Mega Resources Ltd., Kolkata V. DCIT, Circle-4, Kolkata, Kolkata

CO 103/KOL/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3373 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S JHAJHARI FCA SHRI DAVI
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Question of law; Bad and doubtful debts
• Section: 143(3); 28

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1951 / KOL / 2014 ASSESSMENT YEAR :2008-09 DCIT, CIRCLE-4(2), 4 TH FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . M/S MEGA RESOURCES LTD.10, CLIVE ROW, 3 RD FLOOR, KOLKATA-01 [ PAN NO.AADCM 5397 E ] /APPELLANT .. / RESPONDENT C.O. NO.103/KOL/2014 (A/O ITA NO.1951/KOL/2014) ASSESSMENT YEAR:2008-09 M/S MEGA RESOURCES LTD.10, CLIVE ROW, 3 RD FLOOR, KOLKATA-01 V/S . DCIT, CIRCLE-4(2), 4 TH FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 CO-OBJECTOR .. / RESPONDENT /BY ASSESSEE SHRI S. JHAJHARI, FCA /BY RESPONDENT SHRI DAVID Z. CHOWNGTHU, ADDL. CIT-DR /DATE OF HEARING 11-10-2017 /DATE OF PRONOUNCEMENT 06-12-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL AS WELL AS CROSS OBJECTION (CO) BY THE REVENUE AND ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEALS)-I, KOLKATA DATED 02.07.2014. ASSESSMENT W AS FRAMED BY DCIT, CC.-VII, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 2 TO AS THE ACT) VIDE HIS ORDER DATED 27.12.2010 FO R ASSESSMENT YEAR 2008-09. THE APPEAL AND CO ARE DISPOSED OFF BY THIS COMMON O RDER FOR THE SAKE OF CONVEYANCE. SHRI DAVID Z. CHOWNGTHU, LD. DEPARTMENTAL REPRESENT ATIVE APPEARED ON BEHALF OF REVENUE AND SHRI S.JHAJHARIA, LD. AUTHORI ZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. THE REVENUE HAS RAISED FOLLOWING REVISED GROUNDS :- 1. THE LD. CIT(A) ERRED IN LAW AS FACTS IN DELETI NG RS.48,76,650/- OUT OF TOTAL DISALLOWANCE OF RS.1,10,50,904/- ON ACCOUN T OF BAD DEBT, IGNORING THE FACT THAT IT WAS NOT CLARIFIED WHETHER MONEY ADVANCED WAS FOR PURCHASE OF SHARES OR OTHERWISE AND THAT SCH-9 OF THE BALANCE SHEET CLEARLY SHOWS THAT DEBT OUTSTANDING FOR MORE THAN 6 MONTHS AS ON 31.03.2007 IS RS.60,91,791/- AND RS.13,65,504/- AS ON 31.08.2008. 2. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FAC T THAT BORROWED FUND WAS UTILIZED IN EXTENDING INTEREST FREE ADVANCES OF RS.35 LAKH. 3. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE, AMEND O MODIFY ANY GROUND BEFORE OR AT THE TIME OF APPELLATE PROCE EDINGS. THE ASSESSEE HAS RAISED FOLLOWING GROUND FOR ITS CO :- 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN ALLOWING ONLY PARTIAL RELIEF OF RS.48,76,650/- (OUT OF THE ASSESSEES COMPANYS TOT AL BAD DEBT CLAIM OF RS.1,10,50,904/- AS DEDUCTION U/S. 36 OF THE ACT, B UT DISALLOWED IN THE ASSESSMENT) AND ARBITRARILY CONFIRMING THE DISALLOW ANCE OF THE BALANCE BAD DEBT CLAIM OF RS.61,74,254/- WITHOUT CONSIDERIN G AND APPRECIATING THE FULL FACTS OF THE CASE AND THE PAST RECORDS. 2. FOR THAT YOUR PETITIONER CRAVES THE RIGHT TO PUT ADDITIONAL GROUNDS AND/OR TO ALTER/AMEND/MODIFY THE PRESENT GROUNDS BE FORE OR AT THE TIME OF HEARING. 3. FIRST ISSUE RAISED BY REVENUE IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER FOR 48,76,650/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF SHARE DEALINGS AND MONEY LENDING AS PRINCIPAL BUSINESS ACTIVITY. THE ASSESSEE DURING THE YEAR HAS DEBITED ITS PROFIT AND LOSS ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 3 ACCOUNT FOR 1,10,50,904//- UNDER THE HEAD BAD DEBTS. THE RELEVA NT DETAILS OF BAD DEBT WRITTEN OFF STAND AS UNDER:- SL.NO NAME OF THE PARTIES AMOUNT REMRK(S) 1 INDIABULLS SECURITIES 13,924 SALE OF SECURITIES 2 KARVEY STOCK BROKING 1,36,519 -DO- 3 BP SECURITIES PVT. LTD 47,26,207 -DO- 4 WILLARDS INDIA LTD. 59,28,712 LOAN GIVEN ON INTER EST (AMOUNT COMPRISES OF PRINCIPAL & INTEREST I.E. RS. 30 LACS PLUS 29,28,712) 5 ADVANCE OF STAFF 1,28,042 ADVANCE TO STAFF 6 ADVANCE TO STAFF 62,500 -DO- 7 LEGAL ADVANCE 55,000 ADVANCE AGAINST THE LEGAL EXPENSES THE ASSESSEE CLAIMED TO HAVE WRITTEN OFF ALL THE AD VANCES IN THE COURSE OF BUSINESS THEREFORE, ALL THE BAD DEBTS ARE ELIGIBLE FOR DEDUCTION. HOWEVER, AO DISAGREED WITH THE CONTENTION OF THE ASSESSEE ON TH E GROUND THAT ASSESSEE HAS SHOWN DEBTS OUTSTANDING FOR MORE THAN SIX MONTH S ONLY FOR 60,91,791/- AND 13,65,504/- AS ON 31.03.2007 AND 31.03.2008 RESPECT IVELY. THEREFORE THE QUESTION CLAIMING THE BAD DEBTS FOR RS. 1,10,50 ,904.00 DOES NOT ARISE. THUS, THE AO OPINED THAT THE AMOUNT OF ADVANCE WRIT TEN OFF DOES NOT ACTUALLY REPRESENT THE BAD DEBT. ACCORDINGLY, THE AO DISALLO WED THE CLAIM OF 1,10,50,904/- AND ADDED TO THE TOTAL INCOME OF ASSE SSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT-A SUBMITTED THAT AMOUNT OF RS. 13,924.00, 1,36,519.00 & 47,26,207.00 REPRESENTS THE AMOUNT DU E FROM INDIABULLS SECURITIES, KARVEY STOCK BROKING AND BP SECURITIES PVT. LTD ON ACCOUNT OF SALE OF SHARES. THE SALE AMOUNT OF THE ABOVE TRANSACTION S WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF ACCOUNTS AND OFFERED TO TAX. THE LD. CIT-A AFTER CONSIDERING THE SUBMISSION OF T HE ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 4 THE LD. AR HAS PLACED ON RECORD RELEVANT DOCUMENTS IN SUPPORT OF HIS CONTENTIONS. IN THIS FACTUAL BACKGROUND, I FIND MERIT I THE CLAIM OF THE ASSESSEE THAT THE ABOVE AMOUNTS WRITTEN OFF IN THE BOOKS OF ACCOUNT ARE ALLOWABLE AS BAD DEBT. THE ASSESSEE BEFORE LD. CIT-A FURTHER SUBMITTED THA T SUM OF RS.59,28,712/- IS INCLUSIVE OF PRINCIPAL AND INTEREST OF RS. 30,00,00 0.00 AND 29,28,712.00 ONLY WHICH WAS DUE FROM WILLARDS INDIA LTD. THE AMOUNT O F RS. 29,28,712.00 IS REPRESENTING THE AMOUNT OF UNREALISED INTEREST PRIO R TO THE AY 2001-02. THE ASSESSEE FURTHER ARGUED THAT THE AMOUNT OF LOAN WAS GIVEN IN THE COURSE OF BUSINESS THEREFORE THE SAME SHOULD BE ALLOWABLE AS DEDUCTION. HOWEVER THE LD. CIT-A REJECTED THE CONTENTIONS OF T HE ASSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- I AM NOT IMPRESSED WITH THE ARGUMENT THAT HE PRINC IPAL AMOUNT IS ALLOWABLE AS BAD DEBT. ALSO, THE ASSESSEE HAS FAILE D TO BRING ON RECORD ANY MATERIAL TO SHOW THAT THE UNREALIZED INTEREST O F RS.29,28,712/- PRIOR TO THE ASSESSMENT YEAR 2001-02 WAS ACTUALLY CONSIDE RED AS INCOME IN THE RELEVANT YEARS. IN VIEW OF THE ABOVE, THE AO WA S JUSTIFIED IN NOT ACCEPTING THE CLAIM OF RS.59,28,712/-. THE LD. CIT(A) ALSO CONFIRMED THE OTHER ADDITIONS M ADE BY THE AO, AS DISCUSSED ABOVE BY OBSERVING AS UNDER : I FIND FROM THE SUBMISSIONS OF THE ASSESSEE THAT T HE CLAIM OF RS.1,28,042/- AND RS.62,500/- RELATE TO ADVANCES TO STAFF WHEREAS THAT OF RS.55,000/- PERTAINS TO ADVANCE AGAINST LEGAL EX PENSES. I AGREE WITH THE AO THAT THESE CLAIMS ARE NOT ALLOWABLE AS BAD D EBT. IN EFFECT, THE CLAIM OF BAD DEBT IS RESTRICTED TO RS.48,76,650/-. THE ADDITION OF RS.61,74,254/- IS CONFIRMED. GROUND NO 2 IS PARTLY ALLOWED. THE REVENUE, BEING AGGRIEVED IS IN APPEAL AND ASSES SEE ALSO FILED CO BEFORE US. 6. THE REVENUE CAME IN APPEAL FOR THE RELIEF GRANTE D BY THE LD. CIT(A) FOR THE BAD DEBTS WRITTEN OFF ON ACCOUNT OF SALES TO IN DIABULLS SECURITIES, KARVEY STOCK BROKING AND BP SECURITIES PVT. LTD FOR THE SA LE OF SHARES FOR RS. 13,924.00, 1,36,519.00 & 47,26,207.00. ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 5 THE ASSESSEE IS IN CO FOR THE ADDITIONS CONFIRMED B Y THE LD. CIT(A) FOR RS. 61,74,254.00 AS DISCUSSED ABOVE. FIRST WE TAKE UP THE GROUND OF APPEAL OF THE REVENU E 7. THE LD. DR BEFORE US VEHEMENTLY RELIED ON THE OR DER OF AO AND HE STATED THAT THE MATTER MAY BE DECIDED ON MERIT. ON THE OTHER HAND, LD. AR FILED PAPER BOOK WHICH IS RUNNING PAGES FROM 1 TO 134 AND SUBMITTED THAT THE CLAIM FOR THE BAD DEBTS WAS MADE IN RESPECT OF FOLLOWING PARTIES:- NAME OF THE PARTY AMOUNT REMARKS INDIABULLS SECURITIES 13,924/- STANDING IN SUNDRY D EBTORS. THIS IS DUE AGAINST HARE PURCHASED/SOLD FROM THEM. KARVEY STOCK BROKING 1,36,519/- -DO- DINESH KR. SINGHANIA (-) 20,81,850/- LYING SINCE 2 002 AND RELATED WITH BPS SECURITIES BP SECURITIES PVT.LTD 68,08,057/- LYING SIN CE 2002 AND RELATED WITH DINESH SINGHANIA HE FURTHER SUBMITTED THAT THE SHARES WERE SOLD TO T HE ABOVE PARTIES AND CORRESPONDING SALES WERE DULY SHOWN IN THE IT RETUR N WHICH WAS DULY ACCEPTED BY REVENUE. SO THE BAD DEBT WRITTEN OFF WA S CLAIMED WITHIN THE PROVISION OF LAW AS SPECIFIED UNDER SECTION 36(1)(V II) OF THE ACT. LD. AR IN SUPPORT OF ASSESSEES CLAIM DREW OUR ATTENTION ON P AGES FROM 6 TO 19 WHERE THE LEDGER COPIES OF ALL THE AFORESAID PARTIES WERE PLACED. HE RELIED ON THE ORDER OF LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE DISALLOWANCE OF BAD DEBT WAS MADE BY THE AO ON THE GROUND THAT THE AMOUNT OF BAD DEBT CLAIMED IN THE PROFIT AND LOSS ACCOUNT VIS-A-VIS CORRESPONDING OPE NING AND CLOSING BALANCE OF THE DEBTOR ARE NOT MATCHING. THEREFORE, THE ADDITIO N WAS MADE BY THE AO. HOWEVER, ON PERUSAL OF THE DETAILS FILED BY ASSESSE E, WE NOTE THAT THE SALE OF SHARES FOR RS. 13,924.00, 1,36,519.00 & 47,26,207.0 0 TO INDIABULLS SECURITIES, KARVEY STOCK BROKING AND BP SECURITIES PVT. LTD WER E DULY ACCOUNTED FOR IN THE ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 6 BOOKS OF ACCOUNTS OF ASSESSEE. THEREFORE, WE HOLD T HAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION IN RESPECT OF BAD D EBT AS DISCUSSED ABOVE. THUS AFTER CONSIDERING THE FACTS IN TOTALITY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). CONSEQUENTLY, GROUND RAISED BY REVENUE IS DISMISSED. NOW COMING TO THE GROUND RAISED BY THE ASSESSEE IN ITS CO 9. THE LD. AR BEFORE US SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER THE HEAD BAD DEBTS IN RESPECT OF FO LLOWING ITEMS:- WILLARDS INDIA LTD 59,28,712/- UNRECOVERABLE INTEREST ADVANCES TO STAFF 1,28,042/- ADVANCES GIVEN TO STAF F ADJUSTABLE AGAINST DUES. A. CHATTERJEE 55,000/- ADVANCE GIVEN FOR LEGAL EXPENSES ADVANCE FOR EXPENSES 62,500/- ADVANCE GIVEN TO S TAFF FOR COMPANYS EXPENSES, BUT REMAIN UNACCOUNTED DUE TO LEAVING THE ORGANIZATION BY THE STAFF. THE AMOUNT SHOWN IN THE NAME OF WILLARDS INDIA LTD. IS REPRESENTING THE LOAN PROVIDED TO IT IN THE COURSE OF BUSINESS WHICH IS I NCLUSIVE OF PRINCIPAL AMOUNT OF RS. 30,00,000.00 AND INTEREST AMOUNT OF 29,28,312/-. THE AMOUNT OF INTEREST WAS DULY OFFERED TO TAX IN THE EARLIER YEA R. THE LD. AR FURTHER SUBMITTED THAT THE MAIN BUSINESS OF ASSESSEE IS DEALING IN SHARES AND TO LEND THE MONEY AS EVIDENT FROM THE ME MORANDUM OF ASSOCIATION OF COMPANY, WHICH READS AS UNDER:- 2. TO CARRY ON BUSINESS OF AN INVESTMENT COMPANY O R AN INVESTMENT TRUST COMPANY OR TO UNDERTAKE AND TRANSACT TRUST AN D AGENCY INVESTMENT, FINANCIAL BUSINESS, FINANCIERS AND FOR THAT PURPOSE TO LEND OR INVEST MONEY AND NEGOTIATE LOANS IN ANY FORM OR MAN NER, TO DRAW, ACCEPT, ENDORSE, DISCOUNT, BUY, SELL AND DEAL IN BI LLS OF EXCHANGE. THUS, LD. AR ALSO SUBMITTED THAT THE AMOUNT OF INTE REST HAS ALREADY BEEN OFFERED TO TAX IN THE EARLIER YEAR FOR 29,28,712/-, THEREFORE IT IS VERY MUCH ELIGIBLE FOR DEDUCTION IN THE YEAR UNDER CONSIDERAT ION. THE LD. AR ALSO SUBMITTED THAT THE BALANCE AMOUNT REPRESENTING THE PRINCIPLE AMOUNT FOR 30 LAKH WHICH WAS GIVEN IN THE COURSE OF ASSESSEES BU SINESS. THEREFORE, THE PRINCIPAL AMOUNT SHOULD BE ALLOWED AS DEDUCTION U/S 28 OF THE ACT. ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 7 LD. AR FURTHER SUBMITTED THAT THE AMOUNT OF ADVANCE GIVEN TO THE STAFF AND THE AMOUNT OF ADVANCE FOR LEGAL EXPENSES REPRESENT THE TRANSACTION IN THE COURSE OF ASSESSEES BUSINESS AND THEREFORE, THE SAME IS E LIGIBLE FOR DEDUCTION U/S 28 OF THE ACT. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF AU THORITIES BELOW. HE REQUESTED THE BENCH TO CONFIRM THE SAME. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO TH E ADVANCE WRITTEN OFF IN THE YEAR UNDER CONSIDERATION. THE NECESSARY AND RELEVAN T DETAILS OF ADVANCE HAVE ALREADY BEEN DISCUSSED ABOVE. THEREFORE THE SAME IS NOT REPEATED HEREWITH FOR THE SAKE OF BREVITY. 10.1 AS FAR AS ADVANCE GIVEN TO THE STAFF AND FOR L EGAL EXPENSES ARE CONCERNED, WE FIND THAT IT WAS PROVIDED IN THE COUR SE OF BUSINESS THEREFORE THESE ARE ELIGIBLE FOR DEDUCTION U/S 28 OF THE ACT. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF HONBLE CALC UTTA HIGH COURT IN THE CASE OF CIT VS. DHAWAN INVESTMENT & TRADING CO. LTD . REPORTED IN 100 TAXMAN 562 WHEREIN IT WAS HELD AS UNDER : WHETHER THE PREMISES WERE TAKEN ON RENT FOR THE PU RPOSE OF BUSINESS OR NOT, THE CONCURRENT FINDING WAS THAT IT WAS TAKEN FOR TH E PURPOSE OF BUSINESS. THEREFORE, THE QUESTIONS BEING RAISED ON FINDINGS O F FACT, FINDINGS COULD NOT BE SAID TO BE PERVERSE. SIMILARLY WE DRAW SUPPORT AND GUIDANCE FROM THE ORD ER OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. REPORTED IN 218 TAXMAN 122. THE FOLLOWING QUESTION OF LAW WAS FRAMED BEFORE THE HONBLE COURT. (II) WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, TRIBUNAL HAS ERRED IN LAW IN DELETING DISALLOWANCE OF RS. 21,08,918/- MAD E ON ACCOUNT OF ADVANCE WRITTEN OFF WITHOUT APPRECIATING THAT PROVISIONS OF SECTION 36(1)(VII) WERE NOT APPLICABLE AND THE BUSINESS LOSS HAD NOT CRYSTALLIZ ED YET?' THE RELEVANT FINDING OF THE HONBLE COURT IN THE AB OVE CASE STANDS AS UNDER: ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 8 5. CONSIDERING THE FACT THAT THE AMOUNT OF RS.14,22,2 73/-WAS ADVANCE TO THE CO-OPERATIVE SOCIETY, WHOSE MEMBERS ARE THE EMPLOYE ES OF THE ASSESSEE- COMPANY, TO RUN THE PETROL PUMP FOR THE EMPLOYEES O F THE ASSESSEE, HOWEVER, THE CO-OPERATIVE SOCIETY INSTEAD OF RUNNIN G THE PETROL PUMP GAVE IT TO THE CONTRACTOR WHO DEFRAUDED THE SOCIETY AND IT WAS FOUND BY THE ASSESSEE THAT THE AFORESAID AMOUNT WAS NOT RECOVERABLE AT AL L, THE ASSESSEE WRITTEN OFF THE SAME AS BUSINESS LOSS AND CLAIMED DEDUCTION UND ER SECTION 36(1)(VII) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE SAME, WHICH WAS CONFIRMED BY THE CIT(A), WHICH CAME TO BE SET ASIDE BY THE LEARN ED TRIBUNAL AND THE LEARNED TRIBUNAL BY IMPUGNED ORDER DELETED THE SAID DISALLOWANCE OF RS.21,08,918/-, WHICH WAS GIVEN ON ADVANCE AND, THE REFORE, IT CANNOT BE SAID THAT THE LEARNED TRIBUNAL HAS COMMITTED ANY ERROR A ND/OR IT RAISES ANY QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW. UNDE R THE CIRCUMSTANCES, WE SEE NO REASON TO INTERFERE WITH THE SAID APPEAL AND THE SAID APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISSED. THUS, WE ARE INCLINED TO HOLD THAT THE ADDITION ON ACCOUNT OF ADVANCE GIVEN TO THE STAFF AND LEGAL EXPENSES ARE NOT SUSTAINABLE IN THE GIVEN FACTS & CIRCUMSTANCES. 12. NOW COMING TO THE ADVANCE GIVEN TO M/S WILLARDS INDIA LTD., FOR 59,28,712/- INCLUSIVE OF INTEREST OF 29,28,712/-. IN THIS REGARD, LD. AR BEFORE US DEMONSTRATED THAT INTEREST INCOME TO THE TUNE OF 20 LAKH WAS RECOGNIZED IN THE ASSESSMENT YEAR 1997-98. THE RELEVANT DETAIL S STAND AS UNDER:- MEGA RESO URCES LTD. FOR THE YEAR E NDED 31.03.97 ASSESSMENT YE AR: 1997-98 SUB-SCHEDULE OF SCHEDULE 12 DETAILS OF INCOME INTEREST RECEIVED GROSS TDS 31.3.97 NET WILLARDS INDIA 2,000,000 435.014 1,564.986 ARAVALI SECURITIES 1,755,099 385.240 1,369,849 HEMLATHA TEXTILES 900,000 195,757 704,243 DUNCN INDUSTRIES 1,786,026 400,658 1,385,368 ASIAN CABLES 2,796,164 612,883 2,183,281 9,2,27,289 2,029,552 7,207,737 HOWEVER, ASSESSEE BEFORE US DID NOT BRING ANY EVIDE NCE TO DEMONSTRATE THE BALANCE AMOUNT OF INTEREST INCOME FOR 9,28,712/- (29,28,712.00 20,00,000.00) WHETHER SUCH INCOME WAS OFFERED TO TA X OR NOT. ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 9 HOWEVER, ON PERUSAL OF DETAILS WE NOTE THAT ASSESSE E HAS BEEN CARRYING THE BUSINESS OF SHARE DEALING AS WELL AS MONEY LENDING. THIS FACT HAS NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. HOWEVER WE NOTE T HAT THE DOCUMENTARY EVIDENCE SHOWING THE INCOME OF RS. 20 LACS OFFERED TO TAX WAS NOT BROUGHT TO THE NOTICE OF THE LOWER AUTHORITIES. THUS, IN OUR C ONSIDERED VIEW, THE ISSUE FOR THE DEDUCTION OF LOAN WRITTEN OFF NEEDS TO BE RECON SIDERED BY THE LD. CIT-A IN ACCORDANCE WITH THE LAW AND IN THE LIGHT OF ABOVE D ISCUSSION. THEREFORE WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF LD. CI T-A. THUS THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR THE STATISTIC AL PURPOSES. 13. IN THE RESULT, ASSESSEES CO IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 14. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 35.59 LAKH ON ACCOUNT OF DIVERSION OF INTEREST BEARING FUND TO NON-INTEREST BEARING LO AN. 15. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS OBSERVED THAT THE BORROWED CAPITAL HAS BEEN MAINLY UTILIZED FOR THE P URPOSE OF SHARE AND INTEREST FREE ADVANCE. THEREFORE, THE AO DISALLOWED THE AMOU NT OF INTEREST FOR 35,59,793/- AND ADDED TO THE TOTAL INCOME OF ASSESS EE. 16. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). BEFORE LD. CIT(A) ASSESSEE CONTENDED THAT INVESTMENT IN SHARES AND INTEREST FREE ADVANCE WERE MADE OUT OF ITS OWN CAPITAL AND RESERV E. THE ASSESSEE IN SUPPORT OF ITS CLAIM FURNISHED THE FOLLOWING DETAIL S:- CAPITAL RESERVE 114.75 CR ADVANCE 56.29 CR INVESTMENT IN SHARE 51.21 CR TOTAL 114,75 CR TOTAL 107.5 CR LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSIONS OF THE LD. AR. IT WAS ARGUED THAT THE INVESTMENT IN SHARES AND INTEREST FREE ADVANCES WERE MADE BY THE ASSESSEE OUT OF ITS OWN FUND AND THAT ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 10 BORROWED FUND WAS UTILIZED FOR THE PURPOSES OF THE BUSINESS. I FIND FROM THE BALANCE SHEET FOR THE RELEVANT YEAR THAT THE AS SESSEE OWNED SUFFICIENT FUND FOR INVESTING IN SHARES OR MAKING A DVANCES. I THEREFORE FIND MERIT IN THE ARGUMENT THAT THE INVESTMENT IN S HARES AND INTEREST FREE ADVANCES WERE MADE BY THE ASSESSEE OUT OF ITS OWN F UND AND THAT THE BORROWED FUND WAS UTILIZED FOR THE PURPOSES OF THE BUSINESS AND CONSEQUENTLY NO DISALLOWANCE OUT OF INTEREST EXPEND ITURE WAS JUSTIFIED. THE CONTENTION OF THE ASSESSEE IS SUPPORTED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. 280 ITR 525 (CAL). ALSO THE AO HAS FAILED TO ESTABLISH ANY NEXUS BETWEEN THE BORROWED FUNDS AND THE INVESTMENT IN SHARES OR ADVA NCES AND INSTEAD HAS MECHANICALLY MADE THE DISALLOWANCE. THIS ACTION OF THE AO IS NEITHER SUSTAINABLE IN LAW NOR ON FACTS. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS.35,59,793/- AS MADE IN THE IMPUG NED ORDER IS DIRECT TO BE DELETED. GROUND NO 3 IS ALLOWED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 16. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER OF AUTHORITIES BELOW AS FAVORABLE TO THEM. 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, IT WAS OBSERVED THAT OWN CAPITAL OF ASSESSEE WAS EXCEEDING THE AMOUNT OF INVESTMENT AND INTEREST FREE LOAN & ADVANCE MADE BY IT. THE RELEVANT DETAILS OF OWN CAP ITAL VIS-A-VIS INVESTMENT IN SHARES / ADVANCE ARE PLACED ON PAGE NO.71 OF THE PA PER BOOK. THUS, IN OUR CONSIDERED VIEW, A PRESUMPTION CAN BE DRAWN THAT TH E OWN FUND WAS UTILIZED IN THE INVESTMENT IN SHARES AS WELL AS INTEREST FRE E ADVANCE. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE PRINCIPLES LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009) REPORTED IN 313 ITR 340 (BOM). THE RELEVANT EXTRACT IS REPRODUCED BELOW:- IF THERE ARE FUNDS AVAILABLE BOTH, INTEREST-FREE A ND OVERDRAFT AND/OR LOANS ARE TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTME NTS WOULD BE OUT OF THE INTEREST-FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FUNDS ARE SUFFICIENT TO MEET THE INVESTMENTS. IN TH E INSTANT CASE SAID PRESUMPTION WAS ESTABLISHED CONSIDERING THE FINDING S OF FACT, BOTH BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL. ITA NO.1951/KOL/2014 & CO 103/KOL/2013 A.Y. 2008- 09 DCI, CIR-4(2), KOL. VS. M/S MEGA RESOURCE S LTD. PAGE 11 THE FACTS OF THE PRESENT CASE ARE EXACTLY IDENTICAL WITH THE PRINCIPLES LAID DOWN BY THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. (SUPRA). RESPECTFULLY, FOLLOWING THE SAME, WE DO N OT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CI T(A). CONSEQUENTLY, GROUND RAISED BY REVENUE IS DISMISSED. 18. IN COMBINE RESULT, APPEAL OF REVENUE STANDS DISMISS ED AND THAT OF ASSESSEES CO IS PARTLY ALLOWED FOR STATISTICAL PUR POSE. ORDER PRONOUNCED IN THE OPEN COURT 06 /12/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP &- 06 / 12 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S MEGA RESOURCES LTD., 10, CLIVE ROW, 3 RD FLOOR, KOLKATA-001 2. /REVENUE-DCIT, CC-4(2), 4 TH FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOL KATA-69 3. 1 2 / CONCERNED CIT KOLKATA 4. 2- / CIT (A) KOLKATA 5. 5 881, 1, / DR, ITAT, KOLKATA 6. ; / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 1,