Deputy Commissioner of Income-tax, V. Serum Institute of India Ltd., Pune

ITA 607/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5194 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-08-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJSHEKHAR S ABHYANKAR
• Keywords: Bogus purchase; Gift; Business income; Depreciation; Business expenditure; Search and seizure; Opportunity of being heard; Rule of consistency; Additional depreciation; Retrospective amendment; Question of law; Cost of acquisition; Accommodation entries; Revenue expenditure; Capital expenditure
• Section: 153A; 14A; 133(6); 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.549 & 550/PUN/2016 / ASSESSMENT YEARS : 2011-12 AND 2012-13 SERUM INSTITUTE OF INDIA LTD. SAROSH BHAVAN, 16-B/1, DR. AMBEDKAR ROAD, PUNE 411 001 PAN : AABCS4225M . /APPELLANT VS. DCIT, CENTRAL CIRCLE-1(1), PUNE . / RESPONDENT . / ITA NOS.607 & 934/PUN/2016 / ASSESSMENT YEARS : 2011-12 AND 2012-13 DCIT, CENTRAL CIRCLE-1(1), PUNE . /APPELLANT VS. SERUM INSTITUTE OF INDIA LTD. 212/2, HADAPSAR, PUNE-411 028. PAN : AABCS4225M . / RESPONDENT ASSESSEE BY : SHRI RAJSHEKHAR S. ABHYANKAR REVENUE BY : SHRI RAJEEV KUMAR / DATE OF HEARING : 23.08.2018 / DATE OF PRONOUNCEMENT: 12.10.2018 / ORDER PER D. KARUNAKARA RAO, AM : THESE ARE THE TWO SETS OF CROSS APPEALS FILED BY THE ASS ESSEE AND THE REVENUE AGAINST THE SEPARATE ORDERS OF CIT (APPEALS )-11, PUNE, DATED 29-01-2016 & 04-02-2016 FOR THE ASSESSMENT YEA RS 2011-12 AND 2012-13. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 2 2. BACKGROUND FACTS OF THE ASSESSEE INCLUDE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF LIFE SAVING DRUGS AND VACCINES. THE CASES OF POONAWALLA GROUP INCLUD E TWO SUB- GROUPS (1) INCLUDES FAMILY MEMBERS OF SHRI CYPRUS SOLI POONAW ALLA (IN SHORT CSP) AND THE GROUP CONCERNS UNDER HIS CONTROL AN D MANAGEMENT (WITH M/S. SERUM INSTITUTE OF INDIA LTD. AS THE FLAGSHIP COM PANY; AND (2) OTHER SUB-GROUP INCLUDES FAMILY MEMBERS OF SHRI ZAVARE H SOLI POONAWALLA (IN SHORT ZSP) AND THE GROUP CONCERNS UNDER HIS CONTRO L AND MANAGEMENT, WHICH IS MAINLY ENGAGED IN STUD FARM ACTIVITIES. THERE WAS SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT ON THE ASSESSEES GROUP OF CASES ON 21-06-2011. IN RESPONS E TO NOTICE U/S.153A OF THE ACT, ASSESSEE FILED THE RETURN OF INCOME O N 13-02-2012 DECLARING TOTAL INCOME OF RS.14,83,08,431/-. DURING THE SAID SEARCH ACTION, VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEI ZED/ BY THE DEPARTMENT IN RESPECT OF ENTITIES CONNECTED WITH THE GRO UP. CASH WAS ALSO SEIZED BY THE DEPARTMENT. DURING THE ASSESSMENT P ROCEEDINGS U/S.143(3) OF THE ACT, AO MADE VARIOUS DISALLOWANCES U/S.14A OF THE ACT, EDP EXPENSES, FOREIGN TRAVEL EXPENSES, DEPRECIATION O N PLANT AND MACHINERY, FREIGHT AND INSURANCE EXPENSE PERTAINS TO EOU UNIT, PROVISION FOR LEAVE ENCASHMENT, REPAIRS TO BUILDING, PLANT AND MACHINERY AND PRODUCT DEVELOPMENT EXPENSES, ETC., APAR T FROM OTHERS AND FINALLY ASSESSED THE INCOME AT RS.109,08,84,068/-. CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE RELYING ON THE DECISION S OF HIS PREDECESSOR/TRIBUNAL. 3. AGGRIEVED WITH THE PART RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. FURTHER, AGGRIEVED WITH THE CONFIRMATION OF ADDITIONS, THE ASSESSEE IS IN APPEAL BEFORE US SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 3 WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE. ITA NO.549/PUN/2016 (BY ASSESSEE) A.Y. 2011-12 4. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED: 1A. IN CONFIRMING THE DISALLOWANCE U/S.14A AMOUNTIN G TO RS.2,42,65,925/- AS PER RULE 8D. B. IN NOT ADDRESSING THE GROUND REGARDING NET OFF INTEREST RECEIVED WITH INTEREST PAID TO CONSIDER THE PROPORTIONATE DISAL LOWANCE OF INTEREST PAID. 2. IN CONFIRMING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF EMPLOYEES AMOUNTING TO RS.12,38,850/- WHO TRAVELLED ABROAD. 3. A. IN DIRECTING THE AO TO CLASSIFY ITEMS OF FIXED ASSETS OF RS.38,70,450/- LIKE STAINLESS STEEL TABLES, STOOLS, RACKS ETC. LOCATED IN MANUFACTURING UNIT INTO FURNITURE AND FIXTURES AN D PLANT AND MACHINERY. 4. IN CONFIRMING THE DISALLOWANCE OF THE PROVISION FOR LEAVE ENCASHMENT AMOUNTING TO RS.128,83,627/- PERTAINING TO DTA U NIT ASCERTAINED ON THE BASIS OF ACTUARIAL VALUATION FOR THE SPECIFIC EMPLOYEES OF THE APPELLANT COMPANY. 5. A. IN CONFIRMING DISALLOWANCE OF DEDUCTION U/S.3 5(2AB) ON PRODUCT DEVELOPMENT EXPENSES OF RS.2,25,42,606/- RELATED TO PERIOD PRIOR TO THE DATE OF APPROVAL OF IN-HOUSE R&D FACIL ITY Y/S.35(2AB) , I.E. BEFORE 03-08-2010. B. IN NOT ALLOWING THE WEIGHTED DEDUCTION ON EXPEN DITURE INCURRED FOR CLINICAL TRIALS AMOUNTING TO RS.5,45,4 9,486/-. 6. IN CONFIRMING THE DISALLOWANCE OF DEMAT CHARGES AMOUNTING TO RS.4,28,524/- MADE BY THE ASSESSING OFFICER. 7. IN UPHOLDING THE DISALLOWANCE OF PURCHASES OF RS .61,172/- BY TREATING THE SAME AS BOGUS PURCHASES. 8. IN CONFIRMING DISALLOWANCE OF RENT PAID OF RS.31,44,000/- FOR BUNGALOW LOCATED AT 70, KOREGAON PARK, PUNE TAKEN O N LEASE (BELONGING TO M/S. POONAWALLA FINVEST & AGRO PVT. LTD., ZSP GR OUP COMPANY) FOR OFFICE OF DIRECTOR OF APPELLANT COMPANY AND DEPRECI ATION OF RS.12,97,701/- ON THE ASSETS PLACED THERE AT 9. A. NOT CONSIDERING THE COST OF ELECTRICAL WORK AND CIVIL WORK RS.20,82,47,820/- REQUIRED TO ERECT WINDMILL AS INTEGRATED COST OF WINDMILL ELIGIBLE FOR @80% DEPRECIATION. B. IN NOT GRANTING ADDITIONAL DEPRECIATION ON WIND MILLS GENERATING POWER FOR CAPTIVE CONSUMPTION IN SPITE OF COMPLYING THE PROVISIONS OF SEC. 32(1)(IIA). SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 4 10. IN CONFIRMING DISALLOWANCE OF SELLING AND DISTR IBUTION EXPENSES OF RS.3,64,81,120/-. 11. IN CONFIRMING THE ACTION OF A.O. FOR NOT DIRECT ING THE AO TO REDUCE WEALTH TAX PAID OF RS.20,45,836/- FOR COMPUTING BOO K PROFIT U/S.115JB. 12. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/WITHDRA W ANY OF THE GROUNDS OF APPEAL AT THE TIME OF APPEAL PROCEEDINGS . YOUR APPELLANT FURTHER SUBMITS THAT THE GROUNDS OF APPEAL ARE, SAV E AS OTHERWISE SPECIFIED, NOTWITHSTANDING AND WITHOUT PREJUDICE TO EACH OTHER. 4.1 ASSESSEE ALSO FILED MODIFIED GROUNDS AND THE SAME READ AS UNDER: 1A. THE LD.CIT(A) OUGHT TO HAVE HELD THAT NO DISAL LOWANCE U/S.14A(2) R.W.R.8D CAN BE SUSTAINED IN THE ABSENCE OF A SPECI FIC RECORDING OF SATISFACTION BY THE A.O. BASED ON COGENT MATERIAL AN D HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, TO THE EFFECT THAT TH E CLAIM OF THE ASSESSEE IS NOT CORRECT. B. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE A.O. MADE THE DISALLOWANCE MERELY ON THE BASIS OF OBSERVATION THA T SALARIES AND OTHER ADMINISTRATIVE EXPENSES ARE DEBITED TO P&L A/C FOR BOTH TAXABLE AND TAX FREE INCOMES, THEREFORE IT IS DIFFICULT TO ACCEPT T HAT TAX FREE INCOMES ARE EARNED WITHOUT INCURRING THESE EXPENSES. SUPPLEMENTARY GROUND TO GROUND -10. 10. DISALLOWANCE OF SELLING & DISTRIBUTION EXPENSE S HAVE BEEN PARTLY SET OFF AGAINST CONTINGENCY OFFERED, IF THE DISALLO WANCE IS DELETED BY HON. ITAT, AS A COROLLARY, THE ADDITION OF CONTINGENCY M AY ALSO BE DELETED IN VIEW OF DECISIONS OF EARLIER YEARS. 5. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT MOST OF THE GROUNDS RAISED BY THE REVENUE AND TH E ASSESSEE ARE COVERED ISSUES IN FAVOUR OF THE ASSESSEE. IN THIS REGARD , LD. COUNSEL SUBMITTED CHARTS ON THE GROUNDS RAISED BY THE REVENU E AS WELL AS THE ASSESSEE. THEREFORE, WE PROCEED TO DECIDE THE ISSUES RA ISED IN THESE APPEALS BASED ON THE SAID INFORMATION. WE SHALL TAKE UP THE ISSUE-WISE ADJUDICATION IN THE FOLLOWING PARAGRAPHS. 6. GROUND NO.1(A) : IF THE DISALLOWANCE MADE BY THE AO U/S.14A R.W. RULE 8D(2) OF THE I.T. RULES, 1962 IS SUSTAINABLE WHEN THERE IS NO SATISFACTION INVOKING THE PROVISIONS OF THE ACT/RULES. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 5 6.1 BRINGING OUR ATTENTION TO THE ASSESSMENT ORDER IN TH IS REGARD, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, ON SIMILAR SATISFAC TION MENTIONED BY THE AO, THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10 AND IN THE GROUP CASE OF THE COMPANY - PO ONAWALLA INVESTMENTS AND INDUSTRIES LTD. VS. DCIT IN ITA NOS. 24 5 TO 250/PUN/2016 FOR A.YRS. 2006-07 TO 2011-12, DATED 28-02 -2018 DELETED THE DISALLOWANCE MADE U/S.14A OF THE ACT. IN THIS REGARD, HE READ OUT THE FOLLOWING LINES FROM THE ASSESSMENT ORDER : 5.1 . . . . . . . . IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT ALL THE TAX FREE INCOME HAS BEEN EARNED WITHOUT INCURRING THESE EXPE NDITURES AND THESE EXPENDITURES WERE INCURRED ONLY FOR EARNING TAXABLE INCOME. FURTHER, ASSESSEE HAS DISALLOWED EXPENDITURE ON ADHOC BASIS WITHOUT APPLYING RULE 8D. THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS NOT MADE ADEQUATE DISALLOWANCE AS MANDATED U/S.14A OF THE I.T. ACT AN D THEREFORE, THE CASE OF THE ASSESSEE IS A FIT CASE FOR COMPUTATION OF TH E SAID DISALLOWANCE U/S.14A OF THE I.T. ACT. 6.2 AFTER HEARING BOTH THE SIDES ON THIS ISSUE, PERUSING TH E ORDERS OF THE REVENUE AND THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10, WE FIND THE AO DID NOT GIVE THE SATISFACTION HAVING REGARD TO THE BOOK OF ACCOUNT OF THE ASSESSEE. FURTHER, WITH SIMILAR KIND OF SATI SFACTION IN THE CASE OF POONAWALLA INVESTMENT AND INDUSTRIES PVT. LT D. (SUPRA), WE HOLD THAT THE SAME FALLS SHORT OF THE REQUIREMENT. FOR TH E SAKE OF COMPLETENESS, RELEVANT PARAS ARE EXTRACTED AS FOLLOWS : 27. IN CONNECTION WITH GROUND NO.1, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT AO FAILED TO RECORD SATISFACTION WHI CH IS REQUIRED WHILE INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R .W. RULE 8D OF THE I.T. RULES, 1962. BRINGING OUR ATTENTION TO THE CONTENT S OF PARA NO.5.1 OF THE ASSESSMENT ORDER, LD. COUNSEL SUBMITTED THAT THE AO FAILED TO RECORD THE SATISFACTION BEFORE INVOKING THE PROVISIONS U/S.14A OF THE ACT. FURTHER, LD. AR READ OUT THE RELEVANT LINES FROM THE SAID PA RA OF THE ASSESSMENT ORDER. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE SAME AS UNDER : 5.1. . . . . . . . IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT ALL THE TAX FREE INCOME HAS BEEN EARNED WITHOUT INCURRING THESE EXPENDITURE S AND THESE EXPENDITURE WERE INCURRED ONLY FOR EARNING TAXABLE INCOME. THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS NOT MADE ADEQUATE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 6 DISALLOWANCE AS MANDATED U/S.14A OF THE I.T. ACT AN D THEREFORE, THE CASE OF THE ASSESSEE IS A FIT CASE FOR COMPUTAT ION OF THE SAID DISALLOWANCE U/S.14A OF THE I.T. ACT. 28. FURTHER, LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ABOVE RECORDED SATISFACTION , IS EXTREMELY GENERAL AND IT FALLS SHORT OF THE LEGAL REQUIREMENT AS PROVIDED IN THE JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING COMPANY LTD VS. DCIT 394 ITR 448 (SC). CONTENTS OF PARA NO.37 OF THE SAID JUDGM ENT IS RELIED HEAVILY AND PRAYED FOR DELETION OF THE ADDITION MADE BY THE AO INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. 29. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE AO/CIT(A). 30. WE HEARD BOTH THE PARTIES ON THE ISSUE RELATING TO THE ISSUE OF RECORDING OF SATISFACTION AND PERUSED THE ABOVE EXT RACTED SATISFACTION RECORDED BY THE AO ON THIS ISSUE. WE FIND THE LEGA L POSITION WAS EXPLAINED BY THE HONBLE APEX COURT AND THE PARA NO .37 OF THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF GODREJ AND BOY CE MANUFACTURING COMPANY LTD. (SUPRA) ARE RELEVANT. HONBLE SUPREME COURT EXPLAINED THE PROVISIONS OF SUB-SECTION (2) AND (3) OF SECTION 14 A OF THE ACT. FOR THE SAKE OF COMPLETENESS, WE PROCEED THE EXTRACT THE SA ME HERE AS UNDER : 37. WE DO NOT SEE HOW IN THE AFORESAID FACT SITUAT ION A DIFFERENT VIEW COULD HAVE BEEN TAKEN FOR THE ASSESSMENT YEAR 2002-03. SUB-SECTIONS (2) AND (3) OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES MERELY PRESCRIBE A FORMULA FOR DETERMI NATION OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN A SITUATI ON WHERE THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CLAIM O F THE ASSESSEE. WHETHER SUCH DETERMINATION IS TO BE MADE ON APPLICA TION OF THE FORMULA PRESCRIBED UNDER RULE 8D OR IN THE BEST JUD GMENT OF THE ASSESSING OFFICER, WHAT THE LAW POSTULATES IS THE R EQUIREMENT OF A SATISFACTION IN THE ASSESSING OFFICER THAT HAVING R EGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, IT IS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE . IT IS ONLY THEREAFTER THAT THE PROVISIONS OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RULES OR A BEST JUDGMENT DETERMINATION, AS EARLIER PREVAILING, WOUL D BECOME APPLICABLE. (EMPHASIS SUPPLIED). 31. THE ABOVE RATIO WAS ADOPTED BY THE PUNE BENCH O F THE TRIBUNAL IN THE CASE OF CAPGEMINI TECHNOLOGY SERVICES INDIA LIMI TED, (IN THE MATTER OF IGATE COMPUTER SYSTEMS LIMITED, (FORMERLY PATNI COMP UTER SYSTEMS LIMITED AMALGAMATED WITH IGATE GLOBAL SOLUTIONS LIM ITED AND NAME CHANGED) VS. DCIT VIDE ITA NOS. 216 AND 360/PUN/201 5, ORDER DATED 25-01-2018 AND ALLOWED THE ISSUE IN FAVOUR OF THE A SSESSEE. FOR THE SAKE OF COMPLETENESS, RELEVANT OPERATIONAL PARAS AR E EXTRACTED HERE AS UNDER : 34. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ASSESSING OFFICER WHILE PASSING THE AS SESSMENT ORDER IN PARA 10 HAD OBSERVED THAT THE ASSESSEE HAD EARNE D SIGNIFICANT AMOUNT OF TAX FREE DIVIDENDS AND IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS DISALLOWED SUM OF RS.50 LAKHS UNDER SE CTION 14A OF THE ACT. THEN, REFERENCE IS MADE TO THE NOTE FILED BY THE ASSESSEE ON EXPENDITURE DISALLOWABLE UNDER SECTION 14A OF TH E ACT. THE ASSESSING OFFICER THEREAFTER, TAKES NOTE OF THE CON TENTS OF SAID EXPLANATION AND OBSERVED AS UNDER:- SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 7 I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE AS SESSEE. IT IS OBSERVED THAT APART FROM INVESTMENTS IN THE OVERSEA S SUBSIDIARIES (WHERE THERE IS NO TAX-FREE INCOME SINCE THE DIVIDE ND IS ALSO TAXABLE) THE INVESTMENTS MADE BY THE ASSESSEE ARE I N MUTUAL FUNDS. THE ENTIRE INVESTMENT IN MUTUAL FUND IS IN NON-EQUITY SCHEME. IN RESPECT OF INVESTMENT IN MUTUAL FUNDS, EXCEPT FOR GROWTH FUNDS, THE COMPANY RECEIVES TAX FREE DIVIDEN D. THE AMOUNT OF DIVIDEND RECEIVED BY THE COMPANY IS SUBST ANTIAL. THIS IS A CLEAR CASE FOR APPLICATION OF RULE 8D. HENCE, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. THE DISALLOWANCE U/S 14A IS REQUIRED TO BE MADE BY APPLYING RULE 8D. AS PER TH E WORKING OF DISALLOWANCE U/S 14A AS PER RULE 8D, THE AMOUNT OF D ISALLOWANCE COMES TO RS.5,68,32,323/-. THE ASSESSEE HAS ALREAD Y DISALLOWED RS.50,00,000/- IN THE COMPUTATION OF INCOME. 35. THE REQUIREMENT OF SECTION 14(2) OF THE ACT IS THAT THE ASSESSING OFFICER IS TO RECORD AS TO WHY THE DISALL OWANCE MADE BY THE ASSESSEE I.E. RS.50 LAKHS UNDER SECTION 14A OF THE ACT IS NOT CORRECT. THE ASSESSING OFFICER TAKES NOTE OF THE D ISALLOWANCE, CONSIDERS THE EXPLANATION OF ASSESSEE AND HOLDS THA T THE CONTENTION OF ASSESSEE CANNOT BE ACCEPTED. THE PRE LIMINARY SATISFACTION TO BE RECORDED BY ASSESSING OFFICER, B EFORE MAKING DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES, IS MISSING IN THE CASE; IN THE ABSENCE O F THE SAME, THERE IS NO MERIT IN THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BL E SUPREME COURT IN GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT & ANR. (2017) 394 ITR 449 (SC). 37. WE DO NOT SEE HOW IN THE AFORESAID FACT SITUAT ION A DIFFERENT VIEW COULD HAVE BEEN TAKEN FOR THE ASSESSMENT YEAR 2002-03. SUB-SECTIONS (2) AND (3) OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES MERELY PRESCRIBE A FORMULA FOR DETERMI NATION OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN A SITUATI ON WHERE THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CLAIM O F THE ASSESSEE. WHETHER SUCH DETERMINATION IS TO BE MADE ON APPLICA TION OF THE FORMULA PRESCRIBED UNDER RULE 8D OR IN THE BEST JUD GMENT OF THE ASSESSING OFFICER, WHAT THE LAW POSTULATES IS THE R EQUIREMENT OF A SATISFACTION IN THE ASSESSING OFFICER THAT HAVING R EGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, IT IS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE . IT IS ONLY THEREAFTER THAT THE PROVISIONS OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RULES OR A BEST JUDGMENT DETERMINATION, AS EARLIER PREVAILING, WOUL D BECOME APPLICABLE. (UNDERLINE PROVIDED BY US FOR EMPHASIS) 36. THE RATIO LAID DOWN BY THE HONBLE HIGH COURT O F DELHI IN INDIABULLS FINANCIAL SERVICES LTD. VS. DCIT (SUPRA) IS THUS, NOT APPLICABLE. THE GROUND OF APPEAL NO.3 RAISED BY TH E REVENUE IS THUS, DISMISSED. 32. FROM THE ABOVE, WE ARE OF THE VIEW THAT THE SAT ISFACTION RECORDED BY THE AO IN PARA NO.5.1 IS EXTREMELY BASED ON THE SUSPICION AND SURMISES. THE SATISFACTION ARRIVED AT BY THE AO WI TH REFERENCE TO THE ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ALSO HAVING REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IN T HAT SENSE OF THE MATTER, THE SATISFACTION RECORDED BY THE AO IS EXTREMELY GE NERIC AND WHICH FALLS SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 8 SHORT OF THE LEGAL REQUIREMENT FOR ASSUMING JURISDI CTION U/S.14A OF THE ACT. CONSIDERING THE ABOVE POSITION, WE ARE OF THE VIEW THAT THE AO FAILED TO RECORD THE SUSTAINABLE SATISFACTION BEFORE INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. THEREFORE, THE DISALLOWANC E MADE BY THE AO IS UNSUSTAINABLE TECHNICALLY. ACCORDINGLY, THIS PART O F THE ARGUMENT OF GROUND NO.1 IS ALLOWED. WE FIND ADJUDICATION OF TH E OTHER ISSUES OF THE SAID GROUND RELATING TO MERITS BECOMES AN ACADEMIC EXERCISE. THEREFORE, THE SAME ARE DISMISSED AS ACADEMIC. THEREFORE, ON THE TECHNICAL GROUNDS, THE GROUND NO.1(A) RAIS ED BY THE ASSESSEE ON THE ISSUE OF SATISFACTION STANDS ALLOWED IN FAV OUR OF THE ASSESSEE. GROUND NO.1(B), BEING ON MERITS OF QUANTIFICATION OF DISALLOWABLE EXPENDITURE U/S.14A OF THE ACT, IS DISMISSED AS ACADEMIC IN VIEW OF THE RELIEF GRANTED TO THE ASSESSEE IN GROUND 1(A). ACCORDINGLY , GROUND NO.1 (A) & (B)/MODIFIED GROUNDS 1(A) AND (B) STAND PARTLY ALLOWED . 7. GROUND NO.2 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF EMPLOYEES AMOUNTING TO RS.12,38,850/- 7.1. RELEVANT FACTS OF THE ISSUE INCLUDE THAT THE AO TREATE D THE SAID FOREIGN TRAVEL EXPENSES AS CAPITAL IN NATURE AS AGAINST TH E CLAIM OF ASSESSEE AS REVENUE EXPENDITURE. ASSESSEE CONTENDED THAT THE EXPENDITURE IS INCURRED BY SENIOR EXECUTIVES IN THE NORMA L COURSE OF BUSINESS AND 75% OF THE ASSESSEES TURNOVER IS ON EXP ORTS AND THEREFORE, THE EXPENDITURE IS ALLOWABLE U/S.37(1) OF THE ACT. THE AO CONSIDERED THE DECISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR THE A.Y. 2006-07 WHERE THE MATTER WAS TRAVELLED UPTO TH E TRIBUNAL AND THE TRIBUNAL CONFIRMED THE SAME. THEREFORE, CONSIDERING THE ABOVE FACTS, AO CONCLUDED THAT THE ASSESSEE TRAVELLED ABROAD FO R ACQUIRING MACHINERY AND THUS DENIED THE BENEFIT TO THE ASSESSEE. IN THE FIRST SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 9 APPELLATE PROCEEDINGS, THE CIT(A) UPHELD THE VIEWS OF THE AO . AGGRIEVED WITH THE ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7.2. BEFORE US, LD. COUNSEL SUBMITTED THAT THE EXPENSES INC URRED ARE PURELY FOR THE BUSINESS PURPOSES. HE FURTHER SUBMITTED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10 THE TRIBUNAL RE LYING ON THE ORDER OF TRIBUNAL FOR THE A.Y. 2008-09 REMITTED THE ISSUE T O THE FILE OF AO FOR VERIFICATION. HE SUBMITTED THAT, IN THIS YEAR ALSO, TH E ISSUE MAY BE REMITTED TO THE FILE OF AO FOR VERIFICATION OF FACTS. 7.3 PER CONTRA, LD. DR RELIED ON THE ORDERS OF THE AO/CIT(A). 7.4 ON HEARING BOTH THE SIDES ON THIS ISSUE, WE FIND THE TR IBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009-10 REMITTED THE M ATTER TO THE FILE OF AO. WE PROCEED TO EXTRACT THE FINDINGS OF THE TRIBUNAL AND THE SAME READS AS UNDER : 31. HOWEVER, ON THE ISSUE OF CAPITALIZATION OF THE EXPENDITURE, IN VIEW OF THE ASSESSEES SUBMISSION THAT THE EXPENSES INCU RRED FOR THE PURPOSE OTHER THAN THE PURCHASE OF MACHINERY, NEEDS TO BE V ERIFIED BY THE AO, WE FIND THIS ISSUE NEEDS TO BE REMITTED BACK TO THE FILE OF AO FOR VERIFICATION OF CORRECTNESS OF THE FACTS RELATING T O THIS CLAIM. AO IS DIRECTED TO VERIFY THE EXPENSES IN THIS REGARD AFTE R GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ASSESS EE IS DIRECTED TO PRODUCE RELEVANT DOCUMENTS TO SUBSTANTIATE HIS CLAI M. ACCORDINGLY, GROUND NO. 2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7.5 FOLLOWING THE SAME REASONING, WE ARE OF THE VIEW THAT T HIS GROUNDS NEEDS TO BE REMITTED TO THE FILE OF AO. THUS, GR OUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO CLASSIFICATION OF ITEMS OF FIXED ASSETS AMOUNTING TO RS.40,60,897/-. 8.1 RELEVANT FACTS OF THIS ISSUE INCLUDE THAT THE AO CLASSIFIED CERTAIN ITEMS AS FURNITURE AND ALLOWED DEPRECIATION AT THE RATE APPLICABLE TO FURNITURE AND CERTAIN ITEMS AS PLANT AND MACHINERY AND A LLOWED SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 10 DEPRECIATION AT THE RATE APPLICABLE TO THEM BY APPLYING FU NCTIONAL TEST. EVENTUALLY, IN THE ASSESSMENT MADE U/S.143(3) R.W.S. 153A O F THE ACT, THE AO MADE ADDITION OF RS.1,08,291/- BEING DIFFERENCE IN DEP RECIATION @10% AND 15% ON SOME ITEMS UNDER BLOCK OF PLANT AND MAC HINERY TREATING THE SAME AS FURNITURE. BEFORE THE CIT(A), THE A SSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUN AL FOR THE A.YRS. 2006-07 AND 2007-08. THE CIT(A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND THE ORDER OF CIT(A) PARTL Y ALLOWED THE APPEAL OF THE ASSESSEE. CONTENTS OF PARA NO.7.1 OF THE ORD ER OF CIT(A) ARE RELEVANT. 8.2. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THIS ISSUE IS CONSISTENTLY BEING ALLOWED IN FAVOUR OF THE ASSESSEE IN T HE EARLIER YEARS A.Y. 2006-07 TO 2009-10. THEREFORE, LD. COUNSEL PRA YED FOR ALLOWING THE GROUND. 8.3 AFTER HEARING BOTH THE SIDES, WE FIND THIS ISSUE IS SETTLE D ONE IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDERS OF TRIBUNA L IN THE A.YRS. 2006-07 TO 2009-10. CONSIDERING THE SAME AND FOLLOWING TH E RULE OF CONSISTENCY, WE ALLOW THE GROUND NO.3 RAISED BY THE ASSESSEE. 9. GROUND NO.4 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE MADE BY THE AO ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT AMOUNTING TO RS.18,16,795/-. 9.1 BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE STANDS DECIDED AGAINST THE ASSESSEE BY THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE 2008-09 & 2009-10. 9.1 WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE AS WELL AS THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OW N CASE FOR THE A.Y. 2009-10 AND FIND THIS ISSUE STANDS DECIDED AGAINST TH E ASSESSEE IN SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 11 THE EARLIER ASSESSMENT YEARS. CONSIDERING THE SAME, WIT HOUT GOING INTO THE MERITS, WE DISMISS THIS GROUND NO.4 RAISED BY THE ASSESSEE. 10. GROUND NO.5 RELATES TO CONFIRMATION OF DISALLOWANCE ON ACCOUNT OF PRODUCT DEVELOPMENT EXPENSES AMOUNTING TO RS.2,25,42,606/-. 10.1 RELEVANT FACTS ON THIS ISSUE INCLUDE THAT THE ASSESSE E AN AMOUNT OF RS.19,08,48,208/- HAS BEEN CLAIMED AS REVENUE EXPENDITU RE U/S.35(2AB)OF THE ACT. AO DID NOT ALLOW THE WEIGHTED DEDUC TION OF THE EXPENSES INCURRED PRIOR TO 03-08-2010 (APPROVAL DATE). I N THE FIRST APPELLATE PROCEEDINGS, THE CIT(A), RELYING ON THE ORDER OF TRIBUNAL IN THE CASE OF M/S.ADVIK HIGHTECH PVT. LTD. 51 TAXMANN.COM 245, C ONFIRMED THE ADDITION MADE BY THE AO. 10.2 BEFORE US, ASSESSEE SUBMITS THAT IT HAS ALL THE APPRO VALS IN PLACE FROM THE PRESCRIBED AUTHORITY WHICH ARE APPLICABLE FOR THE PERIOD UNDER CONSIDERATION. HOWEVER, THE CIT(A) EMPHASIZED THAT THE AP PROVAL FOR REVENUE EXPENSES SHOULD BE AVAILABLE FROM 03-08-2010. AS SESSEE SUBMITTED THAT SECTION 35(2AB) WAS INTRODUCED WITH A VIEW TO ENCOURAGE THE R&D IN INDUSTRIAL SECTOR AND NOWHERE IT IS MENTIONED R&D FACILITY IS TO BE APPROVED FROM A PARTICULAR DATE. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. CLARIS LIFE SCIENCES LTD. 326 ITR 251 (G UJ.) 2. MARUTI SUZUKI INDIA LTD. VS. UOI 84 TAXMANN.CO M 45 (DELHI HC) 3. BANCO PRODUCTS (INDIA) LTD. VS. DCIT 95 TAXMANN. COM 132 (GUJARAT). LD. AR FOR THE ASSESSEE FURTHER SUBMITTED THAT IT CARRIED OUT THE SCIENTIFIC RESEARCH IN THE FACILITY APPROVED BY DSIR. ASSES SEE INCURRED VARIOUS EXPENDITURE WHICH INCLUDES EXPENSES ON CLINICAL TRIALS FOR SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 12 PRODUCT DEVELOPMENT WHICH ARE CONDUCTED OUT OF THE APP ROVED FACILITY AND THE REASONS BEHIND THE SAME ARE : I. CLINICAL DRUG TRIAL IS AN INTEGRAL PART OF R&D ACTIVITY CARRIED BY THE APPROVED R&D UNIT. II. DUE TO PECULIAR NATURE OF VACCINES, PRACTICALLY OF BRINGING SUBJECTS OF CLINICAL TRIALS TO THE APPROVED R&D FACILITY AND REGULATORY REQUIREMENT OF MINISTRY OF HEALTH, SUCH TRIALS ARE REQUIRED TO BE NECESSARILY CARRIED OUT IN THE APPROVED GOVERNMENT HOSPITALS. III. WHILE CONDUCTING SUCH CLINICAL TRIALS, COMPANY S R&D PERSONNEL RETAIL ULTIMATE CONTROL OVER AND REMAIN RESPONSIBLE FOR THE ACTIVITIES OF CLINICAL TRIAL EVEN IF SUCH ACTIVITIES ARE CARRIED OUT BY THE EXTERNAL AGENCIES OUTSIDE THE APPROVED FACILITIES. ASSESSEE FURTHER SUBMITTED THAT THE CIT(A) FAILED TO TAKE NOTE OF EXPLANATION TO SECTION 35(2AB)(1) OF THE ACT INTRODUCED BY FINANCE ACT, 2001 W.E.F. 01-04-2002 AND RELIED ON THE DECISION IN THE CAS E OF CIT VS. CADILA HEALTH CARE LTD. 31 TAXMANN.COM 300 (GUJARAT). 10.3 ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEA VILY ON THE ORDERS OF THE AO AND THE CIT(A). 10.4 WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AS WELL AS THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE U S. WE FIND THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S.MARUTI SUZUKI INDIA LTD. VS. UOI HELD AS UNDER : 40. THE SETTLED POSITION IN LAW IS THAT, FOR AVAIL ING THE BENEFIT UNDER SECTION 35 (2AB) OF THE ACT WHAT IS RELEVANT IS NOT THE DATE OF RECOGNITION OR THE CUT- OFF DATE MENTIONED IN THE C ERTIFICATE OF THE DSIR OR EVEN THE DATE OF APPROVAL BUT THE EXISTENCE OF THE RECOGNITION. IF A R&D CENTRE IS NOT RECOGNISED IT I S NOT ENTITLED TO DEDUCTION BUT IF IT IS RECOGNISED, IT IS ENTITLED T O THE BENEFIT. THE GUJARAT HIGH COURT IN CLARIS LIFESCIENCES (SUPRA) H AS RIGHTLY OBSERVED THAT THE DATE OF APPROVAL OF THE R&D CENTRE, NOT BE ING A PART OF THE PROVISION, EXTENDING BENEFIT ONLY FROM THE DATE OF RECOGNITION 'AMOUNTS TO READING MORE IN THE LAW WHICH IS NOT EXPRESSLY PROV IDED'. 41. SECTION 35 (2AB) CLEARLY PROVIDES THAT ANY EXPE NDITURE INCURRED BY A PARTY ON ITS R&D FACILITY EXCEPT, INSOFAR AS IT REL ATES TO LAND AND BUILDING IS LIABLE TO BE ALLOWED TO BE CLAIMED AS DEDUCTION (TWICE THE AMOUNT OF EXPENDITURE). A PERUSAL OF THE SCHEME OF THE ACT ES PECIALLY SECTIONS 35 (2AB), 35A AND 35AB REVEALS IN NO UNCERTAIN TERM S, THAT THE PURPOSE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 13 BEHIND THESE PROVISIONS IS TO PROVIDE IMPETUS FOR R ESEARCH, DEVELOPMENT OF NEW TECHNOLOGIES, OBTAINING PATENT RIGHTS, COPYR IGHTS AND KNOW-HOW. 42. INSOFAR AS THE APOLLO TYRES (SUPRA) IS CONCERNE D, IN THE SAID CASE, THE PETITIONER HAD OMITTED TO APPLY FOR APPROVAL UNDER FORM 3CK, THOUGH RECOGNITION WAS GRANTED TO ITS R&D CENTRE. THE SAID FORM 3CK CONSISTS OF THE AGREEMENT TO BE ENTERED INTO WITH THE DSIR, IN PART B. THE OMISSION BY THE PETITIONER WAS HELD AGAINST IT AND THIS COUR T HELD THAT SINCE THE PETITIONER HAD OMITTED TO OBTAIN THE APPROVAL UNDER FORM 3CK, IT IS NOT ENTITLED TO THE BENEFIT OF SECTION 35(2AB) SINCE 20 04. THE FACTS OF THE PRESENT CASE ARE DIFFERENT AND THERE HAS BEEN NO OM ISSION BY THE PETITIONER HEREIN TO OBTAIN APPROVALS. THE STAGE FO R APPROVAL ARISES AFTER THE RECOGNITION IS GRANTED BY THE DSIR, FOR WHICH T HE APPLICATION WAS FILED RIGHT AT INCEPTION BY THE PETITIONER. UPON OBTAININ G RECOGNITION, WHICH WAS GRANTED ON 26TH MARCH 2014, THE FORM 3CK WAS FILED ON 31ST MARCH 2014. THERE HAS BEEN NO LAPSE OF TIME, UNLIKE IN AP OLLO TYRES (SUPRA) WHEREIN THE RECOGNITION WAS GRANTED ON 31ST MARCH, 2004 AND THE FORM 3CK APPLICATION WAS MADE ONLY ON 21ST AUGUST, 2008. THUS THE PRESENT CASE IS CLEARLY DISTINGUISHABLE FROM THE FACTS IN A POLLO TYRES (SUPRA). 43. IN THE PRESENT CASE, IT COULD BE TRUE THAT THER E ARE SOME ERRORS IN THE PETITIONER'S APPLICATION DATED 31ST OCTOBER, 2011, HOWEVER, ONE CANNOT IGNORE THAT SINCE 2011, THE PETITIONER HAS BEEN CAN DID WITH THE DSIR ABOUT ITS EXPENSES FOR THE GURGAON AND ROHTAK R&D C ENTRES AND HAS GIVEN THE BREAK-UP OF THE EXPENDITURE INCURRED THER EUPON; HAS SUBMITTED THE AUDITOR'S CERTIFICATE REQUIRED FOR THE SAME; HA S ENTERED INTO AN AGREEMENT WITH THE DSIR AS REQUIRED FOR SHARING OF TECHNOLOGIES; AND HAS ALSO REPEATEDLY REQUESTED FOR CERTIFICATION OF THE EXPENDITURE INCURRED BY IT. UNDER SUCH CIRCUMSTANCES, AN ISOLATED ERROR IN AN APPLICATION CANNOT RESULT IN THE ENTIRE BENEFIT ITSELF BEING REFUSED T O THE PETITIONER RESULTING IN IT BEING DEPRIVED OF THE DEDUCTION AS PERMISSIBLE U NDER SECTION 35 (2AB). 44. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, THIS COURT HOLDS THAT THE PETITIONER IS ENTITLED TO DEDUCTION UNDER SECTION 35 (2AB) OF THE ACT FOR THE EXPENDITURE IN RESPECT OF ITS RO HTAK R&D CENTRE AS PER THE PROVISIONS OF SECTION 35 (2AB) FOR AYS 2 011-12, 2012-13 AND 2013-14. ACCORDINGLY, THE CORRIGENDUM DATED 7TH MAY, 2015 I S SET ASIDE AND THE RESPONDENT NO.1 DSIR IS DIRECTED TO I SSUE A FRESH CERTIFICATION IN FORM 3CL IN RESPECT OF THE EXPENDI TURE ON SCIENTIFIC RESEARCH ON THE ROHTAK R&D CENTRE OF THE PETITIONER FOR AYS 2011-12, 2012-13 AND 2013-14. SINCE THE DSIR HAS ALREADY ISS UED THE CERTIFICATION FOR THE GURGAON R&D CENTRES, FOR AYS 2012- 13 AND 2013-14, NO ORDERS ARE CALLED FOR IN THAT RESPECT. THE RESPO NDENT NO.2 IS FURTHER DIRECTED TO GIVE CONSEQUENTIAL DEDUCTIONS AS PER SE CTION 35 (2AB) TO THE PETITIONER. 10.5 FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSMENT Y EAR SPECIFIC APPROACH IS THE DECIDED ISSUE LEGALLY AND NOT THE DATE S PECIFIC APPROACH. WE FIND THE FACTS ARE SOMEWHAT IDENTICAL TO THE FACTS OF THE PRESENT CASE. CONSIDERING THE ABOVE, WE ALLOW THE GROUND NO.5 (A) AND (B) NEEDS TO BE REMANDED TO THE FILE OF AO FOR FRESH ADJUDICAT ION ON THE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 14 MATTERS. AO SHALL FOLLOW THE ABOVE JUDGMENT WITH REFERENCE TO THE ISSUE RAISED IN GROUND 5(A) AND 5(B). AO IS DIRECTED TO DECIDE THE ISSUE IN THE SET ASIDE PROCEEDINGS AFTER GRANTING REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND 5(A) AND 5(B) ARE ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.6 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS.4,28,524/- U/S.48 OF THE ACT MADE ON ACCOUNT OF DEMAT CHARGES WHICH WAS CLAIMED AS EXPENDITURE INCURRED FOR EARNING INCO ME FROM CAPITAL GAINS. 11.1 RELEVANT FACTS ON THIS ISSUE INCLUDE THAT ASSESSEE D EBITED THE SAID SUM TO THE PROFIT AND LOSS ACCOUNT AND CLAIMED THAT THE SAME SHOULD BE ALLOWED WHILE COMPUTING THE CAPITAL GAINS. ASSESSEE RELIED O N THE DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF I NFOSYS TECHNOLOGIES VS. JCIT 109 TTJ 631 (BANG.). ASSESSEE CONTEN DED THAT THE SAID EXPENSES HAS BEEN INCURRED IN THE NORMAL COURS E OF BUSINESS AND THE DEMATERIALIZATION HELPED THE ASSESSEE SIGNIFICANTLY IN REDUCING THE ADMINISTRATIVE COSTS. AO OPINED THAT THE EXPENDITURE INCURRED FOR MAINTENANCE OF SHARE TRANSACTIONS FROM DEMAT ACCOUNT IS NOT TO BE ALLOWED U/S.48 OF THE ACT SINCE THE EXPENDITURE WAS NOT IN CURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER OR AS TH E COST OF ACQUISITION AND COST OF IMPROVEMENT THERETO AND THUS MAD E THE DISALLOWANCE OF SUM OF RS.4,28,524/-. WHILE DOING SO, THE AO RE LIED ON THE DECISION OF KOLKATA BENCH OF THE TRIBUNAL IN THE CASE O F ACIT VS. SRI RAGHUPATI SINGHANIA ITA NO.1761/KOL/2010.THE CIT(A) UP HELD THE DISALLOWANCE MADE BY THE AO RELYING ON THE EARLIER ORDERS . AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 15 11.2 LD COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTE D THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDER OF TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10. THE TRIBUNAL IN THE SAID ORDER RELIED ON THE DECISION OF THE PUNE BENC H OF THE TRIBUNAL IN THE CASE OF KRA HOLDING AND TRADING PVT. LTD. VS . DCIT AND VICE-VERSA VIDE ITA NO.703/PN/2012 & ITA NO.665/PN/2012 ORDER DATED 19-09-2013 FOR A.Y. 2008-09 AND HELD THAT THE CLAIM OF PORTFOLIO MANAGEMENT FEES IS AN ALLOWABLE EXPENDITURE FROM SUCH CAPITAL GAIN. 11.3 LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE AO/CIT(A). 11.4 ON HEARING BOTH THE SIDES AND ON PERUSING THE DECIS ION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10 , WE FIND THE ISSUE OF ALLOWING THE DEMAT CHARGES, STANDS DECIDED IN FAVO UR OF THE ASSESSEE. THEREFORE, FOLLOWING THE SAME REASONING, WE ALLOW G ROUND NO.6 RAISED BY THE ASSESSEE. 12. GROUND NO.7 RELATES TO DISALLOWANCE OF PURCHASES MADE BY THE ASSESSEE TREATING THEM AS BOGUS PURCHASES. 12.1 RELEVANT FACTS INCLUDE THAT BASED ON THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THROUGH DGIT (INV.), PUNE, THE AO NOTICED THAT ASSESSEE PURCHASED SOME GOODS FROM THE PARTIES W HOSE NAMES ARE LISTED IN THE SUSPECTED SUPPLIERS PROVIDING ACCOMMODATION ENTRIES. IN THE ASSESSMENT PROCEEDINGS, ASSESSEE CLAIMED THESE PURC HASES AS GENUINE. ALTERNATIVELY, THE ASSESSEE CLAIMED THE QUANTUM OF PURCHASES FOR THE YEAR UNDER CONSIDERATION MAY BE TREATED AS INFLAT ED AND THE SET OFF MAY BE GIVEN AGAINST THE NON-BUSINESS EXPENDITURE OFFER ED DURING SEARCH ACTION AT RS.2.25 CRORES. HOWEVER, IN THE ABSENC E OF PRODUCING THE PARTIES AND SUBSTANTIATING THE CLAIM WITH SUPPORTING E VIDENCES, THE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 16 AO TREATED THE SAME AS NON-BUSINESS EXPENDITURE. THE CONTENTION OF THE ASSESSEE TO GIVE SET OFF AGAINST THE NON-BUSINESS EX PENDITURE IS ALLOWED. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) UP HELD THE ACTION OF THE AO. 12.3 AGGRIEVED WITH THE ACTION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 12.4 BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED FOR REMANDING THE ISSUE TO THE FILE OF AO BY VIRTUE OF DECISION OF PUNE BEN CH OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010-11, DECIDED ON 28-04-2017. 12.5 LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE AO/CIT(A). 12.6 ON HEARING BOTH THE SIDES, WE ARE OF THE OPINION THA T THE MATTER SHOULD BE REMANDED TO THE FILE OF CIT(A) FOR DECIDING THE ISSU E IN THE LIGHT OF CLASSIFICATION OF VARIOUS GROUPS OF SUPPLIERS AS DONE B Y THE TRIBUNAL WHILE ADJUDICATING THE APPEAL IN THE CASE OF M/S. C HHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT IN ITA NO.795/PUN /2014, RELATING TO ASSESSMENT YEAR 2010-11, DECIDED ON 28-04-2 017. IN THIS CASE, THE TRIBUNAL ANALYSED VARIOUS BENEFICIARIES OF SUCH BO GUS ENTRY OPERATORS AND DEPENDING ON THE SUBMISSION OF THE EVIDEN CES WITH REGARD TO THE TRAIL OF GOODS, PAYMENT ETC. THE TRIBUNAL IDE NTIFIED 4 TYPES OF CATEGORIES. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE SAID PARAGRAPHS FROM THE ORDER OF THE TRIBUNAL (SUPRA) AND THE SAME READ AS UNDER : 40. IN VIEW OF THE ABOVE SAID RATIOS, THE PRESENT ISSUE OF BOGUS PURCHASES IS TO BE DECIDED ON THE BASIS OF FACTS OF EACH CASE. THE FIRST ASPECT IS THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE SALES SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 17 TAX DEPARTMENT IN RESPECT OF ALLEGED HAWALA DEALERS . IN MANY CASES, THE ASSESSING OFFICER HAS NOT EVEN RECEIVED THE COPY OF STATEMENT RECORDED OR ANY OTHER EVIDENCE FROM THE SALES TAX DEPARTMENT, E XCEPT THE LIST OF HAWALA DEALERS AND ON THE BASIS OF THE SAID LIST, T HE ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED IN THE HANDS OF ASS ESSEE, WHO HAD MADE THE PURCHASES FROM THE SAID PARTIES. IN CASE, NO S UCH EVIDENCE HAS BEEN RECEIVED BY THE ASSESSING OFFICER BEFORE MAKING ADD ITION, THEN THERE IS NO WARRANT IN MAKING AFORESAID ADDITION IN THE HANDS O F ASSESSEE MERELY ON THE BASIS OF SO CALLED LIST OF HAWALA DEALERS. THE RE ARE OTHER CASES, WHERE THE ASSESSING OFFICER HAD RECEIVED THE STATEMENT OF THE PERSONS WHO WERE HAWALA DEALERS AND WHO HAD ADMITTED TO HAVE JUST IS SUED BILLS OF SALE WITHOUT DELIVERY OF GOODS. IN SUCH CIRCUMSTANCES, THERE IS EVIDENCE AGAINST THE RESPECTIVE ASSESSEE THAT WHERE THE SELLER OF TH E GOODS, HAS ADMITTED NOT TO HAVE ENTERED INTO REAL TRANSACTION OF SALE OF GO ODS. AGAINST SUCH NON- TRANSACTION, THERE CAN BE NO DELIVERY OF GOODS, THE N IT IS CASE OF PASSING OF BILLS OF SALE AND PURCHASES, AGAINST WHICH NO VAT H AS BEEN PAID. SUCH BOGUS PURCHASES ARE THEN TO BE ADDED IN THE HANDS O F ASSESSEE. WHERE THE ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE WITH THE INFORMATION RECEIVED, SUPPLIED COPIES OF STATEMENTS AND WHERE T HE PERSONS HAVE NOT BEEN TRACED AND NO CONFIRMATION HAS BEEN FILED BY T HE ASSESSEE IN THIS REGARD, THEN THE ADDITION IS TO BE MADE IN THE HAND S OF ASSESSEE ON ACCOUNT OF SUCH BOGUS PURCHASES. IN THE FACTS AND CIRCUMST ANCES OF SOME CASES, THE GOODS HAVE BEEN TRANSFERRED BY SUCH HAWALA DEAL ERS TO THE RESPECTIVE PURCHASERS, AGAINST WHICH THE ASSESSEE HAS TO DISCH ARGE ONUS OF ESTABLISHING THE TRAIL OF GOODS WHICH ARE TRANSFERR ED AND FURTHER SOLD BY THEM. WHERE THE ASSESSEE IS ABLE TO PRODUCE EVIDEN CE OF PURCHASE OF GOODS BY WAY OF WEIGHMENT BRIDGE RECEIPTS, TRANSPORTATION DOCUMENTS, PAYMENT OF OCTROI AND SUBSEQUENT SALE OF GOODS TO THE RESPE CTIVE PARTIES AND / OR WHERE THE ASSESSEE HAS MAINTAINED COMPLETE QUANTITA TIVE DETAILS OF PURCHASE AND SALE OF GOODS, THEN TOTAL BOGUS PURCHA SES CANNOT BE ADDED IN THE HANDS OF ASSESSEE, BUT GP RATE OF 10% IS TO BE APPLIED ON BOGUS PURCHASES. WHERE THE ASSESSEE DOES NOT ESTABLISH I TS CASE, THEN THE COMPLETE BOGUS PURCHASES ARE TO BE ADDED AS HAWALA PURCHASES. FURTHER, IN CASES, WHERE THE STATEMENTS ARE RECORDED AND COP IES OF WHICH HAVE BEEN SUPPLIED TO THE ASSESSEE AND ASSESSEE ESTABLISHED T HE CASE OF RECEIPT OF GOODS AND ITS ONWARD TRANSMISSION BY WAY OF SALE BI LLS, THEN THE FACTUM OF PURCHASES BY THE ASSESSEE STANDS ESTABLISHED IN SUC H CIRCUMSTANCES. HOWEVER, THE BENEFIT OF PURCHASES BEING MADE FROM G REY MARKET, NEEDS ESTIMATION IN THE HANDS OF ASSESSEE. THE TRIBUNAL HAS ALREADY HELD THAT THE ADDITION BE MADE BY ESTIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHASES. ACCORDINGLY, IT IS SO HELD. IN VIEW TH EREOF, THE ISSUES WHICH EMERGE ARE AS UNDER:- I. IN CASE NO INFORMATION IS RECEIVED BY THE ASSESSING OFFICER FROM THE SALE TAX DEPARTMENT AND NO COPY OF STATEMENT RECORDED OR ANY OTHER EVIDENCE IS RECEIVED FROM THE SALES TAX DEPARTMENT, THEN NO ADDITION IS TO BE MADE ON THE BASIS OF NAME OF HAWALA DEALER IN THE LIST PREPARED BY THE SALES TAX DEPARTMENT, WHERE THE ASSESSEE HAD ASKED FOR THE SAID INFORMATION DURING ASSESSMENT PROCEEDINGS. II. WHERE THE ASSESSING OFFICER HAD RECEIVED THE STATEM ENTS OF PERSONS WHO HAD ADMITTED TO HAVE JUST ISSUED BILLS OF SALE WITH OUT ANY DELIVERY OF GOODS. IN VIEW OF SUCH EVIDENCE, WHERE THE ASSESSE E HAD NOT ENTERED INTO REAL TRANSACTION OF PURCHASE OF GOODS AND IN T HE ABSENCE OF ANY DELIVERY OF GOODS, THE SALES ARE BOGUS AND THE ENTI RE SALES ARE TO BE ADDED IN THE HANDS OF ASSESSEE. ADMITTEDLY, THE DE ALER HAD NOT EVEN PAID VAT AGAINST SUCH PASSING OF GOODS. III. THE CASE WHERE THE ASSESSING OFFICER HAD CONFRONTED THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT AND HAD SUPP LIED COPIES OF STATEMENTS RECORDED AND HAD ALSO ISSUED NOTICE UNDE R SECTION 133(6) OF THE ACT, WHERE HAWALA DEALER WAS NOT TRACEABLE AND IN THE ABSENCE OF THE ASSESSEE FAILING TO FILE ANY DOCUMENTARY EVIDEN CE OF DELIVERY OF SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 18 GOODS, ADDITION IS TO BE UPHELD IN THE HANDS OF ASS ESSEE ON ACCOUNT OF SUCH BOGUS PURCHASES. IV. THE NEXT INSTANCE IS THE CASE OF GOODS WHICH HAVE B EEN ADMITTEDLY SOLD BY THE HAWALA DEALER AND HAS BEEN R ECEIVED BY THE ASSESSEE, WHO IN TURN HAD MAINTAINED QUANTITATI VE DETAILS AND ALSO EVIDENCE OF ITS MOVEMENT I.E. TRANSPORTATI ON DETAILS AND QUALITY CONTROL DETAILS OF CONSUMPTION OF THE SAID MATERIAL OR EXACT DETAILS OF SALE OF THE SAME CONSIGNMENT THROU GH SAME TRANSPORTER DIRECTLY TO THE PARTY, THEN THE TOTAL P URCHASES CANNOT BE ADDED IN THE HANDS OF ASSESSEE. HOWEVER, SINCE THE PURCHASES ARE MADE FROM THE GREY MARKET, SOME ESTIM ATION NEEDS TO BE MADE IN THE HANDS OF ASSESSEE. THE TRI BUNAL IN M/S. CHETAN ENTERPRISES VS. ACIT (SUPRA) HAS ALREADY HEL D THAT THE ADDITION BE MADE BY ESTIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHASES, OVER AND ABOVE THE GP SHOWN BY TH E RESPECTIVE ASSESSEE. V. ANOTHER SET OF CASES WHERE THE STATEMENTS RECORDED BY THE SALES TAX DEPARTMENT HAVE BEEN HANDED OVER TO THE ASSESSEE AN D THE COPIES OF SAME HAVE BEEN SUPPLIED TO THE ASSESSEE, THEN WHERE THE ASSESSEE ESTABLISHED THE CASE OF RECEIPT OF GOODS AND ITS ON WARD TRANSMISSION, THEN THE FACTUM OF PURCHASES BY THE ASSESSEE STANDS ESTABLISHED IN SUCH CIRCUMSTANCES. HOWEVER, ESTIMATION IS TO BE M ADE IN THE HANDS OF ASSESSEE BECAUSE OF PURCHASES FROM THE GREY MARKET AND FOLLOWING THE ABOVE SAID RATIO, ADDITION IS TO BE MADE BY ESTIMAT ING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHASES, OVER AND ABOVE THE NET PROFIT SHOWN BY THE ASSESSEE. 41. NOW, COMING TO THE FACTUAL ASPECTS OF EACH OF T HE APPEAL, WHICH HAVE ALREADY BEEN REFERRED TO BY THE LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE AND ALSO REFER TO THE ORDERS OF AUTHOR ITIES BELOW, WHERE NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. 42. THE LEAD CASE IS IN THE CASE OF M/S. CHHABI ELE CTRICALS PVT. LTD., WHERE THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASS ESSING OFFICER BEFORE MAKING THE ADDITION HAS NOT EVEN SUPPLIED THE COPY OF STATEMENT OR ANY OTHER EVIDENCE RECORDED BY THE SALES TAX DEPARTMENT TO ESTABLISH THAT THE PURCHASES MADE BY THE ASSESSEE WERE BOGUS. I HAVE ALREADY DECIDED THIS ISSUE IN M/S. CHETAN ENTERPRISES VS. ACIT (SUPRA) A ND HELD THAT IN CASES WHERE THE ASSESSING OFFICER HAS FAILED TO SUPPLY SU CH STATEMENT RECORDED BY THE SALES TAX DEPARTMENT OR ANY OTHER EVIDENCE J USTIFYING THE ADDITION, NO ADDITION IS TO BE MADE IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. THE LEAR NED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FURTHER REFERRE D TO VARIOUS DOCUMENTS I.E. GATE PASS, GRN AND ISSUE PASS ESTABLISH ITS CA SE OF DELIVERY OF GOODS I.E. PURCHASE FROM HAWALA DEALER AND ITS ONWARDS CO NSUMPTION IN THE MANUFACTURING PROCESS OF THE ASSESSEE. IN SUCH CIR CUMSTANCES, WHERE THE ASSESSEE HAS ESTABLISHED THE TRAIL OF GOODS PURCHAS ED TO THE FINAL CONSUMPTION, THEN THERE IS NO MERIT IN THE ADDITION MADE BY THE ASSESSING OFFICER. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED AND APPEAL OF THE ASSESSEE IS ALLOWED. 12.7 FURTHER, WE FIND THE SAID DECISION OF THE TRIBUNAL IS NO T AVAILABLE AT THE TIME OF PASSING OF ORDER BY THE CIT(A) ON 29-01-2 016. IN ALL FAIRNESS, WE ARE OF THE OPINION THAT THE MATTER SHOULD BE REMANDED TO THE FILE OF CIT(A) FOR CONSIDERING THE ABOVE DECISION OF THE TR IBUNAL AND SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 19 APPLY THE RATIO LAID DOWN TO THE FACTS OF THE PRESENT C ASE. ACCORDINGLY, THE GROUND NO.7 RAISED BY THE ASSESSEE ON MERITS IS ALLOW ED FOR STATISTICAL PURPOSES. 13. GROUND NO.8 RAISED BY THE ASSESSEE RELATES TO THE ADDITION MADE ON ACCOUNT OF RENT PAID FOR THE PROPERTY AT BUNGALOW NO.70, KOREGAON PARK AMOUNTING TO RS.31,44,000/- AND DEPRECIATION AT RS.12,97,701/-. 13.1 BACKGROUND FACTS OF THIS ISSUE INCLUDE THAT THERE IS H OUSE PROPERTY AT 70, KOREGAON PARK AND THE SAME IS OWNED B Y POONAWALLA FINVEST AND AGRO PVT. LTD. THE SAID PROPERTY IS OCCUPIED BY MR. Z.S. POONAWALLA (DIRECTOR OF BOTH POONAWALLA FINVEST AND AGRO PV T. LTD. AND SERUM INSTITUTE OF INDIA LTD.). HE IS THE BROTHER OF DR. C YPRUS POONAWALLA. CONSIDERING THE HERITAGE VALUE OF THE PROPERTY AS WELL AS THE OCCUPATION OF THE SAID PROPERTY BY MR. Z.S. POONAWALLA (DIRECTOR OF THE COMPANY), THE SERUM INSTITUTE INCURRED HUGE EXPENDI TURE ON THE REPAIRS AND RENOVATION OF THE SAID HOUSE. FURTHER, TO CO MPENSATE THE HOUSING FACILITY PROVIDED TO ITS OWN DIRECTOR, SERUM INSTITUT E PAID RENT OF RS.31,44,000/- PER ANNUM OVER THE YEARS INCLUDING THE YEAR UNDER CONSIDERATION. ALLOWABILITY OF THE SAID EXPENDITURE INCURRED T HE RENT AND THE REPAIRS/RENOVATION WAS THE BONE OF CONTENTION B ETWEEN THE ASSESSEE AND THE REVENUE OVER THE YEARS. IN THE F IRST APPELLATE PROCEEDINGS, THE CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE STATING THAT THE ISSUE IS SAME AS THAT OF A.Y. 2010-11. 13.1 BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T, THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE SAID EXPENDITURE INCURRED ON REPAIRS AND RENOVATION CON STITUTES REVENUE EXPENDITURE AND ALLOWABLE U/S.37(1) OF THE ACT IN THE CASE OF SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 20 SERUM INSTITUTE OF INDIA LTD, THE DECISION OF THE TRIBUNA L IN THIS REGARD ARE ALREADY CITED BY THE ASSESSEES COUNSEL BEFORE US. ADDITIONALLY, THE RENT OF RS.31,44,000/- LAKHS PAID BY SERU M INSTITUTE OF INDIA LTD. TO POONAWALLA FINVEST AND AGRO P VT. LTD. IS ALSO HELD AS AN ALLOWABLE DEDUCTION IN THE CASE OF SERUM INSTITU TE OF INDIA LTD. OVER THE YEARS INCLUDING A.Y. 2006-07. CONTENTS OF PARA NOS. 24 T O 27 OF THE ORDER OF TRIBUNAL IN ITA NOS. 985 AND 986/PN/20 15 AND ITA NOS.1535 & 1536/PUN/2015, DATED 28-11-2007 FOR THE A.Y RS. 2006-07 AND 2007-08 ARE RELEVANT. 13.2 WE HEARD BOTH THE SIDES, PERUSED THE ORDERS OF THE REVENUE AND THE ORDER OF TRIBUNAL FOR THE A.Y. 2009-10. WE FIND IT RELEVA NT TO REPRODUCE THE FINDING GIVEN BY THE TRIBUNAL AND THE SAME READS AS UNDER : 54. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE AND THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.YRS. 2006-07 AND 2007-08. ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL (SUPRA), IT IS EVIDENT THAT THE GROUND RAISED IN TH IS APPEAL RELATES TO RENT AS WELL AS EXPENDITURE INCURRED ON REPAIRS AND RENO VATION. AT THE END OF THE PROCEEDINGS, THE TRIBUNAL ALLOWED THE GROUND RA ISED BY THE ASSESSEE. WE FIND IT RELEVANT TO EXTRACT THE RELEVANT PARAS O F THE TRIBUNAL (SUPRA) AND THE SAME READS AS UNDER : 25. ON THIS ISSUE, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT SIMILAR ISSUE WAS ADJUDICATED IN ASSESSEES OWN CASE FOR A. Y. 2005-06 IN HIS FAVOUR. BRINGING OUR ATTENTION TO PARA NOS. 35 TO 37 OF THE ORDER OF THE TRIBUNAL IN ITA NO.1703/PN/2014 DATED 30-11-2016, L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE INCURRED ON REPAIRS/RENOVATION OF THE BUNGALOW WAS ALLOWED, AS BUSINESS EXPENDITU RE OF THE ASSESSEE. 26. ON HEARING BOTH THE SIDES ON THIS ISSUE, WE PER USED THE SAID PARAGRAPHS OF THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE DATED 30- 11-2016 AND FOR THE SAKE OF COMPLETENESS, WE PROCEE D TO EXTRACT THE RELEVANT LINES OF THE OPERATIONAL PARA. THE SAME RE ADS AS UNDER : 35. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE EXPENDITURE OF RS.1,17,88,000/- INCURRED ON REPAIRS AND RENOVATION ON BUNGALOW LOCATED AT 70, KOREGAON PARK, PUNE HAS TO BE ALLOWED AS A BUSINESS EXPENDITURE IN THE HANDS OF THE ASSESSEE COMPANY. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A). THE G ROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 21 27. WE FIND THAT THE ARGUMENTS RAISED BY THE LD. DR FOR THE REVENUE ARE IDENTICALLY RAISED IN THE SAID APPEAL PROCEEDIN GS FOR A.Y. 2005-06. FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2005-06 (SUPRA), WE ARE OF THE OPINION THAT THIS IS SUE ALSO SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GR OUND NO.4 RAISED BY THE ASSESSEE IS ALLOWED. ALTHOUGH, THE ABOVE FINDING DID NOT SPECIFY THE REN T EXPENDITURE IN FACT, THE GROUND IS ON THE RENT ONLY. THEREFORE, THE GRO UND RAISED BY THE ASSESSEE STANDS ALLOWED IN FAVOUR OF THE ASSESSEE. CONSIDERING THE ABOVE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CA SE, WE ARE OF THE OPINION THAT THE EXPENDITURE ON ACCOUNT OF RENT PAI D ON THE HOUSE PROPERTY IS ALLOWABLE IN FAVOUR OF THE ASSESSEE. 55. REGARDING THE OTHER LIMB OF GROUND RELATING TO ALLOWABILITY OF DEPRECIATION OF CAPITAL EXPENDITURE IN CONNECTION W ITH THE SAID HOUSE PROPERTY AT 70, KOREGAON PARK, IT IS NOW SETTLED LE GAL ISSUE THAT THE EXPENDITURE BY SERUM INSTITUTE OF INDIA LTD. CONSTI TUTES AN ALLOWABLE EXPENDITURE SO LONG AS THERE ARE REVENUE IN NATURE. REGARDING THE EXPENDITURE OF CAPITAL NATURE OF SAME ANALOGY, ASSE SSEE ONLY WANTED ALLOWABILITY OF DEPRECIATION ON THE SAID CAPITALISE D EXPENDITURE CONSIDERED FOR BUSINESS PURPOSES. 56. ON HEARING BOTH THE PARTIES ON THIS ISSUE, WE F IND THERE IS NO CLARITY WITH REFERENCE TO THE CAPITALISED ITEMS OF A SSETS CREDITED TO THE SERUM INSTITUTE OF INDIA LTD. IN THE SAID HOUSE PRE MISES OCCUPIED BY MR. Z.S. POONAWALLA, APPLICABLE RATE OF DEPRECIATION AN D THE USE OF THE ASSET ETC. AS DISCUSSED IN THE OPEN COURT, WE ARE OF TH E OPINION THAT THIS LIMB OF THE GROUND SHOULD BE REMANDED TO THE FILE OF AO FOR FRESH ADJUDICATION AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTI CE. ACCORDINGLY, THIS PART OF THE ISSUE IS ALLOWED FOR STATISTICAL PURPOS ES. THUS, GROUND NO.8 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13.3 CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT, WIT H SIMILAR DIRECTIONS GIVEN IN A.Y. 2009-10 (SUPRA) THIS GROUNDS IS REMA NDED TO THE FILE OF AO FOR FRESH ADJUDICATION. ACCORDINGLY, THE GROUN D NO.8 BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 14. GROUND NO.9 RELATES TO ALLOWABILITY OF DEPRECIATION @80% ON THE COST AND ELECTRICAL AND CIVIL WORKS AMOUNTING TO RS.20,82,47,820/-. 14.1 RELEVANT FACTS ON THIS ISSUE INCLUDE THAT, DURING THE IM PUGNED ASSESSMENT YEAR, ASSESSEE INSTALLED WINDMILL AND CLAIMED DEPR ECIATION @80% ON THE SAME. THE AO RELYING ON THE DECISION OF TRIB UNAL IN THE CASE OF POONAWALLA FINVEST AND AGRO (P) LTD. VS. ACIT 118 T TJ 68 SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 22 ALLOWED THE DEPRECIATION AT THE RATE OF 10% AND 15% ON B UILDING/CIVIL CONSTRUCTION AND TRANSFORMER. IN THE FIRST APPELLATE PRO CEEDINGS, THE CIT(A) RELYING ON THE DECISION OF PUNE BENCH OF THE TRIBUNA L IN THE CASE OF GHODAWAT ENERGY PVT. LTD. IN ITA NO.1986/PN/2012, DATE D 14-07-2014 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. W E PROCEED TO REPRODUCE THE OPERATIONAL PARA NO.26 OF THE ORDER OF CIT (A) HERE AS UNDER : 26. IN THE PRESENT CASE IT CAN BE SEEN THAT THE AO HAS DISALLOWED THE APPELLANTS CLAIM OF ACCELERATED DEPRECIATION ON TH E CIVIL FOUNDATION WORK OF RS.14,20,32,000/-. FOLLOWING THE ABOVE CITED ITA T ORDER THE AO MAY TREAT 60% OF THIS AS PART OF THE WINDMILL ELIGIBLE FOR 80% DEPRECIATION AND 40% AS CIVIL WORK ELIGIBLE FOR NORMAL RATE OF DEPRE CIATION. THE AO SHALL VERIFY THE DETAILS, APPLY THE FUNCTIONAL TEST AS HE LD BY THE HONOURABLE TRIBUNAL AND ALLOCATE THE ELECTRIC WORK ALSO IN A L IKE FASHION. THE GROUND OF APPEAL IS ALLOWED PARTLY, SUBJECT TO ABOVE DISCU SSION. AS REGARDS THE CLAIM OF ADDITIONAL DEPRECIATION, THE AMENDMENT CIT ED BY THE APPELLANT IS NOT RETROSPECTIVE. THE CONTENTION IS THEREFORE REJ ECTED. 14.2 AGGRIEVED WITH THE PART RELIEF GIVEN BY THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 14.3 BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE COMPANY CONSIDERED THE EXPENDITURE INCURRED ON ELECTRICA L AS WELL AS CIVIL WORK AND LABOUR CHARGES AS AN INTEGRAL COST SO AS TO MAKE THE WINDMILL FUNCTIONAL. HOWEVER, THE AO DEVIATING FROM THE PRINCIPLE S OF CAPITALIZATION ISOLATED CERTAIN EXPENSES ALLOWED THE DEPRECIA TION AT DIFFERENT RATES AND THE DISPUTE DEPRECIATION AMOUNT WORKS OUT TO RS.9,20,56,123/-. IN SUPPORT OF ITS CLAIM, LD. COUNSEL RELIED O N THE FOLLOWING DECISIONS : 1. CIT VS. COOPER FOUNDRY PRIVATE LTD. ITA NO.1326/2 010 (BOMBAY HIGH COURT) 2. CIT VS. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. 69 TAXMANN.COM 20 (BOMBAY) 3. CIT VS. CTR MANUFACTURING INDUSTRIES LTD. ITA NO. 2125 OF 2025 (BOMBAY HIGH COURT) SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 23 IN CONNECTION WITH GRANTING OF ADDITIONAL DEPRECIATION ON W INDMILLS GENERATION POWER FOR CAPTIVE CONSUMPTION, DESPITE COMPLY ING THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT. LD. COUNSEL CONTEND S THAT THE GENERATION OF ELECTRICITY FALLS UNDER THE AMBIT OF PRODUCTION OF ANY ARTICLE OR THING. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOW ING DECISIONS : 1. CTR MANUFACTURING INDUSTRIES LTD. VS. DCIT ITA NO.2456/PUN/2012 (PUNE ITAT) 2. GIRIRAJ ENTERPRISES VS. DCIT 163 ITD 1 (PUNE TRIB.) (TM) 14.4 WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE ON THIS ISSUE AND THE DECISIONS RELIED ON BY THE LD. COUN SEL FOR THE ASSESSEE. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. COOPER FOUNDARY PVT. LTD. ON THE IDENTICAL ISSUE HAS HELD AS UNDER : 2. THE TRIBUNAL HAS RECORDED FINDING OF FACT THAT WINDMILL WAS ERECTED IN THE DESERT AREA OF RAJASTHAN WHICH REQUI RED SPECIAL FOUNDATION OF REINFORCED CEMENT CONCRETE AND THAT THE SAID REI NFORCED CEMENT CONCRETE FORMED INTEGRAL PART OF THE WINDMILL. THE TRIBUNAL HAS ALSO FOLLOWED THE DECISION OF THIS COURT IN THE CASE OF CIT VS. HERDILLA CHEMICALS LTD. REPORTED IN (1005) 216 ITR 742 (BOM. ) IN ALLOWING THE CLAIM OF THE ASSESSEE. IN OUR OPINION, THE FINDING RECORDED BY THE TRIBUNAL THAT RCC FOUNDATION FORMS INTEGRAL PART OF THE WINDMILL IS A FINDING OF FACT AND NO QUESTION OF LAW ARISES FROM THE SAME. HENC E THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 14.5 FURTHER, WE FIND THE PUNE BENCH OF THE TRIBUNAL ALSO D ECIDED SIMILAR ISSUE IN CATENA OF DECISIONS. WE FIND IN THE CASE OF DC IT VS. SHRI SUBHAS HASTIMAL LODHA IN ITA NO.1078/PUN/2016 FOR TH E A.Y. 2011-12, DATED 20-06-2018 HELD AS UNDER : 5. WE HEARD BOTH THE SIDES ON THIS LIMITED ISSUE OF ALLOWING OF DEPRECIATION @80% FOR CIVIL STRUCTURES OF THE WINDM ILL. WE ALSO PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE DECIS IONS RELIED ON BY BOTH THE REPRESENTATIVES. WE FIND IT RELEVANT TO EXTRAC T THE DISCUSSION GIVEN BY THE CIT(A) WHILE CONCLUDING THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE SAME READS AS UNDER : 3.1.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, IN RESPECT OF GROUND NO.1 FOR RESTRICTING THE ALLOWANCE OF DEPREC IATION ON WIND MILL FOUNDATION CIVIL WORK WHICH RESULTED IN ADDITI ON OF RS.54,19,719, THE LD AR SUBMITTED THAT SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 24 A) ADDITION ON ACCOUNT OF DISALLOWANCE OF DEPRECIAT ION ON WIND MILL FOR A.Y. 2009-10 IS PENDING BEFORE HON'BL E ITAT IS TOTALLY WRONG. ACCORDING, TO THE LD AR THERE WAS NO ADDITION ON AC COUNT OF DISALLOWANCE OF DEPRECIATION ON WIND MILL AND NO AP PEAL WAS FILED BEFORE CIT(A) FOR A.Y. 2009-10 AND NO APPEAL IS PEN DING BEFORE ITAT. B) AO HAS NOT CONSIDERED THE FACT THAT THE APPELLAN T HIMSELF HAS NOT CLAIMED DEPRECIATION OF RS.12,43,100 BEING CONSIDERATION PAID FOR PROVIDING EASY AND FREE ACCESS AND KEEPING THE AREA VACANT SURROUNDING LAND. C) LD AR SUGGESTED THAT NO EXPENSES WERE INCURRED F OR CONTROL ROOM, SITE DEVELOPMENT AND INTERNAL ROAD HAS CLAIME D BY. THE AO AND THE DEPRECIATION OF 10% HAS BEEN ALLOWED BY HON 'BLE ITAT, PUNE IN THE CASE OF POONAWALA FINVEST & AGRO PVT. L TD. (2008) 118 TTJ 68. D) LD AR ALSO SUBMITTED THAT FOUNDATION CIVIL WORK IN A INTEGRAL PART OF WIND MILL ON WHICH DEPRECIATION @ 80% IS ALLOWABLE AND THIS HAS BEEN HELD IN THE FOLLOWING C ASES. I) MAYURA STEELS PVT. LTD. VS. ACIT ITA NO1347/PN/2014 BY ITAT B BENCH, PUNE DATED 26-10-2015. II) DR. SANTOSH KALMESH PRABHU VS. ACIT ITA NO.1294/PN/2014 BY ITAT B BENCH, DATED 28/10/2015 III) ACIT VS. SUMA SHILIPA LIMITED ITAT PUNE (2015) 44 C CH 514. E) LD AR ALSO SUBMITTED THAT CIT VS. SAI UDYOG LTD. RELIED BY AO IS IN NO WAY APPLICABLE TO THE FACTS OF THIS CAS E. WITH THE ABOVE, LD AR FOR THE APPELLANT REQUESTED T HAT ADDITIONS OF RS.54,19,719 MAY KINDLY BE DELETED. 3.1.3 AT THE OUTSET, THE OBSERVATION MADE BY THE AO THAT SIMILAR DISALLOWANCES MADE FOR THE AY 2009-10 IS PENDING BE FORE THE HON'BLE ITAT IS FACTUALLY INCORRECT. ADVERTING TO T HE MERIT OF THE CASE, THE QUANTUM WHICH REMAINS IS WHETHER CIVIL WO RK AND FOUNDATION NECESSARY FOR INSTALLATION OF WIND MILL SHOULD BE CONSIDERED AS INTEGRAL PART OR NOT. IF YES, THEN, D EPRECIATION AS APPLICABLE TO WIND MILL SHOULD BE ACCORDED TO THE C IVIL STRUCTURE AND FOUNDATION NEEDED TO SET UP WIND MILL OR NOT. I N MY CONSIDERED VIEW IT IS A WELL SETTLED LEGAL POSITION THAT EXPENSES INCURRED ON FOUNDATION SHOULD BE CONSIDERED AS AN I NTEGRAL PART OF THE PLANT AND MACHINERY. THIS FACT HAS BEEN REITERA TED BY THE HON'BLE SUPREME COURT IN THE CASE OF CHALLAPALLI SU GARS LTD. VS. CIT (SUPRA) WHEREIN IT HAS BEEN DECIDED THAT 'FIXED ASSETS SHOULD INCLUDE ALL THE EXPENDITURE NECESSARY TO BRING SUCH ASSETS INTO EXISTENCE AND PUT THEM IN WORKING CONDITION. DURING THE COURSE OF THE APPELLATE PROCEEDINGS LD AR WHILE REFERRING THE RATIO OF DECISION OF CIT VS. K. K. ENTERPRISE (2014) REPORTE D AT 108 DTR 0109 (RAJ), HON'BLE RAJASTHAN HIGH COURT HAS OBSERV ED THAT THE CIVIL WORK AND FOUNDATION IS NECESSARY FOR STRONG F OUNDATION AND NO WINDMILL COULD BE INSTALLED WITHOUT HAVING A STR ONG FOUNDATION. AS SUCH DEPRECIATION ON INVESTMENT FOR CIVIL WORK A ND FOUNDATION AT THE RATE WHICH THE DEPRECIATION IS ALLOWED TO WI NDMILL IS APPLICABLE FOR THESE ITEMS TOO. THE ELECTRICAL ITEM S, COMPONENTS AND COMMON POWER EVACUATION TOO ARE INTEGRAL PART O F A WIND MILL AS THAT COULD HAVE NOT BEEN OPERATIONAL WITHOUT THE SE ITEMS'. THE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 25 REVENUE CHALLENGED THE DECISIONS OF THE CIT(A) BEFO RE THE ITAT, JODHPUR BE DISMISSED WHEREIN THE HON'BLE ITAT AFFIR MED THE FINDINGS GIVEN BY THE CIT(A) BY HOLDING AS UNDER:- 'WITHOUT DOING THE CIVIL CONSTRUCTION WORK INCLUDIN G FOUNDATION WORK, IT WAS NOT POSSIBLE TO INSTALL THE WINDMILL. SIMILARLY, THE ELECTRIC ITEMS, COMPONENTS AND INSTALLATION WERE NE CESSARY FOR THE WIND MILL, BECAUSE IN THE ABSENCE OF THESE COMPONEN TS AND ELECTRIC ITEMS IT WAS NOT POSSIBLE FOR THE WINDMILL TO PRODU CE ELECTRICITY. THEREFORE, IT WAS ALSO THE INTEGRAL PART OF THE WIN DMILL.' IN THIS REGARD HON'BLE ITAT HAS ALSO HELD THAT FOUN DATION OF CIVIL WORK IS AN INTEGRAL PART OF WINDMILL ON WHICH DEPRE CIATION @ 80% IS TO BE ALLOWED. THE ABOVE POSITIONS HAVE BEEN DEC IDED BY HON'BLE ITAT, PUNE IN THE CASE OF MAYURA STEELS PVT . LTD. VS. ACIT (SUPRA), IN THE CASE OF SANTOSH KALMESH PRABHU VS. ACIT (SUPRA) AND IN THE CASE OF ACIT VS. SUMA SHILIPA LIMITED (S UPRA). IN THE CASE OF MAYURA STEELS PVT. LTD. VS. ACIT (SUPRA), H ON'BLE ITAT HAS FOLLOWED THE RATIO OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT, AHMEDABAD-III VS. PARRY ENGINEERING & ELECTRONICS ( P) LTD (SUPRA). THE SAME IS REPRODUCED BELOW FOR READY REFERENCE:- '5. WE ARE OF THE OPINION THAT THE APPROACH OF BOTH THE AUTHORITIES IS PERFECTLY JUSTIFIED. WINDMILL WOULD REQUIRE A SC IENTIFICALLY DESIGNED MACHINERY IN ORDER TO HARNESS THE WIND ENE RGY TO THE MAXIMUM POTENTIAL. SUCH DEVICE HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION, EQUIPPED WITH ELECTRIC FITTINGS IN ORDER TO TRANSMIT THE ELECTRICITY SO GENERATED. SUCH CIVIL S TRUCTURE AND ELECTRIC FITTINGS, THEREFORE, IT CAN BE WELL IMAGIN ED, WOULD BE HIGHLY SPECIALIZED. THUS, SUCH CIVIL CONSTRUCTION AND ELEC TRIC FITTING WOULD HAVE NO USE OTHER THAN FOR THE PURPOSE OF FUNCTIONI NG OF THE WINDMILL. ON THE OTHER HAND, IT CAN BE EASILY IMAGI NED THAT WINDMILL CANNOT FUNCTION WITHOUT APPROPRIATE INSTAL LATION AND ELECTRIFICATION. IN OTHER WORDS, THE INSTALLATION O F WINDMILL AND THE CIVIL STRUCTURE AND THE ELECTRIC FITTINGS ARE SO CL OSELY INTERCONNECTED AND LINKED AS TO FORM THE COMMON PLANT. AS ALREADY NOTED, THE LEGISLATURE HAS PROVIDED FOR HIGHER RATE OF DEPRECI ATION OF 80% ON RENEWABLE ENERGY DEVISES INCLUDING WINDMILL A ND ANY SPECIALLY DESIGNED DEVISES, WHICH RUNS ON WINDM ILL. THE CIVIL STRUCTURE AND THE ELECTRIC FITTING, EQUIP MENTS ARE PART AND PARCEL OF THE WINDMILL AND CANNOT BE SEPAR ATED FROM THE SAME. THE ASSESSEE'S CLAIM FOR HIGHER DEPRECIATION ON SUCH INVESTMENT WAS, THEREFORE, RIGHTLY ALLOWED.' 3.1.4 HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT-III, P UNE VS. COOPER FOUNDRY PVT. LTD.(SUPRA) HAS ALSO HELD THAT CEMENT FOUNDATION IS TO BE INCLUDED IN THE COST OF THE WIN DMILL WHILE GRANTING DEPRECIATION @ 80%. SIMILAR ISSUE HAS BEEN TAKEN BY PUNE BENCH 'B' IN THE CASE OF ACIT VS. WESTERN PREC ICAST PVT. LTD. (SUPRA) AND BY CHENNAI TRIBUNAL IN THE CASE OF KUTT I SPINNERS (P) LTD. IN VIEW OF THE FOREGOING DISCUSSION AND RESPEC TFULLY FOLLOWING THE DECISIONS OF BOMBAY HIGH COURT IN THE CASE OF C IT VS. GREAT EASTERN SHIPPING CO. LTD. REPORTED AT 118 ITR 772 ( BORN) AND CHALLAPALLI SUGARS LTD. VS. CIT 98 ITR 167 (SC) AND DECISION OF PUNE ITAT IN THE CASE OF MAYURA STEELS PVT. LTD. VS . ACIT (SUPRA), IN THE CASE OF DR. SANTOSH KALMESH PRABHU VS. ACIT (SUPRA) AND IN THE CASE OF ACIT VS. SUMA SHILIPA LIMITED (SUPRA) , I AM OF THE CONSIDERED VIEW THAT HIGHER DEPRECIATION IS APPLICABLE IN WIND MILL AND ALSO EXPENSES INCURRED ON CIVIL STRUC TURES ARE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 26 APPLICABLE IN WIND MILL AND THEREFORE THE AMOUNT OF RS.54,19,719 DISALLOWED BY THE AO ON ACCOUNT OF HEN CE, THE AO IS DIRECTED TO DELETE THE AMOUNT OF RS.54,19,719/- ON ACCOUNT OF EXCESS DEPRECIATION. WITH THIS GROUND NO.1 STANDS ADJUDICATED IN FAVOUR OF THE APPELLANT. 5.1 FURTHER, WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SUMA SHILPA LIMITED 44 CCH 0514 (PUNE-TRIB.) HAS HELD AS UNDER : CONCLUSION : CIVIL CONSTRUCTION AND ELECTRICAL WORK ARE SPECIFIC ALLY DESIGNED FOR OPERATION OF WINDMILLS AND ARE NOT SEPARABLE, THERE FORE, DEPRECIATION ON THESE STRUCTURES/FITTINGS HAVE TO BE APPLIED AT SAM E RATE, AS IS AVAILABLE TO PRINCIPLE ASSET. CONSIDERING THE BINDING PRECEDENTS ON THIS LIMITED ISSUE OF ALLOWING HIGHER DEPRECIATION ON THE CIVIL WORKS LINKED TO THE FOUNDATION WORK OF THE WINDMILL, WE ARE OF THE OPINION THAT THE ASS ESSEE IS ENTITLED TO CLAIM HIGHER DEPRECIATION @80% ON THE CIVIL STRUC TURES OF THE WINDMILL WHICH IS PART AND PARCEL OF THE WINDMILL A ND WHICH CANNOT BE SEPARATED. THEREFORE, THE ORDER OF CIT(A ) HOLDING THAT THE HIGHER DEPRECIATION IS APPLICABLE IN WINDMILL A ND ALSO EXPENSES INCURRED ON CIVIL STRUCTURE, IS FAIR AND R EASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 14.6 CONSIDERING THE ABOVE AND FOLLOWING THE RULE OF CONSISTE NCY, WE ALLOW GROUND NO.9 RAISED BY THE ASSESSEE IN ITS FAVOUR. 15. GROUND NO.10 RELATES TO DISALLOWANCE OF SELLING AND DISTRIBUTION EXPENSES AMOUNTING TO RS.3,64,81,120/-. 15.1 RELEVANT FACTS ON THIS ISSUE INCLUDE THAT, ASSESSEE DURING THE YEAR UNDER CONSIDERATION, LAUNCHED VARIOUS SCHEMED FOR THE DOC TORS. ON BEING ASKED AS TO WHY THE EXPENDITURE ON THESE SCHEME S SHOULD NOT BE DISALLOWED U/S.37(1) OF THE ACT, ASSESSEE FURNISHED THE REPL Y. THE AO INCORPORATED THE SUBMISSION OF THE ASSESSEE ON PAGE 51 OF THE ASSESSMENT ORDER. THE AO REJECTED THE SUBMISSIONS GIVE N BY THE ASSESSEE RELYING ON THE CBDT CIRCULAR NO.5/2012, DATED 01 -08-2012. EVENTUALLY, THE AO DISALLOWED AN AMOUNT OF RS.3,64,81,120/- U /S.37(1) OF THE ACT. HOWEVER, THE AO ALLOWED THE SET OFF OF THE SA ME AGAINST THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE ON NON-BUSINES S SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 27 EXPENDITURE/OTHER EXPENSES/CONTINGENCY AT RS.6.07 CRORE S. THE CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE RELYING ON THE ORDER FOR A.Y.2010-11. 15.2 AGGRIEVED WITH THE CONFIRMATION OF DISALLOWANCE BY THE CIT(A) ON THIS ISSUE, THE ASSESSEE IS IN APPEAL BEFORE US. 15.3 BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COMPANY IS ONE OF THE LARGEST VACCINE MANUFACTURING COMPANY. DURING THE YEAR, A SSESSEE COMPANY LAUNCHED VARIOUS NEW PRODUCTS, SUCH AS HIBPRO & PENTAVAC. IN ORDER TO MAKE THE DOCTORS AWARE OF THIS INNOVATION, A SSESSEE COMPANY CONDUCTED A CAMPAIGN INVOLVING PRIVATE DOCTORS FO R ENCOURAGING THE DOCTORS TO CONDUCT VACCINATION ON INFANT S. IN THE PROCESS, A SCHEME WAS FORMULATED OFFERING DISCOUNT ON THE BASIS OF PURCHASES MADE BY THEM. HE SUBMITTED THAT THE AO FA ILED IN PLACING RELYING ON THE NOTIFICATION ISSUED BY MEDICAL COUNCIL OF INDIA DATED 14-09-2009. THE SAID CIRCULAR PROHIBITS MEDICAL PRACTITIONER S, PROFESSIONAL ASSOCIATES FROM TAKING ANY GIFT, TRAVEL FACILITY, HO SPITALITY ETC. AO FAILED TO APPRECIATE THAT THE PHARMA COMPANIES A RE NOT THE MEMBERS OF MEDICAL COUNCIL AND HENCE, THE NOTIFICATION IS NOT APPLICABLE TO THEM. AO FAILED TO APPRECIATE THE FACTS ON RE CORDS THAT THE EXPENDITURE INCURRED BY THE ASSESSEE COMPANY BY GIVING DISCOUNTS AS INCENTIVE TO THE DOCTORS ARE WHOLLY & EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. PASSING OF THE DISCOUNTS IS A POST-FACTO STEP, W HICH CANNOT BE EQUATED WITH FREEBIES, WHICH ARE PROHIBITED BY THE NOTIFIC ATION OF MEDICAL COUNCIL OF INDIA. SINCE DISCOUNTS ON PURCHASE OF VA CCINES GIVEN TO DOCTORS DO NOT VIOLATE ANY LAWS AND HENCE, ARE NOT COVERED BY EXPLANATION U/S.37(1) OF THE ACT. AO FAILED TO APPRECIATE THA T THE CIRCULAR ISSUED BY CBDT NO.5/2015 ENLARGES THE SCOPE OF DISALLOWANCE SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 28 IN THE HANDS OF PHARMA COMPANIES WITHOUT ANY ENABLING NO TIFICATION OR CIRCULAR OF MEDICAL COUNCIL OF INDIA. IN SUPPORT OF ITS CLAIM, LD. COUNSEL RELIED ON THE FOLLOWING DECISIONS : 1. M/S. SOLVAY PHARMA INDIA LTD. VS. PCIT 89 TAXMANN.C OM 249 (MUM. ITAT) 2. DCIT VS. PHL PHARMA PVT. LTD. 78 TAXMANN.COM 36 (MU M. ITAT) 3. EMCURE PHARMACEUTICALS LTD. VS. DCIT ITA NO.1532/ PUN/2015 15.4 ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE AO/CIT(A). 15.5 WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AND THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASS ESSEE. WE PERUSED THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF EMCURE PHARMACEUTICALS LTD. DECIDED ON 29-01-2018 (SUPRA ) HAD AN OCCASION TO DECIDE AN IDENTICAL ISSUE IN FAVOUR OF THE ASSE SSEE. WE PROCEED TO EXTRACT THE FINDINGS GIVEN BY THE TRIBUNAL HER E AS UNDER FOR THE SAKE OF COMPLETENESS : 8. WE HEARD BOTH THE PARTIES ON THE ISSUE OF REQUI REMENT OF MAKING DISALLOWANCE U/S.37(1) OF THE ACT IN RESPECT OF THE COMPANIES, THE GIVER OF THE GIFTS AND THE ARTICLES AND OTHERS TO THE MED ICAL PROFESSIONALS. THERE IS NO DISPUTE ON THE FACT THAT CLAIM OF RS.76,28,62 2/- WAS BY THE ASSESSEE ON THE GIFTS AND OTHER BENEFITS PASSED ON TO THE MEDICAL PROFESSIONALS. THERE IS ALSO NO DISPUTE ON THE TAXA BILITY OF THE SAME IN THE HANDS OF THE SAID MEDICAL PROFESSIONALS. THE ONLY D ISPUTE RELATES TO THE CORRECT LEGAL POSITION WITH REGARD TO DISALLOWABILI TY OF THE SAME U/S.37(1) OF THE ACT IN THE CASES OF PHARMACEUTICAL COMPANIES . WE FIND THIS ISSUE IS NOW SQUARELY COVERED BY THE DECISIONS OF MUMBAI BEN CH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PHL PHARMA PVT. LTD.DECIDED ON 12-01-2017 AND IN THE CASE OF M/S. SOLVAY PHARMA INDIA LTD. VS. PR .CIT DECIDED ON 11- 01-2018. FOR THE SAKE OF COMPLETENESS OF THE ORDER, WE PROCEED TO EXTRACT THE OPERATIONAL FINDING FROM THE AFORESAID ORDERS O F THE TRIBUNAL. FINDING FROM PHL PHARMA PVT. LTD. '6. ON A PLAIN READING OF THE AFORESAID NOTIFICATIO N, WHICH HAS BEEN HEAVILY RELIED UPON BY THE DEPARTMENT, IT IS QUITE APPARENT THAT THE CODE OF CONDUCT ENSHRINED THEREIN IS MEANT TO BE FOLLOWE D AND ADHERED BY MEDICAL PRACTITIONERS/DOCTORS ALONE. IT ILLUSTRATES THE VARIOUS KINDS OF CONDUCT OR ACTIVITIES WHICH A MEDICAL PRACTITIONER SHOULD AVOID WHILE DEALING WITH PHARMACEUTICAL COMPANIES AND ALLIED HE ALTH SECTOR INDUSTRY. IT PROVIDES GUIDELINES TO THE MEDICAL PRACTITIONERS OF THEIR ETHICAL CODES AND MORAL CONDUCT. NOWHERE THE REGULATION OR THE NO TIFICATION MENTIONS THAT SUCH A REGULATION OR CODE OF CONDUCT WILL COVE R PHARMACEUTICAL COMPANIES OR HEALTH CARE SECTOR IN ANY MANNER. THE DEPARTMENT HAS NOT SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 29 BROUGHT ANYTHING ON RECORD TO SHOW THAT THE AFORESA ID REGULATION ISSUED BY MEDICAL COUNCIL OF INDIA IS MEANT FOR PHARMACEUT ICAL COMPANIES IN ANY MANNER........ THE AFORESAID PROVISION APPLIES TO AN ASSESSEE WHO IS CLAIMING DEDUCTION OF EXPENDITURE WHILE COMPUTING HIS BUSINESS INCOME. THE EXPLANATION PROVIDES AN EMBARGO UPON ALLOWING ANY EXPENDITURE I NCURRED BY THE ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHI CH IS PROHIBITED BY LAW. THIS MEANS THAT THERE SHOULD BE AN OFFENCE BY AN ASSESSEE WHO IS CLAIMING THE EXPENDITURE OR THERE IS ANY KIND OF PR OHIBITION BY LAW WHICH IS APPLICABLE TO THE ASSESSEE. HERE IN THIS CASE, N O SUCH OFFENCE OF LAW HAS BEEN BROUGHT ON RECORD, WHICH PROHIBITS THE PHA RMACEUTICAL COMPANY NOT TO INCUR ANY DEVELOPMENT OR SALES PROMOTION EXP ENSES. A LAW WHICH IS APPLICABLE TO DIFFERENT CLASS OF PERSONS OR PART ICULAR CATEGORY OF ASSESSEE, SAME CANNOT BE MADE APPLICABLE TO ALL. TH E REGULATION OF 2002 ISSUED BY THE MEDICAL COUNCIL OF INDIA (SUPRA), PRO VIDES LIMITATION/CURB/PROHIBITION FOR MEDICAL PRACTITIONER S ONLY AND NOT FOR PHARMACEUTICAL COMPANIES........... 10. FROM THE PERUSAL OF THE NATURE OF EXPENDITURE I NCURRED BY THE ASSESSEE, IT IS SEEN THAT UNDER THE HEAD 'CUSTOMER RELATIONSHIP MANAGEMENT', THE ASSESSEE ARRANGES NATIONAL LEVEL S EMINAR AND DISCUSSION PANELS OF EMINENT DOCTORS AND INVITING O F OTHER DOCTORS TO PARTICIPATE IN THE SEMINARS ON A TOPIC RELATED TO T HERAPEUTIC AREA. IT ARRANGES LECTURES AND SPONSORS KNOWLEDGE UPGRADE CO URSE WHICH HELPS PHARMACEUTICAL COMPANIES TO MAKE AWARE OF THE PRODU CTS AND MEDICINES MANUFACTURED AND LAUNCHED BY IT. UNDER KEY ACCOUNT MANAGEMENT, THE ASSESSEE MAKES ENDEAVOUR TO CREATE AWARENESS AMONGS T CERTAIN CLASS OF KEY DOCTORS ABOUT THE PRODUCTS OF THE ASSESSEE AND THE NEW DEVELOPMENTS TAKING PLACE IN THE AREA OF MEDICINE A ND PROVIDING CORRECT DIAGNOSIS AND TREATMENT OF THE PATIENTS. THE SAID AC TIVITIES BY THE ASSESSEE ARE TO MAKE THE DOCTORS AWARE OF ITS PRODU CTS AND RESEARCH WORK CARRIED OUT BY IT FOR BRINGING THE MEDICINE IN THE MARKET AND ITS RESULTS ARE BASED ON SEVERAL LEVELS OF TESTS AND AP PROVALS. UNLESS THE PHARMACEUTICAL COMPANIES MAKE AWARE OF SUCH KIND OF PRODUCTS TO KEY DOCTORS OR MEDICAL PRACTITIONERS, THEN ONLY IT CAN SUCCESSFULLY LAUNCH ITS PRODUCTS/MEDICINES. THIS KIND OF EXPENDITURE IS DEF INITELY IN THE NATURE OF SALES AND BUSINESS PROMOTION, WHICH HAS TO BE ALLOW ED...... FINDING FROM M/S. SOLVAY PHARMA INDIA LTD. '17. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBE RATED ON THE JUDICIAL PRONOUNCEMENTS CITED BY LEARNED AR AND DR DURING TH E COURSE OF HEARING BEFORE US AS WELL AS REFERRED BY CIT IN HIS ORDER P ASSED U/S.263 OF THE IT ACT, IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. IN THIS CASE, WE FOUND FROM RECORD THAT THE ASSESSEE IS ENGAGED IN THE MAN UFACTURING OF PHARMACEUTICAL PRODUCTS. IN THE COURSE OF ITS BUSIN ESS IT HAS INCURRED EXPENDITURE ON ADVERTISEMENT AND PUBLICITY. WHILE F RAMING THE ASSESSMENT, AO HAS CALLED FOR THE DETAIL OF EXPENDI TURE SO INCURRED AND EXAMINED THE NATURE OF EXPENDITURE AND THEREAFTER O NLY AO HAS ALLOWED THE EXPENDITURE AS HAVING BEEN INCURRED FOR THE PUR POSE OF BUSINESS. WE HAD ALSO CAREFULLY GONE THROUGH THE NOTIFICATION DA TED 11/03/2002 NOTIFYING THE REGULATIONS ISSUED BY THE MEDICAL COU NCIL OF INDIA (MCI). THE CODE OF CONDUCT LAID DOWN IN THE INDIAN MEDICAL COU NCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 (' MCI REGULATIONS') ISSUED WITH EFFECT FROM 10TH DECEMBER 2009 APPLIES ONLY TO DOCTORS AND NOT TO PHARMACEUTICAL AND MEDICAL DEVICE COMPANIES. ACCORDINGLY, MCI REGULATIONS ARE NOT APPLICABLE TO ASSESSEE, THE QUE STION OF ASSESSEE INCURRING EXPENDITURE IN ALLEGED VIOLATION OF THE R EGULATIONS DOES NOT ARISE. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 30 18. ON THE PLAIN AND SIMPLE READING OF THE PROVISIO N OF THE INDIAN MEDICAL COUNCIL ACT, 1956, IT IS APPARENT THAT THE AMBIT OF STATUTORY PROVISIONS RELATING TO PROFESSIONAL CONDUCT OF REGISTERED MEDI CAL PRACTITIONERS UNDER THE INDIAN MEDICAL COUNCIL ACT, 1956 IS RESTRICTED ONLY TO PERSONS REGISTERED AS MEDICAL PRACTITIONERS WITH THE STATE MEDICAL COUNCIL AND WHOSE NAMES ARE ENTERED INTO THE INDIAN MEDICAL REG ISTER MAINTAINED U/S 21 OF THE ACT. 'UNDER THE SCHEME OF THE ACT. 19. FURTHERMORE, THERE IS NO AMBIGUITY OF ANY KIND IN THE SCHEME OF THE INDIAN MEDICAL COUNCIL ACT, 1956 THAT IT NEITHE R DEALS WITH NOR PROVIDES FOR ANY CONDUCT OF ANY ASSOCIATION / SOCIE TY AND DEALS ONLY WITH THE CONDUCT OF INDIVIDUAL REGISTERED MEDICAL PRACTI TIONERS. THERE IS NO OTHER INTERPRETATION, WHICH IS POSSIBLE UNDER THE A CT. 20. THE INTENT OF THE APPLICABILITY OF THE MCI REGU LATIONS WAS ALWAYS TO COVER ONLY INDIVIDUAL MEDICAL PRACTITIONERS, AND NO T THE PHARMACEUTICAL AND MEDICAL DEVICE COMPANIES. WHETHER THERE IS ANY CONTRAVENTION OF THE MCI REGULATIONS OR NOT IS A MATTER WHICH CAN BE DEC IDED BY THE MCI ITSELF AND NOT BY THE INCOME-TAX DEPARTMENT. FURTHERMORE, THE MCI HAS ITSELF ADMITTED THAT IT HAS NO JURISDICTION WHATSOEVER OVE R ANY ASSOCIATION/ SOCIETY ETC AND ITS JURISDICTION IS CONFINED ONLY T O THE CONDUCT OF THE REGISTERED MEDICAL PRACTITIONERS. FURTHERMORE, SINC E THE SAID MCI REGULATIONS 2002 CONTAINS PUNITIVE 'PROVISIONS, IT HAS TO BE READ STRICTLY AND CONSEQUENTLY IT CAN APPLY ONLY TO MEDICAL PRACT ITIONERS AND PHYSICIANS AND NOT TO THE PHARMACEUTICAL COMPANIES. FURTHER, MCI ACT, 1956 DOES NOT APPLY PHARMACEUTICAL COMPANIES AND CO NSEQUENTLY MCI REGULATIONS 2002 CANNOT APPLY TO SUCH COMPANIES. 21. CBDT CIRCULAR NO. 5 OF 2012 SEEKS TO DISALLOW E XPENDITURE INCURRED BY PHARMACEUTICAL COMPANIES INTER-ALIA IN PROVIDING 'FREEBIES' TO DOCTORS IN VIOLATION OF THE MCI REGULATIONS. THE TERM 'FREE BIES' HAS NEITHER BEEN DEFINED IN THE INCOME-TAX ACT NOR IN THE MCI REGULA TIONS'. HOWEVER, THE EXPENDITURE SO INCURRED BY ASSESSEE DOES NOT AMOUNT TO PROVISION OF 'FREEBIES' TO MEDICAL PRACTITIONERS. THE EXPENDITUR E INCURRED BY IT IS IN THE NORMAL COURSE OF ITS BUSINESS FOR THE PURPOSE OF MA RKETING OF ITS PRODUCTS AND DISSEMINATION OF KNOWLEDGE ETC AND NOT WITH A V IEW TO GIVING SOMETHING FREE OF CHARGE TO THE DOCTORS. THE ACT OF GIVING SOMETHING FREE OF CHARGE IS INCIDENTAL TO THE MAIN OBJECTIVE OF PR ODUCT AWARENESS. ACCORDINGLY, IT DOES NOT AMOUNT TO PROVISION OF FRE EBIES. CONSEQUENTLY, THERE IS NO QUESTION OF CONTRAVENTION OF THE MCI RE GULATIONS AND APPLICABILITY OF CIRCULAR NO. 5 OF 2012 FOR DISALLO WANCE OF THE EXPENDITURE. 22. THE DEPARTMENT HAS NOT BROUGHT ANYTHING ON RECO RD TO SHOW THAT THE AFORESAID REGULATION ISSUED BY MEDICAL COUNCIL OF I NDIA IS MEANT FOR PHARMACEUTICAL COMPANIES IN ANY MANNER. ON THE CONT RARY, THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE BENCH THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF MAX HOSPITAL V. MCI IN [WPC 13 34 OF 2013, DATED 10- 1-2014], WHEREIN THE MEDICAL COUNCIL OF INDIA ADMIT TED THAT THE INDIAN MEDICAL COUNCIL REGULATION OF 2002 HAS JURISDICTION TO TAKE ACTION ONLY AGAINST THE MEDICAL PRACTITIONERS AND NOT TO HEALTH SECTOR INDUSTRY. FROM THE AFORESAID DECISION, IT IS OSTENSIBLY CLEAR THAT THE MEDICAL COUNCIL OF INDIA HAS NO JURISDICTION TO PASS ANY ORDER OR REGU LATION AGAINST ANY HOSPITAL OR ANY HEALTH CARE SECTOR UNDER ITS 2002 R EGULATION. SO ONCE THE INDIAN MEDICAL COUNCIL REGULATION DOES NOT HAVE ANY JURISDICTION NOR HAS ANY AUTHORITY UNDER LAW UPON THE PHARMACEUTICAL COM PANY OR ANY ALLIED HEALTH SECTOR INDUSTRY, THEN SUCH A REGULATION CANN OT HAVE ANY PROHIBITORY EFFECT ON THE PHARMACEUTICAL COMPANY LI KE THE ASSESSEE. IF MEDICAL COUNCIL REGULATION DOES NOT HAVE ANY JURISD ICTION UPON PHARMACEUTICAL COMPANIES AND IT IS INAPPLICABLE UPO N PHARMA COMPANIES LIKE ASSESSEE THEN, WHERE IS THE VIOLATION OF ANY O F LAW/REGULATION? UNDER WHICH PROVISION THERE IS ANY OFFENCE OR VIOLA TION IN INCURRING OF SUCH KIND OF EXPENDITURE. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 31 23. NOW COMING TO THE EXPLANATION TO SECTION 37(1) INVOKED BY THE CIT, THE EXPLANATION PROVIDES AN EMBARGO UPON ALLOWING A NY EXPENDITURE INCURRED BY THE ASSESSEE FOR ANY PURPOSE WHICH IS A N OFFENCE OR WHICH IS PROHIBITED BY LAW. THIS MEANS THAT THERE SHOULD BE AN OFFENCE BY AN ASSESSEE WHO IS CLAIMING THE EXPENDITURE OR THERE I S ANY KIND OF PROHIBITION BY LAW WHICH IS APPLICABLE TO THE ASSES SEE. HERE IN THIS CASE, NO SUCH OFFENCE OF LAW HAS BEEN BROUGHT ON RECORD, WHICH PROHIBITS THE PHARMACEUTICAL COMPANY NOT TO INCUR ANY DEVELOPMENT OR SALES PROMOTION EXPENSES. A LAW WHICH IS APPLICABLE TO DIFFERENT CL ASS OF PERSONS OR PARTICULAR CATEGORY OF ASSESSEE, SAME CANNOT BE MAD E APPLICABLE TO ALL. THE REGULATION OF 2002 ISSUED BY THE MEDICAL COUNCI L OF INDIA (SUPRA), PROVIDES LIMITATION/CURB/PROHIBITION FOR MEDICAL PR ACTITIONERS ONLY AND NOT FOR PHARMACEUTICAL COMPANIES. HERE THE MAXIM OF 'EXPRESSIO UNIUS EST EXCLUSIO ALTERIUS' IS CLEARLY APPLICABLE, THAT IS, IF A PARTICULAR EXPRESSION IN THE STATUTE IS EXPRESSLY STATED FOR P ARTICULAR CLASS OF ASSESSEE THEN BY IMPLICATION WHAT HAS NOT BEEN STAT ED OR EXPRESSED IN THE STATUTE HAS TO BE EXCLUDED FOR OTHER CLASS OF A SSESSEE. IF THE MEDICAL COUNCIL REGULATION IS APPLICABLE TO MEDICAL PRACTIT IONERS THEN IT CANNOT BE MADE APPLICABLE TO PHARMA OR ALLIED HEALTH CARE COM PANIES. IF SECTION 37(1) IS APPLICABLE TO AN ASSESSEE CLAIMING THE EXP ENSE THEN BY IMPLICATION, ANY IMPAIRMENT CAUSED BY EXPLANATION 1 WILL APPLY TO THAT ASSESSEE ONLY. ANY IMPAIRMENT OR PROHIBITION BY ANY LAW/REGULATION ON A DIFFERENT CLASS OF PERSON/ASSESSEE WILL NOT IMPINGE UPON THE ASSESSEE CLAIMING THE EXPENDITURE UNDER THIS SECTION. 24. WE OBSERVE THAT THE CBDT CIRCULAR DATED 1-8-201 2 (SUPRA) IN ITS CLARIFICATION HAS ENLARGED THE SCOPE AND APPLICABIL ITY OF 'INDIAN MEDICAL COUNCIL REGULATION 2002' BY MAKING IT APPLICABLE TO THE PHARMACEUTICAL COMPANIES OR ALLIED HEALTH CARE SECTOR INDUSTRIES. SUCH AN ENLARGEMENT OF SCOPE OF MCI REGULATION TO THE PHARMACEUTICAL COMPA NIES BY THE CBDT IS WITHOUT ANY ENABLING PROVISIONS EITHER UNDER THE PR OVISIONS OF INCOME TAX LAW OR BY ANY PROVISIONS UNDER THE INDIAN MEDIC AL COUNCIL REGULATIONS. THE CBDT CANNOT PROVIDE CASUS OMISSUS TO A STATUTE OR NOTIFICATION OR ANY REGULATION WHICH HAS NOT BEEN E XPRESSLY PROVIDED THEREIN. THE CBDT CAN TONE DOWN THE RIGOURS OF LAW AND ENSURE A FAIR ENFORCEMENT OF THE PROVISIONS BY ISSUING CIRCULARS AND BY CLARIFYING THE STATUTORY PROVISIONS. CBDT CIRCULARS ACT LIKE 'CONT EMPORANEA EXPOSITIO' IN INTERPRETING THE STATUTORY PROVISIONS AND TO ASCERT AIN THE TRUE MEANING ENUNCIATED AT THE TIME WHEN STATUTE WAS ENACTED. HO WEVER THE CBDT IN ITS POWER CANNOT CREATE A NEW IMPAIRMENT ADVERSE TO AN ASSESSEE OR TO A CLASS OF ASSESSEE WITHOUT ANY SANCTION OF LAW. THE CIRCULAR ISSUED BY THE CBDT MUST CONFIRM TO TAX LAWS AND FOR PURPOSE OF GI VING ADMINISTRATIVE RELIEF OR FOR CLARIFYING THE PROVISIONS OF LAW AND CANNOT IMPOSE A BURDEN ON THE ASSESSEE, LEAVE ALONE CREATING A NEW BURDEN BY ENLARGING THE SCOPE OF A DIFFERENT REGULATION ISSUED UNDER A DIFF ERENT ACT SO AS TO IMPOSE ANY KIND OF HARDSHIP OR LIABILITY TO THE ASS ESSEE. IN ANY CASE, IT IS TRITE LAW THAT THE CBDT CIRCULAR WHICH CREATES A BU RDEN OR LIABILITY OR IMPOSES A NEW KIND OF IMPARITY, SAME CANNOT BE RECK ONED RETROSPECTIVELY. THE BENEFICIAL CIRCULAR MAY APPLY RETROSPECTIVELY BUT A CIRCULAR IMPOSING A BURDEN HAS TO BE APPLIED PROSPE CTIVELY ONLY. HERE IN THIS CASE THE CBDT HAS ENLARGED THE SCOPE OF 'INDIA N MEDICAL COUNCIL REGULATION, 2002' AND MADE IT APPLICABLE FOR THE PH ARMACEUTICAL COMPANIES. THEREFORE, SUCH A CBDT CIRCULAR CANNOT B E RECKONED TO HAVE RETROSPECTIVE EFFECT. THE FREE SAMPLE OF MEDICINE I S ONLY TO PROVE THE EFFICACY AND TO ESTABLISH THE TRUST OF THE DOCTORS ON THE QUALITY OF THE DRUGS. THIS AGAIN CANNOT BE RECKONED AS FREEBIES GI VEN TO THE DOCTORS BUT FOR PROMOTION OF ITS PRODUCTS. THE PHARMACEUTICAL C OMPANY, WHICH IS ENGAGED IN MANUFACTURING AND MARKETING OF PHARMACEU TICAL PRODUCTS, CAN PROMOTE ITS SALE AND BRAND ONLY BY ARRANGING SE MINARS, CONFERENCES AND THEREBY CREATING AWARENESS AMONGST DOCTORS ABOU T THE NEW RESEARCH IN THE MEDICAL FIELD AND THERAPEUTIC AREAS, ETC. EV ERY DAY THERE ARE NEW DEVELOPMENTS TAKING PLACE AROUND THE WORLD IN THE A REA OF MEDICINE AND THERAPEUTIC, HENCE IN ORDER TO PROVIDE CORRECT DIAG NOSIS AND TREATMENT OF SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 32 THE PATIENTS, IT IS IMPERATIVE THAT THE DOCTORS SHO ULD KEEP THEMSELVES UPDATED WITH THE LATEST DEVELOPMENTS IN THE MEDICIN E AND THE MAIN OBJECT OF SUCH CONFERENCES AND SEMINARS IS TO UPDAT E THE DOCTORS OF THE LATEST DEVELOPMENTS, WHICH IS BENEFICIAL TO THE DOC TORS IN TREATING THE PATIENTS AS WELL AS THE PHARMACEUTICAL COMPANIES.' 9. THE ABOVE JUDGMENTAL LAWS ARE RELEVANT FOR THE P ROPOSITION THAT THE CIRCULAR ISSUED BY THE CBDT ENLARGING THE SCOPE OF DISALLOWANCE TO THE PHARMACEUTICAL COMPANIES IS WIT HOUT ANY ENABLING NOTIFICATION OR CIRCULAR OF THE MEDICAL CO UNCIL OF INDIA. CONSIDERING THE SETTLED LEGAL POSITION ON THE ISSUE , WE ARE OF THE OPINION THAT THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE. THE PHARMACEUTICAL COMPANY LIKE THE ASSES SEE IS OUTSIDE THE SCOPE OF THE CIRCULARS BY THE MEDICAL C OUNCIL OF INDIA OR THE CBDT. THEREFORE, THE CONCLUSIONS OF THE AO/C IT(A) IN THIS REGARD ARE REVERSED. THUS, THE GROUNDS RAISED BY TH E ASSESSEE ARE REQUIRED TO BE ALLOWED. FROM THE ABOVE, IT IS EVIDENT THAT THE SCOPE OF THE CBDT CIRCULAR CANNO T BE EXTENDED TO THE PHARMACEUTICAL COMPANIES WITHOUT HAV ING ANY ENABLING NOTIFICATION OR CIRCULAR FOR MEDICAL COUNCIL OF INDIA. CONSEQUENTLY, THE PRESENT ASSESSEE BEING A PHARMACEUT ICAL COMPANY IS OUTSIDE THE SCOPE OF THE SAID CIRCULARS OF MCI AND THE C BDT. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE GR OUND NO.10/MODIFIED GROUND NO.10 RAISED BY THE ASSESSEE SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. 16. GROUND NO.11 RAISED BY THE ASSESSEE RELATES TO ALLOWABILITY OF DEDUCTION TO THE WEALTH TAX PAID BY THE ASSESSEE FOR THE PURPOSE OF COMPUTING BOOK PROFITS U/S.115JB OF THE ACT. AO DENIED TH E SAID PAYMENT OF TAX AS NOT AN ALLOWABLE DEDUCTION. 16.1 BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF DEC ISION OF TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NOS. 1183 AND 1537/P UN/2015, DATED 28-11-2017 FOR THE A.Y. 2008-09 AS WELL AS ITA NO.1184/PUN/2016, DATED 08-06-2018 FOR THE A.Y. 2009-10. 16.1 ON HEARING BOTH THE SIDES, WE FIND THIS ISSUE NEEDS T O BE DECIDED ALLOWED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF ORDERS OF TR IBUNAL (SUPRA) SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 33 IN ASSESSEES OWN CASE FOR THE A.YRS. 2008-09 AND 2009- 10. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE FINDING G IVEN BY THE TRIBUNAL FOR THE A.Y. 2009-10 (SUPRA) AND THE SAME READS AS UNDER : 59. ON HEARING BOTH THE SIDES, WE FIND THIS ISSUE H AS TO BE DECIDED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE ORDER OF TRIB UNAL (SUPRA) IN ASSESSEES OWN CASE FOR THE A.Y. 2008-09. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE FINDING GIVEN BY THE TRIB UNAL AND THE SAME READS AS UNDER : 26. ON HEARING BOTH THE PARTIES ON THIS ISSUE, WE FIND THE DECISION IN THE CASE OF USHA MARTIN INDUSTRIES LTD. (SUPRA) HELPS THE ASSESSEE. FOR THE SAKE OF COMPLETENESS, WE PER USED THE SAID DECISION OF THE TRIBUNAL AND FIND THE DISCUSSION GI VEN IN PARA NOS. 7 & 8 ARE RELEVANT. THE TRIBUNAL CONSIDERED THE RE LEVANT PROVISIONS OF SECTION 115JA(2) OF THE ACT AND HELD THE PROVISIONS OF WEALTH TAX CONSTITUTES AN ASCERTAINED LIABILITY. T HE RELEVANT PORTION OF THE TRIBUNAL ORDER IS EXTRACTED AS UNDER : 7. . . . . . . . . . . .WE AGREE WITH THE CONTENTI ON OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT A PR OVISION MADE FOR WEALTH-TAX CANNOT BE EQUATED TO ANY LIABILITY T OWARDS INCOME- TAX AND ACCORDINGLY, CANNOT BE DISALLOWED WHILE COM PUTING THE BOOK PROFIT BY INVOKING CLAUSE (A) OF THE EXPLANATI ON TO SECTION 115JA(2) OF THE ACT. 27. IN ANY CASE, THIS IS THE CASE WHERE NO INCRIMIN ATING MATERIAL WAS SEIZED BY THE REVENUE DURING THE SEARC H ACTION CONNECTING TO THE DISALLOWABILITY OF WEALTH TAX PAY MENT QUA THE BOOK PROFITS COMPUTATION. THEREFORE, ON BOTH COUNT S, THE ASSESSEE IS ENTITLED TO RELIEF. ACCORDINGLY, GROUND NO.9 RA ISED BY THE ASSESSEE IS ALLOWED. THUS, THE WEALTH TAX PAID CONSTITUTES AN ALLOWABLE DEDUCTION AS HELD BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2008-09. CONSIDERING THE SETTLED NATURE OF THE ISSUE IN FAVO UR OF THE ASSESSEE, THE GROUND NO.9 RAISED BY THE ASSESSEE IS ALLOWED. 16.2 CONSIDERING THE ABOVE, WE HOLD THAT THE WEALTH TAX P AID BY THE ASSESSEE, BEING AN ASCERTAINED LIABILITY IS AN ALLOWABLE DEDUCT ION FOR THE PURPOSE OF SECTION 115JA OF THE ACT. ACCORDINGLY, GROUND NO.11 BY THE ASSESSEE IS ALLOWED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 34 ITA NO.550/PUN/2016 BY ASSESSEE A.Y. 2012-13 18. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED: 1. IN CONFIRMING THE DISALLOWANCE U/S.14A AMOUNTING TO RS.4,08,35,729/- AS PER RULE 8D. 2. A. IN CONFIRMING THE DISALLOWANCE OF FOREIGN TRA VEL EXPENSES OF EMPLOYEES AMOUNTING TO RS.12,13,652/- B. IN NOT ALLOWING DEPRECIATION TOWARDS THE ADDITIO N OF RS.12,13,652/- C. IN NOT ADDRESSING AND ALLOWING THE EXPENDITURE I NCURRED ON FOREIGN TRAVEL EXPENDITURE OF LADY DIRECTORS AMOUNT ING TO RS.76,11,395/-. D. IN NOT ADDRESSING TOWARDS ADDITION OF RS.76,11,3 95 TO INCOME IN THE COMPUTATION INSPITE OF IT BEING SET O FF IN THE AMOUNT DECLARED IN SEARCH ACTION AS NON BUSINESS EXPENDIT URE. 3. IN DIRECTING THE AO TO CLASSIFY ITEMS OF FIXED A SSETS OF RS.15,19,712/- LIKE STAINLESS STEEL TABLES, STOOLS, RACKS ETC. LOCATED IN MANUFACTURING UNIT INTO FURNITURE AND FIXTURES AN D PLANT AND MACHINERY. 4. IN NOT ALLOWING THE WEIGHTED DEDUCTION OF EXPEND ITURE INCURRED FOR CLINICAL TRIALS AMOUNTING TO RS.5,23,17,132/-. 5. IN NOT CONFIRMING THE DISALLOWANCE OF DEMAT CHA RGES AMOUNTING TO RS.7,52,744/- MADE BY THE ASSESSING OFFICER. 6. A. IN NOT CONSIDERING THE COST OF ELECTRICAL WO RK AND CIVIL WORK OF RS.1,22,83,188/- REQUIRED TO ERECT WINDMILL AS I NTEGRATED COST OF WINDMILL ELIGIBLE FOR @80% DEPRECIATION. B. IN NOT GRANTING ADDITIONAL DEPRECIATION ON WIND MILLS GENERATION POWER FOR CAPTIVE CONSUMPTION INSPITE O F COMPLYING THE PROVISIONS OF SEC.32(1)(IIA). 7. IN CONFIRMING DISALLOWANCE OF SELLING AND DISTRI BUTION EXPENSES OF RS.4,03,04,115/- (AFTER SETTING OF RS.2,48,88,605/- AGAINST THE AMOUNT OF INCOME OFFERED AS NON BUSINESS EXPENDITURE DURING S EARCH PROCEEDINGS. 8. IN CONFIRMING THE ACTION OF A.O. FOR NOT DIRECTI NG THE AO TO REDUCE WEALTH TAX PAID OF RS.27,74,198/- FOR COMPUTING BOO K PROFIT U/S.115JB. 9. IN CONFIRMING THE DISALLOWANCE OF THE PROVISION FOR LEAVE ENCASHMENT AMOUNTING O RS.1,39,65,575/- PERTAINING TO DTA UNIT ASCERTAINED ON THE BASIS OF ACTUARIAL VALUATION FOR THE SPECIFIC EMPLOYEES OF THE APPELLANT COMPANY. 10. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/WITHDRA W ANY OF THE GROUNDS OF APPEAL AT THE TIME OF APPEAL PROCEEDIN GS. YOUR APPELLANT FURTHER SUBMITS THAT THE GROUNDS OF APPEAL ARE, SAV E AS OTHERWISE SPECIFIED, NOTWITHSTANDING AND WITHOUT PREJUDICE TO EACH OTHER. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 35 18.1 THE MODIFIED GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1A. THE LD.CIT(A) OUGHT TO HAVE HELD THAT NO DISAL LOWANCE U/S.14A(2) R.W.R.8D CAN BE SUSTAINED IN THE ABSENCE OF A SPECI FIC RECORDING OF SATISFACTION BY THE A.O. BASED ON COGENT MATERIAL AN D HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, TO THE EFFECT THAT TH E CLAIM OF THE ASSESSEE IS NOT CORRECT. B. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE A.O. MADE THE DISALLOWANCE MERELY ON THE BASIS OF OBSERVATION THA T SALARIES AND OTHER ADMINISTRATIVE EXPENSES ARE DEBITED TO P&L A/C FOR BOTH TAXABLE AND TAX FREE INCOMES, THEREFORE IT IS DIFFICULT TO ACCEPT T HAT TAX FREE INCOMES ARE EARNED WITHOUT INCURRING THESE EXPENSES. SUPPLEMENTARY GROUND TO GROUND -10. 10. DISALLOWANCE OF SELLING & DISTRIBUTION EXPENSE S HAVE BEEN PARTLY SET OFF AGAINST CONTINGENCY OFFERED, IF THE DISALLO WANCE IS DELETED BY HON. ITAT, AS A COROLLARY, THE ADDITION OF CONTINGENCY M AY ALSO BE DELETED IN VIEW OF DECISIONS OF EARLIER YEARS. 19. WE FIND ALL THE GROUNDS/MODIFIED GROUNDS RAISED BY THE A SSESSEE ARE IDENTICAL TO THAT OF GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2011-12. WE HAVE DECIDED THE ISSUES AND ALLOWED/PARTLY ALLOWED/DISMISSED/ALLOWED FOR STATISTICAL PURPOS ES, THE GROUNDS, AS THE CASE MAY BE. FOLLOWING THE SAME PARITY O F REASONING, WE DISPOSE THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2012-1 3 PRO TANTO AS STATED IN PARA NOS. 6 TO 16.2 OF THIS ORDER FOR THE A.Y. 2011-12. 20. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE A.Y. 20 12-13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ITA NO.607 & 934/PUN/2016 (BY REVENUE) A.YRS. 2011-12 AND 2012-13 WE SHALL NOW TAKE UP THE APPEALS OF THE REVENUE FOR THE A.YRS. 2011-12 AND 2012-13. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 36 21. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE REVENUE FO R BOTH THE ASSESSMENT YEARS. THEREFORE, WE PROCEED TO DECIDE THE APPEAL NO.607/PUN/2016, TAKING THE FACTS IN THE SAID APPEAL, AS A STANDARD ONE. GROUNDS RAISED BY THE REVENUE FOR A.Y. 2011-12 ARE EXTRACTED HERE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO EXCLUDE INVESTMENTS IN DEBT ORIENTED MUTUAL FUNDS FOR THE PURPOSE OF DISALLOWANCE U/S.14A R.W.R. 8D W HEN NO SUCH EXCLUSION HAS BEEN MANDATED BY THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO SEGREGATE ASSETS INTO FURNITURE AND PLANT AND MACHINERY WHEN BOTH ASSETS ARE INDISTINGUISHABLE AN D FALL IN THE CATEGORY OF FURNITURE AND NOT PLANT AND MACHINERY. 3. THE ORDER OF THE LD.CIT(A) MAY BE VACATED AND TH E ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND A ND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 22. THE ISSUES RAISED BY THE REVENUE IN THESE TWO ASSES SMENT YEARS VIDE GROUND NOS. 1 AND GROUND NO.2 HAVE BEEN DEALT BY U S WHILE ADJUDICATING THE APPEAL OF THE ASSESSEE VIDE GROUND NOS. 1 AND 3 ABOVE. WE HAVE DECIDED GROUND NO.1 AGAINST THE REVENUE ON THE TECHNICALITIES, I.E. ABSENCE OF SATISFACTION OF THE AO; FURTHER THE GROUND NO.2, BEING RELATED TO CLASSIFICATION OF THE ASSETS INT O FURNITURE AND PLANT AND MACHINERY QUA THE DEPRECIATION RATES, WAS DECIDED IN FAVOUR OF THE ASSESSEE RELYING ON THE ORDER OF TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10. THEREFORE, THE ADJUDICATION OF THESE GROUNDS BECOMES AN ACADEMIC. ACCORDINGLY, THE GROUNDS RAISED BY THE REVEN UE IN BOTH THE APPEALS ARE DISMISSED. SERUM INSTITUTE OF INDIA LTD., A.YRS. 2011-12 AND 2012-13 37 23. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 24. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE ARE PAR TLY ALLOWED FOR STATISTICAL PURPOSES AND BOTH THE APPEALS OF THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 12 TH OCTOBER, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(APPEALS-11, PUNE. 4. THE CIT (CENTRAL), PUNE. 5. , , A BENCH PUNE; 6. / GUARD FILE.