The ACIT, Central Circle - 5, Hyderabad V. M/s. Lanco Infratech Ltd, Hyderabad

ITA 60/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61937 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-12-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 15-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAO
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Earning of tax free income; Assessment record; Revised return
• Section: 143(3); 14A; 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER S. NO. ITA NO. AY APPELLANT RESPONDENT 1. 60/HYD/10 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-5, HYDERABAD. M/S LANCO INFRATECH LTD., HYDERABAD. (PAN AAACL3449H) 2. 61/HYD/10 2006-07 -DO- -DO- 3. 87/HYD/10 2003-04 M/S LANCO INFRATECH LTD., HYDERABAD. (PAN AAACL3449H) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, HYDERABAD. 4. 88/HYD/10 2004-05 -DO- -DO- REVENUE BY : SHRI M.S. RAO ASSESSEE BY: SHRI P. MURALI MOHANA RAO DATE OF HEARING: 09/05/2012 DATE OF PRONOUNCEMENT: 09/07/2012 O R D E R PER ASHA VIJAYARAGHAVAN, J.M.: THESE APPEALS FILED BY THE REVENUE AS WELL AS ASSE SSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE CIT(A)-I, HYDE RABAD FOR THE ASSESSMENT YEARS 2003-04, 2004-05 & 2006-07. SINCE IDENTICAL ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE HEARD TOGE THER AND, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 2 ITA NOS. 60 & 61/HYD/10 FOR AY 2004-05 & 2006-07 APPEALS BY THE REVENUE 2. IN BOTH THESE APPEALS, THE REVENUE HAS RAISED A GROUND REGARDING DISALLOWANCE U/S 14A OF THE ACT. 3. BRIEFLY THE FACTS BORN OUT FROM AY 2004-05 ARE T HAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS. 5,30,76,446/-. THE AO NOTICED THAT DU RING THE YEAR THE ASSESSEE HAD CLAIMED EXEMPTION FOR DIVIDEND INCOME OF RS. 1,90,40,000/- DERIVED FROM INVESTMENTS IN THE GROUP COMPANY LANCO KONDAPALLY POWER PVT. LTD. THE SAID DIVIDEND INCOME BEING EXEMPT, TH E AO MADE DISALLOWANCE OF RS. 1,07,68,545/- U/S 14A BEING THE INTEREST PAID TO THE SAID LANCO KONDAPALLY POWER PVT. LTD. AGAINST LOAN TAKEN BY THE ASSESSEE. HOWEVER, IN VIEW OF THE FACT THAT ASSESSMENT WAS AL READY COMPLETED U/S 143(3) ON 29/12/2006, WHERE THE ENTIRE INTEREST EXP ENSES CLAIMED BY THE ASSESSEE WAS DISALLOWED, NO SEPARATE ADDITION ON TH IS ISSUE WAS MADE IN THE ASSESSMENT ORDER. THE AO ADOPTED THE SAME ASSES SED INCOME OF RS. 10,01,45,141/- AS WAS DETERMINED EARLIER IN THE ASS T. ORDER U/S 143(3). ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DEC ISION OF THE CO-ORDINATE BENCH OF ITAT, HYDERABAD IN ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO. 417/HYD/07 VIDE ORDER DATED 2 ND NOVEMBER, 2007 WHEREIN THE TRIBUNAL HELD AS UNDER:- 9. WE ARE FORTIFIED IN THIS BEHALF BY THE RECENT DE CISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF WIMCO SE EDLINGS LTD. VS. DCIT(ASSESSMENT)(2007) 293 ITR 216(AT(TM), WHEREIN THE TRIBUNAL, AS PER RELEVANT PORTION OF THE HEAD-NOTE OF THE DECISION AT PAGE 216 OF THE REPORTS (293 ITR), OBSERVED AS UNDE R:- ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 3 ONLY EXPENDITURE WHICH HAS BEEN PROPOSED TO HAVE B EEN INCURRED IN RELATION TO THE EARNING OF TAX-FREE INC OME CAN BE DISALLOWED U/S 14A OF THE INCOME TAX ACT, 1961. THE WORD INCURRED REFERS TO THE FACTUAL SPENDING OF THE EX PENDITURE IN RELATION TO THE EXEMPT INCOME AND DOES NOT REFER TO A DEEMED OR ASSUMED SPENDING FOR THE PURPOSE. THE SECTION WA S BROUGHT TO NULLIFY THE EFFECT OF CERTAIN RULINGS TO THE EFFECT THAT WHERE THERE IS BOTH ACTIVITY WHICH BRINGS IN TAXABL E INCOME AND ACTIVITY WHICH BRINGS IN TAX-FREE INCOME AND BO TH ACTIVITIES CONSTITUTE AN INDIVISIBLE BUSINESS, THE EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOSE OF THE IND IVISIBLE BUSINESS CANNOT ARTIFICIALLY BE BROKEN UP TO IDENTI FY AND DISALLOW EXPENDITURE WHICH IS SUPPOSED TO HAVE BEEN INCURRED FOR THE PURPOSE OF EARNING THE EXEMPT INCOME. HOWEV ER, WHILE APPLYING THE SECTION THERE IS NO AUTHORITY CO NFERRED BY THE SECTION UPON THE ASSESSING OFFICER TO DEEM OR A SSUME CERTAIN EXPENDITURE TO HAVE BEEN INCURRED IN RELATI ON TO THE TAX-FREE INCOME. COMMON EXPENDITURE INCURRED AT THE HEAD OFFICE CANNOT BE BROKEN UP ARTIFICIALLY TO ATTRIBUT E OR APPORTION A PART THEREOF TO THE EARNING OF THE TAX-FREE INCOM E ON THE ASSUMPTION THAT SUCH PART OF THE COMMON EXPENDITURE WAS INCURRED IN RELATION TO THE TAX-FREE INCOME. NOT ON LY THE INCURRING THE EXPENDITURE BUT ALSO ITS RELATION TO THE EXEMPTED INCOME MUST BE CLEAR AND MUST BE CAPABLE OF BEING ASCERTAINED ON THE FACE OF IT WITHOUT INVOKING ANY FURTHER MENTAL EXERCISE. THE BURDEN IS ON THE ASSESSING OFF ICER NOT ONLY TO SHOW THAT SOME EXPENDITURE WAS FACTUALLY IN CURRED BUT ALSO TO SHOW ITS RELATIONSHIP WITH THE INCOME EXEMP T FROM TAX. THE SECTION ONLY PERMITS THE ASSESSING OFFICER, IN AN INDIVISIBLE BUSINESS CONSISTING PARTLY OF TAXABLE A CTIVITIES AND PARTLY OF TAX-FREE ACTIVITIES, TO IDENTIFY EXPENDIT URE, IF ANY, INCURRED IN RELATION TO THE EARNING OF NON-TAXABLE INCOME AND DISALLOW IT. THE SECTION CANNOT BE TAKEN BEYOND THI S TO ATTRIBUTE, BY SOME YARDSTICK, EVERY ITEM OF EXPENDI TURE WHICH HAS NO APPARENT CONNECTION OR NEXUS WITH THE EARNIN G OF TAX- FREE, TO THE EARNING OF TAX-FREE INCOME. IT HAS BEEN HELD AS PER HEAD NOTE, VIDE PER PAGE-21 9 OF THE REPORTS (293 ITR), AS UNDER:- .......... (IV) THAT THEREFORE, NO EXPENDITURE, OTHER THAN THE EXPENDITURE APPORTIONED BY THE ASSESSEE ITSELF AGAI NST AGRICULTURAL RECEIPTS INCURRED BY THE ASSESSEE COUL D BE APPORTIONED AGRICULTURAL RECEIPTS. ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 4 10. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER PASS ED BY THE LEARNED CIT(A) ON THIS ACCOUNT DOES NOT CALL FOR AN Y INTERFERENCE AND ACCORDINGLY, THE GROUND TAKEN BY T HE REVENUE IS REJECTED. 5. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THE ONE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2003- 04(SUPRA), RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE IN BOT H THE YEARS UNDER CONSIDERATION. 6. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. ITA NO. 87/HYD/2010 APPEAL BY THE ASSESSEE FOR AY 2003-04 7. THE ASSESSEE HAS RAISED 8 GROUNDS IN THIS APPEAL , THE SUM AND SUBSTANCE OF WHICH IS NON SETTING OFF OF CAPITAL LO SS ON SALE OF SHARES IN LANCO NET LTD. AGAINST CAPITAL GAINS. 8. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION, HAD FILED ITS RETU RN OF INCOME SHOWING BUSINESS LOSS OF RS. 2,56,69,012/- INCOME FROM CAPI TAL GAINS RS. 4,93,44,307/- AND INCOME FROM OTHER SOURCES AT RS. 8,33,56,313/-. SUBSEQUENTLY, THE APPELLANT FILED REVISED RETURNS I N WHICH IT CLAIMED DIVIDEND INCOME OF RS. 8,33,00,000/- RECEIVED FROM M/S LANCO KONDAPALLY POWER PVT. LTD. A COMPANY NOTIFIED U/S 10 (23G) OF THE IT ACT AND DECLARED TOTAL INCOME OF RS. 2,37,01,610/-. APPAREN TLY, AN ASSESSMENT U/S 143(3) WAS COMPLETED ON 13/03/2006 DETERMINING THE TOTAL LOSS FROM BUSINESS AT RS. 1,84,77,699/- AND INCOME FROM LTCG AT RS. 11,08,50,307/-. THIS ORDER WAS SUBJECTED TO FIRST A PPEAL AND AFTER GIVING EFFECT TO THE ORDER OF FIRST APPELLATE AUTHORITY, T HE TOTAL BUSINESS LOSS WAS COMPUTED BY THE ASSESSING OFFICER AT RS. 2,26,42,69 9/- AND INCOME FROM LTCG AT RS. 11,08,50,307/-. THE ASSESSING OFFICER I N THE COURSE OF THE ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 5 PRESENT ASSESSMENT PROCEEDINGS CONSIDERED THE DETAI L FILED BY THE ASSESSEE AND ADOPTED THE TOTAL INCOME AS DETERMINED EARLIER U/S 143(3) RWS 250 OF THE ACT AT RS. 8,82,07,608/-. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 9. BEFORE THE CIT(A), THE ASSESSEE STATED THAT THE ASSESSING OFFICER HAD NOT ALLOWED SHORT TERM CAPITAL LOSS OF RS. 6,15 ,06,000/- ON SALE OF SHARES TO BE SET OFF AGAINST THE LONG TERM CAPITAL GAIN BEFORE ARRIVING AT THE NET TAXABLE CAPITAL GAIN, WHICH SHOULD HAVE BEE N CONSIDERED. THE SET- OFF IS ALLOWABLE U/S 70 OF THE ACT. AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD AS UNDER:- 4. I HAVE GONE THROUGH THE FACT OF THE CASE AND THE SUBMISSION OF THE APPELLANT. I FIND THAT IN THE ASSESSMENT WHI CH IS UNDER THIS APPEAL, THE ASSESSING OFFICER HAS NOT MADE ANY FRES H ADDITION ANY DISALLOWANCES AND HAD ADOPTED THE TOTAL INCOME DETE RMINED EARLIER U/S 143(3) RWS 250 OF THE IT ACT. THIS FACT WAS ALS O POINTED OUT TO THE AR OF THE APPELLANT DURING THE COURSE OF THE AP PELLATE HEARING. FURTHER, APPEAL WAS FILED AGAINST THE EARLIER ASSES SMENT ORDER WHICH WAS ALREADY DECIDED BY THE CIT(A)-V, HYDERABAD. APP ARENTLY, APPEAL HAD BEEN FILED AGAINST THE ORDER OF THE CIT( A)-V BEFORE ITAT AND ITAT HAVE ALSO DECIDED THE APPEAL. THE AR HAS A DMITTED THE FACT AS ABOVE. SINCE IN THE PRESENT ASSESSMENT ORDE R NO FRESH ADDITION/DISALLOWANCE HAS BEEN MADE, IN MY VIEW THE GRIEVANCES RAISED IN THE GROUNDS OF APPEAL AS ABOVE DO NOT EMA NATE FROM THE PRESENT ORDER. FURTHER THE ISSUES HAVE ALREADY BEEN DECIDED BY THE APPELLATE AUTHORITIES. ACCORDINGLY, THE GROUNDS OF APPEAL DO NOT DESERVE TO BE DECIDED AFRESH SINCE THE SAME HAVE AL READY BEEN DECIDED EARLIER BY THE CIT(A). AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE A UTHORITIES BELOW. WE FIND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE ITAT, HYDERABAD BENCH IN ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO. 377/HYD/2007 VIDE ORDER DATED 30/11/2007 WH EREIN THE TRIBUNAL HELD AS UNDER:- ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 6 10.2 .......................WE ARE OF THE CONSIDERE D VIEW THAT TRANSACTIONS INVOLVED RELATED TO SHARE TRANSACTION OF LANCO NET LTD. IS NOT A TRANSACTION IN ACCORDANCE WITH THE BUSINE SS ACTIVITIES OF THE ASSESSEE. THE SALE PRICE OF SHARES I.E. @ 10 PAISE PER SHARE IS ARBITRARY AND IS NOT SUPPORTED BY ANY EVIDENCE OR M ATERIAL. THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM BY CO GENT MATERIAL AND EVIDENCE REGARDING THE SALE OF SHARES @ 10 PAISE PE R SHARE. THUS, THE LOSS CLAIMED BY THE ASSESSEE BY SELLING SHARES ON AN ARBITRARY RATE OF 10 PAISE PER SHARE IS NOT ALLOWABLE AS SHOR T-TERM CAPITAL LOSS. WE UPHOLD THE ORDER OF THE CIT(A). 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. 11. AS THE ISSUE UNDER CONSIDERATION IS IDENTICAL T O THAT OF THE CASE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN A Y 2003-04 (SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE L OSS ON SALE OF LANCO NET LTD. SHARES ARE NOT IN ACCORDANCE WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE AND HENCE NOT ALLOWABLE AS CAPITAL LOSS. I N THE CIRCUMSTANCES, THERE IS NO QUESTION OF THE SAME BEING ADJUSTED AGA INST CAPITAL GAINS. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ITA NO. 88/HYD/10 APPEAL BY THE ASSESSEE FOR AY 2 004-05. 13. IN THIS APPEAL THE ASSESSEE HAS RAISED TWO GROU NDS OF APPEAL PERTAINING TO DISALLOWANCE OF LEGAL AND PROFESSIONA L FEES. 14. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT VIDE LETTER DATED 22/12/2006, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN SUPPORT OF ITS CLAIM OF DEDUCTION U/S 80IA. IN REPL Y, THE ASSESSEE VIDE LETTER DATED 28/12/2006 SUBMITTED CERTAIN INFORMATI ON AND AUDIT REPORT IN FORM NO. 10CCB ALONG WITH P&L ACCOUNT AND THE BALAN CE SHEET PERTAINING TO ELIGIBLE BUSINESS CLAIMING DEDUCTION U/S 80IA. A FTER VERIFYING THE P&L ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 7 A/C AND BALANCE SHEET THE ASSESSING OFFICER OBSERVE D THAT THESE STATEMENTS WERE PREPARED IN A COOKED MANNER FOR TH E PURPOSE OF CLAIMING THE EXEMPTION. FOR INSTANCE, IN THE CASE O F BALANCE SHEET ON THE LIABILITY SIDE, AN ACCOUNT STYLED AS DUE TO HEAD O FFICE RS. 7,46,46,345/- WAS SHOWN. SIMILARLY, ON THE ASSETS SIDE, NO DETAIL S LIKE CASH ON HAND, CASH AT BANK, CURRENT ASSETS ETC. WERE GIVEN. EVEN THE BREAK UP OF FIXED ASSETS WAS ALSO MISSING. FROM THIS, THE ASSESSING O FFICER CONCLUDED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER ACCOUNTS IN RESPECT OF ENTERPRISE CLAIMING DEDUCTION U/S 80IA, HENCE, THE DEDUCTION C LAIM WAS DISALLOWED. 15. ON APPEAL, BEFORE THE CIT(A) THE ASSESSEE CONTE NDED THAT THE ASSESSING OFFICER ERRED IN DISALLOWING THE CLAIM FO R DEDUCTION ON FLIMSY GROUNDS WITHOUT PROPERLY APPRECIATING VARIOUS DETAI LS SUBMITTED DURING THE COURSE OF ASSESSMENT. THE CIT(A) AFTER CONSIDER ING THE SUBMISSIONS, HELD AS UNDER:- 7.1 I HAVE GONE THROUGH THE ISSUE. I FIND THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER VIDE HIS LETTER DATED 22/12/2006 HAS SPECIFICALLY CALLED FOR THE EXPLANAT ION OF THE APPELLANT IN RESPECT OF THE CLAIM OF DEDUCTION U/S 80IA OF RS. 38,21,764/-. THE ASSESSING OFFICER HAD OBSERVED THA T THE APPELLANT HAD NOT ANNEXED THE FORM NO. 10CCB AS ALSO SEPARATE BALANCE SHEET AND P&L ACCOUNT FOR THE UNDERTAKING AS PER RU LE 18BBB(2). IN REPLY, THE APPELLANT HAD FILED THE FORM NO. 10CCB A LONG WITH THE BALANCE SHEET AND P&L A/C. HOWEVER, IN THE BALANCE SHEET ON THE LIABILITY SIDE EXCEPT FOR SECURED LOANS THERE WAS N O OTHER ITEM REFLECTED IN PARTICULAR. ITEMS SHOWN AS DUE TO HEA D OFFICE WAS NOTHING BUT THE BALANCING FIGURE TO TALLY THE LIABI LITY AND ASSETS SIDE. SIMILARLY ON THE ASSETS SIDE ONLY FIXED ASSETS AND SUNDRY DEBTORS WERE SHOWN. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER HAS DENIED THE CLAIM OF DEDUCTION U/S 80IA ON THE GROUND THAT THE ASSESSEES BALANCE SHEET IS COOKED UP AND NOT P ROPERLY MAINTAINED. AFTER GOING THROUGH THE PROVISIONS IN R ULE 18BBB, I AGREE WITH THE FINDINGS OF THE ASSESSING OFFICER. R ULE 18BBB PRESCRIBES THAT A SEPARATE REPORT IS TO BE FURNISHE D BY EACH UNDERTAKING OR ENTERPRISE CLAIMING DEDUCTION U/S 80 IA OR 80IB AND SHALL BE ACCOMPANIED WITH THE P&L A/C AND BALANCE S HEET OF THE UNDERTAKING FOR ENTERPRISE AS IF THE UNDERTAKING OR ENTERPRISE WERE A DISTINCT ENTITY. FROM THE BALANCE SHEET SUBMITTED B Y THE APPELLANT, I DO NOT THINK THAT THE SAME REPRESENTS THE TRUE AND FULL FINANCIAL ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 8 AFFAIR OF THE UNDERTAKING. THE APPELLANT MUST BE HA VING SEPARATE BANK ACCOUNT AND SEPARATE CASH ACCOUNT FOR THE UNDE RTAKING BUT THERE IS NO SUCH MENTION IN THE BALANCE SHEET. FURT HER, AS PER RULE 18BBB(3), AND 18BBB(4) THE 10CCB FORM SHALL BE ACCO MPANIED BY A COPY OF THE AGREEMENT/APPROVAL/PERMISSION, AS THE CASE MAY BE, TO CARRY ON THE ACTIVITY ELIGIBLE FOR THE DEDUCTION U/S 80IA. ASSESSMENT RECORDS DOES NOT SHOW THAT ANY SUCH PERMISSION/AGREEMENT ETC. WAS FILED FOR THE ALLEGED WIND MILL PROJECT OF THE APPELLANT. THUS CONSIDERING THE FACT AND CIRCUMSTANCES FOR THE CASE I AM OF THE VIEW THAT TH E APPELLANT HAS NOT SATISFIED THE CONDITION LAID DOWN IN SEC. 80IA( 7) SO AS TO ENTITLE IT FOR THE DEDUCTION CLAIMED. IN VIEW THEREOF, THE REJECTION OF THE CLAIM BY THE ASSESSING OFFICER IS JUSTIFIED AND HEN CE SUSTAINED. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 16. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US SUBMITTED THAT FOR OBTAINING DEDUCTION U/S 80IA, SEPARATE P&L BOOKS HA VE TO BE MAINTAINED AND P&L COMPUTED. THE LEARNED COUNSEL FOR THE ASSES SEE RELIED UPON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. HARINKHOLA ICE VS. COLD STORAGE LTD., 134 ITR 540 ( CAL) WHEREIN IT WAS HELD THAT IT IS NOT NECESSARY FOR MAINTAINING SEPAR ATE BOOKS FOR THE ELIGIBLE UNDERTAKING IF THE PROFITS OF THE UNDERTAKING CAN B E COMPUTED FROM THE BOOKS MAINTAINED BY THE ASSESSEE. 17. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 18. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS THE DECISION CITED. THE ASSESSEE HAD COMPUTED PROFITS OF THE UNDERTAKING AND HAS ALSO FILED CERTIFICATE OF THE AUDITOR IN RESPEC T OF THE ELIGIBLE UNDERTAKING. IN THESE CIRCUMSTANCES, WE DEEM IT FIT TO SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDER ING THE PROFITABILITY OF THE ELIGIBLE UNDERTAKING ON THE BASIS OF THE WORKINGS F URNISHED BY THE ITA NOS. 60,61, 87 & 88/HYD/10 M/S LANCO INFRATECH LTD. 9 ASSESSEE, AFTER GIVING REASONABLE OPPORTUNITY TO TH E ASSESSEE TO PUT FORWARD ITS CASE. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. 20. TO SUM UP, ITA NOS. 60, 61 & 87/HYD/2010 ARE DI SMISSED AND ITA NO. 88/HYD/10 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09/07/2012. SD/- (CHANDRA POOJARI) SD/- (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 9 TH JULY, 2012 KV COPY FORWARDED TO: 1. ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCL E-5, ROOM NO. 803, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S LANCO INFRATECH LTD., LANCO HOUSE, PLOT NO. 4, SOFTWARE UNITS LAYOUT, HITECH CITY, MADHAPUR, HYDERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS) -I, HYDERABA D 4. COMMISSIONER OF INCOME-TAX(CENTRAL), HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.