Neelachal Ispat Nigam Ltd, Bhubaneswar V. ACIT, Bhubaneswar

ITA 69/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65183 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 06-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: P S PANDAK K AGARWAL ARS
• Keywords: Depreciation; Opportunity of being heard; Corroborative evidences; Competent authority; Revised return; Revenue expenditure; Capital expenditure
• Section: 32; 145; 12; 154; 43B; 143(3); 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO S . 69,70 AND 71/CTK/2012 / ASSESSMENT YEAR S 2006 - 07,2007 - 08 AND 2008 - 09 NEELACHAL ISPAT NIGAM LTD., 1 ST FLOOR, ANNEXE, IP I COL HOUSE, BHUBANESWAR. PAN: AAACN 9433 B. - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, CIRCLE2(1), RAJASWA VIHAR, BHUBANESWAR 751 007 ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.S.PANDA/K.K.AGARWAL,ARS / FOR THE RESPON DENT: / S MT. PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 06.11.2012 / DATE OF PRONOUNCEMENT: 30.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THESE APPEALS BY THE ASSESSEE F OR THE RESPECTIVE AYS ARE BEFORE US WHEN THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 HAS INCURRED LOSS WHICH LOSS HAS BEEN ASSESSED AFTER DISALLOWING EXPENSES AND UNUTILIZED PORTION OF THE CENVAT TO BE CARRIED FORWARD ALONG WITH THE BROUGHT FORWARD LOSSES . FOR THE ASSESSMENT YEAR 2007 - 08 THE RETURN OF INCOME UNDER THE PROVISIONS OF SECTION 115JB HAS BEEN FILED ALONG WITH THE REGULAR ASSESSMENT U/S.143(3) WHEN THE ADJUSTMENT OF THE BROUGHT FORWARD LOSSES TO BE CARRIED OUT ALONG WITH THE DISALLOWANCE OF EXPE NSES OF THE IMPUGNED ASSESSMENT YEAR CONSIDERED BY THE ASSESSING OFFICER WERE APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY WHICH DISALLOWANCES OF EXPENSES INCLUDED A MAIN ISSUE REGARDING PRIOR PERIOD EXPENSES TO BE CONSIDERED BY THE TRIBUNAL AS A COMMON GROUND FOR THE THREE YEARS WAS TO BE ADJUDICATED ALONG WITH DISALLOWANCE OF I.T.A.NOS. 69,70 AND 71/CTK/2012 2 EXPENDITURES INCURRED UNDER THE HEAD REPAIRS AND MAINTENANCE UNDER THE DEEMING PROVISIONS OF SECTION 40(A)(IA) AND DISALLOWANCE ON DEPRECIATION ON THE ASSESSING OFFICER GIV ING A FINDING THAT AN ADDITION TO THE FIXED ASSETS WHETHER COULD BE PUT TO USE IN ACCORDANCE WI TH THE REQUIREMENT OF SECTION 3 2 ENTITLING THE ASSESSEE TO CLAIM DEPRECIATION. FOR THE ASSESSMENT YEAR 2008 - 09 AN ADDITIONAL GROUND APART FROM THE GROUND OF DISA LLOWANCE OF PRIOR PERIOD EXPENSES DISALLOWING INTEREST U/S.40(A)(IA) AND DISALLOWANCE OF DEPRECIATION, DISALLOWANCE OF MISCELLANEOUS EXPENSES HAVE BEEN MADE BY THE ASSESSING OFFICER WHEN THE ASSESSEE CHOOSE TO FILE A RETURN OF INCOME UNDER THE PROVISIONS O F SECTION 115JB WHICH HAS BEEN ASSESSED WHEN THE REGULAR ASSESSMENT FOR THE PURPOSE OF COMPUTING TAXABLE INCOME HAS BEEN ADJUSTED AGAINST THE BOOK PROFITS FOR THE PURPOSE OF SETTING OFF BROUGHT FORWARD LOSSES AND/OR DEPRECIATION IN ACCORDANCE WITH THE PROV ISIONS OF THE I.T.ACT. 2. AS ISSUES DEALT WITH BY THE LEARNED COUNSEL OF THE ASSESSEE IN RESPECT OF ALL THE THREE AYS STAND ADJUDICATED BY HIM AS PER THE FINDINGS OF THE AUTHORITIES BELOW, FOR THE SAKE OF CONVENIENCE WE TAKE UP THE ISSUES IN RESPECT OF THE ADDITIONS AND PART DELETIONS MADE BY THE LEARNED CIT(A) INDIVIDUAL ASSESSMENT YEAR WISE IN THIS COMMON ORDER. 3. THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING AND IN THE BUSINESS OF MANUFACTURING AND SALE OF PIG IRON, BILLETS AND WIRE RODS. THE RESPECTIVE A SSESSMENT YEARS WERE TAKEN UP FOR SCRUTINY UNDER THE PROVISIONS OF SECTION 143(3) WHEN AFTER ADJUDICATING THE ASSESSING OFFICER MADE THE DISALLOWANCES AS WERE APPEALED AGAINST THE APPELLATE AUTHORITY. PART SUSTENANCE OF THE DISALLOWANCES HAVE BEEN AGITATED BY THE ASSESSEE BEFORE US WHICH WE PROPOSE TO NOW TAKE UP THE CASES YEAR - WISE AS UNDER . I.T.A.NOS. 69,70 AND 71/CTK/2012 3 ASSESSMENT YEAR 2006 - 07 : 4. FOR THE ASSESSMENT YEAR 2006 - 07, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS & CIRCUMSTANCES O F THE CASE T HE ORDER PASSED BY L D. CIT (A) IS ILLEGAL & BAD IN LAW. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER PASSED BY A.O. WITHOUT GOING INTO THE SUBMISSIONS FILED BY THE APPELLANT & FACTS PRESENTED DURI NG THE HEARING. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS ERRED IN NOT CONSIDERING THE PRIOR PERIOD EXPENSES AMOUNTING TO 8 ,15,81,473 CRYSTA LLIZED DURING THE YEAR & CONFIRMING THE DISALLOWANCE MADE BY LD. A.O. 4. ON THE FACTS & C IRCUMSTANCES OF THE CASE THE LD. A.O. IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY LD. A.O. FOR THE UNUTILIZED PORTION OF CENVAT CRE DIT AMOUNTING TO 66,03,912 WITHOUT APPRECIATING THE FACT. 5. AS REGARDS DISALLOWANCE OF PRIOR PERIOD EXPENSES, TH E BRIEF FACTS ARE THAT THE ASSESSING OFFICER EXAMINED THE DETAILS FURNISHED BY THE ASSESSEE AND FOUND THE ASSESSEE TO HAVE CLAIMED 8,15,81,473 UNDER THE HEAD PRIOR PERIOD EXPENSES, WHICH ACCORDING TO THE ASSESSING OFFICER ARE NOT ALLOWABLE EXPENDITURES UNDER THE INCOME - TAX ACT,1961 HOLDING A VIEW THAT IN MERCANTILE SYSTEM OF ACCOUNTING THE ASSESSEE CAN CLAIM DEDUCTION FOR LIABILITY, WHICH HAS ARISEN AND INCURRED DURING THE ACCOUNTING YEAR AND IS NON CONTINGENT AND ASCERTAINABLE IN NATURE AND SHOULD HAVE CRYSTALLIZED DURING THE RELEVANT PREVIOUS YEAR. IN THIS CASE THE LIABILITY/EXPENSES HAS NOT ACCRUED DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THEREFORE ANY EVENTS/EXPENSES INCLUDED IN THE PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH AS - 4, SHALL NOT HINDER THE ASSESSING OFFICER TO DISALLOW THE SAME AS PER THE INCOME TAX ACT. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE AMOUNT 8,15,81,473 CLAIMED AS PRIOR PERIOD EXPENSES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CI T(A) CONFIRMED THE I.T.A.NOS. 69,70 AND 71/CTK/2012 4 SAME ON THE OBSERVATIONS AS MADE IN PARAGRAPHS 4.1 AND 4.2 IN HIS ORDER , WHICH IS REPRODUCED AS UNDER : 4.1. LENGTHY SUBMISSION WAS ALSO FILED BY THE APPELLANT CHALLENGING THE FINDING OF THE A.O. THE SUBMISSION RUNS INTO SIX PAGES. I HA VE CAREFULLY CONSIDERED THE SUBMISSION OF THE ASSESSEE . THE APPELLANT HAS TRIED TO SUBMIT THAT EXPENSES IN QUESTION WERE CRYSTALLIZED DURING THE PREVIOUS YEAR. THIS FACT WAS DULY EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE AO HAS CLEARLY GIVE N A QUASI JUDICIAL FINDING THAT EXPENSES HAVE NOT BEEN CRYSTALLIZED DURING THE RELEVANT PREVIOUS YEAR. SINCE THE EXPENSES WERE NOT CRYSTALLIZED , OBVIOUSLY, THEY CANNOT BE ALLOWED IN THIS ASSESSMENT YEAR. 4.2. AFTER HAVING CAREFULLY CONSIDERED THE ORDER OF THE AO AND THE SUBMISSION OF THE APPELLANT AND TAKING THE FACTS AND CIRCUMSTANCES INTO ACCOUNT, I WOULD TEND TO AGREE WITH THE AO. IN VIEW OF THE SAME, NO MERIT IS FOUND IN THE APPELLANTS SUBMISSION FOR THE DETAILED REASON GIVEN ABOVE. ACCORDINGLY, ADDITI ON OF 8,15,81,473 ON ACCOUNT OF PRIOR PERIOD EXPENSES IS CONFIRMED THE GROUND NO. 2 OF THE APPEAL IS DISMISSED. 5.1. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE CONTENTION OF THE A.O. IS NOT CORRECT. THE LEARNED CIT (A) HAS ONLY CONFIRMED T HE A.O.S ORDER BUT WITHOUT ANY REASONING. HE CONTENDED THAT THE EXPENSES WHICH ARE CRYSTALLIZED DURING THE YEAR HAVE BEEN BOOKED UNDER THE PRIOR PERIOD EXPENSES. THE SAME HAS BEEN DULY VERIFIED BY THE EXTERNAL AUDITORS OF THE COMPANY AS WELL AS THE CAG. B EING A PSU, THE SYSTEM OF ACCOUNTING STRICTLY ADHERES TO THE ACCOUNTING NORMS FOR PRIOR PERIOD EXPENSES WHICH IS ALSO EVIDENT FROM THE TAX AUDIT REPORT ON THE BASIS OF WHICH THE ADDITIONS HAVE BEEN MADE. DURING THE COURSE OF HEARING FOR ASSESSMENT AS WELL AS APPEAL, THE BOOKS OF ACCOUNTS WERE PRODUCED WITH ALL DETAILS AND SUPPORTING EVIDENCES LIKE VOUCHERS ETC. WHICH CLEARLY INDICATE THAT THE EXPENSES CRYSTALLIZED DURING THE YEAR. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE DEPARTMENT HAS TO APPR ECIATE THAT IN SUCH LARGE PSU, IT MAY NOT ALWAYS BE POSSIBLE TO LOCATE SOURCE DOCUMENTS AFTER A LAPSE OF ALMOST COUPLE OF YEARS AND THEY HAVE TO RELY ON THE SYSTEM OF ACCOUNTING TO A FAIR EXTENT. I.T.A.NOS. 69,70 AND 71/CTK/2012 5 SOME SOURCE DOCUMENTS ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 21 TO 40 INCLUDING THE OFFICE NOTE ATTACHED TO IT WHICH CONFIRMS THE BASIS OF ACCOUNTING ADOPTED BY THE PSU. IN VIEW OF THE ABOVE, DISALLOWANCE OF GENUINE EXPENSES ON THE GROUND OF LACK OF EVIDENCE TO PROVE THE YEAR OF CRYSTALLIZATION AND IGNORING THE BOOKS OF ACCOUNTS AND OTHER EVIDENCES PRODUCED WILL CREATE CONSIDERABLE HARDSHIP TO THE ASSESSEE . 5.2. THE LEARNED COUNSEL OF THE ASSESSEE POINTED OUT THE REASONING OF CRYSTALLIZATION OF THE EXPENSES DURING THE YEAR OF EACH OF THE PRIOR PERIOD EXPENDITURE AS UNDER: I) INTEREST ADJUSTMENT ON LOAN/CDR FOR 1,54,68,496 THE ASSESSEE COMPANY HAD BORROWED LOAN FROM 15 BANKS AND 8 FIS FOR SETTING UP THE PLANT AND DUE TO FINANCIAL CRUNCH IT HAD GONE FOR CORPORATE DEBT RESTRUCTURING FOR WHICH THE CUT OFF DATE WAS FIX ED AT 1ST. APRIL, 2003. HOWEVER, THE CDR PACKAGE GOT SANCTIONED DURING THE A.Y. 2005 - 06 AND AFTER DUE RECONCILIATION IT WAS EFFECTED DURING THE A.Y. 2006 - 07. AFTER THE RECONCILIATION, THE SHORT INTEREST CHARGED IN EARLIER YEARS AMOUNTING TO 154,68,496 WE RE ACCOUNTED FOR DURING THE YEAR AS PRIOR PERIOD EXPENSES WHICH WAS NEVER KNOWN TO THE ASSESSEE IN EARLIER YEA RS. IN SUPPORT OF THE ABOVE A LETTER ISSUED BY VIJAYA BANK CLAIMING INTEREST AMOUNTING TO 80,75,430 IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 21 . THE AFORESAID BANK ON 16.04.2005 CLAIMED 80,75,430 TOWARDS INTEREST UP TO 31.03.2005 WHICH WAS CRYSTALISED DURING THE YEAR ONLY. ACCORDINGLY, THE ASSESSEE COMPANY ACCOUNTED FOR THE SAME DURING THE A.Y. 2006 - 07 AS PRIOR PERIOD EXPENSES. HENCE THE CONTE NTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITURE WAS NOT CRYSTALISED DURING THE YEAR IS NOT CORRECT. II) EMPLOYEES RELATED CLAIMS FOR 2,83,42,494 DURING THE YEAR ON 24.06.2005 THE BOARD OF DIRECTORS APPROVED THE ARREARS OF PAY REVISION FOR THE PE RIOD FROM 01.01.97 TO 31.12.2000. A CERTIFIED COPY OF THE RESOLUTIONS PASSED IN THE BOARD MEETING IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 22 TO 24. BASED ON THE ABOVE APPROVAL, THE LIABILITY ON ACCOUNT OF WAGES REVISION COMPUTED AT 2,83,42,494 AND SINC E THE ENTIRE I.T.A.NOS. 69,70 AND 71/CTK/2012 6 EXPENSES PERTAINS TO EARLIER YEARS BUT CRYSTALISED DURING THE YEAR WHICH IS EVIDENT FROM THE DATE OF PASSING THE BOARD RESOLUTION, ACCOUNTED FOR AS PRIOR PERIOD EXPENSES. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITU RE WAS NOT CRYSTALISED DURING THE YEAR IS NOT CORRECT. III) RAILWAY DEMURRAGE FOR 1 , 92,69,351 ON 27.02.2006 THE DEMURRAGE CLAIMED BY RAILWAY DEPARTMENT FOR 8,81,76,720 WAS SETTLED AT 5,37,04,992. THE YEAR WISE BREAK UP OF THE DEMURRAGE CLAIMED AND SETTLED AND COPY OF LETTER ISSUED BY SR. DIVL. OPERATIONS MANAGER , KHURDA ROAD ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 25 AND 26 RESPECTIVELY. OUT OF 537,04,992 SETTLED DURING THE YEAR, 1,92,69,351 PERTAINS OF F.Y. 2002 - 03, F.Y. 2003 - 04 AND F.Y. 2004 - 05, ACCORDINGLY CLAIMED AS EXPENSES UNDER THE HEAD PRIOR PERIOD EXPENSES FOR THE A.Y. 2006 - 07. THE ABOVE EXPENDITURE WAS CRYSTALISED DURING THE YEAR BASED ON THE LETTER DT. 27.02.2006 RECEIVED. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITURE WAS NOT CRYSTALISED DURING THE YEAR IS NOT CORRECT. IV) PLANT C OMMISSIONING EXPENSES FOR 22,12,387 RASHTRIYA ISPAT NIGAM LTD. RAISED A BILL DURING THE YEAR ON 05.04.2005 FOR 22,12,387 TOWARDS PLANT COMMISSIONING EXPENSES WHICH PERTAINS TO F.Y. 2002 - 03 AND F.Y. 2004 - 05. A COPY OF THE BILL RAISED BY RINL IS ENCLOSED IN THE PAPER BOOK AT PAGE NO.27 TO 30. SINCE THE EXPENSES CRYSTALLIZED MATERIALIZED DURING THE YEAR ON 05.04.2005 BUT RELATED TO EARLIER YEAR, HENCE CONSIDERED AS PRIOR PERIOD EXPENSES. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. V) SALES ADJUSTMENT FOR THE F.Y. 2004 - 05 FOR 1 , 36,27,747 DURING THE YEAR ON 24.08.2005, THE ASSESSEE COMPANY ISSUED A CREDIT NOTE FOR 1,36,27,747 BEFORE SALES TAX FOR EXCESS BILLING MADE DURING THE F.Y. 2004 - 05 AFTER SETTLEMENT WITH MMTC. A COPY OF THE CREDIT NOTE ISSUED IS ENCLOSED IN THE PAP ER BOOK AT PAGE NO. 31. SINCE THE ABOVE CREDIT NOTE FOR EXCESS BILLING PERTAINS TO A.Y. 2005 - 06 AND ISSUED ON 24.08.2005, ACCORDINGLY CONSIDERED AS PRIOR PERIOD EXPENSES FOR THE A.Y. 2006 - 07. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. VI) ADMINISTRATIVE EXPENSES OF 10,45,619 I.T.A.NOS. 69,70 AND 71/CTK/2012 7 ON 27.12.2005 MMTC ISSUED A LETTER TOWARDS CLAIM RECOVERABLE FOR THE YEAR 2004 - 05. COPY OF THE LETTER ISSUED BY MMTC IS ENCLOSED IN THE PAPER BOOK AT PAGE NO.32. SINCE THE CLAIM WAS CRYSTALISED DURING THE A.Y.2006 - 07 ACCORDINGLY CONSIDERED AS PR IOR PERIOD EXPENDITURE. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. VII) SALES TAX FOR 12,70,242 ON 30.03.2005 THE SALES TAX AUTHORITIES PASSED AN ORDER U/S 12 FOR THE F.Y. 2 001 - 02 WHEREIN RAISED A DEMAND OF 12,27,993 WHICH WAS RECEIVED BY THE ASSESSEE DURING THE A.Y. 2006 - 07 AND ACCORDINGLY CLAIMED AS PRIOR PERIOD EXPENSES. A COPY OF THE SAID ORDER IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 33 TO 37. BESIDES ABOVE CENTRAL SA LES TAX DEPARTMENT ALSO RAISED A DEMAND OF 42,249 FOR THE A.Y. 2001 - 02, COPY OF THE ORDER WAS RECEIVED ON 05.12.2005 I.E. DURING THE A.Y. 2006 - 07. A COPY OF THE ORDER IS ENCLOSED AS IN THE PAPER BOOK AT PAGE NO. 38 TO 40. ACCORDINGLY THE TOTAL EXPENSES U NDER THE HEAD SALES TAX COMES TO 12,70,242 ( 12,27,993 + 42,249) WHICH WAS BOOKED UNDER THE HEAD PRIOR PERIOD EXPENSES SINCE THE SAME WAS CRYSTALLIZED DURING THE YEAR. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT (A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. THE LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT F ROM THE ABOVE, IT IS TO BE APPRECIATED THAT THE ASSESSEE COMPANY HAS PROVIDED FOR THE LIABILITY ONLY WHEN IT HAS BEEN CRYSTALLIZED, AND A S STATED ABOVE, OBLI GATION OF THE ASSESSEE FOR PAYMENT OF SUCH EXPENSES HAS CRYSTALLIZED ONLY DURING THE PERIOD RELEVANT TO THE YEAR UNDER APPEAL AND ACCORDINGLY IT WAS BOOKED UNDER THE HEAD PRIOR PERIOD EXPENSES. THEREFORE, THE LEARNED COUNSEL OF THE ASSESSEE REQUESTED TO A CCEPT THE SUBMISSION S OF THE ASSESSEE AND DELETE THE ADDITIONS MADE UNDER THE HEAD PRIOR PERIOD EXPENSES . I.T.A.NOS. 69,70 AND 71/CTK/2012 8 5.3. AS REGARDS SUSTENANCE OF ADDITION UNUTILIZED CENVAT CREDIT TO THE VALUATION OF CLOSING STOCK , VIDE PARAGRAPH 1, THE ASSESSING OFFICER OBSERVE D AS UNDER : .. IN VIEW OF THE ABOVE, THE UNUTILIZED CENVAT CREDIT OF 66,03,912 IS ADDED TO THE CLOSING STOCK OF THE ASSESSEE. NOW, ONCE THE ABOVE AMOUNT IS ADDED TO THE CLOSING STOCK WHICH WAS NOT EARLIER INCLUDED BY THE ASSESSEE, THE APPLICABILITY OF SECTION 43B OF THE I.T. ACT COMES INTO PICTURE. THE ASSESSEE HAS NOT IN CLUDED THE CENVAT CREDIT IN THE CLOSING STOCK AND HAS ONLY SHOWN IN THE BALANCE SHEET UNDER THE HEAD LOANS AND ADVANCES. THIS CLEARLY MEANS THAT THE SAID AMOUNT WAS NEITHER DEBITED TO THE PROFIT AND LOSS ACCOUNT NOR PAID TO THE GOVERNMENT ACCOUNT. THEREF ORE, THE SAID AMOUNT CANNOT BE CLAIMED AS EXPENDITURE WHICH WAS OTHERWISE ALLOWABLE UNDER THIS ACT AND PAID WITHIN THE TIME LIMIT AS MENTIONED IN THE SECTION 43B OF THE ACT, AS THE SAME WAS NEVER DEBITED TO THE PROFIT AND LOSS ACCOUNT NOR IT WAS PAID TO TH E GOVERNMENT ACCOUNT. HENCE, THE UNUTILIZED CENVAT CREDIT OF 66,03, 912 IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CIT(A) AGREED WITH THE VIEW OF THE ASSESSING OFFICER AND CONFIRMED THE IMPUGNED DISALLOWANCE HOLDING VIEW THAT CENVAT CREDIT NEEDS TO BE CONSIDERED IN ACCORDANCE WITH SECTION 145 OF THE ACT AND THE ASSESSING OFFICER HAS RIGHTLY ADDED THE AMOUNT AND NO INFIRMITY IS FOUND IN THE ACTION OF THE AO AND NO MERIT IN THE SUBMISSION OF THE ASSESSEE . 5.4. THE LEARNED COUNSE L OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE ADOPTS GROSS METHOD OF ACCOUNTING FOR CENVAT CREDIT, AS EXPLAINED BY THE LD. A.O. AND NOT THE NET METHOD. ACCORDINGLY THE CREDIT AVAILED ON THE CLOSING STOCK OF PURCHASED ITEM IS ALREADY REDUCED FROM THE PURCHA SE COST AND TRANSFERRED TO CENVAT CREDIT PENDING UTILIZATION ACCOUNT IN THE BALANCE SHEET TREATMENT OF WHICH IS NOW BEING DISPUTED. THE ENTIRE EXPLANATION / REFERENCE QUOTED BY THE ASSESSING OFFICER IS FOR THE PURPOSE I.T.A.NOS. 69,70 AND 71/CTK/2012 9 OF UNDERSTANDING BOTH THE SYSTEM OF A CCOUNTS BUT A.O. HAS PRESUMED THAT THE WRONG SYSTEM (NET) HAS BEEN ADOPTED, WHEREAS THE ASSESSEE ADOPTS THE GROSS SYSTEM. THEREFORE, THE LEARNED COUNSEL OF THE ASSESSEE REQUESTED TO DELETE THE ADDITION MADE ON ACCOUNT OF UNUTILIZED PORTION OF CENVAT CREDI T AMOUNTING TO 66,03,912. 6. THE LEARNED CIT - DR SUBMITTED THAT THE ASSESSEE CANNOT TAKE ADVANTAGE OF ITS OWN SHORT COMINGS INSOFAR AS THE ASSESSEE OUGHT TO HAVE FILED A REVISED RETURN IN CASE THE INCOME OR EXPENSES THE NET OF WHICH HAS BEEN CLAIMED IN THE IMPUGNED ASSESSMENT YEAR WAS TO BE CONSIDERED ALONG WITH THE INCOME OR LOSS ALREADY ASSESSED AND COMPUTED BY THE ASSESSING OFFICER. THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE CANNOT TAKE ADVANTAGE OF HOLDING VIEW THAT THE EXPENSES HAVE BEEN CLAIMED IN THE IMPUGNED ASSESSMENT YEAR ON THE CRYSTALLIZATION THEREOF. THIS GOES TO THE ROOT OF ACCOUNTING STANDARD NOT BEING FOLLOWED BY THE ASSESSEE AS PER THE I.T.ACT. THE LEARNED CIT(A) THEREFORE CONSIDERED THE CASE OF THE ASSESSEE INSOFAR A S HE CONFIRMED THE DISALLOWANCE WITH RESPECT TO THE PRIOR PERIOD EXPENSES WHICH MAY KINDLY BE CONFIRMED INSOFAR AS AN OPINION CANNOT BE THE BASE FOR HOLDING VIEW THAT THE MERCANTILE SYSTEM OF ACCOUNTING HAS BEEN FOLLOWED WHICH DIRECTLY INDICATES THAT THE ASSESSEE CANNOT COMPUTE ITS INCOME ON ACCOUNT OF THESE ITEMS WHICH DIRECTLY INCREASE OR DECREASE THAT INCOME FOR THAT PARTICULAR YEAR. WITH RESPECT TO THE ADDITION OF UNUTILIZED CENVAT CREDIT TO THE CLOSING STOCK, SHE SUBMITTED THAT THE LAW PROVIDES FOR S UCH ADDITION AS MAY KINDLY BE PERUSED WHICH HAS BEEN SUPPORTED BY THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. INSOFAR AS THE PRIOR PERIOD EXPENSES ARE CONCERNED THE EXPENDITURE CLAIMED UNDER THE HEAD PRIOR PERIOD EXPENSES ARE SUCH, WHERE I.T.A.NOS. 69,70 AND 71/CTK/2012 10 THE LIABILITIES WERE CRYSTA L LIZED AND QUANTIFIED DURING THE YEAR UNDER CONSIDERATION. IT IS NOT CORRECT TO SAY THAT THE L IABILITIES WERE KNOWN AND AROSE DURING THE YEAR TO WHICH IT RELATED AND THE ASSESSEE HAS NOT CORRECTLY ACCOUNTED FOR THE SAME. IN FACT, IN LARGE UNDERTAKING THERE ARE MANY REASONS WHERE L IABILITIES ARE NOT QUANTIFIED AND SOME ITEMS ARE ALSO NOT KNOWN DURING THE YEAR. SIMILARLY , THE INCOMES RELATING TO THE PRIOR PERIOD ARE ALSO ACCOUNTED FOR IN TH E YEAR WHEN IT AROSE AND OFFERED FOR TAXATION. WHEN THE PRIOR PERIOD INCOMES ARE SUBJECTED FOR TAXATION, IN OUR CONSIDERED VIEW IT WILL NOT BE CORRECT TO DISALLOW PRIOR PERIOD EXPENSES. IN ANY CASE, THE CLAIM OF PRIOR PERIOD EXPENSES DOES NOT GO AGAINST TH E PRINCIPLE OF MERCANTILE SYSTEM OF ACCOUNTING AS THE L IABILITY OF THE SAID EXPENDITURE HAS ACTUALLY CRYSTALLIZED D URING THE YEAR OF CLAIM. THE ASSESSING OFFICER AND THE LEARNED CIT (A) WITHOUT EXAMINING THE ACCRUAL OF THE EXPENDITURE S , H AS DISALLOWED THE EXPENDITURE S WHICH CANNOT BE SUSTAINED. THIS PRACTICE OF ACCOUNTING PRIOR PERIOD EXPENDITURE IS A COMMON PRACTICE IN PUBLIC SECTOR UNDERTAKINGS. THE EXPENDITURE HAVING BEEN ACTUALLY INCURRED AND HAVING BEEN DULY ACCOUNTED FOR ON THE BASIS OF CRYSTALLIZATIO N , THE AUTHORITIES BELOW ARE NOT JUSTIFIED TO DISALLOW THE SAME. IT IS POSSIBLE THAT SINCE THE MATTER IS OLD AND THE BEING A LARGE ORGANIZATION, THE SUPPORTING EVIDENCES FOR THE ALL THE PRIOR YEAR EXPENSES BUT CRYSTALLIZED DURING THE YEAR MAY NOT BE AVAILA BLE FOR VERIFICATION. HOWEVER, IT IS A FACT THAT THE ACCOUNTS OF SUCH ORGANIZATION ARE AUDITED BY EXTERNAL AUDITORS AND ALSO BY CAG. AFTER DUE VERIFICATION, THE DETAILS OF THE EXPENDITURE OF SUCH NATURE IS GIVEN IN THE TAX AUDIT REPORT BY THE TAX AUDITOR. HENCE, OCCURRENCE OF THE EXPENDITURE CANNOT BE DOUBTED. IN THE PRESENT CASE THE ASSESSEE HAS SUBMITTED FEW SUPPORTING EVIDENCES FOR THE EXPENSES CRYSTA L LIZED DURING THE YEAR WHICH PERTAINS TO EARLIER YEARS AND SHOWED INABILITY TO SUBMIT THE EVIDENCES FOR I.T.A.NOS. 69,70 AND 71/CTK/2012 11 E ACH AND EVERY EXPENDITURE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE EVIDENCES FOR THE EXPENSES CRYSTALLIZED DURING THE YEAR AS PRODUCED BY THE ASSESSEE BESIDES THE STATUTORY EXPENSES WHICH ARE MENTIONED IN THE TAX AUDIT MAY BE ALLOWED. IN VIEW OF THE ABOVE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND DIRECT THE ASSESSING OFFICER TO ALLOW THE PRIOR PERIOD EXPENSES IN THE ASSESSMENT YEAR 2006 - 07 BEING 1) INTEREST ON LOAN AMOUNTI NG TO 80,75,430 OUT OF 1 , 54,68,496 CLAIMED , SINCE SUPPORTING EVIDENCE FOR THE AFORESAID AMOUNT WERE SUBMITTED. 2) EMPLOYEES RELA TED CLAIMS FOR 2,83,42,494. 3) RAILWAY DEMURRAGE FOR 2003 - 04 & 2004 - 05 FOR 1,92,69,351 . 4) PLANT COMMISSIONING EXPENSE PAID TO RINL FOR 22,12,387. 5) S AL ES ADJUSTED FOR 2004 - 05 FOR 1 ,36,27,747. 6) A DMINISTRATIV E EXPENSES PAID TO MMTC FOR 10,29,245. 97 OUT OF 10,45,619 CLAIMED. 7) SALES TAX OF 12,70,242 AGGREGATING TO 7,38,26,896.97 OUT OF TOTAL CLAIM OF 8,15,81,473 . AGGREGATING TO 7,38,26,896 OUT OF TOTAL CLAIM OF 8,15,81,473. 8. INSOFAR AS THE UNUTILISATION OF CENVAT CREDIT IS CONCERNED, WE ARE INCLINED TO FIND JUSTIFICATION IN THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS CHOSEN TO PICK THE PROVISIONS OF LAW INSOFAR AS SECTION 145A HAS BEEN PARTLY ADOPTED BY THE AO FOR TAXING THE UNUTILIZED PORTION OF THE CENVAT CREDIT IN THE HANDS OF THE ASSESSEE. THE VALUATION OF PURCHASE AND SALES OF GOODS AND INVENTORY FOR THE PURPOSE OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION SHALL BE FURTHER ADJUSTED TO INCLUDE THE UNUTILIZED PORTION OF CENVAT CREDIT HAS BEEN ENHANCED ONLY FOR THE VALUATION IS UNJUST TO THE ASSESSEE INSOFAR AS THE AS SESSEES CONTENTION IS THAT THE PURCHASES DO NOT INCLUDE THE PORTION OF EXCISE DUTY WHICH REMAINED UNUTILIZED. THE I.T.A.NOS. 69,70 AND 71/CTK/2012 12 ASSESSEE HAS NOT SOLD THE GOODS ON WHICH THE EXCISE DUTY COULD BE BURDENED INSOFAR AS THE CREDIT WAS TO BE AVAILED ONLY ON THOSE GOODS WHICH ARE LYING IN THE STOCK MAY BE UNFINISHED AS PER THE EXCISE DUTY NORMS THEREFORE SHOULD HAVE BEEN CONSIDERED FOR INFLATION OF THE OPENING STOCK AS WELL OF THE SUBSEQUENT YEAR WHICH COULD HAVE NO AFFECT INSOFAR AS IT IS NOT IN THE HANDS OF THE ASSESSEE TO PR E - PONE OR POSTPONE THE UTILIZATION OF THE UNUTILIZED CREDIT. RATHER THE MANUFACTURING IS CONTROLLED BY THIS PROCESS WITH STOCK REGISTER INCLUDE THOSE ITEMS OF INVENTORIES ON WHICH NO EXCISE DUTY WAS PAID. IN OTHER WORDS, WE DO NOT FIND THE CIT(A)S CONTENT ION OF UPHOLDING THE SAME FOR DISALLOWANCE TO BE ADDED AS VALUATION WHERE HE NOTED THAT IT HAS TO BE IN ACCORDANCE WITH SECTION 145 WHEN SECTION 145A RATHER CLARIFIES THE STAND INSOFAR AS THE EXCISE DUTY REMAIN UNUTILIZED IS GOVERNED BY THAT SECTION. WE A LSO AGREE TO THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE CONCEPT OF MERCANTILE SYSTEM OF ACCOUNTING HAS TO BE UNDERSTOOD TO THE HILT INSOFAR AS THE ASSESSING OFFICER HAS DISALLOWED THE PRIOR PERIOD EXPENSES ON THE UNDERSTANDING OF MERCA NTILE SYSTEM OF ACCOUNTING. THE NULLITY AFTER ENHANCING THE VALUATION WHICH VALUATION IS CONSISTENT AT LOWER OF COST OR MARKET VALUE CANNOT BE UNLESS CORRESPONDING EFFECT IS GIVEN TO THE OPENING OR CLOSING STOCK UNDER THE MERCANTILE SYSTEM OF ACCOUNTING TH EREFORE WOULD LEAD TO A NULLITY CANNOT BE CONSIDERED FOR VALUATION PURPOSES ONLY. IT IS THE INCOME WHICH IS TO BE DETERMINED INSOFAR AS THE METHOD OF ACCOUNTING REMAINED THE SAME FOR THE PREVIOUS AND LATER YEARS. IN VIEW OF THE ABOVE, THE ADDITION OF 66,0 3,912 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNUTILIZED PORTION OF CENVAT CREDIT AND CONFIRMED BY THE LEARNED CIT(A) IS NOT AT ALL JUSTIFIED. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFI CER TO DELETE THE ADDITION OF 66,03,912 MADE ON THIS COUNT. I.T.A.NOS. 69,70 AND 71/CTK/2012 13 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 IS PARTLY ALLOWED. ASSESSMENT YEAR 2007 - 08 : 10. FOR THE ASSESSMENT YEAR 2007 - 08, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS & CIRCUMSTANCES O F THE CASE THE ORDER PASSED BY L D. CIT (A) IS ILLEGAL & BAD IN LAW. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L D. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER PASSED BY L D. A.O. WITHOUT GOING INTO THE SUBMISSIONS FILED BY THE AP PELLANT AND FACTS PRESENTED DURING THE HEARING. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L D. CIT (A) IS ERRED IN NOT CONSIDERING THE PRIOR PERIOD EXPENSES AMOUNTING TO 73,34,229 CRYSTALLIZED DURING THE YEAR & CONFI RMING THE DISALLOWANCE MADE BY L D. A.O. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L D. CIT (A) IS ERRED IN NOT CONSIDERING THE DETAILS SUBMITTED WITH REGARD TO NON DEDUCTION OF TDS ON AMOUNT DEBITED UND ER THE HEAD REPAIR & MAINTENANCE WITH A CONTENTION THAT THE SAME CAN BE RECTIFIED BY A.O. U/S 154 OF THE INCOME TAX ACT,1961. 5. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L D. CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF ID. A.O. WITH REGARD TO DISALLOWANCE OF DEPRECIATION ON PLANT & MACHINERY AMOUNTING TO 5,57,84,307 . 6. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L D. CIT (A) IS ERRED IN NOT ADJUDICATING THE GROUNDS OF APPEAL FILED FOR DISALLOWANCE OF DEPREC IATION ON PLANT & MACHINERY BY L D. A.O. WITH A CONTENTION THA T THE SAME CAN BE RECTIFIED BY L D. A.O. U/S 154 OF THE INCOME TAX ACT, 1961. 11. AS REGARDS DISALLOWANCE OF PRIOR PERIOD EXPENSES, THE ASSESSEE CLAIMED PRIOR PERIOD EXPENSES OF 73,34,229. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENSES OF EARLIER YEAR CAN ONLY BE ALLOWED IF SUCH EXPENSES ARE ESTABLISHED TO HAVE BEEN CRYSTALLIZED IN THE RELEVANT FINANCIAL YEAR. HE OBSERVED THAT NOTHING WAS PRODUCED TO SHOW THAT THE SAID EXPENSES ACTUALLY CRYSTALLIZED IN THE RELEVANT FINANCIAL YEAR AND AS SUCH, HE DISALLOWED I.T.A.NOS. 69,70 AND 71/CTK/2012 14 THE SAME. ON APPEAL, THE LEARNED CIT(A) UPHELD THE VIEW AS WELL AS THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE SAID CLAIM. 12. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE CONTENTION OF ASSESSING OFFICER IS NOT CORRECT. THE LEARNED CIT (A) HAS ONLY CONFIRME D THE A.O.S ORDER BUT WITHOUT ANY REASONING. THE EXPENSES WHICH ARE CRYSTALLIZED DURING THE YEAR HAS BEEN BOOKED UNDER THE PRIOR PERIOD EXPENSES. THE SAME HAS BEEN DULY VERIFIED BY THE EXTERNAL AUDITORS OF THE COMPANY AS WELL AS THE CAG. BEING A PSU, THE SYSTEM OF ACCOUNTING STRICTLY ADHERES TO THE ACCOUNTING NORMS FOR PRIOR PERIOD EXPENSES WHICH IS ALSO EVIDENT FROM THE TAX AUDIT REPORT ON THE BASIS OF WHICH THE ADDITIONS HAVE BEEN MADE. DURING THE COURSE OF HEARING FOR ASSESSMENT AS WELL AS APPEAL, THE B OOKS OF ACCOUNTS WERE PRODUCED WITH ALL DETAILS AND SUPPORTING EVIDENCES LIKE VOUCHERS ETC. WHICH CLEARLY INDICATE THAT THE EXPENSES CRYSTALLIZED DURING THE YEAR. THE DEPARTMENT HAS TO APPRECIATE THAT IN SUCH LARGE PSU, IT MAY NOT ALWAYS BE POSSIBLE TO LOC ATE SOURCE DOCUMENTS AFTER A LAPSE OF ALMOST COUPLE OF YEARS AND THEY HAVE TO RELY ON THE SYSTEM OF ACCOUNTING TO A FAIR EXTENT. SOME SOURCE DOCUMENTS ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 16 TO 28 INCLUDING THE OFFICE NOTE ATTACHED TO IT WHICH CONFI RMS THE BASIS OF ACCOUNTING ADOPTED BY THE PSU. IN VIEW OF THE ABOVE, DISALLOWANCE OF GENUINE EXPENSES ON THE GROUND OF LACK OF EVIDENCE TO PROVE THE YEAR OF CRYSTALLIZATION AND IGNORING THE BOOKS OF ACCOUNTS AND OTHER EVIDENCES PRODUCED WILL CREATE CONSID ERABLE HARDSHIP TO THE APPELLANT. THE LEARNED COUNSEL OF THE ASSESSEE POINTED OUT THE REASONING OF CRYSTALLIZATION OF THE EXPENSES DURING THE YEAR OF EACH OF THE PRIOR PERIOD EXPENDITURE AS UNDER. (1) WATER CESS TO POLLUTION CONTROL BOARD FOR 16,80,953 ON 28.03.2006 THE STATE POLLUTION CONTROL BOARD RAISED THE FOLLOWING DEMAND TOWARDS CESS ASSESSMENT. I.T.A.NOS. 69,70 AND 71/CTK/2012 15 ASSESSMENT MONTH ASSESSMENT REFERENCE AMOUNT JANUARY2006 NIN - DBR - JAN - 06 60,397 MAY 2003 DEC.,2005 NIN - MAY03 - DEC - 05 15,37,464 APRIL 20 03 NIN - FEB02 - APR - 03 83,092 ----------- 16,80,953 ====== COPIES OF SUPPORTING EVIDENCES FOR THE ABOVE DEMAND RAISED ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 16 TO 19. FROM THE ABOVE, THE HONBLE BENCH MAY KINDLY NOTE THAT THE ABOVE DEMAND WAS RAISE D ON 28.03.2006 PERTAINING TO EARLIER YEARS WHICH WAS RECEIVED BY THE APPELLANT DURING APRIL06 AND ACCORDINGLY CONSIDERED AS PRIOR PERIOD EXPENSES DURING THE YEAR 2007 - 08 I.E. THE YEAR OF RECEIPT OF THE DEMAND. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD . CIT(A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. (II) OST DEMAND FOR 16,28,502 THE SALES TAX AUTHORITIES PASSED THE ASSESSMENT ORDER FOR THE F.Y. 2003 - 04 ON 13.11.2006 RAISING A DEMAND OF 16,28,502. COPY OF THE ORDER IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 20 TO 24. SINCE THE ABOVE DEMAND CRYSTALLIZED ON 13.11.2006 AND RELATES TO F.Y. 2003 - 04, ACCORDINGLY CONSIDERED AS PRIOR PERIOD EXPENSES. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT(A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. (III) REVERSAL OF CENVAT FOR 2005 - 06 FOR 1,67,479 THE SUPERINTENDENT (AUDIT), CENTRAL EXCISE, CUSTOMERS AND SERVICE TAX RAISED THE FOLLOWING DEMAND ON 29.08.2006 PERTAINING TO F.Y. 2005 - 06. SPOT MEMO NO. AMOUNT 1. 157,741 (152,770+5,471) 112 9,738 (7,930+1,808) -------------- 1,67,479 ===== === SUPPORTING EVIDENCES FOR THE ABOVE DEMAND RAISED ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 25 TO 28. FROM THE ENCLOSED I.T.A.NOS. 69,70 AND 71/CTK/2012 16 EVIDENCE THE HONBLE BENCH MAY KINDLY NOTE THAT THE ABOVE EXPENSES WERE CRYSTALLIZED DURING THE YEAR AND PERTAINING TO EARLIER YEAR S, ACCORDINGLY CONSIDERED AS PRIOR PERIOD EXPENSES. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT(A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. FROM THE ABOVE , THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT IT MAY BE APPRECIATE D THAT THE ASSESSEE COMPANY HAS PROVIDED FOR THE LIABILITY ONLY WHEN IT HAS BEEN CRYSTALLIZED. THE OBLIGATION OF THE ASSESSEE FOR PAYMENT OF SUCH EXPENSES HAS CRYSTALLIZED ONLY DURING THE PERIOD RELEVANT TO THE YEAR UNDER APPEAL AND ACCORDINGLY IT WAS BOOKED UNDER THE HEAD PRIOR PERIOD EXPENSES. THEREFORE, THE LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE DISALLOWANCE OF THE ABOVE PRIOR PERIOD EXPENSES IS NOT JUST AND PROPER AND THEREFORE, LIABLE FOR DELETION. 13. THE LEARNED CIT - DR, SUPPORT ED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT ON THE FACT FINDING THAT THE PRIOR PERIOD EXPENSES ARE NOT CRYSTALLIZED, THE AUTHORITIES BELOW ARE JUSTIFIED IN DISALLOWING SUCH EXPENSES . SHE REITERATED THE SUBMISSIONS IN THIS REGARD AS S UBMITTED IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 ABOVE. 14. IT MAY BE MENTIONED HERE THAT WE HAVE DECIDED SIMILAR SUCH ISSUE IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 VIDE PARAGRAPHS 5 TO 7 OF THIS ORDER. FOR THE R EASONS DISCUSSED THEREIN, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND DIRECT THE ASSESSING OFFICER TO ALLOW THE PRIOR PERIOD EXPENSES IN THE ASSESSMENT YEAR 2007 - 08 BEING 1) WATER CESS PAID TO STATE POLLUTION CONTROL BOARD FROM FEB. 2002 TO JAN,2006 FOR 16,80,953. 2) REVERSAL OF CENVAT FOR 2005 - 06 AS PER EXCISE MEMO FOR 1,67,479. 3) OST DEMAND FOR 2003 - 04 FOR 16,28,502 4) ENTRY TAX LIABILITY FOR 2003 - 04 FOR 19,02,636 I.T.A.NOS. 69,70 AND 71/CTK/2012 17 AGGREGATING TO 53,79,5 7 0 OUT OF 73,34,229 CLAIMED BY THE ASSESSEE. 15. AS REGARDS DISALLOW ANCE OF REPAIRS & MAINTENANCE U/S.40(A)(IA), DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD INCURRED A SUM OF 6,34,07,000 ON REPAIRS OF WHICH 1,58,66,000 IS SPENT ON REPAIRS OF BUILDING, 4,60,79,000 FOR REPAIRS OF P LANT AND MACHINERY AND 14,62,000 FOR OTHER REPAIR AND VEHICLES. HE CALLED FOR THE DETAILS OF THE EXPENDITURE OF PLANT AND MACHINERY AND THE ASSESSEE PRODUCED THE SAME. ON VERIFICATION OF SUCH DETAILS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS FROM PAYMENTS MADE TO CONTRACTO RS. THIS, ACCORDING TO THE ASSESSING OFFICER , IS IN VIOLATION OF SECTION 40(A)(IA) OF THE I.T. ACT. ON WORKING OUT THE QUANTUM OF SUCH VIOLATION AS TABULATED IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DISALL OWED A SUM OF 1,33,63,868 U/S.40(A)(IA). ON APPEAL, THE LEARNED CIT(A) ON THE OBSERVATION VIDE PARAGRAPH 5.3 OF HIS ORDER, CONFIRMED THE ACTION OF THE ASSESSING OFFICER, WHICH IS REPRODUCED AS UNDER : . IN ANY CASE NO MERIT IS FOUND IN THE APPELLANTS SUBMISSION THA T THERE IS ANY INHERENT DEFECT IN THE AOS ACTION IN ADDING THE SAID SUM OF 1,33,63,868 U/S. 40(A)(IA) OF THE ACT. IT IS NOT KNOWN WHETHER THE CLAIM OF THE AMOUNTS ON WHICH THE APPELLANT CLAIMS THAT TDS IS NOT DEDUCTIBLE WAS PRESENTED BEFORE THE AO WITH NECESSARY EVIDENCE. IN ANY CASE THEY CAN BE RECTIFIED, IF THE CLAIM IS IN ORDER, U/S. 154 OF THE ACT BY THE AO. APPARENT MISTAKES NEEDS TO BE RECTIFIED AND NOT TO BE CONTESTED IN APPEAL. IN VIEW OF THIS, NO MERIT IS FOUND IN THE APPELLANTS SUBMISSION AND NO DEFECT IN THE ORDER OF THE AO. ACCORDINGLY ADDITION OF 1,33,63,868 IS CONFIRMED AND GROUND NO. 2 OF THE APPEAL IS DISMISSED. 15.1. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE ACCOUNTS OF THE APPELLANT COMPANY HAVE BEEN AUDITED BY THE EXTERNAL AUDITOR APPOINTED BY CA&G. AFTER DUE VERIFICATION OF THE ACCOUNTS, THE TAX AUDITOR HAS GIVEN THEIR REPORT IN FORM NO. 3CA AND 3CD. IN CLAUSE N O. 27 OF THE FORM NO. 3CD, THE TAX AUDITOR HAS MENTIONED WITH REGARD TO THE TDS AND THEY HAVE MENTIONED THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF CHAPTER I.T.A.NOS. 69,70 AND 71/CTK/2012 18 X VIIB REGARDING DEDUCTION OF TAX AT SOURCE. SINCE THE TAX AUDITOR IS RESPONSIBLE PERSON AND AFTER DUE VERIFICATION THEY HAVE MENTIONED THAT NECESSARY TDS WHEREVER IT IS APPLICABLE HAS BEEN MADE, THE DISALLOWANCE MADE BY THE LD. A.O. MERELY ON PRESUMPTION W ITHOUT ANY EVIDENCE IS ILLEGAL AND BAD IN LAW. THE ASSESSING OFFICER HAS MENTIONED THE DETAILS OF DISALLOWANCE IN PAGE NO. 3 & 4 OF HIS ORDER. THE SAID DETAILS INCLUDES A SUM OF 85,78,310 TOWARDS SUPPLY MADE BY ACE REFRACTORIES . THE DETAILS ALONG WITH SUP PORTING EVIDENCES ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 32 TO 37. FROM THE ENCLOSED STATEMENT IT CAN BE SEEN THAT THE NATURE OF TRANSACTION DOES NOT ATTRACT TDS AS PER PROVISION OF SECTION 194C. BESIDES ABOVE, THE APPELLANT HAS MADE TDS ON A SUM OF 27,57,996, THE DETAILS OF WHICH IS ENCLOSED IN THE PAPER BOOK AT PAGE S . THE APPELLANT HAS ALSO RECEIVED CERTIFICATE U/S 197 FOR NON DEDUCTION OF TDS FROM M/S HSCL. A COPY OF CERTIFICATE IS ENCLOSED IN THE PAPER BOOK AT PAGE S 41 & 42 DURING THE YEAR THE APP ELLANT HAS PAID 9,93,438 AND BOOKED UNDER THE HEAD REPAIR & MAINTENANCE THE DETAILS OF WHICH IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 43. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT IT MAY BE SEEN THAT OUT OF TOTAL DISALLOWANCE OF 1,33,63,868 UNDER T HE HEAD OF REPAIR & MAINTENANCE, EITHER TDS IS NOT APPLICABLE OR NECESSARY . TDS HAS BEEN MADE BY THE APPELLANT ON 1,23,29,744.( 85,78,310 + 27,57,996, + 9,93,438). THE LEARNED CIT(A) IGNORED THESE ABOVE FACTS THOUGH SUBMITTED BEFORE HIM DURING THE COURSE OF HE ARING OF APPEAL BUT HE LEFT ADJUDICATING THE ISSUE WITH A SUGGESTION TO THE ASSESSEE TO FILE PETITION U/S.154 TO THE ASSESSING OFFICER. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE OF REPAIR & MAINTENANCE MADE U/S.40(A)(IA) IS NO T JUSTIFIED AND AS SUCH DESERVES TO BE DELETED. I.T.A.NOS. 69,70 AND 71/CTK/2012 19 15.2. THE LEARNED CIT - DR, ON THE OTHER HAND, SUBMITTED THAT THE SUBMISSION OF THE ASSESSEE DO NOT CLARIFY WHETHER IT COULD GIVE A PETITION U/S.154 IN CASE THE ASSESSEE WAS THE PAID TDS CERTIFICATES IN ACCORDA NCE WITH THE PROVISIONS UNDER CHAPTER XVIIB. THEREFORE, THE ASSESSEE ITSELF AGREES THAT THE PROVISIONS OF TDS WERE NOT APPLICABLE OR NECESSARY TDS HAD BEEN MADE WHICH INFORMATION WAS FLOWED TO EITHER THE ASSESSING OFFICER OR THE LEARNED CIT(A) MAY KINDLY B E CONSIDERED IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT. 15.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL OF THE AS SESSEE THAT THE LEARNED CIT(A) OUGHT TO HAVE RENDE RE D THE ISSUE IN ACCORDANCE WITH THE CLAIM MADE BY THE ASSESSEE BEFORE IT INSOFAR AS THE DEEMING PROVISIONS OF SECTION 40(A)(IA) COULD NOT BE MADE ALLOWABLE U/S.1 5 4 AS OPINED BY HIM. THE ASSESSING OFFICER HAD MADE SPECIFIC DISALLOWANCES INSOFAR AS DEEMING PROVISIONS OF SECTION 40(A)(IA) DO NOT APPLY TO THE CAPITAL EXPENDITURE INCURRED. IN ANY CASE AS PER THE FACTS AS NOW HAVE BEEN BROUGHT ON RECORD IT WAS THE ENDEAVOR OF THE ASSESSING OFFICER TO FIND AS TO WHICH ITEM DO NOT REQUIRE DISALLOWANCE UNDER THE DEEMING PROVISIONS OF SECTION 40(A)(IA) WHEN THE ASSESSEE SAYS THAT OUT OF 1,33,63,868 ONLY A SUM OF 1,23,29,744 OUGHT TO HAVE BEEN ALLOWED. THEREFORE, WE ARE OF THE CONSIDERED VIEW IN THE LIGHT OF THE SU BMISSIONS MADE BY THE RIVAL PARTIES TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN THE LIGHT OF THE ASSESSEE CLAIMING THAT THE PAYMENTS HAVE BEEN DISALLOWED WHICH HAVE BEEN MADE IN PERSONAL NAMES WHICH ACCOUNTING SHO ULD BE RELATED TO THE EXPENDITURE CLAIMED UNDER THE MERCANTILE SYSTEM OF ACCOUNTING WHEN ONLY THOSE EXPENSES COULD ONLY BE DISALLOWED WHICH EXPENSES HAVE BEEN CLAIMED AND I.T.A.NOS. 69,70 AND 71/CTK/2012 20 NOT OTHERWISE. NEEDLESS TO SAY THAT THE ASSESSEE IS TO BE AFFORDED AN OPPORTUNITY OF BEING HEARD ON THIS ISSUE AND PASS NECESSARY CONSEQUENTIAL ORDER IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT. 16. AS REGARDS TO DISALLOWANCE OF DEPRECIATION ON PLANT & MACHINERY AMOUNTING TO 5,57,84,307 , THE ASSESSING OFFICER OBSERVED IN PARAGRAPH 4 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER : 4. DEPRECIATION: IT WAS OBSERVED THAT 31 ADDITIONS WERE MADE TO COKE OVEN PLANT FROM THE PERIOD 20.06.2007 TO 31.03.2007. SINCE THE PLANT IS A TOTAL SYSTEM TO CLAIM DEPRECIATION IT SHOULD BE PUT TO USE FOR PR ODUCTION. THE ASSESSEE VIDE THIS OFFICE LETTER 26.10.2009 WAS INFORMED OF THE OBSERVATION AND WAS ASKED TO PRODUCE PUT TO USE CERTIFICATE. TRIAL TESTS WILL NOT SUFFICE. SIMILARLY FOR POWER PLANT AND COOLING TOWER SIMILAR PUT TO USE WAS DESIRED ALONG WI TH SYNCHRONIZATION REPORT IN CASE OF POWER PLANT. THE AIR VIDE LETTER DATED 12.11.2009 INFORMED THE COKE OVEN PLANT WAS INSTALLED AND PUT TO USE IN SEPTEMBER, 2004 AND DULY CAPITALIZED IN THE F.Y.2004 - 05. THE SAME IS EVIDENT FROM THE ANNUAL ACCOUNTS FILED FOR THE AFORESAID YEAR AND ALSO VERIFIED DURING THE SCRUTINY ASSESSMENT. AS REGARD THE ALLEGED PIECEMEAL ADDITION, THE ASSESSEE WOULD LIKE TO MENTION THAT CERTAIN ADDITIONS TO COKE OVEN PLANT WERE MADE DURING THE YEAR TO IMPROVE THE OPERATIONAL EFFICIENCY AND ACCORDINGLY CAPITALIZED ON THE DATE OF PUT TO USE. NOTHING MORE WAS PRODUCED. THE AIR VIDE NOTE SHEET ENTRY DATED 07.12.2009 WAS ONCE AGAIN ASKED TO PRODUCE PUT INTO USE OR CHANGING REPORT AS CALLED FOR EARLIER AND THE AIR WAS AGAIN REMINDED THAT W ERE TRIAL RUN WILL NOT DO. THE A / R VIDE SUBMISSION DATED 23.12.2009 SUBMITTED A LETTER FROM EXECUTIVE DIRECTOR (WORKS) CLAIMING THE ASSETS WERE INSTALLED. IT IS TO BE SEEN THE FOLLOWING ITEMS OF PLANT AND MACHINERY AND BUILDING WERE CLAIMED TO BE PUT TO US E ON 31.03.2007. I.T.A.NOS. 69,70 AND 71/CTK/2012 21 ALL THESE ITEMS ARE NOT STANDALONE ITEMS AS ALL ARE RELATED ITEMS. ON THIS DATE I.E. 31.03.2007 THAT END OF FINANCIAL YEAR THE ITEMS OF ASSETS MIGHT HAVE BEEN TRANSFERRED TO ASSETS FROM WIP BUT NO WAY CAN IT BE SAID TO BE PUT INT O USE . THE ASSESSEE AND ITS A/ R WERE ASKED REPEATEDLY TO PRODUCE PUT INTO USE CERTIFICATE FROM COMPETENT AUTHORITY TO SUBSTANTIATE ITS CLAIM BUT INSTEAD PRODUCED A LETTER WHICH THE CERTIFICATE OF COMPET ENT AUTHORITY DESIRED. IF SINTER PLANT BUILDING F OR 85,00, 864 IS PUT INTO USE ON 31.03.2007 HOW CAN THE SINTER PLANT FOR 15,04,028 BE ALSO PUT INTO USE ON SAME DAY. IN VIEW OF NON - PRODUCTION OF PLANT AND MACHINERY ARE DENIED BEING PUT INTO USE AS ENVISAGED IN SECTION 32 OF THE IT. ACT AND NO DEPRECIATI ON ALLOWED ON SUCH ITEMS. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE OF DEPRECIATION AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 16.1. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT D URING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED FOR INSTALLATION REPORT FROM COMPETENT AUTHORITY FOR THE ADDITIONS MADE UNDER CERTAIN PLANT AND MACHINERY, IN RESPONSE TO WHICH THE ASSESSEE PRODUCED A CERTIFICATE FROM E.D. (WORKS). HE B EING A BOARD MEMBER, THE APPELLANT PREFERRED TO SUBMI T A CERTIFICATE FROM HIM AND CONSIDER HIM COMPETENT AUTHORITY. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE APPELLANT AND DID NOT ACCEPT THE E.D. (WORKS) AS COMPETENT AUTHORITY. THE LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER HAS DISALLOWED THE DEPRECIATION ON COMPLETELY A VAGUE REASON WHICH IS ILLEGAL AND BAD IN LAW. HE FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS IGNORED THE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER, WHICH IS NOT PROPER. AS REGARD THE CAPITALIZATION OF SINTER PLANT REFERRED TO BY THE ASSESSING OFFICER, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ENTIRE BLOCK IS CAPITALIZED ALONG WITH THE BUILDING ON A SINGLE DATE SINCE BOTH THE BUILDI NG AND PLANT & MACHINERY IS PUT TO USE ON ONE DATE. ON THE BASIS OF ABOVE, THE LEARNED COUNSEL OF THE ASSESSEE REQUESTED TO DELETE THE DISALLOWANCE OF DEPRECIATION AMOUNTING TO 5,57,84,307. I.T.A.NOS. 69,70 AND 71/CTK/2012 22 16.2. THE LEARNED CIT - DR, ON THE OTHER HAND, SUBMITTED THAT THE CERTIFICATE FROM THE EXECUTIVE DIRECTOR (WORKS) WAS NOT SUFFICIENT TO ESTABLISH WHETHER TWO PLANTS OF THE SAME NATURE WHEN ONE OF THEM WAS STILL UNDER CONSTRUCTION COULD BE ENTITLED FOR DEPRECIATION WAS TO BE CONSIDERED FOR HAVING BEEN PUT TO USE WAS THEREFORE RIGHTLY CONSIDERED FOR DISALLOWANCE OF DEPRECIA TION. 16.3. HAVING HEARD BOTH THE PARTIES AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO FIND THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE APPROPRIATE TO THE EXTENT THAT THE EXECUTIVE DIRECTOR (WORKS) WAS THE APPROPRIATE AUTHORITY INDICATING THAT THE PARTICULAR ASSET WAS PUT TO USE EVEN FOR A DAY TO ALLOW IT THE CLAIM OF DEPRECIATION INSOFAR AS THE ACCOUNTING FOR THE UN - BUILT ASSET BY THE ASSESSEE CANNOT BE DOUBTED INSOFAR AS THE CAPITAL EXPENDITURE HAS BEEN INCURRED EITHER FOR RE PLACEMENT, RE CONSTRUCTION OR RENOVATION ETC. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY THAT THE DEPRECIATION OUGHT TO HAVE BEEN ALLOWED AS PER THE CERTIFICATION CARRIED OUT FOR THE ASSETS HAVING BEEN PUT TO USE FOR CLAIMING DEPRECIATION. IN VIEW OF THE ABOVE, THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION IS DELETED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08 IS PARTLY ALLOWED. ASSE SSMENT YEAR 2008 - 09 : 19. FOR THE ASSESSMENT YEAR 2008 - 09, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY LD. CIT (A) IS ILLEGAL & BAD IN LAW. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER PASSED BY LD. A.O. WITHOUT GOING INTO THE SUBMISSIONS FILED BY THE APPELLANT AND FACTS PRESENTED DURING THE HEARING. I.T.A.NOS. 69,70 AND 71/CTK/2012 23 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS ERRED I N NOT CONSIDERING THE PRIOR PERIOD EXPENSES AMOUNTING TO 5,21,04,852 CRYSTALLIZED DURING THE YEAR & CONFIRMED THE DISALLOWANCE MADE BY LD. A.O. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS ERRED IN NOT DELETING THE ADDITION MADE BY LD. A.O. WITH REGARD TO DISALLOWANCE OF INTEREST PAID TO HUDC O & MMTC AMOUNTING TO 20,74,471 & RS.6,02,03,956 U/S 40(A)(IA). 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) SHOULD NOT HAVE SUGGESTED FOR FILING OF RECTIFICATION PETITION U/S. 154 BEFORE THE LD. A.O. FOR THE DISALLOWANCE MADE U/S. 40( A)(IA) FOR NON DEDUCTION OF TDS ON INTEREST PAID TO HUDCO AND MMTC. 6. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS NOT JUSTIFIED IN NON ADJUDICATING THE MATTER RELATING TO DISALLOWANCE OF DEPRECIATION ON FIXED ASSETS AMOUNTING TO 16,49, 989 AND SUGGESTING TO MOVE RECTIFICATION PETITION U/S 154 OF THE INCOME TAX ACT, 1961 BEFORE THE LD. A.O. 7. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT (A) IS ERRED IN CONFIRMING THE ORDER OF ID. A.O. WITH REGARD TO DISALLOWANCE OF MISC. EXPENS ES AMOUNTING TO 2,87,40,000 WITHOUT APPRECIATING THE FACTS SUBMITTED BEFORE HIM . 20. AS REGARDS DISALLOWANCE OF PRIOR PERIOD EXPENSES, THE ASSESSEE CLAIMED PRIOR PERIOD EXPENSES OF 5,21,04,852. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENSES OF EARLIER YEAR CAN ONLY BE ALLOWED IF SUCH EXPENSES ARE ESTABLISHED TO HAVE BEEN CRYSTALLIZED IN THE RELEVANT FINANCIAL YEAR. HE OBSERVED THAT NOTHING WAS PRODUCED TO SHOW THAT THE SAID EXPENSES ACTUALLY CRYSTALLIZED IN THE RELEVANT FINANCIAL YEAR AND AS SU CH, HE DISALLOWED THE SAME. ON APPEAL, THE LEARNED CIT(A) UPHELD THE VIEW AS WELL AS THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE SAID CLAIM. 20.1. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE CONTENTION OF AO IS NOT CORRECT. THE LEAR NED CIT(A) HAS ONLY CONFIRMED THE ASSESSING OFFICERS ORDER BUT WITHOUT ANY REASONING. THE EXPENSES WHICH ARE CRYSTALLIZED DURING THE YEAR HAVE BEEN BOOKED UNDER THE PRIOR PERIOD EXPENSES. THE SAME HAS BEEN DULY VERIFIED BY THE EXTERNAL AUDITORS OF THE I.T.A.NOS. 69,70 AND 71/CTK/2012 24 COM PANY AS WELL AS THE CAG. BEING A PSU, THE SYSTEM OF ACCOUNTING STRICTLY ADHERES TO THE ACCOUNTING NORMS FOR PRIOR PERIOD EXPENSES WHICH IS ALSO EVIDENT FROM THE TAX AUDIT REPORT ON THE BASIS OF WHICH THE ADDITIONS HAVE BEEN MADE. DURING THE COURSE OF HEARI NG FOR ASSESSMENT AS WELL AS APPEAL, THE BOOKS OF ACCOUNTS WERE PRODUCED WITH ALL DETAILS AND SUPPORTING EVIDENCES LIKE VOUCHERS ETC. WHICH CLEARLY INDICATE THAT THE EXPENSES CRYSTALLIZED DURING THE YEAR. THE LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE DEPARTMENT HAS TO APPRECIATE THAT IN SUCH LARGE PSU, IT MAY NOT ALWAYS BE POSSIBLE TO LOCATE SOURCE DOCUMENTS AFTER A LAPSE OF ALMOST COUPLE OF YEARS AND THEY HAVE TO RELY ON THE SYSTEM OF ACCOUNTING TO A FAIR EXTENT. HE FURTHER STATED THAT SOME SOURCE DOCUMENTS ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 15 TO 22 INCLUDING THE OFFICE NOTE ATTACHED TO IT WHICH CONFIRMS THE BASIS OF ACCOUNTING ADOPTED BY THE PSU. IN VIEW OF THE ABOVE, DISALLOWANCE OF GENUINE EXPENSES ON THE GROUND OF LACK OF EVIDENCE TO P ROVE THE YEAR OF CRYSTALLIZATION AND IGNORING THE BOOKS OF ACCOUNTS AND OTHER EVIDENCES PRODUCED WILL CREATE CONSIDERABLE HARDSHIP TO THE APPELLANT. THE LEARNED COUNSEL OF THE ASSESSEE POINTED OUT THE REASONING OF CRYSTALLIZATION OF THE EXPENSES DURING THE YEAR OF EACH OF THE PRIOR PERIOD EXPENDITURE AS UNDER: I) REVERSAL OF CENVAT AMOUNTING TO 1,45,49,906 DURING THE YEAR ON 07.11.2007 THE SUPERINTENDENT (AUDIT) OF CENTRAL EXCISE DEPARTMENT RAISED A DEMAND OF 8,89,24,271 AFTER SCRUTINY OF SERVICE TAX REC ORD OF THE APPELLANT. A COPY OF THE ORDER PASSED ENCLOSED IN THE PAPER BOOK AT PAGE NO. 15 TO 17. ACCORDINGLY THE ENTIRE EXPENSES WERE CLAIMED AS EXPENSES. OUT OF THE ABOVE, A SUM OF 145,49,906 PERTAINS TO EARLIER YEARS WHICH EVIDENT FROM THE ENCLOSED EV IDENCES. ACCORDINGLY, THE SAME WERE CLAIMED AS PRIOR YEAR EXPENSES. AS REGARD, THE CRYSTALLIZATION OF THE EXPENSES, THE SAME IS EVIDENT FROM THE ORDER PASSED BY THE AUTHORITIES ENCLOSED IN THE PAPER BOOK. I.T.A.NOS. 69,70 AND 71/CTK/2012 25 HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT(A ) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. II) WATER TAX AMOUNTING TO 48,41,988 ON 11.06.2007, THE COLLECTOR, JAJPUR ISSUED LETTER FOR COLLECTION OF OUTSTANDING WATER TAX FOR THE YEAR 2003 - 04 TO 2006 - 07 AMOUNTING TO 48,41,9 88 WHICH WAS UNDER DISPUTE. A COPY OF THE LETTER RECEIVED FROM THE COLLECTOR IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 18. SINCE THE ENTIRE EXPENSES CLAIMED PERTAINS TO EARLIER WHICH WAS CRYSTALLIZED ON 11.06.2007 WAS CLAIMED AS PRIOR PERIOD EXPENSES FOR T HE A.Y. 2008 - 09. HENCE THE CONTENTION OF BOTH LD. A.O. AND LD. CIT(A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. III) PERIPHERIAL DEVELOPMENT EXPENSES OF 57,80,133 ON 31.12.2007 THE ADDITIONAL DISTRICT MAGISTRATE, KALINGA NAGAR, THE AREA IN WHICH THE FACTORY OF THE APPELLANT COMPANY IS LOCATED ISSUED A LETTER FOR CONTRIBUTION TOWARDS PERIPHERY DEVELOPMENTS FOR KNIIC. IN THE AFORESAID LETTER IT WAS MENTIONED THAT AS THE DECISION TAKEN IN 2ND. RPDAC MEETING HELD ON 01.08.2007, THE INDUSTRIAL UNITS ARE REQUIRED TO CONTRIBUTE TOWARDS PERIPHERY DEVELOPMENT FUNDS 2,000 PER ACRE OR 1% OF NET PROFIT OF THE YEAR, WHICHEVER IS HIGHER. A COPY OF THE ORDER IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 19. ACCORDINGLY, THE APPELLANT COMPA NY CONTRIBUTED A SUM OF 57,80,133 BEING 1% OF THE NET PROFIT AFTER TAX TOWARDS THE ABOVE EXPENDITURE FOR THE A.Y. 2007 - 08. IN SUPPORT OF THE PROFIT OF THE COMPANY, COPY OF THE AUDITED PROFIT & LOSS ACCOUNT FOR THE A.Y. 2007 - 08 IS ENCLOSED IN THE PAPER BO OK AT PAGE NO. 20. SINCE THE ABOVE EXPENDITURE WAS CRYSTALISED DURING THE YEAR ON 31.12.2007 BUT PERTAINS TO A.Y. 2007 - 08 IS CONSIDERED AS PRIOR PERIOD EXPENSES IN THE ANNUAL ACCOUNTS. HENCE THE CONTENTION OF BOTH A.O. AND LD. CIT(A) THAT THE EXPENDITURE WAS NOT CRYSTALISED DURING THE YEAR IS NOT CORRECT. IV) SALARY OF 1.74 CRORES THE APPELLANT COMPANY MADE A PROVISION OF 1.74 CRORES TOWARDS ARREAR SALARY IN THE ANNUAL ACCOUNTS FOR JAN2007 TO MARCH2007 BASED ON THE APPROVAL MADE ON 23.05.2008. COPIES OF THE APPROVAL AND BASIS OF COMPUTATION ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 21 & 22. RESPECTIVELY. SINCE THE ABOVE I.T.A.NOS. 69,70 AND 71/CTK/2012 26 EXPENDITURE WAS CRYSTALLIZED ON 23.05.2008, CONSIDERED AS PRIOR PERIOD EXPENDITURE IN THE BOOKS OF ACCOUNTS FOR THE A.Y.2008 - 09. HENCE T HE CONTENTION OF BOTH A.O. AND LD. CIT(A) THAT THE EXPENDITURE WAS NOT CRYSTALLIZED DURING THE YEAR IS NOT CORRECT. FROM THE ABOVE, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT IT MAY BE APPRECIATED THAT THE ASSESSEE COMPANY HAS PROVIDED FOR THE LIA BILITY ONLY WHEN IT HAS BEEN CRYSTALLIZED. THE OBLIGATION OF THE ASSESSEE FOR PAYMENT OF SUCH EXPENSES HAS CRYSTALLIZED ONLY DURING THE PERIOD RELEVANT TO THE YEAR UNDER APPEAL AND ACCORDINGLY IT WAS BOOKED UNDER THE HEAD PRIOR PERIOD EXPENSES. THEREFORE, THE LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE DISALLOWANCE OF THE ABOVE PRIOR PERIOD EXPENSES IS NOT JUST AND PROPER AND THEREFORE, LIABLE FOR DELETION. 20.2. THE LEARNED CIT - DR, SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND CONTENDE D THAT ON THE FACT FINDING THAT THE PRIOR PERIOD EXPENSES ARE NOT CRYSTALLIZED, THE AUTHORITIES BELOW ARE JUSTIFIED IN DISALLOWING SUCH EXPENSES. SHE REITERATED THE SUBMISSIONS IN THIS REGARD AS SUBMITTED IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YE AR 2006 - 07 ABOVE. 20.3. IT MAY BE MENTIONED HERE THAT WE HAVE DECIDED SIMILAR SUCH ISSUE IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 VIDE PARAGRAPHS 5 TO 7 OF THIS ORDER. FOR THE REASONS DISCUSSED THEREIN, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND DIRECT THE ASSESSING OFFICER TO ALLOW THE PRIOR PERIOD EXPENSES IN THE ASSESSMENT YEAR 200 8 - 09 BEING 1) REVERSAL OF CENVAT FOR 1,45,49,906. 2) WATER TAX FOR 48,41,988. 3) SALARY FOR 1,74,00,000. AGGREGATING T O 4,25,72,027 OUT OF 5,21,04,852 CLAIMED BY THE ASSESSEE. I.T.A.NOS. 69,70 AND 71/CTK/2012 27 21. AS REGARDS DISALLOWANCE OF INTEREST PAID ON LOAN TO HUDCO & MMTC AMOUNTING TO 6,22,78,427, THE ASSESSING OFFICER DISALLOWED THE SAME U/S.40(A)(IA) ON THE OBSERVATION THAT TDS IS LIABLE TO DED UCTED ON SUCH PAYMENTS AND NO EVIDENCE WAS PRODUCED TO SHOW THAT TDS WAS DEDUCTED AND DEPOSITED. ON APPEAL, CONFIRMED THE SAID DISALLOWANCE. HOWEVER, HE OBSERVED THAT IN ANY CASE IF MMTC IS RALLY COVERED U/S.194A(3)(III)(F), THE ASSESSEE IS AT LIBERTY TO M OVE A PETITION U/S.154 BEFORE THE ASSESSING OFFICER FOR RECTIFICATION OF THE MISTAKE. HE DIRECTED THE ASSESSING OFFICER TO DISPOSE OFF SUCH PETITION, IF FILED, IN ACCORDANCE WITH LAW. 22. HAVING HEARD BOTH THE PARTIES AND PERUSING THE IMPUGNED ORDERS OF TH E AUTHORITIES BELOW AND THE MATERIAL ON RECORD, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS PAID INTEREST OF 20,74,471 ON HUDCO LOAN AND 6,02,03,956 ON MMTC LOAN . FOR NON - DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENTS, THE ASSESSING OFFICER DISAL LOWED THE SAME U/S.40(A)(IA) AND THE LEARNED CIT(A) CONFIRMED THE SAME. HOWEVER, IN CASE OF INTEREST PAID TO MMTC THE ASSESSEE CONTENDED BEFORE THE LEARNED CIT(A) THAT TDS IS NOT ATTRACTED AS PER THE PROVISIONS OF SECTION 194A(3)(III)(F). IN SUPPORT IT FI LED A COPY OF THE TDS CIRCULAR IN WHICH IT IS STATED THAT MMTC IS NOTIFIED U/S.194A (3)(III)(F) VIDE SO 4222 DT.23.11.1968. THE LEARNED CIT(A) CONSIDERING SUCH FACT SUGGESTED IN HIS ORDER TO FILE A PETITION U/S.154 BEFORE THE ASSESSING OFFICER IN THIS REGAR D. THUS, IT IS SEEN THAT WITH RESPECT TO INTEREST DISALLOWED U/S.40(A)(IA) ON THE PAYMENT OF INTEREST TO MMTC, IT IS TO BE VERIFIED BY THE ASSESSING OFFICER AS PER THE CLAIM INSOFAR AS THE NOTIFICATION WITH RESPECT TO NON - DEDUCTION OF TAX AT SOURCE WAS MA DE KNOWN TO THE ASSESSEE VIDE NOTIFICATION DT.1.6.2007 I.E., AFTER THE FINANCIAL YEAR ENDING 2007. THEREFORE, THIS FACT HAS TO BE VERIFIED INSOFAR AS THE LEARNED CIT(A) HAS MERELY OPINED THAT A PETITION U/S.154 WOULD SUFFICE. WE ARE OF THE I.T.A.NOS. 69,70 AND 71/CTK/2012 28 CONSIDERED VIEW THAT INSTEAD OF SUGGESTING FOR FILING OF PETITION U/S.154, THE LEARNED CIT(A) WOULD HAVE RENDERED BETTER JUSTICE IN RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION OF THE SAME IN THE LIGHT OF THE CLAIM OF THE ASSESSEE. WE, THEREF ORE, SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISSUE OF NON - DEDUCTION OF TAX ON PAYMENT OF INTEREST TO MMTC IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE MADE ABOVE. HOWEVER, SINCE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON THE PA YMENT OF INTEREST TO HUDCO, THE DISALLOWANCE OF 20,74,471 U /S.40(A)(IA) IS UPHELD. 23. AS REGARDS DISALLOWANCE OF DEPRECIATION ON FIXED ASSETS AMOUNTING TO 16,49,989, IT IS MENTIONED HERE THAT WE HAVE ALREADY DEALT WITH SUCH ISSUE IN THE APPEAL FOR THE ASSESSMENT YEAR 20 0 7 - 08 AND THE DISALLOWANCE OF DEPRECIATION HAS BEEN DELETED VIDE DISCUSSIONS MADE IN PARAG RAPHS 16 TO 16.3 IN THIS ORDER. FOR THE SAME REASONING, THE IMPUGNED ADDITION ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF 16,49,989 IN THE ASSESS MENT YEAR 2008 - 09 IS ALSO DIRECTED TO BE DELETED. 24. AS REGARDS TO DISALLOWANCE OF MISC.EXPENSES OF 2,87,40,000, THE LEARNED COUNSEL OF THE ASSESSEE REITERATED HIS SUBMISSIONS THAT THE ASSESSEE INCURRED THE FOLLOWING EXPENSES WHICH WERE CONSIDERED AS DEF ERRED REVENUE EXPENDITURE. PARTICULARS AMOUNT PREL. EXPENSES 72,16,320 TRAINING EXPENSES 90,73,984 FINANCE CHARGES ON WCL 5,34,83,916 MISC. CHARGES 2,68,500 -------------- 7,00,42,720 ======== HE SUBMITTED THAT THESE EXPENDITURES WERE INCURRED PRIOR TO A.Y. 2005 - 06 DURING THE CONSTRUCTION. IN MARCH, 2004 THE APPELLANT STARTED ITS COMMERCIAL I.T.A.NOS. 69,70 AND 71/CTK/2012 29 OPERATION AND THE ABOVE EXPENDITURE WERE CONSIDERED AS DEFERRED REVENUE EXPENDITURE AND THE SAME WERE STARTED AMORTISED FROM THE F.Y. A.Y. 2005 - 06. AS PER TH E PREVAILING PRACTICE, THE APPELLANT AMORTISED 1/5TH OF THE DEFERRED REVENUE EXPENDITURE EACH YEAR UPTO A.Y. 2007 - 08 I.E. FOR 3 YEARS AND CLOSING BALANCE OF UNAMORTISED PORTION OF DEFERRED REVENUE EXPENDITURE WAS RS. 287.40 LACS WHICH WAS TO BE AMORTISED I N NEXT TWO YEARS. DURING THE A.Y. 2008 - 09, IN COMPLIANCE TO AS - 26 ISSUED BY ICAI AND AS SUGGESTED BY THE EXTERNAL AUDITORS, THE UNABSORBED PORTION OF THE ABOVE EXPENDITURE WERE CHARGED TO PROFIT AND LOSS ACCOUNT UNDER THE HEAD MISC. EXPENSES. THE ASSESSIN G OFFICER DISALLOWED THE ABOVE EXPENDITURE WITHOUT CONSIDERING THE SUBMISSION AND WITH A VAGUE GROUND WHICH IS ILLEGAL AND BAD IN LAW. THE LEARNED COUNSEL OF THE ASSESSEE FURTHER CONTENDED THAT W ITHOUT PREJUDICE TO THE ABOVE, T HE APPELLANT HAS NO OBJECTIO N TO CONTINUING THE CONSISTENT PRACTICE FOLLOWED DURING EARLIER YEARS AND TAKE 50% OF THE BALANCE UNAMMORTISED PORTION DI S ALLOWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) TO THE SUBSEQUENT ASSESSMENT YEAR FOR WRITE OFF. IN VIEW OF THE ABOVE , THE LEARNED COUNSEL OF THE ASSESSEE REQUESTED TO DELETE THE DISALLOWANCE MADE BY LD. A.O. AND CONFIRMED BY THE LEARNED CIT(A). 24.1. THE LEARNED CIT - DR, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. 24.2. HAVING HEARD BO TH THE PARTIES AND PERUSING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND MATERIAL ON RECORD, THE FACTS WHICH HAVE BEEN BROUGHT ON RECORD HAVE NOT BEEN CONTROVERTED BY THE LEARNED CIT - DR WHEN THE ASSESSEE SUBMITS THAT THESE EXPENSES COULD NOT BE DISALLO WED UNDER THE MISINTERPRETATION OF FACTS FOR HAVING A SECOND THOUGHT TO THE EXPENSES CLAIMED AS DISALLOWABLE AS PRIOR PERIOD EXPENSES. IT WAS THE CONTENTION OF THE ASSESSEE FROM THE BEGINNING THAT THEY HAVE INCURRED DEFERRED REVENUE I.T.A.NOS. 69,70 AND 71/CTK/2012 30 EXPENDITURE TO BE WRITT EN OFF IN A PHASED MANNER OVER A PERIOD OF FIVE YEARS WHEN IN COMPLIANCE TO THE AS - 26 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA THE UNABSORBED PORTION OF THE DEFERRED REVENUE EXPENDITURE WAS CLAIMED IN THE IMPUGNED ASSESSMENT YEAR. IN OTHER WORDS, 50% OF THESE EXPENSES FOR THE SUBSEQUENT YEAR WAS ALSO CLAIMED IN THE IMPUGNED AY WHICH WE FEEL WOULD SETTLE THE ISSUE INSOFAR AS THERE WILL BE NO LOSS OF REVENUE TO EITHER OF THE PARTIES INSOFAR AS HAVING CAPITALIZED THE SAME THE ASSESSEE WAS TO CARRY FORWARD THE INCOME, IF ANY, PRIOR TO ASSESSMENT YEAR 2006 - 07 HAS BEEN DEALT WITH BY US AS OF NOW. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT INSTEAD OF DISALLOWING THE WHOLE OF THE AMOUNT FOR THE PURPOSE OF INCOME - TAX FOR THE IMPUGNED ASSESSMENT YEAR AS NOT BE PRIOR PERIOD EXPENSES BUT IN THE LIGHT OF INTANGIBLE ASSETS HELD BY THE ASSESSEE AND IT WOULD BE PROPER TO ALLOW THE ASSESSEE TO CONTINUE CLAIMING 1/5 TH PORTION OF THE DEFERRED REVENUE EXPENDITURE INCURRED BY THE ASSESSEE AMORTIZED FROM THE AY 2006 - 07. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO ALLOW 50% OF THE BALANCE WHICH HAS BEEN DISALLOWED UNDER THE HEAD MISC. EXPENSES BY THE ASSESSING OFFICER AND THE REMAINING 50% TO BE ALLOWED IN THE SUBSEQUENT YEAR AS WAS BEING DONE BY THE ASS ESSEE. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 IS PARTLY ALLOWED. 26. TO SUM UP ALL THE APPEALS OF THE ASSESSEE FOR THE AYS 2006 - 07, 2007 - 08 AND 2008 - 09 ARE PARTLY ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 30.11.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NOS. 69,70 AND 71/CTK/2012 31 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : NEELACHAL ISPAT NIGAM LTD., 1 ST FLOOR, ANNEXE, IP I COL HOUSE, BHUBANESWAR. 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE2(1), RAJASWA VIHAR, BHUB ANESWAR 751 007 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 27.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DAT E ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..