M/s. India Cements Limited, CHENNAI V. ACIT, CHENNAI

ITA 925/CHNY/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8277 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 20-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-04-2012
• Court: TRIBUNAL
• Department Lawyers: S BHARATH; A B KOLI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital asset; Depreciation; Business expenditure; Difference of opinion; Scheme of amalgamation; Notional interest; Change of opinion; Revenue expenditure
• Section: 43B; 14A; 115JB; 32; 37; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1343/MDS/2010, 604 & 1299/MDS/2012, 237, 238 & 239/MDS/2015 / ASSESSMENT YEARS : 2007-08, 2008-09, 2009-10, 2 007-08, 2010-11, 2011-12 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(3)/ DY. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE 2(1) CHENNAI VS. M/S THE INDIA CEMENTS LTD DHUN BUILDING NO.827, ANNA SALAI CHENNAI 600 002 [PAN AAACT 1728 P ] ( %& / APPELLANT) ( '(%& /RESPONDENT) ./ I.T.A.NOS. 925, 363 & 1070/MDS/2012, 159,160 & 161/MD S/2015 / ASSESSMENT YEARS : 2007-08, 2008-09, 2009-10, 2007-08, 2010-11 & 2011-12 M/S THE INDIA CEMENTS LTD DHUN BUILDING NO.827, ANNA SALAI CHENNAI 600 002 VS. THE ASST./DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(3)/II(1) CHENNAI ( %& / APPELLANT) ( '(%& /RESPONDENT) DEPARTMENT BY : SHRI S. BHARATH, CIT & SHRI A.B KOLI, JCIT ASSESSEE BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 20 - 08 - 2015 & 18.12.2015 / DATE OF PRONOUNCEMENT : 01 - 01 - 201 6 ITA NO. 1343 ETC :- 2 -: / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER ALL THE APPEALS OF THE REVENUE AND THE ASSESSEE A RE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME-TAX (APPEALS). SINCE COMMON ISSUES ARISE FOR CONSIDERA TION IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. 2. LET US FIRST TAKE THE REVENUES APPEAL IN I.T.A.NO.1343/MDS/2010 FOR ASSESSMENT YEAR 2007-08. 3. THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADDITI ON MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REVERSAL OF INC OME ARISING ON CANCELLATION OF SALES TAX ASSIGNMENT. 4. SHRI S. BHARATH, LD. DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT THE ASSESSEE-COMPANY ENGAGED ITSELF IN MANUFAC TURE AND SALE OF CEMENT. THE COMPANY IS ALSO ENGAGED IN REAL ESTATE , PROPERTY DEVELOPMENT AND GENERATION OF WIND POWER. DURING T HE YEAR UNDER CONSIDERATION, M/S VISAKA CEMENT INDUSTRY LTD. MERG ED WITH THE ASSESSEE-COMPANY WITH EFFECT FROM 1.7.2006 PURSUANT TO A SCHEME OF AMALGAMATION FRAMED U/S 391 OF THE COMPANIES ACT. THE AMALGAMATION WAS APPROVED BY THE MADRAS HIGH COURT BY JUDGMENT DATED 25.7.2007. ACCORDING TO THE LD. DR, M/S VISA KA CEMENT INDUSTRY ITA NO. 1343 ETC :- 3 -: LTD. APPLIED SALES TAX DEFERRAL SCHEME FRAMED BY GO VERNMENT OF ANDHRA PRADESH. UNDER THE DEFERRAL SCHEME, THE SALE TAX COLLECTED WAS REQUIRED TO BE REMITTED TO THE GOVERNMENT AFTER A P ERIOD OF 14 YEARS IN THE STATE OF ANDHRA PRADESH. SIMILARLY THE ASSE SSEE-COMPANY HAS ALSO AVAILED DEFERRAL SCHEME OF GOVERNMENT OF TAMIL NADU AND THE SALES TAX COLLECTED WAS DEFERRED FOR A PERIOD OF 12 YEARS. THE LD. DR FURTHER POINTED OUT THAT THE ASSESSEE-COMPANY AND M /S VISAKA CEMENT INDUSTRY LTD. ENTERED INTO A SEPARATE AGREEMENT IN RESPECT OF SALES TAX PAYABLE UNDER THE DEFERRAL SCHEME. AS PER THIS AGR EEMENT, THE OBLIGATION OF PAYMENT OF SALES TAX TO GOVERNMENT OF TAMILNADU AND GOVERNMENT OF ANDHRA PRADESH WAS ASSIGNED TO M/S TR ISHUL INVESTMENTS PVT. LTD. BY PAYING THE NET PRESENT VAL UE OF FUTURE OBLIGATION. THE DIFFERENCE BETWEEN THE AMOUNT ASSI GNED TO M/S TRISHUL INVESTMENTS PVT. LTD. AND THE AMOUNT PAID A S NET PRESENT VALUE WAS TREATED AS INCOME IN THE YEAR OF AGREEMENT BY T HE ASSESSEE- COMPANY. REFERRING TO THE ASSESSMENT ORDER, THE LD . DR POINTED OUT THAT THE DIFFERENCE BETWEEN THE SALES TAX DEFERRED LIABILITY AND THE NET PURCHASE VALUE OF THE LIABILITY ASSIGNED TO M/S TRI SHUL INVESTMENTS PVT. LTD. WAS TREATED AS INCOME BY THE ASSESSEE-COMPANY. OBLIGATION OF M/S TRISHUL INVESTMENTS PVT. LTD. TO PAY THE AMOUNT OF SALES TAX DEFERRED TO THE RESPECTIVE STATE GOVERNMENTS WAS IN THE YEARS 2010- 11 TO 2019-20. HOWEVER, THE ASSESSEE-COMPANY CANCE LLED THE ITA NO. 1343 ETC :- 4 -: OBLIGATION CAST ON M/S TRISHUL INVESTMENTS PVT. LTD . WITHOUT WAITING FOR THE DUE DATE OF PAYMENT TO THE STATE GOVERNMENT. A CCORDINGLY, THE DIFFERENCE BETWEEN THE SALES TAX DEFERRED LIABILITY AND THE NET PRESENT VALUE WAS CLAIMED AS REVERSAL OF INCOME ARISING ON CANCELLATION OF AGREEMENT. ACCORDING TO THE LD. DR, THE DIFFERENCE BETWEEN THE SALES TAX DEFERRED LIABILITY AND THE PRESENT VALUE DOES N OT ARISE TO THE ASSESSEE OR CRYSTALLIZED DURING THE YEAR UNDER CONS IDERATION AND THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSE SSEE. HOWEVER, ON APPEAL BEFORE THE CIT(A), THE CLAIM OF THE ASSESSE E WAS ALLOWED ON THE GROUND THAT REVERSAL OF THE AMOUNT ON CANCELLAT ION OF ASSIGNMENT TO M/S TRISHUL INVESTMENTS PVT. LTD. IS ONLY A LOSS ARISING IN THE NORMAL COURSE OF BUSINESS ACTIVITY. THE LD. DR FURTHER PO INTED OUT THAT THE CIT(A) ALSO FOUND THAT IT IS AN EXPENDITURE ALLOWAB LE U/S 37 OF THE ACT. ACCORDING TO THE LD. DR, THE DUE DATE FOR PAYMENT O F THE DEFERRED SALES TAX HAS NOT EXPIRED, THEREFORE, BY CANCELLING THE AGREEMENT IN A HURRIED MANNER, THE ASSESSEE CANNOT CLAIM THE LOSS AS REVENUE EXPENDITURE. ACCORDING TO THE LD. DR, THE LIABILIT Y OF THE ASSESSEE- COMPANY TO PAY THE DEFERRED SALES TAX ARISES IN THE FINANCIAL YEARS 2010-11 TO 2019-20, THEREFORE, THERE IS NO OCCASION FOR THE ASSESSEE TO CANCEL THE AGREEMENT ENTERED INTO WITH M/S TRISH UL INVESTMENTS PVT. LTD. MERE EXISTENCE OF AN ARRANGEMENT BETWEEN THE ASSESSEE AND M/S TRISHUL INVESTMENTS PVT. LTD. TO WRITE OFF THE OBLIGATION OF M/S ITA NO. 1343 ETC :- 5 -: TRISHUL INVESTMENTS PVT. LTD. WOULD NOT BIND THE A SSESSEE TO HOLD THAT THE PAYMENT WAS MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. ACCORDING TO THE LD. DR , THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER. 5. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE-COMPANY, ADMIT TEDLY, ENGAGED IN MANUFACTURE AND SALE OF CEMENT. IN PURSUANCE TO THE JUDGMENT OF THE MADRAS HIGH COURT DATED 25.7.2007, M/S VISAKA CEMENT INDUSTRY LTD. WAS AMALGAMATED WITH ASSESSEE-COMPANY WITH EFF ECT FROM 1.7.2006. IT IS ALSO AN ADMITTED FACT THAT BOTH AS SESSEE-COMPANY AND M/S VISAKA CEMENT INDUSTRY LTD. AVAILED ITSELF SALE S TAX DEFERRAL SCHEME FOR A PERIOD OF 12 YEARS AND 14 YEARS RESPEC TIVELY. THE ASSESSEE-COMPANY AS WELL AS M/S VISAKA CEMENT INDUS TRY LTD ENTERED INTO ANOTHER AGREEMENT WITH M/S TRISHUL INVESTMENTS PVT. LTD. ASSIGNING THE LIABILITY/OBLIGATION OF PAYMENT OF SA LES TAX TO GOVERNMENT OF TAMILNADU AND ANDHRA PRADESH. IN FACT, THE OBLI GATION OF PAYMENT OF SALES TAX WAS ASSIGNED TO M/S TRISHUL INVESTMENT S PVT. LTD. BY PAYING THE NET PRESENT VALUE OF THE FUTURE OBLIGATI ON. THE ASSESSEE SUBSEQUENTLY CANCELLED THE AGREEMENT WITH M/S TRISH UL INVESTMENTS PVT. LTD. WITH WHOM THE SALES TAX DEFERRAL WAS ASSI GNED. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE SCHEME OF AMALGAMATION WAS APPROVED BY THE MADRAS HIGH COURT BY JUDGMENT ITA NO. 1343 ETC :- 6 -: DATED 25.7.2007 WITH EFFECT FROM 1.7.2006 WHICH IS ALSO ONE OF THE REASON FOR CANCELLING THE AGREEMENT WITH M/S TRISHU L INVESTMENTS PVT. LTD. REFERRING TO PAGE 8 OF THE CIT(A)S ORDER, TH E LD. COUNSEL SUBMITTED THAT ONE OF THE CLAUSE IN THE AGREEMENT S TIPULATES THAT THE PROFIT OF THE ASSESSEE-COMPANY SHALL BE DEBITED WIT H AMOUNT OF INCOME RECOGNIZED IN THE EARLIER YEAR UPON SANCTION OF THE SCHEME OF AMALGAMATION BY THE COURT. THE LD. COUNSEL FURTHER SUBMITTED THAT AS AND WHEN THE ASSIGNMENT OF SALES TAX TOOK PLACE, TH E DIFFERENCE BETWEEN THE DEFERRAL AMOUNT AND THE NET PRESENT VAL UE OF THE ASSIGNED AMOUNT WAS SHOWN AS INCOME AND OFFERED TO TAX. THEREFORE, THE CIT(A) HAS RIGHTLY FOUND THAT THE RE VERSAL OF THE AMOUNT ON CANCELLATION OF THE ASSIGNMENT CONSEQUENT UPON T HE AMALGAMATION IS ONLY A LOSS ACCRUED IN THE NORMAL COURSE OF BUSI NESS. THE CIT(A) FURTHER FOUND THAT IT IS A EXPENDITURE INCURRED BY THE ASSESSEE IN THE COURSE OF ITS BUSINESS ACTIVITY AND HENCE, IT IS A LLOWABLE U/S 37 OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S AN ADMITTED FACT THAT M/S VISAKA CEMENT INDUSTRY LTD. WAS AMALGAMATE D WITH THE ASSESSEE-COMPANY WITH EFFECT FROM 1.7.2006. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE-COMPANY AND M/S VISAKA CEMEN T INDUSTRY LTD AVAILED SALES TAX DEFERRAL SCHEME AS FRAMED BY THE RESPECTIVE STATE ITA NO. 1343 ETC :- 7 -: GOVERNMENTS. BOTH ASSESSEE-COMPANY AND M/S VISAKA CEMENT INDUSTRY LTD ENTERED INTO A SEPARATE AGREEMENT IN R ESPECT OF SALES TAX PAYABLE UNDER THE DEFERRAL SCHEME WITH M/S TRISHUL INVESTMENTS PVT. LTD. ASSIGNING THE PAYMENT OF LIABILITY. THE OBLIG ATION OF PAYMENT OF SALES TAX TO THE RESPECTIVE STATE GOVERNMENTS WAS A SSIGNED TO M/S TRISHUL INVESTMENTS PVT. LTD. BY PAYING THE NET PRE SENT VALUE OF FUTURE OBLIGATION. SUBSEQUENTLY, THE SAID AGREEMENT WAS C ANCELLED. THE MAIN CONTENTION OF THE REVENUE BEFORE THIS TRIBUNAL IS THAT THE OBLIGATION TO PAY THE SALES TAX AROSE DURING THE FI NANCIAL YEARS 2010- 11 TO 2019-20 BY VIRTUE OF THE DEFERRAL SCHEME, THE REFORE, MERELY BECAUSE THE AGREEMENT ENTERED INTO BETWEEN THE ASS ESSEE AND M/S VISAKA CEMENT INDUSTRY LTD WITH M/S TRISHUL INVESTM ENTS PVT. LTD. WAS CANCELLED, THE LIABILITY WILL NOT ARISE FOR THE YEA R UNDER CONSIDERATION. THE CIT(A), HOWEVER, FOUND THAT THE PROFIT OF THE A SSESSEE-COMPANY SHALL BE DEBITED WITH THE AMOUNT OF INCOME RECOGNIZ ED IN THE EARLIER YEARS UPON SANCTION OF THE SCHEME OF AMALGAMATION. THE CIT(A) IN FACT, EXTRACTED THE RELEVANT CLAUSE FROM THE AGREEM ENT. THE CIT(A) FURTHER FOUND THAT THE DIFFERENCE BETWEEN THE DEFER RAL AMOUNT AND THE NET PRESENT VALUE OF THE ASSIGNED AMOUNT WAS SHOWN AS INCOME AND OFFERED TO TAXATION. IF THAT IS SO, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE REVERSAL OF THE AMOUNT ON CANCELLA TION OF SUCH ASSIGNMENT CONSEQUENT UPON THE AMALGAMATION OF M/S VISAKA CEMENT ITA NO. 1343 ETC :- 8 -: INDUSTRY LTD WITH ASSESSEE-COMPANY IS ONLY A LOSS I N THE COURSE OF NORMAL BUSINESS, THEREFORE, AS RIGHTLY FOUND BY THE CIT(A), IT HAS TO BE ALLOWED. THE LOSS RESULTED TO THE ASSESSEE IS DUE TO CANCELLATION OF ASSIGNMENT OF SALES TAX DEFERRED. SINCE THE PROFIT RESULTING FROM THE AGREEMENT HAS ALREADY BEEN TREATED AS INCOME OF THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE LOSS ARISING OUT OF THE CANCELLATION OF THE AGREEMENT HAS ALSO TO BE TREATE D AS LOSS IN THE COURSE OF REGULAR BUSINESS. THEREFORE, THIS TRIBUN AL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE SAME IS CONFIRMED. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 19,69,49,714/- BEING NOTIONAL INTEREST. 8. SHRI S.BHARATH, LD. DR SUBMITTED THAT THE ASSESSEE- COMPANY DIVERTED HUGE AMOUNT TO ITS SUBSIDIARY COMPANIES WI THOUT INTEREST. ACCORDING TO THE LD. DR, THE COMPANY BORROWED HUGE MONEY FROM VARIOUS FINANCIAL INSTITUTIONS AND PAID INTEREST. HOWEVER, IT HAS NOT CHARGED ANY INTEREST ON THE LOAN GIVEN TO SUBSIDIAR Y COMPANIES, THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF ` 19,69,49,714/- BEING THE NOTIONAL INTEREST @ 6%. 9. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUFFICIEN T INTEREST FREE FUNDS ITA NO. 1343 ETC :- 9 -: FOR MAKING ADVANCES TO SUBSIDIARY COMPANIES. EVEN ASSUMING THAT THE BORROWED FUNDS WERE ADVANCED TO SISTER CONCERNS FOR BUSINESS PURPOSE, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION OF NOTIONAL INTEREST. ACCORDING TO THE LD. COUNSEL, IT IS NOT THE CASE OF THE REVENUE THAT THE FUNDS WERE MISUSED BY THE SUBS IDIARY COMPANIES. IN FACT, THE FUNDS WERE USED BY THE SUB SIDIARY COMPANIES FOR THE BUSINESS. REFERRING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF S.A. BUILDERS VS CIT, 288 ITR 1, THE LD. CO UNSEL SUBMITTED THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS R IGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE EVEN IF THE BORRO WED FUNDS WERE DIVERTED FOR MAKING ADVANCES TO SUBSIDIARY COMPANIE S, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE CANNOT BE ANY ADDITION OF NOTIONAL INTEREST SINCE IT IS NOT THE CASE OF THE REVENUE TH AT THE SUBSIDIARY COMPANIES HAD MISUSED THE FUNDS FOR ANY OTHER PURPO SE. IN OTHER WORDS, SINCE THE SUBSIDIARY COMPANIES USED THE FUND S FOR THEIR BUSINESS THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT IN VIEW OF THE JUDGMENT OF THE APEX COURT IN S.A BUILDERS(SUPRA) T HERE CANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE. A BARE REA DING OF THE ORDER OF THE CIT(A) SHOWS THAT SIMILAR ADDITION WAS MADE BY THE ASSESSING ITA NO. 1343 ETC :- 10 -: OFFICER IN ASSESSMENT YEARS 2003-04 AND 2004-05. T HE CIT(A), HOWEVER, DELETED THE ADDITION. THIS TRIBUNAL IN I. T.A.NOS.778 & 779/MDS/2008 DATED 15.7.2009 HAS CONFIRMED AN IDENT ICAL ORDER OF THE CIT(A). IN FACT, THE CIT(A), BY FOLLOWING THE DEC ISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 AND THE JUDGMENT OF THE APEX COURT IN S .A BUILDERS(SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 11. THE NEXT GROUND OF APPEAL IS WITH REGARD TO COMPUTA TION OF BOOK PROFIT U/S 115JB OF THE ACT. 12. SHRI S. BHARATH, LD. DR SUBMITTED THAT THE ASSESSE E HAS REDUCED A SUM OF ` 294,05,22,507/- BEING THE REVERSAL OF INCOME ARISING ON CANCELLATION OF SALES TAX ASSIGNMENT AGR EEMENT. ACCORDING TO THE LD. DR, THE ASSESSEE CLAIMED THE REDUCED AM OUNT AS REVENUE EXPENDITURE. SINCE THE REVERSAL OF INCOME ON CANCE LLATION OF THE ASSIGNMENT DOES NOT ARISE DURING THE YEAR UNDER CON SIDERATION AND IT HAS TO BE CONSIDERED ONLY WHEN THE AMOUNT WAS DUE F OR PAYMENT, IT CANNOT BE REDUCED WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. REFERRING TO SEC. 115JB OF THE ACT, THE LD. D R POINTED OUT THAT THE SAID SECTION DOES NOT PROVIDE FOR DEDUCTION OF NET PROFIT ON ACCOUNT OF ITA NO. 1343 ETC :- 11 -: REVERSAL OF INCOME. REFERRING TO THE JUDGMENT OF A PEX COURT IN APOLLO TYRES LTD VS CIT, 255 ITR 273, THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER CANNOT GO BEYOND THE NET PROFIT SHOWN IN TH E PROFIT & LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLA NATION TO SEC. 115JB OF THE ACT. THEREFORE, THE REVERSAL OF INCOM E HAS TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. 13. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT ADDED BY THE ASS ESSING OFFICER WAS CHARGED TO THE PROFIT & LOSS ACCOUNT. ACCORDIN G TO THE LD. COUNSEL, THIS AMOUNT WAS TREATED AS INCOME AT THE T IME OF ASSIGNING OF LIABILITY AND HAD BEEN CREDITED TO THE ACCOUNT. SI NCE THE AMOUNT WAS TAKEN AS INCOME AT THE TIME OF ASSIGNING OF LIABILI TY BY WAY OF AGREEMENT AND THE DEPARTMENT HAS ACCEPTED THE SAME AS INCOME OF THE ASSESSEE, IT HAS TO BE REVERSED WHILE THE AGRE EMENT WAS CANCELLED. THEREFORE, MAKING A DEBIT ENTRY ON THE CANCELLATION OF THE ASSIGNMENT WAS BASIC ACCOUNTING REQUIREMENT. HENCE , ACCORDING TO THE LD. COUNSEL, THE JUDGMENT OF APEX COURT IN APOL LO TYRES LTD (SUPRA) SQUARELY SUPPORTS THE CASE OF THE ASSESSEE . REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUNSEL SUBMITTED THAT SINCE THE CIT(A) FOUND THAT THE LOSS INCURRED IN THE NORMAL COURSE O F BUSINESS ACTIVITY IT HAS TO BE DEBITED TO THE PROFIT & LOSS ACCOUNT AND HAS TO BE ALLOWED ITA NO. 1343 ETC :- 12 -: AS DEDUCTION WHILE COMPUTING THE BOOK PROFIT, HENCE , THE BOOK PROFIT WAS COMPUTED AS PER EXPLANATION TO SEC. 115JB OF TH E ACT. THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE AS SESSEE. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WHI LE ENTERING INTO AN AGREEMENT WITH M/S TRISHUL INVESTMENT PVT. LTD. AS SIGNING THE SALES TAX LIABILITY, THE ASSESSEE HAS TAKEN THE AMOUNT A S INCOME AND IT WAS CHARGED TO THE PROFIT & LOSS ACCOUNT. THEREFORE, W HEN THE ASSIGNMENT WAS CANCELLED, THE INCOME WHICH WAS ALREADY CREDITE D IN THE BOOKS OF ACCOUNT AND CHARGED TO THE PROFIT & LOSS ACCOUNT HA S TO BE REVERSED. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT ONCE THE AMOUNT WAS REVERSED AND IT WAS CONSIDERED TO BE A L OSS IN THE BUSINESS, THEREFORE, IT HAS TO BE DEDUCTED WHILE CO MPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. THEREFORE, AS RIGHTL Y SUBMITTED BY THE LD. COUNSEL, THE JUDGMENT OF THE APEX COURT IN APOLLO T YRES LTD (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGL Y, THE SAME IS CONFIRMED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.A.N O. 1343/MDS/2010 IS DISMISSED. ITA NO. 1343 ETC :- 13 -: 16. NOW COMING TO ASSESSMENT YEAR 2008-09, FIRST WE TAK E REVENUES APPEAL I.T.A.NO.604/MDS/2012. 17. THE FIRST GROUND IS WITH REGARD TO INTEREST ON THE ADVANCES MADE TO SUBSIDIARY COMPANIES TO THE EXTENT OF ` 20.08 CRORES. 18. WE HEARD THE LD. DR AND THE LD. COUNSEL FOR THE AS SESSEE. 19. THE ASSESSING OFFICER FOUND THAT THE BORROWED FUNDS WERE ADVANCED TO SUBSIDIARY COMPANIES AND NO INTEREST WA S CHARGED. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED NOTIONA L @ 6% ON THE ADVANCES MADE TO SUBSIDIARY COMPANIES. WHILE HEARI NG THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007-08 IN I.T.A.NO . 1343/MDS/2010 IN THE EARLIER PART OF THIS ORDER, THIS TRIBUNAL FO UND THAT THE SUBSIDIARY COMPANIES USED THE FUNDS ADVANCED BY THE ASSESSEE FOR BUSINESS PURPOSES. THEREFORE, IN VIEW OF THE JUDGMENT OF TH E APEX COURT IN S.A. BUILDERS LTD (SUPRA) EVEN IF THE BORROWED FUND S WERE DIVERTED FOR MAKING ADVANCES TO SUBSIDIARY COMPANIES, THERE CANN OT BE ANY DISALLOWANCE OF INTEREST. IN VIEW OF THE ABOVE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 20.08 CRORES. 20. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF DEPRECIATION ON THE FRANCHISEE FEE PAID BY THE ASS ESSEE TO THE EXTENT OF ` 36.4 CRORES. ITA NO. 1343 ETC :- 14 -: 21. SHRI S. BHARATH, LD. DR SUBMITTED THAT THE ASSESSEE -COMPANY WAS A SUCCESSFUL BIDDER FOR FRANCHISEE OF IPL CHEN NAI SUPERKINGS. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT CHENNAI SUPERKINGS FRANCHISEE FOR CHENNAI PART OF IPL IS A PART OF THE ASSESSEE AND THEREFORE, THE OPERATIONAL INCOME OF CHENNAI SU PERKINGS IS INTEGRAL PART OF THE ASSESSEE-COMPANY. THE ASSESS EE MAINTAINED THE BOOKS OF ACCOUNT OF CHENNAI SUPERKINGS AS PART OF T HE ACCOUNTS OF THE ASSESSEE-COMPANY. THE FRANCHISE RIGHTS OF CHENNAI S UPERKING WAS AWARDED TO THE ASSESSEE FOR A PERIOD OF 10 YEARS F OR ` 364 CRORES. THE ASSESSEE-COMPANY HAS TO PAY ` 364 CRORES IN 10 YEARS. IN OTHER WORDS, THE ASSESSEE HAS TO PAY ` 36.4 CRORES IN EVERY YEAR. THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE FRANCHISE RIGHTS @ 25% ON THE ENTIRE AMOUNT OF ` 364 CRORES BEING THE TOTAL AMOUNT OF THE BID. ACCORDING TO THE LD. DR, THE FRANCHISE RIGHTS WAS A CQUIRED YEARWISE FOR ` 36.4 CRORES AND THE SAME IS PAYABLE TO BOARD OF CR ICKET CONTROL IN INDIA DURING THE YEAR UNDER CONSIDERATION. THE ASS ESSEE CLAIMED DEPRECIATION ON THE ENTIRE AMOUNT OF ` 364 CRORES. HOWEVER, THE ASSESSING OFFICER RESTRICTED THE SAME AT 36.4 CRORE S. REFERRING TO THE ASSESSMENT ORDER, THE LD. DR POINTED OUT THAT THE F RANCHISE RIGHTS ACQUIRED BY THE ASSESSEE IS AN INTANGIBLE ASSET ON WHICH THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION @ 25%. HOWEVER, AS FA R AS THE COST OF THE ASSET IS CONCERNED, THE ASSESSEE WAS REQUIRED TO P AY ONLY ` 36.4 ITA NO. 1343 ETC :- 15 -: CRORES DURING THE YEAR UNDER CONSIDERATION AND THE SUBSEQUENT PAYMENTS HAVE TO BE MADE IN FULFILLMENT OF TERMS AN D CONDITIONS AS AGREED, THEREFORE, ACCORDING TO THE LD. DR, THE AS SESSEE IS ELIGIBLE TO CLAIM DEPRECIATION ONLY ON THE AMOUNT OF ` 36.4 CRORES PAID DURING THE YEAR UNDER CONSIDERATION. THE FRANCHISE RIGHTS WAS ACQUIRED AFTER 30 TH SEPTEMBER, 2007 THEREFORE, THE DEPRECIATION ON ` 36.4 CRORES WAS COMPUTED AT ` 4.55 CRORES. THE ASSESSING OFFICER ACCORDINGLY, DISALLOWED THE EXCESS CLAIM OF DEPRECIATION ON F RANCHISE RIGHTS TO THE EXTENT OF ` 40.95 CRORES. 22. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L SUBMITTED THAT THE ASSESSEE-COMPANY WAS A SUCCESSFU L BIDDER OF CHENNAI SUPERKING FRANCHISEE FOR A PERIOD OF 10 YEA RS. THE ASSESSEE IS ENTITLED TO EXPLOIT THE RIGHT FOR A PERIOD OF 10 YEARS. ADMITTEDLY, THE FRANCHISE RIGHTS IS AN INTANGIBLE RIGHT AND ENTITLE D FOR DEPRECIATION @ 25%. THIS IS NOT IN DISPUTE. THE ONLY DISPUTE IS WHETHER THE DEPRECIATION IS ALLOWABLE ON THE ENTIRE AMOUNT OF ` 364 CRORES OR ` 36.4 CRORES. ACCORDING TO THE LD. COUNSEL, THE AS SESSEE HAS CLAIMED THE DEPRECIATION @ 25% AT ` 45.50 CRORES ON THE ENTIRE AMOUNT OF ` 364 CRORES. HOWEVER, THE ASSESSING OFFICER DISALLO WED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 40.95 CRORES BY TAKING COST OF FRANCHISE RIGHTS AT ` 36.4 CRORES. ITA NO. 1343 ETC :- 16 -: 23. ACCORDING TO THE LD. COUNSEL, WHEN THE ASSESSEE BE COMES A SUCCESSFUL BIDDER, THE ASSESSEE HAS TO PAY THE ENT IRE AMOUNT OF ` 364 CRORES TO THE BOARD OF CRICKET CONTROL IN INDIA. A CCORDING TO THE LD. COUNSEL, THE FRANCHISEE AGREEMENT ENABLES THE ASSE SSEE TO MAKE PAYMENT OF AGGREGATE CONSIDERATION OVER A PERIOD OF TIME. THIS DOES NOT MEAN THAT THE COST OF FRANCHISE RIGHTS IS ONLY THAT MUCH OF THE AMOUNT WHICH HAS BEEN PAID DURING THE ASSESSMENT YE AR UNDER CONSIDERATION. AS PER THE CONTRACTUAL AGREEMENT EN TERED INTO BETWEEN THE ASSESSEE AND THE BOARD OF CRICKET CONTROL IN I NDIA, THE ASSESSEE HAS TO PAY THE AGGREGATE CONSIDERATION OF ` 364 CRORES TO THE BOARD OF CRICKET CONTROL IN INDIA AND TO THAT EXTENT THE AS SESSEE IS ABLE TO CAPITALIZE THE ASSET IN THE BOOKS OF ACCOUNT. THER EFORE, THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE ASSET HAS TO BE ALLOWED. REFERRING TO THE CONTENTION OF THE LD. DR THAT DEPR ECIATION HAS TO BE ALLOWED ONLY TO THE EXTENT OF AMOUNT PAID DURING TH E YEAR UNDER CONSIDERATION TOWARDS FRANCHISE RIGHTS, THE LD. COU NSEL SUBMITTED THAT DEPRECIATION HAS TO BE ALLOWED ON THE COST OF CAPIT AL ASSET AND NOT ON THE AMOUNT PAID BY THE ASSESSEE. IN OTHER WORDS, ACCORDING TO THE LD. COUNSEL, THE ENTIRE COST OF CAPITAL ASSET HAS TO BE TAKEN INTO CONSIDERATION FOR COMPUTING THE DEPRECIATION. MERE LY BECAUSE THE ASSESSEE HAS PAID THE AMOUNT ON INSTALLMENT BASIS T HAT WILL NOT REDUCE THE COST OF THE CAPITAL ASSET. ACCORDING TO THE LD . COUNSEL, THE ITA NO. 1343 ETC :- 17 -: PAYMENT OF AMOUNT ON INSTALLMENT BASIS SPREAD OVER A PERIOD OF TIME IS ONLY AN ARRANGEMENT BETWEEN THE PARTIES. HOWEVE R, THE ASSESSEE HAS ACQUIRED A FULL RIGHT OVER THE FRANCHISE RIGHTS FOR A PERIOD OF 10 YEARS AND THE COST OF THE CAPITAL ASSET NAMELY, FRA NCHISE RIGHTS, IS ` 364 CRORES. THEREFORE, IRRESPECTIVE OF THE PERIOD OF PAYMENT, THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE COST O F THE CAPITAL ASSET. THUS, THE ASSESSING OFFICER IS NOT JUSTIFIED IN RES TRICTING THE SAME TO THE AMOUNT PAID DURING THE YEAR UNDER CONSIDERATION . 24. REFERRING TO SEC. 32 OF THE ACT, MORE PARTICULARLY, SEC. 32(1), THE LD. COUNSEL SUBMITTED THAT DEPRECIATION HAS TO BE ALLOWED ON THE ACTUAL COST OF THE ASSET AT THE RATE PRESCRIBED. I N CASE OF BLOCK OF ASSET, DEPRECIATION HAS TO BE ALLOWED AT THE PRESCR IBED RATE ON THE WRITTEN DOWN VALUE. IN THIS CASE, THE COST OF ASSE T NAMELY, FRANCHISE RIGHTS IS ` 364 CRORES. THE COST IS PAYABLE IN 10 YEARS. AS PER SEC. 32(1), DEPRECIATION HAS TO BE ALLOWED ON THE COST O F ASSET AND NOT ON THE AMOUNT PAID OR PAYABLE DURING THE YEAR UNDER CO NSIDERATION. THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THE ASSESSEE IS A SUCCESSFUL BIDDER FOR FRANCHISE RIGHT S OF CHENNAI SUPERKING. THE COST OF THE FRANCHISE RIGHTS IS ` 364 CRORES WHICH HAS ITA NO. 1343 ETC :- 18 -: TO BE PAID IN 10 YEARS @ 36.4 CRORES PER ANNUM. TH E ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE FRANCHISE RIGHT BE ING AN INTANGIBLE ASSET UNDER EXPLANATION (3) TO SEC. 32(1) OF THE A CT. THIS IS NOT IN DISPUTE. THE ONLY DISPUTE IS WHETHER THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE COST OF THE FRANCHISE RIGHTS OR ON THE AMOUNT PAID DURING THE YEAR UNDER CONSIDERATION. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 32 OF THE ACT. SEC. 32(1) CLEAR LY SAYS THAT IN CASE OF AN ASSET USED FOR GENERATION OR GENERATION AND DIST RIBUTION OF POWER, DEPRECIATION HAS TO BE ALLOWED ON THE ACTUAL COST O F THE ASSET AT THE RATE PRESCRIBED. IN CASE OF BLOCK OF ASSETS, DEPRE CIATION HAS TO BE ALLOWED ON THE WRITTEN DOWN VALUE AT THE RATE PRES CRIBED. IN THIS CASE, THE PRESCRIBED RATE FOR FRANCHISE RIGHTS IS 2 5%. IT IS NOT IN DISPUTE THAT THE ASSESSEE ACQUIRED THE FRANCHISE R IGHTS DURING THE YEAR UNDER CONSIDERATION. THE COST OF BLOCK OF ASSETS W AS INCREASED TO THE EXTENT OF ` 364 CRORES. SINCE THE COST OF THE FRANCHISE RIGHT S IS ADMITTEDLY ` 364 CRORES, AS PER THE TERMS AND CONDITIONS OF THE BID, THE ASSESSEE HAS TO PAY ` 364 CRORES IN 10 YEARS PERIOD. THE ASSESSEE HAS TO PAY ` 36.4 CRORES EVERY YEAR. HOWEVER, THE COST OF BLOCK OF ASSETS WAS INCREASED TO THE EXTENT OF ` 364 CRORES. IT IS NOT A CASE OF SUBSIDY OR DISCOUNT IN THE COST WHICH WAS G IVEN TO THE ASSESSEE. IN SUCH A CASE, THE COST OF FRANCHISE RI GHTS WOULD BE REDUCED TO THE EXTENT OF SUBSIDY OR DISCOUNT, IF AN Y, GIVEN TO THE ITA NO. 1343 ETC :- 19 -: ASSESSEE. IT IS AN ADMITTED CASE OF BOTH PARTIES T HAT THE COST OF ` 364 CRORES WAS TO BE PAID IN 10 EQUAL INSTALLMENTS. TH EREFORE, THE COST OF ASSET IS ` 364 CRORES AND NOT ` ` 36.4 CRORES. WHEN THE COST OF BLOCK OF ASSETS WAS INCREASED TO THE EXTENT OF ` 364 CRORES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT DEPRECIATION HAS TO BE ALLOWED ON THE COST OF BLOCK OF ASSETS INCREASED. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN RESTRICTING THE DEPRECIATION AT ` 36.4 CRORES WHICH WAS SAID TO BE PAID DURING THE YEAR UNDER CONSIDERATION . THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ENTIRE COST OF T HE FRANCHISE RIGHTS HAS TO BE TAKEN INTO CONSIDERATION FOR COMPUTATION OF DEPRECIATION. THE ASSESSEE ALSO FILED APPEAL AGAINST THE ORDER OF THE CIT(A), RESTRICTING THE DEPRECIATION ON THE AMOUNT ACTUALLY PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. WHILE ADJUDICATING T HE ASSESSEES APPEAL AT PARA 34 HEREUNDER THIS TRIBUNAL FOUND THA T THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE COST OF ` 364 CRORES. ACCORDINGLY, THE ORDER OF THE CIT(A) IS MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON THE ENTIRE COST OF ` 364 CRORES. 26. IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.A.N O. 604/MDS/2012 IS DISMISSED. 27. COMING TO THE ASSESSEES APPEAL IN I.T.A.NO. 363/M DS/2012 FOR ASSESSMENT YEAR 2008-09, THE FIRST GROUND IS WI TH REGARD TO ITA NO. 1343 ETC :- 20 -: DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT TO T HE EXTENT OF ` 16,70,21,000/-. 28. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE CLAIMED ` 16,70,21,000/- AS PROVISION FOR LEAVE ENCASHMENT. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE U/S 43B(F) OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A). THE LD. COUNSEL SUBMITTED THAT THE AP EX COURT IN THE CASE OF BHARAT EARTH MOVERS LTD VS CIT, 245 ITR 428, ALL OWED THE CLAIM OF THE ASSESSEE WITH REGARD TO PROVISION FOR LEAVE EN CASHMENT. IN ORDER TO NULLIFY THE EFFECT OF JUDGMENT IN BHARAT EARTH M OVERS LTD, THE PARLIAMENT INTRODUCED SUB CLAUSE (F) IN SECTION 43B WITH EFFECT FROM 1.4.2002 BY FINANCE ACT, 2001. THE CONSTITUTIONAL VALIDITY OF SEC. 43B(F) WAS CHALLENGED BEFORE THE CALCUTTA HIGH COUR T IN EXIDE INDUSTRIES LTD VS UNION OF INDIA, 292 ITR 470. THE CALCUTTA HIGH COURT IN FACT STRUCK DOWN SUB-CLAUSE(F) OF SECTION 43B AS UNCONSTITUTIONAL. THE LD. COUNSEL FURTHER SUBMITTE D THAT EVEN THOUGH THE APEX COURT STAYED OPERATION OF THE JUDGMENT OF THE CALCUTTA HIGH COURT IN EXIDE INDUSTRIES LTD (SUPRA), ON IDENTICAL SET OF FACTS, THE OTHER BENCHES OF THE TRIBUNAL ARE REMANDING THE MAT TER BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE AFRESH AFTER TH E JUDGMENT OF THE APEX COURT WHICH IS PENDING AGAINST THE JUDGMENT OF THE CALCUTTA HIGH COURT. ITA NO. 1343 ETC :- 21 -: 29. ON THE CONTRARY, SHRI S. BHARATH, LD. DR SUBMITTED THAT SECTION 43B(F) CLEARLY SAYS THAT THE SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE CANNOT BE ALLOWED AS DEDUCTION UNLESS IT IS ACTUALLY PAID. I N THIS CASE, ADMITTEDLY, THE AMOUNT IS NOT ACTUALLY PAID AND I T REMAINS TO BE PAYABLE. THEREFORE, SECTION 43B(F) HAS TO BE APP LIED AND THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. REFERRING TO THE JUDGMENT OF THE CALCUTTA HIGH COU RT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA), THE LD. DR SUBMITTED THAT THE OPERATION OF THE JUDGMENT OF THE CALCUTTA HIGH COURT IN EXIDE IN DUSTRIES LTD IS STAYED BY THE APEX COURT, THEREFORE, THE PROVISION OF SEC. 43B(F) IS VERY MUCH IN EXISTENCE IN THE STATUTE BOOK, HENCE, IT HAS TO BE APPLIED. 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SEC. 43B(F) CLEARLY SAYS THAT THE AMOUNT PAYABLE BY THE ASSESSEE AS AN EMPL OYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE CANNOT BE A LLOWED UNLESS IT IS ACTUALLY PAID. IN THIS CASE, ADMITTEDLY, THE AMO UNT IS NOT PAID AND REMAINS TO BE PAYABLE. THEREFORE, IT CANNOT BE A LLOWED U/S 43B(F) OF THE ACT. NOW, THE CALCUTTA HIGH COURT, ADMITTEDLY, STRUCK DOWN SUB- CLAUSE (F) OF SEC. 43B AS UNCONSTITUTIONAL AND THE APPEAL IS PENDING BEFORE THE APEX COURT. IT IS ALSO NOT IN DISPUTE T HAT THE APEX COURT STAYED THE OPERATION OF THE JUDGMENT OF THE CALCUTT A HIGH COURT. ITA NO. 1343 ETC :- 22 -: THEREFORE, AS RIGHTLY SUBMITTED BY THE LD. DR, THE PROVISIONS OF SEC. 43B(F) IS VERY MUCH IN EXISTENCE AND APPLICABLE. H OWEVER, THE ISSUE IS PENDING BEFORE THE APEX COURT. THEREFORE, THE ASS ESSEE SHALL BE GIVEN AN OPPORTUNITY TO MOVE THE ASSESSING OFFICER IN CASE THE APEX COURT AFFIRM THE JUDGMENT OF THE CALCUTTA HIGH COUR T IN EXIDE INDUSTRIES LTD (SUPRA) HOLDING THAT SUB-CLAUSE(F) O F SECTION 43B IS UNCONSTITUTIONAL. THEREFORE, WHILE CONFIRMING THE ORDER OF THE CIT(A), WE GIVE LIBERTY TO THE ASSESSEE TO MOVE THE ASSESS ING OFFICER AFTER THE JUDGMENT OF THE APEX COURT IN EXIDE INDUSTRIES LTD (SUPRA) WHICH IS SAID TO BE PENDING BEFORE THE APEX COURT. IF THE ASSESSEE MOVES THE ASSESSING OFFICER AFTER THE JUDGMENT OF THE APEX CO URT IN EXIDE INDUSTRIES LTD (SUPRA) ALONGWITH A COPY OF JUDGMENT THEN THE ASSESSING OFFICER HAS TO EXAMINE THE CLAIM OF THE ASSESSEE AND DECIDE THE SAME IN THE LIGHT OF THE JUDGMENT OF THE APEX C OURT WHICH MAY BE DELIVERED IN THE CASE OF EXIDE INDUSTRIES LTD (SUPR A). WITH THE ABOVE OBSERVATION, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED. 31. THE NEXT GROUND OF APPEAL IS WITH REGARD TO FRANCHI SE RIGHTS ACQUIRED BY THE ASSESSEE OF CHENNAI SUPERKING. 32. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL SUBMITTED THAT THE CIT(A) FOUND THAT DEPRECIATION HAS TO BE ALLOWED ON THE PAYMENT MADE BY THE ASSESSEE FOR A PARTICULAR YEAR AND IT DOES NOT ENJOY THE ITA NO. 1343 ETC :- 23 -: BENEFIT OVER A PERIOD OF TIME, THEREFORE, DEPRECIAT ION IS ALLOWABLE ONLY FOR THE FIRST YEAR AND FOR THE REST OF THE YEARS, T HE PAYMENT HAS TO BE ALLOWED U/S 37 OF THE ACT. REFERRING TO THE PROVI SIONS OF SEC. 32 OF THE ACT, THE LD. COUNSEL SUBMITTED THAT DEPRECIATIO N HAS TO BE ALLOWED ON THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS TH EREFORE, THERE IS NO QUESTION OF ALLOWING THE SAME AS REVENUE EXPENDITUR E. REFERRING TO THE ASSESSMENT ORDER, THE LD. COUNSEL SUBMITTED THA T THE ASSESSING OFFICER HIMSELF ACCEPTED THAT THE FRANCHISE RIGHTS ACQUIRED BY THE ASSESSEE IS BLOCK OF ASSETS ON WHICH DEPRECIATION I S ALLOWABLE @ 25%. THEREFORE, THE CIT(A) OUGHT TO HAVE ALLOWED THE CLA IM OF THE ASSESSEE FOR DEPRECIATION @ 25% INSTEAD OF ALLOWING THE FRAN CHISE RIGHTS AS REVENUE EXPENDITURE U/S 37 OF THE ACT. 33. WE HEARD SHRI S. BHARATH, LD. DR ALSO. 34. AS DISCUSSED EARLIER IN THE DEPARTMENTS APPEAL, TH E ASSESSEE HAS ACQUIRED THE ASSET OF FRANCHISE RIGHTS FOR ` 364 CRORES AND THEREFORE, THE COST OF THE ASSET IS ` 364 CRORES. WHAT WAS PAID BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS O NLY ` 36.4 CRORES. THE DEPRECIATION HAS TO BE ALLOWED ON THE WRITTEN D OWN VALUE OF THE BLOCK OF ASSET. WHEN THE INTANGIBLE ASSET WAS INTR ODUCED FOR THE FIRST TIME, THE COST OF BLOCK OF ASSET WAS INCREASED TO ` 364 CRORES AND IT MAY NOT BE RIGHT TO SAY THAT THE ASSESSEE IS ENTIT LED FOR DEPRECIATION ITA NO. 1343 ETC :- 24 -: ONLY TO THE EXTENT OF AMOUNT PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE VALUE OF BLOCK OF ASSET WAS INCREASED TO THE EXTENT OF COST OF ASSET INTRODUCED IRRESPECTIVE OF THE AMOUNT PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. WHEN THE COST OF THE ASS ET IS ` 364 CRORES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE VALUE OF THE ASSET INCREASED BY ` 364 CRORES. THEREFORE, DEPRECIATION HAS TO BE ALL OWED ON THE VALUE OF THE CAPITAL ASSET AND NOT ON THE AM OUNT PAID BY THE ASSESSEE. HENCE, THE OBSERVATION MADE BY THE CIT(A ) THAT THE PAYMENT MADE BY THE ASSESSEE FOR THE SUBSEQUENT YE AR HAS TO BE ALLOWED U/S 37 MAY NOT BE A CORRECT LEGAL POSITION . ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION @ 25% ON THE ENTIRE AMOUNT OF ` 364 CRORES. 35. IN THE RESULT, THE APPEAL OF THE ASSESSEE I.T.A.NO. 363/MDS/2012 IS PARTLY ALLOWED. 36. COMING TO ASSESSMENT YEAR 2009-10 IN ASSESSEES AP PEAL I.T.A.NO.1070/MDS/2012, THE FIRST GROUND IS WITH R EGARD TO DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT OF ` 2,35,01,000/-. 37. WE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE L D. DR ALSO. WHILE CONSIDERING THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09 IN I.T.A.NO.363/MDS/2012, THIS ISSUE WAS CO NSIDERED ITA NO. 1343 ETC :- 25 -: ELABORATELY AND IN VIEW OF SEC. 43B(F) OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO CLAIM THE DEDUCTION WHILE COMPUTING THE TOTAL INCOME. HOWEVER, THE CALCUTTA HIGH COURT IN THE CASE OF M/S EXIDE INDUSTRIES LTD (SUPRA) FOUND THAT SEC. 43B(F) OF THE ACT IS UN CONSTITUTIONAL. THE REVENUE HAS ALREADY FILED AN APPEAL BEFORE THE APEX COURT AND THE APEX COURT HAS STAYED OPERATION OF THE JUDGMENT OF THE CALCUTTA HIGH COURT. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE ORDER OF THE CIT(A) IS CONFIRMED. HOWEVER, THE ASSESSEE IS AT LIBERTY TO MOVE THE ASSESSING OFFICE R AFTER THE JUDGMENT OF THE APEX COURT IN THE CASE THE PROVISIONS OF SEC . 43B(F) IS DECLARED TO BE UNCONSTITUTIONAL. IF SUCH AN APPLICATION IS MADE, THE ASSESSING OFFICER SHALL CONSIDER THE SAME AFTER THE JUDGMENT OF THE APEX COURT AND DISPOSE OF THE SAME ON MERIT. 38. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEPRECI ATION ON THE ASSET OF IPL FRANCHISE RIGHTS. 39. WE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR. 40. THIS ISSUE IS ALSO ELABORATELY CONSIDERED IN THE EA RLIER PART OF THIS ORDER. SINCE THE COST OF ASSET WAS TO BE TAKE N INTO CONSIDERATION FOR GRANTING OF DEPRECIATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ENTIRE COST HAS TO BE TAKEN IRRESPECTIVE O F THE PAYMENT MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATIO N. ACCORDINGLY, THE ITA NO. 1343 ETC :- 26 -: ORDER OF THE LOWER AUTHORITY IS SET ASIDE AND THE A SSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON THE IPL FRANCHISE RIGHTS BY TAKING THE COST OF ASSET AT ` 364 CRORES. THE ASSESSING OFFICER SHALL ALSO REDU CE THE DEPRECIATION GRANTED IN THE EARLIER YEAR FOR AR RIVING AT THE WRITTEN DOWN VALUE. 41. THE NEXT ISSUE FOR CONSIDERATION IS DISALLOWANCE OF ` 2,50,00,000/- PAID TO M/S RISHI VIDHYA CONSULTANTS PVT. LTD. 42. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE PAID A SUM OF ` 2,50,00,000/- TO M/S RISHI VIDHYA CONSULTANTS PVT. LTD. ACCORDING TO TH E LD. COUNSEL, M/S RISHI VIDHYA CONSULTANTS PVT. LTD. IS A VASTU CONSU LTANT AND THE ASSESSEE HAS TO CONSULT THEM FOR INCREASING ITS PRO FIT. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, THE LD. COUNSEL SU BMITTED THAT THE NATURE OF SERVICES RENDERED BY M/S RISHI VIDHYA CON SULTANTS PVT. LTD. TO THE ASSESSEE HAS BEEN REPRODUCED IN THE ASSESSM ENT ORDER, MORE PARTICULARLY AT PAGE 8. THE ASSESSING OFFICER HOWE VER, DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE PAYME NT MADE TO M/S RISHI VIDHYA CONSULTANTS PVT. LTD IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ACCORDING TO THE LD. COUNSEL, VASTU SHASTRA IS DEPENDING UPON THE BELIEF OF THE INDIVIDUAL AND IF A PARTICULAR INDIVIDUAL BELIEVES THAT BY PERFORMING POOJA AND OT HER ADJUSTMENT IN ITA NO. 1343 ETC :- 27 -: THE PREMISES WOULD INCREASE THE PROFIT, THE ASSESSI NG OFFICER CANNOT STAND IN THE WAY BY SAYING THAT IT IS NOT FOR THE P URPOSE OF BUSINESS. ACCORDING TO THE LD. COUNSEL, THE ENTIRE SERVICES W ERE RENDERED IN THE PREMISES OF THE ASSESSEE-COMPANY AND IT WAS ONLY TO INCREASE THE PRODUCTION AND PROFITABILITY OF THE ASSESSEE-COMPAN Y. APART FROM THAT, THE ASSESSEE HAS PERFORMED SPECIAL POOJAS TO IMPRO VE THE HARMONY AMONG THE WORKERS. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS NOT FOR BU SINESS PURPOSES. 43. ON THE CONTRARY, THE LD. DR SUBMITTED THAT U/S 37 OF THE ACT, THE EXPENDITURE INCURRED BY THE ASSESSEE WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS HAS TO BE ALLOWED. IN THIS CASE, THE PAYMENT WAS MADE TO VASTU CONSULTANT FOR ADVISING SPECIAL P OOJAS. ACCORDING TO THE LD. DR, THE PAYMENT MADE BY THE ASSESSEE IS NOT FOR BUSINESS PURPOSES. SINCE THE NATURE OF SERVICES RENDERED BY THE CONSULTANT, M/S RISHI VIDHYA CONSULTANTS PVT. LTD. IS VASTU AND FOR PERFORMING POOJAS AND RITUALS, ACCORDING TO THE LD. DR, IT CAN NOT BE CONSTRUED AS BUSINESS EXPENDITURE. THE LD. DR FURTHER SUBMITTED THAT THE BENEFIT MAY BE ON THE PSYCHOLOGICAL AND MENTAL FIELD RATHER THAN FOR BUSINESS PURPOSES, THEREFORE, THE CIT(A) HAS RIGHTLY DISALLO WED THE CLAIM OF THE ASSESSEE. ITA NO. 1343 ETC :- 28 -: 44. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE SPECIFICALLY CLAIMS THAT THE VASTU CONSULTANT SUGGESTED TO PERFO RM HOMAMS ON DIFFERENT OCCASIONS AT DIFFERENT PLACES FOR INCREAS ING THE PRODUCTION AND PROFITABILITY OF THE COMPANY AND ALSO TO IMPROVE H ARMONY AMONG THE WORKERS. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL F OR THE ASSESSEE, VASTU IS DEPENDING UPON THE BELIEF OF THE INDIVIDUA LS LIKE ASTROLOGY. THE CIT(A) FOUND THAT PERFORMING POOJA WOULD BENEFI T BASICALLY ON THE PSYCHOLOGICAL AND MENTAL FIELD RATHER THAN SUBJECTI VE IN THE NATURE OF BUSINESS. THE ASSESSEE CLAIMS THAT M/S RISHI VIDH YA CONSULTANTS PVT. LTD. PERFORMED THE FOLLOWING SERVICES: NATURE AND SERVICES RENDERED BY M/S RISHI VIDHYA CONSULTANTS PVT. LTD TO ALL OUR PLANTS AND COLONIES :- 3. THEY HAD VISITED ALL PLANTS/COLONIES AND SUGGE STED US TO PERFORM SPECIAL YAGNAMS AND HOMAMS TO INCREASE THE PRODUCTION AND PROFITABILITY AND IMPROVE THE HARMONY AMONGST T HE WORKERS THEREON. 4. THEY SUGGESTED THE VARIOUS HOMAMS AND YAGNAMS T HAT WERE PERFORMED ON THE AUSPICIOUS DATES. 5. THEY HAVE HELPED US IN IDENTIFYING THE GOOD PRO HIT TO CARRY OUT HOMAMS AND YAGNAMS. 6. THEY ALSO IDENTIFIED THE SOURCES FOR PROCUREMENT OF VARIOUS MATERIALS FOR HOMAMS AND YAGNAMS. 7. THEY SUGGESTED PREETHIS TO BE PERFORMED PERIODI CALLY AT VARIOUS LOCATIONS. 8. THEY ALSO EXAMINED AND ADVISED US ABOUT THE ITE MS TO BE CONSUMED IN THE HOMAMS/YAGNAMS. ITA NO. 1343 ETC :- 29 -: 9. THEY HAVE GUIDED US IN ESTABLISHMENT OF NEW TEMPLES/INSTALLATION OF DEITY TO WARD OFF EVILS. 10. THEY HAVE ALSO IDENTIFIED THE SPECIAL CEREMONY WHICH HAVE TO BE PERFORMED TO THE MOOLAVAR OF THE TEMPLES AT ALL FACTORIES. 11. THEY ALSO EXAMINED THE FEASIBILITY OF INSTALLI NG NAVAGRAHAS IN THE RIGHT PLACES OF THE TEMPLES. 12. THEY ALSO SUGGESTED US WHERE AND WHEN TO CONDU CT DAILY/WEEKLY POOJAS AND MONTHLY POOJAS IN VARIOUS P LANTS AND LOCATIONS. 13. THEY ALSO SUGGESTED US TO EXECUTE SPECIAL POOJ A AT TEMPLES IN THE FACTORIES AND COLONIES. 14. THEY HAVE ALSO REVIEWED THE PLACES WHERE NEW P LANTS/LINES OF BUSINESS ARE PLANNED TO BE SET UP IN FUTURE. IT IS NOT IN DISPUTE THAT M/S RISHI VIDHYA CONSULTA NTS PVT. LTD. RENDERED THE SERVICES AS CLAIMED BY THE ASSESSEE. THE QUES TION ARISES FOR CONSIDERATION IS WHETHER THESE SERVICES ARE FOR BUS INESS PURPOSES OR NOT. IF IT IS FOR BUSINESS PURPOSES THEN DEFINITEL Y THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED AS REVENUE EXPENDITURE. 45. AS ALREADY OBSERVED, VASTU IS BELIEF OF A PARTICULA R INDIVIDUAL/ GROUP OF INDIVIDUALS. IT MAY INCREASE THE PROFIT O F THE ASSESSEE OR MAY NOT. BUT ONCE THE ASSESSEE BELIEVES THAT PERF ORMING POOJAS AND HOMAMS AT A PARTICULAR PLACE WOULD INCREASE PRODUCT ION AND PROFITABILITY OF THE COMPANY, THE ASSESSING OFFICER CANNOT DOUBT THE BELIEF OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE ASSESSING OFFICER CANNOT SIT IN THE ARM CHAIR O F THE ASSESSEE AND DICTATE HOW THE BUSINESS SHALL BE CARRIED OUT. THE ASSESSING OFFICER ITA NO. 1343 ETC :- 30 -: SHALL NOT STEP INTO THE SHOES OF THE ASSESSEE AND FIND OUT WHETHER THE EXPENDITURE IS FOR BUSINESS PURPOSE OR NOT? HOMAM S AND POOJAS PERFORMED BY THE COMPANY ARE NOT FOR THE WELFARE OF ANY PARTICULAR INDIVIDUAL, HOWEVER, THE ASSESSEE BELIEVES THAT TH IS MAY INCREASE THE PRODUCTION OF THE COMPANY AND IMPROVE THE HARMONY AMONG THE WORKERS OF THE COMPANY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT, PERFORMING POOJAS AS SUGGESTED BY M/S RISHI VIDHYA CONSULTANTS PVT. LTD IS ONLY FOR THE PURPOSE OF BUS INESS. THEREFORE, THE SERVICES RENDERED BY M/S RISHI VIDHYA CONSULTAN TS PVT. LTD ARE ONLY FOR THE PURPOSE OF BUSINESS. ONCE THE ASSESSEE BEL IEVES THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WOULD INCREAS E THE PRODUCTION AND PROFIT AND ALSO IMPROVE THE HARMONY AMONG THE W ORKERS OF THE COMPANY, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THERE IS NO REASON THE DISALLOW THE CLAIM OF THE ASSESSEE. HOW EVER, THE CLAIM OF ` 2,50,00,000/- IS HIGHLY EXCESSIVE. IRRESPECTIVE OF THE BELIEF AND FAITH, THE PAYMENT SHALL BE REASONABLE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT VASTU IS JUST LIKE ASTROLOGY AND THE OPINION OF AN EXPERT IN THE FIELD MAY BE ONE OF THE GUIDING FACTORS. THERE FORE, THE PAYMENT FOR SUCH OPINION SHALL NOT BE UNREASONABLE AND ARBI TRARY. THE CLAIM OF ` 2,50,00,000/- IS HIGHLY EXCESSIVE AND UNREASONABLE . HOWEVER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLAI M TO THE EXTENT OF ` 50,00,000/- MAY BE REASONABLE. ACCORDINGLY, THE O RDERS OF THE LOWER ITA NO. 1343 ETC :- 31 -: AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE U/S 37 OF THE ACT TO TH E EXTENT OF ` 50,00,000/-. HENCE, THE DISALLOWANCE TO THE EXTENT OF ` 2,00,00,000/- IS CONFIRMED. 46. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A .NO. 1070/MDS/2012 IS PARTLY ALLOWED. 47. NOW COMING TO REVENUES APPEAL I.T.A.NO.1299/MDS/20 12, THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLO WANCE OF INTEREST ON THE ADVANCES MADE TO SUBSIDIARY COMPANIES TO THE EXTENT OF ` 20.08 CRORES. 48. THE ASSESSING OFFICER DISALLOWED THE NOTIONAL INTE REST @ 6% ON THE ADVANCES MADE TO SUBSIDIARY COMPANIES. HOWE VER, THE CIT(A) FOUND THAT THIS TRIBUNAL DELETED A SIMILAR ADDITION MADE BY THE ASSESSING OFFICER FOR ASSESSMENT YEARS 2003-04 AND 2004-05 ON THE BASIS OF THE JUDGMENT OF THE APEX COURT IN S.A. BUI LDERS (SUPRA). ACCORDINGLY, BY FOLLOWING THE ORDER OF THIS TRIBUNA L, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 49. AFTER HEARING THE LD. DR AND THE LD. COUNSEL FOR TH E ASSESSEE, THIS TRIBUNAL FINDS THAT WHEN THE FACTS DURING THE YEAR UNDER CONSIDERATION ARE IDENTICAL AS THAT OF THE ASSESSME NT YEARS 2003-04 ITA NO. 1343 ETC :- 32 -: AND 2004-05 AND THE INVESTMENT WAS ACTUALLY MADE IN SUBSIDIARY COMPANIES, THERE IS NO NEED FOR DISALLOWING ANY NOT IONAL INTEREST. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDIT ION MADE BY THE ASSESSING OFFICER BY FOLLOWING THE ORDER OF THIS TR IBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2003-04 AND 2004-05 A ND ALSO JUDGMENT OF THE APEX COURT IN S.A. BUILDERS (SUPRA) . ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED. 50. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DEPRECIA TION ON FRANCHISE RIGHTS. 51. THE ASSESSEE CLAIMED DEPRECIATION ON THE ENTIRE AM OUNT OF ` 364 CRORES BEING THE COST OF IPL FRANCHISE RIGHTS. HOWEVER, THE ASSESSING OFFICER RESTRICTED THE SAME TO THE PAYMEN T MADE DURING THE YEAR UNDER CONSIDERATION. THIS ISSUE WAS ELABORATE LY CONSIDERED IN THE EARLIER PART OF THIS ORDER AND THIS TRIBUNAL FOUND THAT THE COST OF ASSET OF ` 364 CRORES HAS TO BE TAKEN AND NOT THE PAYMENT MAD E ON INSTALLMENT BASIS. THE COST OF ASSET IS ` 364 CRORES HENCE, THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE ENTIRE COST. ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED. 52. IN THE RESULT, THE REVENUES APPEAL I.T.A.NO. 1299/ MDS/2012 IS DISMISSED. ITA NO. 1343 ETC :- 33 -: 53. NOW, COMING TO ASSESSMENT YEAR 2010-11, IN ASSESSE ES APPEAL I.T.A.NO.160/MDS/2015, THE FIRST ISSUE ARISE S FOR CONSIDERATION IS WITH REGARD TO NOTIONAL EXPENDITURE U/S 14A. 54. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE INVESTED IN THE SHARES OF OTHER COMPANIES FROM ITS OWN FUNDS. THE ASSESSEE HAS NOT DIVERTED ANY BORROWED FUNDS FOR MAKING INVESTMENT IN OTHER COMPANIES, THE REFORE, ACCORDING TO THE LD. COUNSEL, NO EXPENDITURE WAS INCURRED FOR EARNING THE EXEMPTED INCOME. THE ASSESSING OFFICER BY APPLYING RULE 8D OF INCOME-TAX RULES, CALCULATED THE EXPENDITURE AT 0.5 % OF THE AVERAGE INVESTMENT. ACCORDING TO THE LD. COUNSEL, SINCE TH E ASSESSEE USED ITS OWN FUNDS, THERE IS NO QUESTION OF ANY DISALLOWANCE U/S 14A OF THE ACT. 55. ON THE CONTRARY, SHRI S. BHARATH, LD. DR SUBMITTED THAT THERE IS NO MATERIAL AVAILABLE ON RECORD WITH REGARD TO A VAILABILITY OF ASSESSEES OWN FUNDS. THE ASSESSEE HAS MADE HUGE INVESTMENT IN THE SHARES OF OTHER COMPANIES FOR EARNING THE EXEMP TED INCOME. IN FACT, THE ASSESSEE EARNED ` 2,11,76,000/- IN ASSESSMENT YEAR 2010-11 AND ` 1,65,32,000/- IN ASSESSMENT YEAR 2011-12. ACCORDI NG TO THE LD. DR, WHILE MAKING INVESTMENT, THE ASSESSEE HAS TO N ECESSARILY UTILIZE THE MANPOWER AND INFRASTRUCTURE FACILITY. THEREFORE , THE ASSESSEE ITA NO. 1343 ETC :- 34 -: CANNOT SAY THAT THERE WAS NO EXPENDITURE INCURRED F OR EARNING THE EXEMPTED INCOME. THE ASSESSING OFFICER BY APPLYING THIRD LIMB OF RULE 8D, COMPUTED THE EXPENDITURE AT 0.5% OF THE AVERAGE INVESTMENT. ACCORDING TO THE LD. DR, THIS EXPENDITURE COMPUTED BY THE ASSESSING OFFICER AT 0.5% HAS TO BE NECESSARILY INCURRED IN T HE MANPOWER AND INFRASTRUCTURE FACILITY OF THE ASSESSEE-COMPANY. T HEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OF FICER. 56. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. DR, THE ASSESSEE EARNED EXEMPTED INCOME OF ` 2,11,76,000/- IN ASSESSMENT YEAR 2010-11 AND ` 1,65,32,000/- IN ASSESSMENT YEAR 2011-12. EVEN THOUGH THE ASSESSEE CLAIMS THAT OWN FUNDS WERE AVAILABLE FOR MAKING SUCH HUGE INVESTMENT, THE ASS ESSEE HAS TO ENGAGE THE CONSULTANT AND UTILIZE THE INFRASTRUCTUR E FACILITIES TO MONITOR THE INVESTMENT. THE ASSESSEE BEING A CORPORATE ENT ITY, WITHOUT ENGAGING MANPOWER, WOULD NOT HAVE EARNED ` 2,11,76,000/- DURING THE YEAR UNDER CONSIDERATION. THEREFORE, A PART OF THE EXPENDITURE INCURRED IN THE MANPOWER AND INFRASTRUCTURE FACILIT IES DIVERTED FOR EARNING EXEMPTED INCOME HAS TO BE DISALLOWED. AS R IGHTLY SUBMITTED BY THE LD. DR, THE ASSESSING OFFICER HAS COMPUTED 0 .5% OF THE AVERAGE INVESTMENT AS EXPENDITURE BY APPLYING THIRD LIMB OF RULE 8D. RULE 8D(2)(III) PROVIDES FOR DISALLOWANCE OF AN AMO UNT EQUAL TO 0.5% ITA NO. 1343 ETC :- 35 -: OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHI CH DOES NOT FORM PART OF THE TOTAL INCOME, SHALL BE DISALLOWED. ACCO RDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE MODIFIED AND THE ASSESSIN G OFFICER IS DIRECTED TO DISALLOW 0.5% OF THE AVERAGE VALUE OF INVESTMENT , THE INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. 57. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISALLOW ANCE OF PROVISION FOR LEAVE ENCASHMENT TO THE EXTENT OF ` 14,76,00,000/-. 58. WE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE L D. DR. AN IDENTICAL ISSUE HAS BEEN DISCUSSED ELABORATELY I N THE EARLIER PART OF THIS ORDER. SINCE THE CALCUTTA HIGH COURT IN THE C ASE OF EXIDE INDUSTRIES LTD (SUPRA) FOUND THAT SECTION 43B(F) IS UNCONSTITUTIONAL AND NOW THE MATTER IS PENDING BEFORE THE APEX COURT. T HE APEX COURT STAYED THE OPERATION OF THE JUDGMENT OF THE CALCUTT A HIGH COURT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AT THIS STAGE. HOWEVE R, THE ASSESSEE IS AT LIBERTY TO MOVE THE ASSESSING OFFICER AFTER THE JUD GMENT OF THE APEX COURT IF THEY ARE SO ADVISED. IF SUCH AN APPLICATI ON IS MADE BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER SHALL PASS ORDER IN CONFORMITY WITH THE ORDER OF THE APEX COURT IN EXIDE INDUSTRIE S LTD (SUPRA). WITH THE ABOVE OBSERVATION, THE ORDER OF THE CIT(A) IS C ONFIRMED. ITA NO. 1343 ETC :- 36 -: 59. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DEPRECIA TION ON THE COST OF IPL FRANCHISE RIGHTS. 60. WE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE L D. DR. THE ASSESSING OFFICER RESTRICTED THE DEPRECIATION O N THE AMOUNT ACTUALLY PAID FOR THE YEAR UNDER CONSIDERATION. TH E ASSESSEE CLAIMED DEPRECIATION ON THE TOTAL COST OF ` 364 CRORES. AS ALREADY DISCUSSED IN THE EARLIER PART OF THIS ORDER, DEPRECIATION HAS TO BE ALLOWED ON THE COST OF THE ASSET AND NOT ON THE AMOUNT PAID BY THE ASSESSEE. SINCE THE FRANCHISE RIGHTS IS ALSO ONE OF THE CAPITAL ASS ET ON WHICH DEPRECIATION HAS TO BE ALLOWED U/S 32 OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER H AS TO ALLOW DEPRECIATION ON THE ENTIRE COST OF ` 364 CRORES WITHOUT RESTRICTING THE SAME TO THE AMOUNT ACTUALLY PAID FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE ENTIRE COST OF IPL FRANCHISE FEE OF ` 364 CRORES. 61. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REG ARD TO DISALLOWANCE OF PAYMENT MADE TO DR. K. VENKATESAN. 62. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE HAS MADE A PAYMENT OF ` 75 LAKHS FOR THE ASSESSMENT YEAR 2010-11 TO DR. K. VENKATESAN AND A NOTHER SUM OF ` ITA NO. 1343 ETC :- 37 -: 63,75,000/- FOR THE ASSESSMENT YEAR 2011-12. ACCORD ING TO THE LD. COUNSEL, THE PAYMENT WAS MADE TO DR. K VENKATESAN W HO IS AN EXPERT IN VASTU. ACCORDING TO THE LD. COUNSEL, VASTU IS F OR THE PURPOSE OF WELL BEING OF THE ASSESSEE AND ITS EMPLOYEES AND IT IS ALSO A RELIGIOUS MATTER. VASTU LIKE YOGA AND MEDITATION IS A TRADIT IONAL SCIENCE WHICH WAS IN PRACTICE FOR SEVERAL GENERATIONS IN INDIA. THE LD. COUNSEL FURTHER SUBMITTED THAT IF THE PAYMENT CANNOT BE ALL OWED AS REVENUE EXPENDITURE, IT HAS TO BE CAPITALIZED AND THE ASSE SSEE IS ENTITLED FOR DEPRECIATION. THE ASSESSING OFFICER, WITHOUT APPRE CIATING THE FACTS OF THE CASE, DISALLOWED THE CLAIM OF THE ASSESSEE. 63. ON THE CONTRARY, SHRI S. BHARATH, LD. DR SUBMITTED THAT THE ASSESSEE HAS PAID ` 75 LAKHS DURING THE YEAR UNDER CONSIDERATION TO DR. K VENKATESAN TOWARDS VASTU CONSULTANCY CHARGES. SIMILAR PAYMENT WAS ALSO MADE TO M/S RISHI VIDHYA CONSULTANTS PVT. LTD TO THE EXTENT OF ` 2,50,00,000/- IN THE SAME YEAR. PAYMENT OF VASTU CONSULTANCY FEE TO VARIOUS PERSONS IS NOT FOR BUSINESS PURPOSE, THE REFORE, THE ASSESSING OFFICER FOUND THAT IT CANNOT BE ALLOWED A S REVENUE EXPENDITURE. SINCE NO ASSET CAME INTO EXISTENCE, T HE CIT(A) FOUND THAT THE ASSESSEE IS NOT ENTITLED FOR ANY DEPRECIA TION ALSO. 64. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. VAS TU IS DEPENDING ITA NO. 1343 ETC :- 38 -: UPON THE BELIEF OF A PARTICULAR INDIVIDUAL/GROUP OF INDIVIDUALS. IT MAY IMPROVE THE PRODUCTIVITY AND PROFIT OR MAY NOT IMPR OVE THE PRODUCTIVITY AND PROFIT OF THE COMPANY. BUT NOBODY COULD STAND IN THE WAY OF BELIEF OF A PARTICULAR INDIVIDUAL. AT THE V ERY SAME TIME, THE ASSESSEE CANNOT MAKE SUCH AN EXORBITANT PAYMENT YEA R AFTER YEAR ON THE GROUND THAT IT IS FOR BUSINESS PURPOSE. FOR TH E ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS MADE A PAYMENT OF ` 2,50,00,000/- TO M/S RISHI VIDHYA CONSULTANTS PVT. LTD. IN THE EARLIER PART OF THIS ORDER, THIS TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 50,00,000/- ON THE GROUND THAT IT WOULD DEPEND UPON THE INDIVIDUAL BELIEF OF THE BUSINESSMAN AND WHEN THE SERVICES REN DERED WERE NOT DOUBTED, NO DISALLOWANCE CAN BE MADE. HOWEVER, SUC H A HUGE PAYMENT CANNOT BE MADE YEAR AFTER YEAR. WHEN THE A SSESSEE CLAIMS THAT PAYMENT OF ` 2,50,00,000/- WAS MADE FOR ASSESSMENT YEAR 2009- 10, IT IS NOT KNOWN WHY SUCH A HUGE PAYMENT OF ` 75 LAKHS WAS MADE TO DR. K. VENKATESAN FOR THE SAME SERVICES. THE A SSESSEE IS EXPECTED TO INCUR CERTAIN EXPENDITURE ON THE BELIEF THAT THE ART OF VASTU MAY INCREASE THE PRODUCTIVITY OR PROFIT OF THE ASSESSE E. HOWEVER, CLAIMING SUCH EXPENDITURE YEAR AFTER YEAR CANNOT BE FOR BUSI NESS PURPOSE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT PAYMENT FOR ` 75 LAKHS FOR THE YEAR UNDER CONSIDERATION TO DR. K. VENKATESAN CANNOT ITA NO. 1343 ETC :- 39 -: BE CONSIDERED TO BE FOR BUSINESS PURPOSE. THEREFOR E, THE CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE. 65. NOW, COMING TO THE PAYMENT MADE TO M/S RISHI VIDHYA CONSULTANTS PVT. LTD TO THE EXTENT OF ` 2,50,00,000/-, THIS TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR ASSESSMENT Y EAR 2009-10 AS REVENUE EXPENDITURE TO THE EXTENT OF ` 50,00,000/-. IT IS NOT KNOWN WHY SUCH A HUGE PAYMENT WAS MADE TO THE VERY SAME C OMPANY M/S RISHI VIDHYA CONSULTANTS PVT. LTD FOR THE YEAR UNDE R CONSIDERATION. THE ASSESSEE CANNOT MAKE SUCH A PAYMENT YEAR AFTER YEAR IN THE NAME OF VASTU CONSULTANCY, THEREFORE, IT LACKS BONA FIDENESS OF THE SERVICES RENDERED BY M/S RISHI VIDHYA CONSULTANTS P VT. LTD FOR THE YEAR UNDER CONSIDERATION. HENCE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION. 66. THE NEXT ISSUE ARISES FOR CONSIDERATION OF DISALLOW ANCE OF LEASE RENT PAID BY THE ASSESSEE U/S 40(A)(IA) OF THE ACT. 67. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE CLAIMED ` 11,16,400/- AS LEASE RENTAL FOR HIRING EARTH MOVING EQUIPMENT FROM M/S SERI INFRA STRUCTURE FINANCE ITA NO. 1343 ETC :- 40 -: LTD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT TDS WAS NOT DEDUCTED ON THE PAYMENT MAD E TO M/S SERI INFRASTRUCTURE FINANCE LTD. ACCORDING TO THE LD. C OUNSEL, THE EARTH MOVING EQUIPMENT WAS TAKEN ON FINANCE LEASE, HENCE, THE PROVISION OF 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUNSEL SUBMITTED THAT THE CIT(A) P ROCEEDED ON THE GROUND THAT THE ASSESSEE HAS PAID RENT ON HIRING T HE EQUIPMENT. ACCORDING TO THE LD. COUNSEL, IT IS NOT HIRING OF T HE EQUIPMENT, IT IS ONLY A FINANCE LEASE FOR PURCHASING THE EARTH MOVING EQU IPMENT, THEREFORE, PROVISIONS OF SEC. 194I IS NOT APPLICABLE AND HENCE , THERE CANNOT BE ANY DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 68. ON THE CONTRARY, SHRI S. BHARATH, LD. DR SUBMITTED THAT THE ASSESSEE HAS TAKEN HEAVY EARTH MOVING EQUIPMENT ON LEASE FROM M/S SERI INFRASTRUCTURE FINANCE LTD. AND WHAT WAS PAID BY THE ASSESSEE IS A LEASE AMOUNT. THE ASSESSEE ACQUIRED THE EARTH M OVING EQUIPMENT ON RIGHT TO USE BASIS. ACCORDING TO THE LD. DR, WH ETHER IT IS A FINANCE LEASE OR OPERATIONAL LEASE, THE ASSESSEE IS BOUND TO DEDUCT TAX HENCE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 69. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOT IN DISPUTE THAT ITA NO. 1343 ETC :- 41 -: THE ASSESSEE HAS TAKEN HEAVY EARTH MOVING EQUIPMEN T ON LEASE FROM M/S SERI INFRASTRUCTURE FINANCE LTD. AND PAID A SUM OF ` 11,16,400/-. HOWEVER, NO TAX WAS DEDUCTED. THE ASSESSEE CLAIMS THAT IT IS NOT AN OPERATIONAL LEASE BUT IT IS ONLY A FINANCE LEASE. IN THE CASE OF FINANCE LEASE, ASSESSEE WOULD BORROW MONEY AND THE ASSET W OULD BE PURCHASED IN THE NAME OF THE ASSESSEE . THE FACT REMAINS THAT THE ASSET WAS ACQUIRED ON RIGHT TO USE BASIS, THEREFORE , WHAT WAS PAID BY THE ASSESSEE IS IN THE NATURE OF RENT. HENCE, TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS TO DEDUCT TAX WHILE MAKING THE PAYMENT TO M/S SERI INFRASTRUCTURE FINANCE LTD. . THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY T HE ASSESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY REASON TO I NTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONF IRMED. 70. THE NEXT ISSUE FOR CONSIDERATION IS WITH REGARD TO ADDITION OF EXPENDITURE ATTRIBUTABLE TO EARNING EXEMPT INCOM E WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. 71. SINCE THE DISALLOWANCE UNDER RULE 8D WAS CONFIRMED AT 0.5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHI CH DOES NOT FORM PART OF TOTAL INCOME, BOTH FOR REGULAR COMPUTATION AS WELL AS COMPUTATION U/S 115JB OF THE ACT, THE ASSESSING OFF ICER HAS RIGHTLY MADE THE ADDITION. HOWEVER, THE ORDERS OF THE LOWE R AUTHORITIES ARE ITA NO. 1343 ETC :- 42 -: MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW 0.5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOME. 72. THE NEXT ISSUE ARISES FOR CONSIDERATION IS PROVISIO N FOR LEAVE ENCASHMENT WHILE COMPUTING THE BOOK PROFIT U/S 115 JB OF THE ACT. 73. AS ALREADY DISCUSSED, SEC. 43B(F) OF THE ACT WAS DE CLARED UNCONSTITUTIONAL BY THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD.(SUPRA). HOWEVER, THE APEX COURT ST AYED OPERATION OF JUDGMENT OF THE CALCUTTA HIGH COURT. THEREFORE, AS ON TODAY, THE MATTER IS PENDING BEFORE THE APEX COURT, HENCE, THE ASSESSING OFFICER IS BOUND TO APPLY SEC. 43B(F) AND PROVISION MADE FO R LEAVE ENCASHMENT HAS TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. HOWEVER, IT IS OPEN TO THE ASSE SSEE TO MOVE THE ASSESSING OFFICER AFTER THE JUDGMENT OF THE APEX CO URT. WITH THE ABOVE OBSERVATION, THE ORDER OF THE CIT(A) IS CONFI RMED. 74. IN THE RESULT, THE APPEAL OF THE ASSESSEE I.T.A.NO. 160/MDS/2015 IS PARTLY ALLOWED. 75. IN REVENUES APPEAL I.T.A.NO.238/MDS/2015, THE FIRS T GROUND IS WITH REGARD TO NOTIONAL INTEREST ON THE AMOUNT A DVANCED TO SUBSIDIARY COMPANIES. ITA NO. 1343 ETC :- 43 -: 76. WE HEARD THE LD. DR AND LD. COUNSEL FOR THE ASSESSE E. ADMITTEDLY, THE ADVANCE WAS MADE TO SUBSIDIARY COMP ANIES. THE CIT(A) BY FOLLOWING THE ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 ALLOWED THE CLAIM OF THE ASSES SEE. THE ONLY OBJECTION OF THE REVENUE IS THAT APPEAL IS PENDING BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRIBUNAL. IT IS NO T IN DISPUTE THAT THE FACTS ARE IDENTICAL AS THAT OF THE ASSESSMENT YEARS 2003-04 AND 2004- 05 AND THEREFORE, THE CIT(A) HAS RIGHTLY FOLLOWED T HE ORDER OF THIS TRIBUNAL. HENCE, WE DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 77. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEPRECI ATION ON IPL FRANCHISE RIGHTS. 78. WE HEARD THE LD. DR AND THE LD. COUNSEL FOR THE AS SESSEE. IN THE EARLIER PART OF THIS ORDER, THIS TRIBUNAL HA S DISCUSSED THE ISSUE OF DEPRECIATION ON IPL FRANCHISE RIGHTS ELABORATELY. THIS TRIBUNAL FOUND THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION U/ S 32(1) OF THE ACT ON THE TOTAL COST OF THE ASSET IRRESPECTIVE OF THE PAY MENT MADE DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AN D ACCORDINGLY, THE SAME IS CONFIRMED. ITA NO. 1343 ETC :- 44 -: 79. IN THE RESULT, THE APPEAL OF THE REVENUE I.T.A.NO. 238/MD/2015 STANDS DISMISSED. 80. NOW COMING TO ASSESSMENT YEAR 2011-12, IN ASSESSEE S APPEAL I.T.A.NO.161/MDS/2015, THE FIRST GROUND IS WITH REGARD TO DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT. 81. WE HEARD LD. COUNSEL FOR THE ASSESSEE AND LD. DR. THE ASSESSING OFFICER DISALLOWED A SUM OF ` 1,65,32,000/- U/S 14A OF THE ACT. THE CONTENTION OF THE LD. COUNSEL IS THAT THE ASSESSEE IS HAVING SUFFICIENT INTEREST FREE FUNDS FOR MAKING INVESTMEN T IN THE SHARES OF OTHER COMPANIES, THEREFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE U/S 14A OF THE ACT. FOR THE ASSESSMENT YEAR 2009-1 0, THE ASSESSING OFFICER HAS DISALLOWED 0.5% OF THE AVERAGE INVESTME NT AS NOTIONAL EXPENDITURE BY FOLLOWING LIMB (III) OF RULE 8D OF THE INCOME-TAX RULES. DURING THE YEAR UNDER CONSIDERATION RULE 8D IS VERY MUCH APPLICABLE. THEREFORE, BY APPLYING THE 3 RD LIMB OF RULE 8D, 0.5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FOR M PART OF TOTAL INCOME, HAS TO BE CONSTRUED AS EXPENDITURE FOR EARN ING THE EXEMPTED INCOME. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHO RITIES ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW 0 .5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FOR M PART OF TOTAL INCOME. ITA NO. 1343 ETC :- 45 -: 82. THE NEXT GROUND OF APPEAL WITH REGARD TO PROVISION FOR LEAVE ENCASHMENT TO THE EXTENT OF ` 4,95,96,000/-. 83. WE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND LD. D R ALSO. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASS ESSEE, THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUP RA) HAS HELD THAT SEC. 43B(F) IS UNCONSTITUTIONAL. HOWEVER, ON APPE AL BY THE REVENUE, THE APEX COURT STAYED OPERATION OF THE JUDGMENT OF THE CALCUTTA HIGH COURT. THEREFORE, AS ON TODAY, THE PROVISION OF SE C. 43B(F) IS VERY MUCH IN THE STATUTE BOOK, THEREFORE, THE ASSESSING OFFICER IS BOUND TO FOLLOW THE SAME. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). HOWEVER, IT IS OPEN TO TH E ASSESSEE TO MOVE THE ASSESSING OFFICER AFTER THE JUDGMENT OF THE AP EX COURT IN EXIDE INDUSTRIES LTD IN CASE THE APEX COURT AFFIRM THE OR DER OF THE CALCUTTA HIGH COURT. IF SUCH AN APPLICATION IS MADE, THE AS SESSING OFFICER SHALL CONSIDER THE SAME ON MERIT AND DISPOSE OF THE SAME IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT. 84. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEPRECI ATION ON THE COST OF IPL FRANCHISE RIGHTS. 85. THE ASSESSING OFFICER RESTRICTED THE DEPRECIATION O N THE AMOUNT PAID BY THE ASSESSEE. ADMITTEDLY, THE TOTA L COST OF THE IPL FRANCHISE RIGHTS IS ` 364 CRORES. THEREFORE, THE ASSESSEE IS ENTITLED ITA NO. 1343 ETC :- 46 -: FOR DEPRECIATION ON THE TOTAL COST OF THE ASSET. T HE DEPRECIATION ALLOWED IN THE EARLIER YEARS HAS TO BE REDUCED AND FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE IS ENTITLED FOR DEPRECI ATION ON THE WRITTEN DOWN VALUE OF THE IPL FRANCHISE RIGHTS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER I S NOT JUSTIFIED IN RESTRICTING THE CLAIM OF DEPRECIATION ON THE AMOUNT PAID BY THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE LOWER AUT HORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPR ECIATION ON THE WRITTEN DOWN VALUE AFTER TAKING THE COST OF FRANCHI SE RIGHTS AT ` 364 CRORES. 86. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF ` 63,75,000/- PAID TO DR. K. VENKATESAN. 87. SHRI R. VIJAYARAGAVAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID ` 63,75,000/- TO DR.K.VENKATESAN FOR CONDUCTING CERTAIN RITUALS IN THE BUSINESS PREMISES OF THE ASSESSEE. WE FIND THAT AN IDENTICAL ISSUE WAS CONSIDERED FOR ASSESSMENT YEAR 2010-11 IN RESPECT OF THE PAYMENT MADE TO THE VERY SAME DR.K.VENKATESAN TO THE EXTENT OF ` 75 LAKHS. SINCE THE ASSESSEE HAS ALSO PAID A SUM OF ` 2,50,00,000/- TO M/S RISHIVIDYA CONSULTANTS PVT. LTD., THE PAYMENT OF ANOTHER SUM OF ` 63,75,000/- FOR THE VERY SAME SERVICES MAY NOT BE JUSTIFIED. THEREFORE, THIS TR IBUNAL DO NOT FIND ANY ITA NO. 1343 ETC :- 47 -: REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY. ACCORDINGLY, THE DISALLOWANCE OF ` 63,75,000/- IS CONFIRMED. 88. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF ` 2,50,00,000/- SAID TO BE PAID TO M/S RISHIVIDYA CON SULTANTS PVT. LTD. 89. ACCORDING TO THE LD. COUNSEL, M/ RISHIVIDYA CONSULT ANTS PVT. LTD PROVIDED VASTU SERVICE AND SUGGESTED THE RITUAL S AND POOJAS TO BE PERFORMED IN THE PREMISES OF THE ASSESSEE. 90. WE HEARD SHRI S. BHARATH, LD. DR ALSO. 91. FOR THE ASSESSMENT YEAR 2009-10, AN IDENTICAL ISSUE CAME BEFORE THIS TRIBUNAL. THIS TRIBUNAL ALLOWED THE CL AIM OF THE ASSESSEE TO THE EXTENT OF ` 50,00,000/-. HOWEVER, FOR THE ASSESSMENT YEAR 2010-11, THE ASSESSEE HAS PAID ANOTHER SUM OF ` 2,50,00,000/-. THIS TRIBUNAL FOUND THAT SUCH A HUGE AMOUNT WAS PAID FOR THE EARLIER ASSESSMENT YEAR ALSO, THEREFORE, THERE IS NO REASON FOR MAKING PAYMENT OF SUCH A HUGE AMOUNT FOR THE SUBSEQUENT AS SESSMENT YEAR. IN THE ABSENCE OF ANY SPECIAL REASON FOR MAKING SUC H PAYMENT YEAR AFTER YEAR, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAM E IS CONFIRMED. ITA NO. 1343 ETC :- 48 -: 92. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF EXPEND ITURE ATTRIBUTABLE TO EARNING OF EXEMPTED INCOME WHILE CO MPUTING BOOK PROFIT U/S 115JB OF THE ACT. 93. WE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE L D. DR ALSO. 94. THIS TRIBUNAL CONFIRMED THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER U/S 14A @ 0.5% OF THE AVERAGE VA LUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOM E. THEREFORE, THE DISALLOWANCE MADE U/S 14A HAS TO BE NECESSARILY AD DED TO THE INCOME OF THE ASSESSEE WHILE COMPUTING THE BOOK PROFIT U /S 115JB OF THE ACT. THE ASSESSING OFFICER HAS TO MODIFY HIS ORDER AND T HE ADDITION SHALL BE RESTRICTED TO 0.5% OF THE AVERAGE VALUE OF INVESTME NT, INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOME. WITH TH E ABOVE OBSERVATION, THE ORDER OF THE LOWER AUTHORITY IS CO NFIRMED. 95. THE NEXT ISSUE IS ADDITION OF PROVISION FOR LEAVE E NCASHMENT TO THE EXTENT OF ` 298.80 LAKHS WHILE COMPUTING BOOK PROFIT U/S 115J B OF THE ACT. 96. AS ALREADY DISCUSSED IN THE EARLIER PART OF THIS OR DER, SEC. 43B(F) OF THE ACT WAS DECLARED AS UNCONSTITUTIONAL BY THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA). HOWEVER, THE APEX ITA NO. 1343 ETC :- 49 -: COURT STAYED THE OPERATION OF THE JUDGMENT OF THE C ALCUTTA HIGH COURT. THEREFORE, AS ON TO-DAY, THE MATTER IS PENDING BEFO RE THE APEX COURT. HENCE, THE PROVISION MADE FOR LEAVE ENCASHMENT HAS TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE BOOK PRODUCT U/S 115JB OF THE ACT. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRME D. 97. IN THE RESULT, THE APPEAL OF THE ASSESSEE I.T.A.NO.161/MDS/2015 IS PARTLY ALLOWED. 98. COMING TO REVENUES APPEAL I.T.A.NO.239/MDS/2015, T HE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLOWANC E OF NOTIONAL INTEREST. 99. AS DISCUSSED IN THE EARLIER PART OF THIS ORDER, THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEA RS 2003-04 AND 2004-05. THE ONLY CONTENTION OF THE LD. DR IS THAT THE DEPARTMENTS APPEAL IS PENDING BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRIBUNAL. ADMITTEDLY, THE ASSESSEE MADE INVESTMEN T IN THE SUBSIDIARY COMPANIES, THEREFORE, THERE IS NO QUESTION OF ANY D ISALLOWANCE OF INTEREST ON NOTIONAL BASIS. THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT MERE PENDENCY OF APPEAL BEFORE THE HIGH COURT IS NOT A REASON TO TAKE A DIFFERENT VIEW WHEN THE FACTS ARE IDENTICAL TO THAT OF THE ASSESSMENT YEARS 2003-04 AND 2004-05. THEREFORE, T HIS TRIBUNAL DO ITA NO. 1343 ETC :- 50 -: NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 100. THE NEXT ISSUE FOR CONSIDERATION IS WITH REGARD TO DEPRECIATION ON IPL FRANCHISE RIGHTS. 101. AS DISCUSSED EARLIER, THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE COST OF IPL FRANCHISE RIGHTS IRRESPECTIVE OF THE PAYMENT MADE DURING THE YEAR UNDER CONSIDERATION. THEREFORE, TH E ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE IPL FRANCHISE RIGHTS. IN OTHER WORDS, THE COST OF THE ASSET SHAL L BE TAKEN AT ` 364 CRORES AND DEPRECIATION WHICH WAS ALLOWED IN THE EA RLIER YEAR SHALL BE REDUCED TO ARRIVE AT THE WRITTEN DOWN VALUE. ACCOR DINGLY, THE ORDER OF THE CIT(A) IS MODIFIED. 102. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF ADVERTISEMENT CHARGES PAID TO M/S KALAIGNAR TV PVT. LTD. 103. SHRI S. BHARATH, LD. DR SUBMITTED THAT THE ASSES SEE ENTERED INTO AGREEMENT WITH M/S KALAIGNAR TV PVT. L TD. ON 12.1.2011 FOR TELECAST OF ITS ADVERTISEMENT. THE ASSESSEE C LAIMED THAT A SUM OF ` 60 CRORES WAS PAID IN TWO INSTALLMENTS OF ` 30 CRORES EACH ON 19.1.2011 AND 20.1.2011. THE ASSESSEE HAS CLAIMED PROPORTIONATE AMOUNT OF ` 1,59,38,000/- AS EXPENSES DURING THE YEAR UNDER ITA NO. 1343 ETC :- 51 -: CONSIDERATION. ACCORDING TO THE LD. DR, AS PER THE AGREEMENT, THE ADVERTISEMENT WAS NOT ADVERTISED IN THE TV CHANNEL. THERE WAS A WIDE VARIATION BETWEEN THE TELECAST MADE BY M/S KAL AIGNAR TV PVT. LTD. AND THE SCHEDULE GIVEN IN THE AGREEMENT. THE LD. DR FURTHER POINTED OUT THAT THE CONTRACT WAS FOR FIVE YEARS. THE ASSESSEE HAS PAID THE AMOUNT IN ADVANCE FOR THE ENTIRE FIVE YEAR S IN ADVANCE. THEREFORE, THERE IS NO JUSTIFICATION OF COST EFFECT IVENESS IN PAYING THE MONEY IN ADVANCE. THE ASSESSEE HAS NOT MADE ANY M ARKETING STUDY BEFORE ENTERING INTO THE AGREEMENT. THE ASSESSEE HAS CHOSEN M/S KALAIGNAR TV PVT. LTD. WHEN OTHER CHANNELS ARE AVAI LABLE IN THE STATE. IN THE ABSENCE OF ANY MARKET STUDY TO PREFER M/S KA LAIGNAR TV PVT. LTD. TO ADVERTISE ITS PRODUCT, ACCORDING TO THE LD. DR, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE AS SESSEE. THE LD. DR FURTHER POINTED OUT THAT THE PAYMENT WAS MADE FROM CASH CREDIT ACCOUNT OF THE ASSESSEE. THEREFORE, ACCORDING TO THE LD. DR, THE CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF TH E ASSESSEE. 104. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSI DERATION THE ASSESSING OFFICER DISALLOWED ADVERTISEMENT EXPENSES OF ` 1,59,38,000/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S KALAIGNAR TV PVT. LTD. F OR ADVERTISING ITS PRODUCTS IN THE TELEVISION. TOTAL CONSIDERATION WA S ` 60 CRORES AS PER ITA NO. 1343 ETC :- 52 -: THE AGREEMENT AND THE ENTIRE AMOUNT OF ` 60 CRORES WAS TO BE PAID IN ADVANCE. ACCORDINGLY, THE ASSESSEE-COMPANY, IN FAC T, PAID ` 30 CRORES EACH ON 19.1.2011 AND 20.1.2011 AND DEBITED THE SAM E TO THE PROFIT & LOSS ACCOUNT. HOWEVER, WHILE COMPUTING THE TAXABLE INCOME, THE ASSESSEE CLAIMED ONLY ` 1,59,38,000/- OUT OF ` 60 CRORES PAID, BEING THE PROPORTIONATE EXPENDITURE FOR THE YEAR UNDER CO NSIDERATION. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, THE ENTIRE CLAI M OF ADVERTISEMENT EXPENSES PAID TO M/S KALAIGNAR TV PVT. LTD. IS NOT A GENUINE TRANSACTION. ACCORDING TO THE LD. COUNSEL, THE AS SESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF CEMENT IN V ARIOUS BRAND NAMES. FOR MARKETING VARIOUS BRANDS OF CEMENT NEED S SUBSTANTIAL ADVERTISEMENT IN THE COUNTRY THROUGH ELECTRONIC MED IA. THEREFORE, THE ASSESSEE DECIDED TO ADVERTISE ITS PRODUCT THROUGH M/S KALAIGNAR TV PVT. LTD. HENCE, THE AMOUNT CLAIMED BY THE ASSESSE E HAS TO BE ALLOWED. 105. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND M/S KALAIGNA R TV PVT. LTD. IT IS AN ELECTRONIC ERA AND ADVERTISEMENT HAS TO BE MA DE THROUGH ELECTRONIC MEDIA. EVEN THOUGH CONVENTIONAL METHOD OF ADVERTISING IS AVAILABLE IN THE COUNTRY, THE EFFECTIVE METHOD TO R EACH PEOPLE IS TO ITA NO. 1343 ETC :- 53 -: MAKE ADVERTISEMENT IN THE TV. THE REVENUE IS OBJEC TING IN CHOOSING M/S KALAIGNAR TV PVT. LTD. WHEN OTHER CHANNELS ARE AVAILABLE. IT IS NOT FOR THE ASSESSING OFFICER TO SUGGEST THE TELEVISION CHANNEL THROUGH WHICH THE ASSESSEE HAS TO ADVERTISE ITS PRODUCT. THE ASSESSEE BEING A BUSINESSMAN KNOWS VERY WELL IN WHICH MANNER HE HA S TO ADVERTISE ITS PRODUCT TO EARN MAXIMUM PROFIT. WHEN THE ASSE SSEE DECIDED TO MAKE ADVERTISEMENT THROUGH M/S KALAIGNAR TV PVT. LT D. THE ASSESSING OFFICER CANNOT DOUBT THE GENUINENESS OF THE DECISIO N TAKEN BY THE ASSESSEE FOR CHOOSING M/S KALAIGNAR TV PVT. LTD. I T IS OPEN TO THE ASSESSEE TO SELECT ANY CHANNEL INCLUDING M/S KALAI GNAR TV PVT. LTD. ADMITTEDLY, THE ASSESSEE HAS PAID ` 60 CRORES IN ADVANCE FOR MAKING ADVERTISEMENT FOR FIVE YEARS. THE PAYMENT WAS IN F ACT MADE ON TWO DATES OF ` 30 CRORES EACH. THE ASSESSEE IS NOT CLAIMING THE ENTIRE ` 60 CRORES AS DEDUCTION. THE ASSESSEE IS ONLY CLAI MING PROPORTIONATE AMOUNT OF ` 1,59,38,000/-. THE NEXT OBJECTION OF THE ASSESSIN G OFFICER IS THAT THERE WAS VARIATION IN TELECASTING THE ADVERTISEMENT. IT IS FOR THE ASSESSEE AND THE M/S KALAIGNAR TV PVT. LTD. TO DECIDE THE TIME SCHEDULE FOR THE ADVERTISEMENT. THE ASSESSING OFFICER CANNOT SUGGEST THE ASSESSEE OR M/S KALAIGNAR TV PVT. LTD. WHEN TO TELECAST THE ASSESSEES ADVERTISEMENT IN THEIR CHANNEL. W HEN THE ASSESSEE AND M/S KALAIGNAR TV PVT. LTD. DECIDED TO TELECAST THE ADVERTISEMENT IN A PARTICULAR TIME, THE ASSESSING OFFICER CANNOT DOU BT THE GENUINENESS ITA NO. 1343 ETC :- 54 -: OF THE TRANSACTION. THE FACT REMAINS THAT THERE WA S A TELECAST OF ADVERTISEMENT IN RESPECT OF THE PRODUCT MANUFACTURE D BY THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEE HAS PAID ` 60 CRORES BEING THE COST OF ADVERTISEMENT FOR FIVE YEA RS AND THE ASSESSEE IS CLAIMING PROPORTIONATE COST FOR THE YEAR UNDER C ONSIDERATION. THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 106. IN THE RESULT, THE REVENUES APPEAL I.T.A.NO. 239/M DS/2015 IS DISMISSED. 107. NOW, COMING TO ASSESSMENT YEAR 2007-08, THE ASSESS EE FILED APPEAL I.T.A.NO.925/MDS/2012 AGAINST THE ORDE R OF THE ADMINISTRATIVE COMMISSIONER PASSED U/S 263 OF THE ACT. 108. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE-COMPANY CONVERTED OCDS/ WARRANTS INTO SHARES AND THE PREMIUM ON THE ISSUE WAS CREDITED TO SECURITIES PREMIUM ACCOUNT TO THE EXTENT OF ` 10952.36 LAKHS AND THE PREMIUM PAYABLE ON THE CONVERTED DEBENTURES TO THE EXTENT O F ` 5901.08 LAKHS WAS DEBITED TO THE SAME ACCOUNT. THIS WAS TREATED AS RELEASE OF RESERVE AND CLAIMED AS DEDUCTION. THE ASSESSING OF FICER ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE CIT FOUND THA T THE ORDER OF THE ITA NO. 1343 ETC :- 55 -: ASSESSING OFFICER ALLOWING THE DEDUCTION TO THE EXT ENT OF ` 59,01,08,369/- IS ERRONEOUS AND IT HAS TO BE WITHDR AWN. SIMILARLY, A SUM OF ` 50,66,58,000/- WAS CLAIMED AS DEDUCTION TOWARDS EM PLOYEES BENEFITS SUPERANNUATION FUND AND LEAVE ENCASHMENT A S RELEASE OF RESERVE WHICH WAS DEBITED TO RESERVES ACCOUNT. THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE C IT FOUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE HAS ALSO CL AIMED UNABSORBED LOSS OF ` 1,53,16,83,957/- AS DEDUCTION WHILE COMPUTING BOOK PROFIT WHICH INCLUDES THE BOOK LOSS OF THE AMALGAMATED COM PANY OF ` 40,55,32,878/-. THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER THE CIT FOUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. THE CIT DIRECTED THE ASSESSING OFFICER TO EXAMINE A LL THE FACTS AND THEREAFTER TO REFRAME THE ASSESSMENT. 109. ON A QUERY FROM THE BENCH WHETHER THE ASSESSING OFF ICER HAS DISCUSSED ALL THE THREE ISSUES IN THE ASSESSMEN T ORDER, THE LD. COUNSEL VERY FAIRLY SUBMITTED THAT THERE IS NO DISC USSION IN THE ASSESSMENT ORDER ABOUT THESE THREE ISSUES RAISED BY THE CIT. HOWEVER, THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS AND ALLOWED THE CLAIM OF THE ASSESSEE , THEREFORE, THE CIT CANNOT TAKE A DIFFERENT VIEW WHICH AMOUNTS TO CHANGE OF OPINION . ITA NO. 1343 ETC :- 56 -: 110. ON THE CONTRARY, SHRI S. BHARATH, LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY BEFORE A LLOWING THE CLAIM OF THE ASSESSEE. THERE IS NO DISCUSSION IN THE AS SESSMENT ORDER ALSO. ACCORDING TO THE LD. DR, SINCE THE ASSESSING OFFICE R HAS NOT PASSED A SPEAKING ORDER WITH REGARD TO THE ISSUES RAISED BY THE CIT, THE ASSESSING OFFICER HAS TO RE-EXAMINE THE MATTER AS D IRECTED THE CIT. 111. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED THE LD. COUNSEL, THE CIT REVISED THE ORDER OF THE A SSESSING OFFICER ON THREE ISSUES. THE FIRST ISSUE IS WITH REGARD TO CO NVERSION OF OCDS/WARRANTS, SECOND ISSUE IS WITH REGARD TO DEDUC TION TOWARDS PAYMENT OF EMPLOYEES BENEFITS SUPERANNUATION FUND A ND LEAVE ENCASHMENT AND THE THIRD ISSUE IS UNABSORBED LOSS O F ` 1,53,16,83,957/-. AS RIGHTLY SUBMITTED BY THE LD. DR, THESE ISSUES ARE NOT DISCUSSED IN THE ASSESSMENT ORDER AND THE ASSES SING OFFICER HAS NOT MADE ANY PROPER ENQUIRY BEFORE ALLOWING THE CLA IM OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER BEING A JUDICIAL PROCEEDING, THE REASON FOR THE CONCLUSION REACHED T HEREIN SHALL BE REFLECTED IN THE ASSESSMENT ORDER ITSELF. THE ASSE SSING OFFICER IS EXPECTED TO DISCUSS EACH AND EVERY ISSUE ARISES FOR CONSIDERATION AND RECORD HIS OWN REASONING IN THE ASSESSMENT ORDER SO AS TO ENABLE THE ITA NO. 1343 ETC :- 57 -: APPELLATE/REVISIONAL AUTHORITY TO APPRECIATE THE RE ASON ON WHICH THE CLAIM WAS ALLOWED. SINCE NO SUCH EXERCISE WAS DONE BY THE ASSESSING OFFICER, THE CIT HAS RIGHTLY EXERCISED HIS POWER U /S 263 OF THE ACT. HENCE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE CIT. ACCORDINGLY, THE SAME IS CONFIRMED. 112. IN THE RESULT, THE ASSESSEES APPEAL I.T.A.NO.925/ MDS/2012 IS DISMISSED. 113. COMING TO I.T.A.NO.159/MDS/2015, THE ASSESSEE HA S FILED THIS APPEAL AGAINST THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER SUBSEQUENT TO THE REVISIONAL ORDER U/S 263 OF THE ACT. 114. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH RE GARD TO DISALLOWANCE OF LEASE RENTAL. 115. THE ASSESSING OFFICER DISALLOWED A SUM OF ` 1,16,87,205/- BEING THE LEASE RENTAL PAID FOR ACQUISITION OF CAPI TAL ASSET ON RIGHT TO USE BASIS. ACCORDING TO THE LD. COUNSEL, IT IS ONL Y A FINANCE LEASE, THEREFORE, TAX NEED NOT BE DEDUCTED. THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT WHETHER IT IS A FINANCE LEA SE OR OPERATIONAL LEASE, THE ASSESSEE IS EXPECTED TO DEDUCT TAX. SI NCE THE ASSET WAS ACQUIRED FOR RIGHT TO USE BASIS, HENCE, THE PAYMENT HAS TO BE CONSTRUED IN THE NATURE OF RENT, THEREFORE, THE AS SESSEE IS VERY MUCH ITA NO. 1343 ETC :- 58 -: LIABLE TO DEDUCT TAX U/S 194I OF THE ACT. THIS TR IBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 116. IN THE RESULT, THE ASSESSEES APPEAL I.T.A.NO. 159 /MDS/2015 IS DISMISSED. 117. COMING TO REVENUES APPEAL I.T.A.NO.237/MDS/2015, T HE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO REDUCING THE AMOUNT FROM THE NET PROFITS SHOWN IN THE PROFIT & L OSS ACCOUNT FOR THE PURPOSE OF COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. 118. ACCORDING TO THE LD. DR, THE PRINCIPLE BEHIND THE E XCLUSION IS THAT WHAT WAS ALREADY TAXED SHOULD NOT BE TAXED AGA IN. IN THIS CASE, THE AMOUNT SHOWN IN THE PROFIT & LOSS ACCOUNT WAS N OT SUBJECTED TO TAX AT ALL, THEREFORE, IT CANNOT BE REDUCED FROM TH E BOOK PROFIT. 119. ON THE CONTRARY, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS CREATED ` 50.66 CRORES AS PROVISION IN THE BOOKS OF ACCOUNT AND DEBITED TO PROFIT & LOSS ACCOUNT IN ALL THE RELEVAN T ASSESSMENT YEAR. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE I TSELF HAD ADDED BACK THESE PROVISIONS IN THE COMPUTATION STATEMENT. HOWEVER, IN TERMS OF ACCOUNTING STANDARD 15 EMPLOYEE BENEFITS I SSUED AND MADE MANDATORY AS PER THE PROVISIONS OF SEC. 211(3C) OF THE COMPANIES ACT, ITA NO. 1343 ETC :- 59 -: 1956, EVERY COMPANY HAS TO PROVIDE FOR ITS OBLIGATI ONS TOWARDS ITS EMPLOYEES RETIREMENT PLAN. THE TOTAL EMPLOYEE BEN EFITS DURING THE YEAR UNDER CONSIDERATION IS ` 50.66 CRORES. AS PER THE ACCOUNTING STANDARD, THE ASSESSEE WITHDREW THE SAME FROM THE RESERVES AND REDUCED THE SAME FROM THE RESERVES AND DETAILS OF S UCH WITHDRAWAL WERE GIVEN IN SCHEDULE 2 OF THE BALANCE SHEET. AFT ER WITHDRAWING THE AMOUNT, THE ASSESSEE INSTEAD OF DEBITING THE SAME IN THE PROFIT & LOSS ACCOUNT HAS SET OFF THE SAME AGAINST THE EMPLOYEE BENEFITS OF THE CURRENT FINANCIAL YEAR AND ONLY THE NET AMOUNT WAS CARRIED TO THE PROFIT & LOSS ACCOUNT. THE OUTSTANDING LIABILITY UNDER TH E HEAD EXPENSES HAS BEEN INCREASED BY A CORRESPONDING AMOUNT OF ` 50.66 CRORES. THEREFORE, THE CIT(A) FOUND THAT THE ASSESSEE EFFE CTIVELY DEBITED THE ABOVE EMPLOYEES BENEFIT OF ` 50.66 CRORES IN THE PROFIT & LOSS ACCOUNT BY SETTING OFF OF THE EMPLOYEE BENEFITS OF THE CUR RENT YEAR. THIS WAY OF PRESENTATION OF THE ACCOUNT IS ALSO PERMISSIBLE METHOD. THE CIT(A) FURTHER FOUND THAT THE OBSERVATION OF THE ASSESSING OFFICER THAT THE AMOUNT WAS NOT CREDITED TO THE PROFIT & LOSS ACCOUN T IS NOT CORRECT. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE AM OUNT WAS WITHDRAWN FROM THE RESERVES AS TRANSITIONAL ARRANGE MENT BEING THE FIRST YEAR OF THE NEW ACCOUNTING STANDARD AND THE N ET AMOUNT WAS CARRIED TO THE PROFIT & LOSS ACCOUNT, THE CIT(A) FO UND THAT THE CLAIM OF ITA NO. 1343 ETC :- 60 -: THE ASSESSEE TO REDUCE ` 50.66CRORES WHILE COMPUTING THE BOOK PROFIT IS AS PER LAW. 120. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THE ASSESSEE-COMPANY WITHDRAWN A SUM OF ` 50.66 CRORES BY REDUCING THE SAME FROM THE RESERVE AND DETAILS OF SUCH WITHDRAW AL ARE AVAILABLE AT SCHEDULE 2 OF THE BALANCE SHEET. AFTER WITHDRAWAL OF THE AMOUNT OF ` 50.66 CRORES, THE SAME WAS SET OFF AGAINST THE EMPL OYEE BENEFITS OF THE CURRENT FINANCIAL YEAR AND THE NET AMOUNT WAS C ARRIED TO THE PROFIT & LOSS ACCOUNT. THE DETAILS OF THE OUTSTANDING LIA BILITIES ARE AVAILABLE AT SCHEDULE 8 OF THE BALANCE SHEET. THEREFORE, AS RIGHTLY FOUND BY THE CIT(A) THE ASSESSEE-COMPANY EFFECTIVELY DEBITED THE ABOVE EMPLOYEES BENEFIT TO THE EXTENT OF ` 50.6 CRORES IN THE PROFIT & LOSS ACCOUNT BY SETTING OFF AGAINST THE EMPLOYEE BENEFITS OF THE CU RRENT YEAR. THEREFORE, THE CIT(A) HAS RIGHTLY DIRECTED THE ASSE SSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE ABOUT WITHDRAWAL OF THE AMOUNT OF ` 50.66 CRORES FROM THE RESERVES AND SETTING OFF THE SAME AGAINST THE EMPLOYEE BENEFITS OF THE YEAR UNDER CONSIDERATION A ND DEBITING ONLY THE NET AMOUNT IN THE PROFIT & LOSS ACCOUNT. THERE FORE, THE DIRECTION OF THE CIT(A) TO ALLOW DEDUCTION OF ` 50.66 CRORES WHILE COMPUTING BOOK PROFIT U/S 115JB CANNOT BE FOUND FAULTED WITH . THEREFORE, THIS ITA NO. 1343 ETC :- 61 -: TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A). ACCORDINGLY THE SAME IS CONFIRMED. 121. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE MADE ON BROUGHT FORWARDED LOSSES CONSEQUENT TO AMA LGAMATION. 122. SHRI S.BHARATH, LD. DR SUBMITTED THAT THE ASSESSEE CLAIMED BROUGHT FORWARD LOSSES AND DEPRECIATION PERTAINING TO AMALGAMATING COMPANY M/S VISAKA CEMENT INDUSTRIES LTD. WHILE CO MPUTING BOOK PROFIT U/S 115JB OF THE ACT. THE ASSESSING OFFIC ER FOUND THAT THERE WERE NO REAL LOSSES IN THE AMALGAMATING COMPANY, TH EREFORE, HE DISALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 40.55 CRORES. ACCORDING TO THE LD. DR, FOR THE PURPOSE OF COMPUTI NG BOOK PROFIT, THE PROFIT AS REPORTED BY THE COMPANY UNDER THE COMPANI ES ACT HAS TO BE TAKEN INTO CONSIDERATION. ONCE THE BOOK PROFIT WAS COMPUTED AS PER THE PROVISIONS OF THE COMPANIES ACT, THE SAME CANNO T BE TAMPERED WITH. ACCORDING TO THE LD. DR, THE ASSESSEE HAS C HOSEN TO IGNORE THE LOSSES OF THE AMALGAMATING COMPANY WHILE PREPARING THE BOOKS OF ACCOUNT WHICH WAS REPORTED TO THE STATUTORY AUTHORI TIES AND THE SHAREHOLDERS IN ORDER TO SHOW A HEALTHY BALANCE SHE ET AND ON THE OTHER HAND, THE ASSESSEE IS CLAIMING THE LOSSES OF THE AMALGAMATING COMPANY WHICH WERE NEUTRALIZED BY WAY OF REVALUATIO N ARE TO BE SET OFF. ACCORDING TO THE LD. DR, THERE CANNOT BE TWO SET OF BOOKS OF ITA NO. 1343 ETC :- 62 -: ACCOUNT. THEREFORE, THE PROFIT AS REPORTED TO THE STATUTORY AUTHORITIES AND AS PROJECTED TO THE SHAREHOLDERS HAS TO BE TAKE N INTO CONSIDERATION. 123. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L SUBMITTED THAT ADMITTEDLY, THERE WAS AMALGAMATION A ND THE BROUGHT FORWARD UNABSORBED LOSSES AND DEPRECIATION TO THE E XTENT OF ` 40.55 CRORES PERTAINING TO M/S VISAKA CEMENT INDUSTRIES L TD WAS TAKEN TO THE BOOKS OF ACCOUNT OF THE ASSESSEE. ONLY DURING THE COURSE OF AMALGAMATION, CERTAIN LIABILITIES AND ASSETS HAVE B EEN INCORPORATED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WHICH IS PERM ISSIBLE AS PER ACCOUNTING STANDARD-14 U/S 211(3C) OF THE COMPANIE S ACT. THIS PROCESS OF ACCOUNTING RESULTED IN DEBIT BALANCE IN THE PROFIT & LOSS ACCOUNT OF THE AMALGAMATING COMPANY. HOWEVER, THE SAME WAS NOT REFLECTED IN THE COMBINED ENTITY. THE ASSESSEE HA S CLAIMED THAT BROUGHT FORWARD LOSSES AND DEPRECIATION OF ` 40.55 CRORES PERTAINING TO M/S VISAKA CEMENT INDUSTRIES LTD HAS TO BE ALLOWED IN THE HANDS OF THE ASSESSEE. REFERRING TO THE ORDER OF THE CIT(A ), THE LD. COUNSEL SUBMITTED THAT THE AMOUNTS CARRIED FORWARD AS UNABS ORBED LOSSES AND DEPRECIATION WILL NOT GET REDUCED OR NEUTRALIZED ON ACCOUNT OF REVALUATION, THEREFORE, THE CIT(A) HAS RIGHTLY ALLO WED THE CLAIM OF THE ASSESSEE. ITA NO. 1343 ETC :- 63 -: 124. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT M/S VISAKA CEMENT INDUSTRIES LTD. AMALGAMATED WITH THE ASSESSEE- COMPANY. ONCE M/S VISAKA CEMENT INDUSTRIES LTD AMAL GAMATED WITH THE ASSESSEE-COMPANY, THE ENTIRE ASSETS AND LIABILI TIES INCLUDED THE UNABSORBED LOSSES AND DEPRECIATION HAS TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE BOOK PROFIT. AS RIGHTLY SUBMIT TED BY THE LD. COUNSEL FOR THE ASSESSEE, THE UNABSORBED LOSSES AND DEPRECIATION TO THE EXTENT OF ` 40.55 CRORES IN THE HANDS OF M/S VISAKA CEMENT INDUSTRIES LTD. BEFORE AMALGAMATION WILL NOT GET RE DUCED OR NEUTRALIZED ON ACCOUNT OF REVALUATION, THEREFORE, THE ASSETS AN D LIABILITIES AT THE FAIR VALUE DURING THE COURSE OF AMALGAMATION HAS TO BE CONSIDERED IN THE HANDS OF AMALGAMATED COMPANY. IN VIEW OF THE A BOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE BROU GHT FORWARD LOSSES AND DEPRECIATION TO THE EXTENT OF ` 40.55 CRORES HAS TO BE ALLOWED WHILE COMPUTING THE BOOK PROFIT IN THE HANDS OF THE ASSESSEE- COMPANY. ACCORDINGLY, THIS TRIBUNAL DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE CIT(A), HENCE THE SAME IS CONFIRMED. 125. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REG ARD TO MINE DEVELOPMENT EXPENSES. ITA NO. 1343 ETC :- 64 -: 126. THE ASSESSEE CLAIMED ` 20,80,753/- TOWARDS MINE DEVELOPMENT EXPENSES AND CLAIMED THE SAME AS DEFERR ED REVENUE EXPENDITURE. ACCORDING TO THE LD. DR, INCOME-TAX D OES NOT RECOGNIZE ANY DEFERRED REVENUE EXPENDITURE. IN FACT, THERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE UNDER THE SCHEME OF TH E INCOME-TAX ACT, 1961, THEREFORE, THE ASSESSING OFFICER HAS RIG HTLY MADE THE ADDITION OF ` 20,80,753/-. 127. ON THE CONTRARY, SHRI R. VIJAYARAGHAVAN, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD IN FACT I NCURRED AN EXPENDITURE OF ` 20,80,753/- WHICH WAS BASICALLY A REVENUE EXPENDITURE. HOWEVER, THE BENEFITS OF SUCH EXPENDI TURE ARISE IN THE SUBSEQUENT YEARS, THEREFORE, THE COMPANY CONSIDERED THE SAME AS DEFERRED REVENUE EXPENDITURE AND ONLY 1/5 TH OF THE EXPENDITURE WAS CLAIMED IN THE YEAR UNDER CONSIDERATION. THE BALANC E EXPENDITURE WOULD BE CLAIMED FOLLOWING THE NEXT FOUR YEARS. SI NCE THE ASSESSEE HAS CLAIMED THE EXPENDITURE PROPORTIONATELY, ACCORD ING TO THE LD. COUNSEL THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 128. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE HAS INCURRED EXPENDITURE OF ` 20,80,753/- FOR MINE DEVELOPMENT. AS RIGHTLY OBSERVED BY THE CIT(A), ON CE THE ASSESSEE ITA NO. 1343 ETC :- 65 -: INCURRED THE EXPENDITURE, THE SAME HAS TO BE ALLOWE D IN THE YEAR IN WHICH THE EXPENDITURE WAS INCURRED. HOWEVER, WHEN THE EXPENSES WERE MADE AND THE BENEFITS OF SUCH EXPENSES WOULD B E SPREAD OVER TO FOLLOWING FOUR ASSESSMENT YEARS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NOTHING WRONG IN CLAIMING THE EXPENDITURE PROPORTIONATELY FOR ALL THE ASSESSMENT YEARS IN WHI CH THE BENEFITS WOULD ACCRUE TO THE ASSESSEE. THOUGH THERE IS NO REFERENCE IN THE INCOME-TAX ACT, 1961, THE ACCOUNTING PRINCIPLE RECO GNIZES SUCH CLAIM PROPORTIONATELY. THEREFORE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE ASSESSEE HAS RIGHTLY CLAIMED 1/5 TH OF THE EXPENDITURE DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT HAS TO BE ALLOWED IN THE NEXT FOUR YEARS IN EQUAL INSTALLMENT S. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRME D. 129. IN THE RESULT, THE APPEAL OF THE REVENUE I.T.A.NO. 237/MDS/2015 STANDS DISMISSED. 130. TO SUMMARIZE THE RESULT ALL THE APPEALS OF THE RE VENUE ARE DISMISSED. APPEALS OF THE ASSESSEE IN I.T.A.NOS.3 63 AND 1070/MDS/2012 AND 160 & 161/MDS/2015 ARE PARTLY AL LOWED WHEREAS I.T.A.NOS.925/MDS/2012 AND 159/MDS/2015 ARE DISMISS ED. ITA NO. 1343 ETC :- 66 -: ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 1 ST JANUARY, 2016 RD !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF