M/s Vardhman Industries Ltd., New Delhi V. DCIT, Ludhiana

ITA 734/CHANDI/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0066 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Capital asset; Opportunity of being heard; Earning of tax free income; Capital receipt; Retraction
• Section: 14A; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 734/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S VARDHMAN INDUSTRIES LTD., VS THE DCIT, 2 ND FLOOR, JEEVANDEEP BUILDING, CENTRAL CIRCLE-I PARLIAMENT STREET, LUDHIANA. NEW DELHI. PAN: AAACV3229R & ITA NO. 887/CHD/2012 ASSESSMENT YEAR: 2007-08 THE DCIT, VS M/S VARDHMAN INDUSTRIES LTD., CENTRAL CIRCLE-I, 2 ND FLOOR, JEEVANDEEP BUILDING, LUDHIANA. PARLIAMENT STREET, NEW DELHI. PAN: A AACV3229R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 02.05.2016 DATE OF PRONOUNCEMENT : 05.05.2016 O R D E R PER BHAVNESH SAINI,JM BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 05.06.20 12 FOR ASSESSMENT YEAR 2007-08. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND 2 CONSIDERED THE MATERIAL AVAILABLE ON RECORD. BOTH APPEALS ARE DECIDED AS UNDER. ASSESSEE'S APPEAL 3. ON GROUND NO. 1 IN ASSESSEE'S APPEAL, THE ORDER OF THE LD. CIT(APPEALS) IS CHALLENGED FOR UPHOLDING DISALLOWANCE UNDER SECTION 14A TO THE EXTENT OF RS. 2,16,445/-. IT IS NOTED IN THE IMPUGNED ORDER THAT ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA D INVESTMENT TO THE TUNE OF RS. 36,38,000/- AS ON 01.04.2006 AND RS. 37,28,000/- AS ON 31.03.2007 AND NO DISALLOWANCE UNDER SECTION 14A HAD BEEN WORKED OUT. THE ASSESSING OFFICER NOTED THE OBJECTIONS OF THE ASSES SEE AGAINST THE PROPOSED DISALLOWANCE IN WHICH THE ASSE SSEE CONTENDED THAT MOST OF THE INVESTMENTS AS APPEARING IN THE BALANCE SHEET ARE CONTINUING FROM THE PREVIOUS YEAR PRIOR TO THE PREVIOUS YEAR UNDER CONSIDERATION I.E. THESE ARE OLD INVESTMENTS. THE INVESTMENT TOWARDS THE PU RCHASE OF THESE INVESTMENTS IS OUT OF CASH PROFIT AVAILABL E WITH THE ASSESSEE AND IT IS NOT FROM THE BORROWED FUNDS. THE PROVISIONS OF RULE 8D WHICH CAME INTO BEING W.E.F. 24.03.2008 IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION. 3(I) IT WAS FURTHER CONTENDED THAT THIS DISALLOWANC E, IF ANY, SHOULD NOT EXCEED TO EXEMPTED INCOME AND SINCE THE ASSESSEE HAS EARNED ANY INCOME WHICH HAS BEEN CLAIM ED AS EXEMPT AND AS SUCH NO DISALLOWANCE IS CALLED FOR . THE 3 ASSESSING OFFICER CONCLUDED THAT ASSESSEE HAS INCUR RED EXPENDITURE ON INVESTMENTS WHICH HAD BEEN MADE AFTE R DEBITING THE WORKING CAPITAL LOAN FROM THE BANK WHE RE THE EXPENSES SUCH AS INTEREST, HAD BEEN DEBITED. THE ASSESSING OFFICER, FOLLOWING RULE 8D MADE THE ABOVE DISALLOWANCE. THE WRITTEN SUBMISSION OF THE ASSESSE E IS REPRODUCED IN THE IMPUGNED ORDER IN WHICH THE ASSES SEE BRIEFLY EXPLAINED THAT DISALLOWANCE HAS BEEN MADE W ITHOUT PIN-POINTING ANY SPECIFIC AMOUNT OF EXPENSES WHICH HAVE BEEN INCURRED TO EARN EXEMPT INCOME. NO OTHER EXEM PT INCOME WAS RECEIVED/EARNED. RULE 8D IS NOT APPLICA BLE TO THE YEAR UNDER CONSIDERATION. SINCE NO EXPENSES HA VE BEEN INCURRED AND NO EXEMPT INCOME IS EARNED, THERE FORE, ADDITION IS UNJUSTIFIED. 4. THE LD. CIT(APPEALS) DID NOT ACCEPT THE CONTENTI ON OF THE ASSESSEE AND CONFIRMED THE ADDITION AND DISMISS ED THIS GROUND OF APPEAL OF THE ASSESSEE. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE WAS CON SIDERED BY ITAT CHANDIGARH BENCH IN THE GROUP CASE OF THE ASSESSEE IN THE CASE OF M/S VALLABH STEELS LTD. IN VARIOUS APPEALS FOR ASSESSMENT YEARS 2007-08 TO 2009-10 IN ITA NO. 889/2012 AND OTHERS, VIDE ORDER DATED 18.12.201 5, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE. T HE FINDINGS OF THE TRIBUNAL IN PARA 5 TO 8 OF THIS ORD ER ARE REPRODUCED AS UNDER : 5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE 4 REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V DEEPAK MITTAL 361 ITR 131 HELD AS UNDER: HELD, DISMISSING THE APPEALS, THAT THE ONUS WAS UPON THE ASSESSEE TO PROVE THE QUANTUM OF EXPENDITURE INCURRED ON EARNING OF TAX FREE INCOME OF DIVIDEND. WHEN THE CONSISTENT CASE OF THE ASSESSEE, DESPITE THE NOTICE GIVEN BY THE ASSESSING OFFICER TO GIVE DETAILS OF THE EXPENDITURE MADE ON EARNING OF EXEMPTED INCOME IN THE NATURE OF DIVIDEND, WAS THAT HE HAD NOT MADE ANY EXPENDITURE ON EARNING SUCH INCOME, THE ASSESSING OFFICER IN TERMS OF SUB-SECTION (2) OF SECTION 14A HAD TO PROCEED FURTHER TO COLLECT SUCH MATERIAL OR EVIDENCE TO DETERMINE THE EXPENDITURE, IF ANY, INCURRED BY THE ASSESSEE BUT THE ASSESSING OFFICER INSTEAD, RELYING ON RULE 8D OF THE RULES, APPLIED AS A FORMULA, APPLICABLE TO AN ASSESSEE WHO HAS INCURRED EXPENDITURE BY WAY OF INTEREST WHICH WAS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT WHICH WAS NOT THE CASE OF THE PRESENT ASSESSEE, WHICH WAS CLEARLY A WRONG APPLICATION INTRODUCED AS A SUBSTITUTE FOR SUB- SECTION (2) OF SECTION 14A AND THUS WAS NOT PERMISSIBLE IN LAW. 6. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HERO CYCLES LTD.(SUPRA) HELD THAT WHERE NO EXPENDITURE IS INCURRED, NO DISALLOWANCE SHOULD BE MADE. SIMILAR VIEW IS TAKEN IN THE CASE OF WINSOME TEXTILE INDUSTRIES LTD. (SUPRA) IN WHICH IT WAS HELD THAT WHEN ASSESSEE DID NOT MAKE CLAIM OF EXEMPTION, 14A DO NOT APPLY. OWN FUNDS USED TO ACQUIRE SHARES, NO EXPENSES INCURRED. IN THE CASE OF METALMAN AUTO P. LTD. 336 ITR 434, HON'BLE PUNJAB & HARYANA HIGH COURT HELD THAT, WHEN NO EXPENSES INCURRED TO EARN EXEMPT INCOME, 14A DO NOT APPLY. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITS RECENT DECISION IN THE CASE OF CIT V 5 KAPSON ASSOCIATES ITA 354/2013 VIDE JUDGEMENT DATED 04.08.2015 IN PARA 7 TO 10 HELD AS UNDER : 7. THE ASSESSEE HAD INVESTED AN AMOUNT OF RS.25,22,43,396/- IN SHARES AND MUTUAL FUNDS. THE INCOME IN RESPECT THEREOF WOULD BE EXEMPTED. IN ANSWER TO A QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE CATEGORICALLY STATED THAT THE INVESTMENTS IN SHARES WERE OLD INVESTMENTS WHICH HAD BEEN MADE OUT OF THE CAPITAL AND OUTSTANDING RESERVES OF THE COMPANY AND THAT NO SEPARATE AMOUNT HAD BEEN BORROWED FOR MAKING THE SAID INVESTMENTS. IT FURTHE R STATED THAT NO SPECIAL EXPENDITURE WAS INCURRED FOR EARNING THIS DIVIDEND INCOME. 8. THE ENTIRE RECORD OF THE ASSESSEE WAS AVAILABLE. THE ASSESSEE CANNOT ESTABLISH THE NEGATIVE. IF THE ASSESSING OFFICER DISBELIEVED THE ASSESSEE, IT WAS FOR HIM TO HAVE ESTABLISHED THE SAME FROM THE RECORDS O R OTHERWISE. THE ASSESSING OFFICER HAS NOT EVEN CONSIDERED THIS ASSERTION EXPRESSLY MADE BY THE ASSESSEE. THE ASSESSING OFFICER'S CONCLUSION THAT T HE ASSESSEE HAD NOT PROVIDED DETAILS OF EXPENSES INCURRED ON MAKING THESE INVESTMENTS, THEREFORE, CANNOT BE ACCEPTED. THE ASSESSEE'S CASE WAS THAT NO SUCH EXPENSES HAD BEEN INCURRED. IT WAS, THEREFORE, RIGHTLY OBSERVED BY THE CIT (APPEALS) THAT THE ASSESSING; OFFICER HAD NOT RECORDED ANY REASONS IN THE ASSESSMENT ORDER TO HOLD THAT ANY EXPENDITURE H AD BEEN INCURRED ON EARNING THE EXEMPT INCOME AND THAT THE ASSESSING OFFICER HAD REJECTED THE CLAIM OF THE APPELLANT WITHOUT GIVING .ANY REASONS FOR THE SAME. WE HAVE ALREADY DEALT WITH THIS ISSUE. THE CONCLUSI ON, THEREFORE, THAT THE ASSESSING OFFICER HAD MECHANICA LLY APPLIED RULE 8D OF THE INCOME TAX RULES, 1962 IS WE LL FOUNDED. THE TRIBUNAL REITERATED THESE FACTS AND TH E SAME POSITION. 9. AS HELD BY A DIVISION BENCH OF THIS COURT IN ITA NO. 320 OF 2013 TITLED AS COMMISSIONER OF INCOME TAX-I, LUDHIANA VS. M/S. ABHISHEK INDUSTRIES LTD, LUDHIANA DECIDED ON 27.01.2015, SECTION 14A REQUIRES THE ASSESSING OFFICER TO RECORD SATISFACTI ON THAT THE INTEREST BEARING FUNDS HAVE BEEN USED TO E ARN TAX FREE INCOME AND THAT THE SATISFACTION MUST BE BASED UPON CREDIBLE AND RELEVANT EVIDENCE. IT WAS FURTHER HELD THAT THE TO PROVE THAT INTEREST BEARI NG FUNDS WERE USED LIES SQUARELY ON THE REVENUE. THE ISSUE, THEREFORE, IN THIS REGARD WAS BASED ONLY ON FACTS. THE LEAST THAT MUST BE SAID IN FAVOUR OF TH E RESPONDENTS IS THAT THE FINDINGS OF FACTS RECORDED BY THE CIT (APPEALS) AND BY THE TRIBUNAL ARE NOT PERVERSE AND THAT THE VIEW TAKEN BY THEM IS CERTAIN LY A POSSIBLE VIEW. IN VIEW THEREOF, NO QUESTION OF LA W ARISES WITH RESPECT TO THESE QUESTIONS AS WELL. 6 10. THE APPEAL IS THEREFORE, DISMISSED. 7. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE SPECIFICALLY SUBMITTED THAT MOST OF THE INVESTMENTS APPEARING THE BALANCE SHEET ARE COMING FROM PREVIOUS YEAR AND THESE ARE OLD INVESTMENTS. THE INVESTMENTS SO MADE ARE OUT OF CASH PROFIT AVAILABLE TO THE ASSESSEE AND NOT FROM BORROWED FUNDS. THE ASSESSEE ALSO EXPLAINED THAT NO EXPENDITURE HAVE BEEN INCURRED FOR EARNING THE EXEMPT INCOME. THE ASSESSING OFFICER HAS NOT CONSIDERED THE EXPLANATION OF THE ASSESSEE IN PROPER PERSPECTIVE. THE ASSESSING OFFICER INSTEAD OF EXAMINING THE EXPLANATION OF THE ASSESSEE THAT NO EXPENDITURE HAVE BEEN INCURRED TO EARN EXEMPT INCOME, REJECTED EXPLANATION OF THE ASSESSEE WITHOUT ANY REASONS. SECTION 14A REQUIRES THE ASSESSING OFFICER TO RECORD SATISFACTION THAT INTEREST BEARING FUNDS HAVE BEEN USED TO EARN TAX FREE INCOME AND THAT THE SATISFACTION WAS BASED UPON CREDIBLE AND RELEVANT EVIDENCE. THUS, ONUS UPON ASSESSING OFFICER HAVE NOT BEEN DISCHARGED IN THIS CASE. THE LD. CIT(APPEALS) MERELY ON THE BASIS OF EXPENDITURE PRESUMED THAT CERTAIN AMOUNT OF INTEREST EXPENDITURE RELATE TO EARNING OF EXEMPT INCOME. FINDINGS OF THE AUTHORITIES BELOW HAVE NO BASIS WHAT-SO-EVER, FURTHER RULE 8D WOULD NOT APPLY TO THE ASSESSMENT YEAR 2007-08 UNDER APPEAL. 8. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS, IT IS CLEAR THAT WHEN ASSESSEE CLAIMED THAT NO EXPENDITURE HAVE BEEN INCURRED FOR EARNING EXEMPT INCOME, THEN THE ASSESSING OFFICER SHALL HAVE TO RECORD SATISFACTION AS REQUIRED UNDER SECTION 14A WHICH IS NOT SO DONE IN THIS CASE. THEREFORE, 7 DISALLOWANCE MADE BY THE ASSESSING OFFICER IS WHOLLY UNJUSTIFIED PARTICULARLY READ WITH RULE 8D WHICH IS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION. THIS GROUND IN ASSESSMENT YEAR 2007- 08 IS ACCORDINGLY ALLOWED. 5. AFTER CONSIDERING RIVAL CONTENTIONS, WE ARE OF T HE VIEW ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF M/S VALLABH ST EELS LTD. (SUPRA) IN WHICH ON IDENTICAL FACTS, THE ADDIT ION HAS BEEN DELETED. FOLLOWING THE SAME ORDER, WE SET ASID E THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION . 6. GROUND NO. 1 OF APPEAL OF THE ASSESSEE IS ALLOWE D. 7. ON GROUND NO. 2, ASSESSEE CHALLENGED THE DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) O F THE ACT OF RS. 17,03,011/-. IT IS NOTED IN THE IMPUGNED OR DER THAT ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAD DE BITED INTEREST EXPENDITURE AMOUNTING TO RS. 8.09 CR IN PR OFIT & LOSS ACCOUNT AND AT THE SAME TIME, HAS NOT CHARGED ANY INTEREST FROM FAMILY MEMBERS ON THE AMOUNTS ADVANCE D TO THEM TO THE TUNE OF RS. 1.05 CR. THE ASSESSEE EXPLA INED BEFORE ASSESSING OFFICER THAT COMPANY HAS SUFFICIEN T AMOUNT OF BALANCE OF UNSECURED LOANS FROM FAMILY MEMBERS FREE OF INTEREST AND HAD ITS SHARE CAPITAL/ FREE RESERVES TO THE TUNE OF RS. 43.12 CR WHICH MEANS TH AT THE AMOUNTS ADVANCED FREE OF INTEREST WERE FROM SUCH SO URCES RATHER THAN BORROWED. THE ASSESSING OFFICER DID NO T 8 ACCEPT CONTENTION OF THE ASSESSEE AND DISALLOWED TH E ABOVE AMOUNT. 8. THE ASSESSEE REITERATED THE SAME SUBMISSIONS BEF ORE LD. CIT(APPEALS) AND IT WAS ALSO EXPLAINED CERTAIN ADVANCE HAD BEEN GIVEN FOR PURCHASES. NO INTEREST WAS CHAR GED FROM ADVANCES GIVEN TO THE EMPLOYEES BECAUSE OF THE IR TEMPORARY REQUIREMENTS AND TO MAINTAIN CORDIAL RELA TIONS WITH THEM. HOWEVER, INTEREST HAS NOT BEEN CHARGED ON CERTAIN ADVANCES TO THE FAMILY MEMBERS. THE ASSESS EE HAS SUFFICIENT RESERVES AND CAPITALS AND UNSECURED LOAN S, THEREFORE, SUFFICIENT FUNDS ARE AVAILABLE TO THE AS SESSEE TO GIVE ADVANCE TO THE FAMILY MEMBERS. 8(I) THE LD. CIT(APPEALS) DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND FOLLOWING THE DECISION OF HON'BLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRI ES LTD. VS CIT 286 ITR 1 AND CONSIDERING COMMON KITTY AND DIVERSION OF FUNDS FOR NON BUSINESS PURPOSE, DISMIS SED THIS GROUND OF APPEAL OF THE ASSESSEE. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE WAS CON SIDERED BY ITAT CHANDIGARH BENCH IN THE CASE OF M/S VALLABH STEELS LTD. (SUPRA) IN WHICH THE MATTER HAS BEEN RE MANDED TO THE ASSESSING OFFICER TO RE-DECIDE THE ISSUE AFR ESH. THE FINDINGS OF THE TRIBUNAL IN PARA 14 OF THIS O RDER ARE REPRODUCED AS UNDER : 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THE MATTER REQUIRES RE- CONSIDERATION AT THE LEVEL OF THE ASSESSING 9 OFFICER. THE ASSESSEE CLAIMED BEFORE THE AUTHORITIES BELOW THAT IT HAS SUFFICIENT FUNDS AVAILABLE OUT OF WHICH, INTEREST FREE FUNDS COULD BE GIVEN FOR BUSINESS EXPEDIENCY. THE CLAIM OF ASSESSEE WAS DISALLOWED BY FOLLOWING THE DECISION IN THE CASE OF ABHISHEK INDUSTRIES LTD. (SUPRA). IN THE RECENT DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HERO CYCLES P.LTD. (SUPRA), THE MATTER HAS BEEN CONSIDERED IN FAVOUR OF THE ASSESSEE BY CONSIDERING THE JUDGEMENT IN THE CASE OF ABHISHEK INDUSTRIES LTD. THEREFORE, IT WOULD BE APPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND TO RESTORE THE MATTER BACK TO ASSESSING OFFICER TO RE-DECIDE THIS ISSUE IN THE LIGHT OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HERO CYCLES P.LTD. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF DECISION IN THE CASE OF HERO CYCLES P. LTD. (SUPRA). THE ASSESSING OFFICER SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF T HE VIEW THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THE TRIBUNAL IN THE CASE OF M/S VALLABH ST EELS LTD. (SUPRA) IN WHICH THE MATTER HAS BEEN REMANDED TO THE ASSESSING OFFICER FOLLOWING THE JUDGEMENT OF THE SU PREME COURT IN THE CASE OF HERO CYCLES PVT. LTD. WE, FOL LOWING THE ORDER IN THE CASE OF M/S VALLABH STEELS LTD.(SU PRA), SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE T HIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTI ON TO RE- DECIDE THIS ISSUE IN THE LIGHT OF DECISION OF HON'B LE 10 SUPREME COURT IN THE CASE OF HERO CYCLES PVT. LTD. 63 TAXMAN.COM 308 IN WHICH JUDGEMENT IN THE CASE OF ABHISHEK INDUSTRIES LTD.9SUPRA) HAVE BEEN OVER0RULE D. THE ASSESSING OFFICER SHALL GIVE REASONABLE SUFFICI ENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9(I) THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 10. ON GROUND NO.3, THE ASSESSEE CHALLENGED THE ORD ERS OF AUTHORITIES BELOW IN TREATING THE AMOUNT OF SALE S TAX SUBSIDY AMOUNTING TO RS. 3.18 CR AS REVENUE RECEIPT AS AGAINST CLAIM OF ASSESSEE THAT SAME REPRESENTED CAP ITAL RECEIPT. IT IS NOTED IN THE IMPUGNED ORDER THAT AS SESSING OFFICER, IN THIS REGARD, OBSERVED THAT THE IMPUGNED AMOUNT OF SUBSIDY RECEIVED BY THE ASSESSEE WAS TREA TED AS REVENUE RECEIPT FOR PRECEDING ASSESSMENT YEAR 2004- 05 AND 2005-06 AND MATTER WAS PENDING WITH THE HIGH CO URT. 10(I) DURING THE APPELLATE PROCEEDINGS, THE ASSESSE E EXPLAINED THAT ADDITION WAS MADE ON ACCOUNT OF SALE S TAX SUBSIDY AMOUNTING TO RS.3.18 CR BY TREATING THE SAM E AS REVENUE RECEIPT. SIMILAR ADDITIONS WERE MADE DURIN G ASSESSMENT YEAR 2003-04 TO 2006-07. THE FIRST APPE AL OF THE ASSESSEE COMPANY AGAINST SUCH ADDITIONS IN THOS E YEARS HAS BEEN ALLOWED BY LD. CIT(APPEALS), NEW DEL HI AND SAME HAVE BEEN UPHELD BY ITAT DELHI BENCH. COPY OF THE ORDER OF THE TRIBUNAL WAS FILED BEFORE LD. CIT(APPE ALS). THE LD. CIT(APPEALS), CONSIDERING THE SAME NOTED TH AT THIS 11 ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY JURISDICTIONAL ITAT AND DEPARTMENTAL APPEAL IS PEND ING BEFORE HON'BLE HIGH COURT OF DELHI. HOWEVER, THE P RESENT JURISDICTION OF THE ASSESSEE LIES IN PUNJAB AND THE REFORE, ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY FOLL OWING DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S ABHISHEK INDUSTRIES LTD. 286 ITR 1 IN W HICH IT WAS HELD THAT SUBSIDY WAS REVENUE RECEIPT. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ITAT CHANDIGARH BENCH IN THE CASE OF M/S BHUSHAN LTD. AN D ORS. IN ITA 744/2006 VIDE ORDER DATED 16.06.2015 DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, CONSIDERING TH E SALES TAX SUBSIDY TO BE CAPITAL RECEIPT IN NATURE AND ACCORDINGLY, ALLOWED THE APPEALS OF THE ASSESSEE. COPY OF THE ORDER IS FILED AT PAGE 16-36 OF THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE PUN JAB GOVERNMENT SCHEME FOR SUBSIDY ON SALES TAX AND ELIGIBILITY CERTIFICATE ISSUED UNDER PUNJAB GOVERNM ENT SCHEME. HE HAS ALSO FILED COPY OF THE WEST BENGAL GOVT. SCHEME FOR SUBSIDY BY STATE WHICH ISSUE WAS INVOLVE D IN THE CASE OF M/S BHUSHAN LTD. (SUPRA). HE HAS FURTH ER SUBMITTED THAT IN ASSESSMENT YEAR 2003-04 TO 2005-0 6 IN CASE OF ASSESSEE, ITAT DELHI BENCH VIDE ORDER DATED 27.11.2009 DISMISSED THE DEPARTMENTAL APPEALS CONFI RMING SALES TAX SUBSIDY TO BE CAPITAL RECEIPT, COPY OF WH ICH IS FILED AT PAGE 86 TO 90. THE LD. COUNSEL FOR THE AS SESSEE, THEREFORE, SUBMITTED THAT ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE. 12 12. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF THE VIEW THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF BHUSH AN LTD. (ITA NO. 744/CHD/2006 & ORS). THE FINDINGS IN THIS ORDER IN PARA 20 TO 26 ARE REPRODUCED AS UNDER : 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS ADMITTED FACTS THAT THE CASE OF BOTH THE ASSESSEES FALL WITHIN THE SCHEME KNOWN AS WEST BENGAL INCENTIVE SCHEME, 1999, COPY OF THE SAME IS PLACED ON RECORD. IT PROVIDES THAT INCENTIVE SCHEME IS APPROVED BY THE GOVERNMENT OF WEST BENGAL FOR LARGE/MEDIUM AND SMALL SCALE INDUSTRIES. THE VARIOUS SALIENT FEATURES OF THIS INCENTIVE SCHEME PROVIDE THAT WHEREAS, THE GOVERNOR IS OF OPINION THAT IT IS NECESSARY AND EXPEDIENT TO EXTENT INCENT IVE FOR PROMOTION OF INDUSTRIES IN THIS STATE, THEREFO RE, GOVERNOR IS PLEASED HEREBY, IN SUPERCESSION OF 1993 SCHEME, SANCTIONED PRESENT INCENTIVE SCHEME. THE TITLE OF THE SCHEME IS CALLED THE WEST BENGAL INCENTIVE SCHEME, 1999 FOR INDUSTRIAL PROJECTS OF LARGE, MEDIUM AND SMALL SCALE UNITS TO BE SET UP IN THE STATE. 21. THE DEFINITION OF SMALL SCALE UNIT WOULD MEAN A UNIT HAVING INVESTMENT UPTO THE LIMIT AS PRESCRIBED BY THE GOVERNMENT OF INDIA FROM TIME TO TIME. THE DEFINITION OF NEW UNITS MEANS AN INDUSTRIAL UNIT IN THE LARGE/MEDIUM/SMALL SCALE SECTOR HAVING INVESTMENT IN FIXED CAPITAL ASSET WHICH IS ESTABLISHED AND COMMISSIONED BY THE ENTREPRENEUR FOR THE MANUFACTURE OF GOODS IN WEST BENGAL FOR FIRST TIME ON OR AFTER 01.04.1999 AND IS REGISTERED WITH THE DIRECTORATE OF INDUSTRIES/DIRECTORATE OF COTTAGE & SMALL SCALE 13 INDUSTRIES, AS THE CASE MAY BE. THE DEFINITION OF ELIGIBLE UNIT MEANS A UNIT IN THE LARGE/MEDIUM/SMALL SCALE SECTOR HAVING REGISTRATION CERTIFICATE ISSUED BY THE DIRECTORATE OF INDUSTRIES AND ELIGIBLE CERTIFICATE BY W.B.I.D.C. O R REGISTRATION CERTIFICATE ISSUED BY THE DISTRICT INDUSTRIES CENTRE, AS THE CASE MAY BE. THE EXPLANATION-I TO THE DEFINITION OF THE SCHEME AL SO PROVIDES THAT SUCH PROJECTS SHOULD BE COVERED BY APPROPRIATE APPROVAL UNDER THE INDUSTRIES ACT, 1951 OR A SECRETARIAT FOR INDUSTRIAL APPROVAL REFERENCE NUMBER OR APPROVAL BY ANY DIRECTORATE UNDER THE COTTAGE & SMALL SCALE INDUSTRIES DEPARTMENT, WEST BENGAL. THE DEFINITION OF FIXED CAPITAL INVESTMEN T MEANS INVESTMENT MADE IN THE LAND, BUILDING, PLANT & MACHINERY AND EQUIPMENT INSTALLED FOR THE POLLUTION CONTROL MEASURES OF THE APPROVED PROJECT UNDER THE SCHEME. THE EXPLANATION ALSO PROVIDES HOW THE FIXED CAPITAL INVESTMENT SHALL BE CALCULATED. THE APPLICABILITY OF 1999 SCHEME SHALL BE APPLICABLE TO ALL LARGE, MEDIUM COTTAGE AND SMALL SCALE PROJECT UNITS TO BE SET UP AND ALSO EXPANSION PROJECT OF THE EXISTING UNITS ON OR AFTER 01.01.1999. THE ELIGIBILITY CRITERIA FOR INCENTIVE UNDER THE 1999 SCHEME PROVIDES THAT INDUSTRIAL PROJECT TO WHICH THE SCHEME APPLIES, SHALL BE ELIGIBLE FOR SECURING ELIGIBILITY CERTIFICATE PROVI DED ; A) THE PROJECT IS COVERED BY A DETAILED FEASIBILITY REPORT/PROJECT REPORT PREPARED FOR THE PURPOSE; B) THE PROJECT HAS BEEN APPROVED AND SANCTIONED BY THE CENTRAL FINANCIAL INSTITUTION OR COMMERCIAL BANKS OR STATE FINANCIAL INSTITUTIONS, AS THE CASE MAY BE. IN THE CASE OF PROJECTS WITH ARRANGEMENT OF FINANCE FROM OWN RESOURCES, ISSUE OF ELIGIBILITY CERTIFICATE SHALL BE CONSIDERED PROVIDED THE WBIDC IS SATISFIED ABOUT THE ARRANGEMENT OF SUCH FINANCE. 14 22. IT FURTHER PROVIDES THAT ANY INDUSTRIAL UNIT IN THE SMALL SCALE SECTOR SHALL BE ELIGIBLE FOR INCENTIVES UNDER THIS SCHEME SUBJECT TO THE FULFILLMENT OF THE CONDITION THAT UNIT IS REGISTERE D WITH THE DISTRICT INDUSTRIES CENTRE. HOWEVER, IN RESPECT OF SUBSIDY OR INVESTMENT IN PLANT AND MACHINERY THE UNDERTAKING CONCERNED MAY BE PROVISIONALLY OR TEMPORARILY REGISTERED ON OR AFTER 01.04.1998 AND VALID REGISTRATION TO THAT EFFECT MAY BE ACCEPTED AND THE AMOUNT OF SUBSIDY SHALL BE JUDGED ON THE QUANTUM OF INVESTMENT IN THE PLANT AND MACHINERY AS SANCTIONED AND DISBURSED BY THE FINANCIAL AGENCY CONCERNED. THE SCHEME FURTHER PROVIDES CLASSIFICATION OF DEVELOPED AREAS AND BACKWARD AREAS. THE INCENTIVE WOULD BE AVAILABLE UNDER THE SCHEME FOR APPROVED PROJECTS ACCORDING TO THEIR LOCATION WHICH ARE CLASSIFIED IN GROUP A B AND C. IT IS PROVIDED THAT NO SUBSIDY SHALL BE GRANTED TO GROUP A (DEVELOPED AREA). THE SCHEME FURTHER PROVIDES THE SALES TAX DEFERMENT/REMISSION ON SALE OF FINISHED GOODS. A NEW UNIT FOR ITS APPROVED PROJECT SHALL BE ELIGIBLE FOR DEFERRED PAYMENT OF SALES TAX DUE FOR PAYMENT BY IT OR ALTERNATIVELY FOR REMISSION OF SALES TAX D UE TO PAYMENT BY IT FOR THE PERIOD AND SUBJECT TO CEILING AS IS REFERRED DEPENDING UPON LOCATION OF THE UNIT AND IN CASE OF THE ASSESSEE, IT IS REMISSION OF SALES TAX DUE FOR PAYMENT BY THE UNIT, PERCENTAGE CEILING IN TERMS OF GROSS VALUE OF FIXED CAPITAL ASSET OF THE APPROVED PROJECT. GROUP A WOULD NOT GET ANY BENEFIT. IT IS ALSO PROVIDED THAT A NEW UNIT FOR ITS APPROVED PROJECT OR AN EXISTING UNIT FOR ITS APPROVED EXPANSION PROJECT SHALL BE ENTITLED TO EXEMPTION OF SALES TAX PAYABLE ON RAW MATERIAL PURCHASED BY IT FOR ITS COMMERCIAL PRODUCTION FOR THE PERIOD MENTIONED IN THE LIST. 15 23. CONSIDERING THE ABOVE SALIENT FEATURES OF THE WEST BENGAL INCENTIVE SCHEME,1999 IT IS CLEAR THAT THE SCHEME WAS MEANT FOR INDUSTRIAL PROJECT TO BE SET UP IN THE STATE OF WEST BENGAL. THE NEW UNIT SHALL BE CONSIDERED ON THE BASIS OF INVESTMENT IN FIXED CAPITAL ASSET MEANT FOR MANUFACTURE OF GOODS IN WEST BENGAL FOR THE FIRST TIME AND IS REGISTERED WITH THE DIRECTORATE OF INDUSTRIES OR SMALL SCALE. THE ELIGIBLE UNIT SHALL HAVE TO GET CERTIFICATE FRO M THE DIRECTORATE OF INDUSTRIES AND ELIGIBILITY CERTIFICATE BY WBIDC. THE UNIT SHOULD HAVE MADE FIXED CAPITAL INVESTMENT IN LAND, BUILDING, PLANT A ND MACHINERY AND EQUIPMENT AND FORMULA IS GIVEN HOW TO CALCULATE THE FIXED CAPITAL INVESTMENT. THE CLASSIFICATION OF DEVELOPED AREA AND BACKWARD AREA IS GIVEN IN GROUP A B AND C. GROUP A WOULD NOT GET INCENTIVE BENEFITS BEING DEVELOPED AREA. SUBSIDY RECEIVED BY ASSESSEE FOR AREA-B UNIT MAY BE BACKWARD AREA. THEREFORE, SUBSIDY WOULD LINK TO CAPITAL ONLY. AS PER CERTIFICATE OF REGISTRATION UNDER WEST BENGAL INCENTIVE SCHEME, 1999 ISSUED BY DIRECTORATE OF INDUSTRIES, GOVT. OF WEST BENGAL IN THE CASE OF THE ASSESSEE, THE UNIT OF THE ASSESSEE IS LOCATED IN DISTRICT HOOGHLY WHICH FALLS IN GROUP B AND IS A NEW UNIT. THIS CERTIFICATE HAS TERMS AND CONDITIONS. NO. 9 IS RELEVANT WHICH READS, THE UN IT IS ELIGIBLE TO GET REMISSION OF SALES TAX ON SALE O F FINISHED GOODS AND EXEMPTION OF SALES TAX ON PURCHASE OF RAW MATERIAL FOR A PERIOD OF 12 YEARS I N THE SCALE OF 100% ON THE FIXED CAPITAL INVESTMENT WITHOUT ANY CAP. THUS, THE ASSESSEE WOULD BE ELIGIBLE FOR SALES TAX DEFERMENT/REMISSION ON SALE OF FINISHED GOODS ETC. AS PER THE SCHEME. THE ASSESSEE ALSO FILED LETTER FROM COMMERCE & INDUSTRIES DEPARTMENT DATED 31.12.1998 WHO HAVE CONSIDERED THE CASE OF ASSESSEE THROUGH HIGH POWERED COMMITTEE AND ASSESSEE HAS BEEN GRANTED 16 SALES TAX INCENTIVES IN THE SCALE OF 100% OF FIXED CAPITAL INVESTMENT FOR 12 YEARS ON SALE OF FINISHED GOODS AND ON PURCHASE OF RAW MATERIAL WITHOUT ANY CAP. THE WEST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION LTD. ALSO ISSUED AN ELIGIBILITY CERTIFICATE IN FAVOUR OF THE ASSESSEE UNDER THE INCENTIVE SCHEME THAT ASSESSEE WOULD GET REMISSION OF SALES TAX ON SALE OF FINISHED GOODS AN D EXEMPTION OF SALES TAX ON PURCHASE OF RAW MATERIAL FOR A PERIOD OF 12 YEARS IN THE SCALE OF 100% OF TH E FIXED CAPITAL INVESTMENT. THE COPY OF ELIGIBILITY CERTIFICATE UNDER THE SCHEME IS ALSO FILED WHICH ALSO PROVIDES THAT IN CASE THE INDUSTRIAL UNIT OF T HE ASSESSEE HAS FAILED TO TAKE EFFECTIVE STEPS FOR ESTABLISHMENT OF THE AFORESAID PROJECT WITHIN THE SPECIFIED PERIOD, THE VALIDITY OF CERTIFICATE WOULD NOT BE EXTENDED. THE CRUX OF THE ABOVE WEST BENGAL INCENTIVE SCHEME, 1999 THUS, PROVIDES THAT THE SCHEME IS DIRECTLY RELATED TO THE SETTING UP OF THE INDUSTRIAL UNITS/PROJECTS IN THE STATE OF WEST BENGAL, THE INDUSTRY SHOULD BE REGISTERED WITH THE DIRECTORATE OF INDUSTRIES WHICH IS IN THE CASE OF T HE ASSESSEE AND THE REQUIRED CERTIFICATE HAS BEEN OBTAINED. THE ELIGIBILITY CERTIFICATE SHALL HAVE T O BE ISSUED IN FAVOUR OF INDUSTRY/UNIT AND THE INVESTMENT SHALL BE CALCULATED WITH REFERENCE TO FIXED CAPITAL INVESTMENT AND THE INCENTIVE/SUBSIDY SHALL HAVE TO BE GRANTED OUT OF THE SALES TAX. THU S, THE ASSESSEE HAS FULFILLED ALL THE REQUIREMENTS UNDER THE WEST BENGAL INCENTIVE SCHEME, 1999 AND ONLY ON FULFILLING THE CONDITIONS OF THE SCHEME, TH E DIRECTORATE OF INDUSTRIES ISSUED CERTIFICATE OF REGISTRATION AND THE WEST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION LTD. ISSUED AN ELIGIBILITY CERTIFICATE UNDER THE SCHEME IN FAVOUR OF THE ASSESSEE. 17 24. THE HON'BLE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICALS LTD. (SUPRA) CONSIDERING ITS EARLIER DECISION IN THE CASE OF SAHNEY STEELS & PRESS WORKS LTD.(SUPRA) DIRECTED THAT THE TEST IS THAT THE CHARACTER OF THE RECEIPT IN THE HANDS OF ASSESSEE HAS TO BE DETERMINED WITH RESPECT TO THE PURPOSE FOR WHICH SUBSIDY IS GIVEN. IN OTHER WORDS , IN SUCH CASES, ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TIME AT WHICH SUBSIDY IS PAID, IS NOT RELEVANT. THE SOURCE IS IMMATERIAL. THE FORM OF SUBSIDY IS IMMATERIAL. 25. CONSIDERING THE FACTS OF THE CASE AND THE WEST BENGAL INCENTIVE SCHEME, 1999 IN THE LIGHT OF THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICALS LTD. (SUPRA), IT IS CLE AR THAT THE UNIT OF ASSESSEE WAS SET UP AS PER SCHEME FORMULATED BY GOVERNMENT OF WEST BENGAL AND ASSESSEE HAS BEEN ALLOWED REMISSION OF SALES TAX FOR 12 YEARS UPTO 100% OF GROSS FIXED CAPITAL INVESTMENT/ASSET OF THE APPROVED PROJECT. THE INCENTIVE SCHEME WAS AVAILABLE FOR LOCATION OF THE UNIT. NO INCENTIVE IS AVAILABLE TO UNITS LOCATED I N GROUP A. THE UNIT OF ASSESSEE IS LOCATED IN GROU P B (HOOGHLY). THE SUBSIDY WOULD HELP THE GROWTH OF INDUSTRY AND NOT TO SUPPLEMENT PROFIT. SUBSIDY IS DETERMINED WITH REFERENCE TO THE FIXED CAPITAL INVESTMENT/ASSET AND NOT PROFIT. NO WORKING CAPITAL IS CONSIDERED IN THE SCHEME. THE LD. DR SAYS THAT THE SUBSIDY IS GIVEN FOR 12 YEARS AFTER PRODUCTION AND AS SUCH IT IS REVENUE IN NATURE. TH E ARGUMENTS OF LD. DR CANNOT BE ACCEPTED IN VIEW OF THE ABOVE FACTS BECAUSE THE SCHEME IS MADE TO ENCOURAGE THE PROMOTION OF INDUSTRIES/SETTING UP IN THE STATE OF WEST BENGAL. THE INCENTIVES ARE PROVIDED TO APPROVED PROJECTS ONLY. THE PURPOSE OF GIVING SUBSIDY IS THUS, TO PROMOTE AND SET UP INDUSTRIES IN STATE OF WEST BENGAL. THE ELIGIBILIT Y 18 CERTIFICATE WAS ISSUED BEFORE COMMENCEMENT OF PRODUCTION, THEREFORE SUBSIDY BASED ON FIXED CAPITA L INVESTMENT. THE TIME OF 12 YEARS AFTER COMMENCEMENT OF THE PRODUCTION IS NOT RELEVANT. THE SOURCE OF SUBSIDY OUT OF SALES TAX IS IMMATERIAL. THE FORM OF SUBSIDY IS ALSO NOT RELEVANT. THE OBJECT/PURPOSE OF ASSISTANCE UNDER THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO SET UP NEW UNIT IN STATE OF WEST BENGAL. THEREFORE , THE RECEIPT OF THE SALES TAX SUBSIDY IN THE HANDS O F ASSESSEE WAS CAPITAL IN NATURE. THE DECISIONS RELIED ON BY LD. DR WOULD NOT SUPPORT THE CASE OF THE REVENUE. THE DECISION CITED BY LD. COUNSEL FOR THE ASSESSEE CLEARLY SUPPORT THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE THAT THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE ARE CAPITAL IN NATURE. WE MAY ALSO NOTE HERE THAT THE SAME SCHEME UNDER WEST BENGAL INCENTIVE SCHEME, 1999 UNDER REFERENCE WAS SUBJECT MATTER OF CONSIDERATION BEFORE ITAT KOLKATTA BENCH IN THE CASE OF KEVENTER AGRO LTD. (SUPRA) AND THE TRIBUNAL ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE WEST BENGAL INCENTIVE SCHEME, 1999 CATEGORICALLY ENCOURAGE THE PROMOTION OF INDUSTRIES IN THE STATE OF WEST BENGAL. 26. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICALS LTD. (SUPRA) AND CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE IS CAPITAL RECEIPT IN NATURE AND ARE NOT SUBJECTED TO TAX. THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RECEIPT OF SALES TAX SUBSIDY ARE ACCORDINGLY DELETED IN ALL THE ASSESSMENT YEARS IN APPEALS. THE ISSUE REMANDED TO THE TRIBUNAL IS THUS, DECIDED 19 IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN ALL THE APPEALS UNDER REFERENCE. 13. THE LD. COUNSEL FOR THE ASSESSEE HAS DEMONSTRAT ED THAT THE SCHEME WHICH IS CONSIDERED IN THE CASE OF M/S BHUSHAN LTD. IS SAME AS HAVE BEEN CONSIDERED IN THE CASE OF THE PRESENT ASSESSEE. THE LD. COUNSEL FOR THE A SSESSEE FILED THE ORDER OF ITAT CHANDIGARH BENCH IN THE CAS E OF M/S TRIDENT ALCO CHEM LTD. ETC. DATED 29.10.2015 IN ITA 26/1999 ETC. IN WHICH THE SALE TAX SUBSIDY RECEIVED BY ASSESSEE FROM PUNJAB GOVERNMENT IS CONSIDERED AND I SSUE HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY FOLL OWING DECISION IN THE CASE OF M/S BHUSHAN LTD. (SUPRA), T HE COPY OF THE ORDER IS PLACED ON RECORD. 13(I) IT MAY ALSO BE NOTED HERE THAT IN PRECEDING ASSESSMENT YEARS IN THE CASE OF THE SAME ASSESSEE, ITAT DELHI BENCH HAS DISMISSED THE DEPARTMENTAL APPEALS BY HOLDING THAT THE SALES TAX SUBSIDY TO BE CAPITAL RE CEIPT IN NATURE. IT MAY BE NOTED HERE THAT IN THE GROUP CAS ES OF M/S BHUSHAN LTD. (SUPRA) HON'BLE PUNJAB & HARYANA H IGH COURT REMANDED THE MATTERS TO THE FILE OF TRIBUNAL FOR RE- DECIDING THE SAME. MAIN ORDER WAS PASSED IN THE CA SE OF M/S VARDHMAN ACRYLIC LTD. VS CIT, LUDHIANA & ORS. THE PARTIES IN THESE CASES SUBMITTED THAT THOUGH IN THE CASE OF ABHISHEK INDUSTRIES 286 ITR 1, SALES TAX SUBSIDY HA S BEEN HELD TO BE REVENUE RECEIPT, BUT HON'BLE SUPREME COU RT HAS, WHILE DECIDING THE NATURE OF SALES TAX SUBSIDY , HELD 20 IN 306 ITR 392 PONNI SUGARS & CHEMICALS LTD. THAT IT IS THE NATURE AND PURPOSE OF SUBSIDY THAT WOULD DETERM INE WHETHER IT IS CAPITAL OR REVENUE RECEIPT CLARIFYING THAT SALES TAX SUBSIDY SHALL BE REVENUE RECEIPT DEPENDIN G UPON ITS NATURE AND PURPOSE. THEREFORE, ISSUE WAS CONS IDERED IN DETAIL IN THE LIGHT OF NATURE AND PURPOSE OF THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE AND IT WAS HEL D THAT SALES TAX SUBSIDY RECEIVED BY ASSESSEE IS CAPITAL R ECEIPT IN NATURE AND ARE NOT SUBJECTED TO TAX. 14. THE LD. DR DID NOT CONTRADICT THE SUBMISSIONS O F THE LD. COUNSEL FOR THE ASSESSEE AND NO DISTINCTION HAV E BEEN BROUGHT OUT IN THE WEST BENGAL INCENTIVE SCHEME CONSIDERED IN THE CASE OF M/S BHUSHAN LTD. (SUPRA) AND THE PUNJAB GOVERNMENT SCHEME CONSIDERED IN THE CASE OF THE ASSESSEE. THEREFORE, WE FIND THAT ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF M/S BHUSHAN LTD. (SUPRA). FURTHER T HE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT DELHI BENCH IN ITS OWN CASE. THEREFORE, WE SE T ASIDE THE ORDERS OF AUTHORITIES BELOW AND HOLD THAT SALES TAX SUBSIDY IS IN THE NATURE OF CAPITAL RECEIPT AND IS NOT SUBJECTED TO TAX. THIS GROUND OF APPEAL OF THE ASS ESSEE IS, ACCORDINGLY, ALLOWED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, AS INDICATED ABOVE. 21 DEPARTMENTAL APPEAL 16. ON GROUND NO.1, REVENUE CHALLENGED THE DISALLOWANCE MADE OUT OF DIRECTORS TRAVELING EXPEN SES. THE ASSESSING OFFICER TREATED 20% OF EXPENSES DEBIT ED UNDER THE HEAD DIRECTORS TRAVELING AS BEING NON- BUSINESS PURPOSES. THE ASSESSING OFFICER, IN THIS REGARD HAS HIGHLIGHTED A RESOLUTION AUTHORIZING THE DIRECT ORS TO TAKE THEIR SPOUSE ALONGWITH THEM ON THEIR BUSINESS TRIP AND ACCORDING TO THE ASSESSING OFFICER, THIS MEANS THAT CERTAIN PORTION OF TRAVELING EXPENSES WERE ATTRIBUT ABLE TO THE TRAVELING DONE BY THE SPOUSE AND THEREFORE, DIS ALLOWED THE PART OF TRAVELING EXPENSES. 17. IT WAS SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC ITEM OF TRAVELING EXPENSES BEING PERSONAL IN NATURE. THE A SSESSEE SUBMITTED COMPLETE DETAILS TO PROVE THAT EXPENSES W ERE INCURRED FOR THE PURPOSE OF BUSINESS ONLY AND COMPA NY HAS PASSED THE RESOLUTION AUTHORIZING THE DIRECTORS TO TAKE THEIR SPOUSE ALONGWITH THEM ON BUSINESS TRIP. FURTHER, ASSESSEE COMPANY IS LIABLE TO MAKE PAYMENT OF FRINGE BENEFIT TAX WHICH HAS ALSO NOT BEEN CONSIDER ED BY THE ASSESSING OFFICER. THE LD. CIT(APPEALS) ACCEPTE D THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION . 18. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET , SUBMITTED THAT THIS ISSUE IS COVERED BY ORDER OF IT AT CHANDIGARH BENCH IN THE CASE OF M/S VALLABH STEELS 22 LTD. (SUPRA) IN WHICH IN PARA 23, THE DEPARTMENTAL APPEAL ON IDENTICAL ISSUE HAVE BEEN DISMISSED. PARA 23 OF THE ORDER IS REPRODUCED AS UNDER : 23. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE DEPARTMENTAL APPEAL. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC ITEM OUT OF TRAVELING EXPENSES TO PROVE IF THE SAME EXPENSES WERE INCURRED FOR PERSONAL PURPOSES. THE ASSESSEE IS A COMPANY AND LEGAL ENTITY AND COULD NOT HAVE UNDERTAKEN ANY PERSONAL EXPENDITURE. IT, THEREFORE, APPEARS TO BE ADHOC ADDITION WHICH HAVE BEEN RIGHTLY DELETED BY THE LD. CIT(APPEALS). THESE GROUNDS OF APPEAL OF DEPARTMENTAL APPEALS HAVE NO MERIT, SAME ARE ACCORDINGLY DISMISSED. 19. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. IDENTICAL GROUND HAS BEEN CONSIDERED IN THE CASE OF M/S VALLABH STEELS LTD. (SUPRA) IN WHICH THE TRIBUNAL H AS DISMISSED DEPARTMENTAL APPEAL. FOLLOWING THE SAME REASON FOR THIS ISSUE, WE DISMISS THIS GROUND OF AP PEAL OF THE REVENUE. 20. ON GROUND NOS. 2 AND 3, REVENUE CHALLENGED THE DELETION OF ADDITION ON ACCOUNT OF UNDER STATEMENT OF INVESTMENT IN PURCHASE OF LAND. 21. BRIEFLY FACTS OF THE CASE ARE THAT ASSESSING OF FICER MADE ADDITION OF RS. 3.68 CR ON ACCOUNT OF ALLEGED UNDER- 23 STATEMENT IN THE PURCHASE OF LAND BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY ALONGWITH ITS ASSOCI ATE GROUP ENTITIES NAMELY M/S VALLABH STEELS LTD., M/S VARDHMAN INDUSTRIES LTD., M/S ADINATH INVESTMENTS P .LTD. AND M/S ASSOCIATE LEASING LTD. HAD PURCHASED AGRICU LTURE LAND NEAR CHANDIGARH, MOSTLY IN SUB TEHSIL MAJRI OF MOHALI DISTRICT. THE VALUE OF THE LAND PURCHASED S HOWN IN THE BALANCE SHEET BY VARIOUS GROUP CONCERNS ARE NOT ED IN THE IMPUGNED ORDER. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS REFERRED TO CERTAIN DOCUMENTS WHICH HAD BEEN FOUND AND SEIZED DURING SEARCH OPERATION I N THE CASE OF THE ASSESSEE COMPANY WHICH REVEALED TOTAL L AND PURCHASED BY THEM. POST SEARCH INVESTMENT CARRIED OUT BY THE INVESTIGATION WING LED TO RECORDING OF STATEMEN TS OF 31 PERSONS WHO HAD SOLD THEIR LAND TO THE ASSESSEE COM PANY. ALL THE 31 PERSONS WHOSE STATEMENTS WERE RECORDED B Y INVESTIGATION WING STATED TO HAVE RECEIVED AMOUNTS OVER AND ABOVE THE FIGURE RECORDED IN THE REGISTRATION D EED. THE ASSESSING OFFICER, DURING ASSESSMENT PROCEEDING S, ALLOWED OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMIN E THE PERSONS WHO HAD GIVEN THE STATEMENTS AGAINST THE ASSESSEE. THE CROSS-EXAMINATION OF ONLY 23 PERSONS COULD BE CARRIED OUT AS THE REST OF THEM ( 8 PERSONS) EIT HER WERE NOT AVAILABLE OR HAD EXPIRED. THE CROSS-EXAMINATION CARRIED OUT BY THE ASSESSEE COMPANY BROUGHT ON RECO RD RETRACTION ON THE PART OF ALL THE PERSONS WHO HAD O RIGINALLY STATED TO HAVE RECEIVED AMOUNTS IN EXCESS OF THE REGISTRATION AMOUNT. THE ASSESSING OFFICER, CONSID ERING 24 STATEMENTS MADE BY THE SELLERS BEFORE INVESTIGATION WING CONCLUDED THAT THERE WAS UNDER STATEMENT OF INVESTM ENT TO THE TUNE OF RS. 3.68 CR. 22. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS). THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE APPELLATE ORDER. IT WAS EXPLAINE D THAT ONLY 23 PERSONS WERE PRODUCED FOR CROSS-EXAMINATION AND THEY HAVE CATEGORICALLY STATED THAT THEY DID NOT RE CEIVE ANY AMOUNT OVER AND ABOVE THE AMOUNT REFLECTED IN T HE REGISTRATION DEEDS. OTHER PERSONS COULD NOT BE PRO DUCED, THEREFORE, THEIR STATEMENTS CANNOT BE READ IN EVIDE NCE. THERE WAS NO EVIDENCE OR MATERIAL AVAILABLE ON RECO RD TO PROVE ANY AMOUNT PAID OVER AND ABOVE WHAT IS STATED IN THE REGISTRATION DEEDS. DURING THE COURSE OF SEARC H, NO INCRIMINATING MATERIALS WERE FOUND AGAINST THE ASSE SSEE FOR MAKING ANY PAYMENT OVER AND ABOVE WHAT IS RECOR DED IN THE SALE DEEDS. 22(I) THE LD. CIT(APPEALS) ACCEPTED THE CONTENTI ON OF THE ASSESSEE AND FOUND THERE WAS NO EVIDENCE AGAINST TH E ASSESSEE IN RESPECT OF ANY DEAL MADE WITH THE SELLE RS FOR GIVING ANY AMOUNT OVER AND OVER WHAT IS RECORDED IN THE SALE DEEDS AND ACCORDINGLY, DELETED THE ADDITION. 23. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE WAS CONSIDERED IN THE GROUP ASSOCIA TE CASE OF M/S VALLABH STEELS LTD. (SUPRA) IN WHICH ON IDEN TICAL FACTS, DEPARTMENTAL APPEAL HAVE BEEN DISMISSED BY T HE 25 TRIBUNAL. THE FINDINGS OF THE TRIBUNAL IN PARA 3 0 TO 33 OF THIS ORDER ARE REPRODUCED AS UNDER : 30. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS ADMITTED FACT THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND TO PROVE THAT ASSESSEE PAID ANY MONEY OVER AND ABOVE WHAT IS RECORDED IN THE REGISTERED SALE DEEDS. THE ADIT (INVESTIGATION) SUBSEQUENTLY IN POST SEARCH ENQUIRIES RECORDED THE STATEMENTS OF 31 PERSONS/SELLERS IN WHICH THEY HAVE ALLEGED TO HAVE STATED THAT THEY HAVE RECEIVED HIGHER AMOUNT ON ACCOUNT OF SALE CONSIDERATION. HOWEVER, SUCH STATEMENTS RECORDED AT THE BACK OF THE ASSESSEE. THEREFORE, SAME WOULD NOT BE ADMISSIBLE IN EVIDENCE AGAINST THE ASSESSEE UNLESS THE SAME WERE CONFRONTED TO THE ASSESSEE AND SUBJECTED TO CROSS-EXAMINE ON BEHALF OF THE ASSESSEE. THE ASSESSING OFFICER, HOWEVER, AT THE ASSESSMENT STAGE PRODUCED 23 PERSONS/SELLERS FOR CROSS-EXAMINATION ON BEHALF OF THE ASSESSEE. THE REMAINING EIGHT PERSONS COULD NOT BE PRODUCED BECAUSE EITHER THEY WERE NOT AVAILABLE OR HAD EXPIRED. THEREFORE, THE INITIAL STATEMENTS OF THESE 8 PERSONS CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. WE RELY UPON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELA RAM VS CIT 125 ITR 713. FURTHER, NO REGISTRATION DEED HAS BEEN DONE BELOW THE CIRCLE RATE AND SINCE NO MATERIAL WAS FOUND AGAINST THE ASSESSEE DURING THE COURSE OF SEARCH THAT ASSESSEE PAID ANY AMOUNT TO THE SELLERS OF THE LAND OVER AND ABOVE THE AMOUNT REFLECTED IN THE REGISTERED SALE DEEDS, THEREFORE, THE THEORY OF THE ASSESSING OFFICER WAS ENTIRELY DEPENDANT UPON THE INITIAL STATEMENTS RECORDED BY THE ADIT. IT IS INTERESTING TO NOTE HERE THAT WHEN 23 26 PERSONS WERE PRODUCED AT THE ASSESSMENT STAGE FOR CROSS-EXAMINATION ON BEHALF OF THE ASSESSEE, ALL THESE PERSONS/SELLERS RESILED FROM EARLIER INITIAL STATEMENTS MADE TO THE ADIT AND DID NOT SUPPORT CASE OF THE REVENUE THAT THEY HAVE RECEIVED ANY AMOUNT OVER AND ABOVE WHAT IS RECORDED IN THE REGISTERED SALE DEEDS. THEY HAVE RETRACTED FROM THEIR INITIAL STATEMENTS AND HAVE AFFIRMED THE CASE OF THE ASSESSEE THAT WHATEVER SALE CONSIDERATION WAS RECORDED IN THE REGISTERED SALE DEEDS, HAVE BEEN RECEIVED BY THEM. THEREFORE, NOTHING WAS LEFT FOR THE REVENUE TO MAKE ANY ADDITION AGAINST THE ASSESSEE. THE INITIAL STATEMENT, AT THE MOST, COULD BE SAID TO BE THE EXAMINATION-IN-CHIEF OF THESE WITNESSES WHICH HAVE RESILED IN CROSS-EXAMINATION, THEREFORE, THE ENTIRE STATEMENTS OF THESE 23 PERSONS SHALL HAVE TO BE CONSIDERED IN ENTIRETY WHICH CLEARLY SUGGEST THAT THERE WERE NO EVIDENCES AVAILABLE WITH THE ASSESSING OFFICER TO PROVE THAT ASSESSEE HAS PAID ANY EXTRA AMOUNT TO THESE SELLERS. IN THESE CIRCUMSTANCES, NO ORAL EVIDENCE I.E. INITIAL STATEMENT IS ADMISSIBLE ONCE THE DETAILS OF SALE CONSIDERATION ARE RECORDED IN THE REGISTERED SALE DEEDS. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARAMJIT SINGH V ITO (SUPRA)HELD AS UNDER : IT IS A WELL KNOWN PRINCIPLE THAT NO ORAL EVIDENCE IS ADMISSIBLE ONCE THE DOCUMENTS CONTAIN ALL THE TERMS AND CONDITIONS. SECTIONS 91 AND 92 OF THE INDIAN EVIDENCE ACT, 1872 INCORPORATE THE PRINCIPLE. THE TRIBUNAL HELD THAT THE OSTENSIBLE SALE CONSIDERATION OF THE LAND DISCLOSED IN THE REGISTERED SALE DEED DATED SEPTEMBER 24, 2002 ADDED TO THE INCOME OF THE ASSESSEE. 27 THE TRIBUNAL DISREGARDED THE STATEMENT MADE ON AFFIDAVIT BY THE VENDORS WHO WERE THE UNCLES OF THE ASSESSEE. THEY HAD STATED THAT NO SALE CONSIDERATION HAD PASSED HANDS AND THEY HAD RELINQUISHED THEIR SHARE IN THE LANDED PROPERTY. THE OBJECT OF EXECUTING THE SALE DEED WAS ONLY TO HAND OVER LANDED PROPERTY TO THE ASSESSEE. ON APPEAL TO THE HIGH COURT : HELD, DISMISSING THE APPEAL, THAT THE OSTENSIBLE SALE CONSIDERATION DISCLOSED IN THE SALE DEED DATED SEPTEMBER 24, 2002, HAD TO BE ACCEPTED AND IT COULD NOT BE CONTRADICTED BY ADDUCING ANY ORAL EVIDENCE. THEREFORE, THE ORDER OF THE TRIBUNAL DID NOT SUFFER FROM ANY LEGAL INFIRMITY. THE AMOUNT SHOWN IN THE REGISTERED SALE DEED WAS RECEIVED BY THE VENDORS AND DESERVED TO BE ADDED TO THE GROSS INCOME OF THE ASSESSEE. 31. THE ITAT CHANDIGARH BENCH IN THE CASE OF RAJDEEP BUILDERS V ACIT 52 SOT 62 IN PARA 9 TO 11 OF THE ORDER HELD AS UNDER : 9. IN THE PRESENT CASE, THE AO AS WELL AS THE CIT(A), PROCEEDED TO DRAW INFERENCES AGAINST THE ASSESSEE, ON THE BASIS OF INVALID STATEMENT OF SHRI SUBHASH SHARMA, WHICH WAS RECORDED ON 3.9.2004, IGNORING THE RETRACTION MADE BY HIM IN THE CROSS- EXAMINATION, CONDUCTED ON 7.11.2006. IT IS, FURTHER CONSEQUENT TO HIGHLIGHT THAT BOTH THE AO AND CIT(A), COMPLETELY DISREGARDED THE SALE DEED, EXECUTED BY THE PARTIES VOLUNTARILY, WHICH CONTAINS RS.9 LACS AS SALE CONSIDERATION. AS DISCUSSED ABOVE, 28 ORAL EVIDENCES CANNOT DISPLACE THE DIRECT DOCUMENTARY EVIDENCE, IN THE SHAPE OF SALE DEED CONTAINING SPECIFIC SALE CONSIDERATION OF RS. 9 LACS. THIS VIEW IS DULY SUPPORTED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PARAMJIT SINGH (SUPRA), CHANDNI BHOCHAR. 9(1) THE QUESTION IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT V SMT. K.C.AGNES & OTHERS (2003) 262 ITR 354 (KERALA), WHEREIN THE HON'BLE HIGH COURT HELD THAT WHEN A DOCUMENT SHOWS FIXED PRICE, THERE WILL BE A PRESUMPTION THAT, THAT IS CORRECT PRICE AGREED UPON BY THE PARTIES. IT IS NOT NECESSARY THAT THE PRICE STATED IN THE AGREEMENT WILL BE THE PRICE SHOWN IN THE SALE DEED. SOMETIMES, IT MY BE HIGHER AND SOMETIMES IT MAY BE LOWER. SOMETIMES, INTENTIONALLY A LESSER VALUE MAY BE SHOWN IN THE SALE DEED. EVEN IF IT IS ASSUMED TO BE SO, UNLESS IT IS PROVED THAT THE AGREEMENT WAS ACTED UPON AND UNLESS THE AMOUNT STATED IN THE AGREEMENT WAS PAID FOR SALE, THE COURT CANNOT COME TO THE CONCLUSION THAT THE PRICE MENTIONED IN THE SALE DEED IS NOT CORRECT. IN THIS CASE, APPEAL OF THE REVENUE WAS DISMISSED. IT IS SEEN THAT THE HON'BLE HIGH COURT HAS GONE A STEP AHEAD AND EVEN CONSIDERED THE EXISTENCE OF BOTH THE AGREEMENT TO SELL AND THE SALE DEED AND UPHELD THE VALIDITY AND SANCTITY OF THE SALE DEED. 29 10. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSIONS AND HAVING REGARD TO THE DIRECT DECISIONS OF THE HON'BLE TRIBUNALS, INCLUDING THAT OF CHANDIGARH TRIBUNAL, VARIOUS HIGH COURTS AND THE HON'BLE SUPREME COURT, IN THE MATTER, WE HOLD THAT THE SALE CONSIDERATION SPECIFIED IN THE IMPUGNED SALE DEED CANNOT BE SUBSTITUTED, ON THE BASIS OF MERE ORAL EVIDENCES. THEREFORE, THE IMPUGNED ADDITION UPHELD BY THE CIT(A), IS DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 32. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO DEMONSTRATED DURING THE COURSE OF ARGUMENTS THAT IN THE SAME AREA, SALE CONSIDERATION WAS SAME AS HAVE BEEN RECORDED IN THE REGISTERED SALE DEEDS ON WHICH NO ADVERSE COMMENTS HAVE BEEN OFFERED. SINCE NO EVIDENCE WAS FOUND AGAINST THE ASSESSEE AT ANY STAGE REGARDING CASH PAID OVER AND ABOVE THE SALE CONSIDERATION RECORDED IN THE SALE DEED, LD. CIT(APPEALS) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD WAS JUSTIFIED IN DELETING THE ADDITION. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT ONUS CAST UPON THE REVENUE TO PROVE THAT SALE CONSIDERATION AS RECORDED IN THE REGISTERED SALE DEED WAS NOT REAL, HAS NOT BEEN DISCHARGED EVEN IN RESPECT OF LAND DEALS ENTERED INTO BY 31 SELLERS. SINCE, THERE IS NO EVIDENCE ON RECORD IN RESPECT OF DEALS WITH 31 SELLERS TO SUBSTITUTE PERCEIVED MARKET RATE FOR REGISTERED SALE PRICE, THE OBSERVATION MADE BY THE ASSESSING OFFICER IN RESPECT OF OTHER DEALS WOULD NOT SURVIVE. 30 33. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW LD. CIT(APPEALS) CORRECTLY APPRECIATED THE FACTS AND MATERIAL ON RECORD AND RIGHTLY DELETED THE ADDITION IN ALL THE THREE YEARS. NO INFIRMITY HAVE BEEN POINTED OUT IN THE ORDERS OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION. THEREFORE, WE DO NOT FIND ANY MERIT IN DEPARTMENTAL APPEALS ON THIS ISSUE. THE SAME ARE THEREFORE, DISMISSED. 24. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF THE VIEW THE ISSUE IS COVERED BY ORDER OF ITAT CHANDIGA RH IN THE CASE OF M/S VALLABH STEELS LTD. (SUPRA) IN WHIC H DEPARTMENTAL APPEAL HAVE BEEN DISMISSED ON IDENTICA L FACTS. FOLLOWING THE REASON FOR DECISION IN THE SA ME, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 25. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . 26. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAIN I) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH MAY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD