HIL Limited , Hyderabad V. Asst. Commissioner of Income Tax, Circle-2(2), Hyderabad

ITA 647/Hyd/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4373 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 17-10-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation; Rectification of order; Additional depreciation; Corroborative evidences; TDS; Set aside
• Section: 143(3); 40(a)(ia); 207; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B: HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1701/HYD/14 2009-10 M/S.HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED) HYDERABAD [PAN: AAACH2676Q] ADDL. COMMISSIONER OF INCOME TAX, RANGE-2, HYDERABAD 1702/HYD/14 2010-11 1703/HYD/14 2011-12 647/HYD/19 2012-13 ACIT, CIRCLE-2(2), HYDERABAD 555/HYD/17 2013-14 FOR ASSESSEE : SHRI A.V.RAGHU RAM, AR FOR REVENUE : S HRI Y.V.S.T.SAI, CIT - DR DATE OF HEARING : 16-10-2019& 17-10-2019 DATE OF PRONOUNCEMENT : 22-11-2019 M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 2 -: O R D E R PER D.S. SUNDER SINGH, A.M. : THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS),H YDERABAD& GUNTUR, FOR THE RESPECTIVE ASSESSMENT YEARS. SINCE THE FACTS AND ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON, ALL THESE APPEALS ARE CLUBBED, HEARD AND ARE BEING DISPOSED-OF BY WAY OF THIS COMMON ORDER AS UNDER. I.T.A. 1701/HYD/2014, A.Y.:2009-10 2. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS A COMPANY, ENGAGED IN THE BUSINESS OF PRODUCTION OF ASBESTOS CEMENT SHEET S AND EXPORTS, FITTINGS OF INSTALLATION PANELS ETC. FOR THE AY.200 9-10, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30-09-2009 AND DECLARED TH E INCOME OF RS.66,45,31,440/- UNDER THE NORMAL PROVISIONS OF TH E INCOME TAX ACT [ACT]. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY, NOTICE U/S.143(2) OF THE ACT WAS ISSUED AND DULY SERVED ON ASSESSEE. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 3 -: 3. THE ASSESSING OFFICER (AO) PASSED THE ORDER U/S. 143(3) OF THE ACT, DT.28-12-2011, BY MAKING THE FOLLOWING ADDITIONS/DI SALLOWANCES TO THE RETURNED INCOME: AMOUNT (RS) 1. SALES INCENTIVES PAID TO STOCKISTS DISALLOWED 9,23,76,914 2. DIFFERENCE IN INVENTORY ADDED 3,80,31,000 3. DIRECTORS COMMISSION DISALLOWED 50,00,000 4. DIFFERENCE IN DEPRECIATION 13,57,000 4. THE FIRST ISSUE IN APPEAL FOR THE A.Y.2009-10 IS THE DISALLOWANCE OF SALES INCENTIVE TO STOCKISTS ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED THE TAX AT SOURCE AS REQUIRED U/S.194H OF THE ACT. THE AO TREATED DISCOUNTS GIVEN TO STOCKISTS AS COMMISSION AND APPLIED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TO THE C ASE AND ACCORDINGLY DISALLOWED THE AMOUNT OF RS.9,23,76,914/- AND ADDED BACK TO THE INCOME RETURNED BY THE ASSESSEE. 5. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON AP PEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MAD E BY THE AO. LD.CIT(A) HELD THAT AS PER SECTION 194H OF THE ACT, ANY PAYMENT MADE DIRECTLY OR INDIRECTLY BY THE ASSESSEE OR ANY PAYME NT FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF THE GOODS OR ANY INCOME IS M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 4 -: CREDITED TO ANY ACCOUNT BY ANY OTHER NAME IN THE BO OKS OF ACCOUNT OF THE PERSONS LIABLE TO PAY SUCH INCOME CREDITED SHOU LD BE DEEMED TO BE CREDITED TO THE ACCOUNT OF PAYEE AND THE PROVISIONS OF SECTION SHALL APPLY. ACCORDINGLY, LD.CIT(A) HELD THAT TDS IS REQ UIRED TO BE DEDUCTED ON THE PAYMENTS MADE TO STOCKISTS U/S 194H OF THE A CT AND THE AO RIGHTLY DISALLOWED THE EXPENDITURE U/S 40(A)(IA) OF THE ACT. THE LD.CIT(A) FURTHER VIEWED THAT THIS VIEW IS SUPPORTE D BY THE DECISION OF HONBLE ITAT, JAIPUR IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES P. LTD., VS. ITO(2005) 097 ITD 0105 AND ACCORDINGLY CO NFIRMED THE ORDER OF THE AO. 6. AGAINST THE ORDER OF LD.CIT(A), ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 7. DURING THE APPEAL HEARING, LD.AR SUBMITTED THAT THE PAYMENT MADE TO THE STOCKISTS GOES TO DIRECT CREDIT OF THE CUSTOMERS, HENCE ARGUED THAT THE PAYMENT IS IN THE NATURE OF DISCOUN T BUT NOT THE COMMISSION. IN THE BOOKS OF HIL, THE DISCOUNTS WERE ACCOUNTED FOR IN THE DISCOUNT ACCOUNT AND AS AT THE END OF THE YEAR THE SAME WAS TRANSFERRED TO THE SALES A/C AND THE DISCOUNT ACCOU NTS WERE NULLIFIED. THE AMOUNT OF DISCOUNT TRANSFERRED TO SALES REDUCES THE SALES VALUE TO M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 5 -: THE EXTENT OF DISCOUNTS AND THE REDUCED VALUE APPEA R IN PROFIT & LOSS A/C. THE DISCOUNTS, WHICH WERE GIVEN AS A PART OF NORMAL CREDIT WERE ACCOUNTED THROUGH INVOICES AND DISCOUNTS GIVEN OVER AND ABOVE THE NORMAL CREDITS, IN ACCORDANCE WITH THE DIFFERENT CL AIMS APPROVED BY THE MANAGEMENT ARE ACCOUNTED THROUGH CREDIT NOTES. DISCOUNTS GOES TO THE ACCOUNT OF CUSTOMERS DIRECTLY. THE STOCKISTS ACT AS DIRECT CUSTOMERS TO THE COMPANY IN CERTAIN TRANSACTIONS, E XCEPT WHERE THE ORDERS ARE RECEIVED FROM CUSTOMERS THROUGH THE STOC KISTS FOR WHICH THE COMMISSION IS PAID TO STOCKISTS AND NO DISCOUNT IS PAID TO THE STOCKISTS ON SUCH TRANSACTION. SALES ARE MADE DIREC TLY TO THE STOCKISTS, WHO IN TURN SELL THE MATERIAL TO THE CUSTOMERS AND HIL IS NOT AT ALL INVOLVED IN SUCH DIRECT SALES MADE BY ITS STOCKISTS TO THEIR CUSTOMERS. DURING THE PERIOD, THE STOCKISTS GET VARIOUS TYPES OF DISCOUNTS APART FROM CASH DISCOUNTS AND IT IS GENERALLY GIVEN ON T HE INVOICES. LD.AR ARGUED THAT DISCOUNT GIVEN TO STOCKISTS PASSED ON T O THE CUSTOMERS, HENCE, THE DISCOUNT DOES NOT ATTRACT TDS. THEREFOR E, HE ARGUED THAT THE AO HAD ERRED IN MAKING THE ADDITION U/S.40(A)(I A) OF THE ACT, TREATING THE SAME AS COMMISSION. LD.AR ALSO SUBM ITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 6 -: BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.917, 918 & 919/HYD/2009, DT.02-07-2012 RELATING TO AYS.2005-06 & 2006-07. 8. PER CONTRA, THE LD.DR ARGUED THAT THE HON'BLE IT AT IN THE AFORESAID CASE LAW RELIED UPON BY THE ASSESSEE, REMITTED THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO EXAMINE THE ISSUE, H ENCE ARGUED THAT THE ISSUE MAY SENT TO THE FILE OF THE AO FOR RECONSIDE RATION. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED ON RECORD. THE CONTENTION OF THE ASSESSEE IS THE PAYM ENT MADE WAS DISCOUNT AND NOT THE COMMISSION. WHEREAS THE DEPAR TMENTS CONTENTION IS THAT THE PAYMENT WAS COMMISSION AND A TTRACTS THE TDS U/S 194H OF THE ACT. THE ASSESSEE RELIED ON THE DE CISION OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR, WHEREIN THE TRIBUNAL HAS DISMISSED THE REVENUES AP PEAL ON THE FINDING GIVEN BY THE LD.CIT(A) THAT THE PAYMENT MAD E TO THE STOCKISTS WAS DISCOUNT, BUT NOT THE COMMISSION IN THE RELEVAN T ASSESSMENT YEAR. THE COORDINATE BENCH HELD THAT BROKERAGE OR COMMISS ION ENVISAGED U/S 194H IS FOR THE PAYMENT RECEIVED BY THE PERSON ON BEHALF OF ANOTHER, FOR SERVICES RENDERED IN THE COURSE OF BUY ING AND SELLING OF GOODS. IN THE INSTANT CASE, THE ASSESSEE HAS STATE D THAT THE STOCKISTS M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 7 -: THEMSELVES ARE BUYING THE GOODS AND IT CANNOT BE SA ID THAT THEY ARE RENDERING ANY SERVICES IN THE COURSE OF SUCH BUYING OF GOODS WHICH WILL RENDER ANY PAYMENT TO THEM AS COMMISSION. THO UGH THE AO STATED THAT THE FACTS ARE SIMILAR TO THAT OF A.Y.20 06-07, THE AO DID NOT VERIFY THE FACTS AND GAVE FINDING WITH REGARD TO T HE NATURE OF PAYMENT. THE ASSESSEE ALSO DID NOT PROVE WITH THE BOOKS OF A CCOUNTS THE NATURE OF PAYMENT. THEREFORE, WE ARE OF THE CONSIDERED VIE W THAT THE ISSUE NEEDS TO BE VERIFIED AT THE END OF THE AO TO ASCERT AIN WHETHER THE PAYMENT IS COMMISSION OR DISCOUNT WITH RELEVANT VOU CHERS OF SALES AND THE CONCERNED ACCOUNTS OF THE STOCKISTS. HENCE , WE REMIT THE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE BOO KS OF ACCOUNTS, RELEVANT VOUCHERS AND ASCERTAIN WHETHER THE PAYMENT IS COMMISSION OR DISCOUNT. IF THE PAYMENT IS IN THE NATURE OF COM MISSION OR BROKERAGE, THE PAYMENT NEEDS TO BE DISALLOWED U/S 4 0(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE U/S 194H OF THE ACT. IN CASE THE PAYMENT IS IN THE NATURE OF DISCOUNTS ALLOWED ON TH E SALES THE PROVISIONS OF SECTION 194H AND THE CONSEQUENT DISAL LOWANCE DOES NOT ATTRACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE O N THIS GROUND IS SET ASIDE AND ALLOWED FOR STATISTICAL PURPOSES. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 8 -: 10. GROUND NO.4 IS RELATED TO OPENING STOCK GENERA TED DURING TRIAL RUN PRODUCTION. DURING THE ASSESSMENT PROCEED INGS, THE AO FOUND THAT THE ASSESSEE HAS CLAIMED THE OPENING STOCK OF FINISHED GOODS OF RS.380.31 LAKHS IN THE OPENING STOCK INVENTORIES, W HEREAS THE SAID OPENING STOCK WAS NOT FOUND IN THE CLOSING STOCK OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. ON A QUERY FROM THE AO, THE ASSESSEE EXPLAINED THAT THE ASSESSEE HAS MADE THE TRIAL RUN PRODUCTION AND INITIALLY THE EXPENDITURE WAS DEBITED TO CONSTRUCTI ON ACCOUNT. PENDING CLEARANCE OF TRIAL RUN PRODUCTION THE EXPENDITURE S UCH AS RAW MATERIALS AND OTHER RELATED EXPENSES WERE CAPITALIZ ED AND NOT DEBITED TO THE PROFIT & LOSS A/C. ON TESTING TRIAL RUN SUCC ESSFULLY, THE STOCK GENERATED OUT OF TRIAL RUN PRODUCTION FOUND TO BE F IT FOR SALE, HENCE, TRANSFERRED THE STOCKS AS WELL AS THE EXPENDITURE I NCURRED DURING THE TRIAL RUN PRODUCTION TO THE PROFIT &LOSS ACCOUNT. S INCE THE STOCKS WERE TAKEN IN THE CLOSING STOCK ACCOUNT AND THE COST OF PRODUCTION OF THE STOCK RELATED TO THE TRIAL RUN PRODUCTION WAS DEBIT ED TO THE PROFIT & LOSS A/C UNDER THE HEAD OPENING STOCK THUS, SUBMI TTED THAT THERE IS NO OVERSTATING OF THE EXPENDITURE OR DIFFERENCE IN OPENING STOCK. NOT BEING IMPRESSED WITH THE EXPLANATION OFFERED BY THE ASSESSEE, THE AO M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 9 -: VIEWED THAT ASSESSEE HAS DEBITED THE RAW-MATERIAL C ONSUMPTION RELATING TO TRIAL RUN PRODUCTION TO THE PROFIT & LO SS A/C UNDER THE HEAD OPENING STOCKS WITHOUT TAKING THE TRIAL RUN STOCKS TO TRADING ACCOUNT AND HENCE THE OPENING STOCK AMOUNT OF RS.380.31 LA KHS WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 11. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL O F ASSESSEE. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 12. DURING THE APPEAL HEARING, LD.AR REITERATED TH E SUBMISSIONS MADE BEFORE THE AO AND SUBMITTED THAT THE OPENING S TOCK WAS RELATED TO BALASORE UNIT, WHICH HAS STARTED THE PRODUCTION IN THE FY.2008-09, RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , THUS THERE WAS NO QUESTION OF CLOSING STOCK IN THE EARLIER YEAR AN D IT WAS THE STOCK GENERATED OUT OF TRIAL PRODUCTION DURING THE YEAR U NDER CONSIDERATION. THE LD.AR FURTHER STATED THAT INITIALLY, THE ASSESS EE HAS DEBITED THE ENTIRE EXPENDITURE RELATING TO THE TRIAL RUN PRODUC TION TO THE CONSTRUCTION PERIOD ACCOUNT, BUT NOT TO THE PROFIT & LOSS A/C. THE STOCK GENERATED OUT OF THE EXPENDITURE INCURRED DUR ING THE CONSTRUCTION PERIOD AMOUNTING TO RS.4.26 LAKHS WAS TRANSFERRED TO THE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 10 -: PROFIT & LOSS A/C FROM 11-09-2008 TO 31-03-2009, WH ICH WAS NETTED TO RS.3,80,30,600/-. THE LD.AR SUBMITTED THAT BOTH THE STOCK AS WELL AS THE EXPENDITURE WAS TAKEN TO THE PROFIT AND LOSS AC COUNT. THE LD.A.R FURTHER SUBMITTED THAT THE FINISHED GOODS WERE TRA NSFERRED TO THE MANUFACTURING AND TRADING ACCOUNT, WHICH INCREASED THE STOCKS AND THE RELEVANT EXPENDITURE WAS GROUPED UNDER OPENING STOCK AND BOTH THE ITEMS WERE TAKEN TO PROFIT & LOSS A/C. SINCE TH E EXPENDITURE AS WELL AS THE CLOSING STOCK WAS TRANSFERRED TO THE TR ADING A/C, THERE WAS NO DIFFERENCE IN THE CLOSING STOCK / OPENING STOCK, HENCE, ARGUED THAT THERE IS NO CASE FOR MAKING ADDITION, THUS, THE ASS ESSEE REQUESTED TO DELETE THE ADDITION MADE BY THE AO. 13. ON THE OTHER HAND, THE LD.DR ARGUED THAT THOUG H THE ASSESSEE STATED TO HAVE TAKEN THE CLOSING STOCKS RE LATING TO THE RAW- MATERIAL, THERE WAS NO EVIDENCE PLACED ON RECORD TO SHOW THE SALES OR TRANSFER OF STOCK TO TRADING AND MANUFACTURING ACCO UNT. THEREFORE, ARGUED THAT THE AO HAS RIGHTLY MADE THE ADDITION. L D.DR FURTHER SUBMITTED THAT BY TAKING THE OPENING STOCK TO THE P ROFIT & LOSS A/C, WITHOUT ACCOUNTING THE SALES OR INCREASING THE CLOS ING STOCK WITH EQUAL AMOUNT OF THE OPENING STOCK, THE ASSESSEE HAS INFLA TED THE SALES. THUS, M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 11 -: THERE WAS SUPPRESSION OF INCOME TO THE EXTENT OF OP ENING STOCK. HENCE REQUESTED TO UPHOLD THE ORDER OF LOWER AUTHORITIES AND DISMISS THE APPEAL OF THE ASSESSEE. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE AO MADE THE ADDITION REPRESE NTING THE STOCKS OF FINISHED GOODS GENERATED OUT OF TRIAL RUN PRODUCTIO N WHICH WAS CLAIMED AS OPENING STOCK. THE CONTENTION OF THE AO IS THAT THE ASSESSEE HAS CLAIMED THE EXPENDITURE RELATING TO TR IAL RUN PRODUCTION AS OPENING STOCK IN THE YEAR UNDER CONSIDERATION WI THOUT HAVING TRANSFERRED THE REPRESENTING STOCK TO THE TRADING ACCOUNT. THE CONTENTION OF THE ASSESSEE IS THAT THE SUM OF RS.38 0.31 LAKHS DOES NOT REPRESENT THE CLOSING STOCK OF THE EARLIER YEAR AND THE SAME WAS RELATED TO THE STOCKS GENERATED OUT OF TRIAL RUN PR ODUCTION AND BOTH THE STOCK GENERATED OUT OF TRIAL RUN PRODUCTION AND THE EXPENDITURE WAS TRANSFERRED TO THE TRADING AND MANUFACTURING ACCOUN T OF THE YEAR UNDER CONSIDERATION, THEREFORE, THERE IS NO CASE FO R ADDITION REPRESENTING THE OPENING STOCK. THOUGH THE LD.AR A LSO SHOWN THE TRANSFER ENTRIES, THE ASSESSEE HAS NOT PLACED ANY E VIDENCE RELATING TO THE STOCK TRANSFER OF TRIAL RUN PRODUCTION TO THE T RADING ACCOUNT, WITH M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 12 -: STOCK REGISTER. IN THE SUBSEQUENT YEAR, THE AO HAS CALLED FOR THE DETAILS OF SALES MADE OUT OF TRIAL RUN PRODUCTION BUT THE A SSESSEE COULD NOT FURNISH THE EVIDENCE BEFORE THE AO. WHEN THE ASSES SEE CLAIMS THAT BOTH EXPENDITURE ON THE TRIAL RUN PRODUCTION AND TH E STOCKS WERE TRANSFERRED TO THE TRADING ACCOUNT, IT IS INCUMBENT UPON THE ASSESSEE TO ESTABLISH THE TRANSFER OF STOCKS. HOWEVER, THE ASSESSEE DID NOT ESTABLISH THE SALES OR TRANSFER OF STOCK RELATING T O TRIAL RUN PRODUCTION TO THE STOCK ACCOUNT WITH THE STOCK AND SALES REGIS TERS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE NEEDS TO BE RECONSIDERED AFTER DETAILED EXAMINATION OF THE STOCK REGISTER AS WELL AS THE BOOKS OF ACCOUNTS TO ASCERTAIN WHETHER THE ASSESSEE HAS REAL LY TRANSFERRED THE STOCK GENERATED OUT OF TRIAL PRODUCTION TO THE TRAD ING AND MANUFACTURING ACCOUNT OR NOT ? THE ASSESSEE HAS TO PROVE BEFORE THE AO WITH REGARD TO TRANSFER OF TRIAL RUN PRODUCTION STOCKS TO THE STOCK REGISTER AND THE RESULTANT REVENUE OR SALES WAS ADM ITTED IN THE PROFIT & LOSS ACCOUNT. THUS, WE REMIT THE ISSUE BACK TO T HE FILE OF THE AO WITH A DIRECTION TO REEXAMINE THE ISSUE IN THE LIGHT OF SUBMISSION MADE BY THE ASSESSEE AND THE DIRECTIONS GIVEN IN THIS ORDER AND DECIDE THE ISSUE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 13 -: AFRESH ON MERITS. APPEAL OF THE ASSESSEE ON THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSES. 15. GROUND NO.5 IS RELATED TO THE COMMISSION PAID TO THE DIRECTOR. THE AO FOUND THAT THE COMPANY HAS PAID T HE COMMISSION OF RS.50 LAKHS TO THE DIRECTOR. THE AO HAS CALLED FOR THE DETAILS OF THE COMMISSION PAID TO THE DIRECTOR, THE PURPOSE FOR WH ICH IT WAS PAID ALONG WITH SUPPORTING EVIDENCES. SINCE THE ASSESSEE FAILED TO EXPLAIN THE SAME, AO MADE THE ADDITION OF RS.50 LAKHS IN TH E HANDS OF ASSESSEE. 16. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORDER OF AO. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 17. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE COMPANY HAS PAID THE COMMISSION TO THE WHOLE TIME D IRECTOR, WHO IS LOOKING AFTER THE OPERATIONS OF THE COMPANY AND THE PAYMENT OF COMMISSION IS PERMITTED BY THE COMPANIES ACT AND TH E SAME WAS APPROVED BY THE AGM HELD ON 21-07-2008. THE EXPENDI TURE WAS DEBITED TO PROFIT & LOSS A/C, WHICH WAS ALSO ADMITT ED BY THE RECIPIENTS M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 14 -: IN THEIR RETURNS, THUS ARGUED THAT THERE IS NO CAS E FOR DISALLOWANCE OF COMMISSION IN THE HANDS OF THE COMPANY, HENCE, RE QUESTED TO DELETE THE ADDITION MADE BY THE AO AND ALLOW THE APPEAL. 18. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTE D THE ORDERS OF LOWER AUTHORITIES. 19. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE MATERIAL PLACED ON RECORD. IT IS TRUE THAT THE COMP ANY HAS PAID THE COMMISSION TO THE WHOLE TIME DIRECTOR, WHICH WAS DE BITED TO THE PROFIT & LOSS A/C AND THE PAYMENT OF COMMISSION WAS ALSO APPROVED IN THE AGM. AS SUBMITTED BY THE LD.AR, THE TAX WAS ALSO DEDUCTED AT SOURCE ON PAYMENT OF COMMISSION TO THE DIRECTORS. P AYMENT OF COMMISSION IS THE BUSINESS DECISION OF THE COMPANY AND THE ASSESSING OFFICER HAS NO ROLE IN IT. THEREFORE, THERE IS NO R EASON TO MAKE THE DISALLOWANCE OF PAYMENT OF COMMISSION, HENCE, WE SE T ASIDE THE ORDER OF LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO . THE APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE A.Y.2009-10 IS PARTLY ALLOWED. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 15 -: ITA NO.1702/HYD/2014 (AY.2010-11) 21. THE AO PASSED THE ORDER U/S 143(3) DT.30-03-2 013 AND MADE THE FOLLOWING ADDITIONS/DISALLOWANCES TO THE R ETURNED INCOME: AMOUNT (RS) A. CLAIM OF WEIGHTED DEDUCTION U/S.35(2AB) 1,62,15,011 B. HIRING OF CHARTERED FLIGHT FOR TRAVEL OF SHRI C.K. BIRLA, CHAIRMAN OF THE APPELLANT 23,16,625 C. PAYMENT FOR COPYRIGHT INFRINGEMENT 2,88,400 D. P ROFIT ON SALE OF TRIAL RUN STOCK 68,27,000 22. GROUND NO.1 IS RELATED TO THE WEIGHTED DEDUCT ION U/S.35(2AB) OF THE ACT. THIS ISSUE IS INVOLVED FOR THE A.Y.2010-11 TO 2013-14 FOR 4 ASSESSMENT YEARS. DURING THE ASSESSME NT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS CLAIMED THE DEDU CTION U/S.35(2AB) OF THE ACT TO THE EXTENT OF RS.1,62,15,011/- AND TH E ASSESSEE FAILED TO SUBMIT FORM 3CL FROM DEPARTMENT OF SCIENTIFIC & IND USTRIAL RESEARCH (DSIR) QUANTIFYING THE EXPENDITURE. THE ASSESSEE S UBMITTED BEFORE THE AO THAT THE APPLICATION WAS MADE BEFORE THE PRE SCRIBED AUTHORITY FOR THE ISSUE OF FORM 3CL AND HENCE REQUESTED TO A LLOW THE DEDUCTION PENDING RECEIPT OF FORM 3CL/3CM FROM THE DSIR. THE ASSESSEE ALSO M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 16 -: RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL, MUMBAI IN THE CASE OF ACIT CIRCLE 6(3) VS M/S.MECO INSTRUMENT S PVT. LTD., ITA NO.4246/MUM/2009 DATED 20 TH AUGUST 2010 SUPPORTING ITS CLAIM. THE AO CONSIDERED THE PROVISIONS OF THE ACT, THE RU LES AND THE DECISIONS RELIED UPON BY THE ASSESSEE AND OBSERVED THAT THE ACT PRESCRIBES APPROVAL FOR BOTH FACILITY AND QUANTUM O F EXPENDITURE. THE AO VIEWED THAT THE FACTS OF THE CASE LAWS RELIED UP ON BY THE ASSESSEE ARE DISTINGUISHABLE AND UNLESS THE QUANTUM OF EXPEN DITURE IS CERTIFIED IN FORM 3CL, WEIGHTED DEDUCTION CANNOT BE WORKED O UT AS PER THE PROVISIONS OF THE ACT, THEREFORE, HELD THAT CERTIFI CATION U/S.3CL IS MANDATORY REQUIREMENT TO ALLOW THE WEIGHTED DEDUCTI ON. HENCE, THE AO RESTRICTED THE R&D EXPENSES TO THE ACTUAL AMOUNT S SPENT I.E., RS.108.10 LAKHS AND EXCESS CLAIM OF RS.54,05,003/- WAS DISALLOWED AND ADDED BACK TO THE INCOME. HOWEVER, THE AO HAS GIVEN AN OBSERVATION THAT AS AND WHEN THE FORM 3CL IS RECEIV ED, THE ASSESSEE IS FREE TO MAKE APPLICATION U/S.154 OF THE ACT AND THE AO WOULD PASS NECESSARY RECTIFICATION ORDERS TO ALLOW THE WEIGHTE D DEDUCTION. 23. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL O F ASSESSEE AND M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 17 -: UPHELD THE ORDER OF AO. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 24. DURING THE APPEAL HEARING, LD.COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS MADE THE APPLICATION I N FORM 3CK TO THE DSIR AND HAD INCURRED IN-HOUSE R&D EXPENDITURE OF R S.108.10 LAKHS ON THE RESEARCH AND DEVELOPMENT AND THE ASSESSEE I S ENTITLED FOR WEIGHTED DEDUCTION OF ONE AND HALF TIMES OF THE EXP ENDITURE INCURRED AND ACCORDINGLY REQUESTED TO ALLOW THE DEDUCTION. T HE LD. AR FURTHER SUBMITTED THAT THE FACILITY WAS APPROVED BY THE DSI R AND THE ISSUE OF FORM 3CL IS ONLY PROCEDURAL REQUIREMENT. THE LD.AR ARGUED THAT FOR THE SAKE OF PROCEDURAL REQUIREMENTS, HAVING SPENT T HE AMOUNTS BENEFIT SHOULD NOT BE DENIED. .HE RELIED ON THE DECISION OF COMMISSIONER OF INCOME-TAX III. V. SANDAN VIKAS (INDIA) LTD. , 207 TAXMANN 216) AND THE DECISION OF ACIT CIRLE-6(3) VS MECO INSTRUMENTS P L TD, MUMBAI IN ITA NO.4246/MUM/2009 DATED 20 TH AUGUST 2010. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE FORM 3CK AS REQUIRED UNDER RULE 6 1B(IV) BEFORE THE DUE DATE AND THE GOV ERNMENT HAS APPROVED THE FACILITY AND THE PRESCRIBED AUTHORITIE S REQUIRED TO PASS AN ORDER IN FORM 3CM AND 3CL WHICH WAS NOT YET RECE IVED BY THE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 18 -: ASSESSEE. FORM 3CL QUANTIFYING EXPENDITURE INCURRED AND THE QUANTUM DEDUCTION UNDER SUB SECTION 2AB OF SECTION 35 OF THE ACT REQUIRED TO BE FURNISHED ELECTRONICALLY BY THE PRES CRIBED AUTHORITY TO THE PR.CCIT OR THE CHIEF COMMISSIONER OF INCOME TAX , WHO IS HAVING JURISDICTION OVER THE SAID COMPANY. THE LD.AR STATE D THAT THE COMPANY HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT AS REQUIRE D UNDER RULE 6 (1B) AND FURNISHED THE REPORT AND COMPLIED WITH ALL THE REQUIREMENTS ON THE PART OF THE COMPANY, THEREFORE, REQUESTED TO ALLOW THE DEDUCTION U/S 35(2AB). ALTERNATIVELY, LD.AR PLEADE D THAT THE AO MAY BE DIRECTED TO ALLOW THE WEIGHTED DEDUCTION AS AND WHEN THE CERTIFICATE IN FORM NO. 3CL IS RECEIVED, WITHOUT TH E TIME LIMIT FOR RECTIFICATION U/S 154. 25. PER CONTRA, THE LD.DR SUBMITTED THAT UNLESS TH E APPROVAL FROM PRESCRIBED AUTHORITY IS RECEIVED IN FORM 3CL, THE WEIGHTED DEDUCTION COULD NOT BE QUANTIFIED AND IT IS NOT PER MISSIBLE TO ALLOW THE WEIGHTED DEDUCTION. IN THE INSTANT CASE, THE APPROV AL FROM PRESCRIBED AUTHORITY QUANTIFYING THE EXPENDITURE IN FORM 3CL I S NOT RECEIVED, LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT NO INTERFERENCE IS CALLED-FOR IN THE ORDERS OF THE LOWER AUTHORITIES. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 19 -: THE LD.DR FAIRLY CONCEDED FOR ALTERNATE CLAIM OF TH E ASSESSEE TO ALLOW THE DEDUCTION AS AND WHEN THE APPROVAL IS RECEIVED. 26. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE MATERIAL PLACED ON RECORD. THE DISALLOWANCE MADE B Y THE AO U/S 35(2AB) FOR AYS.2010-11 TO 2013-14 YEAR-WISE, IS AS UNDER : A.Y AMOUNT OF DEDUCTION AMO UNT DISALLOWED CLAIMED 2010-11 1,62,15,011/- 54,05,003/- 2011-12 3,28,03,964/- 1,64,01,982/- 2012-13 4,63,94,097/- 2,31,97,035/- 2013-14 3,15,62,384/- 32,61,000/- 26.1. THE ASSESSEE HAS FURNISHED FORM NO.3CK TO THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH(DSIR) BUT T ILL DATE THE APPROVAL OF EXPENDITURE IN FORM 3CL WAS NOT RECEIVED BY THE DEPARTMENT.. THE AO ALLOWED THE ACTUAL EXPENDITURE AND DISALLOWED TH E WEIGHTED DEDUCTION CLAIMED BY THE ASSESSEE FOR WANT OF FORM 3CL. AS PER RULE 6(1)(B) OF INCOME TAX RULES, WEIGHTED DEDUCTION U/S 35(2AB) IS ALLOWED ON RECEIPT OF ORDER IN FORM NO.3CL FROM THE DSIR. SO FAR, THE SAID ORDER U/R 3CL QUANTIFYING THE EXPENDITURE INCU RRED ON IN HOUSE RESEARCH AND DEVELOPMENT FACILITY OF THE COMPANY W AS NOT YET M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 20 -: RECEIVED. THOUGH THE ASSESSMENT IS RELATED TO A.Y.2 011-12 AND MORE THAN 7 YEARS HAVE BEEN PASSED THE PRESCRIBED AUTHOR ITY HAS NOT PASSED THE ORDER IN FORM NO.3CL. IN THE ABSENCE OF FROM N O.3CL AS PROVIDED U/S 35(2AB), DEDUCTION IS NOT ALLOWABLE. THE LEGISL ATURE IN ITS WISDOM PRESCRIBED THE TERMS AND CONDITIONS FOR GRANT OF DE DUCTION. UNDER RULE 6(1B) FOR GRANT OF WEIGHTED DEDUCTION THE ASSESSEE REQUIRED TO SATISFY CERTAIN TERMS AND CONDITIONS SUCH AS MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS, THE EXPENDITURE REQUIRED TO BE SPENT ONLY ON RESEARCH. ALL THE SUNDRY EXPENSES, PERSONAL EXPENSES, ROUTINE BUS INESS EXPENDITURE ARE NOT TO BE INCLUDED FOR CLAIMING THE DEDUCTION U /S 35(2AB). THEREFORE, QUANTIFICATION OF EXPENDITURE REQUIRED T O BE VERIFIED AND CERTIFIED BY DSIR TO PREVENT THE MISUSE OF THE BENE FIT. FOR THIS PURPOSE, ASSESSEE HAS TO SUBMIT THE AUDIT REPORT ALONG WITH FORM 3CK AND THEN ONLY AFTER SATISFYING THE CORRECTNESS, GENUINENESS OF EXPENDITURE AND THE QUANTIFICATION OF EXPENDITURE THE GOVERNMENT OF INDIA (DSIR) WOULD ISSUE FORM 3CL. ON RECEIPT OF THE FORM 3CL TH E ASSESSEE WOULD BE ENTITLED TO WEIGHTED DEDUCTION. THE AO IS NOT PE RMITTED TO GRANT THE WEIGHTED DEDUCTION, WHEN RULE PRESCRIBES TO GRANT D EDUCTION ON RECEIPT FORM 3CL. CERTIFICATION OF QUANTIFICATION A ND THE GENUINENESS M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 21 -: OF EXPENDITURE IS THE LOOK OUT OF DSIR BUT NOT THE INCOME TAX DEPARTMENT. THE ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SANDAN VIKAS INDIA LIMITED (SU PRA) AND MECO INSTRUMENTS P.LTD. (SUPRA) BOTH THE CASE WERE DISTI NGUISHED BY THE LD.AO IN HIS ORDER. THE COORDINATE BENCH OF ITAT, H YDERABAD ON SIMILAR ISSUE IN THE CASE OF ELECTRONICS CORPN. OF INDIA LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE, 2(2), HYDERABAD *[2012] 28 TAXMANN.COM 280 (HYD.) HELD AS UNDER: AS PER THE PROVISIONS OF SECTION 35(2AB) AS APPLICA BLE TO THE RELEVANT ASSESSMENT YEAR, THE EXPENDITURE INCURRED BY THE ASSE SSEE IN ANY APPROVED IN- HOUSE RESEARCH FACILITY, TO THE EXTENT OF APPROVED BY THE PRESCRIBED AUTHORITY, IS ENTITLED TO WEIGHTED DEDUCTION OF 150 PER CENT OF SU CH APPROVED EXPENDITURE. THEREFORE, THE EXPENDITURE AS APPROVED BY THE DSIR IN T HE CERTIFICATE GIVEN BY THEM IN FORM 3CL ALONE IS TO BE GRANTED WEIGHTED DEDU CTION. THE DSIR IN THEIR CERTIFICATE HAS CERTIFIED EXPENDITURE ELIGIBLE FOR W EIGHTED DEDUCTION AS RS. 3,126.02 LAKHS. THEREFORE, IT IS NOT FOR EITHER THE AS SESSING AUTHORITY OR THE APPELLATE AUTHORITY TO DECIDE ON THE EXPENDITURE WHICH WILL BE ENTITLED TO WEIGHTED DEDUCTION UNDER SECTION 35(2AB). IN FACT, U NDER SECTION 35(2AB)(3) IF ANY QUESTION ARISES UNDER SECTION 35 AS TO WHETHER AN D IF SO, WHAT EXTENT ANY ACTIVITIES CONSTITUTES OR CONSTITUTED OR ANY ASSET WAS USED FOR SCIENTIFIC RESEARCH, THE MATTER SHOULD BE REFERRED TO THE APPROPRIATE AUTHO RITY WHOSE DECISION WILL BE FINAL. IN THIS CASE THE APPROPRIATE AUTHORITY IS T HE DSIR. THEREFORE ONCE THE DSIR HAS CERTIFIED THE QUANTUM OF ELIGIBLE R&D EXPENDIT URE FOR THE PURPOSES OF WEIGHTED DEDUCTION UNDER SECTION 35(2AB) THE FIGURE C ANNOT BE TAMPERED WITH BY THE TRIBUNAL. EVEN IF THE ASSESSEE IS RIGHT IN THAT THERE IS A MISTAKE IN THE CERTIFICATE ISSUED BY THE DSIR, SAME CAN ONLY BE REC TIFIED BY DSIR AND NOT THE THE TRIBUNAL IN APPELLATE PROCEEDINGS. THEREFORE, THE DE CISION OF LOWER AUTHORITIES IN DISALLOWING SUM OF RS. 1,69,73,987 OUT OF THE CLAIM MADE BY THE ASSESSEE IS UPHELD. HOWEVER, IT IS DIRECTED THAT IN CASE DSIR COR RECTS THE AMOUNT OF RESEARCH AND DEVELOPMENT EXPENDITURE ON WHICH THE ASSESSEE IS E NTITLED WEIGHTED DEDUCTION FOR THE ASSESSMENT YEAR UNDER APPEAL, CORR ESPONDING WEIGHTED DEDUCTION UNDER SECTION 35(2AB) SHALL BE GRANTED ON RECEIPT OF THE CLARIFICATION FROM DSIR. CONSEQUENTLY, IF THE ASSESSEE IS ABLE TO P ROVE THAT ANY AMOUNT OF EXPENDITURE IN THEIR IN-HOUSE RESEARCH AND DEVELOPME NT FACILITIES WAS OMITTED TO M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 22 -: BE CONSIDERED BY THE DSIR FOR WEIGHTED DEDUCTION THE SA ME MAY BE ALLOWED AS A DEDUCTION UNDER SECTION 35/37. [PARA 17]. HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF CUSTOMS (IMPORT)MUMBAI VS DILIP KUMAR AND ORS IN CIVIL APP EAL NO.3327 OF 2007 DATED 30 TH JULY2018 HELD THAT WHILE INTERPRETING THE EXEMPTI ON NOTIFICATIONS THE SAME SHOULD BE INTERPRETED STRICT LY AND WHERE THERE IS AMBIGUITY IN EXEMPTION NOTIFICATION, THE BENEFIT OF SUCH AMBIGUITY CANNOT BE CLAIMED BY THE ASSESSEE AND IT IT MUST BE INTERPRETED IN FAVOUR OF THE REVENUE. 26.2. IN THE INSTANT CASE ISSUE IS WITH REGARD TO W EIGHTED DEDUCTION U/S 35(2AB) IS TO BE ALLOWED AFTER SATISFYING THE C ONDITIONS SPECIFIED IN RULE 6(1B) AND THE QUANTIFICATION OF EXPENDITURE RE QUIRED TO BE APPROVED BY THE DSIR IN FORM 3CL.THEREFORE, THE AO IS NOT PERMITTED TO ALLOW THE DEDUCTION WITHOUT THE APPROVAL FROM THE P RESCRIBED AUTHORITY, HENCE, WE DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE LD.CIT(A). THIS VIEW IS SUPPORTED BY THE DEC ISION OF COORDINATE BENCH OF ITAT, HYDERABAD IN ELECTRONICS CORPN. OF INDIA LTD AND THE DECISION HONBLE APEX COURT IN DILIP KUMAR AND ORS SUPRA. ACCORDINGLY WE, UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS T HE APPEAL OF THE ASSESSEE. THIS ISSUE IS INVOLVED FOR THE A.YS 2010-11,2011- 12,2012-13 M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 23 -: AND 2013-14. THE APPEALS OF THE ASSESSEE FOR ALL TH E IMPUGNED ASSESSMENT YEARS ON THE ISSUE OF DEDUCTION U/S 35(2 AB) ARE DISMISSED. 26.3. ALTERNATELY, THE ASSESSEE HAS MADE A REQUEST TO ALLOW THE DEDUCTION U/S 35(2AB) AS AND WHEN THE APPROVAL IS R ECEIVED WITHOUT THE LIMITATION U/S 154 FOR RECTIFICATION. WE FIND MERIT IN THE SUBMISSION OF THE ASSESSEE FOR WHICH THE LD.DR ALSO DID NOT OB JECT. THEREFORE, WE, DIRECT THE AO TO ALLOW THE WEIGHTED DEDUCTION AS AN D WHEN THE APPROVAL IN FORM 3CL IS RECEIVED WITHOUT THE LIMITATION PERI OD U/S 154. ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSE ON ALTERNATE GROUND. 27. THE SECOND ISSUE IN GROUND NO.2 IS RELATED T O THE DISALLOWANCE OF RS.23,16,625/- PAID FOR HIRE CHARGE S FOR HIRING CHARTERED FLIGHT FROM M/S. FORUM I AVIATION LTD., F OR TRAVEL OF SHRI C.K.BIRLA, CHAIRMAN OF THE ASSESSEE-COMPANY. I N THIS CONNECTION, THE ASSESSEE SUBMITTED THAT SHRI C.K.BIRLA VISITED HYDERABAD FROM DELHI IN CONNECTION WITH AGM OF THE ASSESSEE-COMPANY HELD ON 23-07-2009. IT WAS ALSO STATED THAT THE ASSESSEE-COMPANY USED T HE CHARTERED FLIGHT FOR THE PURPOSE OF BUSINESS AND NOTHING ELSE. HENCE , THE HIRE CHARGES M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 24 -: AMOUNTING TO RS.23,16,625/- PAID FOR HIRING CHARTER ED FLIGHT SHOULD BE ALLOWED AS DEDUCTION. 28. THE AO OBSERVED FROM THE ANNUAL REPORT OF THE ASSESSEE THAT NOWHERE IT WAS SHOWN THAT THE CHAIRMAN IS ENTITLED FOR TRAVEL BY CHARTERED FLIGHT AND THE TERMS AND CONDITIONS OF AP POINTMENT DID NOT PROVIDE FOR ENGAGING THE CHARTERED FLIGHT AND THE A SSESSEE ALSO DID NOT EXPLAIN THE URGENCY FOR ENGAGING THE CHARTERED FLIG HT AS THE AGM WAS A PLANNED EVENT. THE CHARTERED FLIGHT WAS FLOWN FROM DELHI TO HYDERABAD ON 23.07.2009, HYDERABAD TO KOLKATA ON 23.07.2009 AND WENT BACK TO DELHI FROM KOLKATA ON 25.07.2009. THE AO MADE THE ENQUIRIES AND CAME TO KNOW THAT THE COMPANY HAS HIRED THE 7 SEATE R AIRCRAFT FOR THIS PURPOSE . THE ASSESSEE COULD NOT EXPLAIN WHY THE C HARTERED FLIGHT WAS ENGAGED FROM KOLKATA TO HYDERABAD AND BACK TO DELHI . THUS, THE AO HELD THAT THE JOURNEY UNDERTAKEN BY THE CHAIRMAN, S HRI C.K.BIRLA WAS NOT EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSIN ESS AND ACCORDINGLY DISALLOWED THE SAME. AGAINST WHICH THE ASSESSEE FIL ED APPEAL BEFORE THE LD.CIT(A) BUT DID NOT SUCCEED. HENCE, THE APPEAL I S FILED BEFORE US. 29. DURING THE APPEAL HEARING, LD.AR SUBMITTED THA T ASSESSEE HAD INCURRED THE EXPENDITURE OF RS.23,16,625/- FOR HIRE CHARGES PAID TO M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 25 -: CHARTERED FLIGHT HIRED FROM M/S.FORUM I AVIATION LT D., FOR TRAVEL OF SHRI C.K.BIRLA, THE CHAIRMAN OF THE ASSESSEE-COMPANY. TH E ASSESSEE SUBMITTED THAT SHRI C.K.BIRLA VISITED HYDERABAD FRO M DELHI IN CONNECTION WITH THE AGM OF THE ASSESSEE-COMPANY. S INCE THE CHARTERED FLIGHT WAS USED FOR THE PURPOSE OF BUSINESS, THE LD .AR ARGUED THAT NO DISALLOWANCE IS CALLED FOR AND ACCORDINGLY REQUESTE D TO SET ASIDE THE ORDER OF LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 30. ON THE OTHER HAND, LD.DR ARGUED THAT THE CHAIRM AN, SHRI C.K.BIRLA HAS TRAVELLED FROM KOLKATA TO HYDERABAD BY CHARTERE D FLIGHT. FROM HYDERABAD, THE CHAIRMAN VISITED DELHI. THUS, THE E NTIRE EXPENDITURE WAS NOT WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PUR POSE OF ASSESSEES BUSINESS. LD.DR FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH THE TERMS AND CONDITIONS OF THE EMPLOYMENT OF SHRI C.K. BIRLA. UNLESS THERE IS A SANCTION AND THE TERMS AND CONDITIONS OF EMPL OYMENT PERMITS THE TRAVEL THE EXPENDITURE CANNOT BE HELD TO BE TREATED AS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. T HEREFORE, ARGUED THAT THE LOWER AUTHORITIES HAVE RIGHTLY MADE THE ADDITIO N AND NO INTERFERENCE IS CALLED FOR. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 26 -: 31. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE MATERIAL PLACED ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSEE HAS PAID A SUM OF RS.23,16,625/- TOWARDS HIRE CHARGES TO M/S.F ORUM I AVIATION LTD., FOR TRAVEL OF SHRI C.K. BIRLA, THE CHAIRMAN O F THE COMPANY. SHRI C.K.BIRLA IS ONE OF THE BUSINESS GIANTS AND INDUSTR IALISTS AND ALSO HAPPENS TO BE THE DIRECTOR OF MANY COMPANIES OF BI RLA GROUP. HOWEVER, THE PAYMENT OF CHARTERED FLIGHT CHARGES RE QUIRED TO BE INCURRED IN TERMS OF EMPLOYMENT OF SHRI BIRLA. THE ASSESSEE-COMPANY DID NOT PROVIDE THE TERMS AND CONDITIONS OF EMPLOYM ENT FOR ENGAGING CHARTERED FLIGHT FOR VISITING OF SHRI C.K.BIRLA BEF ORE THE LOWER AUTHORITIES. THOUGH THE ASSESSEE STATED THAT THE CH ARTERED FLIGHT WAS ENGAGED IN CONNECTION WITH AGM, THE ASSESSEE DID NO T SHOW THE BUSINESS EXPEDIENCY FOR ENGAGING THE CHARTERED FLIG HT SINCE IT WAS A PLANNED EVENT. IN THE ABSENCE OF THE TERMS AND COND ITIONS OF EMPLOYMENT AND THE BUSINESS EXPEDIENCY, WE ARE UNAB LE TO ACCEPT THE CONTENTIONS OF LD.AR THAT THE EXPENDITURE WAS WHOLL Y AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. APART FROM TH E ABOVE, THE CHARTERED FLIGHT WAS ENGAGED FROM KOLKATA TO HYDERABAD AND HY DERABAD TO DELHI AND THE ASSESSEE FAILED TO FURNISH THE REASONS FOR MAKING VISIT TO DELHI. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 27 -: THEREFORE, WE ARE NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE THAT THE CHARTERED FLIGHT WAS ENGAGED DUE TO BUSINE SS EXPEDIENCY. THE CHAIRMAN HAVING ATTENDED THE AGM IS ENTITLED TO TRA VEL IN THE HIGHEST CLASS IN THE FLIGHT. ACCORDINGLY WE, DIRECT THE AO TO ALLOW THE EXPENDITURE TO THE EXTENT OF BUSINESS CLASS OR EXEC UTIVE CLASS, WHICHEVER IS HIGHER TO SHRI BIRLA AND TO ONE ASSISTANT AND D ISALLOW THE BALANCE EXPENDITURE. THIS GROUND RAISED BY ASSESSEE IS PART LY ALLOWED. 32. THE THIRD ISSUE RELATES TO THE DISALLOWANCE OF EXPENDITURE OF RS.2,88,400/- PAID FOR COPYRIGHT INFRINGEMENT IN O UT OF COURT SETTLEMENT WITH THE MICROSOFT. THE AO DISALLOWED THE EXPENDITU RE ON THE GROUND THAT IT WAS AN OUT OF COURT SETTLEMENT HENCE VIEWED THAT THE EXPENDITURE IS NOT ALLOWABLE. THE ASSESSEE ARGUED BEFORE THE AO THAT IT IS SETTLED ISSUE THAT THE COURTS PERMIT OUT OF COURT SETTLEME NT FOR REDRESSAL OF DISPUTES INSTEAD OF LINGERING THE MATTERS IN THE CO URT FOR A LONG TIME. HENCE, THE ASSESSEE ARGUED THAT THE PROPOSED DISALL OWANCE OF RS.2,88,400/- IS BAD IN LAW, HENCE, REQUESTED TO AL LOW THE EXPENDITURE. HOWEVER THE AO DID NOT SATISFY WITH THE EXPLANATION OFFERED BY THE ASSESSEE AND MADE THE DISALLOWANCE. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 28 -: 33. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON A PPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL OF AS SESSEE AND UPHELD THE ORDER OF AO. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 34. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED BEFORE US. IN THE INSTANT CASE, THE ASSESSEE PAID FOR COPYRIGHT OF MICROSOFT USING THE SOFTWARE WITHOUT PROPER AUTHORI ZATION. THEREFORE, THE MICROSOFT HAD INITIATED THE LEGAL ACTION, WHICH WAS SETTLED OUT OF COURT. SINCE THE COPY RIGHT WAS USED FOR THE PURPO SE OF BUSINESS, THOUGH THERE WAS AN INFRINGEMENT, WHICH WAS SETTLED OUT OF COURT, WE ARE OF THE OPINION THAT THE EXPENDITURE IS REQUIRED TO BE ALLO WED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 35. THE FOURTH ISSUE IS WITH REGARD TO ADDITION OF RS.68.27 LAKHS RELATING TO THE GROSS PROFIT ON TRIAL RUN PRODUCTIO N WHICH WAS CLAIMED AS OPENING STOCK IN THE EARLIER YEAR. THE AO MADE THE ADDITION OF RS.68.27 LAKHS REPRESENTING THE GROSS PROFIT ON THE VALUE OF OPENING STOCK ADDED IN THE EARLIER YEAR SINCE THE ASSESSEE FAILED TO PR OVE THE TRANSFER OF STOCK TO MANUFACTURING AND TRADING ACCOUNT OR SALES. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 29 -: 36. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON A PPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL OF AS SESSEE BY UPHOLDING THE ORDER OF AO. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 37. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL PLACED ON RECORD. THE AO MADE THE ADDITION ON GROSS PROFIT @ 17.95% ON THE OPENING STOCK OF RS.380.31 LAKHS SINCE THE ASSESSEE FAILED TO ESTABLISH THAT THE SALES WERE ADMITTED IN THE SALES ACCOUNT I N THE YEAR UNDER CONSIDERATION. DURING THE APPEAL HEARING ALSO, THE LD.AR DID NOT BRING ANY EVIDENCE TO SHOW THAT THE TRIAL RUN PRODUCTION WAS TRANSFERRED TO THE STOCK ACCOUNT. SINCE THE ISSUE FOR THE A.Y.200 9-10 IS REMITTED BACK TO THE FILE OF THE AO TO VERIFY THE TRANSFER OF EXP ENDITURE AS WELL AS THE STOCKS TO TRADING ACCOUNT, THIS ISSUE ALSO REQUIRE VERIFICATION AT THE END OF THE AO. ACCORDINGLY, WE REMIT THE MATTER BACK T O THE FILE OF THE AO WITH A DIRECTION TO RE-EXAMINE THE ISSUE IN THE LIG HT OF THE DISCUSSION MADE FOR THE A.Y.2009-10 AND DECIDE THE ISSUE AFRES H ON MERITS ON THE OUTCOME OF THE PROCEEDINGS FOR THE A.Y 2009-10 ON T HIS GROUND. ACCORDINGLY, THE APPEAL OF THE ASSESSEE ON THIS GRO UND IS ALLOWED FOR STATISTICAL PURPOSE. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED PARTLY. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 30 -: ITA NO.1703/HYD/2014 (AY.2011-12), ITA NO.647/HYD/2 019 (A.Y.2012-13) AND I.T.A.NO.555/HYD/2017 (A.Y.2013-1 4) : 38. THE FIRST COMMON ISSUE FOR THE A.Y. 2011-12 AND FOR THE A.Y.2012- 13 TO 2013-14 IS THE WEIGHTED DEDUCTION U/S 35(2AB) . THIS WAS DISCUSSED IN DETAIL IN A.Y.2010-11 AND DECIDED AGAI NST THE ASSESSEE. ACCORDINGLY THE APPEALS OF THE ASSESSEE FOR THE A.Y .2011-12 TO 2013-14 ARE DISMISSED ON THIS GROUND. 39. THE NEXT COMMON ISSUE INVOLVED FOR THE AYS.2011 -12 TO 2013-14 IS THE DISALLOWANCE OF EXPENDITURE INCURRED FOR CHAIRM ANS TRAVEL BY CHARTERED FLIGHT. THE AO HAS MADE THE ADDITIONS FOR THE IMPUGNED ASSESSMENT YEARS AS UNDER: S.NO. AY. RS. 1 2011-12 15,98,384 2 2012-13 28,96,393 3 2013-14 25,10,996 39.1. THE FACTS OF THE CASE ARE IDENTICAL TO THAT O F A.Y2010-11, HENCE, KEEPING IN VIEW OF THE STATUS OF SHRI BIRLA BEING BUSY INDUSTRIALIST WE DIRECT THE A.O. , TO ALLOW THE HIGHEST CLASS OF AIR FARE TO SHRI BIRLA AND HIS ASSISTANT IN THE PLACE OF CHARTERED FLIGHT CHAR GES. THE ASSESSEE SHOULD FURNISH THE HIGHEST FARE TO THE AO ON THE DA TES OF TRAVEL. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 31 -: ACCORDINGLY THE APPEALS OF THE ASSESSEE ON THIS IS SUE FOR THE A.Y.2011- 12 TO 2013-14 IS PARTLY ALLOWED. 40 . THE NEXT ISSUE FOR THE A.Y.2011-12 IS DEPRECIA TION ON WIND MILL. THE ASSESSEE CLAIMED THE DEPRECIATION ON WIND MILL TO THE EXTENT OF RS.6,29,04,322/- . DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE CLAIMED TO HAVE COMMISSIONED THE VESTAS MAKE WIND ELECTRIC GENERATOR (WEG) V100 (1800KW) ON 31.03.2011 AT GUJA RAT AND CAPITALISED THE EXPENDITURE OF RS.12,58,08,664/- ON THIS ACCOUNT. THE ASSESSEE FURNISHED THE COPIES OF LETTER FROM VESTAS FOR COMMISSIONING THE ELECTRIC GENERATOR. AS PER THE LETTER DATED 01 .04.2011 ISSUED BY THE MANAGER (PROJECTS) OF M/S VESTAS WIND TECHNOLOGY IN DIA PVT. LTD., ELECTRIC GENERATOR WAS SUCCESSFULLY COMMISSIONED ON 31.03.2011 AND FURTHER INFORMED THAT THE CUSTOMER SERVICE EXECUTIV E WOULD BE IN TOUCH WITH THE ASSESSEE TO TAKE LEAD OF PROJECT IN POST C OMMISSIONING PERIOD AND TO GUIDE THE ASSESSEE ON SERVICE OR GENERATION RELATED QUERIES. THE COPY OF THE COMMISSIONING CERTIFICATE FROM THE GUJA RAT ENERGY DEVELOPMENT AGENCY(GEDC) DATED 07.04.2011 WAS ALSO FILED BY THE ASSESSEE CERTIFYING THAT THE COMMISSIONING TOOK PLA CE ON 31.03.2011. THE WIND FARM WAS CONNECTED TO 33KV GRID LINE OF GE TCOS SAMAKHIYALI M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 32 -: SUBSTATION. AS PER CERTIFICATE OF GEDC, THE WEG W AS OPERATED ON 31.03.2011 FROM 16:50 HOURS TO 17:15 HOURS FOR 25 MINUTES AND GENERATED 374 UNITS OF ELECTRICITY. THE AO DURING T HE ASSESSMENT PROCEEDINGS FOUND THAT CRITICAL EQUIPMENT LIKE TOWE RS AND TURBINE BLADES WERE DELIVERED TO THE ASSESSEE ON 16.03.2011 AND 19.03.2011 AT THE SITE AND HE WAS OF THE OPINION THAT IT WOULD TA KE SUBSTANTIAL TIME TO UNPACK AND ASSEMBLE THE PLANT AS WELL AS TO LAY THE FOUNDATION, THEREFORE, IT IS NOT POSSIBLE TO COMMISSION THE PLA NT BEFORE 31.03.2011. SINCE THE PLANT WAS OPERATED ONLY FOR 25 MINUTES AN D THE ASSESSEE FAILED TO FURNISH THE BILLING DETAILS, THE AO DISBE LIEVED THE COMMISSIONING OF THE PLANT. THE ASSESSEE STATED TH AT THE POWER WAS USED FOR CAPTIVE CONSUMPTION AND THE AO WAS OF THE VIEW THAT IT WAS FALSE ASSERTION, BECAUSE THE UNIT WAS CONNECTED TO GETCO SUBSTATION AND THE POWER HAS TO COME FROM GETCO, WHICH IS AN I NDEPENDENT AGENCY. THE AO ALSO FOUND FROM THE PRODUCTION SHEE T FOR THE MONTHS OF MARCH, APRIL AND MAY 2011 AND OBSERVED THAT THE SY STEM DID NOT STABILISE TILL 14.04.2011 AND PLANT DID NOT FUNCTIO N ON 1 ST TO 3 RD , 6 TH , 7 TH AND 11 TH TO 13 TH AS THERE WAS ZERO POWER GENERATION ON THESE DATES. THEREFORE, THE AO VIEWED THAT THE COMMISSIONING WAS ONLY DONE AROUND M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 33 -: 14.04.2011 FROM WHICH DATE, THERE WAS SOME STABLE P OWER. THUS HELD THAT THE COMMISSIONING CERTIFICATE FURNISHED FROM G UJARAT ENERGY DEVELOPMENT AGENCY AND VESTAS WERE ONLY AN ARRANGE MENT WITH A VIEW TO CLAIM THE DEPRECIATION AND THE PLANT DID NOT COM MENCE COMMERCIAL OPERATION IN THE FINANCIAL YEAR 2010-11. THE AO FU RTHER OBSERVED THAT THE FIRST BILLING OF GETCO WAS DONE ONLY DURING THE PERIOD 01.04.2011 TO 30.04.2011. ACCORDINGLY, THE AO DISALLOWED THE DEP RECIATION AND THE ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE. 41. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON A PPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL OF AS SESSEE. THE LD.CIT(A) OBSERVED THAT THE PLANT WAS OPERATED ONLY FOR 25 MINUTES AFTER COMMISSIONING AND DID NOT STABILIZE TILL 14/0 4/2011. THE LD.CIT(A) FURTHER OBSERVED THAT COMMISSIONING CERTI FICATE RECEIVED FROM GUJARAT ENERGY DEVELOPMENT AGENCY AND VESTAS W ERE ONLY AN ARRANGEMENT TO CLAIM THE DEPRECIATION AND GIVEN FIN DING THAT THE PLANT DID NOT COMMENCE COMMERCIAL PRODUCTION IN F.Y.2010- 11. BEFORE THE LD.CIT(A), THE ASSESSEE ALSO DID NOT PRODUCE TRANSM ISSION OF STABLE POWER TO THE GRID ON 31-03-2011.THE LD.CIT (A) WAS OF THE OPINION THAT THE ASSESSEE DID NOT PRODUCE ANY CONCLUSIVE PROOF T O REBUT THE FINDING M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 34 -: OF AO OTHER THAN STATING THAT THE ASSESSEE DID NOT BILL THE ELECTRICITY GENERATED SINCE IT WAS CAPTIVELY CONSUMED. THE LD.C IT BELIEVED THAT THE EXPLANATION OF THE ASSESSEE WAS AN AFTER THOUGHT AN D HENCE DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST THE ORDER OF TH E LD. LD.CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 42. DURING THE APPEAL HEARING, LD.AR SUBMITTED THAT ASSESSEE HAS ACQUIRED THE VESTAS MAKE WIND ELECTRIC GENERATOR V1 00(1800KW) ON 31-03-2011 AT GUJARAT FOR AN AMOUNT OF RS.12,58,08 ,664/- AND THE AMOUNT WAS CAPITALIZED. THE ASSESSEE PRODUCED THE E VIDENCE FOR COMMISSIONING OF THE SAID WIND MILL FROM GUJARAT EN ERGY DEVELOPMENT AGENCY, A GOVERNMENT OF GUJARAT ORGANISATION AND A LSO COMMISSIONING LETTER FROM VESTAS. REFERRING TO PG.5 OF THE PAPER BOOK, THE ASSESSEE FURNISHED THE COPY OF GUJARAT ENERGY DEVELOPMENT AG ENCY DT.07.04.2011, CERTIFYING THAT THE ASSESSEE HAD INS TALLED THE WIND MILL ON 31.03.2011 AND HAD GENERATED 347 UNITS OF ELECTRICI TY. THE ASSESSEE ALSO FURNISHED A COPY OF GUJARAT ENERGY TRANSMISSIO N CORPORATION LTD., IN PG.6, WHEREIN THE GUJARAT GETCO HAS FURNISHED TH E PARTICULARS OF STATE LOAD DISPATCH CENTRE(GOTRI) VADODARA FURNISH ING THE DETAILS OF SHARE OF ELECTRICITY GENERATED BY WIND FARM AT WAND HIYA FOR THE MONTH M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 35 -: MARCH 2011 IN SR.NO.3 OF PART B AND IT WAS CERTIFI ED THAT THE ASSESSEE COMPANYS SHARE OF ACTIVE ENERGY WAS 6.903 MV. IN PG.7 THE ASSESSEE HAS FURNISHED THE COPY OF LETTER ISSUED BY VESTAS, THE SUPPLIERS WIND MILL, CERTIFYING THE COMMISSIONING OF THE WIND MILL ON 31.03.2011 AND SUBMITTED THAT THE ASSESSEE HAD COMMISSIONED THE WI ND MILL ON 31.03.2011 THEREFORE, ARGUED THAT THE DISALLOWANCE OF DEPRECIATION IS UNJUSTIFIED AND REQUESTED TO SET ASIDE THE ORDER O F LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 43. PER CONTRA, THE LD.DR ARGUED THAT IT IS NOTICED FROM THE LETTER OF VESTAS THAT THE CRITICAL EQUIPMENT LIKE TOWERS AND TURBAN BLADES WERE DELIVERED ON 16.03.2011AND 19.03.2011 AND IT WOULD TAKE LOT OF TIME TO UNPACK THE TOWERS AND TURBINES AS WELL AS TO LAY FOUNDATION AND FOR INSTALLATION AND COMMISSIONING THE WINDMILL. THOUG H THE GUJARAT ENERGY DEVELOPMENT AGENCY HAD CERTIFIED THAT THE WI ND MILL WAS COMMISSIONED ON 31-03-2011, THE WIND MILL HAD GENER ATED ELECTRICITY ONLY FOR 25 MINUTES FROM 16.50 HRS. TO 17.50 HRS AN D THERE WAS NO PROOF OF COMMISSIONING THE UNIT COMPLETELY. FROM T HE COPY OF THE PRODUCTION SHEET, THE AO FOUND THAT SUBSEQUENT TO 3 1.03.2011, THERE WAS NO GENERATION OF POWER TILL 03.04.2011 AND THE SYSTEM DID NOT M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 36 -: STABILIZE TILL 14.04.2011 AND THE ASSESSEE DID NOT EXPLAIN THE REASONS AS TO WHY THERE WAS NO GENERATION OF POWER SUBSEQUENT TO COMMISSIONING THE UNIT. THEREFORE ARGUED THAT THE CERTIFICATES W ERE OBTAINED FROM GEDC /GETCO AND VESTAS WAS WITH A VIEW TO CLAIM THE DEPRECIATION AND ARGUED THAT THE PLANT DID NOT COMMENCE IN THE FY.2 011 AND ARGUED THAT THE AO HAS RIGHTLY DISALLOWED THE DEPRECIATION WHIC H WAS CONFIRMED BY THE LD.CIT(A) AND NO INTERFERENCE IS CALLED-FOR IN THE ORDER OF THE LD.CIT(A). 44. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS SEEN FROM THE ASSESSMENT ORDER AND THE PARTICULARS FURNISHED BY THE ASSESSEE, WIND MILL STATED TO BE C OMMISSIONED ON 31.03.2011 AND RUN FOR 25 MINUTES. THE WIND MILL DI D NOT FUNCTION FOR THE REMAINING TIME ON THE SAID DATE AND SUBSEQUENTL Y 1 ST TO 3 RD AND 6 TH , 7 TH , 9 TH AND 11 TH TO 13 TH APR, SINCE THERE WAS ZERO POWER GENERATION ON THESE DAYS. THE AO ALSO ATTACHED POWER GENERATION REPORT FOR VANDIA SITE. AS PER THE POWER GENERATION REPORT, THE GRID WAS AVAILABLE 100% ON ALL THESE DAYS. ONCE, THE WIND MILL IS COMMISSI ONED PROPERLY, THERE IS NO REASON FOR NON FUNCTIONING OF THE PLANT AFTER COMMISSIONING. THE ASSESSEE ALSO DID NOT EXPLAIN THE REASONS FOR NON F UNCTIONING OF THE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 37 -: WIND MILL ON 31.03.2011 AFTER 17:15 HRS. THE WIND M ILL WAS OPERATED FROM 16:50 HRS TO 17:50 HRS AND DID NOT FUNCTION FR OM 17:50 HRS ONWARDS TILL 03.04.2011. THOUGH THE ASSESSEE HAS FURNISHED THE LETTER FROM VESTAS STATING THAT WIND MILL WAS SUCCESSFULLY COMMISSIONED ON 31.03.2011, IT WAS STATED IN THE SAID LETTER THAT T HE CUSTOMER EXECUTIVE WOULD STAY IN TOUCH WITH THE ASSESSEE FOR POST COMM ISSIONING WORK AND THE SERVICE ON GENERATION RELATED QUERIES. THE LET TER FURTHER STATES THAT THE ASSESSEE REQUIRED TO PAY STATUTORY TAXES, DUTY CESS ETC., PERTAINING TO WEG FROM THE DATE OF COMMENCEMENT TO THE RESPECTIVE GOVERNMENT AGENCIES. FURTHER, INSURANCES IS ALSO REQUIRED TO BE TAKEN FOR POSSIBLE LOSSES, DAMAGES ARISING OUT IN THE EVENTS OF THIRD PARTY ACCIDENTS LIABILITY ETC. ALL THE ABOVE EVIDENCES WERE NOT PL ACED BY THE ASSESSEE EITHER BEFORE THE AO OR BEFORE THE LD.CIT(A). THOU GH THE ASSESSEE STATED TO HAVE COMMISSIONED THE WIND MILL ON 31.03. 2011 AS OBSERVED FROM THE ASSESSMENT ORDER, CRITICAL EQUIPMENT LIKE TOWERS AND TURBINE BLADES WERE DELIVERED ON 16.03.2011 AND 19.03.2011 AT THE SITE. ACCORDING TO THE AO, SUBSTANTIAL TIME WOULD BE TAKE N TO UNPACK AND ASSEMBLE THE PLANT AS WELL AS TO LAY THE FOUNDATION . THE ASSESSEE DID NOT SUBMIT THE JOB CARD OF THE VESTAS ON DAILY BASI S FROM 19.03.2011 TO M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 38 -: TILL THE DATE OF COMMISSIONING. EXCEPT THE COPY OF THE LETTER FROM VESTAS AND GEDA LETTER CONFIRMING THE COMMISSIONING AND GE TCOS STATEMENT HAVING GENERATED THE POWER, NO OTHER EVIDENCE WAS A VAILABLE WITH THE ASSESSEE WITH REGARD TO SUCCESSFUL COMMISSIONING OF THE WIND MILL AND TRANSFER OF THE OWNERSHIP TO THE ASSESSEE. THE ASS ESSEE REQUIRED TO MAKE INSURANCE FOR THE PLANT AND THIRD PARTY INSURA NCE BEFORE COMMISSIONING THE WIND MILL WHICH IS NOT MADE AVAIL ABLE TO THE DEPARTMENT. SIMILARLY, THE ASSESSEE ALSO DID NOT P AY THE STATUTORY DUES IF ANY PAYABLE TO THE LOCAL GOVERNMENT OR THE CONCE RNED AGENCIES ETC. PERTAINING TO THE WEG FROM THE DATE OF COMMISSIONIN G OF THE PLANT. THEREFORE, THE ISSUE WITH REGARD TO INSTALLATION AN D COMMISSIONING OF WEG PLANT REQUIRED TO BE EXAMINED IN DETAIL BEFORE ALLOWING THE DEPRECIATION AND THE ADDITIONAL DEPRECIATION FOR TH E YEAR UNDER CONSIDERATION. THEREFORE, IN OUR CONSIDERED OPINIO N, THE ISSUE NEEDS TO BE REMITTED BACK TO THE FILE OF THE AO FOR EXAMINAT ION OF ALL THE RELATED ISSUES AND TO DECIDE THE ISSUE AFRESH ON MERITS. H ENCE, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO RECON SIDER THE ISSUE AFRESH ON MERITS. ACCORDINGLY, APPEAL OF THE ASSESSEE ON THI S GROUND IS ALLOWED FOR STATISTICAL PURPOSE. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 39 -: 45. THE ISSUE IN GROUND NO.4 IS RELATED TO THE DEPR ECIATION ON COMPUTER SOFTWARE. THIS ISSUE IS INVOLVED FOR THE A YS.2011-12 AND 2012-13. DURING THE ASSESSMENT PROCEEDINGS, AO FOUN D THAT THE ASSESSEE HAS PURCHASED LICENSE FOR USAGE OF SONIC W ALL FOR MAIL SECURITY FOR RS.1,90,000/- AND IBHAR PERFORMANCE MANAGER SOF TWARE FOR RS.7 LAKHS. BOTH THESE ARE FOUND TO BE INTANGIBLE ASSET S FOR USE OF SOFTWARE WHICH ARE IN THE NATURE OF PROFIT MAKING APPARATUS AND DO NOT FALL IN THE CATEGORY OF COMPUTERS OR OPERATING SYSTEM. HENCE, THE AO VIEWED THAT THE DEPRECIATION IS REQUIRED TO BE ALLOWED ONLY @25 % AS AGAINST THE CLAIM OF 60%. ACCORDINGLY, THE AO DISALLOWED THE D EPRECATION OF 25% AND 12.5% DEPENDING ON THE USAGE OF THE ASSETS DURI NG THE IMPUGNED ASSESSMENT YEAR. 46. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON A PPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL OF AS SESSEE AND CONFIRMED THE ADDITION MADE BY THE AO. HENCE, THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 47. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. ASSESSEE HAS PURCHASED THE COMPUT ER OPERATING SYSTEM, WHICH IS PART AND PARCEL OF THE COMPUTER. W ITHOUT THE OPERATING M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 40 -: SYSTEM, THE COMPUTER CANNOT BE OPERATED AND THE PUR POSE WOULD NOT BE SERVED. IT IS A SETTLED ISSUE THAT THE COMPUTER SO FTWARE IS NOT INTANGIBLE ASSET AND FORMS PART OF THE COMPUTER. THEREFORE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION @60%. ACCORDI NGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE D EPRECIATION @60% AND 50% OF 60% FOR THE ASSETS PUT TO USE LESS THAN 180 DAYS. ACCORDINGLY THE APPEAL OF THE ASSESSEE ON THIS GROU ND FOR THE AYS.2011- 12 AND 2012-13 ARE ALLOWED. 48. THE NEXT ISSUE IS DISALLOWANCE OF FOREIGN TRAVE L EXPENSES FOR BUSINESS PURPOSES. THE ASSESSEE HAD INCURRED THE SU M OF RS.7,10,930/- TOWARDS FOREIGN TRAVEL EXPENSES TO NIGERIA INCURRED FOR TRAVEL OF SHRI S.P.TIWARI AND SHRI P.S.RAO, SENIOR EXECUTIVES OF M/S.SUPER CORE INDUSTRIES. THE DETAILS OF EXPENDITURE INCURRED BY THE ASSESSEE ARE FURNISHED IN PG.5 OF THE ASSESSMENT ORDER AS UNDER: DATE AMOUNT IN RS. DESCRIPTION PURPOSE 24-06-10 1,76,494 P.S.RAO NIGERIA TOUR OPERATIONS HEAD SUPER CORE INDS 30-11-10 1,76,377 -DO- -DO- 12-02-11 83,538 S.P. TIWARI HYD DXB LOS AIR TICKET MD SUPER CORE INDUSTRIES M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 41 -: 26-12-10 53,603 -DO- -DO- 10-02-11 39,036 -DO- -DO- 14-12-10 3142 P.S.RAO HYD-DXB-LOS MGMT FEE 26-12-10 1000 S.P.TIWARI OTHER C 24-07-10 912 P.S.RAO OVERSEAS MED INSURANCE 10-02-11 740 S.P.TIWARI HYD-DXB-LOS MGMT FEE 30 - 11 - 10 1,09,938 P.S.RAO NIGERIA TOUR DA 24 - 06 - 10 66,150 P.S.RAO NIGERIA TOUR DA TOTAL 7,10,930 48.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO DIRECTED THE ASSESSEE TO JUSTIFY THE EXPENSES. THE ASSESSEE FAILED TO JUSTIFY THE SAME. THEREFORE, THE AO MADE ADDITION OF RS.7,10,9 30/-.AND THE SIMILAR ADDITIONS WERE MADE FOR THE AYS.2012-13 AND 2013-14 AS UNDER A.Y. AMOUNT IN RS. REMARKS 2012-13 9,16,216 INCURRED FOR TRAVEL OF ABHAY SHANKAR AND SHARAD DAMLE OF HIL 2013 - 14 3,25,637 SHRI SHARAD DAMLE, VP, HIL FOR THE A.Y. 2012-13, SHRI ABHAY SHANKAR, MD,HIL AN D SHARAD DALMIA, OPERATIONS HEAD OF HIL HAVE TRAVELLED TO NIGERIA IN RELATION TO THE WORK OF SUPER CORE INDUSTRIES. SIMILARLY FOR THE A.Y.201 3-14 SHRI SHARAD DALMIA,SR.V.P OPERATIONS HAD TRAVELLED TO NIGERIA T O ATTEND THE BOARD MEETING OF M/S.SUPER CORE INDUSTRIES. IN ALL THE OC CASIONS THE ASSESSEE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 42 -: COULD NOT EXPLAIN THE OBLIGATION ON THE PART OF THE ASSESSEE TO MEET THE TRAVELLING EXPENDITURE. THE AO VIEWED THAT SINCE T HE EMPLOYEES OF THE COMPANY HAVE TRAVELLED TO ASSIST M/S.SUPER CORE IN DUSTRIES, THE EXPENDITURE OUGHT TO HAVE BORNE BY M/S.SUPER CORE I NDUSTRIES BUT NOT BY THE ASSESSEE. HENCE THE AO DISALLOWED THE EXPEND ITURE AND ADDED BACK TO INCOME ON APPEAL. 49. THE LD CIT(A) CONFIRMED THE ADDITIONS MADE BY T HE AO, HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 50. DURING THE APPEAL HEARING, LD.AR SUBMITTED THAT THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOS E OF BUSINESS, HENCE THE EXPENDITURE IS ALLOWABLE IN THE HANDS OF THE CO MPANY. THE LD.AR FURTHER SUBMITTED THAT SHRI P.S.RAO IS AN EMPLOYEE OF SUPER CORE INDUSTRIES AND SHRI TIWARI WAS RETAINER DURING 01.0 9.2010 TO 31.12.2010. IN ORDER TO LOOK AFTER THE OVERSEAS OPE RATIONS OF M/S.SUPER CORE INDUSTRIES, SHRI P.S.RAO AND SHRI TIWARI HAVE VISITED NIGERIA AND PROVIDED OPERATIONAL GUIDELINES TO THE TEAM OF SUPE R CORE INDUSTRIES. BOTH OF THEM HAVE VISITED FOR DEVELOPMENT OF BUSIN ESS AND THE ASSESSEE IS IN OBLIGATION TO MEET THE TRAVEL EXPEND ITURE, HENCE, REQUESTED TO ALLOW THE SAME. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 43 -: 51. ON THE OTHER HAND THE LD.DR ARGUED THAT THERE WAS NO BUSINESS EXPEDIENCY FOR THE ASSESSEE TO VISIT NIGERIA. THE E XPENDITURE WAS NOT RELATABLE TO THE ASSESSEE AND THE ASSESSEE COULD NO T ESTABLISH THE NEED FOR INCURRING SUCH EXPENDITURE. THE LD.DR FURTHER S UBMITTED THAT FOR THE A.YS 2012-13 AND 2013-14 THOUGH THE EXECUTIVES OF THE ASSESSEE COMPANY VISITED NIGERIA, THE ASSESSEE FAILED TO SUB STANTIATE THE REASON FOR INCURRING THE EXPENDITURE BY THE ASSESSEE COMPA NY INSTEAD OF SUPER CORE INDUSTRIES. THUS ARGUED THAT THE EXPENDITURE O N FOREIGN TRAVEL TO NIGERIA HAS NO BUSINESS CONNECTION OF THE ASSESSEE. HENCE, REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A). 52. WE HEARD BOTH THE PARTIES AND OBSERVE FROM THE ARGUMENTS AND THE ORDERS OF THE LOWER AUTHORITIES THAT THE EXPEN DITURE WAS NOT INCURRED FOR THE PURPOSE OF ASSESSEES BUSINESS AND THE EXPENDITURE WAS INCURRED IN CONNECTION WITH NIGERIAN COMPANY, T HE ASSESSEE DID NOT ESTABLISH THE BUSINESS EXPEDIENCY OF THE EXPENDITUR E INCURRED IN THE HANDS OF THE ASSESSEE-COMPANY RELATING TO NIGERIAN COMPANY. DURING THE APPEAL HEARING ALSO THE ASSESSEE COULD NOT EXPL AIN THE BUSINESS OBLIGATION TO VISIT NIGERIA. THEREFORE, WE DO NOT F IND ANY REASON TO INTERFERE WITH THE ORDER OF LOWER AUTHORITIES. HEN CE, WE CONFIRM THE M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 44 -: ORDER OF LOWER AUTHORITIES AND DISMISS THE APPEAL O F THE ASSESSEE ON THIS GROUND. 53. THE NEXT ISSUE RAISED IN AYS.2011-12 AND 2012-1 3 IS DENIAL OF TDS CREDIT. THE ASSESSEE SUBMITTED THAT THE AO HAS NO T ALLOWED THE CREDIT FOR TDS FOR THE AMOUNT OF RS.38,243/- FOR THE AY.20 11-12 AND RS.64,576/- FOR THE AY.2012-13. 54. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. IT IS THE MANDATORY OBLIGATION OF THE AO TO ALLOW THE CREDIT FOR THE TAXES PAID BY THE ASSESSEE. THEREFOR E, WE DIRECT THE AO TO VERIFY THE TAXES DEDUCTED AT SOURCE AND ALLOW THE C REDIT FOR THE PREPAID TAXES CORRECTLY. IN THE RESULT, THIS GROUND RAISED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 55. THE NEXT ISSUE IS RELATED TO LOSS ON MARKET TO MARKET (MTM) VALUATION OF FOREIGN FORWARD CONTRACTS. THE ASSESSE E HAS RAISED ADDITIONAL GROUND VIDE PETITION UNDER RULE 11 OF TH E ITAT RULES VIDE LETTER DT.08.01.2018 FOR THE A.Y.2011-12. AFTER HEA RING BOTH THE SIDES, THE ADDITIONAL GROUND RAISED BY ASSESSEE IS ADMITTE D. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 45 -: 55.1. THIS ISSUE IS INVOLVED FOR THE AYS.2011-12, 2 012-13 & 2013- 14 AND THE ADDITION MADE BY THE AO FOR THE A.Y.2011 -12 TO 2013-14 IS AS UNDER : A.Y. MTM LOSS 2011-12 RS.27,27,934/- 2012-13 RS.13,48,381/- 2013-14 RS.10,01,400/- 55.2. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOU ND THAT THE ASSESSEE CLAIMED LOSSES ON ACCOUNT OF MARKET TO MAR KET IN THE CASE OF FORWARD CONTRACTS AND THE CONTRACTS WERE ENTERED IN TO COVER THE BUYERS CREDIT. AS MTM LOSSES ARE CONTINGENT IN NATURE AND ARE NOT ALLOWABLE AS PER THE INSTRUCTION OF CBDT VIDE NO.3/2010, DT.2 3.03.2010, THE LOSS CLAIMED BY THE ASSESSEE WAS DISALLOWED AND ADDED BA CK TO THE INCOME IN THE RESPECTIVE ASSESSMENT YEARS. 56. AGAINST THE ORDER OF AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL O F ASSESSEE. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 46 -: 57. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE MATERIAL PLACED ON RECORD. THE ISSUE WITH REGARD T O ALLOWABILITY OF EXPENDITURE ON ACCOUNT OF MARKET TO MARKET LOSSES O N FORWARD CONTRACTS IS SETTLED ISSUE AS PER THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. [179 TAXMANN326(SC) WHEREIN THE HON'BLE SUPREME COURT HELD THAT THE LOSSES SUFFERED IN RESP ECT OF REVENUE LIABILITY ON ACCOUNT OF SUCH DIFFERENCE ON THE DATE OF BALANCE SHEET IS AN ALLOWABLE EXPENDITURE U/S.37(1) OF THE ACT. WE FIN D THAT THE CASE OF ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HON 'BLE SUPREME COURT, HENCE WE SET ASIDE THE ORDER OF LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. 58. IN THE RESULT, APPEALS OF THE ASSESSEE FOR TH E A.Y. 2009-10 TO 2013-14 ARE PARTLY ALLOWED. SD/- SD/- (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIALMEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 22.11.2019 TNMM & LR M/S. HIL LIMITED (FORMERLY KNOWN AS M/S.HYDERABAD INDUSTRIES LIMITED ) (GROUP CASES) :- 47 -: COPY TO : 1. M/S.HIL LIMITED, (FORMERLY KNOWN AS M/S.HYDERABA D INDUSTRIES LIMITED), C/O.CH.PUSHYAM KIRAN, ADVOCATE FLAT NO.D, 1 ST FLOOR, UMA ENCLAVE, RD.NO.9, BANJARA HILLS, HYDERA BAD. 2.THE ADDL.COMMISSIONER OF INCOME TAX, RANGE-2, HYD ERABAD. 3. THE ACIT, CIRCLE-2(2), HYDERABAD. 4. CIT(APPEALS)-III, HYDERABAD. 5. CIT(APPEALS)-2, GUNTUR. 6. THE CIT-II, HYDERABAD. 7. THE PR.CIT-2, HYDERABAD. 8. D.R. ITAT, HYDERABAD. 9. GUARD FILE.