RAJASTHAN EXPLOSIVES & CHEMICALS LTD., NEW DELHI V. DCIT, BHARATPUR

ITA 842/JPR/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2121 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 11-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Keywords: Depreciation; Opportunity of being heard; Question of law; Reasonable cause; Bad and doubtful debts; Right to appeal
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 842/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2000-01 RAJASTHAN EXPLOSIVES & CHEMICALS LTD., NEAR MACHKUND, DHOLPUR (RAJ)-328001. CUKE VS. J.C.I.T., RANGE- BHARATPUR, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR 9819 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 799/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2000-01 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- BHARATPUR. CUKE VS. RAJASTHAN EXPLOSIVES & CHEMICALS LTD., NEAR MACHKUND, DHOLPUR (RAJ)- 328001. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR 9819 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SALIL KAPOOR & MS. ANANYA KAPOOR. JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/03/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/04/2017 ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 2 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND THE REVENUE EMANATES FROM THE ORDER OF LD. CIT(A), ALWAR DATED 01 /08/2013 PERTAINING TO THE ASSESSMENT YEAR 2000-01. 2. BOTH THE APPEALS ARE BEING HEARD TOGETHER, FOR T HE SAKE OF CONVENIENCE AND BREVITY, A COMMON ORDER IS BEING PA SSED. 3. FIRSTLY, WE TAKE REVENUES APPEAL BEING ITA NO. 7 99/JP/2013. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS REPRO DUCED AS UNDER:- (I) THAT THE COMMISSIONER OF INCOME TAX (APPEALS), ALWA R HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTAN CES OF THE CASE IN DELETING THE ADDITION OF RS. 55,10,113/- MAD E BY THE A.O. BY DISALLOWING THE CLAIM OF DEPRECIATION ON PL ANT AND MACHINERY AND OTHER ASSETS DUE TO CLOSURE OF FACTOR Y. 3.1 THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AGAINS T DELETING THE ADDITION OF RS. 55,10,113/- MADE BY THE ASSESSING OFFICER BY DISALLOWING THE CLAIM OF DEPRECIATION ON PLANT AND MACHINERY AND OTHER AS SETS DUE TO CLOSURE OF FACTORY. 4. THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 55,1 0,113/- AND THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AND ASKED AS TO WHY THE DEPRECIATION CLAIMED BY IT MAY NOT BE DISALLOWED AS THE COMPANY WAS ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 3 CLOSED FROM 03/6/1998 TO 19/06/2000 I.E. THE WHOLE Y EAR UNDER CONSIDERATION AND HE DISALLOWED THE CLAIM OF THE ASS ESSEE. 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DELETED THE AD DITION BY OBSERVING AS UNDER:- 2. THE COMPANY REMAINED CLOSED DURING THE PERIOD F ROM 03.06.1998 TO 19.06.2000 AND THE COMPANY WAS UNDER THE PURVIEW OF HONORABLE BIFR. THE HONORABLE BIFR SANCTIONED THE S CHEME ON 8.5.2000 AND CHANGED THE MANAGEMENT FROM MR. RAJESH JAIN TO CAPT K S SOLANKI GROUP. DURING THE CLOSURE PERIOD T HE COMPANY WAS UNDER THE CONTROL AND CHARGE OF M/S RAJASTHAN I NDUSTRIAL INVESTMENT CORPORATION LTD. (RIICO) JAIPUR (RAJASTH AN) AS PER THE DIRECTIVES OF BIFR. 3. THE LEARNED ASSESSING OFFICER HAS DISALLOWED DEP RECIATION OF RS. 55,10,113/- DUE TO CLOSURE OF FACTORY. THE LEARNED ASSESSING OFFICER DID NOT CONSIDER THE CIRCUMSTANCES AND REAS ONS FOR THE CLOSURE OF THE FACTORY. HE ALSO DID NOT CONSIDER TH E PREVIOUS BACK GROUND OF THE COMPANY. HE ALSO DID NOT CONSIDER THE STATE OF THE MACHINERIES AND OTHER FIXED ASSETS OF THE COMPANY. WE SUBMIT THAT THE ASSESSEE IS QUITE OLD COMPANY AND IT HAS C OMMENCED ITS OPERATIONS IN THE YEAR 1980. THE COMPANY HAD BEEN U SING ITS PLANT AND MACHINERIES AND OTHER FIXED ASSETS SINCE INCEPT ION. THE COMPANY COULD NOT UTILIZE THE FIXED ASSETS TEMPORAR Y FOR THE PERIOD FROM 03.06.1998 TO 19.06.2000 DUE TO CLOSURE OF ITS FACTORY FOR THE WANT OF WORKING CAPITAL ETC. THE FIXED ASSETS OF TH E COMPANY ALWAYS REMAINED IN THE FACTORY AND READY FOR USE IN THE CLOSURE PERIOD ALSO. THE FIXED ASSETS COULD NOT BE UTILIZED AND THE ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 4 CIRCUMSTANCES WERE BEYOND THE CONTROL OF MANAGEMENT . AS THE COMPANY WAS SICK AND COMMENCED AGAIN AS PER THE DIR ECTIVES OF THE HONORABLE BIFR. THE ASSETS WERE ALWAYS IN PASSI VE USE. WE REFER TO THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE COMMISSIONER OF INCOME TAX V. LAKSHMI SUGAR MILLS LIMITED (2012) TAXMANN.COM 41 (DELHI). THE JUDGMENT IS ENCLOSED IN ANNEXURE-2. THE HONORABLE HIGH COURT HAS ALLOWED THE DEPRECIATI ON FOR THE CLOSURE PERIOD OF THE FACTORY. THE CIRCUMSTANCES OF THIS CASE ARE QUITE SIMILAR TO OUR CASE. LAKSHNI SUGAR MILLS LIMI TED WAS ALSO CLOSED FOR THE YEARS 2002-03, 2005-06 AND 2006-07 A ND THE COMPANY BECAME SICK. THE DEPRECIATION WAS ALLOWED F OR THE CLOSURE PERIODS. THUS IN THIS CIRCUMSTANCES WE THER EFORE PRAY BEFORE YOUR HONOR TO KINDLY DELETE THE ADDITION MAD E OF RS. 55,10,113/- ON ACCOUNT OF DEPRECIATION. 4.3 I HAVE CONSIDERED THE AOS ORDER AND SUBMISSIONS MADE BY THE AR AND THE CASE LAWS CITED BY THE AR AND FIND FORCE IN THE ARGUMENTS GIVEN BY THE APPELLANT. AO HAS MADE DISALLOWANCE ON THE GROUND THAT THE FACTORY WAS CLOSED DURING THE YEAR AND ALS O IN THE PRECEDING YEAR AND THE MACHINERY WAS NOT FIT FOR US E. IT IS STATED BY THE AR THAT FACTORY HAD TO BE CLOSED FROM 03.06. 1998 TO 19.06.2010 ON ACCOUNT OF LIQUIDITY PROBLEMS AND THE MATTER WAS PENDING BEFORE BIFR FOR REVIVAL OF THE BUSINESS. FU RTHER, THE AR HAS RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LAXMI SUGAR MILLS LTD. (2012) TAXMA N.COM 41(DELHI). DEPRECIATION IS AN ALLOWANCE WHICH HAS T O BE GIVEN, EVEN IF, THE FACTORY HAS BEEN CLOSED FOR SOME REASON, AS IT DEPRECIATES BOTH BY USAGE AND WITH THE PASSAGE OF TIME. IN VIEW OF THESE FACTS, I FIND THAT THE AO WAS NOT JUSTIFIED IN NOT ALLOWIN G THE DEPRECIATION ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 5 ON THE PLANT AND MACHINERY. ACCORDINGLY, I DELETE T HE ADDITION OF RS.55, 10,113 MADE BY THE AO UNDER THIS HEAD. 6. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND P ERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE FIND THAT THE LD. SR.DR WAS NOT ABLE TO CONTROVERT THE FINDING GIVEN BY THE LD. CIT(A). THE ASSESSEES FACTORY WAS CLOSED ON THE ACCOUNT OF LIQUIDITY PROBLEM AND THE MATTER WAS PENDING BEFORE THE BIFR FOR REVIVAL OF THE BUSINESS. THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LAXMI SUGAR MILLS LTD. (SUPRA) H AS HELD AS UNDER:- ASSESSEE CLAIMED DEPRECIATION IN RESPECT OF MACHINE RIES INSTALLED IN ITS SUGAR MILL - ASSESSING OFFICER DISALLOWED CLAIM OF DEPRECIATIO N ON GROUND THAT SUGAR MILL HAD STOPPED FUNCTIONING AND WAS NOT IN OPERATION - LOWE R AUTHORITIES FOUND THAT MILL REMAINED CLOSED BECAUSE OF FACT THAT COMPANY HAD BE COME SICK DUE TO LACK OF FUND AND EFFORTS WERE MADE BY COMPANY FOR ITS REVIV AL AND RESTARTING OF MILL AND IT WAS, SUBSEQUENTLY, REOPENED ON 19-12-2006 WHEN A SCHEME OF REHABILITATION WAS SANCTIONED BY BIFR AND SINCE THAT DATE, MILL WA S WORKING AND SAME PLANT AND MACHINERY WERE BEING USED IN MANUFACTURING ACTI VITY OF SUGAR - IT WAS, THEREFORE, HELD THAT IN INTERVENING PERIOD, PLANT W AS READY FOR USE THROUGHOUT AND SAME COULD NOT BE USED FOR REASONS BEYOND CONTR OL OF ASSESSEE AND HENCE, THERE WAS PASSIVE USER OF PLANT AND THEREFORE, IN V IEW OF FACTS THAT ABOVE CLAIM OF ASSESSEE REGARDING DEPRECIATION SHOULD BE ALLOWED - WHETHER IN VIEW OF THAT FACTS PLANT AND MACHINERY WERE KEPT READY FOR USE W ITH INTENTION AND DESIRE TO MAKE IT OPERATIONAL AS SOON AS LIQUID FUNDS WERE MA DE AVAILABLE AND THAT FACTORY WAS ULTIMATELY MADE OPERATIONAL, LOWER AUTHORITIES RIGHTLY ALLOWED DEPRECIATION TO ASSESSEE - HELD, YES [IN FAVOUR OF ASSESSEE]. ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 6 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE SUST AIN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY, THE GROUND RAISED IN THE REVENUES APPEAL STANDS DISMISSED. 7. NOW WE TAKE ASSESSEES APPEAL BEING ITA NO. 842/JP /2013. IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL. (I) ACTION OF CIT(A) IN CONFIRMING THE ACTION OF THE A. O. OF DISALLOWANCE OF WRITING OF SUNDRY DEBTORS M/S NAM -N AM DHAKA OF RS. 58,80,646/- IS UNJUST, ILLEGAL, ARBITRAR Y AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. TH IS AMOUNT HAVE BEEN WRITTEN OFF SINCE IT WAS NOT RECOVERABLE CONSIDERING THE REHABILITATION SCHEME SANCTIONED BY HONORABLE BIFR DATED 08/05/2000. (II) ACTION OF CIT(A) IN CONFIRMING THE ACTION OF T HE A.O. OF DISALLOWANCE OF WRITE OFF OF LOANS AND ADVANCES OF RS. 1,47,62,069/- IS UNJUST, ILLEGAL, ARBITRARY AND AGAI NST THE FACTS AND CIRCUMSTANCES OF THE CASE. THESE AMOUNTS HAVE B EEN WRITTEN OFF CONSIDERING THE REHABILITATION SCHEME S ANCTIONED BY HONORABLE BIFR DATED 08/05/2000. (III) ACTION OF CIT (A) IN CONFIRMING THE ACTION OF THE A.O. OF DISALLOWANCE OF WRITE OFF OF FIXED ASSETS OF RS. 13 ,67,295/- IS UNJUST, ILLEGAL, ARBITRARY AND AGAINST THE FACTS AN D CIRCUMSTANCES OF THE CASE. THESE ASSETS WERE FOUND MISSING DURING THE COURSE OF TAKING OVER OF THE OPERATION OF THE COMPANY BY THE NEW MANAGEMENT AND COMPANY HAS WRITT EN OFF THESE ASSETS. (IV) ACTION OF CIT (A) IN CONFIRMING THE ACTION OF THE A.O. OF DISALLOWANCE OF INTEREST AMOUNT OF RS. 35,00,000/- I S UNJUST, ILLEGAL, ARBITRARY AND AGAINST THE FACTS AND CIRCUM STANCES OF THE CASE. THIS INTEREST FORMS PART OF TOTAL INTERES T OF RS. ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 7 65,00,000/- WHICH HAS BEEN PROVIDED, AS PER THE DIRE CTION GIVEN BY THE HONORABLE BIFR IN SCHEME SANCTIONED ON DATED 08/05/2000, ON THE VARIOUS CREDIT FACILITY AVAILED BY THE COMPANY FROM THE BANKERS. 8. THE FIRST GROUND OF APPEAL IS AGAINST SUSTAINING THE ADDITION OF RS. 58,80,646/- ON ACCOUNT OF DISALLOWANCE OF WRITING OFF SUNDRY CREDITORS M/S NAM NAM DHAKA. DURING THE YEAR THE ASSESSEE WRITE OF F RS. 58,80,646/- IN THE NAME OF M/S NAM NAM DHAKA. THE ASSESSEE WAS ASKED TO PRODUCE APPROVAL/PERMISSION OF RBI TO WRITE OFF THIS AMOUNT. THE ASSESSEE HAD NOT FILED APPROVAL IN THIS REGARD. THE ASSESSEE APPLIED TO RBI FOR PERMISSION ON 20/01/2003 AND THEREFORE, THE WRITE OFF WAS NOT ALLO WED. 8.1 THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSI NG OFFICER BY HOLDING THAT THE CASE LAWS RELIED UPON WERE DIFFERENT FROM THE FACTS OF THE ASSESSEE AND NOT APPLICABLE IN ASSESSEES CASE. HE ALSO NOTED THAT THE HON'BLE SUPREME COURT CONSTITUTION BENCH IN ITS ORD ER PASSED IN 2012, WHEREIN IT WAS HELD THAT A PROVISION MADE BY THE NBFC S IN THEIR BOOKS OF ACCOUNTS IN ACCORDANCE WITH THE INSTRUCTIONS/GUIDELI NES ISSUED BY THE RBI FOR NPAS, WOULD NOT BE ALLOWABLE AS A DEDUCTION UNDER THE INCOME TAX ACT AND THEREFORE, THE LD. CIT(A) CONFIRMED THE ACTION O F THE ASSESSING OFFICER. 9. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE L D AR OF THE ASSESSEE HAS RELIED ON THE DECISION OF THE ITAT A BENCH, BANGALORE IN THE ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 8 CASE OF ADEA INTERNATIONAL PVT. LTD. VS. ACIT IN ITA NO. 565/BANG/2010 WHEREIN THE COORDINATE BENCH OF THE TRIBUNAL HAS HELD AS UNDER:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE PAPER BOOK FILED BY THE ASSESSEE ALONG WITH THE COPIES OF THE DECIDED C ASES. IT IS NOT DISPUTED THAT THE AMOUNT OF RS.1,94,99,064 WERE THE BILLS OU TSTANDING FOR REALIZATION FROM EXPORT TURNOVER. THE ONLY GROUSE O F THE REVENUE IS THAT THEY CANNOT BE CLAIMED AS BAD DEBTS SINCE THE ASSES SEE HAD NOT OBTAINED THE REQUISITE APPROVAL FROM THE APPROPRIATE AUTHORI TY AS PER THE FOREIGN EXCHANGE MANAGEMENT ACT. THE ASSESSEE HAS RELIED ON THE CASE SOUTHERN TECHNOLOGIES LTD. V. JCIT 320 ITR 577 (SC), WHEREIN IT WAS HELD THAT THE RBI DIRECTIONS OF 1998 ARE MERELY PRUDENTIAL NORMS REGA RDING PRESENTATION OF NON-PERFORMING ASSETS PROVISION IN THE BALANCE SHEE T; THEY DO NOT TOUCH UPON THE NATURE OF EXPENSE TO BE DECIDED BY THE ASS ESSING OFFICER IN THE ASSESSMENT PROCEEDINGS UNDER THE INCOME TAX ACT. TH OUGH THIS JUDGMENT IS RENDERED WITH RESPECT TO COMPLIANCE OF RBI DIREC TIONS ON PRUDENTIAL NORMS REGARDING PRESENTATION OF NONPERFORMING ASSET S, THE RATIO OF THIS DECISION HAS A BEARING ON THE INSTANT CASE ON HAND. WE HAVE ALSO PERUSED THE CASE PEARL AGENCIES V. DY. CIT DELHI REFERRED S UPRA WHEREIN IT WAS HELD AS REGARDS THE QUESTION AS TO WHETHER THE DEBT IN QUESTION REALLY BECAME BAD IN THE YEAR IN WHICH SUCH A CLAIM WAS MADE AND THE AMOUNT WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT WITH A CORRE SPONDING CREDIT TO EITHER THE INDIVIDUAL ACCOUNT OF THE DEBTOR OR TO ACCOUNT LIKE BAD DEBT RESERVE ACCOUNT INDICATING THE AMOUNT DUE BY THE PARTICULAR DEBTOR, IT WOULD BE A SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF THE ST ATUTORY REQUIREMENT FOR WRITING OFF AS IRRECOVERABLE THE CONCERNED DEBT IN THE BOOKS OF THE ASSESSEE FOR THE PURPOSES OF THE ACT. IT IS NOT ESS ENTIAL THAT THE DEBTORS INDIVIDUAL ACCOUNT BE SQUARED OFF BY AN APPROPRIATE CREDIT ENTRY. IN THE INSTANT CASE THE AMOUNT IN QUESTION WAS DEBITED IN THE PROFIT AND LOSS ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 9 ACCOUNT WITH A CORRESPONDING CREDIT TO BAD DEBT RES ERVE ACCOUNT. HENCE, THIS CONDITION ALSO STOOD FULFILLED IN THE CASE OF THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS AND DISCUSSIONS, THE ASSESSEE WAS E NTITLED TO GRANT OF DEDUCTION OF A SUM OF RS.11,46,432 CLAIMED AS BAD D EBT IN THE YEAR UNDER CONSIDERATION. 9. IT IS A SETTLED LAW THAT WHEN THE ASSESSEE ARRI VES AT A DECISION THAT CERTAIN DEBTS HAVE BECOME BAD AND ACCORDINGLY WRITES OFF TH E SAME IN THE BOOKS OF ACCOUNTS, SECTION 36(1)(VII)OF THE ACT PROVIDES FOR A DEDUCTION. FURTHER, SECTION 41(1) OF THE ACT PROVIDES THAT IF SUCH BAD DEBTS WRITTEN OFF IS RECOVERED DURING THE SUBSEQUENT ASSESSMENT YEARS, I T SHALL BE TREATED AS INCOME OF THAT YEAR. FROM THE FACTS AND CIRCUMSTANC ES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS JUSTIFI ED TO CLAIM DEDUCTION U/S. 36(1)(VII) OF THE ACT WITH RESPECT TO THE UNREALIZE D BILLS FROM EXPORT TURNOVER TO THE TUNE OF RS. 1,94,99,064. 9.1 THE HON'BLE SUPREME COURT IN THE CASE OF T.R.F. L IMITED VS CIT, RANCHI IN CIVIL APPEAL NO. 5293 OF 2003 WITH 5294 OF 2003 ORDER DATED 09/02/2010 HAS HELD AS UNDER:- THIS POSITION IN LAW IS WELL SETTLED. AFTER 1 ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT TH E DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER THE DEBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBITED AND THE CUSTOMERS ACCOUNT IS CR EDITED, THUS, CLOSING THE ACCOUNT OF THE CUSTOMER. IN THE C ASE OF ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 10 COMPANIES, THE PROVISION IS DEDUCTED FROM SUNDRY DE BTORS. AS STATED ABOVE, THE ASSESSING OFFICER HAS NOT EXAMINE D WHETHER, IN FACT, THE BAD DEBT OR PART THEREOF IS WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE ASSESSING OFFICER. HENCE, THE MAT TER IS REMITTED TO THE ASSESSING OFFICER FOR DE NOVO CONSI DERATION OF THE ABOVE-MENTIONED ASPECT ONLY AND THAT TOO ONLY T O THE EXTENT OF THE WRITE OFF. SUBJECT TO ABOVE, THE CIVIL APPEALS FILED BY THE AS SESSEE ARE DISPOSED OF WITH NO ORDER AS TO COSTS. 9.2 THE FACTS OF ADEA INTERNATIONAL PVT. LTD. VS. AC IT ARE SIMILAR TO THE FACTS OF THE ASSESSEES CASE AND THEREFORE, WRITING OFF BAD DEBT IN THE NAME OF NAM NAM DHAKA IS ALLOWED AND THIS GROUND OF ASSESSEES APPEAL STANDS ALLOWED. FURTHER WHENEVER THE BAD DEBIT WRITTEN OFF IS RECOVERED DURING SUBSEQUENT YEAR, IT SHALL BE TREATED INCOME OF THAT YEAR. 10. THE GROUND NO. 2 OF THE APPEAL IS AGAINST CONFIR MING THE DISALLOWANCE OF WRITING OFF LOANS AND ADVANCES OF RS. 1,47,62,069/-. THIS AMOUNT WAS WRITTEN OFF BY THE BIFR ORDER DATED 08/05/ 2000. 11. THE LD. CIT(A) HAS DEALT THE ISSUE IN THE FOLLOWIN G MANNER: A SUM OF RS. 1,47,62,069/- WAS WRITTEN OFF AGAINST LOANS AND ADVANCES. THE ASSESSEE WAS ASKED TO PRODUCE DETAILS AND ITS BREAK UP AND ALSO TO EXPLAIN WHETHER THEY ARE BUSINESS LOANS/ADVANCES, HOW OLD A RE THEY, EFFORTS MADE FOR RECOVERY ARID PROVE EXISTENCE OF PARTY IN FORM OF F ULL NAME, ADDRESS ETC. ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 11 THE ASSESSEE FILLED REPLY STATING THEREIN THAT 'HON 'BLE BENCH OF BIFR SCHEME HAS SANCTIONED A REHABILITATION SCHEME. AS PER THIS SCHEME THE ASSETS AND LIABILITIES WOULD BE LIMITED TO WHAT WAS SHOWN IN T HE SANCTIONED SCHEME. IN THE SCHEME BALANCE SHEET FOR F.Y. 99-2000 HAS BEEN RE-CASTED BY BIFR AND ONLY THOSE ITEMS HAS BEEN SHOWN WHICH ARE TAKEN BY THE NEW MANAGEMENT I.E. ONLY THOSE ASSETS AND LIABILITIES HAVE BEEN SH OWN WHICH ARE RECOVERABLE AND PAYABLE RESPECTIVELY BY THE NEW MANAGEMENT AND LOANS AND ADVANCES WHICH ARE NOT RECOVERABLE OF RS. 1,47,62,069/- HAS BEEN WRITTEN OFF AT IN THE LINE OF PROVISION OF THE SANCTIONED SCHEME'. I HAVE GONE THROUGH THE REPLY FILED BY THE ASSESSEE AND FOUND THE SAME NOT CONVINCING. THE ASSESSEE WAS ASKED TO PRODUCE DETAI LS OF LOANS/ADVANCES, THEIR BREAKUP AND THE NATURE OF THE ADVANCE AND EFF ORTS MADE FOR THE RECOVERY ETC. BUT THE ASSESSEE HAS FILED A VAGUE RE PLY IN PLACE OF GIVING THE ABOVE DETAILS/CORRESPONDENCE REGARDING THE ADVANCES WRITTEN OFF. NO REASONS OR CORRESPONDENCE WITH THE DEFAULTING PARTIES HAVE BEEN FURNISHED. IT CLEARLY SHOWS THAT ASSESSEE HAS NO REASONABLE CAUSE FOR WRI TING OFF THE ABOVE LOANS AND ADVANCES. IN VIEW OF THE SAME A SUM OF RS. 1,47 ,62,069/- IS DISALLOWED. 12. AFTER HEARING BOTH THE SIDES, WE FIND THAT BY TH E BIFR, A SCHEME WAS SANCTIONED FOR REHABILITATION OF THE SCHEME. AS PER SCHEME, ASSETS AND LIABILITIES WOULD BE LIMITED TO WHAT WAS SHOWN IN THE SANCTIONED SCHEME. IN VIEW OF THIS SCHEME, THE BALANCE SHEET FO R FINANCIAL YEAR 1999- 2000 WAS RECASTED. ONLY THOSE ITEMS WERE SHOWN IN REC ASTED BALANCE SHEET, WHICH WERE TAKEN BY THE NEW MANAGEMENT. ONLY T HOSE ASSETS AND LIABILITIES WERE SHOWN, WHICH WERE RECOVERABLE AND PAYA BLE RESPECTIVELY BY THE NEW MANAGEMENT AND LOANS AND ADVANCES WHICH ARE N OT RECOVERABLE ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 12 WERE WRITTEN OFF IN THE LINE OF THE SANCTIONED SCHEME . CONSIDERING THESE FACTS, WE FIND MERIT IN THE PLEADINGS OF THE LD AR A ND THEREFORE, WE ALLOW THIS GROUND OF APPEAL. THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITED VS. CIT, RANCHI (SUPRA). 13. GROUND NO. 3 OF THE APPEAL IS AGAINST DISALLOWAN CE OF WRITE OFF OF FIXED ASSETS OF RS. 13,67,295/-. THESE ASSETS WERE F OUND MISSING DURING THE COURSE OF TAKING OVER OF THE OPERATION OF THE C OMPANY BY THE NEW MANAGEMENT AND THE COMPANY HAS WRITTEN OFF THESE ASS ETS. 13.1 THE LD. CIT(A) HAS DEALT THE ISSUE BY HOLDING AS UNDER: THE ASSESSEE WAS ASKED TO GIVE DETAILED BREAKUP OF FIXED ASSETS OF RS. 13,67,295/- WRITTEN OFF. IT WAS ASKED TO INFORM IF ANY ASSETS WERE LOST. IF THERE WAS ANY THEFT WHETHER ANY FIRST INFORMATION REPORT (FIR) WAS LODGED REGARDING THIS BY THE COMPANY AND WHETHER INSURANCE WAS CLAIMED FOR THE LOSS. THE ASSESSEE FILED A REPLY STATING THEREIN TH AT ABOVE COMPANY WAS CLOSED FROM 3 RD JUNE, 98 TO 19 TH JUNE, 2000 AND AN INSURANCE POLICY EXPIRED AND COU LD NOT BE RENEWED DUE TO CLOSURE OF THE COMPANY. NO FI R WAS FILED BY THE NEW MANAGEMENT, IT WAS NOT ASCERTAINABLE AT THE TIME OF TAKING THE POSSESSION BY THE NEW MANAGEMENT WHAT ASSETS WERE MISSING DURING THE CLOSURE PERIOD OF THE COMPANY. WHEN THE BOOKS OF ACCOUNTS OF THE COMPANY WERE FINA LIZED THEN SOME ASSETS WERE NOT FOUND IN THE FACTORY EITHER THEY HAVE BEEN LOSSES, VANISHED/STOLEN. THE FOLLOWING FIXED ASSETS WERE WRITTEN OFF :- FURNITURE AND FIXTURES RS. 914065/- LIGHT VEHICLE RS. 453229/- ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 13 TOTAL RS. 1367294/-'' THE REPLY SUBMITTED BY THE ASSESSEE IS BASELESS, TH E COMPANY HAS NOT FILED ANY FIR OF THE FIXED ASSETS WHICH WERE EITHER STOLEN/LO ST. IN ABSENCE OF THE FIR IT CANNOT BE ASCERTAINED WHETHER THESE FIXED ASSETS WE RE STOLEN OR NOT. THE ASSESSEE HAS ALSO NOT CLAIMED FROM THE INSURANCE CO MPANY. ALL THESE FACTS CLEARLY SHOWS THAT NO FIXED ASSETS WERE EITHER STOL EN/LOST. IN VIEW OF ABOVE THE CLAIM OF THE ASSESSEE FOR WRITE OFF OF ABOVE FIXED ASSETS IS DISALLOWED. THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THE EXT RAORDINARY LOSSES EXCEPT A SUMMARY IN REPLY DATED 27.02.2003. THE FIGURES OF T HE SAME ARE NOT TALLYING WITH AMOUNT SHOWN IN THE P & L ACCOUNT. DUE TO NON- AVAILABILITY OF DETAILS THE CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE AND RS. 1,2 0,80,155/- IS DISALLOWED. SINCE, THIS SUM INCLUDES THE ABOVE DISCUSSED AMOUNT S WRITTEN OFF REGARDING FIXED ASSETS, SUNDRY DEBTORS, LOANS AND ADVANCES ET C. THEREFORE, NO SEPARATE ADDITIONS ARE BEING MADE ON THEIR ACCOUNT. 14. AFTER HEARING BOTH THE SIDES, WE FIND THAT THESE WERE THE ASSETS MISSING AND THE SAME WERE WRITTEN OFF IN THE BOOKS O F ACCOUNT. IN OUR CONSIDERED VIEW, THIS WAS NOT THE PROPER WAY TO DEAL WI TH THESE MISSING ASSETS AS THESE ASSETS WERE ALREADY FORMING PART OF THE BLOCK ASSETS. THERE WAS NO NEED TO WRITING OFF THE SAME IN THE BOOK S OF ACCOUNT AS THESE WERE MERGED IN BLOCK OF ASSETS AND DEPRECIATIO N WAS ALLOWED. SINCE NO DETAILS ARE FILED, HENCE, WE FIND NO MERIT IN THE GROUND. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AN D DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 14 15. THE 4 TH GROUND OF THE APPEAL IS AGAINST CONFIRMING THE DIS ALLOWANCE OF INTEREST AMOUNT OF RS. 35,00,000/-. THIS INTEREST FORMS PART OF TOTAL INTEREST OF RS. 65,00,000/- WHICH HAS BEEN PROVIDED, AS PER THE DIRECTION GIVEN BY THE BIFR IN SCHEME SANCTIONED ON DATED 08/ 5/2000. 15.1 THE LD. CIT(A) HAS DEALT THE ISSUE BY HOLDING AS UNDER: AN AMOUNT OF RS. 95,41,977/- HAS BEEN DEBITED TO P& L ACCOUNT AS PAYMENT OF INTEREST TO FINANCIAL INSTITUTIONS AND BANKS ON BOR ROWED MONEY. THE ASSESSEE WAS ASKED TO FURNISH DETAILS WITH NAME, ADDRESS, AM OUNT AND WHY SHOULD IT NOT BE DISALLOWED U/S 43B AS IT IS PAYMENT OF INTER EST TO FINANCIAL AGENCIES EG. ICICI, IDBI, LIC, SBI ETC.. OUT OF THIS A SUM OF RS . 3041977/- HAS ALREADY BEEN ADDED BACK BY ASSESSEE IN COMPUTATION OF INCOME. AS REGARDS THE INTEREST OF RS. 65,00,000/- BEING INTEREST ON CASH CREDIT LIMIT OF RS. 2 CRORES AS CLAIMED BY THE ASSESSEE AS DEDUCTABLE EXPENDITURE IN P&L ACCOU NT, THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE REPLIED THA T THE INTEREST PAYABLE ON WORKING CAPITAL TO SBBJ WOULD NOT BE COVERED U/S 43 B. BESIDES THIS THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS AND BASIS OF CALCULATION REGARDING THE AMOUNT OF RS. 65 LACS. THE ASSESSEES CONTENTION CA NNOT BE ACCEPTED BECAUSE AS PER BALANCE SHEET CREDIT BALANCE IN CASH CREDIT LIMIT WAS RS. 2 CRORES AND AS PER PREVAILING AVERAGE BANK LENDING RATE @ 15% PER ANNUM THE INTEREST PAYABLE BY THE ASSESSEE COMES TO RS. 30,00,000/-. T HE DIFFERENCE OF RS. 35,00,000/- IS THUS, DISALLOWED AND ADDED TO THE AS SESSEES INCOME. 16. AFTER HEARING OF BOTH THE SIDES AND LOOKING TO THE FACTS OF THE CASE, WE FIND THAT THE ASSESSING OFFICER HAS COMPUTED HYPO THETICAL INTEREST BY ADOPTING 15% RATE OF INTEREST ON AN AMOUNT OF RS. 2 CRORES. FACTUALLY, THE ACTUAL INTEREST PAID ON THE WORKING CAPITAL LOAN FRO M BANK ARE COMPLETELY ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 15 DIFFERENT FROM WHAT THE ASSESSING OFFICER HAS ASSUME D. THE ASSESSEE COMPANY WAS HAVING WORKING CAPITAL OF RS. 5,25,59,463 /- AS AN OPENING BALANCE AND THERE WAS CLOSING BALANCE OF RS. 5,17,52 ,067/-. THUS THE ACTUAL BANK LIMIT REMAINED AROUND RS. 5.25 CRORES D URING THE YEAR. THE INTEREST OF RS. 65.00 LACS HAS BEEN ON THE AMOUNT O F AROUND 5.25 CRORES AND NOT ON RS. 2.00 CRORES AS ASSUMED BY THE ASSESS ING OFFICER. THE ASSESSEE SUBMITTED THE DETAILS OF O.D. ACCOUNT FOR THE RELEVANT PERIOD FROM 01/4/1999 TO 31/3/2000. THE LOAN AS ON 31/3/20 00 FROM THE BANK WAS RS. 2.00 CRORES AS CASH CREDIT, EXPORT BILLS AND PACKING CREDIT RS. 79.52 LACS AND WORKING CAPITAL TERM LOAN RS. 2.38 CR ORES. THE PART OF THE WORKING CAPITAL LOANS WERE CONVERTED DURING THE YEAR AS WORKING CAPITAL TERM LOAN AS PER THE SCHEME OF THE BIFR. THUS THE T OTAL LOAN OUTSTANDING OF BANK TOWARDS THE WORKING CAPITAL WAS RS. 5,17,52,06 7, WHICH IS VERIFIABLE FROM THE BALANCE SHEET AS ON 31/3/2000. FURTHER THE ASSESSEE COMPANY HAS CHARGED INTEREST OF RS. 6.50 LACS ONLY IN THE P&L ACCOUNT, WHICH IS A NET EFFECT OF 90% OF THE INTEREST PAYABLE . AS PER THE SCHEME OF THE BIFR, THE BALANCE AMOUNT HAS BEEN CREDITED TO E XTRA ORDINARY INCOME. KEEPING IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THIS ADDITION AND DIRECT TO DELETE THE SAME. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. IN THE RESULT, THE REVEN UES APPEAL IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 16 17. THE LD AR OF THE ASSESSEE HAS SUBMITTED AN APPLI CATION FOR ADMITTING ADDITIONAL GROUNDS, WHICH IS READ AS UNDER:- 6. THAT THE A.O./CIT(A) HAS ERRED IN LAW AND ON FA CTS, IN NOR REDUCING THE ASSESSABLE INCOME BY RS. 6,04,98,043/-, WHICH I S INCLUDED IN THE PROFIT AND LOSS ACCOUNT AS EXTRAORDINARY INCOME AND THE SAME IS NOT TAXABLE IN VIEW OF THE SCHEME SANCTIONED BY THE BIFR. THE A.O. IS BOUND TO ASSESS THE CORRECT INCOME UNDER TH E LAW. 7. THAT, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE EXTRAORDINARY ITEM OF RS. 6,04,8,043/- HAS BEEN WRO NGLY AND ILLEGALLY INCLUDED IN THE ASSESSABLE INCOME AND THE SAME IS LIABLE TO BE REDUCED FROM THE ASSESSABLE INCOME. THE LD AR PLEADED THAT THE RELEVANT FACTS WITH REGARD TO THESE GROUNDS ARE ON RECORD AND NO NEW FACTS IS REQUIRED TO BE INVESTI GATED AND THESE GROUNDS GO TO THE ROOT OF THE MATTER, THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NTPC 229 ITR 383 (SC) BE ADMITTED. SINCE THIS IS THE FIRST TIME RAISED BEFOR E THE ITAT AND THE ASSESSEES CLAIM NEED TO BE VERIFIED AT THE LEVEL O F THE ASSESSING OFFICER, THEREFORE, IT WAS ALSO PLEADED THAT THE ISSUE RAISED IN THESE GROUNDS MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER. 18. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE OF AD DITIONAL GROUNDS RAISED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC) HAS HELD AS UNDER:- ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 17 UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREO N AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH APPE ALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCOR DANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIV EN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE I S NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE REL EVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM. THERE IS NO REASON T O RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DEC IDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTM ENT HAVE A RIGHT TO FILE AN APPEAL/CROSS-OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERING Q UESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAI SED EARLIER. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES A RISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) IS TOO NAR ROW A VIEW TO TAKE OF THE POWERS OF THE TRIBUNAL. UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALL OW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL I S ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO R EASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASS ESS THE TAX LIABILITY OF AN ASSESSEE. DURING THE ASSESSMENT YEAR 1978-79, THE ASSESSEE HA D DEPOSITED ITS FUNDS WHICH WERE NOT IMMEDIATELY REQUIRED ON SH ORT-TERM DEPOSITS WITH BANKS. INTEREST RECEIVED ON SUCH DEPO SITS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1978- 79 AMOUNTED TO RS. 22,84,994. THIS WAS OFFERED BY THE ASSESSEE FOR ASSESSMENT AND THE ASSESSMENT WAS COMPLETED ON THAT BASIS. BEF ORE THE COMMISSIONER OF INCOME-TAX (APPEALS), A NUMBER OF G ROUNDS WERE TAKEN BY THE ASSESSEE CHALLENGING THE ASSESSMENT. H OWEVER, THE INCLUSION OF THIS AMOUNT OF RS. 22,84,994 WAS NEITH ER CHALLENGED BY THE ASSESSEE NOR CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). FROM THE ORDER OF THE COMMISSIONER OF IN COME-TAX ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 18 (APPEALS), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. THE INCLUSION OF THE SAID AMOUNT OF RS. 22,84,994 WAS N OT OBJECTED TO EVEN IN THE GROUNDS OF APPEAL AS ORIGINALLY FILED B EFORE THE TRIBUNAL. HOWEVER, BY A FORWARDING LETTER DATED JULY 16, 1983, THE FOLLOWING ADDITIONAL GROUNDS WERE SOUGHT TO BE RAISED BY THE ASSESSEE: (1) THAT THE SUM OF RS. 22,84,994 DEDUCTED FROM 'STATEM ENT OF EXPENDITURE DURING CONSTRUCTION' COULD NOT BE INCLU DED IN THE TOTAL INCOME; (2) THAT ON ADMISSION (ERRONEOUS), NO INCOM E (THE SUM OF RS. 22,84,994) COULD BE INCLUDED IN THE TOTAL INCOM E; AND (3) THAT THE AUTHORITIES BELOW HAD ERRED AND FAILED IN THEIR DUTY IN NOT ADJUDICATING THE FACTS AND EVIDENCE ON RECORD AND M ECHANICALLY INCLUDED RS. 22,84,994 IN THE TOTAL INCOME. THE ASS ESSEE CONTENDED THAT IT LEARNT THAT THE INTEREST EARNED B EFORE THE SETTING UP OF BUSINESS WAS NOT TAXABLE AS INCOME AND IT WEN T TO REDUCE THE CAPITAL COST OF THE PLANT AND HENCE INCLUDED THE AB OVE THREE GROUNDS IN ITS GROUNDS OF APPEAL. HOWEVER, THE TRIBU NAL DECLINED TO ENTERTAIN THE THREE ADDITIONAL GROUNDS. THE TRIBUNA L DIRECTLY REFERRED TO THE SUPREME COURT THE QUESTION WHETHER WHERE, ON THE FACTS FOUND BY THE INCOME-TAX AUTHORITIES, A QUESTI ON OF LAW AROSE (ALTHOUGH NOT RAISED BEFORE THE AUTHORITIES) WHICH BORE ON THE TAX LIABILITY OF THE ASSESSEE THE TRIBUNAL HAD JURISDIC TION TO EXAMINE THE SAME: HELD, THAT THE TRIBUNAL HAD JURISDICTION TO EXAMINE A QUESTION OF LAW WHICH AROSE FROM THE FACTS AS FOUND BY THE INCO ME-TAX AUTHORITIES AND HAVING A BEARING ON THE TAX LIABILI TY OF THE ASSESSEE. IN VIEW OF THE BINDING PRECEDENT OF THE HON'BLE SUPR EME COURT IN THE DECISION OF (SUPRA), THE MATTER RAISED IN THE ADDIT IONAL GROUNDS IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED ON MERIT. 19. THE APPEAL REGARDING ADMISSION OF ADDITIONAL GRO UNDS OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ITA 842 & 799/JP/2013_ RAJASTHAN EXPLOSIVES & CHEMICALS LTD. VS JCIT 19 20. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/04/2017. SD/- SD/- DQY HKKJR HKKXPAN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 TH APRIL, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- RAJASTHAN EXPLOSIVES & CHEMICALS LTD. , DHOLPUR, RAJASTHAN. 2. IZR;FKHZ @ THE RESPONDENT- THE JCIT, RANGE- BHARATPUR/ACIT, CIRCL E, BHARATPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 842 & 799/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR