Rathi Transpower Pvt. Ltd., Pune V. Joint Commissioner of Income-tax,

ITA 874/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7347 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Depreciation; Earning of tax free income; Bad and doubtful debts
• Section: 14A; 37(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO S . 873 TO 875 /P U N/20 1 5 / ASSESSMENT YEAR S : 2009 - 10 TO 20 1 1 - 1 2 RATHI TRANSPOWER PVT. LTD., GAIA APEX, S.NO.33/2D, VIMAN NAGAR, NEAR HOTEL HINDUSTAN INTERNATIONAL, PUNE - NAGAR ROAD, PUNE 411014 . / APPE LLANT PAN: AA ACR8221P VS. THE JT. COMMISSIONER OF INCOME TAX, RANGE - 6, PUNE . / RESPONDENT . / ITA NO S . 916 & 917 /P U N/20 15 / ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 THE JT. COMMISSIONER OF INCOME TAX, RANGE - 6 , PUNE . / APPELLANT VS. RATHI TRANSPOWER PVT. LTD., GAIA APEX, S.NO.33/2D, VIMAN NAGAR, NEAR HOTEL HINDUSTAN INTERNATIONAL, PUNE - NAGAR ROAD, PUNE 411014 . / RESPONDENT PAN: AAACR8221P ASSESSEE BY : SHRI C.H. NAN IWADEKAR REVENUE BY : SHRI VIVEK AGGARWAL / DATE OF HEARING : 2 8 .0 9 . 201 7 / DATE OF PRONOUNCEMENT: 24 . 1 0. 201 7 2 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. / ORDER PER SUSHMA CHOWLA, JM: OUT OF THIS BUNCH OF APPEALS, APPEAL FILED BY THE ASSESSEE REL ATING TO ASSESSMENT YEAR 2009 - 10 AND CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT(A) - 4 , PUNE, DATED 03 . 03 .201 5 RELATING TO ASSESSMENT YEAR S 2010 - 11 AND 20 1 1 - 1 2 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 14 3 ( 3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . ALL THE APPEALS RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.873/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING DISALLOWANCE OF RS.3,85,073/ - U/S 14A OF THE ACT. HE ALSO FAILED TO APPRECIATE THAT THE AO HAD FAILED TO RECORD HIS SATISFACTION AS REQUIRED UNDER RULE 8D. THE LEARNED CIT(A) FURTHER FAILED TO APPRECIATE THE ARGUMENTS AND CONTENTIONS ADVANCED IN THIS BEHALF. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) HAS ERRED ON THE FACTS AND IN LAW UPHOLDING THE ENTIRE AMOUNT OF DISALLOWANCE OF RS.3,85,073/ - U /S 14A OF THE ACT WHEREAS THE AMOUNT OF DISALLOWANCE U/S 14A EXCEEDS THE EXEMPT INCOME EARNED BY THE ASSESSEE. 3. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE RESTRICTION OF THE CLAIM OF DEPRECIATION ON CIVIL FOUNDATION WORK FOR WINDM ILLS TO 10% AS AGAINST 80% CLAIMED BY THE ASSESSEE. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT, CIVIL FOUNDATION WORK IS AN INTEGRAL PART OF WINDMILLS. 4. THE REVENUE IN ITA NO.916/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 THE ORDER OF TH E LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED ALLOWING THE EXPENDITUR E ON ACCOUNT OF DISCOUNT GIVEN TO DEALERS BY IGNORING THE FACT THAT THE ASSESSEE HAS INFLATED EXPENDITURE ON ACCOUNT OF ACCELERATED DISCOUNT TO ADJUST THE PROFIT WITHOUT HAVING ANY FIXED POLICY OR CONSISTENCY. 3 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LOW, THE LD.COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ALLOWING THE CLAIM OF B A D DEBTS WHEN THE ASSESSEE HAS FAILED TO SUBSTANTIATE BEFORE THE ASSESSING OFFICER THAT THE DEBT HAS BEEN REFLECTED AS ITS INCOME. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ALLOWING THE EXPENDITURE ON ACCOUNT OF LATE DELIVERY CHARGES AS THE ASSESSEE HAS DEFAULTED IN NOT ADHERING TO THE TERMS AND CONDITIONS OF AGREEMENT AND DELI VERING ORDERS IN TIME. 5 FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE ID. C I T(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE FIRST ISSUE WHICH HAS BEEN RAISED IN ASSESSMENT YEARS 2009 - 1 0 AND 2010 - 11 IN THE APPEALS FILED BY THE ASSESSEE IS AGAINST DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUE, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ASSESSMENT YEAR 2009 - 10. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING OF POWER TRANSMISSION COUPLINGS AND POWER GENERATION THROUGH WINDMILL. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2,89,12,819 / - . THE ASSESSING OFFICER NOTED FROM SCHEDULE 14 OF PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS.1,29,39,294/ - ON ACCOUNT OF FINANCIAL CHARGES, WHICH INCLUDED BANK CHARGES OF RS.14,97,818/ - AND INTEREST EXPENDITURE OF RS. 1,14,41 ,476/ - . THE ASSESSING OFFICER FURTHER NOTED FROM THE COMPUTATION OF INCOME THAT THE ASSESSEE HAD EARNED INCOME OF RS.1,07,061/ - WHICH WAS EXEMPT UNDER SECTION 10 OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULES 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES) SHOULD NOT BE APPLIED. IN RESPONSE THERETO, THE ASSESSEE POINTED OUT THAT THE DIVIDEND WAS RECEIVED ON INVESTMENTS MADE IN MUTUAL FUNDS DURING EARLIER YEARS AND NO ADDITIONAL INV ESTMENT WAS MADE DURING THE YEAR UNDER CONSIDERATION. THE SAID INVESTMENT WAS CLAIMED TO BE OUT OF PROFIT GENERATED DURING EARLIER YEARS AND WAS 4 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. NOT LINKED TO THE LOAN TAKEN FROM THE BANK WHICH WAS FOR WORKING CAPITAL. THE ASSESSING OFFICER ON THE OTHER HAND, NOTED THAT THE ASSESSEE HAD MADE INVESTMENTS TO THE TUNE OF RS.1.68 CRORES, OUT OF WHICH INVESTMENTS OF RS.87,15,759/ - WAS THE INVESTMENT IN THE SUBSIDIARY I.E. RATHI POLYBOND, AUSTRALIA. THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS.1,07,061/ - AND HAD CLAIMED FINANCIAL EXPENDITURE TO THE TUNE OF RS.1.29 CRORES. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 14A OF THE ACT WERE SQUARELY APPLICABLE AND THE ARGUMENT OF ASSESSEE THAT THE INVESTMENT WAS NOT LINKED TO THE LOANS OBTA INED FROM THE BANK, WAS REJECTED AND THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE TO BE MADE UNDER SECTION 14A OF THE ACT, WHEREIN SUM OF RS.3,44,322/ - WAS DISALLOWED ON ACCOUNT OF INTEREST EXPENDITURE AS PER RULE 8D(II) OF THE RULES AND SUM OF RS.40,75 1/ - WAS DISALLOWED ON ACCOUNT OF PROPORTIONATE ADMINISTRATIVE EXPENSES AS PROVIDED IN RULE 8D(III) OF THE RULES. ACCORDINGLY, AN ADDITION OF RS.3,85,073/ - WAS MADE IN THE HANDS OF ASSESSEE. 7. SIMILARLY, IN ASSESSMENT YEAR 2010 - 11, THE DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS MADE AT RS.2,66,058/ - , WHEREIN THE DISALLOWANCE UNDER RULE 8D(II) OF THE RULES TO THE EXTENT OF RS.2,19,363/ - AND THE DISALLOWANCE UNDER RULE 8D(III) OF THE RULES WAS RS.46,695/ - . 8. THE CIT(A) UPHELD THE ADDITIONS MADE BY TH E ASSESSING OFFICER. 9. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD OWN FUNDS TO THE EXTENT OF RS.9.78 CRORES IN THE YEAR UNDER CONSIDERATION, AGAINST WHICH THE INVESTMENT IN SECURITIES, ON WHICH THE INCOME WAS EXEMPT, WAS TO THE TUNE OF RS.1.68 CRORES. IN THE SUCCEEDING YEAR I.E. ASSESSMENT 5 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. YEAR 2010 - 11, OWN FUNDS WERE TO THE TUNE OF RS.12.26 CRORES AND THE TOTAL INVESTMENTS IN SECURITIES HAVING TAX F REE INCOME WAS RS.1.92 CRORES. OUR ATTENTION WAS DRAWN TO THE BALANCE SHEET PLACED AT PAGE 20 OF PAPER BOOK. HE FURTHER POINTED OUT THAT IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. (2014) 366 ITR 505 (BOM) , T HERE IS NO MERIT IN MAKING ANY DISALLOWANCE ON ACCOUNT OF INTEREST. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.1 IS AGAINST THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES. THE ASSESSEE ADMITTEDLY, HAD MADE CERTAIN INVESTMENTS, INCOME FROM WHICH WAS EXEMPT FROM TAX. T HE TOTAL INVESTMENTS MADE IN ASSESSMENT YEAR 2009 - 10 WERE TO THE TUNE OF RS.1.68 CRORES AND RS.1.92 IN ASSESSMENT YEAR 20 1 0 - 1 1 . AS AGAINST THE SAME, THE ASSESSEE CLAIMS THAT IT HAD INTEREST FREE FUNDS AVAILABLE WITH IT IN THE FORM OF SHARE CAPITAL AND RES ERVES & SURPLUS, WHICH WERE TO THE TUNE OF RS.9.78 CRORES AS ON 31.03.2009 AND RS.12.26 CRORES AS ON 31.03.2010. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED THAT THE INVESTMENTS WERE MADE OUT OF INTEREST FREE FUNDS AVAILABLE WITH IT AND HENCE, NO DISALLOWANCE HAD TO BE MADE OUT OF INTEREST EXPENDITURE, WHEREIN THE LOAN WAS UTILIZED FOR CARRYING ON THE BUSINESS ACTIVITIES OF THE ASSESSEE. 13. THE ISSUE RAISED BY THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMB AY HIGH COURT IN CIT VS. HDFC BANK LTD. (SUPRA) AND IN VIEW OF THE AVAILABILITY OF INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES & SURPLUS, BEING MORE THAN THE INVESTMENTS MADE IN SECURITIES, INCOME FROM WHICH 6 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. WAS EXEMPT FROM TAX, THERE IS NO MERIT IN MAKING ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D(II) OF THE RULES. THE ASSESSEE HAVING APPLIED THE SAID FUNDS IN FIXED AND CURRENT ASSETS, CANNOT BE THE BASIS FOR DENYING THE AVAILABILITY OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE I.E. SHARE CAPITAL AND RESERVES & SURPLUS FOR MAKING INVESTMENTS IN TAX FREE SECURITIES. ACCORDINGLY, WE HOLD SO. IN VIEW THEREOF, THERE IS NO MERIT IN MAKING ANY DISALLOWANCE UNDER RULE 8D(II) OF THE RULES. HOWEVER, WE UPHOLD THE DISA LLOWANCE MADE UNDER RULE 8D(III) OF THE RULES ON ACCOUNT OF ADMINISTRATIVE EXPENSES. ACCORDINGLY, THE ADDITION OF RS.40,751/ - IN ASSESSMENT YEAR 2009 - 10 AND RS.46,695/ - IN ASSESSMENT YEAR 2010 - 11 IS UPHELD. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSE E IN ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 IS THUS, PARTLY ALLOWED. 14. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE WITHOUT PREJUDICE TO THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT DOES NOT STAND IN VIEW OF OUR ALLOWING THE CLAIM OF ASSESSEE AN D HENCE, THE SAME IS DISMISSED. 15. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD WITHDRAWN THE GROUND OF APPEAL NO.3 IN ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 AND HENCE, THE SAME ARE DISMISSED AS WITHDRAWN. FURTHER, THE ASSESSEE HAD ALSO WITH DRAWN THE GROUND OF APPEAL NO.1 RAISED IN ASSESSMENT YEAR 2011 - 12 AND HENCE, THE SAME IS ALSO DISMISSED. IN VIEW THEREOF, THE ASSESSEES APPEAL S IN ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 ARE PARTLY ALLOWED AND THE APPEAL IN ASSESSMENT YEAR 2011 - 12 IS DISMIS SED. 16. NOW, COMING TO THE APPEALS FILED BY THE REVENUE IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 , WHEREIN SIMILAR ISSUES HAVE BEEN RAISED. 17. THE FIRST GROUND OF APPEAL RAISED BY THE REVENUE IN BOTH THE APPEALS IS GENERAL AND HENCE, THE SAME ARE DISMI SSED. 7 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. 18. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.2 IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE EXPENDITURE INCURRED ON ACCOUNT OF DISCOUNT GIVEN TO THE DEALERS. IN ORDER TO ADJUDICATE THE ISSUE, WE MAKE REFERENCE TO THE FACTS AND ISSUES IN ASSESSMEN T YEAR 2010 - 11. 19. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS. 1,28,33,151/ - ON ACCOUNT OF DISCOUNT PAID. THE ASSESSEE WAS ASKED TO EXPLAIN THE GENUINENESS OF EXPENDITURE ALONG WITH RELEVANT EXTRACTS AND INFORMATION. T HE ASSESSEE HAD MADE THE AFORESAID PAYMENTS TO SEVEN DIFFERENT PARTIES. THE ASSESSEE IN REPLY, EXPLAINED THAT IT HAD GIVEN TRADE DISCOUNT TO THE CUSTOMERS IN THE RANGE OF 5% TO 25% . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED THAT IT WA S BU SINESS EXPENDITURE SINCE IT WAS PART OF ORDER NEGOTIATIONS AND BUSINESS MOTIVATION ACTIVITIES. THE ASSESSEE HAD GIVEN THE AFORESAID DISCOUNT ON CASE TO CASE BASIS, WHICH IN TURN, DEPENDS ON THE ORDER VALUE, PRODUCT RANGE, ETC. THE ASSESSEE POINTED OUT TH AT IT HAD GIVEN DISCOUNT IN THE RANGE OF 15% TO 25% FOR FEW SELECTED CUSTOMERS, WHERE THE MARGINS WERE CONSIDERED HIGHER THAN STANDARD PRICE . NORMALLY, THE SAID HIGHER DISCOUNT WAS BEING OFFERED FOR NON STANDARD PRODUCTS, WHERE THE PRICES QUOTED WERE ON H IGHER PRICE AND MARGIN WAS ALSO GOOD, COMPARED TO SALE OF STANDARD PRODUCTS. THE ASSESSEE WAS ENGAGED IN MANUFACTURE AND SALE OF CUPPLINGS, WHICH HAD DIFFERENT SIZES, HUGE DESIGNS AND DIFFERENT TECHNICAL SPECIFICATIONS AND RATES DEPEND ED ACCORDING TO THE REQUIREMENT AND APPLICATIONS . THE ASSESSEE HAD DECLARED GROSS PROFIT RATE OF 42.95% AND NET PROFIT RATE OF 14.80% I.E. AFTER DISCOUNT AND THE ASSESSEE CLAIMED THAT THE MARGINS WERE PETTY AND SAID EXPENDITURE MERITS TO BE ALLOWED. THE DETAILS OF PARTY - WIS E, PRODUCTS - WISE PROFITABILITY FOR THE YEAR UNDER CONSIDERATION ALONG WITH RATE OF DISCOUNT AND THE AMOUNT OF DISCOUNT GIVEN BY THE ASSESSEE WERE FURNISHED IN A TABULATED FORM, WHICH IS REPRODUCED BY THE ASSESSING OFFICER AT PAGES 11 TO 14 OF 8 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. THE ASSESSMEN T ORDER. THE ASSESSEE WAS ASKED WHETHER ANY WRITTEN AGREEMENTS WERE ENTERED INTO BY THE ASSESSEE WITH THE DEALERS VIS - - VIS RATE CONTRACT. IN REPLY, THE ASSESSEE POINTED OUT THAT THE GUIDELINES ARE MENTIONED IN POLICY MANUAL, COPY OF WHICH WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS REPRODUCED DISTRIBUTOR POLICY MANUAL - 2006 AT PAGES 15 TO 22 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT IN POLICY MANUAL, NOWHERE DISCOUNT WAS REFLECTED IN THE POLICY MANUAL. THE ASSE SSING OFFICER ASKED THE ASSESSEE T O JUSTIFY ITS STAND OF GIVING DISCOUNT. THE EXPLANATION GIVEN BY THE ASSESSEE IN THIS REGARD THAT THE DISCOUNT TO THE CUSTOMERS WAS BY WAY OF MOTIVATION TO SELL THE PRODUCTS OF THE ASSESSEE, WAS NOT ACCEPTED BY THE ASSESS ING OFFICER AND HE WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE EXPENDITURE BY LOWERING THE PROFIT ON ACCOUNT OF ACCELERATED DISCOUNT GIVEN TO THE PARTIES WHICH WAS NOT ACCEPTABLE. THE ASSESSING OFFICER DISALLOWED THE DISCOUNT OF RS. 1,28,33,151/ - . 20. BEFORE THE CIT(A), THE ASSESSEE FURNISHED THE DETAILS PRODUCT - WISE I.E. SALE PRICE, DISCOUNT OFFERED AND OVERALL PROFITABILITY AND CLAIM ED THAT EVEN AFTER THE DISCOUNT, THE ASSESSEE HAD EARNED SUFFICIENT AND REASONABLE PROFITS. WHERE THE ASSESSING OFF ICER HAD NOT DOUBTED THE GENUINENESS OF PAYMENTS MADE BUT HAD ONLY OBSERVED THAT IN VIEW OF DIFFERENT RATES OF DISCOUNT GIVEN ON THE SAME PRODUCT, THE ASSESSEE HAD INFLATED THE EXPENDITURE TO REDUCE THE PROFIT MARGINS WAS CLAIMED TO BE NOT JUSTIFIED AND WA S TOTALLY ARBITRARY. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON DIFFERENT DECISIONS OF THE HON'BLE SUPREME COURT ON THE GROUND THAT THE MATTER HAS TO BE EXAMINED FROM THE BUSINESS MAN S POINT OF VIEW. THE CIT(A) NOTED THAT LIFE CYCLE OF THE PRODUCTS MANUFACTURED BY THE ASSESSEE I.E. CUPPLINGS WAS BETWEEN ONE TO THREE YEARS AND THE COMPETITION IN THE MARKET WAS HEAVY. THE BUSINESS MODEL OF THE ASSESSEE REQUIRE S THAT IT SHOULD HAVE DISTRIBUTERS AND DEALERS APPOINTED AND STATI ONED AT VARIOUS PARTS OF THE 9 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. COUNTRY IN ORDER TO EXPAND THE BUSINESS, SINCE THE DEALERS REACH OUT TO THE END USERS, MAINTAIN STOCK, OFFER PRE AND AFTER SALES SERVICES AND ALSO CARRIED OUT SALES PROMOTION ACTIVITIES AND G AV E VALUABLE FEEDBACK ABOUT THE BUSI NESS PROSPECTS, COMPETITION AND SALES ACTIVITIES, THEN THE SAME HAVE TO BE CONSIDERED. HE REFERRED TO THE DISTRIBUTOR POLICY SCHEME THAT WAS FORMULATED BY THE ASSESSEE IN THE YEAR 2009 IN ORDER TO SPELL OUT THE RESPONSIBILITIES OF THE DEALERS AND DISTRIBU TORS AND HE OBSERVED THAT IT WAS A COMMON BUSINESS POLICY ADOPTED BY MANUFACTURING COMPANIES IN ORDER TO ENSURE FURTHERANCE OF THEIR BUSINESSES. THE ASSESSING OFFICER HAD MENTIONED THAT THE DISCOUNTS OFFERED TO DEALERS AND DISTRIBUTORS DID NOT FIND MENTIO N IN THE DISTRIBUTORS POLICY MANUAL. THE CIT(A) IN THIS REGARD OBSERVED THAT ANY DISCOUNT OFFERED BY A MANUFACTURER WAS DECIDED INTERNALLY AND INFORMED TO THE DEALERS. IT WAS ALSO NOTED BY THE CIT(A) THAT THE ASSESSEE WAS OFFERING DISCOUNT RANGING 5% TO 15% OF THE SALES PRICE TO THE NETWORK OF DISTRIBUTORS AND DEALERS AND ANYTHING EXCEEDING THE AMOUNT WAS OFFERED ONLY FOR NON STANDARD PRODUCTS HAVING HIGHER PRICE AND HIGHER PROFIT MARGINS. THE CIT(A) REFERRING TO THE DETAILS FURNISHED BY THE ASSESSEE RE GARDING THE DISCOUNT OFFERED AND THE PROFITABILITY EARNED POST DISCOUNT ON EACH PRODUCT WHICH IS REPRODUCED AT PAGES 11 TO 14 OF THE ASSESSMENT ORDER, NOTED THAT THE ASSESSEE HAD EARNED PROFIT PERCENTAG E , RANGING BETWEEN 13% TO 28.83% , WHICH WAS NOT DENIED BY THE ASSESSING OFFICER. REFERRING TO THE PROVISIONS OF SECTION 37(1) OF THE ACT, THE CIT(A) HELD THAT DISALLOWANCE C OULD BE MADE WHERE THERE WA S FINDING THAT EXPENDITURE WA S EITHER OF CAPITAL OR PERSONAL EXPENDITURE OR IN THE ALTERNATE, THE SAME HA D NO T BEEN INCURRED FOR THE PURPOSE OF BUSINESS. THE CIT(A) REFERRING TO THE ORDER OF ASSESSING OFFICER, POINTED OUT THAT THERE WAS NO WHISPER IN THE ASSESSMENT ORDER THAT THE DISCOUNT GIVEN WAS NOT REAL OR THAT THE DISCOUNT WAS NOT NECESSITATED BY BUSINESS C ONSIDERATION. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PROVE THAT THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINESS WAS 10 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. NEGATED BY THE CIT(A), IN VIEW OF THE DETAILED SUBMISSIONS FILED BY THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXPLAINING THE RATES OF DISCOUNT, ALSO FURNISHING THE DETAILED LIST OF DISCO UNT PAID TO PARTIES AND ALSO THE PROFIT MADE AFTER DISCOUNT. FURTHER, THE CIT(A) OBSERVED THAT THE COURTS HAVE HELD THAT THE ASSES SING OFFICER CANNOT PUT HIMSELF IN THE SHOES OF THE BUSINESSMAN IN ORDER TO DECIDE HOW THE ASSESSEE SHOULD CONDUCT ITS BUSINESS. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. WALCHAND & CO. PVT. LTD. (19 67) 65 ITR 381 (SC) AND THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 21. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 22. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AFTER TAKING US THROUGH THE FACTUAL ASPECTS OF TH E CASE, POINTED OUT THAT FROM THE PERUSAL OF THE DETAILS FILED BY THE ASSESSEE I.E. PAGES 11 TO 14 OF THE ASSESSMENT ORDER REFLECTS THE ASSESSEE TO HAVE GIVEN THE DISCOUNT RANGING FROM 0% TO 25% . THE TOTAL TURNOVER OF THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 WAS RS.32.02 CRORES. THE ISSUE WHICH WAS RAISED BY THE ASSESSING OFFICER WAS WHETHER IT MADE IN BUSINESS SENSE TO MAKE THE SAID PAYMENT ON ACCOUNT OF DISCOUNT. 23. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AS AGAINST T HE TURNOVER OF RS.32 CRORES IN ASSESSMENT YEAR 2010 - 11, EXPENDITURE WAS ONLY TO THE EXTENT OF ABOUT RS.1 CRORE. THE ASSESSEE IN OVERALL TERMS HAD PAID DISCOUNT WHICH WAS LESS THAN 5% AND ON THE OTHER HAND, THE ASSESSEE WAS MAKING THE PROFIT @ 9%. HE POIN TED OUT THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING OF CUPPLINGS, WHICH HAD LIFE CYCLE OF ONE TO THREE YEARS SINCE IT WAS HIGHLY CONSUMABLE ITEM AND THE ASSESSEE WAS OPERATING IN HIGHLY COMPETITI VE MARKET. HE FURTHER SUBMITTED THAT THOUGH AN INDICA TIVE PRICE LIST WAS MAINTAIN ED BUT 11 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. IF THE DISTRIBUTOR SELLS THE GOODS AT HIGHER RATES, THEN THE DISCOUNT PAID TO SUCH A DISTRIBUTOR IS HIGHER. HE FURTHER REFERRED TO THE RATIO RELIED UPON BEFORE THE CIT(A) AND POINTED OUT THAT THE ASSESSEE WAS THE BEST JU DGE TO COMMERCIALLY MAKE A DECISION OF PAYMENT OF DISCOUNT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED O UT THAT THERE WAS A DISTRIBUTORS POLICY IN PLACE IN FURTHERANCE TO WHICH THERE WAS AN AGREEMENT WITH DEALERS AND IT WA S MENTIONED IN THE AGREEMENT THAT THE DISCOUNT MAY VARY. HE FURTHER STRESSED THAT WHERE THERE WAS NO T A SINGLE CASE OF LOSS MAKING I N ANY OF THE TRANSACTIONS AND HENCE, NO MERIT IN DISALLOWING ANY PART OF EXPENDITURE. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IN ADDITION TO OTHER BUSINESSES CARRIED ON BY IT HAS ALSO CARRIED ON THE BUSINESS OF MANUFACTURE AND SALE OF CUPPLINGS. THE SAID ITEM MANUFACTURED BY THE ASSESSEE IS CONSUMABLE ITEM, WHICH IS UTILIZED IN DIFFERENT FIELDS, INDUSTRIES AND IN ORDER TO SELL ITS GOODS, THE ASSESSEE HAD ESTABLISHED A DISTRIBUTION NETWORK. THE ASSESSEE WAS OPERATING IN VERY HIGHLY COMPETITI VE FIELD, WHERE THE LIFE CYCLE OF THE PRODUCT WHICH WAS MANUFACTURED BY THE AS SESSEE, WAS BETWEEN ONE TO THREE YEARS. IN OTHER WORDS, THE MANUFACTURED ITEMS HAD TO BE SOLD AS QUICKLY AS IT WAS MANUFACTURED. SO TO BOOST ITS SALES, THE ASSESSEE HAD A DISTRIBUTION POLICY IN PLACE, WHICH WAS APPLICABLE TO ALL THE DISTRIBUTORS ALL OVER INDIA WHICH WERE ENGAGED IN SELLING CUPPLINGS. THE ROLE OF THE DISTRIBUTORS WAS NOT ONLY TO SELL THE GOODS BUT TO COLLECT THE PAYMENTS AND ALSO TO PROVIDE PRE AND AFTER SALES SERVICES, CARRIED OUT SALES PROMOTION ACTIVITIES AND G A VE FEEDBACK ABOUT THE BU SINESS PROSPECTS OF THE ITEMS, COMPETITION AND SALES ACTIVITIES TO THE ASSESSEE. THE ASSESSEE WAS DEALING IN CERTAIN STANDARD PRODUCTS AND IT WAS OFFERING DISCOUNTS RANGING FROM 5% TO 15% OF THE SALES PRICE TO I TS DISTRIBUTORS AND THE DEALERS. THERE WER E CERTAIN NON STAND ARD PRODUCTS WHICH HAD HIGHER PRICE AND 12 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. EVEN HAD HIGHER PROFIT MARGIN S , ON WHICH THE ASSESSEE WAS GIVING HIGHER PERCENTAGE OF DISCOUNT TO THE EXTENT OF 25%. THE SAID POLICY WAS FOLLOWED BY THE ASSESSEE ACROSS THE COUNTRY IN RESPECT OF A LL ITS DISTRIBUTORS AND DEALERS. THE ASSESSEE HAD FURNISHED COMPLETE DETAILS IN RESPECT OF SALE PRICE, PROFIT COST AND OTHER COSTS, DISCOUNT ALLOWED AND THE PROFIT MADE BEFORE TAXES, WHICH ARE REPRODUCED BY THE ASSESSING OFFICER AT PAGES 11 TO 14 OF THE A SSESSMENT ORDER. THE ASSESSING OFFICER HA D ALSO REPRODUCED DISTRIBUTION POLICY MANUAL AT PAGES 15 TO 22 OF THE ASSESSMENT ORDER, WHICH PROVIDES COMPLETE AND EXHAUSTIVE LIST OF THE RESPONSIBILITIES OF THE DISTRIBUTORS WHICH WOULD ENABLE THEM TO EARN THE AF ORESAID DISCOUNT . T HOUGH RATE OF DISCOUNT IS NOT MENTIONED BUT THE UNDERSTANDING THAT THE RATES WOULD BE FINALIZED ON TRANSACTION BASIS C OULD NOT BE REJECTED ON MERE SURMISES. THE PERUSAL OF THE DETAILS WOULD REFLECT THAT IN NONE OF THE CASES EVEN AFT ER PAYING DISCOUNT WHICH THE ASSESSING OFFICER FELT WAS HIGHER, THE ASSESSEE HAD MADE THE PROFITS. THE TOTAL TURNOVER OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS ABOUT RS.32 CRORES AND THE TOTAL EXPENDITURE BOOKED BY THE ASSESSEE ON ACCOUNT OF DI SCOUNT IS RS.1 CRORE WHICH LESS THAN 5% OF THE TOTAL SALES. THE ASSESSEE AS BUSINESSMAN HAD TAKEN BUSINESS DECISION TO MAKE A POLICY FOR THE DISTRIBUTION OF ITS GOODS AND TO PAY DISCOUNT TO DIFFERENT DEALERS IN THIS REGARD. SUCH BUSINESS DECISION CANNOT BE NEGATED BY THE ASSESSING OFFICER ON THE SURMISE THAT AS PER THE ASSESSING OFFICER, THE DISCOUNT PAID BY THE ASSESSEE WAS HIGHER. THE ASSESSEE IS BEST JUDGE OF ITS BUSINESS ARRANGEMENT AND IN THE ABSENCE OF ANY EVIDENCE FOUND THAT THE EXPENDITURE HAS NO T BEEN INCURRED, MERELY ON THE GROUND THAT THE RATE OF DISCOUNT PAID IS HIGHER, THE EXPENDITURE CANNOT BE DISALLOWED IN THE HANDS OF ASSESSEE. 25. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. WALCHAND & CO. PVT. LTD. (SUPRA). ACCORDINGLY, WE FIND NO MERIT IN THE 13 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. ORDER OF ASSESSING OFFICER IN THIS REGARD. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUND OF APPEAL NO.2 IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 RAISED BY THE REVENUE. 26. THE NEXT ISSUE VIDE GROUND OF APPEAL NO.3 IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF BAD DEBTS. 27. THE REVENUE IS AGGRIEVED BY THE FACT THAT THE CONDITIONS MENTION ED IN SECTION 36(2) OF THE ACT WE RE NOT FULFILLED. THE CASE OF THE ASSESSING OFFICER WAS THAT THE ASSESS EE HAS NOT SHOWN THAT THE DEBT WRITTEN OFF WAS IN THE INITIAL YEARS SHOWN AS PART OF ITS INCOME. THE ASSESSEE HAD FURNISHED THE EXPLANATION BEFORE THE ASSESSING OFFICER FOR WRITING OFF THE SAID DEBTS, WHEREIN IN ONE CASE THE OUTSTANDING AMOUNT WAS NOT CLE AR ED AND IN OTHER CASES, THE AMOUNT WAS NOT PAID BECAUSE OF SHORT DELIVERY / QUALITY DEFECTS. 28. THE CIT(A) NOTED THAT THE OUT STANDING SHOWN BY THE ASSESSEE WAS AGAINST THE S ALE INVOICES WHICH WERE SHOWN AS INCOME IN THE RESPECTIVE YEARS. THE ASSESSIN G OFFICER REFERRED TO THE LEDGER ACCOUNT FURNISHED TO HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE FILED AT PAGES 66 TO 70 OF THE PAPER BOOK, WHICH PROVIDE THE RELEVANT SALE BILLS AND DATA/S IN RESPECT OF WHICH DEBT WAS TAKEN INTO CONSIDERATI ON AS INCOME. THE CIT(A) APPLYING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT (2010) 323 ITR 397 (SC) NOTED THAT THE REQUIREMENT OF PROVING THAT THE DEBT WA S IRREVOCABLE WAS NO LONGER FASTENED ON THE ASSESSEE, WHO HAD WRITTEN OFF THE SAID DEBT IN ITS BOOKS OF ACCOUNT TO CLAIM THE DEDUCTION OF BAD DEBTS. THE ASSESSEE SINCE HAD WRITTEN OFF THE AMOUNT IN THE LEDGER ACCOUNT S OF THE RESPECTIVE DEBTORS IN ITS BOOKS OF ACCOUNT FOR THE IMPUGNED YEAR AND SINCE AMOUNTS WERE TAKE N INTO ACCOUNT IN THE RESPECTIVE 14 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. PREVIO US YEAR TO WHICH THE SALE INVOICES RELATE, CLAIM OF THE ASSESSEE WAS FOUND TO BE BONAFIDE AND HENCE, ALLOWED. 29. THE REVENUE IS IN APPEAL VIDE GROUND OF APPEAL NO.3 ON THE GROUND OF NON - FULFILLMENT OF CONDITIONS L AID DOWN IN SECTION 36(2) OF THE ACT. 30. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A), 31. WE HAVE HEARD T HE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD CLAIMED BAD DEBTS TO THE TUNE OF RS.7,23,841/ - IN ASSESSMENT YEAR 2010 - 11 AND RS.1,69,111/ - IN ASSESSMENT YEAR 2011 - 12. THE ASSESSEE HAD EXPLAINED THE NATURE OF BAD DEBTS WRITTEN OFF I.E. THE AMOUNTS DUE FROM DIFFERENT CONCERNS AGAINST THE OUTSTANDING DUES AND ALSO CERTAIN PAYMENTS NOT BEING RECEIVED ON ACCOUNT OF QUALITY DEFECT S AND SHORTAGE OF GOODS. THE PARTY - WISE LEDGER ACCOUNTS OF THE PARTIES FOR THE RESPECTIVE YEARS TO WHICH THE SAID PUR CHASES RELATED ARE FILED AT PAGES 72 TO 76 OF THE PAPER BOOK. THE CASE OF THE ASSESSEE WAS THAT COMPLETE DETAILS WERE FILED BEFORE THE ASSESSING OFFICER, WHO FAILED TO CONSIDER THE SAME AND HAS SUMMARILY REJECTED THE CLAIM OF ASSESSEE. THE CIT(A) ON THE OTHER HAND, AFTER CONSIDERING THE EVIDENCE FILED BEFORE THE ASSESSING OFFICER AS TO FULFILLMENT OF PROVISIONS OF SECTION 36(2) OF THE ACT HA D ALLOWED THE CLAIM OF ASSESSEE. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAS FILED THE OUTSTANDING STATEMENT AND PROOFS OF THE ENTRIES MADE IN THE BOOKS OF ACCOUNT IN THE RESPECTIVE PREVIOUS YEARS TO WHICH SALES TO THE SAID PARTIES WE RE REFLECTED AND ONCE THE AMOUNT HA D NOT BEEN RECOVERED AND HA D BEEN WRITTEN OFF IN THE BOOKS OF AC COUNT OF THE ASSESSEE, THEN THE SAME IS TO BE ALLOWED AS DEDUCTION UNDER SECTION 36(1)(VII) R.W.S. 36(2) OF THE ACT. ACCORDINGLY, WE HOLD SO. THE GROUND OF 15 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. APPEAL NO.3 IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 RAISED BY THE REVENUE IS DISMISSED. 32. NOW, COMING TO THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE I.E. IN ALLOWING LATE DELIVERY CHARGES OF RS.1,90,998/ - AND RS.68,167/ - FOR ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY. 33. THE ASSESSEE CLAIMED THAT IT WAS SELLING SOME SPECIALIZED PRODU CTS TO OEM CUSTOMERS LIKE BHEL AND NTPC. THE SAID CUSTOMERS HAD BIG PROJECTS AND WERE USING THE ASSESSEES PRODUCTS IN THE SAID PROJECTS. THE ORDERS PLACED BY THE OEM CUSTOMERS HAD TO BE EXECUTED WITHIN SPECIFIED TIME. THE ASSESSEE CLAIMED THAT EVEN THO UGH THE MATERIAL WAS SUPPLIED IN TIME, SOME OF THE PROJECTS GOT DELAYED. BECAUSE OF L.D. LATE DELIVERY, CLAUSE IN THE ORDER, OEM CUSTOMERS DEBITED L.D. CHARGES IN SUCH DELAYED CASES AND DEDUCTED THE SAME FROM THE PAYMENT TO THE ASSESSEE. IN VIEW OF THE C ARRYING ON ITS BUSINESS WITH THE SAID OEM CUSTOMERS, THE ASSESSEE ACCEPTED THE L.D. CHARGES LEVIED ON IT. THE ASSESSING OFFICER HOWEVER, DISALLOWED THE CLAIM OF ASSESSEE. 34. THE CIT(A) ALLOWED THE SAME BECAUSE OF EXPENDITURE BEING INCURRED WHOLLY AND EX CLUSIVELY IN THE COURSE OF BUSINESS AND ALSO HELD THAT THE IMPUGNED CHARGES WERE NOT IN THE FORM OF PENALTY COVERED UNDER EXPLANATION (1) TO SECTION 37(1) OF THE ACT. 35. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND AFTER HEARING BOTH T HE LEARNED AUTHORIZED REPRESENTATIVES, WE FIND NO ERROR IN THE ORDER OF CIT(A) IN HOLDING THAT THE LATE DELIVERY CHARGES PAID BY THE ASSESSEE WERE IN THE NATURE OF EXPENDITURE CARRIED OUT DURING THE COURSE OF CARRYING ON THE BUSINESS. THE SAID LATE DELIVE RY CHARGES WERE LEVIED BY THE OEM CUSTOMERS , WHO WERE GIVEN SPECIFIC 16 ITA NO S . 873 TO 875 /P U N/201 5 ITA NOS.916 & 917/PUN/2015 RATHI TRANSPOWER PVT. LTD. ORDERS TO THE ASSESSEE FOR DELIVERY WITHIN TIME FRAME, BUT BECAUSE OF THE DELAY IN THE PROJECT, CLAUSE FOR L.D. CHARGES WAS APPLIED AND THE AMOUNT WAS RECOVERED FROM THE ASSESSEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE SAID EXPENDITURE IS DULY ALLOWABLE IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE HOLD SO. THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 IS THUS, DISMISSED. 36. THE GROUND OF APPEAL NO.5 BEING GENERAL, IS DISMISSED. 37 . IN THE RESULT, ASSESSEES APPEALS IN ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 ARE PARTLY ALLOWED, APPEAL IN ASSESSMENT YEAR 2011 - 12 IS DISMISSED AND BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF OCTO BER , 201 7 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 24 TH OCTOB ER , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APP ELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 4 , PUNE; 4. THE CIT - 3 , PUNE . 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , / /TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE