THAT SINCE THE LIABILITY WAS DISPUTED, IT HAD NOT CRYSTALLIZED DUR ING THE YEAR. HE ALSO HELD THAT THE BENEFIT OF PAYING THE SAME IN THE EXTENDED TIME U/S.43B WAS ALSO NOT AVAILABLE TO THE APPELLANT SINCE THE SAME WAS A LLOWABLE TO A PAYMENT IN RESPECT OF AN ASCERTAINED LIABILITY. 2.4.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 2.4.3 IT WAS SUBMITTED BYTE LD. A.R. THAT THIS IS N OTED BY THE A.O. ALSO ON PAGE 5 OF THE ASSESSMENT ORDER THAT THIS AMOUNT WAS PAID TO UTI IN THE NEXT YEAR I.E. ON 30.06.2004. HE FURTHER SUBMITTED THAT IN VIEW O F THE RETROSPECTIVE AMENDMENT IN THE PROVISIONS OF SECTION 43B, DEDUCTI ON IS ALLOWABLE TO THE ASSESSEE U/S 43B IF THE SAME IS MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AND, THEREFORE, AS PER THESE AMENDED PROVISI ONS OF SECTION 43B, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN THE PRESENT Y EAR ITSELF. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ALOM EXTRUSIONS AS REPORTED IN 319 ITR 306. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 2.4.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE FIRST OBJECTION OF THE AUTHORITIES BELOW IS THIS THAT DED UCTION IS NOT ALLOWABLE AS PER I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 10 THE PROVISIONS OF SECTION 43B BECAUSE THE PAYMENT W AS NOT MADE BY THE ASSESSEE. IN THE LIGHT OF THE RETROSPECTIVE AMENDM ENT OF SECTION 43B AND AS PER THE JUDGEMENT OF HONBLE APEX COURT CITED BY THE LD . A.R., THIS OBJECTION DOES NOT SURVIVE BECAUSE THE PAYMENT IN QUESTION WAS MAD E BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THE 2 ND OBJECTION OF THE AUTHORITIES BELOW IS THIS THAT DEDUCTION IS NOT OTHERWISE ALLOW ABLE ALSO BECAUSE CDR PACKAGE HAS BEEN ACCEPTED ON IMPLEMENTATION OF WHIC H UTI WAS A PARTY THOUGH IT DISSENTED AND DISAGREED WITH REGARD TO THE PAYME NT OF LOWER RATE OF INTEREST AND THEREFORE, IT CANNOT BE SAID THAT LIABILITY HAD ACCRUED DURING THE PRESENT YEAR AND HAS CRYSTALLIZED. WE FIND NO FORCE IN THESE CO NTENTIONS OF THE AUTHORITIES BELOW AND OF THE LD. D.R. BECAUSE WHEN UTI HAS NOT AGREED WITH THE CDR PACKAGE REGARDING PAYMENT OF LOWER RATE OF INTEREST ULTIMATELY, THE ASSESSEE HAD TO PAY AGREED RATE OF INTEREST, WITHOUT ANY BENEFIT FROM THE CDR PACKAGE. UNDER THESE FACTS, IT CANNOT BE SAID THAT LIABILITY HAS N OT ACCRUED AND NOT CRYSTALLIZED. HENCE, THIS DISALLOWANCE IS DELETED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 2.5 GROUND NO.5 IS AS UNDER: 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.3,36,224/- BEING AMOR TIZATION OF LEASE RENT PAID FOR THE LAND TREATING THE SAME AS OF CAPI TAL NATURE. IT IS SUBMITTED THAT DISALLOWANCE MADE IS UNWARRANTED AND BE DELETE D NOW. 2.5.1 IT WAS FAIRLY CONCEDED BY LD. A.R. THAT THIS ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04. BUT IT WAS ALSO HIS SUBMISSION THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY A SUBSEQUENT JUDGEMENT OF HONBL E GUJARAT HIGH COURT RENDERED IN THE CASE OF DCIT VS SUN PHARMACEUTICAL INDUSTRIES LTD. AS REPORTED IN 329 ITR 479. HE ALSO PLACED RELIANCE ON THE JUD GMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS MADRAS AUTO SE RVICE LTD. AS REPORTED IN 233 ITR 468. LD. D.R. SUPPORTED THE ORDERS OF AUTH ORITIES BELOW. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 11 2.5.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW AND THE TRIBUNAL DECISION IN THE EARLIER YEAR AND THE JUDGEMENTS CITED BY THE LD. A.R. FIRST, WE DISCUSS THE APPLICABILITY OF THE JUDGEMENT OF HONBLE GUJAR AT HIGH COURT RENDERED IN THE CASE OF DCIT VS SUN PHARMACEUTICAL INDUSTRIES LTD. (SUPRA). IN THAT CASE, THE DECISION OF HONBLE GUJARAT HIGH COURT IS MAINLY ON THIS BASIS THAT THE LESE RENT IS MUCH NOMINAL AND BY OBTAINING THIS LAND BY LEASE , THE CAPITAL STRUCTURE OF THE COMPANY HAS NOT BEEN CHANGED. IN THAT CASE, LEASE RENT WAS RS.40/- PER YEAR WHEREAS IN THE PRESENT CASE, THE LEAS RENT IS RS.3, 36,324/- PER YEAR AND BECAUSE OF THIS DIFFERENCE IN THE FACTS, THIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE IN THE P RESENT CASE, THE LEASE RENT IS NOT NOMINAL. NOW, WE CONSIDER THE APPLICABILITY OF THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS MADRAS AU TO SERVICE LTD. (SUPRA). THIS JUDGEMENT IS ALSO NOT APPLICABLE IN THE PRESEN T CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THE DISPUTE WAS REGARDING THE EXPENDITURE INCURRED BY THE ASSESSEE FOR DEMOLISHING THE PREVIOUS EXISTING STRU CTURE OF LEASED PREMISES AND CONSTRUCT A NEW BUILDING AT OWN EXPENSES AND THE DI SPUTE WAS NOT REGARDING PAYMENT OF LEASE RENT AS SUCH. THEREFORE, THIS JUD GEMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. THIS ISSUE IS COVERED IN FAVO UR OF THE REVENUE AND AGAINST THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OW N CASE AND THE JUDGEMENTS CITED BY THE LD. A.R. ARE NOT RENDERING ANY HELP TO THE ASSESSEE. THEREFORE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT (A) ON THIS ISSUE. THIS GROUND IS REJECTED. 2.6 GROUND NO.6 IS AS UNDER: 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.1,77,00,000/- BEING C ONTRIBUTION TO GACL EMPLOYEES WELFARE TRUST AND RS,3,15,960 BEING CONTR IBUTION TO BENEVOLENT FUND. IT IS SUBMITTED THAT CONTRIBUTIONS SO MADE ARE ALLOWABLE REVENUE EXPENDITURE U/S 37(1) OF THE ACT. IT BE HEL D NOW AND DISALLOWANCE MADE AGGREGATING TO RS.1,80,15,960 BE DELETED. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 12 2.6.1 IT WAS FAIRLY CONCEDED BY THE LD. A.R. THAT T HIS ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 AND IN THIS REGARD, HE DRAWN OUR ATTEN TION TO PAGE 20 PARA 26 OF THIS TRIBUNAL ORDER IN I.T.A.NO. 4461/AHD/2007 AND ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE R EVENUE. THIS GROUND OF THE ASSESSEE IS REJECTED. 2.7 GROUND NO.7 IS AS UNDER: 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.10,53,35,222/- BEING EXPENSES INCURRED ON MEMBRANE CELL TREATED IN THE NATURE OF CAPITAL E XPENDITURE. YOUR APPELLANT SUBMITS THAT THE ACIT BE DIRECTED TO ALLO W CLAIM OF MEMBRANE CELL EXPENDITURE AND DISALLOWANCE MADE OF RS.10,53, 35,222/- BE DELETED. 2.7.1 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS IS SUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN THE ASSESSEES OW N CASE FOR THE ASSESSMENT YEAR 2003-04. HE DREW OUR ATTENTION TO PARA 30.1 ON PAG E 23 OF THIS ORDER. LD. D.R. SPORTED THE ORDERS OF AUTHORITIES BELOW. 2.7.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW AND THE TRIBUNAL DECISION CITED BY LD. A.R. WE FIND THAT IN ASSESSMENT YEAR 2003-04, THIS ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE O N THIS BASIS THAT IN ASSESSMENT YEAR 1993-94 TO 1995-96, THE A.O. HIMSELF HAS ALLOW ED THE CLAIM OF THE ASSESSEE AS REVENUE EXPENDITURE. IN THE PRESENT YEAR, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW AND HENCE, BY RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION, THIS GROUND OF THE ASSESSEE IS ALLOWED. 2.8 GROUND NO.8 IS AS UNDER: 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.45,53,992/- TOWARDS R IGHT ISSUE EXPENSES. IT IS SUBMITTED THAT RIGHT ISSUE EXPENDITURE IS AN ALLOWABLE REVENUE EXPENDITURE WHICH BE ALLOWED FULLY AS CLAIMED BY YO UR APPELLANT. DISALLOWANCE MADE BY THE ASSESSING OFFICER BE DELET ED NOW. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 13 2.8.1 THE LD. A.R. SUBMITTED THAT THIS GROUND IS NO T PRESSED AND ACCORDINGLY, THIS GROUND IS REJECTED AS NOT PRESSED. 2.9 GROUND NO.9 IS AS UNDER: 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.95,54,536/- BEING WAT ER AND SERVICE CHARGES TREATING AS CAPITAL EXPENDITURE. YOUR APPEL LANT SUBMITS THAT DISALLOWANCE MADE IS UNJUST AND UNCALLED FOR. IT IS TO BE DELETED NOW AND SAME BE ALLOWED AS CLAIMED. 2.9.1 IT WAS SUBMITTED BY THE LD. A.R. THAT THE ASS ESSEE COMPANY IS NOT THE OWNER OF THE ASSETS AND FOR WHICH IT PAID RS.1886.8 2 LACS AND THE ASSESSEE HAS WRITTEN THE SAME AS DEFERRED REVENUE EXPENDITURE FO R 20 YEARS FROM ASSESSMENT YEAR 1999-2000 AND ON THIS BASIS, THE ASSESSEE HAS DEBITED THE AMOUNT OF RS.95,54,536/- TO P & ACCOUNT IN THE PRESENT YEAR. IT WAS ALSO SUBMITTED BY HIM THAT THE MATTER MAY BE RESTORED BACK TO THE FIL E OF THE A.O. TO CHECK UP THE FACT BECAUSE LD. CIT(A) HAS BY MISTAKE RECORDED THA T THIS GROUND WAS NOT PRESSED. IN REPLY, IT WAS SUBMITTED BY THE LD. D.R . THAT WHEN THIS GROUND WAS NOT PRESSED BEFORE LD. CIT(A), THIS ISSUE CANNOT BE RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL. 2.9.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. WE FIND THAT IN PARA 20 ON PAGE 12 OF THE IMPUGNED ORDER, IT IS NOTED BY LD . CIT(A) THAT THE GROUND REGARDING EXPENDITURE OF RIGHT ISSUE AND WATER AND SERVICE CHARGES WERE NOT PRESSED BECAUSE THE SAME WERE DECIDED AGAINST THE ASSESSEE IN EARLIER YEARS. NOW, BEFORE US, IT IS SUBMITTED BY THE LD. A.R. THA T THIS IS WRONGLY RECORDED BY LD. CIT(A) THAT THIS GROUND IS NOT PRESSED. NOTHIN G HAS BEEN BROUGHT ON RECORD BY THE LD. D.R. TO SHOW THAT THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE IN EARLIER YEAR WHICH IS THE BASIS OF LD. CIT(A) OF RE CORDING THAT ASSESSEE HAS NOT PRESSED THIS GROUND BEFORE HIM BECAUSE THIS ISSUE W AS DECIDED AGAINST THE ASSESSEE IN EARLIER YEAR. BE THIS AS IT MAY BUT WE FEEL THAT NO PREJUDICE WILL BE CAUSED TO THE REVENUE IF THE MATER IS RESTORED BACK TO THE FILE OF THE A.O. FOR A I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 14 FRESH DECISION AFTER VERIFYING THE FACTS. HENCE, W E SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR A FRESH DECISION. THE A.O. SHOULD VERIFY THE FACT AS TO WH ETHER THE AMOUNT OF RS.95.54 LACS DEBITED BY THE ASSESSEE IN THE PRESENT YEAR IS THE PROPORTIONATE AMOUNT OF RS.1886.82 LACS PAID BY THE ASSESSEE IN ASSESSMENT YEAR 1999-2000 FOR 20 YEARS AND WHETHER ANY DEDUCTION WAS ALLOWED IN THAT YEAR AND SUBSEQUENT YEARS ON THIS BASIS THAT THE SAME IS DEFERRED REVENUE EXPEND ITURE. HE SHOULD ALSO VERIFY THIS ASPECT AS TO WHETHER THIS ISSUE WAS DECIDED BY THE TRIBUNAL OR BY LD. CIT(A) AGAINST THE ASSESSEE IN ANY EARLIER YEAR AS HAS BEEN NOTED BY LD. CIT(A) IN THE PRESENT YEAR. AFTER VERIFYING ALL THESE FAC TS AND AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE, THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW. THIS GROUND OF THE ASS ESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 2.10 GROUND NO.10 IS AS UNDER: 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.2,00,000/- BEING STAM P DUTY PAID FOR AVAILING TERM LOAN FROM UTI. THE ASSESSING OFFICER TREATED THE SAME AS OF CAPITAL EXPENDITURE. YOUR APPELLANT SUBMITS THAT DISALLOWANCE MADE IS UNJUST AND UNCALLED FOR. IT BE DELETED NOW AND SAME BE ALLOWED AS CLAIMED. 2.10.1 IT WAS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX CO URT RENDERED IN THE CASE OF INDIA CEMENT AS REPORTED IN 60 ITR 52. LD. D.R. SU PPORTED THE ORDERS OF AUTHORITIES BELOW. 2.10.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, P ERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE BASIS OF THE DECISION OF LD. CIT(A) IS THIS THAT TH E ASSESSEE WILL GET ENDURING BENEFIT FOR AVAILING BANK TERM LOAN FROM UTI BANK I N PLACE OF EXISTING LOAN CARRYING HIGHER RATE OF INTEREST. WHILE DECIDING T HE SIMILAR ISSUE AS PER GROUND NO.2 I.E. EXPENDITURE FOR DEBIT RESTRUCTURING, WE H AVE HELD THAT THIS IS REVENUE I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 15 EXPENDITURE BUT SHOULD BE ALLOWED PROPORTIONATELY D URING THE YEARS FOR WHICH THE ASSESSEE WILL GET BENEFIT AND ACCORDINGLY FOR T HIS ISSUE ALSO, WE DIRECT THE A.O. TO EXAMINE THE NUMBER OF YEARS FOR WHICH THE A SSESSEE WILL GET THE BENEFIT ON ACCOUNT OF REDUCTION IN RATE OF INTEREST AND THI S EXPENDITURE WILL BE ALLOWED TO THE ASSESSEE PROPORTIONATELY DURING THAT PERIOD. THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DIRECTION A FTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSES. 2.11 GROUND NO.11 IS AS UNDER: 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING BOOK PROFIT BY ADDING BACK 'PROVISIONS F OR TAKE OR PAY CHARGES TO GCPTL' OF RS.3,05,17,835. YOUR APPELLANT SUBMITS THAT ASSESSING OFFICER IS NO T JUSTIFIED IN TREATING THE ABOVE IN THE NATURE OF UNASCERTAINED LIABILITY AND MAKING ADDITION TO BOOK PROFIT COMPUTED UNDER SECTION 115JB OF THE ACT . THE PROVISIONS MADE ARE IN ACCORDANCE WITH METHOD OF ACCOUNTING RE GULARLY FOLLOWED BEING 'MERCANTILE' AND SUCH LIABILITIES ARE ASCERTA INED. FURTHER, FINAL ACCOUNTS HAS BEEN PREPARED AS PER ACCOUNTING STANDA RDS PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND SAME ARE IN ACCORDANCE WITH SCHEDULE VI TO THE COMPANIES ACT 19 56 AND HENCE FURTHER ADJUSTMENTS AS ABOVE, TO PROFIT AS PER 'FIN AL ACCOUNTS' ARE NOT PERMISSIBLE UNDER SECTION 115JB. IT BE HELD SO NOW AND BOOK PROFIT AS DECLARED BE ACCEPTED NOW. IT BE HELD SO NOW AND AD DITION MADE FOR RE- COMPUTATION OF PROFIT BE DELETED. 2.11.1 BRIEF FACTS OF THIS ISSUE TILL THE ASSESSMEN T STAGE ARE THESE THAT REGARDING THE CLAIM OF THE ASSESSEE FOR THIS EXPENDITURE OF R S.3,5,17,835/, THE A.O. DISALLOWED THE SAME WHILE COMPUTING REGULAR INCOME AND WHILE COMPUTING BOOK PROFIT ALSO, HE HAD ADDED THE SAME IN BOOK PRO FIT ON THIS BASIS THAT THIS IS A CLAIM FOR UNASCERTAINED LIABILITY. BEING AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCC ESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2.11.2 IT WAS SUBMITTED BY THE LEARNED AR THAT THE AS PER THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS A POLLO TYRES AS REPORTED IN I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 16 55 ITR 273, ADDITION MADE BY THE A.O. IN BOOK PROFI T IS NOT JUSTIFIED. AS AGAINST THIS, LD. D.R. SUPPORTED THE ORDERS OF AUTH ORITIES BELOW. 2.11.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, P ERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT WHILE DECIDING THIS ISSUE IN RESPECT OF COMPUTATION OF REGULAR INCOME, WE HAVE ALREADY DECIDED THIS ISSUE AGAINST THE ASSESSEE BY HOLDING THAT THIS IS A PROVISION OF UNASCERTAINED LIABILITY AND, THEREFORE, NOT ALLO WABLE BECAUSE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN SUBSEQUENT FIVE YEARS IF THERE IS EXCESS CHARGE PAYABLE BY THE ASSESSEE IN THAT PERIOD. SINCE, WE HAVE ALR EADY HELD THAT IT IS AN UNASCERTAINED LIABILITY, WE FIND NO REASON TO INTER FERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. REGARDING THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF APOLLO TYRES (SUPRA), WE FIND THAT THIS JUD GEMENT DOES NOT HELP THE ASSESSEE BECAUSE ADJUSTMENT IS AS PER THE PROVISION S OF SECTION 115JB AND THE BOOK PROFIT DECLARED BY THE ASSESSEE IN THE P & L A CCOUNT HAS NOT BEEN DISTURBED BY THE A.O. AND HENCE, THIS ARGUMENT IS OF NO HELP TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS REJECTED. 2.12 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED IN TERMS INDICATED ABOVE. 3. NOW, WE TAKE UP THE REVENUES APPEAL IN I.T.A.NO . 4556/AHD/2007 FOR THE ASSESSMENT YEAR 2004-05. 3.1 GROUND NO.1 IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.2,2 7,467/- U/S 14A TOWARDS INTEREST AND OTHER EXPENSES INCURRED IN REL ATION TO EXEMPTED INCOME OF DIVIDEND AND TAX-FREE INTEREST, WITHOUT T AKING NOTE OF THE LANDMARK DECISION IN THE CASE OF CIT(A) VS ABHISHEK INDUSTRIES LTD. 286ITR 01 (P&H), LAYING DOWN THAT, IN VIEW OF SECTI ON 106 OF THE INDIAN EVIDENCE ACT, THE FACTS BEING IN THE SPECIAL KNOWLE DGE OF THE ASSESSEE, IT WAS UP TO HIM TO ADDUCE EVIDENCE THAT ALL THE BORRO WINGS WERE USED FOR THE PURPOSES OF BUSINESS AND IT IS ASSESSEE'S OWN S URPLUS FUNDS THAT WERE I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 17 INVESTED IN THE SHARES AND DEPOSITS EARNING EXEMPTE D INCOME AND, EVEN IN CASE OF MIXED FUNDS, THE DISALLOWANCE OF INTEREST C OULD BE MADE. (B) THE ID. CIT(A) ERRED IN ACCEPTING THE ASSES SEE'S PLEA THAT THE INVESTMENT IN SHARES AND DEPOSITS BEING LESS THAN T HE ASSESSEE'S OWN FUNDS IN THE BALANCE SHEET, NO DISALLOWANCE OF INTE REST WAS CALLED FOR, WITHOUT APPRECIATING THAT THE ASSESSEE'S OWN FUNDS ALREADY STOOD INVESTED IN FIXED ASSETS OR AS WORKING CAPITAL WHEN THE BORR OWINGS WERE MADE; OTHERWISE, THERE WAS NO NEED FOR SUCH BORROWINGS AN D HENCE IT IS THESE BORROWINGS WHICH WERE UTILISED TO EARN EXEMPTED INC OME AND THE CO- RELATION BETWEEN THE BORROWINGS AND UTILIZATION CAN NOT BE REFLECTED IN THE BALANCE SHEET PREPARED ON A PARTICULAR DATE. (C) THE ID. CIT(A) FAILED TO APPRECIATE THAT W HEN THE ASSESSING OFFICER SHOW-CAUSED THE ASSESSEE AGAINST PROPOSED D ISALLOWANCE, IT WAS UP TO HIM TO PROVE BY FURNISHING DAY-TO-DAY CASH FL OW THAT NO INTEREST- BEARING FUNDS WERE DEPLOYED TO EARN EXEMPTED INCOME AND, IN THE ABSENCE OF THE SAME, THE ASSESSING OFFICER WAS JUST IFIED IN DRAWING INFERENCE AS PER THE RATIO SETTLED IN THE CASE OF C IT VS MOTOR GENERAL FINANCE LTD. 254 ITR 449 (DEL) SINCE CONFIRMED IN P RINCIPAL BY THE SUPREME COURT IN THE CASE OF MOTOR GENERAL FINANCE VS CIT267ITR 381 (SC). (D) THE ID. CIT(A) ERRED IN DELETING THE ENTIR E DISALLOWANCE BY PUTTING ARBITRARY AND NARROW MEANING ON THE TERM 'INCURRED' IN SECTION 14A WHEN THIS SECTION NOWHERE REFERS TO INCURRING OF EXPRESS LY QUANTIFIED EXPENDITURE IN RELATION TO EXEMPTED INCOME AND, INS TEAD, USES THE WIDER EXPRESSION 'IN RELATION TO' AND NOT 'FOR EARNING OF 3.1.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITTED THAT RU LE 8D IS NOT APPLICABLE IN THE PRESENT YEAR AS PER THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & BOYCE MANUFACTURING LTD. AS REPORT ED IN 328 ITR 81 (BOMBAY). HE ALSO SUBMITTED THAT THE ASSESSEES OW N FUNDS WERE MUCH MORE THAN THE INVESTMENT IN SHARES AND, THEREFORE, NO IN TEREST IS RELATABLE TO EARNING OF DIVIDEND IN THE ABSENCE OF ANY DIRECT NEXUS HAVING BEEN ESTABLISHED BY THE A.O. BETWEEN BORROWED FUNDS AND INVESTMENT IN SHARES. H E ALSO PLACED RELIANCE ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF RELAX O FOOTWEAR VS ACIT AS REPORTED IN 50 SOT 102 (DEL.) IN SUPPORT OF THIS CO NTENTION THAT EXPENDITURE COULD NOT BE DISALLOWED ON PRESUMPTION THAT THERE I S BOUND TO BE SOME I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 18 EXPENDITURE FOR EARNING EXEMPT INCOME. AT THIS JUN CTURE, A QUERY WAS RAISED BY THE BENCH AS TO WHETHER THE ASSESSEE WAS HOLDING TH E INVESTMENT IN DMAT ACCOUNT OR IN PHYSICAL FORM AND WHETHER ANY EXPENDI TURE WAS INCURRED BY THE ASSESSEE IN RESPECT OF DMAT ACCOUNT BECAUSE THIS OB SERVATION IS MADE BY THE A.O. IN THE ASSESSMENT ORDER THAT AT LEAST SOME EXP ENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF DMAT ACCOUNT HAS TO BE THERE . IN REPLY, IT WAS SUBMITTED BY THE LD. A.R. THAT THERE MAY BE SOME EXPENDITURE IN RESPECT OF DMAT ACCOUNT. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 3.1.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. WE FIND THAT SINCE THE OWN FUNDS OF THE ASSESSEE ARE MUCH MORE THAN THE IN VESTMENT AND THERE IS NO NEXUS ESTABLISHED BY THE A.O. BETWEEN THE INVESTMEN T AND INTEREST BEARING BORROWED FUNDS, IT CANNOT BE SAID THAT ANY INTEREST EXPENDITURE IS INCURRED BY THE ASSESSEE FOR EARNING EXEMPT DIVIDEND INCOME AND HEN CE, NO DISALLOWANCE CAN BE MADE U/S 14A OUT OF INTEREST EXPENDITURE. REGARDI NG OTHER EXPENDITURE, IT CANNOT BE SAID THAT THERE IS NO EXPENDITURE INCURRE D BY THE ASSESSEE AT ALL FOR EARNING DIVIDEND INCOME BECAUSE ADMITTEDLY, THE ASS ESSEE WAS HOLDING THESE INVESTMENTS IN DMAT ACCOUNT AND, THEREFORE, THERE M UST BE SOME EXPENDITURE INCURRED IN RESPECT OF SUCH DMAT ACCOUNT. NORMALLY , WE RESTORE THIS TYPE OF MATTER TO THE FILE OF THE A.O. FOR DECIDING THE DIS ALLOWANCE OF EXPENDITURE ON A REASONABLE BASIS BUT IN THE FACTS OF THE PRESENT CA SE, CONSIDERING THE SMALLNESS OF THE MOUNT, WE FEEL THAT THIS WILL BE A FUTILE EXERC ISE AND HENCE, WE HOLD THAT A DISALLOWANCE OF RS.50,000/- WILL MEET THE ENDS OF J USTICE. WE, THEREFORE, CONFIRM THE DISALLOWANCE OF RS.50,000/- AND DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) IN RESPECT OF BALANCE DISALLOWANCE DELET ED BY HIM. THIS GROUND OF THE REVENUE IS PARTLY ALLOWED. 3.2 GROUNDS NO.2, 3 & 4 ARE AS UNDER: 2.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT(A) ERRED IN NEGATING THE ADJUSTMENT OF PROVISIO N FOR BAD DEBTS IN THE I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 19 COMPUTATION OF BOOK PROFIT U/S 115JB ON THE GROUND THAT IT WAS NOT A LIABILITY FOR EXPENSES BUT A LIABILITY RELATING TO ASSETS, WITHOUT APPRECIATING THAT THE WORD 'LIABILITY' IN CLAUSE (C ) OF THE EXPLANATION BELOW SECTION 115JB(2) DOES NOT DISTINGUISH BETWEEN A LIABILITY TOWARDS EXPENSES AND A LIABILITY RELATING TO ASSETS BOTH OF WHICH ARE A CHARGE ON THE PROFITS. (B) WITHOUT PREJUDICE, THE ID CIT(A) FAILED TO APPR ECIATE THAT IF THE AMOUNT DID NOT CONSTITUTE LIABILITY, IT WAS A RESER VE 'BY WHATEVER NAME CALLED' WITHIN THE MEANING OF CLAUSE (B) OF THE EXP LANATION BELOW SECTION 115JB (2) IN VIEW OF NOT BEING ACTUAL AMOUNT OF DEB TS WRITTEN OFF BUT ONLY AN ARBITRARY PROVISION AT AN ESTIMATED FRACTIO N OF TOTAL DEBTS, WHICH IS TREATED AS RESERVE EVEN UNDER RULE 7(2) OF SCHED ULE VI OF THE COMPANIES ACT WITHOUT THE EXTENTION OF MEANING AS I N CLAUSE (B) OF THE AFORESAID EXPLANATION. 3.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN NEGATING THE ADJUSTMENT OF BOOK PRO FIT U/S 115JB BY THE LIABILITY TOWARDS PROVISION FOR GRATUITY AND SUPERA NNUATION BENEFITS MADE ON THE BASIS OF ACTUARIAL VALUATION, WHICH CONSTITU TED A CONTINGENT AND HENCE UNASCERTAINED LIABILITY IN ACCORDANCE WITH TH E RATIO OF SHREE SAJJAN MILLS LTD. VS CIT 156 ITR 585 (SC) AND HENCE WAS CO VERED BY CLAUSE (C) OF THE EXPLANATION BELOW SECTION 115JB(2). (B) THE ID CIT(A) ERRED IN TREATING SUCH LIABILITY OF GRATUITY AND SUPERANNUATION BENEFIT AS AT PAR WITH THE LIABILITY OF LEAVE SALARY WHEN THE LATTER CRYSTALLIZES YEAR TO YEAR ON ACCOUNT OF THE ELIGIBLE EMPLOYEES NOT AVAILING OF LEAVE DURING THE YEAR IN CONTRAST WITH THE PROVISION FOR GRATUITY AND SUPERANNUATION BENEFITS PROVIDED WITH REFERENCE TO THE CONTINGENCY OF EMPLOYEES' RETIREMENT IN REMOTE FUTU RE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN NEGATING THE ADJUSTMENT OF PROV ISION FOR INTEREST ON DEBENTURES ISSUED TO UTI UNDER CLAUSE (C) OF THE EX PLANATION BELOW SECTION 115JB, WHEN THIS CONTRACTUAL LIABILITY OF I NTEREST WAS DISPUTED AND HAD NOT YET FINALLY SETTLED AND HENCE CONSTITUTED A CONTINGENT AND UNASCERTAINED LIABILITY AS PER LAW SETTLED IN THE C ASE OF CIT VS SWADESI COTTON & FLOUR MILLS PVT. 53 ITR 134 (SC) AND ALEMB IC CHEMICAL WORKS LTD. VS DCIT266ITR 47 (GUJ). 3.2.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE FURTHER SUBMITTED THAT THERE ARE 4 TYPES OF ISSUES INVOLVED IN THESE GROUNDS. REGARDING THE FIRST ISS UE I.E. PROVISION FOR BAD DEBT OF RS.3,25,77,089/-, IT IS FAIRLY CONCEDED THAT THE SAME HAS TO BE DECIDED AGAINST THE ASSESSEE AS PER CLAUSE (II) OF EXPLANATION (1) TO SECTION 115JB. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 20 ACCORDINGLY, THIS PART OF THE GROUND IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. REGARDING CONTRIBUTION TO G RATUITY FUND OF RS.64,53,658/-, IT WAS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE DELHI HIGH COU RT RENDERED IN THE CASE OF CIT VS HEWLETT PACKARD INDIA (P) LTD. AS REPORTED I N 314 ITR 55 (DEL.). IT WAS ALSO SUBMITTED THAT SLP WAS FILED BY THE REVENUE AG AINST THIS JUDGMENT OF HONBLE DELHI HIGH COURT AND THE SAME WAS DISMISSED BY THE HONBLE APEX COURT AS REPORTED IN 320 ITR 17 (STATUTE). UNDER T HIS FACTUAL AND LEGAL POSITION, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ASPECT BECAUSE LD. D.R. COULD NOT POINT OUT AS TO HOW, THIS JUDGEMENT OF HONBLE DELHI HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE. REGARDING T HE 3 RD ITEM, I.E. CONTRIBUTION TO SUPERANNUATION FUND OF RS.2,61,60,033/- AND ALSO FO R 4 TH ITEM I.E. PROVISION FOR INTEREST TO UTI OF RS.1,52,92,991/-, IT WAS SUBMITT ED THAT BOTH THESE ASPECTS SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE AS PER THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF APOLLO TYRES (SU PRA). WE FIND THAT THE ISSUE REGARDING ADDITION OF RS.2,61,6,033/- ON ACCOUNT OF CONTRIBUTION TO SUPERANNUATION FUND AND RS.64,52,658/- IN RESPECT O F CONTRIBUTION TO GRATUITY FUND HAS BEEN DELETED BY LD. CIT(A) BY FOLLOWING TH E JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF BHARAT EARTH MOV ERS AS REPORTED IN 245 ITR 428 (S.C.) WHEREIN, IT WAS HELD THAT SUCH LIABILITY IS ASCERTAINED LIABILITY. THEREFORE, IN RESPECT OF THESE TWO ITEMS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). REGARDING THE ITEM OF RS.1,52,92,991/-, IN RESPECT OF THE PROVISION FOR INTEREST TO UTI, WE HAVE ALREA DY HELD THAT THIS IS AN ALLOWABLE EXPENDITURE WHILE DECIDING GROUND NO.4 OF THE ASSESSEES APPEAL AND HENCE, ON THIS ISSUE ALSO ,WE DO NOT FIND ANY REASO N TO INTERFERE IN THE ORDER OF LD. CIT(A). ACCORDINGLY, THIS GROUND IS PARTLY ALL OWED. 3.3 GROUND NO.5 OF THE REVENUE IS AS UNDER: 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING TO ADJUST DEDUCTION U/S 8 0HHC AS PER BOOK I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 21 PROFIT AND NOT AS COMPUTED UNDER THE PROVISIONS OF SECTION 80HHC IN THE COMPUTATION OF DEEMED TOTAL INCOME UNDER SECTION 11 5JB, BY IGNORING THE LANGUAGE OF CLAUSE (IV) OF THE EXPLANATION BELO W SECTION 115JB(2) REFERRING TO AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTI ON U/S 80HHC AS COMPUTED UNDER SECTION 80HHC(3) SUBJECT TO THE COND ITIONS SPECIFIED IN SECTION 80HHC, WHICH INCLUDES THE CONDITION LAID DO WN IN EXPLANATION (BAA) BELOW SECTION 80HHC. (B) THE CIT(A) ERRED IN PLACING AN INTERPRETATIO N WHICH IS DISCRIMINATORY BETWEEN AN ASSESSEES PAYING TAX ON T HE NORMAL TOTAL INCOME AND AN ASSESSEE PAYING TAX ON THE DEEMED TOT AL INCOME UNDER SECTION 115JB, MAKING ONLY THE LATTER ENTITLED TO B ENEFIT UNINTENDED IN THE LETTER AS WELL AS THE SCHEME OF THE ACT. 3.3.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS IT IS SUBMITTED BY THE LD. A.R. THAT IN THE ASSESSEES OWN CASE FOR THE AS SESSMENT YEAR 2003-04 IN I.T.A.NO. 4553/AHD/2007, THIS ISSUE WAS RESTORED TO THE FILE OF THE A.O. WITH THE DIRECTION TO CONSIDER ALL THE CASE LAW. HE SUBMITT ED THAT IN THE PRESENT YEAR ALSO, THIS ISSUE MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AND HE SHOULD BE DIRECTED TO CONSIDER LATEST JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF AJANTA PHARMA LD. VS CIT AS REPORTED IN 327 ITR 305. 3.3.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SIN CE IN ASSESSMENT YEAR 2003-04 IN THE ASSESSEES OWN CASE, THIS ISSUE HAS BEEN RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER CONSIDER ALL THE RELEVANT CASE LAW, IN THE PRESENT YEAR ALSO, WE SET ASIDE THE ORDER OF LD. CI T(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL IN ASSESSMENT YEAR 2003-0 4 ON THIS ISSUE. APART FORM THOSE JUDGEMENTS WHICH ARE REFERRED TO BY THE TRIBU NAL IN ASSESSMENT YEAR 2003-04, THE A.O. SHOULD ALSO CONSIDER APPLICABILIT Y OF THE LATEST JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF AJANTA P HARMA LTD. (SUPRA). NEEDLESS TO SAY, THE A.O. SHOULD PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATIS TICAL PURPOSES. 3.4 ADDITIONAL REVISED GROUND HAS BEEN RAISED BY TH E REVENUE VIDE LETTER DATED 11.10.2012 WHICH IS AS UNDER: I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 22 REVISED ADDITIONAL GROUND [ ITA NO.4556/AHD/2007 ] L(A). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID.CIT(APPEALS) ERRED IN RELYING ON THE DECISION OF THE ID.CIT(APPEALS) AND THE HON'BLE ITAT IN THE CASE OF THE ASSESSEE FO R A. Y. 1991-92 AND THEREBY DELETING THE DISALLOWANCE OF? 1,89,17,094/- TOWARDS LEASE RENT PAID. L(B). THE ID.CIT(APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE TRANSACTIONS ARE IN THE NATURE OF FINANCIAL LEASE A ND THAT THE COMPANY HAS CAPITALIZED THE ASSETS POROCURED THROUGH SUCH FINAN CE ARRANGEMENT AND HAD CLAIMED DEPRECIATION FOR THEM. FURTHER THE ASSE SSEE COMPANY HAS DEBITED ONLY THE INTEREST AMOUNT IN THE BOOKS .OF A CCOUNT. THE ASSESSEE'S CONTENTION THAT NATURE OF THIS TRANSACTION SHOULD B E TREATED DIFFERENTLY FOR THE PURPOSE OF BOOKS AND FOR INCOME-TAX IS NOT TENA BLE EITHER IN FACT OR IN LAW. 2. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR AL TER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE LD. CIT(APPEALS) ON THE ABOVE ISSU E MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.4.1 REGARDING ADMISSION OF ADDITIONAL GROUND, IT WAS SUBMITTED BY THE LD. D.R. THAT THIS IS A LEGAL ISSUE AND HENCE, CAN BE R AISED AND SHOULD BE ADMITTED AS PER THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF NTPC (SUPRA). LD. A.R. COULD NOT SHOW THAT THIS JUDGEMENT OF NTPC (SUPRA) IS NOT APPLICABLE IN THE PRESENT CASE AND THE ISSUE RAISED BY THE REV ENUE IN THE ADDITIONAL GROUND IS NOT LEGAL ISSUE AND HENCE, THIS ADDITIONAL GROUN D IS ADMITTED. IT WAS SUBMITTED BY THE LD. D.R. THAT IT IS ADMITTED BY TH E ASSESSEE THAT VARIOUS LEASE TAKEN BY THE ASSESSEE ARE FINANCIAL LEASE AS HAS BE EN NOTED BY THE A.O. IN PARA 7 OF THE ASSESSMENT ORDER. HE FURTHER SUBMITTED THAT AS PER THE RECENT DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BANK AS REPORTED IN 135 ITD 165 (MUM.) (SB), IN RESPECT OF FINANCIAL LEASE, THE LESSEE IS ENTITLED FOR DEDUCTION ON ACCOUNT OF INTEREST EXPENDITURE I. E. LEASE RENT (-) PRINCIPLE REPAYMENT WHEREAS THE LESSOR HAS TO BE TAXED ONLY F OR INTEREST INCOME I.E. LEASE RENT RECEIVED LESS PRINCIPLE REPAYMENT RECEIVED AND DEPRECIATION ON LEASED ASSET IS ALLOWABLE TO THE LESSEE. HE SUBMITTED THAT THE MATTER MAY BE RESTORED BACK TO I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 23 THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LI GHT OF THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL. LD. A.R. COULD NOT POINT OU T AS TO HOW THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL IS NOT APPLICABLE IN THE PRESENT CASE AND HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LIGHT OF THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BA NK (SUPRA). THE ASSESSEE SHOULD BE ALLOWED DEDUCTION ON ACCOUNT OF INTEREST PAYMENT OUT OF LEASE RENT PAID AND ASSESSEE SHOULD ALSO BE ALLOWED DEDUCTION ON ACCOUNT OF DEPRECATION IF THE ASSETS IN QUESTION ARE PUT TO USE. THE ALLOWAB ILITY OF INTEREST ALSO SHOULD BE DECIDED IN THE LIGHT OF THE PROVISO TO SECTION 36(1 )(III) INSERTED BY THE FINANCE ACT 2003 W.E.F. 01.04.2004. THIS GROUND OF THE REV ENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 3.5 IN THE RESULT, APPEAL OF THE REVENUE STANDS PAR TLY ALLOWED IN TERMS INDICATED ABOVE. 4. NOW, WE TAKE UP THE REMAINING APPEALS FOR WHICH ARGUMENTS WERE MADE BY MR. SUNIL TALATI ON BEHALF OF THE ASSESSEE IN PL ACE OF MR. J P SHAH. FIRST, WE TAKE UP THE THREE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08 IN I.T.A.NO. 179, 180 & 181/AHD/2 010. BOTH SIDES AGREED THAT ALMOST ALL THE ISSUES RAISED BY THE ASSESSEE A S PER THESE THREE APPEALS ARE SIMILAR TO THE ISSUES RAISED BY THE ASSESSEE IN ASS ESSMENT YEAR 2004-05 AND HENCE, THE SAME CAN BE DECIDED ON SIMILAR LINES. 4.1 IT WAS POINTED OUT THAT GROUND NO.1 IN ALL THE THREE YEARS IS GENERAL. 4.2 IT WAS FURTHER SUBMITTED THAT GROUND NO.2 IN AS SESSMENT YEAR 2005-06 AND 2006-07 IS RELATED TO DISALLOWANCE OF PROFESSIONAL FEES IN RESPECT OF CORPORATE DEBT RESTRUCTURING AND THIS ISSUE IS THE SAME AS PE R GROUND NO.2 RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2004-05. WHILE DECIDIN G THIS ISSUE IN ASSESSMENT YEAR 2004-05, WE HAVE HELD AS PER PARA 2.2.4 TO 2.2 .7 ABOVE THAT IT IS REVENUE EXPENDITURE BUT DEDUCTION IS TO BE ALLOWED TO THE A SSESSEE ON PROPORTIONATE BASIS I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 24 DURING ALL THESE YEARS IN WHICH THE ASSESSEE IS GET TING BENEFIT FOR DEBT RESTRUCTURING AS PER THE JUDGMENT OF HONBLE APEX C OURT RENDERED IN THE CASE OF MADRAS INDUSTRIES DEVELOPMENT CORPORATION (SUPRA). ACCORDINGLY, IN THESE TWO YEARS ALSO, WE DECIDE THIS ISSUE ON SIMILAR LINE AN D DIRECT THE A.O. TO ALLOW DEDUCTION OF THIS EXPENDITURE ON PROPORTIONATE BASI S AS HAS BEEN DECIDED BY US IN ASSESSMENT YEAR 2004-05. 4.3 IT WAS FURTHER SUBMITTED THAT GROUND NO.3 IN AS SESSMENT YEARS 2005-06 AND 2006-07 AND GROUND NO.2 IN ASSESSMENT YEAR 2007 -08 IS THE SAME AS GROUND NO.5 IN ASSESSMENT YEAR 2004-05. WHILE DECIDING TH IS ISSUE IN ASSESSMENT YEAR 2004-05 AS PER PARA 2.5.2 ABOVE, WE HAVE REJECTED T HIS GROUND OF THE ASSESSEE AND ACCORDINGLY IN THESE THREE YEARS ALSO, THIS ISS UE IS DECIDED AGAINST THE ASSESSEE. 4.4 REGARDING GROUND NO.4 IN ASSESSMENT YEAR 2005-0 6, IT WAS SUBMITTED BY THE LD. A.R. THAT THE SAME IS SIMILAR TO GROUND NO. 6 IN ASSESSMENT YEAR 2004-05 AND WHILE DECIDING THIS ISSUE IN ASSESSMENT YEAR 20 04-05 AS PER PARA 2.6.1 ABOVE, WE HAVE DECIDED THIS ISSUE AGAINST THE ASSES SEE AND ACCORDINGLY, IN THE ASSESSMENT YEAR 2005-06 ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 4.5 REGARDING GROUND NO.5 IN ASSESSMENT YEAR 2005-0 6, IT WAS SUBMITTED BY THE LD. A.R. THAT THE SAME IS IDENTICAL TO GROUND N O.9 IN ASSESSMENT YEAR 2004- 05. WHILE DECIDING THIS ISSUE IN ASSESSMENT YEAR 2 004-05, THIS ISSUE WAS RESTORED BACK BY US TO THE FILE OF THE A.O. FOR A F RESH DECISION AS PER PARA 2.9.2 AND ACCORDINGLY, IN ASSESSMENT YEAR 2005-06 ALSO, T HIS ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION WITH THE SAME DIRECTION. 4.6 REGARDING GROUND NO.3 RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2007- 08, IT WAS SUBMITTED THAT THIS DISALLOWANCE HAS BEE N MADE U/S 43B OF THE INCOME TAX ACT, 1961 AND HENCE, THE A.O. SHOULD BE DIRECTE D TO ALLOW SUCH DEDUCTION IN THE YEAR OF PAYMENT. IN THIS REGARD, WE WOULD LIKE TO OBSERVE THAT WHEN THE DISALLOWANCE IS MADE U/S 43B, NO DIRECTION IS REQUI RED TO THE A.O. FOR ALLOWING I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 25 DEDUCTION IN THE YEAR OF PAYMENT BECAUSE THIS IS AS PER LAW. HENCE, THIS GROUND IS REJECTED WITH THESE OBSERVATIONS. 4.7 IT WAS FURTHER SUBMITTED THAT GROUND NO.6 IN AS SESSMENT YEAR 2005-06, GROUND NO.4 IN ASSESSMENT YEAR 2006-07 AND GROUND N O.4 IN ASSESSMENT YEAR 2007-08 IS REGARDING CONFIRMATION OF ENHANCEMENT OF BOOK PROFIT ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBT. IN THIS REGAR D, IT WAS FAIRLY CONCEDED BY THE LD. A.R. THAT THIS ISSUE HAS TO BE DECIDED AGAI NST THE ASSESSEE AS PER CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB AND HENCE, TH IS ISSUE IS DECIDED AGAINST THE ASSESSEE IN ALL THE THREE YEARS. 4.8 IN THE RESULT, APPEALS OF THE ASSESSEE IN ASSES SMENT YEAR 2005-06 AND 2006-07 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES WHEREAS THE REMAINING APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 IS DISMISSED. 5. NOW, WE TAKE UP THE REVENUES APPEALS FOR ASSESS MENT YEARS 2005-06, 2006-07 & 2007-08 IN I.T.A.NOS.473, 474 & 475/AHD/2 010. IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE AS PER GROUND NO.1 OF THE REVENUES APPEAL IN ALL THE THREE YEARS IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ASSESSMENT YEAR 2004-05 BY WAY OF REVISED ADDITIONAL GROUND AND HEN CE, THE SAME MAY BE DECIDED ON SIMILAR LINES IN THESE THREE YEARS ALSO. WHILE DECIDING THIS ISSUE IN ASSESSMENT YEAR 2004-05, WE HAVE RESTORED THE MATTE R TO THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LIGHT OF THE DECISION OF SP ECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF INDUSIND BANK (SUPRA). OUR DECISION IN ASSESSMENT YEAR 2004-05 IN THIS REGARD IS AS PER PARA 3.4.1 ABOVE. IN THESE THREE YEARS ALSO, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION WITH THE SAME DIRECTION AS GIVEN BY US IN ASSESSMENT YEAR 2004-05. THIS GROUND OF THE REVENU E IN ALL THESE THREE YEARS STANDS ALLOWED FOR STATISTICAL PURPOSES. 5.1 GROUND NO.2 IN ASSESSMENT YEAR 2005-06 AND GROU ND NO.3 IN ASSESSMENT YEAR 2007-08 ARE SIMILAR TO GROUND NO.3 IN ASSESSEE S APPEAL FOR ASSESSMENT YEAR 2004-05. IN ASSESSMENT YEAR 2004-05, THIS ISS UE HAS BEEN DECIDED BY US AS I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 26 PER PARA 2.3.5 AND IT WAS HELD BY FOLLOWING THE TRI BUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 THAT IN ASSESS MENT YEARS 1993-94 TO 1995- 96, THE A.O. HAS ALLOWED CLAIM OF THE ASSESSEE AS R EVENUE EXPENDITURE AND IN ASSESSMENT YEAR 1999-2000 AND 2000-01 ALSO, THE ISS UE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND NO MATERIAL IS PLACED BEFORE US SH OWING ANY DIFFERENCE IN FACTS WITH THE YEARS IN WHICH, THIS CLAIM OF THE ASSESSEE WAS ALLOWED. ACCORDINGLY, IN THESE TWO YEARS ALSO, THE CLAIM OF THE ASSESSEE IS ALLOWED AND THE RELEVANT GROUND OF THE REVENUE BEING GROUND NO.2 IN ASSESSME NT YEAR 2005-06 AND GROUND NO.3 IN ASSESSMENT YEAR 2007-08 ARE DISMISSE D. 5.2 GROUND NO.3 IN ASSESSMENT YEAR 2005-06 IS REGAR DING DELETION OF ADJUSTMENT IN BOOK PROFIT MADE BY THE A.O. U/S 115J B ON ACCOUNT OF THE PROVISIONS FOR GRATUITY OF RS.108.77 LACS AND PROVI SION FOR SUPERANNUATION OF RS.246.58 LACS. IT WAS AGREED BY BOTH THE SIDES TH AT THESE ISSUES ARE IDENTICAL TO GROUND NO.3 OF THE REVENUES APPEAL IN ASSESSMENT Y EAR 2004-05. WHILE DECIDING THE APPEAL FOR 2004-05, WE HAVE DECIDED BO TH THESE ISSUES IN FAVOUR OF THE ASSESSEE AS PER PARA 3.2.1 ABOVE AND ACCORDINGL Y IN ASSESSMENT YEAR 2005-06 ALSO, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASS ESSEE AND GROUND NO.3 FOR THE ASSESSMENT YEAR 2005-06 IS REJECTED. 5.3 GROUND NO.4 IN ASSESSMENT YEAR 2005-06 IS REGAR DING DELETION OF DISALLOWANCE OF RS.1,59,92,991/- BEING INTEREST PAY MENT TO UTI. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS CONSEQUENTIAL TO GROUND NO.4 AS PER ASSESSEES APPEAL IN ASSESSMENT YEAR 2004-05 AND BO TH THE SIDES AGREED THAT IF THIS CLAIM IS ALLOWED IN ASSESSMENT YEAR 200-405 TH EN THE RELIEF ALLOWED BY LD. CIT(A) IN THE PRESENT YEAR SHOULD BE WITHDRAWN. WH ILE DECIDING GROUND NO.4 OF THE ASSESSEES APPEAL IN ASSESSMENT YEAR 2004-05 AS PER PARA 2.4.4 ABOVE, WE HAVE ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE AS SESSEE IN THAT YEAR AND HENCE, NO FURTHER RELIEF CAN BE ALLOWED TO THE ASSESSEE IN THE PRESENT YEAR AS HAS BEEN ALLOWED BY LD. CIT(A). THEREFORE, THE ORDER OF LD. CIT(A) ON THIS ISSUE IS REVERSED. GROUND NO.4 IN ASSESSMENT YEAR 2005-06 O F THE REVENUE IS ALLOWED. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 27 5.4 GROUND NO.5 IN ASSESSMENT YEAR 2005-06, GROUND NO.2 IN ASSESSMENT YEAR 2006-07 AND GROUND NO.2 IN ASSESSMENT YEAR 200 7-08 ARE IDENTICAL AND THE SAME ARE IN RESPECT OF THE CLAIM OF THE ASSESSEE U/ S 80-IA(4) FOR TAKING THE PRICE OF ELECTRICITY SUPPLIED BY GEB. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT (A). HE ALSO SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. I T WAS FURTHER SUBMITTED THAT WHILE DECIDING THIS ISSUE, LD. CIT(A) HAS FOLLOWED VARIOUS TRIBUNAL DECISIONS INCLUDING THE TRIBUNAL DECISION RENDERED IN THE CAS E OF ALEMBIC LIMITED IN I.T.A.NO. 3594/AHD/2007 DATED 06.06.2008 AND ALSO T HE TRIBUNAL DECISION RENDERED IN THE CASE OF WEST COAST PAPER MILLS VS ACIT 103 ITD 19 AND ALSO IN THE CASE OF ADDL. CIT VS JINDAL STEEL & POWER LT D. AS REPORTED IN 16 SOT 509 AND HENCE, NO INTERFERENCE IS CALLED FOR IN THI S ORDER OF LD. CIT(A) ON THIS ISSUE. 5.4.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER THE TRIBUNAL DECISION IN THE CASE OF ALEMBIC LTD. (SUPRA) AND ALSO IN THE CASE OF JINDAL STEELS & POW ER LTD. (SUPRA)AND WORKED OUT DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80-IA I N RESPECT OF CAPTIVE CONSUMPTION OF POWER, THE RATES FIXED BY ELECTRICIT Y BOARD I.E. GEB IN THE PRESENT CASE, HAS TO BE APPLIED AND NOT THE PRICE F IXED BY THE LEGISLATIVE MANDATE. HE HAS ALSO NOTED THAT IN THE PRESENT CAS E, THE ASSESSEE IS PREVENTED BY LEGISLATIVE MANDATE FROM SELLING POWER TO ANY PERSO N OTHER THAN GEB AND THE RATES FIXED BY GEB WAS RS.1.86 PER UNIT ONLY BUT TH E GEB IS ASKING THE ASSESSEE TO PAY AT RS.4.55 PER UNIT AND HENCE, HE HAS DIRECT ED THE A.O. TO ALLOW DEDUCTION U/S 80-IA AS CLAIMED, BEING THE MARKET RATE OF RS.4 .55 PER UNIT OF POWER. NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY THE LD. D.R. AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD . CIT(A) ON THIS ISSUE WHICH IS IN LINE WITH VARIOUS TRIBUNAL DECISIONS. THIS ISSU E IS DECIDED IN FAVOUR OF THE ASSESSEE AND THESE GROUNDS OF THE REVENUE IN ALL TH E THREE YEARS ARE REJECTED. I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 28 5.4.2 REGARDING THE CONTENTION RAISED BY THE REVENU E IN THIS REGARD IN THE GROUNDS OF APPEAL ITSELF THAT THE LD. CIT(A) AS WEL L AS THE TRIBUNAL HAVE RELIED UPON THE DECISION OF THE TRIBUNAL RENDERED IN THE C ASE OF CHETINAR .. IN I.T.A.NO. 1026/MDS/2005 FOR ASSESSMENT YEAR 2001-02 , WE FIND THAT IN THIS GROUND ITSELF, IT IS STATED BY THE REVENUE THAT THE TRIBUNAL DECISION WAS NOT FOLLOWED BY THE TRIBUNAL AND LD. CIT(A) ON THIS GRO UND THAT THE ASSESSEE HAS CAPTIVE POWER GENERATION PLANT AND THEREFORE, THE C LAIM WAS NOT ALLOWABLE. SINCE THE REVENUE ITSELF HAS GIVEN THE REASON REGAR DING NOT FOLLOWING THIS TRIBUNAL DECISION BY LD. CIT(A) AND BY THE TRIBUNAL , NO FURTHER COMMENTS ARE REQUIRED FROM US IN THIS REGARD. 5.5 IN THE RESULT, ALL THESE THREE APPEALS OF THE R EVENUE ARE PARTLY ALLOWED IN TERMS INDICATED ABOVE. 6. IN THE COMBINED RESULT, APPEALS OF THE ASSESSEE IN I.T.A.NOS. 4462/AHD/2007, 179 & 180/AHD/2010, APPEALS OF THE R EVENUE IN I.T.A.NOS. 4556/AHD/2007, 373-375/AHD/2010 ARE PARTLY ALLOWED IN TERMS INDICATED ABOVE, WHEREAS ASSESSEES APPEAL IN I.T.A.NO. 181/AHD/2010 IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.4462,4556 /AHD/2007 I.T.A.NO. 179-181 & 473-475/AHD/10 29 1. DATE OF DICTATION 05.03.2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11/03/2013.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22/3/2013 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.1/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 01/4/2013 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .