M/s Mount Shivalik Breweries Ltd., Mohali V. Addl. CIT, Mohali

ITA 681/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63945 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-08-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 19-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Gift; Business income; Depreciation; Additional evidence; Question of law
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI H.L. KARWA, VP AND SHRI T.R. SOOD, A.M ITA NO. 681/CHD/2012 ASSESSMENT YEAR : 2009-10 M/S MOUNT SHIVALIK BREWERIES V. ADDL C.I.T. MOHAN GRAM RANGE VI P.O. BANKARPUR MOHALI SAS NAGAR MOHALI AAACM 9806 D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SING H RESPONDENT BY : SMT. JYOTI KUMARI DATE OF HEARING : 28.08.2012 DATE OF PRONOUNCEMENT : 24.09.2012 O R D E R PER T.R.SOOD, A.M IN THIS APPEAL THE ASSESSEE HAS RAISED VARIOUS GROU NDS OUT OF WHICH GROUNDS NO. 4 & 5 WERE NOT PRESSED AND THEREF ORE, THE SAME ARE DISMISSED AS NOT PRESSED. OTHER GROUNDS ARE AS UNDER:- 1 THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 3,31,16,818/- FOR ALLEGED NON- DEDUCTION OF TAX U/S 194C OF THE ACT AND THEREAFTER APPLYING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WHIC H IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 2. THAT THE PROVISIONS OF SECTION 194C OF THE ACT A RE NOT ATTRACTED IN AS MUCH AS THERE WAS NO CONTRACT BETWE EN THE PARTIES AND THUS, THE INVOCATION OF SECTION 40(A)(I A) OF THE ACT IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. THAT WITHOUT PREJUDICE TO THE ABOVE FOR ARGUMENT SAKE, IT IS TAKEN THAT PROVISIONS OF SECTION 40(A)(IA) ARE A TTRACTED, THE SAID SECTION IS APPLICABLE ONLY TO PAYMENTS WHICH A RE PAYABLE AND NOT THE PAYMENTS WHICH HAVE BEEN PAID OFF DURIN G THE YEAR AND AS SUCH THE ADDITION MADE OF THE ENTIRE PAYMENT MADE IS UNWARRANTED AND UNJUSTIFIED. 4. NOT PRESSED 5. NOT PRESSED 6. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDI NG THE DISALLOWANCE OF DEPRECIATION OF RS. 20,80,484/- CLA IMED ON EFFLUENT TREATMENT PLANT ON THE GROUND THAT THE SAM E WAS PUT TO USE FOR LESS THAN 180 DAYS WHICH IS CONTRARY TO THE FACT AND AS SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY A ND UNJUSTIFIED. 2 7. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDI NG THE DISALLOWANCE OF EXPENDITURE OF RS. 8,23,025/- CLAIM ED UNDER THE HEAD ENTERTAINMENT AND MISCELLANEOUS EXPENSES IN UTTER DISREGARD OF THE EXPLANATION RENDERED AND DOCUMENTA RY EVIDENCE PLACED ON RECORD WHICH IS ARBITRARY AND UN JUSTIFIED. 8. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDI NG THE DISALLOWANCE OF EXPENDITURE OF RS. 14,21,898/- CLAI MED ON ACCOUNT OF FOREIGN TRAVEL UNDERTAKEN BY THE DIRECT ION OF THE ASSESSEE-COMPANY IN UTTER DISREGARD OF THE EXPLANAT IONS RENDERED AND DOCUMENTARY EVIDENCE PLACED ON RECORD WHICH IS ARBITRARY AND UNJUSTIFIED. 9. THAT THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE EVIDENCE FILED IN RESPECT OF GROUNDS NO. 7 AND 8 SU PRA WAS ADDITIONAL EVIDENCE AND NOT ADMISSIBLE UNDER RULE 4 6A(1) OF THE ACT WHICH IS ARBITRARY AND UNJUSTIFIED. 2. GROUNDS NO. 1, 2 & 3 RELATE TO THE ISSUE REGARDING NON- DEDUCTION OF TAX ON PURCHASE OF CORRUGATED BOXES FO R PACKING OF BEER BOTTLES, CAPS AND INSERTS FOR PACKING OF BOTTL ES OF COUNTRY LIQUOR AND SUPPLY OF PRINTED CORRUGATED BOXES. DURING ASS ESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PURCHASED THE SAID MATERIAL BUT NO TAX HAS BEEN DED UCTED. ON ENQUIRY IT WAS FURTHER FOUND THAT NO AGREEMENT WAS ENTERED INTO M/S MOUNT SHIVALIK FOR SUPPLY OF THESE MATERIALS. THE PERUSAL OF THE CONTRACT WITH M/S MOUNT SHIVALIK DEPICTED THAT THE SAID PARTY WAS MAKING SUPPLY OF CUSTOMIZED AND SPECIFIC CARTON BOX ES TO THE ASSESSEE WHICH WERE TO BE USED FOR PACKING OF BEER BOTTLES KNOWN AS THUNDER BOLT SUPER STRONG (650 ML) AS PER SPEC IFICATIONS OF ASSESSEE. SIMILARLY OTHER PARTIES M/S R.K. INDUST RIES WAS SUPPLYING CAPS AND INSERTS WHICH WERE AGAIN AS PER THE PRESCR IBED SPECIFICATIONS OF THE ASSESSEE. LASTLY M/S DISHTIA PACKAGES SUPPLIED PRINTED CORRUGATED BOXES FOR BEER BOTTLES PRINTED AS THUNDER BOLT SUPER STRONG AS PER SPECIFICATIONS G IVEN BY THE ASSESSEE. FROM THIS THE ASSESSING OFFICER CONCLUDE D THAT THESE PARTIES WERE SUPPLYING THE GOODS AS PER PRESCRIBED DESIGN AND SPECIFICATIONS GIVEN BY THE ASSESSEE. THESE PARTIE S WERE NOT AT THEIR LIBERTY TO SUPPLY PACKING MATERIAL WHICH COUL D BE USED BY ANY 3 THIRD PARTY IN THE OPEN COMMERCIAL MARKET. THEREFO RE, THESE TRANSACTIONS WOULD FALL UNDER THE AMBIT OF DEFINITI ON OF CONTRACTUAL RELATIONSHIP FOR CARRYING OUT SPECIFIC WORK AS PER THE SPECIFICATIONS GIVEN BY THE ASSESSEE. THUS THE ASSESSEE WAS REQUI RED TO DEDUCT TAX ON THESE TRANSACTIONS U/S 194C OF THE ACT. SINC E THE TAX HAS NOT BEEN DEDUCTED, THEREFORE, PROVISIONS OF SECTION 40( A)(IA) WERE CLEARLY APPLICABLE AND ACCORDINGLY A SUM OF RS. 3, 31,16,818/- WAS DISALLOWED U/S 40(A)(IA) OF THE ACT. 3. ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY CO NTENDED THAT THOUGH CORRUGATED BOXES WERE PURCHASED FROM VENDER S AS PER SPECIFICATIONS OF THE ASSESSEE BUT THE RAW MATERIAL USED BY THE VENDERS WAS FROM ITS OWN SOURCES. THE RIGHT OF OWN ERSHIP PASSED TO THE ASSESSEE ONLY AFTER THE GOODS WERE SUPPLIED TO THE ASSESSEE AS FINISHED GOODS. IN THIS REGARD HE RELIED ON THE DEC ISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. DY. C HIEF ACCOUNTS OFFICER, MARKFED, 304 ITR 17 (PH) AND CIT V. DABUR INDIA LTD. 283 ITR 197 (DELHI) AND VARIOUS OTHER DECISIONS. 4. THE LD. CIT(A) DID NOT AGREE WITH THE SUBMISSION BECAUSE ACCORDING TO HIM REAL ISSUE TO BE CONSIDERED WHETHE R THE PARTIES TO WHOM THE PAYMENTS WERE MADE ARE IN THE BUSINESS OF SELLING CORRUGATED BOXES, BOTTLE CAPS ETC. AND THE ANSWER T O THIS QUESTION WAS NO. THESE PARTIES WERE NOT MAKING ANY SALES OF THESE PRODUCTS TO ANY OTHER PERSON THEN ASSESSEED, THEREF ORE, THESE PARTIES WERE UNDER A CONTRACTUAL OBLIGATION TO DO J OBS ONLY FOR THE ASSESSEE. THOUGH LOT OF STRESS IS BEING LAID BY TH E APPELLANT ON THE POINT THAT CORRUGATED BOXES, ON WHICH THE NAME AND LOGO OF THE APPELLANT TO THE VENDERS HAS BEEN PRINTED AND BEING SOURCED BY THESE PARTIES BUT SINCE THE TRANSACTIONS WERE NOT B ETWEEN TWO UNRELATED PARTIES, IT WILL NOT MAKE MUCH DIFFERENCE . THE SITUATION WAS LIKE SOME PERSONS ENGAGING THE CONTRACTOR FOR E XECUTION OF A 4 PARTICULAR WORK AND IF THE CONTRACTOR IS FULLY TRUS TWORTHY, THE PERSON MAY ASK THE CONTRACTOR TO PURCHASE THE MATERIAL REQ UIRED FOR THE JOB WORK. IF THE CONTRACTOR IS TOTALLY UNRELATED THE M ATERIAL WILL BE PURCHASED FROM THE MARKET AND GIVEN TO THE CONTRACT OR. IN EITHER CASE THE BASIC RELATIONSHIP BETWEEN THE TWO IS THAT OF A PRINCIPLE AND CONTRACTOR AND THE SAME SITUATION PREVAILED BET WEEN THE ASSESSEE AND ITS SUPPLIERS. IN THIS BACKGROUND THE LD. CIT(A) CONFIRMED THE ADDITION. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT ONLY M/S MOUNT SHIVALIK IS A SUPPLIER TO THE ASSESSEE ON EXCLUSIVE BASIS AND THE FACT BECOMES CLEAR FROM THE BALANCE SHEET O F M/S MOUNT SHIVALIK PACKING (COPY OF WHICH IS AVAILABLE AT PAG E 156 TO 173). HOWEVER, THE LD. CIT(A) IS NOT CORRECT IN CASE OF M /S R.K. INDUSTRIES BECAUSE THAT FIRM HAS SOLD THE GOODS TO OUTSIDERS A LSO, IN THIS REGARD HE REFERRED TO PAGE 175 OF PAPER BOOK WHICH IS A COPY OF PROFIT AND LOSS ACCOUNT AND POINTED OUT THAT M/S R. K. INDUSTRIES HAD TOTAL SALES OF RS. 1,36,89,127/- WHEREAS THEY HAVE SUPPLIED GOODS WORTH RS. 22,17,873/- TO THE ASSESSEE. THIS CLEARL Y SHOWS THAT M/S R.K. INDUSTRIES WAS SELLING GOODS TO THE OUTSIDERS ALSO. IN FACT M/S R.K. INDUSTRIES WAS SELLING THE GOODS EVEN TO M/S D ABUR INDUSTRIES WHICH IS CLEAR FROM COPY OF BILL PLACED AT PAGE 177 OF THE PAPER BOOK. SIMILARLY IN CASE OF M/S DISHTIA PACKAGES TO TAL SALES ARE RS. 17,70,657/- WHEREAS THE ASSESSEE HAS PURCHASED MATE RIAL ONLY FOR RS. 11,53,000/-. IN ANY CASE MERELY BECAUSE THE SA ME PARTIES WERE SELLING THE GOODS EXCLUSIVELY TO THE ASSESSEE IT W ILL NOT MAKE MUCH DIFFERENCE. HE CONTENDED THAT BASICALLY THESE ARE CONTRACT FOR SALES OF GOODS. THE PROPERTY HAS PASSED TO THE ASSESSEE ONLY AFTER THE DELIVERY OF SUCH GOODS EVEN THOUGH THE SPECIFICATIO NS WERE GIVEN BY THE ASSESSEE. THE SAME VIEW HAS BEEN TAKEN BY H ON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. DY. CHIEF AC COUNTS OFFICER, 5 MARKFED (SUPRA). HE ALSO RELIED ON THE FOLLOWING D ECISIONS CIT V. DABUR INDIA LTD (SUPRA) AND BDA LTD V ITO, 2 81 ITR 99. 6 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SU BMITTED THAT THIS A CLEAR CASE OF CONTRACT FOR RENDERING OF SERV ICE IN THE FORM OF PRINTING. ONCE THE SPECIFICATIONS WERE GIVEN BY TH E ASSESSEE THEN NATURALLY PRINTING WAS BEING DONE ACCORDING TO THE SPECIFICATIONS THEN THIS WOULD CONSTITUTE CONTRACT FOR SUPPLY OF L ABOUR AND MATERIAL. SHE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND PARTICULARLY REFERRED TO PARA 2.3.1 OF HIS ORDER. 7 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD. DR FOR THE REVENUE. WE FIND THAT THERE IS ALWAYS DISTINCTION BETWEEN THE CONTRA CT FOR SUPPLY OF LABOUR AND MATERIALS AND CONTRACT FOR SALE OF GOODS AS SUCH. WHEN THE PERSON PLACES AN ORDER FOR PRINTING AND SUPPLY EVEN IF SPECIFICATIONS ARE GIVEN BY SUCH PERSON THEN SUCH C ONTRACT HAS TO BE TREATED AS CONTRACT FOR SALE SIMPLICITOR PARTICULAR LY WHEN SUCH PERSON HAS NOT GIVEN HIS OWN PAPER OR INK TO THE PRINTER. NO DOUBT THE SPECIFICATIONS GIVEN FOR PRINTING WILL NOT ALTER THE SITUATION AND THE CONTRACT WOULD REMAIN A CONTRACT FOR SALE. FURTHER SO BECAUSE LET US SAY MATERIAL IS PRINTED INCORRECTLY AND THERE IS AN Y DEFECT IN SUCH PRINTED MATERIAL THEN OBVIOUSLY BUYER WOULD NOT ACC EPT THE LOSS. IN ANY CASE THIS ISSUE CAME UP FOR CONSIDERATION OF HO N'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF DY CAO, MARKFED (SUPR A). IN THAT CASE THE HON'BLE HIGH COURT AFTER CONSIDERING THE D ECISIONS OF HON'BLE DELHI HIGH COURT IN CASE OF CIT V. DABUR I NDIA LTD (SUPRA) AND THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CA SE OF BDA LTD. V ITO (TDS) (SUPRA) OBSERVED AT PAGE 5 OF THE JUDGM ENT AS UNDER:- WE HAVE CONSIDERED THE SUBMISSIONS MADE BY LD. COU NSEL OF THE REVENUE. THERE IS NO DISPUTE THAT THE MAIN PUR POSE OF THE ASSESSEE TO BUY PACKING MATERIAL IS TO OBTAIN GOODS FOR THE PURPOSE OF PACKING OF ITS FINISHED PRODUCTS. THE F ACTURM OF SUCH PACKING MATERIAL CARRYING SOME PRINTED WORK CA N ONLY BE REGARDED AS THE WORK EXECUTED BY THE SUPPLIER INCID ENTAL TO 6 THE SALE TO THE ASSESSEE. THE FACT OF SOME PRINTIN G BEING DONE AS A PART OF SUPPLY IS OF NO CONSEQUENCE TO TH E CONTRACT BEING ESSENTIALLY OF A SALE OF CHATTEL. THE PREDOM INANT OBJECT UNDERLYING THE CONTRACTS WERE SALE/PURCHASE OF GOOD S AND ONLY THE INTENTION OF THE RESPONDENT WAS TO BUY PACKING MATERIAL. ADMITTEDLY, THE RAW MATERIAL FOR THE MANUFACTURING OF SUCH PACKING MATERIAL WAS NOT SUPPLIED BY THE RESPONDENT . THUS, IT WAS A CASE OF SALE AND NOT A CONTRACT FOR CARRYING OUT ANY WORK. IN THE CASE OF CIT V. DABUR INDIA LTD. (2006 ) 283 ITR 197, THE HON'BLE DELHI HIGH COURT HELD THAT PRINTI NG LABELS ON CORRUGATED BOXES DID NOT REQUIRE ANY SPECIAL SKILL OR INVOLVE ANY CONFIDENCE OR SECRECY AND THE TRIBUNAL WAS JUST IFIED IN HOLDING THAT THE PREDOMINANT OBJECT UNDERLYING THE CONTRACT WAS ONE FOR SALE OF GOODS WHICH TOOK THE CONTRACT O UT OF THE PURVIEW OF SECTION 194C OF THE INCOME-TAX ACT, 1961 . IN BDA LTD. V ITO (TDS) (2006) 281 ITR 99 (BOM) THE COURT HELD THAT IF A MANUFACTURER PURCHASES MATERIAL ON HIS OWN AND MANUFACTURES A PRODUCT AS PER THE REQUIREMENT OF A SPECIFIC CUSTOMER, IT IS A CASE OF SALE AND NOT A CONTRACT F OR CARRYING OUT ANY WORK. THE FACT THAT THE GOODS MANUFACTURED WERE , ACCORDING TO THE REQUIREMENT OF THE CUSTOMER, DOES NOT MEAN OR IMPLY THAT ANY WORK WAS CARRIED OUT ON BEHALF OF THAT CUSTOMER. WE ARE IN RESPECTFUL AGREEMENT OF THE ABOVECITED JU DGMENTS AND HOLD THAT THE PURCHASE OF PARTICULAR PRINTED PA CKING MATERIAL BY THE RESPONDENT WAS A CONTRACT FOR SALE AND OUTSIDE THE PURVIEW OF SECTION 194C OF THE ACT. NO SUBSTAN TIAL QUESTION OF LAW AS PROPOSED ARISES FOR DETERMINATIO N OF THE COURT. THUS, WE FIND NO INFIRMITY IN THE ORDER OF THE TRIBUNAL, THE APPEAL IS WITHOUT ANY MERIT AND THE SAME IS DIS MISSED. THEREFORE, IN THE LIGHT OF ABOVE DECISION, IT IS CL EAR THAT CONTRACT FOR PURCHASE OF CORRUGATED BOXES AND OTHER PRINTED MATE RIAL WOULD BE ONLY A CONTRACT FOR SALE. THE LD. CIT(A) HAD LAID LOT OF EMPHASIS ON THE FACT THAT ALL THE THREE PARTIES HAVE SUPPLIED T HE MATERIAL EXCLUSIVELY TO THE ASSESSEE. FIRST OF ALL THIS FI NDING IS NOT CORRECT BECAUSE FROM PAGE 175 OF THE PAPER BOOK WHICH IS A COPY OF THE PROFIT AND LOSS ACCOUNT OF M/S R.K. INDUSTRIES, IT IS CLEAR THAT THAT FIRM HAS SOLD THE GOODS WORTH RS. 1,36,89,127/- WHE REAS THE ASSESSEE HAS PURCHASED ONLY THE GOODS WORTH RS. 22, 17,873/-. SIMILARLY IN CASE OF M/S DISHTIA PACKAGES THE TOTAL SALES ARE 17,90,659/- WHEREAS THE ASSESSEE HAS PURCHASED THE GOOD ONLY WORTH RS. 11,53,000/-. NO DOUBT M/S MOUNT SHIVALIK WAS EXCLUSIVELY SUPPLYING MATERIAL TO THE ASSESSEE. BUT IN OUR OPI NION, SIMPLY BECAUSE A PARTICULAR SUPPLIER WAS SELLING ALL THE G OODS TO THE 7 ASSESSEE, WILL NOT ALTER THE NATURE OF THE CONTRACT . THEREFORE, IN THE LIGHT OF OUR DISCUSSION PARTICULARLY THE DECISION O F HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF DY CEO, MARKFE D (SUPRA) WE SET ASIDE THE ORDER OF LD. CIT(A) AND HOLD THAT THE PUR CHASE OF PRINTED MATERIAL WOULD BE A CONTRACT FOR SALE AND NOT LIABL E FOR DEDUCTION OF TAX U/S 194C OF THE ACT AND HENCE THE ADDITION U/S 40(A)(IA) IS NOT JUSTIFIED. ACCORDINGLY WE DELETE THE ADDITION. 8 GROUND NO. 6 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN ADDITION OF RS. 41,60,961/- ON ACCOUNT OF ADDITION OF EFFLUENT TREATMENT PLANT ON WHICH DEPRE CIATION CLAIMED WAS 100%. SINCE THE PLANT WAS INSTALLED IN THE YEA R ITSELF AND USED FOR LESS THAN 180 DAYS, THEREFORE, DEPRECIATION WA S CLAIMED AT RS. 20,80,484/-. ON ENQUIRY THE COPIES OF INVOICES FOR PURCHASE OF PLANT AND OTHER DETAILS WERE FILED. ON PERUSAL OF SAME I T WAS NOTICED THAT BILLS FOR VARIOUS PLANTS WERE RAISED IN THE MONTH O F NOVEMBER 2008 TO MARCH 2009 WHICH MEANS THAT THE ASSESSEE WAS IN THE PROCESS OF DESIGNING AND INSTALLING EFFLUENT TREATMENT PLANT. THE ASSESSEE COULD NOT FURTHER SUBSTANTIATE THE CLAIM, THEREFORE , THE DEPRECIATION WAS DISALLOWED. 9 ON APPEAL, IT WAS CONTENDED THAT THE ASSESSEE HAD SENT BY E- MAIL CONFIRMATION FROM PUNJAB POLLUTION CONTROL BOA RD (IN SHORT PPCB) TO SHOW THAT THE PLANT WAS ALREADY INSTALLE D. THE ASSESSEE HAD ALSO ENCLOSED A LETTER DATED 26.2.2009 GRANTING PERMISSION TO THE ASSESSEE FOR DISCHARGE OF EFFLUENT TREATMENT WH ICH CLEARLY SHOWS THAT THE PLANT HAD ALREADY BEEN PUT TO USE. 10 THE LD. CIT(A) AFTER CONSIDERING THE ABOVE SUBMI SSIONS PERHAPS CONFUSED THE ISSUE BECAUSE HE HAS OBSERVED THAT THE ASSESSING OFFICER HAS RIGHTLY RESTRICTED THE DEPREC IATION AT 50% BECAUSE THE PLANT WAS USED FOR LESS THAN 180 DAYS. 8 11 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REFER RED TO VARIOUS PURCHASE BILLS OF VARIOUS ITEMS OF THE PLANT AND SU BMITTED THAT MOST OF THE PLANT ITEMS WERE PURCHASED BEFORE MARCH 2009 . HE ALSO REFERRED TO CLEARANCE CERTIFICATE ISSUED BY PPCB AN D SUBMITTED THAT THESE CERTIFICATES CLEARLY SHOW THAT THE ASSESSEE H AD ALREADY PUT THE EFFLUENT PLANT TO USE. 12 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE R EFERRED TO THE CERTIFICATE PLACED AT PAGE 120 OF THE PAPER BOOK AN D POINTED OUT THAT THIS CERTIFICATE IS FOR CLEARANCE OF ADDITIONAL POW ER SINCE THIS CERTIFICATE WAS ISSUED ON 20 TH FEB 2009 WHICH MEANS AFTER THIS THE ASSESSEE MUST HAVE GONE TO ELECTRICITY BOARD FOR RE LEASE OF EXTRA POWER AND PLANT MUST HAVE BEEN PUT TO USE MUCH LATE R. 13 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND FIND THAT EFFLUENT TREATMENT PLANT HAS BEEN SHOWN IN THE DEPR ECIATION SCHEDULE AS INSTALLED FOR LESS THAN 180 DAYS. VAR IOUS BILLS FOR THE PLANT HAVE BEEN RAISED FROM MAY 2008 TO FEB 2009. HOWEVER, A CERTIFICATE ISSUED BY PPCB READS AS UNDER:- PUNJAB POLLUTION CONTROL BOARD VATAVARAN BHAWAN, PATIALA TO THE ASSISTANT EXECUTIVE ENGINEER PUNJAB STATE ELECTRICITY BOARD DISTRIBUTION SUB-DIVISION, DERA BASSI DISTT. MOHALI SUB: CLEARANCE CERTIFICATE FOR RELEASE OF ADDITIONA L POWER LOAD OF 350.064 KW TO M/S MOUNT SHIVALIK BREWERIES LTD., VILLAGE BHANKARPUR, TEHSIL DERA BASSI, DISTT. MOHALI THIS BOARD HAS NO OBJECTION FOR RELEASE OF ADDITI ONAL POWER LOAD OF 350.064 (THREE HUNDRED FIFTY POINT ZERO SIX FOUR KW ONLY) TO M/S MOUNT SHIVALIK BREWERIES LTD., VILLAGE BHANKARPUR, TEHIL DRA BASSI, DISTT. MOHALI. SD/- ENVIORNMENTAL ENGINEER (ZP-I) FOR & ON BEHALF OF PUNJAB POLLUTION CONTROL BOARD 14 THE ABOVE CLEARLY SHOWS THAT THIS IS ONLY NO OB JECTION 9 CERTIFICATE FOR RELEASE OF ADDITIONAL POWER. THER EFORE, IT IS CLEAR THAT AFTER THE ISSUE OF THIS CERTIFICATE THE ASSESS EE MUST HAVE APPROACHED THE ELECTRICITY AUTHORITIES FOR RELEASE OF POWER AND ONLY AFTER THAT PLANT COULD HAVE BEEN OPERATED BUT NO FU RTHER EVIDENCE IS THERE TO SHOW WHEN THE EFFLUENT PLANT WAS ACTUALLY PUT TO USE. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THIS MATTER BACK TO THE FILE OF AS SESSING OFFICER FOR FRESH EXAMINATION OF THE ISSUE. THE ASSESSEE IS A LSO DIRECTED TO PRODUCE FURTHER EVIDENCE WHICH IS AVAILABLE WITH TH E ASSESSEE TO SUBSTANTIATE ITS CLAIM. 15 GROUNDS NO. 7 & 9 AFTER HEARING BOTH THE PARTIES WE FIND DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE A CLAIM OF RS. 8,23,025/- ON ACCOUNT OF ENTERTAINMENT EXPENSES AND MISCELLANEOUS EXPENSES. THE ASSESSEE COULD NOT FILE ANY VOUCHERS TO SUPPORT THE CLAIM. THEREFORE, THESE EXPENSES WERE DISALLOWED. 16 ON APPEAL BEFORE THE LD. CIT(A), IT WAS STATED THAT VOUCHERS COULD NOT BE SUBMITTED BEFORE THE ASSESSING OFFICER BECAUSE THE SAME WERE MISPLACED IN THE VOLUMINOUS RECORD. IT W AS FURTHER SUBMITTED THAT ALL THE PAYMENTS IN RESPECT OF THES E EXPENSES WERE MADE, THROUGH CHEQUES AND COPY OF BILLS WAS ALSO EN CLOSED FOR REFERENCE. THE LD. CIT(A) OBSERVED THAT BILLS PRODU CED BEFORE HIM WERE IN THE NATURE OF ADDITIONAL EVIDENCE AND SINCE NO REASON WAS GIVEN WHY THE SAME COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER, THEREFORE, THE SAME WERE NOT ADMITTED AND ACCORDINGLY HE CONFIRMED THE DISALLOWANCE. 17 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT BILLS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER BECAUSE THE SAME HAD BEEN MISPLACED IN THE VOLUMINOUS RECORD AN D THE LD. CIT(A) SHOULD HAVE ADMITTED THE SAME. HE ALSO REFE RRED TO PAGE 10 139 TO 155 WHICH IS COPY OF DETAILS OF EXPENDITURE AND COPIES OF THE BILLS FOR THE SAME. HE ALSO SUBMITTED THAT THESE E XPENSES HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND THERE FORE, THE SAME SHALL BE ALLOWED. 18 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S TRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 19 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. THE LIST OF EXPENSES, A COPY OF WHICH IS FILED AT PAGE 139 OF T HE PAPER BOOK, READS AS UNDER:- DATE VR PARTICULARS RS. 30.8.2008 HO 219 OST OF GIFTS PACKS CH (3600 + 4000) 76000 19.12.2008 JV 1040 COST OF JUICE, DT 157766 19.12.2008 JV 1040 COST OF GIFT PAC, DT 167232 31.3.2009 JV 1549 COST OF GIFT ITEM PURCHASSED, DT 135664 31.3.2009 JV 1549 COST OF GIFT ITEM PURCHASED, DT 95878 31.3.2009 JV 1549 COST OF GIFT ITEM PURCHASSED, DT 94320 31.3.2009 JV 1553 COSTG OF FOOD BILL 166, DT 15221 LIST OF MISSING VOUCHERS OF MISCELLANEOUS EXPENSES 2008-09 DATE VR PARTICULARS RS. 7.6.2008 CV 1507 CHARGES OF WASTER TANKER, DT 19870 30.8.2008 HB 402 COST OF LAMP BLOCK CH 23074.5 27.3.2009 HB 1214 COST OF FLORIST/MARIGOLD FLORIST CH (16000+22000) 38000 THE ABOVE CLEARLY SHOW THAT THE EXPENSES HAVE BEEN INCURRED FOR PURCHASING GIFT ITEMS AND RESTAURANT BILLS. IT HAS NOT BEEN CLARIFIED ON WHAT OCCASION AND TO WHOM VARIOUS GIFTS WERE DIS TRIBUTED. THERE ARE LOT OF RESTAURANT BILLS AND IT HAS NOT BEEN CLA RIFIED THAT WHO ARE 11 THE PERSONS WHO WERE TAKEN FOR LUNCH OR DINNER. CO NSIDERING ALL THESE ASPECTS, WE PROPOSED THAT ONLY LUMP SUM AMOUN T CAN BE ALLOWED. THE LD. COUNSEL OF THE ASSESSEE AGREED TH AT REASONABLE AMOUNT MAY BE DISALLOWED. AFTER CONSIDERING THE TO TALITY OF THE FACTS AND THE NATURE OF EXPENSES, WE PROPOSED THAT ONLY 50% OF THE EXPENSES CLAIMED ON ACCOUNT OF ENTERTAINMENT AND MI SCELLANEOUS EXPENSES SHOULD BE ALLOWED. THIS POSITION WAS ACCE PTED BY THE LD. COUNSEL OF THE ASSESSEE. ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DISALLOW ONLY 50% ENTERTAINMENT AND MISCELLANEOUS EXPENSES. 20 GROUNDS NO. 8 & 9 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OF FICER NOTICED THAT AN AMOUNT OF RS. 14,21,898/- HAS BEEN INCURRED BY THE ASSESSEE IN FOREIGN TRAVELING OF THE M.D. THE ASSES SEE WAS REQUESTED TO FURNISH THE DETAILS AND JUSTIFICATION FOR THE EXPENSES. IN RESPONSE IT WAS MAINLY STATED THAT MAIN PURPOSE OF THE TRAVELING WAS TO VISIT THE BREWERIES IN EDINBURGH, UK WHICH H AS ACQUIRED THE UK BUSINESS OF SCOTTISH AND NEW CASTLE AND SCOTTISH COURAGE, BREWING LTD. THE MAIN IDEA WAS TO EXPLORE NEW TECH NICAL AND BUSINESS OPPORTUNITIES IN THE BEER SECTORS. SOME E XPENSES WERE ALSO INCURRED TO ATTEND THE ANNUAL INTERNATIONAL TR ADE FAIR FOR THE BEVERAGE INDUSTRY IN GERMANY. SINCE THESE SUBMISSIO NS WERE NOT SUBSTANTIATED WITH ANY DOCUMENTARY EVIDENCE, THE EX PENSES WERE DISALLOWED. 21 ON APPEAL, THE ASSESSEE COULD NOT IMPROVE UPON H IS CASE BEFORE THE LD. CIT(A) AND THEREFORE, ACTION OF THE ASSESSING OFFICER WAS CONFIRMED. 22 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REFER RED TO PAGE 124 OF THE PAPER BOOK WHICH IS A COPY OF DETAILS OF EXPENSES AS WELL AS VARIOUS PAYMENT BILLS OF OTHER EXPENSES. WHEN I T WAS POINTED 12 OUT THAT THESE DETAILS ARE NOT AVAILABLE BEFORE THE ASSESSING OFFICER HE CONTENDED THAT THESE DETAILS WERE FILED BEFORE T HE LD. CIT(A). 23 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF LD. CIT(A). 24 AFTER HEARING BOTH THE PARTIES WE FIND THAT THES E DETAILS WERE NOT AVAILABLE BEFORE THE ASSESSING OFFICER AND THE LD. CIT(A) HAS NOT PROPERLY EXAMINED THE SAME, THEREFORE, IN THE INTE REST OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR RE -EXAMINING THE ISSUE IN THE LIGHT OF THE DETAILS FILED BEFORE THE LD. CIT(A). 25. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 24.09.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 24.09. 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 13