TMI Blog2004 (7) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... p of companies whose family tree is as under:- Family Tree Shantilal Mardia ----------------------------------------------------------- Raju Mardia Rasik Mardia Rakesh Mardia Madhu Sanghi Rupam : Prem: Madhu: Mohit Romil -------------- Nina Tina ----------------------------------------------------------- As against the returned income filed as per Col. 3 of the chart given below, income has been assessed under section 143(3) on 23-3-1998 in all the 4 cases as indicated in Col. 5 of the chart given below:- --------------------------------------------------------------------------------------------- Name of Date of Returned Asst. order Assd 271(1 )(c) 271(1)(c) Date of the Regn. income u/s 143(3) income penalty dated appeal Appell- filed ant --------------------------------------------------------------------------------------------- Rupam 29-11-1995 4271414 23-3-1998 27573309 7200000 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 995 31-3-1995 31-3-1995 Face Value 100 100 100 100 Amt. of purported 4.25 cr. 5.50 cr. 2.50 cr. 4.00 cr. loan Date of receipt of 25-3-1995 25-3-1995 25-3-1995 25-3-1995 amount by Company Int. on Deb. 2.635 cr. 3.41 cr. 1.55 cr. 2.48 cr. Int. (net of TDS) 2.3715 cr. 3.069 cr. 1.395 cr. 2.232 cr. paid Net inflow of funds 1.615 cr. 2.09 cr. 0.95 cr. 1.52 cr. to Co. Date of payment 25-3-1995 25-3-1995 25-3-1995 25-3-1995 of interest by Company ------------------------------------------------------------------------- This has been discussed by the Assessing Officer at pages 6,7,8 9 in the case of M/s. Rupam Mercantile Ltd. and the facts are similar in other 3 cases also except for number of debentures, recipients and the amount of funds etc. as indicated in the above chart. It was noted by the Assessing Officer that the entire interest amounting to Rs. 62 for the period of a year from the date of issue were shown as interest paid and accrued in FY 1994-95 itself in all the 4 cases. The assessee companies have considered this amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Rupam Mercantiles Ltd. dated 23-3-1998. Similarly proportionate interest for 7 days were allowed by the Assessing Officer in the case of other three companies and the balance was disallowed. The assessee went in appeal to the CIT(A) VI, Ahmedabad who upheld the disallowance made by the assessee as per order dated 22-3-1999 No. CIT(A)-VI/CC-2(2)/10/98-99. The following findings were given by the CIT(A) while dismiss the appeal: "I have considered the contention of the appellant as also the observations of the Assessing Officer. I agree with the reasons given by the Assessing Officer for making disallowance of the claim of interest in debentures to the extent of Rs.1,54,457. There is also no substance in the appellant's claim made before the Assessing Officer that as per the agreement between the parties, the whole amount of interest on the amount of debentures was payable on day one and for the remaining period, the loan was interest-free. Para 4 of the notes forming part of accounts in the balance sheet of the appellant-company for the assessment year 1995-96 due on non-convertible redeemable debentures issued during the year was for full term as per the terms of the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1995-96. After considering the various submissions made by the assessees before him and also considering the various judicial decisions cited by the assessees, discussed in detail in penalty orders dated 31-5-2000 in the cases of four assessees under section 271(1)(c), the Assessing Officer imposed minimum penalty at the rate of 100% as indicated in Col. No. 6 of above chart. The above four assessees went in appeal before CIT(A) against penalty orders under section 271(1)(c) dated 31-5-2000 amounting to Rs. 72,00,000, Rs. 1,21,00,000, Rs. 1,14,00,000 Rs. 1,57,00,000 in the cases of 4 assessees discussed in detail in table 1 above. 3. The matter was carried in appeal before the first appellate authority wherein the ld. AR for assessees submitted written submissions, copies of assessment orders under section 143(3), appellate orders of CIT(A) and Tribunal's order were furnished. The ld. AR submitted that there is no jurisdiction in imposing the penalty under section 271(1)(c) and referred to various case law many of which were also cited in assessment under section 143(3) and also in 271(1)(c) proceedings before the Assessing Officer. The CIT(A) after considering the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992] 193 ITR 379. The plea of the assessee is not tenable since it is a case of the appellants that the Assessing Officer has not imposed penalty for concealment for furnishing of inaccurate particulars. The view taken by the assessees is not correct since in clear terms the Assessing Officer has held that the appellants have concealed income by wrongly claiming deductions which were not admissible as referred by the assessee above also. The said observations were verified by the CIT(A) from the respective orders under section 143(3) and language used in all the cases are similar. The substance of the same is that the assessee has concealed true income and, therefore, provisions of section 271(1)(c) have been invoked, ft is a different matter that the appellants gave explanation for the claim made which could not be substantiated in the assessment proceedings, in first appeal and also before the Tribunal as referred above. The CIT(A) observed that in this respect it is relevant to refer to Explanation to section 271(1)(c) of the IT Act as under:- "271. Failure to furnish returns, comply with notices, concealment of income etc. (1) if the Assessing Officer or the (..) Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision was rendered on 4-4-1997 whereas the return was filed on 29-11-1995. It was therefore submitted that the same cannot be relied on by the Assessing Officer while considering the explanation as unsatisfactory of mala fide. The CIT(A) observed that he had perused the case laws cited and discussed by the Assessing Officer including in the case of Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 in the case of P.M. Mohd. Meerakhan v. CIT [1969] 73 ITR 735 in the case of State Bank of India v. CIT [1986] 157 ITR 67 Supreme Court in the case of K.S. Krishna Rao v. CIT [1990] 181 ITR 408. The gist of the judgment referred above has endorsed one common ratio that income has to be assessed under sections 4 5 of the Income-tax Act having taken into account the total income which actually is received or accrued during the year and after taking into account the expenses which are justifiable related to the earning of the said income and relate to the relevant financial year. In particular, it would be relevant to note the observations made by the Assessing Officer at page 13 of his order in the case of State Bank of India as under:- "Any liability incurred for the business of obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the findings and the ratio of the above decisions this argument of the assessees would be of little help and it is therefore held that the same would not be allowable under any above sections. The next argument taken in the written submissions before the CIT(A) by the assessees was that the Assessing Officer in the case of recipients i.e., Rakesh Mardia, Rasik Mardia and Rajeev Mardia have added the respective debenture interest in their assessment orders on protective basis and, therefore, in view of the same no penalty is justified. In particular, it is further submitted that in the case of Shri Rakesh Mardia, the said addition was made on protective basis and assessees had gone in appeal before the first appellate authority and the first appellate authority vide his order dated 26-3-1999 has held that the addition is required to be made substantive basis. It was, therefore, pleaded that the expenditure of the assessees should be considered as bona fide and satisfactory and therefore no penalty could be called for. The first appellate authority considered and also perused the returns of income and also relevant orders of his predecessor in this respect. In both the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually relates to the year can be allowed on accrual basis for the relevant previous year and it has been observed that there has been no diversity or difference this aspect in the above referred decisions of the Apex Court. The case law cited by the assessees have no applicability as discussed earlier. Having regard to the above reasons, the CIT(A) held that the penalty imposed by the Assessing Officer in the cases of all the four assessees is fully justified in view of the cumulative effect of the above findings and including the following reasons: (1) As discussed above, the Explanation to section 271(1)(c) is clearly applicable. Even though the Assessing Officer has not specifically mentioned this in the body of the order, it has been held by the Supreme Court in the case of Madhusudan and others referred in 251 ITR 99 that it is not essential that the same should be specifically mentioned in the orders. The onus in this respect is on the appellant to prove that the explanation or the claim made was bona fide. This has not been done in the instant case. (2) In none of the returns filed by the recipients corresponding interest income was declared and offered for tax on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lourable device, as discussed earlier also in CIT(A)'s order, (7) The Assessing Officer has already taken the most lenient view in the matter and imposed minimum penalty of 100 per cent as against 300 per cent (maximum). In view of above discussion, the CIT(A) confirmed the penalty under section 271(1)(c) in respect of all the assessees. 4. Before us the ld. AR submitted that the CIT(A) is not justified in upholding the impugned order imposing penalty on the ground that the assessees had concealed particulars of income by furnishing inaccurate particulars thereof. The ld. counsel for the assessees submitted that the CIT(A) overlooked the claim and contentions of the assessees that default of furnishing inaccurate particulars of income vis-a-vis default of concealment of income are two distinct and different defaults and could not be dovetailed as held by the authorities below. The ld. counsel for the assessee submitted that the decision of the first appellate authority to uphold the impugned penalty on the ground of concealment of furnishing inaccurate particular's as he did being contrary to the binding decision of the jurisdictional High Court, is wholly unsustainable in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents: Rupam Mercantiles Ltd. (in Liquidation) 1. Written submissions before CIT(A) dated 11-1-2002. 2. Reply to penalty notice under section 271(1)(c) dated 8-4-2002. 3. Letter from Assessing Officer under section 271(1)(c) dated 5-1-2002. 4. Reply to Original Notice under section 271(1)(c) dated 7-4-1998. 5. Notice initiating penalty proceedings under section 271(1)(c) dated 23-3-1998. 6. Order of Hon'ble Gujarat High Court admitting appeal on question of law dated 27-9-2000. 7. Order of Hon'ble ITAT on quantum appeal dated 28-10-1999. 8. Order of CIT(A) on quantum appeal dated 22-3-1999. 9. Order of assessment under section 143(3) dated 23-3-1995. 10. Statement of Total Income dated 29-11-1995. 11. Audited Annual accounts for financial year 1994-95, 29-8-1995. The ld. counsel for the assessee submitted and placed on record copy of "Order/Section 119(2)(a) of Income-tax Act" as Annexure-E to the compilation, which reads as under: "Section 119(2)(a) of the Income-tax Act, 1961 - Central Board of Direct Taxes - Instructions to subordinate authorities. Order F. No. 400/234/95-IT (B), dated 30-1-1997. 1. The Board has issued an order vide F. No. 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax and Director-General of Income-tax may reduce or waive interest charged under section 234A, or section 234B or section 234C of the Act in the classes of cases or classes of income specified in paragraph 2 of this order for the period and to the extent the Chief Commissioner of Income-tax/Director-General of Income-tax deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income for the relevant assessment year and paid the entire tax due on the income as assessed except the amount of interest for which reduction or waiver has been requested for. The Chief Commissioner of Income-tax or the Director-General of Income-tax may also impose any other conditions deemed fit for the said reduction or waiver of interest. 2. The class of incomes or class of cases in which the reduction or waiver of interest under section 234A or section 234B or as the case may be, section 234C can be considered, are as follows:- (a) Where during the course of proceedings for search and seizure under section 132 of the Income-tax Act, or otherwise, the books of account and other incriminating documents have been seized and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction or waiver of such interest. (e) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer. 3. The Chief Commissioner of Income-tax/Director General of Income-tax may order the waiver or reduction of interest under sections 234A 234B and 234C under this order with reference to the assessment year 1989-90 or any subsequent assessment year but shall not so reduce or waive penal interest in those cases where waiver or reduction of such interest has been rejected in the past on the merits of the case. It any petition in the past has been rejected because the Board had not issued this direction earlier, these may be reconsidered and decided in accordance with this order." 4.2 The ld. AR has also relied on various decisions, to support of his case, as under: 1. Sarabhai Chemicals (P.) Ltd. v. CIT [2002] 257 ITR 355. 2. CIT v. Baroda Tin Works [1996] 221 ITR 661 (Guj.) 3. Navjivan Oil Mills v. CIT [2001] 252 ITR 417 (Guj.) 4. National Textiles' case 5. Madras Industrial Investment Corpn. Ltd.' case 6. Nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in quantum appeal traveled upto the Tribunal wherein the Tribunal observed as under: "Accordingly, the Hon'ble Supreme Court relying on the aforesaid decision of the M.P. High Court in the case of M.P. Financial Corporation 165 ITR 765 held that the assessee was correct in claiming deduction only in respect of the proportionate part of discount of Rs. 12,500 over the relevant accounting period in question. The Supreme Court further noted that the view taken by them was in conformity with the accounting practice of showing the discount in the "Discount of Debenture Account" which is written off over the period of debentures. The facts of the case before us are similar to the facts of the case of Mardia Industrial Investment Corporation and accordingly we do not find any merit in the ground taken by the four assessee companies, as the issue is squarely covered by the decision of the Supreme Court in Madras Industrial Investment Corporation. Accordingly, we adjudicate ground No. 1 in all the appeals against the assessees and in favour of the revenue." Assessees have shown actual amount received by them after deduction of TDS. These figures have been detailed in para 2 of this or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Madras Industrial Investment Corporation Ltd.'s case. Accordingly, we adjudicate ground No. 1 in all the appeals against the assessees and in favour of the Revenue." Meanwhile the Assessing Officer initiated penalty proceedings under section 271(1)(c) in respect of assessment orders passed under section 143(3) in case of all four assessees companies as discussed earlier. The Assessing Officer after providing opportunity of hearing and taking into consideration the submissions made by assessees, discussed in detail in the penalty order dated 31-5-2000 in case of four assessees under section 271 (1)(a) of the Income-tax Act and imposed minimum penalty at the rate of 100 per cent as indicated in column 6 of above-mentioned chart. The matter was carried in appeal before the CIT(A) who has confirmed the order of Assessing Officer vide his detailed discussion made in para 3 of this order. Before us the assessees raised various contentions as discussed above. Having considered the rival submissions and going through the material on record we are not inclined to interfere in the findings of CIT(A). Regarding stand of assessees, having neither concealed any income nor fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to discuss the ratio laid down by Hon'ble Supreme Court in State Bank of India's case wherein on similar issue the Court observed as under:- "Any liability incurred for the business of obtaining a loan would be revenue expenditure. Ordinarily, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books, over a period of years. However, the facts may justify on assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year. Issuing debentures is an instance where, although the assessee has incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure a benefit over a number of years. There is a continuing benefit to the business of the company over the entire period. The liability should, therefore, be spread over the period of the debentures." Even if decision of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the proposition that liability to pay interest on the debentures can accrue to the appellant on the first date when the debentures are issued to the recipients. The view taken by the Assessing Officer is, therefore, in full conformity with established principles of accountancy as well as the provisions of the Income-tax Act, 1961 duly supported by ratio of the Apex Courts as discussed earlier in this order. As the appellant(s) having followed mercantile system it cannot change the real nature of the transaction by claiming a deduction on the basis of cash payments which have been held to be mere advance payments only. (6) As referred earlier, the Apex Court in the case of State Bank of India referred in 157 ITR 67 have clearly observed that the substance of transaction has to be seen and not the form. Mere recording of entries in the books in itself cannot justify the stand taken by the appellants or make the explanation bona fide or taking on argument that liability for interest be accrued on the basis of the scheme and the said debentures between the appellant and recipients. Since the said schemes were clearly devised in one go for all the four companies around the same time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fact and circumstances we are not inclined to interfere in the order of CIT(A) who has upheld the penalty orders of Assessing Officer in case of all four assessee companies as discussed above. It is pertinent to mention that all case laws relied by the assessees at different levels have been taken into consideration though same have not been specifically mentioned. 7. In the result, all the four appeals of the assessees are dismissed. Per Shri R.P. Garg, Vice-President. - I have gone through the order proposed by the learned Judicial Member upholding the levy of penalties in all the 4 cases holding the assessee to be guilty of concealment. I, however, find myself unable to subscribe to his conclusions. In my opinion, none of these cases could be a case of concealment for the reasons as discussed in the subsequent paragraphs hereunder. 2. The relevant facts in all cases of assessees which are group companies of Mardia group are similar. I, therefore, narrate the fact as are appearing in the case Rupam Mercantile Ltd. which would be applicable mutatis mutandis to all these cases. The assessee issued Non-convertible Redeemable debentures on 25-3-1995 carrying interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the Hon'ble Supreme Court which squarely applies to the facts of the present case. The relevant portion of the judgment is reproduced below: 'Any liability incurred for the business of obtaining a loan would be revenue expenditure. Ordinarily, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books, over a period of years. However, the facts may justify an assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year. Issuing debentures is an instance where, although the assessee has incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure a benefit to the business of the company over the entire period. The liability should, therefore, be spread over the period of the debentures. In view of above discussion, the claim of deduction of payment of debenture i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee companies, as the issue is squarely covered by the decision of the Supreme Court in Madras Industrial Investment Corporation. Accordingly, we adjudicate ground No. 1 in all the appeals against the assessee and in favour of the revenue." 10. On the disallowance of this interest the Assessing Officer held the assessee guilty of concealment and levied penalty under section 271 (1)(c) by order dated 31-5-2000. CIT(A) upheld the same by giving a 7 point reasons thereof as quoted in the penultimate paragraph of the order proposed by the ld. Judicial Member. 11. The High Court has admitted the appeal of the assessee on a substantial question of law vide order dated 27-9-2000 by observing as under: "The appeals are admitted on the following common substantial question of law: 'Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the assessee was not entitled to the deduction of interest paid by it on debentures issued by it?" 12. From the order of the Tribunal in the cases of recipients Rasiklal Rajiv and Rakesh S. Mardia [ITA Nos. 1142,1145 and 1101 /Ahd./1999, dated 28-10-1999], we find that besides the tax deducted at source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purpose of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 14. The courts have invariably held that concealment proceedings are penal in character and under the substantive provisions of section 271 (1)(c) it is for the department to prove that the assessee had concealed the particulars of his income or furnished inaccurate particulars thereof to bring the case of the assessee within the mischief of the main provisions of section 271(1)(c) of the Act. Mere rejection of assessee's claim would not be sufficient to hold the assessee to be guilty of concealment. If there is no evidence on record except the explanation of the assessee which explanation is either found to be false or is unacceptable, it does not follow that concealment has been established. CIT v. Anwar Ali [1970] 76 ITR 696 (SC), CIT v. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation little minutely. (I) The first sentence of this part B is "such person offers an explanation which he is not able to substantiate". Can it be said that assessee's explanation was not substantiated? "Not substantiated" does mean not accepted by the authority concerned but not showing a substance in the claim made by the assessee. The word "substantiate" is opposite to the words vague or fanciful, or without any foundation or basis. It cannot be equated with the expenditure allowed. What more can it be said about its substantiation that its High Court has admitted its appeal for consideration of the appeal which as per the provisions of section 260A is admitted only when a substantial question of law arise out of its claim for allowance. The Tribunal in the case of K.G. Nariman Alias N.K. Gajwani v. ITO [1989] 33 TTJ (Bom.) 565 has even taken a view that when a simple question of law is granted in reference under section 256(2) as it stood at that time the case of the assessee goes out of part B of the Explanation 1 to section 271(1)(c) of the Act. In this case an addition of Rs. 2,64,789 was made by the Assessing Officer to the income of the assessee under section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) had accepted the assessee's explanation in the quantum proceedings and the Hon'ble High Court was pleased to grant reference under section 256(2) of the Act in respect of invoking the provisions of section 68 of the Act. In this view of the matter, even assuming for the sake for argument that the assessee's case falls within clause (B) of the Explanation 1 of section 271(1)(c) of the Act, the assessee's case could still be saved by the provisions contained in the proviso to the said clause. Further, after carefully going through the relevant portions of the commentaries of Kanga Palkhiwala and Sampath Iyengar (referred to on behalf of the assessee), we are fully satisfied that this is not a fit case for imposing penalty under section 271(1)(c) of the Act." Again, in the case of Emtici Engg. Ltd. [IT Appeal Nos. 2278 (Ahd.) of 1991 and 2984, 1341, 1342 and 1343 (Ahd.) of 1995 dated 28-11-2002], the penalty levied by the Assessing Officer for non-disclosure of the property income under the head "income from house property" was deleted by finding that question of law under section 256(1) was referred to the High Court regarding the taxability of the income from house p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee not only during the assessment proceedings but at the threshold in the return of income itself, i.e., in the details of interest furnished alongwith the return, in the note No. 4 in statement of accounts, in the terms of deed of debenture etc. It would be relevant to note that on the basis of these very material and not more the Assessing Officer has allowed a part of the interest of Rs. 49,543 allocating it as pertaining to 7 days of the previous year under consideration and disallowed the balance Rs. 1,54,50,457. No other material or fact has been brought on record for making the disallowance. There is also no allegation of revenue that debenture agreement is sham or bogus. In my opinion, the assessee's case is very much similar and near to the case of jurisdictional High Court in the case of Sarabhai Chemical (P.) Ltd. The following is the extract from the judgment: "The deeming fiction that the added/disallowed amounts represent the income in respect of which particulars have been concealed contained in Expln. 1 will not apply if the explanation that was given by the assessee in the quantum proceedings which he could not substantiate in those proceedings was (i) bona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 1 are those where explanation furnished by the assessee falls in the category of a fact 'disproved' whereas cases where an explanation so furnished falls in the category of fact 'not proved'. The expressions 'proved', 'disproved' and 'not proved' have well known distinct connotation in legal terminology, as may be apparent from the provisions of Indian Evidence Act. On finding an explanation as was existent or disproved a reasonable inference of lack of bona fide can be drawn mere failure to substantiate the explanation as a fact not proved, cannot raise a presumption about deliberate concealment and lack of bona fide. In such events question of bona fide has to be proved as a fact like any other fact on preponderance of probability uninfluenced with any presumption." 19. It is in my opinion a mere rejection of assessee's claim for deduction cannot, in any case, be equated with concealment. Reference may had to the following cases: (i) Addl. CIT v. Delhi Cloth General Mills Co. Ltd. [1986] 157 ITR 822 wherein the court observed:- "The mere fact that a claim for expenditure stands disallowed does not, by itself lead to the inference that the assessee had furnished inaccur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact it was not a case where under some mistaken belief the assessee did not disclose the cash compensatory support received by it which it could offer to tax. After the assessee had filed its return of income, which was correct as per law on the date of filing of the return, it was thereafter that the cash compensatory support also came within the way of section 28. When additional tax has imprint of penalty, the revenue cannot be heard saying that levy of additional tax is automatic under section 143(1 A). If additional tax could be levied in such circumstances, it would be punishing the assessee for no fault of it. That cannot even be the legislative intent. The court observed: "It shocks the very conscience if in the circumstances section 143(1A) could be invoked by levying the additional tax. In the circumstances of the case, levy of additional tax taking into account, the income by way of cash compensatory support was not warranted." 21. Reference in this case may be had the decisions of Jiyajeerao Cotton Mills Ltd.'s case. The High Court made the distinction between the retrospectivity which governs the statutory amendment and the retrospectivity qua the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The order of the Appellate Tribunal in the appeal preferred, by the assessee had been passed much earlier on 11-10-1994. The Tribunal referred to the Calcutta High Court in the case of Jiyajeerao Cotton Mills Ltd. and held that the principle of retrospective legislation is not applicable to the decisions of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute. In view of this position in law, it was not right to say that in view of the later judgment of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. the cost of the purchase of loom hours should be allowed now as revenue expenditure, although in the appeal on the point the Appellate Tribunal vide its order dated 11-10-1974 had treated the above expenditure as capital. 24. The Gujarat High Court in CIT v. Maneklal Harilal Spg. Mfg. Co. Ltd. [1977] 106 ITR 24 also observed similarly as under: "Though the effect of the Supreme Court decision by virtue of the provisions of the Constitution is that the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books over a period of years. However, the facts may justify an assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year. Thus in the case of Hindustan Aluminium Corporation Ltd. v. CIT [1983] 144 ITR 474, the Calcutta High Court upheld the claim of the assessee to spread out a lump sum payment to secure technical assistance and training over a number of years and allowed a proportionate deduction in the accounting year in question. Issuing debentures at a discount is another such instance where, although the assessee has incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure a benefit over a number of years. There is a continuing benefit to the business of the company over the entire period. The liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laying electric cables and electric supply transmission lines, etc., for a Beneficiation Plant to enable the assessee to separate waste material from useful mineral. One-seventh of the total amount of Rs. 20.46 lakhs was shown as revenue expenditure written off by way of expenditure. The installation was completed in December, 1968. The assessee claimed the amount of Rs. 20.46 lakhs as a revenue expenditure for the assessment year 1969-70. The Tribunal held that the expenditure did not relate to the year under appeal and in any event it was a capital expenditure: On a reference High Court held that it was to enable the assessee to carry on its business more efficiently and more profitably that it installed the Beneficiation Plant. The advantage was not in the capital field and hence the expenditure, although its benefit would enure for a number of years, was of a revenue nature applying Empire Jute Co. Ltd. (iii) Hindustan Commercial Bank Ltd., In re [1952] 21 ITR 353 (All.): In this case, the assessee, a bank, incurred during the relevant account year certain expenses in opening forty-six new branches, sub-branches and pay offices. A sum of Rs. 24,675 represented charges for ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This has not been done in the instant case." As regards this point, the reference of Madhusudan's case in my opinion, has no relevance, firstly because it was a case dealing with Explanation as it existed prior to introduction of the present explanation w.e.f. 1-4-1976; and secondly because neither the assessee nor the revenue has raised any objection to the applicability thereof. In fact both have based their respective case on the Explanation itself - assessee's claim being that Part B of the Explanation exonerate it from deemed concealment in view of fact that it had disclosed all facts material to the computation of its income and even though the explanation could not be taken to have been substantiated, it bona fide claim of the assessee based on the prevailing law at the time of filing its return of income and that by mere disallowance or rejection of its claim in assessment proceeding by itself it could be said that its was not substantiated and amounting to concealment of income or furnishing inaccurate particulars thereof. (ii) The second point is as under:- "(2) In none of the returns filed by the recipients, corresponding interest income was declared and offered fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nster's case (1936) AC 1 (HL); 19 TC 490 is very much alive and kicking in the country of its birth. And as far as this country is concerned, the observations of Shah, J. in CIT v. Raman [1968] 67 ITR 11 (SC) are very much relevant even today. We may in this connection usefully refer to the judgment of the Madras High Court in M.V. Valliappan v. ITO [1988] 170 ITR 238, which has rightly concluded that the decision in McDowell [1985] 154 ITR 148 (SC) cannot be read as laying down that every attempt at tax planning is illegitimate and must be ignored, or that every transaction or arrangement which is perfectly permissible under law, which has the effect of reducing the tax burden of the assessee, must be looked upon with disfavour. Though the Madras High Court had occasion to refer to the judgment of the Privy Council in IRC v. Challenge Corporation Ltd. [1987] 2 WLR 24, and did not have the benefit of the House of Lords' pronouncement in Craven's case (1988) 3 All ER 495 (HL); (1990) 183 ITR 216 (HL), the view taken by the Madras High Court appears to be correct and we are inclined to agree with it. We may also refer to the judgment of the Gujarat High Court in Banyan and Berry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which docs not follow from the plain, unambiguous language of the statute which will serve the spirit and intention of the Legislature." The Constitution Bench reiterated the observations in Bank of Chettinad Ltd. v. CIT [1940] 8 ITR 522 (PC), quoting with approval the observations of Lord Russel of Killowen in IRC v. Duke of Westminster [1936] AC 1 (HL); (1936) 19 TC 490 and the observations of Lord Simonds in Russel v. Scott (1948) 2 All. ER 15. It thus appears to us that not only is the principle in Duke of Westminster's case (1936) AC 1 (HL); 19 TC 490 alive and kicking in England, but it also seems to have acquired judicial benediction of the Constitutional Bench in India, notwithstanding the temporary turbu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the appellant and recipients. Since the said schemes were clearly devised in one go for all the four companies around the same time within the small group of family members of Mardia Group, it is obvious that the transaction is in the nature of colourable device, as discussed earlier also in this order." It is true that substance of the transaction is to seen in determining its character but the legal effect of a transaction can also not be ignored altogether and given a go by as stated by the recent decision of the Supreme Court in Azadi Bachao Andolan's case wherein the court at page 763 observed as under: "We are unable to agree with the submission that an act which is otherwise valid in law can be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interests, as perceived by the respondents." (vii) The seventh point is as under: "(7) The Assessing Officer has already taken the most lenient view in the matter and imposed minimum penalty of 100% as against 300 (maximum)." When it is not a case for levy of penalty at all the reduction in the quantum thereof cannot be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 68 permitting the Assessing Officer to treat unexplained cash credit as Income are enabling provisions for making certain additions, where there is failure by the assessee to give an explanation or where the explanation is not to the satisfaction of the Assessing Officer. However, the addition made on this count would not automatically justify imposition of penalty under section 271(1)(c) by recourse only to Explanation 1 below section 271(1)(c). In order to justify the levy of penalty, 2 factors must co-exist, (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income and (ii) the circumstances must show that there was animus, i.e., conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. The Explanation has no bearing on factor No. (i) but it has bearing only on factor No. (ii). The explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment had not proved that the money was earned during the relevant year and that the amount had been disclosed in the return and, therefore, there was no concealment of income. On a reference the High Court that as the total income returned was less than 80% of the total income as assessed, a rebuttable presumption that the assessee had concealed particulars of income or furnished inaccurate particulars thereof arose. The assessee had failed to discharge the burden which lay upon him to prove that the failure to return the correct income did not arise on account of any fraud or wilful neglect on his part. In view of the fact that the assessee had shown the amount in Part IV of his return, there was a clear admission that he had earned the income shown therein, in the year under consideration. The assessee could not claim immunity from penalty by falsely indicating in Part IV of the return that he had earned income of a casual nature. This case does not in any way help the Revenue as the assessee's claim is not false. 33. Similarly the case of Atul Kumar Deovrat Co. v. CIT [1987] 168 ITR 286 (Cal.) is a case where the assessee has been found guilty of a conscious and deliberate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 255(4) of the Income-tax Act on account of difference of opinion between the Members who heard above referred four appeals:- "Whether on the fact and in the circumstances of the case a penalty could be validly levied for concealment under section 271(1)(c) read with Explanation 1 thereto." 2. The facts of the case are given in detail in the orders of the learned Brothers, yet for disposal of these cases, it is necessary for me to state them briefly. 3. The assesses before me are companies belonging to Mardia Group. Facts in all four cases are identical and therefore, can be stated with reference to case of Rupam Mercantiles Ltd. The above company issued non-convertible redeemable debentures on 25-3-1995 carrying interest @ Rs. 62 and were redeemable after six years at par in one instalment. A sum of Rs. 62 was payable on each of the debenture upfront on the date of allotment itself. The assessee therefore, claimed deduction of Rs. 1.55 crore towards interest paid @ Rs. 62 per debenture in the year ending 31-3-1995 i.e. the year in which the debentures were allotted. 4. In the return of income filed by the assessee on 29-11-1995 and in the detail of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the notes forming part of accounts in the balance-sheet of the appellant-company for assessment year 1995-96 states that the payment of interest of Rs. 1,55,00,000 due on non-convertible redeemable debentures issued during the year was for full term as per the terms of the issue. The ratio laid down by the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. v. CIT squarely applies to the case of the appellant. In view of the above, the disallowance made of Rs. 1,54,50,457 is upheld." 9. On further appeal, the Tribunal in its order dated 28-10-1999 in ITA No. 1102/Ahd./1999, confirmed the disallowance with the following remarks:- "7.1 Accordingly, the Hon'ble Supreme Court relying on the aforesaid decision of the M.P. High Court in the case of M.P. Financial Corporation 165 ITR 765 held that the assessee was correct in claiming deduction only in respect of the proportionate part of discount of Rs. 12500 over the relevant accounting period in question. The Supreme Court further noted that the view taken by them was in conformity with the accounting practice of showing the discount in the "Discount of Debenture Account" which is written off ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act against the assessee and issued show-cause notice to the assessees to why penalty under section 271(1)(c) be not levied for furnishing inaccurate particulars of income and concealing his income. The assessee filed reply to above notice on 8-4-2000 and relevant portion of said reply is reproduced in the penalty order. In nutshell, the assessee contended that neither main provisions of section 271(1)(c) nor Explanation to the said section were invoked in the notice nor these were otherwise applicable. The assessee further raised the following objections:- (1) That deduction of interest on debenture was rightly claimed but wrongly disallowed. The liability was to be allowed under section 36(1)(iii). (2) That all the particulars of income were duly disclosed in the return. The assessee referred to statement of income and in particularly to Note No. 4 (referred to above) in the statement of account. (3) The assessee further pointed out that even revenue authorities were not sure whether entire interest claimed was expenditure/income and had added entire interest in the hands of debenture holders. In the above circumstances, initiation of penalty proceedings under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of deduction was clearly wrong in the light of decision of the Hon'ble Supreme Court in the case of Madras Industrial Investment Ltd. He held that the assessee concealed true characters of its income chargeable to tax for the year under consideration. It tried to make false claim of expenditure by creating evidence in the form of agreement. It attempted to change the nature of transaction through structured deeds and designs. It used colourable devices to conceal its income. After rejecting all the contentions raised on behalf of the assessee, the Assessing Officer levied penalty under section 271(1)(c) of the Act with the following observations:- "12. In view of the facts narrated above, I am satisfied that the assessee has concealed income by furnishing inaccurate particulars and provisions of section 271(1)(c) are attracted. I accordingly levy a penalty of Rs. 72,00,000 (Rupees Seventy two lakhs only) as against the maximum penalty leviable of Rs. 2,13,21,627." 15. The assessee carried the matter in appeal before the learned CIT(A) who noted the amount of penalty imposed under section 271(1)(c) in all the four cases. He also noted that name of debenture holders and amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation Ltd. at page 10 of the impugned order and took the view that in the light of the decision of Hon'ble Supreme Court in the case of State Bank of India, the deduction could not be claimed. Accordingly plea of the assessee was rejected. The learned CIT(A) also did not find any force in the argument that in the case of Madras Industrial Investment Corpn. Ltd., the subject-matter under consideration was deduction under section 37 whereas the appellant raised his claim under section 36(1)(iii) of Income-tax Act. He held that question to be considered was whether' expenditure did accrue in reality in the relevant previous year or not. It was immaterial and of academic interest whether claim was made under section 37 or 36 of Income-tax Act. The learned CIT(A) also did not find any force in the submission of the assessee that the Assessing Officer in the case of recipients i.e. Rakesh Mardia, Rasik Mardia and Rajiv Mardia had added total interest on debentures in their assessment orders made on protective basis. The learned CIT(A) on the other hand, noted that recipients in their returns had not shown the entire interest in their returns but only fraction of the same. It was A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this respect is on the appellant to prove that the explanation or the claim made was bona fide. This has not been done in the instant case. (2) In none of the returns filed by the recipients corresponding interest income was declared and offered for tax on their own. The plea of the appellant that there were valid bona fide explanation therefore lacks acceptability. (3) It is clear from the facts narrated above that in all the four appellants cases, the transactions are within the closely knit Mardia Group of Companies and their Directors and that have been arranged only with a view to reduce the tax liability of the appellant companies. The transactions relating to issue of debentures are also between the appellant and only one person who is either a director of the appellant companies or is a relative of the director of the appellant. The decision of Supreme Court in the case of McDowell Co. reported in 154 ITR 148 is also clearly applicable to the facts of the case. (4) As discussed by the Assessing Officer, the transactions in reality are only in the nature of advance payments paid to the respective recipients by the appellant companies for which the actual interest w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liability by adopting a device. On the facts and circumstances of the case the learned Judicial Member confirmed the levy of penalty. 20. The learned Vice President (Accountant Member) did not agree with the order proposed by the learned Judicial Member. In his dissenting order, he noted that assessees had issued debentures on 25-3-1995 which carried interest at Rs. 62 payable upfront on the date of allotment of the debentures. The debentures were redeemable after six years at par. The assessee charged interest payable @ Rs. 62 per debenture to the previous year and thus claimed deduction of Rs. 1.55 crores (in case of M/s. Rupam Mercantiles Ltd.) for assessment year 1995-96. The learned Vice President then referred to Note No. 4 in the statement of account about which specific reference was made in the return filed by the assessees on 29-11-1994. He noted that particulars of interest on debentures i.e. rate of interest payable and fact that these were redeemable at par at the end of six years from the date of allotment were duly specified in the return and statement of accounts. 21. The learned Vice President (V.P.), further noted that the Assessing Officer in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of National News Print Paper Mills Ltd. wherein their Lordships have held "that the amount of interest could be claimed as deduction in a particular year, the assessee ought to have undertaken unconditionally to pay it to the Government." In the present case the assessee has undertaken unconditionally to pay interest of Rs. 62 per debenture upfront on the date of allotment itself. The assessee could not be said to be wrong in making a claim in the year under consideration i.e., on the date of allotment of debenture. Thus there was no lack of bona fide on the part of the assessee if liability was claimed as a deduction on the basis of agreement between the parties. 25. As regards the requirement of the Explanation, "that all the facts relating to the same and material to the computation of his total income have been disclosed by him", the learned VP referred to note No. 4 in the statement of accounts and its mention in the return filed by the assessee. No material fact which was not disclosed, has been brought on record by the revenue authorities while making the disallowance in question. There is no allegation that debenture agreement is sham and bogus. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that liability for discount has been incurred in the accounting year i.e., the year of allotment of debenture and that it was revenue in nature. It was incurred wholly and exclusively for purposes of business. As the assessee had secured a benefit over a number of years, the liability should be spread over the period of debenture. The learned VP has further quoted certain decisions wherein expenditure benefiting the assessee for several years was allowed in the year in which it was incurred by the assessee. 29. In the light of above discussion, the learned VP concluded that the assessee cannot be held guilty of concealment of income or furnishing inaccurate particulars of income thereof either under the main provision of section 271(1)(c) or under deeming provision of Explanation 1 thereto. In his opinion, the appeals were required to be allowed. 30. Thereafter, the learned VP discussed all the points raised by the learned Judicial Member in the proposed order one by one and held that no case of levy of penalty was made out. The assessee did not adopt any device in claiming the deductions. The learned VP referred to the decision of the Hon'ble Supreme Court in the case of Azadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income has been established. I am inclined to agree with the above view of the learned VP for reasons given by him and further for the reasons discussed herein below. 33. The fundamental question, therefore, requires to be examined is whether the deduction of interest as claimed by the assessee can be said to be mala fide or is it possible to hold that case pleaded by the assessee that entire interest @ Rs. 62 per debenture had accrued, was a plausible view and, therefore, the question of levy of penalty would not arise in this case. As a corollary to the above question it is to be seen whether there is any justification for holding that interest as claimed could reasonably be treated to have accrued and was an expenditure which could legitimately be claimed as a deduction. In the case of Madras Industrial Investment Corpn. Ltd. their Lordships quoted decision of Hon'ble Calcutta High Court in the case of CIT v. Indian Jute Mills Association [1982] 134 ITR 68, as to what is an expenditure incurred for computing profits and gains of business or profession under sections 30 to 36 of Income-tax Act. Their Lordships have observed as under:- "In that case, the Calcutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred "in the year of account". This allowance was made right upto the Hon'ble High Court. About the undertaking given by the assessee to provide development in the shape of road, drains etc. their Lordships observed as under:- "This undertaking having been incorporated in the deeds of sale themselves there was certainly a liability undertaken by the appellant to carry out these developments within six months from the dates of those deeds. Time was of course not of the essence of the contract and the appellant, therefore was at liberty to carry out that undertaking within a reasonable time. That, however, did not absolve it in any manner whatever from carrying out the undertaking and the purchasers were in a position to enforce the undertaking by taking appropriate proceedings in that behalf." As at page 6 of the report, their Lordships noted distinction between legal enforceable liabilities and contingent liabilities. Their Lordships decided the question as under:- "Approaching the question before us in the light of the observations made above we have got to determine what was the nature of the liability which was undertaken by the appellant in regard to the development of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed in return of income and in the statement of account, appropriate note was made to draw the attention of the revenue authorities to the deduction claimed. Evidently no attempt was made by the assessee to conceal any income or furnish inaccurate particulars of income. It is nobody's case that deduction of interest was not supported by contract or such contract was not filed during the course of assessment proceedings. It is therefore, difficult to conclude that the assessee failed to substantiate its claim during the course of assessment proceedings and therefore, Explanation 1 to section 271(1)(c) of the Income-tax Act was attracted in this case. The said Explanation had no application for the above short reasons apart from elaborated reasons given by the learned VP in his proposed order. 36. The revenue has justified disallowance of interest of Rs. 62 and levy of penalty as the assessee paid interest for six years when it could pay only for 7 days in the relevant period. It has been over emphasized by the revenue that interest for period other than 7 days, did not accrue to the assessee; the excess amount was paid as advance interest only on account of close relationship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y liability incurred for the purpose of obtaining the loan would be revenue expenditure." Therefore, no addition or penalty could be levied on the assessee on how the recipient treated interest income in their returns. 37. The plea of the revenue that the assessee adopted a device and therefore, should be penalized in the light of decision of the Hon'ble Supreme Court in the case of McDowell Co. Ltd., has been properly dealt with by the learned VP with reference to subsequent decisions. In my view the assessee entered into a legal transaction and there is no case for levy of penalty on this account. 38. The bedrock of revenue's case is why did the assessee agree to pay entire amount of interest for six years on the date of issue of debentures. This was done to reduce the tax liability. How interest for the whole period could be agreed to be paid in advance. This was agreed to be paid to because of close relationship between the assessee and recipient directors or their relations. It is settled law that businessman is the best judge of his affairs and how they are to be conducted. The revenue authorities cannot apply subjective standard. In a recent decision in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have the advantage of abovesaid decision in which it has been held that discount on debenture is to be spread over and allowed on proportionate basis. But even in the above decision, it has been accepted that discount, was a loss and it accrued in the year of account in the business. Their Lordships observed as under:- "Therefore, when a company issues debentures at a discount, it incurs, a liability to pay a larger amount than what it has borrowed, at a future date. We need not go into the question whether this additional liability equivalent to the discount, which is incurred in praesenti but is payable in future, represents deferred interest or not. That may depend upon the totality of circumstances relating to the issue of debentures, including terms. The liability, however, to pay the discounted amount over and above the amount received for the debentures is a liability which has been incurred by the company for the purposes of its business in order to generate funds for its business activities. The amounts so obtained by issue of debentures are used by the company for the purposes of its business. This would, therefore, be expenditure." (Italics to emphasis). Their Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n advance is not unknown in the trading circle. Money-lenders as per above practice, take entire interest in advance on the money lent. I am therefore, inclined to hold that the argument to pay entire interest in advance and claim of above amount in the return, cannot be said to be mala fide. Such claim is not unknown to the commercial world, so as to justify the levy of penalty under section 271(1)(c) of the Income-tax Act. 42. Before concluding I would like to quote the following observation of their Lordships of Hon'ble Supreme Court in the case of Hindustan Electro Graphites Ltd.:- "This court further said that if the view canvassed on behalf of the Revenue were accepted, the result would be that even if the assessee raises a bona fide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the court to be not acceptable. That surely could never have been intended by the Legislature, this court so observed." In the earlier portion of the said decision, their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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