Keerthi Industries Limited, Hyderabad V. Asst.CIT, Circle-2(1), Hyderabad

ITA 83/HYD/2013

• Counselvise Citation: 8322514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Additional evidence; Unabsorbed depreciation
• Section: 32; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH AND SHRI SAKTIJIT DEY ITA NO.83/HYD/2013 : ASST. YEAR 2008 - 09 M/S. KEERT H I INDUSTRIES LIMITED, HYDERABAD ( PAN - A AFCS 3938 P ) V/S. INCOME TAX OFFICER WARD 11(3), HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.106/HYD/2013 : ASST. YEAR 2008 - 09 DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD V/S. M/S. KEERT H I INDUSTRIES LIMITED, HYDERABAD ( PAN - A AFCS 3938 P ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.SIVAKUMAR REVENUE BY : SHRI SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 29 . 4 .201 4 DATE OF PRONOUNCEMENT 18.06.2 0 14 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE ARE CROSS - AP PEALS FOR THE ASSESSMENT YEAR 2008 - 09. THEY ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD DATED 6.11.2012. SINCE THE FACTUAL BACKGROUND AND ISSUES INVOLVED IN THESE APPEALS ARE COMMON, THESE APPEALS ARE BEING DIS POSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS OF THE CA S E IN BRIEF LE A DING TO THE FILING OF THE PRESENT APPEALS ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTUR E AND SALE OF CLINKER AN CEMENT. IT FILED IT S E - RETURN OF IN C OM E FOR THE ASSESSMENT YEAR 2008 - 09 ON 27.9.2008 DECLARIN G TOTAL INCOME OF RS .22,74,63,708. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER S.143(3) OF THE AC T, ON A TOTAL INCOME ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 2 OF RS .21,42,75,620, INTER ALIA BY DISALLOWING EXPENDIT URE CLAIMED ON ACCO U N T OF LEAVE ENCASHMENT UNDER S.43B(F) OF R S .7,22,394; AND BY MAKING ADDITION OF RS .1,36,21,500 UN D ER THE H E AD OTHER SOU R CES ON ACCOUNT O F SUPPR E SSION OF RECEIPTS TOWARDS SALE OF LAND. WHILE COMPUTING THE INCOME O F THE ASSESSEE UNDER THE NORMAL PROVIS I ON S O F THE AC T, THE ASSESSING OFFICER HAS NOT ALLOWED THE CLAIM OF THE ASSESSEE FOR SET OFF OF CARRIED FORWARD UNABSORBED DEPRECIATION OF R S .13,31,02,785, REL A TING TO ASSESSMENT YEARS 1996 - 97 TO 2001 - 02, AGA I NST THE INCO M E O F THE YEAR UN DER APPEAL, ON THE G R OUND THAT THE SAID DEPRECIATION CAN BE CARRIED FORWARD ONLY FOR EI G HT YEARS FOR ALLO W IN G SET OFF. HE ALSO NOTED THAT SUCH EIGHT YEARS PERIOD HAS LAPSED IN THE PRESENT CASE, AND HENCE THE SAID UNABSORBED DEPRECIATION CANNOT BE SET OF F AGAINST THE INCOME FOR THE ASSESSMENT YEAR 2008 - 09. 3. ON APPEAL, THE CIT(A), TAKING NOTE OF THE ELABORATE SUB M I S SIONS OF THE ASSESSEE IN THE LIGHT OF THE SUCCESSIVE AMENDMENTS TO S.32(2) OF THE ACT, NOTED THAT THE 1996 AMENDMENT WAS PROSPECTIVE AN D BY THE SAME LOGIC THE AMENDMENT MADE IN 2001 WAS ALSO PROSPECTIVE, AND CONSEQUENTLY, HE HELD T H A T FROM THE ASSESSMENT YEAR 1997 - 9 8 T O 2001 - 02, THE LIMIT OF 08 YEARS F O R CARRY FORWARD O F UNABSORBED DEPRECIATI O N SHALL APPLY AND THE LAST AMENDMENT DID NO T NULLIFY THE INTERVENING PERIOD. HE CON S E Q UENTLY HELD THAT IN PRINCIPLE THE INTERPRETATION OF LAW BY THE ASSESSING OFFICER IS CORRECT AND FOR TH E IN T ERVENIN G PERIOD, THE LIMIT OF 8 YEARS F O R CARRY FORWARD O F UNABSORBED DEP RE CI A TION SHALL APPLY. CONSIDERI NG THE FA C TS AND CIRCUMSTANCES OF TH E CASE, HE HELD THAT THOUGH THE INTERPRETATION OF THE ASSESSING OFFICER IS CORRECT AND THE PERIOD O F EIGHT YEARS FOR CARRY FORWARD OF UNABSORBED DEPR E CIATION APPLI E D FOR THE ASSESSMENT YEAR S 1997 - 98 TO 2001 - 02, HE HELD T HAT IN SO FA R AS ASSESSMENT YEARS 200 0 - 01 AND 2001 - 02 ARE CONCERNED, THEY FALL WITHIN A PERIOD OF EIGHT SUCCEEDING ASSESSMENT YEARS. HE A C COR D INGLY DIRECTED THE ASSESSING OFFICER TO R ECOMPU T E THE DEPRECIATION GIVING EFFECT, AS ABOVE, AND T H US P A RTLY ALLO WING THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 3 4. FURTHER THE CIT(A) CONFIRMED THE DISALLOWANCE IN RESPECT OF PROVISION FOR LEAVE ENCASHMENT AMOUNTING TO RS .7,22,394 UN D ER S.43B(F), OBSERVING THAT THOUGH IN THE DECISION OF THE HONBLE CALCUTTA HIGH COU R T IN TH E CASE OF EXIDE INDUSTRIES LIMITED V/S. UNION OF I NDIA (292 I T R 470), S.43B(F) HAD BEEN STRUCK DOWN BY THE HO N B LE COU R T AS BEIN G ARBITRARY AND UNCONSTITUTIONAL, THE SAID DECISION HAS BEEN STAYED BY THE HONBL E APEX COURT, AND CONSEQUENTLY, THE EFFE CT OF THE PROVISION S OF S.43B(F) HAS NO T BEEN NULLIFIED AND IS IN FORCE. 5. AS FOR THE ADDITION OF R S .1,36,21,500 ON ACCOUN T O F SUPPRESSION OF RECEIPTS ON SALE O F LANDS, BY TR E ATING THE SAME AS INC O ME FROM OTHER SOU R CES, THOUGH THE CIT(A) UPHELD THE AD DITION MADE BY THE ASSESSING OFFICER, HE DIRECTED THAT THE UNACCOUN TE D PART OF THE RECEIPT AS PER S.50C HAS TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) AS ABOVE, ASSESSEE AS WELL AS THE R E VENUE ARE IN APPEAL BE FORE US. 7. THE FIRST ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE AS WELL AS THE REVENUE RELATES TO DISALLOWANCE OF CLAIM FOR SET OFF OF UNABSORBED DEPRECIATION BROUGHT FORWARD FROM ASSESSMENT YEARS 1996 - 97 TO 1999 - 00, AND 2000 - 01 AND 2001 - 02 AGAINST THE INCOME O F THE ASSESSMENT YEAR 2008 - 09. 8. THE LEARNED COUNSEL FOR THE ASSESSEE CONTESTING THE DISALLOWANCE SUSTAINED BY THE CIT(A) SUBMITTED THAT THE AMENDMENT MADE TO S.32(2) BY THE FINANCE ACT, 2001 RESTORED THE POSITION OF CARRY FORWARD UNABSORBE D DEPRECIATION AS IT EXISTED PRIOR TO 1.4.1997 AND TO THE LEGAL POSITION APPLICABLE ORIGINALLY. HE SUBMITTED THAT THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. V/S. DCIT (2012 - 25 TAXMANN.COM.364) IS CLEARLY APPLICA BLE TO THE FACTS OF THE ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 4 PRESENT CASE, AND IT HAS BEEN CATEGORICALLY HELD IN THAT CASE THAT UNABSORBED DEPRECIATION PERTAINING TO ASSESSMENT YEARS UPTO 1999 - 2000 IS TO BE SET OFF, EVEN THOUGH SUCH CARR Y FORWARD IS FOR MORE THAN EIGHT YEARS, AND THE VIEW T AKEN BY THE REVENUE AUTHORITIES TO THE CONTRARY AS TO APPLICABILITY OF THE SAID DECISION IS NOT CORRECT. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, BESIDES CONTESTING THE GROUNDS OF THE ASSESSEE IN ITS APPEAL, REITERATED THE SUBMITTE D THAT THE CIT(A) OUGHT NOT TO HAVE ALLOWED THE BROUGHT FORWARD DEPRECIATION PERTAINING TO ASSESSMENT YEAR 2000 - 01 AND 2001 - 02 TO BE SET OFF AGAINST THE INCOME OF THE YEAR UNDER CONSIDERATION. 10. W E HEARD THE PARTIES, PERUSED THE M ATERIAL ON RECO RD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITI E S ON THIS ISSUE. WE HAVE ALSO EXAMINED THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA LTD. V.S. DCIT (SUPRA) RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE. AS CAN BE SEEN FROM THE FACTS ON RECORD, THE CRUX OF THE ISSUE IS WHETHER THE UNABSORBED DEPRECIATION IN RELATI ON TO ASSESSMENT YEAR S 1997 - 98 TO 2001 - 02 CAN BE CARRIED FORWARD FOR SETTING OFF FOR AN UNLIMITED PERIOD OR IT HAS TO BE RESTR ICTED FOR A PERIOD OF EIGHT YEARS. ON AN EXAMINATION OF THE LEGISLATIVE HISTORY OF S.32(2) OF THE INCOME - TAX ACT , I T CAN BE SEEN THAT PRIOR TO 1.4.1996, THERE WAS NO RESTRICTION/LIMITATION FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION. IN FINA NCE ACT, 1996, S.32(2) OF THE ACT WAS AMENDED BY IMPOSING RESTRICTION OF EIGHT YEARS FOR CARRY FORWARD OF UNABSORBED DEPRECIATION. IN CBDT CIRCULAR NO.762 DATED 18.2.1998, IT WAS CLARIFIED THAT UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 1996 - 97 SHALL BE AD DED TO THE ALLOWANCE OF ASSESSMENT YEAR 1997 - 98 AND WILL BE DEEMED TO BE THE ALLOWANCE OF THAT YEAR. THE LIMITATION OF EIGHT YEARS ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 5 SHALL START FORM 1997 - 98. THIS PROVISION REMAINED IN FORCE TILL ASSESSMENT YEAR 2001 - 02. S.32(2) UNDERWENT ANOTHER AMENDM E N T BY FINANCE ACT, 2001, AS PER WHICH RESTRICTION OF EIGHT YEARS WAS AGAIN REMOVED AND THE SITUATION THAT EXISTED PRIOR TO 1.4.1996 WAS RESTORED. IN OTHER WORDS, THE UNABSORBED DEPRECIATION AS AVAILABLE WAS ALLOWED TO BE CARRIED FORWARD AND SET OFF FOR AN U NLIMITED PERIOD. THE HONBLE GUJARAT HIGH COURT WHILE CONSIDERING THE EFFECT OF AMENDMENT BROUGHT TO S.32(2) OF THE ACT, BY FINANCE ACT, 2001, IN THE CASE OF GENERAL MOTORS V/S. DCIT(SUPRA), TOOK INTO CONSIDERATION THE IMPORT OF THE AMENDMENT EFFECTED BY FINANCE ACT, 2001 AS WELL AS CLARIFICATION ISSUED BY THE BOARD HELD THAT THE AMENDMENT BROUGHT TO THE STATUTE BY FI N A N C E ACT, 2001 WOULD APPLY TO UNABSORBED DEPRECIATION PERTAINING TO ASSESSMENT YEAR 1997 - 98. THE HONBLE GUJARAT HIGH COURT HELD AS UNDER - 30. THE LAST QUESTION WHICH ARISES FOR CONSIDERATION IS THAT WHETHER THE UNABSORBED DEPRECIATION PERTAINING TO A.Y. 1997 - 98 COULD BE ALLOWED TO BE CARRIED FORWARD AND SET OFF AFTER A PERIOD OF EIGHT YEARS OR IT WOULD BE GOVERNED BY SECTION 32 AS AMENDED BY FINANCE ACT 2001? THE REASON GIVEN BY THE ASSESSING OFFICER UNDER SECTION 147 IS THAT SECTION 32(2) OF THE ACT WAS AMENDED BY FINANCE ACT NO.2 OF 1996 W.E.F. A.Y. 1997 - 98 AND THE UNABSORBED DEPRECIATION FOR THE A.Y. 1997 - 98 COULD BE CARRIED FORWARD UP T O THE MAXIMUM PERIOD OF 8 YEARS FROM THE YEAR IN WHICH IT WAS FIRST COMPUTED. ACCORDING TO THE ASSESSING OFFICER, 8 YEARS EXPIRED IN THE A.Y. 2005 - 06 AND ONLY TILL THEN, THE ASSESSEE WAS ELIGIBLE TO CLAIM UNABSORBED DEPRECIATION OF A.Y. 1997 - 98 FOR BEING C ARRIED FORWARD AND SET OFF AGAINST THE INCOME FOR THE A.Y. 2005 - 06. BUT THE ASSESSEE WAS NOT ENTITLED FOR UNABSORBED DEPRECIATION OF RS.43,60,22,158/ - FOR A.Y. 1997 - 98, WHICH WAS NOT ELIGIBLE FOR BEING CARRIED FORWARD AND SET OFF AGAINST THE INCOME FOR THE A.Y. 2006 - 07. 31. PRIOR TO THE FINANCE ACT NO.2 OF 1996 THE UNABSORBED DEPRECIATION FOR ANY YEAR WAS ALLOWED TO BE CARRY FORWARD INDEFINITELY AND BY A DEEMING FICTION BECAME ALLOWANCE OF THE IMMEDIATELY SUCCEEDING YEAR. THE FINANCE ACT NO.2 OF 1996 RE STRICTED THE CARRY FORWARD OF UNABSORBED DEPRECIATION AND SET - OFF TO A LIMIT OF 8 YEARS, FROM THE A.Y.1997 - 98. CIRCULAR NO.762 DATED 18.2.1998 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) IN THE FORM OF EXPLANATORY NOTES CATEGORICALLY PROVIDED, THAT THE UNABSORBED DEPRECIATION ALLOWANCE FOR ANY PREVIOUS YEAR TO WHICH FULL EFFECT CANNOT BE GIVEN IN THAT PREVIOUS YEAR SHALL BE CARRIED FORWARD AND ADDED TO THE DEPRECIATION ALLOWANCE OF THE NEXT YEAR AND BE DEEMED TO BE PART THEREOF. 32. SO, THE UNABSORB ED DEPRECIATION ALLOWANCE OF A.Y. 1996 - 97 WOULD BE ADDED TO THE ALLOWANCE OF A.Y. 1997 - 98 AND THE LIMITATION OF 8 YEARS FOR THE CARRY - FORWARD AND SET - OFF OF SUCH UNABSORBED DEPRECIATION WOULD START FROM A.Y. 1997 - 98. ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 6 33. WE MAY NOW EXAMINE THE PROVISIONS OF SECTION 32(2) OF THE ACT BEFORE ITS AMENDMENT BY FINANCE ACT 2001. THE SECTION PRIOR TO ITS AMENDMENT BY FINANCE ACT, 2001, READ AS UNDER: - WHERE IN THE ASSESSMENT OF THE ASSESSEE FULL EFFECT CANNOT BE GIVEN TO ANY A LLOWANCE UNDER CLAUSE (II) OF SUB - S ECTION (1) IN ANY PREVIOUS YEAR OWNING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR OR OWING TO THE PROFITS OR GAINS BEING LESS THAN THE ALLOWANCE, THEN, THE ALLOWANCE OR THE PART OF ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN (HER EINAFTER REFERRED TO AS UNABSORBED DEPRECIATION ALLOWANCE), AS THE CASE MAY BE, - (I) SHALL BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR P ROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMENT YEAR; (II) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE WHOLLY SET OFF UNDER CLAUSE (I), THE AMOUNT NOT SO SET OFF SHALL BE SET OFF FROM THE INCOME UNDER ANY OTHER HEAD, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR; (III) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE WHOLLY SET OFF UNDER CLAUSE (I) AND CLAUSE (II), THE AMOUNT OF ALLOWANCE NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AND (A) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR P ROFESSION CARRIED ON BY HI M AND ASSESSABLE FOR THAT ASSESSMENT YEAR; (B) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE WHOLLY SO SET OFF, THE AMOUNT OF UNABSORBED DEPRECIATION ALLOWANCE NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR NOT BEING MORE T HAN EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE AFORESAID ALLOWANCE WAS FIRST COMPUTED: PROVIDED THAT THE TIME LIMIT OF EIGHT ASSESSMENT YEARS SPECIFIED IN SUB - CLAUSE (B) SHALL NOT APPLY IN CASE OF A COMPANY FOR THE ASS ESSMENT YEAR BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SAID COMPANY HAS BECOME A SICK INDUSTRIAL COMPANY UNDER SUB - SECTION (1) OF SECTION 17 OF THE SICK INDUSTRIAL COMPANY (SPECIAL PROVISIONS) ACT, 1985 (1 OF 1986) AND ENDING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE ENTIRE NET WORTH OF SUCH COMPANY BECOMES EQUAL TO OR EXCEEDS THE ACCUMULATED LOSSES. EXPLANATION. - FOR THE PURPOSES OF THIS CLAUSE, NET WORTH SHALL HAVE THE MEANING ASSIGNED TO I T IN CLAUSE (GA) OF SUB - SECTION (1) OF SECTION 3 OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985. 34. THE AFORESAID PROVISION WAS INTRODUCED BY FINANCE (NO.2) ACT, 1996 AND FURTHER AMENDED BY THE FINANCE ACT, 2000. THE PROVISION INTRODUCE D BY FINANCE (NO.2) ACT WAS CLARIFIED BY THE FINANCE MINISTER TO BE APPLICABLE WITH PROSPECTIVE EFFECT. 35. SECTION 32 (2) OF THE ACT WAS AMENDED BY FINANCE ACT, 2001 AND THE PROVISION SO AMENDED READS AS UNDER : - WHERE, IN THE ASSESSMENT OF THE ASSESS EE, FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB - SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OWING TO THE PROFIT S ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 7 OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB - SECTION (2) OF SECTION 72 AND SUB - SECTION (3) OF SECTION 73, THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE, SHAL L BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR DEPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART OF THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE ALLOWANCE OF THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. 36. THE PURPOSE OF THIS AMENDMENT HAS BEEN CLARIFIED BY CENTRAL BOARD OF DIRECT TAXES IN THE CIRCULAR NO.14 OF 2001. THE RELEVANT PORTION OF THE SAID CIRCULAR READS AS UNDER : - MODIFICATION OF PROVISIONS RELATING TO DEPRECIA TION 30.1 UNDER THE EXISTING PROVISIONS OF SECTION 32 OF THE INCOME - TAX ACT, CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION IS ALLOWED FOR 8 ASSESSMENT YEARS. 30.2 WITH A VIEW TO ENABLE THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AN D MACHINERY, SPECIALLY IN AN ERA WHERE OBSOLESCENCE TAKES PLACE SO OFTEN, THE ACT HAS DISPENSED WITH THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION. THE ACT HAS ALSO CLARIFIED THAT IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR PROFESSION FOR ANY PREVIOUS YEAR, DEDUCTION OF DEPRECIATION UNDER SECTION 32 SHALL BE MANDATORY. 30.3 UNDER THE EXISTING PROVISIONS, NO DEDUCTION FOR DEPRECIATION IS ALLOWED ON ANY MOTOR CAR MANUFACTURED OUTSIDE INDIA UNLESS IT IS USED (I) IN THE BUSINESS OF RUNNING IT ON HIRE FOR TOURISTS, OR (II) OUTSIDE IN THE ASSESSEES BUSINESS OR PROFESSION IN ANOTHER COUNTRY. 30.4 THE ACT HAS ALLOWED DEPRECIATION ALLOWANCE ON ALL IMPORTED MOTOR CARS ACQUIRED ON OR AFTER 1 ST APRIL, 2001. 30.5 THESE AME NDMENTS WILL TAKE EFFECT FROM THE 1 ST APRIL, 2002, AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2002 - 03 AND SUBSEQUENT YEARS. 37. THE CBDT CIRCULAR CLARIFIES THE INTENT OF THE AMENDMENT THAT IT IS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AND MACHINERY AND ACCORDINGLY THE AMENDMENT DISPENSES WITH THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION. THE AMENDMENT IS APPLICABLE FROM ASSESSMENT YEAR 2002 - 03 AND SUBSEQUENT YEARS . THIS MEANS THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1ST DAY OF APRIL, 2002 (A.Y. 2002 - 03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND NOT BY THE PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT. HAD THE INTENTION OF THE LEGISLATURE BEEN TO ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE WORKED OUT IN A.Y. 1997 - 98 ONLY FOR EIGHT SUBSEQUENT ASSESSMENT YEARS EVEN AFTER THE AMENDMENT OF SECTION 32(2) BY FINANCE ACT, 2001 IT WOULD HAVE INCORPORATED A PROVISION TO THAT EFFECT. HOWEVER, IT DOES NOT CONTAIN ANY SUCH PROVISION. HENCE KEEPING IN VIEW THE PURPOSE OF AMENDMENT OF SECTION 32(2) OF THE ACT, A PURPOSIVE AND HARMONIOUS INTERPRETATION HAS TO BE TAKEN. WHILE CONST RUING TAXING STATUTES, RULE OF STRICT INTERPRETATION HAS TO BE APPLIED, GIVING FAIR AND REASONABLE CONSTRUCTION TO THE LANGUAGE OF THE SECTION WITHOUT LEANING TO THE SIDE OF ASSESSEE OR THE REVENUE. BUT IF THE LEGISLATURE FAILS TO EXPRESS CLEARLY AND THE A SSESSEE ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 8 BECOMES ENTITLED FOR A BENEFIT WITHIN THE AMBIT OF THE SECTION BY THE CLEAR WORDS USED IN THE SECTION, THE BENEFIT ACCRUING TO THE ASSESSEE CANNOT BE DENIED. HOWEVER, CIRCULAR NO.14 OF 2001 HAD CLARIFIED THAT UNDER SECTION 32(2), IN COMPUTING THE P ROFITS AND GAINS OF BUSINESS OR PROFESSION FOR ANY PREVIOUS YEAR, DEDUCTION OF DEPRECIATION UNDER SECTION 32 SHALL BE MANDATORY. THEREFORE, THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 WOULD ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AV AILABLE IN THE A.Y. 1997 - 98, 1999 - 2000, 2000 - 01 AND 2001 - 02 TO BE CARRIED FORWARD TO THE SUCCEEDING YEARS, AND IF ANY UNABSORBED DEPRECIATION OR PART THEREOF COULD NOT BE SET OFF TILL THE A.Y. 2002 - 03 THEN IT WOULD BE CARRIED FORWARD TILL THE TIME IT IS SE T OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS. 38. THEREFORE, IT CAN BE SAID THAT, CURRENT DEPRECIATION IS DEDUCTIBLE IN THE FIRST PLACE FROM THE INCOME OF THE BUSINESS TO WHICH IT RELATES. IF SUCH DEPRECIATION AMOUNT IS LARGER THAN THE AMOUNT O F THE PROFITS OF THAT BUSINESS, THEN SUCH EXCESS COMES FOR ABSORPTION FROM THE PROFITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINESS, IF ANY, CARRIED ON BY THE ASSESSEE. IF A BALANCE IS LEFT EVEN THEREAFTER, THAT BECOMES DEDUCTIBLE FROM OUT OF INCOME FROM ANY SOURCE UNDER ANY OF THE OTHER HEADS OF INCOME DURING THAT YEAR. IN CASE THERE IS A STILL BALANCE LEFT OVER, IT IS TO BE TREATED AS UNABSORBED DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YEAR. WHERE THERE IS CURRENT DEPRECIATION FOR SUCH SUCCEED ING YEAR THE UNABSORBED DEPRECIATION IS ADDED TO THE CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR AND IS DEEMED AS PART THEREOF. IF, HOWEVER, THERE IS NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR, THE UNABSORBED DEPRECIATION BECOMES THE DEPRECIATION A LLOWANCE FOR SUCH SUCCEEDING YEAR. WE ARE OF THE CONSIDERED OPINION THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1 ST DAY OF APRIL 2002 (A.Y. 2002 - 03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANC E ACT, 2001. AND ONCE THE CIRCULAR NO.14 OF 2001 CLARIFIED THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION HAD BEEN DISPENSED WITH, THE UNABSORBED DEPRECIATION FROM A.Y.1997 - 98 UPTO THE A.Y.2001 - 02 GOT CARRIED FORWA RD TO THE ASSESSMENT YEAR 2002 - 03 AND BECAME PART THEREOF, IT CAME TO BE GOVERNED BY THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND WERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. 11. ON GOING THROUGH THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT, NOTED ABOVE, IT IS CLEARLY EVIDENT THAT THE HONBLE GUJARAT HIGH COURT IN NO UNCERTAIN TERMS HAS HELD THAT UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEAR 19 97 - 98 AND UPTO ASSESSMENT YEAR 2001 - 02 WOULD BE ELIGIBLE FOR CARRY FORWARD AND SET OFF FOR AN UNLIMITED PERIOD. HOWEVER, IT APPEARS, THIS ISSUE HAS BEEN CONSIDERED IN ASSESSEES OWN CASE BY THE ITAT IN ITA NO.145/HYD/2013, VIDE ORDER DATED 31.7.2013 FOR THE PRECEDING ASSESSMENT YEAR, VIZ. 2007 - 08. THEREFORE, UNABSORBED DEPRECATION, IF ANY, QUANTIFIED IN ASSESSMENT YEAR 2007 - 08 SHALL BE CARRIED FORWARD FOR SET OFF IN THE IMPUGNED ASSESSMENT YEAR AS WELL AS SUBSEQUENT ASSESSMENT YEARS. WE DIRECT ACCORDINGL Y. ACCORDINGLY, WHILE ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 9 GROUNDS RAISED BY THE ASSESSEE DESERVE TO BE ALLOWED, THE GROUND RAISED BY THE DEPARTMENT IN ITS APPEAL ON THIS ISSUE, BEING DEVOID OF MERIT, IS REJECTED. 12. THE NEXT ISSUE INVOLVED ONLY IN THE APPEAL OF THE ASSESSEE RELATES TO T HE ADDITION OF RS.7,22,394, IN TERMS OF S.43B(F) WITH REGARD TO PROVISION FOR LEAVE ENCASHMENT. 13. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. AN EXAMINATION OF THE PROVISION OF S.43B(F), MAKES IT CLEAR T HAT DEDUCTION ON ACCOUNT OF ANY AMOUNT PAID BY AN EMPLOYER TO ITS EMPLOYEE IN LIEU OF ANY LEAVE AT THE CREDIT OF THE EMPLOYEE WILL BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS. UNDISPUTEDLY, IN THE PRESENT CASE, THE ASSESSEE HAS MADE ONLY A PROVISION AND AMOUN T CLAIMED AS DEDUCTION HAS NOT BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THE ASSESSEE HAS OBJECTED TO THE DISALLOWANCE OF AN AMOUNT OF RS.7,22,394 UNDER S.43B(F) OF THE ACT, ONLY ON THE GROUND THAT THE PROVISION OF S.43B(F) OF THE AC T WAS STRUCK DOWN AS UNCONSTITUTIONAL, BY THE HONBLE KOLKATA HIGH COU R T IN TH E C ASE OF EXIDE INDUSTRIES LT D . (292 ITR 470) . THE LEARNED CIT(A), UPON CONSIDERING THE FACT THAT THE SAID DECISION OF THE HONBLE KOLKATA HIGH COU R T HAS BEEN STAYED BY THE HONB LE SUPREME COURT, UPHELD DISALLOWANCE MADE BY THE ASSESSING OFFICER. THEREFORE, IN VIEW OF THE CLEAR STATUTORY PROVISION AND FOR THE REASON S STATED BY THE LEARNED CIT(A), IN THE IMPUGNED ORDER, WHICH ARE NOT DISPUTED, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 14. THE NEXT ISSUE INVOLVED IN BOTH THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE RELATES TO THE ADDITION UNDER THE HEAD OTHER SOU RCES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALE OF LAND, BUT SUSTAINED BY THE CIT(A) TO CERTAIN EXTENT OBSERVING THAT THE SAME SHOULD BE ASSESSED AS CAPITAL GAINS. ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 10 1 5 . FACTS IN BRIEF RELATING TO THIS ADDITION ARE THAT THE ASSESSEE ACQUIRED LAND MEA SURING 6294 SQ. YARDS SITUATED AT PLOT NO.40, IDA BALANAGAR, HYDERABAD ON 1.1.1993. O UT OF THIS LAND, 1294 SQ. YARDS WAS SOLD DURING THE FINANCIAL Y E AR 2007 - 08 RE L EVANT TO ASSESSMENT YEAR 2008 - 09. I N THE COMPUTATION OF CAPITAL GAINS, THE VALUE O F THE L AND HAS BEEN SHOWN AS RS.96 LAKH S , WHEREAS THE STAMP DUTY WAS PAID ON THE MARKET VALUE O F THE PROPERTY OF RS.2,32,21,500. ASSESSEE STATED THAT THE ACTUAL SALE VALUE WAS LESS THAN THE MARKET VALUE BECAUSE THERE WAS AN AGREEMENT WITH M/S. VIZAG STEEL PROFIL ES TO PU R CHASE THE LAND AT LOW PRICE. SIN C E THE ASSESSEE HAD TO HONOUR THAT AGREEMENT, I T HAD TO ACCEPT THE LOW PRICE. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE, INTER - ALIA OBSERVING IN PARA 6.2 OF THE IMPU G N E D ORDER AS FOLLO W S - 6.2 .ON PERUSAL O F THE DO C UM E N T S FURNISHED IT CLEARLY INDICATES THAT THE AGREEMENT OF SALE DATED 26.11.2001 WAS STAND CANCELLED AS THE ASSESSEE COMPANY, HAD FAIL E D TO GET THE CONSENT AND MARKETABLE TITLE FROM IDBI MADRAS, THEREIN THE IDBI REJECTE D REQUEST OF THE ASSESSEE COMPANY FOR SALE OF THE ABOVE PROPERTY. AFTERWARDS, WHATEVER THE AGREEMENT CONTINUED IS LESSEE AND LESSOR RELATIONSHIP. T H E RE I S NO REL A TIONSHI P OF VENDEE AND VENDOR. TH E AGRE E MENT O F SALE CAN B E CONSTRUED FROM DATE OF AGREEMENT O F SALE I.E. 27/03/2006 BUT NOT THE DATE OF EARLIER AGREEM E NT I.E.. IN 2001 AS CLAIMED BY TH E ASSESSEE COMPANY. ACCORDINGLY, THE S A LE DEED WAS EXECUTED ON 20 TH DAY OF NOVEMB E R, 2007 FOR THE SAID LAND FOR TOTAL CONSIDERATION OF RS .96 LAKH S BUT NOT THE M A RK E T VALUE WAS AT RS. 2,32,21,500/ - ON WHICH STAMP DUTY WAS PAID. HENCE, TH E ASSESSEE S CONTENTION THAT IT HAS ENTERED THE AGREEMENT O F SALE LONG AGO IN 2001 AND THE R ATE AGREED WAS DATES BACK TO THAT TIME, IS REJECTED . WITH THE ABOVE OBSERVATIONS, AND RE FERRING TO AND RELYING ON TH E PROVISIONS OF S.50C OF THE AC T, THE ASSESSING OFFICER TREATED THE DIFFERENTIAL AMOUNT OF RS.1,36,21,500 (DIFFERENCE BETWEEN THE MARKET VALUE OF THE LAND SOLD IN TERMS OF EXPLANATION 2 OF PROVISIONS OF S.50C READ WITH S.47A O F THE STAMP ACT OF RS.2,32,21,500, AND SALE CONSIDERATION OFFERED BY THE ASSESSEE OF RS.96,00,000) AS ASSESSEES INCOME FROM OTHER SOURCES. A S NOTED ABOVE, THE CIT(A), THOUGH UPHELD THE VIEW TAKEN BY THE ASSESSING OFFICER IN ADOPTING THE SALE CONSIDERATI ON AT RS.2,32,21,500 BY APPLYING THE PROVI S ION S OF S.50C, HOWEVER, HE ACCEPTED ASSESSEES ALTERNATIVE CONTENTION AND FOUND NO REASON FOR ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 11 THE ASSESSING OFFICER TO TR E AT IT AS INCOME FROM OTHER SOU R CES , SINCE THE ASSESSEE ITSELF OFFERED IT AS INCOME FROM SA LE OF PROPERTY. HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ASSESS THE UNACCOUNTED AMOUNT OF SALE CONSIDERATION, TREATING THE SAME AS CAPITAL GAINS ONLY. 1 6 . THE L EARNED COUNSEL FOR THE ASSESSEE REITERATING THE CON T ENTION S U R GED BEFORE THE R E VENUE AUTHORITIES SUBMITTED THAT AN AGREEMENT WAS ENTERED INTO ON 27.3.2006 BY THE ASSESSEE FOR SALE O F 1300.642 SQ.MTR. OF LAND IN BALANAGAR FOR RS.96,00,000. HOWEVER, SALE DEED IN PURSUANCE OF SUCH AGREEMENT WAS EXECUTED ON 28.11.2007 AS REL EA SE O F MORTGAGE FROM IDBI COULD BE OB T AIN E D IN S E P T E M B E R, 2007. BY THAT TIME, IT WAS CLAIMED, LAN D RATES FIXED FOR REGI S TRATION PURPO S ES HAVE GONE UP AND SALE DEED WAS TO B E R E GIS T ERED FOR VALUE OF RS .2,32,21,500. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAVING E NTERED INTO A REGISTERED AGREEMENT OF SALE WITH THE PURCHASER ON 27.3.2006, THE SALE DEED MUST RELATE BACK TO THE DATE OF AGREEMENT OF SALE. THEREFORE, THE RATE PREVAILING ON THE DATE OF THE AGREEMENT OF SALE SHOULD BE TAKEN FOR COMPUTATION OF CAPITAL GAIN S. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE DECISIONS OF COORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES OF (A) DCIT V/S. S.VENKAT REDDY (2013) 32 TAXMAN.COM.324; AND (B) ACIT V/S. SUVARNA REKHA (ITA NO.743/HYD/2009 DATED 29.10.2010), DULY FILIN G COPIES THEREOF IN THE PAPER - BOOK BEFORE US. THUS, IT WAS CONTENDED BY THE LEARNED COUNSEL THAT WITHOUT APPRECIATING THE AFORESAID FACTUAL POSITION AND THE LEGAL PRINCIPLES LAID DOWN, THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISION S O F S.50C OF THE ACT. 1 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, THOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER, IN THE CONTEXT OF THE GROUNDS RAISED BY THE ASSESSEE, SUBMITTED THAT THE CIT(A) HAS NO T PROPERLY A PPRECI A TED THE ACTION OF THE ASSESSING OFFICER IN TREATING THE I N COME ON ACCOUNT OF SUPPRESSION OF RECEIPTS ON SALE OF LAND AS INCOME FROM OTHER SOURCES. ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 12 1 8 . WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD, ON THIS ISSUE. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. THERE IS NO DISPUTE TO THE FACTS WHICH HAVE BEEN CLEARLY BROUGHT IN PARA 7.2 OF THE IMPUGNED ORDER OF THE CIT(A), WHI CH HAVE BEEN DISCUSSED ABOVE. THOUGH THE ASSESSEE HAS INITIALLY ENTERED INTO AN AGREEMENT IN THE YEAR 2001 FOR THE SALE OF THE LAND IN QUESTION, THE SAME WAS NEVER ACTED UPON AND THAT AGREEMENT LAPSE D BY THE PASSAGE OF TIME AND NON - FULFILMENT OF THE TERMS THEREOF BY THE PARTIES TO THE SAME. THEREAFTER, ANOTHER AGREEMENT OF SALE WAS EXECUTED ON 27.3.2006. HOWEVER, THE FINAL SALE DEED TRANSFERRING THE PROPERTY WAS REGISTERED ON 20.11.2007 AND THE REGISTERING AUTHORITY VALUED THE PROPERTY AT RS.2,32,21,500 FO R THE PURPOSE OF STAMP DUTY VALUATION, WHEREAS THE ASSESSEE WHILE COMPUTING THE CAPITAL GAIN, HAS DISCLOSED THE SALE CONSIDERATION AT RS.96 LAKHS. THEREFORE, THERE BEING UNDERSTATEMENT OF VALUE OF THE PROPERTY, AS COMPARED TO THE STAMP DUTY VALUE TAKEN BY THE REGISTERING AUTHORITY, THE PROVISIONS OF S.50C IS CLEARLY ATTRACTED. FURTHER, ON AN EXAMINATION OF THE REGISTERED SALE DEED, IT BECOMES CLEAR THAT THE ASSESSEE DELIVERED THE VACANT PHYSICAL POSSESSION OF THE SCHEDULED PROPERTY TO THE PURCHASER ONLY O N THE EXECUTION OF SALE DEED ON 20.11.2007. THEREFORE, TRANSFER AS PER S.2(47) OF THE ACT DID TAKE PLACE ONLY UPON DELIVERY OF THE POSSESSION TO THE PURCHASER I.E. ON 20.11.2007, ON THE DATE OF EXECUTION OF SALE DEED. ANOTHER VITAL FACT, WHICH IN OUR VIEW, CLINCHES THE ISSUE IS THAT THE ASSESSEE ITSELF HAS OFFERED THE CAPITAL GAIN IN THE IMPUGNED ASSESSMENT YEAR WHICH IS SUGGESTIVE OF THE FACT THAT ASSESSEE ITSELF ACKNOWLEDGES THAT TRANSFER OF THE PROPERTY IN TERMS OF S.2(47) OF THE ACT HAS TAKEN P LACE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THAT BEING THE CASE, ASSESSEE CANNOT OBJECT TO THE VALUATION OF THE PROPERTY AS APPLICABLE ON 20.11.2007 AS PER THE GUIDELINES OF THE REGISTERING AUTHORITY. IT IS ALSO A FACT THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS NOT RAISED ANY OBJECTION TO THE APPLICATION OF S.50C OF THE ACT, BY SEEKING A REFERENCE TO THE VALUATION OFFICER FOR DETERMINING THE MARKET VALUE OF THE PROPERTY. THEREFORE, THE ASSESSEES OBJECTION AT THIS STAGE CANNOT BE SU STAINED. SO FAR AS ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 13 THE DECI S ION S RELIED UPON BY THE LEARNED COUNSEL ARE CONCERNED, ON CAREFUL EXAMINATION, THEY ARE FOUND TO BE FACTUALLY DISTINGUISHABLE. IN TH E CA S E OF DCIT V/S. S.VENKAT REDDY (SUPRA) , THE COORDINATE BENCH OF THIS TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE POSSESSION OF THE PROPERTY WAS DELIVERED IN THAT CASE IN THE PREVIOUS YEAR IN WHICH THE ASSESSEE ADMITTED CAPITAL GAIN. FURTHER, IN THE CITED CASE, THE AGREEMENT OF SALE AS WELL AS THE FINAL SALE DEED WERE EXECUTED IN THE SAME PREVIOUS YEAR, WITHIN A TIME SPAN OF FOUR MONTHS, UNLIKE THE ASSESSEES CASE WHERE THE TIME GAP IS MORE THAN ONE - AND - HALF YEARS. SAME IS ALSO THE FACTUAL POSITION IN THE CASE OF ACIT V/S. SUVARNA REKHA (SUPRA). IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDING THAT CAPITAL GAIN H A S TO BE COMPUTED BY APPLYING THE PROVISIONS OF S.50C OF THE ACT. IN THE COURSE OF HEARING, LEARNED AUTHORISED REPRESENTATIVE FILED A PETITION FOR ADMISSION OF CERTAIN ADDITIONAL EV IDENCE. ON EXAMINING THE SAME, WE ARE OF THE VIEW THAT THEY ARE NEITHER NECESSARY NOR RELEVANT FOR DECIDING THE ISSUE AT HAND. FURTHER, ASSESSEE HAS NOT EXPLAINED WHAT PREVENTED THE ASSESSEE FROM PRODUCING THE SAID ADDITIONAL EVIDENCE BEFORE THE ASSESSING OFFICER AND THE CIT(A). IN THIS VIEW OF THE MATTER, WE DECLINE TO ADMIT THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED FOR THE FIRST TIME BEFORE US. 1 9 . SO FAR AS THE GRIEVANCE OF THE DEPARTMENT, RELATING TO THE HEAD UNDER WHICH THE GAIN ON THE SALE OF P ROPERTY IS TO BE ASSESSED, IS CONCERNED, WE ARE OF THE VIEW THAT IT IS THOROUGHLY MISCONCEIVED. THE ASSESSING OFFICER HIMSELF INVOKED THE P R OVISION S OF S.50C OF THE ACT, WHICH FALLS IN SECTION E OF CHAPTER IV, WHICH DEALS WITH COMPUTATION OF CAPITAL GA INS, AND NOT IN SECTION F OF CHAPTER IV, WHICH DEALS WITH COMPUTATION OF INCOME FROM OTHER SOURCES. HAVING THUS INVOKED THE PROVISIONS OF S.50C OF THE ACT, THE ASSESSING OFFICER CANNOT TREAT THE GAIN ON SALE OF PROPERTY, AS INCOME OF THE ASSESSEE FROM OTHER SOURCES. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A) ON THIS ASPECT AS WELL. WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUNDS OF THE REVENUE IN THIS BEHALF. ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 14 20 . THE LAST GRIEVANCE OF THE ASSESSEE, IN ITS APPEAL, CONTAINED IN GROUND NO.4, IS AGAINST THE ACTION OF THE ASSESSING OFFICER IN ADDING BACK PROVISION OF RS.7,22,394 FOR LEAVE ENCASHMENT WHILE COMPUTING THE BOOK PROFIT UNDER S.115JB OF THE ACT , WHICH HAS BEEN SUSTAINED BY THE CIT(A) . 2 1 . T HE CIT(A) HAS REJECTED THE GROUND OF THE ASSESSEE ON THIS ASPECT, VIDE PENULTIMATE PARA OF THE IMPU G N E D ORDER, VI Z . PARA 8, OBSERVING AS FOLLOWS - I N VIEW OF REASON ALREADY DISCUSSED IN THIS ORDER THE AFOREMENTIONED PROVISION IS NOT ALLOWABLE AS A DEDUCT ION AND I FIND THAT IT HAS BEEN RIGHTLY DISALLOWED BY THE ASSESSING OFFICER FOR CALCULATIONS U/S. 115JB. 2 2 . AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 2 3 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE DI SALLOWANCE MADE WITH REGARD TO LEAVE ENCASHMENT, DEALT WITH BY HIM IN THE EARLIER PART O F THE ORDER NOTED IN THE PARA EXTRACTED ABOVE, WAS IN THE CONTEXT OF COMPUTATION OF INCOME UNDER NORMAL PROVISION S , THE GRIEVANCE O F TH E ASSESSEE IN THE GROUND UNDER CO N S I D ERATION DEALT WITH IN PARA 8 WAS IN THE CONTE X T OF SUCH DISALLOWANCE WHILE COMPUTING BOOK PROFIT UNDER S.115JB, AND AS SUCH THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE GROUND WITHOUT APPRECIATING THE DIFFERENCE IN THE PROVISIONS OF NORMAL COMPUTATION AND S.115JB. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT PROVISION MADE FOR LEAVE ENCASHMENT BEING AN ASCERTAINED LIABILITY, NO DISALLOWANCE CAN BE MADE. RELIANCE IN THIS BEHALF IS PLACED ON THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN TH E CASE OF HIGHLAND PRODUCE CO. LTD. V/S., DCIT (ITA NO.07/COCH/2010 DATED 2.2.2012), DULY FURNISHING A COPY THEREOF BEFORE US. 23. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 24. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THE CIT(A), AS NOTED ABOVE, ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 15 SIMPLY FOLLOWING THE REASONING GIVEN BY HIM, WHILE DEALING WITH THE DISALLOWANCE MADE IN RESPECT O F PROVISION FOR LEAVE ENCASHMENT, IN THE COMPUTATION OF INCOME UNDER THE NORMAL PROVISIONS, UPHELD THE ADDING BACK OF THE SAME DONE BY THE ASSESSING OFFICER WHILE COMPUTING THE BOOK PROFIT UNDER S.115JB OF THE ACT. THUS, HE DID NOT INDEPENDENTLY EXAMINE THE ISSUE OF JUSTIFICATION OF ADD - BACK OF THE PROVISION, WHILE COMPUTING THE INCOME IN TERMS OF S.115JB OF THE ACT. AT THE SAME TIME, IN THE CA S E OF HIGHLAND PRODUCE CO. LTD. (SUPRA), RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE COCHIN BENCH OF THE TRIBUNAL, HAS HELD AS FOLLOWS - 5. WE HAVE CONSIDERED THE RIVAL SUBMI S SION S ON EITHER SIDE AND ALSO PERUSED THE M A TE R IAL AVAILABLE ON RECORD. THE O N LY CONTENTION O F THE L D . DR IS THAT PROVISION FOR L E AVE ENCASHMENT IS A CONTINGENT LIABILITY. THIS I SSUE WAS EXAMINED BY THE APEX COU R T IN TH E CASE OF BHARAT EARTH MOVERS LTD. (SUPRA). THE APEX COU R T, AFTER CON S IDERIN G THE JUDICIAL PRONOUNCEMENT ON TH E SUBJ E CT FOUN D TH A T MEETING THE LIABILITY INCURRED BY TH E COMPANY UNDER THE LEAVE ENCASHMENT SCHEME PROP ORTIONATE WITH ENTITLEMENT EARNED BY EMPLOYEES O F TH E COMPANY INCLUSIVE O F OFFICERS AND THE STAFF SUBJ E CT TO CEILING OF ACCUMULATION AS APPLI C ABL E ON THE RELEVANT DATE IS ENTITLED TO DEDUCTION OUT OF TH E GROSS RECEIPT FOR THE ACCOU N TING YEAR DURING WHICH TH E PROVISION IS M A DE FOR THE LIABILIT Y . THE APE X COURT SPECIFICALLY OBSERVED THAT THE LIABILITY IS NO T A CONTINGENT LIABILITY. IN VIEW OF THE JU D GMENT OF THE APEX COU R T, THE PROVISION MADE FOR LEAVE ENCASHMENT CANNOT BE CONSIDERED TO BE A CONTINGENT LIAB IL I T Y . T H E R E FORE, THERE IS NO QUESTION OF ANY ADDITION. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COU R T IN TH E CASE OF BHARAT EARTH MOVERS LTD. (SU P RA), THE ORDERS O F THE LOWER AUTHO R ITI E S ARE SET ASIDE AND THE ADDITION MADE BY TH E ASSESSING OFFI CER TO TH E EXTENT OF RS.2,74,000 IS DELETED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL, APART FROM THE DECISION OF THE AP E X COU R T IN THE CASE OF BHARAT EARTH MOVERS LTD. (SUPRA) , FOLLOWED THEREIN, WE SET ASIDE THE IMPU G N E D ORDER OF THE CIT(A) , ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RECONSIDER THIS ISSUE, IN THE LIGHT OF THE ABOVE DECISIONS, IN ACCORDANCE WITH LAW, AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE. ITA NO. 83 & 106/HYD/2013 M/S. KEERTI INDUSTRIES LIMITED, HYDERABAD 16 2 6 . IN THE RESULT, WHILE APPEAL OF THE ASSESSEE, BEING ITA NO.83/HYD/2013 , IS PARTY ALLOWED FOR STATISTICAL PURPOSES, AND THAT OF THE REVENUE, BEING I TA NO.106/HYD/2013 IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 18.06.2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 18 TH JUNE , 2014 COPY FORWARDED TO: 1. M/S. KEERT H I INDUSTRIES LTD., PLOT NO.40, IDA BALANAGAR, HYDERABAD 500 037. 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) II I HYDERABAD COMMISSIONER OF INCOME - TAX II HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S