ACIT 1(1), MUMBAI V. GOLCHA CINETALC P.LTD, MUMBAI

ITA 5506/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4026 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2016
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 03-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2011
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Cost of acquisition; Onus to prove
• Section: 43B; 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5506 /M/ 2011 (AY 2006 - 2007) ITA NO.5507/M/ 2011 (AY 2007 - 2008) ITA NO.5714 /M/ 2011 (AY 2008 - 2009 ) ACIT - 1(1), ROOM NO.579, AAYAKAR BHAVAN, MUMBAI 400 020. / VS. M/S. GOLCHA CINETALC P LTD., 9 RAJ MAHAL, 84, VEER NARIMAN ROAD, MUMBAI 400 020. ./ PAN : AAACG1817G ( / APPELLANT) .. ( / RESPONDENT ) ITA NO. 6187/M/2013 (AY 2009 - 2010) M/S. GOLCHA CINETALC P LTD., 9 RAJ MAHAL, 84, VEER NARIMAN ROAD, MUMBAI 400 020. / VS. INCOME TAX OFFICER, WARD - 1(1)(4), MUMBAI. ./ PAN : AAACG1817G ( / APPELLANT) .. ( / RESPONDENT ) / A SSESSEE BY : SHRI VIJAY MEHTA / REVENUE BY : SHRI SENTHIL KUMARAN, DR / DATE OF HEARING : 29 .02.2016 / DATE OF PRONOUNCEMENT : 20 .04.2016 / O R D E R PER D. KARUNAKARA RAO, AM : THERE ARE FOUR APPEALS UNDER CONSIDERATION. OUT OF THEM, THREE APPEALS ARE FILED BY THE REVENUE FOR THE AYS 2006 - 07; 2007 - 08 & 2008 - 09 AND THE OTHER APPEAL FOR THE AY 2009 - 2010 IS FILED BY THE ASSESSEE. SINC E, THE ISSUES RAISED IN ALL THESE APPEALS ARE IDENTICAL / INTER - CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY 2 ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. I. ITA NO.5506/M/2011 (AY 2006 - 07) (BY REVENUE) II. 2. FIRSTLY, WE SHALL TAKE UP THE REVENUES APPEAL ITA NO.5506/M/2011 FOR THE AY 2006 - 07, WHICH IS FILED AGAINST THE ORDER OF THE CIT (A) - I, MUMBAI DATED 25.3.2011. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS RIGHT IN DELETING THE ADDITION OF RS. 10 LAKHS U/S 40A(2)(B) AS DISALLOWED BY THE AO. 2. WHETHER ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) IS RIGHT IN DIRECTING THE AO TO ALLOW THE DEDUCTION OF RS. 25,81,300/ - U/S 80IB(7A) OF THE ACT AS DISALLOWED BY THE AO ON THE GROUND THAT THE CONSTRUCTION HAS NOT BEEN COMPLETED BEFORE 31.3.2005 AND THE BUSINESS OF MULTIPLEX THEATRE BY WAY OF SPLITTING UP OF EXISTING BUSINESS ETC? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1,40,149/ - MADE ON ACCOUNT OF DELAY IN REMITTANCE OF EMPLOYEES CONTRIBUTION TO PF AND ESIC AND AS SUCH SECTION 43B IS NOT APPLICABLE TO THE EMPLOYEES CONTRIBUTION. 3 . BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MINING AND GRINDING OF SOAPST ONES. HE IS ALSO IN THE BUSINESS OF RUNNING OF MULTIPLEX THEATRES. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 59 LAKHS (ROUNDED OFF) FOR THE AY 2006 - 07. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 96.44 LAKHS (ROUNDED OFF). APART FROM OTHERS, AO MADE A DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S 80IB(7A) OF THE ACT FOR ALL THE FOUR ASSESSMENT YEARS UNDER CONSIDERATION. DURING THE FIRST APPELLATE PROCEEDINGS, CIT (A) DELETED T HE ADDITION AND GAVE RELIEF AND THEREFORE, THE REVENUE IS IN APPEAL BEFORE US FOR THE AY S 2006 - 07 TO 2008 - 09. IN THE AY 2009 - 10, CIT (A) CONFIRMED THE DECISION OF THE AO ON THE ISSUE OF THE SAID CLAIM OF DEDUCTION U/S 80IB(7A) OF THE ACT. CIT (A) IS OF T HE VIEW THAT IT IS A CASE OF SPLITTING UP / RECONSTRUCTION. THEREFORE, ASSESSEE IS IN APPEAL BEFORE US ON THE SAME ISSUE FOR THE AY 2009 - 2010 . IN TOTO, THE COMMON ISSUE RAISED BY THE REVENUE AND THE ASSESSEE IN ALL THE FOUR APPEALS RELATES TO THE CLAIM OF DEDUCTION U/S 80IB(7A) OF THE ACT. IN FACT, THERE ARE DIVERGENT CONCLUSIONS OF THE CIT (A) ON THIS ISSUE. ONE CIT (A) GRANTED RELIEF FOR T HE AYS 2006 - 07 TO 2008 - 09 3 AND THE OTHER DEVIATED FROM THE SAID DECISION OF HIS PREDECESSOR ON THIS ISSUE. THE RELEVANT FACTS CONNECTED TO THIS ISSUE OF CLAIM OF DEDUCTION U/S 80IB(7A) OF THE ACT INCLUDE THAT THE ASSESSEE WAS ORIGINALLY IN THE BUSINESS OF THEATRE RUNNING. SUBSEQUENTLY, HE MADE VARIOUS CHANGES TO THE EXISTING THEATRE AND CONSTRUCTED NEW THEATRES (MULTIPLEXES) NAMELY TRIVOLI AND NILE AND CLAIMED DEDUCTION U/S 80IB(7A) OF THE ACT. AS PER THE SUB - SECTION (7A) OF SECTION 80IV OF THE ACT, A SSESSEE IS ENTITLED TO DEDUCTION SUBJECT TO THE CONDITION THAT HE SHOULD BE IN THE BUSINESS OF BUILDING, OWNING & OPERATING MULTIPLEX THEATRES, WHICH ARE LOCATED OUTSIDE 4 METROS. THE DEDUCTION IS AVAILABLE IF THE CONSTRUCTION OF THESE MULTIPLEX IS COMPLE TED IN TIME BETWEEN 1.4.2002 TO 31.3.2005. HOWEVER, IT IS THE REQUIREMENT OF THE LAW THAT THE SAID MULTIPLEX THEATRE SHOULD NOT BE FORMED BY SPLITTING UP OR RECONSTRUCTION OF THE EXISTING BUSINESS AND THERE IS NO TRANSFER OF ANY BUILDING OR PLANT & MACHIN ERY PREVIOUSLY USED BY THE ASSESSEE. ALL THESE FACTS HAVE TO BE AUDITED BY THE CHARTERED ACCOUNTANT (CA) AND SUBMIT AN AUDIT REPORT IN THIS REGARD. 4 . DURING THE SCRUTINY ASSESSMENT, AO CAME TO THE CONCLUSION THAT THE SAID MULTIPLEX THEATRES WERE COMPLET ED BY 31.3.2005. IN THIS REGARD, SOME CORRESPONDENCE OF THE DISTRICT MAGISTRATE (DM), EXECUTIVE ENGINEERS (EE) (PWD) AND THE CONDITION OF LICENSE FOR RUNNING MULTIPLEX WERE CITED BY THE AO. HE NOTICED THAT CERTAIN CORRESP ONDENCE WAS DATED AFTER MARCH 2 005. HE RELIED ON VARIOUS DECISIONS TO COME TO THE CONCLUSION THAT THE CONSTRUCTION OF THESE MULTIPLEXES WAS NOT COMPLETED AS ON 31.3.2005. HE ACCORDINGLY DENIED THE DEDUCTION U/S 80IB(7A) OF THE ACT. 5 . FURTHER, AO GAVE A FINDING THAT THE ABOVE MULTIP LEX THEATRES CAME INTO EXISTENCE BY VIRTUE OF SPLITTING AND RECONSTRUCTION OF THE EXISTING THEATRE . IN THIS REGARD, AO HELD THAT THE ASSESSEE WAS IN THE EXISTING BUSINESS OF RUNNING OF THEATRE SINCE 2003 - 2004. AO FURTHER HELD THAT THE ASSESSEE CONTINUED T O RUN THE SAME OLD THEATRE WITH SOME MAJOR CHANGES IN ADDITION TO THE NEW MULTIPLEX THEATRES, WHICH ARE CLAIMED COMPLETED BY 31.3.2005. HE ALSO ALLEGED THAT THE EXISTING PLANT & MACHINERY IS TRANSFERRED TO THE NEW MULTIPLEXES . AO FURTHER MENTIONED THAT THE ASSESSEE FAILED TO PROVE THAT THE CONDITIONS WITH REGARD TO TRANSFER OF THE OLD PLANT & 4 MACHINERY ARE NOT VIOLATED. ACCORDINGLY, AO CONCLUDED THAT ASSESSEE IS NOT ENTITLED TO DEDUCTION ON THE GROUND OF SPLITT ING UP AND RECONSTRUCTION ALSO IN ADDITION TO ASSESSEES FAILURE TO COMPLETE THE NEW MULTIPLEX THEATRES BY 31.3.2005. 6 . IN THE ASSESSMENT ORDER ASSESSING OFFICER MENTIONED THAT THE DOCUMENTS RELATING TO CONDITIONS OF LEASE DOES NOT BEAR THE NAME OF THE ASSESSEE OR THE THEATRES. AO ALSO COMMENTE D ADVERSELY ON THE CORRESPONDENCE MENTIONED IN PARA 4 ABOVE . T HE INSPECTION REPOR T FURNISHED BY THE PWD ENGINEER TO THE DM IN COMPLIANCE OF THE DMS LETTER DATED 14.3.2005 DID NOT FIND IN FAVOUR OF THE AO . CONSIDERING THE DATES OF AUGUST AND DECEMBER, 20 05 (SINCE SUBSEQUENT TO THE DUE DATE OF MARCH 2005), AO REASONED THAT THESE ARE SINCE DATED AFTER MARCH 2005, THE DUE DATE FOR THE COMPLETION OF THE CONSTRUCTION OF THE MULTIPLEX THEATRES, IT CAN BE INFERRED THAT THE MULTIPLEXES CONSTRUCTION NOT COMPLETED BY MARCH 2005. HE IGNORED THE FACT THAT THE DM WANTED AN INSPECTION REPORT IN RESPONSE TO LETTER DATED 14.3.2005. AO REJECTED THE ASSESSEES CONTENTION THAT THE INSPECTION REPORT IS CALLED FOR ONLY AFTER THE COMPLETION OF CONSTRUCTION. DURING THE FIRST APPELLATE PROCEEDINGS ALSO, AO MADE A SUBMISSION WHICH REVOLVES AROUND THE ARGUMENT OF COMPLETENESS OF THE CONSTRUCTION OF MULTIPLEX BY 31.3.2005. ASSESSEE RELIES ON THE SUB - DIVISIONS MAGISTRATE S (SDM) REPORT DATED 26.2.200 5 AND DMS LETTER DATED 14.3.20 05 AND AUDITORS REPORT IN FORM NO.10CCBA. IN THIS REGARD, THERE IS A CERTIFICATE BY THE ARCHITECT (M/S. KAMALAKANT & ASSOCIATES) DATED 10.5.2005 CITING THAT THAT THE CONSTRUCTION WAS COMPLETED BY 31.3.2005. FURTHER ALSO, IT IS THE CLAIM OF THE ASSESS EE THAT THE CONSTRUCTION OF THE NEW MULTIPLEX THEATRES (TRIVOLI AND NILE) STARTED WAY BACK IN 2002 AND THE CONSTRUCTION WAS COMPLETED BY 31.3.2005. ASSESSEE SPENT AN AMOUNT OF RS. 2.61 CRS IN THIS REGARD (PARA 5.2(II) OF THE CIT (A)S O RDER IS RELEVANT IN THIS REGARD) AND THERE IS NO VIOLATION OF ANY CONDITIONS FOR CLAIMING DEDUCTION U/S 80IB(7A) OF THE ACT. CONSIDERING THE ABOVE, CIT (A) GRANTED RELIEF FOR THE FIRST THREE ASSESSMENT YEARS (2006 - 07; 2007 - 08 & 2008 - 09). HOWEVER, FOR THE AY 2009 - 2010 , THE C IT (A) DID NOT AGREE WITH THE ABOVE DECISION OF HIS PREDECESSOR AND DISCUSSED THE FACT OF CONTINUING OF OLD THEATRE AND HELD THIS IS THE CASE OF SPLITTING UP OR RECONSTRUCTION . HE ALSO DISCUSSED THE CONCLUSION OF HIS PREDECESSOR FOR THE EARLIER AYS. THE C ONTENTS OF PARA 4.4 OF THE CIT (A)S ORDER FOR 5 THE AY 2009 - 2010 CONTAIN CERTAIN FACTS IN SUPPORT OF HIS DIVERGENT DECISION ON THE ISSUE. PARA 4.5 OF HIS ORDER SHOWS THAT THE MULTIPLEX THEATRES (TRIVOLI AD NILE) CA ME INTO EXISTENCE ON THE SAME PLOT OF LAND , WHERE THE BUSINESS OF RUNNING A THEATRE WAS ALREADY IN EXISTENCE. THE SAID OLD THEATRE CONTINUES TO OPERATE EVEN AFTER NEW THEATRES WERE ADDITIONALLY CONSTRUCTED ON THE SAME PLOT OF LAND. IT IS NOT THE CASE THAT OLD THEATRE WAS COMPLETELY WOUND UP BEFO RE THE NEW ONE S CAME INTO EXISTENCE ON THE SAME PLOT OF LAND. CIT (A) ALSO HELD THE PLANT & MACHINERY AND OTHER INFRASTRUCTURAL REQUIREMENTS SUCH AS ELECTRICITY, WATER CONNECTION, LAND ETC, WHICH WERE ALREADY IN EXISTENCE, WERE UTILISED FOR NEW BUSINESS O F RUNNING MULTIPLEXES NAMELY TRIVOLI AND NILE. FURTHER, CIT (A) ALSO CONCLUDED THAT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PROVE THAT THE NEW BUSINESS CAME INTO EXISTENCE WITHOUT RECONSTRUCTION OF THE OLD BUSINESS. HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMP LTD VS. CIT (1992) 62 TAXMAN 480 (SC) FOR DEFINING THE MEANING OF NOT FORMED BY SPLITTING OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. RELYING ON ANOTHER SUPREME COURT JUDGMENT IN THE CASE OF ELECTRONIC CORPORATION OF INDIA LTD VS. CIT [1985] 204 ITR 412 (SC) AS WELL AS THE JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF PERIYAR CHEMICALS LTD VS. CIT (KER) 226 ITR 467, THE CIT (A) DISCUSSED THE SAME AGAINST THE ASSESSEE IN PARA 4.6 OF HIS ORDER DATED 7.8.2013 FOR THE AY 2009 - 2010. EVENTUALLY, AS PER THE PARA 4.7, CIT (A) HELD AGAINST THE ASSESSEE MENTIONING THAT HIS PREDECESSOR DID NOT CONSIDER THE AS PECT OF CONSTRUCTION OF THE MULTIPLEX THEATRES BY WAY OF RECONSTRUCTION OR SPLITTING UP. THUS, HE DEPARTED FROM THE ORDERS OF HIS PREDECESSOR FOR THE AY 2009 - 10. THUS, THERE ARE DIVERGENT DECISIONS OF TWO CIT (A)S ON THIS ISSUE AMONG VARIOUS ASSESSMENT Y EARS UNDER CONSIDERATION. THE ASSESSEE / REVENUE ARE IN APPEAL BEFORE US ON THE COMMON GROUND RELATING TO THE CLAIM OF DEDUCTION U/S 80IB(7A) OF THE ACT RELATING TO THE BUSINESS OF MULTIPLEX THEATRES. 7 . ON THE OTHER HAND, LD DR MENTIONED THAT ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IB(7A) OF THE ACT FOR THE REASONS THAT THE ASSESSEE IS CONTINUOUSLY IN THE BUSINESS OF RUNNING THE THEATRES AND THE INSPECTION REPORTS OF THE PWD ENGINEERS WHICH ARE DATED SUBSEQUENT IN TIME (POST MARCH 2005) GOES AGAINST THE ASSESSEES ASSERTION THAT THE MULTIPLEXES WERE CONSTRUCTED BY 31.3.2005. NO 6 CONCLUSIVE EVIDENCE IS FURNISHED BY THE ASSESSEE IN THIS REGARD. THE ARCHITECTS CERTIFICATE ALSO BEARS THE DATE POST - MARCH 2005. ON THE ISSUE RELATING TO RECONSTRUCTION / S PLITTING UP, LD DR SUBMITTED THAT ASSESSEE UNDISPUTEDLY WAS IN THE BUSINESS OF RUNNING OF THEATRES PRIOR TO 2002 AND THE CONSTRUCTION OF THEATRES VIZ TRIVOLI AND NILE AND THE OLD THEATRES WERE FORMED OUT OF SPLITTING UP / RECONSTRUCTION, AS THE CASE MAY BE . AS PER THE DR, THERE ARE INADEQUATE FACTS ON THE OLD THEATRE AND THE LIST OF NEW CHANGES MADE TO IT AND THE LIST OF ITEMS TRANSFERRED TO THE NEW THEATRES. LD DR ALSO MENTIONED THAT THE PROFITS EARNED FROM THE OLD THEATRE ARE NOT ELIGIBLE FOR DEDUCTIO N U/S 80IB(7A) OF THE ACT. 8 . WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE OF CLAIM OF DEDUCTION U/S 80IB(7A) OF THE ACT AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE PAPER BOOKS FILED BEFORE US. IT IS AN UNDISPUTED FACT THAT THE ASSESS ING OFFICER DENIED THE BENEFIT OF DEDUCTION FOR A COUPLE OF REASONS IE (I) TRIVOLI AND NILE WERE NOT CONSTRUCTION BY 31.3.2005 AND (II) THEY ARE FORMED OUT OF RECONSTRUCTION / SPLITTING UP. ON HEARING BOTH THE PARTIES, WE FIND THE ORDERS OF THE CIT (A) AR E DEFICIENT ON VARIOUS ASPECTS. THE CIT (A) FOR THE AYS 2006 - 07; 2007 - 08 & 2008 - 09 WAS OF THE VIEW THAT THE CONSTRUCTION OF THE NEW THEATRES WAS COMPLETED BY MARCH 2005 AND THEREFORE, THE CLAIM OF DEDUCTION IS RIGHTLY MADE AND AO UNFAIRLY DENIED IT. ORDE RS OF THE CIT (A) FOR ALL THESE THREE AYS , IN OUR VIEW, ARE DEFICIENT TO VARIOUS ASPECT RELATING TO THE EXISTING BUSINESS OF RUNNING THEATRES IN THE SAME LOCATION; THERE IS NO EXAMINATION INTO THE FACTS RELATING TO THE AREA OF LAND; WHETHER THERE WAS ADEQU ATE LAND SUFFICIENT FOR RUNNING OF THE THREE THEATRES AT THE SAME LOCATION; NO DISCUSSION ABOUT THE CONSUMPTION OF ELECTRICITY IN RUNNING OF THE NEW THEATRES PRIOR TO 31.3.2005; NO DETAILS ON THE EMPLOYMENT OF PEOPLE / LABOURERS FOR RUNNING THEATRES; NO DI SCUSSION ON SALE OF TICKETS FOR RUNNING THEATRES; NO DISCUSSION ON THE FILMS SCREENED; NO DISCUSSION WHETHER IT IS A CASE OF SET UP OF THEATRE OR IT IS A CASE OF ACTUAL COMMENCEMENT OF BUSINESS ETC. FURTHER , THE CIT (A) FOR THE AY 2009 - 2010 HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION IN VIEW OF THE CONDITIONS RELATING TO FORMATION OF NEW BUSINESS BY SPLITTING UP / RECONSTRUCTION. HE HAS NOT MENTIONED WHETHER THE ALLEGATION OF NON - COMPLETION OF CONSTRUCTION OF MULTIPLEX THEATRES BY 31.3.2005 IS AC CEPTABLE TO HIM OR NOT? CONSIDERING ALL THE ABOVE, WE ARE OF THE 7 OPINION, THE ASSESSING OFFICER SHOULD HAVE BROUGHT OUT CLEAR VIOLATION OF RELEVANT CONDITIONS BY THE ASSESSEE EXPLAINING THE EVIDENCES PLACED BEFORE HIM OR EVIDENCES GATHERED BY VIRTUE OF HI S INVESTIGATION. WE HAVE ALSO CONSIDERED THE FACT THAT THE MATTER RELATES TO 10 YEARS OLD. IN OUR OPINION, RELEVANT FACTS NECESSARY FOR MAKING THE ASSESSMENT WERE NOT GARNERED BY THE AO AND THE TRIBUNAL CANNOT DECIDE THE ISSUE CLOSING ITS EYES TO THE RELEVANT OF THE FACTS OF THE CASE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS IN THE BUSINESS OF RUNNING OF THEATRES PRIOR TO THE PROVISIONS OF SUB - SECTION (7 A) TO SECTION 80IB OF THE ACT CA ME INTO EXISTENCE, THE DETAILS OF WHICH WERE NOT DISCUSSED BY THE AO I N THE ORDER . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THIS ISSUE, INVOLVED IN ALL THE FOUR APPEALS UNDER CONSIDERATION, SHOULD BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AO IS DIRECTED TO EXAMINE IF THE DEDUCTION U/S 80IB(7A) OF THE ACT IS MADE IN RESPECT OF THE PROFITS OF THE OLD REMODELLED THEATRE AS WELL. CONSIDERING THE LETTERS OF SDM / AE OF PWD / DMS LETTERS, WE FIND THAT THE TWO THEATRES IE TRIVO LI AND NILE APPEAR COMPLETED BEFORE THE 31.3.2005. NEVERTHELESS, AO IS FREE TO GARNER ANY CLINCHING EVIDENCES IF HE HAS TO DENY DEDUCTION ON THE ISSUE OF COMPLETION OF CONSTRUCTION OF MULTIPLEX THEATRES. FURTHER, AO SHALL NOTE THAT FORMATION OF BUSINE SS IS THE NECESSARY CONDITION TO BE COMPLIED WITH BY THE AO VIDE THE PROVISIONS OF CLAUSE (II) OF SECTION 80IB(7A) AND NOT THE COMMENCEMENT OF SCREENING OF FILMS IN THE SAID THEATRES. HE SHALL ALSO COLLECT DETAILS ON OLD THEATRES TOO. ACCORDINGLY, THE RELEVANT GROUNDS IN ALL THE FOUR APPEALS RELATING TO THE ISSUE OF DEDUCTION U/S 80IB(7A) OF THE ACT ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . THERE ARE COUPLE OTHER ISSUES RAISED BY THE REVENUE FOR AY 2006 - 07. GROUND NO.1 RELATES TO THE DELETION OF ADDITIO N OF RS. 10 LAKHS U/S 40A(2)(B) OF THE ACT. RELEVANT FACTS IN THIS REGARD ARE IN THE ASSESSMENT AO MADE ADDITION OF RS. 10 LAKHS OUT OF PAYMENTS MADE FOR PURCHASE OF MATERIAL GOODS. IN THIS REGARD, THERE WAS A DISCUSSION ABOUT THE QUOTATION BY M/S. YESH RAJ MINERS AMOUNTING TO RS. 875/ - PER M.T. OF SOAPSTONE CRUDE. THERE WAS ALSO A DISCUSSION ABOUT ACCEPTING THE ASSESSEES CLAIM OF PER UNIT PURCHASE COST OF RS. 884/ - , WHICH IS MUCH HIGHER THAN THIS YEARS COST OF RS. 858.50. CIT (A) GRANTED RELIEF STATI NG THAT THE CLAIMS U/S 8 40A(2)(B) CANNOT BE DENIED ON AD - HOC BASIS WITHOUT BRINGING ANY COMPARABLE OR OTHER CLINCHING EVIDENCE TO DEMONSTRATE THAT THE PAYMENTS MADE BY THE ASSESSEE ATTRACTS THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. WE FIND, THE DISCU SSION OF THE CIT (A) IN PARA 4.2 FOR THE AY 2006 - 07 IS RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME IS EXTRACTED AS UNDER: - 4.2. I HAVE GONE THROUGH THE ARGUMENTS AS WELL AS THE SUBMISSION OF THE APPELLANT. THE OBJECTION OF THE AO WAS THAT THE ASSESSEE HAS NOT SUBMITTED THE RATE AT WHICH SOAPSTONE CRUDE WAS SOLD TO THE VARIOUS OUTSIDE PARTIES. THE AR OF THE APPELLANT SUBMITTED THAT EVEN IN THE PREVIOUS YEAR WHERE THE ORDER WAS PASSED U/S 143(3) WHEREIN THE PURCHASE COST O F SOAPSTONE CRUDE WAS 884/ - PER M.T. AS AGAINST RS. 858.50 IN THE YEAR UNDER APPEAL. MOREOVER, THE AR STARED THAT M/S. YASHRAJ MINERS HAS QUOTED THE RATE RS. 875/ - + TAXES. IN VIEW OF THESE FACTS AND SUBMISSIONS, I DO NOT FIND ANY REASON FOR SUSTAINING T HE AD - HOC ADDITION OF RS. 10,00,000/ - UNDER THE PROVISIONS OF SECTION 40A(2)(B). ACCORDINGLY, THE ADDITION OF RS. 10,00,000/ - IS DELETED. 10 . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) DISCUSSED THE ISSUE AT LENGTH BEFORE DELETING THE ADDITION MADE BY THE AO. THEREFORE, IN OUR OPINION, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTER FERENCE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE FOR THE AY 2006 - 07 IS DISMISSED . 1 1 . GROUND NO.3 RAISED BY THE REVENUE IN ITS APPEAL FOR THE AY 2006 - 07 RELATES TO THE DISALLOWANCE OF RS. 1,40,149/ - ON ACCOUNT DELAYED PAYMENT OF PF AND ESIC. THE S AID AMOUNT OF RS. 1,40,149/ - WAS DISALLOWED IN VIEW OF DELAY IN REMITTANCE OF EMPLOYEES CONTRIBUTION TO PF AND ESIC. ON THIS ISSUE, CIT (A) EXAMINED THE FACTS VIDE PARA 6 AND ITS SUB - PARAS OF HIS ORDER AND HELD THAT THE SAID PAYMENTS WERE NOT MADE OUT OF THE GRACE PERIOD PROVIDED UNDER THE STATUTE. THE DISCUSSION GIVEN IN PARA 6.2 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS THE SAID PARA 6.2 IS EXTRACTED AS UNDER: - 6.2. I HAVE GONE THROUGH THE OBJECTION OF THE AO AN D SUBMISSIONS OF AR OF APPELLANT AND HOLD THAT OUT OF THE PF AMOUNT OF RS. 1,37,505/ - ALL THE PAYMENTS EXCEPT RS. 15,363/ - WAS PAID DURING THE GRACE PERIOD AND EVEN THE PAYMENT OF RS. 15,363/ - WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME WHIC H IS ALLOWABLE AS PER THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ORS VS. SABARI ENTERPRISES (2008) 298 ITR 141 (KARN.) AND IN THE CIT VS. ANZ INFORMATION TECHNOLOGY (P) LTD (2009) 318 ITR 123 (KAR.) AND DELHI HIGH COURT IN THE CA SE OF CIT VS. AIMIL LTD (2010) 229 CTR (DEL.) 418, (2010) 321 ITR 508. THE ESIC OF RS. 2,634/ - WAS ALSO PAID BEFORE THE DUE DATE OF FILING OF RETURN. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 1,40,149/ - IS HEREBY DELETED. 9 1 2 . CONSIDERING THE ABOVE, WE ARE OF THE OPINION, THE CIT (A) DISCUSSED THE ISSUE AT LENGTH BEFORE DELETING THE ADDITION MADE BY THE AO. THEREFORE, IN OUR OPINION, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERF ERENCE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE FOR THE AY 2006 - 07 IS DISMISSED . 13 . IN THE RESULT, APPEAL OF THE REVENUE FOR THE AY 2006 - 07 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. II. ITA NO.5507/M/2011 (AY 2007 - 2008) (BY REVENUE) III. ITA NO.5714/M/2011 (AY 2008 - 2009) (BY REVENUE) IV. ITA NO.6187/M/2013 (AY 2009 - 2010) (BY ASSESSEE) 14 . IN THESE THREE APPEALS (TWO APPEALS BY THE REVENUE AND ONE BY THE ASSESSEE), THE ONLY ISSUE RAISED RELATES TO THE ALLOWABILITY OF DEDUCTION U/S 80IB(7A) OF THE ACT. WE HAVE ALREADY ADJUDICATED THIS ISSUE WHILE DEALING WITH GROUND NO.2 OF THE REVENUES APPEAL FOR THE AY 2006 - 07 IN THE ABOVE PARAGRAPHS OF THIS ORDER WHEREIN WE REMANDED THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND THE SAID GROUND IS ALLOWED FOR STATISTICAL PURPOSES. CONSIDERING THE COMMONALITY OF THE ISSUE, OUR DECISION GIVEN ON GROUND NO.2 OF THE REVENUES APPEAL FOR THE AY 2006 - 07 SQUARELY APPLIES TO THE PRESENT APPEALS TOO. ACCORDINGLY, ALL THE GROUNDS RAISED IN THE PRESENT TH REE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 15 . IN THE RESULT, TWO APPEALS OF THE REVENUE AND ONE APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 16 . CONCLUSIVELY, REVENUES APPEAL FOR THE AY 2006 - 07 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES. THE OTHER TWO REVENUES APPEALS FOR THE AYS 2007 - 08 & 2008 - 09 AS WELL AS THE ASSESSEES APPEAL FOR THE AY 2009 - 2010 ARE ALLOWED FOR STATISTICAL PURPO SES. ORDER PRONOUNCE D IN THE OPEN COURT ON 2 0 T H APRIL, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) MUMBAI, DT: 2 0 .4.2016. 10 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI