Income Tax Appellate Tribunal - Chandigarh
M/S Vardhman Polytex Ltd., Ludhiana vs Dcit, C-1 , Ludhiana on 21 June, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा गु(ता, लेखा सद य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.837/Chd/2018
नधा रण वष / Assessment Year : 2010-11
M/s Vardhman Polytex Ltd., बनाम The D.C.I.T.,
Vardhman Park, Chandigarh Circle-I,
Road, Ludhiana. Ludhiana.
थायी लेखा सं./PAN NO: A A A C V 5 8 2 1 H
आयकर अपील सं./ ITA No.1062/Chd/2016
नधा रण वष / Assessment Year : 2011-12
The D.C.I.T., बनाम M/s Vardhman Polytex Ltd.,
Circle-I, Vardhman Park, Chandigarh
Ludhiana. Road, Ludhiana.
थायी लेखा सं./PAN NO: A A A C V 5 8 2 1 H
C.O. No.39/Chd/2016
In
आयकर अपील सं./ ITA No.1062/Chd/2016
नधा रण वष / Assessment Year : 2011-12
M/s Vardhman Polytex Ltd., बनाम The D.C.I.T.,
Vardhman Park, Chandigarh Circle-I,
Road, Ludhiana. Ludhiana.
.
थायी लेखा सं./PAN NO: A A A C V 5 8 2 1 H
2 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12
नधा रती क ओर से/Assessee by : Shri Subhash Aggarwal, Adv.
राज व क ओर से/ Revenue by : Shri Manjit Singh, Sr. DR
सन
ु वाई क तार"ख/Date of Hearing : 09.05.2019
उदघोषणा क तार"ख/Date of Pronouncement: 21.06.2019
आदे श/ORDER
Per Anna pur na G upta, Account ant Member Th e a pp e a l of th e a sse s see in I TA N o. 8 37 /C h d / 2 0 1 8 a nd th e a p pe a l of th e Re ve n ue i n I TA N o. 1 06 2 / C h d/2 0 1 8 a nd a ss e sse s C ross O b j e ct ion i n C O N o. 3 9/2 0 1 6 , h a ve be en fi le d a ga i n st the se p a r a te or de rs of the C om mi ss io ne r of I nc ome Ta x ( Ap p e a l s) -1 , Lud h ia n a (i n s hor t 'C I T( A ) ' d a te d 29 . 3. 2 0 18 a nd 2 6 .7 . 2 01 6 p a ss e d u /s 2 5 0 (6 ) of t h e I n come Ta x Ac t, 1 96 1 ( he re i na f te r re fe rr e d to a s ' Act '), r e l a ti n g to a sse ssme nt ye a r s 20 1 0 -1 1 a n d 2 0 11 -1 2 r e spe c tive ly.
S in ce common i s su e i s i nvo lve d i n b oth th e a pp e a l s, the se we re he a r d toge t he r a nd a re b e i ng d i sp ose d of f b y th is com mon , con sol i da te d or de r. F or th e sa ke of c onv e n ie nce , we sh a l l fi r st be ta k i ng up the a p p e a l of th e a s se sse e i n ITA N o. 83 7 /C hd /20 18 .
ITA N o. 83 7 /C hd /20 18 ( Ass e sse e ' s Ap pe a l ): A. Y 20 10 -1 1)
2. The ground Nos. 1 and 2 raised by the assessee are legal grounds challenging the jurisdiction assumed 3 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 by the A.O. in initiating proceedings u/s 147/148 of the Act and the same read as under:
"1. That the learned CIT(A)-1 has erred in confirming the action of the AO in initiating proceedings u/s 147/148 of the Income Tax Act.
2. That all the facts stood disclosed and discussed during the course of regular assessment proceedings and there was no justification for the issue of notice u/s 147/148.
3. The said grounds were not pressed before us and, therefore, the same are dismissed as not pressed.
4. Ground No.3 raised by the assessee reads as under:
"3. That the CIT(A) has erred in confirming premium of Rs. 1,75,72,704/--payable on redemption of FCCB Bonds wrongly holding the same to the in the nature of capital expenditure."
5. The above ground relates to the disallowance of the claim of the assessee of expenses being premium payable on redemption of Foreign Currency Convertible Bonds(in short referred to as 'FCCB') amounting to Rs.1,75,72,704/-.
6. Brief facts relating to the issue are that the assessee company had raised zero coupon FCCB on 12.2.2008 at pa r aggre gating to U SD 1 0 million. The FCCB had maturity period of 5 years and 7 days and 4 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 were optionally convertible into equity shares at a price of Rs.106.86 per share or were to be redeemed at a premium of 3.2 6% withi n the stipulated per iod. Th e assessee had claimed the premium payable on the redemption of the said bonds as a reduction from the share premium account in its Balance Sheet, but in the computation of income accompanying the return of income, the same was reduced from the income on which the tax was payable, claiming it as a revenue expenditure. The entire amount so claimed, amounting to Rs.1,75,72,704/-, was disallowed by the A.O., on the ground that the said expenditure was capital in nature . Th is wa s uphel d b y the Ld .CI T(A) f ol lowin g the orders passed by the First Appellate Authority in the case of the assessee itself in subsequent assessment years i.e. assessment years 2011-12 and 2012-13.
7. Before us, the Ld.Counsel for the asssessee at the outset pointed out that identical issue had been dealt with by the ITAT Chandigarh Bench in the case of Vardhman Textiles Ltd. Vs. Addl.CIT in I TA No.787/2015, 894/2015, 483/2016 and 518/2016 dated 14.3.2019 holding the premium on FCCB bonds 5 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 to be revenue in nature. Reliance was also placed on the decision of the I .T. A. T., H ydera ba d Bench i n the case of Gati Ltd. Vs. ACI T in ITA No.1467/2017, dated 20.6.2018 and on the decision of the I. T.A. T. , Mumb ai Bench in the case of Strides Shasun Ltd. Vs. ACIT in ITA No.864/2011 dated 8.6.2018. Copies of all the above orders were placed before us.
8. The Ld. DR, on the other hand, relied upon the or der of the Ld .CI T( A).
9. We have heard the rival contentions and perused the orders of the authorities below. We have also gone through the order of the I TA T C ha ndi gar h Be nch in the case of Vardhman Textiles Ltd. (supra) and find that the I.T.A.T. in the said case had dealt with the treatment of the premium paid on FCCB bonds whether capital or revenue in nature and had held that the same was revenue in nature. At the same time, we find that the I.T.A.T. had also held that the said expenditure was to be allowed only for the year of payment and the relevant findings of the I.T.A.T. at para Nos.13 to 15 of the order are as under: 6 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12 " 1 3 . G r o u n d N o. 5 : V i d e g r o u n d N o . 5 , th e a s se s se e h a s a g i t a t e d th e a c ti o n of th e l o we r a u th o r i ti e s i n h o l d in g th a t t h e p r e m iu m p a i d o n r e d e mp t i o n o f F or e i g n C u r r e n c y C o n v e r ti b l e B o n d s ( F C C B ) i s c a p i t a l r e c e i p t a s ag a i n s t th e c l a i m of th e a s se s se e th a t th e s a me is Revenue e x p e n d i tu r e . T h e f a c t s r e l e v an t to th e i s s u e a r e th a t t h e a ss e s se e issued Foreign C u r r e n cy C o n v e r ti b l e B o n d s i n th e y e a r 2 0 0 6 a n d th e s e we r e to b e m a t u r e d in F e b r u a r y 2 0 1 1 . A s th e B o n d s h o l d e r s d i d n o t e x e r c i se th e ir o p t i o n to c o n v e r t th e b o n d s i n e q u i t y sh ar e s, s o F C C B we r e r e p a i d a l o n g wi t h p r e m iu m / in t e r e s t @ 6 % p e r a n n u m. The l o we r a u th o r i ti e s tr e a te d th e af or e sa id p a y me n t a s c a p i t a l p a y me n t an d d e n i e d th e d e d u c ti o n of e x p e n d i t u r e i n th i s r e s p e c t.
1 4 . T h e L d . C o u n se l f or th e a s se s se e h a s i n v i te d o u r a tt e n ti o n to t h e d e c i s i o n of th e T r i b u n a l i n th e o wn c a s e of th e a s se s se e M /s V a r d h ma n T e x ti l e s L td V s. A d d l . C IT L u d h ia n a i n IT A no.
1 4 2 9 / C h d / 2 0 1 0 f or th e a s se s s m e n t y e a r 2 0 0 6 - 0 7 a n d i n IT A N o . 27 0 / C h d / 2 0 1 1 f o r a sse s s me n t y e a r 2 0 0 7 - 0 8 o r d er d a te d 1 8 . 1 2 . 2 0 1 8 , wh e r e i n , o n i d e n t i c a l f a c ts , t h e T r i b u n al af te r c o n si d e r i n g th e r e l e v a n t f a c ts h a s h e l d th a t t h e s a i d e x p e n d i tu r e i s to b e t r e a te d a s R e v e n u e e x p e n d i tu r e , i n th e y e a r of p a y me n t. T h e r e l e v an t f in d in g s o f th e T r i b u n a l o n th i s i s s u e a r e r e p r o d u c e d as u n d e r : -
"20. G r o u n d N o . 9 : V i d e g r o u n d N o . 9 , th e a s se s se e h a s a g i ta t e d t h e a c t i o n of th e C IT ( A ) i n c o n f ir m in g t h e ac ti o n of th e A s se s s in g of f i c e r i n n o t a l l o wi n g pr e m i u m p a y a b l e o n r e d e mp t i o n of op t io n a l l y c o n v e r ti b l e f o r e i g n c u r r e n c y b o n d s a s R e v e n u e e x p e n d i tu r e .
21. T h e L d . C o u n se l f or th e a ss e s se e in th i s r e s p e c t h a s r e l ie d u p o n t h e d e c i s i o n of th e H o n ' bl e J u r i s d i c t i o n a l H i g h C o u r t i n th e c a s e o f ' C IT P a ti a l a V s. In d u s tr i a l C a b l e s ( P ) L td ' . r e p o r te d i n ( 2 0 0 7 ) 1 6 2 ta x m an 2 7 2 ( P & H ) , wh e r e i n , t h e i s su e i s a s to wh e th e r th e p r e m i u m p a i d o n e x p i r y / r e d e mp ti o n of 7 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 d e b e n tu r e s wa s to b e tr e a te d a s c a p i t a l e x p e n d i tu r e o r R e v e n u e e x p e n d i tu r e . T h e H o n ' b l e C o u r t w h i l e r e l y i n g u p o n th e o th e r c a s e l a ws h e l d t h a t th e s a i d p r e m i u m p a i d b y th e a s se s se e o n r e d e m p ti o n of d e b e n tu r e s a s R e v e n u e ex p e n d i tu r e . T h e L d . c o u n se l h a s f u r th e r r e l i e d u p o n th e d e c i s io n o f th e H o n ' b l e S u p r e me C o u r t i n th e c a se of ' T a p a r i a T o o l s L td V s . J C IT ' ( 2 0 1 5 ) 7 ta x m a n 3 6 1 wh e r e i n , th e H o n ' b l e S u p r e me C o u r t h a s h e l d th a t su c h ty p e of p r e mi u m / i n t e r e s t p a i d to d e b e n tu r e h o l d e r s wa s t o b e a l l o we d a s R e v e n u e e x p e n d i tu r e i n th e y e a r o f p a y me n t i ts e l f . A d mi t t e d l y , in th e y e a r u n d e r c o n si d e r a t i o n , th e a s s e sse e h a s b o o k e d th e af o r e sa i d e x p e n s e s p a y a b l e wh i c h wa s p a i d i n th e a s se s s me n t ye ar 2 0 1 1 - 1 2 . In v i e w o f th i s, th e s a i d e x pe n d i tu r e i s to b e al l o we d i n t h e y e a r of p a y m e n t. S u b j e c t to th e a b o v e o b se r v a t i o n , th i s g r o u n d of th e a s se ss e e ' s a p pe al f o r th e year under c o n si d e r a t i o n is hereby d i s m i s se d . "
1 5 . T h e L d . D R c o u l d n o t r e b u t th e a b o v e f in d i n g s of th e T r i b u n a l b y b r i n g i n g o u t a n y d i s ti n g u i sh i n g f a c t o r c a se l a w.
In v ie w of th i s , th i s i s su e , i n th e a bo v e te r m s, i s d e c i d e d i n f av o u r of th e a s s e s se e . "
10. Since the issue involved in the present case is identical to that in the case of Vardhman Textiles Ltd.
(supra) and the Ld. DR having not brought any distinguishing facts to our notice, nor having drawn our attention to the decision of the Hon'ble High Court or Higher Authority contrary to that rendered by 8 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 the I.T.A.T. in the case of Vardhman Textiles Ltd.
(supra), the decision rendered by the I.T.A.T. in the case of Vardhman Textiles Ltd. (supra) will apply to the present case also, following which, we hold that the premium on FCCB bonds is in the nature of revenue and is to be allowed in the year of payment of the same. Ground of appeal No.3 raised by the assessee is allowed in the above terms.
11. I n e ffe c t, the a p pe a l of the a sse s see i s p a r tly a l l owe d .
ITA N o. 10 6 2/C h d/2 01 6 (R e ve nu e ' s A pp e a l) :
12. Ground No.1 raised by the Revenue reads as under:
"1. Whether on facts and on circumstances of the case in law, Ld. CIT(A) was justif ied in deleting the addition amounting to Rs. 1,05,11,097/- made u/s 14A of Income-tax Act, 1961 read with rule 8D?"
13. The above ground relates to disallowance of expenses pertaining to exempt income earned by the assessee under the provision of section 14A of the Act.
14. Briefly stated, the A.O. on noticing that the assessee had made investment amounting to 9 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 Rs.13260.07 lacs and had incurred interest expenditure of Rs.4792.33 lacs, asked the assessee why expenses incurred in relation to the same be not disallowed u/s 14A of the Act, since the assessee had earned dividend income from the same which were exe mpt fr om taxa tion. Th e a ssessee rep lied that it had earned dividend income of Rs.11,57,390/- from the said investments like any other investor and submitted a detailed reply in this regard. The AO was not satisfied with the reply of the assessee and applying Rule 8D of the Income Tax Rules,1962, worked out the disallowance of interest and administrative expenses at Rs.98,38,097/- & Rs.6,73,000/- respectively, amounting in all to Rs.1,05,11,097/-. Accordingly disallowance of Rs. 1,05,11,097/- was made u/s 14A of the Act.
15. The Ld.CIT(A) deleted the disallowance on finding that identical disallowance made in the preceding years i.e. A.Y. 2008-09 to 2010-11 had been deleted in appeal by the Ld.CIT(A).
16. Before us, the Ld.Counsel for the asssessee at the outset pointed out that the matter had travelled up to 10 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 the I .T. A. T. in the preceding years since the Department had gone in appeal against the order of the CIT(A) deleting the disallowance and the I.T.A.T. had in turn upheld the order of the Ld.CI T(A) on finding that there were sufficient own funds available with the assessee for the purpose of making the impugned investment, thus raising the presumption that the own funds were used for making the investments , calling for no disallowance of interest expenses u/s 14A of the Act, and also in the absence of any satisfaction recorded by the AO as to the claim of the assessee of not having incurred any expenditure for earning exempt income, the disallowance of administrative expenses was also deleted. Our attention was drawn to the findings of the I.T.A.T. in this regard for assessment year 2008-09 in I TA Nos.372/Chd/2015 dated 19.4.2016 at para Nos.8 to 10 of the order as under:
"8. We have heard the learned representatives of bo th the parties, perused the f indings of the authoritie s below and considered the material available on record. As pointed out by y th e learned counsel f or the assessee, f ro m the p e r u s a l o f r e c o r d , we o b s e r v e t h a t t h e a s s e s s e e h a s m o r e t h a n s u f f i c i e n t o wn e d f u n d s t o m a k e investments. S i n c e i t i s h a v i n g h u g e o wn e d 11 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 funds and in comparison to that inv estments are of a very lesser amount, in vie w of the judgment of the Jurisdictional High Court in the case of K a p s o n s A s s o c i a t e s In v e s t m e n t P . L t d . ( s u p r a ) , we c a n s a f e l y i n f e r t h a t t h e i n v e s t m e n t s h a v e b e e n m a d e o u t o f o wn e d f u n d s a n d n o t f r o m b o r r o we d f u n d s . T h i s p r o p o s i t i o n h a s a l s o b e e n l a i d d o wn b y t h e j u r i s d i c t i o n H i g h C o u r t i n a n o t h e r c a s e o f B r i g h t E n t e r p r i s e s P . L t d . V s . C IT in ITA No.224 of 2013 (O&M) dated 24.7.2015 in the f ollo wing terms :
"16. As we noted earlier, the f unds/reserves of the appellant were sufficient to cover the interest free advances made by it of Rs.10.29 crores to its sister company. We are entirely in agreement with the judgment of the Bombay High Court in Commissioner of Income Tax vs. Reliance Utilities & Power Ltd., (2009) 313 ITR 340, para-10, that if there are interest free funds available a presumption would arise that investment would be out of the interest free funds generated or available with the company if the interest free funds were sufficient to meet the investment."
9. In vie w of the abo ve, no disallowance under section 14A of the Act with respect to interest expenditure can be made. A s regards the a d m i n i s t r a t i v e e x p e n d i t u r e , we a r e i n a g r e e m e n t with the submissions of the learned counsel f or t h e a s s e s s e e t h a t i n t h e c a s e o f C IT V s . D e e p a k Mittal (supra), the Jurisdictional Punjab & Haryana High Court has held that in the absence of any satisf action recorded by the Asse ssing Off icer as to the claim of the asses see, the disallowance made by him on account of administrative expense s under Rule 8D of the I n c o m e T a x R u l e s i s n o t a s p e r l a w. I n v i e w o f t h e a b o v e , t h e a c t i o n o f t h e l e a r n e d C IT ( A p p e a l s ) i n d e l e t i n g t h e d i s a l l o wa n c e m a d e b y t h e Asse ssin g Off ic er u nder sec tion 14 A of th e Ac t is co nf irmed. T he grou nds of appeal raised by th e Revenue are dismissed.
1 0 . B e f o r e p a r t i n g , we wo u l d l i k e t o d e a l w i t h the case laws submitted by the learned D.R. 12 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 First case is that of Hon'ble Supreme Court in Walf ort Share & Stock Pvt. Ltd. (supra). The d e c i s i o n wa s r e n d e r e d o n t h e i s s u e o f d i v i d e n d s t r i p p i n g a n d wh i l e a n a l y z i n g t h e i s s u e t h e interpretatio n of section 14A of the Act came bef ore the Apex Court. The f inding given by the Hon'ble Supreme Court is th at the expenses a l l o we d c a n o n l y b e i n r e s p e c t o f e a r n i n g o f t a x a b l e i n c o m e . We do no t h ave an y quarrel wi th the said proposition and bo w be f ore th e Hon'ble Su preme Court. Ho wever, this is wh at the pur por t of section 14A is, wh ile th e issue or dispute arise s as to the compu ta tion of amoun t of expen se s in curred in rel a ti on to exemp t inco me only. Second case rel ied on by the learned D .R. is th at of Spec ial Bench of I.T .A.T . D elhi in Chemin vest L td. (su pra). We wo ul d like to sta te here that th e said ord er of the Spec ial Ben ch of I.T .A.T . D elh i h as been reversed by the Hon'ble Delh i H igh Court in IT A No. 749 of 2014 d ated 2.9.2015, wh ere by it h as been held very c ategoric ally th a t d isallo wance under se ction 14 A of the Ac t c anno t be ma de in the ye ar in wh ic h no exempt income h as been earned or received by th e assessee. In all the ord ers of the I.T .A.T ., Chandigarh Bench r e l i e d o n b y t h e learned D.R., we f ind that the benef it of the judgments of Jurisdictional Punjab & Haryana High Court in the case of Kapso ns As sociate s Investments P. Ltd. (supra) and Bright Enterprises P. Ltd. (supra) to the eff ect that in the presence of suff icient owned f unds, presumptio n can be raised that the investmen ts we r e m a d e o u t o f o wn e d f u n d s , w a s n o t available to th e Coordinate Benches of the I.T .A.T."
It was pointed out that following the above decision, the ITAT deleted disallowance made in subsequent assessment years also .i.e A.Y 2009-10 & 2010-11,vide its order in ITA No.396 & 397/2015 dated 19-04-2016.
13 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12
17. The Ld.Counsel for the asssessee thereafter pointed out that in the impugned year also the assessee had sufficient own funds for making the impugned investment of Rs.13260.07 lacs as under:
Availabil ity of own f unds 31.03.2011 Share capital & Reserves 17603.45 Income of the year 3585.22 Add depreciation 2731.77 Total 6316.99 Net increase in cash and cash equivalents 1092.46
18. The Ld.Counsel for the asssessee contended that the issue therefore stood covered in favour of the assessee by the order of the I.T.A.T. in the case of the assessee itself for the preceding years vide its order in ITA Nos.372, 396 & 397/Chd/2015 dated 19.4.2016. Copy of the order was placed before us.
19. The Ld. DR, on the other hand, relied upon the order of the A.O.
20. We have heard the rival contentions carefully. We have also gone th rough the orde r of the I. T.A. T. for the preceding years, as pointed out by the Ld.Counsel for the asssessee before us. On going through the same we fin d that the I. T.A.T. in the p reced ing yea r s 14 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 had deleted the disallowance of interest expenses made u/s 14A of the Act on finding that the assessee had sufficient own funds available for the purpose of ma kin g the impugned i nvestme nt. Th e I TAT ha d a lso deleted the disallowance of administrative expenses, in the absence of any satisfaction recorded by the AO as to the claim of the assessee of not having incurred any expenditure for earning exempt income.
21. In the impugned case, the Ld.Counsel for the asssessee has demonstrated that the assessee had own funds in the form of share capital and reserves amounting to Rs.17603.45 lacs and income of the year amounting to Rs.3585.22 lacs, while the investments made amounted to Rs.13260.07 lacs. The Ld. DR has been unable to draw our attention to any distinguishing facts as compared to that in the preceding years and has been unable to controvert the factual contention of the assessee. In view of the same, we hold that the issue stands squarely covered by the de ci sion of the I. T.A. T. in the p receding yea rs, following which we uphold the order of the Ld.CI T(A) 15 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 in deleting the disallowance of interest expenses of Rs.98,38,097/- made u/s 14A of the Act .
22. As for the administrative expenses disallowed amounting to Rs.6,73,000/-,we find that the Ld.CIT(A) has followed the order passed by the first appellate authority in preceding assessment years on the issue of disallowance made u/s 14A , where the findings of the CIT(A) are that since the assessee has not incurred any expenditure for making investment in purchase of shares, no disallowance is warranted and further that no disallowance can be made without pointing out connection between the expenditure incurred a nd the exe mpt income . The Ld.CI T(A) , w hile following this decision has not pointed out the identity of facts vis a vis absence of demonstration of connection between expense incurred and exempt income. The Ld .CI T(A) has not mentioned any fact regarding satisfaction of the AO that there was connection between expenses incurred by the assessee and e ar ning of exe mpt income . Eve n the I TA T, we fi nd, had upheld the deletion of disallowance of administrative expenses on this account ,finding 16 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 absence of satisfaction recorded by the AO vis a vis the incorrectness of the claim of the assessee of having incurred no expenses. We therefore hold that the issue of disallowance of administrative expenses cannot be treated a s co vere d by the o rder of the I TA T in the preceding years in the case of the assessee, in the absence establishment of identity of facts with the preceding year. The issue is therefore restored back to the CI T( A) to be a djudica ted afre sh after givi ng d ue opportunity of hearing to the assessee .
23. In effect the order of the Ld.CI T(A) deleting disallowance made u/s 14A of the Act of interest amounting to Rs.98,38,097/- is deleted while the issue relating to disallowance of administrative expenses of Rs.6,73,000/- is restored back to the CI T(A) for adjudication afresh.
Ground of appeal No.1 is partly allowed for statistical purposes.
24. Ground No.2 raised by the Revenue reads as under:
"2. Whether on facts and on circumstances of the case in law, Ld. CIT(A) was justified in deleting the 17 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 addition made on account of disallowance of interest on investments for non business purpose amounting to Rs. 9,74,00,000/- made u/s 36(l)(iii) of Income-tax Act, 1961?"
25. Brief facts relevant to the issue are that the A.O. disallowed interest expenditure on investments made to the tune of Rs.13260.07 lacs from where exempt income would accrue to the assessee, for the reason that the investments were not for the business of the assessee. The AO worked out pr oportiona te i ntere st @ 8.14% on the impugned investments which came to Rs.1079.37 lacs but restricted the same to Rs.974.26 lacs after reducing therefrom the disallowance of interest made u/s 14A of the Act on the said investments, amounting to Rs.105.11 lacs.
26. Th e Ld .CI T(A) dele ted the disa llowan ce on fi nding that identical disallowance made in the preceding years i.e. A.Y 2008-09 to 2010-11 had been deleted in appeal by the Ld.CIT(A).
27. We have heard the rival contentions . Admittedly disallowance of interest u/s 36(1)(iii) of the Act ,has been made on investments in respect of which the interest expenditure incurred was disallowed u/s 14A 18 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 of the Act also, though for different reasons. Th e disallowance of interest has been made u/s 14A of the Act attributing the same as having been incurred for earning exempt income in the form of dividend earned from the said investments. Under section 36(1)(iii) interest has been disallowed for the reason that the expenses were not found to have been incurred for the purpose of business of the assessee. In both the cases, however, interest expenditure incurred for making the investment has been disallowed .
28. Since we have held that no interest is to be disallowed u/s 14A of the Act , in the light of the fact that sufficient own funds were available with the assessee which raise the presumption that these interest free funds were used for making the investments, there remains no basis for making disallowance of interest expenses incurred for making the very same investments in any other section, which in the present case is section 36(1)(iii) of the Act.
The order of the Ld. CIT(A), deleting the disallowance of interest made u/s 36(1)(iii) amounting to Rs.9.74 crores, is therefore upheld. 19 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12 Ground of appeal No.2 raised by the Revenue is therefore dismissed.
29. Ground No.3 raised by the Revenue reads as under:
" 3. Whether on facts and on circumstances of the case in law, Ld. CIT(A) was justified in deleting the addition made on account of disallowance of interest on loans and advances given for non business purposes amounting to Rs. 28,51,128/- made u/s 36(l)(iii) of Income-tax Act, 1961?"
30. Brief facts relevant to the issue are that the A.O made disallowance of interest expenditure on account of loans and advances made to subsidiary companies i.e. Oswal Industrial Enterprises (P) Ltd. of Rs.1,61,73,000/- and FM Hammerls Verwaltings Gmbh of Rs.2,16,12,000/- on finding that the said advances were not for the purpose of business of the assessee. Accordingly, the proportionate disallowance of interest expenses was made amounting to Rs.28,51,182/- u/s 36(1)(iii) of the Act.
31. The Ld.CIT(A) deleted the disallowance on finding that identical disallowance made in the preceding years i.e. A.Y. 2008-09 to 2010-11 had been deleted in appeal by the Ld.CIT(A).
20 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12
32. Before us, the Ld.Counsel for the asssessee at the outset pointed out that the matter had travelled up to the I .T. A. T. in the preceding years since the Department had gone in appeal against the order of the CI T(A) in deleting the disallowance and the I. T.A. T. ha d i n tur n u pheld the orde r of the Ld .CI T(A) on finding that there was sufficient own funds available with the assessee for the purpose of making the impugned investment calling for no disallowance of expenses u/s 14A of the Act. Our attention was drawn to the findings of the I.T.A. T. in this regard for assessment year 2008-09 in I TA Nos.372, 396 & 397/Chd/2015 dated 19.4.2016 at para Nos.17 & 18 of the order as under:
"17. The learned counsel f or the assessee b r o u g h t t o o u r n o t i c e t h a t o wn e d f u n d s o f t h e co mpany are to the tune of Rs.167,15,49,000/- wh i l e t h e i n v e s t m e n t s i n t h e s h a r e a p p l i c a t i o n money of subsidiary companies is amo unting to R s . 3 7 , 5 4 , 6 3 , 6 4 6 / - i n O s wa l R e t a i l P v t . L t d . a n d Rs.12,17,14,976/- in Oswal FM Hammerle T extiles Ltd. to taling Rs.49,71,78,622/- only. It was stated th at in the judgments of Jurisdictional High Court in the case of Bright Enterprises (supra) and Kapsons Associates Investments P. Ltd. (supra), it has been cate gorically held in the context of section 3 6 ( 1 ) ( i i i ) t h a t i n t h e p r e s e n c e o f s u f f i c i e n t o wn e d f u n d s wi t h t h e a s s e s s e e , i t c a n b e p r e s u m e d t h a t t h e i n v e s t m e n t s h a v e b e e n m a d e o u t o f o wn e d 21 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 funds and no borrowed f unds have been used in t h e s a m e . In v i e w o f t h i s , i t w a s p r a y e d t h a t t h e a c t i o n o f t h e l e a r n e d C IT ( A p p e a l s ) i n d e l e t i n g t h e d i s a l l o wa n c e u n d e r s e c t i o n 3 6 ( 1 ) ( i i i ) o f t h e Ac t may be conf irmed .
18. We have heard the learned representatives of bo th the parties, perused the f indings of the authoritie s below and considered the material available on record. From the perusal of reco rd and submissions giv en by the learned counsel f or th e a ssessee, th ere is n o d ispu te to the f ac t th a t the assessee is having more than suff icient o wn e d funds much larger than the to tal inve stments made in the share capital of the subsidiary companies. T h e r e f o r e , we a r e i n a g r e e m e n t wi t h t h e a r g u m e n t s o f t h e l e a r n e d co unsel f or the assessee in view of the judgment of the Jurisdictional High Court in the case of Bright Enterprises (supra) and Kapsons A s s o c i a t e s In v e s t m e n t s P . L t d . ( s u p r a ) , we c a n very e asily presumed that the investmen ts have been made out of the non interest bearing f unds. Theref ore, no d i s a l l o wa n c e under section 36(1)(iii) of the Act can be made. Since it is held th at the inve stments were made out of non interest bearing f unds, it is au tomatically presumed that with re gard to these investments the assessee had not made any claim of inte re st under section 36(1)(ii) of the Act. Theref ore, there is no need f or the assessee to prove tha t t h e f u n d s we r e l e n t f o r b u s i n e s s p u r p o s e s o r n o t . I n v i e w o f t h i s , we d o n o t f i n d a n y n e e d t o i n t e r f e r e i n t h e o r d e r o f t h e l e a r n e d C IT ( A p p e a l s ) in this respect. T he ground of appeal No.3 raise d by the Revenue is dismissed."
33. It was pointed out that following the above decision, the ITAT deleted disallowance made in subsequent assessment years also i.e. A.Y 2009-10 & 22 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 2010-11,vide its order in ITA No.396 & 397/2015 dated 19-04-2016
34. The Ld.Counsel for the asssessee thereafter pointed out that in the impugned year also the assessee had sufficient own funds for making the impugned investment as under:
Availabil ity of own f unds 31.03.2011 Share capital & Reserves 17603.45 Income of the year 3585.22 Add depreciation 2731.77 Total 6316.99 Net increase in cash and cash equivalents 1092.46
35. The Ld.Counsel for the asssessee contended that the issue therefore stood covered in favour of the assessee by the order of the I.T.A.T. in the case of the assessee itself for the preceding years vide its order in ITA Nos.372, 396 & 397/Chd/2015 dated 19.4.2016. Copy of the order was placed before us.
36. The Ld. DR, on the other hand, relied upon the order of the A.O. 23 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12
37. We have heard the rival contentions carefully. We have also gone th rough the orde r of the I. T.A. T. for the preceding years, as pointed out by the Ld.Counsel for the asssessee before us. On going through the same we are in agreement with the contention of the Ld. Counse l for the asssessee that the I .T. A. T. in the preceding years had deleted disallowance of interest expenses made u/s 36(1)(iii) of the Act on finding that the assessee had sufficient own funds available for the purpose of making the impugned investment. In the impugned case also, the Ld.Counsel for the asssessee demonstrated that the assessee had own funds in the form of share capital and reserves amounting to Rs.17603.45 lacs and income of the year amounting to Rs.3585.22 lacs, while the loans/advances made amounted to Rs.377.85 lacs (161.73 lacs + 216.12 lacs). The Ld. DR has been unable to controvert the factual contention of the assessee. In view of the proposition applied in the pre ced ing yea rs b y the I TA T a nd conside ri ng the fact that sufficient own funds were demonstrated to exist by the assessee, we see no reason to uphold the disallowance of interest u/s 36(1)(iii) of the Act. We 24 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 therefore up hold the orde r of the Ld .CI T( A) deleting the disallowance of interest expenses made u/s 36(1)(iii) of the Act amounting to Rs.28,51,182/-. Ground of appeal No.3 raised by the Revenue is, therefore, dismissed.
38. Ground Nos.4 and 5 raised by the Revenue relate to the same issue of disallowance of interest expenditure incurred on Foreign Currency Convertible Bond (in short 'FCCB') and read as under:
"4. Whether on facts and on circumstances of the case in law, Ld. CIT(A) was justified in deleting the addition made on account of disallowance of interest payment on Foreign Currency Convertible Bonds (FCCB) amounting to Rs. 1,20,92,984/-?
5. Whether on facts and on circumstances of the case in law, Ld. CIT(A) was right in treating the interest payment in Foreign Currency Convertible Bonds (FCCB) as revenue in nature without appreciating that nature of application of these f unds was of Capital expenditure?"
39. Brief facts relevant to the issue are that during assessment proceedings the A.O. noticed that the assessee company had issued FCCB aggregating to Rs.10 million USD, which was having a maturity pf 5 years and 7 days and optionally convertible into equity share at a price of 106.86 per share. Further 2% interest rate per annum was also payable on the 25 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 said FCCB semi-annually. The A.O. disallowed the entire amount of interest and premium payable on the same which was claimed by the assessee amounting to Rs.1,20,92,984/- and Rs.1,76,13,971/- respectively.
40. The Ld.CIT(A) upheld the disallowance of premium payable on conversion of FCCB, while he deleted the disallowance of interest on finding that the A.O. had not disputed the said claim made by the assessee and his entire findings were in relation to only the premium payable by the assessee on conversion of the bonds. The Ld.CI T(A) further held that the payment of interest was not a contingent liability as in the case of premium but was actual liability of the assessee being bound to pay the same semi-annually on the due date. Accordingly, the Ld.CI T(A) held that FCCB was in the nature of loans until converted into equity and the interest payment thereon was on a liability/loan and not equity. He, therefore, held that the assessee was entitled to claim the said expenses and relied upon the decisi on of the I. T. A. T., Mu mba i Be nch in the case of Mahindra & Mahindra Ltd., Vs. DCIT in I TA No.8597/Mum/2010 and on the decision of the 26 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 I. T.A. T. Bangalore Bench in the case of M/s C r a ne Sof tw a r e I nte r na ti on a l Ltd I TA Nos.774 & 775/Bang/2010. The re levant fi ndin gs of the CI T(A) at para 6.5 of his order is as under:
"6.5 I have carefully considered the facts of the case, the basis of the additions made and the arguments of the AR. The appellant has claimed interest paid on Foreign Currency Convertible Bond of Rs. 1,20,92,984/- besides premium payable on redemption of Rs. 1,76,13,971/-. The break-up of interest .and premium payable on redemption was duly produced before the Assessing Officer. The copy of account of interest payment and TDS deposited was filed. The Assessing Officer has discussed the issue of premium on redemption of FCCB and has treated it as a capital expenditure but while making the addition on the said account, has added the component of interest on FCCB also, without discussing the same. The same was not disputed/ questioned by the Assessing Officer as such. Only the premium payable on FCCB has been discussed in the assessment order and not the issue of interest thereon. The FCCB has not been converted into equity share. The company was paying interest to the bond holders. The FCCBs/ were having coupon interest rate of 2% calculated and paid on semi- annual basis/ The appellant company was bound to discharge its obligation of paying the interest on the due dates. The conversion of FCCB into the capital of the company on the consent of the bond holders, when they exercise their option, is a future event. According to the AR, presently it is a loan and the possible equity character of the fund is a contingency. During the year under consideration, it was in the nature of interest on liability/ loan and not equity.27 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12 The payment of interest has not been disputed by the Assessing Officer. The company has complied with the provisions of section 115AC and 196C in deducting TDS as the interest income has arisen in the hands of non-resident bond holders in India. The AR has placed reliance on the decision of the Hon'ble Mumbai ITAT in the case of Mahindra & Mahindra Mumbai vs. ACIT in ITA no. 8597/Mum/2010 wherein it has been held that interest payment on FCCBs is an allowable expenditure. Similarly, reliance has been placed on the decision of the Hon'ble ITAT Banglore Bench in the case of M/s Crane Software vs. DCIT in ITA no. 774, 775/Bang/2010 in support of the said contention regarding allowability of FCCB interest. The AR has further submitted that even if it is assumed that this payment is an accretion of capital and paid to equity shareholders, the interest component will not be converted to share capital. The AR has further relied on the judgments in the case of Performing Right Society Ltd. vs. CIT (1997) 106 ITR 11(SC) and Hira Mills Ltd vs. ITO (1946) 14 ITR 417 (All) wherein it has been held that where interest has been paid to bondholders and TDS has been deducted; the interest expenditure is allowable. The appellant company has been paying interest on FCCB from A.Y.2009-10 after deduction of TDS and the same has been allowed u/s 143(3) for A.Y. 2009-10 and 2010-11. Therefore, the Assessing Officer was not justified in disallowing the interest paid on FCCB.
Ground of appeal no.5 (a) is hereby allowed."
41. Before us the Ld. DR relied upon the order of the A.O., while the Ld.Counsel for the asssessee relied upon the order of the CI T(A).
28 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12
42. We have heard the rival contentions and perused the or der s of the authorities be low . The issue before us relates to claim of the assessee of interest expenditure incurred on FCCB issued by it. The fact that the said bonds were issued at interest rate of 2% per annum to be paid semi-annually is not disputed. It is also not disputed that the interest was paid on the bonds and not on their conversion into equity. Therefore, the findings of the Ld.CIT(A) that the interest expenditure was the actual liability of the assessee on loans taken by it in the form of bonds, we find is correct. The Ld. DR has been unable to draw our attention to any infirmity in the findings of the Ld.CI T(A) in this regard. Further the Ld. DR has been unable to draw our attention /point out, as to why the assessee's claim of interest expenditure was disallowable. In view of the same, we have no hesitation in upholding the order of the CIT(A) in allowing the claim of interest expenses incurred on FCCB amounting to Rs.1,20,92,984/-. The ground of appeal No.4 and 5 raised by the Revenue are dismissed.
29 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12 In effect, the appeal of the Revenue is partly allowed for statistical purposes.
43. We shall now deal with the assessee's Cross Objection of the assessee in C.O.No.39/Chd/2016. 44 . G r oun d s of a p p e a l N o. 1 r a i se d b y the a s se s se e re ad a s un de r :
"1. That the learned CIT (A)-1, Ludhiana, has erred in disallowing premium pain on redemption of FCCB wrongly holding the same to be in the nature of capital expenditure as against revenue expenditure claimed by the appellant.
b. That the action of Ld. CIT(A) is against the law and facts of the case."
45. It was common ground between both the parties that the issue raised in this Ground was identical to that raised in the appeal of the assessee in ITA No.837/Chd/2018 adjudicated above. Our findings rendered therein at para Nos.9 & 10 of our order, will apply with full force, following which we allow the ground raised in the same terms as in Ground No. 1 of ITA No.837/Chd/2018. Ground No.1 raised by the assessee is allowed in above terms.
30 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12
46. Ground No.2(a) & (b) raised by the assessee read as under:
"2. a. That the learned CIT(A) has erred in upholding addition of Rs.7,36,977/- on account of difference in the balance of M/s ACE Building Technologies Pvt. Ltd ignoring the submission of the appellant and has further erred in not admitting the evidence which in facts stood filed before the AO.
b. That in any case the disallowance is against the law and facts of the case and further the difference did not relate to the year under consideration."
47 . B r i e f ly sta te d , t he A. O. had ma d e an a d di ti on of Rs. 7, 3 6 ,9 7 7 /- on a cc oun t of non r e con ci l ia t ion of the a ccou nt of o ne M /s AC E B u il d in g Te ch no log ie s Pv t. Ltd . I t wa s noti c e d t ha t w h il e the a cc oun t sta te me n t sub mitt e d b y the a sse s see of th e s a i d comp a n y sh ow e d de bi t ba la n ce of Rs. 14 , 7 4, 9 8 3. 7 2 , t he a sse ssee i n its b ook s ha d re fle c te d a cr e d i t b a la n ce of Rs. 7 ,3 7 ,9 8 7 /- i n r e s pe ct of the sa i d p a r ty. Si nc e the a s se sse e w a s un a ble to r e c onc ile t he di ffe re nce i n the a cc oun ts, t he A. O . ma d e a n a d di ti on of Rs .7 ,3 7 , 98 7 /- i n the i nc ome of the a ss e ssee .
48 . B e f ore the Ld . C I T( A) t he a ss e ssee f ile d de ta i le d sub mi ss ion s sta ti n g th a t M /s AC E B ui l di n g Te c hn ol ogie s Pv t. Ltd . was b u il d in g con str u cti on co ntr a c tor of t he a sse sse e w it h w hom th e a ss e ss ee h a d b ee n de a li ng s in ce 20 0 8 a n d the di f fe re nce in he a ccoun t s ta te me nt a s r e f le cte d 31 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 in the bo oks of b ot h th e p a r tie s w a s on a cc oun t of t he f a ct tha t th e de bi t not e s r a ise d b y the a s se s se e o n t he sa id p a r ty ha d n ot b ee n a ccou nt e d fo r by it i n i ts bo ok s th oug h t he othe r p a r ty ha d no t d i sp ut e d t he sa me a l so a n d u lti ma te ly tha t a l l a mou nt p a ya b le t o M /s A C E B ui ld i ng Te c hn ol ogi es Pv t. Ltd . (s up r a ) h a d b ee n se ttle d . Th e a s se s se e f ile d cop y of the a cc oun t of M /s AC E B ui l d in g Te chn ol ogi e s P vt. Ltd . (s up r a ) r e fle c ti ng th e de bi t note s ra is e d a n d a ls o cop y of the ba n k sta t e me n t a s e v ide n ce of the a b ove e xp l a na t io n. The sub mi ss ion ma d e by t he a sse ssee in th is r e ga r d as re p ro du ce d a t pa ra 8 .1 of th e CI T( A) 's or d e r i s a s un d e r :
"1. Assessee company has awarded the contract of Rs.6,66,430,31/- for construction of its building to M/s Ace Build Technologies Pvt Ltd and payment of Rs 6,66,430,31/- has been made to the said party. The copy of account of M/s Ace Build Technologies Pvt Ltd is enclosed here with at pages no. The Assessee company has been dealing with the contractor since 2008.
2. The Assessing officer has summoned the account statement of the said party and the closing balance as on 31.03.2011 as reflecting in the party's statement is Rs. 14,74,983.72 as borne from the Assessment order dated 28.03.2011 where as the closing balance as per books of the assessee company is Rs. 7,37,987/- and consequently an addition of Rs. 7,36,997/- has been made to the income of the assessee on account of difference.
3. At the outset, it is submitted the assessee has been asked to explain the difference in account statements on 24.03.2015 and the assessee has been asked to submit 32 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 its reply and reconciliation on 25.03.2015. The assessee company has filed its statement of account along with bank statement and has explained that the difference in account is on account of debit notes raised on the party which have not been accepted by the party. The addition has been made without considering the representation and evidence given by the party.
4. Also the assessee company has submitted that the outstanding amount as per its books has been paid off in the next financial year 2011-2012 and there is no outstanding amount payable to the said party which is evident from the fact there has been no dealing with the party after the said final payment.
5. The difference in account statement is because of the various debit notes raised to the party as is evident from the account statement which have not been accounted for by the said party. However, the said party has not raised any dispute with regard to the impugned payment till date. The entire reconciliation statement has been submitted to the Ld Assessing officer but he has not considered the same while passing the Assessment order.
Therefore, in view of the above facts and submissions the assessee company requests your good-self to delete the addition made by the Ld. Assessing Officer w.r.t. non reconciliation of account."
49 . Th e Ld .C I T(A ) d i smi ss e d th e con te nti on of the asse ssee sta ti n g tha t t he c op y of t he ac cou nt of th e sa i d p ar ty pr od u ce d b y the a s se s see w a s a n a d d i ti ona l e vi de nce f i le d wi th out a ny re que st ma d e a s pe r Ru le 46 A of the I n come Ta x , 1 9 6 2 a nd thu s c oul d n ot be a d mitt e d . Th e Ld. C I T( A) , the re fo re , he l d tha t in th e a b se n ce of a n y e v ide nce for re con ci l in g t he dif fe re n ce the a d dit ion ma d e b y th e A. O. w a s 33 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 ju sti fi e d . Acc or din gl y, t he Ld . C IT( A) u p he ld th e a d di ti on ma de b y th e A .O .
50 . B e f ore u s the Ld .C oun se l f or t he a sss e s see sta te d tha t the a ct of the Ld. C I T( A) i n r e j e c tin g th e a d d it ion al e vi de nce wa s u nj us ti fi e d si nc e i t w e n t to the r oot of t he ma tte r e xp la in in g t he di f fe re nce in the a cc oun ts. He p l e a de d , the re fo re , t ha t the e v ide n ce be a d mi tte d a n d th e i ssue be a dj ud i ca t e d a c cor d i ngl y.
51 . Th e Ld . D R, on th e othe r h a nd , re l ie d u p on the ord e r of the CI T(A ).
52 . W e h a ve h e a r d th e r iv a l c on te n tions . U n dou b te d l y, t he cop y of th e a cc oun t of M /s A C E B ui l di n g Te ch nol ogi e s Pv t. Ltd . ( su pr a ) su b mitt e d b y the as se s see d ur i ng a sse ssme nt pr oc ee d i ng s e xp la i n e d the re a s on f or th e d i ffe re nc e i n the ba l a n ce re fle c ted of th e sa i d p a r ty i n th e b oo ks of t he a sse sse e a n d a s r e f le cte d in the b ook s of M /s AC E Bu i ld i ng Te ch nol og ie s P vt. Ltd . ( sup r a ) . I nte re st of j ust ice d e ma n de d tha t th e sa me be a dmi tte d a n d c ons id e re d fo r ad j ud ic a ti ng the i ss ue . M or e ove r , we f i nd tha t th e b ook s of a cc oun ts of the a sse ssee i n a ny c a se , w e re pr od uc e d d ur i ng a sse ssme nt pr oc ee d i ng s. The r e fore , we f a i l to un de r sta n d how a c op y of 34 ITA Nos.837 & 1062/Chd/2018 A.Ys.2010-11 & 2011-12 the a cc oun t of the p a r ty f or the imp u gne d ye a r re fl e cti n g t he de bi t no te s i ss ued to it , con sti tu te d a dd i ti ona l e vid e n ce . 53 . F or the a f ore s a id r e a s ons , we c ons id e r i t f it to re stor e the is sue b a ck to th e Ld .C I T(A ) w i th d i r e ct ion to ad j ud i ca te the s a me in the li gh t of th e e v i de nce fi le d by t he a s se s se e . N ee d le s s to a d d d ue op p or tun it y b e gi ve n t o the a s se s see of he a r i n g. Th e gr o u nd N o. 2( a ) & ( b ) r a i se d b y th e ass e ssee is a ll ow e d for sta t istic a l p ur p os e s.
I n e ffe c t, the C ro ss O bj e c ti on fi le d b y the a s se s se e i s a ll ow e d for sta t istic a l p ur p os e s.
54 . I n the re s ul t;
i) Th e appeal of th e a sses see in I TA
N o.8 3 7 /C hd /2 0 1 8 is p a r tl y a ll ow e d.
i i) Th e a p pe a l of the Re ve nue in I TA
N o.1 0 6 2 /C hd /2 0 1 6 is p a r tl y a ll ow e d for sta ti s tic a l pu r po se s .
i ii ) Th e C . O. N o. 3 9 /C h d /2 01 6 fi l e d b y th e a sse s see i s a ll ow e d for sta t istic a l p ur p os e s.
O r de r p r o n o u n ce d i n t he O p e n C ou r t .
Sd/- Sd/-
संजय गग अ नपण
ू ा ग(ु ता
(SANJAY GARG) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
,दनांक /Dated: 21st June, 2019
*रती*
35 ITA Nos.837 & 1062/Chd/2018
A.Ys.2010-11 & 2011-12
आदे श क ( त)ल*प अ+े*षत/ Copy of the order forwarded to :
1. अपीलाथ,/ The Appellant
2. (-यथ,/ The Respondent
3. आयकर आय.
ु त/ CIT
4. आयकर आयु.त (अपील)/ The CIT(A)
5. *वभागीय ( त न1ध, आयकर अपील"य आ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar