COMMISSIONER OF INCOME TAX Vs. NUCHEM LTD.

JUDGEMENT

(1.) This order shall dispose of I.T.A. Nos. 609 to 613 and 615 of 2009 as, according to the learned counsel for the appellant-Revenue, all the appeals arise out of one consolidated order dated March 27, 2009, passed by the Income-tax Appellate Tribunal, Delhi Bench "I", New Delhi (in short, "the Tribunal") relating to the assessment years from 1994-95 to 1999-2000. In all, five substantial questions of law arise for consideration in I.T.A. No. 609 of 2009. I.T.A. Nos. 611 to 613 of 2009 would be covered by the decision in I.T.A. No. 609 of 2009 as the question(s) claimed therein are similar. However, one additional question regarding the addition of Rs. 47,32,919 made by the Assessing Officer on account of the late deposit of the employees' contribution to ESI and PF has been claimed in I.T.A. No. 615 of 2009 and in I.T.A. No. 610 of 2009, an additional question relating to the disallowance of Rs. 40,000 on account of survey report has been raised. The facts are being extracted from I.T.A. No. 609 of 2009. I.T.A. No. 609 of 2009 has been preferred by the Revenue under section 260A of the Income-tax Act, 1961 (in short, "the Act") against the order dated March 27, 2009, annexure A. III passed by the Tribunal in I.T.A. No. 3756/Del./2000 for the assessment year 1994-95. All the appeals were admitted on January 22, 2010, to consider the following substantial questions of law:

(2.) A few facts relevant for the decision of the controversy involved as narrated in I.T.A. No. 609 of 2009 may be noticed. The return declaring the net loss of Rs. 4,71,39,320 was filed on November 30, 1994. The first revised return was filed on December 12, 1994, declaring the net loss of Rs. 4,71,98,910. The second revised return was filed on February 22, 1996, declaring the net loss of Rs. 4,75,57,488. The assessment was completed under section 143(3) of the Act, vide order dated January 28, 1997, annexure I at an income of Rs. 4,84,38,074 in which many additions/disallowances were made as per the assessment order. The assessee filed an appeal against the order before the Commissioner of Income-tax (Appeals) ("the CIT(A)"). Vide order dated June 8, 2000, annexure II, the Commissioner of Income-tax (Appeals) partly allowed the appeal. Not satisfied with the order, the Revenue filed an appeal before the Tribunal. With regard to first issue regarding the expenses incurred on raising the share capital, the Assessing Officer made disallowance of Rs. 2,97,924 claimed under section 35D of the Act in respect of capital raising expenses being one-tenth of Rs. 29,79,237 on the ground that these were not covered under section 35D of the Act. On appeal, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 2,97,924 observing that the expenditure on debentures was raised for expansion of business and the same fell under the provisions of section 35D of the Act. On appeal by the Revenue, the Tribunal confirmed the order passed by the Commissioner of Income-tax (Appeals). As regards the commitment charges/guarantee commission paid to the asses-see for pledging them land as collateral security, the Assessing Officer made an addition of Rs. 3,60,000. On appeal, the Commissioner of Income-tax (Appeals) deleted the guarantee commission paid to the sister concern for pledging them 321 acres of land as collateral security by following the decision of the Delhi High Court in CIT v. Indian Aluminium Cables Ltd, 1990 184 ITR 516 (No. 1) (Delhi). The Tribunal upheld the order passed by the Commissioner of Income-tax (Appeals). Similarly, the addition made by the Assessing officer on account of the maintenance of guest house on the ground that such expenses were not allowable under section 37(3) of the Act was deleted by the Commissioner of Income-tax (Appeals) which was upheld by the Tribunal on the ground that the expenditure had been incurred for accommodation of employees. With regard to the disallowance of Rs. 3,735 under section 37(2A) of the Act on account of inauguration, expenses of Nuwud Corner was deleted by the Commissioner of Income-tax (Appeals) which was upheld by the Tribunal. Lastly, the addition of Rs. 30,26,723 made by the Assessing Officer on account of trading addition by applying the gross profit rate of 52 per cent instead of 51.7 per cent shown by the assessee after rejecting the book results declared in the MDF division was deleted by the Commissioner of Income-tax (Appeals) which order was affirmed by the Tribunal. Hence, the instant appeals by the Revenue.

(3.) We have heard the learned counsel for the appellant-Revenue and perused the record.