M/s. Construction Engineers, Srinagar V. The Assessing Officer, Srinagar

ITA 753/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8857 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Assessee Lawyers: M A MIR COST ACCOUNTANT
• Keywords: Depreciation; Earning of tax free income; Question of law; Cost of acquisition; Revised return
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO. 753(ASR)/2013 ASSESSMENT YEAR: 2009-10 M/S CONSTRUCTION ENGINEERS 54, INDUSTRIAL ESTATES, BARZULLA, SRINAGAR. PAN:AABFC7715P VS. THE ASSESSING OFFICER CIRCLE, SRINAGAR. (APPELLANT) (RESPONDENT) I.T.A NO.477(ASR)/2013 ASSESSMENT YEAR: 2009-10 THE DCIT, CIRCLE-3, SRINAGAR. VS. M/S CONSTRUCTION ENGINEERS 54, INDUSTRIAL ESTATES, BARZULLA, SRINAGAR. PAN:AABFC7715P (APPELLANT) (RESPONDENT) APPELLANT BY: SH. M. A. MIR (COST A CCOUNTANT) RESPONDENT BY: SH. R.K. SHARDA (DR) DATE OF HEARING: 02.02.2016 DATE OF PRONO UNCEMENT: 18.02.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE CROSS APPEALS FILED BY ASSESSEE AS WELL A S BY REVENUE AGAINST THE ORDER OF LEARNED CIT(A), JAMMU, DATED 2 9.04.2013 FOR THE ASST. YEAR 2009-10. 2. THE GROUNDS OF APPEAL TAKEN BY ASSESSEE AS WELL AS BY REVENUE ARE REPRODUCED BELOW. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 2 2.1 THE FOLLOWING GROUNDS HAS BEEN TAKEN BY THE ASS ESSEE. (I) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY CO NFIRMING ADDITION OF RS.6,74,210/- U/S 14A OF THE INCOME TAX ACT, 1961. THE ADDITION BAD IN LAW THUS LIABLE TO BE DELETED. (II) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY C ONFIRMING ADDITION OF RS.86,89,012/- ON ACCOUNT OF OPENING STOCK. THE ADD ITION HAS ALSO BEEN MADE IN THE ASSESSMENT YEAR 2008-09. THE ADDITION I S BAD IN LAW, UNJUSTIFIED AND LIABLE TO BE DELETED. (III) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY CONFIRMING ADDITION OF RS.2,40,490/- ON ACCOUNT OF SITE EXPENSES. THE ADDI TION IS BAD IN LAW, UNJUSTIFIED AND LIABLE TO BE DELETED. (IV) THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY C ONFIRMING ADDITION OF RS.7,50,000/- ON ACCOUNT OF DEPRECIATION . THE ADDITION IS BAD IN LAW, UNJUSTIFIED AND LIABLE TO BE DELETED. WHEREAS THE FOLLOWING GROUNDS HAS BEEN TAKEN BY TH E REVENUE. (I) ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE DISALLOWANCE OF RS.1,50,000/- MADE ON ACCOUNT OF MEDICAL EXPENSES WHEN THE ASSESSEE HAD FAILED TO FURNISH ANY BREAK UP OF THE EXPENSES AS WELL AS THE SUPPORTING BILLS/VOUCHERS. (II) ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DETERMINING THE LONG TERM CAPITAL GAIN ON LAND AT R S.42,48,533/- INSTEAD OF LONG TERM CAPITAL GAIN OF RS,1,00,00,000/- DETERMINED BY THE ASSESSING OFFICER WHEN THE COST OF ACQUISITION OF PROPERTY WAS TAKEN BY TH E ASSESSEE AS ENTIRELY TOWARDS BUILDING ON WHICH DEPRECIATION WAS CLAIMED IN EARLI ER YEARS AND THEREFORE, THE COST OF ACQUISITION OF THE LAND WAS TAKEN AS NIL. (III) ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD . CIT(A) WAS RIGHT IN DETERMINING THE LONG TERM CAPITAL GAIN ON LAND AT RS .42,48,533/- INSTEAD OF LONG TERM CAPITAL GAIN OF RS.1,00,00,000/- DETERMINED BY THE ASSESSING OFFICER WHEN THE CASE OF CIT VS. YAMUNA SYNDICATE LTD. (2007) 16 2 TAXMAN 167 RELIED UPON THE LD. CIT(A) IS ENTIRELY DISTINGUISHABLE FROM THI S CASE AS THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE BUILDING IN EARLIER YEA RS WHICH INCLUDES COST OF LAND. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 3 3. AT THE OUTSET, THE LEARNED AR INVITED OUR ATTENT ION TO A COPY OF APPLICATION ALONG WITH AFFIDAVIT FOR CONDONING THE DELAY IN FILING OF APPEAL BY ASSESSEE. THE LEARNED AR SUBMITTED THAT THE LEAR NED CIT(A) HAD ISSUED ORDER ON 29.04.2013 AND WHICH WAS HANDED OVE R TO THE COUNSEL OF ASSESSEE ON 29.04.2013 AND THE COUNSEL RETURNED THE SAME TO THE ASSESSEE ON 15.05.2013. ON THAT DATE ONE OF THE EM PLOYEE OF THE FIRM RECEIVED THE ORDER AND KEPT THE ORDER SOMEWHERE AND ASSESSEE WAS NOT HAVING ANY KNOWLEDGE ABOUT SUCH ORDER AND ON 1 ST DECEMBER, 2013 THE ASSESSEE SOME HOW FOUND THAT ORDER AND FILED THE AP PEAL AND THAT IS WHY A DELAY OF 168 DAYS HAS OCCURRED. THE LEARNED AR IN THIS RESPECT SUBMITTED THAT ASSESSEE HAS FILED A DULY SWORN AFFI DAVIT IN THIS RESPECT. IN VIEW OF THE ABOVE, IT WAS PRAYED THAT DELAY IN F ILING OF THE APPEAL MAY BE CONDONED. 4. THE LEARNED DR, HOWEVER OBJECTED TO CONDONATION OF DELAY, HOWEVER, KEEPING IN VIEW THE SUBSTANTIAL JUSTICE WE CONDONED THE DELAY IN FILING OF APPEAL AND LEARNED COUNSEL WAS ALLOWED TO PROCEED ON THE MATTER. 5. INVITING OUR ATTENTION TO THE FACTS OF THE CASE, THE LEARNED AR SUBMITTED THAT ASSESSEE WAS A PARTNERSHIP FIRM ENGA GED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER MADE VARIOUS ADDITIONS. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 4 6. AGGRIEVED WITH THE ADDITIONS THE ASSESSEE FILED APPEAL BEFORE LEARNED CIT(A) AND LEARNED CIT(A) HAD PARTLY ALLOWE D THE RELIEF TO THE ASSESSEE AND PARTLY CONFIRMED THE ADDITIONS. THEREF ORE, BOTH THE PARTIES ARE IN APPEAL BEFORE THIS BENCH. 7. ARGUING UPON GROUND NO.1, IN HIS APPEAL THE LEAR NED AR SUBMITTED THAT THE SUSTAINING OF ADDITION MADE BY A SSESSING OFFICER U/S 14A WAS NOT BASED UPON THE FACTS AS ASSESSEE HAD NO T UTILIZED ANY BORROWED FUNDS FOR THE PURCHASE OF SHARES AND IN TH IS RESPECT INVITED OUR ATTENTION TO WRITTEN SUBMISSIONS FILED BY HIM WHERE IN HE HAD SUBMITTED THAT ALL LOANS WERE UTILIZED FOR BUSINESS PURPOSES AND NO INVESTMENT WAS MADE IN THE SHARES OUT OF BORROWED FUNDS. HE FURTHE R SUBMITTED THAT THE ASSESSEE HAD NOT INCURRED ANY EXPENSES FOR THE EARN ING OF EXEMPT INCOME AND THEREFORE, NO DISALLOWANCE WAS WARRANTED AND IN THIS RESPECT RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS. (I) CIT VS. HERO CYCLES LIMITED 323 ITR 518 (ITAT, DELHI). THE LEARNED AR F URTHER RELIED UPON THE DECISION OF ITAT DELHI IN THE CASE OF DY. CIT V S. JINDAL PHOTO LTD. FOR THE PROPOSITION THAT THE BURDEN IS ON THE ASSESSING OFFICER TO ESTABLISH NEXUS OF EXPENSES INCURRED WITH THE EARNING OF EXEM PT INCOME BEFORE MAKING ANY DISALLOWANCE U/S 14A OF THE ACT. THE LEA RNED AR ALSO RELIED UPON THE DECISION OF ITAT DELHI BENCHES IN THE CASE OF DCIT VS. MAHARASHTRA SEAMLESS LTD., FOR THE PROPOSITION THAT WHERE IN THE CASE OF MIXED FUNDS, IT IS NOT POSSIBLE TO ASCERTAIN AS TO WHETHER INVESTMENT IN TAX FREE BONDS IS FROM BORROWED FUNDS ON ASSESSEES OWN FUNDS NO ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 5 DISALLOWANCE WAS WARRANTED. THE LEARNED AR FURTHER SUBMITTED THAT IN ASST. YEAR 2010-11 SIMILAR DISALLOWANCE U/S 14A WAS MADE IN SIMILAR FACTS AND CIRCUMSTANCES AND LEARNED CIT(A) HAD DELE TED THE SAME IN THIS RESPECT FILED A COPY OF LEARNED CIT(A)S ORDER FOR ASST. YEAR 2010-11. 8. ARGUING UPON THE SECOND ADDITION SUSTAINED BY LE ARNED CIT(A), THE LEARNED AR SUBMITTED THAT DURING THE PROCEEDINGS FO R ASST. YEAR 2007- 08, THE ASSESSING OFFICER HAD ADOPTED THE CLOSING S TOCK FIGURE OF RS.3,40,00,000/-. INSTEAD OF FIGURE OF CLOSING STOC K SUBMITTED BY ASSESSEE. ACCORDINGLY A FRESH PROFIT AND LOSS ACCO UNT WAS PREPARED AND ADDITION WAS MADE. ASSESSEE ON THE BASIS OF SUCH CL OSING STOCK HAD TAKEN THE AMOUNT OF RS.3,40,00,000/- AS OPENING STO CK INSTEAD OF RS.25,31,09,88/-. HE SUBMITTED THAT ASSESSEE HAD TA KEN THIS FIGURE OF OPENING STOCK ON THE BASIS OF CLOSING STOCK AS DETE RMINED BY ASSESSING OFFICER HIMSELF AND THEREFORE, ASSESSEE HAD REVISED RETURN OF ITS INCOME FOR ASST. YEAR 2008-09, HOWEVER, ASSESSING OFFICER DID NOT ALLOW SUCH CLAIM OF ASSESSEE AND ASSESSMENT IN ASST. YEAR 2008 -09 WAS COMPLETED AT THE ORIGINAL FIGURE OF CLOSING STOCK. HE SUBMITT ED THAT IN THE PRESENT YEAR THE ASSESSING OFFICER HAS AGAIN MADE ADDITION OF THE SAME DIFFERENCE IN CLOSING STOCK AND OPENING STOCK WHICH AMOUNTS TO DOUBLE ADDITION AS IN THE EARLIER YEAR THE EFFECT HAS ALREADY BEEN TAK EN INTO ACCOUNT. THEREFORE, IT WAS ARGUED THAT ADDITION IN THIS YEAR SHOULD BE DELETED. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 6 9. ARGUING UPON THE GROUND NO.3, REGARDING CONFIRMI NG THE AMOUNT ON ACCOUNT OF SITE EXPENSES THE LEARNED AR SUBMITTE D THAT THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS.2,40,490/- WHICH THE LEARNED CIT(A) HAD RESTRICTED TO 1/3 OF SUCH EXPENDITURE WHEREAS T HE LEANED CIT(A) SHOULD HAVE ALLOWED THE TOTAL RELIEF AS ALL THE EXP ENSES WERE RELATED TO BUSINESS OF THE ASSESSEE. 10. ARGUING UPON THE GROUND NO.4, REGARDING CONFIRM ATION OF ADDITION OF RS.7,50,000/- ON ACCOUNT OF DISALLOWANCE OF DEPR ECIATION CLAIMED ON THE PROPERTY THE LEARNED AR SUBMITTED THAT THOUGH T HE SALE DEED OF PROPERTY IN QUESTION HAS BEEN EXECUTED IN THE NEXT FINANCIAL YEAR BUT THE PROPERTY WAS ACQUIRED AND PUT TO USE DURING THE YEA R UNDER REFERENCE AND IT WAS DULY REFLECTED IN THE SCHEDULE OF FIXED ASSETS OF THE RELEVANT PREVIOUS YEAR AND THEREFORE, DEPRECIATION WAS RIGHT LY CLAIMED. 11. ARGUING UPON THE GROUND NO.5, THE LEARNED AR SU BMITTED THAT THE ASSESSING OFFICER HAD DISALLOWED RS.1,50,000/- WHIC H THE ASSESSEE HAD INCURRED ON ACCOUNT OF MEDICAL EXPENSES WHICH WAS S PENT ON MEDICAL FACILITIES FOR LABOURERS AND THEREFORE, RESTRICTION BY LEARNED CIT(A) OF THE SAME TO RS,30,000/- WAS NOT BASED UPON THE FACTS AS LEARNED CIT(A) SHOULD HAVE ALLOWED THE COMPLETE RELIEF TO THE ASSE SSEE. 12. THE LEARNED DR, ON THE OTHER HAND, HEAVILY RELI ED UPON THE ORDERS OF AUTHORITIES BELOW. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 7 13. ARGUING UPON THE APPEAL FILED BY THE REVENUE, T HE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HAD WRONGLY ALLOW ED THE RELIEF TO THE ASSESSEE AND HE HEAVILY PLACED HIS RELIANCE ON THE ASSESSMENT ORDER. 14. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. 15. AS REGARDS GROUND NO.1, REGARDING DISALLOWANCE U/S 14A, WE FIND THAT LEARNED COUNSEL HAS TRIED TO JUSTIFY THAT DISA LLOWANCE U/S 14A WAS NOT WARRANTED IN VIEW OF THE FACT THAT NO BORROWED FUNDS WERE UTILIZED FOR MAKING INVESTMENTS AND ALL BANK LOANS WERE UTILIZED FOR BUSINESS PURPOSES. HOWEVER THE FACT AS TO WHETHER ANY EXEMPT INCOME WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION IS NOT COMING OUT FROM THE MATERIAL ON RECORD. ONE OF THE MEMBERS IN THIS APP EAL IS AN AUTHOR IN THE CASE OF M/S MAYANK AUTO ENGINEERS (PVT.) LTD. I N WHICH THE DELHI BENCHES HAS PASSED ORDER IN ITA NO. 1567/DEL)2013 O N 25.03.2015 AND IN THIS CASE THE TRIBUNAL RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD. IN ITA N O. 486/2014 AND 299/2014 HAS HELD THAT WHERE THERE IS NO EXEMPT INC OME THE DISALLOWANCE U/S 14A CANNOT BE MADE. THE FINDINGS O F HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD.(SUPRA) IN ITA NO. 1567/DEL/2013 ARE REPRODUCED BELOW. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 8 13. WE ARE CONFUSED ABOUT THE STAND TAKEN BY THE A PPELLANT-REVENUE. THUS, WE HAD ASKED SR. STANDING COUNSEL FOR THE REV ENUE, TO STATE IN HIS SUBMISSION RAISED WAS THAT THE SHARES WOULD HAVE Y IELDED DIVIDEND, WHICH WOULD BE EXEMPT INCOME AND THEREFORE, THE CIT (A) HAD INVOKED SECTION 14A TO DISALLOW THE ENTIRE EXPENDITURE. THE AFORESAID SUBMISSION DOES NOT FIND ANY SPECIFIC AND CLEAR NARRATION IN T HE REASONS OR THE GROUNDS GIVEN BY THE CIT(A) TO, MAKE THE SAID ADDIT ION. POSSIBLY, THE CIT(A), THOUGH IT IS NOT ARGUED BEFORE US, HAD TAKE N THE STAND THAT THE RESPONDENT- ASSESSEE HAD MADE INVESTMENT AND EXPEND ITURE WAS INCURRED TO PROTECT THOSE INVESTMENTS AND THIS EXPENDITURE C ANNOT BE ALLOWED UNDER SECTION 14A. 14. ON THE ISSUE WHETHER THE RESPONDENT-ASSESSEE CO ULD HAVE EARNED DIVIDEND INCOME AND EVEN IF NO DIVIDEND INCOME WAS EARNED, YET SECTION 14A CAN BE INVOKED AND DISALLOWANCE OF EXPENDITURE CAN BE MADE, THERE ARE THREE DECISIONS OF THE DIFFERENT HIGH COURTS DI RECTLY ON THE ISSUE AND AGAINST THE APPELLANT-REVENUE. NO CONTRARY DECISION OF A HIGH COURT HAS BEEN SHOWN TO US. THE PUNJAB AND HARYANA HIGH COURT IN COMMISSIONER OF INCOME TAX, FARIDABAD VS. MIS. LAKHANI MARKETING INCL., ITA NO. 970/2008, DECIDED ON 02.04.2014, MADE REFERENCE TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT VS. HERO CYCLES LIMITED, [ 2010] 323 ITR 518 AND CIT VS. WINSOME TEXTILE INDUSTRIES LIMITED, [2009] 319 ITR 204 TO HOLD THAT SECTION 14A CANNOT BE' INVOKED WHEN NO EXEMPT INCOME WAS EARNED. THE SECOND DECISION IS OF THE GUJARAT HIGH COURT IN COMMISSIONER OF INCOME TAX-I VS. CORRTECH ENERGY (P.) LTD. [2014] 2 23 TAXMANN 130 (GUJ.). THE THIRD DECISION IS OF THE ALLAHABAD HIGH COURT I N INCOME TAX APPEAL NO. 88 OF 2014, COMMISSIONER OF INCOME TAX (II) KANPUR, VS. M/S. SHIVAM MOTORS (P) LTD. DECIDED ON 05.05.2014. IN THE SAID DECISION IT HAS BEEN HELD: 'AS REGARDS THE SECOND QUESTION, SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER TH E CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. HENCE, WHAT SECTION 14A PROVIDES IS THAT IF THERE IS ANY INCOME WHICH DOES NOT FORM PART OF THE INCOME UNDER THE ACT, THE EXPENDITURE WHICH IS INCURRED FOR EARNING THE INCOM E IS NOT AN ALLOWABLE DEDUCTION. FOR THE YEAR IN QUESTION, THE FINDING OF FACT IS THAT THE ASSESSEE HAD NOT EARNED ANY TAX FREE INCOME. HENCE, IN THE A BSENCE OF ANY TAX FREE INCOME, THE CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALLOWANCE. THE VIEW OF THE CIT(A), WHICH HAS BEE N AFFIRMED BY THE TRIBUNAL, HENCE DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. HENCE, THE DELETION OF THE DISALLOWANCE OF RS.2,03J S2/~ MADE BY THE ASSESSING OFFICER WAS IN ORDER'. 15. INCOME EXEMPT UNDER SECTION 10 IN A PARTICULAR ASSESSMENT YEAR, MAY NOT HAVE BEEN EXEMPT EARLIER AND CAN BECOME TAXABLE IN FUTURE YEARS. FURTHER, WHETHER INCOME EARNED IN A SUBSEQUENT YEAR WOULD OR WOULD NOT BE TAXABLE, MAY DEPEND UPON THE NATURE OF TRANSACTI ON ENTERED INTO IN THE SUBSEQUENT ASSESSMENT YEAR. FOR EXAMPLE, LONG TERM CAPITAL GAIN ON SALE ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 9 OF SHARES IS PRESENTLY NOT TAXABLE WHERE SECURITY T RANSACTION TAX HAS BEEN PAID, BUT A PRIVATE SALE OF SHARES IN AN OFF MARKET TRANSACTION ATTRACTS CAPITAL GAINS TAX. IT IS AN UNDISPUTED POSITION THA T RESPONDENT ASSESSEE IS AN INVESTMENT COMPANY AND HAD INVESTED BY PURCHASIN G A SUBSTANTIAL NUMBER OF SHARES AND THEREBY SECURING RIGHT TO MANA GEMENT. POSSIBILITY OF SALE OF SHARES BY PRIVATE PLACEMENT ETC. CANNOT BE RULED OUT AND IS NOT AN IMPROBABILITY. DIVIDEND MAYOR MAY NOT BE DECLARED. DIVIDEND IS DECLARED BY THE COMPANY AND STRICTLY IN LEGAL SENSE, A SHARE HOLDER HAS NO CONTROL AND CANNOT INSIST ON PAYMENT OF DIVIDEND. WHEN DECL ARED, IT IS SUBJECTED TO DIVIDEND DISTRIBUTION TAX. 16. WHAT IS ALSO NOTICEABLE IS THAT THE ENTIRE OR W HOLE EXPENDITURE HAS BEEN DISALLOWED AS IF THERE WAS NO EXPENDITURE INCU RRED BY THE RESPONDENT-ASSESSEE FOR CONDUCTING BUSINESS. THE CI T(A) HAS POSITIVELY HELD THAT THE BUSINESS WAS SET UP AND HAD COMMENCED . THE SAID FINDING IS ACCEPTED. THE RESPONDENT- ASSESSEE, THEREFORE, H AD TO INCUR EXPENDITURE FOR THE BUSINESS IN THE FORM OF INVESTMENT IN SHARE S OF CEMENT COMPANIES AND TO FURTHER EXPAND AND CONSOLIDATE THEIR BUSINES S. EXPENDITURE HAD TO BE ALSO INCURRED TO PROTECT THE INVESTMENT MADE. TH E GENUINENESS OF THE SAID EXPENDITURE AND THE FACT THAT IT WAS INCURRED FOR BUSINESS ACTIVITIES WAS NOT DOUBTED BY THE ASSESSING OFFICER AND HAS AL SO NOT BEEN DOUBTED BY THE CIT(A). 17.IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THE PRESENT APPEALS THE SAME ARE DISMISSED IN LIMINE 16. AS WE HAVE OBSERVED THAT WHETHER THERE WAS ANY EXEMPT INCOME IN THE YEAR UNDER CONSIDERATION OR NOT IS NOT COMING O UT FROM THE MATERIAL ON RECORD, THEREFORE, IT IS APPROPRIATE TO ASCERTAI N IF THERE WAS ANY EXEMPT INCOME AT ALL AND IF THERE IS NO EXEMPT INCO ME THEN FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HOLCIM INDIA PVT. LTD. NO DISALLOWANCE U/S 14A CAN BE MADE AND THEREFORE, THE ISSUE IS REMITTED BACK TO ASSESSING OFFICER TO ASCERTAIN AS TO WHETHER THERE WAS ANY EXEMPT INCOME WAS NOT IF THERE WAS NO EXEMPT IN COME THEN FOLLOWING THE JUDICIAL PRECEDENTS CITED ABOVE NO DI SALLOWANCE CAN BE MADE AND IF THERE IS EXEMPT INCOME THEN DISALLOWANC E CAN BE MADE AS PER FACTS AND CIRCUMSTANCES AND LEGAL PROVISIONS AN D AFTER CONSIDERING THE CASE LAWS RELIED UPON BY ASSESSEE. IN VIEW OF THE ABOVE, GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 10 17. NOW COMING TO GROUND NO.2, REGARDING ISSUE OF C LAIM OF ASSESSEE THAT THE DIFFERENCE IN OPENING AND CLOSING STOCK HA S ALREADY BEEN CONSIDERED IN ASST. YEAR 2008-09 ALSO NEEDS VERIFIC ATION AT THE END OF ASSESSING OFFICER WHO ON THE BASIS OF RECORDS AVAIL ABLE WITH HIM WILL EXAMINE AS TO WHETHER IN ASST. YEAR 2008-09, THE AS SESSEE HAD BEEN TAXED FOR THE DIFFERENCE IN OPENING AND CLOSING STO CK AND WHETHER THE ASSESSEE IS IN APPEAL IN THAT YEAR AND ON THE BASIS OF DETERMINATION FINAL FACTS AND CIRCUMSTANCES THE ASSESSING OFFICER WILL PASS APPROPRIATE ORDER. IN VIEW OF THE ABOVE GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 18. AS REGARDS GROUND NO.3, WE FIND THAT ASSESSING OFFICER HAD MADE THE ADDITION OF RS.2,40,490/- BEING 1/3 OF THE TOTA L EXPENDITURE CLAIMED TO THE TUNE OF RS. RS.8,01,635/-. THE ASSESSING OFF ICER HAD DISALLOWED 30% OF EXPENSES AS ASSESSEE COULD NOT PRODUCE SOME OF THE BILLS/ VOUCHERS FOR SITE EXPENSES. THE LEARNED CIT(A) HAS FURTHER ALLOWED RELIEF TO THE ASSESSEE BY CONFIRMING THE DISALLOWANCE ONLY UP TO RS.80,163/- REPRESENTING FURTHER 30% OF DISALLOWANCE. WE FIND T HAT THE ORDER OF LEANED CIT(A) IS QUITE REASONABLE AND WE DO NOT FIN D ANY INFIRMITY IN THE SAME, THEREFORE, GROUND NO.3 IS DISMISSED. 19. AS REGARDS THE ADDITION ON ACCOUNT OF DEPRECIAT ION, WE FIND THAT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF D EPRECIATION BY HOLDING THAT THE SALE DEED OF SAID PROPERTY WAS EXECUTED IN THE NEXT FINANCIAL ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 11 YEAR AND FURTHERMORE, HE HELD THAT ON THE SALE DEED ITSELF IT WAS MENTIONED THAT THE PROPERTY WAS UNDER OCCUPATION OF SECURITY FORCES AND THEREFORE THE QUESTION OF USE FOR BUSINESS PURPOSES DID NOT ARISE AND THAT IS WHY HE DISALLOWED THE CLAIM FOR DEPRECIATIO N. THE LEARNED CIT(A) HAS UPHELD THE SAME HOLDING THAT SINCE THE BUILDING WAS PURCHASED IN NEXT YEAR AND AT THE TIME OF SALE THE BUILDING WAS OCCUPIED BY SECURITY FORCES, THEREFORE, IT CANNOT BE SAID TO HAVE BEEN U TILIZED FOR BUSINESS PURPOSES. BEFORE US ALSO THE ASSESSEE COULD NOT BRI NG OUT ANYTHING AGAINST THE FINDINGS OF ASSESSING OFFICER AND LEARN ED CIT(A), THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE GROUND NO. 4 IS DISMISSED. 20. AS REGARDS GROUND NO.5 RELATING TO DISALLOWANCE OF MEDICAL EXPENSES, WE FIND THAT LEARNED CIT(A) HAS RESTRICTE D THE DISALLOWANCE FROM RS.1,50,000/- TO RS.30,000/- ONLY WHICH IS REA SONABLE SUSTENANCE OF ADDITION, KEEPING IN FACT THAT ASSESSEE COULD NO T FURNISH ANY BREAK UP OF THESE EXPENSES AS WELL AS SUPPORTING BILLS. IN V IEW OF THE ABOVE, GROUND NO.5 IS ALSO DISMISSED. 21. NOW COMING TO APPEALS FILED BY REVENUE, WE FIND THAT THE REVENUE IS AGGRIEVED WITH THE DELETION BY LEARNED CIT(A) WH ICH THE ASSESSING OFFICER HAS MADE ON ACCOUNT OF DISALLOWANCE OF MEDI CAL EXPENSES. WE FIND THAT LEARNED CIT(A) HAD GIVEN RELIEF ONLY TO T HE EXTENT OF RS.1,20,000/- WHEREAS IN THE GROUNDS OF ABOVE APPEA L THE REVENUE HAS ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 12 TAKEN THE FIGURE OF DISALLOWANCE AT RS.1,50,000/-. WE FIND THAT LEARNED CIT(A) HAS UPHELD THE ADDITION OF RS.30,000/- AGAIN ST THE DISALLOWANCE OF RS.1,50,000/- WHICH THE ASSESSING OFFICER HAD MA DE. THE RELIEF GIVEN BY LEARNED CIT(A) IS A REASONABLE ONE AS THE ENTIRE MEDICAL EXPENSES OF RS.1,50,000/- CANNOT BE DISALLOWED, THEREFORE, GROU ND NO.1 OF REVENUES APPEAL IS DISMISSED. 22. GROUND NOS. 2 & 3 RELATES TO THE ADDITION MADE BY ASSESSING OFFICER TO THE INCOME OF ASSESSEE BY LONG TERM CAPI TAL GAIN OF RS.1 CRORE. THE LEARNED CIT(A) HAS REDUCED THE LONG TERM CAPITA L GAIN TO RS.42,48,533/-. THE FACTS IN THIS REGARD ARE THAT THE ASSESSING OFFICER HAD MADE THIS ADDITION ON PROTECTIVE BASIS HOWEVER, SINCE THIS ADDITION WAS NOT MADE IN ASST. YEAR 2010-11, THEREFORE, THE ADDITION WAS TREATED AS SUBSTANTIVE IN THE YEAR UNDER CONSIDERATION. THE FACTS IN THIS REGARD ARE THAT THE ASSESSEE HAD DECLARED SALE OF LAND AND BUILDING AT RS.1.20 CROES. THE ASSESSING OFFICER HELD THAT SINCE BUILDI NG WAS A DEPRECIABLE ASSET, THEREFORE, SALE VALUE IS TO BE REDUCED FROM BLOCK OF ASSETS AND LAND BEING A NON DEPRECIABLE ASSET. THE LONG TERM CAPITA L GAIN IS TO BE COMPUTED ON SALE OF SUCH LAND. THE ASSESSING OFFICE R WHILE COMPUTING THE LONG TERM CAPITAL GAIN APPORTIONED THE SALE CON SIDERATION OF RS.1.20 CRORES BETWEEN THE LAND AND BUILDING WHEREIN HE TOO K THE ESTIMATED VALUE OF BUILDING AT RS.20 LAC AND ASSIGNED VALUE O F RS.1 CRORE TO LAND. THE ASSESSING OFFICER HELD THAT SINCE COST OF ACQUI SITION OF PROPERTY WAS TAKEN BY ASSESSEE TOWARDS BUILDING ON WHICH DEPRECI ATION WAS CLAIMED ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 13 IN EARLIER YEARS, THEREFORE, THE COST OF ACQUISITIO N OF LAND WAS TAKEN AS NIL AND THEREBY HE CALCULATED LONG TERM CAPITAL GAIN TO THE TUNE OF RS. 1 CRORE. THE LEARNED CIT(A), ON THE OTHER HAND, APPOR TIONED THE WRITTEN DOWN VALUE OF LAND AND BUILDING AS ON 31.3.2008 BET WEEN LAND AND BUILDING ON THE SAME RATIO ON WHICH ASSESSING OFFIC ER HAD APPORTIONED THE SALE CONSIDERATION BETWEEN LAND AND BUILDING AN D THEREFORE, COST OF ACQUISITION OF LAND WAS CALCULATED AND AFTER APPLYI NG INDEXED OF COST OF ACQUISITION LONG TERM CAPITAL GAIN WAS CALCULATED. WE FIND THAT LEARNED CIT(A) HAS TAKEN A REASONED VIEW AND HAS RIGHTLY AP PORTIONED THE WDV AS ON 31.03.2008 BETWEEN LAND AND BUILDING AND WE D O NOT FIND ANY INFIRMITY IN THE SAME. IN VIEW OF THE ABOVE, GROUND NO.2 & 3 ARE DISMISSED. 23. IN VIEW OF THE ABOVE, THE APPEALS FILED BY TH E REVENUE ARE DISMISSED WHEREAS THE APPEALS FILED BY THE ASSESSEE ARE PARTL Y ALLOWED FOR STATISTICAL PURPOSES AND PARTLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:18.02.2016. /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, ITA NOS.753 & 477 (ASR) /2013 ASST. YEAR: 2009-10 14 (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.