The ACIT, Vapi Circle, Vapi V. M/s. B.T.Plastics & Allied Industries, Daman

ITA 836/AHD/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5764 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 17-03-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV BATHAM
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Business expenditure; Question of law; Bad and doubtful debts; Commercial expediency
• Section: 43B; 143(3); 80HHC; 115JB; 80IA; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGARWAL, ACCOUNTANT MEMBER ITA NO S . 836 /AHD/ 2005 ASSESSMENT YEAR 2001-2002 DATE OF HEARING:15.6.10 DRAFTED:18.6.10 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, PLOT NO.37/1(2), KACHIGAM CHAR RASTA, DAMAN. V/S . ACIT, VAPI CIRCLE, VAPI, GUJARAT. ITA NO S . 947 /AHD/ 2005 ASSESSMENT YEAR 2001-2002 ACIT, VAPI CIRCLE, VAPI, GUJARAT. M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, PLOT NO.37/1(2), KACHIGAM CHAR RASTA, DAMAN. PAN NO: AADFB 0483 H (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI. S.N. SOPARKAR, SR. ADVOCATE REVENUE BY:- SHRI GAURAV BATHAM, DR O R D E R PER MAHAVIR SINGH, J.M. THESE CROSS APPEALS-ONE BY THE ASSESSEE AND OTHER BY THE REVENUE ARE ARISING OUT OF THE ORDER OF CIT(A)-III, SURAT IN AP PEAL NO. CAS/III/91/2003-04 VIDE ORDER DATED 22-12-2004. THE ASSESSMENT WAS FRAMED BY THE ACIT, VAPI CIRCLE UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28-11-2003 FOR THE ASSES SMENT YEAR 2001-2002. FIRST WE WILL TAKE UP ASSESSEES APPEAL IN ITA NO.9 47/AHD/2005 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF P.F. AMOUNT ON ACCOU NT OF EMPLOYS CONTRIBUTION OF RS.75,385/- PAID BEYOND THE DUE DATE PRESCRIBED IN THE PROVIDENT FUND ACT UNDER SECTION 43B AND 36(1)(VA) OF THE ACT. ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 2 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESS EE SHRI. S.N. SOPARKAR STATED THAT THIS ISSUE COVERED IN FAVOUR OF THE ASSESSEE A ND AGAINST THE REVENUE BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD. [2009] 319 ITR 306 (SC). WE FIND THAT THE ISSUE OF EMPLOYEES CON TRIBUTION HAS BEEN CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. P.M. ELECTRONICS LTD. (2008) 220 CTR 635 (DEL), WHEREIN THE HON'BLE DELHI HIGH COURT HAS DISCUSSED IN PARA-4 AS UNDER:- 4. ON 27 TH NOV., 1998 THE ASSESSEE HAD FILED A RETURN OF INCO ME DECLARING A LOSS OF RS.8,92,888. ON 11 TH MAY, 1999 THE RETURN WAS PROCESSED UNDER S. 143(1)(A) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, A NOTICE DT. 27 TH SEPT., 1999 UNDER S. 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE A ND ON EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE WITH RESPECT TO P ROVIDENT FUND PAYMENTS MADE BOTH ON ACCOUNT OF EMPLOYERS AND EMPLOYEES S HARE REVEALED THAT PAYMENTS IN THE SUM OF RS.17,94,042 WERE LATE AS PE R THE PROVISIONS OF S. 36(1)(VA) R.W S. 2(24)(X) AND S. 43B. CONSEQUENTLY , THE AO DISALLOWED THE DEDUCTION AND ADDED A SUM OF RS.17,94,042 TOWARDS E PF CONTRIBUTION. AND SUBSEQUENTLY DECIDE THIS ISSUE IN PARA-10 TO 14 OF HON'BLE DELHI HIGH COURT, WHICH READ AS UNDER:- 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHILE DOING SO TH E SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE I T PERTAINS TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN S. 43B OF THE ACT. T HE AFORESAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO S. 43B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA (SUPRA) . APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED T HE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIV ISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. NEXUS COMPUTER (P) LTD. BY A JUDGMENT DT. 19 TH AUG., 2008, PASSED IN TAX CASE (APPEAL) NO.1192/20 08 [REPORTED AT (2008) 219 CTR (MAD.) 54 ED.] DISCUS SED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. (SUPRA) AND VINAY CEMENT (SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGE (SUPRA). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXP LAINED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED & ORS.VS. STATE OF KERALA & ANR. (2000) 162 CTR (SC) 97: 119 STC 505 AT P. 526 IN PARA 40 AND NOTED THE FOLLOWING OBSERVATIONS : IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKIN G ORDER, I.E., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE O RDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAIN ED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ART. 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLA RATION OF LAW, ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 3 WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RE CORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT. TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUB SEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING TH AT THE ORDER OF THE COURT. TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR T HAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PARTIES. 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COU RT IN KUNHAYAMMED & ORS. (SUPRA) THE DIVISION BENCH OF THE MADRAS HIGH COUR T IN THE CASE OF NEXUS COMPUTER (P) LTD. (SUPRA) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT (SUPRA) WOULD BIND THE HIGH COURT AS IT WAS LAW DECLARED BY THE SUPREME COURT UNDER ART. 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONI NG OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P) LTD. (SUPRA). JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMEN T (SUPRA) AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN I DHARM ENDRA SHARMA (SUPRA). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGRE E WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COUR T IN PAMWI TISSUES LTD. (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDER ATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED. 4. WE FIND THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF P.M. ELECTRONICS LTD. (SUPRA) HAS DECIDED THIS ISSUE OF PAYMENT OF EMPLOY EES CONTRIBUTION TOWARDS PROVIDENT FUND AFTER CONSIDERING THE DECISION OF HO N'BLE APEX COURT IN THE CASE OF VINAY CEMENT (SUPRA) AND ALSO DISTINGUISHED THE CASE LAW REFERRED BY TH E LD. DR OF BOMBAY HIGH COURT IN PAMWI TISSUES LTD. (SUPRA) . EVEN NOW THIS ISSUE HAS BEEN CONSIDERED BY HONBLE APEX COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) / (2009) 185 TAXMAN 416 (SC), WHER EIN, IT IS HELD THAT CONTRIBUTION TO PROVIDENT FUND, MADE BEFORE DUE DA TE OF FILING OF RETURN ALLOWABLE AS DEDUCTION. THE DELETION OF THE SECOND PROVISO TO SE CTION 43B, AND THE AMENDMENT TO THE FIRST PROVISO, BY THE FINANCE ACT, 2003 WAS TO OVERCOME IMPLEMENTATION PROBLEMS. CONSEQUENTLY, THE AMENDMENTS, THOUGH MADE APPLICABLE BY PARLIAMENT ONLY WITH EFFECT FROM 1-4-2004, WERE CURATIVE IN NA TURE AND WOULD APPLY RETROSPECTIVELY W.E.F. 1-4-1988. ACCORDINGLY, FOLL OWING APEX COURT IN THE CASE OF ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 4 ALOM EXTRUSIONS LTD. (SUPRA) AND DELHI HIGH COURT IN P.M. ELECTRONICS LTD. (SUPRA), WE ALLOW THE CLAIM OF THE ASSESSEE. 5. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS AT RS.2,02 ,421/-. 6. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE STATED THAT THE BAD DEBT WRITTEN OFF IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IS FROM THE FOLLOWING PARTIES: MUTUAL MECAPLAST RS. 65,654/- SAURASHTRA TIN AND METAL RS. 1,38,767/- AND ACCORDINGLY, HE STATED THAT THE ISSUE IS COVERE D IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITED V. COMMISSIONER OF INCOME TAX [2010] 323 ITR 397 (SC). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. WE FIND THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITE D (SUPRA). THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE ON THE GROUND THA T THE ASSESSEE HAS NOT PRODUCED SUFFICIENT EVIDENCE TO SHOW THAT REASONABL E STEPS WERE TAKEN TO RECOVER THE DEBT. HOWEVER, THERE IS NO DISPUTE THA T THE ABOVE AMOUNT WAS DULY WRITTEN OF IN THE ASSESSEES BOOKS OF ACCOUNT. ON THE ABOVE FACTS THE DECISION OF HONBLE APEX COURT IN THE CASE OF T.R.F . LIMITED (SUPRA) WOULD BE SQUARELY APPLICABLE WHEREIN, THEIR LORDSHIPS HELD A S UNDER: AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE IN COME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO OBTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE : IT IS ENO UGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HO NBLE APEX COURT, WE REVERSE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS POINT AND ALLOW THIS GROUND OF THE ASSESSEES APPEAL. ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 5 8. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AS REGARD TO THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF COMPENSATION PAID AT RS.5.40 LAKHS AND FURTHER ENHANCING A SUM OF RS.1.41 LACS ON ACCOUNT OF DISAL LOWANCE OF LEASE RENT. 9. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE PAID COMPENSATION TO ASSESSEES SISTER CONCERN M/S. PYRA MID PLASTICS AMOUNTING TO RS.5.40 LACS. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER NOTICED FROM THE BOOKS OF ACCOUNT THAT THE ASSESSEE HAS PAID THIS AMOUNT AND REQUIRED THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF COMPENSATION PAID. THE ASSESSEE REPLIED THAT THE COMPENSATION WAS PAID FOR WEAR AND TEAR OF MACHINES, FOR WHICH THE ASSESSEE HAS EXECUTED AN AGREEMENT WITH T HE AFORESAID PARTY IN JUNE 1995 FOR ACQUIRING THE MACHINERY ON LEASE. IT WAS STATED THAT THE ASSESSEE ACQUIRED MACHINERY ON LEASE FROM M/S. PYRAMID PLASTICS AND I N LIEU OF THAT AN AGREEMENT WAS EXECUTED FOR REPAIRS OF MACHINERIES. IT WAS ALSO C ONTENDED THAT THIS COMPENSATION FOR WEAR AND TEAR WAS PAID SINCE JUNE 1995, WHEN TH E AGREEMENT WAS EXECUTED, AND THE SAME WAS DECLARED IN THE RETURNS OF INCOME AND ALLOWED BY THE REVENUE AUTHORITIES. THE ASSESSEE ALSO SUBMITTED THAT THES E CHARGES ARE BEEN PAID TO THE LESSOR FOR COMPENSATING THE LESSOR ON FOLLOWING ACC OUNTS. A. WEAR AND TEAR OF MACHINES B. EFFLUX OF TIME C. DECREASE IN ECONOMIC LIFE OF THE MACHINE ON ACC OUNT OF PRODUCTION D. TECHNOLOGICAL OBSOLESCE OF THE MACHINE BUT, THE ASSESSING OFFICER WAS NOT CONVINCED WITH T HE ALLOWANCE OF THIS EXPENDITURE AND BY DISALLOWING THE SAME MADE ADDITION. AGGRIEV ED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 10. THE CIT(A) CONFIRMED THE DISALLOWANCE OF COMPEN SATION CHARGES PAID AND ALSO ENHANCED THE ASSESSMENT BY MAKING FURTHER ADDI TION OF RS. 1.41 LACS ON ACCOUNT OF DISALLOWANCE OF LEASE RENT PAID TO M/S. PYRAMID PLASTICS BY GIVING FOLLOWING FINDINGS: 1. THERE WAS NO LEGALLY VALID AGREEMENT FOR EXTENSI ON OF LEASE AFTER TERMINATION OF THE EARLIER AGREEMENT ON 09.11.00. THERE WAS THUS NO BASIS FOR PAYMENT OF MONTHLY RENT OF RS.30,000/- FROM 09.11.0 0 ONWARDS TO M/S. PYRAMID PLASTICS. APPELLANT HAS FAILED TO PLACE AN Y MATERIAL OF CONVINCING AND ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 6 VERIFIABLE NATURE ON RECORD TO CONCLUSIVELY ESTABLI SH THAT SUCH PAYMENT OF RENT WAS OUT OF COMMERCIAL EXPEDIENCY AND IN PURSUANCE O F A LEGAL AND VALID AGREEMENT. THE APEX COURT HAS HELD IN THE DECISION REPORTED IN 86 ITR 11 THAT MERELY BECAUSE AN AGREEMENT EXISTED AND ACTUAL PAYMENTS WERE MADE IT DOES NOT MEAN THAT THE EXPENSES WERE FOR COMMERCIAL EXPEDIENCY. THUS AS FAR AS THE PAYMENT OF LEASE RENT FROM 9.11.00 TO 31 .03.01 IS CONCERNED THE SAME IS TO BE DISALLOWED. THIS WILL MEAN THAT THE INCOME OF THE APPELLANT IS TO BE ENHANCED BY A SUM OF RS.141,000/- BY DISALLOWING THE RENT PAID TO M/S. PYRAMID PLASTICS AFTER 09.11.00 TILL 31.03.01. THE A.O. IS TO TAKE NECESSARY ACTION REGARDING THE SAME. THE INCOME IS ACCORDING LY ENHANCED BY A SUM OF RS.141,000/-. 2. THE NEXT ISSUE IS ABOUT THE PAYMENT OF COMPENSAT ION CHARGES. AS STATED EARLIER IN THE LEASE AGREEMENT WHICH COMMENC ED FROM 10.06.95 AND WAS TERMINATED ON 09.11.00 THERE WAS NO MENTION OF COMPENSATION CHARGES AT ALL. THE APPELLANT TRIED TO JUSTIFY THE PAYMENT OF COMPENSATION CHARGES BY FILING COPIES OF SOME LETTERS AT THE APPELLATE STAG E WHICH WERE NEVER FILED AT THE ASSESSMENT STAGE AND DO NOT CONCLUSIVELY SUPPOR T THE CLAIM OF THE APPELLANT. THE QUESTION THAT SURVIVES FOR THE ADJU DICATION NOW IS AS TO WHETHER THE APPELLANT WAS JUSTIFIED AT ALL IN PAYIN G SUCH COMPENSATION CHARGES. THE ONLY ARGUMENT PUT FORWARD BY THE A.R IS THAT SUCH COMPENSATION CHARGES HAVE BEEN CLAIMED AND ALLOWED IN EARLIER ASSESSMENT YEARS BY THE DEPTT. IN MY VIEW THIS IS NOT A CLINCHING ARGUMENT. A BU SINESSMAN DOES NOT HAVE THE RIGHT TO DO BUSINESS IN ANY MANNER HE LIKE S WITH REGARD TO THE EXISTING LAW. IT IS A WELL KNOWN FACT THAT APPELLA NTS RESORT TO INGENIOUS WAYS IN WHICH BUSINESS TRANSACTIONS ARE CARRIED OUT. IN TH E INSTANCE CASE THERE WAS A REGISTERED LEASE AGREEMENT TILL 9.11.00. WHEN AN A SSET IS LEASED OUT THE TAX IMPLICATION IS THAT THE LESSOR I.E. WHO LEASES OUT THE ASSET DOES NOT REMAIN THE BENEFICIAL OWNER OF THE ASSET. FOR LEASING OUT SUC H ASSETS THE LESSOR GETS LEASE RENT WHICH ARE REFLECTED IN THE P & L A/C. AS INCOME. IN BUSINESS PARLANCE WHEN AN ASSET IS LEASED OUT CERTAIN OTHER RELEVANT ASPECTS SUCH AS THE PERIOD FOR WHICH THE ASSETS ARE LET OUT I.E. WH ETHER THE ASSETS ARE LET OUT ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 7 TEMPORARILY OR ON A LONG TERM BASIS, INTENTION OF T HE APPELLANT, ETC. ARE ALSO TO BE EXAMINED. THERE NEVER WAS ANY KIND OF AGREEMENT FOR THE PAYMENT OF COMPENSATION CHARGES FOR NORMAL WEAR AND TEAR OF MA CHINES. APPELLANT CANNOT RESORT TO THE ARGUMENT THAT THERE IS/WAS A V ERBAL AGREEMENT BETWEEN THE PARTIES AND AS PER SUCH AGREEMENT, COMPENSATION CHARGES ARE BEING PAID. THIS FACT BY ITSELF DOES NOT ESTABLISH THAT THE PAYMENT OF COMPENSATION CHARGES IS FOR COMMERCIAL EXPEDIENCY. IT HAS ALSO BEEN NOTICED THAT AS PER THE LEASE AGREEMENT NORMAL REPAIRS AND MAINTENANCE CHARGES ARE TO BE BORNE BY THE LESSEE AND MAJOR REPAIR AND MAINTENANC E CHARGES ARE TO BE BORNE BY THE LESSOR. APPELLANT HAS FURTHER CLARIFI ED THAT NORMAL REPAIRS MEANS NORMAL WEAR AND TEAR WHICH IS INEVITABLE DURING THE RUNNING OF MACHINES. IT WAS IN RESPECT OF THE MAJOR BREAK DOWN OF MACHINES THAT THE LESSOR WAS SUPPOSED TO BE RESPONSIBLE. IT IS NOT TO BE FORGOT TEN THAT THE M/S. PYRAMID PLASTICS IS ENTITLED TO CLAIM DEPRECIATION ALSO O N SUCH ASSETS FOR NORMAL WEAR AND TEAR, OVER AND ABOVE, THE COMPENSATION CHARGES RECEIVED AGAIN IN RESPECT OF SUCH WEAR AND TEAR OF MACHINES. AGGRIEVED AGAINST ENHANCEMENT AND CONFIRMATION OF D ISALLOWANCE OF COMPENSATION CHARGES BY CIT(A), THE ASSESSEE CAME IN SECOND APPE AL BEFORE US. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSES SING OFFICER IN HIS REMAND REPORT DATED 20-09-2004 HAS CLEARLY ADMITTED THAT NO DOUBT THE LEASE AGREEMENT FOR EXTENSION OF LEASE PERIOD WAS NOT EXECUTED BY BOTH THE PARTIES, BUT THE PERIOD OF LEASE WAS EXTENDED THROUGH EXCHANGE OF LETTERS BETW EEN THESE TWO PARTIES. IT WAS ALSO ADMITTED BY THE ASSESSING OFFICER THAT THE EXT ENSION OF LEASE PERIOD WAS BETWEEN THE PARTIED INVOLVED AND MUTUALLY AGREED WI TH THE HELP OF CORRESPONDENCE LETTERS. THE ASSESSING OFFICER FURTHER AGREED THAT THE REPAIRS AND MAINTENANCE CHARGES WERE BORNE BY THE LESSEE AS PER THE AGREEME NT DATED 19-06-1995 AND SUBSEQUENTLY EXTENSION BY WAY OF EXCHANGE OF LETTER S. IT IS ALSO A FACT THAT NO SUCH EXPENSES HAVE BEEN CLAIMED BY M/S. PYRAMID PLASTICS , I.E. THE LESSOR. IT IS ALSO AN AGREED POSITION THAT THE COMPENSATION CHARGES AGREE D UPON BETWEEN THESE TWO PARTIES ARE SEPARATE FROM LEASE RENTS. THE COMPENS ATION CHARGES ARE TOWARDS THE USAGE OF MACHINES AND TOWARDS EXPECTED LIFE OF MACH INES AND THE AMOUNTS OF ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 8 COMPENSATION CHARGES ARE BORNE BY THE ASSESSEE KEEP ING IN MIND THE EXPECTED LIFE OF MACHINES IN THE INDUSTRY WHICH IS 5 TO 8 YEARS. IT IS ALSO ADMITTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT THAT THE COM PENSATION CHARGES EARNED BY M/S. PYRAMID PLASTICS HAVE BEEN OFFERED FOR TAXATIO N AFTER CLAIMING DEPRECIATION ON THE MACHINERY. HE FURTHER ADMITTED THAT THE LEASE AGREEMENT STATES THAT NORMAL REPAIRS AND MAINTENANCE CHARGES WILL BE BORNE BY TH E LESSEE AND MAJOR REPAIRS AND MAINTENANCE CHARGES WILL BE BORNE BY THE LESSOR. W E FURTHER FIND THAT THE ASSESSING OFFICER ALSO ADMITTED THE NATURE OF EXPENSES IS NOR MAL REPAIRS AND MAINTENANCE CHARGES, WHICH ARE TOWARDS SMALLER DAMAGES WHICH WI LL HAPPEN DURING RUNNING OF MACHINE FOR EXAMPLE SEALS, FUSES, CONTACTORS, ETC. THE MAJOR BREAKDOWN REPRESENTS THE BIG PARTS OF MACHINES SUCH AS TIEBARS, MAIN MOT ORS, ELECTRICAL BALANCE ETC. HE FURTHER NOTED IN HIS REMAND REPORT THAT THE COMPENS ATION CHARGES ARE NOT REFLECTED IN THE LEASE AGREEMENT, BUT THE SAME WERE EFFECTED IN THE FORM OF LETTERS. HE ALSO ADMITTED THAT THE COMPENSATION CHARGES WERE PAID BY THE ASSESSEE IN THE YEAR RIGHT FROM 1995-96 TO 2003-04 BASED ON A FORMULA OF 30 TO 31% FOR FIRST YEAR AND THEREAFTER 25 TO 26%. ACCORDING TO ASSESSING OFFIC ER THERE IS NO FIX PERCENTAGE FOR WORKING OUT THE COMPENSATION CHARGES, BUT TO BE DEC IDED ON OVERALL ASSET VALUE AND RENT EXPECTED ON THESE MACHINES FOR THE YEAR ON THE BASIS OF LIFE EXPECTANCY OF THESE MACHINES. THE ASSESSING OFFICER FURTHER NOTED AND OPINED THAT:- I) PRIMA FACIE IT APPEARS THAT THE COMPENSATION CHA RGES HAVE BEEN WORKED OUT NOW AND HAVE NOT BEEN DECIDED UPON IN 19 95, AS CLAIMED. II) THIS CONCLUSION IS BEING DRAWN FOR THE REASONS GIVEN BELOW: A. BOTH THE PARTNERS WERE NOT ABLE TO EXACTLY TELL THE FORMULA ON THE BASIS OF WHICH THE AMOUNTS WERE ARRIVED AT. THIS A CCORDING TO THEIR OWN ADMISSION VARIES FORM YEAR TO YEAR. WHEN IT VARIES FROM YEAR TO YEAR. WHEN IT VARIES FROM YEAR TO YEA R HOW DID THEY COMPUTE IT TILL 2003-04? B. THE COMPENSATION CHARGES GIVEN AS PER THE DETAIL S FILED BY THEM NOW, AND THE FIGURE SUBMITTED TO THE THEN A.O. DURI NG ASSESSMENT PROCEEDINGS AND THE FIGURE CLAIMED IN TH E P & L A/C. ARE DIFFERENT. ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 9 WE FIND THAT THE ENTIRE DISCUSSION CARRIED OUT BY T HE ASSESSING OFFICER IN HIS REMAND REPORT JUST MADE OUT A CASE ON FACTS TO BE ALLOWED THE COMPENSATION CLAIMED BY THE ASSESSEE, BUT ULTIMATELY A CONTRADICTORY OPINION IS GIVEN AT THE END. WE FIND FROM THE FACTS OF THE CASE AND ARGUMENTS OF BOTH THE SIDES T HAT IT IS NOT IN DISPUTE THAT THESE MACHINERIES WERE USED BY THE ASSESSEE, NO DOUBT THE AGREEMENT DATED 19.06.1995 EXPIRED ON 09.11.2000, BUT FROM THE INTENTION OF BO TH THE PARTIES, IT CAN EASILY BE GATHERED THAT WHEN THE ASSESSEE WAS USING THESE MAC HINES WITHOUT INTERRUPTION, THE LEASE RENTS HAVE BEEN PAID BY THE ASSESSEES AND ALS O COMPENSATION AS CLAIMED BY THE ASSESSEE. IT IS ALSO AN ADMITTED FACT, AS ADMI TTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT THAT THE LEASE AGREEMENT WAS EXTENDED BY THE WAY OF EXCHANGE OF LETTERS BETWEEN THE ASSESSEE AND THE LESSEE. IT IS NOT IN DOUBT THAT THE MACHINERIES WERE NOT USED AND LEASE RENTS WERE NOT PAID OR THE COMPENSATION WAS NOT PAID. EVEN THE PURPOSE OF COMPENSATION, AS NOTED ABOVE IS CLEARLY THE WEAR AND TEAR OF MACHINES, WHICH IS FOR THE PURPOSES OF BUSINESS. I N VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE COMPE NSATION CHARGES PAID BY THE ASSESSEE ARE ALLOWABLE AND EVEN THE ENHANCEMENT MAD E BY THE CIT(A) ON ACCOUNT OF LEASE RENT DESERVES TO BE DELETED. ACCORDINGLY, WE DELETE THESE ADDITIONS. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 12. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF DEDUCTION UNDER SECT ION 80HHC OF THE ACT ON ASSESSED PROFIT, THEREBY RESTRICTING THE DEDUCTION ONLY ON BOOK PROFIT. 13. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSES SEE STATED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS TRIBUNAL I N THE CASE OF J.K. PAPERS LTD. VS. ACIT IN ITA NO.578, 738 OF 2007 AND 346, 390/AHD/20 08 ORDER DATED 04-09-2009, WHEREIN, THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE ON ASSESSED PROFIT BY GIVING FOLLOWING FINDING IN PARA 10.1.4 AND 10.1.5 OF THE APPELLATE ORDER:- 10.1.4. WE HAVE HEARD BOTH THE PARTIES AND PERUS ED THE RECORD. IT IS NOT DISPUTED THAT HONBLE KERALA HIGH COURT IN THE CASE OF GTN TEXTILES LTD (SUPRA) HONBLE MADRAS HIGH COURT IN CASE OF MEGHA ELECTRO AND FUTURA POLYESTER LTD (SUPRA) HAVE HELD THAT DEDUCTION U/S. 80HHC SHOULD BE COMPUTED ON THE BASIS OF BOOK PROFIT COMPUTED AS PE R THE PROVISIONS OF THE ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 10 COMPANIES ACT AND NOT AS PER NORMAL PROVISIONS OF T HE I.T. ACT. THIS IS ALSO UNDISPUTED FACT THAT THOSE JUDGMENTS WERE RENDERED IN THE CONTEXT OF SECTION 115J AND WE ARE DEALING WITH THE PROVISIONS OF SECT ION 115JB. IN ORDER TO FIND OUT SUBSTANTIVE DIFFERENCE IN THE APPLICABILITY OF TWO PROVISIONS, WE REFER TO CLAUSE (III) OF EXPLANATION TO SECTION 115J AS UNDE R AND CLAUSE (4) IN EXPLANATION 1 TO SECTION 115JB AS UNDER: CLAUSE (III) OF EXPLANATION TO SECTION 115J: [(III) THE AMOUNTS [AS ARRIVED AT AFTER INCREASING THE NET PROFIT BY THE AMOUNTS REFERRED TO IN CLAUSES (A) TO (F) AND REDUC ING THE NET PROFIT BY THE AMOUNTS REFERRED TO IN CLAUSES (I) AND (II)] AT TRIBUTABLE TO THE BUSINESS, THE PROFITS FROM WHICH ARE ELIGIBLE FOR D EDUCTION UNDER SECTION 80HHC OR SECTION 80HHD ; SO, HOWEVER, THAT SUCH AMOUNTS ARE COMPUTED IN THE MANNER SPECIFIED IN SUB-SECTION (3) OR SUB-SECTION (3A) OF SECTION 80HHC OR SUB-SECTION (3) OF SECTION 80HHD , AS THE CASE MAY BE; OR] CLAUSE (IV) IN EXPLANATION TO SECTION115JB: ( IV) THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UN DER SECTION 80HHC, COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE ( C) OF SUB-SECTION (3) OR SUB-SECTION (3A), AS THE CASE MAY BE, OF THAT SE CTION, AND SUBJECT TO THE CONDITIONS SPECIFIED IN THAT SECTION ; OR 10.1.5 IN BOTH THE PROVISIONS IT IS LAID DOWN TH AT DEDUCTION U/S.80HHC SHOULD BE COMPUTED IN THE MANNER SPECIFIED IN SUB S ECTION (3) OR SUB-SECTION 3(A) OF SECTION 80HHC. IN OTHER WORDS A PRIMA FAC IE READING OF THESE WORDS INDICATES THAT COMPUTATION OF DEDUCTION U/S.80HHC S HOULD BE DONE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80HHC. T HESE TERMS HAVE BEEN INTERPRETED BY HONBLE KERALA HIGH COURT AND MADRAS HIGH COURT IN THE DECISIONS REFERRED TO ABOVE AND FOR THIS COMPUTATIO N THE BOOK PROFIT HAS TO BE TAKEN AS BASE AND NOT THE PROFIT COMPUTED UNDER THE NORMAL PROVISIONS OF ACCOUNT. SINCE THESE ARE THE TWO JUDGMENTS IN FAVOU R OF THE ASSESSEE AND NO CONTRARY DECISION IS CITED OR REFERRED TO BY THE LE ARNED DR, WE RESPECTFULLY FOLLOW THE SAME, AS THEY ARE BINDING ON THE TRIBUNA L IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V. GODAVARI DEVI ( 1978) 113 ITR 589 (BOM). AS A RESULT THIS GROUND OF THE ASSESSEE IS A LLOWED. ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 11 14. WE FIND THAT THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80HHC AS PER THE FIGURES CLAIMED IN THE RET URN OF THE ASSESSEE, BUT, AS PER SECTION 80HHC OF THE ACT, DEDUCTION IS ALLOWABLE ON PROFITS AND GAINS OF EXPORTS BUSINESS AS COMPUTED UNDER THIS SECTION AND THE LOW ER AUTHORITIES SHOULD HAVE RECALCULATED THE DEDUCTION UNDER SECTION 80HHC OF T HE ACT BY INCLUDING THE AMOUNT OF DISALLOWANCES, WHICH WOULD INCREASE THE FIGURES OF PROFITS AND GAINS FROM BUSINESS AND NOT BY RESTRICTING THE SAME. AS THE ISSUE IS S QUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN THE CA SE OF J.K. PAPERS LTD. (SUPRA), WE ALLOW THE CLAIM OF THE ASSESSEE. 15. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) IN CONFORMING THE DISALLOWANCE OF DEDUCTION UNDER SECT ION 80IA OF THE ACT ON INTEREST RECEIVED. WE FIND THAT THIS ISSUE IS COVERED AGAIN ST THE ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF PANDIAN CHEMICALS LTD. V. CIT, [2003] 262 ITR 278, WHEREIN, IT IS HELD THAT INTEREST ON DEPOSIT M ADE WITH TAMIL NADU ELECTRICITY BOARD IS NOT ALLOWABLE AS DEDUCTION AS IT IS NOT FO RMING PART OF PROFITS AND GAINS DERIVED FROM AN INDUSTRIAL UNDERTAKING SO AS TO BE ELIGIBLE FOR DEDUCTION. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE BEFORE US REQUESTE D FOR NETTING OF INTEREST EXPENDITURE AGAINST THE INCOME OF INTEREST. AS THI S ISSUE HAS NOT BEEN EXAMINED BY THE LOWER AUTHORITIES, AS IF THERE IS A NEXUS OR NO T, WITH THE EARNING OF THIS INTEREST INCOME WITH THAT OF INTEREST EXPENDITURE, THE ASSES SING OFFICER WILL EXAMINE THIS ISSUE AND ALLOW THE CLAIM. IN CASE THERE IS NO NEXUS, TH E ASSESSING OFFICER WILL NOT ALLOW THE CLAIM. THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 16. THE NEXT ISSUE IN THIS APPEAL IS AS REGARDS TO DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE FOLLOWING ITEMS. A. DEPB 15,06,543/- B. DFRC (WRONGLY SPELT DERC IN ORDER) 1,21,574/- C. DEEC 1,54,743/- D. DUTY DRAWBACK 17,052/- E. EXPORT 3,083/- F. IMPORT PREMIUM 6,33,460/- ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 12 17. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSE SSEE STATED THAT THESE ARE EXPORT INCENTIVES ALLOWABLE UNDER SECTION 80IA OF T HE ACT. ON THE OTHER HAND THE LEARNED SR. DR STATED THAT THIS ISSUE IS NOW SETTLE D BY HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA V CIT ( 2009) 317 ITR 218 (SC ) WHEREIN THE HONBLE APEX COURT HAS STATED THAT DUTY DRAWBACK RECEIPTS /DUTY ENTITL EMENT PASS BOOK BENEFITS ARE ON ACCOUNT OF STATUTORY PROVISIONS IN CUSTOMS ACT/SCH EME(S) FRAMED BY GOVERNMENT, THEREFORE PROFITS SO DERIVED DO NOT FORM PART OF NE T PROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKING FOR PURPOSES OF SECTIONS 80 IB, 80 I AN D 80 IA. LD. SR. DR IN VIEW OF THE DECISION OF LIBERTY INDIA (SUPRA) STATED THAT NOW T HE ISSUE IS SETTLED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 18. AFTER HEARING THE RIVAL CONTENTIONS ON THIS ISS UE AND GOING THROUGH THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF L IBERTY INDIA (SUPRA), WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTIO N ON EXPORT BENEFITS RECEIVABLE BY THE ASSESSEE. ACCORDINGLY, THIS ISSUE OF THE ASSES SEES APPEAL IS DISMISSED. NOW COMING TO REVENUES APPEAL IN ITA NO.836/AHD/20 05 19. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE FOLLOWING DISALLOWANCES:- A. PROFESSIONAL CHARGES RS. 74,865/- B. SALES COMMISSION RS. 10,988/- C. SALES PROMOTION EXPENSES RS. 27,000/- D. DISCOUNT SCHEME RS. 91,100/- E. MOULD MODIFICATION RS.2,29,000/- 20. WE HAVE HEARD THE RIVAL CONTENTIONS ON VARIOUS DISALLOWANCES AND GONE THOUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. TH E DISCUSSION IN REGARD TO EACH OF THE DISALLOWANCE IS AS UNDER: A. AS REGARDS TO PROFESSIONAL CHARGES THE SUM HAS B EEN PAID TO M/S. GOLDEN MEAN COMMUNICATION FOR PROFESSIONAL SERVICES RENDERED BY THEM FOR DEVELOPING AND DESIGNING ASSESSEES PROJECTS AND TH E EXPENSES HAVE BEEN INCURRED FOR COMMERCIAL EXPEDIENCY AND THEREFORE TH E CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE CONFIRM THE SAME. ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 13 B. AS REGARDS TO SALES COMMISSION, THE ASSESSING OF FICER DISALLOWED ONLY ON PREMISE THAT NO EVIDENCE HAD BEEN PRODUCED IN RE GARD TO THIS CLAIM. THE CIT(A) AFTER GOING THROUGH THE DETAILS OF THE SALES COMMISSION PRODUCED BEFORE HIM, DELETED THE ADDITION BY STATING THAT AL L THE DETAILS AND EVIDENCES CLEARLY SUGGESTS THAT THE ASSESSEE HAS PAID THE SAL ES COMMISSION, WHICH IS BUSINESS EXPENDITURE. THEREFORE, THE CIT(A) HAS RI GHTLY DELETED THE ADDITION. WE CONFIRM THE SAME. C. AS REGARDS TO SALES PROMOTION EXPENSES, THE ASSE SSING OFFICER DISALLOWED ON THE GROUND THAT NO SPECIFIC DETAILS H AVE BEEN FURNISHED BY THE ASSESSEE, BUT THE CIT(A) NOTED FROM THE DETAILS THA T THE SAID AMOUNT REPRESENTS PURCHASE OF CALCULATOR/CLOCK, ETC. WHICH HAVE BEEN GIVEN TO DEALERS IN TERMS OF SALES PROMOTION SCHEME NAMED M ILLENNIUM DEALER SCHEME ANNOUNCED BY THE ASSESSEE AND ALSO GONE THR OUGH THESE DETAILS AND DELETED THE ADDITION. WE CONFIRM THE SAME. D. AS REGARDS TO DISCOUNT SCHEME, THE ASSESSING OFF ICER DISALLOWED ON THE GROUND THAT NO SPECIFIC DETAILS HAVE BEEN FURNI SHED BY THE ASSESSEE, BUT THE CIT(A) NOTED FROM THE DETAILS THAT THE SAID AMO UNT REPRESENTS THE DISCOUNT GIVEN TO VARIOUS DEALERS FOR ACHIEVING CERTAIN TARG ETS IN RESPECT OF ENHANCE SALES IN TERMS OF QUANTITY AND VALUE, INCENTIVES TO PROMOTE SALES ETC., AND ALSO GONE THROUGH THESE DETAILS AND DELETED THE ADDITION . WE CONFIRM THE SAME. E. AS REGARDS TO MOULD MODIFICATION, THE ASSESSING OFFICER DISALLOWED FOR THE REASON THAT NO DETAILS WERE FILED, BUT THE ASSE SSEE BEFORE THE CIT(A) STATED THAT THE DETAILS OF NAMES AND ADDRESSES OF T HE PARTIES ALONGWITH THE PHOTO COPIES OF THE INVOICES RECEIVED FROM THEM WHI CH GIVES EXPLANATION AND DETAILS ABOUT THE REPAIRING OF MOULDS HAD BEEN FILE D BEFORE THE A.O. THE CIT(A) DELETED THE ADDITION BY GIVING FINDING THAT THE ASSESSING OFFICER HAS DISALLOWED THESE SUMS WITHOUT EXAMINATION OF FACTS AND ACCORDINGLY HE DELETED THE DISALLOWANCE. WE FIND NO REASON TO INT ERFERE IN THE ORDER OF THE CIT(A) AND WE CONFIRM THE SAME. ITA NOS.836 AND 947/AHD/2005 M/S. B.T. PLASTIC AND ALLIED INDUSTRIES, V. ACIT, VAPI C IRCLE, GUJARAT. PAGE 14 THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 21. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN OPEN COURT ON 25/06/2010 SD/- SD/- (D.C. AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED: 25/06/2010 ANKIT* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD