Ind Swift Ltd., Chandigarh V. Addl. CIT, Chandigarh

ITA 511/CHANDI/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7086 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Gift; Business income; Business expenditure; Search and seizure; Period of limitation; Proportionate interest; Retrospective amendment; Question of law; Agreed addition; Non passing of speaking order; Right to appeal; Commercial expediency; Onus to prove; Revenue expenditure; Capital expenditure
• Section: 14A; 115JB; 80IB; 56; 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 511/CHD/2009 ITA NO. 428/CHD/2011 ASSESSMENT YEARS : 2006-07 & 2007-2008 IND SWIFT LTD V ADDL CIT, RANGE I, CHANDIGARH PLOT NO. 781 INDUSTRIAL AREA PHASE II CHANDIGARH ITA NO. 615/CHD/2011 ASSESSMENT YEARS : 2007-2008 DCIT, CIRCLE 1(1) V IND SWIFT LTD CHANDIGARH PLOT NO. 781 INDUSTRIAL AREA PHASE II CHANDIGARH ITA NO. 745 & 746/CHD/2012 ASSESSMENT YEARS : 2006-07 & 200 7-2008 IND SWIFT LABORATORIES LTD V A.C.I.T SCO 850, CIRCLE 4(1), SHIVALIK ENCLAVE CHANDIGARH NAC MANIMAJRA CHANDIGARH AAACI 6306G ITA NO. 1032/CHD/2013 ASSESSMENT YEARS : 2008-09 IND SWIFT LABORATORIES LTD V ADDL CIT SCO 850, RANGE V SHIVALIK ENCLAVE CHANDIGARH NAC MANIMAJRA CHANDIGARH AAACI 6306G ITA NO. 721 & 799/CHD/2012 ASSESSMENT YEARS : 2006-07 & 2007-08 A.C.I.T. V IND SWIFT LABORATORIES LTD CIRCLE 4(1) SCO 850, CHANDIGARH SHIVALIK ENCLAVE NAC MANIMAJRA CHANDIGARH AAACI 6306G (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI NEERAJ SHARMA (CLERK) WITH ADJOURNMENT APPLICATION REVENUE BY: SMT. JYOTI KUMARI 2 DATE OF HEARING 22.7.2014 DATE OF PRONOUNCEMENT 28.8.2014 O R D E R PER BENCH THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST TH E ORDERS DATED 30.4.2009, 7.2.2011, 3.4.2012, 7.2.201 1, 3.4.12, 11.5.2012, 5.2.2013 & 11.5.2012 OF THE LD CIT(A), CHANDIGARH. SOME GROUNDS ARE COMMON IN THESE APPEALS WHICH WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 2 IN THIS GROUP OF CASES ON THE DATE OF HEARING I.E . ON 22.7.2014 AN ADJOURNMENT APPLICATION WAS MOVED ON B EHALF OF THE ASSESSEE BY M/S KANSAL SINGLA & ASSOCIATES, CHA RTERED ACCOUNTANTS THROUGH SHRI NEERAJ SHARMA. THE APPLIC ATION READS AS UNDER: THE HONBLE INCOME TAX APPELLATE TRIBUNAL BENCH B CHANDIGARH SUBJECT: ADJOURNMENT IN THE CASE OF INDUSTRIES SWI FT LTD IN APPEAL NO. 428/CHD/2011 AND 615/CHD/2011 FOR ASSESSMENT YE AR 2007-08 HONBLE MEMBERS; KINDLY REFER TO ABOVE STATED APPEALS ARE FIXED FOR HEARING ON 22.7.2014. IT IS RESPECTFULLY SUBMITTED THAT WE ARE BUSY WITH THE FILING OF THE RETURNS UPTO 31 ST JULY 2014 AND REQUIRE SOME TIME TO FILE THE PAPER BOOK IN THESE APPEALS. YOUR HONOUR IS THEREFORE RE QUESTED TO GIVE ADJOURNMENT IN THESE APPEALS. THANKING HYOU, YOURS FAITHFULLY, SD/- (C.A.T.N.SINGLA) COUNSEL FOR THE APPELLANT IT WAS POINTED OUT TO SHRI. NEERAJ SHARMA THAT IN T HIS CASE LAST AND FINAL OPPORTUNITY WAS GRANTED ON 17.4.2014. IT WAS MADE CLEAR THAT NO FURTHER OPPORTUNITY WOULD BE GIVEN. HIS ATTENTION WAS INVITED TO THE ORDER PASSED BY THE BENCH ON 17. 4.2014 WHICH READS AS UNDER: 3 17.4.2014 PRESENT FOR ASSESSEE: SHRI DINESH SHARMA DEPARTMENT: DR AMARVEER SINGH LD. COUNSEL FOR THE ASSESSEE HAS BEEN GIVEN MANY AD JOURNMENTS. LD. COUNSEL FOR THE ASSESSEE HAS PRAYED FOR LAST OP PORTUNITY. THE CASE IS BEING REPRESENTED BY SHRI T.N. SINGLA. IT IS MADE CLEAR THAT NO FURTHER OPPORTUNITY WOULD BE GIVEN TO ASSES SEE. THEREFORE THE CASE IS ADJOURNED TO 22.7.2014. THEREFORE IN THIS CASE SHRI NEERAJ SHARMA WANTED TO CONTACT MR. T.N. SINGLA WHO IS ARGUING COUNSEL AND ASK HIM TO ARGUE THE APPEAL AND MATTER WAS PASSED OVER. WHEN THE AP PEALS WERE TAKEN UP AGAIN FOR HEARING, SHRI NEERAJ SHARMA INFORMED THAT SHRI SINGLA CANNOT COME AS HE HAS AGAIN REQUES TED FOR ADJOURNMENT FOR A WEEK. THIS REQUEST WAS REJECTED BY US. 3 THE MAIN REASON FOR REJECTION OF THE REQUEST OF T HE ADJOURNMENT WAS THAT THIS APPEAL CAME UP FOR HEARIN G ON 31.7.2009 FOR THE FIRST TIME. THEREAFTER OTHER APPE ALS WERE ALSO FIXED SIMULTANEOUSLY WITH THIS APPEAL AND THE APPEA L WAS ADJOURNED ON 31.7.2009, 3.9.2009, 22.10.2009, 19.12 .2009, 15.1.2010, 12.3.2010, 31.3.2010, 4.6.2010, 24.6.201 0, 6.9.2010, 8.11.2010, 22.12.2010, 22.2.2011, 15.3.20 11, 20.4.2011, 18.7.2011, 18.10.2011, 22.12.2011, 27.2. 2012, 22.5.2012, 9.7.2012, 12.9.2012, 8.10.2012, 26.11.20 12, 26.3.2013, 8.5.2013, 26.6.2013, 16.7.2013, 10.9.201 3 AND 18.12.2013. 17.4.2014 ON THAT DATE THE CASES WERE ADJOURNED A T THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE AND LAS T AND FINAL OPPORTUNITY WAS GRANTED AND THE ORDER PASSED ON THA T DATE HAS ALREADY BEEN EXTRACTED ABOVE. 4 ABOVE CLEARLY SHOW THAT MORE THAT 22 ADJOURNMENTS HAVE BEEN GRANTED AND MOST OF THESE ADJOURNMENTS HAVE BE EN GRANTED ON THE REQUEST OF THE LD. COUNSEL FOR THE A SSESSEE AND COUPLE OF TIMES THE CASES WERE ADJOURNED AT THE REQ UEST OF DEPARTMENTAL REPRESENTATIVE ALSO. BENCH ALSO DID NO T FUNCTION 2-3 TIMES. THE ASSESSEE IS UNNECESSARY TRYING TO PO STPONE THE HEARING. ADJOURNMENTS LEADS TO WASTAGE OF JUDICIAL TIME AND IN OUR OPINION IN A COUNTRY WHERE MILLIONS OF CASES AR E PENDING, MULTIPLE ADJOURNMENTS CANNOT BE ALLOWED TO PERSIST. HON'BLE MADRAS HIGH COURT IN CASE OF BHAWARLAL C. BAFNA V A CIT, 257 4 ITR 687 HAS CLEARLY HELD THAT ADJOURNMENT IS NOT MA TTER OF RIGHT. IT WAS OBSERVED AS UNDER: WE ARE OF THE VIEW THAT THE FILING OF THE LETTER S EEKING ADJOURNMENT IS NOT SUFFICIENT, AS IT CANNOT BE EXPE CTED THAT THE CASE WOULD BE ADJOURNED AS A MATTER OF RIGHT BY FIL ING A LETTER SEEKING ADJOURNMENT. THE TRIBUNAL TOOK NOTE OF THE CONDUCT OF THE ASSESSEES COUNSEL IN SEEKING REPEATED ADJOURNMENTS AND NOT BEING PREPARED TO CONDUCT THE CASE AND DECIDED TO P ROCEED WITH THE CASE ON THE MERITS OF THE CASE. WE DO NOT FIND ANY INFIRMITY IN THAT PART OF THE ORDER OF THE TRIBUNAL IN NOT GRANT ING ADJOURNMENT TO THE ASSESSEE AND PROCEED TO DECIDE THE CASE ON M ERITS OF THE CASE. IN ANY CASE WHEN LAST AND FINAL OPPORTUNITY WAS GI VEN ON 17.4.2014 THAT TOO AFTER MORE THAN 22 ADJOURNMENTS ON BEHALF OF THE ASSESSEE THEN THE LD. COUNSEL FOR THE ASSESS EE SHOULD HAVE TAKEN A PRECAUTION TO PREPARE AND ARGUE THE AP PEALS ON THAT DATE BUT HE PREFERRED TO SEEK SIMPLE ADJOURNME NT REQUESTING THAT HE IS BUSY WITH OTHER WORK. IN THES E CIRCUMSTANCES WE ARE CONSTRAINED TO REJECT ADJOURNM ENT APPLICATION AND DECIDED TO HEAR THE APPEALS ON EX-P ARTE BASIS. ITA NO. 511/CHD/2009 ASSESSEES APPEAL IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GR OUNDS: 1 THAT HE ORDER OF LD. CIT(A) IS BAD, AGAINST THE FACTS AND LAW. 2 THAT HE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISA LLOWANCE OF WEIGHTED DEDUCTION ON RESEARCH AND DEVELOPMENT E XPENDITURE INCURRED DURING THE YEAR U/S 35(2AB) OF THE ACT AMO UNTING TO RS. 23729464/-. 3 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE OF SEED MARKETING EXPENSES AMOUNTING TO RS. 4,11,68 ,104/-. 4 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE OF EXPENSES AMOUNTING TO RS. 37,50,152/- U/S 40(A)( IA) OF THE ACT. 5 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE OF EXPENSES U/S 14A OF THE ACT AMOUNTING TO RS. 634 0937/- OUT OF RS. 109,32,198/-. 6 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE OF HIRE CHARGES PAID TO M/S KOTAK MOHINDRA ON VEHIC LE FINANCED TO THE COMPANY U/S 40(A)(IA) OF THE ACT. 7 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE PETTY REPAIR EXPENSES U/S 40(A)(IA) OF THE ACT. 8 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE OF INTEREST AMOUNTING TO RS. 790,400/- ON FUNDS INV ESTED IN OTHER COMPANIES. 9 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DIS ALLOWANCE OF PREVIOUS YEAR EXPENSES AMOUNTING TO RS. 10,71,90 7/- WITHOUT ADJUSTING PREVIOUS YEAR INCOME AGAINST THESE EXPENS ES. 10 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DI SALLOWANCE OF DEDUCTION U/S 80IB ON OTHER INCOME AMOUNTING TO RS. 1098682/- RELATED TO BUSINESS OF THE ASSESSEE. 5 11 THAT THE LD. CIT(A) HAS ERRED IN DEDUCTING EXPEN SES CLAIMED UNDER THE HEAD SEED MARKETING EXPENSES AND RESE ARCH & DEVELOPMENT EXPENSES OUT OF PROFIT OF PAWANOO II UN IT WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IB. 5 OUT OF ABOVE GROUNDS, GROUND NO. 1 IS OF GENERAL NATURE AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. 6 GROUND NO. 2 BRIEF FACTS OF THE CASE ARE THAT D URING ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED TH AT THE ASSESSEE HAS CLAIMED DEDUCTION OF CAPITAL EXPENDITU RE AS WELL AS REVENUE INCURRED BY IT ON RESEARCH AND DEVELOPME NT ACTIVITIES. DEDUCTION HAS BEEN CLAIMED ON WEIGHTED RECEIPTS AS PROVIDED U/S 35 (2AB) @ 150%. DETAIL OF EXPENDITURE IS AS UNDER: DEFERRED REVENUE EXPENSES RS. 3,61,04,971/- CAPITAL EXPENSES ON R&D RS. 1,13,53,957/- RS. 4,74,58,928/- DURING ASSESSMENT PROCEEDINGS NO DETAILS WERE FILED DESPITE REPEATED OPPORTUNITIES AND THEREFORE THIS CLAIM WAS REJECTED AND DISALLOWANCE WAS MADE FOR RS. 237,29,464/-. 7 ON APPEAL IT WAS MAINLY SUBMITTED AS UNDER: THE APPELLANT IS RECOGNIZED AS IN-HOUSE R&D UNIT BY THE GOVERNMENT OF INDIA, MINISTRY OF SCIENCE & TECHNOLO GY FROM 1.4.2004 TO 31.3.2007 VIDE THEIR LETTER NO. TU/IV-R D/1914/2004 DATED 14.2.2004. THE ASSESSING OFFICER DID NOT ALL OW WEIGHTED DEDUCTION ON THESE EXPENSES ALLOWABLE U/S 35(2AB) O F THE IT ACT, 1961. THE RELIANCE IS PLACED ON DECISION OF ITAT AHMEDABA D BENCH IN CASE OF CLARIS LIFE SCIENCE LTD. V ACIT, CIRCLE I, AHMEDABAD, 112 ITD 307. 8 THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS AN D DECIDED THE ISSUE AGAINST THE ASSESSEE VIDE PARA 2. 3 WHICH IS AS UNDER: I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSING OFFICER HAS DENIED THE DEDUCTION AS THE ASSESSEE FA ILED TO FURNISH THE ORDER OF THE PRESCRIBED AUTHORITY IN WRITING IN FORM NO. 3CM. THE ASSESSEE HAS SIMPLY SUBMITTED THAT R&D UNIT IS RECOGNIZED BY THE GOVERNMENT. EVEN BEFORE ME, THE ASSESSEE HAS N OT GIVEN THE ORDER OF THE PRESCRIBED AUTHORITY. THE DECISION OF AHMEDABAD BENCH IN THE CASE OF CLARIS LIFE SCIENCE LTD. 112 I TD 307 IS NOT APPLICABLE AS IN THAT CASE THE CONDITION OF FURNISH ING THE ORDER OF THE PRESCRIBED AUTHORITY HAS NOT BEEN WAIVED. FURN ISHING THE ORDER OF PRESCRIBED AUTHORITY IS THE NECESSARY REQU IREMENT. THUS THIS GROUND OF THE ASSESSEE IS DISMISSED. 6 9 BEFORE US. THE LD. D.R FOR THE REVENUE SUBMITTED THAT DISALLOWANCE IS JUSTIFIED BECAUSE NO DETAILS WERE F URNISHED BY THE ASSESSEE. SIMILAR ISSUE CAME UP FOR CONSIDERAT ION IN ASSESSMENT YEAR 2005-06 BEFORE THE TRIBUNAL IN ITA NO. 771/CHD/2008 AND SAME WAS DECIDED AGAINST THE ASSES SEE IN THE ABSENCE OF DETAILS. 10 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE AND THE MATERIAL ON RECORD WE FIND THAT ID ENTICAL ISSUE CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN ASSESS MENT YEAR 2005-06 IN ITA NO. 771/CHD/2008 IN ASSESSEES OWN C ASE AND THE ISSUE WAS DECIDED VIDE PARA 15 TO 19 WHICH ARE AS UNDER: 15 GROUND NO. 6 - AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDING IT WAS NOTICED THAT AS SESSEE HAS CLAIMED WEIGHED DEDUCTION @150% IN RESPECT OF REVEN UE AND CAPITAL EXPENDITURE INCURRED ON RESEARCH AND DEVELO PMENT ACTIVITIES. THE ASSESSEE WAS ASKED TO JUSTIFY THE E XPENDITURE. INITIALLY IT WAS SUBMITTED THAT ASSESSEE WAS ENGAGE D IN THE BUSINESS OF MANUFACTURING OF PHARMACEUTICALS AND TH E EXPENDITURE WAS INCURRED FOR IN HOUSE RESEARCH FOR RESEARCH AND DEVELOPMENT AND COMPANY HAS ALSO FURNISHED AN APPLICATION IN FO RM 3CK FOR APPROVAL OF THE IN HOUSE RESEARCH FOR RESEARCH AND DEVELOPMENT, THEREFORE CONDITIONS ARE SATISFIED. AO WAS NOT IMPR ESSED WITH THIS INITIAL REPLY AND ONCE AGAIN ASKED ASSESSEE TO GIVE DETAILED JUSTIFICATION FOR THE CLAIM. NO FURTHER DETAILS WER E FILED. IT WAS OBSERVED THAT SINCE ASSESSEE HAS NOT FILED ANY EVID ENCE TO SUBSTANTIATE THE CLAIM THAT IT SATISFY THE CONDITIO N LAID IN THE SECTION 35(2AB). IT WAS ALSO OBSERVED THAT MAKING O F APPLICATION IN FORM 3CK IS NOT SUFFICIENT FOR ALLOWING OF CLAIM . ACCORDINGLY WEIGHTED DEDUCTION AMOUNTING TO RS. 14,01,64,514/- WAS DISALLOWED. 16 ON APPEAL THE LD. CIT(A) CONFIRMED THE DISALLOWA NCE. 17 BEFORE US THE LD. COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSION MADE BEFORE AO. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 18` AFTER CONSIDERING RIVAL SUBMISSION WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE VIDE PARA 46 TO 48 WHICH AR E AS UNDER: 46 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSES SEE. I FIND THAT THERE IS NO LAW POINT INVOLVED. TO DECIDE THIS ISSU E, THERE HAS TO BE ENQUIRY INTO THE FACTS. THE ASSESSEE CAN AGITATE THE MATTER UNDER ADDITIONAL GROUND OF APPEAL IF A LAW POINT IS INVOLVED. MOREOVER, THE ORDER OF APPROVAL HAS BEEN GIVEN W.E. F. 1/04/2006 TILL 31/03/2010 WHICH DOES NOT FALL IN THE A.YT. 20 05-06. 47 THE ASSESSEE HAS RELIED UPON THE DECISION OF HON BLE ITAT AHMEDABAD BENCH IN 112 ITD 307 WHEREIN HONBLE ITAT HELD THAT ENTIRE EXPENDITURE SHOULD BE ALLOWED EVEN THOUGH IN THAT CASE THE APPROVAL WAS GRANTED ONLY W.E.F. 27/02/2001. THE HO NBLE ITAT HELD THAT HERE IS NO PROVISIONS UNDER THE ACT TO GR ANT APPROVAL W.E.F A CERTIFIED DATE WHEN THE ASSESSEE HAS FILED THE APPLICATION 7 IN TIME. IN THAT CASE, THE ASSESSEE HAD MADE AN APP LICATION VIDE LETTER DATED 07/08/2000 AND THE APPROVAL WAS GRANTE D W.E.F. 27/02/2001. 48 IN MY OPINION, THE FACTS OF THE PRESENT CASE ARE DIFFERENT AND DISTINGUISHABLE. IN THE CASE OF CLARIS LIFE SCIENCE LTD., 112 ITD 307(AHD), THE ASSESSEE HAD MADE AN APPLICATION PRIO R TO THE DATE OF APPROVAL WHEREAS FOR THE PRESENT CASE, THE ASSES SEE MADE APPLICATION ON 08/01/2007 AND THE APPROVAL WAS GRAN TED RETROSPECTIVELY W.E.F 01/04/2006. MOREOVER, THE PRE SCRIBED AUTHORITY HAS TO SATISFY HIMSELF ON THE BASIS OF TH E DATA SUPPLIED BY THE ASSESSEE. THE ASSESSEE HAS ATTACHED THE DETA ILS WHICH ARE TO BE SUBMITTED FOR GETTING THE APPROVAL. CERTAIN D ATA IS SUPPLIED TO THE PRESCRIBED AUTHORITY. THE PRESCRIBED AUTHORI TY EXAMINES THE DETAILS OF THE DATA AND THEN COMES TO A CONCLUSION. IN THE PRESENT CASE, THE PRESCRIBED AUTHORITY AFTER EXAMINING THE CASE GRANTED THE APPROVAL AND THAT TOO W.E.F. 01/04/2006. NOW TH E QUESTION ARISES, THERE HAS TO BE AN ENQUIRY AS TO WHY THE PR ESCRIBED AUTHORITY DID NOT GRANT THE APPROVAL FOR THE A.Y. 2 005-06. THE APPROVAL IS NOT A MERE FORMALITY. THE PRESCRIBED AU THORITY HAS TO GO THROUGH THE ENTIRE DATA SUPPLIED BY THE ASSESSEE AND SATISFY HIMSELF. SINCE THERE HAS TO BE AN ENQUIRY INTO THE FACTS AS TO WHY THE PRESCRIBED AUTHORITY DID NOT GRANT APPROVAL FOR THE A.Y. 2005- 06, THEN THIS ADDITIONAL GROUND OF APPEAL CANNOT BE CALLED AS A LEGAL ISSUE. MOREOVER, IF THE ASSESSEE HAS ANY GRIE VANCE AGAINST THE APPROVAL GRANTED BY THE PRESCRIBED AUTHORITY FO R REDRESSAL OF THE GRIEVANCE. IN THE CASE OF CLARIS LIFE SCIENCE L TD., 112 ITD 307(AHD), THE ASSESSEE HAS TAKEN THE ORIGINAL GROU ND OF APPEAL ARE DIFFERENT. IN THE ADDITIONAL GROUND OF APPEAL, THE ASSESSEE HAS TO MAKE OUT A CASE THAT IT IS CERTAINLY A LEGAL ISS UE. AS I HAVE ALREADY HELD THAT IT IS NOT A LEGAL ISSUE, THE ADDI TIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 19 WE FIND THE LD. CIT(A) HAS CORRECTLY ADJUDICATED THE ISSUE. EVEN BEFORE US, NO FURTHER EVIDENCE WAS FILED TO SU BSTANTIATE THE CLAIM OF THE ASSESSEE. THEREFORE WE CONFIRM THE ORD ER OF LD. CIT(A). SINCE IN THESE APPEALS ALSO NO EVIDENCE HAS BEEN FI LED REGARDING EXPENDITURE ON RESEARCH AND DEVELOPMENT, THEREFORE FOLLOWING THE ABOVE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE AND CONFIRM THE ORDER OF LD. CIT(A). 11 GROUND NO. 3 BRIEF FACTS OF THE CASE ARE THAT PART OF SEED MARKETING EXPENSES WERE DISALLOWED BY THE ASSE SSING OFFICER BECAUSE ACCORDING TO HIM SAME WOULD GIVE EN DURING BENEFIT TO THE ASSESSEE AND THE ASSESSEE ITSELF HAS DEBITED ONLY 1/5 TH OF THE EXPENSES IN THE BOOKS OF ACCOUNT. THE ADDITION WAS CONFIRMED BY THE LD. CIT(A). 12 AS MENTIONED AT THE OUTSET NOBODY APPEARED ON BE HALF OF THE ASSESSEE, THEREFORE THE MATER WAS HEARD ON EXPA RTE BASIS. HOWEVER, ON 11.8.2014 SIMILAR ISSUE AROSE IN APPEAL FILED BY 8 THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 IN ITA NO. 530/CHD/2014 WHICH HAS BEEN ARGUED IN DETAIL BY BOT H THE PARTIES. THIS ISSUE WAS ADJUDICATED VIDE PARA 10 T O 13 WHICH ARE AS UNDER: 10 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT ALLOWABILITY OF EXPENDITURE DOES NOT DEPEND ON THE PROVISION OF THE IT ACT, 1961 AND OTHER PRINCIPLES LAID DOWN UNDER T HIS ACT BY VARIOUS JUDICIAL PRONOUNCEMENTS AND IT DOES NOT DEP END ON ITEMS WHICH HAS BEEN TREATED BY A PARTICULAR ASSESSEE. R EFERENCE MAY BE MADE TO SATLUJ COTTON MILLS LTD V CIT, 116 ITR 1 (S.C). 11 WHAT IS REQUIRED FOR LIABILITY OF EXPENDITURE IS TO BE SEEN WHETHER THE NATURE OF EXPENDITURE IS OF REVENUE OR CAPITAL. THIS ISSUE CAME UP BEFORE THE HON'BLE DELHI HIGH COURT I N CASE OF CIT V JAI PARABOLIC SPRINGS LTD (SUPRA). IN THAT CASE THE ASSESSEE FILED RETURN OF INCOME DECLARING A NET LOSS AT RS. 440,,36,000/- FOR THE ASSESSMENT YEAR 1990-91. THE LOSS WAS COMPUTE D AT RS. 427,63,353/- INTER ALIA BY MAKING SEVERAL ADDITIONS AND DISALLOWANCES. THE ASSESSEE INCURRED AN EXPENDITUR E OF RS. 19,48,125/- AS EXPENDITURE ON ACCOUNT OF CUSTOMER INTRODUCTION CHARGES WHICH WERE DEBITED AS DEFERRED REVENUE EXP ENSES IN THE BALANCE SHEET. THE EXPENDITURE WAS WRITTEN OFF OVER A PERIOD OF FIVE YEARS STARTING FROM THE ASSESSMENT YEAR 199 0-91 AND ACCORDINGLY THE ASSESSEE CLAIMED REDUCTION OF RS. 389,625/- IN THE RETURN. THE CLAIM WAS ALLOWED BY THE ASSESSING OFFICER. IN APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE CLAIMED A N ADDITIONAL GROUND THAT THE ENTIRE DEFERRED REVENUE EXPENSES WE RE DEDUCTIBLE IN THE ASSESSMENT YEAR IN APPEAL. THE APPEAL WAS A LLOWED. THE TRIBUNAL RESTORED THE MATTER TO THE ASSESSING OFFIC ER. THE ASSESSING OFFICER ALLOWED ONLY A REDUCTION OF RS. 3 89,625/- AND DISALLOWED THE CLAIM OF RS. 15,58,500/- ON THE GROU ND THAT THIS WAS NOT CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME IN THE ASSESSMENT YEAR 1990-91. THE LD. CIT(A) HELD THAT THE ASSESSING OFFICER ERRED IN DISALLOWING THE EXPENDITURE ON THE SOLD GROUND THAT NO CLAIM FOR DEDUCTION OF THE AMOUNT WAS MADE IN THE RETURN OF INCOME. THIS ORDER WAS CONFIRMED BY THE TRIBUNA L. 12 ON ABOVE FACTS IT WAS HELD BY THE HONBLE COURT AS UNDER: HELD, DISMISSING THE APPEAL THAT THERE WAS NO PROH IBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL G ROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND F OR THE JUST DECISION OF THE CASE. THERE WAS NO INFIRMITY IN TH E ORDER OF THE TRIBUNAL. SIMILAR VIEW WAS TAKEN BY HON'BLE MADRAS HIGH COURT IN CASE OF CIT V. SAKTHI SOYAS LTD (SUPRA) AND HON'BLE GUJARAT HIGH COURT IN CASE OF DCIT V. CORE HEALTHCARE LTD (SUPRA). 13 IDENTICAL ISSUE HAD ARISEN BEFORE THE CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF GLAXO SMITH KLINE CONSUMER HEALTHCARE LTD V. ACIT (SUPRA) AND HEAD NOTE OF THE DECISION READS AS UNDER: BUSINESS EXPENDITURE CAPITAL OR REVENUE EXPENDIT URE PROMOTIONAL AND TRADE MARKETING EXPENSES THESE EX PENSES WERE INCURRED BY THE ASSESSEE ON EXISTING PRODUCTS WHICH INCLUDED COST OF PRESENTATION ITEMS, GIFTS, ETC. GIVEN TO CUSTOME RS, EXPENDITURE ON ADVERTISEMENT, ETC. THIS IS IN ACTUALITY DISCO UNT IN-KIND ALLOWED TO THE CUSTOMERS AND EXPENDITURE ON ADVERTI SEMENT OF EXISTING PRODUCTS EVEN IF IT IS CONCEDED THAT SUC H EXPENDITURE RESULTS IN ENDURING BENEFIT TO THE ASSESSEE THE END URING BENEFIT IS NOT IN THE CAPITAL FIELD BUT IS IN THE REVENUE FIEL D THEREFORE PROMOTION AND TRADE MARKETING EXPENSES ARE ALLOWABL E AS REVENUE EXPENDITURE. 9 THEREFORE IT IS CLEAR THAT ONCE THE NATURE OF EXPEN DITURE IS REVENUE THEN SAME HAS TO BE ALLOWED EVEN IF SAME HAS NOT BE EN CLAIMED FULLY IN THE BOOKS OF ACCOUNT. THEREFORE WE SET ASI DE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER THAT TH ESE EXPENSES SHOULD BE ALLOWED ON PRINCIPLE. HOWEVER, SINCE NAT URE OF EXPENDITURE HAS NOT BEEN EXAMINED DURING ASSESSMENT PROCEEDINGS AND THE SAME REQUIRES EXAMINATION FOR WHICH THE LD. LD. COUNSEL HAD NO OBJECTION. ACCORDINGLY WE SET A SIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO A LLOW THESE EXPENSES AFTER VERIFYING THE GENUINENESS AND NATURE OF THE SAME. THEREFORE FOLLOWING ABOVE PARAS WE DECIDE THE ISSUE IN FAVOUR OF ASSESSEE AND SET ASIDE THE ORDER OF THE LD. CIT( A) AND REMIT THE SAME TO THE FILE OF ASSESSING OFFICER WITH A DI RECTION TO EXAMINE THE GENUINENESS AND NATURE OF THE EXPENDITU RE AND THEN ALLOW THE SAME IF THE SAME ARE GENUINE AND ARE OF REVENUE NATURE. 13 GROUND NO. 4 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FU RNISH THE DETAILS OF TAX DEDUCTED AT SOURCE AND IN RESPONSE T HE DETAILS WERE FILED WHICH HAVE BEEN ANNEXED BY THE ASSESSING OFFICER AS PER ANNEXURE AI. IT WAS NOTED THAT THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT WERE RS. 37,50,152/- (REMAI NING AMOUNT WAS OF CAPITAL NATURE) ON WHICH TDS WAS NOT DEDUCTE D THEREFORE A SUM OF RS. 37,50,152 WAS DISALLOWED. 14 ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY ST ATED THAT DISALLOWANCE CAN BE MADE ONLY IF THE EXPENDITURE WA S PAYABLE AND NOT IF THE SAME HAS ALREADY BEEN PAID. SINCE T HE AMOUNT OF THE EXPENSES HAVE ALREADY BEEN PAID, THEREFORE T HE PROVISION OF DEDUCTION OF TAX WERE NOT APPLICABLE A ND NO DISALLOWANCE CAN BE MADE. 15 THE LD. CIT(A) AFTER EXAMINATION OF THE SUBMISSI ONS DISCUSSED THE ISSUE IN DETAIL AND DECIDED THE SAME AGAINST THE ASSESSEE. 16 THE LD. D.R FOR THE REVENUE WAS HEARD. 10 17 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND RELEVANT MATERIAL ON RECORD, WE FIND TH AT RECENTLY IDENTICAL ISSUE HAS BEEN DISCUSSED IN DETAIL AND WA S ADJUDICATED BY THIS BENCH OF THE TRIBUNAL IN CASE O F DCIT V. RANA SUGARS IN ITA NO. 48/CHD/2011AND CROSS OBJECTI ONS NO. 20/CHD/2011. INTERESTINGLY THIS ISSUE WAS ARGUED BY SAME COUNSEL WHOSE POWER OF ATTORNEY HAS BEEN FILED IN T HE PRESENT CASE ALSO. THE ISSUE WAS ADJUDICATED VIDE PARA NO. 28 TO 29 WHICH IS UNDER: 28 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE FIND THAT HON'BLE GUJARAT HIGH COURT IN CASE OF CIT V. S IKANDARKHAN N. TUNVAR & ORS, SUPRA) HAS HELD THAT PROVISIONS OF SE CTION 40A(IA) ARE APPLICABLE WHERE THE AMOUNT HAS BEEN PAID OR RE MAIN PAYABLE. IN CONTRAST HON'BLE ALLAHABAD HIGH COURT IN CASE O F CIT V. VECTOR SHIPPING SERVICES (P) LTD (SUPRA), HAS FOLLOWED THE DECISION OF SPECIAL BENCH IN CASE OF MERILIN SHIPPING & TRANSPO RT V ADDL CIT, 136 ITD 23 (VISAKHAPATNAM)(SB). BOTH THESE DECISION S WERE CONSIDERED BY US IN CASE OF HI TECH FOODS V ITO (SU PRA) AND IT WAS OBSERVED AT PARA 22 TO 27 AS UNDER: 22 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D FIND THAT THE DECISION OF SPECIAL BENCH HAS BEEN SPECIFICALL Y OVER RULED BY HON'BLE GUJARAT HIGH COURT BY DISCUSSING THE ISSUE IN DETAIL IN CASE OF CIT V. SIKANDARKHAN N TUNWAR AND OTHERS (SU PRA). WE FURTHER FIND THAT IN CASE OF CIT V. VECTOR SHIPPING SERVICES, THE ISSUE WAS DIFFERENT. IN THAT CASE THE QUESTION POS ED BEFORE THE HON'BLE HIGH COURT READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE HON'BLE ITAT HAS RIGHTLY CONFIRMED THE ORDER OF THE LD. CIT(A) AND THEREBY DELETING THE DISALLOWANCE OF RS. 1,17,68,62 1/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE IT ACT BY IG NORING THE FACT THAT THE COMPANY M/S MERCATOR LINES LTD. HAD PERFOR MED SHIP MANAGEMENT WORK ON BEHALF OF THE ASSESSEE M/S VECTO R SHIPPING SERVICES (P) LTD AND THERE WAS A MEMORANDUM OF UNDE RTAKING SIGNED BETWEEN BOTH THE COMPANIES AND A S PER THE D EFINITION OF MEMORANDUM OF UNDERTAKING, IT INCLUDED CONTRACT ALS O. IN THAT CASE SOME EXPENSES WERE DISALLOWED U/S 40(A )(IA) BECAUSE NOT TAX WAS DEDUCTED. ON APPEAL THE TRIBUNAL FOUND THAT THE LD. CIT(A) HAS ALREADY GIVEN A FINDING THAT MERCATOR LI NES LTD. HAD DEDUCTED THE TDS ON SALARY PAID ON BEHALF OF THE AS SESSEE. UNDER SUCH CIRCUMSTANCES THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TDS ON REIMBURSEMENT ON SALARY BEING MADE BY IT TO M/S MERCATOR LINES LTD. 23 HON'BLE HIGH COURT HAS CONFIRMED THE DECISION OF THE TRIBUNAL. THUS IT IS CLEAR THAT HON'BLE ALLAHABAD HIGH COURT WAS NEITHER REQUIRED NOR HAS GIVEN DETAIL REASONS FOR APPROVING THE DECISION OF SPECIAL BENCH WHEREAS HON'BLE GUJARAT H IGH COURT HAS AFTER DETAILED DISCUSSION, OVER RULED THE DECISION OF SPECIAL BENCH. 24 IN CASE OF SIKANDARKHAN N TUNWAR (SUPRA) THE ASS ESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACTOR AND COMMISSION AGENT. DURING THE SCRUTINY ASSESSMENT IT WAS NOTI CED BY THE ASSESSING OFFICER THAT EXPENDITURE IN THE NATURE OF PAYMENT MADE BY THE ASSESSEE TO ITS SUB-CONTRACTORS TO THE TUNE OF RS. 8.74 CRORES. SINCE THE ASSESSEE HAD ADMITTEDLY NOT DEDU CTED THE TAX 11 FROM SUCH PAYMENTS AND INDIVIDUAL PAYMENTS TO TRANS PORTERS EXCEEDED LIMIT OF RS. 20,000/- FOR A SINGLE TRIP AN D AGGREGATED OVER RS. 50,000/- IN THE YEAR THOUGH THE ASSESSEE H AD OBTAINED FORM NO. 15-I FROM SUCH SUB-CONTRACTORS BUT THE SAM E WERE NOT FURNISHED ALONG WITH THE PARTICULARS IN FORM 15-J T O THE CIT BEFORE DUE DATE AND THEREFORE, THE EXPENDITURE ON ACCOUNT OF PAYMENT TO SUB-CONTRACTORS WAS DISALLOWED BY INVOKING THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT. 25. ON APPEAL THE LD. CIT(A) CONFIRMED THIS ORDER. 26 WHEN THE MATTER TRAVELED TO THE TRIBUNAL THE APP EAL OF THE ASSESSEE WAS ALLOWED BY RELYING ON THE DECISION OF MERILYN SHIPPING TRANSPORTERS V. ACIT (SUPRA). THE TRIBUNA L HELD THAT THE WORD PAYABLE USED IN SECTION 40(A)()IA) WOULD MAK E PROVISION APPLICABLE ONLY IN RESPECT OF EXPENDITURE PAYABLE ON 31 ST MARCH OF A PARTICULAR YEAR AND SUCH PROVISION CANNOT BE I NVOKED TO DISALLOW THE AMOUNTS WHICH HAS ALREADY BEEN PAID DU RING THE YEAR THOUGH THE TAX MAY NOT HAVE BEEN DEDUCTED AT SOURCE . FOLLOWING SPECIFIC QUESTION WAS POSED BEFORE THE HON'BLE HIGH COURT: IN ALL THESE APPEALS THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF M/S MERILYN SHIPPING T RANSPORTERS V. ACIT (SUPRA) AND DELETED THE DISALLOWANCE ON THIS L IMITED GROUND. AS IN THE PRESENT CASE, OTHER MERILYN SHIPPING TRAN SPORTERS V. ACIT (SUPRA) GROUNDS OF CONTROVERSY BETWEEN THE PAR TIES WITH RESPECT TO ALLOWABILITY OR OTHERWISE OF SUCH EXPEND ITURE WAS NOT EXAMINED BY THE TRIBUNAL. FOR THE PURPOSE OF THESE APPEALS, THEREFORE, WE FRAME FOLLOWING SUBSTANTIAL QUESTION OF LAW: 1 WHETHER DISALLOWANCE U/S 40(A)(IA) OF THE I.T AC T COULD BE MADE ONLY IN RESPECT OF SUCH AMOUNTS WHICH ARE PAY ABLE AS ON 31 ST MACH OF THE YEAR UNDER CONSIDERATION? 2 WHETHER DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING TRANSPORTERS V. ACIT ( SUPRA) LAYS DOWN CORRECT LAW? 27 HON'BLE GUJARAT HIGH COURT AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES REFERRED TO THE PRO VISION OF CHAPTER XVII A OF THE ACT DEALING WITH THE TAX DEDU CTION PROVISIONS. AFTER THIS REFERENCE WAS MADE TO SECTI ON 40(A)(IA) THROUGH WHICH IT WAS PROVIDED THAT TAX HAS NOT BEEN DEDUCTED ON CERTAIN PAYMENTS AND THE SAME WILL NOT BE ALLOWABLE . THE HON'BLE HIGH COURT DISCUSSED THE IMPLEMENTATIONS OF THIS PR OVISION AND DECISION OF SPECIAL BENCH IN CASE OF MERILYN SHIPPI NG TRANSPORTERS V. ACIT (SUPRA) AND OBSERVED AND HELD AS UNDER: 17. IN PLAIN TERMS SECTION 40(A)(IA) PROVIDES THAT IN CASE OF ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SER VICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB-CONTRACTOR FOR CARRYING OUT ANY WORK ON WHICH TAX IS DEDUCTIBLE AT SOURCE A ND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID BEFORE THE DUE DA TE, SUCH AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER T HE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION IRRESPECTIVE OF THE PROVISIO NS CONTAINED IN SECTIONS 30 TO 38 OF THE ACT. PROVISO TO SECTION 40(A)(IA), HOWEVER, ENA BLES THE ASSESSEE TO TAKE SUCH DEDUCTION IN SUBSEQUENT YEAR, IF TAX IS DEDUCTED IN SUCH YEAR OR THOUGH DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECI FIED IN SUB-SECTION(1) OF SECTION 139 OF THE ACT. 18. IN SUCH CONTEXT, THEREFORE, THE QUESTION ARISES WHETHER UNDER SECTION 40(A)(IA) OF THE ACT DISALLOWANCE OF THE EXPENDITURE PAYMENT OF WHIC H, THOUGH REQUIRED DEDUCTION OF TAX AT SOURCE HAS NOT BEEN MADE WOULD BE CONFINED ONLY TO THOSE CASES WHERE THE AMOUNT REMAINS PAYABLE TILL THE END OF THE PREVIOUS YEAR O R WOULD INCLUDE ALL AMOUNTS WHICH BECAME PAYABLE DURING THE ENTIRE PREVIOUS YEAR. 19. DECISION IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (SUPRA) WAS RENDERED BY THE SPECIAL BENCH BY A SPLIT OPINION. L EARNED ACCOUNTANT MEMBER WHO WAS IN MINORITY, PLACED HEAVY RELIANCE ON A DECISION OF MADRAS HIGH COURT IN THE CASE OF TUBE INVESTMENTS OF INDIA LTD. AND ANOTHER VS. ASSI STANT COMMISSIONER OF INCOME- TAX (TDS) AND OTHERS REPORTED IN [2010] 325 ITR 610 (MAD) . LEARNED JUDGE DID NOTICE 12 THAT THE HIGH COURT IN SUCH CASE WAS CONCERNED WITH THE VIRES OF THE STATUTORY PROVISION BUT FOUND SOME OF THE OBSERVATIONS MADE BY THE COUR T IN THE PROCESS USEFUL AND APPLICABLE. LEARNED JUDGE REJECTED THE THEORY OF NARROW INTERPRETATION OF TE RM PAYABLE AND OBSERVED AS UNDER: 12.4 IN OUR CONSIDERED OPINION, THERE IS NO AMBIGUI TY IN THE SECTION AND TERM PAYABLE CANNOT BE ASCRIBED NARROW INTERPRETATI ON AS CONTENDED BY ASSESSEE. HAD THE INTENTIONS OF THE LEGISLATURE WER E TO DISALLOW ONLY ITEMS OUTSTANDING AS ON 31 ST MARCH, THEN THE TERM PAYABLE WOULD HAVE BEEN QUALIFIED BY THE PHRASE AS OUTSTANDING ON 31 ST MARCH. HOWEVER, NO SUCH QUALIFICATION IS THERE IN THE SECTION AND, THEREFOR E, THE SAME CANNOT BE READ INTO THE SECTION AS CONTENDED BY THE ASSESSEE. 20. ON THE OTHER HAND, LEARNED JUDICIAL MEMBER SPEA KING FOR MAJORITY ADOPTED A STRICTER INTERPRETATION. HEAVY RELIANCE WAS PLACED ON THE FI NANCE BILL OF 2004, WHICH INCLUDED THE DRAFT OF THE AMENDMENT IN SECTION 40 AND THE ULTIMA TE AMENDMENT WHICH ACTUALLY WAS PASSED BY THE PARLIAMENT. IT WAS OBSERVED THAT FROM THE COMPARISON BETWEEN THE PROPOSED AND THE ENACTED PROVISION IT CAN BE SEEN T HAT THE LEGISLATURE HAS REPLACED THE WORDS AMOUNTS CREDI TED OR PAID WITH THE WORD PAYABLE IN THE ENACTMENT. ON SUCH BASIS, IT WAS HELD THAT THIS IS A CASE OF CONSCIOUS OMISSION AND WHEN THE LANGUAGE WAS CLEAR THE INTENTION OF THE LEGISLATURE HAD TO BE GA THERED FROM LANGUAGE USED. IN THEIR OPINION THE PROVISION WOULD APPLY ONLY TO AMOUNTS W HICH ARE PAYABLE AT THE END OF THE YEAR. HAVING SAID SO, CURIOUSLY, IT WAS OBSERVED TH AT THE PROVISO TO SECTION 40(A)(IA) OF THE ACT LAYS DOWN THAT EARLIER YEAR S PROVISION CAN BE ALLOWED IN SUBSEQUENT YEARS ONLY IF TDS IS D EDUCTED AND DEPOSITED AND, THEREFORE, REVENUE S FEAR IS UNFOUNDED AS THE PROVISION OF SECTION 40(A)(IA) OF THE ACT COVERS TH E SITUATION. 21. IN THE PRESENT CASE, WE HAVE NO HESITATION IN A CCEPTING THE CONTENTION THAT THE PROVISION MUST BE CONSTRUED STRICTLY. THIS BEING A PROVISION WHICH CREATES AN ARTIFICIAL CHARGE ON AN AMOUNT WHICH IS OTHERWISE NOT AN INCOM E OF THE ASSESSEE, CANNOT BE LIBERALLY CONSTRUED. UNDOUBTEDLY IF THE LANGUAGE OF THE SECTION IS PLAIN, IT MUST BE GIVEN ITS TRUE MEANING IRRESPECTIVE OF THE CONSEQUENCES. WE H AVE NOTICED THAT THE PROVISION MAKES DISALLOWANCE OF AN EXPENDITURE WHICH HAS OTHE RWISE BEEN INCURRED AND IS ELIGIBLE FOR DEDUCTION, ON THE GROUND THAT THOUGH TAX WAS RE QUIRED TO BE DEDUCTED AT SOURCE IT WAS NOT DEDUCTED OR IF DEDUCTED, HAD NOT BEEN DEPOSITED BEFORE THE DUE DATE. BY ANY INTENDMENT OR LIBERAL CONSTRUCTION OF SUCH PROVISIO N, THE LIABILITY CANNOT BE FASTENED IF THE PLAIN MEANING OF THE SECTION DOES NOT SO PERMIT. 22. FOR THE PURPOSE OF THE SAID SECTION, WE ARE ALS O OF THE OPINION THAT THE TERMS PAYABLE AND PAID ARE NOT SYNONYMOUS. WORD PAID HAS BEEN DEFINED IN SECTION 43(2) OF THE ACT TO MEAN ACTUALLY PAID OR INCURRED ACCORDING TO THE METHOD OF ACCOUNTING, UPON THE BASIS OF WHICH PROFITS AND GAINS ARE COMPU TED UN DER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION . SUCH DEFINITION IS APPLICABLE FOR THE PURPOSE OF SECTIONS 28 TO 41 UNLESS THE CONTEXT OTHERWISE REQU IRES. IN CONTRAST, TERM PAYABLE HAS NOT BEEN DEFINED. THE WORD PAYABLE HAS BEEN DESCRIB ED IN WEBSTER S THIRD NEW INTERNATIONAL UNABRIDGED DICTIONARY AS REQUIRING TO BE PAID: CAPABLE OF BEING PAID: SPECIFYING PAYMENT TO A PARTICULAR PAYEE AT A SPECI FIED TIME OR OCCASION OR ANY SPECIFIED MANNER. IN THE CONTEXT OF SECTION 40(A)(IA), THE WO RD PAYABL E WOULD NOT INCLUDE PAID . IN OTHER WORDS, THEREFORE, AN AMOUNT WHICH IS ALREADY PAID OVER CEASES TO BE PAYABLE AND CONVERSELY WHAT IS PAYABLE CANNOT BE ON E THAT IS ALREADY PAID. WHEN AS RIGHTLY POINTED OUT BY COUNSEL MR. HEMANI, THE ACT USES TERMS PAID AND PAYABLE AT DIFFERENT PLACES IN DIFFERENT CONTEXT DIFFERENTLY, FOR THE PURPOSE OF SECTION 40(A)(IA) OF THE ACT, TERM PAYABLE CANNOT BE SEEN TO BE INCLUDING TH E EXPRESSION PAID . THE TERM PAID AND PAYABLE IN THE CONTEXT OF SECTION 40(A)(IA ) ARE NOT USED INTERCHANGABLY. IN THE CASE OF BIRLA CEMENT WORKS AND ANOTHER VS. STATE OF RAJASTH AN AND ANOTHER REPORTED IN AIR 1994(SC) 2393 , THE APEX COURT OBSERVED THAT THE WORD PAYABLE IS A DESCRIPTIVE WORD, WHICH ORDINARILY MEANS THAT WHICH MUST BE PAID OR IS DUE OR MAY BE PAID BUT ITS CORRECT MEANING CAN ONLY BE DETERMINED IF THE CONTEXT IN WHICH IT IS USED IS KEPT IN VIEW. THE WORD HAS BEEN FREQUENTLY UNDERSTO OD TO MEAN THAT WHICH MAY, CAN OR SHOULD BE PAID AND IS HELD EQUIVALENT TO DUE . 23. DESPITE THIS NARROW INTERPRETATION OF SECTION 4 0(A)(IA), THE QUESTION STILL SURVIVES IF THE TRIBUNAL IN CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (SUPRA) WAS ACCURATE IN ITS OPINION. IN THIS CONTEXT, WE WOULD LIKE TO E XAMINE TWO ASPECTS. FIRSTLY, WHAT WOULD BE THE CORRECT INTERPRETATION OF THE SAID PROVISION . SECONDLY, WHETHER OUR SUCH UNDERSTANDING OF THE LANGUAGE USED BY THE LEGISLATU RE SHOULD WAVER ON THE PREMISE THAT AS PROPOUNDED BY THE TRIBUNAL, THIS WAS A CASE OF C ONSCIOUS OMISSION ON PART OF THE PARLIAMENT. BOTH THESE ASPECTS WE WOULD ADDRESS ONE AFTER ANOTHER. IF ONE LOOKS CLOSELY TO THE PROVISION, IN QUESTION, ADVERSE CONSEQUENCES OF NOT BEING ABLE TO CLAIM DEDUCTION 13 ON CERTAIN PAYMENTS IRRESPECTIVE OF THE PROVISIONS CONTAINED IN SECTIONS 30 TO 38 OF THE ACT WOULD FLOW IF THE FOLLOWING REQUIREMENTS ARE SA TISFIED:- (A) THERE IS INTEREST, COMMISSION OR BROKERAGE, REN T, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CAR RYING OUT ANY WORK. (B) THESE AMOUNTS ARE SUCH ON WHICH TAX IS DEDUCTIB LE AT SOURCE UNDER CHAPTER XVII-B. (C)SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTIO N HAS NOT BEEN PAID ON OR BEFORE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 39. FOR THE PURPOSE OF CURRENT DISCUSSION REFERENCE TO THE PROVISO IS NOT NECESSARY. 24. WHAT THIS SUB-SECTION, THEREFORE, REQUIRES IS T HAT THERE SHOULD BE AN `AMOUNT PAYABLE IN THE NATURE DESCRIBED ABOVE, WHICH IS SUCH ON WHI CH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B BUT SUCH TAX HAS NOT BEEN DEDUCTED O R IF DEDUCTED NOT PAID BEFORE THE DUE DATE. THIS PROVISION NO-WHERE REQUIRES THAT THE AMOUNT WHICH IS PAYABLE MUST REMAIN SO PAYABLE THROUGHOUT DURING THE YEAR. TO REITERATE THE PROVISION HAS CERTAIN STRICT AND STRINGENT REQUIREMENTS BEFORE THE UNPLEASANT CONSEQ UENCES ENVISAGED THEREIN CAN BE APPLIED. WE ARE PREPARED TO AND WE ARE DUTY BOUND T O INTERPRET SUCH REQUIREMENTS STRICTLY. SUCH REQUIREMENTS, HOWEVER, CANNOT BE ENL ARGED BY ANY ADDITION OR SUBTRACTION OF WORDS NOT USED BY THE LEGISLATURE. THE TERM USED IS INTEREST, COMMISSION, BROKERAGE ETC. IS PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR O R SUB-CONTRACTOR FOR CARRYING OUT ANY WORK. THE LANGUAGE USED IS NOT THA T SUCH AMOUNT MUST CONTINUE TO REMAIN PAYABLE TILL THE END OF THE ACCOUNTING YEAR. ANY SUCH INTERPRETATION WOULD REQUIRE READING WORDS WHICH THE LEGISLATURE HAS NOT USED. N O SUCH INTERPRETATION WOULD EVEN OTHERWISE BE JUSTIFIED BECAUSE IN OUR OPINION, THE LEGISLATURE COULD NOT HAVE INTENDED TO BRING ABOUT ANY SUCH DISTINCTION NOR THE LANGUAGE U SED IN THE SECTION BRINGS ABOUT ANY SUCH MEANING. IF THE INTERPRETATION AS ADVANCED BY THE ASSESSEES IS ACCEPTED, IT WOULD LEAD TO A SITUATION WHERE THE ASSESSEE WHO THOUGH W AS REQUIRED TO DEDUCT THE TAX AT SOURCE BUT NO SUCH DEDUCTION WAS MADE OR MORE FLAGR ANTLY DEDUCTION THOUGH MADE IS NOT PAID TO THE GOVERNMENT, WOULD ESCAPE THE CONSEQUENC E ONLY BECAUSE THE AMOUNT WAS ALREADY PAID OVER BEFORE THE END OF THE YEAR IN CON TRAST TO ANOTHER ASSESSEE WHO WOULD OTHERWISE BE IN SIMILAR SITUATION BUT IN WHOSE CASE THE AMOUNT REMAINED PAYABLE TILL THE END OF THE YEAR. WE SIMPLY DO NOT SEE ANY LOGIC WHY THE LEGISLATURE WOULD HAVE DESIRED TO BRING ABOUT SUCH IRRECONCILABLE AND DIVERSE CONSEQU ENCES. WE HASTEN TO ADD THAT THIS IS NOT THE PRIME BASIS ON WHICH WE HAVE ADOPTED THE IN TERPRETATION WHICH WE HAVE GIVEN. IF THE LANGUAGE USED BY THE PARLIAMENT CONVEYED SUCH A MEANING, WE WOULD NOT HAVE HESITATED IN ADOPTING SUCH AN INTERPRETATION. WE ON LY HIGHLIGHT THAT WE WOULD NOT READILY ACCEPT THAT THE LEGISLATURE DESIRED TO BRING ABOUT AN INCONGRUOUS AND SEEMINGLY IRRECONCILABLE CONSEQUENCES. THE DECISION OF THE SU PREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX, GUJARAT VS. ASHOKBHAI C HIMANBHAI (SUPRA), WOULD NOT ALTER THIS SITUATION. THE SAID DECISION, OF COURSE, RECOGNIZES THE CONCEPT OF ASCERTAINING THE PROFIT AND LOSS FROM THE BUSINESS OR PROFESSION WITH REFERENCE TO A CERTAIN PERIOD I.E. THE ACCOUNTING YEAR. IN THIS CONTEXT, LAST DATE OF SUCH ACCOUNTING PERIOD WOULD ASSUME CONSIDERABLE SIGNIFICANCE. HOWEVER, THIS DECISION N OWHERE INDICATES THAT THE EVENTS WHICH TAKE PLACE DURING THE ACCOUNTING PERIOD SHOUL D BE IGNORED AND THE ASCERTAINMENT OF FULFILLING A CERTAIN CONDITION PROVIDED UNDER TH E STATUTE MUST BE JUDGED WITH REFERENCE TO LAST DATE OF THE ACCOUNTING PERIOD. PARTICULARLY, I N THE CONTEXT OF REQUIREMENTS OF SECTION 40(A)(IA) OF THE ACT, WE SEE NO WARRANT IN THE SAID DECISION OF THE SUPREME COURT TO APPLY THE TEST OF PAYABILITY ONLY AS ON 31 ST MARCH OF THE YEAR UNDER CONSIDERATION. MERELY BECAUSE, ACCOUNTS ARE CLOSED ON THAT DATE AND THE C OMPUTATION OF PROFIT AND LOSS IS TO BE JUDGED WITH REFERENCE TO SUCH DATE, DOES NOT MEAN T HAT WHETHER AN AMOUNT IS PAYABLE OR NOT MUST BE ASCERTAINED ON THE STRENGTH OF THE POSI TION EMERGING ON 31 ST MARCH. 25. THIS BRINGS US TO THE SECOND ASPECT OF THIS DIS CUSSION, NAMELY, WHETHER THIS IS A CASE OF CONSCIOUS OMISSION AND THEREFORE, THE LEGISLATUR E MUST BE SEEN TO HAVE DELIBERATELY BROUGHT ABOUT A CERTAIN SITUATION WHICH DOES NOT RE QUIRE ANY FURTHER INTERPRETATION. THIS IS THE FUNDAMENTAL ARGUMENT OF THE TRIBUNAL IN THE CAS E OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT(SUPRA) TO ADOPT A PARTICULAR VIEW. 26. WHILE INTERPRETING A STATUTORY PROVIS ION THE COURTS HAVE OFTEN APPLIED HYDEN S RULE OR THE MISCHIEF RULE AND ASCERTAINED WHAT WAS THE POSI TION BEFORE THE AMENDMENT, WHAT THE AMENDMENT SOUGHT TO REMEDY AND WHAT WAS THE EFFECT OF THE CHANGES. 27. IN THE CASE OF BENGAL IMMUNITY CO. LTD. VS. STATE OF BIHAR AND OTH ERS REPORTED IN AIR 1955 SC 661 , THE APEX COURT REFERRED TO THE FAMOUS ENGLISH DEC ISION IN HYDEN S CASE WHEREIN WHILE ADOPTING RESTRICTIVE OR ENLARGIN G INTERPRETATION, IT WAS OBSERVED THAT FOUR THINGS ARE TO BE CONSIDERED, (1) WHAT WAS THE COMMON LAW BEFORE MAKING OF THE ACT 14 (2) WHAT WAS THE MISCHIEF AND DEFECT IN WHICH THE C OMMON LAW DID NOT PROVIDE. (3) WHAT REMEDY THE PARLIAMENT HAD RESOLVED AND ADOPTED TO C URE THE DISEASE AND (4) TRUE REASON OF THE REMEDY. 28. IN SUCH CONTEXT, THE POSITION PREVAILING PRIOR TO THE AMENDMENT INTRODUCED IN SECTION 40(A) WOULD CERTAINLY BE A RELEVANT FACTOR. HOWEVER , THE PROCEEDINGS IN THE PARLIAMENT, ITS DEBATES AND EVEN THE SPEECHES MADE BY THE PROPOSER OF A BILL ARE ORDINARILY NOT CONSIDERED AS RELEVANT OR SAFE TOOLS FOR INTERPRETA TION OF A STATUTE. IN THE CASE OF ASWINI KUMAR GHOSE AND ANOTHER VS. ARABINDA BOSE AND ANOTH ER REPORTED IN A.I.R. 1952 SC 369 IN A CONSTITUTION BENCH DECISION OF (CORAM: PATANJALI SASTRI, C.J.) , OBSERVED THAT:- 33. &..IT WAS URGED THAT ACCEPTANCE OR REJECTION OF AMENDMENTS TO A BILL IN THE COURSE OF PARLIAMENTARY PROCEEDINGS F ORMS PART OF THE PRE-ENACTMENT HISTORY OF A STATUTE AND AS SUCH MIGH T THROW VALUABLE LIGHT ON THE INTENTION OF THE LEGISLATURE WHEN THE LANGUAGE USED IN THE STATUE ADMITTED OF MORE THAN ONE CONSTRUCTION. WE ARE UNABLE TO ASSENT TO THIS PREPOSITION. THE REASON WHY A PARTICULAR AMENDMENT WAS PROPOSED OR ACCEPTED OR REJECTED IS OFTEN A MATTER OF CONTROVER SY, AS IT HAPPENED TO BE IN THIS CASE, AND WITHOUT THE SPEECH ES BEARING UPON THE MOTION, IT CANNOT BE ASCERTAINED WITH ANY REASONABLE DEGREE OF CERTAINTY. AND WHERE THE LEGISLATURE HAPP ENS TO BE BICAMERAL, THE SECOND CHAMBER MAY OR MAY NOT HAVE K NOWN OF SUCH REASON WHEN IT DEALT WITH THE MEASURE. WE HOLD ACCORDINGLY THAT ALL THE THREE FORMS OF EXTRINSIC A ID SOUGHT TO BE RESORTED TO BY THE PARTIES IN THE CASE MUS BE EXCLU DED FROM CONSIDERATION IN ASCERTAINING THE TRUE OBJECT AND I NTENTION OF THE LEGISLATURE. 29. IN YET ANOTHER CONSTITUTION BENCH JUDGMENT IN T HE CASE OF A.K.GOPALAN VS. STATE OF MADRAS REPORTED IN AIR 1950 SC 27 , IT WAS OBSERVED AS UNDER:- 17.....THE RESULT APPEARS TO BE THAT WHILE IT IS N OT PROPER TO TAKE INTO CONSIDERATION THE INDIVIDUAL OPINIONS OF MEMBERS OF PARLIAMENT OR CONVENTION TO CONSTRUE THE MEANING OF THE PARTICULAR CLAUSE, WHEN A QUESTION I S RAISED WHETHER A CERTAIN PHRASE OR EXPRESSION WAS UP FOR CONSIDERATION AT ALL OR NO T, A REFERENCE TO THE DEBATES MAY BE PERMITTED. 30. IN THE CASE OF EXPRESS NEWSPAPER (PRIVATE) LTD. AND ANOTHER VS. THE UNION OF INDIA AND OTHERS REPORTED IN AIR 1958 SC 578 , N.H.BHAGWATI, J., OBSERVED AS UNDER:- 173. WE DO NOT PROPOSE TO ENTER INTO ANY ELABORATE DISCUSSION ON THE QUESTION WHETHER IT WOULD BE COMPETENT TO US IN ARRIVING AT A PROPER CONSTRUCTION OF THE EXPRESSION FIXING RATES OF WAGES TO LOOK INTO THE S TATEMENT OF OBJECTS AND REASONS ATTACHED TO THE BILL NO.13 OF 1955 AS INTRO DUCED IN THE RAJYA SABHA OR THE CIRCUMSTANCES UNDER WHICH THE WORD MINIMUM CAME TO BE DELETED FROM THE PROVISIONS OF THE BILL RELATING TO RATES OF WAGES A ND THE WAGE BOARD AND THE FACT OF SUCH DELETION WHEN THE ACT CAME TO BE PASSED IN ITS PRESENT FORM. THERE IS A CONSENSUS OF OPINION THAT THESE ARE NOT AIDS TO THE CONSTRUCTION OF THE TERMS OF THE STATUTE WHICH HAVE OF COURSE TO BE GIVEN THEIR PLAI N AND GRAMMATICAL MEANING ( SEE: ASHVINI KUMAR GHOSH V. ARABINDA BOSE, 1953 SC R 1:( AIR 1952 SC 369) (Z24) AND PROVAT KUMAR KAR V. WILLIAM TREVELYAN CURTIEZ PARKE R, AIR 1950 CAL 116 (Z25). IT IS ONLY WHEN THE TERMS OF THE STATUTE ARE AMBIGUOUS OR VAGUE THAT RESORT MAY BE HAD TO THEM FOR THE PURPOSE OF ARRIVING AT THE TRUE INTENT ION OF THE LEGISLATURE. 31. IT CAN THUS BE SEEN THAT THE DEBATES IN THE PARLIAMENT ARE ORDINARILY NOT CONSIDERED AS THE AIDS FOR INTERPRETATION OF THE ULTIMATE PROVISI ON WHICH MAY BE BROUGHT INTO THE STATUTE. THE DEBATES AT BEST INDICATE THE OPINION OF THE IND IVIDUAL MEMBERS AND ARE ORDINARILY NOT RELIED UPON FOR INTERPRETING THE PROVISIONS, PARTIC ULARLY WHEN THE PROVISIONS ARE PLAIN. WE ARE CONSCIOUS THAT DEPARTURE IS MADE IN TWO EXCEPTI ONAL CASES, NAMELY, THE DEBATES IN THE CONSTITUENT ASSEMBLY AND IN CASE OF FINANCE MIN ISTER S SPEECH EXPLAINING THE REASON FOR INTRODUCTION OF A CERTAIN PROVISION. THE REASON WHY A CERTAIN LANGUAGE WAS USED IN A DRAFT BILL AND WHY THE PROVISION ULTIMATE LY ENACTED CARRIED A DIFFERENT EXPRESSION 15 CANNOT BE GATHERED FROM MERE COMPARISON OF THE TWO SETS OF PROVISIONS. THERE MAY BE VARIETY OF REASONS WHY THE ULTIMATE PROVISION MAY V ARY FROM THE ORIGINAL DRAFT. IN THE PARLIAMENTARY SYSTEM, TWO HOUSES SEPARATELY DEBATE THE LEGISLATIONS UNDER CONSIDERATION. IT WOULD ALL THE MORE BE UNSAFE TO R EFER TO OR RELY UPON THE DRAFTS, AMENDMENTS, DEBATES ETC FOR INTERPRETATION OF A STA TUTORY PROVISION WHEN THE LANGUAGE USED IS NOT CAPABLE OF SEVERAL MEANINGS. IN THE PRE SENT CASE THE TRIBUNAL IN CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (SUPRA) FELL IN A SERIOUS ERROR IN MERELY COMPARING THE LANGUAGE USED IN THE DRAFT BILL AND F INAL ENACTMENT TO ASSIGN A PARTICULAR MEANING TO THE STATUTORY PROVISION. 32. IT IS, OF COURSE, TRUE THAT THE COURTS IN INDIA HAVE BEEN APPLYING THE PRINCIPLE OF DELIBERATE OR CONSCIOUS OMISSION. SUCH PRINCIPLE IS APPLIED MAINLY WHEN AN EXISTING PROVISION IS AMENDED AND A CHANGE IS BROUGHT ABOUT. WHILE INTERPRETING SUCH AN AMENDED PROVISION, THE COURTS WOULD IMMEDIATELY INQ UIRE WHAT WAS THE STATUTORY PROVISION BEFORE AND WHAT CHANGES THE LEGISLATURE B ROUGHT ABOUT AND COMPARE THE EFFECT OF THE TWO. THE OTHER OCCASION FOR APPLYING THE PRI NCIPLE, WE NOTICE FROM VARIOUS DECISIONS OF THE SUPREME COURT, HAS BEEN WHEN THE LANGUAGE OF THE LEGISLATURE IS COMPARED WITH SOME OTHER ANALOGOUS STATUTE OR OTHER PROVISIONS OF THE SAME STATUTE OR WITH EXPRESSION WHICH COULD APPARENTLY OR OBVIOUSLY BEEN USED IF TH E LEGISLATURE HAD DIFFERENT INTENTION IN MIND, WHILE FRAMING THE PROVISION. WE MAY REFER TO SOME OF SUCH DECISIONS PRESENTLY. IN THE CASE OF BHUWALKA STEEL INDUSTRIES LTD. VS. BOMBAY IRON AND STEEL LABOUR BOARD REPORTED IN AIR 2010 (SUPPL.) 122 , THE APEX COURT OBSERVED AS UNDER:- THE OMISSION OF THE WORDS AS PROPOSED EARLIER FROM THE FINAL DEFINITION IS A DELIBERATE AND CONSCIOUS ACT ON THE PART OF THE LEG ISLATURE, ONLY WITH THE OBJECTIVE TO PROVIDE PROTECTION TO ALL THE LABOURER S OR WORKERS, WHO WERE THE MANUAL WORKERS AND WERE ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THEREFORE, THERE WAS A SPECIFIC ACT ON THE PART OF THE LEGISLATURE TO ENLARGE THE SCOPE OF THE DEFINITION AND ONCE WE ACCEPT THIS, ALL THE ARGUMENTS REGARDING THE OBJECTS AND REASONS, THE CO MMITTEE REPORTS, THE LEGISLATIVE HISTORY BEING CONTRARY TO THE EXPRESS L ANGUAGE, ARE RELEGATED TO THE BACKGROUND AND ARE LIABLE TO BE IGNORED. 33. IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE, NARELA, DELH I VS. COMMISSIONER OF INCOME TAX AND ANR. REPORTED IN AIR 2008 SC(SUPPLEMENT) 566 , THE SUPREME COURT NOTICED THAT PRIOR TO FINANCE ACT , 2002, THE INCOME TAX ACT DID NOT CONTAIN THE DEFINITION OF WORDS LOCAL AUTHORITY . TH E WORD CAME TO BE DEFINED FOR THE FIRST TIME BY THE FINANCE ACT OF 2002 BY EXPLANATIO N/ DEFINITION CLAUSE TO SECTION 10(20) OF THE ACT. IT WAS FURTHER NOTICED THAT THERE WERE SIG NIFICANT DIFFERENCE IN THE DEFINITION OF TERM LOCAL AUTHORITY CONTAINED UNDER SECTION 3(31) OF THE GENERAL CLAUSES ACT, 1987 AS COMPARED TO THE DEFINITION CLAUSE INSERTED IN SE CTION 10(20) OF THE INCOME TAX ACT, 1961 VIDE FINANCE ACT, OF 2002. IN THIS CONTEXT IT WAS OBSERVED THAT:- 27. CERTAIN GLARING FEATURES CAN BE DECIPHERED FROM THE ABOVE COMPARATIVE CHART. UNDER SECTION 3(31) OF THE GENER AL CLAUSES ACT, 189 7, LOCAL AUTHORITY WAS DEFINED TO MEAN A MUNICIPAL COMMITTEE, DISTRICT BOARD, BODY OF PORT COMMISSIONE RS OR OTHER AUTHORITY LEGALLY ENTITLED TO THE CONTROL OR MANAGE MENT OF A MUNICIPAL OR LOCAL FUND. THE WORDS OTHER AUTHORITY IN SECTIO N 3(31) OF THE 1897 ACT HAS BEEN OMITTED BY PARLIAMENT IN THE EXPL ANATION/ DEFINITION CLAUSE INSERTED IN SECTION 10(20) OF THE 1961 ACT VIDE FINANCE ACT, 2002. THEREFORE, IN OUR VIEW, IT WOULD NOT BE CORRECT TO SAY THAT THE ENTIRE DEFINITION OF THE WORD LOCAL AU THORITY IS BODILY LIFTED FROM SECTION 3(31) OF THE 1897 ACT AND INCOR PORATED, BY PARLIAMENT, IN THE SAID EXPLANATION TO SECTION 10(2 0) OF THE 1961 ACT. THIS DELIBERATE OMISSION IS IMPORTANT. 34. THE APEX COURT IN THE CASE OF GREATER BOMBAY CO-OPERATIVE BANK LTD. VS. M/S. UNITED YARN TEX.PVT.LTD & ORS. REPORTED IN AIR 2007 SC 1584 , IN THE CONTEXT OF QUESTION WHETHER THE COOPERATIVE BANKS TRANSACTING BUSINESS OF BANKING FALL WITHIN THE MEANING OF BANKING COMPANY DEFINED IN THE BANKING R EGULATION ACT, 1949, OBSERVED AS UNDER:- 59. THE RDB ACT WAS PASSED IN 1993 WHEN PARLIAMENT HAD BEFORE IT THE PROVISIONS OF THE BR ACT AS AMENDED BY ACT NO.23 OF 1965 BY ADDITION OF SOME MORE CLAUSES IN SECTION 56 OF THE ACT. THE PAR LIAMENT WAS FULLY AWARE THAT THE PROVISIONS OF THE BR ACT APPLY TO CO-OPERA TIVE SOCIETIES AS THEY APPLY TO BANKING COMPANIES. THE PARLIAMENT WAS ALSO AWARE THAT THE DEFINITION OF BANKING COMPANY IN SECTION 5(C) HAD NOT BEEN ALTERE D BY ACT NO.23 OF 1965 AND IT WAS KEPT INTACT, AND IN FACT ADDITIONAL DEFINITIONS WERE ADDED BY 16 SECTION 56(C). CO- OPERATIVE BANK WAS SEPARATELY DEFINED BY THE NEWLY INSERTED CLAUSE (CCI) AND PRIMARY CO- OPERATIVE BANK WAS SIMILARLY SEPARATELY DEFINED BY CLAUSE (CCV). THE PARLIAMENT WAS SIMPLY ASSIGNING A MEANING TO WORDS; IT WAS NOT INCORPORATING OR EVEN REFERRING TO THE SUBSTANTIVE PROVISIONS OF THE BR ACT. THE MEANING OF BANKING COMPANY MUST, THEREFORE, NECESSARILY BE STRICTLY CONFINED T O THE WORDS USED IN SECTION 5(C) OF THE BR ACT. IT WOULD HAVE BEEN THE EASIEST THING FOR PARLIAMENT TO SAY THAT BANKING COMPANY SHALL MEAN B ANKING COMPANY AS DEFINED IN SECTION 5(C) AND SHALL INCLUD E CO-OPERATIVE BANK AS DEFINED IN SECTION 5(CCI) AND PRIMARY CO- OPERATIVE BANK AS DEFINED IN SECTION 5(CCV). HOWEVER, THE PARLIAMENT DID NOT DO SO. THERE WAS THUS A CONSCIOUS EXCLUSION AND DELIBERATE COMMI SSION OF CO- OPERATIVE BANKS FROM THE PURVIEW OF THE RDB ACT. THE REASON FOR EXCLUDING CO-OPERATIVE BANKS SEEMS TO BE THAT CO-OP ERATIVE BANKS HAVE COMPREHENSIVE, SELF-CONTAINED AND LESS EXPENSIVE RE MEDIES AVAILABLE TO THEM UNDER THE STATE CO-OPERATIVE SOCIETIES ACTS OF THE STATES CONCERNED, WHILE OTHER BANKS AND FINANCIAL INSTITUTIONS DID NO T HAVE SUCH SPEEDY REMEDIES AND THEY HAD TO FILE SUITS IN CIVIL COURTS . 35. IN THE CASE OF NATIONAL MINERAL DEVELOPMENT CORPORATION LTD. VS. S TATE OF M.P AND ANOTHER REPORTED IN AIR 2004 SC 2456 , THE APEX COURT OBSERVED AS UNDER:- 29. THE PARLIAMENT KNOWING IT FULL WELL THAT THE I RON ORE SHALL HAVE TO UNDERGO A PROCESS LEADING TO EMERGENCE OF LUMPS, FINES, CON CENTRATES AND SLIMES CHOSE TO MAKE PROVISION FOR QUANTIFICATION OF ROYAL TY ONLY BY REFERENCE TO THE QUANTITY OF LUMPS, FINES AND CONCENTRATES. IT LEFT SLIMES OUT OF CONSIDERATION. NOTHING PREVENTED THE PARLIAMENT FROM EITHER PROVID ING FOR THE QUANTITY OF IRON ORE AS SUCH AS THE BASIS FOR QUANTIFICATION OF ROYALTY. IT CHOSE TO MAKE PROVISION FOR THE QUANTIFICATION BEING AWAITED UNTI L THE EMERGENCE OF LUMPS, FINES AND CONCENTRATES. HAVING DONE SO THE PARLIAMENT HAS NOT SAID FINES INCLUDING SLIMES . TH OUGH SLIMES ARE NOT FINES THE PARLIAMENT COULD HAVE ASSIGNED AN ARTIFICIAL OR EXT ENDED MEANING TO FINES FOR THE PURPOSE OF LEVY OF ROYALTY WHICH IT H AS CHOSEN NOT TO DO. IT IS CLEARLY SUGGESTIVE OF ITS INTENTION NOT T O TAKE INTO CONSIDERATION SLIMES FOR QUANTIFYING THE AMOUNT OF ROYALTY. THIS DELIBE RATE OMISSION OF PARLIAMENT CANNOT BE MADE GOOD BY INTER PRETATIVE PROCESS SO AS TO CHARGE ROYALTY ON SLIMES BY READING SECTIO N 9 OF THE ACT DIVORCED FROM THE PROVISIONS OF THE SECOND SCHEDULE . EVEN IF SLIMES WERE TO BE HELD LIABLE TO CHARGE OF ROYALTY, THE QU ESTION WOULD STILL HAVE REMAINED AT WHAT RATE AND ON WHAT QUANTITY WHICH QU ESTIONS CANNOT BE ANSWERED BY SECTION 9. 36. IN THE CASE OF GOPAL SARDAR, VS. KARUNA SARDAR REPORTED IN AIR 2004 SC 3068 , THE APEX COURT IN THE THE CONTEXT OF LIMITATION WITHIN WHICH RIGHT OF PREEMPTION MUST BE EXERCISED AND WHETHER IN THE CONTEXT OF THE RELEVAN T PROVISIONS CONTAINED IN WEST BENGAL LAND REFORMS AND LIMITATION ACT, 1963 APPLIED OR NO T, OBSERVED AS UNDER:- 8....PRIOR TO 15-2-1971, AN APPLICATION UNDER SECTI ON 8 WAS REQUIRED TO BE MADE TO THE REVENUE OFFICER SPECIFICALLY EMPOWERED BY THE STATE GOVERNMENT IN THIS BEHALF. THIS PHRASE WAS SUBSTITU TED BY THE PHRASE MUNSIF HAVING TERRITORIAL JURISDICTION BY THE AFORE MENTIONED AMENDMENT. EVEN AFTER THIS AMENDMENT WHEN AN APPLICATION IS RE QUIRED TO BE MADE TO SECTION 8 OF THE ACT EITHER TO APPLY SECTION 5 OF T HE LIMITATION ACT OR ITS PRINCIPLES SO AS TO ENABLE A PARTY TO MAKE AN APPLI CATION AFTER THE EXPIRY OF THE PERIOD OF LIMITATION PRESCRIBED ON SHOWING SUFF ICIENT CAUSE FOR NOT MAKING AN APPLICATION WITHIN TIME. THE ACT IS OF 1955 AND FOR ALL THESE YEARS, NO PROVISION IS MADE UNDER SECTION 8 OF THE ACT PROVID ING FOR CONDONATION OF DELAY. THUS, WHEN SECTION 5 OF THE LIMITATION AC T IS NOT MADE APPLICABLE TO THE PROCEEDINGS UNDER SECTION 8 OF TH E ACT UNLIKE TO THE OTHER PROCEEDINGS UNDER THE ACT, AS ALREADY STATED ABOVE, IT IS APPROPRIATE TO CONSTRUE THAT THE PERIOD OF LIMITATI ON PRESCRIBED UNDER SECTION 8 OF THE ACT SPECIFICALLY AND EXPRESSLY GOV ERNS AN APPLICATION TO BE MADE UNDER THE SAID SECTION AND NOT THE PERIO D PRESCRIBED UNDER ARTICLE 137 OF THE LIMITATION ACT . 37. IN OUR OPINION, THE TRIBUNAL COMMITTED AN ERROR IN APPLYING THE PRINCIPLE OF CONSCIOUS OMISSION IN THE PRESENT CASE. FIRSTLY, AS ALREADY OBSERVED, WE HAVE SERIOUS DOUBT WHETHER SUCH PRINCIPLE CAN BE APPLIED BY COMPARING THE DRAFT 17 PRESENTED IN PARLIAMENT AND ULTIMATE LEGISLATION WH ICH MAY BE PASSED. SECONDLY, THE STATUTORY PROVISION IS AMPLY CLEAR. 38. IN THE RESULT, WE ARE OF THE OPINION THAT SECTI ON 40(A)(IA) WOULD COVER NOT ONLY TO THE AMOUNTS WHICH ARE PAYABLE AS ON 31 TH MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR. OF COURSE, AS LONG AS THE OTHER REQUIREMENTS OF THE SAID PROVISION EXIST. IN THAT CONTEXT, IN OU R OPINION THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (SURPA), DOES NOT LAY DOWN CORRECT LAW. 39. WE ANSWER THE QUESTIONS AS UNDER:- QUESTION (1) IN THE NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEES. QUESTION (2) ALSO IN THE NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEES. THUS IT IS CLEAR THAT HON'BLE GUJARAT HIGH COURT HA S CONSIDERED ALL ASPECTS OF THE ISSUES RAISED IN THE DECISION OF SPE CIAL BENCH IN CASE OF MERILYN SHIPPING TRANSPORTERS V. ACIT (SUPR A). WE FURTHER FIND THAT THAT EVEN HON'BLE CALCUTTA HIGH COURT HAS OVERRULED THIS DECISION IN CASE OF CIT VS. CRESENT EXPORT SYNDICAT E. MOREOVER CHANDIGARH BENCH OF THE TRIBUNAL CONSISTENTLY HAS BEEN FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF CIT V. SIKANDARKHAN N TUNWAR AND OTHERS (SUPRA) AS WELL AS THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN CASE OF CIT VS. C RESENT EXPORT SYNDICATE (SUPRA). 25 NOW THE QUESTION ARISES WHETHER DISMISSAL OF SLP BY HON'BLE SUPREME COURT IN CASE OF CIT V. VECTOR SHIPPING SE RVICES (P) LTD (SUPRA) WOULD CHANGE THE ABOVE LEGAL POSITION. WE ARE AFRAID THE ANSWER IS NO. THE HON'BLE SUPREME COURT HAD ITS ELF CONSIDERED THE ISSUE IN CASE OF V.M. SALGAOCAR AND BROS. PVT L TD V. CIT, 243 ITR 383. IT WAS OBSERVED BY THE COURT ON THIS ISSU E AS UNDER: DIFFERENT CONSIDERATIONS APPLY WHEN A SPECIAL LEA VE PETITION UNDER ARTICLE 136 OF THE CONSTITUTION IS SIMPLY DISMISSED BY SAYING DISMISSED, AND AN APPEAL PROVIDED UNDER ARTICLE 13 3 IS DISMISSED ALSO WITH THE WORDS THE APPEAL IS DISMISSED. IN THE FO RMER CASE IT HAS BEEN LAID DOWN BY THIS COURT THAT WHEN A SPECIAL LEAVE P ETITION IS DISMISSED THIS COURT DOES NOT COMMENT ON THE CORRECTNESS OR O THERWISE OF THE ORDER FROM WHICH LEAVE TO APPEAL IS SOUGHT. BUT WHAT THE COURT MEANS IS THAT IT DOES NOT CONSIDER IT TO BE A FIT CASE FOR EXERCISE OF ITS JURISDICTION UNDER ARTICLE 136 OF THE CONSTITUTION. THAT CERTAINLY COU LD NOT BE SO WHEN AN APPEAL IS DISMISSED THOUGH BY A NON-SPEAKING ORDER. HERE THE DOCTRINE OF MERGER APPLIES. IN THAT CASE, THE SUPREME COURT UPHOLDS THE DECISION OF THE HIGH COURT OR THE TRIBUNAL FROM WHICH THE AP PEAL IS PROVIDED UNDER CLAUSE (3) OF ARTICLE 133. THIS DOCTRINE OF MERGER DOES NOT APPLY IN THE CASE OF DISMISSAL OF A SPECIAL LEAVE PETITION UNDER ARTICLE 136. WHEN AN APPEAL IS DISMISSED THE ORDER OF THE HIGH COURT IS MERGED WITH THAT OF THE SUPREME COURT. WE QUOTE THE FOLLOWING PARAGRAPH FROM THE JUDGMENT OF THIS COURT IN THE CASE OF SUPREME COURT EMPLOYEE S WELFARE ASSOCIATION V. UNION OF INDIA, AIR 1990 HON'BLE SUP REME COURT 334; [1989] 4 SCC 187 (AT PAGE 344 OF AIR 1990 S.C): 22. IT HAS BEEN ALREADY NOTICE THAT THE SPECIAL LE AVE PETITION FILED ON BEHALF OF THE UNION OF INDIA AGAINST THE SAID JUDGM ENTS OF THE DELHI HIGH COURT WERE SUMMARILY DISMISSED BY THIS COURT. IT IS NOW A WELL SETTLED PRINCIPLE OF LAW THAT WHEN A SPECIAL LEAVE PETITION IS SUMMARILY DISMISSED UNDER ARTICLE 136 OF THE CONSTITUTION, BY SUCH DISM ISSAL THIS COURT DOES NOT LAY DOWN ANY LAW, AS ENVISAGED BY ARTICLE 141 O F THE CONSTITUTION, AS CONTENDED BY THE LEARNED ATTORNEY-GENERAL. IN INDIA N OIL CORPORATION LTD. V. STATE OF BIHAR [1987] 167 ITR 897; [1986] 4 SCC 146; AIR 1986 HON'BLE SUPREME COURT 1780, IT HAS BEEN HELD BY THI S COURT THAT THE DISMISSAL OF A SPECIAL LEAVE PETITION IN LIMINE BY A NON-SPEAKING ORDER DOES NOT JUSTIFY ANY INFERENCE THAT, BY NECESSARY I MPLICATION, THE CONTENTIONS RAISED IN THE SPECIAL LEAVE PETITION ON THE MERITS OF THE CASE HAVE BEEN REJECTED BY THE SUPREME COURT. IT HAS BEE N FURTHER HELD THAT THE EFFECT OF A NON-SPEAKING ORDER OF DISMISSAL OF A SPECIAL LEAVE PETITION WITHOUT ANYTHING MORE INDICATING THE GROUNDS OR REA SONS OF ITS DISMISSAL MUST, BY NECESSARY IMPLICATION, BE TAKEN TO BE THAT THE SUPREME COURT HAD DECIDED ONLY THAT IT WAS NOT A FIT CASE WHERE S PECIAL LEAVE SHOULD BE GRANTED. IN UNION OF INDIA V. ALL INDIA SERVICES PE NSIONERS ASSOCIATION 18 [1988] 2 SCC 580; AIR 1988 HON'BLE SUPREME COURT 50 1, THIS COURT HAS GIVEN REASONS FOR DISMISSING THE SPECIAL LEAVE PETI TION. WHEN SUCH REASONS ARE GIVEN, THE DECISION BECOMES ONE WHICH A TTRACTS ARTICLE 141 OF THE CONSTITUTION WHICH PROVIDES THAT THE LAW DEC LARED BY THE SUPREME COURT SHALL BE BINDING ON ALL THE COURTS WITHIN THE TERRITORY OF INDIA. IT, THEREFORE, FOLLOWS THAT WHEN NO REASON IS GIVEN, BU T A SPECIAL LEAVE PETITION IS DISMISSED SIMPLICITER, IT CANNOT BE SAI D THAT THERE HAS BEEN A DECLARATION OF LAW BY THIS COURT UNDER ARTICLE 141 OF THE CONSTITUTION. IT WAS, THEREFORE, CONTENDED THAT ONCE THIS COURT I N CIVIL APPEAL NO. 424 OF 1999, HAS DISMISSED THE APPEAL IT HAS UPHELD THE ORDER OF THE HIGH COURT IN THE CASE OF THE ASSESSMENT YEAR 1980-81 AN D IT CANNOT TAKE A DIFFERENT VIEW FOR THE ASSESSMENT YEAR 1979-80. THE RE APPEARS TO BE SUBSTANCE IN THE SUBMISSION OF THE ASSESSEE. FROM ABOVE IT BECOMES CLEAR THAT AFTER AN SLP IS DI SMISSED IN LIMINE OR SIMPLICTOR AS SUCH THEN IT CANNOT BE SAID THAT THE HON'BLE SUPREME COURT HAS COMMENTED ON THE MERITS OF THE IS SUE. IT IS A SIMPLE CASE OF REJECTION OF PRAYER FOR ENTERTAINING THE SLP. THE SAME VIEW WAS TAKEN BY THE HON'BLE SUPREME COURT A GAIN IN CASE OF KUNHAYAMMED AND OTHERS V STATE OF KERALA AND ANO THER, 245 ITR 360 (S.C). HEAD NOTE READS AS UNDER: ARTICLE 136 OF THE CONSTITUTION OF INDIA CONFERS A SPECIAL JURISDICTION ON THE SUPREME COURT WHICH IS SWEEPING IN NATURE. IT I S A RESIDUARY POWER IN THE SENSE THAT IT CONFERS AN APPELLATE JURISDICT ION ON THE SUPREME COURT SUBJECT TO SPECIAL LEAVE BEING GRANTED IN SUC H MATTERS AS MAY NOT BE COVERED BY THE PRECEDING ARTICLES. EVEN IN THE F IELD COVERED BY THE PRECEDING ARTICLES, JURISDICTION CONFERRED BY ARTIC LE 136 IS AVAILABLE TO BE EXERCISED IN AN APPROPRIATE CASE. IT IS AN UNTRAMME LED RESERVOIR OF POWER INCAPABLE OF BEING CONFINED TO DEFINITIONAL B OUNDS; THE DISCRETION CONFERRED ON THE SUPREME COURT BEING SUBJECTED TO O NLY ONE LIMITATION, THAT IS, THE WISDOM AND GOOD SENSE OR SENSE OF JUST ICE OF THE JUDGES. NO RIGHT OF APPEAL IS CONFERRED UPON ANY PARTY; ONLY A DISCRETION IS VESTED IN THE SUPREME COURT TO INTERFERE BY GRANTING LEAVE TO AN APPLICANT TO ENTER IN ITS APPELLATE JURISDICTION NOT OPEN OTHERWISE AN D AS OF RIGHT. THE JURISDICTION CONFERRED BY ARTICLE 136 IS DIVISI BLE INTO TWO STAGES; THE FIRST STAGE IS UP TO THE DISPOSAL OF THE PRAYER FOR SPECIAL LEAVE TO APPEAL; THE SECOND STAGE COMMENCES IF AND WHEN THE LEAVE TO APPEAL IS GRANTED AND THE PETITION FOR SPECIAL LEAVE TO APPEAL IS CON VERTED INTO AN APPEAL. WHILE HEARING THE PETITION FOR SPECIAL LEAVE TO APP EAL, THE SUPREME COURT IS CALLED UPON TO SEE WHETHER THE PETITIONER SHOULD BE GRANTED SUCH LEAVE OR NOT. WHILE HEARING SUCH PETITION THE SUPRE ME COURT DOES NOT EXERCISE ITS APPELLATE JURISDICTION; IT MERELY EXER CISES ITS DISCRETIONARY JURISDICTION TO GRANT OR NOT TO GRANT LEAVE TO APPE AL IF THE PETITION SEEKING GRANT OF SPECIAL LEAVE IS D ISMISSED, IT IS AN EXPRESSION OF OPINION BY THE SUPREME COURT THAT A C ASE FOR INVOKING THE APPELLATE JURISDICTION OF THE COURT WAS NOT MADE OU T. AN ORDER REFUSING SPECIAL LEAVE TO APPEAL MAY BE BY A NON SPEAKING ORDER OR BY A SPEAKING ORDER. IN EITHER CASE IT DOE S NOT ATTRACT THE DOCTRINE OF MERGER. AN ORDER REFUSING SPECIAL LEAVE TO APPEAL DOES NOT STAND SUBSTITUTED IN THE PLACE OF THE ORDER UNDER C HALLENGE. ALL THAT IT MEANS IS THAT THE SUPREME COURT WAS NOT INCLINED TO EXERCISE ITS DISCRETION SO AS TO ALLOW THE APPEAL BEING FILED. W HATEVER BE THE PHRASEOLOGY EMPLOYED IN THE ORDER OF DISMISSAL, IF IT IS A NON-SPEAKING ORDER, I.E., IT DOES NOT ASSIGN REASONS FOR DISMISS ING THE SPECIAL LEAVE PETITION, IT WOULD NEITHER ATTRACT THE DOCTRINE OF MERGER SO AS TO STAND SUBSTITUTED IN THE PLACE OF THE ORDER PUT IN ISSUE BEFORE IT, NOR BE A DECLARATION OF LAW BY THE SUPREME COURT UNDER ARTIC LE 141 OF THE CONSTITUTION FOR THERE IS NO LAW WHICH HAS BEEN DEC LARED. IF THE ORDER REFUSING SPECIAL LEAVE TO APPEAL IS A SPEAKING ORDER, I.E., IT GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAIN ED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 WHICH WILL OBVIOUSLY BE BINDING ON ALL COURTS A ND TRIBUNALS IN INDIA AND CERTAINLY THE PARTIES THERETO. SECONDLY, OTHER THAN THE DECLARATION OF 19 LAW, WHATEVER IS STATED IN THE ORDER ARE THE FINDIN GS RECORDED BY THE SUPREME COURT WHICH WOULD BE BINDING ON THE PARTIES AND THE COURT, TRIBUNAL OR AUTHORITY WHOSE ORDER WAS UNDER CHALLEN GE, IN ANY PROCEEDINGS SUBSEQUENT THERETO, ON THE PRINCIPLE OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNT RY. THE DECLARATION OF LAW WILL BE GOVERNED BY ARTICLE 141 BUT, THE CAS E NOT BEING ONE WHERE LEAVE IS GRANTED, THE DOCTRINE OF MERGER DOS NOT AP PLY. FROM ABOVE IT BECOMES CLEAR THAT IF AN SLP IS DISMI SSED THEN IT CANNOT BE SAID THAT THE HON'BLE SUPREME COURT HAS LAID DOWN ANY LAW. NOW IN THE PRESENT CASE THE SLP IN CASE OF CI T V VECTOR SHIPPING SERVICES (SUPRA) FOLLOWING ORDER HAS BEEN PASSED BY THE HON'BLE SUPREME COURT : HEARD MR. MUKUL ROHTAGI, LD. ATTORNEY GENERAL, FOR THE PETITIONER DELAY IN FILING AND REFILLING SPECIAL LEAVE PETITIO N IS CONDONED SPECIAL LEAVE PETITION IS DISMISSED THEREFORE IT IS A CASE OF SIMPLE DISMISSAL OF SLP A ND CANNOT BE SAID TO HAVE LAID DOWN ANY LAW. IN VIEW OF THIS DIS CUSSION AND THE EARLIER DISCUSSION WE HAVE PREFERRED TO FOLLOW THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF CIT V. SIKAND ARKHAN N. TUNVAR & ORS, (SUPRA) INSTEAD THE DECISION OF HON'B LE ALLAHABAD HIGH COURT IN CASE OF CIT V VECTOR SHIPPING SERVICE S (SUPRA), WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND CONFIRM THE ORDER OF LD. CIT(A). FOLLOWING THE ABOVE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE. 18 GROUND NO. 5 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS INVESTED A SUM OF RS. 15,38,82,785/- I N SHARES OF OTHER COMPANIES, THEREFORE THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 14A R.W.R. 8D AND DISALL OWED A SUM OF RS. 109,32,198/-. 19 ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY SU BMITTED THAT RULE 8D WAS INSERTED BY INCOME TAX (FIFTH AMEN DMENT) RULES 2008 W.E.F. 23.4.2008 THEREFORE SAME WAS NOT APPLICABLE IN THE PRESENT ASSESSMENT YEAR . 20 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS DID NOT FIND FORCE IN THE SAME AND REJECTED THE CLAIM OF TH E ASSESSEE. 21 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 22 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT 20 IDENTICAL ISSUE CAME UP FOR CONSIDERATION OF THE TR IBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2005-06 IN ITA NO. 771/CHD/2008. THIS ISSUE WAS ADJUDICATED VIDE PARA 12 WHICH READS AS UNDER: 12 WE HAVE CONSIDERED THE RIVAL SUBMISSION CAREFUL LY AND FIND THAT HONBLE BOMBAY HIGH COURT IN CASE OF GODREJ AN D BOYCE MFG. CO. LTD. V. DEPUTY CIT AND ANOTHER (SUPRA) HAS CLEA RLY HELD RULE 8D IS APPLICABLE FROM AY 2008-09. THEREFORE THIS RU LE CANNOT BE APPLIED IN THE PRESENT CASE WHICH IS FOR ASSESSMENT YEAR 2005-06. AT THE SAME TIME REASONABLE DISALLOWANCES HAS TO BE MADE. CONSIDERING OVER ALL FACT OF THE CASE WE ARE OF THE OPINION THAT DISALLOWANCE OF RS. 1 LAC WOULD MEET THE ENDS OF JU STICE. ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT (A) A ND DIRECT AO TO MAKE DISALLOWANCE OF RS. 1 LAC UNDER SECTION 14 A. IN THE PRESENT YEAR ALSO RULE 8D IS NOT APPLICABLE AND THEREFORE ONLY REASONABLE DISALLOWANCE CAN BE MADE. CONSIDERI NG THE OVERALL FACTS, WE ARE OF THE OPINION THAT DISALLOWA NCE OF RS. 5 LAKHS WOULD MEET THE ENDS OF JUSTICE AND THEREFORE ACCORDINGLY WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO MAKE DISALLOWANCE OF RS. 5 LAKHS U/S 14A . 23 GROUND NO. 6 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PAID INTEREST AMOUNTING TO RS. 37977/- ON A VEHICLE LOAN TO KOTAK MOHINDRA PRIMUS LTD. ON WHICH NO TAX WAS DEDUCTED. VIDE LETTER DATED 21.11.2008 IT WAS A DMITTED THAT THE TAX HAS NOT BEEN DEDUCTED ON THE SAID PAYM ENT, THEREFORE THIS AMOUNT WAS ADDED TO THE INCOME OF TH E ASSESSEE. 24 ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY SU BMITTED THAT CHARGES PAID TO KOTAK MOHINDRA PRIMUS LTD. CAN NOT BE TREATED AS INTEREST AND THEREFORE PROVISIONS OF SEC TION 194A WERE NOT APPLICABLE. 25 THE LD. CIT(A) DID NOT FIND FORCE IN THE SAME AN D DECIDED THE ISSUE AGAINST THE ASSESSEE VIDE PARA 6.3. 21 26 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE LD. CIT(A). 27 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THIS ISSUE HAS BEEN ADJUDICATED VIDE PARA 6.3 OF IMPUGNE D ORDER WHICH IS AS UNDER: 6.3 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 2(28A) GIVES THE DEFINITION OF INTEREST, WHICH READ S AS UNDER: 2(28A) INTEREST MEANS INTEREST PAYABLE IN ANY MA NNER IN RESPECT OF ANY MONEYS BORROWED OR DEBT INCURRED (INCLUDING A DEPOSIT, CLAIM OR OTHER SIMILAR RIGHT OR OBLIGATION) AND INC LUDES ANY SERVICE FEE OR OTHER CHARGE IN RESPECT OF THE MONEYS BORROW ED OR DEBIT INCURRED OR IN RESPECT OF ANY CREDIT FACILITY WHICH HAS NOT BEEN UTILIZED. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY ADJUDI CATED THE ISSUE AND NO INTERFERENCE IS CALLED FOR IN HIS ORDE R. 28 GROUND NO. 7 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS NOT DEDUCTED TAX ON VARIOUS TYPES OF WORKS FOR REPAIR ON PLANT AND MACHINERY TO THE FOLLOWING PARTIES: NAME DATE AMOUNT REMARKS KALYAN PROJECTS CONSTRUCTION CO 8.7.2005 BILLNO. 1109 22750 JOG WORK SARVAN KUMAR 2.12.2006 32,975 JOB WORK OF BUILDING REPAIR THOUGH THE DETAILS WERE FILED BUT IT WAS ADMITTED T HAT NO TAX WAS DEDUCTED AND THEREFORE THE ASSESSING OFFICER IN VOKED THE PROVISIONS OF SECTION 40(A)(IA) AND DISALLOWED A SUM OF RS. 55275/-. 29 ON APPEAL BEFORE THE LD. CIT(A) IT WAS SUBMITTE D THAT THE ASSESSEE HAS DEDUCTED TAX ON REPAIR AMOUNTING TO RS . 22750 AND THEREFORE THIS DISALLOWANCE WAS WRONG. SINCE N O DETAIL AND EVIDENCE WERE GIVEN FOR DEDUCTION OF TAX, THE L D. CIT(A) CONFIRMED THE ADDITION. 22 30 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE LD. CIT(A). 31 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THE ISSUE HAS BEEN DECIDED VIDE PARA 7.3 WHICH IS UNDER : I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSEE HAS RAILED TO GIVE ANY DETAIL REGARDING THE DEDUCTI ON OF TDS ON THE REPAIR BILL. THE ADDITION MADE BY THE ASSESSING OF FICER IS CON AND THIS GROUND OF THE ASSESSEE IS DISMISSED. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY DECIDE D THE ISSUE BECAUSE THE ASSESSEE WAS NOT ABLE TO FURNISH ANY EV IDENCE REGARDING DEDUCTION OF TAX. THEREFORE WE CONFIRM HI S ORDER. 32 GROUND NO. 8 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS GIVEN INTEREST FREE ADVANCES OF RS. 101,36,000/ - TO SWIFT FUNDAMENTAL RESEARCH AND EDUCATION SOCIETY AND RS. 2 CRORES TO SWIFT INFRASTRUCTURE. BOTH THESE PARTIES WERE S ISTER CONCERNS OF THE ASSESSEE. THE ASSESSEE WAS ASKED WHY PROPOR TIONATE INTEREST SHOULD NOT BE DISALLOWED. IN RESPONSE IT W AS STATED VIDE LETTER DATED 25.12.2008 AS UNDER: AN AMOUNT OF RS. 101, 36,000/- WAS GIVEN TO SWIFT FOUNDATION RESEARCH AND EDUCATION SOCIETY FOR RESEARCH AND DEV ELOPMENT ON BEHALF OF THE COMPANY. AS THESE EXPENSES WERE NOT INCURRED BY THE SAID SOCIETY DURING THE YEAR HENCE SHOWN AS ADV ANCE TO SAID SOCIETY WITHOUT CLAIMING IT AS REVENUE EXPENDITURE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE RE PLY. HOWEVER, HE FURTHER OBSERVED THAT SINCE ASSESSEE WA S HAVING MIXED FUNDS AND HE CALCULATED THE RATE OF INTEREST AT 4.33% AND DISALLOWED A SUM OF RS. 790400/-. 33 ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY ST ATED THAT THE ADVANCES WERE GIVEN FOR BUSINESS EXPEDIENCY AND RELIANCE WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V. S.A. BUILDERS LTD. 288 ITR 1. HOWEVER, T HE LD. 23 CIT(A) DID NOT FIND FORCE IN THE SAME AND DECIDED T HE ISSUE AGAINST THE ASSESSEE. 34 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE LD. CIT(A). 35 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THE LD. CIT(A) DECIDED THIS ISSUE VIDE PARA 8.3 WHICH I S AS UNDER: I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE ASSESSEE COULD NOT GIVE ANY EVIDENCE HOW THE ASSESS EE-COMPANY HAS GOT THE BENEFIT BY MAKING INTEREST FREE ADVANCE S TO M/S SWIFT FUNDAMENTAL RESEARCH & EDUCATION SOCIETY AND SWIFT INFRASTRUCTURE. A MERE STATEMENT THAT IT IS GIVEN A S A MEASURE OF COMMERCIAL EXPEDIENCY WITHOUT ANY SUPPORTING EVIDEN CE IS NOT SUFFICIENT TO DISCHARGE THE ONUS. THE ASSESSEE IS A PPLYING THE RATIO OF THE DECISION IN THE CASE OF S.A. BUILDERS V CIT, 288 ITR 1. IN THAT CASE, HON'BLE SUPREME COURT RESTORED THE MA TTER TO THE FILE OF ITAT TO GIVE A FINDING WHETHER INTEREST FREE ADV ANCES WERE GIVEN FOR BUSINESS PURPOSES. HON'BLE SUPREME COURT HAS NOT LAID DOWN ANY LAW THAT NO DISALLOWANCE CAN BE MADE IN RE SPECT OF INTEREST FEE ADVANCES GIVEN TO SISTER CONCERN. THE ONUS IS ON THE ASSESSEE TO PROVE BEYOND DOUBT THAT THE INTEREST FE E ADVANCES WERE MEANT FOR BUSINESS PURPOSES. THE ASSESSEE HAS ALSO ARGUED THAT SUFFICIENT FUNDS IN THE SHAPE OF RESERVE SURPL US, ETC. WERE AVAILABLE WITH THE ASSESSEE. THE ASSESSEE FAILED T O ESTABLISH ANY LINK OF THESE NON INTEREST BEARING FUNDS WITH THE I NTEREST FREE ADVANCES. AS PER THE DECISION OF HON'BLE HIGH COUR T OF PUNJAB & HARYANA THE ONUS IS ON THE ASSESSEE TO ESTABLISH T HE LINK. IN THE LATEST DECISION, ITAT IN THE CASE OF VIJAY CHAUHAN, ITA NO. 851/CHD/2008 DATED 27.2.2009 (PLACED AT ANNEXURE 3) , AFTER REFERRING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILDERS AND ALSO THE DECISION OF HON'BLE SUPR EME COURT IN THE CASE OF ABHISHEK INDUSTRIES HAS UPHELD THE DISA LLOWANCE OF INTEREST. IN ANOTHER DECISION I.E. IN THE CASE OF TRIDENT INFOTEC, IN ITA NO. 800/CHD/2008 DATED 27.1.2009 (PLACED AT ANN EXURE 4), ITAT, CHANDIGARH HAS UPHELD THE DISALLOWANCE OF INT EREST. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY DECIDE D THE ISSUE AGAINST THE ASSESSEE AS THE ASSESSEE HAS HOT SHOWN WHAT IS THE BUSINESS EXPEDIENCY. SOME GENERAL STATEMENT IS NOT SUFFICIENT. THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF CIT(A) AND CONFIRM THE SAME. 36 GROUND NO. 9 - AFTER HEARING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED PREVIOUS YEAR EXPENSES AMOUNTING TO RS. 1071907/- TO THE PROFIT AND LOSS ACCOUNT. THE ASSE SSEE WAS 24 ASKED TO FURNISHED THE DETAILS AND SHOW HOW SUCH EX PENSES WERE ALLOWABLE IN THE PRESENT YEAR. THE ASSESSEE CO ULD NOT EXPLAIN HOW SUCH EXPENSES WERE ALLOWABLE DURING THE YEAR, THEREFORE THE ASSESSING OFFICER DISALLOWED THE PREV IOUS YEAR EXPENSES AMOUNTING TO RS. 1071907/-. 37 ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY SU BMITTED AS UNDER: MOST OF THESE EXPENSES RELATE TO PURCHASE OF RAW M ATERIAL, PACKING MATERIAL, REIMBURSEMENT OF FIELD STAFF EXP ENSES, FULL AND FINAL SETTLEMENT OF EMPLOYEES, NOTICE PAY SALARY ET C. THESE EXPENSES ARE RECOGNIZED IN THE YEAR IN WHICH THE EX PENSES ARE ACTUALLY INCURRED AFTER RECEIPT OF CLAIM FROM VARIO US EMPLOYEES AND FIELD STAFF. THESE EXPENSES ARE DEBITED UNDER THE HEAD PRIOR PERIOD EXPENSES AS THESE EXPENSES WERE INCURRED IN THE YEAR UNDER CONSIDERATION. FURTHER THE PURCHASE OF RAW M ATERIAL, PACKING MATERIAL AND CONSUMABLE STORES DO NOT EFFEC T THE PROFIT AND LOSS OF EARLIER YEAR AS IN CASE THESE PURCHASE HAD BEEN BOOKED IN PRECEDING YEAR THEN PURCHASES WOULD HAVE BEEN INCREASED AND AT THE SAME TIME THE CLOSING STOCK WO ULD HAVE INCURRED AND THE VALUE OF OPENING STOCK BROUGHT FOR WARD DURING THE YEAR WOULD HAVE BEEN INCREASED. 38 THE LD. CIT(A) DID NOT FIND FORCE IN THE SUBMISS IONS AND DECIDED THE ISSUE AGAINST THE ASSESSEE. 39 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE LD. CIT(A). 40 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) VIDE PARA 9.3 WHICH IS AS UNDER: I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE PERUSAL OF DETAILS SHOWS THAT THESE EXPENSES DO NOT CRYSTALLIZ E IN THE PRESENT ASSESSMENT YEAR. IT IS THE DUTY OF THE ASSESSEE TO ASK THE EMPLOYEES AND THE FIELD STAFF TO GIVE THE DETAILS O F EXPENSES WITHIN TIME. ANY LEVERAGE CANNOT BE GIVEN TO THE ASSESSEE TO CLAIM THE EXPENSES IF THERE IS A DELAY ON THE PART OF THE EMP LOYEES AND THE FILED STAFF. IN MY OPINION, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE DISALLOWANCE AND THUS THIS GROUND OF THE ASSESSEE IS DISMISSED. IN OUR OPINION, THE LD. CIT(A) HAS DECIDED THE ISS UE CORRECTLY BECAUSE PREVIOUS YEAR EXPENSES COULD BE ALLOWED ONL Y IF IT IS PROVED THAT SUCH EXPENDITURE CRYSTALLIZED DURING TH E YEAR. THIS 25 FACT HAS NOT BEEN PROVED AND THEREFORE THERE IS NOT HING WRONG WITH THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY W E CONFIRM THE SAME. 41 GROUND NO. 10 - BRIEF FACTS OF THE CASE ARE THA T ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB ON ITS PARWANOO UNIT NO. 2 AND THE TOTAL PROFITS OF THIS UNIT WERE SHOWN AT RS. 13 ,47,52,105/-. SOME DETAILS WERE FILED BUT ACCORDING TO THE ASSESS ING OFFICER OTHER INCOME LIKE INTEREST, DISCOUNT RECEIPTS AND I NSURANCE CLAIM ETC. CANNOT BE SAID TO HAVE BEEN DERIVED FROM INDUSTRIAL UNDERTAKING, THEREFORE SUCH AMOUNTS WERE REDUCED FR OM THE PROFITS FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80IB IN THE LIGHT OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF PANDIAN CHEMICALS LTD. V CIT, 262 ITR 278. 42 ON APPEAL BEFORE THE LD. CIT(A) IT WAS SUBMITTED AS UNDER: THE INCOME FROM OTHER SOURCES INCLUDE DISCOUNT REC EIVED, EXCESS RECOVERY, SALARY RECEIVED IN LIEU OF NOTICE, INSURA NCE CLAIM RECEIVED AND INTEREST RECEIVED ON FDRS PURCHASED FO R L/C PURPOSES. THESE RECEIPTS RE PART OF BUSINESS INCOM E AND CANNOT BE TREATED AS INCOME FROM OTHER SOURCES AS THESE RE CEIPTS ARE DIRECTLY RELATED TO THE BUSINESS OF APPELLANT AND E XPENSES INCURRED FOR THE BUSINESS DURING THE YEAR. 43 THE LD. CIT(A) DID NOT FIND FORCE IN THE SUBMISS IONS AND DISMISSED THIS GROUND. 44 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE LD. CIT(A). 45 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FI ND THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) VIDE PARA 10.3 WHICH IS AS UNDER: I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT IS A SETTLED LAW THAT THE DEDUCTION IS ALLOWED LONELY TO THE INC OME WHICH IS DERIVED FROM THE INDUSTRIAL UNDERTAKING. EVEN THOUG H IT MAYBE TREATED AS PART OF BUSINESS INCOME, YET THE INCOME WOULD BE DERIVED FROM THE INDUSTRIAL UNDERTAKING. IT IS A S ETTLED LAW. THE 26 WORDS DERIVED FROM ARE HAVING NARROWER MEANING. THE LAW IS SETTLED BY HON'BLE SUPREME COURT IN THE CASE OF PA NDIAN CHEMICALS LTD V CIT, 262 ITR 278 (S.C). THE ASSESS ING OFFICER IS JUSTIFIED IN EXCLUDING THESE ITEMS FOR THE PURPOSE OF DEDUCTION U/S 80IB. THIS GROUND OF THE ASSESSEE IS DISMISSED. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY DECIDE D THE ISSUE BECAUSE THE INTEREST AND OTHER ITEMS CANNOT BE SAID TO HAVE BEEN DERIVED FROM INDUSTRIAL UNDERTAKING . THEREFOR E WE UPHOLD THE ORDER OF THE LD. CIT(A). 46 GROUND NO. 11 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS NOT ALLOCATED R&D EXPENDITURE TO THE P ARWANOO UNIT WHICH WAS ELIGIBLE FOR DEDUCTION U/S 80IB. IN RESPONSE TO THE QUERY IT WAS MAINLY STATED THAT THE ACT ALLOWS WEIGHTED DEDUCTION TO ENCOURAGE HUGE INVESTMENT IN THE FIELD OF MEDICINE AND OTHER PRIORITY SECTORS. THE EXPENDITUR E IS INCURRED TO DEVELOP NEW PHARMACEUTICAL PRODUCTS. THEREFORE THERE WAS NO LOGIC OF REDUCING THE SAME ON A SPECIFIC UNIT. 47 ON APPEAL, THE LD. CIT(A)HELD THAT SUCH EXPENSES SHOULD BE ALLOCATED ON THE BASIS OF SALES RATIO. 48 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE ASSESSING OFFICER. 49 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND RELEVANT MATERIAL ON RECORD, WE FIND TH AT THIS ISSUE CAME UP FOR CONSIDERATION IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2006-07 IN THE APPEAL FILED BY THE REVENUE IN ITA NO. 729/CHD/2009. IN THAT CASE THE GROUND READ S AS UNDER: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) VIDE APPELLATE ORDER NO. 208/P/08-09 HAS ERRED IN D ISALLOWANCE OF DEDUCTION U/S 80IB ON SALARY OF DIRECTORS AMOUNTING TO RS. 111, 24,000/-. 2 THE LD. CIT(A) HAS ERRED IN DISALLOWANCE OF DEDUC TION U/S 80IB ON SEED MARKETING EXPENSES AMOUNTING TO RS. 11 9,50,367/-. 3 THE LD. CIT(A) HAS ERRED IN DISALLOWANCE OF DEDUC TION U/S 80IB ON R&D EXPENSES AMOUNTING TO RS. 208,67,119/-. 27 THIS ISSUE WAS ADJUDICATED VIDE PARA 6 & 7 WHICH AR E AS UNDER: 6. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIB UNAL IN ITA NO. 636/CHD/2001 RELATING TO ASSESSMENT YEAR 1997-98 WH EREIN IT WAS HELD AS UNDER:- ..QUITE CLEARLY, THE ASSESSEE BROUGHT OUT BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) THAT THE MANNER OF MAINTENANCE OF THE RECORDS AND THE SYSTEM OF APPORTIONMENT OF IMPUGNED EXPENSES ON THE BASIS OF THE PROPORTIONATE TURNOVER OF VARIOUS UNIT S WAS ACCEPTED IN THE PAST AND THERE NO COGENT REASONS H AVE BEEN BROUGHT OUT BY THE REVENUE WHICH WOULD REQUIRE DEPARTURE FROM THE SAME. 7. THE ASSESSEE BEFORE US HAD ALLOCATED THE IMPUGNE D EXPENSES ON THE BASIS OF SALES RATIO, WHICH IS AN ACCEPTED ACCO UNTING STANDARD APPLICABLE TO COMPUTATION OF INCOME OF VARIOUS UNIT S. THE FACTUM OF INCURRING OF THE EXPENDITURE IS NOT QUESTIONED. THE ONLY POINT OF DISPUTE WAS THE APPORTIONMENT OF THE IMPUGNED EXPENSES. TH E ASSESSEE HAD APPORTIONED THE SEED MARKETING AND DIRECTORS SALAR Y EXPENSES ON THE BASIS OF SALES RATIO AND THE R&D EXPENSES ON ACTUAL S WHEREAS THE ASSESSING OFFICER HAD ADOPTED THE BASIS OF PROFIT R ATIO FOR DETERMINING THE PROFIT ELIGIBLE FOR DEDUCTION U/S 80 IB OF THE ACT. THE METHOD ADOPTED BY THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWED FROM YEAR TO YEAR AND IN THE ABSENCE OF ANY ERROR BEING POINTED OUT BY THE R EVENUE AUTHORITIES, IN THE ADOPTION OF THE SAID METHOD AND WORKING OF T HE RESULT, WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT(A) IN DIRECTIN G THE ASSESSING OFFICER TO RE-WORK THE PROFITS ELIGIBLE FOR DEDUCTION U/S 8 0 IB OF THE ACT BY DEBITING THE IMPUGNED EXPENSES ON THE BASIS OF SAL ES RATIO. THE BURDEN TO PROVE THE METHOD OF ASSESSEE WRONG IS ON THE ASS ESSING OFFICER AS PER THE DECISION OF THE SUPREME COURT IN THE CASE O F REALEST BUILDERS AND SERVICES LTD 307 ITR 202 (SC). WE UPHOLD THE O RDER OF THE CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REV ENUE. FROM ABOVE IT IS CLEAR THAT R&D EXPENSES SHOULD BE ALLOCATED ON THE BASIS OF ACTUAL EXPENDITURE INCURRED. WE T HEREFORE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESS ING OFFICER TO ALLOCATE THE EXPENSES ACTUALLY INCURRED BY THE A SSESSEE ON R&D IN THE ELIGIBLE UNIT. 50 IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 511/CHD/2009 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. ITA NO. 428/CHD/2011 ASSESSEES APPEAL 51 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1 THAT THE ORDER OF LD. CIT(A) IS BAD, AGAINST THE FACTS AND LAW. 2 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF SEED MARKETING EXPENSES AMOUNTING T O RS. 4,56,56,288/-. 3 THAT THE LD. CIT(A) HAS WRONGLY DISALLOWED WEIGHT ED DEDUCTION ON RESEARCH AND DEVELOPMENT EXPENDITURE 28 INCURRED DURING THE YEAR U/S 35(2AB) OF THE ACT AMO UNTING TO RS. 3,64,14,403/-. 4 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT AMOUNTI NG TO RS. 85,34,057/-. 5 THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF EXPENSES OF RS. 460,000/- SHOWN AS CORPORATE AND ADMINISTRATIVE EXPENSES. 6 THAT THE LD. CIT(A) HAS ERRED IN NOT DISCUSSING O UR GROUND OF APPEAL FOR THE ADDITION OF RS. 411,99,000 /- ON ACCOUNT OF DEFERRED TAX WHILE CALCULATING THE TAX PAYABLE (MAT) U/S 115 JB OF THE ACT. 52 GROUND NO. 1 IS OF GENERAL NATURE AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. 53 GROUND NO. 2 IDENTICAL ISSUE HAS BEEN DECIDED WHILE ADJUDICATING ASSESSEES APPEAL IN ITA NO. 511/CHD/2 011 FOR ASSESSMENT YEAR 2006-07 VIDE PARA 12. THEREFORE F OLLOWING THAT DECISION WE DECIDE THIS ISSUE IN FAVOUR OF ASS ESSEE AND SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION T O EXAMINE THE GENUINENESS AND NATURE OF EXPENDITURE AND THEN ALLO W THE SAME IF THE SAME ARE GENUINE AND ARE OF REVENUE NAT URE. 54 GROUND NO. 3 - IDENTICAL ISSUE HAS BEEN DECIDED WHILE ADJUDICATING ASSESSEES APPEAL IN ITA NO. 511/CHD/2 011 FOR ASSESSMENT YEAR 2006-07 VIDE PARA 10. THEREFORE F OLLOWING THAT DECISION WE DECIDE THIS ISSUE AGAINST THE ASSE SSEE. 55 GROUND NO. 4 - IDENTICAL ISSUE HAS BEEN DECIDED WHILE ADJUDICATING ASSESSEES APPEAL IN ITA NO. 511/CHD/2 011 FOR ASSESSMENT YEAR 2006-07 VIDE PARA 22 AND FOLLOWING THE SAME WE RESTRICT THE DISALLOWANCE IN THIS YEAR TO RS. 4 LAKHS. THUS THIS GROUND IS PARTLY ALLOWED. 56 GROUND NO. 5 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE 29 ASSESSEE HAS CLAIMED EXPENDITURE AMOUNTING TO RS. 4 ,60,000/- UNDER THE HEAD CORPORATE AND OTHER ADMINISTRATIVE EXPENSES. THE ASSESSEE DID NOT FURNISH ANY DETAILS. IT WAS N OTICED THAT THIS PAYMENT WAS TOWARDS PENALTY BUT NO DETAILS OF THIS PENALTY EXPENSES WERE FURNISHED, THEREFORE THIS EXPENDITURE WAS DISALLOWED. 57 ON APPEAL IT WAS MAINLY SUBMITTED THAT OUT OF AB OVE PENALTY A SUM OF RS. 3,60,000/- RELATE TO INTEREST PAID TO EXCISE AND SERVICE TAX DEPARTMENT WHICH COULD NOT BE CALLE D IN THE NATURE OF PENALTY. THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS NOTED THAT THERE WAS NO EVIDENCE FILED BY THE ASSESSEE AND IN THE ABSENCE OF SUCH EVIDENCE THIS G ROUND WAS DISMISSED. 58 THE LD. D.R FOR THE REVENUE WAS HEARD. 59 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FO R THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT NO EVIDENCE HAS BEEN FURNISHED TO SHOW THE NATURE OF P ENALTY. IT IS SETTLED LAW THAT ANY EXPENDITURE INCURRED IN CON TRAVENTION OF ANY LAW IS NOT ALLOWABLE IN TERMS OF EXPLANATION TO SEC 37. THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF CIT (A) AND CONFIRM THE SAME. 60 GROUND NO. 6 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS REDUCED A SUM OF RS. 411,99,000/- ON A CCOUNT OF DEFERRED TAX FROM BOOK PROFIT. THE ASSESSING OFFIC ER ADDED A SUM TO THE BOOK PROFIT IN VIEW OF THE AMENDMENT MAD E IN CLAUSE VIII TO SEC 115 JB OF THE ACT. 61 THE LD. D.R FOR THE REVENUE WAS HEARD. 30 62 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT CLAUSE (VIII) TO SEC 115 JB WAS INSERTED BY FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2001. THIS CLAU SE READS AS UNDER: CLAUSE (VIII) TO SEC 115 JB - AN AMOUNT OF DEFERRE D TAX, IF ANY, SUCH AMOUNT IS CREDITED TO THE PROFIT AND LOSS ACCO UNT. THUS IT IS CLEAR THAT THE AMENDMENT IS RETROSPECTIV E AND IS APPLICABLE FROM ASSESSMENT YEAR 2001-02, THEREFORE WE CONFIRMED THIS DISALLOWANCE. 63 IN THE RESULT, ASSESSEES APPEAL IN ITA NO. 428/ CHD/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 615/CHD/2011 REVENUES APPEAL 64 IN THIS GROUND REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS GRAVELY ERRED IN DELETING THE AD DITION OF RS. 13,62,367/- MADE BY THE ASSESSING OFFICER AS PER SE C 36(I)(III) OF THE ACT AFTER CONSIDERING THE JUDGMENT OF HON'BLE H IGH COURT OF PUNJAB & HARYANA IN THE CASE OF ABHISHEK INDUSTRIE S LTD. 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS GRAVELY ERRED IN ALLOWING THE RE LIEF TO THE ASSESSEE ON THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB OF T HE ACT. 3 THAT THE LD. CIT(A) HAS GRAVELY ERRED IN LAW AND ON FACTS IN NULLIFYING THE RECOMPILATIONS OF THE PROFITS MADE B Y THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE ADJU STMENT WAS MADE AS PER EXPLANATION 1(F) TO SEC 115 JB OF THE ACT. 4 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS GRAVELY ERRED IN DELETING THE AD DITION MADE BY THE ASSESSING OFFICER AND APPLYING THE SALES RATIO IN APPORTIONING THE EXPENSES WITHOUT APPRECIATING THE ASSESSING OFF ICERS FINDING THAT THE EXPENDITURE BETWEEN DIFFERENT UNITS SHOULD BE ALLOCATED IN THE PROFIT RATIO. 65 GROUND NO. 1 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAD RAISED SECURED LOANS FROM BANK, THEREF ORE THE ASSESSEE WAS HAVING INTEREST BEARING FUNDS. IT WAS FURTHER SEEN THAT THE ASSESSEE HAS DIVERTED INTEREST BEARIN G FUNDS BY 31 WAY OF INTEREST FREE ADVANCES TO SWIFT FUNDAMENTAL RESEARCH AND EDUCATION SOCIETY, THEREFORE THE ASSESSING OFFI CER DISALLOWED AVERAGE RATE OF INTEREST @ 4.5% AND THUS DISALLOWED INTEREST AMOUNTING TO RS. 13,62,367/-. 66 ON APPEAL IT WAS MAINLY STATED THAT THE ADVANCES WERE GIVEN TO SWIFT FUNDAMENTAL RESEARCH AND EDUCATION S OCIETY AND SWIFT INFRASTRUCTURE FOR BUSINESS PURPOSES. TH E AMOUNT RECEIVED FROM THE ASSESSEE WAS EXCLUSIVELY USED FOR BUSINESS PURPOSES ONLY. RELIANCE WAS PLACED ON THE DECISION OF S.A. BUILDERS V CIT, 288 ITR 1. THE LD. CIT(A) AFTER EXA MINING THE SUBMISSIONS DELETED ADDITION ON THE BASIS OF OBSER VATIONS MADE IN CASE OF S.A. BUILDERS V CIT (SUPRA). 67 BEFORE US THE LD. D.R FOR THE REVENUE STRONGLY S UPPORTED THE ORDER OF ASSESSING OFFICER. SHE RELIED ON THE DECISION OF TRIBUNAL IN CASE OF M/S RAMSON EXPORTS V ITO, ITA N O. 480/CHD/2014. 68 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THE OBSERVATIONS OF THE HONBLE SUPREME COURT IN CASE O F S.A. BUILDERS V CIT (SUPRA) WERE CONSIDERED IN DETAIL IN CASE OF M/S RAMSON EXPORTS V ITO (SUPRA). RELEVANT PORTION OF THAT ORDER READS AS UNDER: 8 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THERE WAS OPENING DEBIT BALANCE OF RS. 4413287/- IN CASE OF JAY ESS EXPORTS. NO DOUBT CERTAIN PURCHASES HAVE BEEN MADE FROM THIS PARTY BUT FOR MAKING PURCHASES FRESH PAYMENTS HAVE BEEN MADE TO THIS PARTY AND AT ALL RELEVANT TIME, THE DEBIT BALA NCES HAS RATHER INCREASED DURING THE YEAR. WE ASKED THE LD. COUNSE L FOR THE ASSESSEE WHETHER ANY DISALLOWANCE WAS MADE IN THE E ARLIER YEAR AND HE ADMITTED THAT DISALLOWANCE WAS MADE WITH REF ERENCE TO THE DEBIT BALANCE IN CASE OF JAY ESS EXPORTS WHICH WAS NOT CHALLENGED BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE C OULD NOT POINT OUT WHY HUGE ADVANCES HAVE TO BE GIVEN TO THIS PART Y AT ALL TIMES, THEREFORE IN OUR OPINION, THE COMMERCIAL EXPEDIENCY CAN NOT BE INFERRED IN THIS CASE. COMING TO THE CASE LAWS, FI RST OF ALL THE DECISION IN CASE OF S.A. BUILDERS V CIT(A) (SUPRA) HAS BEEN DOUBTED OUT BY THE HON'BLE SUPREME COURT ITSELF AN D THE MATTER HAS BEEN REFERRED TO THE LARGER BENCH BUT IN ANY CA SE FOLLOWING 32 IMPORTANT OBSERVATIONS WERE MADE IN THAT CASE ITSEL F AT PARA 25, 29 & 35 WHICH ARE AS UNDER: IN OUR OPINION, THE HIGH COURT AS WELL AS THE TRIBU NAL AND OTHER INCOME- TAX AUTHORITIES SHOULD HAVE APPROACHED THE QUESTION OF ALLOWABILITY OF INTEREST ON THE BORROWED FUNDS FROM THE ABOVE ANGLE . IN OTHER WORDS, THE HIGH COURT AND OTHER AUTHORITIES SHOULD HAVE ENQUIR ED AS TO WHETHER THE INTEREST FREE LOAN WAS GIVEN TO THE SISTER COMPANY (WHICH IS SUBSIDIARY OF THE ASSESSEE) AS A MEASURE OF COMMERCIAL EXPEDIENCY , AND IF IT WAS, IT SHOULD HAVE BEEN ALLOWED. IN THE PRESENT CASE, NEITHER THE HIGH COURT NOT THE TRIBUNAL NOR OTHER AUTHORITIES HAVE EXAMINED WHETHER THE AMOUNT ADVANC ED TO THE SISTER CONCERN WAS BY WAY OF COMMERCIAL EXPEDIENCY. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FROM TH EIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN. AS ALREADY STATED AB OVE, WE HAVE TO SEE THE TRANSFER OF THE BORROWED FUNDS TO A SISTER CONC ERN FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POIN T OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS. WE WISH TO MAKE IT CLEAR THAT IT IS NOT OUR OPINION THAT IN EVERY CASE INTEREST ON BORROWED LOAN HAS TO BE ALLOWED IF THE ASSESSEE ADVANCES IT TO A SISTER CONCERN . IT ALL DEPENDS ON THE FACTS A ND CIRCUMSTANCES OF THE RESPECTIVE CASE. ABOVE OBSERVATION MAKES IT CLEAR THAT THE AUTHORITI ES ARE REQUIRED TO EXAMINE WHETHER THERE IS COMMERCIAL EXPEDIENCY O R NOT? THUS FROM ABOVE IT IS CLEAR THAT EXPEDIENCY HAS TO BE EXAMINED. THE LD. CIT(A) HAS SIMPLY OBSERVED THAT T HE EXPENDITURE MUST BE FOR BUSINESS PURPOSE. THERE IS NO MATERIAL BEFORE THE LD. CIT(A) TO MAKE THIS OBSERVA TION. NO MATERIAL HAS BEEN FURNISHED IN THIS REGARD BEFORE U S. IN ANY CASE SIMILAR VIEW HAS BEEN TAKEN IN EARLIER YEAR BY THE LD. CIT(A) WHICH HAS BEEN CONFIRMED BY US WHILE ADJUDIC ATING ITA NO. 511/CHD/2009 VIDE PARA 35 ABOVE. THEREFORE IN V IEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CA SE OF ABHISHEK INDUSTRIES V CIT, 286 ITR 1, WE ARE OF THE OPINION THAT THE PROPORTIONATE INTEREST HAS TO BE DISALLOW ED BECAUSE THE ASSESSEE HAD ADMITTEDLY DIVERTED INTEREST BEARI NG FUNDS TO THE SISTER CONCERN. 69 GROUNDS NO. 2,3 & 4 DURING ASSESSMENT PROCEEDI NGS THE ASSESSING OFFICER MADE CERTAIN VARIATIONS FOR D EDUCTION TO 33 BE ALLOWED U/S 80IB OF THE ACT. THE LD. CIT(A) ADJU DICATED THIS ISSUE VIDE PARA 35 & 36 WHICH ARE AS UNDER: 35 & 36 I HAVE CONSIDERED THE ISSUE IN HAND AND FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT B Y HONBLE ITAT IN ITA NO. 636/CHD/2001 FOR ASSESSMENT YEAR 1997-9 8 ON 24 TH JUNE 2009 BY HOLDING AS UNDER: WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER IN THIS REGARD AND FIND THAT THERE IS NO SPECIFIC REASON OR DEFECT POINTED OUT BY THE ASSESSING OFFICER IN THE ACCOUNT S SUBMITTED BY THE ASSESSEE TO SUPPORT THAT THE RESUL TS DECLARED IN THE TRADING UNIT ARE NOT CORRECT. IN A NY CASE IN THE ENTIRE ASSESSMENT ORDER AND ALSO IN THE ORDER O F THE LD. CIT(A), WE FIND NO MATERIAL BOUGHT OUT BY THE REVEN UE TO SHOW THAT ANY OF THE EXPENDITURE THAT HAS BEEN DEBI TED IN THE ACCOUNTS OF THE TRADING UNIT, WHICH OTHERWISE B ELONGS TO THE MANUFACTURING UNITS, WHICH ARE ELIGIBLE FOR SEC 80IA/80I BENEFITS. THE ACCOUNTS AS PREPARED BY THE ASSESSEE HAVE NOT BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT OFFERING ANY COGENT REASONS. IN THIS CONNECTION, WE MAY REF ER TO A RECENT DECISION OF THE HON'BLE SUPREME COURT OF IN DIA IN THE CASE OF CIT V JINDAL FINE INDUSTRIES, 307 ITR 202 F OR THE PROPOSITION THAT HE BURDEN UNDER SUCH CIRCUMSTANCES IS ON THE ASSESSING OFFICER. CONSIDERED IN THIS LIGHT, A FTER PERUSING THE ORDER OF THE INCOME TAX AUTHORITIES, W E DO NOT FIND THAT SUCH BURDEN HAS BEEN DISCHARGED BY THE AS SESSING OFFICER SO AS TO REJECT THE PROFITS DECLARED BY TH E ASSESSEE IN THE RESPECTIVE UNITS. THEREFORE WE ARE NOT INCL INED TO UPHOLD THE ORDER OF ASSESSMENT AS MADE BY THE ASSES SING OFFICER. QUITE CLEARLY, THE ASSESSEE BROUGHT OUT B EFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LD. CIT(A) THAT THE MANNER OF MAINTENANCE OF THE RECORDS AND THE SYSTEM OF APPORTIONMENT OF IMPUGNED EXPENDITURE ON THE BASIS OF THE PROPORTIONATE TURNOVER OF VARIOUS UNITS WAS ACCEPT ED IN THE PAST AND THERE NO COGENT REASONS HAVE BEEN BROUGHT OUT BY THE REVENUE WHICH WOULD REQUIRE DEPARTURE FROM THE SAME. 36 IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DECISION OF ITAT IN THE ASSESSEES OWN CASE, THIS G ROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 70 BEFORE US, THE LD. D.R FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 71 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND RELEVANT MATERIAL ON RECORD, WE FIND TH AT THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE IN EARLIER YEARS. THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF CIT(A) AND CONFIRM THE SAME. 72 IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 615/CHD/2011 IS PARTLY ALLOWED. 34 ITA NO. 745/CHD/2012 ASSESSEES APPEAL 73 IN THIS CASE THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS: 1 THAT THE ORDER OF LD. CIT(A) IS BAD, AGAINST THE FACTS AND LAW. 2 THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE D ISALLOWANCE OF PROPORTIONATE EXPENSES U/S 14A OF THE ACT AMOUN TING TO RS. 31,55,004/-. 3 THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE A DDITION OF DISALLOWANCE U/S 14A OF RS. 31,55,004/- FOR EH PURP OSE OF CALCULATION OF BOOK PROFITS U/S 115 JB OF THE ACT. 74 GROUND NO. 1 IS OF GENERAL NATURE AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. 75 GROUND NO. 2 - THIS ISSUE HAS BEEN ADJUDICATED BY US IN ASSESSMENT YEAR 2006-07 IN ITA NO. 511/CHD/2009 A S ISTER CONCERN OF THE ASSESSEE NAMELY INDO SWIFT LTD. VIDE PARA 22. FOLLOWING THE SAME ORDER WE HOLD THAT RULE 8D IS NO T APPLICABLE IN THIS YEAR. REASONABLE DISALLOWANCE IN THIS YEAR IS HELD TO BE RS. 2 LAKH AND THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DISALLOW A SUM OF RS. 2 LAKHS. 76 GROUND NO. 3 BRIEF FACTS OF THE CASE ARE THAT WHILE COMPUTING THE BOOK PROFITS THE ASSESSEE ADDED A SUM OF RS. 31,55,004/- PERTAINING TO DISALLOWANCE U/S 14A OF T HE ACT. 77 ON APPEAL IT WAS MAINLY SUBMITTED NOTIONAL DISAL LOWANCE U/S 14A COULD NOT BE ADDED TO THE BOOK PROFITS. TH E LD. CIT(A) HAS DECIDED THIS ISSUE VIDE PARA 6.3, 6.3.1 AND 6.3 .2 AND 6.3.3 WHICH ARE AS UNDER: 6.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNS ELS FOR THE APPELLANT. FOR THE SAKE OF CONVENIENCE, EXPLANATIO N 1(F) BELOW SECTION 115 JB IS REPRODUCED BELOW: FOR THE PURPOSES OF THIS SECTION, BOOK PROFIT ME ANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SEC (2) A S INCREASED BY (F) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 (OTHER THAN THE PROVISIO NS 35 CONTAINED IN CLAUSE (38) THEREOF) OR SECTION 11 OR SECTION 12 APPLY. 6.3.1 THUS THE AMOUNT OF EXPENDITURE RELATABLE TO A NY INCOME TO WHICH PROVISIONS OF SECTION 10 (EXCEPT 10(38)) APP LY HAVE TO BE ADDED FOR COMPUTING BOOK PROFIT. SECTION 14A(1) READS AS UNDER: FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UND ER THIS CHAPTER, ,NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. 6.3.2 THE MEANS THAT EXPENDITURE RELATABLE TO D IS U/S 14A IS COVERED UNDER THE AFORESAID EXPLANATION BECAUSE THE WORDS USED IN SECTION 14A(1) ARE IN RELATION TO AND SO THE E XPENDITURE INCURRED IN RELATION TO THE INCOME (AND NOT THE REA L/ACTUAL EXPENDITURE INCURRED) IS TO BE ADDED FOR CALCULATIN G BOOK PROFIT U/S 115JB OF THE ACT. THE APPELLANT HAS RELIED UPON TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES ( SUPRA),, BUT THE RATIO OF THAT DECISION DOES NOT APPLY TO THE IN STANT CASE, SINCE THAT DECISION WAS ON SECTION 115J WHICH IS MUCH DIF FERENT FROM SECTION 115JB AND MOREOVER THE HON'BLE APEX COURT H AD MERELY HELD IN THAT CASE THAT WHILE DETERMINING TAX U/S 11 5J THE ASSESSING OFFICER COULD NOT QUESTION THE CORRECTNESS OF THE P ROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH SCHEDULE VI TO THE COMPANIES ACT, 1956. 6.3.3 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD T HAT THE DISALLOWANCE MADE U/S 14A/RULE 8D IS TO BE ADDED TO ARRIVE AT THE BOOK PROFITS U/S 115JB AND THE ASSESSING OFFICER HA S RIGHTLY MADE THE ADJUSTMENT IN THIS REGARD. 78 BEFORE US THE LD. D.R FOR THE REVENUE STRONGLY S UPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT( A). 79 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD AND OBS ERVATION OF THE LD. CIT(A) WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN AY 2006-07 IN ITA NO. 729/CHD/2009. THE ISSUE WAS DECIDED VIDE PARA 8 WHI CH IS AS UNDER: THE GROUND NO. 1(IV) RAISED BY THE REVENUE IS AGAI NST THE COMPUTATION OF BOOK PROFITS U/S 115 JB OF THE ACT. THE ASSESSING OFFICER WHILE COMPUTING THE BOOK PROFIT U/S 115 JB OF THE ACT HAD ADDED BACK THE DISALLOWANCE WORKED U/S 14A OF THE A CT TO THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT AND COM PUTED THE PROFITS FOR THE YEAR. THE LD. CIT(A) REWORKED THE BOOK PROFITS BY EXCLUDING THE SAID NOTIONAL DISALLOWANCE U/S 115 JB OF THE ACT IN TURN FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE A PEX COURT IN APOLLO TYRES LTD 255 ITR 273 (S.C). WE ARE IN CONF ORMITY WITH THE ORDER OF LD. CIT(A). THE ADJUSTMENTS, IF ANY, TO B E MADE TO THE PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT, ARE P ROVIDED IN THE SECTION 115 JB OF THE ACT ITSELF. THERE IS NO PROV ISION IN THE ACT TO MAKE ADJUSTMENT ON ACCOUNT OF NOTIONAL DISALLOWANC E WORKED OUT U/S 14A OF THE ACT. THE HON'BLE SUPREME COURT IN APOLLO TYRES LTD (SUPRA) HELD THAT THE PROFITS OF THE BUSINESS A RE NOT TO BE DISTURBED FOR COMPUTING THE BOOK PROFITS EXCEPT IN THE CIRCUMSTANCES PROVIDED UNDER THE SAID ACT. WE CONF IRM THE ORDER OF LD. CIT(A) IN THIS REGARD AND DISMISS THE GROUND NO. 1(IV) RAISED BY THE REVENUE. 36 FOLLOWING THE ABOVE WE SET ASIDE THE ORDER OF LD. C IT(A) AND DELETE THIS ADDITION. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 745/CHD/2012 IS PARTLY ALLOWED ITA NO. 746/CHD/2012 ASSESSEES APPEAL 80 IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1 THAT THE ORDER OF LD. CIT(A) IS BAD, AGAINST THE FACTS AND LAW. 2 THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE D ISALLOWANCE OF PROPORTIONATE EXPENSES U/S 14A OF THE IT ACT AM OUNTING TO RS. 56,40,504/-. 3 THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING DISAL LOWANCE OF 10% OF INTEREST ON ADVANCES AMOUNTING TO RS. 14,64, 737/-. 4 THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE A DDITION OF DISALLOWANCES U/S 14A OF RS. 56,40,504/- FOR THE PU RPOSES OF C A L C U L A T I O N O F B O O K P R O F I T S U / S 1 1 5 J B O F I T A C T . 81 GROUND NO. 1 IS OF GENERAL NATURE AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. 82 GROUND NO. 2 - THIS ISSUE HAS BEEN ADJUDICATED BY US IN ASSESSMENT YEAR 2006-07 IN ITA NO. 511/CHD/2009 OF THE SISTER CONCERN NAMELY INDO SWIFT LTD. VIDE PARA 22. FOLLO WING THE SAME ORDER WE HOLD THAT RULE 8D IS NOT APPLICABLE I N THIS YEAR. REASONABLE DISALLOWANCE IN THIS YEAR IS HELD TO BE RS. 3 LAKH AND THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DISALLOW A SUM OF RS. 3 LA KHS. 83 GROUND NO. 3 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO PR OVIDE THE DETAILS OF LOANS AND ADVANCES GIVEN BY THE ASSE SSEE. PERUSAL OF THE DETAILS SHOWED THAT THE ASSESSEE HA S GIVEN INTEREST FREE ADVANCES TO CHOPSAN PHARMA AND THE DE TAIL OF THE SAME ARE AS UNDER: 37 DATE AMOUNT INTEREST 30.1.2007 1,00,00,000 1,66,666 7.2.2007 3,50,00,000 5,08,219 12.2.2007 1,00,00,000 1,25,000 15.2.2007 2,50,00,000 3,12,450 25.2.2007 1,96,00,000 1,82,575 28.2.2007 2,00,00,000 1,66,666 31.3.2007 1,15,40,880 3,161 TOTAL 14,64,737 ACCORDING TO THE ASSESSING OFFICER THERE WAS NO BUS INESS EXPEDIENCY FOR GIVING THESE LOANS, THEREFORE HE REF ERRED TO THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF CITV V ABHISHEK INDUSTRIES, 286 ITR 1 AND DISALLOWE D INTEREST @ 10% AMOUNTING TO RS. 14,64,737/-. DISALLOWANCE WA S CONFIRMED BY THE LD. CIT(A) BECAUSE NO REPLY WAS FI LED BY THE ASSESSEE. 84 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 85 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THIS ISSUE HAS BEEN DECIDED BY US IN ASSESSMENT YEAR 20 06-07 IN ASSESSEES OWN CASE IN ITA NO. 511/CHD/2009 A SISTE R CONCERN OF THE ASSESSEE NAMELY INDO SWIFT LTD. VIDE GROUND NO. 8 VIDE PARA NO.35. IT IS RELEVANT TO NOTE THAT IN THAT CAS E THE ASSESSING OFFICER HAS HIMSELF DISALLOWED AVERAGE RA TE OF INTEREST BECAUSE THERE WERE SOME FUNDS AVAILABLE TO THE ASSESSEE WHICH WERE INTEREST FREE. THEREFORE IN OUR OPINION, TO MAINTAIN THE CONSISTENCY IN THIS CASE ALSO, DISALLO WANCE SHOULD HAVE BEEN MADE ONLY ON THE AVERAGE RATE OF FUNDS. T HEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE ON AVERAGE INT EREST RATE WHICH MAYBE WORKED OUT BY HIM. 38 86 GROUND NO. 4 BRIEF FACTS OF THE CASE ARE THAT WHILE COMPUTING THE DISALLOWANCE AND COMPUTING THE DEDUCT ION PROFIT U/S 115 JB, THE ASSESSING OFFICER ADDED A SUM OF DI SALLOWANCE AMOUNTING TO RS. 56,40,504/- WHICH WAS MADE BY HIM U/S 14A OF IT ACT. 87 ON APPEAL BEFORE THE LD. CIT(A) ACTION OF THE AS SESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A). 88 BEFORE US. LD. D.R FOR THE REVENUE STRONGLY SUPP ORTED THE ORDER OF THE LD. CIT(A). 89 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FOR THE REVENUE AND RELEVANT MATERIAL ON RECORD, WE FIND TH AT THIS ISSUE HAS BEEN DECIDED BY US WHILE ADJUDICATING ASSESSES APPEAL ITA NO. 745/CHD/2012 WHICH HAS BEEN DECIDED VIDE PA RA 79 ABOVE. FOLLOWING THE SAME WE SET ASIDE THE ORDER OF LD. CIT(A) AND DELETE THE ADDITION. 90 IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 746/CHD/2012 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. ITA NO. 1032/CHD/2013 ASSESSEES APPEAL 91 IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1 THAT THE ORDER OF LD. CIT(A) IS BAD, AGAINST THE FACTS AND LAW. 2 THAT HE LD. CIT(A) HAS WRONGLY UPHELD HE DISALLOW ANCE OF PROPORTIONATE EXPENSES U/S 14A R.W.R. 8D AMOUNTING TO RS. 57,10,834/-. 3 THAT THE LD. CIT(A) WRONGLY UPHELD THE DISALLOWAN CE RS. 7,13,430/- U/S 40(A)(IA). 92 GROUND NO. 1 IS OF GENERAL NATURE AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. 93 GROUND NO. 2 BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS INVESTED A SUM OF RS. 13,79,50,000 IN SHARES OF 39 VARIOUS COMPANIES. IT WAS NOTICED THAT SOME OF THE INCOME WAS TAXABLE BECAUSE SOME INVESTMENT WAS MADE IN IND USTRIES SWIFT LAB USA AND INCOME FROM DIVIDEND FROM THIS CO MPANY WOULD BE TAXABLE BECAUSE FOR RESIDENT GLOBAL INCOME IS TAXABLE. HOWEVER, FOR THE REMAINING INVESTMENT SEC 14A R.W.R . 8D WOULD BE APPLICABLE. ACCORDINGLY THE ASSESSING OFFICER W ORKED OUT DISALLOWANCE AS PER RULE 8D AT RS. 57,10,834/-. 94 ON APPEAL THE DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A). 95 BEFORE US THE LD. D.R FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 96 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT HON'BLE BOMBAY HIGH COURT IN CASE OF GODREJ & BOYCE E (SUPRA) HAS CLEARLY HELD THAT RULE 8D WOULD BE APPLICABLE F ROM ASSESSMENT YEAR 2008-09, THEREFORE IN THIS YEAR R ULE 8D HAS TO BE APPLIED AND DISALLOWANCE HAS TO BE MADE AS PE R CALCULATION OF RULE 8D. THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM HIS ORDER. 97 GROUND NO. 3 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS PAID SOME COMMISSION TO DOMESTIC SALES BUT TDS HAS NOT BEEN DEDUCTED. THEREFORE ASSESSING OFFICER INVOKED SECTION 40(A)(IA) AND DISALLOWED A SUM OF RS. 7,13, 430/-. ON APPEAL ACTION OF THE ASSESSING OFFICER WAS CONFIRME D BY THE LD. CIT(A). 98 THE LD. D.R FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 99 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THIS 40 ISSUE HAS BEEN ADJUDICATED BY US VIDE GROUND NO. 4 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NO. 511/CHD/2009 A SISTER CONCERN OF THE ASSESSEE NAMEL Y INDO SWIFT LTD.VIDE PARA NO. 17. FOLLOWING THE SAME WE D ECIDE THIS ISSUE AGAINST THE ASSESSEE. 100 IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 1032/CHD/2013 IS DISMISSED. ITA NO. 721/CHD/2012 REVENUES APPEAL 101 IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING EFFECTIVE GROUND: 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 418,86,628/- MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVI SIONS OF SECTION 145A OF THE ACT. 102 BRIEF FACTS OF THE CASE ARE TAT DURING ASSESSME NT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD NOT ROUTED VARIOUS DUES AND TAXES THROUGH PROFI T AND LOSS ACCOUNT. SHE ALSO NOTED THAT ALTHOUGH SALES AND FI NISHED GOODS IN CLOSING STOCK WERE INCLUSIVE OF EXCISE DUT IES, CENVAT WAS NOT BEING INCLUDED IN RAW MATERIAL PURCHASED AN D RAW MATERIAL IN CLOSING STOCK. THE ASSESSEE HAD FILED A REPLY BUT THE ASSESSING OFFICER WAS NOT SATISFIED AND INCREAS ED THE INCOME OF THE ASSESSEE BY RS. 418,86,628/- ON THIS ACCOUNT. 103 ON APPEAL IT WAS SUBMITTED THAT SIMILAR ISSUE H AS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE HI GH COURT OF PUNJAB & HARYANA IN CASE OF NAHAR SPINNING MILLS L TD IN ITA NO. 503 OF 2007. THE LD. CIT(A) FOLLOWING THAT DECI SION DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 104 BEFORE US THE LD. D.R FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. 41 105 AFTER CONSIDERING THE SUBMISSIONS OF LD. D.R FO R THE REVENUE AND RELEVANT MATERIAL ON RECORD, WE FIND TH AT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) VIDE PARA 5.3 WHICH IS AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSELS FOR THE ASSESSEE. SIMILAR ADDITION WAS MADE IN ASSESSMENT YEAR 2005-06 ALSO AND IT WAS DELETED BY MY PREDECESSOR VIDE PARA 43 OF HIS ORDER DATED 3.7.2008 IN THE ASSESSEES OWN CASE. T HE ISSUE IS DIRECTLY COVERED BY THE DECISION OF HON'BLE HIGH CO URT OF PUNJAB & HARYANA DATED 25.2.2008 IN ITA NO. 503 OF 2007 (SU PRA). BY RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA , THE ADDITION MADE IN THIS YEAR IS ALSO DELETED. GROUND OF APPEAL NO. 5 IS ALLOWED. IN OUR OPINION, ONCE THE LD. CIT(A) HAS FOLLOWED TH E DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA THEN NO FAU LT CAN BE FOUND IN HIS ORDER. THE LD. D.R FOR THE REVENUE HA S NOT PRODUCED ANY CONTRARY DECISION BEFORE US. THEREFOR E WE FIND NOTHING WRONG IN THE ORDER OF CIT(A) AND CONFIRM TH E SAME. 106 IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 721/CHD/2012 IS DISMISSED. ITA NO. 799/CHD/2012 REVENUES APPEAL 107 IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING EFFECTIVE GROUNDS: 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 184,18,422/- MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVI SIONS OF SECTION 145A OF THE ACT. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .14,702/- WITHOUT CONSIDERING THE FACT THAT THE ASSESSING OFF ICER HAD RIGHTLY MADE THE SAID ADDITION AS PER THE PROVISIONS OF SEC TION 36(1)(VA) R.W.S. 2(24)(X). THE LD. CIT(A) HAS FURTHER IGNORE D THE FACT THAT THE ADDITION WAS AN AGREED ADDITION. 108 GROUND NO. 2 IDENTICAL ISSUE HAS BEEN DECIDED BY US FOR ASSESSMENT YEAR 2006-07 IN REVENUES APPEAL VIDE P ARA 105. THEREFORE FOLLOWING THAT DECISION WE DECIDE THIS IS SUE AGAINST THE REVENUE. 42 109 GROUND NO. 3 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED PROVIDENT FUND DUES BE CAUSE THE PAYMENT WAS MADE LATE. 110 ON APPEAL THE ISSUE WAS DECIDED IN FAVOUR OF TH E ASSESSEE BY FOLLOWING THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA . 111 BEFORE US THE LD. D.R FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 112 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D. R FOR THE REVENUE AND THE RELEVANT MATERIAL ON RECORD, WE FIN D THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) VIDE PARA 7.3 WHICH IS AS UNDER: 7.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNS ELS FOR THE APPELLANT. THE DEDUCTION OF EMPLOYEES SHARE OF PF IS TO BE ALLOWED IF THE PAYMENTS HAVE BEEN MADE BEFORE DUE D ATE OF FILING OF RETURN IN VIEW OF THE DECISION OF HON'BLE HIGH C OURT OF PUNJAB & HARYANA IN THE CASE OF M/S NUCHEM LTD. IN ITA NO. 323 OF 2009. THE APPELLANT HAD AGREED FOR THIS ADDITION AT THE T IME OF ASSESSMENT PROCEEDINGS , BUT THE ISSUE IS BEING DEC IDED IN FAVOUR OF THE APPELLANT IN VIEW OF THE DECISION OF THE HON 'BLE JURISDICTIONAL HIGH COURT AND ALSO ON ACCOUNT OF T HE FACT THAT THE AMOUNT INVOLVED IS TOO SMALL. THE APPELLANT HAS CLA IMED THAT THE PAYMENTS WERE MADE BEFORE THE DUE DATE OF FILING OF RETURN BUT NO EVIDENCE IN THIS REGARD HAS BEEN FILED. THE ASSESS ING OFFICER IS DIRECTED TO VERIFY THIS CONTENTION OF THE APPELLANT AND ALLOW THE DEDUCTION IF THE AMOUNTS HAVE BEEN PAID BEFORE DUE DATE OF FILING OF RETURN. GROUND OF APPEAL NO. 6 IS ALLOWED. IN OUR OPINION, THE LD. CIT(A) HAS FOLLOWED THE DEC ISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF CIT V. NUCHEM LTD. ITA NO. 323 OF 2009. THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF CIT(A) AND CONFIRM THE SAME. 113 IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 799/CHD/2012 IS DISMISSED. 114 IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE AND THE REVENUE ARE DISPOSED OFF AS UNDER: SL NO. ITA NO PARTY RESULT 1 511/CHD/2009 ASSESSEES APPEAL PARTLY ALLOWED FOR STATISTICAL PURPOSES. 43 2 428/CHD/2011 ASSESSEES APPEAL PARTLY ALLOWED FOR STATISTICAL PURPOSES. 3 615/CHD/2011 REVENUES APPEAL PARTLY ALLOWED 4 745/CHD/2012 ASSESSEES APPEAL PARTLY ALLOWED 5 746/CHD/2012 ASSESSEES APPEAL PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6 1032/CHD/2013 ASSESSEES APPEAL DISMISSED 7 721/CHD/2012 REVENUESAPPEAL DISMISSED 8 799/CHD/2012 REVENUES APEPAL DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 28.8.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28.8.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR