Ms. Sushma Chowla, Judicial Member - Out of these four appeals, three appeals filed by the same assessee are against the different orders of CIT(A), Chandigarh dated 28.11.2008, 25.9.2009 and 26.2.2010 relating to assessment years 2005-06 to 2007-08 respectively against the orders passed under section 143(3)of the I.T. Act, 1961. The Revenue has also filed an appeal in ITA No.116/Chd/2010 relating to assessment year 2005-06 against which the assessee has filed Cross objection being C.O. No. 22/Chd/2010.

2. All the appeals/cross objection relating to the same assessee and appeal of the Revenue having similar grounds were heard together and are being disposed of by this consolidated order for the sake of convenience.

3. The assessee in ITA No. 1115/Chd/2008 relating to assessment year 2005-06 has raised the following grounds of appeal:-

1. That the Ld. CIT(A) has further erred in holding that the assessee's reasonable profit for the period 1.10.2004 to 31.1.2005 is the cost + @ 17% as against the profit shown at 49% merely on the suspicious premise holding it to be mode of computation of excessive profit which is arbitrary and unjustified.

2. That the Ld. CIT(A) has further erred in holding that the assessee would not be eligible for deduction under section 10B on the difference of profit shown by the assessee and the profit taken cost + @ 17% holding it to be taxable which otherwise is exempt under section 10B of the Act and as such is arbitrary and unjustified.

3. That the Ld. CIT(A) has further erred in upholding the disallowance of Rs. 5,54,752/- invoking the provisions of section 14A of the Act which is arbitrary and unjustified.

4. The Revenue in ITA No. 116/Chd/2009 relating to assessment year 2005-06 has raised the following grounds of appeal:-

1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case.

2. Whether On the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing exemption us/ 10B of the Income Tax Act.

3. Whether On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer on account of expenditure incurred by the assessee to the tune of Rs. 48,22,679/- u/s 69C r/w with section 10B(7) and disallowance of an expenditure of Rs. 5,54,752/- incurred by the assessee company u/s 14A of the Income Tax Act, 1961.

5. The following grounds have been raised by assessee in the Cross objections in C.O. 22/Chd/2000 relating to assessment year 2005-06.

1. That the exemption under section 10B of the Income Tax Act is allowable to the assessee which has also been allowed by the Assessing Officer himself in the subsequent assessment year i.e. 2006-07 and now to say that the Ld. CIT(A) has erred in allowing exemption under section10B of the Act is wholly warranted.

2. That the Ld. CIT(A) has rightly deleted the addition of Rs. 48,22,679/- made under section 69C r.w.s. 10B(7) of the Act made by the Ld. Assessing Officer allegedly on account of expenditure incurred by the appellant outside the books of account.

3. That the Ld. CIT(A) has wrongly upheld the disallowance of an expenditure of Rs. 5,54,752/- under section 14A of the Act while the assessee did not claim any such deduction by way of expenditure. As a matter of fact no such relief has been allowed by the Ld. CIT(A) and the ground of appeal of the Department is untenable.

6. The assessee in ITA No 1066/Chd/2010 relating to assessment year 2006-07 and in ITA No.294/Chd/2010 relating to assessment year 2007-08 has raised the following common grounds of appeal:-

4. That the Ld. CIT(A) has erred in holding that the assessee's reasonable profit during the year is the cost + @ 22% as against the profit shown at Rs. 54.14% (assessment year 2006-07) and 52.70% (assessment year 2007-08) merely on the suspicious premise holding it to be mode of computation of excessive profit which is arbitrary and unjustifie