JCIT(OSD), Circle -4, Kolkata, Kolkata V. M/s Rexon Strips Limited, Kolkata

ITA 682/KOL/2012

• Counselvise Citation: 68223514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: N K PODDA R
• Keywords: Depreciation

Judgement Text

I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 682/KOL./ 2012 ASSESSMENT YEAR : 2007-2008 JOINT COMMISSIONER OF INCOME TAX (OSD),.......... ..APPELLANT CIRCLE-4, KOLKATA, P-7, CHOWRINGHEE SQUARE, 8 TH FLOOR, KOLKATA-700 069 -VS.- M/S. REXON STRIPS LTD.,............................ .......................RESPONDENT KAMALA COMPLEX, POWER HOUSE ROAD, ROURKELA-769 001 [PAN : AABCR 4854 P] APPEARANCES BY: SMT. RANU BISWAS, JCIT, SR. D.R., FOR THE DEPARTMEN T SHRI N.K. PODDAR, C.A., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DECEMBER 18, 2013 DATE OF PRONOUNCING THE ORDER : JANUARY 08, 2014 O R D E R PER ABRAHAM P. GEROGE: 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST AN ORDER DATED 21.12.2011 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-IV, KOLKATA. 2. APPEAL HAS BEEN FILED WITH A DELAY OF 11 DAYS. R EVENUE HAS FILED A CONDONATION PETITION ALONGWITH AN AFFIDAVIT. REASON S MENTIONED IN THE AFFIDAVIT ARE ACCEPTABLE. LD. COUNSEL FOR THE ASSES EE DID NOT RAISE ANY OBJECTION. DELAY IS CONDONED AND APPEAL IS ADMITTED . 3. REVENUE HAS TAKEN SIX GROUNDS OF WHICH GROUND NO . 6 IS GENERAL NEEDING NO ADJUDICATION. I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 2 4. VIDE ITS GROUND NO. 1, REVENUE IS AGGRIEVED ON LD. CIT(APPEALS) DIRECTION TO ALLOW ASSESSEES CLAIM OF DEPRECIATION ON A PELLET MANUFACTURING UNIT. 5. FACTS APROPOS ARE THAT THE ASSESSEE ENGAGED IN T HE BUSINESS OF MANUFACTURING SPONGE IRON AND M.S. INGOT, HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR, INTER ALIA, CLAIMING DEPR ECIATION ON A NEW PELLETISATION UNIT. FOR MANUFACTURING SPONGE IRON, ASSESSEE PURCHASED IRON ORE FROM BRABIL/JODA/KOIRA AREA OF ORISSA. THE BY-PRODUCT ON CRUSHING OF IRON ORE IS IRON ORE FINES OR DUST. THE COARSE IRON ORE FINES, IF PELLETIZED COULD BE USED FOR THE SPONGE IRON. FOR T HIS PURPOSE, ASSESSEE DURING THE RELEVANT PREVIOUS YEAR ENDEAVOURED TO SE T UP A PELLETIZATION UNIT, IN THE SAME LOCATION WHERE IT WAS MANUFACTURI NG SPONGE IRON AND M.S. INGOT. ASSESSEE CLAIMED DEPRECIATION ON THIS N EW UNIT. ACCORDING TO THE ASSESSEE THE SAID UNIT WAS COMMISSIONED DURING THE RELEVANT PREVIOUS YEAR. 6. ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODU CE EVIDENCE SHOWING THAT THE PELLETIZATION PLANT HAS COME INTO EXISTENCE DURING THE RELEVANT PREVIOUS YEAR AND HAD STARTED PRODUCTION. ASSESSEE THEREUPON FURNISHED COPY OF A LETTER FROM PROJECT MANAGER, DI STRICT INDUSTRY CENTRE, ROURKELA ADDRESSED TO THE BANKING AUTHORITY, WHEREI N IT WAS STATED THAT FIRING OF THE UNIT WAS SUCCESSFULLY UNDERTAKEN ON 1 9.10.2006. ASSESSEE ALSO PRODUCED COPY OF A CERTIFICATE FROM THE STATE POLLUTION CONTROL BOARD IN SUPPORT OF ITS CLAIM THAT THE PELLETIZATION PLAN T STARTED FUNCTIONING DURING THE RELEVANT PREVIOUS YEAR. A CERTIFICATE DA TED 23.11.2006 FROM REGISTERED VALUER WAS ALSO FILED. ASSESSING OFFICER HOWEVER WAS OF THE OPINION THAT THE CERTIFICATE OF POLLUTION CONTROL A UTHORITY ONLY GRANTED A CONSENT FOR CONSTRUCTION/ERECTION OF THE UNIT AND W AS NOT A CLEARANCE FOR COMMISSIONING. AS FOR THE CERTIFICATE FROM REGISTER ED VALUER, ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAD WRONGL Y CLAIMED IT TO BE A CERTIFICATE FROM BOILER INSPECTOR. AS PER THE ASSES SING OFFICER, ASSESSEE I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 3 COULD NOT PRODUCE AN ASSET REGISTER NOR ALL THE BIL LS FOR THE ADDITIONS MADE TO FIXED ASSETS. ASSESSING OFFICER ALSO NOTED THAT THE POWER SUPPLY AUTHORITY HAD NOT ENHANCED THE POWER AVAILABILITY T O THE ASSESSEE. AS PER THE ASSESSING OFFICER, POWER CONNECTION FOR ADDITIO NAL LOAD WAS SUPPOSED TO BE ALLOWED FROM 1 ST APRIL, 2007. ASSESSEE WAS ALSO NOT HAVING CERTIFICATION UNDER FACTORY SAFETY RULES, FOR START ING A NEW BOILER. NEITHER WAS THERE A CERTIFICATION FROM THE BOILER CONTROL A UTHORITY. THERE WAS NO CONSUMPTION OF BENTONITE, WHICH WAS A RAW MATERIAL REQUIRED FOR PELLETIZATION. ASSESSING OFFICER ALSO MADE A GOOGLE SEARCH, WHICH ACCORDING TO HIM REVEALED THAT FIRST PELLET PLANT I N ORISSA WAS COMMISSIONED ONLY IN 2010. THUS AS PER ASSESSING OF FICER, ASSESSEE COULD NOT SHOW THAT THE NEW PELLETIZATION PLANT HAD START ED OPERATION DURING THE RELEVANT PREVIOUS YEAR. DEPRECIATION OF RS.5,06 ,37,504/- CLAIMED ON THE PELLETIZATION PLANT WAS DISALLOWED. 7. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. C IT(APPEALS). ASSESSEE ARGUED BEFORE THE LD. CIT(APPEALS) THAT LE TTER NO. 619 DATED 02.04.2007 ISSUED BY THE DEPUTY DIRECTOR OF FACTORI ES & BOILERS, ROURKELA CLEARLY MENTIONED THAT THE SAID DIRECTOR HAD INSPEC TED ASSESSEES IRON ORE PELLETIZED PLANT ON 29.03.2007 AND CERTIFIED THAT T HE PLANT HAD STARTED COMMERCIAL OPERATION ON 27.02.2007. AS PER THE ASSE SSEE, THE PROJECT MANAGER OF DISTRICT INDUSTRIES CENTRE ALSO HAD CONF IRMED THROUGH HIS CERTIFICATE DATED 21.06.2007 THAT THE PELLETIZATION PLANT HAD COMMENCED COMMERCIAL PRODUCTION FROM 27.02.2007. ASSESSEE ALS O SUBMITTED THAT IT HAD ISSUED A LETTER TO CENTRAL EXCISE & CUSTOMS, RO URKELA INTIMATING COMMENCEMENT OF COMMERCIAL PRODUCTION ON 27.02.2007 . ASSESSEE ALSO PRODUCED COPIES OF CONSENT ORDER DATED 20.10.2006 P ASSED BY THE STATE POLLUTION CONTROL BOARD, ORISSA, AND COPY OF CERTIF ICATE DATED 01.03.2007 ISSUED BY SARPANCH OF CHANDIPOSH OF GRAM PANCHAYAT CERTIFYING COMMENCEMENT OF COMMERCIAL PRODUCTION OF THE PELLET IZATION PLANT ON 27.02.2007. PROJECT MANAGER OF DISTRICT INDUSTRIES CENTRE HAD ALSO NOTED THAT THERE WERE SEVERAL DEFECTS, TO BE RECTIFIED, W HICH WERE FOUND WHEN I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 4 TRIAL PRODUCTION STARTED ON 18.01.2007. AS PER THE ASSESSEE PLANT STARTED FUNCTIONING AFTER RECTIFYING SUCH DEFECTS ON 27.02. 2007. ASSESSEE ALSO PRODUCED STOCK REGISTER OF BENTONITE POWDER WHEREIN PURCHASES OF 50 MT ON 15.08.2006 WAS RECORDED, WHICH WAS ISSUED FOR TR IAL PRODUCTION DURING THE PERIOD 26.11.2006 TO 15.02.2007. AS PER THE ASS ESSEE, DIRECTORS REPORT FOR THE RELEVANT PREVIOUS YEAR ALSO CLEARLY MENTIONED THAT COMMERCIAL PRODUCTION IN THE IRON PELLETIZATION PLA NT HAD STARTED ON 27.02.2007. THE QUANTITY OF FINISHED PRODUCT FROM S UCH PELLETIZATION PLANT BEING PELLETS 1198.16 MT WAS REFLECTED IN THE CLOSING STOCK APPEARING IN SCHEDULE 6 OF ITS AUDITED ACCOUNTS. 8. LD. CIT(APPEALS) SOUGHT A REMAND REPORT FROM THE ASSESSING OFFICER ON THE ABOVE SUBMISSIONS. AS PER LD. CIT(APPEALS) I N THE REMAND REPORT ASSESSING OFFICER SIMPLY REITERATED WHAT WAS STATED BY HIM IN THE ASSESSMENT ORDER. CONSIDERING ALL THE DOCUMENTS FUR NISHED BY THE ASSESSEE, LD. CIT(APPEALS) WAS OF THE OPINION THAT INCONTROVERTIBLE EVIDENCE WAS PRODUCED BY THE ASSESSEE TO PROVE THAT COMMERCIAL PRODUCTION OF THE NEW PELLETIZATION PLANT HAD START ED DURING THE RELEVANT PREVIOUS YEAR. TAKING THIS VIEW OF THE MATTER, THE CLAIM OF DEPRECIATION WAS ALLOWED. 9. NOW BEFORE US, LD. D.R. STRONGLY ASSAILING THE O RDER OF LD. CIT(APPEALS) SUBMITTED THAT THE ASSESSEE DID NOT PR ODUCE ANY DETAILS OF COMMERCIAL PRODUCTION OF NEW PELLETIZATION PLANT BE FORE THE ASSESSING OFFICER. ASSESSEE HAD PRODUCED A FALSE CERTIFICATE BEFORE THE ASSESSING OFFICER WITH REFERENCE TO ITS POWER CONNECTION FOR ADDITIONAL LOAD. ASSESSEE HAD NOT PRODUCED THE MANDATORY CERTIFICATI ON UNDER FACTORY SAFETY RULES, FOR STARTING A NEW BOILER FROM THE BO ILER CONTROL AUTHORITY. ASSESSEE DID NOT SUBMIT ANY CREDIBLE EVIDENCE TO SH OW THAT PELLETIZATION PLANT HAD STARTED FUNCTIONING DURING THE RELEVANT P REVIOUS YEAR. THEREFORE, ACCORDING TO THE LD. D.R. LD. CIT(APPEAL S) FELL IN ERROR IN GIVING RELIEF TO THE ASSESSEE. I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 5 10. PER CONTRA, LD. AR SUPPORTED THE ORDER OF AUTHO RITIES BELOW. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REASON WHY ASSESSING OFFIC ER DENIED THE DEPRECIATION CLAIM ON THE NEW PELLETIZATION PLANT, WAS THAT THERE WAS NO ADDITIONAL POWER USED BY THE ASSESSEE. AS PER THE A SSESSING OFFICER ADDITIONAL POWER LOAD WAS TO BE GIVEN ON 01.04.2007 , FOR WHICH THERE WAS A LETTER DATED 12.03.2007 ADDRESSED TO THE ASSESSEE -COMPANY BY THE WESTERN ELECTRICITY SUPPLY COMPANY OF ORISSA LIMITE D, SAMBALPUR, ORISSA. ASSESSING OFFICER NOTED THAT THIS WAS CONTRADICTORY WITH THE OTHER RECORDS PRODUCED BY THE ASSESSEE. IN OUR OPINION, A SSESSING OFFICER PLACED TOO MUCH RELIANCE ON THE LETTER SANCTIONING ADDITIONAL POWER LOAD. THERE WAS NO COMPILATION MADE BY THE ASSESSING OFFI CER WITH REGARD TO THE POWER REGULARLY USED BY THE ASSESSEE WHEN THERE WAS NO PELLETIZATION PLANT AND HOW IT COMPARED WITH POWER CONSUMPTION FO R THE RELEVANT PREVIOUS YEAR, AFTER THE ALLEGED COMMISSIONING OF T HE PELLET PLANT. JUST BECAUSE POWER SANCTION FOR ADDITIONAL POWER LOAD WA S NOT GIVEN WOULD NOT BE A REASON TO SAY THAT ASSESSEE HAD NOT STARTE D WORKING ITS NEW PELLETIZATION PLANT. SIMILARLY NON-AVAILABILITY OF CERTIFICATION UNDER THE FACTORY SAFETY RULES, FOR STARTING A NEW BOILER FRO M THE CONCERNED BOILER CONTROL AUTHORITY, COULD MAKE FUNCTIONING OF THE UN IT IRREGULAR. IT CANNOT BE CONSIDERED AS SUFFICIENT EVIDENCE TO REACH A CON CLUSION THAT COMMERCIAL FUNCTIONING HAD NOT STARTED. AS AGAINST THIS, ASSESSEE HAD PRODUCED CONSIDERABLE EVIDENCE MENTIONED AT PARA 7 ABOVE, WHICH, INTER ALIA, INCLUDED CERTIFICATE FROM SARPANCH, CHANIPOSH GRAM PANCHAYAT, CERTIFICATE FROM PROJECT MANAGER, DISTRICT INDUSTRI ES CENTRE, ROURKELA AND LETTER FROM DEPUTY DIRECTOR OF FACTORIES AND BOILER S, ROURKELA DIVISION, UDITNAGAR, ROURKELA, WHICH ALL POINTED OUT CLEARLY THAT ASSESSEE HAD COMMENCED COMMERCIAL PRODUCTION ATLEAST ON 27.02.20 07. ASSESSEE HAD ALSO SHOWN CONSUMPTION OF BENTONITE POWDER, FURNACE OIL AND C.P. COKE IN ITS STOCK REGISTER DURING THE RELEVANT PREVIOUS YEAR. ASSESSEE ALSO SHOWED THAT THERE WAS PURCHASE OF BENTONITE POWDER WHICH WAS ONE OF I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 6 THE RAW MATERIAL REQUIRED FOR PELLETIZATION. ASSESS ING OFFICER HAD NOT MADE ANY COMMENTS ON THESE ASPECTS IN HIS REMAND RE PORT NOTED BY THE LD. CIT(APPEALS). THIS POSITION HAS NOT BEEN REBUTT ED BY THE REVENUE. WE ARE, THEREFORE, OF THE OPINION THAT THE LD. CIT(APP EALS) TOOK A CORRECT VIEW WHEN HE DIRECTED DEPRECIATION TO BE ALLOWED ON THE PELLETIZATION PLANT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THIS DI RECTION OF LD. CIT(APPEALS). GROUND NO. 1 OF REVENUE STANDS DISMIS SED. 12. VIDE GROUND NO. 2, REVENUE IS AGGRIEVED ON THE DELETION OF A DISALLOWANCE OF RS.11,43,809/- UNDER HEAD COMMISSI ON PAYMENT. 13. FACTS APROPOS ARE THAT ASSESSEE HAD PAID COMMIS SION OF RS.11,43,809/- TO ONE M/S. R.B. STEEL & ALLOYS @ RS .25/- PER TON FOR ITS OVERALL SALES. IN ADDITION THERE WERE PAYMENTS OF C OMMISSION MADE FOR SPECIFIC SALES TO EIGHT PARTIES. AS PER ASSESSING O FFICER, NO DETAILS WERE AVAILABLE WITH REGARD TO COMMISSION PAID ON OVERALL BASIS TO M/S. R.B. STEEL & ALLOYS. NO DETAILS REGARDING THE SERVICES R ENDERED BY THE SAID CONCERN WAS FURNISHED. HE, THEREFORE, CONCLUDED THA T COMMISSION CLAIMED WAS NOT EXCLUSIVELY AND WHOLLY INCURRED BY ASSESSEE FOR THE PURPOSE OF ITS BUSINESS. A DISALLOWANCE OF RS.11,43,809/- WAS MADE . 14. IN ITS APPEAL BEFORE THE LD. CIT(APPEALS), ARG UMENT OF THE ASSESSEE WAS THAT PAYMENT OF SALES COMMISSION WAS MADE TO M/ S. R.B. STEEL & ALLOYS BASED ON AN AGREEMENT DATED 01.10.2005. IN S UCH AGREEMENT IT WAS SPECIFIED THAT COMMISSION @ RS.25/- PER MT OF SPON GE IRON AND MS INGOT AND @ RS.10/- PER MT FOR IRON ORE FINES WERE TO BE PAID TO THEM. SINCE THERE WAS NO SALE OF IRON ORE FINES IN RELEVANT PRE VIOUS YEAR AND THERE WAS NO COMMISSION PAYMENT ON THIS HEAD. EVEN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR SIMILAR COMMISSION WAS PA ID TO M/S. R.B. STEEL & ALLOYS, BUT NO DISALLOWANCE WAS MADE. TAX WAS ALS O DEDUCTED AT SOURCE ON THE COMMISSION PAYMENT. THEREFORE, AS PER THE AS SESSEE, IT WAS A GENUINE PAYMENT WHICH COULD NOT HAVE BEEN DISALLOWE D. I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 7 15. LD. CIT(APPEALS) WAS APPRECIATIVE OF THESE CONT ENTIONS. ACCORDING TO HIM, NOT ONLY ASSESSEE HAD DEDUCTED TAX AT SOURC E BUT HAD ALSO PAID SERVICE TAX @ RS.12.24%. AS PER LD. CIT(APPEALS) IN THE PRECEDING YEARS SUCH COMMISSION WAS ALLOWED BY THE ASSESSING OFFICE R. HE, THEREFORE, HELD THAT THERE WAS NO CASE FOR A DISALLOWANCE OF COMMIS SION AS DONE BY THE ASSESSING OFFICER. SUCH DISALLOWANCE WAS DELETED. 16. NOW BEFORE US, LD. D.R. STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS) SUBMITTED THAT NOTHING WAS BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THE NECESSITY OF MAKING THE COMMIS SION PAYMENT TO M/S. R.B. STEEL & ALLOYS. PER CONTRA, LD. A.R. STRONGLY SUPPORTED THE ORDER OF LD. CIT(APPEALS). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE WAS AN AGRE EMENT BETWEEN ASSESSEE AND M/S. R.B. STEEL & ALLOYS AND THE COMMI SSION WAS PAID BY THE ASSESSEE TO THE SAID CONCERN AS PER TERMS AND AGREE MENT. THE COMMISSION WAS PAID AFTER DEDUCTING TAX AND ALSO AFTER EFFECTI NG SERVICE TAX PAYMENT. SIMILAR COMMISSIONS PAID IN THE PRECEDING YEARS WER E ALLOWED BY THE REVENUE. THERE IS NO CASE FOR THE REVENUE THAT M/S. R.B. STEEL & ALLOYS WAS IN ANY WAY RELATED TO THE ASSESSEE. COMMISSION OF @ RS.25/- PER MT ON SPONGE IRON SOLD, AND COULD NOT BE CONSIDERED AS EXCESSIVE PAYMENT. THERE WAS NOTHING ON RECORD TO SHOW THAT COMMISSION INCURRED WAS NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. LD. CI T(APPEALS) WAS, THEREFORE, JUSTIFIED IN DELETING THE DISALLOWANCES. GROUND NO. 2 OF REVENUE STANDS DISMISSED. 18. VIDE ITS GROUND NO. 3, GRIEVANCE OF THE REVENU E IS THAT LD. CIT(APPEALS) DIRECTED ALLOWANCE OF KEYMANS INSURAN CE PREMIUM OF RS.54,65,175/-. I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 8 19. ASSESSEES CLAIM FOR KEYMANS INSURANCE PREMIUM WAS DISALLOWED BY THE ASSESSING OFFICER. HOWEVER, LD. CIT(APPEALS) RELYING ON THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CA SE OF CIT VS.- B.N. EXPORTS (2010) 323 ITR 178 HELD THAT THE PREMIUM ON KEYMANS INSURANCE POLICY WAS AN ALLOWABLE EXPENSE. 20. NOW BEFORE US, LD. D.R. STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS) SUBMITTED THAT PURPOSE OF THE EXPENDIT URE WAS ONLY PERSONAL AND NOT FOR BUSINESS. PER CONTRA, LD. A.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 21. WE HAVE HEARD THE RIVAL SUBMISSIONS. THERE IS N O DISPUTE THAT KEYMANS INSURANCE POLICY WAS ON THE DIRECTORS OF T HE ASSESSEE-COMPANY. PREMIUM PAID WAS FOR THEIR LIFE INSURANCE. THERE IS NO CASE FOR THE REVENUE THAT THE DIRECTORS ON WHOSE BEHALF THE KEYM ANS INSURANCE PREMIUM WERE PAID WERE NOT INVOLVED IN THE BUSINESS OF ASSESSEE OR WERE NOT PIVOTAL IN ITS WORKING. VARIOUS COURTS HAVE C ONSISTENTLY HELD THAT KEYMANS INSURANCE POLICY PREMIUM PAID ON PERSONS W HO ARE INSTRUMENTAL FOR THE EFFECTIVE FUNCTIONING OF A BUS INESS, IS AN ALLOWABLE DEDUCTION. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(APPEALS). GROUND NO. 3 OF THE REVENUE STANDS DI SMISSED. 22. VIDE ITS GROUND NO. 4, GRIEVANCE OF THE REVENU E IS THAT LD. CIT(APPEALS) DELETED AN ADDITION OF RS.56,58,520/- ON ACCOUNT OF INTEREST. 23. ASSESSING OFFICER HAD DISALLOWED THE ABOVE INTE REST FOR THE REASON THAT THE NEW PELLETIZATION UNIT ON WHICH THE LOANS WERE RAISED HAD NOT COMMENCED PRODUCTION. LD. CIT(APPEALS) HAD DELETED THIS DISALLOWANCE, SINCE ACCORDING TO HIM THE PELLETIZATION UNIT HAD S TARTED FUNCTIONING IN THE RELEVANT PREVIOUS YEAR. FURTHER ACCORDING TO LD . CIT(APPEALS) IT WAS I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 9 ONLY AN EXPANSION OF BUSINESS AND DISALLOWANCE OF I NTEREST COULD NOT HAVE BEEN MADE. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS. NOTHING WA S BROUGHT ON RECORD BY THE LD. D.R. TO REBUT THE FINDINGS OF LD. CIT(APPEALS). WE HAVE ALSO ACCEPTED THE STAND OF LD. CIT(APPEALS) THAT PE LLETIZATION PLANT OF THE ASSESSEE HAD STARTED FUNCTIONING DURING THE RELEVAN T PREVIOUS YEAR WHILE DISPOSING OF GROUND NO. 1 OF THE REVENUE. THEREFORE , IN OUR OPINION, LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOW ANCE OF INTEREST. GROUND NO. 4 OF THE REVENUE STANDS DISMISSED. 25. VIDE ITS GROUND NO. 5, GRIEVANCE OF THE REVENU E IS THAT A SUM OF RS.54,445/- DISALLOWED BY THE ASSESSING OFFICER UND ER SECTION 36(1)(VA) WAS DIRECTED TO BE ALLOWED BY THE LD. CIT(APPEALS). 26. ABOVE DISALLOWANCE PERTAINED TO EMPLOYEES CONT RIBUTION TO PROVIDENT FUND FOR THE MONTHS OF FEBRUARY AND MARCH , 2007 WHICH WAS DEPOSITED BY THE ASSESSEE AFTER THE DUE DATE AS PER THE PROVIDENT FUND RULES. LD. CIT(APPEALS) HAD ALLOWED THE CLAIM BASED ON A SPECIFIC FINDING STATED THAT THE AMOUNTS WERE DEPOSITED BEFORE THE D UE DATE OF FURNISHING THE RETURN OF INCOME. ISSUE IN OUR OPINION IS COVER ED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS.- ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC). EVEN EMPLOYEES CONTRIBUTI ON TO P.F., IF REMITTED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME IS ALLOWABLE. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE DIRECTION OF LD. CIT(APPEALS) IN THIS REGARD. GROUND NO. 5 STANDS DI SMISSED. 27. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF JANUARY, 2014. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 8 TH DAY OF JANUARY, 2014 I.T.A. NO.: 682/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 10 10 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.