GROWMORE LEASING & INVESTMENT LTD, MUMBAI V. DCIT CEN CIR 4(3) CEN RG 4, MUMBAI

ITA 1219/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7861 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Proportionate interest; Cost of acquisition; Condonation of delay
• Section: 143(3); 234B; 14A; 32; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1219/MUM/2017 (ASSESSMENT YEAR: 2012-13) M/S. GROWMORE LEASING & VS. DCIT, CENTRAL CIRCLE - 4 (3) INVESTMENT LTD. 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 CENTRAL RANGE - 4 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN AAACG4937D APPELLANT RESPONDENT ITA NO.418/MUM/2016 ITA NO.2736/MUM/2017 (ASSESSMENT YEARS: 2011-12 & 2012-13) MS. DEEPIKA A. MEHTA VS. ACIT, CENTRAL CIRCLE - 23 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 [NOW DCIT, CC - 4(1)] 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABNPM8231D APPELLANT RESPONDENT ITA NOS. 419 & 420/MUM/2016 (ASSESSMENT YEARS: 2010-11& 2011-12) MS. JYOTI H. MEHTA VS. DCIT, CENTRAL CIRCLE - 23 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 [NOW DCIT, CC - 4(1)] 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABNPM8233B APPELLANT RESPONDENT ITA NOS. 1728, 1729 & 1730/MUM/2015 (ASSESSMENT YEARS: 2002-03, 2003-04 & 2004-05) SHRI ASHWIN S. MEHTA VS. DCIT, CENTRAL CIRCLE - 23 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 [NOW DCIT, CC - 4(1)] 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABAPM2121M APPELLANT RESPONDENT ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 2 ITA NOS.5799, 5800 & 5801/MUM/2015 (ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12) SHRI SUDHIR S. MEHTA VS. DCIT, CENTRAL CIRCLE - 23 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 [NOW DCIT, CC - 4(1)] 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABAPM4496R APPELLANT RESPONDENT ITA NOS. 5804 & 5805/MUM/2015 (ASSESSMENT YEARS: 2010-11 & 2011-12) ITA NOS. 2600, 2601, 4570 & 4571/MUM/2017 (ASSESSMENT YEARS: 2012-13, 2013-14, 2004-05 & 200 5-06) SMT. RINA S. MEHTA VS. DCIT, CENTRAL CIRCLE - 23 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 [NOW DCIT, CC - 4(1)] 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABNPM8222C APPELLANT RESPONDENT ITA NO.5806/MUM/2015 ITA NOS.2738 & 2739/MUM/2017 (ASSESSMENT YEARS: 2011-12, 2012-13 & 2013-14) SMT. RASILA S. MEHTA VS. ACIT, CENTRAL CIRCLE - 23 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 [NOW DCIT, CC - 4(1)] 4TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN ABNPM8219R APPELLANT RESPONDENT ITA NO.4430/MUM/2017 (ASSESSMENT YEAR: 2012-13) SHRI HITESH S. MEHTA VS. ACIT, CENTRAL CIRCLE - 4(1) 32, MADHULI DR. A.B. ROAD WORLI, MUMBAI 400018 AIR INDIA BUILDING NARIMANPOINT MUMBAI 400021 PAN ABAPM4491J APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAY MEHTA & SHRI DHARMESH SHAH RESPONDENT BY: DR. P. DANIEL DATE OF HEARING: 13.11.2017 DATE OF PRONOUNCEMENT: 27.12.2017 ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 3 O R D E R PER P.K. BANSAL, VICE PRESIDENT ALL THESE APPEALS HAVE BEEN FILED THE DIFFERENT ASS ESSES AGAINST SEPARATE OF THE CIT(A) FOR DIFFERENT ASSESSMENT YEA RS. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, ALL THESE APPEAL S ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER ON THE BASIS OF THE FACTS INVOLV ED IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2014 FOR A.Y. 2 009-10 AS AGREED AND ARGUED BY BOTH THE PARTIES. 2. THE ASSESSEE, SHRI SUDHIR S. MEHTA, HAS FILED THE FOLLOWING REVISED GROUNDS OF APPEAL: - 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE ALLOWED THE DEDUCTION OF INTEREST EXPENDITURE TO TH E EXTENT OF RS.2,64,72,208/- AS FOLLOWS: SR. NO. ENTITIES OUTSTANDING AMOUNT PAYABLE INTEREST @ 12% P. A. PAYABLE 1. ASHWIN S. MEHTA 4,87,92,875 58,55,145 2. JYOTI H. MEHTA 4,43,50,467 53,22,056 3. HARSHAD S. MEHTA 13,03,84,858 1,56,46,183 TOTAL 22,35,28,200 2,68,23,384 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14 A OF THE ACT 3,51,176 TOTAL 2,64,72,208 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ESTIMATED ADDITION O N ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES AMOUNTING TO RS. 6,00,0 00/-. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT. 4. THE LD, COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME AS SESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVIS IONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF THE ACT. SUBSEQUENTLY THE ASSESSEE HAS TAKEN THE FOLLOWING A DDITIONAL GROUND: - WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. ASSESSING OFFICER AND LD. CIT(A) OUGHT TO HAVE GRANTED CAPITA LIZATION OF INTEREST ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 4 EXPENSES ATTRIBUTABLE TO SHARES AND SECURITIES WHIC H IS NOT ALLOWABLE U/S 57(III) OF THE ACT. SIMILAR ADDITIONAL GROUND WAS TAKEN BY THE ASSESSEE IN EACH OF THE CASE EXCEPT ONE MORE ADDITIONAL GROUND TAKEN IN THE CASE OF MS. JYOTI H. MEHTA AND SHRI ASHWIN S. MEHTA WHEREIN THE ASSESSEE HAS T AKEN ONE MORE ADDITIONAL GROUND. SO FAR AS THE ADDITIONAL GROUND IS CONCERNED THE LEARNED A.R. VEHEMENTLY CONTENDED THAT THE ADDITION AL GROUND TAKEN IS LEGAL GROUND AND THE FACTS ARE VERIFIED, THEREFORE THERE THIS HAS TO BE ADMITTED IN VIEW OF THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. VS. DCIT 229 ITR 383. THE LEARNED D.R., THOUGH AGITATED BUT COULD NOT CONVINCE US AS TO WHY THE GROUND TAKEN BY THE ASSESSEE IN EACH OF THE CASE CANNOT BE ADMITTED . THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT WE ADMIT THIS ADDITIONAL GROUND IN THE CASE OF EACH OF THE ASSESSEE. 3. IN RESPECT OF THE ADDITIONAL GROUND THE LEARNED A.R . CONTENDED THAT THE ASSESSEE INVESTED THE BORROWED FUNDS IN SHARES AND SECURITIES WHICH WERE HELD AS INVESTMENT. SINCE THE SHARES WERE HELD AS INVESTMENT THE INTEREST PAID ON THE BORROWINGS FOR ACQUIRING SUCH SHARES WILL FORM PART OF COST OF ACQUISITION AND HAS TO BE CAPITALISED. IT W AS ALSO POINTED OUT THAT THE INTEREST TO THAT EXTENT CANNOT BE REGARDED TO B E A DEDUCTIBLE DEDUCTION OUT OF THE INTEREST EARNED BY THE ASSESSEE ON TERM DEPOSIT. IN THIS REGARD RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - I. CIT VS. MITHLESH KUMARI 92 ITR 9 (DEL) II. CIT VS. TRISHUL INVESTMENTS LTD. 305 ITR 434 (MAD). SLP IN THIS CASE STANDS DISMISSED BY HON'BLE SUPREME COURT AT 3 06 ITR 4 (ST.) III. CIT VS. K.S. GUPTA 119 ITR 372 (AP) IV. DCIT VS. SHRI FRITZ D. SILVA ITA NO.236/MUM/2010 DA TED 08.05.2015. 4. THE LEARNED D.R., ON THE OTHER HAND, CONTENDED THAT THIS INTEREST TO THE EXTENT TO BE DISALLOWED OUT OF THE INTEREST EAR NED ON TERM DEPOSIT CANNOT FORM PART OF COST OF ACQUISITION OF SHARES A S IT REPRESENT THE MAINTENANCE COST OF INVESTMENT. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 5 5. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROU GH THE ORDERS OF THE TAX AUTHORITIES BELOW AS WELL AS THE CASE LAW R ELIED UPON BEFORE US WHICH WE HAVE GONE THROUGH, WE HOLD THAT TO THE EXT ENT THE ASSESSEE HAS NOT INCURRED LIABILITY TOWARDS INTEREST FOR EARNING OF THE INCOME TOWARDS BORROWING FOR THE PURPOSE OF MAKING INVESTMENT IN S HARES AND SECURITIES. THE INTEREST TO THAT EXTENT SHALL FORM PART OF THE COST OF ACQUISITION OF SHARES AND SECURITIES AND HAS TO BE TAKEN INTO ACCO UNT AS PART OF COST OF SHARES FOR DETERMINING THE PROFIT ON SALE OF SHARES . TO THAT EXTENT WE ALLOW THE ADDITIONAL GROUND IN EACH OF THE CASE. 6. GROUND NO. 1 RELATES TO THE INTEREST EXPENDITURE CL AIMED BY THE ASSESSEE. THE AO DISALLOWED THE SAME BECAUSE THE IN TEREST INCOME ON TERM DEPOSITS AS CLAIMED BY THE ASSESSEE, IN THE OPINION OF THE AO, WAS NOT ALLOWABLE DUE TO THE FOLLOWING REASONS: - (A) THE INTEREST PAYABLE IS TENTATIVE AND PROVISIONAL. (B) THERE IS NO BASIS AS PER WHICH THE ASSESSEE HAS A R IGHT TO PAY AND THE CREDITORS HAS A RIGHT TO RECEIVE. (C) THERE IS NO BASIS OF COMPUTATION OF INTEREST PAYABL E WHICH HAS BEEN PROVIDED BY THE ASSESSEE. (D) THE PROVISIONS MADE ON ACCOUNT OF INTEREST PAYABLE IS A CONTINGENT LIABILITY AND THEREFORE CANNOT BE ALLOWED. (E) THE BROKING FIRMS HAVE NOT CHARGED ANY INTEREST ON THE AMOUNT RECEIVABLE FROM COMPANIES OF THIS GROUP WHERE THE B OOKS OF ACCOUNTS HAVE BEEN PRODUCED BEFORE THE AO. 7. AGAINST THE SAID DISALLOWANCE THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE GROUND RELATING TO DEDUCTION OF INTEREST ON THE GROUND THAT THE ASSESSEE HAS ONLY MADE PROVISIO NS FOR INTEREST BUT NO INTEREST HAS ACTUALLY BEEN PAID TO THE CREDITORS. E VEN THE RECIPIENTS HAVE NOT OFFERED THE SAID INTEREST IN THEIR RETURNS FILE D BEFORE THE AO. THE INTEREST WAS NOT PAYABLE AS THERE IS NO AGREEMENT T O PAY THE INTEREST ON THE BORROWED FUNDS. THE CIT(A) FURTHER HELD THAT TH E ASSESSEE HAS NOT ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 6 EXPLAINED AND ESTABLISHED THE NEXUS BETWEEN THE INT EREST EXPENSES AND THE INTEREST INCOME. OTHERWISE ALSO THE ISSUE RELAT ING TO THE INTEREST HAS TO BE DECIDED BY THE SPECIAL COURT AND THERE IS NO ORD ER OF THE SPECIAL COURT DIRECTING TO PAY THE INTEREST BY THE ASSESSEE TO CR EDITORS. 8. BEFORE US THE LEARNED A.R. CONTENDED THAT THE DISAL LOWANCE OF INTEREST MADE BY THE AO IS WITHOUT APPRECIATING THE FACTS. HE, AT THE OUTSET, STATED THAT IN THE ORIGINAL GROUNDS THE FIG URES OF INTEREST WERE INCORRECT AND THEREFORE THESE SHOULD BE REPLACED WI TH THE FIGURES GIVEN IN THE REVISED GROUNDS OF APPEAL. IDENTICAL ISSUE WAS RAISED IN THE CASE OF THE ASSESSEE AND HIS FAMILY MEMBERS IN OTHER YEARS WHER EIN THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) FOR R EADJUDICATION. THE VERY FIRST ORDER SETTING ASIDE THE ISSUE TO THE FILE OF THE CI T(A) WAS PASSED IN THE CASE OF DR. HITESH S. MEHTA VIDE ORDER DATED 26.04.2013 IN ITA NOS. 7726 & 7727/MUM/2010 FOR A.Y. 2005-06 AND 2006-07 WHICH WA S FOLLOWED BY THE TRIBUNAL IN THE CASE OF SAME ASSESSEE IN ITA NO. 55 87 TO 5589/MUM/2011 FOR A.Y. 1994-05, 1995-96, 2001-02 AND 2008-09. THE CIT(A) WHILE PASSING THE ORDER IN THE CASE OF THE ASSESSEE HAS DULY CONS IDERED THE ORDER OF THE TRIBUNAL IN THE CASE OF DR. HITESH S. MEHTA DATED 1 2.06.2013. FOR THIS OUR ATTENTION WAS DRAWN TOWARDS PARA 8 OF THE ORDER OF THE CIT(A). SINCE THE ORDER OF THE CIT(A) IS AFTER CONSIDERING THE ORDER OF THE TRIBUNAL THEREFORE IT WAS VEHEMENTLY CONTENDED THAT THE PRESENT APPEAL BE DECIDES ON MERIT. THE LEARNED A.R. SUBMITTED THAT THE FINDING OF THE AO IN RESPECT OF INTEREST NOT PAYABLE IS FACTUALLY INCORRECT. THE ASSESSEE HA S ENTERED INTO ORAL AGREEMENT WITH CREDITORS BEING THREE BROKERAGE FIRM S, I.E. M/S. HARSHAD S. MEHTA, M/S. J.H. MEHTA AND M/S. ASHWIN S. MEHTA TO PAY THE INTEREST @12% PER ANNUM ON THE CREDIT BALANCE. THE FAMILY ME MBERS ARE DEALING WITH THE ABOVE THREE BROKERAGE FIRMS WITHIN THE FAM ILY ITSELF. THERE WAS NO WRITTEN AGREEMENT. BASED ON SUCH UNDERSTANDING INTE REST ON CREDIT BALANCE WAS PROVIDED BY THE ASSESSEE AS HE FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE IT IS NECESSARY FOR THE AS SESSEE TO RECKON BOTH INCOME AND EXPENDITURE. OUR ATTENTION WAS DRAWN TOW ARDS THE ASSESSMENT ORDER IN THIS REGARD THAT THE ASSESSEE WAS FOLLOWIN G MERCANTILE SYSTEM OF ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 7 ACCOUNTING. IT WAS FURTHER SUBMITTED THAT THE ASSES SEE HAS MADE SUCH CLAIMS IN THE PAST WHICH WERE DULY ALLOWED BY THE A O. IN THIS REGARD ATTENTION WAS DRAWN TOWARDS COMPUTATION OF INCOME F OR A.Y. 1990-91 AS WELL AS ASSESSMENT ORDER DATED 26.03.1993 PASSED UN DER SECTION 143(3). IN THAT YEAR ASSESSEE CLAIMED INTEREST ON MERCANTIL E BASIS, WHICH WAS ALLOWED. THE ORDER FOR A.Y. 1990-91 WAS PASSED WELL AFTER NOTIFICATION OF THE ASSESSEE ON 08.06.1992 AND EVEN WITHOUT ANY ORD ER BEING PASSED BY THE HON'BLE SPECIAL COURT. THE LEARNED A.R. ALSO RE FERRED TO THE ORDER OF THE CIT(A) DATED 26.06.2012 PASSED IN THE CASE OF M/S. GROW MORE LEASING & INVESTMENT LTD. FOR A.Y. 2007-08 AND OTHER CASES WH EREIN THE CIT(A) HAS ACCEPTED THE EXISTENCE OF AGREEMENT TO PAY INTEREST ON SUCH CREDIT BALANCES. THE LEARNED A.R. BY REFERRING TO THE ORDE R ALSO CONTENDED THAT THE CIT(A) FOLLOWING HIS OWN ORDER IN THE CASE OF M /S. EMINENT HOLDINGS PVT. LTD. FOR A.Y. 2007-08 HAD ACCEPTED THE CONTENT ION OF THE ASSESSEE AND HELD THAT A REASONABLE NEXUS CAN BE SAID TO EXIST B ETWEEN THE INTEREST INCURRED BY THE ASSESSEE AND THE INTEREST INCOME EA RNED FROM THESE ASSETS. THE LEARNED A.R. ALSO REFERRING TO THE ORDER OF THE CIT(A) DATED 29.09.2013 FOR A.Y. 2006-07 IN ASSESSEES OWN CASE SUBMITTED S IMILAR FINDINGS WERE GIVEN BY THE CIT(A) WHICH WAS NOT CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL. THE EXISTENCE OF AGREEMENT FOR PAYMENT OF INTEREST ALSO STANDS CONFIRMED BY THE FACT THAT THE INTEREST INCOME EARN ED BY THE CREDITORS HAVE BEEN OFFERED TO TAX EXCEPT BY MR. HARSHED MEHTA SIN CE HE FOLLOWED CASH SYSTEM OF ACCOUNTING. IT WAS FURTHER SUBMITTED THAT INTEREST INCOME IN THE HANDS OF RECIPIENTS WERE BROUGHT TO TAX IN ALL FAIR NESS THE INTEREST EXPENSES INCURRED BY THE ASSESSEE MUST BE ALLOWED. THE FACT THAT THE HON'BLE SPECIAL COURT HAS NOT GRANTED INTEREST PAYMENT, WIL L NOT HAVE ANY BEARING ON ALLOWABILITY OF INTEREST EXPENSES UNDER LAW SINC E THE ASSESSEE FOLLOWED MERCANTILE SYSTEM OF ACCOUNTS AND THEREFORE IN VIEW OF THE MERCANTILE SYSTEM OF ACCOUNTING INTEREST ACCRUED HAS TO BE ALL OWED. THE NOTIFICATION OF THE ASSESSEE ON 08.06.1992 HAD NO EFFECT ON THE EXI STING CONTRACTS AND OBLIGATIONS. OUR ATTENTION WAS DRAWN IN THIS REGARD TOWARDS THE DECISION OF THE HON'BLE SUPREME COURT HOLDING THAT EXISTING CON TRACTUAL RIGHTS AND OBLIGATIONS CREATED THERE UNDER DO NOT GET AFFECTED BY NOTIFICATION OF ANY ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 8 PERSON UNDER THE SPECIAL COURT ACT. REFERENCE WAS I NVITED TO SECTION 4(1) OF THE SPECIAL COURT ACT EMPOWERING THE CUSTODIAN T O MAKE ENQUIRY IF HE THINKS FIT TO CANCEL ANY AGREEMENT ENTERED INTO BET WEEN 01.04.1991 TO 06.06.1992 WITH RELATION TO ANY PROPERTY OF THE PER SON NOTIFIED PROVIDED THEY HAVE ENTERED INTO THE CONTRACT FRAUDULENTLY OR TO DEFEAT THE PROVISIONS OF THE ACT. THUS IT WAS CONTENDED THAT SECTION 4(1) CONCLUSIVELY PROVE THAT THE EXISTING CONTRACT OR AGREEMENT DO NOT GET DISTU RBED BY INVOCATION UNLESS THE CUSTODIAN APPOINTED UNDER THE SPECIAL CO URT ACT INVOKE POWER UNDER SECTION 4(1). THE CUSTODIAN IN THE IMPUGNED C ASE DURING THE PAST 25 YEARS HAS NOT CANCELLED THE AGREEMENT TO PAY INTERE ST BETWEEN THE ASSESSEE AND HIS CREDITORS. OUR ATTENTION WAS ALSO DRAWN TO THE EVIDENCE FILED BY THE CUSTODIAN IN M.P. NO. 41 OF 1999 IN WHICH THE CUSTO DIAN HIMSELF STRONGLY ADVOCATED LEVY OF INTEREST AND INFACT CALCULATED IN TEREST ON SUCH CREDIT BALANCES @15% TO 18% PER ANNUM TO DEMONSTRATE THAT THE LIABILITY OF THE FAMILY MEMBERS INCLUDING THE ASSESSEE ARE MORE THAN THE ASSETS OF THE RESPECTIVE MEMBERS. THIS PROVES THAT THE FUNDS BORR OWED BY THE ASSESSEE FROM THE BROKERAGE FIRMS WERE SUBJECT TO LEVY OF IN TEREST AS CLAIMED, EVEN AS PER THE CUSTODIAN. THUS IT WAS CONTENDED THAT SI NCE THE CONTRACT ENTERED INTO BY THE ASSESSEE TO AVAIL INTEREST BEAR ING LOANS AND ADVANCES HAS NOT AFFECTED BY THE NOTIFICATION AND THE ASSESS EE IS LIABLE TO PAY THE INTEREST. THE SAID INTEREST SHOULD BE ALLOWED AS DE DUCTION. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION OF THE HON'BL E SUPREME COURT IN THE CASE OF ASEA BROWN BOVERI LTD. VS. IFCI 154 TAXMAN 512 (SC) AND BOI FINANCE LTD. VS. CUSTODIAN AND OTHERS 10 SEC 488. 9. WITH REGARD TO THE CONTENTION OF THE AO THAT THE RE CIPIENT HAS NOT OFFERED INTEREST INCOME TO TAX IN THEIR RETURN, THE LEARNED A.R. SUBMITTED THAT THOUGH THIS ISSUE HAS NOT RELEVANT FOR THE PUR POSE OF DECIDING THE DEDUCTIBILITY OF EXPENSES BUT THE FACT IS THAT THE INTEREST PAYABLE BY THE ASSESSEE TO THE CREDITORS ASHWANI MEHTA AND JYOTI M EHTA HAS ACTUALLY BEEN OFFERED THEM IN THEIR RESPECTIVE RETURNS OF IN COME. THE LEARNED A.R. ALSO RELIED ON THE ORDER OF THE CIT(A) DATED 30.11. 2005 IN THE CASE OF SHRI ASHWIN S. MEHTA FOR A.Y. 2010-11 WHEREIN THE ISSUE RELATING TO TAXABILITY ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 9 OF INTEREST INCOME HAS SPECIFICALLY BE DISCUSSED AN D ADJUDICATED. RELIANCE WAS ALSO PLACED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S. GROWMORE LEASING & INVESTMENT LTD. VS. ACIT IN ITA NOS. 5135 & 5136/MUM/2012 DATED 03.05.2015 FOR A.Y. 2007-08 AND 2009-10 WHEREIN THIS TRIBUNAL HAS ALREADY ISSUED DIRECTIONS THAT TH E RECIPIENTS CAN BE TAXED WITH RESPECT TO THE INCOME IN CASE IF THE SAME IS N OT BROUGHT TO TAX IN THEIR ASSESSMENTS. 10. WITH REGARD TO INCOME IN THE HANDS OF LATE SHRI HAR SHAD MEHTA, THE LEARNED A.R. SUBMITTED THAT LATE SHRI HARSHAD MEHTA HAS CONSISTENTLY FOLLOWING CASH SYSTEM OF ACCOUNTING AND THEREFORE T HE TRIBUNAL IN HIS CASE FOR A.Y. 1989-90 UPHELD THIS ISSUE. INTEREST INCOME IN THE CASE OF LATE SHRI HARSHAD MEHTA SHALL BE OFFERED ONLY WHEN THE SAME I S ACTUALLY RECEIVED BY HIM. WITH REGARD TO THE OBJECTION OF THE AO THAT TH E INTEREST HAS NOT BEEN PAID BY THE ASSESSEE, THE LEARNED A.R. SUBMITTED TH AT THE INTEREST IN THE PAST HAS BEEN PAID TO THE ACCOUNT OF THE CREDITORS REFERRING TO THE INTEREST CLAIM IN 1991. HE SUBMITTED THAT SEVERAL PAYMENT HA VE BEEN MADE TO THESE CREDITORS SUBSEQUENT TO A.Y. 1990-91, THEREBY THE LIABILITY TOWARDS THE CREDITORS REGARDING PRINCIPAL AND INTEREST WAS DISCHARGED. THE PAYMENT IN THE IMPUGNED YEAR TO THE CREDITORS COULD NOT BE PAID DUE TO THE NOTIFICATION DATED 08.06.1992 AND CONSEQUENT ATTACH MENT OF ALL THE ASSETS ON WHICH NOTIFICATION HAS CASTED LEGAL RESPONSIBILI TY ON THE ASSESSEE AND AN ASSESSEE HAS LESS FREEDOM TO DISCHARGE HIS OBLIG ATION TOWARDS CREDITORS. IN TERMS OF PROVISIONS OF SPECIAL ACT THE LIABILITY TO PAY INTEREST FALLS UNDER SECTION 11(2)(C). THE LIABILITY TOWARDS INTEREST CA N BE MADE ONLY AT THE STAGE OF DISTRIBUTION TO THE CREDITORS UNDER SECTIO N 11(2) OF THE SPECIAL COURT ACT. IT WAS FURTHER SUBMITTED THAT IN PURSUAN CE TO THE DIRECTION OF THE HON'BLE SPECIAL COURT SOME PAYMENT HAS BEEN MAD E TO THE ACCOUNT OF LATE SHRI HARSHAD MEHTA DURING A.Y. 2011-12 AND FOR THIS ATTENTION WAS DRAWN TOWARD THE LEDGER ACCOUNT OF LATE SHRI HARSHA D MEHTA IN HIS BOOKS FOR A.Y. 2011-12. FOR THE OBJECTION OF THE AO THAT NO BASIS FOR CALCULATION OF INTEREST HAS BEEN SUBMITTED BY THE ASSESSEE, THE LEARNED A.R. CONTENDED THAT THIS ALLEGATION IS TOTALLY INCORRECT. THE DETA ILS WERE DULY FILED ALONG ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 10 WITH REVISED GROUND OF APPEAL AND THEREFORE THE OBS ERVATIONS OF THE AO ARE NOT JUSTIFIED. WITH REGARD TO ALLEGATION OF THE CIT (A) THAT THE NEXUS OF INTEREST INCOME WITH INTEREST EXPENSES IS NOT ESTAB LISHED THE LEARNED D.R. CONTENDED THAT THE MONIES WERE BORROWED TO MEET THE INVESTMENT IN SHARES AND SECURITIES. SUBSEQUENTLY UNDER THE DIREC TION OF THE HON'BLE SPECIAL COURT FOR OTHER YEARS PART OF THESE VERY IN VESTMENTS WERE SOLD AND THE FUND REALISED WERE INVESTED IN THE FIXED DEPOSI TS WITH SEVERAL BANKS. THUS THE INCOME GENERATED HAS BEEN BROUGHT TO TAX B Y THE AO IN THE IMPUGNED ASSESSMENT YEAR. THERE WAS IN FACT A DIREC T NEXUS BETWEEN THE MONEY BORROWED AND THE INVESTMENT MADE IN TERMS DEP OSITS. REFERENCE WAS INVITED TO THE ORDER OF THE CIT(A) DATED 31.08. 2010 PASSED IN THE CASE OF DR. HITESH S. MEHTA FOR A.Y. 2005-06 WHEREIN THI S ISSUE HAS BEEN SPECIFICALLY CONSIDERED AND HELD THAT THERE WAS NEX US BETWEEN THE CREDIT BALANCE AND THE INVESTMENT IN TERMS DEPOSITS. HE SU BMITTED THAT FOLLOWING THE SAID ORDER THE CIT(A) HAS ALSO HELD IN ASSESSEE S OWN CASE IN HIS ORDER DATED 29.09.2013 FOR A.Y. 2006-07 ACCEPTING THE NEX US BETWEEN SUCH CREDIT BALANCE AND INVESTMENT IN TERM DEPOSITS. THU S IT WAS VEHEMENTLY CONTENDED THAT THERE WAS NEXUS BETWEEN THE AMOUNT B ORROWED AND THE INVESTMENT. 11. THE LEARNED D.R., ON THE OTHER HAND, CONTENDED THAT THE ASSESSEE HAS NOT FILED THE RETURN OF A.Y. 2009-10. INCOME HA S BEEN DETERMINED BY THE AO ON THE BASIS OF THE DETAILS FILED BY THE ASS ESSEE AND THE COMPUTATION OF INCOME FILED BEFORE THE AO. HE RELIE D ON THE ORDERS OF THE AO AND CIT(A) BY MENTIONING THAT THREE FIRMS OF CHA RTERED ACCOUNTANTS APPOINTED BY THE SPECIAL COURT STATED THAT THE LOAN TAKEN BY THE DIRECTORS ARE INTEREST FREE AND THERE ARE NO TERMS AND CONDIT IONS TO PAY INTEREST TO THE CREDITORS ON INVESTMENT. HE FURTHER STRESSED TH AT NO PAYMENT HAS BEEN MADE BY THE ASSESSEE TO THE CREDITORS TOWARDS INTER EST AND THE RECIPIENTS HAS ALSO NOT OFFERED THE SAID INTEREST INCOME TO TA X. THE PAYMENT OF INTEREST HAS NOT BEEN DECIDED BY THE HON'BLE SPECIA L COURT AND NO ORDER IN THIS REGARD HAS BEEN PASSED. THEREFORE, HE VEHEMENT LY CONTENDED THAT INTEREST HAS RIGHTLY BEEN DISALLOWED BY THE AO AND SUSTAINED BY THE CIT(A). ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 11 12. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSID ERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAW AS HAS BEEN CITED BEFORE US TH E RELEVANT PROVISIONS OF THE SPECIAL COURT ACT WHICH HAS BEEN REFERRED TO BE FORE US DURING THE COURSE OF HEARING. THIS IS AN UNDISPUTED FACT WHICH WE NOTED THAT THE ASSESSEE IS A NOTIFIED PERSON FROM 08.06.1992 UNDER SECTION 3(2) OF THE SPECIAL COURT ACT. AS PER THE PROVISIONS OF THE SPE CIAL COURT ACT CONTRACT ENTERED INTO BY A NOTIFIED PERSON PRIOR TO NOTIFICA TION MADE UNDER SECTION 3(2) ARE NOT AFFECTED BY THE NOTIFICATION. SECTION 4(1) OF THE SPECIAL COURT ACT EMPOWERS THE CUSTODIAN TO CANCEL ANY CONTRACT O R AGREEMENT ENTERED INTO BETWEEN 01.04.1991 TO 06.06.1992 IF THE CUSTOD IAN FINDS THAT THESE CONTRACTS HAVE BEEN ENTERED INTO FRAUDULENTLY OR TO DEFEAT THE PROVISIONS OF THE SPECIAL COURT ACT. IN A.Y. 1990-91, THE AO IN T HE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 26.03.1993 ALLOWE D THE INTEREST EXPENSES TO THE ASSESSEE TO THE EXTENT OF ` 5,86,404/-. FROM PAGE 75 OF THE PAPER BOOK WHICH CONTAINS THE COMPUTATION OF INCOME FOR A.Y. 1990-91, WE NOTED THAT THE ASSESSEE HAS DISCLOSED THE LOAN T AKEN FOR THE PURCHASE OF INVESTMENT. THE ASSESSEE IS CONSISTENTLY FOLLOWI NG MERCANTILE SYSTEM OF ACCOUNTING WHICH IS APPARENT EVEN FROM THE ASSESSME NT ORDER OF A.Y. 1990-91 AS WELL AS FROM THE IMPUGNED ASSESSMENT YEA R. THE ORDER FOR A.Y. 1990-91 IN FACT HAS BEEN PASSED BY THE AO AFTER THE DATE OF NOTIFICATION AND THE ENACTMENT OF THE SPECIAL COURT ACT. WE HAVE GONE THROUGH THE ORDER PASSED BY THE CIT(A) IN THE CASE OF SHRI ASHW IN S. MEHTA ASSESSMENT YEARS 2010-11 AND 2011-12, WHERE WE NOTED THAT THIS ISSUE OF TAXABILITY OF INTEREST INCOME OF THE ASSESSEE AND OTHER PARTIES H AS SPECIFICALLY BEEN DEALT WITH BY THE CIT(A) AND ACCORDINGLY INTEREST I NCOME OF ` 10,68,83,732/- WAS BROUGHT TO TAX. IN VIEW OF THIS FACT IT IS APPARENT THAT THE ASSESSEE IS LIABLE TO PAY INTEREST ON THE AMOUN T OUTSTANDING. THEREFORE THE LIABILITY TOWARDS INTEREST GOT ACCRUED. UNDER T HE MERCANTILE SYSTEM OF ACCOUNTING INTEREST IS DEDUCTIBLE WHEN IT HAS ACCRU ED. THIS ALSO PROVES THAT THERE WAS AN AGREEMENT, MAY BE ORAL, TO PAY TH E INTEREST ON THE BORROWED FUNDS BY THE ASSESSEE TO THE OTHER FAMILY MEMBERS. WE, THEREFORE, REJECT THE PLEA OF THE LEARNED D.R. THAT NO LIABILITY TOWARDS ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 12 INTEREST HAS ACCRUED BUT IT WAS MERELY A CONTINGENT LIABILITY. WE NOTED THAT SECTION 4 OF THE SPECIAL COURT ACT EMPOWERS THE CUS TODIAN AND THE COURT TO CANCEL ANY CONTRACT OR AGREEMENT IN RELATION TO THE PROPERTY OF A PERSON NOTIFIED UNDER THAT ACT PROVIDED THEY HAVE ENTERED INTO FRAUDULENTLY. IN THIS CASE NO COGENT MATERIAL OR EVIDENCE HAS BEEN B ROUGHT TO OUR KNOWLEDGE OR PLACED BEFORE US WHICH MAY PROVE THAT THE CUSTODIAN UNDER SECTION 4(1) OF THE SPECIAL COURT ACT HAS TAKEN ANY ACTION TO CANCEL THE TERMS RELATING TO PAYMENT OF INTEREST. RATHER WE HA VE NOTED FROM THE AFFIDAVIT OF THE CUSTODIAN DATED 01.03.2006 IN M.P. NO. 41 OF 1999 THAT THE CUSTODIAN SEEKING TO LEVY INTEREST @ 15% TO 18% PER ANNUM. THEREFORE THE INTEREST ON OUTSTANDING CREDIT BALANCE OF THE BROKE RAGE FIRM HAS ACCRUED AS ACTUAL LIABILITY. THE ISSUE WITH REGARD TO CONTR ACT FOR PAYMENT OF INTEREST HAS BEEN RAISED BY THE AO AND THE CIT(A) IN THE CAS E OF OTHER NOTIFIED ENTITIES DULY APPROVE THE EXISTENCE OF LIABILITY. W E NOTED THAT IN THE CASE OF GROWMORE LEASING & FINANCE LTD. FOR A.Y. 2007-08 BY ORDER DATED 26.06.2014 THE CIT(A) FOLLOWED THE FINDING IN THE C ASE OF OTHER GROUP CONCERNS, I.E. EMINENT HOLDING PVT. LTD. BY OBSERVI NG AS UNDER: - 6.3 I HAVE GONE THROUGH THE SUBMISSIONS OF THE LD. AR. I FIND THAT THOUGH THERE IS NO EXPRESS DOCUMENT EVIDENCING PAYM ENT OF INTEREST TO THE BROKERAGE FIRMS, THE INTENTIONS OF THE PARTI ES WERE ALWAYS SO, THIS IS EVIDENT FROM THE FACT THAT IDENTICAL CLAIM WAS ALSO MADE DURING A.Y. 1990-91 AND THE SAME WAS ALLOWED TO THE APPELL ANT AND OTHER CONCERNS. THE CLAIM MADE IN THE AFFIDAVIT OF CUSTOD IAN IN MP NO. 41 OF 1999 ALSO SUPPORTS THIS CLAIM. I ALSO AGREE WITH TH E APPELLANT THAT THERE NEED NOT BE ANY WRITTEN AGREEMENT AND THAT TH E ORAL AGREEMENT COUPLED WITH THE ACTIONS AND INTENTIONS OF THE PART IES IS SUFFICIENT TO PROVE THE EXISTENCE OF THE LIABILITY. 13. SIMILAR ISSUE WAS INVOLVED IN THE CASE OF OTHER FAM ILY MEMBER, I.E. SHRI HITESH S. MEHTA FOR A.Y. 2005-06 WHERE ALSO TH E AO HAS DISPUTED THE VERY EXISTENCE OF LIABILITY TOWARDS INTEREST TO CRE DITORS. THE CIT(A) VIDE HIS ORDER DATED 31.08.2010 CONFIRMED AND APPROVED THE C LAIM OF THE ASSESSEE THAT THERE WAS NO NEED FOR ANY WRITTEN AGREEMENT AN D THAT THE ORAL AGREEMENT COUPLED WITH ACTION AND INTENTIONS OF THE PARTIES IS SUFFICIENT TO PROVE THE EXISTENCE OF LIABILITY. THIS ORDER OF THE CIT(A) WAS FOLLOWED BY HIM IN THE CASE OF THE ASSESSEE WHILE ADJUDICATING THE GROUND RELATING TO THE ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 13 INTEREST EXPENSES FOR A.Y. 2006-07 VIDE ORDER DATED 27.09.2013 UNDER PARA 6 WHICH HAS BEEN REPRODUCED UNDER PARA 18 OF THE OR DER OF THE ASSESSEE. THESE FINDING AND OBSERVATION IN THE ABOVE ORDERS O F THE CIT(A) HAS NOT BEEN DISPUTED BY THE REVENUE BY FILING AN APPEAL. I N VIEW OF THIS FINDING BECOMING FINAL, IN OUR VIEW, THE EXISTENCE OF LIABI LITY FOR PAYMENT OF INTEREST CANNOT BE DISPUTED. 14. COMING TO THE OBJECTION OF THE REVENUE THAT INTERES T CANNOT BE ALLOWED AS DEDUCTION HAS NOT BEEN SHOWN BY RECIPIEN TS IN THEIR INCOME. AS HAS BEEN DISCUSSED BY US IN THE PRECEDING PARAGRAPH S THE INTEREST HAS BEEN SHOWN AS INCOME BY MR. ASHWIN S. MEHTA IN ASSE SSMENT YEARS 2010- 11 AND 2011-12. WE ALSO NOTED THAT LATE SHRI HARSHA D MEHTA HAS BEEN OFFERING HIS INCOME ON CASH BASIS AND THE METHOD OF ACCOUNTING HAS BEEN DULY UPHELD BY THE TRIBUNAL IN HIS CASE FOR A.Y. 19 89-90. EVEN OTHERWISE DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE CA NNOT BE MADE MERELY BECAUSE IN THE OPINION OF THE AO THE CORRESPONDING INTEREST INCOME HAS NOT BEEN OFFERED BY THE RECIPIENTS. THE INTEREST CA N BE ALLOWED ON THE BASIS OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. W E NOTED THAT SIMILAR ISSUE WHEN AROSE IN THE CASE OF M/S. GROWMORE LEASI NG & INVESTMENT LTD. VS. CIT IN ITA NO. 51354 & 5136/MUM/2012 WHEREIN TH E COORDINATE BENCH OF THIS TRIBUNAL WHILE SETTING ASIDE THE ISSU E TO THE FILE OF THE CIT(A) DIRECTED HIM TO TAX THE INCOME IN THE HANDS OF RECI PIENT FAMILY MEMBERS IN ACCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWED B Y THEM. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED A.R. THAT SINCE TH E ASSESSEE AS WELL AS THE RECIPIENTS ARE NOTIFIED ENTITIES UNDER THE SPECIAL COURT ACT UNLESS THE COURT DIRECTS FOR DISTRIBUTION OF THE ASSETS TOWARD S EXISTING LIABILITIES UNDER SECTION 11(2) OF THE SPECIAL COURT ACT, THE ASSESSE E CANNOT MAKE THE PAYMENT TO THESE CREDITORS. EVEN OTHERWISE SINCE TH E EXISTENCE OF LIABILITY TOWARDS INTEREST HAS ACCRUED ESPECIALLY WHEN THE AS SESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING THE INTEREST IS TO BE ALLOWED. DURING THE COURSE OF HEARING WE RAISED A QUERY ABOUT THE NEXUS OF INTEREST EXPENSES WITH THE INTEREST INCOME. THE LEARNED A.R. POINTED OUT THAT THE LIABILITY IN THE PRESENT CASE WAS ACCRUED ON ACCOUNT OF PURCHASE S OF SHARES AND ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 14 SECURITIES BY THE ASSESSEE WHICH WERE SOLD IN TERMS OF THE DIRECTIONS OF THE HON'BLE SPECIAL COURT IN SUBSEQUENT YEARS AND THE S ALE PROCEEDS SO RECEIVED WERE INVESTED IN TERM DEPOSITS WITH THE BA NKS AND ACCORDINGLY THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE AGAINST T HE INTEREST EARNED ON TERM DEPOSITS. NO CONTRARY EVIDENCES OR MATERIAL WE RE BROUGHT TO OUR KNOWLEDGE TO CONTRADICT THIS FACT. IN VIEW OF THIS FACT WE FIND THAT THERE IS A NEXUS BETWEEN BORROWED FUNDS AND INVESTMENTS IN TER M DEPOSITS. THEREFORE, THE INTEREST PAID ON THE BORROWED FUNDS HAS TO BE ALLOWED OUT OF THE INTEREST EARNED BY THE ASSESSEE ON TERM DEPOSIT S. WE NOTED THAT IDENTICAL ISSUE WAS RAISED IN THE CASE OF M/S. GROW MORE LEASING & INVESTMENT LTD. IN A.Y. 2007-08. THE CIT(A) IN HIS ORDER DATED 26.02.2012 CONSIDERED THE ISSUE OF NEXUS OF INTEREST EXPENDITU RE WITH INTEREST INCOME, FOLLOWING HIS OWN FINDING IN THE CASE OF ANOTHER NO TIFIED ENTITY, I.E. EMINENT HOLDING PVT. LTD. FOR A.Y. 2007-08 WHICH ARE REPROD UCED AS UNDER: - 'AS REGARDS THE NEXUS OF THE INTEREST EXPENDITURE W ITH THE INTEREST INCOME, I FIND THAT THE BALANCE SHEET OF THE APPELL ANT AND THE AFFIDAVIT FILED BY THE CUSTODIAN BEFORE THE HON'BLE SPECIAL COURT SUPPORTS THE FACT THAT THE FUNDS BORROWED FROM SHRI HARSHAD S. MEHTA WERE DEPLOYED BY THE APPELLANT IN VARIOUS ASS ETS LIKE SHARES AND SECURITIES, PROPERTIES, ETC. THESE FUNDS GENERA TED INCOME IN THE FORM OF DIVIDEND AND INTEREST INCOME. AFTER BEING N OTIFIED, SUCH SHARES AND SECURITIES GOT CONVERTED INTO FIXED DEPOSITS WI TH VARIOUS BANKS. THESE FIXED DEPOSITS GENERATED INTEREST INCOME WHIC H IS OFFERED TO TAX. HENCE, A REASONABLE NEXUS CAN BE SAID TO EXIST BETW EEN THE INTEREST LIABILITY INCURRED BY THE APPELLANT, AND THE INTERE ST INCOME EARNED FROM THESE ASSETS. HOWEVER, THIS MATTER BEING SUB-J UDICE BEFORE THE HON'BLE SPECIAL COURT, NO FINDING CAN BE GIVEN ON T HESE MATTERS.' 15. SIMILAR ISSUE HAS ARISEN IN THE CASE OF SHRI HITESH S. MEHTA FOR A.Y. 2005-06 WHEREIN THE CIT(A) VIDE HIS ORDER DATED 31. 08.2010 APPROVED THE NEXUS BETWEEN BORROWED FUNDS AND THE INVESTMENT IN TERM DEPOSIT WHICH HAS BEEN FOLLOWED BY THE CIT(A) EVEN IN THE CASE OF THE ASSESSEE FOR A.Y. 2006-07 DATED 27.09.2013. WE DO NOT AGREE WITH THE SUBMISSION OF THE LEARNED D.R. THAT INTEREST EXPENSES CANNOT BE ALLOW ED TILL THE HON'BLE SPECIAL COURT DECIDE THE ISSUE. THE ALLOWANCE OR DI SALLOWANCE OF THE EXPENDITURE DEPENDS ON THE ACCRUAL OF EXPENDITURE. EVEN NO DISPUTE HAS BEEN RAISED IN RESPECT OF INTEREST ON SUCH CREDIT B ALANCES BEFORE THE ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 15 SPECIAL COURT. EVEN ON THIS BASIS, FOLLOWING THE PR INCIPLE OF CONSISTENCY, AS THE INTEREST HAS BEEN ALLOWED AS DEDUCTION IN THE A .Y. 2006-07 AND THERE IS NO CHANGE IN THE FACTS, THE DEDUCTION IN RESPECT OF THE INTEREST EXPENDITURE HAS TO BE ALLOWED. OUR AFORESAID VIEW IS SUPPORTED BY THE FOLLOWING DECISIONS: THE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG SAOMI BAGH VS. CIT 193 ITR 321 REFERRED TO THE FOLLOWING PASSA GE FROM HOYSTEAD V COMMISSIONER OF TAXATION 1926 AC 155 (PC), WHEREIN IT WAS OBSERVED (PAGE 328): PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO N BECAUSE OF NEW VIEW THEY MAY ENTERTAIN OF THE LAW OF THE CASE, OR NEW V ERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHER OF THE CONSTRUCTION OF THE DOCU MENTS OR THE WEIGHT OF CERTAIN CIRCUMSTANCES. IF THIS WERE PERMITTED, LITI GATION WOULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT I S A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIRDLY, THE SAME PRINCIPLE, NAMELY , THAT OF SETTING TO REST RIGHTS OF LITIGANTS, APPLIES TO THE CASE WHERE A PO INT, FUNDAMENTAL TO THE DECISION, TAKEN OR ASSUMED BY THE PLAINTIFF AND TRA VERSABLE BY THE DEFENDANT, HAS NOT BEEN TRAVERSED. IN THAT CASE ALS O A DEFENDANT IS BOUND BY THE JUDGEMENT, ALTHOUGH IT MAY BE TRUE ENO UGH THAT SUBSEQUENT LIGHT OR INGENUITY MIGHT SUGGEST SOME TR AVERSE WHICH HAD NOT BEEN TAKEN. AT PG 329 OF THE JUDGEMENT, THEIR LORDSHIPS OBSERVE D AS UNDER: WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RE S JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH ASSESS MENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THOUGH TH E DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 16 THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO AL LOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 19. ON THESE REASONINGS IN THE ABSENCE OF ANY MATER IAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER AND IF THERE WAS NOT CHANGE IT WAS IN SUPPORT OF THE ASSESSES WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CONTRARY TO WHAT HAD BEEN DECIDED BY THE COMMISSION OF INCOME-TAX IN THE EARL IER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THAT THESE APPEALS SHOULD BE ALLOWED AND THE QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE NAME LY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME D ERIVED BY THE RADHASOAMI SATSANG WAS ENTITLED TO EXEMPTION UNDER SECTIONS 11 AND 12 OF THE INCOME TAX ACT OF 1961. THE AFORESAID DICTUM OF LAW WAS REITERATED RECENTLY BY THE SUPREME COURT IN CIT VS. EXCEL INDUSTRIES LTD. : 358 ITR 295. IT APPEARS FROM THE RECORD THAT IN SEVERAL ASSESSM ENT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOU R OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RE SPECT OF SOME ASSESSMENT YEARS THE MATTER WAS TAKEN UP IN APPEAL BEFORE THE BOMBAY HIGH COURT BUT WITHOUT ANY SUCCESS. THAT BEI NG SO, THE REVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER SPEND THE TAX PAYERS MONEY IN PU RSUING LITIGATION FOR THE SAKE OF IT. 16. IN VIEW OF OUR AFORESAID DISCUSSION WE SET ASIDE TH E ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW DEDUCTION IN RESP ECT OF SAID INTEREST ACCRUED AND CALCULATED AT 12% PER ANNUM AMOUNTING T O ` 2,64,72,208/- AFTER DISALLOWING PROPORTIONATE INTEREST IN RESPECT OF THE INVESTMENT IN ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 17 SHARES AMOUNTING TO ` 3,51,176/- AFTER VERIFYING THE CALCULATION OF THE INTEREST QUANTIFICATION. 17. NOW COMING TO THE ADDITIONAL GROUND RAISED WITH RES PECT TO CAPITALIZATION OF INTEREST WE ARE OF THE VIEW THAT TO THE EXTENT THE INTEREST RELATE TO THE INVESTMENT, I.E. BEING DISALLOWABLE U NDER SECTION 57 WILL BECOME PART OF COST OF ACQUISITION OF SHARES AND TH EREFORE THE AO IS DIRECTED TO TAKE IT AS PART OF THE COST OF SHARES F OR DETERMINING PROFIT ON SALE OF THE SHARES. THUS, THE ADDITIONAL GROUND STA NDS ALLOWED TO THAT EXTENT. 18. GROUND NO. 2 RELATES TO SUSTENANCE OF THE ADDITION ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES BY THE CIT(A) TO THE EX TENT OF ` 6,00,000/-. THE FACTS RELATING TO THIS ISSUE ARE THAT THE AO MA DE AN ADDITION ON ESTIMATE BASIS ON ACCOUNT OF THE PERSONAL HOUSEHOLD EXPENSES AT ` 12,00,000/- BY APPLYING PROVISIONS OF SECTION 69C. WHEN THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), THE CIT(A), FOLLO WING HIS OWN ORDER IN THE CASE OF OTHER FAMILY MEMBERS, VIZ. SMT. DEEPIKA A. MEHTA AND SMT. RASILA S. MEHTA FOR A.Y. 2006-07 REDUCED THE DISALLOWANCE BY 50% THUS SUSTAINING THE ADDITION TO THE EXTENT OF ` 6,00,000/-. 19. WE HAVE GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI ASHWIN S. MEHTA FOR A.Y. 2006-07 IN ITA NO. 6596/MU M/2013 AND FOR A.Y. 2007-08 IN ITA NO. 6597/MUM/2013 DATED 18.04.2 016 AND ALSO IN THE CASE OF MS. DEEPIKA A. MEHTA FOR A.Y. 2006-07 I N ITA NO. 5487/MUM/2011 AND OTHERS DATED 31.05.2006, WE NOTED THAT THE TRIBUNAL FURTHER REDUCED THE ADDITION SUSTAINED BY THE CIT(A) BY 50% BY OBSERVING AS UNDER: - '19: BEFORE US, THE LD. COUNSEL SUBMITTED THAT, APP ELLANT IS LIVING IN JOINT FAMILY SET-UP AND MOST OF THE EXPENSES HAVE BEEN IN CURRED BY OTHER FAMILY MEMBERS. HE SUBMITTED THAT, PROFESSIONAL FEE S TO THE CONSULTANTS AND OTHER EXPENDITURES HAVE BEEN MAINLY INCURRED BY DR. HITESH S. MEHTA. LOOKING TO THE OVERALL WITHDRAWALS BY THE FA MILY MEMBERS, THE ADDITION MADE AND SUSTAINED IS FAR TOO HIGH AND EXC ESSIVE. HE FURTHER REFERRED TO THE DETAILS OF EXPENDITURE ON ACCOUNT O F PERSONAL AND ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 18 HOUSEHOLD EXPENSES INCURRED AND ADDED IN THE HANDS OF THE FOLLOWING MEMBERS OF THE FAMILY, WHICH ARE AS UNDER:- SR. NO. NAME A.Y. 20O6-07 A.Y. 2007-O8 ADDITIONS BY AO (RS.) CONFIRMED BY CIT(A) (RS.) ADDITIONS BY AO (RS.) CONFIRMED BY CIT(A) (RS.) 1. ASHWIN S. MEHTA (APPELLANT) 12,00,0000 6,00,000 12,00,000 6,00,000 2. JYOTI H. MEHTA 18,00,000 9,00,000 18,00,000 9,00,000 3. RASILA S. MEHTA 6,00,000 3,00,000 6,00,000 3,00,000 4. DEEPIKA A. MEHTA 6,00,000 3,00,000 6,00,000 3,00,000 5. SUDHIR S. MEHTA - - 12,00,000 12,00,000 6. SMT. RINA S. MEHTA - 6,00,000 6,00,000 TOTAL 42,00,000 21,00,000 60,00,000 39,00,000 20: ON THE OTHER HAND, LD. SPECIAL COUNSEL SUBMITTE D THAT THE APPELLANT IS MAINTAINING MOTOR CAR AND LIVE IN POSH AREA OF M UMBAI, AND NO DETAILS OF HOUSEHOLD EXPENSES HAS BEEN GIVEN BY THE APPELLA NT. IN SUCH A CASE, ADDITION SUSTAINED BY THE CIT(A) APPEARS TO BE FAR MORE REASONABLE. 21: AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE RELEVANT FINDING IN THE IMPUGNED ORDER, WE FIND THAT THE ADD ITION MADE BY THE AO AS WELL AS SUSTAINED BY THE CIT(A) ARE THOUGH ON AD -HOC BASIS, BUT SAME WAS DONE BECAUSE NO DETAILS OF EXPENDITURES WAS FIL ED BY THE APPELLANT. BEFORE US, THE LD. COUNSEL HAS SUBMITTED THAT, MOST OF THE EXPENSES HAVE BEEN INCURRED BY DR. HITESH S. MEHTA AND OTHER FAMI LY MEMBERS LIVING IN A JOINT FAMILY SET-UP. FURTHER OTHER MEMBERS HAVE C ONTRIBUTED FOR HOUSEHOLD EXPENSES AND THAT SOME OF THE ADDITIONS H AVE BEEN CONFIRMED ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES BY THE DE PARTMENT. ON THESE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO SCALE D OWN THE ADDITIONS TO RS.3 LAKHS. ACCORDINGLY, ADDITION SUSTAINED ON ACCO UNT OF PERSONAL HOUSEHOLD EXPENSES WOULD BE RS.3 LAKHS. ACCORDINGLY , THE GROUND NO.5 OF THE APPELLANT IS PARTLY ALLOWED.' RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUN AL WE REDUCE THE DISALLOWANCE SUSTAINED BY THE CIT(A) BY 50%, I.E. ` 3,00,000/-. THUS, GROUND NO. 2 IS PARTLY ALLOWED. 20. GROUND NOS. 3 & 4 RELATE TO LEVY OR INTEREST UNDER SECTION 234A, 234B AND 234C AS WELL AS CALCULATION OF THE SAID IN TEREST. WE FIND THAT THE SAID ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN THE CASE OF EMINENT HOLDING P. LTD. IN ITA NO. 2139/MUM/2013 FO R A.Y. 2002-03 IN WHICH THIS TRIBUNAL WHILE DEALING WITH THE SAID ISS UE HELD AS UNDER: - ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 19 3.NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT. BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFI ED ENTITY THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WER E DEEMED TO HAVE COMPLIED WITH, THAT THE ASSETS WERE ALREADY IN ATTA CHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPE CIAL COURTS ACT, THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAVOUR OF THE APPELLA NT, THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PV T. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVIS IONS OF SECTIONS 234A,234B AND 234C OF THE ACT WERE MANDATORY AND WE RE APPLICABLE TO THE NOTIFIED ENTITIES ALSO, THAT THE ASSESSEE WA S IN THE-PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HON'BLE SUPREME COURT, THAT THE INCOME EARNED IN THE YEAR UNDER CON SIDERATION WAS SUBJECTED TO PROVISIONS OF TDS, THAT THE CHANGEABIL ITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AFTER CONS IDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME AS SESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DE CISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL.) (SB)], SEDCO FORES DRILLING CO. LTD. [264 ITR 320], NGC NETWORK ASIA LLC [313 ITR 187], SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(S B)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/2009] & EMILLO RUIZ BERDEJ O [320 ITR 190 (BOM)]. DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF DEVINE HOLDI NGS PVT. LTD. HON'BLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSO N ALSO. THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT, WE H OLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE. AS FAR AS CALCULATION PART IS CONCERNED, WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE. THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE F ILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASS ESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE. GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUN AL IN THE CASE OF EMINENT HOLDING P. LTD. (SUPRA) WE DIRECT THE AO TO RECOMPU TED THE INTEREST LIABILITY AFTER REDUCING THE AMOUNT OF TAX DEDUCTIBLE AT SOUR CE ON THE INCOME EARNED. THUS, GROUND NO. 3 STAND DISMISSED WHILE GR OUND NO. 4 STAND PARTLY ALLOWED. 21. THUS, THE APPEALS FILED BY THE ASSESSEE FOR ASSESSM ENT YEARS 2009- 10, 2010-11 AND 2011-12 ARE PARTLY ALLOWED. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 20 SHRI HITESH S. MEHTA ITA NO. 4430/MUM/2017 22. SINCE THE FIRST GROUND RELATING TO TAXING OF THE IN COME IN THE HANDS OF LATE SHRI HARSHAD S. MEHTA IS NOT PRESSED BY THE ASSESSEE, THE SAME IS DISMISSED AS NOT PRESSED. 23. GROUND NO. 2 IS SIMILAR TO THE GROUND NO. 1 IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015. AS AGREED BY BOTH THE PARTIES THAT WHATEVER VIEW MAY BE TAKEN IN THE CASE OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015, THE SAME VIEW MAY BE TAKEN I N THE CASE OF THE ASSESSEE. WE, THEREFORE, RESPECTFULLY FOLLOWING OUR FINDING GIVEN WHILE DISPOSING OF GROUND NO. 1 IN THE CASE OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW DEDUCTION TO THE UNDER SECTION 57 IN RESPECT OF INTEREST ACCRUED @12% AMOUNTING TO ` 1,10,86,8343/- OUT OF THE INTEREST EARNED ON TERM DEPOSIT AFTER VERIFYING THE CALCULATION OF THE INTE REST QUANTIFICATION. 24. THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE RELATES TO THE DISALLOWANCE OF PROPORTIONATE INTEREST AMOUNTING TO ` 2,56,194/- WHICH HAS BEEN CLAIMED BY THE ASSESSEE TO BE CAPITALISED TOWA RDS THE COST OF SHARES AND SECURITIES. AS BOTH THE PARTIES AGREED THAT SIM ILAR ISSUE HAS ARISING IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MU M/2015 FOR A.Y. 2009-10 AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CASE OF SHRI SUDHIR S. MEHTA THE SAME VIEW MAY BE TAKEN IN THE C ASE OF THE ASSESSEE ALSO. WE THEREFORE RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF SHRI SUDHIR S. MEHTA DIRECT THE AO TO T AKE THE SUM OF ` 2,56,194/- AS PART OF INTEREST CAPITALISED TOWARDS THE COST OF SHARES AND SECURITIES. THUS THIS GROUND STANDS ALLOWED. 25. GROUND NOS. 3 & 4 RELATE TO THE LEVY AND COMPUTATIO N OF INTEREST UNDER SECTION 234A, 234B AND 234C. AS AGREED BY BOT H THE PARTIES THAT SIMILAR GROUND HAS ARISEN IN THE CASE OF SHRI SUDHI R S. MEHTA IN ITA NO. 5799/MUM/2015 FOR A.Y. 2009-10. THEREFORE THE TRIBU NAL MAY TAKE THE SAME VIEW IN THE CASE OF THE ASSESSEE ALSO. WE ,THE REFORE, RESPECTFULLY FOLLOWING OUR ORDER IN THE PRECEDING PARAGRAPH IN I TA NO. 5799/MUM/ ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 21 2015 DISMISS GROUND NO. 3 AND DIRECT THE AO TO RECO MPUTED THE INTEREST IN ACCORDANCE WITH OUR DIRECTION GIVEN IN THE CASE OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 WHILE DISPOSING OFF GROUND NO. 4. THUS GROUND NO. 4 IS STATISTICALLY ALLOWED. 26. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. SMT. RASILA S. MEHTA ITA NOS. 5806/MUM/2015 & ITA 2378 & 2379/MUM/2017 27. IN THIS CASE ALSO THE ASSESSEE HAS TAKEN ADDITIONAL GROUND AS HAS BEEN TAKEN IN THE CASE OF SHRI SUDHIR S. MEHTA IN I TA NO. 5799/MUM/2015. IN VIEW OF THE DISCUSSION IN THE CAS E OF SHRI SUDHIR S. MEHTA THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE S TANDS ADMITTED. 28. IN A.Y. 2011-12 ASSESSEE HAS TAKEN IDENTICAL GROUND S AS TAKEN IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MU M/2015. IN ASSESSMENT YEARS 2012-13 AND 2013-14 THE ASSESSEE H AS TAKEN ONLY GROUND NOS. 1 3 & 4 WHICH WERE RENUMBERED AS GROUND NOS. 1, 2 & 3 EXCEPT CHANGE IN FIGURE IN GROUND NO. 1. IN GROUND NO. 1 ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST AT ` 1,29,51,465/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST AT ` 12,25,871/- FOR A.Y. 2012-13 AND IN A.Y. 2013- 14 THE ASSESSEE HAS CLAIMED INTEREST OF ` 1,35,62,185/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 6,15,151/- IN PLACE OF ` 1,08,72,373/- AFTER DISALLOWANCE OF PROPORTIONATE INTEREST OF ` 33,04,963 IN A.Y. 2011.12. BOTH THE PARTIES AGREED THAT AS THE FACTS AND CLAIM OF I NTEREST IS SIMILAR TO GROUND NO. 1 IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015, THE SAME VIEW MAY BE TAKEN IN THE CA SE OF THE ASSESSEE. WHILE DISPOSING OF GROUND NO. 1 RELATING TO CLAIM O F INTEREST OF ASSESSEE IN THE CASE OF SHRI SUDHIR S. MEHTA WE HAVE ALLOWED TH E CLAIM OF INTEREST AGAINST INTEREST ON TERM DEPOSIT AND CONFIRMED PROP ORTIONATE DISALLOWANCE OF INTEREST. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF SHRI SUDHIR S. MEHTA IN IT A NO. 5799/MUM/2015 SET ASIDE THE ORDER OF THE CIT(A) AND ALLOWED DEDUC TION OF INTEREST AS ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 22 CLAIMED BY THE ASSESSEE OUT OF THE INTEREST ON TER M DEPOSIT AFTER DISALLOWING THE PROPORTIONATE INTEREST DISALLOWED T O BE TREATED AS COST OF ACQUISITION OF SHARES AND SECURITIES. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN THE PRECEDING PARAGRAPH S, WE ALLOW THE DEDUCTION OF INTEREST EXPENDITURE AS CLAIMED BY THE ASSESSEE OUT OF THE INTEREST ON TERM DEPOSIT AFTER VERIFICATION OF THE CALCULATION OF INTEREST QUANTIFICATION. WE FURTHER DIRECT THE AO TO ALLOW C APITALISATION OF INTEREST WHICH HAS BEEN PROPORTIONATELY DISALLOWED IN VIEW O F THE ADDITIONAL GROUND. THUS GROUND NO. 1 AND ADDITIONAL GROUND ARE ALLOWED. 29. GROUND NO. 2 TAKEN IN A.Y. 2011-12 WHICH RELATE TO DISALLOWANCE OF INTEREST UNDER SECTION 14A, IN OUR OPINION BECAME I NFRUCTUOUS AFTER TAKING ADDITIONAL GROUND BY THE ASSESSEE AND CLAIMING THE CAPITALIZATION OF INTEREST WHICH HAS BEEN DISALLOWED. WE HAVE ALREADY ALLOWED CAPITALISATION OF SUCH INTEREST WHILE DISPOSING OF GROUND NO., 1 A ND ADDITIONAL GROUND IN THE PRECEDING PARAGRAPH. THUS, THIS GROUND STAND DI SMISSED AS SUCH. 30. SINCE GROUND NOS. 3 & 4 IN A.Y. 2011-12 AND GROUND NOS. 2 & 3 IN A.Y. 2012-13 AND 2013-14 RELATING TO LEVY AND CALCU LATION OF INTEREST UNDER SECTION 234A, 2343B AND 234C ARE SIMILAR TO G ROUND NOS. 3 & 4 GROUND TAKEN IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 FOR A.Y. 2009-10, BOTH THE PARTIES AG REED THAT THE TRIBUNAL MAY TAKE THE SAME VIEW IN THE CASE OF THE ASSESSEE ALSO. WE ,THEREFORE, RESPECTFULLY FOLLOWING OUR ORDER IN THE PRECEDING PARAGRAPH IN ITA NO. 5799/MUM/ 2015 DISMISS GROUND NO. 3 IN A.Y. 2011-12 AND GROUND NO. 2 IN A.Y. 2012-13 AND 2013-14 AND DIRECT THE AO TO RECOMPUTE THE INTEREST IN ACCORDANCE WITH OUR DIRECTION GIVEN IN THE CASE OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 WHILE DISPOSING OFF GROUND NO. 4. THUS GROUND NO. 4 IN A.Y. 2011-12 AND GROUND NO. 3 IN A. Y. 2012-13 AND 2013- 14 ARE STATISTICALLY ALLOWED. 31. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTLY A LLOWED FOR STATISTICAL PURPOSES. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 23 SMT. RAINA S. MEHTA ITA NOS. 5804 & 5805/MUM/2015 & ITA NOS. 2600, 2601, 4570 & 4571/MUM/2017 32. BOTH THE PARTIES AGREED THAT THE ISSUE INVOLVED IN ALL THESE APPEALS ARE COMMON. IN A.Y. 2004-05 AND 2005-06 THERE ARE T WO MORE GROUNDS RELATING TO THE INCOME TO BE TAXED IN THE HANDS OF LATE SHRI HARSHED MEHTA AND NOT GRANTING OF CREDIT OF TDS BEING GROUND NOS. 1 & 3. SINCE THESE GROUNDS WERE NOT PRESSED THROUGH IN BOTH THE APPEAL S, THEY ARE DISMISSED AS NOT PRESSED. 33. NOW, THEREFORE, IN ALL THE YEARS EXPECT CHANGE IN F IGURES IN THE GROUND RELATING TO DISALLOWANCE OF INTEREST EXPENDI TURE THERE SURVIVE ONLY THREE GROUNDS AS PER THE REVISED GROUNDS OF APPEAL FOR OUR ADJUDICATION. AS AGREED BY BOTH THE PARTIES THAT ALL THESE APPEALS B E DECIDED ON THE BASIS OF THE FACTS RELATING TO A.Y. 2004-05, WE THEREFORE RE PRODUCE THE SURVIVING GROUNDS FOR A.Y. 2004-05 AS UNDER: - 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE ALLOWED THE DEDUCTION OF INTEREST EXPENDITURE TO TH E EXTENT OF RS.32,72,218/- AS FOLLOWS: SR. NO. ENTITIES OUTSTANDING AMOUNT PAYABLE INTEREST @ 12% P. A. PAYABLE 1. ASHWIN S. MEHTA 5,62,86,358 67,54,363 2. HARSHAD S. MEHTA 6,68,35,833 80,20,300 TOTAL 12,31,22,192 1,47,74,663 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14 A OF THE ACT 1,15,02,445 TOTAL 32,72,218 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT. 5. THE LD, COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME AS SESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVIS IONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF THE ACT. SIMILAR GROUNDS HAVE BEEN TAKEN RELATING TO THE ISS UE ABOUT THE CLAIM OF INTEREST EXPENDITURE AND LEVY AND CALCULATION OF IN TEREST UNDER SECTION 234B AND 234C IN ASSESSMENT YEARS 2005-06, 2010-11, 2011-12, 2012-13 ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 24 & 2013-14 EXCEPT CHANGE IN FIGURES IN GROUND RELATI NG TO CLAIM OF INTEREST. IN A.Y. 2005-06, 2010-11, 2011-12, 2012-13 AND 2013 -14, THE CLAIM OF INTEREST BE READ AS ` 1,06,22,235/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 41,52,428/-, ` 80,62,066/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 67,08,896/-, ` 29,18,359/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 1,85,52,603/-, ` 10,23,246/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 1,37,51,413/- AND ` 1,12,,80,362/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 34,94,301/- RESPECTIVELY. BOTH THE PARTIES AGREED THAT THIS ISSUE IS SIMILAR TO THE CLAIM OF I NTEREST ARISING IN GROUND NO. 1 IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO . 4799/MUM/2015 AND WHATEVER VIEW THE TRIBUNAL MAY TAKE IN THAT CASE TH E SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSESSEE ALSO. WE, WHILE D ISPOSING OF THE SAID ISSUE IN THE CASE OF SHRI SUDHIR MEHTA HAS DELETED THE SA ID DISALLOWANCE. WE, THEREFORE RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TRIBUNAL IN THE PRECEDING PARAGRAPH ALLOW THE DEDUCTION OF INTEREST AFTER DISALLOWANCE OF PROPORTIONATE INTEREST IN EACH OF THE ASSESSMENT YE AR AFTER VERIFYING THE CALCULATION OF INTEREST QUANTIFICATION. 34. THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE RELATES TO THE DISALLOWANCE OF PROPORTIONATE INTEREST WHICH HAS BE EN CLAIMED BY THE ASSESSEE TO BE CAPITALISED TOWARDS THE COST OF SHAR ES AND SECURITIES. AS BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS ARIS EN IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 FOR A.Y. 2 009-10 AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CASE OF SHRI SUDHIR S. MEHTA THE SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSES SEE ALSO. WE THEREFORE RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRI BUNAL IN THE CASE OF SHRI SUDHIR S. MEHTA DIRECT THE AO TO TREAT THE PROPORTI ONATE INTEREST DISALLOWED IN EACH ASSESSMENT YEAR TO BE PART OF CO ST OF ACQUISITION OF SHARES AND SECURITIES. THUS THE ADDITIONAL GROUND I N EACH OF THE ASSESSMENT YEAR STAND ALLOWED. 35. THE REST OF THE TWO GROUNDS IN EACH OF THE ASSESSME NT YEAR RELATE TO LEVY AND CALCULATION OF INTEREST UNDER SECTION 234A , 234B AND 234C. AS AGREED BY BOTH THE PARTIES THAT SIMILAR GROUND HAS ARISEN IN THE CASE OF ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 25 SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 FOR A .Y. 2009-10. THEREFORE THE TRIBUNAL MAY TAKE THE SAME VIEW IN TH E CASE OF THE ASSESSEE ALSO. WE, THEREFORE, RESPECTFULLY FOLLOWING OUR ORD ER IN THE PRECEDING PARAGRAPH IN ITA NO. 5799/MUM/ 2015 DISMISS GROUND RELATING TO LEVY OF INTEREST AND DIRECT THE AO TO RECOMPUTE THE INTERES T IN ACCORDANCE WITH OUR DIRECTION GIVEN IN THE CASE OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 WHILE DISPOSING OFF GROUND RELATING T O CALCULATION OF INTEREST IS CONCERNED. THUS THIS GROUND IN EACH OF THE ASSESSMENT YEAR IS STATISTICALLY ALLOWED. 36. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. SMT. DEEPIKA A. MEHTA ITA NOS. 418/MUM/2016 & ITA NO. 2736/MUM/2017 37. IN THESE CASES IN A.Y. 2011-12 THE ASSESSEE HAS TAK EN AS MANY AS FIVE GROUNDS OF APPEAL. GROUND NO. 1 SINCE NOT PRES SED STANDS DISMISSED AS NOT PRESSED THEREBY SURVIVING THE FOLLOWING GROU NDS: - 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE ALLOWED THE DEDUCTION OF INTEREST EXPENDITURE TO TH E EXTENT OF RS.1,35,81,461/- AS FOLLOWS: SR. NO. ENTITIES OUTSTANDING AMOUNT PAYABLE INTEREST @ 12% P. A. PAYABLE 1. ASHWIN S. MEHTA 99,17,408 11,90,089 2. JYOTI H. MEHTA 1,03,77,667 12,45,320 3. HARSHAD S. MEHTA 9,47,79,200 1,13,73,504 TOTAL 11,50,74,275 1,38,08,913 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14 A OF THE ACT 2,27,452 TOTAL 1,35,81,461 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE U/S. 14 A OF THE ACT. 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 26 5. THE LD, COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME AS SESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVIS IONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF THE ACT. EXCEPT THE GROUND RELATING TO SUSTENANCE OF DISALLO WANCE UNDER SECTION 14A, GROUND RELATING TO THE CLAIM OF INTEREST EXPEN DITURE IS SIMILAR TO GROUND NO. 4 IN Y 2011-12 EXCEPT CHANGE IN FIGURE. IN A.Y. 2012-13 THE CLAIM OF THE ASSESSEE FOR INTEREST IS ` 4,15,511/- AFTER PROPORTIONATE DISALLOWANCE OF ` 2,06,778/-. BOTH THE PARTIES AGREED THAT BOTH THE A PPEALS BE DECIDED ON THE BASIS OF THE FACTS RELATING TO A. Y. 2011-12. IN BOTH THE ASSESSMENT YEARS THE ASSESSEE HAS ALSO TAKEN THE AD DITIONAL GROUND RELATING TO CAPITALIZATION OF INTEREST. AS THE ADD ITIONAL GROUND HAS BEEN ADMITTED IN ALL THE OTHER CASES, THEREFORE THE SAID GROUND STAND ADMITTED IN BOTH THE YEARS. 38. SO FAR AS THE GROUND RELATING TO THE CLAIM OF INTE REST AFTER DISALLOWING PROPORTIONATE INTEREST IS CONCERNED IN BOTH THE ASSESSMENT YEARS, BOTH THE PARTIES AGREED THAT SIMILAR ISSUE H AS ARISING IN GROUND 1 IN ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CASE OF SHRI SUDHIR S. MEHTA SAME MAY BE TAKEN IN THE CASE OF THE ASSESSEE. WHIL E DISPOSING OF THE APPEAL FOR A.Y. 2009-10 ITA NO. 5799/MUM/2015 IN TH E CASE OF SHRI SUDHIR S. MEHTA RELATING TO DISALLOWANCE OF INTERE ST WE HAVE DELETED THE SAID DISALLOWANCE AND DIRECTED THE AO TO ALLOW THE DEDUCTION OF INTEREST AFTER REDUCING PROPORTIONATE INTEREST OUT OF THE IN TEREST EARNED ON DEPOSITS. RESPECTFULLY FOLLOWING THE SAID DECISION IN THE PRE CEDING PARAGRAPH WE ALLOW THE GROUND ON SIMILAR TERMS RELATING TO THE C LAIM OF INTEREST TAKEN BY THE ASSESSEE. 39. THE ASSESSEE HAS TAKEN ADDITIONAL GROUND IN BOTH TH E ASSESSMENT YEARS RELATING TO THE DISALLOWANCE OF PROPORTIONATE INTEREST WHICH HAS BEEN CLAIMED BY THE ASSESSEE TO BE CAPITALISED TOWARDS T HE COST OF SHARES AND SECURITIES. AS BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS ARISING IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/20 15 FOR A.Y. 2009-10 ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 27 AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CAS E OF SHRI SUDHIR S. MEHTA THE SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSESSEE ALSO. WE THEREFORE RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF SHRI SUDHIR S. MEHTA DIRECT THE AO TO TREAT THE PROPORTIONATE INTEREST DISALLOWED IN EACH ASSESSMENT YEAR TO BE PART OF CO ST OF ACQUISITION OF SHARES AND SECURITIES. THUS THE ADDITIONAL GROUND I N EACH OF THE ASSESSMENT YEAR STAND ALLOWED. 40. THE NEXT ISSUE RAISED IN THE TWO GROUNDS IN BOTH TH E YEARS RELATE TO LEVY AND CALCULATION OF INTEREST UNDER SECTION 234A , 234B AND 234C. AS AGREED BY BOTH THE PARTIES THAT SIMILAR GROUND HAS ARISEN IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 FOR A .Y. 2009-10. THEREFORE THE TRIBUNAL MAY TAKE THE SAME VIEW IN TH E CASE OF THE ASSESSEE ALSO. WE, THEREFORE, RESPECTFULLY FOLLOWING OUR ORD ER IN THE PRECEDING PARAGRAPH IN ITA NO. 5799/MUM/ 2015 DISMISS GROUND RELATING TO LEVY OF INTEREST AND DIRECT THE AO TO RECOMPUTE THE INTERES T IN ACCORDANCE WITH OUR DIRECTION GIVEN IN THE CASE OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 WITH REGARD TO INTEREST LEVIED UNDER SECTION 234A, 234B AND 234C. THUS GROUND THE GROUND RELATING TO CALCUL ATION OF INTEREST IS STATISTICALLY ALLOWED. 41. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES. MS. JYOTI H. MEHTA ITA NOS. 419 & 420/MUM/2016 42. IN A.Y. 2010-11 THE ASSESSEE HAS TAKEN AS MANY AS F IVE GROUNDS OF APPEAL. GROUND NO. 1 SINCE NOT PRESSED STANDS DISMI SSED AS NOT PRESSED THEREBY SURVIVING THE FOLLOWING GROUNDS FOR OUR ADJ UDICATION: - 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE ALLOWED THE DEDUCTION OF INTEREST EXPENDITURE TO TH E EXTENT OF RS.5,98,27,767/- AS FOLLOWS: SR. NO. ENTITIES OUTSTANDING AMOUNT PAYABLE INTEREST @ 12% P. A. PAYABLE 1. ASHWIN S. MEHTA 2,18,55,629 59,53,246 2. HARSHAD S. MEHTA 2,37,00,42,828 28,10,74,569 ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 28 TOTAL 2,39,18,98,457 28,70,27,815 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14 A OF THE ACT 17,51,42,729/- TOTAL 11,18,85,023 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ESTIMATED ADDITION O N ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES AMOUNT TO RS.3,00,000/- . 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT. 5. THE LD, COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME AS SESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVIS IONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF THE ACT. 43. IN A.Y. 2011-12 THE ASSESSEE HAS ALSO TAKEN SIMILAR GROUNDS OF APPEAL EXCEPT CHANGE IN THE FIGURE IN GROUND NO. 2. IN GROUND NO. 2 IN A.Y. 2011-12 THE CLAIM OF INTEREST AFTER DISALLOWANCE OF PROPORTIONATE INTEREST OF ` 96,60,054/- IS ` 3,24,62,732/- IN PLACE OF ` 5,92,27,767/- AFTER PROPORTIONATE DISALLOWANCE OF INTEREST OF ` 17,51,42,792/- IN A.Y. 2010-11. 44. IN BOTH THE ASSESSMENT YEARS THE ASSESSEE HAS TAKEN THE FOLLOWING ADDITIONAL GROUNDS: - 1. WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER AND LD.CIT(A) OUGHT TO HAVE ADJUDICATED THE ISSUE OF INTEREST INCOME. THE CORRECT AMOUNT OF INTEREST INC OME OUGHT TO HAVE BEEN DETERMINED TO ARRIVE AT THE CORRECT TAXAB LE INCOME AS PER LAW. 2. WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. ASSESSING OFFICER AND LD. CIT(A) OUGHT TO HAVE GRAN TED CAPITALIZATION OF INTEREST EXPENSES ATTRIBUTABLE TO SHARES AND SECURITIES WHICH IS NOT ALLOWABLE U/S 57(III) OF TH E ACT. 45. AFTER HEARING THE RIVAL SUBMISSIONS, WE NOTED THAT THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE GO TO THE ROOT OF THE MATTER AND NO NEW FACT HAS TO BE BROUGHT ON RECORD. WE, THEREFORE, IN VIE W THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF THE NTPC VS. DCIT 229 ITR 383 ADMIT THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 29 46. IN RESPECT OF ADDITIONAL GROUND NO. 1 AND LEARNED A .R. CONTENDED THAT THE INTEREST ACCRUED TO HIM ON THE ADVANCES TO VARIOUS NOTIFIED ENTITIES HAVE NOT BEEN CORRECTLY ASSESSED TO TAX DU E TO THE DIFFICULTY CAUSED BY NOTIFICATION OF THE ASSESSEE UNDER THE PROVISION S OF SPECIAL COURT ACT AND LEVYING TAX ON SUCH ASSESSEE COULD NOT FOLLOWED PROPERLY AT THE RELEVANT POINT OF TIME. IN THE SAID ADDITIONAL GROU ND THE INTEREST ACCRUED TO HEAR ON THE ADVANCES TO VARIOUS NOTIFIED ENTITIES H AS BEEN LEFT TO BE OFFERED TO TAX IN SOME OF THE ASSESSMENT YEARS IN THE COURS E OF ASSESSMENT PROCEEDINGS DUE TO DIFFICULTIES AND CIRCUMSTANCES B EYOND THE CONTROL ARISING OUT OF NOTIFICATION OF THE ASSESSEE UNDER T HE PROVISIONS OF THE SPECIAL COURT ACT, THE ASSESSEE COULD NOT FILE THE RETURN AT THE RELEVANT POINT OF TIME. THEREFORE IT WAS ARGUED EVEN THOUGH THE ASSESSEE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING THE INTEREST IN COME HAS BEEN LEFT TO BE ASSESSED TO TAX. EVEN THE AO FAILED TO CALCULATE TH E INTEREST INCOME EARNED BY THE ASSESSEE FROM THE FAMILY MEMBERS WHO WERE AS SESSED UNDER HIS CHARGE INTO HER INCOME EVEN THOUGH THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE CORRECT AMOUNT OF INTERES T TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THA T THE DETAILS OF INTEREST INCOME HAVE NOW BEEN FILED AND PROVIDED UNDER THE P RIOR ADMISSION OF ADDITIONAL GROUND. THEREFORE HE REQUESTED TO GIVE T HE DIRECTION TO THE AO TO DETERMINE THE INCOME OF THE ASSESSEE AFTER INCLUDIN G THE SAID INTEREST INCOME. 47. THE LEARNED D.R., ON THE OTHER HAND RELIED ON THE O RDER OF THE TAX AUTHORITIES BELOW. 48. AFTER HEARING AND CAREFULLY CONSIDERING THE RIVAL S UBMISSIONS, WE ARE OF THE VIEW THAT THE CORRECT INTEREST INCOME HAS TO BE ASSESSED IN THE HAND OF THE ASSESSEE. THE ASSESSEE HAS GIVEN THE CALCULA TION OF INTEREST INCOME WHICH HAS TO BE ASSESSED IN THE HAND OF THE ASSESSE E AMOUNTING TO ` 24,18,43,334/-. WE, THEREFORE, SET ASIDE THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSEE AND DIRECT THE AO TO RE CALCULATE THE INTEREST INCOME IN THE HANDS OF THE ASSESSEE AND TREAT THE C ORRECT INCOME TO BE THE INCOME OF THE ASSESSEE FROM INTEREST WHICH HAS ACCR UED TO THE ASSESSEE ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 30 FROM VARIOUS FAMILY MEMBERS IN WHOSE HANDS THE SAID INCOME HAS BEEN ALLOWED AS DEDUCTION. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES IN BOTH THE YEARS. 49. THE ADDITIONAL GROUND NO. 2 RELATES TO CAPITALIZATI ON OF INTEREST EXPENSES. SIMILAR ISSUE HAS ARISEN IN ITA NO. 5799/ MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10. WE, RESPE CTFULLY FOLLOWING OUR DECISION IN THAT CASE, DIRECT THE AO TO TREAT THE P ROPORTIONATE INTEREST WHICH STANDS DISALLOWED WHILE DISPOSING OF GROUND N O. 1 AS PART OF COST OF SHARES AND SECURITIES. THUS, THIS GROUND IS STATIST ICALLY ALLOWED. 50. ADDITIONAL GROUND 2 IS SIMILAR TO ADDITIONAL GROUND ADMITTED IN THE CASE OF ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI S UDHIR S. MEHTA FOR A.Y. 2009-10 WE RESPECTFULLY FOLLOWING THE ORDER IN THE CASE OF ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA ADMIT THE ADDITIONAL GROUND NO. 2. SO FAR THE ADDITIONAL GROUND NO. 1, A FTER HEARING THE RIVAL SUBMISSION WE NOTED THAT THIS GROUND IS CONSEQUENTI AL IN NATURE TO THE GROUND RELATING TO DEDUCTION OF INTEREST AND THEREF ORE HAS TO BE ADMITTED AS ALL THE FACTS ARE AVAILABLE REGARDING INTEREST B Y OTHER FAMILY MEMBERS. WE, THEREFORE, ADMIT THE SAME TO TAX CORRECT INCOME AND INCOME MAY NOT ESCAPE TAX IN THE HANDS OF THE ASSESSEE. 51. SO FAR AS THE GROUND RELATING TO THE CLAIM OF INTER EST AFTER DISALLOWING PROPORTIONATE INTEREST IS CONCERNED IN BOTH THE ASS ESSMENT YEARS, BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS ARISING IN GR OUND 1 IN ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA A ND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CASE OF SHRI SUDHIR S . MEHTA SAME MAY BE TAKEN IN THE CASE OF THE ASSESSEE. WHILE DISPOSING OF THE APPEAL FOR A.Y. 2009-10 ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI S UDHIR S. MEHTA RELATING TO DISALLOWANCE OF INTEREST WE HAVE DELETE D THE SAID DISALLOWANCE AND DIRECTED THE AO TO ALLOW THE DEDUCTION OF INTER EST AFTER REDUCING PROPORTIONATE INTEREST OUT OF THE INTEREST EARNED O N DEPOSITS. RESPECTFULLY FOLLOWING THE SAID DECISION IN THE PRECEDING PARAGR APH WE ALLOW THE GROUND ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 31 ON SIMILAR DIRECTIONS AS GIVEN IN ITA NO. 5799/MUM/ 2015 RELATING TO THE CLAIM OF INTEREST TAKEN BY THE ASSESSEE. 52. THE ADDITIONAL GROUND NO. 2 IN BOTH THE ASSESSMENT YEARS RELATING TO CAPITALIZATION OF INTEREST ATTRIBUTABLE TO ACQUISIT ION OF SHARES AND SECURITIES. AS BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS ARISING IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/20 15 FOR A.Y. 2009-10 AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CAS E OF SHRI SUDHIR S. MEHTA THE SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSESSEE ALSO. WE THEREFORE RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF SHRI SUDHIR S. MEHTA DIRECT THE AO TO TREAT THE PROPORTIONATE INTEREST DISALLOWED IN EACH ASSESSMENT YEAR TO BE PART OF CO ST OF ACQUISITION OF SHARES AND SECURITIES. THUS THE ADDITIONAL GROUND N O. 2 IN EACH OF THE ASSESSMENT YEAR STAND ALLOWED. 53. THE NEXT GROUND IN BOTH THE ASSESSMENT YEARS RELATE TO SUSTENANCE OF ADDITION ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENS ES. SIMILAR ISSUE, AS AGREED BY BOTH THE PARTIES, HAS ARISEN IN ITA NO. 5 799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10. AS I N THAT CASE WE HAVE REDUCED THE ADDITION ON ACCOUNT HOUSEHOLD EXPENSES BY 50%, WE THEREFORE RESPECTFULLY FOLLOWING OUR ORDER IN ITA NO. 5779/MU M/2015 FOR A.Y. 2009- 10 REDUCE THE ADDITION ON ACCOUNT OF HOUSEHOLD EXPE NSES TO 50% AND SUSTAIN THE ADDITION TO THE EXTENT OF ` 1,50,000/- IN EACH OF THE ASSESSMENT YEARS. 54. THE NEXT TWO GROUNDS IN BOTH THE ASSESSMENT YEARS R ELATE TO LEVY AND CALCULATION OF INTEREST UNDER SECTION 234A, 234 B AND 234C. AS AGREED BY BOTH THE PARTIES THAT SIMILAR GROUND HAS ARISEN IN THE CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 FOR A.Y. 2 009-10. THEREFORE THE TRIBUNAL MAY TAKE THE SAME VIEW IN THE CASE OF THE ASSESSEE ALSO. WE, THEREFORE, RESPECTFULLY FOLLOWING OUR ORDER IN THE PRECEDING PARAGRAPH IN ITA NO. 5799/MUM/ 2015 DISMISS GROUND NO. 3 AND DIR ECT THE AO TO RECOMPUTED THE INTEREST IN ACCORDANCE WITH OUR DIRE CTION GIVEN IN THE CASE ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 32 OF SUDHIR S. MEHTA IN ITA NO. 5799/MUM/2015 WHILE D ISPOSING OFF GROUND NO. 4IN BOTH THE YEARS. THUS GROUND NO. 5 IS STATIS TICALLY ALLOWED. 55. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. M/S. GROWMORE LEASING & INVESTMENT LTD. ITA 1219/ MUM/2017 56. IN THIS CASE THE ASSESSEE HAS TAKEN THE FOLLOWING REVISED GROUND OF APPEAL: - 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE ALLOWED THE DEDUCTION OF INTEREST EXPENDITURE TO TH E EXTENT OF INTEREST INCOME I.E. RS.1,43,721/- AS FOLLOWS: SR. NO. ENTITIES OUTSTANDING AMOUNT PAYABLE INTEREST @ 12% P. A. PAYABLE 1. JYOTI H. MEHTA 25,06,82,692 3,00,81,923 2. HARSHAD S. MEHTA 61,60,61,525 739,27,383 TOTAL 86,67,44,217 10,40,09,306 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14 A OF THE ACT 2,12,47,194 TOTAL 8,27,62,112 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT. 4. THE LD, COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME AS SESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVIS IONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF THE ACT. 57. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LIMIT ATION OF 391 DAYS. WE HEARD BOTH THE PARTIES ON THE ISSUE OF CONDONATI ON OF DELAY. THE ASSESSEE HAS SUBMITTED THE APPLICATION UNDER SECTIO N 253(5). THE MAIN REASON FOR CONDONATION OF DELAY IS THAT THE DELAY W AS CAUSED ON ACCOUNT OF DELAY ON THE PART OF THE CUSTODIAN FOR RELEASING TH E APPEAL FEES REQUIRED FOR FILING THE APPEAL. IT WAS POINTED OUT THAT IDENTICA L ISSUE HAS ARISEN IN THE CASE OF ANOTHER NOTIFIED ENTITY, M/S. FORTUNE HOLDI NG PVT. LTD. WHEREIN THE DELAY IN FILING THE APPEAL FOR 749 DAYS WAS CONDONE D BY THE COORDINATE BENCH OF THIS TRIBUNAL. THE APPEAL IN THE PRESENT C ASE IS ALSO IDENTICAL. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 33 EVEN IT WAS ALSO CONTENDED THAT THIS TRIBUNAL HAS C ONDONED THE DELAY IN THE CASE OF AATUR HOLDING PVT. LTD. AND OTHERS VS. DCIT IN ITA NO. 1223/MUM/2017 FOR A.Y. 2012-13 OF 391 DAYS WHICH WA S DUE TO THE INACTION OF THE CUSTODIAN. A CHART SHOWING CHRONOLO GY OF EVENTS LEADING TO THE DELAY WAS FILED. 58. ON THE OTHER HAND, THE LEARNED D.R. CONTENDED THAT THIS IS A CASE OF NEGLIGENCE ON THE PART OF THE ASSESSEE, THEREFORE T HE DELAY SHOULD NOT BE CONDONED. 59. WE NOTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANC ES THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF FO RTUNE HOLDING P. LTD. ITA NO. 939/MUM/2017 HAS CONDONED THE DELAY FOR MOR E THAN 749 DAYS. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COO RDINATE BENCH, WE CONDONE THE DELAY AND ADMIT THE APPEAL FILED BY THE ASSESSEE. 60. GROUND NO. 1 RELATES TO THE CLAIM OF INTEREST BY TH E ASSESSEE AMOUNTING TO ` 1,43,721/- AFTER DISALLOWING PROPORTIONATE INTEREST AMOUNTING TO ` 2,12,47,194/- OUT OF INTEREST EARNED BY THE ASSESSE E ON TERM DEPOSITS. BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS ARISEN IN ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEH TA FOR A.Y. 2009-10 AND WHATEVER VIEW THE TRIBUNAL MAY TAKEN IN THAT CA SE THE SAME VIEW MAY BE TAKEN IN THE IMPUGNED CASE. AFTER HEARING THE RI VAL SUBMISSIONS AND CONSIDERING THE SAME WE NOTED THAT THIS TRIBUNAL WH ILE DISPOSING OF THE SAID GROUND ALLOWED CLAIM OF THE ASSESSEE IN RESPEC T OF INTEREST EXPENDITURE AFTER PROPORTIONATE DISALLOWANCE. WE, T HEREFORE, RESPECTFULLY FOLLOWING OUR FINDING GIVEN IN ITA NO. 5799/MUM/201 5 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10 ALLOW THE CLAIM O F INTEREST OF THE ASSESSEE TO THE EXTENT OF ` 1,43,721/- AFTER PROPORTIONATELY DISALLOWING A SUM OF ` 2,12,47,194/- AND GIVE SIMILAR DIRECTION TO THE AO AS GIVEN IN ITA NO. 5799/MUM/2015. THUS, GROUND NO. 1 IS ALLOWED. 61. SO FAR AS THE ADDITIONAL GROUND IS CONCERNED AS AGR EED BY BOTH THE PARTIES, SIMILAR ADDITIONAL GROUND HAS BEEN TAKEN I N ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA F OR A.Y. 2009-10. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 34 WE, RESPECTFULLY FOLLOWING OUR DECISION IN THAT CAS E DIRECT THE AO TO TREAT THE PROPORTIONATE INTEREST WHICH STANDS DISALLOWED WHILE DISPOSING OF GROUND NO. 1 AS PART OF COST OF SHARES AND SECURITI ES. 62. GROUND NO. 2 & 3 RELATE TO LEVY AND CALCULATION OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE INCOME TAX ACT. AS AGREED BY BOTH THE PARTIES, SIMILAR ISSUE HAS ARISEN IN ITA NO. 57 99/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR 2009-10. WE, THERE FORE, RESPECTFULLY FOLLOWING THE SAID DECISION DISMISS GROUND NO. 2 RE GARDING LEVY OF INTEREST BUT DIRECT THE AO IN RESPECT OF GROUND NO. 3 THAT T HE INTEREST LEVIED UNDER SECTION 234A, 234B AND 234C BE RECOMPUTED AFTER EXC LUDING THE INCOME WHICH IS SUBJECT TO TDS. THUS, THIS GROUND IS ALLOW ED FOR STATISTICAL PURPOSES. SHRI ASHWIN S. MEHTA ITA NOS. 1728, 1729 & 1730/M UM/2015 63. IN A.Y. 2002-03 THE ASSESSEE HAS TAKEN THE FOLLOWIN G REVISED GROUND OF APPEAL: - 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) O UGHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF HON'BLE SPE CIAL COURT DATED 30.04.2010 IN MP NO. 41 OF 1999, THE ASSETS U NDER CONSIDERATION AND THE CONSEQUENTIAL INCOME BELONGS TO LATE SHRI HARSHAD S. MEHTA AND HENCE THE INCOME CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE BEEN TAXED IN THE HANDS OF LATE SHRI. HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE APPELLANT. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS.6,37, 325/- ON ACCOUNT OF UNEXPLAINED ENTRIES IN THE BANK ACCOUNT OF THE APPELLANT. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) O UGHT TO HAVE ALLOWED THE DEDUCTION OF FOLLOWING INTEREST EXPENDI TURE TO THE EXTENT OF INTEREST INCOME I.E. RS.1,47,13,638/- SR. NO. ENTITIES OUTSTANDING AMOUNT PAYABLE INTEREST @ 12% P.A. PAYABLE 1. JYOTI H. MEHTA 9,38,31,858 1,12,59,823 2. HARSHAD S. MEHTA 80,79,93,217 9,69,59,186 ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 35 TOTAL 90,18,25,075 10,82,19,009 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14A OF THE ACT 8,39,99,631 TOTAL 2,42,19,378 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF AUDI T FEES RS.40,000/-. 5. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT. 6. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME AS SESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVIS IONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234A, 234B AND 234C OF THE ACT. 64. GROUND NOS. 1 AND 4 SINCE NOT PRESSED STAND DISMISS ED AS NOT PRESSED. GROUND NO. 2 RELATES TO SUSTENANCE OF ADDI TION ON ACCOUNT OF UNEXPLAINED ENTRIES IN THE BANK ACCOUNT OF THE ASSE SSEE. 65. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES B ELOW. THE AO MADE THE ADDITION OF ` 9,28,78,955/- IN RESPECT OF THE BALANCE IN THE SUSP ENSE ACCOUNT. WHEN THE MATTER WENT BEFORE THE CIT(A), TH E CIT(A) AFTER CONSIDERING THE REMAND REPORT OF THE AO FOUND THAT ONLY A SUM OF ` 6,37,325/- REMAINED UNEXPLAINED. THEREFORE, THE CIT (A) REDUCED THE SAID ADDITION TO ` 6,37,325/-. 66. THE LEARNED A.R. BEFORE US CONTENDED THAT SIMILAR I SSUE HAS ARISEN IN THE CASE OF SMT. JYOTI H MEHTA AND IN THAT CASE THE CIT(A) HAS RESTORED THIS ISSUE TO THE FILE OF THE AO. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES RESTORE THIS ISSUE RE GARDING NON EXPLAINING THE ENTRIES IN THE BANK ACCOUNT TO THE EXTENT OF ` 6,37,325/- TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL REDECIDE TH IS ISSUE AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND IN C ASE THE ASSESSEE HAS ADDUCED EVIDENCES AND EXPLAINED THE NATURE IN RESPE CT OF SUCH ENTRIES TO ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 36 HIS SATISFACTION, THE ADDITION MAY BE DELETED. THUS , THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 67. GROUND NO. 3 RELATES TO THE CLAIM OF INTEREST TO TH E EXTENT OF ` 1,47,13,638/- AFTER PROPORTIONATE DISALLOWANCE OF ` 8,39,99,631/- OUT OF THE INTEREST INCOME EARNED BY THE ASSESSEE ON TERM DEPOSIT. BOTH THE PARTIES AGREED THAT THIS ISSUE HAS ARISEN IN ITA NO . 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10 A ND THEREFORE WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THAT CASE SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSESSEE. SINCE WE ALLOWED THE DEDUCTIO N TOWARDS INTEREST EXPENDITURE OUT OF INTEREST EARNED ON TERM DEPOSIT IN ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA, WE THEREFORE RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TR IBUNAL DIRECT THE AO TO ALLOW DEDUCTION TO THE ASSESSEE IN RESPECT OF INTER EST EXPENDITURE OUT OF INTEREST EARNED ON TERM DEPOSIT AMOUNTING TO ` 1,47,13,638/- OUT OF INTEREST EARNED ON TERM DEPOSIT WITH THE SIMILAR DI RECTIONS. THUS, THIS GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 68. GROUND NOS. 5 & 6 TAKEN BY THE ASSESSEE RELATE TO L EVY AND CALCULATION OF INTEREST UNDER SECTION 234A, 234B AN D 234C. AS AGREED BY BOTH THE PARTIES, SIMILAR ISSUE HAS ARISEN IN ITA N O. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR 2009-10. WE, T HEREFORE, RESPECTFULLY FOLLOWING THE SAID DECISION DISMISS GROUND NO. 5 RE GARDING LEVY OF INTEREST BUT DIRECT THE AO IN RESPECT OF GROUND NO. 6 THAT T HE INTEREST LEVIED UNDER SECTION 234A, 234B AND 234C BE RECOMPUTED AFTER EXC LUDING THE INCOME WHICH IS SUBJECT TO TDS. THUS, THIS GROUND IS ALLOW ED FOR STATISTICAL PURPOSES. 69. THE ASSESSEE HAS ALSO TAKEN THE FOLLOWING ADDITIONA L GROUNDS: - 1. WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER AND LD. CIT(A) OUGHT TO HAVE ADJU DICATED THE ISSUE OF INTEREST INCOME. THE CORRECT AMOUNT OF INT EREST INCOME OUGHT TO HAVE BEEN DETERMINED TO ARRIVE AT THE CORR ECT TAXABLE INCOME AS PER LAW. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 37 2. WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER AND LD. CIT(A) OUGHT TO HAVE GRAN TED CAPITALIZATION OF INTEREST EXPENSES ATTRIBUTABLE TO SHARES AND SECURITIES WHICH IS NOT ALLOWABLE U/S 57(III) OF TH E ACT. 70. AFTER HEARING THE RIVAL SUBMISSIONS WE NOTED THAT T HE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE GO TO THE ROOT OF THE MATTER AND NO NEW FACTS HAS TO BE BROUGHT ON RECORD. WE, THEREFORE, I N VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL T HERMAL POWER CO. VS. DCIT 229 ITR 383 ADMIT THE ADDITIONAL GROUNDS. 71. IN RESPECT OF ADDITIONAL GROUND NO. 1 AND LEARNED A .R. CONTENDED THAT THE INTEREST ACCRUED TO HIM ON THE ADVANCES TO VARIOUS NOTIFIED ENTITIES HAVE NOT BEEN CORRECTLY ASSESSED TO TAX DU E TO THE DIFFICULTY CAUSED BY NOTIFICATION OF THE ASSESSEE UNDER THE PROVISION S OF SPECIAL COURT ACT AND LEVYING TAX ON SUCH ASSESSEE COULD NOT FOLLOWED PROPERLY AT THE RELEVANT POINT OF TIME. EVEN THE AO FAILED TO CALCU LATE THE INTEREST INCOME EARNED BY THE ASSESSEE FROM THE FAMILY MEMBERS WHO WERE ASSESSED UNDER HIS CHARGE. THE CORRECT AMOUNT OF INTEREST TO BE AS SESSED IN THE HANDS OF THE ASSESSEE. 72. THE LEARNED D.R., ON THE OTHER HAND RELIED ON THE O RDER OF THE TAX AUTHORITIES BELOW. AFTER HEARING AND CAREFULLY CONS IDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE CORRECT IN TEREST INCOME HAS TO BE ASSESSED IN THE HAND OF THE ASSESSEE. THE ASSESSEE HAS GIVEN THE CALCULATION OF INTEREST INCOME WHICH HAS TO BE ASSE SSED AMOUNTING TO ` 10,68,83,731/-. WE, THEREFORE, SET ASIDE THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSEE AND DIRECT THE AO TO RE CALCULATE THE INTEREST INCOME IN THE HANDS OF THE ASSESSEE AND TREAT THE C ORRECT INCOME TO BE THE INCOME OF THE ASSESSEE FROM INTEREST WHICH HAS ACCR UED TO THE ASSESSEE FROM VARIOUS FAMILY MEMBERS IN WHOSE HANDS THE SAID INCOME HAS BEEN ALLOWED AS DEDUCTION. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 73. THE ADDITIONAL GROUND NO. 2 RELATES TO CAPITALIZATI ON OF INTEREST EXPENSES. SIMILAR ISSUE HAS ARISEN IN ITA NO. 5799/ MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10. WE, RESPE CTFULLY FOLLOWING OUR ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 38 DECISION IN THAT CASE, DIRECT THE AO TO TREAT THE P ROPORTIONATE INTEREST WHICH STANDS DISALLOWED WHILE DISPOSING OF GROUND N O. 1 AS PART OF COST OF SHARES AND SECURITIES. THUS, THIS GROUND IS STATIST ICALLY ALLOWED. 74. IN A.Y. 2003-04 THE ASSESSEE HAS TAKEN AS MANY AS S IX REVISED GROUNDS. SINCE GROUND NOS. 1 & 3 ARE NOT PRESSED, T HEREFORE THE SAME IS DISMISSED AS NOT PRESSED. GROUNDS NO. 2, 3, 5 & 6 A RE SIMILAR TO GROUND NOS. 2, 3, 5 & 6 TAKEN IN A.Y. 2002-03 EXCEPT CHANG E IN FIGURE. THEREFORE, BOTH THE PARTIES AGREED THAT WHATEVER VIEW THIS TRI BUNAL MAY TAKEN IN DISPOSING OFF GROUND NOS. 2, 3, 5 & 6 FOR A.Y. 2002 -03 SAME VIEW MAY BE TAKEN IN THIS ASSESSMENT YEAR ALSO. 75. IN ASSESSMENT YEAR 2002-03 WE HAVE RESTORED GROUND NO. 2 TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL REDECIDE THIS ISSUE RELATING TO SUSTENANCE OF THE ADDITION BY CIT(A) ON ACCOUNT OF UNEXPLAINED ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE. WE, TH EREFORE, RESPECTFULLY FOLLOWING OUR ORDER IN THE CASE OF THE ASSESSEE FOR A.Y. 2002-03 RESTORE THIS ISSUE REGARDING ADDITION OF ` 1,50,79,191/- ON ACCOUNT OF UNEXPLAINED ENTRIES TO THE FILE OF THE AO WITH THE DIRECTION TH AT THE AO SHALL REDECIDE THIS ISSUE AFRESH AFTER GIVING PROPER AND SUFFICIEN T OPPORTUNITY TO THE ASSESSEE. IN CASE THE AO IS SATISFIED WITH THE EXPL ANATION OF THE ASSESSEE TO THAT EXTENT THE ADDITION SHOULD BE DELETED. 76. SO FAR AS GROUND NO. 3 IS CONCERNED SIMILAR GROUND HAS ARISEN IN A.Y. 2002-03. WE HAVE ALLOWED THE CLAIM OF INTEREST OUT OF THE INTEREST INCOME EARNED BY THE ASSESSEE ON TERM DEPOSIT. RESP ECTFULLY FOLLOWING OUR FINDING IN A.Y. 2002-03 WE GIVE SIMILAR DIRECTION T O THE AO IN RESPECT OF ALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO ` 5,40,27,927/-. THUS, THIS GROUND TO THAT EXTENT STANDS ALLOWED. 77. GROUND NOS. 5 & 6 RELATE TO LEVY AND CALCULATION OF INTEREST UNDER SECTION 234A, 234B AND 234C. SIMILAR ISSUE HAS ARIS EN IN THE CASE OF ASSESSEE IN A.Y. 2002-03. WE, THEREFORE RESPECTFULL Y FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE PRECEDING PARAGRAPH IN THE CAS E OF ASSESSEE CONFIRM THE LEVY OF INTEREST UNDER SECTION 234A, 234B AND 2 34C AND DISMISS ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 39 GROUND NO. 5 BUT DIRECT THE AO TO RECOMPUTE INTERES T CHARGEABLE UNDER SECTION 234A, 234B AND 234C AFTER EXCLUDING INCOME WHICH IS SUBJECT TO PROVISIONS OF TDS. THUS GROUND NO. 6 IS STATISTICAL LY ALLOWED. 78. IN A.Y. 2004-05 ALSO THE ASSESSEE HAS FILED TWO REV ISED GROUNDS WHICH IDENTICAL TO GROUND NOS. 1 & 2 OF A.Y. 2003-0 4 EXCEPT CHANGE IN FIGURE IN GROUND NO.2. GROUND NO. 1 SINCE NOT PRESS ED, DISMISSED AS NOT PRESSED. IN RESPECT OF GROUND NO. 2 BOTH THE PARTIE S AGREED THAT SIMILAR ISSUE HAS ARISING IN ITA NO. 5799/MUM/2015 IN THE C ASE OF SHRI SUDHIR S. MEHTA AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN T HAT CASE, THE SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSESSEE. SINC E IN THE CASE OF SHRI SUDHIR S. MEHTA WHILE DISPOSING OFF SIMILAR GROUND RELATING TO INTEREST EXPENDITURE WE ALLOWED THE DEDUCTION TO THE ASSESSE E OUT OF THE INTEREST EARNED ON TERM DEPOSIT. RESPECTFULLY FOLLOWING OUR SAID ORDER IN THE PRECEDING PARAGRAPH WE DIRECT THE AO TO ALLOW DEDUC TION TO THE ASSESSEE AMOUNTING TO ` 20,90,180/- OUT OF THE INTEREST ON TERM DEPOSIT BY FOLLOWING OUR SIMILAR DIRECTION GIVEN THEREIN. THUS, THIS GRO UND TO THAT EXTENT IS ALLOWED. 79. IN BOTH THE ASSESSMENT YEARS I.E. 2003-04 AND 2004 -05 THE ASSESSEE HAS TAKEN TWO ADDITIONAL GROUNDS SIMILAR T O THE ADDITIONAL GROUNDS TAKEN IN A.Y. 2002-03. SINCE THESE GROUNDS HAVE BEEN ADMITTED IN A.Y. 2002-03 AND BOTH THE PARTIES AGREED THAT WHATE VER VIEW THIS TRIBUNAL MAY TAKE IN A.Y. 2002-03 THE SAME VIEW MAY BE TAKEN IN ASSESSMENT YEARS 2003-04 AND 2004-05. WE, THEREFORE, RESPECTFULLY FO LLOWING OUR FINDING GIVEN IN A.Y. 2002-03 WHILE DISPOSING OFF THE APPEA L OF THE ASSESSEE ADMIT BOTH THE ADDITIONAL GROUNDS IN ASSESSMENT YEARS 200 3-04 AND 2004-05. SINCE IN A.Y. 2002-03 IN RESPECT OF ADDITIONAL GROU ND 1 WE HAVE RESTORED THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL BRING TO TAX THE CORRECT INTEREST INCOME IN THE HANDS OF THE ASSESSEE RECEIVABLE FROM FAMILY MEMBERS AND CONCERN TO WHOM THE DEDUCTION HA S BEEN ALLOWED IN RESPECT OF INTEREST INCOME BY THIS TRIBUNAL AND DET AILS OF WHICH HAS BEEN SUBMITTED ALONG WITH THE ADDITIONAL GROUND IN EACH OF THE ASSESSMENT YEAR BEFORE US. WE, THEREFORE, RESPECTFULLY FOLLOWING OU R FINDING GIVEN IN A.Y. ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 40 2002-03 DIRECT THE AO TO BRING TO TAX IN ASSESSMENT YEARS 2003-04 AND 2004-05 ALSO THE CORRECT INTEREST INCOME IN THE HAN DS OF THE ASSESSEE WHICH HAD BEEN CLAIMED BY THE ASSESSEE IN A.Y. 2003 -04 AT ` 10,68,83,731/- AND IN A.Y. 2004-05 ALSO AT ` 10,68,83,731/- AND ADD IT IN THE INCOME OF THE ASSESSEE. 80. SO FAR AS SECOND ADDITIONAL GROUND IS CONCERNED IN BOTH THE ASSESSMENT YEARS, BOTH THE PARTIES AGREED THAT THE GROUND IS SIMILAR TO THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE IN A.Y. 200 2-03 IN THE CASE OF THE ASSESSEE. AFTER HEARING THE RIVAL SUBMISSIONS IN A. Y. 2002-03 WE RESPECTFULLY FOLLOWING THE ORDER OF THIS TRIBUNAL W HILE DISPOSING OF SIMILAR ISSUE IN ITA NO. 5799/MUM/2015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10 DIRECTED THE AO TO TREAT PROPORTIONATE INTEREST DISALLOWED TO BE THE PART OF COST OF ACQUISITION OF SHARES AND SE CURITIES. IN BOTH THESE YEARS ALSO IN RESPECT OF ADDITIONAL GROUND NO. 2 WE ISSUE SIMILAR DIRECTION TO THE AO THAT THE PROPORTIONATE INTEREST DISALLOWE D BE TAKEN AS PART OF ACQUISITION OF SHARES AND SECURITIES. 81. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FO R ALL THE THREE ASSESSMENT YEARS ARE ALLOWED STATISTICALLY. 82. TO SUM UP, ALL THE APPEALS OF THE RESPECTIVE ASSESS EE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DECEMBER, 2017. SD/- SD/- (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 27 TH DECEMBER, 2017 ITA NO. 1219/MUM/2017 (+ 20) GROWMORE LEASING&INVESTMENT LTD. & OTHERS 41 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -52, MUMBAI 4. THE CIT - CENTRAL-2, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.