ANIL SHARMA, MUMBAI V. A.C.I.T. RG. 11(1), MUMBAI

ITA 1041/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9413 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: KRUPA P TOPRANI
• Keywords: Principle of natural justice; Proportionate interest; Bad and doubtful debts
• Section: 143(3); 37

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 1041/ MUM/2012 ( / ASSESSMENT YEAR : 2007-08) ANIL SHARMA , R. NO. 1001, ABHISHEK APARTMENTS, E- WING, 10 TH FLOOR, JUHU VERSOVA LINK ROAD, ANDHERI (W), MUMBAI / V. ACIT, RANGE (11)(1) AAYAKAR BHAVAN, M.K ROAD, MUMBAI 400020 ./ PAN : AACPS0951Q ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: PANKAJ R. TOPRANI & KRUPA P. TOPRANI REVENUE BY : SHRI RAJESH KUMAR YADAV / DATE OF HEARING : 18.09.2017 / DATE OF PRONOUNCEMENT : 28.09.2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 1041/MUM/2012, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 18.11.2 011 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI (HER EINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2007-08, APPELLATE PR OCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM THE ASSESSMENT ORDER DAT ED 20.11.2009 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) . 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMB AI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX-(A)-3, M UMBAI, HAS ERRED IN CONFIRMING THE ADDITION MADE BY A.O ON BAD DEBT S OF RS. 92,71,234/- I.T.A. NO. 1041/MUM/2012 2 2. THE LEARNED COMMISSIONER OF INCOME TAX-(A)-3, MU MBAI, HAS ERRED IN CONFIRMING THE ADDITION MADE BY A.O ON FINANCE CHARGES OF RS. 24,95.770/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX-(A)-3, M UMBAI, HAS IGNORING THE MATERIAL PLACE BEFORE HIM. 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEAL BEFORE THE TRIBUNAL , AS UNDER:- THE LOWER AUTHORITIES ERRED IN NOT GRANTING DEDUCTI ON OF RS. 92,71,234/- BEING THE ADVANCE GIVEN DURING THE COUR SE OF THE APPELLANTS BUSINESS AS A BUSINESS LOSS U/S. 28/37 OF THE I.T. ACT,1961. 4. THE ASSESSEE HAS SUBMITTED THAT THE ADDITIONAL G ROUND OF APPEAL RAISED BY IT IS PURELY LEGAL GROUND AND NEED TO BE ADMITTED IN THE INTEREST OF JUSTICE AS IT GOES TO ROOT OF THE MATTER . THE ASSE SSEE PRAYED FOR THE ADMISSION OF THE SAID ADDITIONAL GROUND OF APPEAL. THE LD. DR RAISED PRELIMINARY OBJECTION TO THE ADMISSION OF AFORESAI D ADDITIONAL GROUND OF APPEAL. AFTER HEARING BOTH THE PARTIES AND KEEPING IN VIEW RATIO OF DECISION IN THE CASE OF NATIONAL THERMAL POWER CORP. LTD. V. CI T (1998) 229 ITR 383(SC), WE ARE INCLINED TO ADMIT THE SAID GROUND OF APPEAL WHICH IS A LEGAL GROUND , TO BE ADJUDICATED THEREAFTER ON MERITS IN ACCORDANC E WITH LAW. WE ORDER ACCORDINGLY. 5.THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS FILM DIRECTOR, EDITOR, STORY WRITER, DIALOGUE WRITER AND PRODUCER. THE ASSESSEE HAS DURING THE FINANCIAL YEAR WRITTEN OFF BAD DEBTS OF RS. 93,62,875/- OUT O F WHICH RS. 92,71,234/- IS ON ACCOUNT OF PAYMENT MADE ON BEHALF OF MOVIE WORLD STUDIOS LTD. , WHICH IS A RELATED CONCERN OF THE ASSESSEE. THERE WAS DEB IT OPENING BALANCE OF RS. 71,55,949 IN THE BOOKS OF THE ASSESSEE AGAINST THE NAME OF SAID COMPANY AND DURING THE YEAR THE ASSESSEE HAS FURTHER MADE PAYMENT OF RS. 21,15,825/- AND THE LAST PAYMENT WAS MADE ON 31 ST MARCH, 2007 OF RS. 15,00,000/- WAS MADE BY THE ASSESSEE TO THE SAID CO MPANY. THE ASSESSEE WROTE OFF RS. 92,71,234/- AS BAD DEBTS DURING THE Y EAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT ORIGINAL AMOUNT WAS PAID TO M OVIE WORLD STUDIO LIMITED IN FINANCIAL YEAR 2004-05. THE ASSESSEE SUB MITTED BEFORE THE AUTHORITIES BELOW THAT ASSESSEE HAS ADVANCED AN AMO UNT OF RS. 2.5 CRORES TO MOVIE WORLD STUDIOS LTD. AGAINST THE RIGHT OF THE F ILM AB WATAN TUMARE I.T.A. NO. 1041/MUM/2012 3 HAWALE SATHIYO AGAINST WHICH SOME RECOVERY WAS MA DE FROM THE BUSINESS EARLIER YEARS AND THE BALANCE OUTSTANDING ON 31 ST MARCH, 2007 WAS 92,71,234/- WHICH WAS WRITTEN OFF. IT WAS SUBMITTED THAT SINCE THE COMPANY WAS IN BAD SHAPE AND HAS INCURRED HEAVY FINANCIAL L OSSES IN THE FILM AB WATAN TUMARE HAWALE SATHIYO AND THE AMOUNT WAS NO T RECEIVED, THE AMOUNT WAS WRITTEN OFF AS BAD DEBTS U/S 36(2) R.W.S . 36(1)(VII). THE A.O DID NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE THAT T HE DEBT HAS BECOME BAD AS THE ASSESSEE HAS MADE FURTHER PAYMENT OF RS.21,1 5,285/- DURING THE YEAR WHILE LAST PAYMENT OF RS.15,00,000/- WAS MADE ON TH E LAST DAY OF THE FINANCIAL YEAR I.E. ON 31-03-2007. THUS, IT WAS OBS ERVED BY AO THAT ONCE PAYMENT HAS BEEN MADE ON THE LAST DAY OF FINANCIAL YEAR, HOW THE DEBT CAN BECOME BAD BONAFIDELY AND THE AO OBSERVED THAT IT W AS NOT GENUINELY WRITTEN OFF AS BAD DEBT. THE AO RELIED UPON SEVERAL JUDICIAL PRECEDENTS AS MENTIONED IN ASSESSMENT ORDER AT PAGE 4 AND 5 TO DI SALLOW THE CLAIM OF THE ASSESSEE AS IN VIEW OF THE AO , THE ASSESSEE HAS NO T EXPLAINED THE BUSINESS EXIGENCY IN MAKING AFORESAID ADVANCES NOR BONA FIDE OF WRITING OFF OF THE SAID AMOUNT AS BAD DEBT WAS BROUGHT ON RECORD BY THE ASS ESSEE AND HENCE THE CLAIM OF THE ASSESSEE FOR BAD DEBTS U/S 36(2) R.W.S . 36(1)(VII) WAS REJECTED BY THE A.O , VIDE ASSESSMENT ORDER DATED 20-11-2009 PA SSED U/S 143(3) , WHICH WAS LATER CONFIRMED BY LEARNED CIT(A) IN FIRST APPE AL VIDE APPELLATE ORDER DATED 18-11-2011 WHEREIN ASSESSEE APPEAL STOOD DISM ISSED. 6. AGGRIEVED BY THE APPELLATE ORDER DATED 18-11-201 1 PASSED BY LEARNED CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL. BEFORE US, THE ASSESSEE HAS TAKEN A FRESH CONTENTION THAT ADVANCES MADE TO MOVIE WORLD STUDIOS LTD. WERE BUSINESS ADVANCES AND SAID WRITE OFF WAS IN FACT BUSINESS LOSS WHICH WAS WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND THE SAME NEED TO BE ALLOWED U/S. 37 OF THE ACT INSTEAD OF CLAIM OF BAD DEBT WRITE OFF MADE BY THE ASSESSEE U/S 36(1)(VII) R.W.S. 36(2). IT IS PRAYED BY THE ASSESSEE THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O FOR FRESH ADJUDICATION AFTER CONSIDERING AND VERIFYING THE CONTENTION OF THE ASS ESSEE AS TO THE CLAIM OF BUSINESS LOSS AND ITS ALLOWABILITY U/S 37. LD. D.R DID NOT OBJECTED TO THE SET ASIDE OF THE ISSUE FOR FRESH ADJUDICATION BY THE A .O . SO THAT THE AO GETS AN OPPORTUNITY TO MAKE NECESSARY ENQUIRIES AND VERIFIC ATIONS W.R.T. CLAIM OF BUSINESS LOSS SET UP BY THE ASSESSEE. I.T.A. NO. 1041/MUM/2012 4 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE HAD SUBMITTED BE FORE THE AUTHORITIES BELOW THAT ASSESSEE HAS ADVANCED AN AMOUNT OF RS. 2 .5 CRORES TO MOVIE WORLD STUDIOS LTD. AGAINST THE RIGHT OF THE FILM A B WATAN TUMARE HAWALE SATHIYO AGAINST WHICH SOME RECOVERY WAS MADE FROM THE BUSINESS IN EARLIER YEARS AND THE BALANCE OUTSTANDING ON 31 ST MARCH, 2007 WAS 92,71,234/- . IT HAD BEEN SUBMITTED BY ASSESSEE BEFORE AUTHORITIES B ELOW THAT SINCE THE COMPANY WAS IN BAD SHAPE AND HAS INCURRED HEAVY FIN ANCIAL LOSSES IN THE FILM AB WATAN TUMARE HAWALE SATHIYO AND THE AMOU NT WAS NOT RECEIVED, THE AMOUNT WAS WRITTEN OFF AS BAD DEBTS AND CLAIM W AS MADE WITH REVENUE FOR ALLOWABILITY OF BAD DEBT U/S 36(1)(VII) R.W.S. 36(2) BUT NOW IT IS CONTENDED THAT IT WAS A BUSINESS ADVANCE WHICH HAS TURNED INT O LOSS AND IS TO BE ALLOWED AS BUSINESS LOSS U/S 37(1), WHICH NEED VERI FICATION BY AUTHORITIES BELOW. KEEPING IN A VIEW FITNESS OF THE MATTER AND IN THE INTEREST OF JUSTICE , THIS MATTER/ISSUE NEEDS TO BE RESTORED TO THE FILE OF THE A.O FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW AFTER CONSIDERING AND VERIFYING THE CONTENTIONS OF THE ASSESSEE AS TO THE GENUINENESS AND BONA FIDE OF THE CLAIM OF THE ASSESSEE AS TO THE BUSINESS LOS S INCURRED BY ASSESSEE BY VIRTUE OF ADVANCES MADE TO MOVIE WORLD STUDIO LIMIT ED WHICH IS TO BE EVALUATED ON THRESHOLD OF THE PROVISIONS OF SECTION 37 OF THE ACT, AFTER MAKING SUCH ENQUIRY AS THE AO MAY DEEM FIT IN ACCOR DANCE WITH LAW. THE A.O SHALL GIVE PROPER AND ADEQUATE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE ON MERITS I N DENOVO PROCEEDINGS. THE AO SHALL ADMIT ALL RELEVANT EVIDENCES AND CONTENTIO NS OF THE ASSESSEE IN DENOVO PROCEEDINGS WHICH SHALL BE EVALUATED ON MERI TS BY THE AO IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 8. THE SECOND ISSUED IS WITH REGARD TO THE DISALLOW ABILITY OF FINANCE CHARGES OF RS. 24,95,770/- WHICH WAS CLAIMED BY THE ASSESSE E IN P&L ACCOUNT , AS DETAILED BELOW:- INTEREST ON BANK LOAN- 14,74,476/- BANK CHARGES- 2,93,338/- CREDIT CARD CHARGES- 4,48,173/- INTEREST ON LOAN- 2,79,783/- ---------------- I.T.A. NO. 1041/MUM/2012 5 TOTAL 24,95,770/- ---------------- THE A.O DISALLOWED THE FINANCE CHARGES AS THE ASSES SEE COULD NOT PROVE THAT THE SAID AMOUNT HAS BEEN USED WHOLLY AND EXCLUSIVEL Y FOR BUSINESS PURPOSES OF THE ASSESSEE, WHEREIN THE A.O HELD AS UNDER: E) DISCUSSIONS ON THE ISSUE - THE CONTENTIONS OF T HE ASSESSEE HAVE BEEN PERUSED AND NOT FOUND TO BE ACCEPTABLE ON THE FOLLOWING GROUNDS: (I) DURING THE YE.IR ASSESSEE HAS RECEIVED ONLY P ROFESSIONAL RECEIPTS OF RS. 42.65 LACS AND IT IS NOT AT ALL ESTABLISHED BY THE ASSESSEE HOW THE ABOVE MENTIONED FINANCE CHARGES ARE INCURRED WHOLLY AND EXCLUSIVELY FOR T HE PURPOSES OF THE PROFESSION OF THE ASSESSEE. (II) FUND FLOW STATEMENT OF THE LOANS TAKEN WERE NEVER SUBMITTED SUBSTANTIATING THE USAGE OF THE INTEREST BEARING LOANS BY THE ASSESSEE. (III)THE INTEREST BEARING LOANS WERE FORWARDED TO RELATED CONCERN WITHOUT CHARGING ANY INTEREST. 9. AGGRIEVED BY THE ASSESSMENT ORDER DATED 20-11-2009 PASSED BY THE AO U/S 143(3), THE ASSESSEE FILED FIRST APPEAL WITH LE ARNED CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS. I FIND THAT THE ASSESS EE HAD EARNED PROFESSIONAL RECEIPTS ONLY OF RS. 42.65 LAKHS WHERE AS THE APPELLANT HAS CLAIMED THE DEDUCTION ON ACCOUNT OF FINANCIAL CHARG ES AT RS. 24.95 LAKHS. IT IS FURTHER SEEN THAT THE LOANS RECEIVED F ROM CREDIT CARD WERE CLAIMED TO HAVE BEEN UTILISED FOR REPAYMENT OF LOAN S HOWEVER, THE APPELLANT IS NOT ABLE TO SUBSTANTIATE ITS CLAIM BY FURNISHING THE FUND FLOW STATEMENT AS MENTIONED BY THE AO IN THE ASSESS MENT ORDER. IT IS FURTHER SEEN FROM THE GROUND NO.1 ABOVE THAT THE AP PELLANT HAD MADE PAYMENT ON BEHALF OF THE RELATED CONCERN, THEREFORE IT CANNOT BE RULED OUT THAT THE CREDIT CARD LOANS ARE ALSO UTILISED TO WARDS FOR MAKING THE PAYMENT OF THE SAID AMOUNT PERTAINING TO RELATED PA RTIES/THE COMPANY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, I AM OF T HE CONSIDERED OPINION THAT THE APPELLANT IS NOT ABLE TO SUBSTANTIATE, ITS STAND THAT THE CREDIT CARD LOAN TAKEN/RECEIVED WAS UTILISED TOWARDS PROFE SSIONAL INCOME. THEREFORE THE BANK CHARGES BEING INTEREST, CREDIT C ARD ETC. IS NOT ALLOWABLE AS DEDUCTION, ACCORDINGLY THE FINDING OF THE AO ARE THERE-FORE UPHELD. 10. AGGRIEVED BY THE APPELLATE ORDER DATED 18-11-20 11 PASSED BY LEARNED CIT(A) , THE ASSESSEE FILED AN APPEAL BEFORE THE T RIBUNAL . I.T.A. NO. 1041/MUM/2012 6 11. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT ASSESSEE HAS RAISED TOTAL AMOUNTS OF LOAN FUND OF RS. 3,16,58,84 2/- AS AT 31-03-2007 WHICH IS REFLECTED IN BALANCE SHEET , OUT OF WHICH LOAN FUNDS OF RS.1,73,66,504/- WERE UTILISED FOR THE PURPOSE OF T HE BUSINESS OF THE ASSESSEE WHILE RS. 1,42,92,338/- WERE UTILISED FOR NON BUSINESS PURPOSES . IT WAS SUBMITTED THAT OUT OF TOTAL INTEREST EXPENDITUR E OF 24,95,770/- , INTEREST EXPENDITURE TO THE TUNE OF RS. 13,69,058/- NEED TO BE ALLOWED AS BUSINESS EXPENSE AS THE SAME WAS UTILISED FOR BUSINESS PURPO SES. THE ASSESSEE HAS GIVEN FOLLOWING CHART DULY SIGNED BY SH P R TOPRAN I,AR GIVEN DURING THE COURSE OF HEARING BEFORE THE TRIBUNAL, AS UNDER. MR. ANIL SHARMA A.Y 2007-08 UTILISATION OF LOAN FUNDS FOR NON-BUSINESS PURPOSES & BUSINESS PURPOSE SR. NO. PARTICULARS RS . RS . L OA N FUND S AS P E R BA L A N C E SHEET AS AT 31 . 0 3 .2 0 07 3,16,58,842 /- LESS : UTILISATION OF LOAN F U N DS FOR NON - BUSINESS PURPOSE . (I) OWNERSHIP PREMISES 6,25,000/- (II) OWNERSHIP FLAT AT MHADA 18,05,596/- (III) OWNERSHIP GARAGE 1 , 00,000/- (IV) INVESTMENTS 97,33,086/- (V) JEWELLERY 2,60,500/- ( VI ) INTEREST FREE LOANS 17,68,156/- 1,42 , 92 , 338 / - LOAN FUNDS USED FOR BUSINESS PURPOSE 1 , 73 , 66 , 50 4 / - I.T.A. NO. 1041/MUM/2012 7 TOTAL INTEREST, ETC. RS.24,95,770/- PROPORTIONATE INTEREST RS. 13,69,058/- ALLOWABLE ON LOAN USED FOR BUSINESS PURPOSE 1,73,66,504 X 24,95,770 3,16,58,842 SD/- P.R TOPRANI 12. LD. D.R ON THE OTHER HAND SUBMITTED THAT THIS C ONTENTION OF THE ASSESSEE THAT PART OF THE LOAN FUNDS WERE UTILISED FOR BUSINESS PURPOSES NEED VERIFICATION BY THE A.O AND MATTER CAN BE REMANDED BACK TO THE FILE OF THE A.O FOR VERIFICATION OF THE CONTENTION OF THE ASSES SEE . 13. WE HAVE HEARD RIVAL PARTIES AND PERUSED THE MAT ERIAL ON RECORD. WE HAVE OBSERVED THAT THE AO HAS DISALLOWED FINANCE CHARGE S OF RS. 24,95,770/- WHICH WAS CLAIMED BY THE ASSESSEE IN P&L ACCOUNT , AS DETAILED BELOW:- INTEREST ON BANK LOAN- 14,74,476/- BANK CHARGES- 2,93,338/- CREDIT CARD CHARGES- 4,48,173/- INTEREST ON LOAN- 2,79,783/- ---------------- TOTAL 24,95,770/- ---------------- THE A.O DISALLOWED THE FINANCE CHARGES AS THE ASSES SEE COULD NOT PROVE THAT THE SAID AMOUNT HAS BEEN USED WHOLLY AND EXCLUSIVEL Y FOR BUSINESS PURPOSES OF THE ASSESSEE, WHICH DISALLOWANCE WAS CONFIRMED B Y LEARNED CIT(A) IN FIRST APPEAL. THE ASSESSEE SUBMITTED THAT ASSESSEE HAS RA ISED TOTAL AMOUNTS OF LOAN FUND OF RS. 3,16,58,842/- AS AT 31-03-2007 WHI CH IS REFLECTED IN BALANCE SHEET. IT IS NOW CONTENDED AND CLAIMED BY T HE ASSESSEE BEFORE THE TRIBUNAL THAT TOTAL AMOUNTS OF LOAN FUND OF RS. 3,1 6,58,842/- WERE OUTSTANDING AS AT 31-03-2007 WHICH IS REFLECTED IN BALANCE SHEET , OUT OF WHICH LOAN FUNDS OF RS.1,73,66,504/- WERE UTILISED FOR THE PURPOSE OF THE I.T.A. NO. 1041/MUM/2012 8 BUSINESS OF THE ASSESSEE WHILE RS. 1,42,92,338/- WE RE UTILISED FOR NON BUSINESS PURPOSES . IT WAS SUBMITTED THAT OUT OF TO TAL INTEREST EXPENDITURE OF 24,95,770/- , INTEREST EXPENDITURE TO THE TUNE OF R S. 13,69,058/- NEED TO BE ALLOWED AS BUSINESS EXPENSE AS THE SAME WAS UTILISE D FOR BUSINESS PURPOSES. THE ASSESSEE HAS GIVEN FOLLOWING CHART DULY SIGNED BY SH P R TOPRANI,AR GIVEN DURING THE COURSE OF HEARING BEFORE THE TRIBU NAL, AS UNDER. MR. ANIL SHARMA A.Y 2007-08 UTILISATION OF LOAN FUNDS FOR NON-BUSINESS PURPOSES & BUSINESS PURPOSE SR. NO. PARTICULARS RS . RS . L OA N FUND S AS P E R BA L A N C E SHEET AS AT 31 . 0 3 .2 0 07 3,16,58,842 /- LESS : UTILISATION OF LOAN F U N DS FOR NON - BUSINESS PURPOSE . (I) OWNERSHIP PREMISES 6,25,000/- (II) OWNERSHIP FLAT AT MHADA 18,05,596/- (III) OWNERSHIP GARAGE 1 , 00,000/- (IV) INVESTMENTS 97,33,086/- (V) JEWELLERY 2,60,500/- ( VI ) INTEREST FREE LOANS 17,68,156/- 1,42 , 92 , 338 / - LOAN FUNDS USED FOR BUSINESS PURPOSE 1 , 73 , 66 , 50 4 / - TOTAL INTEREST, ETC. RS.24,95,770/- PROPORTIONATE INTEREST RS. 13,69,058/- ALLOWABLE ON LOAN USED FOR BUSINESS PURPOSE 1,73,66,504 X 24,95,770 3,16,58,842 SD/- I.T.A. NO. 1041/MUM/2012 9 P.R TOPRANI AFTER HEARING BOTH THE PARTIES AND PERUSING THE MAT ERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT IN THE INTEREST OF THE JUS TICE , THIS MATTER NEED TO BE RESTORED TO THE FILE OF THE A.O FOR DENOVO ADJUDICA TION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW AFTER CONSIDERING AND VERIFI CATION OF THE CONTENTIONS OF THE ASSESSEE AS TO THE UTILISATAION OF PART OF I NTEREST BEARING LOAN FUNDS FOR BUSINESS OF THE ASSESSEE. THE AO SHALL VERIFY THE C ONTENTIONS OF THE ASSESSEE ON MERITS IN ACCORDANCE WITH LAW AFTER REFERRING TO BOOKS OF ACCOUNTS AND SUCH OTHER ENQUIRIES AND VERIFICATIONS AS MAY BE DE EMED FIT BY THE AO. NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNIT Y OF BEING HEARD SHALL BE PROVIDED BY THE AO TO THE ASSESSEE IN ACCORDANCE W ITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. THE RELEVANT EVIDE NCES AND CONTENTIONS OF THE ASSESSEE SHALL BE ADMITTED BY THE AO IN THE INT EREST OF JUSTICE AND SHALL BE DEALT WITH IN ACCORDANCE WITH LAW. WE ORDER ACCO RDINGLY. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 1041/MUM/2012 FOR ASSESSMENT YEAR 2007-08 IS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2017 !' #$ 28.09.2017 SD/- SD/- (JOGINDER SINGH ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28 .09.2017 I.T.A. NO. 1041/MUM/2012 10 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT- CONCERNED, MUMBAI 5. THE DR BENCH, E 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI