M/s K.N. Guruswamy Oil Mills Ltd., New Delhi V. DCIT, Hubli

ITA 626/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9534 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 15-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SWATHI S PATIL
• Assessee Lawyers: ARVIND V SONDE
• Keywords: Business income; Depreciation; Business expenditure; Rectification of order; Share purchase agreement; Unabsorbed depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.626/BANG/2009 ASSESSMENT YEAR : 2006-07 M/S. K.N. GURUSWAMY OIL MILLS LTD., DHARWAD, (AMALGAMATED WITH TINNA AGRO INDUSTRIES LTD. W.E.F. 1.4.2007 I.E. APPOINTED DATE), 6, SULTANPUR (MANDI ROAD), MEHRAULI, NEW DELHI 110 030. : APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 3(1), HUBLI. : RESPONDENT APPELLANT BY : SHRI ARVIND V. SONDE RESPONDENT BY : SMT. SWATHI S. PATIL O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER K.N.GURUSWAMY OIL MILLS LIMITED [AMALGAMATED WITH M /S.TINNA AGRO INDUSTRIES] THE ASSESSEE COMPANY HAS PREFE RRED THIS APPEAL, AGGRIEVED BY THE ORDER OF THE LD.CIT(A), HUBLI, FOR THE ASSESSMENT YEAR 2006-07. ITA NO.626/B/09 PAGE 2 OF 19 2. THE ASSESSEE COMPANY HAS RAISED SIX EXHAUSTIVE A ND ILLUSTRATIVE GROUNDS OF APPEAL. WHILE FORMULATING THE GROUNDS OF APPEAL, UTMOST CARE SHOULD HAVE BEEN TAKEN TO CONSTRUCT THE GROUND(S) I N A CONCISE AND PRECISE MANNER INSTEAD OF IN A NARRATIVE FORM AS IN THE PRE SENT APPEAL. THE GROUNDS RAISED ARE, THEREFORE, REFORMULATED IN A CONCISE MANNER, FOR THE SAKE OF CONVENIENCE AND CLARITY, AS UNDER: THE CIT(A) : (I) ERRED IN HOLDING THAT THE COMPENSATION RE CEIVED FROM LETTING OUT OF GO-DOWN FROM TINNA AGRO INDUSTRIES LIMITED [TAIL] WAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS; (II) NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE AY IN DISPUTE; - HOLDING THAT NO BUSINESS WAS CARRIED OUT AND CONFIR MING THE FINDING OF THE AO THAT THE ASSESSEE WAS NOT ENTITLED TO DED UCTION OF ANY BUSINESS EXPENDITURE AND CONSEQUENTLY NOT ALLOWING THE BUSINESS LOSS; (III) ERRED IN CONFIRMING THAT THE CLAIM OF DEPRECIATION/ UNABSORBED DEPRECIATION NOT TO BE ALLOWED AS THERE WERE NO BUS INESS ACTIVITIES OR MANUFACTURING ACTIVITIES AND THE ASSETS WERE NOT US ED DURING THE AY IN DISPUTE; (IV) ERRED IN CONFIRMING THAT THE PAYMENT OF INTEREST ON CUSTOM DUTY SHOULD NOT BE ALLOWED AS EXPENDITURE ON THE GROUND THAT NO MANUFACTURING ACTIVITY HAD TAKEN PLACE AND NO EXPOR T WAS MADE BY THE ASSESSEE; (V) NOT JUSTIFIED IN HOLDING THAT THE WAIVER OF UNSECUR ED LOAN OUTSTANDING TO THE CREDIT OF DIRECTOR TO BE TAXED U/S 41(1) OF THE ACT - WITHOUT PREJUDICE, THE CIT (A) ERRED IN UPHOLDING T HAT THE AMOUNT OF UNSECURED LOAN WAIVED OFF BY THE DIRECTOR WAS RS.20 920040 AS AGAINST RS.20783570; (VI) ERRED IN NOT APPRECIATING THAT THE AMOUNT WRITTEN B ACK ON ACCOUNT OF DE-CAPITALIZATION OF DEPRECIATION PERTAINING TO EAR LIER YEARS AND INTEREST PAYABLE TO THE FINANCIAL INSTITUTIONS ON T HE LOANS GRANTED BY ITA NO.626/B/09 PAGE 3 OF 19 THEM WERE REVERSAL OF ENTRIES MADE IN EARLIER PREVI OUS YEARS AND NO WAIVER HAD HAPPENED IN THE PREVIOUS YEAR RELEVANT T O THE AY IN DISPUTE; - WITHOUT PREJUDICE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DE- CAPITALIZATION OF THE AMOUNT OF DEPRECIATION PERTAI NING TO EARLIER YEARS AND WAIVER OF THE AMOUNT OF INTEREST PAYABLE TO THE FINANCIAL INSTITUTIONS ON THE LOANS GRANTED BY THEM, WAS TAXA BLE U/S 41(1) OF THE ACT. 3. THE FACTS OF THE ISSUES, IN BRIEF, ARE THAT THE ASSESSEE COMPANY HAD COMMENCED ITS PRODUCTION DURING 1996, BUT, THE MANU FACTURING ACTIVITIES COULD NOT BE CONTINUED BEYOND 1999 AS THE NET WORTH OF THE ASSESSEE COMPANY WAS ERODED DURING 1999. AN APPLICATION WAS FILED BEFORE THE BIFR TO CONSIDER THE COMPANY AS SICK UNIT AND, ACCO RDINGLY, IDBI WAS APPOINTED AS OPERATING AGENCY. AFTER CONSIDERING IT S REPORT, THE ASSESSEE COMPANY WAS CONSIDERED AS NOT A SICK COMPANY AND DI SCHARGED IT FROM ITS PURVIEW. 3.1.1. RENTAL INCOME : THE AO, TAKING CUE FROM THE BIFR DECISION, CONSIDER ING IT NEITHER A SICK COMPANY NOR MANUFACTURING ACTIVITIES WERE BEING CAR RIED ON AND ONLY THE GO-DOWNS WERE RENTED OUT WHICH WAS CLAIMED RENTAL I NCOME AS BUSINESS INCOME OF THE COMPANY. AFTER DELIBERATING THE ISSU E IN DEPTH, THE AO CONCLUDED THAT THE COMPANY HAD NO CONTINUOUS COURSE OF ACTIVITY AND, AS SUCH, THE RENTAL INCOME WAS NOT TREATED AS BUSINESS INCOME. AFTER CONSIDERING THE RIVAL CLAIMS AND ALSO PLACING RELIANCE ON THE JURISDICTIONAL HIGH COURT IN THE CASE OF BHOOPALAM COMMERCIAL COMPLEX AND INDUSTRIES REPORTED IN 262 ITR 517, THE CIT(A) CONFIRMED THE ACTION OF THE AO IN TREATING THE RENTAL INCOME AS INCOME FRO M HOUSE PROPERTY. ITA NO.626/B/09 PAGE 4 OF 19 3.1.2. DEPRECIATION AND UN-ABSORBED DEPRECIATION : WHILE COMPUTING THE INCOME, THE AO HAD NOT CONSIDERED THE DEPRECIATION TO SET OFF OF UNABSORBED DEPRECIATION, ON THE GROUND THAT AS PER THE CONDITIONS LAID DOWN IN SECTIONS 32 TO 34 OF THE ACT, IT WAS NECESS ARY TO OWN MACHINERIES AND ALSO THEY SHOULD BE PUT TO USE. SINCE THERE WE RE NO MANUFACTURING ACTIVITIES FROM 1999, THE ASSESSEE COMPANYS CLAIM WAS NOT CONSIDERED, CITING CASE LAWS, IN THE CASE OF LIQUIDATORS OF PUR SA LTD. V. CIT DECIDED BY THE HONBLE APEX COURT AND BOMBAY HIGH COURTS RUL ING IN DINESH KUMAR GULABCHAND AGARWAL [267 ITR 768] WHERE SPECIAL LEAV E PETITION WAS DISMISSED BY THE HONBLE SUPREME COURT. BRUSHING ASIDE THE ASSESSEES CONTENTION THAT MERE BUSINESS ACTIVITY WAS NOT CARRIED OUT WHICH CANNOT BE THE RE ASON TO DISALLOW DEPRECIATION, BECAUSE MACHINERIES WERE KEPT READY F OR PUT TO USE BUT FOR FINANCIAL CRISIS, BUT, THERE WAS NO MANUFACTURING A CTIVITY, THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DE PRECIATION AS THERE WERE NO BUSINESS ACTIVITIES AND THE ASSETS WERE NOT PUT TO USE AND, THUS, THE CLAIM OF DEPRECIATION WAS REJECTED. THE CIT (A) H AD CONCURRED WITH THE VIEW OF THE AO. 3.1.3. PAYMENT OF EXCISE DUTY: THE AO HAD STATED IN THE ORDER THAT IT WAS NOT PAYMENT OF EXCISE DUTY BUT PENALTY. IT WAS IN THE NATURE OF DEFAULT PAYMENT DECIDED AFTER SETTLEMENT FOR NON-PERFORMANC E OF EXPORT OBLIGATIONS. REJECTING THE ASSESSEE COMPANYS CLAIM THAT THE FACTS OF THE CASE OF NARAYAN SWADESHI WEAVING MILLS WERE NOT APP LICABLE IN THEIR CASE ON THE GROUND THAT AFTER SETTLEMENT IT REMAINS AS A CUSTOMS DUTY AND NOT AS ITA NO.626/B/09 PAGE 5 OF 19 A PENALTY, THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE COMPANY HAS DEVIATED FROM EXPORT OBLIGATIONS COMMITTING A DEFAU LT OF NOT EXPORTING 50% OF PRODUCTS AS PER IMPORT TERMS OF MACHINERIES, THU S IT CANNOT BE A PENALTY BUT DEFINITELY IT IS A DEFAULT AND DURING SETTLEMEN T IT IS DECIDED THAT APPELLANT SHOULD PAY FOR DEFAULT COMMITTED BY HIM ( SIC) IT AND QUESTION OF CUSTOM DUTY DOES ARISE. SINCE NO MANUFACTURING ACTI VITY WAS TAKEN PLACE AND NO EXPORT WAS MADE BY APPELLANT. THEREFORE, ADDITIO N MADE BY AO IS CONFIRMED. 3.1.4. CESSATION OF LIABILITY : THE ASSESSEE COMPANY HAD WRITTEN BACK THE AMOUNT OU TSTANDING WITH THE CREDITOR K.N.TILAK KUMAR TO THE EXTENT OF RS.2.09 C RORES; DE-CAPITALIZATION OF EARLIER YEARS OF RS.64.22 LAKHS AND INTEREST PAY ABLE TO FINANCIAL INSTITUTIONS OF RS.1.55 CRORES WHICH, ACCORDING TO THE AO, WERE TO BE BROUGHT TO TAX U/S 41(1) OF THE ACT. THE AO WAS OF THE VIEW THAT ACCORDING TO SECTION 41 (1), THE FICTION IS THAT ANY BENEFIT ACCRUING TO AN ASSESSEE BY REMISSI ON OR CESSATION OF ITS TRADING LIABILITY IS DEEMED TO BE ITS PROFITS AND G AINS OF THE ASSESSEES BUSINESS COMES INTO PLAY IF WHILE COMPUTING ITS INC OME FOR SOME ASSESSMENT YEAR, AN ALLOWANCE OR DEDUCTION IN RESPE CT OF THE TRADING LIABILITY IS MADE AND SUBSEQUENTLY THE ASSESSEE ACQ UIRES IN RESPECT OF THAT TRADING LIABILITY SOME BENEFIT WHETHER IN CASH OR O THER MANNER ACCRUES TO THE ASSESSEE BECAUSE OF ITS CEASING TO EXIST. ANOT HER CONDITION FOR APPLICABILITY OF S.41 (1) IS THAT THE ASSESSEE SHOU LD IN THE ASSESSMENT YEAR ITA NO.626/B/09 PAGE 6 OF 19 IN QUESTION RECEIVE SOME BENEFIT BY WAY OF CESSATIO N OF TREATING OF ITS TRADING LIABILITY. EXAMINATION OF THE BOOKS OF ACCOUNTS REVEALED THAT THE ASSESSEE COMPANY HAD RECEIVED RS.20920040/- FROM ITS DIRECTO R K.N.TILAKKUMAR. IN COMPLIANCE TO A SHOW-CAUSE NOTICE AS TO WHY THE SUM OF RS.2.09 CRORES SHOULD NOT BE BROUGHT TO TAX U/S 41(1) OF THE ACT, THE ASSESSEE COMPANY HAD CONTENDED THAT THE SAID SUM BEING THE CREDIT ST ANDING IN THE NAME OF TILAK KUMAR CANNOT BE BROUGHT TO TAX U/S 41(1) BASE D ON THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA REPORTED IN 114 ITR 853 ON THE GROUND THAT THE SAID CASE LAW IS NOT APPLICABLE TO TRANSA CTION HEREIN AS IT RELATED TO RENTS PAYABLE BY A COMPANY WHICH HAD BECOME TIME BA RRED. HERE THE SUM INVOLVED WAS A CREDIT STANDING IN THE NAME OF CREDI TOR WHICH CANNOT BE CLASSIFIED AS EITHER A LOSS OR EXPENDITURE OR TRADI NG LIABILITY. THEREFORE, IT IS NOT WITHIN THE PURVIEW OF OPERATION OF S.41 (1). I T WAS UNSECURED LOAN ADVANCED BY A CREDITOR AND NOT A TRADING LIABILITY. RELIANCE WAS PLACED ON THE RULING OF DELHI HIGH COURT IN CIT V. TOSHA INTE RNATIONAL LTD. DT: 23/9/08 WHICH HAD FOLLOWED THE DECISION REPORTED IN 261 ITR 501 (BOM). DISTINGUISHING THE CASE LAWS ON WHICH THE ASSESSEE COMPANY HAD PLACED RELIANCE, THE AO TOOK A STAND THAT THE DIREC TOR THROUGH A CONFIRMATION LETTER DT. 30/1/06 HAD WAIVED OFF HIS LIABILITY WHICH PROVES THAT THE PROVISIONS OF S.41 (1) WERE SQUARELY APPLICABLE TO THE FACTS OF THE CASE AND, ACCORDINGLY, BROUGHT THE SAME TO THE TAX NET U /S 41(1) OF THE ACT. THE AO WAS OF THE VIEW THAT WRITING BACK OFF THE LIABIL ITY BEING INTEREST WAIVER AND DE-CAPITALIZATION OF DEPRECIATION WAS RECOGNISE D AS INCOME BY THE ITA NO.626/B/09 PAGE 7 OF 19 ASSESSEE BASED ON THE ACCOUNTING PRINCIPLES WHICH W ERE GENERALLY ACCEPTED AND LAID DOWN BY THE ICAS AND IN ACCORDANC E WITH THE PROVISIONS OF COMPANIES ACT. HE, ACCORDINGLY, BROUGHT THE TOT AL AMOUNT ASSESSABLE TO TAX WAS RS.42895431/-. AFTER CONSIDERATION OF RIVAL SUBMISSIONS AND ALSO A NALYZING THE CASE LAWS, THE CIT (A) CAME TO THE CONCLUSION THAT AS PE R THE PROVISIONS OF THE ACT AND ALSO THE VERDICT OF THE JURISDICTIONAL HIGH COURT REPORTED IN 114 ITR 853, THERE WAS A CESSATION OF LIABILITY AND THE ASS ESSEE COMPANY HAD ACTUALLY MADE PAYMENTS, THE PROVISIONS OF SECTION 4 1(1) OF THE ACT ARE SQUARELY APPLICABLE AND, THUS, CONFIRMED THE ACTION OF THE AO. 4. AGGRIEVED, THE ASSESSEE COMPANY HAS COME UP WITH THE PRESENT APPEAL. THE LD. A R REITERATED MORE OR LESS WHAT H AS BEEN PUT-FORTH BEFORE THE FIRST APPELLATE AUTHORITY. BUTTRESS HIS CLAIM; FURTHER SUBMISSIONS MADE BY THE LD. A R ARE SUMMARIZED AS UNDER: (I) TREATING THE RENTAL INCOME AS INCOME FROM HOUSE PR OPERTY AS AGAINST BUSINESS INCOME : - THIS ISSUE IS COVERED BY THE FINDING OF THE HONBL E TRIBUNAL, IN ASSESSEES OWN CASE FOR THE AY 01-02; (II) DISALLOWANCE OF ENTIRE BUSINESS EXPENDITURE AND CON SEQUENTLY BUSINESS LOSS OF RS.1,02,57,510: - THIS ISSUE IS COVERED BY THE ORDER OF THE HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 01-02; (III) NON-ALLOWANCE OF UNABSORBED DEPRECIATION OF RS.8152 3509 TO BE CARRIED FORWARD AND SET OFF IN SUBSEQUENT YEARS: - THE ASSESSEE HAD NOT CLAIMED ANY DEPRECIATION WHIL E COMPUTING TOTAL TAXABLE INCOME AND, ACCORDINGLY, TH E GROUND RELATING TO THE CLAIM OF DEPRECIATION IS NOT PRESSED ; ITA NO.626/B/09 PAGE 8 OF 19 - THE AO OUGHT TO HAVE ALLOWED UNABSORBED DEPRECIATI ON AS PER THE PROVISIONS OF S.32(2) OF THE ACT TO BE CARR IED FORWARD AND SET OFF IN THE SUBSEQUENT AYS AS ALL THE CONDIT IONS REGARDING THE SAME AS PROVIDED IN S.32(2) ARE SATIS FIED BY THE ASSESSEE; - THE ERSTWHILE PROVISIONS OF S.72(2) AND S.32(2) OF THE ACT, WHEREIN THE CONDITIONS RELATING TO CONTINUANCE OF B USINESS OR PROFESSION FOR WHICH THE LOSS/DEPRECIATION WAS ORIG INALLY COMPUTED WAS IN EXISTENCE IN THE STATUE. HOWEVER, THE SAID CONDITIONS HAS BEEN DISPOSED WITH, BOTH U/S 72(2) [ W.E.F. AY 2000-01] AND S.32(2) [W.E.F. AY 02-03] OF THE ACT. ACCORDINGLY, THE SUBMISSION IS THAT IN THE POST-AME NDMENT ERA, IT IS NOT NECESSARY FOR THE BUSINESS OR PROFES SION IN RESPECT OF WHICH THE LOSS/DEPRECIATION WAS ORIGINAL LY COMPUTED TO CONTINUE. THERE IS NO TIME LIMIT FOR U NABSORBED DEPRECIATION TO BE CARRIED FORWARD AND SET OFF; (IV) DISALLOWANCE OF INTEREST ON CUSTOMS DUTY OF RS.7083 470 : - THE DISPUTE IN QUESTION IS THE ALLOWANCE OF INTERE ST ON CUSTOMS DUTY OF RS.7083470/- AND NOT ALLOWANCE OF C USTOMS DUTY OF RS.5782963/- AND THE SAID CUSTOMS DUTY WAS FORGONE UNDER A CERTAIN LICENCE ISSUED TO IT. HOWEVER, DUE TO NON- FULFILLMENT OF EXPORT OBLIGATION, THE ASSESSEE WAS REQUIRED TO PAY THE CUSTOM DUTY FORGONE OF RS.5782963/- AS PER THE SETTLEMENT ORDER ALONG WITH INTEREST ON IT. THERE IS NO DISPUTE REGARDING THE PAYMENT OF THE DUTY. THE DISPUTE IS REGARDING THE INTEREST PAID WHICH WAS COMPENSATORY IN NATURE AND NOT PENALTY. AS THE ASSESSEE HAS BEEN GRANTED IMMUNITY FROM PENALTY BY THE SETTLEMENT COMMISSION, THE AMOUNT OF RS.7083470/-WAS NOT IN THE NATURE OF PENALTY. AS T HE SAID AMOUNT BEING COMPENSATORY IN NATURE, THE SAME MAY B E ALLOWED; (V) CESSATION OF LIABILITY OF RS.42895431/- U/S 41(1) O F THE ACT : (A) WAIVER OF UNSECURED LOAN PROVIDED BY DIRECTOR K.N.T ILAK KUMAR OF RS.20920040/- TAXABLE U/S 41(1) OF THE ACT : - THE FIRST CONDITION TO BE SATISFIED TO ATTRACT S.4 1(1) OF THE ACT WAS THAT THE ASSESSEE OUGHT TO HAVE CLAIMED AN ALLO WANCE OR DEDUCTION IN RESPECT OF LOSS, EXPENDITURE OR TRA DING LIABILITY. THE ASSESSEE HAD NOT BEEN ALLOWED ANY ALLOWANCE/DEDUCTION IN RESPECT OF LOAN PROVIDED OF RS.20920040/- BY TILAK KUMAR TO THE ASSESSEE. THE LOAN HAD BEEN APPEARING ON THE LIABILITY SIDE OF THE BAL ANCE SHEET UNDER THE HEAD UNSECURED LOAN FROM YEAR ON YEAR BASIS; ITA NO.626/B/09 PAGE 9 OF 19 - SINCE THE FIRST CONDITION OF S.41(1) ITSELF IS NOT ATTRACTED, THE PROVISIONS OF S.41(1) CANNOT BE INVOKED IN RESPECT OF WAIVER OF LOAN PROVIDED BY TILAK KUMAR OF RS.20920040 [IN FACT, THE UNSECURED LOAN WRITTEN BACK WAS RS.20783570] (B) DE-CAPITALIZATION OF INTEREST OF RS.15552535/- TAX ABLE U/S 41(1) OF THE ACT: - SINCE THE AO HAD PASSED A RECTIFICATION ORDER DATED:27/2/2009, THIS GROUND OF APPEAL IS NOT PRESSED. (C) DEPRECIATION OF RS.6422856/- OF EARLIER YEARS WRITT EN BACK TAXABLE U/S 41(1) OF THE ACT : - THE ASSESSEE HAD WRITTEN BACK DEPRECIATION OF RS.6 422856/- ON THE DE-CAPITALIZED INTEREST OF RS.15552535/-. T HE WRITE BACK OF THE SAID DEPRECIATION WAS NOTHING BUT BOOK DEPRECIATION WHICH HAD NEVER BEEN CLAIMED BY THE AS SESSEE COMPANY IN ITS RETURN OF INCOME; - IT IS EVIDENT FROM THE SCHEDULE ON FIXED ASSETS. THE DE- CAPITALIZATION OF INTEREST OF RS.1.55 CRORES HAS BE EN SHOWN AS A DEDUCTION FROM THE GROSS BLOCK OF THE RESPECTI VE ASSETS RS.3587398 (FROM BUILDING) + RS.10540463 (FROM PL ANT AND MACHINERY) + RS.1424675 (FROM ELECTRICAL EQUIPMENT AND INSTALLATION) AND THE DEPRECIATION RELATING TO TH E ABOVE INTEREST AMOUNTING TO RS.6422856/- HAS ALSO BEEN RE DUCED FROM THE DEPRECIATION OF THE RESPECTIVE ASSETS RS .1118312 (FROM BUILDING) + RS.4672939 (FROM PLANT AND MACHIN ERY) + RS.631606 (FROM ELECTRICAL EQUIPMENT AND INSTALLATI ON) WHICH SHOWS THAT THE SAID DEPRECIATION REPRESENTS BOOK DEPRECIATION . THE ASSESSEE HAD NEVER BEEN ALLOWED BOOK DEPRECIATION WHILE COMPUTING TOTAL TAXABLE INCOME I N ANY OF THE YEARS; - SINCE NO BOOK DEPRECIATION HAS BEEN ALLOWED WHILE COMPUTING TOTAL TAXABLE INCOME, THE QUESTION OF INV OKING THE PROVISIONS OF S.41 (1) OF THE ACT DOES NOT ARISE. 4.1. ON THE OTHER HAND, THE LD. D R HAD VEHEMENTLY ARGUED THAT THE AO HAD CARVED OUT THE ASSESSMENT ORDER IN A JUDICIOUS MANNER WHICH HAS BEEN RATIFIED BY THE CIT(A) IN TOTO. SHE WAS, HOWE VER, OF THE VIEW THAT SINCE THE ASSESSEE HAS NOW RAISED NUMBER OF ISSUES CHALLENGING THE STAND ITA NO.626/B/09 PAGE 10 OF 19 OF THE LOWER AUTHORITIES, THE ISSUES MAY BE REMANDE D BACK ON THE FILE OF THE CIT (A) FOR FRESH CONSIDERATION. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE HAVE ALSO PERUSED THE RELEVANT RECORDS AND ALSO THE PAPER BO OK CONTAINING 1 39 PAGES WHICH CONSISTS OF INTER-ALIA, COPIES OF ANNUA L ACCOUNTS, ORDER OF SETTLEMENT COMMISSION OF CENTRAL EXCISE AND CUSTOMS , COPY OF TRIBUNALS ORDER ETC. FURNISHED BY THE LD. A R DURING THE COU RSE OF HEARING. I. RENTAL INCOME : AN IDENTICAL ISSUE HAD CROPPED UP IN THE ASSESSEE C OMPANYS OWN CASE FOR THE ASSESSMENT YEAR 2001-02. THE HONBLE ITAT IN I TA NO.249/BANG/04 DATED: 20/5/2005, AFTER DELIBERATING THE ISSUE IN D EPTH, HAD OBSERVED THUS 4.2. THE LEARNED SUPREME COURT IN THE CASE OF CIT VS. VIKRAM COTTON MILLS LTD. [169 ITR 597] HAS HELD THAT RENT RECEIVED FROM LETTING OFF MILL IS BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES WHEN BUSINESS WAS DISCONTINUED DUE TO HEAVY LOSSES BUT THERE WAS NO INTENTION TO PERMANENTLY DISCONTINUE B USINESS. IN THE INSTANT CASE IT IS NOT A FACT THAT AT THE CLOSE OF PREVIOUS YEAR, THERE WAS AN INTENTION TO PERMANENTLY CLOSE THE BUSINESS. APPLICATION TO BIFR WAS MADE FOR REVIVAL OF BUSINESS. HENCE, IT C AN NOT BE SAID THAT BUSINESS IS CLOSED. MANUFACTURING ACTIVITIES WERE DISCONTINUED. SCRAP WAS PART OF BUSINESS AND REALIZATION OF SALE FROM SCRAP IS BUSINESS RECEIPT. HENCE, IT IS HELD THAT RENT RECEIVED AND RECEIPTS FROM SALE OF SCRAP ARE ASSESSABLE AS BUSINESS INCOM E. THE LEARNED CIT (A) HAS REFERRED TO JUDGMENT OF LEARNED SUPREME COURT REPORTED AT 237 ITR 589. THE ISSUE BEFORE LEARNED SUPREME COURT WAS AS TO WHETHER AMOUNT RECEIVED FROM LETTING OF G O-DOWN IS EXEMPT UNDER SECTION 10(29) OF THE ACT. THIS JUDGM ENT IS NOT APPLICABLE. ITA NO.626/B/09 PAGE 11 OF 19 RESPECTFULLY FOLLOWING THE FINDING OF THE HONBLE T RIBUNAL REFERRED SUPRA, THE AO IS DIRECTED TO ASSESS THE RENTAL INCOME AS BUSINESS INCOME OF THE ASSESSEE COMPANY. II. DISALLOWANCE OF BUSINESS EXPENDITURE : IN VIEW OF THE FINDING OF THE HONBLE TRIBUNAL FOR THE AY 01-02, THE ASSESSEE COMPANY PLEADED THAT THE ENTIRE BUSINESS E XPENDITURE IS TO BE ALLOWED AND CONSEQUENTLY, THE BUSINESS LOSS OF RS.1 0257510/- IS ORDERED TO BE CARRIED FORWARD AND SET OFF. HOWEVER, LD. D .R HAD INSISTED THAT THE ISSUE MAY BE REMANDED BACK TO THE CIT (A) FOR FRESH CONSIDERATION. THE HONBLE TRIBUNAL HAD DEALT WITH A SIMILAR ISSUE AND IN ITS CONCLUSION, IT HAD OBSERVED THAT, EXPENSES NECESSARY TO RETAIN THE STATUS OF COMPANY AND ESTABLISHMENT EXPENSES WILL BE ALLOWED. FOR QUANTIFICATION OF EXPENSES NECESSARY TO RETAIN THE STATUS OF COMPANY AND ESTABLISHMENT EXPENSES, THE MATTER IS RESTORED ON THE FILE OF THE A.O. DURING THE COURSE OF HEARING, IT WAS BROUGHT TO THE REFERENCE OF THIS BENCH BY THE LD. A R THAT THE AO HAD ALLOWED THE BU SINESS EXPENSES INCURRED IN AY 01-02 WHILE GIVING EFFECT TO THE TRI BUNALS ORDER. CONSIDERING THE OVER ALL FACTS OF THE ISSUE AND IN CONFORMITY WITH THE HONBLE TRIBUNALS FINDING, WE ARE OF THE CONSIDERE D VIEW THAT THE ASSESSEE COMPANY WAS ENTITLED TO THE ESTABLISHMENT EXPENSES. FOR QUANTIFICATION OF EXPENSES, THE MATTER IS REMANDED BACK ON THE FIL E OF THE AO TO TAKE ITA NO.626/B/09 PAGE 12 OF 19 APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISION S OF LAW, AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE COMPANY OF BEING HEARD.. III. NON-ALLOWANCE OF UNABSORBED DEPRECIATION : DURING COURSE OF HEARING, IT WAS SUBMITTED THAT THE ASSESS EE COMPANY HAD NOT CLAIMED DEPRECIATION WHILE COMPUTIN G THE TOTAL TAXABLE INCOME AND, THUS, THE GROUND WITH REGARD TO THE CLA IM OF DEPRECIATION WAS NOT PRESSED. THUS, THE ASSESSEES CLAIM OF DEPRECIATION IS DISMI SSED AS NOT PRESSED. THE ISSUE TO BE ADJUDICATED IS: WHETHER THE UNABSORBED DEPRECIATION IS TO BE ALLOWED TO BE CARRIED FORWARD AND SET OFF? THE FACTS, IN BRIEF, ARE THAT THE OPERATING LOSS B EFORE EXTRAORDINARY ITEMS WAS RS.17339740 WHICH WAS ARRIVED AT AFTER DEBITING THE BOOK DEPRECIATION OF RS.7082230 [PAGE 10 OF PAPER BOOK]. ON A PERUSA L OF THE COMPUTATION [PAGE 22 OF PB] THE ASSESSEE HAD BEGUN THE COMPUTAT ION OF BUSINESS INCOME WITH OPERATING LOSS BEFORE EXTRAORDINARY ITE MS OF RS.17339740 [PAGE 10 OF PB]. FROM THE SAID OPERATING LOSS BEFO RE EXTRAORDINARY ITEMS, THE ASSESSEE HAD ADDED THE BOOK DEPRECIATION OF RS. 7082230/- WHICH HAD RESULTED IN THE NET LOSS FROM BUSINESS HAD REDUCED. THUS, THE ASSESSEE HAD NOT REDUCED ANY DEPRECIATION TO BE CLAIMED UNDE R S.32 OF THE ACT. ON A PERUSAL OF THE RELEVANT RECORDS, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS NO CLAIM OF DEPRECIATION BY THE ASSESSEE. ITA NO.626/B/09 PAGE 13 OF 19 ON VERIFICATION OF THE COMPUTATION OF TOTAL INCOME [PAGE 22 OF PB], WE FIND THAT THE ASSESSEE HAD CLAIMED UNABSORBED DE PRECIATION OF RS.81523509/- TO BE ALLOWED TO BE CARRIED FORWARD A ND SET OFF. IT IS EVIDENT FROM THE ABOVE THAT NO CLAIM OF DEPRE CIATION U/S 32 OF THE ACT WAS MADE BY THE ASSESSEE. HOWEVER, THERE W AS NO DISCUSSION WHATSOEVER IN THE IMPUGNED ORDER OF THE AO WITH REG ARD TO THE NON- ALLOWABILITY OF UNABSORBED DEPRECIATION TO BE CARRI ED FORWARD AND SET OFF. FURTHER THE LD. CIT(A) HAD CONFIRMED THE ACTION OF THE AO IN A CRYPTIC WAY WITHOUT GIVING ANY SPEAKING ORDER OR LEGAL BACK-GRO UND IN DOING SO. THE AMENDED PROVISIONS OF S. 32(2) [W.E.F.1.4.2002] READ AS UNDER: (2) WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHA RGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) OF SECTION 72 AND SUB-SECTION (3) OF SECTION 73 , THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT B EEN GIVEN, AS THE CASE MAY BE, SHALL BE ADDED TO THE AMOUNT OF THE AL LOWANCE FOR DEPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DE EMED TO BE PART OF THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE THE ALLOWANCE FOR THAT PREVIO US YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. IT COULD BE SEEN FROM THE AMENDED PROVISIONS OF S. 32(2) OF THE ACT, THERE WAS NO TIME LIMIT FOR UNABSORBED DEPRECIATION TO BE CARRIED FORWARD AND SET OFF. FURTHER, THE HONBLE TRIBUNAL REFERRED SUPRA, HAD O BSERVED THAT , 4.3. IN THE END, IT IS HELD THAT RENT FROM GO-DOWN AND RECE IPT FROM SALE OF SCRAP WILL ITA NO.626/B/09 PAGE 14 OF 19 BE TAXED UNDER THE HEAD BUSINESS AND UNABSORBED LOSSES AND DEPRECIATION WILL BE SET OFF IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUM STANCES OF THE ISSUE AND IN CONFORMITY WITH THE FINDING OF THE HON BLE TRIBUNAL REFERRED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE COMPANY IS ENTITLED FOR UNABSORBED DEPRECIATION TO BE CARRIED FORWARD AND SET OFF . IT IS ORDERED ACCORDINGLY. IV. DISALLOWANCE OF INTEREST ON CUSTOMS DUTY : THE ASSESSEE COMPANY HAD CLAIMED AN EXPENDITURE OF RS.70.83 LAKHS BEING EXCISE DUTY PAID TO THE GOVERNMENT. THE AO TOOK A STAND THAT THIS LIABILITY WAS NOT IN CONNECTION WITH BUSINESS ACTIVITIES OF THE ASSESSEE, BUT, IT WAS ONLY FOR CONTRAVENTION OF CERTAIN PROVI SIONS OF CUSTOMS AND CENTRAL EXCISE RULES WHICH WAS NOT AN ALLOWABLE EXP ENDITURE. THE CIT (A) TOOK A STAND THAT THE ASSESSEE HAD DEVI ATED FROM EXPORT OBLIGATIONS COMMITTING A DEFAULT OF NOT EXPORTING 5 0% OF PRODUCTS AS PER IMPORT TERMS OF MACHINERIES, IT WAS A DEFAULT AND D URING SETTLEMENT IT WAS DECIDED THAT THE ASSESSEE SHOULD PAY FOR DEFAULT AN D THUS THE ADDITION MADE BY THE AO WAS CONFIRMED. WE HAVE PERUSED THE ORDER DATED: 20/7/2005 OF THE S ETTLEMENT COMMISSION: CUSTOMS & CENTRAL EXCISE, ADDITIONAL BE NCH, MUMBAI [PAGE 23 OF PB]. THE COMMISSION, AFTER DELIBERATING VARI OUS ASPECTS, HAD SETTLED THE CASE ON THE FOLLOWING TERMS AND CONDITIONS: ITA NO.626/B/09 PAGE 15 OF 19 CUSTOMS DUTY : THE CUSTOMS DUTY WAS SETTLED AT RS.57,82,963/-. OU T OF WHICH, RS.28, 09,000/- HAD BEEN REALISED BY THE REVENUE. THE BAL ANCE AMOUNT TO BE PAID WAS DETERMINED AT RS.29, 73,963/- WHICH WAS TO BE P AID WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THE SAID ORDER. INTEREST : THE ASSESSEE WAS DIRECTED TO PAY INTEREST AS PRESCR IBED UNDER NOTIFICATION NO.110/95-CUS DATED: 5/6/1995. THE REVENUE SHALL C ALCULATE THE AMOUNT OF INTEREST AS ORDERED AFORESAID WITHIN 15 DAYS OF REC EIPT OF THE SAID ORDER. PENALTY AND PROSECUTION : THE BENCH GRANTED IMMUNITY TO THE ASSESSEE FROM PENALTY AND PROSECUTION UNDER THE ACT . FROM THE SAID ORDER, THE THREE ISSUES EMERGED ARE C ULLED OUT AS UNDER: (I) AS ON 20/7/2005, THE BALANCE OF CUSTOMS DUTY TO BE PAID WAS DETERMINED AT RS. 2973963 /- [THE REVENUE HAD ALREADY ENCASHED THE BANK GUARANTEES TO THE EXTENT OF RS. 2809000 /-, THE DATE(S) OF SUCH REALISATION COULD NOT BE ASCERTAINED FROM THE SAID ORDER]. (II) THE ASSESSEE WAS LIABLE TO PAY ONLY THE INTEREST AS PRESCRIBED IN THE NOTIFICATION. HOWEVER, THE EXACT AMOUNT OF INT EREST PAYABLE IS NOT FURNISHED BEFORE US; & (III) THE BENCH FURTHER GRANTED IMMUNITY TO THE ASSESSEE FROM PENALTY AND PROSECUTION UNDER THE ACT. SCHEDULES FORMING PART OF P & L ACCOUNT [PAGE 15 OF PB], IT HAS BEEN MENTIONED ONLY AS INTEREST ON CUSTOMS DUTY - RS. 70,83,470/-. SINCE NO CLARIFICATION IS FORTHCOMING, WHETHER THE SAID AMOU NT OF RS.7083470/- INCLUDE THE BALANCE AMOUNT OF CUSTOMS DUTY OF RS.29 , 73,963/ - [OR THE ENTIRE CUSTOMS DUTY OF RS.5782963/-] AND ALSO THE I NTEREST AMOUNT OR ONLY THE INTEREST AMOUNT, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE SHOULD BE ITA NO.626/B/09 PAGE 16 OF 19 RESTORED ON THE FILE OF THE AO FOR PROPER VERIFICAT ION. THE ASSESSEE COMPANY IS - THROUGH ITS LD.A.R - ADVISED TO FURNIS H THE REQUIRED DETAILS WHICH WILL FACILITATE THE AO TO TAKE APPROPRIATE AC TION IN THE MATTER. THE DETAILS WHICH WILL BE FURNISHED BY THE ASSESSEE COM PANY, AS DIRECTED ABOVE, IF TALLY WITH THE FIGURE OF RS.7083470/- AS CLAIMED BY THE ASSESSEE COMPANY, THE AO IS DIRECTED TO ALLOW THE SAME, AFTE R DUE VERIFICATION. V. CESSATION OF LIABILITY : THE ASSESSEE COMPANY HAD (I) WRITTEN BACK OF RS.20 920040/- OUTSTANDING WITH THE CREDITOR SHRI K.N.TILAK KUMAR, (II) DE-CAPITALIZATION OF DEPRECIATION OF EARLIER YEARS OF RS.6422856/- AND ( III) INTEREST PAYABLE TO THE FINANCIAL INSTITUTIONS OF RS.15552535/- WHICH HAS B EEN BROUGHT TO TAX U/S 41(1) OF THE ACT BY THE AO. (I) THE ASSESSEE SUBMITTED THAT THE FIRST CONDI TION TO BE SATISFIED TO ATTRACT S. 41(1) OF THE ACT IS THAT THE ASSESSEE OU GHT TO HAVE CLAIMED AN ALLOWANCE OR DEDUCTION IN RESPECT OF ANY LOSS, EXPE NDITURE OR TRADING LIABILITY. THE ASSESSEE WAS NOT ALLOWED ANY ALLOWANCE OR DEDUCTION IN RESPECT OF LOAN OF RS.2.09 CRORES PROVIDED BY SHRI TILAK KU MAR TO THE ASSESSEE. THE LOAN HAS BEEN APPEARING ON THE LIABILITY SIDE O F THE BALANCE SHEET UNDER THE HEAD UNSECURED LOAN FROM YEAR ON YEAR B ASIS. THE CONTENTION OF THE ASSESSEE THAT THE F IRST CONDITION OF S.41 (1) ITSELF WAS NOT ATTRACTED; THE PROVISIONS OF S. 41(1 ) CANNOT BE INVOKED IN RESPECT OF WAIVER OF LOAN PROVIDED BY SHRI TILAK KU MAR. ITA NO.626/B/09 PAGE 17 OF 19 IT IS SEEN FROM THE SCHEDULE 3 [PAGE 11 OF PB] THAT THE LOAN AMOUNT WAS APPEARING ON THE LIABILITY SIDE OF THE BALANCE SHEET UNDER THE HEAD UNSECURED LOAN AND THAT THE UNSECURED LOAN OF R S.20783570/- HAS BEEN WRITTEN BACK ON SCHEDULE 15 [P 16 OF PB] IN ACCORDANCE WITH A REHABILITATION PACKAGE, ON THE REQUEST OF THE ASSESSEE COMPANY, SHRI TILAK KUMAR HAD, VIDE HIS LE TTER - ON A STAMP PAPER - WAIVED OFF THE ENTIRE LOAN AMOUNT PAYABLE B Y THE ASSESSEE, AMOUNTING TO RS.2.09 CRORES [P 18 & P.29 OF PB]. WE HAVE PERUSED SCHEDULE 16 NOTES TO THE ACCOUNTS UNDER THE CAPTION 6. UNSECURED LOANS FROM DIRECTORS, IT HAS M ENTIONED THAT A SUM OF RS.2.08 CRORES LYING TO THE CREDIT OF MR. K. N. TILAK KUMAR IS NO LONGER PAYABLE BY THE COMPANY, CORRESPONDINGLY THE SAME HA S BEEN WRITTEN BACK DURING THE PERIOD TO THE CREDIT OF PROFIT & LOSS A CCOUNT. SHRI TILAK KUMAR IN HIS LETTER CITED SUPRA HAD MENT IONED THAT I HEREBY AGREE AND CONFIRM WAIVER OF THE OUTSTANDI NG UNSECURED LOAN OF RS.2,09,20,040/- IN THE BOOKS OF THE COMPANY, WHICH WAS GIVEN BY ME IN COMPLIANCE OF MY OBLIGATION AS SHAREHOLDER/GUARANTO R OF THE COMPANY FOR CLEARING THE LIABILITIES OF THE COMPANY IN TERMS OF SHARE PURCHASE AGREEMENT DATED 27.06.2005 EXECUTED BY ME WITH M/S. TINNA AGRO INDUSTRIES LTD., I THEREFORE UNDERTAKE TO RENOUNCE ALL MY RIGH TS, CLAIMS ANY OTHER RIGHTS OF ANY NATURE WHATSOEVER, WHETHER PRESENT OR FUTURE , WHETHER ASCERTAINED OR NOT, IN RESPECT OF THE SUMS AFORESAID MENTIONED. I ALSO UNDERTAKE TO INDEMNIFY K N GURUSWAMY OIL MIL LS LIMITED, IN RESPECT OF THE ABOVE SUMS IF ANY PECUNIARY LIABILITY DEVOLV ES ON THE SAID COMPANY ON ACCOUNT OF THE ABOVE SUMS. CONSIDERING THE FACTS AND THE ISSUE ON HAND, WE ARE OF THE VIEW S.41(1) IS NOT ATTRACTED AND, THUS, THE AO WAS NOT JUSTIFIED IN IN VOKING THE PROVISIONS IN RESPECT OF WAIVER OF LOAN PROVIDED BY SHRI TILAK KU MAR. ITA NO.626/B/09 PAGE 18 OF 19 IN OVERALL CONSIDERATION OF THE ISSUE, WE ARE OF TH E CONSIDERED VIEW THAT THE FIRST CONDITION OF S.41(1) OF THE ACT IS NOT ATTRAC TED, THE PROVISIONS OF S.41(1) OF THE ACT, AS RIGHTLY POINTED OUT BY THE ASSESSEE COMPANY, CANNOT BE INVOKED IN RESPECT OF WAIVER OF LOAN AMOUNT PROVIDE D BY SHRI TILAK KUMAR. (II) WITH REGARD TO DE-CAPITALIZATION OF INTEREST O F RS.1.55 CRORES TAXABLE U/S 41(1) OF THE ACT, IT WAS SUBMITTED DURING THE C OURSE OF HEARING THAT THE AO HAD RECTIFIED THE SAME VIDE HIS ORDER DATED: 27/ 2/09 AND, THUS, THIS GROUND OF APPEAL WAS NOT PRESSED. ACCORDINGLY, THI S GROUND IS DISMISSED AS NOT PRESSED . (III) IN RESPECT OF DEPRECIATION OF RS.6422856, WE HAVE PERUSED THE RELEVANT RECORDS AND ALSO TAKEN INTO ACCOUNT THE FORCEFUL AR GUMENTS PUT-FORTH BY THE LD. A.R. IT COULD BE SEEN FROM THE SCHEDULE ON FIXED ASSETS ON PAGE 12 OF PB THAT THE RECAPITALIZATION OF INTEREST OF RS.1.5 5 CRORES WAS SHOWN AS A DEDUCTION FROM THE GROSS BLOCK OF THE ASSETS AND TH E DEPRECIATION RELATING TO THE SAID INTEREST AMOUNTING TO RS.64.22 LAKHS WA S ALSO REDUCED FROM THE DEPRECIATION OF THE RESPECTIVE ASSETS WHICH EXHIBIT S THAT THE SO CALLED DEPRECIATION OF RS.64.22 LAKHS REPRESENTS BOOK DEPRECIATION ONLY AND THAT, THE ASSESSEE COMPANY WAS NOT ALLOWED BOOK DEP RECIATION WHILE COMPUTING TOTAL TAXABLE INCOME IN ANY OF THE YEARS. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF S. 41(1 ) OF THE ACT AND THAT TOO WHEN SUCH BOOK DEPRECIATION WAS NOT ALLOWED WHILE C OMPUTING THE TOTAL TAXABLE INCOME OF THE ASSESSEE COMPANY. ITA NO.626/B/09 PAGE 19 OF 19 6. IN THE RESULT, THE ASSESSEE COMPANYS APPEAL IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2009. SD/- SD/- (SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE, DATED, THE 31 ST AUGUST, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.