DCIT, New Delhi V. M/s Orient Abrasives Ltd., New Delhi

ITA 85/DEL/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5668 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-03-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K TIWARI
• Keywords: Business income; Depreciation; Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.85/DEL/2010 ASSESSMENT YEAR : 2007-08 DY.COMMISSIONER OF INCOME TAX, CIRCLE-13(1), NEW DELHI. VS. M/S ORIENT ABRASIVES LIMITED, 1307, CHIRANJIV TOWER, 43, NEHRU PLACE, NEW DELHI 110 019. PAN NO.AAACO0221C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K.TIWARI, CIT-DR. RESPONDENT BY : SHRI SALIL AGGARWAL, ADVOCATE. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 1.10.2009 FOR THE AY 2007-08, IN THE MATTER OF ORDE R PASSED U/S 143(3) OF THE IT ACT. 2. FOLLOWING FOUR GROUNDS HAVE BEEN TAKEN BY THE RE VENUE :- 1. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS AN D CIRCUMSTANCES OF THE CASE IN GRANTING THE DEDUCTION OF RS.4,69,94,249/- CLAIMED BY THE ASSESSEE U/S 80IA, OF THE INCOME TAX ACT, 1961 DISALLOWED BY THE ASSESSING OFFICER. 2. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ALLOWING DEPRECIATION ON THE ASSETS OF POWER DIVISION AS PER THE SPECIAL RATES APPLICABLE FOR POWER GENERATING UNITS AS PER INCOME TAX ACT, 1961. 3. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ALLOWING DEPRECIATION @ 100% ON DUST COLLECTOR FOR THE ABRASSIVE GRAIN DIVISION I NSTEAD OF 25% ALLOWED BY ASSESSING OFFICER. ITA-85/DEL/2010 2 4. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.2,89,417/- MADE BY ASSESSING OFFICER ON ACCOUNT OF SURRENDER V ALUE OF KEYMAN INSURANCE POLICY. 3. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE O RDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2004-05 DATED 30.8.2009 AND ORDER FOR AY 2002-03, 2005-06 & 2006-07, DATED 30.11.2009, WHEREIN EXACTL Y SIMILAR ISSUE WAS CONSIDERED BY THE TRIBUNAL AND DECIDED IN FAVOUR OF THE ASSESSEE. COPIES OF THESE ORDERS WERE ALSO HANDED OVER TO THE LEARNED DR TO F ILE HIS OBJECTION IF ANY WITH REGARD TO ASSESSEES CONTENTION. 4. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL I N ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS AND FOUND THAT ISSUE W ITH REGARD TO DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IA IS COVERED BY THE ORDER OF THE TRIBUNAL DATED 13.8.2009 VIDE PAGE 6 PARA 2.4 WHICH READS AS UNDER :- 2.4 WE HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BEFORE US. WE FIND THAT BOTH T HE ISSUES STAND COVERED BY THE ORDER OF THE TRIBUNAL IN THE CAS E OF WEST COAST PAPER MILLS LTD. (SUPRA), IN WHICH IT WAS HELD THAT -(I) THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80-IA IN RESPECT OF POWER GENERATED BY IT FOR CAPTIVE CONSUMPTION BY THE OT HER UNIT; AND (II) THE CIT(APPEALS) HAD CORRECTLY ARRIVED AT TRANSFER PRICE ON THE BASIS OF AVERAGE PRICE PAID BY THE ASSESSEE DURING THE WHOLE YEAR TO KARNATAKA STATE ELECTRICITY BOARD MINU S CERTAIN EXTRANEOUS CHARGES SUCH AS ELECTRICITY DUTY ETC., WHICH WAS NOT CONNECTED WITH THE BUSINESS OF THE ASSESS EE. IT MAY BE MENTIONED THAT THE LEARNED CIT(APPEALS) HAD D IRECTED THE AO TO ALLOCATE INDIRECT EXPENSES ON A PRO-RATA BASIS FOR THE PURPOSE OF COMPUTATION OF PROFITS OF THE POWER GENER ATING UNIT. THIS FINDING WAS ALSO UPHELD IN THAT ORDER. THE OPERATIVE PORTION IS CONTAINED IN PARAGRAPHS 9 AND 10 ON PAGES 266 TO 269, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE:- WE HAVE CAREFULLY CONSIDERED THE RIVAL SUB MISSIONS AND HAVE GONE THROUGH RECORDS, INCLUDING THE VOLUMINOUS P APER BOOK FILED BY THE ASSESSEE. THE ASSESSEE ALTHOUGH ENGA GED IN THE MANUFACTURE AND SALE OF PAPER AND PAPERBOARDS, MULTI-LAYER BOARDS, ETC. WAS ALSO INTO THE BUSINESS OF PO WER GENERATION RIGHT FROM THE ASSESSMENT YEAR 1996-97. THE FINDINGS IN ITA-85/DEL/2010 3 IMPUGNED ORDER ARE CLEARLY UNASSAILABLE. THE ASSESSEE HAS FROM TIME TO TIME RIGHT FROM THE ASSESSMENT YEAR 1996-97 SET UP FOUR SUCH UNITS TO FACILITATE ITS POWER REQ UIREMENT IN THE PAPER PLANT AT DANDELI IN KARNATAKA STATE. THE AS SESSEE AS THE RECORDS SHOW, MADE SUBSTANTIAL CAPITAL OUTLA YS FOR THIS PURPOSE. THIS ONLY CONFIRMS THAT THE ASSESSEE WAS I N THE BUSINESS OF GENERATION OF POWER. NOW THE QUESTION IS WHET HER THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT COULD BE DENIED MERELY ON THE GROUND THAT THESE DG UNITS WERE CATERING TO THE CAPTIVE POWER REQUIREMENT . AS THE ASSESSING OFFICER PUTS IT, IF THE ASSESSEE HA S NOT REALIZED ANY REVENUE BY SELLING THE POWER TO OUTSIDERS, CAN THE ASSESSEE BE HELD TO BE ENTITLED TO DEDUCTION UNDER SECTION 80-IA OF THE ACT? THE ASSESSING OFFICER WAS OF THE VIEW THA T IT IS ONLY AN INTER-DIVISION TRANSFER AND THERE WAS NO REV ENUE REALIZED BY IT AND CONSEQUENTLY THERE WAS NO DERIVATION OF PROFIT OR INCOME IN THE BUSINESS OF INDUSTRIAL UNDERTAKING. THE QUESTIONS RAISED BY THE ASSESSING OFFICER HAVE ALL BEEN ANSWERED BY THE SUPREME COURT IN THE CASE OF ORIENT PAPER MILLS LTD. [1989] 176 ITR 110. THIS DECISION OF THE SUPREME COURT DOES NOT BRING OUT THE FACTS. IT HAS ONLY AFFIRMED THE DECISION OF THE CALCUTTA HIGH COURT IN CIT VS. ORIENT PAPER MILLS LTD. [1974] 94 ITR 73. THE FACTS COULD ONLY BE FOUND IN THIS JU DGMENT OF THE CALCUTTA HIGH COURT. THE ASSESSEE IN THAT C ASE OWNED A PAPER BILL. IT SET UP A PLANT FOR THE MA NUFACTURE OF CAUSTIC SODA AN ESSENTIAL CHEMICAL FOR USE IN THE PRO CESS OF MANUFACTURE OF PAPER. THE ASSESSEE OBTAINED A SEPARATE LICENCE FOR THE MANUFACTURE OF CAUSTIC SODA AND THE PLANT WA S HOUSED IN A SEPARATE BUILDING. THE INCOME-TAX OFFICER IN THA T CASE HELD THAT THE CAUSTIC SODA PLANT WAS ANCILLARY TO TH E MAIN MANUFACTURING UNIT AND NO PART OF CAUSTIC SO DA WAS SOLD TO ANY OUTSIDER AND, THEREFORE, NO RELIEF CO ULD BE CLAIMED BY THE ASSESSEE UNDER SECTION 15C OF THE 1 922 ACT. THE MATERIAL PRODUCED IN THE PLANT WAS USED FOR CAPTIVE CONSUMPTION. BEFORE THE TRIBUNAL IT WAS CONTEND ED BY THE REVENUE THAT THE LANGUAGE USED IN SECTION 15C WAS PROFIT AND GAIN DERIVED FROM AN INDUSTRIAL UNDERTAKIN G. UNLESS THE PROFITS AROSE BY THE SALE OF THE PRODUCT OF TH E NEW PLANT, NO PROFIT COULD BE SAID TO HAVE BEEN DERIVED. THE ARGUMENT WAS THAT PROFIT SHOULD BE DIRECTLY DERIVED AND N OT INDIRECTLY OR DEEMED TO BE DERIVED. THE TRIBUNAL DID NOT ACCEPT THESE SUBMISSIONS OF THE REVENUE AND PROCEEDED TO GRA NT THE RELIEF. THE HONBLE CALCUTTA HIGH COURT CONFIRMED THE O RDER OF THE TRIBUNAL AND THE APEX COURT HAS DISMISSED THE AP PEAL OF THE REVENUE BY TAKING SUPPORT FROM ITS OWN DECIS IONS IN TEXTILE MACHINERY CORPORATION LTD. VS. CIT [1977] 107 IT R 195 AND ITA-85/DEL/2010 4 CIT VS. INDIAN ALUMINIUM CO. LTD. [1977] 108 ITR 367. THEREFORE, THE STAND OF THE ASSESSING OFFICER CANNOT BE ACCEPTED. AGAIN THE CALCUTTA HIGH COURT WAS FAC ED WITH THE SAME SET OF FACTS IN THE CASE OF CIT VS. HINDUSTAN MOTORS LTD. [1981] 127 ITR 210. THE ASSESSEE IN THAT CASE W AS ENGAGED IN THE MANUFACTURE OF MOTOR CARS. IT ESTABLISHED C ERTAIN ANCILLARY UNITS. THE ASSESSING OFFICER REPEATED HIS FINDI NGS ON THE SAME LINE AS HE DID IN THE CASE OF ORIENT PAPER MI LLS LTD. [1974] 94 ITR 73 (CAL.) AND DENIED THE RELIEF UNDER SECTION 80E OF THE 1961 ACT. THE CALCUTTA HIGH COURT HELD THAT T HE ASSESSEE WAS ENTITLED TO SUCH RELIEF IRRESPECTIVE OF WHETHE R THE ANCILLARIES MANUFACTURED WERE SOLD BY THE ASSESSEE TO OUTS IDERS OR WERE USED BY IT FOR ITS OWN MANUFACTURE OF CARS. SI MILARLY, THE BOMBAY HIGH COURT IN CIT VS. SAHNEY STEEL AND PRESS WORKS P. LTD. [1989] 177 ITR 354, THE ASSESSING OFFI CER DENIED SIMILAR CLAIM UNDER SECTION 80J OF THE ACT ON THE GROUN D THAT THE NEW UNIT WAS MANUFACTURING ARTICLES TO BE USED AS RAW MATERIAL FOR THE EXISTING BUSINESS OF THE ASSESSEE. THE BOMBAY HIGH COURT HELD THAT THE FACT THAT THE NEW UNIT MANUFACTURED ARTICLES USED IN THE EXISTING BUSINESS OF THE ASSESSEE WAS NOT RELEVANT AND THE ASSESSEE WAS HELD TO BE ENTITL ED FOR RELIEF UNDER SECTION 80J OF THE ACT. IN THE LIGHT O THESE DECISIONS, WE ARE OF THE OPINION THAT THE CLAIM OF THE ASSESSEE CA NNOT BE DENIED ONLY ON THE GROUND THAT THE DG SETS MANUFACTURED TH E POWER ONLY FOR THE CAPTIVE CONSUMPTION OF THE ASSESSEE. IT M AY BE STATED THAT THE TRIBUNAL IN THE ASSESSMENT YEARS 1997-98 A ND 1998-99 HAS ALREADY GRANTED RELIEF IN RESPECT OF UNIT NOS. I AND II WHICH WERE ESTABLISHED FOR THE PURPOSE OF CAPTIVE CONSUMPTIO N. MOREOVER, THE PROVISION OF SECTION 80-IA(8) ITSELF SAYS THAT WHERE ANY GOODS OF SERVICE OF THE ELIGIBLE BUSINESS A RE TRANSFERRED TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE AND THE CONSIDERATION, IF ANY FOR SUCH TRANSFER IS RECORDED IN THE ACCOUNTS OF THE ELIGIBLE BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS OR SERVICES AS ON THE DATE OF TR ANSFER, THEN FOR THE PURPOSE OF DEDUCTION UNDER THAT SECTION, TH E PROFIT AND GAINS FOR SUCH TRANSFERRED BUSINESS SHALL BE COMPUT ED AS IF THE TRANSFER HAS BEEN MADE AT MARKET VALUE AS ON THAT DATE. IN OTHER WORDS, THE PROVISIONS OF SECTION 80-IA THEMSELVES PROVIDE AN ANSWER AND GIVE A SOLUTION WHERE THERE IS A CAPTIVE CONSUMPTION OF THE FINISHED GOODS OF THE ELIGIBLE UNITS. IN THE LIGHT OF THESE DISCUSSION THE ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS) GRANTING 80-IA RELIEF IN RESPECT OF DG UNITS I, II, III AND IV CANNOT BE FOUND FAULT WITH. THE OTHER CONSIDERATION THAT THE ASSESSEE HAS NOT OPERATED THESE UNITS BY ITSELF BUT GOT THEM OPERATED THROUGH OUTSIDER S AND, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR SECTION 8 0-IA RELIEF IN OUR ITA-85/DEL/2010 5 VIEW, IS NOT A RIGHT APPROACH. SUCH CONSIDERA TION, IN OUR OPINION, IS NOT RELEVANT CONSIDERATION. KEEPI NG IN VIEW THE PURPOSE AND INTENT OF RELIEF UNDER SECTION 8 0-IA, SUCH CONSIDERATION, IN OUR OPINION, IS NOT GERMANE FROM THE PROVISION OF SECTION 80-IAOF THE ACT. THAT LEAVES US WITH THE ISSUE RELATING TO THE RATE TO BE ADOPTED FOR THE UNIT OF POWER GENERATED AND SUPPL IED TO THE PAPER DIVISION, WHICH WOULD IMPACT THE PROFIT TO BE DETERMINED FOR THE PURPOSE OF SECTION 80-IA OF THE ACT. THE ASSESSEE ADOPTED THE RATE AT WHICH THE KSEB SUPPLIED POWE R TO INDUSTRIAL USER WHICH THE ASSESSING OFFICER CONSIDERED TO B E PURELY A NOTIONAL RATE AND HAS NO SEMBLANCE OF REALITY. THESE RATES, ACCORDING TO THE ASSESSING OFFICER, WERE UNREA LISTIC AS KSEB IS NOT EXPECTED TO PURCHASE POWER FROM THE A SSESSEE AND IT IS ALSO UNREALISTIC TO EXPECT KSEB TO PURCHASE POWER FROM THE ASSESSEE AT A FUTURE DATE AT THE SAME RATE O N WHICH IT SUPPLIES POWER TO THE OTHER INDUSTRIAL USERS AND IT IS ALSO NOT THE FACT THAT THE ASSESSEE HAS SOLD ANY POWER TO THE KSEB IN ANY FUTURE YEAR. THE CIT(APPEALS) ASKED THE ASSES SEE TO SUBMIT AN ALTERNATIVE CALCULATION BASED ON THE AVERAGE A CTUAL PER UNIT COST OF POWER PURCHASED FROM THE KSEB BY THE PAPER DIVISION. ACCORDING TO THIS CALCULATION, THE AVERAGE PRICE FOR THE UNIT OF POWER CONSUMED WORKED OUT TO RS. 4.74 PER UNI T. THE ASSESSEE AS ASKED TO FURNISH COPIES OF ELECTRICITY BIL LS RECEIVED FOR ONE MONTH ON A SAMPLE BASIS. ON AN EXAMINATION OF THE BILLS, THE COMMISSIONER OF INCOME-TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ELECTRICITY BILLS ON WHIC H THE ASSESSEE HAS BASED ITS WORKING OF THE TRANSFER PRICE AND RECALCULATE THE PRICE TO BE ADOPTED AFTER EXCLUDING THE ELE MENTS OF TAX OR LEVY WHICH MAY FORM PART OF THE TOTAL AMOUNT BI LLED. AFTER EXCLUDING SUCH AMOUNT, THE PRICE PER UNIT OF PO WER WOULD BE DETERMINED WHICH WOULD BE ADOPTED AS THE TRAN SFER PRICE OF THE POWER GENERATED BY THE ASSESSEE. THE OTHER IM PORTANT ISSUE WHICH THE COMMISSIONER OF INCOME-TAX (APPEALS ) FOUND THAT IN THE PROFIT AND LOSS ACCOUNT OF THE INDUSTRIAL UNDERTAKING THERE IS NO MENTION ABOUT INDIRECT COSTS SUCH AS MANAG ERIAL REMUNERATION, ADMINISTRATIVE OVERHEADS, ETC., WHICH ALSO NEEDS TO BE CONSIDERED FOR THE PURPOSE OF ARRIV ING AT THE PROFIT OF THE ELIGIBLE UNIT. ON THESE FINDINGS, BOTH THE ASSESSEE AND THE REVENUE ARE AGGRIEVED. THE GRIEVANCE OF THE REVE NUE IS THAT THE DEDUCTION UNDER SECTION 80-IA SHOULD NOT BE ON THE AVERAGE RATE OF ACTUAL CONSUMPTION OF THE ELECTRICI TY FROM THE KSEB WHEN THE ASSESSEE ITSELF HAS SOLD ELECTRICITY TO THE TNSEB AT THE RATE OF RS. 2.62 PER UNIT. THE ASSESSEE S GRIEVANCE IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN ITA-85/DEL/2010 6 HOLDING THAT THE ELEMENT OF TAX SHOULD NOT BE INCLUDED IN THE COMPUTATION OF TRANSFER PRICE AND HE ALSO E RRED, ACCORDING TO THE ASSESSEE IN DIRECTING TO GIVE A PRO-RATA ALLOCATION OF INDIRECT EXPENSES OF THE COMPANY FOR THE PURPOSE OF COMPUTATION OF THE PROFIT OF THE POWER GENERATING UNITS. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES ON THIS ISSUE AND ARE UNABLE TO FIND ANY MERIT IN THEM. THE ASSESSING OFFICERS A DOPTION OF THE RATE AT WHICH IT SOLD THE POWER TO TNSEB CANNOT BE ACCEPTED SINCE THE UNITS THEMSELVES ARE WORKING AT DANDELI IN THE STATE OF KARNATAKA AND THE COST OF GENERATION OF POWER IN TAMIL NADU AND KARNATAKA IS DIFFERENT. APART FROM THAT, THE ASSESSEE HAS PAID TO THE KSEB FOR PURCHASE OF THE POWER AND TH E COMMISSIONER OF INCOME-TAX (APPEALS) HAS CORRECTLY COME TO A REASONABLE CONCLUSION THAT THE TRANSFER PRICE SHOULD BE ON THE BASIS OF AVERAGE PRICE PAID BY THE ASSESSEE DURING T HE WHOLE YEAR TO THE KSEB MINUS CERTAIN EXTRANEOUS CHARGES SUCH AS ELECTRICITY DUTY, ETC., WHICH IS NOT CONNECTED WITH THE BUSINESS OF THE ASSESSEE. THEREFORE, THE COMMISSIONER OF INC OME-TAX (APPEALS) HAS CORRECTLY AND REASONABLY DIRECTE D THE ALLOCATION OF THE INDIRECT EXPENSES FOR THE PURPOSE OF ARRI VING AT THE INCOME OF THE ELIGIBLE UNIT AND WE DECLINE TO DISTURB SUCH DIRECTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS). ACCORDINGL Y, THE GROUNDS RAISED BOTH BY THE ASSESSEE AND THE REVENUE S HOULD BE TAKEN TO HAVE BEEN REJECTED. THE CASE OF THE LD. COUNSEL WAS THAT ALL INDI RECT EXPENSES EXCEPT THE SALARY OF MANAGING DIRECTOR HAD BEEN CONSIDERED. THAT, ACCORDING TO US, IS A MATTER OF DETAIL S TO BE WORKED OUT BY THE AO. THUS, IT IS HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80-IA AND THE TRANSFER PRICE HAS TO BE WORKED OUT ON THE BASIS OF DIRECTIONS GIVEN BY THE TRIBUNAL IN THE CASE OF WEST COAST PAPER MILLS LTD. (SUPRA). THE AO IS DIRECTED TO COMPUTE THE TRANSFER PRICE ACCORDINGLY AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. T HUS, WHILE GROUND NOS. 1 AND 2 ARE DISMISSED, GROUND NO. 3 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO.2 WITH REGARD TO ALLOWING CLAIM OF DEP RECIATION ON ASSETS OF POWER DIVISION AS PER THE SPECIAL RATES APPLICABLE FOR POWER GENERATING UNITS, IS DEALT BY THE TRIBUNAL AT PAGE 7 PARA 3 WHICH READS AS UNDER:- 3. GROUND NO. 4 IS AGAINST THE DEDUCTION OF D EPRECIATION ON POWER DIVISION AS PER SPECIAL RATES APPLICAB LE TO POWER GENERATING UNITS, MENTIONED IN THE INCOME-TAX RU LES, 1962. NO ERROR COULD BE INDICATED BY THE LEARNED DR IN THIS REGARD IN THE ITA-85/DEL/2010 7 ORDER OF THE LEARNED CIT(APPEALS). THE POWER GENERATING UNIT HAS BEEN CONSIDERED AS A SEPARATE UNIT FOR THE PURPOSE OF WORKING OUT ITS PROFITS. THEREFORE, SPECIAL RATE APPLICABLE TO POWER GENERATING UNITS WILL BE APPLICABLE TO I T. THUS, THIS GROUND IS ALSO DISMISSED. 6. WITH REGARD TO GROUND TAKEN FOR ALLOWING DEPRECI ATION AT 100% ON DUST COLLECTOR FOR THE ABRASIVE GRAIN DIVISION, THE ISSU E HAS BEEN DEALT BY THE TRIBUNAL IN ITS ORDER DATED 20.11.2009 AT PAGE 14, PARA 17 WHIC H READS AS UNDER:- 17. ON MERIT OF ALLOWABILITY OF DEPRECIATION @ 100 % ON DUST COLLECTOR, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A SPECIFIC FINDING ON PAGE 3 OF HIS ORDER THAT VARIOU S EVIDENCES FURNISHED BEFORE HIM GOES TO PROVE THAT THE SAID EQ UIPMENTS INSTALLED ARE AIR POLLUTION CONTROL EQUIPMENT AND THE SAME HA VE BEEN INSTALLED WITH THE INTENTION TO CONFORM TO REQUIREMENTS OF GU JARAT POLLUTION CONTROL BOARD AND THE LD.DR OF THE REVENUE COULD NO T POINT OUT ANY SPECIFIC DEFECT IN THIS FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND HENCE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE IN BOTH THE YEARS. GROUND NO.5 OF THE REVENUE IS ALSO REJECTED IN BOTH THE YEARS. 7. THE GROUND WITH REGARD TO DELETION OF ADDITION M ADE BY THE AO ON ACCOUNT OF SURRENDER VALUE OF KEYMAN INSURANCE POLICY HAS B EEN DEALT BY THE TRIBUNAL IN ITS ORDER DATED 13.8.2009 AT PAGES 8 & 9 PARA 4.3 WHICH READS AS UNDER:- 4.3 WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. WE FIND THAT AS PER PROVISIONS CON TAINED IN SECTION 145, THE INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION HAS TO BE COMPUTED IN ACCORDANC E WITH SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE, WHICH IS ME RCANTILE IN THIS CASE. THE ASSESSEE HAD ACCOUNTED FOR THE RECEIPTS OF INSURANCE POLICIES ON ACCRUAL BASIS. HOWEVER, AT THE TIME OF FILING THE RETURN ADJUSTMENTS WERE MADE TO DECLARE THE INCOME FROM THIS SOURCE ON RECEIPT BASIS. THERE COULD BE A VIEW THAT THE WORDS ANY SUM RECEIVED USED IN SECTI ON 28(VI) HAVE TO BE READ IN THE CONTEXT OF SYSTEM OF ACCOUNT ING EMPLOYED BY THE ASSESSEE, WHICH IS MERCANTILE IN THIS CASE. HOWEVER, WE FIND THAT THE LEGISLATURE HAS USED THE WORDS ANY SUM, WHETHER RECEIVED OR RECEIVABLE, IN CASH OR KIND IN SECTION 28(VA) AS DISTINGUISHED FROM THE WORDS ANY SUM RECEIVE D USED IN ITA-85/DEL/2010 8 SECTION 28(VI). THEREFORE, IT COULD POSSIBLY BE ARGUED ON THE SIDE OF THE ASSESSEE THAT IN RESPECT OF ITEM S, WHICH ARE DEEMED TO BE BUSINESS INCOME U/S 28, THE ACTUAL LA NGUAGE OF THE PROVISION SHOULD BE TAKEN INTO ACCOUNT. THIS WOULD SUPPORT THE CASE OF THE ASSESSEE. IN VIEW OF THE AFORESAID , IT IS CLEAR THAT TWO VIEWS MAY BE POSSIBLE IN THIS MATTER. THEREFORE , WE CHOOSE TO FOLLOW THE INTERPRETATION WHICH IS IN FAVOUR OF THE ASSESSEE. IT IS THE CLAIM OF THE ASSESSEE THAT THIS AMOUNT OF RS. 15,75,739/- HAS BEEN INCLUDED IN THE INCOME FOR ASSESSMEN T YEAR 2005-06. THE DETAILS OF THE AMOUNT OF RS. 68,61,000/- O FFERED FOR TAXATION IN THAT YEAR ARE NOT AVAILABLE. THEREFORE, TH E AO IS DIRECTED TO VERIFY WHETHER THIS SUM HAS BEEN OFFERED FOR TAXATION IN ASSESSMENT YEAR 2005-06 AND IF YES, THIS AMOU NT MAY BE DEDUCTED IN COMPUTATION OF TOTAL INCOME. 8. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE IN PARI-MATERIA, RESPECTFULLY FOLLOWING THE ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF THE CIT(A) ON ALL THE FOUR GROUNDS STRICTLY IN TERMS OF ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE DATED 30.8.2009 AND 30.11.2009. THE DIRECTIONS ISSUED BY THE TRIBUNAL WITH REGARD TO TAXABILITY OF SURRENDER VALUE OF KEYMAN POLICY IS TO BE FOLLOWED AS GIVEN IN PARA 4.3 AT PAGES 8 & 9 OF ORDER DATED 13.8.2009. WE DIRECT ACCORDINGL Y. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH, 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08.03.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-85/DEL/2010 9