ITAT CHANDIGARH BENCH ‘A’
Vishal Paper Industries
Joint Commissioner of Income-tax
IT Appeal Nos. 267 & 348 (Chandi.) of 2011
[ASSESSMENT YEAR 2007-08]
MARCH 26, 2012
Mehar Singh, Accountant Member
The present cross appeals filed by the assessee and the revenue for the Assessment Year 2007-08 vide ITA No. 348/Chd/2011 and ITA No. 267/Chd/2011 respectively are directed against the order of ld. CIT(A), Patiala, dated 24.1.2011, passed u/s 250(6) of the Income-tax Act, 1961 (hereinafter referred to, in short as “the Act”).
2. In its appeal the assessee has raised the following grounds:
“1 The observation of the ld. CIT(A) that Shri Yash Paul Goyal has persistently elongated the proceedings by seeking numerous opportunities is against facts and law.
2. The observation of the ld. CIT(A) that the appellant throughout the appellant proceedings resorted to ‘running with the hare and hunting with the hounds’ is uncalled for in the facts and circumstances of the case.
3. The ld. CIT(A) has erred both on facts and law in confirming the rejection of accounts books u/s 145(3) on the ground that no stock registers were maintained.
4. The ld. CIT(A) has erred in confirming addition of Rs. 74,62,190/- on account of unaccounted production and sale when there is not a single instance of unaccounted purchase or sale. The addition is based on surmises and conjectures only.
5. The ld. CIT(A) has erred in confirming addition of Rs. 12,34,686/- on account of alleged capital employed in unaccounted production.
6. The ld. CIT(A) has erred both in law and facts in not allowing deduction u/s 80IB on total assessed income when the entire assessed income is undisputedly derived from industrial undertaking.
7. The ld. CIT(A) has erred both in law and facts in confirming addition of Rs. 45,22,937/- on the ground that out of expenses debited in ‘repair and maintenance account’ expenses worth Rs. 45,22,937/- were of capital nature.
8. The appellant craves leave to add or amend any ground of appeal during the course of appellate proceedings.”
3. The ld ‘AR’, for the assessee, offered no serious comments in respect of ground Nos. 1 & 2. It appears that the ld ‘AR’, for the assessee, was prompted by certain observations of the ld. CIT(A) to raise such grounds of appeal. Therefore, these two grounds of appeal need no separate adjudication, in the interest of propriety and non-pursing the same, by the ld ‘AR’, for the assessee. The ld ‘DR’ for the revenue relied on the order of ld. CIT(A). Hence, these two grounds of appeal are dismissed as not pressed.
4. In respect of ground No. 3, the ld ‘AR’, for the assessee, referred to various pages of the paper book and written synopsis filed by him. The ld ‘DR’ for the revenue placed reliance on the orders passed by the lower authorities.
5. We have carefully perused the rival submissions, facts of the case, relevant pages of paper book and case laws relied upon by the parties. Briefly stated, the facts of the case are that the assessee filed return of income, on 31.10.2007, declaring an income of Rs, 20,62,950/-. The assessee is a manufacturer of paper. The AO, in the course of assessment proceedings, on examination of books of account and information filed by the appellant, noticed certain discrepancies therein. These discrepancies have been incorporated by the ld. CIT(A), in his order, in para 5.1. In sum and substance these discrepancies pertain to un-even consumption of electricity, in the production of paper. The AO observed that the assessee had shown per metric consumption of electricity, for financial year 2005-06, at 638.9 units while in financial year 2006-07, the per MT consumption of electricity was 803.2 units. The AO also noticed that the nature, quality and material used during the year under consideration, was the same as that of the last year. The AO also observed steep rise in consumption of electricity per MT done, in financial year 2006-07 vis-à-vis shown by the assessee in financial year 2005-06. No satisfactory explanation was filed by the assessee in the matter. Further, the AO pointed out that the assessee failed to maintain record of monthwise consumption of chemicals or consumables which made it difficult for the AO to verify the manufacturing results. No stock register was maintained for phuk which was main input for generating steam in the boiler. The AO, further, noticed that total production of paper for financial year 2005-06 was 7794.22 MT against which total electric units consumed were 4506677 units. Thus, average production per unit worked out to 0.172 and average consumption per MT was 638.9 units. Apart from total production in the current financial year i.e. 2006-07 was 13948.58 MT for which the total of electricity units consumed were 11203170 units. This gave average production unit of 0.124 and average consumption of electricity per MT of 803.02 units. The AO, further, observed that no proper production record had been maintained, in the regular course of business and the figures appeared to be doctored. The AO held that 10-20% variation can be acceptable but not a 121% increase. Accordingly, the AO invoked the provisions of section 145(3) of the Act.
6. The ld. CIT(A), upheld the finding of the AO, in the matter of rejection of books of account u/s 145(3) of the Act. The basis of upholding the action of the AO, by the ld. CIT(A), was founded on higher consumption of electricity specifically from 638.9 units consumed per MT in financial year 2005-06 to 803.2 units per MT, in the year under consideration. The ld. CIT(A), also found that consumption of electricity, in the month of July 2006 and October 2006 not in consonance with the material used. The assessee failed to file any documentary evidence, for such high consumption of electricity. The ld. CIT(A), upheld the action of the AO u/s 145(3) of the Act and the relevant findings of the ld. CIT(A) are reproduced hereunder:-
“In view of the facts and circumstances of the case and from the rival contentions of both the AO in his various remand reports and the contentions of the counsel in his written submissions filed on various dates, it is clear that the appellant has not maintained the books of account and other relevant documents as was required to be done. There is no proper co-relation between the electricity consumed and the production of finished goods shown. The appellant was required to show how various inputs used in the manufacturing process tally with its production account. He has admitted that no stock register was maintained for many of the consumables. The presence or absence of stock register is one of the relevant aspects to be taken into account in considering the acceptability of the book results as held in CIT v. Pareck Bros  167 ITR 344 (Patna). Further the absence of stock register is one of the material grounds for rejection of the books as held in CIT v. British Pains India Ltd .  188 ITR 44 (SC). It is correct to say that it was not possible for the AO to deduce the true profits of the business and profession carried on by the appellant from the state of affairs prevailing and that too without a stock register. The books of account being in such a state the AO was within his rights not to accept the figures returned. In all the factors and circumstances that have been mentioned by the AO, it is clear that all was not well with the books of account. In view of all these variations, discrepancies pointed out by the AO and the rival contention of the counsel for the appellant I find that the AO has drawn a very reasonable inference that the higher consumption of electricity has gone towards unaccounted production which has not been fully reflected in the in the books of account. He has gathered sufficient material to make the impugned addition. The ld. counsel himself admits in reply that there has been higher consumption of electricity, but he does not admit to the unaccounted production. In view of these facts and findings it can be safely held that the AO has rightly rejected the books of account maintained by the appellant on the ground that these are false, cooked up and he has rightly done the calculation for arriving at the impugned addition on the basis of records made available by the appellant.”
7. The assessee justified the increase in consumption of electric units on various grounds in the written synopsis and the same is reproduced here under:-
“This is an appeal filed by the appellant and cross appeal by the Department and we first take up the assessee’s appeal.
1. The appellant is engaged in the manufacture of Paper and the basic raw material required is waste paper and also chemicals are being used in the manufacture process. The appellant is maintaining regular books of accounts which are subject to audit for which the audit report is at Pages 255 to 288 of the Paper Book.
2. The Unit of the appellant is under the supervision and control of Central Excise department and the appellant is maintaining RG-1 and RG-23 register, which reflects day to day to production, receipt of raw material and consumption of raw material as well as consumables and the Assessing Officer has not found any fault in such voluminous record of day to day manufacturing. Refer to letter, dated 30.12.2009. Page 51, Clause (D).
3. All purchases and sales are fully vouched and no discrepancy noticed by the Assessing Officer or by the CIT (A).
4. During the course of assessment proceedings, the numerous details were filed which were crossed verified by the Assessing Officer and after scrutinizing the details, the AO has framed the assessment on wrong figures and facts which have partly been sustained by the CIT(A), Patiala, which is also against the factual facts and circumstances.
5. In the above said case, we have filed written submissions on various grounds of appeal and , accordingly, each of the ground of appeal is being argued on the basis grounds of appeal taken before the Worthy CIT(A) as under:-
i. Regarding first two grounds of appeal, which relate to the observation made by the CIT(A) in para-3 of the order, we have given our comments at page 1 and 2 of our submissions and briefly, it is stated there has never any chance, where the counsel of the assessee had tried to delay the proceedings by taking dates and the’ order of the CIT(A) itself speaks about the fact that besides, the written submissions made by the counsel of the Appellant, there were two remand reports for which further replies were given along with relevant Annexures, wherever, required in order to prove the case of the assessee that the additions as made by the AO were not justified. The observation of the CIT(A) are really painful and, therefore, it is prayed that such observations as made by the CIT(A) be ignored, since it is against the factual facts and circumstances and even not borne out from the records. We are filing separately the details of order sheet entries of CIT(A) to prove that there was no delay from the side of the counsel to submit the replies or to represent before CIT(A).
ii. The sequence of events described by the CIT(A) in his order in Para-2 clearly clinches the issue in favour of the counsel of the assessee that – no time was taken to reply to the remand reports or other evidences, which were filed before the Worthy CIT(A).
Ground No. 3: For rejection of books of accounts u/s. 145(3)
i. The Assessing Officer’s paragraph-1 page 2 to 5, submissions of the assessee have recorded from pages 5 to page 14.
ii. The Assessing Officer’s finding on rejection o books of accounts have been contained at pages 14 to 21.
iii. Before the CIT (A), the finding on this issue is there as under:-
a. Para-5.1 Page 2 to 4
b. Our submissions have been discussed in Para 5.2 and 5.3.
c. The Assessing Officer’s remand report has been discussed in Para 5.4 and by recording our submissions to remand report in Para 5.5, the finding has been given by the CIT(A) in Para 5.6.
We are submitting herewith the basis of rejections of books of accounts made by the AO/CIT and our contentions are tabulated form as under:
|S No.||Ld. CIT(A)’s Basis or rejection||Assessee’s Submissions|
|I||High consumption of electricity specially from 638.9 units consumed PMT to 803.2 units PMT in the year under consideration.||The chart of average consumption PMT as relied by the AO for the year under consideration and for the earlier year is at page 59 of the paper book and the actual/correct is at page 60 of the paper book.|
|II||Consumption of electricity in the month of July, 2006 and October, 2006 is highly variable.||The corrected figures supported by bills of electricity department placed at pages 184B and 184C read with certificate from electricity department placed at page 300 of the paper book.|
|III||No documentary evidence produced for increase in the electric consumption||The reasons for increase in the electricity units explained to the AO as per letter, dated 28.12.2009 placed at paper book pages 56 to 58 read with reply dated 30.12.2009 placed at paper book pages 50 to 55.|
Our load had increased from 990 KWs to 2450 KWTs on 19.4.2006 (immediately at the beginning of the year) placed at pages 184A of the paper book.
The production capacity had increased from 7300 MT to 18250 MT placed at paper book page 66 and in this year the total production was 13948.5820 MT giving an increase by 78.96%.
New plant and machinery worth 2.61 crores installed and put to use during the year. Refer to page 269 of the paper book.
The electric Motor and equipment worth 1.55 crores installed and put to use during the year. Page 269 of paper book.
Boiler under Fabrication/Installation valuing to the tune of Rs. 2,28,90,151/- at page 284 of the paper book and for which electricity had been used.
The machinery and other equipments required installation for which usage of electricity is required to a substantial extent which led to increase in consumption of the electricity units without any increase in the production.
Construction of sheds was made during the year to the tune of 60.21 lakhs which required welding etc. as per page 269 of the paper book.
The peak load exemption charges, which were earlier to the tune of 3,65,000 units, increased to 4,85,800 units, meaning thereby that minimum charges increased as compared to last year.
The AO has simply discarded the explanation of the assessee even with reference to incorrect figures adopted by him in the month of July 2006 and October, 2006 for consumption of Electricity units and which is as per page 14 and 15 of the order. The AO despite having been given the clarification of correct units provided to adopt incorrect figures. Pages 6 & 7 of the AO’s order read with page 15 of the order.
Ld. . CIT(A) Findings:
The finding of he ld. CIT(A) in para 5.6 does not dispute the above explanation given by the assessee, but he has only in a general way stated in para 5.6 that there is no co-relation between the electricity and production of finished goods shown. This finding is against the factual facts and circumstances as narrated above before the AO/ld. CIT(A).
Then again, the finding of the ld. CIT(A) at page 9 that the counsel had admitted about the higher consumption of electricity , it is submitted that higher consumption of electricity is because of the valid reasons and assumption of unaccounted production vis-à-vis higher consumption of electricity is not justified in view of the facts as stated above.
Thus both the AO and the ld. CIT(A) has not been able to dispute or find any fault in the bonafide valid arguments for increase in the consumption of electricity units and thus the books of account could not be rejected on such increase of electricity units.
Lastly we rely on the judgment of the Hon’ble Supreme Court in large number of cases wherein it has been held that no excessive production can be estimated on the basis of higher electricity consumption. Copy enclosed in the judgment set.
No case is made out by the Central Excise department for higher production in respect of alleged excessive consumption of electricity. Even no case made out by Sales Tax depreciation[artment for any sales outside the books and the Central Excise Audit also completed for the year under consideration and no adverse view taken.
Since, we had installed the new machinery during the year, some trial runs had to be made and which had led to increase in the consumption of electricity has totally been ignored by the AO/ld. CIT(A).2Non-maintenance of stock register for Steam, Chemicals and consumablesThere are no consumables at all and only chemicals are there. The steam is being purchased from M/s Vishal Cotton Ltd. And no doubt has cast upon by the AO and such purchases have been made from sister concern. It is practically impossible to maintain stock register of steam used, for drying of the paper. The same is fed through the pipes only. The steam do not increase weight of finished products.
For chemicals, all the purchases are fully vouched and each type of chemicals numbering more than 50 of small quantities a re being used in the manufacturing process and therefore it is not practically possible to maintain the stock register.
It has also been pointed out that consumption of chemicals is less as compared to the earlier year as per chart at paper book page 61.
There is no other consumable except the Steam and Chemicals. The finding of the CIT and the AO about the use of phuck is only farfetched imagination on the part of the AO and the CIT since no phuck has been purchased during the year f or generation of steam for drying of paper.3Absence of stock register
The CIT has stated in para 5.6 that absence of stock register is relevant aspect for acceptability of book result.We have maintained day to day stock register of raw material of waste paper used in manufacturing, which is the basic raw material. For chemicals, the complete vouchers are there and our consumption of chemicals is less as compared to earlier year and no case is made out by the Excise Department. All purchase of chemicals are supported by bills and vouchers and if the chemicals stock register cannot be maintained due to practical point of view, it cannot form the basis of rejection of books of account.
The chemicals do not increase the weight of finished products; it only acts as cleaning process of the paper. Similar is steam, which dries the moisture on the paper.
Even our net profit rate is higher as per letter given to AO at pages 50 to 56 of the paper book and the net profit rate rosoe from 2.02% to 3.82% before depreciation.
Even we have placed a chart at pages 62 to 64 of the paper book and by taking into consideration the increase in the cost of raw material and rise in the sale prices, cost of electricity consumption, still our profit is much more and which chart has not been disputed by the AO and the ld. CIT(A) either in the Reliance by the CIT on certain case laws of British Paint as reported in 188 ITR 44 and on the judgment of Patna High Court in the case of CIT v. Pareck Brothers as reported in 167 ITR 344.4Reference and our comment on the judgment by the ld. CIT(A) and our reliance on judgmentsThe reliance by the ld. CIT(A) is totally improper. The judgment of British Paints deals with method of accounting and the judgment as reported in 167 ITR 344, wherein the facts are absolutely different in the sense, that no purchases detail were there and no stock register was maintained. In our case, day to day stock register of waste paper is maintained and opening and closing stock details are there and no defects pointed out therein.
We rely upon the following judgment that rejection of books cannot be made in the circumstances as mentioned in our cases, besides the judgment enclosed in the paper book from pages 69 to 132:
a. Pyarelal Mittal v. CIT 291 ITR 214 (Gau)
b. Income Tax Officer v. Girish M. Mehta , 105 ITD (Trib-Rajkor) 585
c. International Foresh Co. v. CIT 101 ITR 721 (J&K)
d. CIT v. Om Overseas 315 ITR 185
e. CIT v. R.K. Rice Mills 319 ITR 173
f. Judgment of the Jurisdictional Bench of the ITAT, Chandigarh Bench, Chandigarh in the case of M/s Babu Jewellers Bearing ITA No. 126/Chd/2011 for AY 2007-08.
g. Shiva Exports v. ITO 28 SOT (Chd-Trib) 512
h. Reliance on the written submissions field as para 3 from page 3 to 115Ground Nos. 4 & 5 read with Ground No. 2 of the Department appeal which deals with the alleged unaccounted production on the basis of alleged higher consumption of Electricity units, based on incurred figures by the AO and non-application of mind by the ld. CIT(A).The AO has discussed this issue in para 8 page 22 to 24 of the assessment order and the CIT has discussed this issue and given his finding in para 5.7.
Though the ld. CIT(A) has reduced the addition but the basis of reducing the addition is only on the basis of corrected figures of electricity consumption supplied by the electricity department and he has brushed aside all valid explanation supported by documentary evidences.
No evidence of purchase and sales outside the books of account found or noticed by the AO/ld. CIT(A).
No defects in the books of accounts pointed out or noticed.
No defects in the day to day maintenance of stock register.
No violation noticed by the Excise Department and rather audit by Excise Department completed and no adverse view taken.
RG-1 and other registers maintained and no defects noticed.
Our explanation of increase in the electricity units having not been proved to be wrong either by the AO or CIT. The increase in the electricity units are supported by facts and figures and charts, and thus there cannot be any wild guess for assuming the unaccounted production and there cannot be any , alleged capital investment on such unaccounted production.
Reliance on the judgment of Rajasthan High Court in the case of Dr A.P. Behal as reported in 322 ITR 71 (copy enclosed in the judgment set). Reliance on the judgment of Gujarat High Court as reported in 302 ITR 63 on this issue. Page 185 of paper book.
Reliance on the written submissions placed at pages 1 to 13 of the paper book.6Ground No. 6, deduction u/s 80IB
The AO has allowed the deduction u/s 80IB on the book profit but in the addition made by him, which have been assessed as business income. It has been stated that he should have allowed the deduction on that. According to us, since no addition is called for this ground of appeal dependent on the addition, if any remains.
2 The CIT has discussed this issue in paras 7.1 to 7.3.1.Our submissions are contained in para 6 page 14 and our contention is that the deduction u/s 80IB has not been disputed and it is allowable on the income finally determined. Reliance is being placed on the judgment of Allied Industries as reported in 31 DTR 323. This issue is otherwise covered if the Hon’ble Bench deletes the addition as made by the AO.7Ground No. 7
The AO has discussed this issue at page 25 to 38 of the order with regard to the capital nature of expenses. The ld. CIT(A) has discussed this issue in para 9.8 to 9.12 of the order. This ground is common with the ground No.2 of the department’s appeal.A separate chart is being filed herewith to indicate the parawise additions made by the AO and relief/confirmation of addition made by the ld. CIT(A).
We had field detailed submissions in our written submissions to the ld. CIT(A) from page 26 to 39 of the paper book read with pages 156 to 160 along with annexures from pages 161 to 179 is the chart of each and every item at pages 172 to 179 of the paper book.
Our is an integrated manufacturing process in as much as that the raw material of chemicals are different from one end and from the other end, the finished product is retrieved. In the manufacturing process, there are number of machines, which are working with different attachments and any small defects in any of the machine/attachment would lead to disruption of manufacturing activity.
Besides that it is a continuous process and, whatever, amount has been claimed as revenue expenditure is on account of tax or other items capable, being named as full machines itself.
All such purchase are vouched and the AO has not pointed out any defects and to prove our contention, the chart is at page 172 to 179 as contained in the paper book, is self explanatory and is being relied upon.
Reliance by the AO on the judgment of Hon’ble Supreme Court have been distinguished at pages 27 to 29 and other judgment applicable to the facts of our case have been dealt at page 30 & 31 of the paper book. In fact, submissions for case law have again been supported at page 31,42,43 and 44. Departmental appeal
The ground No. 1 is with regard to the deduction of interest u/s 36(i)(iii) on borrowed capital used to acquire new assets.The AO has discussed this issue at page 39 to 44 of the order and the ld. CIT(A) has deleted the addition and he has discussed this issue in para 8.1 and 8.2 and finding has been given in para 8.6 and 8.7. Our submissions are at pages 39 to 41. Even the AO has adopted the incorrect figures which had been dealt with at page 41 of the paper book.
It is an undisputed fact that no specific loan has been raised for purchase of machinery and at page 280, there are no secured loans of MTL and reliance is being placed on the judgment as cited before the ld. CIT(A) and the judgment of ITAT, Chandigarh Bench in the case of M/s Uppepr India Steel Manufacturing Co. Ltd in ITA No. 920/Chd/2009. Ground No. 2Ground No. 2 deals with the appeal by the AO against part relief given by the ld. CIT(A) from the head “Machinery repair and maintenance” and this ground is common with our ground of appeal No. 7. Ground No. 3
This ground is with regard to Section 40(a)(ia)This issue has been discussed at page 44 to 55 by the AO at page 44 to 55 and the ld. CIT(A) has discussed the issue at page 22 of the order in Para 10 to Para 10.7. Our written submissions a re a t pages 42 to 48 of the paper book.
The AO has held that expense is disallowable because it is in the nature of contract where packing material is being purchased on the basis of specific sizes.
The CIT has discussed this issue in appellate proceedings a10.1 of the order and the finding has been given in para 10.5 of the order.
There is no contract and neither we are supplying any material to the persons from whom, the packing material is being purchased. It is simply a case of purchases from other party and all the invoices a re raised as per Punjab VAT Act and there is no job work involved.
The issue covered by the judgment of Hon’ble Punjab & Haryana High Court as reported in 304 ITR 17. Even, there has been clarificatory amendment to section 194C sub clause (7)(iv).
Reliance on the written submissions before the CIT is at pages 42 to 48 and we rely upon the another submissions made before the Hon’ble Bench.
7(i) We have carefully perused and considered the rival submissions, facts of the case and relevant records. The assessee has filed correct chart of figures of consumption of electricity vis-a-vis the chart relied upon by he AO. A chart of consumption by the assessee is supported by bills of electricity department placed, at pages, 184 B and 184C read with certificate from Electricity Department placed at page 300 of the paper book. It was, further, pointed out that the boiler under fabrication of Rs. 2,28,90,151 (paper book page 124) was installed, which led to increase in electricity consumption. The ld ‘AR’ for the assessee, further, pointed out that the findings of the ld. CIT(A), in para 5.6 does not dispute the explanation given by the assessee, in the matter. However, the observations of the ld. CIT(A), are purely general in nature and no co-relation had been established between electricity consumption and production of the goods. Therefore, the findings of the ld. CIT(A), are not in consonance with the factual position of the case. The assessee placed reliance on the decision of Hon’ble Supreme Court, wherein it has been held that no excessive production can be estimated, on the basis of higher electric consumption. It was, argued that no case is made out by the Central Excise Department, for higher production, in respect of alleged excessive consumption of electricity. It was, further, argued that even no such case was made out by the Sales Tax Department that any sales was effected outside the regular books of account. It was also contended that the assessee had installed new machinery during the year and also undertook some trial runs which led to increase in consumption of electricity. Further, the ld. CIT(A) ignored such material and relevant facts in the matter. It was, further, argued by the ld ‘AR’ for the assessee that there are no consumables at all and only chemicals are there. The steam is being purchased from Vishal Cotton Ltd. and no doubt has been cast upon by the AO and such purchases have been made from sister concern. It is practically, impossible to maintain stock register of Steam used for drying of the paper by transmitting the same through the pipes only. It was argued by the ld ‘AR’ for the assessee that the finding of the ld. CIT(A), on the decision of British Paints India reported in 188 ITR 44, is totally misplaced. The judgment of British Paints deals with method of accounting wherein the facts are absolutely different. In our case, day to day stock register of waste paper is maintained and opening and closing stock details are there and no defects were pointed out therein. The assessee placed reliance on the following decisions:
(a) Pyarelal Mittal v. CIT 291 ITR 214 (Gau)
Accounting – Rejection of accounts – Estimate of income – No fault found with books of account or method of accounting – No suppression of material facts – Rejection of Accounts and estimate of income – Not justified – Income-tax Act, 1961.
Appeal (High Court) – Jurisdiction of High Court – Interference with findings of fact – where the findings of fact by the Tribunal are perverse and contrary to materials on record and based on surmises and conjectures, the High Court under sec 260A would be competent to interfere.
(b) I.T.O. v. Girish M. Mehta 105 ITD (Trib-Rajkot) 585
Accounts -Rejection-Estimation of income-Burden of proof, scope and validity-Before rejecting the books of account, the Department has to prove that accounts are unreliable, incorrect or incomplete-The accounts regularly maintained in the course of business, duly audited under the provisions of IT Act and free from any qualification by the auditors, should be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable-For rejecting the books of account, it is the Revenue’s onus to prove that either the books of account maintained by the assessee are not correct and complete or the method of accounting adopted is such that true profit cannot be deducted therefrom.
(c) International Forest Co. v. CIT 101 ITR 721 (J&K)
Accounts – Rejection – Omission of sale in books of account – Estimated addition by ITO – In absence of any omission, irregularity or other defect in method of accounting or positive evidence to show that accounts did not disclose the whole income of assessee, account books cannot be rejected.
(d) CIT v. Om Overseas 315 ITR 185
Accounts-Rejection-Absence of specific defect-AO rejected assessee’s books of account and made addition by applying GP rate of 27 per cent as against 25.38 per cent shown by the assessee – CIT(A) has given a finding of fact that the addition was made by the AO without pointing out any specific defect in the books of account-Same upheld by the Tribunal – Departmental Representative unable to point out any illegality or perversity in the said finding of fact-addition rightly deleted-No substantial question of law arises for determination.
(e) CIT v. R.K. Rice Mills 319 ITR 173
Income from undisclosed sources – Addition on account of suppression of yield – No material to show suppressed sales or inflated purchase – No mistakes found in books of account maintained by assessee- Tribunal deleting addition – Findings of Fact – Income-tax Act, 1961.
Accounts-Rejection of books of account-Rejection made by the AO on the ground that the assessee had not maintained separate details of yield of rice in respect of paddy milled owned by it and the yield of paddy milled belonging to FCI and PUNSUP – Addition made on account of low yield of rice and other by-products from paddy as compared to yield shown by eight other parties.”
8. Having regard to the fact situation of the case, rival submissions and the case laws, we are of the considered opinion that the books of account cannot be rejected, on the ground of consumption of electric being abnormally high vis-à-vis the units of production as held in the case of N. Raja Pullaiah v. Dy Commercial Tax Officer  73 ITR 224 (A.P) and St. Teresa’s Oil Mills v. State of Kerala  76 ITR 365 (Ker). Both the AO and the ld. CIT(A) in substance rejected the books of account of the assessee on the basis of consumption of high electricity vis-à-vis the production therefrom. So far as the consumption of steam chemicals and consumable is concerned, the submissions filed by the assessee remains un-rebutted. Thus, we do find any merit in the rejection of books of account by the AO u/s 145(3) of the Act and confirmation of the same by the ld. CIT(A). Therefore, this ground of appeal of the appellant is allowed.
9. In ground No. 4, the assessee contended that the ld. CIT(A) erred in confirming the addition of Rs. 74,62,190/-, on account of unaccounted production and sale when there is no single instance of unaccounted purchase or sale, the addition is based on surmises and conjectures only.
10. The findings of the ld. CIT(A) as contained in para 5.7 are reproduced hereunder:
“5.7 As stated earlier the AO in his latest remand report dated 17.1.2011 has afresh determined the unaccounted production for 3-047 MT instead of 5008 MT taken earlier on the basis of the July and October, 2006 figures of electricity consumption . These figures are as per latest confirmations made from PSEB authorities. He has also stated that the sale rate of Rs. 22,390/- per MT be taken to calculate the unaccounted production. During discussions with him he accepts that there is an element of excise duty included in the sale rate. In case the benefit of excluding this excise duty element in the sale price is given then the sale price would be Rs. 20,223/- per MT. After applying the correct GP rate of 12.11% (against 12.5% taken by the AO in his assessment order) the value of unaccounted production would be reduced to Rs. 74,62,119/-. Addition to this extent only needs to be sustained and balance relief allowed to the appellant.”
11. We have considered the rival submissions, facts of the case and relevant record. The ld. CIT(A) had adjudicated the ground No. 4 of the present appeal, in para 5.7 of his order, as reproduced above. The AO worked out suppression of actual production by the assessee-appellant, on the ground of consumption of abnormally high electricity. The AO has taken 492 electricity units, in the months of July 2006, and further allowance of 15-20%, on account of variation was allowed. The AO adopted the average consumption of electricity units, to produce 1 MT paper at 591 Units. Having regard to the units consumed during financial year, the actual production was worked by the AO at 18956 MT by applying Gross profit @ 12.5% average of two years. The AO computed addition at Rs. 1,40,16,140/-. The ld. CIT(A), upheld such addition, as is evident from reproduction of his findings vide para 5.7 of his order. However, the ld. CIT(A) reduced the addition after applying correct gross profit rate of 12.11% against taken by the AO, at 12.5%. Thus, the unaccounted production worked out by the AO was reduced to Rs. 2,74,62,119/- by the ld. CIT(A). The ld. CIT(A), has failed to bring any tangible and corroborative evidence to support his finings The ld. CIT(A), in substance substituted his estimate of unaccounted production, on the foundation of high consumption of electricity in place of such estimate made by the AO. The submission made by the assessee before the ld. CIT(A), was not properly appreciated and, hence, the same remained un-rebutted. Both the lower authorities, failed to bring on record any evidence, establishing the factum of purchases and sales of raw materials out side the regular books of account. However, Government agencies such as Excise Department and Sales Tax Department did not find any adverse features and, hence, did not make any adverse view in the matter. The assessee placed reliance, on the decision of Hon’ble Rajasthan High Court in the case of CIT v. Dr. A.P. Bahal  322 ITR 71 and the decision of Gujarat High Court, in the case of CIT v. Gurubachhan Singh J. Juneja  302 ITR 63.
12. In the case of Dr. A.P. Bahal (supra) Hon’ble Rajasthan High Court held that the question that the AO rejected books of account of the assessee and main judgment u/s 145 of the Act making certain additions under different heads. The Commissioner deleted certain additions. The Tribunal upheld the order of the ld. CIT(A). The Tribunal upheld the order passed by the Commissioner (Appeals) and the Tribunal’s findings were questions of fact and would not tantamount to any substantial question of law.
12(1). Hon’ble Gujarat High Court in the case of Gurubachhan Singh J. Juneja (supra) held that in the absence of any material on record, to show that there was any unexplained investment made by the assessee which was reflected by the alleged unaccounted sales, the finding of the Tribunal that only gross profit on the said amount can be brought to tax, does not call for any interference.
13. The decision of the Hon’ble Supreme Court, in the case of CST v. H.M. Esufali H.M. Abdulali  90 ITR 271, is relevant in the instant case. In this case, there was detection of sales for 19 days not entered in the books of account. Therefore, the Hon’ble Apex Court held that estimate of unaccounted sales can be made on such basis. However, the Hon’ble Apex Court gave this finding on the specific fact that the assessee had dealing outside the books of account, in respect of the value of Rs. 31,171.28, for 19 days. Therefore, it was open to the AO, to infer that the assessee had large scale dealing outside the books of account. In such a situation, it was not possible, for the AO, to find out precisely the turnover suppressed and he could only make an estimate of the suppressed turnover, on the basis of the material before him. In this regard, the Hon’ble Supreme Court specifically held that such estimate should not be arbitrary and must have reasonable nexus with the facts and material discovered.
13(1) If the ratio of this decision of the Hon’ble Supreme Court is applied to the fact-situation of the case, the findings of the ld. CIT(A), would collapse, as the same are based on surmises and conjectures. The Hon’ble Apex Court, in a number of decisions frowned upon the tendency of the Revenue Authorities, in making addition and confirming thereof, based on surmises and conjectures. It is well settled principle of law that revenue cannot decide on issue, without proper facts supporting its decision. In the absence of any fundamental and foundational fact, as existed, in the case of H.M. Esufali H.M. Abdulali (supra), the revenue can not make any estimate. It is not proper on the part of the Revenue, to compute estimated unaccounted production solely on the basis of higher consumption of electricity, in the face of credible reasons assigned by the appellant, for such variation in the consumption of electricity. No, further corroborative material has been brought on record by the ld. CIT(A), to substantiate his findings.
14. The Hon’ble Supreme Court, in the case of Dhirajlal Girdharilal v. CIT  26 ITR 736, Omar Salay Mohamed Sait v. CIT  37 ITR 151 (S.C)Dhakeswari Cotton Mills Ltd. v. CIT  26 ITR 775 (SC) and LalChand Bhagat Ambica Ram v. CIT  37 ITR 288 (SC) clearly held that no addition can be made on the foundation of mere surmises and conjectures.
14(i). Similarly the Hon’ble Supreme Court, in the case of State of Kerala v. C. Velukutty  60 ITR 239 held that it is necessary for existence of reasonable nexus to the available material, for making best judgment assessment. The AO can not make estimate without any support of any foundational facts.
15. In the present case, the ld. CIT(A) presumed that consumption of higher electricity would directly and invariably lead to the higher production, not accounted for by the assessee in his books of account. There is fundamental fallacy in the conclusions and findings of the ld. CIT(A) in attributing unaccounted production, to such sole factor. The ld. CIT(A), failed to bring on record, to demonstrate that the assessee indulged in the purchases of raw material outside the books of account and sales of the manufactured goods outside the books of account allegedly produced by way of higher consumption of electricity. In the real manufacturing world, there is hardly any direct and uniform correlation with consumption of electricity and production of manufactured goods. Having regard to the above legal and factual discussions, we do not find any substance and merit, in the findings of the ld. CIT(A). Therefore, such findings cannot be sustained. Consequently, this ground of appeal of the assessee-appellant is allowed.
16. In ground No. 5, the assessee contended that the ld. CIT(A) erred in confirming the addition of Rs. 12,34,686/-, on account of alleged capital employed in the unaccounted production.
17. The brief facts of the case are that the AO after rejection of books of account, worked out unaccounted production on the basis of higher consumption of electricity. The AO, further, concluded that unexplained investment had been made by the assessee, for funding such unaccounted production. The AO computed the working capital at Rs. 2,94,91,430/-, for earlier years production of 13948.6 MT of paper. For the unaccounted production of 508 MT of paper, the working capital was determined by the AO at 1,05,88,380. After allowing the benefit of average stock of two months, the AO arrived at gross profit of Rs. 23,36,000/-, which he held was ploughed back as working capital. The AO telescopically covered the gross profit in the impugned addition of unaccounted production of Rs. 1,40,16,140/-. The total addition of Rs. 1,63,35,140/- (Rs. 1,40,16,000 for gross profit as discussed earlier + Rs. 23,36,000/- in the peak investment), was made to the income of the appellant. The findings of the ld. CIT(A), are contained in para 6.4, and hence, the same are reproduced hereunder for the purpose of proper appreciation of the same:
“6.4 In view of the facts and circumstances of the case and rival submissions of both the AO in his remand report and the submissions of the ld. counsel for the assessee the peak investment in the unaccounted production has to be reworked out in light of AO’s fresh remand report dated 17.1.2011. Since the AO has taken the average cycle of two months the addition would now be restricted to Rs. 12,43,686/- on the unaccounted production determined as in para 5.7 supra. Addition to the extent of Rs. 12,43,686/- is sustained and the balance is deleted. The AO is directed to allow relief to the appellant accordingly.”
17(i). Thus, the ld. CIT(A) sustained addition to the extent of Rs. 12,43,686/-.
17(ii). We have carefully perused the rival submissions, facts of the case and relevant records. In this context, the findings given by us on ground No. 4, pertaining to the addition made by the AO and upheld by the ld. CIT(A), in respect of unaccounted production are relevant and applicable, to this ground of appeal, being directly linked to each other. We have deleted the addition made by the ld. CIT(A), in the context of unaccounted production, based on higher consumption of electricity on the ground of non-existence of corroborative and cogent evidence and other factors as recorded in our above findings in respect of ground No. 4. The issue raised in ground No. 5 is directly linked to the issue raised in ground No. 4. This Ground of appeal is directly an off-shoot of the addition made by the AO and upheld by the ld. CIT(A) in respect of unaccounted production. Therefore, such addition made by the AO and sustained by the ld. CIT(A) of Rs. 12,43,686/-, on account of alleged capital employed, in such unaccounted production, cannot be upheld. The core issue in the present ground of appeal is that in the absence of unaccounted production, there can not be a case for employment of unaccounted capital. Therefore, we do not find any substance and merit in addition made by the AO. Hence, the findings of the ld. CIT(A) cannot be upheld. Therefore, this ground of appeal of the appellant is allowed.
18. In ground No. 6, the assessee contended that the ld. CIT(A) erred both in law and facts in not allowing deduction u/s 80IB on total assessed income when the entire assessed income is derived from industrial undertaking.
18(1) The ld. CIT(A), has recorded a finding in para 7.1 of his order that the AO has not discussed this claim in the assessment order. He, further, recorded that it is not known whether such claim was made in the return of income and why the AO has not taken this fact for consideration. The ld. CIT(A), further, observed that it seems that the assessee is making new claim at this stage. The assessee stated that the claim was made as per returned income. Various additions made by the AO, pertain only to the business income, is required to be considered, for allowing deduction u/s 80IB of the Act. The AO, in his remand report dated 9.8.10 stated that the contention of the assessee-appellant that entire additions may pertain to industrial undertaking and, therefore, the appellant is entitled to deduction u/s 80IB is not acceptable. His claim of deduction u/s 80IB has already been allowed on the basis of audit report. The ld. CIT(A) dismissed this ground of the assessee.
19. We have carefully perused the rival submissions and relevant record. The assessee has placed reliance on the decision, in the case of Allied Industries reported in 31 DTR 321. The contention raised by the appellant find support from the ratio of the decision relied upon by the assessee. In this case, it was held that addition was made to the income of the assessee and had been assessed under the head of profits and gains of business. Since, the entire profits of the business are entitled for 100% deduction, the addition on account of such discrepancy will only result in the enhancement of income of the business and would be entitle for such deduction. In the present case, the assessee is eligible for deduction u/s 80IB of the Act. Therefore, any addition to the income of the present appellant would entitle him enhanced deduction. Both the AO and the ld. CIT(A) misconceived the issue in question. In view of this, the findings of the ld. CIT(A) cannot be held. This ground of appeal of the appellant is allowed.
20. In ground No. 7, the assessee contended that the ld. CIT(A), erred in confirming the addition of Rs. 45,22,937/-, on the ground that out of the expenses debited under the head ‘repair and maintenance account’ expenses worth Rs. 45,22,937/- were of capital nature. The issue in question is that the AO disallowed certain expenses incurred on repair and maintenance as capital in nature. The assessee contended that having regard to the integrated manufacturing process, expenses incurred, on repair and maintenance of machinery are patently in the nature of revenue expenses which are admissible u/s 31(1) of the Act. The ld. CIT(A) after detailed discussions of the fact-situation of the present case and various items of repair and maintenance gave a finding, in para 9.10 of his order whereby items listed in para 9.11 of his order amounting to Rs. 49,77,172/- were allowed as revenue expenses and the balance expenses were treated as capital in nature. The assessee contended that the detailed submissions was filed before the ld. CIT(A) which is annexed at page 26 to 30 of the paper book read with pages 156 to 160 along with annexure from page 161 to 179, with the chart of each and every item at page 172 and 179 of the paper book.
21. We have carefully perused the page Nos. 172 to 179 wherein details of the items, amount and remarks of the assessee are furnished, in respect of expenses incurred under the head ‘repair and maintenance’. These items included GP Sheets, Rounds, Flats, TMS Bars, Channels, Angles, Squares, Channels and Angles, TMT Bars, MS Bend, MS Round, Regulator, Pneumatic Cylinder, Gear Box, Vibro Screen, Air Dryer, Vaccum Pump, Filter, Air Pipe, CAM System, Indicator, Transmitter, Panel View, Screen, Grinding Wheel, Gear Pully and Dousing Pump Etc. All these item have independent use. Having regard to the nature of items and their use, we do not find any substance in the confirmation of addition by the ld. CIT(A), treating such items as capital expenses. The issue of capital or revenue expenditure in nature, depends on several tests. No single test is universally applicable and infallible in nature. Each item of such expenses is to be seen and considered in the light of facts of each case and its use. Therefore, having regard to the submissions made before the ld. CIT(A) and various items listed in the paper book at relevant pages, we do not find any merit in the findings of the ld. CIT(A) in question and hence, the same cannot be sustained. Thus, this ground of appeal of the assessee is allowed.
22. Ground No. 8 of assessee’s appeal is general in nature and, hence, does not need any separate adjudication, hence, the same is dismissed.”
23. In the result, appeal of the assessee is partly allowed.
ITA No. 267/Chd/2011 -Revenue’s Appeal
24. In ground No. 1, the revenue contended that the ld. CIT(A) erred in deleting the addition of Rs. 15,61,828/-, made by the AO, on account of disallowance of interest u/s 36(1)(iii) of the Act, on borrowed capital without appreciating the fact that the same asset was not put to use.
25. We have perused the rival submissions, facts of the case, relevant record and the paper book. The ld ‘DR’ for the revenue placed reliance on the order of the AO. The ld ‘AR’ for the assessee contended that the AO adopted incorrect figures which have been dealt with at page 41 of the paper book. It was, further, argued by the ld ‘AR’ for the assessee that it is undisputed fact that no specific loan has been raised, for the purchase of machinery, as is evident from page 280 of the paper book. The assessee placed reliance on the decision of Chandigarh Tribunal in the case of Upper India Steel Manufacturing Co. Ltd. in ITA 920/Chd/2009.
26. Brief facts of the case are that the AO in his assessment order has mentioned that the appellant in his balance sheet has shown secured loans of R. 2,64,14,278/- and unsecured loans of Rs. 65587263/- respectively. Correspondingly, he debited Rs. 80,89,966/- as bank interest, (financial charges) in the profit and loss account. The appellant had shown addition to capital assets of Rs. 10,80,48,935/-. For this addition the appellant had borrowed funds to acquire the capital assets. The AO was of the opinion that the interest of Rs. 80,89,966/- charged on borrowed funds utilized for the acquisition of the capital assets needed to be treated as capital expenditure. He gave a show cause notice to the appellant for his proposal to make such an addition. The appellant replied that investment in fixed assets was nominal during the current year whereas the major investment for acquisition of fixed assets like boiler, building, electric motors and machinery accounts of Rs. 38452705/- had been made in the financial year 2005-06 i.e. a year prior to the current assessment year. In fact these assets had been put to use only on 19.4.2006 and the addition made during this financial year 2006-07 was very nominal. All the investments had not been made out of unsecured loans or secured loans but only out of the profits of the firm and out of non-interest bearing funds.
27. The AO did not accept the contention of the assessee and made the impugned addition u/s 36(1)(iii) and proviso thereunder.
28. The ld. CIT(A) deleted the impugned addition, on the ground that the appellant has own capital as well as borrowed funds and hence the AO’s presumption that the borrowed funds have been utilized for purchase of capital asset is too far-fetched conclusion. It is, further, observed by the ld. CIT(A) that the AO presumed that out of funds available from secured and unsecured loans, the appellant made payments for purchase of assets, even though the same was far in excess of profits earned. The ld. CIT(A), further, observed as “also, interest cannot be disallowed merely because the asset was never used and where the borrowing had been held for business (CIT v. Associated Fibre & Rubber Industries Pvt Ltd  236 ITR 471 (SC). In view of this discussion made the addition made by the AO needs to be deleted.”
29. This is undisputed fact that the interest has been paid by the assessee, as is evident from perusal of the profit and loss account, as mentioned by the AO. It is also undisputed fact that the assessee had purchase assets. Therefore, the provisions of section 36(1)(iii) and proviso thereunder, which is inserted w.e.f. 1.4.2004 vide Finance Act, 2003 are applicable. It is evident that the interest on borrowed capital cannot be allowed unless such asset was first put to use. In the present case, the ld. CIT(A), has placed reliance on the decision of Hon’ble Supreme Court in the case of Associated Fibre and Rubber Industries Pvt Ltd (supra) which relates to period prior to the insertion of proviso to section 36(1)(iii) of the Act. We are dealing with AY 2007-08 which falls under the proviso to Sec 36(1)(iii). In this context, the Hon’ble Supreme Court pointed out in a batch of cases in ACIT v. Arvind Policot Ltd V JCIT , 299 ITR 12 (SC), United Phosphorous Ltd (2008) 299 ITR 9 (S.C) and DCIT v. Gujarat Alkalies and Chemicals Ltd  299 ITR 85 (SC), holding that its earlier decision in DCIT v. Core Health Care Ltd  298 ITR 194 (SC) continue to have application, for pre-amended period, for AY before AY 2004-05. Similarly, the decisions relied upon by the ld. CIT(A) are applicable to the pre-amended era. In view of this, the findings of the ld. CIT(A) are contrary to the provisions of Section 36(1)(iii) and proviso thereunder, in the light of these, the latest decisions of the Hon’ble Supreme Court. Having regard to the facts of the case and relevant provisions of the Act, as discussed above as also decisions of the Hon’ble Apex Court. This ground of appeal of the Revenue is allowed. However, the appellant would be entitled for enhanced deduction u/s 80IB, in respect of such addition as held in the foregoing paragraphs.
30. In ground No. 2, the revenue contended that the ld. CIT(A) erred in deleting the addition of Rs. 49,77,172/-, out of total Rs. 95,00,109/-, made by the AO, on account of disallowances incurred on purchase of new items without appreciating the fact that most of the items were new and cannot be termed as current repairs.
31. We have considered the rival submissions and facts of the case. The issue raised by the revenue in ground no. 2 has been adjudicated in assessee’s appeal, under ground No. 7. Therefore, the findings recorded thereunder are applicable to this ground of appeal. Consequently, this ground of Revenue is dismissed having regard to the findings given in respect of Ground No. 7 of assessee’s appeal.
32. In Ground No. 3, the revenue contended that the ld. CIT(A), erred in deleting the addition of Rs. 18,74,947/- made by the AO, on account of disallowance u/s 40a(ia) of the Act without appreciating the fact that the assessee had failed to deduction TDS u/s 194C on payments made in lieu in contract with Amba Ply Chrome Pvt Ltd.
33. We have perused the rival submissions and relevant record. The ld ‘DR’, for the revenue placed relied, on the assessment order whereas the ld ‘AR’ for the assessee contended that there is neither contract and nor the assessee supplied any material, to the persons from whom, material is being purchased. It is simply a case of purchases from other parties and all the invoices are raised as per Punjab VAT Act. There is no job work involved. The assessee placed reliance on the decision of Hon’ble jurisdictional High Court reported in 304 ITR 17. The assessee, further, relied on the written submissions made before the ld. CIT(A) as per pages 42 to 48 of the paper book. The findings of the ld. CIT(A) as contained in para 10.5 are reproduced hereunder:-
“10.5 I have considered the facts of the case and the rival contentions. The main question in dispute in this case is whether the supply of packing material with pre-printed labels to the appellant is a simple case of ‘contract for sale of goods’ or ‘work contract’. The party named by the AO in his order is an independent manufacturer of different printed and packing material. It is supplying this material to the appellant as per its specifications. All the work of manufacturing, the packing material and the printing work of this packing material was being done in the premises of the of the other party. Before taking a decision on the applicability of TDS u/s 194C on a contract, it is necessary for the AO to examine whether the contract in question is a ‘contract for work’ or ‘contract for sale’ and TDS can only be applicable where there is a ‘contract for work’. As held in the case of BDA Ltd. v. ITO  281 ITR 99 (Bombay) the Hon’ble High Court considered the issue with regard to the supply of wrappers, labels for bottles containing liquor sold by the assessee. It was found that the work was done in the premises of the assessee and he incurred the cost of labels. The number of labels was determined by assessee. It was held that this was a contract for sale and not works contract.
10.6 However, CBDT in Circular No. 13 of 2006 dated 13.12.2006 has clarified that exclusive reliance on Circular No. 715 dated 8.8.1995 can not be made without considering the principles laid down in Circular No. 681 dated 8.3.1994. Each contract is to be examined separately to determined whether it is contract for work or for sale.
10.7 The entire activity of packaging and printing and later supplying the same to the appellant shows that this is a contract of sale and can not be termed as a works contract as held by the AO in his order. In case, this is a contract for sale no TDS is required to be deducted by the appellant u/s 194C of the Act. Therefore, this amount is not disallowable while computing the income of the assessee. The main purpose of the appellant was to buy the packing and printing material from the third party for the purpose of packing and no works contract was involved. The provisions of section 194C r.w.s. 40a(ia) of the Act have been wrongly held to be applicable in the appellant’s case. The addition made is, therefore, deleted.”
34 On perusal of the fact-situation of the present case, the findings of the ld. CIT(A), and the decision of Hon’ble Punjab & Haryana High Court in CIT v. Dy Chief Accounts Officer, Markfed , 304 ITR 17, we find that the issue is covered by the decision of Hon’ble jurisdictional High Court. Hence, the findings of the ld. CIT(A) are upheld. This ground of appeal of the revenue is dismissed.
35 Ground Nos. 4 & 5 are general in nature and hence need no separate adjudication. The same are dismissed.”
36. In the result, appeal of the assessee is partly allowed whereas the appeal of the Revenue is also partly allowed.