TRIVENI ENGINEERING & INDUSTRIES LTD.,NOIDA V. ACIT, NOIDA

ITA 1965/DEL/2016

AI Insights

The case involves a series of appeals and cross-appeals by Triveni Engineering & Industries Ltd. against the orders of the CIT(A)-I, Noida, and the Addl. CIT, Range-16, New Delhi, concerning the assessment years 2007-08 to 2011-12. The primary legal disputes revolved around the classification of subsidies received under the Sugar Industry Promotion Policy, the treatment of certain expenses as provisions rather than accrued liabilities, and the eligibility for deductions under various sections of the Income Tax Act. The Tribunal's decision addressed these issues by examining the nature of the subsidies, the legal standards for recognizing provisions and liabilities, and the statutory requirements for claiming deductions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471994 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Other Referred Cases: Sahney Steel and Press Works Ltd. & Others v. CIT, CIT v. Pony Sugar & Chemicals Ltd., CIT v. Chaphalkar Brothers, Chainrup Sampatram v. CIT, PCIT v. Abhisar Buildwell P. Ltd., Bharat Earth Movers v. CIT, Calcutta Company Ltd. v. CIT, CIT v. Triveni Engineering & Industries Ltd., Godrej & Boyce Manufacturing Co. Ltd. v. DCIT, CIT v. Girish Choudhry
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Additional evidence; Revised return; Unexplained expenditure; Rule of consistency; Capital receipt; Search and seizure; Earning of tax free income; Rule 8D
• Section: 143(3); 153A; 14A; 37(1); 80IA; 80G

Judgement Text

"1 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA nos. 1962 to 1967/Del/2016 & ITA nos. 2357 to 2362/Del/2016 Asstt. Yrs: 2007-08 to 2011-12 Triveni Engineering & Industries Ltd., 8th Floor, Express Trade Tower, 15-16, Sector-16A, Noida- 201301. PAN: AABCT 6370 L Vs Addl. CIT, Range-16, New Delhi. APPELLANT RESPONDENT/ CROSS -APPELLANT Assessee represented by Sh. Rohit Jain, Adv.; & Ms. Somya Jain, CA Department represented by Shri Sanjeev Kaushal, CIT(DR) Date of hearing 13.01.2025 Date of pronouncement 29 .01.2025 O R D E R PER BENCH: The instant batch of twelve appeals and cross appeals; as the case may be, pertains to the single assessee herein, namely, M/s Triveni Engineering & Industries Limited. All other relevant details thereof stand tabulated as under: 2 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 Sl. No./ITA no./assessment year Appellant Order appealed against Proceedings u/s 1. ITA 1962/Del/2016 (A.Y. 2007-08) Triveni Engineering & Industries Ltd. CIT(A)-I, Noida’s order dt. 27.01.2016 in case no. 262/2009-10/Noida. 143(3) of the Income- tax Act, 1961 (“Act”) 2. ITA 2358/Del/2016 (A.Y. 2007-08 JCIT(OSD),CC, Noida -do- -do- 3. ITA 1963/Del/2016 (A.Y. 2007-08) Triveni Engineering & Industries Ltd. CIT(A)-I, Noida’s order dt. 27.01.2016 in case no. 149/2013-14/Noida 153/143(3) of the Act. 4. ITA 2357/Del/2016 (A.Y. 2007-08) JCIT(OSD),CC, Noida -do- -do- 5. ITA 1964/Del/2016 (A.Y. 2008-09) Triveni Engineering & Industries Ltd. CIT(A)-I, Noida’s order dt. 27.01.2016 in case no. 148/2013-14/Noida 153A/143(3) of the Act 6. ITA 2359/Del/2016 (A.Y. 2008-09) JCIT(OSD),CC, Noida -do- -do- 7. ITA 1965/Del/2016 (A.Y. 2009-10) Triveni Engineering & Industries Ltd. CIT(A)-I, Noida’s order dt. 27.01.2016 in case no. 147/2013-14/Noida 153A/143(3) of the Act 8. ITA 2360/Del/2016 (A.Y. 2009-10) JCIT(OSD),CC, Noida -do- -do- 9. ITA 1966/Del/2016 (A.Y. 2010-11) Triveni Engineering & Industries Ltd. CIT(A)-I, Noida’s order dt. 27.01.2016 in case no. 146/2013-14/Noida 153A/143(3) of the Act 10. ITA 2361/Del/2016 (A.Y. 2010-11) JCIT(OSD),CC, Noida -do- -do- 11. ITA 1967/Del/2016 (A.Y. 2011-12) Triveni Engineering & Industries Ltd. CIT(A)-I, Noida’s order dt. 27.01.2016 in case no. 145/2013-14/Noida 143(3) of the Act. 12. ITA 2362/Del/2016 (A.Y. 2011-12) JCIT(OSD),CC, Noida -do- -do- Heard both the parties at length. Case files perused. We proceed assessment year wise for the sake of convenience and brevity. A.Y. 2007-08 – ASSESSEE’S AND REVENUE’S CROSS APPEALS – ITA 1962 & 2358/Del/2016: 3 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 2. This assessee’s appeal ITA no. 1962/Del/2016 raises the following substantive grounds: “1 That on facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs.6.20,94,770 on account of remission of statutory levies and reimbursement of specified expenses under the Sugar Industry Promotion Policy, 2004 (in short \"Policy\"). 1.1 That the CIT(A) erred on facts and in law in not appreciating that the subsidy/incentive receivable under the Policy was merely contingent receipt, not resulting in accrual of any amount in favour of the appellant. 1.2 That the CIT(A) erred on facts and in law in holding that since the Policy was withdrawn on 04.06.2007, the appellant was entitled to receive incentive till 03.06.2007 and therefore, the incentive/subsidy under the Policy could not be regarded as contingent. 1.3 That the CIT(A) erred on facts and in law in not appreciating that remission of statutory levies and reimbursement of specified expenses under the Policy (since revoked) was, in any case, in the nature of a capital receipt, not liable to tax under the provisions of Income-tax Act, 1961 ('the Act'). 2. That the CIT(A) erred on facts and in law in upholding disallowance to the extent of Rs.5,13,50,000 out of Rs.6,89,80,258, being expenses incurred on account of after sale and other expenses, holding the same to be merely provision and not accrued liability. 2.1 That the CIT(A) failed to appreciate that the aforesaid amount of Rs.5,13,50,000 was in respect of ascertained contractual liability and not merely in the nature of a provision. 3. That the CIT(A) erred on facts and in law in upholding the disallowance to the extent of Rs.1,09,126 under section 14A of the Act. 4. That the CIT(A) erred on facts and in law in confirming the denial of deduction of Rs.41.72.500 claimed under section 80G of the Act. 5 That on the facts and circumstances of the case and in law, the assessing officer should be directed to allow exemption of dividend income of Rs.13,43,047 in respect of mutual fund under section 10(34) of the Act. 4 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 5.1 That the CIT(A) erred on facts and in law in not adjudicating the aforesaid ground of appeal taken in the memorandum of appeal (refer Ground No.7 to 8 in Form No.35) 6. That on the facts and circumstances of the case and in law, the assessing officer should be directed to allow deduction of Rs. 1,91,524, being expenses relatable to the relevant assessment year but debited in the Profit & Loss Account of the subsequent assessment year (s). 6.1 That the CIT(A) erred on facts and in law in not adjudicating the aforesaid ground of appeal taken in the memorandum of appeal (refer Ground No. 10 in Form No.35) 7. That on the facts and circumstances of the case and in law, the legal claims made vide ground of appeal Nos. 5 and 6 should be directed to be allowed, in order to compute the correct taxable income of the appellant under the provisions of the Act.” 3. The Revenue’s cross appeal ITA 2358/Del/2016 herein canvasses the following substantive grounds: “1. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs 1,04,70,00,000/- on account of capital subsidy credited to the assessee and was to augment the revenues of the assessee company. 2. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1.76,30,000/- out of total addition of Rs.6.89.80,258/- on account of after sales expenses and others as the same was provision and not the liability actually accrued. 3. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.15,04,675/- out of total addition of Rs. 16,13,775/- on account of disallowance of proportionate management expenses for earning dividend income as per provisions of section 14A of the 1.T. Act, 1961. 4. That the Ld. CIT(A) did not appreciate the facts and material on record. 5 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 5. That the order of the Ld. CIT(A) being erroneous in law and on facts which needs to be vacated and the order of the AO be restored.” 4. It is in this factual backdrop that both parties are indeed ad-idem during the course of hearing that the first and foremost common issue raised in the instant appeal is that of correctness of the CIT(A)’s action partly reversing the Assessing Officer’s finding rejecting the assessee’s subsidy claim of Rs. 1,10,90,94,770/-; to the extent of Rs. 1,04,70,00,000/-; which leaves the taxpayer as well as the department aggrieved. 5. Learned counsel reiterates the assessee’s stand all along that the above subsidy/ incentives receivable under the sugar industrial promotion policy, 2004 is in the nature of a capital receipt going by the “purpose test” in light of Sahney Steel and Press Works Ltd. & Others v. CIT (1997) 228 ITR 253 (SC); CIT v. Pony Sugar & Chemicals Ltd. (2008) 306 ITR 392 (SC); & CIT v. Chaphalkar Brothers (2018) 400 ITR 279 (SC). 6. Learned CIT(DR) on the other hand, strongly supports the assessment findings that the impugned subsidy in fact deserves to be treated as a revenue receipt on “accrual” basis and, therefore, we ought to revive the entire addition of Rs. 1,10,90,94,770/-. 6 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 7. Faced with this situation, learned counsel takes us to the assessment discussion in para 4 page 1 onwards dated 31.12.2009 to buttress the point that the state government herein had revoked the sugar incentive promotion policy itself w.e.f. 4.6.2007. And that this very issue had arisen between all the similarly situated industrial undertakings against the State of Uttar Pradesh in the main writ petition WP(C) no. 2679 of 2008 (pages 299 to 334), which stood allowed by the hon’ble jurisdictional high court of judicature at Allahabad on 12.02.2019. And that hon’ble supreme court’s interim order(s) dated 1.7.2019 and 9.7.2021 (pages 372-377) in the Special Leave Petition(s) “SLPs” preferred by the State of Uttar Pradesh & others, has stayed the operation thereof and the matter is yet to be taken up thereafter for final adjudication as informed to us by both the parties. 8. That being the case and despite the assessee having argued in favour of the “purpose” test (supra), we are of the considered view that since the issue herein is very much pending before their lordships for final adjudication, it would indeed be pre mature for us to apply “accrual” principle at this stage for lack of any reasonable certainty in recognition of revenue as per Chainrup Sampatram v. CIT (1953) 24 ITR 481 (SC). Their lordships have categorically held that a revenue receipt could be recognized as an income only in case there arise a reasonable certainty thereof. We reiterate that the Revenue’s clear cut case is that the same has indeed been not actually received all along as the dispute is pending before hon’ble 7 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 apex court. We, accordingly are of the considered view that the instant common first and foremost issue between the parties is required to be re-adjudicated by the learned Assessing Officer after it is decided in the hon’ble supreme court so as to avoid multiplicity of proceedings. We order accordingly. It is made clear tht the assessee indeed be at liberty to raise all legal and factual pleas in consequential proceedings. This assessee’s instant substantive ground nos. 1 to 1.3 and Revenue’s corresponding first substantive ground herein are hereby accepted for statistical purposes in very terms. 9. Next comes the assessee’s and Revenue’s respective second substantive ground that the learned CIT(A) has erred in law and on facts in restricting the Assessing Officer’s action disallowing after sales expenses etc. from Rs. 6,89,80,258/- made in the course of assessment to Rs. 5,13,56,000/-, in the lower appellate discussion, reading as under: “14. The Id. A.O. disallowed an amount of Rs.6,89,80,258/- treating the same as provision and not the liability having actually accrued. The appellant in its grounds at para 6.1 on page 14 of its paper book filed with appeal memo has admitted that out of the expenditure of Rs. 6.89 crores an amount of Rs. 5.1350 Crores only was provision and the balance of Rs.1.7630 Crores was actual expense. The ground taken by the appellant in its appeal memo settles the dispute. The disallowance to the extent Rs. 5.1350 Crores is therefore confirmed being the provision and for which the liability has not yet arisen. The amount for Rs. 1.7630 Crores which admittedly represented actual expenses is allowed and addition to that 8 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 extend is deleted. The appellant gets relief to the extent of Rs. 1.7630 Crores out of the disallowance of Rs. 6,89,80,258/-.” 10. Both the parties reiterate their respective stands against and in support of the impugned after sales expenditure disallowance claim as a provision which stands treated as a mere contingent liability by the learned lower authorities. 11. It has come on record that the learned CIT(A) had simply gone by the assessee’s provision to reject its claim on the one hand and deleted the balance portion on account of actual expenditure in it’s favour. We are of the considered view that the Revenue’s second substantive ground herein, seeking to revive the impugned actual expenditure, hardly carries any merits as this is not even its case that the same has not been expended wholly and exclusively for the purpose of business u/s 37(1) of the Act. Its second substantive ground raised herein fails therefore. 12. We now advert to the assessee’s instant grievance seeking to allow the impugned provision wherein case law Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC); Calcutta Company Ltd. v. CIT (1959) 37 ITR 1 (SC); & CIT v. Triveni Engineering & Industries Ltd. (2011) 336 ITR 374 (Delhi) i.e. the assessee itself, in paras 6,7,8 & 11 has held that such a provision based on scientific computation formula could indeed be allowed. 9 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 13. Learned counsel further reiterates the assessee’s stand that it has all along been recognizing the revenue from all projects subject to the corresponding expenditure provision which has to be incurred in future. 14. We find merit in the assessee’s arguments as the learned CIT(A) has simply brushed aside it’s impugned provision for after sales expenditure etc. by observing, “The ground taken by the appellant in its appeal memo settles the issue”. Meaning thereby that the assessee’s scientific computation herein has nowhere been specifically dealt with or rejected as the learned lower authorities have declined it’s provision of the impugned expenditure raised for meeting future anticipated liabilities as per Bharat Earth Movers (supra). Coupled with this, the assessee has already succeeded on the very issue before hon’ble jurisdiction high court hereinabove. We, thus see no substance in the Revenue’s vehement contentions supporting the impugned disallowance, which stands deleted therefore. This assessee’s second substantive ground succeeds in very terms therefore. Necessary computation shall follow as per law. 15. The third substantive issue between the parties herein is that of correctness of the learned CIT(A)’s action restricting the learned Assessing Officer’s findings invoking section 14A disallowance of Rs. 16,13,775/- qua the assessee’s exempt 10 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 income of Rs. 21,82,517/-; @ 5% thereof; coming to Rs. 1,09,126/- only leaving both the parties aggrieved against the same. 16. The assessee’s case is that the impugned disallowance deserves to be deleted in entirety as against the Revenue’s contention that we ought to revive the Assessing Officer’s action invoking 14A read with Rule 8D of the Act. 17. We have given our due consideration to the foregoing vehement rival stands and see no merit in the learned Assessing Officer’s computation invoking Rule 8D of the Income-tax Rules, which has been made applicable from A.Y. 2008-09 onwards in light of Godrej & Boyce Manufacturing Co. Ltd. v. DCIT 394 ITR 449 (SC). That being the case and in absence of any other material to the contrary, we make it clear that although the assessee has claimed not to have incurred any expenditure; but, the same cannot be accepted as at least some indirect expenditure in such an instance could not be altogether ruled out. Faced with this situation, we conclude that the learned CIT(A) has fairly estimated the impugned disallowance @ 5% of the assessee’s exempt income (supra). The same stands upheld. Both these assessee’s and Revenue’s corresponding third substantive ground(s) herein stand rejected in above terms. The Revenue’s instant cross appeal ITA 2358/Del/2016 raising these three grounds is partly accepted for statistical purpose in above terms. 11 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 18. We next note that the assessee’s fourth substantive ground herein is directed against both the learned lower authorities’ action disallowing it’s section 80G deduction amounting to Rs. 41,72,500/- in question. Learned Assessing Officer held in para 9 of the assessment order that it had not filed any supportive evidence. Coming to the lower appellate discussion, we note that the learned CIT(A) has attributed the assessee’s very failure in para 17 page 5 of his order. 19. That being the case, learned counsel invites our attention to the assessee’s contribution/ donation receipts to the duly registered recipients (page 117-119 of the paper book). His case, therefore, is that the same is not in the nature of additional evidence which would require further opportunity to the department for verification thereof. We make it clear that assessee has further given its due certification which has not been disputed at the Revenue’s behest in principle so far as its foregoing supportive evidence is concerned. Faced with this situation, we deem it appropriate to accept the assessee’s instant claim of section 80G deduction in principle and indeed leave to open for the learned Assessing Officer to frame his consequential computation afresh after verification of the necessary relevant facts, as per law. The assessee’s instant 4th substantive ground is accepted in very terms. 20. Learned counsel next takes us to the assessee’s substantive ground nos. 5 to 5.1 claiming exemption of dividend income of Rs. 13,43,047/- u/s 10(34) of the 12 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 Act. Learned Assessing Officer appears to have quoted Goetz (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC) in holding that such a claim ought not to be entertained except submitted in a revised return. The very factual position has continued in the learned CIT(A)’s lower appellate discussion as well. 21. The Revenue’s vehement contention in light of the foregoing facts is that learned lower authorities have rightly followed the hon’ble supreme court’s decision and, therefore, the impugned disallowance ought to be upheld. 22. We have given our thoughtful consideration to the assessee’s and Revenue’s respective vehement arguments. There could be hardly any dispute that their lordships’ elaborate discussion in para 4 has categorically concluded that jurisdiction of the appellate authorities under the provisions of the Act in entertaining such a new claim for the first time; even without a revised return, has not been impinged upon. We thus accept the assessee’s instant 5th substantive ground in principle and direct the learned assessing authority to frame its consequential computation as per law subject to a rider that it shall be the tax payer’s risk and responsibility only to plead and prove the corresponding claim u/s 10(34) of the Act within three effective opportunities. Ordered accordingly. 23. Learned counsel lastly submits that the assessee’s sixth substantive ground seeks deduction of 1,91,524/- representing expenditure relatable to the relevant 13 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 assessment year but debited in the P&L a/c of the succeeding assessment year i.e. in the nature of “prior period expenditure”. Our attention is further invited to this tribunal’s common order in it’s appeal ITA 1955 to 1959/Del/2016 relevant to A.Y. 2001-02 to A.Y. 2005-06 pages 142 para 14, wherein the very claim of prior period expenditure was restored back to the CIT(A). And that the instant ground is indeed revenue neutral instance wherein the impugned expenditure ought to be allowed either in the year of accrual or that of crystallization; as the case may be. We are further informed that the learned lower authorities have followed Goetz India Ltd. v. CIT (supra) to reject the instant last claim as well. 24. We have given out thoughtful consideration to the foregoing vehement rival stands. We are of the considered view that the Revenue’s stand seeking to reject the assessee’s impugned expenditure claim both on accrual as well as that of crystallization (supra), could not be upheld going by the principle of consistency and in view of the fact that this is an instance of revenue’s neutral expenditure only as per CIT vs. Modipon Ltd. (2012) 18 taxmann.com 331 (Del.). The fact also remains that we have already rejected the Revenue’s stand based on Goetz India Ltd. in preceding paras. It further fails to rebut the fact that the very expenditure stands declined in the succeeding assessment year of crystallization as well. We accordingly direct the learned Assessing Officer to accept the assessee’s impugned 14 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 claim after verification of all the necessary facts as per law. Ordered accordingly. This assessee’s “lead” appeal ITA 1962/Del/2016 is partly allowed in above terms. 25. A perusal of the case file indicates that the assessee and the Revenue have filed another set of appeals ITA 1963 and 2357/Del/2016 arising from the learned Assessing Officer’s section 143(3) read with section 153A assessment framed on 31.03.2013 in furtherance to the department’s search action dated 7.4.2010. This being the clinching fact in the instant cross appeals, we are of the considered view that once there is no addition made by the learned Assessing Officer specifically based on the seized material, we quote PCIT v. Abhisar Buildwell P. Ltd. (2023) 454 ITR 212 (SC) to conclude that such an assessment itself is not sustainable in law. We order accordingly. Learned Assessing Officer’s impugned assessment herein stands quashed. We further make it clear before parting that he had in fact repeated his first round disallowance/ additions in the instant search assessment as well. This assessee’s appeal ITA 1963/Del/2016 is allowed and the Revenue’s cross appeal ITA 2357/Del/2016 is dismissed in very terms. A.Y. 2008-09 – ASSESSEE’S AND REVENUE’S CROSS APPEALS ITA 1964/Del/2016 and 2359/Del/2016: 26. Both the learned representatives are indeed very fair during the course of hearing that this A.Y. 2008-09 also involves an “unabated” assessment as on the date of search i.e. 7.4.2010 wherein no additions based on any specific seized 15 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 material has been made. We thus quash the impugned assessment itself in very terms. This assessee’s appeal ITA 1964/Del/2016 is allowed and the Revenue’s cross appeal ITA 2359/Del/2016 is dismissed. A. Y. 2009-10 – Assessee’s appeal and Revenue’s cross appeal - ITA 1965 and 2360/Del/2017: 27. Coming to the assessee’s appeal ITA 1965/Del/2016 herein, we note that it’s sole substantive ground seeks to claim deduction of expenses amounting to Rs. 6,52,803/-; which are found as “prior period” in nature. Both the learned representatives very much agree during the course of hearing that the same is indeed identical to that already dealt with in the preceding assessment year wherein we have accepted the same in principle. We thus adopt judicial consistency to accept the same in very terms. This assessee’s appeal ITA 1965/Del/2016 succeeds therefore. 28. The Revenue’s cross appeal herein ITA 2360/Del/2016 on the other hand raises following substantive grounds: “1. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Wool/Rs.3.08.000/- on account of fly ash as the rate of fly ash applied by the A.O. after giving due consideration to the fact that fly ash generated from bagasse would fetch a lower price than the fly ash generated from coal, the latter was sold by the assessee in A.Υ. 2011-12 at Rs.60/- per tone. 16 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 2. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.15,43,91,140/- on account of capital subsidy as the same was credited to the assessee and was to augment the revenues of the assessee company. 3. That the Ld. CIT(A) did not appreciate the facts and material on record. 4. That the order of the Ld. CIT(A) being erroneous in law and on facts which needs to be vacated and the order of the AO be restored. 5. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise.” 29. Both the learned representatives invite our attention to the learned CIT(A)’s detailed lower appellate discussion deciding the instant issue against the Department as under: “7. The next ground of addition as made by the Id. A.O. is of Rs. 3,08,000/- which was estimated by the Id. A.O. as amount received by the appellant over and above the amount disclosed by the appellant in its books of accounts. The Id. A.O. did not accept the amount of Rs. 15/- per MT as adequate and felt that an amount of Rs. 60 per MT was adequate as in A.Y. 2011-12 the appellant sold the same fly ash at that rate. Apart from the fact that there was a time gap of about six years in the transactions involved, i.e., those in the A.Y. 2005-06 and those in A.Y. 2011-12, the revenue found no incriminating material on this issue in course of search and seizure operation the Id. A.O. had no jurisdiction to supplant the value disclosed by the appellant by the value which the Id. A.O. feels to be adequate. The action of the Id. A.O. is beyond jurisdiction and cannot be sustained in the eyes of law. The addition of Rs.3,08,000/- is therefore, deleted. The appellant gets relief to that extent.” 17 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 30. Learned CIT(DR) could hardly dispute the clinching fact emerging from the case file that there is no actual material indicating the assessee to have sold the fly ash in question over and above the corresponding figures stated in the books of account. What is thus clear is that impugned addition is based on mere assumptions and presumptions and without even quoting market comparables which cannot be held to have been rightly made in the facts and circumstances of the case. Learned CIT(A)’s impugned lower appellate findings stand upheld therefore. Rejected accordingly. 31. The Revenue’s second substantive ground raises the issue of capital subsidy which is admittedly identical to that raised in the first and foremost assessment year 2007-08 herein above. The same is hereby restored back to the learned Assessing Officer in very terms. This latter ground is accordingly accepted for statistical purposes and this cross appeal ITA 2360/Del/2016 is partly allowed for statistical purposes. A. Y. 2010-11:Assessee’s and Revenue’s cross appeals ITA 1966/Del/2016 and 2361/Del/2016. 32. We advert to the assessee’s sole substantive ground canvassed in the instant main appeal ITA 1966/Del/2016 raising the issue of “prior period” expenditure disallowance amounting to Rs. 6,33,346/- which has already been accepted in principle in the preceding assessment years going by accrual method. We accept 18 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 the assessee’s sole grievance as well as the main herein ITA 1966/Del/2016 in very terms. 33. The Revenue’s cross appeal ITA 2361/del/2016 on the other hand raises three substantive grounds i.e. addition of fly ash’s enhanced rates involving addition of Rs. 2.98 lakhs, unexplained expenditure addition based on the alleged seized papers of Rs. 78,66,269/- and capital subsidy items accepted in the lower appellate proceedings of Rs. 6,68,22,777/- respectively. We make it clear that we have, inter alia, rejected the instant first substantive ground and restored the third one in the preceding assessment years (supra). The Revenue is indeed very fair in not pin pointing any specific distinction on facts or law; as the case may be. Ordered accordingly. 34. This leaves us with the Revenue’s second substantive ground seeking to revive unexplained expenditure addition of Rs. 78,66,269/-, deleted in lower appellate discussion as under: “10. Loose sheets of paper found in a premises not under the control of the appellant per- se cannot be admissible as evidence against the appellant. The Id. A.O. must have some further material and evidence to link up the loose sheets as well as the entries recorded on the same to the appellant. The Hon'ble Supreme Court has settled this issue in several cases where such loose sheets in the absence of independent material linking up those loose sheets to the assessee cannot be treated as books of accounts and therefore cannot be held against the assessee. In the impugned assessment the Id. A.O. who admittedly had the details of payments made and the persons and incidences for which those payments were made was required in law to 19 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 bring on record additional material to link up those details to the appellant. The Id. A.O. had the necessary authority in law to prove the transactions recorded on those loose sheets and to find out whether those transactions related to the appellant. Neither the Id. A.O. made any such enquiry nor the Id. A.O. brought any such material on record. The Id. A.O. had no material to reject the denial of the appellant except the fact that the loose sheets were found from the residence of one of the Sr. Executives of the appellant. The Id. A.O. did not follow the judicial discipline either. In view of the procedural and substantive errors committed by the Id. A.O. to arrive at the conclusion that the amount of Rs.78,66,269/- was unaccounted expenditure of the appellant cannot be sustained in the eyes of the law. The same is therefore deleted. The appellant gets relief to that extent.” 35. The Revenue vehemently argues during the course of hearing that the learned CIT(A) has erred in law and on facts in deleting the impugned addition. The assessee’s case on the other hand is that the same is indeed not based on any specific seized material from its custody during the course of search. Learned counsel has further referred to paper book for the relevant previous year (page 69) wherein the assessee’s name even does not figure so as to attract the statutory presumption of correctness of the contents thereof u/s 292C of the act. 36. Faced with this situation, we quote hon’ble jurisdictional high court decision in CIT v. Girish Choudhry (2008) 296 ITR 619 (Delhi) that such a dumb document could not lead to an addition in assessment proceedings. Ordered accordingly. This Revenue’s cross appeal ITA 2361/Del/2016 is partly allowed for statistical purposes in above terms. 20 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 A.Y. 2011-12: Assessee’s and Revenue’s cross appeals 1967 & 2362/Del/2016. 37. This assessee’s appeal ITA 1967/Del/2016 raises following substantive grounds: “1. That the CIT(A) erred in law in confirming the addition of Rs. 17,50,000/-, on account of alleged excess stock of bagasse, which was not recorded in the books of accounts. 1.1 That the CIT(A) erred on facts and in law in confirming the action of the assessing officer in alleging that the appellant has not accounted for 10,000 quintals of bagasse, which we alleged to have been lying in the bagasse yard of the sugar mill, even though there was evidence to support such allegation. 2 Without prejudice, the CIT(A) erred in not directing the assessing officer to allow increased deduction under section 80-IA of the Income Tax Act, 1961 (the Act to which the appellant was eligible as per the provisions of the Act.” 38. The Revenue vehemently argues in support of the impugned addition made by the learned lower authorities on account of alleged excess stock of bagasse. It could hardly dispute the clinching facts, inter alia, emerging from the case file that the assessee herein has already been held entitled for claiming section 80IA deduction. And also that the relevant item i.e. baggage herein is indeed ‘derived’ from the eligible business activity of producing power and, therefore, the same is also in the nature of “business income” only, which would fall u/s 80IA deduction. We thus accept the assessee’s second substantive ground claiming the impugned deduction relief in very terms. It’s instant appeal ITA 1967/Del/2016 is allowed. 21 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 39. Coming to the Revenue’s last cross appeal ITA 2362/Del/2016, we note that its twin substantive grounds pleaded herein seek to revive fly ash addition by way of rate difference; of Rs. 3.25 lakhs and capital subsidy addition of Rs. 4,64,18,358/-; respectively. 40. Suffice to say, this former substantive ground already stands declined in the Revenue’s corresponding appeals of the earlier assessment years in preceding paras and the latter issue of capital subsidy has been restored back to the learned Assessing Officer right from the A.Y. 2007-08 onwards. We thus adopt judicial consistency to pass the very order in the instant twin grounds as well in absence of any distinction of facts or law as the case may be. Ordered accordingly. This Revenue’s cross appeal 2362/Del/2016 is partly allowed for statistical purposes. 41. To sum up, the assessee’s appeals ITA 1962/Del/2016 for A.Y. 2007-08 is partly allowed; ITA 1963/Del/2016 for A.Y. 2007-08 is allowed; ITA 1964/Del/2016 for A.Y. 2008-09 is allowed; ITA 1965/Del/2016 for A.Y. 2009-10 is allowed; ITA 1966/Del/2016 for A.Y. 2010-11 is allowed; ITA 1967/Del/2016 is allowed; and Revenue’s corresponding appeals i.e. ITA 2358/Del/2016 for A.Y. 2007-08 is partly allowed; ITA 2357/Del/2016 for A.Y. 2007-08 is dismissed; ITA 2359/Del/2016 for A.Y. 2008-09 is dismissed; ITA 2360/Del/2016 for A.Y. 2009- 10 is partly allowed for statistical purposes; ITA 2361/Del/2016 is partly allowed; 22 ITA 1962/Del to 1967/Del/2016 & ITA 2357 to 2362/Del/2016 and ITA 2362/Del/2016 for A.Y. 2011-12 is partly allowed for statistical purposes, respectively. A copy of this common order be placed in the respective case files. Order pronounced in open court on 29.01.2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "