TaxTMI 
TaxTMI 
2006 (2) TMI 496
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....,32,311 under section 80-IB of the Income-tax Act, 1961. 5. The third ground was addressed before us first by the learned counsel for the assessee. 6. The assessee filed the return on 31-10-2001, declaring income at Rs. 5,14,717. The case was selected for scrutiny. The assessee is carrying the business of making photographic films out of jumbo rolls in the style and name of "Photo Film Industry" (hereinafter referred to as 'PFI') and also manufacturing and sale of 35 mm and 16 mm cinematographic positive films used in the film industry for exhibition of movies and release of films in cinema halls. The raw materials used in jumbo rolls are imported from AGFA Belgium. The raw material imported is converted into final product through the process of tilting, slitting, perforation and packaging. According to the Assessing Officer, the assessee started making of cinema roll on 6-11-2000 upon the plot, which was allotted to the assessee on 6-9-2000, with Sales Tax exemption for five years. Prior to this, the business of the assessee was giving loans to various parties and making investments. The assessee changed the business all of a sudden. Incidentally, Assessing Officer noticed; ....
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....factory premises of GGPL, Mettupalayam, Pondicherry, it was found that the name of the company, outside on the company board was written as "Photo Film Industry", whereas it would have been GGPL. The General Manager of GGPL, Shri Natarajan stated; PFI, a proprietary concern of Smt. Madhu Gupta, wife of Sushil Gupta, Director of GGPL is running business from the very same premises. He was asked about the plant and machinery installed with GGPL and the building constructed on the plot. He was also asked to explain, as there was no separate purchase of plot for PFI and no separate construction of building either or any installation of new machinery in the premises. Shri Natarajan confirmed that this was the very same plot, same machinery and the building used by GGPL. It was further submitted, there was no separate construction of building for PFI and there was no new purchase of machinery. He further submitted that the plot was surrendered to PIPDIC Industrial Estate and the same was re-allotted to Smt. Madhu Gupta, wife of Sushil Gupta, Director of GGPL. Shri Natarajan further submitted, all the infrastructure used by the assessee are the same; only name changed on paper from GGPL t....
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....Film Industries. 4.3-2 Machinery (i )All the machinery which was owned by G.G. Photo Ltd. and was lying at the Pondicherry factory premises were used by Photo Film Industries though not transferred on paper, but as such it was a full transfer of machinery or can be called an arrangement for usage by the new concern. (ii)There was no machinery which was moved out of the premises ever. (iii)There were no major repair of machinery since being transferred from G.G. Photo Ltd. (iv)There was only civil work carried out of the dark rooms during the period of transfer from G.G. Photo Ltd. to Madhu Gupta (Photo Film Industries). (v)The machinery showed to be owned by Photo Film Industries was installed much prior to the starting of the activity of Photo Film Industries (refer B6, Answer 23). (vi)The slitter is the main machinery required for the activity, as it is being only one which is installed and cuts the jumbo rolls and has been in very good condition throughout. (vii)The valuation of machinery was never carried out, as they were never moved out of the dark room. (viii)The assessee has transferred only part of the machinery on paper and continued to use all ....
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....was transferred from G.G. Photo Ltd. (viii)There was no new business in the case of M/s. Photo Film Industries, it was just taken over from the business of G.G. Photo Ltd. 4.5 So in view of the elaborate facts and evidences found during the search on 26-9-2000 and survey on 8-3-2004 wherein identical facts were revealed, it is clear that business of M/s. Photo Film Industries is a reconstruction of business of M/s. G.G. Photo Ltd. and relying on the decision of CIT v. Suessin Textiles, Ball Bearing & Products 118 ITR 45 and CIT v. Kerala State Cashew Department Corporation 205 ITR 19 (Ker.), so the requirement as per clause (i) to sub-section (2) of section 80-IB is not satisfied, so the deduction under section 80-IB to the assessee is disallowed." 10. With regard to cost of machinery also the Assessing Officer held that the machinery in fact was transferred to the assessee at a low cost to meet the conditions as required under section 80-IB(2)(ii), so as to keep the total value of the machinery below 20 per cent. He further held that the assessee has used all the machinery of the company, GGPL and even the factory building, which has dark rooms, and air-conditioning plant....
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.... of section 80-IB. Assessing Officer further records, this paper was also found during the course of survey under section 133A at Mumbai premises and made it clear that the value of machinery in total was not less than Rs. 40 lakhs as the same document was found with the assessee and also justified a sort of fair market value as per assessee group only; yet, assessee being a part of the same group, as an afterthought the machinery was transferred at Rs. 4.83 lakhs at 25 per cent of the book value by transferring only certain machinery as given vide para 6.6 of his order. He further held the GGPL transferred only certain assets on paper and did not transfer on paper the balance machinery, so as to avoid apparent transfer at very less price; whereas, in fact the whole machinery was transferred and used by the assessee. The assessee has used all the perforators of GGPL and the value of slitter as per the paper found is atleast Rs. 12,57,597.98, which was transferred at the value of Rs. 2,88,413. 12. Assessing Officer further noted, assessee has bought 4 perforator machinery, which were imported on 9-10-1998 and 5-11-1999, worth Rs. 30,61,264, inclusive of customs duty etc. As per t....
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.... Industries, (ii)the purchase party of both has been the same, (iii)the employees have largely remained the same as almost all the employees continued from G.G. Photo Ltd. to M/s. Photo Film Industries, (iv)the machines used in manufacturing activity of M/s. G.G. Photo Ltd. have all been transferred to Mrs. Madhu Gupta's Photo Film Industries, as found on physical verification during survey under section 133A, (v)there is no difference in any of the manufacturing activity of M/s. G.G. Photo Ltd. and M/s. Photo Film Industries, (vi)the transfer of business reason was mainly because of expiry of sales tax benefit of M/s. G.G. Photo Ltd., So in view of the above facts, why the same should not be taken as an arrangement and why the assessee should not be taken as ineligible for deduction under section 80-IB as it is a mere reconstruction of business. Further, prove why the claim of partial transfer of machinery, as reported in the Balance Sheet and P&L Account should be accepted in view of the physical verification under section 133A where it has been found that all the machinery of M/s. G.G. Photo Ltd. have been used by the assessee and no machinery has ever been ....
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....ion under section 133A on 8-3-2004. The statements recorded from Shri R. Natarajan, General Manager, Shri V. Sudarshan, Shri Pavan Manghnani, Accountant; Shri S.G. Ravi, Senior Technician; Shri K. Rajendran and Shri A. Gurumurthy, Assistant Manager (Quality) were not given to the assessee. No cross-examination opportunity was provided to the assessee. However, it was contended that the findings for denying benefit under section 80-IB were based on these documents/statements, copies of which never made available to the assessee. Even the bare facts were not communicated to the assessee. This is clear violation of principles of natural justice and non-compliance with the express mandatory provisions of section 142(3). Even otherwise, the Assessing Officer has referred to/reproduced only a portion of the several questions and answers. The entire text of the statements is not available even today. It was contended, it is possible that some of the answers given by the witnesses may be favourable to the assessee, which had not come at all on record even in spite of the fact that no cross-examination opportunity was given to the assessee. For example, assessee in the written submission....
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....f natural justice have not been violated. Assessing Officer has not relied upon any evidence gathered from any other outside source but of assessee's own staff. When the persons from whom statements recorded were assessee's own employees; there is no question of any opportunity of cross-examination to the assessee. The only other evidence relied upon by the Assessing Officer was of Shri R. Natarajan, recorded during the course of search and seizure action in the case of GGPL on 26-9-2000. Shri Natarajan was the General Manager of the industrial undertaking of GGPL and he continued to remain so in the same position in assessee's own industrial undertaking, i.e. PFL. Thus, there is no violation of principles of natural justice. CIT(A) further held that he has not been impressed by the arguments of the assessee that the assessee had been allotted the same industrial plot along with the factory building standing thereon by PIPDIC, Pondicherry and it is not an intentional planning. He held, the assessee cannot claim to have set up a new industrial undertaking without constructing her own factory building. The plant and machinery used in the earlier industrial undertaking, i.e. GGPL, rem....
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....s are substantial, there would be little scope for describing what emerges as a reconstruction of the business. For instance, if the ownership of a business or an undertaking changes hands not ostensibly but in reality and effectively, that would not be reconstruction. Or, if the very nature of the business is changed, that again would not be reconstruction. On the other hand, reorganization of the business on sounder lines or alterations in the mode or method or scope of the activities of the business or in its personnel or infusion of new blood in the management or control of the business which may even be by some changes in the constitution of persons interested in the undertaking would be no more than reconstruction of the business if it is substantially the same business carried on by substantially the same persons." Learned counsel further submitted, the above view has been approved by the Hon'ble Supreme Court in the case of Textiles Machinery Corpn. Ltd. v. CIT [1977] 107 ITR 195 and also in the following cases :- (1)Hindustan Malleables & Forgings Ltd. v. ITO [1978] 112 ITR 389 (Pat.) (2)CIT v. Simmonds Marshall Ltd. [1986] 161 ITR 817 (Bom.) (3)CIT v. U. Foam ....
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....on to Paper Book page 69, which is installation certificate issued by Superintendent of Central Excise, Range X, Pondicherry on 1-11-2000, learned counsel pointed out that it clearly established the fact that the machinery described therein had been installed at the premises No. 134/137, PIPDIC Industrial Estate, Mettupalayam, Pondicherry. This is clear contradiction to the statement of Shri R. Natarajan, wherein he stated that the plant and machinery in the said premises belong to GGPL and that there is no purchase and installation of new machinery for PFI. Hence, this statement of Shri R. Natarajan had no evidentiary value and cannot be used against the assessee. Secondly, the statements were never made available to the assessee; as also an opportunity to cross-examine such persons was ever made available to the assessee. When the matter was brought to the notice of the CIT(A), he brushed aside the arguments, on the lines noted hereinabove. It is clearly against the principles of natural justice, as laid down by the Hon'ble Supreme Court in the case of Tin Box Co. v. CIT [2001] 249 ITR 216, wherein the Hon'ble Supreme Court held : "an assessment made without giving the assesse....
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....are the present machinery in this premises?). Shri V. Sudarshan states at page 8 of the assessment order : "12 perforation machines of 10 are MABA make and one is BUKO and other is AGFA machine. They were brought during the year 1996-97, prior by G.G. Photo Ltd. and they are presently with Photo Film Industries, so all the perforation machinery were transferred and came to Photo Film Industries. These are the machines in operation, further there are three machines (perforation) AGFA make which belonged to G.G. Photo Ltd. have not in use since past 3 years" and also the Department did not resolve the inconsistency in Answer to Question No. 23 of Shri A. Gurumurthy, reproduced at page 10 of the assessment order, which reads as under :- "There are total 17 perforating machines purchased by us during the last 8 years starting in 1995. The year-wise break-up is as under : During financial year 1995-96 total 6 perforating machines including 4 Primax machine (Maba make) and two Buko make machines were purchased; During financial year 1996-97 total 5 machines comprising of 2 Primax machine (Maba make) and two Agfa make were purchased by M/s. G.G. Photo Ltd.; During financial ye....
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....her submitted; there is no evidence to the effect that the Government merely replaced one businessman for another. It is altogether a new industrial undertaking. There is no reconstruction of old business. Had it been so, the Government would not have allowed the benefit of Sales Tax exemption to the assessee. As such, the benefit has got to be granted to new business and only to new industry for initial period of 5 years. It is all the more inconsistent and difficult to understand that when the State Government recognises the business of the assessee as a new one and grants Sales Tax exemption accordingly; another wing of the Government, i.e., Central Government, denies the Income Tax exemption to the assessee on the same circumstances and on the same set of facts. 24. Learned counsel submitted, it is incorrect to say that on closure of industrial undertaking of GGPL, the assessee stepped into the shoes by taking over the same industrial undertaking. The matters were not arranged by two interconnected parties, i.e., GGPL and the assessee; just to avail the benefit of Sales Tax exemption, as has been concluded by the Assessing Officer. In fact, on the other hand, the assessee he....
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....phic films. Subsequently, the assessee for strategic reasons thought it better to establish the industrial unit at Pondicherry than at Daman. Even the original address at Pondicherry where the factory proposed was "No. 20 (New No. 77), Republic Street, Villupuram High Road, Reddiarpalayam, Pondicherry-10", which was subsequently changed to "B-134-137, PIPDIC Industrial Estate, Mettupalayam, Pondicherry" i.e., the present address. Necessary corrections were made in the Registration Certificate. The Registration Certificate was issued to the assessee on 11-2-2000 by Commercial Tax Officer, Pondicerry (page 36 of the Paper Book). The Directorate of Industries, Government of Pondicherry issued Provisional Registration Certificate dated 31-12-1999 to the industrial unit of the assessee (page 38 of the Paper Book), showing therein at the backside the proposed location of the factory originally as "No. 20 (New No. 77), Republic Street, Villupuram High Road, Reddiarpalayam, Pondicherry-10", which was subsequently changed to present address. Thus, from any angle, it is clear that the assessee had taken positive steps and imported machineries to start a new unit. Assessee also took steps for....
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....er the decision of CIT v. Sussein Textiles as reported in 118 ITR 45 of Bombay High Court." Page 13 Para 5.5-"So, on the basis of above, if the above block is added back to the assessee opening WDV, it is amply clear that the plant and machinery of the assessee of four perforation machines, though installed before production and utilised by G.G. Photo Ltd., is much below the 80 per cent requirement of new machinery for the purpose of eligibility of deduction under section 80-IB, rather the cost contribution of the assets of the assessee is less than 20 per cent when compared to the building, air condition and other plant and machinery which was not transferred on record from G.G. Photo Ltd. and used by the assessee." 27. Learned counsel further submitted, the Assessing Officer tried to fortify his stand on the basis of the following evidences :- (a)Page 65 of the Paper Book - Paper found during survey under section 133A; (b)New block of assets of the assessee; (c)Report received from TDS Ward, Pondicherry; and (d)'As is where is' machinery of GGPL used by the assessee. Learned counsel further submitted that the Assessing Officer, at page 14 para 6.5, records th....
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.... Rs. 1,64,883 Rs. 30,61,264" Para 7.2 - "As per the statement of employees these perforator machines were installed during financial year 1999-2000. The party M/s. G.G. Photo Ltd. has not brought any machinery in that relevant year. It is clear that the machinery which were imported on 9-10-1998 or 15-11-1999 were installed earlier and used by M/s. G.G. Photo Ltd. As M/s. G.G. Photo Ltd. has used this machines, as evident from statement of the three employees Mr. Sudarshan, Mr. K. Rajendran and Mr. A Gurumurthy (refer to para B.4 question No. 23). The machines taken on first in first out basis of Rs. 17,71,906 is presumed to be installed and pro rata amount of duty of Rs. 1,64,483 being Rs. 1,06,611 is allocated to the same. So the value of old machinery in the case of the assessee, as it was utilised by M/s. G.G. Photo Ltd., already is Rs. 18,72,517, so the balance out of the block of assets is only Rs. 11,88,146 which can be called new machinery in the case of the assessees. So in any way the ratio of new machinery as compared to total machinery is below 30 per cent, far below the minimum requirement of 80 per cen....
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....man". Learned counsel further submitted, copies of other connected papers, viz., bill of entry/exchange control (pages 74 to 78 of the Paper Book) and purchase of other imported machines (pages 79 and 80 of Paper Book) show the address of purchaser PFI as "Kachigam, Daman". Copy of acknowledgment dated 3-8-1998 issued by the Government of India, Ministry of Industry, Secretariat for Industrial Assistance, Entrepreneurial Assistance Unit to the proposal by the assessee regarding setting up of an industrial unit for production of cinematographic negative and manufacture of positive film (page 83 of the Paper Book) shows the address of the proposed industrial unit as "Industrial Area, Daman - 396 210, Daman and Diu". Registration-cum-membership certificate issued by the Federation of Indian export Organisation on 1-9-1998 (page 84 of the Paper Book) also shows the address of the unit as Daman. Learned counsel further submitted, assessee was allowed to set up her factory at the premises of Shri Gautam Gupta, as is evident from the sale deed dated 2-3-1998 (pages 85 to 95 of the Paper Book) and that the installation certificate issued by the Superintendent of Central Excise, Pondicherry....
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....machinery from their competitors. Further, these machinery were affixed to land and dismantling them would further reduce their value. Hence, GGPL could either sell the machinery to Smt. Madhu Gupta at the price offered or sell it at scrap value. This is also evident from the statement of Shri Pavan Manghnani reproduced at page 7 of the assessment order in answer to Question No. 5. The Ld. Assessing Officer has completely ignored this part of the statement as the same was not favourbale to the department. However, at the same time, the learned Assessing Officer has tried to include income of the nature of 'perquisites from business' being the difference between the WDV in the books of GGPL of the machinery purchased by the appellant (Rs. 19,34,979) and the actual purchase price (Rs. 4,83,744) in the hands of the appellant. Thereby, he has acknowledged the genuineness of the purchase. 4. As regards the machinery of GGPL, lying at the said factory premises, the same cannot be taken to mean that the appellant was using them. As regards the allegation of the Ld. Assessing Officer that the statements of the employees prove that the same were being used, the appellant would like to dr....
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...., as submitted above was contemplating to set up a new industrial unit at Daman and subsequently changed the location to Pondicherry. There is no evidence that these items of machinery had been installed at Pondicherry factory, when it was under the occupation of GGPL. Therefore, the allegation of the Assessing Officer is without any basis. Learned counsel further submitted, in fact the machinery purchased by the assessee from GGPL is at Rs. 4,83,744 and other new machinery purchased by the assessee from the market is at Rs. 30,61,264. Hence, the old machinery purchased/transferred is less than 20 per cent of the machinery. Thus, the condition laid down under section 80-IB(2)(ii) is clearly satisfied. 34. Learned counsel submitted, the decisions relied upon by the Department in the case of Sussein Textiles, Ball Bearing & Products (P.) Ltd. (supra) and in the case of Kerala State Cashew Development Corporation (supra), are not applicable in the instant case of the assessee. That was a case wherein the building also been considered and lease accepted as a type of transfer. In that case the building was positively and specifically included in the assets; which is not so in the cas....
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....the short question is whether the assessee is eligible for deduction under section 80-IB or not. The learned DR submitted, it is not the industry but the person is subjected to tax. It is not important whether the industry was charged earlier on the same set of circumstances. There is a difference between the industry and the individual. The learned DR submitted, this individual has started a new business and therefore, she is liable to be taxed. The learned DR, relying upon the findings of the learned CIT(A) submitted, the assessee has not set up any new industrial undertaking in a different building and a different location distinct from the industrial undertaking of GGPL. The assessee got the industrial plot used by GGPL in her name with the same set of machinery and even the staff of GGPL continued to run the business, though the ownership changed. In fact, there is only a change in name and no new industrial undertaking has come into existence. There is no dispute that the nature of business in both the industrial undertakings has remained exactly the same. The provisions of section 80-IB(2) clearly prohibit the allowance of special deduction in such a situation. The learned D....
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....is not done. Assessee relied on the decisions, as stated above, for the submissions that the finding arrived at without providing the assessee the copies of depositions/evidences is not reliable to come to a conclusion against the assessee. We find; the contention of the assessee is to be accepted. In the case of Bhogilal H. Patel (supra), the Hon'ble jurisdiction High Court held that a finding arrived at without affording an opportunity to the assessee properly to cross-examine cannot be used against the assessee. This was a case wherein the finding was arrived at by the revenue authorities on the basis of inspector's report by the Department. It was unilaterally obtained at the instance of AAC and no opportunity was afforded to the assessee to pursue the report or to counter it. But at a later stage the counsel on behalf of the Department referred to cross-examination of the assessee where this report was put to the assessee. However, Hon'ble High Court observed "counsel on behalf of the Department referred to the cross-examination of the assessee where this report was put to the assessee (vide Annexure "G"), Question Nos. 32 to 35. No doubt in this cross-exmaination the report h....
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...., we find, one of the arguments is that the revenue is taking an inconsistent stand, i.e., to say, where the statements of the employees are in revenue's favour, they are accepted and where it is against the revenue, it is not accepted. For example, hereinabove we have noted that Sri Pavan Manghnani, at page 7 of the assessment order, has stated that machinery having WDV of Rs. 19,34,979 was transferred to the assessee at Rs. 4,83,744, as it was the market value. This statement of his is ignored. It is well-established that unless specific and clinching evidence is brought on record, the statement cannot be accepted in part where it is perverse and it can be rejected where it is not so. So also Shri V. Sudarshan stated, which is recorded at page 8 of the assessment order, that three machines (perforation) AGFA make, which belonged to GGPL, have not been used since last three years. So also the answer to Question No. 23 of Shri A. Gurumurthy, stated at page 10 of the assessment order. It is also the case of the assessee that Assessing Officer has not made any attempt to cross verify the above statements before coming to a conclusion and neither summoned any representative of GGPL so....
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.... 44. It is to be seen that the Pondicherry Government allowed the benefit of Sales Tax exemption in respect of the industrial undertaking of the assessee. Such exemption is allowable to a new unit only and not to any old or reconstructed unit. Therefore, the State Government accepts that the change of ownership of the factory premises from the erstwhile owner to the assessee is real and substantive and not merely nominal as such it cannot be treated as reconstruction for the purpose of income tax to deny the benefit to the assessee under section 80-IB of the Act. 45. It is the stand of the revenue that the assessee failed to meet the requirement under section 80-IB(2)(ii) read with Explanation 2. We have recorded assessee's version that the machinery of GGPL was transferred to the assessee at market price for Rs. 4,83,745; whereas according to the Assessing Officer, as per the Companies Act, the value of the machinery comes to Rs. 17,12,893; thereby the true value of the machinery to the total machinery would be 35 per cent or so as against assessee's assertion that it is below 14 per cent. We have already dealt with the above issue in this order; therefore, the contention of....
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....13 instead of the real value of Rs. 9,49,000. According to the revenue authorities, this is an internal arranged price to somehow comply with the provisions of Explanation 2 to clause (ii) of section 80-IB(2), so that the value of the machinery could be brought down to 20 per cent or less. The case of the assessee is that since there were only three players in the field of this line of business, assessee was in a position to purchase the machinery for her own advantage at a lesser price. Merely because the assessee had links with GGPL, not necessarily Assessing Officer should reject this contention of the assessee. 49. Coming to other contention regarding building and dark room, it is the case of the assessee that same is part of the plot surrendered by GGPL and the assessee has not treated this as part of the plant and machinery and depreciation at higher rate relevant to plant and machinery. 50. Coming to the report of TDS Ward, Pondicherry regarding the sale bill came into possession, there is nothing brought on record to show ultimately that the price mentioned was received/paid. This fact has not at all been verified. On the contrary, assessee's assertion is that it was ....
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....e assessee by the State Government. It is the assertion of the learned counsel that in this connection non-consideration of any other item by the Assessing Officer as business perquisite under section 2(24)(iv) proves that the Assessing Officer himself was not certain and does not consider that the assessee received factory building, dark room and other items of machinery from GGPL. In other words, the first objection of the Assessing Officer is that the machinery worth Rs. 17,12,893 had been purchased by the assessee for much a lower price of Rs. 4,83,744 as mentioned above and as a result of this the percentage of the value of the machinery used by the assessee from erstwhile GGPL has been considerably brought down. This contention, we have already rejected. 53. The next stand of the revenue is that there were some machines lying in the premises of GGPL, which were not sold but used. We find there is no evidence brought to this effect. We have already noted that three machines imported by the assessee, also lying in the same premises, which admittedly not been used for three years, even according to the assessee's employees, whose statements have been relied by the revenue. Re....
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....he real market value of the impugned assets, does not hold good." 56. We have already hereinabove, dealing with Ground No. 3, held that there is no evidence to show that the market value of the machinery purchased actually was at Rs. 17,12,893. In view of the above, there is no reason in holding that the difference is a perquisite in the hands of the assessee. Hence, this ground (Ground No. 1) by the assessee stands allowed. 57. Coming to the second ground, i.e. addition of Rs. 10,01,161 being interest income of M/s. Shree Chitra from four parties, the facts have been discussed by the Assessing Officer as under : During the relevant assessment year, Rs. 6,89,407 was claimed as loss from business of financing as no interest income was provided against loans advanced to the following four parties on the ground that the loans were sticky : Name of the party Amount (Rs.) Chaudhari Enterprises 6,00,000 Mark Film International 19,99,950 Monalisa Films 26,62,027 Sap Frish Films 4,00,034 58. Assessing Officer calculated the interest at the rate of 18 per cent in the case of last three parties mentioned and 15 per cent from Chaudhari Enterprises, wh....
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....ry for the assessee to follow the Accounting Standard published by ICAI from time to time. RBI guidelines issued to Non-Banking Financial Companies (NBFC) also prohibit inclusion of non-performing assets and also notional interest on sticky loans within the account of NBFC. Learned counsel further submitted, in the case of Peerless Financial Services Ltd. [IT Appeal Nos. 1522 & 1153 (Kol.) of 2004, dated 25-2-2005] (copy placed on record), the Tribunal held that Chapter III-B of RBI Act, incorporating the guidelines has got an overriding effect on other provisions of the Act and hence these guidelines are required to be followed in considering the accounting position of NBFC. The Tribunal further held, following the decision of the Delhi Bench in the case of TEDCO Investment & Financial Services (P.) Ltd. v. Dy. CIT [2003] 87 ITD 298 (Delhi) interest on sticky loans not to be considered as income of NBFC. It is the case of the assessee that if the assessee is sure that certain income unlikely to arise, it need not provide for such income even while following the mercantile system of accounting. In this regard, assessee relied upon the decision in the case of CIT v. Motor Credit Co.....