DCIT, Ludhiana V. M/s Cremica Agro Food Ltd., Ludhiana

ITA 459/CHANDI/2013

• Counselvise Citation: 45921514 RSA 2013
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH AGGARWAL
• Assessee Lawyers: D S SIDHU
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Corroborative evidences
• Section: 234B; 80IB; 133(6); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 714/CHD/2011 ASSESSMENT YEAR: 2006-07 THE ACIT, CIRCLE-III, VS. M/S CREMICA AGRO FOODS PVT LTD., LUDHIANA LUDHIANA PAN NO. AADFK3384J & C.O. NO.61/CHD/2011 (IN ITA NO. 714/CHD/2011) ASSESSMENT YEAR: 2006-07 M/S CREMICA AGRO FOODS PVT LTD., VS. THE DCIT, CIRC LE-III, LUDHIANA LUDHIANA PAN NO. AADFK3384J ITA NO. 344/CHD/2013 ASSESSMENT YEAR: 2007-08 M/S CREMICA AGRO FOODS PVT LTD., VS. THE ACIT, RA NGE-III, LUDHIANA LUDHIANA PAN NO. AADFK3384J & ITA NO. 459CHD/2013 ASSESSMENT YEAR: 2007-08 THE DCIT, CIRCLE-III, VS. M/S CREMICA AGRO FOODS PVT LTD., LUDHIANA LUDHIANA PAN NO. AADFK3384J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUBHASH AGGARWAL RESPONDENT BY : SH. D. S. SIDHU 2 DATE OF HEARING : 15.09.2015 DATE OF PRONOUNCEMENT : 14.10.2015 ORDER PER H.L.KARWA, VP THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 AND CROSS APPEALS BY THE AS SESSEE AND REVENUE FOR ASSESSMENT YEAR 2007-08 WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY, WE WILL TAKE ITA NO. 714/CHD/2011 FOR ASSESSMENT YEAR ASSESSMENT YEAR 2006-07. THIS APPEAL HAS BEEN FILE D BY THE REVENUE AGAINST THE ORDER OF CIT-II, LUDHIANA DATED 27.4.2011. GROUND NO. 1 TO 3 OF THE APPEAL READ AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 80IB BY HOLDING THE ASSES SEE UNIT TO BE SMALL SCALE INDUSTRIAL UNIT BY SIMPLY RE LYING ON THE SUBMISSIONS OF THE ASSESSEE AND BY NOT GIVING ANY INDEPENDENT FINDINGS. 2. THAT THE LD, C1T(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 80IB BY HOLDING THE ASSES SEE UNIT TO BE SMALL SCALE INDUSTRIAL UNIT AND BY NOT G IVING ANY FINDING AS TO WHY SOME MACHINERIES HAVE BEEN EXCLUDED FROM THE TOTAL PLANT AND MACHINERY FOR MAK ING IT ELIGIBLE FOR A SMALL SCALE INDUSTRY. 3. THAT THE LD. C1T(A) HAS ERRED IN LAW A ND ON FACTS IN ALLOWING DEDUCTION U/S 801B BY HOLDING THE ASSESSEE UNIT TO BE SMALL SCALE INDUSTRIAL UNIT AND BY NOT GIVING ANY FINDING THAT WHETHER THE VALUE OF MACHIN ERY IS TO BE CONSIDERED AS ON THE LAST DAY OF THE PREVIOUS YEAR OR IN THE YEAR IN WHICH THE ASSESSEE WAS REGISTERED AS A SMALL SCALE INDUSTRY ALTHOUGH IT IS CLEARLY PROVIDED IN C LAUSE (G) OF SUB SECTION 14 OF SECTION 80IB THAT THE VALUE OF PLANT 3 AND MACHINERY HAS TO BE CONSIDERED ON THE LAST DAY OF THE PREVIOUS YEAR. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SSESSEE DERIVES INCOME FROM MANUFACTURING AND TRADING OF BISCUITS, NAMKEEN AND BUNS ETC. AND TRADING ON CONFECTIONARY BISCUITS, RUSK AND BREAD. DURING TH E ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE WAS RUNNING FOUR SEPARAT E UNITS I.E. ONE AT NOIDA, ONE AT THALIWAL AND TWO AT PHILLUAR. THE NOIDA UNIT IS MANUFACTURING BUNS BASICALLY FOR MC DONALD, THE THALIWAL UNITS IS MANUFACTURING BISCUITS AND ALSO DOING JOB WORK FOR M/S ITC BY MANUFACTURING BISCUITS ON THE P LANT AND MACHINERY SUPPLIED BY M/S ITC, ONE UNIT AT PHILLUAR IS MANUFACTURING B ISCUITS AND ALL THE BISCUITS SUPPLIED IN AFGHANISTAN UNDER WORLD FOOD PROGRAMME WERE MANUFACTURED IN IT AND THE OTHER UNIT AT PHILLUAR IS MANUFACTURING NAM KEEN PRODUCTS. THE UNIT AT NOIDA WAS STARTED ON 7.12.2001 AND ITS FIRST ASSESS MENT YEAR FOR CLAIM U/S 80IB WAS 2002-03. THE ASSESSEE WAS CLAIMING DEDUCTION U/ S 80IB FOR NOIDA UNIT. THE SAID UNIT IS RECOGNIZED AS SMALL SCALE INDUSTRY AS PER THE ORDER OF MINISTRY OF COMMERCE AND INDUSTRY ISSUED VIDE S.O. 1288(E) DATE D 24 TH DECEMBER 1999 READ WITH S.O. 857(E) DATED 10.12.1997. THE ASSESSING OF FICER HAS DISCUSSED THIS ISSUE IN PARAS 3 TO 7 OF THE ASSESSMENT ORDER AND THE AMO UNT TO RS. 39,14,380/- CLAIMED AS DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT') WAS DISALLOWED STATING THAT THE SMALL SCALE INDUSTRIES AS PER SECTION 80IB(2)(III) OF THE ACT, SHOULD NOT PRODUCE ANY ARTICLE OR THING SPECIF IED IN THE LIST IN ELEVENTH SCHEDULE OF THE ACT. LIST SIX OF THE SAID SCHEDULE PROHIBITS MANUFACTURING OF CONFECTIONARY AND CHOCOLATES. ACCORDING TO ASSESSI NG OFFICER THE MANUFACTURING OF BUNS IS PART OF THE CONFECTIONARY ITEMS. HE, THE REFORE, HELD THAT THE ASSESSEE CANNOT BE GIVEN THE BENEFIT U/S 80IB OF THE ACT. TH E ASSESSING OFFICER CATEGORICALLY STATED THAT THE ASSESSEE WAS MANUFACT URING AN ITEM LISTED IN THE ELEVENTH SCHEDULE OF THE ACT. CONSEQUENTLY, THE DED UCTION U/S 80IB OF THE ACT CLAIMED BY THE ASSESSEE ON NOIDA UNIT WAS DISALLOWE D. 4 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND THE LD. CIT( A) ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER:- 5.3 I HAVE GONE THROUGH THE SUBMISSIONS & CASE L AWS CITED BY THE APPELLANT COUNSEL & HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ALLOWING DEDUCTION U/S 80IB OF THE INCOME TAX ACT. THE APPELLANT SUCCEEDS ON GROUND NO.2 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE VERY OUTSET, THE WE MAY OBSERVE HERE THAT THE ORDER PASSED BY CIT(A) IS CRYPTIC AND NON-SPEAKING IN VIE W OF THE PROVISIONS OF SECTION 250(6) OF THE INCOME-TAX ACT, 1961, THEREFO RE, THE ORDER IS NOT TENABLE. SECTION 250(6) OF THE ACT READS AS UNDER:- 250 (6) THE ORDER OF THE [COMMISSIONER (APPEALS) D ISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POIN TS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISIO N. IT IS WELL SETTLED LAW THAT PROVISIONS OF SECTION 2 50(6) ARE MANDATORY AND IT IS OBLIGATORY FOR COMMISSIONER (APPEALS) TO PASS A SPE AKING ORDER STATING POINTS RAISED IN APPEAL, HIS DECISION THEREON AND REASONS FOR SUCH DECISIONS. THE UNDER LYING RATIONALE OF THE PROVISION IS THAT SUCH ORDER S ARE SUBJECT TO FURTHER APPEAL TO THE TRIBUNAL. SPEAKING ORDER WOULD OBVIOUSLY ENABLE A PARTY TO KNOW PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENC E OF THE FORMULATION OF THE POINT FOR DECISION FOR WANT OF CLARITY IN A DECISIO N UNDOUBTELDY PUTS A PARTY IN QUANDARY. IN OUR CONSIDERED OPINION, SECTION 250(6) EXPRESSLY EMBODIES THE PRINCIPLES OF NATURAL JUSTICE AND SUCH A PROVISION IS CLEARLY MANDATORY IN NATURE. THE IMPUGNED ORDER PASSED BY THE CIT(A) IN VIOLATIO N OF THE PROVISIONS OF 5 SECTION 250(6) COULD NOT, THEREFORE, BE SUSTAINED. WHILE TAKING SUCH A VIEW WE ARE FORTIFIED BY THE JUDGMENT OF HON'BLE BOMBAY HON 'BLE HIGH COURT IN THE CASAE OF MANEKLAL D. SHAH VS. P.K. GUPTA AND OTHERS [2004 ] 267 ITR 340 (BOM.). THE HON'BLE HIGH COURT AT PAGE 344 HELD AS UNDER:- A RIGHT TO REASONS IS, THEREFORE, AN INDISPENSABLE PART OF A SOUND SYSTEM OF JUDICIAL REVIEW. A REASONED DECISIO N IS NOT ONLY FOR THE PURPOSE OF SHOWING THAT THE CITIZEN IS RECEIVING JUSTICE, BUT ALSO A VALID DISCIPLINE FOR THE AUTHOR ITY ITSELF. THEREFORE, STATING OF REASONS IS ONE OF THE ESSENTI ALS OF JUSTICE. THE APPELLATE AUTHORITY IS ENJOINED AND IT IS INCUM BENT UPON IT TO APPRECIATE THE EVIDENCE CONSIDER THE REASONING O F THE PRIMARY AUTHORITY AND ASSIGN ITS OWN REASONS AS TO WHY IT DISAGREES WITH THE REASONS AND FINDINGS OF THE PRIM ARY AUTHORITY. UNLESS ADEQUATE REASONS ARE GIVEN, MEREL Y BECAUSE IT IS AN APPELLATE AUTHORITY, IT CANNOT BRUSH ASIDE THE REASONING OR FINDINGS RECORDED BY THE PRIMARY AUTHO RITY. THE ORDER SHOULD BE SELF-EXPLANATORY AND SHOULD NOT KEE P THE HIGHER COURT GUESSING FOR REASONS. THE REASONS PROV IDE A LIVE LINK BETWEEN THE CONCLUSION AND THE EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARINESS. IT GIVES AN OP PORTUNITY TO THE HIGHER COURT TO SEE WHETHER OR NOT THE SUBORDIN ATE COURT OR AUTHORITY OR THE TRIBUNAL CONSIDERED THE RELEVANT M ATERIAL. SINCE NO REASONS ARE FOUND IN THE ORDER, WE ARE LEF T WITH NO OTHER ALTERNATIVE BUT TO QUASH AND SET ASIDE THE IM PUGNED ORDER TO THE EXTENT IT IS CHALLENGED AND TO REMIT T HE PROCEEDINGS BACK TO THE COMMISSIONER OF INCOME-TAX, CENTRAL- II, MUMBAI, FOR HEARING AND CONSIDERATION AFRESH ON THE MERITS. IN THE ABOVE DECISION, THE HON'BLE BOMBAY HIGH COU RT HAS CATEGORICALLY HELD THAT APPELLATE AUTHORITY IS ENJOINED AND IT IS INC UMBENT UPON IT TO APPRECIATE THE EVIDENCE CONSIDER THE REASONING OF THE PRIMARY AUTH ORITY AND ASSIGN ITS OWN REASONS AS TO WHY IT DISAGREES WITH THE REASONS AND FINDINGS OF THE PRIMARY AUTHORITY. UNLESS ADEQUATE REASONS ARE GIVEN, MEREL Y BECAUSE IT IS AN APPELLATE AUTHORITY, IT CANNOT BRUSH ASIDE THE REASONING OR F INDINGS RECORDED BY THE PRIMARY 6 AUTHORITY. IN THE INSTANT CASE, THE LD. CIT(A) HAS NOT PROVIDED REASONS IN THE IMPUGNED ORDER, WE LEFT WITH NO OTHER ALTERNATIVE B UT TO SET ASIDE THE IMPUGNED ORDER AND REMAND THE MATTER TO CIT(A) WITH A DIRECT ION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. WE MAY OBSERVE HERE THAT IN THE ASSESSMENT YEAR 2007-08, ON SIMILAR SET OF FACTS, THE CIT(A) HAS CONFIRMED THE DISALLOWANCE UN DER SECTION 80IB AMOUNTING TO RS. 26,41,716/- IN RESPECT OF NOIDA UNIT. IN TH E ASSESSMENT YEAR 2007-08, WHILE DECIDING A SIMILAR ISSUE THE CIT(A) HAS NOT M ADE ANY REFERENCE TO THE ORDER PASSED BY HIS PREDECESSOR IN ASSESSEES CASE FOR AS SESSMENT YEAR 2006-07. THE ORDER PASSED BY DIFFERENT CIT(A)S ON SIMILAR ISSUE INVOLVING ASSESSMENT YEARS 2006-07 AND 2007-08 ARE CONTRARY TO EACH OTHER. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND REM AND THE MATTER TO CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANC E WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. 7. GROUND NO. 4 & 5 OF THE APPEAL, READS AS UNDER:- 4. THAT THE LD. CIT(A) HAS ERRED IN LAW AND O N FACTS IN DELETING THE DISALLOWANCE OF 10% ( RS. 12.16,332/-) MADE BY AO ON DEDUCTION U/S 801C CLAIMED BY ASSESSEE ON TAHLIWAL UNIT WITHOUT GIVING ANY REASONS AND BY SIM PLY STATING THAT THE AO IS HIGHLY UNJUSTIFIED IN DENYIN G DEDUCTION U/S 80IC TO THE ASSESSEE ON THE BASIS OF SOME NOTIONAL EXPENSES AS KNOW HOW, GOOD WILL, TRADE NAM E ETC, WHEN THE AO HAS VERY CLEARLY HELD THAT THE PROVISIO NS OF SECTION 80IA (8) & (10) R.W.S 801C ARE APPLICABLE T O THE ASSESSEE ON TAHLIWAL UNIT. 5. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING DEDUCTION 80IC ON JOB CHARGES BY SIMPLY R ELYING 7 ON THE SUBMISSIONS OF THE ASSESSEE AND BY NOT GIVIN G ANY INDEPENDENT FINDINGS. 8. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BISCUITS ON ITS OWN ACCOUNT AS WELL AS DOING JOB WORK FOR M/S ITC A T THALIWAL (HIMACHAL PRADESH). THE MANUFACTURING IS DONE AT PHILLAUR UN IT (PUNJAB) ON WHICH NO DEDUCTION WAS CLAIMED. THE ASSESSING OFFICER HELD T HAT SINCE THE SAME BUSINESS WAS BEING DONE AT PHILLUAR UNIT AND THE THALIWAL UN IT, THE ASSESSEE HAS DERIVED THE BENEFITS BY WAY OF KNOWHOW, GOODWILL, TRADENAME ETC. AND HE HAS ESTIMATED 10% OF THE PROFITS EARNED BY THE THALIWAL UNIT AS A N INDIRECT BENEFITS DERIVED FROM THE PARENT UNIT PHILLUAR, WHICH WAS CALCULATED AT RS. 12,16,332/- I.E. 10% OF NET PROFITS OF THALIWAL UNIT AND THIS AMOUNT WAS RE DUCED FROM THE DEDUCTION CLAIMED U/S 80IC. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD RECEIVED JOB CHARGES OF RS. 6,21,91,396/- FROM ITC LTD FOR MANUF ACTURING OF BISCUITS. THE ASSESSING OFFICER COMPUTED THE PROPORTIONATE PROFIT S ON JOB WORK AT RS. 16,36,199.- AND HELD THE ASSESSEE NOT ENTITLED TO D EDUCTION U/S 80IC TO THE EXTENT OF RS. 16,36,199/-. 9. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE O N JOB CHARGES AMOUNTING TO RS. 12,16,332/- OBSERVING AS UNDER:- I HAVE PERUSED THE SUBMISSION OF THE APPELLANT AND AGREE WITH THE APPELLANT AND HOLD THAT THE APPELLANT IS E NTITLED TO DEDUCTION U/S 80IC ON INCOME EARNED AS JOB CHARGES. THE APPELLANT THEREFORE, SUCCEEDS ON GROUND NO.3, 4, & 5. ON A PERUSAL OF THE IMPUGNED FINDINGS GIVEN BY THE CIT(A) IN RESPECT OF BOTH THE ISSUES, WE HELD THAT THE LD. CIT(A) HAS PASSED A N ON-SPEAKING ORDER. IN VIEW OF OUR FINDINGS GIVEN IN RESPECT OF GROUND NOS. 1 TO 3 OF THE INSTANT APPEAL, WE SET 8 ASIDE THE FINDINGS OF CIT(A) ON BOTH THESE ISSUES. THE DETAILED FINDINGS GIVEN IN RESPECT OF GROUND NOS. 1 TO 3 (SUPRA) SHALL APPLY W ITH EQUAL FORCE ALSO TO THESE GROUNDS. IT IS ALSO RELEVANT TO OBSERVE HERE THAT AS REGARDS THE DISALLOWANCE OF 10% MADE BY THE ASSESSING OFFICER ON DEDUCTION U/S 80IC OF THE ACT CLAIMED BY THE ASSESSEE AT THALIWAL UNIT, THE CIT(A) HAS CONFI RMED THE DISALLOWANCE IN ASSESSMENT YEAR 2007-08. HOWEVER, IN THIS YEAR THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. THE FACTS ARE SIMILAR AND TH ERE IS NO CONSISTENCY IN THE FINDINGS OF CIT(A). IN FACT, ON SIMILAR ISSUE, THE APPELLATE AUTHORITY BELOW HAS GIVEN CONTRARY FINDINGS. FURTHERMORE, IN THIS YEAR THE ORDER PASSED BY CIT(A) IS CRYPTIC AND NON-SPEAKING. WE THEREFORE, SET ASIDE T HE ORDER OF CIT(A) ON THESE ISSUE AND REMAND THE MATTER TO HIM WITH A DIRECTION TO DECIDE THE ISSUE BY PASSING A SPEAKING ORDER. THE CIT(A) HAS ALSO DIRECTED TO G IVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. 10. GROUND NO.6 OF THE APPEAL READS AS UNDER:- 6. THAT THE LD. C1T(A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE ALLOCATION OF COMMON EXPENSES OF HE AD OFFICE FROM RS. 25 LACS TO RS. 10 LACS AGAINST THE INCOME OF TAHLIWAL UNIT WHILE COMPUTING DEDUCTION U/S 80IC OF THE IT ACT, 1961 WITHOUT GIVING ANY REASONS. THE ASSESSING OFFICER ADDED A SUM OF RS. 25 LAKHS T O THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF WRONG DISTRIBUTION OF COMMON EXPENSES INCURRED BY THE HEAD OFFICE AS PER PROVISIONS OF SECTION 40A(2)(A), 80IA(8) AND 80IA(10) READ WITH SECTION 80IC OF THE ACT. THE ASSESSING OFFICER DISCUSSED THIS ISSUE IN PARA 15.1 OF THE ASSESSMENT ORDER. 11. ON APPEAL, THE CIT(A) ALLOWED THE RELIEF OF RS. 15 LAKHS TO THE ASSESSEE STATING THAT THE ADDITION MADE BY THE ASSESSING OFF ICER IS ADHOC IN NATURE. IN FACT, 9 LD. CIT(A) HAS NOT ASSIGNED ANY COGENT REASON WHILE ALLOWING A RELIEF OF RS. 15 LAKHS TO THE ASSESSEE. HE HAS ALSO NOT GIVEN ANY BA SIS WHILE ALLOWING RELIEF OF RS. 15 LAKHS TO THE ASSESSEE. IN FACT THE FINDINGS GIVE N BY THE CIT(A) ARE NON- SPEAKING. AS WE HAVE ALREADY REMANDED THE ISSUE INV OLVED IN GROUND NOS. 1 TO 5 OF THE APPEAL, WE THEREFORE, SET ASIDE THE FINDINGS OF CIT(A) ON THIS ISSUE ALSO AND REMAND THE SAME TO THE CIT(A) FOR FRESH A DECIS ION IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED C.O.NO. 61/CHD/2011 13. GROUND NO. 1 OF THE CROSS OBJECTION READS AS UN DER:- 1. THAT THE LEARNED CIT (A) - II, LUDHIANA, H AS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 15 LAKHS U/S 36(L)(III) ON ALLEGED INTEREST FREE ADVANCES TO VAR IOUS PARTY IGNORING THE FACT THAT THE SAID ADVANCES WERE OUT O F APPELLANT'S OWN RESOURCES IN THE SHAPE OF SHARE CAP ITAL, INCOME DEPRECIATION AND RESERVES & SURPLU SES AND AS SUCH NO DISALLOWANCE WAS CALLED FOR. 14. THE ISSUE RELATES TO DISALLOWANCE OF RS. 15 LAK HS U/S 36(1)(III) OF THE ACT. OUT OF CLAIM OF INTEREST ON ALLEGED INTEREST FREE A DVANCES TO MRS. RAJNI BECTOR, M/S CREMICA INDUSTRIES P. LTD., M/S BECTOR FOOD P. LTD., M/S CREMICA FOODS LIMITED, M/S DHARAMVIR &SONS, M/S E,B.I. FOOD COATI NG LTD AND M/S CREMICA FOODS LIMITED. THE ASSESSING OFFICER DISALLOWED THE IMPUGNED AMOUNT RELYING ON THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES V CIT REPORTED IN 286 ITR 1 (P&H). TE AS SESSEE CLAIMED THAT IT HAS DECLARED AN INCOME OF RS. 1,54,70,605/- BESIDES CLA IM OF DEPRECIATION OF RS. 2,11,45,809/- . THE ASSESSEE FURTHER SUBMITTED THAT SHARE CAPITAL OF THE COMPANY 10 IS AT RS. 1,49,85,000/- AND RESERVES & SURPLUS AMOU NT TO RS. 12,32,75,800/- AND THE COMPANY HAD ENOUGH FUNDS OF ITS OWN TO GIVE THE ADVANCES TO THE PARTIES. SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE RECENT DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES PVT. LTD IN ITA NO. 224 OF 2013 DATED 2 4.7.2015, THE DECISION RENDERED IN THE CASE OF ABHISHEK INDUSTRIES LTD VS. CIT (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS TO BE VERIFIED AND DECIDED AT THE LEVEL OF THE ASSESSING OFFICER. THE ASSESSEE IS FREE TO PRODUCE THE RECENT DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT ON THIS ISSUE. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTAN CES OF THE PRESENT CASE, WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMAND THE MATTER TO THE CIT(A) FOR A FRESH DECISION IN ACCORDANCE WITH LAW. FOR STATIST ICAL PURPOSES, THIS GROUND OF THE CROSS OBJECTION IS ALLOWED. 15. GROUND NO.2 OF THE CROSS OBJECTION, READS AS U NDER:- 2. THAT THE LEARNED CIT (A) - II, LUDHIANA, HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 10 LAKHS U/S 80IC IN THE TAHLIWAL UNIT IGNORING THE FACT THAT THE APPELL ANT HAD CORRECTLY ALLOCATED THE COMMON EXPENSES AND NO FURT HER ALLOCATION WAS REQUIRED TO MAKE A DISALLOWANCE OF R S. 10 LAKHS. WHILE DECIDING GROUND NO.6 OF THE APPEAL, WE HAVE S ET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMANDED THE MATTER TO CIT(A) FOR A FRESH DECISION. IN THAT VIEW OF THE MATTER, WE REMAND GROUND NO.2 OF THE CROSS O BJECTION TO TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE SAME AFRE SH IN ACCORDANCE WITH LAW. FOR STATISTICAL PURPOSES, THE GROUND NO.2 OF THE CROSS OBJECTION IS ALLOWED. 16. IN THE RESULT, CROSS OBJECTION IS ALLOWED FOR S TATISTICAL PURPOSES. 11 ITA NO. 344/CHD/2013 17. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, LUDHIANA DATED 11.2.2013 RELATING TO ASSESSMENT YE AR 2007-08. GROUND NOS.1 & 2 OF THE APPEAL READS AS UNDER:- 1. THAT THE LEARNED CIT(A)-II HAS ERRED IN R EJECTING THE CLAIM APPELLANT U/S 801B AMOUNTING TO RS. 26,41,716/-- IN RESPECT OF NOIDA UNIT BY MERELY FOLLOWING THE ORDER OF THE AO AND WI THOUT APPLICATION OF HIS MIND TO THE FACTS OF THE CASE AN? THE ORDER OF HIS LD PREDECESSOR, 2. THAT THE LEARNED CIT(A}-II HAS ERRED IN C ONFIRMING THE ORDER OF THE AO IN REDUCING THE CLAIM U/S 80IC BY RS. 17,41, 964/-- IN RESPECT OF TAHLIWAL UNIT BY MERELY FOLLOWING THE ORDER OF T HE AO AND WITHOUT APPLICATION OF HIS MIND TO THE FACTS OF THE CASE AN D THE ORDER OF HIS LD PREDECESSOR. 18. WHILE DECIDING REVENUES APPEAL IN ITA NO. 714/ CHD/2011 FOR THE ASSESSMENT YEAR 2006-07, WE HAVE OBSERVED THAT ON S IMILAR SET OF FACTS, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE, OF CO URSE, NOT BY PASSING A SPEAKING ORDER. FOR THE ASSESSMENT YEAR 2007-08, ON SIMILAR SET OF FACTS, THE CIT(A)-II LUDHIANA HAS DISALLOWED THE CLAIM OF THE ASSESSEE. IT IS OBSERVED THAT THE CIT(A) HAS PASSED THE ORDER FOR ASSESSMENT YEAR 2006-07 ON 27.4.2011 AND FOR ASSESSMENT YEAR 2007-08, ON 11.2.2013. IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS MADE NO REFERENCE TO THE ORDER OF HIS P REDECESSOR DATED 27.4.2011 PASSED IN ASSESSEES CASE. BOTH THE DECISIONS ARE C ONTRARY TO EACH OTHER, PARTICULARLY WHEN IT IS CLAIMED THAT THE FACTS ARE SIMILAR. SINCE WE HAVE REMANDED THE MATTER FOR THE ASSESSMENT YEAR 2006-07 TO THE C IT(A) FOR A FRESH ADJUDICATION, AND THEREFORE, WE THINK IT APPROPRIATE TO SET ASIDE THE ORDER OF CIT(A) ON THE ABOVE ISSUE AND REMAND THE SAME TO THE CIT(A) FOR A FRESH DECISION IN ACCORDANCE 12 WITH LAW AFTER AFFORDING DUE AND REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 19. GROUND NO.3 OF THE APPEAL READS AS UNDER:- 3. THAT THE LEARNED CIT(A)-II HAS ERRED IN C ONFIRMING THE DISALLOWANCE OF PRIOR PERIOD EXPENSES OF RS. 1,15 ,595/- IGNORING THE FACT THAT THE LIABILITY TO PAY THESE EXPENSES CRYSTALLIZED ONLY IN THIS YEAR. 20. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DEBITED EXPENSES OF EARLIER YEARS TO THE PROFIT AND LOSS ACCOUNT. THE D ETAILS OF THESE EXPENSES ARE GIVEN IN PARA 10 OF THE ASSESSMENT ORDER. THE CONTE NTION OF THE ASSESSEE WAS THAT SOME BILLS WERE RECEIVED AFTER THE CLOSE OF THE YEA R WHICH PERTAINED TO THE EARLIER YEARS. BY THIS TIME, THE BALANCE SHEET HAD BEEN FI NALIZED THEREFORE, THE BILLS RECEIVED AFTER THE CLOSE OF ACCOUNTS WERE BOOKED IN THE CURRENT YEAR. THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS FOLLOW ING THE MERCANTILE SYSTEM OF ACCOUNTING AND AS SUCH THE BILLS SHOULD HAVE BEEN D EBITED IN THE YEAR TO WHICH THEY BELONG. THE ASSESSING OFFICER ALSO OBSERVED THAT SOME OF THE BILLS PERTAINED TO THE YEAR 2004, THEREFORE, SUBMISSIONS OF THE ASSESSEE WERE REJECTED. CONSEQUENTLY, THE ASSESSING OFFICER DISALLOWED RS. 1,15,595/-. 21. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION AN D, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 22. WE HAVE HEARD SHRI SUBHASH AGGARWAL, LD. COUNSE L FOR THE ASSESSEE. HE SUBMITTED THAT LIABILITY WAS DETERMINED AND CRYSTAL LIZED IN THE YEAR IN QUESTION ON THE BASIS OF MAINTAINING ACCOUNT ON MERCANTILE BASI S. SHRI SUBHASH AGGARWAL, FURTHER POINTED OUT THAT EXPENDITURE OF RS. 1,15,59 5/- ACTUALLY INCURRED DURING THE PREVIOUS YEAR WAS NOT ALLOWED AS DEDUCTION FROM THE PROFITS OF THE PREVIOUS YEAR ON THE GROUND THAT THE LIABILITY IN RESPECT OF THES E EXPENSES HAD ARISEN IN THE 13 EARLIER PREVIOUS YEAR AND NOT IN THE RELEVANT PREVI OUS YEAR AND AS THE ASSESSEE IS MAINTAINING ACCOUNT ON MERCANTILE SYSTEM, SAME IS A LLOWABLE AS EXPENSES OF THE PREVIOUS YEAR IN QUESTION . SH. SUBHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE LIABILITY WAS DETERMINED AND CRYSTALLIZED IN THE YEAR IN QUESTION AND, THEREFORE, ON THE BASIS OF MAINTAI NING ACCOUNT ON MERCANTILE BASIS, THE SAME IS ALLOWABLE. THERE IS NO DISPUTE T HAT THE BILLS WERE RECEIVED LATE AND THE LIABILITY TO PAY THESE EXPENSES MATERIALIZE D ONLY WHEN THE CLAIM IS RECEIVED BY THE ASSESSEE COMPANY. IN THE CASE OF SA URASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. [1995] 213 ITR 523 (GUJ.), THE HON'BLE HIGH COURT HELD AT PAGE 531 AS UNDER:- HAVING CONSIDERED THE MATERIAL ON RECORD, WE DO NO T FIND ANY JUSTIFICATION FOR THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE ON SUCH AN ABSTRACT PROPOSITION. MERELY BE CAUSE AN EXPENSE RELATES TO A TRANSACTION OF AN EARLIER Y EAR IT DOES NOT BECOME A LIABILITY PAYABLE IN THE EARLIER YEAR UNLESS IT CAN BE SAID THAT THE LIABILITY WAS DETERM INED AND CRYSTALLIZED IN THE YEAR IN QUESTION ON THE BASIS O F MAINTAINING ACCOUNTS ON THE MERCANTILE BASIS. IN EA CH CASE WHERE THE ACCOUNTS ARE MAINTAINED ON THE MERCANTILE BASIS IT HAS TO BE FOUND IN RESPECT OF ANY CLAIM, WHETHER SUCH LIABILITY WAS CRYSTALLIZED AND QUANTIFIED DURING TH E PREVIOUS YEAR SO AS TO BE REQUIRED TO BE ADJUSTED I N THE BOOKS OF ACCOUNT OF THAT PREVIOUS YEAR. IF ANY LIAB ILITY, THOUGH RELATING TO THE EARLIER YEAR, DEPENDS UPON M AKING A DEMAND AND ITS ACCEPTANCE BY THE ASSESSEE AND SUCH LIABILITY HAS BEEN ACTUALLY CLAIMED AND PAID IN THE LATER PREVIOUS YEARS IT CANNOT BE DISALLOWED AS DEDUCTION MERELY ON THE BASIS THE ACCOUNTS ARE MAINTAINED ON MERCANT ILE BASIS AND THAT IT RELATED TO A TRANSACTION OF THE P REVIOUS YEAR. THE TRUE PROFITS AND GAINS OF A PREVIOUS YEAR ARE REQUIRED TO BE COMPUTED FOR THE PURPOSE OF DETERMIN ING TAX LIABILITY. THE BASIS OF TAXING INCOME IS ACCRUAL OF INCOME 14 AS WELL AS ACTUAL RECEIPT. IF FOR WANT OF NECESSARY MATERIAL CRYSTALLIZING THE EXPENDITURE IS NOT IN EXISTENCE I N RESPECT OF WHICH SUCH INCOME OR EXPENSES RELATE, THE MERCAN TILE SYSTEM DOES NOT CALL FOR ADJUSTMENT IN THE BOOKS OF ACCOUNT ON ESTIMATE BASIS. IT IS ACTUALLY KNOWN INCOME OR E XPENSES, THE RIGHT TO RECEIVE OR THE LIABILITY TO PAY WHICH HAS COME TO BE CRYSTALLIZED, WHICH IS TO BE TAKEN INTO ACCOU NT UNDER THE MERCANTILE SYSTEM OF MAINTAINING BOOKS OF ACCOU NT. IN THE ABOVE JUDGMENT THE HON'BLE GUJRAT HON'BLE HI GH COURT HAS CATEGORICALLY HELD THAT MERELY BECAUSE AN EXPENSE RELATES TO A TRANSACTION OF AN EARLIER YEAR IT DOES NOT BECOME A LIABILITY PAYABLE IN THE EARLI ER YEAR UNLESS IT CAN BE SAID THAT THE LIABILITY WAS DETERMINED AND CRYSTALL IZED IN THE YEAR IN QUESTION ON THE BASIS OF MAINTAINING ACCOUNTS ON THE MERCANT ILE BASIS. IN THE INSTANT CASE, BILLS WERE RECEIVED IN THIS YE AR AND, THEREFORE, IT CAN BE SAID THAT THE LIABILITY WAS DETERMINED AND CRYSTALLIZED IN THE YEAR IN QUESTION ON THE BASIS OF MAINTAINING ACCOUNT ON MERCANTILE BASIS. IN VIEW OF THE JUDGEMENT OF THE HON'BLE GUJRAT HIGH COURT REFERRED TO ABOVE, WE ALLOW GROUND NO.3 OF THE APPEAL. 23. GROUND NO.4 OF THE APPEAL, READS AS UNDER:- 4. THAT THE LEARNED CIT(A)-II HAS ERRED IN CONFIR MING THE DISALLOWANCE OF RS. 4,71,880/- U/S 40A(IA) OF THE INCOME TAX ACT IGNORING THE FACT OF THE CASE. 24. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HA D MADE PAYMENTS DURING THE YEAR ON WHICH TAX WAS NOT DEDUCTED AT SOURCE AS PER FOLLOWING DETAILS:- S. NO A/C HEAD DUE DATE OF DEDUCTION ACTUAL DATE OF DEDUCTION DUE DATE OF DEPOSIT DATE OF DEPOSIT AMOUNT OF EXPENDITURE RS. 1. SERVICE CHARQES 20.05.2006 NOT DEDUCTED 07.06.2006 NOT DEPOSITED 40243.00 15 2. SERVICE CHARGES 01.05.2006 NOT DEDUCTED 07.06.2006 NOT DEPOSITED 68250.00 3. FEES & TAXES 16.06.2006 NOT DEDUCTED 07.07.2006 NOT DEPOSITED 20050.00 4. INTT. ON UNSECURED LOAN 31.07.2006 NOT DEDUCTED 07.08.2006 NOT DEPOSITED 343337.00 TOTAL 471880.0O THE ASSESSING OFFICER DISALLOWED RS. 4,71,880/- FOR THE REASONS STATED IN PARA 11 OF THE ASSESSMENT ORDER. 25. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWAN CE AND, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 26. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI SUBHA SH AGGRWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TDS ON INTEREST PAY MENT OF RS. 3,43,337/- WAS DEPOSITED BY M/S MRS. BECTOR FOOD SPECIALTIES LTD. AS REGARDS OTHER PAYMENTS, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUT HORITIES BELOW HAVE NOT CORRECTLY APPRECIATED THE FACTS OF THE CASE AND ALS O THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. IN THE CASE OF HINDUSTAN C OCA COLA BEVERAGE P. LTD [2007] 293 ITR 226 (SC) THE HON'BLE SUPREME COURT H AS HELD THAT WHERE PAYEE HAS ALREADY PAID TAX ON THE INCOME IN WHICH THERE W AS SHORT DEDUCTION OF TAX AT SOURCE, RECOVERY OF SHORT TAX CANNOT BE MADE ONCE AGAIN FROM THE TAX ON DEDUCTOR. SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR TH E ASSESSEE ALSO REFERRED TO A DECISION OF HON'BLE DELHI HON'BLE HIGH COURT IN THE CASE OF CIT-I VS. ANSAL LAND MARK TOWNSHIP (P) LTD IN ITA 160 OF 2015 AND 1 61 OF 2015 WHEREIN THE HON'BLE DELHI HIGH COURT VIDE ITS ORDER DATED 28.8 .2015 THAT THE SECOND PROVISO TO SECTION 40 (A) (IA) OF THE ACT IS DECLARATORY AN D CURATIVE IN NATURE AND SHOULD BE GIVEN RETROSPECTIVE EFFECT FROM 1ST APRIL 2005. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE SET ASIDE THE ORDER OF CIT(A) AND 16 REMAND THE ISSUE TO CIT(A) WITH A DIRECTION TO DECI DE THE ISSUE AFRESH KEEPING IN VIEW THE ABOVE DECISIONS. 27. GROUND NO.4 OF THE APPEALS IS ALLOWED FOR STATI STICAL PURPOSES. 28. GROUND NOS. 5 & 6 OF THE APPEAL READS AS UNDER; - 5. THAT THE LEARNED CIT(A)-!I HAS ERRED IN C ONFIRMING THE DISALLOWANCE OF RS. 4,05,610/- - PAID TO M/S ERNST & YOUNG AND M/S KPWG AS ADVISORY CHARGES. 6. THAT THE LEARNED CIT(A)-!I HAS ERRED IN C ONFIRMING THE DISALLOWANCE OF RS. 17,33,220/- PAID TO M/S AZB A PARTNERS, BMR ASSOCIATES AND PKP CONSULTANTS P LTD AS CONSULTAN CY CHARGES. 29. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFF ICER DISALLOWED THE EXPENDITURE OF RS. 4,05,610/- AND RS. 17,33,220/- C LAIMED BY THE ASSESSEE AS DEDUCTION WHILE COMPUTING CAPITAL GAINS ON TRANSFE R OF THE ASSESSEES COMPANY TO M/S MRS. BECTOR FOOD SPECIALTIES LTD. THE ASSESSEE SOLD ITS BUSINESS TO M/S MRS. BECTOR FOOD SPECIALTIES LTD. AND HAVE PAID TAX ON C APITAL GAIN ON SUCH SALES. IN THE CALCULATION OF THE CAPITAL GAINS, THE ASSESSEE HAS CLAIMED CERTAIN EXPENSES AS DEDUCTION. THE ASSESSING OFFICER REQUIRED THE ASS ESSEE TO SUBMIT THE EVIDENCE IN RESPECT OF THE EXPENDITURE CLAIMED AS DEDUCTION. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE FAILED TO SUBMIT ANY DETAILS REGARDING THE CHARGES PAID TO MS. KPMG AND M/S ERNST & YOUNG. AS REGARDS THE EXPE NDITURE OF RS. 4,05,610/-, THE ASSESSEE SUBMITTED THAT BILLS ARE NOT TRACEABLE . CONSEQUENTLY, THE ASSESSING OFFICER DISALLOWED EXPENDITURE AMOUNTING TO RS. 4,0 5,610/-. THE ASSESSING OFFICER ALSO CALLED FOR INFORMATION U/S 133(6) FROM MS. BMR ADVISORS PVT. LTD, M/S PKP CONSULTANTS AND M/S AZB & PARTNERS. AS P ER THE INFORMATION FURNISHED BY THE ABOVE CONCERNS, IT WAS CLAIMED THA T THEY HAD PROVIDED SERVICES 17 TO CONDUCT DUE DILIGENCE ON M/S BECTOR FOODS SPECI ALTIES LTD. ON BEHALF OF M/S GOLD SACHS AS IT HAD TO MAKE INVESTMENT IN M/S M/S MRS BECTOR FOODS SPECIALTIES LTD. THE ASSESSING OFFICER OPINED THAT PAYMENT TO M /S BMR ADVISORS PVT LTD AND M/S AZB & PARTNERS WAS MADE FOR CONDUCTING DUE DILIGENCE ON M/S MRS. BECTOR FOOD SPECIALTIES LTD ON BEHALF OF M/S GOLDMA N SACHS AND M/S GOLDEN SACHAS HAD TO MAKE INVESTMENT IN M/S MRS. BECTOR F OOD SPECIALTIES LTD. ACCORDING TO ASSESSING OFFICER THESE PAYMENTS HAVE NOTHING TO DO WITH TRANSFER OF BUSINESS OF THE ASSESSEE TO M/S MRS. BECTOR FOOD S SPECIALTIES LTD. THEREFORE, THE ASSESSING OFFICER HELD THAT THE EXPENDITURE OF RS. 17,33,220/- CLAIMED BY THE ASSESSEE WAS NOT WHOLLY AND EXCLUSIVELY INCURRED IN CONNECTION WITH TRANSFER OF BUSINESS OF THE ASSESSEE TO M/S MRS. BECTOR FOODS S PECIALTIES LTD. CONSEQUENTLY, THE ASSESSING OFFICER MADE THE IMPUGNED DISALLOWANC E. 30. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANC E VIDE PARA 8.3, OBSERVING AS UNDER:- 8.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS. THE EXPENDITURE ON ACCOUNT OF PAYMENTS MADE TO M/S KPMG AND M/S ERNEST & YOUNG HAVE BEEN DISALLOWED BY THE AO AS THE APPELLANT HAS FAILED TO PRODUCE ANY EVIDENCE IN THE FORM OF BILLS FROM THES E CONCERNS. EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS, NO SUCH BILLS WERE FILED. THE MERE CLA IM OF THE APPELLANT THAT THESE EXPENSES WERE ON ACCOUNT O F LEGAL EXPENSES FOR THE PURPOSE OF BUSINESS TRANSFER DOES NOT JUSTIFY THE CLAIM. THE AO WAS FULLY JUSTIFIED IN DI SALLOWING THESE EXPENSES AS THE APPELLANT HAD FAILED TO FILE THE SUPPORTING EVIDENCE. AS REGARDS THE PAYMENTS MADE TO M/S PKP CONSULTANT S AND M/S AZB & PARTNERS IS CONCERNED, THE AO HAS CLE ARLY BROUGHT OUT THE PURPOSE OF THESE PAYMENTS AS VERIFI ED, FROM THE INFORMATION OBTAINED U/S 133(6) OF THE INC OME TAX ACT. THESE PAYMENTS HAVE NOTHING TO DO WITH THE TRANSFER OF BUSINESS OF THE APPELLANT TO THE SUCCES SOR COMPANY. THESE PAYMENTS WERE INFACT RELATED TO THE DUE 18 DILIGENCE ON THE SUCCESSOR COMPANY ON BEHALF OF THE M/S GOLDMAN SACHS. THE APPELLANT HAS NOT BEEN ABLE TO CONTROVERT THIS FINDING OF FACT OF AO THROUGH ANY E VIDENCE. KEEPING IN VIEW THE AFORESAID FACTS OF THE CASE, TH E AO WAS FULLY JUSTIFIED IN DISALLOWING THESE EXPENSES O F RS.17,33,220/-. THESE GROUNDS OF APPEAL ARE ACCORDI NGLY DISMISSED . 31. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE ASSES SEE CLAIMED THE EXPENDITURE AND, THEREFORE, ONUS WAS UPON IT TO SUB STANTIATE ITS CLAIM. IT IS APPARENT FROM THE RECORDS THAT THE ASSESSEE HAS FAI LED TO PRODUCE ANY EVIDENCE IN THE FORM OF BILLS, FROM THE CONCERNED PARTIES. THE LD. CIT(A) HAS CATEGORICALLY OBSERVED THAT EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO SUCH BILLS WERE FILED. WE ARE IN AGREEMENT WITH THIS OBSERVATI ON OF THE CIT(A) THAT THE MERE CLAIM OF THE ASSESSEE THAT THESE EXPENSES WERE ON A CCOUNT OF LEGAL EXPENSES FOR THE PURPOSE OF BUSINESS TRANSFER WOULD NOT JUSTIFY THE CLAIM. AS REGARDS THE PAYMENTS MADE TO M/S PKP CONSULTANTS AND M/S AZB & PARTNERS IS CONCERNED, THE CIT(A) HAS CATEGORICALLY OBSERVED THAT THE ASSE SSING OFFICER HAD VERIFIED FROM THE ABOVE PARTIES. THE LD. CIT(A) HAS CATEGORI CALLY STATED THAT THE EXPENSES CLAIMED BY THE ASSESSEE HAVE NOTHING TO DO WITH THE TRANSFER OF THE BUSINESS OF THE ASSESSEE TO HIS SUCCESSOR COMPANY. THERE IS NOT MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF THE LOWER AUTH ORITIES. AT THIS STAGE ALSO, NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THESE E XPENSES WERE INCURRED IN CONNECTION WITH TRANSFER OF THE BUSINESS OF THE ASS ESSEE TO THE SUCCESSOR COMPANY. IN THE ABSENCE OF ANY SUPPORTING EVIDENCE , WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LOWER AUTHORITIES ON THIS ISSUE . ACCORDINGLY, WE REJECT GROUND NOS. 5 & 6 OF THE APPEAL. 32. GROUND NO.7 OF THE APPEAL READS AS UNDER:- 7. THAT THE LEARNED CIT(A)-II HAS ERRED IN C ONFIRMING THE CHARGING OF INTEREST U/S 234B OF THE INCOME TAX ACT . 19 AT THE TIME OF HEARING OF THE APPEAL, THE AUTHORIZE D REPRESENTATIVES OF BOTH THE PARTIES AGREED THAT THIS GROUND OF APPEAL IS CONSEQ UENTIAL IN NATURE. WE HOLD ACCORDINGLY. 34. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. ITA NO. 459/CHD/2013 35. THE ONLY GROUND RAISED BY THE REVENUE IN THIS A PPEAL READS AS UNDER:- THAT THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETI NG THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS. 34,31,320/- BY DISALLOWING THE CLAIM OF THE ASSESSE E U/S 80IC ON THE JOB WORK WHEREAS INCOME FROM JOB CHARGE S CANNOT BE TREATED TO HAVE BEEN DERIVED BY THE UNDER TAKING FROM MANUFACTURING OR PRODUCING ANY ARTICLE OR THIN G NOT PROHIBITED BY 13 TH SCHEDULE 36. IT IS OBSERVED THAT WE HAVE DECIDED A SIMILAR I SSUE IN REVENUES APPEAL IN ITA NO. 714/CHD/2011 (GROUND NO.5) FOR ASSESSMENT Y EAR 2006-07. FOR THE DETAILED REASONS GIVEN THEREIN, WE HAVE SET ASIDE T HE ORDER OF CIT(A) ON SIMILAR ISSUE AND REMANDED THE MATTER TO CIT(A) FOR A FRES H DECISION IN ACCORDANCE WITH LAW. THE FINDINGS GIVEN THEREIN SHALL APPLY TO THI S GROUND OF APPEAL ALSO WITH EQUAL FORCE. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 37. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.2015 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 14 TH OCTOBER, 2015 RKK 20 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 21 22