M/s. Tamilnadu State Marketing Corporation Ltd., CHENNAI V. ACIT, CHENNAI

ITA 7/CHNY/2012

• Counselvise Citation: 721714 RSA 2012
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R VIJAYARAGHAVAN
• Keywords: Rule of consistency; Retrospective amendment; Cost of acquisition
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NOS. 962/MDS/2010, 964/MDS/2011 & 07/MDS/201 2 ASST. YEARS : 2007-08, 08-09 AND 07-08 M/S.TAMILNADU STATE MARKETING CORPORATION LIMITED,4 TH FLOOR, CMDA TOWER-II, GANDHI IRWIN BRIDGE ROAD, EGMORE, CHENNAI - 600 008. [PAN : AACT2964P] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1) CHENNAI (APPELLANT) (RESPONDENT) I .T.A. NOS. 1202MDS/2010, 925/MDS/2011 & 258/MDS/201 2 ASST. YEARS : 2007-08, 08-09 AND 07-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1) CHENNAI VS. M/S.TAMILNADU STATE MARKETING CORPORATION LIMITED,4 TH FLOOR, CMDA TOWER-II, GANDHI IRWIN BRIDGE ROAD, EGMORE, CHENNAI - 600 008. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI R. VIJAYARAGHAVAN DATE OF HEARING : 07.08.2012 DATE OF PRONOUNCEMENT : 18.09.2012 O R D E R PER BENCH : I.T.A. NOS 962 AND 1202/MDS/2010 THESE CROSS APPEALS OF ASSESSEE AND REVENUE ARISE FROM THE ORDER OF CIT(A)-III, CHENNAI PASSED IN ITA NO.465/09-10/A/II I DATED 23 APRIL 2010 FOR I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 2 ASST, YEAR 2007-08 IN PROCEEDINGS UNDER SEC.143(3) OF THE INCOME TAX ACT, 1961, HEREINAFTER TO BE REFERRED AS ACT. FOR THE SAKE OF CONVENIENCE AND BREVITY BOTH CASES ARE TAKEN UP TOGETHER. 2. IN THESE APPEALS, THE ASSESSEE HAS STATED THAT T HE CIT(A) HAS WRONGLY UPHELD THE AOS FINDINGS REGARDING SPECIAL PRIVIL EGE FEE BY NOT ACCEPTING IT @ ` . 57.72 PER LITRE OF LIQUOR INSTEAD OF ` . 53.23 PER LITRE. ON THE OTHER HAND, THE REVENUE ASSAILS THE CIT(APPEALS)S ORDER IN ACCEPTI NG THE ASSESSEES APPEAL PARTLY QUA SPECIAL PRIVILEGE FEES. THE REVENUE HAS ALSO CHALLENGED CIT(A)S ORDER IN DELETING ADDITION RE-CHANGE IN VALUATION OF CLOSING STOCK OF BOTTLES, WHICH WAS MADE BY THE ASSESSING OFFICER. 3. AS IT APPEARS FROM THE RESPECTIVE GROUNDS RAISE D IN THE APPEALS, WE FRAME THE FOLLOWING ISSUES FOR OUR ADJUDICATION :- I) WHETHER CIT(APPEALS) HAS ERRED IN ADOPTING THE EXPENDITURE TOWARDS SPECIAL PRIVILEGE FEES AT A UNIFORM RATE OF ` . 53.23 PER LITRE OF IMFL INSTEAD OF ` . 57.72 PER LITRE AS CLAIMED BY THE ASSESSEE AND THAT TAKEN BY ASSESSING OFFICER AS ` .46.35 PER LITRE AS PLEADED BY BOTH THE PARTIES BEFORE US IN THEIR RESPECTIVE APPE ALS. IF SO, WHETHER THE CIT(APPEALS)S ORDER TO THIS EFFECT IS LIABLE T O BE CONFIRMED OR MODIFIED PER RESPECTIVE STAND ADOPTED BY BOTH PARTI ES (COMMON GROUND IN BOTH APPEALS) ? I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 3 II) WHETHER THE ORDER OF CIT(APPEALS) IN DELETING ADDITION MADE BY ASSESSING OFFICER IN RESPECT OF CHANGE IN VALUAT ION OF CLOSING STOCK OF EMPTY BOTTLES IS LIABLE TO BE UPHELD OR NO T (THE SECOND SUBSTANTIVE GROUND IN REVENUES APPEAL)? ISSUE NO.(I) : 4. BRIEF FACTS RELEVANT TO THE FIRST ISSUE ARE THAT THE ASSESSEE COMPANY (A CORPORATION WHOLLY OWNED AND CONTROLLED BY STATE GO VERNMENT OF TAMIL NADU) IS ENGAGED IN THE BUSINESS OF TRADING/RETAIL VENDING O F LIQUOR IN THE STATE OF TAMIL NADU. THE STATE ALSO PROMULGATED AN ACT CALLED TAMIL NADU PROHIBITION ACT, 1937 (HEREINAFTER TO BE REFERRED AS PROHIBITION ACT ) GRANTING THE ASSESSEE EXCLUSIVE RIGHTS OF SUPPLYING WHOLE SALE INDIAN MAD E FOREIGN LIQUOR AND FOREIGN SPIRITS (IMFL) THROUGHOUT TAMIL NADU TERRITORY. TH E RELEVANT PROVISION OF THE PROHIBITION ACT I.E., SEC.17C(1A)(B) READS AS FOLLO WS :- 17-C. EXCLUSIVE PRIVILEGES OF MANUFACTURE, ETC., M AY BE GRANTED [(1) IT SHALL BE LAWFUL FOR THE STATE GOVERNMENT TO GRANT TO ANY PERSON OR PERSONS ON SUCH CONDITIONS AND FOR SUCH PERIOD AS T HEY MAY DEEM FIR THE EXCLUSIVE OR OTHER PRIVILEGE (A) X X X X X X X X X X X X X X X X X X X (B) X X X X X X X X X X X X X X X X X X X (1-A)(A) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, THE TAMIL NADU STATE MARKETING CORPORATION LIMITED, WHICH IS A COR PORATION WHOLLY OWNED AND CONTROLLED BY THE STATE GOVERNMENT, SHALL HAVE THE EXCLUSIVE PRIVILEGE OF SUPPLYING, BY WHOLESALE, [INDIAN-MADE FOREIGN SPIRITS AND FOREIGN LIQUOR], FOR THE WHOLE OF THE STATE OF TAMI L NADU AND NO OTHER PERSON SHALL BE ENTITLED TO ANY PRIVILEGE OF SUPPLY ING, BY WHOLESALE, I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 4 [INDIAN-MADE FOREIGN SPIRITS AND FOREIGN LIQUOR] FO R THE WHOLE OR ANY PART OF THE STATE. UNDER SEC.17-D OF THE PROHIBITION ACT, STATE GOVT. IS FURTHER EMPOWERED TO LEVY ANY SUM OR FEES OR BOTH IN LIEU OF GRANT O F SPECIAL PRIVILEGE OF SELLING LIQUOR AS FOLLOWS:- 17-D. PAYMENT OF A SUM IN CONSIDERATION OF THE GRA NT OF ANY EXCLUSIVE OR OTHER PRIVILEGE OR FEE ON LICENSES FOR MANUFACTURE OR SALE THE STATE GOVERNMENT MAY, BY RULES, LEVY A SUM OR FEE OR BOTH IN CONSIDERATION OF THE GRANT OF ANY EXCLUSIVE OR OTHER PRIVILEGE UNDER SEC TION 17-C AND ALSO FEE ON LICENSES GRANTED UNDER SECTION 17-C. NOT ONLY THIS, SEC.54 OF THE PROHIBITION ACT EMPOW ERS THE STATE GOVERNMENT TO FRAME RULES EVEN WITH RETROSPECTIVE E FFECT PRESCRIBING PAYMENT OF CONSIDERATION OF LIQUOR RIGHTS, WHICH READS AS FOLL OWS :- 54. POWER TO MAKE RULES (1) THE [STATE] GOVERN MENT MAY MAKE RULES FOR THE PURPOSE OF CARRYING INTO EFFECT THE PROVISI ONS OF THIS ACT. (2) IN PARTICULAR AND WITHOUT PREJUDICE TO THE GENE RALITY OF THE FOREGOING PROVISIONS, THE [STATE] GOVERNMENT MAY MAKE RULES (A) TO (O) X X X X X X X X X X X X (2-A). A RULE OR NOTIFICATION UNDER THIS ACT MAY B E MADE OR ISSUED SO AS TO HAVE RETROSPECTIVE EFFECT ON AND FROM A DATE NOT EA RLIER THAN, - (I) THE 1 ST SEPTEMBER 1973, IN SO FAR A IT RELATES TO TODDY; A ND (II) THE 1 ST SEPTEMBER 1974, IN SO FAR AS IT RELATES TO ANY LIQ UOR OTHER THAN TODDY; (III) THE 1 ST MAY 1981, IN SO FAR AS IT RELATES TO THE MATTERS D EALT WITH IN SECTIONS 17-B, 17-C, 17-D, 17-E, 18-B AND 18-C : I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 5 A. PROVIDED THAT A NOTIFICATION ISSUED UNDER SUB SE CTION (1) OF SECTION 16 MAY HAVE RETROSPECTIVE EFFECT FROM A DATE NOT EARLI ER THAN 1 ST NOVEMBER 1972: PROVIDED FURTHER THAT THE RETROSPECTIVE OPERATION O F ANY RULE MADE OR NOTIFICATION ISSUED UNDER THIS ACT SHALL NOT RENDER ANY PERSON GUILTY OF ANY OFFENCE IN REGARD TO THE CONTRAVENTION OF SUCH RULE OR THE BREACH OF ANY OF THE CONDITIONS SUBJECT TO WHICH THE EXEMPTION IS NOTIFI ED IN SUCH NOTIFICATION WHEN SUCH CONTRAVENTION OR BREACH OCCURRED BEFORE T HE DATE ON WHICH THE RULE OR NOTIFICATION IS PUBLISHED, AS THE CASE MAY BE. 3. ALL RULES UNDER THIS ACT SHALL, AS SOON AS POSSI BLE AFTER THEY ARE MADE, BE PLACED ON THE TABLE OF THE LEGISLATIVE ASSEMBLY SHALL BE SUBJECT TO SUCH MODIFICATIONS BY WAY OF AMENDMENTS OR REPEAL AS THE LEGISLATIVE ASSEMBLY MAY MAKE WITHIN FOURTEEN DAYS ON WHICH THE HOUSE AC TUALLY SITS EITHER IN THE SAME SESSION OR IN MORE THAN ONE SESSION. 5. THEN, UNDER SEC.55 OF THE PROHIBITION ACT, IT IS PROVIDED THAT THE RULES AND NOTIFICATION UNDER THIS ACT HAVE TO BE NOTIFIED IN THE OFFICIAL GAZETTE WHICH IS ALSO REPRODUCED AS UNDER :- 55. PUBLICATION OF RULES AND NOTIFICATIONS ALL RULES MADE AND NOTIFICATIONS ISSUED UNDER THIS ACT SHALL BE PUBLIS HED IN THE OFFICIAL GAZETTE AND UPON SUCH PUBLICATION, SHALL HAVE EFFECT AS IF ENACTED IN THIS ACT. 6. UNDER THE PROVISIONS OF PROHIBITION ACT, THE ST ATE OF TAMIL NADU HAS ALSO FRAMED THE TAMIL NADU IMFS (SUPPLY BY WHOLE SALE) R ULES 1983 AS PER THE POWERS VESTED IN IT UNDER THE PROHIBITION ACT; PRES CRIBING THE ASSESSEE TO PAY FO VEND FEES, ADDITIONAL VEND FEES AND OTHER RELATED D UTIES TO THE STATE ON THE QUANTITIES OF IMFSL BEER SOLD. RELEVANT RULE 15(3) OF THE ABOVE SAID RULES IN THIS REGARD IS REPRODUCED AS FOLLOWS :- 15(3) AN ADDITIONAL VEND FEE AT THE RATES SPECIFI ED BELOW SHALL ALSO BE PAID BY THE LICENSEE ON THE QUANTITIES OF I MFS AND BEER SOLD. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 6 RATE OF ADDITIONAL VEND FEE BULK LITRE ( ` .) (I) SPIRITS, LIQUORS, CHAMPAGNE AND OTHER WINES CLA SSIFIED BY THE COMMISSIONER AS SPARKLING WINES CONTAINING MORE THAN 42 PER CENT OF PROOF SPIRIT. [57.72] (II) WINES OF ALL OTHER KINDS 1.00 (III) CIDER AND OTHER FERMENTED LIQUOR 4.3 (IV) BEER INCLUDING DRAUGHT BEER (16.19) (V) INDIAN MADE FOREIGN SPIRIT ORDINARY A BRANDS IN 100 ML. PACK SIZE 7.44 THE ADDITIONAL VEND FEE AT THE ABOVE RATES SO PAYAB LE SHALL BE CALCULATED FOR EVERY MONTH ON THE QUANTITY OF IMFS AND BEER SO LD BY THE LICENSEE DURING THAT MONTH AND PAID ON OR BEFORE THE 10 TH DAY OF THE SUCCEEDING MONTH. THE ABOVE SCHEME OF THE PROHIBITION ACT AND RULES FRAMED THEREUNDER MAKES IT CLEAR THAT THE ASSESSEE ENJOYS EXCLUSIVE P RIVILEGE OF LIQUOR WHOLE SALE BUSINESS IN THE STATE OF TAMIL NADU IN LIEU OF PAYM ENT OF VEND FEE, SPECIAL PRIVILEGE FEE ETC., AS PRESCRIBED BY THE RULES FRAM ED UNDER THE PROHIBITION ACT FROM TIME TO TIME. 7. THE INSTANT STRIFE BETWEEN THE ASSESSEE AND REVE NUE REVOLVES AROUND THE EFFECTIVE DATE OF NOTIFICATION AMENDING THE RULES F OR LEVY OF SPECIAL PRIVILEGE FEES WHICH THE GOVERNMENT CHARGES ANNUALLY FROM THE ASSE SSEE, WITH RETROSPECTIVE EFFECT. AS PER THE PAPER BOOK AVAILABLE BEFORE US, IN ASST. YEAR 1987-88, THE ASSESSEE HAD SHOWN VEND FEE ETC. PAYABLE TO THE STA TE UNDER THE HEAD OUTSTANDING EXPENSES. THE A.O. IN THE SAID ASSES SMENT PROCEEDINGS INVOKED SEC.43B OF THE ACT AND DISALLOWED THE ASSESSEES CLAIM IN THE SHAPE OF PROVISION MADE QUA THE SAID EXPENDITURE. IT APPEAR S THAT THE SAID CASE CAME I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 7 BEFORE THE CO-ORDINATE BENCH OF ITAT, MADRAS WHICH WAS DECIDED ON 31.12.1991 (REPORTED AS ITD VOL.42 PAGE 349 TAMIL NADU STATE M ARKETING CORPORATION V. DCIT), WHEREIN WHILST DECIDING ISSUE OF APPLICABILI TY OF SEC.43B OF THE ACT VIS-- VIS THE VEND FEE SOUGHT TO BE CHARGED BY THE STATE UNDER THE PROHIBITION ACT AND RULES FRAMED THEREUNDER (SUPRA), IT HAD BEEN OBSERV ED HEREIN BELOW:- 27. WE MAY NOW NOTICE SECTIONS 17B, 17C AND 17D OF THE PROHIBITION ACT. SECTION 17B AUTHORISES THE STATE GOVERNMENT, OR SUB JECT TO THEIR CONTROL, THE COLLECTOR, TO ISSUE, SUBJECT TO CONDITIONS AS MAY B E PRESCRIBED, LICENSE TO ANY PERSON OR ANY INSTITUTION, WHETHER UNDER THE MANAGE MENT OF GOVERNMENT OR NOT, FOR MANUFACTURE OF LIQUOR FOR HUMAN CONSUMPTIO N, OR FOR THE IMPORT, EXPORT OR TRANSPORT OF LIQUOR FOR HUMAN CONSUMPTION . SECTION 17C AUTHORISES THE STATE GOVERNMENT TO GRANT TO ANY PERSON OR PERS ONS ON SUCH CONDITIONS AND FOR SUCH PERIOD AS THEY MAY DEEM FIT, THE EXCLU SIVE OR OTHER PRIVILEGE OF MANUFACTURING, OR SELLING BY RETAIL, COUNTRY LIQUOR OR INDIAN-MADE FOREIGN SPIRITS. SUB-SECTION (1A) OF THE SECTION STIPULATES THAT NOT WITHSTANDING ANYTHING CONTAINED IN THE PROHIBITION ACT, THE TAMIL NADU ST ATE MARKETING CORPORATION LIMITED, WHICH IS A CORPORATION WHOLLY OWNED AND CONTROLLED BY THE STATE GOVERNMENT, AND WHICH IS THE ASSESSEE BEF ORE US, SHALL HAVE THE EXCLUSIVE PRIVILEGE OF SUPPLYING, BY WHOLESALE, COU NTRY LIQUOR OR INDIAN- MADE FOREIGN SPIRITS FOR THE WHOLE OF THE STATE OF TAMIL NADU AND NO OTHER PERSON SHALL BE ENTITLED TO THE SAID PRIVILEGE. SUB -CLAUSE (B) OF SUB-SECTION (1A) OF SECTION 17C STIPULATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROHIBITION ACT, THE SAID CORPORATION SHALL BE GRAN TED THE LICENCE, FOR THE EXERCISE OF THE SAID EXCLUSIVE PRIVILEGE, THE LICEN SE OF COURSE BEING SUBJECT TO THE RULES MADE BY THE STATE GOVERNMENT AND TO THE C ONDITIONS AND RESTRICTIONS THAT MIGHT BE IMPOSED BY THE COMMISSIO NER APPOINTED UNDER SECTION 25(A) OF THE ACT. SECTION 17D AUTHORISES TH E STATE GOVERNMENT TO LEVY, BY RULES, A SUM OR FEE OR BOTH IN CONSIDERATI ON OF THE GRANT OF ANY EXCLUSIVE OR OTHER PRIVILEGE UNDER SECTION 17C AND ALSO A FEE ON LICENSES GRANTED UNDER SECTION 17C. A PLAIN READING OF SECTION 17D MAKES IT CLEAR THAT IT CONTEMPLATES THE LEVY OF A SUM OR FEE OR BOTH ON TWO COUNTS, NAMELY, AS PRIC E OR CONSIDERATION FOR THE GRANT OF ANY EXCLUSIVE OR OTHER PRIVILEGE UNDER SEC TION 17C AND FOR THE GRANT OF LICENSE UNDER THE SAID SECTION. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 8 THE MATTERS RELATING TO BOTH THE AFORESAID LEVIES A RE GOVERNED BY THE RULES ISSUED BY THE STATE GOVERNMENT FROM TIME TO TIME, S UCH AS THE TAMIL NADU ARRACK (SUPPLY BY WHOLESALE), RULES, 1983, THE TAMI L NADU INDIAN-MADE FOREIGN SPIRITS (SUPPLY BY WHOLESALE) RULES, 1983 A ND THE LIKE. 28. WE ARE HERE CONCERNED WITH VEND FEE AND ADDL. V END FEE COLLECTED BY THE STATE GOVERNMENT FROM THE ASSESSEE-CORPORATI ON UNDER RULE 15 OF THE TAMIL NADU INDIAN-MADE FOREIGN SPIRITS (SUPPLY BY WHOLESALE) RULES, 1983 READ WITH SECTION 17C(1A) OF THE PROHIBITION A CT, AND THE ISSUE IS WHETHER THE SAID VEND FEE AND ADDL. VEND FEE ARE FE ES WITHIN THE MEANING OF ENTRY 66 OF THE STATE LIST, OR A TAX SIM PLICITER, OR THE PRICE OR CONSIDERATION CHARGED BY THE STATE GOVERNMENT FOR P ARTING WITH, IN FAVOUR OF THE ASSESSEE-CORPORATION, ITS EXCLUSIVE RIGHTS A ND PRIVILEGE OF SUPPLY BY WHOLESALE INDIAN-MADE FOREIGN SPIRITS FOR THE WHOLE OF THE STATE OF TAMIL NADU. 29. AS WE SEE IT, THE SAID VEND FEE AND ADDL. VEND FEE ARE NOTHING BUT THE PRICE OR CONSIDERATION CHARGED BY THE STATE GOV ERNMENT, IN ITS CAPACITY AS A TRADER, FOR PARTING WITH ONE OF ITS V ALUABLE RIGHTS AND PRIVILEGES, NAMELY THE RIGHT AND PRIVILEGE OF SUPPL YING, BY WHOLE SALE, INDIAN-MADE FOREIGN LIQUOR THROUGHOUT THE STATE OF TAMIL NADU. SUCH FEES ARE DIRECTLY RELATABLE TO THE EXECUTIVE POWER OF THE STATE TO CARRY ON ANY TRADE (ART. 298) A POWER WHICH THE STATE GOVERN MENT HAD EXERCISED IN THE PROCESS OF MAKING LAWS UNDER ENTRY 8 OF THE STA TE LIST. THIS BEING THE ESSENCE OF THE MATTER, IRRESPECTIVE OF THE MODE AND MECHANICS OF COLLECTION OF THE FEES, IRRESPECTIVE OF THE QUANTUM OF THE FEES LEVIED, AND IRRESPECTIVE ALSO OF THE FACT THAT THE PROVISIONS R ELATING TO THE LEVY ARE CONTAINED IN THE PROHIBITION ACT AND THE RULES MADE THEREUNDER, THE FEES IN QUESTION CANNOT BE REGARD EITHER AS FEES, WITHIN THE MEANING OF ENTRY 66 OF THE STATE LIST, OR AS A DUTY WITHIN THE MEANI NG OF ENTRY 51A OF THE STATE LIST, OR AS A TAX PROPER. 30. SUCH THEN IS THE CONCLUSION ON FIRST PRINCIPLES . WE MAY NOW SEE WHETHER THE CONCLUSION IS SUPPORTED BY AUTHORITY. T HERE IS A LONG LINE OF CASES IN WHICH NOT ONLY THE STATUS OF THE STATE GOV ERNMENT AS THE SOLE AND EXCLUSIVE HOLDER OF RIGHTS AND PRIVILEGES IN MATTER S, CONNECTED WITH INTOXICATING DRINKS AND LIQUORS, BUT ALSO ITS STATU S AS A 'SELLER' OF SUCH RIGHTS HAVE BEEN RECOGNISED. IN THE CASE OF STATE O F ORISSA V. HARINARAYAN JAISWAL AIR 1972 SC 1816, THE HIGHEST BID IN AN AUC TION HELD FOR GRANTING THE EXCLUSIVE PRIVILEGE OF SELLING COUNTRY LIQUOR W AS NOT ACCEPTED BY THE STATE OF ORISSA; AND THE HIGHEST BIDDER CHALLENGED THE SAID REJECTION, THROUGH A WRIT PETITION CONTENDING, INTER ALIA, THA T THE SAID REJECTION VIOLATED ARTICLES 14 AND 19(1)(G) OF THE CONSTITUTI ON. DISMISSING THE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 9 PETITION, THE SUPREME COURT OBSERVED THAT THE GOVER NMENT HAD THE POWER TO SELL EXCLUSIVE PRIVILEGES AND THAT SECONDLY, IT COULD NOT BE CONTENDED THAT THE OWNER OF THE PRIVILEGES COULD NOT DECLINE TO ACCEPT THE HIGHEST BID IF IT THOUGHT THAT THE PRICE OFFERED WAS INADEQUATE . IN THAT REGARD, HEGDE J. SPEAKING FOR THE DIVISION BENCH, OBSERVED: 'THE FACT THAT THE GOVERNMENT WAS THE SELLER DOES N OT CHANGE THE LEGAL POSITION ONCE ITS EXCLUSIVE RIGHT TO DEAL WITH THOS E PRIVILEGES IS CONCEDED. IF THE GOVERNMENT IS THE EXCLUSIVE OWNER OF THOSE P RIVILEGES, RELIANCE ON ARTICLE 19(1)(G) OR ARTICLE 14 BECOMES IRRELEVANT. CITIZENS CANNOT HAVE ANY FUNDAMENTAL RIGHT TO TRADE OR CARRY ON BUSINESS IN THE PROPERTIES OR RIGHTS BELONGING TO THE GOVERNMENT NOR CAN THERE BE ANY INFRINGEMENT OF ARTICLE 14, IF THE GOVERNMENT TRIES TO GET THE BEST AVAILABLE PRICE FOR ITS VALUABLE RIGHTS.' (EMPHASIS SUPPLIED) IN THE CASE OF NASHIRWAR V. STATE OF MADHYA PRADESH AIR 1975 SC 360 IT WAS HELD THAT THE STATE HAD THE EXCLUSIVE RIGHT OR PRIVILEGE OF MANUFACTURING AND SELLING LIQUOR: THAT IT HAD THE P OWER TO HOLD A PUBLIC AUCTION FOR GRANTING THE RIGHT OR PRIVILEGE TO SELL LIQUOR; THAT TRADITIONALLY INTOXICATING LIQUORS WERE THE SUBJECT-MATTER OF STA TE MONOPOLY; AND THAT THERE WAS NO FUNDAMENTAL RIGHT IN A CITIZEN TO CARR Y ON TRADE OR BUSINESS IN LIQUOR. A.N. RAY, THE LEARNED CHIEF JUSTICE, SPE AKING ON BEHALF OF THE 3- JUDGE BENCH OBSERVED: 'THERE ARE THREE PRINCIPAL REASONS TO HOLD THAT THE RE IS NO FUNDAMENTAL RIGHT OF CITIZENS TO CARRY ON TRADE OR TO DO BUSINE SS IN LIQUOR. FIRST, THERE IS THE POLICE POWER OF THE STATE TO ENFORCE PUBLIC MOR ALITY TO PROHIBIT TRADES IN NOXIOUS OR DANGEROUS GOODS. SECOND, THERE IS POW ER OF THE STATE TO ENFORCE AN ABSOLUTE PROHIBITION OF MANUFACTURE OR S ALE OF INTOXICATING LIQUOR. ARTICLE 47 STATES THAT THE STATE SHALL ENDE AVOUR TO BRING ABOUT PROHIBITION OF THE CONSUMPTION EXCEPT FOR MEDICINAL PURPOSES OF INTOXICATING DRINKS AND OF DRUGS WHICH ARE INJURIOU S TO HEALTH. THIRD, THE HISTORY OF EXCISE LAW SHOWS THAT THE STATE HAS THE EXCLUSIVE RIGHT OR PRIVILEGE OF MANUFACTURE OR SALE OF LIQUOR.' (EMPHA SIS SUPPLIED). IN THE CASE OF HAR SHANKAR (SUPRA) THE LEGAL POSITI ON WAS STATED THUS: 'THERE IS NO FUNDAMENTAL RIGHT TO DO TRADE OR BUSIN ESS IN INTOXICANTS. THE STATE, UNDER ITS REGULATORY POWERS, HAS THE RIGHT T O PROHIBIT ABSOLUTELY EVERY FORM OF ACTIVITY IN RELATION TO INTOXICANTS - ITS MANUFACTURE, STORAGE, EXPORT, IMPORT, SALE AND POSSESSION. IN ALL THEIR M ANIFESTATIONS, THESE RIGHTS ARE VESTED IN THE STATE AND INDEED WITHOUT S UCH VESTING THERE CAN BE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 10 NO EFFECTIVE REGULATION OF VARIOUS FORMS OF ACTIVIT IES IN RELATION TO INTOXICANTS...' ** ** ** ** 'SINCE RIGHTS IN REGARD TO INTOXICANTS BELONG TO TH E STATE, IT IS OPEN TO THE GOVERNMENT TO PART WITH THOSE RIGHTS FOR A CONSIDER ATION. BY ARTICLE 298 OF THE CONSTITUTION, THE EXECUTIVE POWER OF THE STATE EXTENDS TO THE CARRYING ON OF ANY TRADE OR BUSINESS AND TO THE MAKING OF CONTR ACTS FOR ANY PURPOSE. ** ** ** ** THE POWER OF THE GOVERNMENT TO CHARGE A PRICE FOR P ARTING WITH ITS RIGHTS AND NOT THE MODE OF FIXING THAT PRICE IS WHAT CONST ITUTES THE ESSENCE OF THE MATTER. NOR INDEED DOES THE LABEL AFFIXED TO THE PR ICE DETERMINE EITHER THE TRUE NATURE OF THE CHARGE LEVIED BY THE GOVERNMENT OR ITS RIGHT TO LEVY THE SAME.' (EMPHASIS SUPPLIED). DEALING WITH THE 'LICENSE FEE' OR 'FIXED FEE' CHARG ED BY THE STATE GOVERNMENT, THE SUPREME COURT OBSERVED: 'THE WORD 'FEE' IS NOT USED IN THE ACT OR THE RULES IN THE TECHNICAL SENSE OF THE EXPRESSION. BY 'LICENSE FEE' OR 'FIXED FEE' IS MEANT THE PRICE OR CONSIDERATION WHICH THE GOVERNMENT CHARGES TO THE L ICENSEES FOR PARTING WITH ITS PRIVILEGES AND GRANTING THEM TO THE LICENS EES. AS THE STATE CAN CARRY ON A TRADE OR BUSINESS, SUCH A CHARGE IS THE NORMAL INCIDENT OF A TRADING OR BUSINESS TRANSACTION.' (EMPHASIS SUPPLIED). IT MAY THUS BE SEEN THAT THE HIGHEST COURT OF THE L AND HAS CONSISTENTLY TAKEN THE VIEW THAT THE SUMS CHARGED BY THE STATE FOR PAR TING WITH ITS RIGHTS AND PRIVILEGES RELATING TO INTOXICATING DRINKS AND LIQU ORS ARE NOT A FEE PROPER BUT A PRICE CHARGED FOR PARTING WITH THE RIGHTS AND PRI VILEGES; NOR ARE THEY DUTY OR TAX IN THE ACCEPTED SENSE OF THE TERM. 31. IF, AS DEMONSTRATED ABOVE, THE VEND FEE AND THE ADDL. VEND FEE IN QUESTION ARE THE PRICE PAID BY THE ASSESSEE-CORPORA TION TO THE STATE GOVERNMENT FOR ACQUIRING FROM THE STATE GOVERNMENT THE EXCLUSIVE RIGHT AND PRIVILEGE IN QUESTION, THEN THE FACT THAT THESE WER E LEVIED AND COLLECTED UNDER THE PROHIBITION ACT ALONG WITH EXCISE DUTY, OR THE FACT THAT THE MAGNITUDE OF THE LEVY IS DISPROPORTIONATE TO THE SERVICES RENDER ED, OR THE COMPULSORY NATURE OF THE LEVY, OR EVEN THE FACT THAT THE INCID ENCE OF THE LEVY WAS ON THE ULTIMATE CONSUMERS AS IN THE CASE OF EXCISE DUTY ON LIQUOR - CONSIDERATIONS I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 11 WHICH WEIGHED WITH THE LOWER AUTHORITIES DO NOT ALT ER THE NATURE OF THE LEVY. THE LEVY REMAINS WHAT IT ESSENTIALLY IS, NAMELY, TH E PRICE PAID IN A PURELY COMMERCIAL TRANSACTION TO THE STATE GOVERNMENT FOR PARTING WITH ITS VALUABLE RIGHTS AND PRIVILEGE RELATING TO INTOXICATING LIQUO RS. 32. THE QUESTION THEN ARISES FOR CONSIDERATION IS W HETHER THE PROVISIONS OF SECTION 43B OF THE INCOME-TAX ACT, 1961, WITH OR WI THOUT THE 1988 AMENDMENT, WOULD BE APPLICABLE TO THIS CASE. IN OUR CONSIDERED OPINION, THE PROVISIONS OF THE SAID SECTIONS ARE NOT AT ALL APPL ICABLE TO THE CASE BEFORE US. IT IS SELF-EVIDENT THAT, AS IT STOOD PRIOR TO THE 1 988 AMENDMENT, THE SECTION GOVERNED TAXES AND DUTIES PROPERLY SO-CALLED. THE C ASE BEFORE US IS NOT ONE OF TAX OR DUTIES. THE SAID SECTION IS, THEREFORE, N OT APPLICABLE. 33. EVEN IF WE WERE TO GO ON THE BASIS THAT, THE 19 88 AMENDMENT IS DECLARATORY IN NATURE AND RETROACTIVE IN OPERATION, THE CASE OF THE DEPARTMENT WILL NOT IMPROVE, BECAUSE THE CASE BEFOR E US, AS WE HAVE SEEN EARLIER, IS NOT ONE OF FEE STRICTU SENSU, NOR IS IT ONE OF CESS. WE, THEREFORE, HOLD THAT THERE IS NO QUESTION OF INVOKING THE PROV ISIONS OF SECTION 43B OF THE ACT. 34. IN VIEW OF THE FOREGOING, THEREFORE, WE HOLD TH AT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT THE LEVY IN QUESTION PARTOOK THE CHARACTERISTICS OF A TAX, AND IN APPLYI NG THE PROVISIONS OF SECTION 43B OF THE ACT. WE, THEREFORE, SET ASIDE THE DECISI ONS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO A LLOW THE ASSESSEE THE BENEFIT OF REVENUE DEDUCTION IN RESPECT OF THE ENTIRETY OF THE SUM OF RS. 9,83,30,732. 35. IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED . IN THIS MANNER, THE CO-ORDINATE BENCH WAS PLEASED T O HELD THAT THE FEE PAID BY THE ASSESSEE TO THE STATE GOVT. IN LIEU OF ACQUI RING EXCLUSIVE RIGHTS OF LIQUOR WAS NEITHER A TAX OR A CESS NOR A DUTY. BASICALLY, IT WAS PRICE PAID BY THE ASSESSEE FOR ENJOYING THE PRIVILEGE GRANTED BY THE GOVT. QUA LIQUORS WHOLE SALE SUPPLY RIGHTS. 8. COMING TO THE ISSUE INVOLVED, ON 13.11.2007, T HE ASSESSEE HAD FILED ITS RETURN STATING INCOME AS ` .4,13,76,749. IN SCRUTINY PROCEEDINGS, THE ASSESSIN G I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 12 OFFICER NOTICED THAT THE ASSESSEE HAD BEEN DEBITING SPECIAL PRIVILEGE FEES TO GOVT. OF TAMIL NADU EACH YEAR PER GOVT. ORDERS. TH E ASSESSEE HAD SHOW IN ITS P & L ACCOUNT ADDITIONAL VEND FEE ON MONTHLY BASIS AT THE RATE OF ` .53.23 PER LITRE OF LIQUOR FROM 1.4.2006 TO 31.3.2007. FURTHER, IN VIEW OF THE GO DATED 20.7.2007, IT HAD ALSO MADE PROVISION OF AN AMOUNT OF ` .2,18,80,15,141/- SINCE THE GO DATED 20.7.2007 WAS MADE APPLICABLE WITH EFFECT FR OM 1.4.2006 IN VIEW OF THE FACT THAT THE SAME HAD BEEN ISSUED BEFORE FINALIZAT ION OF ACCOUNT. IN SUPPORT THEREOF, THE ASSESSEE PLACED RELIANCE ON TWO GOS DA TED 25.10.2006 AND 20.7.2007 REVISING THE FEES UNDER RULE 15(3)(SUPR A) FROM ` .46.35 TO ` .53.23 AND ` . 57.72 FROM ` . 53.23. IT IS NOT OUT OF PLACE TO REPRODUCE HEREUN DER THE RELEVANT GOS DATED 25.10.2006 & 20.7.2007 AS FOLLOWS :- PROHIBITION AND EXCISE (VIII) DEPARTMENT GO (S) NO.74 DATED : 25.10.2006 1. G.O.(MS) NO.65, PROHIBITION AND EXCISE (VIII) DE PARTMENT, DATED 27.10.2005. 2. FROM THE MANAGING DIRECTOR, TAMIL NADU STATE MAR KETING CORPORATION LIMITED, LETTER 1184/N2/2006, DATED 20. 10.2006. -------- ORDER : THE FOLLOWING NOTIFICATION WILL BE PUBLISHED IN TH E NEXT ISSUE OF THE TAMIL NADU GOVERNMENT GAZETTE :- NOTIFICATION IN EXERCISE OF THE POWERS CONFERRED BY SECTIONS 17 -D AND 54 OF THE TAMIL NADU PROHIBITION ACT, 1937 (TAMIL NADU ACT X OF 193 7), THE GOVERNOR OF TAMIL NADU HEREBY MAKES THE FOLLOWING AMENDMENT TO THE TAMIL NADU INDIAN MADE FOREIGN SPIRIT (SUPPLY BY WHOLESALE) RU LES, 1983. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 13 2. THE AMENDMENT HEREBY MADE SHALL BE DEEMED TO HA VE COME INTO FORCE ON THE 1 ST APRIL 2005. AMENDMENT IN THE SAID RULES, IN RULE 15, IN SUB-RULE (3), FO R THE EXPRESSION 46.35 AGAINST ITEM (I), THE EXPRESSION 53.23 SHALL BE S UBSTITUTED. S.K. PRABAKAR SECRETARY TO GOVERNMENT WE NOTICE THAT THE ABOVE SAID GO WAS SUBSTITUTED BY ANOTHER GO DATED 20.7.2007 WHICH IS REPRODUCED BELOW :- HOME PROHIBITION AND EXCISE (VIII) DEPARTMENT G.O.(MS) NO.53 DATED : 20.07.2007 1. GO (MS) NO.74, PROHIBITION AND EXCISE DEPARTMENT, D ATED 25.10.2006 2. FROM THE MANAGING DIRECTOR, TAMIL NADU STATE MARKET ING CORPORATION LIMITED, LETTER NO.5905/N2/2007, DATED 17.07.07. _______ ORDER : THE FOLLOWING NOTIFICATION WILL BE PUBLISHED IN TH E NEXT ISSUE OF THE TAMIL NADU GOVERNMENT GAZETTE :- NOTIFICATION IN EXERCISE OF THE POWERS CONFERRED BY SECTIONS 17 -D AND 54 OF THE TAMIL NADU PROHIBITION ACT, 1937 (TAMIL NADU ACT X OF 193 7), THE GOVERNOR OF TAMIL NADU HEREBY MAKES THE FOLLOWING AMENDMENT TO THE TAMIL NADU INDIAN MADE FORWEIGN SPIRIT (SUPPLY BY WHOLESALE) R ULES, 1983. 2. THE AMENDMENT HEREBY MADE SHALL BE DEEMED TO HAVE COME INTO FORCE ON THE 1 ST APRIL 2006. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 14 AMENDMENT IN THE SAID RULES, IN RULE 15, IN SUB-RULE (3), FO R THE EXPRESSION 53.23, AGAINST ITEM (I), THE EXPRESSION 57.72 SHALL BE SUB STITUTED. S. MALATHI SECRETARY TO GOVERNMENT ACCORDINGLY, THE ASSESSEES SUBMISSION BEFORE ASSES SING OFFICER WAS THAT SINCE THE SPECIAL PRIVILEGE FEE HAD BEEN INCREASED RETROS PECTIVELY UNDER THE PROHIBITION ACT AND RULES FRAMED THEREUNDER (SUPRA), IT HAD NO OPTION BUT TO MAKE PROVISO REGARDING THE REVISED RATE OF RS.57.72 PER LITRE OF LIQUOR AND CLAIM THE SAME IN ITS PROFIT AND LOSS ACCOUNT AS EXPENDITURE.. 9. THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 14.12.2009 DID NOT AGREE TO ASSESSEES CONTENTION AND OBSERVED THAT TH E GO DATED 20.7.2007 WAS NOT IN OPERATION AS ON 31.3.2007 (ON THE CLOSING DA Y OF PREVIOUS YEAR) BEING NOTIFIED THEREAFTER I.E. ON 20.7.2007 AND ONLY GO D ATED 25.10.2006 HAD BEEN IN OPERATION AS ON 31.3.2007. PER ASSESSING OFFICER, BY WAY OF G.O. DATED 20.07.2007, A METHOD WAS ADOPTED BY THE ASSESSEE TO REDUCE NET PROFIT FOR THE PURPOSE OF COMPUTATION OF INCOME. SINCE THE ASSESS EE HAD BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, ASSESSING OFFICER OBSERVED THAT THE ASSESSEES CLAIM WAS UNACCEPTABLE AS THE GO COULD NOT BE GIVEN EFFECT RETROSPECTIVELY AS THE FEES HAD BEEN ENHANCED AFTER THE END OF FINAN CIAL YEAR. THE ASSESSING OFFICER, THEREFORE, TREATED THE PROVISION MADE BASE D ON THE SUBSEQUENT GO DATED 20.7.2007 WHICH WAS SUBSEQUENT TO THE END OF PREVIOUS YEAR AS COLORABLE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 15 EXERCISE OF POWER TO AVOID THE PAYMENT OF TAX. ACCORDINGLY, AS PER GO DATED 25.10.2006 (SUPRA) PREVAILING DURING THE PREVIOUS Y EAR RELEVANT TO ASST. YEAR, THE ASSESSING OFFICER CONSIDERED SPECIAL PRIVILEGE FEE AS ` .46.35 FOR THE PERIOD 1.4.2006 TO 25.10.2006 AND ` .53.23 FOR THE PERIOD FROM 25.10.2006 TO 31.3.2007 FOR ONE BULK LITRE OF LIQUOR SOLD AND ADDED DIFFER ENCE OF ` .218,80,15,141/- IN ASSESSEES INCOME. 10. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL WHEREI N ITS PLEA WAS THAT THE FEE WAS A STATUTORY LIABILITY IMPOSED BY THE PROH IBITION ACT AND RULES FRAMED. HOWEVER, CIT(APPEALS) HAS HELD THAT THE LIABILITY O VER AND ABOVE ` .53.23 PER BULK LITRE HAD NOT ACCRUED AS ON 31.3.2007. THEREFORE, THE SAME WAS NOT LIABLE TO BE TAKEN INTO CONSIDERATION. FURTHER, PER CIT(A), THE RE WAS NO DEMAND MADE ON THE ASSESSEE BY THE STATE GOVT. AS ON 31.3.2007 AS THE VERY BASIS OF DEMAND WAS THE GO DATED 20.7.2007. ACCORDINGLY, THE CIT(APPEAL S) CONFIRMED THE ASSESSING OFFICERS ORDER IN PRINCIPLE. IT HAS BEEN FURTHER OBSERVED BY THE CIT (A) THAT THE ASSESSING OFFICER SHOULD HAVE ADOPTED RATE OF ` .53.23 FOR THE WHOLE YEAR INSTEAD OF BIFURCATING THE RATES FROM 1.4.2006 TO 24.10.200 6 AND FROM 25.10.2006 (SUPRA) BECAUSE THE GO DATED 25.10.2006 HAD REVISED THE RAT E RETROSPECTIVELY WITH EFFECT FROM 1.4.2006 ONWARDS AND, THEREFORE, THE REVISED R ATE AS PER GO APPLIED FOR WHOLE OF THE PREVIOUS YEAR, IE. FROM 1 ST OF APRIL 2006. IT IS IN THIS BACKDROP THAT BOTH ASSESSEE AND REVENUE HAVE RAISED THE ISSUE IN HAND. THE CASE OF THE ASSESSEE IS THAT IT IS ENTITLED FOR THE SPECIAL VE ND FEE @ ` .57.72 PER BULK LITRE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 16 W.E.F. 1.4.2006. THE REVENUES GRIEVANCE IS CIT(A) S DIRECTIONS ISSUED TO A.O. QUA RATE OF ` .53.23 PER LITRE FOR THE WHOLE OF THE PREVIOUS YEAR AGAINST ` .46.35/LITRE CONSIDERED BY THE AO FOR THE PERIOD 1.4.2006 TO 24. 10.2006 AND ` .53.23/LITRE CONSIDERED FOR THE PERIOD FROM 25.10.2006 TO 31.3.2 007. 11. BY DRAWING OUR ATTENTION TO ASSESSEES STATUS, ITS PRIVILEGE OF HAVING EXCLUSIVE RIGHTS TO SUPPLY INDIAN MADE FOREIGN LIQU ORS AND FOREIGN SPIRITS IN THE ENTIRE STATE OF TAMIL NADU, PROVISIONS OF PROHIBI TION ACT, RULES FRAMED THEREUNDER, GOS IN QUESTION, ASSESSEES MAKING OF P ROVISIONS IN COMPLIANCE THEREOF AND FACTS NARRATED HEREINABOVE, THE A.R. H AS JUSTIFIED ASSESSEES ACTION OF MAKING PROVISION QUA REVISED RATES (SUPRA) IN IT S P&L ACCOUNT IN VIEW OF RATES REVISED ON 20/7/2007 BY WAY OF GO CONCERNED. IT HA S ALSO BEEN HIGHLIGHTED THAT THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTIN G IN WHICH LIABILITY IS ALLOWABLE IN THE YEAR OF ACCRUAL EVEN IF THE SAME I S CRYSTALLIZED WELL BEYOND THE PREVIOUS YEAR. MORE SO, ON THE PRINCIPLE THAT UNDE R ABOVE SYSTEM OF ACCOUNTING, THE LIABILITY WHICH HAS ATTAINED FINALITY GOES BACK TO THE YEAR OF ACCRUAL WHICH IN THE INSTANT CASE IS A.Y. 2007-08 (TIME PERIOD FROM 1.4.2006 TO 31/3/2007). TO BUTTRESS THE PLEA, CASE LAW OF HONBLE APEX COURT R EPORTED AS 82 ITR 363 (KEDERNATH JUTE MANUFACTURING CO. V. CIT), 218 ITR 164 (CIT V. KALINGA TUBES) AND HONBLE JURISDICTIONAL HIGH COURT 245 ITR 221 H AS ALSO BEEN CITED. 12. NEXT SUBMISSION MADE BY THE A.R. IS THAT AS HAS BEEN PAST PRACTICE OF THE ASSESSEE, THE LIABILITY IN HAND HAS BEEN CONTINUOUS LY ARRIVED AT BEYOND THE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 17 PREVIOUS YEARS AND NO SUCH ACTION WAS INITIATED BY THE DEPARTMENT AS THE SAME WAS ALLOWED TO BE CLAIMED HAVING BEEN ARISEN WELL B EFORE THE FINALIZATION OF THE ACCOUNT. IN THIS REGARD, OUR ATTENTION HAS BEEN DI VERTED TO ASSESSEES 1 ST PAPER BOOK PAGE 20 WHICH IS HEREIN BELOW: SPECIAL PRIVILAGE FEE - RATES ASST. YEAR FINANCIAL YEAR G.O. NO. DATE IMFS BEER RATE ARREAR CLAIMED AS EXPENDITURE IN THE A.Y. PASSED ORDER U/S. 2001-02 2000-01 128 P& E VIII DEPT. DATED 16.07.01 15.95 TO 17.18 5.24 01.04.2000 (TO 31.03.01) 2001-2002 143(3) 2002-03 2001-02 193 P& E VIII DEPT. DATED 06.09.02 17.18 TO 19.29 5.24 01.04.01 ( TO 31.03.02) 2002-2003 143(3) 2003-04 2002-03 366 P& E VIII DEPT. DATED 27.11.03 19.29 TO 19.37 5.24 01.04.02 ( TO 31.03.03) 2003-2004 143(3) 2004-05 2003-04 2004-05 143(3) E.F.29.11.03 49 P& E VIII DEPT. DATED 19.02.04 19.37 TO 29.78 5 .24 TO 8.29 01.04.03 ( TO 31.03.04) E.F.29.11.03 338 P& E VIII DEPT. DATED 29.10.04 29.78 TO 43.37 E.F.29.11.03 344 P& E VIII DEPT. DATED 01.12.04 8.29 TO 16.19 2005-06 2004.05 65 P& E VIII DEPT. DATED 27.10.05 43.37 TO 46.35 16.19 01.04.04 ( TO 31.03.05) 2005-06 143(3) 2006-07 2005-06 74 P& E VIII DEPT. DATED 25.10.06 46.35 TO 53.23 16.19 01.04.05 ( TO 31.03.06) 2006-07 143(3) THE ARS SUBMISSION IS THAT THE ABOVE ASSESSMENTS H AD BEEN FINALIZED U/S.143(3) OF THE ACT ALLOWING ASSESSEES CLAIM OF LIABILITY WHICH HAD ARISEN WELL AFTER THE RELEVANT PREVIOUS YEARS WERE OVER. IN SU PPORT OF THIS PLEA OF CONSISTENCY, THE AR HAS PLACED RELIANCE ON CASE LAW S :- A) LAXMI MACHINE WORKS 241 ITR 53 MADRAS HC B) ASHOKA MILLS 52 TTJ 88, ITAT AHMEDABAD C) ASSAM ROLLER FLOUR MILLS V. CIT 227 ITR 43 RAJAS THAN HC D) BHARAT EARTH MOVERS 245 ITR 428 SC E) BHOJRAJ TEXTILES MILLS LTD. 2012 TIOL 381 MADRAS HC F) CIT V. BOKARO STEELS LTD. 236 ITR 315 I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 18 13. FURTHER PLEA RAISED ON BEHALF OF THE ASSESSEE I S THAT ADMITTEDLY, THE HIKE IN SPECIAL PRIVILEGE FEES IS NOT BY WAY OF ANY EXECUTI VE ORDER OR INSTRUCTIONS; BUT BY THE OPERATION OF RULES AND IN SUCH A CASE, EARLIE R FEE STANDS SUBSTITUTED BY THE NEW FEE AS HAS BEEN DONE IN THE INSTANT CASE. THER EAFTER, THE AR HAS PREFERRED TO AGAIN THROW LIGHT ON THE ENTIRE SCHEME OF ACT AND RULES TO URGE THAT SINCE AT THE TIME OF FINALIZATION OF ACCOUNTS, THE FEE PER L ITRE STOOD REVISED, SO IT WAS INCUMBENT ON THE ASSESSEE TO MAKE NECESSARY PROVISI ON IN THE P&L ACCOUNT. PER AR, THE AMENDED FIGURES OF SPECIAL PRIVILEGE FE E AS IT EXISTED AT THE TIME OF FILING THE RETURN STOOD COMPLIED BY THE ASSESSEE AS THE CONCEPT OF LIABILITY AS IT EXISTED ON CLOSING DAY OF THE PREVIOUS YEAR WOULD N OT APPLY AS PER THE RETROSPECTIVE AMENDMENT IN RULES (SUPRA) AND TILL T HE CONCERNED AMENDMENT IS NOT DECLARED NULL AND VOID BY THE APPROPRIATE JUDIC IAL FORUM, THE SAME HOLDS GROUND. THE CASE LAW CITED IN SUPPORT IS INDIA CEM ENTS 98 ITR 69 MADRAS HC; KSN BHATTS CASE 145 ITR 1 SC; CIT V. UNITED BANK O F INDIA 115 CTR 35. THE GIST OF THE ASSESSEES SUBMISSIONS BEFORE US I S THAT THE LIABILITY IN QUESTION CAME INTO BEING BY RETROSPECTIVE LEGISLATI VE AMENDMENT; THEREFORE, IT WOULD RELATE BACK TO THE YEAR OF ACCRUAL WHICH IS A LLOWABLE AS A DEDUCTION. 14. IN ADDITION TO THIS, ASSESSEES ALTERNATIVE SUB MISSION IS IF THE ASSESSEES PLEA OF LIABILITY IS NOT ACCEPTED IN THE YEAR OF AC CRUAL IS AY 2007-08, THE SAME BE ALLOWED AS DEDUCTION IN THE YEAR OF ISSUANCE OF GO DT. 20.7.2007 IE AY 2008-09. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 19 15. OPPOSING ASSESSEES PLEAS RAISED HEREINABOVE, T HE DR HAS ALSO CHOSEN TO REITERATE THE VERY FACTUAL BACK GROUND OF THE CA SE IE. ASSESSEES STATUS, SCHEME AND SCOPE OF PROHIBITION ACT AND RULES FRAME D THEREUNDER AND RAISED A CONTENTION THAT AO IN THE INSTANT CASE HAD ALREADY ALLOWED DEDUCTION (SUPRA) TO THE ASSESSEE QUA FEE AS ON 31.3.2007. FURTHER, T HE DR HAS LAID STRESS ON THE NATURE OF IMPUGNED LIABILITY IE. WHETHER IT IS STAT UTORY OR CONTRACTUAL. IN THIS REGARD, HE HAS ACCUSED THE ASSESSEE OF ADOPTING MUT UALLY CONTRADICTORY PLEAS. HIS SUBMISSION IS THAT THE ASSESSEE HAS SOMETIMES C LAIMED THE SPECIAL PRIVILEGE FEE TO BE STATUTORY LIABILITY ON SOME OCCASIONS T HE CLAIM IS IN THE NATURE OF CONTRACTUAL LIABILITY. 16. IN ADDITION TO THIS, THE AR HAS MADE REFERENCE TO ASSESSEES EARLIER CASE REPORTED AS 42 ITD 349 TITLED AS TASMAC V. CIT(SUPR A) AND SUBMITTED THAT THOUGH THE DECISION STILL HOLDS THE FIELD; BUT IT O NLY RELATED TO APPLICATION OF THE PROVISION OF SEC.43B OF THE ACT AND DOES NOT SETT LE THE LIABILITYS NATURE I.E. WHETHER STATUTORY OR CONTRACTUAL. IN THE SAME BREATH, THE DR HAS EMPHASIZED THAT A ST ATUTORY LIABILITY ARISES ONLY IN CASE THE STATE EXERCISES ITS SOVEREIGN POWE R OF TAXATION BY WAY OF LAW WHEREAS A CONTRACTUAL LIABILITY COMES INTO PICTURE ONLY IN CASE OF AN AMOUNT WHICH BECOMES PAYABLE BY WAY OF A CONTRACTUAL OBLIGATION BETWEEN THE CONCERNED PARTIES. THEREAFTER, BY TAKING US TO PROHIBITION ACT AND RULES , HE HAS LAID STRESS IN THE PLEA THAT A LICENCE THEREUNDER IS RENEWED EACH YEAR ON THE BASIS I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 20 OF NECESSARY APPLICATION MADE BY THE ASSESSEE IN LI EU OF SPECIAL PRIVILEGE FEE WHICH SHOWS THAT THE LIABILITY IS IN FACT CONTRACT UAL IN NATURE AND NOT STATUTORY. 17. BY FURTHER ELABORATING THE NATURE AND SCOPE OF CONTRACTUAL LIABILITY VIS--VIS ASSESSEES PROVISION IN QUESTION, THE DRS CONTENTI ON IS THAT THE SAID PAYMENT IS CONSIDERATION FOR LIQUOR RIGHTS IS PURELY A COMMERC IAL TRANSACTION AND THE SAME WAS PAYABLE @ ` . 53.23 LITRE OF LIQUOR WHICH; FROM THE ASSESSEES RECORD, IS NOWHERE SPELT OUT THAT THERE WAS ANY ENFORCEABLE DE MAND EVER MADE BY STATE GOVT. REGARDING ENFORCEABILITY OF THE GO DATED 20.7 .2007 GIVING RISE TO ANY CONTRACTUAL LIABILITY WITH RESPECT TO THE PAYMENT I N QUESTION AS ON 31.3.2007. ON THE SAID DAY, PER DR, THE ADDITIONAL SPECIAL VEND F EE AS NOTIFIED ON 20.7.2007 DID NOT EXIST. THEREFORE, HIS STAND IS THAT THE ASSESSE ES PLEA IS NOT ACCEPTABLE. HE HAS ALSO BEEN PLACED RELIANCE ON CASE LAW IN SUPPOR T OF THE ARGUMENT THAT ONLY LIABILITY PRESENT AND CRYSTALLIZED IS ALLOWABLE AND NOT THE ONE WHICH ARISES IN FUTURE AS UNDER: A) CIT V. LACHHMA DAS MATHURA DAS 124 ITR 411 ALL B) CIT V. SESHASAYEE INDUSTRIES LTD. 242 ITR 691 (MADRAS) C) ALEMBIC CHEMICAL WORKS V. DCIT 266 ITR 47 (GUJRA T HC) 18. FURTHER, OPPOSING THE ASSESEES SUBMISSION THAT THE LIABILITY IS STATUTORY IN NATURE HAVING BEEN IN EXISTENCE AS SOON AS THE SALE S WERE MADE, THE DR HAS FORCEFULLY SUBMITTED THAT THE GO HAD COME ON 20.7.2 007. TILL THEN, THERE WAS NO REASONABLE BELIEF OR INDICATION OF ANY HIKE; THAT T OO, WITH RETROSPECTIVE EFFECT. SO, I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 21 THE REVENUES ARGUMENT IS THAT AT THE BEST, THE LIA BILITY AROSE IN ACCOUNTING YEAR 2007-08 IE. YEAR WHEN DEMAND WAS MADE GIVING RISE T O ITS ENFORCEABILITY ONLY WHEN THE NOTIFICATION CAME INTO OPERATION. THE CAS E LAW CITED IN SUPPORT IS :- A) NARENDER KUMAR V. UNION OF INDIA AIR 1960 SC 430 B) CIT V. KS MOHAMMED 116 CTR 356 KERALA HC C) CIT V. ORIENT SUPPLY SYNDICATE 134 ITR 12 (CA LCUTTA HC) D) CIT V. PADMAVATI RAJU COTTON MILLS 203 ITR 37 5 (CALCUTTA HC) E) CIT V. REVATI EQUIPMENT LTD. 298 ITR 67 (MADRAS HC) F) CIT V. JUTE & STORES LTD. 200 ITR 411 G) CIT V. PRABHAVATI D MEHTA 240 ITR 447 (BOMBAY HC) H) LAKHANPAL NATIONAL LTD. V. ITO 24 ITD 214 ITA T AHD. J) KJ FRANCIS V. SCIT 236 ITR 308 (SC) K) CIT V. WEST CHUSICK COAL CO. 129 ITR 62 CAL CUTTA HC L) AVERY INDIA LTD V. CIT 199 ITR 745 CAL HC M) CANARA BANK V. ITO 121 ITD 1 ITAT NAGPUR N) CIT V. ESTATE OF LATE MAHBOOK KHAN 152 ITR 35 3 MADRAS HC 19. THE NEXT ARGUMENT OF DR IS THAT ACCOUNTING STAN DARD 4 IN THE ACCOUNTANCY STANDARDS DEALS WITH THE EVENTS AFTER C LOSE OF THE YEAR FOR CONTINGENCIES AND EVENTS OCCURRING PAST CLOSURE OF THE YEAR. IN THIS REGARD HE HAS DRAWN OUR ATTENTION TOWARDS PARA 4 OF THE ABOVE ACCOUNTING STANDARD REFERRING TO VARIOUS CONTINGENCIES (AVAILABLE IN PA PER BOOK) AND SUBMITTED THAT THE ASSESSEES PROVISION AS MADE IN P&L ACCOUNT DOE S NOT SATISFY THE CONTINGENCIES IN THE FORM OF CONDITIONS OR SITUATIO NS EXISTED IN THE BALANCE SHEET SO AS TO WARRANT ACCEPTANCE OF CLAIM. IN HIS OPINI ON, PROVISION DESERVES TO BE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 22 MADE IN P&L ACCOUNT AS IT SHOULD HAVE BEEN THERE IN BALANCE SHEET. WHILST MAKING THIS SUBMISSION, THE CASE LAW REFERRED IS :- I) MORVI INDUSTRIES V. CIT 82 ITR 35 (SC) II) CIT V. ARVIND INDUSTRIES 201 ITR 821 (GUJARAT HC) III) CIT V. ALAMPALLY BROTHERS 50 DTR 325 (KARNATAKA) 20. THE REVENUES NEXT ARGUMENT IS THAT GO DATED 20 .72007 ITSELF IS INVALID AS NO LIABILITY HAD ACCRUED AGAINST THE ASSESSEE IN TH E ABSENCE OF THE SO CALLED AMENDED RULES SINCE THE SAME WERE NEVER PLACED BEFO RE THE TAMIL NADU STATE LEGISLATIVE ASSEMBLY NOR THEY STAND APPROVED PER SP ECIFIC PROVISION IN THE ACT AND RULES AND THE GO DATED 20.7.2007 IS AN EXECUTIV E ORDER HAVING NO SANCTITY UNDER THE LAW. THE CASE LAW RELIED UPON IN SUPPORT IS :- A) MCT MUTHIAH CHETTIAR FAMILY TRUST V. ITO (MAD) 86 ITR 284 B) HUKUMCHAND V. VOI (1972) 2 SCC 601 21. THE REVENUES NEXT PLEA IS THAT FOR ALL INTENTS AND PURPOSES, THE ASSESSEE IS A 100% TAMIL NADU STATE UNDERTAKING AND ALL ITS FUNCTIONARIES ARE GOVT. OFFICIALS INCLUDING SECRETARIES AND COMMISSIONER EX CISE ETC. PER REVENUE, SINCE THE ASSESSEE HAD ACCUMULATED PROFITS OF ` .218 CRORES QUA AY IN HAND AN ATTEMPT HAD BEEN MADE TO REDUCE THE TAXABLE INCOME TO A PAL TRY SUM OF ` .5 CRORES. THEREFORE, THE ASSESSEE HAS ACTED IN CONNIVANCE WIT H STATE GOVT. AS IT DID NOT CHALLENGE THE HIKE IN SPECIAL PRIVILEGE FEE WITH RE TROSPECTIVE EFFECT. HENCE, A CORPORATE VEIL HAS BEEN ADOPTED BY THE ASSESSEE WHI CH DESERVES TO BE PIERCED SO AS TO BRING INTO TAX THE ACTUAL INCOME. THE REV ENUES CASE LAW IN SUPPORT IS :- I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 23 I) CIT V. MEENAKSHI MILLS LTD. (SC) 631 ITR 609 II) CIT V. INDIAN EXPRESS NEWSPAPER 238 ITR 70 III) WORKMEN V. ASSOCIATED RUBBER INDUSTRY 157 I TR 77 22. THE DR THEN PRAYED FOR REJECTION OF ASSESSEES APPEAL AND IN SUPPORT OF REVENUES APPEAL, PRAYED FOR RESTORING A.OS ORDER. 23. IN REBUTTAL, THE AR HAS REITERATED VARIOUS SUBM ISSIONS RAISED AND DISTINGUISHED THE CASE LAW RELIED UPON BY REVENUE. HE HAS ALSO SUPPLIED COPY OF NECESSARY CORRESPONDENCE DATED 2.11.2007 BY THE UNDER SECRETARY OF THE TAMIL NADU STATE LEGISLATIVE ASSEMBLY INFORMING THE EXCISE DEPARTMENT THAT THE GO DATED 20.7.2007 HAD BEEN TABLED BEFORE THE HOUSE AND PRAYED FOR ACCEPTANCE OF THE APPEAL. 24. WE HAVE HEARD SUBMISSIONS OF BOTH PARTIES AT LE NGTH AND ALSO PERUSED THE RELEVANT FINDINGS, CONTENTS OF PAPER BOOK REFERRED AND THE CASE LAW CITED. BOTH LEARNED REPRESENTATIVES HAVE ALSO LED THEIR LIVELY ARGUMENTS IN DETAIL SO AS TO ASSIST US TO THE BEST OF THEIR ABILITIES. A PERUSA L OF THE RECORD MAKES IT CLEAR THAT THE ASSESSEE IS ADMITTEDLY A COMPANY OWNED AND CONT ROLLED BY THE STATE OF TAMILNADU. UNDER THE SCHEME OF THE CONSTITUTION OF INDIA, A STATE GOVT. IS EMPOWERED TO LEVY EXCISE ON LIQUOR BY WAY OF NECESS ARY LEGISLATION. IT IS FOR THIS PURPOSE THAT THE PROHIBITION ACT AND RULES FRAM ED THERE UNDER REGULATE THE EXCISE ON LIQUOR BUSINESS THROUGHOUT THE STATE. FO R BETTER MANAGEMENT OF THE LIQUOR SALES IN THE STATE, THE TAMILNADU GOVT. HAS CONFERRED EXCLUSIVE PRIVILEGE OF I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 24 SUPPLYING WHOLE SALE INDIAN MADE FOREIGN LIQUORS A ND FOREIGN SPIRITS (IMFL) TO THE ASSESSEE. IN LIEU THEREOF, THE ASSESSEE PAYS VA RIOUS LEVIES SUCH AS BOTTLING FEES, STATE EXCISE, VEND FEE, PRIVILEGE FEES TO THE TAMIL NADU GOVERNMENT. WE MAY ALSO CLARIFY HERE THAT THE ASSESSEES CHAIRMAN AND DIRECTORS INCLUDE SECRETARY OF DEPARTMENT OF HOME, PROHIBITION AND EX CISE OF THE TAMILNADU GOVT. AND OTHER SENIOR FUNCTIONARIES WHO ALSO DISCHARGE T HE DUTIES PERTAINING TO THE OFFICE OF ASSESSEES MANAGING DIRECTOR. 25. COMING TO THE CHRONOLOGY OF THE EVENTS RELEVANT TO THE CASE, IT TRANSPIRES THAT THE PROVISIONS OF PROHIBITION ACT(SUPRA) EMP OWERS THE TAMIL NADU GOVT. TO IMPOSE CERTAIN FEES AND LEVIES QUA THE LIQUOR R IGHTS EVEN WITH RETROSPECTIVE EFFECT. THE RATES ETC. TO BE PAID ARE INCORPORATED IN THE 1983 RULES. WE NOTICE THAT THE RATES CONTAINED IN THE RULES ARE SUBJECT T O PROVISIONS OF THE ACT. BY EXERCISING THIS LEGISLATIVE AUTHORITY, THE STATE GO VT. PREFERRED TO REVISE THE WHOLE SALE RATES IN QUESTION WITH RETROSPECTIVE EFFECT IE . FROM ` .46.35 PER LITRE TO ` . 53.23 W.E.F. 1.4.2005 VIDE GO DATED 25.10.2006. AND FROM ` . 53.25 PER LITRE TO ` . 57.72 PER LITRE W.E.F. 01.4.2006. THE PAGE 20 OF AUTHORI ZED REPRESENTATIVES 1 ST PAPER BOOK (SUPRA) FURTHER REVEALS THAT THIS HAS NOT BEEN DONE FOR THE FIRST TIME AS THE VERY METHODOLOGY IS BEING FOLLOWED SINCE VERY MANY YEARS. THEREFORE, WE CONCLUDE IT SAFELY THAT THE PRESENT IS NOT THE ONLY INSTANCE OF THE ASSESSEE MAKING PROVISION FOR SPECIAL PRIVILEGE FEES ARISING OUT OF NOTIFICATIONS HAVING I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 25 RETROSPECTIVE EFFECT; THAT TOO WHICH WERE ISSUED AF TER THE END OF RELEVANT FINANCIAL YEAR. 26. MOREOVER, THE PAST HISTORY ALSO SUGGESTS THAT S O FAR AS THE LEVIES OR FEES IMPOSED BY THE TAMIL NADU STATE GOVT. IS CONCERNED, THE LD. CO-ORDINATE BENCH (SUPRA) HAD DULY ELABORATED THE SCHEME OF FEE ETC. PRESCRIBED BY THE STATE GOVT. TO BE PAID BY THE ASSESSEE IN REACHING TO THE CONCL USION THAT THE SAID FEES ARE NOTHING BUT CONSIDERATION PAID BY THE ASSESSEE TO T HE STATE GOVT. IN LIEU OF ENJOYING EXCLUSIVE RIGHTS OF LIQUOR WHOLE SALE BUSI NESS. AFTER GOING THROUGH THE SAME, WE ALSO OBSERVE THAT IN THE SAID CASE, THERE WERE NO PLEAS RAISED ON PART OF THE REVENUE THAT IN COMPLYING WITH VARIOUS NOTIF ICATIONS UNDER PROHIBITION ACT AND RULES, THERE WAS ANY ATTEMPT BY THE ASSESSEE TO EVADE TAX BY RESORTING TO CORPORATE VEIL. THOUGH IN THE SAID CASE, THE ISS UE WAS OF VEND FEES AND ADDITIONAL VEND FEES, BUT AT THE SAME TIME, WE ARE UNABLE TO LOOSE SIGHT OF THE FACT THAT THE MECHANISM ADOPTED BY THE STATE GOVT. WAS THE SAME IN LEVYING THE FEE IE. NOTIFICATION UNDER PROHIBITION ACT AND RUL ES. THE DIFFERENCE BETWEEN THE TWO INSTANCES AS WE FOUND IS THAT IN THAT CASE; UNL IKE THE INSTANT APPEAL, THE ISSUE THEREIN WAS REGARDING THE NATURE OF LIABILITY IE. W HETHER STATUTORY OR CONTRACTUAL. IN ANY CASE, REGARDLESS OF THE DIFFERENCE BETWEEN T HE TWO CASES, STILL WE CAN SAFELY CONCLUDE THAT THE DECISION OF THE LD. CO-ORD INATE BENCH STILL THROWS LIGHT IN THE APPLICABILITY OF PROHIBITION ACT AND RULES AND ALSO DEFINES THE NATURE OF I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 26 VARIOUS FEES ETC. PAID BY THE ASSESSEE TO THE TAMIL NADU GOVT. IMPOSED BY PROHIBITION ACT & RULES. 27. SO FAR AS THE NATURE OF LIABILITY IN THE INSTAN T CASE IS CONCERNED, IN OUR CONSIDERED OPINION, THE SPECIAL PRIVILEGE FEES IS N OT A STATUTORY LIABILITY. BECAUSE EVEN THE LD. CO-ORDINATE BENCH HAD HELD THAT THE LI ABILITY UNDER THE PROHIBITION ACT IS NOT COVERED BY SEC.43B OF THE ACT. TAKING C UE FROM THE SAME, WE ALSO FOLLOW THE SAID DECISION AND HOLD THAT FEES AND LEV IES IMPOSED BY THE PROHIBITION ACT AND RULES DO NOT PARTAKE THE CHARACTER OF A S TATUTORY LIABILITY. 28. FURTHER, WE NOTICE THAT THE LIABILITY INCURRED BY THE ASSESSEE IS ALSO NOT A CONTRACTUAL LIABILITY AS WELL SINCE NO AGREEMENT E XISTED BETWEEN ASSESSEE AND TAMIL NADU GOVT. CLEARLY SPELLING OUT THAT THERE WO ULD BE YEARLY REVISION OF SPECIAL PRIVILEGE FEE. AT THE SAME TIME, SINCE THE SPECIAL PRIVILEGE FEE STOOD REVISED ON 20.7.2007 AND ASSESSEE WAS YET TO FINALI ZE HIS ACCOUNT, SO IT HAD NO OTHER OPTION BUT TO MAKE A PROVISION (SUPRA) IN ITS PROFIT AND LOSS ACCOUNT. IN THIS BACKDROP OF FACTS OF THE INSTANT CASE, WE DEEM IT A PPROPRIATE TO TERM THE LIABILITY OF SPECIAL PRIVILEGE FEE AS QUASI-STATUTORY IN NATU RE BECAUSE EVERY NON-STATUTORY LIABILITY CANNOT BE CALLED AS CONTRACTUAL LIABILITY . 29. WE ALSO HAVE DULY CONSIDERED REVENUES PLEA RE VALIDITY OF GO NOTIFICATION (SUPRA). IN THIS REGARD, THE AUTHORISED REPRESENTA TIVE HAS PLACED ON RECORD THE RELEVANT CORRESPONDENCE IN SUPPORT OF THE PLEA THAT THE SAME HAD BEEN DULY PUT I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 27 UP BEFORE THE LEGISLATIVE ASSEMBLY OF THE TAMIL NAD U STATE (SUPRA). MEANING THEREBY THAT THE GO DATED 20.7.2007 HAS BEEN VALIDI TY LEGISLATED PER THE SPIRIT OF PROHIBITION ACT & RULES. THEREFORE, THE LEGISLAT IVE REQUIREMENTS OF AMENDMENT INCORPORATED IN THE RULES FRAMED UNDER THE PROHI BITION ACT STAND SATISFIED. 30. SO FAR AS PLEA OF REVENUE LIFTING CORPORATE VEI L (SUPRA) IS CONCERNED, IT EMERGES THAT ALTHOUGH SECRETARY LEVEL OFFICERS OF T AMIL NADU GOVT. ARE IN THE ASSESSEES BOARD OF DIRECTORS AND ALSO ITS MD IS ON E OF THE SAID OFFICERS, HOWEVER, THIS ITSELF CANNOT ACT AS THE BASIS FOR PR OCEEDING ON THE ASSUMPTION AS THEY ARE NOT HOLDING THE DIRECTORSHIP OF ASSESSEE I N THEIR INDIVIDUAL CAPACITIES BUT ON BEHALF OF THE GOVT. OF TAMIL NADU. SO, AFTER LI FTING THE VEIL, WHAT WE SEE IS THE STATE GOVT. BEING ASSESSEES OWNER HAS NOMINATED IT S ABOVE SAID HIGH LEVEL OFFICER TO ACT AS ITS DIRECTORS. IN SUCH AN EVENT, THERE CAN BE NO TWO OPINIONS AT ALL THAT BY VIEW OF EXERCISING LEGISLATIVE JURISDIC TION UNDER CONSTITUTION OF INDIA; THE SPECIAL PRIVILEGE FEE HAS BEEN INCREASED WITH R ETROSPECTIVE EFFECT; WITHOUT ANY COLORABLE EXERCISE OF POWER. HENCE, WE HOLD THAT S INCE THERE IS NO CASE FOR LIFTING VEIL. 31. MOREOVER, IT IS ALSO CLEAR THAT ON THE CLOSING DAY OF A.Y. 2007-08 IN QUESTION IE. 0N 31.3.2007, THE ASSESSEE COULD NOT H AVE FORESEEN INCREASED FEE TO BE LEVIED BY THE TAMIL NADU GOVT. UNDER PROHIBI TION ACT AND RULES VIDE GO DATED 20.7.2007. THAT TOO W.E.F. 01.4.2006 LEADING TO HIKE OF SPECIAL PRIVILEGE FEE FROM ` . 53.25 PER LITRE TO ` . 57.72 PER LITRE. HOWEVER, WHEN ITS ACCOUNTS WERE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 28 BEING FINALIZED, THE GO DATED 20.7.2007 HAD COME IN TO BEING W.E.F. 01.4.2006 (SUPRA). HENCE, BY NO STRETCH OF IMAGINATION COULD WE SAY THAT THE ASSESSEE OUGHT TO HAVE IGNORED THE SAME AND PROCEEDED WITH T HE FINAL RETURN ON THE BASIS OF UNREVISED RATES. AS WE FIND FROM THE LANGUAGE I NCORPORATED IN GO DATED 20.7.2007 (SUPRA) AND ALSO HIGHLIGHTED BY THE LD. A .R., THE WORD SUBSTITUTED IMPLIES THAT FOR ALL INTENTS AND PURPOSES, THE EAR LIER SPECIAL PRIVILEGE FEES RATE NO MORE EXISTS. TO PUT IT IN OTHER WORDS, IT STOOD EF FACED. THERE CAN BE NO DISPUTE BETWEEN THE PARTIES THAT THIS LIABILITY IS NOT ALLO WABLE AS A PROVISION FOR THE PREVIOUS YEAR ENDED ON 31.3.2007, IT HAD TO BE ALLO WABLE QUA THE YEAR ENDED ON 31.3.2008 WHEN ACTUAL PAYMENT WAS EFFECTIVE. THIS, AT THE BEST IS ONLY AN EXPLANATION AND BEING A RECURRING PHENOMENON, THERE WOULD NOT BE ANY REVENUE LOSS. IN OUR CONSIDERED OPINION, HAVING ALLOWED TH E ASSESSEE TO FOLLOW THIS VERY METHODOLOGY FOR VERY MANY YEARS (SUPRA), IT IS HARD LY JUSTIFIABLE FOR REVENUE TO FORCE THE ASSESSEE FOR CHANGING ITS A.Y. IN HAND AS IT WILL ONLY RESULT IN CREATION OF ARTIFICIAL DISTURBANCE AND LEVY OF TAX. THEREFORE, WE CONCLUDE THAT THE RULE OF CONSISTENCY IN SUCH A CASE, CANNOT BE GIVEN A GO B YE UNLESS IT CONTRAVENES A LEGAL PROVISION OR THE ASSESSEES CLAIM IS APPARENT LY UNALLOWABLE BY ITS VERY NATURE. 32. ADVERTING TO THE VOLUMINOUS CASE LAWS METICULOU SLY CITED BY LD. D.R., WE HOLD THAT ALL THESE WERE INSTANCES WHERE AN ASSESSE E COULD NOT MAKE EVEN A PROVISION DURING THE RELEVANT PREVIOUS YEAR DUE TO LACK OF KNOWLEDGE OR I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 29 AWARENESS OF LIABILITY EVEN AT THE TIME OF FINALIZA TION OF ACCOUNTS AND THEREFORE FORCED TO CLAIM THE SAME IN THE SUBSEQUENT YEAR. T HE DICTUM REGARDING ACCRUAL OF LIABILITY REFERABLE TO EARLIER YEARS AS HELD BY VARIOUS HONBLE COURTS CANNOT BE APPLIED WHERE THE CIRCUMSTANCES ARE EXACTLY TO THE CONTRARY. IN OUR VIEW, THE CASE LAW OF JUDICIAL PRONOUNCEMENTS AND PRECEDENTS CANNOT BE RELIED UPON WHEN FACTS AND CIRCUMSTANCES OF THE CASE IN HAND LEAD TO A DIFFERENT CONCLUSION. AS IN THE INSTANT CASE, THE ASSESSEE HAS CHOSEN TO MAKE A PROVISION IN ITS P&L ACCOUNT AND CLAIM THE EXPENSES IN THE SAME YEAR ITS ELF. THIS IN OUR OPINION, IS IN CONSONANCE WITH THE FUNDAMENTALS OF REAL INCOME F OR THE PURPOSE OF TAXATION. 33. IN VIEW OF OUR ABOVE DETAILED EXAMINATION OF FA CTS AND RELEVANT RECORD, WE DECIDE THE ISSUE NO.1 IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ISSUE NO.2 : 34. FACTS APROPOS TO THIS ISSUE ARE THAT IN ITS PR OFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD SHOWN VAL UE OF THE CLOSING STOCK COMPRISING EMPTY BOTTLES AS ` .1.00 PER BOTTLE, WHEREAS, THE CORRESPONDING VALUE OF THE SAME AS ON 31.03.2006 WAS ` .1,24,08,08,595/- REGARDING ASSESSMENT YEAR 2006-07. SIMILARLY, THE ASSESSEE HAD REPORTED SALES IN THE ASSESSMENT YEAR 2007-08 OF ` .894,34,62,632.48 AS COMPARED TO SALES OF ` .731,46,60,9732.89 I.E. INCREASE OF SALES ABOUT 20%. THE ASSESSING OFFICER WAS OF THE OPINION THAT THERE SHOULD HAVE BEEN PROPORTIONATE INCREASE IN THE ASSE SSEES CLOSING OF EMPTY I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 30 BOTTLES, WHICH HAD BEEN SHOWN BY THE ASSESSEE AS ` .1.00 ONLY. PER HIM, THE ASSESSEES VALUATION OF CLOSING STOCK OF EMPTY BOTT LE AS ` .1.00 ONLY HAD RESULTED INCONSISTENCY IN THE METHOD OF CLOSING STOCK, WHICH HAD REDUCED ITS PROFIT. THEREFORE, THE ASSESSING OFFICER ESTIMATED ASSESSEE S CLOSING STOCK AS PER THE FOLLOWING FORMULA: CLOSING STOCK AS ON 31.3.06 X SALE OF A.Y 2007-08 SALE OF A.Y. 2006 -07 = ` . 1,51,71,695 THEREAFTER, THE ASSESSING OFFICER ADDED THE ABOVE AMOUNT IN THE ASSESSEES TOTAL INCOME. 35. IN APPEAL, WE FIND THAT THE CIT(A) HAS DELETED THE ABOVE SAID ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING THAT THE A SSESSEES VARIANCE ADOPTED IN THE METHOD OF VALUATION OF THE STOCK WAS BASED O N THE OPINION AS OBTAINED FROM THE EXPERT ADVISORY COMMITTEE OF THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA. THEREFORE, THE REVENUE IS AGGRIEVED. 36. REITERATING THE SUBMISSIONS RAISED IN THE GROU NDS, THE DR HAS VEHEMENTLY ARGUED THAT THE ASSESSEE COULD NOT RESORTED TO CHAN GE THE METHODOLOGY ADOPTED FOR VALUATION OF ITS CLOSING STOCK IN DIFFERENT ASS ESSMENT YEARS AS STATED ABOVE. IN SUPPORT OF THE ARGUMENT, THE DR HAS ALSO PLACED REL IANCE ON THE CASE LAW CHAINRUP SAMPATRAM VS. CIT 24 ITR 481 (SC), CIT V. BENGAL JUTE MILLS CO. LTD. 107 ITR 34 (CAL), CIT V. DOOM DOOMA INDIA LTD. 200 ITR 496 (GUJ.), CIT V. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 31 MAHAVIR ALLUMINIUM LTD. 297 ITR 77 (DEL.), DECISION OF PRIVY COUNCIL IN CIT V. AHMEDABAD NEW COTTON MILLS CO. LTD. AIR 1930 P 56 A ND CIT V. MAHALAXMI GLASS WORKS P. LTD. 318 ITR 116 (BOM.). IN ADDITION TO THIS, BY REFERRING TO THE OPINION O F THE ICAI ADVISORY COMMITTEE, IT HAS BEEN SUBMITTED THAT THE VALUE OF STOCK OF BOTTLES WAS ` .1.00 AS ON 31.03.2006 (SUPRA). PER DR, THE VALUE OF THE OPE NING STOCK AS ON 01.04.2006 ALSO BE ADOPTED AS AT ` .1.00 AS THE ASSESSEE COULD NOT BE ALLOWED TO VARY THE STOCKS COMPUTATION ABOVE SAID. ACCORDINGLY, HE PRA YED FOR ACCEPTANCE OF THE ISSUE IN FAVOUR OF THE REVENUE. 37. OPPOSING THE ARGUMENTS OF THE REVENUE, THE A R OF THE ASSESSEE, ON THE OTHER HAND, HAS MADE SUBMISSIONS THAT FROM NOV 03 FEB 05, THE ASSESSEE HAD BEEN COLLECTING BOTTLES OF LIQUOR SOLD. BUT, W.E.F. FEB 05, IT HAS BEEN COMPUTING THE STOCK OF BOTTLES BY ESTIMATING THE VALUE PER NE T REASONABLE METHOD. HE HAS ALSO CLARIFIED THAT NO NEW BOTTLES HAVE BEEN ACQUIR ED DURING THE ASST. YEAR AND THE STOCK IS OF OLD BOTTLES WHICH WAS COMPUTED AS ` . 1.00. IN ADDITION, HE HAS ALSO MADE SUBMISSIONS THAT FOR VERIFICATION, THE MATTER BE SENT BACK TO ASSESSING OFFICER WITH DIRECTION TO PASS ORDER AFRESH IN ACCO RDANCE WITH LAW. 38. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE ISSUE AND ALSO PERUSED RELEVANT FACTS AND FINDINGS. ADMITTEDLY, THE ASSESS EES SUBMISSION IS THAT IT COLLECTS ONLY THOSE BOTTLES WHICH ARE LEFT EMPTY IN FRONT OF LIQUOR SHOPS, WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE. SO, THERE IS NO COST OF ACQUISITION AS THE I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 32 SAME IS NOT ASSESSEES PROPERTY. FACED WITH THIS S ITUATION THE ICAI ADVISED IT NOT TO VALUE THE CLOSING STOCK IN THE ABSENCE OF ACQUIS ITION AS THE PRINCIPLE OF VALUING THE CLOSING STOCK AS MARKET VALUE, WHICHEVER IS LOW ER. SO, THE CLOSING STOCK WAS NOT VALUED. HENCE, ON LEGALITY, WE AGREE WITH THE ASSESSEE. AT THE SAME TIME, WE FIND FROM BOTH ASSESSING OFFICER AND CIT(APPEALS )S ORDERS THAT THERE IS NEITHER ANY EVIDENCE REFERRED QUA PROPER VERIFICATI ON OF STOCK NOR ANY FINDINGS OF FACTS TO THIS EFFECT HAVE BEEN RECORDED. FACED WIT H THIS SITUATION, WE REMIT THE MATTER BACK TO ASSESSING OFFICER TO VERIFY THE FACT UAL POSITION ENUMERATED ABOVE AFTER HEARING THE ASSESSEE IN ACCORDANCE WITH LAW. THEREFORE, THIS ISSUE IS ACCEPTED IN FAVOUR OF REV ENUE FOR STATISTICAL PURPOSE. 39. TO SUM UP, ASSESSEES APPEAL I.T.A. NO. 962/MD S/2010 STANDS ACCEPTED, WHEREAS I.T.A. NO. 1202/MDS/2010THAT FILED BY REVEN UE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 07/MDS/2012 AND 258/MDS/2012: ASSESSMENT YEAR 2007-08 40. THESE TWO CROSS APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY AGAINST THE ORDER OF THE CIT(A ) III, DATED 25.11.2011 IN ITA NO. 889/2010-11A.III FOR THE ASSESSMENT YEAR 2007-0 8 IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT [ IN SHORT ACT]. 41. BRIEF NARRATION OF THE FACTS, QUA THE INSTANT APPEALS IS THAT WHILST FINALIZING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, T HE ASSESSING OFFICER HAD I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 33 DISALLOWED ASSESSEES CLAIM QUA SPECIAL PRIVILEGE FEE VIDE ASSESSMENT ORDER DATED 14.12.2009 (SUPRA). AS DISCUSSED HEREIN ABOVE , THE CIT(A), THROUGH ORDER DATED 23.04.2010 HAD PARTLY ACCEPTED THE ASSESSEES APPEAL. SINCE IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAD ISSUED NOTICE TO THE ASSESSEE FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT, THEREFORE, AFTER THE CIT(A)S ORDER, THE PENALTY PROCEEDINGS COMMENC ED. THEREAFTER, THE ASSESSING OFFICER REJECTED THE ASSESSEES EXPLANATI ON AND CAME TO THE CONCLUSION THAT IT HAD FURNISHED INACCURATE PARTICU LARS AND ALSO CLAIMED WRONG DEDUCTION OF EXPENSES AFTER CLOSING OF THE YEAR WIT H REFERENCE TO THE PAYMENTS MADE AGAINST THE G.OS ISSUED AT THE TIME OF FILING OF RETURN. 42. WE FIND THAT IN THE APPEAL PREFERRED BY THE AS SESSEE AGAINST THE PENALTY ORDER, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICE R TO LEVY THE MINIMUM PENALTY IN VIEW OF THE ORDER DATED 23.04.2010 (SUPRA). THER EFORE, BOTH THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. 43. BOTH THE REPRESENTATIVES APPEARING FOR THE ASS ESSEE AND THE REVENUE ARE AD IDEM THAT OUR FINDINGS IN THE MAIN CASE I.E. I.T.A. NOS . 962 AND 1202/MDS/2010 (SUPRA) REGARDING QUANTUM PROCEEDINGS UNDER SECTION 143(3) OF THE ACT SQUARELY COVER THE INSTANT APPEALS AS WEL L. 44. WE HAVE CONSIDERED THE FAIR SUBMISSIONS. ACCOR DINGLY, WE ARE OF THE OPINION THAT IN THE QUANTUM PROCEEDINGS, SINCE WE H AVE ACCEPTED THE ASSESSEES I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 34 APPEAL QUA THE SPECIAL PRIVILEGE FEE (SUPRA) SUBS TITUTED VIDE G.O. DATED 20.07.2007, WE ALLOW THE ASSESSEES APPEAL AGAINST PENALTY CONFIRMED BY THE CIT(A) AND DISMISS THE REVENUES APPEAL. CONSEQUENTLY, I.T.A. NO.07/MDS/2012 FILED BY THE A SSESSEE IS ALLOWED AND I.T.A. NO. 258/MDS/2012 FILED BY THE REVENUE STANDS DISMISSED. I.T.A. NOS. 925/MDS/2011 & 964/MDS/2011: ASSESSMENT YEAR 2008-09 45. THESE TWO CROSS APPEALS FILED BY THE REVENUE A ND THE ASSESSEE RESPECTIVELY HAVE BEEN PREFERRED AGAINST THE ORDER OF THE CIT(A) III, CHENNAI DATED 18.03.2011 IN ITA NO. 342/2000-11/A.III FOR T HE ASSESSMENT YEAR 2008-09 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME T AX ACT, 1961 [IN SHORT ACT]. 46. QUA THIS CASE AS WELL, BOTH THE REPRESENTATIVE S ARE IN AGREEMENT THAT THE ONLY DIFFERENCE IN THE FACTS OF THESE CASES VIZ-A-V IZ I.T.A. NOS. 962 AND 1202/MDS/2010 DECIDED HEREINABOVE (SUPRA) IS THAT I N THE INSTANCE APPEALS THE GOVERNMENT OF TAMIL NADU HAD SUBSTITUTED SPECIAL P RIVILEGE FEE TO BE CHARGED FROM THE ASSESSEE VIDE G.O. DATED 04.08.2008 W.E.F. 01.04.2007 @ ` .66.60 INSTEAD OF ` .57.72. PER REPRESENTATIVES, THE ISSUE INVOLVED IN THESE CASES IS IDENTICAL TO THOSE IN THE ASSESSMENT YEAR 2007-08. ACCORDINGLY THEY HAVE SUBMITTED THAT OUR FINDING QUA THE ASSESSMENT YEAR 2007-08 HEREIN ABOVE ALSO COVER THE ISSUE INVOLVED IN THESE CASES. I.T.A. NOS. 962/M/10, 964/M/11 & 07/M/12 & I.T.A. NOS. 1202M/10, 925/M/11 & 258/M/12 35 47. WE HAVE GIVEN THOUGHTFUL CONSIDERATION ON THE FAIR SUBMISSIONS OF BOTH PARTIES. APPRECIATING THE SAME, WE NOTICE THAT IN T HESE APPEALS AS WELL, THE ISSUE INVOLVED ARE OF ALLOWABILITY OF SPECIAL PRIVILEGE FEE CLAIMED BY THE ASSESSEE IN VIEW OF THE GOVERNMENT G.O. DATED 04.08.2008 ISSUED BY THE GOVERNMENT OF TAMIL NADU SUBSTITUTING WHOLESALE RATES OF BULK LIT RE FROM ` .57.72 TO ` .66.60 W.E.F. 01.04.2007. IT IS ALSO NOTICED THAT IN THE REVENUE S APPEAL, THE ISSUE IS OF VALUATION OF CLOSING STOCK OF EMPTY BOTTLES IS ISSU E NO. 2 IN I.T.A. NOS. 962 & 1202/MDS/2010. HENCE, BY PLACING RELIANCE ON OUR FI NDING IN I.T.A. NOS. 962 AND 1202/MDS/2010 DECIDED HEREIN ABOVE (SUPRA), WE ALLO W I.T.A. NO. 964/MDS/2011 FILED BY THE ASSESSEE AND THE APPEAL FILED BY THE R EVENUE IN I.T.A. NO. 925/MDS/2011 IS PARTLY ALLOWED FOR STATISTICAL PURP OSE. 48. DISPOSED OFF ACCORDINGLY. ORDER PRONOUNCED ON TUESDAY, THE 18 TH OF SEPTEMBER, 2012 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 18.09.2012 JLS. TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.