KAMLESH S. PATIL, MUMBAI V. ITO 24(2)(3), MUMBAI

ITA 1121/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1498 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH
• Keywords: Capital asset; Business income; Depreciation; Opportunity of being heard; Principle of natural justice; Question of law; Cost of acquisition; Fair market value; Bad and doubtful debts; Set aside
• Section: 45(2); 143(3); 2(14); 133(6); 32; 27

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ./ I.T.A. NO.1121/ MUM/2017 ( / ASSESSMENT YEAR : 2012 - 13) KAMLESH S. PATIL OCKAM SYSTEMS 1001, 10 TH FLOOR, QUANTUM TOWER, RAMBAUG LANE NADIYADWADA COLONY 2 MALAD(WEST) MUMBAI - 400064 / V. ITO 24(2)(3) ROOM NO. 609,6 TH FLOOR, PIRAM AL CHAMBERS, LALBAUG, MUMBAI 400012 ./ PAN : AADPP9859R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. AJAY R. SINGH (AR) REVENUE BY: SHRI MANOJ KUMAR SINGH, (DR) / DATE OF HEARING : 22.01.2019 / DATE OF PRONOUNCEMENT : 15 .0 3 .2019 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE, BEING ITA NO. 1121/MUM/2017 , IS DIRECTED AGAINST APPELLATE ORDER DATED 29.12.2016 IN APPEAL NO. CIT(A) - 36/IT - 117/ITO - 24(2)(3)/2015 - 16, PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 36 , MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR (AY) 2012 - 13 , THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM THE ASSESSMENT ORDER DATED 28.03.2015 PASSED BY LEARNED ASSESSING OFFICER I.T.A. NO.1121/MUM/2017 2 (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2012 - 13 . 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - I. BAD DEBTS WRITTEN OFF CLAIM RS. 26,81, 722 : 1. THE CIT (A) ERRED IN CONFIRMIN G THE DISALLOWING CLAIM U/S 36(1 )( VII) OF BAD DEBTS WRITTEN OFF RS. 26,81,722/ - WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS FULLY SATISFIED THE CONDITIONS NECESSARY TO CLAIM THE BAD DEBTS LIKE THE AMOUNTS WRITTEN OFF WERE OFFERED AS INCOME EARLIER AND THE WRITE OFF OF DEBTS AS IRRECOVE RABLE WAS EFFECTED IN ACCOUNTS OF THE PREVIOUS YEAR. 2. THE LD CIT(A) ERRED IN OBSERVING THAT FOR CLAIM OF BAD DEBTS WRITTEN OFF U/S. 36 (1 )(VII) OF THE ACT THERE HAS TO BE REASONABLE TIME ELAPSED AND EVIDENCE OF THE BAD DEBTS IRRECOVERABLE, WITHOUT APP RECIATING NO SUCH REQUIREMENT IS PROVIDED UNDER THE ACT. II. PROFIT ON SALE OF ASSETS RS. 12, 39 , 137 3. THE LEARNED CIT (A) ERRED IN DIRECTING THE AO TO REWORK THE PROFIT ON SALE OF FIXED ASSETS FROM THE BLOCK OF ASSETS AS SHORT TERM CAPITAL GAIN WITHOUT CONSIDERING THE FACT THAT THIS IS SALE OF CAPITAL ASSETS WAS FORMING PART OF THE BLOCK OF DEPRECIABLE FIXED ASSETS QUALIFYING FOR DEPRECIATION @ 60% THEREFORE THE VALUE OF THE BLOCK OF ASSETS OUGHT TO BE REDUCE AND ACCORDINGLY THE DEPRECIATION WOULD BE RED UCED. 4. THE LD CIT(A) FAILED TO APPRECIATE THE ACCOUNTING TREATMENT GIVEN UPON SALE OF FIXED ASSETS, ONCE AN ASSET IS PURCHASED IT BECOMES PART OF THE BLOCK OF ASSETS THEN WHAT IS REQUIRED UPON SALE IS ONLY TO REDUCE THE SALE CONSIDERATION FROM THE AGGREGATE OF WDV BROUGHT FORWARD, THERE IS NO REQUIREMENT TO IDENTIFY AND CALCULATE WDV OF EACH ITEM OF ASSET. 5. THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. I.T.A. NO.1121/MUM/2017 3 3. THE BRIEF FACTS OF THE CASE ARE THAT TH E ASSESSEE HAS INCOME FROM PROPRIETARY BUSINESS OF DEALING IN COMPUTER AND ITS PERIPHERALS AND REPAIRS & MAINTENANCES SERVICES AND INCOME FROM OTHER SOURCES. 3.2 . THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(2) READ WITH SECTION 143(3) OF T HE 1961 ACT OBSERVED THAT THE ASSESSEE HAD CLAIMED BAD DEBTS OF RS. 26,81,722/ - TOWARDS AMOUNT RECEIVABLE FROM M/ S. MAYA DIGITAL MEDIA PVT. LTD.. T HE ASSESSEE WAS ASKED BY THE AO TO EXPLAIN REASONS FOR SUCH WRITE OFF. T HE ASSESSEE SUBMITTED THAT M/S. MAYA ENTERTAINMENT LTD. S MOST AMBITIOUS HOME PRODUCTION ANIMATION MOVIES RA MYANA - THE EPIC MISERABLY FLOPPED WHICH MADE ITS FINANCIAL CONDITION IN A VERY BAD SHAPE AND CONSIDERING THIS 75% OF THE OUTSTANDING AMOUNT OF RS. 35,75 ,629/ - WAS TREATED AS BAD FOR RECOVERY AND CONSEQUENTLY BAD DEBTS WERE WRITTEN OFF IN BOOKS OF ACCOUNTS AT RS. 26,81,722/ - ON 1 ST APRIL 2011. 3.3 ON PERUSAL OF LEDGER ACCOUNT OF M/ S. MAYA ENTERTAINMENT STUDIO PRIVATE LTD., IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS TRANSFERRED AN AMOUNT OF RS. 25,94,795/ - ON 15 TH JULY, 2010 BY BOOK ENTRY. IT WAS OBSERVED BY THE AO FROM THE PERUSAL OF THE LEDGER ACCOUNT OF M/S MAYA DIGITAL MEDIA PRIVATE LIMITED THAT THE ASSESSEE HAD BILLED AN AMOUNT OF RS. 32,89,479/ - AND R ECEIVED AN AMOUNT OF RS . 23,08,645/ - IN ASSESSMENT YEAR 2011 - 12, LEAVING CLOSING BALANCE OF RS. 35,75,62 9/ - , OUT OF WHICH AN AMOUNT OF RS. 26,81,722/ - WAS WRITTEN OFF DURING THE IMPUGNED ASSESSMENT YEAR 2012 - 13 . THUS, IT WAS APPARENT TO THE AO THAT THERE WAS NO REVENUE FROM M/ S. MAYA DIGITAL MEDIA PRIVATE LIMITED DURING THE RELEVANT YEAR UNDER CONSIDERATION , AND CLAIM OF BAD DEBT DOES NOT SATISFY THE CONDITIONS OF SECTION 36(1)(VII) OF THE 1961 ACT. THE AO ISSUED NOTICE DATED 10.03.2015 U/S. 133(6) OF THE 1961 ACT TO MAYA DIGI TAL MEDIA PRIVATE LTD., WHICH WAS RETURNED UN - SERVED BY THE POSTAL AUTHORITIES WITH A REMARK LEFT . THE ASSESSEE ALSO FAILED TO PRODUCE THE PARTY N OR ASSESSEE FILED ANY CONFIRMATION FROM THE PARTY BEFORE THE AO . THE ASSESSEE , HOWEVER, CLAIMED THAT THE SAID BA D DEBT WAS WRITTEN OFF IN I.T.A. NO.1121/MUM/2017 4 TERMS OF PROVISION OF SECTION 36(1)(VII ) OF THE 1961 ACT . THE AO OBSERVED THAT THE ASSESSEE WAS STILL DOING BUSINESS WITH SISTER CONC ERN OF THE PARTY M/S MAYA DIGITAL STUDIO S PRIVATE LTD., AND HEN CE COULD HAVE PRODUCE D THE AFORESAID SAID PARTY FOR CONFI RMATION . THE AO ALSO OBSERVED THAT THE ASSESSEE HAS NOT MADE ANY SALE S TO M/S. MAYA DIGITA L MEDIA P RIVATE LTD., AND AS PER SECTION 3 6(2) OF THE 1961 ACT, , THE SAME HAS NOT BEEN TAKEN INTO ACCOUNT WHILE COMPUTING INCOME BY THE ASSESSEE AND HENCE AMOUNT WRITTEN OFF ON ACCOUNT OF BAD DEBT OF RS.26,81,722/ - DID NOT MEET THE CONDITION S AS ARE STIPULATED U/S. 36(2) OF THE 1961 ACT . THUS, THE AO DISALLOWED AN AMOUNT OF RS. 26,81,722/ - TO THE INCOME OF T HE ASSESSEE WHILE FRAMING AN ASSESSMENT ORDER DATED 28.03.2015 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT. 4 . AGGRIEVED BY AN ASSESSMENT ORDER DATED 28.03.2015 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT, THE ASSESSEE FILED AN FIRST APPEAL BEFORE L D. CIT(A) , WHEREIN THE ADDITIONS WERE CONFIRM ED BY LEARNED CIT( A ) AND THE APPEAL OF THE ASSESSEE STOOD DISMISSED , VIDE APPELLATE ORDER DATED 29.12.2016 PASSED BY LEARNED CIT(A) , BY HOLDING AS UNDER: - 5 .2. MATTER HAS BEEN CONSIDERED: I HAVE CONSID ERED THE FACTS PLACED IN THE IMPUGNED ASSESSMENT ORDER, THE STATEMENT OF FACTS BY THE APPELLANT AND THE SUBMISSION MADE DURING THE APPELLATE PROCEEDINGS. ON CAREFUL PERUSAL OF THE MATERIAL ON RECORD AND THE OBJECTIONS PLACED BY THE APPELLANT,THE FOLLOWING QUESTIONS ARISE, WHICH ARE REQUIRED TO BE ANSWERED IN ADJUDICATING THIS GROUND. FIRSTLY, THE LEGAL POSITION ON THE MATTER. SECONDLY, THE DETAILS OF THE DEBT WHICH HAS BEEN WRITTEN OFF BY THE APPELLANT AND THE REASONS FOR TRANSFER OF THE DEBT TO OTHER ENTIT Y. THIRDLY, PROCESS ADOPTED FOR PROVING THE BAD DEBT ELIGIBLE FOR WRITE OFF, AND LASTLY PRESENCE OF ANY RELATION BETWEEN THE ENTITIES CONCERNED IN THE TRANSACTION. BEFORE PROCEEDING ANY FURTHER, IN MY OPINION THE ABOVE FOUR QUESTIONS NEED TO BE ANSWERED. 5 .2.1.THE APPELLANT HAS RELIED ON THE CBDT CIRCULAR NUMBER 12 OF 2016 DATED 30.05.2016 WHICH STIPULATES THAT IN PURSUANCE TO THE HON'BLE APEX COURT DECISION IN THE I.T.A. NO.1121/MUM/2017 5 CASE OF TRF LTD. IN CA NOS. 5292 TO 5294 OF 2003 WHEREIN THE HON'BLE APEX COURT HELD THAT THE APPELLANT IS NOT REQUIRED TO ESTABLISH THAT THE DEBT HAS BECOME IRRECOVERABLE AND IT IS ENOUGH THAT THE BAD DEBT IS WRITTEN OFF IN THE BOOKS OF THE APPELLANT. HENCE, THERE IS NO DOUBT THAT THE ONUS OF PROVING THE BAD DEBT TO BE IRRECOVERABLE DOES NOT LIE ON THE APPELLANT IN PURSUANCE TO THE APEX COURT'S ORDER SUPRA. HERE, ONE QUESTION ARISES, AS TO WHETHER IT STOPS THE REVENUE TO ESTABLISH THE AUTHENTICITY OF THE BAD DEBTS WRITTEN OFF AND TO SEE THAT NO PROVISIONS OF THE INCOME TAX ARE FLOUTED BY ANY MEANS . IN THIS REGARD, IT WILL BE PERTINENT TO QUOTE THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S KOHLI BROTHERS COLOR LAB (P) LTD, REPORTED IN (2010) 228 CTR (ALL) 84, THE RELEVANT PART OF THE SAME IS REPRODUCED HEREUNDER: ........... HON'BLE APEX COURT IN THE CASE OF TRAVANCORE TEA ESTATES CO. LTD. VS. CIT (1999) 151 CTR (SC) 231; (1998) 233 ITR 203 (SC) HAS TAKEN THE VIEW, THAT AS TO WHETHER A DEBT HAS BECOME BAD OR AT WHAT POINT OF TIME IT BECAME BAD, ARE PURE QUESTION OF FACT. THOUGH STANDARD OF PROOF OF PROVING THE SAME IS BAD DEBT, IS NOT REQUIRED TO BE ADOPTED AND IS TO BE DECIDED ON THE WISDOM OF THE RESPONDENT - APPELLANT AND NOT ON THE WISDOM OF ASSESSING OFFICER, BU T TO SHOW THAT ENTRY WHICH HAD B EEN MADE AS BAD DE BT THERE HAS TO BE SOME MATERIAL IN SUPPORT OF THE SAME, GIVING SOME SEMBLANCE OF GENUINENESS AND TRUTHFULNESS TO THE SAME IN THE DIRECTION OF FORMING OPINION, THAT SAID DEBT WAS ARISING OUT OF TRADING ACTIVITY, THERE WAS RELATIONSHIP OF DEBTOR OR CREDITOR , SAME WAS IRRECOVERABLE. MERELY BECAUSE ENTRIES HAVE BEEN MADE, IN RESPECT OF BAD DEBT OR PART THEREOF, WRITING IT OFF, CLAIMING DEDUCTION, THE SAID ENTRIES CAN ALWAYS BE EXAMINED BY THE ASSESSING OFFICER, BEFORE PROCEEDING TO AWARD DEDUCTIONS, AND NOT BY MERELY BLINDLY FOLLOWING THE SAME, BUT STAND OF THE APPELLANT HAS TO BE TESTED FROM THE POINT OF VIEW OF APPELLANT, AND APPELLANT CANNOT COME FORWARD AND SAY THAT ON ACCOUNT OF CHANGE BROUGHT IN BY WAY OF AMENDMENT W .E.F. 1.4.1989, UNDER SECTION 36 (1)(VII ) INQUIRY IS NOT PERMISSIBLE. THUS IN THE PRESENT CASE, ON THE SUBSTANTIAL QUESTION OF LAW, POSED, PROVISION OF SECTION 143 (2) OF INCOME TAX ACT VIZ - A - VIZ SECTION 36(1) (VII) OF THE INCOME TAX ACT, 1961 READ WITH SECTION 36(1) BOTH WOULD BE HARMONIZED TO GIVE PURPOSEFUL MEANING TO BOTH THE I.T.A. NO.1121/MUM/2017 6 STATUTORY PROVISIONS, AS ONE EXTENDS BENEFIT TO THE RESPONDENT - APPELLANT OF DEDUCTION FOR THEIR DEBT OR PART THEREOF BECOMING BAD AND OTHER AUTHORIZES ASSESSING OFFICER TO SEE THAT PROVISION OF INCOME TAX ACT ARE NOT FLO UTED BY ANY MEANS. ............. THUS, IT IS CLEAR THAT THE JUDICIAL PRONOUNCEMENTS IN THE MATTER IS NOT AN ESTO PPEL FOR THE REVENUE TO INVESTIGATE THE MATTER AND PROVE THE GENUINENESS OF THE BAD DEBT WRITTEN OFF. 5.2.2.COMING TO THE SECOND QUESTION, THE LEDGER OF THE M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD. SUBMITTED BY THE APPELLANT FOR THE FINANCIAL YEAR REFLECTS CLOSING BALANCE OF RS.30,594/ - . THIS FIGURE IN THE LEDGER HAS BEEN ARRIVED AFTER GIVING EFFECT OF TRANSFER FOR RS.25,94,795/ - ON 15.07.2010 TO M/S MAYA DIGITAL MEDIA PVT. LTD. AND THE LAST TRANSACTIONS M ADE WITH M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD. ARE RECEIPT OF RS.10,85,262/ - ON 02.07.2010 AND SALES MADE FOR RS.3,23,581/ - & RS.10,65,396/ - ON 09.07.2010 AND THERE ARE NO OTHER TRANSACTIONS W ORTH MENTIONING FOR THE REST OF THE YEAR. THE LEDGER OF M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD. FOR THE FINANCIAL YEAR 2011 - 12 PERTAINING TO THE ASSESSMENT YEAR IN APPEAL SHOWS THE OPENING AND CLOSING BALANCE OF RS.30,594/ - . THE APPELLANT HAS SUBMITTED TH AT THE AMOUNT OF RS.25,94,795/ - REMAINING AS DEBT HAS BEEN TRANSFERRED TO M/S MAYA DIGITAL MEDIA PVT. LTD. ON TRANSFER OF STUDIO BUSINESS OF M/S. MAYA ENTERTAINMENT STUDIOS PVT. LTD. TO M/S. MAYA DIGITAL MEDIA PVT. LTD. NOW COMING TO THE LEDGER OF M/S MAYA DIGITAL MEDIA PVT. LTD. FOR THE FINANCIAL YEAR 2010 - 11, THE LEDGER STARTS WITH EFFECT FROM 15.07.2010 BY TRANSFER OF AMOUNT RS.25,94,795/ - BEING PAYABLE BY M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD AND FURTHER SALE AND PAYMENT HAS GOT EFFECTED WITH THE M/S MAYA DIGITAL STUDIOS PVT. LTD. FOR THE REST OF THE YEAR. IN VIEW OF THE FLOW OF TRANSACTIONS, IT IS NOTICED THAT INDEED THE STUDIO BUSINESS TRANSACTIONS HAVE BEEN TRANSFERRED TO M/S MAYA DIGITAL MEDIA PVT. LTD.,THE LEDGER OF M/S MAYA DIGITAL MEDIA PVT. LTD . FOR THE FINANCIAL YEAR 20 11 - 12 RELEVANT TO THE ASSESSMENT YEAR IN QUESTION REFLECTS ONLY TWO TRANSACTIONS I.E. 'BAD DEBTS WRITTEN OFF FOR RS.26,81,722/ - ON 02.04.2011 AND 'PAYMENT RECEIVED FROM M/S MAYA DIGITAL MEDIA PVT. LTD. FOR RS.1,50,000/ - ON 04.05 .2011' AND SUBSEQUENTLY, RS.7,43,907/ - HAS BEEN CARRIED FORWARD TO THE SUCCEEDING YEAR AND ULTIMATELY WRITTEN OFF IN FINANCIAL YEAR 2012 - 13 AS CLAIMED BY THE APPELLANT. BY PLAINLY LOOKING AT THE CHRONOLOGY OF THE I.T.A. NO.1121/MUM/2017 7 FINANCIAL TRANSACTIONS, IT IS NOTICED THAT THE BUSINESS OF THE APPELLANT WAS WITH THE M/S MAYA ENTERTAINMENT PVT. LTD. AND M/S MAYA DIGITAL PVT. LTD. FOR THE WHOLE OF THE ASSESSMENT YEAR, COMPLIMENTING IN PARTS I.E. FIRST FOUR MONTHS WITH THE FIRST ENTITY AND SECOND EIGHT MONTHS WITH SECOND ENTITY. THEREAFTER, ONLY THE BAD DEBTS HAVE BEEN WRITTEN OFF IN THE SUCCEEDING TWO YEARS. HERE, IT WILL BE PERTINENT TO NOTE THAT THE APPELLANT HAS CLAIMED THAT THE STUDIO BUSINESS OF M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD. WAS TRANSFERRED TO M/S MAYA DIGITAL ME DIA PVT. LTD., HOWEVER, THE REMAINING DEBT ALSO HAS BEEN TRANSFERRED BY THE APPELLANT TO M/S MAYA DIGITAL MEDIA PVT. LTD. WHICH RAISES QUESTION. FURTHER, THE APPELLANT HAS CLAIMED THAT THE WRITE OFF WAS MADE ON THE PART OF THE DEBT ON ACCOUNT OF M/S MAYA DIGITAL MEDIA PVT. LTD. BUT THE LEDGER REFLECTS ALTOGETHER ANOTHER THEORY. 5.2.3. THE APPELLANT HAS AT FIRST TRANSFERRED THE REMAINING AMOUNT PAYABLE BY M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD. TO THE LEDGER OF M/S MAYA DIGITAL MEDIA PVT. LTD. THEN CONTINU ED BUSINESS FOR BALANCE OF THE YEAR. SUBSEQUENTLY, WENT ON TO WRITE OFF THE DEBT AS BAD DEBT AT THE VERY BEGINNING OF THE ASSESSMENT YEAR EVEN THOUGH THE SALES HAVE EFFECTED WITH THE M/S MAYA DIGITAL MEDIA PVT. LTD. TILL THE END OF THE PRECEDING YEAR. T HE APPELLANT HAS ALSO CONTESTED THAT OUT OF THE DEBT OF THE M/S MAYA E NTERTAINMENT STUDIOS PVT. LTD. ONLY RS.1,50,000/ - WAS WRITTEN OFF AND THAT TOO IN THE FINANCIAL YEAR 2012 - 13 AND BALANCE WRITTEN OFF BAD DEBT CONSTITUTES THE AMOUNT PAYABLE FROM M/S MAYA DIGITAL MEDIA PVT. LTD.. HOWEVER, IT IS NOTICED THAT THE EXPLANATION OF THE APPELLANT DOES NOT HOLD GOOD IN THE LIGHT OF THE TRANSACTIONS REFLECTED IN THE LEDGER OF M/S MAYA DIGITAL MEDIA PVT. LTD.. THE LAST OF THE RECEIPT FROM M/S MAYA DIGITAL MEDIA PVT. LTD. WAS ON 11.03.2011 IN THE FINANCIAL YEAR 2010 - 11 AND WRITE OFF WAS EFFECTED ON 02.04.2011 AND ANOTHER PAYMENT WAS RECEIVED FROM M/S MAYA DIGITAL MEDIA PVT. LTD. ON 04.05.2011 I.E. AFTER THE WRITE OFF MADE. HENCE, THE CONTENTION OF THE APPELLANT IS NOT SUSTAINABLE AS PAYMENTS WERE RECEIVED JUST BEFORE AND AFTER THE WRITE OFF ENTRY. 5.2.4. COMING TO THE QUESTION OF RELATIONS BETWEEN THE ENTITIES INVOLVED IN THE CHAIN OF THE EVENTS PERTAINING TO THESE TRANSACTIONS. THE AO OBSERVED THAT THE APPELLANT HAS BEEN DOING BUSINESS WITH M/S MAYA DIGITAL STUDIOS PVT. LTD. WHICH IS SISTER CONCERN OF THE M/S MAYA DIGITAL MEDIA PVT. LTD.. THE APPELLANT HAS REBUTTED THIS FINDING OF THE AO AS 'THE LEARNED AO ERRED IN OBSERVING THE FACT M/S. MAYA DIGITAL STUDIOS PVT. LTD . IS A SISTER CONCERN OF M/S. MAYA DIGITAL MEDIA I.T.A. NO.1121/MUM/2017 8 PVT. LTD. WHEN ACTUALLY IT IS A DIFFERENT COMPANY OWNED AND CONTROLLED BY DIFFERENT DIRECTORS AND ALSO LOCATED AT A DIFFERENT PLACE. THESE DETAILS ARE AVAILABLE IN PUBLIC DOMAIN IN THE WEBSITE OF MINISTRY OF COMPANY AFFAIRS.'ONGOING BY THE STATEMENT OF THE APPELLANT, IT IS FOUND THAT IN THE MAZE OF THIS BAD DEBT WRITE OFF, THERE ARE TOTAL OF THREE ENTITIES FIRST M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD., SECOND M/S MAYA DIGITAL MEDIA PVT. LTD., THIRD M/S MAYA DIGITAL STUDIOS PVT. LTD., AND BEFORE PROCEEDING FURTHER THE RELATION BETWEEN THESE THREE ENTITIES NEED TO BE LOOKED INTO. THE DATA FROM THE PUBLIC DOMAIN AND DETAILS GIVEN BY THE APPELLANT HAS BEEN EXHAUSTED AND THE OUTCOME IS TABULATED AS UNDER: CIN U 92100MH2004PTC150 019 U93000M H2010PTC205033 U93000MH2011PTC2I2553 COMPANY / LLP NAME MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED MAYA DIGITAL MEDIA PRIVATE LIMITED MAYA DIGITAL STUDIOS PRIVATE LIMITED DATE OF INCORPORATION 15/12/2004 29/06/2010 20/01/2011 OLD ADDRESS 601, INTERFACE NO. 11, 6TH FLOOR, BEHIND GOREGAON SPORTS CLUB, OFF LINK ROAD, MALAD (WEST), MUMBAI - 64 601, INTERFACE NO.11 6TH FLOOR, BEHIND GOREGAON SPORTS CLUB, OFF LINK ROAD, MALAD (WEST), MUMBAI - 64 PRESENT ADDRESS BLOCK NO. 20, 22, BOMBAY COTTON MILL COMPOUND DATTARAM LAD PATH, KALACHOWKY ROAD MUMBAI MUMBAI CITY MH 400033 IN 2ND FLOOR, MUKTA HOUSE,FILM CITY COMPLEX, OPP RELIANCE MEDIA, GOREGAON - EAST MUMBAI MUMBAI CITY MH 400065 IN COMMUNICATION CENTRE,MUKTA HOUSE, 2ND FLOOR, SECTOR II, FILM CITY, GOREGAON (EAST), MUMBAI MH 400065 IN EMAIL ID [e-mail] ACCOUNTS@MAYADIGITALSTUDIO S.COM INFO@MAYADIGITALSTUDIOS .COM _ COMPANY STATUS (FOR EFILING) A CTIVE ACTIVE ACTIVE NAME FO THE DIRECTORS SHILPA AJAY BHARTIYA AJAY BHARTIYSA DEEPA SAHI KETAN MEHTA FRANK ALBERT FOSTER DEEPA SAHI KETAN MEHTA AS CAN BE EASILY OBSERVED FROM THE TABLE ABOVE THAT THE M/S MAYA ENTERTAINMENT STUDIOS PVT. LTD. AND M/S MAYA DIGITAL MEDIA PVT. LTD. HAS BEEN WORKING AT THE SAME ADDRESS. THE M/S MAYA DIGITAL MEDIA PVT. LTD. AND M/S MAYA DIGITAL STUDIOS PVT. LTD. HAVE SAM E SET OF DIRECTORS I.E. M.S DEEPA SAHI AND MR. KETAN MEHTA, HENCE, THE ARGUMENT OF THE APPELLANT THAT THESE COMPANIES ARE NOT RE LATED DOES NOT SUSTAIN. ACCORDINGLY , IT IS FOUND THAT M/S. MAYA DIGITAL MEDIA PVT. LTD., AND M/S. MAYA DIGITAL STUDIOS PVT. LTD. ARE CLOSELY RELATED AND CAN BE TERMED AS SISTER CONCERN. HERE ONE MORE I.T.A. NO.1121/MUM/2017 9 THING CAN BE OBSERVED FROM THE LEDGER OF M/S MAYA DIGITAL MEDIA PVT. LTD. AND M/S MAYA DIGITAL STUDIOS PVT. LTD. THAT PAYMENT MADE TO THE APPELLANT FROM BOTH THESE CONCERNS ARE EFFECTED FROM THE SAME CURRENT ACCOUNT I.E. 00420100024064 HELD WITH THE DCB BANK.AII THE THREE ENTITIES ARE ACTIVE AS ON DATE AND THERE IS NO EVIDENCE OF ANY FINANCIAL HARDSHIP OF THESE CONCERNS. HENCE, THE OBJECTION OF THE APPELLANT THAT THERE IS NO RELATION BETWEEN THE ENTITIES INVOLVED IN THIS TRANSACTION DOES NOT SUSTAIN. 5.3. IN VIEW OF THE FACTS, LAW POINTS AND ACCOUNTING OBSERVATIONS PLACED IN THE PRECEDING PARAS CLEARLY DISPLAYS THAT THE BAD DEBTS WRITTEN OFF BY THE APPELLANT DOES NOT PASS THE TEST OF AUTHENTICITY AND HAS BEEN AFFECTED WITH MOTIVE TO REDUCE THE PROFIT WITHOUT MAKING RELEVANT EFFORTS AND TAKING UNDUE ADVANTAGE OF LEGAL PRONOUNCEMENTS IN THE MATTER. FURTHER, IT CAN BE NOTED THAT THE REVERSE EFFE CT OF BAD DEBTS WRITE OFF WILL BE CESSATION OF LIABILITY IN THE BOOKS OF THE DEBTOR. AS IT HAS BEEN ESTABLISHED BY SEVERAL JUDICIAL PRONOUNCEMENTS THAT THERE SHALL BE REASONABLE TIME ELAPSED BEFORE CESSATION OF LIABILITY, HENCE, ON THE REVERSE, THERE HAS T O BE SOME REASONABLE LAPSE OF PERIOD OR BONAFIDE EVIDENCE OF THE BAD DEBTS IRRECOVERABLE, WHICH IS COMPLETELY ABSENT IN THIS CASE. ACCORDINGLY, I CONFIRM THE ADDITION MADE ON ACCOUNT OF BAD DE BT WRITTEN OFF FOR RS.26,81,722/ - . THE GROUNDS OF APPEAL RAISED ARE DISMISSED. 5 . BEING AGGRIEVED BY THE APPELLATE ORDER DATED 29.12.2016 PASSED BY LEARNED CIT(A), THE ASSESSEE HAS FILED SECOND APPEAL WITH TRIBUNAL. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT AN AMOUNT OF RS. 26,81,722/ - WAS WRITTEN OFF AS BAD DEBT UNDER THE HEAD ADMINISTRATIVE E XPENSES . O UR ATTENTION WAS ALSO DRAWN BY LEARNED COUNSEL FOR THE ASSESSEE TO PAGE NO. 25 OF THE PAPER BOOK FILED WITH THE TRIBUNAL , WHICH IS SCHEDULE ANNEXED TO AND FORMING PART OF BALANCE SHEET OF THE ASSESSEE AS AT 31.03.2012, WHEREIN UNDER THE HEAD ADMINISTRATIVE EXPENSES, AN AMOUNT OF RS. 26,81,722/ - IS SHOWN AS BAD DEBTS WRITTEN OFF . OUR ATTENTION WAS ALSO DRAWN TO PAGE NO. 36 - 38 OF THE PAPER BOOK WHEREIN LEDGER ACCOUNT OF M/S. MAYA EN T ERTAINMENT STUDIO S PRIVATE LTD. IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS PLACED FROM 1 ST APRIL 2009 TO 31 ST MARCH, 2012 . I T WAS SUBMITTED THAT ON 15 TH JULY, 2010 AN AMOUNT OF RS. 25,94,795/ - I.T.A. NO.1121/MUM/2017 10 RECOVERABLE BY THE ASSESSEE FROM M/S MAYA ENTERTAINMENT STUDI OS PRIVATE LIMITED W AS TRANSFERRED TO THE ACCOUNT OF M/S. MAYA DIGITAL MEDIA PRIVATE LTD AS THE STUDIO BUSINESS OF MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED WAS TRANSFERRED TO M/S MAYA DIGITAL MEDIA PRIVATE LIMITED . OUR ATTENTION WAS DRAWN TO LETTER DATED 15.07.2010 ISSUED BY MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED IN FAVOUR OF THE ASSESSEE WHEREIN IT IS MENTIONED THAT STUDIO BUSINESS OF SAID M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED STOOD TRANSFERRED TO M/S MAYA DIGITAL MEDIA PRIVATE LIMITED W . E . F . 15 TH JULY 2010. THE SAID LETTER AS IS PRODUCED BEFORE THE BENCH IS PLACED IN FILE. O UR ATTENTION WAS ALSO DRAWN TO PAGE NO. 39 TO 41 OF THE PAPER BOOK FILED WITH THE TRIBUNAL, WHERE IN LEDGER ACCOU NT OF M/S. MAYA DIGITAL MEDIA PRIVATE LTD. FROM 1 ST APRIL 2010 31 ST MARCH 2013 IS PLACED . I T WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT EVEN AFTER TRANSFER OF B ALANCE AMOUNT OF RS. 25,94,795/ - ON 15.07.2010 , SALES WERE MADE BY THE ASSESSEE TO MAYA DIGITAL MEDIA PRIVATE LIMITED AND THE BALANC E CARRIED FORWARD TO THE NEXT YEAR ON 31 ST MARCH , 2011 WAS RS. 35,75,629/ - , OUT OF WHICH RS. 26,81,722/ - WAS WRITTEN OFF ON 02.04.2011 AS BAD DEBT . T HUS , IT WAS SUBMITTED THAT SINCE THE ASSESSEE COULD NOT RECOVER THE AFORESAID AMOUNT , IT WAS WRITTEN OFF AS BAD DEBTS IN ITS BOOKS OF ACCOUNTS TO THE TUNE OF 75% OF RS. 35,75,629/ - , WHICH COMES TO RS. 26,81,722/ - . IT WAS S UBMITTED THAT OCKAM S YSTEM S IS PROPRIETARY CONCERN OF THE ASSESSEE . I T WAS SUBMITTED THAT IN IMMEDIATELY NEXT YEAR V IZ. AY 2013 - 14 , THE ASSESSMENT WAS FRAMED BY REVENUE U/S 143(3) OF THE 1961 ACT VIDE ORDERS DATED 14.03.2016 WHEREIN AN A MOUNT OF RS. 7 ,43,907 / - RECEIVABLE FROM M/S MAYA DIGITAL MEDIA PRIVATE LIMITED WAS WRITTEN OFF AS BAD DEBTS IN THE SAID FY ENDING 31.0 3.2013 , WHICH WAS ACCEPTED BY R EVENUE IN AN ASSESSMENT FRAMED U/S 143(3) OF THE 1961 ACT VIDE ASSESSMENT ORDER DATED 14.03.2016 AND NO ADDITION S /DISALLOWANCE ON ACCOUNT OF BAD DEBTS WRITTEN OFF CLAIMED BY THE ASSESS EE WERE MADE BY THE REVENUE . THE ASSE SSMENT ORDER FOR AY 2013 - 14 DATED 14.03.2016 PASSED BY THE AO U/S 143(3) OF THE 1961 I.T.A. NO.1121/MUM/2017 11 ACT IS PLACED ON RECORD IN THE FILE. OUR ATTENTION WAS ALSO DRAWN TO THE APPELLATE ORDER PASSED BY LD. CIT(A) ORDER . IT WAS SUBMITTED THAT NOTICES U/S 133(6) OF THE 1961 ACT WERE ISSUED TO M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED BUT IT DID NOT RESPONDED WHICH ITSELF SHOWS THAT DEBTS HAVE BECOME BAD . O UR ATTENTION WAS BROUGHT BY LEARNED COUNSEL FOR THE ASSESSEE TO THE TABLE /CHART OF STATUS OF ALL THE THREE COMPANIES VIZ. MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED, MAYA DIGITAL MEDIA PRIVATE LIMITED AND MAYA DIGITAL STUDIOS PRIVATE LIMITED AS IS PLACE D VIDE CHART BY LD. CIT(A) IN ITS APPELLATE ORDER WHICH SHOWS THAT THESE CO MPANIES ARE IN EXISTENCE WHICH AS PER LEARNED COUNSEL FOR THE ASSESSEE PROVES AS TO THE GENUINENESS OF THE WRITE OFF OF BAD DEBTS . 6 . THE LD. DR ON THE OTHER SUBMITTED THAT THE GENUINENESS OF THE BAD DEBT WRITTEN OFF IS NO T PROVED. IT WAS SUBMITTED BY L EARNED DR THAT SELF SERVING DOCUMENTS WERE PRODUCED. IT WAS SUBMITTED THAT ALL THREE COMPANIES NAMELY MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED, MAYA DIGITAL MEDIA PRIVATE LIMITED AND MAYA DIGITAL STUDIOS PRIVATE LIMITED ARE SISTER/ASSOCIATED CONCERNS AS IS BROUGHT OUT BY LEARNED CIT(A) IN ITS APPELLATE ORDER AT PAGE 20 . IT WAS SUBMITTED BY LEARNED DR THAT T HE ASSESSEE STILL HAS DEALING WITH ENTIT Y OF THE SAME GROUP/ASSOCIATED CONCERN S NAMELY MAYA DIGITAL STUDIOS PRIVATE LIMITED AND THERE IS NO JUSTIFICAT ION/REASONING FOR WRITE OFF OF DEBTS WHICH WAS DONE TO SUPPRESS PROFITS AND EVADE TAXES WITH A VIEW TO DEFRAUD REVENUE . IT WAS SUBMITTED BY LEARNED DR THAT GENUINENESS OF WRITE OFF OF BAD DEBT COULD NOT BE PROVED. IT WAS SUBMITTED THAT NOTICE S WERE ISSUED BY THE AO U/S 133(6) TO MAYA DIGITAL MEDIA PRIVATE LIMITED, WHICH RETURNED UN - SERVED . THE ASSESSEE DID NOT PRODUCE THE AFORESAID PARTY M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED BEFORE THE AUTHORITIES BELOW NOR C ONFIRMATION FROM THE PARTIES W AS SUBMITTED. IT WAS SUBMITTED THAT PRINCIPLES OF RES - JUDICATA ARE NOT APPLICABLE TO INCOME - TAX PROCEEDINGS AND NEXT YEAR SELECTION OF THE CASE OF THE ASSESSEE FOR FRAMING SCRUTINY ASSESSMENT WAS UNDER I.T.A. NO.1121/MUM/2017 12 CASS WHICH CANNOT BE TAKEN AS BASIS TO CONTEND THAT THE BAD DEBTS WRITTEN OFF WERE ALLOWED IN THAT AY WILL LEAD TO INFERENCE THAT THE SAME SHOULD BE ALLOWED IN THIS YEAR ALSO . 7 . WE HAVE HEARD RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING I N COMPUTERS AND ITS PERIPHERALS , REPAIRS AND MAINTENANCE SERVICES AND INCOME FROM OTHER SOURCES. W E HAV E OBSERVED THAT T HE ASSESSEE HAD CLAIMED THAT IT HAD EARLIER DEALING S WITH M/S. MAYA ENTERTAINMENT STUDIO S PRIVATE LTD. FOR RENTING OF COMPUTERS, REPAI RS AND MAINTENANCE. THE LEDGER ACCOUNTS OF THE SAID CONCERN M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED IN ASSESSEES BOOKS OF ACCOUNTS FROM 01.04.2009 TO 31.03.2012 ARE PLAC ED IN PAPER BOOK/PAGE 36 - 38. P ERUSAL OF THE SAID LEDGER ACCOUNTS OF M/S MAYA EN TERTAINMENT STUDIOS PRIVATE LIMITED REVEAL S THAT AN AMOUNT OF RS. 25,94,795/ - WAS TRANSFERRED TO ITS SISTER CONCERN M/S. MAYA DIGITAL STUDI O PRIVATE LTD. ON 15.07.2010 . O N PERUSAL OF THE LEDGER ACCOUNT OF MS/. MAYA ENTERTAINMENT STUDIO S PRIVATE LTD. FOR THE YEAR ENDING 31.0.2011 AND 31.03.2012 , IT IS OBSERVED THAT THERE IS NO FURTHER BUSINESS DEALING OF THE ASSESSEE WITH AFORE - SAID M/S MAYA ENTERTAINMENT STUDIO S PRIVATE L TD. , POST 15.07.2010 . THE ASSESSEE HAS PRODUCED LETTER DATED 15.07.2010 FOR T HE FIRST TIME BEFORE US WHEREIN MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED HAS WRITTEN TO THE ASSESSEE THAT ITS STUDIO BUSINESS STOOD TRANSFERRED TO M/S MAYA DIGITAL MEDIA PRIVATE LIMITED WITH EFFECT FROM 15.07.2010 AND HENCEFORTH ALL OBLIGATIONS/LIABILITI ES AND BUSINESS DEALINGS CONNECTED WITH STUDIO BUSINESS SHALL BE UNDERTAKEN BY M/S MAYA DIGITAL MEDIA PRIVATE LIMITED . THE ASSESSEE AT FIRST INSTANCE TOOK A STAND BEFORE THE AO THAT THE SAID M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED INCURRED HUGE LOS SES IN ITS MOST AMBITIOUS HOME PRODUCTION ANIMATION MOVIES RAMYANA - THE EPIC WHICH MISERABLY FLOPPED WHICH MADE ITS FINANCIAL CONDITION IN A VERY BAD SHAPE AND CONSIDERING THIS 75% OF THE OUTSTANDING AMOUNT OF RS. 35,75,629/ - WAS TREATED AS BAD FOR RE COVERY AND CONSEQUENTLY I.T.A. NO.1121/MUM/2017 13 BAD DEBTS WERE WRITTEN OFF IN BOOKS OF ACCOUNTS AT RS. 26,81,722/ - ON 1 ST APRIL 2011 BUT LATER IT CHANGED ITS STANCE BEFORE LEARNED CIT(A) AND CONTENTIONS WERE MADE THAT SO FAR AS DUES RECEIVABLE FROM M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED ARE CONCERNED , THE SAME STOOD RECEIVED BY THE ASSESSEE WHICH ARE REFLECTED IN THE LEDGER ACCOUNT OF M/S MAYA DIGITAL MEDIA PRIVATE LIMITED . IT IS NOW CLAIMED THAT AN AMOUNT OF RS. 24,44,795/ - OUT OF TOTAL DEBT OUTSTANDING OF RS. 25,94,79 5/ - WAS RECEIVED IN THE FINANCIAL YEAR 2010 - 11 AND 2011 - 12, WHILE ONLY RS. 1,50,000/ - REMAINED OUTSTANDING WHICH WAS WRITTEN OFF BY THE ASSESSEE IN AY 2013 - 14 AS BAD DEBTS WRITTEN OFF AND ALL THESE RECOVERIES RELATED TO THE DEBT OUTSTANDING OF MAYA ENTERTA INMENT STUDIOS PRIVATE LIMITED . ONCE AGAIN BEFORE US , THE ASSESSEE HAS REVERTED TO ITS INITIAL CONTENTIONS THAT THE WRITE OFF OF DEBTS AS BAD DEBTS RELATED TO THE RECOVERABLE FROM MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED. SO, THE ASSESSEE IS CHANGING I TS STANCE TIME AND AGAIN. IT IS PERTINENT TO MENTION THAT IT IS ADMITTED BY THE ASSESSEE THAT BOTH THE CONCERNS NAMELY M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED AND M/S MAYA DIGITAL MEDIA PRIVATE LIMITED ARE SISTER/ASSOCIATED CONCERNS. THE ASSESSEES DEALING WITH M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED ENDED ON 09.07.2010 AND W.E.F. 15.07.2010 IT IS CLAIMED THAT STUDIO BUSINESS OF M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED STOOD TRANSFERRED TO M/S MAYA DIGITAL MEDIA PRIVATE LIMITED. THE AS SESSEES DEALING WITH M/S MAYA DIGITAL MEDIA PRIVATE LIMITED ENDED ON 04.05.2011 WHEN THE LAST PAYMENT OF RS. 1,50,000/ - WAS RECEIVED BY THE ASSESSEE AS IS REFLECTED IN LEDGER ACCOUNT WHICH IS PLACED IN THE PAPER BOOK. THE ASSESSEE HAD HOWEVER CONTINUED TO DEAL WITH ANOTHER COMPANY NAMELY M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED , WHICH AS PER REVENUE DEALING CONTINUED EVEN AFTER LAST OF THE ALLEGED BAD DEBTS OF RS. 7,43,907/ - WAS WRITTEN OFF BY THE ASSESSEE AS BAD DEBT ON 31.03.2013 . THE ASSESSEE HAS NOT PLACED LEDGER ACCOUNT OF THE SAID CONCERN M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED IN ITS BOOKS OF ACCOUNTS , IN THE PAPER BOOK FILED WITH THE TRIBUNAL . RATHER, THE ASSESSEE HAS CLAIMED THAT I.T.A. NO.1121/MUM/2017 14 THIS CONCERN NAMELY M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED IS A N INDEPENDENT ENTITY ALTOGETHER AND IS NOT ASSOCIATED/CONNECTED WITH EITHER OF THE TWO ENTITIES NAMELY M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED OR M/S MAYA DIGITAL MEDIA PRIVATE LIMITED BUT HOWEVER , THE LEARNED CIT(A) HAS MADE VERIFICATIONS FROM THE WEB - SITE OF MCA ETC. AND HAS BROUGHT ON RECORD COGENT EVIDENCES TO PROVE THAT ALL THREE ENTITIES NAMELY MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED, MAYA DIGITAL MEDIA PRIVATE LIMITED AND MAYA DIGITAL STUDIOS PRIVATE LIMITED ARE ASSOCIATED /CONNECTED EN TITIES. THE ASSESSEE HAS ADMITTED THAT M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED AND MAYA DIGITAL MEDIA PRIVATE LIMITED ARE SISTER CONCERNS WHILE EVIDENCE BROUGHT ON RECORD BY LEARNED CIT(A) CLEARLY REVEALS THAT DIRECTORS OF M/S MAYA DIGITAL MEDIA PR IVATE LIMITED AND M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED ARE SAME AND EVEN THEIR WEB ADDRESS ES ARE ALSO SAME, WHICH CONCLUSIVELY PROVES THAT ALL THESE ENTITIES BELONGS TO SAME GROUP AND ARE UNDISPUTEDLY ASSOCIATED /CONNECTED ENTITIES. THE LEARNED CIT(A) ALSO OBSERVED THAT THE PAYMENT RECEIVED BY THE ASSESSEE FROM M/S MAYA DIGITAL MEDIA PRIVATE LIMITED AND M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED WERE EFFECTED FROM SAME BANK ACCOUNT 00420100024064 HELD WITH DCB BANK. THE AFORESAID FINDINGS OF LEARNED CIT( A ) COULD NOT BE DEMOLISHED BY THE ASSESSEE EVEN BEFORE US . THE CHART SHO WING THAT ALL THREE ENTITIES HAD COMMON THREAD RUNNING THROUGH THEM AS PRESENTED BY LEARNED CIT(A) IN ITS APPELLATE ORDER, IS REPRODUCED HEREUNDER: CIN U92100MH2004PTC150019 U93000M H2010PTC205033 U93000MH2011PTC2I2553 COMPANY / LLP NAME MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED MAYA DIGITAL MEDIA PRIVATE LIMITED MAYA DIGITAL STUDIOS PRIVATE LIMITED DATE OF INCORPORATION 15/12/2004 29/06/2010 20/01/2011 OLD ADDRESS 601, INTERFACE NO. 11, 6TH FLOOR, BEHIND GOREGAON SPORTS CLUB, OFF LINK ROAD, MALAD (WEST), MUMBAI - 64 601, INTERFACE NO.11 6TH FLOOR, BEHIND GOREGAON SPORTS CLUB, OFF LINK ROAD, MALAD (WEST), MUMBAI - 64 I.T.A. NO.1121/MUM/2017 15 PRESENT ADDRESS BLOCK NO. 20, 22, BOMBAY COTTON MILL COMPOUND DATTARAM LAD PATH, KALACHOWKY ROAD MUMBAI MUMBAI CITY MH 400033 IN 2ND FLOOR, MUKTA HOUSE,FILM CITY COMPLEX, OPP RELIANCE MEDIA, GOREGAON - EAST MUMBAI MUMBAI CITY MH 400065 IN COMMUNICATION CENTRE,MUKTA HOUSE, 2ND FLOOR, SECTOR II, FILM CITY, GOREGAON (EAST), MUMBAI MH 400065 IN EMAIL ID [e-mail] ACCOUNTS@ MAYADIGITALSTUDIO S.COM INFO@ MAYADIGITALSTUDIOS .COM _ COMPANY STATUS (FOR EFILING) A CTIVE ACTIVE ACTIVE NAME FO THE DIRECTORS SHILPA AJAY BHARTIYA AJAY BHARTIYSA DEEPA SAHI KETAN MEHTA FRANK ALBERT FOSTER DEEPA SAHI KETAN MEHTA 7.2 THE FIRST TWO ENTITIES NAMELY M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED AND M/S MAYA DIGITAL MEDIA PRIVATE LIMITED ARE ASSOCIATED/ SISTER CONCERNS BY ASSESSEES OWN ADMISSION AND THE LAST TWO ENTITIES NAMELY M/S MAYA DIGITAL MEDIA PRIVATE LIMITED AND M/S MAYA DIGIT AL STUDIOS PRIVATE LIMITED ARE ASSOCIATED CONCERNS , BY THE EVIDENCES AS DETAILED ABOVE BROUGHT IN BY LEARNED CIT(A) WHICH REMAINED UNSHAKEN EVEN BEFORE US . AND BY VIRTUE OF COMPLETION OF COMMON THREAD RUNNING THROUGH ALL THESE THREE ENTITIES AS DETAILED ABOVE , ALL THE AFORESAID THREE ENTITIES GET CONNECTED TO EACH OTHER CONCLUSIVELY AND CONTENTION OF THE ASSESSEE THAT M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED IS NOT A CONNECTED ENTITY WITH THE OTHER TWO ENTITIES STAND REJECTED. THE ASSESSEE HAS NOT PRODUC ED LEDGER ACCOUNT OF M/S MAYA DIGITAL STUDIOS PRIVATE LIMITED BEFORE US. 7.3 THE AO HAD SENT NOTICES U/S 133(6) DATED 10.03.2015 TO M/S MAYA DIGITAL MEDIA PRIVATE LIMITED WHICH RETURNED UN - SERVED WITH REMARKS LEFT. THE ASSESSEE COULD NOT PRODUCE THE SAID PARTY BEFORE THE AUTHORITIES BELOW. THE CONFIRMATIONS FROM ALL THESE THREE PARTIES WERE ALSO NOT PRODUCED BEFORE THE AUTHORITIES BELOW NOR THE SAME IS PRODUCED BEFORE US. RATHER BEFORE US , THE ASSESSEE HAS TAKEN AN UNUSUAL PLEA THAT NON SERVING OF THE NO TICES U/S 133(6) PROVES THAT THE DEBT HAS BECOME BAD AND NEEDED TO BE WRITTEN OFF. THIS IS TOO FAR - FETCHED AND HAS NO RELEVANCE FOR DECIDING THE CONTROVERSY AS TO I.T.A. NO.1121/MUM/2017 16 GENUINENESS OF THE WRITE OFF OF THE BAD DEBT OR WHETHER THE SAID BAD DEBT WRITE OFF WAS CAMO UFLAGED IN ORDER TO SUPPRESS PROFITS WITH AN INTENT TO EVADE TAXES AND DEFRAUD REVENUE .MORE - SO, THE ASSESSEES DEALING WITH GROUP COMPANIES CONTINUED EVEN AFTER DEALING WITH THE TWO COMPANIES NAMELY M/S MAYA ENTERTAINMENT STUDIOS PRIVATE LIMITED OR M/S M AYA DIGITAL MEDIA PRIVATE LIMITED HAD ENDED , WHICH BUSINESS DEALINGS EVEN CONTINUED BEYOND THE WRITE OFF OF BAD DEBTS . THE REVENUE MADE EFFORTS TO GET THE CONFIRMATIONS FROM M/S MAYA DIGITAL MEDIA PRIVATE LIMITED TO UNRAVEL THE TRUTH BUT NOTICES ISSUED U/S 133(6) REMAINED UNSERVED AND THE ASSESSEE ALSO DID NOT PRODUCE THE SAID PARTY BEFORE THE AUTHORITIES BELOW NOR IT FIL ED CONFIRMATIONS FROM THESE PARTIES TO SUBSTANTIATE ITS STAND AND AT THE SAME TIME IT CONTINUED WITH ITS BUSINESS DEALINGS WITH THE GROUP ENTITIES. THE EVER - CHANGING STAND OF THE ASSESSEE AS WELL THE PRIMARY BURDEN WHICH LAY ON THE ASSESSEE TO SATISFY THE MANDATE OF SECTION 36(1)(VII) READ WITH SECTION 36(2) OF THE 1961 ACT DID NOT GET DISCHARGED FOR THE DETAILED REASONS CITED ABOVE . NO DOUBT THE ASSESSEE IS ENTITLED TO WRITE OFF DEBT AS BAD DEBT IN ITS BOOKS OF ACCOUNTS BUT IT HAS TO SATISFY THE MANDATE O F SECTION 36(1)(VII) READ WITH SECTION 36(2) FOR WHICH PRIMARY BURDEN IS TO BE DISCHARGED BY THE ASSESSEE WHICH DID NOT GET DISCHARGED DUE TO CITED REASONS AND SECONDLY , THE REVENUE HAS ALL THE RIGHT S TO SEE BEYOND SMOKE SCREEN TO UNEARTH/UNRAVEL TRUTH IN CASE THE TRANSACTION OF BA D DEBT WRITE OFF IS CAMOUFLAGED WITH AN INTENT TO SUPPRESS PROFIT, EVADE TAXES AND DEFRAUD REVENUE. UNDER THE FACTS AND IN CIRCUMSTANCES OF THE CASE, IT WILL BE PROPER TO SET ASIDE AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DENOVO ADJUDICATION OF THE MATTER AND ONE MORE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO BRING ON RECORD COGENT EVIDENCES / EXPLANATIONS TO SUBSTANTIATE ITS CONTENTIONS THAT WRITE OFF OF THE BAD DEBTS WAS NOT UNDERTAKEN AS SMOKE SCREEN WITH AN INTE NT TO DEFRAUD REVENUE AND TO PROVE THAT THE SAID DEBT WAS DULY INCLUDED WHILE COMPUTING INCOME OF THE ASSESSEE . NEEDLESS TO SAY THAT THE AO SHALL PROVIDE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE I.T.A. NO.1121/MUM/2017 17 ASSESSEE IN DENOVO PROCEEDINGS IN ACCORDANCE WI TH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. THE EVIDENCES/EXPLANATIONS SUBMITTED BY THE ASSESSEE IN ITS DEFENCE SHALL BE ADMITTED BY THE AO AND ADJUDICATED BY THE AO ON MERITS IN ACCORDANCE WITH LAW. THIS DISPOSES OF GROUND NUMBER 1 AND 2 FILE D BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL WHICH ARE ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. 8 . THE SECOND ISSUE RELATES TO PROFIT ON SALE OF FIXED ASSETS OF RS. 12,39,137/ - . THE ASSESSEE HAD TRANSFERRED FIXED ASSETS TO TRADING ACCOUNT AN AMOUNT OF RS. 10,71,991/ - AND HAS SHOWN PROFIT ON SALE OF FIX ED ASSETS OF RS. 12,39,137/ - AS THE SALE PRICE OF FIXED ASSETS WAS FIXED AT RS. 23,11,128/ - . THE ASSESSEE DID NOT PRODUCED BEFORE THE AO THE ORIG INAL BUYING PRICE OF THE SAID ASSETS, ITS YEAR OF ACQUISITION, COPIES OF THE INVOICES ETC. IT COULD ALSO NOT BE EXPLAINED BY THE ASSESSEE BEFORE THE AO WHETHER THE SAID ASSETS WERE CAPITAL ASSETS AS DEFINED IN SECTION 2(14) OF THE 1961 ACT. TH E ASSESSEE AL SO FAILED TO CO - RE L A TE THE ACTUAL SALE OF THESE SO CALLED ASSETS AND ITS SALE PRICE. THE AO WAS OF THE VIEW THAT PROVISIONS OF SECTION 45(2) OF THE 1961 ACT ARE NOT APPLICABLE IN THE INSTANT CASE AND THE ASSESSSEE HAD TRIED TO REDUCE ITS PROFITS ON SALE OF ASSETS TRANSFERRED TO STOCK BY SHOWING PROFIT ON SALE OF FIXED ASSETS OF RS. 12,39,13 7/ - AND REDUCING THE SAME FROM BLOCK OF A SSETS. THE AO HELD IT AS A TRADING RECEIPT AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AS BUSINESS PROFIT , VIDE ASSESS MENT ORDER DATED 28.03.2015 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT. 9. AGGRIEVED BY AN ASSESSMENT FRAMED BY AO U/S 143(3) OF THE 1961 ACT VIDE ASSESSMENT ORDER DATED 28.03.2015 , THE ASSESSEE FILED FIRST APPEAL WITH LEARNED CIT(A). THE ASSESSEE HAD CO NTENDED BEFORE LEARNED CIT(A) THAT THE ASSESSEE HAS GIVEN C OMPUTERS AS WELL HIGH END COMPUTER S ERVERS WITH THEIR P ERIPHERALS ON HIRE IN BIG QUANTITIES. THE ASSESSEE HAD CLAIMED THESE ASSETS AS CAPITAL ASSETS FORMING PART OF BLOCK OF A SSETS ON WHICH DEPREC IATION @ 60% WAS CLAIMED BY THE I.T.A. NO.1121/MUM/2017 18 ASSESSEE . THE ASSESSEE CONTENDED THAT IT HAS PROVIDED COMPLETE DETAILS OF W.D.V. OF EACH ITEM OF THE FIXED ASSETS SOLD AND ALSO DETAILS OF EACH OF THE ITEM OF FIXED ASSETS SOLD. IT WAS SUBMITTED THAT COMPLETE RECORDS OF THES E COMPUTERS AND HIGH END COMPUTER SERVERS WITH PERIPHERALS ARE MAINTAINED BY THE ASSESSEE. IT WAS ALSO CLAIMED THAT THE SAID COMPUTERS AND HIGH END COMPUTER SERVERS WITH PERIPHERALS ARE FIXED ASSETS OF THE ASSESSEE WHICH ARE GIVEN ON HIRE IN BULK QUANTITI ES TO CLIENTS . IT WAS EXPLAINED THAT T HESE COMPUTERS AND HIGH END COMPUTER SERVERS WITH PERIPHERALS ARE RECEIVED BACK FROM THE CLIENTS AFTER END OF CONTRACT PERIOD OF HIRE AND THEN AGAIN THESE COMPUTERS AND HIGH END COMPUTER SERVERS WITH PERIPHERALS ARE GIVEN ON HIRE TO OTHER PARTIES . IT WAS CLAIMED THAT ON SALE OF THESE COMPUTERS AND HIGH END COMPUTER SERVERS ALONG WITH PERIPHERALS , THE ACCOUNTING ENTRIES WERE PASSED IN A PARTICULAR MANNER IN BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WHICH HAS NO BEARING ON THE COMPUTATION OF INCOME WITHIN MANDATE OF THE 1961 ACT, AS THESE CAPITAL ASSETS WERE NEVER CONVERTED INTO STOCK - IN - TRADE AND THESE CAPITAL ASSETS FORMED PART OF BLOCK OF ASSETS ON WHICH DEPRECIATION AT PRESCRIBED RATE @60% WAS CLAIMED UNDER T HE 1961 ACT . IT WAS CLAIMED THAT ON SALE OF THESE CAPITAL ASSETS WHICH FORMED PART OF BLOCK OF ASSETS, THE RELEVAN T AND APPLICABLE PROVISION IS CLAUSE (III) TO SUB - SECTION (1) TO SECTION 32 OF THE 1961 ACT AND THE SALE PRICE IS TO BE REDUCED FROM W . D . V . A S IS STIPULATED THEREIN AND ON THE BALANCE AMOUNT REMAINING, DEPRECIATION SHALL BE ALLOWABLE. THUS, IT WAS CLAIMED THAT THE ASSESSEE HAS VERY RIGHTLY FOLLOWED THE RELEVANT PROVISIONS OF THE 1961 ACT. T HE LD. CIT(A) DIRECTED THE AO TO REWORK PROFIT ON SAL E OF THE FIXED ASSETS FROM THE BLOCK OF ASSE TS AS SHORT T ERM CAPITAL G AIN S BY FOLLOWING PROVISIONS OF SECTION 50 OF THE 1961 ACT, VIDE APPELLATE ORDER DATED 29.12.2016 PASSED BY LEARNED CIT(A) , BY HOLDING AS UNDER: 7.2. MATTER HAS BEEN CONSIDERED: I HAVE CONSIDERED THE FACTS PLACED IN THE ASSESSMENT ORDER, THE STATEMENT OF FACTS BY THE APPELLANT AND THE SUBMISSION I.T.A. NO.1121/MUM/2017 19 MADE DURING THE APPELLATE PROCEEDINGS. ON CAREFUL PERUSAL OF THE MATERIAL ON RECORD AND THE OBJECTIONS PLACED BY THE APPELLANT THE FOLLOWING QUESTIONS ARISE, WHICH ARE REQUIRED TO BE ANSWERED IN ADJUDICATING THIS GROUND. FIRSTLY, PROVISIONS OF THE ACT GOVERNING THE SALE OF DEPRECIABLE ASSETS. SECONDLY, THE DETAILS OF THE TRANSACTION IN THE PROCESS OF SALE OF THE ASSET AND THE DETAILS OF INCOME ARRIVED IN THE TRANSACTION AND WHETHER THIS INCOME HAS BEEN OFFERED FOR TAXATION. BEFORE PROCEEDING FURTHER, IN MY OPINION THE ANSWERS TO THE ABOVE QUESTIONS ARE REQUIRED TO BE DERIVED. 7.2.1. IN THE PROCESS OF THE S ALE OF THE FIXED ASSETS, THERE ARE FOUR SECTIONS IN THE ACT WHICH GOVERN THE END RESULT OF THE TRANSACTIONS I.E. SECTION 2(14), SECTION 32(1)(III), SECTION 45(2) AND SECTION 50 OF THE ACT. THE PROVISIONS OF SECTION 2(14) OF THE ACT ARE HELPFUL IN DETERMINI NG THE NATURE OF ASSET I.E. CAPITAL OR NOT. (I) SINCE, THERE IS NO DOUBT THAT THE DEPRECIABLE ASSETS ARE COVERED UNDER THE PROVISIONS OF SECTION 2(14) OF THE ACT, AS HELD BY PLETHORA OF JUDICIAL PRONOUNCEMENTS, HENCE, THIS ISSUE IS NOT DISCUSSED UPON. (II) FURTHER, THE FIRST SECTION OF THE ACT COMING INTO THE PLAY IS SECTION 32(1)(III) AND THE SAME IS REPRODUCED HEREUNDER: 32. (1) IN RESPECT OF DEPRECIATION OF (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS; (II) KNOW - HOW, PATENT S, COPYRIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OWNED, WHOLLY OR PARTLY, BY THE APPELLANT AND USED FOR THE PURPOSES OF T HE BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED ........................................ (III) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWED UNDER CLAUSE (I) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED IN THE PREVIOUS YEAR (OTHER THAN THE PREVIOUS YEAR IN WHICH IT IS FIRST BROUGHT INTO USE), THE AMOUNT BY WHICH THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MACHINERY, PLANT OR FURNITURE, TOGETHER WITH T HE AMOUNT OF SCRAP VALUE, IF ANY, FALL SHORT OF THE WRITTEN DOWN VALUE THEREOF: I.T.A. NO.1121/MUM/2017 20 PROVIDED THAT SUCH DEFICIENCY IS ACTUALLY WRITTEN OFF IN THE BOOKS OF THE APPELLANT' HERE, IT IS CLEAR THAT THIS PROVISION COMES INTO PLAY WHEN THE SALE PROCEEDS ARE LESS THAN THE WDV OF THE FIXED ASSET, HENCE, THE CONTENTION OF THE APPELLANT THAT HE HAS FOLLOWED THE PROVISIONS OF SECTION 32(1)(III) OF THE ACT IN REPORTING THIS TRANSACTION DOES NOT SU STAIN. (III ) NOW COMING TO THE OTHER PROVISIONS OF THE ACT THAT COMES INT O PLAY IN THIS MATTER I.E. SECTION 45(2) OF THE ACT, WHICH READS AS UNDER: - (2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1), THE PROFITS OR GAINS ARISING FROM THE TRANSFER BY WAY OF CONVERSION BY THE OWNER OF A CAPITAL ASSET INTO, OR ITS TREATM ENT BY HIM AS STOCK - IN - TRADE OF A BUSINESS CARRIED ON BY HIM SHALL BE CHARGEABLE TO INCOME - TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUCH STOCK - IN - TRADE IS SOLD OR OTHERWISE TRANSFERRED BY HIM AND, FOR THE PURPOSES OF SECTION 48, THE FAIR MARKET VALU E OF THE ASSET ON THE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET.' IT IS CLEAR FROM THE PROVISIONS OF THE SECTION 45(2) OF THE ACT, I N CASE OF THE PROFITS ARISING FROM TRANSFER OF THE FIXED ASSETS TO THE STOCK - IN - TRADE, THE FAIR MARKET VALUE OF THE ASSET WILL BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUED ON TRANSFER OF THE PARTICULAR ASSET. HOWEVER, THIS SECTION IS ALSO RULED O UT AS THE APPELLANT HAS DENIED HAVING TRANSFERRED THE FIXED ASSET TO THE STOCK - IN - TRADE.(IV) FURTHER, THE PROVISIONS OF SECTION 50 OF THE ACT GOVERNS THE NATURE OF RECEIPTS ON SALE OF DEPRECIABLE ASSET. THE PROVISIONS OF SECTION 50 ARE AS UNDER: . . . '50 . NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (42A) OF SECTION 2, WHERE THE CAPITAL ASSET IS AN ASSET FORMING PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT OR UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922), THE PROVISIONS OF SECTIONS 48 AND 49 SHALL BE SUBJECT TO THE FOLLOWING MODIFICATIONS: '(1) WHERE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ASSET TOGETHER WITH THE FULL VALUE OF SUCH CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF ANY OTHER CAPITAL ASSET FALLING I.T.A. NO.1121/MUM/2017 21 WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR, EXCEEDS THE AGGREGATE OF THE FOLLOWING AMOUNTS, NAMELY: (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTI ON WITH SUCH TRANSFER OR TRANSFERS; (II) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR; AND (III) THE ACTUAL COST OF ANY ASSET FALLING WITHIN THE BLOCK OF ASSETS ACQUIRED DURING THE PREVIOUS YEAR, SUCH EXCESS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT - TERM CAPITAL ASSETS; (2) WHERE ANY BLOCK OF ASSETS CEASES TO EXIST AS SUCH, FOR THE REASON THAT AL L THE ASSETS IN THAT BLOCK ARE TRANSFERRED DURING THE PREVIOUS YEAR, THE COST OF ACQUISITION OF THE BLOCK OF ASSETS SHALL BE THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, AS INCREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSETS, ACQUIRED BY THE APPELLANT DURING THE PREVIOUS YEAR AND THE INCOME RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER OR TRANSFERS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT - TERM CAPITAL ASSETS.' FROM THE ABOVE, IT IS SEEN THAT SINCE THE PREVIOUS TWO SECTIONS HA VE BEEN RULED OUT IN THE CASE OF THE APPELLANT, HENCE, THE PROVISIONS OF SECTION 50 OF THE ACT IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT. 7.2.2. NOW COMING TO THE SECOND OBSERVATION, IT IS NOTICED THAT THE APPELLANT CLAIMED THAT WHEN THE FIXED A SSETS WAS SOLD AS PER ACCOUNTING POLICY AND PRACTICE THE WDV OF COMPUTERS OR PARTS SOLD WERE TRANSFERRED TO 'GOODS TRANSFERRED FROM FA TO TRADING ACCOUNT' ONLY FOR THE SAKE OF CONVENI ENCE AND TO ARRIVE AT PROFIT & LOSS ON SALE OF FIXED ASSETS. SIMILARLY, S ALE PRICE OF FIXED ASSETS WHICH WAS INITIALLY POSTED TO SALES ACCOUNT (SINCE ENTRY FOR SALE OF FIXED ASSETS HAS TO BE PASSED THROUGH 'SALES MODULE' TO TAKE CARE OF VAT EFFECTS AS WELL AS EFFECT ON INVENTORY WHICH GETS UPDATED UPON SALE ENTRY) WERE THEN TRA NSFERRED TO ACCOUNT VIZ. 'SALE OF GOODS TRF FROM FIXED ASSETS'. THE NET AMOUNT OF ABOVE TWO ACCOUNTS I.E. SALE PRICE AND WDV I.T.A. NO.1121/MUM/2017 22 REPRESENTS 'PROFIT OR LOSS ON SALE OF FIXED ASSETS' THIS PROFIT OR LOSS ON FIXED ASSETS WAS THEN SHOWN IN PROFIT & LOSS ACCOUNT AS A SEPARATE ITEM. HENCE, IN MONETARY TERMS, HE SOLD FIXED ASSETS FOR CONSIDERATION OF RS.23,11,127/ - .THE WDV IN RELATION TO FIXED ASSETS SOLD CAME TO RS.10,71,990/ - . THUS IN BOOKS OF ACCOUNTS THE PROFIT ON SALE OF FIXED ASSETS WAS CREDITED AT RS.12,39,136/ - . (RS.23,11,127/ - SALE PRICE MINUS WDV RS. 10,71,990/ - ). THEN THE APPELLANT DEDUCTED RS. 12,39,136/ - FROM NET PROFIT AS PER PROFIT & LOSS A/C. IN THE COMPUTATION OF TOTAL INCOME, SINCE IT WAS ALREADY ADDED TO NET PROFIT AS PER PROFIT & LOSS ACCOUNT. THE A PPELLANT ALSO ADDED BACK DEPRECIATION OF RS.62,54,851 AS PER PROFIT & LOSS A / C. THE APPELLANT ALSO DEDUCTED AN AMOUNT OF RS.23,11,128/ - WHICH REPRESENTED SALE PRICE OF FIXED ASSETS SOLD FROM BLOCK OF ASSETS FOR ASSETS CARRYING RATE OF DEPRECIATION OF 60%. HENCE, IT IS FOUND THAT THE APPELLANT SOLD THE ASSET, CALCULATED THE PROFIT ELEMENT AND REFLECTED IN TH E PROFIT LOSS ACCOUNT AND THEN R EDUCED IT WHILE COMPUTING THE INCOME FOR THE PURPOSES OF THE INCOME TAX. HE ALSO REDUCED THE AMOUNT OF SALE PROCEEDS FROM THE BLOCK OF ASSETS TO WORK OUT THE REVISED VALUE OF DEPRECIATION. BUT HERE ONE THING APPEARS TO BE MISSING IS THAT THE AMOUNT OF PROFIT ON TRANSFER OF THE FIXED ASSET WAS NOT CARRIED FORWARD TO THE HEAD CAPITAL GAIN AS IS REQUIRED UNDER THE PROVISIONS OF SECTION 50 OF THE ACT. FURTHER, IT IS OBSERVED THAT WHILE CALCULATING THE BUSINESS INCOME IN THE COMPUTATION OF INCOME THE APPELLANT HAS SHOWN, ' LESS: ITEMS ALLOWABLE/CONSIDERED SEPARATELY' AND HAS REDUCED THE AMOUNT OF DEPRECIATION AND PROFIT ON SALE OF FIXED ASSET. SUBSEQUENTLY, IT IS NOTICED THAT THE APPELLANT HAS ALREADY ADDED THE AMOUNT OF DEPRECIATION CLAIMED IN THE P&L ACCOUNT AND THUS AFTER REDUCING IT, AGAIN THE PROFIT REMAINS UNCHANGED TO THE EXTENT OF ALLOWABLE DEPRECIATION. HOWEVER, IN THE CAS E OF THE PROFIT ON SALE OF FIXED ASSETS, IT IS NOTICED THAT THIS PROFIT HAS BEEN NOWHERE ACCOUNTED IN CALCULATING THE TAXABLE INCOME IN THE COMPUTATION OF INCOME. HENCE, IT IS CLEAR THAT THE PROFIT FOR RS.1 2,39,137/ - ON SALE OF FIXED ASSET HAS ESCAPED FROM BEING PART OF THE COMPUTATION OF THE INCOME. 7.3. IN VIEW OF THE FACTS, LAW POINTS AND ACCOUNTING OBSERVATIONS PLACED IN THE PRECEDING PARAS CLEARLY DISPLAYS THAT THE AMOUNT OF PROFIT ON SALE OF FIXED ASSET HAS ESCAPED THE INCLUSION IN THE TAXABLE INCOME OF THE APPELLANT. THE APPELLANT HAS BEEN REITERATING THAT THE EFFECT OF THE SALE OF THE FIXED ASSET HAS BEEN GIVEN IN THE BLOCK OF ASSETS BY REDUCING THE VALUE OF BLOCK OF ASSET WHICH WILL GO ON TO REDUCE THE VALUE OF DEPRECIATION, HENCE, I.T.A. NO.1121/MUM/2017 23 HE IS NOT LIABLE TO OFFER THE PROFIT ON SALE OF FIXED ASSET SEPARATELY.' ON THE OTHER HAND, THE AO HAS ADDED THIS AMOUNT AS RECEIPTS FROM THE TRADE OF THE APPELLANT. AFTER CONSIDERING ALL THE ASPECTS OF THE TRANSACTION AND THE PROVISIONS OF THE ACT, I FIND THAT THE AO AS WELL AS THE APPELLANT HAS ERRED IN TREATING THE HEAD OF THE INCOME ON SALE OF THE FIXED ASSET AND TAKING INTO ACCOUN T FOR TAXATION OF THIS INCOME, I HOLD THAT THE PROFIT ON SALE OF FIXED ASSET WHICH WAS INCLUDED IN THE BLOCK OF ASSET HAS TO BE ARRIVED AS P ER THE PROVISIONS OF THE SECTION 50 OF THE ACT AND ACCOMMODATED IN THE HEAD 'SHORT TERM CAPITAL GAIN'. ACCORDINGLY, I DIRECT THE AO TO REWORK THE PROFIT ON SALE OF THE FIXED ASSET FROM THE BLOCK OF ASSETS AS SHORT TERM CAPITAL GAINS. THE GROUNDS OF APPEAL RAISED ARE DISMISSED. 10. AGGRIEVED BY THE APPELLATE ORDER DATED 29.12.2016 PASSED BY LEARNED CIT(A), THE ASSESSEE HAS FILED AN SECOND APPEAL WITH THE TRIBUNAL. I T IS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT PROFIT ON SALE OF FIXED ASSETS WHICH FOR MED PART OF BLOCK OF ASSETS , HAS BEEN BROUGHT TO TAX BY THE AUTHORITIES BELOW BY SEPARATING FROM BLOCK OF ASSET TO WHICH SAID ASSETS BELONGED WHICH IS NOT CORRECT . I T WAS SUBMITTED THAT THESE ASSETS WHICH CONSTITUTED COMPUTER AND HIGH END COMPUTER SERVERS WITH PERIPHERALS WERE CAPITAL ASSETS OWNED BY THE ASSESSEE ON WHICH DEPRECIATION @60% WAS CLAIMED BY THE ASSESSSEE AS PROVIDED IN THE 1961 ACT AND THESE CAPITAL ASSETS FORMED PART O F B LOCK OF ASSETS . IT WAS CLAIMED THAT THESE COMPUTERS AND HIGH END COMPUTER SERVERS WITH PERIPHERALS WERE GIVEN ON HIRE IN BULK TO CLIENTS AND ON ITS RETURN FROM CLIENTS ON CONCLUSION OF THE CONTRACT PERIOD, THESE COMPUTERS AND SERVERS ARE AGAIN GIVEN ON HIRE TO OTHER CLIENTS. IT WAS SUBMITTED THAT SINCE BLOCK OF ASSETS OF WHICH THESE COMPUTERS AND HIGH END SERVERS WITH PERIPHERALS FORMED PART HAD NOT BEEN EXHAUSTED AT THE END OF THE YEAR , THE CONSIDERATION RECEIVED BY THE ASSESSEE ON SALE OF THESE FIXED ASSETS SHALL BE REDUCED FROM THE BLOCK OF ASSETS OF WHICH THEY CONSTITUTED PART OF INSTEAD OF BRINGING TO TAX EXCESS OF SALE CONSIDERATION OVER W . D . V .AT THE BEGINNING OF THE YEAR TO TAX AS SHORT TERM CAPITAL GAINS . IT WAS CLAIMED THAT LOWER DEPRECIATION WILL BE AVAILABLE TO THE ASSESSEE ON THE SAID BLOCK OF I.T.A. NO.1121/MUM/2017 24 ASSETS ONCE THE SALE PRICE OF THESE FIX ED ASSETS ARE REDUCED FORM THE B LOCK OF A SSET , WHICH IS IN TUNE WITH PROVISIONS OF THE 1961 ACT A N D WAS CORRECTLY DONE WHILE FILING RETURN OF INCOME WITH REVENUE . OUR ATTENTION WAS ALSO DRAWN TO PAPER BOOK / PAGE NO. 21 WHEREIN SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS ON 31.03.2012 IS PLACED AND IT IS SUBMITTED THAT FIXED ASSETS SOLD WERE PART OF COMPUTER AND PERIPHERALS FOR RENTAL WHICH FORMED PART OF BLOCK OF ASSETS AND FOR ACCOUNTING PURPOSES FOR MAINTAINING BOOKS OF ACCOUNTS W . D . V . OF THE FIXED ASSET SOLD OF RS. 10 , 71 , 991/ - WAS REDUCED FROM THE OPENING W . D . V . OF T HE SAID BLOCK OF A SSET TO WHICH IT BELONGED AND ACCORDINGLY DEPRECIATION WAS COMPUTED ON REMAINING BLOCK OF ASSETS FOR ACCOUNTING PURPOSES FOR MAKING ENTRIES IN BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE . OUR ATTENTION WAS ALSO DRAWN TO TAX AUDIT REPORT / A NNEXURE 2 (PAGE 15/PB) ISSUED BY CHARTERED ACCOUNTANT AND ALSO TO THE CO MPUTATION OF INCOME PREPARED WHILE WHILING RETURN OF INCOME WITH REVENIE (PAGE 2/PB) , WHEREIN FOR INCOME - TAX PURPOSES, BLOCK OF ASSET AS AT YEAR END IS COMPUTED BY REDUCING THE ENTIRE SALE PROCEEDS OF RS. 23,11,128/ - OF COMPUTER AND HIGH END COMPUTER SER VERS WITH PERIPHERALS FROM BLOCK OF ASSET TO WHICH IT PERTAINED AND DEPRECIATION IS COMPUTED @60% ON LOWER W . D . V . AS THE BLOCK OF ASSET WAS NOT YET EXHAUSTED. IT IS CLAIMED THAT WHILE FILING RETURN OF INCOME WITH REVENUE , THE ASSESSEE MADE ADJUSTMENTS T O BOOK PROFITS AS PER ACCOUNTS PREPARED BY ADDING BACK DE PRECIATION COMPUTED FOR ACCOUNTING PURPOSES AND WHILE REDUCING THE DEPRECIATION COMPUTED AS PER INCOME TAX ACT , 1961 FOR INCOME - TAX PURPOSES , TO ARRIVE AT INCOME CHARGEABLE TO TAX AS PER PROVISIONS OF THE 1961 ACT . OUR ATTENTION WAS DRAWN TO THE ORDERS OF THE AUTHORITIES BELOW AND IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT BOTH THE AUTHORITIES BELOW MISCONSTRUED THEMSELVES IN INTERPRETING PROVISIONS OF THE 1961 ACT . 10.2 THE LD. DR ON THE OTHER HAND DREW OUR ATTENTION TO THE PARA 7.2.2. AND 7.3 OF LEARNED CIT(A) APPELLATE ORDER AND IT WAS SUBMITTED I.T.A. NO.1121/MUM/2017 25 THAT CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE NEEDED VERIFI CATION FOR WHICH THIS ISSUE CAN BE RESTORED TO THE FILE OF THE AO. THE LEARNED DR PLACED RELIANCE ON THE APPELLATE ORDER PASSED BY LEARNED CIT(A). 11. WE HAVE CONSIDERED RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALINGS IN COMPUTERS AND PROVIDING REPAIRS AND MAINTENA NCE SERVICES. W E HAVE OBSERVED THAT THE ASSESSEE HAS CLAIMED THAT IT OWNED COMPUTERS AND HIGH END SERVERS ALONG WITH PERIPHERALS WHICH WERE GIVEN IN BULK TO CLIENTS ON HIRE. THE SAID ASSETS ARE CLAIMED AS AN CAPITAL ASSETS AS ARE DEFINED U/S 2(14) OF THE 1 961 ACT. AFTER CONCLUSION OF THE CONTRACT OF HIRE, THE SAID COMPUTERS AND HIGH END SERVERS ALONG WITH PERIPHERALS WERE RECEIVED BACK BY THE ASSESSEE WHICH ARE AGAIN GIVEN ON HIRE TO NEW CLIENTS . THESE COMPUTERS AND HIGH END SERVERS ALONG WITH PERIPHERALS WERE HELD AS CAPITAL ASSETS AND WERE PART OF THE BLOCK OF ASSETS ON WHICH DEPRECIATION @60% WAS CLAIMED BY THE ASSESSEE . THE COMPUTERS AND HIGH END SERVERS ALONG WITH PERIPHERALS WITH OPENING W . D . V . OF RS. 10,71,990/ - AT THE BEGINNING OF THE YEAR WERE SOL D FOR SALE CONSIDERATION OF RS. 23,11,727/ - DURING THE IMPUGNED ASSESSMENT YEAR , THEREBY GENERATING SURPLUS OF RS. 12,39,136/ - WHICH WAS CREDITED TO PROFIT AND LOSS ACCOUNTS PREPARED BY THE ASSESSEE VIDE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE , WHICH IS SUBJECT MATTER OF DISPUTE BETWEEN RIVAL PARTIES. IT IS THE CONTENTION OF THE AO THAT THE SAME IS CHARGEABLE TO INCOME - TAX AS TRADING RECEIPT AS BUSINESS PROFIT WHILE LEARNED CIT(A) WAS OF THE VIEW THAT THE SAME IS CHARGEABLE TO INCOME - TAX AS SHORT TERM CAPITAL GAINS KEEPING IN VIEW PROVISIONS OF SECTION 50 OF THE 1961 ACT. IT IS HELD BY CATENA OF JUDGMENTS AND IS SETTLED LAW NOW THAT ENTRIES IN BOOKS OF ACCOUNTS ARE NOT CONCLUSIVE IN COMPUTING INCOME CHARGEABLE TO TAX WHICH NEEDED TO BE COMPUTED AS PER R ELEVANT APPLICABLE PROVISIONS OF THE 1961 ACT . WE HAVE WITH THE ASSISTANCE OF THE LEARNED COUNSEL FOR THE ASSESSEE HAS GONE THROUGH THE AUDITED FINANCIAL STATEMENTS AS WELL TAX - AUDIT I.T.A. NO.1121/MUM/2017 26 REPORT ISSUED BY THE TAX - AUDITORS AND ALSO COMPUTATION OF INCOME PREPARE D WHILE FILING OF RETURN OF INCOME BY THE ASSESSEE . THESE DOCUMENTS ARE PLACED IN PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL. THE ASSESSEE HAS FOR ACCOUNTING PURPOSES REDUCED THE W . D . V . OF THE FIXED ASSETS SOLD FROM OPENING W . D . V . OF THE BLOCK OF A SSETS TO WHICH THESE ASSETS SOLD PERTAINED, WHILE COMPUTING CLOSING W . D . V . ON WHICH DEPRECIATION WAS COMPUTED @60% WHILE THE DIFFERENTIAL BETWEEN SALE CONSIDERATION OF THE ASSETS SOLD AND THE W.D.V. OF THE ASSETS SOLD BEING SURPLUS ON THE SALE OF FIXED ASSETS WAS TAKEN TO PROFIT AND LOSS ACCOUNT. THIS HAS LED TO HIGHER DEPRECIATION CLAIM ON THE FIXED ASSETS HELD BY THE ASSESSEE ON ACCOUNT OF LOWER W.D.V. OF ASSETS SOLD BEING ADJUSTED AGAINST THE OPENING W.D.V. OF BLOCK OF ASS ETS TO WHICH THE ASSET SOLD BELONGED . WHILE COMPUTING DEPRECIATION UNDER INCOME - TAX ACT, 1961 , THE ASSESSEE HAS REDUCED ENTIRE SALE CONSIDERATION OF THE FIXED ASSETS SOLD FROM THE OPENING W . D . V . OF THE BLOCK OF ASSETS TO WHICH THE ASSETS SOLD PERTAINED A ND THEREAFTER CLOSING W . D . V . OF THE BLOCK OF THE ASSETS IS COMPUTED ON WHICH DEPRECIATION IS COMPUTED @ 60% . WHILE FILING OF RETURN OF INCOME WITH REVENUE , THE ASSESSEE HAS ADDED BACK DEPRECIATION COMPUTED ABOVE FOR ACCOUNTING PURPOSES FOR MAINTAINING IT S BOOKS OF ACCOUNTS TO THE BOOK PROFITS AND DEDUCTED THEREOF DEPRECIATION COMPUTED ABOVE FOR INCOME - T AX PURPOSES WHILE COMPUTING INCOME CHARGEABLE TO INCOME - TAX AS PER THE 1961 ACT . THE ASSESSEE HAS CLAIMED THAT THE ENTIRE FIXED ASSETS SOLD WERE PART O F BLOCK OF ASSETS BEING COMPUTERS AND COMPUTER SERVERS ALONG WITH PERIPHERALS ON WHICH DEPRECIATION @ 60% IS ALLOWABLE AS PER PROVISIONS OF THE 1961 ACT AND THE SAID BLOCK OF ASSET WAS NOT EXHAUSTED EVEN BY THE END OF THE YEAR AND THE ASSETS REMAINED IN TH E SAID BLOCK OF ASSETS EVEN AFTER EXCLUDING THE ASSETS SOLD BY THE ASSESSEE . MOREOVER, IT IS ALSO CLAIMED THAT SALE PROCEEDS OF THE ASSETS SOLD BEING LOWER THAN W.D.V. OF THE BLOCK OF THE ASSETS TO WHICH THE ASSETS SOLD BELONGED, THERE WAS NO SURPLUS LEFT. IN OUR CONSIDERED VIEW, THE AUTHORITIES BELOW ERRED IN INVOKING PROVISIONS OF SECTION 32(1)(III) AS THE SAID PROVISION IS APPLICABLE TO ASSETS REFERRED I.T.A. NO.1121/MUM/2017 27 TO IN SECTION 32(1)(I) OF THE 1961 ACT WHICH CONCERNS ITSELF WITH TAXPAYERS ENGAGED IN GENERATION AND DISTRIBUTION OF POWER, WHILE THE ASSESSEE CASE SHALL BE COVERED BY PROVISIONS OF SECTION 32(1)(II) OF THE 1961 ACT WHICH DEALS WITH BLOCK OF ASSETS READ WITH PROV ISIONS OF SECTION 43(6)(C) OF THE 1961 ACT. THUS, IN CASE OF BLOCK OF ASSETS , THE OPENING W.D .V. OF BLOCK OF ASSET IS TO BE ADJUSTED BY INCREASE OF ACTUAL COST OF THE ASSET ACQUIRED AND REDUCTION OF THE MONEYS PAYABLE IN RESPECT OF ASSET SOLD, DISCARDED , OR DEMOLISHED OR DESTROYED DURING THE IMPUGNED ASSESSMENT AS IS REFERRED TO IN SECTION 43(6)( C) OF THE 1961 ACT . IT IS CLAIMED THAT THE BLOCK OF THE ASSETS OUT OF WHICH THE AFORESAID FIXED ASSETS WERE SOLD HAD NOT EXHAUSTED EVEN BY THE END OF THE PREVIOUS YEAR AND HENCE THE ENTIRE SALE CONSIDERATION SHALL BE REDUCED FROM THE OPENING W . D . V . OF THE SAID BLOCK OF ASSETS. IT IS ALSO CLAIMED THAT SALE CONSIDERATION RECEIVED WITH RESPECT TO ASSETS SOLD HAS ALSO NOT EXCEEDED W.D.V. OF THE BLOCK OF ASSET . AS COULD BE SEEN FROM SECTION 50 OF THE 1961 ACT , IT SHALL HAVE APPLICABILITY WHEN THE CONSI DERATION HAS EXCEEDED W.D.V. OF THE BLOCK LEAVING SURPLUS OR THE BLOCK OF ASSET WAS EXHAUSTED DURING THE IMPUGNED ASSESSMENT YEAR AND NO ASSET REMAINED IN THE SAID BLOCK OF ASSET . THE ASSESSEE HAS CLAIMED THAT IT IS NOT HIT BY ANY OF THE CONDITIONS AS ARE STIPULATED U/ S 50 OF THE 1961 ACT AND THE PROVISIONS OF SECTION 50 SHALL NOT GET TRIGGERED. ONCE THE ASSET FORMS PART OF THE BLOCK OF ASSET, THE INDIVIDUA L ASSET SHALL LOSE ITS IDENTITY. THE AUTHORITIES BELOW HAD MISDIRECTED THEMSELVES IN BRINGING TO TAX SURPLUS ON SALE OF FIXED ASSETS EITHER AS TRADING PROFITS OR AS SHORT TERM CAPITAL GAINS , KEEPING IN VIEW FACTUAL MATRIX AS IS CLAIMED BY THE ASSESSEE TO BE EXISTING . HOWEVER, A LL THE AFORESAID CONTENTIONS AND CLAIMS OF THE ASSESSEE VIS - A - VIS FACTUAL MA TRIX OF THE CASE AS ARE MADE OUT BY THE ASSESSEE BEFORE US NEEDS VERIFICATION BY THE AUTHORITIES . WE ARE OF THE CONSIDERED VIEW THAT THE MATTER NEED ED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR VERIFYING THE CLAIM AND CONTENTIONS OF THE ASS ESSEE VIS - A - VIS RECORDS AND THEN THE AO SHALL ADJUDICATE THE ISSUE IN ACCORDANCE WITH OUR AFORESAID OBSERVATIONS AFTER PROVIDING PROPER I.T.A. NO.1121/MUM/2017 28 AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE GROUND NUMBER 3 AND 4 RAISED BY THE ASSESSEE IN MEMO OF APP EAL FILED WITH TRIBUNAL ARE ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. 1 2 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE . ORDER PRONO UNCED IN THE OPEN COURT ON 1 5 .03 .2019. 1 5 .03 .2019 S D / - S D / - ( RAVISH SOOD ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 5 .03 .2019 NIS HANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI