M/s. Business India Television International Ltd., Mumbai V. ITO, New Delhi

ITA 1358/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2856 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R WADHWA
• Assessee Lawyers: SUBHAKANT SAHU
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 72(1); 32; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O. P. KANT, ACCOUNTANT MEMBER I.T.A. NO.4371/DEL/2010 ASSESSMENT YEAR: 2002-03 DCIT, CIRCLE-3(1), NEW DELHI. VS. BUSINESS INDIA TELEVISION INTERNATIONAL LTD., 14 TH FLOOR, NIRMAL BUILDING, NARIMAN POINT, MUMBAI. TAN/PAN: AAACB 4781G (APPELLANT) (RESPONDENT) I.T.A. NO.4415/DEL/2010 ASSESSMENT YEAR: 2002-03 BUSINESS INDIA TELEVISION INTERNATIONAL LTD., 14 TH FLOOR, NIRMAL BUILDING, NARIMAN POINT, MUMBAI. V. ACIT, CIRCLE-3(1), NEW DELHI. TAN/PAN: AAACB 4781G (APPELLANT) (RESPONDENT) I.T.A. NO.1358/DEL/2013 ASSESSMENT YEAR: 2009-10 BUSINESS INDIA TELEVISION INTERNATIONAL LTD., 14 TH FLOOR, NIRMAL BUILDING, NARIMAN POINT, MUMBAI. V. ITO, WARD-3(1), NEW DELHI. TAN/PAN: AAACB 4781G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUBHAKANT SAHU, SR.DR. RESPONDENT BY: SHRI S.R. WADHWA, ADV. DATE OF HEARING: 11 12 2017 DATE OF PRONOUNCEMENT: 18 12 2017 O R D E R I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 2 PER AMIT SHUKLA, J.M.: THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2002-03 H AS BEEN FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST IMPUGNED ORDER DATED 20 TH JULY, 2010, PASSED BY LD. CIT (APPEALS)- VI, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S .143(3) R.W.S. 254 FOR THE ASSESSMENT YEAR 2003-04; AND THE A PPEAL FOR THE ASSESSMENT YEAR 2009-10 HAS BEEN FILED BY THE ASS ESSEE AGAINST ORDER DATED 19.12.2012, PASSED BY THE LD. CIT (A)-VI, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.144. 2. WE WILL FIRST TAKE UP THE ASSESSEES APPEAL FOR AS SESSMENT YEAR 2002-03, WHEREIN THE FOLLOWING GROUNDS HAVE BEE N RAISED. 1. THE ORDER OF THE LD. CIT (A) DATED 20.07.2010 IS BAD IN LAW AND ON FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE UNSECURED LOANS AMO UNTING TO RS. 2,40,11,399/- U/S 68 OF THE INCOME-TAX ACT, 1961 DE SPITE THE FACT THAT NO FRESH LOANS WERE TAKEN DURING THE YEAR AND INCREASE IN LOANS SHOWN AS UNSECURED LOANS IN THE BALANCE SHEET AS ON 31.03.2002 WAS DUE TO MISCLASSIFICATION OF THEM AS SECURED LOANS IN THE PRECEDING YEAR. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) O UGHT TO HAVE GIVEN ADEQUATE OPPORTUNITY TO THE ASSESSEE TO ADDUC E NECESSARY EVIDENCE TO SUBSTANTIATE ITS CLAIM AND SHOULD HAVE CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER BEFORE CON FIRMING THE ADDITION U/S. 68 OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.4 8,41,204/- BEING INCREASE IN THE CURRENT LIABILITIES I.E., FRO M RS. 36,96,80,588/- AS ON 31.03.2001 TO RS. 37,45,21,752 /- AS ON 31.03.2002 ON THE GROUND THAT DETAILS AND SUPPORTIN G EVIDENCES WERE NOT FILED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF PROP ORTIONATE INTEREST OF RS.1,06,022/- OUT OF TOTAL CLAIM OF RS. 81,95,186/- WITHOUT GIVING ANY VALID REASON. I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 3 3. THE FACTS IN BRIEF QUA THE ADDITION MADE U/S.68 AS CULLED OUT FROM THE IMPUGNED ORDER ARE THAT THE ASSESSING OFFI CER HAD NOTED THAT THERE WAS AN INCREASE IN UNSECURED LOANS IN THE BALANCE SHEET FOR SUM OF RS.2,40,11,399/- AND WAS AS KED TO PROVIDE THE CONFIRMATION FROM THE PARTIES FROM WHOM TH E UNSECURED LOAN WAS TAKEN ALONG WITH THEIR PAN AND COP Y OF THEIR LATEST INCOME TAX RETURN. HOWEVER, NO SUCH DETAILS OR CO MPLIANCE WAS MADE BY THE ASSESSEE AND IN ABSENCE OF THE REQUIS ITE DETAILS THE ENTIRE AMOUNT WAS ADDED U/S.68 BY THE AO. THIS MATT ER HAD TRAVELLED UPTO THE STAGE OF THE ITAT, WHEREIN THE TRIBUN AL HAS SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFI CER TO REDO THE ASSESSMENT. AGAIN, IN THE SET-ASIDE ASSESSMENT PROCEED INGS NO SUCH DETAILS HAVE BEEN PROVIDED BY THE ASSESSEE AND AS A CONSEQUENCE ADDITIONS HAVE BEEN REITERATED BY HIM. B EFORE THE LD. CIT (A), THE ASSESSEE HAD SUBMITTED THAT IT HAD TAKEN LOAN S/ICDS IN THE EARLIER YEAR FROM SOME LENDERS WHICH WAS WRON GLY CLASSIFIED UNDER THE HEAD UNSECURED LOANS BUT AT THE TIME OF FI NALIZATION OF ACCOUNT AND AFTER VERIFYING THE ACCOUNT IT WAS FOUND THAT THESE LOANS WERE UNSECURED LOANS TAKEN FROM VARIOUS PARTIES AND THE MAJORITY OF WHICH HAD COME FROM 5 PUBLIC LIMITED COM PANIES. HOWEVER, BEFORE THE LD. CIT (A) ALSO THE PRIMARY ONU S FOR PROVING THE GENUINENESS OF THE LOAN COULD NOT BE ESTABLISHED AN D ACCORDINGLY, LD. CIT (A) TOO HAS CONFIRMED THE SAID ADDITION. 4. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE, MR. S. R. WADHWA SUBMITTED THAT ALMOST THE ENTIRE UNSECURED LOANS O F RS. 2.40 CRORE HAD BEEN RECEIVED THROUGH WELL REPUTED PUB LIC LIMITED COMPANIES AND ASSESSEE ITSELF BEING A PUBLIC LIMITED COMPANY HAD I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 4 DULY DISCLOSED SUCH UNSECURED LOAN IN THE AUDITED FIN ANCIAL ACCOUNTS. AFTER THE MATTER WAS SET ASIDE BY THE TRIBUNAL , SINCE HUGE TIME HAD LAPSED, THEREFORE, CONFIRMATION FROM ALL THE PARTIES COULD NOT BE OBTAINED, BARRING THE CONFIRMATION OBTAINED FROM ONE COMPANY, M/S. GANESH BANZOPLAST LTD. AND COPIES OF L EDGER ACCOUNT OF OTHER FIVE PARTIES HAS ALSO BEEN FILED JUS T TO SHOW THAT THE LOANS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES FROM THE PUBLIC LIMITED COMPANIES AND THEREFORE, THE GENUINENES S CANNOT BE DOUBTED. SINCE THE BUSINESS OF THE ASSESSEE HAD ALR EADY BEEN STOPPED LONG AGO, THEREFORE, IT WAS DIFFICULT TO GET THES E LETTERS FROM THESE PARTIES. IN ANY CASE THESE BEING LIMITED COMPANIE S THEIR ACCOUNTS ARE IN PUBLIC DOMAIN AND HENCE THE LOANS OBT AINED FROM THESE PARTIES MUST HAVE BEEN DULY REFLECTED IN THEIR RE SPECTIVE BALANCE SHEETS AND NOT ONLY THAT, THE LOANS FROM THESE PARTIES IN THE EARLIER YEARS HAVE DULY BEEN ACCEPTED WITHOUT DOU BTING THE GENUINENESS. THUS, HE SUBMITTED THAT INCOME TAX AUTHORITI ES MAY BE DIRECTED TO CALL FOR THE INFORMATION DIRECTLY FROM THESE PARTIES TO EXAMINE THE GENUINENESS OF THE LOAN AND ACCORDINGLY, ADDITION MADE ALSO DIRECTED TO BE DELETED AFTER RECEIVING SUC H INFORMATION. 5. ON THE OTHER HAND, LD. SENIOR D.R. STRONGLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ONUS WHICH LIED UPON THE ASSESSEE UNDER THE LAW TO PROVE THE GENUINENESS OF THE LOAN HAS NOT BEEN PROVED DESPITE AMPLE OPPORTUNITIES GIVEN TO THE ASSESSEE AT VARIOUS STAGES R IGHT FROM THE ORIGINAL ASSESSMENT PROCEEDINGS TO SET ASIDE PROCEEDIN GS. THUS, THE CONTENTION OF THE LEARNED COUNSEL THAT INCOME TAX AU THORITIES SHOULD BE DIRECTED TO OBTAIN THE INFORMATION FROM THE SA ID CONCERNED PARTIES CANNOT BE ACCEPTED, ESPECIALLY AFTER THE EXPIRY OF I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 5 FIFTEEN YEARS SINCE THE TRANSACTION. THUS, THE ORDER OF THE LD. CIT (A) SHOULD BE CONFIRMED. 6. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF TH E MATERIAL REFERRED TO BEFORE US, WE FIND THAT ASSESSEE HAD TAKEN LOAN FOR A SUM AGGREGATING TO RS.2,40,11,399/- FROM THE FOLLOWING PARTIES:- SR. NO. NAME OF THE PARTY AMOUNT (IN RS.) 1. SIEL FINANCIAL SERVICES LTD. 50,00,000/- 2. WIZEMAN LIMITED 63,50,000/- 3. GANESH BENZOPLAST 50,00,000/- 4. GARDEN FINANCE LIMITED 6500000/- 5. MUTHOOT LEASING & FINANCE LTD. 10,29,468/- 6. OTHER/MISCELLANEOUS PARTIES 1,31,931/- AT NO STAGE EITHER DURING THE COURSE OF THE ORIGINAL ASS ESSMENT PROCEEDINGS OR IN THE SET ASIDE PROCEEDINGS, THE ASS ESSEE COULD FILE ANY CONFIRMATION OR ANY OTHER DOCUMENT TO PROVE THE GENU INENESS OF THE CREDITS AS APPEARING IN ITS BOOKS OF ACCOUNT. 7. THE PRIMARY REQUIREMENT AS ENVISAGED IN SECTIO N 68 IS THAT, ASSESSEE HAS TO EXPLAIN THE NATURE AND SOURCE OF TH E SUM FOUND CREDITED IN THE BOOKS AND IF SUCH AN EXPLANATION IS NO T OFFERED OR IS NOT FOUND TO BE SATISFACTORY, THEN SUCH AN AMOUNT IS DEE MED TO BE INCOME OF THE ASSESSEE CHARGEABLE TO INCOME TAX. THOUG H THE NATURE OF TRANSACTION APPEARING IN THE BOOKS HAVE B EEN STATED TO BE UNSECURED LOAN, HOWEVER, THE SOURCE FROM WHERE SUCH LOAN HAVE BEEN RECEIVED COULD NOT BE PROVED SATISFACTORILY . FOR PROVING I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 6 THE SOURCE OF CREDIT, THE ASSESSEE IS REQUIRED TO SATIS FY PRIMA FACIE THE IDENTITY, CREDITWORTHINESS OF THE CREDITORS/LENDERS AND THE GENUINENESS OF THE TRANSACTION. FROM THE FACTS AS CAN B E CULLED OUT ARE THAT, THE ASSESSEE IS PUBLIC LIMITED COMPANY WH ICH SEEMS TO HAVE RECEIVED UNSECURED LOANS MOSTLY FROM THE PU BLIC LIMITED COMPANIES NOT ONLY IN THE EARLIER YEARS, BUT ALSO I N THIS YEAR AS THERE WAS AN INCREASE IN SUCH LOAN. WHEN THE ASSESSIN G OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE LOAN RECEIVED DURING THE YEAR THE ASSESSEE MISERABLY FAILED TO DISC HARGE ITS ONUS. THOUGH THESE AMOUNTS MAY HAVE COME THROUGH ACCOUNT PA YEE CHEQUES FROM PUBLIC LIMITED COMPANIES, BUT AT LEAST SOM E KIND OF CONFIRMATION OF ACCOUNT OR CONFIRMATION LETTER FROM THE SE CREDITOR COMPANIES SHOULD HAVE BEEN OBTAINED AND GIVEN TO THE A SSESSING OFFICER THAT THESE LOANS HAVE BEEN GIVEN FROM THE SOURC ES DISCLOSED IN THEIR RESPECTIVE BOOKS OF ACCOUNT AND OR DULY REFL ECTED IN THEIR BALANCE SHEETS. IT IS ONLY WHEN ASSESSEE DISCHARGES ITS PRIMARY ONUS THAT THE BURDEN SHIFTS ON THE ASSESSING OFFICER, THAT SUCH AN EVIDENCE OR EXPLANATION IS REBUTTABLE OR NOT TENABLE ON THE BASIS OF MATERIAL AND INFORMATION GATHERED BY HIM. HERE IN THIS CASE, THE FIRST STEP ITSELF HAS NOT BEEN FOLLOWED BY THE ASSESSEE AND THEREFORE, WE ARE OF THE OPINION THAT ADDITION HAS RIGHT LY BEEN MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A). SO F AR AS IN THE CASE OF ONE PARTY, THE CONFIRMATION OF LOAN WHICH HA S BEEN FILED FOR THE FIRST TIME BEFORE US AND COPY OF LEDGER ACCOUNT OF OTHER FIVE PARTIES IN THE BOOKS OF THE ASSESSEE HAVE BEEN GIVEN, ONLY GOES TO SHOW THAT THE AMOUNTS HAVE BEEN RECEIVED THROUGH ACCOU NT PAYEE CHEQUES. THOUGH THIS ONLY GOES TO SHOW ONE SIDED ENTRY IN ASSESSEES BOOKS OF ACCOUNT AND EVEN THOUGH AMOUNTS MAY HAVE COME THROUGH ACCOUNT PAYEE CHEQUES, BUT SOMETHING MORE IS REQUIRED U/S.68, LIKE CREDITWORTHINESS AND IDENTITY O F THE CREDITOR I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 7 AS PER THE PRINCIPLES LAID DOWN IN CATENA OF JUDGMEN TS. THOUGH PREPONDERANCE OF PROBABILITY MAY BE SLIGHTLY IN FAVO UR OF THE ASSESSEE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND LOANS HAVE BEEN RECEIVED FROM PUBLIC LIMITED COMPANIES NO T ONLY IN THE EARLIER YEARS (WHERE IT IS NOT IN DISPUTE) BUT ALSO IN THIS YEAR, THEREFORE, THE GENUINENESS OF THE LOAN IS MOST LIKELY TO BE ACCEPTABLE, BUT IN THE QUANTUM PROCEEDINGS, THE ASSESSEE HAS TO SUBSTANTIATE OR EXPLAIN THE SOURCE OF SUCH LOAN WHICH CAN ONLY BE PROVED BY THE CONFIRMATION OF THE PARTIES OR FROM THEIR AUDITED ACCOUNTS OR INCOME TAX RETURNS THAT MONEY HAS COME FROM THEIR OWN SOURCES AND THEY HAVE THE CREDITWORTHINESS FOR GR ANTING SUCH LOAN. THE COPY OF CONFIRMATION FROM ONE PARTY AT THIS STAGE CANNOT BE THE SOLE BASIS FOR ACCEPTING THE GENUINENESS OF THE LOAN TAKEN FROM THE SAID PARTY, BECAUSE IT HAS NOT BEEN VERIFIED OR SUBJECT TO SCRUTINY BY THE ASSESSING OFFICER AS ASSESSEE SHOUL D HAVE FILED THESE DOCUMENTS BEFORE THE LOWER AUTHORITIES WHEN SEVERA L OPPORTUNITIES WERE GIVEN TO IT. THE ASSESSEE, IF MAY S O DESIRE, CAN FILE ALL THESE DOCUMENTS AND PLEAD ITS CASE IN THE COU RSE OF PENALTY PROCEEDINGS IF AT ALL IS INITIATED, WHERE THE CONSIDER ATIONS ARE SEPARATE AND DISTINCT FROM THE QUANTUM PROCEEDINGS. BUT IN THE PRESENT PROCEEDINGS SUCH AN EXPLANATION LACKS CREDIBL E EVIDENCE AND IS NOT SUFFICIENT TO DISCHARGE THE ONUS/BURDEN WHIC H LIED UPON THE ASSESSEE. ACCORDINGLY, GROUND NO.1, 2 AND 3 ARE DISMISSED. 8. SO FAR AS THE ISSUE RAISED VIDE GROUND NO.4 WITH REGARD TO INCREASE ON ACCOUNT OF CURRENT LIABILITIES OF RS.48,4 1,204/- AND INTEREST PAID OF UNSECURED LOANS. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER HAD NOTED THAT THERE HAS BEEN INCREAS E IN THE CURRENT LIABILITIES BY SUM OF RS.48,41,204/- AND DES PITE ASSESSING I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 8 OFFICERS REQUEST TO PROVIDE THE LIST OF SUNDRY CREDITOR S ALONG WITH PAN AND INCOME TAX RETURN, NO SUCH DETAIL COULD BE FUR NISHED BY THE ASSESSEE EITHER IN THE COURSE OF ORIGINAL ASSESSM ENT PROCEEDINGS OR IN THE COURSE OF SET ASIDE PROCEEDING S IN PURSUANCE OF THE ITAT ORDER. THE CURRENT LIABILITIES HAVE INCREA SED FROM RS.36,96,80,548/- TO RS.37,45,21,752/- AS ON 31.03.2 002. THE CONTENTION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AND LD. CIT (A) HAS BEEN THAT THESE CURRENT LIABILITIES WERE INCURRE D IN THE COURSE OF BUSINESS WHICH CANNOT BE DOUBTED AND THEY RE PRESENT EXPENSES AND NOT ANY KIND OF CASH CREDIT. HOWEVER BOTH ASSESSING OFFICER AND LD. CIT (A) DID NOT AGREE WITH SUCH AN E XPLANATION AND CONFIRMED THE SAID ADDITION ON THE GROUND THAT THE ASS ESSEE COULD NOT FURNISH THE REQUISITE INFORMATION AND DETAILS AS AS KED. SO FAR AS THE INTEREST ADDITION OF RS.1,06,022/- IS CONCERNED , THE SAME HAS BEEN CONFIRMED ON THE GROUND THAT ASSESSEE COULD NOT EXPLAIN THE CREDIT ENTRIES OF THE LOAN AND THEREFORE, INTEREST C ANNOT BE ALLOWED. 9. BEFORE US THE LEARNED COUNSEL, MR. WADHWA SU BMITTED THAT THE ADDITION HAS BEEN MADE ON PRESUMPTION AND GUESS WO RK WITHOUT LOOKING INTO THE PAST RECORD AND THAT THE CUR RENT LIABILITIES WERE INCURRED IN THE COURSE OF BUSINESS WHICH CANNOT BE DOUBTED. HOWEVER, DUE TO LAPSE OF TIME AND ASSESSEES BUSINESS BEING CLOSED, IT WAS DIFFICULT TO OBTAIN CONFIRMATION OR DETAI LS AS REQUIRED BY THE ASSESSING OFFICER FROM THE RESPECTIVE PARTIES, B UT THE LIABILITIES INCURRED IN THE COURSE OF THE BUSINESS CA NNOT BE DISALLOWED. SIMILARLY WITH REGARD TO THE INTEREST HE PO INTED OUT THAT NO BASIS HAS BEEN GIVEN IN THE ASSESSMENT ORDER AN D AS PER SCHEDULE-3 OF THE BALANCE SHEET IT CAN BE SEEN THAT ASSE SSEE HAS TAKEN HUGE LOAN FROM THE BANK AND OVERDRAFT FACILITY BY PLEDGING I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 9 THE MOVABLE ASSET BY THE COMPANY AND PERSONAL GUARANTEE OF TWO OF ITS DIRECTORS. THE INTEREST ACCRUED ON SUCH LOANS C ANNOT BE DISALLOWED, BECAUSE OF THESE AMOUNT HAS BEEN USED FOR THE PURPOSE OF BUSINESS. 10. ON THE OTHER HAND, LEARNED SR. DR STRONGLY RELIED UPON THE ORDER OF THE LD. CIT (A). 11. AFTER CONSIDERING RIVAL SUBMISSIONS AND ON PERUS AL OF THE IMPUGNED ORDER, WE FIND THAT THE ASSESSING OFFICER AND LD. CIT (A) HAD MADE THE ADDITION ON THE GROUND THAT ASSESSEE COULD NOT FILE ANY REQUISITE INFORMATION OR DETAILS AS REQUIRED, BECA USE THERE WAS INCREASE IN THE LIABILITY IN THIS YEAR FOR WHICH THE ONUS WAS UPON THE ASSESSEE TO SHOW THAT SUCH A LIABILITY HAD ARISEN IN THE COURSE OF BUSINESS AND IT IS A GENUINE LIABILITY. SIMPLY BE CAUSE THE ACCOUNTS ARE AUDITED AND LIABILITY IS APPEARING IN T HE BOOKS OF ACCOUNT IT CANNOT BE HELD OR PRESUMED THAT THESE LIABILIT IES HAVE BEEN INCURRED PURELY DURING THE COURSE OF THE BUSINE SS. THE ONUS IS UPON THE ASSESSEE TO PROVE THAT SUCH A LIABILITY DI D EXIST AND HAS BEEN DULY RECOGNIZED BY THE OTHER PARTY AND IF R EQUIRED FROM THE REVENUE OFFICIALS, ASSESSEE HAS TO SUBSTANTIATE THE S AME. THUS, ON THIS SCORE ALSO, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A) THAT SUCH AN INCREASE IN THE LIABILITY FOR SUM OF RS.48,41,204/- HAS NOT BEEN EXPLAINED BY THE ASSESSEE AND ACCORDINGLY, SAME HAS RIGHTLY BEEN ADDED. 12. IN RESPECT OF INTEREST AMOUNT ALSO, WE ARE U NABLE TO GAUGE AS TO WHETHER THIS INTEREST IS AN ACCOUNT OF THE UNSECURED LOANS OR ANY OTHER SECURED LOANS TAKEN FROM THE BANK WHICH HA S BEEN USED FOR THE PURPOSE OF THE ASSESSEES BUSINESS. IF THESE I NTEREST I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 10 PERTAINS TO LOANS FOR THE BUSINESS PURPOSE THEN THE SAM E HAS TO BE ALLOWED, BUT HERE THE ASSESSEE IS UNABLE TO SHOW THAT THE INTEREST AMOUNTING TO RS.1,06,022/- IS FOR THE PAYMENT ON ACCOU NT OF LOAN WHICH IS ALLOWABLE U/S.36(1)(III). ACCORDINGLY, THE ORDER OF THE ASSESSING OFFICER AND LD. CIT (A) ARE CONFIRMED AND RESULTANTLY, GROUND NO.4 IS ALSO DISMISSED. 13. BEFORE US THE LEARNED COUNSEL, MR. S.R. WADHWA H AD PLEADED THAT ASSESSEE HAD HUGE BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION, THE SET-OFF WHICH HAS NOT BEE N GIVEN BY THE ASSESSING OFFICER. BEFORE THE LD. CIT (A) THE ASSE SSEE HAS TAKEN A SPECIFIC GROUND WHICH LD. CIT(A) WAS PLEASED TO GI VE DIRECTION TO THE ASSESSING OFFICER TO ALLOW THE SAME AFTER VERIFYIN G FROM THE RECORDS. THE RELEVANT GROUND AND THE OBSERVATION OF TH E LD. CIT (A) ON THIS ISSUE READS AS UNDER: 5. GROUND NO. 6 OF THE APPEAL IS AS UNDER: THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. AO HAS GROSSLY ERRED IN NOT SETTING OFF OF BROUGHT FOR WARDED LOSSES AND UNABSORBED DEPRECIATION AGAINST CURRENT YEARS INCOME AS REQUIRED UNDER SUB-SECTION (2) OF SECTION 32 AND SU B-SECTION (1) OF SECTION 72 OF THE INCOME-TAX ACT, 1961 IN SPITE OF FURNISHING COPIES OF ASSESSMENT ORDERS/PROOF OF FILING INCOME TAX RETURNS FOR A.Y. 1995-96 TO 2001-02. 5.1 DURING THE PROCEEDINGS BEFORE ME, IT WAS SUBMI TTED THAT THE ASSESSING OFFICER HAS NOT GIVEN SET OFF OF BROUGHT FORWARD LOSSES FROM ASSESSMENT YEARS 1995-96 TO 2001- 02 AS REQUIR ED U/S 32(1) AND 72(1) OF THE ACT. IT WAS FURTHER ADDED TH AT AS PER THE APPELLANTS RECORDS, BROUGHT FORWARD LOSSES ARE OF RS. 156,85,76,114/-. 5.2 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMIS SIONS OF LD. AR. THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE ISSUE OF BROUGHT FORWARD LOSSES HOWEVER, IN VIEW OF THE SUBMISSIONS OF LD. AR, THE ASSESSING OFFICER IS DIR ECTED TO RECORDS AND MAKE NECESSARY COMPUTATION AS PER THE P ROVISIONS OF THE ACT. I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 11 14. MR. WADHWA SUBMITTED THAT TILL DATE ASSESSING OFFICER HAS NOT CARRIED OUT THE DIRECTIONS OF THE LD. CIT (A). LD. D .R., SUBMITTED THAT THE DIRECTION CAN BE GIVEN TO THE ASSESSING OFFICER TO EXAMINE THIS ISSUE IN THE LIGHT OF THE ORDER OF THE LD. CIT (A ) AND DECIDED EXPEDITIOUSLY. 15. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TH AT BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION, THE DETAIL S OF WHICH HAS BEEN GIVEN BY THE LEARNED COUNSEL BEFORE US IN TH E WRITTEN SUBMISSION MAY BE EXAMINED AND SET-OFF SHOULD BE GI VEN AGAINST THE INCOME ASSESSED FOR THIS YEAR IN ACCORDANCE WITH LAW. THUS, THIS PLEA OF THE LEARNED COUNSEL IS ACCEPTED AND ALLO WED FOR STATISTICAL PURPOSES. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. 17. IN REVENUES APPEAL, FOLLOWING GROUNDS HAVE BEE N RAISED:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO VERIFY AND ALLOW DEPRECIATION ON ASSTS W HICH ARE INCLUDED IN THE BLOCK OF ASSETS AND WERE USED FOR THE PURPOSE OF BU SINESS IN EARLIER YEARS, IGNORING THAT: A) ONCE THE INDIVIDUAL ASSET IS NOT PUT TO USE WHICH I S PREREQUISITE CONDITION FOR AVAILING DEPRECIATION U/S.32 OF THE I NCOME TAX ACT,1961, THE SAME BECOMES INELIGIBLE/DISQUALIFIED FOR BLOCK OF A SSETS ON WHICH DEPRECIATION IS ALLOWED AS PER RULE 5 AND APPEDIX-I A OF THE INCOME TAX RULES, 1962, BUT SHALL CONTINUE TO REMAIN THE PART OF THE BLOCK OF ASSETS FOR ALL OTHER PURPOSE EXCEPT FOR THE PURPOSE OF CLA IMING DEPRECIATION UNLESS PUT TO USE. B) IN THE CASE OF CIT VS. ORIENTAL COAL CO. LTD. (1994 ) 206 ITR 682/78 TAXMAN 240(CAL.) IT HAS BEEN OBSERVED BY THE HON'BL E HIGH COURT THAT WHERE ASSETS WERE NOT AT ALL USED DUE TO LOCK OUT, DEPRECIATION CANNOT BE ALLOWED. RELIANCE IS ALSO PLACED ON THE DECISIONS I N LIQUIDATORS OF PURSA LTD. VS. CIT (1954) 25 ITR 265(SC); DCIT VS. YELLAM MA DASAPPA HOSPITAL (2007) 159 TAXMAN 58/290 ITR 353 (KAR.) AND CIT VS. SUHRID GEIGY LTD. (1982) 133 ITR 884 (GUJ.)/CIT VS. JIWAJI RAO SUGAR CO. LTD. (1969) 71 ITR 319 (MP) (APP.) I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 12 16. THE BRIEF FACTS QUA THE AFORESAID GROUND ARE THAT ASSESSEE COMPANY HAS CLAIMED DEPRECIATION OF RS.59,99,297/- O N PLANT AND MACHINERY AND RS.36,395/- ON DISTRIBUTION EQUIPMENT. THE ASSESSING OFFICER FROM THE PERUSAL OF AUDIT REPORT NOTE D THAT AUDITORS HAVE COMMENTED THAT DURING THE YEAR DUE TO DISCONTINUANCE OF THE MAIN ACTIVITY OF THE COMPANY THEY ARE NOT IN A POSITION TO COMMENT ON THE VERIFICATION OF THE ASSETS BY THE MANAGEMENT OR ANY DISCREPANCY THEREOF, HELD THAT, SINC E THERE WAS NO BUSINESS ACTIVITY IN THIS YEAR, THEREFORE, NO DEPRECIATION IS ALLOWABLE. ACCORDINGLY, HE ALLOWED THE CLAIM OF DEPR ECIATION OF RS.60,35,692/-. 17. BEFORE THE LD. CIT (A) THE ASSESSEE SUBMITTED THAT I T HAS EARNED GROSS INCOME OF MORE THAN RS.14 LACS SHOWN UN DER THE HEAD OTHER INCOME IN THE PROFIT AND LOSS ACCOUNT AND TILL LAST YEAR ASSESSEES TURNOVER WAS MORE THAN RS.1.99 CRORE AND OTHER INCOME WAS RS.17.16 LACS. ALL THESE PLANT AND MACHIN ERY ARE PART OF THE BLOCK OF ASSETS AND THEREFORE, IT CANNOT BE HEL D THAT THEY WERE NOT PUT TO USE IN THIS YEAR SIMPLY BECAUSE MANAGE MENT COULD NOT CERTIFY THE FIGURES TO THE AUDITORS. MERE SUSPENSIO N OF A BUSINESS ACTIVITY DOES NOT MEAN THAT BUSINESS HAS BEE N CLOSED DOWN AND ASSESSEE WOULD BE INELIGIBLE FOR CLAIM OF DEPRECIATION ON THE ASSETS WHICH WERE KEPT READY FOR USE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS; I. CIT VS. REFRIGERATION & ALLIED INDUSTRIES LTD., 247 ITR 12 II. CIT VS. GEOTECH CONSTRUCTION CORPORATION 24 4 ITR 452, III. CAPITAL BUS SERVICES (P), LTD., 123 ITR 404 . 18. LD. CIT (A) AFTER REFERRING TO THE JUDGMENTS OF HO N'BLE DELHI HIGH COURT IN THE CASES, VIZ., CIT VS. BHARAT A LUMINIUM CO. I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 13 LTD., 187 TAXMAN 111; AND CIT VS. YAMAHA MOTOR INDIA (P). LTD, 226 CTR 304, HELD THAT IN THE CONCEPT OF BLOCK OF ASS ETS USED FOR THE PURPOSE OF BUSINESS WOULD MEAN USE OF BLOCK OF ASSET AND NOT AN INDIVIDUAL ASSET. IF THE PLANT AND MACHINERY FORMS PART OF BLOCK OF ASSETS IN THE EARLIER YEAR AND WERE USED FOR THE P URPOSE OF BUSINESS FROM THE EARLIER YEARS THEN THE SAME CANNOT BE DISALLOWED. HE DIRECTED THE ASSESSING OFFICER TO VERI FY FROM THE RECORDS AND ALLOW THE DEPRECIATION ONLY ON THOSE ASSETS WHICH WERE USED FOR THE PURPOSE OF BUSINESS IN THE EARLIER YEARS AND FORMED PART OF THE BLOCKS OF ASSETS. 19. BEFORE US LD. D.R., SUBMITTED THAT IF THE ASSESSEE H AS NOT USED THE ASSET FOR THE PURPOSE OF BUSINESS IN THIS YEA R, THEN DEPRECIATION CANNOT BE ALLOWED AND IN SUPPORT HE REFER RED TO ONE JUDGMENT OF CALCUTTA HIGH COURT IN THE CASE OF, CIT VS. PUNJAB COAL CO. LTD., REPORTED IN (1994) 76 TAXMAN 240. HE H AD ALSO REFERRED A JUDGMENT OF HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT VS. (2012) AGRO MILLS LTD., REPORTED IN 341 ITR 647 . THUS, HE SUBMITTED THAT ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE DEPRECIATION. 20. LD. COUNSEL ON THE OTHER HAND STRONGLY RELIED UPON THE ORDER OF CIT (A) AND ALSO RELIED UPON THE JUDGMENTS OF VAR IOUS COURTS ON THIS POINT. 21. AFTER CONSIDERING THE SUBMISSIONS MADE BY TH E PARTIES AND ON PERUSAL OF THE MATERIAL REFERRED TO BEFORE US, WE FIND THAT IT IS NOT IN DISPUTE THAT PLANT AND MACHINERY ON WHICH DEPRECI ATION HAS BEEN DISALLOWED BY THE ASSESSING OFFICER FORMED PART OF THE ASSETS UTILIZED FOR THE PURPOSE OF BUSINESS BY THE ASSE SSEE IN THE I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 14 EARLIER YEARS AND THE DEPRECIATION ON SUCH BLOCK OF A SSETS HAVE BEEN ALLOWED. AFTER THE CONCEPT OF BLOCK OF ASSETS B ROUGHT IN THE STATUTE BY CLAUSE (C) OF SUB SECTION (6) OF SECTION 43 W .E.F. 01.04.1998, THE CONCEPT OF INDIVIDUAL ASSETS HAS LOST ITS RELEVANCE AND NO LONGER STANDS. THOUGH AS PER SECTION 32(1) IN ORDER TO CLAIM DEPRECIATION NOT ONLY THE ASSET SHOULD BE OWNED B Y THE ASSESSEE BUT IT SHOULD ALSO BE USED FOR THE PURPOSE OF BUSINESS OR PROFESSION. HOWEVER, HERE THE CONCEPT USED FOR THE PU RPOSE OF BUSINESS WHEN APPLIED TO BLOCK OF ASSETS, THEN WHAT IS REQUIRED TO BE SEEN IS, WHETHER SUCH BLOCK OF ASSETS HAD BEEN USED FOR THE BUSINESS IN THE EARLIER YEARS OR NOT. IF ANSWER IS A FFIRMATIVE, THEN THE SAME HAS TO BE ALLOWED, BECAUSE THE INDIVIDUAL ASS ET LOSES ITS IDENTITY. THIS PROPOSITION HAS NOW BEEN WELL SETTLED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BHARAT ALUMINIUM CO. (P) LTD. (SUPRA). APART FROM THAT THE JUDGMENT AS RELIED UPON BY THE LD. D.R. IN THE CASE OF CIT VS. OSWAL AGRO MILLS LTD. ,(SUPRA), THE HON'BLE HIGH COURT HAS IN FACT ALLOWED T HE DEPRECIATION ON THE BLOCK OF ASSETS EVEN WHEN THERE WAS A PASSIVE USER. THE RELEVANT PORTION OF THE SAID JUDGMENT CAN BE SUMMARIZED AS UNDER:- AFTER THE AMENDMENT OF SECTION 32 OF THE INCOME-TAX ACT, 1961, BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROV ISIONS) ACT, 1986, SECTION 32(1) OF THE ACT ALLOWS DEPRECIATION ON THE WRITTEN DOWN VALUE OF A BLOCK OF ASSETS. SECTION 2(11) OF T HE ACT DEFINES THE TERM 'BLOCK OF ASSETS'. ALONG WITH THE AMENDMENT, T HE DEFINITION OF 'WRITTEN DOWN VALUE' AS CONTAINED IN SECTION 43(6) WAS ALSO AMENDED. THUS, FOR THE ASSESSMENT YEAR 1998-99, THE WRITTEN DOWN VALUE OF ANY BLOCK OF ASSETS SHALL BE THE AGGR EGATE OF THE WRITTEN DOWN VALUE OF ALL THE ASSETS FALLING WITHIN THAT BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR. FROM THIS, ADJUSTMENT HAS TO BE MADE FOR THE INCREASE OR REDUCTION IN THE BLOCK OF ASSETS DURING THE YEAR UNDER CONSIDERATION. THE DEDUCTION FROM THE BLOCK OF ASSETS HAS TO BE MADE IN RESPECT OF ANY ASSET, S OLD DISCARDED OR I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 15 DEMOLISHED OR DESTROYED DURING THE PREVIOUS YEAR. T HUS, THE DEPRECIATION IS ALLOWED ON THE BLOCK OF ASSETS, AND THE REVENUE CANNOT SEGREGATE A PARTICULAR ASSET THEREFROM ON TH E GROUND THAT IT WAS NOT PUT TO USE. INDIVIDUAL ASSETS HAVE LOST THE IR IDENTITY AND THE CONCEPT OF 'BLOCK OF ASSETS' HAS BEEN INTRODUCE D FOR CALCULATING DEPRECATION. ASSESSEES ARE NOT REQUIRED TO MAINTAIN PARTICULARS OF EACH ASSET SEPARATELY. THE REVENUE CANNOT CLAIM THA T FOR ALLOWING THE DEPRECIATION, USER OF EACH AND EVERY ASSET IS E SSENTIAL EVEN WHEN A PARTICULAR ASSET FORMS PART OF A 'BLOCK OF A SSETS'. MOREOVER, THE REVENUE IS NOT PUT TO ANY LOSS BY ALLOWING DEPR ECIATION ON A PARTICULAR ASSET, FORMING PART OF THE 'BLOCK OF ASS ETS' EVEN WHEN THAT PARTICULAR ASSET IS NOT USED IN THE RELEVANT A SSESSMENT YEAR, AS WHENEVER SUCH AN ASSET IS SOLD, IT WOULD RESULT IN SHORT-TERM CAPITAL GAINS, WHICH WOULD BE EXIGIBLE TO TAX. THE COURT CANNOT GIVE AN EXPRESSION A MEANING WHICH WOULD MAKE THE PROVISION SUPERFLUOUS. FOR SIX ASSESSMENT YEARS BEGINNING FROM 1998-99, TH E ASSESSING OFFICER DENIED THE ASSESSEE DEPRECIATION IN RESPECT OF ITS BHOPAL UNIT ON ASSETS FORMING PART OF A BLOCK OF ASSETS, O N THE GROUND THAT THE UNIT WAS CLOSED THROUGHOUT THE YEARS. THIS WAS CONFIRMED BY THE COMMISSIONER (APPEALS) BUT THE TRIBUNAL ALLOWED DEPRECIATION ON TWO GROUNDS, THAT THERE WAS A PASSIVE USER OF TH E ASSETS AT THE BHOPAL UNIT, WHICH COULD BE TREATED AS 'USED FOR TH E PURPOSE OF BUSINESS' AND THAT THE ASSETS OF THE BHOPAL UNIT CO ULD NOT BE SEGREGATED FOR THE PURPOSE OF ALLOWING DEPRECIATION AND DEPRECIATION HAD TO BE ALLOWED ON THE ENTIRE BLOCK OF ASSETS. ON APPEAL: HELD, ACCORDINGLY, THAT WHILE THE TRIBUNAL WAS NOT RIGHT IN HOLDING THAT THERE HAD BEEN PASSIVE USER OF THE ASSET, BECA USE, IN THE SIX YEARS TILL THE LAST ASSESSMENT YEAR IN QUESTION THE RE WAS NO SIGN OF THIS UNIT BECOMING FUNCTIONAL AND 'PASSIVE USER', I N THESE CIRCUMSTANCES, COULD NOT BE EXTENDED TO ABSURD LIMI TS, OTHERWISE, THE WORDS 'USED FOR THE PURPOSE OF BUSINESS' WOULD LOSE THEIR TOTAL SANCTITY, THE TRIBUNAL WAS RIGHT IN ALLOWING DEPREC IATION BASED ON THE 'BLOCK OF ASSETS'. 22. THUS, RESPECTFULLY FOLLOWING THE AFORESAID JUDGME NT, WE UPHOLD THAT LD. CIT (A) HAS RIGHTLY ALLOWED THE DEPRE CIATION ON SUCH BLOCK OF ASSETS AND IN ANY CASE THE DEPRECIATIO N CLAIMED ON I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 16 WDV HAS TO BE ALLOWED. THE GROUNDS RAISED BY THE REV ENUE ARE THUS DISMISSED. 23. NOW WE WILL COME TO THE APPEAL FOR ASSESSMENT YEA R 2009- 10 WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE. 1. THE ORDER OF THE LD. CIT (A) DATED 19.12.2012 IS BA D IN LAW AND ON FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECI ATION ON PLANT & MACHINERY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT.(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF ADMINIS TRATIVE EXPENSES OF RS. 3,52,978/- CLAIMED BY THE ASSESSEE. 24. SO FAR AS THE GROUND NO.2 IS CONCERNED, BOTH THE P ARTIES HAVE ADMITTED THAT THIS ISSUE IS SAME WHICH HAS BEEN RA ISED IN THE REVENUES APPEAL, I.E., DISALLOWANCE OF DEPRECIATION ON CERTAIN PLANT AND MACHINERY WHICH WERE PART OF BLOCK OF ASS ETS ALLOWED IN THE EARLIER YEARS. THE SAME HAS BEEN DISALLOWED BY TH E ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) MAINLY ON THE GROUND THAT THE BUSINESS ACTIVITIES OF THE ASSESSEE HAS BEEN DISCON TINUED. SINCE THIS ISSUE IS SIMILAR TO THE GROUND RAISED IN THE ASSESSMENT YEAR 2002-03, THEREFORE, ON THE SAME REASONING, WE A LLOW THE DEPRECIATION ON THE PLANT AND MACHINERY FORMING PART O F THE BLOCK ASSET ALLOWED IN THE EARLIER YEARS. THUS, GROUND NO. 2 IS ALLOWED. 25. SO FAR AS THE ISSUE OF DISALLOWANCE OF ADMINISTRA TIVE EXPENSES OF RS.3,52,978/- IS CONCERNED, WE FIND THAT THE DETAILS AS GIVEN IN THE SCHEDULE TO PROFIT & LOSS ACCOUNT, THE M AJOR EXPENSES ARE LEGAL EXPENSES OF RS.85,000/-; AUDIT FEE OF RS.9 7550/-; AND OFFICE MAINTENANCE OF RS.45,875/-, BESIDES SOME MISC ELLANEOUS I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 17 OTHER EXPENSES. THESE HAVE BEEN DISALLOWED BY THE ASS ESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) ON THE GROU ND THAT BUSINESS ACTIVITIES HAVE NOT BEEN CARRIED OUT BY THE A SSESSEE AND THEREFORE, SUCH EXPENSES CANNOT BE ALLOWED. 26. BEFORE US THE LEARNED COUNSEL SUBMITTED THAT THE CO RPORATE STRUCTURE OF THE ASSESSEE IS STILL CONTINUING AND ASSE SSEE WAS REQUIRED TO CARRY OUT STATUTORY AUDIT OF ITS BOOKS OF ACC OUNT AND OTHER ACTIVITIES FOR WHICH IT HAD PAID AUDIT FEES AND HA S ALSO INCURRED LEGAL EXPENSES FOR THE PURPOSE OF THE BUSINE SS AND ALSO THESE EXPENSES WERE NECESSITATED FOR PROTECTION OF THE P ROPERTY OF THE COMPANY AND DAY TO DAY RUNNING OF THE COMPANY. THU S, SAME CANNOT BE DISALLOWED. 27. ON THE OTHER HAND, LD. D.R. STRONGLY RELIED UP ON THE ORDER OF THE ASSESSING OFFICER AND LD. CIT (A). 28. FROM THE PERUSAL OF THE IMPUGNED ORDER AS WELL AS FINDING GIVEN BY THE LEARNED ASSESSING OFFICER AND LD. CIT( A), WE FIND THAT THE CORPORATE OFFICE OF THE ASSESSEE IS STILL BEING MAI NTAINED IN THIS YEAR ALONG WITH OTHER INFRASTRUCTURES AND ACTIVITIES EVEN THOUGH MAIN BUSINESS ACTIVITY HAS BEEN DISCONTINUED. IN SO F AR AS EXPENSES LIKE LEGAL EXPENSES, AUDIT FEES, OFFICE MAI NTENANCE AND OTHER MINOR ADMINISTRATIVE EXPENSES ARE CONCERNED, IT C ANNOT BE HELD THAT THE SAME IS TO BE DISALLOWED, BECAUSE THE EXP RESSION FOR THE PURPOSE OF BUSINESS IS MUCH WIDER IN SCOPE THAN FOR THE PURPOSE OF EARNING PROFIT AND TO MAINTAIN THE CORPORA TE STRUCTURE AND PRESERVATION OF THE BUSINESS, SUCH EXPENSES ARE R EQUIRED WHICH NEEDS TO BE ALLOWED. BEFORE US, THE LEARNED COU NSEL HAS RELIED UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COUR T IN THE I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 18 CASE OF SAHAKARI SHAKKAR KARKHANA VS. CIT-II, 229 ITR 577 , WHEREIN IT WAS HELD IN THE FOLLOWING MANNER: SO FAR AS THE SCOPE AND AMBIT OF THE EXPRESSION 'FO R THE PURPOSES OF THE BUSINESS' IS CONCERNED, IT IS WELL-SETTLED BY THE DECISION OF TH E SUPREME COURT IN CIT VS. MALAYALAM PLANTATIONS LTD. (1964) 53 ITR 140 (SC), THAT THE EXPRESSION 'FOR THE PURPOSE OF THE BUSINESS' IS WIDER IN SCOPE THAN THE EXPRESSION 'FOR THE PURPOSE OF THE EARNING PROFITS'. ITS RANGE IS WIDE: IT MAY TAK E IN NOT ONLY THE DAY TO DAY RUNNING OF A BUSINESS BUT ALSO THE RATIONALISATION OF ITS ADMINISTRATION AND MODERNISATION OF ITS MACHINERY; IT MAY INCLUDE MEAS URES FOR THE PRESERVATION OF THE BUSINESS AND FOR THE PROTECTION OF ITS ASSETS A ND PROPERTY FROM EXPROPRIATION, COERCIVE PROCESS OR ASSERTION OF HOSTILE TITLE; IT MAY ALSO COMPREHEND PAYMENT OF STATUTORY DUES AND TAXES IMPOSED AS A PRE-CONDITION TO COMMENCE OR FOR THE CARRYING ON OF A BUSINESS; IT MAY COMPREHEND MANY O THER ACTS INCIDENTAL TO THE CARRYING ON OF A BUSINESS. THE ONLY LIMITATION IS T HAT THE PURPOSE SHOULD BE FOR THE PURPOSE OF THE BUSINESS, THAT IS TO SAY, THE EXPEND ITURE INCURRED SHOULD BE FOR THE CARRYING ON OF BUSINESS AND THE ASSESSEE SHOULD INC UR IT IN HIS CAPACITY AS A PERSON CARRYING ON THE BUSINESS.' 29. THUS, IF WE APPLY THE SAID PRINCIPLE IN THE AFORE SAID CASE, WE DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES AMOUNTING TO RS.3,52,978/- AN D SAME IS DIRECTED TO BE DELETED. 30. BEFORE US, THE LEARNED COUNSEL HAD SUBMITTED THAT ASSESSING OFFICER MAY BE DIRECTED TO SET-OFF THE CARR Y FORWARD BROUGHT FORWARD LOSSES IN THE FORM OF BUSINESS LOSS A ND UNABSORBED DEPRECIATION PERTAINING TO THE EARLIER ASSES SMENT YEARS, AS CLAIMED IN THE RETURN OF INCOME. WE ACCORDI NGLY, DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE RECORDS THE CL AIM OF THE ASSESSEE AND IF ANY BROUGHT FORWARD LOSS AND UNABSOR BED DEPRECIATION HAS BEEN CLAIMED IN THE RETURN OF INCOME COMING FROM THE EARLIER YEARS AND SUCH CLAIM AND QUANTIFICATI ON IS CORRECT, THEN THE SAME SHOULD BE ALLOWED IN ACCORDANCE WITH LA W. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. I.T.A. NO.4371, 4419/DEL/2010 & 1358/DEL/2013 19 31. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 IS DISMISSED; WHEREAS THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2017. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH DECEMBER, 2017 PKK: