Cosmos Industries Ltd., Ghaziabad V. ITO, New Delhi

ITA 877/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6365 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-04-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 14-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Business income; Depreciation; Notional interest; Revised return
• Section: 43B; 132; 28

Judgement Text

1IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.877/DEL/2011 ASSESSMENT YEAR : 2004-05 COSMOS INDUSTRIES LIMITED, 202, THAPAR ARCADE, 47, KALU PURA, HAUS KHAS, NEW DELHI 110 016. PAN : AAACC6682R VS. ITO, WARD-3 (4), NEW DELHI. ITA NO.1819/DEL/2011 ASSESSMENT YEAR : 2004-05 DCIT, CIRCLE 3 (1). NEW DELHI. VS. COSMOS INDUSTRIES LIMITED, FARM NO.16, RAJOKRI, NH-8, NEW DELHI.. PAN : AAACC6682R ITA NOS.1906 & 1965/DEL/2011 ASSESSMENT YEARS : 2006-07 & 2007-08 ITO, WARD-3 (4), NEW DELHI. VS. COSMOS INDUSTRIES LIMITED, 202, THAPAR ARCADE, 47, KALU PURA, HAUS KHAS, NEW DELHI 110 016. PAN : AAACC6682R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AKHILESH KUMAR, ADVOCATE & SHRI RAKESH GARG, CA DEPARTMENT BY : SMT. NIDHI SRIVASTAVA, CIT, DR ITA NOS.877, 1819, 1906 & 1965/DEL/2011 2 ORDER PER A.D. JAIN, JUDICIAL MEMBER: ITA NO.1819/DEL/2011 THIS IS DEPARTMENTS APPEAL FOR AY 2004-05 AGAINST THE ORDER DATED 04.01.2011, PASSED BY THE CIT (A)-V, NEW DELHI, TAKING THE FOLL OWING GROUNDS:- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW I N DELETING ADDITION OF RS.29,34,000/- ON ACCOUNT OF DISALLOWANCE OF INTERE ST LIABILITY FOR YEAR ON SUGAR DEVELOPMENT FUND LOAN U/S 43B OF THE IT ACT IGNORI NG THE FACT THAT THE ASSESSEE CANNOT ABSOLVE HIS RESPONSIBILITY TO PAY INTEREST O N TERM LOAN MERELY BY TERMING IT AS LOAN FROM CENTRAL GOVT. AND THE CASE OF THE ASSE SSEE SQUARELY FALLS WITHIN THE AMBIT OF SECTION 43B (D) OF THE IT ACT. 2. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS.24,59,447/- ON ACCOUNT OF DISALLOWANCE OF CANE C ESS AND BONUS PAYABLE BY INVOKING SECTION 43B OF THE IT ACT IGNORING THAT CI RCULAR NO.581 OF CBDT REFERRED BY LD. CIT (A) FOR ALLOWING RELIEF TO THE ASSESSEE HAS NO RELEVANCE. FURTHER, KEEPING IN VIEW THE JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF M/S GOETZE (I) LIMITED VS. CIT (2006) 157 TAXMAN 1 (SC) WHEREI N T WAS PRONOUNCED THAT THE AO HAS NO POWER TO ENTERTAIN A CLAIM MADE BY THE AS SESSEE AFTER FILING OF ORIGINAL RETURN OTHERWISE THAN BY FILING REVISED RETURN. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE ASSESSEES CLAIM T HAT AN INCOME OF RS.1,90,70,843/- WAS TAXED TWICE WHICH WAS NOT ACCE PTED BY THE AO ON THE GROUND THAT THE RETURN WAS NOT REVISED. HERE ALSO R ELIANCE IS PLACED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF M/S G OETZE (I) LTD. VS. CIT (2006) 157 TAXMAN 1 (SC). 2. APROPOS GROUND NO.1, THE AO MADE DISALLOWANCE OF AN AMOUNT OF RS. 29,34,000/- U/S 43B OF THE IT ACT ON ACCOUNT OF NON -PAYMENT OF INTEREST ON SUGAR DEVELOPMENT FUND. THE AO HELD: A) THE ASSESSEE HAS SHOWN THE TERM LOAN AS SUGAR DEVELOPMENT FUND LOAN (THRU IFCI) IN SCHEDULE-2 OF SECURED LOA N OF THE BALANCE SHEET. B) THE ASSESSEE HAS NOT PAID INTEREST DURING THE YE AR. C) THAT IFCI HAS WRITTEN LETTER DATED 17.2.2000, WH EREIN THE CO WAS ASKED TO REMIT THE ENTIRE AMOUNT OF LOAN. ON THE BA SIS OF THIS LETTER THE AO ITA NOS.877, 1819, 1906 & 1965/DEL/2011 3 CONCLUDED THAT IFCI HAS NOT ONLY GIVEN THE LOAN BUT PURSUED FOR ITS REPAYMENT. 3. THE CIT (A) DELETED THIS DISALLOWANCE/ADDITION. 4. THE LD. DR HAS CONTENDED THAT THE LD. CIT (A) HA S ERRED IN DELETING THE DISALLOWANCE CORRECTLY MADE; THAT WHILE DOING SO, T HE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT SINCE THE ASSESSEE HAS TERMED THE LOA N AS A LOAN FROM THE CENTRAL GOVERNMENT, THIS ALONE DOES NOT ABSOLVE THE ASSESSE E FROM ITS RESPONSIBILITY TO PAY INTEREST ON THE TERM LOAN AND THAT THE CASE OF THE ASSESSEE SQUARELY FALLS WITHIN THE AMBIT OF SECTION 43B (D) OF THE ACT. THE LD. COUNSE L FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED OR DER, CONTENDING THAT IT REMAINS UNDISPUTED THAT THE LOAN IN QUESTION WAS FROM THE G OVERNMENT OF INDIA AND NOT FROM IFCI, WHICH IS EVIDENT FROM THE DEED OF HYPOTHECATI ON, SANCTION LETTER REGARDING THE LOAN, THE CHARGE IN FAVOUR OF THE GOVERNMENT OF INDIA AND THE LETTERS OF THE IFCI, DATED 17.02.00 AND 14.11.03, ALL OF WHICH DOCUMENTS WERE BEFORE BOTH THE TAXING AUTHORITIES AND WHICH HAVE ALSO BEEN PLACED BEFORE THE TRIBUNAL . 5. IT IS AVAILABLE FROM THE RECORD AND NOT DISPUTED BEFORE US, THAT A SUGAR DEVELOPMENT FUND LOAN (SDF) WAS SANCTIONED TO COSMO S INDUSTRIES LTD. (CIL) FOR MODERNIZATION OF THE ERSTWHILE BHAGWANPURA SUGAR MI LLS LTD. (BSML) FOR RS.489.00 LACS IN TWO INSTALMENTS RS.88.00 LACS AS FIRST INSTALM ENT AND RS.401.00 LACS AS SECOND INSTALMENT; THAT THE SDF WAS CREATED FROM THE SANCT IONED BUDGET GRANT OF THE DEPARTMENT OF FOOD MINISTRY OF FOOD AND CIVIL SUPPL IES, GOVT. OF INDIA (GOI) FOR THE REHABILITATION/MODERNIZATION OF SUGAR MILLS (NON-PL AN) DEVELOPMENT FUND FOR AGRICULTURE PURPOSES; THAT IN TERMS OF SUB-RULE (7) OF RULE 16, THE AMOUNT OF THE LOAN SANCTIONED AS ABOVE WAS DISBURSED THROUGH A FINANCI AL INSTITUTION VIZ., INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI), NEW DELHI. IFC I IS THE WAS NODAL AGENCY OF THE GOI FOR THE PURPOSE OF ADMINISTERING SDF LOANS; THAT T HE DEED OF HYPOTHECATION WAS EXECUTED IN FAVOUR OF THE PRESIDENT OF INDIA AND A CHARGE WAS DULY CREATED IN FAVOUR OF THE PRESIDENT OF INDIA THROUGH THE MINISTRY OF FOOD AND CIVIL SUPPLIES, GOVERNMENT OF INDIA (COPY OF CHARGE CERTIFICATE IS ON RECORD); TH AT THE LOAN WAS SANCTIONED BY THE DEPARTMENT OF FOOD, MINISTRY OF FOOD & CIVIL SUPPLI ES, GOI; THAT THE CHARGE WAS CREATED ITA NOS.877, 1819, 1906 & 1965/DEL/2011 4 IN FAVOUR OF THE PRESIDENT OF INDIA (CERTIFICATE OF REGISTRATION OF MORTGAGE U/S 132 OF THE COMPANIES ACT); AND THAT IN THE DEPARTMENTAL COMMUN ICATION ADDRESSED TO THE CONTROLLER OF ACCOUNTS, DEPTT. OF FOOD, MINISTRY OF FOOD & CIVIL SUPPLIES, REGARDING SANCTION OF SDF LOAN TO BSML, THE DEPUTY SECRETARY TO THE GOVT. OF INDIA MENTIONED IN CLAUSE 3 OF THE SANCTION THAT : THE EXPENDITURE IN VOLVED IS DEBITABLE TO THE TO THE SANCTIONED BUDGET GRANT OF THIS DEPARTMENT FOR YEAR 1989-90 UNDER GRANT NO.38, MAJOR HEAD 6860-CC-LOANS FOR CONSUMER INDUSTRIES-CC.1 SUGAR CC-1 (I)(I)(I) LOANS FOR MODERNIZATION/REHABILITATION OF SUGAR MILLS (NON-PL AN) AND RECOVERABLE FROM THE MAJOR HEAD 8229 DEVELOPMENT AND WELFARE FUNDS SUGAR DEVELOPMENT FUND. 6. THE AO, HOWEVER, OBSERVED THAT THE SUBMISSION OF THE ASSESSEE GETS DILUTED IN THE WAKE OF THE FACT THAT IFCI HAS WRITTEN A LETTER DATED 17.02.2000 TO THE ASSESSEE COMPANY ASKING THE COMPANY TO REMIT TO THEM THE ENT IRE AMOUNT OF LOAN IMMEDIATELY, AND THAT THE LETTER PRIMA FACIE ESTABLISHED THAT IF CI HAD NOT ONLY GIVEN THE LOAN, BUT WAS ALSO PURSUING THE ASSESSEE FOR REPAYMENT. IT WAS FU RTHER OBSERVED THAT THE CORRESPONDENCE FOR EARLY REPAYMENT HAD BEEN REGULAR LY MADE BY IFCI WITH THE ASSESSEE AND UNDER THE GIVEN CIRCUMSTANCES, THE ASS ESSEE COULD NOT ABSOLVE ITSELF OF ITS RESPONSIBILITY TO PAY INTEREST ON TERM LOAN, ME RELY BY TERMING IT IS A LOAN FROM THE CENTRAL GOVERNMENT; AND THAT IFCI ALWAYS ACTS ON BE HALF OF THE CENTRAL GOVERNMENT AND THE CASE OF THIS ASSESSEE SQUARELY FALLS WITHIN THE AMBIT OF SECTION 43B (D) OF IT ACT, 1961. 7. IT WAS IN THIS MANNER THAT THE AO MADE THE DISAL LOWANCE IN QUESTION. 8. WE FIND THAT THE DEED OF HYPOTHECATION IS AT APB 92-101, GIVING ALL THE DETAILS REGARDING THE CREDITOR, THE DEBTOR AND THE AGENT. T HE SDF LOAN, DEFINITELY, WAS GIVEN BY THE MINISTRY OF FOOD AND CIVIL SUPPLIES, NEW DELHI AND NOT BY ANY FINANCIAL INSTITUTION. THEREFORE, THE PROVISIONS OF SECTION 43B OF THE ACT DO NOT GET ATTRACTED FOR THIS REASON ITSELF. THE SDF WAS CREATED FROM THE SANCTIONED BUD GET GRANT OF THE DEPARTMENT OF FOOD AND CIVIL SUPPLIES, GOVERNMENT OF INDIA FOR TH E REHABILITATION AND MODERNIZATION OF SUGAR MILLS. THIS FUND WAS CREATED TO UNDERTAKE ACT IVITIES ENVISAGED WITH THE INTENTION OF DEVELOPING A PARTICULAR AGRICULTURAL COMMODITY IN O RDER TO IMPROVE THE MARKETABILITY OF THE PRODUCT. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 5 9. APB 89-91A IS A COPY OF THE SANCTION LETTER REGA RDING THE LOAN, AS ISSUED BY THE GOVERNMENT OF INDIA. THIS LETTER STATES THAT: THE EXPENDITURE INVOLVED, IS DEBITABLE TO THE SANCTIONED BUDGET GRANT OF THIS DEPARTMENT FOR CONSUMER INDUSTRIES-LOANS FOR MODERNIZATION, REHABILITATIONS OF SUGAR MILL (NON P LAN) AND RECOVERABLE FROM THE DEVELOPMENT AND WELFARE FUNDS SUGAR DEVELOPMENT F UND. THE SANCTION LETTER REQUIRES THAT THE COMPANY SHALL CREATE SECOND CHARG E ON ITS FIXED AND MOVABLE ASSETS IN FAVOUR OF CENTRAL GOVERNMENT. THIS SIGNIFIES THA T IT IS A LOAN GRANTED BY AND REPAYABLE TO GOVERNMENT OF INDIA AND NOT GRANTED BY OR REPAYA BLE TO IFCI. 10. APB 102-103 IS A COPY OF THE CERTIFICATE OF REG ISTRATION OF MORTGAGE U/S 132 OF THE COMPANIES ACT, 1956, CERTIFYING THAT THE CHARGE DAT ED 11.12.89 FOR RS. 401.00 LACS AND THAT DATED 09.03.88 FOR RS. 88.00 LACS STOOD REGIST ERED IN THE OFFICE OF THE REGISTRAR OF COMPANIES, PUNJAB, HIMACHAL PRADESH AND CHANDIGARH, IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 125 TO 130 OF THE COMPANIES ACT. AS PER THE PROVISIONS OF SECTION 125 OF THE COMPANIES ACT, 1956, EVERY CHARG E CREATED BY A COMPANY SHALL BE VOID AGAINST ANY CREDITORS OF THE COMPANY, UNLESS T HE PRESCRIBED PARTICULARS OF THE CHARGE ARE FILED WITH REGISTRAR OF COMPANIES. ACCOR DINGLY, A CHARGE WAS CREATED IN FAVOUR OF THE CREDITORS NAMELY, THE PRESIDENT OF I NDIA THROUGH RESPECTIVE MINISTRY. 11. THE ASSESSEE IS ALSO CORRECT IN MAINTAINING THA T IF THE CREDITOR IN THE SDF LOAN WAS IFCI, THE CHARGE WOULD HAVE BEEN CREATED IN FAV OUR OF IFCI, AND NOT IN FAVOUR OF THE PRESIDENT OF INDIA, SINCE UNDER THE COMPANIES ACT, A CHARGE CAN ONLY BE CREATED IN FAVOUR OF THE CREDITOR OF THE LOAN. 12. FURTHER, IT GOES WITHOUT SAYING THAT A LOAN TAK EN IS REQUIRED TO BE REPAID TO ITS CREDITOR. THE SANCTION LETTER OF THE SDF LOAN REQUI RES THAT IT SHOULD BE REPAID TO THE CONTROLLER OF ACCOUNTS, DEPARTMENT OF FOOD, GOVERNM ENT OF INDIA. HENCE, THE CREDITOR OF LOAN IS THE GOVERNMENT OF INDIA. THE CORRESPONDE NCE MADE BY IFCI CLEARLY STATES THAT THE ASSESSEE WAS REQUIRED TO CREDIT THE INSTAL LMENT OF PRINCIPAL AND INTEREST AMOUNT TO THE CONTROLLER OF ACCOUNTS, MINISTRY OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION. THUS, A DEBTOR-CREDITOR RELATIONSHIP WAS ESTABLISHE D BETWEEN THE ASSESSEE COMPANY AS A DEBTOR AND THE MINISTRY OF FOOD & CIVIL SUPPLIES, GOVERNMENT OF INDIA, AS A CREDITOR. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 6 13. IFCI LETTER DATED 23.08.07 (APB 87 AND 106) STA TES THAT: YOU ARE REQUESTED TO CREDIT THE INSTALLMENT OF PRINCIPAL AND INTEREST AM OUNT DIRECTLY TO CONTROLLER OF ACCOUNTS, MINISTRY OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIB UTION. 14. IFCI LETTER DATED 21.09.07 (APB 88 AND 107) REA DS:- WE HAVE ALSO TO ADVICE THAT ANY AMOUNT RECEIVED BY WAY OF REPAYMENT OF LOAN, PAYMENT OF INTEREST THEREON OR ANY OTHER RECE IPT, CREDIT THE SAID AMOUNT TO SUGAR DEVELOPMENT FUND, GOVERNMENT OF IND IA. IFCI ACTING AS A NODAL AGENCY, CHARGE AGENCY COMMISSION FROM GOVER NMENT OF INDIA. 15. IFC LETTER DATED 17.02.00 (APB 104) SPECIFICALL Y STATES THAT IFCI WAS ACTING AS AN AGENT OF THE GOVERNMENT OF INDIA AND THAT THE ASSES SEE COMPANY REMITTED THE LOAN AMOUNT TO IT, I.E., THE IFCI. 16. IFCI LETTER DATED 14.11.03 (APB 105) IS TO THE SAME EFFECT. 17. THE AO TOOK THE FACTUM OF THE DEPICTION OF THE SDF LOAN IN SCHEDULE II OF THE ASSESSEES BALANCE SHEET AS SUGAR DEVELOPMENT FUND LOAN THROUGH IFCI, TO BE GOING AGAINST THE ASSESSEE AND REVEALING THAT THE LOAN WA S IN FACT TAKEN FROM IFCI. HOWEVER, THE AO OMITTED TO NOTICE THAT THE OPERATIVE WORD HE RE IS THROUGH AND NOT FROM. THIS MAKES IT ABUNDANTLY CLEAR THAT THE CREDITOR WAS NOT IFCI, BUT WAS THE GOVERNMENT OF INDIA. IFCI ACTED AS A NODAL AGENT FOR THE GOVERNME NT OF INDIA REGARDING THE SDF LOAN, WHICH FACT IS ALSO EVIDENT FROM THE COPIOUS DOCUMEN TATION INCLUDING THE HYPOTHECATION DEED, THE SANCTION LETTER AND THE NUMEROUS LETTERS OF IFCI, AS TAKEN NOTE OF HEREINABOVE. THEREFORE, INDISPUTABLY, IT IS THE GOV ERNMENT OF INDIA WHICH IS THE PRINCIPAL AND THAT BEING SO, ITS AGENT, IFCI, ACCORDING TO SE CTION 182 OF THE INDIAN CONTRACT ACT, 1872, CANNOT BE TAKEN TO BE A PERSON EMPLOYED TO DO ANY ACT AS SUCH PRINCIPAL. SUCH AGENT IS A PERSON EMPLOYED (APB 37A). SECTION 43B PROVIDES THAT ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWING F ROM ANY PUBLIC FINANCIAL INSTITUTION OR A STATE FINANCIAL CORPORATION OR A STATE INDUSTRIAL INVESTMENT CORPORATION IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGR EEMENT GOVERNING SUCH LOAN OR BORROWING, SHALL BE ALLOWED ONLY ON ACTUAL PAYMENT. IN THE PRESENT CASE, THE IFCI DID NOT RECEIVE ANY INTEREST. THE INTEREST WAS ON THE SDF LOAN TAKEN FROM THE GOVERNMENT OF INDIA. AS PER THE TERMS AND CONDITIONS OF THE SD F LOAN, THE CHARGE ON THE IMMOVABLE ITA NOS.877, 1819, 1906 & 1965/DEL/2011 7 AND MOVABLE PROPERTIES OF THE COMPANY OPERATES AS S ECURITY, INTER ALIA, FOR DUE PAYMENT BY THE COMPANY TO THE PRESIDENT OF INDIA FOR TERM L OAN TOGETHER WITH INTEREST, ADDITIONAL INTEREST, LIQUIDATED DAMAGES AND ALL OTHER MONIES P AYABLE BY THE COMPANY TO THE PRESIDENT OF INDIA. THE MODE OF REPAYMENT OF LOAN A ND PAYMENT OF INTEREST THEREON SHOULD BE BY MEANS OF A DEMAND DRAFT DRAWN ON THE R ESERVE BANK OF INDIA OR THE STATE BANK OF INDIA, NEW DELHI, IN FAVOUR OF THE CONTROLL ER OF ACCOUNTS, DEPARTMENT OF FOOD, GOVERNMENT OF INDIA, NEW DELHI.. 18. IN ITS LETTER DATED 21.09.07 (APB 88-106), IFCI HAS SPECIFICALLY STATED THAT: I) IFCI HAS WORKED AS A NODAL AGENCY OF SUGAR DEVE LOPMENT FUND, GOVERNMENT OF INDIA; II) ANY AMOUNT RECEIVED BY WAY OF REPAYMENT OF LOAN , PAYMENT OF INTEREST THEREON OR ANY OTHER RECEIPT; CREDIT THE S AID AMOUNT TO SUGAR DEVELOPMENT FUND, GOVERNMENT OF INDIA. III) IFCI ACTING AS A NODAL AGENCY AND CHARGE AGENC Y COMMISSION. IV) AS PER LATEST PROCEDURE OF REPAYMENT OF SDF LOA N PRINCIPAL AND INTEREST AMOUNT IS DIRECTLY, TO BE SENT TO CONTROLL ER OF ACCOUNTS MINISTRY OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION, NEW D ELHI. 19. THUS, THE AO OBVIOUSLY WENT WRONG IN CONCLUDING THAT THE SDF LOAN WAS FROM IFCI AND NOT FROM THE GOVERNMENT OF INDIA. THE LD. CIT (A) HAS DULY TAKEN INTO CONSIDERATION ALL THESE FACTS WHILE RIGHTLY DELETIN G THE DISALLOWANCE/ADDITION AND WE DO NOT FIND ANY ERROR WHATSOEVER WITH THE WELL REASONE D OBSERVATIONS RECORDED BY HER IN THE IMPUGNED ORDER. 20. FOR THE ABOVE DISCUSSION, FINDING NO MERIT THER EIN, THE GROUND NO.1 RAISED BY THE DEPARTMENT IS REJECTED. 21. APROPOS GROUND NO.2, THE AO DISALLOWED THE ASSE SSEES CLAIM OF PAYMENT OF LIABILITY OF RS. 24,59,447 ON ACCOUNT OF CANE CESS AND BONUS PAYABLE. WHILE DOING SO, THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION THA T IT WAS BY MISTAKE THAT THIS AMOUNT PAID HAD NOT BEEN CLAIMED IN THE RETURN OF INCOME F ILED AND HAD BEEN CLAIMED DURING THE ASSESSMENT PROCEEDINGS, THOUGH THIS AMOUNT WAS ALLO WABLE U/S 43B OF THE IT ACT. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 8 ACCORDING TO THE AO, A REVISED RETURN OF INCOME OUG HT TO HAVE BEEN FILED BY THE ASSESSEE. THE LD. CIT (A) DIRECTED THE AO TO ALLOW THIS PAYMENT. 22. THE LD. DR HAS CONTENDED THAT WHILE ILLEGALLY D ELETING THE DISALLOWANCE CORRECTLY MADE U/S 43B OF THE ACT, THE LD. CIT (A) HAS FAILED TO CONSIDER THAT CBDT CIRCULAR NO.581 DATED 28.09.90 HAS NO RELEVANCE; AND THAT TH E LD. CIT (A) HAS FAILED TO CONSIDER THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF M/S GOETZE (I) LTD. VS. CIT, 157 TAXMAN 1 (SC), HOLDING THAT THE AO HAS NO POWER TO ENTERTAIN A CLAIM MADE BY THE ASSESSEE AFTER FILING OF THE ORIGINAL RETURN, OTHER WISE THAN BY FILING A REVISED RETURN OF INCOME. 23. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT T HE AMOUNT IN QUESTION IS ALLOWABLE UNDER THE PROVISIONS OF SECTION 43B OF THE ACT; THA T THE PAYMENT WAS MADE DURING THE YEAR UNDER CONSIDERATION; THAT IN THE AUDIT REPORT, THIS AMOUNT HAS BEEN REPORTED AS AN ALLOWABLE EXPENDITURE; THAT EVIDENCE FOR SUCH PAYME NT WAS DULY FURNISHED BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS; THAT IT WAS DUE T O A BONA FIDE MISTAKE WHICH HAD OCCURRED IN THE COMPUTATION OF TAXABLE INCOME, AS F ILED ALONG WITH THE RETURN OF INCOME, THAT THIS AMOUNT WAS NOT CLAIMED, BUT WAS CLAIMED I N THE ASSESSMENT PROCEEDINGS. 24. DURING THE YEAR, THE ASSESSEE HAD PAID RS. 6 LA CS TOWARDS CANE CESS PAYABLE AND RS.18,59,947/- TOWARDS BONUS LIABILITIES. BOTH THESE LIABILITIES PRE-EXISTED ON THE FIRST DAY OF THE PREVIOUS YEAR. BEFORE THE AO, THE ASSESSEE FILED VOUCHERS AS EVIDENCE FOR PAYMENT OF BONUS AND CHALLANS SHOWING PAYMENT O F CESS. UNDISPUTEDLY, THE ENTIRE AMOUNT IS AN ALLOWABLE EXPENDITURE UNDER THE PROVIS IONS OF SECTION 43B OF THE ACT, ACCORDING TO WHICH, A DEDUCTION OTHERWISE ALLOWABLE UNDER THE ACT SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISION OF THE ACT, BE ALLOWED IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF T HE ACT, OF THAT PREVIOUS YEAR, IN WHICH SUCH SUM IS ACTUALLY PAID BY THE ASSESSEE. IN THE TAX AUDIT REPORT OF THE ASSESSEE, BOTH THESE AMOUNTS HAVE DULY BEEN REPORTE D AS ALLOWABLE EXPENDITURE. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 9 25. IN THE ABOVE FACTS, THE LD. CIT (A) IS FOUND TO HAVE CORRECTLY ALLOWED THE PAYMENT OF RS.24,59,957/- ON ACCOUNT OF CANE CESS AND BONUS PAID DURING THE YEAR BY THE ASSESSEE OUT OF PRE-EXISTING LIABILITIES. ACCORDING LY, GROUND NO.2 IS REJECTED. 26. ADDRESSING GROUND NO.3, THE ASSESSEE CLAIMED TH AT AN INCOME OF RS.1,90,70,843/- HAD BEEN TAXED TWICE. THIS CLAIM O F THE ASSESSEE WAS REJECTED BY THE AO FOR THE REASON THAT THE ASSESSEE HAD NOT REVISED ITS RETURN OF INCOME. THE LD. CIT (A) ALLOWED THE ASSESSEES CLAIM. 27. THE LD. DR CONTENDS THAT HERE ALSO, AS FOR GROU ND NO.2, THE LD. CIT (A) HAS FAILED TO TAKE INTO CONSIDERATION THE DECISION IN M/S GOE TZE (I) LTD. (SUPRA). 28. THE LD. COUNSEL FOR THE ASSESSEE, PER CONTRA, H AS AGAIN RELIED ON THE CIT (A)S ORDER. 29. THE CLAIM OF THE ASSESSEE HAS BEEN THAT INCOME OF RS.1,90,70,843/- WAS TAKEN TWICE, ONCE AS BUSINESS INCOME AND AGAIN AS INCOME FROM LONG-TERM CAPITAL GAIN. IN SCHEDULE-II TO THE ASSESSEES PROFIT AND LOSS ACCOU NT FOR THE YEAR UNDER CONSIDERATION, THIS AMOUNT APPEARS AS PROFIT ON SALE OF FIXED ASS ETS. IT INCLUDES RS.1,89,71,606/-, BEING PROFIT ON SALE OF PLOTS AND RS.99,237/-, REPR ESENTING PROFIT ON SALE OF VEHICLES. THE PROFIT ON SALE OF PLOTS WAS CONSIDERED AS INCOME FR OM LONG-TERM CAPITAL GAIN, WHEREAS THE PROFIT ON SALE OF VEHICLES WAS CONSIDERED IN TH E DEPRECIATION CHART. THESE AMOUNTS WERE NOT DEDUCTED FROM BUSINESS INCOME AND, AS SU CH, THEY WERE TAXED TWICE. 30. THE PROFIT & LOSS ACCOUNT, THE DEPRECIATION CHA RT, THE COMPUTATION OF INCOME AND ALL THE OTHER CONNECTED DOCUMENTS WERE DULY TAKEN I NTO CONSIDERATION BY THE LD. CIT (A) AND IT WAS ON THE BASIS OF THIS DOCUMENTARY EVIDENC E, THAT THE LD. CIT (A) ARRIVED AT AND, IN OUR CONSIDERED OPINION, RIGHTLY SO, THE CONCLUSI ON THAT THE AMOUNT HAD BEEN TAXED TWICE. THEREFORE, THE AO WAS RIGHTLY DIRECTED TO RE DUCE THIS AMOUNT FROM THE ASSESSEES BUSINESS INCOME. THUS, FINDING NO ERROR THEREIN, TH E ORDER OF THE LD. CIT (A) IN THIS REGARD IS CONFIRMED AND GROUND NO.3 IS REJECTED. 31. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 10 ITA NO.877/DEL/2011 32. THIS IS ASSESSEES APPEAL FOR AY 2004-05, AGAIN ST THE ORDER DATED 04.01.2011 PASSED BY THE CIT (A)-V, NEW DELHI, TAKING THE FOLL OWING GROUNDS:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) V , NEW DELHI ERRED IN LAW BY HOLDING THAT APPELLANT COMPANY HAS NOT BEEN ABLE TO IDENTIFY AND LINK THAT THE ADVANCES TO THE TUNE OF RS.42 LACS WERE PAID OU T OF INTERNAL GENERATION OF FUNDS THOUGH THE APPELLANT HAS FURNISHED SUFFICIENT AND DOCUMENTARY EVIDENCE WITH REGARD TO IT. 2. THAT CIT (APPEALS) IGNORED THE DECISION PRONOUNC ED BY VARIOUS HIGH COURTS & SUPREME COURT WHEREIN IT WAS HELD THAT IN CASE PROFIT EARNED BY THE ASSESSEE WERE SUFFICIENT TO COVER THE IMPUGNED LOAN S, ADDITION CANNOT BE SUSTAINED. SIMILARLY ON THE PRINCIPLE OF PRUDENCE S UCH ADDITION CAN ALSO NOT BE SUSTAINED. 33. THE FACTS ARE THAT THE AO NOTICED THE ASSESSEE COMPANY TO HAVE SHOWN AN AMOUNT OF ` 1,60,24,219/- AS DUE TO ITS DIRECTOR. THE ASSESSEE HAD GIVEN INTEREST FREE LOANS TO DIRECTORS AND WHILE AT THE SAME TIME IT HA D PAID A SUM OF ` 2,91,86,597/- TO BANK AS INTEREST. RELYING ON THE DECISION IN HR SU GAR FACTORY PVT. LTD. VS. CIT, 187 ITR 363 (ALL), DISALLOWED AN AMOUNT OF ` 9,61,952/-, ON ACCOUNT OF INTEREST CLAIMED AS PAID TO BANK ON BORROWED FUNDS @ 6%. 34. WHILE RESTRICTING THE ADDITION FROM ` 9,61,952/- TO ` 2,52,000/-, THE LD. CIT (A) OBSERVED AS FOLLOWS:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A S WELL AS THE WRITTEN SUBMISSION OF THE APPELLANT AS WELL AS THE CASE LAW S RELIED ON BY THE AO AND THE APPELLANT. THE FACTS OF THE CASE OF H.R. SUGAR FACT OR V/S CIT 187 ITR 363 RELIED ON BY THE AO IS SIMILAR ONLY TO THE EXTENT THAT THE ASSESSEE IN BOTH THE CASE IS A SUGAR MILL. IN THE CASE OF H.R. SUGAR FACTORY, OVER THE LAST SEVERAL YEARS, IT HAS BEEN ADVANCING LOANS TO ITS DIRECTORS AND SINCE THE RE WAS PRACTICALLY NO REPAYMENT, THE LOAN AMOUNT WENT ON MOUNTING AND RIS ING STEADILY. THE ADVANCES WERE MADE TO DIRECTORS AT A VERY LOW RATE OF 2.5% AND HENCE THE AO CONCLUDED THAT THE APPELLANT IS NOT IN THE BUSINESS OF MERCY LENDING AND HAD BORROWED HUGE FUNDS FROM THE BANK AT HIGHER RATE OF INTEREST WHILE AT THE SAME TIME GIVING HUGE ADVANCES TO DIRECTORS/SHAREHOLDERS AND THEREFORE THE HIGH COURT HELD THE AO WAS RIGHT IN DISALLOWING THE BALA NCE. IN THE PRESENT CASE IT IS SEEN THAT THE APPELLANT COMPANY HAS ENJOYED INTERES T FREE LOANS FROM ITS DIRECTORS SINCE 1999 AND INTEREST FREE ADVANCES WER E MADE ONLY FOR THE YEARS ENDING 31.3.2003 AND 31.3.2004. IT IS ALSO SEEN THA T RS.120 LACS WAS IN THE FORM OF CALLS IN ARREARS TO BE RECEIVED FROM DIRECTORS FOR WHICH AN ENTRY DEBITING AMOUNT DUE FROM DIRECTORS AND CREDITING SHARE CAP ITAL A/C WAS JOURNALIZED WHERE NO ACTUAL OUTFLOW OF FUND WAS INVOLVED. IT IS ONLY IN RESPECT OF THE BALANCE ITA NOS.877, 1819, 1906 & 1965/DEL/2011 11 AMOUNT OF RS.42 LACS, WHICH THE COMPANY CLAIMS THAT IT WAS GIVEN OUT OF INTERNAL GENERATION OF FUNDS. HOWEVER, THE APPELLANT COMPANY HAS NOT BEEN ABLE TO IDENTIFY AND LINK THAT THE ADVANCES WERE PAID OUT O F THE INTERNAL GENERATION OF FUNDS. THEREFORE, THE ADDITION OF 6% TO THE EXTENT OF RS.9,61,952/- WHICH WORKS OUT TO RS.2,52,000/- IS UPHELD AND THE BALANCE AMOU NT OF RS.7,09,952/- IS DELETED. 35. CHALLENGING THE AFORESAID ACTION OF THE LD. CIT (A) IN SUSTAINING THE ADDITION TO THE EXTENT OF ` 2,52,000/-, THE LD. COUNSEL FOR THE ASSESSEE HAS C ONTENDED THAT THE LD CIT (A) HAS FAILED TO TAKE INTO CONSIDERATION THE AMPLE EVIDENCE BROUGHT BY THE ASSESSEE TO PROVE THAT THE ADVANCES OF ` 42 LACS WERE PAID BY THE ASSESSEE OUT OF ITS OWN I NTERNAL FUNDS. IT HAS BEEN CONTENDED THAT THERE WAS A RUNNI NG ACCOUNT OF THE ASSESSEE WITH ITS DIRECTORS SINCE 1999 AND THE AMOUNT OF ` 42 LACS STOOD PAID IN THE EARLIER YEAR; THAT OTHERWISE, THE ASSESSEE HAD TAKEN HUGE INTEREST FRE E LOANS FROM ITS DIRECTORS AND HAD GOT THE BENEFIT OF INTEREST OF ` 124 LACS EVEN AFTER SETTING OFF THE IMPACT INTERES T, IF ANY, AS ON 31.3.03 AND 31.3.04; THAT THE TERM LOANS TAKE N FROM THE BANK WERE UTILIZED IN CREATING LONG TERM ASSETS OF THE ASSESSEE COMPANY; THAT THE LONG-TERM ASSETS OF THE COMPANY DURING THE YEAR WERE WORTH ` 34.65 CRORES, AS AGAINST OUTSTANDING TERM LOAN OF ` 9.45 CRORE ONLY; THAT LIKEWISE, THE WORKING CAPITA L CREDIT WAS DEPLOYED IN CURRENT ASSETS, WHICH WAS WORTH ` 16.66 CRORES, AS AGAINST OUTSTANDING BANK CREDITS OF ` 10.84 CRORES; THAT IN FACT, THE LOAN IN QUESTION WAS CONT INUOUSLY REDUCING DUE TO REPAYMENT FROM 31.3.01 TO 31.3.04; AND THAT THIS AMPLY PROVES THAT THE LOAN WAS NOT UTILIZED FOR PAYMENT OF THE AMOUNT OF ` 42 LACS AS ADVANCED TO THE DIRECTORS OF THE ASSESS EE COMPANY. 36. IT HAS FURTHER BEEN CONTENDED THAT IT WAS A CON TINUOUS INTERNAL GENERATION OF FUNDS AND DURING THE YEARS ENDED ON 31.3.2002 AND 3 1.3.03, ASSESSEES NET PROFIT BEFORE PROVIDING DEPRECIATION, AMOUNTED TO ` 28 LACS AND ` 170 LACS, RESPECTIVELY; THAT THIS APART, THE ASSESSEE COMPANY WAS HAVING A SHARE CAPITAL OF ` 7.6 CRORES, WHICH WAS INTEREST FREE; AND THAT THE LD. CIT (A) HAS FAILED TO TAKE INTO CONSIDERATION THESE ASPECTS OF THE MATTER WHILE WRONGLY SUSTAINING THE ADDITION TO THE EXTENT OF ` 2,50,000/-. 37. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRON G RELIANCE ON THE IMPUGNED ORDER. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 12 38. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE FACTUM OF THE ASSESSEE COMPANY HAVING ENJOYED INTEREST FRE E LOANS FROM ITS DIRECTORS SINCE 1999 AND HAVING MADE INTEREST FREE ADVANCES ONLY IN THE YEAR ENDED ON 31.3.2003, 31.3.04 AND THE FACTUM OF AN AMOUNT OF ` 120 LACS OUT OF ` 160 LACS BEING CALLS IN ARREARS ONLY BY WAY OF BOOK ENTRY AND NOT INVOLVIN G ANY ACTUAL OUTFLOW OF FUNDS, HAVE DULY BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT ( A). THE SOLE OBJECTION RAISED BY THE LD. CIT (A) IS THAT THE ASSESSEE COMPANY HAS NOT BE EN ABLE TO IDENTIFY ANY LINK IN RESPECT OF THE BALANCE AMOUNT OF ` 42 LACS TO SHOW THAT THE ADVANCES WERE PAID OUT OF INTERNAL GENERATION OF FUNDS. 39. THIS, HOWEVER, IS FOUND TO BE INCORRECT. THE RE CORD, AS PRODUCED BEFORE THE TAXING AUTHORITIES, I.E., THE AO AS WELL AS THE LD. CIT (A), SHOWS THAT AS PER THE BALANCE SHEET OF THE ASSESSEE COMPANY, AS AT 31.3.04, THE T ERM LOAN TAKEN FROM THE BANK WAS UTILIZED IN CREATING LONG-TERM ASSETS OF THE ASSESS EE COMPANY. FURTHER, THE WORKING CAPITAL CREATED HAD ALSO BEEN DEPLOYED IN INVENTORI ES, DEBTORS AND LIQUID ASSETS IN AN APPROPRIATE MANNER. THEN, AS PER THE FUND FLOW OF THE ASSESSEE COMPANY, THERE WAS CONTINUOUS INTERNAL GENERATION OF FUNDS THROUGH SAL ES ACTIVITY. THE CURRENT ACCOUNT TRANSACTIONS IN THE CURRENT ACCOUNT MAINTAINED WITH THE ASSESSEES DIRECTORS, WERE MAINTAINED FROM THE EARLIER YEAR AND NOT DONE DURIN G THE YEAR. FURTHER, AS PER ANNEXURE A (APB 51) FILED BY THE ASSESSEE ALONG WITH ITS W RITTEN SUBMISSIONS (APB 48-52), THE CUMULATIVE IMPACT OF BENEFIT OF NOTIONAL INTEREST N OT PAID ON NET CREDIT BALANCES OF THE DIRECTORS, CALCULATED @ 6% PER ANNUM OF SUCH INTERE ST FREE LOANS, FOR THE YEARS ENDED 31.3.99 TO 31.3.02, WAS OF ` 144.89 LACS. AS PER ANNEXURE B (APB 52) OF THE S AID WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE TH E LD. CIT (A), THE INTEREST ON THE DEBIT BALANCE OF THE DIRECTORS FOR THE YEARS ENDED 31.3.0 3 AND 31.3.04, AMOUNTED TO ` 19.34 LACS ONLY. THIS, NOTICEABLY, WAS INCLUSIVE OF THE T ENTATIVE IMPACT OF INTEREST @ 6% PER ANNUM, OF 9.6%, FOR THE YEAR ENDED 31.3.04. THUS, A S RIGHTLY CONTENDED, EVEN AFTER SETTING OFF THE DEBIT IMPACT OF INTEREST FOR THE YE ARS ENDED 31.3.03 AND 31.3.04, THE ASSESSEE COMPANY HAD A BENEFIT OF MORE THAN ` 124 LACS. 40. IN MUNJAL SALES CORPORATION VS. CIT, 298 ITR 298 (SC), IT WAS HELD THAT WHERE OPENING BALANCE OF PROFIT AND LOSS ACCOUNT AND THE PROFITS ARE SUFFICIENT TO COVER THE ITA NOS.877, 1819, 1906 & 1965/DEL/2011 13 LOANS GIVEN, SUCH LOAN IS TO BE TREATED AS GIVEN OU T OF THE ASSESSEES OWN FUNDS AND NO DISALLOWANCE OF THE INTEREST PAID ON BORROWED FUNDS FOR BUSINESS, IS CALLED FOR. 41. IN CIT VS. BHARTI TELEVENTURE LTD., 331 ITR 502 (DEL), WHERE THE ASSESSEE HAD ESTABLISHED THAT IT HAD ADEQUATE NON-INTEREST BEARI NG FUNDS BY WAY OF SHARE CAPITAL AND RESERVES AT THE TIME OF ADVANCE AND THE LOAN WAS AL SO PROMPTED BY BUSINESS CONSIDERATION, IT WAS HELD THAT THE DEDUCTION ALLOW ED BY THE TRIBUNAL WAS NOT TO BE INTERFERED WITH. 42. IN CIT VS. DALMIA CEMENT PVT. LTD. 254 ITR 37 7 (DEL), AS CONFIRMED BY THE HONBLE SUPREME COURT IN SA BUILDERS LTD. VS. CIT , 288 ITR 1 (SC), IT WAS HELD THAT THE REVENUE IS NOT JUSTIFIED TO PUT ITSELF IN THE A RMCHAIR OF THE BUSINESSMEN OR IN THE POSITION OF THE BOARD OF DIRECTORS TO DISALLOW A CL AIM OF INTEREST ON BORROWING, HOLDING THAT THE ASSESSEE HAD AMPLE RESOURCES AT HIS DISPOS AL AND NEED NOT HAVE BORROWED. 43. IN CIT VS. PREM HEAVY ENGG. WORKS P. LTD., 28 5 ITR 554 (ALL), IT WAS HELD THAT WHERE, IN A CASE OF INTEREST ON BORROWED CAPITAL CO NCERNING ADVANCES MADE BY THE ASSESSEE TO ITS SISTER CONCERNS, SUFFICIENT INTERES T FREE FUNDS WERE AVAILABLE WITH THE ASSESSEE IN THE FORM OF INTEREST FREE ADVANCES FROM CUSTOMERS, SHARE CAPITAL SURPLUS AND RESERVES TO MAKE ADVANCES, INTEREST ON BORROWIN GS WAS NOT TO BE DISALLOWED. 44. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSE SSEE IS JUSTIFIED AND IS ACCEPTED. THE DISALLOWANCE OF INTEREST PAID OF ` 2,52,000/- IS DELETED. ITA NO.1965/DEL/2011 45. THIS IS DEPARTMENTS APPEAL FOR AY 2007-08 AGAI NST THE ORDER DATED 15.2.2011, PASSED BY THE CIT (A)-VI, NEW DELHI, TAKING THE FOL LOWING GROUNDS:- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW I N DELETING ADDITION OF RS.8450784/- ON ACCOUNT OF DISALLOWANCE OF INTEREST LIABILITY FOR YEAR ON SUGAR DEVELOPMENT FUND LOAN U/S 43B OF THE IT ACT IGNORI NG THE FACT THAT THE ASSESSEE CANNOT ABSOLVE HIS RESPONSIBILITY TO PAY INTEREST O N TERM LOAN MERELY BY TERMING IT AS LOAN FROM CENTRAL GOVT. AND THE CASE OF THE ASSE SSEE SQUARELY FALLS WITHIN THE AMBIT OF SECTION 43B (D) OF THE IT ACT. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 14 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS.80294/- ON ACCOUNT OF DISALLOWANCE OF EXTRA DEPRECIATION ON COMPUTER PERIPHERALS IGNORING THAT AS PER THE IT RULES 60% DEPRECIATION IS ALLOWABLE ONLY ON COMPUTER AND COMP UTER SOFTWARE AND NOT ON COMPUTER PERIPHERALS AND ACCESSORIES. 46. THE MATTER CONCERNING GROUND NO.1 IS, MUTATIS MUTANDIS , EXACTLY SIMILAR TO THAT RELATING TO GROUND NOS.1 AND 2 IN ITA NO.1819/DEL/2 011. FOR OUR PRECEDING DISCUSSION WHILE DEALING WITH THOSE GROUNDS IN ITA NO.1819/DEL /2011, THIS GROUND RAISED BY THE DEPARTMENT IS ALSO REJECTED. 47. APROPOS GROUND NO.2, THE LD. CIT (A) HAS DELETE D THE ADDITION MADE BY THE AO, FOLLOWING THE HONBLE DELHI HIGH COURT ORDER DATED 31.08.2010, PASSED IN THE CASE OF CIT VS. BSES RAJDHANI POWERS LTD. IN ITA NO.1266/ 2010. 48. NO DECISION CONTRARY TO BSES RAJDHANI POWERS L TD. (SUPRA) HAS BEEN BROUGHT TO OUR NOTICE BY THE DEPARTMENT. IN BSES RAJDHANI POWERS LTD. (SUPRA), IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT COMPUTER ACCESSOR IES AND PERIPHERALS SUCH AS PRINTERS, SCANNERS, SERVERS, ETC FORMED AN INTEGRAL PART OF THE COMPUTER SYSTEM, AS THEY CANNOT BE USED WITHOUT THE COMPUTER; AND THAT THUS, THEY ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60%. 49. IN VIEW OF THE ABOVE, THE LD. CIT (A) HAS CORRE CTLY DELETED THE DISALLOWANCE MADE BY THE AO CONCERNING EXTRA DEPRECIATION ON COMPUTER PERIPHERALS. ACCORDINGLY, GROUND NO.2 IS ALSO REJECTED. ITA NO.1906/DEL/2011 50. THIS IS DEPARTMENTS APPEAL FOR AY 2006-07 AGAI NST THE ORDER DATED 15.2.2011, PASSED BY THE CIT (A)-VI, NEW DELHI. THE ISSUE INVO LVED IN THIS APPEAL IS, MUTATIS MUTANDIS , EXACTLY SIMILAR TO THE ONE CONCERNING ITA NO.1819 /DEL/2011. THEREFORE, FOR THE REASONS GIVEN BY US WHILE DECIDING ITA NO.1819/ DEL/2011, THIS APPEAL OF THE DEPARTMENT IN ITA NO.1906/DEL/11 IS ALSO DISMISSED. ITA NOS.877, 1819, 1906 & 1965/DEL/2011 15 51. IN THE RESULT, THE APPEALS OF THE DEPARTMENT IN ITA NOS.1819/DEL/11, 1906/DEL/11 AND 1965/D/11ARE DISMISSED. THE ASSESSEES APPEAL IN ITA NO.877/DEL/2011 IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.05. 2014. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, MAY, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.