DCIT, Kanpur V. M/s. MKU (Armours) Pvt. Ltd., Kanpur

ITA 612/LKW/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83408 (ITAT-LUCKNOW)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K GARG SHRI P K KAPOOR
• Assessee Lawyers: VIVEK MISHRA
• Keywords: Business income; Loose papers; Double taxation relief; Opportunity of being heard; Principle of natural justice; Additional evidence; Question of law; Speculation loss; Bad and doubtful debts; Difference of opinion; Change of opinion
• Section: 143(3); 80HHC; 133A; 14A; 10B; 201(1); 147; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.612/LKW/2010 ASSESSMENT YEAR:2007 - 08 DY.C.I.T. - VI, KANPUR. VS. M/S MKU (ARMOURS) PVT. LTD., 105, CHANDRALOK COMPLEX, 26/72 - D, BIRHANA ROAD, KANPUR. PAN:AADCM8195Q (APPELLANT) (RESPONDENT) C.O. NO.49/LKW/2010 (IN ITA NO.612/LKW/2010) ASSESSMENT YEAR:2007 - 08 M/S MKU (ARMOURS) PVT. LTD., 105, CHANDRALOK COMPLEX, 26/72 - D, BIRHANA ROAD, KANPUR. PAN:AADCM8195Q VS. DY.C.I.T. - VI, KANPUR. (OBJECTOR) (RESPONDENT) ITA NO.401/LKW/2011 ASSESSMENT YEAR:2008 - 09 DY.C.I.T. - VI, KANPUR. VS. M/S MKU PVT. LTD., 13, GANDHI GRAM, KANPUR. PAN:AACCM6302Q (APPELLANT) (RESPONDENT) C.O. NO.33/LKW/2011 (IN ITA NO.401/LKW/2011) ASSESSMENT YEAR:2008 - 09 M/S MKU PVT. LTD., 13, GANDHI GRAM, KANPUR. PAN:AACCM6302Q VS. DY.C.I.T. - VI, KANPUR. (OBJECTOR) (RESPONDENT) 2 ITA NO.179/LKW/2012 ASSESSMENT YEAR:2009 - 10 DY.C.I.T. - VI, KANPUR. VS. M/S MKU PVT. LTD., 13, GANDHI GRAM, KANPUR. PAN:AACCM6302Q (APPELLANT) (RESPONDENT) ITA NO.152/LKW/2012 ASSESSMENT YEAR:2009 - 10 DY.C.I.T. - VI, KANPUR. VS. M/S MKU (ARMOURS) PVT. LTD., 105, CHANDRALOK COMPLEX, 26/72 - D, BIRHANA ROAD, KANPUR. PAN:AADCM8195Q (APPELLANT) (RESPONDENT) REVENUE BY SHRI VIVEK MISHRA, CIT, D.R. REVENUE BY SHRI S. K. GARG, ADVOCATE SHRI P. K. KAPOOR, C.A. DATE OF HEARING 15/ 10 /2014 DATE OF PRONOUNCEMENT 2 1 /11/2014 O R D E R PER A. K. GARODIA, A.M. OUT OF THIS BUNCH, THERE IS ONE APPEAL BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE IN THE CASE OF M/S MKU (ARMOURS) PVT. LTD. FOR ASSESSMENT YEAR 2007 - 08, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 15/07/20 10. THERE IS ONE APPEAL BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE IN THE CASE OF M/S MKU PVT. LTD., WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 31/03/2011. THERE ARE TWO APPEALS FILED BY THE REVENUE IN THE CASE OF TWO D IFFERENT ASSESSEES I.E. M/S MKU (ARMOURS) PVT. LTD. AND M/S MKU PVT. LTD., WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT(A) - II, KANPUR DATED 20/01/2012 AND 30/01/2012 FOR THE ASSESSMENT YEAR 2009 - 10. SINCE THE UNDERTAKING 3 OWNED BY M/S MKU (ARMOURS) PVT. LTD. WAS TAKEN OVER BY M/S MKU PVT. LTD. AND THE MAIN DISPUTE IS ABOUT ALLOWABILITY OF EXEMPTION U/S 10B IN RESPECT OF THIS VERY UNIT , IT WAS AGREED BY BOTH THE SIDES THAT THESE APPEALS ARE INTER - CONNECTED AND HENCE , THE APPEALS AND CROSS OBJECTION S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF M/S MKU (ARMOURS) PVT. LTD. I.E. I.T.A. NO.612/LKW/2010. IN THIS APPEAL , THE RE VENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.3,29,28,386/ - CLAIMED U/S 10 - B WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - )II, KANPUR HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE FOLLOWING ADDITIONAL EVIDENCES WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER BY VIOLATING THE PROVISIONS U/R 46A(3) OF THE INCOME TAX RULES. (I) AN AF FIDAVIT DATED 11.06.2010 SWORN BY SHRI MANISH KHANDELWAL. DIRECTOR OF THE COMPANY HAS BEEN ACCEPTED WITHOUT APPRECIATING THE FACT THAT ADMISSION OF AFFIDAVIT WITHOUT GIVING OPPORTUNITY TO OTHER PARTY HELD ILLEGAL BY AHMEDABAD ITAT IN THE CASE OF ITO VS. ZU BEDA SALT WORKS (1982), 13 TTJ 272, 273. (II) RECORDED STATEMENT OF SHRI G.C. MISHRA AN EMPLOYEE OF THE APPELLANT AND SHRI MANISH KHANDELWAL, DIRECTOR OF THE COMPANY. (III) RECEIVED PERMISSION LETTERS ISSUED BY THE CENTRAL EXCISE DEPARTMENT, WHICH WERE N OT FIFED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ALTHOUGH, THE ASSESSING OFFICER REQUESTED TO FILE RELEVANT RECORDS REGARDING SHIFTING OF MACHINERIES. 4 (IV) COLLECTED INFORMATION U/S 133 (6) FROM MKU PVT. LTD., PARENT COMP ANY OF THE ASSESSEE COMPANY GROUP. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT REASONABLE OPPORTUNITIES WERE PROVIDED BY THE ASSESSING OFFICER ON THE ISSUE OF SHIFTING OF MACHINERIES AND FOR JUSTIFICATION OF CLAIM OF EXEMPTION U/S 10 - B. DURING THE COURSE OF SURVEY CONDUCTED IN THE MONTH OF FEBRUARY - 2008, THE ASSESSEE COULD NOT PRODUCE THE RELEVANT DOCUMENTS; HOWEVER, THE RELEVANT DOCUMENTS COULD BE PRODUCED DURING THE COURS E OF ASSESSMENT PROCEEDINGS TILL THE PASSING OF ORDER I.E. ON 31.12.2009. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT THE. 100% EOU HAS BEEN FORMED BY SPLITTING AND RE - CONSTRUCTION OF OLD BUSINESS CARRIED BY ASSESSEE GROUP IN THE NAME OF MKU PVT. LTD. 5. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT THE MANAGEMENT AND FINANCIAL CONTROL WERE I N THE HANDS OF PARENT COMPANY I.E. M/S. MKU PVT. LTD. 6. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT THE MACHINE PURCHASED ON HIGH SEAS BY M/S. MKU PVT. LTD. HAS BEEN TRANSFERRE D TO 100%EOU. 7. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS IN DELETING THE CONSULTANCY CHARGES OF RS.3,55,600/ - PAID TO SHRI SHARAD KHANDELWAL WITHOUT APPRECIATING THE FACT THAT PR OPER OPPORTUNITY WAS PROVIDED BY THE ASSESSING OFFICER BY ISSUING WRITTEN QUESTIONNAIRE DATED 20.11.2009 VIDE PARA - 11 AND THE ASSESSES WAS UNABLE TO JUSTIFY ITS CLAIM BY FURNISHING DETAILS OF SERVICES RENDERED BY SHRI SHARAD KHANDELWAL. 8. THAT THE COMMIS SIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE 5 ADDITION OF RS.28,386/ - WITHOUT APPRECIATING THE FACT THAT IT WAS A DEFERRED EXPENDITURE AND CLAIMED IN P/L ACCOUNT AND IT WAS NOT DISALLOWED BY THE ASSESSEE WHILE COMP UTING THE TOTAL INCOME. 9. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS, EVEN ON THE PRESUMPTION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS COLLECTED THE ADDITIONAL EVIDENCE (AS REFERRED IN GROU ND NO.2 SUPRA) AND RECORDED THE STATEMENT OF ONE WITNESS UNDER RULE 46A(4), THEN ALSO THERE WAS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE BY NOT PROVIDING OPPORTUNITY TO EXAMINE THE EVIDENCES SO COLLECTED AND TO CROSS EXAMINE THE WITNESS BY THE ASSESSING O FFICER AND THUS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR BEING ERRONEOUS IN LAW, DESERVES TO BE SET - ASIDE. 10. THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR BEING ERRONEOUS, IN LAW AND ON FACTS DESERVES TO B E VACATED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. REGARDING GROUND NO. 2 I.E. REGARDING VIOLATION OF RULE 46A, IT WAS SUBMITTED BY LEARNED D.R. OF THE REVENUE THAT CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER AND HENCE, THERE IS VIOLATION OF RULE 46A OF THE I.T. RULES. 4. AS AGAINST THIS, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT CIT(A) IS HAVING CO - TERMINOUS POWER OF THE ASSESSING OFFICER AND IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS NIRBHERAM DALURAM [1997] 224 ITR 610 (SC) . HE ALSO DRAWN OUR ATTENTION TO THE PROVISIONS OF SECTION 250(4) AND POINTED OUT THAT AS PER TH ESE PROVISION S , THE CIT(A) MAY MAKE SUCH FURTHER ENQUIRY AS HE DEEMS FIT AND IN THE PRE SENT CASE , THE ENQUIRIES WERE MADE BY CIT(A) AND THEREFORE, THERE IS NO VIOLATION OF RULE 46A OF THE INCOME TAX RULES . HE ALSO SUBMITTED THAT NO OUTSIDER WAS 6 PRODUCED BEFORE CIT(A). HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) INCOME TAX OFFICER VS. INDUSTRIAL ROADWAYS REPORTED IN [2008] 305 ITR (AT) 219 ( II ) HANUTRAM RAMPRASAD VS. CIT (GAUHATI HIGH COURT) (UR) ( III ) SMT. PRABHAVATI S. SHAH VS COMMISSIONER OF INCOME - TAX [1998] 231 ITR 1 (BOM) ( IV ) COMMISSIONER OF INCOME - TAX VS DEV MUSCO LIGHTING P. LTD. [2009] 316 ITR 209 (DEL) ( V ) COMMISSIONER OF INCOME - TAX VS CENTRAL MALL [2011] 332 ITR 320 (P&H) ( VI ) SHILPA ASSOCIATES VS INCOME - TAX OFFICER [2003] 263 ITR 317 (RAJ) ( VII ) MOHINDAR KAUR (SMT.) VS CENTRAL GOVERNMENT [1976] 104 ITR 120 (ALL) ( VIII ) COMMISSIONER OF INCOME - TAX VS NIRBHERAM DALURAM [1997] 224 ITR 610 (SC) ( IX ) COMMISSIONER OF INCOME - TAX VS K. RAVINDRANATHAN NAIR [2004] 265 ITR 217 (KER) ( X ) P. L. PATIL VS. INCOME TAX OFFICER [2011] 60 DTR (MUM) (TRIB.) 53 ( XI ) CIT VS. CONTINENTAL ENGINEERS LTD. [2011] 60 DTR (DEL) 40 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS NOTED BY CIT(A) IN PARA 5.6, THE LEARNED A.R. OF THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 11/06/2010, SWORN BY MR. MANISH KHANDELWAL, DIRECTOR OF THE ASSESSEE COMPANY. THE CIT(A) HAS REPRODUCED T HE RELEVANT PORTION OF THIS AFFIDAVIT IN HIS ORDER. THEREAFTER, THE CIT(A) HAS DECIDED THE ISSUE AS PER PARA 6 OF HIS ORDER. WE ALSO FIND THAT CIT(A) HAS EXAMINED THE AUTHENTICITY OF THE SAID AFFIDAVIT AND FOR THIS PURPOSE , HE HAS ALSO EXAMINED THE AFFID AVIT OF TECHNICAL STAFF. IN PARA 6.2.7 OF HIS ORDER, IT IS NOTED B Y CIT(A) THAT IN COMPLIANCE TO HIS DIRECTION, SHRI MANISH KHANDELWAL ATTENDED WITH SHRI G. C. MISHRA, THE TECHNICAL STAFF AND THEIR STATEMENTS WERE RECORDED ON OATH. THE CIT(A) HAS ALSO RE PRODUCED THE RELEVANT PORTION OF THEIR STATEMENT S . THEREAFTER, THE CIT(A) HAS DECIDED THE ISSUE ON THE BASIS OF THESE AFFIDAVITS AND STATEMENTS. IN OUR CONSIDERED OPINION, THE STATEMENTS WERE RECORDED OF SHRI MANISH 7 KHANDELWAL ALONG WITH SHRI G. C. MISH RA ON THE DIRECTION OF CIT(A) AND THEREFORE, THE SAID STATEMENTS ARE COVERED BY SECTION 250(4) AND FOR THESE STATEMENTS , THERE IS NO APPLICABILITY OF RULE 46A. REGARDING THE AFFIDAVIT OF SHRI MANISH KHANDELWAL, DIRECTOR OF THE ASSESSEE ALSO, WE ARE OF THE CONSIDERED OPINION THAT AFFIDAVIT OF THE DIRECTOR OF THE ASSESSEE COMPANY CANNOT BE CONSIDERED AS A NEW EVIDENCE EFFECTED BY RULE 46A. ON PAGE NO. 25 OF HIS ORDER, IT IS NOTED BY CIT(A) THAT VARIOUS DOCUMENTS WERE SUBMITTED BY THE ASSESSEE IN PURSUANCE O F HIS SPECIFIC DIRECTION S GIVEN U/S 250(4) OF THE ACT. CONSIDERING ALL THESE FACTS, IN OUR CONSIDERED OPINION, THERE IS NO VIOLATION OF RULE 46A AND THEREFORE, WE DO NOT FIND ANY MERIT IN GROUND NO. 2 RAISED BY THE REVENUE. ACCORDINGLY, THIS GROUND IS RE JECTED. 6. REGARDING OTHER GROUNDS, IT IS SEEN THAT ALL THESE GROUNDS ARE IN CONNECTION WITH ONE ISSUE I.E. DELETION OF DISALLOWANCE OF EXEMPTION OF RS.3,29,28,386/ - CLAIMED BY THE ASSESSEE U/S 10B WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. ON THIS ISSUE, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO FURNISHED WRITTEN SUBMISSIONS, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF R EADY REFERENCE: - 1. THE FACT THAT ONLY 17 ITEMS OF MACHINERY WERE FOUND AT THE PREMISES OF ASSESSEE DURING THE COURSE OF SURVEY AND REMAINING 77 ITEMS WERE FOUND AT JACKET DIVISION OF M/S MKU (P) LTD. AS MENTIONED IN CIT(A) ORDER 5.2.1 PAGE 6 AS UNDER: - '5.2.1 THAT A SURVEY U/S 133A WAS CARRIED OUT BY INCOME TAX DEPARTMENT ON 25.02.2008 AT PREMISES NO. 118F, SHYAM NAGAR KANPUR INCLUDING OTHER BUSINESS PREMISES BELONGING TO THE ASSE SSEE GROUP. THE ASSESSING OFFICER HAS OBSERVED THAT DURING THE COURSE OF SURVEY, VARIOUS DOCUMENTS & BOOKS OF ACCOUNTS WERE FOUND & IMPOUNDED. THE ASSESSEE COMPANY CLAIMED TO BE OWING 94 ITEMS OF MACHINERIES BUT IT WAS FOUND THAT ONLY 17 ITEMS WERE INSTALL ED AT THE FACTORY PREMISES (AT 118E, SHYAM NAGAR, KANPUR). THAT REST OF 77 ITEMS OF MACHINERIES WERE FOUND TO BE INSTALLED AT JACKET DIVISION 8 OF M / S MKU (P) LTD. 30, UPSIDC, MALWAN & SALEMPUR (ROOMA). IT HAS ALSO BEEN STATED THAT LOOSE PAPERS IN ANN. LP - 18 CONTAINED TWO BILLS DATED 07.03.2005 AND 09.03.2005 FOR ENGAGING CRANES AND LABOURS FOR SHIFTING OF HYDRAULIC PRESS MACHINE TO MALWAN FROM GANDHI GRAM, KANPUR BEING ONE OF THE FACTORY PREMISES OF MKU (P) LTD. THE ASSESSING OFFICER HAS ALLEGED THAT THE ASS ESSEE GROUP IS FORMED TO HAVE CLAIMED DEDUCTION/EXEMPTION U/S 80HHC, 10B & U/S 80IC IN SUCCESSION ON STRENGTH OF BASICALLY THE SAME INFRASTRUCTURE IN FLAGRANT VIOLATION OF LAW. 2. THE ASSESSING OFFICER'S FINDING AS PER CIT(A) IS BASED ON THE POINTS MENTIO NED AT PARA 11 PAGE 16 OF CIT(A) ORDER AS UNDE R - A) AT THE TIME OF SURVEY ON 25.02.2008 AT 118 - E, SHYAM NAGAR, KANPUR WHICH WAS THE SITE OF INDUSTRIAL UNDERTAKING OF THE 'APPELLANT' AND APPROVED ALSO AS EOU BY THE ASSTT. DEVELOPMENT COMMISSIONER, NOIDA U NDER SECTION 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT 1951 WHOLE OF THE MACHINERIES AS BELONGING TO THE 'APPELLANT' WERE NOT FOUND TO BE INSTALLED THERE; B) OTHER PLANT AND MACHINERY OF THE 'APPELLANT' WERE REPORTED TO BE INSTALLED AT THE PREMISES OF M/S MKU (P) LTD. SITUATED 30, UPSIDC, MALWA, DISTT, FATEHPUR/RUMA INDUSTRIAL ESTATE (PROMOTED AND DEVELOPMENT BY UPSIDC), KANPUR; C) AS PER THE MATERIAL COMING INTO POSSESSION OF THE AUTHORISED OFFICERS THERE EXISTED EVIDENCE WHICH WENT ON SHO W THAT SOME IMPORTANT MACHINERIES HAD BEEN SHIFTED FROM 13, GANDHI GRAM, KANPUR TO THE SITE AT MALWA; IN THIS RESPECT REFERENCE HAS BEEN MADE TO THE LOOSE PAPERS SHOWING PAYMENT OF TRANSPORTATION CHARGES FOR HYDRAULIC MACHINE; D) AS PER STATEMENT GIVEN BY SRI. G.C. MISHRA, VICE PRESIDENT OF THE 'APPELLANT' COMPANY MOST OF THE PROCESS CONNECTED WITH MANUFACTURING, WAS BEING UNDERTAKEN AND CARRIED OUT BY THE SISTER CONCERN M/S MKU (P) LTD. TO WHOM JOB CHARGES WERE BEING PAID; 9 E) THE 'APPELLANT' HAD SET UP I NDUSTRIAL UNIT ONLY FOR CLAIMING BENEFIT UNDER SECTION JOB OF THE ACT, AS A SISTER CONCERN ENGAGED IN THE SAME BUSINESS BECAME DISENTITLED FOR DEDUCTION UNDER SECTION 80HHC ON ITS EXPORT TURNOVER, BECAUSE OF CHANGE IN LAW' AND F) RAW - MATERIAL ETC. WERE BE ING PROCURED THROUGH THE SISTER CONCERN M/S MKU (P) LTD. 3. THE CIT(A) HAS ADMITTED IN PARA 6.2.5 PAGE 26 THAT THE ASSESSEE HAS OUT SOURCED MANUFACTURING ACTIVITIES AS UNDE R - ' 6 .2.5 THERE IS NO DOUBT THAT THE APPELLANT HAD INSTALLED VARIOUS MACHINES FOR MANUFACTURING OF THE GOODS BEING EXPORTED, YET IT IS AN ADMITTED FACT THAT IT HAD OUTSOURCED SOME OF THE MANUFACTURING ACTIVITIES TO OTHER UNITS ON JOB WORK BASIS. THIS BRINGS US TO ANOTHER FUNDAMENTAL ISSUE, I.E. WHETHER TO QUALITY FOR BEING A MANUFACTURI NG UNIT, THE ENTIRE MANUFACTURING PROCESS HAS TO BE CARRIED OUT IN - HOUSE? 4. IN PARA 6.5 ON PAGE 35 , CIT(A) HAS HELD THAT MANUFACTURING OF VARIOUS ARTICLES AND THIS UNIT IS ALSO NOT HIT BY THE PROVISIONS OF SPLITTING UP. STATE AS UNDER: - ' 6 .5 LOOKING TO THE ENTIRETY OF FACTS, CIRCUMSTANCES & VARIOUS CASE LAWS, I HOLD THAT THE APPELLANT HAS ESTABLISHED A NEW INDUSTRIAL UNDERTAKING WHICH IS 100% EOU ENGAGED IN MANUFACTURING OF VARIOUS ARTICLES AND THIS UNIT IS ALSO HIT BY THE PROVISIONS OF SPL ITTING UP OR RECONSTRUCTION AND IS, THEREFORE, ENTITLED FOR THE CLAIM OF DEDUCTION U/S 10B OF THE I.T. ACT WHICH IS HEREBY DIRECTED TO BE ALLOWED & THE GROUNDS RELATING TO THIS ISSUE STAND ALLOWED. 5. THE FACT THAT ONLY 20% MACHINES ENGAGED IN MANUFACTURI NG WERE FOUND IN THE PREMISES OF ASSESSEE. THE OUTSOURCING DOES NOT MEAN THAT 80% OF MACHINES ARE LENT TO SOME OTHER CONCERN FOR DOING MANUFACTURING ON ITS BEHALF. OUTSIDE MANUFACTURING OF MAJOR PORTION IS NOT WITHIN THE AMBIT OF OUTSOURCING. 10 6. THE OBSER VATION OF CIT(A) REGARDING DEFINITION OF OUT SOURCING IS BEYOND THE SPIRIT OF OUT SOURCING WORK. 7. THE PROVISIONS OF SECTION 10B(2) (II) STATE AS UNDER: - 10(2) THIS SECTION APPLIES TO ANY UNDERTAKING WHICH FULFILL ALL THE FOLLOWING CONDITIONS, NAMELY (II) IT IS NOT FORMED BY THE SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE; 8. THE SPLITTING IS PROVED FROM THE FACTS GATHERED AT THE TIME OF SURVEY. 9. IT CAN BE SEEN THAT THE PROVISIONS OF SECTION 10B(2) IS NOT FULFILLED. 10. IN THE CASE OF CIT WEST BENGAL - II VS DURGA PRASAD MORE 82 ITR 540(SC). THE HON'BLE SUPREME COURT OBSERVED: - .... IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL.... .. ..... SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO LEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFORE, THE COUNTS AND TRIBUNAL HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIE S. HUMAN MINDS MAY DIFFER AS TO THE RELIABILITY OF A PIECE OF EVIDENCE..... ..... THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS ..... 11. THE HON'BLE BENCH MAY BE PLEASED TO CONFIRM THE ORDER OF ASSESSING OFFICER AS THE PROVISIONS OF SECTION 10B(2) ARE NOT FULFILLED. 7. IN COURSE OF HEARING, HE ALSO SUBMITTED THAT VARIOUS JUDGMENTS CITED BY THE ASSESSEE ARE NOT APPLICABLE IN THE PRESENT CASE BECAUSE FACTS ARE DIFFERENT. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT 11 RENDERED IN THE CASE OF COMPUTER GRAPHIC S LTD. VS COMMISSIONER OF INCOME - TAX [2009] 308 ITR 98 (SC) . RELIANCE WAS ALSO PLACED ON A JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF JEANS KNIT (P.) LTD. VS. DCIT [2013] 38 TAXMANN.COM 112 (KARNATAKA). HE SUBMITTED A COPY OF THIS JUDGMENT. 8. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO SUBMITTED THAT ON PAGE NO. 109 TO 125 OF THE PAPER BOOK IS AN AGREEMENT DATED 19/03/2007 WITH M/S MKU PRIVATE LIMITED REGARDING TRANSFER OF EOU UNIT OF THE ASSESSEE TO THAT COMPANY WITH EFFECT FROM 01/04/2007. HE ALSO SUBMITTED THAT THE CERTIFICATE DATED 11/03/2004 FOR SETTING UP A UNIT UNDER EOU SCHEME IS AVAILABLE ON PAGE NO. 13 OF THE PAPER BOOK. AT THIS JUNCTURE , IT WAS POINTED OUT BY THE BENCH THAT THE ANNUAL C APACITY IS MENTIONED AGAINST ONE ITEM ONLY I.E. BULLET PROOF JACKET TO THE EXTENT OF 6,480 THEN WHAT IS THE ANNUAL CAPACITY OF THE REMAINING 12 ITEMS. IN REPLY, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT CAPACITY IS NOT RELEVANT. HE ALSO DRAWN OUR ATTENTION TO VARIOUS JUDGMENTS CONSIDERED BY CIT(A), WHICH ARE AS UNDER: ( I ) COMMISSIONER OF INCOME - TAX VS TALWAR KHULLER (P.) LTD. [1999] 235 ITR 70 (ALL) ( II ) COMMISSIONER OF INCOME - TAX VS PRABHUDAS KISHORDAS TOBACCO PRODUCTS P. LTD. [2006] 282 ITR 568 (GUJ .) ( III ) LIBERTY GROUP MARKETING DIVISION VS COMMISSIONER OF INCOME - TAX [2007] 294 ITR 61 (P&H) 8.1 IN ADDITION TO THIS , HE ALSO PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : - ( I ) SUNRISE METAL INDUSTRIES VS. INCOME TAX OFFICER [2004] 89 ITD 406 (MUM) ( II ) CIT VS. PENWALT INDIA LTD. 196 CTR 813 ( III ) INTIMATE FASHIONS (INDIA) (P) LTD. VS. ACIT [2012] 077 DTR (A.T.) 0068 12 8.2 REGARDING THE ALLEGATION OF SPLITTING UP AND RECONSTRUCTION, HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) CIT VS. QUALITY STEEL TUBES P. LTD. [2006] 280 ITR 254 (ALL) ( II ) CIT VS. STARLIGHT SILK MILLS PVT. LTD. [2006] 280 ITR 37 (GUJ) ( III ) TEXTILE MACHINERY CORPORATION LTD. VS. CIT [1977] 107 ITR 195 ( IV ) HINDUSTAN MALLEABLES AND FORGINGS LTD. VS. INCOME TAX OFFICER [1978] 112 ITR 389 (PATN A) ( V ) CIT VS. SIMMONDS MARSHALL LTD. [1986] 161 ITR 817 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY IS NOT AN ISOLATED COMPANY BUT BELONGS TO A GROUP OF COM PANIES WHICH COMPRISED OF M/S MKU PVT. LTD., M/S A. R. THERMOSETS PVT. LTD., M/S A. R. POLYMERS PVT. LTD. AND M/S A. R. PLIMSOLS PVT. LTD. T HE ASSESSING OFFICER HAS ALSO NOTED THAT SURVEY U/S 133A WAS CARRIED OUT ON 25/02/2008 AT THE PREMISES OF THE ASSES SEE COMPANY AT 118 - E, SHYAM NAGAR, KANPUR INCLUDING OTHER BUSINESS PREMISES BELONGING TO THE ASSESSEE GROUP. THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE COURSE OF SURVEY , VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND IMPOUNDED. HE ALSO NOTED THAT THE ASSESSEE COMPANY CLAIMED TO BE OWNING 94 ITEMS OF MACHINERIES BUT IT WAS FOUND THAT ONLY 17 ITEMS WERE INSTALLED AT THE FACTORY PREMISES WHICH IS THE EOU UNIT OF THE ASSESSEE AT 118 - E, SHYAM NAGAR, KANPUR AND BALANCE 77 ITEMS OF THE MACHINERIES WERE F OUND TO BE INSTALLED AT JACKET DIVISION OF M/S MKU PVT. LTD., 30 UPSIDC, MALWAN. THE ASSESSING OFFICER ALSO NOTED THAT CERTAIN LOOSE PAPERS WERE ALSO IMPOUNDED AND ONE BUNCH OF LOOSE PAPERS MARKED AS LOOSE PAPERS - 18 CONTAINED TWO BILLS DATED 07/03/2006 AN D 09/03/2005 FOR ENGAGING CRAINS AND LABOURS FOR SHIFTING OF HYDROLIC PRESS MACHINE TO MALWAN FROM 13, GANDHI GRAM, KANPUR BEING ONE OF THE FACTORY PREMISES OF M/S MKU PVT. LTD. AND ASSESSING OFFICER HAS ENCLOSED THE SCANNED COPY OF THESE TWO BILLS WITH TH E ASSESSMENT ORDER. THE ASSESSING OFFICER HAS ALSO REPRODUCED 13 PORTION OF THE STATEMENT OF SHRI G. C. MISHRA, VICE PRESIDENT OF THE ASSESSEE COMPANY, WHICH WAS RECORDED ON THE DATE OF SURVEY AND PARTICULARLY HE HAS NOTED QUESTION AND ANSWER NO. 18. IN REPLY TO THIS QUESTION, IT WAS SUBMITTED BY SHRI G. C. MISHRA THAT THERE ARE 13 STAGES FOR MANUFACTURING OF HELMET. BASED ON THIS STATEMENT, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT AT THE ADDRESS OF THE MANUFACTURING UNIT OF THE ASSESSEE CO MPANY, THE ONLY ACTIVITY WHICH WAS BEING CARRIED OUT WAS PAINTING OF THE FINISHED HELMETS. HE ALSO NOTED THAT THE MAIN MANUFACTURING IS CARRIED OUT AT 13, GANDHI GRAM, KANPUR. THE ASSESSING OFFICER HAS RAISED THIS ISSUE IN THE ASSESSMENT ORDER THAT AS PE R THE STATEMENT OF SHRI G. C. MISHRA, VICE PRESIDENT OF THE ASSESSEE COMPANY ON OATH THAT AS AGAINST 13 STAGES OF MANUFACTURING PROCESS, THE ASSESSEE COMPANY CARRIED OUT ONLY PROCESS NUMBER 2 & 3 AND 10 AND 13 AT SHYAM NAGAR, KANPUR. BASED ON THIS STATEME NT, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT NO MANUFACTURING IS BEING CARRIED OUT BY THE ASSESSEE AT ITS PREMISES. HE HAS ALSO NOTED THAT THE ASSESSEE COMPANY HAS PAID JOB WORK CHARGES OF RS.117 LAC S AND ON THIS BASIS , HE CONCLUDED THAT THIS PROV ES THAT THE ASSESSEE COMPANY IS NOT DOING ANY MANUFACTURING ACTIVITY AT ALL. HE HELD THAT CONDITION NO. (I) OF MANUFACTURING OR PRODUCTION O F ARTICLE OR THING AS ENVISAGED IN SECTION 10B(2) IS NOT FULFILLED AT ALL. WE ALSO FIND THAT ON PAGE NO. 38 OF THE PAPER BOOK IS SCHEDULE - 14 TO THE BALANCE SHEET AS ON 31/03/2007 AND AS PER THE SAME , THE ASSESSEE HAS PAID JOB WORK EXPENSES OF RS.117.24 LAC S AND HAS PAID ONLY RS.5.98 LAC S FOR POWER, FUEL AND WATER. AS PER SCHEDULE - 14 APPEARING ON PAGE NO. 39 OF THE PA PER BOOK, THE ASSESSEE HAS INCURRED ONLY RS. 1 3.8 7 LAC S ON ACCOUNT OF WAGES AND SALARY AND THEREFORE, THE AMOUNT INCURRED ON ACCOUNT OF JOB WORK EXPENSES IS ALMOST 8.5 TIMES OF WAGES AND SALARY. IT IS ALSO SEEN THAT THE EXPENSES INCURRED BY THE ASSESSEE CO MPANY ON POWER, FUEL AND WATER IS VERY NEGLIGIBLE OF RS.5.98 LAC S ONLY WHEREAS THE ASSESSEE HAS INCURRED HUGE SUM ON ACCOUNT OF JOB WORK EXPENSES OF RS.117.24 LAC S . THIS IS THE CLAIM OF THE ASSESSEE THAT EVEN JOB 14 WORK GOT DONE FROM OUTSIDE WAS UNDER THE S UPERVISION AND CONTROL OF THE ASSESSEE COMPANY BUT IT IS NOT SUPPORTED BY BRINGING ANT COGENT MATERIAL ON RECORD BECAUSE WHEN ONLY RS.13.87 LAC S WAS INCURRED ON ACCOUNT OF WAGES AND SALARY, IT IS NOT ACCEPTABLE THAT THE ASSESSEE WAS HAVING SUFFICIENT TECHN ICAL EXPERTS TO SUPERVISE AND CONTROL THE JOB WORK BY OUTSIDE AGENCIES FOR WHOLE OF THE YEAR BECAUSE MONTHLY EXPENSES ON ACCOUNT OF WAGES & SALARY IS ONLY RS. 1 . 16 LACS APPROX AND IT INCLUDES THE EXPENSES FOR LABOURS WHO HAD CARRIED OUT SOME PROCESSES AND IT ALSO INCLUDES SALARY TO OFFICE STAFF AND SECURITY GUARDS ETC. 9.1 THIS WAS ALSO AN OBJECTION OF THE ASSESSING OFFICER THAT AS PER THE PROVISIONS OF SECTION 10B, THE BUSINESS SHOULD NOT BE FORMED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. IN THIS REGARD, IT WAS THE REPLY OF THE ASSESSEE BEFORE TH E ASSESSING OFFICER THAT THE BUSINESS WAS NOT FORMED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. IN THIS REGARD, IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO. 14 OF THE ASSESSMENT ORDER THAT THE UNDISPUTED FACT IS THAT EARLIER T HE NAME OF THE ASSESSEE COMPANY WAS M/S A. R. PLIMSOLS PVT. LTD. AND DURING FINANCIAL YEAR 2004 - 05 , IT WAS RENAMED AS M/S MKU ARMORS PVT. LTD. AND THEREFORE, THE ASSESSEE COMPANY WAS ALREADY IN EXISTENCE. IN THIS REGARD, WE FEEL THAT AS PER CLAUSE (III) O F SUB SECTION (2) OF SECTION 10B, THIS IS A PRE REQUISITE FOR AVAILING DEDUCTION U/S 10B THAT THE NEW BUSINESS IS NOT FORMED BY TRANSFER OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. APART FROM STATING THIS THAT THERE IS CHANGE IN NAME, NOTHING IS STATED BY THE A..O. THAT NEW BUSINESS WA S FORMED BY THE ASSESSEE BY TRANSFER OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE AND HENCE , THIS OBJECTION OF THE A.O. IS NOT VALID BUT THERE IS AMPLE FORCE IN THE HIS FIRST OBJECTION THAT NO MANUFACTURI NG ACTIVITY WAS CARRIED OUT BY THE ASSESSEE BECAUSE WE HAVE SEEN THAT THE ASSESSEE COMPANY WAS NOT EVEN HAVING SUFFICIENT TECHNICAL EXPERTS TO 15 SUPERVISE AND CONTROL THE JOB WORK DONE BY OUTSIDER AND MAJOR PORTION OF WORK WAS GOT DONE FROM OUTSIDE THAT TOO WITHOUT OWN SUPERVISION AND CONTROL . 9.2 IN THE LIGHT OF THESE FACTS, NOW WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 9.2.1 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE AL LAHABAD HIGH COURT RENDERED IN THE CASE OF TALWAR KHULLER (P.) LTD. (SUPRA). IN THIS CASE , IT WAS NOTED BY HON'BLE ALLAHABAD HIGH COURT THAT THE ASSESSEE COMPANY WAS MANUFACTURING VARIOUS ARTICLES OF BRASSWARE FROM ARTISANS UNDER ITS SUPERVISION AND CONTR OL . IT WAS ALSO NOTED THAT THE ASSESSEE GAVE THE PATTERN AND DESIGN OF THE ARTICLES TO BE MANUFACTURED BY THE ARTISANS AND ADVANCED MONEY TO THEM FOR PURCHASING THE RAW MATERIAL. IT WAS ALSO NOTED THAT THE ARTISANS MADE ARTICLES IN DIFFERENT MODELS. IT FURTHER NOTED THAT THE ARTICLES IN RAW FORM WERE EXAMINED BY THE ASSESSEE AND THEN DIRECTIONS WERE GIVEN TO THE ARTISANS TO MODIFY AND POLISH THE SAME. UNDER THESE FACTS, IT WAS HELD BY HON'BLE ALLAHABAD HIGH COURT THAT THE ASS ESSEE COMPANY WAS A NEW COMPANY MANUFACTURING OR PROCESSING GOODS. IN THE PRESENT CASE, WE HAVE ALREADY SEEN THAT THE ASSESSEE IS INCURRING ONLY AN AMOUNT OF RS.13.87 LAC ON ACCOUNT OF WAGES AND SALARY AND IT HAS NOT BEEN SHOWN THAT THE ASSESSEE WAS HAVING SUF FICIENT TECHNICAL EXP E RTS TO SUPERVISE AND CONTROL THE MANUFACTURING BY JOB WORKERS. W HEN THE ASSESSEE WAS NOT HAVING TECHNICAL EXPERTS TO SUPERVISE AND CONTROL THE MANUFACTURING PROCESS BEING CARRIED OUT BY JOB WORKERS, THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 9.2.2 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF LIBERTY GROUP MARKETING DIVISION (SUPRA). THERE IS NO DECISION TAKEN IN THIS JUDGMENT AND IT WAS MERELY HELD THAT THE TRIBUNAL SHOULD DRAW A STATEMENT OF THE CASE AND REFER THE QUESTION OF LAW ALONG WITH THE STATEMENT OF THE CASE TO 16 PUNJAB & HARYANA HIGH COURT. HENCE, THIS JUDGMENT IS NOT RELEVANT BECA USE THERE IS NO DECISION IN THIS JUDGMENT ON THE ISSUE IN DISPUTE. 9.2.3 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF PRABHUDAS KISHORDAS TOBACCO PRODUCTS P. LTD. (SUPRA). I N THIS CASE ALSO , THE DECISION IS ON THE BASIS THAT THE TEST IS WHETHER THE OUTSIDER AGENCY WORKS DIRECTLY UNDER THE SUPERVISION AND CONTROL OF THE ASSESSEE AND THIS IS IM MATERIAL WHETHER THE PROCESSING IS DONE BY THE WORKERS EMPLOYED BY THE ASSESSEE AT A PLACE OUTSIDE THE PREMISES OF THE ASSESSEE. HENCE, AS PER THIS JUDGMENT ALSO, THE REAL TEST IS AS TO WHETHER THE OUTSIDE AGENCY HAS WORKED UNDER DIRECT SUPERVISION AND CONTROL OF THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE WAS NOT HAVING SUFFICIENT T ECHNICAL EXPERTS AND IT IS NOT SHOWN AND ESTABLISHED THAT THE OUTSIDE AGENCY WAS WORKING UNDER ITS DIRECT SUPERVISION AND CONTROL AND THEREFORE, THIS JUDGMENT IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 9.2.4 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION RENDERED IN THE CASE SUNRISE METAL INDUSTRIES (SUPRA). IN THIS CASE ALSO, THE DECISION OF THE TRIBUNAL IS ON THE SAME BASIS THAT WHEN THE OUTSIDE A GENCY WORKING UNDER DIRECT SUPERVISION AND CO NTROL OF THE ASSESSEE, THE ASSESSEE IS DOING MANUFACTURING ACTIVITY. SINCE IN THE PRESENT CASE, THE ASSESSEE WAS NOT GETTING THE WORK DONE UNDER ITS DIRECT SUPERVISION AND CONTROL, THIS JUDGMENT IS ALSO NO T RENDERING ANY HELP TO THE ASSESSEE IN THE PRESEN T CASE. 9.2.5 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF PENWALT INDIA LTD. (SUPRA). THE BASIS OF THIS JUDGMENT IS THE SAME THAT WHEN THE ASSESSEE IS GETTING MACHINERY MAN UFACTURED BY SOMEBODY ELSE UNDER ITS 17 DIRECT SUPERVISION AND CONTROL AND ALL OTHER ACTIVITIES ARE UNDERTAKEN BY THE ASSESSEE, THE ASSESSEE IS ENGAGED IN MANUFACTURE OF SUGAR AND TEA MACHINERY AND THEREFORE, ENTITLED TO SPECIAL DEDUCTION U/S 80I OF THE ACT. SINCE IN THE PRESENT CASE , THE ASSESSEE COULD NOT ESTABLISH THAT IT WAS GETTING THE WORK DONE UNDER ITS DIRECT SUPERVISION AND CONTROL, THIS JUDGMENT IS NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 9.2.6 IN ADDITION TO THIS, ONE MORE CIT ATION WAS GIVEN BY THE ASSESSEE I.E. 77 DTR 68. THE LEARNED A.R. OF THE ASSESSEE WAS ASKED TO FURNISH COPY OF THIS JUDGMENT BUT HE HAS NOT DONE THE SAME. WE HAVE ALSO TRIED TO LOCATE THIS JUDGMENT BUT WE FIND THAT NO SUCH JUDGMENT IS REPORTED ON PAGE 68 OF 77 DTR. 9.2.7 IN ADDITION TO THIS, RELIANCE WAS ALSO PLACED ON VARIOUS JUDGMENTS IN SUPPORT OF HIS CONTENTION THAT THERE IS NO SPLITTING UP OR RECONSTRUCTION AS HAS BEEN ALLEGED BY THE ASSESSING OFFICER. WE FEEL THAT IN THE PRESENT CASE, THE ASSESSEE COULD NOT ESTABLISH THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING THEN THIS ASPECT AS TO WHETHER THERE IS ANY SPLITTING OR RECONSTRUCTION, IS NO T RELEVANT. HENCE, WE DO NOT ENTER IN THIS ASPECT PARTICULARLY WHEN THE A.O. ALSO HAS NOT ALLEGED THAT THERE WA S ANY TRANSFER OF USED MACHIN TO THE ASSESSEE COMPANY . 10. AS PER THE ABOVE DISCUSSION, WE HAVE SEEN THAT AS PER THE FACTS OF THE PRESENT CASE, IT CANNOT BE ACCEPTED THAT THE ASSESSEE IS UNDERTAKING ANY MANUFACTURING ACTIVITY BECAUSE WE HAVE SEEN THAT THE ASSESSEE COMPANY IS GETTING MOST OF THE WORK ON JOB WORK BASIS AND AT THE SAME TIME , THE ASSESSEE COMPANY IS NOT HAVING SUFFICIENT TECHNICAL EXPERT S TO CLAIM THAT SUCH JOB WORK WAS DONE UNDER ITS DIRECT SUPERVISION AND CONTROL. THEREFORE, WE FIND FORCE I N TH IS STAND OF THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT CARRYING OUT THE MANUFACTURING ACTIVITY. 18 11. REGARDING THE FINDING OF CIT(A), WE FIND THAT HE HAS DECIDED THE ISSUE BY FOLLOWING THREE JUDGMENTS, WHICH WE HAVE ALREADY DISCUSSED IN ABOVE PARAS AND WE HAVE FOUND THAT THESE JUDGMENTS ARE NOT APPLICABLE BECAUSE IN THOSE CASE S , THIS FINDING WAS GIVEN BY TRIBUNAL THAT THE ASSESSEE WAS GETTING THE WORK DONE FROM OUTSIDE AGENCY UNDER ITS DIRECT SUPERVISION AND CONTROL WHEREAS IN THE PRESENT CASE , WE H AVE SEEN THAT THE ASSESSEE IS NOT HAVING SUFFICIENT TECHNICAL EXPERT S TO CLAIM THAT SUCH JOB WORK WAS DONE UNDER ITS DIRECT SUPERVISION AND CONTROL. HENCE, IN THE FACTS OF THE PRESENT CASE, THE ORDER OF CIT(A) IS NOT SUSTAINABLE. WE ALSO FIND THAT IN PAR A NO. 6.2.9, IT IS STATED BY CIT(A) THAT MERE THIS FACT THAT SOME OF ITS MANUFACTURING PROCESS HAD BEEN OUTSOURCED COULD NOT ALTER ITS STATUS AS MANUFACTURING UNIT BUT WE HAVE SEEN THAT THE FACTS ARE TOTALLY DIFFERENT. IN THE PRESENT CASE, WE HAVE SEEN TH AT NO T SOME OF THE ACTIVITIES ARE OUTSOURCED BUT MOST OF THE ACTIVITIES ARE OUTSOURCED AND VERY FEW ACTIVITIES WERE UNDERTAKEN BY THE ASSESSEE WHICH IS ESTABLISHED FROM THIS FACT THAT THE EXPENSES INCURRED ON JOB WORK CHARGES IS 8.5 TIMES MORE THAN EXPENSES INCURRED ON WAGES AND SALARIES AND VERY SMALL AMOUNT WAS INCURRED ON ACCOUNT OF POWER, FUEL AND WATER OF RS.5.98 LAC S ONLY. HENCE, IT IS SEEN THAT THE BASIS ADOPTED BY CIT(A) IS TOTALLY INCORRECT BECAUSE HE HAS STATED THAT SOME OF THE ACTIVI TIES WERE OUTSOURCED WHEREAS IN THE FACTS OF THE PRESENT CASE, MOST OF THE ACTIVITIES WERE OUTSOURCED THAT TOO WITHOUT DIRECT SUPERVISION AND CONTROL OF THE ASSESSEE. HENCE, WE REVERSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 13. NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 I.E. C.O.NO.49/LKW/2010. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 19 1. THAT THE LEARNED CIT (A) WAS WRONG IN LAW AND ON FACTS IN NOT ALLOWING THE EXEMPTION OF INTEREST OF RS.3,09,767/ - ON FDRS UNDER THE PROVISIONS OF SECTION 10B OF THE I.T. ACT 1961. 2. THAT THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THAT THE FDRS WERE TA KEN FOR PLEDGING THE SAME BY WAY OF MARGIN MONEY, IN ORDER TO MEET ESSENTIAL BUSINESS REQUIREMENT & AS SUCH INTEREST ON SUCH FDRS WAS A PART OF BUSINESS ACTIVITY CARRIED ON BY THE EOU OF THE APPELLANT COMPANY & THE SAME QUALIFY FOR EXEMPTION U/S 10B OF THE ACT. 14. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS IN THE CROSS OBJECTION, WHICH ARE AS UNDER: (III) THAT IN RELATION TO GROUND NO.2 AS HAS BEEN TAKEN BY THE REVENUE IN THE ABOVE MENTIONED APPEAL, THE ASSESSEE/CROSS OBJECTOR BEGS TO SUBMIT THAT NO ADDITIONAL EVIDENCE WAS TAKEN INTO CONSIDERATION BY THE LD. CIT (APPEALS), IN UPHOLDING THE APPELLANT'S CLAIM FOR EXEMPTION UNDER SECTION 10B OF THE ACT AND THE SAID GROUND IS NOT MAINTAINABLE AT ALL. (IV) THAT THERE IS NO INFIRMITY IN THE APPELLATE O RDER DATED 15.7.2010, WHICH IS THE SUBJECT MATTER OF APPEAL FILED BY THE REVENUE, EXCEPTING THE ADDITIONAL PLEA THAT THE ASSESSEE SEEKS TO TAKE HEREINAFTER. (V) THAT THE APPLICABILITY OF SECOND PROVISO BELOW SECTION 10B READING AS 'PROVIDED (FURTHER) THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2003, THE DEDUCTION UNDER THIS SUB - SECTION SHALL BE NINETY PERCENT OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE' WAS RESTRICTED ONLY FOR THE ASSESSMENT YEAR 2003 - 04. (VI) THAT THE ASSESSMENT ORDER DATED 30.12.2009 IS LIABLE TO BE DECLARED NULL AND VOID AS THE ASSESSEE ALREADY STOOD ASSESSED IN TERMS OF INTIMATION UNDER SECTION 143(1) 20 DATED 20.3.2009, AS HAD BEEN ISSUED BY THE ASSESSING OFFICER AFTER MAKING NECESSARY ENQUIR IES. (VII) THAT THE ASSESSMENT SO MADE, ALTHOUGH CAPTIONED AS 'ASSESSMENT/INTIMATION UNDER SECTION 143(1), HAD ALL THE ATTRIBUTES OF AN ASSESSMENT MADE UNDER SECTION AND THE ASSESSMENT SO MADE BEING IN FORCE, NO SUBSEQUENT ORDER COULD HAVE BEEN PASSED.' 15. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT ADDITIONAL GROUND NO. (VI) & (VII) ARE ONLY PRESSED ALONG WITH MAIN GROUND NO. 1 & 2 AND ADDITIONAL GROUND NO. (III), (IV) & (V) ARE NOT PRESSED. ACCORDINGLY, THESE THREE ADDITIONAL GROUNDS ARE REJECTED AS NOT PRESSED. 16. REGARDING ADDITIONAL GROUND NO. 6 & 7, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT SINCE INTIMATION U/S 143(1) WAS ISSUED ON 20/03/2009, WHICH IS AFTER THE ISSUE OF NOTICE U/S 143(2) ON 30/07/2008, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) ON 31/12/2009 IS BA D IN LAW AND SHOULD BE QUASHED. THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 4.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - I HAVE CONSIDERED THE ARGUMENTS TAKEN BY THE APPELLANT'S COUNSEL BUT I DO NOT AGREE WITH THE PROP OSITION THAT THE ASSESSMENT ORDER FRAMED UNDER SEC. 143(3) ON 31.12.2009 IS ILLEGAL OR BAD IN LAW. AS PER PROVISIONS OF THE ACT, NOTICE UNDER SEC. 143(2) CAN BE ISSUED AT ANY TIME AFTER THE FILING OF RETURN WITHIN THE SPECIFIED TIME LIMIT PROVIDED UNDER TH E PROVISIONS OF SEC. 143. IN THE INSTANT CASE, IT'S NOT THE CASE OF THE APPELLANT THAT THE NOTICE U/S 143(2) WAS NOT ISSUED WITHIN THE STIPULATED TIME. MOREOVER, THE INTIMATION ISSUED UNDER SEC. 143(1) IS NOT AN ASSESSMENT ORDER AS IT IS ONLY AN INTIMATION . THE LAW IS ALREADY WELL SETTLED IN THIS REGARD IN VIEW OF THE HON SC'S DECISION IN THE CASE OF RAJESH JHAVERI. I, THEREFORE, HOLD THAT THERE WAS NO ILLEGALITY IN THE ISSUANCE OF NOTICE UNDER SEC. 143(2) AND PASSING OF THE ASSESSMENT ORDER UNDER SEC. 143( 3) ON 31.12.2009. AS A RESULT, THE GROUNDS NOS. 1 & 2 OF THE APPEAL ARE DISMISSED. 21 17. LEARNED A.R. OF THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - ( I ) COMMISSIONER OF INCOME - TAX VS KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DEL) ( II ) INCOME - TAX OFFICER VS DELHI DEVELOPMENT AUTHORITY [2001] 252 ITR 772 (SC) ( III ) COMMISSIONER OF INCOME - TAX VS MEGHALAYA STEELS LTD. [2013] 356 ITR 235 (GAU) 18. ON THE OTHER HAND, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 19. WE HAVE CONSIDER ED THE RIVAL SUBMISSIONS. WE FIND THAT THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) WAS ON THE ISSUE AS TO WHETHER EVEN FOR CHANGE OF OPINION BY INCOME TAX OFFICER , ACTION U/S 147 CAN BE TAKEN OR NOT . THEREFOR E, THIS JUDGMENT IS NOT RELEVANT FOR THIS ISSUE RAISED BY THE ASSESSEE BEFORE US. THE ISSUE RAISED BY THE ASSESSEE IS NOT REGARDING REOPENING U/S 147 ON MERE CHANGE OF OPINION AND THEREFORE, THIS JUDGMENT IS NOT RELEVANT IN THE PRESENT CASE. LEARNED A.R. OF THE ASSESSEE HAS ALSO GIVEN A CITATION AS 130 ITR 9. HE HAS NOT GIVEN COPY OF THIS JUDGMENT AND WHEN WE TRIED TO FIND OUT THIS JUDGMENT, WE FIND THAT THERE IS NO JUDGMENT ON PAGE NO. 9 OF 130 ITR . 20. THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF DELHI DEVELOPMENT AUTHORITY (SUPRA). IN THIS CASE, THE DISPUTE BEFORE HON'BLE APEX COURT WAS REGARDING INTEREST U/S 244( 1A ) OF THE ACT IN RESPECT OF REFUND ARISING OUT OF AMOUNT COLLECTED UNDER THE PROVISIONS OF SECTION 201(1) AND 201(1A). HENCE, IT IS SEEN THAT IN THIS CASE ALSO, IT WAS NOT IN DISPUTE AS TO WHETHER AFTER ISSUE OF INTIMATION SUBSEQUENT TO ISSUE OF NOTICE U/S 143(2) OF THE ACT, AN 22 ASSESSMENT ORDER U/S 143(3) CAN BE FRAMED OR NOT. THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 21. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE. WE ALSO FIND THAT AS PER THE PROVISIONS OF SECTION 143(1), INTIMATION U/S 143(1) HAS TO BE ISSUED FOR INTIMATING THE ASSESSEE AFTER MAKING ADJUSTMENT, IF ANY, ON ACCOUNT OF ANY ARITHMETICAL ERROR IN THE RETURN OR FOR INCORRECT C LAIM IF SUCH IN CORREC T CLAIM IS APPARENT FROM THE INFORMATION IN THE RETURN AND NO INTIMATION IS REQUIRED TO BE ISSUED TO THE ASSESSEE IF NO TAX OR INTEREST IS PAYABLE OR RE FUNDABLE TO HIM. AS AGAINST THIS , ASSESSMENT ORDER U/S 143(3) IS TO BE FRAMED AFTE R ISSUE OF NOTICE U/S 143(2) AFTER GRANTING HEARING TO THE ASSESSEE AND AFTER CONSIDERING THE MATERIAL BROUGHT ON RECORD BY THE ASSESSEE IN COURSE OF SUCH HEARING. HENCE, IT IS SEEN THAT THE INTIMATION U/S 143(1) AND ASSESSMENT ORDER U/S 143(3) ARE TWO D IFFERENT THINGS AND ONE IS NOT THE SUBSTITUTE OF THE OTHER. HENCE, MERELY BECAUSE INTIMATION U/S 143(1) WAS ISSUED TO THE ASSESSEE AFTER ISSUE OF NOTICE U/S 143(2), IT CANNOT BE SAID THAT AN ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER U/S 143(3) ON A DATE AFTER THE DATE OF SUCH INTIMATION IS BAD IN LAW. HENCE, THESE ADDITIONAL GROUNDS OF THE ASSESSEE ARE REJECTED. 22. REGARDING THE MAIN GROUNDS OF THE ASSESSEE, LEARNED A.R. OF THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMENT OF HON'BLE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA). 23. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT SINCE WE HAVE HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR ANY DEDUCTION U/S 10B WHILE DECIDING THE APPEAL OF THE REVENUE, THESE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS 23 OBJEC TION HAVE BECOME INFRUCTUOUS BECAUSE WHEN THE ASSESSEE IS NOT ELIGIBLE FOR ANY DEDUCTION U/S 10B, INTEREST INCOME ON FDR ALONE CANNOT BE CONSIDERED FOR GRANTING EXEMPTION U/S 10B OF THE ACT. HENCE, THESE GROUNDS ARE ALSO REJECTED. 25. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE STANDS DISMISSED. 26. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 - 09 I.E. I.T.A. NO. 401/LKW/2011. GROUND NO. 1 TO 3 ARE INTER - CONNECTED, WHICH READ AS UNDER: 1. THE LD. CIT(A) - II HAS ERRED IN LAW A ND ON FACTS IN DELETING THE DISALLOWANCE OF RS.20,92,98,696/ - CLAIMED U/S 10B WITHOUT APPRECIATING THE FACTS OF THE CASE THAT CONDITIONS FOR THE CLAIM OF EXEMPTION U/S 10B WERE NOT SATISFIED. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIA TING THE FACTS THAT THE 100% EOU HAS BEEN FORMED BY SPLITTING AND RE - CONSTRUCTION OF OLD BUSINESS CARRIED BY THE ASSESSEE GROUP IN THE NAME OF MKU ARMOURS PVT. LTD. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACT THAT M/S MKU ARMOURS PVT. LTD. HAS NOT BEEN AMALGAMATED IN M/S MKU PVT. LTD., THEREFORE, EXEMPTION U/S 10B OF THE IT ACT, 1961 IS NOT ALLOWABLE. 27. REGARDING THESE GROUNDS, BOTH THE SIDES AGREED THAT THE ISSUE RAISED IN THIS GROUNDS IS IDENTICAL TO THE ISSUE RAISED BY REVENUE IN THE CASE OF M/S MKU (ARMOURS) PVT. LTD., FOR ASSESSMENT YEAR 2007 - 08 AND THE SAME CAN BE DECIDED ON SIMILAR LINES. 28. WE H AVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE DECISION OF CIT(A) IS ON THE BASIS THAT SINCE THE DEDUCTION WAS ALLOWED BY HIM IN THE CASE OF M/S MKU (ARMOURS) PVT. LTD., FOR ASSESSMENT YEAR 2007 - 08, DEDUCTION IS ALLOWABLE FOR ASSESSMENT YEAR 2008 - 09 BECAUSE THE SAME UNDERTAKING WAS 24 TAKEN OVER BY THIS ASSESSEE. IN THIS REGARD, WE FIND THAT IN ASSESSMENT YEAR 2007 - 08 IN THE CASE OF M/S MKU (ARMOURS) PVT. LTD., WE HAVE HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 10B BECAUSE THE ASSESSEE WAS NOT DOING MANUFACTURING ACTIVITY SINCE MOST OF THE PROCESSING WORK WAS OUTSOURCED BY THE ASSESSEE WITHOUT HAVING DIRECT SUPERVISION AND CONTROL. SINCE THE PRESENT ASSESSEE HAS ACQUIRED THE SAME UNDERTAKING FROM M/S MKU (ARMOURS) PVT. LTD., WHICH WAS N OT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT, THIS ASSESSEE IS ALSO NOT ELIGIBLE FOR DEDUCTION U/S 10B BECAUSE THIS ASSESSEE HAS ACQUIRED AN UNDERTAKING WHICH WAS PREVIOUSLY OPERATING AND WAS NOT ELIGIBLE FOR DEDUCTION U/S 10B. HENCE, EVEN IF THIS ASSESSE E IS NOT GETTING THE WORK DONE BY OUTSOURCING TO JOB WORKER, THIS ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 10B BECAUSE THIS ASSESSEE IS USING USED MACHINERIES AND THE EARLIER USER WAS NOT ENTITLED FOR EXEMPTION U/S 10B. HENCE, THERE IS VIOLATION OF THE C ONDITION OF SECTION 10B . THEREFORE, IN THIS CASE ALSO, WE REVERSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. ACCORDINGLY, GROUND NO. 1, 2 & 3 ARE ALLOWED. 29. GROUND NO. 4 READS AS UNDER: 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 24,60,525/ - WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE COMPANY HAD NOT FURNISHED THE DETAILS OF GOODS INSPECTED BY THE DELEGATION AND ALSO THE DETAILS OF TDS DEDUCTED BY THE ASSESSEE AS REQUIRED U/S 195 SINCE THE DELEGATION HAD INSPECTED THE GOODS IN INDIA. 30. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO SUBMITTED THAT THE RELEVANT IN VOICE IS ON PAGE NO. 45 OF THE PAPER BOOK. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 8.1, WHICH IS REPRODUCED BELOW: 25 8.1 THE PAYMENT FOR INSPECTION OF EXPORT CARGO WAS MADE TO AN EGYPTION CONCERN NAMELY M/S. ASHMAND ISRAIL. THE SAID PERSON IS EGYPTION RESIDENT AND, THEREFORE, THE PROVISIONS OF DTAA BETWEEN INDIA AND EGYPT (UAR) ARE APPLICABLE. INSPECTION WORK DONE BY THIS CO NCERN IN INDIA MAY GIVE RISE TO BUSINESS CONNECTION IN INDIA, BUT WOULD NOT CONSTITUTE PE IN INDIA AS IT WAS A ONE - OFF ACTIVITY AND THIS CONCERN DID NOT HAVE ANY ESTABLISHMENT OR BRANCH OFFICE IN INDIA. IN ABSENCE OF PE IN INDIA NO BUSINESS INCOME OF THIS EGYPTIAN RESIDENT WAS TAXABLE IN LNDIA AND THUS, THE APPELLANT COMPANY WAS NOT REQUIRED TO DEDUCT TDS IN TERMS OF SECTION 195 OF THE ACT. THE ADDITION MADE U/S. 40(A)(I) IS, THEREFORE, DELETED. 31.1 FROM THE ASSESSMENT ORDER, WE FIND THAT THE MAIN BASIS OF THE ASSESSING OFFICER FOR MAKING DISALLOWANCE IS THAT NO TDS WAS DEDUCTED. AS PER THE FINDING OF CIT(A), IT IS SEEN THAT IT IS HELD BY HIM THAT AS PER DTAA BETWEEN INDIA AND EGYPT (UAR) , NO TDS WAS DEDUCTIBLE BECAUSE TH ERE CAN BE A BUSINESS CONNECTION BUT IT WOULD NOT CONSTITUTE PE IN INDIA OF THE PAYEE COMPANY. THIS CONTENTION COULD NOT BE CONTROVERTED BY LEARNED D .R. OF THE REVENUE . HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF L EARNED CIT(A) ON THIS ISSUE . GROUND NO. 4 OF THE APPEAL IS REJECTED. 32. GROUND NO. 5 IS AS UNDER: 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.23,85,395/ - MADE ON ACCOUNT OF BALANCE CLAIM OF INSURANCE WITHOUT APPRECIATING THE FACT THAT THE CLAIM OF THE ASSESSEE COMPANY WAS NOT FINALIZED IN THE YEAR UNDER CONSIDERATION. 33. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT ON THIS ISSUE, NO RELIEF WAS ALLOWED BY CIT(A) AND THEREFORE, THIS GROUND OF REVENUE IS INFRUCTUOUS. HE DRAWN OUR ATTENTION TO PARA 12. 2 WHERE CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. WE FIND THAT CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE AS PER PARA 12.2 OF HIS ORDER. HENCE, THIS GROUND OF REVENUE IS INFRUCTUOUS AND IS REJECTED ACCORDINGLY. 26 34. IN THE RESULT, THE APP EAL OF THE REVENUE STANDS PARTLY ALLOWED. 35. NOW WE TAKE UP THE APPEAL CROSS OBJECTION FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 I.E. C.O. NO.33/LKW/2011. IN THIS CROSS OBJECTION THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (APPEAL) SHOULD HAVE ANNULLED THE ASSESSMENT ON THE FOLLOWING GROUNDS: - (I) BECAUSE IN ANY CASE NOTICE UNDER SECTION 143(2) COULD NOT HAVE BEEN ISSUED ON THE BASIS OF 'SELECTION FOR SCRUTINY' UNDER COMPUTER AIDED SCRUTINY SCHEME (CASS), AS ISSUED BY T HE 'ASSESSING OFFICER' WAS ILLEGAL, AS ISSUANCE OF SUCH A NOTICE HAS TO BE SOLELY BASED ON THE SATISFACTION OF THE 'ASSESSING OFFICER' CONCERNED AS PER CLAUSE (II) OF SUB - SECTION (2) OF SECTION 143 OF THE ACT. (II) BECAUSE NOTICE UNDER SECTION 143(2) HAVI NG BEEN ISSUED IN VIOLATION OF CLAUSE (II) OF SUB - SECTION (2) OF SECTION 143, IS 'NO NOTICE' IN THE EYES OF LAW AND ACCORDINGLY VARIATION BETWEEN THE 'RETURNED INCOME' AND 'ASSESSED INCOME' IS WHOLLY UNAUTHORIZED AND ILLEGAL TOO AND THE SAME DESERVES TO BE VACATED. (III) BECAUSE WITHOUT CAUSING IN ANY MANNER ANY PREJUDICE TO THE CONTENTION RAISED IN THE FOREGOING GROUND, IN THE ASSESSMENT ORDER DATED 30.12.2010 PASSED UNDER SECTION 143(3), THERE IS A 'DEVIATION' FROM THE NORMS ON THE BASIS OF WHICH CASE HA D BEEN STATED TO HAVE BEEN SELECTED FOR SCRUTINY AND VARIOUS ADDITIONS AS HAD BEEN MADE THEREIN, ARE WHOLLY ILLEGAL. WITHOUT PREJUDICE 2. THE LEARNED CIT (APPEAL) WAS WRONG IN LAW AND ON FACTS IN CONFIRMING THE FOLLOWING ADDITIONS/DISALLOWANCES MADE BY AO IN THE ASSESSMENT ORDER FOR ASSTT. YEAR 2008 - 2009. ( I ) RS.3 , 08 , 937/ - ADDITIONS MADE FOR ALLEGED EXCESS STOCK FOUND AT THE TIME OF SURVEY . 27 ( II ) PROFIT ON ALLEGED SALE OF SHORT OF STOCK FOUND AT THE TIME OF SURVEY. ( III ) RS.18 , 25 , 119/ - DISALLOWANCE OF PAYMENTS MADE TO DEFEXCO U/S 40(A)(IA). ( IV ) RS.90 , 000/ - DISALLOWANCE OF EXHIBITION EXPENSES U/S 40 (A)(IA). ( V ) RS. 1 , 47 , 00 , 000/ - LOSS IN CURRENCY WRONGLY CONSIDERED AS SPECULATIVE LOSS. ( VI ) RS.23 , 85 , 395 / - CLAIM OF INSURANCE DISALLOWED. 3. THE LEARNED CIT (APPEAL) HAS FAILED TO APP RECIATE THE FACTS OF THE CASE AND THE WRITTEN SUBMISSION FILED BEFORE HIM IN RESPECT OF THE AFORESAID ADDITIONS/DISALLOWANCES. 4. IN ANY CASE AND WITHOUT PREJUDICE THE ADDITIONS/DISALLOWANCE CONFIRMED BY CIT (APPEAL) ARE HIGH & EXCESSIVE. 36. GROUND NO. 1 AND 2(I) TO 2(V) WERE NOT PRESSED AND ACCORDINGLY THESE GROUNDS ARE REJECTED AS NOT PRESSED. 37. REGARDING GROUND NO. 2(VI), IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE F OR ASSESSMENT YEAR 2004 - 05 IN I.T.A. NO.53/LKW/2012 DATED 09/01/2014. HE SUBMITTED COPY OF THIS TRIBUNAL ORDER AND DRAWN OUR ATTENTION TO PAGE NO. 4 PARA 7. HE ALSO SUBMITTED THAT THE RELEVANT DOCUMENTS ARE AVAILABLE ON PAGE NO. 140 AND 143 OF THE PAPER BOOK. 38. ON THE OTHER HAND, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 39. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT ON 02/06/2004, A FIRE BROKE OUT IN THE FACTORY AND AT THAT TIME , LOSS IN FILE WAS CLAIMED FROM THE INSURANCE COMPANY FOR A SUM OF RS.98,94,282/ - AND THIS AMOUNT WAS DEBITED TO INSURANCE COMPANY. HE HAS ALSO NOTED THAT THE CLAIM WAS NOT SETTLED BY THE INSURANCE COMPANY TILL THIS YEAR. IN THIS YEAR, THE CLAIM WAS SETTLED FOR AN 28 AMOUNT OF RS.75,08,888/ - AND THE BALANCE AMOUNT W AS WRITTEN OFF BY THE ASSESSEE. SINCE IN ASSESSMENT YEAR 2005 - 06, THE ENTIRE AMOUNT WAS DEBITED TO THE ACCOUNT OF THE INSURANCE COMPANY AND THE SAME WAS ALSO ACCOUNTED FOR AS INCOME IN THAT YEAR, ANY WRITE OFF IN THE PRESENT YEAR IS ALLOWABLE U/S 3 6 (1)(VI I) BECAUSE IT TAKES A CHARACTER OF BAD DEBTS WRITTEN OFF. IN T HE TRIBUNAL DE CISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05, WE FIND THAT THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND HENCE, IN THE PRESENT YEAR ALSO, THIS ISS UE IS DECIDED IN FAVOUR OF THE ASSESSEE. GROUND NO. 2(VI) IS ALLOWED. 40. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE STANDS PARTLY ALLOWED. 41. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009 - 2010 I.E. I.T.A. NO.179/LKW/2012. 42. GROUND NO. 1 TO 4 ARE INTER - CONNECTED, WHICH ARE AS UNDER: 1. THE LD. CIT (A) - II HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.24,00,90,908/ - CLAIMED U/S 10 - B WITHOUT APPRECIATING THE FACTS OF THE CASE THAT CONDITIONS FOR THE CLAIM OF EXEMPTION U/S 10B WERE NOT SATISFIED. 2. THE LD, CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT THE 100% EOU HAS BEEN FORMED BY SPLITTING AND RE - CONSTRUCTION OF OLD BUSINESS CARRIED BY THE ASSESSEE GROUP IN THE NAME OF MKU ARMO URS PVT. LTD. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT M/S MKU ARMOURS PVT. LTD., HAS NOT BEEN AMALGAMATED IN M/S MKU ARMOURS PVT, LTD., THEREFORE, EXEMPTION U/S 10B OF THE I.T. ACT, 1961 IS NOT ALLOWABLE. 4. TH E LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS AS MENTIONED IN THE ASSESSMENT ORDER OF ASSESSMENT YEAR 2009 - 10 WHICH ARE DIFFERENT FROM EARLIER YEARS AND ALSO IN ADDITION TO THE FACTS DISCUSSED IN DETAIL IN THE YEAR OF EARLIER YE ARS AND ALSO IN 29 ADDITION TO THE FACTS DISCUSSED IN DETAIL IN THE YEAR OF EARLIER ASSESSMENT ORDER WHEREAS APPEAL WAS ALLOWED ON THE BASIS OF ASSESSMENT ORDER OF ASSESSMENT YEAR 2008 - 09. 43. IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE IN ABOVE GROUNDS IS IDENTICAL IN RESPECT OF CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B AND THE SAME CAN BE DECIDED ON SIMILAR LINE AS PER DECISION IN ASSESSMENT YEAR 2007 - 08 & 2008 - 09. IN ASSESSMENT YEAR 200 7 - 08 AND 2008 - 09, WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ACCORDINGLY, IN THIS YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THESE GROUNDS OF THE REVENUE ARE ALLOWED. 44. GROUND NO. 5 IS AS UNDER: 5. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY ACCEPTING ADDITIONAL EVIDENCES OR FRESH EVIDENCES D URING APPELLATE PROCEEDINGS IN RESPECT OF DISALLOWANCE OF RS.9,65, 0 72/ - WHER EAS THE SAME SHOULD NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB - RULE (1) OF RULE 46A UNLESS THE ASSESSING OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY. 45. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 46. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) ON THE BASIS THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IN COMPUTATION CHART ONLY WITHOUT ANY DISCUSSION IN THE ASSESSMENT ORDER AND WITHOUT GIVING ANY REASON. HE HAS ALSO NOTED THE CONTENTION OF LEARNED A.R. OF THE ASSESSEE THAT THIS AMOUNT OF RS.9,65,072/ - INCLUDES BAD DEBTS OF RS.1,753/ - , BALANCE WRITTEN OFF RS.54,542/ - AND PRELIMINARY EXPENSES WRITTEN OFF RS.9, 08,777/ - . IN OUR CONSIDERED OPINION, NO DISALLOWANCE IS CALLED FOR OUT OF THESE EXPENSES AND HENCE, WE DECLINE TO 30 INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 5 IS REJECTED. 47. GROUND NO. 6 IS AS UNDER: 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND F ACTS B Y I GNORING T H E F ACTS E L A B ORATE D BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN RESPECT OF DISALLOWANCE OF RS. 18 ,37,855/ - U/S. 14A IN DETAIL. 48. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD . VS. DCIT [2010] 234 CTR (BOM) 1 AND THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF S. A. BUILDERS LTD. VS COMMISSIONER OF INCOME - TAX (APPEALS) [2007] 288 ITR 1 (SC) . 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY CIT(A) ON PAGE NO. 8 OF HIS ORDER THAT THE ASSESSEE WAS HAVING INTEREST FREE FUND IN THE FORM OF SHARE CAPITAL AND RESERVE AND SURPLUS OF RS.3,212.26 LAC S AND INVESTMENT IN SHARES IS OF RS.38.54 LAC S . THE CIT(A) HAS ALREADY CONFIRMED THE DISALLOWANCE OF RS.1,23,327/ - IN RESPECT OF ADMINISTRATIVE EXPENSES AS PER RULE 8D(2) OF THE ACT. HE HAS DELETED THE DISALLOWANCE OF ONLY RS.18,14,528/ - IN RESPECT OF DISALLOWANCE OF INTEREST. THE MAJO R INVESTMENT IS IN SHARES OF GERMAN COMPANY. SINCE THE DIVIDEND INCOME FROM FOREIGN COMPANY IS NOT EXEMPT, NO DISALLOWANCE IS CALLED FOR U/S 14A IN RESPECT OF SUCH INVESTMENT IN SHARES OF A FOREIGN COMPANY. CONSIDERING ALL THESE FACTS, WE DECLINE TO INTE RFERE IN THE ORDER OF CIT(A). GROUND NO. 6 IS ALSO REJECTED. 50. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED . 31 51. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009 - 10 I.E. I.T.A. NO.152/LKW/2012. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER PASSED BY THE L D. CIT (A) DESERVES TO BE QUASHED WITHOUT GOING INTO ITS MERITS BECAUSE IT WAS PASSED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, I.E., WITHOUT GIVING THE ASSESSING OFFICER PROPER OPPORTUNITY OF BEING HEARD; WITHOUT CONSULTING THE RECORDS OF THE ASSESSMENT PROCEEDING; WITHOUT CALLING FOR A REMAND REPORT U/S 250(4) OF THE INCOME TAX ACT:, 1961 OR EVEN WITHOUT OBTAINING STATUTORY FORM NOS. I.T.N.S. - 37 AND I . T.N . S.51. WITHOUT PREJUDICE TO THE GROUND NO. 1 ABOVE, THE FOLLOWING FURTHER GROUNDS ARE TAKEN: 2. THE IMPUGNED APPELLATE ORDER DESERVES TO BE QUASHED AS BEING ERRONEOUS O N F A CTS AS WELL AS IN LAW IN AS MUCH AS THE L D CIT(A) DID NEITHER SUMMON T HE REGISTER MAINTAI NED U/S 301 OF THE COMPANIES ACT, 1956, WHOSE NON - PRODUCTION WAS THE ROOT CAUSE OF ADDITION, NOR DID HE GIVE A FINDING TH A T THE PRODUCTION OF THE SAME WAS NOT NEEDED. 3. THE L D . CIT(A) HAS FAILED TO NOTICE THAT THE RESOLUTION TO TRANSFER/S A LE OF THE ENTIRE UNDERTAKING OF THE ASSESSEE WAS PASSED IN AN EXTRA ORDINARY GENERAL MEETING HELD ON 19.03,2007 AND THE PURSUANT T RANSFER AGREEMENT WAS N OTARI Z ED ON THE SAME DAY, I.E., ON 19.03.2007 WHICH SEEM S , IMPROBABLE AND PUTS SERIOUS DOUBTS ON THE SANCTIT Y OF EOGM AND THE TRANSFER AGREEMENT. 4. THE L D. CIT(A) H AS FAILED TO NOTICE THAT NO REASONS FOR TRANSFER/SALE HAVE BEEN ASSIGNED IN THE TRANSFER AGREEMENT. 5. THE L D. CIT(A) HAS FAILED TO NOTICE THAT THE MODE OF PAYMENT OF TRANSFER/SALE CONSIDERATION WA S NOT SPECIFIED IN THE TRANSFER AGREEMENT. 32 6. THE LD. CIT(A) HAS FAILED TO NOTICE THAT OUT OF A TOTAL TRANSFER CONSIDERATION OF RS.8,20,51,379.65, THE TRANSFEREE ISSUED SHARES WORTH RS.3,22,4 0 ,230/ - ONLY AND APPROPRIATED THE BALANCE CONSIDERATION OF RS.4, 98,11,149.65 TOWARDS SHARE PREMIUM . 7. THE LD. CIT (A) HAS FAILED TO NOTICE THAT, THE TRANSFEREE COMPANY NEVER CHARGED SHARE PREMIUM FROM ANYONE, NOT EVEN FROM THE OUTSIDERS, BE FOR E OR AFTER THE ALLOTMENT OF SHARES TO THE ASSESSEE ON 28.03.2008. 8. THE LD. CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW BY NOT APPRECIATING THAT, IN THE ABSENCE OF ANY SPECIFIC PROVISIONS IN THE TRANSFER AGREEMENT IN THIS REGARD, THE ACTS OF ISSUE OF SHARES AS PART CONSIDERATION AND APPROPRIATION OF THE BALANCE CONSIDERATI ON AS SHARES PREMIUM WERE BOTH SUBJECT MATTERS OF APPROPRIATE RECORDINGS TO THIS RESPECT IN THE REGISTER MAINTAINED U/S 301 OF THE COMPANIES ACT, 1956. 9. THE LD. CIT (A) HAS ERRED IN LAW EQUATING THE FILLING OF EXPLANATION FOR NON - PRODUCTION OF REGISTER U/S 301 OF THE COMPANIES ACT, 1955 WITH THAT OF ACTUAL PRODUCTION THEREOF BEFORE THE ASSESSING OFFICER. 10. THE LD. CIT(A) HAS REED IN LAW BY HOLDING THAT, THERE WAS NO JUSTIFICATION OF MAKING THE ASSESSMENT U/S 144 WHILE IGNORING THAT, THE REGISTER U/S 301 OF THE COMPANIES ACT, 1956, WHICH WAS A KEY IN DETERMINING THE ACTUAL STATE OF AFFAIRS, WAS NEVER PRODUCED BEFORE THE ASSESSING OFFICER FOR NO APPARENT REASONS. 11. THE LD. CIT(A) HAS ERRED ON FACTS IN NOT APPRECIATING THAT, LEAVING ONE'S BUSINESS PREMISES IN FAVOUR OF OTHER AND MORTGAGING WITH BANK ONE'S INDIVIDUAL PROPERTY AND GIVING PERSONAL GUARANTEE TO BANK IN FAVOUR OF OTHER ARE THINGS WHICH DO COST IN MONETARY TERMS AND WHICH CAN BE VALUED I N MONETARY TERMS. 12. THE LEARNED CIT(A) HAS ERRED ON FACTS WHITE REJECTING THE ESTIMATE OF INCOME IGNORING THE PRACTICE PREVALENT IN THE MARKET . 33 13. T H E ORDER PASSED BY THE CIT(A) IS ERRONEOUS BOTH ON FACTS AS WELL US IN L AW, THEREFORE, DESERVES TO BE QUASHED AND THAT OF THE ASSESSING OFFICE R BE RESTORED . 52. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS ISSUE WAS DECIDED BY LEARNED CIT(A) BY MAKING FOLLOWING OBSERVATIONS: I HAVE CONSIDERED THE FINDING OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. I FIND THAT THE ASSTT. FRAMED BY THE A.O. IS NEITHER PROPER NOR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. IT SUFFERS FROM FOLLOWING INFIRMITIES : 1. ABOUT THE COMPLIANCES MADE BY THE APPELLANT THE AO HAS MENTIONED 'IN RESPONSE, SHRI PRAMOD KUMAR AR APPEARED FROM TIME TO TIME AND FILED VARIOUS REPLIES, PAPERS AND DOCUMENTS IN SUPPORT. CASH BOOK AND LEDGER WERE PRODUCED AND TEST CHECKED. THE CASE WAS DISCUSSED WITH HIM.' THERE WAS THEREFORE NO JUSTIFICATION IN MAKING THE ASSTT. U/S 144OF THE ACT . 2. THAT THE AO HAS NOT POINTED OUT ANY TRANSACTIONS WHICH REQUIRED THE MAINTENANCE OF REGISTER PRESCRIBED U/S 301 OF THE COMPANIES ACT. THE APPELLANT HAD FURNISHED TH E EXPLANATION WITH REGARDS TO THE NOTICE ISSUED U/S 142 DT. 21 .11.2011. ALL OTHER DETAILS RECORDS WERE PRODUCED. 3. THAT THE ESTIMATE OF INCOME OF RS. 38 LACS IS WITHOUT ANY BASIS AND COGENT REASONS AND EVEN WITHOUT GIVING ANY OPPORTUNITY BEFORE MAKING SU CH ADDITIONS. I AGREE WITH THE ARGUMENTS ADVANCE BY THE LEARNED COUNSEL WHICH HAS BEEN REPRODUCED HERE IN BEFORE. IT SEEMS THAT THE ADDITIONS HAVE BEEN MADE ON IMAGINATION, SUSPICION AND PURELY ON WHIMS OF AO. THE LAW DOES NOT PERMIT SUCH TYPES OF ADDITION S WHICH ARE PURELY BASED ON SURMISES AND CONJUNCTURES. DECISIONS CITED BY THE LEARNED AR ARE FULLY APPLYING TO THE FACTS OF THE CASE. 34 4. GROUND NO.2 RELATES TO THE CLAIM OF LOSS DURING THE YEAR WHICH HAS RIOT BEEN PRESSED. HOWEVER, THERE HAS NOT BEEN BUSI NESS ACTIVITIES DURING THE YEAR, THEREFORE, THE LOSS CLAIMED BY THE ASSESSEE IS NOT ALLOWED. ACCORDINGLY, THE APPEAL ON THESE GROUNDS IS DENIED. 5. ON OVERALL CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.38 LAKH IS DELETED AND THE CLAIM OF LOSS IS DENIED . 54. FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT THE ISSUE WAS DECIDED IN OBJECTIVE MANNER AFTER CONSIDERING ALL THE ASPECTS. WE DO NOT FIND ANY INFIRMITY THEREIN. HENCE , W E DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 55. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 56. IN THE COMBINED RESULT, THE APPEALS OF THE REVENUE IN I.T.A. NO.612, 179 AND 401 ARE PARTLY ALLOWED AND IN I.T.A. NO.152 IS DISMISSED AND C.O. NO. 49 IS DISMISSED AND C.O. NO.33 IS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 1 /11/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR