ACIT 9(3), MUMBAI V. RUSAN PHARMA LTD, MUMBAI

ITA 8691/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5788 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 16-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJAN BAHADUR
• Keywords: Business income; Depreciation; Earning of tax free income; Tax effect; Unabsorbed depreciation; Revenue expenditure; Capital expenditure
• Section: 14A; 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI . . , . . , , BEFORE SHRI I.P.BANSAL,JM AND SHRI N.K. BILLAIYA , AM ITA NOS.59&8703/MUM/2011: ASST.YEARS 2007-08&2008-0 9 RUSAN PHARMA LTD. 58-D, GOVERNMENT INDUSTRIAL ESTATE, CHARKOP, KANDIVALI (W) MUMBAI 400 067 PAN : AABCR3179H. / VS. ADDL. CIT RG 9(3), AAYKAR BHAVAN, II FLOOR, M.K. MARG MUMBAI. 400020 ( ! '# / APPELLANT) ( $%'# / RESPONDENT) ITA NOS.1063&8691/MUM/2011: ASST.YEARS 2007-08&2008 -09 ADDL. CIT RG 9(3), AAYKAR BHAVAN, II FLOOR, M.K. MARG MUMBAI. 400020 / VS. RUSAN PHARMA LTD. 58-D, GOVERNMENT INDUSTRIAL ESTATE, CHARKOP, KANDIVALI (W) MUMBAI 400 067 PAN : AABCR3179H. ( ! '# / APPELLANT) ( $%'# / RESPONDENT) ! '# ! / APPELLANT BY : SHRI PRAKASH PANDIT $%'# ! / RESPONDENT BY : SHRI RAJAN BAHADUR & ' ( )*+ / DATE OF HEARING : 16.01.2014 ,-./ ( )*+ / DATE OF PRONOUNCEMENT :16.01.2014 '!# / O R D E R I.P.BANSAL ( JM) : THESE ARE CROSS APPEALS FOR ASSESSMENT YEARS 2007-0 8 & 2008-09. THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY CIT(A) DATED 26 TH NOVEMBER 2010 AND 31 ST OCTOBER 2011 FOR ASSESSMENT YEARS 2007-08 & 2008-0 9 RESPECTIVELY. GROUNDS OF APPEAL IN EACH OF THE APPE ALS READ AS UNDER: 2. ITA NO.59/M/2011, ASSESSEES APPEAL FOR A.Y.2007 -08. 1.THE ORDERS PASSED BY THE LEARNED LOWER AUTHORITIE S ARE BAD IN LAW AND BAD IN FACTS. 2. THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN REDUCTING RS.8,324,090/-(8,994,622-673,532) FROM THE PROFITS OF THE ELIGIBLE UNITS ON ACCOUNT OF OTHER INCOME HOLDING IT TO BE UNRELATED INCOME OF UNITS COVERED BY THE PROVISIONS OF SEC.10A&10B. ITA NOS .59,1063,8703,8691/ MUM/2011 . 2 3. THE IMPUGNED ADDITION OF RS.8,324,090/- HAS BEEN MADE WITHOUT APPRECIATING THE EVIDENCE ON RECORD AND IS BASED ON CONJECTURES AND SURMISES. 4. THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN DISALLOWING EXPENSES OF RS.1,106,715/- INCURRED AT DEHRADUN UNI T. REASONS ASSIGNED FOR IMPUGNED DISALLOWANCE ARE WRONG AND CONTRARY TO THE PROVISIONS OF LAW. 5.THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN ADDING A SUM OF RS.349,525/- BY RECOURSE TO SEC.14A OF THE I.T. ACT 1961, EVEN THOUGH THE SAID PROVISIONS ARE NOT ATTRACTED AT ALL. THE IMPUG NED DISALLOWANCE HAS BEEN MADE WITHOUT COMPLYING WITH THE REQUIREMENTS OF SAI D SECTION READ WITH THE DECISION OF JURISDICTIONAL HIGH COURT. 6.THE LEARNED ASSESSING OFFICER HAS GROSSLY ERRED I N NOT ALLOWING THE SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION/BUSINESS LOSS. THE REASONS ASSIGNED FOR THE SAID REFUSAL ARE WRONG AND CONTRAR Y TO THE PROVISIONS OF LAW. 3. ITA NO.1063/M/2011, DEPARTMENTAL APPEAL FOR A.Y.200 7-08. 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.35,04,6 40/- WHICH REPRESENTS THE PROPORTIONATE DISALLOWANCE OF DEDUCTION CLAIMED U/S .10B OVERLOOKING THE FINDING OF THE ASSESSING OFFICER THAT ONLY THE PROF ITS DERIVED WITH EFFECT FROM 22.06.2006 WERE ELIGIBLE FOR THE EXEMPTION, BASED O N THE CERTIFICATE REGARDING EXPORT ORIENTED UNDERTAKING ISSUED TO THE ASSESSEE FOR THE ANKLESHWAR UNIT AND THAT THE PROFITS OF THE PRIOR PERIOD DID NOT QU ALIFY OF THE EXEMPTION U/S.10B. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BE SET ASIDE ON THE GROUNDS MENTIONED ABOVE AND THAT OF THE ASSESSING OFFICER B E RESTORED. 4. ITA NO.8703/M/2011, ASSESSEES APPEAL FOR A.Y.2008- 09. I.DISALLOWANCE OF SALE OF SCRAP-RS.1,44,000/- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THAT INCOME OF RS.1,44, 000/- ON ACCOUNT OF SALE OF SCRAP DOES NOT QUALIFY FOR DEDUCTION U/S. 10A/10 B OF THE IT ACT, 1961. 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING THAT INCOME OF RS.1,44,000/- ON ACCOUNT OF SALE OF SCRAP DOES NOT QUALIFY FOR DEDUCTION U/S 10A/10B OF THE IT ACT, 1961 ARE WRONG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. II DISALLOWANCE OF FD INTEREST-RS.37,620/- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THAT INCOME OF RS.37,26 0/- ON ACCOUNT OF FD INTEREST RECEIVED FROM ANKLESHWAR UNIT DOES NOT QUALIFY FOR DEDUCTION U/S. 10A/10B OF THE IT ACT,1961. 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING THA T INCOME OF RS.37,260/- ON ACCOUNT OF FD INTEREST RECEIVED FROM ANKLESHWAR UNIT DOES NOT QUALIFY FOR DEDUCTION U/S10A/10B OF THE IT ACT, 196 1 ARE WRONG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD. III .DISALLOWANCE OF SUNDRY BALANCE WRITTEN OFF- RS .2,54,688 /- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT APPELA ERRED IN CONFIRMING THAT AMOUNT OF RS.1,68,059/- AN D RS.86,635/- BEING SUNDARY BALANCES WRITTEN OFF AT ANKLESHWAR UNIT AND KANDLA UNIT RESPECTIVELY DOES NOT QUALIFY FOR DEDUCTION U/S 10A/10B OF THE IT,1961. ITA NOS .59,1063,8703,8691/ MUM/2011 . 3 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING THA T AMOUNTS OF RS.1,68,059/- AND RS.86,635/- BEING SUNDRY BALANCES WRITTEN OFF AT ANKLESHWAR UNIT AND KANDLA UNIT RESPECTIVELY DOES NOT QUALIFY FOR D EDUCTION U/S 10A/10B OF THE IT ACT, 1961 ARE WRONG, INSUFFICIENT AND CONTRARY TO T HE FACTS AND EVIDENCES ON RECORD. IV DISALLOWANCE OF MISCELLANEOUS RECEIPTS RS.53,42 2/- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THAT INCOME OF RS. 53,4 22/- RECEIVED ON ACCOUNT OF MISCELLANEOUS RECEIPTS DOES NOT QUALIFY FOR DEDUCTI ON U/S 1 OA/1 OB OF THE IT ACT, 1961. 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING THA T INCOME OF RS. 53,422/- RECEIVED ON ACCOUNT OF MISCELLANEOUS RECEI PTS DOES NOT QUALIFY FOR DEDUCTION ULS 1 OA/1 OB OF THE IT ACT, 1961 ARE WRO NG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD V. DISALLOWANCE OF COMMISSION & BROKERAGE - RS. 8,0 2,536/- 1.IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 8,02,53 6/- ON ACCOUNT OF COMMISSION & BROKERAGE BEING THE AMOUNT NOT QUALIFYING FOR DEDUC TION U/S 1 OA/1 OB OF THE IT ACT, 1961. 2 REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING T HE DISALLOWANCE OF RS. 8,02,536/- ON ACCOUNT OF COMMISSION & BROKERAGE BEI NG THE AMOUNT NOT QUALIFYING FOR DEDUCTION U/S 1 OA/1 OB OF THE IT ACT, 1961 ARE WRONG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD VI. DISALLOWANCE OF EXCHANGE VARIATION GAIN - RS. 4 ,93,202/- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 4,93,202/- ON ACCOUNT OF EXCHANGE VARIATION GAIN BEING THE AMOUNT NOT QUALIF YING FOR DEDUCTION U/S 1 OA/1 OB OF THE IT ACT, 1961. 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING TH E DISALLOWANCE OF RS. 4,93,202/- ON ACCOUNT OF EXCHANGE VARIATION GAIN BE ING THE AMOUNT NOT QUALIFYING FOR DEDUCTION U/S 1 OA/1 OB OF THE IT ACT, 1961, AR E WRONG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD VII. DISALLOWANCE OF NOTICE PERIOD SALA RY RECOVERED - RS. 30,158/- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 30,158/- ON ACCO UNT OF NOTICE PERIOD SALARY RECOVERED BEING THE AMOUNT NOT QUALIFYING FOR DEDUCTION U/S 1 OA/1 OB OF THE IT ACT, 1961. 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING THE DISALLOWANCE OF RS. 4,93,202/- ON ACCOUNT OF EXCHANGE VARIATION GAIN BEING THE AMOUNT NOT QUALIFYING FOR DEDUCTION U/S 1 OA/1 DB OF THE IT ACT, 1961, ARE WRONG, INSUFFICIEN T AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD VIII. DISALLOWANCE OF DEPB LICENSE - RS. 25,88,979 /- 1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT APPEALS ERRED IN CONFIRMING THAT INCOME OF RS. 25,88,979/- ON ACCOUN T OF DEPB INCENTIVE PERTAINING TO KANDLA UNIT DOES NOT QUALIFY FOR DEDUCTION U/S 1 OA /1 OB OF THE IT ACT, 1961. 2 REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING T HAT INCOME OF RS. 25,88,9791- ON. ACCOUNT OF DEPB I NCENTIVE PERTAINING TO KANDLA UNI T DOES NOT QUALIFY FOR DEDUCTION U/S 1 OA/1 OB OF THE IT ACT, 1961 ARE WRONG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD IX. PRODUCT REGISTRATION CHARGES - RS. 92,24,172/- ITA NOS .59,1063,8703,8691/ MUM/2011 . 4 1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT APPEALS' ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 92,24,1721- ON A CCOUNT OF PRODUCT REGISTRATION CHARGES. 2 REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING T HE DISALLOWANCE OF RS. 92,24,172/- ON ACCOUNT OF PRODUCT REGISTRATION CHARGES ARE WRONG, INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCES ON RECORD . X . WITHOUT PREJUDICE TO THE ABOVE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) OUGHT TO HAVE DIRECTED AO TO RECOMPUTED THE INCOME FOR THE PURPOSE OF SECTION 10A/10B AND OUGHT TO HAVE GIVEN DEDUCTION I/S.10A/10B ON THE SUCH ENHANCED INCOME. XI THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, M ODIFY OR OMIT ANY OF THE AFORESAID GROUNDS OF APPEAL AS OCCASION MAY ARISE OF DEMAND 5. ITA NO.8691/M/2011, DEPARTMENTAL APPEAL FOR A.Y.200 7-08 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 14A OF RS. 4,00,104 R ELYING ON THE ASSESSEES GROUND, THAT THE SAID AMOUNT OF DISALLOWANCE HAS BEEN ADDED TO THE COMPUTATION/RETURN OF INCOME, WHEREAS THE ASSESSEE HAD NOT ADDED IN BACK IN THE COMPUTATION/RETURN OF INCOME. THE SAME IS ENCLOSED HEREWITH AS ANNEXURED- A. ALL THESE APPEALS WERE ARGUED TOGETHER BY BOTH THE PARTIES, HENCE FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. ITA NO.59/M/2011 6. GROUND NO. 1 IS GENERAL IN NATURE AND IN GROUND NOS. 2 AND 3 THE ASSESSEE IS AGGRIEVED BY THE EXCLUSION OF AN AMOUNT OF RS. 83,24,090/- OUT OF A TOTAL EXCLUSION OF RS . 89,94,622/- FROM ELIGIBLE AMOUNT FOR DEDUCTION U/S.10A AND 10B. THE DETAILS OF AGGREGATE AMOUNT OF RS. 89,94,622/- IS GIVEN IN PARA 5OF THE ASSESSMENT ORDER WHICH IS AS READ UNDER: (RS.) SALE OF SCRAP 96,789 EXCISE REFUND 677,186 SALE TAX REFUND 134,324 ECGC CLAIM RECEIVED 287,434 DIVIDEND RECEIVED 673,532 EXPORT BENEFITS (DEPB) 453,652 INTEREST ON F.D./MARGIN MONEY 681,665 (TAX DEDUCTED AT SOURCE RS.143593/PREVIOUS YEAR RS.37,491/-) MISCELLANEOUS RECEIPTS 1,068,956 INSURANCE CLAIM RECEIVED 687,774 COMMISSION & BROKERAGE RECEIVED 1,351,840 EXCHANGE VARIATION GAIN (NET) 2,781,414 NOTICE PERIOD SALARY RECOVERED 102,956 LONG TERM CAPITAL GAINS ------- DISCOUNT RECEIVED ------ ITA NOS .59,1063,8703,8691/ MUM/2011 . 5 INTEREST ON INCOME TAX REFUND ----- PROFIT ON SALE OF ASSETS 100 TOTAL . 8,997,622 7. ACCORDING TO THE AO, THE AFOREMENTIONED AMOUNT WAS NOT ELIGIBLE FOR DEDUCTION U/S.10A/10B OF THE INCOME TAX ACT AS IT C ONSTITUTES INCOME FROM OTHER SOURCES. EACH OF THE AFOREMENTIONED ITEM S HAS NOT BEEN DISCUSSED SEPARATELY IN THE ORDER OF AO. THE AFOREM ENTIONED EXCLUSION WAS AGITATED IN THE APPEAL FILED BEFORE THE CIT(A) ON AGGREGATE BASIS AND THIS ISSUE HAS BEEN DISCUSSED BY THE LEARNED CIT(A) IN PARA 5 TO 7. BEFORE THE LEARNED CIT(A), IT WAS PLEADED THAT THE AFOREME NTIONED AMOUNTS SHOULD BE CONSIDERED FOR ELIGIBILITY AS IT CONSTITU TE GAINS DERIVED BY THE ASSESSEE FROM PROFIT AND GAINS OF THE UNDERTAKING A ND DEDUCTION U/S.10A/10B DOES NOT RELATE TO THE OTHER ACTIVITY. THE CIT(A) HAS REJECTED SUCH CONTENTION OF THE ASSESSEE ON THE BAS IS OF DECISION OF HONBLE SUPREME COURT IN CASE OF LIBERTY INDIA 317 ITR 218. HOWEVER, LEARNED CIT(A) HAS GIVEN PART RELIEF ON THE GROUND THAT THE AFOREMENTIONED AMOUNTS INCLUDE A SUM OF RS. 6,73,532 /- WHICH REPRESENT DIVIDEND BEING EXEMPT INCOME AND COULD NOT BE DISAL LOWED. THUS THE ADDITION WAS RESTRICTED TO A SUM OF RS. 83,24,090/-. THE ASSESSEE HAS AGGRIEVED HENCE HAS FILED THE AFOREMENTIONED GROUND . LEARNED AR HAS SUBMITTED A CHART WHICH WAS REFERRED DURING THE COURSE OF HEARING. THE SAID CHART READ AS UNDER; PARTICULARS AMOUNT SUBMISSION (I) DISALLOWANCE OF SALE OF SCRAP 96,789/ - SCRAP WAS GENERATED DURING THE PROCESS OF MANUFACTURING AND HAS DIRECT NEXUS TO EXPORT ORIENTED BUSINESS. NOT PRESSED (II) EXCISE REFUND 6,77,186/- THE SAID EXCISE REFUND PERTAINS TO MUMBAI UNIT OTHER THAN KANDLA & ANKALESHWAR UNIT THEREFORE IT DOES NOT FORM PART OF 10A&10B PROFIT. SAID ADDITION BE DELETED (III) SALES TAX REFUND 1,34,324/- THE SAID EXCISE REFUND PERT AINS TO MUMBAI UNIT OTHER THAN KANDLA & ANKALESHWAR UNIT THEREFORE IT DOES NOT FORM PART OF 10A & 10B SAID ADDITION BE DELETED (IV) ECGC CLAIM 2,87,434/- NOT PRESSED (V) DISALLOWANCE OF DEPB INCENTIVES 4,53,652/- DEPB INCENTIVES OF RS.4,53,652/- PERTAINS TO MUMBAI UNIT OTHER SAID ADDITION BE DELETED ITA NOS .59,1063,8703,8691/ MUM/2011 . 6 THAN KANDLA & ANKALESHWAR UNIT THEREFORE IT DOES NOT FORM PART OF 10A & 10B PROFIT. (VI) DISALLOWANCE OF F.D. INTEREST AND MARGIN MONEY 6,29,627/- F.D. INTEREST PERTAINING TO MUMBAI UNIT IS 6,29,627/- OTHER THAN KANDLA & ANKALESHWAR UNIT THEREFORE IT DOES NOT FORM PART OF 10A &10B PROFIT FD RECEIVED FROM THE KANDLA UNIT IS RS.52,038/- ADDITION BE RESTRICTED TO THE EXTENT TO RS.52,038/- (VII) MISCELLANEOUS RECEIPTS 10,68,956/- RS.10,51,521/- PERTAINS TO ANKALESHWAR UNIT AND BALANCE PERTAINS TO MUMBAI & BARODA UNITS ADDITION BE RESTRICTED TO RS.10,51,521/- (VIII) INSURANCE CLAIM 6,87,774/- THE SAID PERTAINS TO MU MBAI UNIT OTHER THAN KANDLA & ANKALESHWAR UNIT THEREFORE IT DOES NOT FORM PART OF 10A&10B PROFIT. SAID SEE DETAILS ON PAGE NO.14 TO 18 OF THE PAPER BOOK & SUBMISSIONS ON PAGE 6(VII) OF THE PAPER BOOK OF A.Y.2008-09. (X) DISALLOWANCE OF EXCHANGE VARIATION GAIN. 27,81,413/ - THIS INCLUDES GAIN REALIZED ON ACCOUNT OF FLUCTUATION OF FOREIGN EXCHANGE RATES. FOREIGN EXCHANGE IS DIRECTLY RELATED TO EXPORT ACTIVITIES. THEREFORE, IT CANNOT BE DISALLOWED U/S.10A/10B. ISSUE IS COVERED BY 282 ITR PAGE 144, 294 ITR PAGE 451, 114 ITD PAGE 448 AND 149 TTJ PAGE 767 PLEASE SEE SUBMISSIONS ON PAGE NO.7, VIII OF THE PAPER-BOOK FOR A.Y.2008-09. (XI) DISALLOWANCE OF NOTICE PERIOD SALARY RECOVERED 1,02,956/- NOT PRESSED RELYING UPON THE AFOREMENTIONED CHART, IT WAS SUBMI TTED BY THE LEARNED AR THAT APPROPRIATE RELIEF MAY BE GIVEN TO THE ASSESSEE. 8. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER PASSED BY AO AND CIT(A). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. FROM THE ORDER PASSED BY THE AO AND LEARNED CIT(A), IT IS OBSERVED THAT THE ARGUMENTS STATED IN THE CHART WERE NOT TAKEN BY THE ASSESSEE BEFORE THEM. IN ANY CASE, THERE IS NO DISCUSSION IN THIS REGARD EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER PASS ED BY CIT(A). THEREFORE, AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT IT WILL SERVE THE INTEREST OF JUSTICE, IF THE MATTER IS RESTORED BACK TO THE FILE OF AO, IN RESPECT ITA NOS .59,1063,8703,8691/ MUM/2011 . 7 OF ITEMS OTHER THAN WHICH ARE NOT PRESSED BY THE AS SESSEE, WITH A DIRECTION TO GIVE AN APPROPRIATE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL THE FACTS AND MATERIAL ON RECORD AND THEREAFTER TO RE-ADJUDICATE THE SAME AS PER PROVISIONS OF LAW. WE DIRECT ACCORDINGLY. GROUND NO.2 AND 3 AR E CONSIDERED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANN ER AFORESAID. 10. IN GROUND NO.4 THE ASSESSEE IS AGGRIEVED BY THE SUSTAINED ADDITION OF RS. 11,06,715 /- IN RESPECT OF DEHRADUN UNIT. IT WAS FURTHER NOTICED THAT THERE WERE NO SALES OR ANY OTHER REVENUE ARISING OUT OF DEHRAD UN UNIT. THEREFORE, AO OBSERVED THAT THE BUSINESS OF DEHRADUN UNIT DID NOT COMMENCE AND THOSE EXPENSES ARE PRE-COMMENCEMENT EXPENSES. ACCORDING LY, HE DISALLOWED THIS EXPENDITURE AND THE DISALLOWANCE WAS AGITATED IN AP PEAL FILED BEFORE LEARNED CIT(A) WHO HAS DISCUSSED THIS ISSUE IN PARA 8 TO 10 . BEFORE CIT(A), IT WAS SUBMITTED THAT ASSESSEE IS ALREADY IN THE BUSINESS OF MANUFACTURING OF PHARMA GOODS AND SETTING UP OF A PLANT AT DEHRADUN WHICH I S MERELY EXPANSION OF ITS EXISTING BUSINESS AND IS NOT STARTING OF A NEW OR S EPARATE BUSINESS. THEREFORE, IT WAS PLEADED THAT EXPENSES SHOULD BE ALLOWED. ON THE SE SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS BEEN MANUFACTURING DIFFERENT PRODUCTS IN VARIOUS UNITS. FROM THE DIRECTORS REPORT FOR THE FINANCIAL YEAR 2001-02, IT WAS SEEN THAT TH E MAJOR STRENGTH WAS DEVELOPMENT OF NEW PROCESS FOR BULK DRUG AND FORMUL ATION OF MOLECULES. THE ASSESSEE HAD IDENTIFIED HARM REDUCTION & PAIN MANAG EMENT AS ITS THRUST AREA FOR FUTURE GROWTH. THE FUTURE PLANS OF ACTION WAS REPOR TED AS FOCUS ON DEVELOPING DMF FOR BULK DRUGS & FORMULATIONS TO CATER TO VARIO US EUROPEAN MARKETS, PROCESS DEVELOPMENT FOR THE NALLOXANE AND AMORPHINE AND NEW THRUST AREAS FOR DIVERSIFICATION AND EXPANSION WILL BE IDENTIFIED. I T WAS FURTHER OBSERVED THAT ASSESSEE WAS MANUFACTURING DIFFERENT PRODUCTS IN IT S EXISTING UNITS AT MUMBAI, ANKLESHWAR AND KANDLA. NO MATERIAL WAS BROUGHT TO H IS ATTENTION TO SHOW THAT WHETHER DEHRADUN UNIT IS PROPOSED TO MANUFACTURE SA ME ITEM OR DIFFERENT PRODUCT, BUSINESS AS INTEGRATED ONE HAS DIFFERENT S OURCES OF INCOME. LEARNED ITA NOS .59,1063,8703,8691/ MUM/2011 . 8 CIT(A) FURTHER OBSERVED THAT ASSESSEE HAS NOT SHOWN IN ANY MANNER THAT THE DEHRADUN UNIT IS BEING SET UP TO EXPAND PRODUCTION OF AN ITEM ALREADY MANUFACTURED ELSEWHERE AND THUS HE HAS CONFIRMED TH E ACTION OF THE AO TO TREAT THE IMPUGNED EXPENSES/ LOSS PERTAINING TO PRE-COMME NCEMENT PERIOD OF NEW BUSINESS FACILITY. 11. LEARNED AR REFERRED TO THE DETAILS OF IMPUGNED EXPENDITURE WHICH IS FILED AT PAGE 45 AND 45(B) OF THE PAPER BOOK. IT WA S PLEADED BY HIM THAT THE EXPENSES BEING IN THE NATURE OF EXPANSION OF EXISTI NG BUSINESS SHOULD BE ALLOWED. HOWEVER, LEARNED AR COULD NOT IDENTIFY THE EXPENDITURE RELATING TO SET UP OF THE PLANT AT DEHRADUN. HE COULD NOT SHOW ANY MATERIAL OR EVIDENCE TO SUPPORT THE CONTENTION RAISED BY THE ASSESSEE BEFOR E AO AND CIT(A) SUPPORTING THE ALLOWABILITY OF THE ABOVE EXPENDITURE. 12. IN THIS VIEW OF THE SITUATION, AFTER HEARING BO TH THE PARTIES WE DECLINE TO INTERFERE IN THE DISALLOWANCE UPHELD BY LEARNED CIT (A) AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 13. IN GROUND NO.5, THE ASSESSEE IS AGITATING THE D ISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D. THE ASSESSEE HAS EAR NED DIVIDEND INCOME OF RS.6,73,532/-. APPLYING RULE 8D, THE AO HAS DETERMI NED THE DISALLOWANCE OF RS.3,49,525/-. BEFORE THE LEARNED CIT(A), IT WAS S UBMITTED THAT INTEREST COST OF RS.2,74,471/- SHOULD NOT BE INCLUDED AS INVESTMENT IN SHARES WAS NOT MADE OUT OF BORROWED FUNDS. IT WAS PLEADED THAT ACCORDING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . CO. LTD. VS. DCIT [2010] 234 CTR(BOM) 1], RULE 8D COULD NOT BE APPLIE D. LEARNED CIT(A), THOUGH HAS ACCEPTED THIS SUBMISSION OF THE ASSESSEE BUT HAS SUSTAINED THE DISALLOWANCE. IT IS THE SUBMISSION OF THE LEARNED A R THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF AO WITH A DIRECTION TO RE- ADJUDICATE THIS ISSUE WITHOUT APPLICATION OF RULE 8D. 14. IN THIS VIEW OF THE SITUATION, AFTER HEARING BO TH THE PARTIES, WE RESTORE THIS ISSUE TO THE FILE OF AO FOR RE-ADJUDICATION IN THE LIGHT OF AFORESAID DECISION OF ITA NOS .59,1063,8703,8691/ MUM/2011 . 9 HONBLE HIGH COURT IN THE CASE OF GODREJ & BOYCE MF G. CO. LTD. VS. DCIT (SUPRA), AS ADMITTEDLY THE DISALLOWANCE CANNOT BE M ADE AS PER RULE 8D AS THE SAME NOT CANNOT BE APPLIED TO THE IMPUGNED ASSESSME NT YEAR. WE DIRECT ACCORDINGLY, THIS GROUND IS CONSIDERED TO BE ALLOWE D FOR STATISTICAL PURPOSE. 15. IN GROUND NO.6, THE ASSESSEE IS SEEKING SET OFF OF BROUGHT FORWARD/BUSINESS LOSS. IT WAS SUBMITTED THAT THIS I SSUE IS NOW SETTLED BY HE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2005-06 AND REFERENCE WAS MADE TO THE ORDER DATED 18 TH JUNE, 2013 PASSED IN ITA NO.6139/M/2010. THE COPY OF THE ORDER WAS PLACED ON RECORD AND WAS ALSO GIVEN T O LEARNED DR. IN THE SAID APPEAL SIMILAR ISSUE WAS RAISED AS PER GROUND NO. 1 &2 WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT DEDUCTION U/S.10A OF THE INCOME TAX AC T,1061 SHOULD BE WORKED OUT WITHOUT SETTING OFF THE LOSS AND UNABSORBED DEPRECIATION ON NON-10A UNITS. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE PROVISION OF SECTION 10A AS AMENDED W.E.F. 01.04.2001, CONTEMPLATE A DEDUCTION FROM THE TOTAL INCOME OF TH E ASSESSEE WHICH HAS TO BE COMPUTED AFTER SETTING OFF THE LOSS AND/OR UNABSORBED DEPREC IATION INCLUDING THOSE OF NON-10A UNITS. AFOREMENTIONED GROUND HAS BEEN DECIDED BY THE TRIBU NAL WITH THE FOLLOWING OBSERVATIONS: 4. AGGRIEVED, REVENUE PREFERRED AN APPEAL AND CONTE NDED, VIDE GROUND NO.1 & 2, THAT THE PROVISIONS OF SECTION 10A, AS AMENDED W.E. F. 01.04.2001, CONTEMPLATES DEDUCTION FROM TOTAL INCOME OF THE ASSESSEE WHICH H AS TO BE COMPUTED AFTER SET OFF OF THE LOSS OF NON-10A UNITS. IN SUPPORT OF THE CONTEN TION THE LEARNED D.R. RELIED UPON THE FOLLOWING CASE LAWS WHEREIN THE HONBLE KARNATA KA HIGH COURT AS WELL AS THE HONBLE KERALA HIGH COURT HAVE TAKEN A DECISION THA T CARRIED FORWARD UNABSORBED DEPRECIATION, ETC. HAVE TO BE SET OFF BEFORE COMPUT ING DEDUCTION UNDER SECTION 10B OF THE ACT: I.CIT VS. HIMATASINGIKE SEIDE LTD. 156 TAXMAN 151(K AR) II.CIT VS. PATSPIN INDIA LTD. 15 TAXMAN.COM 122 (KE R) 5.THE LEARNED COUNSEL SUBMITTED THAT THE AFORESTAT ED DECISIONS WERE RENDERED UNDER SECTION 10B OF THE ACT WHEREAS THERE IS A DIRECT DE CISION OF THE JURISDICTIONAL HIGH COURT VIS--VIS THE PROVISIONS OF SECTION 10A(CIT) VS. PLACK AND VEATCH CONSULTING P.LTD. 348 ITR 72) WHEREIN THE COURT OBSERVED THAT DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN EFFECT TO AT THE STAGE OF COMPUTING THE PROFITS AND GAINS OF BUSINESS AND THE COMPUTATION SHOULD BE ANTERIOR TO THE APPLICATI ON OF PROVISIONS OF SECTION 72 OF THE ACT. THE COURT NOTICED, IN ANOTHER CASE, THAT P ROFITS ON ONE UNIT CANNOT BE SET OFF FROM THE LOSS OF ANOTHER FIRM IN THE PROCESS OF COM PUTATION OF DEDUCTION UNDER SECTION 10A OF THE ACT. HE ALSO ADVERTED OUR ATTENT ION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT (CIT VS. YOKOGAWA INDIA LTD. 3 41 ITR 385) TO SUBMIT THAT THE ITAT BANGALORE BENCHS DECISION WAS UPHELD BY THE H ONBLE KARNATAKA HIGH COURT. ITA NOS .59,1063,8703,8691/ MUM/2011 . 10 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO N AND PERUSED THE RECORD. IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH CO URT CITED SUPRA WE ARE OF THE VIEW THAT THE DEDUCTION UNDER SECTION 10A HAS TO BE COMPUTED BEFORE SETTING OFF THE LOSS OF EARLIER YEARS OR OF A DIFFERENT UNIT. SINCE THE VIEW TAKEN BY THE LEARNED CIT(A) IS IN CONFORMITY WITH THE VIEW TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE SAID ORDER. THEREFORE , GROUND NO.1 & 2 ARE REJECTED. 16. IN THIS SITUATION, AFTER HEARING BOTH THE PARTI ES, WE RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION TO ADOPT A SIMILAR COMP UTATION AS HE WILL ADOPT FOR A.Y.2005-06 WHILE GIVING EFFECT TO THE AFOREMENTION ED ORDER OF THE TRIBUNAL. WE DIRECT ACCORDINGLY. FOR STATISTICAL PURPOSE, THI S GROUND IS CONSIDERED AS ALLOWED. 17. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED I N THE MANNER AS INDICATED ABOVE. 18. ITA NO.1063/M/2011 THE ONLY ISSUE RAISED BY THE DEPARTMENT IN THE PRES ENT APPEAL IS REGARDING DELETION OF ADDITION OF A SUM OF RS.35,04,640/- WHI CH REPRESENT PROPORTIONATE DISALLOWANCE OF DEDUCTION CLAIMED U/S.10B. THIS ISS UE IS DISCUSSED BY THE AO IN PARA 6 OF THE ASSESSMENT ORDER. THE AO NOTICED T HAT ANKLESHWAR UNIT (EXPORT ORIENTED UNDERTAKING) OF THE ASSESSEE WAS G RANTED CERTIFICATE FROM 22.6.2006, HE OBSERVED THAT DEDUCTION U/S.10B SHOUL D BE ALLOWED ONLY W.E.F. 22.6.2006. ACCORDINGLY, THE AO DISALLOWED A SUM OF RS. 35,04,640/-. THE DISALLOWANCE MADE BY THE AO WAS CHALLENGED IN AN AP PEAL FILED BEFORE THE CIT(A) AND THIS ISSUE HAS BEEN DISCUSSED BY LD. CIT (A) IN PARA 11 TO 13. REFERRING TO THE PROVISIONS OF SECTION 10B, IT WAS PLEADED THAT WHEN THE CERTIFICATE IS GRANTED AND CONDITIONS ARE FULFILLED , SECTION 10B DOES NOT CONTAIN ANY RESTRICTION AS CANVASSED AO AND THE SECTION PRO VIDES FOR THE DEDUCTION IN THE CONTEXT OF ASSESSMENT YEAR. THE LEARNED CIT(A) HAS CONSIDERED SUCH SUBMISSIONS OF THE ASSESSEE. LD. CIT(A) REFERRED TO EXPLANATION-2(IV) BELOW SECTION 10B WHICH DEFINES 100% EOU AS AN UNDERTAK ING WHICH HAS BEEN APPROVED AS A 100% EOU BY THE BOARD APPOINTED IN TH IS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY S ECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT 1951 AND RULES MAD E THEREIN. LD. CIT(A) ITA NOS .59,1063,8703,8691/ MUM/2011 . 11 FURTHER OBSERVED THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS BEEN GRANTED SUCH CERTIFICATE OF APPROVAL DURING THE CURRENT YEAR UN DER CONSIDERATION. THEREFORE, LD. CIT(A) OBSERVED THAT ASSESSEE IS ENTITLED TO CL AIM EXEMPTION U/S.10B ON THE ENTIRE PROFITS DERIVED DURING THE YEAR. IN THIS MANNER LD. CIT(A) HAS DELETE THE ADDITION. 19. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT LD . CIT(A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. SECTION 10 B PROVIDES THAT A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY 100% EX PORT ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER S OFTWARE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS RELEVANT TO THE PREVIO US YEAR IN WHICH THE UNDERTAKING BEGINS MANUFACTURE OR PRODUCTS ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION ITSEL F THE ASSESSEE WAS GRANTED APPROVAL AS 100% EXPORT ORIENTED UNIT. THE MAIN PRO VISION DOES NOT RESTRICT ELIGIBILITY OF DEDUCTION FROM THE DATE OF THE APPRO VAL BUT IT RELATES TO ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH UNDERTAKING BEGINS MANUFACTURE OR PRODUCTS ARTICLES OR THINGS. THEREFO RE, WE DO NOT FIND ANY INFIRMITY IN THE RELIEF GRANTED BY LD. CIT(A). WE D ECLINE TO INTERFERE AND THIS GROUND OF THE REVENUE IS DISMISSED. 20. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.8703/M/2011 21. FOR THIS YEAR ALSO A SUM OF RS.80,83,556/- WAS EXCLUDED FROM ELIGIBILITY OF DEDUCTION U/S 10A/10B OF THE ACT. THE DETAILS AS DESCRIBED IN THE ASSESSMENT ORDER ARE AS UNDER: (I) SALE OF SCRAP RS.1,44,400/- (II) EXCISE REFUND RS. 3,135/- (III) DIVIDEND RS.6,25,048/- (IV) EXPORT BENEFITS (DEPB) RS.33,34,332/- (V) INTEREST ON FIXED DEPOSITS/MARGIN MONEY (VI) INTEREST ON I.T.REFUND RS.2,01,475/- (VII) SUNDRY BALANCE WRITTEN BACK RS.8,34,761/- (VIII) MISCELLANEOUS RECEIPTS RS.8,38,487/- (IX) COMMISSION AND BROKERAGE RS.8,02,536/- (X) EXCHANGE VARIATION GAIN RS.4,93,202/- (XI) NOTICE PERIOD SALARY RECOVERED RS. 30,158/ - ITA NOS .59,1063,8703,8691/ MUM/2011 . 12 (XII) PROFIT ON SALE OF ASSETS RS. 84,591/- TOTAL. RS.80,83,556/ - ----------------------------------------------- 22. SIMILAR REASONS HAVE BEEN ASSIGNED BY AO, WHIL E EXCLUDING THE AFOREMENTIONED AMOUNT FOR THE PURPOSE OF SECTION 10 A/10B AS WERE GIVEN IN A.Y. 2007-08. HOWEVER, BEFORE LD. CIT(A) FOR EACH I TEMS THE SUBMISSIONS WERE MADE AND RELEVANT PART OF THE ORDER OF LD. CIT (A) READ AS UNDER: A. ' DISALLOWANCE OF SALE OF SCRAP RS. 1 , 44,400/-: I. THE APPELLANT CLAIMS THAT SALE OF SCRAP WAS GENERATE D DURING MANUFACTURING AND IT WAS DIRECTLY RELATED TO EXPORT BUSINESS. II.THIS IS A RECURRING ISSUE WHICH CAME UP IN APPEAL FO R A . Y. 2007-08 WHERE T HE CIT(A) RELYING ON THE DECISION OF LIBERTY INDIA 317 ITR 21 8 HAS UPHELD THE D I SALLOWANCE WHILE PASSING THE ORDER ON 26.11 . 2010. SINCE THE DECISION IS OF THE C OORDINATE AUTHOR I TY , NO INTERFERENCE IS CALLED FOR . THE DISALLOWANCE IS, THEREFORE , CONFIRMED. B. DISALLOWANCE OF EXCISE REFUND RS. 3,135/- I . I T WAS H I GHLIGHTED THAT EX C ISE REFUND IS RECE I VED FROM THE UN I T OTHER THAN . KANDLA AND ANK L ESHWAR UNITS AND , THEREFORE , IT DOES NOT FORM PART OF PROFIT U /S .1 0A A N D U/S . 10B AND SO NOT LIABLE FOR EXCLUSION . IT HIGHLIGHTED THE FACT THAT SCHEDULE ' A ' TO ' S ' ANNEXED TO AND FORMING PART OF BALANCE SHEET AS ON 31 . 0 3 . 2008 AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03 . 2008 WAS FILED BEFO R E T HE ASSESSING OFFICE R I N RESPECT OF EACH OF UNITS (VIZ , MUMBAI , BARODA , ANKLESHWAR , DEHRADUN OTHER THAN KANDLA) BUT WAS NOT REFERRED BY THE ASSESSING OFFICER LEADING TO TH I S ERRONEOUS CONCLUSIONS ON HIS PART. SINCE THE SAID AMOUN T IS NOT FORMING PART OF PROFIT U/S.1 OA AS IT HAS BEEN SHOWI NG INCOME IN P R OF I T & LOSS ACCOUN T, THERE WAS NO CASE FOR MAKING DISALLOWANCE. THE ADDITI ON IS, THEREFORE ' DELETED. C. DISALLOWANCE OF DIVIDEND INCOME OF ~ 6,25,048: I. FO R THE PURPOSES OF COMPUTATION OF TAXABLE PROFIT , THE APPELLANT HAS CONS I DERED DIVIDEND SEPARATELY AND I T DID NOT FORM PART OF DEDUCTION U/S . 10A OR U /S . 10B . IN THESE C I RCUMSTANCES , THERE WAS NO CASE F OR MAKING THIS D I SAL L OWA N CE . THE ADDITION IS DELETED . D. DISALLOWANCE OF FD INTEREST RS. 6,91 , 431/- : IT WAS HIGHLIGHTED THAT FD INTEREST WAS RECEIVED FROM ANKLESHWAR UN I T IS RS.37,260/- AND REMAIN I NG RS. 6 , 54 , 171/ - PERTAINS TO MUMBA I UNIT AND , THE R EFO R E ,DOES NOT FORM PART OF DEDUCTION U/S . 1 OA OR U/S . 1 OB . IT DREW ATTENTION TO SCHEDULE Z T O ' S ' A ND PROF I T & LOSS ACCOUNT OF EACH OF THE UNITS . IN THESE CIRCUMSTANCES, I NTE R EST T O THE EXTENT OF RS. 37 , 260/ - WILL QUALIFY FOR D I SALLOWANCE AND THE R EMA I NING AMOUNT OF RS.6 , 54 , 171/- WHICH WAS RECEIVED BY THE NON 10A AND 10B UNIT S CA N NOT BE DISALLOWED . THE APPELLANT GETS PARTIAL RELIEF IN RESPECT OF THIS I TEM . / E . DISALLOWANCE OF RS. 2,01,475/- BEING INTEREST ON I.T.R EFUND : I . THI S R ECE I PT WAS CONSIDERED SEPARATELY AND DID NOT FORM PART & PARCEL OF T OTA L IN COME I N THE COMPUTATION AND SO WAS NOT CLAIMED WHILE COMPUTING D EDUCT I ON U/S . 10A AND U/S . 10B AND THEREFORE, THE SAID AMOUNT WHICH WAS ADDED BY THE ASSESSING OFFICER FOR THE PURPOSES OF COMPUTATION U/S . 10A AND U/S . 10B IS DELETED . THE APPELLANT GETS RELIEF ON THIS ISSUE. F . DISALLOWANCE OF SUNDRY BALANCES WRITTEN OFF- RS. 8,34,76 1/-: ITA NOS .59,1063,8703,8691/ MUM/2011 . 13 I . IT WAS HIGHLIGHTED THAT IT WAS REFUND OF EXPENSES IN E ARLIER YEARS AND, T HEREFORE , H AS A DIRECT NEXUS TO EXPORT BUSINESS . THE AMOUNTS PERTAINING TO A NKLESHWAR UNIT IS RS. 1 , 68 , 059/ - AND KANDLA UNIT IS RS. 86 , 635/- AND THE BALANCE AMOUNT DOES NOT FORM PART OF DEDUCTION U/S . 1 OA AND U/S . 1 OB II . IN VIEW OF THE FACTUAL POSITION, THE AMOUNT WHICH CAN BE ADDED BACK IS RS. . 2 , 54,694/ - AND THE BALANCE AMOUNT HAS TO BE DELETED. THE APPELLANT GETS PA R T I AL RELIEF ON THIS POINT . G . DISALLOWANCE OF MISCELLANEOUS RECEIPTS RS.8,38 . 487/-: I . IT WAS HIGHLIGHTED THAT THIS AMOUNT INCLUDES AMOUNTS RE CEIVED FROM SALE OF SCRAP AND THA T AMOUNT I S RS. 7 , 85 , 065/- . THIS AMOUNT WAS ALREADY ADDED AND N OT CONSIDERED FOR THE PURPOSES OF SECTION 1 08 . KEEPING I N VIEW THE FACT THAT THIS AMOUNT I S ALREADY ADDED BACK , THE ADDITION MADE BY THE ASSESSING OFFICER TANTAMOUNT TO DOUBLE O NE . THE BALANCE ADDITION OF RS.53 , 422/ - I S CONFI R MED. T HE APPELLANT GETS PARTIAL RELIEF ON THIS ISSUE . H . DISALLOWANCE OF COMMISSION & BROKERAGE RS. 8,02,536/-. DISALLOWANCE OF EXCHANGE VARIATION GAIN RS.4,93,202/-, DISALLOWANCE OF NOTICE PERIOD SALARY RECOVERED RS.. 30,158/-: I . THESE I TEMS WILL ALSO DISALLOWED I N EAR L IER YEAR WHILE COMPUTING PROFITS U / S . 10A AND WAS UPHELD BY CIT(A) IN HIS ORDER FOR A . Y.2007-08 HENCE THE ADDITIONS/DISALLOWANCES IS , THEREFORE , CONFIRMED. I.DISALLOWANCE OF PROFIT ON SALE OF ASSETS RS.84.591 /-: I. IT WAS HIGHLIGHTED THAT THIS WAS NOT INCLUDED WHILE COMPUTING PROFIT U/S.10A AND U/S.10B AND, THEREFORE, NEEDS TO BE DELETED. II.SINCE TH I S AMOUNT WAS NOT INCLUDED INITIALLY WHILE COMPUTING PRO FITS, THERE WAS NO CASE FOR ITS BEING DISALLOWANCE WHILE COMPUTING PROFITS . THE APPELLANT G ETS REL I EF ON T H I S ISSUE . J.DISALLOWANCE OF DEPB LICENSE RS. 33.34.332/-: I . IT WAS H I GHL I GHTED THAT DEPB INCENTIVES OF RS. 7 , 45,353/ - PERTAINS TO B OMBAY UN I T WH I CH WAS OFFERED FOR TAXATION AND RS.25,88 , 979/- PERTAIN TO KANDLA UNIT ON WHIC H 10A AND 1OB DEDUCTION WAS CLAIMED. I I . IN VIEW OF DECISION OF HON'BLE SUPREME COURT IN THE CA SE OF LIBERTY INDI A 317 ITR 218 RS.25,88,979/- HAS TO ADDED BACK AS IT IS NOT A SOURCE OF FIRST DEGREE . HOWEVER, INCENTIVES OF ~ 7 , 45,353/- PERTAINING TO BOMBAY UNIT AND NOT CLAIMED A S DEDUCTION SHOULD BE EXCLUDED. THE APPELLANT GETS PARTIAL RELIEF ON THIS ITEM . 4.1 . AT THE END IT HAS TO BE MENTIONED THAT THE ASSESSING O FFICER HAS MADE 12 I TEMS OF ADDITIONS IN A SUMMARY MANNER WITHOUT VERIFYING BASIC FACTS . THE APPELLANT HAD FILED SCHEDULE ' A ' TO'S ' ANNEXED TO AND FORMING PART OF BALANCE SHEET AS ON 31.03 . 2008 AND THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31 . 03 . 2008 IN RESPECT OF EACH OF THE UNITS. IT WOULD HAVE BE EN IN THE FITNESS OF THINGS IF THE ASSESSING OFFICER HAD SEPARATELY AND INDIVIDUALLY VERIFI ED EACH AND EVERY ITEM CROSS CHECKED FROM THESE ACCOUNTS AND AFFECTED THE DISALLOWANCES U/S . 10A OUT OF CLAIMED . THE OMNIBUS DISALLOWANCE OF RS.80 , 83,556/- IS NEITHER SPEAKING NOR EXAMINES EACH ITEM I N DETAIL . TO SUM UP, OUT OF ISALLOWANCES COMPRISING OF 12 ITEMS, THE APPELLANT GETS PARTIAL RE LIEF ON SOME ITEMS WHILE BALANCE IS DISALLOWED AS PER THIS ORDER . 5. G R OUND OF APPEAL NO.3 RELATES TO DISALLOWANCE OF RS.5,88, 814/- ON ACCOUNT OF VALUATION OF WORK-IN-PROGRESS . 5 . 1 THE ASSESS I NG OFFICER HAS MADE THE ADDITION ON ACCOUNT OF UNDER V ALUATION OF WORK-IN- PROGRESS ON THE GROUND THAT WORK-IN-PROGRESS WAS VALUED AT COST INCLUDING RAW-MATERIAL AND EXCLUDING LABOUR CHARGES. IN THIS CONNECTION, IT WAS SUB MITTED THAT IN THE PAST ALSO SUCH ADDITIONS WAS MADE AND WORK-IN- PROGRESS WAS ENHANCED. HOWEVER BY ADDING THE SAID AMOUNT OF RS. 5,88,814/- THE ASSESSING OFFICER FAILED TO ADJUST THE OPENING WORK-IN-PROGRESS OF AY.2007-08. 5 . 2 . I HAVE PERUSED THE ASSESSMENT ORDER AND WRITTEN SUBMI SSIONS OF THE APPELLANT . THE ASSESSING OFFICER IS DIRECTED TO TAKE OPENING WORK-IN-P ROGRESS AT THE SAME FIGURE OF CLOSING WORK-IN-PROGRESS OF AY.2007-08 SO AS TO TAKE THE AT LOG ICAL END . BY NOT DOING SO, IT WAS ONLY WEAKENING THE ADDITION MADE IN THE CURRENT YEAR. THI S GROUND OF APPEAL IS DECIDED IN APPELLANTS FAVOUR. ITA NOS .59,1063,8703,8691/ MUM/2011 . 14 23. FOR A.Y. 2008-09 ALSO LD. AR HAS SUBMITTED A C HART WHICH READ AS UNDER: GROUND NOS. PARTICULARS AMOUNT(RS.) SUBMISSION I(1)(2) DISALLOWANCE OF SALE OF SCRAP 1,44,400/- SCRAP WAS GENERATED DURING THE PROCESS OF MANUFACTURING AND HAS DIRECT NEXUS TO EXPORT ORIENTED BUSINESS. NOT PRESSED II(1)(2) DISALLOWANCE OF F.D.INTEREST 37,620/- F.D. INTEREST RECEIVED FROM THE ANKELESHWAR UNIT IS RS.37,260/- NOT PRESSED BECAUSE OF THE SMALLNESS OF THE AMOUNT III(1)(2) DISALLOWANCE OF SUNDRY BALANCE W/OFF 2,54,688/- IT IS REFUND OF EXPENSES CLAIMED IN EARLIER YEARS AND THEREFORE, HAS DIRECT NEXUS TO EXPORT BUSINESS. AMOUNT PERTAINING TO ANKLESHWAR UNIT IS RS.1,68,059/- AND KANDLA UNIT IS RS.86,635/- BALANCE AMOUNT DOES NOT FORM PART OF FROFIT U/S. 10A/10B. SEE SUBMISSIONS ON PAGE 4 VI OF PAPER BOOK IV(1)(2) DISALLOWANCE OF MISCELLANEIOUS RECEIPTS. 53,422/- NOT PRESSED V(1)(2) DISALLOWANCE OF COMMISSION AND BROKERAGE 8,02,536/- THIS REPRESENTS DISCOUNT GIVEN ON CLEARING AND FORWARDING CHARGES. AMOUNT PERTAINING TO KANDLA UNIT IS RS.7,64,360/- PLEASE SEE DETAILS ON PAGE NO.19 TO 22 OF THE PAPER BOOK & SUBMISSIONS ON PAGE 6 PARA VII OF THE PAPER BOOK VI(1)(2) DISALLOWANCE OF EXCHANGE VARIATION GAIN 4,93,202/- THIS INCLUDES GAIN REALIZED ON ACCOUNT OF FLUCTUATION OF FOREIGN EXCHANGE RATES. FOREIGN EXCHANGE IS DIRECTLY RELATED TO EXPORT ACTIVITIES. THEREFORE, IT CANNOT BE DISALLOWED U/S.10A/10B. ISSUE IS COVERED BY 282 ITR PAGE 144, 294 ITR PAGE 451, 114 ITD PAGE 448 AND 149 TTJ PAGE 767 PLEASE SEE SUBMISSIONS ON PAGE NO.7 PARA VII OF THE PAPER-BOOK VII(1)(2) DISALLOWANCE OF NOTICE PERIOD SALARY RECOVERED 30,158/- THIS IS RECEIVED FROM THE UNIT OTHER THAN KANDLA AND ANKLESHWAR UNITS. THEREFORE, IT DOES NOT FORM PART OF PROFIT U/S.10A/10B. REFER PAGE 35 OF PAPERBOOK. NOT PRESSED VIII(1)(2) DISALLOWANCE OF DEPB INCENTIVES 25,88,979/- DEPB INCENTIVES OF RS.25,88,979/- PERTAINS TO KANDLA UNIT. REFER PAGE 35 OF PAPGER BOOK. ISSUE IS COVERED BY THE SPECIAL BENCH DECISION 146 TTJ PAGE 129 MARAL OVERSEAS LTD. VS. ADDITIONAL CIT PARA NO.77,79 &80 OF THE SAID DECISION . SUBMISSION ON PAGE 8 IX(1)(2) PRODUCT REGISTRATION CHARGES 92,24,172/- PLEASE SEE FACTS AND SUBMISSIONS ON PAGE 11& 12 OF THE PAPER BOOK THE ISSUE IS COVERED BY EARLIER YEARS DECISION OF ITAT IN ASSESSEES OWN CASE. A.Y.2001- 02,2003-04 ITA NOS .59,1063,8703,8691/ MUM/2011 . 15 24. REFERRING TO THE AFOREMENTIONED CHART, IT WAS S UBMITTED BY LD. AR THAT LD. CIT(A) HAS WRONGLY SUSTAINED THE ADDITION WHICH ARE PRESSED IN THE CHART AND TO THAT EXTENT RELIEF SHOULD BE GRANTED TO THE ASSESSEE. IN RESPECT OF DEPB ISSUE, HE SUBMITTED THAT THE DEDUCTION WAS CLAIMED FOR A SUM OF RS.25,88,979/-. LD. AR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVO UR OF ASSESSEE BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. ARTS AND CRAFTS EXPORT LMT. 246 CTR (BOM) 463. REFERENCE WAS MADE T O FOLLOWING QUESTION & ANSWER THEIRTO. Q.(C).WHETHER ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL ERRED IN LAW IN HOLDING DEPB AS A PROFIT DERIVED FR OM EXPORT BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10BA I GNORING THE RATIO OF DECISION IN THE CASE OF LIBERTY INDIA VS. CIT(2009) 225 CTR (SC) 233:(2009) 28 DTR (SC) 73 : (2009) 317 ITR 218 (SC) HAVING BIN DING FORCE ON FACTS AND CIRCUMSTANCES OF THE CASE. DECISION: AS REGARDS QUESTION (C) IS CONCERNED, COU NSEL FOR THE REVENUE FAIRLY STATES THAT THOUGH THE QUESTION HAS BEEN RAISED BY RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (2009) 225 CTR (SC) 73: (2009) 317 218(SC), THE SAID DECISION HAS NO RELEVA NCE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER THE THIRD QUESTION REAISED BY THE REVENUE CANNOT BE ENTERTAINED. 25. LD. AR SUBMITTED THAT LD. CIT(A) HAS WRONGLY R ELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE LIBERTY INDIA VS. CIT 317 ITR 218. HE SUBMITTED THAT THIS DECISION HAS BEEN CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT AND IT WAS HELD THAT DECISION IN THE CAS E OF LIBERTY INDIA WILL NOT BE APPLICABLE AND THE DECISION OF TRIBUNAL IN THE CASE OF ARTS AND CROFTS EXPORT VS. ITO 144 TTJ 66 MUMBAI WAS APPROVED IN WHICH IT WAS HELD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.10B ON DEPB AS THESE ARE BUSINESS INCOME WITHIN THE MEANING OF SECTION 28. THUS, IT WAS PLEADED BY LD. AR THAT THIS ADDITION SHOULD BE DELETED AS IT IS DIRECTLY COVERED BY THE AFOREME NTIONED DECISION. WITH REGARD TO FOREIGN EXCHANGE, THE LD. AR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AS MENTIONED IN THE CHART AND HE PL EADED THAT THE SAID ADDITION SHOULD ALSO BE DELETED. WITH REGARD ADDITION RELATI NG TO PRODUCT REGISTRATION CHART, IT WAS SUBMITTED THAT THE SAME COVERED IN FA VOUR OF THE ASSESSEE BY THE EARLIER DECISION OF THE TRIBUNAL. ITA NOS .59,1063,8703,8691/ MUM/2011 . 16 26. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY CIT(A). 27. AFTER HEARING BOTH THE PARTIES, IN VIEW OF THE SUBMISSIONS OF THE ASSESSEE IN THE CHART GROUND NO.I(1)(2),II(1)(2),IV(1)(2), V II(1)(2) ARE DISMISSED BEING NOT PRESSED. GROUND NOS. III(1)(2), V(1)(2), VI(1)( 2) ARE BEING RESTORED BACK TO THE FILE OF THE AO WITH A DIRECTION TO RE-ADJUDICAT E THE SAME AS PER OUR DECISION GIVEN IN RESPECT OF A.Y.2007-08. GROUND NO.VIII(1)( 2) RELATING TO DISALLOWANCE OF DEPB INCENTIVES IS COVERED IN FAVOU R OF ASSESSEE BY THE DECISION OF TRIBUNAL IN THE CASE OF ARTS AND CRAFTS EXPORT VS. ITO(SUPRA) WHICH HAS BEEN APPROVED BY HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS. ARTS AND CRAFTS (SUPRA) AND THIS GROUND IS ALLOWED. 28. GROUND NO.IX(1)(2) IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2001-02, WHERE DISALLOWANCE OF RS.57,55,256/- ON ACCOUNT OF PRODUCT REGISTRATION C HARGES WAS DELETED WITH THE FOLLOWING OBSERVATIONS; 2. THE FIRST GROUND RELATES TO DEISALLOWANCE OF RS .57,55,256/- ON ACCOUNT OF PRODUCT REGISTRATION CHARGES. 3.THE ASSESSEE HAD CLAIMED SUM OF RS. 57,55,256/- A S PRODUCT REGISTRATION CHARGES FOR REGISTRATION AS WELL AS RENEWAL CHARGES FOR ITS PRODUCTS PAID TO US AUTHORITIES FOR GETTING THE PRODUCT REGISTERED. THE SAME WERE DISAL LOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE NEW PRODUCTS WOULD BE SOLD BY T HE ASSESSEE NOT ONLY FOR ONE YEAR BUT IN MANY YEARS AS SUCH THE EXPENSE HAS BEEN INCU RRED TO HAVE BENEFIT OF ENDURING NATURE. THE LD. CIT(A) UPLEHD THE TRADING OF THE AS SESSING OFFICER. 4. THE COUNSEL FOR THE ASSESSEE SHRI K. GOPAL STATE D THAT IN ORDER TO EXPORT THE GOODS MANUFACTURED BY THE ASSESSEE IT HAD TO REGISTER THE SAME. HE FURTHER STATED THAT THE SAID REGISTRATION CHARGES INCLUDES REGISTRATION OF NEW PRODUCTS AS WELL AS RENEWAL OF REGISTRATION OF SOME OF THE PRODUCTS. HE STATED THA T AT THE TIME OF REGISTRATION THERE IS NO SURETY FOR A FUTURE SALE OF A PARTICULAR PRODUCT . IT MAY BE POSSIBLE THAT THE SAID PRODUCT MAY NOT HAVE GOOD MARKET IN FUTURE. IN ORDE R TO SELL THE GOODS IN FOREIGN MARKET THE SAME ARE REQUIRED TO BE REGISTERED WITH THE REGULATORY AUTHORITY. THE MERE FACT THAT THE ASSESSEE WAS GETTING SOME BENEFI T OF ENDURING NATURE DOES NOT MEAN THAT EXPENSE CAN BE DISALLOWED IF THE EXPENSE IS IN THE REVENUE FILED. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF EMPIRE JUTE CO. LTD. VS. CIT 124 ITR 1. HE ALSO RELIED ON THE DECISION OF AP PELLANTE TRBUNAL IN THE CASE OF JCIT VS. ANGLO FRENCH DRUGS LTD. IN ITA 4345/MUM/20 00. ON THE OTHER HAND, LD. DR SHRI AJAY STATED THAT THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. ANGLO FRENCH DURGS & INDUSTRIES LTD. IS NOT A SPEAKING ORDER AS IN THAT CASE HE TRIBUNAL HAS MERELY RELIED ON THE CASE OF EMPIRE JUTE CO. LTD. S UPRA. HE FURTHER STATED THAT THE FACTS OF THE CASE OF EMPIRE JUTE CO.LTD. WERE TOTAL LY DIFFERENT AS IN HAT CASE THE ASSESSEE HAD PURCHASED LOOM HOURS FROM DIFFERENT MA NUFACTURERS AT THE SAME CEILING IMPOSED ON WORKING TIME OF THE LOOMS AND THE APEX C OURT HAD HELD THAT EXPENDITURE INCURRED ON PURCHASE OF SAID LOOM HOURS WAS A REVEN UE EXPENDITURE. ITA NOS .59,1063,8703,8691/ MUM/2011 . 17 5. WE HAVE HEARED BOTH THE PARTIES IN DETAIL. THERE CANNOT BE ANY DOUBT THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON REGISTRATIO N OF ITS PRODUCTS WAS IN THE REVENUE FILED. IT IS BEYOND DOUBT THAT THE PRODUCTS ONCE REGISTERED ARE NOT SOLD ONLY IN THAT PARTICULAR YEAR BUT THE SALE CAN BE MADE OV ER A SPAN OF TIME UNTIL THE RENEWAL OF REGISTRATION IS REQUIRED. THE BENEFIT FORM THE S AID REGISTRATION OF THE PRODUCT IS NOT RESTRICTED TO THE RELEVANT ASSESSMENT YEAR AT THE S AME TIME THE EXPENSE IS OF REVENUE NATURE. WE ARE OF THE VIEW THAT THE ISSUE IS COVERE D BY THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF ANGLO FRENCH DURGS & INDUST RIES LTD. SUPRA, IN WHICH THE TRIBUNAL HAS ALLOWED PRODUCT REGISTRATION CHARGES P AID FOR FIVE YEARS AS REVENUE EXPENDITURE. RESPECTFULLY FOLLOWING THE SAME WE ALL OW THE PRODUCT REGISTRATION CHARGES AS CLAIMED BY THE ASSESSEE AND THE FINDING OF BOTH THE LOWER AUTHORITIES ARE VACATED. THE FIRST GROUND IS ALLOWED. 29. REFERENCE IN THIS RECORD CAN ALSO BE MADE TO TH E DECISION OF TRIBUNAL DATED 25 TH MAY, 2006 IN ITA NO.127/MUM/2005 COPY PLACED ON RE CORD. THE AFOREMENTIONED DECISION WAS SUBSEQUENTLY FOLLOWED B Y ITAT IN RESPECT OF ASSESSMENT YEAR 2002-03 VIDE ORDER DATED 31 ST AUGUST, 2006 IN ITA NO.2182/MUM/2006 COPY OF THE SAID ORDER IS ALSO PLA CED ON RECORD. THE RELEVANT OBSERVATION OF TRIBUNAL ARE AS UNDER: THE ONLY ISSUE IN THIS APPEAL IS THAT ACCORDING TO THE REVENUE EXPENDITURE OF RS.46,03,887/- TOWARDS PRODUCT REGISTRATION CHARGES IS CAPITAL EXPENDITURE WHEREAS ACCORDING TO THE ASSESSEE, THE SAME IS ALLO WABLE AS REVENUE EXPENDITURE. DURING THE COURSE OF HEARING BEFORE US , THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE AND AGAINST REVENUE BY THE DECISION OF ITAT, F BENCH, MUMBAI DATED 25.5.2006 IN THE CASE OF ASSESSEE IN ITA NO.127/MUM/2005 FOR ASSESSMENT Y EAR 2001-02. THE LD. DR HOWEVER, RELIED UPON THE JUDGMENT REPORTED IN 82 IT R 98(SC) AND 260 ITR 102(MUMBAI). ON CONSIDERATION OF THE MATTER, WE FIN D THAT THE JUDGMENTS RELIEF UPON BY THE LD. DR ARE ON DIFFERENT FACTS, WHEREAS THE TRIBUNAL DECISION IS IN THE CASE OF THE ASSESSEE HIMSELF AND DIRECTLY ON TH E CONTROVERSY FOR US. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE T RIBUNAL, WE ALLOW THIS APPEAL FILED BY THE ASSESSEE AND DIRECT THE LD. AO DEDUCTI ON OF RS.46,03,887/- AS REVENUE EXPENDITURE AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, GROUND NO.IX(1)(2) IS ALLOWED. 30. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ITA NO.8691/MUM/2011 31. IT WAS OBSERVED THAT THE DELETION WHICH IS AGIT ATED BY REVENUE IN THE PRESENT APPEAL IS ONLY A SUM OF RS.4,00,104/- FOR W HICH TAX EFFECT IS MUCH LESS THAN RS. 2 LACS. THE APPEAL HAS BEEN FILED CONTRARY TO INSTRUCTION NO.3 DATED 9 TH FEBRUARY, 2011. SECTION 268A PRESCRIBES THAT NO APP EAL SHALL BE FILED BY THE ITA NOS .59,1063,8703,8691/ MUM/2011 . 18 REVENUE BEFORE THE TRIBUNAL WHERE THE TAX EFFECT IS LESS THAN RS.3 LACS. HOWEVER, IT WAS CANVASSED BY LD. DR THAT LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE ON THE BASIS THAT THE ASSESSEE SUO MOTU HA S DISALLOWED A SUM OF RS.4,00,104 U/S.14A AND DISALLOWANCE WAS MADE BY TH E AO IS DOUBLE DISALLOWANCE AND ON THIS GROUND LD.CIT(A) HAD DELET ED THE DISALLOWANCE. HE SUBMITTED THAT IN THE COMPUTATION OF INCOME NO SUCH DISALLOWANCE HAS BEEN MADE BY THE ASSESSEE AND SINCE THE MATTER IS RESTOR ED BACK TO THE FILE OF AO ON OTHER ISSUES, THIS ISSUE MAY ALSO BE RESTORED BACK TO THE FILE OF AO FOR VERIFICATION. 32. WE HAVE CAREFULLY CONSIDERED SUCH SUBMISSIONS OF LD.DR BUT WE DO NOT FIND ANY FORCE IN SUCH SUBMISSIONS OF LD. DR. THE A FOREMENTIONED INSTRUCTIONS ARE BINDING ON THE REVENUE. ANY APPEAL FILED BY THE DEPARTMENT CONTRARY TO AFOREMENTIONED INSTRUCTIONS IS REQUIRED TO BE DISMI SSED IN LIMINE. THEREFORE, WE DISMISS THE PRESENT APPEAL ON ACCOUNT OF LOW TAX EFFECT. WE MAY ALSO MENTION HERE THAT IF IT IS A CASE OF REVENUE THAT LD.CIT(A), BASED ON WRONG FACTS, HAS GIVEN THE IMPUGNED RELIEF TO THE ASSESS EE THEN THE REVENUE CAN FILE RECTIFICATION APPLICATION BEFORE CIT(A) AND CAN GET THE IMPUGNED ORDER RECTIFIED IF THERE IS A PATENT AND OBVIOUS MISTAKE. WITH THESE OBSERVATIONS THE APPEAL FILED BY THE REVENUE IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 33. TO SUM UP, BOTH THE APPEALS BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES & BOTH THE APPEALS FILED BY TH E REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 16TH DAY OF JANUARY 2014. 0 ( ,-./ 12 16.01.2014 - ( 8' SD/- SD/- ( N.K. BILLAIYA ) ( I.P.BANSAL ) / ACCOUNTANT MEMBER $ '% / JUDICIAL MEMBER & ' MUMBAI ; 1 DATED : 17 TH JAN, 2014. AK PATEL* ITA NOS .59,1063,8703,8691/ MUM/2011 . 19 '!# &$'() *!)+' / COPY OF THE ORDER FORWARDED TO : 1. ! '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. * & 9) ( ! ) / THE CIT, MUMBAI. 4. * & 9) / CIT(A)-41 , MUMBAI 5. <=8 $)>? , * ! + !>?*/ , & ' / DR, ITAT, MUMBAI 6. 8@ A' / GUARD FILE. '!# / BY ORDER, %< ) $) //TRUE COPY// ,/ - . ( DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI