M/s Silvassa Bottling Co., Silvassa V. The Income Tax Officer, Vapi Circle, Vapi

ITA 740/SRT/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1828 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Revenue expenditure
• Section: 32; 37; 263; 43B; 37(1); 195

Judgement Text

SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO.740/SRT/2018: ASSESSMENT YEAR: 2011-12 SILVASSA BOTTLING CO., SURVEY NO. 131/1, SHED NO. A, KHANVEL SILVASSA MAIN ROAD NEAR GLOBAL HEALTH CARE DAPADA , SILVASSA PAN: AAFNS 7444P VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -VAPI APPELLANT RESPONDENT ASSESSEE BY SHRI DEEPAK CHOPRA , ADVOCATE REVENUE BY SHRI PRASOON KABRA, SR. D.R. DATE OF HEARING 27.02.2019 DATE OF PRONOUNCEMENT 28.02.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-, VALSAD (IN SHORT THE CIT (A)) DATED 28.09.2018 PERTAINING TO ASSESSMENT YEAR 2011-12, WHICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) READ WITH SECTION 263 DATED 27.1.22016 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -VAPI (IN SHORT THE AO). 2. GROUND NO. 1 TO 4 ARE AGAINST THE ORDER UNDER SECTION 263 PASSED BY THE PR. COMMISSIONER OF INCOME TAX- VALSAD. HOWEVER, THE APPEAL HAS BEEN FILED AGAINST THE ORDER OF CIT (A)-VALSAD WHICH IN TURN ARISES FROM CONSEQUENTIAL ASSESSMENT ORDER PASSED BY THE AO. THEREFORE, THESE GROUNDS OF APPEAL DOES NOT ARISE FROM THE PRESENT APPEAL ORDER OF LD. CIT (A). HENCE, THESE GROUNDS OF APPEALS ARE THEREFORE, DOES NOT REQUIRE ANY ADJUDICATION HENCE, TREATED AS DISMISSED. SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 2 OF 8 3. GROUND NO. 5 TO 8 STATES THAT LD. CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING LOSS OF RS. 45,12,520 ON ACCOUNT OF BREAKAGE OF BOTTLES AND CRATES WITHOUT APPRECIATING THAT THE SAME HAS BEEN DISCARDED / DESTROYED AND WRITTEN OFF IN THE BOOKS OF ACCOUNTS IN TERMS OF PROVISO TO SECTION 32(1)(III) OF THE ACT. THE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS BEEN REGULARLY FOLLOWING PRACTICE INCLUDING THE VALUE OF BOTTLES & CRATES PURCHASED AS PART OF BLOCK OF ASSETS IN TERMS OF ACTUAL LOSS ON ACCOUNT OF BREAKAGE OF BOTTLES & CRATES AND WDV VALUE OF BLOCK OF ASSETS IS REDUCED TO THE EXTENT OF FALLING SHORT ON ACCOUNT OF SUCH DEMOLITION/ DESTRUCTION. WITHOUT PREJUDICE TO THE CIT (A) NOT APPRECIATED THAT BOTTLES & CRATES WERE PURCHASED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THE LOSS ON ACCOUNT OF BREAKAGE IS INEXTRICABLY LINKED TO THE ACTIVITY OF CARRYING OUT OF BUSINESS IN ITS NORMAL COURSE, WHICH OUGHT TO HAVE ALLOWED UNDER SECTION 37(1) OF THE ACT. GROUND NO. 8 STATES THAT WITHOUT PREJUDICE, IN THE EVENT CLAIM OF DEDUCTION OF RS. 45,12,520 WAS NOT ALLOWABLE THEN THE SAME WOULD FORM PART OF BLOCK OF ASSETS AS BOTTLES & CRATES BEING PLANTS AND MACHINERY AND WOULD BE ELIGIBLE FOR DEPRECIATION. 4. THE AO NOTED THAT THE ASSESSEE HAS STATED IN HIS SUBMISSIONS THAT IT HAS WRITTEN OFF RS. 45,12,520 AGAINST BOTTLES AND CRATES BREAKAGES DURING HANDLING / LOST IN THE MARKET AND THE GLASS BOTTLE SUBJECT TO BREAKAGE IN SOFT DRINK INDUSTRIES AND IT IS UNAVOIDABLE. THEREFORE, IT IS REVENUE EXPENDITURE. HOWEVER, THE AO WAS OF THE VIEW THAT THE REVENUE EXPENDITURE IS CHARGED AGAINST OPERATION AND INCURRED IN DAY TO DAY RUNNING OF BUSINESS IN THE NORMAL COURSE OF BUSINESS. THE AO OBSERVED THAT THE GLASS BOTTLES & CRATES FORMED PART OF BLOCK OF ASSETS ON WHICH DEPRECIATION HAS BEEN REGULARLY CLAIMED. SO THE REDUCTION IN THE BLOCK OF ASSETS EITHER DUE TO SALE OF DUE TO LOSS /DAMAGE SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 3 OF 8 ETC. WOULD RESULT IN REDUCING THE WDV OF SUCH BLOCK OF ASSETS. FURTHER, BLOCK OF ASSETS OF BOTTLES & CRATES HAS NOT ENTIRELY CEASED TO EXIST DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2011-12. THEREFORE, DEBITING THE PROFIT & LOSS ACCOUNT WITH AMOUNT OF BREAKAGE IS NOT PROPER ACCOUNTING TREATMENT. THEREFORE, THE AO DISALLOWED THE AMOUNT OF RS. 45,12,520 UNDER SECTION 37 (1) OF THE ACT. 5. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). WHEREIN IT WAS CONTENDED THAT THE PLASTIC CRATES WERE TOTALLY DESTROYED AND BECOME UNUSABLE IN THE BUSINESS AND THE BOTTLES BECAME SUBJECT TO BREAKAGE, WHICH WERE DISCARDED. THEREFORE, THE ASSETS WORTH RS. 45,12,520 WERE WRITTEN OFF ON ACCOUNT OF BREAKAGE OF BOTTLES & CRATES. IT WAS FURTHER SUBMITTED THAT THE EXPRESSION DESTROYED USED IN SECTION 32(1)(III) HAS WIDER CONNOTATION THAN MERE PHYSICAL DESTRUCTION AND APPLIED TO THE CASE WHERE USE OF ASSETS IS DENIED TO THE ASSESSEE FOR INDEFINITELY LONG PERIOD. HOWEVER, THE CIT (A) OBSERVED THAT THE GLASS, BOTTLES AND CRATES FORMED PART OF BLOCK OF ASSETS ON WHICH DEPRECIATION HAS BEEN REGULARLY CLAIMED AND ALLOWED. THEREFORE, REDUCTION DUE TO LOSS OR DESTRUCTION WOULD REDUCE THE WDV OF SUCH BLOCK OF ASSETS. THE BLOCK OF ASSETS DOES NOT CEASED TO EXIST. DISCARDING OF PORTION OF BLOCK OF ASSETS SO AS TO CLAIM DEDUCTION IS NOT PERMISSIBLE AS PER PROVISIONS OF THE ACT. THE PROVISIONS OF SECTION 32(1)(III) IS APPLICABLE FOR BUILDING, PLANT, MACHINERY OR FURNITURE WHICH IS SOLD, DESTROYED OR DISCARDED MEANING THEREBY THAT COMPLETE BLOCK OF ASSETS UNDER THOSE SPECIFIC HEADS IS CEASED TO EXIST AND IN SUCH SITUATION, DEDUCTION IS ALLOWABLE PERTAINING TO MONEYS PAYABLE WHICH FALLS SHORT OF WDV OF THAT BLOCK OF ASSETS. AS HELD BY THE AO THAT BLOCK OF ASSETS OF BOTTLES & CRATES DID NOT CEASED TO EXIST AND IN THAT CASE, THERE IS NO QUESTION OF DEDUCTION UNDER SECTION 32(1)(III) OF THE ACT. THE LD. CIT (A) ALSO OBSERVED THAT SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 4 OF 8 DECISION REFERRED BY THE ASSESSEE IN THE CASE OF OTIS ELEVATORS CO (INDIA) LTD. V. CIT [1992] 195 ITR 682 (BOMBAY) ARE NOT RELEVANT TO THE FACTS OF CURRENT CASE. 6. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH PAPER BOOK PAGE NO. 7, SCHEDULE-E OF FIXED ASSETS AND DEPRECIATION TO SHOW THAT BLOCK OF ASSETS OF BOTTLES & CRATES HAS BEEN REDUCED BY AN AMOUNT OF RS. 45,12,520 ON WHICH NO DEPRECIATION HAS BEEN CLAIMED. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT PAPER BOOK PAGE NO. 12, BEING NOTES ATTACHED TO ACCOUNTS WOULD SHOW THAT BOTTLES & CRATES OF RS. 45,12,,520 HAS BEEN WRITTEN OFF IN BOOKS OF ACCOUNTS DUE TO BREAKAGE AND HANDLING LOSS DURING THE YEAR. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED THE PROVISIONS OF SECTION 32(1)(III) OF THE ACT AND SUBMITTED THAT THE EXPRESSION USED IN SECTION 32(1)(III) HAD A WIDER CONNOTATION THAN MERE PHYSICAL DESTRUCTION. THE LOSS ON ACCOUNT OF DISCARDED AND DESTROYED IN THE COURSE OF BUSINESS IS ALLOWABLE UNDER SECTION 32(1)(III)OF THE ACT. IN SUPPORT OF HIS VIEW, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE IN THE CASE OF OTIS ELEVATORS CO (INDIA) LTD. V. CIT [1992] 195 ITR 682 (BOMBAY) WHEREIN EXPRESSION DESTROYED HAS BEEN DEFINED TO MEAN THAT IT HAS WIDER CONNOTATION AND INCLUDES A SITUATION WHERE THE ASSET BECOMES UNAVAILABLE TO THE ASSESSEE FOR AN INDEFINITELY LONG PERIOD, ALBEIT ON ACCOUNT OF AN ACT OF STRANGER, EVEN THOUGH THERE MAY BE NO EVIDENCE OF ITS PHYSICAL DESTRUCTION. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER PLACED RELIANCE IN THE CASE OF CIT(E) V. BHATIA GENERAL HOSPITAL [2018] 405 ITR 24 (BOMBAY) 254 TAXMAN 285 (BOMBAY) WHEREIN PRINCIPLE LAID DOWN IN SECTION 32(1)(III) WAS EXPLAINED IN RESPECT OF DEPRECIATION BY HOLDING THAT PROVISIONS OF SECTION 32(1)(III) TAKES CARE OF A SITUATION WHERE A PLANTS AND MACHINERY IS DISCARDED / DESTROYED IN THE PREVIOUS YEAR , THE AMOUNT SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 5 OF 8 OF MONEY RECEIVED ON SALE OF SUCH OR AS SCRAP OR ANY INSURANCE AMOUNT RECEIVED TO THE EXTENT IT FALLS SHORT OF THE WRITTEN DOWN VALUE IS ALLOWED AS DEPRECIATION, PROVIDED THE SAME IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. THE HON`BLE HIGH COURT FURTHER HELD THAT EVEN SUCH EXPENSES COULD BE ALLOWED AS DEDUCTION UNDER SECTION 37 OF THE ACT AS IT IS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR CARRYING OUT ITS ACTIVITY AS HOSPITAL ( ON APPLICATION OF COMMERCIAL PRINCIPLE) . THEREFORE, IT WAS CONTENDED THAT SINCE THE ASSESSEE HAS WRITTEN OFF THE VALUE OF WRITTEN DOWN VALUE IN THE BOOKS OF ACCOUNTS. THE SAME SHOULD BE ALLOWED AS LOSS UNDER SECTION 32(1)(III) OF THE ACT OR EITHER UNDER SECTION 37(1) OF THE ACT AS REVENUE EXPENDITURE INCURRED IN THE COURSE OF BUSINESS. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER REFERRED SECTION 43(6) OF THE ACT AND CLAIMED THE ASSET DESTROYED SHOULD BE ALLOWED AS EXPENDITURE. 7. PER CONTRA, THE LD. SR. D.R. RELIED ON THE ORDER OF THE AO. THE LD. SR. D.R. FURTHER SUBMITTED THAT THERE IS NO EVIDENCE THAT BOTTLES & CRATES HAVE BEEN ACTUALLY DESTROYED AS IT IS NOT BORNE OUT FROM ASSESSMENT ORDER NOR THE ASSESSEE HAS BROUGHT ON RECORD TO SUBSTANTIATE THIS POSITION. HENCE, THE ISSUE NEEDS VERIFICATION BY THE AO. THE LD. SR. D.R. ACCORDINGLY, SUBMITTED THAT THE AO AND LD. CIT (A) WERE JUSTIFIED IN DISALLOWING THE REDUCTION OF WDV AS LOSS FOR BUSINESS EXPENSES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AMOUNT OF RS. 45,12,520 CLAIMED AS WRITTEN OFF IN THE BOOKS OF ACCOUNTS ON ACCOUNT OF DESTRUCTION/ DISCARDED BOTTLES & CRATES ON BREAKAGE HAS BEEN REDUCED FROM THE WDV OF BLOCK OF ASSETS AS APPEARING AT PAPER BOOK PAGE NO. 7 UNDER SECTION 32(1)(III) OF THE ACT. HOWEVER, THE PROVISIONS OF SECTION 32(1)(III) ARE SUBJECT SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 6 OF 8 TO PROVISIONS OF SECTION 32(1)(I) OF THE ACT. THE RELEVANT PROVISION OF SECTION 32 (1) ARE REPRODUCED AS UNDER: 32. (1) 7 [IN RESPECT OF DEPRECIATION OF ( I ) BUILDINGS 8 , MACHINERY 8 , PLANT 8 OR FURNITURE, BEING TANGIBLE ASSETS; ( II ) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE 8 , BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OWNED 8 , WHOLLY OR PARTLY, BY THE ASSESSEE 8 AND USED 8 FOR THE PURPOSES OF THE BUSINESS 8 OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED] 9 [( I ) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTAGE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED 10 ;] ( II ) 11 [IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCENTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED 12 :] 13 [***] 14 [ PROVIDED 15 [***] THAT NO DEDUCTION SHALL BE ALLOWED UNDER THIS CLAUSE IN RESPECT OF (III) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWED UNDER CLAUSE (I) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED IN THE PREVIOUS YEAR (OTHER THAN THE PREVIOUS YEAR IN WHICH IT IS FIRST BROUGHT INTO USE), THE AMOUNT BY WHICH THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MACHINERY, PLANT O R FURNITURE, TOGETHER WITH THE AMOUNT OF SCRAP VALUE, IF ANY, FALL SHORT OF THE WRITTEN DOWN VALUE THEREOF : PROVIDED THAT SUCH DEFICIENCY IS ACTUALLY WRITTEN OFF IN THE BOOKS OF THE ASSESSEE. 9. THE PERUSAL OF ABOVE PROVISIONS WOULD SHOW THAT PROVISIONS OF SECTION 32(1)(III) ARE SUBJECT TO PROVISIONS OF SECTION 32(1)(I) WHICH ARE APPLICABLE IN RESPECT OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTAGE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED. WHERE THE BLOCK OF ASSETS DOES NOT CEASED TO EXIST AND THEREFORE, THERE IS NO QUESTION OF ALLOWABILITY OF DEDUCTION UNDER SECTION 32(1)(III) OF THE ACT. THEREFORE, THE CASE OF THE ASSESSEE IS NOT EXPLICITLY COVERED BY ABOVE PROVISIONS. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN ANALOGY BY CITING SOME DECISION I.E. OTIS ELEVATORS CO (INDIA) LTD. V. CIT (SUPRA) AND CIT(E) V. BHATIA GENERAL HOSPITAL [2018] 405 ITR 24 (BOMBAY) 254 SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 7 OF 8 TAXMAN 285 (BOMBAY) WHEREIN RATIO OF SECTION 32(1)(III) WAS EXPLAINED. WE FIND THAT THE LD. SR. D.R. HAS RAISED AN OBJECTION THAT WHETHER THE ASSETS IN QUESTION WERE ACTUALLY DESTROYED OR NOT AS NO PROOF OF THE SAME BEEN FORTHCOMING FROM THE ASSESSMENT ORDER. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT ONE MORE OPPORTUNITY OF BEING HEARD TO BE ALLOWED TO THE ASSESSEE TO EXPLAIN WHETHER THE ASSETS IN QUESTION WERE ACTUALLY DISCARDED OR DESTROYED. THEREFORE, WE DEEM IT FIT TO RESTORE THIS MATTER TO THE FILE OF THE AO TO EXAMINE THIS ASPECT AND CONSIDER THE ALLOWABILITY OF DEPRECIATION IN THE LIGHT OF RATIO AS LAID DOWN IN THE JUDICIAL PRONOUNCEMENTS OF OTIS ELEVATORS CO (INDIA) LTD. V. CIT [1992] 195 ITR 682 (BOMBAY) AND BHATIA GENERAL HOSPITAL (SUPRA) AS FRESH. NEVERTHELESS, TO MENTION THAT THE ASSESSEE WILL FURNISH NECESSARY DOCUMENTARY EVIDENCE AND CASE LAWS, WHICH IT MAY WANT TO RELY IN SUPPORT OF HIS CONTENTIONS. THIS GROUND OF APPEAL IS ACCORDINGLY, SET-ASIDE TO THE FILE OF THE AO. 10. GROUND NO.9 RELATES TO DISALLOWING A SUM OF RS.1,92,499 ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION OF PROVIDENT FUND INTO GOVERNMENT ACCOUNT WITHOUT APPRECIATING THAT SAME HAS BEEN DEPOSITED BEFORE DUE DATE OF FILING OF RETURN OF INCOME AND DESERVE TO BE ALLOWED IN TERMS OF SECTION 43B OF THE ACT. 11. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE WAS DECIDED BY THE PR. CIT IN HIS ORDER UNDER SECTION 263 IN FAVOUR OF THE ASSESSEE AS HELD IN PARA 6(II) OF HIS ORDER BY OBSERVING THAT THE PAYMENT OF PF BEYOND DUE DATE IS CONCERNED, SINCE THE ASSESSEE HAS CLARIFIED THAT THE SAME HAS BEEN PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME, AS PER LAW THE SAME SHOULD BE ALLOWED AS A DEDUCTION IN THE YEAR UNDER CONSIDERATION. THE CONTENTION OF THE ASSESSEE HAS BEEN FOUND TO BE CORRECT AND THEREFORE, THE ORDER OF THE AO IS NOT TO BE DISTURBED / SET-ASIDE ON THIS COUNT / ISSUE. SILVASSA BOTTLING CO. V. ACIT- VAPI/I.T.A. NO.740/SRT/2018/A.Y.11-12 RS. PAGE 8 OF 8 THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THIS ISSUE WAS NOT SET- ASIDE TO THE FILE OF THE AO, THEREFORE, THE AO HAS NO JURISDICTION TO DEAL WITH SUCH ISSUE IN CONSEQUENTIAL ASSESSMENT ORDER PASSED TO GIVE EFFECT TO ORDER MADE UNDER SECTION 263 OF THE ACT. 12. AU CONTRAIRE, THE LD. SR. D.R. RELIED ON LOWER AUTHORITIES. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE PAYMENT OF EPF WAS FOUND TO BE IN ORDER BY THE PR. CIT IN HIS ORDER UNDER SECTION 263 AS OBSERVED IN PARA 6 (II) OF THE ORDER. THE PR. CIT HAS CLEARLY STATED THAT THE ASSESSMENT ORDER OF THE AO ON THIS ISSUE IS NOT TO BE DISTURBED. IN SUCH A SITUATION THE AO HAS NO JURISDICTION TO ADJUDICATE ON THIS ISSUE IS HIS CONSEQUENTIAL ORDER PASSED IN CONSEQUENCE ORDER UNDER SECTION 263 OF THE ACT. WE ARE THEREFORE, OF THE CONSIDERED VIEW THAT THE AO HAS ACTED BEYOND HIS JURISDICTION. HENCE, DISALLOWANCE OF RS.1,92,499 MADE UNDER SECTION 43B ARE THEREFORE, DELETED. THIS GROUND OF APPEAL IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY SET-ASIDE FOR STATISTICAL PURPOSES. 15. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28 .02.2019 SD/- SD/- (KUL BHARAT) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 28 TH FEBRUARY, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT