NTPC Ltd., New Delhi V. DCIT, New Delhi

ITA 4754/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6798 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 20-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA M BISWAS
• Assessee Lawyers: VED JAIN SHRI NISCHAY KANTOOR
• Keywords: Capital asset; Search and seizure; Earning of tax free income; Retrospective amendment; Commercial expediency; Revenue expenditure; Capital expenditure; Rule 8D; Set aside
• Section: 271(1)(c); 14A; 37(1); 80IA; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4754/DEL./2015 (ASSESSMENT YEAR : 2005-06) M/S. NTPC LIMITED, VS. DCIT, CIRCLE 13 (1), CORE 7, SCOPE COMPLEX, NEW DELHI. 7, INSTITUTIONAL AREA, LODHI ROAD, NEW DELHI 110 003. (PAN : AAACN0255D) ITA NO.4183/DEL./2015 (ASSESSMENT YEAR : 2005-06) DCIT, CIRCLE 13 (1), VS. M/S. NTPC LIMITED, NEW DELHI. CORE 7, SCOPE COMPLEX, 7, INSTITUTIONAL AREA, LODHI ROAD, NEW DELHI 110 003. (PAN : AAACN0255D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE SHRI NISCHAY KANTOOR, CA REVENUE BY : MS. PRAMITA M. BISWAS, CIT DR DATE OF HEARING : 11.04.2019 DATE OF ORDER : 25.04.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 2 PRESENT CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCUSSION. 2. THE APPELLANT, DCIT, CIRCLE 18(2), NEW DELHI (HE REINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.03.2015 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, NEW DELHI, QUA THE ASSESSMENT YEAR 2005-06 ON THE GROUNDS INTER ALIA T HAT :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE BY THE AO BY DISALLOWING THE CLAIM OF DEDUCTION AMOUNT ING TO RS.13,50,80,21,000/- UNDER SECTION 80IA OF THE INCO ME TAX ACT, 1961. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION MADE BY THE AO BY DISALLOWING THE EXPENDITURE ON ASSETS NOT OWNED BY THE ASSESSEE AMOUNTING TO RS.20,60,00,000/-. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE BY THE AO BY DISALLOWING PRE-COMMISSIONING SALES AMOUN TING TO RS.58,30,00,000/-. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE TUNE OF RS.40.42 CRORES BY COMPUTING THE DISALL OWANCE BY MAKING RETROSPECTIVE APPLICATION OF RULE 8D OF THE I.T. RULES ALTHOUGH THE RULE WAS INTRODUCED INTO THE STATUTE O NLY IN YEAR 2008. 5. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. 3. THE APPELLANT, M/S. NTPC LIMITED (HEREINAFTER RE FERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOU GHT TO SET ASIDE ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 3 THE IMPUGNED ORDER DATED 26.03.2015 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-6, NEW DELHI, QUA THE ASSES SMENT YEAR 2005-06 ON THE GROUNDS INTER ALIA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED CIT(A) IS BAD, BOTH IN THE EY E OF LAW AND ON FACTS. 2.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE DISALLOWANCE MADE BY THE LD. AO TO THE EXTENT OF RS .82.67 CRORES UNDER SECTION 14A READ WITH RULE 8D OF THE I.T. ACT (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED IGNO RING THE EXPLANATION AND THE EVIDENCES SUBMITTED BY THE ASSE SSEE. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE CLAIMED DEDUCTIO N TO THE TUNE OF RS.14,90,23,24,000/- UNDER SECTION 80IA OF THE INCO ME-TAX ACT, 1961 (FOR SHORT THE ACT) WHICH HAS BEEN RESTRICTE D TO RS.13,50,80,21,000/- BY THE ASSESSING OFFICER BY CO NSIDERING THE COMBINED CENTRAL ACTS POWER STATION (CCGPS) PLANT A S SINGLE INDUSTRIAL UNDERTAKING ON THE BASIS OF FINAL INSPEC TION CARRIED OUT AT THE NTPC LTD. FARIDABAD GAS POWER STATION ON 02.09. 2004. ASSESSEE INCURRED AN AMOUNT OF RS.20,60,00,000/- AS EXPENDITURE ON REPAIR AND MAINTENANCE OF ROADS, WATER SUPPLY, R AIL CONNECTIVITY AND OTHER INFRASTRUCTURE FACILITIES NOT OWNED BY TH E ASSESSEE AND CLAIMED THE SAME AS REVENUE EXPENDITURE U/S 37(1) O F THE ACT. HOWEVER, AO ADDED BACK THE SAID EXPENDITURE TO THE TOTAL INCOME ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 4 OF THE ASSESSEE INCURRED ON THE ASSETS NOT OWNED BY THE ASSESSEE ON THE GROUNDS THAT ASSESSEE HAS NOT POSTED THIS EXPEN DITURE INTO P&L ACCOUNT RATHER DEBITED THE SAME IN COMPUTATION OF I NCOME NOR THE ASSESSEE HAS FURNISHED ANYTHING ABOUT THE NATURE OF THE EXPENDITURE TO WORK OUT WHETHER THE SAME IS REVENUE OR CAPITAL PASSING THE ENDURING BENEFIT TO THE ASSESSEE. 5. ASSESSEE RECORDED PRE-COMMISSIONING EXPENSES TO THE TUNE OF RS.119.1 CRORES INCLUDED IN FIXED ASSETS/CAPITAL WORK-IN-PROGRESS AFTER ADJUSTMENT OF PRE-COMMISSIONING SALES OF RS.5 8.3 CRORES RESULTING IN THE NET PRE-COMMISSIONING EXPENDITURE OF RS.60.08 CRORES. AO FOLLOWING THE ORDER PASSED IN AY 2004-0 5 HELD THAT PRE-COMMISSIONING EXPENDITURE HAS TO BE CAPITALIZED AND ANY REVENUE RECEIPT DURING THE PRE-COMMISSIONING PERIOD HAS TO BE TAXED AS INCOME AND THEREBY ADDED BACK AN AMOUNT OF RS.58.30 CRORES ON ACCOUNT OF PRE-COMMISSIONING SALES TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER S OURCES. 6. AO MADE ADDITION OF RS.123,09,00,000/- U/S 14A O F THE ACT BY REJECTING THE PLEA RAISED BY THE ASSESSEE THAT N O EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE TO EARN THE EXEMPT IN COME. 7. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS BY ALLOWI NG THE CLAIM OF THE ASSESSEE U/S 80IA OF THE ACT; BY ALLOWING THE E XPENDITURE ON ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 5 ASSETS NOT OWNED BY THE ASSESSEE; AND BY ALLOWING P RE- COMMISSIONING SALES; HOWEVER, LD. CIT (A) PARTLY AL LOWED THE APPEAL BY PROVIDING A RELIEF OF RS.40.42 CRORES QUA ADDITION MADE BY THE AO U/ 14A OF THE ACT, BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, BOTH THE ASSESSEE AS WELL AS REV ENUE HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 IN ITA NO.4183/DEL/2015 (REVENUES APPEAL) 9. CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), LD. DR FOR THE REVENUE CONTENDED THAT THE LD. CIT ( A) HAS ERRED IN DELETING THE ADDITION BY RELYING UPON THE ORDER PAS SED BY HIS PREDECESSOR IN ASSESSEES OWN CASE FOR AY 2004-05 B ECAUSE FACTS OF THE YEAR UNDER ASSESSMENT ARE DISTINGUISHABLE.. THE LD. DR DREW OUR ATTENTION TOWARDS FINAL INSPECTION CARRIED OUT BY THE NTPC FARIDABAD GAS POWER STATION ON 02.09.2004 WHEREIN I T WAS HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IA FOR THE STEAM UNITS AS AN INDUSTRIAL UNDERTAKING/ENTERPRISE AS CL AIMED BY THE ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 6 ASSESSEE AND FURTHER CONTENDED THAT THIS FACT WAS N OT THERE BEFORE THE AO AS WELL AS LD. CIT (A) FOR AY 2004-05. 10. HOWEVER, TO REPEL THIS CONTENTION RAISED BY THE LD. DR, LD. AR FOR THE ASSESSEE CONTENDED THAT FINAL INSPECTION DATED 02.09.2004 CARRIED OUT BY NTPC FARIDABAD GAS POWER STATION WAS DULY CONSIDERED BY THE AO AS WELL AS LD. CIT (A) WH ILE PASSING THE ORDER FOR AY 2004-05 AND DREW OUR ATTENTION TOWARDS ASSESSMENT ORDER DATED 27.02.2006 FOR AY 2004-05 PASSED U/S 14 3 (3) OF THE ACT. 11. WHEN WE EXAMINE PARA 3.5 OF THE ASSESSMENT ORDE R FOR AY 2004-05, AVAILABLE IN THE SEPARATE PAPER BOOK, AND INSPECTION REPORT DATED 14.09.2004 PREPARED ON THE BASIS OF IN SPECTION DATED 02.09.2004 HAS BEEN DULY DISCUSSED AND CONSIDERED B EFORE PASSING THE ORDER. FURTHERMORE, ISSUE IN QUESTION HAS ALRE ADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE FOR AY 2004-05 BY THE COO RDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 04.05.2018 , AVAILABLE AT PAGES 39 TO 48 OF THE CASE LAW PAPER BOOK, BY DULY CONSIDERI NG THE INSPECTION REPORT DATED 02.09.2004 BY RETURNING FOL LOWING FINDINGS:- 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THA T AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS ALREADY BEEN ADJUDIC ATED BY THE ITAT DELHI BENCH' B', NEW DELHI IN ASSESSEE'S OWN C ASE IN ITA NOS. 1377 & 2188/DEL/2002 FOR THE ASSESSMENT YEARS 1998-99 AND ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 7 1999-2000 RESPECTIVELY. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 8 TO 11 OF THE SAID ORDER WHICH READ AS UNDER : '8. RIVAL SUBMISSIONS OF THE PARTIES HAVE BEEN CONSIDERED CAREFULLY IN THE LIGHT OF THE MATERIALS PRODUCED AS WELL AS CASE LAW REFERRED TO. THE QUESTION FOR O UR CONSIDERATION IS HOW TO COMPUTE THE PROFITS DERIVED FROM AN INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION UN DER THE AFORESAID SECTIONS. THERE ARE NO PROVISIONS IN THES E SECTIONS FOR COMPUTING SUCH PROFITS. IN THE ABSENC E OF SUCH PROVISIONS, THE PROFITS OF AN INDUSTRIAL UNDER TAKING MUST BE DETERMINED IN ACCORDANCE WITH THE SETTLED L EGAL PRINCIPLES. AS PER THE COMMERCIAL ACCOUNTING PRACTI CE, THE BUSINESSMAN WOULD DEBIT THE PROFIT AND LOSS ACCOUNT EITHER ON THE BASIS OF EXPENDITURE ACTUALLY PAID OR ON THE BASIS OF LIABILITY INCURRED/ACCRUED AS PER THE MERC ANTILE METHOD OF ACCOUNTING. THERE IS NO SCOPE OF NOTIONAL EXPENDITURE IN COMPUTING SUCH PROFITS. IF NO EXPEND ITURE IS INCURRED FOR USE OF ANY MATERIAL OR SERVICES, WH ERE IS THE QUESTION OF DEBITING ANY AMOUNT ON ACCOUNT OF S UCH NOTIONAL EXPENSES? ADMITTEDLY, THE HOT GAS WAS FREE LY AVAILABLE TO THE STEAM UNIT. IF THE ASSESSEE HAD NO T SET UP THE STEAM UNIT, SUCH HOT GAS WOULD HAVE TO BE EXPOS ED TO THE OPEN ATMOSPHERE. THERE IS NO EVIDENCE THAT SUCH HOT GAS CAN BE SOLD IN THE OPEN MARKET. IT IS ONLY BECA USE OF THE ADVANCED TECHNOLOGY THAT SUCH HOT GAS, WHICH OTHERWISE GOES WASTE, CAN BE UTILIZED FOR GENERATIN G ELECTRICITY. BUT THAT REQUIRES MASSIVE INVESTMENT. WHAT WOULD HAPPEN IF THE ASSESSEE, IN THE NATIONAL INTER EST, ALLOWS A THIRD PARTY TO USE SUCH GAS FREE OF ANY CH ARGES? WOULD THE DEPARTMENT REDUCE THE PROFITS OF STEAM UN IT BY NOTIONAL EXPENDITURE? IN OUR OPINION, THE ANSWER WO ULD BE CLEARLY IN THE NEGATIVE AS NO DEDUCTION CAN BE A LLOWED UNLESS ANY EXPENDITURE IS INCURRED. THEREFORE, IN O UR HUMBLE OPINION, NO PORTION OF THE EXPENDITURE INCUR RED BY THE GAS UNITS CAN BE ALLOCATED TO THE STEAM UNIT . 9. HEAVY RELIANCE HAS BEEN PLACED BY THE LOWER AUTHORITIES ON THE PROVISIONS OF SUB-SECTION (6) OF SECTION 80-I, WHICH FOR THE BENEFIT OF THIS ORDER IS BEING REPRODUCED AS UNDER:- SECTION 80-I(6) : NOTWITHSTANDING ANYTHING CONTAIN ED IN ANY OTHER PROVISIONS OF THIS ACT, THE PROFITS AND G AINS OF AN INDUSTRIAL UNDERTAKING OR A SHIP OR THE BUSINESS OF A HOTEL OR THE BUSINESS OF REPAIRS TO OCEANGOING VES SELS OR OTHER POWERED CRAFT TO WHICH THE PROVISIONS OF SUBS ECTION (A) APPLY SHALL, FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECTION (1) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 8 ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH INDUSTRIAL UNDERTAKING OR SHIP OR THE BUSINESS OF THE HOTEL OR THE BUSINESS OF REPAIRS TO OCEAN- GOING VESSELS OR OTHER POWERED CRAFT WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEARS RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVER Y SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE.' WE ARE AFRAID HOW THE ABOVE PROVISIONS HELP THE CAS E OF THE REVENUE. ON THE CONTRARY, IT HELPS THE CASE OF THE ASSESSEE. THIS PROVISION HAS BEEN RELIED UPON BY TH E ASSESSING OFFICER FOR THE SUBMISSION THAT PROFITS O F EACH UNIT HAS TO BE DETERMINED INDEPENDENTLY AS IF SUCH UNIT WERE ONLY SOURCE OF INCOME OF THE ASSESSEE. THERE I S NO DISPUTE TO SUCH SUBMISSION. ACCORDING TO SUCH SUBMISSION, PROFITS OF GAS UNIT AS WELL AS STEAM UN IT MUST BE DETERMINED INDEPENDENTLY AS THE SALE SOURCE OF I NCOME OF THE ASSESSEE AND CONSEQUENTLY, THE EXPENDITURE INCURRED FOR THE GENERATION OF ELECTRICITY BY GAS U NIT CANNOT BE SHIFTED TO ANY OTHER UNIT EVEN BY THE LOG IC OF THE ASSESSING OFFICER. FOR THE SIMILAR REASONS, PROFIT OF THE STEAM UNIT HAS TO BE DETERMINED INDEPENDENTLY ON TH E BASIS OF THE EXPENDITURE INCURRED BY SUCH UNIT. STE AM UNIT HAS NOT INCURRED BY EXPENDITURE FOR ACQUIRING HOT G AS. THEREFORE, THE QUESTION OF REDUCING THE PROFITS OF SUCH UNIT BY ANY NOTIONAL FIGURE DOES NOT ARISE. THEREFO RE, WE REJECT THE STAND OF THE REVENUE THAT SUB-SECTION (6 ) OF SECTION 80-I PERMITS THE REVENUE TO SHIFT THE EXPEN SES OF ONE UNIT TO ANOTHER UNIT. 10. FURTHER, HEAVY RELIANCE HAS BEEN PLACED BY THE REVENUE ON THE PROVISIONS OF SUB-SECTION (8) OF SEC TION 80- I AND SUB-SECTION (9) OF SECTION 80-IA WHICH, FOR T HE BENEFIT OF THIS ORDER, ARE REPRODUCED AS UNDER: 'SECTION 80-1 (8): WHERE ANY GOODS HELD FOR THE PUR POSES OF THE BUSINESS OF THE INDUSTRIAL UNDERTAKING OR TH E HOTEL OR THE OPERATION OF THE SHIP OR THE BUSINESS OF REP AIRS TO OCEAN-GOING VESSELS OR OTHER POWERED CRAFT ARE TRANSFERRED TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE, OR WHERE ANY GOODS HELD FOR THE PURPOSES BUSINESS CARRIED ON BY THE ASSESSEE, OR WHERE ANY G OODS HELD FOR THE PURPOSES OF ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE ARE TRANSFERRED TO THE BUSINESS OF THE INDUSTRIAL UNDERTAKING OR THE HOTEL OR THE OPERATIO N OF THE SHIP OR THE BUSINESS OF REPAIRS TO OCEAN-GOING VESS ELS OR OTHER POWERED CRAFT AND, IN EITHER CASE, THE CONSID ERATION, IF ANY, FOR SUCH TRANSFER AS RECORDED IN THE ACCOUN TS OF THE ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 9 BUSINESS OF THE INDUSTRIAL UNDERTAKING OR THE HOTEL OR THE OPERATION OF THE SHIP OR THE BUSINESS OF REPAIRS TO OCEANGOING VESSELS OR OTHER POWERED CRAFT DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS AS ON THE DATE OF THE TRANSFER, THEN, FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, THE PROFITS AND GAINS OF THE INDUSTRIAL UNDERTAKING OR THE BUSINESS OF THE HOTEL OR THE OPERATION OF THE SHIP OR THE BUSINESS OF REPAIRS TO OCEAN- GOING VESSELS OR OTHER POWERED CRAFT SHALL BE COMPU TED AS IF THE TRANSFER, IN EITHER CASE, HAD BEEN MADE AT T HE MARKET VALUE OF SUCH GOODS AS ON THAT DATE: PROVIDED THAT WHERE, IN THE OPINION OF THE ASSESSIN G OFFICER, THE COMPUTATION OF THE PROFITS AND GAINS O F THE INDUSTRIAL UNDERTAKING OR THE BUSINESS OF THE HOTEL OR THE OPERATION OF THE SHIP OR THE BUSINESS OF REPAIRS TO OCEAN- GOING VESSELS OR OTHER POWERED CRAFT IN THE MANNER HEREINBEFORE SPECIFIED PRESENTS EXCEPTIONAL DIFFICU LTIES, THE ASSESSING OFFICER MAY COMPUTE SUCH PROFITS AND GAINS ON SUCH REASONABLE BASIS AS HE MAY DEEM FIT. EXPLANATION. IN THIS SUB-SECTION, 'MARKET VALUE ', IN RELATION TO ANY GOODS, MEANS THE PRICE THAT SUCH GO ODS WOULD ORDINARILY FETCH ON SALE IN THE OPEN MARKET. SECTION 80-IA(9): WHERE ANY GOODS HELD FOR THE PURP OSES OF THE ELIGIBLE BUSINESS ARE TRANSFERRED TO ANY OTH ER BUSINESS CARRIED ON BY THE ASSESSEE, OR WHERE ANY G OODS HELD FOR THE PURPOSES OF ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE ARE TRANSFERRED TO THE ELIGIBLE BUSINE SS AND, IN EITHER CASE, THE CONSIDERATION, IF ANY, FOR SUCH TRANSFER AS RECORDED IN THE ACCOUNTS OF THE ELIGIBLE BUSINES S DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS AS ON THE-DATE OF THE TRANSFER, THEN, FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF THE TRANS FER, IN EITHER CASE, HAD BEEN MADE AT THE MARKET VALUE OF S UCH GOODS AS ON THAT DATE: PROVIDED THAT WHERE, IN THE OPINION OF THE ASSESSIN G OFFICER, THE COMPUTATION OF THE PROFITS AND GAINS O F THE ELIGIBLE BUSINESS IN THE MANNER HEREINBEFORE SPECIF IED PRESENTS EXCEPTIONAL DIFFICULTIES, THE ASSESSING OF FICER MAY COMPUTE SUCH PROFITS AND GAINS ON SUCH REASONAB LE BASIS AS HE MAY DEEM FIT. EXPLANATION.-IN THIS SUB-SECTION, 'MARKET VALUE', I N RELATION TO ANY GOODS, MEANS THE PRICE THAT SUCH GO ODS WOULD ORDINARILY FETCH ON SALE IN THE OPEN MARKET. ' ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 10 AFTER GOING THROUGH THE ABOVE PROVISIONS CAREFULLY, WE ARE UNABLE TO UPHOLD THE STAND OF THE REVENUE. SUCH PROVISIONS CAN BE APPLIED IF IT IS ESTABLISHED BY T HE REVENUE THAT THE GAS UNIT TRANSFERRED THE STEAM UNI T AND THE CONSIDERATION FOR THE TRANSFER OF GAS DOES NOT CORRESPOND TO THE MARKET VALUE AS ON THE DATE OF TR ANSFER. MARKET VALUE HAS BEEN DEFINED AS THE PRICE, WHICH S UCH GOODS WOULD FETCH ON SALE IN THE OPEN MARKET. NO EVIDENCE, WHATSOEVER, HAS BEEN BROUGHT TO OUR NOTIC E TO SHOW THAT THERE IS ANY MARKET FOR SALE OF SUCH WAST E HOT GAS IN INDIA. THERE IS ALSO NO EVIDENCE THAT SUCH G AS TRANSPORTED. SUCH GAS, IF NOT USED, HAS TO BE EXPOS ED TO THE OPEN ATMOSPHERE. MAYBE SUCH GAS MAY FIND A MARK ET BUT AS PER THE PROVISIONS OF SUB-SECTION (8) OF SEC TION 80-1 AND SUB-SECTION (9) OF SECTION 80-IA, THE MARKET VA LUE HAS TO BE SEEN AS ON THE DATE OF TRANSFER. SINCE THERE IS NO EVIDENCE OF ANY MARKET FOR SALE OF SUCH WASTE HOT G AS, WE ARE UNABLE TO ACCEPT THE STAND OF THE REVENUE. 11. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD TH AT THE COURSE ADOPTED BY THE ASSESSING OFFICER FOR SHIFTIN G A PORTION OF EXPENSES INCURRED BY GAS UNIT TO THE STE AM UNIT WAS NOT PERMISSIBLE IN LAW AND, THEREFORE, CANNOT B E APPROVED. CONSEQUENTLY, THE ORDER OF THE CIT(A) CONFIRMING THE ABOVE ACTION OF THE ASSESSING OFFICE R IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLO W DEDUCTIONS UNDER SECTIONS 80-I AND 80-IA WITHOUT ALLOCATING ANY EXPENDITURE OF GAS UNIT TO STEAM UNI T. 12. SO, FOLLOWING THE DECISION RENDERED BY THE COOR DINATE BENCH OF THE TRIBUNAL ON THE IDENTICAL ISSUE, WE ARE OF T HE CONSIDERED VIEW THAT THE ARGUMENTS ADDRESSED BY THE LD. DR FOR THE REVENUE ARE MISCONCEIVED AND AS SUCH THE ASSESSEE IS ENTITL ED TO DEDUCTION U/S 80I AND 80IA WITHOUT ALLOCATING ANY EXPENDITURE TO THE GAS UNIT TO STEAM UNIT. THE LD. CIT(A) HAS DULY THRASHED TH IS ISSUE IN THE LIGHT OF THE FINDINGS RETURNED BY HONBLE DELHI HIGH COURT IN WP (C) 14562/2006 DATED 10.01.2013 IN ASSESSEES OWN CA SE FOR AY 2000- 01 WHEREIN HONBLE HIGH COURT HAS HELD THAT BOTH THE G AS TURBINE ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 11 OR STEAM TURBINE GENERATED ELECTRICITY INDEPENDENTL Y AND INSPECTION REPORT DATED 02.09.2004 DOES NOT INDICATE ANY NEW F ACTS. SO, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, HENCE GROUND N O.1 OF REVENUES APPEAL IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 IN ITA NO.4183/DEL/2015 (REVENUES APPEAL) 13. ASSESSEE CLAIMED THE DEDUCTION OF EXPENDITURE O F RS.20,60,00,000/- U/S 37 OF THE ACT INCURRED ON THE ASSETS NOT OWNED BY IT BUT BELONGS TO VARIOUS STATE GOVERNMENT S LIKE IRRIGATION, PWD, ELECTRICITY BOARD AND IN A FEW CAS ES CENTRAL GOVERNMENT LIKE INDIAN RAILWAYS AND THE AMOUNT WAS PAID TO VARIOUS GOVERNMENT DEPARTMENTS FOR CONSTRUCTING ROA DS, WATER SUPPLY, RAIL CONNECTIVITY AND OTHER INFRASTRUCTURE FACILITY LIKE EXTENSION OF POWER LINES ETC. TO FACILITATE SMOOTH RUNNING OF THE BUSINESS. 14. LD. DR CHALLENGING THE IMPUGNED ORDER RELIED U PON THE ASSESSMENT ORDER AND CONTENDED THAT WHEN ASSETS ARE NOT OWNED BY THE ASSESSEE, THE EXPENDITURE CANNOT BE ALLOWED AS REVENUE EXPENDITURE RATHER IT WAS HAVING ENDURING BENEFITS TO THE ASSESSEE. ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 12 15. LD. CIT (A) DECIDED THE ISSUE IN CONTROVERSY IN FAVOUR OF THE ASSESSEE BY RETURNING FOLLOWING FINDINGS :- 4.5.5 THERE IS NO DISPUTE THAT NTPC HAS INCURRED T HE EXPENDITURE ON CONSTRUCTION OF RAILWAY TRACK, RAILW AY SIDING, ELECTRIFICATION WORK, RAILWAY OVER BRIDGE, APPROACH ROAD, POWER LINE, WIDENING OF ROAD, WATER SUPPLY SYSTEM, TAXI S TAND AND ERECTION OF SUB STATION, THE INFRASTRUCTURE FACILIT IES WHICH WERE NOT OWNED BY NTPC. THE POWER PLANTS OF NT PC ARE MA INLY SITUATED IN REMOTE AREAS, WHICH ARE LOCATED AT FAR- AWAY PLACES FROM THE CITIES/ TOWNS AND HIGHWAYS. THE EXPENDITUR E ON INFRASTRUCTURE FACILITIES WHICH ARE NOT OWNED BY NT PC BUT ARE OWNED BY STATE GOVERNMENT AUTHORITIES ARE INCURRED FOR SMOOTH, EFFICIENT AND SUCCESSFUL OPERATION OF POWER PLANTS OF NTPC. THE STATE/LOCAL AUTHORITIES WHO ARE SUPPOSED TO MAINTAI N THE INFRASTRUCTURE/ROADS ARE NOT ABLE TO MAINTAIN SUCH FACILITIES IN GOOD WORKING CONDITION ON WHICH THE DEVELOPMENT OF THE PLANT IS DEPENDANT. THESE INFRASTRUCTURE FACILITIES THOUGH N OT OWNED BY NTPC, BUT ARE BEING USED FOR OPERATION OF ITS NORMA L BUSINESS. ALL SUCH EXPENDITURE HAS BEEN INCURRED FOR THE NECE SSITY AND BENEFIT OF NTPC BUSINESS FOR THE PURPOSE OF RUNNING ITS BUSINESS. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION, TH E EXPENSES INCURRED ON CAPITAL ASSETS NOT OWNED BY THE COMPANY IS OF THE REVENUE NATURE WHICH ARE ALLOWABLE UNDER SECTION 37 OF THE I.T. ACT BASED ON THE PRINCIPLE OF COMMERCIAL EXPEDIENCY . THEREFORE, THE ADDITION MADE BY THE AO ON THIS ACCOUNT IS LEGA LLY NOT SUSTAINABLE. THE APPEAL IS ALLOWED IN THIS GROUND I N FAVOUR OF THE APPELLANT. 16. WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ILLEGALITY OR INFIRMITY IN THE FINDINGS RETURNED BY THE LD. CIT ( A) WHICH ARE BASED UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE OF L.H. SUGAR FACTORY & OIL MILLS (P) LTD. VS. CIT 125 ITR 293 (SC) AND HONBLE DELHI HIGH COURT IN CASES OF AIRPORT AUTHORITY OF INDIA VS. CIT - 2012-TIOL-09-HC-DEL-IT -LB AND BIKANER GYPSUSMS LTD. VS. CIT 187 ITR 39 , WHICH ARE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE AS THE ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 13 HONBLE SUPREME COURT HAS HELD THAT WHEN THE ROADS WERE CONSTRUCTED AROUND THE FACTORY WITH AN AMOUNT INCUR RED BY THE ASSESSEE EXISTING ON THE LAND OWNED BY GOVERNMENT O F UP, THE ASSESSEE DID NOT ACQUIRE ANY ASSET OF AN ENDURING N ATURE. HONBLE SUPREME COURT HAS ALSO HELD THAT ASSESSEE IS HAVING EXISTING RIGHT TO CARRY OUT THE BUSINESS, ANY EXPENDITURE MADE BY IT FOR SMOOTH RUNNING OF THE BUSINESS WOULD NOT LEAD TO ACQUISITI ON OF CAPITAL ASSETS. SO, WE ARE OF THE CONSIDERED VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON CONSTRUCTION OF ROAD, W ATER SUPPLY, RAIL CONNECTIVITY AND OTHER INFRASTRUCTURE ACTIVITIES ON THE ASSETS NOT OWNED BY IT BUT OWNED BY VARIOUS GOVERNMENT DEPARTM ENTS ARE REVENUE EXPENDITURE. SO, GROUND NO.2 OF REVENUES APPEALS IS DETERMINED AGAINST THE REVENUE. GROUND NO.3 IN ITA NO.4183/DEL/2015 (REVENUES APPEAL) 17. AO DISALLOWED PRE-COMMISSIONING SALES AMOUNTING TO RS.58,30,00,000/- OUT OF PRE-COMMISSIONING EXPENSES OF RS.119.1 CRORES NETTED BY THE ASSESSEE, WHICH HAS BEEN DELET ED BY THE LD. CIT (A) BY FOLLOWING THE DECISION RENDERED IN THE E ARLIER YEARS FOR AYS 2003-04 & 2004-05. 18. THE LD. DR FOR THE REVENUE CHALLENGING THE IMPU GNED DELETION BY THE LD. CIT (A) RELIED UPON THE ORDER P ASSED BY THE AO. ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 14 HOWEVER, LD. AR FOR THE ASSESSEE CONTENDED THAT THI S ISSUE HAS SINCE ATTAINED FINALITY AS THE DELETION OF ADDITION MADE BY THE LD. CIT (A) FOLLOWING THE ORDER BY LD. CIT (A) FOR AY 2 004-05 HAS BEEN ACCEPTED BY THE REVENUE AS NO APPEAL HAS BEEN PREFERRED. 19. LD. CIT (A) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF CIT (A) PASSED IN AYS 200 3-04 AND 2004-05 BY RETURNING FOLLOWING FINDINGS :- DECISION OF CIT (A) IN AY 2003-04 : 'I HAVE EXAMINED IN DETAIL THE REASON GIVEN BY THE AO FOR INCLUDING THE PRE-COMMISSIONING SALES WITHOUT NETTI NG THE PRE-COMMISSIONING EXPENDITURE. HE HAS RELIED ON THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CAS E OF SARRAF TEXTILES INDUSTRIES V S CIT (1996) 217 ITR 2 07. THIS CASE IS FULLY DISTINGUISHABLE FROM THE FACTS I N THE CASE OF THE APPELLANT. THE BUSINESS ACTIVITY, AS AD MITTED BY THE AO HAS ALREADY COMMENCED IN THIS INSTANT WHEREA S IN CASE OR SARRAF TEXTILES INDUSTRIES LTD. THE BUSINES S ACTIVITY WAS NOT CARRIED OUT BY THE ASSESSEE AND. T HEREFORE, THE INTEREST RECEIVED WAS ASSESSABLE AS INCOME FROM OTHER SOURCES. EVEN IF, THE PRE-COMMISSIONING SALES WERE TO BE TRE ATED AS INCOME FROM OTHER SOURCES, THE DIRECT EXPENDITURE INCURRED ON FUEL AND CONSUMABLE HAS TO BE NETTED BE FORE CHARGING THE AMOUNT UNDER THE INCOME-TAX ACT, 1961. THE ALTERNATE CLAIM MADE BY THE APPELLANT WITH REGA RD TO ALLOWANCE OF DEDUCTION OF NETTING OF PRE-COMMISSION ING EXPENSES AFTER ADJUSTMENT OF CORRESPONDING SALES CA NNOT BE ALLOWED SINCE SECTION 43(1) READ WITH EXPLANATIO N 10 CLEARLY PROVIDES FOR REDUCTION OF THE 'ACTUAL COST' OF THE ASSET BY THE AMOUNT RECEIVED DIRECTLY OR INDIRECTLY (BY WHATEVER NAME CALLED) RELATABLE TO THE ASSET. IN TH E CASE OF THE APPELLANT, THE SEB' S HAD MET THE PART COST OF THE ASSETS IN THE FORM OF PRE-COMMISSIONING SALES. IN THE CIRCUMSTANCES, I AM IN AGREEMENT WITH THE APPELLANT'S SUBMISSION THAT IN CASE OF SALE OF ELEC TRICITY ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 15 PRIOR TO COMMERCIAL OPERATION ANY REVENUE FROM SUCH SALES (OTHER THAN FUEL COST) SHALL BE TAKEN FOR RED UCTION IN CAPITAL EXPENDITURE. THIS GROUND OF APPEAL IS THEREFORE ALLOWED IN FAVOU R OF ASSESSEE.' DECISION OF CIT (A) FOR IN 2004-05: 'I HAVE EXAMINED THE FACTS AND LEGAL POSITION DISCU SSED BY THE A.O. IN THE ASSESSMENT ORDER, SUBMISSION MAD E BY THE APPELLANT AND ALSO THE ORDER OF CIT(A) PASSED F OR AY 2003-04. I AGREE WITH THE DECISION OF MY PREDECESSO R ON THIS ISSUE. THE RATIO OF THE JUDGMENT IN THE CASE O F SARRAF TEXTILES INDUSTRIES IS FULLY DISTINGUISHABLE FROM T HE FACTS IN THE CASE OF THE APPELLANT, WHEREAS THE PRINCIPAL S LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF BOKARO STEEL IS SQUARELY APPLICABLE IN THE PRESENT CASE OF THE APPELLANT. IN VIEW OF THE ABOVE, I HAVE NO REASON TO DISAGREE WITH THE VIEW EXPRESSED BY MY PREDECESSOR ON THE ISSUE AND ACCORDINGLY DECIDE THE GROUND IN FAVOUR OF THE APPE LLANT. AS A RESULT THIS GROUND OF APPEAL IS THEREFORE ALLO WED IN FAVOUR OF THE APPELLANT. APPELLANT ACCORDINGLY GETS RELIEF OF RS. 43.60 CRORES.' AS THE ADDITION IS MADE BY THE AO FOLLOWING THE ASS ESSMENT ORDER OF A Y 2004-05, THEREFORE RESPECTFULLY FOLLOWING TH E DECISION OF LD. CITCA) THIS GROUND OF APPEAL IS DECIDED IN FAVO UR OF THE APPELLANT AND THE AO IS DIRECTED TO ALLOW THE NETTI NG OFF PRE- COMMISSIONING SALES AGAINST PRE-COMMISSIONING EXPEN SES AS CLAIMED BY THE ASSESSEE AND DELETE THE ADDITION MAD E AS INCOME FROM OTHER SOURCES. THE APPEAL IS ALLOWED IN THIS G ROUND. 20. WE ARE OF THE CONSIDERED VIEW THAT WHEN UNDISPU TEDLY THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE REVENUE ITSELF HAS THRASHED THE ISSUE IN DETAIL BY RELYING UPON THE DECISION OF HONBLE HIGH COURT, THE DELETION MADE B Y THE LD. CIT (A) QUA PRE-COMMISSIONING EXPENSES DISALLOWED BY TH E AO NEEDS ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 16 NO INTERFERENCE. CONSEQUENTLY, GROUND NO.3 OF REVE NUES APPEAL IS DETERMINED AGAINST THE REVENUE. GROUND NO.4 IN ITA NO.4183/DEL/2015 (REVENUES APPEAL) AND GROUNDS NO.2(I) & (II) IN ITA NO.4754/DEL/2015 (ASSESSEES APPEAL) 21. ASSESSEE EARNED AN INCOME OF RS.1466.12 CRORES FORM TAX FREE INTEREST BONDS @ 8.5% AND DIVIDEND INCOME AND CLAIMED THE SAME AS EXEMPT U/S 10 OF THE ACT. HOWEVER, THE AO DISALLOWED THE AMOUNT OF RS.123.09 CRORES BY WORKING OUT THE D ISALLOWANCE AS UNDER :- EXEMPT INCOME X OPERATIONAL EXPENSES TOTAL INCOME APPLYING THE ABOVE FORMULA THE DISALLOWANCE U/S 14 A IN THE CASE WORKS OUT IN THE FOLLOWING MANNER :- (RS.IN CRS.) TOTAL INCOME (I) SALES 22540.2 (II) ENERGY INTERNALLY CONSUMED 24.8 (III) OTHER INCOME 2357.5 24922.50 TAX FREE INCOME 1466.12 OPERATIONAL EXPENSES (A) EMPLOYEES REMUNERATION & BENEFITS 883.50 (B) ADMN.& OTHER EXPENSES 1209.06 2092 .56 DISALLOWANCE U/S 14A OF THE I.T. ACT 1961 EXEMPT INCOME X OPERATIONAL EXPENSES TOTAL INCOME 1466.12 X 2092.56 24922.50 = 123.09 I AM ALSO SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME ON THIS ISSUE, PENALTY PROCEEDINGS U/S 271(1)(C) HAVE BEEN INITIAT ED SEPARATELY. (ADDITION : RS.123,09,00,000/-) ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 17 22. HOWEVER, LD. CIT (A) REDUCED THE DISALLOWANCE F ROM RS.123.09 CRORES TO RS.82.67 CRORES BY RESTRICTING THE DISALLOWANCE TO 0.5% OF THE AVERAGE VALUE OF THE TAX EXEMPT INVE STMENT. HOWEVER, BOTH THE ASSESSEE AS WELL AS REVENUE HAVE CHALLENGED THE FINDINGS RETURNED BY THE LD. CIT (A). 23. LD. AR FOR THE ASSESSEE CHALLENGING IMPUGNED OR DER CONTENDED INTER ALIA THAT SINCE NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE IN RELATION TO THE EARNING OF THE EXEM PT INCOME, NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT; THAT N O PROPER SATISFACTION HAS BEEN RECORDED BY THE AO BEFORE REJ ECTING THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURR ED TO EARN THE EXEMPT INCOME; THAT NO BORROWED FUNDS USED BY THE A SSESSEE FOR MAKING SUCH INVESTMENTS AND THE LOAN TO THE GOVERNM ENT ARE CONTINUED FROM THE EARLIER YEARS; THAT CASE OF THE ASSESSEE IS COVERED BY ITS OWN CASE RENDERED BY THE TRIBUNAL FO R AY 2004-05 AND RELIED UPON THE DECISIONS IN (I) CIT VS. MODI RUBBER LTD. [2017] 79 TAXMANN.COM 366 (HONBLE HIGH COURT OF DE LHI); (II) HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS REL IANCE UTILITIES AND POWER LTD. 313 ITR 340 (SLP FILED IN THIS CASE BY THE DEPARTMENT HAS BEEN DISMISSED BY THE HON'BLE SU PREME COURT IN CIVIL APPEAL NO 11 OF 2019); (III) HONBLE GUJARAT HIGH ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 18 COURT IN THE CASE OF CIT VS SUZLON ENERGY LTD. (201 3) 354 ITR 630; (IV) HONBLE PUNJAB & HARYANA HIGH COURT IN TH E CASE OF CIT VS WINSOME TEXTILE INDUSTRIES LTD. 319 ITR 204; (V) AHMEDABAD ITAT DATED 10.05.2013 IN THE CASE OF DCIT VS GUJARAT NARMADA VALLEY FERT. CO. LTD. 2013-TIOL-405 -ITAT- MUM; (VI) MUMBAI ITAT IN THE CASE OF SHOPPER'S STOP LTD. VS ACIT 2011-TIOL-581-ITAT-MUM; AND (VII) AHMEDABAD IT AT DATED 05/12/12 IN THE CASE OF DCIT VS JAY CHEMICAL INDUSTRIES LTD. IN ITA NO. 97/AHD/2012. 24. LD. DR FOR THE REVENUE CONTENDED THAT THE DISAL LOWANCE IS TO BE MADE EVEN IF NO INCOME IS EARNED DURING THE Y EAR AND RELIED UPON THE DECISION RENDERED BY THE SPECIAL BENCH OF THE TRIBUNAL IN CHEMINVEST LTD. VS. ITO (2009) 121 ITD 318 (DELHI)( SB) . LD. DR FILED WRITTEN SUBMISSIONS WHICH HAVE BEEN MADE P ART OF THE RECORD AND HAS ALSO RELIED UPON THE DECISIONS IN (I) INDIABULLS FINANCIAL SERVICES LTD. VS. DCIT (2016) 76 TAXMAN N.COM 268 (DELHI); (II) DCIT VS. VIRAJ PROFILES LTD. 156 IT D 72; (III) NYK LINE INDIA LTD. VS. ACIT 175 TTJ 180; (IV) SUPER AUTO FORGE (P.) LTD. VS. ACIT 156 ITD 467; (V) VIPIN MALIK VS. ACIT 45 ITR 589; (VI) PUNJAB TRACTORS LTD. VS. CIT 2017-TIOL- 353-HC- P&H-IT; (VII) GODREJ & BOYCE MFG. COMPANY LTD. 39 4 ITR 449 ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 19 (SC); AND MAXOPP INVESTMENT LTD. VS. CIT (2018) 91 TAXMANN.COM 154 (SC) . 25 PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE, AV AILABLE AT PAGES 4 TO 38 OF THE PAPER BOOK, GOES TO PROVE THAT THE ASSESSEE IS HAVING SUFFICIENT OWN FUNDS TO THE TUNE OF RS.41776 CRORES. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS MADE INVE STMENT OF RS.16469 CRORES. 26. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE, WHEN WE EXAMINE THE ISSUE IN CONTROVERSY AO AS WELL AS CIT (A) HAVE FAILED TO ESTABLISH ANY NEXUS BETWEEN THE EARNING OF TAX FREE INCOME AND THE EXPENDITURE INCURRED RATHER THE ENTIRE ADDITION HAS BEEN MADE ON ESTIMATION BASIS. BECAUS E THE ASSESSEE IS HAVING FAR MORE SUFFICIENT OWN FUNDS TO THE TUNE OF RS.41776 CRORES TO MAKE THE INVESTMENT AS IS EVIDENT FROM TH E FINANCIAL STATEMENT BROUGHT ON RECORD. 27. FURTHERMORE, THE ASSESSEE HAS INCOME OF RS.1394 .90 CRORES BEING THE INTEREST INCOME @ 8.5% ON TAX FREE BOND, INCOME FROM TAX FREE LOAN TO THE GOVERNMENT TO THE TUNE OF RS.5 9.47 CRORES AND DIVIDEND INCOME FROM INVESTMENT IN JOINT VENTURE AN D SUBSIDIARIES TO THE TUNE OF RS.11.75 CRORES. WHEN WE EXAMINE TH E BALANCE SHEET OF THE ASSESSEE, AVAILABLE AT PAGES 4 TO 38 OF THE PAPER BOOK, THE LD. CIT (A) HAS RECORDED WRONG FACT THAT THE ASSESSEE H AS INCREASED ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 20 INVESTMENT IN TAX FREE BONDS BY RS.140 CRORES DURIN G THE YEAR UNDER ASSESSMENT. RATHER INVESTMENT MADE IN THE TA X FREE BOND AND LOAN TO THE GOVERNMENT WAS MADE LONG TIME BACK UNDER ONE TIME SETTLEMENT SCHEME. 28. IDENTICAL ISSUE HAS ALREADY BEEN DECIDED IN FAV OUR OF THE ASSESSEE IN ASSESSEES OWN CASE BY THE COORDINATE BENCH OF THE TRIBUNAL IN AY 2004-05 BY RETURNING FOLLOWING FINDINGS :- 14. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL AVAILABLE ON THE RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BEEN ADJUDICATED IN THE AFORESAID REFERRED TO CASE OF DCIT VS POWER GRID CORPORATION OF INDIA LTD. WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 10 TO 11.5 WHICH READ AS UNDER: '10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE AFORECITED DECISI ONS RELIED ON BY THE ID. AR ON BEHALF OF THE ASSESSEE. INDISPU TABLY, THE ASSESSEE DID NOT INCUR ANY EXPENDITURE BY WAY O F INTEREST FOR INVESTMENT IN TAX FREE BONDS. IN FACT, THE TAX FREE BONDS WERE ACQUIRED ON THE ORDERS OF THE GOVERNMENT ON CONVERSION OF SUNDRY DEBTORS OF STATE ELECTRICITY BOARDS, FACING FINANCIAL CRUNCH. THE AO DISALLOWED 2.5 % OF THE ADMINISTRATIVE EXPENSES FOR EARNING INTEREST INCOME FROM TAX FREE BONDS IN THE ASSESSMENT YEARS 2002-03 TO 2004-05 WHILE IN ASSESS MENT YEAR 2007-08 DISALLOWANCE HAS BEEN MADE HAVING RECOURSE TO PROVISIONS OF RULE 80 OF THE I. T RULES , 1962. THERE IS NO MATERIAL BEFORE US, SUGGESTING THAT THE ASSESSEE INCURRED ANY EXPENDITURE BY WAY OF ADMINISTRATIVE EXPENSES FOR EARNING INTEREST INCOME IN THESE FOUR ASSESSMENT YEARS NOR THE AO IDENTIFIED A NY ITEM OF SUCH EXPENDITURE FOR EARNING THE INTEREST I NCOME. IN THESE CIRCUMSTANCES, THE ESTIMATED DISALLOWANCE MADE BY THE AO, WITHOUT ESTABLISHING THE NEXUS BETWEEN ADMINISTRATIVE EXPENSES AND INTEREST INCOME FROM TA X FREE BONDS, CANNOT BE SUSTAINED. 11. WE FIND-THAT THE HON'BLE BOMBAY HIGH COURT IN THEIR DECISION DATED 12.8.2010 IN CASE OF GODREJ & BOYCE MFG. CO. LTD. MUMBAI WHILE HOLDING THAT RULE 80, ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 21 INSERTED W.E.F 24.3.2008 CANNOT BE REGARDED AS RETROSPECTIVE BECAUSE IT ENACTS AN ARTIFICIAL METHO D OF ESTIMATING EXPENDITURE RELATABLE TO TAX-FREE INCOME AND IS APPLICABLE ONLY W.E.F AY 2008-09, CONCLUDED THAT FO R THE ASSESSMENT YEARS WHERE RULE 8D DOES NOT APPLY, THE AO WILL HAVE TO DETERMINE THE QUANTUM OF DISALLOWABLE EXPENDITURE BY A REASONABLE METHOD HAVING REGARD TO ALL THE FACTS AND CIRCUMSTANCES. THUS, THE DISALLOWANCE MADE BY THE AO INVOKING RULE 8D OF THE IT RULES, 1962 IN THE AY 2007-08, IS NOT JUSTIFIED. 11.1. MOREOVER, HON'BLE SUPREME COURT IN THEIR DECISION DATED 6.7.2010 IN CIT V. WALFORT SHARE & S TOCK BROKERS (P) LTD., 326 ITR 1, INTER ALIA, OBSERVED T HAT FOR ATTRACTING SECTION 14A OF THE ACT THERE HAS TO BE A PROXIMATE CAUSE FOR DISALLOWANCE, WHICH IS ITS RELATIONSHIP WITH THE TAX EXEMPT INCOME. HON'BLE AP EX COURT OBSERVED IN THE CONTEXT OF PROVISIONS SEC. 14 A OF THE ACT IN THE FOLLOWING TERMS: '17. THE INSERTION OF SECTION 14A WITH RETROSPECTIVE EFFECT IS THE SERIOUS ATTEMPT ON THE PART OF THE PARLIAMENT NOT TO ALLOW DEDUCTION IN RESPECT OF ANY EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT AGAINST THE TAXABLE INCOME (SEE CIRCULAR NO. 14 OF 2001, DATED 22-11-2001). IN OTHER WORDS, SECTION 14A CLARIFIES THAT EXPENSES INCURRED CAN BE ALLOWED ONLY TO THE EXTENT THEY ARE RELATABLE TO THE EARNIN G OF TAXABLE INCOME. IN MANY CASES THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE MAY BE RELATABLE PARTLY TO THE EXEMPT INCOME AND PARTLY TO THE TAXABLE INCOME. IN THE ABSENCE OF SECTION 14A, THE EXPENDITURE INCURRED IN RESPECT AT EXEMPT INCOME WAS BEING CLAIMED AGAINST TAXABLE INCOME. THE MANDATE OF SECTION 14A IS CLEAR. IT DESIRES TO CURB THE PRACTICE TO CLAIM DEDUCTION OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME AGAINST TAXABLE INCOME AND AT THE SAME TIME AVAIL THE TAX INCENTIVE BY WAY OF EXEMPTION OF EXEMPT INCOME WITHOUT MAKING ANY APPORTIONMENT OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME. THE BASIC REASON FOR INSERTION OF SECTION 14A IS THAT CERTAIN INCOMES ARE NOT INCLUDIBLE WHILE COMPUTING TOTAL INCOME AS THESE ARE EXEMPT UNDER CERTAIN PROVISIONS OF THE ACT. IN THE PAST, THERE HAVE BEEN CASES IN WHICH DEDUCTION HAS BEEN SOUGHT IN RESPECT OF SUCH INCOMES WHICH IN EFFECT WOULD MEAN THAT TAX INCENTIVES TO CERTAIN INCOMES WAS ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 22 BEING USED TO REDUCE THE TAX PAYABLE ON THE NON- EXEMPT INCOME BY DEBITING THE EXPENSES, INCURRED TO EARN THE EXEMPT INCOME, AGAINST TAXABLE INCOME. THE BASIC PRINCIPLE OF TAXATION TO TAX THE NET INCOME I.E. GROSS INCOME MINUS THE EXPENDITURE. ON THE SAME ANALOGY THE EXEMPTION IS ALSO IN RESPECT OF NET INCOME. EXPENSES ALLOWED CAN ONLY BE IN RESPECT OF EARNING OF TAXABLE INCOME. THIS IS THE PURPORT OF SECTION 14A. IN SECTION 14A, THE FIRST PHRASE IS 'FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER' WHICH MAKES IT CLEAR THAT VARIOUS HEADS OF INCOME AS PRESCRIBED 'UNDER CHAPTER IV WOULD FALL WITHIN SECTION 14A. THE NEXT PHRASE IS, 'IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THE ACT'. IT MEANS THAT IF AN INCOME DOES NOT FORM PART OF TOTAL INCOME, THEN THE RELATED EXPENDITURE IS OUTSIDE THE AMBIT OF THE APPLICABILITY OF SECTION 14A. FURTHER, SECTION 14 SPECIFIES FIVE HEADS OF INCOME WHICH ARE CHARGEABLE TO TAX. IN ORDER TO BE CHARGEABLE, AN INCOME HAS TO BE BROUGHT UNDER ONE OF THE FIVE HEADS. SECTIONS 15 TO 59 LAY DOWN THE RULES FOR COMPUTING INCOME FOR THE PURPOSE OF CHARGEABILITY TO TAX UNDER THOSE HEADS. SECTIONS 15 TO 59 QUANTIFY THE TOTAL INCOME CHARGEABLE TO TAX. THE PERMISSIBLE DEDUCTIONS ENUMERATED IN SECTIONS 15 TO 59 ARE NOW TO BE ALLOWED ONLY WITH, REFERENCE TO INCOME WHICH IS BROUGHT UNDER ONE OF THE ABOVE HEADS AND IS CHARGEABLE TO TAX. IF AN INCOME LIKE DIVIDEND INCOME IS NOT A PART OF THE TOTAL INCOME, THE EXPENDITURE/DEDUCTION THOUGH OF THE NATURE SPECIFIED IN SECTIONS 15 TO 59 BUT RELATED TO THE INCOME NOT FORMING PART OF TOTAL INCOME COULD NOT BE ALLOWED AGAINST OTHER INCOME INCLUDIBLE IN THE TOTAL INCOME FOR THE PURPOSE OF CHARGEABILITY TO TAX. THE THEORY OF APPORTIONMENT OF EXPENDITURE BETWEEN TAXABLE AND NON-TAXABLE HAS, IN PRINCIPLE, BEEN NOW WIDENED UNDER SECTION 14A. READING SECTION 14 IN JUXTAPOSITION WITH SECTIONS 15 TO 59, IT IS CLEAR THAT THE WORDS 'EXPENDITURE INCURRED' IN SECTION 14A REFERS TO EXPENDITURE ON RENT, TAXES , SALARIES, INTEREST, ETC. IN RESPECT OF WHICH ALLOWANCES ARE PROVIDED FOR (SEE SECTIONS 30 TO 37). 11.2 HON'BLE PUNJAB & HARYANA HIGH COURT IN THEIR DECISION IN CIT VS. HERO CYCLES LTD.,323 ITR 518 HA VE OBSERVED THAT DISALLOWANCE UNDER SECTION 14A REQUIR ES FINDING OF INCURRING OF EXPENDITURE AND WHERE IT IS FOUND ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 23 THAT FOR EARNING EXEMPTED INCOME NO EXPENDITURE HAS BEEN INCURRED, DISALLOWANCE UNDER SECTION 14A CANNO T STAND. 11.3 HON'BLE KERALA HIGH COURT IN THEIR DECISION IN CATHOLIC SYRIAN BANK LTD.(SUPRA) HELD THAT THERE BE ING NO PRECISE FORMULA FOR PROPORTIONATE DISALLOWANCE, NO DISALLOWANCE IS CALLED FOR OUT OF ADMINISTRATIVE EX PENSES UNTIL RULE 80 CAME IN TO FORCE. 11.4 HON'BLE JURISDICTIONAL HIGH COURT IN THEIR DECISION IN PRINTERS HOUSE (P) LTD. (SUPRA) UPHELD THE FINDINGS OF THE ITAT, HOLDING THAT EXPENDITURE CANN OT BE DISALLOWED ON THE BASIS OF A MERE ESTIMATE AS TO WH AT POSSIBLY COULD HAVE BEEN INCURRED TO EARN INCOME EXEMPTED FROM TAX. 11.5 IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS, ESPECIALLY WHEN THE REVENUE HAS NOT PLAC ED BEFORE US ANY MATERIAL IN ORDER TO CONTROVERT THE A FORESAID FINDINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TA KE A DIFFERENT VIEW IN THE MATTER NOR EVEN REFERRED TO U S ANY MATERIAL THAT IMPUGNED EXPENDITURE WAS INCURRED TO EARN TAX FREE INTEREST INCOME, WE ARE NOT INCLINED TO IN TERFERE WITH THE FINDINGS OF THE LD. CIT (A). IN VIEW THER EOF, GROUND NO.2 IN THE APPEAL FOR ASSESSMENT YEAR 2003- 04, GROUND NOS. I TO III IN THE APPEAL FOR THE AY 2002- 03, GROUND NO.2 IN THE APPEAL FOR ASSESSMENT YEAR 2004- 05 AND GROUND NO.1 IN THE APPEAL FOR THE AY 2007- 08, ARE DISMISSED.' 15. SINCE, THE FACTS OF THE ASSESSEE'S CASE ARE SIM ILAR TO THE FACTS INVOLVED IN THE CASE OF DCIT, CIRCLE-14(1), N EW DELHI VS POWER GRID CORPORATION OF INDIA LTD. (SUPRA). SO, R ESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 31. 10.2011, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTA L APPEAL. 29. PERUSAL OF THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN AY 2004-05 APPARENTLY GOES TO PROVE THAT IDENTICAL ISSUE AS TO DISALLOWANCE OF THE EXPENDITURE MADE BY THE ASSESSEE TO EARN THE EXEMPT INCOME FROM INVESTMENT IN TAX FREE BONDS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WHEREIN AO HAS DI SALLOWED 2.5% ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 24 OF THE ADMINISTRATIVE EXPENSES FOR EARNING INCOME F ROM TAX FREE BONDS AND THE DISALLOWANCE WAS ORDERED TO BE DELETE D. 30. WHEN WE EXAMINE THE PROPOSITION AT HAND AS TO M AKING DISALLOWANCE OF RS.123.09 CRORES BY THE AO AND REDU CED THE SAME TO RS.82.67 CRORES BY THE LD. CIT (A) IN THE LIGHT OF THE FACTS INTER ALIA THAT AO HAS NOT RECORDED ANY DISSATISFACTION A S TO THE WORKING OUT MADE BY THE AO; THAT THE AO HAS FAILED TO ESTAB LISH ANY NEXUS BETWEEN THE TAX FREE INCOME AND EXPENDITURE INCURRE D; THAT THE ASSESSEE WAS HAVING HUGE SUFFICIENT OWN FUNDS OF RS .41776 CRORES AS AGAINST THE INVESTMENT OF RS.16469 CRORES AND TH E FACT THAT THE ENTIRE INVESTMENT WAS MADE LONG BACK UNDER ONE TIME SETTLEMENT, DISALLOWANCE MADE BY THE AO AS WELL AS LD. CIT (A) IS NOT SUSTAINABLE. THERE IS NOT AN IOTA OF MATERIAL ON F ILE TO PROVE THE FACT THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE BY WAY OF ADMINISTRATIVE EXPENSES FOR EARNING THE EXEMPT INCO ME, WHICH MAKES THE ESTIMATED DISALLOWANCE MADE BY THE AO AS WELL AS LD. CIT (A) NOT SUSTAINABLE. 31. HONBLE SUPREME COURT IN CASE CITED AS COMMISSIONER OF INCOME TAX VS. WALFORT SHARE & STOCK BROKERS (P)LTD 326 ITR 1 HELD THAT, THERE HAS TO BE PROXIMATE COST FOR DISALLOWANCE HA VING RELATIONSHIP WITH THE TAX EXEMPT INCOME. ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 25 32. LD. DR FOR THE REVENUE DREW OUR ATTENTION TOWAR DS PARA 16 OF THE ASSESSMENT ORDER WHEREIN ASSESSEE ITSELF ADM ITTED THAT IT HAS ESTABLISHED AN INVESTMENT GROUP HEADED BY DEPUTY GE NERAL MANAGER (FINANCE) ASSISTED BY TWO EXECUTIVES AND ON E STENO TO LOOK AFTER THE MATTER RELATING TO MANAGING SURPLUS FUNDS OF THE COMPANY WHICH INCLUDE INVESTMENT WITH BANKS AND VAR IOUS SECURITIES ISSUED BY THIS GOVERNMENT AND THEY ARE M ANAGING A TOTAL INVESTMENT OF MORE THAN RS.20000 CRORES AS SHOWN IN SCHEDULE 9 & 14 OF THE ANNUAL ACCOUNTS AND AS SUCH, ADMINISTRA TIVE EXPENSES IN EARNING THE EXEMPT INCOME MUST BE DISALLOWED. 33. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT REP LY OF THE ASSESSEE IN THIS REGARD IS TO BE READ AS A WHOLE WH EREIN IT IS SAID THAT THE SAID STAFF IS APPOINTED TO MANAGE THE SURP LUS FUNDS AS WELL AS INVESTMENT MADE BY THE ASSESSEE AND AT THE SAME TIME, THEY HAVE ALSO BROUGHT ON RECORD BY WAY OF FINANCIALS THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO EARNING SUCH INCOME. A CCOUNTS OF THE ASSESSEE ARE AUDITED BY AUDITOR AS WELL AS CONTROLL ER & AUDITOR GENERAL (CAG) AND WHEN THE AO HAS FAILED TO PROVE O N RECORD MATERIAL TO SHOW THAT SUCH AND SUCH EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE TO EARN EXEMPT INCOME, IN THE FACE OF THE FACT THAT ALL THE INVESTMENTS ARE OLD INVESTMENTS THAT TOO IN TAX FREE BONDS AND LOAN TO THE GOVERNMENT OUT OF ITS OWN HUGE SURP LUS FUNDS, NO ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 26 DISALLOWANCE CAN BE MADE. HONBLE HIGH COURT OF PU NJAB & HARYANA IN CASE OF CIT VS. HERO CYCLES LTD. - 323 ITR 518 HELD THAT DISALLOWANCE U/S 14A IS NOT PERMISSIBLE WHERE THERE IS NO NEXUS BETWEEN EXPENDITURE INCURRED AND INCOME GENER ATED BY RETURNING FOLLOWING FINDINGS :- HELD, DISMISSING THE APPEAL, THAT THE EXPENDITURE ON INTEREST WAS SET OFF AGAINST THE INCOME FROM INTEREST AND TH E INVESTMENT IN THE SHARES AND FUNDS WERE OUT OF THE DIVIDEND PR OCEEDS. IN VIEW OF THIS FINDING OF FACT, DISALLOWANCE UNDER SE CTION 14A WAS NOT SUSTAINABLE. WHETHER, IN A GIVEN SITUATION, ANY EXPENDITURE WAS INCURRED WHICH WAS TO BE DISALLOWED, WAS A QUES TION OF FACT. THE CONTENTION OF THE REVENUE THAT DIRECTLY OR INDI RECTLY SOME EXPENDITURE WAS ALWAYS INCURRED WHICH MUST BE DISAL LOWED UNDER SECTION 14A AND THE IMPACT OF EXPENDITURE SO INCURRED COULD NOT BE ALLOWED TO BE SET OFF AGAINST THE BUSI NESS INCOME WHICH MAY NULLIFY THE MANDATE OF SECTION 14A, COULD NOT BE ACCEPTED. DISALLOWANCE UNDER SECTION 14A REQUIRED F INDING OF INCURRING OF EXPENDITURE AND WHERE IT WAS FOUND THA T FOR EARNING EXEMPTED INCOME NO EXPENDITURE HAD BEEN INCURRED, DISALLOWANCE UNDER SECTION 14A COULD NOT STAND. CO NSEQUENTLY, THE DISALLOWANCE WAS NOT PERMISSIBLE. 34. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AN D FOLLOWING THE DECISION RENDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN AY 2004-05, WE ARE OF THE CONSIDERED VIEW THAT AO AS W ELL AS LD. CIT (A) HAVE ERRED IN MAKING DISALLOWANCE OF RS.123.09 CRORES, WHICH WAS FURTHER REDUCED TO RS.82.67 CRORES BY THE LD. C IT (A), WHICH IS ORDERED TO BE DELETED BEING NOT SUSTAINABLE IN THE EYES OF LAW. CONSEQUENTLY, GROUND NO.4 OF THE REVENUES APPEAL I S DETERMINED AGAINST THE REVENUE AND THE GROUND NO.2(I) & (II) O F THE ASSESSEES APPEAL IS ALLOWED. ITA NO.4183/DEL./2015 ITA NO.4754/DEL./2015 27 GROUND NO.5 IN ITA NO.4183/DEL/2015 (REVENUES APPEAL) AND GROUND NO.1 IN ITA NO.4754/DEL/2015 (ASSESSEES APPEAL) 33. GROUND NO.5 OF REVENUES APPEAL AND GROUND NO.1 OF ASSESSEES APPEAL ARE GENERAL IN NATURE, HENCE NEED NO ADJUDICATION. 34. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF APRIL, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF APRIL, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)- VI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.