Income Tax Appellate Tribunal - Lucknow
M/S Vil Limited, Lucknow vs Astt. Commissioner Of Income Tax ... on 30 November, 2018
I.T.A. No.350 & 410/Lkw/2017
1
Assessment Year:2012-13
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH 'A', LUCKNOW
BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER
ITA No.350/Lkw/2017
Assessment Year:2012-13
M/s VIL Limited, Vs. A.C.I.T.,
(Formerly Vijay Infrastructure Central Circle-1,
Ltd., Lucknow.
B-5/21, Vishal Khand,
Gomti Nagar, Lucknow.
PAN:AABCV 2697 Q
(Appellant) (Respondent)
ITA No.410/Lkw/2017
Assessment Year:2012-13
Dy.C.I.T., Vs. M/s Vijay Infrastructure Ltd.,
Range-6, B-5/21, Vishal Khand,
Lucknow. Gomti Nagar, Lucknow.
PAN:AABCV 2697 Q
(Appellant) (Respondent)
Assessee by Shri Yogesh Agrawal, Advocate
Revenue by Shri A. K. Bar, CIT (D.R.)
Date of hearing 26/11/2018
Date of pronouncement 30/11/2018
ORDER
PER T. S. KAPOOR, A.M.
These are cross appeals filed by the Revenue as well as by the assessee against the order of learned CIT(A) dated 31/03/2017. The only ground taken by the Revenue in its appeal is the action of learned CIT(A) by I.T.A. No.350 & 410/Lkw/2017 2 Assessment Year:2012-13 which he has allowed claim of the assessee u/s 80IA of the Act. The assessee in its appeal has taken the following grounds:
"I. The Ld. Commissioner of Income Tax (Appeals)-III, Lucknow [here-in-after referred to as the Ld. CIT (A)'s] erred on facts and in law in not passing any speaking order on the issue regarding making an assessment order u/s 143(3)/144 by rejecting the books of accounts whereas in fact the entire books of accounts along with relevant bills, vouchers, etc. are duly maintained and are also duly audited and thus the order being vitiated needs to be quashed and the returned income accepted.
NOTWITHSTANDING AND WITHOUT PREJUDICE TO GROUND NO. I ABOVE :-
II. The Ld. CIT (A)'s grossly erred on facts and in law in conforming the disallowance of depreciation amounting to Rs.1,42,80,490/- being shuttering material purchased from M/s. Shyam Steel Industries despite the fact that the entire bills and vouchers are available and were also produced before her and payments made through account payee cheques and thus the addition based wholly on notions, conjectures and surmises and without any concrete facts may kindly be ordered to be deleted.
III. The Ld. CIT (A)'s further grossly erred on facts and in law in conforming the addition of Rs.1,18,28,291/- being advance made to M/s. NCC VEE-JV despite the fact that the same is as per the terms contained in the Memorandum of Agreement and duly recorded in the books of accounts and thus the disallowance and its confirmation being against all settled principles of law and natural justice may kindly be ordered to be deleted.
IV. The Ld. CIT (A)'s again erred on facts and in law in conforming the disallowance of expense of Rs.3,69,70,315/- towards work contract and other tax despite the fact that the certificate regarding the TDS deducted under UP VAT Rules, 2006 by produced being amount deposited as VAT on behalf of NCC-VEE (JV) and thus the disallowance so made wholly on irrelevant considerations, without any cogent material on record and whims and fancies may kindly be ordered to be deleted.
I.T.A. No.350 & 410/Lkw/2017 3 Assessment Year:2012-13 V. The Learned. CIT (A)'s erred on facts and in law in confirming the addition made under the head sundry creditors for an amount of Rs.9,90,07,964/- which such addition was made without any basis only on whims and fancies and thus the said addition may kindly be ordered to be deleted.
VI. On the facts and in the peculiar circumstances of the present case the Ld. CIT (A)'s grossly erred on facts in confirming the addition of Rs.9,90,07,964/- by ignoring the fact that these are trade creditors and have been paid through banking channels and also that confirmations were also filed all the balances are duly reconciled and that all such evidences as was available were placed before the assessing officer during assessment stage itself and thus this addition being made without any basis only on notions, conjectures and surmises may kindly be ordered to be deleted.
VII. The addition so sustained is very highly excessive, contrary to facts, laws and principles of natural justice and fair- play and thus may kindly be ordered to be quashed/annulled.
VIII. That, the Ld. CIT (A)'s did not afford the appellant any proper or sufficient opportunity to have its say or make necessary compliance of the reasons relied upon by her in conforming the additions and thus the order so passed without affording adequate opportunity may kindly be ordered to be quashed."
2. At the outset, Learned A. R. submitted that the appeal filed by the Revenue is duly covered in favour of the assessee by the earlier order of the Tribunal in the case of assessee itself which has been confirmed by Hon'ble Allahabad High Court and further the appeal filed by the Revenue in the Supreme Court has been dismissed and in this respect our attention was invited to paper book pages 1 to 60 where the relevant copies of orders of various courts was placed.
3. Learned D. R. fairly agreed that the issue is well settled against the Revenue.
I.T.A. No.350 & 410/Lkw/2017 4 Assessment Year:2012-13
4. As regards the appeal of the assessee, Learned A. R. invited our attention to petition for admission of additional ground which was filed vide letter dated 20th August, 2018. Learned A. R. submitted that the ground taken by the assessee is a legal ground which goes to the root of the matter and which could not be taken at the time of filing of the appeal and therefore, it was prayed that the same may be admitted. Explaining the additional grounds of appeal, Learned A. R. submitted that while disallowing the claim of the assessee u/s 80IA, the Assessing Officer and learned CIT(A) have made certain other disallowances and ground of appeal relates to the claim of the assessee that such enhanced income is also subject to deduction u/s VIA of the I.T. Act. Learned D. R. did not object to the admission of additional grounds of appeal and therefore, the same was admitted. Learned A. R. submitted that the assessee was denied certain depreciation on additional items of shuttering material which has increased the income of assessee. It was submitted that since the income of the assessee was entitled to benefit u/s 80IA therefore, the increased income would also be eligible for deduction u/s 80IA of the Act. Learned A. R. further submitted that there were other disallowances also which were not allowed by the authorities below despite of the fact that all the necessary documents were submitted to the Assessing Officer and in this respect our attention was invited to pages 95 to 111 of the paper book where copies of such documents was placed. Learned A. R. further invited our attention to the addition sustained by learned CIT(A) on account of non confirmation of sundry creditors. Learned A. R. submitted that the assessee had duly discharged its onus of filing the necessary copies of accounts, the payments of which were made through banking channels and, therefore, the addition was not sustainable and without prejudice it was argued that even if additions were sustainable, the same would be exempt u/s 80IA of the Act. Learned A. R. further invited our attention to the admission of additional I.T.A. No.350 & 410/Lkw/2017 5 Assessment Year:2012-13 evidence under Rule 29 of the Appellate Tribunal Rules and submitted that the documents filed as additional evidence is copy of memorandum of agreement dated 05/12/2005 between the assessee company and M/s Nagarjuna Construction Company Ltd. whereby the assessee was required to make payments equivalent to 4% of the gross receipts to M/s Nagarjuna Construction Company Ltd. Learned A. R. submitted that the assessee had entered into a joint venture agreement with M/s Nagarjuna Construction Company Ltd. and assessee was required to pay 4% of the gross receipts to M/s Nagarjuna Construction Company Ltd. and all other income and expenses were required to be borne by the assessee company.
5. Learned D. R., on the other hand, heavily relied on the orders of the authorities below.
6. We have heard the rival parties and have gone through the material placed on record. First we take up the appeal filed by the Revenue. The only ground taken by the Revenue is the action of learned CIT(A) by which he has allowed relief to the assessee by allowing exemption u/s 80IA of the Act. We find that in the case of the assessee itself the issue has been decided by the Tribunal vide order dated 30/10/2015. The relevant findings of Hon'ble Tribunal, as contained from para 14.1 to 14.2, are reproduced below:
14.1 From the above paras, reproduced from the order of CIT(A), we find that a categorical finding has been given by CIT (A) that the assessee company is not a mere work contractor but has developed the road from existing 2 lane to 4 lane and while doing so, the assessee company has also made substantial investment by itself and also executed the development works and carried out civil-works on its own by using its own material and expertise and no material consumed in the roads and bridges were provided by the NHAI and UP PWD. This is also noted by CIT(A) that the maintenance of the I.T.A. No.350 & 410/Lkw/2017 6 Assessment Year:2012-13 existing facility during the period of development also was of the assessee company and so also was the risk during this period to maintain the infrastructure and after the completion of development of road and its handing over to the Government, the risk period of the assessee company was of 12 months for maintenance of the road. As per explanation below sub section (4) of section 80IA, infrastructure facility includes a road including toll road, bridge or a rail system. This is not in dispute that the assessee has widened the road and therefore, activity of the assessee falls within the definition of infrastructure. The CIT(A) has also referred to several judicial pronouncements as per which it was held that there is no requirement that the assessee should have been the owner of the infrastructure facility. The facts in the case of Koya & Co.
(Supra) are identical. In that case, the relevant paras of the Tribunal Order are Para No. 21 to 28 and the same are reproduced below for ready reference:-
21. We have considered the elaborate submissions made by both the parties and also perused the materials available on record.
We have also gone through all the case laws cited by both the parties. We find that the provisions of Section 80IA (4) of the Act when introduced afresh by the Finance Act, 1999, the provisions under section 80IA (4A) of the Act were deleted from the Act. The deduction available for any enterprise earlier under section 80IA (4A) are also made available under Section 80IA (4) itself. Further, the very fact that the legislature mentioned the words
(i) "developing" or (ii) "operating and maintaining" or (iii) "developing, operating and maintaining" clearly indicates that any enterprise which carried on any of these three activities would become eligible for deduction. Therefore, there is no ambiguity in the Income-Tax Act. We find that where an assessee incurred expenditure for purchase of materials himself and executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word "owned" in sub-clause (a) of clause (1) of sub section (4) of Section 80IA of the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provisions are made applicable to the person to whom such enterprise belongs to is explained in sub-clause (a). Therefore, the word "ownership" is attributable only to the enterprise carrying on the business which would mean that only I.T.A. No.350 & 410/Lkw/2017 7 Assessment Year:2012-13 companies are eligible for deduction under section 80IA (4) and not any other person like individual, HUF, Firm etc.
22. We also find that according to sub-clause (a), clause (i) of sub section (4) of Section 80-IA the word "it" denotes the enterprise carrying on the business. The word "it" cannot be related to the infrastructure facility, particularly in view of the fact that infrastructure facility includes Rail system, Highway project, Water treatment system, Irrigation project, a Port, an Airport or an Inland port which cannot be owned by any one. Even otherwise, the word "it" is used to denote an enterprise. Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility.
23. The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80IA (4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. We find that the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility. It is the assessee's responsibility to do all acts till the possession of property is handed over to the Government. The first phase is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. The assessee has to develop the infrastructure facility. In the process, all the works are to be executed by the assessee. It may be laying of a drainage system; may be construction of a project; provision of way for the cattle and bullock carts in the village; provision for traffic without any hindrance, the assessee's duty is to develop infrastructure whether it involves construction of a particular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee I.T.A. No.350 & 410/Lkw/2017 8 Assessment Year:2012-13 hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are occurred it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an un-developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05-2010, such activity is eligible for deduction under section 80IA (4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility. Therefore, the assessee is a developer and not a works contractor as presumed by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly indicate that the assessee is eligible for deduction under section 80IA (4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer.
24. We also find that as per the provisions of the section 80IA of the Act, a person being a company has to enter into an agreement with the Government or Government undertakings. Such an agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word "contractor" is used to denote a person entering into an agreement for undertaking the development of infrastructure facility. Every agreement entered into is a contract. The word "contractor" is used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor. Therefore, the contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor.
25. We find that the decision relied on by the learned counsel for the assessee in the case of CIT vs. Laxmi civil Engineering works [supra] squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgment of the Mumbai High Court in the case of ABG Heavy Engineering [supra]. The case of ABG is not the pure developer whereas, in the present case, the assessee is the pure developer. We also find that Section 80IA of the Act, intended to cover the entities carrying out developing, operating and maintaining the infrastructure facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT.
I.T.A. No.350 & 410/Lkw/2017 9 Assessment Year:2012-13 We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 80IA of the Act. But, certainly, the Explanation cannot be read to do away with the eligibility of the developer; otherwise, the parliament would have simply reversed the Amendment made in the Finance Act, 2001. Thus, the aforesaid Explanation was inserted, certainly, to deny the tax holiday to the entities who does only mere works contact or sub-contract as distinct from the developer. This is clear from the express intension of the parliament while introducing the Explanation. The explanatory memorandum to Finance Act 2007 states that the purpose of the tax benefit has all along been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work. It categorically states that the deduction under section 80IA of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Without any doubt, the learned counsel for the assessee clearly demonstrated before us that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources. Further, the order of Tribunal in the case of B.T.Patil cited supra is prior to amendment to sec 80IA(4), after the amendment the section 80IA(4) read as (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility, prior to amendment the "or" between three activities was not there, after the amendment "or" has been inserted w.e.f. 1-4-2002 by Finance Act 2001. Therefore, in our considered view, the assessee should not be denied the deduction under section 80IA of the Act if the contracts involves design, development, operating & maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction u/s 80IA of Act. In our opinion the contracts which contain above features to be segregated on this deduction u/s. 80-IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those work are not entitle for deduction u/s 80IA of the Act. The profit from the contracts which involves design, development, operating & maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. It is needless to say that similar view has been taken by the Chennai Bench of the Tribunal and deduction u/s. 80IA was granted in the case of M/s. Chettinad Lignite Transport Services (P) Ltd., in ITA No. 2287/Mds/06 order dated 27th July, 2007 for the assessment year 2004-05. Later in ITA No. 1179/Mds/08 vide order dated 26th February, 2010 the Tribunal has taken the same view by inter-alia holding as follows:
I.T.A. No.350 & 410/Lkw/2017 10 Assessment Year:2012-13 "7. Moreover, the reasons for introducing the Explanation were clarified as providing a tax benefit because modernisation requires a massive expansion and qualitative improvement in infrastructures like expressways, highways, airports, ports and rapid urban rail transport systems. For that purpose, private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other work contract has been encouraged by giving tax benefits. Thus the provisions of section 80IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the section but where a person makes the investment and himself executes the development work, he carries out the civil construction work, he will be eligible for the tax benefit under section 80IA."
26. The above order was followed in subsequent assessment years 2007-2008 & 2008-09 in ITA Nos. 1312 & 1313/Mds/2011 vide order dated 18.11.2011 in the case of the same assessee.
27. Further in the case of R.R. Constructions, the Chennai Bench of Tribunal in I.T.A. No. 2061/Mds/2010 for assessment year 2007-08 vide order dated 3.10.2011 held as follows:
28. Being so, we are inclined to partly allow the ground relating to claiming of deduction u/s. 80IA.
14.2 From the above Para of this tribunal order, it comes out that if the contracts involves design, development, operating & maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction under s. 80IA and profit from the contracts which involves design, development, operating & maintenance, financial involvement, and defect correction and liability period is to be accepted as development and cannot be said to be contract simplicitor to apply the explanation. In the present case, categorical finding has been given by CIT (A) that the assessee was engaged in development of road and is not a mere contractor as he had deployed his own capital, used his own management and expertise in maintenance and had to bear the risk and defect correction. These findings of CIT (A) could not be controverted by learned DR of the revenue and therefore, this tribunal order rendered in the case of Koya & Co. (Supra) is squarely applicable because the facts are similar. In the order of CIT (A), he has followed this tribunal order and various other judicial pronouncements as noted by him in his order, as reproduced above. Considering this factual and legal position, we find no I.T.A. No.350 & 410/Lkw/2017 11 Assessment Year:2012-13 infirmity that the order of CIT (A) on this aspect that in the facts of the present case, it cannot be said that the assessee company was mere a contractor and not a developer. Therefore, on issue No. 3, we find no infirmity in the order of CIT(A). This issue is decided in favour of the assessee.
The above order of Hon'ble Tribunal has been confirmed by Hon'ble Allahabad High Court vide order dated12/07/2018, copies of which are available from pages 52 to 56 of the paper book. Further the appeal filed by the Revenue against the order of Hon'ble Allahabad High Court has been dismissed by Hon'ble Supreme Court, a copy of which is placed at page 59 of the paper book. Therefore, respectfully following the above judicial precedent in the case of the assessee itself, the grounds of appeal of the Revenue are dismissed. Accordingly, the appeal of the Revenue stands dismissed.
7. Now coming to the appeal filed by the assessee. We find that the first ground of appeal has not been argued by Learned A. R. therefore, this ground of appeal regarding rejection of books of account is dismissed as not pressed.
8. The second ground of appeal of the assessee is regarding disallowance of depreciation on shuttering material purchased from Shyam Steel Industries. The Assessing Officer has stated that no bills of purchases for shuttering material were filed. The learned CIT(A) has held that the Assessing Officer in the remand proceedings vide letter dated 03/08/2016 had asked the assessee to produce bills and vouchers in respect of addition made for shuttering material which the assessee had not filed. From the copy of remand report dated 23/08/2016, we find that no such query regarding additions to shuttering material was made. The learned CIT(A) has further held that the detail of purchases of shuttering material has been I.T.A. No.350 & 410/Lkw/2017 12 Assessment Year:2012-13 examined and during examination he had found an amount of Rs.57,91,665/- having been purchased after 30/09/2011 and rest of the purchases were from 01/04/2011 to 30/09/2011 whereas the assessee had claimed depreciation @100% on the total purchases. The learned CIT(A), after having observed the purchase of shuttering material by the assessee, did not allow claim of the assessee as he held that assessee had not produced the relevant material before the Assessing Officer during the remand proceedings also. However, we feel that one more opportunity should be given to the assessee to produce the purchase bills which has been used for making claim for depreciation. Therefore, ground No. 2 of the assessee's appeal is allowed for statistical purposes.
9. Now coming to ground No. 3 regarding advance made to NCC-VEE (JV). We find that as per the additional evidence the assessee was bound to pay an amount of 4% to NCC-VEE (JV). The said additional evidence could not be filed before the authorities below. However, we find that the additional evidence goes to the root of the matter and, therefore, we have admitted the same and we remand this issue also back to the file of the Assessing Officer who should readjudicate the above in view of the additional evidence.
10. Now coming to ground No. 4. We find that the assessee had claimed deduction of Rs.5,35,08,525/- out of which the assessee was allowed relief to the tune of Rs.1,65,38,210/-. The rest of the claim was not allowed as the Assessing Officer held that the necessary evidence for the remaining amount were not filed. From the order of learned CIT(A) we find that he has noted in his order that during remand proceedings the assessee was asked to furnish proof of payment of work contract tax and other tax and in the remand report dated 23/08/2016 the Assessing Officer had stated that I.T.A. No.350 & 410/Lkw/2017 13 Assessment Year:2012-13 no further proofs were provided. The learned CIT(A) has further held that the assessee has not reconciled the figures of tax deducted in the certificate of TDS etc. However, we find that the assessee had submitted details of tax, break-up of which was submitted to assessing authority, a copy of which is placed at pages 95 to 111 of the paper book. Therefore, we deem it appropriate to remand this issue also back to the Assessing Officer who should readjudicate on the issue after going through the submissions of the assessee.
11. Now coming to last grounds of appeal i.e. ground No. 5 & 6. We find that the Assessing Officer had made addition on account of non confirmation of sundry creditors. The Assessing Officer during remand proceedings again issued notice u/s 133(6) to such creditors and part of the creditors responded and therefore, learned CIT(A) allowed part relief to the assessee. Learned A. R. before us has argued that the above creditors were trade creditors who had been paid through banking channel and the confirmation of the same was available with them. The learned CIT(A) has held that during remand proceedings the assessee had not co-operated and he has confirmed the addition by holding that the notices issued to creditors had returned back unserved. However, while confirming the addition he has ignored the fact that the assessee had claimed to have made payments to these creditors through banking channels and assessee was having confirmation from these creditors. Therefore, we deem it appropriate to remand this issue also back to the file of the Assessing Officer to adjudicate the issue afresh. These grounds are allowed for statistical purposes.
12. The assessee has also raised additional ground of appeal which reads as under:
I.T.A. No.350 & 410/Lkw/2017 14 Assessment Year:2012-13 "That without prejudice to the grounds above, if in case any addition is sustained, the deduction under Chapter VI-A allowable be allowed on the income finally assessed."
13. In this respect our attention was invited to a copy of CBDT Circular also, a copy of which is placed at pages 193 and 194 of the paper book which says that if the expenditure is disallowed and such expenditure is related to the business activity against which the Chapter VI-A deduction has been claimed, the deduction needs to be allowed on the enhanced profits. Since we have remanded the entire issue raised by the assessee to the Assessing Officer for readjudication, the Assessing Officer will look into this aspect of additional ground also. In view of the above, the additional ground raised by the assessee is also remitted back to the Assessing Officer for adjudication. Accordingly, this ground is also allowed for statistical purposes.
14. In the result, the appeal of the Revenue is dismissed whereas the appeal of the assessee is partly allowed for statistical purposes.
(Order pronounced in the open court on 30/11/2018) Sd/. Sd/.
(PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR )
Judicial Member Accountant Member
Dated:30/11/2018
*Singh
Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T., Lucknow
A.R.