Income Tax Appellate Tribunal - Hyderabad
Income-Tax Officer vs Transport Corpn. Of India Ltd. on 22 September, 1986
Equivalent citations: [1987]20ITD11(HYD)
ORDER
Per Shri T. V. Rajagopala Rao, Judicial Member - These two appeals filed by the revenue against the order of the Commissioner (Appeals)-I, Hyderabad dated 20-8-1984 for the assessment year 1979-80 and a separate order of the same date for the assessment year 1980-81. The assessee is a limited company carrying on business in goods transport by road, manufacturing of textiles, steel re-rolling and manufacture of iron rods, etc. The assessee and got two accounting years for different sources. As far as business is concerned, it accounting year ends by 30-6-1978 for the assessment year 1979-80 and 30-6-1979 for the assessment year 1980-81. As some of the questions in both these appeals are common as the assessee is the one and the same and as the assessment involved are consecutive assessment years, we feel it convenient to dispose of both the appeals is whether the expenditure of Rs. 60,000 shown as part of expenditure incurred for advertising and said to have been paid to Maud Advertising Services for the assessment year 1979-80 and Rs. 94,500 said to have been paid towards advertisement expenditure to Rita Advertising Agency, Bombay were in fact incurred as advertising expenditure and whether they are allowable as business expenditure in the two assessment years under consideration. Ground No. 6 in the grounds of appeal for 1980-81 relate to the common ground. Maud Advertising services az proprietary concern of Mr. J. D. Fernandes and the said proprietary concern is in existence since last 20 years. Rita Advertising Agency was proprietary concern floated in the name of the daughter of Mr. J. D. Fernandes in about 1978. From the evidence on record, we gather that Mr. J. D. Fernandes was aged 53 years and was having 9 school-going children. He was paying amount of Rs. 300 per month perhaps for his office premises comprising of only for table space. The rent is paid to one Shri Dhanji. He would be requiring Rs. 2,000 per month towards household expenses. He has no immovable properties he has got bank accounts in Union Bank of India, Bombay where he has got account No. 23153 in the name of Maud Advertising Services. So also, he had got another account in Central Bank of India, Share Bazar Branch, Bombay account No. 5333 and it stands in the name of Maud Advertising Services. There are 9 cumulative time deposit accounts opened in the Syndicate Bank, P.M. Road, Bombay in the names of each of his children. He was having a telephone of his own at his business premises and he employs 6 to 7 persons to work under him for business purposes. Out of them, all except a peon are either daughters, sons or nephews of Mr. Fernandes on 14-4-1981, his business premises were searched under the provisions of section 132 of Income-Tax Act, 1961 (the Act) and his statements were recorded twice on that date. On both the occasions Mr. Fernandes gave statements on oath. The salient points given out in his examination on oath, on that date are as follows.
2. He was being assessed to income-tax by the 7th ITO, Ward A-1, Bombay and he has been deriving income from his proprietary concern Maud Advertising Services for the last 20 years. He does press work, advertising, printing of stationery, like letter heads, bill forms, diary calendar, advertisement displays, etc., on behalf of his clients. While giving the name and address of one of his major clients who remained as such for the last four years before his deposition, he gave out the name of the assessee herein, as one out of the 10 named by him. He stated that he did not maintain regular books of account and only at the end of the year, he tally the month wise incomes, outgoing bills and from there he deduct his expenses and the net income only was shown in his income-tax return. He did not maintain any party wise accounts either for receipts or for expenses. When the ITO put a specific question what are the services rendered by the following concerns, namely : (1) Royal Advertisers, (2) Anjali Associates, (3) Modern Publicity Services, (4) Express Advertising, (5) Great Art India, and (6) Arun Bros. to Mr. Fernandes and elicited his answer, Mr. Fernandes replied that Great Art India is printing greeting cards and Arun Bros. is printing calendars and all other concerns are doing display works on behalf of his clients. He does not remember on which clients behalf the services are received and payments made to them. He admitted in answer to another question that he had been maintaining two registers, one for sale and another for the purchase and a statement of expenditure incurred by him for various purposes. He had not maintained separate accounts exclusively for his different claims. Question No. 30 and the answer given to it in the first examination of Mr. Fernandes on 14-4-1981 appears to us to be categorical and so they are given out verbatim as under :
"So according to you all the receipts and payments made as per the bills and your bank account are correct and genuine, is it not ? Answer : Yes, they are all genuine."
3. Mr. Fernandes having thus examined in the morning hours on 14-4-1981 in the first instance was again examined on oath in the presence of Ashok Kockar, ADI from 8 p.m. to 11-30 p.m. In the second examination, he stated that when he started his business his income was Rs. 10,000 to Rs. 12,000 from business and it gradually rose to Rs. 20,000 per year. In about November and December 1976 he fell sick and it resulted in curtailment of his business as he could not move around much. In that period, his wife came to his help and carried on his business substantially and during that period of his illness despite the substantial help of his wife, he was not able to earn at least sufficiently to meet both ends meet with large family of 9 school-going children. His wife introduced him to one Shri Jalan, regional manager of the assessee-company who in turn introduced him to Mr. S. R. Jivarajka. They gave an idea to Mr. Fernandes that he can give bogus bills purporting to be for display, advertising and for doing this they have assured financial profits. In that way, he was lured into the clandestine business of havala bills. Slowly his clientage in this type of business increased and with that his income also grew. When a specific question was put as to who are the partners and to whom the havala bills were issued during the last four years Mr. Fernandes gave out the name of the assessee who was one among the four to whom such bills were given. When asked to explain the modus operandi of the clandestine business Mr. Fernandes stated that he receives message on telephone from the parties concerned to prepare the bills for the desired amount. He personally carries these bills to the respective offices either on the same day or sometime later he would be paid the amount mentioned in the bills by a crossed account payee cheque. The cheque would be received by him in their offices and it would deposited by him in one of his bank accounts. After the gap of 4 to 6 days, he would withdraw 90 per cent of the above amount by a self-cheque and that amount would be carried by him and would be handed over back to the party who issues the cheque. In this process, he confessed that he would get 10 per cent of the total amount mentioned in the bill. He further stated that he used to hand over the money after encashing the self-cheque to one Shankerlal who is probably an employee in the assessees company. He admitted that he had no personal relationship or contract with him. He stated that none of the transactions carried on with any one of the four parties named by him, in which the assessee is one were genuine transactions. He stated that all the transactions carried on by them are bogus. He further stated except these four parties named in the deposition he did not issue havala bills to any other concern. The total of the bogus bills, thus, issued by him would be around Rs. 5 lakhs for the year. He did not show the commission earned by him on these havala bills in his income-tax returns and in order to cover up the said clandestine income earned by him he used to inflate his expenses and he would show that payments were made to four named bogus concerns. He also stated for one question as to what are obvious mistakes found in his accounts, he stated that in the total turnover declared by him the accommodation amounts received in the name of Rita Advertising Agency is not included. So also the bogus expenses shown as payments made to the four bogus concerns named by him are accounted only in the case of his proprietary business, namely, Maud Advertising Services and no expenses have been debited in the accounts of Rita Advertising Agency. He stated categorically that except this bare word of mouth there is no proof for his returning back 90 per cent of the amount by cash. He stated that he does not own any hoarding site. But yet, he had given bogus bills in which the period of display and the side of the address of the hoarding was given and it can be verified from the site owners that such display was never made. When asked why he made contradictory statements earlier in the day he explained at that time he was under confusion and mental tension and he asserts that his statement which continued up to 11.30 p.m. is a true one from which he never altered or changed. On 10-10-1983, on behalf of Shri Jalan one Shri C. L. Aggarwal, CA, was given opportunity to cross-examine Mr. Fernandes. In answer to question No. 5, Mr. Fernandes went to the extent of stating that prior to the statement recorded from him at 8 p.m. on 14-4-1981 he did not give any other statement on that date to the Income-tax Department. When cross-examined as to when he was introduced to Mr. S. R. Jivarajka and how and in what capacity Mr. Fernandes was connected with Mr. Jalan and he introduced him to Mr. S. R. Jivarajka and he does not remember the date and the year. When asked how he was introduced, he stated that Shri Jalan asked Mr. Fernandes to go and see Mr. Jivarajka. To another question asked he had stated that his wife asked him to go and see Shri Jalan in his office. He further stated that he was sick for five years and in spite of his sickness, he was attending office regularly. He stated that except issuing bogus bills he did not have other business with either Shri Jalan or with the assessees company during the period in question. He also stated that he does not know how his wife knows Shri Jalan. He further stated exactly for how many years he has issued the bogus bills to Shri Jalan. To another question, he answered that he has been showing the bill amounts issued in favour of the assessee-company as part of his income in his income-tax returns. He admitted that on 4-4-1981 both his office as well as his residence were searched. He ascertained that he returned the amount only to Shri Shankerlal. To a question from which concerns he had been issuing advertisement bills to TCI Ltd., and he stated that he had issued the bills from Maud Advertising Services.
4. On 23-1-1982, Shri Jalan, regional manager of the assessee-company was examined. He stated that on promotion he came to Bombay and assumed office on 23-9-1976. He came from Pune where he worked as a circle manager of the assessee-company. He came to know Mrs. Fernandes only from 1978 onwards. His wife Mrs. fernandes approached him for canvassing the business for advertisement. Sometime later he was introduced to her husband. Even after that Mr. fernandes alone used to come in connection with advertisement dealings. He admitted to have given advertisement and publicity work to Maud Advertising Agency or Rita Advertising Agency during the years 1977 to 1981. He also stated that display of hoardings on highways at prominent places is the type of advertisement or publicity which were entrusted to them. Payment used to be made after the execution of the work. Once or twice he got verified whether advertisement was done or not through his subordinates. Now he cannot say who was the employee and who made the verification. He also did not obtain any written report of getting verified the advertisement work done by Maud Advertising Agency and Rita Advertising Agency. Later, the payments were made on trust and no specific verification was done as to whether the hoardings were displayed or not. When the version of Mr. Fernandes that he was made to part with havala bills and in the modus operandi adopted, Mr. Fernandes used to get only 10 per cent commission and the rest of the bills amount used to draw and used to be handed over to him. Shri Jalan emphatically denied it and termed the statement of Mrs. Fernandes as completely false. He asserted that every payment was made by account payee cheque and Mr. Fernandes never paid back any money to him. He was not aware that Mrs. Fernandes was the owner of the three advertising concerns herself. He further stated that the newspaper advertisements and calendars, etc., was entrusted to Chitla Advertising Agency, Bombay. He also stated that he got verified once or twice whether Maud Advertising Agency had displayed hoardings. According to him, he verified the hoarding in the highway named Eastern Express Highway between Bombay and Agra. He also stated that it is in April or May 1981 after the enquiry by the Income-tax Department stated he came to know that Maud Advertising Services had not displayed the hoardings as per the bills passed by it. They gave legal notice to Mr. J. D. Fernandes and also gave a reminder. He further course of action had to be decided. Now they have terminated the services of Maud Advertising Agency and Rita Advertising Agency and the work of giving advertisements is now being handled by one of its directors Shri V. P. Agarwal, who had his office at Nariman Point, Bombay.
5. One 23-1-1982, i.e. the same day on which Shri Jalan was examined and Shri Shankerlal Sinwal was also examined on oath. He stated that in June 1970 he was appointed as accountant in the assessees company firstly at Secunderabad and later he was transferred to Bombay. He stated that the person who is authorised to determine whether any expenditure should be incurred for the company was his regional manager, Shri Jalan, where the amount involved is more than Rs. 1,000. He knows Mr. J. D. Fernandes for the last 4 or 5 years and 2 or 3 times he had handed over the cheques to him. The modus operandi spoken in his (Mr. Fernandes) deposition is false. He had never paid to Shri Shankerlal any money. In fact, normally the cheques were issued by the cashier only. Only when there is any difficulty he might have interfered and seen that the cheques are issued. He does not know that any one verified whether the hoardings climbed to have been put up were actually put up or not. Only the regional manager would know about it. He knows Rita Advertising Agency for the past one-half year.
6. Mrs. Fernandes, wife of Mrs. Fernandes, was examined on 11-1-1985. Except stating that she had sent her husband to Mr. Jalan she denied the knowledge about the actual publicity work done by Maud Advertising Services and Rita Advertising Agency to the assessee-company. To the question, how she knows Shri Jalan, she replied that he goes to the transport company for business and that is how she came to know of it.
7. On 10-1-1985, one Mr. L. Rego the manager of Art Advertising Bureau was examined. He deposed that Mrs. Kantabai P. Zaveri is the proprietrix of the said concern and he has been working since 20 years. They have taken lease rights of putting up two neon sign boards and one advertisement hoarding on the outer wall of the building known as Marina Mansion situated at Chowpatti, Bombay. The lease agreement is dated 14-11-1974. The lease rent fixed was Rs. 300 per month. According to him, from 1977 till date the neon sign board of the Transport Corporation of India was never exhibited on Marine Mansion building. To a question whether Maud Advertising Service did any publicity of Marine Mansion building at any time, he stated that 10 years ago there was an advertisement of Zeep Torch through Maud Advertising Service for a period of three months. Except these two instances, the said concern had not done any publicity on Marine Mansion building. He categorically stated that no publicity of Transport Corporation of India Ltd., was done on Marine Mansion building by Rita Advertising Services. Mr. Rego was cross-examined on 2-8-1985. In the cross-examination, he stated that they have taken three sites of Marine Mansion buildings on lease. He also stated that owners of the said building was not prohibited for allowing other advertising agencies to put on their advertisements on the rest of the walls on the said building but they should not obstruct their advertisements.
8. To a question as to how he knows Maud Advertising Service, he replied that we had taken one hoarding site from them for Geep Troch advertisement. The following specific question and answer are important and hence they are quoted :
"Have you even seen the advertisement of TCI Ltd., on Marine Mansion building ?"
Answer "I have not seen on our side."
He has been shown three photos disclosing that advertisement of Transport Corporation of India LTd., was exhibited on the building called Marina Mansion. He said that after 1982 Marine Mansion building was booked by Road Transport Corporation through Maud Advertising Service. It is possible that they would have actually displayed the name of Transport Corpn. Of India Ltd. He did not verify the actual advertisement, but, this happened only in 1982. The agreement dated 14-1-1974 entered into by the Trust of Vithaldas Thakurdas Charity Trust with the proprietrix of Art Advertising Bureau, Mrs. Kantabai P. Zaveri has been provided in the paper book filed on behalf of the department at pages 9 to 11. Except to disclose that Art Advertising Bureau is entitled to display and one advertisement board and two neon sign boards on the outer wall of the said building (Marine Mansion) for a period of ten years from 1-1-1974 with a proviso that she will be entitled to display with an option to renew for further period of 10 years under the same terms and conditions set out, it is not of much relevance to our purpose.
9. The ITO after going through the evidence came to the conclusion that the payment made to Maud Advertising Agency is not genuine and therefore, disallowed Rs. 60,000 and also added the same to the returned income. Following the elaborate discussion made by him in his assessment order for 1979-80 for the assessment year 1980-81 also he had disallowed and added Rs. 94,000 to the returned income disbelieving the payment made to Rita Advertising Agency. In appeal, the learned Commissioner (Appeals) found that the assessee had made the payments during the assessment year 1979-80 to Maud Advertising Services by account payee cheque. He stated that Mr. Fernandes earlier in the day gave a statement on 14-4-1981 stating that he had only done advertisement work for Transport Corporation of India Ltd. The fact that 90 per cent of the amount was withdrawn 2 or 3 days after the crossed cheque was remitted into the bank account of Maud Advertising Agency and Rita Advertising Agency can be explained away otherwise than on a reasonable hypothesis substantiating the complicity of the assessee-company in the alleged clandestine business. Mere withdrawal of 90 per cent of the amount paid by a crossed cheque does not point out the complicity of the assessee-company and it does not lead to the only conclusion that the withdrawal must again have come to the coffers of the assessee-company. The withdrawal of 90 per cent of the amount covered by the crossed cheques deposited would not lead to the only conclusion that the withdrawal must again have come to the coffers of the assessee-company. The withdrawal of 90 per cent of the amount covered by the crossed cheques deposited would not lead to an irresistible conclusion in favour of hawala transaction. It could be that this amount may be withdrawn for payment for work done by other persons to whom sub-contracts were given by Mr. Fernandes. The learned Commissioner (Appeals) also held that the evidence of Mr. Fernandes gave back 90 per cent of the amount. Under the circumstances, the learned Commissioner (Appeals) set aside the ITOs order and allowed Rs. 60,000 for the assessment year 1979-80 and Rs. 94,000 paid to Rita Advertising Agency for the assessment year 1980-81.
10. As against the impugned order of the learned Commissioner (Appeals), the revenue came up in second appeals before this Tribunal. It is contended that the disallowance of Rs. 60,000 should have been upheld as there was no supportable evidence to substantiate the assessees version. The deposition of Mr. Fernandes goes to establish that 90 per cent of the payments came back to it by form of withdrawals by Mr. Fernandes. The preponderance of probability or circumstantial evidence available on record corroborates the deposition of Mr. Fernandes as against the mere denial by Shri Jalan and Mrs. Shankerlal. The Commissioner (Appeals) erred in assuming that withdrawal made by Shri Fernandes might have been paid to the sub=contractors in the face of the clear evidence on records that no publicity word was undertaken at all. The Commissioner (Appeals) failed to appreciate the fact that the assessee-company never cared to inspect whether any advertisement service was rendered at all and the said conduct of the company itself would further strengthen the deposition of Mr. Fernandes that 90 per cent of the payments were refunded to the assessee-company. It is also contended that the case of Associated Electrical Agency is different from the facts of the assessees case. We have heard Shri C. Satyanarayana, the learned senior departmental representative and Shri Y. Ratnakar the learned advocate for the assessee-company.
11. For the assessment year 1979-80, the assessee filed a return on 20-8-1979 disclosing a total income of Rs. 80,95,727. However, the assessment was completed on 27-9-1982 on a total income of Rs. 91,16,320. The total turnover under all the units being run by the assessee-company worked out to Rs. 25,10,54,785. The assessee-company was having about 450 branches throughout India but the learned departmental representative submits that the hoardings were exhibited only in Bombay and nowhere else. Obviously this would not be correct because in the bills furnished by Rita Advertising Agency it is stated that neon sign boards were exhibited at Dapudi, Pune and also at Pune Road, Nasik. The particulars of bills issued by Maud Advertising Services for the accounting year relevant to the assessment year 1979-80 and Rita Advertising Agency for the accounting year relevant to the assessment year 1980-81 were furnished by the learned senior departmental representative in a paper. On 14-4-1981 Shri J. D. Fernandes gave two statements which are contrary to each other in material particulars. In the first of the statements he stated that under the bills issued, inter alia, to the assessee-company he had rendered advertisement services, whereas, in the second statement given on the same day he had resold from it and came with a story that every bill issued to the assessee-company was hawala bill and he did not take out any hoarding sites and did not also render any services to the Transport Corporation of India Ltd. He went to the extent of stating that he did not give any statement whatsoever earlier on the day, i.e., 14-4-1981. This would speak volumes about the truthfulness of version of Mr. Fernandes. Admittedly, he did not show the income derived from the bill amounts received from Transport Corporation of India Ltd., as part of his income. Taking advantage of that vulnerable aspect the ADI who got the statement of Mr. Fernandes by threats an promises and extracted the statement. Therefore, that statement cannot be taken to be true. In our opinion, the evidence of Mr. Fernandes should be viewed as the evidence of an approver in criminal law which is entitled to no value at all unless it is corroborated in material particulars by reliable and material pieces of evidence. One of sub corroborative paid under the bill was soon withdrawn by self-cheque and said to have been paid to the assessee-company. This circumstance is not a clinching circumstance inasmuch as it is capable of being explained away on a hypothesis other than that of establishing the complicity of the assessee company. For instance, if Maud Advertising Services had not taken any premises on lease to exhibit its hoardings or put on neon signs, nothing prevents it to hire such premises from other advertising agencies and with reference to such hiring he might have withdrawn 90 per cent and paid it to other advertising agencies wherefrom it had hired the premises for performing its advertising services. Mr. Rego had already admitted the Maud Advertising Services had taken one hoarding from them for Geep Torch advertisement. Mr. Fernandes in his first statement on 14-4-1981 admitted that (i) Royal Advertisers, (ii) Anjali Associates, (iii) Modern Publicity Services, and (iv) Express Advertisers used to do display works on behalf of their clients. But he does not remember on which of his clients behalf the services were rendered and the particulars of payment made to them. This would show that there is every scope for Mr. Fernandes to utilise services of the above four concerns also to display the works and advertisements on behalf of its clients for which payments might have been made. Therefore, simply because Maud Advertising Services did not take any premises on lease for putting up advertisements or neon sign boards does not by itself establish that he was not capable of rendering advertisement services to his clients. According to us he can do so through others and in order to pay to others, 90 per cent of the amounts mentioned in the bill might also have been withdrawn. However, Mr. Fernandes in all probability might have been under the influence of threats or promises which made him give altogether a different wise and made the second statement on 14-4-1981. Otherwise, there is no rational explanation as to why he made almost volte-face in his version given on the same day. Further, the version of Mr. Fernandes that only with reference to four parties, he used to make havala bills and all other transactions which he had were genuine and real did not sound true and does not conform to the natural course of human conduct. Further except his bare word of mouth, there is nothing in evidence to show that 90 per cent of the bill money withdrawn was handed over at any time to Shri Jalan or to Shri Shankerlal. The version of Mr. Fernandes was that the crossed cheques used to be given by Shri Shankerlal in the bill amounts, he used to hand over 90 per cent of the drawn cheques to Shri Shankerlal. Shri Shankerlal strongly refuted the same on oath when he was examined by the revenue. Further, in our opinion, unless the assessee-company had requisite knowledge of the bogus transaction or the clandestine arrangement, or unless it had knowledge that the amounts withdrawn reach the coffers of the assessee-company, it cannot be said that the amounts paid towards advertising to Maud Advertising or Rita Advertising Agency do not constitute expenditure incurred by the assessee-company. The accounts maintained by Mr. Fernandes in the Central Bank of India as well as in Union Bank of India were extracted by the ITO in his assessment orders. The date or remittances of amounts given by crossed cheques to Maud Advertising services and dates of withdrawal therefrom are new to each other and the dates would fit in with the situation set up by Mr. Fernandes. However, as regards the Rita Advertising Agency is concerned, the correlation of the dates of remittances and the dates of withdrawal were never established just like in the case of Maud Advertising Services. That itself would falsify the version of Mr. Fernandes regarding the havala nature of the transactions. Further, in a vast organisation like that of the assessee company, it is well-nigh impossible either to check or detect the dealings which the staff of the assessee-company develop with outsiders. Assuming without admitting that either Shri Jalan or Shri Shankerlal was hand it glove with Maud Advertising Agency, how can the assessee-company he punished for it unless the assessee-company is a consenting party to the clandestine transactions ? The revenue did not even suggest at least faintly that the assessee-company had a hand in such a clandestine act of obtaining havala bills from two advertising agencies. Further, the photographs with which Shri Rego was confronted with in cross-examination would clearly show that an advertising service was done on Transport Corporation of India ltd., at Marina Mansion. Out of the 4 sides of the building, permission was taken for display the hoardings on three sides by Mr. Regos master. The fourth side was not given on rent to Art Advertising Bureau. When a specific question was put to Mr. Rego whether he had ever seen advertisement of Transport Corporation of India Ltd. on Marina Mansion, he replied that he has not seen on their site. That does not mean that the advertisement might not have been displayed on a side not taken on rent by Art Advertising Bureau. Therefore, we are satisfied that some advertising service was performed by Maud Advertising Agency, in the accounting year relevant to the assessment year 1979-80 and we also hold that the story of havala transaction spoken of by Mr. Fernandes does not appear to be true or believable. Further, as regards Rita Advertising Agency is concerned, there is absolutely no evidence to show that the payment is not made by the assessee-company and Rita Advertising Agency did not do any advertising services to the assessee-company. It is no doubt true that letter dated 2-8-1985 addressed by Nasik Municipal Corporation to the ITO and the letter dated 3-10-1985 addressed by the Municipal Corporation of Greater Bombay to the ITO and also the letter dated 12-2-1985 addressed by the Municipal Corporation of Greater Bombay to the ITO were filed. They only show that Rita Advertising Agency did no obtain any permit for display of neon signs at Chowpatty, Marina Mansion from 1-1-1978 to 30-9-1978, from 1-10-1978 to 30-9-1980 and 1-1-1978 to 30-9-1980. However, as we have already stated nothing prevented Rita Advertising Agency to take on rent the places already taken on rent by any other advertising agencies and display either hoardings or neon signs in those places. Therefore, the letters produced by the learned departmental representative were not conclusive of the matters. We, therefore, hold that there is nothing to show that the amounts of Rs. 60,000 and Rs. 94,000 incurred as expenditure for advertising by the assessee-company were not spent for said purposes, but, 90 per cent of the said amount was received back by the assessee-company. Therefore, the order of the learned Commissioner (Appeals) in our opinion is quite justifiable and cannot be interfered with. Even otherwise, it should be held to be a trading loss under section 28 of the Act. Even on this ground, the amounts are allowable as business expenditure. The revenue fails on this point.
12. The next common question is about the disallowance made by the ITO under section 40A (5) of the Act which was set aside by the Commissioner (Appeals). The disallowance involved is Rs. 60,215 in the accounting year relevant to the assessment year 1979-80 and Rs. 1,11,764 for the accounting year relevant to the assessment year 1980-81. The learned Commissioner (Appeals) held in his impugned orders that the matter is covered by the Tribunals decision rendered in the assessees case for an earlier assessment year. Both the parties agreed that the matter is covered by the order of this Tribunal dated 19-7-1984 passed in IT Appeal No. 664 (Hyd.) of 1983 for the assessment year 1976-77. even otherwise, the matter is covered by the Andhra Pradesh High Court decision in CIT v. Warner Hindustan Ltd. [1984] 145 ITR 24, the Gujarat High Courts decision in CIT v. Bharat Vijay MIlls Ltd. [1981] 128 ITR 633. Hence, this ground raised by the assessee in both the appeals should fail.
13 to 18. [These paras are not reproduced here as they involve minor issues.]