Commissioner Of Income Tax, Kota v. M/S Mangalam Cement Ltd., Aditya Nagar, Kota

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 56 / 2012 Commissioner of Income Tax, Kota ----Appellant Versus M/S Mangalam Cement Ltd., Aditya Nagar, Kota ----Respondent Connected With D.B. Income Tax Appeal No. 59 / 2012 Commissioner of Income Tax, Kota ----Appellant Versus M/S Mangalam Cement Ltd., Aditya Nagar, Morak, Kota ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain with Ms. Shiva GoyalFor Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHJudgment 30/08/2017 1.By way of these appeals, the appellant has challenged thejudgment and order passed by the Tribunal whereby the Tribunalthe appeal preferred by the assessee and dismissed the appeal ofthe department modifying the order of the Commissioner ofIncome Tax, Kota. 2.This Court while admitting the appeals on different dates has framed the following substantial questions of law:- “1.Whether the Tribunal was legally justified inreversing the findings of the CIT(A) and holding that pre operative expenses of Rs.3,13,26,280/- asrevenue expenditure as against capital expenditureshown by the assessee itself in the books of accountsand also stated so by the assessee’s auditors? 2.Whether the Tribunal was legally justified inholding the pre operative expenses as revenueexpenditure specifically when the new unit had notcommenced commercial production in the relevantfinancial year and provisions of Sec.35D wouldapply?.” 3.Counsel for the appellant has taken us to the order of the AOwhere the AO while considering the matter has held as under:- “Regarding issue of net expenditure relating to newplant M/s. Neer Shree Cement, the assessee explainedthat there is no pre operative income nor the expensesclaimed are in the nature of pre operative expensessince the operation of new unit stared on 27.3.93. theassessee’s reply is contradictory. The assessee inassessment proceedings of A.Y.1995-96 claimed thatnew unit which was under trial run in the last year (i.e.A.Y.1993-94) has started commercial production from20-4-94. As per schedule 17, Note no.11, the assessee hadincurred expenditure in relation to M/s. Neer ShreeCement, which was capitalized in the books ofaccounts. The amount of such expenditure as reducedby receipts was Rs.3,13,26,880/-. The CIT(A) allowedthese expenses treating them as revenue expenses.The ITAT restored this issue to the file of the AO. Toexamine the nature of these expenses details alongwith explanation was sought from the assessee whichwas filed as mentioned above.” 4.It is contended that the income has wrongly been included in the expenses which are rightly rejected. 5.She has also taken us to para 4.2 and 4.3 of the order of the CIT (A) and after considering the same, the order of the AO wasconfirmed. Para 4.2 and 4.3 reads as under:- “4.2 The appellant further argued in its writtensubmissions:- Submission 4.It is contended that the income has wrongly been included in the expenses which are rightly rejected. 5.She has also taken us to para 4.2 and 4.3 of the order of the CIT (A) and after considering the same, the order of the AO wasconfirmed. Para 4.2 and 4.3 reads as under:- “4.2 The appellant further argued in its writtensubmissions:- Submission 1.At the outset it may be pointed out thatwhile disallowing the claim of expenses the AOhas not examined the nature of these expensesto ascertain whether they are pre-operativeexpenses or not. As per Hon’ble ITAT only pre-production expenses are to be capitalized. FromNote No.11 to Schedule 17 of assessee’s Annualreport it can be noted that the expenditureclaimed are in respect of salary, wages, staffwelfare, travelling, legal expenses, power andfuel, rent rate and taxes, other miscellaneousexpenses etc. These expenses excluding interestand depreciation amounts to Rs.19,58,33,148/.During the year the revenue generated is16,45,06,268/-. Thus the net expenditureexcluding interest and depreciation is–Rs.3,13,26,880/-(19,58,33,14816,45,06,268/-). This net expenditure is incurredafter the commencement of production whichstarted on 27.03.1993. Thus as per the directionof Hon’ble ITAT, the said expenditure which isincurred after commencement of productionneeds to be allowed. The expenditure is requiredto be allowed under the Income Tax Act, themoment trial run production starts and it neednot to wait till the start of the commercialproduction. For this proposition reliance is placedon the following decision: Essar Steel Ltd. Vs. Deputy Commissioner ofIncome Tax 97 ITD 125 (Ahd) (TM) New unit of the assess-company being anexpansion of the existing business with completeinterconnection and interlacing, expenditure onstart up, establishment and folio maintenance asalso interest pertaining to new unit incurredduring the trial production were revenueexpenditure. V. Ramkrishna & Sons Ltd. Vs. CIT 149 ITR554 (Mad) Managing agency business being an all-embracing business, acquiring the machineryfrom a company promoted by the managingagent would amount to using the machinery forthe purpose of the managing agency business;and the assessee is entitled to deduction ofexpenses and loss in the year subsequent toinstallation of factory remained in suspendedanimation after trial run. 2.So far as observation of the AO areconcerned, same are irrelevant. Of course, theassessee has capitalized the expenditure in booksof account but the same has been claimed asrevenue expenditure before CIT(A) by filingadditional ground of appeal. It is a settled lawthat treatment in the books of accounts is notrelevant for computing the income under theIncome Tax Act. For this reliance is placed in caseof Madhav Prasad Jatia Vs. CIT 118 ITR 200(SC), CIT Vs. Motors & General Stores (P) Ltd.,66 ITR 692 (SC), Kedarnath Jute Manuf. Co. Ltd.Vs. CIT 82 ITR 363 (SC) & Sutlej Cotton Mills Ltd.Vs. CIT 116 ITR 1 (SC). It is also to be notedthat interest expenditure has been allowed to theassessee but only because the Department is inappeal before the High Court on this issue theexpenditure claimed above cannot be disallowed.The net expenditure claimed as above arerevenue expenditure as evident from the natureof the expenditure and are incurred after thecommencement of trial production dated27.03.1993 and therefore the decision ofSupreme Court in Tutikorin Alkalies Chemicalsand Fertilizers Limited 227 ITR 172 is notapplicable. In view of above the claim of net expenditure ofRs.3,13,26,880 be directed to be allowed. Without prejudice to above, if it is held that theseexpenditures are to capitalized, then direction begiven to allow depreciation on the same.” In view of above the claim of net expenditure ofRs.3,13,26,880 be directed to be allowed. Without prejudice to above, if it is held that theseexpenditures are to capitalized, then direction begiven to allow depreciation on the same.” 4.3Argument of the appellant has beencarefully considered but the same is notacceptable.ThenetexpenditureofRs.3,13,26,880/-was capitalized by appellantitself in the books of account. Moreover theseexpenses include capital work in progress. Theauditors have also classified these expenses aspre operative expenses. The issue regardingexpenses on interest is also disputed beforeHon’ble Jurisdictional High Court by theDepartment. Keeping in view all these facts AO isjustifiedindisallowingthesumofRs.3,13,26,880/- as non revenue expenditure.His action is confirmed. Ground No.1 is thusdismissed.” 6.Counsel for the respondent has taken us to the para 2.4, 2.5 and 2.6 which reads as under:- “2.4 We have heard both the parties. Schedule No. 17 of thebalance sheet and P & L A/c has been summarized by the ld. AR ofthe assessee in his written submission as under:- Sale of Cement, Other income & Rs.16,45,06,268/-increase in inventoryInterestRs.25,15,63,056/-DepreciationRs.9,34,625/-Other ExpenditureRs.19,58,33,148/-Rs.44,83,30,829/-Net ExpenditureRs.28,38,24,561/- The issue of interest and depreciation stand already allowed. Thusthe difference of receipt of Rs. 16,45,06,268/- and otherexpenditure of Rs. 19,58,33,148/- is to be considered forallowability. The details of such expenses have been filed by theld. AR. We are reproducing some of the expenses contained in Rs.19,58,38,148/- and the receipts of Rs. 16,45,06,268/- are not indispute. Salary and allowancesRs.70,80,452/-Consultancy, Professional & legal chargesRs.1,76,57,299/-Power, Fuel and Electricity ChargesRs.10,17,80,870/-Inter unit transfer and stock in processesRs.99,98,724/-Raw Material consumedRs.2,64,73,012/-Packing, Forwarding & Distribution Exp.Rs.71,11,652/-Excise DutyRs.1,52,75,531/- (we have reproduced expenses which exceeded Rs. 50.00 lacs)We find that none of the above expenses can be considered ascapital expenses. If the revenue wanted to treat certain expensesas capital expenses then onus was on the revenue. The AO cannotmake the addition on the basis of book entry. It is well settled lawthat book entries are not relevant to decide the issue as the issueis to be decided as per provisions of the Income Tax Act, 1961.The Hon'ble Apex Court in the following cases have held that bookentries are not conclusive. 1.Kedarnath Jute Mfg. Co. Ltd. Vs. CIT,, 82 ITR 363 (SC) 5 2. CIT Vs. Indian Discount Co. Ltd. 75 ITR 191 (SC) 3. Satluj Cotton Mills Ltd. Vs. CIT, 116 ITR 1 (SC) 4. CIT Vs. Tuticorin Alkali Chemicals & Fertilizers Ltd. 227 ITR 172 SC 5. CIT Vs. Shoorji Vallabhdas & Co. , 46 ITR 144 (SC) 6. CIT Vs. Triveni Engineerng & Industries Ltd. 181 Taxman 5(Del.) Unless and until the revenue records the finding in respect of aparticular expenditure as capital, the Tribunal cannot make theinvestigation of the expenses as to which expenses are of capitalnature. 2.5 During the course of proceeding before us, the ld. DR statedthat the expenses contained in Schedule NO. 14 may contain theexpenses relating to earlier year. We have verified from the annualaccounts which contains the expenses of this year as well as of thelast year. The pre-operative expenses incurred upto the previousyear have been shown separately and are not included in the totalof Rs. 44,38,30,829/- 2.6 In respect of setting up a business, we have held in the caseof ITO Vs. Mahendra World City (Jaipur) (ITA No.1170/JP/2010dated 22-07- 2011) that business can be considered as set upwhen the trial run is made. For this, we have placed reliance onthe following decisions. 1. West India Vegetable Products Ltd. Vs. CIT, 26 ITR 151 (Bom.) 2. CWT Vs. Ramraj Surgical Ltd. 63 ITR 478 (SC) 3. CIT Vs. Hughes Escorts Communication Ltd., 311 ITR 253 (Del.) 4. Whirl Pool India Ltd. 318 ITR 347 (Del.) 2.6 In respect of setting up a business, we have held in the caseof ITO Vs. Mahendra World City (Jaipur) (ITA No.1170/JP/2010dated 22-07- 2011) that business can be considered as set upwhen the trial run is made. For this, we have placed reliance onthe following decisions. 1. West India Vegetable Products Ltd. Vs. CIT, 26 ITR 151 (Bom.) 2. CWT Vs. Ramraj Surgical Ltd. 63 ITR 478 (SC) 3. CIT Vs. Hughes Escorts Communication Ltd., 311 ITR 253 (Del.) 4. Whirl Pool India Ltd. 318 ITR 347 (Del.) Thus expenditure of Rs. 3,13,36,880/- is to be considered asrevenue. Thus the C.O. of the assessee is allowed and the appealof the revenue is dismissed. “ 7.Counsel for the respondent has relied on the decision of the Supreme Court in the case of Commissioner of Wealth Tax Vs. Ramaraju Surgical Cotton Mills Ltd. :: reported in (1967) 63 ITR 0478 wherein the Supreme Court has held as under:- “3.The High Court held that unless a factory iserected and the plants and machinery installedtherein, it cannot be said to have been set up. Theresolution of the Board of Directors, the orders placedfor purchasing machinery, licence obtained from theGovernment for constructing the machinery, aremerely initial stages towards setting up, howevererected and the plants and machinery installedtherein, it cannot be said to have been set up. Theresolution of the Board of Directors, the orders placedfor purchasing machinery, licence obtained from theGovernment for constructing the machinery, aremerely initial stages towards setting up, however Ramaraju Surgical Cotton Mills Ltd. :: reported in (1967) 63 ITR 0478 wherein the Supreme Court has held as under:- “3.The High Court held that unless a factory iserected and the plants and machinery installedtherein, it cannot be said to have been set up. Theresolution of the Board of Directors, the orders placedfor purchasing machinery, licence obtained from theGovernment for constructing the machinery, aremerely initial stages towards setting up, howevererected and the plants and machinery installedtherein, it cannot be said to have been set up. Theresolution of the Board of Directors, the orders placedfor purchasing machinery, licence obtained from theGovernment for constructing the machinery, aremerely initial stages towards setting up, however necessary and essential they may be to further theachievement of the end. It is not, however, the actualfunctioning of the factory or its going into productionthat can alone be called setting up of the factory. Thesetting up is perhaps a stage anterior to thecommencement of the factory. Thereafter, the HighCourt referred to a decision of the Bombay High Courtin Western India Vegetable Products, Limited v.Commissioner of Income-tax, Bombay City,(') and onits basis, concluded that the proper meaning to beassigned to the expression "set up" in section 5(1)(xxi) would be "ready to commence business." We areunable to agree with the learned counsel for theCommissioner that in arriving at this view, the HighCourt committed any error. A unit cannot be said tohave been set up unless it is ready to discharge thefunction for which it is being set up. It is only whenthe unit has been put into such a shape that it canstart functioning as a business or a manufacturingOrganisation that it can be said that the unit has beenset up. The expression used in the proviso, underwhich the period for which the exemption is availableis to be deter- mined, is not the same as used in theprincipal clause. In the proviso, the period of fivesuccessive years of exemption has to commence withthe assessment year next following the date on whichthe company commences operations for theestablishment of the unit. Operations for theestablishment of a unit, from the very nature of thatexpression, can only signify steps that have to betaken to establish the unit. The word "set up" in theprincipal clause, in our opinion, is equivalent to theword "established", but operations for establishmentcannot be equated with the establishment of the unititself or its setting up. The applicability of the provisohas, therefore, to be decided by finding out when thecompany commenced operations for establishment ofthe unit, which operations must be antecedent to theactual date on which the company is held to havebeen set up for purposes of the principal clause. Thisis also the meaning that the Bombay High Courtderived in the case of Western India VegetableProducts Ltd.(,) where that Court was concerned withthe interpretation of the expression "set up" as usedin section 2(l1) of the Income-tax Act. That Courtheld: "It seems to us that the expression 'settling up'means, as is defined in the Oxford English Dictionary,'to place on foot" or 'to establish', and iscontradistinction to 'commence.' The distinction is thisthat when a business is established and is ready tocommence business, then it can be said of thatbusiness that it is set up. But before it is ready to commence business it is not set tip." This view wasexpressed when that Court was considering thedifference between the meaning of the expression"setting up a business" and " commencing of abusiness." In the case before us, the proviso does noteven refer to commencement of the unit.. Thecriterion for determining the period of exemption isbased on the commencement of the operations for theestablishment of the unit. These operations forestablishment of the unit cannot be simultaneous withthe setting up of the unit, as urged on behalf of theCommissioner, but must precede the actual setting upof the unit. In fact, it is the operations forestablishment of a unit which ultimately culminate inthe setting up of the unit. 4.On this interpretation, it is clear that in thiscase, the claim put forward by the respondent forexemption has been rightly held to be allowable bythe High Court. In the statement of the case and in itsappellate judgment, the Tribunal did not specificallyrecord any finding as to the date when the unit wasready to go into business and to start production. Inthe appellate order, it was mentioned that accordingto the respondent, the unit was set up only when theInspector of Factories issued a licence to therespondent for working the factory, which was inJune, 1958. In the, statement of the case, the factsrecited show that the construction of the factorybuildings was completed by December, 1957 and theerection of the spinning machinery and plant wascompleted in several stages commencing from June,1957. On these facts, the High Court, and we considerrightly, proceeded on the basis that the unit wascompleted and became ready to go into business onlyafter 1st April, 1957, when the Act had already comeinto force. Consequently, the condition laid down inthe principal clause of s. 5(1)(xxi) was satisfied, andthe company became entitled to exemption in respectof the value of the assets used up in setting up thisunit. Learned counsel for the Commissioner, however,challenged the right of the respondent to claim thisexemption on another ground, viz., that theexemption was claimed in respect of money laid out ina period which was not covered by the periodenvisaged in the second proviso. It was urged that if itbe held that the unit was set up after the Act hadcome into force on the 1 st April, 1957, it must alsobe held that the operations for the establishment ofthe unit had been commenced by the company almostsimultaneously with the unit having been set up, andthat date would, therefore, be a date subsequent tothe assessment year 1957-58 in which year the exemption was claimed. This is a question which wedo not think can be legitimately raised on behalf ofthe Commissioner at this stage. The only contentionbefore the Tribunal on behalf of the Commissioner wasthat the operations for the establishment of the unithad been commenced by the respondent before theAct came into force, and that it should be held thatthe unit was also set ;up at the same time when thoseoperations were commenced. There was no contentionat any stage that the operations for the establishmentof the unit were commenced at a subsequent stage.In fact, it was only for the purpose of urging that theprincipal clause was not applicable to the case of therespondent that the position was taken up on behalfof the Commissioner that the operations forestablishment of the unit had been commenced before1st April, 1957, and the unit must be held to havebeen set up at the same time when those operationswere commenced. That submission, as we haveindicated above, has no force. 5.In any case, the judgments passed by all theWealth-tax Authorities show that it was at no stage indispute that the operations for establishment of theunit had been commenced by the respondent prior to1 st April, 1957. Para 5 of the statement of the casementions that the wealth-tax officer disallowed theclaim on the ground that unit was set up prior to 1stApril, 1957. The Appellate Assistant Commissioneralso in his judgment said: "In this view of the matter,the appellant set up the undertaking even prior to 1stApril, 1957 as operations were carried out prior tothat date for the establishment of the undertaking.The operations consisted of the seeking of permissionfrom the Government to install the unit, and placingof orders with manufacturers of machinery andadvancing of moneys towards the purchase ofmachinery." The Tribunal also disallowed the claim onthe basis that the respondent commenced operationsfor setting up the unit earlier than 1st April, 1957. Itdoes not appear to be necessary for us to express anyopinion as to the particular stage at which it can besaid that a company commences operations for theestablishment of a unit. In the present case, theTribunal proceeded on the basis that, whatever be theexact date of commencement of the operations forestablishment of this unit by the respondent, it wascertainly before 1st April, 1957; and we consider thatthat fact, by itself, is sufficient to entitle therespondent to claim the exemption. TheCommissioner cannot, at this stage, be allowed toraise a new question and ask this Court to decide thatthe date of commencement of the operations for establishment of the unit by the respondent wasdifferent from that accepted by the Tribunal. Thatquestion was not raised and dealt with by theTribunal. It is not even a question that might havebeen raised before the Tribunal and the Tribunal mighthave failed to deal with, nor is it a question whichmay not have been raised before the Tribunal and,yet, was dealt with by it. On the principle laid down bythis Court in CIT vs. Scindia Steam Navigation Co.,Ltd.,(1961)42 ITR 589 (SC): TC38R.477, such aquestion could not be canvassed before the HighCourt and cannot be allowed to- be raised in thisCourt. The question referred to the High Court had tobe answered on the basis that the respondent didcommence operations for establishing this unit before1st April, 1957; and the further finding of factrecorded by the Tribunal is that a sum of Rs.1,43,727/- had been invested in setting up the unit by30th September, 1956, which was the valuation datefor the assessment year 1957-58. The very firstassessment year after the commencement of theoperations for establishment of the unit was thisassessment year 1957-58, In the Wealth Tax Act,assessment year has been defined to mean the yearfor which tax is chargeable under s. 3 of that Act.Since the Act came into force on the 1st April, 1957,the financial year 1957-58 was the first assessmentyear for which tax became chargeable, andconsequently, for purposes of the second proviso tosection 5(1)(xxi), the assessment year following thecommencement of operations for establishment of theunit in the case of any company which commencedthe operations any time before the 1st April, 1957,will be the assessment year 1957-58. Prior to the year1957-58, there was no assessment year as definedunder the Act, and consequently, the first assessmentyear for which exemption could be claimed was thisassessment year 1957-58. The respondent which hadcommenced operations for establishment of its newunit prior to 1st April, 1957, was rightly allowedexemption in respect of the amount that had beeninvested by it upto the relevant valuation date. Theanswer returned by the High Court was, therefore,correct. The appeal fails and is Appeal dismissed withcosts.” 8.Counsel for the respondent has also relied on the decision of 8.Counsel for the respondent has also relied on the decision of the Supreme Court in the case of Commissioner of Income Tax Vs. India Discount Co. Ltd. :: reported in (1970) 75 ITR 0191 wherein the Supreme Court has held as under:- “4.It is manifest that dividends declared byKedarnath Jute Manufacturing Co., between the years1936 and 1945 were the property of the personswhose names stood on the share register on therelevant dates. When a company declares dividendthe same can only be paid to the person who is thenthe registered holder. A purchaser of shares becomesentitled to all dividends declared since his purchasebut not before. If the purchase is made on the eve ofdeclaration of dividend but the purchaser does not gethis name mutated in the records of the company intime to have the dividend-warrant issued in his ownname he is entitled to call upon his vendor to makeover the dividend to him if and when received. It iswell settled that after a sale of the shares and so longas the purchaser does not get his name registered,the vendor is for certain purposes considered atrustee for the purchaser of the rights attaching to theshares or accruing thereon,including the voting rights.In the present case there was a contract between theassessee and the registered shareholders to sell theshares to the assessee with arrear dividends. In otherwords the assessee entered into the contract with theregistered shareholders not only to purchase sharescrips but the dividends which had been declared butnot collected by him or paid over to shareholders. Asthe dividends had been declared long ago there wasno uncertainly as to the exact amount receivable inrespect of them. It is. therefore, Clear that both thepurchaser and the vendor knew exactly what sum ofmoney would come to the vendor by way of suchdividend. In other words the purchase considerationincluded the amount of the arrear dividends and asthe dividends had been declared long ago, there wasno uncertainty as to the exact amount receivable inrespect of them. The existence of a contract bindingthe vendors to make over to the purchaser the arreardividends clearly implied that the price paid by thepurchaser was not only for the value of the sharescrips but also for the sum of Rs. 43,925/- which wasgoing to be realised in the form of arrear dividends bythe purchaser. The High Court held upon anexamination of the evidence that such anarrangement implied that the value of Rs. 9-8-0 andRs. 9-4-0 per share as settled into the broker's billswas not the real value of the share scrips alone butalso included the element of the arrear dividendsagreed to be receivable by the purchaser. The legal position, therefore, is that the arrear dividends werenot claimable by the purchaser by virtue of his rightas such purchaser and could not become his incomefrom the shares. He was to get the same because thevendor had contracted to pass the arrear dividends onto him. They were the income of the vendors, i.e., theregistered holders but they could not become theincome of the purchaser. In fact the assessee hadpurchased the amount of arrear dividends for a pricewhich was included in the total consideration of Rs.1,12,575/-. What the assessee acquired in the form ofshare scrip represented its stock-in-trade, whichconsisted of the shares and the dividends potentialwhich had to be realised. In this state of facts it ismanifest that the assessee paid the amount of Rs.1,12,575/- not only for the share scrips but also forthe arrear dividends which was inextricably connectedwith the purchase of the share scrips. In our opinionthe High Court rightly held that the amount of Rs.43,925/- was not income which could be assessed inthe hands of the assessee. 5.It was said that the assessee had itself creditedthe amount of Rs. 43,925/- to the profit and lossappropriation account and thereafter transferred thesame to a reserve fund in the accounting year endingSeptember 30, 1955. No adjustment was made in theshare purchase account on account of the receipt ofdividend. But it is well established that a receipt whichin law cannot be regarded as income cannot becomeso merely because the assessee erroneously credited itto the profit and loss account. [see Commissioner ofIncome-tax, Bombay City I v. M/s. Shoorji Vallabhdas& Co.(1)]. The assessee's case, had all along been thatthe amount of arrear dividends received could not betreated as income of the assessee liable to tax for theassessment year 1956-57. As we have already shownthe consideration paid by the assessee was given notonly for the shares but also for share dividendsamounting to Rs. 43,925/- and the amount of Rs.1,12,575/- was paid not only for the share scrips butalso for the arrear dividends. In other words there wascapital purchase by the assessee. of the sharestogether with arrear dividends due on the shares forthe years 1936 to 1945. It is therefore not possible totreat the payment of Rs. 43,925/- as income liable totax either as profit under s. 10 of the Act or asdividend under s. 12 of the Act.” 2.5 where the expenses which are incurred had shown in theprevious year and it was shown separately and in view of thedecision of the Supreme Court in the case of Ramaraju SurgicalCotton Mills Ltd. (supra), the issues are required to be answeredin favour of the assessee against the department. 10.The appeals stand dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Pdaiya/40-41