ACIT, Ajmer V. M/S SHREE CEMENT LTD., BEAWAR

ITA 575/JPR/2012

• Counselvise Citation: 57523114 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Gift; Depreciation; Business expenditure; Earning of tax free income; Additional evidence; Notional interest; Onus to prove; Revised return; Revenue expenditure; Capital expenditure
• Section: 43B; 14A; 32; 37; 139

Judgement Text

ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 575/JP/2012 ASSESSMENT YEAR : 2000-01 PAN : AACCS 8796 G THE ACIT VS. M/S. SHREE CEMENT LTD. CIRCLE- 2 BANGUR NAGAR AJMER BEAWAR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI SUBHASH CHANDRA ASSESSEE BY : SHRI VIJAY MEHTA DATE OF HEARING: 11-08-2014 DATE OF PRONOUNCEMENT: 17-10-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A), AJMER DATED 16-03-2012 FOR THE ASSESSME NT YEAR 2000-01. 2.0 GROUND NOS. 1 TO 3 RAISED BY THE REVENUE AGITAT ES ONLY ONE ISSUE WHICH CAN BE PREFACED AS UNDER:- (I) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ALL OWING AN AMOUNT OF RS. 32,08,085/- AS REVENUE EXPENDITURE IN CURRED BY THE ASSESSEE FOR CONVERSION OF WBM ROAD INTO CONCRE TE ROAD. THE SAME HAS BEEN HELD TO BE CAPITAL IN NATURE BY T HE AO AND ACCORDING TO THE REVENUE IT IS IN ITS FAVOUR BY FOL LOWING JUDGEMENTS. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 2 (A) CIT VS. PANDIAN CHEMICALS LTD. VS. CIT, 233 ITR 497 (MAD.) (B) DALLMIYA JAIN (P) LTD. VS. CIT 81 ITR 754 (S C) 3.0 THE GROUND NO. 4 OF THE REVENUE IS TREATED AS GROUND NO. (II) OF THE REVENUE WHICH READS AS UNDER:- (II) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION MADE OF RS. 1,20,522/- MADE ON ACCOUNT OF DEPRECIA TION OF GUEST HOUSE IGNORING THE FACT THAT DEPRECIATION IS NOT ALLOWABLE ON GUEST HOUSE AS UPHELD IN THE CASE OF CIT VS. PON NI SUGAR & CHEMICALS LTD., 260 ITR 605 (MAD.) AND BRITANNIA IN DUSTRIES LTD. VS. CIT, 278 ITR 546 (SC). 4.0 THE GROUND NO. 5 OF THE REVENUE IS TREATED AS G ROUND NO. (III) OF THE REVENUE WHICH READS AS UNDER:- (III) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION OF RS. 68,09,000/- MADE ON ACCOUNT OF NON-INCLUSION O F EXCISE DUTY IN THE CLOSING STOCK U/S 145A OF THE I.T. ACT, 1961 IGNORING THE DECISION RELIED UPON BY THE AO IN THE CASE OF CIT VS. BRITISH PAINTS INDIA LTD., 188 ITR 44 (SC) 5.0 THE GROUND NOS. 6 AND 7 OF THE REVENUE ARE TREA TED AS GROUND NO. (IV) OF THE REVENUE WHICH IS RELATED TO ONLY ONE IS SUE I.E. DELETION OF ADDITION OF RS. 1,37,45,680/- FOR COMPUTATION OF BO OK PROFIT U/S 115JA, RELATABLE TO INTEREST AND OTHER EXPENSES SHOWN AS N ON-TAXABLE ASSET. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 3 6.0 THE GROUND NO. 8 OF THE REVENUE IS TREATED AS G ROUND NO. (V) OF THE REVENUE WHICH READS AS UNDER:- (V) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE ON ACCOUNT OF LONG TERM CAPITAL LOSS OF RS. 7 3,59,094/- BY ACCEPTING THE ADDITIONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO AO AS REQUIRED UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 7.0 THE GROUND NO. 9 OF THE REVENUE IS TREATED AS G ROUND NO. (VI) OF THE REVENUE WHICH READS AS UNDER:- (VI) THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE MADE BY AO ON ACCOUNT OF EXPENSES INC URRED IN GIFTS FROM RS. 3,04,225/-TO RS. 1,00,000/- 8.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY IS THE CEMENT MANUFACTURING INDUSTRY WHICH INVOLVES HEAVY VEHICLE S MOVEMENT FOR SUPPLY OF RAW MATERIAL AS WELL AS CLEARANCE OF FINISHED G OODS. THE ASSESSEE COMPANY HAS WBM ROAD WHICH REQUIRES FREQUENT REPAIR S AND PATCH UP DUE TO RAINS AND HEAVY VEHICULAR USE. THIS CAUSED PROBL EMS IN THE OPERATION OF THE ASSESSEE COMPANY TO MAKE THE ROAD MORE EFFICIEN T. IT WAS CONVERTED INTO CONCRETE ROAD FOR WHICH THE ASSESSEE COMPANY INCURR ED AN EXPENDITURE OF RS. 32,08,085/-. THE AO HELD THAT THE ASSESSEE COMP ANY HAS DERIVED THE ADVANTAGE OF ENDURING NATURE FOR CONVERTING THE WBM ROAD INTO CONCRETE ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 4 ROAD. THEREFORE, IT WAS A CAPITAL EXPENDITURE AND T HIS ADDITION WAS ADDED TO THE INCOME OF THE ASSESSEE COMPANY. FOR THIS PURPOS E, THE ASSESSEE RELIED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF D ALMIA JAIN & CO. LTD. VS. CIT, 81 ITR 754. 9.0 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE REITERATED THE FACTS, ARGUMENT S AND CONTENDED THAT NO NEW ASSET HAS COME INTO EXISTENCE AS IT HAS NOT BEE N DISPUTED BY THE AO THAT WBM ROAD WAS ALREADY IN EXISTENCE. FOR OPERATIONAL EFFICIENCY, IT HAS BEEN CONVERTED INTO CONCRETE ROAD WHICH DOES NOT BRING T HAT ANY NEW ASSET HAS COME INTO EXISTENCE. THE EFFICIENCY HAS RESULTED IN AUGMENTING THE PROFITABILITY OF THE INDUSTRY AND THE EXPENDITURE I NCURRED WAS TOWARDS PROFIT GENERATING ASSET. THE ASSESSEE IN SUCH AN EVENTUALI TY EXPLAINED THAT IT GIVES ENDURING ADVANTAGE WHICH SHOULD BE ALLOWED AS REVEN UE EXPENDITURE. THE LD. AR OF THE ASSESSEE HAS RELIED ON THE HON'BLE S UPREME COURT JUDGEMENT IN THE CASE OF EMPIRE JUTE CO. LTD. VS. CIT , 124 I TR 1 WHEREIN IT HAS BEEN HELD AS UNDER:- THERE MAY BE CASES WHERE EXPENDITURE, EVEN IF INC URRED FOR OBTAINING AN ADVANTAGE OF ENDURING BENEFIT, MAY, NO NE THE LESS, BE ON REVENUE ACCOUNT AND THE TEST OF ENDURING BENEFIT MA Y BREAK DOWN. IT IS NOT EVERY ADVANTAGE OF ENDURING NATURE ACQUIRED BY AN ASSESSEE THAT BRINGS THE CASE WITHIN THE PRINCIPLE LAID DOWN IN T HIS TEST. WHAT IS MATERIAL TO CONSIDER IS THE NATURE OF THE ADVANTAGE IN A COMMERCIAL SENSE AND IT IS ONLY WHERE THE ADVANTAGE IS IN THE CAPITAL FIELD THAT THE ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 5 EXPENDITURE WOULD BE DISALLOWABLE ON AN APPLICATION OF THIS TEST. IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE ASSES SEE'S TRADING OPERATIONS OR ENABLING THE MANAGEMENT AND CONDUCT O F ASSESSEE'S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABILITY WHILE LEAVING THE FIXED CAPITAL UNTOUCHED, THE EXPENDITUR E WOULD BE ON REVENUE ACCOUNT, EVEN THOUGH THE ADVANTAGE MAY ENDU RE FOR AN INDEFINITE FUTURE. 10. THE LD. AR FURTHER PLACED RELIANCE BEFORE THE L D. CIT(A) AS UNDER:- (I) PANIPAT COOPERATIVE SUGAR MILLS LTD. VS. CIT ,1 08 ITR 111 (P&H). (II) CIT VS. VENKATESWARA HATCHERY (P) LTD. 27 ITR 116 (A.P.) (III) CIT VS. CHEMAUX LTD., 74 TAXMAN 201 (BOM.) (IV) L.H. SUGAR FACTORY OIL MILLS (P) LTD. VS. CIT , 125 ITR 293 (SC) 11. THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO BY FOLLOWING OBSERVATION. 4.5 I THEREFORE, HOLD THAT EXPENDITURE INCURRED ON REPAIR OF ROADS BY APPELLANT IS REVENUE EXPENDITURE AND ALLOWABLE U/S 37. AO IS NOT JUSTIFIED TO MAKE DISAL LOWANCE OF RS. 32,08,085/- AND DISALLOWANCE IS DIRECTED TO BE DELETED. GROUND NO. 2 IS THUS ALLOWED. 12. APROPOS SECOND ISSUE OF THE REVENUE IN RESPECT OF DEPRECIATION ON GUEST HOUSE AMOUNTING TO RS. 1,20,522/-. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN ORIGINAL RETURN CLAIMED DEPRECIATIO N OF GUEST HOUSE. THEREAFTER THE ASSESSEE FILED A REVISED RETURN IN W HICH THE AMOUNT OF WDV WAS INCREASED RESULTING INTO INCREASED DEPRECIATION . THE WDV WAS ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 6 INCREASED TO THE EXTENT OF REFUSAL OF CLAIM OF DEPR ECIATION IN EARLIER YEARS. IN SHORT, THE ASSESSEE CLAIMED DEPRECIATION ON THE WDV WHICH WAS AS PER INCOME-TAX RECORD. THE AO THEREFORE, HELD THAT AN A MOUNT OF RS. 1,20,522/- CLAIMED IN REVISED RETURN BY INCREASING THE WDV OF GUEST HOUSE WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. 13. THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSE E BY FOLLOWING OBSERVATION. 5.3 AS PER SECTION 32 OF THE I.T. ACT, DEPRECIATI ON IS ALLOWABLE IN THE CASE OF ANY BLOCK OF ASSETS ON THE WDV THEREOF AT THE RATES PRESCRIBED BY THE IT RULES. FU RTHER AS PER SECTION 43 (6)(II), WDV MEANS IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, THE WRITTEN DOWN VALUE OF THAT BLOCK OF ASSETS IN THE IMMEDIATELY PRECEDING PREVIOUS YE AR AS REDUCED BY THE DEPRECIATION ACTUALLY ALLOWED IN RES PECT OF THAT BLOCK OF ASSETS IN RELATION TO THE SAID PRECEDING P REVIOUS YEAR AND AS FURTHER ADJUSTED BY THE INCREASE OR THE REDU CTION REFERRED TO IN ITEM (I). THE HARMONIOUS CONSTRUCT ION OF THESE TWO SECTIONS MAKES IT CLEAR THAT FOR THE PURPOSE OF DEPRECIATION, THE WDV MEANS ACTUAL COST OF THE ASSET AS REDUCED B Y THE DEPRECIATION ACTUALLY ALLOWED IN THE PAST. IN THIS CASE, EVEN THOUGH DEPRECIATION WAS CLAIMED BY THE ASSESSEE DUR ING THE ASSESSMENT YEARS 1986-87 TO ASSESSMENT YEAR 1997-98 , THE SAME WAS NOT ALLOWED IN VIEW OF PROVISION OF SECTIO N 37 (4) OF THE I.T. ACT. SINCE NO DEPRECIATION WAS ACTUALLY AL LOWED TO THE ASSESSEE, THE WDV FOR THIS YEAR HAS TO BE ENHANCED BY AN AMOUNT OF DEPRECIATION, WHICH WAS CLAIMED BY THE AS SESSEE IN THE PAST BUT NOT ALLOWED BY THE DEPARTMENT. THIS VI EW ALSO DERIVES SUPPORT FROM THE DECISION OF HON'BLE KERAL A HIGH COURT IN THE CASE OF SMT. LAXMI VS. DCIT REPORTED IN 204 CTR 462. THE AO IS THEREFORE, REFERRED TO ALLOW DEPRECI ATIONS ON THE ENHANCED WDV OF THE ASSETS. GROUND NO. 3 IS THUS AL LOWED. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 7 14. APROPOS GROUND NO. (III) OF THE REVENUE IN RESP ECT OF NON-INCLUSION OF EXCISE DUTY IN THE CLOSING STOCK. THE BRIEF FACT S OF THE CASE ARE THAT THE ASSESSEE VALUED ITS CLOSING STOCK AS PER CONSISTENT LY FOLLOWED PRACTICE OF EXCLUDING THE EXCISE DUTY ELEMENT OF VALUATION OF C LOSING STOCK. THE AO INCREASED THE CLOSING STOCK OF THE ASSESSEE BY FOL LOWING OBSERVATIONS. 05 .. AS PER NOTE NO. 9 OF SCHEDULE 19(B) OF ACCOUNTING POLICY THE EXCISE DUTY LIABILITY AMOUNTI NG TO RS. 68.09 LACS ON CEMENT PRODUCT BUT NOT DISPATCHED FRO M THE FACTORY HAS BEEN PROVIDED AND NOT INCLUDED IN THE V ALUE OF THE FINISH GOOD. IN RESPONSE OF THE QUERY THE ASSESSEE VIDE ANNEXURE 7 LETTER DATED 21-02-2003 HAVE ALSO ADMITTED THAT D URING THE YEAR UNDER CONSIDERATION WE HAVE NOT INCLUDED THE E XCISE DUTY AMOUNTING TO RS. 68.09 LACS IN THE VALUE OF THE CLO SING STOCK OF THE CEMENT AS SILO AS THE SAME WAS NOT DEBITED TO P &L A/C. FINANCE ACT, 1998 INSERTED A NEW CLAUSE 145 W.E.F. 1-4-1999 THE VALUATION OF INVENTORY FOR THE PURPOSE OF DETE RMINING THE INCOME CHARGEABLE UNDER THE HEADS PROFITS OF BUSINE SS AND PROFESSION INCLUDED IN ANY TAX, DUTY, CESS OR FEES ACTUALLY PAID INCURRED BY THE ASSESSEE TO THE PLACE OF ITS LOCATI ON AND CONDITION AS ON THE DATE OF VALUATION. IT WAS ALSO HELD BY SUPREME COURT IN THE CASE OF CIT VS. BRITISH PAIN 1 88 ITR 44 THAT ANY SYSTEM OF ACCOUNTING WHICH EXCLUDES SPARKI NG TRADE ALL COST OTHER THAN COST OF RAW MATERIAL IN RESULT OF D ESTROYED PICTURE OF TRUE DATE OF BUSINESS FOR THE PURPOSE OF ITS CHARGEABLE INCOME ACCORDING TO THE ACCOUNTING PRACTICE EXCISE DUTY IS A MANUFACTURING EXPENSES AND IT IS COST OF INVENTORY VALUATION. IN VIEW OF ABOVE, THE CASE DECISIONS SO IT CLEARLY SHO WS THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISION OF SECTION 145A AND DECLARED THE VALUE OF THE FINISHED GOODS L ESS TO THE TUNE OF RS. 68.09 LAC RESULTED THE INCOME DECLARED LESS TO THE SAME RUPEE ACCORDINGLY THE AMOUNT OF RS. 68.09 LACS ON ACCOUNT OF THE EXCISE DUTY OF THE LIABILITIES AND ADDED BACK INCOME OF THE ASSESSEE. 15. BEFORE THE LD. CIT(A), THE ASSESSEE MADE FOLLOW ING SUBMISSION. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 8 MOREOVER, STATUTORY AUDITORS IN NOTE NO. 9 OF SCH EDULE 19(B) I.E. ACCOUNTING POLICIES AND NOTES ON ACCOUNT FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE PREVIOUS YEAR ENDED 31-03-2000 HAS REPORTED THAT EXCISE DUTY LIABILITY AMOUNTING TO RS. 68.09 LAC ON CEMEN T PRODUCED BUT NOT DISPATCHED FROM THE FACTORY HAS NOT BEEN PR OVIDED AND ALSO NOT INCLUDED IN THE VALUATION OF THE FINISHED GOODS. THUS NON-PROVISION OF THIS LIABILITY WILL NOT EFFECT THE PROFIT FOR THE YEAR. RELEVANT EXTRACT OF AUDITED ACCOUNTS IS ENC LOSED AS ANNEXURE-4. TOWARDS THIS, IT IS SUBMITTED THAT THE STATUTORY AUDITORS THEMSELVES HAS CERTIFIED THAT EVEN IF PROV ISION FOR EXCISE DUTY HAS NOT BEEN MADE ON CLOSING STOCK THE SAME HAS NO IMPACT ON THE PROFIT FOR THE YEAR4 UNDER CONSIDE RATION. IN THIS CONTEXT WE, ON BEHALF OF THE APPELLANT, WOU LD LIKE TO SUBMIT THAT IN ANY CASE EXCISE DUTY REFERABLE TO CLOSING STOCK AS ON 31-03-2000 HAS BEEN DULY PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1). COPY OF THE CHALLAN EVIDENCING PAYMENT OF EXCISE DUTY IS ENCLOSED HEREW ITH AND MARKED AS ANNEXURE -5. THUS EVEN IF THE CONTENTION OF THE LD. ACIT REGARDING ADDITION OF EXCISE DUTY IN VALUATION OF CLOSING STOCK IS ACCEPTED (OF COURSE, ONLY FOR THE SAKE OF ARGUMENT), THEN THE CORRESPONDING DEBIT OF EXCISE DUTY OF AN I DENTICAL AMOUNT TO THE PROFIT AND LOSS ACCOUNT SHALL BE DED UCTIBLE IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT RE AD WITH FIRST PROVISO THERETO. THUS, IN VIEW OF THE ABOVE, THERE WOULD HAVE BEEN NO ADDITION EVEN AS PER THE CONTENTIONS RAISED . THE LD. CIT(A) FOUND THE ASSESSEE'S CONTENTIONS AS CORRECT THAT ENTIRE AMOUNT OF EXCISE DUTY ON CLOSING STOCK WAS PAID BEFORE DUE DATE OF FILING OF RETURN AND HE DELETED THE ADDITION BY FOLLOWING OBSERVATIO N. 6.3 IN THIS CASE STATUTORY AUDITORS HAVE CERTIFIE 4D THAT EVEN THOUGH PROVISION FOR EXCISE DUTY HAS NOT BEEN MADE ON CLOSING STOCK, THE SAME HAS NO IMPACT ON PROFIT FOR YEAR. APPELLANT ALSO EXPLAINED BEFORE AO THAT IN ANY CASE THE ENTIRE AMOUNT OF EXCISE DUTY ON CLOSING STOCK WAS DULY PAI D BEFORE ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 9 DUE DATE OF FILING OF RETURN. IN SUCH A SITUATION, AO IS NOT JUSTIFIED TO MAKE ADDITION OF RS. 68,09,000/- AND S AME IS DIRECTED TO BE DELETED. GROUND NO. 4 IS THUS ALLOWE D. 16. APROPOS GROUND NO. (IV) OF THE REVENUE (I.E. GR OUND NO. 6 & 7 AS MENTIONED BY THE DEPARTMENT) IS IN RESPECT OF BOOK PROFIT CALCULATION AMOUNTING TO RS. 1,37,45,680/-. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY EARNED DIVIDEND INCOME ON SHARES A MOUNTING TO RS. 1,82,700/- WHICH WAS EXEMPTED U/S 10(33) OF THE ACT . BESIDES THE ASSESSEE COMPANY EARNED AN AMOUNT OF RS. 9.00 LACS ON TAX FR EE BONDS. ACCORDING TO THE AO, THE ASSESSEE'S INVESTMENTS WERE MADE OUT OF THE SURPLUS FUNDS. THE AO HOWEVER, REJECTED THE ASSESSEE'S CONTENTIONS AND DISALLOWED THE PROPORTIONATE EXPENSES ON ESTIMATE BUSINESS HOLDIN G THAT THE SAME HAS BEEN INCURRED FOR EARNING EXEMPT INCOME BY FOLLOWING OBS ERVATIONS. 07. (A) IT IS CLEAR THAT THE ASSESSEE HAS MADE T HE INVESTMENT TO ACQUIRE THE ASSETS INCLUDING THE ASSE TS FROM WHICH INCOME IS EXEMPT TO TAX. THE FINANCE ACT 201 HAD BR OUGHT AMENDMENT VIDE SECTION 14A AS WHICH NO DEDUCTION IN RESPECT O F EXEMPT INCOME WILL BE MADE AGAINST THE TAXABLE INCOME. THIS WAS S HOWN IN RAJASTHAN WATERHOUSE LTD. VS. CIT 242 ITR 450. SO FAR AS SECT ION 14A IT HAS BEEN PROVIDED THAT FOR COMPUTING TOTAL INCOME NO DE DUCTION WILL BE ALLOWED INCURRED BY THE ASSESSEE WHICH DOES NOT FOU ND AS EARNED INCOME UNDER THE I.T. ACT . DURING THE YEAR UNDER C ONSIDERATION TWO INCOMES WERE DEBITED. 1 DUTY OFFICE EXPENSES, 2. DI VIDEND INCOME, IT MAY BE TREATED INVESTMENT IN SHARES WHICH HAVE BEEN OUT OF BORROWED FROM BANK, FINANCIAL INSTITUTION AND OTHER CREDITOR S AND ASSESSEE AND HAD PAID INTEREST TO SAME . ASSESSEE HAS NOT DISCHA RGED HIS ONUS TO PROVE FROM ANY SURPLUS FUNDS / AVAILABLE FUNDS. ACC ORDINGLY IN PROPORTIONATE THE INTEREST PAID TO FINANCIAL INSTIT UTION IS DISALLOWED TO ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 10 THE TUNE OF RS. 1,31,24,053/- AND ADDED BACK TO INC OME OF THE ASSESSEE. THE AMOUNT IS CALCULATED AS UNDER:- (INVESTMENT IN SHARES AND TAX FREE BONDS AMOUNTING TO RS. 3,99,77,625/-)/ (NET ASSETS RS. 1,32,46,81,789 X (I NTEREST & OTHER FINANCIAL EXPENSES RS. 4,34,87,33,140) INTEREST INV OLVEMENT IN SHARES RS. 1,31,24,053/- (B) ALSO DURING THE YEAR UNDER CONSIDERATION THE AS SESSEE HAS DEBITED IN THE P & L A/C TO THE TUNE OF RS. 48, 80,340/- ON ACCOUNT OF LEGAL AND PROFESSIONAL FEES AND EXPENSES OUT OF WHICH PAYMENT OF RS. 4,59,627/- WAS PAID TO KARVY CONSULTANT ON THE STATUS OF SECRETARIAL CONSULTANT AS MENTIONED VIDE ORDER SHEE T ENTRY DATED 28- 03-2003 WHICH PAYMENT WAS MADE ON CONSULTING OF SHA RES AND INVESTMENT AS DIVIDEND ON THE SHARES ARE EXEMPTED O N TAXES. THEREFORE, EXPENSES INCURRED ON NON-TAXABLE INCOME COULD NOT BE ALLOWED. THEREFORE, THE PAYMENT OF RS. 4,69,627/- M ADE TO KARVY CONSULTANT ARE DISALLOWED AND ADDED BACK IN THE TOT AL INCOME OF THE ASSESSEE. FURTHER OUT OF THE OFFICE EXPENSES AND ADMINISTRA TIVE ON THIS ACCOUNT DISALLOWED RS. 1.5 LACS AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY TOTAL AMOUNTS A S PER PARA (A) (B) AND (C) AS DISCUSSED ABOVE ARE DISALLOWED TO THE TU NE OF RS. 1,37,33,680/- 17. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED A S UNDER:- 8.2B. INVESTMENT IN THE TAX FREE BONDS OF NTPC WAS MADE IN FINANCIAL YEAR 1992-93 AND EQUITY SHARES OF IDBI IN FINANCIAL YEAR 1995-96. DURING THESE TWO YEARS APPELLANT EARN ED PROFITS OF RS. 57.03 LACS AND RS. 4137.98 LACS RESPECTIVELY. THE A PPELLANT ALSO DECLARED DIVIDEND IN THESE YEARS. THUS IT WAS ARGUE D THAT INVESTMENT WAS MADE OUT OF PROFIT AND NOT FROM BORROWED FUNDS. C. THE TOTAL INTEREST FREE FUNDS CONSTITUTING SHARE CAPITAL PLUS RESERVES AND SURPLUS AMOUNTED TO RS. 385.87 CR ORES AS ON 31-03- 2000 AND RS. 185.84 CRORES AS ON 31-03-1999. THEREF ORE, THE OWN FUNDS OF APPELLANT COMPANY WERE FAR IN EXCESS OF TH E INVESTMENT MADE OF RS. 4 CRORES. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 11 D. M/S. KARVY CONSULTANTS WERE APPOINTED FOR CONSUL TATION ON SECRETARIAL MATTERS AND NO AMOUNT WAS PAID TO TH EM ON ACCOUNT OF INVESTMENT IN SHARES. 8.3 APPELLANT ALSO PLACED RELIANCE ON FOLLOWING JUD ICIAL DECISIONS. WOOLCOMBERS OF INDIA LTD. VS. CIT (1982) 134 ITR 219 (CAL.) CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009) 31 3 ITR 340 (BOM.) CIT VS. HOTEL SAVERA (1999) 239 ITR 795 (MAD. CIT VS. HERO CYCLES LTD. (2009) 31 DTR 301 (P&H) WIPRO INFORMATION TECHNOLOGY LTD. VS. DCIT (2004) 8 8 TTJ 778 (TRIB. BANGALORE) SHREE DIGVIJAY CEMENT CO. LTD. VS. CIT (1982) 138 I TR 45 (GUJ.) THE LD. AR ALSO PLACED FOLLOWING RELIANCE 1. CIT VS. HOTEL SAVERA, 239 ITR 795 (MAD.) 2. R.D. JOSHI & CO. VS. CIT, 251 ITR 332 (M.P.) 3. MALWA COTTON SPINNING MILLS VS. ACIT 89 ITR 65 (CHD .) 4. ACIT VS. CHANDRA PRAKASH, 27 TW 328 (JAIPUR BENCH) 5. CIT VS. DDHANRAJGIRI RAJA NARSINGIRI , 91 ITR 544 ( SC) THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CA SE AND THE DECISIONS OF VARIOUS COURTS OF LAW HEREINBEFORE, TH E AO IS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF NOTIONAL INTEREST ON INTEREST FREE ADVANCE GIVEN TO SISTER CONCERN. THE SAME IS DIRECT ED TO BE DELETED. THUS, THE SOLITARY GROUND OF THE C.O. OF THE ASSESS EE IS ALLOWED. 8.8 IT HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIE S THAT THE BURDEN OF PROVING NEXUS BETWEEN INTEREST BEARING LOANS AND INTEREST FREE ADVANCE IS ON THE REVENUE. SIMILARLY, IT HAS BEEN H ELD THAT THE BURDEN OF PROVING NEXUS BETWEEN BORROWED FUNDS AND EARNING OF INTEREST FREE INCOME IS ON THE REVENUE. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 12 THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING O BSERVATIONS. 8.9 WHEN THE ABOVE CASE IS EXAMINED IN VIEW OF TH IS LEGAL POSITION, IT IS FOUND THAT THERE IS NO MATERIAL ON RECORD BROUGHT BY AO TO HOLD THAT BORROWED FUNDS WERE DIVERTED BY APPELL ANT FOR EARNING OF INTEREST FREE INCOME. MOREOVER, APPELLANT HAD HIS O WN FUNDS, WHICH WERE MUCH MORE THAN THE INVESTMENT MADE BY IT. 8.10 FROM THE PERUSAL OF MEMORANDUM OF UNDERSTANDIN G BETWEEN THE APPELLANT COMPANY AND M/S. KARVEY CONSU LTANTS IT IS FOUND THAT THE COMPANY APPOINTED THEM TO ACT AS SHA RE TRANSFER AGENT. THEY WERE ASKED TO PROCESS REQUEST FOR TRANSFERS EN DORSEMENT AS FULLY PAID UP, CALL MONEY, CHANGE OF ADDRES ETC. AND DISP ATCH OF TRANSFERS CERTIFICATES TO THE SHAREHOLDERS. IN THE BILLS RAIS ED BY M/S. KARVY CONSULTANTS, IT IS CLEARLY MENTIONED THAT THEY HAVE BEEN PAID FOLIO MAINTENANCE CHARGES FOR ACTING AS REGISTRARS AND SH ARE TRANSFER AGENTS. THEREFORE, THE AO IS NOT JUSTIFIED TO CONCL UDE THAT PAYMENT WAS MADE TO THEM IN RESPECT OF INVESTMENT OF APPEL LANT COMPANY IN SHARES. THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF RS. 4,69,627/- MADE TO M/S. KARVY CONSULTANTS. 8.11 PROVISIONS OF SECTION 14A APPLY ONLY WHEN THER E IS ACTUAL EXPENDITURE IN RELATION TO AN EXEMPT INCOME. IT DOE S NOT CREATE ANY LEGAL FICTION TO TREAT ANY EXPENDITURE AS INCURRED IN RELATION TO EXEMPT INCOME ON ESTIMATE BASIS. THIS VIEW DERIVES SUPPOR T FROM DECISION OF HON'BLE ITAT MUMBAI BENCH IN THE CASE OF ACIT VS. CLARIDGES INVESTMENTS & FINANCE (P) LTD. (2007) 18 SOT 390 (M UM.) SIMILAR VIEW WAS HELD BY HON'BLE ITAT DELHI BENCH IN THE C ASE OF ACIT VS. EICHER LTD. (2006) 101 TTJ 369 (DEL.) AND HON'BLE ITAT MUMBAI BENCH IN THE CASE OF DCIT VS. B.S.E.S. LTD. (2008) 113 TTJ 227 (MUMBAI). 8.12 I, THEREFORE, HOLD THAT THERE IS NO JUSTIFICAT ION FOR DISALLOWANCE OF INTEREST OF RS. 1,31,24,053/-, ADMI NISTRATIVE EXPENSES OF RS. 4,69,627/- AND OFFICE EXPENSES OF RS. 1,50,0 00/- BY AO. THE DISALLOWANCE ARE DIRECTED TO BE DELETED. GROUND NO. 6 IS THUS ALLOWED. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 13 18. BY GROUND NO (V), (I.E. GROUND NO. 8 AS PER GR OUNDS OF APPEAL OF THE DEPARTMENT ) THE REVENUE HAS AGITATED THE ISSUE THA T THE LD. CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCE WITHOUT CONFRONTIN G IT TO THE AO . 19. APROPOS GROUND NO. (VI) (I.E. GROUND NO. 9 AS P ER GROUNDS OF APPEAL OF THE DEPARTMENT), THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY EVERY CLAIMS TO HAVE INCURRED THE EXPENSES ON GIFTS ON THE EVEN OF DIWALI WITHOUT BEARING THE NAME AND LOGO OF THE COMPANY. T HESE GIFTS ARE DISTRIBUTED TO PROMOTE ITS BUSINESS AND CLAIMED IT TO BE AS BUSINESS EXPENDITURE. THE AO WAS OF THE VIEW THAT THE GIFTS DISTRIBUTED TO GOVT. DEPARTMENT CANNOT BE HELD TO BE IN RELATION TO THE BUSINESS OF THE ASSESSEE AND THE AO DISALLOWED THE GIFTS EXPENDITURE AMOUNTI NG TO RS. 3,04,225/-. 20. THE LD. CIT(A) IN FIRST APPEAL BY RELYING ON TH E ITAT ORDER IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 WHEREIN THE DISALLOWANCE WAS RESTRICTED TO 1/3 RD , GAVE CORRESPONDING RELIEF TO THE ASSESSEE BY REDUCING THE DISALLOWANCE TO RS. 1.00 LAC. THUS THE ASSESSEE COMPANY WAS GIVEN RELIEF OF RS. L2,04,225/- BY THE LD. CIT(A). 21. THE REVENUE IS BEFORE US IN RESPECT OF THE ABO VE ISSUES. 22. THE LD. DR FOR THE GROUND NO. (I) RELIED ON THE JUDGEMENT OF HON'BLE APEX COURT IN THE CASE OF DALMIA JAIN & CO. LTD. VS . CIT, 81 ITR 754 AND CIT VS. PANDIAN CHEMICALS LTD. 233 ITR 497 (MAD.) AND FURTHER CONTENDED ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 14 THAT WMB ROAD IS DISTINCT ASSET AS COMPARED TO CONC ERETE ROAD. THUS A NEW ASSET HAS COME INTO EXISTENCE. THERE IS NO DISPUTE THAT THE ROAD IS PROVIDED FOR ENDURING BENEFIT TO ASSESSEE. THEREFORE, IT WAS THE CAPITAL NATURE AND HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. P ANDIAN CHEMICALS LTD. HAS HELD THAT THE ROAD WITHIN THE FACTORY PREMISES SHOULD BE TREATED AS A PART OF THE BUILDING AND THE ASSESSEE SHALL ACCORDINGLY BE ELIGIBLE TO DEPRECIATION. 23. APROPOS OTHER GROUNDS, THE RELIED ON THE ORDER OF THE AO. 24. THE LD. COUNSEL FOR THE ASSESSEE IN REPLY CONTE NDS THAT THE CASE OF DALMIA JAIN & CO. LTD. VS. CIT (SUPRA) IS NOT APPLI CABLE TO THE ASSESSEE'S CASE INASMUCH AS IT RELATED TO LITIGATION EXPENSES INCURRED BY THE ASSESSEE FOR THE PURPOSE OF PROTECTING ITS BUSINESS AND IT IS TO BE HELD AS REVENUE IN NATURE. IN THIS CASE, THE HON'BLE HIGH COURT JUDGME NT ALLOWING SUCH EXPENDITURE AS CAPITAL WAS REVERSED BY THE HON'BLE SUPREME COURT. THIS JUDGMENT IN FACT WAS RENDERED IN FAVOUR OF THE ASSE SSEE. THEREFORE, IT HAS NO APPLICABLE TO THE ASSESSEE'S CASE. 25. APROPOS HON'BLE MADRAS HIGH COURT DECISION IN THE CASE OF CIT VS. PANADIAN CHEMICALS LTD. (SUPRA), THE DECISION HAS B EEN RENDERED IN THE BACKDROP OF THE SUBSIDY AND THE ROAD IN QUESTION WA S A NEW ROAD IT IS A CONVERSION OF WMB ROAD THAT EXISTING ASSET HAS BEEN CONVERTED INTO A CONCRETE ROAD. THIS NEW ASSET CAME INTO EXISTENCE. THE LD. CIT(A) HAS ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 15 RIGHTLY APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE AND CATENA OF CASE LAWS AND THE LD. AR HAS RELIED ON HON'BLE APEX COU RT JUDGEMENT IN THE CASE OF EMPIRE JUTE CO. LTD. VS. CIT, 124 ITR 1 WHEREIN THE HON'BLE SUPREME COURT CATEGORICALLY LAID DOWN THAT ANY EXPENDITURE THOUGH MAY BE FOR ENDURING BENEFIT IF INCURRED FOR AUGMENTING REVENUE GENERATING APPARATUS OF THE ASSESSEE'S BUSINESS IS TO BE ALLOWED AS A REVEN UE EXPENDITURE. IT IS UNDISPUTED FACT THAT THE ASSESSEES PREMISES IS INV OLVED WITH HUGE AND HEAVY VEHICLE TRAFFIC MOVEMENT AND HAVING THE PROPE R ROAD AND ITS MAINTENANCE WILL INCREASE THE EFFICIENCY OF MOVEMEN T OF RAW MATERIALS AS WELL AS CLEARANCE OF FINISHED GOODS. THEREFORE, THE RE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH DESERVES TO BE UPHELD ON THIS ISSUE. 26. APROPOS 2 ND ISSUE ABOUT DEPRECIATION ON GUEST HOUSE, LD COUNSE L CONTENDS THAT INCOME TAX ACT PROVIDES FOR ALLOWANCE OF DEPRECIATION ON WDV AS PER ACTUAL CLAIM ALLOWED IN THE INCOME TAX R ECORD AND NOT ON THE BASIS OF BOOK ENTRIES. LD. CIT(A) HAS ALLOWED THE D EPRECIATION ACCORDINGLY WHICH IN ACCORDANCE WITH LAW. 27. APROPOS 3 RD ISSUE ABOUT NON-INCLUSION OF EXCISE DUTY IN THE CL OSING STOCK IT IS PLEADED THAT ASSESSEE VALUED ITS CLOSIN G STOCK AS PER CONSISTENTLY FOLLOWED PRACTICE OF EXCLUDING THE EXCISE DUTY ELEM ENT OF VALUATION OF CLOSING STOCK, IT HAS NO EFFECT ON THE PROFIT AND L OSS A/C . BESIDES CLOSING ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 16 OUTSTANDING EXCISE DUTY AMOUNT AS ON 31-03-2000 HAS BEEN DULY PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139 (1). COPY OF THE CHALLAN EVIDENCING PAYMENT OF EXCISE DUTY WAS PRODUCED BEFO RE AO. THUS EVEN IF THE CONTENTION OF THE LD. ACIT REGARDING ADDITION O F EXCISE DUTY IN VALUATION OF CLOSING STOCK IS ACCEPTED EVEN THEN TH E CORRESPONDING DEBIT OF EXCISE DUTY OF AN IDENTICAL AMOUNT TO THE PROFIT AN D LOSS ACCOUNT SHALL BE DEDUCTIBLE IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT READ WITH FIRST PROVISO THERETO. THUS, THE ORDER OF LD. CIT(A) IN T HIS BEHALF SUFFERS FROM NO INFIRMITY. 28 . APROPOS THE ISSUE ABOUT ADMISSION OF ADDITIONAL EVI DENCE IN CONTRAVENTION OF RULE 46A, LD. COUNSEL VEHEMENTLY A RGUES THAT NO ADDITIONAL EVIDENCE WAS FILED BEFORE LD. CIT(A) WHICH IS EVIDE NT FROM THE FACT THAT APPELLATE ORDER NEITHER REFERS TO ANY APPLICATION N OR ADMISSION THEREOF. THUS THE REVENUE GROUND IS MISCONCEIVED. 29. APROPOS LAST ISSUE ABOUT PART ALLOWANCE OF DIWALI G IFTS LD. COUNSEL CONTENDS THAT IT HAS NOT BEEN DISPUTED THAT THE GIF T ARTICLES DID NOT BEAR THE LOGO OF THE COMPANY AND THE PART ALLOWANCE HAS BEEN ALLOWED BY LD. CIT(A) FOLLOWING HIS ORDER FOR AY 2003-04, THEREFORE, THER E IS NO INFIRMITY IN THE APPELLATE ORDER. ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 17 30. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. APROPOS THE 1 ST ISSUE OF CONVERSION OF WBM ROAD INTO CONCRETE ROAD THE CEMENT INDUSTRY INVOLVES HEAVY VE HICLULAR MOVEMENT FOR INWARD SUPPLY OF RAW MATERIAL AS WELL AS CLEARANCE OF FINISHED GOODS. THE ASSESSES WBM ROAD REQUIRED FREQUENT REPAIRS AND PAT CH UP WORK DUE TO RAINS AND HEAVY VEHICULAR USE. FOR MORE EFFICIENT B USINESS OPERATIONS ASSESSEE COMPANY TOOK A BUSINESS DECISION TO CONVER T EXISTING WBM ROAD INTO CONCRETE ROAD AND INCURRED THIS EXPENDITURE TO MAKE ITS PROFIT EARNING SETUP BETTER AND HASSLE FREE. THIS HAD IMPACT ON PR OFIT EARNING POTENTIAL DUE TO EASE OF TRANSPORTATION. WE ARE OF THE VIEW THAT HONBLE SUPREME COURT JUDGMENT IN THE CASE OF EMPIRE JUTE CO.(SUPRA) HAS BEEN RIGHTLY APPLIED BY LD. CIT(A). HONBLE COURT LAID DOWN THAT IT IS NOT EVERY ADVANTAGE OF ENDURING NATURE DERIVED BY ASSESSEE WHICH IS TO BE HELD AS CAPITAL AND NOT REVENUE IN NATURE. IF THE ADVANTAGE RESULTS IN FACI LITATING THE ASSESSEE'S TRADING OPERATIONS OR ENABLING THE MANAGEMENT AND C ONDUCT OF ASSESSEE'S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABILITY, THE EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN THOUG H THE ADVANTAGE MAY ENDURE FOR AN INDEFINITE FUTURE. WE FIND FURTHER ME RIT IN THE PLEA THAT NO NEW ASSET CAME INTO EXISTENCE IN AS MUCH AS THE WBM ROA D WAS ALREADY IN EXISTENCE AND A CONCRETE ROAD INSTEAD OF METAL ROAD RESULTED BY THIS ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 18 EXPENDITURE. THUS THE EXISTENCE OF OLD ASSET I.E. R OAD CONTINUED WITH BETTER PHYSICAL PROPERTIES. SINCE NO NEW ASSET CAME INTO E XISTENCE THE EXPENDITURE BECOMES ONE OF PATENTLY REVENUE NATURE. IN VIEW OF THESE OBSERVATIONS AND RELYING ON THE CATENA OF OTHER CASE LAWS CITED BY A SSESSE, WE SEE NO INFIRMITY IN THE ORDER OF LD CIT(A) WHICH IS UPHELD. REVENUES GROUNDS IN THIS BEHALF ARE DISMISSED. 31. APROPOS 2 ND ISSUE OF GUEST HOUSE DEPRECIATION, WE UPHOLD THE O RDER OF LD. CIT(A) RIGHTLY HOLDING THAT ASSESSE IS ENTITLED TO DEPRECIATION ON WDV WHICH IS AS PER THE ACTUAL CLAIM ALLOWED IN INCOME TAX RECORD AND NOT THE ASSESSES DEPRECIATION CHART. THIS GROUND OF THE REV ENUE IS DISMISSED. 32. APROPOS 3 RD ISSUE ABOUT EXCISE DUTY SINCE THE ASSESEE HAS ALRE ADY PAID THE REQUISITE EXCISE DUTY BEFORE DUE DATE OF FILING THE RETURN, THE CLAIM IN ANY CASE IS ALLOWABLE U/S 43B OF THE IT ACT. IN VIEW TH EREOF THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) ON THIS SCORE ALSO, THIS GRO UND OF THE REVENUE IS DISMISSED. 33. APROPOS THE 4TH ISSUE ABOUT RE-COMPUTATION OF BOOK PROFITS WE FIND THAT BILLS RAISED BY M/S. KARVY CONSULTANTS, WERE P AID FOR FOLIO MAINTENANCE CHARGES ACTING AS REGISTRARS AND SHARE TRANSFER AGE NTS. THIS DOES NOT AMOUNT TO A PAYMENT IN RESPECT OF INVESTMENT OF APPELLANT COMPANY IN SHARES, THUS ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 19 THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF RS. 4 ,69,627/- MADE TO M/S. KARVY CONSULTANTS. THE LD. CIT(A) IS RIGHT IN HOLDI NG THAT THE PROVISIONS OF SECTION 14A APPLY ONLY WHEN THERE IS ACTUAL EXPENDI TURE IN RELATION TO AN EXEMPT INCOME. IT DOES NOT CREATE ANY LEGAL FICTION TO TREAT ANY EXPENDITURE AS INCURRED IN RELATION TO EXEMPT INCOME ON ESTIMAT E BASIS. THIS VIEW DERIVES SUPPORT FROM DECISION OF COORDINATE BENCH I .E. ITAT MUMBAI IN THE CASE OF ACIT VS. CLARIDGES INVESTMENTS & FINANCE (P ) LTD. (2007) 18 SOT 390 (MUM.) AS ALSO BY ITAT DELHI BENCH IN THE CASE OF ACIT VS. EICHER LTD. (2006) 101 TTJ 369 (DEL.) AND MUMBAI BENCH IN THE CASE OF DCIT VS. B.S.E.S. LTD. (2008) 113 TTJ 227 (MUMBAI). 34. WE, THEREFORE, HOLD THAT THERE IS NO JUSTIFICAT ION FOR DISALLOWANCE OF INTEREST OF RS. 1,31,24,053/-, ADMINISTRATIVE EXPEN SES OF RS. 4,69,627/- AND OFFICE EXPENSES OF RS. 1,50,000/- BY AO IN RE COMPU TING THE BOOK PROFITS. THIS GROUND OF THE REVENUE IS DISMISSED. 35. REVENUE GROUND CHALLENGING THE ADMISSION OF ADD ITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A IS DISMISSED AS LD DR COU LD NOT POINT OUT ANY INSTANCE OF ADMISSION OF FRESH EVIDENCE. 36. APROPOS LAST ISSUE ABOUT PART RELIEF IN RESPECT OF DIWALI EXPENSES ALSO IT HAS NOT BEEN DISPUTED BY THE DEPARTMENT THAT GIF TED ARTICLES DIDNT BEAR THE ITA NO. 575//JP/2012 ACIT VS. SHREE CEMENT LTD. 20 ASSESSEES LOGO. LD. CIT(A) ALLOWED THE PART RELIEF RELYING ON EARLIER YEAR. WE SEE NO INFIRMITY THEREIN AND THE RELIEF IS UPHEL D. THIS GROUND OF THE REVENUE IS DISMISSED. 37. IN THE RESULT REVENUES APPEAL IS DISMISSED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17-10- 2014. SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 17 TH OCT 2014 *MISHRA COPY FORWARDED TO:- 1. THE ACIT, CIRCLE- 2, AJMER 2. M/S. SHREE CEMENT LTD., BEAWAR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 575/JP/2012) AR ITAT, JAIPUR