IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 01.03.2016
+ ITA 32/2004
ANZ GRINDLAYS BANK
(now Standard Chartered Grindlays Bank Ltd.) .....Appellant
versus
DEPUTY COMMISSIONER OF INCOME TAX
AND ORS. ..... Respondents
Advocates who appeared in this case:
For the Appellant : Ms Shashi N. Kapila with Mr Pravesh Sharma
and Mr Sanjay Kumar.
For the Respondents : Mr P. Roy Chaudhari, Senior Standing Counsel
with Ms Lakshmi Gurung, Ms Easha Kadian,
Mr Ishant Goswami and Mr Rajesh Kumar.
CORAM:
JUSTICE S.MURALIDHAR
JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
1. The present appeal has been filed by Standard Chartered Grindlays
Bank Ltd., formerly known as 'ANZ Grindlays Bank Ltd.' (hereafter the
'Assessee') under Section 260A of the Income Tax Act, 1961 (hereafter
the 'Act') impugning an order dated 29th August, 2003 passed by the
Income Tax Appellate Tribunal (hereafter ,,the Tribunal) in ITA No.
1442/Del of 1997. The said appeal, ITA 1442/Del of 1997, was preferred
by the Assessee against an order dated 14th January, 1997 passed by the
ITA 32/2004 Page 1 of 22
Commissioner of Income Tax (Appeals) [hereafter 'CIT(A)'] in Appeal
No.164/96-97 which in turn was preferred by the Assessee against the
assessment order dated 25th March, 1994 passed in respect of Assessment
Year (AY) 1991-92 .
2. The controversy involved in the present appeal relates to the denial
of deduction of expenses - by virtue of provision of Section 40(a)(iii) of
the Act -for failure on the part of the Assessee to deduct and deposit Tax
Deducted at Source (TDS) within the prescribed time. This appeal was
admitted on 28th April, 2005 and two questions of law were framed. At
the hearing on 22nd December 2015, the Assessee did not press for one of
the questions as it was stated that it had since obtained relief in respect
thereof. Consequently only the following question of law arises for
consideration:
"Whether the Income Tax Appellate Tribunal was right
in law in holding that salaries paid to ex-patriate
employees overseas on which tax was paid in accordance
with CBDT Circular dated 685 dated 17/20 June 94 and
Circular 686 dated 12.8.94, is not permissible as a
deduction in computation of taxable business income in
view of the provisions of Section 40 (a)(iii) of the
Income Tax Act, 1961 read with Article 7 of the Indo-
UK Double Taxation Avoidance Treaty?"
ITA 32/2004 Page 2 of 22
3. The aforesaid question has to be considered in the following
context:
3.1 During the relevant period - financial years 1984-85 to 1993-94 -
the Assessee was a non-resident banking company and its principal place
of business was situated outside India. The Assessee also carried on
banking business in India through its branches situated within the
country. During the relevant period, the Assessee seconded some of its
employees from overseas to its branches in India. These expatriate
employees were employed for the business carried on in India. They
received a part of their remuneration by way of salaries and perquisites in
India which were duly reflected in the Profit and Loss Account drawn up
by the Assessee in respect of its Indian operations. The Assessee also
deducted tax at source on so much of the remuneration that was payable
to the aforementioned expatriate employees in India. Undisputedly, such
TDS was deposited with the Government.
3.2 In addition to the remuneration paid to the aforementioned
expatriate employees in India, the Assessee's head office situated
overseas also made certain payments to and/or for the benefit of such
expatriate employees. However, the Assessee did not account for such
payments, which were in the nature of salaries, allowances and
ITA 32/2004 Page 3 of 22
perquisites, in its Profit and Loss Account drawn up in respect of its
business in India. The Assessee neither claimed such payments as a
deduction for the purposes of computing its income chargeable to tax in
India nor deducted any tax under Chapter XVII B of the Act.
3.3 During the relevant period, some of the other non-resident
assessees, who had employed expatriate employees in India, had also not
deducted TDS on payments made to and/or for the benefit of such
employees abroad on an erroneous understanding that payments made
abroad were not subject to withholding tax in India. In order to clarify the
position, the Central Board of Direct Taxes (CBDT) issued a Circular i.e.
Circular No. 685 dated 17/20th June, 1994. By the aforesaid Circular, the
CBDT clarified that all payments made and perquisites provided to
employees overseas for services rendered in India are taxable in India
irrespective of the place where such payments or perquisites have been
made or provided. Accordingly, if the employees have rendered services
in India, the employers are liable to deduct tax at source even in respect
of payment of salary, allowances and perquisites paid and/or provided to
such employees overseas. The said circular also indicated that in order to
encourage immediate voluntary compliance, CBDT had decided that
penalty proceedings under Section 221 and 271C of the Act and
ITA 32/2004 Page 4 of 22
prosecution under Section 276B of the Act would not be initiated in cases
where the employers came forward and paid the entire amount of tax due
under Section 192 of the Act along with interest before 31st July, 1994.
3.4 Pursuant to the aforesaid Circular (CBDT Circular No.685 dated
17/20th June, 1994), the Assessee deposited a sum of Rs.9,69,43,214/-,
being the amount of TDS pertaining to the payments made abroad to
and/or for the benefit of the employees serving in India during the
financial years 1984-85 to 1993-94 and the interest due thereon, with the
Income Tax Authorities.
3.5 The tax and interest deposited by the Assessee was duly verified
and accepted by the income tax authorities and the concerned
Commissioner of Income Tax issued a communication on 11 th November,
1994 duly informing the Assessee that in view of the payments made, no
penalty or prosecution action would be initiated in respect of the
payments made overseas to and/or for the benefit of the expatriate
employees.
3.6 The assessments for the six assessment years from AY 1985-86 to
1990-91 stood concluded as on 28th July, 1994 and, thus, the Assessee
could not claim any deduction on account of the payments made in
ITA 32/2004 Page 5 of 22
respect of the said years. However, the Assessees appeal in respect of
AY 1991-92 was pending before CIT(A) and the Assessee sought to
claim a deduction of an amount of Rs.1,32,46,994/- in respect of
payments made pertaining to the financial year 1990-91. The CIT(A)
rejected the Assessee's claim by holding that such claim could not be
made in appellate proceedings. He also observed that no deduction could
be claimed in view of Section 40(a)(iii) of the Act. He doubted whether
the entire tax due had been paid by the Assessee since the amount of tax
paid would also be includable as income of the employees and, therefore,
have the effect of increasing their income and consequently, the tax
payable thereon. He further observed that it was possible that the salaries
paid to the employees overseas were a part of the head "office expenses".
3.7 On appeal, the Tribunal permitted the Assessee to urge the
additional ground but rejected the same principally as falling foul of
Section 40(a)(iii) of the Act. The Tribunal observed that Section 40 of the
Act is a 'prohibitive' or 'disincentive' provision and, thus, had to be
considered strictly. It held that since no tax had been deducted at source
under Chapter XVII B of the Act within the prescribed time, no deduction
under Section 40(a)(iii) was permissible. The Tribunal was of the view
that a deduction would be permissible only if the provisions of Chapter
ITA 32/2004 Page 6 of 22
XVII B are strictly complied with and TDS is deducted and paid within
the prescribed time. It observed that the CBDT Circular only gave
immunity to the Assessee from penalty and prosecution but did not
remove the disincentive under Section 40 of the Act.
3.8 The Tribunal also referred to Section 40(a)(i) of the Act which
expressly provided that no deduction would be allowed in respect of any
interest, royalty, fees for technical services or other sum chargeable under
the Act which is payable outside India and in respect of which no tax has
been deducted and paid under Chapter XVII B of the Act. The Tribunal
noted that proviso to Section 40(a)(i) of the Act expressly provided that
where tax in relation to any sum mentioned in sub clause (i) of clause (a)
of Section 40 of the Act is paid or deducted in any subsequent year, the
deduction would be allowed in the previous year in which such tax was
paid or deducted. The Tribunal reasoned that since no such similar
provision existed in respect of sub clause (iii) of clause (a) of Section 40
of the Act, no deduction would be permissible for payments which are
chargeable under the head "Salaries" if tax had not been paid or deducted
under Chapter XVII B.
4. The question whether an assessee is liable to deduct tax at source
on the aforementioned payments made to and/or for benefit of its
ITA 32/2004 Page 7 of 22
employees seconded from its head office situated outside India, is no
longer res integra in view of the decision of the Supreme Court in
Commissioner of Income Tax v. Eli Lilly & Co. (India) P. Ltd.: (2009)
312 ITR 225 (SC). The same is also not a subject matter of dispute in the
present appeal.
5. It cannot be disputed that the Assessee has paid the tax which it
was required to withhold under the provisions of Section 192 of the Act.
Although before the CIT(A), the Revenue had sought to contend that the
amount paid to the employees has not been verified as it did not form a
part of the Profit and Loss Account submitted by the Assessee, however,
the same is without merit as the communication dated 11 th November,
1994 issued by the Commissioner of Income Tax (hereafter also referred
to as "CIT") duly indicates that the Assessee had made a disclosure of the
payments made outside India for financial years 1984-85 to 1993-94 in
respect of its expatriate employees and further had provided "full details".
The Commissioner of Income Tax had also obtained a report from the
lower authorities and the TDS payments made were duly verified. The
AO had also examined the exchange rates applied by the Assessee while
determining the amount of tax to be deposited. It is only after duly
verifying the relevant facts that the CIT had issued the communication
ITA 32/2004 Page 8 of 22
accepting that no action for penalty or prosecution would be initiated in
respect of the payments made to expatriate employees.
6. Undisputedly, the entire tax payable on the salaries along with
interest due thereon has been received by the Revenue. Even before us,
Mr P. Roy Chaudhari, learned Senior Standing Counsel for the Revenue
did not dispute that the Assessee had paid the requisite amount of tax.
7. Concededly, the powers of a CIT (A) are wide and in an Appeal
against an Assessment order, it may confirm, reduce, enhance or annul
the assessment. Thus, in cases where there is dispute as to the material
facts for entertaining a claim, the CIT (A) would be well within his
powers to do so. In the present case, the reliance placed by the CIT (A)
on the decision of Additional Commissioner of Income Tax v.
Gurjargravures P. Ltd: [1978] 111 ITR 1 (SC) is mis-placed as in that
case neither any claim was made before the AO nor was there any
material on record to support the claim. The Supreme Court specifically
noted the same and held that on the facts of that case, the question
referred to the High Court should have been answered in the negative. In
the present case, there is no dispute as to the material facts required for
allowing the deduction as claimed by the Assessee. The TDS paid on the
expenses claimed have been duly verified and the tax on the payments
ITA 32/2004 Page 9 of 22
made which are chargeable under the head ,,Salaries have been recovered
by the Government. The only reason for denying the claim is non-deposit
of TDS within the prescribed time. The TDS having been deposited, there
is no impediment for Assessee to claim the related expense.
8. In the aforesaid circumstances, the principal issue to be addressed
is whether the provisions of Section 40(a)(iii) disentitles an assessee to
claim a deduction on account of Salaries paid to its employees if the tax is
not paid within the specified time but is paid subsequently. Mr
Chaudhari, learned Senior Standing Counsel for the Revenue has
contended that there are twin requirements to be fulfilled; the first being
that tax should have been deducted under Chapter XVII B of the Act; and
second being that tax should have been paid. He argued that even if the
tax is paid in subsequent years, deduction on account of expenses could
not be allowed because the second condition which is deduction of tax at
the time of payment of the amount as required under Section 192 of the
Act would not be fulfilled. According to him, if the tax is not deducted
and paid within the time prescribed for such deduction or payment under
the relevant provisions, an assessee would not be entitled to claim that it
had deducted or paid the tax under Chapter XVII B of the Act. He also
referred to the decision of the Supreme Court in Eli Lilly & Co. (India)
ITA 32/2004 Page 10 of 22
P. Ltd. (supra) in support of his contention that Section 40(a)(iii) was an
integrated code and Section 40(a)(iii) would have to be read in
conjunction with Section 192 of the Act which required an employer
(assessee) to deduct and deposit the tax payable in respect of payments
chargeable under the head "Salaries".
9. Mr Chaudhari further supported the Tribunals view that absence
of proviso similar to that as under Section 40(a)(i) also indicated that no
deduction under Section 40(a)(iii) was allowable in case where tax was
not deducted or paid within the prescribed time under Chapter XVII B of
the Act.
10. In order to address the controversy, it is necessary to refer to the
provisions of sub-clauses (i) and (iii) of clause (a) of Section 40 of the
Act as in force during the relevant period and the same are reproduced
hereunder:
"40 Notwithstanding anything to the contrary in sections
30 to 38, the following amounts shall not be deducted in
computing the income chargeable under the head "Profits
and gains of business or profession",--
(a) in the case of any assessee--
(i) any interest (not being interest on a loan issued
for public subscription before the 1st day of April, 1938),
royalty, fees for technical services or other sum chargeable
ITA 32/2004 Page 11 of 22
under this Act, which is payable outside India, on which tax
has not been paid or deducted under Chapter XVII-B;
Provided that where in respect of any such sum, tax has been
deducted under Chapter XVII-B or paid in any subsequent
year, such sum shall be allowed as a deduction in computing
the income of the previous year in which such tax has been
paid.
*****
(iii) Any payment which is chargeable under the head
"Salaries" if it is payable outside India and if the tax has not
been paid thereon nor deducted therefrom under Chapter
XVII B."
11. Section 40 of the Act begins with the non obstante clause and,
thus, expressly disentitles an assessee to claim deductions which may
otherwise be allowable under Sections 30 to 38 of the Act. Thus, even
though an amount is deductable in computing the income chargeable
under the head "profits and gains of business or profession" , the same
would not be deductable if it falls foul of any of the clauses of Section 40
of the Act. A plain reading of Section 40(a)(iii) of the Act as was in force
during the relevant year indicates that no deduction would be allowable in
respect of any payments chargeable under the head "Salaries" if (a) the
same are payable outside India and (b) if tax has not been paid or
deducted thereon under Chapter XVII B of the Act. The said clause (iii)
was substituted by virtue of the Finance Act, 2003 with effect from 1st
ITA 32/2004 Page 12 of 22
April 2004. By virtue of the aforesaid amendment, the rigor of sub clause
(iii) of clause (a) of Section 40 of the Act now also extends to any amount
payable as salaries in India. Plainly, the principal object of the aforesaid
sub clause (iii) is to provide a further disincentive for non-compliance of
provisions of Section 192 of the Act.
12. The provisions of Section 192 fall within Chapter XVII B of the
Act which relates to collection and recovery of tax. Provisions for
deduction of tax at source are a part of the machinery provided for
collection of taxes payable by a payee (recipient of income) by directly
imposing upon the payer an obligation to withhold the tax due and
deposit the same with the Government. Such tax is deposited to the credit
of the payee and not the payer. In case of salaries, any person responsible
for paying the income chargeable under the head "Salaries" - who would
inevitably be the employer - is obliged to deduct the tax chargeable on the
income of the employee (payee) under the head "Salaries". Thus, in the
present case, the tax deposited by the Assessee is clearly in discharge of
its obligation under Chapter XVII B of the Act. In this view, the
contention advanced by Mr Chaudhari that the condition that the
Assessee has not deducted and deposited the tax under Chapter XVII B of
the Act, cannot be accepted. Indisputably, the Assessee has deposited the
ITA 32/2004 Page 13 of 22
requisite amount which it was required to deposit in respect of amounts
chargeable under the head "Salaries" that was payable to and or for the
benefit of employees outside India. The said tax is deposited to the credit
of such employees. Thus, for all intents and purposes the same is
considered as a part of their Salaries which has not been paid to them but
has been deposited directly with the Government.
13. It is also relevant to mention that Circular No. 685 dated 17/20th
June, 1994, in compliance of which the Assessee had deposited the
amount of tax, was issued under Chapter XVII B of the Act; the said
Circular granted amnesty from penalties and prosecution to the assessees
who complied with their obligation to deposit TDS in terms of Section
192 of the Act for the preceding years for which they had not done so, on
or before 31st July, 1994. The said circular clarified the position regarding
the applicability of provisions to withhold and deposit tax in respect of
payments made abroad and required the employers to immediately
comply with the provisions of Section 192 of the Act. Such compliance
was also incentivised by granting the amnesty as aforesaid. In the
circumstances, it can hardly be disputed that the tax deposited by the
Assessee was in discharge its obligations, albeit belatedly, as imposed
under Chapter XVII B of the Act. That being so, the Assessee had also
ITA 32/2004 Page 14 of 22
overcome the rigor of sub-clause (iii) of clause (a) of Section 40 of the
Act as the necessary condition for applicability of the said provision, that
is, non-deduction and payment of TDS under Chapter XVII B of the Act,
no longer held good. Having complied with the said obligation, the
Assessee could not be denied the deduction which was otherwise
allowable under Section 37 of the Act.
14. In our view, an absence of a provision similar to the proviso to sub-
clause (i) of clause (a) of Section 40 of the Act cannot be read as to
disentitle an Assessee to claim a deduction even though it has complied
with the condition under sub-clause (iii) of clause (a) of Section 40 of the
Act. A plain reading of proviso to sub-clause (i) of clause (a) of Section
40 of the Act indicates that where an Assessee has not deducted or paid
the tax at source in terms of Chapter XVII B in respect of any sum as
specified under sub-clause (i) of clause (a) of Section 40 of the Act, the
Assessee can, nonetheless, claim a deduction in the year in which the
assessee deposits the tax. This benefit is not available to an assessee in
respect of payments chargeable under the head "Salaries" which fall
within sub-clause (iii) of clause (a) of Section 40 and not sub-clause (i) of
clause (a) of Section 40 of the Act. Thus, an assessee would not be
entitled to claim deduction on account of salaries if it fails to deduct or
ITA 32/2004 Page 15 of 22
pay the amount under Chapter XVII B of the Act. In cases where such
assessee deposits the amount in a subsequent year, the Assessee would
still not be able to claim the deduction in the year in which such tax is
deposited; his claim for deduction can be considered only in respect of
the year to which such expense relates. Therefore, in cases where the
assessments stand concluded, the Assessee would lose the benefit of
deduction for the expenses incurred on account of its failure to have
deposited the tax at source. Thus, concededly, in the present case the
Assessee has lost its right to claim a deduction for a period of six years -
AY 1985-86 to AY 1990-91- even though the Assessee has paid the TDS
on the expenses pertaining to said period.
15. If a provision similar to the proviso to Section 40(a) (i) was
applicable to Section 40(a) (iii) then the Assessee would have been
entitled to claim the entire expenses on account of salaries paid overseas
pertaining to financial years 1984-85 to 1993-94 in the financial year
1994-95 relevant to AY 1995-96 as the payment for the tax for the
aforesaid years was paid on 20th July, 1994. However, absence of a
provision similar to that under sub-clause (i) of clause (a) of Section 40
does not mean that the Assessee would also be disentitled to claim
deduction on account of salaries in the year to which such expenses
ITA 32/2004 Page 16 of 22
pertained even though the Assessee has subsequently discharged its
obligation to deposit the tax and has thus overcome the rigor of sub-
clause (iii) of clause (a) of Section 40 of the Act.
16. The Tribunal has proceeded on the basis that if the tax due on
salaries paid overseas is not deposited strictly within the time prescribed
under Chapter XVII B of the Act, Section 40(a) (iii) would be applicable.
In our view, this added condition that the tax must be deducted and paid
within time, cannot be read in Section 40(a) (iii) of the Act. The plain
language of the Section 40(a) (iii) does not permit such interpretation. If
the parliament so desired, it would have specifically enacted so. This
becomes apparent when one reads the legislative amendments made to
Section 40 of the Act.
17. Sub-clause (i) and sub-clause (iii) of clause (a) of Section 40 were
substituted by Finance Act, 2003 w.e.f. 1st April, 2004. The said sub-
clauses as substituted read as under:-
"(i) any interest (not being interest on a loan issued
for public subscription before the 1st day of April,
1938), royalty, fees for technical services or other
sum chargeable under this Act which is payable,--
(A) Outside India: or
(B) In India to a non-resident, not being a company
or to a foreign company, on which tax has not been
ITA 32/2004 Page 17 of 22
deducted or, after deduction, has not been paid
before the expiry of the time prescribed under sub-
section (1) of section 200 and in accordance with
other provisions of Chapter XVII-B:
Provided that where in respect of any such sum, tax
has been deducted under Chapter XVII-B or paid in
any subsequent year, such sum shall be allowed as a
deduction in computing the income of the previous
year in which such tax has been paid.
Explanation.---For the purposes of this sub-clause,--
-
(A) "royalty" shall have the same meaning as in
Explanation
2 to clause (vi) of sub-section (1) of section 9;
(B) "fees for technical services" shall have the
same meaning as in Explanation 2 to clause
(vii) of sub-section (1) of section 9;"
xxxx xxxx xxxx
"(iii) any payment which is chargeable under the
head "Salaries", if it is payable--
(A) Outside India; or
(B) To a non-resident,
and if the tax has not been paid thereon nor
deducted therefrom under Chapter XVII-B;"
(underlining for emphasis)
18. It is at once seen that where the legislature wanted to make
payment of tax within a specified time a necessary pre-condition, it had
expressly indicated so. The Parliament has expressly enacted that
deduction in respect of payments made under sub-clause (i) of clause (a)
of Section 40 of the Act would not be available where such payments
ITA 32/2004 Page 18 of 22
were made in India to a non-resident in respect of which tax had not been
paid "before the expiry of time prescribed under sub Section (i) of
Section 200". However, no such condition for depositing the tax paid
within a prescribed time was introduced in sub clause (iii) of clause (a) of
Section 40 of the Act.
19. It is also relevant to note that sub-clause (i) of clause (a) of Section
40 was further substituted by sub-clauses (i), (ia) and (ib) by virtue of
Finance Act (No.2) w.e.f. 1st April, 2005. However, the pre-condition for
depositing the tax within the time prescribed under Section (i) of Section
200 was retained in sub-clause (i) and (ia). Thereafter, by virtue of
Finance Act (No.2), 2014, sub clause (i) was further amended and the
principal condition of depositing tax in respect of payments made in India
was amended and instead of the pre-condition of depositing the tax within
the time prescribed under Section 200 (i) of the Act, it was now stipulated
that the tax be deposited "on or before the due date specified in sub
section (i) of Section 139".
20. With effect from 1st April, 2015, sub-clause (i) of clause (a) of
Section 40 reads as under:
"40. Notwithstanding anything to the contrary in
sections 30 to [38], the following amounts shall not be
ITA 32/2004 Page 19 of 22
deducted in computing the income chargeable under the
head "Profits and gains of business or profession",---
(a) in the case of assessee--
[(i) any interest (not being interest on a loan issued for
public subscription before the 1st day of April, 1938),
royalty, fees for technical services or other sum
chargeable under this Act, which is payable,---
(A) outside India; or
(B) in India to a non-resident, not being a company or to
a foreign company, on which tax is deductible at source
under Chapter XVII-B and such tax has not been
deducted or, after deduction, has not been paid [on or
before the due date specified in sub-section (1) of
section 139]:
[Provided that where in respect of any such sum, tax
has been deducted in any subsequent year, or has been
deducted during the previous year but paid after the due
date specified in sub-section (1) of section 139, such
sum shall be allowed as a deduction in computing the
income of the previous year in which such tax has been
paid.]
Explanation.--For the purposes of this sub-clause,--
(A)"royalty" shall have the same meaning as in
Explanation 2 to clause (vi) of sub-section (1) of section
9;
(B)"fees for technical services "shall have the same
meaning as in Explanation 2 to clause (vii) of sub-
section (1) of section 9;"
It is apparent from the above that the condition to deposit TDS within the
prescribed time cannot be read into sub-clause (iii) of clause (a) of
ITA 32/2004 Page 20 of 22
Section 40 of the Act as-unlike the language of item (B) of sub-clause (i)
of clause (a) of Section 40-the same has not been specifically enacted.
21. We are also unable to agree with Mr. Chaudharis contention that
no deduction can be claimed by the Assessee as the salaries were not
reflected in the profit and loss account. The controversy whether an
Assessee can claim deduction on an expense which is not reflected in its
profit and loss account for the relevant period has been authoritatively
settled by the Supreme Court in its decision in The Kedarnath Jute Mfg.
Co. Ltd. v. The Commissioner of Income Tax, (Central), Calcutta:
[1971] 82 ITR 363 (SC) wherein the Court held as under:-
"We are wholly unable to appreciate the suggestion that if an
assessee under some misapprehension or mistake fails to
make an entry in the books of account and although under the
law, a deduction must be allowed by the Income Tax Officer,
the assessee will lose the right of claiming or will be debarred
from being allowed that deduction. Whether the assessee is
entitled to a particular deduction or not will depend on the
provision of law relating thereto and not on the view which
the assessee might take of his rights nor can the existence or
absence of entries in the books of account be decisive or
conclusive in the matter."
22. In view of the above, the question of law is answered in the
negative, that is, in favour of the Assessee and against the Revenue.
ITA 32/2004 Page 21 of 22
23. The appeal is allowed. In the circumstances, the parties are left to
bear their own costs.
VIBHU BAKHRU, J
S.MURALIDHAR, J
MARCH 1, 2016
RK/pkv
ITA 32/2004 Page 22 of 22
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