M/s. Sidwal Refrigeration Industries Ltd, New Delhi V. DCIT, New Delhi

ITA 674/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9987 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 16-06-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 23-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Keywords: Business income; Depreciation; Fair market value; Bad and doubtful debts; Set aside
• Section: 80IC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO. 674/DEL/2009 ASSESSMENT YEAR : 2004-05 M/S SIDWAL REFRIGERATION INDUSTRIES LTD., 108-A, MADANGIR, NEW DELHI 110 062. PAN : AABCS2363L VS. DCIT, CIRCLE 8(1), NEW DELHI . (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.N. GUPTA, ADVOCATE REVENUE BY : SHRI M.L. MEENA, SR.DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER OF THE CIT (A) DATED 26 TH DECEMBER, 2008 FOR ASSESSMENT YEAR 2004- 05. GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN LAW, THE ORDER OF THE LD. C IT (A) DATED 26.12.08, IS UNSUSTAINABLE, AS PASSED IN GROSS VIOL ATION OF ITS JURISDICTION AND, AS SUCH, IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND IN LAW, THE LD. CIT (A) HAS ERR ED IN ENHANCING THE ADDITION TO RS.95,00,347/-, IN RESPE CT OF AN ISSUE, WHICH WAS NOT AGITATED BEFORE HIM. 3. ON THE FACTS AND IN LAW, WHETHER THE LD. CIT (A) WAS JUSTIFIED IN ISSUING AN ENHANCEMENT NOTICE AND MAKI NG AN ITA NO.674/DEL/2009 2 ADDITION OF RS.95,00,347/- BY BASING HIS FRESH ADDI TION ON A MERE BELIEF AND ESTIMATION? 4. ON THE FACTS AND IN LAW, WHETHER THE LD. CIT (A) EXCEEDED IS JURISDICTION IN GOING BEYOND THE SUBJECT MATTER OF THE ASSESSMENT, RENDERING HIS ORDER ILLEGAL AND LIABLE TO BE SET ASIDE? 5. ON THE FACTS AND IN LAW, WHETHER THE LD. CIT (A) WAS BOUND TO FOLLOW THE HONBLE ITAT ORDER DATED 19.10. 07 PASSED IN THE APPELLANTS OWN CASE IN IT NO.4530/DE L/03 ALONG WITH CO NO.119(DEL)/06 FOR A.Y. 2000-01 AND I TA NO.3283(DEL)/04 & ITA NO. 3901(DEL)/04 FOR A.Y. 200 1- 02, WHICH HAD ALREADY DECIDED THE SAID ISSUE OF TRA NSFER O PROFIT, IN APPELLANTS FAVOUR AT PAGE 20 PARA 3.3 A ND HAD BECOME FINAL AS NO APPEAL WAS FILED AGAINST IT BY T HE DEPARTMENT? 6. ON THE FACTS AND IN LAW, WHETHER, CONSIDERING TH E FACT THAT THE DEPARTMENT NOT HAVING FILED AN APPEAL TO THE HI GH COURT AGAINST THE AFORESAID ITAT ORDER, THUS, RENDE RING FINALITY TO THE SAID ORDER, THE CIT (A) WAS JUSTIFI ED IN DOING INDIRECTLY WHAT HE COULD NOT DO DIRECTLY, I.E., SHI FT THE PROFIT OF THE TWO UNITS ON ESTIMATION? 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER, SUBSTITUTE, DELETE OR WITHDRAW ANY OF THE GROUNDS O F APPEAL ON OR BEFORE THE DATE OF DISPOSAL OF THE APP EAL. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS ACTIVITY OF MANUFACTURING AND SALE OF WATER COOLERS AND VARIOUS TYPES OF AIR CONDITIONERS ROOM, SPLIT AND PACKAGE AIR CONDITIO NERS. IT RUNS TWO FACTORIES TO MANUFACTURE THESE ITEMS. ONE UNIT IS SITUATED A T FARIDABAD AND OTHER AT MAINTHAPAL INDL. AREA, KALA AMB, NAHAN DISTT., SIRM OUR (HP). THIS UNIT WAS SET UP IN ASSESSMENT YEAR 1998-99 AND IT IS ELIGIBL E FOR DEDUCTION U/S 80-IB @ 100% UPTO ASSESSMENT YEAR 2003-04. THEREAFTER TH E ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION AT ITS KALA AMB UNI T WITHIN THE MEANING OF SECTION 80-IC OF THE IT ACT AND HAS CLAIMED DEDUCTI ON ON PROFITS @ 100% ITA NO.674/DEL/2009 3 AS PER FORM NO.10CCB ENCLOSED WITH THE RETURN. THE UNIT OF THE ASSESSEE AT FARIDABAD HAS EXHAUSTED SUCH DEDUCTIONS. THE AS SESSEE HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT OF BOTH OF ITS UNITS AND COPY OF SUCH AUDITED ACCOUNTS WERE ALSO FILED. AS THE MANUFACTURED ARTICLES IN BOTH THE UNITS WERE SAME, THE ASSESSEE FROM ITS FARIDABAD UNIT HAD TRANSFERRED THE UNFINISHED GOODS TO KALA AMB UNIT A MOUNTING TO RS.6,65,52,250/-. IT WAS FURTHER NOTICED BY THE AS SESSING OFFICER THAT A SUM OF RS.2,76,76,415/- AS EXCISE DUTY PAID BY FARIDAB AD UNIT WAS NOT CONSIDERED TO ARRIVE AT THE VALUE OF STOCK TRANSFER FROM FARIDABAD UNIT TO KALA AMB UNIT. ACCORDING TO THE ASSESSING OFFICER, EXCISE DUTY WAS ALSO A PART AND PARCEL OF MANUFACTURING COST AND THE ASSES SEE WAS REQUIRED TO EXPLAIN AS TO WHY SUCH EXCISE DUTY ALSO SHOULD NOT BE ADDED TO THE VALUE OF STOCK TRANSFERRED BY THE ASSESSEE FROM ITS FARIDABA D UNIT TO KALA AMB UNIT. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT SUCH ARGUMENT. THE ASSESSING OFFICER HAS MADE HIS OWN CALCULATIONS WIT H REGARD TO THE RAW MATERIAL TRANSFERRED BY THE ASSESSEE FROM ITS FARID ABAD UNIT TO KALA AMB UNIT AND HAS ARRIVED AT A CONCLUSION THAT EXCESS PR OFIT FROM FARIDABAD UNIT TO KALA AMB UNIT WAS TRANSFERRED IN THE SHAPE OF TRANS FER OF RAW MATERIAL TO THE TUNE OF RS.88,33,254/-. THE RELEVANT CALCULATION O F THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ARE REPRODUCED BELOW:- TOTAL SALES OF FARIDABAD UNIT 19,47,41,042 EXCISE DUTY 2,76,76,415 SALES NET OF EXCISE DUTY 16,70,64,627 ITA NO.674/DEL/2009 4 STOCK TRANSFERRED TO KALA AMB UNIT (NET OF EXCISE DUTY 6,65,52,250 ------------------- 23,36,16,877 EXCISE DUTY IN RESPECT OF STOCK TRANSFERRED TO KALA AMB UNIT 6,65,52,250 X 2,76,76,415 23,36,16,877 FURTHER, IT WAS ALSO NOTICED FROM THE WORKING OF OV ERHEAD EXPENSES THAT THE FOLLOWING EXPENSES WERE NOT CONSIDERED IN THE WORKING OF OVERHEADS:- I) DIRECTORS REMUNERATION OF RS.6,54,550/- II) STAFF WELFARE (CORPORATE) OFFICE EXPENSES AMOUN TING TO RS.79,505/- III) REPAIR & MAINTENANCE CHARGES (VEHICLES) RS.11,68,025/-. THE WORKING OF OVERHEADS IS COMPUTED AS UNDER:- A) FACTORY OVERHEADS OF FARIDABAD UNIT AS FURNISHED RS.24874837/- B) OTHER OVERHEADS AS FURNISHED RS.31081188/- C) DIRECTORS REMUNERATION RS.654550/- D) STAFF WELFARE RS.79505/- F) REPAIRS & MAINTENANCE CHARGES (VEHICLES) RS.1168025/- TOTAL (A) RS.57858105/- RAW MATERIALS CONSUMED IN FARIDABAD (B) RS.14705738 0/- TOTAL OVERHEADS PERCENTAGE = A/B = 39.34% 9. THE ASSESSEE HAS TAKEN FACTORY OVERHEAD @ 17% A ND OTHER OVERHEAD @ 22% AND ADDED TO THE DIRECT MATERIAL COS T TO WORK OUT THE TOTAL MATERIAL COST AS AGAINST THE TOTAL OVERHE AD OF 39.34% AS WORKED OUT ABOVE. THE PRICE OF THE MATERIAL TRANSF ERRED BY THE ASSESSEE HAS BEEN UNDERVALUED AND IS REVALUED AS UN DER:- DIRECT MATERIAL COST AS PER WORKING FILED RS.435266 51/- ADD: FACTORY COST & OVERHEAD @ 39.34% RS.17123384/- ADD : EXCISE DUTY (AS DISCUSSED) RS.7882242/- ITA NO.674/DEL/2009 5 GROSS COST RS.68532277/- ADD: 10% MARGIN OF PROFIT ON COST AS PER EXCISE RULE RS.6853227 TOTAL VALUE OF MATRIAL TRANSFERRED RS.75385504/- LESS : VALUE OF MATERIALS TRANSFERRED AS PER BOOKS 66552250 EXCESS : PROFIT TRANSFERRED TO KALA AMB UNIT RS.883 3254/- 3. IN THIS MANNER THE ASSESSING OFFICER REDUCED THE DEDUCTION CLAIMED BY THE ASSESSEE IN RESPECT OF KALA AMB UNIT U/S 80- IC. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). T HE REMAND REPORT FROM THE ASSESSING OFFICER WAS ALSO CALLED FOR. REFEREN CE WAS MADE TO EARLIER DECISION OF ITAT TO CONTEND THAT ADJUSTMENT MADE BY THE ASSESSING OFFICER COULD NOT BE MADE IN THE LIGHT OF THE DECISION OF I TAT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEARS 2000-01 AND 2001-02. HOWEVER, LD. CIT (A), AFTER CONSIDERING ALL THESE SUBMISSIONS AND AF TER REFERRING TO THE DECISIONS OF ITAT IN THE CASE OF ASSESSEE FOR EARLI ER YEARS HAS OBSERVED THAT EVEN IF THE FACTS OF EARLIER YEARS ARE SIMILAR , IT CANNOT BE SAID THAT SINCE ADDITION/DISALLOWANCE MADE IN THOSE YEARS WAS DELET ED, NO SUCH DISALLOWANCE CAN BE MADE IN SUBSEQUENT YEAR. HE OB SERVED THAT THE DELETION OF SOME ADDITION BY THE HIGHER JUDICIAL AU THORITY MAY RATHER MAKE THE ASSESSING OFFICER AWARE OF THE SHORTCOMINGS IN THE ORDER AND HE MAY CHOOSE TO CORRECT OR OVERCOME SUCH SHORTCOMINGS IN FUTURE PROCEEDINGS. THEREFORE, HE OBSERVED THAT THE ORDER OF ITAT IN EA RLIER YEARS IS NOT TO BE COMPLETELY FOLLOWED. IT IS IN THIS MANNER THE LD. CIT (A) HAS DEALT WITH SUCH CONTENTION OF THE ASSESSEE. IN PARA 5.8 LD. CIT (A ) OBSERVED THAT EVEN THE ITA NO.674/DEL/2009 6 METHOD SUGGESTED BY ADDL. CIT IN HIS REMAND REPORT IS NOT CORRECT BECAUSE EXPENSES UNDER A FEW HEADS CANNOT BE ALLOCATED TO D IFFERENT UNIT WITHOUT DUE EXAMINATION OF VOUCHERS, ETC. LD. CIT (A) HAS DELETED THE ADDITION REGARDING EXCISE DUTY. HOWEVER, TAKING NOTE OF THE FACT THAT NET PROFIT RATIO OF FARIDABAD UNIT BEING 0.55% AS AGAINST KALA AMB U NIT OF ABOUT 16%, LD. CIT (A) HAS OBSERVED THAT THE ASSESSEE HAS NOT BEEN SHOWING CORRECT POSITION OF PROFIT IN THE RESPECTIVE UNITS TO AVAIL HIGHER DEDUCTION U/S 80-IC AS ONE OF THE UNITS OF THE ASSESSEE WAS NOT ELIGIBL E FOR DEDUCTION U/S 80-IC. HE HAS MADE VARIOUS ANNEXURES TO HIS ORDER TO SHOW THAT THE ASSESSEE HAS BEEN CLAIMING HIGHER PROFIT IN THE EXEMPTED UNIT AN D THEREBY THE LD. CIT (A) HAS ENHANCED THE ADDITION TO A SUM OF RS.95,00,347/ - IGNORING THE ITAT DECISION IN THE CASE OF ASSESSEE FOR EARLIER YEARS AND BY MAKING HIS OWN CALCULATIONS. IT IS AGAINST THESE FINDINGS OF LD. CIT (A) THE ASSESSEE IS AGGRIEVED, HENCE, IN APPEAL. 4. AFTER NARRATING THE FACTS, IT WAS VEHEMENTLY PLE ADED BY LD. AR THAT SO AS IT RELATES TO ADJUSTMENT OF PROFIT MADE ON ACCOU NT OF EXCISE DUTY RELATING TO UNFINISHED GOODS TRANSFERRED BY THE ASSESSEE FRO M ITS FARIDABAD UNIT TO KALA AMB UNIT, THE ASSESSING OFFICER IN HIS REMAND REPORT HAS ACCEPTED THAT SUCH ADJUSTMENT WAS NOT WARRANTED AND LD. CIT (A) H AS ALSO DELETED THE SAME AND, THEREFORE, THE QUESTION REMAINS ONLY REGA RDING OTHER ADJUSTMENT MADE BY THE ASSESSING OFFICER, WHICH ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT FOR ASSESSMENT YEAR 2000-02 AND 2001-02 A COPY OF WHICH IS PLACED AT PAGES 96 TO 131 OF THE PAPER BOOK. IT WAS PLEADED ITA NO.674/DEL/2009 7 THAT IT IS AGAINST ALL PRINCIPLES OF JUDICIAL PROPR IETY THAT LD. CIT (A) HAS IGNORED THE SAID DECISION OF ITAT AND HAS PROCEED ED TO DECIDE THE ISSUE ON HIS OWN. IT WAS CONTENDED THAT WHATEVER ADJUSTM ENT WAS REQUIRED TO BE MADE, IT WAS MADE BY THE ASSESSEE ITSELF. THE ASSE SSEE HAS BEEN MAKING UNIFORM ALLOCATION OF EXPENSES AND THE SAID COMPUTA TION OF THE ASSESSEE HAS BEEN ACCEPTED BY ITAT. IT WAS PLEADED THAT THE METHOD ADOPTED BY THE LD. CIT (A) REGARDING NET PROFIT CONCEPT CANNOT BE APPLIED AS THERE MAY BE SEVERAL REASONS FOR THE LOW NET PROFIT RATE E.G., T HE CLAIM OF DEPRECIATION WILL IMPACT THE NET PROFIT AS IF THE MACHINERY EMPLOYED IS OF HIGH VALUE, THE NET PROFIT WILL BE LOW. IT WAS SUBMITTED THAT THE REAS ONS OF LOW PROFIT IN FARIDABAD UNIT WERE EXPLAINED BEFORE THE ASSESSING OFFICER AND CIT (A) BUT THEY DID NOT APPRECIATE THE REASONS WELL. THUS, IT WAS SUBMITTED THAT THE METHOD ADOPTED BY THE ASSESSEE FOR ALLOCATION OF EX PENSES ON GROSS PROFIT BASIS AND TURNOVER BASIS WAS THE CORRECT METHOD AND THE LD. CIT (A) WAS WRONG IN ADOPTING THE NET PROFIT METHOD TO HOLD THA T PROFITS OF FARIDABAD UNITS WERE TRANSFERRED TO KALA AMB UNIT IN THE SHAP E OF LOW PRICE TRANSFER OF UNFINISHED GOODS. IT WAS PLEADED THAT THE DISPUTE, IF ANY, COULD BE IN RESPECT OF DIRECT REMUNERATION, STAFF WELFARE AND R EPAIR AND MAINTENANCE CHARGES, ETC. OF VEHICLES AS SO FAR AS IT RELATES T O EXCISE DUTY LD. ASSESSING OFFICER HAS ACCEPTED THAT THE SAID ADJUSTMENT COULD NOT BE MADE. THUS, IT WAS PLEADED THAT THE ADJUSTMENT MADE BY THE LD. CIT (A) BY WAY OF ENHANCEMENT IS NOT WARRANTED AT ALL AND THAT THE SA ME IS AGAINST THE EARLIER ORDER OF ITAT AND, HENCE, SHOULD BE DELETED. ITA NO.674/DEL/2009 8 5. ON THE OTHER HAND, RELYING ON THE ORDER OF THE L D. CIT (A) IT WAS VEHEMENTLY PLEADED BY LD. DR THAT THE ASSESSEE HAS BEEN SHOWING EXCESS PROFIT IN ITS KALA AMB UNIT JUST TO CLAIM HIGHER DE DUCTION AND, THUS, THE LD. CIT (A) WAS RIGHT IN OBSERVING THAT THE SAME NEEDS ENHANCEMENT AND HE HAS RIGHTLY MADE THE ADDITION OF RS.95,00,347/- ON THIS ISSUE AND HIS ORDER SHOULD BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. COPY OF THE REMAND REP ORT SUBMITTED BY THE ASSESSING OFFICER IS PLACED AT PAGE 83 TO 86 OF THE PAPER BOOK. IN PARA 2 THE ASSESSING OFFICER HAS MENTIONED THAT ADJUSTMENT S REGARDING EXCISE DUTY WAS MADE AS ASSESSEE COULD NOT EXPLAIN THE BASIS OF ALLOCATION OF EXCISE DUTY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS A RESULT OF POOR REPRESENTATION OF FACTS BEFORE THE ASSESSING OFFICE R, IT WAS CONCLUDED BY THE ASSESSING OFFICER THAT THE GOODS TRANSFERRED WERE N ET OF EXCISE AND, IN THESE CIRCUMSTANCES, EXCISE DUTY WAS ADDED TO THE C OST OF GOODS. LD. CIT (A) HAS ALSO ACCEPTED SUCH FACTS AND, THEREFORE, TH E MAIN ADJUSTMENT MADE BY THE ASSESSING OFFICER IN RESPECT OF EXCISE DUTY IS NO MORE THE ISSUE AND THE ONLY ISSUE REMAINS BEFORE THE TRIBUNAL IS REGAR DING ALLOCATION OF OTHER EXPENSES WHICH HAVE BEEN TAKEN INTO ACCOUNT BY LD. CIT (A) FOR HOLDING THAT EXCESS PROFIT WAS SHOWN BY THE ASSESSEE IN ITS KALA AMB UNIT TO CLAIM HIGHER DEDUCTION. IT MAY BE MENTIONED HERE THAT TH IS ISSUE IS NOT A VIRGIN ISSUE AS SIMILAR TYPE OF ADDITIONS WERE BEING MADE BY THE DEPARTMENT TO THE INCOME OF THE ASSESSEE IN EARLIER YEARS ALSO I.E., ASSESSMENT YEAR 2000- ITA NO.674/DEL/2009 9 2001 AND 2001-02. THE ASSESSEE HAS BEEN FOLLOWING CONSISTENT METHOD OF TRANSFERRING THE SEMI FINISHED GOODS FROM ITS FARID ABAD UNIT TO KALA AMB UNIT AND NO DISCREPANCY WHATSOEVER HAS BEEN FOUND BY THE ASSESSING OFFICER IN SUCH COMPUTATION EXCEPT WHAT IS POINTED OUT BY THE ASSESSING OFFICER IN RESPECT OF EXCISE DUTY, DIRECTORS REMUNERATION, ST AFF WELFARE AND REPAIR AND MAINTENANCE OF VEHICLES. IT MAY BE POINTED OUT HER E THAT SIMILAR TYPE OF ADJUSTMENT WAS MADE BY THE REVENUE IN THE CASE OF A SSESSEE FOR ASSESSMENT YEAR 2000-01 WHEREIN ADDITION OF RS.7,27 ,311/- WAS MADE ON ACCOUNT OF EXCESS PROFIT SHIFTED FROM FARIDABAD UNI T TO HIMACHAL PRADESH UNIT. 7. THE SAID ADDITION WAS DELETED BY THE CIT(A) WHOS E ORDER HAS BEEN CONFIRMED BY ITAT AND IT WILL BE RELEVANT TO REPROD UCE THE OBSERVATIONS OF THE TRIBUNAL ON THAT ISSUE: - 3. GROUND NO. 2 IS TO THE EFFECT THAT THE LEAR NED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 7,27,311/ - MADE ON ACCOUNT OF EXCESS PROFIT SHIFTED FROM HIMACHAL PRADESH UNIT TO FARIDABAD UNIT. IN THIS CONNECTION, IT IS M ENTIONED IN THE ASSESSMENT ORDER THAT HIMACHAL PRADESH UNIT IS ELIGIBLE FOR 100% DEDUCTION OF ITS PROFITS U/S 80-IA. IN THE ASSESSMENT ORDER, IT IS MENTIONED THAT CERTAIN GOODS W ERE TRANSFERRED FROM FARIDABAD UNIT TO HIMACHAL PRADESH UNIT. TH E ASSESSING OFFICER WAS OF THE VIEW THAT THE VALUE ON T RANSFERRED GOODS WAS NOT PLACED ON ARMS LENGTH BASIS. TH IS WAS DONE TO INFLATE THE PROFITS OF THE UNIT, WHICH WERE FULLY DEDUCTIBLE IN COMPUTING THE TOTAL INCOME. TH E PROFITS OF HIMACHAL PRADESH UNIT WERE REDUCED BY AN AM OUNT OF RS. 7,27,311/- ON THIS COUNT. IN APPEAL, IT WAS AGITATED THAT SEPARATE BOOKS OF ACCOUNT HAD BEEN MAINTAINE D FOR THE UNITS, WHICH HAD ALSO BEEN AUDITED. THUS, TH ERE WAS NOTHING WRONG EITHER WITH THE METHOD OF ACCOUN TING EMPLOYED FOR MAINTAINING THE BOOKS OF ACCOUNT OR IN RESPECT OF DEBITING EXPENDITURE OF RESPECTIVE UNITS IN THEIR ITA NO.674/DEL/2009 10 ACCOUNTS. THE LEARNED CIT(A) CAME TO THE CONCLU SION THAT THE A.O. NOWHERE POINTED OUT ANY DISCREPANC Y IN THE BOOKS OF ACCOUNT OR THE METHOD OF ACCOUNTING, WHICH HAS BEEN USED CONSISTENTLY FROM YEAR TO YEAR. THE BOOKS HAVE BEEN MAINTAINED IN CONSONANCE WITH THE EXCISE RECORDS AND AS PER STANDARD LAID DOWN UNDER THE EXCISE ACT. THE ASSESSING OFFICER HAS NOT GIVEN ANY DEFINITE FINDING IN THE MATTER. THUS, IT WAS HELD THAT HE ERRED IN R EDUCING THE PROFIT OF HIMACHAL PRADESH UNIT BY AN AMOUNT OF RS. 7,27,311/-. 3.1 BEFORE US, THE LEARNED DR REFERRED TO T HE DISCUSSION ON PAGE 9 OF THE ASSESSMENT ORDER, WHERE IT IS POINTED OUT THAT THE EXCESS PROFITS OF HIMACHAL PRADESH UN IT WILL HAVE TO BE TRANSFERRED TO FARIDABAD UNIT IN THE PROPO RTION WHICH THE MATERIAL CONSUMED CARRIES TO THE STOCK RECEI VED ON TRANSFER FROM FARIDABAD UNIT. IN VIEW THEREO F, RS. 7,27,311/- WERE REDUCED FROM THE PROFITS OF HIMACHAL PRADESH UNIT AND THIS AMOUNT WERE TAKEN AS PROFITS OF FARIDABAD UNIT. 3.2 IN REPLY, THE LEARNED COUNSEL EXPLAINED THAT THE ASSESSEE HAD TRANSFERRED GOODS OF THE VALUE OF RS. 1,25,46,983/- FROM FARIDABAD UNIT TO HIMACHAL PR ADESH UNIT. IT WAS EXPLAINED TO THE A.O. THAT THE PRODUCTS MANUFACTURED BY THE ASSESSEE ARE SUBJECT TO LEVY OF EXCISE DUTY AND, THUS, THE GOODS CANNOT LEAVE FARIDABAD FACTORY WITHOUT PROPER DOCUMENTATION. SUCH DOCUMENTS WERE PLA CED BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESS ING OFFICER OBSERVED THAT SEMI-FINISHED GOODS WERE TRANSFE RRED FROM FARIDABAD UNIT TO HIMACHAL PRADESH UNIT. BOTH THE UNITS ARE ENGAGED IN MANUFACTURE OF IDENTICAL PRODUCT S AND THUS, SUCH TRANSFER WAS UNDERTAKEN TO SAVE SALES- TAX AS LOWER RATE IS APPLICABLE IN HIMACHAL PRADESH. IT W AS FURTHER MENTIONED THAT THE VALUE ADDITION TO THE SEM I-FINISHED GOODS MADE AT HIMACHAL PRADESH UNIT WAS RS. 5 6,10,060/- ALTHOUGH THE UNIT INCURRED EXPENDITURE OF RS. 9 4,982/- ONLY. THUS, THE RATIO OF EXPENDITURE TO NET SALES WAS 0.425% IN HIMACHAL PRADESH UNIT WHILE SUCH RATIOS WERE 11.30% AND 9.20% IN UNITS I AND II RESPECTIVELY AT FARIDAB AD. IN THE LIGHT OF THESE FACTS, HE CAME TO THE CONCLUSION THA T THE PROFIT OF HIMACHAL PRADESH UNIT WAS TO BE REDUCED BY AN AMOUNT OF RS. 7,27,311/- AND THAT OF FARIDABAD UNIT HAD TO BE INCREASED BY AN IDENTICAL AMOUNT. IT WAS SUB MITTED BEFORE THE LEARNED CIT(A) THAT THE WORKING OF THE FIG URE OF RS. 7,27,311/- WAS NOT FURNISHED ANYWHERE IN THE AS SESSMENT ORDER. THE ACCOUNTS OF HIMACHAL PRADESH UNIT WERE ALSO ITA NO.674/DEL/2009 11 AUDITED AND ITS BOOKS WERE MAINTAINED FROM YEAR TO YEAR FOLLOWING CONSISTENT METHOD OF ACCOUNTING. NO ERROR WAS FOUND EITHER IN THE SYSTEM OF ACCOUNTING FOLL OWED BY THE ASSESSEE OR IN THE MAINTENANCE OF ACCOUNTS. THE ASSESSEE HAD TRANSFERRED GOODS FROM FARIDABAD UNIT TO HIMACHAL PRADESH UNIT AFTER CARRYING OUT THE COSTING AND THE GOODS WERE TRANSFERRED ON COST PLUS 15% BASIS, WHI CH WAS CONSISTENT WITH RULE 8 OF THE EXCISE RULES. TH E LEARNED CIT(A) SPECIFICALLY MENTIONED THAT NO CALCU LATION WAS GIVEN REGARDING THE REDUCTION OF PROFITS OF HI MACHAL PRADESH UNIT BY RS.7,27,311/- AND THAT NO DEFECT WAS POINTED OUT EITHER IN THE BOOKS OF ACCOUNT OR THE SYSTEM OF ACCOUNTING EMPLOYED BY THE ASSESSEE. THEREFORE, HE REJE CTED THE FINDING OF THE ASSESSING OFFICER THAT PROFIT TO THE EXTENT OF RS. 7,27,311/- WAS SHIFTED FROM HIMACHAL PRADESH UNIT TO FARIDABAD UNIT. A REFERENCE WAS MADE TO PROV ISION CONTAINED IN SECTION 80-IA(8), WHICH MANDATE S THE COMPUTATION OF PROFITS OF THE ELIGIBLE UNIT ON A STAND ALONE BASIS AND IN CASE OF TRANSFER OF ANY GOODS OR SERVICES FROM OTHER CONNECTED BUSINESSES TO THE BUSINESS O F THE ELIGIBLE UNIT TO TAKE THE VALUE AT ARMS LENGTH PRINCIPLE. IT WAS HIS CASE THAT GOODS HAVE BEEN TRANSF ERRED FROM FARIDABAD UNIT TO HIMACHAL PRADESH UNIT AT ARMS LENGTH PRINCIPLE BY EMPLOYING COST PLUS 15% BASIS, A S PROVIDED IN RULE 8 OF THE CENTRAL EXCISE RULES, WHICH IS NOTH ING BUT FAIR MARKET VALUE OF THE GOODS TRANSFERRED BY FAR IDABAD UNIT TO HIMACHAL PRADESH UNIT. RELIANCE WAS PLACED ON T HE ORDER OF HON'BLE ITAT, DELHI BENCH B, IN THE CASE OF N ATIONAL THERMAL POWER CORPORATION LTD. VS.ADDL. CIT, (2004) 91 ITD 101, IN WHICH IT WAS POINTED OUT THAT THE PRO VISIONS OF SECTIONS 80-IA(8) AND 80-IA(9) COULD BE APPLI ED IF IT WAS ESTABLISHED THAT THE GAS TRANSFERRED TO THE STEAM UNIT WAS NOT DONE AT THE MARKET VALUE ON THE DATE OF I TS TRANSFER. MARKET VALUE WILL BE THE PRICE WHICH THE GOO DS WILL FETCH IN THE OPEN MARKET ON A HYPOTHETICAL SALE. NOTHING WAS BROUGHT ON RECORD TO SHOW THAT THERE WAS A NY MARKET FOR SALE OF WASTE HOT GAS IN INDIA. THERE WAS A LSO NO EVIDENCE THAT SUCH GAS COULD BE PACKAGED OR TRANSPORTED. SUCH GAS, IF NOT USED, HAS TO BE DISCHARGED I N THE OPEN ATMOSPHERE. IT MAY BE THAT A MARKET MAY DEV ELOP IN FUTURE FOR SUCH GAS, BUT THE PRICE OF SUCH GAS ON THE DATE OF TRANSFER IN THE OPEN MARKET WAS NIL. THE REFORE, NO ADJUSTMENT COULD BE MADE TO THE PROFITS UNDER THE AFORESAID PROVISION. ON THE BASIS OF THIS CA SE, IT WAS ARGUED THAT THE ASSESSING OFFICER DID NOT BRIN G ANY EVIDENCE ON RECORD TO SHOW THAT GOODS WERE T RANSFERRED AT LESS THAN FAIR MARKET VALUE. ITA NO.674/DEL/2009 12 3.3 WE HAVE CONSIDERED THE FACTS OF THE CASE A ND RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSING OFFICER HAS NOT STATED HIS CASE PROPERLY IN RESPECT OF IMPUGN ED REDUCTION OF RS. 7,27,311/- FROM THE PROFITS OF HIMACHAL P RADESH UNIT. THE LEARNED D.R. POINTED OUT THAT THIS WAS ON ACCOUNT OF SUBSTANTIAL VALUE ADDITION IN SPITE OF VERY L ITTLE EXPENSES INCURRED IN THE HIMACHAL PRADESH UNIT. THE ASSESSING OFFICER DOES MAKE A MENTION OF TRANSFER OF GOODS FROM FARIDABAD UNIT TO HIMACHAL PRADESH UNIT AND R ATIO OF MANUFACTURING EXPENSES TO NET SALES IN VARIOUS UNITS. HE HAS ALSO DISCUSSED THE PAYMENT OF EXCISE DUT Y IN HIMACHAL PRADESH UNIT IN THIS YEAR. HOWEVER, AFTER DOING SO, HE HAS NOT DRAWN ANY CALCULATION AS TO HO W THE PROFITS WERE REDUCED BY AN AMOUNT OF RS. 7,27,311/-. T HE CASE OF THE LEARNED COUNSEL IS THAT THE GOODS WER E TRANSFERRED AT COST PLUS 15% BASIS, WHICH IS IN CONSONANC E WITH RULE 8 OF CENTRAL EXCISE RULES. SINCE FARIDABAD UNIT IS SUBJECT TO LEVY OF EXCISE-DUTY ON PRODUCTION OF ITS GOODS , THE TRANSFER OF GOODS AT COST PLUS 15% WAS AT REASONABLE PRICE. IN FACT, THE NET PROFIT RATIO OF FARIDABAD U NIT WAS 6.78% AND, THUS, IT CANNOT BE SAID THAT TRANSFER A T COST PLUS 15% LED TO INCREASE IN PROFIT OF HIMACHAL PRADESH UNIT. WE FIND THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE T O SHOW ANY RATIONAL BASIS FOR MAKING ADJUSTMENT TO PROFITS BY SAYING THAT THE GOODS WERE TRANSFERRED AT LESS THAN FAIR MARKET VALUE. ACCORDINGLY, WE ARE NOT IN A POSITIO N TO UPHOLD HIS FINDING THAT THE PROFITS OF HIMACHAL PRADESH U NIT WERE OVER- STATED BY AN AMOUNT OF RS. 7,27,311/-. CONSEQUE NTLY, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A ) IN THIS MATTER. THUS, GROUND NO. 2 IS DISMISSED. 8. WHEN A PLEA WAS TAKEN BEFORE CIT(A) THAT ADDITIO N WAS NOT WARRANTED FOR THE REASON THAT IN EARLIER YEAR CIT(A ) HAS DELETED THE ADDITION AND THE SAID ORDER OF CIT(A) HAS BEEN CONFIRMED BY ITAT, THE CIT(A) HAS DISCUSSED THIS PLEA IN PARA 3.3 OF THE IMPUGNED ORD ER AND THE OBSERVATIONS OF LD. CIT(A) ARE REPRODUCED FOR THE SAKE OF CONVEN IENCE: - 3.3. NOW I COME TO THE ARGUMENT THAT THIS ISSUE IS COVERED BY EARLIER APPEAL DECISIONS OF CIT (A) AND ITAT. I HA VE SEEN THE ORDERS OF CIT (A) AND ALSO THE ORDER DTD. 19/10/07 OF ITAT. FIRST OF ALL IT MAY BE MENTIONED THAT A DECISION ON ANY I SSUE IS GIVEN ITA NO.674/DEL/2009 13 ON THE BASIS OF FACTS GATHERED AS A RESULT OF ENQUIRIES/INVESTIGATION. A PERSON MAY HAVE IN FACT COMMITTED SOME CRIME, BUT CONVICTION CAN BE MADE ONLY ON THE BASIS OF EVIDENCE PRODUCED BEFORE THE COURT BY THE PROSECUTI ON. SIMILARLY EVEN IF THE FACTS OF EARLIER YEARS ARE SIMILAR, IT CANNOT BE SAID THAT SINCE ADDITION/DISALLOWANCE MADE IN THOSE YEARS WAS DELETED NO SUCH DISALLOWANCE CAN BE MADE IN SUBSEQUENT YEARS. THIS DELETION OF SOME ADDITION BY HIGHER JUDICIAL AUTHOR ITY MAY RATHER MAKE THE A.O. AWARE OF SHORTCOMINGS IN THE ORDER A ND HE MAY CHOOSE TO CORRECT OR OVERCOME SUCH SHORTCOMINGS IN FUTURE PROCEEDINGS. IN FACT THIS HAS BEEN CLEARLY MENTION ED BY THE ITAT IN FIRST LINE OF PARA 3.3 ON PAGE 19. TE ISSUE WAS REGARDING COST OF TRANSFERRED GOODS. THE ITT MENTIONED THAT A.O. HAS NOT MADE OUT PROPER CASE IN RESPECT OF REDUCTION OF KALA AMB (HIMACHAL PRADESH UNIT) PROFIT. THIS HAS BEEN REPEATED IN LA ST SENTENCE ON PAGE 19 WHICH CONTINUED ON NEXT PAGE. AS ABOUT THE ISSUE OF ALLOCATION OF EXPENSES OF RS.12,06,853 AGAIN THE IS SUE WAS EXAMINED ON SPECIFIC FACTS IN THAT YEAR. THE DETAI LS OF EXPENSES (ON PAGE 22 OF THE ORDER) WERE SEPARATELY DISCUSSE D BY THE ITAT AND FINALLY PART OF THE EXPENSES ALLOCATED WAS UPHE LD ON PAGE 26. THERE IS NO DISPUTE WITH THE LEGAL FINDING. H OWEVER THE ISSUE NEEDS EXAMINATION OF FACTS AND IF MORE AND PROPER F ACTS ARE GATHERED IN A DIFFERENT YEAR, OBVIOUSLY A DIFFEREN T WORKING OF ALLOCATION OF EXPENSES CAN BE JUSTIFIED. IT MAY B E MENTIONED THAT THE ISSUE UNDER CONSIDERATION IS NOT A PURE LE GAL ISSUE WHICH, ONCE DECIDED BY A HIGHER JUDICIAL FORUM CANNOT BE D EVIATED BY LOWER AUTHORITIES. THIS IS AN ISSUE OF FACTS AND A CTUALLY ONLY OF MATHEMATICAL WORKING OF CORRECT WORKING OF KALA AMB UNIT. THE RELEVANT FACTS I.E., QUANTUM & RATIOS OF EXPENSES, THEIR SPECIFIC PURPOSE ETC. ARE DIFFERENT INDIFFERENT YEARS & HENC E ORDER OF ITAT IN EARLIER YEAR I NOT TO BE BLINDLY FOLLOWED. THE LEGAL PROVISIONS HAVE TO BE APPLIED TO THE FACTS GATHERED IN PARTICU LAR YEAR AS A RESULT OF ENQUIRY. IT IS ALSO JUDICIALLY SETTLED THAT EVERY ASSESSMENT YEAR IS A SEPARATE PROCEEDING. THEREFOR E FACTUAL DECISION IN ONE A.Y. IS NOT BINDING IN ANOTHER A.Y . 9. IT IS IN THIS MANNER LD. CIT(A) HAS DEVIATED FRO M EARLIER YEARS. HE HAS DISCUSSED THE TURNOVER OF BOTH THE UNITS FOR VARIOU S YEARS AND RATIO OF PROFIT OF BOTH THE UNITS AND FINALLY CONCLUDED THAT THE PR OFIT OF KALA AMB UNIT WAS ABNORMALLY HIGH AS COMPARED TO FARIDABD UNIT WITH A N INTENTION TO CLAIM HIGHER DEDUCTION. IT WAS EXPLAINED BY THE ASSESSEE THAT THE REASON FOR ITA NO.674/DEL/2009 14 MORE PROFIT IN KALA AMB PROFIT ARE FIRSTLY; DEPRECI ATION OF FARIDABD UNIT IS MORE BECAUSE OF LARGE NUMBER OF HEAVY MACHINERIES A ND DEPRECIATION IN RESPECT OF KALA AMB UNIT IS LESS. SECONDLY; THE RA TE OF ELECTRICITY IN FARIDABAD IS MORE AS COMPARED TO RATE OF ELECTRICIT Y IN KALA AMB. IT WAS SUBMITTED THAT THE RATE OF PER UNIT IN FARIDABAD IS 4.09 AS AGAINST PER UNIT RATE OF RS. 2.40 PER UNIT IN KALA AMB. THIRDLY; TH E BAD DEBTS CLAIMED IN FARIDABAD UNITS WERE TO THE TUNE OF RS. 18,02,726/- WHEREAS SIMILAR AMOUNT OF BAD DEBT CLAIM IN KALA AMB UNIT WAS 1,26,628/- O NLY. FOURTHLY; IN FARIDABAD UNIT THERE IS LOSS IN SALE OF FIXED ASSET S AMOUNTING TO RS. 5,85,502/-. FIFTHLY; ADDITIONAL DEMAND FOR SALES T AX FOR PAST YEARS AMOUNTING TO RS. 10,53,616/- WAS RAISED FOR FARIDABAD UNIT. SIXTHLY; REPAIR AND MAINTENANCE CHARGES OF FARIDABAD UNITS WERE HIGHER AT RS. 25,25,795/- AS COMPARED TO KALA AMB UNIT WHICH ARE 6,63,224/-. RE FERRING TO THESE REASONS OF LOW PROFIT IN FARIDABAD UNIT IT WAS SUBM ITTED THAT VARIOUS LETTERS WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS IN WHICH THE DETAILED EXPLANATIONS WERE GIVEN REGARDING LOWER NE T PROFIT IN FARIDABAD UNIT AND THE SAME MAY ALSO BE REFERRED. IT WAS SUBMITTE D THAT DULY AUDITED SEPARATE BOOKS OF ACCOUNT FOR BOTH THE UNITS ARE MA INTAINED WHICH WERE PRODUCED BEFORE AO AND WERE ALSO ACCEPTED BY HIM. METHOD OF VALUATION OF STOCK WAS ALSO EXPLAINED TO THE AO WHO HAS RIGHT LY UNDERSTOOD AND ACCEPTED THE SAME AND THE MINOR ADJUSTMENT HAS BEEN MADE IN RESPECT OF SOME EXPENSES TO WORK OUT THE PERCENTAGE OF OVERHEA D TO BE ADDED TO THE COST OF MATERIAL. THIS EXPLANATION OF THE ASSESSEE IS RECORDED IN PARA 4.7 OF THE IMPUGNED ORDER OF CIT(A). HOWEVER, LD. CIT(A) DID NOT GIVE MUCH ITA NO.674/DEL/2009 15 WEIGHT TO SUCH SUBMISSION OF THE ASSESSEE AND HE OB SERVED THAT THERE WERE CERTAIN OTHER EXPENSES JUST LIKE ANNUAL MAINTENANCE CHARGES, RESEARCH AND DEVELOPMENT FACILITIES ETC. WHICH WERE NOT TAKEN IN TO ACCOUNT WHILE COMPUTING THE INCOME AND THESE EXPENSES WERE DEBITE D ONLY TO FARIDABAD UNIT. LD. CIT(A) HAS ARRIVED AT A CONCLUSION THAT EXCEPTIONALLY HIGHER PROFIT WAS SHOWN BY THE ASSESSEE IN KALA AMB UNIT JUST TO CLAIM HIGHER DEDUCTION. HE OBSERVED THAT EXACT CALCULATION COULD BE MADE ON LY IF VERIFICATION OF ALL VOUCHERS IS CARRIED OUT MAY BE IN SOME SPECIAL AUDI T AND IN ABSENCE OF AVAILABILITY OF SUCH DETAILS I.E. EXPENSES ON CERTA IN ACTIVITIES LIKE FOR AMC, R&D ETC. ARE NOT SEPARATELY IDENTIFIED, AN ESTIMATE IS REQUIRED TO BE MADE. IT IS OBSERVED BY HIM THAT THE EFFECT OF MAKING EST IMATE OF EXPENSES UNDER ALL HEADS WHICH ARE TO BE ALLOCATED TO KALA AMB UNI T WILL HAVE THE ULTIMATE EFFECT OF REDUCING THE PROFIT OF THAT UNIT. IT IS IN THIS MANNER LD. CIT(A) HAS PROCEEDED TO ESTIMATE THE PROFIT AND IT IS OBSERVED BY HIM THAT THE NET PROFIT WHICH HAS BEEN SHOWN BY THE ASSESSEE IN RESPECT OF KALA AMB UNIT @ 15.97% AS AGAINST NET PROFIT RATE OF 0.78% OF FARID ABD, THE NET PROFIT RATE OF KALA AMB UNIT IS HIGHER BY 5%. IT IS OBSERVED BY H IM THAT COMBINED NET PROFIT RATE OF BOTH THE UNITS COMES TO 7.93%. THUS , HE OBSERVED THAT IT WILL BE QUITE REASONABLE IF THE NET PROFIT RATE OF KALA AMB UNIT IS TAKEN AT 10% WHICH IS HIGHER THAN THE NET PROFIT RATE OF THE COM PANY. HE OBSERVED THAT TURNOVER OF THE KALA AMB UNIT INCLUDING STOCK TRANS FER TO FARIDABAD IS RS. 15,90,24,747/-, 10% OF THE SAME WILL BE AN AMOUNT O F RS. 1,59,02,474/-. AS THE NET PROFIT OF KALA AMB UNIT FOR WORKING OUT AMO UNT OF DEDUCTION U/S 80IC WAS SHOWN AT RS. 2,54,02,821/-, ADDITION WAS SUSTAI NED TO THE EXTENT OF ITA NO.674/DEL/2009 16 95,00,347/- (BEING DIFFERENCE OF TWO AMOUNTS 2,54,0 2,821/- BEING PROFIT COMPUTED BY THE ASSESSEE ELIGIBLE FOR DEDUCTION U/S 80IC NET PROFIT ESTIMATED BY LD. CIT(A) IN RESPECT OF KALA AMB UNIT AT RS. 1,59,02,474/-). THIS ADDITION HAS BEEN MADE ON ACCOUNT OF TRANSFER OF EXPENSES FROM FARIDABAD UNIT TO KALA AMB UNIT. LD. CIT(A) FURTHE R OBSERVED THAT THIS ADDITION IS MADE INSTEAD OF SUSTAINED ADDITION OF R S. 9,51,012/- AS OUT OF TOTAL ADDITION MADE BY THE AO AT A SUM OF RS. 88,33 ,254/-, ADDITION OF RS. 78,82,242/- MADE ON ACCOUNT OF EXCISE DUTY HAS ALRE ADY BEEN DELETED BY HIM. IT IS FURTHER OBSERVED THAT THE REDUCED PROFI T OF KALA AMB UNIT AFTER MAKING SUCH ADDITION IS STILL 58% OF THE TOTAL PROF IT OF THE COMPANY. IT IS IN THIS MANNER LD. CIT(A) HAS ENHANCED THE ADDITION MA DE BY THE AO. 10. FROM THE ABOVE ORDER OF CIT(A) WE OBSERVE THAT HE HAS ENHANCED THE INCOME ONLY ON THE BASIS OF ASSUMPTIONS AND PRE SUMPTIONS. HE HAS NOT PROPERLY APPRECIATED THE SUBMISSIONS OF THE ASSESSE E VIDE WHICH IT WAS EXPLAINED THAT HOW THERE WAS DISPARITY BETWEEN THE NET PROFIT SHOWN IN THE FARIDABAD UNIT AND KALA AMB UNIT. THE REASONS WERE EXPLAINED, WHICH HAVE NOT BEEN PROPERTY APPRECIATED. LD. CIT(A) HAS PROCEEDED TO MAKE AN ESTIMATE SIMPLY ON THE BASIS THAT WITH RESPECT TO E XPENSES LIKE AMC AND R&D ALLOCATION WAS NOT MADE. IN OUR OPINION THAT D OES NOT JUSTIFY THE ENHANCEMENT MADE BY LD. CIT(A). HE HAS SIMPLY IGNO RED THE DECISION OF CIT(A) AND ITAT IN EARLIER YEAR IN WHICH THE COMPUT ATION MADE BY THE ASSESSEE WAS ACCEPTED. THE COMPUTATION OF THE ASSE SSEE FOR THE YEAR UNDER CONSIDERATION IS ALSO BASED ON SAME PRINCIPLE . IT HAS BEEN STATED BY LD. AR THAT FOR ASSESSMENT YEARS 2000-01 & 2001-02 VIDE WHICH THE ITA NO.674/DEL/2009 17 NECESSARY RELIEF WAS GIVEN BY THE ITAT VIDE ITS ORD ER DATED 19 TH OCTOBER, 2007, THE DEPARTMENT HAS NOT FILED ANY APPEAL AGAIN ST THIS ISSUE AND THUS, THE ORDER OF THE TRIBUNAL HAS BECOME FINAL. THIS H AS SO BEEN SPECIFICALLY STATED IN GROUND NO. 5. WE DO NOT APPRECIATE THE M ANNER IN WHICH LD. CIT(A) HAS DEVIATED FROM THE EARLIER FINDINGS GIVEN BY APPELLATE AUTHORITY IN ASSESSEES OWN CASE. THE ISSUE IS SAME. DEVIATING FROM EARLIER YEARS IS NOT IN THE INTEREST OF JUSTICE AS PER WELL-ESTABLIS HED PRINCIPLES OF LAW. DECISION OF HIGHER APPELLATE AUTHORITY IS BINDING O N CIT(A) AS WELL. LD. CIT(A) HAS NOT MADE OUT ANY CASE TO JUSTIFY HIMSELF FOR DEVIATING WITH THE EARLIER DECISION IN THE CASE OF ASSESSEE BY HIS PRE DECESSOR AS WELL AS BY THIS TRIBUNAL. WE HAVE ALREADY REPRODUCED THE RELE VANT PORTION OF ORDER OF ITAT VIDE WHICH SUCH ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE. WE HAVE NO REASON TO DIFFER WITH THE SUCH FINDINGS OF ITAT IN ASSESSEES OWN CASE. THEREFORE, THERE IS NO JUSTIFICATION IN THE ORDER O F CIT(A) VIDE WHICH THE IMPUGNED ENHANCEMENT HAS BEEN MADE. THE SAME IS DE LETED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 12. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.08 .2009. [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED,07.08.2009. DK ITA NO.674/DEL/2009 18 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES