Chiripal Industries Ltd., Ahmedabad V. Dy.Commissioner of Income Tax,(OSD)Range-1, Ahmedabad

ITA 833/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8603 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: GOURAV NAHTA
• Keywords: Deemed owner of house property; Depreciation; Earning of tax free income; Proportionate interest; Bad and doubtful debts; Scheme of amalgamation; Unabsorbed depreciation; Capital expenditure
• Section: 143(3); 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, CIRCLE - 1(1)(2), AHMEDABAD (APPELLANT) VS M/S. CHIRIPAL INDUSTRIES LTD., SURVEY NO. 199/200/1,2, SAIJPUR GOPALPUR, PIRANA ROAD,PIPLEJ, AHMEDABAD PAN: AAACC8513B (RESPONDENT) M/S. CHIRIPAL INDUSTRIES LTD., SURVEY NO. 199/200/1,2, SAIJPUR GOPALPUR, PIRANA ROAD,PIPLEJ, AHMEDABAD PAN: AAACC8513B (APPELLANT) VS THE DCIT, CIRCLE - 1(1)(2), AHMEDABA D (RESPONDENT) REVENUE BY : S H RI LALIT P. JAIN , SR. D . R. ASSESSEE BY: SHRI GOURAV NAHTA, A.R. DATE OF HEARING : 18 - 10 - 2 018 DATE OF PRONOUNCEMENT : 10 - 12 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE FIVE APPEALS THREE BY REVENUE FOR ASSESSMENT YEARS 2010 - 11 TO 2012 - 13 AND TWO BY ASSESSEE FOR A. Y. 2011 - 12 TO 2012 - 13 , ARI SE FROM ORDER OF I T A NO S . 2092 / A HD/20 15, 900 & 1547/A HD/2016 A SS ESSMENT YEAR 2010 - 11 TO 2012 - 13 ITA NOS. 833 & 1425/AHD/2016 ASSESSMENT YEAR 2011 - 12 TO 2012 - 13 I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 2 THE CIT(A) - 1, AHMEDABAD DATED 13 - 04 - 2 015 , 27 - 01 - 20 16, 29 - 03 - 2016, 27 - 01 - 2016 AND 29 - 03 - 2016 RESPECTIVELY, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. ALL THESE FIVE APPEALS ARE ADJUDICATED TOGETHER BY THIS COMMON ORDER AS MOST OF THE APPEALS CONSISTED OF COM MON ISSUES BASED ON IDENTICAL FACTS . ITA NO. 2092/AHD/2015 FILED BY REVNEUE 3 . THE REVENUE HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - (1) THE ID, CIT(A) HAS ERRED IN LAW AND ON FACTS IN PARTLY DELETING THE DISALLOWANCE OF RS.25,69,571/ - MADE U/S 35D OF THE ACT. (2) THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.2,10,000/ - MADE U/S 36(1)(III) OF THE ACT. (3) THE CIT(A) HAS ERRED IN LAW AND ON FACT IN DELETING THE DISALLOWANCE OF RS.54,50,016/ - MADE U/S 14A OF THE ACT. 4. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 14 , 81 , 15 , 160/ - WAS FILED ON 14 TH SEP, 2010. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) ON 24 TH AUGUST, 201 1. F URTHER FACTS OF THE CASE ARE DISCUSSE D UNDER DIFFERENT GROUNDS OF APPEAL: - DISALLOWANCE U/S. 14A 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS MADE INVESTMENT IN SHARES OF I T S SUBSIDIARY COMPANY AND OTHER COM PANIES AS APPEARING IN SCHEDULE - 6. HE OBSERVED THAT INCOME FROM SHARES OF DOMESTIC SUBSIDIARY COMPANIES WAS EXEMPT FROM TAX BUT NO DIVIDEND INCOME EITHER FROM SUBSIDIARY COMPANIES OR OTHER DOMESTIC COMPANIES WERE SHOWN BY THE ASSESSEE. THEREFORE, THE ASSESSEE WAS CALLED UPON TO EXPLAI N WHY THE DISALLOWANCE U/S. 14A R.W RULE 8D OF THE IT RULE SHOULD NOT BE MADE. THE ASSESSEE RESPONDED THAT THERE WAS NO FRESH INVESTMENT MADE DURING THE Y E AR. IT IS FURTHER STATED THAT THE INVESTMENT MADE IN THE EARLIER YEARS WERE MADE OUT OF INTERNAL ACCRUAL AND INTEREST FREE FUNDS. IT WAS ALSO CONTENDED THAT THERE I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 3 WAS NO EXEMPT INCOME, THEREFORE, THE PROVISION OF SECTION 14A CANNOT BE APPLIED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND STATED THAT ASSESSEE HAS ACTUA LLY INCURRED EXPENDITURE BY WAY OF USING OF MAN HOURS OF DIRECTOR S / MANAGERS AND USING OF OFFICE MANPOWER , INFRASTRUCTURE FACILITIES FOR MAKING INVESTMENT THE INCOME FROM WHICH IS EXEMPT FROM TAX . HE HAS OBSERVED THAT THE FUNDS OF THE ASSESSEE COMPANY HA VE BEEN DIVERTED TO THE INVESTMENT INCOME WHICH WAS EXEMPT FROM TAX . HE FURTHER STATED THAT DESPITE INCURRING SO ME EXPENDITURE FOR INVESTMENT ACTIVITY , THE ASSESSEE COMPANY HAS NOT DISALLOWED ANY EXPENDITURE U/S. 14A. THEREFORE, HE HAS COMPUTED DISALLOWAN CE TO THE AMOUNT OF RS. 54 , 50 ,0 16/ - AS PER SECTION 14A R.W. RULE 8D OF THE ACT. 6 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE GROUND OF APPEAL OF THE ASSESSEE AFTER PLACING RELIANCE ON THE DECISION OF J URI SDICTIONA L H IGH COURT IN THE CASE OF CORR TECH ENERGY PVT. LTD. RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - I AM PARTLY INCLINED WITH APPELLANT. THE PRINCIPLE OF RESJUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEEDINGS AND EACH ASST T. YEAR IS DIFFERENT & DISTINCT. THE A.O. AT PARA 7.3 OF THE IMPUGNED ORDER DISCUSSED THIS ISSUE. IN REFERENCE TO APPELLANT'S CONTENTION THAT THERE IS NO EXEMPT INCOME, THE A.O. AT PARA 7.4 OF THE IMPUGNED ORDER DEALT WITH VARIOUS LEGAL PREPOSITION. BUT, I AM NOT INCLINED WITH A.O. IN VIEW OF JURISDICTIONAL HIGH COURT ORDER IN THE CASE OF CORRTECH ENERGY PVT. LTD. (SUPRA) AS RELIED ON BY APPELLANT, IN VIEW OF THIS RATIO, THE OTHER CONTENTIONS & FINDINGS BECOME ACADEMIC IN NATURE THOUGH THE APPELLANT IS CORR ECT IN CONTENTING THAT INVESTMENT IN APPELLANT'S SUBSIDIARIES AS WELL AS GROUP COMPANIES WERE QUITE OLD AND STRATEGIC INVESTMENT MADE OUT OF INTEREST FREE FUND. IT IS THEREFORE, FOLLOWING THE RATIO OF JURISDICTIONAL HIGH COURT, THE A.O. IS DIRECTED TO DELE TE THE ADDITION SO MADE OF RS. 54,50,016/ - U/S 14A OF THE ACT. THE APPELLANT GETS RELIEF ACCORDINGLY. THIS GROUND IS ALLOWED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER HAS MADE DISALLO WANCE OF RS. 54,50,016 AFTER INVOKING THE PROVISION OF SECTION 14A ON THE GROUND THAT ASSESSEE HAS NOT DISALLOWED INTEREST AND ADMINISTRATIVE EXPENSES U/S. 14A AND HE WAS OF THE VIEW THAT INTEREST AND ADMINISTRATIVE EXPENSES WERE INCURRED FOR EARNING EX EMP T INCOME . T HE ASSESSEE HAD PLEADED THAT NO BORROWED FUNDS I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 4 WERE USED FOR MAKING INVESTMENTS IN SHARES/MUTUAL FUND, THEREFORE, NO DISALLOWANCE WAS REQUIRED TO BE MADE. WE HAVE NOTICED THAT ASSESSEE WAS HAVING HUGE BALANCE IN SHARE S CAPITAL AND RESERVES A ND SURPLUS AND AS PER AUDIT STATEMENT, THE RE WAS NON - INTEREST BEARING FUNDS TO THE AMOUNT OF RS. 189.55 CRORES WHEREAS THE INVESTMENT IN THE SHARES WAS ONLY AT RS. 11.63 CRORES. AP ART FROM THE ABOVE, WE HAVE NOTICED DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. SINCE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, THEREFORE, WE ARE OF THE VIEW THAT NO DISALLOWANCE U/S. 14A IS REQUIRED IN THE CASE OF THE ASSESSEE. VIDE A NUMBER OF JUDICIAL PRONOUNCEMENTS THE CO - ORDINA TE BENCHES OF THE ITAT AHMEDABAD HAVE HELD THAT THE NO DISALLOWANCE SHALL BE MADE UNDER SECTION 14A OF THE ACT IF THE ASSES SEE HAS NOT EARNED ANY EXEMPT INCOME AND THE DISALLOWANCE SHALL BE RESTRICTED TO THE EXEMPT INCOME. SECTION 14A(1) PROVIDES THAT FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER CHAPTER IV, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF OTHER TOTAL INCOME UNDER THE ACT. HOWEVER, IN THE CASE OF THE ASSESS EE, IT HAS NOT MADE ANY CLAIM OR EXEMPTION OF ANY INCOME FROM PAYMENT OF TAX FOR THE YEAR UNDER CONSIDERATION. WE HAVE PERUSED THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF SHAH ALLOYS LTD. (2315/AHD/2010 DATED 27 - 03 - 2015 AND THE DECIS ION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CORRETECH ENERGY PVT. LTD. (45 TAXMANN.COM 116) ON IDENTICAL ISSUE OF DISALLOWANCE U/S. 14A WHEN NO DIVIDEND INCOME IS EARNED BY THE ASSESSEE. THE JUDICIAL FINDINGS OF THE HON BLE JURISDICTIONAL HIGH COURT HA S BEEN ELABORATED IN THE DECISION OF THE LD. CIT(A) HAS CITED SUPRA IN THIS ORDER ON IDENTICAL FACTS DECIDED IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES AND FOLLOWING THE DECISION OF THE HON BLE JURISDIC TIONAL HIGH COURT OF GUJARAT, WE CONSIDER THAT THE DISALLOWANCE U/S. 14A R.W.S RULE 8D CANNOT BE MADE AS THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 5 DISALLOWANCE U/S. 35D 8 . DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 25 ,61, 571/ - UNDER THE HEAD PRELIMINARY EXPENSES U/S. 35D OF THE ACT. IT IS STATED THAT ASSESSEE HAS INCURRED AN AMOUNT OF RS. 12 , 62 , 518/ - DURING THE YEAR UNDER THE HEAD IPO EXPENSES OUT OF WHICH 1/5 AMOUNTING TO RS. 2 , 52 , 504/ - WAS CLAIMED U/S. 35D FOR THE YEAR UNDER CONSIDERATION I N ADDITION TO RS. 23 , 17 , 067/ - OF EARLIER YEAR EXPENSES UNDER THE SAME HEAD . T HE ASSESSING OFFICER HAS STATED THAT THIS ISS UE WAS DISCUSSED IN DETAIL FOR ASSESSMENT YEAR 2008 - 09. THE ASSESSING OFFICER HAS STATED THAT MAJORITY OF THE EXPENSE S INCURRED UNDER THE HEAD IPO EXPENSES WERE NOT ELIGIBLE FOR DEDUCTION U/S. 35D AS THESE EXPENSES DO NOT FALL WITHIN THE NATURE OF EXPENSE S SPECIFIED IN SECTION 35D(2) OF THE ACT. IT WAS HELD THAT THE SAID EXPENSES WERE CAPITAL IN NATURE AND THE SAID IPO HAD NOT BEEN BROUGHT BY THE COMPANY. THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF VARELI TEXTILES LTD 284 ITR 238 (GUJ) AND STATED THAT IN THIS CASE THE DECISION OF SUPREME COURT IN BROOKE INDIA VS CIT 225 ITR 798 (SC) WAS FOLLOWED. THEREFORE, THE CLAIM OF PRELIMINARY EXPENSES OF RS.25,61,571(RS.2317067 BEING PART OF LAST YEAR IP O EXPENSES AND RS.2,52,504 BEING 1/5 TH OF THE IPO EXPENSES INCURRED DURING THE YEAR ) WERE DISALLOWED . 9 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - I AM PARTLY INCLINED WITH APPELLANT. AS FAR AS DISALLOWANCE OF RS. 1111226/ - IS CONCERNED, THE SAME WAS NEVER DISALLOWED IN ANY OF THE EARLIER YEAR, HENCE DISALLOWANCE IN THE IMPUGNED PREVIOUS YEAR WITHOUT A NY REASON IS NEITHER JUSTIFIED NOR SUSTAINABLE. THE A.O. IS DIRECTED TO ALLOW SUCH CLAIM AND DELETE THE ADDITION. THE APPELLANT GETS RELIEF OF RS. 1111226/ - . IN REFERENCE TO CLAIM OF RS. 1312701/ - , FOLLOWING THE RATIO OF EARLIER YEARS IN THE CASE OF APPELL ANT I.E. A.Y. 08 - 09 & A.Y. 09 - 10, THE DEDUCTION OF RS. 900161/ - IS ALLOWABLE WHILE BALANCE OF RS. 412540/ - (1312701 - 900161) IS DISALLOWABLE. THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF RS. 9001617 - AND DELETE THE ADDITION TO THIS EXTENT. THE APPELLANT GETS PART RELIEF OF RS. 900161/ - WHILE DISALL OWANCE & ADDITION OF RS. 412540/ - IS UPHELD AND CONFIRMED. IN R EFERENCE TO CLAIM OF RS. 145644/ - BEING SHORT CLAIM OF EARLIER YEAR, THERE IS NO REASONING OR PROPER FACTS OF SUCH CLAIM. THE DISALLOWANCES SO MADE BY I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 6 A .O. IS THEREFORE UPHELD AND CONFIRMED. IN RESPECT OF LEGAL PREPOSITION OF ALLOW ABILITY OF CLAIM U/S 37(1) OF THE ACT IN VIEW OF HON'BLE BOMBAY HIGH COURT ORDER IN THE CASE OF M/S NIMBUS COMMUNICATION LTD., WITH DUE REGARDS, THE FACTS ARE DISTINGUISHABLE. THE APPELLANT NEVER ABLE TO BROUGHT ANY IPO SO TO SAY THAT THERE WAS ANY ABORTING OF IPO FOR WHICH HON'BLE BOMBAY HIGH COURT ALLOWED IN THAT CASE THE EXPENSES RELATED TO IPO. IN CONCLUSION APPELLANT GETS P ART RELIEF OF RS. 2011387/ - (1111226 + 900161) WHIL E BALANCE DISALLOWANCE OF RS. 558184/ - (2569571 - 2011387) IS UPHELD AND CONFIRMED. THIS GROUND IS TREATED AS PARTLY ALLOWED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS. 25,69,571/ - OUT OF PRELIMINARY EXPENSES ON THE GROUND THAT IN THE ASSESSMENT YEAR 2008 - 09 SIMILAR EXPENSES WERE DISALLOWED. WE NOTICED THAT ASSESSEE HAS CLAIMED PRELIMINARY EXPENSES OF RS. 23,17,067/ - ON THE BASIS OF EARLIER YEARS EXPENSES AND ASSESSEE HAS INCURRED RS. 12,62,518/ - DURING THE YEAR UNDER CONSIDERATION AND CLAIMED 1/5 I.E. RS. 25,250 4 / - AS PRELIMINARY EXPENSES. THE ASSESSEE HAS INCURRED THESE EXPENSES AS IPO EXPENSES OF RS. 52,50,805/ - IN F.Y. 2007 - 08 WHICH WAS NOT ALLOWED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2008 - 09 BY CITING THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF M/S. VARLI TEXTILE LTD. AND DECISION OF HON BLE SUPREME COURT IN THE CASE OF BROOK BOND INDIA LTD. DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS AGAIN CLAIMED SUCH EXPENSES UNDER THE HEAD IPO TO THE AMOUNT OF RS. 12,62,518/ - AND THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE CLAIM U/S. 35D OF THE ACT. IN THIS CONNECTION, WE HAVE NOTICED THAT CLAIM OF THE ASSESSEE AS 1/5 OF RS. 55,56,127/ - RELATED TO EXPENSES IPO F.Y. 2007 - 08 WERE NEVER DISALLOWED BY THE ASSESSING OFFICER IN ANY OF THE EARLIER YEARS. EVEN, IN THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10, THIS DEDUCTION WAS ALLOWED. WE HAVE ALSO NOTICED THAT 1/5 EXPENSES OF RS. 52,50,805/ - TO THE AMOUNT OF RS. 1 111226 / - WAS ALLOWED BY THE CIT(A) IN ASSESSMENT YEAR 2008 - 09 AND 2009 - 10 . THEREFORE, WE JUSTIFY THE DECISION OF LD. CIT(A) TO ALLOW THE CLAIM OF PRELIMINARY EXPENSES TO THE AMOUNT OF RS. 20,11,38 7/ - CONSISTING OF RS. 1 1 ,1 1 , 226 +9,00,161. AFTER PERUSAL OF THE ABOVE FACTS, WE OBSERVED THAT CLAIM OF THE ASSESSEE TO THE AMOUNT OF RS. 11,11,226/ - WAS NEVER DISALLOWED IN ANY OF I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 7 THE EARLIER YEARS AND SIMILARLY FOR THE ASSESSMENT YEAR 2008 - 09 AND 20 10 - 11 THE LD.CIT(A) HAD ALLOWED THE D EDUCTION OF RS. 900161/ - . IN THE LIGHT OF THE FACT AND FINDINGS REPORTED IN THE DECISION OF THE LD.CIT(A) , WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL OF THE REVENUE THEREFORE THE SAME IS DISMISSED. DEEMED INTEREST D ISALLOWANCE U/S. 36(1)(III) 12 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PERUSAL OF THE DETAILS OF LOAN AND ADVANCES THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN RS. 20 LACS AS OUTSTANDING RECEIVABLE FROM M/S. RED EVENT INDIA PVT. LTD. H E OBSERVED THAT DURING THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 THE ASSESSING OFFICER HAS GIVEN THE FINDINGS THAT AMOUNT OF ADVANCES TO M/S RED EVENT PVT. LTD. WAS INTEREST FREE ADVANCES AND NO PURCHASES OR SERVICES WERE OBTAINED FROM TH E SAID PARTY BY THE ASSESSEE. ACCORDINGLY THE ASSESSING OFFICER HAS TREATED THIS AMOUNT ADVANCED FOR NON BUSINESS PURPOSES. THEREFORE, THE ASSESSING OFFICER HAS CHARGED INTEREST @ 12% TO THE AMOUNT OF RS. 2,10,000/ - ON THE SAID ADVANCES AND ADDED THE SAME TO THE TOTAL INCOM E OF THE ASSESSEE. 1 3 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: I AM PARTLY INCLINED WITH APPELLANT. THE PR INCIPLE OF RESJUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS, HENCE APPELLANT IS NOT CORRECT IN CONTENDING THAT NO DISALLOWANCES WERE MADE BY A.O. IN EARLIER YEARS. IN FACT A.O. REFERRED SUCH DISALLOWANCES MADE IN A.Y. 09 - 10. BUT, MY PREDECESSOR, IN APPEAL ORDER DT. 26.03.2013 FOR A.Y. 2009 - 10 ON THIS ISSUE WITH SIMILAR CONTENTION & LEGAL PREPOSITION FOLLOWED RATIO OF APPEAL ORDER IN THE CASE OF APPELLANT FOR A.Y. 08 - 09 AFTER CONSIDERING TOTAL AVAILABILITY OF FUNDS I.E. RS. 20 CRORE SHARE CAPITAL AND RESERVE & SURPLUS FOLLOWED RATIO OF HON'BLE ITAT AHMEDABAD AND DIRECTED THE A.O. TO DELETE THE DISALLOWANCES SO MADE. THERE IS NO CHANGE OF FACTS & CONTENTIONS, HENCE FOLLOWING RATIO ON THIS ISSUE IN APPELLANT'S CASE FOR EARLIER YEARS, THE DISALLOWANCES SO MADE BY A.O. OF RS. 210000/ - IS DIRECTED TO BE ALLOWED. THE A.0.IS DIRECTED TO DELETE THE ADDITION SO MADE. THE APPELLANT GETS RELIEF OF RS. 210000/ - . THIS GROUND IS ALLOWED. I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 8 14 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS DI SALLOWED A SUM OF RS. 2 , 10 , 000 OUT OF INTEREST ON THE GROUND THAT ASSESSEE HAD GIVEN ADVANCE TO RED EVENT INDIA PVT. LTD. IN F.Y. 2006 - 07 WHICH WAS STILL OUTSTANDING. AFTER REFERRING THE ASSESSMENT YEAR 2009 - 10, THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS GIVEN INTEREST FREE ADVANCES TO M/S. RED EVENT INDIA PVT. LTD. AND THIS AMOUNT WAS ADVANCED FOR NON - BUSINESS PURPOSES. THEREFORE, CONSIDERING THE AVERAGE RATE OF INTEREST @ 12% ON AVERAGE OF BALANCE OF 20 LACS AFTER STATING THAT RS. 15 LASCS RECEIVED DURING THE YEAR, THE ASSESSING OFFICER HAS MADE DISALLOWANCE TO THE AMOUNT OF RS. 21,0000/ - . HOWEVER, WE HAVE NOTICED THAT ASSESSEE HA D GIVEN THE AFORESAID AMOUNT TO RED EVENT INDIA PVT. LTD. FOR MANAGING THE FUNCTION RELATED TO THE CUSTOMERS OF THE ASSESSEE S COMPANY AND SUCH CONTRACT WAS CANCELLED , T HEREAFTER, THE ASSESSEE HA D RECEIVED BACK SUCH AMOUNT FROM THEM. IN THE LIGHT OF THE ABOVE FACTS WE ARE INCLINED WITH THE DECISION OF THE LD. CIT(A) THAT ASSESSEE HAD USED THESE BORROWED FU NDS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 833/AHD/2016 FILED BY ASSESSEE 1 5 . THE ASSESSEE HA S RAISED FOLLOWING GROUNDS OF APPEAL: - 1 . THE LD. CIT APPEALS 1 AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 27/01/2016 FOR A.Y, 2011 - 12 IN THE CASE OF APPELLANT BY CONFIRMING DISALLOWANCE MADE BY THE A.O. 2. THE LD. CIT APPE ALS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE MADE UNDER SECTION 14A OF RS. 755141 / - 3. THE LD. CIT APPEALS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 27,54,269/ UNDER SECTION 35D. 4. THE LD. CIT APPEALS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION FOR DEEMED RENTAL INCOME OF RS. 1 ,68,000 / - . DISALLOWANCE U/S. 14A 16 . THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS. 52,23,911/ - AFTER INVOKING THE PROVISION OF SECTION 14A ON THE GROUND THAT ASSESSEE HAS NOT I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 9 DISALLOWE D INTEREST AND ADMINISTRATIVE EXPENSES U/S. 14A FOR EARING EXEMPT INCOME. IN THIS CONNECTION THE HAS ASSESSEE HAS STATED THAT NO BORROWED FUNDS W ERE USED FOR MAKING INVESTMENT IN SHARES/MUTUAL FUND THEREFORE NO DISALLOWANCE WAS REQUIRED TO BE MADE. IT IS NOTICED THAT TH E ASSESSEE WAS HAVING HUGE INTEREST FR EE FUND IN THE FORM AND SHARE CAPITAL AND RESERVES FUNDS TO THE AMOUNT OF RS. 174.74 CRORES WHER EAS THE INVESTMENT WAS MADE TO THE AMOUNT OF RS. 18.90 CRORES ONLY . IT IS ALSO NOTICED THAT ASSESSE E HAS CLAIMED EXEMPT DIVIDEND INCOME TO THE AMOUNT OF RS. 13,951/ - ONLY DURING THE YEAR UNDER CONSIDERATION. T HE ASSESSING OFFICER HAS MADE ADDITION TO THE AMOUNT OF RS. 52,23,911/ - WHICH WAS MUCH MORE THAN EXEMPT INCOME EARNED BY THE ASESSEE DURING THE Y EAR CONSIDERATION. HOWEVER, THE LD. CIT(A) HAS DELETED THE PROPORTIONATE INTEREST DISALLOWANCE MADE BY THE ASSESSING OFFICER TO THE AMOUNT OF RS. 44,68,770/ - AND CONFIRMED THE ADDITION TO THE AMOUNT OF RS. 7,55,141/ - BY REFERRING AMOUNT TO BE DISALLOWED F OR ADMINISTRATIVE EXPENSES. WE HAVE ALSO CONSIDERED THAT CO - ORDINATE BENCH OF THE ITAT AHMEDABAD IN THE CASE OF JIVRAJ TEA LTD. VS. DCIT ITA NO. 886/AHD/2012 ORDER DATED 28 TH AUGUST, 2014 RELATED TO ASSESSMENT YEAR 2008 - 09 RESTRICTING THE DISALLOWANCE T O THE EXTENT OF EXEMPT AFTER PERUSAL OF THE FACTS, WE ARE OF THE VIEW THAT DISALLOWANCE IN THE CASE OF THE ASSESSEE AFTER REFERRING THE NUMBER OF DECISION OF CO - ORDINATE BENCHES CANNOT EXCEED THE AMOUNT OF EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YE AR UNDER CONSIDERATION, THEREFORE, WE RESTRICT THE DISALLOWANCE U/S. 14A TO THE AMOUNT OF RS. 13,951/ - EXEMPT INCOME EARNED BY THE ASSESSEE. THEREFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. DISALLOWANCE U/S. 35D 17 . DURING THE YEAR UNDER CONSI DERATION, THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF PRELIMINARY EXPENSES TO THE AMOUNT OF RS. 27,54,269/ - ON THE GROUND THAT IN THE EARLIER YEARS ASSESSMENT YEAR SIMILAR EXPENSES WERE DISALLOWED IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAS GIVEN A B REAK UP OF I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 10 THIS EXPENSES STATING THAT AN AMOUNT OF RS. 10,50,161/ - WAS A PART OF EXPENDITURE OF RS. 52,50,805/ - INCURRED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2007 - 08 RELATING TO IPO. IT WAS FURTHER STATED THAT THE PUBLIC ISSUE WAS NOT MATERIALIZED, THEREFORE, THE ASSESSEE COMPANY FORCED TO WITHDRAW THE ISSUE FOR REASON BEYOND ITS CONTROL . IN RESPECT OF THE CLAIM OF EXPENSES OF RS. 11 , 11 , 226/ - BEING 1/5 OF RS. 33 , 36 , 127/ - EXPENSES INCURRED FY 2006 - 07 RELA TED TO ASSESSMENT YEAR 2007 - 08, I T WAS STATED THAT SUCH EXPENSES WERE ALLOWED IN THE PAST BY THE ASSESSING OFFICER, THEREFORE, THE SAME SHOULD HAVE ALSO BEEN ALLOWED BY THE ASSESSING OFFICER DURING THE YEAR UNDER CONSIDERATION. WE HAVE NOTICED THAT IN THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10, THE AS SESSING OFFICER HAS ALLOWED PRELIMINARY EXPENSES TO THE AMOUNT OF RS. 11 , 11 , 226/ - AS 1/5 EXPENSES OF RS. 55 , 56 , 127/ - . FURTHER, IN ASSESSMENT YEAR 2010 - 11 THE LD. CIT(A) HAS AGAIN ALLOWED THE CLAIM OF THE ASSESSEE TO THE AMOUNT OF RS. 11 , 11 , 226/ - PERTAININ G TO THE PRELIMINARY EXPENSES OF RS. 5556127/ - . FURTHER, WE HAVE NOTICED THAT WITHOUT ANY REASON, LD. CIT(A) HAS DISALLOWED THE CLAIM OF THE ASSESSEE OF 1/5 OF THIS EXPENSE TO THE AMOUNT OF RS. 11 , 11 , 226/ - WITHOUT ANY RELEVANT FINDING THIS CLA IM OF THE AS SESSEE IS REJECTED DURING THIS YEAR WHICH HAS BEEN CONTINUOUSLY ALLOWED IN THE PRECEDING ASSESSMENT YEARS. REGARDING IPO EXPENSES PERTAINING TO F.Y. 2007 - 08 FOR THE ASSESSMENT YEAR 2008 - 09 TO THE AMOUNT OF RS. 52 , 50 , 805/ - , WE HAVE NOTICED THAT LD. CIT(A) HAS ALLOWED THE CLAIM OF HE ASSESSEE TO THE AMOUNT OF RS. 9 , 00 , 161/ - IN ASSESSMENT YEAR 2008 - 09, 2009 - 10 AND 2010 - 11 AS THESE EXPENSES WERE CLAIMED BY THE ASSESSEE PERTAINING TO PUBLIC ISSUE U/S. 35D OF THE ACT. HOWEVER, WE HAVE NOTICED THAT DURING THE YE AR UNDER CONSIDERATION, LD. CIT(A) HAS SIMPLY STATED THAT HE WAS NOT AGREED WITH THE FINDINGS OF HIS PREDECESSORS AND WITHOUT DISPROVING THE CLAIM OF THE ASSESSEE HAS SIMPLY DISALLOWED THE CLAIM OF THE ASSESSEE TO THE AMOUNT OF RS. 900161/ - . WE FIND THAT LD. CIT(A) IS NOT CORRECT IN HIS DECISION AS THE CLAIM OF THE ASSESSEE HAS BEEN CONTINUOUSLY ALLOWED IN THE EARLIER YEARS AS PER RULE 35D FOR THE EXPENSES INCURRED FOR PUBLIC ISSUE, THEREFORE, WE ARE OF THE VIEW THAT ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 35D TO THE AMOUNT OF RS. 9 , 00 , 161/ - AS ALLOWED IN THE I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 11 EARLIER YEARS IN THE CASE OF THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE ASSESSE IS PARTLY ALLOWED. D EEMED RENTAL INCOME OF RS. 1,68,000/ - 1 8 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER HAS NOTICED THAT AS PER SCHEDULE 6 OF THE BALANCE SHEET, THE ASSESSEE HAS SHOWN INVESTMENT IN FOUR FLATS. THE ASSESSEE WAS ASKED TO EXPLAIN THE USE OF THESE FLATS FOR BUSINESS PURPOSES. T HE ASSESSEE HAS EXPLAINED T HAT THESE SIX FLATS WERE USED FOR GUEST HOUSE FOR BUSINESS, THEREFORE, NO INCOME UNDER THE HEAD HOUSE PROPERTY HAS BEEN OFFERED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE STATED THAT AS MENTIONED IN THE ASSESSMENT ORDER U/S. 143(3) FOR ASSESSMENT YEAR 2006 - 07, THE EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE, THEREFORE, HE HAS COMPUTED NOTIONAL HO USE PROPERTY INCOME FOR TWO FLATS AT RS . 1,68,000/ - AFTER ACCEPTING THE OTHER TWO FLATS BEING USED AS GUEST HOUSES FOR BUSINESS PURPOSES. 1 9 . AGGRIEVED ASS ESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS CONFIRM ED THE ADDITION MADE BY THE ASSESSING OFFICER . THE RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 6.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT O RDER AND APPELLANT S SUBMISSION. IT IS NOT IN DISPUTE THAT APPELLANT OWNED THESE HOUSE PROPERTIES ON WHICH HOUSE PROPERTY INCOME WAS NOT SHOWN. THE REASON FOR NOT SHOWING HOUSE PROPERTY INCOME IS T H AT THESE WER E USED AS GUEST HOUSE S . HOWEVER, APPELLANT DID NOT DISCHARGE ITS ONUS THAT THESE PROPERTIES WERE UTILIZED AS GUEST HOUSE FO R THE BUSINESS OF THE APPELLANT APART F R O M CLAIM OF GUEST HOUSE EXPENSES . I N ABSEN CE O F EVIDENCE OF USAGE OF THESE PROPERTIES AS GUEST HOUSE FOR THE PUR P OS E OF APPELLANT S BUS INESS, I UPHOLD THE STAND OF THE ASSESSING OFFICER THAT THESE PROPERTIES ARE LIABLE FOR TAX FOR HOUSE PROPERTY INCOME. THE BASIS OF CALCULATING HOUSE PROPERTY INCOME IS REASONABLE AND THEREFORE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 1,68,000/ - IS C ONFIRMED. 20 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE WAS HAVING 4 FLATS CLAIMED AS USED FOR BUSINESS PURPOSES BEING GUEST HOUSES. HOWEVER, THE ASSESSING OFFICER HAS TREATED THE TWO FLATS AS GUEST HOU SES AS DECIDED IN ASSESSMENT YEAR 2006 - 07 AND IN RESPECT OF OTHER TWO I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 12 FLATS MADE ADDITION OF RS. 1,68,000/ - AFTER TAKING THE NATIONAL INCOME @ 84,000/ - PER FLATS. THE LD. CIT(A) HAS SUSTAINED THE ADDITION ON THE GROUND THAT ASSESSEE HAS NOT SUBSTANTIATED ITS CLAIM WITH RELEVANT EVIDENCES TO DEMONSTRATE THAT THESE PROPERTIES WERE USED AS GUEST HOUSES FOR THE PURPOSE OF BUSINESS DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, WE HAVE ALSO NOT FOUND ANY RELEVANT M ATERIAL PRODUCED BY THE ASSESSEE WHICH DEMONSTRATE THAT ASSESSEE HAS USED ALL THE PROPERTIES AS A GUEST HOUSES FOR THE PURPOSE OF THE BUSINESS DURING THE YEAR UNDER CONSIDERATION. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED WITH THE DECISION OF LD. CIT(A), THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 900/AHD/2016 FILED BY REVENUE 21 . THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - (1) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.44,68,770 / - MADE U/S 14A R.W. RULE 8D(II) OF THE I. T. ACT. (2) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO ALLOW THE ASSESSEE COMPANY'S CLAIM OFRS.3,03,57,497/ - U/S 80IA OF THE I.T. ACT. DISALLOWANCE U/S. 14A 22. THIS GROUND OF APPEAL OF DEPA RTMENT IS BASED ON IDENTICAL ISSUE AND FACT AS ADJUDICATED IN THE GROUND OF APPEAL OF THE ASSESSEE VIDE ITA NO. 833/AHD/2016 AS SUPRA IN THIS ODRER, THEREFORE, WE DO NOT FIND ANY MERIT ON THE GROUND OF APPEAL OF THE REVENUE AS THE DISALLOWANCE WAS RESTRICT ED TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESSEE WHICH WAS TO THE AMOUNT OF RS. 13,951/ - . THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. U /S. 80IA 23. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION OF THE COMPUTATION OF INCOME, THE ASSESSING OFFICER NOTICED THAT ASSE SSEE HAS CLAIMED I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 13 DEDUCTION OF RS . 3 , 03 , 57 ,497 / - U/S. 80IA OF THE ACT. ON VERIFICATION OF FORM 10CCB, THE ASSESSING OFFICER HAS OBSERVED T HAT ASSESSEE HAS SHOWN ACTIVITY OF POWER GENERATION AND TOTAL VALUE OF MACHINERY AND PLANTS USED FOR THE SAID ACTIVITY WAS AT RS. 766.44 LACS AND THE POWER PLANT WAS ORIGINAL LY INSTALLED BY THE ERSTWHILE OWNER M/S. SHANTI PROCESSING LTD PRIOR TO 01 - 04 - 2005. THE TOTAL VALUE OF POWER PLANT AS ON 31 ST MARCH, 2008 WAS RS. 7 , 66 , 75 , 468/ - OF WHICH VALUE OF OLD MACHINERY WAS RS. 7 , 11 , 23 , 416/ - . HE WAS OF THE VIEW THAT THE POWER PLANT SET UP BY THE ASSESSEE WAS NOT A NEW POWER PLANT AND IT WAS FO RMED BY TRANSFER OF OLD AND PREVIOUSLY USED MACHINERY THE VALUE OF WHICH WAS MORE THA N 90% OF THE TOTAL VALUE OF PLANT. IN VIEW OF THIS HE WAS OF THE OPINION THAT CLAIM OF ASSESSEE WAS NOT ALLOWABLE. HE WAS OF THE VIEW THAT THE POWER PLANT IN QUESTION WAS ALREADY USED BY SHANTI PROCESSING LTD. WHICH HAD S UBSEQUENTLY AMALGAMATED WITH THE ASSESSEE COMPANY. THE POWER PLANT WAS ORIGINALLY INSTALLED BY THE ERSTWHILE OWNER DURING FINANCIAL YEAR 2005 - 06. ORIGINAL COST OF PLANT WAS RS. 7 , 11 , 23 , 416/ - AND THIS VALUE REPRESENT THE COST TO THE PREVIOUS OWNER MAINLY INCURRED DURING FINANCIAL YEAR 2 004 - 05 AND INSTALLATION O F THE SAME WAS MADE DURING FINANCIAL YEAR 2005 - 06. HE HAS FURTHER STATED THAT AS PER PROVISIONS OF SECTION 80IA(12) WHEN ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO DEDUCTION UNDER THIS SECTION IS TRANSFERRED BEFORE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION TO ANOTHER COMPANY THEN CLAUSE (B) THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE AMALGAMATED COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING COMPANY IF THE AMALGAMATION HAD NOT TAKEN PLACE. HE HAS FURTHER STATED THAT IN THIS CASE IT IS NOT CLEAR WHETHER THE AMALGAMATING COMPANY I.E. SH ANTI P ROCESSING LTD. WAS ELIGIBLE FOR CLAIMING U/S. 80IA OR NOT IN THE FIRST PLACE. IN VIEW OF THE SAME, THE CLAIM OF THE ASSESSEE WAS DISALLOWED. 24 . AGGRIEVED ASSE SSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION FILED BY THE APPELLANT. THE ASSESSEE COMPANY IS AN AMALGAMATED COMPANY WHEREIN SHANTI I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 14 PROCESSOR LTD WAS MERGED WITH THE ASSESSEE COMPANY WEF 01/04/2005 AS PER THE ORDER OF HON'BLE HIGH COURT OF GUJARAT DATED 31/03/2006. THE POWER PLANT WAS INSTALLED IN SHANTI PROCESSOR S LTD. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF APPELLANT DEDUUCTION U/S 80IA ON TWO GROUNDS; FIRST, PLANT AND MACHINERY WAS OLD AND SECONDLY, IT WAS NOT CLEAR TO HIM WHETHER SHANTI PROCESSOR WAS ELIGIBLE TO CLAIM DEDUCTION. THE APPELLANT HAS SUBM ITTED THAT ENTIRE PLANT WAS NEW ONE AND MACHINERY WERE PURCHASED BY SHANTI PROCESSOR LTD WHICH WAS AMALGAMATING COMPANY AND SINCE THE SAME WERE NOT USED PRIOR TO 01/04/2005, THE ASSETS CANNOT BE TREATED AS OLD MACHINERY. AS REGARDS ELIGIBILITY OF DEDUCTION , IT IS STATED BY THE APPELLANT THAT COMPANY HAD FULFILLED ALL THE REQUIRED CONDITION AND THEREFORE IT WAS ELIGIBLE. THE APPELLANT HAS FURTHER STATED THAT THE A.O. HAS NOT SPECIFICALLY POINTED OUT WHY THERE WAS ANY DOUBT IN THE MATTER. AS THE A.O. HAS NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL IN THIS REGARDS, THE PRESUMPTION MADE BY HIM IS ON GUESS WORK AND NOT TENABLE IN THE EYES OF LAW. THE APPELLANT FURTHER SUBMITS THAT THE A.O. IN THE ASSESSMENT ORDER U/S. 143(3) FOR A.Y.2009 - 10 & A.Y.2010 - 11 HAD ALLOW ED THE DEDUCTION CLAIMED ON IDENTICAL ISSUE AND THEREFORE SUCH REMARK FOR THE YEAR IS UNWARRANTED TO THE FACTS. 8.4. THE SUBMISSION OF THE ASSESSEE HAS BEEN GONE THROUGH CAREFULLY. UNDER SECTION 80IA, AN INDUSTRIAL UNDERTAKING WHICH GENERATES/DISTRIBUTES P OWER CAN CLAIM DEDUCTION WITH FOLLOWING CONDITIONS: - > IT SHOULD BE A NEW UNDERTAKING > IT IS SET UP IN ANY PART OF INDIA FOR THE GENERATION OR GENERATION AND DISTRIBUTION OF POWER > IT SHOULD NOT BE FORMED BY TRANSFER OF OLD PLANT AND MACHINERY WITH RE STRICTION THAT VALUE OF OLD MACHINERY SHOULD NOT BE MORE THAN 20% OF THE TOTAL VALUE OF THE PLANT. > THE ACTIVITY SHOULD COMMENCE DURING THE SPECIFIED PERIOD. BEFORE GOING INTO THE MERIT OF THE ASSESSEE'S CASE FOR DEDUCTION U/S. 80IA(4) OF THE ACT, IT I S VERY IMPORTANT TO LOOK AT THE FACTS OF THE CASE RELATING TO THE CLAIM OF DEDUCTION U/S. 80IA(4) OF THE ACT THE ASSESSEE WAS HITHERTO CARRYING ON THE BUSINESS OF MANUFACTURING OF TRADING OF YARN, FABRICS AND GARMENT. THE ASSESSEE HAS STARTED THE GENERATIO N OF ENERGY IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2006 - 07 AND STARTED CLAIMING DEDUCTION U/S. 80IA(4) OF THE ACT FROM ASSESSMENT YEAR 2009 - 10, WHICH WAS FIRST YEAR OF ITS CLAIMED THE SAME WAS ALLOWED MEANING THEREBY THE A.O. WAS SATISFIED THAT THE APPELLAN T HAD FULFILLED ALL THE CONDITIONS. AS STATED ABOVE, THE PLANT & MACHINERY VALUING RS. 7,11,23,416/ - WERE INSTALLED IN THE FACTORY OF ERSTWHILE SHANTI PROCESSOR LTD. WHICH WAS TRANSFERRED TO CHIRIPAL INDUSTRIES LTD. ON AMALGAMATION BY THE ORDER OF GUJARAT HIGH COURT. THE POWER PLANT WAS ORIGINALLY INSTALLED BY THE ERSTWHILE OWNER DURING FINANCIAL YEAR 2005 - 06. THE ORIGINAL COST OF THE SAID PLANT WHICH INCLUDED COAL HANDLING SYSTEM, BOILERS, STEAM TURBINE AND ELECTRICAL FITTINGS WAS OF RS.7,11,23,416/ - . THIS VALUE REPRESENTS THE COST TO THE PREVIOUS OWNER MAINLY INCURRED DURING FY 2004 - 05 THE INSTALLATION OF WHICH WAS DURING FY 2005 - 06. AS PER THE PROVISIONS OF SECTION 80IA(12) WHEN ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO DEDUCTION UNDER THI S SECTION IS TRANSFERRED BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION TO ANOTHER INDIAN COMPANY THEN AS PER CLAUSE (B) THE PROVISION OF THIS SECTION SHALL APPLY TO THE AMALGAMATED COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING COMPANY IF THE AMALGAMATION HAD NOT TAKEN PLACE. THE CRUCIAL POINT IS THAT THE PROVISIONS OF SUB SECTION (12) WOULD ONLY APPLY IF THE AMALGAMATING COMPANY WAS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA. THE FACTS, ASSESSMENT ORDER AS WELL AS WRITTEN SUBMISSION PUT F ORTH BY THE A.R., IT WOULD BE PROPER TO LOOK INTO THE RELEVANT PROVISION OF THE ACT WHICH READS AS FOLLOW: - 801A (12) WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO THE DEDUCTION UNDER THIS SECTION IS TRANSFERRED, BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION, TO ANOTHER INDIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER - I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 15 (A) NO DEDUCTION SHALL BE ADMISSIBLE UNDER THIS SECTION TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIOUS YEAR IN WHICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND (B) THE PROVISIONS OF THEIR SECTION SHALL, AS FAR AS MAY BE, APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. 8.5. IT IS SEEN THAT SHANTI PROCESSORS LTD WAS AMALGAMATED WITH THE APPELLANT COMPANY W.E.F. 01/04/2005 AS PER SCHEME APPROVED BY HON'BLE GUJARAT HIGH COURT VIDE ORDER DATED 31/03/2006 AND THE MAJORITY OF PLANT AND MACHINERY I.E. RS.71123416/ - (OUT OF TOTAL ADDITION OF RS.76675468/ - ) WAS ACQUIRED BY AMALGAMATING COMPANY WHICH WAS NOT USED AND WAS SHOWN IN WIP IN THE BALANCE SHEET OF AMALGAMATING CO., WHICH WERE TRANSFERRED TO THE APPELLANT ON AMALGAMATION. THE A.O. HAS PRESUMED THAT ADDITION OF RS. 711234167 - WAS OLD PLANT AND MACHINERY IN THE HANDS OF THE APPELLANT SINCE THE APPELLANT HAD NOT PURCHASED IT, WHICH IS NOT CORRECT INTERPRETATION OF LAW. THE AO HAS NOWHERE STATED THAT THE MACHINERY WHICH WAS PURCHASED IS OLD MEANING THEREBY THAT SHANTI P ROCESSORS LTD HAD PURCHASED NEW MACHINERY AND ALL THE BILLS WERE ALSO SUBMITTED BEFORE THE AO. NEW MACHINERY CANNOT BE TERMED AS OLD MERELY ON ITS TRANSFER DUE TO AN AMALGAMATION BY THE ORDER OF THE HIGH COURT. THE APPELLANT HAS VEHEMENTLY STATED THAT, IF THE INTERPRETATION IS DONE IN THIS MANNER THEN IN ALL THE AMALGAMATION CASES BENEFIT WILL NOT BE AVAILABLE TO RESULTANT COMPANY AS THERE IS A TRANSFER OF MACHINERY IN ALL THE CASES. FURTHER, A MACHINERY DOES NOT BECOME OLD ON TRANSFER VIDE ORDER OF HIGH CO URT AS THE EXISTING COMPANY GETS MERGED WITH THE NEW COMPANY AND THE EXISTENCE OF THE EXISTING COMPANY IS NO MORE. THE A.O. HAS NOT BROUGHT ON RECORD EVIDENCE TO SUBSTANTIATE HIS ARGUMENT BY SHOWING THAT PARTICULARS MACHINERY WAS PURCHASED BY SHANTI PROCES SOR LTD WHICH WAS ALREADY USED. THEREFORE, NEW MACHINERY ' PURCHASED BY SHANTI PROCESSORS LTD CANNOT BE TERMED AS OLD MACHINERY SINCE DUE TO SCHEME OF AMALGAMATION; APPELLANT IS LEGALLY ENTITLED TO CLAIM DEDUCTION. THEREFORE, ON AMALGAMATION, THE APPELLANT BECAME ENTITLED TO ALL THE BENEFITS WHICH WERE AVAILABLE TO THE AMALGAMATING COMPANY NAMELY SHANTI PROCESSORS LTD. IT IS ALSO NOTED THAT SIMILAR CLAIM WAS MADE BY THE APPELLANT IN THE ASSESSMENT YEAR 2009 - 10, WHICH WAS FIRST YEAR OF ITS CLAIM AND THE SAME WAS ALLOWED MEANING THEREBY THE A.O. WAS SATISFIED THAT THE APPELLANT HAD FULFILLED ALL THE CONDITIONS. THERE IS NO CHANGE IN FACTS AND THEREFORE, IT IS NOT PROPER TO AGAIN REVISIT THE ELIGIBILITY OF CLAIM MORE SO WHEN THERE IS NO CHANGE IN FACTS. THE DE CISION RELIED UPON BY THE A.R. IN THE CASES OF DYNEMIC PRODUCTS LTD AS WELL AS THAT OF INCOME TAX OFFICER V/S. LAST PEAK DATA PVT. LTD. ITA NO. 154&155/KOL/2013(SUPRA), WHEREIN IT IS HELD AS UNDER: 'AMALGAMATION OF ANOTHER C OMPANY WITH ASSESSEE - ADMITTEDLY, AMALGAMATING COMPANY LP LTD. WAS ENJOYING STP UNIT STATUS - THUS THERE IS NO QUESTION OF THE ASSESSEE HAVING BEEN FORMED BY SPLITTING UP OR RECONSTRUCTION OF A UNIT ALREADY IN EXISTENCE - ASSESSEE WAS ALREADY AN EXISTING UNIT - LP LTD. HAD NOT AVAILED DEDUCTION UNDER S. 10A FOR PERIOD BEYOND TEN YEARS BEFORE AMALGAMATION WITH THE ASSESSEE. THEREFORE, THERE IS NO VIOLATION OF THE CONDITIONS LAID DOWN IN S. 10AA(4)(II) AND (III) BY THE ASSESSEE'. THE RATIO OF THE ABOVE CASE LAWS SUPPORTS THE CASE OF THE APPELLANT. UNDER THESE FACTS, I AM INCLINED WITH THE CONTENTION OF THE A.R. THAT DEDUCTION CLAIMED CANNOT BE DENIED. ACCORDINGLY, A.O. IS DIRECTED TO ALLOW THE CLAIM U/S 801 A AS CLAIMED BY THE APPELLANT. THE GROUND OF THE APPEAL IS ALLOWED. 25. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT WAS UNDISPUTED FACT THAT THAT ENTIRE PLANT WAS NEW ONE AND MACHINERY WERE PURCHASED BY SHANTI PROCESSOR LTD WHICH WAS AMALGAMATING COMPANY AND SINCE THE SAME WERE NOT USED PRIOR TO 01/04/2005 AND IN THE ASSESSMENT ORDER U/S. I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 16 143(3) FOR A.Y.2009 - 10 & A.Y.2010 - 11 THE ASSESSING OFFICER H AD ALLOWED THE DEDUCTION ON IDENTICAL ISSUE AND SIMILAR FACTS . T HE ASSESSEE HAS STARTED THE GENERATION OF ENERGY IN THE PREVI OUS YEAR RELEVANT TO A.Y. 2006 - 07 AND STARTED CLAIMING DEDUCTION U/S. 80IA(4) OF THE ACT FROM ASSESSMENT YEAR 2009 - 10, WHICH WAS FIRST YEAR OF ITS CLAIMED AND THE SAME WAS ALLOWED MEANING THEREBY THE A.O. WAS SATISFIED THAT THE ASSESSEET HAD FULFILLED ALL THE CONDITIONS. IT IS ALSO NOTICED THAT THE ASSESSEE HAS EXPLAINED ITS ENTITLEMENT FOR THE IMPUGNED CLAIM OF DEDUCTION UNDER SECTION 80IA(12) AS UNDER : - 'THE POWER PLANT, IN QUESTION, WAS TRANSFERRED TO ASSESSEE COMPANY UNDER THE SCHEME OF AMALGAMATION O F TWO COMPANIES VIZ SHANTI PROCESSORS LTD & CHIRIPAL PETRO CHEMICALS LTD. M/S SHANTI PROCESSORS LTD. WAS AMALGAMATING COMPANY & CHIRIPAL PETRO CHEMICALS LTD. WAS AMALGAMATED COMPANY UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. THE SCHEME OF AMALGAMATIO N WAS APPROVED BY HON'BLE HIGH COURT OF GUJARAT, VIDE ITS ORDER DATED 31/03/2006 W.E.F. 01/04/2005. IT IS ALSO ADDED THAT NAME OF THE COMPANY CHIRIPAL PETRO CHEMICALS LTD. WAS CHANGED TO CHIRIPAL INDUSTRIES LTD. AS PER APPROVAL OF REGISTRAR OF COMPANIES OF GUJARAT (A COPY OF BOTH THE ORDERS ARE ENCLOSED HEREWITH FOR YOUR HONOUR'S KIND PERUSAL AND RECORD PURPOSE.) AT THIS POINT, THE ASSESSEE COMPANY WOULD LIKE TO SUBMIT THE DEFINITION OF AMALGAMATION , TAX CONCESSIONS AVAILABLE TO AMALGAMATED COMPANY AND OTH ER PROVISIONS, FOR YOUR HONOURS KIND PERUSAL AS UNDER: A. DEFINITION OF AMALGAMATION : ACCORDING TO SECTION 2(1B) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), AMALGAMATION IN RELATION TO COMPANIES MEANS THE MERGER OF ONE OR MORE COMPAN IES WITH ANOTHER COMPANY OR THE MERGER OF TWO OR MORE COMPANIES TO FORM ONE COMPANY (THE COMPANY OR COMPANIES WHICH SO MERGE BEING REFERRED TO AS THE AMALGAMATING COMPANY OR COMPANIES AND THE COMPANY WITH WHICH THEY MERGE OR WHICH IS FORMED AS A RESULT OF THE MERGER, AS THE AMALGAMATED COMPANY) IN SUCH A MANNER THAT: - A. ALL THE PROPERTY OF THE AMALGAMATING COMPANY OR COMPANIES IMMEDIATELY BEFORE THE AMALGAMATION BECOMES THE PROPERTY OF THE AMALGAMATED COMPANY BY VIRTUE OF AMALGAMATION. B. ALL THE LIABILIT IES OF THE AMALGAMATING COMPANY OR COMPANIES IMMEDIATELY BEFORE THE AMALGAMATION BECOME THE LIABILITIES OF THE AMALGAMATED COMPANY BY VIRTUE OF AMALGAMATION. SHAREHOLDERS HOLDING NOT LESS THAN 3/4 TH IN VALUE OF THE SHARES IN AMALGAMATING COMPANY OR COMPAN IES (OTHER THAN SHARES HELD THERE IS IMMEDIATELY BEFORE THE AMALGAMATION OR BY A NOMINEE FOR THE AMALGAMATED COMPANY OR ITS SUBSIDIARY) BECOME SHAREHOLDERS OF THE AMALGAMATED COMPANY BY VIRTUE OF THE AMALGAMATION, OTHERWISE THAN AS A RESULT OF THE ACQUISIT ION OF THE PROPERTY ONE COMPANY BY ANOTHER COMPANY PURSUANT TO THE PURCHASE OF SUCH PROPERTY BY THE OTHER COMPANY AS A RESULT OF DISTRIBUTION OF SUCH PROPERTY TO THE OTHER COMPANY AFTER THE WINDING UP OF FIRST MENTIONED COMPANY. B. TAX CONCESSIONS TO THE AMALGAMATED COMPANY: THE AMALGAMATED COMPANY SHALL BE ELIGIBLE FOR TAX CONCESSIONS ONLY IF THE FOLLOWING TWO CONDITIONS ARE SATISFIED: I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 17 I. THE AMALGAMATION SATISFIES ALL THE THREE CONDITIONS LAID DOWN IN SECTION2(LB) AND II THE AMALGAMATED COMPANY IS AN IN DIAN COMPANY. IF THE ABOVE CONDITIONS ARE SATISFIED THE AMALGAMATED COMPANY SHALL BE ELIGIBLE FOR FOLLOWING TAX CONCESSIONS: (A) EXPENDITURE ON SCIENTIFIC RESEARCH SECTION 35(5): (B) EXPENDITURE ON ACQUISITION OF PATENT RIGHTS OR COPY RIGHTS SECTION 35A(6): (C ) EXPENDITURE OF KNOW - HOW SECTION 35AB(3): (D) TREATMENT OF PRELIMINARY EXPENSES SECTION 35D(5): (E) AMORTIZATION OF EXPENDITURE IN CASE OF AMALGAMATION SECTION 35DD (F) TREATMENT OF CAPITAL EXPENDITURE ON FAMILY PLANNING SECTION 36(1)(IX): (G) TREATMENT OF BAD DEBTS SECTION 36(1)(VII): (H) DEDUCTION AVAILABLE U/S 80IA & 80IB: (I) CARRY FORWARD AND SET OFF BUSINESS LOSSES & UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANY.' WE OBSERVE THE ASSESSING OFFICER HAS NOT DISPROVED THESE MATERIAL FACTS AND DIS ALLOWED THE CLAIM OF DEDUCTION ON PRESUMPTION BASIS WITHOUT CONSIDERING THE RELEVANT LEGAL PROVISION AS ELABORATED IN THE FINDINGS OF THE LD.CIT(A). THE RELEVANT LEGAL PROVISION HAS ALREADY BEEN ELABORATED BY THE LD. CIT(A) IN HIS FINDINGS THAT AS PER THE PROVISIONS OF SECTION 80IA(12) WHEN ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO DEDUCTION UNDER THIS SECTION IS TRANSFERRED BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION TO ANOTHER INDIAN COMPANY THEN AS PER CLAUSE (B) THE PROVIS ION OF THIS SECTION SHALL APPLY TO THE AMALGAMATED COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING COMPANY IF THE AMALGAMATION HAD NOT TAKEN PLACE AND THE PROVISIONS OF SUB - SECTION (12) WOULD ONLY APPLY IF THE AMALGAMATING COMPANY WAS ELIGIBLE FOR C LAIMING DEDUCTION U/S 80IA. IT IS DEMONSTRATED FROM THE ABOVE FACTS AND CIRCUMSTANCES THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON PRESUM P TION BASIS THAT ADDITION OF RS. 71 , 12 , 34 , 167 - WAS OLD PLANT AND MACHINERY WITHOUT BRINGING ON RECORD EVIDENCE TO SUBSTANTIATE THAT SPECIFIED MACHINERY WAS PURCHASED BY SHANTI PROCESSOR LTD AND THE ASSESSING OFFICER HAS ALSO FAILED TO DISPROVED THE MATERIAL FACT THAT SIMILAR CLAIM WAS ALLOWED TO THE ASSESSEE IN THE ASSESSMENT YEAR 2009 - 10 ON FU LFILL ING OF ALL THE CONDITIONS. IN THE LIGHT OF THE ABOVE FACTS , LEGAL FINDINGS AND ELABORATED FINDINGS OF THE LD.CIT(A) AS SUPRA IN THIS ORDER WE DO NOT FIND ANY ERROR IN THE DECISION OF THE LD.CIT(A),THEREFORE THE APPEAL OF THE REVENUE IS DISMISSED. I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 18 I TA NO. 1425 /AHD/2016 FILED BY ASSESSEE 2 6 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT APPEALS 1 AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 29/03/2016 FOR A.Y. 2012 - 13 IN THE CASE OF APPELLANT BY CONF IRMING DISALLOWANCE MADE BY THE A.O. 2. THE LD. CIT APPEALS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 16,43,045/ - ON ACCOUNT OF PRELIMINARY EXPENSES. 3. THE LD. CIT APPEALS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS. 16800 0/ ON ACCOUNT OF DEEMED HOUSE PROPERTY INCOME. DISALLOWANCE U/S. 35D 27 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS. 16,43,045/ - OUT OF RS. PRELIMINARY EXPENSES ON THE GROUND THAT IN THE EARLIER AS SESSMENT YEARS SIMILAR EXPENSE WERE DISALLOWED BY HIS PREDECESSOR AND THERE WAS NO CHANGE IN THE EXPENSES CLAIMED FOR THE YEAR. THE LD. CIT(A) HAS DISMISSED THIS GROUND OF APPEAL OF THE AS SESSEE. IN THIS CONNECTION, WE NOTICED THAT ASSESSEE HAS GIVEN BRE AKUP OF CLAIM OF EXPENSES OF RS. 16,43,045/ - . O UT OF THE SAID EXPENSES AN AMOUNT OF RS. 10,50,161/ - WAS RELATED TO TOTAL EXPENDITURE OF RS. 52,50,805/ - INCURRED BY THE ASSSESSEE DURING THE PREVIOUS YEAR 2007 - 08 RELATED TO ASSESSMENT YEAR 2008 - 09 PERTAINI NG TO PUBLIC ISSUE AS T HE ASSESSEE WAS FORCED TO WITHDRAW THE PUBLIC ISSUE REASON BEYOND ITS CONTROL . W E HAVE NOTICED THAT IN THE P RECE D ING ASSESSMENT YEAR 2008 - 09, 2009 - 10 AND 2010 - 11 THE IDENTICAL CLAIM ON SIMILAR FACTS TO THE AMOUNT OF RS. 900161/ - WAS ALLOWED BY THE LD. CIT(A) HOLDING THAT ASSESSEE WAS ENTITLED FOR CLAIM OF EXPENSES PERTAINING TO PUBLIC ISSUE AS 1/5 O F TOTAL EXPENDITURE FOR FIVE YEARS. WE HAVE NOTICED THAT DURING THE YEAR UNDER CONSIDERATION THE LD. CIT(A) HAS SIMPLY STATED THAT HE IS NOT AGREED WITH THE FINDING OF HIS PREDECESSOR OR IN ALLOWING THE CLAIM WITHOUT SPECIFICALLY DISPROV ING THE BASIS OF CLAIM WHICH HAS BEEN CONTINUALLY BEING ALLOWED BY THE LD. CIT(A) FROM ASSESSMENT YEAR 2008 - 09 TO ASSESSMENT YEAR 2010 - 11 , THEREFORE, WE CO NSIDER CIT(A) IS NOT JUSTIFIED. T HEREFORE , WE ALLOW THE CLAIM OF THE ASSESSEE TO THE AMOUNT OF RS. 9 , 00 , 161/ - OUT OF THE PRELIMINARY EXPENSES OF RS. 52 , 50 , 805/ - PERTAINING TO ASSESSMENT YEAR I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 19 2008 - 09 AS ALLOWED IN THE PRECEDING ASSESSMENT YEAR ON IDENTI CAL ISSUE AND IDENTICAL FACTS. IN RESPECT OF THE REMAINING CLAIM WE HAVE NOTICED THAT IN ASSESSMENT YEAR 2009 - 10 SIMILAR CLAIM WAS DISALLOWED BY LD. CIT(A) IN RESPECT OF RS. 3 , 40 , 380/ - AND SIMILARLY TO THE AMOUNT FOR THE CLAIM OF RS. 2 , 52 , 504/ - FOR ASSES SMENT YEAR 2010 - 11 THE LD. CIT(A) HAS DISALLOWED THE CLAIM OF AS THE ASSESSEE HAS FAILED TO SUBSTANTIATE THAT THE SAID EXPENDITURE WERE INCURRED FOR THE EXTENSION OF ITS UNDERTAKING OR IN CONNECTION WITH SETTING UP OF NEW UNIT, WE DO NOT FIND ANY CHANGE I N THIS FACTS DURING THE YEAR UNDER CONSIDERATION, THEREFORE, THE DISALLOWANCE UP TO THIS AMOUNT IS JUSTIFIED ON THE REASON SPECIFIED IN THE PRECEDING YEAR IN THE ORDER OF THE LD.CIT(A) . THEREFORE, THIS GROUND OF THE ASSESSE ON THIS ISSUE IS PARTLY ALLOWED . DEEMED RENTAL INCOME OF RS. 1,68,000/ - 28 . THIS GROUND OF APPEAL OF THE ASSESSEE IS ALREADY ADJUDICATED ON THE IDENTICAL FACT AND IDENTICAL ISSUE IN THIS ORDER IN ITA NO. 833/AHD/ THEREFORE, WE DO NOT FIND ANY NEW FACT AND NEW EVIDENCES, THEREFO RE, THIS GROUND OF THE ASSESSE IS DISMISSED. ITA NO. 1547/AHD/2016 FILED BY REVENUE 29 . THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - A) THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING RS.28,97,950/ - OUT OF TOTAL ADDITION OFRS.29, 13,282/ - MADE ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE IT ACT. . B) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,74,548/ - MADE ON ACCOUNT OF DISALLOWANCE OF 'INTEREST EXPENSES'. C) THAT THE LD. CIT( A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,31,3 3,001/ - MADE ON ACCOUNT OF DISALLOWANCE U/S 80IA. DISALLOWANCE U/S. 80IA OF RS. 3,31,33,001/ - 3 0 . THIS ISSUE ON SIMILAR FACT HAS ALREADY BEEN ADJUDICATED VIDE ITA NO. 900 SUPRA IN THIS ORDER, THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 20 THE REVENUE ON THE REASON AND FINDING GIVEN IN ITA NO. 900, THEREFORE, THIS GROUND OF THE REVENUE IS DISMISSED. DISALLOWANCE U/S. 14A OF RS. 28,97,950/ - 3 1 . DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS. 29 , 13 , 282/ - BY INVOKING PROVISION OF SECTION 14A ON THE GROUND THAT ASSESSEE HAS NOT DISALLOWED INTEREST AND ADMINISTRATIVE EXPENSES UNDER SECTION 14A FOR EARNING EXEMPT INCOME. IN TH IS CONNECTION, WE NOTICED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ONLY EARNED EXEMPT INCOME TO THE EXTENT OF RS. DIVIDEND OF RS. 15 , 332/ - AND THE LD. CIT(A) AFTER REFERRING A NUMBER OF JUDICIAL PRONOUNCEMENTS TO RE STRICT THE DISALLOWANC E TO THE EXTENT OF DIVIDEND INCOME OF RS. 15332/ - . IN THIS CONNECTION, THE FINDING OF CIT(A) IS REPRODUCED AS UNDER: - 2.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSION FILED BY THE APPELLANT THE AO HAS OBSERVED THAT THE ASSESSES COMPAN Y HAD MADE HUGE INVESTMENT IN SHARES AND HAS CLAIMED EXEMPTION ON DIVIDEND INCOME OF RS. 15,332/ - . FURTHER, AS PER THE P&L A/C. THE ASSESSEE HAS CLAIMED INTEREST PAYMENT TO THE LOANS AND INCURRED OTHER EXPENSES. THE AO HAS FURTHER OBSERVED THAT THE ASSESSE E HAS ALSO FAILED TO SUBSTANTIATE WITH EVIDENCE FOR ITS CLAIM THAT IT HAS NOT INCURRED ANY EXPENDITURE IN THE INVESTMENT ACTIVITY AND IN VIEW OF THE ABOVE, THE PROVISIONS OF SECTION 14A R.W.R. 8D IS CLEARLY APPLICABLE IN THE ASSESSEE'S CASE. ACCORDINGLY, D ISALLOWANCE U/S. 14A R.W.R. 8D IS MADE OFRS. 29, 13,282/ - THE APPELLANT HAS SUBMITTED THAT IT HAD HUGE BALANCE IN SHARE CAPITAL AND RESERVES AND SURPLUS AND THEREFORE TO THAT EXTENT, IF FUNDS ARE INVESTED, NO DISALLOWANCE WAS REQUIRED TO BE MADE. THE APPEL LANT FURTHER SUBMITS THAT AS PER THE AUDITED FINANCIAL STATEMENT, SHARE CAPITAL AND RESERVES AND SURPLUS STOOD AT RS. 232.94 CRORE WHEREAS INVESTMENT IN SHARE WAS ONLY AT RS.39.88 CRORE WHICH AGAIN INCLUDED A SUM OF RS. 28.79 CRORE IN RESPECT OF STRATEGIC INVESTMENT IN NANDAN EXIM LTD, WHICH IS OUTSIDE THE PURVIEW OF 14A. THE INVESTMENT IN SHARES WAS MUCH LOWER THAN SHARE CAPITAL AND RESERVES & SURPLUS. THE APPELLANT FURTHER SUBMITS THAT IT HAD EARNED INTEREST INCOME OF RS. 10797443/ - (INCLUDING BANK INTERE ST RS.7656780/ - ) DURING THE YEAR AND THE SAME ARE REFLECTED UNDER SCHEDULE '19' OF AUDITED FINANCIAL STATEMENT. SUCH INTEREST INCOME WAS REQUIRED TO BE REDUCED WHILE COMPUTING THE INTEREST EXPENSES CLAIMED BY THE APPELLANT. RECENTLY HON'BLE STAT AHMEDABAD BENCH 'D' AHMEDABAD IN THE CASE OF !TO VS. KARNAVATI PETROCHEM P. LTD I.T. A. NO. 2228/AHD/2012 HAS HELD THAT INTEREST EXPENSES SHOULD BE NETTED AGAINST INTEREST INCOME. NO NEXUS HAS BEEN ESTABLISHED BY THE AO BETWEEN THE EXPENDITURE INCURRED BY THE ASSESS EE AND THE TAX FREE INCOME EARNED BY HIM (TRADE (ITAT KOL) & MORGAN STANLEY (ITAT MUM). RELIANCE IS ALSO PLACED ON OF INCOME TAX VS. CYCLES LTD. (2010) 233 CTR (P&H) 74 WHEREIN INTEREST PAID WAS SET OFF FROM INTEREST INCOME. THE APPELLANT FURTHER SUBMITS T HAT DURING THE COURSE OF ASSESSMENT PROCEEDING, IT HAD CLEARLY STATED THAT, AMOUNT WAS INVESTED OUT OF OWN FUNDS AND NON INTEREST BEARING FUNDS. THEREFORE, THE APPELLANT HAD NOT USED THE BORROWED I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 21 FUNDS FOR MAKING INVESTMENTS AND ACCORDINGLY NO PART OF INTE REST WAS REQUIRED TO BE DISALLOWED INVOKING THE PROVISION OF SECTION 14A. 2.4. ON CAREFUL CONSIDERATION OF OBSERVATION OF ASSESSING OFFICER AND CONTENTION OF APPELLANT, IT IS OBSERVED THAT APPELLANT HAS MADE INVESTMENT IN SHARES FROM WHICH EXEMPT INCOME IS EARNED. THE APPELLANT FURTHER SUBMITS THAT AS PER THE AUDITED FINANCIAL STATEMENT, SHARE CAPITAL AND RESERVES AND SURPLUS STOOD AT RS. 232.94 CRORES WHEREAS INVESTMENT IN SHARE WAS ONLY AT RS.39.88 CRORES WHICH AGAIN INCLUDED A SUM OF RS.28.79 CRORES IN R ESPECT OF STRATEGIC INVESTMENT IN NANDAN EXIM LTD, WHICH IS OUTSIDE THE PURVIEW OF 14A. CONSIDERING THE FACTS DISCUSSED HEREIN ABOVE PROPORTIONATE INTEREST DISALLOWANCE MADE BY ASSESSING OFFICER FOR RS. 14,60,0 74/ - IS DELETED. SO FAR AS DISALLOWANCE OF A DMINISTRATIVE EXPENSES IS CONCERNED, IT IS OBSERVED THAT TOTAL ADMINISTRATIVE EXPENDITURE DEBITED IN PROFIT AND LOSS INCLUDES DIFFERENT EXPENDITURES RELATED TO THE RUNNING THE ADMINISTRATION. THE CONTENTION OF APPELLANT THAT IN THE CASE OF JIVRAJ TEA LIMIT ED S DCIT ITA 866,982,1994/AHD/2012 REGARDING DISALLOWANCE OF ADMINISTRATIVE EXPENSES, TRIBUNAL IN A.C.I.T. VS. PUNJAB STATE COOP & MARKETING FED. LTD. HELD THAT DISALLOWANCE U/S. 14A READ WITH RULE 8D COULD NOT EXCEED EXEMPT DIVIDEND INCOME DISALLOWANCE OF ADMINISTRATIVE EXPENSES RESTRICTED, TO AMOUNT OF EXEMPT DIVIDEND INCOME EARNED BY ASSESSEE ASSESSEE'S APPEAL PARTLY ALLOWED'. IN SAHARA INDIA FINANCIAL CORPORATION LTD. VS. DY. CIT (DEL 'H') 257 (TTJ VOL. 163, PART III, ISSUE NO. 27) IT IS ALSO HELD THA T DISALLOWANCE OF EXPENDITURE UNDER S. 14A CANNOT BE EXCEED THE INCOME EARNED. HON'BLE ITAT AHMEDABAD, IN THE CASE OF CHUDGAR RANCHODLAL JETHALAL TRADE PVT.. LTD. IN ITA NO.245/AHD/2013 HAS HELD ON THE BASIS OF HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF JOINT INVESTMENT PVT. LTD. V/S CIT IN ITA NO. 117 OF 2015 THAT THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A, AND IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE 'INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME'. IN VIEW OF THE ABOVE, THE DISALLOWANCE ON THIS POINT IS RESTRICTED TO DIVIDEND INCOME OF RS. 15,332/ - . THE GROUND OF APPEAL IS PARTLY ALLOWED. THIS GROUND OF APPEAL OF DEPARTMENT IS BASED ON IDENTICAL ISSUE AND FACT AS ADJUDICATED IN THE GROUND OF APPEAL OF THE ASSES SEE VIDE ITA NO. 833/AHD/2016 AS SUPRA IN THIS ODRER, THEREFORE, WE DO NOT FIND ANY MERIT ON THE GROUND OF APPEAL OF THE REVENUE AS THE DISALLOWANCE WAS RESTRICTED TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESSEE AFTER CONSIDERING THE DETAILED FINDING AND JUDICIAL PRONOUNCEMENT AS ELABORATED ABOVE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE , THEREFORE, THE SAME IS DISMISSED. DISALLOWANCE OF INTEREST EXPENSES OF RS. 2,74,548/ - 3 2 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS. 2 , 74 , 548 OUT OF INTEREST ON THE GROUND THAT ASSESSE HAD GIVEN INTEREST FREE ADVANCES TOTALING TO RS. 22 , 87 , 900/ - TO THREE PARTIES ON WHICH NO INTEREST WAS CHARGED. IN THIS CONNECTION, WE HAVE NOTICED THAT ASS ESSEE HAS I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 22 EXPLAINED THAT THE ADVANCES WERE GIVEN IN THE ORDINARY COURSE OF BUSINESS AND THE SAME WAS NOT IN THE NATURE OF LOAN. IN THIS CONNECTION, WE HAVE NOTICED THAT ASSESSEE WAS HAVING INTEREST FREE FUND IN THE FORM OF SHARE CAPITAL AND RESERVES AND S URPLUS TO THE AMOUNT OF RS. 233.93 CRORES AND AS THE INTEREST FREE FUND ENJOYED BY THE ASSESSEE WERE FAR IN EXCESS OF THE INTEREST FREE FUND MADE BY THE ASSESSEE, THEREFORE, NO DISALLOWANCE U/S. 36(1)(III) CAN BE MADE AS ADJUDICATED IN THE DECISION OF TOR RENT FINANCE VS. ACIT TTJ 624. LD. CIT(A) HAS DELETED THE ADDITION. RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 4.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSION FILED BY THE APPELLANT. THE ASSESSING OFFICER H AS OBSERVED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 2,92,57,770/ - BEING INTEREST PAID ON SHORT TERM FUNDS AND INTEREST ON OTHERS AND' IT IS NOTICED THAT THE ASSESSEE HAS NOT CHARGED INTEREST FROM THE PERSONS/PARTIES TO WHOM IT HAS GIVEN ADVANCE. IT IS OBSERVED THAT THE ASSESSEE HAS ADVANCED INTEREST FREE LOAN TO VRAJ INTEGRATED TEXTILE PARK OF RS. 10,00,000/ - , VRAJ MEGA FOOD PARK PVT. LTD. OF RS. 10,00,000/ - AND HIRABHAI S. BHARWARD OF RS. 2,87,900/ - TOTALING OF RS. 22,87,900/ - . THE ASSESSEE ON THE O NE HAND PAYING HEAVY INTEREST ON SECURED AND UNSECURED LOANS AND ON THE OTHER HAND IT HAS DIVERTED SUCH INTEREST BEARING FUND TO INTEREST FREE ADVANCES TO OTHERS. THE EXPENDITURE U/S. 36(1))(HI) OF THE ACT IS ALLOWABLE IF THE BORROWED FUND ARE UTILIZED FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAS NOT UTILIZED THE INTEREST BEARING FUND FOR ITS BUSINESS PURPOSE BUT ADVANCED THE SAME AS INTEREST FREE. IN VIEW OF THE ABOVE, PROPORTIONATE @12%ON ADVANCE OF RS. 22,87,9007 - WHICH WORKS OUT TO RS 2,74,548/ - IS DIS ALLOWED U/S. 36(1) (HI) OF THE I. T. ACT, TREATING THE SAME IS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE APPELLANT HAS SUBMITTED THAT ASSESSING OFFICER HAS FAILED TO APPRECIATE THAT THE ADVANCES WERE GIVEN IN THE ORDINARY COURSE OF BUSINESS AND THE SAME WERE NOT IN THE NATURE OF ANY LOAN. THEREFORE, THE APPELLANT CANNOT BE EXPECTED TO CHARGE INTEREST WHICH IS NOT RECEIVABLE. IT WAS NOT A CASE WHERE ANY INTEREST FREE ADVANCE WAS GIVEN TO ANY RELATED PARTY, HERE OUT OF THE BUSINESS COMPULSION THE ADVANCE WAS GIVEN AND IT WAS NOT POSSIBLE FOR THE COMPANY TO CHARGE INTEREST ON IT. IT IS SUBMITTED THAT THE FUNDS BORROWED BY THE APPELLANT COMPANY HAVE BEEN USED BY IT IN ITS BUSINESS ONLY AND HENCE THE INTEREST EXPENDITURE INCURRED FOR SU CH BORROWINGS WAS INVARIABLY ALLOWABLE U/S. 36(1)(III) OF THE ACT - THE APPELLANT FURTHER SUBMITS THAT IT HAD SUFFICIENT FUND AVAILABLE IN FORM OF SHARE CAPITAL, RESERVE AND SURPLUS FOR GIVING THE LOANS AND ADVANCES AND THEREFORE INTEREST ON BORROWED FUNDS C ANNOT BE DISALLOWED. IT HAS SHARE CAPITAL, RESERVE AND SURPLUS OF RS.232,93,95,958/ - . AS THE INTEREST FREE FUNDS ENJOYED BY THE APPELLANT ARE FAR IN EXCESS OF THE INTEREST FREE ADVANCES MADE BY APPELLANT, NO DISALLOWANCE U/S 36(I)(III) CAN BE MADE IN CASE OF APPELLANT. IN THIS CONNECTION THE APPELLANT RELIES ON THE DECISION OF TORRENT VS. ACIT 73 TTJ 624(AHD). THE ENTIRE INTEREST - FREE FUNDS INCLUDE OWNER'S OWN CAPITAL, ACCUMULATED PROFITS AND OTHER INTEREST - FREE CREDITORS AND LOANS, IF TOTAL INTEREST - FREE A DVANCES INCLUDING DEBIT BALANCES OF PARTNERS DO NOT EXCEED THE TOTAL INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSES, NO INTEREST IS DISALLOWABLE ON ACCOUNT OF UTILISATION OF FUNDS FOR NON - BUSINESS PURPOSES. EVEN THE CIT VS. & RELIANCE UTILITIES & POWER LTD. 435 221 HAS HELD THAT INVESTMENT OF INTEREST BEARING FUNDS IN SISTER CONCERNS - TRIBUNAL HAVING RECORDED A CLEAR FINDING THAT THE ASSESSEE POSSESSED SUFFICIENT INTEREST FREE FUNDS OF ITS OWN WHICH WERE GENERATED IN THE COURSE OF THE RELEVANT FINANCIAL YEAR, APART FROM SUBSTANTIAL SHAREHOLDERS FUND, PRESUMPTION STANDS ESTABLISHED THAT THE I.T.A NOS. 2092/AHD/2015, 900, 1547, 833 & 1425/AHD82016 A.Y. 2010 - 11 TO 2012 - 13 PAGE NO DCIT VS. M/S. CHIRIPAL INDUSTRIES LTD. 23 INVESTMENTS IN SISTER CONCERNS WERE MADE BY THE ASSESSEE OUT OF INTEREST - FREE FUNDS AND THEREFORE NO PART OF INTEREST ON BORROWINGS CAN BE DISALLOWED ON THE B ASIS THAT THE INVESTMENTS WERE MADE OUT OF INTEREST BEARING FUNDS. ? IN VIEW OF THE FACTS OF THE CASE AND JUDICIAL RATIOS (SUPRA), AND ALSO FOLLOWING ORDER OF MY PREDECESSORS FOR EARLIER YEARS, THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. THE GRO UND OF THE APPELLANT IS ALLOWED. IN VIEW OF THE DETAILED FINDING AS ELABORATED IN THE DECISION OF LD. CIT(A), THAT THE INTEREST FRE E FUNDS ENJOYED BY THE ASSESSEE WERE FAR IN EXCESS OF THE INTEREST FREE ADVANCES MADE BY ASSESSEE AND AFTER CONSIDERING THE DECSION OF CIT VS. & RELIANCE UTILITIES & POWER LTD. WE DO NOT FIND ANY ERROR IN THE DECISION OF LD.CIT(A). THEREFORE , THE APPEAL OF THE REVENUE ON THIS ISSUE IS DISMISSED. 33 . IN THE RESULT, APPEAL ITA 2092/AHD/2015, 900 & 1547/AHD/2016 FILED BY R EVENUE ARE DISMISSED AND APPEAL ITA 833 & 1425/AHD/2016 ARE PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 10 - 12 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 10 /12 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,