The J C I T (Asstt) Sr-9, Ahmedabad V. M/S Vividh Leasing & Finance Ltd, Ahmedabad

ITA 1424/AHD/2000

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0538 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 02-06-2000
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S BENUPANI
• Keywords: Business income; Speculation loss; Set aside; Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:3.11.2009 DRAFTED ON: 04.11. 2009 ITA NO.1424/AHD/2000, ITA NO.1640/AHD/2001 & ITA NO.426/AHD/2002 ASSESSMENT YEAR : 1995-96, 1997-98, 1996-97 JT. C.I.T.,/A.C.I.T. SPL. RANGE-9, FLOOR, NATURE VIEW BUILDING, NEAR H.K.HOUSE, ASHRAM ROAD, AHMEDABAD. VS. VIVIDH LEASING & FINANCE LTD., AMBUJA TOWER, NR. MEMNAGAR FIRE STN, NAVRANGPURA, AHMEDABAD. PAN/GIR NO. : 31-108-CZ-7231 (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI D.S.BENUPANI CIT D.R. RESPONDENT BY: SHRI S.N.SOPARKAR SR. ADV. WITH SHRI M.K.KAJI O R D E R PER BENCH:- THESE APPEALS ARE FILED BY THE REVENUE AGAINST TH E SEPARATE ORDERS OF THE LD.CIT(APPEALS)-XII, AHMEDABAD, DATED 01.03.2000, 04.04.201 AND ORDER OF THE LD. CIT(APPEALS)-I, AHMEDABAD DATED 5.12.2001 B Y TAKING THE FOLLOWING GROUNDS OF APPEAL. ITA NO.1424/AHD/2000 1. THE LD.CIT(A) DY.CIT(A) HAS ERRED IN LAW AND ON FAC T IN DIRECTING THE A.O. TO ALLOW THE CLAIM OF A REG. INTEREST PA YMENT OF RS.42,90,411/- IN RESPECT OF GUJARAT AMBUJA COSTPIN LTD. II) DIRECTING TO ALLOW THE CLAIM OF A REG. INTEREST P AYMENT OF RS.76,27,500/- IN RESPECT OF M/S. PUJA FREIGHT CARR IES (P) LTD. IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 2 - III) DIRECTING TO ALLOW SET OFF OF SPECULATION LOSS AGAI NST OTHER INCOME OF THE A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)/DY.CIT(A) CAUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A ) DY.CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OF FICER BE RESTORED TO THE ABOVE EXTENT. ITA NO.1640/AHD/2001 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF TH E CASE IN DIRECTING TO ALLOW SET OFF OF SPECULATION LOSS AGAINST THE DIVID END INCOME OF RS.11,88,924/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. ITA NO.426/AHD/2002 1) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE DISALLOWANCE OF RS.6,47,288/- BEING INTEREST ON FRE SH LOANS. 2) THE LD.CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.69,33,699/- BEING INTEREST PERTAININ G TO INVESTMENT. 3) THE LD.CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF BUSINESS LOSS OF RS.10,76,587/-. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 5) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C IT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 3 - 2. GROUND NOS.1 AND 2 OF THE APPEAL FOR ASSESSMENT YEAR 1995-96 ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETING THE DISALLOWANCE OF INTEREST OF RS.42,90,4 11/- IN RESPECT OF GUJARAT AMBUJA COTSPIN, RS.76,27,500/- IN RESPECT OF POOJA FREIGHT CARRIERS LTD. 3. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE AT THE TIME OF THE HEARING SUBMITTED THAT THE ABOVE GROUNDS OF APPEAL ARE COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY CONSOLIDAT ED ORDER OF THE TRIBUNAL DATED 25.04.2008 PASSED IN THE CASE OF SHRI VIJAYKU MAR D. GUPTA AND SMT. SULOCHANA V. GUPTA IN ITA NOS. 1430/AHD/2000, 1359/ AHD/2003, 1431/AHD/2000 WITH C.O.NO.225/AHD/2002 IN THE ASSES SMENT YEARS 1995-96 AND 1997-98 AND SUBMITTED THAT THIS GROUND OF APPEA L OF THE REVENUE HAS TO BE ALLOWED IN VIEW OF THE ABOVE DECISION OF THE TRIBUN AL. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE LEARNED ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. THAT IN ASSESSMENT YEAR 1995-96, THE ASSESSEE HAD ADVANCED A SUM OF RS.15 C RORES OUT OF BORROWED FUNDS TO GUJARAT AMBUJA COTSPIN LTD. (GACL FOR SHOR T). THIS MONEY WAS GIVEN ON 1.02.1995 TOWARDS SHARE APPLICATION MONEY FOR THE PROPOSED PUBLIC ISSUE OF THE COMPANY TO FINANCE THE DENIM PROJECT. M/S. GACL PROJECTED THE NEED OF TOTAL FINANCE OF RS.85 CRORES FOR THE SAID PROJECT. AS A PROMOTER OF THE COMPANY, THE ASSESSEE WAS ALSO ASKED TO FINANCE THE PROJECT BY INVESTING FUNDS IN THE NATURE OF SHARE APPLICATION MONEY TO BE SUBS EQUENTLY CONVERTED INTO SHARES. GACL, THEREAFTER IN THE LAST WEEK OF MARCH, 1995 DECIDED TO SET UP THE PROJECT FROM INTERNAL ACCRUALS AND LOANS FROM THE F INANCIAL INSTITUTIONS INSTEAD OF THE EQUITY AND THEREFORE, IT REFUNDED THE TOTAL APP LICATION MONEY TO THE ASSESSEE. IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 4 - ON THIS INVESTMENT OF RS.15 CRORES, THE ASSESSEE WA S SADDLED WITH THE INTEREST BURDEN OF RS.42,90,411/-. THE FINDING OF THE LEARNE D ASSESSING OFFICER WAS THAT THIS EXPENDITURE OF INTEREST WAS NOT FOR THE PURPOS E OF BUSINESS AND THEREFORE, THE INTEREST PAYMENT OF RS.42,90,411/- WAS DISALLOWED. 6. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT IT IS NOTICED THAT THE FACTS AND CIRCUMSTANCES AND THE BA SIS OF THIS DISALLOWANCE IS EXACTLY SIMILAR AS IT WAS IN THE CASE OF SMT.SULOCH ANA V. GUPTA IN APPEAL NO.CIT(A)XII/CC.1(2)/110/98-99 FOR A.Y.1995-96. THI S APPEAL HAS SINCE BEEN DECIDED BY ME WITH REGARD TO THIS ISSUE ON 1.03.200 0. THE SAME LEARNED ASSESSING OFFICER HAS PASSED BOTH THE ASSESSMENT OR DERS. THE REASONING OF LEARNED ASSESSING OFFICER FOR MAKING THIS DISALLOWA NCE IS EXACTLY SIMILAR AS IT WAS IN THE CASE OF SMT. SULOCHANA V. GUPTA. THE ARG UMENTS OF THE APPELLANT AGAINST THE DISALLOWANCE ARE AGAIN EXACTLY SIMILAR AS THERE WERE IN THE CASE OF SMT.SULOCHANA V. GUPTA. NATURALLY, THE SAME FINDING HAS TO FOLLOW WITH REGARD TO THIS DISALLOWANCE. FOLLOWING MY OWN ORDER AS REF ERRED ABOVE IN THE CASE OF SMT. SULOCHANA V. GUPTA, FOR THE SAME REASONING AND LOGIC, THE LEARNED ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF INTEREST AS MADE BY THE APPELLANT. 7. FURTHER, THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INVESTED A SUM OF RS.4,75,00,000/- AS SHARE APPLICA TION MONEY IN THE CASE OF ANOTHER CONCERN NAMELY, M/S. POOJA FREIGHT CARRIERS (P) LTD. (PFCPL FOR SHORT). THE FUNDS IN QUESTION WERE BORROWED FROM M/S. SHAR MA FINANCE CO. (SFC FOR SHORT) AND WERE ADVANCED FROM M/S. SHARMA FINANCE C O. (SFC FOR SHORT) AND WERE ADVANCED TO M/S. PFCPL AS SHARE APPLICATION MO NEY. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT WAS BORROWED FROM M /S. SFC IN THE MONTH OF MAY, 1994 AND WAS INVESTED AS SHARE APPLICATION MO NEY IN M/S.PFCPL. LATER IT IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 5 - WAS DECIDED BY THE SAID M/S. PFCPL THAT THE COMPANY WAS NOT TO ISSUE CAPITAL AND THEREAFTER FUNDS ADVANCED BY THE ASSESSEE AS SH ARE APPLICATION MONEY WERE REFUNDED IN THE MONTH OF JULY, 1995. IN THE PROCESS , THE ASSESSEE HAD NOT EARNED ANY INTEREST OR DIVIDEND INCOME ON THE INVESTMENT A S APPLICATION MONEY ALTHOUGH SUBSTANTIAL INTEREST EXPENDITURE ON THE FU NDS BORROWED WAS INCURRED. THE FINDINGS OF THE LEARNED ASSESSING OFFICER ULTIM ATELY WAS THAT THE EXPENDITURE ON INTEREST WAS NOT FOR THE PURPOSE OF BUSINESS OF THEREFORE, INTEREST PAYMENT OF RS.76,27,500/- WAS DISALLOWED. 8. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) OBSERVED THAT IT IS NOTICED THAT THE FACTS AND CIRCUMSTANCES AND THE BASIS OF THIS DISALLOWANCE IS EXACTLY SIMILAR AS IT WAS IN THE CA SE OF SHRI VIJAYKUMAR GUPTA IN APPEAL NO.CIT(A)XII/CC.1(2)/109/98-99 FOR ASSESSMEN T YEAR 95-96. THIS APPEAL HAS SINCE BEEN DECIDED BY ME WITH REGARD TO THIS ISSUE ON 1.03.2000. BOTH THESE ORDERS HAVE BEEN PASSED BY THE SAME LEAR NED ASSESSING OFFICER. THE REASONING OF THE LEARNED ASSESSING OFFICER FOR MAKI NG THIS DISALLOWANCE IS EXACTLY SIMILAR AS IT WAS IN THE CASE OF SHRI VIJAY KUMAR GUPTA. THE ARGUMENTS OF THE APPELLANT AGAINST THE DISALLOWANCE ARE AGAIN EXACTLY SIMILAR AS THESE WERE IN THE CASE OF SHRI VIJAYKUMAR GUPTA. NATURALLY, TH E SAME FINDING HAS TO FOLLOW WITH REGARD TO THIS DISALLOWANCE. FOLLOWING MY OWN ORDER AS REFERRED ABOVE IN THE CASE OF SHRI VIJAYKUMAR GUPTA FOR THE SAME REAS ONING AND LOGIC, THE LEARNED ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF INTEREST AS MADE BY THE APPELLANT. 9. WE FIND THAT BY CONSOLIDATED ORDER OF THE TRIBUN AL DATED 25.04.2008 PASSED IN THE CASE OF SHRI VIJAYKUMAR D. GUPTA AND SMT. SULOCHANA V. GUPTA IN ITA NOS. 1430/AHD/2000, 1359/AHD/2003, 1431/AHD/200 0 WITH IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 6 - C.O.NO.225/AHD/2002 IN THE ASSESSMENT YEARS 1995-96 AND 1997-98 HAS HELD AS UNDER: 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND, PERUSED THE MATERIAL ON RECORD. THIS IS AN UNDISPUTED FACT THAT WHEN THE ASSESSEE HAS APPLIED FOR ALLOTMENT OF SHARES AND PAID THE SH ARE APPLICATION MONEY, GACL WAS HAVING AUTHORISED CAPITAL OF RS.95 CRORES, THE COMPANY COULD NOT HAVE ISSUED THE SHARES WITHOUT IN CREASING THE AUTHORISED CAPITAL. THE SHARE APPLICATION MONEY WER E RETURNED TO THE ASSESSEE SUBSEQUENTLY WITHOUT ALLOTTING THE SHARES. THE ASSESSEE IS ONE OF THE PROMOTERS OF GACL. THE FUNDS HAVE BEEN ADVANCED BY GACL TO SFC WHOSE PROPRIETOR WAS ONE OF THE EMPLOYEES OF GACL A ND IN TURN THE ASSESSEE HAS RECEIVED THE FUNDS FROM SFC AND ULTIMA TELY GIVEN THE SHARE APPLICATION MONEY TO GACL. THE MONEY WAS ADVANCED I N RESPECT OF SHARES WHICH WERE NEVER ALLOTTED TO THE ASSESSEE. T HE ASSESSEE ALTHOUGH CLAIMS THAT HE DERIVED INCOME FROM THE BUSINESS AND HAS CLAIMED THE DEDUCTION U/S. 36(1)(III). WE HAVE ALSO GONE THROUG H THE COMPANY OF THE BALANCE SHEET AS FILED BY THE ASSESSEE AND WE NOTED THAT THE ASSESSEE HAS SHOWN SOME OF THE SHARES IN GUJARAT ALKALIES GROUP COMPANY AS INVESTMENT WHILE THE OTHER SHARES WERE SHOWN AS STA CK IN TRADE. THEREFORE, WE DO NOT AGREE WITH THE PLEA OF THE LEA RNED AUTHORISED REPRESENTATIVE THAT THE SHARES WERE HELD AS STOCK I N TRADE AND THE ASSESSEE PAID THE SHARE APPLICATION MONEY FOR ACQUI RING THE BUSINESS ASSETS. WE HAVE ALSO GONE THROUGH THE DECISION AS R ELIED UPON BY THE LEARNED DR IN THE CASE OF DCIT V. PRAMUKH OXYGEN P VT. LTD. [ITA NOS.3939/AHD/2002, 1935 AND 1936/AHD/2001, FOR AYS 1996-97 TO 1998- 99] AND WE FIND THAT THE FACTS INVOLVED IN THAT CAS E ARE SIMILAR TO THE FACTS IN THE CASE OF THE ASSESSEE. IN THAT CASE ALSO THE ASSESSEE HAD MADE PAYMENT OF RS.43,30,000/- AS SHARE APPLICATION MONE Y TO ONE M/S. AKSHAR PVT. LTD.. A SISTER CONCERN OF THE ASSESSEE OUT OF THE FUNDS BORROWED BY TAKING LOAN FROM BARODA PEOPLES CO-OP. BANK FOR WHICH THE ASSESSEE HAS DEPOSITED A SUM OF RS.12,40,000/- AS M ARGIN MONEY WITH THE BANK FOR THIS PURPOSE WHICH WAS TAKEN FROM ASHO KJYOT OXYGEN PVT. LTD. ANOTHER CONCERN OF THE ASSESSEE. IN THE CASE B EFORE US THERE IS A CLEAR CUT FINDING GIVEN BY THE AO THAT THE FUNDS HA D BEEN ROTATED FROM GACL TO SFC, FROM SFC TO THE ASSESSEE AND AGAINST W ENT BACK TO GACL. NO MATERIAL OR EVIDENCE WAS BROUGHT BEFORE US BY TH E LEARNED AR WHICH MAY PROVE THAT THE FINDING GIVEN BY THE AO IS NOT C ORRECT. THIS FINDING, IN OUR OPINION, REMAINS UNCONTROVERTED AND DUE TO THIS FINDING THE FACT INVOLVED IN THIS CASE ARE ALSO SIMILAR TO THE FACTS IN THE CASE OF DCIT V. PRAMUKH OXYGEN LTD. IN WHICH THIS TRIBUNAL HAS VIDE ORDER DATED IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 7 - 31.10.2005 RESTORED THE ORDER OF THE LEARNED ASSESS ING OFFICER DISALLOWING THE INTEREST BY OBSERVING AS UNDER:- 4. WE HAVE HEARD THE PARTIES AND CONSIDERED THEIR RIVAL SUBMISSIONS. WHEN THE ASSESSEE HAS APPLIED FOR ALLO TMENT OF SHARES ON 8-5-1995 AND PAID THE FULL VALUE OF THE SHARES AND WHEN THE PROJECT FOR WHICH THE SHARE CAPITAL WAS BEING RAISED COULD NOT BE COMPLETED BECAUSE OF RECESSION IN THE MARKET AND ANOTHER UNFA VOURABLE MARKET CONDITIONS, THE QUESTION OF RETAINING THE ASSESSEE S MONEY DID NOT ARISE. THIS MAY AMOUNT TO BE UTILIZATION OF ASSESSEES MON EY BY THEM RECEIVED IN THE GARB OF APPLICATION MONEY. BE THAT AS IT MAY , EVEN IF IT IS CONSIDERED TO BE AN APPLICATION MONEY, THE INTEREST WOULD NOT BE AN ALLOWABLE DEDUCTION TO THE ASSESSEE BECAUSE THE SHA RES HAVE NEVER COMES ON THE SURFACE. IT IS TRUE THAT IN VIEW OF TH E CALCUTTA HIGH COURT DECISION IN THE CASE OF RAJIV LOCHAN KANORIA (SUPRA ), AN INTEREST ON BORROWED CAPITAL UTILISED FOR PURCHASE OF SHARES OF DIFFERENT COMPANIES IN ORDER TO ACQUIRE CONTROLLING INTEREST MAY BE AN ALLOWABLE DEDUCTION BUT THE AS HAD NOT ACQUIRED ANY CONTROLLING INTERES T AND, THEREFORE, THE SAID DECISION WOULD NOT BE OF ANY HELD TO THE ASSES SEE. SIMILARLY, THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF L AXMI AGENTS PVT. LTD. (SUPRA), THE INTEREST PAID WAS FOR ACQUIRING SHARES OF ITS MANAGED COMPANY AND IT WAS HELD TO BE AN ALLOWABLE DEDUCTIO N UNDER SECTION 36(1)(III) OF THE ACT. THIS DECISION WOULD ALSO NOT BE OF ANY HELP TO THE ASSESSEE IN THE ABSENCE OF PURCHASE OF SHARES. THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF SHI VALIK AGRO POLYPRODUCTS (SUPRA) REFERRED TO BY THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS) IS ALSO OF NO HELP TO THE ASSES SEE BECAUSE IN THAT CASE, THE DIVERSIFICATION OF BUSINESS BY THE SISTER CONCERN OUT OF BORROWED FUNDS WAS HELD TO BE FOR THE PURPOSE OF BU SINESS. HERE, THE PROJECT WAS ABANDONED BY THE COMPANY OF WHOSE SHARE S. THE ASSESSEE THOUGHT OF PURCHASING AND IN SPITE OF THE ABANDONME NT OF THE PROJECT THE ASSESSEES MONEY WAS RETAINED BY THEM. 5. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT E VEN OTHERWISE THE MONEY GIVEN FOR THE PURCHASE OF SHARES AS APPLI CATION MONEY WOULD BE FOR MAKING AND EARNING INCOME FROM DIVIDEND OF T HAT COMPANY AND THEREFORE, WOULD BE AN ALLOWABLE DEDUCTION U/S. OF THE ACT. HERE ALSO WE DO NOT FIND ANY MERIT IN THE CLAIM OF THE ASSESSEE. THE SHARES HAVE NEVER COME INTO EXISTENCE. THE INTEREST PAYMENT WITH RELA TION TO THE AMOUNT ATTRIBUTABLE TO SHARE APPLICATION MONEY WITHOUT THE ALLOTMENT OF SHARES WOULD NOT ENTITLE THE ASSESSEE TO CLAIM ANY DEDUCTI ON FOR THE INTEREST PAID ON SUCH BORROWINGS AND COULD NOT BE SAID TO BE AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING AND EARNING INCOME FROM OTHER SOURCES. THE ORDERS OF THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS), IN OUR OPINION, ARE NOT IN ACC ORDANCE WITH LAW AND THE SAME ARE REVERSED AND THOSE OF THE AO ARE RESTORED. IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 8 - RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH OF THIS TRIBUNAL, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE AO DISALLOWING THE CLAIM OF INTEREST. THUS, GRO UND NO.1 STANDS ALLOWED. 10. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE HAS ADMITTED THAT THE FACTS IN THE ABOVE GROUNDS OF APPEAL ARE SIMILA R TO THE FACTS THAT WERE IN THE CASE OF SHRI VIJAYKUMAR D. GUPTA AND SMT. SULOCHANA V. GUPTA IN ITA NOS. 1430/AHD/2000, 1359/AHD/2003, 1431/AHD/2000 WITH C. O.NO.225/AHD/2002 (SUPRA), AND THAT FOLLOWING THE SAID DECISION, THE GROUND OF APPEAL OF THE REVENUE IS TO BE ALLOWED. THEREFORE, WE ALLOW THE A BOVE GROUNDS OF APPEAL OF THE REVENUE. 11. GROUND NO.1 (III) IN ASSESSMENT YEAR 1995-96 AN D THE ONLY GROUND OF APPEAL IN ASSESSMENT YEAR 1997-98 AND GROUND NO.3 I N ASSESSMENT YEAR 1996- 97 ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DIRECTING THE LEARNED ASSESSING OFFICE R TO ALLOW SET OFF OF SPECULATION BUSINESS LOSS OF RS.2,13,30,980/- AGAIN ST THE DIVIDEND INCOME OF RS.11,18,824/- IN ASSESSMENT YEAR 1995-96, SET OFF OF SPECULATION BUSINESS LOSS OF RS.61,30,425/- AGAINST DIVIDEND INCOME OF RS.11, 88,924/- IN ASSESSMENT YEAR 1997-98 AND SET OFF OF SPECULATION BUSINESS LO SS OF RS.1,61,91,280/- AGAINST DIVIDEND INCOME OF RS.10,76,587/- IN ASSES SMENT YEAR 1996-97. 12. THE BRIEF FACTS OF THE CASE IN ASSESSMENT YEAR 1995-96 ARE THAT THE ASSESSEE HAD SHOWN DIVIDEND INCOME OF RS.11,18,824/ -, THE ASSESSEE HAD SHOWN BUSINESS LOSS OF RS.2,13,30,980/- IN THE SHARE TRAN SACTION. THIS LOSS WAS TREATED AS SPECULATION BUSINESS LOSS AS PER EXPLANATION TO SECTION 73 OF THE ACT. THE LOSS ARRIVED HAD BEEN DEDUCTED FROM THE DIVIDEND INCOME OF RS.11,18,824/- AND NET LOSS HAD BEEN COMPUTED IN INCOME STATEMENT AS SPECU LATION BUSINESS LOSS. AS IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 9 - PER THE LEARNED ASSESSING OFFICER, THE TREATMENT GI VEN BY THE ASSESSEE WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 73 OF THE ACT BECAUSE THE SPECULATION BUSINESS LOSS COULD BE GIVEN SET OFF ON LY AGAINST SPECULATION PROFIT. SINCE, THERE WAS NO SPECULATION BUSINESS INCOME, TH E SPECULATION BUSINESS LOSS COULD NOT BE SET OFF AGAINST INCOME FROM OTHER SOUR CES. FURTHER, AS PER THE LEARNED ASSESSING OFFICER, INCOME EARNED BY THE ASS ESSEE IN THE FORM OF DIVIDEND HAD TO BE TREATED AS INCOME FROM OTHER SOU RCES AND NOT AS INCOME/LOSS FROM SHARE BUSINESS. IN VIEW OF THIS FACT, THE DIVI DEND INCOME SHOWN BY THE ASSESSEE AT RS.11,18,824/- WAS TAXED AS INCOME FROM OTHER SOURCES AND THE SAME WAS NOT ALLOWED TO BE SET OFF AGAINST THE SPECULATI ON LOSS. IN NUTSHELL, THE DIVIDEND INCOME OF RS.11,18,824/- WAS TREATED AS IN COME FROM OTHER SOURCES AND WAS TAXED AS SUCH WITHOUT ALLOWING SETTING OFF FROM BUSINESS LOSS. 13. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) HELD AS UNDER: I HAVE CAREFULLY GONE THROUGH THE RIVAL SUBMISSION S. EXACTLY SIMILAR ISSUE WAS THERE IN THE CASE OF THE SAME AS IN A.Y. 94-95 ALSO WHERE FOR ALSO SIMILAR REASONING AND LOGIC SIMILAR ACTION WAS TAKEN. APPEAL IN THE CASE OF THE ASSESSEE FOR A.Y. 94-95 HAS SINCE BEEN DECIDED BY ME VIDE APPEAL NO.CIT(A)XII/CC.1(2)/186/96-97. THE DATE OF THE ORDER IS 8.07.1999. IN THE SAID ORDER, IN VIEW OF THE LEGAL POSITION AVAILABLE, THE ACTION OF THE LEARNED ASSESSING OFFICER WAS HELD TO BE UNJUSTIFIED. IT WAS HELD THAT AS PER THREE DECISIONS OF HON'BLE SUPREME COURT, THE MATTER WAS ENTIRELY FREE FROM DOUBT. IT WAS HELD THAT THE DIVIDEND INCOME ARISING OUT OF SHARES HELD AS STOCK IN TRADE FOR THE PURPOS E OF SET OFF OF LOSS WAS BUSINESS INCOME. IN VIEW OF THIS, LOSS FROM SHARE B USINESS WHICH WAS HELD AS SPECULATION LOSS IN VIEW OF THE EXPLANATION TO S ECTION 73 WAS ALLOWED FOR SET OFF AGAINST SHARE DIVIDEND INCOME ARISING O UT OF SHARES HELD AS STOCK IN TRADE. FOLLOWING MY OWN EARLIER FINDING, T HIS GROUND OF APPEAL IS AGAIN DECIDED IN FAVOUR OF ASSESSEE. IT IS ALSO AGR EED THAT IN THE FACTS OF THE CASE INCOME FROM BROKERAGE AND/OR SUB-BROKERAGE FROM SUCH PURCHASE AND SALE OF SHARES CANNOT BE DIVORCED FROM SPECULATION BUSINESS SINCE IT IS PART AND PARCEL OF THE SPECULA TION BUSINESS. IN NUTSHELL, I AM IN COMPLETE AGREEMENT WITH THE ASSES SEE IN THIS REGARD IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 10 - SINCE THE CLAIM IS CONCLUSIVELY HELD TO BE DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENTS OF THE HIGHER COURTS AS R EFERRED ABOVE. THE LEARNED ASSESSING OFFICER IS THEREFORE, DIRECTED TO ALLOW THE CLAIM ARE MADE. IN ASSESSMENT YEARS 1997-98 AND 1996-97 EXCEPT FOR THE CHANGE IN FIGURES, THE FACTS ARE IDENTICAL. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. 15. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE FILED CONSOLIDATED ORDER OF THE TRIBUNAL DATED 30 TH JULY,2002 IN ASSESSEES OWN CASE IN THE CROSS APPEALS FILED BY THE REVENUE AND THE A SSESSEE IN ITA NOS. 5303/AHD/1996 AND ITA NO.4599/AHD/1996 AND SUBMITT ED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE SAID ORDER OF THE TRIBUNAL. FOLLOWING THE SAME, THE APPEAL OF THE ASSESSEE SHOU LD BE ALLOWED IN THE PRESENT YEARS OF APPEAL ALSO. 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDER OF THE LEARNED ASSESSING OFFICER. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED SET OFF OF DIVIDEND INCOME EAR NED FROM SHARES HELD AS STOCK IN TRADE AGAINST THE BUSINESS LOSS SUFFERED I N THE PURCHASE AND SALE OF SHARES WHICH WAS TREATED AS DEEMED SPECULATION LOSS UNDER PRIVISO TO SECTION 73 OF INCOME TAX ACT, 1961. THE SAME WAS DISALLOWED BY THE LEARNED ASSESSING OFFICER AS ACCORDING TO HIM SPECULATIVE BUSINESS L OSS CAN BE SET OFF AGAINST SPECULATIVE BUSINESS INCOME AND AS DIVIDEND INCOME WAS TAXED UNDER THE HEAD IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 11 - INCOME FROM OTHER SOURCE, THE SAME CANNOT BE SET OF F AGAINST THE SPECULATIVE BUSINESS LOSS OF THE ASSESSEE. IN APPEAL, THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) ALLOWED THE SET OFF AS CLAIMED BY THE ASSESSEE HOLDING THAT DIVIDEND INCOME ARISING OUT OF SHARES HELD AS STOCK IN TRADE FOR THE PURPOSES OF SET OFF OF LOSS WAS BUSINESS INCOME. BEING AGGRIEVE D BY THE SAID ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE RE VENUE IS IN APPEAL BEFORE US. WE FIND THAT A SIMILAR ISSUE CAME BEFORE THE TR IBUNAL IN THE ASSESSEES OWN CASE IN ASSESSMENT YEAR 1992-93, WHEREIN VIDE ORDER PASSED IN ITA NO.5303/AHD1996 AND ITA NO.4599/AHD/1996 ON 30 TH JULY, 2002, THE TRIBUNAL HAS HELD AS UNDER: 2. THE LEARNED DR RELIED UPON THE DETAILED REASONS MENTIONED IN THE ASSESSMENT ORDER. IT WAS POINTED OUT BY HIM THAT TH E LOSS OF RS.3,10,900/- CLAIMED BY THE ASSESSEE ON SALE AND PURCHASE OF 200 0 SHARES OF RELIANCE LIMITED WAS CLEARLY A SPECULATION LOSS WHICH COULD NOT BE SET OFF AGAINST PROFITS OF REGULAR BUSINESS CARRIED OUT BY THE ASSE SSEE. HE THUS STRONGLY URGED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON THIS POINT SHOULD BE REVERSED AND T HAT OF THE LEARNED ASSESSING OFFICER SHOULD BE RESTORED . THE LD. COUN SEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE LOSS OF R S.3,10,900/- CLAIMED BY THE ASSESSEE ON SALE AND PURCHASE OF 2000 SHARES OF RELIANCE LIMITED IS UNDOUBTEDLY AS SPECULATION LOSS BUT THE ENTIRE PROF ITS DERIVED BY THE ASSESSEE IN OTHER TRANSACTIONS OF DEALING IN SHARES IS ALSO DEEMED TO BE SPECULATIVE PROFITS BY VIRTUE OF A CLEAR INTERPRETA TION OF PLAIN LANGUAGE USED IN EXPLANATION TO SECTION 73. HE DREW OUT ATTE NTION TO THE AUDITED STATEMENTS AND THE NOTE MENTIONED BELOW THE COMPUTA TION OF TOTAL INCOME AND THE AUDITED BALANCE SHEET SUBMITTED AT PAGES 63 AND 69 OF THE COMPILATION TO SHOW THAT THE ASSESSEE COMPANY IS AN INVESTMENT COMPANY SOLELY ENGAGED IN THE BUSINESS OF PURCHASIN G AND SELLING OF SHARES OF COMPANIES. THE EXPLANATION TO SECTION 73 IS REPRODUCED BELOW. EXPLANATION:-WHERE ANY PART OF THE BUSINESS OF A CO MPANY [OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEAD INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM O THER SOURCES] OR A COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF BANKING OR THE GRANTING OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASES AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHA LL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPEC ULATION BUSINESS TO IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 12 - THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PU RCHASE AND SALE OF SUCH SHARES.] 2.1 THE AUDITED PROFIT & LOSS ACCOUNT SHOWS THAT OU T OF TOTAL INCOME OF RS.12,11,808/-, THE OTHER INCOME WAS ONLY RS.71, 060/-. THE REMAINING AMOUNT REPRESENTS PROFIT/LOSS ON PURCHASE/SALE OF S HARES. IT IS ALSO NOT A COMPANY WHOSE PRINCIPAL BUSINESS IS BUSINESS OF BAN KING OR GRANTING LOANS AND ADVANCES. THEREFORE, THE PURCHASE AND SAL E OF SHARES OF OTHER COMPANIES MADE BY THE APPELLANT COMPANY SHALL, FOR THE PURPOSE OF SECTION 73, BE DEEMED TO BE CARRYING ON A SPECULA TIVE BUSINESS. THEREFORE, THE LOSS IN SPECULATIVE BUSINESS HAVE RI GHTLY BEEN SET OFF AGAINST PROFITS WHICH ARE DEEMED TO BE PROFITS OF S PECULATION BUSINESS. 2.2 AFTER CONSIDERING THE AFORESAID SUBMISSIONS MAD E BY THE LEARNED REPRESENTATIVES OF THE PARTIES, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT(A), IN RESPECT OF THE AFORESAID POINT IS PE RFECTLY VALID AND JUSTIFIED. THE VIEW SO TAKEN BY THE CIT(A) IS SUPPO RTED BY CLEAR INTERPRETATION OF PLAIN LANGUAGE USED IN EXPLANATIO N TO SECTION 73. THE ORDER PASSED BY THE CIT(A) IN RELATION TO THIS GROU ND IS THEREFORE, HELD TO BE VALID AND JUSTIFIED. THE REVENUES APPEAL HAS TH EREFORE, NO MERIT. 18. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD N OT SHOW ANY GOOD REASONS TO NOT TO FOLLOW TO THE ABOVE QUOTED ORDER OF THE TRIBUNAL. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE PRECEDENT, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE IN ALL THE YEARS OF APPEAL. 19. GROUND NOS.1&2 OF THE APPEAL FOR ASSESSMENT YEA R 1996-97 ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) DELETING THE DISALLOWANCE OF RS.6,47,288/- BEING IN TEREST ON FRESH LOANS AND DELETING THE ADDITION OF RS69,33,699/- BEING INTERE ST PERTAINING TO INVESTMENT. 20. THE BRIEF FACTS ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED THAT IN THE ASSESSMENT YEAR 1996-97 THE PERUSAL OF THE PROFIT A ND LOSS ACCOUNT REVEALED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.48,00,745/ - ON ACCOUNT OF INTEREST. IT WAS ALSO NOTICED THAT THE ASSESSEES CLAIM FOR INTE REST EXPENDITURE WAS SUBJECTED TO INVESTIGATION BY THE ASSESSING OFFICER WHILE FIN ALIZING THE ASSESSMENT ORDER IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 13 - IN A.Y. 1995-96. SINCE THIS YEAR ALSO THE FACTS AND CIRCUMSTANCES OF THE ISSUE IN HAND ARE MORE OR LESS SAME THE ASSESSEE WAS ASKED T O FILE ITS DETAILED SUBMISSION IN THE LIGHT OF THE FINDINGS OF THE ASSESSING OFFIC ER GIVEN IN A.Y. 1995-96 AND DISCUSS/SUBSTANTIATE THE ALLOWABILITY OF IT IN THE CURRENT YEAR. THE ASSESSEE ACCORDINGLY VIDE ITS SUBMISSION DT.13.3.99 FILED DE TAILED SUBMISSION. 21 THE ASSESSEE HAS SUBMITTED THAT IN A.Y.1995-96 O UT OF THE TOTAL CLAIM OF THE ASSESSEE ON THE INTEREST PAYMENT OF RS.3.03 CRO RES, ONLY SUM OF RS.1,99,711/- WAS DISALLOWED. WHILE DISPUTING THE E NTIRE ADDITION THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE INTEREST PAID FOR THE PURPOSE OF BUSINESS AS UNDER :- (I) INTEREST RELATABLE TO SHARE APPLICATION MO NEY PAID TO BACL WHICH WAS REPAID ON 30/3/95. THE TOTAL SHARE APPLICATION MONE Y PAID WAS RS.15 CRORES AGAINST WHICH INTEREST RELATABLE WAS CALCULATED AT RS.42,90,411/-. BESIDES, INTEREST RELATABLE TO SHARE APPLICATION MO NEY PAID FOR POOJA FREIGHT CARRIERS (P) LTD. OF RS.4,75,00,000/- WAS ALSO DISA LLOWED. THE ASSESSEE HAS PREFERRED APPEAL AGAINST ABOVE ADDITIONS. THE COPY OF APPEAL MEMO IS ENCLOSED HEREWITH. AS PER THE SUBMISSIONS OF THE ASSESSEE, D ISALLOWANCE MADE WAS NOT SUPPORTED BY FACTS AS WELL AS ON LAW. SO FAR THE MA TTER HAS NOT YET BEEN DISPOSED OFF. (II) AS REGARDS THE INTEREST LIABILITY RELATING TO THIS YEAR, WE HAVE TO CLARIFY THAT NO INTEREST HAS BEEN PAID RELATION TO THE AMOU NT OF RS.15 CRORES FOR SHARE APPLICATION MONEY OF BACL AS THE SAME WAS ALREADY R EPAID BY THEM TO THE ASSESSEE ON 30.3.95 AND IN TURN BY ASSESSEE TO SHAR MA FINANCE CO. ON 30.3.95 ITSELF AND THEREFORE THE ABOVE TRANSACTION HAS NO C ARRY FORWARD EFFECT IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE FURTHER SUBMITTED THAT, BESIDES, EVEN IF FOR THE SAKE OF CALCULATION, IT I S ASSUMED THAT INTEREST RELATABLE TO SHARE APPLICATION MONEY GIVEN TO PFCPL AS DISALL OWABLE, THE SAME WOULD BE CALCULATED AT RS.69,33,699/- BEING AMOUNT OF INTERE ST @ 18% CALCULATED UPTO 22.1.96 BEING THE DATE ON WHICH THE SHARE APPLICATI ON MONEY HAS BEEN REPAID BY PFCPL AND THE AMOUNT HAS BEEN REPAID BY THE ASSESSE E TO SHARMA FINANCE CO. IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 14 - HOWEVER, THE ASSESSEE HAS TO SUBMIT THAT AS AGAINST THE TOTAL LOAN OUTSTANDING OF OPENING BALANCE OF RS.8,80,13,229/- THE ASSESSEE HA S ALREADY REPAID DURING THE YEAR A SUM OF RS.9,33,33,779/- WHICH IS IN RELATION TO THE OUTSTANDING PORTION OF RS.4,75,00,000/- AND THEREFORE, TO THAT EXPENDITURE THE INTEREST ALLOWABILITY ALSO BE REDUCED. PLEASE FIND ENCLOSED THE COPY OF ACCOUNT AND STATEM ENT FOR AMOUNT OF FRESH AMOUNTS TAKEN AND LOANS REPAID TOGETHER CALCULATION OF INTEREST TO JUSTIFY THE CLAIM OF THE ASSESSEE. AS REGARDS THE FRESH LOANS BORROWED THE ASSESSEE FU RNISHES A CHART, WHEREIN THE PURPOSE OF FRESH BORROWINGS AND ITS APPLICATION IS MENTIONED ALONGWITH THE TRANSACTIONS. IN VIEW OF THE ABOVE IT WOULD BE NOTI CED THAT ALL THE FRESH BORROWINGS ARE FOR THE PURPOSE OF BUSINESS AND THER EFORE INTEREST RELATABLE TO THE FRESH BORROWINGS ARE TOTALLY ALLOWABLE. 22. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE SUM AND SUBSTANCE OF THE ASSESSEES SUBMISSION IS THAT DURING THE YEAR U NDER CONSIDERATION NO DISALLOWANCE OF INTEREST PAYMENT CAN BE MADE TO THE EXTENT OF THE FUNDS ALREADY REPAID IN FINANCIAL YEAR1995-96. 23. WHILE DISPUTING ENTIRE DISALLOWANCE THE ASSESSE E HAS SUBMITTED THAT AT THE BEST INTEREST RELATABLE TO SHARE APPLICATION MONEY PAID FOR SUBSCRIPTION IN PUJA FREIGHT CARRIER (P) LTD. CAN BE DISALLOWED. AS THE ASSESSEES SUBMISSION ITSELF SHOWS @ 18% THE DISALLOWABLE SUM ON ACCOUNT OF INTE REST WORKS OUT TO RS.69,33,699/-. IN VIEW OF THE FACTS AND CIRCUMSTAN CES OF THE CASE NARRATED TO THE ASSESSING OFFICER IN ASSESSMENT YEAR 1995-96 WHICH HAVE NOT UNDERGONE ANY CHANGE IN THE CURRENT YEAR, THE ASSESSEES CLAIM FO R INTEREST EXPENDITURE TO THE EXTENT OF THE FUNDS RELATABLE TO SHARE APPLICATION MONEY PAID FOR PUJA FREIGHT CARRIER (P) LTD. OF RS.4.75 CRORE IS REQUIRED TO BE DISALLOWED. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL THIS YEAR, FOR THE SAME REASONS AS HAVE BEEN QUOTED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 1995-96 , THE ASSESSEES CLAIM FOR INTEREST PAYMENT TO THE EXTENT OF RS.69,33,699/- IS HEREBY DISALLOWED. IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 15 - 24. IN APPEAL THE LD. LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) OBSERVED THAT THE FIRST GROUND IN APPEAL IS AGAINST ADDITION OF RS.69,39,699/- IN RELATION TO INTEREST PERTAINING TO INVESTMENT IN M/ S PUJA FREIGHT CARRIERS (P) LTD. AND RS.6,47,288/- RELATED TO SHARE APPLICATION MONE Y INVESTED IN GUJARAT AMBUJA COTTON TEXTILE INDUSTRIES LTD. THESE GROUNDS ARE BEING TAKEN TOGETHER AS ISSUES INVOLVED ARE COMMON. THIS ASPECT HAS BEEN DISCUSSED IN PARA -4 OF THE ASSESSMENT ORDER AND IT IS SEEN THAT THE ADDITION H AS BEEN MADE BASED ON THE FINDING GIVEN IN ASSESSMENT YEAR 1995-96. RELYING O N THE REASONING FOR ASSESSMENT YEAR 1995-96, THESE TWO DISALLOWANCES WE RE MADE BY THE LEARNED ASSESSING OFFICER. 25. IN RESPONSE TO NOTICE OF HEARING, SHRI KAUSHIK C. KHONA, C.A. AUTHORISED REPRESENTATIVE APPEARED FOR THE APPELLANT AND DISCU SSED THE WRITTEN SUBMISSIONS FILED. IT IS SEEN FROM THE APPEAL RECORDS THAT COMM ENTS OF THE LEARNED ASSESSING OFFICER WERE ASKED FOR. IN HIS COMMENTS, THE LEARN ED ASSESSING OFFICER HAS POINTED OUT THAT THESE TWO ISSUES WERE IDENTICAL TO ONE INVOLVED IN ASSESSMENT YEAR 1995-96 AND THE LD. LEARNED COMMISSIONER OF IN COME TAX(APPEALS) VIDE HIS ORDER NO.CIT(A) XII/CC.1(2)/111/98-99 DATED 1.3 .2000 HAS DELETED THESE ADDITIONS. 26. FOLLOWING THE ORDER FOR ASSESSMENT YEAR 1995-96 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE CASE OF THE ASSESSEE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADD ITION OF RS.69,39,699/- AND RS.6,47,288/-. 27. THE LEARNED AUTHORISED REPRESENTATIVE OF THE A SSESSEE AT THE TIME OF THE HEARING SUBMITTED THAT THE ABOVE GROUNDS OF APP EAL ARE COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY CONSOLIDAT ED ORDER OF THE TRIBUNAL IT A NO.1424/A/2000, 1640/A/2001, 426/A/2002 M/S.VIVIDH LEASING & FINANCE LTD. ASST.YEAR -1995-96, 1997-98, 1996-97 - 16 - DATED 25.04.2008 PASSED IN THE CASE OF SHRI VIJAYKU MAR D. GUPTA AND SMT. SULOCHANA V. GUPTA IN ITA NOS. 1430/AHD/2000, 1359/ AHD/2003, 1431/AHD/2000 WITH C.O.NO.225/AHD/2002 IN THE ASSES SMENT YEARS 1995-96 AND 1997-98 AND SUBMITTED THAT THIS GROUND OF APPEA L OF THE REVENUE HAS TO BE ALLOWED IN VIEW OF THE ABOVE DECISION OF THE TRIBUN AL. THEREFORE, THESE GROUNDS OF REVENUES APPEAL ARE ALLOWED. 28. IN THE RESULT, THE APPEAL OF THE REVENUE FOR AS SESSMENT YEAR 1995-96 AND 1999-97 ARE PARTLY ALLOWED AND THAT FOR ASSESSMENT YEAR 1997-98 IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 6/11/ 2009. SD/- SD/- ( H.L. KARWA ) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD; DATED 6/11/ 2009 PREPARED AND COMPARED BY: PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD