M/s. Jakson Enterprises, New Delhi V. ACIT, New Delhi

ITA 6791/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6750 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Validity of assessment; Documents seized; Unabsorbed depreciation
• Section: 143(3); 153A; 14A; 115JB; 80IB; 263; 132; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D: NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AN D SHRI L.P. SAHU, ACCOUNTANT MEMBER , ITA NOS. 6791 TO 6793/DEL/2013 [A.YS : 2008-09 TO 2010-11] JAKSON ENTERPRISES VS. ACIT, 101-A, RATAN JYOTI BUILDING, CENTRAL CIRCLE-25, 18, RAJNDRA PLACE, NEW DELHI. NEW DELHI PAN: AAEF J2136J [APPELLANT] [RESPON DENT] DATE OF HEARING : 14.06.2016 DATE OF PRONOUNCEMENT : 29.07.2016 ASSESSEE BY:- SHRI VED JAIN, ADV SHRI PRANJAL SRIVASTAVA, ADV SHRI ASHISH CHADHA, CA . REVENUE BY:- SHRI SANJAY KUMAR , CIT- DR. ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE THREE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, NEW DEL HI, DATED 17/09/2013 PASSED IN FIRST APPEAL NO. 459/2011-12 F OR AYS 2008-09 TO 2010-11. SINCE ALL THE THREE APPEALS PE RTAIN TO SAME 2 ITA NOS. 6791 TO 6793/DEL/2013 2 ASSESSEE AND WERE HEARD TOGETHER, WE ARE DISPOSING THEM OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ALL THE THREE APPEALS: A.Y. 2008-09 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] UNDER SECTION 153A/143(3) IS BAD BOTH IN T HE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE PROCEEDINGS INI TIATED UNDER SECTION 153A ARE BAD IN LAW IN THE ABSENCE OF ANY I NCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BEING FOUND DURI NG THE COURSE OF THE SEARCH. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE AO IN MAKING ADDITION OF RS.15.91,792 /- BEING INCOME FROM SALE OF SCRAP TREATING THE SAME AS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW'IN NOT FO LLOWING THE JUDGMENT OF THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF SADHU FORGINGS LTD. (2011) 336 ITR 444 (DEL) WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. 3 ITA NOS. 6791 TO 6793/DEL/2013 3 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE! THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE DISALLOWANCE OF RS.1.25,000/- UNDER SECTION 14A OF THE ACT READ WITH RULE 8D. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE AO IN IGNORING THE PROVISIONS OF RULE 8D. A.Y. 2009-10 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] UNDER SECTION 153A/143(3) IS BAD BOTH IN T HE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE PROCEEDINGS INI TIATED AND THE ORDER PASSED UNDER SECTION 153A ARE BAD IN LAW IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BEING FOUND DURING THE COURSE OF THE SEARC H. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.5,69,7 42/- BEING INCOME FROM SALE OF SCRAP TREATING THE SAME AS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE ACT. 4 ITA NOS. 6791 TO 6793/DEL/2013 4 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT FO LLOWING THE JUDGMENT OF THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF SADHU FORGINGS LTD. (2011) 336 ITR 444 (DEL) WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. A.Y. 2010-11 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.2,64,0 39/- BEING INCOME FROM SALE OF SCRAP TREATING THE SAME AS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT FO LLOWING THE JUDGMENT OF THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF SADHU FORGINGS LTD. (2011) 336 ITR 444 (DEL) WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. GROUND NOS. 1 & 2 A.Y. 2008-09 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE RELEVANT MATERIAL ON RECORD, INTER ALIA THE ASSESSM ENT ORDER, 5 ITA NOS. 6791 TO 6793/DEL/2013 5 IMPUGNED ORDER OF THE CIT(A) AND ORDER OF THE TRIBU NAL D BENCH, NEW DELHI IN ASSESSEES OWN CASE IN ITA NO. 383/DEL/2013 FOR AY 2006-07 DATED 27.05.2015, AS RELIED UPON BY THE ASSESSEE, TO SUBMIT THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE. THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORI TIES BELOW AND SUBMITTED THAT THE PROCEEDINGS INITIATED U/S 153A R .W.S 143(3) OF THE ACT ARE LEGAL AND VALID. HOWEVER, HE COULD NOT CONTROVERT THE FACT THAT IN THE SIMILAR SET OF FACTS AND CIRCU MSTANCES, THE TRIBUNAL ORDER DATED 27.5.2015 [SUPRA] THE PROCEEDI NGS U/S 153A/143(3) OF THE ACT HAS BEEN DECLARED AS NULL AN D VOID. THE RELEVANT OPERATIVE PARAS OF THE TRIBUNAL ORDER [SUP RA] READ AS FOLLOWS: 3. SINCE THE ISSUE RAISED IN GROUND NOS. 2 TO 6 IS LEGAL IN NATURE AND GOING TO THE ROOT OF THE MATTER, WE PREFERRED T O ADJUDICATE IT FIRST. 4. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES ON THE ISSUE, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON IN THIS REGARD. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE BELONGS TO JAKSON GROUP OF COMPANIES HEADED BY SHRI S. K. GUPTA AND I S IN THE AREA OF ASSEMBLY OF DG SETS. THE SEARCH OPERATION W AS CONDUCTED ON 10.02.2010 IN THE GROUP. NOTICE U/S 15 3A WAS ISSUED AND IN RESPONSE THE ASSESSEE FILED RETURN OF RS.25,72,304/- AND ASSESSMENT WAS FRAMED U/S 153A R .W. S.143(3) OF THE ACT. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS THE ASSESSEE QUESTIONED THE VALIDITY OF INITIATION OF PROCEEDINGS U/S 153 A OF THE ACT ON THE BASIS THAT NO INCRIMINATING MATERIAL 6 ITA NOS. 6791 TO 6793/DEL/2013 6 WAS FOUND DURING THE COURSE OF SEARCH AND THE ASSES SMENT U/S 143(3) WAS ALREADY FRAMED BEFORE THE DATE OF SEARCH . THE AO DID NOT AGREE WITH THE ASSESSEE AND REJECTED THE OBJECT ION WITH THIS FINDING THAT THERE WAS NO REQUIREMENT THAT AN ASSES SMENT MADE U/S 153 A OF THE ACT SHOULD BASED ON ANY MATERIAL SEIZED IN THE COURSE OF SEARCH. THE AO ALSO MADE DISALLOWANCE OF RS.12,32,226/- ON ACCOUNT OF SCRAP SALE FOR THE PUR POSES OF DEDUCTION U/S 80IB OF THE ACT AND DISALLOWANCE OF R S.61,412/- U/S 14 A OF THE ACT IN THE ASSESSMENT FRAMED. 6. THE ASSESSEE QUESTIONED THE VALIDITY OF ABOVE AS SESSMENT BOTH ON INITIAON OF PROCEEDINGS U/S 153 A OF THE ACT IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND IN ABSENCE OF PENDENCY OF THE ASSESSMENT ON THE DATE O F SEARCH AS WELL AS THE DISALLOWANCES MADE, BUT COULD NOT SUCCE ED. 7. IN SUPPORT OF LEGAL ISSUE RAISED IN GROUND NOS. 2 TO 6, THE LD. AR SUBMITTED THAT IN THE PRESENT CASE ASSESSMENT WA S COMPLETED U/S 143(3) OF THE ACT, WHERE THE ISSUE OF DEDUCTION U/S 80IB WAS ELABORATELY INVESTIGATED AND DISCUSSED. HE CONTENDE D THAT THE PROCEEDINGS INITIATED U/S 153A ARE BAD IN LAW AS NO INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BEING FOUND DURI NG THE COURSE OF SEARCH. IN SUPPORT HE PLACED RELIANCE ON THE FOL LOWING DECISIONS: I) AL-CARGO GLOBAL LOGISTIC LTD. VS. ACIT - 137 ITD 287 (MUM.)- (S.B); II) DCIT VS. DEVI DAYAL PETRO-CHEMICAL PVT. LTD. - ITA NOS. 5430 TO 5436/DEL/2013, C.O. NOS. 83 TO 88/DEL/14 DATED 1 0.9.2014; 6 III) SSP AVIATION LTD. VS. DCIT - 346 ITR 177; IV) KUSUM GUPTA VS. DCIT - ITA NO. 4873/DEL/2009 DT . 28.3.2013; V) ACIT VS. ASHA KATARIA - ITA NO. 3105/DEL/2011 DA TED 20.5.2013; VI) SANJAY AGGARWAL VS. DCIT - ITA NO . 3184/DEL/2013 DT. 16.2.2014; VII) JAI STEEL INDIA VS. ACIT - 259 CTR 281 (RAJ.); & VIII) CIT VS. ANIL KUMAR BHATIA - 352 ITR 493 (DEL.). 7 ITA NOS. 6791 TO 6793/DEL/2013 7 IX) JAKSON ENGINEERING LTD. VS. ACIT & ORS. ITA NOS . 349/DEL/2013 (2005-06) TO 2007-08) & ORS. ORDER DAT ED 11.04.2014. X) RAJ KUMAR CHAWLA VS. ACIT ITA NOS. 1682/DEL/2013 AND ORS. (A.YS. 2004-05 & ORS) ORDER DATED 17.02.2015. 8. LEARNED CIT DR ON THE OTHER HAND SUBMITTED THAT THERE IS NO NEED OF FINDING OF INCRIMINATING MATERIAL DURING TH E COURSE OF SEARCH TO JUSTIFY THE VALIDITY OF ASSESSMENT FRAMED UNDER SEC. 153A READ WITH SEC. 143(3) OF THE INCOME-TAX ACT , 1961 AND THE ONLY REQUIREMENT IS THAT SEARCH HAS BEEN CONDUCTED AT THE PREMISES OF THE ASSESSEE UNDER SEC. 132 OF THE ACT. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. FILA TEX INDIA LTD. - ITA NO. 269/2014 D ATED 14.7.2014 (DEL.); II) CANARA HOUSING DEVELOPMENT CO. VS. DCIT - ITA N O. 38/2014 DATED 25.7.2014 (KARNATAKA). III) CIT VS. ANIL KUMAR BHATIA 24 TAXMAN.COM 98 (DEL). IV) PROMAIN LTD. VS. DCIT 95 ITD 489 (DEL) (SB). V) M.B. LAL 279 ITR 298 (DEL) VI) DR. A.K. BANSAL, 355 ITR 513 (ALL). VII) ITO VS. VARIA PRATIK ENGINEERING 120 TTJ 1 (AH D) VIII) CIT VS. RAJ KUMAR ARORA, ITA NO . 56/2011 (ALL. H.C.) IX) DCIT VS. APOORVA EXTRUSION PVT. LTD. & ORS. ITA NOS. 3308/DEL/2010 (A.Y. 2002-03) & ORS. ORDER DATED 09. 10.2014. 9. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THE LEARNED CIT(APPEALS) HAS REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE ISSUE OF VALIDITY OF ASSESSM ENT FRAMED UNDER SEC. 153A READ WITH SEC. 143(3) OF THE INCOME-TAX ACT , 1961 IN ABSENCE OF INCRIMINATING MATERIAL FOUND DUR ING THE COURSE OF SEARCH AND IN THE ABSENCE OF THE PENDENCY OF THE ASSESSMENT AS ON THE DATE OF SEARCH ON THE BASIS TH AT FOR FRAMING ASSESSMENT UNDER SEC. 153A, NO SUCH REQUIREMENT IS THERE AND THE ONLY REQUIREMENT IS THAT SEARCH HAS BEEN CONDUC TED UNDER SEC. 132 OF THE ACT. 8 ITA NOS. 6791 TO 6793/DEL/2013 8 10. HAVING GONE THROUGH THE DECISIONS CITED BY THE LEARNED AR INCLUDING THE DECISION OF SPECIAL BENCH OF THE ITAT IN THE CASE OF AL CARGO GLOBAL LOGESTIC LTD. VS. CIT (SUPRA), WE F IND THAT THE RATIO LAID DOWN THEREIN, SUPPORTS THE CONTENTIONS O F THE ASSESSEE ON THE ISSUE. IT READS AS UNDER: '58. THUS, QUESTION NO. 1 BEFORE US IS ANSWERED AS UNDER :- (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEAR SEPARATELY : (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTE XT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUME NTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL 8 ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN T HE COURSE OF SEARCH.' 11. THE ISSUE RAISED BEFORE THE SPECIAL BENCH WAS A S TO WHETHER SCOPE OF ASSESSMENT U/S 153A ENCOMPASSES ADDITIONS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH? 12. IN THE CASE OF KUSUM GUPTA (SUPRA) ALSO THE RET URN WAS PROCESSED U/S 143(1) OF THE ACT AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) HAD EXPIRED ON THE DATE OF SEARCH AND IT WAS HELD THAT NO ASSESSMENT WAS PENDING IN THAT CASE AN D THUS THERE WAS NO QUESTION OF ABATEMENT OF ASSESSMENT. THEREFO RE, THE ADDITION IN THE ASSESSMENT U/S 153A WOULD BE MADE O NLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SE ARCH. THE DELHI BENCH OF THE TRIBUNAL IN ITS RECENT DECISION ON THE ISSUE IN THE CASE OF SHRI KABUL CHAWLA (SUPRA) AND OTHERS VI DE ORDER DATED 23.5.2014 HAS EXPRESSED THE SIMILAR VIEW. IT HAS ALSO DISCUSSED THE DECISION OF HON'BLE JURISDICTIONAL DE LHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA (2012) 211 TAXMANN 453 (DEL.), WHILE DECIDING THE ISSUE. THE RELEVANT PARA NO. 8 & 9 IN THIS REGARD IS BEING REPRODUCED AS UNDER :- 9 ITA NOS. 6791 TO 6793/DEL/2013 9 '8. WE ARE UNABLE TO ACCEPT THE CONTENTION ADVANCED ON BEHALF OF THE REVENUE FOR THE REASON THAT IF BOTH THE PEND ING AND COMPLETED ASSESSMENT WERE TO BE TAKEN ON SAME PEDES TAL, THEN THERE WAS NO NEED TO ENSHRINE SECOND PROVISO TO SEC . 153A( 1) PROVIDING THAT THE PENDING ASSESSMENTS WITHIN THE P ERIOD OF SIX ASSESSMENT YEARS SHALL ABATE. THE HON'BLE DELHI HIG H COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA) DEALT WITH A SITUATION IN WHICH SOME INCRIMINATING MATERIAL WAS FOUND IN RESP ECT OF A NON-PENDING ASSESSMENT. IT WAS IN THAT BACKGROUND T HAT THE HON'BLE HIGH COURT HELD THAT SEC. 153A APPLIES IF I NCRIMINATING MATERIAL IS FOUND EVEN IF ASSESSMENTS ARE COMPLETED . THE QUESTION AS TO WHETHER ANY ADDITION CAN BE MADE IN RESPECT OF COMPLETED ASSESSMENTS WHEN NO INCRIMINATING MATERIA L WAS FOUND, WAS APPARENTLY LEFT OPEN. HOWEVER, WE FIND T HAT THERE ARE SUFFICIENT INDIRECT HINTS GIVEN BY THE HON 'BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA) ABOU T NOT MAKING OF ANY ADDITION IN RESPECT OF AN ASSESSMENT YEAR FO R WHICH THE ASSESSMENT IS ALREADY COMPLETED UNLESS SOME INCRIMI NATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH. THIS CAN BE SEEN FROM THE FOLLOWING OBSERVATIONS OF THE HON'BLE HIGH COURT :- '20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED I N RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UN DER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INC OME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED D URING THE SEARCH.' 9. THE ABOVE EXTRACTED OBSERVATIONS OF THE HON'BLE HIGH COURT, WHICH ARE THOUGH OBITER DICTA, MAKE THE POINT CLEAR THAT WHERE AN ASSESSMENT ORDER HAS ALREADY BEEN PASSED FOR A Y EAR(S) WITHIN THE RELEVANT SIX ASSESSMENT YEARS, THEN ALSO THE A. O IS DUTY BOUND TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME BUT BY 'TAKING NOTE OF THE UNDISCLOSED INCOME IF AN Y, UNEARTHED DURING THE SEARCH'. THE EXPRESSION 'UNEARTHED DURIN G THE SEARCH' IS QUITE SIGNIFICANT TO DENOTE THAT IN RESPECT OF C OMPLETED OR NON-PENDING ASSESSMENTS, THE ASSESSING OFFICER IS A LBEIT DUTY BOUND TO ASSESS OR REASSESS THE TOTAL INCOME BUT TH ERE IS A CAP ON THE SCOPE OF ADDITIONS IN SUCH ASSESSMENT, BEING THE ITEMS OF 10 ITA NOS. 6791 TO 6793/DEL/2013 10 INCOME 'UNEARTHED DURING THE SEARCH'. IN OTHER WORD S, THE DETERMINATION OF 'TOTAL INCOME' IN RESPECT OF THE A SSESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE ALREADY COMPLET ED ON THE DATE OF SEARCH, SHALL NOT BE INFLUENCED BY THE ITEM S OF INCOME OTHER THAN THOSE BASED ON THE MATERIAL UNEARTHED DU RING THE COURSE OF SEARCH. THERE IS NOT AND CANNOT BE ANY QU ARREL OVER THE PROPOSITION THAT THE ASSESSING OFFICER HAS NO O PTION BUT TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN RESPE CT OF THE RELEVANT SIX ASSESSMENT YEARS. HOWEVER, THE SCOPE O F SUCH DETERMINATION OF TOTAL INCOME IS DIFFERENT IN RESPE CT OF THE YEARS FOR WHICH THE ASSESSMENTS ARE PENDING VIS-A-V IS THE YEARS FOR WHICH ASSESSMENTS ARE NON-PENDING. IN RESPECT T O THE ASSESSMENT YEARS FOR WHICH THE ORIGINAL ASSESSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH, THE TOTAL INC OME SHALL BE DETERMINED BY RESTRICTING ADDITIONS ONLY TO THOSE W HICH FLOW FROM INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SU CH COMPLETED ASSESSMENT, THEN THE TOTAL INCOME IN THE PROCEEDING S U/S 153A SHALL BE COMPUTED BY CONSIDERING THE ORIGINALLY DET ERMINED INCOME. IF SOME INCRIMINATING MATERIAL IS FOUND IN RESPECT OF 11 SUCH ASSESSMENT YEARS FOR WHICH THE ASSESSMENT IS N OT PENDING, THEN THE 'TOTAL INCOME' WOULD BE DETERMINED BY CONS IDERING THE ORIGINALLY DETERMINED INCOME PLUS INCOME EMANATING FROM THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. IN THE OTHER SCENARIO OF THE ASSESSMENTS PENDING ON THE DA TE OF SEARCH WHICH WOULD ABATE IN TERMS OF SECOND PROVISO TO SEC . 153A( 1), THE TOTAL INCOME SHALL BE COMPUTED AFRESH UNINFLUEN CED BY THE FACT WHETHER OR NOT THERE IS ANY INCRIMINATING MATE RIAL. IN FACT, THIS IS THE POSITION WHICH FOLLOWS WHEN WE READ THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN ANIL KUMAR BHATIA ( SUPRA) IN JUXTAPOSITION TO THE SPECIAL BENCH ORDER IN THE CAS E OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). THE OTHER JUDGMENT R ELIED BY THE LD. DR IN THE CASE OF MADUGULU VENU (SUPRA) ALSO TA LKS ABOUT THE NEED FOR MAKING FRESH ASSESSMENT IN RESPECT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE NOT PENDING ON THE DATE OF SEARCH BUT DOES NOT SET OUT THE SCOPE OF SUCH ASSES SMENT, WHICH IS THE ISSUE BEFORE US.' 13. WE, THUS, FIND THAT THE DECISION OF THE HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF ANIL KR. BHATIA (SU PRA) SUPPORTS THE CASE OF THE ASSESSEE THAT IN ABSENCE OF INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH AN ADDIT ION U/S 153 A 11 ITA NOS. 6791 TO 6793/DEL/2013 11 OF THE ACT CANNOT BE MADE IN THE ASSESSMENT FRAMED THEREUNDER . THE DECISIONS RELIED UPON BY THE LD. CIT, DR IN THE CASES OF CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT (SUPRA) OF HON'BLE KARNATAKA HIGH COURT AND FILATEX INDIA P. LTD. VS. CIT (SUPRA) OF HON'BLE DELHI HIGH COURT HAVING DISTING UISHABLE FACTS ARE NOT APPLICABLE IN THE PRESENT CASE. IN TH E CASE OF FILATEX INDIA PVT. 12 LTD. (SUPRA), THE QUESTION RA ISED ON THE APPLICABILITY OF PROVISIONS U/S 153A WAS THAT 'WHET HER THE TRIBUNAL ERRED ON FACTS AND IN LAW IN NOT HOLDING T HAT RE- COMPUTATION OF BOOK PROFIT, DE-HORS ANY MATERIAL FO UND DURING THE COURSE OF SEARCH IN THE ORDER PASSED U/S 153 A OF THE ACT WAS WITHOUT JURISDICTION, BEING OUTSIDE THE SCOPE OF PR OCEEDINGS UNDER THAT SECTION?' THE OTHER QUESTION WAS, 'WHETH ER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL E RRED IN LAW IN UPHOLDING THE ACTION OF THE AO IN DENYING SET OFF, OF BOOK LOSS UNABSORBED DEPRECIATION RELATABLE TO EARLIER ASSESS MENT YEAR IN TERMS OF CLAUSE (III) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT?' THE RELEVANT FACTS OF THAT CASE NOTED IN PARA NO. 2 OF THE DECISION ARE THAT THE AO IN THE PROCEEDINGS U/S 153 A OF THE ACT , HAD MADE SEVERAL ADDITIONS, RELYING UPON THE INCRIM INATING MATERIAL FOUND IN THE COURSE OF SEARCH, WHICH WAS C ONDUCTED ON 18.1.2006 AND SUBSEQUENT DATES. IN THIS PARAGRAPH O F THE DECISION IT HAS BEEN PERUSED FROM THE IMPUGNED ORDE R OF THE TRIBUNAL THAT INCRIMINATING MATERIAL INCLUDING STAT EMENT OF SANJAY AGARWAL, GM (MARKETING) HAVE RESULTED IN ADD ITIONS, WHICH HAVE BEEN UPHELD. THE HON'BLE HIGH COURT HAS BEEN PLEASED TO NOTE IN THIS PARAGRAPH AS 'IT IS NOT THE CASE OF THE APPELLANT - ASSESSEE THAT INITIATION OF PROCEEDINGS U/S 153A WAS BAD OR UNWARRANTED IN LAW AS NO INCRIMINATING MATER IAL WAS FOUND DURING THE SEARCH. THE CONTENTION RAISED BY T HE APPELLANT - ASSESSEE IS THAT THE ADDITION, WHICH IS THE SUBJE CT MATTER OF QUESTIONS NO. (II) AND (III), WAS/IS NOT JUSTIFIED IN THE ASSESSMENT ORDER U/S 153, AS NO INCRIMINATING MATERIAL WAS FOU ND CONCERNING THE ADDITION U/S 115JB OF THE ACT.' THE HON'BLE HIG H COURT HAS REJECTED THIS CONTENTION OF THE ASSESSEE WITH THIS FINDING THAT U/S 153 A OF THE ACT , THE ADDITIONS NEED NOT TO BE RESTRICTED OR LIMITED TO THE INCRIMINATING MATERIAL, WHICH WAS FO UND DURING THE COURSE OF SEARCH. THUS, IT IS CLEAR FROM THE FA CTS OF THIS CASE BEFORE THE HON'BLE HIGH COURT THAT SEVERAL ADDITION S RELYING UPON THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH WERE MADE BY THE AO IN THE ASSESSMENT PROCEEDINGS U /S 153 A OF THE ACT AND ADDITION U/S 115JB WAS MADE BY THE AO IN ABSEN CE 12 ITA NOS. 6791 TO 6793/DEL/2013 12 OF INCRIMINATING MATERIAL CONCERNING THIS ADDITION. THIS ADDITION WAS QUESTIONED BY THE ASSESSEE ON THE BASIS THAT TH ERE WAS NO INCRIMINATING MATERIAL FOUND CONCERNING THE ADDITIO N MADE IN THE ASSESSMENT U/S 153 A OF THE ACT , WHICH HAS BEEN REJECTED BY THE HON'BLE HIGH COURT WITH THE ABOVE FINDING. IT W AS HELD BY THE HON'BLE HIGH COURT THAT THERE CANNOT BE MULTIPLE AS SESSMENTS, ONCE SEC. 153 A OF THE ACT IS APPLICABLE. SECTION 153A(1) POSTULATES ONE ASSESSMENT; PUTTING THE TOTAL INCOM E OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS C ONDUCTED OR REQUISITION WAS MADE. 14. IN PARA NO. 3 OF THE JUDGMENT THE HON'BLE DELHI HIGH COURT WHILE DISCUSSING THE CITED DECISIONS IN THE CASES CIT VS. CHETAN DAS (2012), 254 CTR (DEL) 292 AND CIT VS. ANIL KR. BHATIA (2012), 2010-11 TAXMAN 453 (DEL) CITED BY THE LD. AR OF THE ASSESSEE APPELLANT, HAS NOTED CERTAIN OBSERVATIONS MADE AND FINDINGS GIVEN BY THE HON'BLE COURT THEREIN. THEREAFTER IN P ARA NO. 4 OF THE JUDGMENT, THE HON'BLE HIGH COURT HAS HELD AS UN DER: 'THE FIRST QUESTION, WE NOTICE WAS NOT RAISED BY THE APP ELLANT BEFORE THE AO, CIT(A) AND BEFORE THE TRIBUNAL. THE APPELLA NT CLAIMS THAT THE CONTENTION BEING LEGAL CAN BE RAISED AT AN Y STAGE. WE HAVE EXAMINED SEC. 153 A OF THE ACT AND FIND THAT THE SUBMISSION/CONTENTION HAS NO MERIT'. 15. WHEN WE PERUSE THE FACTS OF THE CASE IN THE CAS E OF FILATAX INDIA LTD. AND THE QUESTION RAISED THEREIN IT COMES OUT THAT IN THAT CASE ADMITTEDLY DURING THE COURSE OF SEARCH IN CRIMINATING MATERIAL INCLUDING STATEMENTS WERE FOUND AND RESULT ED IN ADDITIONS AND THE ADDITION MADE U/S 115JB OF THE AC T WAS NOT BASED UPON ANY INCRIMINATING MATERIAL. THUS, THE QU ESTION RAISED BEFORE THE HON'BLE HIGH COURT WAS AS TO WHETHER THE TRIBUNAL HAS ERRED IN LAW IN NOT UPHOLDING THAT RECOMPUTATIO N OF BOOK PROFIT, DE-HORS ANY MATERIAL FOUND DURING THE COURS E OF SEARCH IN THE ORDER BASED U/S 153 A OF THE ACT WAS WITHOUT JURISDICTION, BEING OUTSIDE THE SCOPE OF PROCEEDINGS UNDER THAT S ECTION. THE HON'BLE HIGH COURT AFTER DISCUSSING THE ISSUE IN DE TAIL HAS BEEN PLEASED TO DECIDE THE QUESTION AGAINST THE ASSESSEE AND HAS UPHELD THE ADDITION MADE U/S 115JB OF THE ACT. THUS , HAVING DISTINGUISHABLE FACTS THIS CITED THE DECISION IN TH E CASE OF FILATAX INDIA LTD. (SUPRA) IS NOT HELPFUL TO THE REVENUE. 13 ITA NOS. 6791 TO 6793/DEL/2013 13 16. SO FAR AS, THE DECISION OF HON'BLE KARNATAKA HI GH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY (SUPRA) RELIED UPON BY THE LD. CIT DR IS CONCERNED, THE ISSUE RAIS ED BEFORE THE HON'BLE HIGH COURT WAS REGARDING VALIDITY OF REVISI ONAL ORDER PASSED U/S 263 OF THE ACT BY THE LD. CIT PARTLY UPH ELD BY THE TRIBUNAL AND DURING THAT COURSE THE HON'BLE HIGH CO URT HAS ALSO BEEN PLEASED TO DISCUSS THE DECISION IN THE CASES O F ANIL KUMAR BHATIA (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. (SUPR A). IT HAS BEEN OBSERVED BY THE HON'BLE HIGH COURT THAT THE CONDITI ON PRECEDENT FOR APPLICATION OF SEC. 153A IS THAT THERE SHOULD B E A SEARCH U/S 132 AND INITIATION OF PROCEEDINGS U/S 153A IS NOT D EPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTH DURING THE SUC H SEARCH. THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (SUPRA) HAS BEEN PLEASED TO HOLD THAT IF ANY BOOKS OF ACCOU NTS OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN P RODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH, SUCH BOOKS OF ACCOUNTS OR OTHER DOCUMENTS H AVE TO BE TAKEN INTO CONSIDERATION WHILE ASSESSING OR RE-ASSE SSING THE TOTAL INCOME UNDER THE PROVISIONS OF SEC. 153 A OF THE ACT . EVEN ANY UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AFTER THE CONCLUSIONS OF THE SEARCH, SAME WOULD ALSO BE T AKEN INTO CONSIDERATION. THE REQUIREMENT OF ASSESSMENT OR RE- ASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEX T OF SECTIONS 132 OR 132 A OF THE ACT , IN MUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF RE-ASSESSMENT OF THE CONCLUDED ASSESSME NT DOES NOT ARISE, WHICH WOULD REQUIRE MORE REITERATION AND IT IS ONLY IN THE CONTEXT OF THE ABATED ASSESSMENT UNDER SECOND PROVI SO WHICH IS REQUIRED TO BE ASSESSED. 17. IN THE CASE OF SSP AVIATION LTD. VS. DCIT (SUPR A) WHERE THE VALIDITY OF ASSESSMENT FRAMED U/S 153C WAS CHALLENG ED IT WAS HELD THAT IF THE AO IS SATISFIED THAT ANY MONEY, BU LLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED IN THE COURSE OF THE SEARCH BEL ONGS TO A PERSON OTHER THAN THE PERSON WHO WAS SEARCHED, THEN SUCH ASSETS OR BOOKS OF ACCOUNTS OR DOCUMENTS SHALL BE HANDED O VER BY HIM TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSO N. ONCE, THAT IS DONE, THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON SHALL PROCEED AGAINST HIM FOR MAKING AN ASSESSMENT OR REA SSESSMENT OF HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SEC. 153A. THE 14 ITA NOS. 6791 TO 6793/DEL/2013 14 PETITIONER THEREIN WAS NOT SEARCHED U/S 132 OF THE ACT, HOWEVER, SOME DOCUMENTS BELONGING TO IT WERE FOUND DURING THE SEARCH CARRIED OUT IN THE PREMISES OF PURI GROUP OF COMPANIES. 18. WE, THUS, FIND THAT THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT AND HON'BLE RAJASTHAN HIGH COURT IN THE ABOVE CITED AND DISCUSSED DECISIONS SUPPORTS THE CASE OF THE AS SESSEE THAT IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE U/S 153 A OF THE ACT WHERE THE ORIGINAL ASSESSMENT WAS ALREADY FRAMED ON THE DATE OF SEARCH. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CAN ARA HOUSING DEVELOPMENT COMPANY (SUPRA) HAS, HOWEVER, BEEN PLEA SED TO EXPRESS DIFFERENT VIEW, HOWEVER, AS PER THE ESTABLI SHED PROPOSITION OF LAW, WE ARE BOUND TO FOLLOW THE DECI SION OF HON'BLE JURISDICTIONAL DELHI HIGH COURT AND SINCE, THE HON'BLE KARNATAKA HIGH COURT AND THE HON'BLE RAJASTHAN HIGH COURT HAVE EXPRESSED DIFFERENT VIEWS ON THE ISSUE, THE VIEW FA VOURABLE TO THE ASSESSEE IS TO BE FOLLOWED. WE, THUS, REITERATE THAT IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE IN A CASE WHERE ORIG INAL ASSESSMENT WAS ALREADY FRAMED ON THE DATE WHEN SEAR CH TOOK PLACE. 19. IN ABSENCE OF REBUTTAL OF THIS MATERIAL FACT BY THE REVENUE IN THE PRESENT CASE BEFORE US THAT NO INCRIMINATING MA TERIAL WAS FOUND DURING THE COURSE OF SEARCH RELATING TO THE A SSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION TO JUSTIFY THE ADDITIONS MADE IN THE YEAR BY THE ASSESSING OFFICER AND ASSES SMENT BASED ON THE ORIGINAL RETURN OF INCOME FILED UNDER SEC. 1 39 OF THE ACT WAS NOT PENDING AS ON THE DATE OF SEARCH, WE FOLLOW ING THE ABOVE CITED DECISIONS BY THE LEARNED AR, DISCUSSED ABOVE, HOLD THAT THE ASSESSMENT FRAMED UNDER SEC. 153A READ WIT H SEC. 143(3) OF THE INCOME-TAX ACT , 1961 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS NOT VALID AND THE SAME IS ACCORDIN GLY HELD AS NULL AND VOID. THE RELATED GROUND NOS. 2 TO 6 ON TH E ISSUE IS THUS ALLOWED. 15 ITA NOS. 6791 TO 6793/DEL/2013 15 4. IN VIEW OF THE ABOVE, IN THE PRESENT CASE ALSO, MATERIAL FACT WHICH EMERGES FROM THE RECORDS IS THAT NO INCRIMINA TING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH RELATING TO THE ASSESSEE FOR A.Y. 2008-09 TO JUSTIFY ADDITIONS MADE BY THE AO ON ACCOUNT OF SALE OF SCRAP AND ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] R.W.R 8 D OF THE INCOME-TAX RULES, 1962 [HEREINAFTER REFERRED TO AS 'THE RULES' ] AND THAT TOO, THAT THE ASSESSMENT ORDER BASED ON THE ORIGINAL RETURN F ILED U/S 139 OF THE ACT HAS NOT BEEN PENDING AND THE SAME HAS BEEN COMP LETED ON THE DATE OF THE SEARCH. THEREFORE, ASSESSMENT FRAMED U /S 153A R.W.S 143(3) OF THE ACT FOR AY 2008-09 IS NOT VALID AND W E HOLD THE SAME AS NULL AND VOID. ACCORDINGLY, THE ISSUE COVERED BY THE TRIBUNAL ORDER DATED 27.5.2015 IS DECIDED IN FAVOUR OF THE ASSESSE E AND THUS THESE LEGAL GROUNDS ARE ALLOWED. GROUND NOS. 3 TO 5 5. SINCE BY THE EARLIER PART OF THIS ORDER THE ASSE SSMENT ORDER HAS BEEN HELD AS NULL AND VOID, THEREFORE, THE OTHE R GROUNDS OF THE ASSESSEE ON MERITS HAVE BECOME ACADEMIC AND INF RUCTUOUS AND THUS WE DISMISS THE SAME HAVING BECOME INFRUCTU OUS. 16 ITA NOS. 6791 TO 6793/DEL/2013 16 ITA NO. 6792/DEL/2013 FOR AY 2009-10 6. SINCE THE FACTS AND CIRCUMSTANCES IN THE REMAINI NG TWO APPEALS ARE SAME AND SIMILAR, OUR VIEW TAKEN IN A.Y 2008-09 WILL ALSO APPLY MUTATIS MUTANDIS TO AYS. 2009-10. ACCORD INGLY, THE APPEALS FOR AYS. 2009-10 IS ALLOWED ONLY ON LEGAL G ROUNDS AS INDICATED ABOVE. ITA NO. 6793/DEL/2013 FOR AY 2010-11 GROUND NOS. 1 TO 3 OF THE ASSESSEE 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE RELEVANT MATERIALS PLACED ON RECORD OF THE TRIBUNAL. THE LD. COUNSEL PLACING RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF S ADHU FORGING LTD 336 ITR 444 [DEL] CONTENDED THAT THE ISSUE IS SQUAR ELY COVERED IN FAVOUR OF THE ASSESSEE BY THE RATION OF THIS DECISI ON. THE LD. AR POINTED OUT THAT THE CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION MADE BY THE AO OF RS. 2,64, 039/- BEING INCOME FROM SALE OF SCRAP TREATING THE SAME AS NON- ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. 17 ITA NOS. 6791 TO 6793/DEL/2013 17 8. THE LD. DR STRONGLY SUPPORTED THE ACTION OF THE AO AND VEHEMENTLY CONTENDED THAT THE INCOME FROM SALE OF S CRAP DOES NOT CONSTITUTE PROFITS OR GAINS DERIVED FROM AN IND USTRIAL UNDERTAKING FOR THE PURPOSE OF QUALIFYING AS A DEDU CTION U/S 80IB OF THE ACT. HE ALSO DREW OUR ATTENTION TO PARA 4.2 TO 4.4 AT PAGES 8 AND 9 OF THE ORDER OF THE CIT(A). 9. ON CAREFUL CONSIDERATION OF THE ABOVE, FROM THE RELEVANT OPERATIVE PART OF THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. SADHU FORGING LTD [SUPRA], THEIR LORDSHIPS HAVE HELD AS UNDER: 13. KEEPING IN VIEW THE ACTIVITIES OF THE ASSESSEE IN GIVING HEAT TREATMENT FOR WHICH IT HAD EARNED LABOUR CHARG ES AND JOB-WORK CHARGES, IT CAN THUS BE SAID THAT THE APPE LLANT HAD DONE A PROCESS ON THE RAW MATERIAL WHICH WAS NOTHIN G BUT A PART AND PARCEL OF THE MANUFACTURING PROCESS OF THE INDUSTRIAL UNDERTAKING. THESE RECEIPTS CANNOT BE SA ID TO BE INDEPENDENT INCOME OF THE MANUFACTURING ACTIVITIES OF THE UNDERTAKINGS OF THE ASSESSEE AND THUS COULD NOT BE EXCLUDED FROM THE PROFITS AND GAINS DERIVED FROM THE INDUSTR IAL UNDERTAKING FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80IB . THESE WERE GAINS DERIVED FROM INDUSTRIAL UNDERTAKINGS AND SO ENTITLED FOR THE PUR POSE OF COMPUTING DEDUCTION UNDER SECTION 80IB . THERE CANNOT BE 18 ITA NOS. 6791 TO 6793/DEL/2013 18 ANY TWO OPINIONS THAT MANUFACTURING ACTIVITY OF THE TYPE OF MATERIAL BEING UNDERTAKEN BY THE ASSESSEE WOULD ALS O GENERATE SCRAP IN THE PROCESS OF MANUFACTURING. THE RECEIPTS OF SALE OF SCRAP BEING PART AND PARCEL OF THE ACTIVITY AND BEING PROXIMATE THERETO WOULD ALSO BE WITHIN THE AMBIT OF GAINS DERIVED FROM INDUSTRIAL UNDERTAK ING FOR THE PURPOSE OF COMPUTING DEDUCTING UNDER SECTION 80IB . 10. IN THE PRESENT CASE, UNDISPUTEDLY THE IMPUGNED AMOUNT RECEIVED BY THE ASSESSEE HAS BEEN DERIVED FROM SALE OF SCRAP GENERATED FROM THE ACTIVITIES CARRIED OUT BY THE AS SESSEE WHICH ARE PART AND PARCEL OF THE MANUFACTURING PROCESS OF INDUSTRIAL UNDERTAKING AND SCRAP WAS GENERAL FROM CARRYING OUT THE SAID ACTIVITIES HAS BEEN SOLD. THUS, IN VIEW OF THE ABO VE NOTED FACTUM, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. SADHU FORGING LTD [SUPRA]. ACCORDI NGLY, GROUND NOS. 1 TO 3 OF THE ASSESSEE ARE ALLOWED AND THE AO IS DIRECTED TO GRANT DEDUCTION U/S 80IB OF THE ACT PARTAKING TOE H AMOUNT RECEIVED FROM SALE OF SCRAP AND IMPUGNED ADDITION I S DIRECTED TO BE DELETED. CONSEQUENTLY, THE SAID GROUNDS HAVING SOLE EFFECTIVE ISSUE ARE ALLOWED. 19 ITA NOS. 6791 TO 6793/DEL/2013 19 11. IN THE RESULT, ALL THE THREE APPEALS OF THE A SSESSEE ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29.07. 2016. SD/- SD/- (L.P. SAHU) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH JULY, 2016 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI