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The Income- Tax Act, 1995
Section 80HHC in The Income- Tax Act, 1995
Section 36(1)(iii) in The Income- Tax Act, 1995
Section 80 in The Income- Tax Act, 1995
Section 80HH in The Income- Tax Act, 1995

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Income Tax Appellate Tribunal - Chandigarh
Spray Engineering Devices ... vs Assessee on 10 April, 2013

IN THE INCOME TAX APPELLATE TRIBUNAL

CHANDIGARH BENCH 'A', CHANDIGARH

BEFORE SHR I T.R.SOOD, ACCOUNTANT MEMBER

AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER

ITA No.1130 /Chd/2012

(Assessment Year : 2009-10)

M/s Spray Engineering Devices Ltd. Vs. The Addl.CIT, Plot No.25, Indl. Area, Phase II, Range I Chandigarh. Chandigarh. PAN: AAICS5252M

(Appellant) (Respondent)

Appellant by : Shri N.K.Saini, DR Respondent by : Shri Vineet Aggarwal

Date of hearing : 10.04.2013 Date of Pronouncement : 11.06.2013

O R D E R

Per SUSHMA CHOWLA, J.M. :

The appeal filed by the assessee is against the order of the

Commissioner of Income Tax (Appeals), Chandigarh dated 10.09.2012

r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 9 - 1 0 a g a i n s t t h e o r d e r p a s s e d u / s 1 4 3 ( 3 )

of the Income Tax Act, 1961 (in short 'the Act').

2. The assessee has raised following ground of appeal:

"That the learned Commissioner of Income Tax (Appeals), Chandigarh has erred in law and as well as on facts while passing orders on the following grounds:

2. Applicability of section 14A: That the learned CIT (Appeals) has erred in confirming the application of Section 14A and subsequently invoking Rule 8D(2)(i) & Rule 8D(2)(iii), despite the issue being covered by the orders of Hon'ble Chandigarh Bench of ITAT in assessee's own case of AY 2006-07 & AY 2008-09.

2. Disallowance u/s 36(l)(iii): That the learned CIT (Appeals) has erred in confirming the addition amounting Rs 19,76,818/- in the returned income, calculated on an arbitrary basis on the ground that the assessee company has advanced its interest bearing funds to its wholly owned subsidiaries.

3. Disallowance of Deduction U/s 80IB/80IC: That the learned CIT (Appeals) has erred in adjudicating that, benefit of deduction U/s 80-IB & 80-IC for Unit-I & 2

II, amounting to Rs.10,93,06,756/- is not available to the Assessee Company for the unexpired period of the eligible deduction available to the erstwhile Partnership firms, despite the issue being covered by the orders of Hon'ble Chandigarh Bench of ITAT in assessee's own case of AY 2006-07 & AY 2008-09.

4. Deduction u/s 80IB/80IC on recovery of bad debt: That the learned CIT (Appeals) has erred in holding that deduction under section 80IB/80IC is not available on the amount of Rs 2,09,123/- being bad debts recovered as alleging that the same is not derived from the industrial undertaking, despite the issue being covered by the orders of Hon'ble Chandigarh Bench of ITAT in assessee's own case of-AY.,2006-07 & AY 2008-09.

5. Deduction u/s 80IB/80IC on AMC Income:

a. That the learned CIT (Appeals) has erred in denying deduction of Rs. 16,32,036/- U/s 80IB/80IC on the AMC income, despite the issue being covered by the orders of Hon'ble Chandigarh Bench of ITAT in assessee's own case of AY 2006-07 & AY 2008-09.

b. Further, the amount at Ground No. 5(a), being treated as ineligible has been computed at the assumed rate of 30% of the total amount of Rs. 54,50,121/-which is arbitrary and bad in law.

6. Deduction u/s 80IB/80IC on bought out components:

a. That the learned CIT (Appeals) has erred in confirming that Gross Profit of Rs.61,68,507/- U/s 80IB/IC on the Gross Profit on sale of bought out components, despite the issue being covered by the orders of Hon'ble Chandigarh Bench of ITAT in assessee's own case of AY 2006-07 & AY 2008-09.

b. The learned CIT (Appeals) has erred in accepting the method of calculation of ineligible profits used in above Ground No. 6(a), which has been computed as the difference of sale & purchase of bought out components and is arbitrary and bad in law.

7. Deduction of Profits eligible for Sec. 80-HHC in MAT calculation: Despite being fully covered by Hon'ble Supreme Court and further by orders of Hon'ble Chandigarh Bench of ITAT in assessee's own case for AY 2008-09, the learned CIT(Appeals) has erred in confirming the addition of Rs.10,24,11,915/- in Book Profits U/s 115JB, which was claimed as deduction as amount of profits eligible under section 80HHC vide clause (iv) of Explanation 1 to Section 115JB.

8. The learned CIT (Appeals) has committed contempt of the Hon'ble ITAT Chandigarh Bench by not relying on the orders of the Jurisdictional Bench of ITAT on identical issues in assessee's own case for AY 2006-07 & AY 2008- 09 in respect to above Grounds Nos. 1 & 3 to 7, and thereby it is prayed that cost may please be awarded in terms of Section 254(2B) of the Income Tax Act, 1961, for forcing the assessee to file this appeal.

9. That the Ld. Assessing Officer erred in levying interest u/s 234B/234C of the Act.

10. That Learned Assessing Office erred in initiating penalty proceedings U/s 271(l)(c).

11. That the appellant craves leave to add, alter, amend, modify or forego any ground of appeal with the permission of the Hon'ble Bench of Income Tax Appellate Tribunal, before or at the time of hearing/final disposal of this appeal. 3

12. Any other point as may be necessary for adjudicating the appeal."

3. The learned A.R. for the assessee at the outset pointed out that the

issues raised in the present appeal are identical to the issues raised in

a s s e s s e e ' s a p p e a l r e l a t i n g t o a s s e s s m e n t ye a r s 2 0 0 6 - 0 7 a n d 2 0 0 8 - 0 9

wherein the issues were adjudicated by the Tribunal vide order dated

22.6.2012.

4. The learned D.R. for the Revenue placed reliance on the order of

the CIT (Appeals) and certain legal propositions which shall be dealt

with by us under relevant grounds of appeal.

5. We have heard the rival contentions and perused the record. The

issues raised in the present appeal were also before the Tribunal in

a s s e s s e e ' s o w n c a s e w h e r e i n f o r a s s e s s m e n t ye a r 2 0 0 6 - 0 7 c r o s s a p p e a l s

were filed by the assessee and the Revenue and further the assessee had

f i l e d a n a p p e a l a g a i n s t t h e o r d e r p a s s e d i n a s s e s s m e n t ye a r 2 0 0 8 - 0 9 .

The Tribunal in ITA No.701/Chd/2009 in the appeal filed b y the Revenue

and in ITA No.646/Chd/2009 in the appeal filed by the assessee, both

r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 6 - 0 7 a n d i n I T A N o . 1 0 2 1 / C h d / 2 0 1 1

r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 8 - 0 9 i n t h e a p p e a l f i l e d b y t h e a s s e s s e e ,

vide order dated 22.6.2012 had adjudicated various issues and copy of

the order is placed at pages 4 to 46 of the Paper Book. We proceed to

dispose off the present appeal after hearing both the authorized

representatives and also considering the order of the Tribunal in

a s s e s s e e ' s o w n c a s e i n t h e p r e c e d i n g a s s e s s m e n t ye a r s .

6. The ground No.1 raised by the assessee is not pressed and hence

the same is dismissed as not pressed.

7. The ground No.2 raised by the assessee is against the disallowance

under section 36(1)(iii) of the Act at Rs.19,76,818/-. 4

8. Both the authorized representatives admitted that the said issue of

disallowance under section 36(1)(iii) of the Act has been decided against

the assessee by the Tribunal vide their decision in paras 43 to 49 at

pages 25 to 27 of the order dated 22.6.2012. The relevant findings of

the Tribunal in paras 43 to 45 are as under:

"43. The issue in ground No.2 raised by the assessee is on account of disallowance under section 36(1)(iii) of the Act. The assessee has raised two aspects of the said disallowance under section 36(1)(iii) of the Act. One is in relation to the interest free advances made to the group concern M/s SED Engineers & Fabricators Pvt. Ltd. and the second issue is in respect of addition to the fixed assets made during the financial year and the interest relatable to the period prior to putting the assets to use, has been capitalized by the Assessing Officer.

44. In the Balance Sheet the assessee had shown debit balance of Rs.69,04,602/- to its group concern M/s SED Engineers & Fabricators Pvt. Ltd. The Assessing Officer has annexed copy of account of the said party as annexure-A-3 to the assessment order. The perusal of the said copy of account reflects the transfer of funds on various accounts on day-to-day basis by the assessee to M/s SED Engineers Fabricators Pvt. Ltd. The explanation of the assessee in this regard is that the said payments were made for business purposes as is apparent from the narration of the entries in the copy of account itself. The second plea of the assessee was that it had sufficient interest free funds for advancing the interest free advances to its subsidiary. In any case the borrowed funds were claimed to be utilized for specific business needs i.e. purchase of fixed assets investment in shares/securities. The disallowance of Rs.4,40,150/- was made out of the interest expenditure claimed by the assessee by invoking provisions of section 36(1)(iii) of the Act.

45. After hearing both the parties and the plea of the assessee that the transaction was on account of commercial expediency and consequently the ratio laid down by the Hon'ble Supreme Court in S.A.Builders (supra) was applicable, we find that the assessee has raised secured advances against which it was paying interest, which is claimed an expenditure in the Profit & Loss Account. The perusal of the copy of account placed at Annexure A-3 reflects that the assessee had transferred funds for day-to-day running of the business of its subsidiary. The amounts have been advanced for the payment of salaries or for payment of rent and even for the payment to the parties i.e. for various bills raised by the subsidiary. In addition, on monthly basis the assessee had simply transferred funds to the bank account of the assessee on various dates for which there is no justification or no commercial expediency brought on record. In the case of the assessee where it has mixed funds available for its business activity, the plea of the assessee that it had interest free funds available for the purposes of advancing to its subsidiary cannot stand in view of the ratio laid down by the Hon'ble Punjab & Haryana High Court in CIT Vs. Abhishek Industries [286 ITR 1 (P&H)]. The transfer of funds in the range of Rs.5 lacs or there about from month to month also does not justify the plea of commercial 5

expediency raised by the learned A.R. for the assessee. In the totality of the facts and circumstances and applying the ratio laid down by the Hon'ble Punjab & Haryana High Court in Abhishek Industries (supra) we uphold the disallowance of Rs.4,40,150/- under section 36(1)(iii) of the Act."

9. I n t h e c a p t i o n e d a s s e s s m e n t ye a r a l s o t h e a s s e s s e e h a d a d v a n c e d

interest free funds to its sister concern, namely M/S SED Engineers &

Fabricators Pvt. Ltd. and M/s J ay Mahesh Sugar Industries Ltd. The

assessee on the other hand had claimed financial expenses on the interest

bearing loans and advance raised by it. The disallowance under section

36(1)(iii) of the Act was worked out by the Assessing Officer in view of

t h e r a t i o l a i d d o w n b y t h e H o n ' b l e P u n j a b & H a r ya n a H i g h C o u r t i n C I T

Vs. Abhishek Industries [286 ITR 1 (P&H)] The tabulated working of

the interest disallowed under section 36(1)(iii) of the Act by the

Assessing Officer is as per para 3.9 at page 51 of the assessment order.

The facts of the present case are identical to the facts before the

T r i b u n a l i n a s s e s s e e ' s o w n c a s e i n t h e p r e c e d i n g a s s e s s m e n t ye a r s a n d

following the same we uphold the disallowance of interest under section

36(1)(iii) of the Act at Rs.19,76,818/-. The ground No.2 raised by the

assessee is thus dismissed.

10. The issue in ground No.3 raised by the assessee is in relation to

the benefit of deduction under sections 80IB and 80 IC of the Act for

Unit Nos.1 and II for unexpired period of eligible deduction. The

a s s e s s e e d u r i n g t h e ye a r u n d e r c o n s i d e r a t i o n had claimed deduction

under section 80IC of the Act in respect of Unit Nos.I, II and III. The

Assessing Officer noted that the assessee company was incorporated on

8.11.2004 and had started its commercial production w.e.f. 1.12.2004.

As per the Assessing Officer the assessee had taken over as going

concern running partnership firm i.e. M/s Spray Engineering Devices and

M / s C & C S ys t e m s w h i c h w e r e c l a i m i n g d e d u c t i o n u n d e r s e c t i o n s 8 0 I B 6

and 80IC of the Act on the date of their takeover b y the assessee

c o m p a n y. The assessee had claimed deduction under section 80IB/80IC

of the Act for the remaining period out of total eligible period of 10

years, which were denied by the Assessing Officer in view of the

provisions of section 80IC(7) read with the provisions of section

80IA(12) of the Act.

11. Identical issue of claim of deduction under section 80IB/80IC of

the Act for Unit Nos.I and II for the remaining unexpired period of

e l i g i b i l i t y, a r o s e b e f o r e t h e T r i b u n a l ( s u p r a ) i n a s s e s s e e ' s o w n c a s e .

The Tribunal in ITA No.701/Chd/2009 vide paras 34 to 38 at pages 19 to

22 of the said order held the assessee to be eligible for claim of

deduction under section 80IB/80IC of the Act b y the resultant compan y

for the unexpired period. The relevant finding of the Tribunal vide para

38 were as under:

"38. We have heard the rival contentions and perused the record. The business was being carried out by two partnership concerns i.e. M/s Spray Engineering Devices Ltd. and C & C Systems and as per the agreement the assessee company had taken over the two running manufacturing partnership firms as going concerns. The Memorandum of Association of the assessee company vide its main object provide the same. Further object of the assessee was to carry on the business of manufacture, purchase, sale, i.e, in the field of sugar, energy, power, etc. Memorandum and Articles of Association of assessee company is enclosed at pages 640 to 677. The two manufacturing partnership concerns were claiming deduction under section 80IB/80IC of the Act. The assessee company on amalgamation claimed the above said deduction under section 80IB/80IC of the Act for the unexpired period as postulates under the Act. The issue arising in the present grounds of appeal is whether after the said amalgamation or take over by the assessee company, deduction under section 80IB/80IC of the Act for the remaining period was available to the assessee company. The Tribunal (supra) in assessee's own case while deciding appeal in assessment year 2005-06 have held that deduction under section 80IB/80IC of the Act was available to the undertaking and not the assessee as envisaged in CBDT Circular No.F15/5/63/IT (A-1) dated 13.12.1963. The Tribunal further held that the provisions of section 80IA(12) of the Act were not applicable to the facts of the present case as business of the two firms had been transferred under the scheme of the Income Tax Act. The Hon'ble Punjab & Haryana High Court in CIT Vs. Mega Packages (supra) had also laid down the proposition that the benefit admissible to an undertaking under section 80IC of the Act for the remaining period 7

could not be denied to the assessee on the ground that section 80IA(12) of the Act embraces only the cases of amalgamation or demerger of Indian company. It was further held that where the proprietaryship business was taken over by the partnership concern, it could not be held to be the result of splitting or reconstructing of business already in existence, which could justify denying the benefit under section 80IC(4)(ii) of the Act. The Hon'ble High Court held that under the provisions of section 80IC of the Act the benefit was available to an undertaking which had fulfilled the conditions laid down under section 80IC of the Act. It was further held " Section 80IC of the Act bestows the deduction under the Act upon the undertaking and not the owner. Once the same is to be allowed to undertaking the change in ownership of the undertaking would not disentitle the successor, the benefit of deduction for an expired period. Reliance was placed on the Circular dated 13.12.1963 by the Hon'ble Court and it was referred that the said Circular though was issued with reference to section 84, which was replaced by section 80J which has been omitted, but the provisions of section 84/80J and 80IC were similar in the context of benefit of deduction to be allowed to an undertaking. In view of the above said ratio laid down by the Hon'ble Punjab & Haryana High Court, we hold tht the assessee is entitled to the benefit of deduction under section 80IB/80IC of the Act for the un-expired period as deduction is allowable to an undertaking and the taking over of the business of two partnership concerns by the assessee company does not amount to reconstruction of business as business of the undertaking had continued. In view thereof, we dismiss ground Nos.1(vi) to 1(ix) raised by the Revenue. "

12. The said decision was followed by the Tribunal in assessee's own

c a s e r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 8 - 0 9 v i d e p a r a 5 8 a t p a g e 4 1 o f t h e

consolidated order passed by the Tribunal dated 22.6.2012. The issue

before us is identical to the issue before the Tribunal and following the

parity of reasoning we hold that the assessee is entitled to the benefit of

deduction under section 80IB/80 IC of the Act for the unex pired period of

eligible deduction. The Assessing Officer is directed to allow the said

claim of the assessee. The ground No.3 raised by the assessee is thus

allowed.

13. The issue in ground No.4 is in relation of the claim of deduction

under section 80IB/80IC of the Act on the amount of bad debts recovered

d u r i n g t h e ye a r o n s u m o f R s . 2 , 0 9 , 1 2 3 / - . Similar issue of claim of

deduction under section 80IB/80IC of the Act on the bad debts recovered

t o t a l i n g R s . 5 , 5 6 , 6 9 6 / - h a d a r i s e n i n a s s e s s m e n t ye a r 2 0 0 6 - 0 7 a n d t h e

Tribunal vide paras 55 to 57 at pages 29 and 30 of the order dated 8

22.6.2012 held the assessee to be eligible to the said claim of deduction.

The Tribunal had relied upon on the ratio laid down in Amar Radha

Battery [ 9 1 I T D 2 8 0 ( H yd ) ] w h e r e i n i t h a s b e e n l a i d d o w n t h a t t h e

amount of bad debts should be treated as amount derived by the

industrial undertaking as the write off of bad debts went to reduce the

income and the inflow goes to increase the income derived from the

industrial undertaking.

14. Following the above said parity of reasoning and in view of the

r a t i o l a i d d o w n b y t h e T r i b u n a l i n a s s e s s e e ' s o w n c a s e a n d H yd e r a b a d

Bench of the Tribunal in Amar Radha Battery (supra), we hold that the

amount of bad debts recovered at Rs.2,09,123/- is to be included as

profits of eligible units on which deduction under section 80IB/80IC of

the Act is to be allowed. The ground No.4 raised by the assessee is thus

allowed.

15. Now coming to the ground No.5 raised by the assessee wherein the

issue is in relation to the claim of deduction under section 80IB/80IC of

the Act on AMC income. The assessee is engaged in providing

customized cooling to the sugar industries based on clients needs. In

addition to the provision of the said m a c h i n e r y, the assessee is

undertaking AMC for the smooth running of the automation units.

D u r i n g t h e ye a r u n d e r c o n s i d e r a t i o n t h e a s s e s s e e h a d r e c e i v e d s u m o f

Rs.16,32,036/- as AMC income, on which the assessee claimed deduction

under section 80IB/80IC of the Act.

16. Similar issue of claim of deduction under section 80IB/80IC of the

Act on AMC charges arose before the Tribunal in assessee's own case

r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 6 - 0 7 w h e r e i n v i d e p a r a s 5 0 t o 5 3 a t p a g e s

27 to 29 of the order dated 22.6.2012 it was held as under: 9

"50. The issue raised in ground No.3 is against non-allowance of deduction under section 80IB/80IC of the Act on AMC charges. Under the provisions of section 80IC of the Act deduction is allowable against the profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2) of section 80IC of the Act, which talks of manufacturing or production of any article or thing, not being any article or things specified in Thirteenth Schedule and where the assessee undertakes substantial expansation during the period specified thereunder section 2(a) to section 80IC of the Act and under section 2(b) refers to manufacture or production of any article or thing specified in Fourteenth Schedule or commencing any operation specified in that Schedule between the period enumerated thereunder. Implication of section is that the profits and gains which are eligible for deduction under section 80IC of the Act should be derived from the manufacturing or production activity carried on by the assessee.

51. Now coming to the facts of the present case, the explanation of the assessee vis-a-vis the AMC charges received by it is as under:

"With regard to the above we would like to bring to your notice that we are providing customized cooling and condensing systems to the sugar systems to the sugar systems based on our own assessment of the clients' specific needs. Client needs are based on the sizes of the sugar mill and the type of the existing equipment of the sugar mill.

We also provide automation of the above said equipments based on the client needs. Further the smooth running of the automation units the AMC of these units is provided to us. AMC contract normally covers the keep up of the equipments and all damages occurred in the routine operation."

52. The assessee has furnished on record communication with certain customers to whom it had supplied the cooling and condensing systems and Annual Maintenance Contract (AMC) of the said systems were to be carried out by the assessee at negotiated terms and conditions. The claim of the assessee was that it was providing AMC to only such cooling and condensing systems, which were manufactured by it and supplied to the customers as the systems provided by the assessee were client based, depending on the size of the sugar mill and type of the existing sugar mill. The total AMC charges received by the assessee during the year were Rs.37,75,423/-. We find that the Hon'ble Himachal Pradesh High Court in assessee's own case in ITA No.39 of 2006 vide decision dated 7.11.2009 had held that the words 'derived from' in section 80IB of the Act were much narrower in connotation as compared to the words 'attributable to'. It was further laid down that The Industrial Undertaking would be entitled to claim deductions under Section 80-IB only if it shows that the profit is derived from the business of such Industrial Undertaking. The income should be derived from the operational profits of the business and the source of income should be business itself. The Hon'ble High Court after laying down the above said principles held that the assessee was entitled to claim deduction under section 80IB of the Act on MODVAT credit and also erection and commissioning charges, being directly relatable to the business and the source of the income being business itself. The Hon'ble High Court further held that When the assessee is engaged in the business of manufacture, the work 'manufacture' cannot be read so narrowly so as 10

to limit the amount only to the price of the goods sold. If the manufacturer is required by the customer to erect and commission the machinery the amount received by it on this count is income derived from the business itself and therefore eligible for deduction under Section 80-IB.

53. Following the above said parity of reasoning and in view of the factual aspect brought on record by the assessee, we hold that AMC charges received by the assessee are directly relatable to the business carried on by the assessee of manufacturing, commissioning and erection of cooling system and consequently the assessee is eligible to the claim of deduction u/s 80IB/80IC of the Act. Ground No.3 raised by the assessee is allowed."

17. The Tribunal while deciding the issue had relied upon ratio laid

down b y the Hon'ble High Court of Himachal Pradesh in ITA No.39 of

2006 vide judgment dated 7.11.2009 in assessee's own case in respect of

the claim of deduction under section 80IB of the Act on MODVAT credit

and also erecting and commissioning charges, wherein the Hon'ble Court

held that the said is an allowable deduction being directly relatable to

the business and source of income being business. The said ratio was

also applied b y the Tribunal in ITA No.1021/Chd/2011 vide para 61 at

p a g e 4 1 o f t h e o r d e r r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 8 - 0 9 i n a s s e s s e e ' s

own case. The facts of the present case being identical, we hold that the

assessee is entitled to claim of deduction under section 80IB/80IC on

AMC charges being directly relatable to business and source of income

being business carried on by the assessee. The Assessing Officer is

directed to allow the said deduction under section 80IB/80IC of the Act

on AMC income. The ground No.5 raised by the assessee is thus

allowed.

18. The issue in ground No.6 raised by the assessee is in relation to

the deduction under section 80IB/80IC of the Act on sale of bought out

components. Similar issue of deduction under section 80IB/80IC of the

Act on sale of bought out component arose before the Tribunal in 11

assessee's own case and vide paras 58 to 65 at pages 31 to 39 of ITA

No.646/Chd/2009. The relevant discussions of the Tribunal are as under:

58. The issue raised vide ground No.5 is against non-allowance of deduction under section 80IB/80IC of the Act on the alleged profits on sale of components of system.

59. The brief facts relating to the issue are that the assessee was engaged in manufacturing machinery for sugar industry as well as cooling and condensing system. The assessee claimed that it was carrying on the activities which were of manufacturing in nature. The Assessing Officer from the details furnished by the assessee noted that the assessee was not manufacturing all the items, it was supplying to the customers. Some particular items were being purchased from the market and many times were directly delivered to the customers by the supplier and some times of the said machinery/items were sent alongwith the machinery manufactured by it. The Assessing Officer referred to the voltage stabilizers, motors, pumps, switch gear, control valve, cable, etc.. The assessee was requisitioned to furnish copies of its contract with the customers or the purchase orders placed by the customers and to explain how the profits on the said items not manufactured by it, were eligible for deduction under section 80IB/80IC of the Act. Copy of purchase order is enclosed as Annexure A-7 of the order. The Assessing Officer was of the view that the assessee is just a supplier of some major parts of the cooling and condensing system or sugar industry machinery which go into making of a complete cooling and condensing system or sugar industry machinery. Civil work is an important ingredient of the system as without proper foundation no such installation of heavy machinery is possible but the assessee is not into doing the said work. The contract is normally for supply of such manufactured components as well as the other bought out things and the assessee enters into a civil contract for the same. So claim of the assessee that it is claiming deduction for manufacture of sugar industry machinery or cooling systems is not correct. The Assessing Officer thus held that the assessee was not entitled to the benefit of deduction u/s 80IB/80IC on such items, which have been traded by it and were not the integral part of the goods manufactured by it. The Assessing Officer, however, was of the view that the benefit of certain items were to be allowed to the assessee, i.e. nuts or bolts or sheets purchased by it. From the perusal of the Profit & Loss Account the purchase price of the traded goods was Rs.6.12 crores and in views of the net profit rate of the assessee being approximately 14.9%, gross profit rate being approximately 48.13%, the profits earned on the traded goods was estimated at 15%. Thus sum of Rs.1,08,12,103/- was considered as profit from trading activity on which deduction under section 80IB/80IC of the Act was not granted.

60. The CIT (Appeals) upheld the order of the Assessing Officer. Reliance was placed on the ratio laid down by the Hon'ble Punjab & Haryana High Court in M/s Arisudana Spinning Mills Ltd. in ITA No.278 of 2007 placed as Annexure A-2 to the appellate order.

61. The learned A.R. for the assessee placed reliance on the ratio laid down in Mihir Engineers Ltd. Vs. JCIT [112 TTJ (Mum) 940]. The relevant facts relating to the issue as brought out by the assessee before 12

the CIT (Appeals) and as reproduced under para 89 at page 47 of the appellate order are as under:

"The appellant is engaged in the supply of complete assembly of the cooling and condensing systems which consists of both the manufactured as well as bought out items. The contract with the customer is to make the entire assembly available in running mode at the site of the sugar plant. Thee are certain components without which the system cannot be operated, however, those components are not manufactured by the appellant company. Hence, these components are procured from the suppliers and for purely commercial reasons, some times these components are directly delivered at the site of the customers, However, since the supply of these components forms an integral part of the entire assembly of the cooling and condensing system, it is respectfully submitted that the entire income earned from the cooling and condensing system constitutes the profit delivered from the industrial undertaking and hence, eligible for deduction under sections 80IB and 80IC of the Act."

62. The explanation of the assessee were that in addition to manufacturing certain parts of the cooling and condensing system, it was also assembling -the bought out items in order to make available the whole unit in running condition at the site of the company/plant. The components manufactured by the assessee in addition of the bought out items were integral part of the cooling and condensing system, which was the manufacturing business carried by the assessee. The issue arising in the present appeal is whether deduction under section 80IB/80IC of the Act is to be allowed on such bought out components.

63. Similar issue arose before the Mumbai Bench of the Tribunal in Mihir Engineers Ltd. (supra) where the Tribunal vide paras 23 to 30 held as under:

23. The deduction under section 80-IA of the Act is restricted to the profits and gains derived from the business of an industrial undertaking being an eligible business, subject to conditions enumerated in sub-section (2) of section 80-IA of the Act. The clause (iii) to section 80-IA(2) of the Act provides that for the eligibility of deduction, the industrial undertaking should manufacture or produce any article or thing, other than those specified in Eleventh Schedule. The deduction under section 80-IA of the Act is limited to the items manufactured or produced by the assessee. The word manufacturing or production is not defined in the Act. The distinction of the word 'manufacturing' or 'production' was clarified by Hon'ble Supreme Court in CIT v. N.C. Budharaja & Co. [1993] 204 ITR 4121 wherein it has been held as under :

"The word 'production' has a wider connotation than the word 'manufacture'. While every manufacture can be characterized as production, every production need not amount to manufacture. The test evolved for determining whether manufacture can be said to have been taken place is, whether the commodity which is subjected to the process of manufacturing can no longer be regarded as the original commodity but is recognized in the trade as a new and distinct commodity.

The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by 13

a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods."

24. Further it was held by the Hon'ble Bombay High Court in CIT v. Tata Locomotive & Engg. Co. Ltd. [1968] 68 ITR 325, wherein it has been held as under :

"The word 'manufacture' has a wider and also a narrower connotation. In the wider sense it simply means to make, or fabricate or bring into existence an article or a product either by physical labour or by power, and the word 'manufacturer' in ordinary parlance would mean a person who makes, fabricates or brings into existence a product or an article by physical labour or power. The other shade of meaning, which is the narrower meaning, implies transforming raw materials into a commercial commodity or a finished product which has an entity by itself, but this does not necessarily mean that the materials with which the commodity is so manufactured must lose their identity. Thus, both the words 'manufacture' and 'produce' apply to the bringing into existence of something which is different from its components. Whether one takes into account the wider or narrower meaning of the word 'manufacture', assembling of automotive bus or truck chasis from imported parts in a 'knocked down' condition, could give rise to an article which is totally different from the parts and could amount to manufacture. This is so even though the component parts from which the automotive chasis is made, retain their individual identity in the whole article which is thus manufactured or produced."

25. The requirement of law is manufacturing but the whole process may not be carried out the assessee himself. The Chandigarh Bench of Tribunal in the case of Sond Bharat Pedals (India) v. ITO [2003] 84 ITD 89 had held as under :--

"It is not necessary that the assessee should carry out all the manufacturing operations itself, in order to be entitled to benefit of deduction under section 80-I. Such operations can be got done from outside agencies on payment of labour service charges. In fact certificate issued by the Punjab Government showed that the assessee was registered as a small scale industrial unit and the trading account showed the assessee's sales of Rs. 45.98 lakhs for the year under consideration. Since the assessee was engaged in the business of manufacturing cycle pedals, it would be entitled to deduction under section 80-I even though part of such operations was got done from outsiders. Thus, the assessee was engaged in the business of manufacturing bicycle pedals and, therefore, was an industrial undertaking entitled to deduction under section 80-I."

26. The Delhi Bench of Tribunal in the case of Jackson Engineers (P.) Ltd. v. ITO [1989] 31 ITD 79 had held as under :

"From the perusal of pictures given by the assessee in respect of diesel generator sets assembled or manufactured by the assessee it was clear that the same was named as 'Jackson'. The said engines were required by large industrial house for meeting their power requirements. The logo which was placed mainly on the engine was 'Jackson' and the same were made in various kinds and ranges in 1000KVA. There was no controversy about the fact that there were as many components of the said machine. The perusal of list of salaries and workers also showed that the assessee was using different components which might not be technically speaking, raw material, 14

but something between raw material and generating set. There was no controversy about the fact that the assessee purchases its alternators and engines separately from lead manufacturers. What the assessee assembled and manufactured through assembling was not the same name which was assigned to the parts. The engine made by the assessee was known as diesel generating set. With this process in view and there being a separate name in the market for what the assessee made the assessee could not be treated as non-industrial undertaking. Thus the order of the Commissioner (Appeals) was not justified in treating the assessee as the industrial undertaking."

27. The issue of purchasing different components, different equipments and spare parts from various concerns and their assembly, fabrication and erection into plant known as ETP was considered at length by Delhi Bench of Tribunal in Degremont India Ltd. v. Dy. CIT [1996] 59 ITD 423 and after deliberation at length on the facts, decision of Apex Court in CIT v. N.C. Budharaja & Co. [1993] 204 ITR 4121 and various other judicial pronouncements of various courts, it was held that the assessee was covered within the definition of manufacturing of an article or thing. The Delhi Bench of Tribunal in Degremont India Ltd.'s case (supra) had held as under : "It is apparent from a plain reading of the judgment of the Supreme Court in N.C. Budharaja & Co.'s case (supra) that the various findings given related solely and exclusively to concerns engaged in the business of construction of dams and civil works. There was not a single word or whisper in the said judgment by which it could be inferred that an assessee engaged in the activities of designing, fabricating, erecting, supplying, installation and commissioning of a plant like the one supplied by the assessee could be covered by the aforesaid judgment. It is well-settled law that the judgment in each case has to be seen in the light of the facts of that case. A decision is to be understood in the context of the facts in which the decision is rendered. A case is precedent for what it explicitly decides and nothing more in the conditions of people, even the words occurring in a statute are required to be interpreted differently keeping in mind the context in which such expressions have been used in the relevant provisions of law. Therefore, the aforesaid judgment did not in any manner support the revenue's contention. The provisions of section 80- I are intended to provide an incentive for investment in certain desired sectors and promote industrialization in developing countries which has adopted the policy of liberalization." It was further held as under :

"In the instant case, the assessee was purchasing different components, different equipments and spare parts from various other parties and were assembling those components, equipments and accessories and thereby they were preparing fabricating and erecting a plant which was known as ETP. The ultimate end product which was prepared as a result of assembling of various components with the constant application of technical know-how was the ETP. The ETP was obvi-ously distinct and different plant than the various components, equip- ments, purchased or got manufactured according to the tailor made requirement from the different suppliers. The activities carried out by the assessee were, therefore, clearly covered within the definition of manufacture of an article or thing. 15

The assessee had undertaken to design, engineer, manufacture, supply, install and commission the ETP and also undertook to give performance test. The obligation of the assessee would come to a concluding stage only after successful commissioning of the plant. The various bills prepared by the assessee from time to time was merely a mode of payment during the currency of the long period of the carrying out of the entire work. It would be evident from the contract executed by the assessee with the parties that such mode of payment was mutually decided between the parties so that the assessee received the payments on pro rata basis with the progress of the work. Such an arrangement was quite usual and natural in cases of such turn-key project so that the supplier received the payment from time to time."

28. Further, the Ahmedabad Bench of Tribunal in the case of Enviro Central Associates v. Asstt. CIT [1995] 78 Taxman 214 (Mag.) had held as under :

"In the instant case, the activities of the assessee-firm were that of manufacturing or that of producing an article as they were constructing water air pollution plants. Thus, the assessee-firm was an industrial undertaking and was engaged in manufacturing or producing an article in the shape of air, water pollution control. That the assessee was manufacturing or producing the plant in backward area, was one of the requirements of the claim under section 80HH. The contention of the assessee was that only 11.45 per cent of the total receipt had been taken for deduction under section 80HH as that work alone was done in backward area and it was not expected from the assessee to have its office or plant in backward area. The crux of the case laws is that if an industrial undertaking begins to manufacture or produce outside in any backward area, it is entitled to deduction under section 80HH. The assessee for, set up its own industrial undertaking at the site of its customers for whom water air pollution control plant was manufactured and of the places which were falling under the backward area declared under the Act, then, naturally the assessee should be getting benefit of the same and the computation made by the assessee-firm of the same was correct one."

29. The objection of the learned DR for the revenue that situs of assembly is important, has been dealt with by the Pune Bench of Tribunal in Indocan Engg. Systems (P.) Ltd. v. Dy. CIT [1997] 60 ITD

649. There is no merit in the contention of the learned DR for the revenue that main activity of the assessee is of erection at client's site. The end-product is an integrated unit. The assessee is required by its clients to supply a cooling tower, parts of which are manufactured by assessee and certain parts/components are bought from outside. The end-product is the cooling tower supplied to the client. The assessee in its Quotation made to its client's requisitions, also Guarantees the above-said equipment by way of Warranty as incorporated in the Quotation at page 245 of the paper book. The Warranty is against defect in materials and workmanship when erected and operated in a manner provided by us (the assessee).

30. The Pune Bench of Tribunal in Indocan Engg. Systems (P.) Ltd. v. Dy. CIT [1997] 60 ITD 649 had held as under :

"It has been held by the Supreme Court in the case of CIT v. N.C. Budharaja & Co. [1993] 204 ITR 412 / 70 Taxman 312 , that an article or thing must be understood to be movable one. An article can be said to be a movable item only if it is capable of being moved from 16

one place to another. The reasoning given by the Commissioner (Appeals) was that where the plant is erected, it is embedded to the earth and, therefore, cannot be said to be a movable property. Merely because the plant is attached to earth by fixing the same on the foundation by nut and bolts, it cannot be said that it is embedded to the earth or it is attached to the earth. It cannot be disputed that such plant can be shifted from one place to another by unscrewing the same. Therefore, the assessee was engaged in the business of manufacturing and fabricating of plant which was an article or thing as mentioned in section 80-I.

....Further, most of the work was done by the sub-contractors under the supervision of the employees of the assessee. Therefore, the question of showing power expenses did not arise. In this connection, it has been held in CIT v. Neo Pharma (P.) Ltd. [1982] 137 ITR 879 (Bom.) that where the manufacturing activity has been carried on by another concern under the supervision of qualified staff of the assessee then such activity can be treated as activity of the assessee. On the basis of that decision it was to be held that the assessee had been carrying on manufacturing activity."

64. In respect of the deduction claimed under section 80IA of the Act on bought out components the Tribunal held as under:

"31. The deduction under section 80-IA of the Act is available to an assessee whose gross total income includes profits and gains derived from an industrial undertaking as per stipulations in section 80-IA(2), which inter alia requires the manufacturing or production of an article or thing not being any article or thing specified in Eleventh Schedule. In the instant case before us, the assessee was manufacturing components of cooling towers in its factory unit at Chhatral, which in-turn were exigible to Excise Duty. The profits on sale of said components were entitled to deduction under section 80-IA of the Act and as allowed by Assessing Officer. The assessee in the present case was not in the business of sale of components of cooling towers, but the cooling tower as a whole, as is evident from the enquiries of the client, Quotations and Performa Invoice raised by the assessee. In the instant case, the assessee purchases various bought out components, which along with manufacturing components are assembled at the client's site and the cooling tower is erected. The ultimate product erected by the assessee was a cooling tower, which was a distinct product from the various components, bought from outside or manufactured by it. The aforesaid activities of the assessee were covered within the definition of manufacture of an 'article' or 'thing'. The assessee had undertaken the job of erecting a cooling tower as per the individual specification of the client, and after erection, the assessee guarantees the performance of the cooling tower as a whole and not that of manufactured items only. All the activities carried on by the assessee fall within the ambit of 'manufacture' or 'production' of an article or thing. The end-product being the cooling tower, the assessee is entitled to claim of deduction under section 80-IA of the Act on the whole including profits on manufactured items and bought out components. As held by Tribunal in Sond Bharat Pedals (India) v. ITO [2003] 84 ITD 89 (Chd.), it is not necessary that the assessee should carry out all the manufacturing operations itself in order to be entitled to 17

claim of deduction under section 80-IA of the Act. The situs of assembly of end-product being client's premises does not disentitle the assessee from its claim of deduction under section 80-IA of the Act in respect of bought out components utilized for the erection of the said cooling towers. There is no merit in the contention of the learned DR that excise duty is paid only on manufactured items. The levy of Excise Duty is governed by Excise Laws. There is no merit in denial of exemption under section 80-IA of the IT Act on bought out items as the same are not subjected to Excise Duty. The assessee prepares two different bills, one for excisable manufactures items and other for bought out components, both of which are utilized for the erection of cooling tower. The assessee raises separate bills for transportation, erection and service charges. The profits on sale of the manufactured items and bought out components are eligible for deduction under section 80-IA of the Act.

32. Thus, after considering the entire relevant material and decisions of the various High Courts and Tribunal, we are of the view that the assessee is entitled to the benefit of deduction under section 80-IA of the Act both on the manufactured items and the bought out components, used for the erection of cross flow (XE series) and counter flow (CM series) cooling towers. In view of the decision hereinabove that assessee is not entitled to any deduction under section 80-IA of the Act on Round Bottle (RB) Cooling Towers, no deduction/benefit under section 80-IA shall be allowed on bought out components used for erection of Round Bottle Cooling Towers. The Assessing Officer is directed to allow the deduction under section 80- IA of the I.T. Act only on profits on sale of cross flow (XE series) and counter flow (CM series) cooling towers.

65. The CIT (Appeals) while deciding the present issue had relied upon the ratio laid down by the Hon'ble Punjab & Haryana High Court in M/s Arisudana Spinning Mills Ltd. (supra) where the assessee in addition to manufacturing yarn was engaged in the trading of raw wool and knitted cloths. In respect of the trading activities carried on by the assessee the Hon'ble High Court held that the assessee was not entitled to the deduction under section 80IA of the Act. However, in the facts of the present case before us the assessee is not engaged in the trading of any items, but is purchasing certain items from the market like electric motors, Watt. conductor, cables, etc. In order to complete its project of supply the customers cooling and condensing system for the sugar industry on the specific need of its clients, the bought out components are part of the assembly unit assembled by the assessee and made operational at the premises of its clients. We find no merit in the observation of the Assessing Officer that the assessee has dispatched the manufactured items alongwith bought out components for the clients of the assessee to assemble. The claim of the assessee in this regard was to the contrary. Even after assembling the unit the assessee was also providing the services by the Annual Maintenance Contractor of the said unit in entirety and we find no merit in the observation of the Assessing Officer to the contrary. Relying upon the ratio laid down in Mihir Engineers Ltd. (supra) we direct the Assessing Officer to allow the claim of the assessee on the net profits declared without deducting the profits relating to bought out components, as being, eligible for deduction under section 80IB/80IC of the Act. Ground No.5 raised by the assessee is thus allowed."

18

19. The facts of the present case are identical to the facts in

assessment ye a r 2006-07 and in assessment ye a r 2008-09 and the

Tribunal had decided the issue in favour of the assessee vide

consolidated order dated 22.6.2012. Following the order of the Tribunal

i n a s s e s s e e ' s o w n c a s e r e l a t i n g t o e a r l i e r a s s e s s m e n t ye a r s w e d i r e c t t h e

Assessing Officer to allow deduction under section 80IB/80IC of the Act

on sale of bought out components. Thus the ground No.6 raised by the

assessee is allowed.

20. The issue in ground No.7 raised by the assessee is against the

computation of book profits under MAT provisions.

21. The brief facts relating to the said issue are that the Assessing

Officer during the proceedings noted that the assessee while computing

the book profits under section 115JB of the Act reduced sum of

Rs.10,99,62,019/- from the book profits on account of deduction under

section 80HHC of the Act. The assessee failed to file any reply before

the Assessing Officer. The Assessing Officer vide para 9.2 observed as

under:

"9.2 As per Explanation I, sub-clause(iv), it is true that the profits eligible for deduction u/s 80HHC is to be reduced for the purposes of calculation of book

profits u/s 115JB. However, it is clear from sub- clause(iv) of Explanation I that the profits eligible for deduction u/s 80HHC which is to be claimed as

deduction is subject to the conditions specified in the section 80HHC. it is clear that after calculation of profits eligible under deduction 80HHC, the other

conditions specified in that section are also to be

considered. For reducing the amount of deduction u/s 80HHC u/s 115JB, the entire section 80HHC along with the prescribed conditions is to be read in its entirety."

22. The Assessing Officer further noted that the deduction under

s e c t i o n 8 0 H H C o f t h e A c t h a d p h a s e d o u t d u r i n g t h e a s s e s s m e n t ye a r

2008-09 but the assessee was not at all eligible for any deduction under 19

section 80HHC from its gross total income. The Assessing Officer thus

vide para 9.4 held the assessee not eligible for any deduction under

section 80HHC of the Act while computing book profits for the current

year under consideration. The Assessing Officer also observed that the

ratio laid down by the Hon'ble Supreme Court in M/s Ajanta Pharma Vs.

CIT [327 ITR 305 (SC)] was not applicable as the said judgment of the

H o n ' b l e A p e x C o u r t w a s f o r a s s e s s m e n t ye a r 2 0 0 1 - 0 2 a n d t h e e l i g i b i l i t y

under section 80HHC of the Act was 80% of the export profits, whereas

for the assessment year under section 80HHC had been phased out. The

CIT (Appeals) upheld the order of the Assessing Officer.

23. The assessee is in appeal against the order of the CIT (Appeals).

The learned A.R. for the assessee placed reliance on the order of the

T r i b u n a l r e l a t i n g t o a s s e s s m e n t ye a r 2 0 0 8 - 0 9 .

24. The learned D.R. for the Revenue, however, placed reliance on the

ratio laid down by the Hon'ble Kerala High Court in CIT Vs. Kerala

Chemicals & Proteins Ltd. [231 ITR 416 (Ker)]and also pointed out that

clauses (iv) to (vi) to Explanation-I of section 115JB of the Act has been

omitted with retrospective effect.

25. We have heard the rival contentions and perused the record. We

find that the issue of computation of book profits under section 115JB of

the Act and the allowability of deduction under section 80HHC of the

Act arose before the Hon'ble Kerala High Court in CIT Vs. Kerala

Chemicals & Proteins Ltd. (supra). The Hon'ble High Court after

hearing both the sides held as under:

"The assessee was entitled to deduction under section 80HHC computed in accordance with sub-sections (3)

and (3A) of section 80HHC because it is expressly so provided under clause (iv) of section 115JB(2). All that the Supreme Court has held in Ajanta Pharma Ltd.'s

case (supra) is that the ceiling contained in section 80HHC(1B) is not applicable for the purpose of

granting deduction under clause (iv) of section

115JB(2) in the computation of book profits. However, 20

there is nothing in the Supreme Court's decision to

indicate that eligible deduction of export profit under clause (iv) in the computation of book profit can be computed in any other manner, other than what is

provided in sub-sections (3) and (3A) of section

80HHC. It is clearly stated in clause (iv) that deduction of export profit in the computation of book profit is the same 'amount of profit eligible for deduction under

section 80HHC' computed under clause (a) or clause

(b) or clause (c) of sub-section (3) or sub-section (3A) of the said section. So much so, computation of export profit has to be done only in accordance with the

method provided under section 80HHC which is, in fact, done in the computation of business profit if the

assessment was on the total income computed under the other provisions of the Act. MAT assessment is only an alternative scheme of assessment. What is clear from clause (iv) of section 115JB(2) is that even in the

alternative scheme of an assessment under section

115JB the assessee is entitled to deduction of export profit under section 80HHC. In other words, export

profit eligible for deduction under section 80HHC is allowable under both the schemes of assessment. So

much so, the assessees were certainly entitled to

deduction under section 80HHC but it was only by

following the method provided under sub-sections (3) and (3A) of section 80HHC. However, by virtue of the decision of the Supreme Court, the restrictions

contained in section 80AB or section 80B(5) could not be applied inasmuch as carry forward of business loss or depreciation should not be first set off leaving gross total income as nil, which disentitles the assessee to deduction under other provisions of Chapter VIA-C,

which includes section 80HHC also. But the assessee's contention, that export profit has to be computed with reference to the profit and loss account prepared under the Companies Act, 1956, was equally unacceptable

because there is no such provision in section 80HHC to determine the export profit with reference to profit and loss account maintained under the Companies Act. In

view of the decision of the Supreme Court, the assessee was entitled to deduction of export profit under section 80HHC and the relief was to be granted in terms of

sub-sections (3) and (3A) of the said section. The

Assessing Officer was to be directed to recompute the book profit by granting deduction under section 80HHC in terms of above findings and the decision of the

Supreme Court in Ajanta Pharma Ltd.'s case (supra)"

26. In the facts of the present case before us, admittedl y the assessee

was not entitled to any claim of deduction under section 80HHC of the

Act. The assessee fairly admitted that it had not claimed any deduction 21

under section 80HHC of the Act under the normal provisions of the Act,

however, the said deduction was claimed while computing the book

profits under section 115JB of the Act. In view of the ratio laid down

b y the Hon'ble Kerala High Court in CIT Vs. Kerala Chemicals &

Proteins Ltd. (supra), the claim of the assessee is not maintainable. In

any case, the provisions of section 115JB of the Act have undergone

amendment by Finance Act, 2011 w.e.f. 1.4.2005 by which clauses (iv)

to (vi) under Explanation-I to section 115JB of the Act were omitted.

Earlier clause (iv) provided for "the adjustment of the amounts of profits

eligible for deduction under section 80HHC, computed under clause (a)

or clause (b) or clause (c) of sub-section (3) or sub-section 3A), as the

case may be, of that section, and subject to the conditions specified in

that section.". Therefore, in view of the provisions of the Act, we find

no merit in the claim of the assessee. We uphold the order of the CIT

(Appeals) in this regard and the ground No.7 raised by the assessee is

dismissed.

27. The ground No.8 raised by the assessee is not pressed, hence, the

same is dismissed as not pressed.

28. The issue in ground No.9 is against the charging of interest under

section 234B and 234C of the Act, which is consequential and hence the

ground No.9 raised by the assessee is dismissed.

29. In the result, the appeal of the assessee is partl y allowed.

Order pronounced in the open court on this 11th day of June, 2013. Sd/- Sd/- (T.R. SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated 11 t h June, 2013

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar,

ITAT, Chandigarh

22