VASCON ENGINEERS LTD., V. ADDL.CIT RANGE 10(3),

ITA 6535/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7113 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ITA NO; DR VIVEK AGGARWAL ITA NO MUM
• Keywords: Gift; Business expenditure; Principle of natural justice; Additional evidence
• Section: 43B; 14A; 37(1); 80G; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO. 6535/MUM /20 13 / ASSESSMENT YEAR : 2009 - 10 M/S. VASCON ENGINEERS LTD. 15 - 16, HAZARI BAUG, L.B.S. MARG, VIKHROLI (W), MUMBAI - 400 083 PAN : AAACV1249F ....... / APPELLANT / V/S. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 10(3), MUMBAI / RESPONDENT . / ITA NO. 2137/PUN/2013 / ASSESSMENT YEAR : 2009 - 10 THE DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 2(1), PUNE. ....... / APPELLANT / V/S. M/S. VASCON ENGINEERS LTD. 15 - 16, HAJARI BAUG, L.B.S. MARG, VIKROLI (W), MUMBAI - 400 083 PAN : AAACV1249F / RESPONDENT A SSESSEE BY : SHRI DHARMESH SHAH REVENUE BY : DR. VIVEK AGGARWAL 2 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 / DATE OF HEARING : 04.10.2017 / DATE OF PRONOUNCEMENT : 08 .1 2 .2017 / ORDER PER VIKAS AWASTHY, JM THESE CROSS APPEALS BY ASSESSEE AND DEPARTMENT ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 22, MUMBAI DATED 04.09.2013. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND EXECUTION OF CONSTRUCTION CONTRACTS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEAR ON 29.09.2009 DECLARING T OTAL INCOME OF RS.47,30,20,420/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT INCOME OF RS.47,30,20,420/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE CERTAIN ADDITION S / DISALLOWANCE S IN THE INCOME RETURNED BY ASSESSEE AND ASSESSED TOTAL INCOME AT RS. 55,99,17,110/ - . AGG RIEVED BY THE ASSESS MENT ORDER DATED 30 .12.2011, THE ASSESSEE FILED APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). THE FIRST APPELLATE AUTHORITY AFTER CONSIDERING FACTS OF THE CASE AND SUBMISSIONS OF ASSESSEE PARTLY ALLOWED THE APPEAL OF ASSESSEE. AGA INST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) NOW, BOTH, ASSESSEE AND REVENUE ARE IN APPEAL BEFORE TRIBUNAL. 3. THE ASSESSEE IN APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT WAS INCORRECT AND UNJUSTIFIED. 3 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW A ND IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.6,44,363/ - ON ACCOUNT OF LATE PAYMENT OF ESIC AND PF. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE ON ACCOUNT OF DONATION OF RS. 26,21,746/ - . 4 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.1,32,89,135/ - TOWARDS PROVISIONS FOR LEAVE ENCASHMENT U/S. 43B OF THE ACT. 5. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AN D IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.4,62,542/ - ON ACCOUNT VARIOUS PAYMENTS COVERED U/S. 43B OF THE ACT. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF GIFTS AMOUNTING RS.1,50,000/ - . 7. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.37,21,401/ - TOWARDS THE PROVISIONS FOR UNAPPROVED SALES. 8. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST OF RS. 1,47,73,411/ - U/S. 36 (1) (III) OF THE ACT. 9. THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, ALTER, AMEND AND /OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 4 . THE DEPARTMENT HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ALLOWING RELIEF U/S. 14A OF THE I.T . ACT, 1961 DISREGARDING RULE 8D OF THE I .T RULES, 1962 WHICH WAS MANDATORY, WHEN ONCE A DISALLOWANCE U/S. 14A HAS TO BE DONE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN GIVING RELIEF U/S. 14A DISREGARDING THE RATIOS OF THE JURISDICTIONAL HIGH COURT IN THE CASE O F GODREJ BOYCE LTD., 328 ITR 81. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.41,58,745/ - DONE ON ACCOUNT OF NON - COLLECTION OF SHARE PREMIUM FROM EMPLOYEES UNDER EJOP SCHEME, CLAIMED UNDER T HE HEAD EMPLOYEE COMPENSATION EXPENSES DISREGARDING THE FACT THAT THE SAME WAS NOT AN EXPENDITURE OF THE ASSESSEE COMPANY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN D ELETING THE DISALLOWANCE OF RS. 41,58,745/ - DONE ON AC COUNT OF NON COLLECTION OF SHARE PREMIUM FROM EMPLOYEES UNDER EJOP SCHEME, CLAIMED UNDER THE HEAD EMPLOYEE COMPENSATION EXPENSES DISREGARDING THE FACT THAT SHARE PREMIUM RECEIVED BY THE COMPANY WAS NOT OFFERED TO TAX. 5. ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) ERRED IN D ELETING THE DISALLOWANCE OF RS. 41,58,745/ - DONE ON ACCOUNT 4 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 OF NON COLLECTION OF SHARE PREMIUM FROM EMPLOYEES UNDER EJOP SCHEME, CLAIMED UNDER THE HEAD EMPLOYEE COMPENSATION EXPENSES IGNORING THE RATIOS OF ITATS DECISION IN RANBAXY LABORATORIES LTD. VS. ADDL. CIT AND VIP INDUSTRIES VS. DCIT ( ITA NO. 7242/MUM/2008) 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 17,10,000/ - ON ACCOUNT OF RENTAL INCOME IGNO RING THE FACT THAT RENT OF ONLY RS. 23,08,695/ - WAS OFFERED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHEREAS DEDUCTION CLAIMED UNDER THIS HEAD IN THE COMPUTATION WAS OF RS.40,19,298/ - 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING OF RS. 17,10,600/ - ON ACCOUNT OF RENTAL INCOME, WHICH WAS IN FACT THE EXCESS DEDUCTION CLAIMED UNDER THIS HEAD. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,30,243/ - B Y HOLDING THAT THE ASSESSEE, BEING A MEMBER OF AOP M/S. PHOENIX VENTURE, RECEIVED SHARE OF PROFIT AS WELL AS PROFESSIONAL FEES, BUT CAPITALIZED PORTION OF THESE RECEIPTS AND DEBITED THE BALANCE TO P & L A/C OF THE AOP, WITHOUT BRINGING DEFINITE AMOUNTS OF THESE FIGURES AND RECONCILIATION THEREOF. 5. SHRI DHARMESH SHAH APPEARING ON BEHALF OF ASSESSEE SUBMITTE D THAT THE ASSESSING OFFICER MADE DISALLO WANCE OF RS. 4,50,33,010/ - U/S.14A R.W. RULE 8D OF THE ACT AS AGAINST ASSESSEES SUO - MOTO DISALLOWANCE OF RS. R.W. RULE 8D OF THE ACT AS AGAINST ASSESSEES SUO - MOTO DISALLOWANCE OF RS. 2,00,000/ - . IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) GRANTED PART RELIEF TO THE ASSESSEE BY DIRECTING ASSESSING OFFICER TO RE - COMPUTE DISALLOWANCE OF INTEREST UNDER RULE 8D(2) (II) BY EXCLUDING RS.49.02 CRORE, TERM LOAN FROM BANK AND FI NANCIAL I NSTITUTION S OBTAINED BY ASSESSEE FOR SPECIFIC PURPOSE. THE LD. AR SUBMITTED THAT AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THAT ASSESSEE HAD SUFFICIENT OWN FUNDS TO COVER THE INVESTMENT. THE ASSESSEE HAD NOT UTILIZED BORROWED FUNDS FOR INVESTMEN T PURPOSE. THE LD. AR POINTED THAT A PERUSAL OF BALANCE S HEET AS ON 31.03.2009 AT PAGE NO. 8 OF THE PAPER BOOK WOULD SHOW THAT OWN FUNDS OF ASSESSEE AGGREGATED TO RS.665,35,65,747/ - WHICH INCLUDE S HARE C APITAL AND R ESERVES OF RS.383,52,36,669/ - AND INTEREST FREE FUNDS IN FORM OF CURRENT LIABILITIES RS.281,83,29,078/ - . THE LD. AR POINTED THAT SUMMARIZED STATEMENT OF OWN FUNDS IS AT PAGE NO. 58 OF THE PAPER BOOK. 5 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 THE LD. AR SUBMITTED THAT IN IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YE AR 2008 - 09, DISALLOWANCE U/S. 14A R.W. RULE 8D WAS MADE BY ASSESSING OFFICER. THE MATTER TRAVELLED UPTO TRIBUNAL. THE ASSESSEE IN ITA NO. 7404/MUM/2011 ASSAILED THE DISALLOWANCE BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 18.09.2017 DELETED THE DISA LLOWANCE MADE UNDER RULE 8D(2) (II) BY FOLLOWING THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD. VS. DCIT, REPORTED AS 383 ITR 529. IN RESPECT OF DISALLOWANCE UNDER RULE 8D (2)(III) , THE TRIBUNAL DIRECTED THE ASSESSING OFFICE R TO RE - COMPUTE DISALLOWANCE AFTER EXCLUDING STRATEGIC INVESTMENT. 6. ON THE OTHER HAND, DR. VIVEK AGGARWAL REPRESENTING THE DEPARTMENT STRONGLY SUPPORTING THE FINDINGS OF ASSESSING OFFICER IN MAKING DISALLOWANCE U/S.14A R.W.RULE 8D SUBMITTED THAT THE COM MISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE WHILE INCOME TAX (APPEALS) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE WHILE COMPUTING DISALLOWANCE UNDER RULE 8D(2) (III) OF THE ACT. THE DISALLOWANCE UNDER RULE 14A HAS TO BE COMPUTED STRICTLY IN ACCORDANCE WITH THE PROVISION OF RULE 8D. THE LD. DR PRAYED FOR RESTORING THE FINDINGS OF ASSESSING OFFICER. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS EARNED TAX FREE INCOME ON THE INVESTMENT S MADE. THE CONTENTION OF THE ASSE SSEE IS THAT ASSESSEE HAS MADE STRATEGIC INVESTMENT. IT IS ALSO CONTENTION OF THE ASSESSEE THAT OWN FUNDS OF THE ASSESSEE ARE SUFFICIENT T O COVER STRATEGIC INVESTMENTS, T HEREFORE, NO DISALLOWANCE U /S . 14A IS REQUIRED TO BE MADE. WE FIND THA T DISALLOWANCE U/ S.14A R.W.RULE 8D WAS MADE IN IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2008 - 09. THE TRIBUNAL DELETED THE 6 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 DISALLOWANCE MADE UNDER RULE 8D (2) (II) BY PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD. VS. DCIT (SUPRA). THE TRIBUNAL HELD THAT OWN INTEREST FREE FUNDS OF THE ASSESSEE ARE MUCH MORE THAN THE TOTAL INVESTMENT MADE. THEREFORE, NO DISALLOWANCE UNDER RULE 8D(2) (II) WAS REQUIRED TO BE MADE. IN THE ASSESSMENT YEAR UNDER APPEAL, A PERUSAL OF BALANCE S HEE T OF THE ASSESSEE AT PAGE NO. 8 OF THE PAPER BOOK AND THE SUMMARIZED STATEMENT OF OWN FUNDS OF ASSESSEE AT PAGE NO. 58 REVEAL THAT TOTAL INTEREST FREE FUNDS INCLUDING S HARE C APITAL AND RESERVES AND FUNDS IN THE FORM OF CURRENT LIABILITIES AVAILABLE WITH TH E ASSESSEE ARE TO THE TUNE OF RS. 665.35 CRORE AS AGAINST INVESTMENT O F RS. 125.67 CRORE. THUS, OWN INTER EST FREE FUND OF THE ASSESSEE ARE MUCH MORE THAN THE INVESTMENT S MADE. HENCE, NO DISALLOWANCE UNDER RULE 8D(2)(II) IS WARRANTED. 7.1 AS REGARDS DISALLO WANCE UNDER RULE 8D(2)(III) IS CONCERNED, THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAS MADE STRATEGIC INVESTMENT S IN GROUP CONCERN. THE ASSESSEE MADE SUO - MOTO DISALLOWANCE OF RS .2,00,000/ - . IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008 - 09 IN ITA NO.7404/MUM/2011 (SUPRA), THE CO - ORDINATE BENCH OF TRIBUNAL PARTLY ACCEPTED THE CONTENTION OF ASSESSEE WITH REGARD TO DISALLOWANCE UNDER RULE 8D 2(II I ) . THE RELEVANT FINDINGS OF THE TRIBUNAL ON THIS ISSUE READS AS UNDER : 12. NOW, COMING TO THE S ECOND ASPECT I.E. DISALLOWANCE UNDER RULE 8D 2(III) OF THE RULES OF ADMINISTRATION EXPENSES BEING EQUIVALENT TO ONE HALF PERCENT OF AVERAGE OF THE VALUE OF INVESTMENTS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS PLEADED THAT IN CASE THE DIS ALLOWANCE IS TO BE MADE, THEN THE VALUE OF STRATEGIC INVESTMENTS MADE BY THE ASSESSEE IN SPECIAL PURPOSE VEHICLES NEEDS TO BE EXCLUDED FOR COMPUTING THE AFORESAID DISALLOWANCE. WE FIND MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD AND ACCORDINGLY, DIRECT T HE ASSESSING OFFICER TO RE - COMPUTE THE DISALLOWANCE IN THE HANDS OF 7 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 ASSESSEE. THE ASSESSEE HAS SUO MOTO DISALLOWED RS. 6,01,956/ - WHICH MAY BE CONSIDERED AS DISALLOWANCE UNDER RULE 8D(2)(III) OF THE RULES. ACCORDINGLY, THE GROUND OF APPEAL NO. 1 RAISED BY ASSESSEE IS PARTLY ALLOWED. IN LIGHT OF ABOVE DIRECTIONS OF THE CO - ORDINATE BENCH , WE DIRECT THE ASSESSING OFFICER TO RE - COMPUTE DISALLOWANCE UNDER RULE 8D 2(III) IN SAME TERMS BY EXCLUDING STRATEGIC INVESTMENTS . ACCORDINGLY, G ROUND NO. 1 RAISED IN APPEAL BY ASSESSEE IS PARTLY ALLOWED IN THE TERMS , AFORESAID . 8. THE GROUND N O. 2 RAISED IN APPEAL BY ASSESSEE IS WITH RESPECT TO DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO ESIC AND PF. THE LD. AR SUBMITTED THAT ASSESSEE HAS MADE PAYMENT TOWARDS ESIC AND PF BEFORE DUE DATE OF FILING RETURN OF INCOME. THE LD. AR REFERRED TO PAGE NO . 52 AND 54 OF THE PAPER BOOK IN SUPPORT OF HIS CONTENTION S . THE LD. AR SUBMITTED THAT IT IS A WELL SETTLED LAW THAT WHERE CONTRIBUTIONS HAVE BEEN MADE TOWARDS ESIC AND PF BEFORE DUE DATE OF FILING RETUR N OF INCOME, NO TOWARDS ESIC AND PF BEFORE DUE DATE OF FILING RETUR N OF INCOME, NO DISALLOWANCE SHOULD BE MADE. TO BUTTRESS HIS SUBMISSION S , THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) CIT VS. GHATGE PATIL TRANSPORTS LTD. REPORTED AS 368 ITR 749 ( BOM.) II) CIT VS. VINAY CEMENT LTD. REPORTED AS 213 CTR 268 (SC) III) ACIT VS. PRADEEP BAKRU PATIL , ITA NO. 11272/PN/2012 DATED 27.09.2013 IV) DCIT VS. GOPINATH ENGINEERING CO. PVT. LTD., ITA NO. 8624/M/2011 DATED 13.07.2016. 9. T HE LD. DR SUBMITTED THAT ASSESSEE HAS NOT MADE CONTRIB UTION TOWARDS ESIC & PF WITHIN THE STATUTORY TIME PRESCRIBED UNDER RESPECTIVE ACTS; T HEREFORE, AUTHORITIES BELOW HAVE RIGHTLY DISALLOWED THE SAME. 8 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 10. BOTH SIDES HEARD. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT DISALLOWANCE OF RS. 6,44,363/ - HAS BEEN MA DE ON ACCOUNT OF DELAYED PAYMENT ON ESIC AND PF . THE CONTENTION OF ASSESSEE IS THAT AMOUNT HAS BEEN DEPOSITED BEFORE DUE DATE OF FILING RETURN OF INCOME. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GHATGE PATIL TRANSPORTS LTD. (SUPRA.) HAS HELD THAT WHERE CONTRIBUTIO NS TO ESIC AND PF ARE MADE BEFORE DUE DATE OF F ILING RETURN OF INCOME, THE ASSESSEE IS ELIGIBLE TO CLAIM BENEFIT OF THE SAME. IT HAS NOT BEEN DISPUTED BY REVENUE THAT THE ASSESSEE HAS DEPOSITED THE AMOUNTS TOWARDS ESIC AND PF BEFORE DUE DATE OF FILING RETURN OF INCOME. THU S, IN VIEW OF UNDISPUTED FACT S AND THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT , G ROUND NO. 2 RAISED IN APPEAL BY ASSESSEE IS ALLOWED . 11 . IN G ROUND NO. 3, THE ASSESSEE HAS ASSAILED DISALLOWANCE ON ACCOUNT OF DONATION S MADE TO THE TUNE OF RS.26,21,746/ - FOR CELEBRATION OF OF DONATION S MADE TO THE TUNE OF RS.26,21,746/ - FOR CELEBRATION OF AMBEDKAR JAYANTI , CONSTRUCTION OF DOME TO DARSHAK TARUN MANDAL AND FOR DISTRIBUTION OF SCHOOL ACCESSORIES. THE SAME HAS BEEN DISALLOWED BY AUTHORITIES BELOW ON THE GROUND THAT EXPENDITURE INCURRED IS NOT ASSOCIATED OR CONNECTED WITH BU SINESS OF THE ASSESSEE. T HE LD. AR OF THE ASSESSEE POINTED THAT SIMILAR DONATION WERE MADE DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2008 - 09 . IN APPEAL BY THE ASSESSEE, THE TRIBUNAL HE LD SUCH DONATIONS AS ALLOWABLE EXPENDITURE . 1 2 . ON THE OTHER HAND, LD . DR FOR REVENUE VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING ASSESSEE S CLAIM AND CONFIRMING THE ADDITION. 9 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 1 3 . BOTH SIDES HEARD. WE FIND THAT THE ASSESSEE HAS MADE DONATIONS DURING THE PERIOD RELEVANT TO ASSE SSMENT YEAR UNDER APPEAL TO VARIOUS ORGANIZATIONS, UNCONNECTED WITH THE BUSINESS OF ASSESSEE. IN ASSESSMENT YEAR IMMEDIATELY PROCEEDING THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAD MADE DONATIONS TO VARIOUS SUCH ORGANIZATIONS. THE CO - ORDINATE BENCH OF THE TRIBUNAL HELD THAT SUCH DONATIONS ARE ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THE RELEVANT FINDINGS OF THE TRIBUNAL IN THIS REGARD ARE AS UNDER : 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS A BUILDER AND PROMOTER AND IS ENGAGED IN THE DEVELOPMENT OF VARIOUS SITES FOR COMMER CIAL AND RESIDENTIAL PURPOSES. THE CASE OF ASSESSEE IS THAT IT MAKES CERTAIN CONTRIBUTIONS FOR LABOUR WELFARE AND TO OTHER PUBLIC WELFARE ORGA NIZATIONS. THE LIST OF EXPENSES INCURRED BY THE ASSESSEE ARE PLACED AT PAGES 40 TO 43 OF THE PAPER BOOK. THE PERUSAL OF THE DETAILS REFLECT THE FIRST ITEM OF RS.1,01,000/ - ON ACCOUNT OF PURCHASE OF PAINTING, WHEREIN BILL IN WHICH IT IS MENTIONED THAT VOLU NTARY CONTRIBUTION TOWARDS LABOUR WELFARE FUND IS PLACED. THE NECESSARY CERTIFICATE FROM PROMOTERS & BUILDERS ASSOCIATION IS ENCLOSED. THE ASSESSEE HAS FURTHER PAID SUM OF RS.1 LAKH ON 23.05.2007 I.E. CONTRIBUTION TO ROTARY CLUB OF PUNE DOWNTOWN CHARITAB LE TRUST TOWARDS GIFT OF MOBILITY PROGRAM FOR THE DOWNTOWN CHARITAB LE TRUST TOWARDS GIFT OF MOBILITY PROGRAM FOR THE PHYSICALLY CHALLENGED. THE ASSESSEE HAS ALSO PURCHASED FORCE TRAVELER AMBULANCE FOR RS.7,43,265/ - WHICH HAS BEEN DONATED TO VIKAS MANDAL BY THE ASSESSEE. THE NECESSARY DOCUMENTS IN THIS REGARD ARE PLACED ON RECORD. THE ASSESSEE HAS ALSO CONTRIBUTED RS.11,54,837/ - TO UPGRADE SCIENCE LAB OF ST. FELIX HIGH SCHOOL, PUNE. THE NECESSARY BILLS ARE PLACED IN THE PAPER BOOK ALONG WITH QUOTATIONS RECEIVED. FURTHER AMOUNTS HAVE BEEN GIVEN TO THE SAID SCHOOL. THE ASSESSEE HAS ALSO ENCLOSED CERTIFIED DONATION RECEIPTS, WHEREIN THE RECIPIENT IS DULY REGISTERED UNDER SECTION 80G OF THE ACT FOR WHICH, 80G RECEIPTS ARE ENCLOSED. IN VIEW OF THE FACTS AND CIRCUMSTANCES AND EVIDENCES AVAILABLE, THE ASSESSEE IS CARRYING OU T THE ACTIVITIES OF UPLIFTMENT OF PUBLIC AT LARGE AND BY WAY OF MAKING CONTRIBUTIONS FOR UPGRADATION OF SCIENCE LAB OR PROVIDING AMBULANCE TO ORGANIZATIONS OR CONTRIBUTING TO THE SOCIETY BY PURCHASING PAINTINGS, ETC., THEN SUCH ACTIVITIES OF ASSESSEE ARE T O CREATE AND ESTABLISH IMAGE OF ASSESSEE COMPANY IN THE EYES OF PUBLIC. THE BUSINESS CARRIED ON BY THE ASSESSEE IS RELATABLE TO PUBLIC AT LARGE, WHERE THE TENEMENTS BUILT BY THE ASSESSEE WERE TO BE PICKED UP BY THE PUBLIC. HENCE, THE EXPENDITURE INCURRED BY THE ASSESSEE IN THIS REGARD IS DULY TO BE ALLOWED AS BUSINESS EXPENDITURE IN THE HANDS OF ASSESSEE. THE FACTS BEFORE THE HONBLE HIGH COURT OF ALLAHABAD IN ELECTRA INDIA LTD. VS. CIT (SUPRA), WHERE ADVERTISEMENT MATERIAL WAS GIVEN IN THE LAST THREE DA YS OF ACCOUNTING YEAR AND WHERE IT WAS NOT POSSIBLE TO PUBLISH OR ADVERTISE THE NAME THROUGH MEDIUM OF BOARD, THEN SUCH EXPENDITURE WAS HELD TO BE BEING MARGINAL ADVERTISEMENT CONTENT AND WAS DISALLOWED IN THE HANDS OF ASSESSEE. HOWEVER, THE FACTS BEFORE US ARE AT VARIANCE AND WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN THIS REGARD. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE 10 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 EXPENDITURE UNDER SECTION 37(1) OF THE ACT. HERE, IT MAY BE POINTED OUT THAT IN SOME CASES, THE ASSESSEE HAS RECEIPTS OF DONATIONS UNDER SECTION 80G OF THE ACT. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE SAME AND ALLOW THE CLAIM OF SUCH RECEIPTS UNDER SECTION 80G OF THE ACT. ACCORDINGLY, THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS ALLOWED. RESPECTFULLY, F OLLOWING THE VIEW OF CO - ORDINATE BENCH OF THE TRIBUNAL ON THIS ISSUE IN ASSESSEES OWN CASE, WE HOLD THAT EXPENDITURE OF RS. 26,21,746/ - IS ALLOWABLE U/S. 37(1) OF THE ACT. ACCORDINGLY, G ROUND NO. 3 RAISED BY ASSESSEE IN APPEAL IS ALLOWED. 14 . IN G ROUND NO. 4 OF THE APPEAL, ASSESSEE HAS ASSAILED DISALLOWANCE OF RS.1,32,89,135/ - U/S.43B OF THE ACT ON ACCOUNT OF LEAVE ENCASHMENT. THE LD. AR SUBMITTED THAT IN ASSESSMENT YEAR 2008 - 09, THE AS SESSEE HAD CLAIMED SIMILAR PROVISION FOR LEAVE ENCASHMENT , WHICH WAS DISALLOWED BY ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE DISALLOWANCE . BEFORE THE TRIBUNAL, T HE ASSESSEE MADE PRAYER THAT CLAIM THE DISALLOWANCE . BEFORE THE TRIBUNAL, T HE ASSESSEE MADE PRAYER THAT CLAIM TO THE EXTENT OF PAYMENT OF LEAVE ENCASHMENT ALLOWABLE IN TERMS OF SECTION 43B(F) OF THE ACT MAY BE CONSIDERED . THE TRIBUNAL ACCEPTED THE PRAYER OF ASSESSEE AND PARTLY ALLOWED THE GROUND RAISED IN FAVOUR OF ASSESSEE. THE LD. AR CONTENTED THAT THIS GROUND OF APPEAL MAY BE ALLOWED IN T HE SAME TERMS. 15. ON THE OTHER HAND, LD. DR VEHEMENTLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED FOR DISMISSING THE GROUND N O. 4 RASIED IN THE APPEAL BY ASSESSEE. 16. BOTH SIDES HEARD. THE LD AR HAS MADE PRAYER BEFORE US, TO ALLOW CLAIM TO THE EXTENT OF PAYMENT OF LEAVE ENCASHMENT IN TERMS OF SECTION 43B(F) OF THE ACT. WE FIND THAT IN ASSESSMENT YEAR 2008 - 09, THE CO - 11 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 ORDINATE BENCH OF THE TRIBUNAL HAS DEALT WITH THIS ISSUE IN APPEAL BY THE ASSESSEE. THE TRIBUNAL PARTLY ALLOWED THIS GROUND OF APPEAL OF ASSESSEE BY OBSERVING AS UNDER : 21. THE ASSESSEE BEFORE US HAS RAISED THE LIMITED PLEA ON WITHOUT PREJUDICE BASIS THAT THE CLAIM TO THE EXTENT OF PAYMENT OF LEAVE ENCAS HMENT IN TERMS OF SECTION 43B(F) OF THE ACT BE ALLOWED. WE FIND MERIT IN THE SAID PLEA OF ASSESSEE AND DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF ASSESSEE AND ALLOW THE DEDUCTION TO THE EXTENT OF LEAVE ENCASHMENT ACTUALLY PAID DURING THE YEAR UND ER SECTION 43B OF THE ACT. THERE IS NO MERIT IN THE ALTERNATE PLEA RAISED BY THE ASSESSEE THAT THE PROVISIONS OF SECTION 43B(F) OF THE ACT WERE STRUCK DOWN BY THE HONBLE HIGH COURT OF CALCUTTA IN EXIDE INDUSTRIES LTD. & ANR. VS. UNION OF INDIA & ORS. (20 07) 292 ITR 470 (CAL), WHEREIN THE HON'BLE SUPREME COURT IN SLP (CIVIL NO.2289/2008) VIDE ORDER DATED 08.05.2009 HAD STAYED THE OPERATION OF SAID JUDGMENT. ACCORDINGLY, THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. T HE NATURE OF D ISALLOWANCE IN THE ASSESSMENT YEAR UNDER APPEAL IS SIMILAR TO THE ONE ADJUDICATED BY TRIBUNAL IN ASSESSEES OWN CASE IN IMMEDIATELY PRECEDING ASSESSMENT YEAR . IN LINE WITH THE EARLIER ORDER OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 08 - 09, CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 08 - 09, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ASSESSEE TO THE EXTENT OF PERMISSIBLE UNDER THE PROVISIONS OF SECTION 43B(F) OF THE ACT. THUS, G ROUND N O. 4 RAISED IN THE PRESENT APPEAL BY ASSESS EE IS PARTLY ALLOWED IN THE TERMS , AFORESAID . 17 . IN GROUND NO.5 , THE ASSESSEE HAS ASSAILED DISALLOWANCE OF VARIOUS PAYMENTS COVERED U/S.43B OF THE ACT AGGREGATING TO RS.4,62,542/ - . THE LD. AR SUBMITTED THAT AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT AMOUNTS PAID TOWARDS SERVICE TAX, PROFESSIONAL TAX , ETC ARE UNPAID. THE ASSESSEE HAS CLAIMED SERVICE TAX PAYMENTS BY WAY OF SET OF F OF INPUT TAX CREDIT. AS ON 31.03.2009 , NO AMOUNT IS OUTSTANDING , T HEREFORE, NO DISALLOWANCE WAS REQUIRED TO BE MADE. 12 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 18. THE LD. DR SUBMITTED THAT ASSESSEE HAD MADE SIMILAR PRAYER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE PRAYER OF ASSESSEE WAS NOT ACCEPTED AS THE ASSESSEE FAILED TO FURNISH DETAILS OF ADJUSTMENT S MADE AGAINST INPUT TAX CREDIT BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. 19. BOTH SIDES HEARD. A PERUSAL OF IMPUGNED ORDER SHOWS THAT ASSESSEE HAD FAILED TO FURNISH DETAILS OF INPUT TAX CREDIT ADJUSTMENT BEFORE THE ASSE SSING OFFICER. THE ASSESSEE FILED A CHART CONTAINING THE WORKING OF CENVAT CREDIT ALONG WITH SERVICE TAX RE TURN BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CITING PROVISION S OF RULE 46A OF THE INCOME TAX RULES REFUSED TO ACCEPT THE ADDITIONAL EVIDENCES FILED BY ASSESSEE. IN OUR CONS IDERED VIEW, THIS ISSUE NEEDS A RE - VISIT TO THE FILE OF ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO FURNISH THE DETAILS OF INPUT TAX CREDIT AND ADJUSTMENT CLAIMED AGAINST IT FURNISH THE DETAILS OF INPUT TAX CREDIT AND ADJUSTMENT CLAIMED AGAINST IT BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER EXAMINING THE SAME SHALL DECIDE THIS ISSUE AFRESH, AFTE R AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. ACCORDINGLY, G ROUND NO. 5 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 20 . IN GROUND NO. 6 OF THE APPEAL, ASSESSEE HAS ASSAILED DISALLOWANCE OF GIFTS TO VARIOUS ORGANIZATIONS ON FESTIVALS AMOUNTING TO RS.1,50,000/ - . THE LD. AR SUBMITTED THAT ASSESSEE HAD MADE GIFTS TO SHIVSHAHI MITRA MANDAL, SHANKAR MITRA MANDAL, CANCER AWARENESS ETC. AGGREGATING TO RS.3,85,410/ - . THE ASSESSING OFFICER PARTLY ACCEPTED GIFTS MADE BY AS SESSEE AND MADE ADDITION OF RS. 1,50,000/ - ON THE GROUND THAT EXPENDITURE INCURRED IS NOT CONNECTED WITH THE BUSINESS OF ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPE ALS) UPHELD THE FINDINGS OF ASSESSING 13 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 OFFICER. THE LD. AR POINTED THAT THE CO - ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2008 - 09 HAS ALLOWED SUCH GIFTS AND CONTRIBUTION MADE BY ASSESSEE ON VARIOUS OCCASION S AND FESTIVALS. 2 1. THE LD. DR VEHEMENTLY SUPPORTING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT DONATION S MADE BY ASSESSEE TO THE TUNE OF RS.3,85,410/ - TO VARIOUS ORGANIZATION ARE NOT CONNECTED WITH BUSINESS OF ASSESSEE. HENCE, THE S AME ARE NOT ALLOWA BLE UNDER PROVISION OF SECTION 37 OF THE ACT. HOWEVER, AUTHORITIES BELOW HAVE PARTLY ACCEPTED SUCH CONTRIBUTION AN D DONATION MADE BY ASSESSEE, LESS THAN 50% OF SUCH CONTRIBUTION HAVE BEEN DISALLOWED. THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (A PPEALS) ARE VERY REASONABLE IN ALLOWING SUBSTANTIAL RELIEF TO THE ASSESSEE. 22. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL 22. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES. WE FIND THAT DONATIONS OF RS.3,85,410/ - MADE BY ASSESSEE ARE SIMILAR TO THE ONE DEALT WITH US, IN GROUND NO. 3 OF THE APPEAL. THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS ACCEPTED EXPENDITURE TOWARDS SUCH GIFTS AND DONATIONS AND HELD THE SAME TO BE ALLOWABLE UNDER THE PROVISION OF SECTION 37 OF THE ACT. THE ASSESSING OFFICER HAS PARTLY ACCEPTED THE GIFTS/DONATIONS MADE BY ASSESSEE AND COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE SAME. FOLLOWING THE ORDER OF CO - ORDINATE BENCH, WE HOLD THAT CONTRIBUTIONS AN D DONATIONS MADE BY ASSESSEE TO VARIOUS ORGANIZATIONS ON FESTIVALS AS ALLOWABLE EXPENDITURE UNDER THE PROVISION OF SECTION 37 OF THE ACT . THE ASSESSING OFFICER IS DIRECTED TO ALLOW BALANCE AMOUNT OF RS. 1,50,000/ - , AS WELL . HENCE, G ROUND NO. 6 RAISED IN AP PEAL BY ASSESSEE IS ALLOWED . 14 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 23 . IN GROUND NO. 7 OF APPEAL, THE ASSESSEE HAS ASSAILED DISALLOWANCE OF PR OVISION FOR UNAPPROVED SALES RS. 37,21,401/ - . THE LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAD MADE PROVISION ON ACCOUNT OF UNAPPROVED CONTRACT REVENUE AT 1% OF UNAPPROVED SALES AMOUNTING TO RS.37,21,401/ - . THE PROVISION CREATED , IS REVERSED ON THE FI RST DAY OF NEXT FINANCIAL YEAR . THE LD. AR SUBMITTED THAT ASSESSEE IS CREATING THIS PROVISION IN ACCORDANCE WITH ACCOUNTING STAN DARD - 7. THE ASSESSING OFFICER HELD THAT PROVISION CREATED IS AN UN ASCERTAINED LIABILITY AND DISALLOWED THE SAME. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS UPHELD THE FINDINGS OF ASSESSING OFFICER. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERV ED THAT THE SIMILAR PROVISION OF RS.51,07,054/ - WAS MADE IN EARLIER YEAR AND WAS REVERSED IN CURRENT YEAR. THUS, IF THE CURRENT YEAR PROVISION IS DISALLOWED THEN PROVISIONS WHICH HAS BEEN CREATED LAST YEAR AND REVERSED IN CURRENT YEAR SHALL ALSO BE REDUCED . THE LD. AR FURTHER SUBMITTED THAT AS PER ACCOUNTING FOR CONSTRUCTION CONTRACTS, THE SALES HAVE TO BE OFFERED ON ESTIMATE BASIS. THE UNAPPROVED SALES ARE OFFERED ON THE BASIS OF UNAPPROVED MEASUREMENT. UNLESS, THE SAID MEASUREMENT IS APPROVED, THE SALE S CANNOT BE SAID TO BE FINAL. THUS, A PROVISION IS MADE TO REMOVE ANY CONTINGENCIES IN THE ESTIMATION OF MEASUREMENT OF SALES DURING THE YEAR. THE SAID ACCOUNTING TREATMENT IS GIVEN AS PER ACCOUNTING STANDARD - 7 FOR CONSTRUCTION CONTRACTS . THE LD. AR REF ERRED TO DETAIL S OF UNAPPROVED SALES AND PROVISION CREATED FOR UNAPPROVED SALES AT PAGE NO. 87 AND 88 OF THE PAPER BOOK. THE LD. AR ALSO REFERRED TO CLAUSE - 27 OF AS - 7. THE LD. AR CONTENTED THAT THE PROVISION IS CREATED ON LAST DAY OF EARLIER YEAR AND IS RE VERSED ON FIRST DAY OF SUBSEQUENT YEAR. THIS METHOD OF ACCOUNTING IS CONSISTENTLY FOLLOWED BY ASSESSEE OVER THE YEARS. THE ASSESSEE HAD CREATED SIMILAR PROVISION IN 15 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 ASSESSMENT YEAR S 2007 - 08 TO 2011 - 12. THE ASSESSING OFFICER MADE NO DISALLOWANCE IN THE SAID ASSESSMENT YEAR EXCEPT ASSESSMENT YEAR UNDER APPEAL. THE LD. AR FURTHER ASSERTED THAT AS THE PROVISION IS CREATED IN CURRENT YEAR AND IS REVERSED IN SUBSEQUENT YEAR THE ENTIRE EXERCISE IS REVENUE NEUTRAL. THE LD. AR SUBMITTED THAT NO DISALLOWANCE IS REQUI RED TO BE MADE IN THE FACTS OF THE CASE. TO SUPPORT HIS CONTENTIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. EXCEL INDUSTRIES REPORTED AS 358 ITR 295 TO CONTEND THAT NO ADDITION SHALL BE MADE MERELY DUE TO CHANGE IN THE YEAR OF TAXABILITY , IF THE SAME IS REVENUE NEUTRAL. 24. ON THE OTHER HAND, LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOWANCE. THE LD . DR SUBMITTED THAT THE ASSESSEE HAS NOT BROUGHT ANY SCIENTIFIC BASIS FOR CREATING SUCH PROVISION. CREATING SUCH PROVISION. 25. BOTH SIDES HEARD. ORDERS OF AUTHORITIES BELOW PERUSED. IN GROUND NO. 7, THE ASSESSEE HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DISALLOWING THE PROVISION OF UNAPPROVED SALES. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE FIRST APPELLATE AUTHORITY HAS NOT DECIDED THIS ISSUE AGAINST THE ASSESSEE IN TO TO. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS REMITTED THE ISSUE BACK TO TH E FILE OF ASSESSING OFFICER FOR VERIFICATION OF THE FACTS WHETHER THE PROVISION CREATED LAST YEAR WAS REVERSED DURING THE YEAR . T O THE EXTENT SALE IS INCREASED, T HE PROVISION NEEDS TO BE REVERSED. THE LD. AR IN HIS SUBMISSION HAS EXPLAINED THE REASONS AS TO WHY THIS PROVISION OF 1% VALUE OF THE TURNOVER IS CREATED. THE LD. AR HAS DRAWN OUR ATTENTION TO CLAUSE - 27 OF AS - 7 WHICH READS AS UNDER: 16 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 27. WHEN AN UNCERTAINTY ARISES ABOUT THE COLLECTABILITY OF AN AMOUNT ALREADY INCLUDED IN CONTRACT REVENUE AND ALREA DY RECOGNIZED IN THE STATEMENT OF PROFIT AND LOSS, THE UNCOLLECTABLE AMOUNT OR THE AMOUNT IN RESPECT OF WHICH RECOVERY HAS CEASED TO BE PROBABLE IS RECOGNIZED AS AN EXPENSE RATHER THAN AS AN ADJUSTMENT OF THE AMOUNT OF CONTRACT REVENUE. THE FACT THAT THE PROVISION IS CREATED ON LAST DAY OF THE YEAR AND IS REVERSED IN THE SUBSEQUENT ASSESSMENT YEAR HAS NOT BEEN REBUTTED BY THE DEPARTMENT. IN EFFECT THE PROVISION CREATED IN EARLIER YEAR IS OFFERED TO TAX IN THE NEXT ASSESSMENT YEAR WOULD NO T RESULT IN ANY REVENUE LOSS. THE ASSESSEE IS CREATING THIS RESERVE IN ACCORDANCE WITH AS - 7. FURTHER, THE PROVISION IS ONLY TO THE EXTENT OF 1% OF UNAPPROVED SALES, WHICH APPEARS TO BE QUIET REASONABLE IN THE FACTS OF THE CASE. THE ENTIRE TRANSACTION IS RE VENUE NEUTRAL. SINCE, THE REVENUE AT NO POINT OF TIME HAS RAISED DOUBT THAT THE PROVISION CREATED BY ASSESSEE IN THE PRECEDING YEAR HAS NOT BEEN REVERSED IN THE IMMEDIATELY SUBSEQUENT ASSESSMENT YEAR, COUPLED WITH THE FACT THAT ASSESSEE IS FOLLOWING THIS M ETHOD OF ACCOUNTING REGULARLY AND THE DEPARTMENT HAS ACCEPTED THE SAME IN PRECEDING AND SUBSEQUENT ASSESSMENT YEARS, WE FIND NO REASON TO SUSTAIN SUCH DISALLOWANCE. ACCORDINGLY, G ROUND NO. 7 RAISED IN APPEAL BY ASSESSEE IS ALLOWED. 26 . IN GROUND NO. 8 OF THE APPEAL, ASSESSEE HAS ASSAILED DISALLOWANCE OF INTEREST RS. 1,47,73,411/ - U/S. 36(1) (III) OF THE ACT. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFI CER MADE DISALLOWANCE U/S.36(1) (III) OF THE ACT ON THE GROUND THAT A SSESSEE HAS PAI D INTEREST ON BORROWED FUNDS AT THE RATE OF 14% WHEREAS , THE ASSESSEE HAS ADVANCED FUNDS AT AN AVERAGE INTEREST RATE OF 7% TO VARIOUS ENTITIES . THE ASSESSING OFFICER MADE ADDITION OF THE DIFFERENCE IN INTEREST RATE I.E. 7% ON THE FUNDS ADVANCED. THE LD. AR CONTEN TED THAT ASSESSEE HAS GIVEN LOAN TO GROUP CONCERNS AND OTHER PARTIES IN THE SAME LINE OF BUSINESS. THUS, ADVANCES 17 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 ARE IN THE NORMAL COURSE OF BUSINESS AND HENCE, THE SAME ARE ALLOWABLE AS BUSINESS EXPENDITURE . THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS SUFFICIENT OWN FUNDS TO TAKE CARE OF ADVANCES MADE BY ASSESSEE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) CIT VS. RELIANCE UTILITIES AND POWER LTD. REPORTED AS 313 ITR 340 ( BOM.) II) S. A. BUILDERS LTD. VS. CIT REPORTED AS 288 ITR 1 (SC) III) CIT VS. GUJARAT RECLAIM AND RUBBER PRODUCTS LTD. REPORTED AS 383 ITR 236 (BOM.) THE LD. AR ALSO FURNISHED A CHART GIVING DETAILS OF ADVANCES /LOANS, INTEREST DISALLOWED BY ASSESSING OFFICER AND PURP OSE OF ADVANCE/LOAN GIVEN BY ASSESSEE. 27. ON THE OTHER HAND, THE LD. DR VEHEMENTLY SUPPORTING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT ASSESSEE HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT ONLY NON - INTEREST BEARING FUNDS WERE UTILIZED BY THE ASSESSEE FOR ADVANCING LOANS TO THE SISTER CONCERN S AND OTHER RELATED PARTIES . THE ASSESSING OFFICER HAS GIVEN A CATEGORIC FINDING THAT BOTH INTEREST BEARING AND NON - INTEREST BEARING FUNDS HAVE GONE INTO MIXED BASKET AND THEY ARE INEXTRICABLY LINKED. T HE ASSESSEE HAS FAILED TO SHOW CLEAR NEXUS IN ADVANCING OF LOAN S FROM OWN INTEREST FREE FUNDS. 28. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES. THE ASSESSEE HAS ADVANCED FUNDS TO ITS SISTER CONCERNS OR ASS OCIATED PARTIES . IT IS AN UNDISPUTED FACT THAT DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR, UNDER APPEAL, ASSESSEE HAS PAID INTEREST CHARGES ON BORROWED FUNDS AT AN AVERAGE RATE OF 14% . THE ASSESSEE HAS ADVANCED 18 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 LOANS TO SISTER CONCERN S AND OTHER RELAT ED PARTIES AT AN AVERAGE RATE OF 7%. HENCE, ASSESSING OFFICER DISALLOWED 50% OF THE INTEREST EXPENDITURE U/S. 36(1) (III) OF THE ACT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD.(SUPRA) HAS HELD THAT WHERE BOTH I NTEREST FREE FUNDS AND INTEREST BEA RING FUNDS ARE AVAILABLE AND INTEREST FREE FUNDS ARE MORE THAN THE INVESTMENTS MADE, THE PRESUMPTION IS THAT INVESTMENT WOULD HAVE BEEN MADE O UT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. THIS PROPO SITION IS REITERATED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HDFC BANK LTD. VS. DCIT REPORTED AS 368 ITR 505. THUS, IF OWN FUNDS OF THE ASSESSEE ARE SUFFICIENT TO COVER THE LOANS ADVANCED, NO DISALLOWANCE U/S. 36 (1) (III) IS WARRANTED. IN THE PRESENT CASE, A PERUSAL OF THE BALANCE SHEET AT PAGE NO. 8 OF THE PAPER BOOK AND BREAK UP OF THE INTEREST FREE FUNDS/OWN FUNDS AVAILABLE WITH THE ASSESSEE AT PAGE NO. 58 OF THE PAPER BOOK SHOW THAT THE AVAILABLE WITH THE ASSESSEE AT PAGE NO. 58 OF THE PAPER BOOK SHOW THAT THE ASSESSEE IS HAVING INTEREST FREE FUNDS TO THE TUNE OF RS.665.35 CRORE S. THE EXTENT OF LOANS ADVANCED TO SISTER CONCERNS AND OTHER ASSOCIATE CONCERNS IS NOT EMANATING FROM THE ORDERS OF THE AUTHORITIES BELOW. THE LD. AR OF THE ASSESSEE HAS ALSO NOT FURNISHED THE AMOUNT ADVANCED AS LOAN TO SISTER CONCERNS/ ASSO CIA TE CONCERNS. THUS, WE ARE OF CONSIDERED VIEW THAT THIS ISSUE NEEDS A RE - VISIT TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE EXTEN T OF LOANS UNDER QUESTION VIS - A - VIS AVAILABILITY OF INTEREST FREE OWN FUNDS OF THE ASSESSEE. THE ASSESSING OFFICER AFTER EXAMINING THE AVAILABILITY OF OWN FUNDS OF THE ASSESSEE AND IN LIGHT OF OUR ABOVE OBSERVATIONS SHALL RE - EXAMINE THE ISSUE, IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE AND LAW. ACCORDINGLY, G ROUND NO. 8 RAISED IN THE APPEAL BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . 19 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 29 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. ITA NO. 2137/PUN/2013 ( BY REVENUE) 30 . NOW WE PROCEED TO DECIDE THE APPEAL OF THE REVENUE. GROUND S NO. 1 AND 2 RAISED IN APPEAL BY REVENUE RELATE TO DISALLOWANCE U /S. 14A MADE BY ASSESSING OFFICER BY INVOKING THE PROVISION OF RULE 8D OF THE ACT. THE DISALLOWANCE HAS BEEN MADE UNDER RULE 8D 2(II) AND 8D 2(III) OF THE ACT. IN FIRST APPEAL, THE COMMISSIO NER OF INCOME TAX (APPEALS) DELETED THE DISALLOWANCE COMPUTED UNDER RULE 8D 2(II) AND ALSO GRANTED PART RELIEF TO THE ASSESSEE WHILE COMPUTING DISALLOWANCE UNDER RULE 8D 2(III) OF THE ACT. THE REVENUE IS SEEKING RESTORATION OF ENTIRE DISALLOWANCE MADE BY ASSESSING OFFICER. IN THE APPEAL BY ASSESSEE, THE ASSESSEE HAS ALSO ASSAILED DISALLOWANCE U/S. 14A R.W. RULE 8D OF THE ACT. WE HAVE CONFIRMED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING DISALLOWANCE MADE UNDER RULE 8D 2(II) BY FOLLOWIN G THE ORDER OF THE CO - ORDINATE BENCH IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YEAR I.E. ASSESSMENT YEAR 2008 - 09. IN SO FAR AS SECOND LIMB OF DISALLOWANCE UNDER RULE 8D 2(III) IS CONCERNED, WE HAVE FOLLOWED THE DECISION OF CO - ORDINATE BENCH IN A SSESSES OWN APPEAL FOR ASSESSMENT YEAR 2008 - 09 AND HAS GRANTED PART RELIEF TO THE ASSESSEE. IN VIEW OF OUR DETAILED FINDINGS IN PARA 7 ABOVE, THE G ROUND NO. 1 AND 2 RAISED IN APPEAL BY REVENUE ARE LIABLE TO DISMISS. ACCORDINGLY, GROUND NO. 1 AND 2 IN APPE AL BY REVENUE ARE DISMISSED. 31. IN GROUNDS NO. 3 TO 5 RAISED IN APPEAL, THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN D ELETING THE DISALLOWANCE OF RS. 41,58,745/ - ON ACCOUNT OF NON - COLLECTION OF SHARE 20 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 PREMIUM FROM EMPLOYEES UNDER ESOP SCHEME. THE LD. AR POINTED THAT SIMILAR DISALLOWANCE WAS MADE BY THE REVENUE IN ASSESSMENT YEAR 2008 - 09 . T HE MATTER IS TRAVELLED TO THE TRIBUNAL. THE TRIBU NAL GRANTED PART RELIEF TO THE ASSESSEE. THE ISSUE IN THE PRESENT A PPEAL IS IDENTICAL , THEREFORE , HAS TO BE DECIDED IN THE SAME MANNER. 32 . THE LD. DR FAIRLY ADMITTED THAT THE ISSUE RELATING TO DISALLOWANCE ON ACCOUNT OF NON - COLLECTION OF SHARE PREMIUM FROM EMPLOYEES UNDER ESOP SCHEME , HAS BEEN ADJUDICATED BY THE TRIBU NAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2008 - 09. 3 3 . AFTER HEARING RIVAL SIDES, IT EMERGES THAT THE ISSUE RAISED IN GROUND NO. 3 TO 5 IN APPEAL BY THE DEPARTMENT, IS IDENTICAL TO THE ONE ADJUDICATED BY THE CO - ORDINATE BENCH IN ASSESSMENT YEAR 2008 - 09. THE REVENUE HAD MADE DISALLOWANCE OF RS. 41,58,745/ - UNDER ESOP SCHEME. THE TRIBUNAL MADE DISALLOWANCE OF RS. 41,58,745/ - UNDER ESOP SCHEME. THE TRIBUNAL DECIDED THIS ISSUE BY OBSERVING AS UNDER : 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE WHICH ARISES VIDE GROUND OF APPEAL NO.4 BEFORE US IS IN RELATION TO THE ALLOWABILITY OF CLAIM OF DEDUCTION ON ACCOUNT OF ESOP OF EMPLOYEES. THE ASSESSEE HAD ALLOTTED 16,50,000 SHARES TO ITS EMPLOYEES @ RS.10/ - PER SHARE AS AGAINST THE MARKET PRICE OF SAID SHARES @ RS.47.41 PER SHARE. THE TOTAL DISCOUNT ON THE ISSUE OF ESOPS WORKED OUT TO RS.1,24,76,235/ - AND THE ASSESSEE AMORTIZED THE SAME OVER A PERIOD OF THREE YEARS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED EXPENDITURE OF RS.41,58,745/ - . THE ISSUE OF ALLOWABILITY OF ESOP EX PENSES ON THE DATE OF EXERCISING OF OPTION BY THE ASSESSEE WAS HELD TO BE AN ASCERTAINED LIABILITY AND NOT CONTINGENT LIABILITY BY THE SPECIAL BENCH OF BANGALORE TRIBUNAL IN BIOCON LTD. VS. DCIT (SUPRA). THE SPECIAL BENCH HELD THE SAID DISCOUNT ON ESOP WA S TO BE ALLOWED AS DEDUCTION UNDER SECTION 37(1) OF THE ACT, DURING THE YEARS OF VESTING ON THE BASIS OF PERCENTAGE OF VESTING DURING SUCH PERIOD, SUBJECT TO UPWARD OR DOWNWARD ADJUSTMENT AT THE TIME OF EXERCISE OF OPTION. THE PUNE BENCH OF TRIBUNAL FURTH ER IN SANDVIK ASIA PVT. LTD. VS. ACIT (SUPRA) HAD ALSO ALLOWED THE CLAIM OF ASSESSEE VIDE PARA 6 IN TURN, RELYING ON THE SPECIAL BENCH DECISION IN BIOCON LTD. VS. DCIT (SUPRA). FOLLOWING THE SAME PARITY OF REASONING, WE ALLOW THE CLAIM OF EXPENDITURE ON A CCOUNT OF EXERCISE OF ESOP OPTION IN THE HANDS OF ASSESSEE TO THE EXTENT OF 1/3 RD AS CLAIMED BY THE ASSESSEE AT RS.41,58,745/ - . THE GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE IS THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 21 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 UNDISPUTEDLY, THE FACTS IN ASSESSMENT YEAR UNDER APPEAL ARE IDENTIC AL. R ESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH, WE DECIDE THESE GROUNDS OF APPEAL AGAINST THE DEPARTMENT FOR AFORESAID REASONS. ACCORDINGLY, GROUND NO. 3 TO 5 RAISED IN APPEAL BY REVENUE ARE DISMISSED. 34 . IN GROUND NO. 6 AND 7, THE REV ENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING ADDITION OF RS. 17,10,600/ - ON ACCOUNT OF RENTAL INCOME. THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE SAID AMOUNT REPRESENTING RENTAL I NCOME FOR TH E SUBSEQUENT YEAR. THE ASSESSEE HAD RECEIVED TOTAL RENT OF RS. 34,21,206/ - PERTAINING TO ASSESSMENT YEAR 2009 - 10 AND 2010 - 11. OUT OF WHICH RS.17,10,600/ - WAS ADVANCE RENT RELATING TO ASSESSMENT YEAR 2010 - 11. IN ADVERTENTLY, THE CREDIT FOR TDS ON THE TO ASSESSMENT YEAR 2010 - 11. IN ADVERTENTLY, THE CREDIT FOR TDS ON THE ADVANCE RENT WAS CLAIMED DURING THE YEAR. 3 5 . AFTER PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE CONTENTIONS OF ASSESSEE AND DELETED THE ADDITION MADE ON ACCOUNT OF RENTAL INCOME TO THE EXTENT I T IS PERTAIN S TO NEXT YEAR I.E ASSESSMENT YEAR 2010 - 11. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE WELL REASONED FINDINGS OF FIRST APPELLATE AUTHORITY. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, GRO UND NO. 6 AND 7 RAISED IN APPEAL BY REVENUE ARE DISMISSED. 3 6 . THE LAST GROUND I.E. GROUND NO. 8 RAISED BY DEPARTMENT IN APPEAL IS WITH RESPECT TO DELETING ADDITION OF RS.3,30,243/ - ON ACCOUNT OF 22 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 DIFFERENCE IN SHARE OF PROFIT RECEIVED FROM M/S. PHOENIX VENTURE. DURING ASSESSMENT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE RECEIVED PROFESSIONAL FEE OF RS.76,53,346/ - FROM M/S. PHOENIX VENTURES. WHILE COMPUTING TAXABLE INCOME, THE ASSESSEE CLAIMED DEDUCTION OF RS.79,83,589/ - . THE ASSESSING OF FICER ADDED THE DIFFERENCE OF RS. 3,30,243/ - . THE LD. AR SUBMITTED THAT M/S. PHOENIX VENTURE IS AN AOP AND ASSESSEE IS ONE OF MEMBER OF THE SAID AOP. FROM T HE AGGREGATE AMOUNT COMPRISING OF SHARE IN AOP AND PROFESSION AL FEES PAYABLE TO THE ASSESSEE RS. 3 ,30,243/ - WAS CAPITALIZED AND ADDED TO THE COST OF ASSETS AND BALANCE RS.76,53,346/ - WAS DEBITED TO P & L ACCOUNT. ACCORDINGLY, RS. 76,53,346/ - WAS ADDED BACK BY AOP IN ITS COMPUTATION. AS AGAINST THE SAID AMOUNT, THE ENTIRE AMOUNT RECEIVED FROM AOP WAS SH OWN AS INCOME AND CREDITED TO P & L ACCOUNT OF THE ASSESSEE. 37 . ON THE OTHER HAND, THE LD. DR PRAYED FOR REVERSING THE FINDINGS OF 37 . ON THE OTHER HAND, THE LD. DR PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORING THE ADDITION MADE BY ASSESSING OFFICER. 38 . BOTH SIDES HEARD. WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION BY OBSERVING AS UNDER : 14.3 I HAVE CAREFULLY CONSIDERED THE IMPUGNED ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. I FIND THE ABOVE CONTENTION OF THE APPELLANT IS ACCEPTABLE. THE INCOME OF AOP FOR A.Y.2009 - 10 WAS COMPUTED BY THE CONCERNED AO U/S. 143(3). THE APPELLANT BEING ONE OF THE MEMBERS OF THE AOP M/S. PHOENIX VENTURES, HAD RECEIVED THE SHARE OF PROFIT AS WELL AS PROFESSIONAL FEES. PORTION OF THE RECEIPTS WERE CAPITALIZED AND ADDED TO THE COST OF THE ASSET AND THE BALANCE WAS DEBITED TO THE P & L ACCOUNT BY M/S. PHOENIX VENTURES, WHEREAS THE APPELLANT HAS CREDITED THE ENTIRE AMOUNT IN THE P & L ACCOUNT AND THIS IS THE REASON FOR THE DIFFERENCE WHICH WAS NOT APP RECIATED BY THE AO. IN VIEW OF THIS, THE AO IS DIRECTED TO DELETE THE ADDITION MADE. THIS GROUND OF APPEAL IS ALLOWED. 23 ITA NO.6535 /MUM /2013 & ITA NO. 2137/PUN/201 3 A.Y. 2009 - 10 THE LD. DR FOR REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL S). THE FIRST APPELLATE AUTHORITY HAS GIVEN A REASONED FINDING AFTER APPRECIATING THE REASONS FOR DIFFERENCE IN TREATMENT GIVEN BY ASSESSEE AND AOP. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCO ME TAX (APPEALS). ACCORDINGLY, GROUND NO. 8 IN APPEAL BY REVENUE IS DISMISSED . 3 9 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 40 . TO SUM UP, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON FRIDAY , THE 08 TH DAY OF DEC EMBER , 201 7 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 08 TH DEC EMBER , 2017 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) - 22, MUMBAI. 4. THE CIT - 10, MUMBAI. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE .