DCIT CIR 3(3), MUMBAI V. ULKA SEA FOODS P.LTD, MUMBAI

ITA 5259/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3508 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 14-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A DYANI
• Assessee Lawyers: KISHORE I MEHTA
• Keywords: Depreciation; Tax effect
• Section: 40A(3); 143(3); 115JB; 80IB; 194C; 32; 263; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NOS. 4903 TO 4906/MUM/2013 : (A.YS : 2007-08 TO 2010-11) M/S. ULKA SEAFOODS PVT. LTD. PLOT NO. M-79, TALOJA, MIDC, DIST. RAIGAD, MAHARASHTRA 410 208. PAN : AAACU5557H VS. DCIT (OSD) - 3(1) , MUMBAI. ITA NOS. 5260, 5261, 5259 & 5262/MUM/2013 : (A.YS : 2007 - 08 TO 2010-11) DCIT (OSD)-3(1), MUMBAI. VS. M/S. ULKA SEAFOODS PVT. LTD. PLOT NO. M-79, TALOJA, MIDC, DIST. RAIGAD, MAHARASHTRA 410 208. PAN : AAACU5557H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KISHORE I. MEHTA DEPARTMENT BY : SHRI G.M. DOSS (CIT-DR) & SHRI R.A. DYANI DATE OF HEARING : 10.05.2016 DATE OF PRONOUNCEMENT : 25.05.2016 O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER : THE AFOREMENTIONED ARE 4 CROSS-APPEALS ARISING OUT OF ORDERS OF LD. CIT(A), ALL DT. 8.3.2013 FOR A.YS 2007-08 TO 20 10-11. 2 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 2. FIRST OF ALL, WE ARE TAKING UP THE 4 APPEALS FIL ED BY THE ASSESSEE VIDE ITA NOS. 4903 TO 4906/MUM/2013, THE GROUNDS OF WHICH ARE AS UNDER : ITA NO. 4903/MUM/2013 (A.Y 2007-08) 1. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX ( OSD)-3(1) ERRED IN NOT CONSIDERING THE RECEIPT OF RS.1,86,86, 189/- TOWARDS DUTY DRAWBACK INCOME FOR THE PURPOSE OF ALLOWING DEDUCTI ON U/S 80IB AND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) 7 ERRED IN CONFIRMING THE SAME. 2. THE APPELLANT CRAVES LEAVE TO ALTER AND/OR TO MO DIFY AND/OR TO DELETE AND/OR TO AMEND THE ABOVE GROUNDS OF APPEAL AND/OR TO ADD THE ADDITIONAL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. ITA NO. 4904/MUM/2013 (A.Y 2008-09) 1. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX ( OSD)-3(1) ERRED IN NOT CONSIDERING THE RECEIPT OF RS.3,49,09, 413/- TOWARDS DEPB INCOME FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80 IB AND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7 ER RED IN CONFIRMING THE SAME. 2. THE APPELLANT CRAVES LEAVE TO ALTER AND/OR TO MO DIFY AND/OR TO DELETE AND/OR TO AMEND THE ABOVE GROUNDS OF APPEAL AND/OR TO ADD THE ADDITIONAL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. ITA NO. 4905/MUM/2013 (A.Y 2009-10) 1. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TA X CIRCLE 3(3) ERRED IN NOT CONSIDERING THE RECEIPT OF RS.11,30,19 ,938/- TOWARDS DEPB INCOME FOR THE PURPOSE OF ALLOWING DEDUCTION U /S 80IB AND THAT 3 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7 ERRED IN CONFIRMING THE SAME. 2. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3(3) ERRED IN NOT CONSIDERING THE RECEIPT OF RS.2,53,94, 126/- TOWARDS LICENSE SALE INCOME FOR THE PURPOSE OF ALLOWING DED UCTION U/S 80IB AND THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) 7 ERRED IN CONFIRMING THE SAME. 3. THE APPELLANT CRAVES LEAVE TO ALTER AND/OR TO MO DIFY AND/OR TO DELETE AND/OR TO AMEND THE ABOVE GROUNDS OF APPEAL AND/OR TO ADD THE ADDITIONAL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. ITA NO. 4906/MUM/2013 (A.Y 2010-11) 1. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX ( OSD)-3(1) ERRED IN NOT CONSIDERING THE RECEIPT OF RS.9,70,51, 430/- TOWARDS DEPB INCOME FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80 IB AND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7 ER RED IN CONFIRMING THE SAME. 2. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX (O SD)- 3(1) ERRED IN NOT CONSIDERING THE RECEIPT OF RS.12,14,56 ,190/- TOWARDS LICENSE SALE INCOME FOR THE PURPOSE OF ALLOWING DED UCTION U/S 80IB AND THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) 7 ERRED IN CONFIRMING THE SAME. 3. THE APPELLANT CRAVES LEAVE TO ALTER AND/OR TO MO DIFY AND/OR TO DELETE AND/OR TO AMEND THE ABOVE GROUNDS OF APPEAL AND/OR TO ADD THE ADDITIONAL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. IN ALL THE 4 AFOREMENTIONED APPEALS FILED BY THE ASSESSEE, GROUNDS RELATING TO RECEIPT TOWARDS DUTY DRAWBACK I NCOME FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80IB OF THE INCOM E TAX ACT, 1961 (REFERRED AS THE ACT IN SHORT) IS COMMON, THEREFO RE, WE DECIDED TO 4 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 DEAL WITH THIS GROUND TAKING INTO CONSIDERATION ALL THE 4 APPEALS. SINCE THE FACTUAL AND LEGAL POINTS INVOLVED IN THIS GROUN D ARE IDENTICAL FOR ALL THE 4 APPEALS, EXCEPT FOR THE FIGURES, THEREFORE, S AME ARE DISPOSED OF BY THIS COMMON ORDER BY TAKING THE FACTS AND FIGURE S FROM A.Y 2007- 08. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR A.Y 2007-08 ON 1.11.2007 DECLARING TO TAL INCOME AT RS.3,74,499/-. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WHICH WAS COMPLETED ON 17.11. 2009 DETERMINING THE TOTAL INCOME AT RS.29,75,475/- UNDER NORMAL PRO VISIONS AND BOOK PROFIT AT RS.3,63,17,364/- U/S 115JB OF THE ACT. I N THIS CASE, THE LD. CIT(A)-3, MUMBAI PASSED AN ORDER U/S 263 OF THE INC OME TAX ACT, 1961 ON 14.3.2012, WHEREIN HE HAS DIRECTED TO MAKE FRESH ASSESSMENT IN RESPECT OF CLAIM OF DEDUCTION U/S 80IB OF THE AC T. THEREFORE, AFTER SERVING STATUTORY NOTICE AND SEEKING REPLY, THE ASS ESSING OFFICER FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB AS THE RECEIPTS FROM/ TOWARDS DUTY DRAWBACK INCOME ARE NOT CONSIDER ED AS INCOME DERIVED FROM THE ELIGIBLE UNDERTAKING. AGGRIEVED B Y THE ORDER OF THE ASSESSING OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND LD. CIT(A) BY TAKING INTO CONSIDERATION THE JUDGMEN T RENDERED BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA (SUPRA) AND OTHER JUDICIAL PRONOUNCEMENTS PARTLY ALLOWED THE APPEAL FILED BY T HE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE HAS FILED THE PRESENT APPEALS BEFORE US ON THE GROUNDS MENTIONED HEREINAB OVE. 5. WE HEARD THE COUNSELS FOR BOTH THE PARTIES, PERU SED THE MATERIALS PLACED ON RECORD AS WELL AS THE ORDERS PA SSED BY THE LOWER AUTHORITIES. THIS GROUND HAS BEEN DEALT WITH BY TH E LD. CIT(A) AS 5 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 GROUND NO. 1 IN OPERATING PARAGRAPH 4.3 & 4.4 OF HI S ORDER WHICH IS REPRODUCED HEREINBELOW. 4.3 I HAVE CONSIDERED THE A.O.'S ORDER AS WELL AS THE APPELLANT'S SUBMISSION. HAVING CONSIDERED BOTH, I F IND THAT WITH REGARD TO THE DUTY DRAWBACK THE DELHI HIGH COURT OF DELHI IN THE CASE OF CIT VS. RITESH INDUSTRIES LTD. (2005) 2 74 ITR 324 (DEL), WHEREIN THEIR LORDSHIPS APPLYING THE DECISIO N OF APEX COURT IN THE CASE OF CIT VS. STERLING FOODS (SUPRA) AND REFERRING TO CIT VS. JAMEEL LEATHERS & UPPERS (2000) 246 ITR 97 (MAD), CIT VS. VISWANATHAN & CO. (2003) 181 CTR (MAD) 335 HAS HELD AS UNDER: 'THERE MUST BE, FOR THE APPLICATION OF THE WORDS 'D ERIVED FROM', A DIRECT NEXUS BETWEEN THE PROFITS AND GAINS AND THE INDUSTRIAL UNDERTAKING. ON THE RAW MATERIALS UT ILIZED AS INPUTS THE ASSESSEE PAYS DUTY AND ON THE TOTAL COMP ONENT OF COSTS THE ASSESSEE ADDS HIS PROFIT COMPONENT TO ARRIVE AT THE SALE PRICE. IT IS THIS PROFIT WHICH IS INCLU DED IN THE EXPRESSION 'PROFITS AND GAINS DERIVED FROM AN INDUS TRIAL UNDERTAKING'. MERELY BECAUSE UNDER THE SCHEME TO ENCOURAGE EXPORTS THE DUTY IS REFUNDED SUBSEQUENTLY BY WAY OF 'DUTY DRAWBACK', IT CANNOT BE REGARDED AS TH E PROFIT OR GAIN 'DERIVED' FROM THE INDUSTRIAL UNDERTAKING. IT MAY CONSTITUTE PROFITS OR GAINS OF THE BUSINESS BY VIRT UE OF S. 28 OF THE IT ACT, 1961, BUT, IT CANNOT BE CONSTRUED AS PROFITS OR GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING FOR, ITS IMMEDIATE AND PROXIMATE SOURCE IS NOT THE INDUSTRIA L UNDERTAKING BUT THE SCHEME FOR DUTY DRAWBACK. HENCE , THE AMOUNT OF DUTY DRAWBACK CANNOT BE REGARDED AS INCOM E DERIVED FROM AN INDUSTRIAL UNDERTAKING SO AS TO ENT ITLE THE ASSESSEE TO A DEDUCTION UNDER S. 80-I.' THE HON'BLE SUPREME COURT IN LIBERTY INDIA V/S CIT, (2009) 317 ITR 218 (SC), HELD AS FOLLOWS:- 6 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 'DUTY DRAWBACK RECEIPTS AND DEPB BENEFITS DO NOT FO RM PART OF THE NET PROFITS OF ELIGIBLE INDUSTRIAL UNDE RTAKINGS FOR THE PURPOSE OF THE DEDUCTION UNDER SECTION 80-I / 8 0-IA /80-IB OF THE INCOME-TAX ACT, 1961. THE INCOME- TAX ACT, 1961, BROADLY PROVIDES FOR TWO TYPES OF TAX INCENTI VES, VIZ., INVESTMENT-LINKED INCENTIVES AND PROFIT-LINKED INCE NTIVES. CHAPTER VI-A OF THE ACT WHICH PROVIDES FOR INCENTIV ES IN THE FORM OF DEDUCTIONS ESSENTIALLY BELONGS TO THE C ATEGORY OF 'PROFIT-LINKED INCENTIVES'. THEREFORE, WHEN SECT ION 80- IA/80-IB REFERS TO PROFITS DERIVED FROM ELIGIBLE BU SINESS, IT IS NOT THE OWNERSHIP OF THAT BUSINESS WHICH ATTRACT S THE INCENTIVES: WHAT ATTRACTS THE INCENTIVES UNDER SECT ION 80- IA/80-IB IS THE GENERATION OF PROFITS (OPERATIONAL PROFITS). IT IS FOR THIS REASON THAT PARLIAMENT HAS CONFINED DEDUCTION OF PROFITS DERIVED FROM ELIGIBLE BUSINESSES MENTION ED IN SUB-SECTIONS (3) TO (11A). EACH OF THE BUSINESSES MENTIONED IN SUB-SECTIONS (3) TO (11A) CONSTITUTES A STAND- ALONE ITEM IN THE MATTER OF COMPUTATION OF PROFITS. SECTIONS 80-IB AND 80-IA ARE A CODE BY THEMSELVES A S THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROV ISIONS. SECTION 80-IB PROVIDES FOR THE ALLOWING OF DEDUCTIO N IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE ELIGI BLE BUSINESS. THE CONNOTATION OF THE WORDS 'DERIVED FRO M,' IS NARROWER AS COMPARED TO THAT OF THE WORDS 'ATTRIBUT ABLE TO'. BY USING THE EXPRESSION 'DERIVED FROM' PARLIAM ENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGR EE. SECTIONS 80-I, 80-IA AND 80-LB ARE TO BE READ AS HA VING A COMMON SCHEME. SUBSECTION (5) OF SECTION 80-LA (WHI CH IS REQUIRED TO BE READ INTO SECTION 80-LB) PROVIDES FO R THE MANNER OF COMPUTATION OF THE PROFITS OF AN ELIGIBLE BUSINESS. SUCH PROFITS ARE COMPUTED AS IF SUCH ELI GIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESS EE. THEREFORE, DEVICES ADOPTED TO REDUCE OR INFLATE THE PROFITS OF THE ELIGIBLE BUSINESS HAVE TO BE REJECTED IN VIE W OF THE OVERRIDING PROVISIONS OF SECTION 80-IA(5). SECTION S 80-I, 80-IA AND 80-IB PROVIDE FOR INCENTIVES IN THE FORM OF DEDUCTIONS WHICH ARE LINKED TO PROFITS AND NOT INVE STMENT. ON ANALYSIS OF SECTIONS 80-IA AND 80-IB IT BECOMES CLEAR 7 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 THAT ANY INDUSTRIAL UNDERTAKING WHICH BECOMES ELIGI BLE ON SATISFYING SUB-SECTION (2) WOULD BE ENTITLED TO DED UCTION UNDER SUB-SECTION (1) ONLY TO THE EXTENT OF PROFITS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING AFTER THE SPECIFIE D DATE. APART FROM ELIGIBILITY, SUB-SECTION (1) PURPORTS TO RESTRICT THE QUANTUM OF DEDUCTION TO A SPECIFIED PERCENTAGE OF THE PROFITS. THIS IS THE IMPORTANCE OF THE WORDS 'DERIV ED FROM AN INDUSTRIAL UNDERTAKING' AS AGAINST ''PROFITS ATT RIBUTABLE TO AN INDUSTRIAL UNDERTAKING'. 4.4 THUS, DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH F LOW FROM THE SCHEMES FRAMED BY THE CENTRAL GOVERNMENT OR FRO M SECTION 75 OF THE CUSTOMS ACT, 1962. INCENTIVE PROFITS ARE NOT PROFITS DERIVED FROM ELIGIBLE BUSINESS UNDER SECTION 80-IB: THUS, THEY BELONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. PROFITS DERIVED BY WAY OF INCENTIVES SUCH AS DEPB/D UTY DRAWBACK CANNOT BE CREDITED AGAINST THE COST OF MAN UFACTURE OF GOODS DEBITED IN THE PROFIT AND LOSS ACCOUNT AND TH EY DO NOT FALL WITHIN THE EXPRESSION 'PROFITS DERIVED FROM INDUSTR IAL UNDERTAKING UNDER SECTION 80-IB OF THE ACT. AFTER CONSIDERING THE ARGUMENTS AS WELL AS THE ORDE RS PASSED BY THE LD. CIT(A), WE FIND THAT THE LD. CIT(A) HAS DECIDED THE ISSUE IN QUESTION BY RELYING UPON THE JUDGMENT RENDERED BY T HE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA V. CIT (2009), 317 ITR 218 (SC) . THE LD. CIT(A) HAS ALSO TAKEN INTO CONSIDERATION THAT THE DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM T HE SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR FROM THE PROVIS IONS OF THE CUSTOMS ACT, AND SINCE THE INCENTIVE PROFITS ARE NO T PROFITS DERIVED FROM ELIGIBLE BUSINESS U/S 80IB, THEREFORE, THEY BE LONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. THE LD. AR APPEARING ON BEHALF OF THE ASSESSEE ALSO ADMITTED THAT THIS ISSU E RAISED BY HIM IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE SUP REME COURT IN THE CASE OF LIBERTY INDIA V. CIT (2009), 317 ITR 218 (SC) . IN ADDITION, NO 8 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 NEW MATERIAL OR CIRCUMSTANCES HAVE BEEN BROUGHT BEF ORE US TO CONTROVERT OR REBUT THE JUDICIOUS AND WELL-REASONED FINDINGS RECORDED BY THE LD. CIT(A), THEREFORE, WE SO NO REASON TO IN TERFERE OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT(A). THER EFORE, WE DISMISS THIS GROUND RAISED BY THE ASSESSEE AND UPHOLD THE O RDER OF LD. CIT(A). 6. GROUND NO. 2 IN A.YS 2009-10 & 2010-11 IS COMMON . SINCE THIS GROUND IS COMMON, THEREFORE, WE DECIDED TO DISPOSE OF BY THIS COMMON ORDER. 7. WE HEARD THE COUNSELS FOR BOTH THE SIDES, PERUSE D THE MATERIAL PLACED ON RECORD AND ORDERS PASSED BY THE LOWER AUT HORITIES. THE LD. CIT(A) HAS DEALT WITH THIS GROUND IN OPERATING PARA GRAPH 5.11 OF HIS ORDER, WHICH IS REPRODUCED HEREINBELOW. 5.11 THEREFORE IN VIEW OF FOREGOING, THE A.O IS DI RECTED TO ALLOW THE DEDUCTION U/S 80IB ON FOREIGN EXCHANGE GAIN OF RS.5,86,29,593/- AND ALSO ON THE PROCESSING AND FRE EZING CHARGES OF RS.40,31,673/-, AS THE AFORESAID INCOME ARE DIRECTLY DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING AND HAS DIRECT NEXUS WITH THE BUSINESS OF THE APPELLANT COM PANY. WHILE THE DISALLOWANCE MADE ON DEPB AT RS.11,30,19,938/- AND SALE OF LICENCE OF RS.2,53,94,126/- IS CONFIRMED, AS THE SE EXPENSES BEARS NO DIRECT RELATIONSHIP WITH THE ACTIVITY OF I NDUSTRIAL UNDERTAKING. THESE ARE INCENTIVES PROVIDED BY THE GOVERNMENT REGARDLESS OF THE BUSINESS ACTIVITY. IN VIEW OF TH E SAME, THIS GROUND OF APPEAL IS PARTLY ALLOWED. AFTER CONSIDERING THE ARGUMENTS OF BOTH PARTIES AND AFTER ANALYZING DETAILED ORDERS PASSED BY THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS TAKEN INTO CONSIDERATI ON THE FACTS OF THE PRESENT CASE AND ALSO RELIED UPON JUDICIAL PRONOUNC EMENTS OF HON'BLE 9 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 SUPREME COURT. THE LD. DR REPRESENTING THE REVENUE HAS ALSO RELIED UPON THE JUDGMENT PASSED BY THE HON'BLE SUPREME COU RT IN CIT V. STERLING FOODS , 237 ITR 579 (SC) , WHEREIN IT HAS BEEN HELD AS UNDER :- SECTION 80HH OF THE INCOME TAX ACT, 1961 DEDUCTI ON PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS IN B ACKWARD AREAS ASSESSMENT YEAR 1979-80 WHETHER THERE MUS T BE, FOR APPLICATION OF WORDS DERIVED FROM AS USED IN SECT ION 80HH, A DIRECT NEXUS BETWEEN PROFITS AND GAINS AND INDUSTRI AL UNDERTAKING HELD, YES ASSESSEE INDUSTRIAL UNDER TAKING EXPORTED PROCESSED SEA FOOD AND UNDER EXPORT PROMOT ION SCHEME WAS ENTITLED TO IMPORT ENTITLEMENTS WHICH IT COULD SELL WHETHER RECEIPT FROM SALE OF IMPORT ENTITLEMENT COU LD NOT CONSTITUTE PROFIT AND GAIN DERIVED FROM ASSESSEES UNDERTAKING AND SAME COULD NOT BE INCLUDED IN INCOME OF ASSESSE E FOR COMPUTING DEDUCTION UNDER SECTION 80HH HELD, YES. 12. WE DO NOT THINK THAT THE SOURCE OF THE IMPORT ENTITLEMENTS CAN BE SAID TO BE THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. THE SOURCE OF THE IMPORT ENTITLEMENTS CAN, IN THE CIRCUMSTANCES, ONLY BE SAID TO BE THE EXPORT PROMOT ION SCHEME OF THE CENTRAL GOVERNMENT WHERE UNDER THE EXPORT EN TITLEMENTS BECOME AVAILABLE. THERE MUST BE, FOR THE APPLICATI ON OF THE WORDS DERIVED FROM, A DIRECT NEXUS BETWEEN THE PR OFITS AND GAINS AND THE INDUSTRIAL UNDERTAKING. IN THE INSTA NT CASE THE NEXUS IS NOT DIRECT BUT ONLY INCIDENTAL. THE INDUS TRIAL UNDERTAKING EXPORTS PROCESSED SEA FOOD. BY REASON OF SUCH EXPORT, THE EXPORT PROMOTION SCHEME APPLIES. THERE UNDER, THE ASSESSEE IS ENTITLED TO IMPORT ENTITLEMENTS, WH ICH IT CAN SELL. THE SALE CONSIDERATION THERE FROM CANNOT, IN OUR VI EW, BE HELD TO CONSTITUTE A PROFIT AND GAIN DERIVED FROM THE AS SESSEES INDUSTRIAL UNDERTAKING. CO-JOINING THE FACTS OF THE PRESENT CASE AS WELL AS THE ORDERS PASSED BY THE LD. CIT(A), WE FIND THAT THIS GROUND IS SQUAREL Y COVERED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT V. STERLING 10 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 FOODS (SUPRA). FURTHER, NO NEW MATERIAL OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US TO CONTROVERT OR REBUT THE FINDIN G RECORDED BY THE LD. CIT(A), THEREFORE, WE ARE OF THE CONSIDERED VIE W THAT THE LD. CIT(A) HAS PASSED A WELL-REASONED AND JUDICIOUS ORD ER WHILE CONFIRMING THE DISALLOWANCE OF RS.2,53,94,126/- ON ACCOUNT OF SALE OF LICENCE ON THE GROUND THAT THIS INCOME BEARS NO DIR ECT RELATIONSHIP WITH THE ACTIVITY OF INDUSTRIAL UNDERTAKING AS THE INCEN TIVE IS PROVIDED BY THE GOVERNMENT REGARDLESS OF THE BUSINESS ACTIVITY. TH EREFORE, WE SO NO REASON TO INTERFERE OR DEVIATE FROM THE FINDING REC ORDED BY THE LD. CIT(A). ACCORDINGLY, WE DISMISS THIS GROUND RAISED BY THE ASSESSEE AND UPHOLD THE ORDER OF LD. CIT(A). 8. GROUND NO. 2 IN A.Y 2007-08 & 2008-09 AND GROUND NO. 3 IN A.Y 2009-10 & 2010-11 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 9. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE STANDS DISMISSED. 10. NOW, WE DEAL WITH THE AFOREMENTIONED 4 APPEALS FILED BY THE REVENUE. ITA NO. 5262/MUM/2013 (A.Y 2010-11) - 11. AT THE VERY OUTSET, THE LD. AR SUBMITTED THAT T HE TAX EFFECT IN DISPUTE IN THE PRESENT APPEAL IS BELOW THE MONETARY LIMIT OF RS.10.00 LACS SPECIFIED IN THE CBDT CIRCULAR NO. 21/2015 DATED 10/12/2015. THE LD. DR DID NOT PRODUCE ANY MATERIAL TO SUGGEST THAT THE PRESENT APPEAL IS PROTECTED BY ANY OF THE CIRCUMSTANCES PRESCRIBED IN PARA-8 OF THE 11 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 CIRCULAR DATED 10/12/2015 (SUPRA). THEREFORE, THE APPEAL IS DEEMED TO BE WITHDRAWN/NOT PRESSED AS ITS FILING IS IN CONTRA VENTION OF THE CBDT CIRCULAR DATED 10/12/2015(SUPRA). 12. NOW, THERE REMAIN 3 APPEALS OF REVENUE BEING IT A NOS. 5259 TO 5261/MUM/2013 FOR ADJUDICATION WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. ITA NO. 5260/MUM/2013 (A.Y 2007-08) - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THE AMOUNT OF R S.37,95,981/- AS PROCESSING & FREEZING CHARGES, OTHER INCOME OF RS.1 ,07,437/- & SUNDRY BALANCES WRITTEN OFF RS.3,07,210/- REPACKING CHARGE S OR RS.13,791/- & STORAGE CHARGES OF RS.19,629/- ELIGIBLE FOR DEDUCTI ON U/S 80IB WITHOUT APPRECIATING THE FACT THAT ASSESSEES INDUSTRIAL UN DERTAKING CANNOT BE ALLOWED DEDUCTION ON THESE RECEIPTS AS THE SAME ARE NOT DERIVED FROM THE MANUFACTURING ACTIVITY OF THE ASSESSEES BUSINE SS. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO. 5261/MUM/2013 (A.Y 2008-09) - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THE AMOUNT OF R S.59,23,858/- AS PROCESSING & FREEZING CHARGES, OTHER INCOME OF RS.1 ,676/- & SUNDRY BALANCES WRITTEN OFF RS.3,07,210/- ELIGIBLE FOR DED UCTION U/S 80IB WITHOUT APPRECIATING THE FACT THAT ASSESSEES INDUS TRIAL UNDERTAKING CANNOT BE ALLOWED DEDUCTION ON THESE RECEIPTS AS TH E SAME ARE NOT DERIVED FROM THE MANUFACTURING ACTIVITY OF THE ASSE SSEES BUSINESS. 12 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO. 5259/MUM/2013 (A.Y 2009-10) - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.23,38,455/- MADE ON ACCOUNT OF DISALLOWANCE CLAIMED @ 100% ON O PENING WDV IN RESPECT OF EFFLUENT TREATMENT PLANT WITHOUT APPRECI ATING THE FACT THAT 100% DEPRECIATION ON THE ASSET IS ALLOWABLE IN THE YEAR IT IS PUT TO USE AND DEPRECIATION CLAIMED ON OPENING WDV IN RESPECT ASSETS PURCHASED IN THE EARLIER YEARS IS NOT ALLOWABLE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THE AMOUNT OF R S.40,31,673/- AS PROCESSING & FREEZING CHARGES & FOREIGN EXCHANGE GA IN OF RS.5,86,29,593/- ELIGIBLE FOR DEDUCTION U/S 80IB WI THOUT APPRECIATING THE FACT THAT ASSESSEES INDUSTRIAL UNDERTAKING CAN NOT BE ALLOWED DEDUCTION ON THESE RECEIPTS AS THE SAME ARE NOT DER IVED FROM THE MANUFACTURING ACTIVITY OF THE ASSESSEES BUSINESS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.28,78,220/- U/S 40A(IA) AND RS.65,800/- U/S 40A(3) WITHOUT APPRECIA TING THE FACT THAT PROVISIONS OF SEC. 194C ARE CLEARLY ATTRACTED FOR S UPPLY OF LABOUR AND SEC 40A(3) FOR MAKING PAYMENT ABOVE RS.20,000/- IN CASH. 4. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 13 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 13. AS GROUND NO. 1 IN A.YS 2007-08 & 2008-09 AND G ROUND NO. 2 IN A.Y 2009-10 IN THE APPEALS FILED BY THE REVENUE REL ATE TO DISALLOWANCE U/S 80IB IN RESPECT OF PROCESSING & FREEZING CHARGE S, OTHER INCOME, SUNDRY BALANCES WRITTEN OFF, REPACKING CHARGES, STO RAGE CHARGES AND FOREIGN EXCHANGE GAINS, THE SAME ARE DEALT WITH AND DISPOSED OF BY THIS COMMON ORDER. 14. WE HEARD THE COUNSELS FOR BOTH THE PARTIES, PER USED THE MATERIALS PLACED ON RECORD AS WELL AS THE ORDERS PA SSED BY THE LOWER AUTHORITIES. THESE ISSUES HAVE BEEN DEALT WITH BY THE LD. CIT(A) IN OPERATING PARAGRAPH 4.5 AND 4.6 OF HIS ORDER IN ITA NO. 5260/MUM/2013, WHICH IS REPRODUCED HEREINBELOW. 4.5 AS REGARDS TO OTHER INCOME, COMMISSION & BROKE RAGE, REPACKING CHARGES AND STORAGES CHARGES ARE CONCERNE D, IT IS EVIDENT THAT THIS INCLUDES RECEIPTS, WHICH THE APPE LLANT COMPANY RECEIVED IN THE ORDINARY COURSE OF BUSINESS OF INDU STRIAL UNDERTAKING. HENCE THE SAME HAS DIRECT NEXUS WITH THE BUSINESS OF THE APPELLANT COMPANY. REGARDING SUNDR Y BALANCE WRITTEN OFF, I FIND THAT THESE ARE THE BALANCES WRI TTEN OFF IN SUNDRY CREDITORS/SUNDRY RECEIVABLES ACCOUNTS, WHICH DULY REFLECTS THE NET INCOME ON THIS ACCOUNT. THE APPEL LANTS SUCH INCOME DERIVED FROM THE PURCHASES BOOKED AND ACCORD INGLY ADJUSTED ON FINAL SETTLEMENT. THEREFORE THESE RECE IPTS HAVE DIRECT NEXUS WITH THE BUSINESS OF THE APPELLANT COM PANY. 4.6 THEREFORE IN VIEW OF FOREGOING, THE A.O IS DIRE CTED TO ALLOW THE DEDUCTION U/S 80IB ON THE PROCESSING AND FREEZI NG CHARGES, OTHER INCOME, COMMISSION & BROKERAGE, REPACKING CHA RGES, SUNDRY BALANCE WRITTEN OFF AND STORAGE CHARGES AS T HE AFORESAID INCOME ARE DIRECTLY DERIVED FROM THE ACTIVITY OF IN DUSTRIAL UNDERTAKING AND HAS DIRECT NEXUS WITH THE BUSINESS OF THE APPELLANT COMPANY. WHILE THE DISALLOWANCE MADE ON DEPB IS CONFIRMED, AS THESE EXPENSES BEARS NO DIRECT RELATI ONSHIP WITH 14 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 THE ACTIVITY OF INDUSTRIAL UNDERTAKING. THESE ARE INCENTIVES PROVIDED BY THE GOVERNMENT REGARDLESS OF THE BUSINE SS ACTIVITY. IN VIEW OF THE SAME, THIS GROUND OF APPEAL IS PARTL Y ALLOWED. 15. AFTER HEARING BOTH THE COUNSELS, WE FIND THAT T HE ASSESSEE HAS FAILED TO ESTABLISH THAT RECEIPT OF AMOUNT ON ACCOU NT OF OTHER INCOME IS FROM INDUSTRIAL UNDERTAKING. THE ONLY ARGUMENT SUB MITTED BY THE LD. AR IS THAT THIS INCOME INCLUDES MISCELLANEOUS INCOM E IN THE ORDINARY COURSE OF BUSINESS OF INDUSTRIAL UNDERTAKING, THERE FORE, THESE RECEIPTS HAVE BEEN DERIVED FROM ELIGIBLE BUSINESS OF THE UND ERTAKING. AS SUCH, SAME ARE ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT . HOWEVER, THE LD. AR FAILED TO ESTABLISH ANY DIRECT NEXUS TO PROVE TH AT THE RECEIPT OF INCOME CLAIMED BY HIM HAS GOT ANY DIRECT NEXUS TO A ND IS DERIVED FROM THE ELIGIBLE INDUSTRIAL ACTIVITY. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THE LD. CIT(A) FELL IN ERROR WHILE ACCEPT ING THIS GROUND AS RECEIPT OF SAID INCOME ARE INCIDENTAL TO THE BUSINE SS OF THE ASSESSEE AND IS NOT DIRECTLY RELATED TO AND DERIVED FROM THE ELIGIBLE BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE. THEREFORE, WE REVERSE THE ORDERS OF THE LD. CIT(A) AND UPHOLD THE ORDERS OF THE ASSE SSING OFFICER WHILE DISALLOWING DEDUCTION OF AMOUNT OF OTHER INCOME U/S 80IB OF THE ACT. 16. AS FAR AS THE SUNDRY BALANCES WRITTEN OFF AND P ROCESSING & FREEZING CHARGES ARE CONCERNED, WE HEARD THE COUNSE LS FOR BOTH THE PARTIES, PERUSED THE MATERIALS PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE LOWER AUTHORITIES. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE AFORESAID I NCOME ARE DIRECTLY DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING AND HAS DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE COMPANY AND, THER EFORE, WE UPHOLD THE ORDERS OF THE LD. CIT(A) ON THIS COUNT, I.E., P ROCESSING & FREEZING 15 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 CHARGES AND SUNDRY BALANCES WRITTEN OFF. THEREFORE , THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 17. AS REGARDS DEDUCTION ON ACCOUNT OF SURCHARGES, REPACKING CHARGES AND FOREIGN EXCHANGE GAINS, WE HEARD THE CO UNSELS FOR BOTH THE PARTIES, PERUSED THE MATERIALS PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE LOWER AUTHORITIES. THE LD. CI T(A) HAS DEALT WITH THESE ISSUES IN DETAIL AND AFTER CONSIDERING THE SA ME, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE INCOME ON ACCOUNT OF REPACKING CHARGES, SURCHARGES AND FOREIG N EXCHANGE GAINS ARE DIRECTLY DERIVED FROM THE ACTIVITIES OF INDUSTR IAL UNDERTAKING AND HAS DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE COMP ANY. NO NEW MATERIAL OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE LD. CIT(A). THEREFORE, THE ORDERS PASSED BY THE LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES AND BY RELYING UPON THE JUDICIAL PRONOUNCEMENTS ARE HELD TO BE WELL- REASONED AND JUDICIOUS. THEREFORE, WE UPHOLD THE O RDERS OF THE LD. CIT(A) WITH REGARD TO DEDUCTION ON ACCOUNT OF SURCH ARGES, REPACKING CHARGES AND FOREIGN EXCHANGE GAINS. 18. AS REGARDS INCOME ON ACCOUNT OF COMMISSION AND BROKERAGE CHARGES, THE LD. AR FAILED TO ESTABLISH BEFORE US T HAT THE COMMISSION AND BROKERAGE CHARGES ARE DIRECTLY DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING AND HAS DIRECT NEXUS WITH TH E BUSINESS OF THE ASSESSEE COMPANY WHEREAS COMMISSION AND BROKERAGE C OMES UNDER TRADING ACTIVITY AND, THEREFORE, IS NOT DIRECTLY DE RIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING. THE LD. CIT(A) FELL IN ERROR WHILE HOLDING THAT THE COMMISSION AND BROKERAGE CHARGES ARE DIRECTLY D ERIVED FROM ACTIVITY OF INDUSTRIAL UNDERTAKING AND HAS DIRECT N EXUS WITH THE 16 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 BUSINESS OF THE ASSESSEE COMPANY. IN THIS RESPECT, NO MATERIAL HAS BEEN SHOWN TO US TO CONVINCE US THAT THE INCOME FRO M COMMISSION AND BROKERAGE IS DIRECTLY DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING WHEREAS THE SAID INCOME ARE INCIDENTAL TO THE BUSIN ESS OF THE ASSESSEE AND ARE NOT DIRECTLY RELATED TO THE ELIGIBLE BUSINE SS ACTIVITY CARRIED OUT BY THE ASSESSEE. THEREFORE, SUCH INCOMES DO NOT FA LL WITHIN THE EXPRESSION PROFITS DERIVED FROM ELIGIBLE BUSINESS AND ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. THEREFORE, WE A LLOW THIS GROUND RAISED BY THE REVENUE AND REVERSE THE ORDERS OF THE LD. CIT(A) AND UPHOLD THE ORDERS OF THE ASSESSING OFFICER ON THIS COUNT. IN THE NET RESULT, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 19. GROUND NO. 1 RAISED BY REVENUE IN A.Y 2009-10 R ELATES TO DELETION OF ADDITION MADE ON ACCOUNT OF DISALLOWANC E CLAIMED @ 100% OF OPENING WDV IN RESPECT OF EFFLUENT TREATMENT PLA NT. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD AS WELL AS THE ORDER PASSED BY THE LOWER AUT HORITIES. THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) IN PARAGRAPH 4.3 OF HIS ORDER WHICH IS REPRODUCED BELOW. 4.3 I HAVE CONSIDERED THE A.OS ORDER AS WELL AS T HE APPELLANTS A/R SUBMISSION. HAVING CONSIDERED BOTH , I FIND THAT THE REASONING GIVEN BY THE A.O FOR MAKING THE DISAL LOWANCE OF THE DEPRECIATION ARE NOT CORRECT. UNDOUBTEDLY THER E IS NO DISPUTE AS TO THE FACT THAT, THE APPELLANT TREATMEN T PLANT ARE ELIGIBLE FOR 100% DEDUCTION OF DEPRECIATION AS PER SECTION 32 READ WITH IT RULES. HOWEVER IT IS A MATTER OF FACT THAT THE APPELLANTS IN EARLIER YEAR HAD CLAIMED ONLY 15% DE PRECIATION AND NOT CLAIMED THE DEPRECIATION @ 100%. IT IS ALS O NOT IN DISPUTE THAT IT WAS THE DUTY OF THE A.O TO ALLOW TH E CORRECT RATE OF DEPRECIATION ON THE APPELLANT TREATMENT PLANT IN THE YEAR, 17 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 WHEN IT WAS PURCHASED. BE AS IT MAY BE THE FACT RE MAINS THAT THE DEPRECIATION OF 100% WAS ELIGIBLE ON THE EFFLUE NT PLANT WHICH THE APPELLANT HAD CLAIMED IN THE YEAR UNDER CONSIDERATION. HENCE, I AM AT A LOSS TO UNDERSTAND WHY THE APPELLANT SHOULD SUFFER FOR THE INACTION ON THE PAR T OF THE DEPARTMENT AND FOR THE MATTER OF HIS EARLIER MISTAK E, WHICH WAS DULY ALLOWABLE TO THE APPELLANT UNDER THE PROVISION S OF LAW BY THE A.O. IN VIEW OF THE FOREGOING, I CONSIDER IT P ROPER AND APPROPRIATE TO HOLD THAT THE A.O WAS NOT CORRECT IN HIS ACTION, ACCORDINGLY THE ADDITION SO MADE BY THE A.O IS DELE TED. THUS, THIS GROUND OF APPEAL IS ALLOWED. AFTER HEARING THE ARGUMENTS AS WELL AS PERUSING THE ORDER PASSED BY THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION ALL THE FACTS OF THE PRESE NT CASE AS WELL AS THE JUDICIAL PRONOUNCEMENTS. THE LD. CIT(A) HAS RIGHTL Y HELD THAT THERE IS NO DISPUTE AS TO THE FACT THAT THE ASSESSEES TREAT MENT PLANT IS ELIGIBLE FOR 100% DEDUCTION OF DEPRECIATION AS PER SEC. 32 R EAD WITH I.T RULES. IT WAS ALSO TAKEN INTO CONSIDERATION BY THE LD. CIT (A) THAT, AS A MATTER OF FACT, THE ASSESSEE IN EARLIER YEARS HAD CLAIMED ONLY 15% DEPRECIATION AND NOT CLAIMED THE DEPRECIATION @ 100 %. SINCE THE ASSESSEE HAD CLAIMED ONLY 15% DEPRECIATION IN THE E ARLIER YEAR, THIS POINT ALSO DOES NOT CURTAIL THE RIGHT OF THE ASSESS EE WHEN THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION @ 100% AS IT IS A SETTLED LAW THAT THERE IS NO APPLICABILITY OF ESTOPPELS AGAINST STATUTE. NO NEW MATERIAL OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US TO CON TROVERT OR REBUT THE FINDINGS RECORDED BY THE LD. CIT(A). THE LD. C IT(A) HAS RIGHTLY HELD THAT THE FACT REMAINS THAT THE DEPRECIATION @ 100% WAS ELIGIBLE ON EFFLUENT PLANT WHICH THE ASSESSEE HAD CLAIMED IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) IS WELL- REASONED AND JUDICIOUS AND WE SEE NO REASON TO DEVI ATE FROM THE 18 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 ORDER PASSED BY THE LD. CIT(A). THEREFORE, THIS GR OUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 20. GROUND NO. 3 RAISED IN REVENUES APPEAL FOR A.Y 2009-10 RELATES TO DELETION OF ADDITION OF RS.28,78,220/- U/S. 40A( IA) AND RS. 65,800/- U/S. 40A(3) OF THE ACT. WE HEARD THE COUNSELS FOR BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS TH E ORDER PASSED BY THE LOWER AUTHORITIES. THIS GROUND HAS BEEN DEALT WITH BY THE LD. CIT(A) IN PARAGRAPH 6.3 OF HIS ORDER. AFTER HEARIN G THE PARTIES AND PERUSING THE ORDER PASSED BY THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS PASSED A WELL-REASONED AND JUDICIOUS ORDER BY TAKING INTO CONSIDERATION THAT HAD THE EMP LOYEES BEEN ON SUB-CONTRACT WITH LABOUR CONTRACTOR, THEN, IN THAT EVENTUALITY, IT WAS NOT INCUMBENT UPON THE ASSESSEE TO PAY FOR THEIR ES IC AND PF. THE LD. CIT(A) HAS ALSO TAKEN INTO CONSIDERATION THAT T HE ONLY POINT OF REFERENCE IS PAYMENT WHICH UNDOUBTEDLY HAS BEEN ROU TED THROUGH E.B. JIJU FOR WHICH HE IS GETTING PROFESSIONAL FEE ON WH ICH TDS HAS ALREADY BEEN DEDUCTED BY THE ASSESSEE. THE LD. CIT(A) APPR ECIATING THE FACTS, HAS RIGHTLY COME TO THE CONCLUSION THAT ROUTING OF PAYMENT OF WAGES TO THE LABOURERS THROUGH E.B. JIJU, FOR WHICH HE IS GE TTING PROFESSIONAL FEE, IS NOT SOLE CONSIDERATION TO ESTABLISH THAT HE IS A SUB-CONTRACTOR. THEREFORE, LD. CIT(A) HAS RIGHTLY HELD THAT PAYMENT MADE TO E.B. JIJU DOES NOT ATTRACT THE PROVISIONS OF SEC. 194C OF THE ACT AND NOT LIABLE FOR DEDUCTION OF TDS AND LD. CIT(A) HAS RIGHTLY DEL ETED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.28,78,220/- AND RS. 65,800/- ON ACCOUNT OF PAYMENT MADE TO E.B. JIJU. THEREFORE, T HIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. 19 M/S. ULKA SEAFOODS PVT. LTD. ITA NOS. 4903 TO 4906/MUM/2013 & 5259 TO 5262/MUM/2013 21. GROUND NOS. 2 & 3 IN A.YS 2007-08 & 2008-09 AND GROUND NOS. 4 & 5 IN A.Y 2009-10 ARE GENERAL IN NATURE AND DO NOT REQUIRE ADJUDICATION. 22. IN THE NET RESULT, APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED. 23. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISM ISSED AND APPEALS OF THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2016. SD/- SD/- S SD/ - ( JASON P. BOAZ ) ACCOUNTANT MEMBER ( SANDEEP GOSAIN ) JUDICIAL MEMBER MUMBAI, DATE : 25 TH MAY, 2016 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, F BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI