DCIT, Kanpur V. M/s. Rahman Exports Pvt. Ltd., Kanpur

ITA 730/LKW/2010

• Counselvise Citation: 73023714 RSA 2010
• Duration Of Justice: 3 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-05-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 10-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Business income; Business expenditure; Difference of opinion
• Section: 80HHC; 80IB; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.730/LKW/2010 ASSESSMENT YEAR:2003 - 04 DY.C.I.T. - 6, KANPUR. VS. M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N (APPELLANT) (RESPONDENT) C.O.NO.06/LKW/2011 (IN ITA NO.730/LKW/2010) ASSESSMENT YEAR:2003 - 04 M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N VS. DY.C.I.T. - 6, KANPUR. (OBJECTOR) (RESPONDENT) ITA NO.39/LKW/2011 ASSESSMENT YEAR:2004 - 05 DY.C.I.T. - 6, KANPUR. VS. M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N (APPELLANT) (RESPONDENT) C.O.NO.08/LKW/2011 (IN ITA NO.39/LKW/2011) ASSESSMENT YEAR:2004 - 05 M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N VS. DY.C.I.T. - 6, KANPUR. (OBJECTOR) (RESPONDENT) 2 ITA NO.139/LKW/2011 ASSESSMENT YEAR:2005 - 06 DY.C.I.T. - 6, KANPUR. VS. M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N (APPELLANT) (RESPONDENT) C.O.NO.09/LKW/2011 (IN ITA NO.139/LKW/2011) ASSESSMENT YEAR:2005 - 06 M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N VS. DY.C.I.T. - 6, KANPUR. (OBJECTOR) (RESPONDENT) ITA NO.127/LKW/2013 ASSESSMENT YEAR:2006 - 07 DY.C.I.T. - 6, KANPUR. VS. M/S RAHMAN EXPORTS PVT. LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N (APPELLANT) (RESPONDENT) ITA NO S .274 & 275 /LKW/2013 ASSESSMENT YEAR S :2007 - 08 & 2008 - 09 M/S RAHMAN INDUSTRIES LTD., 184/167, WAJIDPUR, JAJMAU, KANPUR. PAN:AAACB6862N VS. DY.C.I.T. - 6, KANPUR. (APPELLANT) (RESPONDENT) REVENUE BY SHRI R. K. RAM, D.R. ASSESSEE BY SHRI RAKESH GARG, ADVOCATE DATE OF HEARING 15 /0 5 /2014 DATE OF PRONOUNCEMENT 1 3 /0 6 /2014 3 O R D E R PER A. K. GARODIA : OUT OF THIS BUNCH OF 9 APPEALS AND CROSS OBJECTIONS , THERE ARE FOUR APPEALS OF THE REVENUE FOR ASSESSMENT YEAR 2003 - 04, 2004 - 05, 2005 - 06 AND 200 6 - 0 7 AND THREE CROSS OBJECTIONS OF THE ASSESSEE FOR ASSESSMENT YEAR 2003 - 04, 2004 - 05 AND 2005 - 06. IN ADDITION TO THAT, THERE ARE TWO APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 AND 2008 - 09. ALL THESE APPEALS AND CROSS OBJECTIONS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2003 - 04 I.E. I.T.A. NO.730/LKW/2010. IN THIS APPEAL , THE REVENUE HAS RAISE D THE FOLLOWING GROUNDS: 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN TREATING THE INTEREST INCOME UNDER THE HEAD BUSINESS INCOME WHEREAS THERE IS DIFFERENCE OF OPINION AMONG VARIOUS COURTS. 2. THAT THE LD. COMMISSIONER OF INCOME - TAX(A) HAS ER RED IN LAW AND ON FACTS REGARDING TREATMENT OF SELF CONSUMED DEPB/DFRC WHEREAS THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE DEPARTMENT BY THE APEX COURT ( LIBERTY INDIA VS. CIT). 3. THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR BEING ER RONEOUS, UNJUST AND BAD IN LAW AND ON FACTS DESERVES TO BE VACATED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED; AND 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEA L GIVEN ABOVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 4 REGARDING GROUND NO. 1, IT WAS ALSO SUBMITTED BY LEARNED D.R. OF THE REVENUE THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS INDO GULF FERTILISER AND CHEMICALS CORPORATION LTD . [2006] 280 ITR 621 (SC). AT THIS JUNCTURE , IT WAS ALSO POINTED OUT BY THE BENCH THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS SHRI RAM HONDA POWER EQUIP [2007] 289 IT R 475 (DEL) . IN REPLY, LEARNED AR OF THE ASSESSEE HAD NOTHING TO SAY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT REGARDING INTEREST INCOME RECEIVED BY THE ASSESSEE FROM FDRS, THE SAME WAS SHOWN BY THE ASSESSEE AS BUSINESS INCOME AND IT WAS INCLUDED BY THE ASSESSEE IN THE INCOME FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC AND 80IB OF THE ACT. AS AGAINST THIS , THE ASSESSING OFFICER HELD THAT SUCH INTEREST INCOME IS NOT THE BUSINESS INCOME BUT INCOME FROM OTHER SOURCES AND HE ASSESSED THE SAME AS INCOME FROM OTHER SOURCES AND AS A CONSEQUENCE , NO DEDUCTION WAS ALLOWED BY HIM TO THE ASSESSEE U/S 80HHC AND 80IB OF THE ACT IN RESPECT OF THIS INCOME . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT ( A) WHO HAS HELD THAT SINCE THE ASSESSEE IS 100% EXPORT ORIENTED UNIT AND THE FDRS WERE PURCHASED FOR AVAILING CREDIT FACILITIES, INTEREST INCOME ON FDRS WERE NOT TO BE TAXED AS INCOME FROM OTHER SOURCES. ON THIS BASIS , HE ALLOWED THE CLAIM OF THE ASSESSEE. NOW THE REVENUE IS IN APPEAL BEFORE US AGAINST THIS DECISION OF CIT(A) AND IT WAS ARGUED BY LEARNED D.R. OF THE REVENUE THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF COMMISSIONER O F INCOME - TAX VS INDO GULF FERTILISER AND CHEMICALS CORPORATION LTD . (SUPRA). IN ADDITION TO THAT , AS PER THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF COMMISSIONER 5 OF INCOME - TAX VS SHRI RAM HONDA POWER EQUIP (SUPRA), IT WAS HELD THAT W H ERE SURPLUS FUNDS ARE PARKED WITH THE BANK AND INTEREST IS EARNED THEREON , IT CAN ONLY BE CATEGORISED AS INCOME FROM OTHER SOURCES BECAUSE I NTEREST EARNED ON FIXED DEPOSITS FOR THE PURPOSES OF AVAILING CREDIT FACILITIES FROM THE BANK, DOES NOT HAVE AN IMMEDIATE NEXUS WITH THE EXPORT BUSINESS QUALIFYING FOR DEDUCTION U/S 80HHC. IN THE PRESENT CASE A LSO, THE FACTS ARE SIMILAR AND THEREFORE, RES PECTFULLY FOLLOWING BOTH THESE JUDGMENTS, WE REVERSE THE ORDER OF CIT ( A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. ACCORDINGLY, GROUND NO. 1 OF THE REVENUES APPEAL IS ALLOWED. 5. REGARDING GROUND NO. 2 OF THE APPEAL, IT WAS SUBMITTED BY LEARNED D.R. OF THE REVENUE THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA VS COMMISSIONER OF INCOME - TAX AS REPORTED IN [2009] 317 ITR 218 (SC) . LEARNED A.R. OF THE ASSESSEE COUL D NOT POINT OUT AS TO HOW THIS ISSUE IS NOT COVERED AGAINST THE ASSESSEE BY TH IS JUDGMENT OF HON'BLE APEX COURT. THIS WAS THE ONLY SUBMISSION THAT SINCE THE ASSESSEE HAS USED THE DEPB/DFRC FOR ITS OWN IMPORT AND DID NOT SELL THE SAME TO OTHERS, THIS JUDGM ENT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. IN OUR CONSIDERED OPINION, THIS ARGUMENT IS DEVOID OF ANY MERIT BECAUSE WHETHER THE ASSESSEE HAS IMPORTED THE GOODS ITSELF AGAINST THE DEPB/DFRC OR WHETHER THE SAME WAS SOLD OUT TO OTHERS, THE FACTS REMAINS THAT THE ASSESSEE HAS ENJOYED THE BENEFIT FROM EXPORT INCENTIVES AND SUCH BENEFIT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT AS HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA). HENCE, ON THIS ISSUE ALSO, WE REVE RSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. THIS GROUND OF THE REVENUE IS ALSO ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED. 6 7. NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.06/LKW/2011 FOR ASSESSMENT YEAR 2003 - 2004. IN THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT ( A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HELD THAT THE DEDUCTION U/S 80HHC HAS TO BE COMPUTED AFTER DEDUCTING THE DEDUCTION GRANTED U/S 80IB, WHICH FINDING IS BAD IN LAW. 2. BECAUSE ON A PROPER INTERPRETATION OF THE PROVISIONS OF SECTION 80IB AND 80HHC, BOTH THE DEDUCTIONS ARE ALLOWABLE INDEPENDENT OF EACH OTHER AND AT TH E SAME TIME ON THE AVAILABLE SURPLUS. 8. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002 - 2003 AND 2006 - 2007 IN I.T.A. NO. 11, 65 & 56/LKW/2013 DATED 22/03/2013. HE SUBMI TTED A COPY OF THE TRIBUNAL DECISION AND DRAWN OUR ATTENTION TO PARA NO. 5 TO 7 OF THIS TRIBUNAL DECISION. 9. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN ASSESS MENT YEAR 2002 - 03 ALSO, A SIMILAR ISSUE WAS RAISED IN THE APPEAL OF THE REVENUE IN THAT YEAR AND IT WAS HELD BY THE TRIBUNAL THAT THE CAP IS TO BE APPLIED ON THE OVERALL DEDUCTIONS AND NOT WHILE WORKING OUT THE DEDUCTIONS INDEPENDENTLY. IN THAT YEAR , THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF ASSOCIATED CAPSULES P. LTD. VS DEPUTY COMMISSIONER OF INCOME - TAX AS REPORTED IN [2011] 332 ITR 42 (BOM) AND ALSO DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF ACIT VS. HINDUSTAN MINT AND AGRO PRODUCTS P. LTD. AS REPORTED IN [2009] 315 ITR (AT) 401 (DELHI) (SB). WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE 7 PRESENT YEAR. HENCE, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED ACCORDINGL Y AND WE HOLD THAT CAP SHOULD BE APPLIED FOR ALLOWING TOTAL DEDUCTION AND SUCH DEDUCTION SHOULD NOT EXCEED THE GROSS TOTAL INCOME BUT DEDUCTION ALLOWABLE U/S 80IB IS NOT REQUIRED TO BE REDUCED FROM THE BUSINESS INCOME FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC OF THE ACT. 11. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED. 12. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2004 - 05 I.E. I.T.A. NO.39/LKW/2011. IN THIS APPEAL, THE REVENUE H AS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW AND ON FACTS REGARDING TREATMENT OF SELF CONSUMED DEPB/DFRC WITHOUT APPRECIATING THE FACT THAT THE FACT OF SELF CONSUMPTION WAS NOT CLAIMED BEFORE THE ASSESSING OFFICER. IN FACT NO SUCH CLAIM WAS MADE. FURTHER THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE DEPARTMENT BY THE APEX COURT (LIBERTY INDIA VS. C.I.T.) 2. THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE AD DITION OF RS.25,49,622/ - OUT OF BUSINESS PROMOTION AND RS.2,28,000/ - OUT OF REMUNERATION PAID U/S 40A(2)(B) WITHOUT APPRECIATING THE FACTS OF THE CASE THAT THEY WERE STUDYING AT U.K. WITHOUT RENDERING SERVICES FOR THE ASSESSEE COMPANY. 3. THAT THE APPELL ANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 13. REGARDING GROUND NO. 1 OF THE APPEAL, IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS IDENTICAL TO GRO UND NO. 2 RAISED BY THE REVENUE IN ASSESSMENT YEAR 2003 - 04 AND ACCORDINGLY IN THIS YEAR ALSO , THIS ISSUE CAN BE DECIDED ON SIMILAR LINES. IN THAT YEAR, AS PER PARA NO. 5 , THIS ISSUE WAS DECIDED BY US IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ACC ORDINGLY 8 IN THIS YEAR ALSO , THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THUS, GROUND NO. 1 OF THE REVENUES APPEAL IS ALLOWED. 14. REGARDING GROUND NO. 2 OF THE APPEAL, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS ISSUE WAS DECIDED BY THE CIT ( A) AS PER PARA 8 & 9 OF HIS ORDER AND FOR THE SAKE OF READY REFERENCE , THE SAME ARE REPRODU CED BELOW: 8. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS OF THE APPELLANT. ADMITTEDLY, THE AMOUNT OF RS.25,49,622/ - HAS BEEN INCURRED ON THE TECHNICAL EDUCATION OF MR. H. RAHMAN. TH E AO HAS NOT QUESTIONED THE GENUINENESS O F THE EXPENDITURE. SAME HAS BEEN DISALLOWED U/S 40A(2)(B) OF THE I.T. ACT. HOWEVER, AS FAR AS THE AMOUNT OF EXPENDITURE ON THE TECHNICAL EDUCATION OF MR. H. RAHMAN IS CONCERNED, IT IS NOT RECORDED BY AO THAT AMOUNT OF RS.25,49,622/ - WAS 'EXCESSIVE' IN RELATION TO ANY OTHER SUCH C ASE OF THE EXPENDITURE ON THE PROFESSIONAL COURSE OF B. TECH. IN U.K. FROM UNI VERSITY, COLLEGE, NORTHAMPTON (U.K.). THE EXPENDITURE I NVOLVING FEES, ETC. IS PRIMA FACIE AS PER THE RATES AND TARIFF OF THE SAID UNIVERSITY AND SAID COURSE. IT IS NOT A CASE WHERE THE EXPENDITURE IS 'EXCESSIVE' AS COMPARED TO ANY OTHER PERSON ACQUIRING THIS DEGREE IN THE SAID INSTITUTION. THEREFORE, APPLICATI ON OF SECTION 40A(2)(B) DOES NOT SEEM TO BE PROPER, UNLESS THERE IS SPECIFIC PAYMENT MADE BY APPELLANT SHOWING THAT SUCH EXPENDITURE IS IN EXCESS AS COMPARED TO OTHERS MADE BY THEM IN THE SAME INSTITUTION FOR THE SAME COURSE. NOW POSSIBLY, THE AO HAS CONSI DERED THE EXPENDITURE AS BEING FOR NON BUSINESS PURPOSE. BECAUSE MR. H. RAHMAN HAPPENS TO BE AN 'SPECIFIED PERSON' WITHIN THE MEANING OF SECTION 40A(2)(B), PERHAPS IT HAS MISLEAD THE A O TO MAKE THE DISALLOWANCE WITHOUT BRINGING OUT ANYTHING ON RECORD TO SH OW THAT THE EXPENDITURE AS SUCH WAS EXCESSIVE AND UNREASONABLE. THE ALLOWABILITY OF THIS EXPENDITURE U/S 37 OF THE I.T.ACT HAS NOT BEEN LOOKED INTO BY AO. WHICH WAS REQUIRED BECAUSE THE PAYMENT MADE FOR EDUCATION OF MR. H. RAHMAN IS NOT EXCESSIVE AND NOT U NREASONABLE FACTS, AS DISCUSSED ABOVE, HENCE QUESTION OF APPLICABILITY OF SECTION 40A(2)(B) DOES NOT ARISE. AS FAR AS 9 ALLOWABILITY OF THE SAID EXPENDITURE U/S 37 OF THE I.T. ACT IS CONCERNED, THE SAME HAS TO BE LOOKED INTO IN THE PERSPECTIVE OF THE BUSINES S OF THE COMPANY AND POSITION OF MR. H. RAHMAN IN THIS CONTEXT. IT IS ON RECORD THAT MR. H. RAHMAN WAS APPOINTED AN EXECUTIVE OF THE COMPANY W.E.F . 1.3.2003 AND HE WAS ALSO POSTED IN U.K. BY THE COMPANY FOR PERFORMING CERTAIN DUTIES/JOB RELATING TO BUSINES S PROMOTION AND MONITORING OF THE SALES AND EXPANDING THE BUSINESS. THE COPY OF THE BOARD RESOLUTION IN THIS BEHALF IS ON RECORD. THEREFORE, WHAT COMES OUT IS THAT MR. H. RAHMAN WAS ALSO WORKING IN THE CAPACITY OF AN E XECUTIVE OF THE COMPANY DURING THE PER IOD. MOST IMPORTANTLY, THE DEGREE OF B.TECH ACQUIRED BY HIM RELATES TO LINE OF THE BUSINESS I.E. LEATHER, OF THE APPELLANT COMPANY AND IT CERTAINLY HAS SOME BENEFITS TO THE BUSINESS OF THE COMPANY ALSO . THE PLACE OF POSTING OF MR. H. RAHMAN IS ALSO RELEVA NT I.E. U.K. WHERE MORE THAN 50% OF THE TURNOVER OF THE COMPANY IS AFFECTED. ALL THESE CIRCUMSTANCES SHOW THAT THERE IS NO ELEMENT OF PERSONAL BENEFIT AND CONSIDERATION BEING RELEASED TO MR. H.RAHMAN EXCLUSIVELY. THE COMPETITIVE EXPORT MARKET AND THE REQUI REMENT OF THE APPELLANT COMPANY TO REMAIN UPDATED IN TERMS OF TECHNOLOGY AND SUPERIOR MAN POWER EQUIPPED AND SKILLED TO ENSURE FUTURE GROWTH AND DEVELOPMENT OF BUSINESS IS A VALID BUSINESS CONSIDERATION AND VERY MUCH A PART OF THE BUSINESS EXPEDIENCY. THE DECISION IN THE CASE OF DCM VS CIT 158 ITR, CIT VS. TELCO 123 ITR AND HINDUSTAN ALUMINUM VS. CIT 159 ITR HAVE LAID DOWN THAT 'THE EXPENDITURE/PAYMENT ON 'SENDING EMPLOYEES ABROAD FOR TRAINING', OR 'TO STUDY THE ADVANCES MADE IN FOREIGN COUNTRIES' IS ALLOWA BLE AS REVENUE BUSINESS EXPENDITURE'. IT WAS HELD IN J.B.ADVANI & CO. LTD. V. CIT [2005] 1 SOT 830 (MUM.) - 'FOREIGN STUDY EXPENSES INCURRED BY A COMPANY IN RESPECT OF AN EMPLOYEE CANNOT BE DISALLOWED SIMPLY BECAUSE EMPLOYEE HAPPENS TO BE RELATIVE OF A DIR ECTOR. IN TH E INSTANT CASE , X WAS NOT ONLY THE DAUGHTER OF ONE OF DIRECTORS OF THE ASSESSEE COMPANY BUT ALSO AN EMPLOYEE OF THE ASSESSEE COM PANY. THE ASSESSEE COMPANY IS ON A BETTER FOOTING IN THE INSTANT CASE. NOT O N LY THAT, S, ON RETURNING TO INDIA, CONTINUED TO WORK FOR THE ASSESSEE IN COMPLIANCE OF THE AGREEMENT SHE HAD ENTERED INTO WITH IT BEFORE LEAVING INDIA. SHE HAS BEEN FURTHER MADE AS A DIRECTOR OF THE ASSESSEE COMPANY. THEREFORE, THE RELATION OF X WITH ONE OF THE DIRECTORS OF THE ASSESSEE COM PANY AS SUCH NEED NOT DISQUALIFY HER FROM BEING SENT ABROAD FOR HIGHER STUDIES BY THE ASSESSEE COMPANY'. THEREFORE, IN VIEW OF ABOVE DISCUSSION, THE AO IS DIRECTED TO ALLOW EXPENDITURE OF RS.25,49,622/ - . 10 9. SIMILAR ARE THE FACTS IN RESPECT OF SALARY PAYM ENT OF RS.2,28,000/ - WHERE THE AO HAS DISALLOWED THE AMOUNT ON THE GROUND THAT THE REMUNERATION PAID TO MR. H.RAHMAN WAS NOT FOR BUSINESS PURPOSE BECAUSE AT THAT TIME HE WAS PURSUING TECHNICAL EDUCATION. HOWEVER, THE AO HAS FAILED TO APPRECIATE THAT THE SA ID MR. H.RAHMAN WAS EXECUTIVE OF THE COMPANY AND FROM THE POINT VIEW OF APPELLANT COMPANY, EVEN IF HE WAS PURSUING TECHNICAL EDUCATION, HE WAS ENGAGED IN THE PERFORMANCE OF THE DUTY ASSIGNED BY THE EMPLOYER. MORE THAN THIS, IT IS CLEAR THAT MORE THAN 50% O F THE TURNOVER OF THE COMPANY IS IN U.K. WHERE THE PERSON WAS LEARNING HIS TECHNICAL EDUCATION. PRIMA - FACIE THERE SEEMS TO BE A RELATION IN THE PRESENCE OF MR. H. RAHMAN IN U.K. WHO WAS PURSUING HIS TECHNICAL EDUCATION, AND ALSO WAS TO INTERACT AND CONTRIB UTE TO THE BUSINESS ACTIVITIES OF THE COMPANY IN DIRECT OR INDIRECT MANNER , EVEN BY PROVIDING INFORMATION OF TRADE, INTERACTING WITH CUSTOMERS, OR/AND BEING PERSON ON BEHALF OF THE COMPANY FOR REQUIRED BUSINESS INTERACTION IN U.K. THUS, IN VIEW OF ABOVE DI SCUSSION, BOTH THE EXPENSES ARE ALLOWABLE U/S 37 OF THE I.T. ACT AND AS FAR AS SECTION 40A(2)(B) IS CONCERNED, SAME IS NOT APPLICABLE BECAUSE THE ELEMENT OF 'EXCESSIVENESS' AND 'UNREASONABLENESS' IS NOT PRESENT AND/OR HAS NOT BEEN EXAMINED AND RECORDED BY AO. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.2,28,000/ - . 15.1 FROM THE ABOVE PARAS FROM THE ORDER OF THE LEARNED CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY CIT(A) THAT NO FINDING HAS BEEN RECORDED BY THE ASSESSING OFFICER THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS EXCESSIVE IN RELATION TO ANY OTHER SUCH C ASE OF THE EXPENDITURE ON THE P ROFESSIONAL COURSE OF B. TECH. IN U.K. FROM UNIVERSITY, COLLEGE, NORTHAMPTON (U.K.). IN THE ABSENCE OF ANY SUCH FINDING OF THE ASSESSING OFFICER ON THE BASIS OF SOME MATERIAL AVAILABLE ON THE RECORD THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE EXCESSIVE OR UNREASONABLE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40A(2)(B) IS NOT SUSTAINABLE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). THIS GROUND OF THE REVENUE IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED. 11 17. NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSE E FOR ASSESSMENT YEAR 2004 - 05 I.E. C.O.8/LKW/2011. IN THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT ( A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HELD THAT THE DEDUCTIO N U/S 80HHC HAS TO BE COMPUTED AFTER DEDUCTING THE DEDUCTION GRANTED U/S 80IB, WHICH FINDING IS BAD IN LAW. 2. BECAUSE ON A PROPER INTERPRETATION OF THE PROVISIONS OF SECTION 80IB AND 80HHC, BOTH THE DEDUCTIONS ARE ALLOWABLE INDEPENDENT OF EACH OTHER AND AT THE SAME TIME ON THE AVAILABLE SURPLUS. 18. BOTH THE SIDES AGREED THAT THIS ISSUE IS IDENTICAL TO THE GROUND RAISED BY THE ASSESSEE IN HIS CROSS OBJECTION FOR ASSESSMENT YEAR 2003 - 04. IN THAT YEAR WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AS PER PARA NO. 10 OF THIS ORDER. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 20. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED. 21 . NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005 - 06 I.E. I.T.A. NO.139/LKW/2011. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW ON FACTS IN ALLOWING THE CLAIM OF 80IB AGAINST INTEREST ON FDR'S, TREATING AS INCOME FROM BUSINESS BY IGNORING THE FACT THAT THE INTEREST ON FDR'S IS NOT AN INCOME FROM INDUSTRIAL UNDERTAKIN G. 2. THAT THE LD COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW ON FACTS IN DELETING THE ADDITION OF RS.15,69,387/ - OUT OF BUSINESS PROMOTION AND RS.2,40,000/ - OUT OF REMUNERATION COVERED U/S 40A(2)(B) WITHOUT APPRECIATING THE FACTS OF THE CASE THAT THEY WERE STUDYING AT U.K. AND HAVE NOT RENDERED SERVICES FOR THE ASSESSEE COMPANY. 12 3. THAT THE LD COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW ON FACTS IN DELETING INTEREST PAID ON INTEREST BEARING LOANS WHICH HAVE NOT BEEN UTILIZED FOR THE BUS INESS PURPOSE IN VIEW OF FACT THAT THE AMOUNT OF RS.92,87,494/ - BEING INTEREST ON FDR & DFRC & DEPB WHICH ARE SELF CONSUMED ARE NOT INCOME FROM INDUSTRIAL UNDERTAKING. 4. THAT THE ORDER OF LD COMMISSIONER OF INCOME TAX (A) - I, KANPUR BEING ERRONE OUS IN LAW AND ON THE FACTS DESERVES TO BE VACATED AND THAT THE ORDER OF ASSESSING OFFICER BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSAR Y TO DO SO. 2 2 . LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT ( A). 2 3 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE FIRST ISSUE RAISED BY THE REVENUE AS PER GROUND NO. 1 IS THAT AS TO WHETHER DEDUCTION IS ALLOWABLE OR NOT U/S 80IB AGAINST INTEREST ON FDR. THIS ISSUE IS IDENTICAL TO GROUND NO. 1 RAISED BY THE REVENUE IN ASSESSMENT YEAR 2003 - 04. IN THAT YEAR , THIS ISSUE HAS BEEN DECIDED BY US IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE AS PER PARA 4 OF THIS ORDER. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. GROUND NO. 1 OF THE REVENUE IS ALLOWED. 2 4 . REGARDING GROUND NO. 2 OF THE APPEAL, WE FIND THAT THIS ISSUE IS IDENTICAL TO GROUND NO. 2 RAISED BY THE REVENUE IN ASSESSMENT YEAR 2004 - 2005. IN THAT YEAR, THIS ISSUE HAS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AS PER PARA NO. 15.1 ABOVE . ACCORDINGLY, IN THE PRESENT YEAR ALSO, T HIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THIS GROUND OF THE REVENUE IS DISMISSED. 13 2 5 . REGARDING GROUND NO. 3 OF THE APPEAL, WE FIND THAT THIS ISSUE IS IDENTICAL TO GROUND NO. 1 OF REVENUES APPEAL RAISED IN ASSESSMENT YEAR 2003 - 04. IN FACT , GROUND NO. 1 OF THE REVENUE IS ALSO IN RESPECT OF INTEREST INCOME ON FDR ON WHICH NO DEDUCTION WAS ALLOWED BY THE ASSESSING OFFICER U/S 80HHC AND 80IB BECAUSE IT WAS HELD BY THE ASSESSING OFFICER THAT SUCH INTEREST INCOME WAS FROM OTHER SOURCES . THE CIT(A) HELD THAT THIS INTEREST INCOME IS BUSINESS INCOME AND, THEREFORE, ALLOWABLE FOR DEDUCTION. WE HAVE ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE REVENUE IN ASSESSMENT YEAR 2003 - 04 AS PER PARA . 4 OF THIS ORDER. ACCORDINGLY, THIS ISSU E IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. GROUND NO. 3 OF THE REVENUES APPEAL STANDS ALLOWED. 2 6 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED. 2 7 . NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 I.E. C.O.9/LKW/2011. IN THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HELD THAT THE DEDUCTION U/S 8 0HHC HAS TO BE COMPUTED AFTER DEDUCTING THE DEDUCTION GRANTED U/S 80IB, WHICH FINDING IS BAD IN LAW. 2. BECAUSE ON A PROPER INTERPRETATION OF THE PROVISIONS OF SECTION 80IB AND 80HHC, BOTH THE DEDUCTIONS ARE ALLOWABLE INDEPENDENT OF EACH OTHER AND AT THE SAME TIME ON THE AVAILABLE SURPLUS. 28 . BOTH THE SIDES AGREED THAT THIS ISSUE RAISED BY THE ASSESSEE IS IDENTICAL TO THE GROUND S RAISED BY THE ASSESSEE IN THE CROSS OBJECTION FOR ASSESSMENT YEAR 2003 - 04 & 2004 - 05. IN BOTH THESE YEARS, WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 14 2 9 . IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED. 30 . NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006 - 07 IN I.T.A. NO.127/LKW/2013. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.10,31,671/ - ON THE STUDY IN FOREIGN OF SHRI HAMMAD RAHAMAN AND ALSO REMUNERATION OF RS.3,00,000/ - PAID TO SHRI HAMMAD RAHAMAN EVEN WHEN HE IS CLEARLY COVERED U/S 40A(2)(B) OF THE I.T. ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.9,00,000/ - ON DIRECTOR REMUNERATION AS THE REMUNERATION WAS ENHANCED DRASTICALLY IN SPITE OF THE FACTS THAT THERE WAS ALMOST NO GROWTH IN BUSINESS. 3. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUND DURING THE PENDENCY OF THIS APPEAL. 3 1 . LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT ( A). 3 2 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. BOTH THE SIDES AGREED THAT THE ISSUE INVOLVED IN GROUND NO. 1 IS SIMILAR TO GROUND NO. 2 OF THE REVENUES APPEAL IN ASSESSMENT YEAR 2005 - 06. IN THAT YEAR, THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THIS GROUND OF THE REVENUE IS REJECTED. 3 3 . RE GARDING GROUND NO. 2 OF THE APPEAL, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY CIT ( A) BY FOLLOWING HIS OWN ORDER IN ASSESSMENT YEAR 2005 - 06. 15 THE CIT(A) HAS ALSO GIVEN A FINDING THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE INCREASE IN DIRECTOR REMUNERATION IS UNREASONABLE. IN THE ABSENCE OF ANY SUCH MATERIAL, THE CIT(A) HAS DELETED THIS DISALLOWANCE AND IN THE LIGHT OF THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. GROU ND NO. 2 OF THE REVENUE IS REJECTED. 3 4 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 3 5 . NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 I.E. I.T.A. NO.274/LKW/2013. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1. BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF RS.61,31,737/ - MADE U/S 80IB OF THE IT. ACT, 1961. 2. BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, THE DEDUCTION OF RS.61,31,737/ - CLAIMED U/S 80IB OUGHT TO HAVE BEEN ALLOWED. 3. BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY DISALLOWING A SUM OF RS.1,80,00 0/ - IN RESPECT OF THE TOTAL REMUNERATION PAID TO HAMAD RAHMAN TREATING IT TO BE INCURRED FOR NON BUSINESS PURPOSES. 4. BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE SAID THAT REMUNERATION PAID TO HAMAD RAHMAN AMOUN TING TO RS.3,00,000/ - OUT OF WHICH THE CIT(APPEALS) HIMSELF HAS HELD RS.1,20,000/ - TO BE REASONABLE, THE ACTION OF THE CIT(APPEALS) IN UPHOLDING THE ADDITION OF RS.1,80,000 / - IS CONTRARY TO THE PROVISIONS OF LAW AND BE DELETED. 5. BECAUSE IT CANNOT BE SAI D THAT THE REMUNERATION PAID TO HAMAD RAHMAN IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NOT ALLOWABLE. 16 3 6 . REGARDING GROUND NO. 1 & 2 OF THE APPEAL, IT WAS ARGUED BY LEARNED D.R. OF THE REVENUE THAT THE ISSUE RAISED VIDE THESE GROUNDS IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA VS. CIT AS REPORTED IN 317 ITR 218 AND LEARNED A.R. OF THE ASSESSEE COULD NOT SHOW US AS TO HOW THIS ISSUE IS NOT SO COVE RED AGAINST THE ASSESSEE. SO RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE APEX COURT, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. THESE GROUNDS OF THE ASSESSEE ARE REJECTED. 3 7 . REGARDING GROUND NO. 3 & 4 OF THE APPEAL, IT WAS SUBMITTED BY THE LEAR NED AR OF THE A SSESSEE THAT IT CAN BE SEEN IN PARA NO. 7.3.7 OF THE ORDER OF CIT ( A) THAT THIS WAS THE ARGUMENT OF THE ASSESSEE BEFORE THE CIT(A) THAT SUCH REMUNERATION WAS DISALLOWED BY THE ASSESSING OFFICER IN THE EARLIER YEARS ALSO BUT THE SAME WAS ALLO WED IN APPEAL. HE FURTHER SUBMITTED THAT CIT(A) HAS TAKEN A DIFFERENT VIEW ON THE BASIS THAT THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY IN INCOME TAX PROCEEDINGS. HE SUBMITTED THAT WHEN THE FACTS ARE IDENTICAL, THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE AS PER THE PR INCIPLE OF CONSISTENCY. 3 8 . LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND SINCE NO DIFFERENCE IN FACTS C OULD BE POINTED OUT BY THE AUTHORITIES BELOW, IN OUR CONSIDERED OPINION, NO DIFFERENT VIEW CAN BE TAKEN IN THE PRESENT YEAR AS COMPARED TO THE VIEW TAKEN IN EARLIER YEARS IN APPEAL PROCEEDINGS BECAUSE NO DIFFERENCE IN FACTS OR LEGAL PROVISIONS IS POINTED OUT . WE, THEREFORE, HOLD THAT THE PART ADDITIO N UPHELD BY CIT(A) OF RS.1.80 LAC IS NOT SUSTAINABLE IN THE FACTS OF THE PRESENT CASE. HENCE, THIS ADDITION IS ALSO DELETED. GROUND NO. 3 & 4 ARE ALLOWED. 40 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 17 4 1 . NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 I.E. I.T.A. NO.275/LKW/2013. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF RS.68,52,766/ - MADE U/S 80 IB OF THE I.T. ACT, 1961. 2. BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, THE DEDUCTION OF RS.68,52,766/ - CLAIMED U/S 80IB OUGHT TO HAVE BEEN ALLOWED. 3. BECAUSE THE CIT(APPEAL) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY DISALLOWING A SUM OF RS.1,80,000/ - IN RESPECT OF THE TOTAL REMUNERATION PAID TO HAMAD RAHMAN TREATING IT TO BE INCURRED FOR NON BUSINESS PURPOSES. 4. BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE SAID THAT REMUNERA TION PAID TO HAMAD RAHMAN AMOUNTING TO RS.3,00,000/ - OUT OF WHICH THE CIT(APPEALS) HIMSELF HAS HELD RS.1,20,000/ - TO BE REASONABLE, THE ACTION OF THE CIT(APPEALS) IN UPHOLDING THE ADDITION OF RS.1,80,000/ - IS CONTRARY TO THE PROVISIONS OF LAW AND BE DELETE D. 5. BECAUSE IT CANNOT BE SAID THAT THE REMUNERATION PAID TO HAMAD RAHMAN IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NOT ALLOWABLE. 4 2 . BOTH THE SIDES AGREED THAT IN THIS YEAR ALSO, ONLY TWO ISSUES ARE RAISED AND BOTH ARE IDENTICAL T O TWO ISSUES RAISED IN ASSESSMENT YEAR 2007 - 2008. IN ASSESSMENT YEAR 2007 - 08, WE HAVE DECIDED THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S 80IB AGAINST THE ASSESSEE BUT REGARDING THE DISALLOWANCE OF REMUNERATION PAID TO HAMAD RAHMAN, THE ISSUE WAS DE CIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S 80IB IS DECIDED AGAINST ASSESSEE AND THE ISSUE 18 REGARDING PART DISALLOWANCE OF REMUNERATION IS DECIDED IN FAVOUR OF THE ASSESSEE ON SI MILAR LINE. 4 3 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 4 4 . IN THE COMBINED RESULT, THE APPEAL OF REVENUE IN I.T.A. NO.730/LKW/2010 IS ALLOWED, CROSS OBJECTION S OF THE ASSESSEE NO.06, 08 & 09/LKW/2011 ARE ALLOWED, I.T.A. NO.39 & 139 /LKW/2011 OF REVENUE ARE PARTLY ALLOWED, I.T.A. NO.127/LKW/2013 OF REVENUE IS DISMISSED, I.T.A. NO.274 & 275 /LKW/2013 OF THE ASSESSEE ARE PARTLY ALLOWED . (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /0 6 /2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR