ACIT - 6(2), MUMBAI V. M/s. CENTURY TEXTILES & INDUSTRIES LTD., MUMBAI

ITA 6106/MUM/2006

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3420 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 10-01-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 20-11-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Assessee Lawyers: S M BANDI; P R TOPRANI
• Keywords: Depreciation; Business expenditure; Bad and doubtful debts
• Section: 143(3); 80HHC; 115JB; 10B

Judgement Text

ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.5935/MUM/2006 (ASSESSMENT YEAR: 2003-04) CENTURY TEXTILES & INDUSTRIES LTD, CENTURY BHAVAN, DR. ANNIE BESANT ROAD, WORLI,MUMBAI 400030 PAN: AAACC 2659 Q VS. ASSTT. COMMISSIONER OF INCOME TAX RANGE-6(2) 5 TH FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) ITA NO.6106/MUM/2006 (ASSESSMENT YEAR: 2003-04) ASSTT. COMMISSIONER OF INCOME TAX RANGE-6(2) 5 TH FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 VS. CENTURY TEXTILES AND INDUSTRIES LTD, CENTURY BHAVAN, DR. ANNIE BESANT ROAD, WORLI, MUMBAI 400030 PAN: AAACC 2659 Q (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P.R. TOPRANI & SHRI S.M. BANDI DEPARTMENT BY: SHRI P.K. SHUKLA, DR DATE OF HEARING: 06/05/2013 DATE OF PRONOUNCEMENT: 12/06/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THESE ARE THE CROSS APPEALS ARISING OUT OF THE IMP UGNED ORDER DATED PASSED BY THE CIT (A)-6 MUMBAI DATED 8. 9.2006 AGAINST THE ORDER OF AO UNDER SECTION 143(3) FOR THE AY 200 3-04. 2. ASSESSEE FILED RETURN OF INCOME DISCLOSING NIL INCO ME AFTER SETTING OFF OF CARRY FORWARD LOSSES ETC AND UNDER T HE PROVISIONS OF SECTION 115JB DECLARING AN INCOME OF ` .84,36,27,030. AO SELECTED THE CASE FOR SCRUTINY AND MADE VARIOUS ADJUSTMENTS OR ADDITIONS TO ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 2 OF 11 THE INCOME RETURNED. IT WAS CONTESTED BEFORE THE CI T (A) THAT THE LEARNED CIT (A) FOLLOWING THE ORDERS OF HIS PREDECE SSORS IN EARLIER YEARS CONFIRMED OR ALLOWED ON MANY ISSUES AND ACCOR DINGLY BOTH ASSESSEE AND REVENUE ARE IN APPEAL. 3. THE LEARNED COUNSEL PLACED ON RECORD A CHART INDICA TING THAT MOST OF THE ISSUES ARE EITHER COVERED OR NOT PRESSE D. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMINING THE RECORD AND ORDERS IN EARLIER YEARS, THE ISSUES ARE DECIDED AS UNDER: ITA NO.5935/MUM/2006 ASSESSEES APPEAL : 4. GROUND NO.1 IN ASSESSEES APPEAL IS WITH REFERENCE TO TREATING CERTAIN INCOMES AS NOT PERTAINING TO/DERIVED FROM 1 00% EOUS FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961. ASSESSEE HAS TWO UNITS CENTURY YARN AND CENTURY DENIM ELIGIBLE FOR 100% DEDUCTION UNDER SECTION 10B . AO RECORDS THAT ASSESSEE HAS INCURRED LOSSES AMOUNTING TO ` .3,98,78,894 AND ` .2,67,95,075 RESPECTIVELY UNDER THE UNITS. THEREFOR E, THE QUESTION OF CLAIMING EXEMPTION UNDER SECTION 10B MAY NOT ARI SE. HOWEVER, HE TREATED SOME OF THE INCOMES AS NOT DERIVED FROM THE EXEMPTED UNITS. BEFORE THE CIT (A) ASSESSEE GOT SUBSTANTIAL RELIEF EXCEPT ON THE FOLLOWING ITEMS: PARTICULARS CENTURY YARN CENTURY DENIM I. SURPLUS ON SALES OF ASSETS 11,125 - II. BONUS RECEIVED AGAINST PURCHASE OF IMPORTED SPARES 1,64,886 - III. STAFF AGREEMENT DEPOSIT FORFEITED 30,831 26,794 IV. AMOUNT RECOVERED FROM EMPLOYEES AGAINST 1 MONTH NOTICE PERIOD SALARY 11,705 4,825 V. BONUS ON SPARES PURCHASED FROM W. SCHLAFHORST AG & CO. - 51,510 TOTAL 2,18,547 83,129 ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 3 OF 11 4.1 WITH REFERENCE TO THE I. SURPLUS SALE OF ASSETS , THIS ISSUE IS DECIDED AGAINST ASSESSEE BY THE ORDERS OF THE ITAT IN AY 2000-01 IN ITA NO.3925/MUM/2005 WHEREIN VIDE PARA 14.1 IT WAS HELD THAT COMPENSATION FOR THE AMOUNT RECEIVED ON SURPLUS OF ASSETS CAN ALSO BE NOT RELATED TO THE BUSINESS OF EXPORT AND T HEREFORE, THE SAME IS DECIDED AGAINST ASSESSEE. RESPECTFULLY FOLLOWIN G THE SAME, WE HOLD THAT SURPLUS RECEIVED ON SALE OF ASSETS CANNOT BE TREATED AS INCOME DERIVED FROM THE EOU UNIT. THEREFORE, GROUND IS REJECTED. 4.2 WITH REFERENCE TO ITEM NO. II & V IE. BONUS REC EIVED AGAINST PURCHASE OF SPARES, THE LEARNED CIT (A) RELIED ON T HE ORDERS IN EARLIER YEARS IN HOLDING THAT THIS ITEM CANNOT BE C ONSIDERED AS INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING. HOW EVER, AS SEEN FROM THE ORDERS OF THE ITAT IN AY 2002-03 IN ITA NO.6365/MUM/2005 THIS ISSUE WAS RESTORED TO THE FIL E OF AO FOR FRESH EXAMINATION. IT WAS HELD AS UNDER: (II) REGARDING BONUS RECEIVED AGAINST PURCHASE OF IMPORTED SPARES OF AUTO CORNERS M/C. AMOUNTING TO RS.24,693/-, IT IS SEEN FROM THE PERUSAL OF THE APP ELLATE ORDER AS WELL AS THE ASSESSMENT ORDER, THAT THIS IS SUE HAS NOT BEEN PROPERLY EXAMINED BY EITHER OF THE AUTHORITIES BELOW, THEREFORE, ON THE FACTS AND CIRCUMSTANCES, THIS ISSUE IS RESTORED BACK TO THE F ILE OF THE ASSESSING OFFICER FOR CONSIDERING IT AFRESH AFTER G IVING OPPORTUNITY TO THE ASSESSEE. THUS, THIS ISSUE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. 4.3 ACCORDINGLY SINCE THE LEARNED CIT (A) RELIED ON THE EARLIER YEARS ORDER WITHOUT EXAMINING THE FACTS, IN THE INTEREST OF JUSTICE WE RESTORE THIS ISSUE TO THE FILE OF AO FOR FRESH EXAM INATION AND DECIDE IT ACCORDINGLY. 4.4 ITEM NO.III. STAFF AGREEMENT DEPOSIT IS COVERED AGAINST ASSESSEE IN EARLIER YEARS. WE FIND THAT THIS ISSUE HAS BEEN DECIDED AGAINST ASSESSEE IN ITA NO.3890 AND 3507/MUM/2005 DATED 13 TH JULY, 2009 IN AY 1999-2000 IN PARA 20 AND IN ITA NO.3906/ MUM/2005 FOR AY 2001-02 VIDE PARA 14. WE DO NOT INTEND TO DI STURB THE ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 4 OF 11 ACCEPTED POSITION. HENCE WE HOLD THAT THIS AMOUNT D ID NOT QUALIFY FOR EXEMPTION UNDER SECTION 10B AS THESE ARE NOT HE LD TO BE THE RECEIPTS DERIVED FROM THE INDUSTRIAL UNDERTAKING. 4.5 ITEM NO.IV IS THE AMOUNT RECOVERED FROM EMPLOYE ES AGAINST ONE MONTH NOTICE PERIOD SALARY. DURING THE COURSE OF TH E ARGUMENTS THE LEARNED COUNSEL DID NOT PRESS FOR THE ISSUE. ACCORD INGLY IT IS TREATED AS NOT PRESSED. 4.6 IN THE RESULT THIS GROUND IS CONSIDERED PARTL Y ALLOWED. 5. GROUND NO.2 PERTAINS TO THE ISSUE OF TREATING THE F ORFEITURE OF SECURITY DEPOSIT COLLECTED FROM EMPLOYEES AND ASSES SEE TREATING THE SAME AS CAPITAL IN RECEIPTS. 5.1 AT THE TIME OF HEARING THE LEARNED COUNSEL AT T HE OUTSET FAIRLY ADMITTED THAT THIS ISSUE IS COVERED AGAINST ASSESSE E BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.3926 /MUM/2005 FOR AY 2001-02 VIDE ORDER DATED 16.05.2012 AND ALSO BY ITA NO.6365/MUM/2005 FOR AY 2002-03 DATED 31.10.2012. 5.2 AFTER GOING THROUGH THE ORDERS OF THE PRECEDING YEARS, WE FIND THAT THIS ISSUE STANDS COVERED AGAINST ASSESSEE FRO M MANY YEARS AND THEREFORE, WE DO NOT INTEND TO DISTURB THE FIND INGS OF THE COORDINATE BENCH. THE GROUND IS DECIDED AGAINST ASS ESSEE AND ACCORDINGLY DISMISSED. 6. GROUND NO.3 PERTAINS TO THE CONFIRMATION OF THE AMO UNTS PAID AS PENALTY WHICH ARE AS UNDER: PENALTY PAID IN RESPECT OF COMPLIANCE OF CENTRAL EXCISE RULE, 1944 IN CENTURY CEMENT DIVISION RS.3000 PENALTY PAID UNDER CST ACT IN MAIHAR CEMENT DIVISION RS.2,49,250 PENALTY PAID UNDER CENTRAL EXCISE DUTY IN MAIHAR CEMENT DIVISION RS.7,000 PENALTY ON CENVAT CLAIM ON EXPLOSIVES AND AMMONIUM NITRATE UNDER SECTION 35F OF CENTRAL EXCISE ACT IN MANIKHGARH CEMENT DIVISION RS.10,000 ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 5 OF 11 6.1 THE LEARNED CIT (A) IN HIS ORDER DISTINGUISHED THE ENTIRE AMOUNT DISALLOWED BY AO AND ALLOWED THE SOME AMOUNTS PARTL Y STATING THAT IT IS COMPENSATORY IN NATURE, WHEREAS HE HAS CONFIR MED THE ABOVE AMOUNTS AS PENALTY. IT WAS FAIRLY ADMITTED THAT THI S ISSUE WAS RESTORED TO AO IN IMMEDIATELY PRECEDING YEAR FOR FR ESH EXAMINATION IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE HON 'BLE SUPREME COURT TO DECIDE WHETHER THE AMOUNTS ARE COMPENSATOR Y IN NATURE OR PENAL IN NATURE. THE FINDINGS OF THE ITAT IN AY 2001-02 ON THE ISSUE ARE AS UNDER: 41. THIS ISSUE HAS BEEN DEALT WITH BY THE TRIBUNAL IN I.T.A. NOS. 3925 & 4170/MUM/2005 IN ASSESSMENT YEAR 2000-01, IN PARAS 69, 70 AND 71 WHICH READ AS UNDER : '69. BEFORE US, IT WAS SUBMITTED THAT THE AMOUNTS DISA1LOWED BY THE CIT(A) ARE BASICALLY OF COMPENSATORY NATURE AND THEREFORE THE SAME SHOULD HAVE HEN ALLOWED. IN THIS REGARD , RELIANCE WAS PLACED ON THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF PRAKASH COTTON MILLS PVT. VS. CIT (201 ITR 684) (SC) AND STANDARD BATTERIES LTD. VS. CIT (211 ITR 444) (SC). 70. ON THE OTHER HAND, THE ID. D.R RELIED ON THE ORDER OF CIT(A). 71. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASES OF PRAKASH COTTON MILLS PVT. LTD. (SUPRA) AND STANDARD BATTERIES LTD. VS. CIT (SUPRA) HAS OBSERVED THAT WHATEVER IS PAID TO THE GOVT. AUTHORITIES, THOUGH KNOWN AS PENALTY, BUT IF THE SAME IS OF COMPENSATORY NATURE, THEN THE SAME, STRICTLY SPEAKING, IS NOT PENALTY AND HAS TO BE ALLOWED AS BUSINESS EXPENDITURE. THE HON'BLE COURT HAS GIVEN THE 'AMPLE OF PENALTY PAID FOR DELAYED PAYMENT OF SALES-TAX WHICH WAS HELD TO BE COMPENSATORY NATURE. SINCE NO DETAILS HAVE BEEN GIVEN FOR THE AMOUNT PAID, WHICH HAS BEEN DISALLOWED BY THE AO, AND EVEN THE SR. COUNSEL OF THE ASSESSEE HAS NOT PLACED ANY ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 6 OF 11 DETAILS BEFORE US, THEREFORE, WE SET ASIDE THE ORDER OF ID. CIT(A AND REMIT THE MATTER BACK TO THE FILE OF AO FOR RE-EXAMINATION OF THE ISSUE AND IF VARIOUS PENALTIES PAID ARE FOUND TO BE ONLY COMPENSATORY IN NATURE IN VIEW OF THE DECISIONS OF THE HON'BLE SUPREME COURT (SUPRA), THEN THE SAME MAY BE ALLOWED.' RESPECTFULLY FOLLOWING THE DECISION TAKEN BY THE CO ORDINATE BENCH IN THE ASSESSEES OWN CASE, WE IN THE CURRENT YEAR, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE I SSUE TO THE FILE OF THE AO TO RE-EXAMINE THE EXACT NATURE O F PAYMENTS, I.E., WHETHER THESE ARE COMPENSATORY OR T HESE ARE PENAL IN NATURE. THE GROUND IS ALLOWED TO THAT EXTANT. GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES . 6.2 RESPECTFULLY FOLLOWING THE ABOVE, WE RESTORE TH E MATTER TO THE FILE OF AO TO EXAMINE THE EXACT NATURE OF THE AMOUN TS PAID AND CONSIDER ACCORDINGLY. GROUND NO.3 IS ALLOWED FOR ST ATISTICAL PURPOSES. 7. GROUND NO.4 PERTAINS TO THE DISALLOWING THE LEASEHO LD AMOUNT WRITTEN OFF IN VARIOUS DIVISIONS OF ` .1,80,291. 7.1 THE LEARNED COUNSEL SUBMITTED THAT THIS ISSUE H AS BEEN RESTORED TO THE FILE OF AO IN ASSESSEES OWN CASE I N AY 2001-02 AND 2002-03. AFTER GOING THROUGH THE ORDER OF THE TRIBU NAL, WE FIND THAT THIS ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE AS SESSING OFFICER FOLLOWING THE EARLIER YEARS ORDER AFTER OBSERVING AND HOLDING AS UNDER :- '24. THE ISSUE HAD BEEN SET ASIDE TO THE FILE OF TH E AO IN THE PRECEDING YEAR IN I.T.A. NOS. 3925 & 4170/MUM/2005 IN ASSESSMENT YEAR 2000-01, FOR RE- EXAMINATION OF THE ISSUE IN THE LIGHT OF THE SPECIA L BENCH DECISION OF THE TRIBUNAL IN THE CASE OF MUKUND LTD. REPORTED IN 106 ITD 231 (MUM SB) FOR FINDING THE NA TURE OF THE PREMIUM PART. RESPECTFULLY FOLLOWING THE ORD ER, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO FOR PASSING FRESH ORDER ON THE IMPUG NED ISSUE AFTER ALLOWING PROPER OPPORTUNITY TO THE ASSE SSEE. GROUND NO. 6 IS ALLOWED FOR STATISTICAL PURPOSES.' ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 7 OF 11 7.2 ACCORDINGLY, IN THIS YEAR ALSO, THIS ISSUE IS S ET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED IN VIEW OF THE DIRECTION GIVEN ABOVE. ACCORDINGLY, THIS GROUND IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. 8. GROUND NO.5 PERTAINS TO THE ISSUE OF CONFIRMING THE ACTION OF AO IN DISALLOWING THE CLAIM FOR MINING LEASE EXPENS ES FOR CENTURY CEMENT DIVISION TO 1/20 TH OF ` .16,23,610 AS AGAINST 1/10 TH CLAIMED BY ASSESSEE ON THE GROUND THAT PERIOD OF LEASE IS 2 0 YEARS. 8.1 LEARNED COUNSEL SUBMITTED THAT THIS ISSUE STAND S DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE EARLI ER YEAR. LEARNED CIT DR FAIRLY ADMITTED TO THIS FACT. 8.2 AFTER GOING THROUGH THE FINDINGS OF THE TRIBUNA L, WE FIND THAT THIS ISSUE HAS COME UP FOR CONSIDERATION IN THE EAR LIER YEARS IN THE CASE OF THE ASSESSEE BEFORE THE TRIBUNAL. IN THE AS SESSMENT YEAR 2001-02, THE TRIBUNAL HAS ALLOWED THIS GROUND FOLLO WING THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01. THE ASSESSING OFFICER HAS DISALLOWED THE LEASE EXPENSES OF RS.16,23,610/- AS AGAINST 1/10TH CLAIMED AT RS.81,1 80/- BY THE ASSESSEE. SINCE THIS ISSUE HAS BEEN DECIDED IN THE EARLIER YEAR ALLOWING THE ASSESSEES CLAIM, THEREFORE, IN THIS YE AR ALSO, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE SAME. ACCORDING LY, THIS GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE. 9. GROUND NO.6 PERTAINS TO THE CONFIRMATION OF THE ACT ION OF AO IN BRINGING TO TAX COMPENSATION RECEIVED FROM EXPLO ITATION OF COMMERCIAL PREMISES NAMELY CENTURY BHAVAN, MUMBAI A ND INDUSTRY HOUSE, KOLKATA AS INCOME OF ` .8,07,652 UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS I NCOME. 9.1 AT THE OUTSET THE LEARNED COUNSEL APPEARING FOR ASSESSEE POINTED OUT THAT THIS ISSUE IS COVERED AGAINST ASSE SSEE IN ASSESSEES OWN CASE IN EARLIER YEARS. SINCE THE ISSUE IS ALREA DY DECIDED AGAINST ASSESSEE IN ALL THE EARLIER YEARS INCLUDING THE AY 2001-02 AND ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 8 OF 11 2002-03 BY THE ORDERS QUOTED (SUPRA) WE DO NOT SEE ANY REASON TO DIFFER FROM THE SAID FINDINGS. ACCORDINGLY THE ISSU E IS DECIDED AGAINST ASSESSEE AND GROUND NO.6 STANDS DISMISSED. 10. GROUND NO.7 IS WITH REFERENCE TO THE DISALLOWANCE O F ` .2,83,559 BEING INTEREST PAID ON INCOME TAX AS IN E ARLIER YEARS THIS CLAIM WAS NOT ALLOWED BY THE CIT (A) AS THERE IS NO REASON FOR ALLOWING THE EXPENDITURE AS BUSINESS EXPENDITURE. T HIS ISSUE WAS CONFIRMED AGAINST ASSESSEE BY THE ORDERS OF THE ITA T IN ITA NO.6365/MUM &6269/MUM/2005 FOR AY 2002-03 WHEREIN IT WAS CONSIDERED THAT THERE IS NO MERIT IN SUCH CLAIM. AC CORDINGLY THE SAME WAS NOT ALLOWED AND THE GROUND STANDS DISMISSE D. 11. GROUND NO.8 PERTAINS TO THE ACTION OF AO OF DISALLO WING THE AMOUNT OF ` .3,03,477 BEING THE INTEREST PAID TO SSI UNITS ON DELAYED PAYMENTS. THE LEARNED COUNSEL FAIRLY ADMITT ED THAT THIS ISSUE STANDS COVERED AGAINST ASSESSEE IN ASSESSEES OWN CASE IN EARLIER AYS. AFTER GOING THROUGH THE ORDERS PASSED BY THE ITAT IN 2001-02 AND 2002-03, WE FIND THAT THE TRIBUNAL HAS RECORDED A FINDING THAT THIS ISSUE STANDS COVERED AGAINST ASSE SSEE IN ASSESSEES OWN CASE FROM AYS 1990-01 ONWARDS. IN VIEW OF THE A DMITTED POSITION, THIS ISSUE IS DECIDED AGAINST ASSESSEE AN D THE GROUND IS REJECTED. 12. GROUND NO.9 PERTAINS TO THE ACTION OF AO IN DISALLO WING PROVISIONS IN RESPECT OF DIFFERENCE OF ELECTRICITY DUTY ON COLONY CONSUMPTION PAYABLE TO MPEB/CSEB ETC., FOR ` .86,74,603 ON THE GROUND THAT IT WILL BE ALLOWED ON PAYMENT BASIS IN SUBSEQUENT YEARS. THE LEARNED COUNSEL POINTED OUT THAT THIS IS SUE HAS BEEN RESTORED TO THE ASSESSING OFFICER WITH A DIRECTION IN THE APPEAL FOR THE ASSESSMENT YEAR 2001-02, WHEREIN THE TRIBUNAL H AS DIRECTED THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE ON P AYMENT BASIS. THE RELEVANT OBSERVATION AND FINDING OF THE TRIBUNA L IN THE ASSESSMENT YEAR2001-02, READS AS UNDER :- ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 9 OF 11 '28. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN PRECEDING YEARS WHEREIN THE AO WAS DIRECTED TO ALLOW THE EXPENDITURE ON PAYMENT BASIS CONSISTENTLY, WHATEVER SYSTEM OF ACCOUNTING I S ADOPTED BY THE ASSESSEE, IS TO BE FOLLOWED YEAR TO YEAR. AFTER CONSIDERING THAT THE ISSUE HAS NOT BEEN DECID ED BY THE AO IN THE PRECEDING YEAR AND THE SAME FINDING I S TO BE ADOPTED HEREIN AS WELL, WE DEEM IT FIT TO RESTOR E THE ISSUE TO THE FILE OF THE AO FOR ADJUDICATION. GROUN D NO. 8 IS ALLOWED FOR STATISTICAL PURPOSES.' 12.1 THUS, RESPECTFULLY FOLLOWING THE AFORESAID DEC ISION, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A SIMILAR DIRECTION AND TO ADJUDICATE THE SAME AFTER GETTING THE DETAIL S FROM THE ASSESSEE. ACCORDINGLY, THIS GROUND IS ALLOWED FOR S TATISTICAL PURPOSES 13. GROUND NO.10 IS WITH REFERENCE TO THE ACTION OF AO BY ADDING BACK PROVISION FOR DOUBTFUL DEBTS AND ADVANCES AMOU NTING TO ` .1,74,00,105 WHILE COMPUTING BOOK PROFITS UNDER SEC TION 115JB OF THE INCOME TAX ACT. 13.1 AS ADMITTED BY BOTH THE PARTIES, THIS ISSUE NO W STANDS COVERED AGAINST ASSESSEE BY INSERTION OF CLAUSE 1 IN EXPLAN ATION 1 TO SECTION 115JB BY THE FINANCE ACT (NO.2) OF 2009 W.E.F. 1.4. 2001. THUS IN VIEW OF THE AMENDMENT IN THE SAID PROVISIONS OF THE ACT, THE GROUND TAKEN BY ASSESSEE IS REJECTED. 14. GROUND NO.11 PERTAINS TO DISALLOWING THE DEDUCTION UNDER SECTION 80HHC ON THE ALLEGED REASON THAT THE INCOME AS PER NORMAL COMPUTATION IS NIL AND ACCORDINGLY NO DEDUCTION IS ALLOWED UNDER SECTION 80HHC WHILE COMPUTING THE BOOK PROFITS UNDE R SECTION 115JB. 14.1 AFTER GOING THROUGH THE FINDINGS OF THE CIT (A ) AS WELL AS AO WE FIND THAT THIS ISSUE STANDS COVERED IN FAVOUR OF AS SESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F AJANTA PHARMA VS. CIT (327 ITR 305)(SC). IN EARLIER YEAR ALSO THI S ISSUE IS COVERED IN FAVOUR OF ASSESSEE FOLLOWING THE ITAT SPECIAL BE NCH DECISION IN THE CASE OF DCIT VS. IS SYNCOME FORMULATIONS (I) LT D.292 ITR (AT) ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 10 OF 11 144 (MUM)(SB) WHICH IN TURN WAS APPROVED BY THE HON BLE SUPREME COURT IN THE CASE OF AL KABIR EXPORTS LTD. IN VIEW OF THE SETTLED POSITION OF THE LAW, AO IS DIRECTED TO WORKOUT THE 80HHC DEDUCTIONS ON THE BOOK PROFITS SEPARATELY AND ALLOW THE SAME. GROUND IS CONSIDERED ALLOWED. 15. GROUND NO.12 IS GENERAL IN NATURE AND NEED NO ADJUD ICATION. IN THE RESULT APPEAL IS PARTLY ALLOWED. ITA NO.6106/MUM/2006 REVENUE APPEAL 16. THIS IS A REVENUE APPEAL IN WHICH THE REVENUE HAS R AISED THREE GROUNDS. GROUND NO. 4 & 5 BEING GENERAL IN NA TURE. 17. GROUND NO. 1 PERTAINS TO THE ISSUE OF ALLOWING FORE IGN TRAVEL EXPENSES OF MRS. S.D. BIRLA, WIFE OF SHRI B.K. BIRL A, CHAIRMAN OF THE COMPANY WITHOUT APPRECIATING THE FACT THAT IT WAS N OT AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF ASSESSEE. EVEN THOUGH THIS ISSUE IS COV ERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN EARLIER YEARS, AS SEEN FROM THE ORDERS OF THE PREVI OUS YEAR IN AYS 2001-02 AND 2002-03, THE ISSUE IS RESTORED TO THE F ILE OF AO TO EXAMINE IN DETAIL THE NATURE OF EXPENSES ALONG WITH THE BOARD RESOLUTION IF ANY, AS IT WAS BROUGHT TO NOTICE THAT ASSESSEE HAS NOT FURNISHED DETAILS BEFORE AO. ACCORDINGLY IN THE INT EREST OF JUSTICE, CONSISTENT WITH THE VIEW TAKEN IN EARLIER TWO YEARS , WE RESTORE THE ISSUE TO THE FILE OF AO TO EXAMINE THE DETAILS AND DECIDE ACCORDINGLY. GROUND IS CONSIDERED ALLOWED FOR STATISTICAL PURPOS ES. 18. GROUND NO.2 PERTAINS TO THE ISSUE OF DIRECTING AO T O ALLOW DEPRECIATION ON ACCOUNT OF ADDITION TO PLANT & MACH INERY BEING PROVISION FOR CUSTOM DUTY ON AIRJET LOOMS AND AUTO CONER WITHOUT APPRECIATING THAT THE SAME ARE COVERED BY THE PROVI SIONS OF SECTION 43B. THE AMOUNT INVOLVED IS ` .32,387. IT WAS FAIRLY ADMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE AND AGA INST THE REVENUE BY THE ORDERS OF THE ITAT IN EARLIER YEARS. CONSIST ENT WITH THE VIEW ITA NOS.5935 AND 6106 OF 2006 CENTURY TEXTILES & IN DUSTRIES LTD MUMBAI PAGE 11 OF 11 TAKEN IN EARLIER YEARS SINCE THE CIT (A) FOLLOWED T HE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE C IT (A). ACCORDINGLY THE GROUND IS REJECTED. 19. GROUND NO.3 PERTAINS TO THE ISSUE OF ALLOWANCE OF S OME OF THE PENALTIES AS COMPENSATORY IN NATURE BY THE CIT (A) TO THE EXTENT OF ` 13,620. THIS GROUND IS SIMILAR TO THE GROUND RAISED BY ASSESSEE IN GROUND NO.3 IN ASSESSEES APPEAL WHEREIN THE ISSUE WAS RESTORED TO THE FILE OF AO TO EXAMINE THE NATURE OF THE AMOUNT PAID AS PENALTY. CONSISTENT WITH THE VIEW TAKEN THEREIN AND ALSO ON THE REASON THAT SIMILAR ISSUE WAS ALSO RESTORED TO THE FILE OF AO I N EARLIER YEARS, WE RESTORE THE ISSUE OF CLAIM OF PENALTIES TO THE FILE OF AO TO EXAMINE AFRESH AND DECIDE ACCORDINGLY. GROUND IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 20. TO SUM UP, BOTH ASSESSEE APPEAL AND THE REVENUE APP EAL ARE CONSIDERED ALLOWED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2013 SD/- SD/- (B.R. MITTAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 12 TH JUNE, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI