M/s. SGS Tekniks Pvt. Ltd, New Delhi V. DCIT, New Delhi

ITA 4571/DEL/2009

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1818 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 23-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUJIT KUMAR SENIOR
• Assessee Lawyers: PROF S SAMPATH
• Keywords: Depreciation; Bonafide belief; Additional evidence; Notional interest; Commercial expediency
• Section: 142(1); 234B; 80IB; 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G: NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.4571/DEL./2009 (ASSESSMENT YEAR : 2006-07) M/S. SGS TEKNIKS PVT. LTD., VS. ACIT, CIRCLE 8 (1 ), F 225A, SAINIK FARMS, NEW DELHI. NEW DELHI 110 062. (PAN : AAACS2999D) ITA NO.97/DEL./2010 (ASSESSMENT YEAR : 2006-07) ACIT, CIRCLE 8 (1), VS. M/S. SGS TEKNIKS PVT. LT D., NEW DELHI. F 225A, SAINIK FARMS, NEW DELHI 110 062. (PAN : AAACS2999D) (APPELLANT) (RESPONDENT) ASSESSEE BY : PROF. S. SAMPATH REVENUE BY : SHRI SUJIT KUMAR, SENIOR DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THESE CROSS APPEALS FILED BY THE REVENUE AND THE AS SESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XI, NEW DELHI DATED 19.10.2009 FOR THE ASSESSMENT YEAR 2006-07. 2 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1. THE ITO AND THE CIT (APPEALS) HAVE ERRED IN NOT ALLOWING DEDUCTION U/S 80IC AS CLAIMED BY THE APPELLANT. 2. IT IS CONTENDED THAT CALCULATION OF DEDUCTION U/ S 80IC IS WRONG AND REQUIRE REVISION. 3. IT IS CONTENDED THAT THE CIT(APPEAL) HAD ERRED I N NOT ACCEPTING THE ADDITIONAL EVIDENCE PROVIDED BY THE A PPELLANT AND THE CIT(APPEALS) HAD CONFUSED HIMSELF BETWEEN THE A DDITIONAL EVIDENCE AND THE ADDITIONAL GROUNDS OF APPEAL. 4. IT IS CONTENDED THAT THE APPELLANT HAD NEVER RAI SED ANY ADDITIONAL GROUND BEFORE THE CIT(APPEAL). IT HAD ON LY FILED THE DOCUMENTS IN ACCORDANCE WITH RULE 46A FOR ACCEPTING THE ADDITIONAL EVIDENCE. 5. IT IS CONTENDED THAT THE CIT(APPEAL) HAD ACCEPTE D THE ADDITIONAL EVIDENCE AND THEN ONLY FORWARDED THE SAM E TO THE ASSESSING OFFICER OR HIS COMMENTS. ACCORDINGLY THE CIT(APPEAL) HAD ERRED IN HOLDING THAT SUCH ADDITIONAL GROUND IS NOT TO BE ENTERTAINED AND ERRED IN REJECTING SUCH ADDITIONAL EVIDENCE. 6. IT IS CONTENDED THAT FOR TECHNICAL BREACH OF NOT FILING FORM NO.10CCB BEFORE THE AO, COULD NOT LEAD TO DISALLOWA NCE OF THE CLAIM OF DEDUCTION U/S. 80IC. FURTHER CONTENDED THA T THE AO HAD NEVER CALLED FOR THE FORM NO.10CCB FROM THE APPELLA NT. 7. IT IS CONTENDED THAT THE APPELLANT HAD FULFILLED THE CONDITIONS OF 80IC WHICH ALSO HAS NOT BEEN DISPUTED BY THE LOW ER AUTHORITIES BUT FOR NON-FILING OF FORM NO.10CCB SUCH DEDUCTION CLAIMED BY THE APPELLANT WAS DISALLOWED. 8. THE ASSESSING OFFICER HAD ERRED IN DISALLOWING I NTEREST OF RS.16,57,972/ - AS CLAIMED BY THE APPELLANT. 9. IT IS CONTENDED THAT THE ASSESSING OFFICER AND T HE CIT(APPEAL) HAVE WRONG ESTABLISHED THE ALLEGED NEXU S BETWEEN THE LOAN TAKEN AND THE INTEREST FREE ADVANCE GIVEN. IT IS CONTENDED 3 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 THAT THERE IS NO NEXUS BETWEEN THE TWO AND ACCORDIN GLY DISALLOWANCE OF INTEREST / RESTRICTING THE DISALLOW ANCE IS WRONG AND BAD IN LAW. 10. IT IS CONTENDED THAT THE ENTIRE INTEREST OF RS. 16,57,972/ - IS FULLY AN ALLOWABLE DEDUCTION AND INCURRED WHOLLY AN D EXCLUSIVELY FOR BUSINESS PURPOSE, WHICH HAS BEEN ALLOWED IN THE PAST AND NO SECOND APPEAL WAS PREFERRED BY THE DEPARTMENT AGAIN ST SUCH RELIEF ON THIS ISSUE GRANTED BY THE CIT(APPEALS) IN EARLIER YEARS. 11. THE DISALLOWANCE OF DEPRECIATION OF RS.2,47,703 /- ON THE ADDITIONS TO THE FACTORY BUILDING OF RS.24,77,037/- IS WRONG AND BAD IN LAW. 12. IT IS CONTENDED THAT THE DISALLOWANCE OF RS.2,4 8,334/ - ON ACCOUNT OF SUBSCRIPTION AND MEMBERSHIP FEE IS WRONG AND BAD IN LAW. 13. DEDUCTION U/S. 80G OF RS.25,500/- IS WRONG AND BAD IN LAW. 14. THE COMPUTATION OF INCOME IS WRONG AND BAD IN L AW. 15. THE PROVISIONS OF SECTION 234B HAS NO APPLICATI ON. ACCORDINGLY CHARGE OF INTEREST UNDER THIS PROVISION IS WRONG AND BAD IN LAW. 16. IT IS CONTENDED THAT PROVISIONS OF SECTION 234B IS NOT TO BE CHARGED IN CASE OF COMPUTATION OF FINAL INCOME U/S. 115JB. 17. WITHOUT PREJUDICE IT IS CONTENDED THAT THE WORK ING U/S. 234B WOULD REQUIRE REVISION. 18. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT P REJUDICE TO ONE ANOTHER. 19. THE APPELLANT PRAYS THAT HE MAY BE PERMITTED TO ADD, TO ALTER OR TO FOREGO ANY GROUNDS AT THE TIME OF THE HEARING . THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPE AL :- 4 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 1. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.23,22,307/- MADE BY THE AO BY DISALL OWING DEDUCTION CLAIMED BY THE ASSESSEE U/S 80I OF THE I T ACT. 2. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN ALLOWING DEDUCTION CLAIMED BY THE ASSESSEE U/S 80I OF THE IT ACT WITHOUT CONSIDERING THE FACT THAT THE DEDUCTION U/S 80I IS NOT ALLOWABLE ON THE DUTY DRAW BACK AND JOB WORK AMOUNTING TO RS.75, 78,346/- AS MENTIONED AT PAGE 4 OF THE ASSESSMENT ORDER. 3. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN ALLOWING DEDUCTION CLAIMED BY THE ASSESSEE U/S 80I OF THE IT ACT WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS MADE EXC ESSIVE CLAIM BECAUSE OF TRANSFER OF PROFITS AS MENTIONED AT PAGE 2 OF THE ASSESSMENT ORDER. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.5,00,000/- MADE BY THE AO OUT OF TRA VELLING EXPENSES. 5. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, AD D OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING T HE HEARING OF THIS APPEAL.' 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF ELECTRONIC COMPONENT MAINLY IN SWITCHES, RE LAYS AND OTHER ASSEMBLIES. THE ASSESSEE COMPANY HAD TWO UNITS ONE AT BADDI (HI MACHAL PRADESH) AND OTHER AT GURGAON (HARYANA). THE BADDI UNIT WAS SITUATED IN SPECIAL ECONOMIC ZONE AND THE PROFIT OF WHICH WERE CLAIMED AS DEDUCTION U /S 80IC OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) @ 100% WHILE THE PROFITS DERIVED FROM GURGAON UNIT WERE CLAIMED TO BE QUALIFYING OF DEDUC TION U/S 80I. THE RETURN OF 5 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 INCOME WAS FILED ON 23.11.2006 ELECTRONICALLY DECLA RING AN INCOME OF RS.53,93,220/-. THE CASE WAS PROCESSED U/S 143(1) OF THE ACT ON 19.01.2008. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND N OTICES U/S 143(2) AND 142(1) WERE ISSUED. IN RESPONSE TO THESE NOTICES, THE ASS ESSEE FILED THE REQUISITE DETAILS/ INFORMATION. THE ASSESSMENT WAS COMPLETED U/S 143( 3) OF THE ACT AT A TOTAL TAXABLE INCOME AT RS.4,49,35,360/- BY MAKING CERTAI N ADDITIONS/DISALLOWANCES. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL TO T HE FIRST APPELLATE AUTHORITY AND THE LD. CIT (A) PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE. 5. THE ASSESSEE AS WELL AS THE REVENUE, BEING AGGRI EVED, ARE IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. CIT (A). 6. GROUNDS NO.1 TO 7 OF THE ASSESSEES APPEAL ARE A GAINST NOT ALLOWING THE DEDUCTION U/S 80IC CLAIMED BY THE ASSESSEE. WHEREAS GROUND NO.1 OF THE REVENUES APPEAL IS AGAINST THE DELETION OF ADDITIO N OF RS.23,22,307/- MADE BY THE AO BY DISALLOWING DEDUCTION CLAIMED BY THE ASSE SSEE U/S 80I OF THE ACT. 7. BRIEF FACTS WITH REGARD TO DEDUCTION U/S 80IC AR E THAT THE AO, ON PERUSAL OF THE SEPARATE FINANCIAL RESULTS FURNISHED BY THE ASSESSEE IN RESPECT OF ITS BADDI AND GURGAON UNITS, MADE THE FOLLOWING OBSERVATIONS :- DESCRIPTION BADDI UNITS GURGAON UNITS TOTAL INCOME 6,27,11,396/- 25,67,84,790/- PROFIT 1,36,70,560/- 3,42,43,249/- % OF PROFIT 21.80% 13.33% 6 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 THE AO NOTICED FROM THE ABOVE TABLE THAT THE NP RAT E IN RESPECT OF BADDI UNITS WAS 21.80% AS COMPARED TO 13.33% IN RESPECT OF GURG AON UNITS. THE AO ASKED THE ASSESSEE TO EXPLAIN THE REASONS BEHIND THIS DIF FERENCE IN NP PERCENTAGE. THE AO OBSERVED THAT THE ASSESSEE HAD NOT GIVEN ANY SAT ISFACTORY ANSWER. HE OBSERVED THAT THE ONLY REASON BEHIND THIS DIFFERENC E IN NP RATE APPEARED THAT THE PROFITS OF THE BADDI UNITS WERE ENTITLED FOR DEDUCT ION U/S 80IC @ 100% WHILE THE PROFITS FROM ITS GURGAON UNITS QUALIFIED FOR DE DUCTION U/S 80I @ 30%. HE, THEREFORE, OBSERVED THAT THE ASSESSEE HAD SHIFTED C ERTAIN EXPENSES OF BADDI UNITS TO GURGAON UNITS TO GET HIGHER NP RATE FOR BADDI UN ITS ON WHICH THE ASSESSEE HAD TO INCUR ZERO TAX LIABILITY. THE AO WAS OF THE OPI NION THAT PROFITS OF GURGAON UNITS WERE SHIFTED TO BADDI UNITS TO THAT EXTENT. THE AO, THEREFORE, OBSERVED THAT THE PROFITS AND RESULTANT DEDUCTION U/S 80I AN D 80IC WERE, THEREFORE, REQUIRED TO BE RECALCULATED CONSIDERING THE OVERALL FINANCIAL RESULTS OF BOTH THE UNITS OF THE COMPANY :- TOTAL TURNOVER 31,94,95,885/- TOTAL PROFIT (AS PER COMPUTATION OF INCOME) 2,06,15,948/- % OF PROFITS 6.45% (APPROX.) PROFITS OF BADDI UNITS 40,46,546/- PROFITS OF GURGAON UNITS 1,65,69,402/- DEDUCTION ALLOWABLE U/S 80I IN RESPECT OF GURGAON UNITS I.E. 30% OF RS.1,65,69,402/- 49,70,820/- 7 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 DEDUCTION ALLOWABLE U/S 80IC IN RESPECT OF BADDI UNITS I.E. 100% OF RS.40,46,546/- 40,46,546/- 90,17,366/- DEDUCTION CLAIM BY THE ASSESSEE U/S 80I 23,22,307/- U/S 80IC 1,28,74,923/- 1,51,97,230/- DIFFERENCE 61,79,864/- THE AO, THEREFORE, WAS OF THE OPINION THAT THE ASSE SSEE HAD CLAIMED DEDUCTION IN EXCESS BY AN AMOUNT OF RS.61,79,864/- WHICH WAS ONLY BECAUSE OF TRANSFER OF PROFITS FROM GURGAON UNITS TO BADDI UNITS. 7.1 FURTHER, ACCORDING TO AO, AS PER PROVISIONS OF SECTION 80IA (7) OF THE ACT, WHICH ALSO APPLY TO SECTION 80IC, THE ASSESSEE WAS REQUIRED TO FILE A REPORT OF AUDIT IN FORM NO.10CCB. BUT THE ASSESSEE HAD NO T FILED THE SAID REPORT. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE HAD FAIL ED TO COMPLY WITH THE PROVISION OF SUB-SECTION 7 OF SECTION 80I AND CONSE QUENTLY THE PROVISION OF SECTION 80IC AND MADE THE DEDUCTION U/S 80IC OF THE ACT. THE LD. CIT (A) SUSTAINED THE ADDITION BY OBSERVING AS UNDER :- 3.3 I HAVE CAREFULLY GONE THROUGH THE SUBMISSION O F THE APPELLANT. IT IS A FACT THAT AT THE ASSESSMENT STAG E NO SUCH DOCUMENT WAS EVER FILED BEFORE THE AO. THE DOCUMENT WAS ASKE D FOR AND INSPITE OF THAT THE SAME WAS NOT FILED. THE PROVISI ON OF THE ACT, MAKES IT MANDATORY FOR FILING OF SUCH DOCUMENT AT T HE ASSESSMENT STAGE AS AND WHEN ASKED FOR AND THE APPELLANT HAS F AILED TO DISCHARGE ITS ONUS. IT HAS ALREADY BEEN STATED THAT THERE IS NO REASON TO ADDUCE THE ADDITIONAL EVIDENCE AND HENCE NON FIL ING OF SUCH DETAILS WHICH IS A MANDATORY REQUIREMENT AS PER THE PROVISION OF THE LAW WOULD MAKE THE CLAIM LIABLE TO BE REJECTED. EVEN AFTER 8 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 JUDGING THE ISSUE ON MERIT - I FIND THAT THE APPELL ANT HAS FAILED TO DISCHARGE ITS ONUS. I AGREE WITH THE OBSERVATIONS M ADE BY THE AO AND DISALLOWANCE OF CLAIM OF RS.1,28,74,923/- U/S 8 0IC IS HEREBY SUSTAINED. 7.2 AS REGARDS 80I DEDUCTION, THE AO OBSERVED THAT THE ASSESSEE HAD NOT FILED FORM NO.10CCB AT THE TIME OF ASSESSMENT PROCEEDINGS . AFTER GOING THROUGH THE PROVISIONS OF SECTION 80I (7), THE AO WAS OF TH E VIEW THAT THE ASSESSEE HAD TO FILE FORM NO.10CCB BUT THE SAME WAS NOT FILED BE FORE HIM AND FURTHERMORE, HE OBSERVED THAT THERE WAS NO EVIDENCE OF COMMENCEM ENT OF PRODUCTION AND ACCORDINGLY, DEDUCTION U/S 80I WAS NOT ALLOWED. HO WEVER, IN APPEAL, THE LD. CIT (A) ALLOWED THE DEDUCTION U/S 80I AFTER GOING T HROUGH THE SUBMISSIONS OF THE ASSESSEE. FOR THE SAKE OF CLARITY, THE RELEVAN T PARA OF THE LD. CIT (A)S ORDER IS REPRODUCED AS UNDER :- PROF. S. SAMPAT, FCA & AR OF THE APPELLANT APPEARE D AND HAS MADE SUBMISSION FROM TIME TO TIME. HE STATED THAT THE A PPELLANT HAS TWO UNITS ONE EACH AT GURGAON (HARYANA) AND IN BADDI (H P). THE GURGAON UNIT WAS GETTING DEDUCTION UNDER 80I FOR THE LAST 9 YEARS AND THE PRESENT AY BEING THE LAST AY FOR SUCH CLAIM. IN ALL THE PRE VIOUS 9 YEARS, THE CLAIM OF THE APPELLANT WAS ALLOWED BY THE REVENUE. SECTION 80I(7) CLEARLY STATES THAT THE MANDATORY PROVISION IS APPL ICABLE FOR A PERSON OTHER THAN A COMPANY OR COOPERATIVE SOCIETY AND ASS ESSEE BEING A COMPANY, ACCORDING TO THE LD AR, IS NOT COVERED BY THE PROVISIONS OF THIS SECTION. IN NONE OF THE YEARS SUCH CERTIFICATE WAS FILED, AS IT WAS NEVER CALLED FOR [ALTHOUGH THE ASSESSMENTS WERE COM PLETED U/S 143(3)]. THE AMOUNT OF DISALLOWANCE U/S 80I WAS RS.23,22,307 / -. HOWEVER IN OTHER PROVISIONS OF THE LAW UNDER CHAPTER VIA I.E. 80IA, 80IB OR 80IC, THERE IS A REQUIREMENT OF FURNISHING OF CERTIFICATE IN FORM 10CCB AND IT IS QUITE POSSIBLE THAT THE AO MIGHT HAVE CARRIED AW AY BY SUCH PROVISIONS OF THE LAW ALTHOUGH FOR 80I, THIS IS NO SUCH REQUIREMENT FOR A COMPANY. SECTION 80I ALLOWS DEDUCTION @ 30% OF PROF ITS AND GAINS 9 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 COMPUTED UNDER THE ACT WHEREAS IN SECTION 80IC ETC. THE ADMISSIBLE AMOUNT IS 100% THEREOF. FURTHERMORE SECTION 80I WA S INTRODUCED BY FINANCE ACT, 1980 W.E.F. 01.04.1981 WHEREAS 80IC WA S BROUGHT INTO THE STATUTE BY FINANCE ACT, 2003 W.E.F. 01.04.2004 I.E. IT IS A MUCH LATER DEVELOPMENT. IN THIS CASE THE MATTER WAS REMANDED T O THE LD AO, HE HAS GIVEN HIS COMMENTS VIDE HIS REPORT NO.1296 DATE D 01.10.2009 WHEREIN HE HAS DISCUSSED THE MATTER ONLY ON TECHNIC AL ISSUE AND NOT ON MERIT. I AM NOW CONSTRAINED TO EXAMINE THE MATTER O N MERIT AND I AM OF THE OPINION THAT THERE IS NO SUCH REQUIREMENT IN LA W FOR FORM NO.10CCB IN RESPECT OF SECTION 80I IN CASE OF THE A PPELLANT COMPANY. HENCE THE ACTION OF THE AO IS NOT SUSTAINED AND THE APPELLANT IS ENTITLED FOR THE CLAIM OF 80I TO THE EXTENT OF RS.23,22,307/ -. 8. LD. AR REITERATED THE SUBMISSIONS MADE BEFORE TH E LD. CIT (A) AND SUBMITTED THAT THE AO HAD NOT ALLOWED THE DEDUCTION U/S 80IC MAINLY DUE TO NON FILING OF FORM NO.10CCB BEFORE HIM. HE AGREED THAT FORM NO.10CCB WAS NOT FILED BEFORE THE AO BUT THE SAME WAS FILED BEFORE THE LD. CIT (A) WHO HAS NOT ACCEPTED THE SAME BEING THE ADDITIONAL EVID ENCE. HE SUBMITTED THAT THE LD. CIT (A) WAS NOT RIGHT IN REJECTING THE ADDITION AL EVIDENCES. HE FURTHER SUBMITTED THAT THIS WAS THE FIRST YEAR OF CLAIM OF 80IC DEDUCTION FOR THE BADDI UNIT. THE LD. AR SUBMITTED THE REASONS FOR NON-PRO DUCTION OF FORM 10CCB WAS BECAUSE THAT THE ASSESSEE WAS OF THE IMPRESSION THAT FORM 10CCB WAS NOT REQUIRED TO BE FILED SINCE AUDITED ACCOUNTS OF THE COMPANY WERE PRODUCED BEFORE THE AO, SO THE COUNSEL FOR THE ASSESSEE THOU GHT IT IN GOOD FAITH THAT WAS NOT NECESSARY. HE SUBMITTED THAT FROM THE LD. CIT (A)S ORDER, IT IS CLEAR THAT THE AFORESAID FORM WAS IN FACT FILED UNDER RULE 46A AS ADDITIONAL EVIDENCE. HE SUBMITTED THAT THE APPEAL IS A CONTINUATION OF ASSE SSMENT AND FOR THAT 10 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 PROPOSITION, RELIED ON THE DECISION OF 274 ITR 552 (MAD.). AS REGARDS 80I DEDUCTION, THE LD. AR RELIED ON THE ORDER OF THE LD . CIT (A) AND SUBMISSIONS MADE BEFORE HIM. HE PLEADED THAT THE ISSUE REGARDIN G 80IC DEDUCTION MAY BE SENT BACK TO THE AO FOR DE NOVO ADJUDICATION AFTER ADMITTING THE FORM NO.10CCB AND THE ORDER OF THE LD. CIT (A) BE UPHELD AS REGARDS 80I DEDUCTION. 9. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS TWO UNITS I.E. GURGAON UNIT WHICH CLAIMED DEDUCTION U/S 80I IN THE TENTH YEAR AND THE BADDI U NIT WHICH CLAIMED THE DEDUCTION U/S 80IC FOR THE FIRST YEAR. HE SUBMITTE D THAT THE PROFIT OF GURGAON UNIT ARE VERY LESS WHEN COMPARED TO BADDI UNIT. HE FURTHER SUBMITTED THAT THE AO ASKED THE ASSESSEE TO PRODUCE FORM NO.10CCB BUT THE ASSESSEE REFUSED TO SUBMIT THE SAME. HE SUBMITTED THAT THERE WAS NO RE ASON GIVEN BY THE ASSESSEE WHICH PREVENTED THE ASSESSEE TO FILE THE SAME, AND THIS SHOWS THE MALAFILE INTENTION OF THE ASSESSEE. HE SUBMITTED THAT BEFOR E THE CIT (A), CERTIFICATE FOR BOTH THE UNITS WERE FILED AND THE CIT (A) ACCEPTED THE CERTIFICATE OF GURGAON UNIT BECAUSE IT WAS THE 10 TH YEAR AND PREVIOUS 9 YEARS, IT WAS ALLOWED BY THE DEPARTMENT, BUT IN RESPECT OF BADDI UNIT THE CLAIM OF 80IC WAS NOT ACCEPTED BEING THE FIRST YEAR OF CLAIM. HE SUBMITTED THAT A CCOUNTANCY IS A PURE JUGGLERY AND WONDERED AS TO HOW CAN A NEW UNIT MAKE SUCH A H UGE PROFIT IN THE FIRST YEAR AND COMPARED THE LOW PROFIT OF 10 YEAR UNIT AT GURG AON. HE SUBMITTED THAT 11 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 THERE IS CLEAR CASE OF TRANSFER OF PROFIT FROM ONE UNIT TO ANOTHER. THE LD. DR DOES NOT WANT US TO INTERFERE IN THE ORDER OF THE A UTHORITIES BELOW AS REGARDS 80IC DEDUCTION AND PLEADED TO REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT (A) ON THE ISSUE OF DEDUCTION CLAIMED UNDER SECTIO N 80I. 10. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. BEFORE DISCUSSING THE AFORESAID ISSUES, WE NEED TO FIRST S EE WHETHER TO ADMIT THE ADDITIONAL EVIDENCE FILED IN THE FORM OF 10CCB. WE FIND THAT THE ASSESSEE HAS TWO UNITS I.E. GURGAON AND BADDI. ADMITTEDLY, THE GURGAON UNIT CLAIMED DEDUCTION U/S 80I FOR THE 10 TH YEAR IN THIS ASSESSMENT YEAR AND PREVIOUSLY THE DEPARTMENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE A ND HAS BEEN GRANTING 80I DEDUCTION FOR THE SAID UNIT. HOWEVER, FOR THE 10 TH YEAR, THE AO DID NOT GRANT THE 80I DEDUCTION BECAUSE OF NON-PRODUCTION OF FORM 10C CB AND ON THE GROUND THAT GURGAON UNIT IS SHOWING LOW TURNOVER COMPARED TO THAT OF BADDI WHICH IS CLAIMING 100% DEDUCTION U/S 80IC. THE LD. CIT (A) WAS OF THE OPINION THAT FORM 10CCB IS NOT REQUIRED FOR 80I UNIT AND SO, HE ALLOWED THE CLAIM OF THE ASSESSEE. WHEREAS THE CLAIM U/S 80IC FOR THE BADDI UNIT WAS NOT FULLY GRANTED BY THE AO BECAUSE AS PER HIM THERE IS A SHIFTING OF PROFIT AND NON PRODUCTION OF FORM 10CCB WHICH, ACCORDING TO THE AO, IS MANDATORY REQUIREMENT UNDER LAW TO CLAIM THE DEDUCTION. LD. CIT (A) ALSO WAS OF TH E SAME OPINION THOUGH THE ASSESSEE TRIED TO PRODUCE THE FORM 10CCB ALONG WITH APPLICATION FOR ADDITIONAL 12 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES. W E FIND THAT THE LD. CIT (A) HAS NOT ADMITTED THE ADDITIONAL EVIDENCE AND HA S WITHOUT DELIBERATING ON THE MERITS OF THE MATTER HAS SIMPLY STATED A LINE THAT FOR NON PRODUCTION OF 10CCB AND ON MERITS ALSO, HE IS DISALLOWING THE CLAIM OF THE BADDI UNIT U/S 80IC. IT IS A TRITE LAW THAT THE ONUS IS ON THE PERSON CLAIM ING EXPENDITURE/EXEMPTION / DEDUCTION UNDER THE ACT. SINCE IT IS THE FIRST YEA R OF CLAIM OF 80IC DEDUCTION OF THE BADDI UNIT, THE BURDEN IS ON THE ASSESSEE TO QU ALIFY THE ELIGIBILITY CRITERIA TO CLAIM 80IC DEDUCTION. ONCE THE ASSESSEE HAS DISCHA RGED ITS BURDEN THEN THE ONUS SHIFTS TO THE AO TO PROVE WHY THE CLAIM SHALL NOT BE GRANTED FULLY OR PARTLY TO THE ASSESSEE. WE FIND THAT THE COUNSEL FOR THE ASSESSEE WAS OF THE BONAFIDE BELIEF THAT ALONG WITH THE CLAIM OF 80IC AND 80I DE DUCTION, THE FORM 10CCB WAS NOT REQUIRED SINCE THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AS PER THE STATUTE. THE ASSESSEE CANNOT BE PENALIZED FOR THE BONAFIDE M ISTAKE OF THE COUNSEL, SO IN THE INTEREST OF JUSTICE, WE ADMIT FORM 10CCB AND WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO ADJUDICATE THE CLAIM OF THE ASSESSEE FOR 80IC FOR BADDI UNIT A ND 80I FOR GURGAON UNIT AND DIRECT HIM TO ADMIT FORM 10CCB AND DE NOVO ADJUDICA TE BOTH THE CLAIMS. WE ORDER ACCORDINGLY. 11. GROUNDS NO.8 TO 10 OF THE ASSESSEES APPEAL ARE AGAINST THE DISALLOWANCE OF INTEREST OF RS.16,57,972/- AS CLAIMED BY THE ASS ESSEE. 13 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 12. THE AO OBSERVED THAT IN THE GURGAON UNIT, THE A SSESSEE HAD SHOWN AN INCREASE IN THE CAPITAL WORK IN PROGRESS FROM RS.60 ,616/- IN THE LAST YEAR TO RS.1,86,86,902/- DURING THE YEAR. THE AO OBSERVED THAT ANY AMOUNT OF INTEREST RELATABLE TO THIS CAPITAL WORK HAD TO BE DISALLOWED AND CAPITALIZED. FURTHER, THE AO OBSERVED THAT THE ASSESSEE HAD MADE LOANS AND AD VANCES AMOUNTING TO RS.2.42 CRORES AND THERE WAS NO EVIDENCE ON RECORD TO SHOW THAT ANY INTEREST HAD BEEN CHARGED ON THE LOANS AND ADVANCES GIVEN. T HE AO ALSO OBSERVED THAT AS AGAINST THESE ELEMENTS OF CAPITAL WORK IN PROGRE SS AND INTEREST FREE LOANS/ADVANCES GIVEN, THE ASSESSEE HAD CLAIMED INTE REST PAYMENT OF RS.16,57,972/- TO THE BANKS AGAINST SECURED LOANS T AKEN. THEREFORE, THE AO HELD THAT INTEREST PAID @ 15% DISALLOWED ON THE AMOUNT O F SECURED LOANS OF RS.2.42 CRORES IS NOT ALLOWABLE AND, THEREFORE, RESTRICTED THE DISALLOWANCE TO RS.16,57,972/- BEING THE AMOUNT OF INTEREST ACTUALL Y CLAIMED. THE LD. CIT (A) SUSTAINED THE ADDITION BY OBSERVING AS UNDER :- 5.4. AFTER CAREFULLY EXAMINING THE RIVAL ISSUES, I COULD FIND THAT THE APPELLANT HAS FAILED TO JUSTIFY FOR ADVANCING FUND TOWARDS INTEREST FREE LOAN TO OTHERS. THE CLAIM OF THE LD AR IS THAT THE APPELLANT IS THE BEST JUDGE FOR UTILIZATION OF IT OWNS FUND AND SUCH JUDG EMENT OF THE APPELLANT NEITHER CANNOT BE DICTATED NOR SUBSTITUTE D NEITHER SUGGESTED BY THE REVENUE. IT IS NOT DENIED THAT THE APPELLANT IS THE BEST JUDGE AS TO WHERE TO INVEST ITS OWN FUND AND THAT TO BE FOR WHA T POINT OF TIME. IT IS ALSO ADMITTED THAT THE APPELLANT IS TO DECIDE AS TO WHETHER SUCH INVESTMENT WOULD BE MADE SCHEME A OR SCHEME B. IN A SIMILAR MANNER, IT IS THE BEST JUDGE TO DECIDE WHETHER IT W ILL BE DEALING WITH THE MANUFACTURE/TRADING OF PRODUCT X OR PRODUCT Y. UPTO THIS POINT, THERE IS NO DISPUTE HOWEVER IF THE APPELLANT IS THE BEST JUDGE FOR ITS MODE OF 14 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 INVESTMENT, THE REVENUE IS THE BEST JUDGE TO SCRUTI NIZE WHETHER THERE IS ANY INTENTIONAL AVOIDANCE ON PART OF THE APPELLANT TOWARDS EVASION OF TAX BY RESORTING TO ANY OF THE ABOVE TECHNIQUE. WHE N THE APPELLANT HAS TO PAY INTEREST ON THE AMOUNT OF LOAN TAKEN BY IT, THERE IS NO COMMERCIAL PRUDENCE IN ADVANCING INTEREST FREE LOAN TO OTHERS AND IF THE APPELLANT TAKES THE PROTECTION UNDER COMMERCIAL EXPEDIENCY IN CHOOSING THE SCHEME OF INVESTMENT THEN THE REVENUE IS ALSO ENTITLED TO EXAMINE AND DRAW ITS CONCLUSION REGARDING INTENTION AL DIVERSION OF FUND. THE APPELLANT HAS FAILED TO ESTABLISH THAT I NTEREST FREE LOAN WAS GIVEN/ADVANCED FOR COMMERCIAL EXPEDIENCY. ON THE OT HER HAND THE LD AO WAS ABLE TO ESTABLISH THAT THERE WAS ONE TO ONE CORRESPONDENCE BETWEEN THE AMOUNT OF LOAN TAKEN (SECURED LOAN) AND THE AMOUNT OF LOAN ADVANCED AT FREE OF INTEREST. THAT BEING THE C ASE, THE ISSUE OF THE APPELLANT IS NOT COVERED UNDER COMMERCIAL EXPEDIENC Y AS CLAIMED BY THE LD AR, INSTEAD IT WILL BE TREATED AS A DELIBERA TE ATTEMPT TO DEFRAUD THE REVENUE TO THE EXTENT OF INTEREST RECEIVABLE (A LSO TO THE INTEREST ACTUALLY PAID). THE ORDER OF LD CIT(A) ON THIS ISSU E CANNOT BE THE GUIDING FACTOR FOR THE SUCCESSOR CIT(A) AND SUCH SU BMISSION OF THE APPELLANT IS ALSO REJECTED. I HEREBY CONFIRM THE AD DITION MADE BY THE AO AND ACTION OF THE AO IS SUSTAINED. 13. LD. AR SUBMITTED THAT IN ASSESSEES OWN CASE IN THE AY 2005-06, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE THEN LD. CIT (A). HE SUBMITTED THAT THESE WERE NOT INTEREST FREE ADVANCE S TO EMPLOYEES. HE TOOK OUR ATTENTION TO PAGE 94, 95 & 96 OF THE PAPER BOOK AND HE FURTHER SUBMITTED THAT IT WAS SUPPLIERS ADVANCE AGAINST THE PURCHASES AND NO DISALLOWANCE WAS MADE IN THE PAST ALSO. HE DREW OUR ATTENTION TO PAGES 94 & 95 OF THE PAPER BOOK TO BOLSTER HIS CLAIM. 14. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT IT WAS NOT NOTIONAL INTEREST BEIN G ADDED BACK AND THE ASSESSEE HAS TAKEN THE LOANS. HE SUBMITTED THAT THE LOANS W ERE TAKEN FOR CAPITAL PURPOSES 15 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 AND ACCORDINGLY, THE INTEREST IS TO BE CAPITALIZED. HE SUBMITTED THAT THESE WERE INTEREST BEARING LOANS AND NOT INTEREST FREE LOAN. HE SUBMITTED THAT WHEN INTEREST BEARING LOAN ARE DIVERTED FOR THE PURPOSES OTHER TH AN BUSINESS, DISALLOWANCE IS VALID. 15. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. FROM THE BALANCE SHEET PLACED BEFORE US, WE TAKE NOTE TH AT ASSESSEE HAD SHARE CAPITAL OF RS 1,50,82,500/= AND RESERVES AND SURPLUS OF R S.9,26,94,892/= AT THE END OF THE YEAR, WHICH ARE FAR IN EXCESS TO THE AMOUNT INV ESTED IN CAPITAL WORKS IN PROGRESS OF RS.1.86 CRORES AND INTEREST FREE ADVANC E OF RS.2.42 CRORES. THUS, APPLYING THE PRINCIPLES LAID DOWN BY HONBLE BOMBAY HIGH COURT IN CIT VS. RELIANCE UTILITIES AND POWER LIMITED REPORTED IN 31 3 ITR 340 (BOM.) AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BHA RTI TELEVENTURE LTD. - 331 ITR 502 (DELHI), IT IS HELD THAT THERE WAS NO DIVE RSION OF BORROWED FUNDS FOR CAPITAL WORK-IN-PROGRESS / INTEREST FREE LOAN. IT IS ALSO NOT A CASE WHERE EITHER THE AO OR CIT (A) HAS IDENTIFIED THAT ANY SPECIFIC BORROWING HAD BEEN UTILIZED FOR MAKING SUCH INVESTMENT / ADVANCES. ON THE CONT RARY, THE ASSESSEE HAS STATED THAT ADVANCES INCLUDE ADVANCE FOR PURCHASE WHICH AR E IN THE COURSE OF THE BUSINESS AND, THEREFORE, EVEN FOLLOWING THE TEST OF COMMERCIAL EXPEDIENCY, NO DISALLOWANCE IS WARRANTED. THE AO HAS HELD THAT IN TEREST PAID @ 15% DISALLOWED ON THE AMOUNT OF SECURED LOANS OF RS.2.4 2 CRORES IS NOT ALLOWABLE 16 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 AND, THEREFORE, RESTRICTED THE DISALLOWANCE TO RS.1 6,57,972/- BEING THE AMOUNT OF INTEREST ACTUALLY CLAIMED AND THE LD. CIT (A) SUSTA INED THE ADDITION . ON THIS ISSUE, OUR ATTENTION WAS TAKEN TO PAGE 94 OF THE PA PER BOOK WHERE A CHART SHOWING THE DETAILS OF BANK CHARGES AND INTEREST WA S MADE AND THE SAME IS REPRODUCED BELOW:- SGS TEKNIKS PVT. LTD. (GGN UNIT) AY 2006-07 DETAILS OF BANK CHARGES & INTEREST BANK CHARGES 994294.18 INTEREST ON WORKING CAPITAL INTEREST ON PACKING CREDIT 131226.24 INTEREST ON BILL PURCHASE 856989.36 INTEREST ON OCC 2610.19 990825.79 1985119.97 BG COMMISSION 5269.41 1990389.38 LESS TRF BADDI 704604.83 1285784.55 INTEREST ON TERM LOAN 372187.50 1657972.05 FROM THE ABOVE, IT IS SEEN THAT INTEREST ON WORKING CAPITAL AND TERM LOAN, WHICH IS ONLY RS.9,90,825/- AND RS.3,71,187/- RESPECTIVEL Y. FURTHER, INTEREST OF RS.9,90,825/- IS FOR AVAILING FACILITIES OF PACKING CREDIT, BILLS PURCHASES, OCC AND NOT FOR ANY DIVERSION OF FUNDS FOR NON-BUSINESS PURPOSES. FURTHER, IT IS NEITHER BEEN ESTABLISHED SUCH INTEREST ON TERM LOAN WAS FOR CAPITAL WORK-IN- 17 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 PROGRESS. MOREOVER, IDENTICAL INTEREST HAS BEEN AL LOWED IN THE PRECEDING YEAR (AY 2005-06). HAVING REGARD TO THE ABOVE, DISALLOW ANCE MADE IS DELETED. 16. GROUND NO.11 IS AGAINST THE DISALLOWANCE OF DEP RECIATION OF RS.2,47,703/- ON THE ADDITIONS TO THE FACTORY BUILD ING OF RS.24,77,037/-. 17. THE AO NOTED FROM THE DEPRECIATION CHART FOR TH E GURGAON UNIT THAT THE ASSESSEE HAD INCURRED A COST OF RS.24,77,037/- AS A DDITION TO THE FACTORY BUILDING AND CLAIMED DEPRECIATION OF THIS ADDED AMOUNT FOR T HE ENTIRE YEAR. THE AO HELD THAT AS THERE WAS NOTHING ON RECORD TO SHOW THAT TH E BUILDING WAS ACTUALLY PUT TO USE DURING THE YEAR, DEPRECIATION OF RS.2,47,703/- @ 10% ON THE AMOUNT OF ADDITION TO THE BUILDING WAS DISALLOWED. LD. CIT ( A) SUSTAINED THE ACTION OF THE AO ON THE GROUND THAT DETAILS WERE NOT FILED. 18. LD. AR SUBMITTED THAT ALL DETAILS WERE PLACED O N RECORD AND DREW OUR ATTENTION TO PAGE 54 OF PAPER BOOK, GIVING THE DETA ILS OF DEPRECIATION CLAIMED. 19. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IT IS NOT CLEAR WHETHER THE ASSE TS WERE PUT TO USE OR NOT. HE FURTHER SUBMITTED THAT IT IS NOT CLEAR WHAT PREVENT ED THE ASSESSEE TO FURNISH THE DETAILS. HE SUBMITTED THAT FOR ALLOWING THE DEPREC IATION, IT HAS TO BE PROVED THAT THESE ASSETS WERE PUT TO USE BEFORE THE AO AND FILI NG OF ONLY THE AUDIT ACCOUNTS WILL NOT HELP. 18 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 20. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. WE FIND THAT THE CIT (A) HAS NOT CONSIDERED THE DEPREC IATION CHART FURNISHED BY THE ASSESSEE. WE FURTHER NOTICE THAT EVEN THE AO HAS H ELD THAT WHETHER THE ASSET WAS PUT TO USE OR NOT COULD NOT BE ASCERTAINED. HA VING REGARD TO THE ABOVE, IT IS APPARENT THAT THE DISALLOWANCE HAS BEEN MADE, WITHO UT PROPER INVESTIGATION AND CONSIDERATION OF THE FACTS. WE, THEREFORE, RESTORE THE MATTER BACK TO THE FILE OF AO, FOR DE NOVO CONSIDERATION THIS ISSUE. 21. GROUND NO.12 IS AGAINST THE DISALLOWANCE OF RS. 2,48,334/- ON ACCOUNT OF SUBSCRIPTION AND MEMBERSHIP FEE. 22. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED R S.2,48,334/- ON ACCOUNT OF SUBSCRIPTION AND MEMBERSHIP FEES AND MOST OF THE AMOUNT WAS PAID TO CLUB MAHENDRA OR MAHENDRA RESORT. THE AO HELD THAT THES E EXPENSES BEING PERSONAL IN NATURE WERE IN NO WAY CONNECTED WITH AS SESSEES BUSINESS, HENCE, THE SAME WERE DISALLOWED. THE LD. CIT (A) ALSO CON CURRED WITH THE ACTION OF THE AO WITH THE OBSERVATION THAT THE ASSESSEE HAD FAILE D TO ESTABLISH THAT SUCH EXPENSES HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF BUSINESS. 23. LD. AR SUBMITTED THAT THE MEMBERSHIP WAS TAKEN FOR THE BUSINESS PURPOSES. HE SUBMITTED THAT CUSTOMERS AND FOREIGN EMPLOYEES USED TO STAY IN THESE RESORTS IN THE NAME OF DIRECTORS AND COMPANY. 19 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 24. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE DIRECTOR WAS ENJOYING THESE BENEFITS. HE SUBMITTED THAT IT IS A PERQUISITE IN NATURE OF PERSONAL EXPENSES P URELY FOR DIRECTORS AND IT WAS NOT TO SOCIALIZE OR FOR BUSINESS RELATIONSHIP. 25. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. WE FIND THAT NO EVIDENCE WAS LED BY THE AR TO DISLODGE THE FINDING THAT EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE S OF BUSINESS OF THE ASSESSEE COMPANY. THE CLAIM THAT THOUGH THE ACCOMMODATION W AS IN THE NAME OF DIRECTOR BUT WAS USED BY THE CUSTOMERS/EMPLOYEES IS ENTIRELY UNSUBSTANTIATED. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE CLAIM, SO THE SAME IS DISMISSED. 26. GROUNDS NO.13 IS AGAINST THE DEDUCTION U/S 80G OF RS.25,500/-. THE AO MADE THE DEDUCTION U/S 80G AND THE LD. CIT (A) SUST AINED THE ACTION OF THE AO AS NO DOCUMENT WAS PRODUCED EITHER BEFORE AO OR BEF ORE HIM. 27. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND P ERUSED THE MATERIAL. WE FIND THAT THE LD. AR SUBMITTED THAT THE CLAIM MAY B E VERIFIED BY THE AO AND GIVEN, WHEREAS THE LD. DR SUBMITTED THAT THE ORIGIN AL DOCUMENTS HAVE TO BE PRODUCED BEFORE THE AO WHILE A CLAIM IS MADE. 28. HAVING CONSIDERED RIVAL SUBMISSIONS, WE CONSIDE R IT APPROPRIATE AND JUST TO SET ASIDE THE ISSUE TO THE FILE OF AO, FOR VERIF ICATION OF THE CLAIM OF DEDUCTION 20 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 U/S 80G. THE ASSESSEE IS ENTITLED TO LEAD THE NECE SSARY EVIDENCE TO SUPPORT ITS CLAIM. GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 29. GROUNDS NO.14 TO 17 ARE CONSEQUENTIAL IN NATURE . 30. GROUNDS NO.18 & 19 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 31. GROUND NO.2 OF THE REVENUES APPEAL IS AGAINST ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80I ON THE DUTY DRAWBAC K AND JOB WORK CHARGES AMOUNTING TO RS.75,78,346/-. 32. THE AO, ON PERUSAL OF FINANCIAL STATEMENT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSEE C OMPANY HAD RECEIVED A SUM OF RS. 55,88,493/- ON ACCOUNT OF DUTY DRAW BACK RS . 19,89,853/- (19,19,623/- + 70,230/-) ON ACCOUNT OF JOB WORK CHARGES AGGREGATIN G TO RS.75,78,346/- ON WHICH DEDUCTION U/S 80I WAS CLAIMED. HE OBSERVED T HAT THIS INCOME NOT BEING AN INCOME FROM INDUSTRIAL UNDERTAKING DID NOT QUALI FY FOR ALLOWANCE OF DEDUCTION U/S 80I OR 80IC AND DISALLOWED THE CLAIM. 33. HAVING ALREADY HELD THAT THE CLAIM OF 80IC NEED S TO BE DE NOVO ADJUDICATED AND SINCE THIS ISSUE IS INTERLINKED WIT H THAT ISSUE, IN THE FITNESS OF THINGS, WE ARE INCLINED TO REMIT THIS ISSUE ALSO TO THE FILE OF THE AO. WE ORDER ACCORDINGLY 21 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 34. GROUND NO.3 OF REVENUES APPEAL WAS NOT PRESSED BY THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 35. GROUND NO.4 TAKEN BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.5 LAKHS MADE OUT OF TRAVELLING EXPENSES. 36. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED T O HAVE INCURRED EXPENSES ON TRAVELLING AND CONVEYANCE AMOUNTING TO RS.51,97, 936/-. THE AO HELD THAT SINCE THERE WAS NO EVIDENCE TO PROVE THAT THE EXPEN SES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, A SUM OF RS.5 LAKHS WAS DISALLOWED OUT OF SUCH EXPENSES. IN APPEAL, THE LD . CIT (A) OBSERVED THAT THE AO DISALLOWED THE AMOUNT AS THERE WAS NO EVIDENCE A ND THE AO HAD NOT IDENTIFIED WHICH EXPENSES WERE NOT ALLOWABLE. THER EFORE, THE LD. CIT (A) HELD THAT THE DISALLOWANCE WAS MADE ON ESTIMATE BASIS AN D ACCORDINGLY DELETED THE ADDITION. 37. LD. DR RELIED ON THE ORDER OF THE AO. ON THE O THER HAND, THE LD. AR RELIED ON THE ORDER OF THE LD. CIT (A). 38. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL. THERE IS NO DISPUTE THAT THERE IS NO BASIS FOR MAKING THE AD HO C DISALLOWANCE OF RS.5 LAKHS. THAT BEING THE CASE, WE UPHOLD THE CONCLUSION OF TH E LD. CIT (A) AND DISMISS THIS GROUND OF THE REVENUE. 22 ITA NO.4571/DEL/2009 ITA NO.97/DEL/2010 39. GROUND NO.5 OF REVENUES APPEAL IS GENERAL IN N ATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 40 IN THE RESULT, BOTH THE APPEAL OF THE ASSESSEE A ND THE APPEAL OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF DECEMBER, 2015. SD/- SD/- (N.K. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 21 ST DAY OF DECEMBER, 2015 TS COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A)-XII, NEW DELHI. 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI