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TMI Blog2024 (3) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... onsolidated order. ITA No. 6832/MUM/2010 (A.Y. 2002-03) - ASSESSEE APPEAL 3. At the outset, we observe from the record that assessee has raised following additional grounds of appeal: - "1. On the facts and in the circumstances of the case, the assessment order dated 22 March 2005 passed by the Additional Commissioner of Income Tax ('Addl. CIT') under section 143(3) of the Income-Tax Act, 1961('the Act') is bad in law, illegal and without jurisdiction and/or in the excess of jurisdiction, on the grounds amongst others, that he did not possessed legal and valid jurisdiction under the Act to pass the assessment order and consequently the Hon'ble tribunal he pleased to quash the said order. 2. On the facts and the circumstances of the case, the Addl. CIT lacked jurisdiction to pass the assessment order under section 143(3) of the Act dated 22 March 2005 and to exercise the powers of performing the functions of an assessing officer, without establishing that he possess such jurisdiction conferred on him under section 120(4)(b) of the Act. Accordingly, in the absence of an order under Section 120(4)(b) conferring jurisdiction on the Addl. CIT the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct (see page 2 of Factual paper book-1). 3 12.03.2003 In response to a rectification application dated 06.03.2003 filed by the Assessee for short grant of credit of TDS, the Dy. CIT had passed an order under section 154 of the Act (see pages 3-5 of Factual paper book-1). 4 25.08.2003 The Dy. CIT issued a notice under section 143(2) of the Act, selecting the Assessee's ROI for scrutiny (see page 6 of Factual paper book-1). 5 17.10.2003 The Addl. CIT (Transfer Pricing -II) issued notice under section 92CA(2) of the Act wherein it is mentioned that the Dy. CIT vide letter dated 14.10.2003 referred the case for determination of Arm's Length price for international transaction (Copy of notice submitted during the course of hearing on 11.01.2024) 6 29.03.2004 The Assessee filed a revised ROI with the Asstt. CIT (see pages 7-8 of Factual paper book-1). 7 20.09.2004 The Asst CIT issued notice under section 143(2) of the Act (see page 9 of Factual paper book-1). 8 09.11.2004 The Addl. CIT issued notices under sections 143(2) and 142(1) of the Act (see pages 10 to 13 of Factual paper book-1). It is the Assessee's submission that, it has not been shown by the Revenue des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) wherein, it is an accepted position that this order allegedly assigning jurisdiction in favor of the Addl. CIT is not available on record. Therefore, the presumption should be that even this order does not exist. It also clarifies that for the year under consideration, no document conferring jurisdiction in favour of Addl. CIT is available on record. 3. Section 143 of the Act which lays down the procedure for assessment identifies the assessing officer as the authority responsible for scrutinizing the return of income and passing the assessment order. The expression 'Assessing Officer' has been defined in section 2(7A) of the Act to inter-alia mean the Asst. Commissioner or the Dy. Commissioner, who is vested with the relevant jurisdiction by virtue of directions or orders issued under subsections (1) or (2) of section 120 or any other provisions of the Act. Based thereon, the jurisdiction to assess the assessee's income vested with the Dy. CIT/the Asstt. CIT pursuant to which the assessee had filed its return including the revised return of income with them. The intimation under section 143(1) of the Act was issued by them and the notices under section 143(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a subject matter of and would be decided by the ITAT while deciding the additional ground raised in the appeal for AY2006-07. However, for the present purpose, it is relevant to note that if the jurisdiction was admittedly assigned in favor of the Addl.CIT on 05.05.2008, then, he had no authority to carry out the assessment proceedings and pass the assessment order dated 22.03.2005 for AY 2002-03. 5. Apart therefrom, the above referred chronology of facts shows that upto 20.09.2004, the jurisdiction over the Appellant's case was exercised by the Dy. CIT /the Asst. CIT and thereafter, by the Addl. CIT. For transfer of the jurisdiction from the Dy. CIT/Asst. CIT to the Addl. CIT there has to be a valid order passed under section 127 of the Act vesting such jurisdiction in his favor. Assuming without admitting that the Addl. CIT could be regarded as the AO, in the absence of any valid transfer of jurisdiction from Dy. CIT/Asst. CIT to him, the assessment order dated 22.03.2005 passed by him is without jurisdiction. 6. Based on the above factual and legal position, it is respectfully submitted that similar issues have been considered by other co-ordinate Benches of the ITAT in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenging the jurisdiction of the Addl. CIT and the validity of the Assessment Order passed 143(3) of the Act. Further, in addition to the oral arguments made before the Hon'ble Bench during the physical hearing, the following written submission in the above referred case may also kindly be considered- 1. The grievance of the assessee appellant is that the assessment order passed u/s 143(3) by the Addl. Commissioner of Income Tax is without jurisdiction as there is no order u/s 120(4)(b) r.w.s. 2(7A) or u/s 127 of the I.T. Act. 2. The undersigned wishes to contest the above additional ground of the assessee on Five (5) broad propositions, which are as under- I. The additional ground is not fit to be admitted by the Hon'ble Tribunal; II. There exist notifications of the Board giving power of the Assessing Officer to the jurisdictional Addl. CIT; Identical issue decided in favour of Revenue by the Hon'ble Mumbai High Court in the case of N. Rajgopal (Appeal No. 1454/2016) and the Delhi High Court in the case of Pr. CIT vs Mega Corporation (ITA no. 128/2016) dated 23.02.2017. The decision of the Mumbai High Court has a binding on the Hon'ble Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observed that the additional ground is to be admitted by the Tribunal to assess the correct tax liability in accordance with law. If in a subsequent judicial decision, certain item is decided to be allowed, the assessee can raise this issue in the additional ground to claim the relief if this benefit was not allowed to the assessee. In a nutshell, additional ground is to be admitted if it is a pure question law and for determination of correct tax liability. In the assesee's case, these both aspects are missing. Firstly, challenging the jurisdiction of assessing officer after 16 years after completion of assessment, is not a pure question of law. This needs to verify the facts from the case records. Hence, factual verification of existence of jurisdiction at the time of assessment is required to be done. Secondly, the assessee has not demonstrated how the assessee is seeking the levy of correct tax liability by raising such an additional ground. There is no issue of determining the correct tax liability in challenging the jurisdiction of the AO after 16 years time lapse. Hence in view of the decision of Hon'ble Supreme Court in the case NTPC (229 ITR 383), the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s failure to respond to a claim within a reasonable time after receiving notice of the claim, thereby giving rise to presumption of acceptance; (ii) Estoppel by laches: an equitable doctrine by which some courts deny relief to a claimant who has unreasonable delayed or been negligent in asserting a claim etc. Reliance is further placed on the following decisions: (i) State of Punjab vs. Bhatinda Dist. Co-operative Milk Producers Union Ltd. (2007) 11 SCC 363 (ii) State of Gujarat vs. Patel Raghav Natha and others AIR 1960 SCC 1297 (iii) Santosh Kumar Shivgonda Patil & Ors vs. Balasaheb Tukarams hevale (2009) 9 SCC 352 (iv) CIT vs. NHK Japan Broadcasting Corporation (2008) 305 ITR 137 (Del) (v) CIT vs. Hutchison Telecom Ltd. (2010) 323 ITR 320 (Del). 5.3 Although no time limit is prescribed for filing additional ground, it does not mean that it can be filed after any lapse of time in a reckless manner. Even when no time limit is provided for filing additional grounds, they need be filed within a reasonable time. In my respectful submission, if the entire order is quashed after such a long time without deciding the merits of the case, there may be substantial loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer did not have the authority of law. Hence, the additional ground raised by the assessee stands dismissed." 5.5 During the hearing, the Id. AR of the assessee has relied on the judgement of the Hon'ble ITAT, J Bench in the case of M/s. Vertiv Energy Pvt. Ltd. (ITA No. 1975/MUM/014 and ITA No. 1771/MUM/2015 dated 22.06.2021. The Id. AR has emphasised on para no. 3.6 of this order. In this para, the Hon'ble ITAT has stated as under:- "We find under similar facts and circumstances, this Tribunal had indeed admitted the additional grounds raised by the assessee after a long gap of ten years or 15 years, as the case may be. And adjudicated those additional grounds". The AR contended that, the Hon'ble Tribunal has decided the issue of condonation of delay in filing an additional ground. 5.5.1 It is to be noted that the delay in filing of an additional ground in this case i.e. Vertiv Energy Pvt. Ltd. is only 5 years, whereas, in the assessee's case, it is 16 years. Further, the Hon'ble Tribunal has not decided the issue of condonation of delay on merit. Hence, this decision is not applicable in the Assessee's case. The facts in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in this decision of M/s. Stock Traders Pvt. Ltd. (supra) is that an additional ground filed after 15 years has no cogent basis whatsoever. In the instant case of the assessee, as stated above, the additional ground challenging the jurisdiction of the Additional CIT has been filed after more than 16 years needs to be quashed on this ground of inordinate delay. 6. Additional Ground raised is not a pure question of Law- The additional ground raised is not a pure "question of law" as contended by the assessee. According to the assessee, this being pure "question of law" can be raised for the first time before the Hon'ble Tribunal in view of Hon'ble Supreme Court decision in the case of NTPC Ltd. vs CIT (1990) 229 ITR 383 (SC) and host of other judgments. 6.1 It is respectfully submitted that the first appellate authority and the AddI. CIT (AO) being lower authorities to the Hon'ble ITAT, had no occasion to examine the facts regarding jurisdiction which arise from notifications passed u/s 120 or existence of any defect in the assignment order u/s 124 as this issue was never agitated before them by the Assessee appellant. In my humble submission, it certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent proceedings, assessment cases pending against the appellant before an office in one word are transferred to an officer in another ward in the same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative conveniences, and that shows that on principle in such cases neither can the notice be said to be necessary, nor would it be necessary to record any reasons for the transfer. The Hon'ble High Court and Supreme Court have given clear findings that the jurisdiction issue is an administrative decision of the department. No prejudice is caused to the assessee depending upon which authority of the department passes an assessment order. 7.3 In this case also, the Assessee has not demonstrated how any prejudice is caused to the Assessee by completion of an assessment by the Addl. Commissioner instead of Asstt. Commissioner/Dy. Commissioner. In view of this fact, the additional ground raised by the assessee is not maintainable and hence the same should not be admitted after the delay of 16 years. 8. To decide jurisdiction is an administrative matter and mistake, if any, is curative i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can, however, be filed questioning the action of the Assessing Officer in not following the procedure mentioned/stipulated in Section 124. In Wallace Brothers & Co. Ltd. v. CIT [1945] 13 ITR 39, Federal Court had held that the objection to place of assessment could not be raised in an appeal against the assessment under the Income Tax Act, 1922. This view was affirmed by the Supreme Court in RaiBahadur Seth Teomalv. CIT [1959] 36 ITR 9 holding that the objection as to the place of objection under the 1922 Act could not be made a subject or issue before the appellate forums including the Tribunal and reference to the High Court. Thus, the question of place or authority of the particular Assessing Officer was the matter of administrative convenience and not strictly a matter of subject matter jurisdiction and where there was an error or erroneous exercise by the Assessing Officer/Commissioner notwithstanding the challenge within stipulated time, it could be corrected by way of writ jurisdiction. The position is no different under the Act i.e. Income Tax Act 1961, as was elucidated by a Division Bench of this Court in Kanji Mal & Sons v. CIT [1982] 138 ITR 391/[1983] 12 Taxman 34 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner or the Commissioner and not by the Tribunal or the Commissioner (Appeals) in terms of Section 124(3)(b). Thus, the ITAT cannot entertain this ground of appeal on jurisdiction and it is a matter which can only be decided u/s 124(3)(b). 8.4 Further, while quoting the decision of Hindustan Transport Co. v. Inspecting Asstt. CIT [1991] 189 ITR 326/[1992] 63 Taxman 246 of the Hon'ble Allahabad High Court-Lucknow Bench, Hon'ble Delhi High Court in S.S.Ahuluwalia (2014) 47 taxman.com 169 (Del) has observed as under:- "A survey of the above provisions of the Act highlights the following situations. After creating the various Income Tax authorities, the Act does not prescribe their respective jurisdiction or functions. Any case can be dealt with by any Income Tax authority with the possible exception of the Board. Accordingly, the various Income Tax authorities are of co-ordinate jurisdiction. What function or functions, which authority or officer, shall perform is left to be decided either by the Board or by the Commissioner. On what principles the Board and the Commissioner will allocate the functions is not indicated in the Act. The principle is, however, apparent from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administrative and procedural and is to be exercised in the interest of exigencies of tax collection and the answer to the second question is that, under the Act, a defect arising from allocation of functions is a mere irregularity which does not affect the resultant action." 8.5 What emerges from the above judicial decisions is that, the allocation of functions to various Authorities under the Income Tax Act is one of procedure and not of substance. Hence, any defect in procedure will not invalidate the end action i.e. even if any defect is found, this is an irregularity which is curable in nature. For this alternative argument, reliance is placed on the landmark decision of Hon'ble Supreme Court in Pr. CIT-4, Mumbai vs S.G. Asia Holdings (India) Pvt. Ltd. (ITA No. 6144 of 2019) dated 13-08-2018 (TS-775-SC-2019-TP) where administrative issues of similar nature came for consideration of the Hon'ble Apex Court. In this case, the Hon'ble Tribunal had noted that when the mandatory instructions issued by the CBDT for making reference to the TPO was not followed by the AO, the T.P. adjustments were bad in law. The Hon'ble Tribunal held as under- "16.2 Before par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1) of section 115VZC; or (c) an order passed by a Principal Commissioner or] Commissioner under section 12AAor under clause (vi) of sub-section (5) of section 80G or under section 263or under section 270Aor under section 271or under section 272Aor an order passed by him under section 154 amending his order under section 263or an order passed by a Principal Chief Commissioner or Chief Commissioner or a Principal Director General or] Director General or a Principal Director or] Director under section 272A; or (d) an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order; (e) an order passed by an Assessing Officer under sub-section (3) of section 143 or section 147 or section 153A or section 153C with the approval of the Principal Commissioner or] Commissioner as referred to in sub-section (12) of section 144BA or an order passed under section 154 or section 155 in respect of such order; (f) an order passed by the prescribed authority under sub-clause (iv) or subclause (v) or] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in section 30 but no appeal is there provided against orders made under section 64(3). Similarly appeals to the Appellate Tribunal which lie under section 33 of the Act also do not provide for any appeal on the question of the place of assessment. In Wallace Brothers' case (supra)at page 79 Spens, C.J., after referring to section 64(3) and the proviso thereto said: "These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the court...This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made. As we have already pointed out, the objection was not raised in the present case even before the Appellate Income-tax Officer but only before the Appellate Tribunal." 9.4 The aforesaid ratio laid down by the Hon'ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court has held in Seth Hiralal Patni Vs. Sri Kali Nath, vide its decision on 4th May 1961 (1962 AIR 199), that the appellant was stopped from challenging the jurisdiction of the Bombay High Court to entertain the suit and to make a reference to the arbitrator; and he was equally stopped from challenging the authority of the arbitrator to render the award. Similar finding was recorded in Sushil Kumar Jalan Vs. ITO ITA 34/GAU/2011 order dt.03.02.2012 of the Guwahati Bench of ITAT. Thus, participation in proceedings amounts to acquiescence and thereby the assessee is stopped from contending the issue further. In the present case too, the assessee cannot, after order u/s 143(3) was passed, question jurisdiction in 2019. 10.2 The Punjab and Haryana High Court in the case of Subhash Chander (218 CPR 191) held that the question with regard to jurisdiction should have been determined by the Director General or the Chief Commissioner or the Commissioner and not by the Tribunal or the Commissioner (Appeals) in terms of Section 124(3)(b). Thus, the ITAT cannot entertain this ground of appeal on jurisdiction and it is a matter which can only be decided u/s 124(3)(b). 10.3 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction, rather Sec. 124(3) limits the availability of those options at the threshold. The assessee upon receipt of the kind mentioned in Clause (a) and (b) of section-3 has the option to urge the question of jurisdiction. The expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time are stipulated in section 124(3)(a). () within one month from the date of service of notice or (ii) After completion of assessment - whichever is earlier In the present case, there is no dispute that the re-assessment notice was issued by the A.O. on 22/03/2010, upon its receipt, the assessee reiterated its earlier return on 21/04/2010. Since its response led to objection as to the jurisdiction, it lost the capacity to urge the ground by virtue of the provision u/s.124(3)(a). This condition has been obviously overlooked by the ITAT which proceeded to set aside the assessment and completed the reassessment proceedings." 10.5 The Hon'ble ITAT Chandigarh in Punjab Urban Development Authority, Mohali (42 taxmann.com 160) held that once a notice u/s 143(3) is issued by a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion gives the definition of Joint Commissioner of Income Tax; Joint Commissioner means a person appointed to be a Joint Commissioner of Income Tax or an Addl. Commissioner of Income Tax under Sec. 117(1). Thus, a Joint Commissioner always meant an Addl. Commissioner from 1-10-1998 itself. Consequently, an Assessing Officer as in Sec. 2(7A) always meant Addl. Commissioner authorized u/s 120(4)(b) right from 1-10-1998. Further, "Addl. Commissioner" has been inserted by Finance Act, 2007 with retrospective effect from 1-6-1994 in sec.2(7A). The amendment to Sec.2(7A) issued in Circular No.3/2008 dated 12-3-2008 which is explanatory notes to the Provisions of Finance Act 2007 reads that it is a clarificatory amendment to the definition of Assessing Officer and definition of certain other Income Tax authorities. It is stated that Addl. Commissioner was not specifically mentioned in Sec. 2(7A) [definition of Assessing officer] because it was already included in the definition of Joint Commissioner u/s 2(28C); and in order to further clarify the intention of the legislator with regard to the meaning of the term "Assessing Officer", amendments have been carried out through Finance Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the absence of any order u/s 120(4)(b) or u/s 127 the assessment order passed by the Additional Commissioner of the Income Tax is bad in law. The Hon'ble Tribunal allowed the appeal of the assessee based on the following facts- (1) The order issues by the CIT, Delhi-II, New Delhi conferring jurisdiction of the case to the concerned AddI. CIT is an order u/s 120(2) of the Act and not u/s 120(4)(b) of the Act. (Kindly refer to para 6-7/page 12-14 of the order) (2) As observed in para 8.1/page 14 of the order, since the issue relates to lack of jurisdiction of the AddI CIT, the ratio of the judgment in CIT vs British India Corpn. Ltd. (2011) 337 ITR 64/(2012) 20 taxmann.com 446 (All.) is applicable, wherein it is held that the question of jurisdiction of the Assessing Authority cannot be disputed after the completion of the assessment proceedings as contemplated under section 124. According, to the Hon'ble High Court, if such a question arises, the said question can be addressed by the Commissioner of Income Tax or the Board. The concluding paragraph of the Hon'ble High Court is as under- "18. It is reasonable to deduce that the question of jurisdiction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Tribunal, Hon'ble High Court held that (i) The notice issued by the DCIT was by a competent officer who always had jurisdiction in view of section 120 r.w.s 2(7A) that includes DCIT as an AO. (Para 5 of the decision) (ii) Reference to an incorrect provision per se cannot invalidate the authority conferred in the present case under section 120(2) instead of section 120(4)(b). Hence, the assessee's argument that the Additional Commissioner of Income-tax (ACIT) did not possess jurisdiction, cannot be countenanced (allowed). (Para 6 of the decision) (iii) In the instant case, the provisions of sec. 124(3) bars raising of the jurisdictional issue within one month of the receipt of the notice. The relevant portion of the judgment in para 7 is reproduced as under- "Secondly, even if for some reason, the assessee was unaware of the notification, it became aware that the ACIT was exercising jurisdiction when it received notice from that official in August 2008. Since that was in continuance of the proceedings by the DCIT, it could well have been urged by the assessee within the stipulated time that the said officer, ACIT did not possess jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reference to "Additional Commissioner" in the list of such officers was included by an amendment made under Finance Act, 2008 but with retrospective effect from 01.06.1994. Thus, by virtue of this amendment, an Additional Commissioner of Income Tax was included in the definition of "Assessing Officer". It is true, as pointed out by the learned counsel for the assessee that when the Additional Commissioner passed the order of assessment, Section 2(7A) did not contain a specific reference of an Additional Commissioner, However, when the statute has been amended with retrospective effect, the effect of such amendment must be applied to the pending proceedings as in the present case. Non-applying such amendment in the present proceedings would destroy the retrospectivity granted to it by the legislature. This contention of the assessee is, therefore, rejected." 11.11 In the light of above factual position and adherence to the settled position of law, it is respectfully submitted that the binding precedence of Hon'ble Bombay High Court in N. Rajgopal (supra), being jurisdictional High Court and Hon'ble Delhi High Court in Pr. CIT-6 vs. Mega Corporation Ltd. (supra), being Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce been admitted by the Hon'ble High Court of Bombay vide appeal no. 1403 of 2017 dated 09.03.2022. The substantial questions of law admitted by the Hon'ble High Court are as under: "1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in admitting the additional ground when the assessee had not raised issue of jurisdiction of the Assessing Officer before the Assessing Officer and CIT(A)? II. Whether on the facts and in the circumstances of the case, the Tribunal was justified in coming to the conclusion that the Additional Commissioner of Income Tax, Range 2(3), Mumbai, has no jurisdiction to pass the assessment order?" II. Tata Communication Ltd. vs Asstt. CIT (ITA No.6981/Mum/2005) (Mumbai- Trib.) (A.Y. 2002-03) (Date of Order- 30-06-2017) i. In this case too, the same issue of competence & jurisdiction of the Addl.CIT to pass the assessment order dated 21/02/2005, was raised. The Hon'ble Mumbai bench was of the view that the orders passed by the Tribunal in cases of Mega Corporation Ltd (supra) and Tata Sons Ltd (2016) 76 taxman.com 126 have already considered the notifications issued by CBDT and relied upon by the DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt decision in Thane Electricity Supply Ltd (supra), it was held that the decision of non- jurisdictional High Court is neither binding decision for another High Court nor for Courts or Tribunals outside its territorial jurisdiction. Instead the Hon'ble Tribunal relied on the decision of Gujarat High Court in case of Ramesh D Patel (362 ITR 493) (Guj) wherein it was held that the provisions of sec. 124 of the IT Act are clearly concerning with territorial jurisdiction of the officer and has not relevance in so far as the inherent jurisdiction for passing an assessment order of assessment u/s.153 of the Act is concerned, when no such an authorisation u/s.132 was issued or requisition u/s.132A of the Act was made. In para 17, the Hon'ble Tribunal has also relied on the decision of Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd (88 ITR 192) to the effect that when the language of a taxing provision is ambiguous, or capable of more meaning than one, then the Court has to adopt an interpretation which favours the assessee. In view of the above, the Hon'ble Tribunal did not follow the Hon'ble Delhi High Court decision in the case of Mega Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this view of the matter, it is difficult to hold, as has been strenuously argued before us by the learned Departmental Representative, that the Hon'ble Bombay High Court's judgment in the case of Godavari Devi Saraf's cases stands overruled by Their Lordship's judgment in the case of Thana Electricity Co. Ltd.'s case. The only way in which we can harmoniously interpret these judgments is that these decisions deal with two different issues and ratio decidendi of these decisions must be construed accordingly". V. Further emphasizing the importance of non-jurisdiction High Court decisions, Hon'ble Bombay High Court in the cases of Humayun Suleman Merchant (2016) 73 taxmann.com 2 (Bombay) and Earnest Business (P.) Ltd. (2017) 80 taxmann.com (Bombay), have held that- 25. It is a settled position in law that the decisions of another High Court though not binding upon us, would deserve the highest respect and normally be followed for the sake of uniformity and comity of Courts, unless the judgment is rendered, per incuriam or sub- silentio. vi. As far as the reliance of the Hon'ble Tribunal on the decision of Hon'ble Supreme Court in CIT vs. Veg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd (2016) 76 taxman.com 126 (Mumbai) and Tata Communications Ltd (A.Y.2002-03) and came to the conclusion that in the absence of an order u/s.120(4)(b) as well as section 127(1) of the I.T. Act, the Addl. CIT cannot exercise powers of an Assessing Officer. ii. As stated above, these judgments cannot be followed since the Hon'ble Tribunal (a) Did not follow the binding non-jurisdictional Delhi High Court decision on the identical issue (b) Did not take into account the retrospective amendment made in the section 2(7A) (c) It chose to follow the decisions of Tata Sons Ltd (supra) and Tata Communications Ltd (supra), ignoring the fact that the said decisions were rendered in the absence of Hon'ble Delhi High Court decision in Mega Corporation Ltd (supra). Therefore, these decisions cannot be followed as it is a sub silentio with respect to the binding precedence of a higher authority on the identical issue. V. Sabras Investment (Tata Chemicals Ltd.) - ITA No. 915 to 918/Mum/2012 dated 05.09.2019 i. In the decision, the Hon'ble Tribunal while deciding the identical issue has completely relied on the decisions of Tata Communications Ltd. (supra) and cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his observation of the Hon'ble Tribunal is contrary to the law point and facts decided by the Hon'ble High Court. As stated in the preceding paragraphs, the question of law before the Hon'ble Delhi High Court in the case of Pr.CIT Vs. Mega Corporation Ltd (supra) was as under :- "Did the Income Tax Appellate Tribunal (ITAT) fall into error in interpretation of provisions of Section 124(3)(a) and holding that the ACIT could not have completed the assessment by virtue of Section 120(4)(b)." (Here 'ACIT' is the abbreviation of AddI.CIT) While rejecting the findings of the Hon'ble Tribunal, Hon'ble High Court held that (1) Reference to an incorrect provision per se cannot invalidate the authority conferred in the present case under section 120(2) instead of section 120(4)(b). Hence, the assessee's argument that the Additional Commissioner of Income-tax (ACIT) did not possess jurisdiction, cannot be countenanced (allowed). (Para 6 of the decision) (2) In the instant case, the provisions of sec. 124(3) bars raising of the jurisdictional issue within one month of the receipt of the notice. The relevant portion of the judgment in para 7 is rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search, by relying on the decision of the Karnataka High Court in the case of CIT v. Wipro Finance Ltd. [2009] 176 Taxman 233/[2010] 323 ITR 467. He agreed that in the present case, search authorization was issued against the partnership firm but according to him since no search was actually carried out, it cannot be stated that the search was initiated against the partnership firm. (ii) Learned Counsel submitted that for the purpose of the Income Tax Act, a partnership firm and its partners are treated as separate independent entities. The search carried out at the premises of the partners cannot be equated with the search against the partnership firm. In this context, the learned Counsel relied on the observations made by the Supreme Court in the case of CIT v. A. W. Figgies&Co. [1953] 24 ITR 405. (iii) Counsel further submitted that the objection of limitation of the Department is wholly fallacious. Section 124 of the Act relates to territorial jurisdiction of the Assessing Officer. The time limit provided under subsection (3) of Section 124, therefore, must be seen in the light of such issue. Vi. In the light of the above peculiar facts and questions of law put up, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case but notice for assessment u/s 153A was issued, Hon'ble High Court held that sec. 124(3) has a relation to its territorial jurisdiction. The facts of the present case are entirely different. vi. Moreover, the Hon'ble Delhi High Court in the case of Pr. CIT vs. Mega Corporation Ltd (supra) has clearly held (on the identical question as in the present case) that the time limitation u/s.124(3) will be applicable where jurisdiction of Addl. CIT making the assessment u/s.143(3) is under question. Finally, as held by the Hon'ble full bench of Guwahati High Court in the case of Smt. Sohani Devi Jain (1977) 109 ITR 130 (Guwahati) Sec. 124(3) has no relationship to territorial jurisdiction since the provisions of sec. 124 is clear and unambiguous. as jurisdiction has been challenged u/s.124(3)(a) and not u/s.124(3)(c). While the former provisions u/s.124(3)(a) relates to jurisdiction of the Assessing Officer where notices u/s.142(1) or 143(2) issued, as in the present case, the latter provision (u/s.124(3)(c) relates to the jurisdiction where search action u/s.132 or requisition u/s.132A was initiated and notices u/s.153A or 153Cissued by the Assessing officer. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court has observed as under: "9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgement as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board [Sub nom British Railways Board v. Herington (1972) 1 All ER 749 (HL). Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases." From the above observations of the Hon'ble Supreme Court, it is humbly submitted that considering the factual situation and the decision of the Hon'ble Bombay High Court in N. Rajgopal (Supra), the decision should be based on the wholistic appreciation of the provisions of the Act, and the subsequent notifications in this regard and judicial precedence cited above. It can be seen that there are different High Court decisions, including jurisdictional High Court in N. Rajgopa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. Sabras Investment (Tata Chemicals Ltd) ITA no 915 to 918/Mum/ 2012 (see Para nos. 3 to 7 at Page nos. 307 to 311, Para no 3.11 to 3.16 at Page no 325 to 330, Para no 11 at Page no 378 to 379 of Legal Paper book Page no 1) viii. Tata Communications Ltd -ITA no 4452 & 3460/Mum/2011 & ITA no 8768Mum/2010 (see Para nos. 5 to 6.2 at page nos. 391 to 425 of Legal paper book no-1) ix. Tata Sons Ltd- ITA no 4893,2545, 4543 & 2487/Mum/2012 - (see Para 3 to 8 at page nos. 432 to 435 of Legal paper book no -1) x. The Indian Hotels Company Ltd - ITA no 8570/Mum/2011 & 565/Mum/2013 & 2049/Mum/2014 - (see Para nos. 2 and 2.1 at page no 468 of Legal paper book no -1) xi. Kishore Vithaldas - ITA no 7397/Mum/ 2016 & ITA no 5661/Mum/ 2017 (see Para nos. 3 to 6 at Page nos. 502.3 to 502.5 of Legal paper book no 1) xii. Tata Communications Ltd-ITA No -7514/MUM/2011 - (see Para 8 at internal Page 9 of order-copy submitted separately) xiii. Vertiv Energy Pvt Ltd -ITA no. 1975/Mum/2014 & 1771/ Mum/ 2015 - (see Para nos. 2 - 2.1 at internal Page no 2 of the order copy provided ) xiv. Sandoz Pvt Limited - ITA no 3733 /Mum / 2013, ITA no 3740/ Mum/2013 - (see Para nos. 9 to 11 at internal Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sons Ltd - ITA no:2519/Mum/2009 and 2639/Mum/2009 - Appeal filed in 2009 and additional ground filed on 17 Mar 2017 v. Tata Sons Ltd - ITA no:5090/Mum/2012 - Appeal filed in 2012 and additional ground filed on 16 March 2017 vi. Tata Communication Ltd - ITA no: 2891/Mum/2010 & ITA no 1015/ Mum/2010 - Appeal filed in 2010 and additional ground filed on 15 Nov 2016 vii. Tata Power Co Ltd - ITA no:3081/Mum/2009 & ITA no 3082/Mum/2009 - Appeal filed in 2009 and additional ground filed on 20 January 2017 viii. Sabras Investment (Tata Chemicals Ltd) - ITA no915 to 918/ Mum/ 2012 - Appeal filed in 2012 and additional ground filed on 5 January 2018 ix. Tata Communication Ltd - ITA no 4452 & 3460/Mum/2011 & ITA no 8768/Mum/2010 - Appeal filed in 2011 and additional ground filed on 25 July 2017 x. Tata Sons Ltd -ITA no 4893,2545, 4543 &2487/Mum/2012 - Appeal filed in 2012 and additional ground filed on 22 February 2017 xi. Kishore Vithaldas- ITA no 7397/Mum/ 2016 & ITA no 5661/Mum/ 2017 -Appeal filed in 2017 and additional ground filed on 8 March 2019 xii. Tata Communication Ltd- ITA No -7514/MUM/2011 - Appeal filed in 2011 and additional ground filed on 10 September 2020 x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction for passing of the assessment order vested with the Addl. CIT in the present case. This issue also stands considered by the above referred Tribunal orders in the following cases: i. Tata Sons Ltd - ITA no 4497/Mum/2005 wherein the Revenue's submission have been referred to in para 3.18 at Page no 15 of the Legal paper book no.1 and the Bench's conclusion is in paragraph 3.22 at pages 18 and 19 thereof ii. Tata Communication Ltd - ITA no 7071/Mum/ 2005 wherein the Revenue's submission have been referred to in para 11 at Page no 5152 of the Legal paper book no.1 and the Bench's conclusion is in paragraph 15 at pages 58 to 63 thereof iii. Tata Sons Ltd - ITA no 193/Mum/ 2006 wherein the Revenue's submission have been referred to in para 8 at Page no 103 of the Legal paper book no.1 and the Bench's conclusion is in paragraph 18 at pages123-124 thereof 4. Relying on section 124(3) of the Act, it was urged that - Firstly orders conferring jurisdiction are not appealable and in any event such orders could be challenged only in accordance with the said provisions i.e. before the Principal Director General or Director General or the Principal Chief Commissioner or Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reached therein is based on section 124(3) of the Act. The jurisdictional High Court in the case of Bansilal B. Raisoni (supra) has clearly held that section 124(3) of the Act and the limitations contained therein would have no application to a case, other than the one dealing with territorial jurisdiction of an assessing officer. Since, section 124(3) of the Act has no application to the present case, the conclusion reached by the Delhi High Court in the case of Mega Corporation will not apply. Further, the impact of the said judgment has been considered by the above referred Tribunal orders in the following paragraphs- i. Kishore Vithaldas -ITA no 7397/Mum/ 2016 & ITA no 5661/Mum/ 2017 - (see Para 16 at page nos 502.46 - 502.47 of Legal paper book no 1) ii. Tata Communications Ltd - ITA no - 7514/Mum/2011 (see Para 11 at internal page no 12 of the order copy submitted separately) iii. Vertiv Energy Pvt Ltd - ITA no 1975/Mum/ 2014 and 1771/Mum/ 2015 - (see Para b at internal pages 14 to 20 of the order copy submitted separately) 6. With reference to the application of the limitation in section 124(3) of the Act, reliance has been placed on judgment of the Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 to 61 and 83-84 of Legal paper book -1) iii. Tata Communication ltd - ITA no 3927/Mum/2017 - (see Para no 5 to 6. at page nos 197 to 227 of Legal paper book no -1) iv. Kishore Vithaldas - ITA no 7397/Mum/ 2016 & ITA no 5661/Mum/ 2017 - (see Para 12 and 13 at page nos 502.14 to 502.15 of Legal paper book no-1) v. VertivEngery Pvt Ltd - ITA 1975/Mum/2014 and 1771/Mum/2015 - (see para 3.2 -3.3. 3.5 (b & d) and 3.6 at Internal page nos 4 - 7, 11,22-23 of order copy submitted separately) vi. Sandoz Pvt Limited - ITA 3733/Mum/2013 & ITA no 3740/Mum/2013 (see para 17-18 at internal page nos 12 of the order copy submitted separately.) vii. Tata International Ltd. - ITA No.1605/Mum/2012 (see para 10 at internal page nos 24 of the order copy submitted separately.) 7. Relying on the judgment of the Delhi High Court in CIT v S.S. Ahuluwalia (2014) 47 taxman.com 169 it has been urged thatjurisdiction is an administrative matter and mistake, if any, in exercising such administrative powers is curable. It is also urged that such administrative matters cannot be taken up in appeal. The said case was also concerned with territorial jurisdiction under section 124 as the question wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority should qualify as an assessing officer. In the present case, the primary submission is that the Addl.CIT cannot be treated as the assessing officer in the absence of fulfillment of the jurisdictional pre-conditions as specified in section 120(4)(b) of the Act. Further, the fact that no prejudice has been caused to the assessee would not justify passing of an assessment order by an authority without jurisdiction. This would be contrary to the express provisions of the Act. The said judgments and the principles laid down therein have been considered by the following above referred Tribunal orders. i. Tata Sons Ltd -ITA no. 4497/Mum/2205(see para 3.22 -3.23 of page no 18 to 23 of Legal paper book no 1) ii. Tata Communications Ltd - ITA no 7071/Mum/ 2005(see Para 18 of page no 83 of Legal paper book no 1) iii. Tata Power Co Ltd -ITA no:3081/Mum/ 2009 & ITA no 3082/Mum/2009 - (see Para 7 at page no 237 of the Legal paper book-1) iv. Sabras Investment (Tata Chemicals Ltd) - ITA no 915 to 918/Mum/ 2012- (see Para 6-8 at page nos 311 to 312 of Legal paper book no-1) v. Tata Sons Ltd - ITA no 4893,2545, 4543 & 2487/Mum/2012(see Para 7-10 at page nos 434 to 437 of Legal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x evasion in which the assessee had engaged. Further, the entire line of documents including the tax evasion petition, the reasons recorded before reopening the assessment, the approvals granted by the specified authority had referred to the assessee as a LLP. In fact, the assessee therein also did not have any confusion in its mind with respect to the name. In a later judgment in PCIT v Maruti Suzuki India Ltd.416 ITR 613/265 taxman 515, the Hon`ble Apex Court has considered this judgment in the context of an assessment order being made on an amalgamating company after its amalgamation and found the facts in that case to be peculiar and hence, distinguishable (see paragraph 27 at pages 631 to 633 of the Report). The facts and issues arising in that case has no resemblance to the present case. Further, the complete lack of jurisdiction in the Addl.CIT in view of non compliance with the jurisdictional preconditions in section 120(4)(b) of the Act cannot be regarded as a mistake, defect or omission in the procedure where in substance and effect the action is in conformity with and according to the intent and purpose of the Act. In the following Tribunal decision, the revenue had r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten submissions dated 12.08.2022 filed by the Ld. DR reliance has been placed on the definition of Jt. Commissioner of Income tax to urge that the said authority would include an Addl. Commissioner, which amendment has brought in by Finance Act, 1999 w.e.f.01.10.1998 It is submitted that mere treating of an Addl. Commissioner of Income-tax to be a Jt. Commissioner of Income-tax would not qualify them to be an assessing officer, unless the pre-conditions in section 120(4)(b) of the Act are fulfilled. Further, the pre-conditions for a Jt. Commissioner of Income-tax to be regarded as an assessing officer is also similar to that of an Addl. Commissioner. This issue has also been considered by the following above referred Tribunal orders: i. Tata Sons Ltd - ITA no. 4497/Mum/2205-(see Para 3.24 to 3.26 at page nos 23-25 of Legal paper book no-1) ii. Tata Communications Ltd - ITA no. 7071/Mum/ 2005- (see Para 14 to 15 at page nos 56-63 of Legal paper book no-1) iii. Kishore Vithaldas - ITA no 5661/Mum/ 2017 & ITA no 8768/Mum 2010 (see Para 12 to 13 at page nos 502.14 to 502.16 of Legal paper book no-1) 14. In paragraph 11.10 reference has been made to judgment of the Hon`ble Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 120(4)(b) or 127 of the Act. 9. After filing of the additional ground, this Tribunal has called for the records from the department to verify, whether there was any such order under section 120(4)(b) or 127 of the Act passed by the concerned authority assigning the case to the Addl. Commissioner of Income Tax from DCIT. However, department could not produce the record on the ground that same is not traceable, because of lapse of time and after so many restructurings in the jurisdiction and field officers the concerned records are not available/traceable. 10. Before us, the Ld. Senior counsel had submitted that, if once the department could not be able to produce the records, then it is to be presumed there is no such order, because onus is upon the department to show that there is an order by the concerned authority authorizing the Addl. Commissioner of Income Tax for passing the order. 11. It was also pointed out that the originally the return of income was filed with Asst. CIT - 7(1), Mumbai, who was then jurisdictional Assessing Officer and thereafter Dy. CIT- 7(1), Mumbai had issued notices under section 143(2) of the Act and he also referred it to Transfer Pricing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.CIT, etc., and therefor assessment order should be declared invalid. 14. Now, whether the benefit can be given to the assessee because the department could not trace the records after a lapse of 16 years for the reason that due to restructuring and change in several jurisdictions the records are not traceable. If such a plea or legal issue would have been raised at a reasonable time, perhaps the records would have been verified by the First Appellate Authority itself and given some kind of finding, so as to decide the issue. 15. We are of the opinion that, such an inordinate delay and in absence of records being available, the "Principle of Estoppel of Latches" can be applied in such a situation, which lays down an equitable doctrine, where the court could deny the relief to claimant who has unreasonably delayed the claim or has been negligent in ascertaining the claim. Can the claim of claimant be condoned to raise the issue after lapse of 16 years. In our opinion it cannot be. 16. Further, doctrine of "Estoppel of Acquiescence" which is a estoppel for the party's failure to respond to claim within a reasonable time after receiving the notice of claim and thereby gave rise to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the original grounds raised by the assessee and they are adjudicated ground wise. 21. In Ground No.1, assessee has raised following grievance: - "GROUND NO. 1 (a) The CIT(A) erred in holding that the appellant would not be eligible for depreciation on assets that stood vested in Ciba Specialty Chemicals (India) Ltd., (CSCIL) pursuant to the scheme of demerger as the appellants had ceased to be the owner of the assets and had ceased to use the assets for the purpose of its business. The CIT(A) failed to appreciate that having regard to the amended scheme of depreciation, the appellant was entitled to the allowance as claimed. (b) The CIT(A) erred in holding that a consideration had flowed to the appellant for the transfer of the assets to CSCIL." 22. At the time of hearing, Ld.AR of the assessee brought to our notice the relevant facts relating to the issue arising in this ground of appeal are on allowability of depreciation under section 32 of the Income-tax Act, 1961 ('Act') on the assets relating to the specialty chemicals division after demerger of the said undertaking by the Appellant to Ciba Specialty Chemicals (India) Ltd. The Assessee was initially carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation claim for the first time in the previous year relevant to assessment year 1997-98, whereby he reduced the book written value of the demerged assets from the written down value of the block of assets. Upon further appeal, the Ld.CIT(A) has accepted the conclusion of the Assessing Officer however directed the reduction of the tax written down value of the block of assets as against book value. Thereafter, the same stand has been taken by the Assessing Officer / Ld.CIT(A) in all the later years including the year under consideration. 26. In this regard, it was submitted before us that disallowance of depreciation on assets transferred on account of demerger has been deleted by the Hon'ble Income-Tax Appellant Tribunal in the Assessee's own case for AY 1997-98 in ITA No 5283/Mum/2003 and ITA No 6224 and 6225/Mum/2004, Ld AR brought to our notice the relevant paras 8.2 and 8.3 of the Order. 27. Further, it was submitted that aforesaid order has been followed in the orders for AY 2000-01 (ITA 6226 & 5981/ MUM/2004) and AY 2001-02 (ITA 3379 & 3046/MUM/2009). The relevant Para no. 3.7 of AY 2001-02 was brought to our notice in which the coordinate benches have allowed the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the beginning of the year and it can be considered as discarded in the provisions with "NIL" value. This issue needs to end some point of time. In that case, the value of the assets has to be written off this year and to be claimed as loss in the statement of income (instead of depreciation). Therefore, we are inclined to direct the Assessing Officer to treat the opening balance of the assets to the extent of assets, which was already transferred to the demerged company as loss of assets or discarded. Accordingly, this ground of appeal filed by the assessee is partly allowed. 29. It was submitted before us that in order to effectively follow the above direction given in the order for the AY 2008-09, it was prayed that the claim of depreciation for the period 2002-03 be allowed by following the earlier order of Tribunal in AY 2000-01 and 2001-02, the Assessee must be granted depreciation on written down value of the demerged assets so that the opening written down value as on 1 April 2007 can be allowed as a loss for the AY 2008-09 in compliance of the Tribunal's order. Further it was also submitted that the Assessee has not accepted the ruling of Tribunal for AY 2008-09 in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to assets in question. It further submitted that reliance placed by the AO with regard to the treatment given by another assessee in its own case was irrelevant and also that the observation made by the AO that the assessee had fraudulently claimed excess depreciation was wholly unjustified, that it had fully disclosed the stand taken by it in the return filed. After considering the submissions of the assessee and the order of the AO, he held,that an assessee had to be the owner of a particular asset on which depreciation had been claimed, that the said assets had to be used for the purpose of its business, that the assessee was neither the owner of the assets transferred nor were same used for the business purposes during the year under consideration, that it had failed to satisfy the basic condition prescribed u/s.32 of the Act on the assets transferred to CSCIL, that the assessee was not justified in claiming that nothing should be reduced from its block of assets and that depreciation should be granted on the full block of assets as existing prior to the transfer of assets, that the reliance placed by the assessee on section 43(6)(c)(i)(B) of the Act was no help to it, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of section 41(2)of the Act as under: " 19. We are unable to accept the contention that the word `money' should be interpreted as `money's worth'. The reasons given by us earlier are sufficient and we need not add to them. The reason for introducing a fiction in S.41 (2) of the Act as explained in Bipinchandra Maganlal& Co. Ltd. (41 I.T.R. 290) quoted in Artex Manufacturing Co. (1997) 6 S.C.C. 437 that it is for the purpose of recoupment by the Revenue of the benefit allowed to the assessee in the previous years does not alter the situation. 20. In the result, we do not find any error in the view expressed by the High Court in the judgment under appeal.We are in agreement with the reasoning and conclusion of the High Court in this case." Respectfully, following the above, we reverse the order of the FAA. We find that what was transferred, in the transaction in question, was not money. In our opinion, facts of the above case are quite similar to the case under appeal. We have also taken note of fact that it is a case of demerger, not of sale or exchange. Last ground of appeal, raised by the assessee, is decided in its favour." 32. The above decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the assets to the extent of assets, which was already transferred to the demerged company as loss of assets or discarded. Accordingly, this ground of appeal filed by the assessee is partly allowed." 33. In the above decision, the coordinate bench has directed the Assessing Officer to allow the outstanding value of block of assets as on 1.4.2007 as loss in the AY 2008-09. In order to follow the above recent decision on this issue, the depreciation disallowed by the Assessing Officer has to be allowed in favour of the assessee relying on the earlier decision of the coordinate bench prior to AY 2001-02 and issue involved in this appeal is relating to AY 2002-03, therefore, we direct the Assessing Officer to allow the depreciation similar to the decision in the case of the assessee in the AY 2001-02. Accordingly, the ground raised by the assessee is allowed. 34. In Ground No.2, assessee has raised following grievance: - GROUND NO. 2 (a) The Commissioner of Income-tax (Appeals)-13 (hereinafter referred to as the CIT(A)] erred in upholding the action of the Deputy Commissioner of Income- tax, Circle 7(1), Mumbai (AO) in disallowing expenditure of Rs. 55,01,084/- in connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities. 40. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench in ITA.No. 5238/Mum/2003 dated 25.01.2017 held as under: - "12. Fourth ground of appeal is with regard to expenditure incurred on computer software of Rs. 25.54 lakhs. The AR and the DR agreed that similar issue was decided in favour of the assessee by the Tribunal while deciding the appeals for the AY.s.1991-92,1995-96 and 199697 and that the Department had not challenged the orders of the Tribunal before the Hon'ble High Court. The AR further referred to the cases of Raychem RPG Ltd.(346ITR148) and Asahi India Safety Glass Limited(245CTR529) 12.1 We find that while deciding the appeal for the AY.1996-97 the Tribunal has dealt the issue as under: "11. First ground of appeal is about expenditure incurred on computer software, amounting to Rs.19.45 lakhs. First ground of CO also deals with the identical issue. During the assessment proceedings, A.O held that the expenditure incurred by the assessee was of capital nature, whereas FAA was of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars and judgment of Raychem RPG Ltd.(supra) of the Jurisdictional High Court, we decide Ground No.4 against the AO." 41. Further, in assessee's own case for the A.Y. 2001-02 the Coordinate Bench of the Tribunal in ITA.No. 3379/Mum/2009 dated 30.04.2021, held as under: - "8.1 The assessee incurred an amount of Rs.27.31 Lacs towards purchase of various computer software packages as detailed in the assessment order. Majority of the expenses consisted of license fee or use of Microsoft packages (excel sheet, word document, power point presentation etc.) and Oracle software for developing accounting software at C & F locations. The assessee submitted that software expenses were for software packages which get frequently outdated and have to be replaced and therefore, the expenditure was revenue in nature. The assessee further stated that operating software is treated as capital expenditure whereas application software which gets outdated early, is revenue in nature. However, following the stand taken in AYs 1995-96 to 2000-01, the expenditure was said to be enduring in nature and thus capital expenditure. Accordingly, depreciation of 25% was allowed against the same. The action of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure with the allegation that the Assessee is unable to prove that the foreign travel is wholly and exclusively for its business. (Refer para no 8 page 13 of Assessment order) 45. Aggrieved, assessee preferred an appeal before Ld. CIT(A). After considering the submissions of the assessee Ld. CIT(A) upheld the order of the Assessing Officer. However, relying on the earlier years CIT(A)'s order, the Ld.CIT(A) restricted the disallowance to 20% instead of 25%. (Refer para no 6.1 - 6.6 page 32-33 of CIT(A)'s order). Aggrieved, Assessee has filed an appeal before us. 46. At the time of hearing, Ld.AR of the assessee submitted that the Hon'ble Tribunal in its own case for assessment years 1991-92 to 199900, also in AY 2000-01 on similar nature of expenditure held that the expenses are wholly in connection with Assessee's business and should be allowed as business expenses in respective AY 1991-92 to 1999-00, also in AY 2000-01. In view of the above, Ld. AR prayed to direct the Assessing Officer to allow entire expense as allowable business expense by deleting the ad-hoc disallowance of 20% of the foreign travel expenses. 47. On the other hand, Ld. DR relied on the order of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in this regard. We find the in the year 1991-92 Cross appeals were filed by the assessee and the AO against the partial allowance/ disallowance of foreign travel expenses. Deciding the appeal, Tribunal held as under: "The disallowance has been made on assumptions and presumptions. The very basis on which the disallowance has been made is found to be not correct. In fact in AY 74-75, 64-65 76-77 and 77-78 similar disallowance of expenses has been deleted by the Tribunal. Copies of the said orders are in the paper book. In view of the above, we direct that the disallowance sustained by the CIT(A) be deleted. Ground No.4(a) is allowed and therefore Ground No.4(b) and (c) do not require any adjudication. Ground No.2 of the Revenue is dismissed." Following the same, we decide the issue in favour of the assessee. As ground no.5(a) has been decided in favour of the assessee, ground no. 5(b) becomes infructuous." Respectfully following the above Tribunal order Ground No.2, raised by the assessee, is allowed." 49. Further, in assessee's own case for the A.Y. 2001-02 the Coordinate Bench of the Tribunal in ITA.No. 3379/Mum/2009 dated 30.04.2021, held as under: - "9.1 In AY 1993- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2). These personnel are either from group Companies or are third parties who regularly comes to India in order to conduct discussions on the company's business, finance, technical matters, etc. However, the Assessing Officer followed the practice of disallowance from earlier years has disallowed the expenses on the grounds that such visits are in connection to the business of the parent company and not the Assessee's business. (Refer para no 9 page 13-14 of Assessment order). 53. Aggrieved, assessee preferred an appeal before Ld. CIT(A). After considering the submissions of the assessee Ld. CIT(A) relying on earlier years appellate order, the CIT(A) has upheld the order of the Assessing Officer. (Refer para no 7.1 - 7.4 page 33-34 of CIT(A)'s order). Aggrieved, Assessee has filed an appeal before us. 54. At the time of hearing, Ld.AR of the assessee submitted that the Hon'ble Tribunal in its own case for various earlier AYs has decided that similar expenses are to be allowed as business expenses. In view of the above, Ld.AR of the assessee prayed to direct the Assessing Officer to allow the travel expenses of foreign visitors as same are incurred for purpose Assessee's busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 83,202/- made on account of entertainment expenses incurred on foreign national. In assessee's own case in the past i.e. Assessment Year 1981-82 and 1982-83, cited supra, this issue has been decided in favour of the assessee. Our attention was drawn on the order of I Bench Mumbai in assessee's own case for the Assessment Year 1982-83 bearing ITA No.2091 & 2077/B/94 order dated 17.12.02 wherein it was held as under: "3. The second ground is that the CIT(A) erred in deleting the addition of Rs. 51,375/- made on account of entertainment expenses incurred on foreign nationals. This issue is discussed in page 6, paras 9 & 10 of the assessment order. The brief facts in this connection are that the assessee incurred expenditure in respect of visitors to India, in connection with its business. Such expenditure amounted to Rs. 51,375/-. The assessee furnished the details of such expenditure. The Assessing Officer took the view that the expenditure represented hospitality extended to the visitors and therefore, disallowed the same as entertainment expenses. On appeal the CIT(A) noted that the foreign visitors had come to India for the purpose of attending Board meeting, general disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, we find that this ground is covered in assessee's favor in several earlier years also and the department has accepted the ruling of the Tribunal in those years and has not preferred further appeal, on this issue. This being the case, we direct Ld. AO to delete this addition. Ground No.3 stands allowed." 58. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in assessee's case for the preceding assessment years are respectfully followed, accordingly, ground raised No.4 raised by the assessee is allowed. 59. In Ground No.5, assessee has raised following grievance: - GROUND NO. 5 (a) The CIT(A) erred in holding that the provisions of Rule 8D were applicable to the assessment year in appeal. (b) Without prejudice to the above, the CIT(A) ought to have directed the AO not to disallow any expenditure with respect to investments made in the past years. (c) Without prejudice to above, the CIT(A) erred in not giving a finding on the ground of appeal filed by the appellants on the disallowance originally made by the AO 60. Brief facts relating to Disallowance under section 14A read with rule 8D of I.T. Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sheet for the year ended 31 March 2002 as under: Liabilities Amount in Rs'000 Assets Amount in Rs'000 Share capital & Reserves 20,86,199 Fixed Assets & Capital WIP 11,37,315 Loan funds 1,06,458 Investment 3,70,162 Def tax liability 75,130 Net Current Assets 7,60,310 Total 22,67,787 Total 22,67,787 63. It is submitted that as evident from the above summary, fixed assets and investment collectively is less than the share capital & reserves. The investments are made in past with own funds and no borrowed funds are used. Further there are no specific expenses or any interest expenses incurred for earning tax free income. 64. Therefore, the Assessee submits that there ought not to be any disallowance under section 14A of the Act and if at all any disallowance is required to be made, the Assessee relies, without prejudice, on the submission vide letter dated 30 November 2004 (supra). However, the Assessing Officer compared the exempt income claimed by the Assessee vis-a vis the quantum of the investment held by the Assessee and rejected the above alternate submission of disallowance of Rs..31,200 being 0.77 of cost of treasury function without recording dissatisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as precedent for subsequent years." 68. On the other hand, Ld. DR relied on the order of the lower authorities. 69. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1998-99. While deciding the issue, the Coordinate Bench in ITA.No. 6224/Mum/2004 dated 25.01.2017 held as under: - "24. Next independent ground (GOA-8) for the year under appeal is about deleting the disallowance on account of expenditure incurred in connection with earning of interest income exempt u/s.10(15) of the Act. During the assessment proceedings the AO found that the assessee had claimed an amount of Rs.2.70 crores relating to receipt of interest on tax free bonds as exempt, that it had also claimed exemption for Rs.45,448/- u/s.10(33), that the deductions under both the provisions were claimed on gross amount of interest /dividend. He held that only net income by way of interest/dividend and not the gross amount received by the assessee was eligible for deduction. He called for an explanation from the assessee in that regard. Finally, he made a disallowance of Rs.5.41 lakhs-calling it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s.80M. In the instant case, the disallowance has been made in respect of expenditure incurred on earning exempt income and such expenditure is expressly disallowable vide the provisions of Sec.14A of the I.T. Act which have been introduced by the Finance Act 2001 with retrospective effect from 1.4.1962." 40. After hearing both the sides and going through the facts, we find that the CIT(A) following the decision of Hon'ble Bombay High Court in the case of CIT v. General Insurance Corpn. of India (No.1) (2002) 254 ITR 203 (Bom), restricting the disallowance at 2% by observing in Para 10.4 as under: - "10.4 On a consideration of the matter I am inclined to agree with the appellant. As pointed out by the appellant a similar issue had arisen in the case of this appellant for AY 1995-96. There, CIT(A)XXIV on the facts of the instant case and relying upon the decision of the Bombay High Court in the case of General Insurance Corporation (supra) had deleted a similar disallowance of 2% made by the AO. Following the decision of CIT(A)-XXIV I had held likewise in AYs 1998-99 and 1999-00. Since the facts during the year under consideration are similar, following the view taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A). After considering the submissions of the assessee Ld. CIT(A) upheld the view of the Assessing Officer (Refer para 11 at Page no 38-42 of the CIT(A)'s order) observing stating as under: - "The addition on account of duty following the provisions of Section 145A is principally called for. No adjustment in the opening stock is possible as held in the case of Melmould corporation v/s CIT 202 ITR 789. Besides, tax provisions under section 145A came into effect from 1.4.98 AY 2003-04 cant be said to be transitional year. Hence, the judgement of Mahavir Aluminum Ltd 297 ITR 77 shall not apply and hence directed to verify the facts and make the addition as per aforesaid directions 75. Aggrieved, Assessee is in appeal before us. At the time of hearing, Ld.AR of the assessee brought to our notice the orders of the Tribunal in assessee's own case for AY 2000-01, AY 2001-02 and AY 2008-09. In view of the above, Ld.AR of the assessee prayed to direct the Assessing Officer that since an adjustment of un-availed MODVAT credit is made to the closing stock as on 31.03.2002, similar adjustment should be made to the opening stock as on 1.04.2001, as per the orders of the Tribunal in earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT Vs. Mahalakshmi Glass Works Private Limited (2009) 318 ITR 116 (BOM) wherein Hon'ble Bombay High Court in the case of Mahalakshmi Glass Works Private Limited (supra) held as under: - "1. The substantial question of law as raised in this appeal is as under: "Whether, on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in confirming the order of the Commissioner of Income-tax (Appeals) whereby he directed the Assessing Officer to make adjustment of unutilized Modvat credit to the opening stock and thus ignoring the ratio laid down in Melmould Corporation v. CIT [1993] 202 ITR 789 (Bom)wherein it was held that changing the value of opening stock will lead to chain reaction and hence the same should not be done ?" 2. This question has been dealt with and answered by the Delhi High Court in the case of CIT v. Mahavir Alluminium Ltd. [2008] 297 ITR77 (Delhi). This question concerns the method of valuation of inventory as contemplated by section 145A of the Income-tax Act. In the case before the Delhi High Court, the Assessing Officer contended that section 145A did not permit the assessee to make a change in the valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded in the order." 21. Respectfully, following the Hon'ble Bombay High Court Decision in the case of Mahalakshmi Glass Works Private Limited (supra) and also upon the decision of co-ordinate Bench of the tribunal in the case of Sunshield Chemicals Private Limited v. ITO (2015) 64 Taxmann.com 161(Mum-trib.), we hold that unutilized MODVAT credit shall be added to the closing stock of the assessee as at year end which will also necessitate similar adjustments to opening stock in light of the aforesaid decisions cited by us. This issue of assessee's appeal is disposed off as indicated above" 78. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in assessee's case for the preceding assessment years are respectfully followed, we direct the AO to make the similar adjustment to opening stock as made to the closing stock towards the unutilized MODVAT credit, accordingly, ground raised No.6 raised by the assessee is allowed 79. In Ground No.7, assessee has raised following grievance: - GROUND NO. 7 (a) The CIT(A) erred in upholding the action of the ACIT in disallowing advances amounting to Rs. 26,01,978/- writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, for the AY 2002-03, the amount claimed as written off are old trade advances which are in relation to the business and the facts of balance written off are similar to earlier AYs. Hence, Ld.AR of the assessee prayed to direct the Assessing Officer to allow the claim of advances written off as the facts are similar to AY 2001-02. 85. On the other hand, Ld. DR relied on the order of the lower authorities. 86. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue, the Coordinate Bench in ITA.No. 3379/Mum/2009 dated 30.04.2021held as under: - 14.4 From factual matrix, it is quite discernible that the assessee made a claim of irrecoverable advances u/s 37(1) of the Act since the loss suffered by the assessee was in the course of carrying out its business. However, both the lower authorities adjudged the assessee's claim merely in terms of Sec. 36(1)(vii) r.w.s. 36(2) which was not the case. The perusal of the details filed before us would show that the amounts written-off by the assessee was mostly in the nature of advance payments for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts relating to the ground are, while filing return of income, the Assessee has claimed deduction under section 80HHC of the Act of Rs..72,54,000. During the course of assessment proceedings, at paragraph 17.2 to 17.16 at pages 22 to 77 of the assessment order, the Assessing Officer relying on clause (baa) of the Explanation below section 80HHC(4C) of the Income-tax Act (the Act), excluded certain items of income detailed hereafter from the profits of the business on which deduction was to be allowed under the said section. Particulars (Rs.) 1. Interest on Employee Loans 10,34,000 2. Interest on overdue debtors 19,39,000 3. Sales Tax Set-off 3,38,46,000 4. Insurance Claims realized 38,94,000 5. Scrap Sales Income 13,53,000 6. Excise duty Refund 12,62,000 7 Other Miscellaneous - write back of liabilities, recovery of expenses, discounts, etc 1,50,71,000 8. Profit u/s 41(3) on Sale of R & D Assets 52,98,588 Cost of Services recovered 1,02,32,000 90. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) and filed its submissions. After considering the submissions of the assessee, Ld. CIT(A) in his appellate order (being paragraph 13 at pages 44 to 51) up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September 2004 in Fno. 153/93 2004 - TPI (Refer Page 28 of the Assessment order), the sale of DEPB, DFRC and other license amounting to Rs 89,93,000 is not considered eligible for deduction under section 80 HHC of the Act. The Ld.CIT(A) upheld order of the Assessing Officer stating as under: (refer para 13.5 page no 51 of the CIT(A) order) "The entire sale consideration of DEPB would fall within the purview of Section 28(iii)(d) and not the excess of sale proceed over the face value. Accordingly face value of DEPB is not entitled to deduction under section 80HHC" 94. With regard to the various items spelt out in paras above, the Ld.AR of the assessee prays that the earlier order of the Tribunal for the AY 2001-02 be followed. Further, as regards issue of disallowance of reduction of 90% of DEPB receipts, attention was invited to Provisos 3 & 4 of section 80HHC(3) wherein by way of a retrospective amendment w.e.f 01.04.1998, position on DEPB receipts for purpose of sec. 80HHC has undergone change, therefore, Ld.AR of the assessee prays that as the Return of income and/or assessment was completed before such retrospective amendment, he submitted that this issue may be remanded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeds received in India by the assessee in foreign exchange. Under the said definition, export turnover is defined to mean the sale proceeds of any goods which are exported out of India but which will not include freight or insurance. Clause (ba) defines total turnover to exclude freight or insurance. This clause (ba) explains the turnover in a negative manner so as to exclude freight or insurance. Therefore, a combined reading of the above two clauses show that they include anything which has nexus with the sale proceeds. Correspondingly, they show that they exclude everything which has no nexus with the sale proceeds. Further, the meaning of export turnover in clause (b) of the Explanation to section 80HHC, therefore, clearly show that export turnover did not include excise duty and sales tax. Export turnover is the numerator in the above formula whereas total turnover is the denominator. The above formula has been prescribed to arrive at profits from exports. In the circumstances, the above two items, namely, sales tax and excise duty cannot form part of total turnover. In fact, if the denominator was to include the above two items and if the numeration excluded the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit and loss account. In fact, they are shown as liability in the balance sheet. In the circumstances, the above two items cannot be included in the total turnover. We prefer this interpretation as it advances the object sought to be achieved by the Legislature. Lastly, we are of the view that sales tax and excise duties are levied under separate enactments which have different objects. We are concerned with section 80HHC which is a separate code by itself. Hence, the general definition of the word 'turnover' or the case law dealing with the said definition under Sales Tax Act which is a State levy, cannot be imported into section 80HHC of the Act. Hence, we do not find any merit in these appeals." 37. The learned Counsel for the assessee similarly in respect to scrap sale argued that the issue is covered by Hon'ble Supreme Court decision in the case of CIT vs Punjab Stainless Steel Industries (2014) 364 ITR 144 (SC), wherein it is held as under: "22. So far as the scrap is concerned, the sale proceeds from the scrap may either be shown separately in the Profit and Loss Account or may be deducted from the amount spent by the manufacturing unit on the raw material, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld.AO opined that these components would be includible as per the decision of Mumbai Tribunal in Ponds India Ltd. V.s DCIT (164 ITD 33). The department was in further appeal against the favorable decision of Hon'ble Bombay High Court in Sudarshan Chemical Industries Ltd. (245 ITR 769). Therefore, these items were to be included in computing the figure of total turnover in denominator. 17.2 It was further seen that while working out profits of the business, the assessee failed to exclude 90% of the following items on the ground that the same were not in the nature of receipts mentioned in explanation (baa) of Sec.80HHC: - No. Item Amount (Rs.) 1. Interest on Employee Loans 14.09 Lacs 2. Interest on overdue debtors 19.91 Lacs 3. Interest on MSEB deposits 2.03 Lacs 4. Interest on MIDC deposits 0.18 Lacs 5. Interest on Sales Tax Refund 2.69 Lacs 6. Interest on Income Tax Refund (gross) 158.18 Lacs 7. Sales Tax Set-off 553.86 Lacs 8. Insurance Claims realized 20.61 Lacs 9. Cash Discount 2.36 Lacs 10. Scrap Sales Income 13.58 Lacs 11. Misc. Claims 0.26 Lacs 12. Excise duty Refund 54.95 Lacs 13. PDC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting deduction u/s 80HHC. Regarding scrap sales, if the proceeds were out of scrap sales of raw material then they were to be excluded from total turnover. However, scrap sale of packing material was to be included as per the decision of Hon'ble Bombay High Court in Sudarshan Chemical Industries Ltd. (245 ITR 769). 17.4 Proceeding further, Ld. CIT(A), relying upon the decision of Hon'ble Apex Court in Pandian Chemicals Ltd. V/s CIT (262 ITR 278) which held that the term "derived from" must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking, held that the tabulated receipts were not directly derived from export activities and therefore, the same should not form part of the eligible profits. Another plea that only net receipts should be reduced was also dismissed. Aggrieved, the assessee is in further appeal before us. Our findings & adjudication 18.1 Upon perusal of statutory provisions, we find that sub-section (1) of Sec. 80HHC provides for certain deduction to a person who is engaged in the business of exports. Such deduction is of profits derived by the assessee from the export of goods or merchandise. Sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock-in-trade of the assessee. The CIT(A) confirmed the order of the AO. The Tribunal noted that for assessment year 1998-99 it had come to the conclusion that there was no justification to exclude 90 per cent of the insurance claim. Besides this, the Tribunal held that the insurance claim formed part of the income of the business of the assessee and was liable to be considered as part of the profits of the business in view of Expln. (baa) to section 80HHC. The Tribunal was of the view that the insurance claim was not in the nature of brokerage, commission, interest, rent or charges, and therefore, was not any other receipt of a similar nature within the meaning of Expln. (baa). The Tribunal, therefore, held that 90 per cent of the insurance claim could not be excluded. 4. Counsel appearing on behalf of the Revenue submits that an insurance claim constitutes an independent income which is not relatable to the export turnover. Hence, it has been urged that 90 per cent of the insurance claim is liable to be excluded from the profits of the business under Expln. (baa) to section 80 HHC. Reliance was sought to be placed in this regard on the judgment of the Supreme Court in CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd service income. The question of law was therefore answered in favour of the Revenue and against the assessee. From this it is apparent that insofar as the insurance claim was concerned, Dresser Rand (supra) proceeded on a concession by counsel appearing on behalf of the assessee. That apart the facts do not contain an elaboration of the nature of the insurance claim in that case. The judgment of the Division Bench in Dresser Rand (supra) would therefore not conclude the issue which has fallen for determination in this appeal. 7. Sub-section (1) of section 80HHC contemplates a deduction to an assessee, being an Indian company or a person resident in India and engaged in the business of export out of India of any goods or merchandise to which the section applies. The deduction is to be allowed in computing the total income of the assessee to the extent of the profits derived by the assessee from the export of such goods or merchandise. Clause (a) of sub-section (3) of section 80HHC provides the formula for determining the profits derived from the export of goods or merchandise to which the section applies. Where the export out of India is of goods or merchandise manufactured or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its." Again, in para 21 the Supreme Court observed as follows : "The said clause stated that 90 per cent of incentive profits or receipts by way of brokerage, commission, interest, rent, charges or any other receipt of like nature included in business profits, had to be deducted from business profits computed in terms of sections 28 to 44D of the IT Act. In other words, receipts constituting independent income having no nexus with exports were required to be reduced from business, profits under clause (baa). A bare reading of clause (baa)(1) indicates that receipts by way of brokerage, commission, interest, rent, charges, etc. formed part of gross total income being business profits. But for the purposes of working out the formula and in order to avoid distortion of arriving export profits clause (baa) stood inserted to say that although incentive profits and "independent incomes" constituted part of gross total income, they had to be excluded from gross total income because such receipts had no nexus with the export turnover." 10. In determining in each case as to whether a receipt which forms part of the profits of business is liable to undergo a reduction of ninety per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover. Sub-section (1) of section 80HHC contemplates a deduction to the extent of profits derived by the assessee from the export of goods or merchandise to which the section applies. The basic issue therefore is to determine the extent of profits derived by the assessee from the export of such goods or merchandise. The formula in sub-section (3) of section 80HHC has been provided by the Parliament, for the purposes of subsection (1) to compute the profits derived from the export of goods. Clause (a) of sub-section (3) specifies that where the export is of goods or merchandise manufactured or processed by the assessee the profits derived from the export shall be the amount which bears to the profits of business, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee. In other words, in determining the profits derived from the export of goods or merchandise the proportion of the export turnover to the total turnover of the business is applied to the profits of the business. The profits of the business in turn are defined in Expln. (baa) to section 80HHC. Hence, the element of export turnover is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n placed for obtaining land on which manufacturing facility would be set up. Unless the deposits are placed the assessee would not be able to manufacture the goods. Thus, the deposits have been placed only out of business compulsion. Insurance Claims- These represents claims allowed by insurance company in respect of loss of trading goods. A contract of insurance is in the nature of indemnity and indemnifies the assessee for loss of stock-intrade. Had the goods not been destroyed, the same would have been sold at profits and therefore, the insurance claims are compensatory in nature. The claims could not be said to be an independent source of income for the assessee and could not be equated with "receipts of similar nature" as mentioned in explanation (baa). Scrap Sales Income- This income arises from the sale of packing material and other material realized during manufacturing process and directly related with manufacturing activities of the assessee. Cash Discount- This represent discount received by the assessee on early payment to suppliers in respect of purchase of goods. These are directly related to normal trading operations and could not be said to be an independen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to re-work the same. Sales Tax Set-off & Excise Duty refund- These two items would stand excluded in view of the fact that as per the impugned order, sales tax as well as excise duty would not form part of total turnover in the denominator. When denominator has been reduced by these two components, similar connected items would stand excluded from the numerator also. 18.5 The Ld. AO is directed to re-compute the deduction available to the assessee u/s 80HHC in the light of our adjudication on various issues effecting computations u/s 80HHC. Ground No.9 of assessee's appeal stand partly allowed." 98. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in assessee's own case for the preceding assessment years are respectfully followed, accordingly, ground raised No.8 raised by the assessee is partly allowed as indicated above. 99. In Ground No.9, assessee has raised following grievance: - GROUND NO. 9 (a) The CIT(A) erred in confirming the action of the AO in computing the income from house property at a notional value. (b) The CIT(A) ought to have held that as the properties were not let, the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to ensure smooth running of existing business, an arrangement was made between the assessee and its demerged entity so that the business premises would be shared with an understanding that the proportionate cost would be recovered from the demerged entity till the time an alternative facility was arranged by the demerged entity. This being the case, the ITAT held that it could very well be said that the premises was being used by the assessee only in furtherance of its business interest, the objective of which was to facilitate demerger. Therefore, the ITAT concluded that on the peculiar facts and circumstances, the action of Assessing Officer in bringing to tax notional rental value of the common premises was not justified and hence, the addition ought to be deleted. 104. In view of the above submissions, Ld.AR of the assessee prayed for deletion of the notional house property income levied by the Assessing Officer as the facts remain the same as in AY 2001-02. 105. On the other hand, Ld. DR relied on the order of the lower authorities. 106. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not charge the rent then in terms of decision of Hon"ble Bombay High Court in M.V. Sonavala Vs. CIT (177 ITR 246) Bom.), it was possible for AO to take into consideration the amount for which the property might be let from year to year or AO could also consider the annual ratable value. Considering the market rate for commercial premises at Goregaon, the rates would be in the region of Rs.30/- per square feet per month and that of residential premises being Rs.15/- per square feet. Applying these rates to commercial area of 34,570 square feet and residential area of 15,278 square feet, Ld. AO arrived at ALV of Rs.124.45 Lacs for commercial space and Rs.27.50 Lacs for residential space. The total ALV was thus determined at Rs.151.95 Lacs. The statutory deduction u/s 24 would not be allowed separately since the assessee did not indicate depreciation claimed in respect of let out property and also did not indicate quantum of repairs & maintenance claimed for this property. Further, both these expenditure were already claimed in the computation of income. 16.3 The Ld. CIT(A), while confirming the stand of Ld. AO, directed him to grant statutory deduction u/s 24(a). Aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the annual value could not exceed municipal retable value in terms of various judicial decisions and not in the manner as estimated by Ld. AO. Another alternative argument was that the amount of Rs.92.24 Lacs recovered by the assessee from CSCIL ought to have been reduced from notional rental value as computed by the Ld. AO. 16.5 We have carefully considered the peculiar facts of the case. It is noted that prior to its demerger, the assessee was carrying on various businesses from various premises including premises at Goregaon (Mumbai). In 1997, the chemical business got demerged from the assessee and new entity i.e. CSCIL came to existence to carry out the chemical business. Since the business was continuing, as a part of demerger arrangement, CSCIL was allowed to use the said premises on the basis that costs would be shared. M/s CSCIL has paid proportionate cost of Rs.92.24 Lacs to the assessee during the year which has actually gone to reduce the assessee's expenditure under the head municipal taxes, water charges and security charges. Therefore, it was not a case where the property was actually let out by the assessee to a third-party but was a case wherein to facilita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) The CIT(A) ought to have directed the AO to compute capital loss as a result of the transfer/sale of development right certificate in respect of certain portion of land on the basis of a 01.04.1981 value of Rs.87 per sq.ft, or such lesser figure as may be finally upheld. 109. Brief facts relating to determination of fair market value of plot no 1 (ground 10) & development rights of vacant land (non-slum) for computing cost (ground 11) as on 1.4.1981, Assessee owned gross land area of 2,96,713.20 sqmtr at Village - Dindoshi & Pahadi, Western express Highway, Goregaon (East), Mumbai, hereinafter referred to as the big land parcel. Over the course of 3-4 years, Assessee has sold the said land/ development rights therein in piecemeal. During the year under consideration, the Assessee had sold part of the big land parcel, viz.: a) Land plot no: 1 (Ground no 10); and b) Development rights in respect of another vacant land (nonslum) (Ground no 11) c) Development rights in respect of slum land (Ground -12) - dealt separately in subsequent paragraphs 110. As a result of sale of land / development rights, the Assessee computed the capital gain/ loss as per provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the valuer (Knight Frank) issued a Letter dated 28.02.2005 - acknowledging the error in the Valuation report dt 8th March 2002 and thereafter issued a Revised Valuation Report stating the rate as on 1.04.1981 ought to have been Rs 80-90 per sqft computed based on values reported for residential and commercial property in " Directory and Reference Book on Market value of Property in Mumbai as on 01.04.1981" and further, applied backward calculation to exclude construction cost (Page no 148 - 149 of Factual paper book no 3) 115. Upon receipt of the above letter, the Assessing Officer issued a show cause notice to the valuer M/s Knight Frank dated 9 March 2005 seeking justification why the value determined should not be rejected (Page no 162 - 163 of Factual paper book no 3). In response, M/s Knight Frank vide letter dated 11 March 2005 provided justification for the valuation at Rs 87 per sqft based on the "Directory and Reference Book on Market value of Property in Mumbai as on 01.04.1981" and 5 fresh sale instances recorded with Sub registrar. (Page no 164 - 165 of Factual paper book no 3) 116. To supplement valuation report from Knight Frank, the Assessee, during the pendency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m AY 2003-04 to AY 2006-07, the Assessing Officer rejected both valuations furnished by the assessee. However, to bring finality to the issue, in AY 2004-05, the Assessing Officer made a reference to the District Valuation officer ('DVO') for obtaining the fair market value of the plot as on 1.04.1981. 122. Basis the valuation undertaken by the DVO vide report dated 13 July 2007 (copy of the same is placed on record), the fair market value of open area land is determined at INR 765.21 Sq meter i.e. INR 71.12 sq feet (765.21/10.76 conversion factor). 123. Ld AR submitted that to put an end to prolonged litigation and considering the DVO valuation report determining the rate at Rs..71.12 per sq feet (765.21/10.76 conversion factor) for same big land parcel, it was prayed to direct the Assessing Officer without prejudice to the various reports of Knight Frank (dated 8 March 2002, 28 February 2005 and letter filed thereto dated 11 March 2005) and Poonager Bilimoria & Co dated 17 March 2005, as sale is arising out of the same land parcel which is valued by DVO, direct the Assessing Officer to accept the valuation at INR 71.12 per sq feet as determined by the DVO in his report dated 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 127. Brief facts relating to determination of fair market value of development rights of slum plot for computing cost as on 1.4.1981, in addition to the sale of Plot no 1 and development rights of vacant land, during the year under consideration, the assessee also sold development rights in land occupied by a slum arising out of the same big land parcel. In order to compute the capital gain on the under section 48 of the Act on aforesaid transaction and for the purpose of section 55(2)(b)(i), the assessee relied on the same fair market valuation ('FMV')as on 1.4.1981 as obtained from M/s Knight Frank (Ind) Pvt Ltd dt 8th March 2002 (Enclosed at Page no 140 - 147 of Factual paper book no 3). 128. As per the said valuation report, the valuer determined the rate of Rs..63 per sqft basis certain actual sale transaction listed therein. On this basis, Assessee computed a capital gain/ loss of Rs..13,17,49,949 (further expenses on transfer of Rs..31,44,090 to be reduced). To substantiate the cost as on 01.04.2001, Assessee relied on the same two independent valuations (Knight Frank and Poonager Bilimoria & Co) as mentioned in ground 10 and 11 above. 129. However, as the plot was occupi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81. 133. Aggrieved with the above order, assessee preferred an appeal before the Ld. CIT(A). After considering the submissions of the assessee Ld. CIT(A) upheld the stand of the Assessing Officer and agreed with the valuation of Rs..5.25 per sqmtr. 134. Aggrieved, assessee is in appeal before us. At the time of hearing, Ld.AR of the assessee submitted that the methodology adopted by the Assessing Officer is arbitrary and not justified as the reduction to the cost made by the Assessing Officer is 92% visa vis 10 to 20% as mentioned by the assessee in its submission. 135. Further it is submitted that, while considering the value of slum land as on 01.04.81, the Assessing Officer failed to consider that majority of land was free land and not encroached by slum at the relevant point of time in 1981. In fact only a small portion of the land actually had slum dwellings (ie 5367.9 sqmtr) as on AY 2002-03. However, the Assessing Officer failed to appreciate that for the purpose of FMV as on 1.04.1981 there is no evidence of existence of any slum. Therefore, it is not correct to de-value the land by 92% as against 10% to 20% mentioned by Assessee during assessment proceedings. 136. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assets as deductible u/s 35 as revenue expenditure. Therefore, there is no asset in the books of assessee and hence no capital loss can be claimed. Further, the Assessing Officer taxed the balance consideration ie Rs..4,34,378 (ie Rs..11,50,000 less Rs..7,15,622) as income under section 41(3) of the Act. (Page 41 -42 of the Assessment order) 142. Aggrieved, assessee preferred an appeal before the Ld. CIT(A). After considering the submissions of the assessee, the Ld.CIT(A) upheld the AO's order without assigning any reasons. 143. Aggrieved, Assessee has filed an appeal before us. At the time of hearing, Ld.AR of the assessee brought to our notice the provision of section 41(3) which is reproduced below: - "The provision of section 41(3) is reproduced as under: Where an asset representing expenditure of a capital nature on scientific research within the meaning of clause (iv) of sub-section (1), or clause (c) of sub-section (2B), of section 35, read with clause (4) of section 43, is sold, without having been used for other purposes, and the proceeds of the sale together with the total amount of the deductions made under clause (i) or, as the case may be, the amount of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 48. 146. In view of the above submissions, Ld.AR of the assessee prayed as under: - a) "The excess amount of Rs 4,34,378 (ie Rs 11,50,000 less Rs 7,15,622) taxed by the AO under section 41(3) as business income may be deleted; and b) Rs 4,34,378 may be considered for computation of capital gain under section 45 of the Act and cost of acquisition of Rs 7,15,622 be allowed to be indexed in order to determine the capital loss on the transaction." 147. On the other hand, Ld. DR relied on the order of the lower authorities. 148. Considered the submissions and material placed on record, we observe that the assessee has acquired the building which is depreciable asset for the purpose of scientific research and the same was allowed to claim as an expenditure u/s 35 of the Act. Even though the above building was allowed 100% deduction but it continued to be used by the assessee in its business. It is to be noted that it is part of block of assets with the value of 'nil' and continued to be used in the business. During this year the assessee has sold the same and recovered the value more than the cost of the acquisition. Hence the provisions of section 41(3) is attracted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (14) of the Act. It is true that the deduction of the entire cost thereof has been allowed under s. 35(1)(iv) r/w s. 35(2), it being expenditure of capital nature on scientific research related to the business carried on by the assessee, but the mere fact that it has been allowed as a deduction under s. 35 does not mean that the asset used for scientific research ceases to be an asset or a capital asset within the meaning of s. 2(14) of the Act. We may usefully refer to the decision of the Andhra Pradesh High Court in the case of Warner Hindustan Ltd. (supra) wherein the Court observed at p. 227 of the report as under : "The fact that deduction is given for the purpose of computing taxable income under s. 35 for expenditure on scientific research does not mean that it ceases to be capital employed or an asset." These observations were approved by Their Lordships of Gujarat High Court in the case of Sarabhai Sons (P) Ltd. (supra) by stating "hence the fact that deduction is given for the purpose of computing taxable income under s. 35 or the expenditure on scientific research does not mean that it ceases to be capital employed or an asset and, therefore, in computing the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is intended, it will be clearly expressed. In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under s. 10(2)(vi) and s. 10(2)(xiv) of the 1922 Act or both under s. 32(1)(ii) and s. 35(1)(iv) of the 1961 Act." It is also held that "The deduction of the allowance on scientific research asset and the depreciation are basically of the same nature intended to enable the assessee to write off certain items of capital expenditure against his business profit". 11. On a careful reading of the decision of supreme Court, it would be noticed that the Court itself made an exception by stating that "if in absence of clear statutory indication to the contrary". In other words, the legislature may provide for allowance of the same amount of expenditure for various purposes. We may mention a few cases which come under s. 80J and the inclusion of scientific research assets allowed fully under s. 35, were again held includible in computing capital employed. The cost of acquisition is includible in computing capital employed. The cost of acquisition is included in value of assets while com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of India & Ors. (1992) 108 CTR (SC) 275 : (1993) 199 ITR 43 (SC). In fact, the Supreme Court has made this clear (p. 874 of (1922) 2 Scale) when it says that the two deductions, i.e., deductions under ss. 32 and 35 are (at p. 59 of 199 ITR) : "basically of the same nature intended to enable the assessee to write off certain items of capital expenditure against his business profits". A deduction under s. 80J is not of the same nature as a deduction under s. 35. Therefore, in our view, the ratio of the Supreme Court judgment in Escorts Ltd.'s case (supra) will not apply to the computation of capital under s. 80J for the purpose of determining the quantum of deduction under s. 80J." 13. The observations of Gujarat High Court in the case of Sarabhai Sons (P) Ltd. (supra) in this connection are at p. 733 of the report as under : "Sec. 80J falls in Chapter VI-A of the Act. Sec. 80A, as it then stood, provided that, in computing the total income of the assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the Chapter, the deductions specified in ss. 80C to 80U. Clause (5) of s. 80B defined "gross total income" as the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of that Chapter, the income as computed in terms of s. 28 to 43A was to be regarded as the gross total income. Having provided like this, the legislature then provided for a deduction under s. 80J. This is a clear indication in the Act itself to show that the deduction contemplated by s. 80J was to be granted in addition to other deductions that were available under other provisions of the Act." 14. The deduction claimed by the assessee is of the indexed cost which is the amount of the actual cost which is allowed under s. 35 and the amount of increase on account of inflation index. The cost of acquisition for the purposes of s. 48 as is generally understood in the common parlance is the price paid for the acquisition of an asset. Sec. 55(2) provides for some different amount to be the cost of acquisition in certain eventualities with which we are not concerned in this case. If the cost of acquisition of an asset is the price paid by the assessee that amount has to be allowed as a deduction under the main provisions of s. 48 of the Act. It has to be allowed at a higher amount as an indexed cost of acquisition by virtue of the second proviso to s. 48. Second proviso of s. 48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction of the entire cot of acquisition has been allowed to an assessee under s. 35 while computing the business income of the assessee may be a relevant consideration for not allowing the cost of acquisition while computing the capital gain arising on transfer of the capital asset, on the principle of prohibition for double deduction of the same amount of capital expenditure or the cost of acquisition. As both the sections deal with computing the income of the assessee under the same Chapter IV of the Act, it would be a case of allowing double deduction to the assessee of the same amount once while computing income under s. 28 and again under s. 45 of the Act and which may be held to be not contemplated by the legislature as envisaged by the Supreme Court in the case of Escorts Ltd. (supra). We, therefore, hold that the assessee is not entitled to deduction of cost of acquisition of the scientific research assets as the same has been allowed already as a deduction under s. 35. 16. The further claim of the assessee that the said loss is to be allowed as a business loss, in our opinion, has no force. The loss is arising firstly because of the enhanced cost of acquisition by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 80HHC of the Act is negative and, therefore, the assessee is not entitled to deduction thereunder. The assessee worked out the deduction under s. 80HHC at Rs. 20,523. The AO, however, observed that as per the provisions of s. 80HHC applicable from asst. yr. 1993-94 the adjusted profit, i.e., assessed profit minus 90 per cent of capital incentive of Rs. 79,400, interest received Rs. 29,27,678 and Rs. 76,00,986, rent and taxes amounting to Rs. 4,36,740 and financial charges of Rs. 12,15,450 worked out in a negative figure and, therefore, denied the claim of the assessee. The CIT(A) upheld the order of the AO as the assessee has not been able to explain as to how the action of the AO in this regard could be faulted. 19. Before us also, no material has been placed on record which would justify a contrary view. In these circumstances, we have no option but to uphold the orders of the authorities below. This ground of the assessee is rejected. 20. In the result, the appeal is partly allowed." 150. Respectfully following the above decision, we are inclined to allow the ground raised by the assessee. Accordingly, Ground No. 14 raised by the assessee is allowed. 151. In Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 159. Further, in the cross objection filed by the assessee, assessee has raised following ground: - "1. The respondent submits that the AO be directed to increase the value of the opening stock of the subsequent year ie, assessment year 200304 by a similar amount in case the AO's action of enhancing the value of closing stock on account of estimated pro- rate freight on stocks lying at depots is upheld." 160. At the time of hearing, Ld. DR brought to our notice the relevant facts of the issues raised by the revenue and submitted that the issue brought on record by the lower authorities are proper and he justified the additions, at the same time, he has fairly agreed that the issue under consideration is similar to the issues raised in the earlier assessment years. 161. On the other hand, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. Copies of the orders are placed on record. 162. Considered the submissions and material placed on record, we observe from the record that identical issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the departmental authorities as well as the ld.DR before us, the factory costs, which are undisputedly to be considered as part of the cost of the product, were not included in the closing stock valuation. It is for this reason that the Supreme Court held that the method adopted by the assessee in that case was not an acceptable or sound method from which the true profits could be deducted. It is in this context, that they held that a method of valuation of closing stock has been adopted by, it is erroneous or unsound or unacceptable or is against accounting or commercial practice, the same can be discarded. In case, this principle is not attracted because the incurring expenses on freight or cartage outward or packing expenses purposes of transporting the goods have not added any stock. They are post manufacturing expenses are to be as selling expenses. Normally, the manufacturing are debited to the manufacturing account whereas the expenses are debited to the profit & loss account. According to the Advanced Accounts by R.N.Carter (1939 Rev.Edn.,Page-32),carriage inwards increases the cost of the goods purchased and is hence debited to trading account whereas carriage outwards i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of an assessment cannot be lightly tinkered with as held by the Supreme Court in the case of Radhasaomi Satsang Sabha (1993 ITR 321)." The same, was followed in ITA.No.7458/Mum/1997. The learned Departmental Representative did not dispute the same. In view of discussion, we are not inclined to interfere with the finding of The same is upheld." In the year 1994-95 and 1995-96 identical issue was decided against the AO. Respectfully following the order of the Tribunal for earlier years, ground no.4, filed by the AO stands dismissed. Ground no.3 of CO is treated as infructuous." Respectfully following the above Ground No.5 is dismissed" 163. Further, in assessee's own case for the A.Y. 2001-02 the Coordinate Bench of the Tribunal in ITA.No. 3379/Mum/2009 dated 30.04.2021, held as under: - "5.1 The assessee did not include proportionate amount of freight component while valuing closing stock of finished goods. As against this, the assessee claimed full expenditure of freight as deduction. The AO opined that as per the decision of Hon'ble Apex Court in CIT Vs. British Paints (1991; 188 ITR 44), it is the real cost of stock which was to be taken into account to deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under the Voluntary Retirement Scheme to the erstwhile workers of the respondents Bhandup unit is upheld." 167. At the time of hearing, Ld. DR brought to our notice the relevant facts of the issues raised by the revenue and submitted that the issue brought on record by the lower authorities are proper and he justified the additions, at the same time, he has fairly agreed that the issue under consideration is similar to the issues raised in the earlier assessment years. 168. On the other hand, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. Copies of the orders are placed on record. 169. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench in ITA.No. 5238/Mum/2003 dated 25.01.2017 held as under: - "First ground of appeal, raised by the assessee, deals with upholding the disallowance on account of incremental liability (Rs.3,21,03,537/-)f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's own case for the A.Y. 2001-02 the Coordinate Bench of the Tribunal in ITA.No. 3379/Mum/2009 dated 30.04.2021, held as under: - "6.1 The assessee claimed an amount of Rs.253.73 Lacs towards incremental VRS (Voluntary Retirement Scheme) for Bhandup unit which was on the basis of actuarial valuation. As held in earlier years, the liability was a contingent liability. Similar disallowance made in AY 199394 was confirmed by Ld. CIT(A). Similar disallowance was in assessment order for AYs 1994-95 to 2000-01. However, actual payment of VRS payment made during relevant year was to be allowed. In this year, assessee made payment of Rs.417.76 Lacs which was to be allowed whereas the claim of Rs.253.72 Lacs as per actuarial valuation was to be disallowed. The said adjustment resulted into net relief of Rs.164.04 Lacs to the assessee. 6.2 The Ld. CIT(A) noted that in appellate order for AYs 1998-99 to 2000-01, Ld.AO was directed to allow the deduction of incremental liability of VRS and also allow that part of actual payment made during the year relating to the provision created during financial year 199293 but disallowed in AY 1993-94. Similar directions were given by Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis which makes expenditure, capital in nature." 173. At the time of hearing, Ld. DR brought to our notice the relevant facts of the issues raised by the revenue and submitted that the issue brought on record by the lower authorities are proper and he justified the additions, at the same time, he has fairly agreed that the issue under consideration is similar to the issues raised in the earlier assessment years. 174. On the other hand, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. Copies of the orders are placed on record. 175. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2001-02. While deciding the issue, the Coordinate Bench in ITA.No. 3379/Mum/2009 dated 30.04.2021, held as under: - "7.1 It transpired that the assessee paid membership fee of Rs.1.76 Lacs to certain club. The Ld. AO opined that the expenditure being enduring in nature, the same would be capital in nature. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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