ITO WD 19(3)(4), MUMBAI V. SHANKAR KRISHNA BHANAGE, MUMBAI

ITA 8568/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9176 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.8568/MUM/2011(A.Y. 2008-09) THE ITO, WARD 19(3)(4), 3 RD FLOOR, PIRAMAL CHAMBERS, R.NO.304, LALBAUG, MUMBAI - 12. (APPELLANT) VS. SHRI SHANKAR KRISHNA BHANGE, 6, BELLEVUE APARTMENT, 115, DR.AMBEDKAR ROAD, PALI NAKA. BANDRA (W), MUMBAI 400 050. PAN: AAIPB 8595 (RESPONDENT) APPELLANT BY : SHRI V.KRISHNAMOORTHY RESPONDENT BY : SHRI ASHOK PATIL. DATE OF HEARING : 05/12/2012 DATE OF PRONOUNCEMENT : 07/12/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-30, MUMBAI DATED 10/10/2011 FOR THE A SSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE CLAIM U/S 801B(11A) OF RS. 41,52,579/- BY FOLLOWING THE DECISION IN THE ASSESSEES OWN CASE F OR A.Y. 2005-06 TO 2007-08 IGNORING THE FACT THAT: A) THE ASSESSEE HAS NEVER PROVIDED ANY EVIDENCES TO ESTABLISH THAT HE IS INVOLVED IN THE STORAGE OF FOOD GRAINS. B) THE TENDER DOCUMENT NOWHERE SAYS THAT THE TASK O F STORAGE IS INHERENT AND THE STATEMENT OF THE ASSESSEE TO THAT EFFECT IS CLE ARLY AN AFTER THOUGHT . ITA NO.8568/MUM/2011(A.Y. 2008-09) 2 C) THE CERTIFICATE GIVEN BY THE ECI REGARDING THE A CTIVITIES OF THE ASSESSEE BEING INTEGRATED ACTIVITIES OF HANDLING, TRANSPORTATION A ND STORAGE OF FOOD GRAINS HAS NO EVIDENTIARY VALUE UNLESS THE ASS ESSEE ESTABLISHED THROUGH EVIDENCES THAT HE IS ENTITLED FOR THE SAID DEDUCTIO N U/S. 801B(11A) OF THE I T ACT. D) THE DEPARTMENT HAD NOT ACCEPTED THE DECISION OF THE ID. CIT(A) IN THE ASSESSEES OWN CASE FOR A.Y. 2005-06 TO 2007-08 AND APPEAL TO ITAT HAS BEEN FILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE AT RS.1,9 2,780/ BEING @ 5% OF CASH EXPENSES AS AGAINST OF RS.5,00,000/- DISALLOWED BY A.O, IGNORING THE FACT THAT THE ASSESSE HAS FAILED TO ESTABLISH THAT THE SAID E XPENSES WERE INCURRED WHOLLY AND EXCLUSIVE FOR THE PURPOSE OF BUSINESS BY SUBMITTING THE SUPPORTING DOCUMENTARY EVIDENCES DURING THE COURSE OF ASSESSME NT PROCEEDINGS. 3. PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET SIDE AND THAT OF THE AO BE RESTORED. 2. AT THE OUTSET IT WAS SUBMITTED BY LD. A.R THAT G ROUND NO.1 IS COVERED IN FAVOUR OF REVENUE BY THE ORDER OF THE TRIBUNAL DATE D 5/9/2012 IN ITA NOS. 3216 & 3217/MUM/2010 FOR ASSESSMENT YEARS 2005-06 AND 2006 -07. HE HAS PLACED BEFORE US A COPY THE ORDER AND COPY OF THE SAME HAS ALSO GIVEN TO LD. D.R. THE ISSUE WAS DECIDED AGAINST THE ASSESSEE WITH THE FOL LOWING OBSERVATIONS: 13. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED THE ORDERS OF LOWER AUTHORITIES. THE WHOLE DISPUTE REVOLVES A ROUND THE CLAIM OF THE ASSESSEE U/S. 80IB(11A) OF THE ACT. LET US FIRST E XAMINE THE PROVISIONS OF SEC. 80IB(11A) OF THE ACT. SEC. 80IB (11A) THE AMOUNT OF DEDUCTION IN A CASE OF AN UNDERTAKING DERIVING PROFIT FROM THE BUSINESS OF PROCESSING, PR ESERVATION AND PACKAGING OF FRUITS OR VEGETABLES OR MEAT AND MEAT PRODUCTS OR POULTRY OR MARINE OR DAIRY PRODUCTS OR] FROM] THE INTEGRATED B USINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOODGRAINS, SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH UNDERTAKING FOR FIVE ASSESSMENT YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AN D THEREAFTER, TWENTY- FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSE E IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM THE OPERATION OF SUC H BUSINESS IN A MANNER THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS AND SUBJECT TO FULFILMENT OF THE C ONDITION THAT IT BEGINS TO OPERATE SUCH BUSINESS ON OR AFTER THE 1ST DAY OF APRIL, 2001 :] ITA NO.8568/MUM/2011(A.Y. 2008-09) 3 [ PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO AN UNDERTAKING ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF MEAT OR MEAT PRODUCTS OR POULTRY OR MA RINE OR DAIRY PRODUCTS IF IT BEGINS TO OPERATE SUCH BUSINESS BEFO RE THE 1ST DAY OF APRIL, 2009.] 14. A PLAIN READING OF THE AFOREMENTIONED PROVISION S SHOW THAT THE DEDUCTION IS AVAILABLE TO AN UNDERTAKING DERIVING P ROFIT FROM THREE BUSINESS ACTIVITIES. WE ARE NOT CONCERNED WITH THE FIRST TW O BUSINESS ACTIVITIES. WE ARE CONCERNED WITH THE THIRD BUSINESS ACTIVITY. FOR OU R CONVENIENCE, LET US REFRAME THE PROVISION WHICH IS AS UNDER: THE AMOUNT OF DEDUCTION IN A CASE OF AN UNDERTAKI NG DERIVING PROFIT FROM THE INTEGRATED BUSINESS OF HANDLING, STORAGE A ND TRANSPORTATION OF FOOD GRAINS SHALL BE .. THREE CONDITIONS HAVE TO BE FULFILLED AS IT APPEAR S FROM A PLAIN READING OF THE AFORESAID PROVISION. FIRST HANDLING, SECOND STORAGE AND THIRD TRANSPORTATION OF FOOD GRAINS. ALL THE THREE CONDITIONS SHOULD BE IN TEGRATED WITH EACH OTHER. THE DISPUTE IN THE PRESENT CASE RELATES TO THE SECOND C ONDITION I.E. STORAGE. LET US NOW SEE HOW IMPORTANT IS THIS CONDITION. THE MEMOR ANDUM APPENDED TO THE FINANCIAL BILL BY WHICH SEC. 80IB(11A) WAS AMENDED SHOW THE LEGISLATIVE INTENT IS AS UNDER: TAX HOLIDAY FOR UNDERTAKINGS ENGAGED IN THE INTEGRA TED HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. UNDER THE EXISTING PROVISIONS OF SEC. 80-IB OF THE INCOME-TAX ACT, A DEDUCTION IS ALLOWED, IN COMPUTING THE TAXABLE INCO ME, IN RESPECT OF PROFITS DERIVED FROM A NEW INDUSTRIAL UNDERTAKIN G OR A SHIP OR THE BUSINESS OF A HOTEL. TO ADDRESS THE COUNTRYS BASIC CONCERNS RELATING TO ENHANCED FOOD SECURITY AND AGRICULTURAL DEVELOPMENT, UPGRADATION AND MODERNIZATION OF INFRASTRUCTURE FOR STORAGE, HANDLING AND TRANSPORTATION OF FOOD GRAINS IS A CEN TRAL CONCERN IN WHICH INTRODUCTION OF MODERN TECHNOLOGY WOULD BRING GREATER EFFICIENCY IN THE GRAIN MANAGEMENT SYSTEM AND MINIM IZE POST HARVEST FOOD GRAIN LOSSES. THE BILL PROPOSES TO ENCOURAGE BUILDING OF STORAGE CAPACITIES, BY PROVIDING THAT ANY UNDERTAKING ENGAGED IN INTEGRATE D BULK HANDLING, STORAGE AND TRANSPORTATION WOULD BE ALLOW ED HUNDRED PER CENT DEDUCTION FOR THE FIRST FIVE YEARS AND THI RTY PER CENT DEDUCTION FOR THE NEXT FIVE YEARS. POLICY AND ITS IMPLEMENTATION :- THE ENTIRE SCHEME COVERED BY SEC. 80-IB(11A) RELATES TO SERVICES IN CONNECTION WITH P RESERVATION OF FOOD GRAINS PROMOTED BY THE GOVERNMENT OF INDIA UND ER TFC- 14/99-VOLUME III, DT. 4 TH JULY, 2000 FOLLOWING THE NATIONAL POLICY IN RESPECT OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. IT RELATES TO BOTH CONSTRUCTION CONTRACT AND THE PRESE RVATION CONTRACTS ITA NO.8568/MUM/2011(A.Y. 2008-09) 4 ARISING OUT OF A SCHEME SPONSORED BY THE GOVERNMENT OF INDIA ADMINISTERED BY AN AGENCY OF THE STATE GOVERNMENT. IT IS PART OF THE CENTRAL SCHEME UNDER THE IMPLEMENTATION OF FOOD CORPORATION OF INDIA IN PURSUANCE OF THE NATIONAL POLICY FOR HA NDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. SECTION 80-IB(11A) TARGETS FOR RELIEF FOR THE BUSIN ESS OF PROCESSING PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLES AS NEWLY ADDED FROM A.Y. 2005-06, WHILE THE RELIEF HAS BEEN AVAILABLE W.E.F. 1.4.2002 FOR ALL UNDERTAKINGS, WHICH HAVE BEGUN TO OPERATE ON OR AFTER 1 ST APRIL, 2001 FOR ANY INCOME FROM THE INTEGRATED BU SINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GR AINS USING THE VERY LANGUAGE OF THE POLICY. BOTH THE CONSTRUCTION AS WELL AS THE PRESERVATION C ONTRACT ARE SUBJECT TO AN AGREEMENT WITH CENTRAL OR STATE WAREH OUSING CORPORATION IN PURSUANCE OF THE POLICY AND THE OTHE R PAPERS ISSUED FROM TIME TO TIME BY THE GOVERNMENT. 15. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS NEITH ER THE OWNER NOR THE LESSEE OF THE GODOWN. THE OWNERSHIP VESTS WITH THE FCI. THE LD. COUNSEL SUBMITTED THAT EVEN WHEN THE ASSESSEE WAS CARRYING FOOD GRAIN S IN HIS TRUCK, HE WAS IN THE PROCESS OF STORAGE OF FOOD GRAINS. TO SUBSTANT IATE, THE LD. COUNSEL RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF ORIS SA IN CRIMINAL REVN. NO. 43 OF 1951 DECIDED ON 15.01.1953 IN THE CASE OF BALABHADR A RAJA GURU MOHAPATRA VS THE STATE AIR 1954 ORISSA 95 AND SUBMITTED THAT IN THIS CASE, THE HONBLE HIGH COURT OF ORISSA HAS HELD THAT CARRYING OF GOOD S IN A TRUCK AMOUNTS TO STORAGE. WE HAVE CAREFULLY GONE THROUGH THE CITED CASE. WE FIND THAT IN THAT CASE THE ACCUSED WAS CARRYING 50 BAGS OR 100 MAUND S RAGI IN A TRUCK WHICH ACCORDING TO THE STATE WAS IN CONTRAVENTION TO THE ORISSA FOOD GRAINS CONTROL ORDER, 1947 WHEREIN IT WAS PROVIDED THAT NO PERSON SHALL ENGAGE IN ANY UNDERTAKING WHICH INVOLVES THE PURCHASE, SALE OR ST ORAGE FOR SALE, IN WHOLESALE QUANTITIES OF ANY FOOD GRAINS EXCEPT UNDER AND IN A CCORDANCE WITH A LICENCE ISSUED IN THAT BEHALF BY THE DIRECTOR OF FOOD SUPPL IES. EXPLANATION (2) OF THE SAID ORDER PROVIDED THAT FOR THE PURPOSE OF THIS CL AUSE ANY PERSON WHO STORES MUNG AND BIRI OR THEIR PRODUCTS IN QUANTITIES EXCEE DING 20 STANDARD MAUNDS AND OTHER FOOD GRAINS IN QUANTITIES EXCEEDING 50 ST ANDARD MAUNDS, SHALL UNLESS THE CONTRARY IS PROVED BE DEEMED TO STORE THE FOOD GRAINS FOR PURPOSES OF SALE. IT WAS HELD THAT THE TRUCK BELONGS TO THE ACCUSED AND THEREFORE 100 MAUNDS OF RAGI FOUND IN THE TRUCK BELONGED TO THE ACCUSED. T HE QUESTION BEFORE THE HONBLE COURT WAS WHETHER POSSESSION OF THE GOODS WHILE IN TRANSIT IN A TRUCK CAN BE DESCRIBED AS STORAGE WITHIN THE MEANING OF THE CO NTROL ORDER. ON THIS QUESTION, THE HONBLE HIGH COURT HAS HELD THAT THE PETITIONER WAS ENGAGED IN AN UNDERTAKING WHICH INVOLVED THE STORAGE FOR SALE OF MORE THAN 50 MAUNDS AND ACCORDINGLY HAD CONTRAVENED THE PROVISIONS OF CLAU SE III(1). WE DO NOT FIND ANY SUBSTANCE IN THE SUBMISSION OF THE LD. COUNSEL TO R ELY UPON THE MEANING GIVEN TO STORAGE OF THIS DECISION OF THE HONBLE HIGH C OURT OF ORISSA BECAUSE IN THAT CASE, THE ACCUSED WAS FOUND TO CARRY GOODS WHICH WE RE PROHIBITED BY THE LAW AND ON THAT NOTE, THE COURT HAS HELD THAT EVEN IF A PERSON IS FOUND CARRYING GOODS WILL BE TAKEN AS INVOLVED IN THE STORAGE FOR SALE. HOWEVER, THE POINT WHICH IS TO BE NOTED HERE IS THAT THE COURT HAS EMP HASIZED ON STORAGE IN ITA NO.8568/MUM/2011(A.Y. 2008-09) 5 RELATION TO SALE. ASSUMING YET DENYING THAT BY C ARRYING GOODS, THE ASSESSEE WAS IN THE PROCESS OF STORAGE THEN SUCH PROCESS SHO ULD CULMINATE INTO SALE WHICH IS MISSING ON THE FACTS OF THE INSTANT CASE. THE ASSESSEE FURTHER RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS AHMEDABAD MASKATI CLOTH DEALERS CO-OPERATIVE WAREHO USES SOCIETY LTD. 162 ITR 142 WHEREIN THE HONBLE GUJARAT HIGH COURT HAD AN OCCASION TO CONSIDER WORDS GODOWNS OR WAREHOUSES AND THEIR DICTIONARY MEANING. IN THAT CASE, THE ASSESSEE CLAIMED EXEMPTION U/S. 80P(2)(E) ON TH E PRETEXT THAT RENTAL INCOME RECEIVED BY IT ON LETTING OUT OF SHOP AMOUNTED TO R ENTAL INCOME RECEIVED FROM GODOWNS OR WAREHOUSES. AFTER CONSIDERING IN DETAIL , THE MEANING OF THE WORDS GODOWNS AND WAREHOUSES AND THE LEGISLATIVE INTENT FOR ALLOWING DEDUCTION U/S. 80P(2)(E) OF THE ACT, THE HONBLE HIGH COURT H ELD THAT ASSESSEE SOCIETY MUST SHOW THAT IT HAS DERIVED INCOME FROM THE LETTING OF GODOWNS OR WAREHOUSES WHICH IT HAS FAILED BECAUSE IT HAS RECEIVED RENTAL INCOME FROM THE LETTING OF SHOPS USED FOR BUSINESS IN CLOTH WHICH CANNOT BE SA ID TO BE INCOME DERIVED FROM LETTING OF GODOWNS AND WAREHOUSES. IN OUR HUMBLE O PINION THIS DECISION ALSO DOES NOT HELP THE ASSESSEE ON THE FACTS OF THIS CAS E. 16. TAKING A LEAF OUT OF THE ABOVE SAID DECISION, W E FIND THAT THE HONBLE GUJARAT HIGH COURT HAS REFERRED TO THE OBSERVATIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CGT VS N.S. GETTI CHETTIAR (1 971) 82 ITR 599 AT PAGES 605- 606 OF THE SAID JUDGEMENT, THE HONBLE SUPREME COUR T HAS OBSERVED AS UNDER: WORDS IN THE SECTION OF A STATUTE ARE NOT TO BE IN TERPRETED BY HAVING THOSE WORDS IN ONE HAND AND THE DICTIONARY I N THE OTHER. IN SPELLING OUT THE MEANING OF THE WORDS IN A SECTION, ONE MUST TAKE INTO CONSIDERATION THE SETTING IN WHICH THOSE TERMS ARE USED AND THE PURPOSES THAT THEY ARE INTENDED TO SERVE. IN RESPONSE TO WHICH THE HONBLE GUJARAT HIGH COUR T OBSERVED THAT THE DICTIONARY MEANING OF A WORD OR EXPRESSION USED IN A STATUTE IS RELEVANT BUT NOT SACROSANCT AND THE COURT WILL NOT HESITATE TO DEPAR T FROM THE DICTIONARY MEANING IF THE CONTEXT AND THE SETTING IN WHICH THE WORD OR EXPRESSION IS USED SO SUGGESTS OR DEMANDS. 17. LITERAL INTERPRETATION OF WORDS INTEGRATED BU SINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS WILL NOT LEAD T O ANY ABSURDITY OR PRODUCE ANY MANIFESTLY UNJUST RESULT. THE LEGISLATIVE INTENT I S NOT TO ENCOURAGE TRANSPORTATION OR HANDLING OF FOOD GRAINS BUT THE L EGISLATIVE INTENT IS TO ENCOURAGE CONSTRUCTION OF GODOWNS AND WAREHOUSES WI TH A VIEW TO PROVIDING STORAGE OF FOOD GRAINS. IF WE CONSIDER THE ENTIRE COMBAT OF THE SCHEME RELATING TO THE TAX HOLIDAY PROVIDED BY THE LEGISLATURE, WE FIN D THAT THE DEDUCTIONS ARE AVAILABLE UNDER VARIOUS PROVISIONS WHEN THE ASSESSE E HAS CONTRIBUTED SOMETHING TOWARDS THE INFRASTRUCTURE DEVELOPMENT OF THE COUNTRY. IN THE INSTANT CASE, WE DO NOT FIND ANY CONTRIBUTION TOWARDS THE I NFRASTRUCTURE BY THE ASSESSEE. THE ASSESSEE IS SIMPLY HANDLING AND TRAN SPORTING THE FOOD GRAINS AND STORING AT THE GODOWNS OF THE FCI WHICH MEANS T HAT THE ASSESSEE IS USING THE EXISTING INFRASTRUCTURE OF THE STATE WHEREAS TH E MAIN PURPOSE OF BRINGING THIS PROVISION IS CONSTRUCTION OF GODOWNS SPECIFICALLY F OR STOCKING FOOD GRAINS FOR GREATER EFFICIENCY IN THE GRAIN MANAGEMENT SYSTEM A ND MINIMIZE POST HARVEST FOODGRAIN LOSSES. THE ASSESSEE HAS NOT DONE ANYTHI NG TOWARDS THESE FACILITIES. ITA NO.8568/MUM/2011(A.Y. 2008-09) 6 IF WE LOOK AT TENDER BY WHICH THE ASSESSEE HAS BEEN AWARDED THIS CONTRACT, THE TENDER IS ISSUED WITH THE FOLLOWING HEAD NOTE: INVITATION TO TENDER AND INSTRUCTIONS TO THE TENDE RERS FOR APPOINTMENT OF HANDLING AND TRANSPORT CONTRACTOR AT FSD. BHUIWANDI WITH HANDLING OF FOODGRAINS AT TURBHE GOO DS SHED/BHIWANDI/KALYAN GOODS SHED AND TRANSPORTATION FROM TURBHE BHIWANDI GOODS SHED AND KALYAN GOODS SHED TO BHIWANDI DEPOT AND VICE VERSA. EVEN THE TENDER PARTICIPATED BY THE ASSESSEE SHOW T HAT THE ASSESSEE HAS BEEN AWARDED THE CONTRACT FOR HANDLING AND TRANSPOR TATION OF FOOD GRAINS TO THE PLACES MENTIONED THEREIN. THE CONTENTION OF THE AS SESSEE THAT SEC. 80IB BEING A BENEVOLENT PROVISION LIBERAL CONSTRUCTION SHOULD BE APPLIED CANNOT BE ACCEPTED BECAUSE BENEFICIAL INTERPRETATION APPLIES ONLY WHER E TWO VIEWS ARE REASONABLY POSSIBLE WHEREAS IN THE INSTANT CASE, WE DO NOT FIN D ANY OTHER POSSIBLE VIEW ON THE FACTS OF THE MATTER WHERE THE LAW IS CLEAR AND UNAMBIGUOUS, WE CANNOT ACT CONTRARY TO IT WITH A VIEW TO GIVE BENEFIT TO THE A SSESSEE. AFTER CONSIDERING THE ENTIRE FACTS IN TOTALITY ALONGWITH THE LEGISLATIVE INTENT, IN OUR CONSIDERATE VIEW, THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS PRECE DENT FOR MAKING HIM ELIGIBLE FOR DEDUCTION U/S. 80IB(11A) OF THE ACT. WE FIND THAT THE LD. CIT(A) HAS BEEN CARRIED AWAY WITH THE CERTIFICATE ISSUED BY DGM OF FCI. THE DGM IN HIS WISDOM MAY HAVE ISSUED THE CERTIFICATE WITHOUT CONSIDERING THE LEGISLATIVE INTENT OF THE SCHEME, THEREFORE WE CANNOT GIVE MUCH WEIGHTAGE TO SUCH CERTIFICATE. THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION TO THE ASSES SEE WHICH HE IS NOT ELIGIBLE. ACCORDINGLY, THE FINDING OF THE LD. CIT(A) IS REVER SED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. 3. AFTER HEARING BOTH THE PARTIES, RESPECTFULLY FOL LOWING THE AFOREMENTIONED ORDER IN THE CASE OF THE ASSESSEE, WE DECIDE GROUND NO.1 IN FAVOUR OF REVENUE AND GROUND NO.1 OF THE REVENUE IS ALLOWED. 2. APROPOS GROUND NO.2, THE ISSUE HAS BEEN DISCUSSE D BY THE AO IN PARA-5 OF THE ASSESSMENT ORDER. THE AO NOTICED THAT THE ASS ESSEE DID NOT HAVE COMPLETE SUPPORTING BILLS AND VOUCHERS IN RESPECT OF LOADIN G AND UNLOADING EXPENSES; TRUCK DRIVER AND CLEANER EXPENSES; WET ESCORT AND TOLL EX PENSES AND BUSINESS PROMOTION EXPENSES. THEREFORE, AO DISALLOWED A SUM OF RS.5.0 0 LACS. 3. BEFORE LD. CIT(A) IT WAS SUBMITTED THAT ADDITION MADE BY THE AO IS ADHOC. THE EXPENDITURE INCURRED BY THE ASSESSEE ARE IN CON SONANCE WITH SIMILAR EXPENSES ITA NO.8568/MUM/2011(A.Y. 2008-09) 7 INCURRED IN EARLIER YEARS. OUT OF LOADING AND UNLO ADING EXPENSES, OUT OF A TOTAL SUM OF RS.2,12,92,009/- THE PAYMENTS TO THE TUNE OF RS.1,90,68,718/- ARE MADE BY CHEQUES. FROM THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) NOTED THAT THE CASH PAYMENTS MADE IN ALL AFOREMENTIONED HEADS WAS ONLY TO THE TUNE OF RS.38,55,616/- AND TAKING A VIEW THAT 5% OF THE CAS H PAYMENTS WILL BE A REASONABLE DISALLOWANCE, LD. CIT(A) HAS SUSTAINED T HE DISALLOWANCE TO THE EXTENT OF RS.1,92,780/- AND RELIEF OF RS.3,07,220/- IS GRANTE D TO THE ASSESSEE. THE REVENUE IS AGGRIEVED, HENCE, IN APPEAL. 4. AFTER NARRATING THE FACTS, LD. DR SUBMITTED THAT THE AO WAS REASONABLE IN MAKING DISALLOWANCE TO THE TUNE OF RS.5.00 LACS, WH ICH HAS WRONGLY BEEN REDUCED TO RS.1,92,780/- BY THE LD. CIT(A). 5. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. A.R T HAT LD. CIT(A) HAS REASONABLY RESTRICTED THE DISALLOWANCE. 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. LD. CIT(A) HAS SORTED OUT A CASH PAYME NT COMPONENT WITH RESPECT TO THE AFOREMENTIONED EXPENSES AND HAS RESTRICTED THE DISALLOWANCE TO 5% OF THOSE CASH PAYMENTS AS AGAINST THE ORDER OF AO, WHERE RS. 5.00 LACS ADHOC DISALLOWANCE IS MADE. AFTER CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT LD. CIT(A) HAS TAKEN A REASONABLE VIEW. WE DECLINE TO INTERFERE AND THIS GROUND OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 7 TH DAY OF DEC. 2012 SD/- SD/- (SANJAY ARORA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 7 TH DEC. 2012 ITA NO.8568/MUM/2011(A.Y. 2008-09) 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R E BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.