Hindustan Gum & Chemicals Ltd., Kolkata V. The DCIT, Cir-12, Kolkata, Kolkata

ITA 462/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9282 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 30-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2014
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Assessee Lawyers: J P KHAITAN; SANJAY BHAUMIK
• Keywords: Business income; Depreciation; Business expenditure; Additional depreciation; Earning of tax free income; Proportionate interest; Question of law; Benefit of exemption
• Section: 43B; 143(3); 80HHC; 14A; 80IB; 37(1); 43(5); 10B; 32

Judgement Text

1 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KO LKATA [BEFORE SHRI M. BALAGANESH, AM & SHRI PARTHA SARAT HI CHAUDHURY, JM] I.T.A NO.462/KOL/2014 ASSESSMENT YEAR: 2008-09 HINDUSTAN GUM & CHEMICALS LTD. VS. DEPUTY COMMISS IONER OF INCOME-TAX, (PAN: AAACH7214E) CIRCLE-12, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & I.T.A NO.752/KOL/2014 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, VS. HINDUSTAN GUM & CHEMICALS LTD. CIRCLE-12, KOLKATA. ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 63/KOL/2014 ARISING OUT OF ITA NO.752/KOL/2014 ASSESSMENT YEAR: 2008-09 HINDUSTAN GUM & CHEMICALS LTD. VS. DEPUTY COMMISS IONER OF INCOME-TAX, CIRCLE-12, KOLKATA. ( CROSS OBJECTOR ) ( RESPONDENT ) DATE OF HEARING: 02.03.2017 DATE OF PRONOUNCEMENT: 08.03.2017 FOR THE ASSESSEE: S/SHRI J. P. KHAITAN, SR. ADV. & SANJAY BHAUMIK, ADV. FOR THE REVENUE: SHRI S. S. ALAM, JCIT, SR. DR ORDER PER SHRI M. BALAGANESH, AM: BOTH THESE APPEALS BY ASSESSEE AND REVENUE AND CROS S OBJECTION BY ASSESSEE ARE ARISING OUT OF COMMON ORDER OF CIT(A)-XII, KOLKATA VIDE APPEAL NO. 475/XII/12/08-09 DATED 13.01.2014. ASSESSMENT WAS FRAMED BY DCIT, CI RCLE-12, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) FOR AY 2008-09 VIDE HIS ORDER DATED 20.12.2011. SINCE SOME OF THE ISSUES ARE COMM ON AND FACTS ARE IDENTICAL, WE DISPOSE 2 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 OF ALL THESE APPEALS AND THE CROSS OBJECTION BY THI S CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 462/KOL/2014 ASSESSEE APPEAL 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE ON ACCOUNT OF PR OVISION FOR LEAVE ENCASHMENT FOR RS. 17,63,884/- IN THE FACTS AND CIRCUMSTANCES OF THE C ASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE MADE PROVISION FOR LEAVE ENCASHMENT TO THE TUNE OF RS. 17,63,884/- AND CLAIMED THE SAME AS DEDUCTION WHICH WAS DISALLOWED BY THE LD AO BY INVOKING THE PROVISIONS OF SECTION 43B (F) OF THE ACT. THE LD CITA SUSTAINED THE DISALLOWANCE BY PLACING RELIANCE ON THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LTD. AGGRIEVED, THE ASSES SEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT HOLDING THAT PROVISION FOR LEAVE ENCASHMENT FOR RS.17,63,88 4/- IS NEITHER STATUTORY LIABILITY NOR CONTINGENT LIABILITY AND THEREFORE NOT TO BE CONSID ERED FOR THE PURPOSE OF COMPUTING DISALLOWANCE U/S. 43B(F) OF THE I. T. ACT, 1961. 2.2. THE LEARNED AR ARGUED THAT SINCE THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD 292 ITR 470 (CAL) HAS STRU CK DOWN THE PROVISIONS OF SECTION 43B(F) OF THE ACT, THE DEDUCTION MAY BE GRANTED TOWARDS LE AVE ENCASHMENT MADE ON PROVISION BASIS ITSELF IN LINE WITH THE DECISION OF THE SUPREME COU RT IN THE CASE OF BHARAT EARTH MOVERS LTD REPORTED IN 245 ITR 428 (SC). IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THOUGH THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS UNION OF INDIA REPORTED IN2 92 ITR 470 (CAL) HAD ST RUCK DOWN THE PROVISIONS OF SECTION 43B(F) OF THE ACT AS UNCONSTITUTIONAL, THE REVENUE HAD CARRIED THE MATTER FURTHER TO THE HONBLE SUPREME COURT WHICH INITIALLY IN SPECIAL LE AVE TO APPEAL (CIVIL) CC 12060 / 2008 DATED 8.9.2008 HAD HELD AS UNDER:- 3 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING O RDER. ISSUE NOTICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNE D JUDGEMENT, UNTIL FURTHER ORDERS. LATER THE HONBLE SUPREME COURT IN SPECIAL LEAVE TO APPEAL (CIVIL) NO(S). CC 22889 / 2008 DATED 8.5.2009 HAD HELD AS UNDER:- THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING O RDER DELAY CONDONED. LEAVE GRANTED. PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL APP EAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHICH HAS ACCRUED T ILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDING INTEREST DEMAND AS OF DATE IS CONCERNED , IT WOULD BE OPEN TO THE DEPARTMENT TO RECOVER THAT AMOUNT IN CASE CIVIL APPEAL OF THE DEP ARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, D URING THE PENDENCY OF THIS CIVIL APPEAL , PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RETURNS. HENCE FROM THE AFORESAID SUPREME COURT JUDGEMENT, I T COULD BE INFERRED THAT THE HONBLE SUPREME COURT HAD NOT STAYED THE JUDGEMENT OF THE C ALCUTTA HIGH COURT DURING LEAVE PROCEEDINGS. BUT THE HONBLE SUPREME COURT HAD ONL Y PASSED AN INTERIM ORDER ON THE IMPUGNED ISSUE. HENCE WE DEEM IT FIT AND APPROPRIAT E , IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LE ARNED AO TO PASS ORDERS BASED ON THE OUTCOME OF THE MAIN APPEAL ON MERITS BY THE HONBLE SUPREME COURT AS STATED SUPRA. ACCORDINGLY GROUND NO. 2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF RS. 2,66,665/- MAD E U/S 14A OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE ASSESSEE HAD RECEIVED DIVIDEND INCOME OF RS. 45,63,162/- AND CLAIMED EXEM PTION FOR THE SAME. THE ASSESSEE HAD NOT CONSIDERED ANY PROPORTIONATE INTEREST AND ADMIN ISTRATIVE EXPENSES RELATED TO EARNING OF THIS EXEMPT INCOME AND ACCORDINGLY SOUGHT TO INVOKE RULE 8D OF THE RULES. THE ASSESSEE REPLIED THAT IT IS ENGAGED IN THE BUSINESS OF MANUF ACTURE AND SALE OF GUAR GUM, POWDER 4 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 GUM, GUAR SPLIT ETC. ALL THE EXPENSES INCURRED WER E IN RELATION TO ITS BUSINESS ONLY. THE SHARES ON WHICH DIVIDEND WAS RECEIVED WERE PURCHASE D OUT OF OWN FUNDS AND NO BORROWED FUNDS WERE UTILIZED FOR INVESTMENTS. IT WAS ALSO S UBMITTED THAT THE DIVIDEND IN RESPECT OF UNITS OF MUTUAL FUNDS IS USUALLY REINVESTED IN THE RESPECTIVE SCHEMES WITHOUT BEING ACTUALLY RECEIVED BY THE ASSESSEE. THE DIVIDEND WARRANTS RE CEIVED FROM COMPANIES ARE REQUIRED TO BE DEPOSITED IN THE ASSESSEES BANK ACCOUNT FOR WHI CH PRACTICALLY NO EXPENDITURE WAS INCURRED. ACCORDINGLY IT PRAYED THAT NO DISALLOWANC E U/S 14 A OF THE ACT IS REQUIRED TO BE MADE. THE LD AO OBSERVED THAT THE FACILITIES AND S ET UP OF THE COMPANY HAS ALSO BEEN USED TO MANAGE THE INVESTMENTS FROM WHICH DIVIDEND WAS E ARNED. HENCE A PART OF THE TOTAL EXPENSES HAS BEEN INCURRED AND UTILIZED FOR EARNING OF DIVIDEND INCOME. ACCORDINGLY HE INVOKED RULE 8D OF THE RULES AND DISALLOWED A SUM O F RS. 17,261/- UNDER RULE 8D(2)(II) AND RS. 2,49,404/- UNDER RULE 8D(2)(III) OF THE RUL ES. ACCORDINGLY THE TOTAL DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES W ORKED OUT TO RS. 2,66,665/- ( 17,261 + 2,49,404). 3.2. BEFORE THE LD CITA, IT WAS STATED THAT THE AS SESSEE HAD MADE INVESTMENTS IN DEBT FUNDS OF THE MUTUAL FUND FOR RS. 4,60,00,000/- OUT OF SURPLUS FUNDS AND DIVIDEND INCOME WAS EARNED FROM SUCH MUTUAL FUNDS. HE REITERATED TH E FINDINGS OF THE LD AO AND SUSTAINED THE DISALLOWANCE MADE U/S 14A OF THE ACT. AGGRIEVE D, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT DELETING THE DISALLOWANCE OF RS.2,66,665/- TREATED BY LD. DCIT AS EXPENSES ATTRIBUTABLE TO EARNING DIVIDEND INCOME AND DID NOT HOLD THAT NO EX PENSES HAVE BEEN INCURRED TO EARN THE SAID INCOME. 3.3. THE LD AR ARGUED THAT ALL THE INVESTMENTS WER E VERY OLD AND WERE MADE IN THE EARLIER YEARS AND THE BORROWED FUNDS WERE NOT UTILIZED FOR MAKING INVESTMENTS. HENCE NO DISALLOWANCE SHOULD BE MADE UNDER RULE 8D(2)(II) OF THE RULES. WITH REGARD TO APPLICATION OF RULE 8D(2)(III) OF THE RULES, HE PRAYED THAT ONL Y DIVIDEND BEARING INVESTMENTS SHOULD BE TAKEN INTO ACCOUNT FOR WHICH PURPOSE, HE PLACED REL IANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF REI AGRO LTD VS DCIT REPORTED IN 36 CCH 360 (KOL). IN RESPONSE TO THIS, THE LD DR PLACED RELIANCE ON T HE DECISION OF THE HONBLE JURISDICTIONAL 5 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 HIGH COURT IN THE CASE OF DHANUKA & SONS REPORTED IN 339 ITR 319 (CAL) WHEREIN IT WAS HELD THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE INVESTMENTS WERE MADE OUT OF OWN FUNDS EVEN THOUGH THE INVESTMENTS WERE MADE IN THE EARLIER YEARS. 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DHANUKA & SONS SUPRA HAD CATEG ORICALLY HELD THAT EVEN THOUGH THE INVESTMENTS WERE MADE IN THE EARLIER YEARS, THE ONU S IS ON THE ASSESSEE TO PROVE THAT IN THOSE RESPECTIVE YEARS, THE INVESTMENTS WERE MADE OUT OF OWN FUNDS AND NO BORROWED FUNDS WERE UTILIZED FOR THE SAME. HOWEVER, WE FIND THAT THE LD AO WHILE FRAMING THE ASSESSMENT FOR ASST YEAR 2004-05 U/S 143(3) OF THE ACT HAD NOT MAD E ANY DISALLOWANCE UNDER RULE 8D(2)(II) OF THE RULES APPRECIATING THE CONTENTIONS OF THE ASSESSEE THAT INVESTMENTS IN EARLIER YEARS WERE MADE OUT OF OWN FUNDS. WE ALSO FIND THA T THE ASSESSEE HAD EXPLAINED THE SOURCE OF EACH INVESTMENTS MADE BY IT BEFORE THE LD CITA D URING APPELLATE PROCEEDINGS FOR ASST YEAR 2005-06 TOGETHER WITH THE DETAILS OF INVESTMEN TS MADE IN RESPECTIVE YEARS OUT OF ITS OWN FUNDS. THE LD CITA GRANTED RELIEF TO THE ASSE SSEE IN THIS REGARD AND AGAINST WHICH THE REVENUE HAD NOT PREFERRED ANY APPEAL BEFORE US. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT NO DISALLOWANCE UNDER RULE 8D(2)(II) O F THE RULES TOWARDS PROPORTIONATE INTEREST IS WARRANTED IN THE INSTANT CASE. IN RESPECT OF DISALLOWANCE MADE TOWARDS ADMINISTRAT IVE EXPENSES UNDER RULE 8D(2)(III) OF THE RULES, WE HOLD THAT THE CO-ORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF REI AGRO LTD SUPRA HAD HELD THAT ONLY DIVIDEND BEARING INVESTMEN TS SHOULD BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF WORKING OUT THE DISALLOWANCE UNDER RULE 8D(2)(III) OF THE RULES. WE DIRECT THE LD AO ACCORDINGLY. HENC,E THE GROUND NO. 1 RAISED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. CO NO. 63/KOL/2014 ASSESSEE CO 4. THE ONLY ISSUE TO BE DECIDED IN THIS CROSS OBJE CTION OF THE ASSESSEE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DISALLOWING THE EXPEND ITURE OF RS. 2,45,835/- BY INVOKING EXPLANATION TO SECTION 37(1) OF THE ACT IN THE FACT S AND CIRCUMSTANCES OF THE CASE. 6 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE ASSESSEE HAD DEBITED A SUM OF RS. 2,45,835/- TOWARDS PENALTY IN ITS PROFIT AND LOSS ACCOUNT. THE LD AO SOUGHT TO DISALLOW THE SAME BY INVOKING PROVISIONS OF EXPLANA TION TO SECTION 37(1) OF THE ACT ON THE PLEA THAT THE SAME WAS PAID FOR INFRACTION OF LAW. THE LD AO ALSO OBSERVED THAT THE PENALTY SUM OF RS. 2,45,835/- WAS ALSO REFLECTED IN THE TAX AUDIT REPORT VIDE COLUMN 17(E)(III) OF FORM 3CD. IN RESPONSE THE ASSESSEE REPLIED THAT I T HAD PROCURED LDO/FO/LPG ETC AS CONSUMABLES AT CONCESSIONAL RATE ON THE STRENGTH O F FORM NO. 26 AND 40 PRESCRIBED UNDER SALES TAX ACT. HOWEVER, THE SALES TAX AUTHORITIES HELD THAT IT IS NEITHER RAW MATERIAL NOR PROCESSING MATERIAL AND CONSUMABLES AND RAISED A DE MAND OF RS. 7.16 LACS WHICH INCLUDED PENALTY OF RS. 2.46 LACS AGAINST WHICH ASSESSEE PRE FERRED AN APPEAL BEFORE THE APPELLATE AUTHORITY. THE SAID APPEAL IS STILL PENDING. THE ASSESSEE CONTENDED THAT THE PENALTY IS NOT FOR VIOLATION OF ANY LAW AND THE SAME IS AN EXPENDI TURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE LD AO HOWEVER HELD THE SAME TO BE PENAL IN NATURE AND DISALLOWED IN THE ASSESSMENT. THE LD CITA UPHELD TH E ACTION OF THE LD AO. AGGRIEVED, THE ASSESSEE HAD PREFERRED CROSS OBJECTION BEFORE US ON THE FOLLOWING GROUND:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT HOLDING THAT PENALTY OF RS.2,45,835/- IS NOT PAID FOR VIOLA TION OF ANY LAW AND THEREFORE THE SAME IS ALLOWABLE AS BUSINESS EXPENDITURE. 4.2. THE LD AR ARGUED THAT THE SAID PENALTY WAS LE VIED U/S 45(6) OF GUJARAT SALES TAX ACT ACCORDING TO WHICH, ANY SALES TAX LEVIED BY THE SAL ES TAX DEPARTMENT IN EXCESS OF TAX PAID BY THE ASSESSEE DEALER, THEN THE DEFICIT SHALL BE DEEM ED TO BE DEFAULTED BY THE ASSESSEE DEALER AND THEREFORE LIABLE FOR PENALTY. HE ARGUED THAT O NLY PURSUANT TO DEEMING FICTION OF A PROVISION CONTAINED IN GUJARAT SALES TAX ACT, THE A SSESSEE DEALER IN THE INSTANT CASE IS INVITED WITH LEVY OF PENALTY. IT IS NOT FOR INFRAC TION OF ANY LAW FOR THE TIME BEING IN FORCE. HE ALSO ARGUED THAT ASSESSEE HAD PREFERRED AN APPEA L AGAINST THE LEVY OF PENALTY BEFORE THE APPELLATE AUTHORITY AND THE SAME IS PENDING DISPOSA L. HE ARGUED THAT IN THE MEANWHILE, SIMILAR ISSUE IN THE CASE OF ANOTHER ASSESSEE DEALE R (I.E AMI PIGMENTS) HAD TRAVELLED UPTO HIGH COURT AND THE HONBLE HIGH COURT HAD SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSMENT OFFICER TO HAVE A RELOOK ON THE FACTS AND THE APPLI CABILITY OF RELEVANT PROVISIONS OF SALES TAX ACT. ACCORDINGLY HE ARGUED THAT THE ISSUE UNDER DIS PUTE IS SQUARELY DEBATABLE AND NO PENALTY 7 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 WOULD BE EXIGIBLE AUTOMATICALLY. HE STATED THAT B Y TAKING SHELTER ON THE SAID HIGH COURT JUDGEMENT, THE ASSESSEE IS CONFIDENT OF WINNING ITS APPEAL BEFORE THE APPELLATE AUTHORITY FOR CANCELLATION OF LEVY OF PENALTY OF RS. 2,45,835/-. IN THESE CIRCUMSTANCES, HE PRAYED THAT THE SAME MAY NOT BE TREATED AS INCURRED FOR INFRACTION OF ANY LAW FOR THE TIME BEING IN FORCE . IN RESPONSE TO THIS, THE LD DR VEHEMENTLY SUPPORTED TH E ORDERS OF THE LOWER AUTHORITIES AND STATED THAT THE SAME IS INCURRED ONLY FOR INFRACTIO N OF LAW AND THEREBY THE EXPLANATION TO SECTION 37(1) OF THE ACT WOULD AUTOMATICALLY APPLY. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE UNDER DISPUTE HAD EMANATED FROM THE SALES TAX ASSESSMENT. THE APPEAL AGAINST THE LEVY OF PENALTY HAD BEEN PREFERRED BY THE ASSESSEE DEALER BEFORE THE APPELLA TE AUTHORITY UNDER SALES TAX ACT AND THE SAME IS PENDING DISPOSAL. HENCE, IN THESE CIRCUMST ANCES, WE DEEM IT FIT AND APPROPRIATE, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LD AO, TO D ECIDE THE DISALLOWANCE OF EXPENDITURE, BASED ON THE OUTCOME OF THE APPEAL BY THE FIRST APPELLATE AUTHORITY UNDER SALES TAX ACT. THE ASSESSEE IS DIRECTED TO EXPEDITE THE SALES TAX APPE AL AT THE EARLIEST AND INFORM THE OUTCOME OF THE SAME TO THE LD AO FOR HIS EXPEDITIOUS DISPOSAL OF THIS SET ASIDE PROCEEDING. ACCORDINGLY, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 752/KOL/2014 REVENUE APPEAL 5. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN ALLOWING EXEMPTION U/S 10B OF THE ACT IN RESPECT OF OTHER INCOME OF THE ASSESSEE TO THE TUNE OF RS. 18,20,101/- IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE IS HAVING A100% EXPORT ORIENTED UNIT (EOU) AT VIRAMGAM AND HAD CLAIMED EXEMPTION U/S 10B OF THE ACT IN RESPECT OF PROFITS OF THE BUSINESS OF THE SAID UNDERTAKING IN THE RETURN. THE SAID PROFITS ADMITTEDLY INCLUDES THE FOLLOWING INCOMES WHICH IN THE OPINION OF THE LD AO WAS NOT DERIVED FROM EXPORT OF ARTICLES AS PER SECTION 10B OF THE ACT :- RENT FROM STAFF QUARTERS 5,712 INSURANCE CLAIMS REALIZED 36,390 EXCESS LIABILITIES NO LONGER REQUIRED 8 8 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 MISCELLANEOUS INCOME & RECEIPTS (INCLUDING DUTY DRAWBACK OF RS. 20,64,901) 20,69,044 INTEREST RECEIVED (NET) (-) 2,91,053 ------------------ 18,20,101 THE LD AO HELD THAT THE AFORESAID INCOMES WERE NOT DERIVED FROM THE EXPORT OF ARTICLES OR THINGS AND ACCORDINGLY DENIED THE EXEMPTION U/S 10B OF THE ACT ON THE SAME. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE ON VARIOUS DECIS IONS. THE LD CITA GRANTED THE EXEMPTION U/S 10B OF THE ACT AND GAVE RELIEF TO THE ASSESSEE BY FOLLOWING THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FO R THE ASST YEARS 2003-04 AND 2004-05 VIDE ORDER DATED 28.12.2007 IN ITA NO.S 150 AND 277 (KOL) OF 2007 AND ITA NOS. 5678 AND 580/KOL/2009 RESPECTIVELY. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT IS THE FACTS AND IN LAW OF THE CASE THE L D. CIT(A) ERRED IN ALLOWING THE EXEMPTED INCOME U/S. 10B FOR INTEREST EARNED FROM OTHER INCO ME IN THE FORM OF INTEREST, DUTY DRAWBACK ETC. OF RS. 18,20,101/-.' 5.2. THE LD DR ARGUED THAT STAFF ACCOMMODATION REN T IS NOT DERIVED FROM EXPORT OF ARTICLES OR THINGS AS PER SECTION 10B OF THE ACT. THE INCOME IN THE FORM OF DUTY DRAWBACK IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS CIT REPORTED IN 317 ITR 218 (SC) WHEREIN IT WAS HELD THAT DUTY DRAWBACK RECEIPTS AND DEPB BENEFITS DO NOT FOR M PART OF THE NET PROFITS ELIGIBLE INDUSTRIAL UNDERTAKINGS FOR THE PURPOSE OF DEDUCTIO N U/S 80IA / 80IB OF THE ACT AS THEY ARE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. IN R ESPECT OF EXCESS LIABILITIES WRITTEN BACK, HE ARGUED THAT IT IS NOT KNOWN WHETHER THE LIABILITIES WERE ORIGINALLY CREATED IN THIS 100% EOU OR FOR OTHER UNITS AS ADMITTEDLY THE ASSESSEE IS HA VING BOTH TAXABLE UNIT AS WELL AS EXEMPT UNIT. IN RESPONSE TO THIS, THE LD AR ARGUED THAT T HE PROVISIONS OF SECTION 10B(1) OF THE ACT STARTS WITH SUBJECT TO THE PROVISIONS OF THIS SECT ION . THE PROVISIONS OF SECTION 10B(4) OF THE ACT CLEARLY SPECIFIES THAT THE PROFIT DERIVED F ROM THE 100% EOU SHOULD BE AS FOLLOWS:- PROFITS OF THE BUSINESS OF THE UNDERTAKING * EXPOR T TURNOVER / TOTAL TURNOVER 9 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 HENCE, THE ENTIRE INCOME OF THE 100% EOU SHALL BE E LIGIBLE FOR EXEMPTION U/S 10B OF THE ACT. HE FURTHER STATED THAT THE ASSESSEE MAINTAINS SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE 100% EOU WHICH IS ALSO PART O F THE RECORDS. IN RESPECT OF RENT RECOVERED FROM STAFF, THE SAME ONLY REPRESENTS RECO VERY OF RENT FROM STAFF QUARTERS IN RESPECT OF THE QUARTERS LET OUT BY THE ASSESSEE ON THE RENT ED PREMISES. IN OTHER WORDS, THE ASSESSEE PAYS RENT FOR THE TOTAL PREMISES INCLUDING STAFF QU ARTERS AND RECOVERS THE RENT FROM STAFF FOR THEIR QUARTERS ACCOMMODATION. HENCE IT IS EFFECTIV ELY RECOVERY OF EXPENDITURE AND NOT ANY INCOME FOR ASSESSEE. IN RESPECT OF INSURANCE CLAI MS RECEIVED, THE SAME WAS RECEIVED FOR DAMAGES FOR GOODS PERTAINING TO 100% EOU AND HENCE IS THE INCOME OF THE 100% EOU. IN RESPECT OF DUTY DRAWBACK, THE LD AO CONCEDES THE FA CT THAT THE SAME BELONGS TO THE CATEGORY OF ANCILLARY PROFITS OF THE 100% EOU AND HAVING SAI D SO, THAT ALSO WOULD ONLY ADD TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING AND HENC E IS ELIGIBLE FOR EXEMPTION U/S 10B IN TERMS OF SECTION 10B(4) OF THE ACT. HE FURTHER ST ATED THAT THE DECISION OF HONBLE APEX COURT IN LIBERTY INDIA CASE SUPRA AND OTHER DECISIO NS RELIED UPON BY THE LD AO WERE ALL RENDERED IN THE CONTEXT OF DEDUCTIONS UNDER SECTION S 80HH / 80HHC / 80IA / 80IB ETC AND HENCE THE SAME CANNOT BE USED FOR SECTION 10B WHERE THE LANGUAGE OF THE STATUTE IS COVERED AND EXEMPTION IS TO BE RECKONED AS PER COMPUTATION MECHANISM PROVIDED IN SECTION 10B(4) OF THE ACT. HE PLACED RELIANCE ON THE DECISION OF T HE HONBLE CALCUTTA HIGH COURT IN ASSESSEES OWN CASE IN ITA 666 OF 2008 WITH GA NO. 3269 OF 2014 ITAT 159 OF 2014 DATED 30.6.2016 WHERE THE SIMILAR ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE PROVISIONS OF SECTION 10B(4) OF THE ACT. HE ACCORD INGLY PRAYED FOR NON-INTERFERENCE OF THE ORDER OF THE LD CITA. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE DETAILS OF OTHER INCOME TO THE TUNE OF RS 18,20 ,101/- AS DETAILED HEREINABOVE PERTAINS TO 100% EOU AS COULD BE EVIDENT FROM THE SEGMENTAL PRO FIT AND LOSS ACCOUNT OF 100% EOU FURNISHED BY THE ASSESSEE BEFORE THE LOWER AUTHORIT IES. HENCE THE ENTIRE OTHER INCOME BECOMES THE PROFITS OF THE BUSINESS OF THE UNDERTAK ING (I.E 100% EOU) . THEN AUTOMATICALLY THE ASSESSEE IS ENTITLED FOR DEDUCTIO N AS PER THE COMPUTATION MECHANISM 10 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 PROVIDED IN SECTION 10B(4) OF THE ACT. FOR THE SAK E OF CONVENIENCE, THE PROVISIONS OF SECTION 10B(1) AND 10B(4) OF THE ACT ARE REPRODUCED HEREUNDER:- 10B (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PER CENT EXPORT-ORIENTED UNDER TAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CON SECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUT ER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE : PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME O F THE UNDERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED B Y APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITU TION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITLED TO THE DEDUCTION REFE RRED TO IN THIS SUB-SECTION ONLY FOR THE UNEXPIRED PERIOD OF AFORESAID TEN CONSECUTIVE ASSES SMENT YEARS 10B(4) FOR THE PURPOSES OF SUB-SECTION (1), THE PR OFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL BE THE AMOUNT WHI CH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURN OVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. FROM THE AFORESAID SECTION, IT IS VERY CLEAR AS RIG HTLY POINTED OUT BY THE LD AR THAT SECTION 10B(1) OF THE ACT STARTS WITH THE EXPRESSION SUBJE CT TO THE PROVISIONS OF THIS SECTION--------. THE PROVISIONS OF SECTION 10B(4) OF THE ACT WHICH S TIPULATES THE COMPUTATION MECHANISM CLEARLY STATES THAT THE ENTIRE PROFITS OF THE BUSIN ESS OF THE ELIGIBLE UNDERTAKING SHOULD BE TAKEN INTO ACCOUNT FOR COMPUTING THE AMOUNT ELIGIBL E FOR SECTION 10B OF THE ACT. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE VIDE ITS ORDER DATED 30.6.2016 SUPRA HAD HELD THIS ISSUE IN FAVOUR OF TH E ASSESSEE. THE QUESTION RAISED BEFORE THE COURT IS AS BELOW:- (A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE INCOME TAX APPELLATE TRIBUNAL ERRED IN LAW IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME OF RS.28,74,473/- AS PART OF THE PROFITS OF BUSINESS OF THE 100% E. O. U . ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961 AND COMPUTE DEDUCTION ACCO RDINGLY WITHOUT APPRECIATING THE FACT THAT THE SAID INTEREST INCOME WAS NOT PROFIT FROM T HE BUSINESS BUT ACCRUED ON FIXED DEPOSIT KEPT BY THE ASSESSEE IN BANK? A BARE READING OF SUB-SECTION (1) SUGGESTS THAT 1 00 % EXPORT ORIENTED UNDERTAKINGS ARE ENTITLED TO A DEDUCTION OF PROFITS AND GAINS DERIVE D FROM THE EXPORT OF ARTICLES FOR A PERIOD OF 10 YEARS. THE AFORESAID ENTITLEMENT IS, HOWEVER, SU BJECT TO THE PROVISIONS OF SECTION 10B. IN OTHER WORDS, SUBJECT TO THE PROVISIONS CONTAINED IN THE OTHER PARTS OF THE SECTION 10B, THE BENEFIT IS AVAILABLE TO AN ASSESSEE. IT WAS NOT DIS PUTED THAT THE ONLY RELEVANT PROVISION TO BE 11 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 TAKEN INTO ACCOUNT IS SUBSECTION (4) WHICH WE ALREA DY HAVE QUOTED. SUB-SECTION (4) PROVIDES THE QUANTUM OF DEDUCTION WHICH CAN BE AVAILED BY AN ASSESSEE. THE QUANTUM OF DEDUCTION IS DEPENDENT UPON THE TOTAL TURNOVER OF THE BUSINESS O F THE UNDERTAKING AND THE EXPORT TURNOVER OF THE UNDERTAKING. ONCE THESE TWO FIGURES ARE AVAI LABLE, ONE HAS TO DIVIDE THE TOTAL TURNOVER BY THE EXPORT TURNOVER IN ORDER TO WORK OUT THE PER CENTAGE OF THE EXPORT TURN OVER, VIS--VIS THE TOTAL TURN OVER. SUPPOSE TOTAL TURN OVER IS RS. 100 /- AND TOTAL EXPORT TURN OVER IS FOR RS 10/-, THEN THE EXPORT TURN OVER IS 10 % OF THE TOTAL TURN OVER. THEN ONE HAS TO FIND OUT THE TOTAL PROFIT OF THE BUSINESS OF THE UNDERTAKING. SUPPOSE THE TOT AL PROFIT OF THE BUSINESS OF THE UNDERTAKING IS RS. 100, IN THAT CASE, DEDUCTION AVAILABLE TO THE A SSESSEE UNDER SECTION 10 SUB-SECTION (1) OF SECTION 10B SHALL BE 10% OF RS. 100, I.E. TO SAY RS . 10/-. THIS IS THE FORMULA WHICH HAS BEEN PROVIDED BY SUBSECTION (4) FOR THE PURPOSE OF WORKI NG OUT THE BENEFIT OR DEDUCTION UNDER SUBSECTION (1). TOTAL TURNOVER SHALL NATURALLY INCL UDE RECEIPT ON ACCOUNT OF 5 INTEREST. THE LEGISLATURE DOES NOT APPEAR TO HAVE PROVIDED FOR EX CLUDING THE AMOUNT OF INTEREST FROM THE TOTAL TURN OVER AS HAS BEEN DONE IN THE CASE OF 80H HC BY EXPLANATION (BAA) OF SUB-SECTION (4C) THEREOF. IN THAT CASE, 90% OF THE INCOME ARISI NG OUT OF INTEREST HAS TO BE EXCLUDED FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF ARRI VING AT DEDUCTION AVAILABLE UNDER SECTION 80HHC. BUT AN IDENTICAL PROVISION IS NOT THERE. THE REFORE, THAT PROVISION CANNOT BE IMPORTED BY IMPLICATION. THE SUBMISSION THAT THE AMOUNT EARN ED FROM INTEREST WAS NOT INTENDED TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF GIVING BENEFI T UNDER SUBSECTION (1) OF SECTION 10B MAY BE CORRECT. BUT THE AMOUNT OF DEDUCTION AVAILABLE T O A 100% EXPORT ORIENTED UNDERTAKING IS NECESSARILY DEPENDENT UPON THE FORMULA PROVIDED IN SUBSECTION (4). THERE IS, AS SUCH, NO SCOPE FOR ANY CONTROVERSY THAT PART OF THE MONEY WAS EARN ED FROM INTEREST AND NOT FROM EXPORT. THIS QUESTION CAME UP BEFORE THE KARNATAKA HIGH COURT AN D WAS ANSWERED IN THE CASE OF CIT VS. MOTOROLA INDIA ELECTRONICS (P.) LTD. REPORTED IN [2 014] 46 TAXMANN.COM 167 (KARNATAKA) AS FOLLOWS : IN THE INSTANT CASE, THE ASSESSEE IS A 100% EOU, W HICH HAS EXPORTED SOFTWARE AND EARNED THE INCOME. A PORTION OF THAT INCOME IS INCL UDED IN EEFC ACCOUNT. YET ANOTHER PORTION OF THE AMOUNT IS INVESTED WITHIN THE COUNTR Y BY WAY OF FIXED DEPOSITS, ANOTHER PORTION OF THE AMOUNT IS INVESTED BY WAY OF LOAN TO SISTER CONCERN WHICH IS DERIVING INTEREST OR THE CONSIDERATION RECEIVED FROM SALE OF THE IMPORT ENTITLEMENT, WHICH IS PERMISSIBLE IN LAW. NOW THE QUESTION IS WHETHER THE INTEREST 6 RECEIVED AND THE CONSIDERATION RECEIVED BY SALE OF IMPORT ENTITLEMEN T IS TO BE CONSTRUED AS INCOME OF THE BUSINESS OF THE UNDERTAKING. THERE IS A DIRECT NEXUS BETWEEN THIS INCOME AND THE INCOME OF THE BUSINESS OF THE UNDERTAKING. THOUGH I T DOES NOT PARTAKE THE CHARACTER OF A PROFITS AND GAINS FROM THE SALE OF AN ARTICLE, IT IS THE INCOME WHICH IS DERIVED FROM THE CONSIDERATION REALIZED BY EXPORT OF ARTICLES. I N VIEW OF THE DEFINITION OF INCOME FROM PROFITS AND GAINS INCORPORATED IN SUBSECTION ( 4), THE ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION OF THE SAID AMOUNT AS CONTEMPL ATED UNDER SECTION 10B OF THE ACT. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN EXTENDING THE BENEFIT TO THE AFORESAID AMOUNTS ALSO. WE DO NOT FIND ANY MERIT IN THESE APPEALS. TH EREFORE, THE FIRST SUBSTANTIAL QUESTION OF LAW RAISED IN ITA NO. 428/2007 IS ANSWE RED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE AND THE FIRST SUBSTANTIAL QUES TION OF LAW IN ITA NO. 447/2007 IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE LIGHT OF THE AFORESAID FINDINGS, THE SECOND QUESTION OF LAW IN BOTH THE APPEALS DO NOT ARISE FOR CONSIDERATION. MR. DUDHORIA, LEARNED ADVOCATE APPEARING FOR THE RE VENUE DREW OUR ATTENTION TO A JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF INTERNATION AL 7 COMPONENTS INDIA LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN 2015 - (372) ITR- 0190 - MADRAS WHEREIN THE FOLLOWING VIEW WAS TAKEN : 12 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 IN THE LIGHT OF THE ABOVE SAID DECISION, WE ARE OF THE FIRM VIEW THAT THE INTEREST EARNED FROM DEPOSITS WITH CORPORATION BANK, ELECTRI CITY BOARD AND ON STAFF ADVANCES DOES NOT HAVE DIRECT OR IMMEDIATE NEXUS WITH THE BU SINESS OF THE ASSESSEES UNDERTAKING AND, CONSEQUENTLY, THEY ARE NOT ELIGIBL E FOR GRANT OF DEDUCTION UNDER SECTION 10B OF THE ACT, WHICH IS AKIN TO SECTION 80 HH OF THE ACT DEALT WITH IN THE DECISION REFERRED SUPRA. MR. R.N.BAJORIA, LEARNED SENIOR ADVOCATE RIGHTLY PO INTED OUT THAT THE JUDGMENT OF THE MADRAS HIGH COURT IS OF NO RELEVANCE FOR THE SIMPLE REASON THAT SUB-SECTION (4) OF SECTION 10B WAS NOT TAKEN INTO ACCOUNT BY THE HONBLE MADRA S HIGH COURT. THEREFORE, THIS JUDGMENT IS OF NO ASSISTANCE IN DECIDING THE ISSUE. THE LEAR NED TRIBUNAL HAS PASSED THE FOLLOWING ORDER: THERE IS NO REQUIREMENT FOR THE PURPOSES OF SECTIO N 10B TO ESTABLISH DIRECT NEXUS BETWEEN THE INCOME AND THE UNDERTAKING. THE ENTIRE BUSINESS INCOME OF THE 100% EOU WILL BE THE PROFITS OF THE BUSINESS OF THE UND ERTAKING. IT HAS BEEN HELD ABOVE THAT THE INTEREST EARNED ON TEMPORARILY SURPLUS BUS INESS FUNDS OF THE 100% EOU DEPOSITED WITH BANKS FOR SHORT PERIODS IS BUSINESS INCOME AND HAS IN FACT BEEN SO ASSESSED. IT IS NOT IN DISPUTE THAT THE SURPLUS FUN DS WERE OF THE 100% EOU. AS SUCH, THE INTEREST EARNED THEREON HAS TO BE REGARDED AS P ART OF THE PROFIT OF THE BUSINESS OF THE UNDERTAKING. WE 8 FURTHER FIND THAT THE TRIBUN AL IN THE CASE OF CHEVIOT CO. LTD. FOR ASSESSMENT YEARS 2003-04 AND 2004-05, RELIED UP ON BY THE ASSESSEE, HAS DEALT WITH SIMILAR ISSUE. IN THOSE CASES, THE DIFFERENCE BETWE EN THE PROVISIONS OF SECTIONS 10B AND 80HH WAS NOTED AND AFTER CONSIDERING THE JUDGMENTS OF THE HONBLE SUPREME COURT IN STERLING FOODS (SUPRA) AND IN P.R.PRABHAKAR VERS US CIT (284 ITR 548 (SC) ) APPROVING THE SPECIAL BENCH DECISION OF THE TRIBUNA L IN INTERNATIONAL RESEARCH PARK LABORATORIES LIMITED VERSUS ASSISTANT C.I.T. (212 I TR (AT) 1 (SB) ), IT WAS HELD THAT THE PROFITS OF THE BUSINESS OF THE UNDERTAKING WOUL D INCLUDE ITS ENTIRE BUSINESS INCOME. KEEPING IN VIEW THE ABOVE DECISION AND THE DECISION OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS TO SUCCEED . THE ASSESSING OFFICER IS DIRECTED TO TREAT THE INTEREST OF RS. 28,74,473/- AS PART OF THE PROFITS OF THE BUSINESS OF THE 100% EOU ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AND CO MPUTE THE DEDUCTION ACCORDINGLY. THE ASSESSING OFFICER SHOULD DEDUCT TH E SUM OF RS. 8,01,30,294/- (RS. 7,72,54,821/- + RS. 28,74,473/-) AND NOT ONLY RS. 7 ,72,54,821/- FROM THE PROFIT AS PER PROFIT AND LOSS ACCOUNT FOR THE PURPOSE OF SEPARATE CONSIDERATION UNDER SECTION 10B GROUND NOS. 3,4 AND 5 OF THE ASSESSEES APPEAL ARE THUS ALLOWED. WE ARE OF THE OPINION THAT THE TRIBUNAL WAS RIGHT I N THE VIEW THEY TOOK FOR THE REASONS DISCUSSED BY US. IN THAT VIEW OF THE MATTER, THE QU ESTION NO. 1 IS 9 ANSWERED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS, THERE FORE, DISMISSED. 5.3.1. WE ALSO AGREE WITH THE ARGUMENT OF THE LD AR THAT THE DECISIONS RELIED UPON BY THE LD AO AND LD DR WERE RENDERED IN THE CONTEXT OF DEDUCT IONS U/S 80HH / 80HHC / 80IA / 80IB OF THE ACT AND THE WORDS USED THEREON CANNOT BE IMP ORTED INTO SECTION 10B OF THE ACT WHEN THE LANGUAGE STIPULATED IN SECTION 10B (4) OF THE A CT IS VERY CATEGORICAL AND UNAMBIGUOUS. 13 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 5.3.2. IN VIEW OF OUR AFORESAID FINDINGS AND RESPEC TFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE SUPRA, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGAR D. ACCORDINGLY, WE DISMISS THE GROUND NO. 1 RAISED BY THE REVENUE. 6. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF ADDITIONAL DEPRECIA TION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE INSTALLED PLANT AND MACHINERY IN THE EARLIER YEAR WHICH WAS PUT TO USE FOR LESS THAN 180 DAYS AND HAD CLAIMED ADDITIONAL DEPRECIATION AT 50% OF APPLICABLE RATES. THE REMAI NING 50% WAS CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER APPEAL ON THE PREMISE THAT TH E GRANT OF ADDITIONAL DEPRECIATION IS AN INCENTIVE PROVISION AND IS GRANTED FOR ENCOURAGING INVESTMENT IN CAPITAL FIELD BY THE ASSESSEE AND THE SAME IS AN ONE TIME ALLOWANCE WHIC H IS ALLOWABLE ONLY IN THE YEAR OF INSTALLATION. HENCE IT WAS ARGUED THAT THERE IS NO THING WRONG IN CLAIMING THE REMAINING 50% OF ADDITIONAL DEPRECIATION PERTAINING TO THE EARLIE R YEAR IN THE IMMEDIATELY SUCCEEDING YEAR (I.E IN THE YEAR UNDER APPEAL). THE LD AO HOWEVER REJECTED THIS CLAIM ON THE GROUND THAT THE ASSET HAD ENTERED INTO THE BLOCK OF ASSETS AND THE DEPRECIATION FOR THE YEAR SHALL BE GRANTED BASED ON THE OPENING WRITTEN DOWN VALUE (WD V) AND FOR ASSETS ADDED DURING THE YEAR DEPENDING UPON THE USAGE OF ASSET FOR NUMBER O F DAYS. THE LD CITA GRANTED RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF AHMEDABAD TRIBUNAL IN THE CASE OF ASWANI INDUSTRIES VS DCIT I N ITA NO. 140/AHD/2013 DATED 31.5.2013 WHEREIN THE VERY SAME ISSUE WAS HELD IN F AVOUR OF THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- 2. THAT IS THE FACTS AND IN LAW OF THE CASE THE I D. CIT(A) ERRED IN ALLOWING THE ADDITIONAL DEPRECIATION OF PLANT & MACHINERY AS THE SAID DEPRE CIATION U/S. 32(I)(IIA) IS NOT ALLOWABLE DEPRECIATION.' 6.2. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF T HE LD AO AND DREW THE ATTENTION OF THE BENCH TO SECOND PROVISO TO SECTION 32(1) OF THE ACT WHEREIN CLAUSE (IIA) IS ALSO INCLUDED. HE 14 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 FURTHER ARGUED THAT THE AMENDMENT BROUGHT IN THE ST ATUTE WITH EFFECT FROM 1.4.2016 BY INTRODUCTION OF THIRD PROVISO THEREON SHOULD HAVE O NLY PROSPECTIVE APPLICATION. IN RESPONSE TO THIS, THE LD AR PLACED RELIANCE ON THE CO-ORDINA TE BENCH DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2007-08 IN IT A NO. 1364/KOL/2013 DATED 8.7.2016 IN SUPPORT OF HIS ARGUMENTS. 6.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE UNDER DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL SUPRA WHEREIN IT WAS HELD AS UNDER :- 4. GROUND NO. 1 RELATING TO DEPRECIATION ON PLANT AND MACHINERY WHICH WERE PUT TO USE LESS THAN 180 DAYS DURING THE SAID FINANCIAL YEAR. DURING THE PREVIOUS ASSESSMENT YEAR (2006- 07) THE ASSESSEE CLAIMED 50% OF DEPRECIATION AND IT WAS ALLOWED. NOW FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED FURTHER 10% DEP RECIATION TO THE EXTENT OF RS.20,97,495/- UNDER SECOND PROVISO TO SEC. 32(1)(IIA) OF THE ACT. THE AO DENIED THE SAME ON THE GROUND THAT THE ACT DOES NOT HAVE OPTION WHERE ASSESSEE CAN CLA IM REMAINING DEPRECIATION IN SUBSEQUENT YEAR. THE CIT(A) CONFIRMED THE ORDER OF THE AO, HO WEVER, DIRECTED THE AO TO RECALCULATE THE AMOUNT OF DEPRECIATION ON WRITTEN DOWN VALUE (WDV). 5. THE LD AR BEFORE US SUBMITS THAT THE CASE IN HAN D IS SQUARELY COVERED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR VS. RITTAL INDIA PVT. LTD REPORTED IN (2016) 380 ITR 423(KARN). 6. THE LD. SR. DR RELIED ON THE ORDERS OF THE AUTH ORITIES BELOW. 7. HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THIS REGARD, WE MAY REFER TO THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT AND ANOTHER VS RITTAL INDIA PRIVATE LTD (SUPRA). THE FA CTS OF THE CASE THEREIN ARE THAT THE ASSESSEE BEING AN EXISTING INDUSTRIAL UNDERTAKING HAD ACQUIR ED AND INSTALLED NEW PLANT AND MACHINERY IN THE F.Y 2006-07 AND CLAIMED 50% OF ADDITIONAL 20% D EPRECIATION I.E, 10% ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE ACT IN THE CORRESPONDING ASSESSMENT YEAR 2007-08 FOR THE REASON THAT THE NEW MACHINERY WAS ACQUIRED AFTER 01-10-2006. THE RELEVANT PORTIONS AT PAGE NOS AT 9 AND 10 OF WHICH IS REPRODUCED HEREIN BELOW FOR BETTER UNDERSTANDING:- THE LANGUAGE USED IN CLAUSE (IIA) OF THE SAID SECT ION CLEARLY PROVIDES THAT A FURTHER SUM EQUAL TO 20 PER CENT. OF THE ACTUAL COST OF SUC H MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (II)'. THE WORD 'SHALL' U SED IN THE SAID CLAUSE IS VERY SIGNIFICANT. THE BENEFIT WHICH IS TO BE GRANTED IS 20 PER CENT. ADDITIONAL DEPRECIATION. BY VIRTUE OF THE PROVISO REFERRED TO ABOVE, ONLY 10 PER CENT. CAN BE CLAIMED IN ONE YEAR, IF PLANT AND MACHINERY IS PUT TO USE FOR LESS THAN 180 DAYS IN THE SAID FINANCIAL YEAR. THIS WOULD NECESSARILY MEAN THAT THE BALANCE 10 PER CENT. ADDITIONAL DEDUCTION CAN BE AVAILED OF IN THE SUBSEQUENT ASSESSMENT YEAR, OTHERWISE THE VERY PURPOSE OF INSERTION OF CLAUSE (IIA) WOULD BE DEFEATED BECAUSE IT PROVIDES FOR 20 PER CENT. DEDUCTION WHICH SHALL BE ALLOWED. IT HAS BEEN CONSISTENTLY HELD BY THIS COURT, AS WEL L AS THE APEX COURT, THAT THE BENEFICIAL LEGISLATION, AS IN THE PRESENT CASE, SHOULD BE GIVE N LIBERAL INTERPRETATION SO AS TO BENEFIT 15 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 THE ASSESSEE. IN THIS CASE, THE INTENTION OF THE LE GISLATION IS ABSOLUTELY CLEAR, THAT THE ASSESSEE SHALL BE ALLOWED CERTAIN ADDITIONAL BENEFI T, WHICH WAS RESTRICTED BY THE PROVISO TO ONLY HALF OF THE SAME BEING GRANTED IN ONE ASSES SMENT YEAR, IF CERTAIN CONDITION WAS NOT FULFILLED. BUT, THAT, IN OUR CONSIDERED VIEW, W OULD NOT RESTRAIN THE ASSESSEE FROM CLAIMING THE BALANCE OF THE BENEFIT IN THE SUBSEQUE NT ASSESSMENT YEAR. THE TRIBUNAL, IN OUR VIEW, HAS RIGHTLY HELD, THAT ADDITIONAL DEPRECI ATION ALLOWED UNDER SECTION 32(1)(IIA) OF THE ACT IS A ONE-TIME BENEFIT TO ENCOURAGE INDUS TRIALISATION, AND THE PROVISIONS RELATED IT HAVE TO BE CONSTRUED REASONABLY, LIBERA LLY AND PURPOSIVELY, TO MAKE THE PROVISION MEANINGFUL WHILE GRANTING THE ADDITIONAL ALLOWANCE. WE ARE IN FULL AGREEMENT WITH SUCH OBSERVATIONS MADE BY THE TRIBUN AL. 8. HEARD BOTH PARTIES AND PERUSED THE RELEVANT MATE RIAL ON RECORD. BY READING OF CLAUSE (IIA) TO SUB-SECTION (1) OF SECTION 32 PROVIDES FOR ALLOWANCE OF INITIAL DEPRECIATION EQUAL TO 20% OF THE ACTUAL COST OF NEW PLANT AND MACHINERY ACQUI RED AND INSTALLED AFTER MARCH 31, 2005 WITH EFFECT FROM THE ASSESSMENT YEAR 2006-07 TO THOSE WH O ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THEREFORE, THE ASSESSEE IS ENTITLED TO CLAIM 20% OF DEPRECIATION EQUAL TO THE ACTUAL COST OF PLANT AND MACHINERY, BUT, WHERE AS THE 2 ND PROVISO TO SECTION 32(1) OF THE ACT RESTRAINS THE AUTHORITY TO ALLOW DEPRECIATION TO 50% OF SUCH 20% IF THE SUBJECTED PLANT AND MACHINERY ACQUIRED DURING THE P REVIOUS YEAR AND IS PUT TO USE FOR A PERIOD OF LESS THAN 180 DAYS IN THAT PREVIOUS YEAR. ACCORD ING TO AO IN HIS ORDER AT PAGE NO-4 REFERRED THAT THE ASSESSEE PUT TO USE NEW PLANT AND MACHINER Y FOR LESS THAN 180 DAYS AND CONFIRMED BY THE CIT-A IN PARA-8 OF IMPUGNED ORDER AND IT IS A R EQUIREMENT UNDER 2 ND PROVISO TO SECTION 32(1) WHICH LIFTS THE RESTRICTION ON AO ALLOW THE F URTHER DEPRECIATION OF 10% OF WHICH REMAINED UNCLAIMED OUT OF 20% AS REFERRED IN CLAUSE (IIA) T O SUB-SECTION (1) OF SECTION 32 OF THE ACT. THE FACTS OF THE PRESENT ARE SIMILAR TO THE DECISION SU PRA RELIED ON BY THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE LAW LAID DOWN BY THE HONBLE H IGH COURT OF KARNATAKA IN THE CASE OF CIT AND ANOTHER VS RITTAL INDIA PRIVATE LTD SUPRA IS AP PLICABLE TO THE PRESENT CASE, THUS WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM REMAINING 50% DE PRECIATION OF SUCH 20% WHICH IS EQUAL TO THE ACTUAL COST OF NEW PLANT AND MACHINERY, ACCORDINGLY GROUND NO-1 RAISED BY THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS GROUND NO. 2 RAISED BY THE REVENUE. 7. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 82,32,966/- FOR PROVISION MADE FOR MARK TO MARKET LOSS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE CURRENT LIABILITIES OF THE ASSESSEE INCLUDED PROVISION FOR MARK TO MARKET LOSS ON FORWARD CONTRACTS AMOUNTING TO RS. 82,32,966/- WHICH WAS CREATED BY CORRESPONDING DEBIT TO PROFIT AND LOSS ACCOUNT AND THE SAME WAS CLAIMED AS DEDUCTION IN THE RETURN OF INCO ME BY THE ASSESSEE. WHEN ASSESSEE WAS SHOW CAUSED AS TO WHY THE SAME SHOULD NOT BE DISALL OWED BY THE LD AO , THE ASSESSEE REPLIED THAT THE ASSESSEE IS ENGAGED IN MANUFACTURI NG / TRADING OF GUAR PRODUCTS AND ITS 16 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 MAJOR REVENUES ARE DERIVED FROM EXPORTS. THE TOTAL EXPORT TURNOVER DURING THE YEAR WAS RS. 236.57 CRORES OUT OF TOTAL TURNOVER OF RS. 336.44 C RORES. IN ORDER TO HEDGE ITS EXCHANGE RISK, THE ASSESSEE ENTERED INTO FOREIGN EXCHANGE FO RWARD CONTRACTS WITH BANKS FOR ITS EXPORT BILLS. IT WAS SUBMITTED THAT THE INSTITUTE OF CHA RTERED ACCOUNTANTS OF INDIA (ICAI) HAD MADE AN ANNOUNCEMENT ON 29.3.2008 WITH REGARD TO AC COUNTING FOR SUCH DERIVATIVE CONTRACTS. IT WAS STATED THAT IN VIEW OF PRUDENCE, AN ENTITY WAS REQUIRED TO PROVIDE FOR LOSSES IN RESPECT OF ALL OUTSTANDING DERIVATIVE CON TRACTS AT THE BALANCE SHEET DATE BY MARKING THEM TO MARKET. IT WAS STATED THAT THE SAID CLARIF ICATORY ANNOUNCEMENT APPLIED TO FINANCIAL STATEMENTS FOR THE PERIOD ENDING 31.3.2008 AND THER EAFTER. IT WAS STATED THAT IN VIEW OF THE SAID ANNOUNCEMENT BY ICAI AND FOLLOWING THE PRINCIP LE OF PRUDENCE ON WHICH THE MERCANTILE SYSTEM OF ACCOUNTING IS BASED, IN RESPEC T OF THE FORWARD CONTRACTS OUTSTANDING AS ON 31.3.2008, THE ASSESSEE DETERMINED THE LOSS OF R S. 82,32,966/- WITH REFERENCE TO THE EXCHANGE RATE PREVAILING AT THE END OF THE YEAR I.E 31.3.2008. THE SAID LOSS WAS PROVIDED FOR IN THE ASSESSEES ACCOUNTS FOR 31.3.2008 AND SUCH P ROVISION WAS REVERSED IN THE NEXT YEAR AND THE ASSESSEE ACCOUNTED FOR THE ACTUAL PROFIT / LOSS UPON SETTLEMENT OF THE FORWARD CONTRACT. THE LD AO NOT SATISFIED WITH THIS EXPLAN ATION CONCLUDED THAT THE LOSS ACCOUNTED FOR BY THE ASSESSEE IS ONLY NOTIONAL AND CONTINGENT . THE LD AO ALSO PLACED RELIANCE ON THE INSTRUCTION NO. 3/2010 DATED 23.3.2010 IN SUPPORT O F HIS CONTENTION. 7.2. BEFORE THE LD CITA, APART FROM EXPLAINING TH E FACTS OF THE CASE, IT WAS SUBMITTED THAT THE LOSS ACCOUNTED FOR BY THE ASSESSEE WITH REFEREN CE TO THE EXCHANGE RATE PREVAILING ON 31.3.2008 WAS NEITHER NOTIONAL NOR CONTINGENT BUT R EPRESENTED AN ACTUAL LOSS AS ON THE BALANCE SHEET DATE. DUE TO ADVERSE FLUCTUATIONS IN THE EXCHANGE RATE AS ON 31.3.2008, THE ASSESSEE WAS REQUIRED TO PAY THE AFORESAID SUM OF R S. 82,32,966/- TO THE BANK WITH WHOM THE FORWARD CONTRACTS WERE MADE. THE PRINCIPLE OF PRUDENCE DEMANDED THAT AN ASSESSEE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING HAD T O PROVIDE FOR SUCH LOSS IN ITS ACCOUNTS FOR THE YEAR ENDED 31.3.2008. THE LD CITA APPRECIA TED THE CONTENTIONS OF THE ASSESSEE AND BY PLACING RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF BECHTEL INDIA (P) LTD VS ADDITIONAL CIT REPORTED IN (2013) 33 TAXMANN.COM 213 (DELHI 17 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 TRIB) , DELETED THE DISALLOWANCE OF RS. 82,3,2966/- . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 3.'THAT IS THE FACTS AND IN LAW OF THE CASE THE LD . CIT(A) ERRED IN ALLOWING THE PROVISION FROM MARK TO MARKET LOSSES AS THE SAID PROVISION IS NOT ALLOWABLE AS PER THE CBDT INSTRUCTION NO. 312011.' 7.3. THE LD DR REITERATED THE FINDINGS OF THE LD A O AND STATED THAT THE LOSS ARISING DUE TO RESTATEMENT BASED ON EXCHANGE RATE PREVAILING ON 31 .3.2008 IS ONLY NOTIONAL AND CONTINGENT. MOREOVER, IT IS LIKE ASSESSEE HOLDING INVESTMENTS I N ITS KITTY AND TRYING TO UNDERSTAND THE VALUE OF INVESTMENTS BASED ON MARKET RATES AS ON 31 .3.2008 BY WATCHING THE STOCK PRICES ON THE SCREEN. BASED ON THE PREVAILING STOCK PRICES AS ON 31.3.2008, THE ASSESSEE CANNOT BOOK THE NOTIONAL LOSS OR GAIN IN ITS BOOKS. THE SITUAT ION IN THE INSTANT CASE IS EXACTLY SIMILAR TO THE EXAMPLE QUOTED HEREIN. HE HEAVILY RELIED UPON THE INSTRUCTION NO. 3./2010 DATED 23.3.2010 WHEREIN IT HAS BEEN MENTIONED THAT MARK T O MARKET LOSS WHERE SALE OR SETTLEMENT HAS ACTUALLY NOT TAKEN PLACE, THE SAID LOSS WOULD B E NOTIONAL AND CONTINGENT IN NATURE AND CANNOT BE ALLOWED AS DEDUCTION. ACCORDINGLY HE PRA YED THAT THE ORDER OF THE LD AO BE RESTORED. 7.4. IN RESPONSE TO THIS, THE LD AR ARGUED THAT OU T OF THE TOTAL TURNOVER OF THE ASSESSEE TO THE TUNE OF RS. 336.44 CRORES , THE ASSESSEE HAD DE RIVED EXPORT TURNOVER OF RS. 236.57 CRORES. HENCE IT COULD BE EVIDENT THAT THE ASSESSEE IS EXPO SED TO HUGE RISK ARISING DUE TO EXCHANGE FLUCTUATION. HENCE IN ORDER TO HEDGE THE SAID RISK, THE ASSESSEE HAD ENTERED INTO FORWARD CONTRACTS WITH BANKS FOR ITS EXPORT BILLS, WHICH WA S CARRIED ON DURING THE COURSE OF ITS BUSINESS. HE ARGUED THAT THE RELIANCE ON INSTRUCTI ON NO. 3/2010 DATED 23.3.2010 IS CLEARLY MISPLACED IN AS MUCH AS IT TALKS ABOUT LOSSES ARISI NG TO AN ASSESSEE ON ACCOUNT OF TRADING IN FOREX DERIVATIVES. ADMITTEDLY THE ASSESSEE HAD NOT DEALT IN TRADING IN FOREX DERIVATIVES. HENCE THE SAID INSTRUCTION NO. 3/2010 CANNOT BE MAD E APPLICABLE TO THE INSTANT CASE. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS IN SUPPO RT OF HIS ARGUMENTS :- (A) DELHI TRIBUNAL IN THE CASE OF BECHTEL INDIA (P) LTD VS ADDL CIT REPORTED IN (2013) 33 TAXMANN.COM 213 (DELHI TRIB) DATED 8.3.2013 18 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 (B) MUMBAI TRIBUNAL IN THE CASE OF RELIANCE INDUSTR IES LTD VS CIT REPORTED IN (2013) 40 TAXMANN.COM 431 (MUMBAI TRIB) DATED 20.11.2013 (C ) BOMBAY HIGH COURT IN THE CASE OF CIT VS D CHET AN & CO REPORTED IN (2016) 75 TAXMANN.COM 300 (BOM) DATED 1.10.2016 7.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD AO HAD PLACED HEAVY RELIANCE ON INSTRUCTION NO. 3/2010 DATED 23.3.2010. FROM THE PERUSAL OF THE SAID INSTRUCTION , WE FIND THAT THE SAME WAS ISSUED IN RESPECT OF LOSS ON ACCOUNT OF TRADING IN FOREIGN EX CHANGE DERIVATIVES. THE ASSESSEE HAD ENTERED INTO FORWARD CONTRACTS IN ORDER TO HEDGE IT S EXCHANGE RISK IN RESPECT OF EXPORT PROCEEDS RECEIVABLE BY IT IN FOREIGN EXCHANGE. TH E ASSESSEES FORWARD CONTRACTS WERE NOT BY WAY OF TRADING AS SUCH IN FOREIGN EXCHANGE DERIV ATIVES. HENCE, INSTRUCTION NO. 3/2010 CANNOT BE MADE APPLICABLE TO THE FACTS OF THE INSTA NT CASE. WE FIND THAT THE DECISION RELIED UPON BY THE LD AR ON THE DECISION OF THE HONBLE BO MBAY HIGH COURT SUPRA IS IN FAVOUR OF THE ASSESSEE WHEREIN THE QUESTION RAISED BEFORE THE HONBLE COURT AND THE DECISION RENDERED THEREON IS AS UNDER:- THE REVENUE HAS URGED THE FOLLOWING QUESTION OF L AW FOR OUR CONSIDERATION:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T H CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION OF MARK TO MARK ET LOSS OF RS.78,10,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF LOS S ON FOREIGN EXCHANGE FORWARD CONTRACT LOSS AND NOT APPRECIATING THE FACT THAT THE SAID L OSS WAS A NOTIONAL LOSS AND HENCE CANNOT BE ALLOWED? 7. THE IMPUGNED ORDER OF THE TRIBUNAL HAS, WHILE UP HOLDING THE FINDING OF THE CIT (APPEALS), INDEPENDENTLY. COME TO THE CONCLUSION THAT THE TRAN SACTION ENTERED INTO BY THE RESPONDENT ASSESSEE IS NOT IN THE NATURE-OF SPECULATIVE ACTIVI TIES. FURTHER THE HEDGING TRANSACTIONS WERE ENTERED INTO SO AS TO COVER VARIATION IN FOREIGN EX CHANGE RATE WHICH WOULD IMPACT ITS BUSINESS OF IMPORT AND EXPORT OF DIAMONDS. THESE CO NCURRENT FINDING OF FACTS ARE NOT SHOWN TO BE PERVERSE IN ANY MANNER. IN FACT, THE ASSESSIN G OFFICER ALSO IN THE ASSESSMENT ORDER DOES NOT FIND THAT THE TRANSACTION ENTERED INTO BY THE RESPONDENT ASSESSEE WAS SPECULATIVE IN NATURE. IT FURTHER HOLDS THAT AT NO POINT OF TIME D ID REVENUE CHALLENGE THE ASSERTION OF THE RESPONDENT ASSESSEE THAT THE ACTIVITY OF ENTERING I NTO FORWARD CONTRACT WAS IN THE REGULAR COURSE OF ITS BUSINESS ONLY TO SAFE GUARD AGAINST T HE LOSS ON ACCOUNT OF FOREIGN EXCHANGE VARIATION. EVEN BEFORE THE TRIBUNAL, WE FIND THAT T HERE WAS NO SUBMISSION RECORDED ON BEHALF OF THE REVENUE THAT THE RESPONDENT ASSESSEE SHOULD BE CALLED UPON TO EXPLAIN THE NATURE OF ITS TRANSACTIONS. THUS, THE SUBMISSION NOW BEING MA DE IS WITHOUT ANY FOUNDATION AS THE STAND OF THE ASSESSEE ON FACTS WAS NEVER DISPUTED. SO FAR AS THE RELIANCE ON ACCOUNTING STANDARD-L L IS CONCERNED, IT WOULD NOT BY ITSELF DETERMINE WHET HER THE ACTIVITY WAS A PART OF THE RESPONDENT-ASSESSEE'S REGULAR BUSINESS TRANSACTION OR IT WAS A SPECULATIVE TRANSACTION. ON PRESENT FACTS, IT WAS NEVER THE REVENUE'S CONTENTIO N THAT THE TRANSACTION WAS SPECULATIVE BUT 19 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 ONLY DISALLOWED ON THE GROUND THAT IT WAS NOTIONAL. LASTLY, THE RELIANCE PLACED ON THE DECISION IN S. VINODKUMAR DIAMONDS (P) LTD. (SUPRA ) IN THE REVENUE'S FAVOUR WOULD NOT BY ITSELF GOVERN THE ISSUES ARISING HEREIN. THIS IS SO AS EVERY DECISION IS RENDERED IN THE CONTEXT OF THE FACTS WHICH ARISE BEFORE THE AUTHORITY FOR A DJUDICATION. MERE CONCLUSION IN FAVOUR OF THE REVENUE IN ANOTHER CASE BY ITSELF WOULD NOT ENT ITLE A PARTY TO HAVE AN IDENTICAL RELIEF IN THIS CASE. IN FACT, IF THE REVENUE WAS OF THE VIEW THAT THE FACTS IN S. VINODKUMAR (SUPRA) ARE IDENTICAL/SIMILAR TO THE PRESENT FACTS, THEN RELIAN CE WOULD HAVE BEEN PLACED BY THE REVENUE UPON IT AT THE HEARING BEFORE THE TRIBUNAL. THE IMP UGNED ORDER DOES NOT INDICATE ANY SUCH RELIANCE. IT APPEARS THAT IN S. VINODKUMAR DIAMONDS (P.) LTD. (SUPRA), THE TRIBUNAL HELD THE FORWARD CONTRACT ON FACTS BEFORE IT TO BE SPECULATI VE IN NATURE IN VIEW OF SECTION 43(5) OF THE ACT. HOWEVER, IT APPEARS THAT THE DECISION OF THIS COURT IN CITV. BADRIDAS GAURIDU (P.) LTD. [2003] 261 ITR 256/[2004] 134 TAXMAN 376 (MUM.) WAS NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL WHEN IT RENDERED ITS DECISION IN S. VINODK UMAR DIAMONDS (P.) LTD. (SUPRA). IN THE ABOVE CASE, THIS COURT HAS HELD THAT FORWARD CONTRA CT IN FOREIGN EXCHANGE WHEN INCIDENTAL TO CARRYING ON BUSINESS OF COTTON EXPORTER AND DONE TO COVER UP LOSSES ON ACCOUNT OF DIFFERENCES IN FOREIGN EXCHANGE VALUATIONS, WOULD N OT BE SPECULATIVE ACTIVITY BUT A BUSINESS ACTIVITY. 8. IN THE ABOVE VIEW, THE QUESTION OF LAW, AS FORMU LATED BY THE REVENUE, DOES NOT GIVE RISE TO ANY SUBSTANTIAL OF LAW. THUS, NOT ENTERTAINED. 7.5.1. WE FIND THAT THE CO-ORDINATE BENCH OF MUMBA I TRIBUNAL SUPRA HAD ALSO DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE WHEREIN IT WAS HELD THAT:- 8. WE HAVE CAREFULLY CONSIDERED THE ORDER OF LD. COMMISSIONER OF INCOME TAX AND THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES. WE HAVE ALSO CAREFULLY CONSIDERED THE CASES CITED BEFORE US (SUPRA). IT IS RELEVANT TO STATE TH AT IN THE CASE OF WOODWARD GOVERNOR INDIA (P.) LTD. (SUPRA), THE HON'BLE APEX COURT OBSERVED AND HELD THAT THE ASSESSEE DEBITED TO ITS PROFIT AND LOSS ACCOUNT CERTAIN UNREALIZED LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION IN FOREIGN CURRENCY TRANSACTIONS TOWARDS REVENUE ITEMS AS ON T HE LAST DAY OF THE ACCOUNTING YEAR. THE A.O. HELD THAT THE LIABILITY AS ON THE LAST DATE OF THE PREVIOUS YEAR WAS NOT AN ASCERTAINED BUT A CONTINGENT LIABILITY. RESULTANTLY, THE SAME WAS ADD ED BACK TO THE TOTAL INCOME. THE CIT(A) ECHOED THE ASSESSMENT ORDER. HOWEVER, THE TRIBUNAL HELD THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF UNREALIZED LOSS DUE TO FOREIGN EXCHANG E FLUCTUATION AS ON THE LAST DATE OF THE PREVIOUS YEAR WAS DEDUCTIBLE. THE SAID ORDER OF THE TRIBUNAL WAS UPHELD BY THE HON'BLE HIGH COURT. ON FURTHER APPEAL BY THE DEPARTMENT, THE HON 'BLE SUPREME COURT HELD THAT THE LOSS SUFFERED BY THE ASSESSEE IS ON REVENUE ACCOUNT TOWA RDS FOREIGN EXCHANGE DIFFERENCE AS ON THE DATE OF BALANCE SHEET AND IS AN ITEM OF EXPENDITURE DEDUCTIBLE U/S 37(1). IT FURTHER OBSERVED THAN AN ENTERPRISE HAS TO REPORT OUTSTANDING LIABIL ITY RELATING TO IMPORT OF RAW MATERIAL USING CLOSING RATE OF FOREIGN EXCHANGE AND ANY DIFFERENCE , LOSS OR GAIN, ARISING ON CONVERSION OF SAID LIABILITY AT CLOSING RATE SHOULD BE RECOGNIZED IN PROFIT AND LOSS ACCOUNT FOR REPORTING PERIOD. FROM THE JUDGMENT OF THE HON'BLE SUPREME CO URT IT CAN BE CLEARLY DEDUCED THAT UNREALIZED LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION IN FOREIGN CURRENCY TRANSACTIONS ON REVENUE ITEM AS ON THE LAST THE ACCOUNTING YEAR IS DEDUCTIBLE. 7.5.2. WE ALSO FIND THAT THE CO-ORDINATE BENCH OF D ELHI TRIBUNAL SUPRA HAD RENDERED A DECISION IN FAVOUR OF THE ASSESSEE ON AN IDENTICAL ISSUE AFTER CONSIDERING THE INSTRUCTION NO. 3/2010 WHEREIN IT WAS HELD THAT :- 20 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 8. COMING TO THE CORPORATE ADDITIONS I.E. DISALLO WANCE OF LOSS, IT CLEARLY EMERGES FROM THE RECORD THAT THE ASSESSEE IN RESPECT OF FOREIGN EXCH ANGE REALIZATION FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING AND NOT CASH SYSTEM OF ACCOUNTING. TH E LOSS HAS BEEN INCURRED FOR HEDGING OF FOREIGN CURRENCY FLUCTUATION INVOLVED IN SALES INVO ICES ON THE BASIS OF FORWARD CONTRACTS, WHICH IS A BUSINESS DECISION TO SAFEGUARD ITS INTER EST. THE LOSS HAS BEEN INCURRED ON THE BASIS OF SCIENTIFIC METHOD IN THE ORDINARY COURSE OF BUSI NESS. THE LOSS BEING BASED ON A SCIENTIFIC METHOD, ON THE BASIS OF CONTRACTUAL LIABILITY WITH BANKS AND ON MERCANTILE SYSTEM HAS TO BE ALLOWED TO THE ASSESSEE FOLLOWING HONBLE SUPREME C OURT JUDGMENT IN THE CASE OF WOODWARD GOVERNOR INDIA (P) LTD. (SUPRA). OUR VIEW IS FURTH ER FORTIFIED BY THE FACT THAT DRP IN ITS OWN ORDER IN SUBSEQUENT YEAR HAS ITSELF HELD THAT THE I SSUE ABOUT THE LOSS ON MERCANTILE SYSTEM IS PENDING DISPUTE IN AY 2008-09. THEREFORE, THE ALLO WABILITY OF THE LOSS ON ACTUAL PAYMENT IN AY 2009-10 HAS BEEN MADE SUBJECT TO THE ALLOWABILIT Y OF THE LOSS FOR AY 2008-09. THIS STAND OF THE DRP ITSELF NEGATES THE OBSERVATIONS OF ASSES SING OFFICER THAT IT IS A NOTIONAL LOSS AND ESTABLISHES THAT IT IS A BUSINESS LOSS INCURRED BY THE ASSESSEE ON MERCANTILE SYSTEM WHICH METHOD IS CONSISTENTLY FOLLOWED BY THE ASSESSEE. U NDER THESE CIRCUMSTANCES, WE ARE INCLINED TO ALLOW THE FOREIGN EXCHANGE FLUCTUATION LOSS TO A SSESSEE IN THIS YEAR. THIS GROUND OF THE ASSESSEE IS ALLOWED. 7.5.3. RESPECTFULLY FOLLOWING THE AFORESAID DECISIO NS AND IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGARD. HENCE THE GROUND NO. 3 RAISED BY THE REVENUE IS DIS MISSED. 8. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE PROVISION ON ACCOUNT OF VAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE ASSESSEE HAD DEBITED PROVISION OF RS. 1,88,88,720/- IN ITS PROFIT AND LO SS ACCOUNT AND THE DETAILS OF THE SAME WERE CALLED FOR FROM THE ASSESSEE. THE ASSESSEE REPLIE D THAT AS REGARDS PROVISION MADE IN THE SUM OF RS. 1,88,88,720/-DURING THE YEAR BUT NOT CON SIDERED AS DISALLOWABLE U/S 43B OF THE ACT, AS PER RAJASTHAN VAT ACT, THE COMPANY WAS ALL OWED TO GET REFUND OF VAT ON CONSUMPTION OF RAW MATERIALS USED IN GOODS MEANT FO R EXPORT. ACCORDINGLY THE ASSESSEE RECEIVED REFUND OF VAT ON THOSE RAW MATERIALS. SUB SEQUENTLY VIDE NOTIFICATION NO. F012(15)FD/TAX/2008/85 DATED 25.2.2008 ISSUED BY GO VT OF RAJASTHAN, FINANCE DEPARTMENT, VAT WAS EXEMPTED WITH RETROSPECTIVE EFF ECT. THE COMPANY WAS THEREFORE LIABLE TO REFUND THE VAT AND AS SUCH NECESSARY PROV ISION WAS MADE IN THE ACCOUNTS FOR THE YEAR WHICH WAS NOT MEANT FOR ANY STATUTORY LIABILIT Y AND NOT COVERED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. SUBSEQUENTLY THE GOVT OF RA JASTHAN HAS WITHDRAWN THIS NOTIFICATION AND THIS PROVISION HAS ALSO BEEN REVERSED IN THE SU BSEQUENT YEAR AND INCLUDED IN THE TOTAL 21 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 INCOME. THE LD AO HOWEVER CONCLUDED THAT THE PROV ISION MADE BY THE ASSESSEE WAS NOT AN ASCERTAINED LIABILITY. THE LD AO ALSO OBSERVED THA T THE REFUND WAS NOT CREDITED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT AND THE DEB IT TO THE PROFIT AND LOSS ACCOUNT WOULD BE JUSTIFIED ONLY IF THERE IS A CORRESPONDING CREDIT O F REFUND RECEIVED IN THE PROFIT AND LOSS ACCOUNT. HENCE HE CONCLUDED THAT THE SAME IS IN THE NATURE OF STATUTORY LIABILITY AND DISALLOWED U/S 43B OF THE ACT AS THE SAME WAS NOT P AID BY THE ASSESSEE. 8.2. THE LD CITA DELETED THE ADDITION APPRECIATING THE CONTENTIONS OF THE ASSESSEE AND ALSO BY THE FACT THAT THE ASSESSEE HAD REVERSED THI S PROVISION IN THE SUBSEQUENT YEAR BASED ON SUBSEQUENT NOTIFICATION OF GOVT OF RAJASTHAN , VAT DEPARTMENT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 4. THAT IS THE FACTS AND IN LAW OF THE CASE THE L D. CIT(A) ERRED IN ALLOWING THE PROVISION ON ACCOUNT OF VAT AS THE SAID PROVISION IS NOT ALLOWAB LE U/S 43B ON WHICH THE SAID PROVISION IS ALLOWABLE ONLY ON ACTUAL PAYMENT.' 8.3. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF T HE LD AO. IN RESPONSE TO THIS, THE LD AR RELIED ON THE RELEVANT PAGES IN THE PAPER BOOK C ONTAINING THE RELEVANT NOTIFICATIONS ISSUED BY GOVT OF RAJASTHAN, VAT DEPARTMENT. HE AR GUED THAT THE SAME IS NOT TAX PAYABLE SO AS TO FALL WITHIN THE AMBIT OF SECTION 43B OF TH E ACT. MOREOVER, PURSUANT TO WITHDRAWAL OF NOTIFICATION BY THE GOVT OF RAJASTHAN, VAT DEPAR TMENT , THE ASSESSEE HAD REVERSED THIS PROVISION AND OFFERED THE SAME TO THE TOTAL INCOME IN THE SUBSEQUENT YEAR. HENCE IF THIS ADDITION IS SUSTAINED, THEN IT WOULD RESULT IN DOUB LE TAXATION OF THE SAME ITEM. 8.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD CITA HAD DELETED THE DISALLOWAN CE BY OBSERVING AS UNDER:- 5.9 GROUND NO.10 THIS GROUND OF APPEAL IS AGAINST THE ACTION OF THE ASSESSING OFFICER FOR MAKING DISALLOWANCE OF RS.18888720/- AS NOT ASCERTAINED LI ABILITY AND FURTHER THAT THE LIABILITY WAS NOT ALLOWABLE U/S 438 OF THE IT ACT. I AM INCLINED TO AGREE WITH THE SUBMISSIONS OF THE APPELLANT. THE PROVISION MADE BY THE APPELLANT FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2008-09 WAS AN ASCERTAINED LIABILITY. ACCORDING TO THE NOTIFICATIO N ISSUED ON FEBRUARY 25, 2008, GUAR GUM WAS EXEMPT FROM VAT WITH EFFECT FROM APRIL 1, 2006. ACCORDINGLY, NO VAT WAS PAYABLE ON THE SAID COMMODITY WITH EFFECT FROM APRIL 1, 2006. THE VAT PAID BY THE APPELLANT AS PART OF THE PURCHASE PRICE OF THE COMMODITY AND DEPOSITED BY TH E SELLER WITH THE GOVERNMENT DID NOT HAVE 22 ITA NOS. 462&752 OF 2014 & CO 63 OF 2014 HINDUSTAN GUM & CHEMICALS LTD., AY 2008-09 THE CHARACTER OF TAX SINCE NO TAX WAS IN FACT LEVIA BLE. IN SUCH CIRCUMSTANCES, THE APPELLANT WAS NOT ENTITLED TO REFUND OF RS.L ,88,88,720/- ON ACCO UNT OF VAT PAID ON RAW MATERIALS. THE APPELLANT HAD TO RETURN THE SUM OF RS.L,88,88,720/- TO THE GOVERNMENT AND MADE A PROVISION FOR THE SAME TREATING IT AS AN ASCERTAINED LIABILIT Y. THE REFUND WHICH THE APPELLANT WAS OBLIGED TO RETURN CANNOT BE TREATED AS ANY SUM PAYABLE BY T HE APPELLANT BY WAY OF TAX WITHIN THE MEANING OF CLAUSE (A) OF SECTION 43B OF THE ACT. IN MY OPINION, THE APPELLANT HAS CORRECTLY REVERSED THE PROVISION IN THE NEXT YEAR CONSEQUENT TO ISSUE OF NOTIFICATION DATED AUGUST 29, 2008 AND OFFERED THE AMOUNT FOR TAXATION IN THE ASS ESSMENT YEAR 2009-10. IN VIEW OF THE ABOVE FACTUAL POSITION AND FINDING, THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGARD. HENCE, THE GROUND NO. 4 RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 462/KOL/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ; CO NO. 63/KOL/2014 IS A LLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IN ITA NO. 752/KOL/2014 IS DI SMISSED. 10. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08.03.2017 SD/- SD/- (PARTHA SARATHI CHAUDHURY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 8 TH MARCH, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT HINDUSTAN GUM & CHEMICALS LTD., BIRLA B UILDING, 4TH FLOOR, 9/1, R. N. MUKHERJEE ROAD, KOLKATA-700 001. 2 RESPONDENT DCIT, CIRCLE-12, KOLKATA. 3. THE CIT(A), KOLKATA 4. 5. CIT, KOLKATA. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .