J.K. Synthetics Ltd., Kanpur vs Department Of Income Tax

A.C.I.T.-4, Vs. M/s J. K. Synthetics Ltd., Kanpur. E-23, Kamla Nagar, Jaykaylon Colony, Kanpur. PAN:AAACJ4988M (Appellant) (Respondent)

ITA No.505/LKW/2010 Assessment year:1991 - 92

M/s J. K. Synthetics Ltd., Vs. A.C.I.T.-4, E-23, Kamla Nagar, Kanpur. Jaykaylon Colony, Kanpur. PAN:AAACJ4988M (Appellant) (Respondent)

Revenue by Dr. Anand Kumar Agarwal, C.I.T., D. R. Assessee by Shri Rakesh Garg, Advocate Date of hearing 01/05/2015 Date of pronouncement 30/06/2015

ORDER

PER A. K. GARODIA, A.M.

First, we take up the revenue's appeal in ITA No. 537/Lkw/2010.

2. Ground No. 1 of the appeal is as under:

"1. On the facts and in the circumstances of the case, the Ld CIT (A) has erred in holding that surplus receipts over refunds 2

in the cops deposits account was not the income of the assessee and thereby deleting the addition of Rs. 14,11,260/-."

3. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 1 and in A.Y. 1990 - 91 as per Ground No. 11. Both these appeals were heard on 23.03.2015 & 227.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

4. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the revenue and against the assessee as per Para No. 3 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 1 of the revenue is allowed.

5. Ground No. 2 of the appeal is as under:

"2. On the facts and in the circumstances of the case, the Ld CIT (A) has erred in allowing relief of Rs.35,37,902/- being the disallowance on account of proportionate interest on interest free loans to M/s J. K. Satoh Agricultural Machines limited while the Assessing Officer has established that the advances had been made to the subsidiary company out of bank overdraft."

6. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 39 and in A.Y. 1990 - 91 as per Ground No. 8. Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

7. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 133 of 3

the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 2 of the revenue is rejected.

8. Ground No. 3 of the appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in restricting the disallowance up to the extent of 50% on account of expenses on kamala Retreat ignoring that these expenses are hit by section 37 (4) and 37 (5) of the Act."

9. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 6 and in A.Y. 1990 - 91 as per Ground No. 10 (a). Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

10. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal as per Para No. 18 of the tribunal order, which is reproduced below for the sake of ready reference:-

"18. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by both the sides. We find that in assessment year 81-82 and 84-85, the Tribunal has upheld the disallowance of expenses incurred for Kamla Retreat expenses to the extent of 50%. Similarly in assessment year 81-82 also, the issue before the Tribunal was that as to whether 50% of the expenses of a guest house Kamla Retreat is admissible as deduction. This issue was decided by the Tribunal against the assessee. In assessment year 85-86, 100% amount of the expenses for Kamla Retreat guest house was disallowed by the authorities below and under these facts, it was held by the Tribunal that such expenses would be allowed to the extent of 50% of the expenses made out for Kamla Retreat. Hence, it is seen that as per these 4

orders, it was held that the expenses incurred for Kamla Retreat is allowable to the extent of 50% of the expenses incurred in this regard. In the present year also, as per Para 8A of the order of CIT(A), it is seen that the assessee has incurred an amount of Rs.2,03,593/- as regard to Kamla Retreat. This entire amount was disallowed by the Assessing Officer but CIT(A) has restricted the disallowance to 50% and in this manner, he has allowed relief of Rs.1,01,796/-. We find that this relief is in line with earlier Tribunal orders for three different preceding years. But in assessment year 88-89, in I.T.A. No.2633/Del/94 in Para No. 14 to 18, the Tribunal has considered the judgment of Hon'ble Apex Court rendered in the case of Britannia Industries Ltd. Vs Commissioner of Income-tax as reported in [2005] 278 ITR 546 (SC). In that year, it was noted by the Tribunal that CIT(A) has confirmed the entire disallowance u/s 37(4)/37(5) of the Act in relation to expenses incurred for Kamla Retreat. The Tribunal also noted that there are contrary decisions of the Tribunal in assessee's own case for assessment year 71-72 and 85-86.

Thereafter, it was observed by the Tribunal that with respect to nature of Kamla Retreat i.e. whether it was a guest house or not, the issue is not clear and hence, the Tribunal restored back the issue to the file of the Assessing Officer for fresh consideration following a latest decision of Hon'ble Apex Court in the case of Britannia Industries Ltd. (supra). We find that this judgment of Hon'ble Apex Court in the case of Britannia Industries Ltd. (supra), is dated 05/10/2005. All the earlier Tribunal orders cited by both the sides up to assessment year 85-86 are of earlier date and the latest order is dated 21/10/94 in I.T.A. No.5850/Del/91 for assessment year 85-86. Hence, we are of the considered opinion that the latest Tribunal decision in I.T.A. No.2633/Del/94 dated 30/06/09 should be followed because in this Tribunal order, the Tribunal has considered a latest judgment of Hon'ble Apex Court rendered in the case of Britannia Industries Ltd. (supra). Hence, respectfully following this Tribunal decision for assessment year 88-89, we restore back this issue to the file of Assessing Officer for fresh consideration in accordance with law after considering the latest decision of Hon'ble Apex Court in the case of Britannia Industries Ltd. (supra) and after finding out as to whether Kamla Retreat is guest house or not as per this judgment of Hon'ble Apex Court and if it is found that Kamla Retreat is guest house then no part of the expenditure incurred can be allowed 5

as per this judgment of Hon'ble Apex Court. The Assessing Officer should pass necessary order as per law after providing reasonable opportunity of being heard to the assessee. Accordingly, ground No. 6 is allowed for statistical purposes."

11. On the same line, in the present year also, we restore back this issue to the file of Assessing Officer for fresh consideration in accordance with law after considering the latest decision of Hon'ble Apex Court in the case of Britannia Industries Ltd. (supra) after finding out as to whether Kamla Retreat is guest house or not as per this judgment of Hon'ble Apex Court and if it is found that Kamla Retreat is guest house then no part of the expenditure incurred can be allowed as per this judgment of Hon'ble Apex Court. The Assessing Officer should pass necessary order as per law after providing reasonable opportunity of being heard to the assessee. Accordingly, ground No. 3 is allowed for statistical purposes."

12. Ground No. 4 (a) of the appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance up to 50% i.e. Rs.

263,598/- on account of Entertainment expenses on Customary presentation even though the expenditure are hit by section 37 (2A) of the Act."

13. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 9 and in A.Y. 1990 - 91 as per Ground No. 20 (b). Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

14. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 31 of 6

the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 4 (a) of the revenue is rejected.

15. Ground No. 4 (b) of the appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance up to 70% i.e. Rs.

10,56,273/- on account of Customary presentation expenses even though the expenditure are hit by section 37 (2A) of the Act."

16. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 9 and in A.Y. 1990 - 91 as per Ground No. 20 (b). Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

17. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 31 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 4 (b) of the revenue is rejected.

18. Ground No. 4 (c) of the Revenue is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 453,207/- even though these expenses were not meant wholly and exclusively for business purposes."

19. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 10 and in 7

A.Y. 1990 - 91 as per Ground No. 20 (c). Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

20. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the revenue and against the assessee as per Para No. 35 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 4 (c) of the revenue is allowed.

21. Ground No. 4 (d) of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 283,768/-

being expenses of entertainment in nature even though the expenditure were hit by section 37 (2A) of the Act."

22. Learned DR of the Revenue supported the assessment order. Learned AR of the assessee supported the order of Learned CIT (A). He also submitted that in assessee's own case in A.Y. 1993 - 94 to 1995 - 96, similar issue under similar facts was decided by the tribunal in favour of the assessee and the relevant portion of this tribunal order is available on pages 263 - 266 of the paper book.

23. We have considered the rival submissions and find that this issue is decided by the tribunal in favour of the assessee in A.Y. 1993 - 94 to 1995

- 96 and Learned DR of the revenue could not point out any difference in facts in the present year. Therefore, we do not find any reason to take a contrary view in the present year. Accordingly, in the present year also, this 8

issue is decided on similar line and the Ground No. 7 of the revenue is rejected.

24. Ground No. 4 (e) of the Revenue is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 605,893/- even though these expenses did not relate to the year under consideration."

25. Learned SR of the assessee supported the order of CIT (A) and Learned DR of the revenue supported the assessment order.

26. We have considered the rival submissions. We find that on pages 15 & 16 of his order, a categorical finding has been given by CIT (A) that these expenses had crystallized during this year. This finding of CIT (A) could not be controverted by the learned DR of the revenue. Hence, we do not find any reason to interfere in the order of CIT (A) on this issue. Accordingly, this ground is rejected.

27. Ground No. 5 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 99,22,260/- on account of proportionate premium on redemption of debentures without appreciating the fact that no premium was payable before expiry of 7 years."

28. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 2 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

9 29. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee as per Para No. 5 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 5 of the revenue is rejected.

30. Ground No. 6 of the Revenue is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 314,904/- on account of guest house maintained in Kamala Castle at Mussorie even though no details of the expenditure were produced before him and as such, the relief given is without basis."

31. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 51 and in A.Y. 1990 - 91 as per Ground No. 13. Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

32. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 169 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 6 of the revenue is rejected.

33. Ground No. 7 of the Revenue is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 305,755/- on account of foreign travel expenses without appreciating the fact that tax auditors reported that these expenses were of capital in nature."

10 34. Learned DR of the Revenue supported the assessment order. Learned AR of the assessee supported the order of Learned CIT (A). He also submitted that in assessee's own case in A.Y. 1985 - 86, similar issue under similar facts were decided by the tribunal in favour of the assessee and the relevant portion of this tribunal order is available on pages 123 - 125 of the paper book.

35. We have considered the rival submissions and find that this issue is decided by the tribunal in favour of the assessee in A.Y. 1985 - 86 and Learned DR of the revenue could not point out any difference in facts in the present year. Therefore, we do not find any reason to take a contrary view in the present year. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 7 of the revenue is rejected.

36. Ground No. 8 of the Revenue is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) was not correct in allowing the relief of Rs. 22,18,039/-

under the head "General Charges" for which no details were filed."

37. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 12 and in A.Y. 1990 - 91 as per Ground No. 19. Both these appeals were heard on 23.03.2015 & 27.04.2015 respectively and therefore, in the present year, this ground can be decided on similar line as per tribunal orders in these years.

38. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue except a small part by confirming the addition to the extent of 30% out of expenses incurred in respect of presentation of articles and gifts. The tribunal order in A.Y. 1987 11

- 88 is as per Paras 43 to 45. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 8 of the revenue is allowed in part. Out of disallowance of Rs. 769,636/- on presentation of articles and gifts, we uphold the disallowance of 30% of Rs. 769,636/-. In addition to this, disallowance in respect of those expenses, for which, no detail is available as per A.O., disallowance was of Rs. 540,361/- and out of this, relief is allowed by CIT (A) to the extent of R. 459,307/- i.e. 90%. In A. Y. 1987 - 88, on this aspect, the order of CIT (A) was reversed and that of the A.O. was restored. Accordingly, in the present year also, on this aspect, we reverse the order of CIT (A) and restore that of the A.O. In this manner, Ground No. 8 is partly allowed in the terms indicated above.

39. Ground No. 9 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 7,63,404/-

under the head travelling expenses even though these expenses were of entertainment in nature and hit by section 37 (2A) of the Act."

40. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 84-85 in I.T.A. No.749/Del/88. He also submitted that as per one more Tribunal decisions for assessment year 94-95 & 1995 - 96 also, this issue is covered in favour of the assessee.

41. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by Learned A.R. of the assessee. In earlier years, the Tribunal has allowed relief to the assessee under similar facts. In the present year also, the CIT(A) has allowed relief to the assessee by 12

observing that specific disallowance as per Rule 6D has already been made and incurring of expenses on Bankers, Customers etc. is normal in business. The order of CIT(A) is in line with earlier Tribunal decisions and therefore, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 9 is rejected.

42. Ground No. 10 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 16,15,181/-

under the head repairs to plant & machinery expenses even though these expenses were of capital in nature as well as expenses related to earlier years."

43. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 83-84 in I.T.A. No.795/Del/87. He also submitted that as per one more Tribunal decision for assessment year 93-94 & 1994 - 95 also, this issue is covered in favour of the assessee.

44. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by Learned A.R. of the assessee. In earlier years, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decisions, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 10 is rejected.

45. Ground No. 11 of the Revenue's appeal is as under:

13 "On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 11,86,947/-

under the head repairs to building expenses even though these expenses were of capital in nature."

46. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 83-84 in I.T.A. No.795/Del/87. He also submitted that as per one more Tribunal decision for assessment year 93-94 & 1994 - 95 also, this issue is covered in favour of the assessee.

47. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by Learned A.R. of the assessee. In those years, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with these Tribunal decisions, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 11 is rejected.

48. Ground No. 12 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 11,86,947/-

under the head repairs to building expenses even though these expenses were of capital in nature."

49. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 84-85 in I.T.A. No.492/Del/88. He 14

also submitted that as per one more combined Tribunal decision for assessment year 93-94 to 1995 - 96 also, this issue is covered in favour of the assessee.

50. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by Learned A.R. of the assessee. In these years, the Tribunal has allowed relief to the asessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with these Tribunal decisions, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 12 is rejected.

51. Ground No. 13 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in allowing relief of Rs. 54,500/- on account of forfeiture of security even though the no evidence was furnished by the assessee in spite of specific opportunity given."

52. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A).

53. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that in the assessment order, the addition was made by the A.O. with a clear finding that no evidence has been filed to substantiate the claim that the expenses relate to this year and also that the amount was actually forfeited. The same was deleted by CIT (A) without a finding that evidence has been filed to substantiate the claim that the expenses relate to this year. Therefore, the order of CIT (A) on this issue cannot be 15

sustained. We, therefore, reverse his order on this issue and restore the order of the A.O. This ground is allowed.

54. Ground No. 14 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in allowing relief of Rs. 14,22,329/- on account of bad debts even though the assessee failed to furnish evidence to prove the debts were become bad in spite of specific opportunity given."

55. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A).

56. We have considered the rival submissions. We find that after 01.04.1989, the assessee is not required to establish that the debt has become bad and mere write off is sufficient subject to section 36 (2). The objection of the A.O. is not this that there is no actual write off in the books or that the provisions of section 36 (2) are not satisfied. Hence, we do not find any reason to interfere in the order of CIT (A) on this issue. This ground of the Revenue is rejected.

57. Ground No. 15 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in allowing relief of Rs. 1,19,715/- on account of interest on employees welfare fund even though the assessee failed to furnish evidence to prove the utilization of funds in employees welfare in spite of specific opportunity given."

58. Learned D.R. of the Revenue supported the assessment order. Learned A.R. of the assessee supported the order of learned CIT (A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 85-86 in I.T.A. No.5689/Del/91, available on pages 203 - 204 of the paper book.

16 59. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 15 is rejected.

60. Ground No. 16 is as under:

""On the facts and in the circumstances of the case, the Ld CIT (A) has erred in holding the technical consultancy fees of Rs.

4,85,710/- as revenue expenditure."

61. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by earlier Tribunal decision for assessment year 84-85. He also submitted that the copy of this tribunal order is available in the paper book.

62. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we 17

decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 16 is rejected.

63. Ground No. 17 is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in holding that the Guarantee Commission of Rs.19,16,627/- as revenue expenditure."

64. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by earlier Tribunal decision for assessment year 89-90 in ITA 1120/D/95 available on pages 24 - 27 of the paper book.

65. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 17 is rejected.

66. Ground No. 18 (a) is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance up to 50% i.e. Rs.

1,36,781/- being expenses of entertainment in nature even though the expenditure hit by section 37 (2A) of the Act."

67. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned 18

CIT(A). He also submitted that this issue is covered in favour of the assessee by earlier Tribunal decision for assessment year 85-86 in ITA 5850/D/91 available on page 119 of the paper book.

68. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 18 (a) is rejected.

69. Ground No. 18 (b) is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 8,89,888/- on account of presentation of articles even though the expenditure hit by section 37 (2A) of the Act."

70. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by earlier Tribunal decision for assessment year 1993-94 to 95-96 available on page 176 - 177, 219 - 220 & 273-274 of the paper book.

71. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In those years, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts 19

and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 18 (b) is rejected.

72. Ground No. 19 of the Revenue's appeal is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 17,890/- on account of other consultancy charges even though the assessee had failed to furnish bills of the expenses in spite of specific opportunity was given."

73. Learned D.R. of the Revenue supported the assessment order. Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 85-86 in I.T.A. No.5689/Del/91, available on page 198 of the paper book.

74. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 19 is rejected.

75. Ground No. 20 reads as under:

20 "On the facts and in the circumstances of the case, the Ld CIT (A) has erred in holding that the professional charges of Rs.

3,96,871/- as revenue expenditure."

76. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 23 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

77. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 84 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 20 of the revenue is rejected.

78. Ground No. 21 reads as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 1,72,032/-

even though the expenses were not relating to the sales made during the year under consideration."

79. Learned D.R. of the Revenue supported the assessment order. Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 1995-96 in I.T.A. No.1249/Luc/06, available on pages 292 - 294 of the paper book.

80. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In assessment year 1995-96, the Tribunal has allowed relief to the asessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a 21

contrary view in the present year. Since, the order of CIT(A) is in line with this Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 21 is rejected.

81. Ground No. 22 is as under:

On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 46,37,551/- on account of closing stock of Spare Parts even though the assessee could not prove that all items charged under this head were routed through stores in spite of specific opportunity given."

82. Learned D.R. of the Revenue supported the assessment order. Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that on this issue, there is an appeal of the revenue in A.Y. 1990 - 91 as per Ground No. 26. This appeal was heard on 28.04.2015 and therefore, in the present year, this ground can be decided on same line as in that year.

83. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that in A.Y. 1990 - 91, similar issue was involved in Ground No. 26 raised by the revenue in that year and as per Para 126 of the tribunal order in that year, this issue was decided in favour of the assessee and therefore, in the present year also, this issue is decided on same line and accordingly, Ground No. 22 is rejected.

84. Ground No. 23 is as under:

"On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 8,83,000/- on account of closing stock of Stores & Spares even though the assessee could not prove that all items charged under this head 22

were routed through stores in spite of specific opportunity given."

85. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 25 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

86. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 90 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 23 of the revenue is rejected.

87. Ground No. 24 (a), 24 (b) & 24 (e) are as under:

"24 (a) On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance up to 50% i.e. Rs. 2,97,758/- on account of entertainment expenses on customary presentation even though the provisions of section 37 (2A) is applicable."

"24 (b) On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the disallowance of Rs. 5,61,635/- on account of customary presentation expenses even though the expenditure hit by section 37 (2A) of the Act."

"24 (e) On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 9,30,129/- on account of cost of presentation articles even though the expenditure hit by section 37 (2A) of the Act."

88. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 31 and 23

this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

89. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 109 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 24 (a), 24 (b) & 24

(e) of the revenue are rejected.

90. Ground No. 24 (c) is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 5,97,522/- even though the assessee failed to furnish the details in spite of specific opportunity was given."

91. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 32 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

92. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 112 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 24 (c) of the revenue is rejected.

93. Ground No. 24 (d) is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in allowing relief of Rs. 8,56,814/- even though the assessee failed to prove clear nexus of the expenditure with the business of the assessee."

24 94. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 33 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

95. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 115 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 24 (d) of the revenue is rejected.

96. Ground No. 25 is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in holding the know - how fees of Rs. 37,38,838/-

and Rs. 5,43,436/- as revenue expenditure."

97. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 13 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

98. We find that in A.Y. 1987 - 88, this issue was restored by the tribunal as per Para No. 48 of the tribunal order in A. Y. 1987 - 88. This Para is reproduced below for ready reference:-

"48. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. We find that this issue has been discussed by the Assessing Officer in Para 12 on page No. 51 & 52 of the paper book. In this Para, it is noted by the Assessing 25

Officer that this claim has been made by the assessee u/s 35AB and the assessee has paid and capitalized this technical knowhow amounting to Rs.2,24,33,031/-. The Assessing Officer has also noted that this amount has been debited to capital work in progress. The disallowance was made by the Assessing Officer on the basis that since the assessee has capitalized the whole amount in books, the amount of technical knowhow is essentially a capital expenditure and is in capital work in progress. In our considered opinion, 1/6 th of such expenses incurred for technical knowhow is allowable u/s 35AB in the year of incurring the expenditure and in this manner 1/6 th of such amount is allowable in the succeeding five years also but it has to be ensured that the assessee is not claiming depreciation also on this expenditure capitalized by the assessee. Hence, to ensure that the assessee is not claiming double deduction in respect of this expenditure, first by claiming u/s 35AB and again by claiming depreciation on such expenses, we feel it proper that the matter should go back to the file of the Assessing Officer to verify this aspect. Hence, we set aside the order of CIT(A) on this issue and restore this matter to the file of the Assessing Officer for fresh decision. The assessee has to establish before the Assessing Officer that no depreciation was claimed and allowed and respect of this expenditure of Rs.224,33,031/- and Rs.,30,60,737/- incurred by the assessee under the head technical knowhow fees and capitalized. The assessee has to satisfy that no such depreciation was claimed in the present year or in any succeeding year and if the assessee is able to do so, no disallowance should be made in the present year as has been claimed by the assessee to the extent of 1/6 th of these two expenses being Rs.37,38,838/- and Rs.5,43,436/-. With these observations, this ground is allowed for statistical purposes.

99. Accordingly, in the present year also, this issue is decided on similar line and the matter is restored to A.O. with similar directions. Ground No. 25 of the revenue is allowed for statistical purposes.

100. Ground No. 26 is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting disallowance of Rs. 1,22,262/- on 26

account of payment made to clubs ignoring the fact that these expenses were not incurred for business purposes."

101. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 50 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

102. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 166 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 26 of the revenue is rejected.

103. Ground No. 27 is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in allowing relief of Rs. 19,22,985/- on account of entertainment expenditure ignoring that these expenses hit by provisions contained in section 37 (2A) of the Act."

104. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 48 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

105. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 160 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 27 of the revenue is rejected.

106. Ground No. 28 (a) is as under:

27 "On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 2,19,653/- on account of maintenance expenses of guest house without appreciating the facts that the assessee did not maintain the books in respect of guest houses except for Kota guest house."

107. Learned D.R. of the Revenue supported the assessment order. Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 82-83 in I.T.A. No.53/Del/1986, available on pages 287 - 288 of the paper book.

108. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decisions cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the asessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Since, the order of CIT(A) is in line with earlier Tribunal decision, we decline to interfere in the order of CIT(A) on this issue. Accordingly, this ground No. 28 (a) is rejected.

109. Ground No. 28 (b) is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 2,00,000/- on account of depreciation on other assets of the guest houses without appreciating the facts the assessee had not produced any details in respect of assets at guest house."

110. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 45 and 28

this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

111. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 151 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 28 (b) of the revenue is rejected.

112. Ground No. 28 (c) is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 6,30,000/- on account of other maintenance expenses of guest house without appreciating the facts that the assessee did not maintain the books in respect of guest houses except for Kota guest house."

113. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 47 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

114. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 157 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 28 (c) of the revenue is rejected.

115. Ground No. 29 is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs. 27,49,414/- on account of presentation articles even though the expenditure hit by section 37 (1) of the Act."

29 116. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 49 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

117. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 163 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 29 of the revenue is rejected.

118. Ground No. 30 (a) & 30 (b) are as under:

" 30 (a) On the facts and in the circumstances of the case, the Ld CIT (A) has not correct in deleting the disallowance of Rs. 556,70,498/- on account of depreciation on amount of foreign exchange rate fluctuation even though the claim was hit by provisions of section 43A."

" 30 (b) On the facts and in the circumstances of the case, the Ld CIT (A) has not correct in deleting the disallowance of Rs. 49,63,542/- on account of depreciation on amount of foreign exchange rate fluctuation even though the claim was hit by provisions of section 43A."

119. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 60 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

120. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 199 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, 30

this issue is decided on similar line and the Ground No. 30 (a) & 30 (b) of the revenue are rejected.

121. Ground No. 30 (c) is as under:

" On the facts and in the circumstances of the case, the Ld CIT (A) has not correct in allowing 100% depreciation on Machinery for energy conservation while such machinery was not directly covered by this type of plant & Machinery as mentioned in I. T. Rules be calculated treating it as plant & Machinery instead of part of roads."

122. It was agreed by both sides that identical issue was raised in the appeal of the revenue for the A.Y. 1987 - 88 as per Ground No. 55 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

123. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee and against the revenue as per Para No. 181 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 30 (c) of the revenue is rejected.

124. Ground Nos. 31 & 32 are general in nature and no separate adjudication is required.

125. In the result, appeal of the Revenue is partly allowed in the terms indicated above.

126. Now we take up the assessee's appeal for assessment year 1991-92 i.e. I.T.A. No.505/Lkw/2010.

127. Ground No. 1 is as under:-

31 "On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

"1. Kamla Retreat Expenses

Confirming disallowance of Rs.2,18,383/- being 50% of the by wrongly treating the same as expenditure hit by section 37(4) / 37(5) of the Act."

128. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 3 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

129. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal against the assessee by following the judgment of Hon'ble Apex Court rendered in the case of Britannia Industries Ltd. vs. CIT [2005] 278 ITR 546 (SC) as per Para 223 of the tribunal order in A. Y. 1987 - 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 1 of the assessee is rejected.

130. Ground No. 2 (a) is as under:-

"On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

"2. Sales Promotion Expenses

a) Not allowing Rs.3,29,499/- holding it to be entertainment expenses."

131. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 4 (a) and 32

this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

132. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee as per Para 227 of the tribunal order in A. Y. 1987

- 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 2 (a) of the assessee is allowed.

133. Ground No. 2 (b) is as under:-

"On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

"2. Sales Promotion Expenses

b) Upholding disallowance of Rs.4,52,688/- (30% of total expenditure of Rs. 15,08,961/-) being expenses on customary presentation of Articles."

134. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 4 (b) and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

135. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal against the assessee as per Para 230 of the tribunal order in A. Y. 1987 -

88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 2 (b) of the assessee is rejected.

136. Ground No. 3 is as under:

"On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

33 "3. Capital Expenditure on Scientific Research

Upholding disallowance of Rs.1,93,992/- without appreciating that the claim was in respect of capital expenditure allowable in the year in which asset is ready for use and while simultaneously not following judicial pronouncements pressed into service by the appellant."

137. Learned D.R. of the Revenue supported the orders of the authorities below. Learned A.R. of the assessee submitted that this issue is covered in favour of the assessee by the Tribunal decision for assessment year 82-83 in I.T.A. No.53/Del/1986, available on pages 285 - 286 of the paper book.

138. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal decision cited by Learned A.R. of the assessee. In earlier year, the Tribunal has allowed relief to the assessee under similar facts and Learned DR of the revenue could not point out any difference in facts and therefore, we do not find any reason to take a contrary view in the present year. Hence, we delete this disallowance. Accordingly, this ground No. 3 is allowed.

139. Ground No. 4 is as under:-

"On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

Not allowing deduction of Rs. 226,502/- being expenses on foreign travelling on the wives of the Directors/employees of the company by not appreciating the facts of the case and the judicial pronouncements relied upon by the appellant."

34 140. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 2 (a) and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

141. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee as per Para 216 of the tribunal order in A. Y. 1987

- 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 4 of the assessee is allowed.

142. Ground No. 5 (a) is as under:-

"On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

5. Charges General

a) Confirming disallowance of Rs.5,85,225/- (being 50% of Rs. 11,70,450/-) holding it to be entertainment expenses."

143. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 5 (a) and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

144. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal against the assessee as per Para 232 of the tribunal order in A. Y. 1987 -

88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 5 (a) of the assessee is rejected.

145. Ground No. 5 (b) is as under:-

35 "On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

5. Charges General

b) Confirming disallowance of Rs.2,56,143/- holding it to be expenses hit by section 37 (4)/ 37 (5) by not appreciating the facts of the case and judicial pronouncements relied upon by the appellant."

146. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 5 (b) and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

147. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal in favour of the assessee as per Para 235 of the tribunal order in A. Y. 1987

- 88. Accordingly, in the present year also, this issue is decided on similar line and the Ground No. 5 (b) of the assessee is allowed.

148. Ground No. 5 (c) is as under:-

"On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred both on fact and in law in :-

5. Charges General

c) Confirming disallowance of Rs.81,054/- (being 15% of Rs. 540,361/-) by wrongly holding that no details/incomplete details were filed."

149. Learned AR of the assessee reiterated the same contentions which were raised before CIT (A). Learned DR of the revenue supported the orders of the authorities below.

36 150. We find that the decision of learned Cit (A) is in line with his order in A.Y. 1987 - 88 & 1990 - 91 and in both these years, his order was approved by the tribunal on this issue and hence, in the present year also, we decline to interfere in the order of CIT (A) on this issue and the Ground No. 5 (c) of the assessee is rejected.

151. Ground No. 6 is as under:

"6. Project Expenses Written off Confirming disallowance of Rs.8,88,723/- being project expenses written off by not appreciating the facts of the case and the judicial pronouncements relied upon by the appellant."

152. Learned AR of the assessee reiterated the same contentions which were raised before CIT (A). Learned DR of the revenue supported the orders of the authorities below.

153. We have considered the rival submissions. We find that on page No. 27 of his order, CIT(A) has decided this issue against the assessee on the basis that since the expenses were incurred on the projects which did not come up, expenses were rightly disallowed by the Assessing Officer. Reliance has been placed by learned AR of the assessee on the judgment of Hon'ble Delhi High Court rendered in the case of Indo Rama Synthetics India Ltd. vs. CIT [2011] 333 ITR 18 (Del). In this case also, the dispute before Hon'ble Delhi High Court was regarding the expenses incurred for expansion of business where the project was abandoned and under these facts, it was held in that case that the expenses incurred are allowable expenditure. The facts in the present case are similar and therefore, respectfully following this judgment of Hon'ble Delhi High Court, the disallowance is deleted. This ground is allowed.

37 154. Ground No. 7 is as under:

"7. Penalty for non fulfillment of contracts

(a) Confirming disallowance of Rs.57,800/- being penalty for not fulfillment of contract by not appreciating the facts of the case.

(b) Confirming disallowance of Rs.9,89,158/-, wrongly holding that the amount did not pertain to the year under consideration by not appreciating the facts of the case."

155. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 7 and this appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

156. We find that in A.Y. 1987 - 88, the issue in dispute was similar as per ground No. 7 in that year and this issue was decided by the tribunal in favour of the assessee as per Para 243 of the tribunal order in A. Y. 1987 - 88 following the judgment of Hon'ble Bombay High Court rendered in the case of CIT vs. Regalia Apparels Pvt. Ltd. [2013] 352 ITR 71 (Bom). Since Learned DR of the revenue could not point out any difference in facts, we do not find any reason to take a contrary view in the present year. Therefore, in line with the Tribunal order in assessee's own case for assessment year 1987-88, this issue in the present year is also decided in favour of the assessee and accordingly, Ground No. 7 of the assessee is allowed.

157. Ground No. 8 is as under:

"Over-riding commission to stockists "Confirming disallowance of Rs.24,57/- being over-riding commission paid to stockists without appreciating the facts of the case."

38 158. Learned AR of the assessee reiterated the same contentions which were raised before CIT (A). Learned DR of the revenue supported the orders of the authorities below.

159. We have considered the rival submissions. We find that it is noted by learned CIT(A) on page No. 31 of his order that this disallowance was made on the basis that the expenses does not pertain to the year under consideration. Neither before CIT (A) nor before us, the assessee could establish that the expenses crystallized in the present year and therefore, we do not find any reason to interfere in the order of CIT (A) on this issue. This ground is rejected.

160. Ground No. 9 is as under:

"Interest paid Confirming disallowance of Rs.7,17,147/- being interest paid to Income Tax Department by not appreciating the facts of the case."

161. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987 - 88 as per Ground No. 6 in that year and the appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

162. We find that in A.Y. 1987 - 88, this issue was decided by the tribunal against the assessee as per Para 239 of the tribunal order in A. Y. 1987 -

88. Since neither side could point out any difference in facts, we do not find any reason to take a contrary view in the present year. Therefore, in line with the Tribunal order in assessee's own case for assessment year 39

1987-88, this issue in the present year is also decided against the assessee. This ground is rejected.

163. Ground No. 10 is as under:

"Interest payable on additional retention price of cement Confirming the addition of Rs.40,77,868/- towards interest payable on additional retention price of cement by not appreciating the facts of the case."

164. It was agreed by both sides that identical issue was raised in the appeal of the Revenue for the A.Y. 1987 - 88 as per Ground No. 41 in that year and the appeal was heard on 23.03.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

165. We find that in A.Y. 1987 - 88 in Revenue's appeal, this issue was decided by the tribunal in favour of the assessee as per Para 139 of the tribunal order in A. Y. 1987 - 88. Since neither side could point out any difference in facts, we do not find any reason to take a contrary view in the present year. Therefore, in line with the Tribunal order in Revenue's appeal for assessment year 1987-88, this issue in the present year is decided in favour of the assessee. This ground is allowed.

166. Ground No. 11 is as under:

"Product Development Expenses"

"In not allowing Rs.1,70,976/- (being 50% of Rs.3,41,952/-) holding it to be entertainment expenses."

167. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1990 - 91 as per Ground No. 14 in that 40

year and therefore, this ground can be decided on similar line as per Tribunal order in that year.

168. We find that in A.Y. 1990-01 in assessee's own appeal, this issue was decided by the tribunal in favour of the revenue and against the assessee as per Para 178 of the tribunal order in A. Y. 1990-91. Since Learned DR of the Revenue could not point out any difference in facts, we do not find any reason to take a contrary view in the present year. Therefore, in line with the Tribunal order in Revenue's appeal for assessment year 1990-91, this issue in the present year is decided against the assessee. This ground is rejected.

169. Ground No. 12 is as under:

"Cash Payment exceeding Rs.10,000/-

Confirming disallowance of an order of Rs.54,474/- being genuine cash payment in excess of Rs.10,000/-, though all these payments fall to be governed by second proviso to section 40A(3) and while simultaneously not following the judicial pronouncement pressed into service by the appellant."

170. Learned AR of the assessee reiterated the same contentions which were raised before CIT (A). Learned DR of the revenue supported the orders of the authorities below.

171. We have considered the rival submissions. We find that on page No. 34 of his order, CIT (A) has decided this issue against the assessee in line with his order for assessment year 1987-88 and 1990-91. This issue was decided by the tribunal against the assessee as per Para 253 of the tribunal order in assessee's own case for assessment year 1987-88 by following another Tribunal order in assessee's own case for assessment year 1988-

89. Since no difference in facts could be pointed out by either side, we do 41

not find any reason to take a contrary view in the present year. Therefore, in line with the Tribunal order for assessment year 1987-88, this issue in the present year is decided against the assessee. This ground is rejected.

172. Ground No. 13(a) is as under:

"Employees Welfare Expenses

(a) Not allowing a sum of Rs.2,97,758/- (being 50% of Rs.5,95,517/-) holding it to be entertainment expenses."

173. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1990-91 as per Ground No. 11(a) in that year and the appeal was heard on 27.04.2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

174. We find that in A.Y. 1990-91 in assessee's own appeal, this issue was decided by the tribunal against the assessee as per Para 165 of the tribunal order in A. Y. 1990-91. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1990-91, this issue in the present year is decided against the assessee. This ground is rejected.

175. Ground No. 13(b) is as under:

"Employees Welfare Expenses

(b) Confirming disallowance of Rs.2,85,604/- (being 25% of Rs.11,42,418/) as unconnected with business."

176. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987-88 as per Ground No. 9(a) in that year and the appeal was heard on 23/03/2015 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

42 177. We find that in A.Y. 1987-88 in assessee's own appeal, this issue was decided by the tribunal against the assessee as per Para 251 of the tribunal order in A.Y. 1987-88. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1987-88, this issue in the present year is decided against the assessee. This ground is rejected.

178. Ground No. 13(c) is as under:

"Employees Welfare Expenses

(c) Confirming disallowance of Rs.62,290/- by holding it to be guest house expenses."

179. It was agreed by both sides that this issue is identical with the issue raised as per Ground No. 5 (b) of this very appeal and therefore, this ground can be decided on same line.

180. We find that Ground No. 5 (b) was decided by us in favour of the assessee as per Para 147 above. Therefore, in line with that decision, where we have followed tribunal order in A.Y. 1987 - 88, this issue is also being decided in favour of the assessee on similar line. This ground is allowed.

181. Ground No. 14 is as under:

"14. Brokerage & commission Confirming disallowance of Rs.1,65,606/- on account of provision for brokerage & commission without appreciating the facts of the case."

182. Learned AR of the assessee reiterated the same contentions which were raised before CIT (A). Learned DR of the revenue supported the orders of the authorities below.

43 183. We have considered the rival submissions. We find that on page No. 38 of his order, CIT (A) has decided this issue against the assessee on this basis that the assessee made provision of Rs. 2 Lacs in the present year but till Accounting Year 1992 - 93, actual credit notes were issued for only Rs. 34,394/-. Admittedly, in mercantile system of accounting, provision can be made of estimated liability but such provision should be on some fair and rationale basis. Even if credit notes were not issued till Accounting Year 1992 - 93, higher provision in the present year can be accepted if the assessee can show a reasonable, fair and rationale basis for making this provision of Rs. 2 Lacs, against which, till Accounting Year 1992 - 93, actual credit notes were issued for only Rs. 34,394/-. But in the preset case, the assessee has not demonstrated that the provision is on a reasonable, fair and rationale basis. Hence, we do not find any reason to interfere in the order of CIT (A) on this issue. This ground is rejected.

184. Ground No. 15 is as under:

"Technical know-how fee "In confirming the disallowance of Rs.12,43,355/- being expenditure on know-how/ technical services fee without appreciating the facts of the case and judicial pronouncements relied upon by the appellant."

185. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987-88 as per Ground No. 1 and in assessment year 1990-91 as per ground No. 15 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

186. We find that in A.Y. 1987-88 in assessee's own appeal, this issue was decided by the tribunal against the assessee as per Para 212 of the tribunal 44

order in A. Y. 1987-88. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1987-88, this issue in the present year is decided against the assessee. This ground is rejected.

187. Ground No. 16 is as under:

"Entertainment Expenses "Not allowing a sum of Rs.19,22,985/- (being 50% of Rs.38,45,971/-) by wrongly treating the same as in the nature of entertainment expenses."

188. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987-88 as per Ground No. 14 and therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

189. We find that in A.Y. 1987-88 in assessee's own appeal, this issue was decided by the tribunal against the assessee as per Para 270 of the tribunal order in A. Y. 1987-88. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1987-88, this issue in the present year is decided against the assessee. This ground is rejected.

190. Ground No. 17(a) is as under:

"Guest House Expenses"

(a) Confirming the addition of Rs.7,34,780/- on account of depreciation on guest house without appreciating that the depreciation on the assets in the guest house is of allowable nature as also not considering the judicial pronouncement pressed into service by the appellant."

191. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987-88 as per Ground No. 13(a) 45

therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

192. We find that in A.Y. 1987-88 in assessee's own appeal, this issue was decided by the tribunal against the assessee as per Para 263 of the tribunal order in A. Y. 1987-88. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1987-88, this issue in the present year is decided against the assessee. This ground is rejected.

193. Ground No. 17(b) is as under:

"Guest House Expenses"

(a) In confirming disallowance of a sum of Rs.1,00,000/- on the ad hoc basis towards depreciation on other assets of guest house."

194. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1987-88 as per Ground No. 13(b) therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

195. We find that in A.Y. 1987-88 in assessee's own appeal, this issue was decided by the tribunal in favour of the assessee as per Para 266 of the tribunal order in A. Y. 1987-88. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1987-88, this issue in the present year is decided in favour of the assessee. This ground is allowed.

196. Ground No. 17(c) is as under:

"Guest House Expenses"

(a) In confirming disallowance of a sum of Rs.70,000/-

towards other maintenance expenses of guest house, on ad hoc basis."

46 197. It was agreed by both sides that identical issue was raised in the appeal of the assessee for the A.Y. 1990-91 as per Ground No. 3(c) therefore, in the present year, this ground can be decided on similar line as per tribunal order in that year.

198. We find that in A.Y. 1990-91 in assessee's own appeal, this issue was decided by the tribunal against the assessee as per Para 134 of the tribunal order in A.Y. 1990-91. Therefore, in line with the Tribunal order in assessee's own appeal for assessment year 1990-91, this issue in the present year is decided in favour of the assessee. This ground is rejected.

199. In the result, the appeal of the assessee stands partly allowed.

200. In the combined result, the appeal of the Revenue and assessee are partly allowed.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:30/06/2015. *C.L.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 Asstt. Registrar