The DCIT, Circle-4, Surat V. M/s. R. Wadiwala Securities Pvt.Ltd., Surat

ITA 1293/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80367 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Business income; Principle of natural justice; Earning of tax free income; Period of limitation
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER M/S. R. WADIWALA & CO., 9/2003-04, LIMDA CHOWK, MAIN ROAD, SURAT PAN: AAEFR5962N (APPELLANT) VS THE ITO, WARD-(4), SURAT (RESPONDENT) THE DCIT, CIRCLE-4 SURAT (APPELLANT) VS M/S. R. WADIWALA SECURITIES PVT. LTD 9/2003-04, LIMDA CHOWK, MAIN ROAD, SURAT PAN: AACCR 7642 A (RESPONDENT) ASSESSEE BY: SRI J.P. SHAH, A.R. REVENUE BY: SRI NIMESH YADAV, SR.D.R. DATE OF HEARING : 16-09-2014 DATE OF PRONOUNCEMENT : 25-09-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- ITA NO. 1061/AHD/2011 ASSESSMENT YEAR 2007-08 ITA NO. 1293/AHD/2011 ASSESSMENT YEAR 2007-08 I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 2 THESE ARE THE ASSESSEE & REVENUES APPEALS AGAINST THE ORDER OF LD. CIT(A)-IV SURAT DATED 21-12-2010 AND 12-01-2011 IN THE CASE OF ASSESSEE AND REVENUE RESPECTIVELY FOR A.Y. 2007-08. WE FIRST TAKE UP ASSESSEES APPEAL IN ITA NO. 1061/ AHD/2011 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER. 3. THE ASSESSEE IS A FIRM STATED TO BE SEBI REGISTE RED SUB-BROKER, COMMISSION AGENT OF MUTUAL FUNDS, BONDS, PRIMARY MA RKET IPO ETC. THE ASESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 18-10-2007 DECLARING TOTAL INCOME OF RS. 2,50,204. THE CASE W AS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VI DE ORDER DATED 31-12- 2009 AND THE TOTAL INCOME WAS ASSESSED AT RS. 10,07 ,410/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 25-12-2010 GRANTED PARTIAL RELIEF TO TH E ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSEE IN N OW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS:- 1) THE ID.COMMISSIONER (APPEALS) WAS NOT CORRECT IN CONFIRMING, IN NOT SERVING THE ASSESSMENT ORDER, BEFORE THE EXPIRATION OF THE LIMITATION, PROVIDED UNDER THE RELEVANT PROVISION. THEREFORE, I T IS TO BE HELD AS PASSED AFTER THE PERIOD OF LIMITATION AND THEREBY IT WILL BECOME INVALID AND VOID ORDER AND THUS NONEST IN LAW. 2) THE ID. COMMISSIONER (APPEALS) IS CLEARLY WRONG IN CONTENDING THAT THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION OF RS . 7,30,435 U/S. 14.A OF THE ACT. 3) THE LD. COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN DETERMINING THE ISSUE OF THE PRINCIPLE OF NATURAL JUSTICE AS THE AO DID N OT GIVE SHOW CAUSE NOTICE TO THE ASSESSEE FOR MAKING ADDITIONS OF RS. 7,30,43 5 TO THE RETURNED INCOME. 4) THE LD. COMMISSIONER (APPEALS) IS NOT JUSTIFIED IN DETERMINING THE INVESTMENT, UNSECURED LOAN AND ASSETS EXPLAINED AND SUBMITTED, EVEN I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 3 THOUGH THE AO DISALLOWED INTEREST OF RS. 7,30,435 U /S. 14.A OF THE IT ACT, 1961. THEREFORE, THE ADDITION OF RS. 7,30,435 MADE IS ARBITRARY AND BAD IN LAW AND NOT JUSTIFIED. GROUND NO. 1 IS WITH RESPECT TO NON SERVING OF ASSE SSMENT ORDER BEFORE THE EXPIRATION OF LIMITATION PROVIDED IN THE ACT. 4. BEFORE US, LD. AR AT THE OUTSET SUBMITTED THAT T HIS GROUND OF ASSESSEE IS TO BE DECIDED AGAINST IT IN VIEW OF THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF C.U. SRINI VASHAN VS. COMMISSIONER OF WEALTH TAX (1985) 152 TTR 128 (AP). WE THUS DISMISS THIS GROUND OF ASSESSEE. GROUND NO. 2, 3 AND 4 IN RELATION TO DISALLOWANCE O F SECTION 14 A. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD CLAIMED INTEREST EXPENSES OF RS. 10,85 ,365/- AND ASSESSEE ALSO HAD INVESTMENTS IN SHARES AMOUNTING TO RS. 56, 97,551/-. HE ALSO NOTICED THAT ASSESSEE HAS CLAIMED EXEMPTION OF DIVI DEND INCOME OF RS. 9,73,603/-. AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY INTEREST CLAIM SHOULD NOT BE DISALLOWED IN VIEW OF PROVISIONS OF S ECTION 14A IN RESPONSE TO WHICH, ASSESSEE INTER ALIA SUBMITTED THAT IT WAS HOLDING THE INVESTMENTS IN SHARES SINCE MORE THAN 15 YEARS AND THE INVESTME NTS WERE OUT OWN INTEREST FREE FUNDS. THE SUBMISSION OF THE ASSESSE E WAS NOT FOUND ACCEPTABLE TO THE AO. ACCORDING TO AO IN VIEW OF T HE PROVISION OF SECTION 14A, DISALLOWANCE OF EXPENDITURE HAD TO BE MADE WHE N THERE WAS EXEMPT INCOME. HE THEREFORE FOLLOWING THE SPECIAL BENCH DECISION OF TRIBUNAL IN THE CASE OF DAGA MANAGEMENT CAPITAL LTD, WORKED TH E DISALLOWANCE BY APPLYING THE FORMULA PRESCRIBED UNDER RULE 8D OF TH E IT RULES AND THE TOTAL DISALLOWANCE WORKED OUT BY HIM WAS RS. 7,30,4 35/-. AGGRIEVED BY I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 4 THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) UPHELD THE ORDER OF AO BY HOLDING AS UNDER:- 2.4 I HAVE GONE THROUGH THE FACTS OF THE CASE. I N THE CASE OF THE APPELLANT DIVIDEND INCOME HAS NOT BEEN EARNED AS PA RT OF ITS TRADING ACTIVITIES. IT HAS BEEN EARNED ON LONG TERM INVESTM ENTS AND THEREFORE IT CANNOT BE SAID THAT EXEMPT INCOME WAS INCIDENTAL TO THE BUSINESS. INVESTMENT IN SHARES WOULD GIVE RISE TO DIVIDEND IN COME OR CAPITAL GAINS BUT NEVER BUSINESS INCOME AS FAR AS THE ACT IS CONC ERNED. THERE CANNOT BE AN INCOME FROM BUSINESS ARISING OUT OF INVESTMEN TS. RULE 8D OF THE ACT HAS BEEN PRESCRIBED TO TAKE INTO ACCOUNT INSTANCES WHERE IT IS DIFFICULT TO BIFURCATE THE FUNDS DEPLOYED TO EARN TAXABLE AND NO N-TAXABLE INCOME. THOUGH, IT HAS BEEN CLAIMED BY THE APPELLANT THAT I NVESTMENTS HAD BEEN MADE NOT OUT OF BORROWED FUNDS BUT OWN FUNDS AND TH EREFORE OF INTEREST WAS ADMISSIBLE, IT HAS NOT BEEN ABLE TO PROVIDE LIN KAGES BETWEEN THE TWO. IT IS CLAIMED THAT YEARWISE DETAILS OF INVESTMENT A ND LOANS WAS PROVIDED TO THE A.O. THIS DOES NOT HELP APPELLANT AS IT IS NOT ABLE TO THROW ANY LIGHT AS TO THE DEPLOYMENT OF FUNDS BEING ONLY FOR PURPOSE O F BUSINESS AS WHAT THE APPELLANT HAS PROVIDED IS FISCAL YEAR ENDING FIGURE S OF INVESTMENT AND UN- SECURED LOANS WHICH CANNOT ESTABLISH THAT OWN FUNDS ALONE WERE DEPLOYED FOR INVESTMENT. FROM THE DETAILS AS MADE AVAILABLE, IT APPEARS THAT LOAN FUNDS HAD BEEN UTILIZED FOR BOTH INVESTMENT AND BUS INESS. AND SINCE INVESTMENTS WOULD EARN EXEMPT INCOME, EXPENDITURE I NCURRED INCLUDING INTEREST TOWARDS EARNING THIS IS NOT ADMISSIBLE AS PER PROVISIONS OF SECTION- 14A OF THE ACT. THE INTEREST HAS TO BE COMPUTED AS PER RULE-8D PRESCRIBED IN THIS REGARD. THE A.O. HAS APPLIED RUL E-8D FOR DETERMINING THE INTEREST AS RELATABLE TO EARNING OF EXEMPT INCO ME. I THEREFORE FIND NO INFIRMITY IN THE ACTION OF THE A.O. THE DISALLOWA NCE MADE IS CONFIRMED. THIS GROUND IS DISMISSED. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. 7. BEFORE US LD. AR REITERATED THE SUBMISSIONS MAD E BEFORE AO AND LD. CIT(A). HE FURTHER SUBMITTED THAT THE ASSESSEE WAS HOLDING THE INVESTMENT SINCE MORE THAN 15,20, AND 25 YEARS AND THE INVESTMENTS WERE MADE OUT OF OWN FUNDS AND NO INTEREST BEARING FUNDS WERE USED FOR THE PURPOSE OF INVESTMENTS. HE FURTHER PLACED RELIANCE ON THE DECISION IN THE CASE OF CIT VS. UTI BANK LTD (2013) 32 TAXMAN.COM 3 70 (GUJARAT) FOR THE I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 5 PROPOSITION THAT IF THERE ARE SUFFICIENT INTEREST F REE FUNDS TO MEET TAX FREE INVESTMENT, THEN IT IS PRESUMED THAT THE INVESTMENT S ARE TO BE MADE FROM INTEREST FREE FUNDS AND NOT LOANED FUNDS AND NO DIS ALLOWANCE CAN BE MADE U/S. 14A. HE FURTHER SUBMITTED THAT PROVISIONS OF RULE 8D WERE NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON IN VIEW OF THAT DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F GODREJ BOYCE VS. DCIT (2010) 328 ITR 81 (BOM) LTD. LD. DR ON THE OT HER HAND SUBMITTED THAT ASSESSEE HAS NOT SUBMITTED ANY CASH FLOW TO PR OVE THE AVAILABILITY OF INTEREST FREE FUNDS IN THE YEAR IN WHICH INVESTMENT S WERE MADE. HE THUS SUPPORTED THE ORDER OF AO AND LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD RECEIVED DIVIDEND INCOME OF RS. 9,73,603/- WHICH HAS BEEN CL AIMED AS EXEMPT FROM TAX. FURTHER IT IS ASSESSEES SUBMISSION THAT THE INVESTMENTS ARE HELD BY HIM FOR MORE THAN 15 YEARS AND NO INTEREST BEARING FUNDS HAVE BEEN USED FOR MAKING INVESTMENTS. APART FROM MAKING THE AFORE SAID SUBMISSION, ASSESSEE HAS NOT PLACED ON RECORD ANY MATERIAL TO P ROVE THE AVAILABILITY OF INTEREST FREE FUNDS IN THE RESPECTIVE YEARS IN WHIC H THE INVESTMENTS WERE MADE. WE ARE OF THE VIEW THAT IT IS FOR THE ASSESS EE TO SHOW THE SOURCE OF ACQUISITION OF INVESTMENTS BY PRODUCTION OF RELEVAN T MATERIAL THAT THE INVESTMENTS WERE ACQUIRED FROM THE FUNDS AVAILABLE IN THE HANDS OF ASSESSEE AT THE RELEVANT POINT OF TIME WITHOUT TAKI NG BENEFIT OF ANY LOAN AND FOR THE AFORESAID PROPOSITION WE FIND SUPPORT O F THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF DHANUKA & SONS C IT (2011) 339 ITR 319(CAL). FURTHER, HONBLE BOMBAY HIGH COURT IN TH E CASE OF GODREJ AND BOYCE (SUPRA) HAS HELD THAT THE RULE 8D PRESCRIBED FOR MAKING DISALLOWANCE U/S. 14A IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 ONWARDS BUT IN THE YEARS PRIOR TO 2008-09, REASONAB LE DISALLOWANCE CAN BE I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 6 MADE BY AO. CONSIDERING THE TOTALITY OF THE AFORE SAID FACTS, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY LD. CIT(A) OF RS. 7,57,297/- IS ON A H IGHER SIDE. WE THEREFORE FEEL THAT AN ESTIMATED ADDITION OF RS. 1, 00,000/- IF MADE WILL MEET THE ENDS OF JUSTICE. WE THEREFORE DIRECT THA T IN THE PRESENT CASE THE DISALLOWANCE BE RESTRICTED TO RS. 1,00,000/-. WE D IRECT ACCORDINGLY. THUS, THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. NOW WE TAKE REVENUES APPEAL IN ITA NO. 1293/AHD/20 11 10. ASSESEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF SHARES AND STOCK BROKER AND IS A MEMBER OF NATIONAL STOCK EXCHANGE. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-0 8 ON 30-10-2007 DECLARING TOTAL INCOME OF RS. 1,16,19,770/-. THE C ASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 26-11-2009 AND THE TOTAL INCOME WAS DECLARED AT RS. 1,16,19,770/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) VIDE ORDER DATED 12-01-2011 ALL OWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND RAISED THE FOLLOWING EF FECTIVE GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN ALLOWING THE ADDITIO N MADE BY WAY OF DISALLOWANCE OF VATAV KASAR EXPENSES OF THE I.T. ACT, OF RS. 15,00,000/- 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAS DEBITED A SUM OF RS. 15,93,487/- UNDER THE HEAD VATAV KASAR. ON PERUSING THE DETAILS SUBMITTED BY THE A SSESSEE, AO NOTICED I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 7 THAT ASSESSEE HAD RECEIVED BROKERAGE WHICH WAS RETU RNED BACK TO SOME OF THE CLIENTS. AO ALSO NOTICED THAT THE BROKERAGE TH AT WAS RETURNED WAS ON CASE TO CASE BASIS AND THERE WAS NO FIXED PERCENTAG E OR RATE. HE ALSO NOTICED THAT IN CASE OF FOUR PARTIES LISTED AT PAGE 2 OF THE ORDER, ASSESSEE HAD EARNED BROKERAGE AND THE BROKERAGE WAS ALSO RET URNED BACK AND THE AMOUNT OF BROKERAGE RETURNED BACK WAS CLAIMED AS EX PENDITURE. AO WAS THEREFORE OF THE VIEW THAT THE EXPENDITURE OF RS. 5 LACS DEBITED TO VATAV KASAR WAS NOT ADMISSIBLE EXPENDITURE. HE ACCORDING LY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRI ED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- I HAVE GONE THROUGH THE FACTS OF THE CASE. THE A.O . MADE THE ADDITION PRIMARILY FOR THE REASON THAT ONCE HAVING EARNED TH E BROKERAGE THERE WAS NO PROVISION FOR REFUND AND THEREFORE THE EXPENDITU RE BY WAY OF REFUND OF BROKERAGE WAS INADMISSIBLE. THE A.O. WAS ALSO OF TH E OPINION THAT THE EXPENSE WAS NOT REASONABLE IN THAT THE DISCOUNT WAS NOT ALLOWED AT FIXED RATES. THE APPELLANT'S A.R. HAS ARGUED THAT THE TRA NSACTION OF REFUNDING BROKERAGE HAS NOT BEEN DOUBTED, I.E. EXPENSE HAS B EEN INCURRED. ONCE, IT IS ESTABLISHED THAT EXPENDITURE HAS BEEN INCURRED F OR THE PURPOSE OF BUSINESS THE REASONABLENESS OF THE EXPENDITURE CANN OT BE QUESTIONED BY THE A.O. IT HAS ALSO BEEN THEIR CONTENTION THAT EVE N IF THE EXPENDITURE IS INCURRED VOLUNTARILY BUT FOR THE BENEFIT OF THE BUS INESS, IT IS TO BE ALLOWED AS A DEDUCTION. I FIND THAT THE APPELLANT HAS BEEN ABLE TO SHOW THAT HIS POLICY OF NOT CHARGING LOWER BROKERAGES UPFRONT ACR OSS THE BOARD BUT TO ALLOW DISCOUNTS BY WAY OF REFUND ONCE THE CLIENT GI VES HUGE VOLUMES IS SOUND BUSINESS PRACTICE. THE EXPENDITURE HAS TO BE THEREFORE HELD AS INCURRED FOR THE PURPOSE OF BUSINESS. ONCE BUSINESS PURPOSE IS ESTABLISHED ALONGWITH THE GENUINENESS, IT IS NOT OP EN FOR THE REVENUE TO SIT IN JUDGMENT IN THE REASONABLENESS OF THE EXPENDITUR E. I FIND THAT THE GENUINENESS OF THE EXPENDITURE HAS NOT BEEN DOUBTED -- IN FACT IT HAS BEEN ESTABLISHED BY WAY OF CONFIRMATIONS FROM CLIENTS. N EXUS WITH BUSINESS IS PRESENT. THE REFUNDS ALLOWED TO CLIENTS FOR GENERAT ING HUGE VOLUMES IS HELD AS ADMISSIBLE. THE REASON FOR ALLOWING THE DIS COUNT TO NANDKISHOREBHAI WAS TO CONTINUE THE BUSINESS, RETAI N CLIENT AND HENCE GOODWILL AND THEREFORE FOR BUSINESS PURPOSE. IT IS IRRELEVANT THAT THE SAID PERSON DID NOT CONTINUE BUSINESS AFTER TAKING COMPE NSATION. THEREFORE, IN MY OPINION, THERE WAS NO REASON FOR DISALLOWING THE CLAIM OF THE APPELLANT IN RESPECT OF VATAV KASAR EXPENSES. THE DISALLOWANC E IS DELETED. I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 8 12. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE I S NOW IN APPEAL BEFORE US. 13. BEFORE US, LD. DR TOOK US THROUGH THE FINDINGS AND OBSERVATIONS MADE BY THE AO IN THE ASSESSMENT ORDER AND SUPPORTE D THE ORDER OF AO. LD. AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND LD. CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE DURING THE PERIOD HAD EARNED BROKERAGE IN EXCESS OF RS. 2 CRORE AND VAT AV KASAR WAS IN RESPECT OF FOUR PERSONS. HE FURTHER SUBMITTED THAT ALL THE FOUR PERSONS WERE ITS CLIENTS, THEY WERE INCOME TAX ASSESSEES AN D ASSESSEE HAD ALSO FILED THEIR CONFIRMATION, PAN NOS AND ADDRESSES. HE THEREFORE SUBMITTED THAT ASSESSEE HAD FULLY JUSTIFIED IN CLAIMING THE E XPENSES. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETING THE ADDITION HAS GIVEN A FINDING THAT THE POLICY OF THE ASSESSEE OF ALLOWING DISCOUNT BY WAY OF REFUND TO THE CLIENTS WHO GAVE HUGE VOLUME OF BUSIN ESS WAS A SOUND PRACTICE AND THE EXPENDITURE WAS INCURRED FOR THE P URPOSE OF BUSINESS. HE FURTHER HELD THAT THE GENUINENESS OF THE EXPENDITUR E HAS NOT DOUBTED BY REVENUE. BEFORE US, REVENUE HAS NOT BROUGHT ANY M ATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A). WE THEREFOR E FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THI S GROUND OF REVENUE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. I.T.A NOS. 1061 &1293/AHD/2011 A.Y. 2007-08 PAGE NO M/S. R. WADIWALA & CO. VS. ITO & DCIT VS. M/S. WADI WALA SECURITIES PVT. LTD 9 16. IN THE COMBINED RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 25/09/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,