DCIT 4(1), MUMBAI vs. ASHIK WOLLEN MILLS LTD, MUMBAI

आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Revenue, being is directed against the appellate order dated 18th October, 2013 passed by learned Commissioner of Income Tax (Appeals)- 8, Mumbai (hereinafter called “the CIT(A)”), for the assessment years 2010-11, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 31st October, 2012 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called “the Act”).

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2. Whether on the facts and in the circumstances of fact and in law, the Ld. CIT(A) erred in allowing the claim of depreciation u/s 32 of the Act of Rs.44.11 lakhs.

3. On the facts and in the circumstances of fact and in law, the impugned order of the Ld. CIT(A) is contrary to law and consequently merits to be set aside that of the Assessing Officer be restored."

It was observed by the AO that assessee has claimed to have incurred ollowing expenses:- i) Manufacturing expenses: Rs 5.86 lakh ii) Selling & Administrative expenses: Rs 12.33 lakhs ITA 03/Mum/2014 3 iii) Financial expenses: Rs 0.58 lakhs iv) Depreciation: Rs 44.11lakhs.

The assessee was asked to file details of all expenses and its justification as to why these expenses should not be disallowed keeping in view that there was no business activity carried out by the assessee during the previous year relevant to the impugned assessment year. In reply, the assessee submitted the following details:-

“With Regards to Expenses detail is as under: 1) Amount of Rs.3.84 Lacs for Power & Fuel Charges which is minimum amount require to pay to Electricity Board and Diesel Charges for Light and to keep Machines in Condition. Detail already submitted.

2) Amount of Rs. 0.11 Lacs for minimum Water Charges paid to Industrial Corporation of Mansa which is required to pay for water connection for drinking water and water to use in Lavatory for the workers/ Security and staff who are still on duty. Detail already submitted.

3) Amount of Rs. 1.71 Lacs paid to Workers is required to keep plant and machinery clean and in condition. Detail enclosed.

4) Amount of Rs.0.12 Lac paid for packing material to buy HDPE Sheet to cover the machine and material which is lying at unit.

5) Amount of Rs.0.07 Lacs paid for Hel Majuri to people to cut the grass and tree near Transformer and to cover the shed by HDPE Tarpoline.

6) Amount of Rs. 2.41 Lacs paid to the Staff and Security is required as to keep plant and machinery safe and in condition. Detail enclosed.

ITA 03/Mum/2014 4 7) Amount of Rs. 0.11 Lacs paid as Staff Welfare is for Tea Expenses of Staff and others.

8) Amount of Rs.0.54 Lacs paid as Conveyance and Travelling. Detail Enclosed. 9) Amount of Rs. 0.20 Lacs paid as Postage, Courier, Regd Post etc. 10) Amount of RS.0.31 Lacs paid for Telephone bill. Detail enclosed. 11) Amount of Rs.0.25 Lacs paid for Printing and Stationary. Detail Enclosed. 12) Amount of Rs.0.04 Lacs paid for Licence Fees. 13) Amount of Rs.0.08 Lacs paid for repairing of Electrical fault in plant. 14) Amount of Rs. 0.62 Lacs paid for General Expenses. Detail enclosed.

15) Amount of Rs. 7.60 Lacs paid as Legal Fees to Professionals. Detail already submitted.

16) Amount of Rs. 0.11 Lacs paid as Auditor Fees.

17) Amount of Rs. O. 06 Lacs paid as Membership fees to Wool and Woolen Export Promotion.

With regards to Depreciation as below:

The Company is carrying on business of manufacturing of Worsted Wool and Wool blended Tops and Yarn with its own set up for manufacturing activities and is in business for many years. Due to bad market conditions, there was lack of sufficient ITA 03/Mum/2014 5 demand for its products. As a result of such adverse conditions and other financial difficulties faced by the company; they decided to temporarily stop the manufacturing activity at its factory, adverse conditions continued and the manufacturing activity could not be started during the year.

The Company has not closed its factory and also retained and maintained its plant and machinery, in anticipation of restarting manufacturing activities as and when market conditions and financial condition improve and there is a change in the economic scenario. As the company is also facing financial difficulties, the management thought it prudent to temporarily stop the manufacturing activities and avoid incidence of heavy losses.

Depreciation, means a decrease in value of Assets through wear, deterioration or obsolescence; the allowance made for this in bookkeeping, accounting, etc. . Depreciation is the measure of the effective life of an asset owing to use or obsolescence during given period. The principal factors responsible for depreciation are (i) ordinary wear and tear, (ii) unusual damage, (iii) inadequacy, and (iv) obsolescence. These factors include not only those relating to physical deterioration but also those referring to the suitability of the asset as an economically productive unit after a period of time.

Assessee on satisfaction of these two primary conditions can claim allowance for depreciation.

It can be stated that word 'used' in S. 32(1) has been interpreted to have a wider meaning so as to include not only the actual user but also the passive user. Further, the allowance for depreciation does not depend upon actual working of the machinery, it is sufficient if the assessee for the purpose of business employs the machinery in question and it is kept ready for actual use and had also retained and maintained its plant, in anticipation of restarting manufacturing activities as and when market conditions improve. Further the said plant and machinery were used for the purpose of the business in the earlier years, and is therefore entitled to depreciation"

The assessee submitted vide letter dated 18.10.2012:

ITA 03/Mum/2014 6 "With Regards to payment of Legal and Professional fees:

Due to bad market conditions, there was lack of sufficient demand for its products. As a result of such adverse conditions and other financial difficulties faced by the company. Company's net worth was eroded and registered with BIFR and due to such adverse condition Bankers of Company has also take legal steps against company and to defend the same, Company have to pay the fees to Advocate and Company Secretary, total amount of Rs. 7.60 Lacs (Including TDS Amount of Rs.0.71 Lacs) paid as Legal and Professional Fees. Detail of the same is already submitted.

With Regards to Depreciation:

We have already submitted detail of the same in our earlier letter. Further to that, Depreciation charged as per single shift basis and debited to Profit and Loss Account is Rs.44.11 Lacs and Depredation allowable as per Income Tax Act is Rs.32.19 Lacs, which has claim in Return of Income.

We have our own set up for manufacturing activities and in business for many years. Due to bad market conditions, there was lack of sufficient demand for its products. As a result of such adverse conditions and other financial difficulties faced by the company, we decided to temporarily stop the manufacturing activity, adverse conditions continued and the manufacturing activity could not be started during the year.

We have not closed the factory and also retained and maintained plant and machinery, in anticipation of restarting manufacturing activities as and when market conditions and financial condition improve and there is a change in the economic scenario. Further the said plant and machinery were used for the purpose of the business in the earlier years and is therefore entitled to depreciation.

Madam, as mention above and in our earlier letters, we have pay minimum and necessary expenses such as wages, salary, electricity expenses, Professional Fees etc. to keep the plant and ITA 03/Mum/2014 7 machinery in running condition. Once again we request you that allow the expenses and deprecation as claimed and oblige.”

The A.O. rejected the contentions of the assessee as there were no business activity during the year . The AO observed that there were no purchases , no sales and no production during the year under consideration. The AO observed that there are income only from interest and dividend to the tune of Rs. 0.85 lacs. Hence, manufacturing expenses Rs 5.86 lakh, selling and administrative expenses of Rs 12.33 lakhs and financial expenses of Rs 0.58 lakhs were disallowed u/s 37 of 1961 Act by the AO on the ground that these were not related to the business of the assessee, vide assessment order dated 31.10.2012 passed by the AO u/s. 143(3) of 1961 Act.

Similarly, depreciation of Rs. 44.11 lakhs was also disallowed by the AO u/s 32 of the Act as there was no business activity during the year as the assets on which assessee had claimed depreciation of Rs 44.11 lakhs were not actually put to use during the previous year relevant to the impugned assessment year for the purpose of business of the assesssee , which was added back to the income of the assessee by the AO , vide assessment order dated 31.10.2012 passed by the AO u/s 143(3) of 1961 Act.

I have considered the facts of the case and the arguments and contention of the appellant. I find that the Assessing Officer has ITA 03/Mum/2014 8 not disputed the fact that due to bad market condition there was lack of sufficient demand for the appellant's products as a result of adverse market condition and financial difficulties, the company's net worth eroded and it was registered with BIFR. The fact that the company was undergoing financial constraint is evident from the fact that the Bankers of the company had taken legal action against the company for recovery. The company had to pay legal fees to the Advocates to defend the various legal suits filed by the Bankers for recovery as also other expenses namely power, fuel & water charges, labour charges and wages. The said expenditure was incurred by the appellant to keep the plant & machinery in a ready to operate condition as well as to keep the factory premises in a ready to operate condition. The said expenditure are, therefore, allowable to the appellant as these expenses were required to be incurred for keeping the factory in a ready to operate condition as soon as there is a change in the economic scenario of the market. The fact clearly indicates that there was no cessation or discontinuance of the appellant's business rather it is a condition where there is a lull due to prevailing market condition. Moreover, it is also reflected that the appellant to keep its business running has not sold plant & machinery or other related items of business assets. Under these circumstances, the expenses as claimed by the appellant are clearly allowable. The Assessing Officer is directed to allow these expenditures. This ground of appeal is thus allowed.

Similarly, the depreciation of Rs. 44.11 lakhs was also allowed by the ld. CIT(A) , vide appellate order dated 18-10-2013 by holding as under:-

I have considered the facts of the case and the arguments and contention of the appellant. I find that the Assessing Officer has made a wrong disallowance in the sense that the claim of depreciation of the appellant is Rs. 32,19,161/- and the additions made by the Assessing Officer is Rs. 44.11 lakhs which is apparently more than what the appellant had claimed. The only ground on the basis of which the AO had made disallowance of depreciation is that no business activity is carried out as the assets were not put to use. However, the Assessing Officer had completely ignored the fact that the appellant had kept the plant & machinery in a ready to operate condition and it is not a case where the appellant has closed down its business. There is a lull in the market due to which the appellant has temporarily closed its business. The facts of the appellant's case are similar to the ITA 03/Mum/2014 9 case of CIT vs. M/s. Integrated Technologies Ltd. (supra) decided by the Delhi Tribunal and subsequently the question of law rejected by the Hon'ble Delhi High Court wherein the Hon'ble High Court has held that depreciation under the conditions as mentioned is allowable. Following the decision of the Hon'ble Delhi High Court in the case of CIT vs. M/s. Integrated Technologies Ltd., depreciation is allowable to the appellant in the facts and circumstances of its case. The Assessing Officer is directed to allow depreciation as claimed by the appellant. This ground of appeal is allowed.

6. Aggrieved by the appellate order dated 18-10-2013 passed by ld. CIT(A), the Revenue is in appeal before the tribunal.

ITA 03/Mum/2014 10 on 21-02-2007. The symbolic possession of the assessee’s asset is still with banks was the averments of learned counsel for the assessee in a statement made before the tribunal. The learned counsel for the assessee submitted that expenses were incurred by the assessee which is not disputed by Revenue and only contention of the Revenue is that there is no business activity during the years and the assets were not put to business use during the year under consideration. It was submitted by learned counsel for the assessee that the assessee has the intention to restart its factory and it was lying closed due to reasons beyond assessee’s control. It was submitted that assessee is keeping the business alive and ready for use with the hope of restarting the factory and to revive the business. It was submitted that the expenses were incurred to keep the business alive. It was submitted that there is no requirement of actual user of plant and machinery to claim depreciation. The ld. counsel drawn our attention to the para No. 2.2 and 3.3 of the ld. CIT(A)’s appellate order, whereby the ld. CIT(A) allowed the claim of the assessee. The ld. counsel relied on the decision of the Hon’ble Delhi High Court in the case of CIT v. Integrated Technologies Ltd., order dated 16th December, 2011. It is submitted that the assessee had an intention to restart the production. There was a temporary lull in the business. The ld. counsel relied on the decision of the tribunal in the case of M/s Swati Synthetics Ltd. v. ITO in ITA No. 1165/Mum/2006 for assessment year 2001-02 dated 17th December, 2009 . Reliance was also placed on the decision of the Hon’ble Madhya Pradesh High Court in the case of CIT v. Kohinoor Tobacco Products (P.) Ltd. reported in [2005] 149 TAXMAN 620 (MP) and also decision of Hon’ble Delhi High Court in the case of CIT v. Oswal Agro Mills Limited in ITA no. 161 of 2006 vide judgment dated 24-12- 2010. On being asked by the Bench, the learned counsel for the assessee fairly submitted that the factory is still lying closed as of the year 2017 , since 2005 and litigation is still continuing with bankers/lenders at DRT/BIFR and other forums.

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Section 13 (2) , 13(4) and Section 35 of the SARFAESI Act read as under: "13(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-Section (4).

ITA 03/Mum/2014 13 **** (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:

PROVIDED that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:

PROVIDED FURTHER that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt. (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.

**** 35. The Provisions of this Act to override other laws The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law."

The afore-stated secured lending banks were in possession of the secured assets of the assessee company since 21-02-2007 by exercising their rights under SARFESI Act, 2002 by invoking Section 13(2) r.w.s.13(4) of SARFESI Act, 2002 , as averred by learned counsel for the assessee in a statement ITA 03/Mum/2014 14 made before us . BIFR vide its orders dated 12-02-2007 rejected the reference as not maintainable as it was observed by BIFR that the assessee company has not come to BIFR with clean hands and had manipulated its accounts. The assessee went to AAIFR which by order dated 16-01-2008 directed BIFR to await the final order passed by DRT/DRAT and till then keep the reference of the assessee company pending. It is clarified by learned counsel for the assessee during course of hearing before us that till date i.e. in year 2017 the unit in Mansa at Gujarat which is a single unit of the assessee at single location is lying closed. There is no manufacturing activity carried out by the assessee since last 12-13 years from the year 2005 -2017. We are concerned with previous year 2009-10 which is relevant for the impugned assessment year 2010-11. The manufacturing stopped in the year 2005 and possession under SARFESI Act is with lender banks since 21-02- 2007, although there is a stay granted by DRT on the operation of action taken by PNB and SASF u/s 13(4) of SARFESI Act, 2002. The relevant previous year under instant appeal is 2009-10 , which is almost 4-5 years after the ceasing of manufacturing activity of single unit / single location assessee company in the year 2005. The possession of the manufacturing unit of the assessee in Mansa at Gujarat is held by the banks since 21-02- 2007 under SARFESI Act which entitles them to transfer the secured assets by sale, lease or assignment to realize their loans but interim stay is imposed on the said action of transfer of secured assets by secured lender to realize their secured debts, by DRT. Thus, under these circumstances , we are of considered view that the assessee company even if it desires to start business cannot re-start and carry out any manufacturing activity in the said unit unless it obtains permission and possession back from the secured lenders who are holding possession of the secured assets under SARFESI Act, 2002, which was invoked in view of the assessee company having defaulted with the secured lending banks , and such permission to re-start business operations and handing back of the possession by the secured lenders will not be ITA 03/Mum/2014 15 forthcoming from consortium of lenders on touchstone of preponderance of probabilities , unless dues of these secured lenders are settled and cleared by assessee company and/ or permission of DRT/courts are obtained which may, if at all it comes may come with several riders which the assessee company may not be able to fulfill and on touchstone of preponderance of probabilities , thus, such possibility of the assessee company restarting its manufacturing unit in distant future is ruled out keeping in view factual matrix of the case as discussed above. BIFR has already given finding that the assessee has manipulated its accounts and has not come for relief to BIFR with clean hands and reference was held to be not maintainable , however , it is a different matter that AAIFR asks BIFR to await outcome of proceedings before DRT in view of interim stay by DRT on action of secured lenders u/s 13(4) of SARFESI Act, 2002. Since almost 12 years have passed since the assessee unit at Mansa is lying closed and it could not settle its dues with the secured bankers till date i.e. year 2017 as it is averred by learned counsel that the matter/litigations are still pending with DRT/BIFR etc and litigations are going on, thus under these peculiar facts and circumstances of this case , it could not be termed and classified as temporary lull in the business as it is not possible for assessee company to recommence its business even if it secures orders or so otherwise desires to restart its manufacturing unit in Mansa at Gujarat, as the possession of the secured assets are with bankers which can not be described as a temporary lull or temporary suspension of business rather it is a severe and serious disability which is faced by the assessee hampering the re-start of the business by the assessee even if it so desires to recommence its business , assessee company cannot re-start its business unless permitted by secured lenders who are in possession of secured assets of its sole unit in Mansa at Gujarat. In any case , no evidence has been placed by the assessee on record to demonstrate that any attempt or efforts have been made by the assessee to do any business or to re-start its manufacturing unit at Mansa in the last 12 years since the said industrial ITA 03/Mum/2014 16 unit in Mansa stood closed in the year 2005 till as of now in the year 2017. In our considered view, the expenses claimed by the assessee cannot be allowed as business expenses as they were not incurred wholly and exclusively for the purpose of business of the assessee as there is in-fact no business carried on by the assessee during previous year relevant to the impugned assessment year and there was also no possibility of carrying on business by the assessee in a near distant visible future keeping in view the severe and serious disability imposed by action by secured lenders under SARFESI Act and continued with the secured lenders , as mandate of Section 37(1) of 1961 Act is not fulfilled in the instant case. The secured assets of the assessee being under possession of the secured lenders during the previous year cannot be claimed by the assessee to have been put to business use both active as well passive user as both being ruled out , as it is not temporary lull in business but severe and serious disability disabling assessee to put the said asset for business user as mandated u/s 32(1) of 1961 Act to enable assessee to claim depreciation. The assessee is a single location unit entity having only one manufacturing unit in Mansa at Gujarat and Block of Assets constituted mainly assets of Mansa unit and hence it could also not be claimed by the assessee that the assets of Mansa unit formed part of Block of assets which block of asset also consists to have other assets of any other unit which is functional , as in the instant case it is a single unit / single location entity having only industrial unit in Mansa at Gujarat , and the assessee cannot claim that other assets except assets of Mansa unit were being put to use for business and hence consequently under the concept of Block of Asset, the assessee claim of depreciation of Mansa Unit should be allowed , as it is a single unit / single location company and the entire Block of asset revolves around and consists mainly of assets of Mansa unit which it- selves are not put to use for business purposes during the entire previous year due to disability imposed under SARFESI Act, 2002 as discussed above. The depreciation claimed by the assessee is also not allowable as the entire ITA 03/Mum/2014 17 block of asset which consists mainly of assets of Mansa unit at Gujarat was not put to use by the assessee, keeping in view peculiar factual matrix of the case and mandate of Section 32(1) of 1961 Act is not fulfilled in the instant case. Thus, claim of the assessee to allow depreciation on Block of Assets held by the assessee cannot be allowed to the assessee.

The case laws relied upon by the assessee were decided on their peculiar facts which are distinguishable as the facts in present appeal are different being invocation of SARFESI Act, 2002 by secured lenders wherein possession of secured assets were held by secured lenders causing severe and serious disability for the assessee to recommence its manufacturing unit in the distant visible future which can not be categorized as temporary lull in the business . In the case of CIT v. Oswal Agro Mills Limited(supra) relied upon by the assessee, the tax-payer had Bhopal unit and other units, wherein Bhopal unit was temporarily closed throughout the year. The assets of Bhopal unit were included in the Block of Assets and remained part of the Block of Assets which also had assets of other units which remained functional and in continuous use , on these peculiar facts , Hon’ble Delhi High Court allowed the depreciation as the assets of Bhopal unit which was closed temporarily got merged with Block of Assets consisting of assets of other units which were functional during the year and were put to use for the purposes of business of the tax-payer during the year and Hon’ble High Court had held that under concept of Block of Asset, there is no need to see user of each and every asset under Block of Asset before allowing depreciation on Block of Asset, while the instant case under appeal with tribunal, the assessee is a single unit and single location company having industrial unit in Mansa at Gujarat and the block of asset mainly consists of this industrial unit which was not functional during the entire previous year relevant to the impugned assessment year and we have held that this suspension of manufacturing was not on account of temporary lull but is a result of serious and severe disability due to action ITA 03/Mum/2014 18 under section 13(2) of SARFESI Act, 2002 by secured lenders against the assessee company, wherein the secured assets are possessed by secured lenders since 21-02-2007 till date.

Similar was the case of Swati Synthetics Limited v. ITO(supa) wherein tax- payer had two units one unit at Dombivili and the second unit at Surat. The unit at Surat which was yarn texturising unit under name and style of Swati Polyster was closed for last two/three years while other unit at Dombivili was undertaking business of dyeing in the name of Swati Dyeing and was functional during the relevant period . The same ratio of law as was applicable for Oswal Agro Mills Limited(supra) was applied by the tribunal as Dombivili assets in the Block of assets were put to use for business of the tax- payer during the relevant year , while assets of Surat unit were not used but they formed part of Block of Assets consisting of Dombivili Unit as well Surat Unit, of which assets of Dombivili units were used for the purposes of business by tax-payer and hence it was held that there is no need to see individual user of each asset, while in the instant appeal before the tribunal, Mansa unit at Gujarat is the only unit of the assessee which was lying closed since 2005 as detailed above.

The case of CIT v. Kohinoor tobacco Products Private Limited(2005) 149 taxman 620(MP) is distinguishable as in the said case the tax-payer acquired 58 properties out of which some of the properties could not be used for business and were let out due to temporary labour problem faced by the tax- payer , while in the instant case we have held that closure was since 2005 and possession was taken over by secured lenders of the secured assets since 21-02-2007 by invoking SARFESI Act, 2002 causing severe and serious disability to the assessee in continuing with the business and the assessee was a single unit/single location entity having industrial unit at Mansa, Gujarat.

ITA 03/Mum/2014 19 The case of CIT v. Integrated Technologies Limited(supra) is also distinguishable as the tax-payer demonstrated that the business was still a going concern and it approached BIFR u/s 15(1) of SICA, 1985 and its application was processed and soon the business will commence as it was closed only due to temporary lull and the business will revive shortly. It was demonstrated that the orders of the tax-payer were cancelled by international customers due to terror attack in USA and the tax-payer could not accept domestic orders due to obligations imposed on tax-payer on being an 100% EOU and also due to insufficient working capital. The business scenario improved and the tax-payer stared getting the substantial orders.The tribunal accepted passive user of the assets keeping in view efforts made by the tax- payer to start the business and also new plant and machinery was purchased during the relevant previous year. Thus, on peculiar facts of that case tribunal allowed the claim of depreciation on plant and machinery as the same was held to be kept ready for use .The allowability of salary and allowance to staff as well repair and maintenance expenditure as allowed by CIT(A) was not challenged by Revenue before the tribunal, which lead to implied acceptability of the Revenue of the fact that the business was kept alive in the hope of revival and there was a temporary lull in the business. The Hon’ble Delhi High Court allowed the claim based on peculiar factual matrix of the case upholding the findings of tribunal, while in the instant appeal , the facts are entirely different as we have discussed above in details as we have held that this suspension of manufacturing was not on account of temporary lull but is a result of serious and severe disability due to action under section 13(2) of SARFESI Act, 2002 by secured lenders against the assessee company, wherein the secured assets are possessed by secured lenders since 21-02-2007 till date.

ITA 03/Mum/2014 20 However, the expenses like auditor fees , ROC fee and other expenses etc. which are incurred by the assesseee company to carry out and meet legal and statutory compliances has to be allowed as the said expenses are incurred for meeting and complying with statutory compliances and obligations as imposed by law, for which we are remitting matter back to the file of the AO for identification of such expenses incurred for audit, ROC fees and other expenses incurred to carry out other statutory compliances , and to allow such expenses after verification. Thus, the appellate order of the ld. CIT(A) is set aside and the assessment order of the A.O. is confirmed subject to allowability of audit fee, ROC fee and other expenses incurred for undertaking and meeting statutory compliances , in accordance with our orders as detailed above. We order accordingly.