DCIT CIR 3, THANE V. SEQUENT SCIENTIFIC LTD, THANE

ITA 14/MUM/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5982 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Assessee Lawyers: H P MAHAJANI
• Keywords: Business expenditure; Commercial expediency; Onus to prove; Revenue expenditure; Liquidation; FORM 26AS
• Section: 10B; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.14/M/2017 ASSESSMENT YEAR: 2011-12 DCIT, CIRCLE -3, ROOM NO.02, 6 TH FLOOR, ASHAR IT PARK, B-WING, WAGLE INDL. ESTATE, THANE (W)- 400 604 VS. M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 301, DOSTI PINNACLE, PLOT NO.E-7, ROAD NO.22, WIE, THANE (W) 400 601 PAN: AAACV1501G (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI H.P. MAHAJANI, A.R. REVENUE BY : SHRI T.S. KHALSA, D.R. DATE OF HEARING : 14.07.2021 DATE OF PRONOUNCEMENT : 27.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 28.09.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE ISSUE RAISED IN 1 ST GROUND OF APPEAL IS AGAINST THE DELETION OF ADDITION BY LD. CIT(A) AS MADE BY THE A O UNDER SECTION 10B OF THE ACT IN RESPECT OF MANGALORE UNIT ON THE GROUND THAT THE ASSESSEE HAS NOT FULFILLED THE PRE- CONDITIONS PROVIDED UNDER THE ACT. ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 2 3. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN ITS OWN CASE IN ITA NO.4443 & 4438/M/2016 A.Y. 2010-11. TH E LD. A.R. SUBMITTED THAT EVEN THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING HIS OWN ORDER FOR A.Y. 2010-11 BY OBSERVING THAT THERE IS NO CHANGE IN FACTS AND CIRC UMSTANCES OF THE CASE AND SINCE IT HAS BEEN ALLOWED IN 2010-11, THEREFORE THE SAME WAS BEING ALLOWED IN THE CURRENT YEAR ALSO. 4. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AO AND GROUNDS OF APPEAL. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE ORDER OF CO- ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.4438/M/201 6 A.Y. 2010-11, WE OBSERVE THAT THE ISSUE IS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE BY DECISION OF THE CO-ORDINATE BENC H OF THE TRIBUNAL AS THE COORDINATE BENCH HAS UPHELD THE ORD ER OF THE LD. CIT(A) ALLOWING THE DEDUCTION UNDER SECTION 10B OF THE ACT TO THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR 2010- 11. WE ARE THEREFORE INCLINED TO UPHOLD THE ORDER OF LD. CIT(A ) BY DISMISSING THE GROUND NO.1 OF THE REVENUE. 6. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE O RDER OF LD. CIT(A) DIRECTING THE AO TO ALLOW DEDUCTION ON ACCOU NT OF ADDITION OF INVENTORY WHICH WAS DISALLOWED BY THE AO IN A.Y. 2009-10. 7. THE LD. COUNSEL OF THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THIS GROUND IS NOT MAINTAINABLE AS NOT BEING E MANATING OUT ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 3 OF THE ORDER OF LD. CIT(A) IN THE CURRENT YEAR AND THEREFORE THE SAME MAY KINDLY BE DISMISSED. 8. THE LD. D.R., ON THE OTHER HAND, FAIRLY AGREED T O THE CONTENTION OF THE LD. A.R., HOWEVER, RELIED ON THE GROUNDS OF APPEAL. 9. AFTER PERUSING THE APPELLATE ORDER, WE FIND THAT THE ISSUE CHALLENGED IN GROUND NO.2 IS NOT EMANATING OUT OF T HE APPELLATE ORDER AND ACCORDINGLY WE ARE INCLINED TO DISMISS TH E SAME. 10. THE ISSUE RAISED IN GROUND NO.3 IS AGAINST THE ORDER OF THE LD. CIT(A) AGAINST THE LONG TERM CAPITAL LOSS CLAIM ED BY THE ASSESSEE IN RESPECT OF SALE OF SHARES OF VEDIC FANX IPANG WITHOUT APPRECIATING THE FACT THAT BENEFIT OF INDEXATION CA N NOT BE GIVEN TO THE ASSESSEE AS THE ASSESSEE HAS NOT PROVIDED TH E EXACT DATE OF ACQUISITION OF ADDITIONAL INVESTMENTS AND DATE OF SALE AT THE TIME OF ASSESSMENT. 11. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFOR E THE BENCH THAT ALL THESE DETAILS HAVE BEEN PROVIDED BEF ORE THE LD. CIT(A) AS NOTED BY THE LD. CIT(A) IN PARA 2.4.8. T HE LD. A.R. ALSO DREW OUR ATTENTION TO PAPER BOOK GIVING COMPRE HENSIVE DETAILS QUA THE YEAR WISE INVESTMENT FROM F.Y. 2005 -06 TO F.Y. 2010-11, THE INDEXATION COST OF INVESTMENT AND THER EAFTER WORKING OF LONG TERM CAPITAL GAIN WHICH WERE FURNI SHED BEFORE THE AO AS WELL AS BEFORE THE LD. CIT(A). THE LD. A .R. SUBMITTED THAT SINCE THE ISSUE RAISED BY THE REVENUE IS ONLY THAT IN ABSENCE OF DATE OF ACQUISITION OF SHARES AND OF DAT E OF SALE, BENEFIT OF INDEXATION OUGHT NOT TO BE GRANTED TO TH E ASSESSEE ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 4 WHEREAS THE LD. CIT(A) AFTER RECORDING A FINDING OF FACT HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE GROUNDS OF APPEAL AND ORDER OF THE AO. 12. AFTER HEARING BOTH THE PARTIES AND PERUSING THE APPELLATE ORDER AND FACTS ON RECORD ON PAGE NO.194, 195, 196 & 197 OF THE PAPER BOOK, WE FIND THAT ASSESSEE HAS PROVIDED ALL THE DETAILS BEFORE THE AO AS WELL AS BEFORE LD. CIT(A) AND LD. CIT(A) HAS CORRECTLY ALLOWED THE BENEFIT OF INDEXATION TO THE ASSESSEE. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE DOES NOT SURVIVE AND IS DISMISSED. 13. THE ISSUE RAISED IN GROUND NO.4 IS AGAINST THE ORDER OF LD. CIT(A) ALLOWING THE EXPENSES ON ACCOUNT OF ENCASHME NT OF BANK GUARANTEE BY RABOBANK WITHOUT APPRECIATING THE FACT THAT THE SAID GUARANTEE WAS THE LIABILITY OF M/S. GANELICA B VC AND AS PER AGREEMENT BETWEEN M/S. GANELICA BVC AND RABO BANK PRODUCED BY THE ASSESSEE IN THE COURSE OF ASSESSMEN T, THE ASSESSEE COMPANY WAS NOT A GUARANTOR. 14. THE FACTS IN BRIEF ARE THAT THE AO DURING THE C OURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS D EBITED AS EXCEPTIONAL ITEM UNDER NOTE 3 TO ACCOUNTS BEFORE AR RIVING AT THE PROFIT BEFORE TAX THE AMOUNT OF ENCASHMENT OF GUARA NTEE GIVEN BY ASSESSEE. THE ASSESSEE HAD GIVEN A CORPORATE GU ARANTEE TO RABO BANK, NETHERLAND TOWARDS LOAN AVAILED BY A SUB SIDIARY GANELICA BV AMOUNTING TO RS.0.665 MILLION (RS.42.05 MILLION). THE SUBSIDIARY HAS GONE INTO LIQUIDATION AND CORPOR ATE GUARANTEE WAS ENCASHED DURING THE YEAR BY THE SAID BANK AND ACCORDINGLY THE ASSESSEE CHARGED THE AMOUNT ENCASHE D BY THE ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 5 BANK UNDER THE HEAD EXCEPTIONAL ITEM WHICH WAS DIS ALLOWED BY THE AO AND ADDED TO THE INCOME OF THE ASSESSEE OF RS.42.05 MILLION (RS.4,20,50,000/-) IN THE ASSESSMENT FRAME D. 15. THE LD. CIT(A) ALLOWED THE SAME BY OBSERVING AN D HOLDING AS UNDER: 5.5.3 IT IS NOTED THAT THE FACTS GIVEN AT INTERNAL PARAS 6.1 TO 6.9 OF THE CONTENTIONS OF THE APPELLANT EXTRACTED ABOVE ARE NOT IN DISPUTE BY THE ASSESSING OFFICER. TO STATE VERY BRIEFLY, THE RELATIONSHIP BETWEEN THE AP PELLANT COMPANY SEQUENT SCIENTIFIC LTD (SSL) AND THE SUBSIDIARY, GALENCIA B V (GBV) CAN BE UNDERSTOOD AS BELOW: SSL IS AN AMALGAMATED COMPANY FORMED FROM AMALG AMATION OF ONE PI DRUGS LTD AND SEQUENT SCIENTIFIC LTD. THE POST-AMAL GAMATION NAME WAS ADOPTED AS SEQUENT SCIENTIFIC LTD. \ PRE-AMALGAMATION THAT THEN SEQUENT ENTERED INTO A JV WITH A EUROPEAN COMPANY ORFFA INTERNATIONAL HOLDINGS BV (ORRFA). TH E JV COMPANY WAS CALLED GALENCIA BV. GALENCIA BV INTERNS FORMED A WHOLLY OWNED SUBSI DIARY CODIFFAR NV, UNDER BELGIAN LAWS. BOTH THE PARTIES TO THE JOINT-VENTURE HAD GIVEN NPN-FUND-BASED FINANCIAL COMMITMENTS FOR COMMENCEMENT OF BUSINESS ACTIVITY O F GALENCIA BV. DURING THE YEAR UNDER CONSIDERATION, THE FINANC IAL CONDITION OF GALENCIA BV AND ITS SUBSIDIARY DETERIORATED AND BOTH THE JOI NT-VENTURE PARTNERS, SSL AND ORRFA WERE REQUIRED BY REBO BANK TO HONOUR THE BANK GUARANTEE. THE APPELLANTS LIABILITY TOWARDS REPAYMENT OF T HE BANK LOAN RESULTED TO EURO 6.65 LAKHS EQUIVALENT TO RS. 4.21 CRORE WAS DE BITED TO P&L ACCOUNT AS EXCEPTIONAL ITEM. DOCUMENTARY EVIDENCE INCLUDING CONT RACT FOR SURETYSHIP, CORRESPONDENCE WITH REBO BANK, ANNUAL REPORT OF GAL ENCIA BV'S, SHAREHOLDERS AGREEMENT BETWEEN APPELLANT, ORRFA AND GALENCIA BV ETC. CORROBORATE THE ABOVE AND THE AO HAS NOT CONTESTED THE ABOVE FACTS. 5.5.4 THE APPELLANT HAD INTENDED THAT PAYMENT MADE IN RESPECT OF BANK GUARANTEE WAS TO FACILITATE ITS BUSINESS AS IT WOULD ENABLE T HE SUBSIDIARY TO CARRY ON BUSINESS WHICH WOULD HAVE DIRECTLY BENEFITED THE BUSINESS OF THE APPELLANT. THEREFORE, IT IS CONTENDED THAT THE TRANSACTION WAS IN NATURE OF COM MERCIAL EXPEDIENCY AND, HENCE ALLOWABLE AS REVENUE EXPENDITURE/BUSINESS EXPENDITU RE. THE APPELLANT HAS ALSO RELIED UPON SEVERAL CASE LAWS INCLUDING SA BUILDERS LTD 288 ITR 1 (SC) AND HERO CYCLES P. LTD VS CIT, 379 ITR 347. 5.5.5 THE FACTS OF THE CASE INDICATE THAT THE SOLE REASON FOR THE APPELLANT TO ENTER INTO A JOINT-VENTURE WITH A EUROPEAN COMPANY WAS TO EXPLORE THE POTENTIAL OF EUROPEAN MARKETS. THE NON-FUND BASED FINANCIAL COMM ITMENT WAS PART OF THE CONDITIONS AGREED TO FURTHER JV. DUE TO RESTRICTION S OF EUROPEAN LAWS, THE APPELLANT ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 6 COULD NOT HAVE EXPANDED IT BUSINESS OR MARKETED PRO DUCTS IN EUROPE WITHOUT FORMING SUCH A JV. 5.5.6 THE SUPREME COURT IN THE CASE OF OR T. A. QUE RESHI VS. CIT [2006] 157 TAXMAN 514 (SC) HELD THAT A BUSINESS LOSS MUST BE ALLOWED ON ORDINARY COMMERCIAL PRINCIPLES IN COMPUTING THE TAXABLE PROFITS. 5.5.7 IN THE CASE OF CIT VS. AMALGAMATION (P) LTD [ 1997] 92 TAXMAN 132 (SC), THE APEX COURT HELD THAT WHERE THE ASSESSEE STOOD AS GU ARANTOR TO BANK IN RESPECT OF LOAN TAKEN BY ITS SUBSIDIARY AND THAT SUBSIDIARY WE NT INTO LIQUIDATION AND LIQUIDATOR RECOVERED NET AMOUNT FROM THE ASSESSEE, SUCH AMOUNT PAID BY THE ASSESSEE WAS ALLOWED AS BUSINESS LOSS BECAUSE AS PER THE APEX CO URT, SUCH LOSS WAS INCURRED IN CARRYING ON ITS OWN BUSINESS BY THE ASSESSEE WHICH INCLUDED FURNISHING GUARANTEES TO DEBTS BORROWED BY SUBSIDIARY COMPANY. 5.5.8 THE PUNJAB & HARYANA HIGH COURT IN THE CASE O F BRIGHT ENTERPRISES PVT. LTD VS. CIT [2016] 381 ITR 107 (P&H), WAS DEALING WITH THE QUESTION WHETHER INTEREST ON LOAN WAS ALLOWABLE ON INTEREST FREE LOAN ADVANCED T O A 89% SUBSIDIARY. THE COURT ALLOWED THE APPEAL AND HELD THAT THE AMOUNTS ADVANC ED WERE USED BY THE SUBSIDIARY FOR ITS BUSINESS PURPOSE. THE ASSESSEE A DVANCED THESE AMOUNTS TO SISTER CONCERN AS A MEASURE OF COMMERCIAL EXPEDIENCY FOR T HE PURPOSE OF BUSINESS. THE ASSESSEE OWNED ABOUT 89% IN THE SISTER CONCERN. THE COURT FURTHER HELD THAT WHEN A HOLDING COMPANY INVESTED MONEY FOR THE PURPOSE OF BUSINESS OF THE SUBSIDIARY, IT MUST NECESSARILY BE HELD TO BE AN EXPENSE ON ACCOUN T OF COMMERCIAL EXPEDIENCY. A FINANCIAL BENEFIT OF ANY NATURE DERIVED BY THE SUBS IDIARY ON ACCOUNT OF THE AMOUNTS ADVANCED TO IT BY THE HOLDING COMPANY, WOULD NOT ME RELY INDIRECTLY BUT DIRECTLY BENEFIT ITS HOLDING COMPANY. THERE WOULD BE A DIREC T BENEFIT ON ACCOUNT OF THE ADVANCE MADE BY THE ASSESSEE TO ITS SISTER CONCERN IF IT IMPROVED THE FINANCIAL HEALTH OF THE SISTER CONCERN AND MADE IT A VIABLE E NTERPRISE. BUT IT WAS NOT NECESSARY THAT THE ADVANCE RESULTS IN A POSITIVE TA NGIBLE BENEFIT. 5.5.9 THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MEHTA (P) LTD. REPORTED IN [2008] 174 TAXRNAN 104 (BOM) HELD THAT THE LOSS INC URRED BY THE ASSESSEE ON ACCOUNT OF GUARANTEE MONEY PAID ON BEHALF OF A COMP ANY AMALGAMATED WITH THE ASSESSEE DUE TO SICKNESS OF THE SISTER CONCERN IS A N ALLOWABLE BUSINESS LOSS DUE TO THE FACT THAT GIVING GUARANTEE WAS A GENUINE ACT. 5.5.10 THE CHENNAI ITAT IN THE CASE OF AC VS. W. S. INDUSTRIES (I) LTD REPORTED IN [2011] 9JTR (TRIB) 596 (CHENNAI) DEALT WITH A QUEST ION WHETHER LOSS SUFFERED BY AN ASSESSEE ON ACCOUNT OF DISCHARGE OF A CORPORATE GUA RANTEE FOR SECURING THE LOAN TAKEN BY THE SUBSIDIARY WAS AN ALLOWABLE DEDUCTION. IN THIS CASE, THE HOLDING COMPANY ADVANCED LOANS AND OTHER AMOUNTS FROM TIME TO TIME AND BALANCE OF SUCH AMOUNTS ADVANCED WAS RS.6.11 CRORES. THE HOLDING CO MPANY ALSO ISSUED A CORPORATE GUARANTEE OF RS.13.07 CRORES TO A BANK TO SECURE THE LOAN TAKEN BY THE SUBSIDIARY. DURING THE RELEVANT PREVIOUS YEAR, DUE TO FINANCIAL DIFFICULTIES, THE ASSESSEE DISCHARGED ITS CORPORATE GUARANTEE BY ENTE RING INTO ONE-TIME SETTLEMENT WITH THE BANK OF THE SUBSIDIARY AND PAID THE LOAN A MOUNT. DUE TO FINANCIAL DIFFICULTIES AND REMOTE POSSIBILITY OF RECOVERY OF THE AMOUNTS DUE FROM THE SUBSIDIARY OF RS.6.11 CRORES AND RS.13.07 CRORES PA ID TO THE BANK WAS CLAIMED AS ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 7 BUSINESS DEDUCTION. THE WRITE OFF OF UNRECOVERED LO AN OF RS.6.11 CRORES WAS DULY ALLOWED BY THE ASSESSING OFFICER BUT THE AMOUNT PAI D FOR SETTLING THE UNPAID BANK LOAN OF THE SUBSIDIARY PURSUANT TO THE CORPORATE GU ARANTEE WAS NOT ALLOWED BY THE AO. THE HON TRIBUNAL HELD THAT IT WAS ONE OF THE AS SESSEE'S BUSINESS TO GIVE GUARANTEES, FINANCIAL OR OTHERWISE. SUCH GUARANTEE WAS GIVEN FOR ITS SUBSIDIARY AND IT WAS IN THE INTEREST OF THE ASSESSEE COMPANY AND HENCE THE COMMERCIALLY EXPEDIENT DECISION TO WRITE OFF THE IRRECOVERABLE A MOUNT AND THE SAME WAS HELD TO BE DEDUCTIBLE. 5.5.11 ACCORDING TO THE RATIO OF THAT JUDGEMENT OF JURISDICTIONAL HON'BLE BOMBAY HIGH COURT IN CIT V. COLGATE PALMOLIVE (INDIA) LTD, 370 ITR 728 (BOM) LOSSES IN RELATION TO SUCH BUSINESS ACTIVITY ARE ALLOWABLE IN THE HANDS OF THE APPELLANT. FURTHER, IN S.A. BUILDERS VS CIT 158 TAXMAN 74 (SC) THE HON'BLE APEX COURT HELD THAT WHERE HOLDING COMPANY HAS DEEP INTEREST IN THE SUBS IDIARY AND ADVANCE INTEREST FREE LOAN TO THE SUBSIDIARY WHICH USES IT FOR BUSIN ESS PURPOSE, THE HOLDING COMPANY WOULD ORDINARILY BE ENTITLED TO DEDUCTION OF INTERE ST ON ITS BORROWED FUNDS. SIMILAR VIEW WAS ALSO EXPRESSED BY HON'BLE BOMBAY HIGH COUR T IN VASSANJI SONS & CO. (P) LTD V. CIT, 125 ITR 462 (BOM), WHEREIN IT WAS HELD THAT LOSS SUFFERED BY HOLDING COMPANY ON ACCOUNT OF AMOUNT OUTSTANDING FROM SUBSI DIARY WHICH WENT INTO LIQUIDATION WAS ALLOWABLE BUSINESS EXPENSE FOR THE HOLDING COMPANY. 5.5.12 (FIND THAT THE RATIO OF VARIOUS DECISIONS IN CLUDING THOSE OF JURISDICTIONAL HIGH COURT AND HON'BLE SUPREME COURT CITED ABOVE AND THO SE RELIED UPON BY THE APPELLANT IN THIS REGARD APPLY WITH FULL FORCE TO T HE FACTS AND CIRCUMSTANCES OF THE CASE. THE INVOCATION OF BANK GUARANTEE BY RABO BANK HAD TO BE PAID BY THE APPELLANT AS A NECESSITY OF COMMERCIAL EXPEDIENCY. THE VERY PURPOSE FOR FORMATION OF A JV WAS TO EXPLORE EUROPEAN MARKETS AND EXPAND BUSINESS. IF THE ACTIVITY OF GALENCIA BV RESULTED IN PROFITS, THE SAME WOULD BE IN FURTHERANCE OF THE APPELLANT'S BUSINESS. SIMILARLY, ANY EXPENDITURE NECESSITATED D UE TO THE OPERATION OF THE JV WOULD ALSO HAVE TO BE TREATED AS COMMERCIAL EXPEDIE NCY AND BUSINESS EXPENDITURE. SUCH EXPENDITURE CANNOT BE SAID TO BE RESULTING IN ACQUISITION OF ANY ENDURING BENEFIT OR ASSET AND, HENCE CANNOT BE TERMED AS CAP ITAL IN NATURE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TREATMENT GIVEN BY THE ASSESSING OFFICER CANNOT BE UPHELD AND DISALLOWANCE OF RS. 4,20,50,00 0/- IS DELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. ALLOWED 5.6 GROUND NO. 7 5.6.1 THIS GROUND RELATES TO ADDITION OF RS. 1,80 ,6367- ON THE BASIS OF AIR INFORMATION. THE ASSESSING OFFICER HAS DEALT WITH I T UNDER PARA 13 OF HIS ORDER. HE HAS NOTED THE FOLLOWING DISCREPANCIES IN FORM 26AS: TEAM LEADER LOG PVT LTD RS 1,17,876/- BOMI RUSTOMJI KARANJIA RS. 33,330/- SANDOZ PVT. LTD. RS. 29,430/- 5.6.2 THE APPELLANT HAD CONTENDED THAT THE AMOUNTS DO NOT PERTAIN TO IT. THE APPELLANT HAS RELIED ON S. GANESH VS ACIT, ITA 527/ MUM/2010 TO CONTEND THAT ADDITION CANNOT BE MADE SOLELY RELYING ON AIR INFOR MATION. ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 8 5.6.3 IN M/S. A.F. FERGUSON & CO. VS. JCIT' IT A NOS.5037/M/2012 & 437/M/2013 DECIDED ON 17.10.2014, THE HON'BLE MUMBAI ITAT WHIL E DEALING THE ISSUE OF UN- RECONCILED AMOUNT AS PER THE ALR INFORMATION HAS HE LD THAT THE ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF AIR INFORMATION, ESPECI ALLY, WHEN THE ASSESSEE DENIES ANY SUCH RECEIPT AS THE BURDEN TO PROVE SUCH RECEIP TS IS ON THE ASSESSING OFFICER AS THE ASSESSEE CANNOT BE ASKED TO PROVE THE NEGATIVE. THIS RATIO HAS ALSO BEEN FOLLOWED IN ITA NOS.6406/M/2012 & 6152/M/2013, IN M /S. S. KANT HEALTHCARE LTD. AND 3/A, SHIV SAGAR ESTATE AND ALSO IN DCIT VS RELI ANCE NETWORK LTD, ITA NO.3531/M/2013. 5.6.4 RESPECTFULLY FOLLOWING THE DECISION OF JURISD ICTIONAL ITAT, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE AMOUNTS AND DELETE THE AD DITION OF THOSE AMOUNTS AS DO NOT PERTAIN TO THE APPELLANT. THIS GROUND IS ALLOWE D FOR STATISTICAL PURPOSES. 16. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ISSUE HAS RIGHTLY BEEN ALLOWED BY LD. CIT(A) AFTER FOLLOWING THE DECISION OF THE JURISDIC TIONAL HIGH COURT AS WELL AS OF HONBLE APEX COURT AS DISCUSSED HEREINABOVE IN THE LD. CIT(A) FINDINGS. WE ARE ALSO IN AGREEME NT WITH THE CONCLUSION OF THE LD. CIT(A) THAT THE CORPORATE GUA RANTEE ENCASHED BY THE BANK AS GIVEN BY THE ASSESSEE ON BEHALF OF ITS SUBSIDIARY IS A REVENUE ITEM IN THE HANDS OF THE AS SESSEE AND HAS TO BE ALLOWED. ACCORDINGLY, GROUND NO. 4 IS DI SMISSED BY UPHOLDING THE ORDER OF LD. CIT(A). 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.07.2021. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO.14/M/2017 M/S. SEQUENT SCIENTIFIC LTD., (FORMERLY KNOWN AS PI DRUGS PHARMACEUTICALS LTD.) 9 THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.