9911796707
TMI Blog2004 (6) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 19, Ground No. 25, Ground No. 27(a ), Ground Nos. 29(c) & (f), and Item (iii ) of Ground No. 30(a). Therefore, the aforesaid grounds are dismissed. The remaining grounds in assessee's appeal are dealt with hereunder: Ground No. 3: "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in upholding the disallowance of Rs. 2,00,000 out of the expenses claimed under the head Gifts & Presents." 1. The Assessing Officer disallowed Rs. 5,00,000 on estimate out of the total expenditure on Gifts & Presents amounting to Rs. 10,73,994. The CIT(A) has discussed this issue vide paras 4.5 & 4.6 at pages 7 - 8 of his appellate order. 2. The Department is also in appeal vide Ground No. 1 in ITA No. 4807/D/92 for the assessment year under appeal. 3. The AR has fairly conceded that similar issue has been considered by the Appellate Tribunal in the Assessment Year 1986-87 by its order dated 10-1-2003 in assessee's appeal as well as in departmental appeal separately. The assessee's appeal as well as the departmental appeals have been dismissed in the Assessment Year 1986-87. 4. Admittedly, the facts being the same and the authorities below having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the information filed by the AR, we agree with the AR that the shortage is quite negligible. Hence, assessee deserves to succeed on this ground. The disallowance of Rs. 12.89 lakhs is deleted. Ground No. 6 : "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in upholding the disallowance of Rs. 1,77,128 under section 38 of the I.T. Act, 1961." 10. The AR states that the Department is also in appeal vide Ground No. 28 in ITA No. 4807/D/92 for the assessment year under reference. The ground of appeal by the assessee is against treating the expenditure on rent etc. of premises hired for residential use of employees as perquisite for the purpose of disallowance under section 40A(5) of the Act. The Assessing Officer treated 75 per cent of the expenditure as disallowable under section 40A(5) whereas the CIT(Appeals) restricted the same to 50 per cent. 11. After hearing the rival parties we find that the issue under reference has been considered by the ITAT in earlier years. In the immediately preceding assessment year the assessee did not file the appeal against the order of the CIT(A) where he restricted such disallowance to 50 per cent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of retainership expenses. However, the Department's appeal before ITAT against deletion of 50 per cent of the retainership fee had been dismissed vide ITAT's order dated 10-1-2003 in ITA No. 5625/Del./91 vide paras 38 to 40 at page 6 of the appellate order. 17. The DR has relied on the Assessing Officer's order. 18. After hearing the rival parties and perusing the appellate orders with which we agree, we delete the disallowance of retainership fee of Rs. 60,000 paid to Mr. H.P. Agrawal. Similarly with regard to conveyance expenses paid to Mr. H.P. Agrawal the disallowance made by the Assessing Officer is deleted following the appellate order for the immediately preceding assessment year 1986-87 whereby vide Ground No. 6(b) and paras 34 to 36 at page 5 of the appellate order in assessee's own case in ITA No. 5623/D/91 the issue has been considered. Ground No. 8(b): "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in disallowing the following expenses out of expenses claimed under the head Legal & Professional charges :- (a) Rs. 25,000 Paid to M/s. A.M. Consultants. (b) Rs. 46,000 charges paid to Dr. S.M. Patil, Technical Consult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's counsel that cost of mattresses; wooden elephant pieces, payment to floweriest, etc. are not in the nature of capital expenditure, hence, the disallowance of Rs. 57,838 in respect of the aforementioned items is deleted. Ground No. 11 : "That on the facts, circumstances and legal position of the case, the learned CIT(A) has erred in law in holding that the proportionate expenditure in respect of "debenture issue expenses" attributable to investment of Rs. 7.10 crores is capital expenditure and would not qualify for deduction under section 37 of the Income-tax Act." 26. This ground is against the disallowance of Rs. 1,51,970 on account of debenture issue expenses. The CIT (A) has considered the issue vide para 14, page 30 of his order and following his appellate order for the Assessment Year 1986-87, he has directed the Assessing Officer to work out the deduction on the basis as done in the assessment year 1986-87. 27. The department is also in appeal in respect of the same issue vide Ground No. 3 and its sub-grounds (i), (ii) & (iii ). The DR has relied on the order of the Assessing Officer whereas the AR has fairly conceded that the similar issue came up for considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case (supra). Ground No. 13 : "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in upholding the non-allowance of deduction admissible under section 80HHC of the Income-tax Act, 1961." 33. This ground is against non allowance of eligible deduction under section 80HHC of the Act. The AR submitted that admittedly the statutory reserve was created for Rs. 4 lakhs. Also a certificate in prescribed form was filed before the CIT (Appeals) in Form No. 10CCAB. The CIT (Appeals) has rejected the claim of the assessee on the ground that a prescribed certificate in Form No. 10CCAB had not been filed either along with the return of income or even at the time of hearing before the Assessing Officer. Therefore, the Assessing Officer was justified in disallowing the claim for deduction under section 80HHC. 34. The AR has invited our attention to a similar claim made in the immediately preceding assessment year and considered by the Tribunal, vide paras 131 to 135 of the appellate order dated 10-1-2003 in ITA No. 5623/D/91 for the Assessment Year 1986-87 in assessee's own case where the appellate Tribunal while rejecting the claim of the assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own order for the assessment year 1986-87. The matter was considered in the assessment year 1986-87 by the Appellate Tribunal vide page 14, paras 72 to 74 of appellate order dated 10-1-2003 in appellant's own case where the similar expenditure incurred on Annual General Meeting has been held as deductible business expenditure on the ground that such meetings are held in compliance of the statutory requirements under the Company Law. It has been argued that the extraordinary general meeting is also held in compliance with the statutory requirements of the Company Law. Hence, the entire expenditure of Rs. 43,975 be allowed as admissible business deduction. 39. The DR has relied on the order of the CIT (Appeals). 40. Following the appellate order for the assessment year 1986-87 with which we agree, we direct to delete the addition of Rs. 43,975. Ground No. 16 : "That on the facts and in the circumstances of the case the learned CIT(A) has erred in law in upholding the disallowance of Rs. 24,635 being expenses incurred in relation to a Seminar organized by Association of Indian Automotive Manufacturers." 41. The AR has submitted that the expenditure of Rs. 24,635 was incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance under section 37(2A) read with Explanation 2. The CIT (Appeals) has dismissed the claim on the ground that no details of employees' participation in respect of entertainment expenses incurred were filed. 47. In this connection reliance has been placed on the jurisdictional High Court's decision in the case of CIT v. Expo Machinery Ltd. [1991] 190 ITR 576 (Delhi) wherein the High Court had held that in the case of composite expenditure it was necessary to resort to an estimate in ascertaining that part of the expenses incurred on food and beverages of employees which is excluded from the purview of section 37(2A) of the Act. It further held that 35% of the entertainment expenses allowed by the Appellate Tribunal towards employees participation couldn't be said to be unreasonable. 48. The assessee has further placed reliance on the decision of Ramnath Exports (P.) Ltd. v. IAC [1992] 42 TTJ (Delhi) 441 wherein the Appellate Tribunal, Delhi, had estimated 40 per cent of the entertainment to be allocable to employees participation and excluded the same from the purview of disallowance. The assessee company has filed Appellate orders in the case of Escorts JCB Ltd. wherein 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late order for the Assessment Year 1986-87 (supra) where the similar issue has been considered vide paras 65 to 69 at page 10 of the appellate order in assessee's own case with which we agree and accordingly restore the issue back to the file of the Assessing Officer to decide it in accordance with the law after giving an opportunity of being heard. Ground Nos. 20(a) & (b) : "(a)That on the facts and in the circumstances of the case the learned CIT(A) has erred in law in ignoring the plea of the appellant that the expenditure on account of repairs and maintenance and depreciation on assets is not to be considered for the purposes of disallowance under section 40A(5)/40(c) of the Income-tax Act, 1961 and has further erred in law in upholding the disallowance of Rs. 3,30,000 (wrongly mentioned Rs. 2,30,000 in the impugned order) under section 40A(5). (b)That on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in observing that no arguments had been advanced before him to indicate how the estimated disallowance is excessive or unreasonable." 53. This ground is against CIT(A)'s order upholding disallowance of Rs. 3,30,000 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny at the residence of the two directors/employees was a perquisite in their hands. (b)Without prejudice to the Ground No. 22(a) here-in-above, the learned Commissioner of Income-tax (Appeals) has erred in law in holding that the actual expenditure incurred on telephone provision at the residence of directors should be considered for the purpose of disallowance under section 40A(5) of the Income-tax Act, 1961." 57. This ground is against the CIT (A)'s order in holding that the telephone facility provided at the residence of the two director employees was a perquisite in their hands and accordingly section 40A(5) was applicable for the purpose of disallowance under that section. 58. The AR has submitted that the similar issue arose in the Assessment Year 1986-87 and the CIT(A) following his appellate order for the Assessment Year 1986-87 upheld the disallowance made by the Assessing Officer. The similar issue came up for hearing in the Assessment Year 1986-87 vide Ground No. 17, paras 81, 82 and 71 (appears to be wrongly typed) at pages 13 and 14 of the appellate order dated 10-1-2003 (supra) in assessee's own case. The AR further submits that the issue has been decided in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred by the individual, if any, i.e. the conditions for exemption are limited to an individual in his personal assessment only. 64. It has also been stated at Bar that in personal assessment of Mr. Rajan Nanda to whom the said LTA was given, the LTA amount had been originally added by the Assessing Officer in his personal assessment but later on while giving appeal effect the same was deleted. 65. The DR has relied on the orders of the authorities below. 66. We are in agreement with the assessee's counsel and hold that in view of the specific provisions the LTA has to be excluded for working out disallowance under section 40A(5) of the Act irrespective of the actual expenditure incurred by the individual. Accordingly, we delete the disallowance of Rs. 19,616. Ground No. 23 : "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in upholding the disallowance of the following out of General expenses :- Rs. 9,900 being expenses on sign boards. Rs. 8,500 being amount for Architect's fee. Rs. 1,29,996 being expenses incurred on Founder's day celebration." 67. The assessee has disputed the disallowance of the following expenses :- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Management as well as employees of the assessee company. He has contended that the break up of such expenditure is given in statement of facts filed before the CIT (A), vide item (vi) under Ground No. 26. In this connection he has filed the copy of Statement of facts filed before the CIT (A) along with the appeal memo and is contained an Annexure 'C' in the Paper Book. At page 11 of the Annexure 'C' the nature of the expenditure of Rs. 1,29,996 is given which is comprised of service awards given to various employees of the assessee company, cost of photographs taken on the occasion of function and the dinner expenses. The dinner expenses are Rs. 46,950 out of Rs. 1,29,996. He has placed reliance on the decision of Bombay High Court in the case of CIT v. Merck Sharp & Dohme of India Ltd. [1983] 140 ITR 332 and the jurisdictional Delhi High Court in the case of Delhi Cloth & General Mills Co. Ltd. v. CIT [1992] 198 ITR 500 and vehemently argued that the very nature of expenditure being mainly on service awards, photographs, etc. would suggest that the expenditure is not entertainment simpliciter, therefore, the same be allowed as an admissible business deduction in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80. Respectfully following the orders of earlier year(s), the disallowance of Rs. 62,250 is deleted. Ground No. 26 : "That the learned CIT (A) has erred in law in upholding the action of the Assessing Officer in rejecting the claim of the appellant regarding deduction of Sur-tax liability while computing total income. 81. This ground is against rejection of the claim of sur-tax liability while computing total income. This AR fairly admits that this ground is covered against the assessee and is, therefore, dismissed. Ground No. 27(b) : "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in law in upholding the disallowance of Rs. 16,42,246 out of travelling expenses." 82. This ground is against the ad hoc disallowance of Rs. 2 lakhs over and above Rs. 14,42,246 offered by the assessee for disallowance under Rule 6D of the I.T. Rules, 1962. The department is also in appeal vide Ground No. 19 in ITA No. 4807/D/92. 83. The Assessing Officer has disallowed the expenditure of Rs. 20 lakhs keeping in view the past history of the case. The CIT (A) has considered the issue vide paras 34 to 34.3 and after considering the past history of the case has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to third parties on Government sales has been the subject-matter of dispute and the Commission/Discount paid to dealers/stockist had not been subjected to any such proportionate disallowance in earlier years. He has also submitted that in the immediately subsequent Assessment Year 1988-89 the Commission paid to dealers/stockist has been disallowed at the rate of 20 per cent of such expenditure by following the assessment order for the Assessment Year 1987-88 which is under appeal and the appeal for the Assessment Year 1988-89 being ITA No. 2923/Del./98 is pending before this Tribunal. He has further submitted that the Assessing Officer while completing the assessment for the Assessment Year 1989-90 has dealt with the issue of Commission & Discount vide pages 29, para 42 of the assessment order dated 30-3-1992 which would reveal that during that year the Commission paid to dealers/stockist amounting to Rs. 3,77,45,463 had duly been considered by the Assessing Officer and allowed it specifically. The assessee company has filed the relevant text of the Assessing Officer's order dated 30-3-1992 for the Assessment Year 1989-90 at Paper Book pages 154 to 163. The Assessing Officer whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1988-89 that so on the same basis as in the Assessment Year 1987-88. The bona fide and genuineness of the expenditure is not under challenge. The Assessing Officer has in our opinion incorrectly disallowed ad hoc 20 per cent of the expenditure. Respectfully following the jurisdictional High Court decisions and the decisions of the Apex Court cited before us, we delete the disallowance of Rs. 51,63,000. Ground Nos. 29 (a),(b), (d) & (e) : "(a)That the learned CIT(A) has erred in law in rejecting the claim of Depreciation of Rs. 1,47,712 under section 32 of the Income-tax Act in respect of the flats at Bombay. (b)That on the facts and in the circumstances of the case, the learned CIT (A) has erred in law in holding that 1/3rd of the buildings, out of the total buildings in respect of Tractor Division, Engineering Division, Automotive Division, Motorcycle & Scooter Division and Yamaha Motorcycle Division of the appellant company which were classified as 'factory buildings' are treated as "non-factory buildings" thereby restricting depreciation allowance at the rate of 5 per cent on the same as against 10 per cent claimed by the appellant. (d)That the learned CIT (A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment allowance on Effluent treatment plant. 99. The AR has submitted that the Effluent treatment plant is for disposal of waste containing cyanide particles and other chemicals, which arise during the course of manufacturing activities before discharging the said waste in sewage to avoid environmental pollution. The wastage is processed through clarifiers and finally discharged in sewage tank. He has submitted that the use of Effluent treatment plant is incidental to the manufacturing activities of the assessee company and also in compliance with anti pollution laws. The CIT (A) has confirmed the order of the Assessing Officer in rejecting the claim of investment allowance on Effluent treatment plant on the ground that nothing has been produced in support of the contention of the assessee's counsel. The AR has further submitted that in the Assessment Year 1982-83 the issue regarding claim of investment allowance on electrical installation, fire fighting equipments, material handling equipments under ground cables, diesel generating sets, air conditioning plants, weighing machines, air cooler Plants. etc. came up for consideration. The Appellate Tribunal discussed the Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery on account of variation in exchange rates. 106. The Assessing Officer has rejected assessee's claim on the ground that the investment allowance on exchange variation in respect of plant & Machinery installed in previous year is not admissible since by incurring said expenditure no plant & Machinery is installed during the year. 107. The CIT (A) has considered the issue vide para 41.3 at page 125 of his appellate order. The CIT(A) while deciding the issue partially in favour of the assessee has held that so far as the plant & machinery that has been acquired and installed during the year or acquired during the preceding year and installed during the year under appeal is concerned increase in liability for making provisions towards cost of that machinery which is to be capitalized under section 43A towards cost of acquisition of said machinery, the appellant would be entitled for investment allowance on such amounts of exchange variation. However, if the machinery has been acquired or installed in the earlier years, the appellant would not be entitled to any investment allowance on the amount represented by increase in the liability for making payments towards cost of machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te in the absence of any contrary decision of any other High Court. 110. The DR has relied on the orders of the authorities below and has not referred to any contrary decisions to the Gujarat and Madras High Courts cited by the assessee's counsel. 111. We have carefully considered the submissions of both the sides and we find substantial merit in the submissions of the learned counsel for the assessee. Respectfully following the High Courts decisions of Gujarat and Madras and also Delhi as mentioned hereinabove, we hold that the assessee would be entitled to investment allowance on entire exchange variation irrespective of the fact that whether the same relates to assets acquired/installed during the current year or acquired/installed in earlier years. The appeal of the assessee on this ground is allowed subject to verification of sufficient statutory reserve created and the departmental appeal is dismissed. Ground No. 31 : "That on the facts, circumstances and legal position of the case, the Assessing Officer has erred in invoking the Provisions of section 215 of the Income-tax Act, 1961 and in charging interest therein. Further, the learned CIT (A) has erred in not considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in directing to bifurcate the expenditure on account of debenture issue in the ratio of 27.90 to 7.10. (ii)in allowing the proportionate expenditure in the ratio as 27.90 aforesaid, as revenue expenditure when whole of such expenditure is covered under section 35D(2)(c)( iv) of the Income-tax Act, including underwriting commission, brokerage and packing and advertisement of prospectus. This expenditure having been incurred in connection with the extension of industrial undertaking and setting up of a new industrial unit, is not allowable under section 37(1) of the Income-tax Act. (iii)in directing the Assessing Officer to allow proportionate expenditure in the ratio of 7.10 aforesaid, as deductible under section 35D without appreciating the fact that the assessee was unable to furnish the details and evidence in support of its claim as required by the Assessing Officer. The order of the CIT(A) being in violation of Rule 46A is liable to be set aside. 120. The assessee is also in appeal vide Ground No. 11 in its appeal for the assessment year under appeal in ITA No. 4773/D/92. 121. We have observed there while dealing with Ground No. 11 of the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a sum of Rs. 39,268 on account of interest paid to HUDA." 126. This ground is against the deletion of Rs. 39,268 on account of interest paid to HUDA. The Assessing Officer vide para 37 at page 21 of the assessment order disallowed the expenditure towards interest paid to CWC and HUDA for the reasons given in the assessment proceedings for the immediately preceding assessment year. The CIT (A) has also followed his appellate order for the immediately preceding assessment year 1986-87. 127. The DR has relied on the order of the Assessing Officer whereas the AR has placed reliance on the CIT(A)'s order for the year under appeal. 128. Admittedly, the issue is covered by our appellate order for the assessment year 1986-87 wherein the departmental appeal on this issue was dismissed. Accordingly, we dismiss this ground of appeal. Ground No. 7 : "On the facts and in the circumstances of the case, the CIT(A) has erred in allowing deduction of interest of Rs. 83,489 paid to UPSIDC on purchase of land." 129. This ground is against the deletion of disallowance of interest of Rs. 83,489 paid to UPSIDC on purchase of land. The Assessing Officer has disallowed the amount of Rs. 83,489 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order for the assessment year 1984-85 and 1985-86 are contained in the Paper Book pages 1 to 5 and 6 to 9. 135. We have carefully perused the appellate orders for the earlier years with which we agree and accordingly dismiss the departmental appeal on this ground. Ground No. 10 : "On the facts and in the circumstances of the case, the CIT(A) has erred in holding that the concessional interest on loan does not amount to perquisite for the purpose of disallowance under section 40A(5)." 136. This ground is against the CIT (A)'s order holding that the concessional rate of interest on loans does not amount to perquisite for the purposes of disallowance under section 40A(5). It has been submitted by the AR that the issue is covered by the consolidated appellate orders for the assessment years 1984-85 and 1985-86 in appellant's own case. The relevant texts of the appellate orders dated 5-9-2000 and 8-11-2001 for the assessment years 1984-85 and 1985-86 (supra) are contained in the Paper Book pages 10 to 14 and 15 to 17 respectively. 137. It has further been stated by the AR that the issue under consideration has since been settled by the Apex Court in favour of the assessee in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in holding that the medical expenses reimbursed by the employer does not constitute perquisite for the purpose of computing disallowance under section 40A(5)." 145. This ground is against deletion of disallowance of reimbursement of medical expenses treated as perquisite for the purpose of section 40A(5) of the Act. The DR has relied on the order of the Assessing Officer whereas the AR has relied on the order of CIT (A). 146. It has been stated by the AR that the issue stands settled by the Apex Court in the following cases :- 1. CIT v. Mafatlal Gangabhai & Co. (P.) Ltd. [1996] 219 ITR 644 (SC), and 2. CIT v. Usha International (P.) Ltd. [1995] 212 ITR (St.) 56. 147. The Appellate Tribunal had considered the similar issue in the assessment year 1986-87 vide paras 60 to 63 at page 8 of the ITAT's order in departmental appeal. 148. We have perused the order for the assessment year 1986-87 in the departmental appeal and following the SC's decision referred to hereinabove and the ITAT's order, we dismiss the ground and uphold the order of CIT(A). Ground No. 14 : "On the facts and in the circumstances of the case the CIT(A) has erred in holding that the conveyan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT (A)'s order where he deleted the estimated addition of Rs. 2,00,000 on account of Commission made by the Assessing Officer on accrual basis on the ground that details of Commission received on accrual basis have not been furnished. It has been stated by the AR that the similar issue came up for consideration before the Appellate Tribunal in departmental appeal vide paras 33 to 37 at page 5 of the Appellate order dated 10-1-2003 in departmental appeal for the assessment year 1986-87 and the departmental appeal on this ground stands dismissed. 156. The DR has relied on the order of the Assessing Officer. 157. Relying on the order of the Appellate Tribunal for the Assessment Year 1986-87 which in turn has followed its order for the Assessment Year 1984-85 in appellant's own case with which we agree, we dismiss this ground and uphold the order of the CIT (A). Ground No. 17 : "On the facts and in the circumstances of the case the CIT (A) has erred in deleting the disallowance of Rs. 9,81,254 representing ex gratia payments to employees without appreciating that the assessee has failed to establish the conditions mentioned in the second proviso to section 36(ii) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the CIT (A) has allowed the expenses vide item 1 (a) at page 70 of his appellate order and in doing so he has relied on the decision of the Apex Court in the case of CIT v. Rajendra Prasad Moody [1978] 115 ITR 519. Further, though he has accepted the contention of the assessee that the amount of Rs. 8,89,332 will be allowed as expenditure against the dividend income received by the assessee company, but at the same time he has directed the Assessing Officer to reduce the dividend income by that amount for the purpose of deduction under section 80M. 166. No infirmity has been pointed out by the DR in the decision of the CIT(A). We find that the CIT(A) is justified in law and no interference is called for in the matter. The departmental appeal on this ground is dismissed. Ground No. 19 : "On the facts and in the circumstances of the case the CIT(A) has erred in reducing the estimated disallowance of Rs. 20 lacs made under Rule 6D of the Income-tax Rules, 1962 to Rs. 16,42,246. The CIT(A) has failed to appreciate the defect and deficiency pointed out by the Assessing Officer for making disallowance of Rs. 20 lacs." 167. This ground is against reducing the ad hoc disallowance mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of assets on account of variation in the exchange rate without appreciating the facts that as per provisions of section 43A of the Income-tax Act the cost of any asset is to be increased only by the amount of increase in the liability on actual payment." 174. This ground is against the deletion of disallowance of depreciation and Extra Shift Allowance (ESA) on exchange rate variation amounting to Rs. 81,71,331 by the Assessing Officer and deleted by the CIT (A). 175. The Assessing Officer has disallowed the depreciation & ESA on exchange rate variation following the reasonings given in the preceding year. The CIT (A) has deleted the disallowance by following the ITAT's order for the assessment year 1982-83 and his own order for the immediately preceeding assessment year i.e. assessment year 1986-87. 176. The DR has relied on the order of Assessing Officer whereas the AR has relied on the order of CIT (A) which in turn has followed the appellate order for the assessment year 1982-83. We find that the similar issue came up for consideration in Departmental appeal for the assessment year 1986-87 vide paras 82-88 at page 12 of the ITAT's order and the Departmental appeal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us vide Ground No. 29(a) in assessee's appeal and the same has been allowed in its favour. Ground No. 23 : "On the facts and in the circumstances of the case the CIT(A) has erred in directing to allow extra shift allowance on the items listed below :- (a)D.G. Set (b)Underground cables (c)Transformer (d)Generator Set (e)Power transmission lines" 183. This ground is against the rejection of claim of Extra Shift Allowance (ESA) in respect of the following assets by the Assessing Officer and allowed by the CIT(A): (i)D.G. Set (ii)Underground cables (iii)Transformers (iv)Generator Set (v)Power transmission lines 184. The CIT(A) has considered the issue vide paras 40.5 & 40.6(i) at pages 101-102 of his appellate order. While allowing the contention of the assessee that it is entitled to claim in respect of aforementioned assets, the CIT(A) has reelied on his appellate order for the earlier years. It has been contended by the AR that in the immediately preceding assessment year, the similar issue came up for consideration before the ITAT vide paras 89-93 at page 13 in Departmental appeal. 185. The DR has relied on the order of Assessing Officer but agrees that this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The DR has relied on the order of Assessing Officer. However, he agrees that this ground is covered in favour of the assessee by the earlier orders of ITAT. The ITAT has considered this issue in earlier years and has allowed investment allowance on such assets based on functional tests. The orders of the ITAT have been filed before us as under : (i)Relevant text of the consolidated ITAT's order dated 18-9-1991 in ITA No.(s) 3995/Del./87 and 4683/Del./87 for the assessment year 1982-83 vide paper book pages 167-171 in assessee's appeal being ITA No. 4773/Del./92 for the Assessment Year 1987-88, and (ii)Appellate order dated 10-1-2003 in ITA No. 5625/Del./91 for the assessment year 1986-87 in assessee's own case in Departmental appeal as Annexure 'B' to the paper book filed (relevant pages are 13-14, paras 94-97 of the appellate order). 193. Relying on the orders of ITAT in previous years with which we agree, we dismiss the ground and uphold the order of the CIT(Appeals). Ground No. 26 : "On the facts and in the circumstances of the case the CIT(A) has erred in allowing investment allowance on Machinery worth Rs. 4,38,40,000 which has been purchased out of investment allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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