M/s. Raghunath Exporters, Kolkata V. ITO, Ward - 32(2), Kolkata, Kolkata

CO 41/KOL/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 7323 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 23-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARINDRAM BHATTACHARJEE
• Assessee Lawyers: KHETTRA MOHAN ROY
• Keywords: Business income; Earning of tax free income; Question of law; Commercial expediency
• Section: 143(3); 14A

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.727-728/KOL/2017 ASSESSMENT YEARS:2012-13 & 2013-14 INCOME TAX OFFICER, WARD-32(2), 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-71 / V/S . M/S RAGHUNATH EXPORTS 5F, NORTH BLOCK, PARK PLAZA, 71, PARK STREET, KOLKATA-700 016 [ PAN NO. AADFR 8371 E ] /APPELLANT .. /RESPONDENT C.O. NO.41-42/KOL/2017 (A/O ITA NO.727 & 728/KOL/2017) ASSESSMENT YEAR: 2012-13 & 2013-14 M/S RAGHUNATH EXPORTS 5F, NORTH BLOCK, PARK PLAZA, 71, PARK STREET, KOLKATA-700 016 / V/S . INCOME TAX OFFICER, WARD-32(2), 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-71 CO-OBJECTOR .. /RESPONDENT /BY ASSESSEE SHRI KHETTRA MOHAN ROY, FCA ! /BY RESPONDENT SHRI ARINDRAM BHATTACHARJEE, ADDL-CIT-DR /DATE OF HEARING 25-10-2017 /DATE OF PRONOUNCEMENT 31-10-2017 /O R D E R ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 2 PER BENCH:- THESE TWO APPEALS BY REVENUE AND CROSS OBJECTIONS ( CO) BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF COMMISSION ER OF INCOME TAX (APPEALS)-9 KOLKATA DATED 19.01.2017. ASSESSMENTS WERE FRAMED B Y ITO WARD-32(2), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE THEIR ORDERS DATED 10.03.2015 & 31.03.2016 FOR ASSESSMENT S YEAR 2012-13 & 2013-14 RESPECTIVELY. SHRI ARINDRAM BHATTACHARJEE, LD. DEPARTMENTAL REPRE SENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI KHETTRA MOHAN ROY, LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. BOTH APPEALS AND COS ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF CONSOLIDATE ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.728/KOL /2017 FOR A.Y 12-13 . 3. THE GROUND AS RAISED BY THE REVENUE READS AS UND ER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-9, KOLKATA ERRED IN DELETING THE ADDITION OF RS.35,098/- IN RE LATION OF DISALLOWANCE MADE U/S 2(24)(X) R.W.S. 36(1)(VA) FOR DELAYED DEPOSIT O F EMPLOYEES PF SINCE THE ADDITION WAS MADE FOR VIOLATIONS OF THE SPECIFIC PR OVISIONS OF INCOME TAX ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-9, KOLKATA ERRED IN DELETING THE ADDITION OF RS.49,30,943/- IN RELATION OF PAYMENT OF INTEREST SINCE THE LOAN FOUND TO HAVE INVESTED IN N ON-INCOME GENERATING PURPOSE AN ASSESSEE FAILED TO SUBSTANTIATE THE COMM ERCIAL EXPEDIENCY. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-9, KOLKATA ERRED IN DELETING THE ADDITION OF RS.1,21,442/- IN RESPECT OF DISALLOWANCE MADE U/S. 14A READ WITH RULE 8D AS THE ASSESSEE FIRM MAD E SUBSTANTIAL INVESTMENT IN SHARES WHICH WERE CAPABLE OF YIELDING EXEMPT INCOME . 4. THAT THE APPELLANT CRAVES LEAVE TO PUT FORWARD A DDITIONAL GROUND AT THE TIME OF HEARING. 4. FIRST ISSUE RAISED BY REVENUE IN GROUND NO.1 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER FOR 35,098/- U/S 2(24)(X) R.W.S. SECTION 36(1)(VA) OF THE ACT ON ACCOUNT OF DELAYED DEPOSIT OF EMPLOYEES PF. 5. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM AND ENGAGED IN BUSINESS OF PROCESSING, TRADING AND EXPORT OF TEA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE H AS FAILED TO DEPOSIT THE EMPLOYEES PF WITHIN THE DUE DATE AS SPECIFIED UNDE R THE PROVIDENT FUND ACT. ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 3 THEREFORE, AN AMOUNT OF 35,098/- WAS DISALLOWED AND ADDED TO THE TOTAL INCO ME OF ASSESSEE ON ACCOUNT OF DELAYED DEPOSIT OF EMPLOYEES PF. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT ALL THE PAYMENTS O F EMPLOYEES PF WERE MADE BEFORE THE DUE DATE OF INCOME TAX RETURN FILING. TH EREFORE, THE SAME CANNOT BE DISALLOWED IN VIEW OF JUDGMENT OF HON'BLE JURISDICT IONAL HIGH COURT BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. M/S VIJAY SHREE LIMITED VIDE ITAT NO.245 OF 2011 IN GA NO.2607 OF 2011 DATED 7 TH SEPTEMBER, 2011, WHEREIN IT HAS BEEN HELD AS UNDER:- AFTER HEARING MR. SINHA, LEARNED ADVOCATE, APPEARI NG ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF T HE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ALOM EXTRUSION LTD. , WE FIND THAT THE SUPREME COURT IN THE AFORESAID CASE HAS HELD THAT T HE AMENDMENT TO THE SECOND PROVISO TO THE SEC. 43(B) OF THE INCOME TAX ACT, AS INTRODUCED BY FINANCE ACT, 2003, WAS CURATIVE IN NATURE AND IS REQUIRED TO BE APPLIED RETROSPECTIVELY WITH EFFECT FROM 1 ST APRIL, 1988. SUCH BEING THE POSITION, THE DELETION OF THE AMOUNT PAID BY THE EMPLOYEES CONTRIBUTION BEYOND DUE DATE WAS DEDUCTIBLE BY INVO KING THE AFORESAID AMENDED PROVISIONS OF SECTION 43(B) OF THE ACT. WE, THEREFORE, FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL AND CONSEQUENTLY, WE DISMISS THIS APPEAL. ACCORDINGLY THE LD. CIT(A) AFTER HEARING THE SUBMIS SION OF ASSESSEE DELETED THE ADDITION MADE BY THE AO. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 7. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER O F AUTHORITIES BELOW AS FAVOURABLE TO THEM. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY THE J URISDICTIONAL HIGH COURT IN THE CASE OF M/S VIJAY SHREE LIMITED (SUPRA). AS THE ISSUE IS ALREADY COVERED, HENCE, W E DISMISSED REVENUES GROUND OF APPEAL. ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 4 9. NEXT ISSUE RAISED BY REVENUE IN GROUND NO.2 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 49,30,943/- ON ACCOUNT OF DIVERSION OF INTEREST BEARING LOAN TO NON-INCOME GENERATING ACTI VITY. 10. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT IN UNQUOTED SHARES AS WELL AS IN SHARE APPLICATION MONEY FOR 2,42,88,338/- AND 1.45 CRORES RESPECTIVELY. AT THE SAME TIME, IT WAS ALSO OBSERVED BY AO THAT ASSESSEE IS HAVING BORROWED FUN D OF 358.97 LAKH ON WHICH AN AMOUNT OF INTEREST FOR 49,30,943/- WAS PAID. THUS, IN VIEW OF THE ABOVE, A O WAS OF THE VIEW THAT THE BORROWED FUND HAS BEEN UTILIZED B Y MAKING INVESTMENT IN UNQUOTED SHARES AS WELL AS IN SHARE APPLICATION MONEY. ACCOR DINGLY, AO OPINED THAT THE INTEREST EXPENSES CLAIMED BY ASSESSEE CANNOT BE ALLOWED AS D EDUCTION. THEREFORE, AO CALLED UPON ASSESSEE TO EXPLAIN WHY INTEREST EXPENSE SHOUL D NOT BE DISALLOWED. IN COMPLIANCE THERETO, ASSESSEE SUBMITTED THAT NO BORR OWED FUND WAS UTILIZED IN THE IMPUGNED INVESTMENT. THE AMOUNT BORROWED BY ASSESSE E IS REPRESENTING THE CASH CREDIT LIMIT AND IT IS MORTGAGED AGAINST THE AMOUNT OF CLOSING STOCK AS WELL AS SUNDRY DEBTORS. THE ASSESSEE ALSO SUBMITTED THAT DURING THE YEAR TH E TOTAL PURCHASES WERE MADE FOR 13.41 CRORES BUT THE SUNDRY CREDITORS WERE SHOWN TO THE TUNE OF 54,47,688/- IN THE BALANCE-SHEET AT THE END OF THE FINANCIAL YEAR. THE REFORE, IT IS EVIDENT THAT THE CASH CREDIT BORROWED WAS USED ONLY FOR MAKING THE PAYMEN T OF CREDITORS. 11.1 HOWEVER, AO OBSERVED THAT THE BORROWED FUND HA S BEEN UTILIZED IN THE IMPUGNED INVESTMENT BY OBSERVING AS UNDER:- SECURED LOAN RS.358.97 LAKH TOTAL INVESTMENT INCLUDING SHARE APPLICATION MONEY RS.387.88 LAKH TOTAL SALES - RS.1448.28 LAKH TOTAL PUR CHASE - RS.1341.42 LAKH LESS: S/DEBTORS RS.148.17 LAKH LESS: S/CREDITORS RS. 53.48 LAKH SALES NET OF SUNDRY DEBTORS RS.1300.11 LAKH PURCH ASE NET OF SUNDRY CREDITORS RS.1287.94 L AKH HENCE, RECEIPT OF RS.1300.11 LAKH OUT OF NET SALES IS ON THE HIGHER SIDE AS AGAINST NET PURCHASE OF RS.1287.94 LAKH. FURTHER, S ECURED LOAN OF RS.358.94 LAKH IS BELOW TOTAL INVESTMENT OF RS.387.88 LAKH WH ICH INDICATES TOTAL INVESTMENT OUT OF SECURED LOANS. NO NEXUS OF THE SU BJECT INVESTMENTS WITH THE ASSESSEES BUSINESS DURING THE RELEVANT PREVIOUS YE AR COULD ALSO BE PROVED BY ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 5 THE ASSESSEE. IT IS THUS EVIDENT THAT TOTAL INVESTM ENTS HAVE BEEN MADE OUT OF SECURED LOANS AND THE EXPLANATION GIVEN BY THE ASSE SSEE IS NOT FOUND TO BE BASED ON THE FACTS ON RECORD. IN VIEW OF THE ABOVE, AO AFTER HAVING RELIANCE ON T HE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD. REPORTED IN 286 ITR 1 (P&H) HAS DISALLOWED THE INTEREST EXPENSE FOR 49,30,943/- AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 12. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT IN THE SIMILAR FAC TS AND CIRCUMSTANCES THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2166/KOL/2014 FOR A.Y. 2010-11 DATED 10.08.2016 HAS DECIDED THE I SSUE IN FAVOUR OF ASSESSEE. THE ASSESSEE FURTHER SUBMITTED THAT THE JUDGMENT OF HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. (SUPRA) IS CONTRARY TO THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRITANNIA INDUSTRIES LTD. REPORTED IN 280 ITS 525 (CAL) THEREFORE SAME CANNOT BE FOLLOWED IN THE INSTANT CASE. 12.1 ASSESSEE FURTHER SUBMITTED THAT THE HON'BLE PU NJAB & HARYANA HIGH COURT IN ITS SUBSEQUENT JUDGMENT HAS RELIED ON THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. (SUPRA) IN THE CASE OF CIT VS. HERO CYCLES REPORTED IN 323 ITR 518 (CAL) WHERE THE IMPUGNED I SSUE WAS ALLOWED IN FAVOUR OF ASSESSEE. 12.2 THE ASSESSEE FURTHER SUBMITTED THAT ITS OWN FU ND IS EXCEEDING IMPUGNED INVESTMENT THEREFORE AN ASSUMPTION CAN BE DRAWN THA T NO BORROWED FUND HAS BEEN USED IN THE IMPUGNED INVESTMENT. THE LD. CIT(A) AFT ER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND AFTER HAVING RELIANCE IN ASSESSEE S OWN CASE FOR A.Y 2010-11 IN ITA NO.2166/KOL/2014 (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSE E. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 13. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE FIN D THAT LD. DR HAS NOT BROUGHT ON RECORD ANY CHANGE IN THE FACTS OF THE PRESENT CASE WITH THAT OF THE EARLIER YEAR ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 6 PERTAINING TO AY 2010-11 WHERE THE ISSUE WAS DECIDE D IN FAVOUR OF ASSESSEE BY THE HONBLE TRIBUNAL IN ITS OWN CASE. INDEED, THE OWN C APITAL OF ASSESSEE IS EXCEEDING THE AMOUNT OF IMPUGNED INVESTMENT. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW:- 12. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. BESIDES REITERATING T HE ARGUMENTS RAISED ON BEHALF OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW SHOWING THE COMMERCIAL EXPEDIENCY OF THE ADVANCES IN QUESTION GIVEN TO THE SISTER CONCERNS, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED MY ATTENTION T O THE BALANCE-SHEET OF THE ASSESSEE PLACED AT PAGE NO. 21 OF HIS PAPER BOOK WH ICH CLEARLY SHOWS THAT THE ASSESSEE AT THE RELEVANT TIME WAS HAVING OWN FUNDS OF RS.6.61 CRORES, WHICH WERE SUFFICIENT TO GIVE THE IMPUGNED ADVANCES TO IT S SISTER CONCERN. ON THE OTHER HAND, THE LOANS TAKEN BY THE ASSESSEE AT THE RELEVANT TIME STOOD ONLY AT RS.1.65 CRORES, WHICH WERE ENTIRELY USED FOR THE PU RPOSE OF ITS BUSINESS. IN MY OPINION, THESE FACTS AND FIGURES CLEARLY EVIDENT FR OM THE RELEVANT BALANCE-SHEET OF THE ASSESSEE; WHICH HAVE REMAINED UNDISPUTED OR UNCONTROVERTED BY THE LD. DR ARE SUFFICIENT TO SHOW THAT THERE WAS NO DIVERSI ON OF BORROWED FUNDS BY THE ASSESSEE FOR NON-BUSINESS PURPOSE AND THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST WAS UNSUSTAINABLE. I N THAT VIEW OF THE MATTER, I UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) D ELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTERE ST AND DISMISS GROUND NO.3 OF THE REVENUES APPEAL. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF LD. CIT(A). HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 15. LAST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 1,21,442/- UNDER THE PROVISION OF SECTION 14A R.W.S RULE 8D OF THE IT RULES, 1962. 16. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO HAS INVOKED THE PROVISION U/S 14A R.W.S RULE 8D OF THE IT RULES, AND MADE THE DIS ALLOWANCE FOR 1,21,442/- ONLY. 17. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY THE AO HAVING RELIANCE IN ASSESSEE S OWN CASE IN ITA NO.2166/KOL/2014 (SUPRA). THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 18. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 7 19. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE FIN D THAT THERE WAS NO DIVIDEND INCOME EARNED BY ASSESSEE IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE QUESTION OF MAKING DISALLOWANCE U/S. 14A OF THE ACT DOES NOT ARISE. IN HOLDING DO WE FIND SUPPORT AND GUIDANCE FROM THE ORDER OF THIS TRIBUNAL IN ASSESSE E OWN CASE IN ITA NO.2166/KOL/2014 (SUPRA). THE RELEVANT EXTRACT OF T HIS ORDER IS REPRODUCED BELOW:- 19. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY HELD BY TH E LD. CIT(APPEALS), THE DISALLOWANCE UNDER SECTION 14A CANNOT BE MADE WHER E THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE RELEVANT Y EAR AND THIS POSITION IS DULY SUPPORTED BY THE VARIOUS JUDICIAL PRONOUNCEMEN TS DISCUSSED BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER. I, THEREFORE, F IND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELI EF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, I DISMISS GROUND NO. 5 OF THE REVS APPEAL. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF LD. CIT(A). HENCE, THIS GROUND OF REVENUE IS DISMISSED. 20. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ITA NO.727/KOL/2017 FOR A.Y.12-13 . 21. THE GROUND AS RAISED BY REVENUE IS REPRODUCED B ELOW:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-9, KOLKATA ERRED IN DELETING THE ADDITION OF RS.46,90,649/- IN RESPECT OF PAYMENT OF INTEREST SINCE THE LOAN FOUND TO HAVE INVESTED IN N ON-INCOME GENERATING PURPOSE AND ASSESSEE FAILED TO SUBSTANTIATE THE COM MERCIAL EXPEDIENCY. 2. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A)-9, KOLKATA ERRED IN DELETING THE ADDITION OF RS.1,21,442/- IN RESPECT OF DISALLOWANCE MADE U/S. 14A READ WITH RULE 8D AS THE ASSESSEE FIRM MAD E SUBSTANTIAL INVESTMENT IN SHARES WHICH WERE CAPABLE OF YIELDING EXEMPT INCOME . 3. THAT THE APPELLANT CRAVES LEAVE TO PUT FORWARD A DDITIONAL GROUND AT THE TIME OF HEARING. 22. THE FACTS OF BOTH THE ISSUE IN THE YEAR UNDER A PPEAL ARE IDENTICAL TO THE FACTS FOR A.Y. 2012-13 EXCEPT THE AMOUNT INVOLVED AND THE SEC TIONS UNDER WHICH THE ORDER HAS BEEN PASSED. AS THE REST OF THE FACTS AND CIRCUMSTA NCES ARE SIMILAR FOLLOWING OUR ORDER IN PARA 9 TO 15 OF THIS ORDER, WE DECIDE THE EFFECT IVE GROUNDS OF APPEAL FOR UNDER APPEAL AGAINST THE AO. WE HOLD ACCORDINGLY. 23. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 8 COMING TO ASSESSEES CO NO.42/KOL/2017 FOR A.Y. 13- 14 . 24. IN THE CO, THE ASSESSEE HAS MERELY SUPPORTED TH E IMPUGNED ORDER OF LD. CIT(A), WHEREBY HE DELETED THE DISALLOWANCE MADE BY THE AO. SINCE WE HAVE ALREADY UPHOLD THE ORDER OF LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE WHILE DISMISSING THE APPEAL OF THE REVENUE, THE CO FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS ACCORDINGLY DISMISSED. 25. IN THE RESULT, ASSESSEES CO IS DISMISSED AS IN FRUCTUOUS. NOW WE TAKE UP ASSESSEES CO NO.41/KOL/2017 FOR A.Y . 12-13 . 26. FIRST ISSUE RAISED BY ASSESSEE IN ITS CO IS THA T LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF 2.50 LAKH ON ACCOUNT OF COMMISSION EXPENSE. 27. DURING THE YEAR ASSESSEE HAS CLAIMED BROKERAGE EXPENSE FOR 2.50 LAKH WHICH WAS PAID TO ITS SISTER CONCERN NAMELY M/S REX AGRO (P) LTD. THE ASSESSEE ALSO SUBMITTED THAT THE AMOUNT OF COMMISSION IS JUST 0.3 % OF THE TOTAL TURNOVER AND IT WAS PAID FOR THE PURPOSE OF COMMERCIAL EXPEDIENCY. HOWE VER, ASSESSEE FAILED TO JUSTIFY THE IMPUGNED EXPENSE ON THE BASIS OF DOCUMENTARY EVIDEN CE. THUS, THE COMMISSION EXPENSE WAS DISALLOWED BY AO AND ADDED TO T THE TOT AL INCOME OF ASSESSEE. 28. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE PAYMENT OF COM MISSION WAS MADE IN PURSUANCE TO AGREEMENT WITH M/S REX AGRO (P) LTD. FOR THE PUR POSE OF BUSINESS. THE AO HAS DISALLOWED THE SAME WITHOUT CONDUCTING NECESSARY EN QUIRY. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF ASSESSEE AND CONFIRME D THE ORDER OF AO BY OBSERVING THAT NO DOCUMENTARY EVIDENCE HAS BEEN PLACED ON REC ORD. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN CO B EFORE US. 29. BEFORE US, THE LD. AR REITERATED THE ARGUMENTS THAT WERE MADE BEFORE THE LD. CIT(A). LD. DR SUPPORTED THE ORDER OF AUTHORITIES B ELOW. 30. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, IT WAS OBSERVED THAT LD. AR FOR THE ASSESSEE FAILED TO BRING ANY EVIDENCE TO JUSTIFYING THE PAYMENT OF COMMISSION EXPENSE. THEREFORE WE ARE NOT INCLINED TO INTERFERE IN THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME. HENCE, THIS GROUND OF ASSESSEES C O IS DISMISSED. ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 9 31. NEXT ISSUE RAISED BY ASSESSEE IN ITS CO IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE DISALLOWANCE OF 1.50 LAKH ON ACCOUNT OF SERVICE CHARGE. 32. THE ASSESSEE HAS CLAIMED EXPENSES OF 1.50 LAKH ON ACCOUNT OF SERVICE CHARGE PAID TO ITS SISTER CONCERN, HOWEVER, AO DISALLOWED THE SAME ON THE GROUND THAT NO DOCUMENTARY EVIDENCE FURNISHED BY ASSESSEE DURING A SSESSMENT PROCEEDINGS. THUS, THE SUM OF 1.50 LAKH WAS ADDED TO THE TOTAL INCOME OF ASSESSEE . 33. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ORDER OF AO IN THE ABSENCE OF ANY DOCUMENTARY EVID ENCE FILED BY THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN CO B EFORE US. 34. BEFORE US LD. AR SUBMITTED THAT THE EXPENSE INC URRED THE SERVICE CHARGES WERE DIRECTLY CONNECTED WITH THE BUSINESS AND THEREFORE IT IS ELIGIBLE DEDUCTION. ON THE OTHER HAND, LD. DR HEAVILY RELIED ON THE ORDER OF AUTHORI TIES BELOW. 35. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, IT WAS OBSERVED THAT LD. AR FOR THE ASSESSEE FAILED TO BRING ANY DOCUMENTARY EVIDENCE T O JUSTIFY THE BUSINESS CONNECTION FOR THE PAYMENT OF COMMISSION EXPENSE. IN THE LIGHT OF ABOVE REASONING WE HOLD THAT THE ORDER OF THE LD. CIT(A) IS CORRECT AND IN ACCOR DANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. HENCE, THE GROUND RAISED BY ASSESSEE IN ITS CO IS DISMISSED. 36. IN THE RESULT, ASSESSEES CO IS DISMISSED. 37. IN COMBINE RESULT, REVENUES APPEALS STAND DISMISSE D AND THAT OF ASSESSEES COS NO. 41/KOL/2017 STAND DISMISSED AND CO NO.42/KOL/2017 DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON 31/10/2017 SD/- SD/- ( ( !) ( !) (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S * - 31/10/2017 / KOLKATA ITA NO.727-728/KOL/2016 & COMMISSION 41-42/KOL/2017 A.YS 12-13 & 13-14 ITO WD-32(2) KOL. VS. M/S RAGHUNATH EXPORTERS PAGE 10 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE- M/S RAGHUNATH EXPORTERS 5F, NORTH BLOCK, PARK PLAZA, 71, PARK STREET, KOL KATA-16 2. ! /REVENUE-ITO, WARD-32(2), 10B, MIDDLETON ROW, 3 RD , FLOOR, KOLKATA-71 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ((- , - / DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO -,