DEEPAK VEGPRO P LTD., Alwar V. DCIT, Alwar

ITA 988/JPR/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7795 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Deemed dividend; Unabsorbed depreciation
• Section: 14A; 80IB; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH : JAIPUR BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.934/JP/2011 (ASSESSMENT YEAR :2007-08) ITA NO.15/JP/2012 (ASSESSMENT YEAR :2008-09) ACIT, CIRCLE 1, VS. M/S. DEEPAK VEGPRO P. LTD., ALWAR. BHAGWATI SADAN, S.D. MARG, ALWAR 301 001 (RAJASTHAN). (PAN : AAACV6864A) ITA NO.988/JP/2011 (ASSESSMENT YEAR :2007-08) ITA NO.65/JP/2012 (ASSESSMENT YEAR :2008-09) M/S. DEEPAK VEGPRO P. LTD., VS. ACIT, CIRCLE 1, BHAGWATI SADAN, S.D. MARG, ALWAR. ALWAR 301 001 (RAJASTHAN). (PAN : AAACV6864A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL, CA REVENUE BY : SHRI RAJESH OJHA, ADDL.CIT DATE OF HEARING : 24.11.2014 DATE OF PRONOUNACEMENT : 02.12.2014 2 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : ITA NOS.934/JP/2011 & 988/JP/2011 THE APPEALS, BEING ITA NO.934/JP/2011 FILED BY THE REVENUE AND ITA NO.988/JP/2011 FILED BY THE ASSESSEE, EMANATE AGAIN ST THE ORDER OF THE CIT (APPEALS), ALWAR DATED 02.08.2011 FOR THE ASSESSMEN T YEAR 2007-08. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF MUSTARD OIL AND VEGETABLE GHEE BY MEANS OF CRUSHING OF OIL SEEDS AND OIL CAKE. BESIDES OIL SEED CRUSHING, ASS ESSEE MANUFACTURES TIN CONTAINERS. THE RETURN OF INCOME WAS FILED ON 31.1 0.2007 DECLARING INCOME AT RS.2,10,32,300/- AND THE ASSESSEE HAS CLAIMED DEDUC TION UNDER CHAPTER VIA OF THE INCOME-TAX ACT, 1961 AND ALSO DEDUCTIONS U/S 80 IA AND 80IB OF THE ACT. 3. BOTH THE SIDES HAVE FILED CROSS APPEALS. THE GR OUNDS OF APPEAL IN THE REVENUES APPEAL IN ITA NO.934/JP/2011 READ AS UNDE R :- 1. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL A S ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE TRADING ADDITION OF RS.20 LACS AS MADE BY THE AO. 2. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1,43,24,420/- U/S 2(22)(E). 3. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF RS.72,07,040/-. 3 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 4. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF RS.24,62,950/- U/S 80IA. 5. THE DEPARTMENT RESERVES ITS RIGHT TO ADD, ALTER, MODIFY, DELETE OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. THE ONLY GROUND OF APPEAL TAKEN IN THE ASSESSEES A PPEAL IN ITA NO.988/JP/2011 READS AS UNDER :- THAT LD. ASSESSING OFFICER HAS ERRED IN LAW AS WEL L AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN APPLYING THE PROVISION OF SEC. 14A OF THE I.TAX ACT 1961 AND ALSO ERRED IN MA KING THE DISALLOWANCE OF RS.2720886.00 BY INVOKING THE PROVI SION OF RULE 8D OF THE I.TAX RULES AND LD. CIT (APPEALS), E RRED IN SUSTAINING THE SAME. 4. GROUND NO.1 OF THE REVENUES APPEAL IS AGAINST D ELETING THE TRADING ADDITION OF RS.20 LACS AS MADE BY THE AO. 5. THE AO ON THE BASIS OF FINDINGS IN THE ORDER OF THE ASSESSMENT YEAR 2006- 07 HAS INVOKED PROVISIONS OF SECTION 145 (3) OF THE ACT. THE REASON FOR ADDITION WAS THAT ASSESSEE IS NOT MAINTAINING LABORATORY TES T REPORTS FOR EACH LOT OF SEEDS PURCHASED. CIT (A) IN APPELLATE PROCEEDINGS HELD T HAT SECTION 145 (3) IS NOT APPLICABLE. THE AO HAS ALSO DISTINGUISHED THE CASE FROM ASSESSMENT YEAR 2003- 04 WHERE SUCH ADDITION MADE AND THE SAME WAS DELETE D. THE AO INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT AND MADE TH E TRADING ADDITION OF RS.20 LACS. THE CIT (A) HAS DELETED THE ADDITION ON THE BASIS OF ITS OWN DECISION IN THE ASSESSMENT YEAR 2006-07 AND ITAT DECISION FOR A SSESSMENT YEAR 2005-06 IN 4 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 ASSESSEES OWN CASE. IN THE ASSESSMENT YEAR2006-07 , THE CIT (A), AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, HELD THAT S ECTION 145(3) OF THE ACT WAS NOT APPLICABLE AND DELETED THE ADDITION. 6. LD. AR HAS DRAWN OUR ATTENTION TO PARAS 18 TO 23 OF THE ITAT DECISION IN ITA NOS.361 & 387/JP/2011 DATED 21.10.2011 FOR ASSE SSMENT YEAR 2006-07 WHICH IS PLACED AT PAGES 66 TO 92 OF THE PAPER BOOK . THE RELEVANT PAGES ARE 73 TO 75 OF THE PAPER BOOK. THE ITAT HAS DELETED THE ADDITION IN THAT YEAR BY HOLDING AS UNDER :- 19. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER O F AO. HOWEVER, IT HAS BEEN STATED THAT SIMILAR ISSUE WAS INVOLVED IN EARLIER YEAR AND THE TRIBUNAL HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. COPY OF ORDER OF THE TRIBUNAL ARE PLA CED ON RECORD. 20. ON THE OTHER HAND, THE LD. A/R PLACED RELIANCE ON THE COPY OF WRITTEN SUBMISSIONS PLACED ON RECORD AND IT WAS SUBMITTED THAT SIMILAR ISSUE HAS BEEN DECIDED BY TH E TRIBUNAL IN EARLIER YEAR. 21. THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURIN G AND TRADING ACTIVITY. DURING THE YEAR UNDER CONSIDERATI ON THE ASSESSEE HAS SHOWN TURNOVER OF RS. 99.94 CRORES OR ODD, GROSS PROFIT OF RS. 7,67,33,595/- HAS BEEN SHOWN WHICH RE SULTED IN GP RATE OF 7.68% AGAINST 7.49% SHOWN IN EARLIER YEA R. AFTER RECORDING CERTAIN DISCREPANCIES FOUND IN OIL PRODUC TION, THE AO HELD THAT NO RECORD OF QUALITY MUSTER SEEDS MAINTAI NED, INCREASE IN CONSUMER STORE, FINISHED GOODS UNDERVALUED ETC. THE AO HELD THAT BOOKS OF ACCOUNT HAVE NOT BEEN PROPERLY M AINTAINED, THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT AND MAD E LUMP SUM ADDITION OF RS. 50,00,000/-. DETAILED SUBMISSIONS W ERE FILED BEFORE LD. CIT (A). RELIANCE WAS ALSO PLACED ON VAR IOUS CASE LAWS. IT WAS SUBMITTED THAT SIMILAR ADDITION WAS MA DE FOR ASSESSMENT YEARS 2003-04 TO 05-06 AND THE ENTIRE AD DITION HAS 5 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 BEEN DELETED BY THE TRIBUNAL. IT WAS ALSO CONTENDED THAT NO ADDITION UNDER THIS HEAD HAS BEEN MADE FOR ASSESSME NT YEAR 2008-09. EVEN THE GP RATE WAS LOWER THAN THE ASSESS MENT YEAR 2007-08. 22. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT SIMI LAR ADDITIONS WERE MADE FOR ASSESSMENT YEARS 2003-04 TO 05-06 AND THEY HAVE BEEN DELETED BY THE TRIBUNAL. THE LD. CIT (A) BY FURTHER OBSERVING THAT AO DID NOT POINT OUT ANY DEFECT IN T HE BOOKS OF ACCOUNT, STOCK REGISTER, PURCHASE AND CONSUMABLE ST OCK, THEREFORE, HE HELD THAT THERE IS NO JUSTIFICATION I N MAKING LUMP SUM ADDITION OF RS. 50,00,000/-. ACCORDINGLY THE SA ME WAS DELETED. LD. AR ALSO SUBMITTED THAT AO HAS REJECTED THE BOOK S OF ACCOUNTS WITH SIMILAR OBSERVATIONS FOR ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 ALSO. THE ITAT HAD DELETED THE ADDITION IN ASSESSMENT YEAR 20 03-04 WHILE DECIDING THE APPEAL BEING ITA NO.415/JP/2007 DATED 27.06.2008. THE RELEVANT PARAS 5 & 6 ARE PLACED AT PAGES 35 TO 37 OF THE PAPER BOOK. LD . DR SUBMITTED THAT THE AO HAS OBSERVED THAT THE REASON FOR INVOKING SECTION 1 45(3) IS FOR NOT MAINTAINING OF LABORATORY TEST REPORTS AND THERE IS NO FINDING IN THIS REGARD OF THE ITAT IN EARLIER YEARS. IN REPLY TO THAT, LD. AR SUBMITTED THAT IN THE EARLIER YEAR, THE ASSESSEE HAS SUBMITTED EVERY LOT OF SEEDS PURCHASED CONTAINING DIFFERENT QUANTITY OF OIL AND AFTER MAKING LABORATORY TEST RE PORT, THE PAYMENTS ARE MADE TO THE SUPPLIER WHICH IS EVIDENT FROM THE ASSESSEES R EPLY DATED 16.12.2009, WHICH HAS BEEN REPRODUCED BY THE CIT (A) IN PAGES 9 & 10 OF HIS ORDER. HE FURTHER SUBMITTED THAT FOR THE YEAR UNDER CONSIDERATION, TH E GROSS PROFIT RATE OF 8.18% 6 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 WAS BETTER THAN THE GROSS PROFIT RATE OF 7.68% IN T HE IMMEDIATE PRECEDING YEAR. FOR THE YEAR UNDER CONSIDERATION, THE TURNOVER HAS ALSO INCREASED. 7. CONSIDERING ALL THESE ASPECTS AND THE REASONING GIVEN BY THE ITAT AND ALSO CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, W E FIND NO MERITS IN THIS GROUND OF REVENUES APPEAL AND THE SAME IS DISMISSE D. 8. IN THE GROUND NO.2, THE ISSUE INVOLVED IS AGAINS T DELETING THE ADDITION OF RS.1,43,24,420/- MADE BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 9. THE ASSESSEE COMPANY HOLDS 24.70% SHARES OF M/S. SAURABH AGROTECH (P.) LTD.. LD. AR SUBMITTED THAT THE ASSESSEE COMP ANY IS HAVING REGULAR BUSINESS TRANSACTIONS RELATING TO PURCHASE AND SALE WITH M/S. SAURABH AGROTECH (P.) LTD. THE DETAILS OF THE PURCHASES AND SALES A RE EVIDENT FROM THE DETAILS SUBMITTED IN THE PAPER BOOK WHICH ARE PLACED AT PAG ES 10 TO 18 FOR PURCHASES AND PAGES 6 TO 9 FOR SALE. IT WAS ALSO SUBMITTED T HAT AS ON 08.09.2006, THE ASSESSEE WAS HAVING A CREDIT BALANCE OF RS.3,81,99, 054/- WHICH IS EVIDENT FORM PAGE 21 OF THE PAPER BOOK WHICH HAS BEEN PAID TO M/ S. SAURABH AGROTECH (P.) LTD. HE ALSO SUBMITTED THAT THIS ADDITION WAS MADE ON THE BASIS OF ADVANCE MADE IN ASSESSMENT YEAR 2006-07. LD. AR SUBMITTED THAT SECTION 2(22)(E) OF THE ACT IS ATTRACTED WHEN ANY PAYMENT IS MADE BY A CLOSELY HELD COMPANY BY WAY OF LOANS OR ADVANCES TO A BENEFICIAL SHAREHOLDE R HOLDING NOT LESS THAN 10% OF THE VOTING POWERS. IN THAT CONDITION ONLY, THE PAYMENT OF ANY SUM BY WAY OF LOAN OR ADVANCE IS TO BE DEEMED DIVIDEND. SINCE I T IS A DEEMING PROVISION, THIS 7 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 IS TO BE CONSTRUED STRICTLY. FOR APPLYING THIS DE EMING PROVISION, THERE SHOULD BE A PAYMENT; PAYMENT SHOULD BE OF A SUM; AND SUCH PAY MENT SHOULD BE A LOAN OR ADVANCE. UNLESS AND UNTIL, ALL THESE CONDITIONS AR E SATISFIED, DEEMING FICTION SHALL NOT BE ATTRACTED. THE ASSESSEE COMPANY IS TR ADING AND MANUFACTURING OF MUSTARD OIL AND OIL CAKE. DURING THE YEAR, IN THE COURSE OF BUSINESS, BOTH THE COMPANIES ARE ENTERED INTO VARIOUS TRANSACTIONS OF PURCHASES, SALES, MAKING PAYMENTS AND RECEIVING PAYMENTS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE MADE PURCHASES OF RS.1163.84 LACS FROM M/S . SAURABH AGROTECH (P.) LTD. AND SOLD GOODS OF RS.595.52 LACS TO IT. AGAIN ST THIS PURCHASES AND SALES, THE ASSESSEE MADE PAYMENTS AND RECEIVED PAYMENTS. THERE WAS AN OPENING CREDIT BALANCE OF M/S. SAURABH AGROTECH (P.) LTD. I N THE BOOKS OF ASSESSEE OF RS.93,43,520/-. LD. AR FURTHER SUBMITTED THAT NATU RE OF TRANSACTION BETWEEN THE ASSESSEE AND M/S. SAURABH AGROTECH (P.) LTD. ARE BU SINESS TRANSACTIONS. HE ALSO SUBMITTED THAT FOR INVOKING THE PROVISIONS OF SECTI ON 2(22)(E), IT IS NECESSARY THAT THE PAYMENT SHOULD BE EITHER A LOAN OR ADVANCE . HE SUBMITTED THAT THE WORD ADVANCE HAS NOT BEEN DEFINED. HOWEVER, IN THE CA SE OF CIT VS. RAJ KUMAR 318 ITR 462 (DEL.), THE HONBLE DELHI HIGH COURT BY APPLYING THE RULE OF NOSCITUR A SOCIIS WHICH MEANS THAT THE WORDS IN AN ACT OF PARLIAMENT IS TO BE CONSTRUED WITH REFERENCE TO THE WORDS FOUND IN IMME DIATE CONNECTION WITH THEM, THE WORD ADVANCE HAS TO BE READ IN CONJUNCT ION WITH THE WORD LOAN. USUALLY, ATTRIBUTES OF A LOAN ARE THAT IT INVOLVES A POSITIVE ACT OF LENDING COUPLED 8 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 WITH ACCEPTANCE BY THE OTHER SIDE OF THE MONEY AS L OAN; GENERALLY CARRIES AN INTEREST; AND OBLIGATION OF REPAYMENT. IN OTHER W ORDS, THE WORD ADVANCE WHICH APPEARS IN THE COMPANY OF THE WORD LOAN COU LD ONLY BE SUCH ADVANCE WHICH CARRIES WITH IT AN OBLIGATION OF REPAYMENT AN D THUS, THE TRADE ADVANCES WHICH ARE IN THE NATURE OF MONEY TRANSACTED TO GIVE EFFECT TO A COMMERCIAL TRANSACTION WOULD NOT FALL WITHIN THE AMBIT OF SECT ION 2(22)(E) OF THE ACT. HE ALSO RELIED ON THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF BOMBAY STEAM NAVIGATION CO.(P.) LTD. REPORTED IN 56 ITR 52 FOR THE PROPOSITION THAT A LOAN OF MONEY RESULTS IN DEBT BUT EVERY DEBT DOES N OT INVOLVE A LOAN. LIABILITY TO PAY A DEBT MAY ARISE FROM DIVERSE SOURCES AND LO AN IS ONLY ONE OF SUCH SOURCE. EVERY CREDITOR WHO IS ENTITLED TO RECEIVE A DEBT CANNOT BE REGARDED AS A LENDER. IN VIEW OF THIS, M/S. SAURABH AGROTECH (P. ) LTD. CANNOT BE CONSIDERED A LENDER IN THESE FACTS AND CIRCUMSTANCES. HE ALSO R ELIED ON THE DECISION OF ITAT, DELHI BENCH IN THE CASE OF ARDEE FINVEST (P.) LTD. REPORTED IN 79 ITD 547 FOR THE PROPOSITION THAT THE LOAN MEANS A LENDING, DELI VERY BY ONE PARTY TO AND RECEIPT BY ANOTHER PARTY OF SUM OF MONEYS UPON AGRE EMENT, EXPRESS OR IMPLIED, TO REPAY WITH OR WITHOUT INTEREST. THEREFORE, FOR THE LOAN, THERE MUST BE A LENDER, A BORROWER, A THING LOANED FOR USE, AS WELL AS A CO NTRACT BETWEEN THE PARTIES FOR THE RETURN OF THE THING LOANED. OUR ATTENTION IS A LSO INVITED TO VARIOUS PARAS OF THIS ORDER WHICH HE HAS SUBMITTED IN BRIEF SYNOPSIS OF HIS ARGUMENTS. HE HAS ALSO RELIED ON THE FOLLOWING CASE LAWS :- 9 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 (I) NH SECURITIES LTD. VS. DCIT 11 SOT 302 (TRIB.) (MUM .) (2007) (II) MTAR TECHNOLOGIES (P.) LTD. VS. ACIT 39 SOT 465 (TR IB.) (HYD.) (2010) (III) CIT VS. AMBASSADOR TRAVELS (P.) LTD. 318 ITR 376 (D EL.) (HC) (IV) CIT VS. IDHAYAM PUBLICATION LTD. 285 ITR 221 (MAD.) (HC) (V) MUTHOOT M. GEORGE BROTHERS VS. ACIT 47 TTJ 434 (COC HIN) (TRIB.) (VI) DCIT VS. LAKRA BROTHERS 106 TTJ 250 (CHAND.) (TRIB. ) (VII) SRI SATCHINDANANAD S. PANDIT VS. ITO 19 SOT 213 (TR IB.) (MUM.) (VIII) CIT VS. CREATIVE DYEING & PRINTING P. LTD. 318 ITR 476 (DEL.) (HC) LD. AR ALSO RELIED ON THE DECISION OF THE ITAT IN A SSESSEES OWN CASE IN ITA NOS.361 & 387/JP/2011 DATED 21.10.2011 FOR THE ASSE SSMENT YEAR 2006-07. 10. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE CIT (A) HAS DELETED THE ADDITION BY HOLDING AS UNDER :- 4.2 AFTER HEARING THE LEARNED COUNSEL IN DETAIL AN D PERUSING THE WRITTEN SUBMISSIONS, IT IS SEEN THAT THE SAME I SSUE HAVE CAME UP FOR CONSIDERATION IN THE ASSESSMENT YEAR 20 06-2007 IN THE ASSESSEE OWN CASE, WHEREIN, WHILE DECIDING THE APPEAL 386/2008-09 DT. 10.02.2011, I HAVE GIVEN THE FOLLOW ING FINDING:- '7.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL THOROUGHLY AND PERUSED THE ASSESSMENT ORDER AND ANNEXURE ANNEXED THERETO. THE SUBMISSIONS OF THE LEARNED COUNSEL ARE FOUND TO BE IN ORDER NOT ONLY O N ONE GROUND BUT ON SEVERAL GROUNDS. FIRSTLY AND FOREMOST AMONG THEM, IS THAT THE ASSESSEE COMPANY IS HAVING THE TRANSACTION WITH THE SAURABH AGROTECH (P) LTD ON RE GULAR 10 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 AND DAILY BASIS, WHEREIN SUBSTANTIAL TRANSACTION AR E BEING TRANSACTED THROUGH. THE TRANSACTION ENTERED INTO TH E ACCOUNT ARE TRANSACTION OF PURCHASE, SALE, PAYMENT RECEIVED AND GIVEN FROM/TO THIRD PARTIES, WHICH HAV E BEEN ACCOUNTED FOR IN THE ACCOUNT OF SAURABH AGROTECH (P ) LTD AND ALSO THE PAYMENT RECEIVED AND PAYMENTS MADE TO SAURABH AGROTECH (P) LTD. BALANCE IN THE ACCOUNT HA VE ALTERNATED BETWEEN DEBIT AND CREDIT. THIS FACT HAVE ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER IN HIS ASSES SMENT ORDER ON PAGE NUMBER L4 IN PARA NUMBER (V) THAT AT SOME POINT OF TIME, THE BALANCE WAS DEBIT AND AT SOME PO INT OF TIME THE BALANCE WAS CREDIT. A LIST OF INSTANCE WHE REIN SUCH BALANCES ARE IN DEBIT HAVE ALSO BEEN GIVEN BY THE APPELLANT AND MENTIONED IN THE ORDER (SUPRA). UNDER THIS SCENARIO, IT IS IMPERATIVE TO DETERMINE THE NATURE OF SUCH ENTRIES WHETHER, THESE ARE THE LOANS OR ADVANCES OR BUSINESS TRANSACTION. THE PROVISION OF SECTION 2 (2 2)(E) OF THE INCOME-TAX ACT 1961 ARE ATTRACTED ONLY UNDER T HE CIRCUMSTANCES, WHEN THE TRANSACTIONS ARE IN THE NAT URE OF LOANS OR ADVANCES AND NOT OTHERWISE. IT IS ALSO SEE N THAT THE NATURE OF THE BUSINESS OF THE ASSESSEE COMPANY AND SAURABH AGROTECH (P) LTD ARE THE SAME. BOTH THE COMPANIES ARE ENGAGED IN THE CRUSHING OF MUSTARD SE ED, PURCHASE AND SALE OIL AND OIL CAKE. BOTH THE COMPAN IES ARE HAVING THE BUSINESS TRANSACTION INTER-SE, WHICH FACTS HAVE REMAIN UNDISPUTED. IT IS FOUND ON VERIFICATION OF THE ACCOUNT AND ON FACT THAT THE ACCOUNT OF THE ASSESSE E WITH THE SAURABH AGROTECH (P) LTD IS A RUNNING, CURRENT, OPEN AND TRADE ACCOUNT. THE BUSINESS TRANSACTIONS ENTERE D INTO BETWEEN THE ASSESSEE COMPANY AND SAURABH AGROTECH ( P) LTD HAVE BEEN ROUTED THROUGH THE SAID ACCOUNT. THE ASSESSEE COMPANY DOES NOT HAVE ANY OTHER ACCOUNT EXCEPT THE ACCOUNT CONSIDERED BY THE ASSESSING OFFI CER. THIS IS SINGLE AND CONSOLIDATED ACCOUNT, WHEREIN TH E TRADE TRANSACTION HAVE BEEN PASSED THROUGH, THEREFORE IT IS A BUSINESS AND TRADE ACCOUNT. NOW THE QUESTION ARISES , WHETHER, THE PROVISION SECTION 2(22)(E) OF THE INCO ME- TAX ACT' 196I ARE ATTRACTED UPON THE BUSINESS OR TR ADE TRANSACTION. IN THIS REGARD LEARNED COUNSEL HAS RIG HTLY PLACED THE RELIANCE UPON THE DECISION OF HONOURABLE DELHI HIGH COURT IN THE CASE OF CIT V/S RAJ KUMAR (2009) TIOL 247 (DEL.) 'TRADE ADVANCE WHICH ARE IN THE NAT URE 11 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 OF MONEY TRANSACTED TO GIVE EFFECT TO A COMMERCIAL TRANSACTIONS WOULD NOT FALL WITHIN THE AMBIT OF THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT - REVENUE 'S APPEAL DISMISSED. WHILE DELIVERING THE JUDGEMENT, HONOURABLE DELHI HIGH COURT HAS DISTINGUISHED THE DECISION OF APEX COURT IN THE CASE OF P.SHARDA AND TARU LATA SHAYARN. IT HAS ALSO RECENTLY BEEN HELD BY HONOURABLE DELHI HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V/S AMBASSADOR TRAVELS (P) LIMITED (2008 ) 173 TAXMAN 407 (DEL.) THAT 'THE ASSESSEE WAS INVOLV ED IN THE BOOKING OF RESORTS FOR THE CUSTOMERS OF THES E COMPANY AND ENTERED INTO NORMAL BUSINESS TRANSACTIO N AS A PART OF ITS DAY-TO-DAY BUSINESS ACTIVITIES. THE F INANCIAL TRANSACTION CANNOT IN ANY CIRCUMSTANCES BE TREATED AS LOANS OR ADVANCES RECEIVED BY THE ASSESSEE FROM THE SE TWO CONCERNS'. DECISION OF HONOURABLE DELHI HIGH C OURT WAS AGAIN RECENTLY FOLLOWED BY THE SAME HIGH COURT IN THE CASE OF CIT V/S CREATIVE DYEING & PRINTING (P) LIMI TED (2009) TIOL 532 (DEL.) WHEREIN IT HAS BEEN HELD THA T 'ADVANCES GIVEN FOR COMMERCIAL PURPOSES OF EXPANSIO N OF BUSINESS CON NOT BE TREATED AS LOAN OR DIVIDEND INCOME IN THE HANDS OF THE SHAREHOLDERS OF THE ASSESSEE COMPANY.' INCOME-TAX APPELLATE TRIBUNAL, BENCH - MUMBAI IN NH SECURITIES LIMITED V/S DEPUTY COMMISSIONER OF INCOME-TAX, (2007) I1 SOT 302 (MUMBAI), AFTER CONSIDERING THE DECISION OF P.K.BAD IANI, M.B.STOCK HOLDING AND WAL CHAND & COMPANY, (SUPRA), HAVE HELD THAT 'PAYMENTS MADE BY A COMPANY IN THE COURSE OF CARRYING ON OF ITS REGULAR BUSINESS T HROUGH A MUTUAL, OPEN AND CURRENT ACCOUNT TO A RELATED PARTY DO NOT COME UNDER PURVIEW OF SECTION 2(22)(E) OF THE ACT.' THEREFORE BY FOLLOWING THE ABOVE DECISION, I HAVE N O HESITATION TO COME TO THE CONCLUSION THAT THE TRANS ACTION ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND THE SAURABH AGROTECH (P) LTD, WHICH HAVE BEEN CONSIDERE D BY THE ASSESSING OFFICER ARE IN THE NATURE OF BUSIN ESS AND TRADE TRANSACTION ENTERED INTO THE REGULAR AND NORM AL COURSE OF BUSINESS AND ARE NOT IN THE NATURE OF LOA NS OR ADVANCES, THEREFORE THE PROVISION OF SECTION 2(22)( E) OF THE INCOME-TAX ACT' L96L ARE NOT APPLICABLE UPON SU CH TRANSACTION AND THE ASSESSING OFFICER HAS ERRONEOUS LY CONSIDERED THE SAME TO BE COVERED U/S 2(22) (E) OF THE 12 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 INCOME-TAX ACT' 1961. WHILE ARRIVING AT THIS CONCLU SION, REFERENCE IS ALSO MADE TO THE DECISION OF JURISDICT IONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X V/S MAHESWARI NIRRUAN UDYOG 302 ITR 201 (RAJNSTHAN) , WHEREIN IT HAS BEEN HELD THAT THE TRANSACTION INTER SE BETWEEN THE SISTER CONCERNS AND THE ASSESSEE COULD NOT PARTAKE THE NATURE OF EITHER 'DEPOSIT' OR LOAN EVEN THOUGH THE INTEREST MIGHT HAVE BEEN PAID ON THE SAME AND T HE SAME VIEW HAVE BEEN UPHELD BY INCOME-TAX APPELLATE TRIBUN.AL, BENCH-JAIPUR, JAIPUR IN THE CASE OF INCO ME TAX OFFICER V/S MAHAVIR STORES, ALWAR ITA NO. 1834 & 1835/JP/981 DATED 23.11.1993. THEREFORE CONSIDERING ALL THE ABOVE FACT AND LATEST CASE LAWS ON THE SUBJECT IT IS CATEGORICALLY HELD THAT THE TRANSACTION OF ASSESSEE COMPANY WITH THE SAURABH AGROTECH (P) LTD, IS THE BUSINESS AND TRADE TRANSACTION ENTERED INTO THE NOR MAL COURSE OF BUSINESS AND THE PROVISION OF SECTION 2(2 2)(E) ARE NOT APPLICABLE THEREUPON AND THE ADDITION OF RU PEES 18415499.00 U/S 2(22)(E) OF THE INCOME-TAX ACT' L96 L IS DELETED. SINCE I HAVE DELETED THE ADDITION OF RUPE ES 18415499.00, THEREFORE MY FINDING UPON THE ISSUE OF DEDUCTION OF TAX LIABILITY, THE DEPRECIATION AS PER THE INCOME TAX AND POSSESS ACCUMULATED PROFIT HAVE REMA IN MERELY OF ACADEMIC INTEREST THEREFORE, NO FINDING THEREUPON HAVE BEEN GIVEN. ' I HAVE NO REASON TO DEVIATE FROM MY EARLIER ORDER. THEREFORE CONSIDERING THE FACTS OF THE PRESENT CASE, AND CASE LAWS ON THE SUBJECT IS CATEGORICALLY HELD THAT THE TRANSACTION OF ASSESSEE COMPANY WITH THE SAURABH AGROTECH (P) LIMITED ARE T HE BUSINESS AND TRADE TRANSACTION ENTERED INTO THE NOR MAL COURSE OF BUSINESS AND THE PROVISION OF SECTION 2(22)(E) ARE NOT APPLICABLE THEREUPON AND THE ADDITION OF RUPEES 14324420.00 U/ S 2(22)(E) OF THE INCOME-TAX ACT' 196L IS DELETED. SINCE I HA VE DELETED THE ADDITION OF RUPEES 14324420.00, THEREFORE MY FINDIN G UPON THE ISSUE OF DEDUCTION OF TAX LIABILITY, THE DEPRECIATI ON AS PER THE INCOME AND POSSESS ACCUMULATED PROFIT HAVE REMAINED MERELY OF ACADEMIC INTEREST THEREFORE, NO FINDING THEREUPO N HAVE BEEN GIVEN. 13 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 AFTER HEARING BOTH THE SIDES AND CONSIDERING ALL TH E RELEVANT FACTS AND CIRCUMSTANCES AND THE CASE LAWS. WE FIND THAT ITAT IN ASSESSEES OWN CASE IN ITA NOS.361 & 387/JP/2011 DATED 21.10.2011 CONFIRME D THE FINDINGS OF THE CIT (A) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE VIDE ORDER DATED 21.10.2011. THE RELEVANT PARAS OF THE AFORESAID OR DER IS REPRODUCED AS UNDER :- 35. AFTER CONSIDERING THE ABOVE FINDINGS OF LD. CI T (A) AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE WHICH ARE A LSO REPRODUCED SOMEWHERE ABOVE IN THIS ORDER, WE FIND T HAT LD. CIT (A) HAS EXAMINED THE ISSUE EXTENSIVELY AND THEN FOU ND THAT THE TRANSACTION DOES NOT RELATE TO EITHER LOAN OR ADVAN CES. THEREFORE, PROVISIONS OF SECTION 2(22)(E) ARE NOT ATTRACTED. W HILE HOLDING SO, THE LD. CIT (A) HAS TAKEN INTO CONSIDERATION VA RIOUS CASE LAWS RELIED UPON BEFORE HIM WHICH ARE ALSO RELIED O N HERE BEFORE THE TRIBUNAL AND THEN ONLY CONCLUDED THAT TH E ADDITION MADE BY AO WAS NOT JUSTIFIED. THE LD. CIT D/R EXCEP T PLACING RELIANCE ON THE ORDER OF AO AND PLACING RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COURT, COULD NOT CONTROVERT THE FINDING OF LD. CIT (A). THE LD. CIT D/R COULD NOT BRING ANY MATERIAL THAT HOW THE TRANSACTION ENTERED INTO BETWEEN THE A SSESSEE AND THE OTHER COMPANIES ARE AKIN TO LOAN AND ADVANCES. THE NATURE OF TRANSACTION CLEARLY 25 ESTABLISHED THAT THEY REL ATED TO PURCHASE AND SALE ENTERED INTO BETWEEN THE PARTIES OR ON ACCOUNT OF RUNNING ACCOUNT. AFTER GOING THROUGH THE CHART O F TRANSACTION, WE FIND THAT THIS TRANSACTION CANNOT B E TREATED AS PAYMENT OR ANY SUM PAID OR PAYABLE AND THIS PAYMENT ARE NOT BY WAY OF LOAN OR ADVANCES AND UNTIL THESE CONDITIO NS ARE SATISFIED, PROVISIONS OF SECTION 2(22)(E) CANNOT BE ATTRACTED. THE NATURE OF TRANSACTION OF BOTH THE COMPANIES IS TRAD ING AND MANUFACTURING OF MUSTARD OIL AND OIL CAKE. IN THE C OURSE OF BUSINESS, BOTH THESE COMPANIES HAD ENTERED INTO A S ERIES OF TRADE TRANSACTIONS OF PURCHASE, SALE, MAKING PAYMEN T AND RECEIVING PAYMENT. THE RESPECTIVE ENTRIES ARE MADE IN THEIR RESPECTIVE BOOKS OF ACCOUNTS IN SINGLE & CONSOLIDAT ED ACCOUNT. THE BRIEF OF THE TRANSACTIONS HAVE BEEN EXPLAINED A T PAGE 8 OF THE WRITTEN SUBMISSION WHICH ARE REPRODUCED SOMEWHE RE ABOVE IN THIS ORDER ALSO. ON PERUSAL OF LEDGER ACCOUNT OF M/S. SAAURABH AGROTECH PVT. LTD. IN THE BOOKS OF THE ASS ESSEE 14 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 COMPANY, IT IS NOTICED THAT THE NATURE OF TRANSACTI ON BETWEEN THEM ARE BUSINESS TRANSACTION. IN CASE OF CIT VS. R AJ KUMAR, 318 ITR 462 (DEL.), THE HONBLE DELHI HIGH COURT HA S HELD THAT APPLYING THE RULE OF NOSCITUR A SOCIIS WHICH MEAN S THAT THE WORD IN AN ACT OF PARLIAMENT IS TO BE CONSTRUCTED W ITH REFERENCE TO THE WORDS FOUND IN IMMEDIATE CONNECTION WITH THE M, THE WORD ADVANCE HAS TO BE READ IN CONJUNCTION WITH THE WORD LOAN. USUALLY ATTRIBUTES OF A LOAN ARE THAT (I) I T INVOLVES A POSITIVE ACT OF LENDING COUPLED WITH ACCEPTANCE BY THE OTHER SIDE OF THE MONEY AS LOAN (II) GENERALLY CARRIES AN INTEREST (III) OBLIGATION OF REPAYMENT. THEREFORE, THE WORD ADVAN CE WHICH APPEARS IN THE COMPANY OF THE WORD LOAN COULD ONL Y BE SUCH ADVANCE WHICH CARRIES WITH IT AN OBLIGATION OF REPA YMENT. THUS, TRADE ADVANCES WHICH IS IN THE NATURE OF MONEY TRAN SACTED TO GIVE EFFECT TO A COMMERCIAL TRANSACTION WOULD NOT F ALL WITHIN THE AMBIT OF SECTION 2(22)(E). 35.1. SIMILAR FACTS ARE INVOLVED IN THIS CASE ALSO AS THE TRANSACTIONS ARE OF BUSINESS NATURE. THEREFORE, THE Y DO NOT FALL WITHIN THE AMBIT OF SECTION 2(22)(E) OF THE ACT. WE HAVE ALSO GONE THROUGH THE VARIOUS CASE LAWS, SOME OF THEM HA VE ALREADY BEEN CONSIDERED BY LD. CIT (A) AND FOUND THAT THEY ARE IN SUPPORT OF THE CASE OF THE ASSESSEE. 35.2. THE DECISIONS RELIED UPON BY LD. CIT D/R ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE AS THES E TRANSACTIONS OF THE ASSESSEE ARE OF BUSINESS IN NATURE AND, THER EFORE, THEY DO NOT FALL WITHIN THE AMBIT OF SECTION 2(22)(E). IN V IEW OF THESE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE DETAILED REASONING GIVEN BY LD. CIT (A) WHICH IS REPRODUCED SOMEWHERE ABOVE IN THIS ORDER, WE HOLD THAT LD. CIT (A) WAS JUSTIFIED IN DELETING THIS ADDITION. ACCORDINGLY WE CONFIRM THE ORDER OF LD. C IT (A) IN THIS RESPECT. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS GROUND NO.2 OF REVENUES APPEAL. 11. GROUND NO.3 IS REGARDING DELETION OF ADDITION O F RS.72,07,040/- MADE U/S 80IB OF THE ACT. 15 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 12. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB OF RS.72,07,040/-. THE AO DISALLOWED CLAIM OF SUCH DEDUCTION IN THE ASSESSMEN T YEARS 2005-06 AND 2006- 07 ALSO FOR THE SAME REASON THAT THE ASSESSEE IS NO T A SMALL SCALE INDUSTRIAL UNDERTAKING AS ITS INVESTMENT IN PLANT AND MACHINER Y IS MORE THAN THE PRESCRIBED LIMIT OF RS.1 CRORE. FOR THE YEAR UNDER CONSIDERAT ION, ALTERNATIVELY, THE AO ALSO OBSERVED THAT THE ASSESSEE HAS SOLD MUSTARD SEED FO R RS.47.12 CRORES BUT THE SAME IS REDUCED FROM THE COST OF PURCHASE OF MUSTAR D SEED. NO PROFIT ON SUCH SALE IS WORKED OUT WHICH NEEDS TO BE ESTIMATED. TH E ASSESSEE HAS TRADED IN MUSTARD OIL IN WHICH IT EARNED PROFIT OF RS.29,73,2 19/-. ON SUCH TRADING PROFIT, DEDUCTION U/S 80IB IS NOT ALLOWABLE AS DECIDED BY I TAT IN ITA NO.465/JP/2007 IN ASSESSMENT YEAR 2003-04 DATED 30.05.2008. IT WA S ALSO PLEADED THAT IN ASSESSMENT YEARS 2000-01 TO 2005-06, THE ITAT HAS D ECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DEPARTMENT HAS NOT FILED ANY RE FERENCE TO HONBLE RAJASTHAN HIGH COURT. THE CIT (A) HAS NOT GIVEN ANY FINDING ON THE ALLOWABILITY OF DEDUCTION U/S 80IB ON THE TRADING PROFIT. 13. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ISSUE REGARDING WHETHER THE ASSESSEE IS A SMALL SCALE INDUSTRY OR NOT HAS A LREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN ASSESSEES OWN CASE WHILE DECIDING THE ITA NOS.223 TO 226/JP/2009 FOR ASSESSMENT YEARS 2000-01 TO 2003-04 VIDE ITS ORDER DATED 18.09.2009. WHEREIN IT HAS BEEN HELD THAT AS SESSEE WAS ENJOYING THE SSI STATUS, THEREFORE, IT IS ENTITLED FOR DEDUCTION U/S 80IB IN THOSE YEARS ALSO. THE 16 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 FACTS REMAIN SAME, HENCE, THE ASSESSEE IS ENTITLED FOR DEDUCTION IN THIS YEAR ALSO. AS FAR AS, THE ALLOWABILITY OF DEDUCTION U/S 80IB O N THE TRADING PROFIT IS CONCERNED, THE CIT (A) HAS NOT GIVEN ANY FINDING. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE FIND IT APPROPRIATE TO REMAN D THE ISSUE TO THE FILE OF THE CIT (A). CIT (A) SHALL DECIDE THE ISSUE AS PER LAW WITH SPEAKING ORDER OF COURSE AFTER PROVIDING AN OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. IN VIEW OF THESE FACTS, THIS GROUND OF REVENUES APPEAL IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE GROUND NO.4, THE ISSUE IS REGARDING DELE TION OF ADDITION OF RS.24,62,950/- U/S 80IA OF THE ACT. 15. THE ASSESSEE INSTALLED WINDMILLS AND STARTED PR ODUCING ELECTRICITY IN THE ASSESSMENT YEAR 2003-04. THE DEPRECIATION AND BUSI NESS LOSSES OF THE WINDMILLS UPTO ASSESSMENT YEAR 2006-07 WERE ADJUSTE D AGAINST OTHER BUSINESS INCOME OF THE ASSESSEE. ASSESSMENT YEAR 2007-08, T HE YEAR UNDER CONSIDERATION, IS THE INITIAL YEAR IN WHICH THE ASSESSEE HAS CLAIM ED DEDUCTION U/S 80IA (4)(IV)(A) OF THE ACT @ 100% OF THE PROFIT AND GAIN S OF ELIGIBLE BUSINESS I.E. WINDMILL. 16. THE CIT (A) HAS GRANTED THE RELIEF TO THE ASSES SEE BY HOLDING AS UNDER :- THE DECISION OF GOLDMINES CASE AS RELIED UPON BY THE ASSESSING OFFICER, IS NO MORE A GOOD SOURCE OF LAW, IN AS MUCH AS IN A SUBSEQUENT DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LIMIT ED VS. ACIT 231 CTR 368, AS RIGHTLY RELIED UPON BY THE COU NSEL, THE 17 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AFTER CO NSIDERING THE DECISION OF GOLDMINES CASE. THE MAIN ISSUE IS AS TO WHEN THE PROVISION OF SECT ION 80IA WILL BECOME APPLICABLE UPON THE APPELLANT. THE APPELLANT HAS OPTED TO CLAIM THE DEDUCTION U/S 80IA W.E.F. AS SESSMENT YEAR 2007-08, THOUGH THE PRODUCTION COMMENCED FROM THE ASSESSMENT YEAR 2003-04, THEREFORE PROVISION IS MAD E APPLICABLE FROM THE ASSESSMENT YEAR 2007-08. THE OP TION TO CLAIM THE DEDUCTION U/S 80IA RESTS WITH THE APPELLA NT TO CLAIM IT IN 10 YEARS OUT OF 15 YEARS. THE INITIAL ASSESSMENT YEAR FOR THE APPELLANT IS ASSESSMENT YEAR 2007-08 AND FROM SUCH ASSESSMENT YEAR, THE ELIGIBLE INDUSTRIAL UNDERTAKING WILL BE C ONSIDERED AS INDEPENDENT SOURCE OF INCOME OF THE APPELLANT AND N OT PRIOR TO THAT. THE ASSESSING OFFICER HAS MADE APPLICABLE THE PROVISIONS OF SECTION 80IA FROM THE ASSESSMENT YEAR 2003-04, WHEN THE APPELLANT HAS NOT EVEN CLAIMED THE DEDUCTI ON UNDER THE SAID PROVISION. THE ASSESSING OFFICER HAS MISUN DERSTOOD THE FIRST YEAR OF COMMENCEMENT OF PRODUCTION AND IN ITIAL ASSESSMENT YEAR AS SYNONYMOUS. THE YEAR OF COMMENCE MENT OF PRODUCTION AND INITIAL ASSESSMENT YEAR BEARS THE DI FFERENT CONNOTATION. FOR THIS PROPOSITION, STRENGTH IS DRAW N FROM THE STATUTORY AUDIT REPORT FORMAT IN FORM NUMBER 10CCB AS RELIED UPON BY LEARNED COUNSEL. I HAVE NO HESITATION IN GI VING A FINDING THAT THE INITIAL ASSESSMENT YEAR FOR THE AP PELLANT IS ASSESSMENT YEAR 2007-08 AND FROM SUCH ASSESSMENT YE AR, IT WILL BE CONSIDERED AS INDEPENDENT SOURCE OF INCOME. WHILE GIVING THIS FINDING I ALSO DRAW STRENGTH FRO M TAXMANNS READY RACKNOR BY DR. VINOD K. SINGHANIA 3 3 RD EDITION FROM PAGE NUMBER A-241 TO A-244. FURTHER, H ONBLE RAJASTHAN HIGH COURT IN CASE OF MEWAR SUGAR MILLS 2 71 ITR 311 HAVE DECIDED THAT IT IS NOT AT ALL REQUIRED THA T LOSSES OR OTHER DEDUCTION WHICH HAVE ALREADY BEEN SET OFF AGAINST T HE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTION U/S 80IA OF THE INCO ME TAX ACT, 1961. 18 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 THERE IS NO PROVISION UNDER THE INCOME TAX ACT, 19 61 OR ANY IOTA OF REFERENCE SUPPORTING THE STAND OF THE A SSESSING OFFICER FOR REVIVING THE EARLIER YEARS ALREADY ADJ USTED BUSINESS LOSSES AND UNABSORBED DEPRECIATION IN THE SUBSEQUEN T YEARS. DECISION OF VELAYUDHASWAMY SPINNING MILLS (P) LIMITED (SUPRA), IS LATEST ON THE SUBJECT, WHEREIN THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF MEWAR SUGAR MILLS HAVE ALSO BEEN FOLLOWED. SIMILAR ISSUE CAME UP BEFO RE ME IN THE APPEAL NUMBER 192/2009-10 OF SAURABH AGROTECH ( P) LTD. AND IN APPEAL NUMBER 191/2009-10 OF VIJAY INDUSTRIE S, KHAIRTAL & VIDE ORDER DT. 12.07.2011 & 11.07.2011 RESPECTIVE LY, I HAVE TAKEN A VIEW THAT THE APPELLANT IS ENTITLED FOR DED UCTION U/S 80IA OF THE I.T. ACT, 1961 AS CLAIMED BY IT IN ITS RETUR N OF INCOME. THEREFORE, CONSIDERING ALL THESE ISSUES & ON THE PR INCIPLE OF CONSISTENCY, IT IS HELD THAT THE ACTION OF AO IS NO T JUSTIFIED IN DENYING DEDUCTION OF RS. 24,62,950/- WITHIN THE MEA NING OF SECTION 80IA OF THE I.T. ACT, 1961. 17. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFF ICER. 18. LD. AR RELIED ON THE ORDER OF THE CIT (A) AND A LSO RELIED ON THE FOLLOWING CASE LAWS :- (I) VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACI T 340 ITR 477 (MAD.) (HC) AS PER SUB-S (5) OF S. 80IA, PROFITS ARE TO BE COMP UTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTION, O NLY THE LOSSES OF INITIAL ASSESSMENT YEAR ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEARS WHICH HAVE BEEN ALR EADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAS A LREADY BEEN SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND SE T OFF THE SAME AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS . FICTION CREATED BY SUB-S. (5) OF S. 80IA DOES NOT CONTEMPLA TE SUCH NOTIONAL SET OFF. IN THE INSTANT CASE, ADMITTEDLY, LOSSES INCURRED BY THE ASSESSEE HAVE ALREADY BEEN SET OFF AND ADJUS TED AGAINST THE PROFITS OF THE EARLIER YEARS. THERE IS A POSITI VE PROFIT DURING 19 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 THE RELEVANT YEAR. THEREFORE, LOSS OR DEPRECIATION IN THE YEAR EARLIER TO INITIAL ASSESSMENT YEAR ALREADY ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS CANNOT BE NOTIONALLY BROUG HT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUS INESS. ALL THE AUTHORITIES BELOW HAVE GIVEN A CATEGORICAL FINDING THAT THE FIRST YEAR OF ASSESSEES CLAIM FOR DEDUCTION UNDER S. 80I A IS 2004-05 AND THE SAME HAS REACHED FINALITY. THERE IS NO ERRO R OR ILLEGALITY IN THE ORDER OF THE TRIBUNAL WARRANTING INTERFERENC E. (II) RANGAMMA STEELS & MALLEABLES VS. ACIT 43 DTR 1 37 (CHENNAI)(TRIB.) IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, DERI VED FROM PROFITS AND GAINS FROM AN ELIGIBLE BUSINESS, WHICH ARE DETAILED IN SUB-S. (4), 100 PER CENT DEDUCTION IS ALLOWED FO R TEN CONSECUTIVE ASSESSMENT YEARS. SUB-S. (2) OF S. 80-I A GIVES OPTION TO THE ASSESSEE TO CHOOSE THE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS BEGINNING FROM THE YEAR IN WH ICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS T O OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVIDING TEL ECOMMUNICATION SERVICE OR DEVELOPS AND INDUSTRIAL PARKS ETC. SUB-S . (5) OF S. 80- IA QUALIFIES DEDUCTION OF SUB-S. (1) OF S. 80-IA WI TH A NON OBSTANTE CLAUSE AND OVERRIDES EVERY OTHER PROVISION IN THIS ACT PROVIDING MECHANISM BY WAY OF ASSUMPTION THAT FOR DETERMINING THE QUANTUM OF DEDUCTION FOR THE ASSESS MENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, IT WOULD BE DEEMED AS I F SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL AS SESSMENT YEAR AND TO EVERY ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. THE ABOVE PROVISIONS ARE VERY CLEAR, PLAIN AND DIRECT IN MEAN ING. BUT ONLY DIFFICULTY IS CAST BY THE TERM INITIAL YEAR WHICH HAS NOWHERE BEEN DEFINED IN THE ACT, YET BY SUB-S. (2) IT IS OB VIOUS THAT IT IS REFERRING TO THE OPTION VESTED IN THE ASSESSEE TO C HOOSE ANY 10 YEARS OUT OF 15 OR 20 YEARS PERIOD PROVIDED, AS THE CASE MAY BE. THE YEAR FROM WHICH OPTION HAS BEEN EXERCISED IS TO BE TREATED AS THE INITIAL ASSESSMENT YEAR BUT AFTER THAT THE 1 0 YEARS HAVE IN CONTINUITY. SUB-S. (5) OF S. 80-IA WOULD COME INTO OPERATION ONLY FROM THE YEAR IN WHICH THE APPELLANT STARTED C LAIMING DEDUCTION UNDER S. 80-IA I.E., FROM THE INITIAL YEA R, AND THE DEPRECIATION RELATING TO THE YEARS PRIOR TO THE INI TIAL ASSESSMENT 20 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 YEAR CANNOT BE BROUGHT BACK NOTIONALLY TO BE ADJUST ED AGAINST THE INCOME OF THE INITIAL OR SUBSEQUENT ASSESSMENT YEARS (III) COMMISSIONER OF INCOME TAX VS. MEWAR OIL AND GENERAL MILLS LTD. 271 ITR 311 (RAJ.)(HC) THE QUESTION OF RECTIFICATION WOULD HAVE BEEN GERMA NE ONLY IF THERE HAD BEEN CARRY FORWARD OF UNABSORBED DEPRECIA TION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORB ED LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIORITY IN DUSTRY AND WHETHER IT WAS REQUIRED TO BE SET OFF AGAINST THE I NCOME OF THE CURRENT YEAR. IN VIEW OF THE FINDING THAT THERE WAS NO CARRY FORWARD OF ALLOWABLE DEDUCTION UNDER THE HEAD DEPRE CIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAI NST THE INCOME OF THE CURRENT ASSESSMENT YEAR 1984-85, RECO MPUTATION OF INCOME FOR THE PURPOSE OF COMPUTING PERMISSIBLE DEDUCTION UNDER SECTION 80I FOR THE NEW INDUSTRIAL UNDERTAKIN G WAS NOT REQUIRED. THERE WAS NO ERROR APPARENT ON THE FACE O F THE RECORD WHICH COULD BE RECTIFIED. (IV) IT MAY BE NOTED THAT THERE IS NO CONTRARY JUDG MENT OF ANY OTHER HIGH COURT. HONBLE ITAT CHENNAI BENCH IN A THIRD MEMBER DECISION IN CASE OF SANGHVI & DOSHI ENTERPRISE VS. ITO 60 DTR 306/131 ITD 151 HELD THAT IF THERE IS NO DECISION OF JURISDICTIONAL HIGH COURT ON THE RELEVANT ISSUE, TRIBUNAL IS BOUND BY THE JUDGMENT OF ANY OTHER HIGH COURT WHICH IS AVAILABLE DIRECTLY ON THE SUBJECT. THEREFORE, THE A BOVE DECISION OF MADRAS HIGH COURT HAS RIGHTLY BEEN FOLLOWED BY C IT(A). 19. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E CASE LAWS, WE FIND NO FAULT IN THE ORDER OF THE CIT (A) AND DISMISS THIS GROUND OF REVENUES APPEAL. 20. GROUND NO.5 IS GENERAL IN NATURE AND DOES NOT R EQUIRE ANY ADJUDICATION. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.934/JP/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 21 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 21. IN THE ASSESSEES APPEAL, THE ONLY GROUND IS WI TH REGARD TO INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962. FOR THE YEAR UNDER CONSIDERATION, ASS ESSEE HAS CLAIMED NET INTEREST EXPENSES OF RS.1,23,51,478/- (RS.1,41,47,423/- MINU S RS.17,95,945/-) ON THE LOANS AND ADVANCES TAKEN FROM BANKS AND OTHERS. AS SESSEE HAD INVESTMENT IN SHARES OF RS.6,88,45,129/-. AO ASKED DETAILS OF SO URCE OF IMMEDIATE INVESTMENTS IN EACH COMPANY AND ASKED TO PROVE THAT INVESTMENTS WERE MADE FROM INTEREST FREE FUNDS. 22. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE HOLD THAT RULE 8D IS NOT APPLICABLE FOR THE ASSESSMENT YEAR 2007-08. HONBL E BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. D CIT REPORTED IN 328 ITR 81 HELD THAT RULE 8D IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 ONLY. BUT, AT THE SAME TIME, HONBLE HIGH COURT HAS ALSO OBSERVED THAT THE AO IS DUTY BOUND TO COMPUTE THE DISALLOWANCE BY APPLYING A REASONABL E METHOD HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. CONSIDERI NG ALL THESE FACTS AND CASE LAWS, WE FIND IT APPROPRIATE TO SET ASIDE THIS ISSU E TO THE FILE OF THE AO TO BE DECIDED AS PER LAW, OF COURSE AFTER PROVIDING AN OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTIC AL PURPOSES. 23. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO. 988/JP/2011 IS ALLOWED FOR STATISTICAL PURPOSES. 22 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 ITA NOS.15/JP/2012 & 65/JP/2012 24. THE APPEALS, BEING ITA NO.15/JP/2012 FILED BY T HE REVENUE AND ITA NO.65/JP/2012 FILED BY THE ASSESSEE, EMANATE AGAINS T THE ORDER OF THE CIT (APPEALS), ALWAR DATED 24.10.2011 FOR THE ASSESSMEN T YEAR 2008-09. 25. THE GROUNDS OF APPEAL IN THE REVENUES APPEAL I N ITA NO.15/JP/2012 READ AS UNDER :- 1. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL A S ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.32,68,447/- ON ACCOUNT OF DEEMED DIVIDEND U/S 2( 22)(E) OF THE I.T. ACT. 2. THAT THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.25,42,980/- DEDUCTION U/S 80IA ON WIND MILLS. 3. THE DEPARTMENT RESERVES ITS RIGHT TO ADD, ALTER, MODIFY, DELETE OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. THE GROUNDS OF APPEAL IN THE ASSESSEES APPEAL IN I TA NO.65/JP/2012 READ AS UNDER :- 1.0 THAT THE LEARNED ASSESSING OFFICER HAS ERRED I N LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN APPLY ING THE PROVISION OF SECTION 14A OF THE INCOME-TAX ACT'1961, IN AS MU CH AS THE SAID PROVISION HAS NO APPLICABILITY UPON FACTS OF THE CA SE SINCE THE ASSESSEE COMPANY DOES NOT HAVE ANY DIVIDEND INCOME DURING THE YEAR AND ALSO THE A' CO. HAS; NOT INVESTED ANY INTE REST BEARING FUNDS IN THE ACQUISITION OF SHARES AND THE LEARNED HONBLE C OMMISSIONER OF INCOME TAX (APPEALS), ALWAR HAS ERRED IN SUSTAINING THE ADDITION OF RS.3711212.00 . 2.0 DEDUCTION U/S 80IB ON DIRECT TRADING 23 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 (A) THAT THE LEARNED ASSESSING OFFICER HAS ERRED I N LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN GIVING A FINDING IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS ENGAGE D IN THE TRADING OF MUSTARD OIL, WHEREAS THE FACT REMAINS THAT THE ASSE SSEE IS NOT ENGAGED IN THE TRADING OF MUSTARD OIL ON THE CONTRA RY THE MUSTARD OIL PURCHASED FROM THE MARKET IS SUBJECTED TO THE PROCE SSING AND RECONDITIONING AND THEN SOLD IN THE MARKET AFTER AT TAINING THE STATUS OF AGMARK, WHICH IS THE INDUSTRIAL ACTIVITY OF THE ASSESSEE COMPANY, HENCE THE LEARNED ASSESSING OFFICER ERRED IN GIVING A FINDING THAT THE ASSESSEE COMPANY IS ENGAGED IN THE TRADING OF MUSTA RD OIL AND HONOURABLE COMMISSIONER OF INCOME-TAX (APPEALS), AL WAR HAS ERRED IN SUSTAINING THE SAME. (B) THAT THE LEARNED ASSESSING OFFICER HAS ERRED I N LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN WORKING OUT THE PROFIT FROM TRADING OF MUSTARD OIL AT RUPEES 30,58, 815.00 AND IN NOT ALLOWING THE DEDUCTION U/S 80IB THEREON AND THE HON OURABLE COMMISSIONER OF INCOME-TAX (APPEALS), ALWAR HAS ERR ED IN SUSTAINING THE SAME. (C) THAT THE LEARNED ASSESSING OFFICER HAS ERRED I N LAW AS WELL AS ON THE FACTS CIRCUMSTANCES OF THE CASE IN E XCLUDING THE PROFIT OF RUPEES 30,58,815.00 FOR PURPOSE OF COMPUTING TH E DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 AND HONOURABLE COM MISSIONER OF INCOME-TAX (APPEALS), ALWAR HAS ERRED IN SUSTAINING THE SAME. 3.0 THE ASSESSEE RESERVES ITS RIGHT TO ADD, ALTER, MODIFY, DELETE OR AMEND ALL OR ANY OF THE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 26. GROUND NO.1 OF THE REVENUES APPEAL IN ITA NO.1 5/JP/2012 IS AGAINST THE DELETION OF ADDITION MADE U/S 2(22)(E) OF THE ACT. THIS ISSUE HAS BEEN DISCUSSED BY US ABOVE IN PARA NOS.8 TO 10 IN ITA NO.934/DEL/2 011 OF THIS ORDER. FOLLOWING OUR OBSERVATIONS MADE AS ABOVE, WE DISMIS S THIS GROUND OF REVENUES APPEAL. 27. IN THE GROUND NO.2 OF THE REVENUES APPEAL IN I TA NO.15/JP/2012, THE ISSUE IS WITH REGARD TO THE DELETION OF ADDITION U/ S 80IA ON WIND MILLS. THIS 24 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 ISSUE HAS BEEN DISCUSSED BY US ABOVE IN PARA NOS.14 TO 19 IN ITA NO.934/DEL/2011 OF THIS ORDER. FOLLOWING OUR OBSERV ATIONS MADE AS ABOVE, WE DELETE THIS GROUND OF REVENUES APPEAL. 28. GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT R EQUIRE ANY ADJUDICATION. 29. IN THE RESULT, THE REVENUES APPEAL BEING ITA N O.15/JP/2012 IS DISMISSED. 30. IN GROUND NO.1 IN ASSESSEES APPEAL IN ITA NO.6 5/JP/2012, THE ASSESSEE HAS CHALLENGED THE APPLICABILITY OF PROVISIONS OF S ECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962. 31. LD. AR SUBMITTED THAT ASSESSEE HAS NO DIVIDEND INCOME FOR THE YEAR UNDER CONSIDERATION, THEREFORE, THESE PROVISIONS AR E NOT APPLICABLE. FURTHER, THE ASSESSEE COMPANY HAS NOT INVESTED ANY INTEREST BEAR ING FUNDS IN THE ACQUISITION OF SHARES, THEREFORE, THE CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD TOTAL INVESTMENT IN SHARES OF RS.7,88,45,129/-. IT WAS PLEADED BEFORE US THAT TH ESE INVESTMENTS WERE MADE IN EARLIER YEARS EXCEPT FOR INVESTMENT OF RS.10 LACS I N DHURVA ENCLAVE P. LTD. LD. AR ALSO SUBMITTED BEFORE US THAT RULE 8D IS NOT AUT OMATIC. THE ASSESSEE HAS CLAIMED THAT IT HAS NOT INCURRED ANY EXPENDITURE IN RELATION TO THE INCOME WHICH IS NOT FORMING PART OF THE TOTAL INCOME THEN THERE CANNOT BE ANY DISALLOWANCE. THE AO HAD TO SATISFY HIMSELF WITH THE CORRECTNESS OF THE ASSESSEES CLAIM AND IF HE IS NOT SATISFIED THEN ONLY HE CAN INVOKE THE PRO VISIONS OF SUB-RULE (2) OF RULE 8D. IT WAS ALSO SUBMITTED BEFORE US THAT ASSESSEE HAS NOT INCURRED ANY 25 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 EXPENDITURE BY WAY OF PAYMENT OF INTEREST OR OTHERW ISE FOR MAKING INVESTMENT IN SHARES. HE PLEADED THAT THIS FACT CAN BE SUBSTA NTIATED FROM THE BOOKS OF ACCOUNTS. HE ALSO PLEADED THAT ASSESSEE HAS INCURR ED INTEREST EXPENSES OF RS.3,35,36,289/- ON WORKING CAPITAL LIMITS AND TERM LOAN TAKEN FROM STATE BANK OF BIKANER AND JAIPUR (SBBJ) AGAINST HYPOTHECATION OF STOCK, DEBTORS AND PLANT & MACHINERY. THE TOTAL WORKING CAPITAL LOAN OUTSTA NDING AS ON 31.03.2008 WAS RS.12.92 CRORES AGAINST WHICH INVESTMENT IN STOCK A ND DEBTORS WAS OF RS.34.60 CRORES. THE ENTIRE LOAN TAKEN FROM SBBJ WAS FOR TH E PURPOSE OF BUSINESS. HE PLEADED THAT SUCH INTEREST PAYMENT IS ALLOWABLE U/S 36(1)(III) OF THE ACT IN VIEW OF THE RATION LAID DOWN BY THE HONBLE SUPREME COUR T IN THE CASE OF SA BUILDERS REPORTED IN 289 ITR 1. IT WAS ALSO PLEADE D THAT THERE WAS NO FRESH INVESTMENT EXCEPT THE INVESTMENT OF RS.10 LACS IN D HRUVA ENCLAVE P. LTD. THE ASSESSEE IS HAVING SHARE CAPITAL RESERVE AND SURPLU S OF RS.17.61 CRORES WHILE THE INVESTMENT IN SHARES WERE OF RS.7.88 CRORES ONLY. THUS THE INTEREST FREE FUNDS WERE MORE THAN THE INVESTMENT IN SHARES. IT WAS AL SO PLEADED THAT IN THE ASSESSMENT YEAR 2006-07, ITAT IN ITS ORDER IN ITA N O.361/JP/2011 DATED 21.10.2011 HAS CONSIDERED THE FACTS REGARDING THE B ORROWED FUNDS WHICH HAVE BEEN UTILIZED FOR ACQUIRING ASSETS FOR WHICH THE BO RROWINGS WERE MADE. IN THAT YEAR, ITAT HAS HELD THAT NO DISALLOWANCE U/S14A IS POSSIBLE. THE LD. AR ALSO RELIED ON VARIOUS ORDERS OF HONBLE HIGH COURTS AND ITAT WHICH ARE GIVEN AS UNDER :- 26 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 (I) MINDA INVESTMENT LTD. VS. DCIT 52 DTR 001 (DE L.)(TRIB.); (II) DCIT VS. MAHARASHTRA SEAMLESS LTD. 52 DTR 00 5 (DEL.)(TRIB.); (III) CIT VS. METALMAN AUTO (P.) LTD. 199 TAXMAN 149 (P&H)(MAG.); (IV) CIT VS. GUJARAT POWER CORPORATION LTD. ORDER D ATED 28.03.2011; (V) G.D. METSTEEL (P.) LTD. VS. ACIT 64 DTR 161 ( MUM.)(TRIB.); (VI) BUNGE AGRIBUSINESS (INDIA) P. LTD. VS. DCIT 1 32 ITD 549 (MUM.)(TRIB.) (VII) VISEN INDUSTRIES LTD. VS. ACIT 136 ITD 309 (MUM.)(TM); (IX) RELIANCE INDUSTRIES LTD. VS. ACIT 79 DTR 315 (MUM .) (TRIB.). 32. LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 33. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE RE IS NO DISPUTE THAT PROVISIONS OF RULE 8D ARE APPLICABLE FROM THE A SSESSMENT YEAR 2008-09 ONLY. THUS, THE RULE IS APPLICABLE FOR THIS YEAR. THIS RULE PROVIDES A FORMULA BY WHICH IT IS WORKED OUT WHAT AMOUNT OF EXPENDITURE I N RELATION TO INCOME WHICH IS NOT INCLUDED IN THE TOTAL INCOME IS TO BE WORKED OUT. WHEN AO IS NOT SATISFIED WITH THE CORRECTNESS OF EXPENDITURE CLAIM ED BY THE ASSESSEE OR WHEN THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN IN CURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME BUT AO IS NOT SATISFIED TO SUCH CLAIM IN THAT CIRCUMSTANCES, THE AO SHALL DETERMINE THE AMOUNT OF EXPENDITURE IN RELATION TO SUCH INCOME IN ACCORDANCE WITH THE P ROVISIONS OF RULE 8D. THE EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FO RM PART OF THE TOTAL INCOME SHALL BE THE AGGREGATE OF THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND IN TEREST EXPENDITURE DURING THE PREVIOUS YEAR WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT, AN AMOUNT COMPUTED ACCORDING TO THE FORMUL A AS PROVIDED IN THE RULES. 27 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 THIS ASPECT OF RULE REQUIRES AO TO LOOK DEEPER IN T HE ACCOUNTS OF ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, THIS ISSUE REQUI RES A FRESH LOOK AT THE LEVEL OF AO PRIOR TO APPLYING THE RULE 8D. ACCORDINGLY, THI S ISSUE IS RESTORED TO THE FILE OF THE AO. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 34. IN THE GROUND NO.2 OF THE ASSESSEES APPEAL IN ITA NO.65/JP/2012, THE ISSUE IS WITH REGARD TO THE DEDUCTION U/S 80IB. TH IS ISSUE HAS BEEN DISCUSSED BY US ABOVE IN PARA NOS.11 TO 13 IN ITA NO.934/DEL/201 1 OF THIS ORDER. FOLLOWING OUR OBSERVATIONS MADE AS ABOVE, WE PARTLY ALLOW THI S GROUND OF ASSESSEES APPEAL FOR STATISTICAL PURPOSES. 32. IN THE RESULT, THE ASSESSEES APPEAL BEING ITA NO.65/JP/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 33. TO SUM UP : IN THE RESULT, THE APPEAL OF THE RE VENUE IN ITA NO.934/JP/2011 IS PARTLY ALLOWED FOR STATISTICAL PU RPOSES; THE ASSESSEES APPEAL IN ITA NO.988/JP/2011 IS ALLOWED FOR STATISTICAL PU RPOSES; THE REVENUES APPEAL BEING ITA NO.15/JP/2012 IS DISMISSED; AND THE ASSES SEES APPEAL IN ITA NO.65/JP/2-12 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF DECEMBER, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTA NT MEMBER JAIPUR DATED : THE 2 ND DAY OF DECEMBER, 2014/TS. 28 ITA NOS.934 & 988/JP/2011 ITA NOS.15 & 65/JP/2012 COPY FORWARDED TO: 1. M/S. DEEPAK VEGPRO P. LTD. 2.ACIT, CIRCLE 1, ALWAR 3.CIT 4.CIT(A) 5.CIT(ITAT) (GUARD FILE : ITA NOS.934 & 988/JP/2011 & 15 & 65/JP /2012) AR, ITAT NEW DELHI.