Judgment:
1. This appeal by the assessee pertains to assessment year 1991-92. The appeal was late by 35 days. Shri S. Ganeshan, the learned counsel for the assessee, invited our attention to the application signed by Shri Pramod Jain, Director of the assessee-company seeking condonation of delay. In the said application it was submitted that the assessee had its office at Bhilai, that it had no office at Nagpur, that the appeal papers were sent from Bhilai to the Nagpur office of its sister concern for filing the same and that due to some confusion and absence of clear directives, the appeal papers could not be filed by the Nagpur office in time. The learned counsel submitted that there was a sufficient cause for the late filing of the appeal. Relying on the ratio of the Supreme Court's decision in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 it was submitted that a liberal approach in the matter be adopted and every day's delay should be construed not in a pedantic but in a pragmatic manner. It was submitted that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred.
It was, therefore, argued that the delay of 35 days be condoned and the assessee's appeal heard on merits.
2. The learned Departmental Representative submitted that the assessee's explanation was too vague to be accepted and that each day's delay had not been explained in this case. He objected to the delay being condoned.
3. After carefully considering the submissions of both the sides and taking a pragmatic rather than a pedantic view of the matter, we hereby condone the delay of 35 days and deal with the appeal on merits.
4. Ground No. 1(a) which is the main issue in this appeal challenges the confirmation of disallowance of depreciation on building, possession of which was taken by the assessee but title of the building was yet to be transferred.
5. The facts in brief are these. The assessee is a Private Limited Company having different Divisions, namely Engineering, Fertilizer, Project, Chemical & Engineering. For the assessment year 1991-92 the assessee declared income of Rs. 2,41,20,280. Assessment was completed on total income of Rs. 2,44,02,990.
6. Under an agreement to sell and purchase executed on 19-2-1990 the assessee-company agreed to purchase DDA/SFS Category III Duplex (Ground + First Floor) Flat No. 368 and Car Garage attached thereto at Mandakini Enclave (WCC), Kalkaji, New Delhi for a total consideration of Rs. 5,00,00. The entire amount of consideration was paid. Vacant physical possession of the building was handed over to the assessee. As per the terms of the agreement the assessee was liable and responsible for all dues and demands from the date of execution of the said agreement. All the expenses on the transfer of the said property including the portion of unearned increase in the value of land were to be borne by the assessee-company. In the event of the assessee desiring to sell the said property to some other party, the seller was to execute, sign and deliver all documents which might be required for the smooth transfer of the said property in favour of the third party.
These were the main terms and conditions of the said agreement.
7. The Assessing Officer noticed from the Notes on Accounts contained in Schedule I to the balance sheet as at 31-3-1991 relevant to assessment year 1991-92 that the cost of the building (with reference to which depreciation was claimed) included the above property of Rs. 5,00,000 in possession of the assessee-company and used for its business but the title of which was not transferred in the name of the assessee till 31-3-1991. He also noted that for assessment year 1990-91 no depreciation was allowed in respect of this building in view of the fact that no legal title had been acquired by the assessee. It was also observed that the first appellate authority had since upheld the action of the Assessing Officer in this regard taking a consistent view of the matter, the Assessing Officer disallowed the assessee's claim for depreciation for assessment year 1991-92 as well.
8. The learned CIT(Appeals) following his predecessor's order in the assessee's own case for the assessment year 1990-91 held that the depreciation on building on which the assessee did not hold a legal title was not admissible.
9. For completing the facts it may be mentioned at this stage that the Appellate Tribunal vide order dated 19-10-1995 for assessment year 1990-91 in I.T.A. No. 89/Nag/92 following the Full Bench decision of the Kerala High Court in Parthas Trust v. CIT[1988] 169 ITR 334/38 Taxman 57 upheld. The order of the CIT (Appeals). It appears that no reference application has been filed against the Tribunal's order for assessment year 1990-91.
10. Shri Ganeshan took us through the various clauses of the agreement to sell an purchase executed on 19-2-1990. It was submitted that section 32 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') laid down that the property on which depreciation was claimed, should by owned by the assessee and used for the purposes of the business. It was submitted that there was no doubt that the property in question had been used for the purposes of the assessee's business. As regards ownership, it was submitted that the term had not been defined in section 32 of the Act. It was submitted that section 22 of the Act used the same expression. It was submitted that if a particular property owned by the assessee was used for the purpose of any business then as per section 22 of the Act there would be no annual letting value. It was submitted that what was excluded in section 22 was governed by section 32. The proposition formulated by Shri Ganeshan was that the meaning assigned to the word "owned" u/s 22 of the Act be given the same meaning while interpreting section 32 of the Act. It was submitted that under the fiscal law, terms had to be understood in a substantial or commercial sense and not in a narrow technical sense.
The learned counsel submitted that the Supreme Court in CIT v. Podar Cement (P.) Ltd. [1997] 92 Taxman 541 has now set at rest the controversy at hand. It was submitted that in that case the Supreme Court had held that income derived from the flats was taxable under the head "Income from house property" u/s 22. The learned counsel in particular relied on para 25 of the said judgment which is reproduced below :- "In our opinion, the above observations of this Court clearly fixes the liability on a person who receives-or is entitled to receive the income from the property in his own right. In spite of this, the Assessing Officers of various circles instead of uniformaly following the ratio laid down in this case have taken different diametrically opposite views depending upon the pronouncements of the concerned High Courts in the circles on the scope of section 22.
The High Courts of Allahabad, Punjab and Haryana, Rajasthan, Calcutta and Patna have taken the view by correctly understanding the ratio laid down in R.B. Jodha Mal Kuthiala's case (supra) and the High Courts of Bombay, Delhi and Andhra Pradesh have taken a different view wrongly distinguishing on facts in R.B. Jodha Mal Kuthiala's case (supra)." 11. The learned counsel argued that in the present case full consideration had been paid by the assessee, vacant possession of the property had been received by the assessee, and vendor had no longer any more interest in the property and so from a pragmatic and practical point of view the assessee was the owner of the property in question and hence was entitled to depreciation u/s 32 of the Act. According to the learned counsel, the Supreme Court's decision in Podar Cement (P.) Ltd. (supra) was a complete answer to the question at hand. It was also submitted that the Supreme Court had in term upheld the decisions of the Allahabad High Court in Addl CIT v. U.P. State Agro Industrial Corpn. Ltd. [1981] 127 ITR 97/6 Taxman 161 of Punjab & Haryana High Court in the case of Smt. Kala Rani v. CIT [1981] 130 ITR 321/6 Taxman 226 of Rajasthan High Court in Maharani Yogeshwari Kumari v. CIT [1995] 213 ITR 541 and Saiffuddin v. CIT [1985] 156 ITR 127/23 Taxman 254, of Calcutta High Court in the case of CIT v. Steelcrete (P.) Ltd. [1983] 142 ITR 45/13 Taxman 24, CIT v. General Marketing & Mfg. Co. Ltd. [1996] 222 ITR 574/86 Taxman 488 and of Patna High Court in Addl. CIT v. Sahay Properties & Investment Co. (P.) Ltd. [1983] 144 ITR 357 and Andhra Pradesh High Court in CIT v. Shahney Steel & Press Works (P.) Ltd. [1987] 165 ITR 399 and CIT v. Sahney Steel & Press Works (P.) Ltd. [1987] 168 ITR 811, and disapproved the decisions of Bombay High Court in the case of CIT v. Zorostrian Building Society Ltd. [1976] 102 ITR 499 and Delhi High Court in CIT v. Hindustan Cold Storage & Refrigeration (P.) Ltd. [1976] 103 ITR 455.
12. The learned counsel submitted that the judgments of the Allahabad High Court in the case of U.P. State Agro Industrial Corpn. Ltd. (supra) of Calcutta High Court in the case of Steelcrete (P.) Ltd. (supra) and of Andhra Pradesh High Court in the case of Shahney Steel & Press Works (P.) Ltd. (supra) and Sahney Steel Works (P.) Ltd.'s case (supra) were in the context of section 32 of the Act. The learned counsel, Therefore, submitted that on the basis of the Supreme Court's decision in the case of Podar Cement (p.) Ltd. (supra) the assessee was entitled to depreciation on the building.
13. In the alternative, it was submitted that even if the Supreme Court's judgment in the case of Podar Cement (P.) Ltd. (supra) was considered to be an obiter dictum the assessee was entitled to depreciation on the building in question. Relying on the Andhra Pradesh High Court's decision in CIT v. Andhra Pradesh Riding Club [1987] 168 ITR 393, Gujarat High Court's decision in L.B. Kharawala v. ITO [1984] 147 ITR 67/17 Taxman 236 Supreme Court's decision in CIT v. Vazir Sultan & Sons [1959] 36 ITR 175 at page 184 and a few other decisions it was submitted that the obiter dictum of the Supreme Court was binding and is to be followed by the subordinate Courts.
14. The learned Departmental Representative, on the other hand, contended that the decision of the Supreme Court in the case of Podar Cement (P.) Ltd. (supra) was only in the context of section 22 of the Act and not in the context of section 32 of the Act. It was submitted that it is in this background that the Supreme Court again and again referred in the judgment to the language of section 22 and explained its earlier decision in the case of R.B. Jodha Kuthiala v. CIT[1971] 82 ITR 570. The learned Departmental Representative in particular relied on para 53 of the said judgment to drive home the point that under the common law owner means a person who had got valid title legally conveyed to him. The said para is reproduced as under : "We are conscious of the settled position that under the common law owner means a person who has got valid title legally conveyed to him after complying with the requirements of law such as Transfer of Property Act, Registration Act, etc. But in the context of section 22 having regard to the ground realities and further having regard to the object of the 'Act, namely, to tax the income', we are of the view that the owner is a person who is entitled to receive income from the property in his own right." It was submitted that only in the context of section 22 of the Act having regard to the ground realities and to the object of the Act, namely, to tax the income the Supreme Court had taken the view that owner is a person who is entitled to receive income from the property in his own right.
15. The learned Departmental Representative further submitted that the Supreme Court had not disapproved the judgments of the Bombay High Court in Zorostrian Building Society Ltd.'s case (supra) and of Delhi High Court in Hindustan Cold Storage & Refrigeration (P.) Ltd.'s case (supra) and that what the Supreme Court in the case of Podar Cement (P.) Ltd. (supra) had held was that the Bombay, Delhi and Andhra Pradesh High Courts had not correctly understood the ratio laid down in R.B. Jodha Mal Kuthiala (supra). According to the learned Departmental Representative this did not amount to disapproving the entire judgment delivered by Bombay High Court or Delhi High Court or Andhra Pradesh High Court.
16. The learned Departmental Representative further submitted that the judgment of the Supreme Court in the case of Podar Cement (P.) Ltd. (supra) could also not be treated as an obiter dictum because nowhere in the judgment was even a vague reference made to section 32 of the Act and the entire discussion was on section 22 of the Act.
17. The learned Departmental Representative also submitted that the judicial opinion on the issue was divided but there was no decision of the Supreme Court on the issue nor of the jurisdictional High Court of Madhya Pradesh. It was, however, submitted that the Delhi High Court in the case of Hindustan Cold Storage & Refrigeration (P.) Ltd. (supra), the Madras High Court in the case of CIT v. Tamil Nadu Agro Industries Corpn. [1991] 192 ITR 108, Karnataka High Court in the case of CIT v.Bharath Gold Mines Ltd. [1995] 192 ITR 639, Orissa High Court in the case of CIT v. Draupadi (P.) Ltd. [1995] 211 ITR 593, Rajasthan High Court in the case of Golcha Properties (P.) Ltd. v. CIT [1987] 166 ITR 259/[1988] 36 Taxman 227, Golecha Properties (P.) Ltd. v. CIT [1988] 171 ITR 47 and Golcha Properties (P.) Ltd. v. CIT [1994] 209 ITR 80 had in the context of section 32 of the Act held that in the absence of legal title the assessee was not entitled to depreciation. The learned Departmental Representative further submitted that the only Full Bench decision of any High Court was of the Kerala High Court in the case of Parthas Trust(supra) which clearly laid down that ownership in the context of section 32 must necessarily mean legal title to the asset and if no legal title was there, the assessee was not entitled to depreciation. It was, therefore, submitted that for the sake of consistency in this case (a similar issue having been decided against the assessee for assessment year 1990-91) and from the point of view of propriety (there being only one Full Bench decision of any High Court) the assessee was not entitled to depreciation on the building legal title of which had not yet passed on to the assessee.
18. We have carefully considered the submissions of both the sides and perused the facts on record. The only issue to be considered is whether the assessee was the owner of the building in question which would entitle it to get depreciation u/s 32 of the Act because there is no dispute regarding the user of the property for business purposes. The expression "owner" in section 32 has not been defined. Judicial opinion is divided as to the meaning of the said expression. While the Punjab & Haryana High Court in the case of Smt. Kala Rani (supra), Andhra Pradesh High Court in the case of Shahney Steel & Press Works (P.) Ltd. (supra) Allahabad High Court in the case of U.P. State Agro Industrial Corpn. (supra), Calcutta High Court in the cases of Madgul Udyog v. CIT [1990] 184 ITR 484 and General Marketing & Mfg. Co. Ltd.'s case (supra) have taken the view that the owner need not necessarily be a lawful owner entitled to pass on the title of the property to another, the Delhi High Court in the case of Hindustan Cold Storage & Refrigeration (P.) Ltd. (supra), Madras High Court in the case of CIT v. Tamil Nadu Agro Industries Corpn. Ltd. [1987] 163 ITR 61, Kerala High Court in the case of Parthas Trust (supra), Rajasthan High Court in the cases of Golcha Properties (P.) Ltd. (supra) and Golecha Properties (P.) Ltd. case (supra) Golecha Properties (P.) Ltd. (supra) and Golecha Properties (P.) Ltd. (supra) and Orissa High Court in the case of Draupadi (P.) Ltd. (supra) have held that ownership must necessarily mean legal title to the asset in the assessee. There is no decision of the Supreme Court or of the Jurisdictional High Court of Madhya Pradesh on the issue.
19. The learned counsel for the assessee has placed complete reliance on the Supreme Court's judgment in the case of Podar Cement (P.) Ltd. (supra) in fact that decision is the sheet-anchor of his case. Reliance has been placed on the observations of the Supreme Court contained in para 25 of the said judgment which has been reproduced above. It was submitted that the Supreme Court have disapproved the decisions of the Bombay, Delhi and Andhra Pradesh High Courts and approved the decisions of the Allahabad, Punjab & Haryana, Rajasthan, Calcutta and Patna High Courts some of which were in the context of section 32 of the Act. It was, therefore, submitted that the Supreme Court's decision was, therefore, an authority that depreciation was admissible to an owner who did next necessarily had the legal title.
20. We have carefully gone through the Supreme Court's decision in the case of Podar Cement (P.) Ltd. (supra). The only issue before the Supreme Court was whether income from the flats could be assessed as income from house property u/s 22 of the Act or not. The Supreme Court considered section 9 of the Indian Income-tax Act, 1922 and section 22 of the Income-tax Act, 1961. At page 553 of the judgment the Supreme Court highlighted and emphasised that they had to judge and interpret the language of section 22 of the Act. At page 556 of the judgment the Supreme Court referred to the practical and logical approach to the true construction and purport of the substance and spirit of section 22. At page 559 the Supreme Court observed that the law laid down in the case of R.B. Jodha Mal Kuthiala (supra) had been rightly understood by the High Courts of Punjab & Haryana, Patna, Rajasthan, etc., The contrary view taken by the Delhi High Court was not found to be correct as mentioned at page 560 of the judgment in para 39. At page 564 of the judgment the Supreme Court observed that they were conscious of the settled position that under the common Law, owner means a person who has got valid title legally conveyed to him after complying requirements of law as Transfer of Property Act, Registration Act, etc.
The Supreme Court again emphasised that in the context of section 22 of the Act having regard to the ground realities and having regard to the object of the Act, namely, "to tax the income" they were of the view that the owner is a person who is entitled to receive income from the property is his own right. No reference was made to section 32 of the Act.
21. From the above discussion, it would be quite clear that the only focus before the Supreme Court in the above cited judgment was on the interpretation of the expression "owner" as used in section 22 of the Act. It is only in this context that they referred to various judgments of various High Courts which had interpreted the earlier decision of the Supreme Court in the case of R.B. Jodha Mal Kuthiala (supra). It is, therefore, strictly in this context that the decisions of the High Courts of Allahabad, Punjab & Haryana, Rajasthan, Calcutta and Patna were approved and those of the High Courts of Bombay, Delhi and Andhra Pradesh were disapproved. In this context it may be mentioned that the Andhra Pradesh High Court decision which was disapproved was in the case of CIT v. Nawab Mir Barkat Alikhan 1974 Tax LR 90 in which the High Court held that when a vendor had agreed to sell his property and had received consideration thereof but had not executed a registered Sale Deed, his liability to pay tax on income from that property did not cease and his position as "owner" of the property within the meaning of section 9 of the Indian Income-tax Act, 1922 and section 22 of the Income-tax Act, 1961 did not thereby change. This decision of the Andhra Pradesh High Court had interpreted the Supreme Court's decision in the case of R.B. Jodha Mal Kuthiala (supra) in a particular manner and that interpretation was not approved by the Supreme Court in the case of Podar Cement (P.) Ltd. (supra). It is significant to note that the Andhra Pradesh High Court in the case of Shahney Steel & Press Works (P.) Ltd. (supra) has otherwise held that for purposes of depreciation u/s 32 of the Act legal ownership or legal title was not necessary. If the argument of the learned counsel for the assessee were to be accepted that all the decisions which were approved by the Supreme Court and referred to section 32 would mean the approval of the said decisions in tote, then by implication it would mean that the Andhra Pradesh High Court decision even in the case of Shahney Steel & Press Works (P.) Ltd. (supra) would stand disapproved because the Supreme Court had not approved the Andhra Pradesh High Court's decision. The fact of the matter is that the Andhra Pradesh High Court's decision in the case of Shahney Steel & Press Works (P). Ltd. (supra) was not noted or discussed by the Supreme Court because such a discussion was not necessary. The Supreme Court was not deciding the issue of depreciation of an asset in the hands of an assessee who was not the legal owner. What the Supreme Court decided in the case of Podar Cement (P.) Ltd. (supra) was that the view adopted by the High Courts of Allahabad, Punjab & Haryana, Rajasthan, Calcutta and Patna regarding the interpretation of the Supreme Court's earlier decision in the case of R.B. Jodha Mal Kuthiala (supra) was correct and that of the Bombay, Delhi and Andhra Pradesh High Courts was erroneous. The said decision of the Supreme Court, therefore, is not an authority for the proposition that depreciation u/s 32 of the Act is admissible even to an owner who does not hold legal title to the asset. On the contrary in para 53 of the judgment the Supreme Court has clearly mentioned that except in the context of section 22 of the Act and under the common law, owner means a person who has got valid title legally conveyed to him after complying with the requirements of law such as, Transfer of Property Act, Registration Act, etc.
22. We also do not find any substance in the argument of the learned counsel for the assessee that the Supreme Court's judgment in the case of Podar Cement (P.) Ltd. (supra) be treated as obiter dictum. Obiter dictum as distinguished from judicial dictum is an opinion expressed by the way in a judgment though it is not necessary to the judgment.
Officer dictum is an observation which is either not necessary for the decision of the case or it is not related to the material facts in issue. There is no doubt that an obiter dictum by the Supreme Court must receive due weight and utmost respect from the lower Courts. But the question is whether the observations of the Supreme Court in para 25 of the judgment in the case of Podar Cement (P.) Ltd. (supra), lay down any obiter dictum In our considered opinion, by no stretch of imagination can it be said that the Supreme Court has expressed any opinion by the way in respect of section 32 of the Act. In fact in the whole judgment there is not even a whisper of section 32. We, therefore, do not accept the submission of the learned counsel for the assessee that the observations contained in para 25 of the abovecited judgment lay down any obiter dictum from the Supreme Court.
23. The only decision by Full Bench of any High Court on the issue is of the Kerala High Court in the case of Parthas Trust (supra). At page 346 of the report the Kerala High Court has observed that after anxiously considering the decision of the Supreme Court in R.B. Jodha Mal Kuthiala's case (supra) they are clearly of the view that the Supreme Court decision does not contain any principle or logic which would induce them to take a different view of the construction of section 32. It is also significant to note that the said decision of the Full Bench of the Kerala High Court was not cited before or considered by the Supreme Court in the case of Podar Cement (P.) Ltd. (supra) because that was in the context of section 32 of the Act which was not before the Apex Court in that case.
24. We may also mention that the Punjab and Haryana High Court in Hotel Skylark & Restaurant (P.) Ltd. v. CIT [1996] 221 ITR 283 had held that when the business of Hotel Skylark & Restaurant (P.) Ltd.'s case (supra) which was previously run under the sole proprietorship was taken over by a firm, depreciation was allowable because the firm had become the owner of the property by a decree of the Court and so the assessee had become the legal owner who used the asset for the purpose of its business thus entitling it to claim depreciation u/s 32 of the Act. In that case the Punjab and Haryana High Court decided the issue in favour of the assessee because the assessee was a legal owner.
25. In the present case the assessee may have incidence of ownership but the legal title had not yet been transferred in the name of the assessee. The Revenue authorities were, therefore, justified in negativing the claim of depreciation of the assessee. The view already taken by the Tribunal in the assessee's own case for assessment year 1990-91, therefore, merits reiteration and confirmation rather than change or modification.
26. In view of the foregoing we hold that the assessee was not entitled to depreciation in respect of the property in question at New Delhi for want of legal title.
28. Ground No. 1(b) is against the confirmation of disallowance of Rs. 15,000 out of guest house expenses being rent paid for the guest house.
29. The Assessing Officer applying the provisions of section 37(4) of the Act held that the expenditure incurred on the maintenance of guest house which included a residential accommodation taken on hire by the assessee in respect of which rent was paid was inadmissible. The learned CIT(Appeals) in view of the specific provisions of section 37(4) and section 37(5) of the Act upheld the action of the Assessing Officer and confirmed the disallowance of Rs. 15,000.
30. Shri Ganeshan relying on the ratio of the Bombay High Court decision in CIT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124/42 Taxman 142 submitted that since rent was specifically allowable as a deduction u/s 30 of the Act, section 37 was not attracted in this case at all and hence no disallowance could be made u/s 37(4) read with section 37(5) of the Act.
31. The learned Departmental Representative relied on the impugned order.
32. We find substantial merit in the submissions of Shri Ganeshan.
Section 37 excludes expenditure of the nature described in sections 30 to 36 of the Act. In other words, deduction in respect of specific items of expenditure mentioned in sections 30 to 36 has to be allowed under those sections while computing the business income of the assessee. Section 37 is only a residuary section. Section 30 stipulates that deduction in respect of rent, rates, taxes, etc., would be admissible under that section. A sum of Rs. 15,000 was paid by the assessee as rent of the building used as a guest house. The deduction was, therefore, admissible to the assessee under the specific provision contained in section 30 of the Act. As the special provision must override a general provision, section 37 which is a residuary section would not come into play so far as this item of expenditure is concerned. If section 37(1) does not come into play, the further exceptions called out under section 37(4) or sub-section (5) would not be attracted. We hold accordingly. The assessee would be entitled to a deduction of Rs. 15,000. The disallowance is, therefore, directed to be deleted.
33. Ground No. 1(c) is against the non-consideration of the disallowed amount out of travelling expenses while allowing deductions under sections 80HH and 80-I of the Act. The Assessing Officer in the computation of total income worked out the deductions under sections 80HH and 80-I of the Act in respect of Urla Unit as per chart enclosed with the assessment order. In the said chart, net profit as per profit and loss account of Urla Unit was taken at Rs. 4,28,68,614. After allowing depreciation the net amount determined as qualifying for deductions under sections 80HH and 80-I was computed at Rs. 4,34,27,035. For purposes of computation of deduction u/s 80-I the net loss of the earlier year computed at Rs. 50,89,978 was further reduced from the aforesaid figure of Rs. 4,34,27,035 in accordance with the provisions contained in section 80-1(6) of the Act.
34. Before the learned CIT(Appeals) the following ground being ground No. 7 was taken : "While allowing deduction u/ss 80HH and 80-I, the learned DCIT (Asst.) has not added back the disallowable expenditure pertaining to Urla (Project) Unit in excess of the limits prescribed under rule 6-D, to the eligible profit of the unit. Hence, the deduction u/ss 80HH and 80-1 were not fully allowed." 35. The learned CIT(Appeals), however, held that the total income before allowance of deduction under rule 6-D of the Income-tax Rules, 1962 and before adding income from other sources worked out to Rs. 4,28,65,908 against which Assessing Officer had allowed deduction under sections 80HH and 80-I on the net profits of Rs. 4,28,68,614 which was more than the income computed and hence there was no loss to the assessee. This ground was accordingly rejected.
36. The learned counsel submitted that the total income computed at Rs. 4,28,65,908 as mentioned by the learned CIT (Appeals) included disallowance of travelling expenditure of the order of Rs. 3,88,656 out of which a sum of Rs. 1,16,929 was in respect of Urla Unit. The submission, therefore, was that deduction under sections 80HH and 80-I was to be allowed in respect of the assessed income and if the assessed income was properly computed then the net profit as per profit and loss account of Urla Unit taken by the Assessing Officer at Rs. 4,28,68,614 would go up by an amount of Rs. 1,16,929 thereby entitling the assessee to higher deduction under sections 80HH and 80-I. It was submitted that since the matter had not been properly considered by the learned CIT(Appeals), the matter may be considered by him now or in the alternative the matter may be restored back to the Assessing Officer for proper adjudication.
37. The learned Departmental Representative relied on the orders of the authorities below.
38. Since there were no details regarding the disallowance, if any, under rule 6-D ascribable to the Urla Unit, we asked the assessee to furnish details as to how net profit of the Urla Unit had been computed at Rs. 4,28,68,614 in the first instance. The assessee was also required to substantiate its claim prima facie before a decision would be taken. The assessee could not satisfy at the time of hearing of the appeal. No details have been furnished immediately thereafter either.
Since the orders of the lower authorities are silent on the issue and the assessee has not been able to prima facie substantiate its case, we dismiss the assessee's ground.