DCIT, Hisar V. M/s. Prakash Industries Ltd., Hisar

ITA 90/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73940 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-06-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 06-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Keywords: Bogus purchase; Depreciation; Peak credit; Additional evidence; Question of law; Unabsorbed depreciation
• Section: 43B; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.90/DEL./2012 (ASSESSMENT YEAR : 1997-98) DCIT, SPECIAL RANGE, VS. M/S. PRAKASH INDUSTRIES LTD., KARNAL. DELHI ROAD, HISAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY WADHWA, ADVOCATE REVENUE BY : SHRI D.K. MISHRA, DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS), ROHTAK DATED 31.10.2011. 2. THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF PVC PIPES, PICTURE TUBES, VIDEO TAPE, POWER GENERATION, SPONGE IRON, INDUCTION FURNACE, HEAVY S TRUCTURAL ROLLING MILL & MINING, AND CRUSHING ACTIVITIES. THE RETURN OF IN COME WAS FILED ON 27.11.1997 DECLARING TAXABLE INCOME AT NIL. THE ASS ESSEE HAS CLAIMED CARRY FORWARD OF UNABSORBED DEPRECIATION ALLOWANCE FOR TH E ASSESSMENT YEAR 1994- ITA NO.90/DEL/2012 2 95, 1995-96 AND 1996-97 IN SUMS OF RS.29,62,98,768/ -, RS.28,05,89,424/- AND RS.31,53,17,903/- TOTALING RS.89,22,06,095/-. BESIDES, CLAIM WAS ALSO MADE FOR CARRY FORWARD OF UNABSORBED CAPITAL LOSS O F RS.25,49,300/-. 3. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .17,08,029/- ON ACCOUNT OF PRECEDING YEARS EXPENSES AS THE ASSES SEE WAS MAINTAINING ITS ACCOUNTS ON MERCANTILE SYSTEM OF AC COUNTING AND THE PRIOR PERIOD EXPENSES CLAIMED WERE NOT ALLO WABLE IN THE YEAR UNDER CONSIDERATION 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .25,00,000/- OUT OF REPAIR EXPENSES WITHOUT APPRECIATING THAT TH E ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THESE EXPENS ES AND THE DEPARTMENT WAS ALREADY IN APPEAL ON THIS ISSUE IN T HE A. Y. 2001-02 WHICH WAS PENDING BEFORE THE IT AT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .2,00,000/- OUT OF MD'S COMMISSION WITH APPRECIATING PROPERLY T HAT THE STEEP HIKE IN EXPENSES WAS NOT JUSTIFIED BY THE GEN UINE NEEDS OF BUSINESS AND THE DEPARTMENTAL APPEAL FILED ON THE I SSUE IS PENDING BEFORE THE LD. ITAT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .50,000/- MADE ON ACCOUNT OF PROFESSIONAL EXPENSES WITHOUT AP PRECIATING THAT THE ASSESSEE COULD NOT FURNISH COMPLETE DETAIL S OF SUCH EXPENSES AND THE APPEAL FILED BY THE DEPARTMENT ON THE ISSUE IS PENDING BEFORE THE ITAT IN THE ASSESSMENTS YEARS 20 01-02 TO 2005-06. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .3,00,000/- ON ACCOUNT OF MISC EXPENSES WITHOUT APPRECIATING TH AT THE ITA NO.90/DEL/2012 3 ASSESSEE COULD NOT FURNISH COMPLETE DETAILS/ NECESS ARY EXPLANATION IN RESPECT OF THESE EXPENSES AS WELL AS JUSTIFICATION FOR INCREASE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .10,00,000/- ON ACCOUNT OF COMMISSION EXPENSES WITHOUT APPRECIAT ING THAT THE CLAIM OF COMMISSION WAS NOT PROPORTIONATE TO TH E LEGITIMATE NEEDS OF BUSINESS AND FURTHER THE ASSESSEE ALSO FAI LED TO DISCHARGE THE ONUS OF PROVING THE GENUINENESS OF HU GE COMMISSION EXPENSES CLAIMED BY FURNISHING COPIES OF AGREEMENTS/CONFIRMATION FROM THE CONCERNED PARTIES. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF DE PRECIATION OF RS.42,50,000/- CLAIMED RESPECTIVELY ON MACHINERY AN D WIND GENERATORS ON ADMISSION OF ADDITIONAL EVIDENCE IN T HE SHAPE OF A CERTIFICATE FROM TAMILNADU WITHOUT AFFORDING ANY OPPORTUNITY IN THIS REGARD. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CLT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF DE PRECIATION OF RS.10,60,941/- ON THE SO-CALLED PURCHASE OF MACHINE RY FROM M/S ASHISH ENGINEERING WORKS WITHOUT APPRECIATING P ROPERLY THAT THE GENUINENESS OF PURCHASE OF MACHINERY COULD NOT BE ESTABLISHED CONCLUSIVELY BY THE ASSESSEE. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.5,71,49,911/- ON ACCOUNT OF LEASE RENT, LEASE MA NAGEMENT FEE AND LEASE RENT OF BUILDING RESPECTIVELY WITHOUT APPRECIATING THAT EVERY YEAR IS INDEPENDENT AND EXPENDITURE OF E ACH YEAR IS ADMISSIBLE ON THE FACTS AND CIRCUMSTANCES WHICH DID NOT WARRANT THE ALLOWANCE OF ABOVE EXPENDITURE IN THE Y EAR UNDER CONSIDERATION. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF IN TEREST OF RS.50,00,000/- OUT OF INTEREST CLAIMED ON ACCOUNT O F UTILISATION OF BORROWED FUNDS FOR NON-BUSINESS PURPOSES BY FOLL OWING HIS ITA NO.90/DEL/2012 4 ORDER PASSED IN THE ASSESSEE'S CASE FOR THE ASSESSM ENT YEAR 2001-02 & 2002-03 WHICH HAS NOT BEEN ACCEPTED AND T HE DEPARTMENTAL APPEAL ON THE ISSUE IS PENDING BEFORE THE LD. ITAT. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE LUMP-SUM ADDITION OF RS.L,00,00,000/- WITHOUT PROPER APPRAISAL OF FINDIN GS OF THE AO THAT THE TRANSACTION WITH M/S ASHISH ENGG. WORKS, M /S A.S. MECHANICAL WORKS AND A.S. FORGINGS, PIONEER ENGG. W ORKS, R.K. VIDEO & OTHER CONCERNS AS RECORDED IN PARA NO: 21 OF THE ASSESSMENT ORDER WERE NOT PROPERLY RECORDED AND THE METHOD OF ACCOUNTING FOLLOWED WAS SUCH THAT THE PROFITS CANNO T BE DEDUCTED THEREFROM. 12. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .10,000/- ON ACCOUNT OF FOREIGN TRAVELING EXPENSES WITHOUT APPRE CIATING THAT THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS NEC ESSARY EXPLANATION IN RESPECT OF THESE EXPENSES AS WELL AS JUSTIFICATION FOR INCREASE. 13. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .50,000/- OUT OF ADVERTISEMENT EXPENSES CLAIMED WITHOUT APPRE CIATING THAT THE ASSESSEE COULD NOT FURNISH COMPLETE DETAIL S NECESSARY EXPLANATION IN RESPECT OF THESE EXPENSES AS WE]] AS JUSTIFICATION FOR INCREASE. 14. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS .5,00,000/- OUT OF STAFF WELFARE EXPENSES AND SALES PROMOTION E XPENSES CLAIMED WITHOUT APPRECIATING THAT THE ASSESSEE COUL D NOT FURNISH COMPLETE DETAILS NECESSARY EXPLANATION IN RESPECT O F THESE EXPENSES AS WE]] AS JUSTIFICATION FOR INCREASE. 15. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED O FF. ITA NO.90/DEL/2012 5 4. IN THE GROUND NO.1, THE ISSUE INVOLVED IS DELETI NG THE DISALLOWANCE OF RS.17,08,029/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND PRIOR PERIOD EXPENSES CLAIMED WERE NOT ALLOWABLE IN THE YEAR UNDER CONSID ERATION. THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PAGES 3 TO 5 IN PARA 5 AND THE CIT (A) IN PARA 4 AT PAGES 4 & 5 OF THEIR ORDERS. THE TAX AUDITOR IN THE TAX AUDIT REPORT FORM 3CD HAS IDENTIFIED PRIOR PERIOD EXPENDITURE OF RS.25,29,275/- AND INCOME OF RS.7,21,322/- I.E. NET EXPENDITURE / INCO ME OF RS.18,07,953/- AS PER TAX AUDIT REPORT, ANNEXURE-M1 TO M9 PLACED AT P AGES 33 TO 38 OF THE PAPER BOOK. THE AO HAS IDENTIFIED CERTAIN ENTRIES A ND HAS DISALLOWED RS.17,08,029/-. THE COMPLETE DETAILS OF DISALLOWANC E WAS SUBMITTED BY THE ASSESSEE BEFORE CIT(A), WHICH ARE PLACED AT PAGES.6 TO 8 OF THE PAPER BOOK. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE H AVE DEALT THE ISSUE OF PRIOR PERIOD EXPENSES IN REVENUES APPEAL IN ITA NO .3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97 IN PARAS 5 TO 8 OF ORDER DA TED 24.09.2013. BOTH THE SIDES RELIED ON THE PLEADINGS IN THAT APPEAL. THE RELEVANT PARA 8 OF THAT ORDER IS REPRODUCED HEREUNDER :- 8. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERU SED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSI DERED THE CASE LAWS RELIED UPON BY BOTH THE SIDES. THE ASSESS ING OFFICER HAS MADE A PATENT MISTAKE WHILE ADDING THE PRIOR PE RIOD EXPENSES TO THE INCOME OF THE ASSESSEE. THE TOTAL P RIOR PERIOD EXPENSES WERE OF RS.96,57,170/- AND THERE WAS PRIOR PERIOD ITA NO.90/DEL/2012 6 INCOME OF RS.26,16,334/-. THE ASSESSING OFFICER ADD ED BOTH THESE AMOUNTS WHICH IS PATENTLY WRONG. THEREFORE, T HE CIT (A) HAS RIGHTLY APPRECIATED THIS FACT AND CONSIDERED TH IS MISTAKE IN HIS ORDER. THE ASSESSEES CONTENTION FOR CONSISTENC Y WHEREIN IT WAS CONTENDED THAT IN RESPECT OF EARLIER YEARS ALSO , THIS ISSUE RELATING TO PRIOR PERIOD EXPENSES HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ASSESSING OFFICER OR BY THE CIT (A). THE DEPARTMENT HAS ALSO NOT FILED FURTHER APPEAL. THE A SSESSEE COMPANY IS HAVING MANY DIVISIONS ALL ACROSS THE CO UNTRY AND THERE CAN BE INSTANCES AND CASES, WHERE BILLS FOR E XPENSES ARE RECEIVED AT MUCH LATER DATED OR BEYOND THE FINANCIA L YEAR AND EXPENSES COULD NOT BE BOOKED WHEN THEY ARE INCURRED . FOR SUCH A SITUATION, THE DECISION OF HON'BLE BOMBAY HIGH CO URT IN THE CASE OF NAGRI MILLS CO. LTD. (SUPRA) IS ALSO A GUID ING FORCE WHILE DECIDING THIS ISSUE OF PRIOR PERIOD EXPENSES. THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR T HE PURPOSE OF BUSINESS. THE BONAFIDE AND GENUINENESS OF EXPENS ES IS NOT DOUBTED. HOWEVER, THE ASSESSING OFFICER OBSERVED TH AT THE BILLS OF THE EXPENSES WERE NOT FURNISHED DURING THE ASSES SMENT YEAR PROCEEDINGS. WE HAVE PERUSED THE AUDIT REPORT AND T HE LETTER DATED 15.03.1999 WHICH GIVE THE DETAILS OF EXPENSES . THE EXPENSES ARE OF VARYING NATURE. THESE PERTAIN TO FR EIGHT, REPAIR, ELECTRICITY, WATER, TELEPHONE, ENTRY TAX, SALES TAX , INTEREST, DISCOUNT, EXGRATIA, BONUS, ADVERTISEMENT, SALE COMM ISSION ETC. ASSESSEE CLAIMS THAT EXPENSES TO THE TUNE OF RS.75, 51,613/- WERE TO BE DISALLOWED U/S 43B OF THE ACT FOR THE RE ASON THAT THESE WERE NOT PAID DURING THE RELEVANT PERIOD AND THESE EXPENSES CAN BE ALLOWED ONLY ON ACTUAL PAYMENTS. TH US, THESE EXPENSES IN ANY CASE ARE TO BE DISALLOWED IN THOSE PARTICULAR YEARS AND TO BE ALLOWED IN THE YEAR OF ACTUAL PAYME NTS. FURTHER, THIS APPEAL RELATES TO ASSESSMENT YEAR 1996-97 WHER E A CONSIDERABLE TIME HAS BEEN LAPSED. IN COMPARISON TO TOTAL TURNOVER, THESE EXPENSES ARE NOT OF SIGNIFICANT VOL UME. THE ASSESSEE HAS SUO-MOTTO MADE A DISCLOSURE OF THE PRI OR PERIOD EXPENSES BOTH BY WAY OF MENTIONING IN THE AUDIT REP ORT AND BY FILING THE REPORT ALONG WITH RETURN OF INCOME. HOWE VER, FOR WANT OF FURTHER FURNISHING OF DETAILS IF THE ISSUE IS RESTORED BACK TO THE ASSESSING OFFICER, NO USEFUL PURPOSE WILL BE SERVED. FURTHER, SUBSTANTIAL AMOUNT OF EXPENSES ARE IN THE NATURE OF THE EXPENSES WHICH ARE ALLOWABLE ONLY ON THE PAYMENT BA SIS ALSO ITA NO.90/DEL/2012 7 PROMPT US NOT TO RESTORE THE ISSUE TO THE FILE OF T HE ASSESSING OFFICER. CONSIDERING ALL THESE FACTS, WE FIND IT AP PROPRIATE TO SUSTAIN ADDITION OF RS.21,05,557/- BEING DIFFERENCE BETWEEN PRIOR PERIOD EXPENSES DEBITED IN PROFIT & LOSS ACCO UNT AND EXPENSES WHICH CAN BE ALLOWED ONLY ON ACTUAL PAYMEN TS. IT WILL BE SUFFICIENT TO MEET THE END OF JUSTICE. WE ORDER ACCORDINGLY. THEREFORE, WE PARTLY ALLOW THIS GROUND OF REVENUES APPEAL. RESPECTFULLY FOLLOWING OUR DECISION IN THE AFORESAI D ORDER, WE FIND THAT THERE IS NO CLAIM IN THIS YEAR THAT PRIOR PERIOD EXPENSES ALSO INCLUDE THE EXPENSES WHICH DESERVED TO BE DISALLOWED U/S 43B OF THE ACT AND THE SAME IS TO BE ALLOWED WHEN THE ACTUAL PAYMENTS ARE MADE. THEREFO RE, IN ABSENCE OF SUCH DETAILS, WE SET ASIDE THE ORDER OF THE CIT (A) ON T HIS ISSUE AND ALLOW THIS GROUND OF REVENUES APPEAL FOR DISALLOWANCE OF RS.1 7,08,029/-. THIS GROUND OF REVENUES APPEAL IS ALLOWED. 6. IN THE GROUND NO.2, THE ISSUE INVOLVED IS DELETI NG THE DISALLOWANCE OF RS.25 LACS OUT OF REPAIR EXPENSES. THE AO HAS DISA LLOWED A SUM OF RS.25 LACS ON ACCOUNT OF REPAIR & MAINTENANCE ON PLANT & MACHINERY, BUILDING AND OTHERS FOR THE REASONS GIVEN IN ASSESSMENT ORDE R FOR THE AY. 1996-97, JUST TO APPREHEND THAT EXPENDITURE OF CAPITAL NATUR E AND INADMISSIBLE NATURE ARE INCLUDED IN THIS EXPENDITURE. THE AO HAS ADMITT ED THAT THE COMPLETE DETAILS OF REPAIR AND MAINTENANCE ON PLANT & MACHIN ERY, BUILDING & OTHERS HAVE BEEN SUBMITTED. THE DISALLOWANCE WAS RESTRICT ED TO RS.25 LACS AS AGAINST RS.50 LACS IN THE AY 1996-97. THE AO HAS I DENTIFIED ITEMS OF ITA NO.90/DEL/2012 8 CAPITAL NATURE SEPARATELY AND ALLOWED DEPRECIATION. FOR THE YEAR CIT(A) HAS ALLOWED DEPRECIATION ON WDV IN SUBSEQUENT YEARS. T HE DEPARTMENT HAS NOT PREFERRED ANY APPEAL. IT IS ALSO A FACT THAT THE D EPARTMENT HAS NOT PREFERRED APPEAL BEFORE ITAT IN THE ASSESSMENT YEAR 2003-04, 2004-05 & 2005-06 AGAINST THE ORDERS OF CIT(A). 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. BOTH THE SIDES RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSE SSMENT YEAR 1996-97. WE HAVE DEALT SUCH ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97 IN PARAS 9 TO 12 OF ORDER D ATED 24.09.2013. THE RELEVANT PARA 12 IS REPRODUCED HEREUNDER :- 12. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE ALSO GONE THROUGH THE DETAILS OF THE REPAIRS AND MAINTEN ANCE IN THE PAPER BOOK AT PAGES 370 TO 451. WE HAVE ALSO PERUSE D THE SHOW CAUSE ISSUED BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER HAS ASKED ONLY GENERAL DETAILS AND NO SPECIFIC BILL S WERE CALLED FOR. THE ASSESSING OFFICER SHOULD HAVE GONE THROUGH THE DETAILS AND INDICATE WHICH EXPENDITURE HE WANT TO VERIFY FU RTHER. THE ASSESSING OFFICER MUST HAVE APPLIED HIS MIND WITH T HE DETAILS SUBMITTED BY THE ASSESSEE AND MUST HAVE PINPOINTED THE DISCREPANCIES AND OMISSIONS. AD HOC DISALLOWANCE CA NNOT BE RESORTED TO IN THE ABSENCE OF ANY SPECIFIC DISCREPA NCY NOTED IN THE DETAILS SUBMITTED BY THE ASSESSEE. THE ASSESSIN G OFFICER HAS FAILED TO IDENTIFY THE EXPENSES AND AMOUNTS WHERE T HERE WAS ANY DISCREPANCY AND HE PROPOSED TO DISALLOW THE SAM E. IN VIEW OF THESE FACTS, WE FIND NO MERITS IN THE APPEAL OF THE REVENUE ON THIS GROUND. WE ALSO GET THE SUPPORT FROM THE DECIS ION OF HON'BLE DELHI HIGH COURT IN THE CASE OF NATIONAL IN DUSTRIAL CORPORATION REPORTED IN 177 CTR 194 (DEL.). KEEPING THESE FACTS IN VIEW, WE SUSTAIN THE ORDER OF THE CIT (A) ON THIS ISSUE. ITA NO.90/DEL/2012 9 FACTS BEING SIMILAR, RESPECTFULLY FOLLOWING OUR AFO RESAID ORDER, WE FIND NO MERITS IN THE APPEAL OF THE REVENUE ON THIS ISSUE A ND THIS GROUND IS DISMISSED. 8. IN THE GROUND NO.3, THE ISSUE INVOLVED IS DELETI NG THE ADDITION OF RS.2 LACS OUT OF MDS COMMISSION. SIMILAR DISALLOWANCE HAS BEEN MADE IN THE ASSESSMENT YEAR 1996-97. BOTH THE SIDES RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. W E HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 F OR ASSESSMENT YEAR 1996-97 IN PARAS 13 TO 16 OF ORDER DATED 24.09.201 3. THE RELEVANT PARA 16 IS REPRODUCED HEREUNDER :- 16. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GON E THROUGH THE SUBMISSION MADE BY BOTH SIDES. WE FIND THAT THE ASSESSING OFFICER HAS MADE AN AD HOC DISALLOWANCE W ITHOUT APPRECIATING THE FACTS OF THE CASE THAT THE TURNOVE R AND PROFIT OF THE COMPANY HAS BEEN INCREASED DURING THE YEAR. THE PAYMENT HAS BEEN MADE IN ACCORDANCE WITH SCHEDULE-XIII OF T HE COMPANIES ACT, 1956 AND THIS PAYMENT HAS ALSO BEEN APPROVED BY THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE C OMPANY. IN VIEW OF THESE FACTS, IT WAS UNJUSTIFIED TO MAKE AN AD HOC DISALLOWANCE OF RS. 1 LAC FROM THE TOTAL PAYMENT OF RS.2.5 LACS TO THE WHOLE TIME MANAGING DIRECTOR OF THE COMPANY. IN VIEW OF THESE FACTS, WE FIND NO MERITS IN THIS GROUND OF REVENUES APPEAL AND WE SUSTAIN THE ORDER OF THE CIT (A) ON T HIS ISSUE. THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE D ISMISS THIS GROUND OF REVENUES APPEAL. ITA NO.90/DEL/2012 10 9. GROUND NO.4 IS AGAINST THE DISALLOWANCE OF RS.50 ,000/- MADE ON ACCOUNT OF PROFESSIONAL EXPENDITURE. SIMILAR DISAL LOWANCE HAS BEEN MADE IN THE ASSESSMENT YEAR 1996-97. BOTH THE SIDES RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. W E HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 F OR ASSESSMENT YEAR 1996-97 IN PARAS 17 TO 20 OF ORDER DATED 24.09.201 3. THE RELEVANT PARA 20 IS REPRODUCED HEREUNDER :- 20. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE ALSO PERUSED THE DETAILS AVAILABLE ON RECORD. THE ASSESS EE SUBMITTED THE DETAILS. THE ASSESSING OFFICER HAS NOT ASKED AN Y FURTHER SPECIFIC INFORMATION. HE HAS ALSO NOT DOUBTED THE G ENUINENESS OF THE EXPENSES. WE FIND NO SUBSTANCE IN MAKING THE AD HOC DISALLOWANCE WITHOUT GIVING ANY SPECIFIC FINDING IN RESPECT OF ANY EXPENDITURE. THEREFORE, WE FIND NO MERITS IN TH IS GROUND OF REVENUES APPEAL AND THE SAME IS ACCORDINGLY DISMIS SED. FACTS BEING SIMILAR, RESPECTFULLY FOLLOWING OUR DEC ISION IN THE AFORESAID ORDER, WE DISMISS THIS GROUND OF REVENUES APPEAL. 10. IN THE GROUND NO.5, THE ISSUE INVOLVED IS DELET ING THE DISALLOWANCE OF RS.3 LACS ON ACCOUNT OF MISC. EXPENSES. THE AO DEA LT THIS ISSUE IN PARA 11 AT PAGE 8 OF HIS ORDER AND THE CIT (A) DEALT THE SA ME IN PARA 10 AT PAGES 8 & 9 OF HIS ORDER. LD. DR RELIED ON HIS PLEADINGS MAD E BEFORE US IN THE APPEAL IN ASSESSMENT YEAR 1996-97. LD. AR SUBMITTED THAT I N THE ASSESSMENT YEARS 1999-2000, 2000-01, 2001-02 AND 2002-03, SPECIFIC D ISALLOWANCES WERE MADE ON VARIOUS ACCOUNTS LIKE FREIGHT, COOLIE, & CA RTAGE, FACTORY & OFFICE ITA NO.90/DEL/2012 11 MAINTENANCE, DIWALI EXPENSES, GENERAL EXPENDITURE, TELEPHONE EXPENSES ETC. AGAINST SOME OF THE ITEMS, DEPARTMENT HAS NOT PREFE RRED APPEAL BEFORE THE ITAT AND ON SOME ITEMS PREFERRED APPEAL BEFORE THE ITAT. HE SUBMITTED THAT HOWEVER IN THE 2003-04 AND 2004-05, DISALLOWAN CE WAS MADE ONLY ON TELEPHONE EXPENDITURE IN THE MISC. HEAD AND FROM TH E ASSESSMENT YEAR 2006- 07 ONWARDS THERE IS NO DISALLOWANCE ON ANY ACCOUNT IN THE MISC. HEAD. FURTHER, HE RELIED ON THE SUBMISSIONS MADE IN THE A PPEAL IN ASSESSMENT YEAR 1996-97 BEFORE US. 11. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESS MENT YEAR 1996-97 IN PARAS 21 TO 24 OF ORDER DATED 24.09.2013. THE RELE VANT PARA 24 IS REPRODUCED HEREUNDER :- 24. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE FIND THAT ASSESSEE HAS HIMSELF DISALLOWED SOME EXPENDITURE WH ICH IS NOT ALLOWABLE. THE ASSESSING OFFICER RELIED ON THE DISA LLOWANCE MADE IN ASSESSMENT YEAR 1995-96 WHICH HAS BEEN FINA LLY DELETED BY THE ITAT WHILE DECIDING THE ITA NO.2978/ DEL/2000 DATED 13.12.2005. THE ASSESSING OFFICER HAS NOT PIN POINTED ANY SPECIFIC DEFECTS IN THE DETAILS NOR HAS HE FURTHER ASKED ANY DETAILS IN THIS REGARD, THEREFORE, WE FIND NO DEFEC TS IN THE ORDER OF CIT (A). ACCORDINGLY, WE SUSTAIN THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. FACTS BEING SAME, THEREFORE, RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE DISMISS THIS GROUND OF REVENUES APPEAL. ITA NO.90/DEL/2012 12 12. GROUND NO.6 IS AGAINST THE DISALLOWANCE OF RS.1 0 LACS ON ACCOUNT OF COMMISSION EXPENSES. THE AO DEALT THIS ISSUE IN PAR A 12 AT PAGE 8 OF HIS ORDER AND THE CIT (A) DEALT THE SAME IN PARA 11 AT PAGES 9 & 10 OF HIS ORDER. 13. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. BOT H THE SIDES RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSE SSMENT YEAR 1996-97. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97 IN PARAS 25 TO 28 OF ORDER DATED 24.09.2013. THE RELEVANT PARA 28 IS REPRODUCED HEREUNDER :- 28. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE ALSO GONE THROUGH THE CONTENTIONS RAISED BY THE LD. DR. WE HAVE NO DOUBT REGARDING THE LEGAL ISSUES RAISED BY THE LD. CIT (DR). THE EXPENSES ARE ALLOWED ONLY IF IT IS INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE BURDEN LIES ON THE ASSESSEE TO ESTABLISH THAT THE EXPENDITURE RELATES TO THE BUSINESS. THUS, THERE IS NO QUARREL REGARDING THE LEGAL ISSUE RAISED BY THE LD. CIT DR. BUT WE HAVE TO SEE HOW THESE LEGAL ISS UES ARE APPLICABLE IN ASSESSEES CASE. WHEN THE ASSESSEE HA S FURNISHED COMPLETE DETAILS OF EXPENSES AS ASKED FOR BY THE AS SESSING OFFICER ALONG WITH EVIDENCES, THEN IT IS INCUMBENT UPON THE ASSESSING OFFICER TO SEEK SPECIFIC INFORMATION OUT OF THE DETAILS FURNISHED. WITHOUT MAKING SUCH EFFORTS, AD HOC DISA LLOWANCE OUT OF COMMISSION EXPENSES IS UNJUSTIFIED. THE ASSE SSING OFFICER WAS FREE TO EXAMINE FURTHER THE COMMISSION AGENTS TO WHOM THE PAYMENTS WERE MADE BY THE ASSESSEE. THEREF ORE, THE LEGAL PROPOSITION RELIED UPON BY THE CIT DR ARE NOT APPLICABLE TO THE FACTS OF ASSESSEES CASE. AD HOC DISALLOWANC ES CAN BE MADE ONLY WHEN THERE ARE NO DETAILS FURNISHED. WHEN DETAILS HAVE BEEN GIVEN BEFORE THE ASSESSING OFFICER AND AS SESSING OFFICER DID NOT SPECIFY ANY EXPENDITURE AND IDENTIF Y THOSE ITEMS OF EXPENDITURE WHICH HAS NOT BEEN MADE FOR WHOLLY A ND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSEE THEN ON LY THE ASSESSING OFFICER CAN PROCEED FOR MAKING THE DISALL OWANCES BUT ITA NO.90/DEL/2012 13 NO SUCH EXERCISE HAS BEEN CARRIED OUT BY THE ASSESS ING OFFICER IN THIS CASE. THE ASSESSEE HAS SUBMITTED EXPLANATIO N FOR MAKING THE PAYMENTS WHICH THE ASSESSING OFFICER HAS NOT FO UND FALSE. THE ASSESSEE IS HAVING LARGE NUMBER BRANCHES AND TH E COMMISSION AGENTS PROCURE ORDERS, FACILITATE IN COL LECTION OF PAYMENT FROM THE CUSTOMERS AND, THEREFORE, THE PAYM ENTS WERE MADE FOR THE WORK CARRIED OUT BY THE AGENTS FOR THE SMOOTH RUNNING OF THE BUSINESS OF THE ASSESSEE. IN VIEW OF THESE FACTS, WE FIND NO FAULT IN THE ORDER OF THE CIT (A) AND WE SUSTAIN THE SAME. THIS GROUND OF REVENUES APPEAL IS DISMISSED. FACTS BEING SAME, THEREFORE, RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE DISMISS THIS GROUND OF REVENUES APPEAL. 14. IN THE GROUND NO.7, THE ISSUE INVOLVED IS AGAIN ST THE DISALLOWANCE OF DEPRECATION OF RS.42,50,000/- CLAIMED ON MACHINERY AND WIND ELECTRIC GENERATOR. THE ASSESSING OFFICER HAS DEALT THIS IS SUE IN PARA 15 AT PAGE 9 OF HIS ORDER AND THE CIT (A) HAS DEALT THIS ISSUE IN P ARA 14 AT PAGE 12 OF HIS ORDER. BOTH THE SIDES RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. 15. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESS MENT YEAR 1996-97 IN PARAS 29 TO 32 OF ORDER DATED 24.09.2013. THE RELE VANT PARA 32 IS REPRODUCED HEREUNDER :- 32. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THI S ISSUE HAS BEEN DISCUSSED BY THE ASSESSING OFFICER IN PARA 17. 1 AND 17.2 AT PAGES 15 & 16 OF ASSESSING OFFICERS ORDER. THE CIT (A) HAS DEALT THE ISSUE IN PARA 15.2 TO 15.10 AT PAGES 28 T O 33 OF HIS ORDER. WE HAVE ALSO PERUSED THE DETAILS SUBMITTED. AT THE ITA NO.90/DEL/2012 14 OUTSET, WE WOULD LIKE TO STATE THAT CONFIRMATION WA S MADE AVAILABLE TO THE ASSESSING OFFICER ON 19.03.1999. T HIS FACT HAS BEEN ACCEPTED BY THE LD. DR WHEN IT WAS POINTED OUT TO HIM DURING THE HEARING. IN VIEW OF THESE FACTS, WE HOLD THAT THE CONFIRMATION FILED FROM TNEC DID NOT CONSTITUTE ADD ITIONAL EVIDENCE AND THE SAME WAS FILED BEFORE THE ASSESSIN G OFFICER. ON THE PERUSAL OF THE CONFIRMATIONS, WE FIND THAT T NEC HAS CONFIRMED THAT 45 WIND ELECTRIC GENERATORS WERE INS TALLED BY THE ASSESSEE. THUS, THE EXISTENCE OF THE WIND ELECTRIC GENERATORS WAS CONFIRMED BY THE USER HIMSELF I.E. TNEC. THESE FACTS ESTABLISH THE FACTUM OF EXISTENCE OF THE ASSESSEE I S BEYOND ANY DOUBT. TNEC HAS ALSO CONFIRMED THAT ELECTRIC GENERA TION WAS STARTED DURING THE YEAR UNDER CONSIDERATION AND THE POWER GENERATION IN TERMS OF UNITS HAS BEEN ALSO QUANTIFI ED. IT AHS INCREASED FROM 54512790 IN ASSESSMENT YEAR 1995-96 TO 129741589 IN THE YEAR UNDER CONSIDERATION. THE INCR EASE IN THE POWER GENERATION WAS ATTRIBUTED TO THE ADDITION OF WIND ELECTRIC GENERATORS INSTALLED DURING THE YEAR. THE SALE OF T HE POWER THROUGH WIND ELECTRIC GENERATORS WAS ALSO SOLD FOR A SUM OF RS.26,66,65,859/- WHICH IS REFLECTED IN THE AUDITED PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE COMP ANY. THE DETAILS OF THE POWER SOLD, COPIES OF BILLS OF PURCH ASE OF WIND ELECTRIC GENERATORS WERE SUBMITTED TO THE ASSESSING OFFICER. THE ASSESSING OFFICERS OBSERVATION THAT THE SUPPLIER W AS NOT FOUND AT THE GIVEN ADDRESS BUT HE HAS NOT ISSUED ANY SUMM ONS U/S 131 OF THE INCOME-TAX ACT, 1961 TO M/S AIRO ENERGY LTD. THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO ISSUE T HE SUMMONS WHICH HAS NOT BEEN ACCEPTED. WE WOULD ALSO LIKE TO MENTION THAT THE ISSUE HAS BEEN ALREADY SETTLED IN FAVOUR O F THE ASSESSEE BY THE ITAT IN ASSESSMENT YEARS 1993-94 AND 1995-96 WHEREIN WHILE EXAMINING THE ALLOWABILITY OF LEASE R ENT THE EXISTENCE OF THE ASSET HAD BEEN ACCEPTED AND ESTABL ISHED. THE RELIANCE ON THE FOLLOWING DECISIONS OF ITAT ALSO MA KE US TO SUSTAIN THE ORDER OF CIT (A) ON THIS ISSUE WHEREIN IT IS DECIDED THAT LEASE RENTAL ALLOWABLE EVEN WHEN MANUFACTURER OF MACHINERY WAS NOT TRACEABLE BUT ASSETS ARE IN EXIST ENCE :- (I) DCIT V. ADINATH INDUSTRIES (2001) 252 ITR 476 (GUJ) (II) J.R. SOLVENT INDUSTRIES PVT. LTD V. ACIT (199 9) 63 TIJ 165 (CHD) (TM) ITA NO.90/DEL/2012 15 (III) BALAJI TEXTILES INDUSTRIES (P) LTD. V, ITO ( 1994) 49 ITD 177 (BOM) (IV) UPPER INDIA TRADING LTD IN I.T.A. NO. 694/BOM /89 DATED 04.08.1993 WE ALSO HOLD THAT THE REVENUES ALLEGATION THAT THE FIRM FROM WHOM THE MACHINES WERE PURCHASED WERE NON-EXISTENT BUT THE FACTS SHOW THAT THE WIND ELECTRIC GENERATORS WERE I NSTALLED AT THE PREMISES OF TNEB WHICH HAS BEEN CONFIRMED BY THE TN EB WHICH IS A GOVERNMENT UNDERTAKING. THE CERTIFICATE SUBMITTED BY THE ASSESSEE FROM TNEB REMAINS UNCONTROVERTED. T HE ASSESSING OFFICER COULD HAVE VERIFIED THE VERACITY OF THE CERTIFICATE ISSUED BY TNEB IF HE WAS HAVING ANY DOU BT REGARDING THE SUPPLIER M/S. AIRO ENERGY LTD.. MEREL Y NOT FINDING M/S. AIRO ENERGY LTD. THAT TOO WITHOUT SUMM ONING THE SAME AT THE PREMISES CANNOT BE MADE A BASIS TO DRAW THE CONCLUSION THAT FIRM WAS NON-EXISTENT. AS IT IS NOT POSSIBLE TO ENSURE THAT THE COMPANY WILL CONTINUE AT THE SAME P REMISES IN THE COMING TIME. ASSESSEE REQUESTED FOR ISSUING SUM MONS TO SUPPLY M/S AIRO ENERGY LTD WHICH WAS NOT ACCEPTED B Y THE ASSESSING OFFICER. THEREFORE, THE EVIDENCE IN THE F ORM OF CERTIFICATE FROM TNEB ASSUMES A CREDENCE AND DESERV ES TO BE CONSIDERED FOR ALLOWING THE DEPRECIATION ON THE ASS ETS. IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1995-96, TH E ITAT HAS HELD AS UNDER :- 'WE HAVE EXAMINED IN DETAIL THE SPOT VERIFICATION R EPORT CARRIED OUT BY THE DR. DIRECTOR OF INCOME-TAX (INV) -I, RAIPU0 MP ON THE INSTRUCTIONS OF THE ADDL. COMMISSIONER OF INCOME-TAX HISSAR RANGE, HISSAR. WE FIND THAT THE ANNEXURE OF THE REPORT CONTAINS THE N AME OF EACH OF THE LESSOR TO WHOM LEASE RENT IS BEING PAID ALONG WITH THE ITEMS SUPPLIED BY HIM AND EXISTING AT THE SITE OF THE ASSESSEE COMPANY AT CHAMPA. THERE IS ALSO A COL UMN WHEREIN THE ITEMS VERIFIED AT THE SITE BY THE CHART ERED ENGINEER HAVE BEEN MENTIONED AND THESE ITEMS TALLY WITH THE ITEMS LEASED BY THE ASSESSEE COMPANY ON WHICH, LEASE RENT IS BEING PAID. THE CHART ENCLOSED ELSEWHERE IN THIS ORDER HAS BEEN VERIFIED BY US AND WE FIND THAT THE DIRECTIONS OF THE CIT(A), PATIALA VIDE HIS ORDER DA TED ITA NO.90/DEL/2012 16 16.03.2000 HAVE IN FACT BEEN CARRIED OUT BY THE DEPARTMENT THOUGH BOTH THE ASSESSING OFFICER AND TH E CIT(A), ROHTAK CHOSE TO IGNORE THE SAME DESPITE SPE CIFIC REFERENCE BEING MADE BY THE ASSESSEE TO THE REPORT OF THE DEPARTMENTAL ENGINEER BEING AVAILABLE WITH THEM. TH E SOLE REASON FOR DISALLOWANCE OF LEASE RENT IS THAT THE SO CALLED SUPPLIERS HAVE NO CAPACITY TO MANUFACTURE AN D HENCE THEY COULD NOT HAVE SOLD THE MACHINERY SAID T O BE LEASED. AS AGAINST THIS PRESUMPTION, THE PHYSICAL EXAMINATION SHOWS THAT MACHINERY DO EXIST IN THE PREMISES OF ASSESSEE AS A RESULT OF WHICH PRODUCTIO N IS ALSO UNDERTAKEN. IF A PERSON HAS TO LOOK TO HIS HAN DS HE NEED NOT SEE IT IN THE MIRROR. THE FACTS SPEAK FOR ITSELF. THE EXISTENCE OF MACHINERY HAVING BEEN PROVED BY TH E PHYSICAL EXAMINATION ITSELF, IT CAN NOT BE SAID THA T NO MACHINERY IS TAKEN ON LEASE FOR WHICH LEASE RENT IS PAID. THE OTHER CORROBORATIVE EVIDENCE LIKE LEASE AGREEME NT PASSING OF MONEY BY BANKING CHANNELS, DECLARING LEA SE INCOME OF RECIPIENTS ETC. ARE OVERWHELMING EVIDENCE AGAINST THE PRESUMPTION THAT MANUFACTURERS DO NOT H AVE CAPACITY TO PRODUCE MACHINERIES. WE THEREFORE HOLD THE LEASE TRANSACTION AS GENUINE. THIS DECISION OF THE ITAT WAS UPHELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT. THE DECISION OF ITAT FOR THE AS SESSMENT YEAR 1993-94 IN ITA NO.2298/D/2004 HAS ALSO BEEN UP HELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT. WE WOULD A LSO LIKE TO STATE THAT THE DECISION OF HON'BLE PUNJAB & HARY ANA HIGH COURT IN THE CASE OF DCIT VS. ADINATH INDUSTRIES (S UPRA) IS VERY RELEVANT AND WHERE THE HON'BLE HIGH COURT HAS HELD AS UNDER :- 'DETAILS ABOUT PURCHASE WERE FURNISHED. TRANSACTION S WERE THROUGH A BROKER WHOSE BILL WAS PRODUCED. ALL DETAILS FROM THE STAGE OF RECEIPT TO PRODUCTION WER E PRODUCED. FOR FURTHER VERIFICATION ASSESSEE PRODUCE D GATE PASS. AVAK CHITHI (RECEIPT NOTE) AND WEIGHT NOTE. ASSESSEE PRODUCED LABORATORY REPORT AND SAMPLE REPO RT. IT POINTED OUT THE DIFFERENCE PAID OR RECOVERED IN VIE W OF REPORTS. ASSESSEE PRODUCED RG 4 FORM TO SHOW THAT DETAILS ENTERED AS PER EXCISE RULES. ASSESSEE POINT ED OUT ITA NO.90/DEL/2012 17 THE PRODUCTION AND PURCHASE OF RAW MATERIALS. ASSES SEE SUBMITTED THAT DETAILS ABOUT THE TRANSACTION, TRUCK NUMBER, ETC. THUS, ASSESSEE PRODUCED RELEVANT MATER IALS TO SHOW PURCHASE OF MATERIALS AND ITS USE IN PRODUC TION. AD HAS ACCEPTED THE EXISTENCE OF G IN CASE OF A FOR ASST. YR. 1985-86. THE TRIBUNAL APPRECIATED ALL THESE FAC TS IN ARRIVING AT A CONCLUSION. IT CLEARLY APPEARS THAT M ATTER HAS BEEN DISPOSED OF ON APPRECIATION OF EVIDENCE AND WH EN THE MATTER HAS BEEN DECIDED BY THE TRIBUNAL ON APPRECIATION OF EVIDENCE, IT CANNOT BE SAID THAT, T HAT RAISES A QUESTION OF LAW. THE TRIBUNAL POINTED OUT THAT AT BEST IT COULD BE INFERRED THAT THESE PARTIES WERE SET UP BY SOMEBODY ELSE AND THE REASONS COULD BE MANIFOLD FOR THAT. IT IS VERY MUCH SURPRISING THAT IN THE INSTAN T CASE THE AD HAS DRAWN A PRESUMPTION THAT THE AMOUNT HAS COME BACK IN THE ASSESSEE' HANDS, WITHOUT ANY EVIDENCE WHATSOEVER MERELY ON THE BASIS OF WITHDRAWAL OF AMO UNTS FROM THE ACCOUNT OF G. IT GOES WITHOUT SAYING THAT IT WAS WITHIN THE KNOWLEDGE OF THE BANKER AS TO WHO WAS TH E ACCOUNT HOLDER AND WHO WITHDREW THE AMOUNT FROM THE SAME BANK. THE AD BY DUE DILIGENCE COULD HAVE UNEARTHED THE FACT THAT G IS A BOGUS PARTY BY RECOR DING STATEMENT OF THE BANK MANAGER, ACCOUNTANT OR CASHIE R OR THE PARTY WHO INTRODUCED G TO THE BANK. THE MATTER IS IN THE REALM OF APPRECIATION OF EVIDENCE AND NO INTERF ERENCE IS CALLED FOR IN THE MATTER. IN THE CIRCUMSTANCES, THE APPEALS ARE DISMISSED'. KEEPING ALL THESE FACTS IN VIEW, WE HOLD THAT THE E XISTENCE OF THE MACHINERY AND ITS USE HAS BEEN ESTABLISHED BY A SSESSEE BEYOND ANY DOUBT. THE TWO DECISIONS OF ITAT IN ASSE SSEES OWN CASE IN EARLIER YEARS WHICH HAVE BEEN ALSO CONF IRMED BY HON'BLE JURISDICTIONAL HIGH COURT ON THE ISSUE ALSO GOES IN FAVOUR OF ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWI NG THESE AFORESAID DECISIONS, WE UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THIS GROUND OF REVENUES APPEAL. FACTS BEING SAME, THEREFORE, RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE DISMISS THIS GROUND OF REVENUES APPEAL. ITA NO.90/DEL/2012 18 16. GROUND NO.8 IS AGAINST THE DISALLOWANCE OF DEPR ECIATION OF RS.10,60,941/- ON THE MACHINERY TRANSFER FROM ONE D IVISION TO ANOTHER DIVISION. THE ASSESSING OFFICER HAS DEALT THIS ISS UE IN PARA 15 AT PAGE 9 OF HIS ORDER AND THE CIT (A) HAS DEALT THIS ISSUE IN P ARA 14 AT PAGE 12 OF HIS ORDER. 17. LD. DR RELIED ON HIS PLEADINGS MADE IN ITA NO.3 036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. LD. AR SUBMITTED THAT A S UM OF RS.55,29,739/- HAS BEEN SHOWN IN THE SALE / ADJUSTMENT COLUMN IN T HE DEPRECIATION CHART AND THE SIMILAR AMOUNT WAS ADDED IN THE POWER CO-GENERA TION DIVISION DUE TO TRANSFER OF ASSET FROM ONE DIVISION TO ANOTHER DIVI SION AS PER BALANCE SHEET AT PAGE NO.299. SIMILARLY, IN THE INCOME TAX DEPREC IATION CHART THE VALUE OF MACHINERY OF RS.25 LACS AND RS.30,29,739/- TOTAL RS .55,29,739/- AT 25% WAS REDUCED AND THE GROSS VALUE OF RS.55,29,739/- WAS A DDED IN THE POWER CO- GENERATION DIVISION DEPRECIABLE AT 100%, AS IS EVID ENT FROM PAGE NOS.314 TO 319, DUE TO TRANSFER OF ASSET DETAILED FILED AT PAG E NO. 320. WHILE PREPARING THE DEPRECIATION CHART AS PER INCOME TAX ACT, GROSS VALUE OF RS.55,29,739/- AS AGAINST WDV OF RS.44,68,798/- AS ON 01.04.1996 W AS REDUCED AND SIMILARLY VALUE WAS ADDED IN THE DEPRECIATION CHART , THEREBY, THERE IS NO EFFECT ON THE DEPRECIATION ON THIS ACCOUNT. LD. AR SUBMITTED THAT THEREFORE, ADDITION MADE BY THE IS LIKELY TO BE DELETED. LD. A R SUBMITTED THAT THE ITA NO.90/DEL/2012 19 ASSESSEE HAS INCURRED CONTINUOUS LOSSES FROM A.Y. 1 997-98 TO A.Y. 2002-03 THEREFORE THERE IS NO EFFECT OF SMALL DEPRECIATION WHETHER CHARGED IN THIS YEAR OR IN FUTURE YEARS. HE ALSO RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. 18. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESS MENT YEAR 1996-97 IN PARAS 33 TO 37 OF ORDER DATED 24.09.2013. THE RELE VANT PARA 32 IS REPRODUCED HEREUNDER :- 37. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE ARE NOT ABLE TO UNDERSTAND WHY THIS AD HOC DISALLOWANCE WAS MADE WITHOUT ANY BASIS OR SUBSTANCE. THE DISALLOWANCE CA NNOT BE MADE MERELY TO COVER POSSIBLE LOOPHOLES OR LEAKAGES OF BOGUS PURCHASE OF CAPITAL GOODS. THE AO HAS TO ESTABLISH THAT NO ASSETS HAVE BEEN PURCHASED OR INSTALLED AND IN THAT CIRCUMSTANCES, HE CAN RESORT TO DISALLOW THE DEPREC IATION. NO EFFORTS HAVE BEEN MADE TO ESTABLISH THAT THE DETAIL S SUBMITTED BY THE ASSESSEE WERE NOT CORRECT. THEREFORE, WE SUSTAI N THE ORDER OF CIT (A) FOR DELETING SUCH AD HOC ADDITION AND THIS GROUND OF REVENUES APPEAL IS DISMISSED. FACTS BEING SAME, THEREFORE, RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE DISMISS THIS GROUND OF REVENUES APPEAL. 19. IN THE GROUND NO.9, THE ISSUE INVOLVED IS DELET ING THE DISALLOWANCE OF RS.5,71,49,911/- OUT OF EXPENSES CLAIMED ON LEASE R ENT/LEASE MANAGEMENT FEES ETC. THE ASSESSING OFFICER HAS DEALT THIS ISS UE IN PARA 18 AT PAGES 12 TO 14 OF HIS ORDER AND THE CIT (A) HAS DEALT THIS ISSU E IN PARA 16 AT PAGES 13 & ITA NO.90/DEL/2012 20 14 OF HIS ORDER. BOTH THE SIDES RELIED ON THE PLEAD INGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. 20. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESS MENT YEAR 1996-97 IN PARAS 38 TO 41 OF ORDER DATED 24.09.2013. THE RELE VANT PARA 41 IS REPRODUCED HEREUNDER :- 41. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND T HE CASE LAWS RELIED UP IN VIEW OF THE FACTS ON RECORD. THE LEASE RENT IS BEING PAID LARGELY IN RESPECT OF ASSETS WHICH HAVE BEEN IN EXISTENCE FOR THE LAST 2-3 YEARS. THE LEASE RENT HA S BEEN ALLOWED BY THE ITAT, DELHI IN RESPECT OF ASSESSMENT YEARS 1 993-94 AND 1995-96 BY HOLDING THAT THE ASSETS WERE IN EXIS TENCE AS PER THE SPOT VERIFICATION REPORT DATED 08.03.2001 OF TH E CHARTERED ENGINEER APPOINTED BY THE INCOME-TAX DEPARTMENT. TH ESE DECISIONS OF THE TRIBUNAL HAVE BEEN APPROVED BY THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT. THEREFO RE, THE LEASE RENT PAID IS IN RESPECT OF THE ASSETS PURCHAS ED IN THE EARLIER YEARS ALSO DESERVE TO BE ALLOWED IN THIS YEAR ALSO. BESIDES THIS, WE FIND THAT ON THE SPOT VERIFICATION REPORT, THE D EPARTMENT FOUND ALL THE ASSETS WHICH HAVE BEEN ACQUIRED / PUR CHASED BY LESSORS FROM THE FIVE PARTIES MENTIONED ABOVE. DURI NG THE HEARING, LD. AR HAS ALSO TAKEN US TO ITEMS REFLECTE D IN THE SPOT VERIFICATION REPORT AND TALLIED IT WITH THE DESCRIP TION OF THE ITEMS OF PLANT & MACHINERY ON WHICH LEASE RENT IS BEING P AID. HENCE, THE EXISTENCE OF THE MACHINERY USED AND PURCHASED F ROM THE FIVE PARTIES IS ESTABLISHED. THEREFORE, RESPECTFULL Y FOLLOWING THE DECISION OF THE ITAT IN ASSESSMENT YEARS 1993-94 AN D 1995- 96 WHICH HAS BEEN CONFIRMED BY HON'BLE PUNJAB & HAR YANA HIGH COURT, WE UPHOLD THE DECISION OF CIT (A) FOR A LLOWING THE LEASE RENT AMOUNTING TO RS.7,05,28,805/-. RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE D ISMISS THIS GROUND OF REVENUES APPEAL. ITA NO.90/DEL/2012 21 21. IN THE GROUND NO.10, THE REVENUE HAS CHALLENGED THE DELETION OF THE ADDITION OF RS.50 LACS OUT OF INTEREST CLAIMED ON A CCOUNT OF UTILIZATION OF BORROWED FUNDS FOR NON-BUSINESS PURPOSES. THE ASSE SSING OFFICER HAS DEALT THIS ISSUE IN PARA 19 AT PAGE 14 OF HIS ORDER AND T HE CIT (A) HAS DEALT THIS ISSUE IN PARA 17 AT PAGES 14 & 15 OF HIS ORDER. BOT H THE SIDES RELIED ON THE PLEADINGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSME NT YEAR 1996-97. 22. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESS MENT YEAR 1996-97 IN PARAS 44 TO 47 OF ORDER DATED 24.09.2013. THE RELE VANT PARA 41 IS REPRODUCED HEREUNDER :- 47. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE ALSO PERUSED THE RECORD. WE HAVE UPHELD THE ORDER OF CIT (A) REGARDING THE GENUINENESS OF THE PAYMENT OF LEASE R ENT RAISED IN GROUND NO.9, THEREFORE, WE FIND THAT THERE IS NO JU STIFICATION IN DISALLOWING THE AD HOC AMOUNT OF INTEREST OF RS.2 C RORES FROM THE INTEREST DEBITED IN THE BOOKS OF ACCOUNT. THERE FORE, WE SUSTAIN THE ORDER OF CIT (A) FOR DELETING THIS ADDI TION. THIS GROUND OF REVENUES APPEAL IS DISMISSED. FACTS BEING SIMILAR, RESPECTFULLY FOLLOWING THE AFO RESAID ORDER, WE DISMISS THIS GROUND OF REVENUES APPEAL. 23. IN THE GROUND NO.11, THE ISSUE RAISED IS AGAINS T THE DELETION OF LUMP SUM ADDITION OF RS.1 CRORE MADE BY THE ASSESSING OF FICER. THE ASSESSING OFFICER MADE THIS AD HOC ADDITION BY HOLDING THAT T RANSACTIONS WITH M/S. ASHISH ENGG. WORKS, M/S A.S. MECHANICAL WORKS, M/S A.S. FORGINGS, M/S ITA NO.90/DEL/2012 22 PIONEER ENGG WORKS, R.K. VIDEO AND OTHER CONCERNS W ERE NOT PROPERLY RECORDED AND THE METHOD OF ACCOUNTING ADOPTED BY TH E ASSESSEE WAS NOT CORRECT. THE ASSESSING OFFICER HAS DEALT THIS ISSU E IN PARA 20 AT PAGES 14 TO 16 OF HIS ORDER AND THE CIT (A) HAS DEALT THIS ISSU E IN PARA 18 AT PAGES 15 & 16 OF HIS ORDER. BOTH THE SIDES RELIED ON THE PLEAD INGS MADE IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97. 24. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN REVENUES APPEAL IN ITA NO.3036/DEL/2010 FOR ASSESS MENT YEAR 1996-97 IN PARAS 48 TO 51 OF ORDER DATED 24.09.2013. THE RELE VANT PARA 51 IS REPRODUCED HEREUNDER :- 51. WE HAVE HEARD BOTH THE SIDES. WE HAVE CONSIDER ED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AFTER CONSID ERING ALL THE RELEVANT MATERIAL, WE FIND THAT THE ADDITION OF RS. 20 CRORES IS PRIMARILY MADE ON THE GROUND THAT FIVE PARTIES WERE BOGUS AND THAT THE PAYMENTS BY CHEQUES HAVE BEEN MADE TO THEM BESIDE THE SALE OF RAW MATERIAL. MOST OF THE PAYMENTS MADE TO THESE PARTIES HAVE BEEN RECEIVED BACK DURING THE YEAR, UN DER CONSIDERATION. WE FIND THAT THE TRANSACTIONS RELATI NG TO FOUR PARTIES SHOWS THERE IS A PEAK DEBIT IN THE BOOKS OF THE ASSESSEE RATHER THAN THE PEAK CREDIT. IN OUR CONSIDERED VIEW , THERE CAN BE NO ADDITION ON ACCOUNT OF PEAK DEBIT BECAUSE IT REP RESENTS AMOUNT ADVANCED THROUGH BOOKS OF ACCOUNT TO A PARTI CULAR PARTY. HOW THE ADVANCE MADE TO THE PARTIES THROUGH ACCOUNT PAYEE CHEQUES FROM THE BOOKS OF ACCOUNT OF THE ASSE SSEE CAN BE ADDED AS INCOME OF THE ASSESSEE. THE ADDITION U/S 6 8 OF THE ACT DEALS WITH THE PEAK CREDIT. THE CREDIT IN THE ACCOU NTS REPRESENTS THE ADVANCE DURING THE YEAR UNDER CONSIDERATION. TH E ITAT ALSO DEALT SUCH ISSUE IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 1993-94 WHEREIN THE ITAT HAS HELD AS UNDER :- ITA NO.90/DEL/2012 23 'ON PERUSAL OF THE COPY OF THE ACCOUNT OF M/S SAHIB ENGINEERING WORKS IN THE BOOKS OF THE ASSESSEE AT P AGE- 102, WE FIND THAT THE AO HAS ADDED TOTAL DEBIT ON A CCOUNT OF SALES UP TO 24 TH SEPTEMBER 1992 TOTALING TO RS.1,48,74,249/-; THESE ARE DEBITS IN THE BOOKS OF THE ASSESSEE AND THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF THE AMOUNTS PURPORTEDLY RECEIVED FROM BA NK ACCOUNT NO.448 OF M/S. SAHIB ENGINEERING WORKS. WHAT IS ADDED AS INCOME IS THE AMOUNT OF PEAK DEBIT BEING VALUE OF GOODS SOLD BY THE ASSESSEE TO M/S SA HIB ENGINEERING WORKS RATHER THAN THE PEAK CREDIT ADDIT ION U/S 68 IS NOT TO BE MADE IN RESPECT OF PEAK OF DEBI T ENTRIES. THE MONEY TRAIL LEADS TO THE SAID THREE LE ASING COMPANIES M/S KOTAK MAHINDRA FINANCE LTD., SRF FINANCE LTD AND TIMES GUARANTEE FINANCE LTD AND THE RE IS NO EVIDENCE TO ESTABLISH THAT THE SAID MONEYS RE MITTED BY M/S KOTAK MAHINDRA FINANCE LTD., SRF FINANCE LTD AND TIMES GUARANTEE FINANCE LTD WERE THE ASSESSEES FUNDS. UNDER THESE CIRCUMSTANCES, THE ADDITION OF RS.1,48,74,249/- IS DELETED. ONCE THE ADVANCE MADE TO A PARTY AND THE SAME AMOUN T WAS RECEIVED BACK THEN THERE CANNOT BE ANY ADDITION FOR ESCAPEMENT OF INCOME, AT THE MOST, THE INTEREST MAY BE DISALLO WED IF THE ADVANCES WERE MADE FOR NON-BUSINESS PURPOSES. THIS HAS NOT BEEN DONE BY THE ASSESSING OFFICER AND WE HAVE NO P OWER TO DO IT. WITHOUT GOING DEEP INTO THE ACCOUNTS MERELY STATING THAT ACCOUNTS WERE BENAMI OF THE ASSESSEE IS NOT JUSTIFI ED. MOREOVER, THE ITAT IN ASSESSEES OWN CASE HAD HELD THAT FIVE PARTIES ARE GENUINE AND THE ASSESSING OFFICER IN REMAND REPORT HAS ALREADY TREATED THESE FIVE PARTIES AS GENUINE. THUS, ALLEGA TIONS HOWSOEVER STRONG BUT THESE CANNOT TAKE PLACE OF EVI DENCE. THE ASSESSING OFFICER HAS FAILED TO DISCHARGE THE ONUS WITH REGARD TO ESTABLISHING THE FACT REGARDING THE BENAMI OF TH ESE SOURCES OF THE ASSESSEE. THE ASSESSING OFFICER COULD HAVE ENQU IRED REGARDING THE PERSON WHO HAS INTRODUCED THE ACCOUNT S FROM THE ACCOUNT OPENING FORM AND THE NECESSARY ENQUIRIES CO ULD HAVE BEEN MADE FROM THE BANKS BUT NOTHING OF SUCH TYPE H AS BEEN DONE BY THE ASSESSING OFFICER. MERELY STATING THAT THE CHEQUES HAVE BEEN ISSUED TO THE PARTIES AND RECEIVED BACK D URING THE ITA NO.90/DEL/2012 24 YEAR UNDER CONSIDERATION CANNOT BE A BASIS FOR MAKI NG SUCH HUGE ADDITION OF RS.20 CRORES. ADDITION CAN BE MADE ONLY IF THERE IS AN ESCAPEMENT OR EVASION OF INCOME. THE AD DITION MADE FOR LEASE RENT PAID TO THESE PARTIES HAS BEEN DELET ED IN VARIOUS YEARS. THE EXISTENCE OF THE ASSETS HAS BEEN ESTABLI SHED. LEASE RENT PAID ON THE LEASE ASSETS HAS BEEN FOUND ALLOWA BLE. IN THESE CIRCUMSTANCES, WE FIND NO FAULT IN THE ORDER OF THE CIT (A) AND WE SUSTAIN THE SAME ON THIS ISSUE. THIS GROUND OF R EVENUES APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE D ISMISS THIS GROUND OF REVENUES APPEAL. 25. IN THE GROUND NO.12, THE ISSUE IS RAISED AGAINS T THE DELETION OF THE DISALLOWANCE OF RS.10,000/- ON ACCOUNT OF FOREIGN T RAVELING EXPENSES. THIS ISSUE HAS BEEN DEALT BY THE ASSESSING OFFICER IN PA RA 7 AT PAGE 5 OF HIS ORDER. THE CIT (A) HAS DEALT THIS ISSUE IN PARA 6 AT PAGE 6 OF HIS ORDER. BOTH THE SIDES RELIED ON THE PLEADINGS MADE IN THE CROSS OBJ ECTION NO.357/DEL/2010 IN ITA NO.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97 . 26. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN ASSESSEES CROSS OBJECTION NO.357/DEL/2010 IN ITA N O.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97 IN PARAS 56 & 57 OF ORDER D ATED 24.09.2013. THE RELEVANT PARA 57 IS REPRODUCED HEREUNDER :- 57. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE HAVE CONSIDERED THE DETAILS SUBMITTED IN THIS REGARD. ASSESSING OFF ICER HAD DISALLOWED THIS AMOUNT OUT OF FOREIGN TRAVELING EXPENSES AS DETAILS SUBMITTED WERE NOT SUFFICIENT TO EXPLAIN THE EXPENDITURE TO JUSTIFY TO THAT EXTEND. SUCH DISALLOWANCES ARE BEING MADE IN PAST YEARS. LD. AR HAS FAILED TO SHOW ANYTHING ADVERSE REGARDING FATE OF ADDITION IN PAST YEARS. HENCE, WE SUSTAIN THE ADDITION. ITA NO.90/DEL/2012 25 RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE A LLOW THIS GROUND OF REVENUES APPEAL. 27. GROUND NO.13 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.50,000/- OUT OF ADVERTISEMENT EXPENSES CLAIMED. ASSESSING O FFICER DISALLOWED THE AMOUNT TO COVER UP LEAKAGES, FOR NOT PRODUCING SOUV ENIR AND IN VIEW OF SOME BOARD CIRCULAR RELEVANT TO ADVERTISEMENT IN SO UVENIR. CIT (A) GRANTED THE RELIEF BY HOLDING AS UNDER :- 13. GROUND NO.13 OF APPEAL IS REGARDING DISALLOWAN CE OF RS.50,000/- ON ACCOUNT OF ADVERTISEMENT EXPENDITURE. THE AO NOT ED THAT THE APPELLANT CLAIMED RS.43,47,836/- ON ACCOUNT OF ADVERTISEMENT EXPENSES FOR WHICH REQUISITE DETAILS HAVE BEEN FILED BY THE APPELLANT. THE AO HELD THAT ADVERTISEMENT GIVEN IN A SOUVENIR CAN BE ALLOWED ON LY AFTER THE PROOF OF ADVERTISEMENT IN THE SOUVENIR HAS BEEN FILED BY THE APPELLANT. IN THE ABSENCE OF SUCH PROOF THE AO DISALLOWED RS.50,000/- ON AD-HOC BASIS. THE AR SUBMITTED BEFORE ME THAT ON THE REQUISITE DETAIL S HAVE BEEN FURNISHED BEFORE THE AO AND THE PAYMENTS HAVE BEEN MADE THROU GH LEADING ADVERTISEMENT COMPANIES BY CHEQUES. THE ACTION OF T HE AO IN DISALLOWING AD-HOC AMOUNT IS NOT JUSTIFIED. I HAVE CONSIDERED T HE ISSUE AND FIND THAT THE AO MADE THE AD-HOC DISALLOWANCE WITHOUT ANY BASIS A ND THEREFORE IT IS DELETED AND THE GROUND OF APPEAL IS ALLOWED. SINCE ASSESSING OFFICER MADE AD HOC DISALLOWANCE WI THOUT ANY SPECIFIC FINDINGS, WE FIND NO MERITS IN THIS GROUND OF REVEN UES APPEAL AND THE SAME IS DISMISSED. 28. GROUND NO.14 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.5,00,000/- OUT OF STAFF WELFARE EXPENSES AND SALES PROMOTION E XPENSES CLAIMED. THIS ISSUE HAS BEEN DEALT BY THE ASSESSING OFFICER IN PA RA 6 AT PAGE 5 OF HIS ORDER. THE CIT (A) HAS DEALT THIS ISSUE IN PARA 5 AT PAGES 5 & 6 OF HIS ORDER. BOTH ITA NO.90/DEL/2012 26 THE SIDES RELIED ON THE PLEADINGS MADE IN THE CROSS OBJECTION NO.357/DEL/2010 IN ITA NO.3036/DEL/2010 FOR ASSESSM ENT YEAR 1996-97. 29. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE HAVE DEALT THIS ISSUE IN ASSESSEES CROSS OBJECTION NO.357/DEL/2010 IN ITA N O.3036/DEL/2010 FOR ASSESSMENT YEAR 1996-97 IN PARAS 53 & 55 OF ORDER D ATED 24.09.2013. THE RELEVANT PARA 55 IS REPRODUCED HEREUNDER :- 55. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE HAVE ALSO CONSIDERED THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE AS WELL AS THE REVENUE. THE ASSESSING OFFICER HAS RESTRICTED THE D ISALLOWANCE TO 10% ON ACCOUNT OF STAFF WELFARE AND SALES PROMOTION EXPENS ES DEBITED IN THE BOOKS OF ACCOUNT OF RS.67,83,464/- AND RS.2,66,113/- RESP ECTIVELY. SOME OF THE EXPENSES WERE SUO MOTO DISALLOWED BY THE ASSESSEE H IMSELF. FULL DETAILS WERE NOT FILED BEFORE ASSESSING OFFICER. KEEPING IN VIEW OF THE NATURE OF EXPENSES DEBITED UNDER THESE HEADS, WE FIND HAT CIT (A) WAS JUSTIFIED IN SUSTAINING THE ADDITION BEING 10% OF THESE EXPENSES BEING TREATED AS NOT ALLOWABLE IN VIEW OF THE PROVISIONS OF SECTION 37(2 ) OF THE ACT. RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE A LLOW THIS GROUND OF REVENUES APPEAL. 30. GROUND NO.14 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION, HENCE DISMISSED. 31. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF JANUARY, 2014. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 15 TH DAY OF JANUARY, 2014/TS ITA NO.90/DEL/2012 27 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), ROHTAK. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.