DCIT, CIRCLE- 23(2), NEW DELHI V. SICPA INDIA PVT. LTD., NEW DELHI

ITA 7483/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3810 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 13-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Gift; Business income; Depreciation; Rule of consistency; Earning of tax free income; Wholly owned subsidiary; Capital receipt; Rule 8D; Set aside; Capital Gains
• Section: 14A; 115JB; 80IB; 201; 80IC; 80IC; 43; 73; 13; 22; 37; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.704/KOL./2015 (ASSESSMENT YEAR : 2009-10) M/S. SICPA INDIA PRIVATE LTD., VS. ADDL.CIT, RANGE 8, (FORMERLY KNOWN AS SICPA INDIA LTD.) KOLKATA. C/O NEWBY TEAS OVERSEAS (P) LTD., 9A, 2 ND FLOOR, 23A, N.S. ROAD, KOLKATA 700 016. (PAN : AADCS6121L) ITA NO.1586/KOL./2016 (ASSESSMENT YEAR : 2010-11) M/S. SICPA INDIA PRIVATE LTD., VS. DCIT, RANGE 8, (FORMERLY KNOWN AS SICPA INDIA LTD.) KOLKATA. C/O NEWBY TEAS OVERSEAS (P) LTD., 9A, 2 ND FLOOR, 23A, N.S. ROAD, KOLKATA 700 016. (PAN : AADCS6121L) ITA NO.7048/KOL./2017 (ASSESSMENT YEAR : 2011-12) M/S. SICPA INDIA PRIVATE LTD., VS. DCIT, CIRCLE 23 (2), 308 312, MERCANTILE HOUSE, NEW DELHI. 15, K.G. MARG, NEW DELHI - 110 001. (PAN : AADCS6121L) ITA NO.838/KOL./2015 (ASSESSMENT YEAR : 2009-10) DCIT, RANGE 8, VS. M/S. SICPA INDIA PRIVATE LTD., KOLKATA. (FORMERLY KNOWN AS SICPA INDIA LTD.) C/O NEWBY TEAS OVERSEAS (P) LTD., 9A, 2 ND FLOOR, 23A, N.S. ROAD, KOLKATA 700 016. (PAN : AADCS6121L) ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 2 ITA NO.7483/KOL./2017 (ASSESSMENT YEAR : 2011-12) DCIT, CIRCLE 23 (2), VS. M/S. SICPA INDIA PRIVATE L TD., NEW DELHI. 308 312, MERCANTILE HOUSE, 15, K.G. MARG, NEW DELHI - 110 001. (PAN : AADCS6121L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NIKHIL SURANA, CA REVENUE BY : SHRI SARAS KUMAR, SENIOR DR DATE OF HEARING : 21.01.2020 DATE OF ORDER : 31.01.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER PRESENT CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, M/S. SICPA INDIA PRIVATE LTD (HEREINA FTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 25.03.2015, 16.06.2016 & 08.08.2017 PASSED BY THE CIT (A)-3, KOLKATA, CIT (A)-3, KOLKAT A & CIT (A)- 12, KOLKATA IN ITA NO.704/KOL/2015, 1586/KOL/2016 & 7048/DEL/2017 QUA THE ASSESSMENT YEARS 2009-10, 201 0-11 & 2011-12 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 3 ITA NO.704/KOL./2015 FOR AY: 2009-10 (ASSESSEES A PPEAL) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED I N CONFIRMING THE ACTION OF THE AO IN MAKING ALLOCATION FOR FOREIGN E XCHANGE FLUCTUATION LOSS TO THE PROFITS AND GAINS OF BUSINESS OF THE UN DERTAKING ELIGIBLE FOR DEDUCTION U/ S 801E. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED I N NOT ALLOWING DEDUCTION OF LEAVE ENCASHMENT CLAIMED ON PROVISION BASIS AMOUNTING TO RS.7,19,216/-. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED B Y SUSTAINING THE DISALLOWANCE U/S 14A R.W. RULE 8D WITHOUT APPRECIAT ING THE FACT THAT THE NO EXPENDITURE HAS BEEN INCURRED TO EARN EXEMPT INCOME. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED IN NOT ALLOWING DEDUCTION FOR EDUCATION CESS ON INCOME TAX, DIVIDEN D DISTRIBUTION TAX AND FRINGE BENEFIT TAX AGGREGATING TO RS.46,34, 854/- IN COMPUTING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. ITA NO.1586/KOL./2016 FOR AY : 2010-11 (ASSESSEES APPEAL) L(A). THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED B Y SUSTAINING THE DISALLOWANCE U/S 14A R.W. RULE 8D WITHOUT APPRECIAT ING THE FACT THAT NO EXPENDITURE HAS BEEN INCURRED TO EARN EXEMPT INC OME. L(B). THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND WITHOUT PREJUDICE TO GROUND NO. L(A) TAKEN HERE IN ABOVE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED IN HO LDING THAT THE A.O. HAS RECORDED HIS DISSATISFACTION BEFORE MAKING DISA LLOWANCE U/S 14A BY APPLYING RULE 8D. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED I N NOT ALLOWING DEDUCTION OF LEAVE ENCASHMENT CLAIMED ON PROVISION BASIS AMOUNTING TO RS.3,04,000/-. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED IN NOT ALLOWING DEDUCTION FOR EDUCATION CESS ON INCOME TAX AND DIVI DEND DISTRIBUTION TAX AGGREGATING TO RS.84,71,689/- IN C OMPUTING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRED I N DISALLOWING ON AD- ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 4 HOC BASIS A SUM OF RS.1,16,473, BEING 15 % OF BUSIN ESS PROMOTION EXPENSES. ITA NO.7048/KOL./2017 FOR AY : 2011-12 (ASSESSEES APPEAL) 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ('LD. CIT(A)') HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW ON CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER ('LD. AO') IN MAKING DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 ('THE RULES') WITHOUT APPREC IATING THE FACT THAT NO EXPENDITURE HAS BEEN INCURRED TO EARN EXEMPT INC OME. 2. WITHOUT PREJUDICE TO GROUND NO.1, THE LD. CIT (A ) HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT THE LD. A.O. HAS RECORDED HIS SATISFACTION FOR INVOKING SECTION 14A OF THE ACT AND APPLYING RULE 8D OF THE RULES . 3. THE LD. CIT(A) WAS NOT JUSTIFIED RATHER GROSSLY ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE LD . AO IN NOT ALLOWING DEDUCTION OF LEAVE ENCASHMENT CLAIMED ON PROVISION BASIS AMOUNTING TO INR 597,487/- . 4. THE LD. CIT(A) HAS GROSSLY ERRED BOTH ON FACTS A ND IN LAW IN CONFIRMING THE ACTION OF THE LD. AO IN NOT ALLOWING DEDUCTION FOR EDUCATION CESS ON INCOME TAX AND DIVIDEND DISTRIBUT ION TAX AGGREGATING TO INR 4,742,7851- IN COMPUTING TOTAL I NCOME UNDER THE NORMAL PROVISIONS OF THE ACT. 3. APPELLANTS, DCIT, RANGE 8, KOLKATA & DCIT, RANGE 23 (2), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE ) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED OR DERS DATED 25.03.2015 & 08.08.2017 PASSED BY THE CIT (A)-3, KO LKATA & CIT (A)-12, KOLKATA IN ITA NO.838/KOL/2015 & 7483/DEL/2 017 QUA THE ASSESSMENT YEARS 2009-10 & 2011-12 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 5 ITA NO.838/KOL./2015 FOR AY : 2009-10 (REVENUES AP PEAL) 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION UNDER SE CTION 80IC OF THE INCOME TAX ACT, 1961 ON THE TRANSPORT SUBSIDY OF RS .3,04,561/- AS THIS SUBSIDY IS IN NATURE OF CAPITAL RECEIPT AND EXTERNA L AID, AND IS NOT DIRECTLY RELATED TO MANUFACTURING ACTIVITIES OF THE ASSESSEE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING DEDUCTION UNDER SECTIO N 80LC OF THE INCOME TAX ACT, 1961 ON THE EXCISE DUTY SUBSIDY TO THE TUNE OF RS.2,39,40,228/-, AS THIS SUBSIDY IS IN NATURE OF C APITAL RECEIPT AND EXTERNAL AID, AND IS NOT DIRECTLY RELATED TO MANUFA CTURING ACTIVITIES OF THE ASSESSEE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN REDUCING THE FOREIGN EXCHAN GE LOSS PERTAINING TO SIKKIM UNIT TO RS.68,33,228/ - INSTEAD OF RS. 1C RORE MADE BY THE AO IN THE ASSESSMENT ORDER DATED 30.03.2013, AS THE AS SESSEE HAS FAILED TO CORRECTLY APPORTION THE LOSS CLAIMED ON ACCOUNT OF FOREIGN EXCHANGE TRANSACTION. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN EXCLUDING THE AMOUNT OF INV ESTMENT MADE BY THE APPELLANT IN ITS SUBSIDIARY COMPANY NAMELY NEWB Y INDUS (P) LTD. FOR THE PURPOSE OF COMPUTING DISALLOWANCE U/S 14A O F THE INCOME TAX ACT, 1961, READ WITH RULE 8D OF THE INCOME TAX RULE 1962, DESPITE THE FACT THAT THE INCOME EARNED BY THE ASSESSEE FROM IT S INVESTMENT WOULD CONSIST OF EXEMPT INCOME, THEREBY ATTRACTING THE PR OVISION OF SECTION 14A READ WITH RULE 8D, WHEN THE ASSESSEE IS UNABLE TO SHOW THE CORRECT QUANTUM OF EXPENSES INCURRED FOR EARNING SUCH EXEMP T INCOME. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING EXCLUSION OF EXCIS E DUTY EXEMPTION IN COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE IN COME TAX ACT, 1961 DESPITE THE FACT THAT THE EXPLANATION 1 TO SEC TION 115JB(2) OF THE ACT STIPULATES THAT THE ONLY ITEM MENTIONED IN CLAU SES (I) TO (VIII) SHOULD BE REDUCED FROM THE NET PROFIT TO COMPUTE THE BOOK PROFIT OF THE ASSESSEE. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U NDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE I NCOME TAX RULES 1962 WHILE COMPUTING BOOK PROFIT UNDER SECTION 115J B OF THE INCOME TAX ACT, 1961 DESPITE THE FACT THAT EXPLANATION 1 ( F) OF SECTION 115JB OF THE INCOME TAX ACT, 1961 STIPULATES THAT FOR THE PU RPOSE OF SECTION 115JB, BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UND ER SUB-SECTION (2) AS INCREASED BY THE AMOUNT OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 OR SECTION 11 OR SECTION 12 OF THE INCOME TAX ACT, 1961 APPLY. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 6 ITA NO.7483/KOL./2017 AY: 2011-12 (REVENUES APPEAL ) 1. WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION TO THE EXTENT OF RS.15,28,408/- (TRANSPORT RECEIPT OF RS.12,43,233/-, MISC. INCOME OF RS.1,31,647/- AND WRITTEN BACK AMOUNT OF RS.1,53,528/-) OUT OF TOTAL ADDITION OF RS.39,97,952/- MADE BY THE AO ON ACCOUNT OF EXCLUSION OF OTHER INCOME NOT ELIGIBLE FOR DEDUCTIO N U/S 80-IC OF THE LT. ACT, 1961. 2. WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,97,06,900/- MADE BY THE AO ON ACCOUNT OF AP PORTIONED INDIRECT HEAD OFFICE EXPENSES E.G. ADVERTISEMENT AND PUBLICI TY EXPENSES, RENT, DEPRECIATION ON VEHICLES & DONATION AND CONTRIBUTIO N PAID FOR SCIENTIFIC RESEARCH, NOT ELIGIBLE FOR 80-IC UNIT. 3. WHETHER THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE FORWARD CONTRACT GAIN OF RS.19,32,946/- AS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S 80-IC WITHOUT VERIFYING TRANSACTION W ISE IMPORT OF RAW MATERIAL/GOODS VIS-A-VIS THE FORWARD CONTRACTS EXEC UTED BY THE ASSESSEE. IN CASE THERE IS NO ONE TO ONE NEXUS BETWEEN THE IM PORTS AND THE FORWARD CONTRACTS, THE PROFIT/LOSS ARISING DUE TO F ORWARD CONTRACTS WERE LIABLE TO BE HELD AS SPECULATION TRANSACTIONS. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS ENGAGED I N THE BUSINESS OF MANUFACTURING AND TRADING OF PRINTING INKS HAVING I TS MANUFACTURING FACILITY AT MAMRING, SIKKIM FOR WHICH DEDUCTION IN TERMS OF SECTION 80IC OF THE INCOME-TAX ACT, 1961 ( FOR SHORT THE ACT) IS BEING CLAIMED FOR ASSESSMENT YEARS 2006-0 7 TO 2015-16. ASSESSEE HAS DEBITED A SUM OF RS.5,97,44,548/- ON A CCOUNT OF FOREIGN EXCHANGE LOSS BUT WITHOUT ALLOCATING ANY SU CH LOSS TO ITS SIKKIM UNIT. ASSESSING OFFICER (AO) HOWEVER PROCEE DED ON THE PREMISE THAT SINCE ENTIRE MANUFACTURING WAS CARRIED OUT AT SIKKIM ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 7 UNIT, HENCE ANY EXCHANGE LOSS RELATING TO IMPORT OF RAW MATERIAL WOULD BE ATTRIBUTABLE TO SAID UNIT AND THEREBY CALC ULATED THE ELIGIBLE DEDUCTION U/S 80IC AT RS.25,48,25,717/- FO R AY 2009-10. 5. AO BY INVOKING THE PROVISIONS CONTAINED U/S 14A OF THE ACT READ WITH RULE 8D(2)(III) OF THE INCOME-TAX RULES, 1962 (FOR SHORT THE RULES) MADE DISALLOWANCE OF RS.41,49,725/-, R S.46,32,475/- & RS.10,90,925/- FOR AYS 2009-10, 2010-11 & 2011-12 RESPECTIVELY ON THE GROUND THAT THE ASSESSEE COMPAN Y HAS NOT MAINTAINED ANY SEPARATE DETAILS/ACCOUNTS RELATING T O MANAGEMENT OF ITS INVESTMENT PORTFOLIO AS IT CANNOT EARN DIVIDEND WITHOUT ITS EXISTENCE AND MANAGEMENT. 6. AO MADE DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF EDUCATION CESS TO THE TUNE OF RS.46,3 4,854/-, RS.84,71,689/- AND RS.47,42,785/- FOR AYS 2009-10, 2010-11 & 2011-12 RESPECTIVELY ON THE GROUND THAT THE TERM T AX IS WIDE ENOUGH TO INCLUDE SURCHARGE, EDUCATION CESS, HIGHER EDUCATION CESS, ETC.. 7. IN AY 2010-11, AO MADE ADDITION OF RS.3,88,244/- ON ACCOUNT OF DISALLOWANCE OF BUSINESS PROMOTION EXPEN SES @ 50% ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 8 OUT OF THE TOTAL EXPENDITURE OF RS.7,76,489/- CLAIM ED BY THE ASSESSEE. 8. AO MADE DISALLOWANCE OF RS.2,39,40,228/- AND RS.3,04,561/- ON ACCOUNT OF EXCISE DUTY EXEMPTION S UBSIDY AND TRANSPORT SUBSIDY RESPECTIVELY QUA THE CLAIM MADE B Y THE ASSESSEE FOR DEDUCTION U/S 80IC ON THE GROUND THAT EXCISE DU TY EXEMPTION SUBSIDY AND TRANSPORT SUBSIDY CANNOT BE TREATED AS PROFITS & GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING OF SIKKIM U NIT. AO, AFTER MAKING DISALLOWANCE OF RS.41,49,725/- U/S 14A OF TH E ACT ADDED THE SAME BACK IN COMPUTING THE INCOME IN NORMAL PRO VISIONS OF THE ACT AS WELL AS NOT COMPUTING THE BOOK PROFIT U/S 11 5JB OF THE ACT. AO ALSO EXCLUDED THE AMOUNT OF RS.2,39,40,228/- AND RS.3,04,561/- DISALLOWED AS CLAIM OF DEDUCTION U/S 80IC ON ACCOUNT OF EXCISE DUTY EXEMPTION SUBSIDY AND TRANSP ORT SUBSIDY RESPECTIVELY TOWARDS PROFIT OF THE UNIT IN COMPUTIN G THE INCOME UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS IN CO MPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. 9. IN AY 2011-12, AO MADE ADDITION OF RS.3 9,97,952/- (RS.12,43,233/- + RS.1,31,647/- + RS.153,528/- ON A CCOUNT OF FREIGHT INCOME, MISC. INCOME AND PROVISION OF EXPEN SES RETURNED ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 9 BACK RESPECTIVELY) ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS IF EXPENSES OF FREIGHT IS THE LIABILITY OF THE ASSESSEE AND ASSESSEE IS EARNING THE FREIGHT INCOME AS FACILITAT OR OR TRANSPORT AGENT WHICH CANNOT BE DIRECTLY LINKED TO THE BUSINE SS OF THE UNDERTAKING AND FOR MISC. INCOME, ON THE GROUND THA T THESE INCOME ARE NOT HAVING ANY BUSINESS NEXUS WITH THE ASSESSEE S BUSINESS UNDERTAKING AND FOR PROVISION FOR EXPENSES WRITTEN BACK, ON THE GROUND THAT THE ASSESSEE HAS NOT PROVIDED ANY PROOF AND HAVING NO DIRECT CONNECTION WITH THE BUSINESS OF THE ASSESSEE UNDERTAKING. AO ALSO MADE ADDITION OF RS.19,74,690/- ON ACCOUNT OF PROPORTIONED INDIRECT HEAD OFFICE EXPENSES EG. AD VERTISEMENT AND PUBLICITY EXPENSES, RENT EXPENSES, DEPRECIATION ON VEHICLES AND DONATIONS & CONTRIBUTION PAID FOR SCIENTIFIC RESEAR CH BEING NOT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. AO ALS O MADE ADDITION OF RS.1,93,946/- BY NOT TREATING THE FORWARD CONTRA CT GAIN AS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S 80IC ON THE GROUND THAT THE ASSESSEE HAS NOT PROVIDED COPY OF FORWARD CONTR ACT NOR HAS BEEN ABLE TO PRODUCE ANY INVOICE PERTAINING TO THE TRANSACTION. 10. AO THEREBY MADE ASSESSMENT AT THE TOTAL INCOME OF RS.40,65,33,730/-, RS.80,04,21,590/- & RS.41,69,35, 099/- UNDER ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 10 NORMAL PROVISIONS OF THE ACT FOR AYS 2009-10, 2010- 11 & 2011-12 RESPECTIVELY AND AT BOOK PROFIT OF RS.64,44,33,730/ - & RS.99,86,22,263/- U/S 115JB FOR AYS 2009-10 & 2010- 11 RESPECTIVELY. 11. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) BY WAY OF FILING THE APPEAL WHO HAS GIVEN PARTIAL RELIEF IN A YS 2009-10 & 2011-12 TO THE ASSESSEE. FEELING AGGRIEVED BY THE ORDERS PASSED BY THE LD. CIT (A), THE ASSESSEE AS WELL AS THE REVENU E HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT CR OSS APPEALS FOR AYS 2009-10 & 2011-12. IN AY 2010-11, LD. CIT (A) CONFIRMED THE ADDITION MADE BY THE AO AGAINST WHICH THE ASSES SEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 OF AY 2009-10 (ASSESSEES APPEAL) GROUNDS NO.1, 2 &3 OF AY 2009-10 (REVENUES APPEAL) 13. AO NOTICED THAT THE ASSESSEE COMPANY HAD DEBITE D AN AMOUNT OF RS.5,97,44,548/- ON ACCOUNT OF FOREIGN EX CHANGE LOSS ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 11 BUT NO SUCH LOSS WAS ALLOCATED TO THE SIKKIM UNIT. AO, HOWEVER, AFTER CONSIDERING THE TURNOVER OF TRADING BUSINESS OF MANUFACTURING UNIT OF SIKKIM UNIT OF THE ASSESSEE, CONSIDERED RS. 1 CRORE AS ALLOCABLE EXPENDITURE RELATING TO THE SIKKIM UNIT A ND CONSIDERED THE SAME FOR CALCULATING THE PROFIT AND ELIGIBLE DEDUCT ION U/S 80IC OF THE ACT. 14. ASSESSEE COMPANY CLAIMED BENEFIT OF EXCISE DUTY EXEMPTION SUBSIDY OF RS.2,39,40,228/- AND TRANSPORT SUBSIDY O F RS.3,04,561/- BY INCLUDING THE PROFIT OF SIKKIM UNIT AS A CLAIM E LIGIBLE FOR DEDUCTION U/S 80IC. ASSESSEE COMPANY HOWEVER EXCLU DED EXCISE DUTY EXEMPTION SUBSIDY FROM THE BOOK PROFIT FOR THE COMPUTATION OF INCOME U/S 115JB OF THE ACT. AO HOWEVER EXCLUDE D EXCISE DUTY EXEMPTION SUBSIDY AND TRANSPORT SUBSIDY OF RS.2,39, 40,228/- AND RS.3,04,561/- RESPECTIVELY FOR THE PURPOSE OF COMPU TATION OF DEDUCTION ELIGIBLE TO THE ASSESSEE UNDER SECTION 80 IC OF THE ACT. AO THEREBY COMPUTED THE ELIGIBLE DEDUCTION U/S 80IC AT RS.25,48,25,717/-. 15. LD. CIT (A) HOWEVER GIVE THE RELIEF BY TREATING EXCISE DUTY EXEMPTION SUBSIDY AND TRANSPORT SUBSIDY TO BE ELIGI BLE FOR DEDUCTION U/S 80IC BY INCLUDING THE SAME IN PROFIT OF SIKKIM UNIT. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 12 LD. CIT (A) ALSO REDUCED THE FOREIGN EXCHANGE LOSS OF SIKKIM UNIT TO RS.68,33228/- INSTEAD OF RS.1 CRORE MADE BY THE AO. BOTH ASSESSEE COMPANY AS WELL AS REVENUE ARE IN APPEAL B EFORE THE TRIBUNAL. 16. UNDISPUTEDLY, ASSESSEE COMPANY BEING IN MANUFAC TURING ACTIVITIES IN THE ESTATE OF SIKKIM RECEIVED EXCISE DUTY EXEMPTION SUBSIDY & TRANSPORT SUBSIDY OF RS.2,39,40,228/- & R S.3,04,561/- RESPECTIVELY. LD. AR FOR THE ASSESSEE CONTENDED TH AT THE SUBSIDY EXTENDED BY THE GOVERNMENT HELPED THE ASSESSEE IN R EDUCING THE COST OF MANUFACTURING AND HAD DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING AND HAS ALSO CONTENDED THAT IDENTICAL R ELIEF ON ACCOUNT OF EXCISE DUTY GRANT AND TRANSPORT SUBSIDY HAS ALRE ADY BEEN GRANTED BY THE LD. CIT (A) FOR AYS 2010-11 AND 2011-12 WHIC H HAS NOT BEEN CHALLENGED BEFORE THE TRIBUNAL. THIS FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE. 17. HONBLE SUPREME COURT IN CASE OF CIT VS. MEGHALAYA STEELS LTD. 383 ITR 217 (SC) BY REFERRING THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. DHARAMPAL PREMCHAND LTD. 317 ITR 353 IN WHICH SLP PREFERRED BY THE REVENUE IN THE HONBL E SUPREME COURT WAS DISMISSED AND UPHELD THE VIEW THAT REFUND OF EXCISE DUTY ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 13 SHOULD NOT BE EXCLUDED IN ARRIVING AT THE PROFIT D ERIVED FROM BUSINESS FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB OF THE ACT. 17.1 IN CASE OF CIT VS. MEGHALAYA STEELS LTD. (S.C.) (SUPRA), HONBLE SUPREME COURT HELD THAT, TRANSPORT SUBSIDY IS A REVENUE RECEIPT WHICH WAS REIMBURSED TO THE ASSESSEE FOR EL EMENTS OF COST RELATING TO MANUFACTURE OR SALE OF THEIR PRODUCTS A ND THERE COULD CERTAINLY BE SAID TO BE A DIRECT NEXUS BETWEEN PROF ITS AND GAINS OF THE INDUSTRIAL UNDERTAKING AND REIMBURSEMENT OF SUC H SUBSIDIES SO, WHEN THE TRANSPORT SUBSIDY IS IN THE NATURE OF REVENUE RECEIPT HAVING BEEN DIRECTLY RELATED TO MANUFACTURING ACTIV ITIES OF THE ASSESSEE COMPANY WHICH WENT TO REIMBURSEMENT OF COS T IN THE PRODUCTION OF GOODS IN A PARTICULAR BUSINESS WOULD ALSO BE INCLUDED UNDER THE HEAD PROFITS & GAINS OF THE BUSINESS & P ROFESSION. EVEN AN IOTA OF MATERIAL HAS NOT BEEN BROUGHT ON RE CORD BY THE REVENUE AS TO WHY RULE OF CONSISTENCY HAD NOT BEEN FOLLOWED. WHEN IDENTICAL RELIEF HAS BEEN GIVEN BY THE LD. CIT (A) TO THE ASSESSEE ON ACCOUNT OF EXCISE DUTY GRANT AND TRANSP ORT SUBSIDY FOR AYS 2010-11 & 2011-12 WHICH HAS SINCE BEEN ATTAINED FINALITY. 17.2 SO, LD. CIT(A) HAD RIGHTLY ALLOWED DEDUCTION ON ACCOUNT OF EXCISE DUTY EXEMPTION SUBSIDY AND TRANSPORT SUBSIDY U/S 80IC OF ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 14 THE ACT HAVING BEEN DIRECTLY RELATED TO MANUFACTURI NG ACTIVITIES OF THE ASSESSEE COMPANY. 18. SO FAR AS QUESTION OF REDUCING THE FOREIGN EXCH ANGE LOSS PERTAINING TO SIKKIM UNIT TO THE TUNE OF RS.68,33,2 28/- FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IC IS CONCERNE D, THE LD. AR FOR THE ASSESSEE CONTENDED THAT SINCE THE FOREIGN E XCHANGE FLUCTUATION LOSS IS IN THE NATURE OF INDIRECT/NON-O PERATING EXPENSES, IT MUST BE ALLOCATED TO THE ELIGIBLE INDUSTRIAL UND ERTAKING. LD. DR FOR THE REVENUE, HOWEVER, RELIED UPON ASSESSMENT OR DERS PASSED BY AO. 19. ASSESSEE COMPANY HAS BROUGHT ON RECORD DETAIL O F FOREIGN EXCHANGE LOSS INCURRED ON ACCOUNT OF IMPORT OF RAW MATERIAL USED AT THE INDUSTRIAL UNDERTAKING, AVAILABLE AT PAGE 19 3 OF THE PAPER BOOK. LD. CIT (A) AFTER TAKING INTO ACCOUNT WORKI NG GIVEN BY THE ASSESSEE COMPANY AT PAGE 193 OF THE PAPER BOOK REST RICTED THE ALLOCATION TO THE TUNE OF RS.68.33 LAKHS. NO DOUBT , FOREIGN EXCHANGE LOSS BEING IN THE NATURE OF INDIRECT/NON-O PERATING EXPENSES MUST NOT BE ALLOCATED TO THE ELIGIBLE INDU STRIAL UNDERTAKING. HOWEVER, WHEN THE ASSESSEE COMPANY HA S COME UP WITH SPECIFIC WORKING/DETAILS OF SUFFERING FOREIGN EXCHANGE LOSS ON ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 15 ACCOUNT OF IMPORT OF RAW MATERIAL USED AT THE INDUS TRIAL UNDERTAKING, THE LD. CIT (A) HAS RIGHTLY THRASHED T HE ISSUE ON FACTS AND DIRECTED THE AO TO REDUCE SUCH ALLOCATION TO RS .68.33 LAKHS AS AGAINST RS.1 CRORE ESTIMATED BY THE AO. SO, AGAIN WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED B Y THE LD. CIT(A). CONSEQUENTLY, GROUND NO.1 OF ASSESSEES APPEAL FOR AY 2009-10 IS ALLOWED AND GROUNDS NO.1, 2 & 3 OF REVENUES APP EAL FOR AY 2009-10 ARE DISMISSED. GROUND NO.2 OF AY 2009-10 (ASSESSEES APPEAL) GROUND NO.2 OF AY 2010-11 (ASSESSEES APPEAL) GROUND NO.3 OF AY 2011-12 (ASSESSEES APPEAL) 20. GROUND NO.2 OF AY 2009-10, GROUND NO.2 OF AY 20 10-11 & GROUND NO.3 OF AY 2011-12 IN ASSESSEES APPEALS A RE NOT PRESSED DURING THE COURSE OF HEARING. GROUND NO.3 OF AY 2009-10 (ASSESSEES APPEAL) GROUND NO.1 OF AY 2010-11 (ASSESSEES APPEAL) GROUNDSNO.1 & 2 OF AY 2011-12 (ASSESSEES APPEAL) 21. AO/CIT(A) MADE DISALLOWANCE OF RS.40.79 LAKHS, RS.45.60 LAKHS & RS.4.71 LAKHS FOR AYS 2009-10, 2010-11 & 20 11-12 RESPECTIVELY BY INVOKING THE PROVISIONS CONTAINED U /S 14A OF THE ACT R/W RULE 8D(2)(III) OF THE RULES. UNDISPUTEDLY , ASSESSEE HAS ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 16 EARNED EXEMPT INCOME TO THE TUNE OF RS.5.22 CRORES, RS.5.24 CRORES & RS.3.24 CRORES FOR AYS 2009-10, 2010-11 & 2011-12 RESPECTIVELY BY INVESTING IN DEBT ORIENTED MUTUAL F UNDS. THE ASSESSEE HAS COME UP WITH POINTED ARGUMENT THAT SIN CE PRIMARY BUSINESS OF ASSESSEE COMPANY IS MANUFACTURING AND S ELLING OF PRINTING INKS AND ITS ENTIRE MANPOWER IS ENGAGED IN CARRYING OUT MAIN ACTIVITIES AND ONLY IDLE FUNDS HAVE BEEN INVES TED IN PRE- DECIDED INVESTMENT AVENUES TO EARN THE REASONABLE I NCOME, THUS HAS NOT INCURRED ANY ADDITIONAL EXPENSES TO EARN TH E DIVIDEND INCOME. IT IS ALSO THE CASE OF THE ASSESSEE COMPAN Y THAT IT HAS EARNED TAXABLE INCOME BY WAY OF CAPITAL GAINS DURIN G THE YEAR UNDER ASSESSMENTS AND BROUGHT ON RECORD DETAILS THE REOF. IT IS ALSO ARGUED BY THE LD. AR FOR THE ASSESSEE THAT NO PROPE R SATISFACTION HAS BEEN RECORDED BY THE AO BEFORE INVOKING THE PROVISI ONS CONTAINED UNDER RULE 8D AND RELIED UPON THE DECISIONS OF EICHER MOTORS LTD. VS. CIT 398 ITR 51 (DEL.) AND HT MEDIA LTD. VS. PCIT 399 ITR 576 (DEL.) . HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE RELIED UPON THE ORDERS PASSED BY THE AO AS WELL AS LD. CIT (A). 22. FIRST OF ALL, WHEN WE EXAMINE THE SATISFACTION RECORDED BY THE AO FOR ALL THE THREE ASSESSMENT YEARS I.E. 2009 -10, 2010-11 & ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 17 2011-12 IN ORDER TO INVOKE THE PROVISIONS CONTAINED UNDER RULE 8D, NO SATISFACTION HAS BEEN RECORDED BY THE AO THA T THE WORKING PROVIDED BY THE ASSESSEE COMPANY THAT NO EXPENDITUR E HAS BEEN INCURRED TO EARN THE DIVIDEND INCOME EXCEPT WITH GE NERAL OBSERVATIONS THAT, A COMPANY CANNOT EARN DIVIDEND WITHOUT ITS EXISTENCE AND MANAGEMENT. INVESTMENT DECISIONS ARE VERY COMPLEX IN NATURE WHICH ARE GENERALLY TAKEN BY MANAGEMENT P ERSONNEL OR OTHER PROFESSIONAL EXPERTS EMPLOYED FOR THE PURPOSE FOR WHICH ADMINISTRATIVE, MANAGERIAL AND ADMINISTRATIVE EXPEN SES ARE INCURRED. 22.1 TO OUR MIND, THIS IS NO SATISFACTION RATHER A O PROCEEDED ON THE BASIS OF ASSUMPTIONS AND GUESSWORK. IN AY 2011 -12, AO WHILE INVOKING THE PROVISIONS CONTAINED UNDER RULE 8D RECORDED THAT, SINCE THE ASSESSEE HAS NOT MAINTAINED ANY SEPARATE BOOKS OF ACCOUNT FOR ACCOUNTING OF EXPENSES INCURRED IN RELA TION TO INCOME NOT INCLUDIBLE IN ITS TOTAL INCOME THE AMOUNT OF EX PENSES ACTUALLY INCURRED CANNOT BE ASCERTAINED FROM THE ASSESSEES BOOKS OF ACCOUNT SATISFACTORILY AND PROCEEDED TO INVOKE THE PROVISIONS CONTAINED U/S 14A OF THE ACT R/W RULE 8D OF THE RUL ES. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 18 23. HONBLE APEX COURT IN GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT 394 ITR 449 (SC) THRASHED THE ISSUE IN CONTROVERSY AS TO INVOKING OF THE PROVISIONS CONTAI NED UNDER RULE 8D OF THE RULES BY OBSERVING AS UNDER :- 37. WE DO NOT SEE HOW IN THE AFORESAID FACT SITUAT ION A DIFFERENT VIEW COULD HAVE BEEN TAKEN FOR THE ASSESS MENT YEAR 2002-2003. SUB-SECTIONS (2) AND (3) OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES MERELY PRESCRIBE A F ORMULA FOR DETERMINATION OF EXPENDITURE INCURRED IN RELATION T O INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN A SITUATION WHERE THE ASSESSING OFFICER IS NOT SATI SFIED WITH THE CLAIM OF THE ASSESSEE. WHETHER SUCH DETERMINATI ON IS TO BE MADE ON APPLICATION OF THE FORMULA PRESCRIBED UNDER RULE 8D OR IN THE BEST JUDGMENT OF THE ASSESSING OFFICER, W HAT THE LAW POSTULATES IS THE REQUIREMENT OF A SATISFACTION IN THE ASSESSING OFFICER THAT HAVING REGARD TO THE ACCOUNTS OF THE A SSESSEE, AS PLACED BEFORE HIM, IT IS NOT POSSIBLE TO GENERATE T HE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IT IS ONLY THEREAFTER THAT THE PROVISIONS OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RULES OR A BEST JUDGMENT DETERMINATION, AS EARLIER PREVAILING, WOUL D BECOME APPLICABLE. 24. HONBLE DELHI HIGH COURT IN CASE OF HT MEDIA LTD. VS. PR. CIT (SUPRA) ALSO HELD THAT BROAD AND GENERAL NATURE OF OBSERVATION MADE BY THE AO ARE NOT ENOUGH TO INVOKE THE PROVISI ONS CONTAINED UNDER RULE 8D. SO, WE ARE OF THE CONSIDERED VIEW T HAT WHEN AO HAS FAILED TO COMPLY WITH THE MANDATORY PROVISIONS OF SECTION 14A (2) OF THE ACT R/W RULE 8D(1)(A) OF THE RULES TO RE CORD A VALID SATISFACTION, PROVISIONS CONTAINED UNDER RULE 8D(2) (III) CANNOT BE INVOKED. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 19 25. MOREOVER, IT IS CATEGORIC CASE OF THE ASSESSEE COMPANY THAT IT HAS INVESTED IN DEBT ORIENTED MUTUAL FUND AS IS EVI DENT FROM PAGE 41 OF THE PAPER BOOK FOR AY 2009-1-. SO, THIS INVE STMENT HAS EARNED TAXABLE INCOME IN THE CAPITAL GAIN IN WHICH CASE PROVISIONS CONTAINED UNDER SECTION 14A ARE OTHERWISE NOT ATTRA CTED. 26. IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDIN ATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN CASE OF AVSHESH MERCANTILE (P) LTD. VS. ITO 148 TTJ 607 (ITAT MUMBA I) BY FOLLOWING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN DELITE ENTERPRISES PVT. LTD. (ITA NO.110 OF 2009) BY RETURNING FOLLOWING FINDINGS :- 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT TH E PROCEEDS OF PREMIUM NOTES (OCPN) ON WHICH THE IMPUGNED REDEMPTI ON PREMIUM WAS PAID BY THE ASSESSEE HAD BEEN INVESTED IN THE SHARES/DEBENTURES OF RUPL AND ALTHOUGH THE DIVIDEND INCOME AND INCOME FROM LONG TERM CAPITAL GAIN FROM THE SAI D INVESTMENT WAS EXEMPT FROM TAX U/S 10(23G), PERUSAL OF THE COP Y OF RELEVANT NOTIFICATION ISSUED U/S 10(23G) PLACED AT PAGE NO. 24 OF THE PAPER BOOK, SHOWS THAT SUCH EXEMPTION WAS INITIALLY GRANTED ONLY FOR THE SPECIFIC PERIOD I.E. ASSESSMENT YEAR 1999-2 000 TO 2001- 2002. NO DOUBT, THE SAID EXEMPTION WAS FURTHER EXTE NDED UPTO ASSESSMENT YEAR 2004-05 AS SUBMITTED BY THE LEARNED DR, A PERUSAL OF THE COPY OF RELEVANT NOTIFICATION PLACED AT PAGE NO. 29 OF THE PAPER BOOK CLEARLY SHOWS THAT SUCH EXTENSION WAS GRANTED SUBJECT TO SATISFACTION OF CERTAIN CONDITIONS. KEEP ING IN VIEW ALL THESE UNCERTAINTIES AND CONTINGENCIES, WE ARE INCLI NED TO AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE PREMIUM PAID BY THE ASSESSEE ON REDEMPTION OF P REMIUM NOTES (OCPN) UTILIZED FOR MAKING INVESTMENT IN THE SHARES/DEBENTURES OF RUPL CANNOT BE REGARDED AS EXP ENDITURE INCURRED EXCLUSIVELY IN RELATION TO EARNING OF EXEM PT INCOME SO ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 20 AS TO INVOKE THE PROVISIONS OF SECTION 14A. MOREOVE R, THE SAID INVESTMENT HAD THE POTENTIAL OF GENERATING TAXABLE INCOME ALSO AS EXPLAINED BY THE LEARNED COUNSEL FOR THE ASSESSEE I N THE FORM OF SHORT TERM CAPITAL GAINS ETC. IN THIS REGARD, THE L EARNED DR HAS SUBMITTED THAT NO SUCH TAXABLE INCOME HOWEVER WAS A CTUALLY EARNED BY THE ASSESSES DURING THE YEARS UNDER CONSI DERATION. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HAS POINTED OUT THAT NO EXEMPT INCOME FROM THE SAID INVESTMENT WAS ALSO ACTUALLY EARNED BY THE ASSESSEE IN THE YEARS UNDER CONSIDERATION. HE HAS ALSO RELIED ON THE DECISION OF COORDINATE BE NCH OF THIS TRIBUNAL IN THE CASE OF DELITE ENTERPRISES PVT. LTD . (SUPRA) AS AFFIRMED BY THE HONBLE BOMBAY HIGH COURT STATING T HAT IN THE SIMILAR FACTS AND CIRCUMSTANCE, DISALLOWANCE MADE U NDER SECTION 14A WAS HELD TO BE NOT SUSTAINABLE. 27. SO, AN AMOUNT OF RS.89.68 LAKHS, RS.32.44 LAKHS AND RS.17.76 LAKHS IN AY 2009-10, 2010-11 & 2011-12 RES PECTIVELY EARNED BY THE ASSESSEE AS CAPITAL GAIN FROM DEBT OR IENTED MUTUAL FUNDS CANNOT BE PLACED IN THE CATEGORY OF EXEMPT IN COME U/S 14A OF THE ACT AND IN THESE CIRCUMSTANCES, RULE 8D(2) C ANNOT BE INVOKED. 28. MOREOVER, AO HIMSELF HAS EXCLUDED THE INVESTMEN T FROM WHICH NON-EXEMPT INCOME HAS BEEN EARNED BY THE ASSE SSEE COMPANY IN AY 2011-12 FOR PURPOSE OF COMPUTING AVER AGE INVESTMENT UNDER RULE 8D(2)(III) OF THE RULES. 29. SO, WE ARE OF THE CONSIDERED VIEW THAT DISALLOW ANCE MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) U/S 14A OF THE ACT R/W RULE 8D(2)(III) OF THE RULES IS NOT SUSTAINABLE, HE NCE ORDERED TO BE ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 21 DELETED. CONSEQUENTLY, GROUND NO.3 OF AY 2009-10, GROUND NO.1 OF AY 2010-11 & GROUNDS NO.1 & 2 OF AY 2010-11 IN A SSESSEES APPEALS ARE ALLOWED. GROUND NO.4 OF AY 2009-10 (ASSESSEES APPEAL) GROUND NO.3 OF AY 2010-11 (ASSESSEES APPEAL) GROUND NO.4 OF AY 2011-12 (ASSESSEES APPEAL) 30. AO/CIT(A) HAVE DISALLOWED DEDUCTION CLAIMED BY THE ASSESSEE COMPANY ON ACCOUNT OF EDUCATION CESS ON IN COME-TAX, DIVIDEND DISTRIBUTION TAX AND FRINGE BENEFIT TAX AM OUNTING TO RS.46.35 LAKHS, RS.84.71 LAKHS & RS.47.42 LAKHS FOR AYS 2009-10, 2010-11 & 2011-12 RESPECTIVELY ON THE GROUND THAT IT IS IN THE NATURE OF SURCHARGE AND THE TERM TAX INCLUDES SURCH ARGE, EDUCATION CESS AND HIGHER EDUCATION CESS. 31. LD. AR FOR THE ASSESSEE CONTENDED THAT EDUCATIO N CESS IS AN ALLOWABLE CESS AND RELIED UPON THE DECISION RENDERE D BY THE HONBLE RAJASTHAN HIGH COURT IN CASE OF M/S. CHAMBAL FERTILIZERS AND CHEMICALS LTD. VS. PR.CIT (D.B. ITA NO.52/2018 JUDGMENT DATED 31.07.2018) AND CBDT CIRCULAR NO.91/58 DATED 19.05.1967. LD. AR FOR THE ASSESSEE FURTHER CONTENDED THAT CESS HAS ALREADY BEEN SPECIFICALLY EXCLUDED FROM SECTION 40(A)(II) O F THE ACT AND ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 22 RELIED UPON THE CBDT CIRCULAR DATED 19.05.1967 (SUP RA). HE FURTHER CONTENDED THAT CESS IS NOT IN THE NATURE OF TAX. HOWEVER, LD. DR FOR THE REVENUE RELIED UPON THE ORDERS PASSED BY THE AO AS WELL AS LD. CIT (A). 32. PERUSAL OF CBDT CIRCULAR DATED 19.05.1967 (SUPR A) IS CATEGORIC ENOUGH THAT VIEW OF ITO DISALLOWING THE C ESS PAID BY THE ASSESSEE IS NOT CORRECT AND THE SELECT COMMITTEE HA S DECIDED TO OMIT THE WORD CESS FROM THE CLAUSE AND ITS EFFECT IS THAT ONLY TAXES PAID ARE TO BE DISALLOWED IN THE ASSESSMENT FOR THE YEAR 1962-63 AND ONWARDS. 33. THIS ISSUE HAS BEEN DECIDED BY HONBLE HIGH COU RT OF RAJASTHAN IN CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LTD. (SUPRA) IN THE LIGHT OF THE INTERPRETATION OF CIRCU LAR DATED 19.05.1967 (SUPRA) IN FAVOUR OF THE ASSESSEE BY RET URNING FOLLOWING FINDINGS :- 13. ON THE THIRD ISSUE IN APPEAL NO.52/2018, IN VI EW OF THE CIRCULAR OF CBDT WHERE WORD CESS IS DELETED, IN O UR CONSIDERED OPINION, THE TRIBUNAL HAS COMMITTED AN E RROR IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE. APART FR OM THE SUPREME COURT DECISION REFERRED THAT ASSESSMENT YEA R IS INDEPENDENT AND WORD CESS HAS BEEN RIGHTLY INTERPRE TED BY THE SUPREME COURT THAT THE CESS IS NOT TAX IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKE N BY THE TRIBUNAL ON ISSUE NO.3 IS REQUIRED TO BE REVERSED A ND THE SAID ISSUE IS ANSWERED IN FAVOUR OF THE ASSESSEE. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 23 34. SO, IN THESE CIRCUMSTANCES, EDUCATION CESS IS N OT A DISALLOWABLE EXPENDITURE U/S 40(A)(II) OF THE ACT H AVING BEEN EXPRESSLY EXCLUDED FROM SECTION 40(A)(II) OF THE AC T. MOREOVER, CESS IS NOT IN THE NATURE OF TAX AS HAS BEEN HELD B Y HONBLE SUPREME COURT IN CASE OF SMITH KLINE AMP; FRENCH (INDIA) LTD. AND ORS. VS. CIT (1996) 219 ITR 581 (SC) . SO, WE ARE OF THE CONSIDERED VIEW THAT AO/CIT(A) HAVE ERRED IN DISALL OWING THE DEDUCTION FOR EDUCATION CESS ON INCOME-TAX, DIVIDEN D DISTRIBUTION TAX AND FRINGE BENEFIT TAX FOR AYS 2009-10, 2010-11 & 2011-12 IN COMPUTING THE TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT, CONSEQUENTLY ORDERED TO BE DELETED. HENCE, GROUND NO.4 OF AY 2009-10, GROUND NO.3 OF AY 2010-11 & GROUND NO.4 OF AY 2010-11 IN ASSESSEES APPEALS ARE ALLOWED. GROUND NO.4 OF AY 2010-11 (ASSESSEES APPEAL) 35. AO DISALLOWED ASSESSEES CLAIM OF BUSINESS PROM OTION EXPENSES OF RS.7,76,489/- TO THE TUNE OF 50% AND CO NSEQUENTLY DISALLOWED AN AMOUNT OF RS.3,88,244/-. HOWEVER, LD . CIT (A) HAS RESTRICTED THE DISALLOWANCE TO 15%. AO AS WELL AS LD. CIT (A) HAVE AGREED IN PRINCIPLE THAT FOR EVERY BUSINESS HOUSE, BUSINESS ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 24 PROMOTION EXPENSES ARE REQUIRED TO PROMOTE ITS BUSI NESS BY HOLDING MEETING WITH ITS PROSPECTIVE CLIENTS AND BY EXTENDI NG GIFTS ON A FESTIVE OCCASIONS BUT PROCEEDED TO MAKE AD HOC DISA LLOWANCE OF 50% BY AO AND THEN 15% BY THE LD. CIT (A). WE ARE OF THE CONSIDERED VIEW THAT WHEN THE DETAILS SUBMITTED BY THE ASSESSEE HAVE NOT BEEN DISPUTED, SUCH AD HOC DISALLOWANCE CA NNOT BE MADE ON THE BASIS OF SURMISES. 36. HONBLE DELHI HIGH COURT IN CASE OF NATIONAL INDUSTRIAL CORPORATION LTD. VS. CIT (2002) 258 ITR 575 (DEL.) HELD THAT WHEN THERE ARE NO FINDINGS THAT PART OF THE EXPENDI TURE ON SALES/ BUSINESS PROMOTION WAS FOR NON-BUSINESS PURPOSES, P ART OF THE EXPENDITURE NOT TO BE DISALLOWED U/S 37 OF THE ACT. SO, WE ARE OF THE CONSIDERED VIEW THAT AO/CIT(A) HAVE PURELY DISA LLOWED 50% & 15% RESPECTIVELY OF THE SALES PROMOTION EXPENSES ON AD HOC BASIS WITHOUT POINTING OUT IF ANY PART OF THE BUSIN ESS PROMOTION EXPENSES CLAIMED BY THE ASSESSEE COMPANY HAVE NOT B EEN INCURRED. SO, WE DELETE THE ADDITION OF RS.1,16,473/- BEING 1 5% OF THE BUSINESS PROMOTION EXPENSES DISALLOWED BY THE LD. C IT (A)., HENCE GROUND NO.4 OF ASSESSEES APPEAL IN AY 2010-11 IS D ETERMINED IN FAVOUR OF THE ASSESSEE. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 25 GROUND NO.4 OF AY 2009-10 (REVENUES APPEAL) 37. AO FOR THE PURPOSE OF CALCULATION OF DISALLOWAN CE IN TERMS OF RULE 8D(2)(III) OF THE RULES CONSIDERED THE INVE STMENT OF RS.1.41 CRORES MADE BY THE ASSESSEE COMPANY IN ITS SUBSIDIARY, NAMELY, M/S. NEWBY INDIA PVT. LTD.. HOWEVER, LD. C IT (A) DIRECTED TO EXCLUDE THE SAID INVESTMENT MADE BY THE ASSESSEE IN M/S. NEWBY INDIA PVT. LTD. FOR THE PURPOSE OF COMPU TING DISALLOWANCE UNDER RULE 8D BY RELYING UPON THE DECI SIONS RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF INTER GLOBE ENTERPRISES LTD. VS. DCIT, J.M. FINANCIAL LTD . VS. ADDL. CIT ITA NO.4521/MUM/2012 AND UP ELECTRONICS CORPN. LTD. VS. DCIT. 37.1 WE ARE OF THE CONSIDERED VIEW THAT WHEN UNDISP UTEDLY STRATEGIC INVESTMENT HAS BEEN MADE BY THE ASSESSEE COMPANY IN ITS SUBSIDIARY COMPANY TO HAVE CONTROL OVER IT, THE SAM E HAS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTING DISALLOWANCE UNDER RULE 8D. WHEN UNDISPUTEDLY THERE IS NO EXEMPT INCOME NO DISALLOWANCE U/S 14A CAN BE MADE. REVENUE ITSELF H AS ALLOWED THE IDENTICAL RELIEF TO THE ASSESSEE COMPANY IN AY 2011 -12 WHICH HAS NOT BEEN CONTESTED BEFORE THE TRIBUNAL. SO, WE ARE OF THE ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 26 CONSIDERED VIEW THAT LD. CIT (A) HAS RIGHTLY DIRECT ED TO EXCLUDE THE AMOUNT OF INVESTMENT MADE BY THE ASSESSEE COMPANY I N ITS SUBSIDIARY FOR THE PURPOSE OF COMPUTATION OF DISALL OWANCE MADE U/S 14A R/W RULE 8D, HENCE GROUND NO.4 OF REVENUES APPEAL FOR AY 2009-10 IS DISMISSED. GROUND NO.5 OF AY 2009-10 (REVENUES APPEAL) 38. ASSESSEE COMPANY BY TREATING THE EXCISE DUTY GR ANT CAPITAL IN NATURE EXCLUDED THE SAME FOR THE PURPOSE OF CALC ULATION OF BOOK PROFIT U/S 115JB OF THE ACT, WHICH THE AO HAS DECLI NED. HOWEVER, LD. CIT (A) BY FOLLOWING THE EARLIER ORDER FOR ASSE SSMENT YEAR 2007-08 ALLOWED THE CLAIM OF THE ASSESSEE. 39. LD. AR FOR THE ASSESSEE CONTENDED THAT IN THE Y EAR UNDER ASSESSMENT, ASSESSEE COMPANY IS LIABLE TO PAY THE T AX AS PER NORMAL PROVISIONS OF THE ACT AND NOT IN TERMS OF SECTION 1 15JB AND RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THE TR IBUNAL IN CASE OF SICPA INDIA PVT. LTD. VS. DCIT (ITA NO.885/KOL/2012 ORDER DATED 22.03.2017) FOR AY 2007-08 IN ASSESSEES OWN CASE. 40. PERUSAL OF THE AFORESAID ORDER IN ASSESSEES OW N CASE PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL SHOWS THAT IDENTICAL ISSUE ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 27 HAS BEEN DEALT WITH AND DECIDED IN FAVOUR OF THE AS SESSEE, OPERATIVE PART THEREOF IS EXTRACTED FOR READY PERUSAL AS UND ER :- 21. THE MAIN ISSUE THAT ARISES FOR CONSIDERATION O N THE BASIS OF THE GRIEVANCE PROJECTED BY THE REVENUE IN THE AFORESAID GROUND NO.2 IS AS TO WHETHER THE EXCISE DUTY REFUND WHICH WERE HELD B Y THE CIT(A) TO BE CAPITAL RECEIPTS NOT CHARGEABLE TO TAX CAN STILL BE CONSIDERED AS PART OF THE BOOK PROFITS U/S.115JB OF THE ACT, EVEN THOUGH THESE SUMS HAVE BEEN CREDITED IN THE PROFIT AND LOSS ACCOUNT AND TR EATED AS INCOME AND EVEN THOUGH THE EXCLUSION OF THESE SUMS FOR THE PUR POSE OF COMPUTING BOOK PROFIT U/S.115JB HAS NOT BEEN SPECIFICALLY PRO VIDED UNDER EXPLANATION BELOW SEC.115JB (2) OF THE ACT. IN REJE CTING THE CLAIM OF THE ASSESSEE IN THIS REGARD, THE AO HELD THAT THESE SUMS HAVE BEEN CREDITED IN THE PROFIT AND LOSS ACCOUNT AND TREATED AS INCOME AND EXCLUSION OF THESE INCOMES (SUMS) FOR THE PURPOSE O F COMPUTING BOOK PROFIT U/S.115JB HAS NOT BEEN SPECIFICALLY PROVIDED UNDER EXPLANATION BELOW SEC. 115JB (2) OF THE ACT. 22. WE HAVE HEARD THE SUBMISSION OF THE LEARNED COU NSEL FOR THE ASSESSEE. AS FAR AS THE EXCLUDING THE SUBSIDIES IN QUESTION FROM COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT IS CONCERNED, THE PROVISIONS OF SEC. 115JB OF THE ACT HAVE TO BE LOO KED AT. SECTION 115JB OF THE ACT PROVIDES THAT NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISION OF THE ACT, WHERE IN THE CASE O F AN ASSESSEE. BEING A COMPANY, THE INCOME- TAX, PAYABLE ON THE TOTAL IN COME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELE VANT TO THE ASSESSMENT YEAR COMMENCING ON OF AFTER THE 1ST DAY OF APRIL, 200L, IS LESS THAN SEVEN AND ONE HALF PERCENT OF ITS BOOK PR OFIT, SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSES SEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF SEVEN AND ONE HALF TEN PE R CENT. THE ASSESSEE BEING A COMPANY THE PROVISIONS OF SEC. 115JB OF THE ACT WERE APPLICABLE. EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURPOSES OF SECTION 115JB OF THE ACT, PREPARE ITS PROFIT AND LO SS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVI SIONS OF PARTS II AND III OF SCHEDULE VI TO THE COMPANIES ACT, 1956 ( L OF 1956). IN SO PREPARING ITS BOOK OF ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT, THE COMPANY SHALL ADOPT THE SAME ACCOUNTING POLICIES, A CCOUNTING STAND AND METHOD AND RATES FOR CALCULATING DEPRECIATION A S IS ADOPTED WHILE PREPARING ITS ACCOUNTS THAT ARE LAID BEFORE THE COM PANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH PROVISIONS OF SE C.210 OF THE COMPANIES ACT. EXPLANATION BELOW SEC. 115JB OF THE ACT PROVIDES THAT FOR THE PURPOSES OF SECTION 115JB OF THE ACT, 'BOOK PROFIT' MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SECTION (2), AS IN CREASED BY- CERTAIN ITEMS DEBITED IN THE PROFIT AND LOSS ACCOUNT IN ARR IVING AT THE NET PROFIT AND AS REDUCED BY- CERTAIN ITEMS THAT ARE CREDITED IN THE PROFIT AND LOSS ACCOUNT. IN OTHER WORDS, ALL THAT ONE HAS TO DO, WH ILE COMPUTING BOOK PROFITS IS TO TAKE THE PROFIT AS PER PROFIT AND LOS S ACCOUNT PREPARED IN ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 28 ACCORDANCE WITH COMPANIES ACT, 1956 AND MAKE ADDITI ONS OR SUBTRACTION AS IS GIVEN IN THE EXPLANATION TO SEC.1 15JB(2) OF THE ACT. 23. WE HAVE ALREADY SEEN THAT THE ISSUE WHETHER SUB SIDIES IN QUESTION CAN BE REGARDED AS INCOME AT AN IS NO LONG ER RES INTEGRA AND HAS BEEN CONCLUDED BY THE HON'BLE JAMMU & KASHMIR H IGH COURT IN THE CASE OF BALAJI ALLOYS (SUPRA). IN THE AFORESAID DECISION THE HON'BLE J & K HIGH COURT ON IDENTICAL FACTS HELD THAT EXCIS E DUTY SUBSIDY AND INTEREST SUBSIDY WERE CAPITAL RECEIPTS NOT CHARGEAB LE TO TAX. IN VIEW OF THE AFORESAID DECISION OF THE HON'BLE HIGH COURT RE NDERED ON IDENTICAL FACTS AS THAT OF THE ASSESSEE'S CASE, THERE CAN BE NO DOUBT THAT SUBSIDIES IN QUESTION DOES NOT HAVE ANY CHARACTER OF INCOME. 24. WHEN A RECEIPT IS NOT IN THE CHARACTER OF INCOM E, CAN IT FORM PART OF THE BOOK PROFITS FOR THE PURPOSE OF SEC.115 JB OF THE ACT, IS THE QUESTION THAT ARISES FOR CONSIDERATION. THE ITAT KO LKATA BENCH IN THE CASE OF BINANI INDUSTRIES LTD. ITA NO.144/KO1L2013 ORDER DATED 2.3.2016 REPORTED IN (2016) 178 TTJ 0658 (KOL) : (2 016) 137 DTR 0185 (KOL)(TRIB) HAD TO DEAL WITH A CASE WHERE THE QUEST ION WAS AS TO WHETHER RECEIPTS ON ACCOUNT OF FORFEITURE OF SHARE WARRANTS AMOUNTING TO RS. 12,65,75,000/-, BEING A CAPITAL RECEIPT, WOU LD BE LIABLE FOR TAXATION U/S 115JB. THE TRIBUNAL AFTER REFERRING TO SEVERAL DECISIONS ON THE ISSUE VIZ., THE HON 'BLE APEX COURT IN CASE OF INDO RAMA SYNTHETICS (I) LTD VS CIT 330 ITR 336 (SC), APOLLO TYRES LTD. 255 ITR 273 (SC), SPECIAL BENCH ITAT IN THE CASE OF RAIN COMMODITIES LTD. VS. DCIT (2010) 131 TTJ (HYD)(SB) 514, ITAT LUCKNOW BENCH IN THE CASE OF ACIT VS. L.H.SUGAR FACTORY LTD AND VICE VERSA IN IT A NOS. 417 ,418 & 339/LKW/2013 DATED 9.2.2016 AND DECISION OF MUMBAI ITAT IN THE CASE OF SHIVALIK VENTURE (P) LTD. VS. DCIT (2015) 1 73 TTJ (MUMBAI) 238 DATED 19.8.2015, CAME TO THE CONCLUSIONS (I) THE OBJECT OF MINIMUM ALTERNATE TAX (MAT) PROV ISIONS INCORPORATED IN SEC.L15JB OF THE ACT WAS TO BRING O UT REAL PROFIT OF COMPANIES AND THE THRUST WAS TO FIND OUT REAL WORKING RESULTS OF COMPANY. (II) INCLUSION OF RECEIPT WHICH ARE NOT IN THE NAT URE OF INCOME IN COMPUTATION OF BOOK PROFITS FOR MAT WOULD DEFEAT TW O FUNDAMENTAL PRINCIPLES, IT WOULD LEVY TAX ON RECEIP T WHICH WAS NOT IN NATURE OF INCOME AT ALL AND SECONDLY IT WOUL D NOT RESULT IN ARRIVING AT REAL WORKING RESULTS OF COMPANY. REA L WORKING RESULT COULD BE ARRIVED AT ONLY AFTER EXCLUDING THI S RECEIPT WHICH HAD BEEN CREDITED TO P&L A/C AND NOT OTHERWIS E. (III) THERE WAS A DISCLOSURE OF THE FACTUM OF FORF EITURE OF SHARE WARRANTS AMOUNTING TO RS. 12,65,75,000/- BY THE ASS ESSEE IN ITS NOTES ON ACCOUNTS VIDE NOTE NO.6 TO SCHEDULE II OF FINANCIAL STATEMENTS FOR YEAR ENDED 31.3.2009. PROFIT AND LOS S ACCOUNT PREPARED IN ACCORDANCE WITH PART II AND III OF SCHE DULE VI OF COMPANIES ACT 1956, INCLUDED NOTES ON ACCOUNTS THER EON AND ACCORDINGLY IN ORDER TO DETERMINE REAL PROFIT OF AS SESSEE, ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 29 ADJUSTMENT NEED TO BE MADE TO DISCLOSURES MADE IN N OTES ON ACCOUNTS FORMING PART OF PROFIT AND LOSS ACCOUNT OF ASSESSEE. PROFITS ARRIVED AFTER SUCH ADJUSTMENT, SHOULD BE CO NSIDERED FOR PURPOSE OF COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT AND THEREAFTER, AO HAD TO MAKE ADJUSTMENTS FOR ADDITIONS/DELETIONS CONTEMPLATED IN EXPLANATION TO SECTION 115JB OF THE ACT. 25. THE TRIBUNAL IN THE AFORESAID DECISION MADE A R EFERENCE TO THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CA SE OF RAIN COMMODITIES (SUPRA) WHICH IN TURN WAS BASED ON THE RATIO LAID DOWN IN THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF APOLLO TYRES LTD. (SUPRA) AS A CASE IN WHICH THE INCOME IN QUEST ION WAS TAXABLE BUT WAS EXEMPT UNDER A SPECIFIC PROVISION OF THE ACT AN D BUT FOR THE EXEMPTION, THE INCOME WOULD BE CHARGEABLE TO TAX AN D SUCH ITEMS OF INCOME SHOULD ALSO BE INCLUDED AS PART OF THE BOOK PROFITS. BUT WHERE A RECEIPT IS NOT IN THE NATURE OF INCOME AT ALL IT CA NNOT BE INCLUDED IN BOOK PROFITS THOUGH IT IS CREDITED IN THE PROFIT AN D LOSS ACCOUNT. THE BENCH FOLLOWED THE DECISION OF THE LUCKNOW BENCH IN THE CASE OF L.H.SUGAR FACTORY LTD.(SUPRA), WHERE RECEIPTS ON AC COUNT OF CARBON CREDITS WHICH WERE CAPITAL RECEIPTS NOT CHARGEABLE TO TAX AND HENCE NOT IN THE NATURE OF INCOME WERE HELD NOT INCLUDED IN T HE BOOK PROFITS. THE BENCH ALSO REFERRED TO THE DECISION OF THE MUMBAI B ENCH OF THE ITAT IN THE CASE OF SHIVALIK VENTURE PVT. LTD. (SUPRA) W HICH WAS A CASE WHERE THE QUESTION WAS WHETHER PROFITS ARISING ON T RANSFER OF A CAPITAL ASSET BY A COMPANY TO ITS WHOLLY OWNED SUBSIDIARY C OMPANY WHICH IS NOT TREATED AS INCOME' U/S 2(24) OF THE ACT AND SIN CE IT DOES NOT FORM PART OF THE TOTAL INCOME U/S.10 OF THE ACT AND THER EFORE DOES NOT ENTER INTO COMPUTATION PROVISION AT ALL UNDER THE NORMAL PROVISIONS OF THE ACT, THE SAME SHOULD BE CONSIDERED FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THE MUMBAI BENCH HELD AS FOLLOWS: '26. WE SHALL NOW EXAMINE THE SCHEME OF THE PROVISI ONS OF SEC. 115JB OF THE ACT. IT IS PERTINENT TO NOTE THAT THE PROVISIONS OF SEC. 10 LISTS OUT VARIOUS TYPES OF INCOME, WHICH DO NOT FORM PART OF TOTAL INCOME. ALL THOSE ITEMS OF RECEIPTS S HALL OTHERWISE FALL UNDER THE DEFINITION OF THE TERM 'INCOME' AS D EFINED IN SEC. 2(24) OF THE ACT, BUT THEY ARE NOT INCLUDED IN TOTAL INCOME IN VIEW OF THE PROVISIONS OF SEC. 10 OF THE ACT. SI NCE THEY ARE CONSIDERED AS 'INCOMES NOT INCLUDED IN TOTAL INCOME ' FOR SOME POLICY REASONS, THE LEGISLATURE, IN ITS WISDOM, HAS DECIDED NOT TO SUBJECT THEM TO TAX U/S 115JB OF THE ACT ALSO, EXCE PT OTHERWISE SPECIFICALLY PROVIDED FOR. CLAUSE (II) OF EXPLANATI ON I TO SEC. 115JB SPECIFICALLY PROVIDES THAT THE AMOUNT OF INCO ME TO WHICH ANY OF THE PROVISIONS OF SECTION 10 (OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (38) THEREOF) IS TO BE REDUCED FROM THE NET PROFIT, IF THEY ARE CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE LOGIC OF THESE PROVISIONS, IN OUR VIEW, IS THAT AN ITEM OF RECEIPT WHICH FALLS UNDER THE DEFINITION OF 'INCOME', ARE E XCLUDED FOR THE PURPOSE OF COMPUTING 'BOOK PROFIT', SINCE THE S AID RECEIPTS ARE EXEMPTED U/S 10 OF THE ACT WHILE COMPUTING TOTA L INCOME. ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 30 THUS, IT IS SEEN THAT THE LEGISLATURE SEEKS TO MAIN TAIN PARITY BETWEEN THE COMPUTATION OF 'TOTAL INCOME' AND 'BOOK PROFIT', IN RESPECT OF EXEMPTED CATEGORY OF INCOME. IF THE S AID LOGIC IS EXTENDED FURTHER, AN ITEM OF RECEIPT WHICH DOES NOT FALL UNDER THE DEFINITION OF 'INCOME' AT ALL AND HENCE FALLS O UTSIDE THE PURVIEW OF THE COMPUTATION PROVISIONS OF INCOME TAX ACT, CANNOT ALSO BE INCLUDED IN 'BOOK PROFIT' U/S 115JB OF THE ACT. HENCE, WE FIND MERIT IN THE SUBMISSIONS MADE BY THE ASSESSEE ON THIS LEGAL POINT.' 26. THE ADMITTED FACTUAL AND LEGAL POSITION IN THE PRESENT CASE IS THAT SUBSIDIES IN QUESTION IS NOT IN THE NATURE OF INCOME. THEREFORE THEY CANNOT BE REGARDED AS INCOME EVEN FOR THE PURPOSE O F BOOK PROFITS U/S.115JB OF THE ACT THOUGH CREDITED IN THE PROFIT AND LOSS ACCOUNT AND HAVE TO BE EXCLUDED FOR ARRIVING AT THE BOOK PROFIT S U/S. 115JB OF THE ACT. WE HOLD ACCORDINGLY AND CONFIRM THE ORDER OF T HE CIT(A) IN THIS REGARD. IN LIGHT OF THE AFORESAID DISCUSSION, WE AR E OF THE VIEW THAT THE SUBSIDIES IN QUESTION SHOULD BE EXCLUDED FOR THE P URPOSE OF DETERMINATION OF BOOK PROFITS U/S.115JB OF THE ACT. WE HOLD ACCORDINGLY AND DISMISS GR.NO.2 RAISED BY THE REVEN UE. 41. SO, FOLLOWING THE DECISION RENDERED BY THE COOR DINATE BENCH OF THE TRIBUNAL ON THIS ISSUE, WE ARE OF THE CONSID ERED VIEW THAT LD. CIT (A) HAS RIGHTLY ALLOWED THE EXCLUSION OF EXCISE DUTY EXEMPTION IN COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. CON SEQUENTLY, GROUND NO.5 OF REVENUES APPEAL FOR AY 2009-10 IS D ETERMINED AGAINST THE REVENUE. GROUND NO.6 OF AY 2009-10 (REVENUES APPEAL) 42. AO MADE ADDITION OF DISALLOWANCE MADE U/S 14A O F THE ACT TO THE BOOK PROFIT OF THE ASSESSEE COMPANY, WHICH T HE LD. CIT (A) ALLOWED BY FOLLOWING ITS OWN ORDER FOR AY 2007-08. IT IS CATEGORIC CASE OF THE ASSESSEE COMPANY THAT FOR THE YEAR UNDE R ASSESSMENT, THE ASSESSEE IS LIABLE TO PAY THE TAX OF THE NORMAL PROVISIONS OF THE ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 31 ACT AND NOT IN TERMS OF SECTION 115JB OF THE ACT. WHEN THIS IDENTICAL ISSUE HAS BEEN ALLOWED BY THE LD. CIT (A) IN AY 2007-08 AND THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANC ES OF THE CASE AND THE SAID DECISION HAS NEVER BEEN CONTESTED BEFO RE THE HIGHER APPELLATE AUTHORITY, THE RULE OF CONSISTENCY HAS TO BE FOLLOWED BY THE REVENUE. WHEN SECTION 115JB BEING NOT A NON-OB STANTE CLAUSE HAVING NO OVERRIDING EFFECT UPON THE OTHER PROVISIO NS OF THE ACT AND PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER ASSESS MENT HAS BEEN MADE ACCORDINGLY BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF PART II & III OF SCHEDULE VI TO THE C OMPANIES ACT, NO FURTHER ADJUSTMENT CAN BE MADE EXCEPT EXPRESSLY PRO VIDED IN THE ACT. SO, THE AO HAS NO JURISDICTION TO TRAVEL BEYO ND THE NET PROFIT SHOWN IN THE P&L ACCOUNT EXCEPT TO THE EXTENT THAT PROFIT IN THE EXPLANATION TO SECTION 115JB OF THE ACT UNDER WHICH DISALLOWANCE U/S 14A IS NOT COVERED. 43. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF M/S. ESSAR TELEHOLDINGS LTD. VS. DCIT (ITA NO.3850/MUM.2010 FO R AY 2005-06 ORDER DATED 29.07.2011) HELD THAT, NO ADDITION TO THE BOOK PROFIT SHALL BE MADE ON ACCOUNT OF EXPENDITURE AS PER RULE 8D R/W SECTION 14A OF THE ACT WHILE COMPUTING INCOM E U/S 115JB ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 32 OF THE ACT. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSIDER ED VIEW THAT LD. CIT (A) HAS RIGHTLY DELETED THE DISAL LOWANCE U/S 14A READ WITH RULE 8D WHILE COMPUTING THE BOOK PROFIT U /S 115JB. SO, GROUND NO.6 OF REVENUES APPEAL FOR AY 2009-10 IS D ISMISSED. GROUND NO.1 OF AY 2011-12 (REVENUES APPEAL) 44. AO MADE ADDITION OF RS.39,97,952/- ON ACCOUNT O F EXCLUSION OF OTHER INCOME VIZ. INCOME EARNED BY WAY OF SCRAP SALES, MISC. INCOME, FREIGHT INCOME, TRANSPORT SUBSIDY AND CASH DISCOUNT NOT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT BY RELYI NG UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE OF CIT VS. STERLING FOODS (1999) 237 ITR 579 (SC) ON THE GROUND THAT A DIRECT AND PROXIMATE CONNECTION IS ABSENT IN RESPEC T OF THE AFORESAID INCOMES EARNED BY THE ASSESSEE COMPANY. 44.1 HOWEVER, LD. CIT (A) RESTRICTED THE ADDITIO N TO THE TUNE OF RS.15,28,408/- (TRANSPORT RECEIPT RS.12,43,233/-, MISC. INCOME RS.1,31,647/- AND PROVISIONS FOR EXPENSES WRITTEN B ACK RS.1,53,528/-) AGAINST THE TOTAL ADDITION OF RS.39, 97,952/- BY FOLLOWING THE DECISION RENDERED BY THE LD. CIT (A) IN CASE OF ASSESSEE IN AYS 2007-08, 2009-10 & 2010-11 AND BY R ELYING UPON ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 33 THE DECISION RENDERED BY HONBLE SUPREME COURT IN C ASE OF LIBERTY INDIA VS. CIT (2009) 28 DTR (SC) . 45. SO FAR AS QUESTION OF TRANSPORT RECEIPT/SUBSIDY OF RS.12,43,233/- RECEIVED BY THE ASSESSEE AND EXCLUDE D BY THE AO BEING NOT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE AC T IS CONCERNED, AS DISCUSSED IN THE PRECEDING PARAS, THERE IS DIREC T NEXUS BETWEEN PROFIT AND BUSINESS AND TRANSPORT SUBSIDY GIVEN BY THE GOVERNMENT BEING REIMBURSEMENT OF COST IN PRODUCTION OF GOODS AS HAS BEEN HELD BY HONBLE SUPREME COURT IN CIT VS. MEGHALAYA STEELS L TD. 383 ITR 217 . SO, WE ARE OF THE CONSIDERED VIEW THAT TRANSPORT SUBSIDY CERTAINLY REDUCED THE COST OF PRODUCTION WO ULD AMOUNT TO PROFITS DERIVED TO INDUSTRIAL UNDERTAKING, HENCE EL IGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. 46. SIMILARLY, MISC. INCOME OF RS.1,31,647/- AND AM OUNT OF RS.1,53,528/- ON ACCOUNT OF WRITTEN BACK AMOUNT IS ALSO ELIGIBLE FOR DEDUCTION U/S 80IC BEING DIRECTLY INTER-LINKED AND DERIVED FROM THE BUSINESS AS HAS BEEN HELD BY HONBLE SUPREME COURT IN LIBERTY INDIA VS. CIT (SUPRA). MOREOVER, IDENTICAL ISSUE HAS BEEN DECID ED IN FAVOUR OF THE ASSESSEE BY THE REVENUE ITSELF IN AY 2007-08 WHICH HAS BEEN ACCEPTED BY THE REVENUE AND NO NEW F ACTS OR LAW ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 34 HAS BEEN BROUGHT ON RECORD BY THE LD. DR FOR THE RE VENUE AS TO WHY THE REVENUE HAS DEPARTED FROM THE EARLIER BINDI NG PRECEDENT. SO, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO SCOPE TO INTERFERE THE FINDINGS RETURNED BY THE LD. CIT (A) ON GROUND NO.1, HENCE GROUND NO.1 OF REVENUES APPEAL FOR AY 2011-12 IS D ECIDED AGAINST THE REVENUE. GROUND NO.2 OF AY 2011-12 (REVENUES APPEAL) 47. AO MADE ADDITION OF RS.1,97,06,900/- (ADVERTISE MENT AND PUBLICITY EXPENSES RS.35,100/-, RENT EXPENSES RS.15 ,90,300/-, DEPRECIATION ON VEHICLES RS.4,50,281/-, DEDUCTION U /S 35 IN RESPECT OF CONTRIBUTIONS RS.1,53,36,000/- & DEDUCTION U/S 8 0G IN RESPECT OF DONATIONS RS.23,08,500/-) ON PROPORTIONED INDIRECT HEAD OFFICE EXPENSES EG. ADVERTISEMENT AND PUBLICITY, RENT, DEP RECIATION ON VEHICLES, DONATION AND CONTRIBUTION PAID FOR SCIENT IFIC RESEARCH BEING NOT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE AC T. HOWEVER, LD. CIT (A) DELETED THE PROPORTIONMENT OF HEAD OFFICE E XPENSES MADE BY THE AO BY FOLLOWING THE DECISIONS RENDERED BY TH E COORDINATE BENCH OF THE TRIBUNAL FOR AY 2006-07 IN ASSESSEES OWN CASE. 48. PERUSAL OF THE ORDER PASSED BY THE COORDINATE B ENCH OF THE TRIBUNAL IN AY 2006-07, AVAILABLE AT PAGES 151 TO 1 53 OF THE PAPER ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 35 BOOK, GOES TO PROVE THAT THE IDENTICAL ISSUE HAS BE EN DECIDED IN FAVOUR OF THE ASSESSEE BY RETURNING FOLLOWING FINDI NGS :- 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. D.R. HAS CONTENDED THAT THE PROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC IS TO BE WORKED OUT AFTER DEDUCTING AL L THE DIRECT AND INDIRECT EXPENSES, THE DEDUCTION UNDER SECTION 80IC, AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, IS IN RESPECT OF ANY PROFIT AND GAINS DERIVED BY THE ELIGIBLE UNDERT AKING. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE IN TH IS REGARD, THE WORDS DERIVED FROM HAS A NARROW MEANING, INASMUCH AS IT CONTEMPLATES FIRST DEGREE CONNECTION WITH THE ELIGI BLE UNIT AS HELD, INTER ALIA, BY THE HONBLE SUPREME COURT IN T HE CASE OF PANDIAN CHEMICALS LIMITED REPORTED IN 262 ITR 278 A ND THIS PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CONTEXT OF INCOME IS ALSO APPLICABLE FOR THE AL LOCATION OF EXPENSES AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL IN TH E CASE OF BALARAMPUR CHINI MILLS LIMITED VS.- DCIT REPORTED IN 140 TTJ 73. IN THE SAID CASE, IT WAS HELD BY THE TRIBUNAL T HAT EXPENSES INCURRED BY THE ASSESSEE UNDER THE GENERAL HEAD OF OFFICE EXPENSES, WHICH ARE NOT DIRECTLY INCURRED FOR THE E LIGIBLE UNIT, CANNOT BE SAID TO HAVE FIRST DEGREE CONNECTION WITH SUCH UNIT SO AS TO REDUCE THE SAME ON PRO RATA BASIS FOR COMPUTI NG THE PROFIT OF SUCH UNIT ELIGIBLE FOR DEDUCTION. IN OUR OPINION , THE ISSUE INVOLVED IN THE PRESENT CASE THUS IS SQUARELY COVER ED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF BALARAMPUR CHINI MILLS LIMITED (SUPRA) AND RESPECTF ULLY FOLLOWING THE SAME, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE. 49. SO, FOLLOWING THE DECISION RENDERED BY THE COOR DINATE BENCH OF THE TRIBUNAL, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN DELETING THE PROPORTIONMENT OF HEAD OFFICE EXPENSES TO THE UNIT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. CONSEQUENTLY, GROUN D NO.2 RAISED ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 36 BY THE REVENUES APPEAL FOR AY 2011-12 IS DETERMINE D AGAINST THE REVENUE. GROUND NO.3 OF AY 2011-12 (REVENUES APPEAL) 50. AO TREATED THE GAIN OF RS.19.32 LAKHS BY THE AS SESSEE COMPANY QUA TRANSACTION OF ENTERING INTO FORWARD CO NTRACTS FOR HEDGING THE RISK ASSOCIATED WITH PAYMENT OF FOREIGN CURRENCY TRADE PAYABLES AS SPECULATION INCOME U/S 43 (5) OF THE AC T. HOWEVER, LD. CIT (A) TREATED THE FORWARD CONTRACT GAIN OF RS.19. 32 LAKHS AS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT ON THE GROUND THAT PURPOSE OF ENTRY INTO FORWARD CONTRACT WAS TO HEDGE THE FOREIGN CURRENCY EXPOSURES QUA IMPORT OF RAW MATERI ALS AND FINISHED GOODS FOR RELYING UPON THE DECISION OF COO RDINATE BENCH OF THE TRIBUNAL IN CASE OF ITO VS. LGW LTD. (2015) 45 CCH 0103 . 50.1 IN CASE OF LGW LTD. (SUPRA) RELYING UPON BY THE LD. CIT (A), IT IS HELD BY THE COORDINATE BENCH OF THE TRIBUNAL THAT FORWARD CONTRACT ENTERED TO SAFEGUARD AGAINST LOSS ARISING OUT OF FLUCTUATION IN FOREIGN CURRENCY ARE NOT SPECULATIVE TRANSACTION HAVING BEEN ENTERED INTO NORMAL COURSE OF BUSINESS. LD. CIT (A ) THRASHED THE LAW AND FACTS ON THIS ISSUE AND CONSEQUENTLY, WE AR E OF THE ITA NO.704/KOL./2015 ITA NO.1586/KOL./2016 ITA NO.7048/KOL./2017 ITA NO.838/KOL./2015 ITA NO.7483/KOL./2017 37 CONSIDERED VIEW THAT WHEN FORWARD TRADING CONTRACT WAS ARRIVED AT BY THE ASSESSEE COMPANY MERELY TO SAFEGUARD AGAINST LOSS ARISING OUT OF FOREIGN EXCHANGE IN FOREIGN CURRENCY, THE SA ME CANNOT BE TREATED AS SPECULATION TRANSACTION AS BUSINESS INCO ME ELIGIBLE FOR DEDUCTION U/S 80IC, SO WE FIND NO GROUND TO INTERFE RE THE FINDINGS RETURNED BY THE LD. CIT (A), HENCE GROUND NO.3 OF R EVENUES APPEAL FOR AY 2011-12 IS DETERMINED AGAINST THE REV ENUE. 51. RESULTANTLY, THE APPEALS FILED BY THE ASSESSEE FOR AYS 2009- 10, 2010-11 & 2011-12 ARE ALLOWED AND THE APPEALS F ILED BY THE REVENUE FOR AYS 2009-10 & 2011-12 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF JANUARY, 2020. SD/- SD/- (DR. B.R.R. KUMAR) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF JANUARY , 2020 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.