M/s. Jaihind Automation Pvt. Ltd., Pune V. Asst. CIT, Circle-9, Pune

ITA 913/PUN/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0577 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Unexplained expenditure; Depreciation; Source of fund
• Section: 143(3); 234B; 133(6)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! , # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM ITA NO.913/PN/2013 ASSESSMENT YEAR : 2009-10 M/S JAIHIND AUTOMATION PVT. LTD., PLOT NO.31, GOODWILL CO-OP. SOCIETY, AUNDH, PUNE 411 007. PAN : AABCJ6925B . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. . RESPONDENT / APPELLANT BY : SHRI M. K. KULKARNI / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 19.09.2016 / DATE OF PRONOUNCEMENT: 27.10.2016 % / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 28.02.2013 FO R THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN T HE BUSINESS OF MANUFACTURING OF PLASTIC MOULDED ARTICLES FOR AUTOM OBILE INDUSTRY AND HAS TWO MANUFACTURING PLANT, ONE AT PUNE AND OTHER AT PANTN AGAR, DISTRICT UDHAMSINGH NAGAR (UTTARAKHAND). ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2 ITA NO.913/PN/2013 2009-10 ON 31.10.2009 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION OF RS.76,31,435/- UNDER SECTION 80IC OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER T HE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 26 .12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,33,84,500/-. AGGRIEVED BY T HE ORDER OF LD. ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO VIDE ORDER DATED 28.02.2013 (IN APPEAL NO.PN/CIT(A)-V/ACIT, CIR. 9/7 25/11-12) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED FURTHER BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS : - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION M ADE UNDER S. 80-IC OF THE ACT OF RS.76,31,345/- HOLDING THAT THE RAW MATERIAL GOING TO PRODUCTION WAS NOT GAS BASED. THE INTERPRETATION OF THIS ENTRY IN SCH. XIV IS NOT IN CONSONANCE WITH TECHNICAL SYSTEM OF PRODUCTION. THE DEDUCTION BE AL LOWED TO THE APPELLANT- ASSESSEE. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW AND IN THE ALTERNATIVE STAND TAKEN BY LD. CIT(A) THAT AFTER IN VOKING THE PROVISIONS OF S. 80- IA(10) HELD IN CASE AT ANY POINT OF TIME DEDUCTION UNDER S. 80IC IS HELD TO BE ALLOWABLE/ADMISSIBLE THE SAME WILL BE RESTRICTED TO RS. 49,45,678/-. THE LD. CIT(A) HAS IN PRINCIPLE ACCEPTED THE ALLOWABILITY OF CLAIM OF DEDUCTION U/S 80- IC OF THE ACT. IN VIEW OF THIS THE FULL CLAIM OF DE DUCTION OF RS. 76,31,435/- MADE U/S 80IC OF THE ACT BE ALLOWED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF DEP RECIATION OF RS. 6,17,250/- IN RESPECT OF MOULD PURCHASED FROM SAHARA MOULD MAKERS . SINCE THE CLAIM IS LAWFUL IT BE ALLOWED TO THE ASSESSEE. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEVY OF INTEREST U/S 234A, 2348 AND 234C IS NOT JUSTIFIED. THE LEVY OF INTEREST BE QUASHED. 5) THE APPELLANT CRAVES/LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 3. FIRST AND SECOND GROUNDS BEING INTER-CONNECTED A RE CONSIDERED TOGETHER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AS SESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IC O F THE ACT. THE DEDUCTION WAS CLAIMED ON THE PROFITS EARNED FROM PLANT LOCATED AT PANTNAGAR WHICH WAS MANUFACTURING PLASTIC MOULDED ARTICLES MAINLY USED IN AUTOMOBILE SECTOR. THE LD. 3 ITA NO.913/PN/2013 ASSESSING OFFICER WAS OF THE VIEW THAT THE PLANT OF THE ASSESSEE WAS PLASTIC PROCESSING UNIT WHICH PRODUCED PLASTIC ARTICLES AS MENTIONED IN THIRTEENTH SCHEDULE OF THE I. T. ACT AND WAS NOT A GAS BASED I NTERMEDIATE PRODUCT INDUSTRIAL UNIT WHICH WAS MANUFACTURING OR PRODUCING PLASTIC O R POLYMER CHIPS AS MENTIONED IN FOURTEENTH SCHEDULE OF THE I. T. ACT. HE ACCORDING LY HELD THAT ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE AC T AND THEREBY DENIED THE CLAIM OF DEDUCTION OF RS.76,31,435/-. AGGRIEVED BY THE ORDE R OF LD. ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO UPHELD THE ORDER OF LD. ASSESSING OFFICER BY HOLDING AS UNDER :- 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS TECHNICAL DATA AS PER ANNEXURE-1. AFTER GOING THROU GH THE TECHNICAL DATA, IT IS SEEN THAT IT TALKS OF GAS ASSISTED INJECTION HOLD PROCESS IN WHICH GAS IS INTRODUCED INTO THE PARTIAL SEALING SURFACE, WHOSE PRESSURE ACTS AS THE HOLDING PRESSURE PROCESS OF INJECTION MOLDING IN GA S AND LIQUID FORMATION, WHICH IS SUMMARIZED AS UNDER: 1. THE PLASTIC GRANULES IS PLACED IN A HOPPER FOR P RE-HEATING. 2. SAME GRANULES WILL BE TRANSFERRED FROM HOPPER TO BARREL. BARREL CONTAINS SCREW, HEATER AND HYDRAULIC SYSTEM. 3. AFTER TEMPERATURE SETTING IN THE HEATER, THE GRA NULES WILL BE CONVERTED TO GAS WITH LIQUID FORMATION BY SCREW PRE SSURE. 4. THE MATERIAL WHICH IS IN GAS AND LIQUID FORMATIO N WILL BE INJECTED TO CLOSED MOULD BY NOZZLE AND THE COMPONENT WILL BE FORMULATED. THUS, INJECTION OF GAS IN A MOLD IS A PROCESS AND N OT A COMPONENT OF THE PRODUCT WHICH TALKS OF GAS BASED INTERMEDIATE PRODU CT. THIS CLAIM COULD HAVE BEEN ALLOWED, PROVIDED RAW MATERIAL WAS GAS BASED. IN TH IS CASE, BASIC RAW MATERIAL IS PLASTIC GRANULE WHICH IS CONVERTED TO GAS WHICH IS INJECTED INTO CLOSED MOULD BY NOZZLE. THIS TEMPORARY FORMATION OF GAS FROM PLASTI C GRANULE CANNOT MAKE THE END PRODUCT AS GAS BASED AS FORMATION OF GAS IS A PROCE SS AND NOT A SOURCE OF RAW MATERIAL. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ASSESSING OFFICER WAS QUITE JUSTIFIED IN DISALLOWIN G DEDUCTION U/S. 80IC OF INCOME- TAX ACT AMOUNTING TO RS.76,31,435/-. THEREFORE, I D O NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE APPELLANT AND THE GROUND IS DISM ISSED. 11. WITHOUT PREJUDICE TO THE ABOVE, IT WAS FURTHER NOTICED THAT THERE WAS WIDE VARIATION IN N.P. OF PUNE UNIT AND U TTRAKHAND UNIT WHILE BOTH THE UNITS WORKED AS ANCILLARY TO TATA MOTORS. FOR T HE SAKE OF CLARITY, THE GROSS PROFIT AND NET PROFIT RATIO IS REPRODUCED AS UNDER : 4 ITA NO.913/PN/2013 STATEMENT OF PROFITABILITY COMPARISON AND 2008-09 JAIHIND PUNE RATIO JAIHIND UK RATIO TOTAL RATIO INCOME SALES 71,294,265 73,351,278 144,645,543 INCREASE/(DECREASE) STOCK OF FINISHED GOODS 6,428,517 4,126,350 10,554,867 TOTAL 77,722,782 77,477,628 155,200,410 EXPENDITURE CONSUMPTION OF RAW MATERIAL/PROCESSING 50,161,337 64.54 50,142,366 64.72 100,303,703 64.63 LABOUR CHARGES(WAGES) 1,979,037 2.55 1,687,036 2.18 3,666,073 2.36 POWER & LIGHT 3,143,991 4.05 1,883,215 2.43 5,027, 206 3.24 1.62 CONSUMABLE STORES 735,191 0.95 144,767 0.19 879,958 0.57 TRANSPORT & OCTROI 1,221,750 1.57 1,813,751 2.34 3, 035,500 1.96 OTHER MANUFACTURING EXPENSES 551,042 0.71 481,271 0 .62 1,032,313 0.67 15,104,534 6,196,328 TOTAL COST OF MANUFACTURING 57,792,347 74.36 56,15 2,406 72.48 113,944,753 73.42 1.88 7,631,010 6,010, 040 GROSS PROFIT 19,930,435 25.64 21,325,222 27.52 41, 255,657 26.58 7,473,524 186,288 EMPLOYEES REMUNERATION 2,338,456 2.75 1,306,636 1. 69 3,445,092 2.22 1.06 SELLING EXPENSES 1,505,873 1.94 491,163 0.63 1,997. 035 1.29 1.31 ADMINISTRATIVE AND OTHER EXPENSES 1,959,570 2.52 94 2,160 1.22 2,901,730 1.87 1.30 INTEREST AND FINANCIAL CHARGES 6,721,004 8.65 3,948 ,491 5.06 10,639,495 6.86 3.59 TOTAL EXPENDITURE 12,324,904 15.86 6,658,449 8.59 18,983,353 12.23 9.14 DEPRECIATION 5,569,785 7.17 5,682,085 7.33 11,251, 870 7.25 0.16 OTHER INCOME 42,159 42,159 NET PROFIT 2,077,905 2.67 8,984,688 11.60 11,062,59 3 7.13 8.93 FROM THE ABOVE, IT IS CLEAR THAT NET PROFIT RATIO I N RESPECT OF PUNE UNIT WAS SHOWN AT 2.67% WHILE IN RESPECT OF UTTRAKHAND UNIT, NET PROFIT WAS SHOWN AT 11.60%. THIS BEING SO, THE APPELLANT COMPANY WAS I SSUED NOTICE U/S. 251(2) OF INCOME-TAX ACT ON 14.02.2013. THE RELEVANT PORTION OF NOTICE READS AS UNDER : '2. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, IT IS NOTICED THAT IN RESPECT OF PUNE UNIT, NET PROFIT HAS BEEN SHOWN AT 2.67% WHILE IN RESPECT OF UNIT LOCATED AT UTTARAKHAND, NET PROFIT HAS BEEN SH OWN AT 11.60%. THIS BEING SO, PROVISIONS OF SEC. 80IA(10) OF INCOME-TAX ACT ARE ATTRACTED WHICH IS OF COURSE SUBJECT TO ADMISSIBILITY OF DEDUCTION U/S. 80IC OF INCOME-TAX ACT. 3. THIS BEING SO, YOU ARE REQUESTED TO EXPLAIN WHY PROFIT OF UTTARAKHAND UNIT SHOULD NOT BE ADOPTED AS PER SEC. 80IA(10) OF INCOME-TAX ACT. YOUR REPLY IN THIS REGARD SHOULD BE FILED ON 18.02.2013 AT 4.30 P.RN.' 12. THE APPELLANT FILED FOLLOWING SUBMISSION IN RES PECT OF HIGHER PROFIT FROM UTTARAKHAND FACTORY ACTIVITIES. 'JUSTIFICATION FOR MORE PROFIT CONTRIBUTION FROM UT TARAKHAND FACTORY ACTIVITIES. FROM THE ATTACHMENT, IT MAY BE NOTICED THAT THE NET PROFIT EARNED FROM THE ACTIVITIES AT UTTARAKHAND FACTORY DURING THE ABOVE REFERRED ASSESSMENT YEAR WAS RS. 8984688/- AS AGAINST THE PROFIT EARNED FROM PUNE OPERATIONS OF RS.2077905/-. THE PERCENTAGE OF NET PROFIT TO SALES AT UK WORKS OUT TO 11.60% AS AGAINST 2.67% OF PUNE WORKS. THE DIFFEREN CE OF 8.93% IS EXPLAINED BELOW: THE BREAK UP IS AS FOLLOWS : G.P.(MAINLY DUE TO SAVING IN POWER COST) 1.88% EMPLOYEE REMUNERATION 1.06% SELLING AND ADMINISTRATION COST 2.61% INTEREST AND FINANCE CHARGES 3.59% 1. SAVING IN POWER COST SAVING IN POWER COST AT UK WAS OF 1.62% WHICH WAS BECAUSE OF THE FOLLOWING REASONS. 5 ITA NO.913/PN/2013 I) IN PUNE COMPANY IS HAVING TWO FACTORIES AND ALSO TWO SEPARATE POWER CONNECTIONS AS AGAINST ONLY ONE AT UK. DUE TO THAT THE MORE POWER BILL IS TO BE PAI D AT PUNE. MINIMUM CHARGES EACH CONNECTION ARE REQUIRED TO BE PAID. II) THE POWER IS CHEAP AT UK AS AGAINST PUNE. THIS CAN BE VERIFIED FROM THE ATTACHED COPIES OF THE BILLS T HAT THE POWER IS AVAILABLE AT UK AT RS. 2.81 PER UNIT A S AGAINST RS. 3.95 PER UNIT AT PUNE. III) THE CAPACITY UTILIZATION AT PUNE IS VERY LESS. THERE ARE NUMBER OF ITEMS MANUFACTURED AS AGAINST VERY FEW AT UK. DUE TO THAT THERE ARE POWER LOSSES AT PUNE AND IT INCREASES CONSUMPTION. 2. SAVING IN EMPLOYEE COST: AS MENTIONED ABOVE, THE MANUFACTURING CAPACITY AT P UNE IS UNDER UTILIZED TO LARGE EXTENT AS AGAINST THAT T HE CAPACITY UTILIZATION AT UK IS SATISFACTORY. ALSO AS MENTIONED EARLIER, THERE ARE TWO FACTORIES AT PUNE, DUE TO THAT MORE PERSONS ARE EMPLOYED, RESULTING IN MORE C OST. PUNE FACTORIES COULD HAVE MANUFACTURE MORE THAN DOU BLE THAN WHAT WAS PRODUCED WITH THE EMPLOYED STRENGTH. IF MORE PRODUCTION WOULD HAVE BEEN POSSIBLE, THE PERCENTAGE OF EMPLOYEE COST WOULD HAVE REDUCED, WHI CH WOULD HAVE BEEN COMPARABLE WITH UK. 3. SAVING IN ADMINISTRATION COST THE FACTORY AT UK IS NEW AND IS VERY CLOSE TO TATA MOTORS. SECONDLY, TATA MOTORS WERE MANUFACTURING ONLY ONE T YPE OF VEHICLE I.E. ACE THERE. NO SELLING COST WAS REQU IRED TO BE INCURRED AS THERE IS ONLY ONE CUSTOMER I.E. TATA MOTORS AND THE UK FACTORY WAS SET UP AS THEY WANTED. AS SU CH THE SELLING COST WHICH INCLUDING TRANSPORT COST, IS VERY LESS AS COMPARED TO PONE. AS MENTIONED ABOVE, THE FACTOR IES AT PUNE ARE AT TWO DIFFERENT LOCATIONS, WHICH RESUL T IN DOUBLE ADMINISTRATIVE COST. 4. SAVING IN INTEREST AND FINANCE CHARGES: THE CREDIT LIMITS SANCTIONED BY THE BANK, WHICH WER E UTILIZED FULLY, WERE AS FOLLOWS: TYPE OF FACILITY PUNE UTTARAKHAND TERM LOANS 423 LACS 245 LACS CASH CREDIT 225 LACS 50 LACS TOTAL 648 LACS 295 LACS AS MENTIONED ABOVE THERE ARE TWO FACTORIES IN PUNE. NUMBER OF PARTS ARE MANUFACTURED IN PUNE AS AGAINST LIMITED NUMBER OF P ARTS AT UK. THE PARTS MANUFACTURED IN PUNE ARE ALSO FOR LARGE VEHICLES OF TATA MOTORS. AS LARGE VARIETY IS MANUFACTURED, THE CAPACITY UTILIZA TION BECOMES LESS. DUE TO THAT MORE AND MORE MACHINES AND MORE SPACE IS REQUI RED. AS SUCH THE 6 ITA NO.913/PN/2013 CAPITAL INVESTMENT IN PUNE IS MORE AND DUE TO THAT THE TERM LOAN BORROWING IS ALSO MORE, RESULTING IN MORE INTEREST COST. AS THE FACTORY AT UK IS CLOSE TO TATA MOTORS, AND A LSO LIMITED TYPES OF ITEMS ARE MANUFACTURED AT UK, THE MOVEMENT OF STOCKS IS F AST WHICH RESULTS IN LESS QUANTITIES OF STOCKS TO BE CARRIED OUT. ALSO THE FA CTORY THERE IS CLOSE TO THEM, THE RECOVERIES BECOME FAST DUE TO GOOD FOLLOW UP. B OTH THESE FACTORS HELP FOR LESSER AMOUNT OF WORKING CAPITAL AND INTEREST C OST. ' 13. IN RESPECT OF NOTICE U/S. 251(2) OF INCOME-TAX ACT, FOLLOWING SUBMISSIONS HAVE BEEN FILED: '1. THE ASSESSEE UPTO 30-09-2008 WAS A PROPRIETARY CONCERN OF SHRI. V. SUGATHAN AND FROM 1-10-2008 IT WAS CONVERTED INTO A PVT. LTD. COMPANY. THE PVT. LTD. COMPANY (CONVERTED FROM PROPRIETORSHI P) CONTINUED ITS MANUFACTURING ACTIVITY AS IT IS WITH THE SAME PRODU CTION LINE IN PUNE. THE PVT. LTD. COMPANY ESTABLISHED ITS NEW BUSINESS OF M ANUFACTURING AUTO PARTS (PLASTIC MOULDED ITEMS) IN UTTARAKHAND W.E.F. 01-10 -2008. 2. THE ITEMS MANUFACTURED AT PUNE AND UTTARAKHAND A RE DIFFERENT IN NATURE AS THE TATA MODELS FOR WHICH THEY ARE MANUFA CTURED AND SUPPLIED ARE TOTALLY OF DIFFERENT NATURE INVOLVING DIFFERENT MAN UFACTURING ACTIVITIES WHERE THE DEDUCTION UNDER S. 80LC IS CLAIMED. PRODUCTION ACTIVITY AT UTTARAKHAND (1) TATA ACE : PRICE OF PRODUCTS (SEL LING PRODUCT OF TATA) RS.2.25 LAKHS (2) TATA IRSH : PRICE OF THE PRODUCTS (SE LLING PRICE BY TATA) IS RS.1.75 LACS TO 2 LACS WHILE IN PUNE THE FINAL PRODUCT IS LIKE TATA SUMO; TATA SUFFARI, TATA 407, INDICA-INDIGO. THE TATA 407 IS ONLY TRUCK MODEL. A LL OTHERS ARE PASSENGER CARS. THE MAXIMUM SELLING PRICE OF PASSENGER CAR IS OF RS. 13 LAKHS WHILE TATA 407 IS SOLD WITHIN 6 & 7 LAKHS RANGE. 3. THE ASSESSEE-COMPANY DOES MASS PRODUCTION ET UTT ARAKHAND. THE MINIMUM QUANTITY OF SUPPLIES TO TATA IS ABOUT 1 LAK H PIECES OR ABOUT PER MONTH. THE LIST OF WHICH IS ENCLOSED. FRO M THIS IT WOULD REVEAL THAT THESE PRODUCTS ARE NOT MANUFACTURED IN PUNE FACTORY. THERE QUOTED PRICES TO TATA ARE IN THE RANGE OF 0.5 7 PER PIECE TO MAXIMUM OF RS. 145 PER PIECE. 4. THE PUNE LIST IS ALSO ENCLOSED. IT WOULD REVEAL THAT THE PRODUCTS SOLD ARE TOTALLY DIFFERENT. THE PRODUCTS MANUFACTURED AND SUPPLIED FROM UTTARKHAND ARE NEVER MANUFACTURED IN PUNE FACTORY. IN VIEW OF MASS PRODUCTION AND MASS SUPPLIES THE MACHINERY INSTALLE D IN UTTARAKHAND FACTORY IS SUITABLE TO DO SUCH PRODUCTI ON ON MASS BASIS AND THEREFORE, THE PRODUCTION OBTAINED O N SUCH MACHINERY WHICH IS OF AUTOMATIC AND INVOLVES ADVANCED TECHNOLOGY BEING COMPETITIVE OF NATURE THE PROFIT ELEMENT IS MORE THERE IN THIS UNIT THAN THAT IN PUNE FACTORY. 5. THE NATURE OF MANUFACTURING AND SUPPLY ACTIVITY IS TOTALLY DIFFERENT THAT IS UNDERTAKEN IN BOTH THE FACTORIES. THE TWO FACTORY UNITS MANUFACTURING DIFFERENT ITEMS ARE NOT 7 ITA NO.913/PN/2013 COMPARABLE WITH EACH OTHER. THE BASIC PRINCIPLES IS 'LIKE IS TO BE COMPARED WITH LIKE'. 6. IN ANY CASE THE PROFIT ELEMENT IN UTTARAKHAND FA CTORY IS MORE AS COMPARED TO PUNE FACTORY. THE COMPARATIVE CHART IS ENCLOSED. 7. THE PRODUCTION AT UTTARAKHAND FACTORY IS CONTINU OUS AND IN BETWEEN NO MANUAL ACTIVITY IS REQUIRED TO BE UNDERTAKEN AS MOULDS ONCE FITTED AND ONCE THE PRODUCTION STARTS THE MOULDS ARE NOT REQUIRED TO RE PLACED. THIS IS NOT THE CASE IN THE PUNE FACTORY. THE MANUA L ELEMENT OF WORK IS MAXIMUM IN PUNE. 8. AS AGAINST MASS SUPPLIES FROM UTTARAKHAND FACTOR Y THE SUPPLIES OF PUNE ARE PIECE BY PIECE AND THE ASSESSE E IS REQUIRED TO MAINTAIN MAXIMUM INVENTORY WHICH INVOLV ES LOCK UP OF BORROWED FUNDS INCREASING INTEREST COST FOR MAINTENANCE OF SUCH INVENTORY. THIS REDUCES THE PRO FIT PERCENTAGE IN PUNE FACTORY. 9. THAT CONSIDERING THE ENTIRE SCENARIO THE PROFITS OF BOTH UNITS BEING DISTANT AND DIFFERENT IN NATURE ARE NOT COMPARABLE AS FAR AS PROFIT RATIOS ARE CONCERNED FO R COMPUTATION OF DEDUCTION UNDER S.80IC OF THE ACT. ' 14. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, THE UNDISPUTED FACT S REMAINS THAT BOTH THE UNITS I.E. UNIT AT PUNE AND UNIT LOCATED AT PANTNAG AR IN UTTARAKHAND IS SUPPLYING SIMILAR PARTS TO TATA MOTORS. THE APPELLA NT CLAIMS THAT PRODUCTION PROFIT OF BOTH THE UNIT IS NOT COMPARABL E IN THE SENSE THAT BOTH THE UNIT CATER TO DIFFERENT BRANDS OF VEHICLES PROD UCED BY TATA MOTORS. WHILE IN CASE OF UTTARAKHAND, THE UNIT WAS CATERING TO THE DEMANDS OF LOW AND VEHICLES LIKE TATA ACE AND TATA IRSH, PUNE UNIT WAS CATERING TO HIGH END BRANDS LIKE TATA SUMO, TATA SAFFARI, TATA 407, INDI CA, INDIGO WHERE MARGIN WAS LESS. THIS SUBMISSION OF THE APPELLANT C OMPANY IS AGAINST THE NORMAL TREND IN THE BUSINESS WHERE PROFIT MARGIN IN MASS PRODUCTION IS ALWAYS LOW AND THE UNITS SURVIVE ON HIGH TURNOVER. FURTHER, THE VARIATION IN PROFIT TO THE EXTENT SHOWN BY THE APPELLANT COMP ANY IS TOO LARGE TO BE ACCEPTED BY WAY OF GENERAL EXPLANATION UNSUBSTANTIA TED BY FACTS AND FIGURES. IT IS ALSO SEEN THAT INTEREST AND OTHER AD MINISTRATIVE COSTS HAS BEEN LOADED ON PUNE UNIT JUST TO INFLATE PROFIT AT UTTARAKHAND UNIT. THEREFORE, THIS IS A FIT CASE FOR INVOCATION OF PRO VISION OF 80IA(10) OF INCOME-TAX ACT AS DUE TO CLOSE CONNECTION BETWEEN P ROFIT AT UTTARAKHAND UNIT HAS BEEN INFLATED. IN THIS CASE, N ET PROFIT AT PUNE UNIT HAS BEEN SHOWN AT 2.67% WHILE NET PROFIT AT PANTNAG AR UNIT HAS BEEN SHOWN AT 11.60%. 15. FROM THE CHART OF NET PROFIT OF BOTH THE UNITS, IT IS SEEN THAT AVERAGE NET PROFIT IS SHOWN AT 7.13%. CONSIDERING T HE EXPLANATION OF THE APPELLANT, IF SOME WEIGHTAGE ON ACCOUNT OF AUTOMATI ON OF UTTARAKHAND PLANT SAY 1% IS ALLOWED THEN NET PROFIT OF UTTARAKH AND UNIT COMES TO 8.13%. THE PROFIT AT 8.13% IN THE MANNER CALCULATED IN THE CHART COMES TO RS. 62,98,931/- (I.E. 8.13% OF 77,477,628/-) INSTEAD OF RS.89,84,68 8/-. THUS, EXCESS PROFIT OF RS.26,85,757/- (89,84,688 - 62,98, 931) HAS BEEN LOADED ON UTTARAKHAND UNIT WHICH IS DISALLOWED INVOKING THE P ROVISIONS OF SEC. 80IA(10) OF INCOME-TAX ACT. IN CASE AT ANY POINT OF TIME DEDUCTION U/S. 80LC OF INCOME-TAX ACT IS HELD TO BE ADMISSIBLE, TH E SAME WILL BE RESTRICTED 8 ITA NO.913/PN/2013 TO RS.49,45,678/- (76,31,435 - 26,85,757). SUBJECT TO THE ABOVE FINDINGS, GROUND NO.1 IS DISMISSED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. 4.1 BEFORE US, LD. AR REITERATED THE SUBMISSIONS MA DE BEFORE LD. ASSESSING OFFICER AND LD. CIT(A) AND FURTHER SUBMITTED THAT T HE CLAIM OF DEDUCTION WAS DENIED TO THE ASSESSEE MAINLY FOR THE REASON THAT THE ASSE SSEE WAS PRODUCING PLASTIC ARTICLES AS MENTIONED IN THIRTEENTH SCHEDULE OF THE I. T. ACT AND WAS NOT A GAS BASED INTERMEDIATE PRODUCT INDUSTRIAL UNIT MANUFACT URING OR PRODUCING PLASTICS OR POLYMER CHIPS AS MENTIONED IN FOURTEENTH SCHEDULE O F I. T. ACT. HE POINTED TO THE PROCESS OF MANUFACTURING AND THE FLOW CHART WHICH I S PLACED IN THE PAPER BOOK AND FROM THAT HE SUBMITTED THAT ASSESSEE USES 85% OF PL ASTIC GRANULES AND REMAINING 15% IS GAS. HE FURTHER SUBMITTED THAT WITHOUT THE USE OF GAS THE PROCESS OF MANUFACTURING CANNOT BE COMPLETED. HE FURTHER SUBM ITTED THAT SINCE THE ASSESSEES CASE FALLS INTO ITEM 13(IV) OF FOURTEENT H SCHEDULE OF I. T. ACT AND AS IT MANUFACTURES PLASTIC AND IS COVERED UNDER GAS INTER MEDIATE PRODUCTS INDUSTRIES, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION. AS FAR AS , LD. CIT(A) OBSERVATION THAT THE NET PROFIT RATIO IN RESPECT OF PUNE UNIT (NON EXEMP T UNIT) WAS LESS THAN THE UTTARAKHAND UNIT (EXEMPT UNIT), HE SUBMITTED THAT A SSESSEE HAS MAINTAINED SEPARATE SET OF BOOKS OF ACCOUNTS WHICH ARE AUDITED AND THAT NO ADVERSE COMMENT WITH RESPECT TO MAINTENANCE OF BOOKS OF ACCOUNTS OR ALLOCATION OF EXPENSES HAS BEEN MADE BY THE AUDITOR. IN SUCH A SITUATION, THE PROFIT SHOWN BY THE ASSESSEE CANNOT BE OUT RIGHTLY REJECTED AND FOR THIS PROPOSI TION HE PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF TRIBUNAL IN THE CASE OF ACIT VS. M/S ACCURATE TRANSFORMERS LTD. IN ITA NO.5426/DEL/2012, ORDER DA TED 30.09.2015. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID ORDER. HE FURTHER SUBMITTED THAT LD. CIT(A) HAS ALSO NOT POINTED OUT ANY INSTANCE OF INC ORRECT ALLOCATION OF EXPENSES 9 ITA NO.913/PN/2013 WHICH COULD DEMONSTRATE THAT ASSESSEE HAS DIVERTED PROFIT FROM NON EXEMPT UNIT TO THE UNIT FROM WHICH ASSESSEE IS CLAIMING DEDUCTION UNDER SECTION 80IC OF THE ACT. HE THEREFORE SUBMITTED THAT ASSESSEE BE ALLOWED THE CLAIM OF DEDUCTION. 5. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ER OF LD. ASSESSING OFFICER AND LD. CIT(A) AND SUBMITTED THAT IN THE PRESENT CA SE THE BASIC RAW MATERIAL IS PLASTIC AND THE GAS IS ONLY USED IN THE PROCESS AND THEREFORE ASSESSEE CANNOT BE SAID TO BE MANUFACTURING ARTICLES STATED IN FOURTEE NTH SCHEDULE OF I. T. ACT AND IN SUCH A SITUATION, THE CLAIM OF DEDUCTION UNDER SECT ION 80IC OF THE ACT WAS RIGHTLY DENIED. HE THUS SUPPORTED THE ORDER OF LD. ASSESSI NG OFFICER AND LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DE NIAL OF DEDUCTION UNDER SECTION 80IC OF THE ACT MAINLY ON THE GROUND THAT ASSESSEE S CASE FALLS UNDER THIRTEENTH SCHEDULE OF I. T. ACT AND NOT UNDER FOURTEENTH SCHE DULE OF I. T. ACT. IT IS ASSESSEES CONTENTION THAT ITS CASE FALLS UNDER FOU RTEENTH SCHEDULE OF I. T. ACT AND NOT UNDER THIRTEENTH SCHEDULE OF I. T. ACT. BEFORE US, ASSESSEE HAS PLACED ON RECORD THE COPY OF FLOW CHART OF THE MANUFACTURING PROCESS AND PHOTOGRAPHS OF PRODUCTION PROCESS. IT IS FURTHER ASSESSEES SUBMI SSIONS THAT FOR MANUFACTURING OF GOODS, THE PLASTIC GRANULES CONSTITUTE 85% AND 15% CONSUMPTION IS OF THE GAS AND WITHOUT THE USE OF GAS THE ASSESSEE CANNOT PRODUCE THE GOODS. ON PERUSING FOURTEENTH SCHEDULE, IT IS SEEN THAT IT LISTS OUT L IST OF ARTICLES OR THINGS OR OPERATIONS, THE PROFITS FROM WHICH EARNED IS ELIGIBLE FOR DEDUC TION UNDER SECTION 80IC OF THE ACT. IT IS FURTHER SEEN THAT FOURTEENTH SCHEDULE HAS BEE N DIVIDED INTO THREE PARTS NAMELY PART A, PART B & PART C. PART A LISTS OUT ARTICLES MANUFACTURED IN NORTH-EASTERN STATES WHICH WOULD BE ELIGIBLE FOR DEDUCTION. SIMI LARLY, PART B LISTS OUT THE LIST OF ITEMS OR ITEMS MANUFACTURED/PROVIDED IN THE STATE O F SIKKIM AND PART C LISTS OUT 10 ITA NO.913/PN/2013 ITEMS MANUFACTURED/PROVIDED IN THE STATE OF HIMACHA L PRADESH AND THE STATE OF UTTARANCHAL. IN THE CASE OF ASSESSEE, SINCE IT IS CONTENDED THAT ITS MANUFACTURING UNIT IS SITUATED IN UDDAMNAGAR IN THE STATE OF UTTA RAKHAND, PART C OF FOURTEENTH SCHEDULE WOULD BE APPLICABLE. BEFORE US, IT IS ASS ESSEES CONTENTION THAT FOR THE PURPOSE OF MANUFACTURING IT USES 15% OF GAS AND 85% OF PLASTIC GRANULES. ON THE OTHER HAND, WE FIND THAT LD. CIT(A) AFTER CONSIDERI NG THE SUBMISSIONS, PRODUCTION PROCESS AND OTHER DETAILS HAS GIVEN A FINDING THAT INJECTION OF GAS IN THE MOULD IS A PROCESS AND NOT A COMPONENT OF THE PRODUCT. THE AF ORESAID FINDING OF LD. CIT(A) HAS NOT BEEN CONTROVERTED BY ASSESSEE BY PLACING AN Y MATERIAL ON RECORD. BEFORE US, LD. AR ALSO COULD NOT DEMONSTRATE THAT THOUGH G AS IS USED FOR THE PURPOSE OF PRODUCTION BUT HOW IT COULD BE CONSIDERED AS A COMP ONENT/PART/RAW MATERIAL WHICH GOES INTO THE PRODUCTION OF THE ARTICLE. FURTHER, ON PERUSING THE LIST OF ARTICLES/THINGS/OPERATIONS WHICH ARE ELIGIBLE FOR D EDUCTION FROM THE UNITS LOCATED IN STATE OF UTTARANCHAL AND HIMACHAL PRADESH AS STATED IN PART C OF FOURTEENTH SCHEDULE, WE FIND THAT THE ASSESSEES PRODUCT DOES NOT FALL INTO ANY OF THE 18 CATEGORIES SPECIFIED THEREIN. ON THE CONTRARY, WE ARE OF THE VIEW THAT ASSESSEES PRODUCT FALLS UNDER THIRTEENTH SCHEDULE, PART B, SR . NO.20 WHICH IS WITH RESPECT TO PLASTIC AND ARTICLES THEREOF. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTION 80IC HAS RIGHT LY BEEN DISALLOWED BY THE ASSESSING OFFICER AND UPHELD BY LD. CIT(A). WE THE REFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF ASSESSEE IS DISMISSED. 7. THIRD GROUND IS WITH RESPECT TO THE DISALLOWANCE OF DEPRECIATION IN RESPECT OF MOULD PURCHASED FROM SAHARA MOULD MAKERS. 7.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD . ASSESSING OFFICER NOTICED THAT ASSESSEE HAD PURCHASED MOULDS FROM SAHARA MOUL D MAKERS. ON PERUSING THE 11 ITA NO.913/PN/2013 BILLS OF SAHARA MOULD MAKERS, LD. ASSESSING OFFICER NOTICED THAT MOST OF PURCHASES WERE STATED TO HAVE BEEN MADE AT THE FAG-END OF MAR CH, 2009 AND THAT TWO INVOICES BEARING INVOICE NO.12 & 13, BOTH WERE DATED 01.10.2 008 FOR RS.1,69,728/- AND RS.9,69,000/- RESPECTIVELY. HE ALSO NOTICED THAT A SSESSEE HAD TRANSFERRED RS.50,50,000/- ON DIFFERENT DATES TO SAHARA MOULD M AKERS WITHOUT GETTING DELIVERY OF ANY MOULD. HE ALSO NOTICED THAT NOTICE UNDER SE CTION 133(6) OF THE ACT ISSUED TO SAHARA MOULD MAKERS WAS RETURNED UNDELIVERED WITH R EMARKS COMPANY LEFT. HE THEREFORE CONCLUDED THAT THE TRANSACTIONS WITH SAHA RA MOULD MAKERS APPEARED TO BE FAKE AND THEREFORE CONSIDERED THE PAYMENT OF RS. 50,50,000/- TO BE UNEXPLAINED EXPENDITURE AND MADE ITS ADDITION. HE ALSO DISALLO WED THE CLAIM OF DEPRECIATION ON THE PURCHASE OF MOULDS. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO GRANTED P ARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 16. GROUND NO. 2 : THE ABOVE GROUND PERTAINS TO DISALLOWANCE OF DEPR ECIATION AMOUNTING RS.6,17,250/- IN RESPECT OF MOULDS PURCHASED FROM BANGALORE BASED PARTY KNOWN AS M/S. SAHARA MOULD MAKERS AMOUNTING TO RS .41,15,028/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER NOTICED THAT THE APPELLANT COMPANY HAS CLAIMED TO HAVE PURCHASED MOULDS AMOUNTING TO RS.41,15,028/- WHICH IS AS UNDER : SR. NO. DATE OF INVOICE INVOICE NO. AMOUNT (IN RS.) 1 29.01.2009 003 61,200 2 19.03.2009 005 1,49,940 3 19.03.2009 006 6,39,540 4 19.03.2009 007 3,42,720 5 23.03.2009 008 1,30,500 6 23.03.2009 009 9,71,040 7 26.03.2009 010 5,81,400 8 26.03.2009 011 99,960 9 01.10.2008 012 1,69,728 10 01.10.2008 013 9,69,000 TOTAL 41,15,028/- THE ASSESSING OFFICER, AFTER THE ANALYSIS OF THE BI LLS FOUND THAT NUMBERING DONE ON THE INVOICES PARTICULARLY INVOICE NO. 12 & 13 WAS NOT IN CONSONANCE WITH THE DATES. THE NOTICE ISSUED U/S. 1 33(6) OF INCOME-TAX ACT 1961 BY THE ASSESSING OFFICER WAS RETURNED BY T HE POSTAL DEPARTMENT WITH THE REMARKS 'COMPANY LEFT'. 12 ITA NO.913/PN/2013 17. THE ASSESSING OFFICER CONFRONTED THE APPELLANT IN THIS REGARD ON WHICH IT WAS REPLIED THAT PARTY WAS UNTRACEABLE AND THE COMPANY WAS NO LONGER IN POSITION TO FILE CONFIRMATION AND OTHER D ETAILS, THOUGH IT'S PURCHASES WERE GENUINE WHICH CAN BE VERIFIED FROM T HE EVIDENCES AVAILABLE WITH THE COMPANY. THE ASSESSING OFFICER, HOWEVER, D ID NOT ACCEPT THE SUBMISSION OF THE APPELLANT AND DISALLOWED DEPRECIA TION OF RS.6,17,250/-(30% OF RS.41,15,028 X ). 18. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE LEARNED COUNSEL OF THE APPELLANT SUBMITTED THAT PAYMENT TOW ARDS PURCHASE OF MOULD WAS MADE BY ACCOUNT PAYEE CHEQUES AND THERE I S NEITHER ANY EVIDENCE NOR ANY FINDING OF THE ASSESSING OFFICER T HAT EXPENDITURE PAID BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUE HAS COME BACK TO THE APPELLANT. THE APPELLANT ALSO SUBMITTED A COPY OF BANK ACCOUNT IN RESPECT OF DEBIT MADE BY THE BANK IN THE NAME OF SAHARA MOULD MAKERS . 19. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE. FOR ALLOWING OF DEPRECIATION USE OF ASSET IS IMPORTANT. IN THIS CASE, THOUGH PAYMENT HAS BEEN MADE BY CHEQUE BUT DELIVERY OF ASSET I.E. MOULD AND IT'S USE BY THE APPELLANT COMPANY HAS NOT BEEN PROVED. THE SUPPLIER M/S. SAHARA MOULD MAKER BEING UNTRACEABLE, THE SAME REMAINS UNVERIFIA BLE EVEN TODAY. THEREFORE, THE CLAIM OF DEPRECIATION CANNOT BE ALLO WED. ACCORDINGLY, ACTION OF THE ASSESSING OFFICER IS UPHELD AND THE G ROUND IS DISMISSED. 20. GROUND NO. 3 : THIS GROUND PERTAINS TO ADDITION OF RS.50,50,000/- BEING ENTIRE FUND MOVEMENT TO M/S. SAHARA MOULD MAKERS, BANGALOR E. THE ASSESSING OFFICER, AS DISCUSSED IN PARA 6(IV) PAGE 6 OF THE A SSESSMENT ORDER NOTICED THAT THERE WAS OPENING DEBIT BALANCE OF RS.26,29,38 0/- IN THE NAME OF M/S. SAHARA MOULD MAKERS AND DESPITE THIS DEBIT BALANCE, THE APPELLANT COMPANY FURTHER TRANSFERRED RS.50,50,000/- ON DIFFERENT DATES UPTO 20.03.2009 AGAINST THE TOTAL PURCHASE OF RS.41,15,028/-. THE ASSESSING OFFICER F URTHER NOTED THAT RS.41,64,292/- STILL REMAINED OUTSTANDING AS DEBIT BALANCE. THE AS SESSING OFFICER FOUND ENTIRE FUND MOVEMENT TO M/S. SAHARA MOULD MAKERS AS DOUBTFUL AN D THEREFORE ISSUED NOTICE U/S. 133(6) OF INCOME-TAX ACT TO M/S. SAHARA MOULD MAKERS AT BANGALORE WHICH WAS RETURNED BY THE POSTAL DEPARTMENT WITH REMARKS 'COM PANY LEFT'. ON BEING CONFRONTED THE APPELLANT EXPRESSED ITS INABILITY TO FILE CONFIRMATION ETC AS THE PARTY M/S. SAHARA MOULD MAKERS WAS UNTRACEABLE. NEVERTHELESS, THE APPELLANT SUBMITTED THAT TRANSACTIONS WERE GENUINE AND ROUTED THROUGH BANK A/C WHICH CAN BE VERIFIED. THE ASSESSING OFFIC ER HOWEVER DID NOT ACCEPT THE SUBMISSION OF THE APPELLANT AND TREATED ENTIRE FUND MOVEMENT OF RS.50,50,000/- AS UNEXPLAINED EXPENDITURE. 21. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS WR ONGLY TREATED THE SAME AS UNEXPLAINED EXPENDITURE AS THE ENTIRE TRANSACTIO N WAS ROUTED THOUGH BANK A/C. 22. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, THE EXPENDITURE/FLOW OF FU ND HAS BEEN CARRIED OUT THROUGH BANK A/C, THEREFORE THE SOURCE OF FUND IS CLEARLY E XPLAINED. AT THE BEST IT CAN BE TREATED AS CAPITAL LOSS BUT THAT ALSO HAS NO BEARIN G ON THE COMPUTATION OF INCOME OF THE APPELLANT. THEREFORE IN MY VIEW, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.50,50,000/- UNDER THE HEAD UN EXPLAINED EXPENDITURE. ACCORDINGLY, HE IS DIRECTED TO DELETE THE ADDITION OF RS.50,50,000/-. THUS, THE GROUND IS ALLOWED. 13 ITA NO.913/PN/2013 8. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. BEFORE US, LD. AR REITERATED THE SUBMISSIONS MADE B EFORE LD. ASSESSING OFFICER AND LD. CIT(A) AND FURTHER SUBMITTED THAT ONCE WHEN THE PAYMENT FOR PURCHASE FOR MOULDS HAS BEEN ALLOWED BY LD. CIT(A), MEANING THER EBY THAT WHEN THE EXPENSES FOR PURCHASES OF MOULDS HAVE BEEN ACCEPTED THEN THE CLAIM OF DEPRECIATION ON THE SAME MOULDS COULD NOT BE DISALLOWED. HE FURTHER SU BMITTED THAT AGAINST THE ORDER OF LD. CIT(A), THE REVENUE HAS NOT PREFERRED ANY AP PEAL MEANING THEREBY THAT REVENUE IS NOT AGGRIEVED BY THE ORDER OF LD. CIT(A) . HE THEREFORE SUBMITTED THAT THE CLAIM OF DEDUCTION BE ALLOWED. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF LD. ASSESSING OFFICER AND LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DI SALLOWANCE OF DEPRECATION ON THE MOULDS PURCHASED BY THE ASSESSEE. THE ASSESSING OF FICER HAD HELD THAT PURCHASES OF MOULDS MADE BY THE ASSESSEE TO BE UNEX PLAINED EXPENDITURE AND DISALLOWED IT. HE ACCORDINGLY MADE THE ADDITION FO R PURCHASE OF MOULDS AND APART FROM DISALLOWING THE EXPENSES FOR PURCHASE OF MOULD S, ALSO DISALLOWED THE CLAIM OF DEPRECIATION. WHEN THE MATTER WAS CARRIED BEFORE L D. CIT(A), LD. CIT(A) DELETED THE ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE BUT HOWEVER UPHELD THE ORDER OF LD. ASSESSING OFFICER OF DISALLOWING THE DEPRECIATION. WE ARE OF THE VIEW THAT WHEN ONCE THE EXPENDITURE OF PURCHASES OF MOULDS HAS BEE N HELD TO BE PROPERLY EXPLAINED AND TO BE AN ORDER, THEN THE DEPRECIATION OF THE SAME MOULDS CANNOT BE DISALLOWED FOR THE REASON THAT THE EXPENDITURE WAS NOT EXPLAINED. IT IS ALSO A FACT THAT AGAINST THE ORDER OF LD. CIT(A) WHEREIN THE AD DITION ON ACCOUNT OF PURCHASES OF MOULDS HAS BEEN SET-ASIDE AND DECIDED IN FAVOUR OF THE ASSESSEE, NO APPEAL HAS BEEN FILED BY THE REVENUE. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT NO DISALLOWANCE OF DEPRECIATION COULD BE MADE IN THE P RESENT CASE. WE ACCORDINGLY 14 ITA NO.913/PN/2013 DIRECT THE ASSESSING OFFICER TO GRANT DEPRECIATION ON THE MOULDS. THUS THIS GROUND OF ASSESSEE IS ALLOWED. 10. FOURTH GROUND WITH RESPECT TO INTEREST UNDER SE CTION 234B AND 234C. SINCE THE LEVY OF INTEREST BEING CONSEQUENTIAL IN NATURE WE ARE OF THE VIEW THAT THE SAME DOES NOT REQUIRE ANY ADJUDICATION AND THEREFORE DIS MISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF OCTOBER, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH OCTOBER, 2016. % & ' () *) / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. % / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE