M/s H.P. Power Corporation Ltd, Shimla V. DCIT, Shimla

ITA 948/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4994 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-05-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 08-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Keywords: Business income; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.942 /CHD/2017 (ASSESSMENT YEAR : 2014-15) THE D.C.I.T., VS. M/S HP POWER CORPORATION LTD., CIRCLE, SHIMLA. HIMFED BHAWAN, TUTI KANDI, SHIMLA. PAN: AAABCH8615G & ITA NO.948 /CHD/2017 (ASSESSMENT YEAR : 2014-15) M/S HP POWER CORPORATION LTD., VS. THE D.C.I.T., HIMFED BHAWAN, TUTI KANDI, CIRCLE, SHIMLA. SHIMLA. PAN: AAABCH8615G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VISHAL MOHAN, ADV. DEPARTMENT BY : DR. GULSHAN RAJ, CIT DR. DATE OF HEARING : 07.08.2018 DATE OF PRONOUNCEMENT : 07.08.2018 ORDER PER ANNAPURNA GUPTA, AM : THE ABOVE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE, ARE AGAINST THE ORDER PASSED BY THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA DATED 31.3.2017 RELATING TO ASSESSMENT YEAR 2014-15. 2. BRIEF FACTS RELATING TO THE CASE ARE THAT THE A SSESSEE COMPANY, NAMELY HP. POWER CORPORATION LIMITED (H PPCL), AN UNDERTAKING OF GOVERNMENT OF HIMACHAL PRADESH WA S INCORPORATED IN DECEMBER, 2006 WITH A VIEW TO PLAN, PROMOTE AND ORGANIZE THE DEVELOPMENT OF ALL ASPECTS OF HYDR OELECTRIC POWER ON BEHALF OF HIMACHAL PRADESH STATE GOVERNMEN T 2 (GOHP) AND HIMACHAL PRADESH STATE ELECTRICITY BOARD (HPSEB) IN THE STATE OF HIMACHAL PRADESH. GOHP AND HPSEB HAVE A 60:40 EQUITY PARTICIPATION IN THE ASSESSEE C OMPANY. THE ASSESSEE COMPANY IS IMPLEMENTING NUMBER OF POWE R PROJECTS IN THE STATE OF HIMACHAL PRADESH. NONE OF THE POWER PROJECTS UNDERTAKEN BY THE ASSESSEE COMPANY HAD COMMENCED PRODUCTION UP TO THE ASSESSMENT YEAR UNDE R CONSIDERATION. DURING THE IMPUGNED ASSESSMENT YEA R THE ASSESSEE COMPANY HAD EARNED INTEREST ON TERM DEPO SITS, MADE OUT OF SURPLUS FUNDS, AT RS.28,11,05,883/-, W HICH IT TREATED AS ITS BUSINESS INCOME AND AFTER CLAIMING E XPENSES AGAINST THE SAME, RETURNED LOSS. THE ASSESSING OF FICER AFTER ELABORATE DISCUSSION AND RELYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS. CIT (1997) 227 ITR 172 (SC) AP EX COURT, HELD THE GROSS INTEREST EARNED AS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. FURTHER IN THE ABSENCE O F RELEVANT DETAILS/BILLS /VOUCHERS OF EXPENSES CLAIME D BY THE ASSESSEE, TO ASCERTAIN THE EXACT AMOUNT WHICH RELAT ED TO THE EARNING OF INCOME OR RELATED TO THE FUNCTIONING OF THE OFFICES, THE A.O. HELD THAT 10% OF THE TOTAL EXPENDITURE AT RS.530.09 LAC WAS TO BE ALLOWED AS 'REVENUE EXPENSES' AND THE BALANCE AMOUNT AT RS.4779.65 LAC WAS TO BE CAPITALIZED. HEN CE, AFTER ALLOWING A DEDUCTION OF 10% OF THE EXPENSES AT RS.5 30.09 LACS OUT OF THE GROSS INTEREST RECEIVED AT RS.2811. 06 LACS, THE NET INTEREST INCOME OF RS.22,80,96,883/- WAS AS SESSED IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER FURTHER BROUGHT TO TAX MISC. INCOME 3 EARNED BY THE ASSESSEE AMOUNTING TO RS.4,22,04,000/ - ,WHICH THE ASSESSEE HAD SET OFF AGAINST THE EXPENDI TURE INCURRED DURING CONSTRUCTION TO WIP, REJECTING THE CONTENTION OF THE ASSESSEE THAT IT RELATED TO DIFFE RENT UNITS. THE DETAILS OF THE MISCELLANEOUS INCOME AS REPRODUC ED IN THE ORDER OF THE CIT(A) IS UNDER: I. INCOME FROM TRANSIT CAMP RS.1.34 LAC II. H.R. COLLECTION RS.31.90 LAC III. INCOME FROM CONTRACTORS RS.366.41 AC IV. MISC. RECEIPTS RS.22.36 LAC TOTAL RS.422.04 LAC 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO FOUND THAT IN ASSESSMENT YEAR 2 010-11 THE TRIBUNAL HAD ADJUDICATED IDENTICAL ISSUE OF TAX ABILITY OF INTEREST EARNED ON FDRS IN THE CASE OF THE ASSESSE E. THE LD.CIT(A) FOUND THAT THE ITAT HAD HELD THAT THE IN TEREST EARNED ON INVESTMENTS MADE IN FDRS FROM FUNDS BO RROWED SPECIFICALLY FOR THE PROJECT & PARKED IN TEMPORARY INVESTMENT IN FDRS SINCE THERE WAS DELAY IN THE PROJECT ,SHOUL D NOT BE SUBJECTED TO TAX, FOLLOWING THE DECISION OF THE COO RDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BEAS VALLEY PO WER CORPORATION LTD. VS. ACIT IN ITA NO.857/CHD/2012 ,W HILE INTEREST OF BALANCE SURPLUS FUNDS SHOULD BE SUBJECT ED TO TAX. ACCORDINGLY, RELYING UPON THE DECISION OF THE TRIBU NAL, THE CIT(APPEALS), ON THE BASIS OF DETAILS RELATING TO T HE INTEREST INCOME EARNED FROM VARIOUS FUNDS SUBMITTED BY THE ASSESSEE, NOTED THAT OUT OF THE TOTAL INTEREST INCO ME EARNED DURING THE YEAR, RS.11,68,81,610/- WAS ATTRIBUTABLE TO INTEREST EARNED ON FUNDS BORROWED SPECIFICALLY FOR THE 4 PROJECTS. THE CIT(APPEALS) ACCORDINGLY DIRECTED THE TAXABLE INTEREST INCOME TO BE REDUCED BY THIS AMOUNT. THE CIT(APPEALS) FURTHER DIRECTED THAT THE FINANCE COST INCURRED BY THE ASSESSEE, TO THE EXTENT ALLOWED AS REVENUE E XPENSE BY THE ASSESSING OFFICER, I.E. 10% OF THE SAME AMOUNTI NG TO RS.25.8999LACS, TO BE REDUCED FROM THE INTEREST INC OME HELD NOT LIABLE TO TAX, AFTER VERIFICATION BY THE ASSESS ING OFFICER THAT IT RELATED TO THE BORROWED FUNDS. THE CIT(APPE ALS) FURTHER UPHELD THE ALLOWANCE OF 10% OF THE EXPENSE S CLAIMED BY THE ASSESSEE AS REVENUE ,TREATING THE BA LANCE AS CAPITAL IN NATURE, HOLDING THAT THE ASSESSING OFFI CER HAD BEEN MAGNANIMOUS IN DOING SO IN THE ABSENCE OF RELE VANT DETAILS FILED BY THE ASSESSEE IN THIS REGARD. THE C IT(APPEALS) ACCORDINGLY DIRECTED THAT THE SAME BE REDUCED FROM THE REMAINING INTEREST INCOME HELD TAXABLE BY HIM. AS R EGARDS THE ISSUE RELATING TO MISCELLANEOUS INCOME BROUGHT TO TAX BY THE ASSESSING OFFICER, THE LD.CIT(APPEALS) UPHELD T HE ORDER OF THE ASSESSING OFFICER. 4. AGGRIEVED BY THE ACTION OF THE LD.CIT(APPEALS) I N NOT SUBJECTING TO TAX THE INTEREST EARNED BY THE ASSESS EE TO THE EXTENT OF RS.11,68,81,610/-, AND IN DIRECTING THE A SSESSING OFFICER TO VERIFY AND THEREAFTER ALLOW FINANCE EX PENSES INCURRED FOR EARNING THE SAME TO THE EXTENT OF 10% OF THE SAME INCURRED, THE REVENUE HAS COME UP IN APPEAL BE FORE US RAISING FOLLOWING GROUNDS IN ITS APPEAL IN ITA NO.942/CHD/2017 : 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE INTEREST EARNED BY THE 5 ASSESSEE ON SURPLUS FUNDS OUT OF BORROWED FUNDS AMOUNTING TO RS.11,68,81,610/- COULD NOT BE TREATED AS INCOME OF THE ASSESSEE, IGNORING THE FACT THAT TH E ASSESSEE HAD NOT MADE ANY SUCH CLAIM IN THE ITR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO REDUCE THE INTERE ST INCOME EARNED ON BORROWED FUNDS, WHICH WAS NOT EVEN DISALLOWED BY THE A.O., WITHOUT APPRECIATING THE FACT THAT ADDITION OF RS.22,80,96,883/-WAS MADE BY DISALLOWING 'CAPITAL NATURE' EXPENSES CLAIMED AS 'REVENUE EXPENDITURE', WHICH WERE ALSO ALLOWED TO B E CAPITALIZED. 5. DURING THE COURSE OF HEARING BEFORE US THE LD. C OUNSEL FOR ASSESSEE AT THE OUTSET POINTED OUT THAT THE IS SUE OF TAXABILITY OF INTEREST INCOME EARNED BY THE ASSESSE E HAD ALSO BEEN ADJUDICATED BY THE ITAT IN THE CASE OF THE ASS ESSEE FOR SUBSEQUENT ASSESSMENT YEARS, I.E. A.Y. 2012-13 AND 2013- 14, FOLLOWING ITS DECISION IN ASSESSMENT YEAR 2010- 11, WHICH HAD BEEN FOLLOWED BY THE CIT(APPEALS) IN THE IMPUGN ED YEAR. COPY OF THE ORDER PASSED BY THE I.T.A.T. IN THE CAS E OF THE ASSESSEE RELATING TO ASSESSMENT YEARS 2012-13 AND 2 013-14 IN ITA NOS.940 & 941/CHD/2017 AND IN ITA NOS.859 & 860/CHD/2017 DATED 2.1.2018 WAS PLACED BEFORE US. T HE LD. COUNSEL FOR ASSESSEE, THEREFORE, STATED THAT THERE WAS NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) IN TREAT ING THE INTEREST INCOME OF 11.68 CRORES AS NOT TAXABLE IN V IEW OF THE CONSISTENT DECISION OF THE I.T.A.T. IN THE PRECEDIN G YEARS ,I.E A.Y. 2010-11 TO A.Y 2013-14. 6. THE LD. DR FAIRLY CONCEDED THAT THE ISSUE WAS CO VERED BY THE ORDER OF THE I.T.A.T. IN THE PRECEDING YEARS . 7. IN VIEW OF THE ABOVE, SINCE THE LD.CIT(APPEALS) HAS HELD THE INTEREST INCOME OF RS.11.68 CRORES AS NOT TAXAB LE 6 FOLLOWING THE DECISION OF THE I.T.A.T. IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11, WHICH HAS BEE N FOLLOWED BY THE I.T.A.T. IN ASSESSMENT YEARS 2012-1 3 AND 2013-14 ALSO ,AND NO DISTINGUISHING FACTS HAVING BE EN BROUGHT TO OUR NOTICE BY THE LD. DR, WE SEE NO REAS ON TO INTERFERE IN THE ORDER OF THE LD.CIT(APPEALS). THE INCOME SO EARNED BY THE ASSESSEE ON BORROWED FUNDS PARKED TEMPORARILY IN FDRS HAVE, THEREFORE, WE HOLD RIGHTL Y BEEN HELD BY THE CIT(APPEALS) TO BE NOT TAXABLE. THE GRO UND OF APPEAL NO.1 RAISED BY THE REVENUE IS, THEREFORE, DI SMISSED. 8. IN GROUND NO.2 THE GRIEVANCE OF THE REVENUE, IT WAS POINTED OUT, IS AGAINST THE DIRECTION OF THE CIT(AP PEALS) TO THE ASSESSING OFFICER TO REDUCE THE INTEREST INCO ME HELD NOT TAXABLE TO THE EXTENT OF RS. 11.68 CRORES BY THE FINANCE CHARGES INCURRED FOR EARNING THE SAME TO THE EXTENT HELD ALLOWABLE BY THE ASSESSING OFFICER, I.E. 10% OF THE FINANCE CHARGES INCURRED. 9. WE HAVE GONE THROUGH THE DIRECTION GIVEN BY THE CIT(APPEALS). THE LD.CIT(APPEALS) WE FIND HAS DIREC TED REDUCING THE INTEREST INCOME HELD NOT TAXABLE BY IT , WITH THE FINANCE EXPENSES INCURRED IF ANY IN RELATION TO THE SAME, TO THE EXTENT HELD ALLOWABLE BY THE ASSESSING OFFICER, I.E. 10%. THE LD.DR HAS NOT BEEN ABLE TO POINT OUT ANY INFIRM ITY IN THE SAID DIRECTION. WE THEREFORE SEE NO REASON TO I NTERFERE IN THE ORDER OF THE LD.CIT(A) IN THIS REGARD. GROUND O F APPEAL NO.2 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 10. THE APPEAL OF THE REVENUE IS, THEREFORE, DISMIS SED. 7 11. THE ASSESSEE IN ITS APPEAL IN ITA NO.948/CHD/2017 HAS AGITATED AGAINST THE ACTION OF THE LD. CIT(APPE ALS) IN TAXING THE REMAINING INCOME ON INVESTMENT IN FDRS W HICH WAS MADE OUT OF THE OWN OR INTEREST FREE FUNDS BY T HE ASSESSEE, IN ITS GROUND NO.1 WHICH READS AS UNDER: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE TREATING OF THE INTER EST EARNED ON FDR'S AS INCOME FROM OTHER SOURCES AND ALLOWING DEDUCTION ONLY TO THE TUNE OF RS.11,68.81.610/- IN RESPECT OF INTEREST PAID ON FUNDS OUT OF WHICH THE FDR'S YIELDING INTEREST HAD BEE N PURCHASED . FACT OF THE MATTER IS THAT THE INTERES T ON FDR'S IS NOT TAXABLE AT ALL UNDER THE HEAD INCOME FRO M OTHER SOURCES. 12. LD.COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THA T THE ISSUE WAS SQUARELY COVERED BY THE ORDER OF THE ITAT IN ASSESSMENT YEAR 2010-11 WHICH HAD BEEN FOLLOWED IN SUBSEQUENTLY FOLLOWED IN ASSESSMENT YEARS 2012-13 & 2013- 14 ALSO. IN VIEW OF THE ABOVE AND IN VIEW OF OUR FINDINGS O N THIS ISSUE IN REVENUES APPEAL, MADE ABOVE IN PARA 7 OF O UR ORDER UNDOUBTEDLY, THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE CASE O F THE ASSESSEE FOR ASSESSMENT YEARS 2010-11, 2011-12 AND 2012- 13. HENCE, THERE IS NO MERIT IN THE GROUND OF APPEA L NO.1 RAISED BY THE ASSESSEE BEFORE US AND THE SAME IS, T HEREFORE, DISMISSED. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UNDER: 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD COMMISSIONER OF INCOME TAX ( APPEALS) IS NOT JUSTIFIE D IN UPHOLDING THE ALLOWING OF EXPENDITURE ONLY TO THE T UNE OF 8 RS 5,30,09,000 AND UPHOLDING THE DISALLOWING THE REMAINING EXPENDITURE. 13. THE PLEA OF THE ASSESSEE IN THE PRESENT GROUND IS THAT THE CIT(APPEALS) HAD ERRED IN UPHOLDING THE EXPENDI TURE TO THE TUNE OF RS.5,30,09,000/-. THE ASSESSING OFFICER , WE FIND, HAD RESTRICTED THE CLAIM OF EXPENDITURE OF THE ASSE SSEE TO THE SAID AMOUNT, BEING 10% OF THE TOTAL CLAIMED, ON ACC OUNT OF ABSENCE OF RELEVANT DETAILS/VOUCHERS AND BILLS OF T HE SAME. THE CIT(APPEALS) HELD THE SAID ALLOWANCE TO BE MAGN ANIMOUS CONSIDERING THE FACT THAT NO DETAILS ETC WERE FURNI SHED BY THE ASSESSEE TO SUBSTANTIATE THE CLAIM. 14. BEFORE US LD.COUNSEL FOR THE ASSESSEE VEHEMENTL Y ARGUED THAT THE ENTIRE EXPENSES CLAIMED WERE ALLOW ABLE, WHICH IS EVIDENT FROM THE DETAILS SUBMITTED OF THE SAME BEFORE THE LOWER AUTHORITIES WHICH HAS NOT BEEN CON SIDERED BEFORE RESTRICTING THE CLAIM TO 10%. 15. LD.DR ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(APPEALS) POINTING OUT THAT THE ASSESSEE HAD FAI LED TO SUBSTANTIATE ITS CLAIM OF EXPENSES WITH NECESSARY E VIDENCES. 16. HAVING HEARD BOTH THE PARTIES WE FIND NO MERIT IN THE GROUND RAISED BY THE ASSESSEE. THE ASSESSEE WE FIND HAS FAILED TO SUBSTANTIATE ITS CLAIM OF EXPENSES BEFORE THE LOWER AUTHORITIES DESPITE AMPLE OPPORTUNITY PROVIDED. EVE N BEFORE US THE LD.COUNSEL FOR THE ASSESSEE WAS UNABLE TO SUBSTANTIATE ITS CLAIM WITH EVIDENCES. WE THEREFORE AGREE WITH THE LD.CIT(APPEALS) THAT THE ASSESSING OFFICER HAS BEEN MAGNANIMOUS IN ALLOWING 10% OF THE EXPENSES CLAIMED 9 DESPITE THE FACT THAT THE ASSESSEE FAILED TO SUBSTA NTIATE THE SAME. IN VIEW OF THE SAME, WE FIND NO REASON TO INT ERFERE IN THE ORDER OF THE CIT(APPEALS) UPHOLDING THE ALLOWAN CE OF EXPENDITURE TO THE EXTENT OF RS. 5,30,09,000/- GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THEREFORE DISMISSED. 17. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO T AXING THE MISCELLANEOUS INCOME EARNED BY THE ASSESSEE AND READS AS UNDER: 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD COMMISSIONER OF INCOME TAX ( APPEALS) IS NOT JUSTIFIED IN TREATING THE MISC. RECEIPTS OF RS 4.22,04,000/- AS T HE INCOME OF THE APPELLANT. FACT OF THE MATTER IS THAT THE SAID ADDITION IS ABSOLUTELY ILLEGAL AND NOT SUSTAINABL E IN THE EYES OF LAW. 18. BEFORE US, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THIS ISSUE ALSO HAD BEEN DEALT WITH BY THE I.T.A.T. IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2012-13 A ND 2013-14 WHEREIN THE I.T.A.T. HAD UPHELD THE ORDER O F THE CIT(APPEALS) HOLDING THAT THE MISCELLANEOUS INCOME EARNED BEING INEXTRICABLY LINKED TO THE INVESTMENT MADE IN THE COURSE OF SETTING UP OF PROJECT WOULD BE REQUIRED T O BE REDUCED FROM THE PREOPERATIVE EXPENDITURE AND NOT B E SUBJECTED TO TAX. OUR ATTENTION WAS DRAWN TO THE RE LEVANT FINDING OF THE I.T.A.T. AT PARA 8 OF ITS ORDER AS U NDER: 8. SO FAR AS THE SECOND ISSUE RELATING TO THE TAXA TION OF MISC. INCOME IS CONCERNED, THE LD. CIT(A) FOLLOWING THE SAME RATIO AND WHILE RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF 'CIT VS. BOKAR O STEEL LTD., 263 ITR 315 (SC) HELD THAT THE RECEIPTS OF ANY AMOUNT WHICH ARE INEXTRICABLY LINKED WITH THE PROCE SS OF SETTING UP OF PLANT AND MACHINERY, WILL GO TO RE DUCE 10 THE COST OF THE ASSETS. THE LD. CIT(A) OBSERVED THA T THE MISC. INCOME EARNED BY THE ASSESSEE WERE LINKED TO THE INVESTMENT MADE IN THE COURSE OF SETTING UP OF THE PR OJECT AND, HENCE, WERE REQUIRED TO BE REDUCED FROM THE PR E- OPERATIVE EXPENDITURE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. 19. THE LD. DR FAIRLY CONCEDED THAT THE ISSUE HAS B EEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR, AS POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE. 20. IN VIEW OF THE ABOVE, SINCE ADMITTEDLY THE ISSU E OF TAXABILITY OF MISCELLANEOUS INCOME EARNED BY THE AS SESSEE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ASSES SMENT YEARS 2012-13 AND 2013-14 AND NO DISTINGUISHING FAC TS HAVING BEEN BROUGHT TO OUR NOTICE BY THE LD. DR, TH E ISSUE WE FIND, IS SQUARELY COVERED BY THE DECISION OF THE I.T.A.T. IN THE PRECEDING YEARS, FOLLOWING WHICH WE DIRECT THAT THE MISCELLANEOUS INCOME IS NOT LIABLE TO BE SUBJECTED TO TAX IN THE IMPUGNED YEAR BUT IS REQUIRED TO BE REDUCED FRO M THE PREOPERATIVE EXPENSES. THE ORDER OF THE LD.CIT(APPE ALS) ON THIS ISSUE IS THEREFORE, SET ASIDE. THE GROUND OF A PPEAL NO.3 RAISED BY THE ASSESSEE IS, THEREFORE, ALLOWED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 7 TH AUGUST, 2018 *RATI* 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH