Escolife IT Services (P) Ltd., New Delhi V. ITO, New Delhi

ITA 713/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7340 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHIRPA
• Assessee Lawyers: R M MEHTA
• Keywords: Business income; Depreciation; Business expenditure; Search and seizure
• Section: 142(1); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B, NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 713 /2012 (ASSESSMENT YEAR 2008-09) ESCOLIFE I T SERVICES PVT. LTD. VS. ITO, CO. WARD 11(2), 202, 1 ST FLOOR, NEW DELHI OKHLA INDUSTRIAL ESTATE, PHASE III, NEW DELHI-110 020 GIR / PAN :AABCR6698H I.T.A.NO. 5930/DEL/2013 (ASSESSMENT YEAR 2010-11) ESCOLIFE I T SERVICES PVT. LTD., VS. ITO, WARD 11 (2), C/O ESCORTS LTD., NEW DELHI 15/5, MATURA ROAD,, FARIDABAD GIR / PAN :AABCR6698H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. M. MEHTA, ADV. RESPONDENT BY : MS. KESANG Y SHIRPA, SR. DR DATE OF HEARING: 26.10.2015 DATE OF PRONOUNCEMENT: 18.01.2016 ORDER PER KULDIP SINGH, JM: SINCE COMMON QUESTION IS INVOLVED IN BOTH THE AFOR ESAID APPEALS TO BE DECIDED BY THE TRIBUNAL, THE SAME ARE BEING DISP OSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. THE APPELLANT, M/S. ESCOLIFE I. T. SERVICES (PVT .) LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 25.11.2011 AND 28.0 2.2013 PASSED BY THE 2 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 LD. CIT(A)S QUA THE ASSESSMENT YEARS 2008-09 AND 20 10-2011 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT: A. I.T.A.NO. 713/DEL./2012: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN UPHOLDING THE DI SALLOWANCE OF DEPRECIATION OF RS.44,61,784/- MADE BY THE ASSESSIN G OFFICER ON THE GROUND THAT NO BUSINESS HAS BEEN CARRIED ON BY THE APPELLANT. THE CIT (A) OUGHT TO HAVE ALLOWED THE DEPRECIATION CLAI MED BECAUSE THE APPELLANT HAD CARRIED OUT THE ALLIED BUSINESS A CTIVITY OF SALE OF INSURANCE RELATED BOOKS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASS ESSING OFFICER, IN TREATING THE INCOME FROM SALE OF INSURANCE RELAT ED BOOKS AS 'INCOME FROM OTHER SOURCES' INSTEAD OF ASSESSING TH E SAME AS INCOME FROM 'BUSINESS': THE SALE OF INSURANCE RELAT ED BOOKS BEING ALLIED TO THE MAIN ACTIVITY OF TECHNICAL CONSULTANC Y AND INSURANCE TRAINING, IS A PART OF THE REGULAR BUSINESS OF THE APPELLANT. 3. THE CIT (A) HAS ERRED IN NOT ALLOWING EXPENDITUR E INCURRED BY THE APPELLANT UNDER THE HEADS 'INSURANCE EXPENSE S' - RS.5003/-, 'MISCELLANEOUS EXPENSES' RS.16,840/- AND 'TRAVELLIN G & CONVEYANCE' - RS.5,355/ - WITHOUT SPECIFYING ANY RE ASON FOR NOT ALLOWING THE SAME. B. I.T.A.NO. 5930/DEL/2013: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN UPHOLDING THE DISALLOWAN CE OF DEPRECIATION OF RS.8,88,239/ - MADE BY THE ASSESSIN G OFFICER ON THE GROUND THAT NO BUSINESS HAS BEEN CARRIED ON BY THE APPELLANT. THE CI'I' (A) OUGHT TO HAVE. ALLOWED THE DEPRECIATION' CLAIMED BECAUSE' THE APPELLANT HAD USED THE ASSETS IN THE COURSE OF NORMAL ADMINISTRATIVE ACTIVITIES TO KEEP THE COMPANY RUNNI NG AND THAT THE ASSETS HAVE SUFFERED NORMAL WEAR & TEAR DURING THE YEAR. 3 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 3. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: DURI NG THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE QUA THE ASSE SSMENT YEAR 2008-09, THE CASE WAS SUBJECTED TO SCRUTINY AND CONSEQUENT U PON THE NOTICES ISSUED U/S 142(1) AND 143(2) OF THE ACT, SHRI J.P. CHAWLA, CA ALONG WITH SHRI A.K. MATHUR, AR ATTENDED THE PROCEEDINGS FILED NECE SSARY DETAILS AND DISCUSSED THE CASE. 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF I. T. SERVICES AND WAS PROVIDING TECHNICAL CONSULTANCY AND TRAINING IN THE PAST. HOWEVER, DURING THE YEAR UNDER CONSIDERATION, THE COMPANY HAS NOT P ROVIDED ANY CONSULTANCY AND TRAINING AND SHOWN THE INCOME AS N IL IN THE P & L ACCOUNT STATEMENT BUT ON THE OTHER HAND, THE CLAIM OF DEPRECIATION HAS BEEN MADE IN FULL. 5. THE ASSESSEE WAS CALLED UPON TO EXPLAIN AS TO WH Y CLAIM OF DEPRECIATION AND OTHER EXPENSES BE NOT DISALLOWED W HEN THERE WAS NO BUSINESS ACTIVITY BUT FAILED TO PRODUCED THE SPECIF IC DOCUMENTS CALLED FOR. IT WAS FOUND THAT THE COMPANY DOES NOT OWN ANY PROP ERTY WHERE THESE COMPUTERS COULD HAVE BEEN INSTALLED AND USED FOR TH E PURPOSE OF BUSINESS AND NO EMPLOYEE CAN BE EXPECTED TO WORK ON SALARY @ RS.12,480/- AND AT RS.5,000/- P.A. ON COMPUTER. THE ASSESSEE HAS FAILE D TO FURNISH ADDRESSES OF THE EMPLOYEES, VOUCHERS IN RESPECT OF SALE AND P URCHASE HAVE NOT BEEN SUBMITTED. SO, THE INCOME DECLARED BY THE ASSESSEE AS TRADING INCOME AND OTHER INCOME AMOUNTING TO RS.52,503/- IS ASSESSED U NDER THE HEAD INCOME FROM OTHER SOURCES AND THE CLAIM OF BUSINESS EXPENS ES OF RS.22,485/- (PERSONAL EXPENSES), RS.3,57,531/- (ADMINISTRATION, SELLING EXPENSES AND RS44,61 ,784/- (DEPRECIATION AS PER THE I. T. RULES ) HAVE BEEN DISALLOWED 4 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 AND CONSEQUENTLY, THE TOTAL INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT RS.52,503/-. 6. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT( A) WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, ASSESSEE HAS COME UP BEFORE THE TRIBUNAL CHALLENGING THE IMPUGNED ORDER BY WAY OF P RESENT APPEAL. 7. LD. A.R. CHALLENGING THE IMPUGNED ORDER CONTEND ED INTER ALIA THAT LD. CIT(A) HAS UPHELD THE DISALLOWANCE OF DEPRECIAT ION OF RS.44,61,784/- IN I.T.A.NO.713/DEL/2012 AND RS.8,88,239/- IN I.T.A . NO.5930//DEL/2013 WITHOUT HAVING ANY MATERIAL ON RECORD TO PROVE THE FACT THAT THE ASSESSEE COMPANY HAD CLOSED ITS BUSINESS PRIOR TO THE ASSESS MENT YEAR 2008-09 AND IN FACT, THE ASSESSEE COMPANY HAS MADE SALES DU RING THESE ASSESSMENT YEARS BUT DUE TO LACK OF BUSINESS ORDER, TRADING BU SINESS COULD NOT BE CARRIED OUT. 8. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ER PASSED BY LD. CIT(A) AND CONTENDED THAT SINCE NO TRADING BUSINESS HAS BEEN SHOWN BY THE ASSESSEE, A.O. HAS RIGHTLY TREATED THE INCOME S HOWN BY THE ASSESSEE AS 'INCOME FROM OTHER SOURCES' . 9. LD. CIT(A) HAS UPHELD THE ASSESSMENT ORDER IN D ISALLOWING THE DEPRECIATION ON THE GROUND THAT THE ASSESSEE IS CLA IMING SET OFF DEPRECIATION ON FIXED ASSETS AGAINST DIFFERENT ACTI VITIES IN THE PAST AND ACTIVITIES OF TRADING HAS BEEN ACCEPTED AS BUSINESS INCOME BUT IN ASSESSMENT YEAR 2008-09 THE ACTIVITY ITSELF IS DOUB TFUL AS APPELLANT COULD NOT PRODUCE ANY VOUCHERS OF THE ALLEGED SALE AND PU RCHASE. THE APPELLANT HAS PROVIDED ONLY COMPUTERIZED LEDGER ACCOUNT AND O RIGINAL SALES / 5 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 PURCHASE VOUCHER HAVE NOT BEEN PRODUCED EVEN DURING THE APPELLATE PROCEEDINGS. THE AUTHORITIES BELOW NOTICED THAT MOS T OF THE SALES ARE SHOWN TO THE SISTER CONCERN M/S. RITU INSURANCE SER VICES LTD. RELATED TO INSURANCE BOOKS ETC. AND THERE IS NO EVIDENCE OF PU RCHASING OF MATERIAL FOR M/S. CHAWLA PRINTERS. SO, IN THE ABSENCE OF VOUCHER S, THE CLAIM OF SALE AND PURCHASE OF ASSESSEE IS DECLINED. LD. CIT(A) RE LIED UPON THE ORDER PASSED BY IT AT DELHI BENCH IN CASE OF SPECIALTY FO ODS INDIA PVT. LTD. IN I.T.A. NO. 1460/DEL/2008. 10. NOW, THE, FIRST QUESTION ARISES FOR DETERMINATI ON IN THIS CASE IS, 'AS TO WHETHER A.O. AND LD. CIT(A) HAVE ERRED IN DISALL OWING THE DEPRECIATION AND OTHER EXPENSES ON THE GROUND THAT NO BUSINESS ACTIVITY HAS BEEN CARRIED OUT BY THE ASSESSEE DURING THE ASS ESSMENT YEAR UNDER CONSIDERATION. 11. BOTH THE A.O. AS WELL AS LD. CIT(A) HAVE DISALL OWED THE DEPRECIATION CLAIMED BY THE ASSESSEE DURING THE ASS ESSMENT YEARS 2008- 09 & 2010-11 ON THE GROUNDS INTER ALIA THAT WHEN TH E ASSESSEE HAS NOT RECEIVED ANY ORDER FOR PROVIDING TECHNICAL CONSULTA NCY NOR IT HAS CARRIED OUT ANY TRAIDING ACTIVITIES, THE QUESTION OF CLAIMI NG DEPRECIATION ON COMPUTER AND OTHER ASSETS DOES NOT ARISE; THAT ASSE SSEE HAS FAILED TO PROVE THAT THE COMPUTER AND OTHER ACCESSORIES CONTINUED T O BE INSTALLED AT THE OLD PREMISES; THAT THE ASSESSEE DOES NOT OWN ANY PROPER TY WHERE THESE COMPUTER COULD HAVE BEEN INSTALLED FOR THE PURPOSE OF BUSINESS AND THAT NO EMPLOYEE CAN BE EXPECTED TO WORK ON COMPUTER AT THE SALARY OF RS.12,480/- OR RS.5,000/- ANNUALLY. WHEN BOTH, THE A.O. AND LD. CIT(A) HAVE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT I T WAS OPERATING ITS 6 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 ACTIVITIES FROM THE PREMISES TAKEN ON RENT BY RITU NANDA INSURANCE SERVICES PVT. LTD., 202, OKHLA INDUSTRIAL ESTATE, P HASE III, NEW DELHI BY NOT RETURNING ANY ADVERSE FINDING THAT THE ASSESSEE COMPANY WAS NEVER ALLOWED TO OPERATE ITS BUSINESS ACTIVITIES THEREFRO M, THEY WERE NOT SUPPOSED TO COME TO THE CONCLUSION THAT NO BUSINESS ACTIVITIES WERE BEING CARRIED OUT BY THE ASSESSEE COMPANY. AT THE SAME T IME, LD. CIT(A) BY ALLOWING THE EXPENDITURE OF THE ASSESSEE RELATING T O AUDIT FEES (RS.20,000/), COMMUNICATION EXPENSES (RS.3446), L EGAL AND PROFESSIONAL CHARGES (RS.39256/-), ELECTRICITY AND WATER (RS.3,2 73/-), BANK INTEREST AND CHARGES (RS.7353), PRINTING AND STATIONARY (RS.482) U/S 57 OF THE I T ACT. DIRECTED THE A.O. TO ALLOW THESE EXPENSES AGAINST T HE INCOME DETERMINED U/S 57 OF THE I. T. ACT, AS BUSINESS EXPENDITURE WE RE ALLOWED THIS FACT GOES TO PROVE THAT THE BUSINESS ACTIVITIES WERE BEING CA RRIED OUT BY THE ASSESSEE COMPANY. 12. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IS, AS TO WHETHER THE ASSESSEE COMPANY IS ENTITLED FOR DEPRECIATION O N COMPUTER AND SOFTWARE IN THE FACE OF THE FACT THAT IT HAS ADMITT EDLY NOT CARRIED OUT ANY TECHNICAL CONSULTANCY AND PROVIDED TECHNICAL TRAINI NG DURING THE YEAR UNDER ASSESSMENT. 13. IDENTICAL ISSUE HAS COME UP FOR DETERMINATION B EFORE THE HON'BLE JURISDICTIONAL HIGH COURT IN CASE ENTITLED CIT VS Y AMAHA MOTOR INDIA (P) LTD, 328 ITR 297. FOR READY REFERENCE, THE OPERATI VE PART AT PARA 6, 7 & 8 OF THE JUDGEMENT IN YAMAHA MOTOR INDIA (P) LTD. (SU PRA) IS REPRODUCED AS UNDER: 7 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 6. THE RELEVANT AND RELATED PROVISIONS, IN THIS RE GARD, FOR DECISION OF THE ISSUE ARE SECTION 32(1) WHICH REQUIRES THAT THE ASSETS ARE USED FOR THE PURPOSES OF THE BUSINESS, SECTION 32(1 )(III) LAYS DOWN THE DETAILS AND REQUIREMENTS WITH RESPECT TO CLAIM OF DEPRECIATION INTER ALIA OF DISCARDED MACHINERY, SECTION 43(6)(C) (B) DEFINES WRITTEN DOWN VALUE WITH RESPECT TO BLOCK OF ASSETS, SECTION 50(2) UNDER THE HEAD OF PROFITS CHARGEABLE TO TAX ON THE ASPECT OF DISCARDED MACHINERY. 7. ON THE ASPECT OF PASSIVE USER, THERE ARE TWO DE CISIONS OF TWO DIVISION BENCHES OF THIS COURT IN THE CASES REPORTE D AS CIT VS. REFRIGERATION AND ALLIED INDUSTRIES LTD., 247 ITR 1 2 AND CAPITAL BUS SERVICES VS. CIT, 123 ITR 404. IN THIS VIEW OF THE MATTER, WE NEED NOT REFER THE JUDGMENTS OF ANY OTHER COURT AS WE ARE BOUND BY THE EARLIER JUDGMENTS OF THIS COURT. IN FACT, WE AL SO AGREE WITH THE RATIO OF BOTH THE DECISIONS WHICH HOLD THAT AS LONG AS THE MACHINERY IS AVAILABLE FOR USE, THOUGH NOT ACTUALLY USED, IT FALLS WITHIN THE EXPRESSION 'USED FOR THE PURPOSES OF THE BUSINESS' AND THE ASSESSEE CAN CLAIM THE BENEFIT OF DEPRECIATION. LOOKING A TH E FACTS FROM THIS POINT OF VIEW, AN ACTUAL USER IS NOT REQUIRED AS HA S BEEN CONTENDED BY THE REVENUE. 8. THE MATTER CAN BE LOOKED AT FROM ANOTHER ANGLE ALSO. NO DOUBT, THE EXPRESSION USED IN SECTION 32 IS 'USED F OR THE PURPOSES OF THE BUSINESS'. HOWEVER, THIS EXPRESSION HAS TO BE R EAD HARMONIOUSLY WITH THE EXPRESSION 'DISCARDED' AS FOU ND IN SUB-SUB- SECTION (III) OF SUB-SECTION (1). OBVIOUSLY, WHEN A THING IS DISCARDED IT IS NOT USED. THUS 'USE' AND 'DISCARDIN G' ARE NOT IN THE SAME FIELD AND CANNOT STAND TOGETHER. HOWEVER, IF W E ADOPT A HARMONIOUS READING OF THE EXPRESSIONS 'USED FOR THE PURPOSES OF THE BUSINESS' AND 'DISCARDED' THEN IT WOULD SHOW THAT ' USED FOR THE PURPOSES OF THE BUSINESS' ONLY MEANS THAT THE ASSES SEE HAS USED THE MACHINERY FOR THE PURPOSES OF THE BUSINESS IN EARLI ER YEARS. IT IS NOT DISPUTED THAT IN THE FACTS OF THE PRESENT CASE, AND AS DISCUSSED ABOVE, THAT THE MACHINERY IN QUESTION WAS IN FACTUS ECF1FLTL1E PREVIOUS YEAR AND DEPRECIATION WAS ALLOWED ON THE B LOCK OF ASSETS IN THE PREVIOUS YEARS. TAKING THEREFORE A REALISTIC APPROACH AND ADOPTING A HARMONIOUS CONSTRUCTION, WE FEEL THAT TH E EXPRESSION 'USED FOR THE PURPOSE OF THE BUSINESS' AS FOUND IN SECTION 32 WHEN 8 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 USED WITH RESPECT TO DISCARDED MACHINERY WOULD MEAN THAT THE USER IN THE BUSINESS IS NOT IN THE RELEVANT FINANCIAL YE AR/PREVIOUS YEAR BUT IN THE EARLIER FINANCIAL YEARS. ANY OTHER INTER PRETATION WOULD LEAD TO AN INCONGRUOUS SITUATION BECAUSE ON THE ONE HAND THE DEPRECIATION IS ALLOWED ON DISCARDED MACHINERY AFTE R ALLOWING INTER ALIA AN ADJUSTMENT FOR SCRAP VALUE, YET, ON T HE OTHER HAND USER WOULD BE REQUIRED OF THE DISCARDED MACHINERY WHICH USE IS NOT POSSIBLE BECAUSE OF VARIOUS REASONS VIZ. THE AGE OF THE MACHINERY, OR THAT IT HAS BECOME OBSOLETE AS NEW TECHNOLOGY HA S COME IN AND SO ON. WE THUS HOLD THAT THE DISCARDED MACHINERY MA Y NOT BE ACTUALLY USED IN THE RELEVANT PREVIOUS YEAR AS LONG AS IT IS USED FOR THE PURPOSES OF BUSINESS IN THE EARLIER YEARS. 14. FOLLOWING THE LAW LAID DOWN BY THE HON'BLE JURI SDICTIONAL HIGH COURT IN THE CASE CITED ABOVE, WE ARE OF THE CONSID ERED VIEW THAT THE ASSESSEE COMPANY IS ENTITLED FOR DEPRECIATION ON CO MPUTER AND SOFTWARE DURING THE YEAR UNDER ASSESSMENT (ASSESSMENT YEAR 2 008-09 AND 2010- 11) THOUGH NOT ACTUALLY USED FOR THE PURPOSE OF BUS INESS ON THE GROUNDS INTER ALIA THAT WHEN DURING THE PREVIOUS ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2007-08, THE ASSESSEE DISCLOSED RECEIPT FROM T ECHNICAL CONSULTANCY AND TRAINING FEE AT RS.4,35,90,000/- , INCOME FROM TRADING ACTIVITIES AT RS.9,75,607/- AND OTHER INCOME AT RS.3,50,381/- BUT SHOWN THE INCOME FROM TECHNICAL CONSULTANCY AND TRAINING FEE AT NIL IN ASSESSMENT YEARS 2008-09 AND 2010-11, IT IS ENTITLED FOR DEPRECIATIO N U/S 32 OF THE ACT AS THE SAME HAS NOT BEEN DISCARDED BY THE ASSESSEE COM PANY; THAT WHEN THE MACHINERY IN QUESTION WAS IN FACT USED IN THE EARLI ER YEAR AND DEPRECIATION WAS ALLOWED ON BLOCK OF ASSETS, THE ASSESSEE COMPAN Y IS ENTITLED FOR DEPRECIATION; THAT THOUGH THE USAGE OF MACHINERY IN THE BUSINESS WAS NOT IN THE RELEVANT ASSESSMENT YEAR BUT IN THE EARLIER FINANCIAL YEAR ITS ENTIRE MACHINERY REMAINED IN READY TO USE MODE BECAUSE T HE ASSESSEE COMPANY HAS COME UP WITH LOGICAL EXPLANATION THAT D UE TO NOT HAVING 9 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 RECEIVED ANY ORDER FOR TECHNICAL CONSULTANCY NOR IT CARRIED OUT ANY TRAINING ACTIVITY, THE INCOME FROM ITS BUSINESS COMES TO NI L; THAT WHEN THE A.O. HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT IT HAS MADE SALES OF RS.5,84,355/- REPRESENTING TRADING ITEMS INCIDENTAL TO ITS MAIN BUSINESS ACTIVITY AND HAS EARNED PROFIT OF RS.49,715/- FROM SUCH ACTIVITY, HE CANNOT DISALLOW THE DEPRECIATION CLAIMED BY THE ASSESSEE; THAT EVEN LD. CIT(A) HAS ERRED IN DOUBTING THE TRADING ACTIVITIES STATED TO HAVE BEEN CARRIED OUT BY THE ASSESSEE COMPANY DURING THE ASSESSMENT YEAR 2008-09 WITHOUT ANY INVESTIGATION THOUGH IN THE PAST, SUCH ACTIVITY HAS BEEN ACCEPTED BY THE REVENUE SPECIFICALLY; THAT NO DOUBT, THE ASSESS EE HAS NOT PRODUCED THE VOUCHERS TO PROVE THE CLAIM OF SALE AND PURCHASE BU T WHEN THE REVENUE HAS ACCEPTED THE AUDITED PROFIT AND LOSS STATEMENT, THEY CANNOT BE ALLOWED TO SAIL IN TWO BOATS; THAT WHEN THE ASSESSEE COMPAN Y HAS NOT SOLD, DISCARDED, DEMOLISHED OR DESTROYED THE ASSETS DURIN G THE PREVIOUS YEAR, THE ASSESSEE HAS CERTAINLY BECOME ENTITLED FOR DEPR ECIATION; THAT THE IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY HON'BLE HI GH COURT OF MADHYA PRADESH IN THE JUDGEMENT CITED AS CIT VS PREMIER INDUSTRIES INDIA LTD. 323 ITR 672; THAT THE DECISION OF ITAT, DELHI IN TH E CASE OF SPECIALTY FOODS INDIA PVT. LTD. IN I.T.A. NO. 1460/DEL/2008 IS NOT A GOOD LAW IN THE FACE OF JUDGMENT DELIVERED BY HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE CITED AS YAMAHA MOTOR INDIA (P) LTD. (SUPRA), WHICH IS OTHERWISE DECIDED ON THE DIFFERENT SET OF FACTS THAT PART OF PLANT AND MACHINERY WAS ALREADY SOLD BY THE ASSESSEE IN THE SAID CASE. 15. SO, WE HEREBY DETERMINE GROUNDS NO.1 OF I.T.A. NO. 713/DEL/2012 FOR ASSESSMENT YEAR 2008-09 AND I.T.A .NO. 5930/DEL /2013 FOR ASSESSMENT YEAR 2010-11 IN FAVOUR OF THE ASSESSEE. 10 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 16. GROUNDS 2 AND 3 OF I.T.A.NO. 713/DEL/2012 (A.Y. 200 8-09): WHEN LD. CIT(A) HAS HIMSELF ALLOWED THE EXPENDITURE OF THE ASSESSEE RELATING TO AUDIT FEES (RS.20,000/-), COMM UNICATION EXPENSES (RS.3446), LEGAL AND PROFESSIONAL CHARGES (RS.39256 ), ELECTRICITY AND WATER (RS.3,273), BANK INTEREST AND CHARGES (RS.735 3), PRINTING AND STATIONARY (RS.482) U/S 57 OF THE I T ACT AND DIREC TED THE ASSESSING OFFICER TO ALLOW THEE EXPENSES AGAINST THE INCOME D ETERMINED U/S57 OF THE I. T. ACT, AS BUSINESS EXPENDITURE, THE ASSESSEE I S PROVED TO BE CARRYING OUT THE BUSINESS ACTIVITIES FROM WHICH IT HAS SHOWN THE BUSINESS INCOME TO THE TUNE OF RS.52,503/- DURING THE YEAR UNDER ASSES SMENT AND CONSEQUENTLY ENTITLED FOR DEPRECIATION. EVEN OTH ERWISE, WHEN THE TRADING BY THE ASSESSEE COMPANY IS ACCEPTED BY THE REVENUE AS INCIDENTAL TO ITS MAIN BUSINESS DURING THE EARLIER YEARS, THE INCOME OF RS.52,503/- CANNOT BE TREATED AS INCOME FROM OTHER SOURCES RATHER IT I S A BUSINESS INCOME. SO, GROUNDS NO.2 & 3 ARE ALSO DETERMINED IN FAVOUR OF T HE ASSESSEE. 17. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, BOTH THE AFORESAID APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED. 18. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JAN., 2016. SD./- SD./- (N. K. SAINI) (KULDIP S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 18.01.2016 SP. 11 I.T.A.NO.713/DEL/2012 I.T.A.NO. 5930/D EL/2013 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 11,11,12,12/1 SR. PS/ PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER