Rohit Jain, Adv, Tejasvi Jain, CA, Somya Jain, CA for the Petitioner. Mritunjay Barnawal, Sr. DR for the Respondent.

These appeals are filed by the assessee against orders dated 27/01/2016 for A.Ys. 2001-02 to 2005-06 passed by the Commissioner of Income Tax (Appeals)- 1, Noida.

3. The Grounds of appeal are as follows:

ITA NO. 1955/Del/2016 (A.Y. 2001-02)

“1. That on facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 1,16,60,400/- being expenses incurred on Enterprise Resource Planning (“ERP”) and software expenses, holding the same as capital expenditure.

2. That the CIT(A) erred on facts and in law in upholding the disallowance to the extent of Rs. 86,398/- under Section 14A of the Act.”

ITA NO. 1956/Del/2016 (A.Y. 2002-03)

“1. That on facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 1,94,03,906/- being expenses incurred on Enterprise Resource Planning (“ERP”) and software expenses, holding the same as capital expenditure.”

ITA NO. 1957/Del/2016 (A.Y. 2003-04)

“1. That on facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 34,44,637/- being expenses incurred on Enterprise Resource Planning (“ERP”) and software expenses, holding the same as capital expenditure.”

ITA NO. 1958/Del/2016 (A.Y. 2004-05)

1. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the assessing officer to allow deduction of Rs.2,87,484, being expenses relatable to the relevant assessment year but debited in the Profit & Loss Account of the subsequent assessment year(s).

2. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the assessing officer to allow depreciation of Rs.35,89,089, based on the revised depreciation chart filed during the course of assessment proceedings.

3. That on the facts and circumstances of the case and in law, the CIT(A) erred in not adjudicating the aforesaid grounds necessary to compute the correct taxable income of the appellant under the provisions of the Income Tax Act, 1961.”

ITA NO. 1959/Del/2016 (A.Y. 2005-06)

1. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the Assessing Officer to allow further depreciation of Rs. 5,64,852/- based on revised depreciation chart filed during the course of assessment proceedings.

2. The CIT (A) erred on facts and in law in not adjudicating the aforesaid ground raised in the memorandum of appeal (refer Ground No. 2 in Form No. 35.)”

3. Firstly, we are taking up the facts of ITA No. 1955/Del/2016 filed by the assessee for Assessment Year 2001-02. The assessee company is in the business of manufacture and sale of Sugar, Turbines, Gear and Gear Boxes and project related activities in the field of settling up of Sugar plants, water treatment plants and mini hydel power projects. Apart from these activities, various sale of spares and servicing and engineering services are also being undertaken by the company. The business activities are being undertaken at diverse locations through various divisions/units of the company. Triveni Engineering and Industries Ltd. i.e. assessee company filed its return of income on 31.10.2001 declaring business income of Rs. 13,38,43,652/- which was entirely set off against brought forward losses/allowances. The assessee also claimed long term capital loss of Rs. 1,27,04,048 which has been carried forward to subsequent year. Book profit of Rs. 6,86,74,133/- was declared u/s 115JB of the Income Tax Act, 1961 and taxes were paid thereupon by the assessee. The return was processed u/s 143(1) on 24.02.2003 and selected for scrutiny. Notice u/s 143(2) dated 18.10.2002 was issued and duly served upon the assessee. Notice u/s 143(2) and 142(1) dated 12.12.2002 along with a questionnaire was issued thereby calling for various details. In response to the notice, CA and Sr. Manager Taxation appeared on behalf of the company from time to time and filed the details before the Assessing Officer. After going through the details and the reply/submissions of the assessee, the Assessing Officer vide assessment order dated 19.03.2004, assessed the business income of the assessee at Rs. 14,71,34,801/-, which was set-off against available brought forward losses / allowances. Long term capital loss of Rs.1,27,04,048/- for the year as claimed by the assessee was allowed to be carried forward to subsequent years in accordance with the provisions of Section 74 of the Income Tax Act, 1961. The book profits in terms of Section 115JB was assessed at Rs. 5,92,24,133/- and the tax due thereon was fully adjusted against the taxes already paid by the assessee. Thus, the summary of the additions / disallowances made by the Assessing Officer are as follows:

i) Interest on SDF loan: Addition of Rs.63,90,848/-

(ii) ERP, Software & Design Development & BPR Expenses: Addition of Rs. 81,62,280/-

(iii) Short Charging of Interest on Loan/Advance to Carvanserai Ltd.: Addition of Rs. 90,95,883/-

iv) Bad Debts written off: Addition of Rs. 5,83,352/-

v) Commission: Addition of Rs. 91,834/-

vi) Dividend Income: Addition of Rs.3,00,000/-

4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5. As regards to Ground No. 1 relating to ERP and software related expenses amounting to Rs. 1,16,60,400/-, the Ld. AR submitted that the assessee is a public limited company engaged in the business of manufacture and sale of Turbine, Gear and Gear Boxes, sugar plants, water treatment plants, mini hydel power projects, etc. The assessee had, during the relevant previous year, inter alia, incurred the following expenditure aggregating to Rs.1,16,60,400 on implementation of new ERP package which was treated as deferred revenue expenditure in the books of accounts:

i) Rs.66,29,773/- on Enterprise Resource Planning (“ERP”) package;

ii) Rs.50,30,627/- on design, development, consultancy and other software related expenses.

The Ld. AR submitted that though in the books of account, the aforesaid expenses were treated as deferred revenue expenditure, the aforesaid expenses, being revenue in nature, were claimed as deduction in the return of income.

The Assessing Officer however, disallowed the aforesaid expenses holding the same to be capital expenditure on the ground that the same resulted in enduring benefit to the assessee, and allowed depreciation @ 60% on the same. Accordingly, the Assessing Officer made disallowance of Rs.81,62,280 (Rs.1,16,60,440 - Rs.34,98,120), after allowing depreciation of Rs.34,98,120 [@ 30% since installed after 30th September, 2000]. On further appeal, the CIT(A), despite agreeing that expenditure was incurred to improve the efficiency and productivity of the assessee, confirmed the action of the Assessing Officer, holding that such efficiency and productivity is a long-term enduring benefit, going beyond the year under consideration. The Ld. AR submitted that the aforesaid action of the Assessing Officer/CIT(A) is without judicious appreciation of the facts of the case and the position in law. During the relevant Assessment year 2001-02, the assessee entered into a License Agreement dated 20.9.2000 with SAP India Systems Ltd. for introduction of ERP package at the Bengaluru Unit. The Ld. AR submitted that ERP is a general purpose software which is used to link the work of each department within the organization so that resources of an organization can be pooled to share information as well as generate reports and to check status of each activity. ERP/SAP software is one of the most robust and highly acclaimed software throughout the world and has its application in processing and documenting business data. The SAP software is divided into sub-modules like work-flow management, human resources, finance and accounting, logistics, production, etc. The software provides capability to surpass the boundaries between departments in an organization and the integrated modules work together and support the individual departments. The Ld. AR submitted that the Assessing Officer failed to appreciate that aforesaid expenses incurred merely facilitated the day-to-day business operations and did not result in any enduring benefit in the capital field, ignoring the following facts:

i) ERP is a standardized software and not a customized software. Further,

ERP is an application software and not an operating software;

ii) The software does not involve transfer of any technology for the production of any particular product nor it is an integral part of any particular machinery used in manufacture of finished products by the assessee; iii) The assessee only had the limited right to use the software for the purpose of business; the assessee cannot copy, translate, disassemble, etc., the software;

iv) The assessee has a non-exclusive license to use the software and proprietary information;

v) The ownership and title in all the intellectual property rights, including patent, trademarks, service mark, copyright and trade secrets in the SAP proprietary information shall continue to vest with the licensor of the software;

vi) There was no outright sale of the aforesaid software by SAP to the assessee and the aforesaid expenditure did not result in acquisition/creation of an asset in the capital field as the assessee did not acquire any ownership rights in the said software;

vii) The assessee was prohibited from making copies of the aforesaid software for commercial exploitation. Further, the use was limited in time and the right to use the software were to lapse after expiry of the license. Accordingly, since no ownership of any software is acquired by the assessee as a consequence of the impugned expenditure and it is only the limited right to use the concerned software product which the assessee acquires without acquiring the right of transferring the impugned software, no benefit of an enduring nature has been derived by the assessee as result of impugned expenditure. The said expenditure has been incurred only for smooth working and for improving the functioning of the organization. That apart, in the modern era of fast changing technology, where software becomes obsolete quite fast and needs to be replaced / upgraded by an assessee, the software, in any, case cannot also be said to result in any enduring benefit to the assessee to be considered as capital expenditure. The Ld. AR pointed out details of the expenditure, which comprised of the following :

(a) SAP implementation costs;

(b) Development and creation of Turbine Frame

(c) Maintenance of SAP software

(d) Cluster software charges

(e) Consultancy charges

(f) Annual Maintenance charges

(g) Software for Torsional Analysis

The Ld. AR further submitted that on these expenses incurred are fundamentally revenue expenses like consultancy charges, AMC, analysis charges, maintenance charges, etc., apart from SAP implementation costs. The Ld. AR submitted that none of the aforesaid expenditure, resulted in any enduring benefit in capital field or creation of a capital asset and therefore, the entire expenditure is allowable revenue expenditure. The Hon’ble Supreme Court in the case of Empire Jute Co Ltd vs CIT: 124 ITR l laid down the test for determining as to what constitutes capital expenditure. The ratio decidendi laid down in the fore said judgment has been reiterated in the following decisions:

• CIT vs Associated Cement Companies Ltd: 172 ITR 257 (SC)

• Alembic Chemical Works Co. Ltd vs CIT: 177 ITR 377 (SC)

The aforesaid expenditure on computer software too, it is submitted, did not result in an enduring benefit in the capital field and, therefore, the same is not in the nature of capital expenditure. The Hon’ble Delhi High Court in the case of CIT vs K & Co. 181 CTR 378 upheld that the order of the Tribunal holding that expenditure incurred by assessee on maintenance of computer and their upgradation including development of software was in the nature of revenue expenditure and did not give rise to any substantial question of law. The Ld. AR relied on the decision of Hon’ble Delhi High Court in the case of CIT vs GE Capital Services Ltd. 300 ITR 420 (Del) wherein purchase of MS Office software was held to be of revenue nature since it was not custom built and would have required alterations. The Ld. AR also relied upon the decision of the Hon’ble Delhi High Court in the case of CIT vs Asahi India Safety Glass Ltd. 346 ITR 329. Revenue’s appeal against the aforesaid decision was dismissed by the Hon’ble Supreme Court vide order dated 05.07.2012 in SLP (C) CC 10108/2012. The Ld. AR further relied upon the decision of the Delhi Tribunal in case of DCIT vs. Eicher Motors Ltd. 37 ITR (T) 427. In this regard, the Ld. AR also relied on the following decisions wherein the expenses incurred towards ERP software/ SAP has been held to be allowable as revenue deduction:

CIT v. Raychem RFG Ltd.: 346 ITR 138 (Bom.)

CIT v. Southern Roadways Ltd: 304 ITR 84 (Mad.)

ACIT v. Torrent Pharmaceuticals Ltd.: 137 ITD 301 (Ahd.)

DCIT v. Bosch Ltd.: 167 ITD 650 (Bang. Trib.) '

The Ld. AR further relied upon decision of the Mumbai Bench of the Tribunal in the case of Glenmark Pharmaceuticals Ltd. v. DCIT: ITA No.1110, 1221, 4434/Mum/2007, wherein on similar facts, the Tribunal allowed the expenditure incurred by the assessee on ERP implementation, after analyzing the various clauses of license agreement entered into by the assessee. Further, the Ld. AR relied upon the following decisions wherein expenditure towards development of software has been held to be allowable as revenue deduction:

CIT(A) Vs. ACL Wireless Ltd: 361 ITR 210 (Del)

CIT v. Technovate E Solutions P. Ltd: 254 ITR 110 (Del.)

CIT v. Varindra Agro Chemicals: 309 ITR 272 (P&H)

CIT vs Kotak Securities Ltd (No. 1): 346 ITR 349 (Bom)

CIT v. Uhde India P. Ltd: 358 ITR 395 (Bom)

CIT v. IBM India Ltd: 357 ITR 88 (Kar.)

CIT v. Lakshmi Vilas Bank Ltd. 97 taxmann.com 105(Mad)

CIT v. Shri Renuga Textiles Mills Ltd.: 366 ITR 649 (Mad)

CIT v. Southern Roadways Ltd: 282 ITR 379 (Mad.)

CIT v. Karur Vysya Bank Ltd: 229 Taxman 396 (Mad)

CIT v Southern Roadways Ltd.:288 ITR 15 (Mad)

CIT v. Harper Collins Publishers India Ltd.: 166 TTJ 152 (Del. Trib.)

ITO v. Spice Communications Ltd: 35 SOT 78 (Del Trib.)

Gujarat Guardian Ltd v. DCIT: 35 ITR(T) 217 (Del Trib.)

Media Video Ltd v. JCIT: 122 Taxman 28 (Del Trib.)

ST Microelectronics Private Ltd v. CIT: 145 TTJ 553 (Del Trib.)

Bank of Punjab Ltd v. JCIT: 122 Taxman 235 (Chd Trib.)

Business Information Processing Services v. ACIT: 73 ITD 304 (Jaipur Trib.)

ITC Classic Finance Ltd v. DCIT: 112 Taxman 155 (Kol Trib.)

ACIT v. SRA Systesm Ltd.: 153 ITD 338 (Chennai Trib.)

Nimbus Communication Ltd. v. Addl. CIT 149 ITD 508 (Mum. Trib.) Sanghvi Savla Stock Brokers Ltd: 152 ITD 820 (Mum Trib.)

In view of the above, the Ld. AR submitted that expenditure incurred by the assessee towards implementation of ERP system in the business, in the present modern era of fast changing technology, cannot be said to result in acquisition of any capital asset nor can be said to have resulted in any benefit of enduring nature, to be regarded as capital expenditure. Further, since the right to use the underlying software is acquired by the assessee to integrate the functioning of the business as a whole, no revenue per-se was generated by the assessee from any of such licensed software. The same merely resulted in the business operations being carried out more efficiently and smoothly. In fairness, the Ld. AR pointed out that the Tribunal in assessee’s own case for the Assessment Year 2000-01 vide order dated 08.08.2008 in ITA No.2848/Del/2004 had set aside the aforesaid issue to the file of the Assessing Officer, following the decision of the Special Bench in the case of Amway India Enterprises 111 ITD 112 (Del) (SB) (supra). The Ld. AR submitted that however, after the said decision, there are direct decisions of the High Courts and the Tribunal referred supra, wherein similar expenditure incurred has been held to be allowable as revenue expenditure. Thus, in view of the above, the Ld. AR submitted that the expenditure incurred by the assessee cannot be said to result in an enduring benefit in the capital field to be regarded as capital expenditure and must be directed to be allowed as a revenue expenditure.

6. The Ld. DR submitted that the expenditure on ERP as pointed out by Assessing Officer clearly is linked to acquiring SAP Software and its implementation. The benefit derived by acquiring such software is not limited to the current year but brings to the Assessee an advantage of enduring nature. The benefits associated with the software would accrue over a protracted period of time. The benefits derived through other expenses on software & design development, similarly confer long term benefits to assessee. Hence such expenditure is in the capital field and rightly disallowed by the Assessing Officer. In Assessment Year 2000-01 the Assessing Officer disallowed and held that the expenses are capital in nature and allowed depreciation benefits. Thus the Assessing Officer as well as CIT(A) was right in holding that these expenses are capital in natures. The Ld. DR relied upon the assessment order and order of the CIT(A).

7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that no ownership of any software is acquired by the assessee as a consequence of the ERP expenditure. This fact was not disputed by the Assessing Officer. The assessee has only limited right to use the concerned software product which the assessee acquired without acquiring the right of transferring the said software. Thus, from the perusal of the material on record it can be seen that no benefit of an enduring nature has been derived by the assessee as result of said expenditure. The said expenditure has been incurred only for smooth working and for improving the functioning of the organization. The Assessing Officer ignored the fact that in today’s fast changing technology where software becomes obsolete for smooth functioning of the business, the software needs to be replaced / upgraded by an assessee from time to time, the software, in any, case cannot also be said to result in any enduring benefit to the assessee to be considered and thus, it cannot be held as capital expenditure. The case laws referred by the Ld. AR supports the contentions of the assessee as expenditure incurred on computer software does not constitute enduring benefit to term the same as capital in nature. Thus, the Assessing Officer as well as the CIT(A) failed to take cognizance of the decisions of the various High Court and the Apex Court as well as the nature of the expenditure incurred by the assessee. Hence, Ground No. 1 of Assessee’s appeal is allowed.

8. As regards to Ground No. 2 relating to disallowance under Section 14A of the Act to the extent of Rs. 86,398/-, the Ld. AR submitted that during the year under consideration, the assessee earned dividend income aggregating to Rs.17,27,950 from investment in various equity shares, which was claimed as exempt under Section 10(33) of the Act. The investment in the shares which yielded above exempt dividend income, had been made out of surplus funds available in earlier years. Since no expenditure was incurred by the assessee in relation to exempt dividend income, no disallowance under Section 14A of the Act was suo moto offered by the assessee. In the assessment order, the Assessing Officer made ad-hoc disallowance of expenses of Rs.3,00,000 on the ground that some manpower/man hours alongwith the expenses on other clerical staff / managerial staff and expenses for portfolio management must have been incurred towards earning of aforesaid exempt dividend income. The CIT(A) however, restricted the disallowance to 5% of the dividend income earned by the assessee during the relevant assessment year. Assessee has challenged the action of the CIT(A) in restricting the disallowance made under Section 14A to 5% of dividend income received. The Ld. AR submitted that the aforesaid action of the Assessing Officer is, not based on correct appreciation of facts and law. In terms of the provisions of Section 14A of the Act, only expenditure incurred, having relation with earning of exempt income, is not an allowable deduction under the provisions of the Act. The phrase “expenditure incurred” used in the aforesaid section refers to actual expenditure, which has proximate nexus with exempt income, and not some imaginary or notional expenses, for the purposes of disallowance under that section. The provisions of Section 14A are applicable if and only if the assessing officer, at the first place, finds that the assessee has actually incurred expenses, which have proximate nexus with earning of exempt dividend income and not otherwise. In other words, the onus is on the Assessing Officer to find proximate nexus of expenses with earning of exempt income, before computing any disallowance under section 14A of the Act. The Ld. AR submitted that in the absence of such nexus being established, it is not open to the Assessing Officer to disallow any part of the expenditure on proportionate basis. Thus, the pre- requisite condition for applying the provisions of Section 14A of the Act is that some expenditure must be incurred “in relation to” the earning of exempt income. The said expression “in relation to” has been judiciously explained in various decisions to mean some real, dominant and immediate relationship. In this regard, the Ld. AR pointed out the decision of Hon’ble Supreme Court in the case of CIT vs. Walfort Share & Stock Brokers: 233 CTR 42, wherein it has been held that there must be a proximate relationship of expenditure with exempt income, for the purposes of making disallowance of same under Section 14A of the Act. In the case of Godrej & Boyce Mfg. Co. Ltd. v. DCIT 328 ITR 81, the Hon’ble Bombay High Court, while deciding the issue of disallowance underSection 14A of the Act, following the aforesaid the Hon’ble Supreme Court decision in Walfort Shares & Stock Brokers (supra), observed that disallowance under Section 14A can be effected only when a proximate cause for disallowance is established, stating the relationship of the expenditure with income which does not form part of the total income. The Ld. AR also relied upon the decision of the Hon’ble Delhi High Court in case of Maxopp Investment Ltd. 203 Taxman 364 wherein the Hon’ble High Court, while approving the contention raised by the assessee held that the term “expenditure incurred’’ appearing in Section 14A(1) of the Act would mean “actual” expenditure incurred, held that no disallowance could be made under the said section where no expenditure has 'actually' been incurred by the assessee in relation to earning of the exempt income. Pertinently, the Hon’ble Supreme Court while affirming the aforesaid decisions of the Hon’ble Bombay and the Delhi High Court have repeatedly emphasized on the requirement of recording satisfaction. The Hon’ble Supreme Court in the case of Godrej & Boyce Manufacturing Co. Ltd vs DCIT, 394 ITR 449 (SC), while affirming the aforesaid decision, held that recording of satisfaction under Section 14A(2) is of paramount importance, failing which the provisions of Rule 8D, applicable from Assessment Year 2008-09 or a best judgment determination, as earlier prevailing till assessment year 2007-08, cannot be applied. It was held, likewise, by the Hon’ble Supreme Court in the case of Maxopp Investment Ltd vs CIT: 402 ITR. Thus the Ld. AR submitted that on perusal of the aforesaid decisions, it can be seen that the disallowance under Section 14A of the Act cannot be made unless there is direct or indirect connection between the exempt income and the actual expenditure incurred. In order to justify disallowance of any part of the expenditure under the said section, the onus is on the Revenue to bring on record nexus between the expenditure and the exempt income. The decision of the Hon’ble Kerala High Court in the case of CIT(A) Vs. Catholic Syrian Bank Ltd and Ors 330 ITR 556/237 CTR 164. The Ld. AR relied upon the decision of the Hon’ble Kerala High Court in case of Catholic Syrian Bank (Supra), the decision of Ahmedabad Bench of Tribunal in case of ACIT Vs. Torrent Pharmaceuticals Ltd 137 ITD 301 as well as the decision of the Delhi Bench of the Tribunal in case of SIL Investment Ltd. vs. ACIT: 148 TTJ 213 (Del.), wherein the Tribunal held that no disallowance could be made under Section 14A of the Act out of audit fees, normal travelling expenses, etc. The Ld. AR also referred the decision of Amritsar Bench of the Tribunal in case of DCIT v. Jammu and Kashmir Bank Ltd. 152 TTJ 522. In the light of the aforesaid, the Ld. AR submitted that there is no rationale/justification as to how Rs.3 lac of administrative expenditure could be assumed to be incurred for earning exempt income, which is received automatically by direct transfer to the bank account of the assessee. In this regard, the Ld. AR pointed out that in the subsequent Assessment Year, i.e., 2002-03, even though the assessee earned dividend income amounting to Rs.7,52,875, no disallowance under Section 14A of the Act was made by the Assessing Officer. Thus, the Ld. AR submitted that the Assessing Officer accepted the contention of the assessee that no expenditure has been incurred for earning the dividend income and therefore no disallowance under Section 14A was called for. Accordingly, the Assessing Officer erred in disallowing, on an ad-hoc basis Rs.3 lacs under section 14A of the Act, without appreciating that no expenditure was actually incurred for earning dividend income and without bringing any evidence on record to establish nexus between the expenditure and earning of dividend income.

9. The Ld. DR relied upon the Assessment Order.

10. We have heard both the parties and perused all the relevant material available on record. From the perusal of records, it can be seen that the Assessing Officer accepted the contention of the assessee that no expenditure has been incurred for earning the dividend income and therefore no disallowance under Section 14A was called for. Without appreciating this aspect, the Assessing Officer disallowed Rs.3 lacs under section 14A of the Act on an ad-hoc basis, and while doing so the Assessing Officer has not established any nexus between the expenditure and earning of dividend income. The CIT(A) also failed to look into this aspect. Thus, Ground No. 2 is allowed.

11. In result, the appeal being ITA No. 1955/Del/2016 filed by the Assessee for A.Y. 2001-02 is allowed.

12. As regards Assessment Year 2002-03 & 2003-04, both these appeals are identical to Ground No. 1 of Assessment Year 2001-02. Thus, ITA No. 1956/Del/2016 and ITA No. 1957/Del/2016 for A.Y. 2002-03 and 2003-04 respectively are allowed.

13. In result, the appeal being ITA No. 1956/Del/2016 and ITA No. 1957/Del/2016 filed by the Assessee for A.Y. 2002-03 and 2003-04 respectively are allowed.

14. As regards Assessment Year 2004-05, Ground No. 1 is related to prior period expenses, the Ld. AR submitted that the CIT(A) has not taken cognizance of all the contentions of the assessee, therefore, the same should be remanded back to the file of the CIT(A). Thus, we are remanding back this issue to the file of CIT(A) for proper adjudication after taking cognizance of all the relevant evidences produced by the assessee. Needless to say, the assessee be given proper opportunity of hearing by following principles of natural justice. Ground No. 1 is partly allowed for statistical purpose. As regards to Ground No. 2 & 3, the Ld. AR submitted that the same are requires to be verified and the same may be set aside to the file of the CIT(A). Thus, we are remanding back this issue to the file of CIT(A) for proper adjudication after taking cognizance of all the relevant evidences produced by the assessee. Needless to say, the assessee be given proper opportunity of hearing by following principles of natural justice. Ground No. 2 and 3 are partly allowed for statistical purpose.

15. In result, ITA No. 1958/Del/2016 filed by the Assessee for A.Y. 2004-05 is partly allowed for statistical purpose.

16. As regards Assessment Year 2005-06, the same is identical to Ground No. 2 to Assessment Year 2004-05 and same needs to be set aside to the file of the CIT(A). Thus, we are remanding back this issue to the file of CIT(A) for proper adjudication after taking cognizance of all the relevant evidences produced by the assessee. Needless to say, the assessee be given proper opportunity of hearing by following principles of natural justice. Ground No. 1 is partly allowed for statistical purpose. As regards Ground No. 2, since the amount is less, the Ld. AR is not pressing the same at this juncture but reserves its right to contest the said issue at the proper time in subsequent years. Therefore, Ground No. 2 is dismissed.

17. In result, ITA No. 1959/Del/2016 filed by the assessee for A.Y. 2005-06

is partly allowed for statistical purpose.

18. In result, ITA No. 1955/Del/2016, ITA No. 1956/Del/2016 and ITA No. 1957/Del/2016 filed by the Assessee for A.Y. 2001-02, A.Y. 2002-03 and 2003- 04 respectively are allowed and ITA No. 1958/Del/2016 & ITA No. 1959/Del/2016 filed by the Assessee for A.Y. 2004-05 and A.Y. 2005-06 are partly allowed for statistical purpose.