ACIT, Range-2, Kolhapur V. Abhishek Cotspin Mills Ltd., Kolhapur

ITA 49/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2788 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 04-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MAZHAR AKRAM
• Keywords: Depreciation; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 6; 2; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 48 & 49 /PN/201 3 / ASSESSMENT YEAR S : 200 6 - 0 7 & 2007 - 08 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, KOLHAPUR . / APPELLANT VS. ABHISHEK COTSPIN MILLS LTD., GAT NO.148, TAMGAON, KOLHAPUR HUPARI ROAD, KOLHAPUR . / RESPONDENT PAN: AACCA0323P / APPELLANT BY : SHRI MAZHAR AKRAM / APPELLANT BY : SHRI MAZHAR AKRAM / RESPOND ENT BY : NONE / DATE OF HEARING : 28 . 12 .2015 / DATE OF PRONOUNCEMENT: 29 . 0 1 .201 6 / ORDER PER SUSHMA CHOWLA, JM : BOTH THE APPEALS FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT(A), KOLHAPUR , DATED 15.10.2012 AND 03.10.2012 RELATING TO ASSESSMENT YEAR S 20 0 6 - 0 7 AND 2007 - 08 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE APPEALS WERE ADJOURNED FROM DAY TO DAY AT THE REQUEST OF THE ASSESSEE. ON THE LAST DATE OF HEARING 28.09.2015, THE LEARNED AUTHORIZED REPRESENTATIVE FOR 2 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. THE ASSESSEE MADE A REQUEST FOR ADJOURNING THE MATTER AND THE SAME WAS ADJOURNED TO 28.12.2015. HOWEVER, ON THE APPOINTED DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. HENCE, WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 3. BOTH THE APPEALS FILED BY THE REVENUE RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO.48/PN/2013 TO ADJUDICATE THE ISSUES. 4 . THE REVENUE IN ITA NO. 48 /PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 01. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING EXPENDITURE NOT CLAIMED IN THE RETURN OF IN COME; 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING POWER CHARGES OF RS.72,00,000 / - NOT CLAIMED AS REVENUE EXPENDITU RE IN THE RETURN OF INCOME ON THE GROUND THAT NO WORK OF CAPITAL EXPANSION WAS CARRIED OUT AND PAYMENT IN RESPECT OF THIS ITEM WAS MADE THROUGH BANK IGNORING THE FACT THAT THIS AMOUNT REPRESENTED CAPITAL WORK - IN - PROGRESS AND WAS SO CLAIMED IN THE RETU RN OF INCOME ; 03. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING EXPENDITURE OF CONSTRUCTION DIVISION AMOUNTING TO RS.2,87,19,681 / - NOT CLAIMED AS REVENUE EXPENDITURE IN THE RETURN OF INCOME ON THE GROUND THAT CON TRACTORS DO NOT HAVE ANY WORK - IN - PROGRESS AT THE END OF THE YEAR IGNORING THE FACT THAT THIS AMOUNT REPRESENTED THE AMOUNT INCURRED BY THE ASSESSEE ON VARIOUS ITEM S LIKE CEMENT, SAND, MURUM, LABOUR PAYMENT, MISCELLANEOUS PURCHASE, FU E L AND POWER AND TRANSPORT CHARGES, IN THE CONSTRUCTION DIVISION AND, THEREFORE, THIS AMOUNT REPRESENTED WORK - IN - PROGRESS OF CONSTRUCTION DIVISION OF THE ASSESSEE AND WAS SO CLAIMED AS CAPITAL WORK - IN - PROGRESS IN THE RETURN OF I NCOME; 04. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING SERVICE TAX OF RS.8,06,329 / - AS REVENUE EXPENDITURE, NOT CLAIMED IN THE RETURN OF INCOME; 05. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWI N G VAT RECEIVABLE OF RS.3,02,969/ - NOT CLAIMED AS REVENUE EXPENDITURE IN THE RETURN OF INCOME; 06. THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT(A) BE VACATED AND THAT OF THE ASSESSING OFFICER'S ORDER MAY BE RESTORED. 3 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. 07. THE APPELLANT CRAVES LEAVE TO ADD , ALTER, AMEND, MODIFY ANY OF THE ABOVE GROUNDS RAISED, ANY OTHER GROUNDS AT THE TIME OF PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL WHICH MAY PLEASE BE GRANTED. 5 . BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SPINNING OF COTTON YARN AND ALSO CIVIL CONSTRUCTION. THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 14,93,01,700/ - ON 31.03.2007. THE RETURN OF INCOME WAS ACCOMPANIED BY TRADING & PROFIT & LOSS ACCOUNT, BALANCE SHEET WITH AUDIT REPORTS IN FORM NO.3CA AND FORM NO.3CD . THE ORIGINAL ASSESSMENT ORDER WAS PASSED ON 19.12.2008 DETERMINING TOTAL INCOME AT RS.15,03,07,250/ - . IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED CERTAIN EXPENSES AS DEDUCTIBLE, WHICH IN THE BOOKS OF ACCOUNT WERE CAPITALIZED BY THE ASSESSEE BEING CAPITAL EXPENDITURE RELATABLE TO THE CIVIL CONSTRUCTION WORK. THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSESSEE IN LIGHT OF DECISION OF HONBLE SUPREME COURT IN GOETZE (INDIA) LTD. VS. CIT (2006) 284 ITR 323 (SC) . THE MATTER WAS RESTORED TO THE ASSESSING OFFICER BY THE TRIBUNAL TO DECIDE THE CLAIM OF THE ASSESSEE DE NOVO. THE ASSESSEE CLAIMED THAT DURING THE COURSE OF FINALIZATION OF ACCOUNTS, SOME OF THE REVENUE EXPENSES WERE WRONGLY CAPITALIZED. T HE ASSESSING OFFICER IN VIEW THEREOF, ISSUED NOTICE OF HEARING TO THE ASSESSEE WITH REGARD TO THE MATTER BEING SET - ASIDE BY THE TRIBUNAL. FROM THE SUBMISSIONS GIVEN BY THE ASSESSEE FROM TIME TO TIME, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS ENGAG ED IN TWO LINES OF BUSINESS SINCE 1995 I.E. SPINNING OF COTTON YARN (EOU) AND CIVIL CONSTRUCTION. IN THE YEAR 2000, THE COMPANY ENTERED INTO AN AGREEMENT WITH M/S. R.M. MOHITE & CO., A PARTNERSHIP FIRM, IN WHICH THE FIRM APPOINTED THE COMPANY AS ITS SUB - C ONTRACTOR TO CARRY OUT CERTAIN WORKS I.E. EARTHEN DAM PROJECT AT MORVE VILLAGE, TAL - KHALAPUR, DIST RAIGAD AWARDED TO M/S. R.M. MOHITE & CO. THE NECESSARY DOCUMENT S RELATING TO THE CONSTRUCTION OF EARTHEN DAM AND ITS AWARD TO M/S. R.M. MOHITE & CO., SUB - CONTRACT TO THE ASSESSEE WERE FILED. THE CONTENTION OF THE ASSESSEE WAS THAT EXPENDITURE INCURRED ON VARIOUS HEADS OF ACCOUNT WERE ACTUALLY DEBITED TO REVENUE ACCOUNT UNDER EACH SEPARATE 4 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. HEAD, BUT AT THE YEAR END ON 31.03.2006, THE JOURNAL ENTRI ES WERE PASSED ON ADHOC BASIS TO CAPITAL WORK - IN - PROGRESS OF BU ILDING ACCOUNT. THE ASSESSEE ON A LATER DATE HAS CLAIMED THAT THE SAID EXPENDITURE WAS ITS REVENUE EXPENDITURE ALTHOUGH A CHART SHOWING DETAILS OF EXPENDITURE INCURRED UNDER EACH HEAD I.E. THE DATE OF EXPENDITURE, NATURE OF EXPENDITURE AND AMOUNT INCURRED WERE FURNISHED, BUT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THIS EXPENDITURE WAS ACTUALLY INCURRED FOR REVENUE ITEMS OF CONSTRUCTION DIVISION. THE ASSESSEE HAD CLAIMED SUCH EXPENDITURE ON SEVEN HEADS, WHICH ARE AS UNDER: - I) MATERIAL PURCHASE RS.2,45,20,073/ - II) PETROL & DIESEL RS. 17,59,389/ - III) WAGES RS. 25,11,219/ - IV) POWER EXPENSES RS. 72,00,000/ - V) VAT SET OFF RS. 3,02, 969/ - VI) SERVICE TAX RS. 8,06,329/ - VII) PRELIMINARY EXPENSES RS. 95,38,330/ - CAPITAL EXPENDITURE & PRE - OPERATIVE EXPENSES 6. THE ASSESSING OFFICER FURTHER NOTES THAT IN THE SUBMISSIONS DATED 20.12.2011, THE ASSESSEE HAS SUBMITTED DETAILS OF SITE EXPENSES (MATERIAL & LABOUR PAYMENT) OF RS.2,45,20,073/ - , FUEL EXPENSES OF RS. 17,59,389/ - , WAGES OF RS.25,11,219/ - AND POWER & FUEL EXPENSES OF RS.72,00,000/ - ONLY AND FAILED TO PROVIDE DETAILS OF EXPENDITURE INCURRED ON VAT SET OFF OF RS. 3,02,969/ - , SERVICE TAX OF RS.8,06,329/ - AND PRELIMINARY EXPENSES, CAPITAL EXPENDITURE TO THE EXTENT WRITTEN OFF AND PRE - OPERATIVE EXPENSES OF RS.95,38,330/ - . THE ASSESSING OFFICER HELD THAT ON THE BASIS OF ACCOUNT HEAD SHOWN AND THE NATURE OF EXPENDITURE, VAT SET OFF, SERVICE TAX AND PRELIMINARY EXPENSES WERE CAPITAL IN NATURE AND COULD NOT BE REVENUE ON ANY ACCOUNT, HENCE, THE SAID EXPENDITURE COULD NOT BE ALLOWED AS REVENUE EXPEN DITURE. AS FAR AS PRELIMINARY EXPENSES WE RE CONCERNED, THE ASSESSING OFFICER NOTED THAT THE SAME WERE ALWAYS SHOWN AS CAPITAL EXPENDITURE NOT WRITTEN OFF , IN THE BALANCE SHEET AND ACTUALLY WRITTEN OFF IN THE NEXT 5 10 YEARS EQUALLY, HENCE, THE SAID EXPENDITURE WAS NOT A LLOWABLE AS REVENUE EXPENDITURE. IN RESPECT OF BALANCE EXPENSES, THE ASSESSING OFFICER NOTED THAT THE DETAILS AND 5 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. PROOFS SUBMITTED BY THE ASSESSEE WERE INSUFFICIENT TO MAKE ANY OPINION WHETHER THEY WERE ACTUALLY REVENUE OR CAPITAL EXPENDITURE. HOWEVER, THE ASSESSING OFFICER QUALIFIED / VERIFIED THE SAME BY SAYING THAT THE POSSIBILITY OF THESE BEING REVENUE IN NATURE, COULD NOT BE RULED OUT ENTIRELY. ANOTHER ASPECT NOTED BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE WAS A PRIVATE LIMITED COMPANY WITH HUGE TURNOVER AND THERE WERE ADEQUATE INTERNAL AUDIT AND CONTROL PROCEDURE S ADOPTED BY THE COMPANY COMMENSURATE WITH THE SIZE OF THE COMPANY AND NATURE OF ITS BUSINESS WITH REGARD TO PURCHASE OF INVENTORIES, FIXED ASSETS AND WITH REGARD TO SALE OF GOODS. REFERENCE WAS MADE TO CLAUSE N O .(IV) OF THE ANNEXURE AS REFERRED TO IN PARA (3) OF THE AUDITORS REPORT. THE ASSESSING OFFICER THUS, OBSERVE D THAT WHENEVER ANY EXPENDITURE WAS INCURRED ON ANY HEAD, PARTICULARLY WHETHER IT IS CAPITAL OR REVENUE AND WHETHER IT BELONGS TO YARN DIVISION OR CONSTRUCTION DIVISION, THE SAME SHOULD HAVE BEEN FULLY CHECKED BY THE MANAGEMENT OF THE COMPANY AND NECESSARY ENTRIES PASSED IN THE BOOKS OF ACCOUNT. WHERE ENTRIES WERE CHECKED BY THE INTERNAL AUDIT OR CONTROL STAFF AND THE REAFTER BY THE STATUTORY AUDITORS, THERE WAS NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD. 7. BEFORE THE CIT(A), THE CONTENTION OF THE ASSESSEE WAS THAT THE MISTAKES IN FINALIZATION OF ACCOUNTS WERE POINTED OUT BY THEIR CONSULTANT SHRI V.M. NAVANDHAR, CHARTERED ACCOUNTANT DURING THE COURSE OF ATTENDING THE INCOME - TAX PROCEEDINGS. FURTHER, THE SUBM ISSIONS WERE MADE BY THE ASSESSEE THAT THE MISTAKES IN PREPARATION OF PROFIT & LOSS ACCOUNT FILED FOR THE FINANCIAL YEARS 2005 - 06 AND 2006 - 07 WE RE ALSO NOTICED BY THEIR CAS B.J. INGROLE AND COMPANY WHILE FINALIZING THE ACCOUNTS FOR THE PERIOD 31.03.2009 AN D IN THIS VIEW, LETTER DATED 05.05.2009 WAS ISSUED TO THEM. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE ACCOUNTS WERE BEING LOOKED AFTER BY THE GENERAL MANAGER , FINANCE AND THE ASSESSEE WANTED TO CORRECT THE DEFECTS BY AMENDING THE BALANCE SHEET M/S. B.J . INGROLE & CO., CA ADVISED VIDE LETTER DATED 12.05.2009 THAT IT WAS NOT POSSIBLE TO REOPEN THE EARLIER ACCOUNTS, 6 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. BUT RECTIFICATION ENTRIES COULD BE PASSED WHILE FINALIZING THE ACCOUNTS FOR THE YEAR 31.03.2009 BY PASSING PROPER ENTRIES. ACCORDINGLY, THE ASSESSEE CLAIMS THAT RECTIFICATION ENTRIES WERE PASSED IN THE BOOKS OF ACCOUNT FOR THE FINANCIAL YEAR 2008 - 09 BY REDUCING SUM OF RS.12,57,23,134/ - FROM SCHEDULE OF FIXED ASSETS AND THE RECTIFIED ENTRIES HAVE BEEN DULY SUBMITTED TO THE ROC. THE NEXT CONTEN TION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE GENERAL MANAGER, FINANCE, WHO WAS RESPONSIBLE FOR THESE MISTAKES HAD BEEN RELIEVED OF HIS DUTIES. IT WAS ALSO EXPLAINED THAT THE GENERAL MANAGER, FINANCE WAS RESPONSIBLE FOR FINANCE AND FUND FLOWS OF THE COMPANY, HE WRONGLY CAPITALIZED THE REVENUE EXPENSES. AS PER THE ASSESSEE, THE MISTAKES WERE DUE TO INADVERTENCE AND WRONG APPLICATION OF KNOWN COMMERCIAL AND ACCOUNTING PRINCIPLES AND W ERE NOT MADE WITH ANY INTENT TO DEFRAUD THE REVENUE. THE ASSESSEE F URTHER RELIED ON REAL INCOME CONCEPT TO SUBMIT THAT THE INCOME ASSESSED IS THE REAL INCOME OF THE ASSESSEE AND THAT ENTRIES IN BOOKS OF ACCOUNT WERE NOT DECISIVE OR CONCLUSIVE FOR TAX PURPOSE. IN THIS REGARD, RELIANCE WAS PLACED ON SEVERAL DECISIONS. THE CIT(A) AGREED WITH THE CONTENTION OF THE ASSESSEE THAT TAX WAS LEVIED ON REAL INCOME OF THE ASSESSEE AND BOOK KEEPING ENTRIES WERE NOT DECISIVE / CONCLUSIVE FOR TAX PURPOSES, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN SEVERAL CASES. IN VIEW THEREOF, THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE WAS ADMITTED. THE CIT(A) THEREAFTER, VIDE PARA 22 NOTED THAT THE POWER CHAR GES OF RS.72 LAKHS WERE WRONGLY INCLUDED IN CAPITAL WORK IN PROGRESS . THE PAYMENTS MADE BY THE ASSESSEE WERE ON ACCOUNT OF ELECT RICITY CHARGES RAISED BY MSEB AND HENCE, THE CIT(A) HELD THAT THE SAME WERE ALLOWABLE AS REVENUE EXPENSES, IN VIEW OF THE FACT THAT THERE WAS NO WORK O F CAPITAL EXPANSION WHICH WOULD REQUIRE SUCH MASSIVE ELECTRICITY CONSUMPTION. IN RESPE CT OF APPROPRIATED AMOUNT OF ADMINISTRATIVE EXPENSES TRANSFERRED TO CONSTRUCTION DIVISION OF RS.15,58,048/ - , APPROPRIATED AMOUNT OF SALARY PAID T O ADMINISTRATION DEPARTMENT TRANSFERRED TO CONSTRUCTION DIVISION OF RS.7,73,393/ - AND VICE VERSA, THE CIT(A) NOTED THAT THE AMOUNTS WERE ADDED TO THE 7 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. PROFITS OF TEXTILE DIVISION. HOWEVER, THE ADHOC TRANSFERS WERE CLEARLY NOT RESULT OF AN ACCOUNTING OR LEG AL MISTAKE. THE CIT(A) WAS OF THE VIEW THAT THE AMOUNTS COULD NOT HAVE BEEN REDUCED FROM THE EXPENSES OF THE TEXTILE DIVISION OR ADDED TO PROFITS OF TEXTILE DIVISION WITHOUT ASCRIBING ANY COGENT REASON. THE NEXT SET OF EXPENSES UNDER THE HEAD CONSTRUCTIO N DIVISION TRANSFERRED TO CAPITAL WORK IN PROGRESS OF RS.2,87,90,681/ - . THE ASSESSEE PROVIDED THE DETAILS OF CONSTRUCTION EXPENSES AGGREGATING TO RS.23.33 CRORES SPENT ON VARIOUS ITEMS. THE EXPENSES WERE INCURRED AT MORBE SITE BETWEEN 01.04.2005 AND 31.03.2006 . SINCE THE MORBE SITE DID NOT BELONG TO THE ASSESSEE, IN FACT WAS A CONTRACT TAKEN FROM THE GOVERNMENT OF MAHARASHTRA AND SINCE IT WAS WELL KNOWN THAT CONTRACTORS DID NOT HAVE ANY WORK IN PROGRESS AT THE END OF THE YEAR, THEREFORE, TO CAPITALIZ E SUM OF RS.2.87 CRORES I.E. ALMOST 12.33% OF THE TOTAL EXPENSES , AS PER THE CIT(A) APPEAR ED TO BE INCORRECT AND SHOULD BE REDUCED FROM THE PROFIT OF THE CONSTRUCTION DIVISION . IN RESPECT OF SERVICE TAX, IT WAS HELD THAT THE SAME WAS ALLOWABLE IN THE YEAR OF ACTUAL PAYMENT AND THE MATTER WAS SENT BACK TO THE ASSESSING OFFICER FOR APPROPRIATE VERIFICATION. FURTHER, THE CIT(A) HELD THAT THE VAT WAS RECEIVABLE ONLY WHEN PERSON WAS ENTITLED TO VAT SET OFF IN RESPECT OF THE ITEMS MANUFACTURED OR PURCHASED AND SOLD BY HIM. IN THE CASE OF CONTRACTORS WHERE THERE ARE NO VAT RECEIPTS, HENCE, THE AMOUNT OF CAPITALIZATION WAS HELD TO BE WRONG AND THE SAME WAS DIRECTED TO BE REDUCED FROM THE PROFITS OF CONSTRUCTION BUSINESS . 8. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS AGAINST THE ALLOWANCE OF EXPENSES IN THE HANDS OF THE ASSESSEE, WHICH WERE NOT CLAIMED IN THE RETURN OF INCOME, BUT WERE LATER CLAIMED BY WAY OF FILING A REVISED RETURN OF INCOME. THE IS SUE IN GROUND OF APPEAL NO.2 IS IN RESPECT OF ALLOWING OF POWER CHARGES OF RS.72 LAKHS, WHICH WAS ALSO CLAIMED AS REVENUE EXPENSES. THE REVENUE IS FURTHER AGGRIEVED BY THE ORDER OF CIT(A) IN ALLOWING EXPENDITURE ON CONSTRUCTION DIVISION OF RS.2.87 CRORES. THE 8 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. GROUNDS OF APPEAL NO.4 AND 5 ARE AGAINST THE ORDER OF CIT(A) IN ALLOWING SERVICE TAX OF RS.8,06,329/ - AND VAT RECEIVABLE OF RS.3,02,969/ - . 9. ON PERUSAL OF THE RECORD, WE FIND THAT THIS APPEAL WAS TAKEN UP FOR HEARING FOR THE FIRST TIME ON 17.02.201 4 AND WAS FIXED THEREAFTER ON VARIOUS DATES. ON EACH DATE OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SOUGHT ADJOURNMENT AND THE MATTER WAS ADJOURNED AT HIS REQUEST. THEREAFTER, NONE APPEARED ON BEHALF OF THE ASSESSEE ON 18.06.2015 AND ON 28.09.2015 , A PROXY COUNSEL APPEARED FOR THE ASSESSEE. HOWEVER, ON THE APPOINTED DATE OF HEARING I.E. 28.12.2015, NONE APPEARED ON BEHALF OF THE ASSESSEE AND WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTA TIVE FOR THE REVENUE. 10. THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING AND SALE OF YARN AND ALSO CIVIL CONSTRUCTION ACTIVITIES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PREPARED ITS ACC OUNTS, WHICH IN TURN, WERE AUDITED BY THE AUDITORS B.J. INGROLE AND COMPANY , CA. THE COPY OF ANNUAL REPORT ALONG WITH DIRECTORS REPORT AND AUDITORS REPORT ALONG WITH AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT AND SCHEDULE S ARE ATTACHED AT PAGES 1 TO 41 OF THE PAPER BOOK. THE ANNUAL REPORT FOR FINANCIAL Y EAR 2005 - 06 LISTS THE DIRECTORS REPORT, COMPANY SECRETARY, STATUTORY A UDITORS, INTERNAL AUDITORS AND VARIOUS BANKERS . THE ASSESSEE HAS REGISTERED OFFICE & WORKS AT GAT NO.148, KOLHAPUR HUPARI ROAD, TALUKA KARVEER, DIST KOLHAPUR AND ONE OFFICE AT SHI V - PARVATI, 17 E, NAGAL PARK, KOLHAPUR. THE YEAR UNDER APPEAL IS THE THIRTEENTH YEAR OF OPERATION OF THE ASSESSEE COMPANY, WHICH IS A LIMITED COMPANY. THE DIRECTORS REPORT ENLISTS THE TOTAL INCOME, USUAL WORKING EXPENSES, GROSS PROFIT BEFORE INTEREST AND DEPRECIATION AND PROFIT AFTER TAXES AND ALSO PROFIT AFTER TAXES. THE DIRECTORS HAVE REPORTED THAT DURING THE YEAR UNDER CONSIDERATION THOUGH THERE WAS FALL IN PRODUCTION AS COMPARED TO THE PRECEDING 9 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. YEAR, HOWEVER, THEY HAD PRODUCED HIGH QUALITY FINE COUNT OF YARN, HA V ING MORE SELLING PRICE AS COMPARED TO NORMAL COUNT OF YARN. THE PROFIT BEFORE TAXES HAD INCREASED FROM 1179.77 LAKHS TO RS.1703.78 LAKHS. THE PROFIT AFTER TAXES HAD ALSO INCREASED FROM 1183.12 LAKHS TO RS.1281.15 LAKHS. THE COMPANY WAS ALSO IN THE PROCESS OF SETTING UP OF AN INTEGRATED FACILITY OF YARN DYEING, WEAVING, PROCESS HOUSE AT TAMGAON, KOLHAPUR - HUPARI ROAD, KOLHAPUR ADJACENT TO THE E XISTING PREMISES AND ADDITIONAL SPINNING FACILITIES AT THE EXISTING LEASEHOLD LAND COSTING AROUN D RS.250 CRORES. FOR THE SAID PURPOSES, SINCE THE ADDITIONAL FUNDS WOULD BE REQUIRED, THE DIRECTORS PROPOSED TO RAISE PART OF NECESSARY FUNDS BY PUBLIC ISSUE OF EQUITY SHARES AND FURTHER TO MAKE BORROWINGS OF RS.150 CRORES FROM 9 BANKS AND THE LETTERS SAN CTIONING THE SAID AMOUNT BY RESPECTIVE BANKS HAVE BEEN RECEIVED. IT WAS ALSO REPORTED BY THE DIRECTORS IN THE DIRECTORS REPORT THAT DURING THE PERIOD UNDER REPORT , THE ASSESSEE HAD EARNED ADEQUATE PROFITS. HOWEVER, THE DIRECTORS WANTED TO INVEST THE SAME IN ITS PROPOSED NEW PROJECT FOR DIVERSIFICATION AND MODERN IZ ATION, SO NO DIVIDEND WAS RECOMMEND FOR THE YEAR UNDER REVIEW . IN THE SAID DIRECTORS REPORT, THERE IS A MENTION OF AUDITORS M/S. B.J. INGROLE AND CO . , CA , STATUTORY AUDITORS OF THE COMPANY. FURTHER, IT IS REPORTED THAT THE COMPANY WAS COMING WITH AN IPO THROUGH 100% AND PROPOSED TO BE LISTED AT BOMBAY STOCK EXCHANGE OF INDIA AND NATIONAL STOCK EXCHANGE OF INDIA . IN ORDER TO MAINTAIN THE HIGH STANDARDS OF CORPORATE GOVERNANCE AND TO COMPLY WITH THE PROVISIONS OF CLAUSE 49 OF LISTING AGREEMENT, THE COMPANY HAS FORMED VARIOUS COMMITTEES, IN WHICH ONE OF THE COM MITTEES WAS THE AUDIT COMMITTEE, WHICH COMPRISED OF ONE CHAIRMAN AND TWO MEMBERS AND ALSO THE SCOPE OF THE SAID COMMITTEE WAS ENLISTED. OTHER COMMITTEES WE RE ALSO FORMED, WHICH HAVE NO RELEVANCE TO THE ISSUE BEFORE US. THE DIRECTORS REPORT IS ENCLOSED AT PAGES 9 TO 16 OF THE PAPER BOOK FOR THE FINANCIAL YEAR 2005 - 06. FURTHER, THE AUDITORS REPORT IS ALSO ENCLOSED AT PAGES 17 ONWARDS, IN WHICH THE AUDITORS HAVE CERTIFIED THAT THE COMPANY HAS MAINTAINED PROPER RECORDS SHOWING FULL PARTICULARS INCLUDING THE QUANTITATIVE DETAILS 10 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. AND SITUATIO N OF FIXED ASSETS. SIMILAR CERTIFICATE HAS BEEN GIVEN IN RESPECT OF THE INVENTORIES. FURTHER, IT HAS BEEN CERTIFIED BY THE AUDITORS THAT THERE WERE ADEQUATE INTERNAL CONTROL PROCEDURES COMMENSURATE WITH SIZE OF THE COMPANY AND NATURE OF ITS BUSINESS , W IT H REGARD TO PURCHASE OF INVENTORIES, FIXED ASSETS A ND WITH REGARD TO SALE OF GOODS. FURTHER, DURING THE COURSE OF AUDIT, THE AUDITORS HAD NOT COME ACROSS OR HAD RECEIVED ANY INFORMATION OF ANY CONTINUING FAILURE TO CORRECT MAJOR EXPENSES IN THE AFORESAID INTERNAL CONTROL PROCEDURES. VIDE CLAUSE (VII), IT HAS BEEN CERTIFIED BY THE AUDITORS THAT IN THEIR OPINION THE COMPANYS PRESENT INTERNAL AUDIT SYSTEM IS COMMENSURATE WITH ITS SIZE AND NATURE OF ITS BUSINESS. THE BALANCE SHEET, PROFIT & LOSS ACCOUNT WIT H ITS SCHEDULES ALONG WITH CASH FLOW STATEMENT AND LIST OF FIXED ASSETS HAS BEEN SIGNED BY THE CHAIRMAN MR. R.M. MOHITE, MANAGING DIRECTOR MR. A.R. MOHITE AND COMPANY SECRETARY MR. S.U. NAGAONKAR. THE AUDITORS HAVE ALSO ENCLOSED THEIR SIGNATURES TO THE SAID AUDITED ACCOUNTS. IN THE NOTES ON ACCOUNTS, IT HAS BEEN CERTIFIED BY THE AUDITORS THAT THE CONSTRUCTION DIVISION HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT AND THE FIGURES HAVE BEEN INCORPORATED IN THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF THE COMPANY. VARIOUS OTHER ACTIVITIES CARRIED OUT DURING THE YEAR BY THE ASSESSEE COMPANY HAVE BEEN REPORTED AND ALL HAVE BEEN FOUND TO BE CORRECT. THEN THE INFORMATION HAS BEEN GIVEN IN RESPECT OF LICEN S E D CAPACITY, THE INSTALLED CAPACITY, FI NISHED GOODS, BREAK - UP OF RAW MATERIALS CONSUMED, CIF VALUE OF I MPORTS, EXPENDITURE ON OPE RATI NG IN FOREIGN EXCHANGE AND CONTINGENT LIABILITIES. SIMILAR ANNUAL REPORT ALONG WITH DIRECTORS REPORT, AUDITORS REPORT FOR THE FINANCIAL YEAR 2006 - 0 7 ARE ANNEXED IN THE PAPER BOOK AT PAGES 42 TO 95. THE AUDIT REPORT FOR ASSESSMENT YEAR 2006 - 07 IS DATED 11.10.2006 AND FOR ASSESSMENT YEAR 2007 - 08 IS DATED 12.06.2007. 11. IN THE ABOVE SAID SCENARIO, WHERE THE ASSESSEE HAD AN INTERNAL AUDIT SYSTEM IN PLACE I.E. BY WAY OF COMMITTEE FORMED FOR AUDIT AND SERVICES OF THE COMPANY SECRETARY AND INT ERNAL AUDITOR S BEING UTILIZED BY THE ASSESSEE , FOR THE PREPARATION , 11 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. FINALIZATION AND AUDIT OF THE ACCOUNTS INCLUDING THE INVENTORIES, F IXED ASS ETS, CASH FLOW STATEMENT, ETC., THE ISSUE WHICH ARISES BEFORE US IS WHETHER SUCH PROFITS DECLARED BY THE ASSESSEE ARE AMENABLE TO VARIATION BY WAY OF PLEA RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THAT CERTAIN EXPENDITURE WHICH WAS REVENU E IN NATURE, WAS BY AN ERROR BOOKED AS CAPITAL EXPENDITURE. THE LIST OF EXPENDITURE CLAIMED UNDER SEVEN HEADS TO BE REVENUE IN NATURE, WHICH WAS BOOKED AS CAPITAL EXPENDITURE IS ENLISTED UNDER PARA 5 OF OUR ORDER. THE FIRST HEAD IS MATERIAL PURCHASE OF RS . 2.45 CRORES. THE ASSESSEE IN THE FIRST INSTANCE HAD TAKEN A STAND THAT THE SAID EXPENDITURE WAS WORK - IN - PROGRESS AND WAS TO BE CAPITALIZED. ONCE SUCH STAND HAS TAKEN WHILE FINALIZING THE ACCOUNTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND THE ASSESSEE BEING A LIMITED CONCERN HAVING PROPER PROCEDURES IN PLACE FOR ACCOUNTING AND AUDITING, THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN AS TO WHY IT WAS CLAIMING THE SAID EXPENDITURE TO BE REVENUE IN NATURE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ANOTHER ASPECT TO BE NOTED IN THE PRESENT CASE IS THAT THE ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR ITS TWO LINE OF BUSINESS I.E. YARN DIVISION AND CONSTRUCTION DIVISION. FURTHER, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE IS UNDERTAKI NG EXPANSION IN THE YARN DIVISION AND AS FAR AS CONSTRUCTION DIVISION IS CONCERNED, IT HAS GOT A PROJECT BY WAY OF SUB - CONTRACT. WHERE ANY EXPENDITURE WA S INCURRED BY THE ASSESSEE UNDER ANY HEAD AND WHETHER IT BELONGS TO YARN DIVISION OR CONSTRUCTION DIVISION AND ALSO WHETHER IT IS CAPITAL OR REVENUE , DECISION HAS BEEN TAKEN BY THE ASSESSEE BY PASSING THE NECESSARY ENTRIES IN THE BOOKS OF ACCOUNT DURING TH E YEAR ITSELF AND FURTHER THE SAID ENTRIES HAVE BEEN VERIFIED NOT ONLY BY THE COMMITTEE OF AUDIT , BUT THE INTERNAL AUDITORS AND ALSO THE EXTERNAL AUDITORS. THE AUDITORS HAVE GIVEN A CERTIFICATE IN ITS REPORT THAT THERE WERE ADEQUATE INTERNAL CONTROL PROCE DURES COMMENSURATE WITH THE SIZE OF THE COMPANY AND NATURE OF ITS BUSINESS WITH REGARD TO PURCHASE OF INVENTORIES, FIXED ASSETS AND WITH REGARD TO SALE OF GOODS. FURTHER, THE AUDITORS HAVE ALSO REPORTED THAT THERE IS NO FAILURE IN MAJOR HEADS OF 12 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. EXPENDITU RE. THE ASSESSEE ON ITS OWN MOTION HAD TREATED CERTAIN EXPENDITURE AS CAPITAL IN NATURE AND HAD PASSED JOURNAL ENTRIES IN THIS REGARD. IT MAY BE NOTED THAT FOR THE YEAR UNDER CONSIDERATION, THE PROFIT BEFORE TAXES HAD INCREASED FROM RS. 1179.77 LAKHS SHOW N IN THE PRECEDING YEAR TO RS.1703.78 LAKHS DURING THE YEAR UNDER CONSIDERATION. IN THE ABOVE SAID SCENARIO, WE FIND NO MERIT IN THE EXPLANATION OF THE ASSESSEE AS POINTED OUT BY THE ASSESSING OFFICER THAT FROM THE DETAILS IN PROOF SUBMITTED BY THE ASSESS EE, IT IS INCOMPREHENSIBLE TO GIVE CONCLUSION WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE WAS CAPITAL OR REVENUE EXPENDITURE. THE ASSESSEE HAS REDUCED SUM OF RS. 12.57 CRORES FROM THE SCHEDULE OF FIXED ASSETS AND PASSED RECTIFICATION ENTRIES IN THE BOOKS OF ACCOUNT RELATING TO FINANCIAL YEAR 2008 - 09. ON THE OTHER HAND, THE AUDITOR IN THE AUDIT REPORT HAVE CERTIFIED THAT THE ASSESSEE WAS MAINTAINING SUFFICIENT MEA SURES TO CONTROL THE PURCHASES, SALES AND SCHEDULE OF FIXED ASSETS AND STOCK IN INVENTORIES. AFTER GIVING SUCH A CERTIFICATE, THE SAME AUDITOR VIDE LETTER DATED 12.05.2009 HAS POINTED OUT THAT THE ENTRIES HAVE BEEN WRONGLY MADE BUT HOW THE ENTRIES WERE MA DE WRONGLY HAS NOT BEEN EXPLAINED OR JUSTIFIED BY THE AUDITOR. THE ENTRIES PASSED IN THE BOOKS OF ACCOUNT CANNOT BE BRUSHED ASIDE ON SUCH STATEMENT MADE BY THE AUDITOR ON A LATER DATE. WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE IN THIS REGARD. ANOTHE R POINT RAISED BY THE ASSESSEE WAS THAT THE GENERAL MANAGER, FINANCE HAD MADE THE SAID MISTAKES. AS REFERRED TO BY US IN THE PARAS HEREINABOVE, THE GENERAL MANAGER, FINANCE WAS NOT PART OF COMMITTEE FOR AUDITS , MADE BY THE COMPANY ITSELF IN ORDER TO CONTR OL ITS OPERATIONS, BUSINESS AND ACCOUNTS. SEVERAL COMMITTEES WERE MADE BY THE ASSESSEE AND ONE OF THE COMMITTEES WAS OF AUDITS AND THERE WERE INTERNAL AUDITORS AND EXTERNAL AUDITORS. IN VIEW OF THE SAID SYSTEM BEING IN PLACE AND IN THE ABSENCE OF THE ASS ESSEE HAVING ESTABLISHED AS TO HOW THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF MATERIAL PURCHASE OF RS.2.45 CRORES, WHICH WAS INITIALLY CAPITALIZED IN THE BOOKS OF ACCOUNT, CAN BE TREATED AS REVENUE EXPENDITURE , WE REJECT THE CLAIM OF THE ASSESSE E IN THIS REGARD. WE REVERSE THE ORDER OF CIT(A) AND 13 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. ALLOW THE GROUND OF APPEAL RAISED BY THE REVENUE. SIMILARLY, NO EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE WITH REGARD TO WAGES OF RS.25,11,219/ - , PETROL & DIESEL OF RS.17,59,389/ - . IN THE ABSENCE OF ANY DETAILS HAVING BEEN FILED BY THE ASSESSEE TO JUSTIFY THE REVISED CLAIM THAT THE SAID EXPENDITURE IS OF REVENUE IN NATURE, MERE PASSING OF ENTRIES OR THE OPINION OF THE AUDITOR DOES NOT ENTAIL THE ASSESSEE TO THE SAID CLAIM. ACCORDING LY, WE UPHOLD THE ORDER OF ASSESSING OFFICER IN THIS REGARD AND ALLOW THE GROUND OF APPEAL RAISED BY THE REVENUE. ANOTHER HEAD OF EXPENDITURE IS POWER EXPENSES OF RS.72 LAKHS. GENERALLY, THE POWER EXPENSES ARE FOR RUNNING THE BUSINESS, BUT IN VIEW OF THE ASSESSEE HAVING TREATED THE SAID EXPENDITURE AS WORK - IN - PROGRESS IN THE FIRST INSTANCE, WE FIND NO MERIT IN THE REVISED CLAIM MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE SAID EXPENDITURE IS ALLOWABLE AS REVENUE EXPENDITURE. THE ASSESSEE HA S FAILED TO ESTABLISH ITS CASE AND IN VIEW OF THE OVERRULING CIRCUMSTANCES, WHERE THE ASSESSEE IS ADMITTEDLY RECOGNIZING WORK - IN - PROGRESS FOR THE EXPANSION OF BUSINESS IN BOTH THE LINES, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE. NO DOUBT, THE ENTRIES IN THE BOOKS OF ACCOUNT ARE NOT THE FINAL AUTHORITY IN DETERMINING THE NATURE OF ENTRIES AND THEIR CONSEQUENT TREATMENT. HOWEVER, THE ONUS IS UPON THE ASSESSEE TO ESTABLISH ITS CASE THAT THE REVISED CLAIM MADE BY IT , WHICH IS CONTRARY TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT , IS TO BE ALLOWED IN ITS HANDS. IT IS NOT A CASE WHERE THE ASSESSEE HAD NOT MADE THE ENTRIES IN RESPECT OF THE ABOVE SAID EXPENDITURE IN ITS BOOKS OF ACCOUNT. THE SAID EXPENDITURE WAS TREATED AS CAPITAL WORK - IN - PROGRESS AND IN VI EW OF THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE I.E. WHERE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND WAS ALSO DOING SUB - CONTRACT AND THERE WAS EXPANSION OF YARN DIVISION , THE EXPENDITURE RELATABLE TO PROJECT WHICH HAS NOT BEEN COMPLETED IS TO BE TREATED AS CAPITAL WORK - IN - PROGRESS. IN THE ABSENCE OF THE ONUS NOT BEING DISCHARGED BY THE ASSESSEE, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE ESPECIALLY KEEPING IN MIND THE TOTAL CONTROL / PROCEDURE ADOPTED BY THE ASSESSEE FOR 14 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. MAI NT E NANCE OF ITS ACCOUNTS, ITS FINALIZATION AND AUDIT. THE GROUNDS OF APPEAL NO.1 TO 3 RAISED BY THE REVENUE ARE THUS, ALLOWED. 1 2 . THE ISSUE VIDE GROUND OF APPEAL NO.4 IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE SERVICE TAX OF RS.8,06,329/ - AS REVENUE EXPENDITURE. 1 3 . THE FINDING OF THE CIT(A) WITH REGARD TO SERVICE TAX OF RS.8,06,329/ - WAS THAT THE AMOUNT WAS NOT A RECEIVABLE AMOUNT AND HENCE, WAS WRONGLY CAPITALIZED. THE CIT(A) FURTHER OBSERVED THAT THE SAME WAS ALLOWABLE IN THE YEAR OF ACTUAL PA YMENT AND HENCE, THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE DATE OF PAYMENT AND ACCORDINGLY, ALLOW THE PAID AMOUNT AS EXPENSES IN THE RELEVANT ASSESSMENT YEAR. WE FIND NO ERROR IN THE DIRECTIONS OF THE CIT(A) IN THIS REGARD AND ACCORDINGLY, WE UPHOL D THE SAME. THE SERVICES TAX PAYABLE OF RS.8,06,329/ - IS AN EXPENDITURE TO BE ALLOWED IN THE YEAR OF PAYMENT, IN VIEW OF THE PROVISIONS OF SECTION 4 3 B OF THE ACT. ACCORDINGLY, WE UPHOLD THE DIRECTIONS OF THE CIT(A) IN THIS REGARD . THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS THUS, DISMISSED. 1 4 . NOW, COMING TO THE GROUND OF APPEAL NO.5 RAISED BY THE REVENUE AGAINST VAT RECEIVABLE OF RS. 3,02,969/ - . 1 5 . THE ASSESSEE HAS CAPITALIZED THE AMOUNT IN ITS BOOKS OF ACCOUNT AS CAPITAL WORK - IN - PROGRESS. H OWEVER, WE FIND NO MERIT IN THE ABOVE SAID CAPITALIZATION MADE BY THE ASSESSEE AND THE SAME IS AN AMOUNT WHICH HAS TO BE SET OFF AGAINST THE VAT PAYABLE AND TILL THE SAME IS SO SET OFF, IT WILL STAND AS AN ENTRY. ACCORDINGLY, THERE IS NO MERIT IN THE CAPI TALIZATION OF THE VAT RECEIVABLE AMOUNT OF RS. 3,02,9 6 9/ - . WE DIRE CT THE ASSESSING OFFICER TO DELETE THE AFORESAID ADDITION IN THE HANDS OF THE ASSESSEE. WE UPHOLD THE ORDER OF CIT(A) ON DIFFERENT FINDINGS. THE GROUND OF APPEAL NO.5 RAISED BY THE REVEN UE IS THUS, DISMISSED. 15 ITA NO S . 48 & 49 /PN/201 3 ABHISHEK COTSPIN MILLS . LTD. 1 6 . THE FACTS AND ISSUES IN ITA NO. 49 /PN/201 3 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO. 48 /PN/201 3 AND OUR DECISION IN ITA NO. 48 /PN/201 3 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 49 /PN/201 3 . 1 7 . IN THE RESULT, BOTH TH E APPEAL S OF REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JANUARY , 201 6 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 29 TH JANUARY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A), KOLHAPUR ; 4. / THE CIT - I / II, KOLHAPUR / CIT (CENTRAL), PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE