PARSOLI CORPORATION LTD, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 149/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1447 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 11-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTHIKIYEN
• Assessee Lawyers: S S AGARWAL
• Keywords: Unexplained cash credit; Depreciation; Opportunity of being heard; Period of limitation; Deemed to accrue or arise in india; Question of law; Speculation loss; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 43B; 143(3); 142(1); 14A; 37(1); 194C; 37; 68

Judgement Text

ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, M UMBAI BEFORE SHRI G . MANJUNATHA , AM AND SHRI RAVISH SOOD , JM ITA NO (S) . 149 /MUM/201 6 ( / ASSESSMENT YEAR: 201 0 - 11 ) M/S PARSOLI CORPORATION LTD., 121/122, ASHOKA SHOPPING CENTRE, NEAR G.T. HOSPITAL, L.T. MARG, MUMBAI - 400 052 . / VS. ASSTT. COMMISSIONER OF INCOME - TAX - 4 ( 2 ) , AAYKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020. ./ ./ PAN NO. AABCP9030F ( / APPELLANT) : ( / RESPONDENT ) ITA NO(S). 150/MUM/2016 ( / ASSESSMENT YEAR: 2011 - 12) M/S PARSOLI CORPORATION LTD., 121/122, ASHOKA SHOPPING CENTRE, NEAR G.T. HOSPITAL, L.T. MARG, MUMBAI - 400 052. / VS. DEPUTY COMMISSIONER OF INCOME - TAX - 4(2), AAYKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020. ./ ./ PAN NO. AABCP9030F ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : S H RI. S.S. AGARWAL, A.R / RESPONDENT BY : SH RI. ABI RAMA KARTHIKIYEN , D.R / DATE OF HEARING : 08.10.2018 / DATE OF PRONOUNCEMENT : 16 . 11 .201 8 ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 2 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDER S PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS) - 9 , MUMBAI, DATED 30.09.2015 , WHICH IN TURN ARISES FROM THE ORDER S PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHOR T ACT), DATED 08.03.2013 AND 29.03.2014 FOR THE A.Y. 2010 - 11 AND A.Y. 2011 - 12 , RESPECTIVELY . AS CERTAIN COMMON ISSUES ARE INVOLVED IN THE AFOREMENTIONED APPEALS, THUS THE SAME ARE BEING DISPOSED OFF BY A CONSOLIDATE ORDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSES FOR A.Y. 2010 - 11. T HE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HA S RAISED BE FORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE THE LEARNED ACIT WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 6,82,963/ - U/S. 14A. AS THE APPELLANT IS A STOCK BROKER AND THE DIVIDEND HAS BEEN RECEIVED B Y CHANCE . 2. THE ACIT HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION OF RS. 2,14,43,635/ - U/S 68 IN SPITE OF SUBMISSION OF CONFIRMATIONS AND OTHER REQUIRED DETAILS FROM THE RESPECTIVE PARTIES. THE SAME ADDITIONS WERE MADE IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 AND WERE DELETED BY THE CIT(A) IN THOSE YEARS . 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE ADDITION U/S 68 AMOUNTING TO RS. 49,165/ - 4. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE ADDITION OF LEGAL EXPENSES DISALLOWI NG RS. 47,77,560/ - BEING 50% OF LEGAL & PROFESSIONAL FEES OUT OF RS. 95,55,123/ - IN SPITE OF GIVING FULL DETAILS OF THE EXPENDITURE INCURRED FOR THE PURPOSE OF THE BUSINESS. SIMILAR ADDITIONS WERE MADE IN THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 AND WAS F ULLY ALLOWED BY THE CIT(A). 5. THE CIT(A) WAS HIGH LY UNJUSTIFIED IN CONFIRMING THE ADDITION @ 10% OF VARIOUS EXPENSES AS MENTIONED IN THE ASSESSMENT ORDER WITHOUT SPECIFYING THE PARTICULAR ITEM OUT OF TOTAL CLAIM OF RS. 80,15,542/ - 6. THE CIT(A) WAS HIGHLY UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS. 1,00,000/ - AS CAPITAL EXPENDITURE OUT OF RS. 6,83,086/ - ON ACCOUNT OF ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 3 REPAIRS AND MAINTENANCE WITHOUT MENTIONING THE ASSISTS GENERATED FOR RS. 1,00,000/ - 7. THE LEARNED CIT(A) WAS HIGHLY UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS. 5,57,78,625/ - FOR LIABILITIES APPEARING IN THE BALANCE SHEET OF YOUR APPELLANT. NONE OF THE CREDITOR HAS WAIVED THE LIABILITY AND ACCORDINGLY THE ACTION OF THE CIT(A) WAS HIGHLY UN JUSTIFIED. THEREFORE IT IS LIABLE TO BE DELETED. THE APPELLANT FURTHER CRAVES THE LEAVE TO PUT IN ADDITIONAL GROUNDS OF APPEAL IF ANY AT THE TIME OF HEARING . 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN MULTIPLE STREAMS OF BUSINESS VIZ. ST OCK BROKING , TRADING OF SHARES, TRAVEL AGEN CY , FOREIGN EXCHANGE DEALER, FOREIGN DEPOSITORY SERVICES AND OTHER SUCH ADVISORY SERVICES HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2010 - 11, DECLARING TOTAL LOSS AT RS. 6,48,20,423/ - . THE RETURN OF INCOME WAS PROC ESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. THE A.O WHILE FRAMING THE ASSESSMENT INTER ALIA MADE THE FOLLOWING ADDITIONS /DISALLOWANCES : S. NO. PARTICULARS AMOUNT 1. DISALLOWANCES UNDER SEC. 14A RS. 6,82,963/ - 2. DISALLOWANCES UNDER SEC. 68 RS. 2,14,43,635/ - 3. DISALLOWANCES OF 50% OF LEGAL & PROFESSIONAL FEES RS. 47,77,560/ - 4. DISALLOWANCES OF 10% OF VARIOUS EXPENSES RS. 8,01,554/ - 5. DISALLOWANCES OUT OF REPAIR AND RENEWAL EXPENSES RS. 1,00,000/ - 6. DISALLOWANCES UNDER SEC. 41(1) RS. 5,57,78,625/ - , AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 1,93,43,460/ - . 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATIN G ON THE CONTENTIONS ADVANCED BY ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 4 THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME AND SUSTAINED THE AFOREMENTIONED ADDITIONS/DISALLOWANCES MADE BY THE A.O. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LEARNED AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE GROUND OF APPEAL NO. 1 IS NOT BEING PRESSED. IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R THE GROUND OF APPEAL NO. 1 IS DISMISSED AS NOT PRESSED. 6. THE LD. A.R. ASSAILED THE ADDITION OF RS. 2,14,43,635/ - MADE BY THE A.O IN RESPECT OF UNSECURED LOANS UNDER SEC. 68 OF THE ACT , WHICH THEREAFTER HAD BEEN SUBSTITUTED BY THE CIT(A) BY AN AMOUNT OF RS. 2,14, 92 , 800 / - . IT WAS SUBMITTED BY THE LD. A.R THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE CONFIRMATIONS OF THE RESPECTIVE PARTIES WAS PLACED ON RECORD OF THE A.O. FURTHER, AS PER THE LD. A.R THE COMPLETE INCOME TAX CREDEN TIALS OF THE RESPECTIVE PARTIES I.E. THEIR RESPECTIVE PAN NUMBERS ETC. WERE ALSO FURNISHED WITH THE A.O. THE LD. A.R SUBMITTED THAT EVEN IN THE COURSE OF THE PROCEEDINGS BEFORE THE CIT(A) THE ASSESSEE HAD PLACED ON RECORD THE COPIES OF THE CONFIRMATION LET TERS ALONG WITH THE RESPECTIVE BANK ACCOUNTS OF THE LEND E R PAR TIES. IN THE BACKDROP OF THE AFORESAID FACTS, IT WAS THE CONTENTION OF THE LD. A.R THAT DESPITE THE FACT THAT THE ONUS CAST UPON THE ASSESSEE WAS DULY DISCHARGED BY IT, HOWEVER THE LOWER AUTHORI TIES HAD MOST ARBITRARILY ASSESSED THE AFOREMENTIONED ACCOUNT OF RS. 2,14,43,635/ - AS AN UNEXPLAINED CASH CREDIT UNDER SEC. 68 OF THE ACT. FURTHER, IT WAS AVERRED BY THE LD. A.R THAT THOUGH THE TRANSACTIONS OF THE ASSESSEE WITH THE AFOREMENTIONED PARTIES WAS ACCEPTED BY THE REVENUE IN THE IMMEDIATE PRECEDING YEAR, HOWEVER, TAKING A DEPARTURE FROM ITS EARLIER VIEW THE SAID PARTIES HAVE BEEN HELD AS NON - GENUINE BY THE A.O DURING THE YEAR UNDER CONSIDERATION. IT WAS FURTHER SUBMITTED ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 5 BY THE LD. A.R THAT THE CIT(A) SUBSTITUTED THE ADDITION OF RS. 2,14,43,635/ - MADE BY THE A.O BY AN AMOUNT OF RS. 2,14,92,800/ - , WHICH THUS HAD RESULTANTLY ENHANCED THE ASSESSED INCOME OF THE ASSESSEE BY AN AMOUNT OF RS. 49,165/ - . ON THE BASIS OF HIS AFORESAID SUBMISSIONS , THE LD. A.R SUBMITTED THAT THE ADDITION OF RS. 2,14,92,800/ - ( RS. 2,14,43,635/ - + RS. 49,165/ - ) WAS LIABLE TO BE VACATED. THE LD. A.R FURTHER ASSAILED THE DISALLOWANCE OF 50% OF LEGAL & PROFESSIONAL FEES OF RS. 95,55,123/ - , WHICH HAD RESULTED TO AN ADDITION OF RS . 47,77,560/ - IN THE HANDS OF THE ASSESSEE. THE LD. A.R SUBMITTED THAT AS THE LEGAL & PROFESSIONAL EXPENSES WERE INCURRED BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS, THUS NO DISALLOWANCE ON THE SAID COUNT WAS LIABLE TO BE MADE. THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CONTENTION SUBMITTED THAT THOUGH COMPLETE DETAILS OF THE LEGAL & PROFESSIONAL FEES WERE FURNISHED WITH THE A.O, HOWEVER THE LATTER WITHOUT MAKING VERIFICATION AS REGARDS THE VERACITY OF THE CLAIM OF THE ASSESS EE HAD MOST ARBITRARILY CARRIED OUT AN ADHOC DISALLOWANCE OF 50% OF THE ENTIRE EXPENSES AND MADE A CONSEQUENTIAL ADDITION OF RS. 47,77,560/ - . FURTHER, IT WAS AVERRED BY THE LD. A.R THAT A SIMILAR 50% DISALLOWANCE OF LEGAL & PROFESSIONAL FEES W AS MADE BY TH E A.O IN THE ASSESS ES OWN CASE FOR A.Y. 2009 - 10 , WHICH ON APPEAL WAS DELETED BY THE CIT(A) . THE LD. A.R FURTHER SUBMITTED THAT THE ORDER OF THE CIT(A) DELETIN G THE ADHOC DISALLOWANCE OF 50% OF THE LEGAL & PROFESSIONAL FEES HAD BEEN UPHELD B Y THE TRIBUNAL W HILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF THE ASSESSEE FOR A.Y. 2009 - 10 VIZ. ACIT, CIRCLE - 4(2), MUMBAI VS. M/S PARSOLI CORPORATION LTD. (ITA NO. 6526/MUM/2013; DATED 25.11.2016). ON THE BASIS OF HIS AFORESAID CONTENTIONS, IT WAS AVERRED B Y THE LD. A.R THAT NO DISALLOWANCE OUT OF THE LEGAL & PROFESSIONAL FEES WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. THE LD. A.R FURTHER ASSAILED THE DISALLOWANCE OF 10% OUT OF TOTAL EXPENSES OF RS. ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 6 80,15,542/ - BY THE A.O ON THE GROUND THAT THE EXPENSES WERE NOT VERIFIABLE. THE LD. A.R SUBMITTED THAT AS TRUCK LOADS OF VOUCHERS WERE THERE, THUS THE ASSESSEE HAD PRODUCED SAMPLE VOUCHER S FOR VERIFICATION BY THE A.O. IT WAS THE CONTENTION OF THE LD. A.R THAT THE A.O HAD NEITHER AT ANY STAGE DIRECTED THE ASSES SEE TO PRODUCE THE REMAINING VOUCHERS, NOR HAD POINTED OUT ANY INFIRMITY IN EITHER OF THE VOUCHER S THAT WAS PRODUCED BEFORE HIM. THE LD. A.R SUBMITTED THAT THE A.O WITHOUT SPECIFICALLY POINT ING OUT AS TO W HICH ALL VOUCHER S WERE NOT VERIFIABLE, HAD THUS MOS T ARBITRARILY CARRIED OUT AN ADHOC DISALLOWANCE OF 10% OF TOTAL EXPENSES AND MADE A CONSEQUENTIAL ADDITION/DISALLOWANCE OF RS. 8,01,554/ - IN THE HANDS OF THE ASSESSEE. THE LD. A.R IN ORDER TO FORTIFY HIS CLAIM THAT ALL THE EXPENSES WERE DULY VOUCHED, THERE I N TOOK SUPPORT OF THE FACT THAT THE ACCOUNTS OF THE ASSESSEE WHICH WAS A PUBLIC LIMITED LISTED COMPANY WERE DULY AUDITED , AND THE FACT THAT ALL THE EXPENSES WERE VOUCHED HAD DULY BEEN VERIFIED BY THE AUDITOR . THE LD. A.R HAD FURTHER CHALLENGED THE DISALLOWANCE OF RS. 1,00,000/ - MADE BY THE A.O OUT OF REPAIRS AND RENEWAL EXPENDITURE OF RS. 6,83,086/ - . IT WAS AVERRED BY THE LD. A.R THAT THE A.O HAD CARRIED OUT THE AFORESAID DISALLOWANCE BY OBSERVING THAT THE EXP ENSES TO THE EXTENT OF RS. 1,00,000/ - WERE IN THE NATURE OF CAPITAL EXPENDITURE. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE ASSESSEE WAS OPERATING FROM A RENT ED PREMISES, HENCE ALL THE EXPENSES OF REPAIRS INCURRED ON A THIRD PARTY PROPERTY WOULD BE IN THE NATURE OF A REVENUE EXPENDITURE AND COULD NOT BE HELD AS A CAPITAL EXPENDITURE. LASTLY, THE LD. A.R ASSAILED THE VALIDITY OF THE DISALLOWANCE OF AN AMOUNT OF RS. 5,57,78,625/ - MADE BY THE A.O ON ACCOUNT OF CESSATION OF LIABILITY UNDER SEC. 41(1) OF THE AC T. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE REVENUE HAD FAILED TO PLACE ON RECORD ANY MATERIAL FROM WHERE IT COULD BE GATHERED THAT EITHER OF THE CRE DITORS HAD FOREGONE THEIR CLAIM, THUS THE SAME IN A WHIMSICAL AND FANCIFUL MANNER HAD BEEN INFERRED ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 7 AS A CE A SED LIABILITY IN THE HANDS OF THE ASSESSEE. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTIONS RELIED ON CERTAIN JUDICIAL PRONOUNCEMENTS VIZ. (I) CIT VS. SUGALI SUGAR WORKS PVT. LTD. ( 1999) 236 ITR 518 (SC); (II) CCIT VS. KESARI TEA CO. PVT. LTD. ( 200 2) 254 ITR 43 4 ( SC ); AND (III) CIT VS. SMT. SITA DEVI JUNEJA ( 2010) 325 ITR 593 (P&H) . 7. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. THE LD. D.R REFERRING TO ADDITION MADE BY THE A.O UNDER SEC. 41(1) , SUBMITTED THAT NO DETAILS AS REGARDS SQUARING UP OF THE OUTSTANDING LIABILITIES IN THE SUBSEQUENT YEARS WAS FURNISHED BY THE ASSESSEE . IT WAS AVERRED BY THE LD. D.R THAT THE MATTER CAN BE SET ASIDE TO THE FILE OF THE A.O FOR ADJUDICA TING THE SAME AFTER MAKING NECESSARY VERIFICATIONS AS REGARDS THE SUBSEQUENT FATE OF THE SAID LIABILITIES. 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECO RD. WE SHALL FIRST ADVERT TO THE ADDITION OF RS. 2,14,43,635/ - MADE BY THE A.O UNDER SEC. 68 OF THE ACT, WHICH THEREAFTER WAS ENHANCED BY THE CIT(A) TO AN AMOUNT OF RS. 2,14,92,800/ - . ON A PERUSAL OF THE ORDER OF THE CIT(A) , IT EMERGES THAT HE HAD NOT ONLY UPHELD THE ADDITION OF RS. 2,14,43,635/ - , BUT RATHER HAD ENHANCED THE SAME BY AN AMOUNT OF RS. 49,165/ - . WE FIND FROM A PERUSAL OF THE RECORDS THAT THE ASSESSEE HAD RAISED UNSECURED LOANS AGGREGATING TO RS. 2,14,92,800/ - DURING THE YEAR UNDER CONSIDERATIO N FROM THE FOLLOWING PARTIES : - PARTICULARS OP. BAL. ADDITIONS REPAYMENT BALANCE (AS ON 31.03.2010) PARSOLI MOTORS PVT. LTD. RS. 1,10,00,000/ - RS. 44,20,000/ - RS. 5,20,000/ - RS. 1,49,00,000/ - UVES Y SARESWALA RS. 20,27,700/ - RS. 1,20,606/ - RS. 3,70,606/ - RS. 17,77,700/ - ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 8 R.J TRADELINKS PVT. LTD. RS. 34,16,620/ - RS. 1,33,79,409/ - RS. 73,43,029/ - RS. 94,53,000/ - ZAFAR Y SARASWALA RS. 80,67,700/ - RS. 10,70,000/ - RS. 27,86,684/ - RS. 63,51,016/ - TOTAL RS. 1,44,85,400/ - RS. 2,14,92,800/ - RS. 1,14,66,180/ - RS. 3,24,81,716/ - ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES , IT EMERGES THAT THE ASSESSEE IS STATED TO HAVE PLACED ON RECORD THE CONFIRMATION LETTERS ALONG WITH THE COPIES OF THE BANK ACCOUNTS , AS WELL AS THE PAN NUMBERS OF THE AFORESAID PARTIES . FURTHER, IT IS THE CONTENTION OF THE LD. A.R THAT THE VERY SAME CASH CREDITORS WHICH WERE NOT ACCEPTED BY THE A.O WHILE FRAMING THE ASSESSMENT IN THE CASE OF THE ASSESSEE FOR A.Y. 2009 - 10 , WERE HOWEVER ON APPEAL ACCEPTED BY THE CIT(A). IT IS THE CLAIM OF THE ASSESSEE THAT THE AFOREMENTIONED AMOUNTS WERE THE INTEREST FREE UNSECURED LOANS RAISED BY THE ASSESSEE EITHER FROM ITS DIRECTORS OR FROM THE COMPANIES IN WHICH THE SAID PERSONS WERE HOLDING SUBSTANTIAL INTEREST. WE FIND FROM A PERUSA L OF THE ORDER OF THE CIT(A) , THAT IN THE BACKDROP OF THE FACT THAT HIS PREDECESSOR WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE FOR A.Y. 2009 - 10 HAD HELD T HE LOAN CREDITORS TO BE GENUINE, THUS ON THE SAID COUNT HE HAD CONCLUDED THAT THE IDENTITY OF THE SAID RESPECTIVE PARTIES WAS NOT IN DOUBT. HOWEVER, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS AS REGARDS THE CREDITWORTHINESS OF THE SAID RESPECTIVE PARTIES, THUS THE ENTIRE AMOUNT OF RS. 2,14,92,800/ - WHICH WAS RAISED DURING THE YEAR UNDER CONSIDERATION WAS TO BE TREATED AS AN UNEXPLAINED CASH CREDIT UNDER SEC. 68 OF THE ACT. FURTHER, THE CIT(A) OBSERVING THAT THE ASSESSEE HAD ADMITTED THAT IT HAD RAISED FRESH LOANS OF RS. 2,14,92,800/ - DURING THE YEAR, WHICH WAS HIGHER THAN THE FIGURE OF RS. 2,14,43,635/ - TAKEN BY THE A.O, THUS WAS OF THE VIEW THAT IT WAS NOT NECESSARY TO GIVE ANY FURTHER SHOW CAUSE TO THE ASSESSEE WHILE ENHANCING THE ADDITION BY AN AMOUNT OF RS. 49,165/ - . ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 9 9. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE AS REGARDS THE ADDITION OF RS. 2,14,92,800/ - MADE UNDER SEC. 68 IN THE HANDS OF THE ASSESSEE , AND ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE OBSERVATIONS OF THE LOWER AUTHORITIES AS SUCH. WE FIND THAT IT IS MATTER OF RECORD WHICH HAS NOT BEEN CONTROVERTED BY THE LD. D.R BEFORE US THAT THE ASSESSEE HAD PLACED ON RECORD THE COPIES OF THE CONFIRMATION LETTERS, COPIES OF THE BANK ACCOUNTS AND THE PAN NUMBERS OF THE RESPECTIVE PARTIES WITH THE LOWER AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT TH E ASSESSEE BY PLACING ON RECORD THE AFORESAID DOCUMENTARY EVIDENCE HAD DISCHARGED THE PRIMARY ONUS AS WAS CAST UPON IT. FURTHER, WE FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT AS NEITHER OF THE CREDITORS WAS NEW , AND IN THE PREVIOUS YEAR T HEY HAVE BEEN TAKEN AS GENUINE, THUS THE VERACITY OF THE LOAN TRANSACTION S IN THE BACKDROP OF THE SAME HAV ING DULY BEEN CONFIRMED BY THEM WOULD SUBSTANTIALLY DISPEL THE DOUBTS AS REGARDS THE SAME. HOWEVER, WE ARE ALSO NOT OBLIVIOUS OF THE FACT THAT THE CRE DITWORTHINESS OF A PARTY IN RESPECT OF A LOAN TRANSACTION DURING A YEAR, HAVING BEEN ACCEPTED BY THE REVENUE IN CONTEXT OF A SPECIFIC TRANSACTION, CANNOT HAVE A PRECEDENT IAL VALUE AS REGARDS THE CREDITWORTHINESS OF THE PARTY IN RESPECT OF ANOTHER TRANSACTION FOR A DIFFERENT AMOUNT IN A SUBSEQUENT YEAR. THUS, ACCEPTANCE OF A LOAN TRANSACTION DURING A YEAR CANNOT ACT AS AN ESTOPPEL, THEREIN DEBARRING THE A.O FROM VERIFYING THE CREDITW ORTHINESS OF THE PARTY IN THE BACKDROP OF THE INDEPENDENT FACTS INVOLVED IN A SUBSEQUENT TRANSACTION. FURTHER, WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE ASSESSEE HAD PLACED ON RECORD THE COPIES OF THE BANK ACCOUNTS OF THE RESPECTIVE LEND E RS, HOWEVER NE ITHER ANY EFFORT HAD BEEN PUT IN EITHER BY THE ASSESSEE TO ESTABLISH BEYOND DOUBT THE CREDITWORTHINESS OF THE SAID LEND E RS , NOR ANY SUCH EXERCISE HAD BEEN EMBARKED UPON BY THE A.O . IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT AS THE IDENTITY OF THE PARTIES ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 10 HAS BEEN ACCEPTED BY THE CIT(A) AND THE SAME HAS NOT BEEN ASSAILED BY THE REVENUE BEFORE US, THUS THE SAME ATTAI NS FINALITY AND IS NOT DISPUTE. HOWEVER, WE FIND THAT THE MATTER AS REGARDS THE CREDITWORTHINESS OF THE RESPECTI VE PARTIES FROM WHOM THE ASSESSEE HAD RECEIVED LOANS AGGREGATING TO RS. 2,14,92,800/ - HAD NOT BEEN PROVED , THUS ON THE SAID COUNT THE ISSUE REQUIRES TO BE REVISITED BY THE A.O THE MATTER IS THEREFORE SET ASIDE TO THE FILE OF THE A.O, WHO IS HEREIN DIRECTE D TO READJUDICAT E THE GENUINENESS AND VERACITY OF THE LOAN TRANSACTIONS UNDER CONSIDERATION AFTER MAKING NECESSARY VERIFICATION AS REGARDS THE CREDITWORTHINESS OF THE LEND E R PARTIES. NEEDLESS TO SAY, THE A.O SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE DURING THE COURSE OF THE SET ASIDE PROCEEDINGS. FURTHER, THE ASSESSEE SHALL REMAIN AT A LIBERTY TO PLACE ON RECORD FRESH DOCUMENT ARY EVIDENCE IN ORDER OF SUBSTANTIATE THE CREDITWORTHINESS OF THE PARTIES UNDER CONSIDERATION. THE GROUND OF APPEAL NO. 2 & 3 ARE ALLOWED FOR STATISTICAL PURPOSE. 10. WE SHALL NOW ADVERT TO THE UPHOLDING BY THE CIT(A) OF THE DISALLOWANCE OF LEGAL AND PROFESSIONAL FEES AMOUNTING TO RS. 47,77,560/ - MADE BY THE A.O . WE FIND THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 95,55,123/ - UNDER THE HEAD LEGAL AND PROFESSIONAL FEES . THE A.O MADE AN ADHOC DISALLOWANCE OF 50% OF SUCH EXPENDITURE AMOUNTING TO RS. 47,77,560/ - , FOR THE REASON THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS OF THE SAID EXPENDITURE BY FAILING TO PLACE ON RECORD THE DETAILS AS REGARDS THE NATURE OF THE SERVICES AND THE RESPECTIVE PERSONS WHO HAD RENDERED THE SAME. THE ASSESSEE REBUTTING THE OBSERVATIONS OF THE LOWER AUTHORITIES HAD CLAIMED THAT DURING THE COURSE OF THE ASS ESSMENT PROCEEDINGS THE A.O HAD CALLED FOR THE DETAILS OF THE LEGAL AND PROFESSIONAL FEES, WHICH WAS PROVIDED IN FORM OF LEDGER ACCOUNTS AND NO OTHER DETAILS WERE CALLED ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 11 FOR BY HIM . THE ASSESSEE HAD FURTHER SUBMITTED BEFORE THE CIT(A) THAT COMPLETE BIL LS IN RESPECT OF THE LEGAL AND PROFESSIONAL FEES OF RS. 95,55,123/ - WERE AVAILABLE , AND THE SAME IF REQUIRED COULD BE PRODUCED FOR VERIFICATION. IN ORDER TO FORTIFY THE VERACITY OF ITS AFORESAID CLAIM OF EXPENSE, IT WAS SUBMITTED BY THE ASSESSEE THAT THE P AYMENTS TOWARDS LEGAL AND PROFESSIONAL EXPENSES WERE MADE THROUGH ACCOUNT PAYEE CHEQUES AFTER DEDUCTION OF TAX AT SOURCE, AS AND WHERE APPLICABLE. FURTHER, IT IS THE CONTENTION OF THE LD. A.R THAT A SIMILAR ADHOC DISALLOWANCE OF 50% OF LEGAL AND PROFESSIONAL EXPENSE MADE BY THE A.O IN THE IMMEDIATELY PRECEDING YEAR VIZ. A .Y. 2009 - 10 WAS DELETED BY THE CIT(A), WHICH THEREAFTER WAS UPHELD BY THE TRIBUNAL, VIDE ITS ORDER PASSED IN ACIT, CIRCLE - 4( 2), MUMBAI VS. M/S PARSOLI CORPORATION LTD. (ITA NO. 6 526/MUM/2013; DATED 25.11.2016) FOR A.Y. 2009 - 10. 11. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDER ATION I N THE BACKDROP OF THE ORDERS OF THE LOWER AUTHORITIES AND THE CONTENTION S ADVANCED BY THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES. WE FIND OURSELVES AS BEING IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A) THAT AS THE ALLOWABILITY OF THE EXPENSES BOOKED BY THE ASSESSEE UNDER THE HEAD LEGAL AND PROFESSIONAL FEES IS A QUESTION O F FACT AND NOT A QUESTION OF LAW, THUS THE MERE FACT THAT THE SAME HAD BEEN ALLOWED IN THE PRECEDING YEAR CANNOT FORM A PRECEDENT FOR ALLOWING THE SAME IN A SUBSEQUENT YEAR. HOWEVER, WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE MANNER IN WHICH AN ADHO C DISALLOWANCE OF THE LEGAL AND PROFESSIONAL FEES EXPENSES HAD BEEN CARRIED OUT BY THE A.O , AND THEREAFTER SUSTAINED BY THE CIT(A). ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES , IT EMERGES THAT THOUGH THE ASSESSEE HAD FURNISHED THE DETAILS OF THE LEGAL AND PROFESSIONAL FEES BY PLACING ON RECORD THE COPY OF THE LEDGER ACCOUNT FROM WHERE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 12 THE COMPLETE DETAILS WERE DISCERNIBLE , HOWEVER, THERE IS NOTHING WHICH COULD PERSUADE US TO CONCLUDE THAT THE ASSESSEE WAS CALLED UPON BY THE A.O TO PLACE ON RECORD DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT THE SAID EXPENSE S W ERE INCURRED IN THE COURSE OF ITS BUSINESS. RATHER, A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE A.O HAD DISALLOWED THE AFORESAID EXPENSE FOR THE REASON THAT THE ASSESSEE EXCEPT FOR FURNISH ING THE LEDGER ACCOUNT OF LEGAL AND PROFESSIONAL FEES AS APPEARING IN ITS BOOKS OF ACCOUNT , HAD HOWEVER NOT PLACED ON RECORD ANY OTHER DETAILS AS REGARDS THE NATURE OF THE LEGAL AND PROFESSIONAL SERVICES RECEIVED BY THE ASSESSEE ALONGWITH THE DETAILS OF THE PERSONS WHO HAD PROVIDED THE SAME , AND ALSO AS TO HOW THE SAID EXPENDITURE WAS RELATED TO THE BUSINESS OF THE ASSESSEE. FURTHER, ON A PERUSAL OF THE ASSESSMENT ORDER , IT EMERGES THAT THE A.O INSTEAD OF MAKING NECESSARY VERIFICATIONS HAD RAT HER CHOSEN TO RESORT TO CERTAIN ASSUMPTIONS , SAY, THE EXPENDITURE MIGHT HAVE BEEN INCURRED BY THE ASSESSEE IN ITS ONGOING SUIT BEFORE SEBI. WE ARE UNABLE TO CONCUR WITH THE ADHOC DISALLOWANCE OF 50% OF THE LEGAL AND PROFESSIONAL FEES BY THE A.O. WE ARE OF THE CONSIDERED VIEW , THAT THE A.O REMAINED UNDER A STATUTORY OBLIGATION TO HAVE VERIFIED THE GENUINENESS AND VERACITY OF THE EXPENSE S IN THE BACKDROP OF THE FACT , AS TO WHETHER THE SAME HAD BEEN INCURRED IN THE COURSE OF BUSINESS OF THE ASSESSEE OR NOT . WE ARE UNABLE TO COMPREHEND AS TO HOW AN ADHOC DISALLOWANCE OF 50% OF LEGAL AND PROFESSIONAL FEES COULD HAVE BEEN MADE BY THE A.O. RATHER, IN CASE THE ASSESSEE WOULD HAD FAILED TO PLACE ON RECORD THE REQUISITE DOCUMENTARY EVIDENCE THAT THE A.O WOULD HAD CALL ED FOR TO SUBSTANTIATE THE ALLOWABILITY OF THE AFORESAID EXPENSE UNDER SEC. 37 OF THE ACT, THEN THE LATTER WOULD HAD DULY BEEN JUSTIFIED TO HAVE DISALLOWED SUCH PART OF UNSUBSTANTIAT ED CLAIM OF EXPENSE RAISED BY THE ASSESSEE. HOWEVER, WE ARE UNABLE TO ENDORSE THE ADHOC 50% DISALLOWANCE OF THE LEGAL AND PROFESSIONAL FEES . WE FIND THAT NEITHER ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 13 THE ASSESSEE HAD BEEN ABLE TO SUCCESSFULLY SUBSTANTIATE ITS CLAIM OF THE AFORESAID EXPENSE BY PLACING ON RECORD IRREFUTABLE DOCUMENTARY EVIDENCE CORROBORATING THE S AME, NOR THE A.O HAD TRIED TO PUT ANY EFFORT AND JUSTIFIABLY DISALLOW ONLY TH AT PART OF THE AFORESAID EXPENDITURE WHICH THE ASSESSEE HAD FAILED TO SUBSTANTIATE TO HIS SATISFACTION AS HAVING BEEN INCURRED IN THE COURSE OF ITS BUSINESS AND ALLOWABLE UNDER SE C. 37 OF THE ACT. WE THUS , IN ALL FAIRNESS ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES TO BE REVISITED BY THE A.O. THE A.O SHALL DURING THE COURSE OF THE SET ASIDE PROCEEDINGS VERIFY THE GENUINENESS AND VERACITY OF THE LEGAL AND PROFESSIONAL FEES E XPENSE CLAIMED BY THE ASSESSEE IN THE BACKDROP OF THE ALLOWABILITY OF THE SAME UNDER SEC. 37 OF THE ACT. WE THUS RESTORE THE MATTER TO THE FILE OF THE A.O IN TERMS OF OUR AFORESAID OBSERVATIONS. 12. WE SHALL NOW TAKE UP THE DISALLOWANCE OF 10% OF VARIOUS EXPENSE OF RS. 80,15,542/ - CARRIED OUT BY THE A.O , ON THE GROUND THAT THE EXPENSES WERE NOT VERIFIABLE . ON APPEAL, THE AFORESAID DISALLOWANCE OF EXPENSES WAS UPHELD BY THE CIT(A) . WE FIND THAT THE ASSESSEE HAD CLAIMED THE FOLLOWING EXPENSES AGGREGATING TO RS. 80,15,542/ - : SR. NO. PARTICULARS AMOUNT (IN RS.) 1. TRAVELLING CONVEYANCE AND VEHICLE EXPENSES 30,46,773/ - 2. OFFICE AND OTHER EXPENSES 8,13,380/ - 3. PRINTING & STATIONERY 5,01,197/ - 4. POSTAGE & COURIER EXPENSES 5,26,113/ - 5. TELEPHONE EXPENSES 12,63,976/ - 6. WEBSITE & COMPUTER EXPENSES 18,64,103/ - TOTAL 80,15,542/ - ON BEING CALLED UPON TO SUBSTANTIATE THE AFORESAID EXPENSES WITH SUPPORTING BILLS/VOUCHERS , AND ALSO TO EXPLAIN THAT THE SAME WERE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 14 EXPENDED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES, THE ASSESSEE PLACED ON RECORD CERTAIN SELF MADE VOUCHERS TO SUPPORT IT S AFORESAID CLAIM. THE A.O NOT INSPIRED BY THE AFORESAID SELF MADE VOUCHERS, OBSERVED THAT AS THE ASSESSEE HAD NOT MAINTAINED ANY LOG BOOK/RECORD S IN RESPECT OF SAID EXPENSES, THUS THE PERSONAL ELEMENT EMBEDDED IN INCURRING OF THE SAID EXPENDITURE FOR WANT OF ITINERARIES, LOG BOOKS AND FINER DETAILS COULD NOT BE RULED OUT. ON THE BASIS OF THE AFORESAID OBSERVATIONS THE A.O DISALLOWED 10% OF THE TOTAL EXPENSES I.E. RS. 8,01,550/ - . 13. WE HAVE DELIBERATED ON THE ISSUE UNDER CONSIDERATION AND ARE UNABLE TO FIND ANY FORCE IN THE CONTENTION OF THE LD. A.R THAT THE LOWER AUTHORITIES HAD ERRED IN DISALLOWING 10% OF THE AFORESAID EXPENSES. WE ARE OF THE CONSIDERED VIEW THAT THE AFOREMENTIONED DISALLOWANCE WAS CARRIED OUT BY THE A.O NOT ONLY FOR T HE REASON THAT CERTA IN VOUCHERS WERE NOT VERIFIABLE, BUT ALSO FOR THE REASON THAT THE ASSESSEE HAD FAILED TO MAINTAIN ANY LOG BOOK/RECORD WHICH COULD RULE OUT INCURRING OF ANY PART OF THE AFOREMENTIONED EXPENSES FOR NON BUSINESS PURPOSES. WE ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF IRREFUTABLE DOCUMENTARY EVIDENCE WHICH COULD SUBSTANTIATE THE CLAIM OF EXPENSE RAISED BY AN ASSESSEE, THE ASSESSING AUTHORITY IS LEFT WITH NO OTHER OPTION BUT IN ALL FAIRNESS TO DISALLOW A PART OF SUCH EXPENDITURE SO CLAIMED BY THE ASSESSEE . IN THE CASE BEFORE US , AS THE ASSESSEE HAD FAILED TO MAINTAIN THE L OG BOOK/RECORDS , AND HAD MERELY TRIED TO SUPPORT ITS CLAIM OF CASH EXPENSES ON THE BASIS OF SELF MADE VOUCHERS, THUS WE ARE OF THE CONSIDERED VIEW THAT THE A.O NOT INSPIRED BY THE SAID UNSUBSTANTIATED CLAIM OF EXPENSES BY THE ASSESSEE, HAD THUS IN ALL FAIRNESS DISALLOWED 10% OF SUCH EXPENSES LEADING TO A CONSEQUENTIAL ADDITION OF RS. 8,01,550/ - IN THE HANDS OF THE ASSESSEE . WE THUS NO T FINDING ANY INFIRMITY IN THE ORDERS O THE LOWER AUTHORITIES, ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 15 UPHOLD THE DISALLOWED OF 10% OF THE TOTAL EXPENSES OF RS. 80,15,452/ - . THE GROUND OF APPEAL NO. 5 IS DISMISSED. 14. WE SHALL NOW TAKE UP THE DISALLOWANCE OF RS. 1,00,000/ - MADE BY THE A.O OUT OF REPAIRS AND MAINTENANCE EXPENDITURE OF RS. 6,83,086/ - . WE FIND THAT THOUGH THE AFORESAID DISALLOWANCE WAS MADE BY THE A.O ON THE GROUND THAT CERTAIN EXPENSES BOOKED BY THE ASSESSEE UNDER THE HEAD REPA IR AND MAINTENANCE AND CLAIMED AS A REVENUE EXPENDITURE WERE FOUND TO BE IN THE NATURE OF A CAPITAL EXPENDITURE, BUT THEREAFTER THE SAID ADHOC DISALLOWANCE OF RS. 1,00,000/ - WAS MADE FOR THE REASON THAT THE REPAIR AND MAINTENANCE EXPENSES WERE NOT FOUND TO BE PROPERLY VOUCHED. THUS, ON A PERUSAL OF THE SELF CONTRADICTORY OBSERVATIONS OF THE A.O , NOTHING CAN BE SAFELY GATHERED AS REGARDS THE EXACT BASIS FOR MAKING OF SUCH DISALLOWANCE BY THE A.O . FURTHER , THE CIT(A) HAD UPHELD THE DISALLOWANCE FOR THE REAS ON THAT THE ASSESSEE HAD FAILED TO PROVE THAT NO ENDURING BENEFIT GOT VESTED WITH IT ON INCUR RING THE AFORESAID EXPENDITURE. 15. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE OBSERVATIONS OF THE LOWER AUTHORIT IES. WE FIND THAT AS OBSERVED BY US HEREINABOVE, THE REASON FOR MAKING OF THE AFORESAID DISALLOWANCE IS NOT CLEARLY DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES . FURTHER, NOTHING CAN BE GATHERED FROM THE ORDERS OF THE LOWER AUTHORITIES AS REGARDS THE BASIS FOR TREATING AN AMOUNT OF RS. 1,00,000/ - AS A CAPITAL EXPENDITURE OUT OF THE TOTAL EXPENSES OF RS. 6,83,086/ - BOOKED BY THE ASSESSEE UNDER THE HEAD REPAIR AN D MAINTENANCE CHARGES. WE THOUGH ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE LOWER AUTHORITIES , THAT AN EXPENDITURE WHICH IS IN THE NATURE OF A CAPITAL EXPENDITURE CANNOT BE ALLOWED IN THE GARB OF CLAIM OF THE SAME BY THE ASSESSEE AS A REVENUE EXPENDIT URE, BUT IN THE ABSENCE OF ANY REFERENCE TO ANY SUCH CAPITAL EXPENDITURE OF RS. ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 16 1,00,000/ - WHICH HAD BEEN CLAIMED BY THE ASSESSEE AS A REVENUE EXPENDITURE , WE ARE UNABLE TO PERSUADE OURSELVES TO DISLODGE THE AFORESAID CLAIM OF EXPENDITURE SO RAISED BY THE ASSESSEE. WE THUS, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS DELETE THE ADDITION/DISALLOWANCE OF RS. 1,00,000/ - OUT OF THE REPAIR AND MAINTENANCE EXPENSES AND SET ASIDE THE ORDER OF CIT(A) TO THE SAID EXTENT. THE GROUND OF APPEAL NO. 6 IS ALLOWED. 16. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF RS. 5,57,78,625/ - MADE BY THE A.O UNDER SEC. 41(1) OF THE ACT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD OUTSTANDING CREDITORS OF RS. 1,77,18,856/ - AND OTHER CURRENT LIABILITIES OF RS. 6,27,03,880/ - . THE ASSESSEE DESPITE SPECIFIC DIRECTION BY THE A.O, HOWEVER FAILED TO PLACE ON RECORD THE COMPLETE DETAILS OF THE OUTSTANDING SUNDRY CREDITORS O F RS. 1, 77,18,856/ - . THE A.O OBSERVING THAT AS THE ASSESSEE HAD NOT PAID THE AFORESAID TRADING LIABILITIES OF RS. 1,77,18,856/ - FOR THE LAST THREE YEARS, THUS ADDED THE SAME AS A CEASED LIABILITY UNDER SEC. 41(1) OF THE ACT. FURTHER, IT WAS NOTICED BY THE A.O THAT OUT OF THE OUTSTANDING LIABILITY OF RS. 6,27,03,880/ - AN AMOUNT OF RS. 3,80,59,769/ - HAD REMAINED UNPAID SINCE 31.03.2009. IN THE ABSENCE OF THE AGEWISE DETAILS AS REGARDS THE OUTSTANDING AMOUNT OF RS. 3,80,59,769/ - , THE SAME WAS ADDED BY THE A.O AS A CEASED LIABILITY CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE UNDER SEC. 41(1) OF THE ACT. ON THE BASIS OF HIS AFORESAID OBSERVATIONS , THE A.O MADE A CUMULATIVE DISALLOWANCE IN RESPECT OF THE OUTSTANDING SUNDRY CREDITORS AND OUTSTANDING CURRENT LIAB ILITIES OF RS. 5,57,78,625/ - (RS. 1,77,18,856/ - + RS. 3,80,59,769/ - ). 17. WE FIND THAT THE SUBMISSIONS OF THE ASSESSEE BEFORE THE CIT(A) THAT THE AFORESAID LIABILITIES WERE OUTSTANDING IN ITS BOOKS OF ACCOUNTS , AND THERE WAS NOTHING AVAILABLE ON RECORD FROM WHICH IT COULD BE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 17 INFERRED THAT THE CREDITORS HAD WRITTEN OFF THE AFORESAID AMOUNTS, THUS ONLY FOR THE REASON THAT THE PERIOD OF LIMITATION PRESCRIBED UNDER THE INDIAN LIMITATION ACT HAD EXPIRED , CANNOT JUSTIFIABLY PROVE THAT THERE WAS A CESSATION OF LIABILITY IN TERM OF SEC. 41(1) OF THE ACT, HOWEVER, DID NOT FIND FAVOUR WITH HIM. FURTHER, THE CONTENTION OF THE ASSESSEE THAT AS THE REVENUE HAD FAILED TO PROVE THAT ANY BENEFIT IN RESPECT OF SUCH TRADING LIABILITY WAS OBTAINED BY THE ASSESSEE BY WAY O F REMISSION OR CESSATION THEREOF, THUS NO ADDITION UNDER SEC. 41(1) WAS CALLED FOR IN THE HANDS OF THE ASSESSEE , WAS ALSO REJECTED BY THE CIT(A). 18. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORITIES , AND FIND THAT THE DETAILS OF CURRENT LIABILITIES AND OTHER DETAILS WHICH WERE REQUISITIONED BY THE A.O UNDER SEC. 142(1) WERE NOT SUPPLIED BY THE ASSESSEE . FURTHER, NO DETAILS IN RESPECT OF THE OUTSTANDING SUNDRY CREDITORS WAS ALSO FURNISHED BY THE ASSESS EE DESPITE SPECIFIC DIRECTIONS BY THE A.O. STILL FURTHER, THE CIT(A) IN ALL FAIRNESS DURING THE COURSE OF THE APPELLATE PROCEEDINGS VIDE HIS ORDER SHEET ENTRY DATED 01.07.2015 DIRECTED THE ASSESSEE TO FILE (I) CONFIRMATIONS FROM THE CREDITORS; (II) DETAILS AS REGARDS THE PAYMENTS SUBSEQUENTLY MADE BY THE ASSESSEE TO THE CREDITORS WITH SUPPORTING EVIDENCE, BANK PAYMENT STATEMENTS HIGHLIGHTING RELEVANT TRANSACTIONS; AND (III) ANY OTHER SUBMISSION IN SUPPORT OF ITS AFORESAID CLAIM. HOWEVER, AS OBSERVED BY THE CIT(A) , THE ASSESSEE DESPITE HAVING BEEN AFFORDED ANOTHER OPPORTUNITY TO SUBSTANTIATE ITS CLAIM THAT THERE WAS NO CESSATION OF LIABILITY IN TERMS OF SEC. 41(1) OF THE ACT, FAILED TO PLACE ON RECORD THE AFORESAID DOCUMENTARY EVIDENCE . WE FIND THAT THE CIT(A ) TAKING COGNIZANCE OF THE AFORESAID FACTS , THUS HELD A CONVICTION THAT THE ASSESSEE HAD NO ADDITIONAL DOCUMENTS TO SUBSTANTIATE ITS CLAIM THAT THERE HAD BEEN NO CESSATION OF LIABILITY . WE FIND THAT THE CIT(A) BEING OF THE VIEW THAT THE ASSESSEE BY FAILING TO PLACE ON RECORD THE CONFIRMATIONS OF THE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 18 RESPECTIVE PARTIES ADMITTING THE OUTSTANDING LIABILITY OF THE ASSESSEE , COUPLED WITH THE FACT THAT THE SAME WAS OUTSTA NDING FOR MORE THAN THREE YEARS, THUS UPHELD THE ADDITION OF RS. 5,57,78,625/ - MADE BY THE A.O UNDER SEC. 41(1) OF THE ACT. 19. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION , AND FIND OURSELVES AS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSES SEE HAD FAILED TO SUBSTANTIATE THAT THE AFOREMENTIONED LIABILITIES WERE OU TSTANDING. HOWEVER, WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE OBSERVATIONS OF THE CIT(A) THAT AS THE AFOREMENTIONED LIABILITIES WERE OUTSTANDING FOR A PERIOD OF MORE TH AN THREE YEARS, THUS IT COULD SAFELY BE CONCLUDED THAT THE SAME IN THE ABSENCE OF ANY POSITIVE CONFIRMATIONS AND THE FACTUAL CIRCUMSTANCES WERE TO BE HELD TO HAVE CEASED TO EXIST. WE ARE OF THE CONSIDERED VIEW THAT THE PERIOD OF LIMITATION BEYOND WHICH A L IABILITY CANNOT BE ENFORCED AS CONTEMPLATED IN THE LIMITATION ACT ,1963 CANNOT BE DECISIVE FOR CHARACTERIZING THE SAME A S A CEASED LIABILITY WITHIN THE MEANING OF SEC. 41(1) OF THE ACT. RATHER, THE FACT THAT THE ASSESSEE WHICH IS A PUBLIC LIMITED COMPANY HAD SHOWN THE LIABILITIES UNDER CONSIDERATION IN ITS BALANCE SHEET FOR THE YEAR VIZ. A.Y. 2010 - 11, THOUGH NOT CONCLUSIVELY , BUT SUBSTANTIALLY PROVES THAT THE SAME IS OUTSTANDING. FURTHER, WE ARE OF THE CONSIDERED VIEW THAT BEFORE THE REVENUE TREATS A LIABILITY AS HAVING BEEN REMITTED OR CEASED, IT HAS TO BE SHOWN THAT THE ASSESSEE DURING THE SAID YEAR HAD OBTAINED SOME BENEFIT IN RESPECT OF SUCH LIABILITY . STILL FURTHER, THE TERM ...AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR, APPEARING IN THE PARENT SEC. 41(1) , CLEARLY REVEALS THAT THE VALUE OF BENEFIT ACCRUING TO THE ASSESSEE ON ACCOUNT OF REMISSION OR CESSATION THEREOF, SHALL BE DEEMED TO BE PROFIT AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME TAX AS THE INCOME OF THAT PREVIOUS YEAR IN WHICH THE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 19 ASSESSEE HAD OBTAINED SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILI TY, BY WAY OF REMISSION OR CESSATION THEREOF. WE THUS, ARE OF THE CONSIDERED VIEW THAT EVEN IN CASE OF REMISSION OR CESSATION OF A TRADING LIABILITY, THE SAME CAN BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE ONLY DURING ANY SUCH PREVIOUS YEAR IN WHICH THE ASSESSEE HAD OBTAINED SOME BENEFIT IN RESPECT OF THE SAME BY WAY OF REMISSION OR CESSATION THEREOF . ON THE BASIS OF OUR AFORESAID OBSERVATION S, WE ARE OF THE CONSIDERED VIEW THAT THOUGH A VERY HEAVY ONUS I S CAST UPON THE ASSESSEE TO PROVE THAT THERE HAS BEEN NO REMISSION OR CESSATION OF LIABILITY, BUT IF HE FAILS TO SO PROVE, THEN THOUGH IT WOULD BE OPEN FOR THE REVENUE TO ASSESS THE SAID AMOUNT AS THE DEEMED INCOME OF THE ASSESSEE UNDER SEC. 41(1) OF THE ACT, HOWEVER, IT WOULD BE FOR THE REVENUE TO PROVE THAT PURSUANT TO SUCH REMISSION OR CESSATION OF SUCH TRADING L IABILITY THE ASSESSEE HAD OBTAINED SOME BENEFIT DURING THE YEAR UNDER CONSIDERATION. 20. WE ARE OF THE CONSIDERED VIEW THAT ADMITTEDLY THE ASSESSEE IN THE CASE BEFORE US HAD FAILED TO PROVE DESPITE HAVING BEEN AFFORDED SUFFICIENT OPPORTUNITIES BOTH BY TH E ASSESSING AUTHORITY AND CIT(A) , THAT THE LIABILITIES UNDER CONSIDERATION VIZ. (I) CURRENT LIABILITIES; AND (II) OUTSTANDING SUNDRY CREDITORS , HAD NOT CEASED TO EXIST AND WERE OUTSTANDING. HOWEVER, AT THE SAME TIME THE REVENUE ALSO HAD FAILED TO PROVIDE ANY REASONING AS TO HOW THE REMISSION OR CESSATION OF LIABILITY AS INFERRED ON THEIR PART WAS TO BE RELATED AND THEREIN ASSESSED IN THE YEAR UNDER CONSIDERATION VIZ. A.Y. 2010 - 11. BE THAT AS IT MAY, WE FIND THAT THE A.O BEFORE INFERRING THE CESSATI ON OR REMISSION OF LIABILITY UNDER SEC. 41(1) OF THE ACT , HA S HOWEVER FAILED TO VERIFY AS TO WHETHER ANY PART OF OUTSTANDING LIABILITY WAS DISCHARGED BY THE ASSESSEE IN THE SUCCEEDING YEARS OR NOT. ON THE BASIS OF OU R AFORESAID DELIBERATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE MATTERS REQUIRES TO BE REVISITED ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 20 BY THE A.O. THE A.O SHALL DURING THE COURSE OF THE SET ASIDE PROCEEDINGS VERIFY AS TO WHETHER ANY PART OF THE OUTSTANDING LIABILITY OF RS. 5,57,78,625/ - AS CLAIMED BY THE ASSESSEE HAD BEEN DISCHARG ED IN THE SUCCEEDING YEARS , OR NOT. FURTHER, THE ASSESSEE IS AFFORDED AN OPPORTUNITY TO PLACE ON RECORD THE CONFIRMATIONS FROM THE RESPECTIVE PARTIES AND/OR DOCUMENTARY EVIDENCE WHICH COULD SUBSTANTIATE TO THE HILT THAT THE SAID RESPECTIVE LIABILITIES WERE OUTSTANDING AS ON 31.03.2010 AND HAD NEITHER CEASED OR STOOD REMITTED. IN CASE THE ASSESSEE FAILS TO SUBSTANTIATE ITS CLAIM IN RESPECT OF THE AFORESAID LIABILITIES, THEN THE A.O SHALL REMAIN AT A LI BERTY TO ASSESS IT AS THE DEEMED INCOME OF THE ASSESSEE U NDER SEC. 41(1), AS PER EXTANT LAW. THE GROUND OF APPEAL NO. 7 IS ALLOWED FOR STATISTICAL PURPOSES. 21. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 150/MUM/2016 A.Y. 2011 - 12 22. WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE THE LEARNED CIT (A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS. 17,73,153 / - U/S. 14A. AS THE APPELLANT IS A STOCK BROKER AND THE DIVIDEND HAS BEEN RECEIVED BY CHANCE IN DUE COURSE OF BUSINESS . 2. THE CIT(A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS. 4,30,042/ - U/S 36(1)(VA) WHICH WAS PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. IN THE ASSESSMENT YEAR 2010 - 11 CIT(A) HAS ALLOWED THIS GROUND. 3. THE CIT(A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS. 2,97,219/ - U/S 40(A)(IA) FOR TRANSACTION CHARGES PAID DURING THE YEAR BY YOUR APPELLANT TO STOCK EXCHANGE AND NO PART REMAINED PAYABLE. THIS GROUND HAS BEEN ALLOWED BY CIT(A) IN THE ASSESSMENT YEAR 2010 - 11. ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 21 4. THE CIT(A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE DISALLOWANCE THE DEPRECIATION ON CAR AMOUNTING TO RS. 4,44,492/ - AS CLAIMED BY YOUR APPELLANT. 5. THE CIT(A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS. 2,46,78,611/ - U/S 68 IN SPITE OF SUBMISSION OF CONFIRMATIONS FROM THE RESPECTIVE PARTIES. CIT(A) HAS DELETED THE ADDITION IN THE ASSESSMENT YEAR 2 008 - 09 AND 2009 - 10 AS THE PARTIES ARE SAME WHICH ARE CARRIED FORWARD FROM YEAR AFTER YEARS. 6. THE CIT(A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS. 41,65,500/ - BEING LEGAL & PROFESSIONAL FEES OUT OF RS. 95,71,697/ - IN SPITE OF GIVING F ULL DETAILS WITH BILLS OF EXPENDITURE INCURRED FOR THE PURPOSE OF THE BUSINESS. THE ADDITION WAS DELETED BY CIT(A) IN THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. 7. THE CIT(A) WAS HIGHLY JUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF HAS WRONGLY DISALLOWED 10% OF VARIOUS EXPENSES RS. 80,15,542/ - . THERE WAS NO DISALLOWANCE UNDER THIS HEAD RATHER THERE WAS AN ADDITIONAL GROUND OF APPEAL WHICH WAS NOT DISPOSED BY THE LEARNED CIT(A). THE APPELLANT FURTHER CRAVES THE LEAVE TO PUT IN ADDITIONAL GROUNDS OF APPEAL IF ANY AT THE TIME OF HEARING . FURTHER, THE ASSESSEE HA S ALSO RAISED AN ADDITIONAL GROUND OF APPEAL AS UNDER : THE A.O WAS HIGHLY UNJUSTIFIED IN TREATING THE BUSINESS LOSS RS. 15,42,375/ - AS SPECULATION LOSS AND HAS ADDED THE SAME AS INCOME OF YOUR APPELLANT. THIS ISSUE HAS BEEN CONSIDERED IN THE APPEALS FOR THE A.Y. 2008 - 09 AND 2009 - 10 AND BUSINESS LOSS WAS ALLOWED. THAT AS THE ADJUDICATION OF AFORESAID ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE INVOLVES PURELY A QUESTION OF LAW BASED ON T HE FACTS AVAILABLE ON RECORD, THUS THE SAME IS ADMITTED. 23. BRIEFLY STATED, THE ASSESSEE HAD AS ON 28.09.2011 E - FILED ITS RETURN OF INCOME FOR A.Y. 2011 - 12, DECLARING TOTAL LOSS AT RS. 5,14, 09,953/ - . THE RETURN OF INCOME WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 22 24. THE A.O WHILE FRAMING THE ASSESSMENT INTER ALIA MADE THE FOLLOWING ADDITIONS /DISALLOWANCES : S. NO. PARTICULARS AMOUNT 1. DISALLOWANCES UNDER SEC. 14A RS. 17,73,153 / - 2. ADDITION UNDER SEC. 36(1)(VA) RS. 4,30,042/ - 3. DISALLOWANCE OF TRANSACTION CHARGES UNDER SEC. 40(A)(IA) RS. 2,97,219/ - 4. DISALLOWANCE OF DEPRECIATION ON CAR RS. 4,44,492/ - 5 . DISALLOWANCES UNDER SEC. 68 RS. 2,46,78,611/ - 6 . DISALLOWANCES OF 50% OF LEGAL & PROFESSIONAL FEES RS. 41,65,500 / - 7 . DISALLOWANCES OF 10% OF VARIOUS EXPENSES RS. 8,01,554/ - 8. ADDITION ON TREATMENT OF BUSINESS LOSS AS A SPECULATION LOSS BY THE A.O RS. 15,42,375/ - , AND ASSESSED THE LOSS OF THE ASSESSEE COMPANY AT RS. 1, 80 , 78 , 561 / - . 25. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATI NG ON THE CONTENTIONS ADVANCED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME AND SUSTAINED THE AFOREMENTIONED ADDITIONS/DISALLOWANCES MADE BY THE A.O. 26 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. A.R SUBMITTED THAT THE GROUND OF APPEAL NO. 1 IS NOT BEING PRESSED. IN THE BACKDROP OF THE CONCESSION MADE BY THE LD. A.R THE GROUND OF APPEAL NO. 1 IS DISMISSED AS NOT PRESSED . 27. THE LD. A.R HAS ASSAILED THE ADDITION OF RS. 4,30,042/ - MADE BY THE A.O UNDER SEC. 36(1)(VA). IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH THERE WAS A DELAY ON THE PART OF THE ASSESSEE IN DEPOSITING THE AMOUNT OF THE EMPLOYEES CONTRIBUTION TO ESIC AND PF, HOWEVER, THE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 23 SAID RESPECTIVE AMOUNTS WERE DEPOSITED WELL BEFORE T HE DUE DATE OF FILING OF THE RETURN OF INCOME BY THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTION DREW OUR ATTENTION TO PAGE 6 - 7 OF THE CIT(A) ORDER , WHEREIN THE COMPLETE DETAILS AS REGARDS THE PAYMENT S MADE BY THE ASSESSEE IN RESPECT OF THE EMPLOYEES CONTRIBUTION TO ESIC AND PF WERE FOUND MENTIONED. THE LD. A.R SUBMITTED THAT AS THE AFOREMENTIONED AMOUNTS WERE DEPOSITED PRIOR TO THE DUE DATE OF FILI NG OF THE RETURN OF INCOME BY THE ASSESSEE, THUS THE SAME COULD NOT HAVE BEEN DISALLOWED. IN SUPPORT OF HIS AFORESAID CONTENTION THE LD. A.R RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. GODAV E RI (MANNAR) SAHAKARI SAKHAR KARKHANA LTD. (2008) 298 ITR 149 (BOM). FURTHER, THE LD. A.R ASSAILED THE DISALLOWANCE UNDER SEC. 40(A)(IA) BY THE A.O OF THE TRANSACTION CHARGES OF RS. 2,97,219/ - THAT WERE PAID BY THE ASSESSEE DURING THE YEAR TO STOCK EXCHANGE . IT WAS AVERRED BY THE LD. A.R THAT AS THE AFORESAID AMOUNT HAD BEEN PAID AND WAS NOT PAYABLE, HENCE NO DISALLOWANCE OF THE SAID CHARGES WAS LIABLE TO BE MADE UNDER SEC. 40(A)(IA). THE LD. A.R SUBMITTED THAT THE CIT(A) HA D ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIATION ON MOTOR CAR AMOUNTING TO RS. 4,44,492/ - . IT WAS AVERRED BY THE LD. A.R , THAT THE AFORESAID DISALLOWANCE WAS MADE BY THE A.O FOR THE REASON THAT THE MOTOR CAR WAS REGISTERED IN THE NAME OF THE DIRECTOR OF THE ASSESSEE COMPANY, LOOSING SIGHT OF THE FACT THAT THE ENTIRE INVESTMENT TOWARDS THE PURCHASE OF THE SAID VEHICLE WAS MADE BY THE COMPANY , AND THE SAME FORM ED PART OF ITS BLOCK OF ASSETS. THE LD. A.R FURTHER ASSAILED THE ADDITION OF RS. 2,46,78,611/ - MADE BY THE A.O UNDER SEC. 68 OF THE ACT. IN SUPPORT O F HIS CONTENTION THE LD. A.R RELIED ON HIS SUBMISSIONS MADE IN RESPECT OF A SIMILAR ADDITION MADE IN THE HANDS OF THE ASSESSEE IN A.Y. 2010 - 11. STILL FURTHER, THE LD. A.R DISPUTED THE DISALLOWANCE OF L EGAL AND PROFESSIONAL FEES AMOUNTING TO RS. ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 24 41,65,500/ - OUT OF TOTAL AMOUNT OF RS. 95,71,697/ - . IN SUPPORT OF THE AFORESAID ISSUE THE LD. A.R RELIED ON THE CONTENTIONS WHICH WERE ADVANCED IN CONTEXT OF A SIMILAR DISALLOWANCE MADE IN THE HANDS OF THE ASSESSEE IN A.Y. 2010 - 11. FURTHER, THE LD. A.R SUBMITTED THAT AS THE GROUND OF APPEAL NO. 7 HAD INADVERTENTLY BEEN RAISED IN THE PRESENT APPEAL, THUS THE SAME MAY BE ALLOWED TO BE WITHDRAWN. IN THE BACKDROP OF THE CONCESSION ADVANCED BY THE LD. A.R IN CONTEXT OF THE GROUND OF APPEAL NO. 7 , THE SAME IS DISMISSED AS N OT PRESSED. THE LD. A.R ADVERTING TO THE ADDITIONAL GROUND OF APPEAL SUBMITTED THAT THE A.O HAD WRONGLY RE - CHARACTERIZED THE BUSINESS LOSS OF RS. 15,42,375/ - CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME, AS A SPECULATION LOSS UNDER SEC. 73 OF THE ACT. I T WAS AVERRED BY THE LD. A.R THAT INVOLVING IDENTICAL FACTS , THE CLAIM OF BUSINESS LOSS WAS ACCEPTED BY THE A.O WHILE FRAMING THE ASSESSMENT FOR A.Y. 2008 - 09 AND A.Y. 2009 - 10 . FURTHER, IT WAS AVERRED BY THE LD. A.R THAT ON APPEAL THE TRIBUNAL WHILE DISPOSI NG OF F THE CROSS APPEALS IN THE ASSESSES OWN CASE FOR A.Y. 2008 - 09 AND A.Y. 2009 - 10 HAD AFTER NECESSARY DELIBERATIONS RESTORE D THE MATTER TO THE FILE OF THE CIT(A) , WITH A DIRECTION TO ADJUDICATE THE SAME AFRESH IN THE L IGHT OF E XPLANATION TO SEC. 73 OF THE ACT. PER CONTRA, THE LD. D.R RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 28. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE SHALL FIRST ADVERT TO THE ADDITION OF RS. 4,30,042/ - MADE BY THE A.O UNDER SEC. 36(1)(VA) IN CONTEXT OF THE DELAYED DEPOSIT BY THE ASSESSEE OF THE EMPLOYEES CONTRIBUTION TOWARDS ESIC AND PF. ON A PERUSAL OF THE DETAILS AS ARE DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORIT IES, IT EMERGES THAT THOUGH THE AFOREMENTIONED AMOUNTS HAD BEEN DEPOSITED BY THE ASSESSEE BEYOND ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 25 THE TIME LIMIT CONTEMPLATED UNDER THE RESPECTIVE ACTS, BUT THE SAME ARE FOUND TO HAVE BEEN DEPOSITED PRIOR TO THE DUE DATE OF FILING OF THE RETURN OF INCOME BY THE ASSESSEE . 29. WE FIND THAT OUR INDULGENCE HAS BEEN SOUGHT BY THE ASSESSEE FOR ADJUDICATING AS TO WHETHER IN THE BACKDROP OF THE POST AMENDED SEC. 43B OF THE ACT, THE LOWER AUTHORITIES WERE RIGHT IN LAW AND FACTS OF THE CASE IN DISALLOWING THE PAYME NTS MADE BY THE ASSESSEE TOWARDS EMPLOYEES CONTRIBUTION TOWARDS ESIC AND PROVIDENT FUND, THOUGH MADE BEYOND THE STIPULATED TIME CONTEMPLATED UNDER THE SAID RESPECTIVE ACT S , BUT BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME BY THE ASSESSEE UNDER SEC. 139(1) OF THE ACT. WE FIND THAT THOUGH THE ASSESSEE HAD MADE THE PAYMENTS TOWARDS EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC BEYOND THE STIPULATED TIME PERIOD, HOWEVER THE SAID AMOUNTS WERE PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME BY THE ASSESSEE UNDER SEC. 139(1) OF THE ACT. WE ARE OF THE CONSIDERED VIEW , THAT NOW WHEN THE AFOREMENTIONED AMOUNTS HAD BEEN DEPOSITED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, THUS NO DISALLOWANCE OF THE SAID AMOUNT WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. GHATGE PATIL TRANSPORTS LTD. (2014) 368 ITR 749 (BOM). THE HONBLE HIGH COURT IN ITS AFORESAID ORDER HAD CLEARLY OBSERVED THAT BOTH EMPLOYEES AND EMPLOYERS CONTRIBUTION WOULD BE COVERED UNDER THE AMENDMENT TO SEC. 43B OF THE ACT AND THE JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) . WE THUS BEING OF THE CONSIDERED VIEW THAT THE DISALLOWANCE OF RS. 4,30,042/ - SUSTAINED BY THE CIT(A) IS NOT IN CONFORMITY WITH THE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT, THUS SET ASIDE HIS ORDER TO THE SAID EXTENT. THE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 26 DISALLOWANCE OF RS. 4,30,042 / - MADE BY THE A.O IS DELETED. THE GROUND OF APPEAL NO. 2 IS ALLOWED. 30. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF AN AMOUNT OF RS. 2,97,219/ - MADE BY THE A.O UNDER SEC. 40(A)(IA). ON A PERUSAL OF THE ASSESSMENT ORDER , IT EMERGES THAT THE A.O BEING OF THE VIEW THAT THE ASSESSEE WHILE MAKING THE PAYMENT TO THE STOCK EXCHANGE FOR THE SERVICES PROVIDED WITH REGARD TO TRANSACTIONS IN SECURIT IES THROUGH THE EXCHANGE , HAD WRONGLY DEDUCTED TAX AT SOURCE UNDER SEC. 194C AS AGAINST SEC. 194J . I N THE BACKDROP OF HIS AFORESAID CONVICTION, THE A.O DISALLOWED THE AMOUNT OF THE TRANSACTION CHARGES OF RS. 2,97,219/ - UNDER SEC. 40(A)(IA) OF THE ACT. THE LD. A.R SUBMITTED THAT AS THE AMOUNT OF TRANSACTION CHARGES HAD BEEN PAID AND WERE NOT PAYABLE, THUS NO DISALLOWANCE UNDER SEC. 40(A)(IA) OF THE ACT WAS LIABLE TO BE MADE. WE ARE UNABLE TO ACCEPT THE AFORESAID CONTENTION OF THE LD. A.R. WE FIND THAT T HE AFORESAID ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF M/S PALAM GAS SERVICE VS. CIT (2017) 394 ITR 300 (SC). THE HONBLE APEX COURT IN ITS AFORESAID ORDER HAD OB SERVED THAT THE WORD PAYABLE O CCU R R ING IN SEC. 40(A)(IA) REFERS NOT ONLY TO THOSE CASES WHERE THE AMOUNT IS YET TO BE PAID, BUT WOULD ALSO COVER THE CASES WHERE THE AMOUNT HAS ACTUALLY BEEN PAID. IN THE BACKDROP OF THE AFORESAID SETTLED POSITION OF LAW, THE CONTENTION RAISED BY THE ASSESSEE IS DISMISSED. THE GROUND OF APPEAL NO. 3 IS DISMISSED. 31. WE SHALL NOW TAKE UP THE DISALLOWANCE OF DEPRECIATION ON CAR AMOUNTING TO RS. 4,44,492 / - . WE FIND THAT THE A.O OBSERVED THAT A PERUSAL OF THE INVOICE OF THE MOTOR VEHICLE REVEALED THAT THE SAME WAS PURCHASED IN THE NAME OF MR. UVES MOHAMMED YOUNUS SARESHWA LA, DIRECTOR OF THE COMPANY. THE A.O BEING OF THE VIEW THAT THE ASSESSEE COMPANY WAS NOT THE LEGAL OWNER OF THE VEHICLE, THUS DECLINED TO ALLOW ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 27 THE CLAIM OF DEPRECIATION OF RS. 4,44,492/ - RAISED BY THE ASSESSEE AS REGARDS THE SAME. 32. WE HAVE GIVEN A TH OUGHTFUL CONSIDERATION TO THE FACTS OF THE ISSUE UNDER CONSIDERATION AND FIND THAT THE VEHICLE WAS REGISTERED IN THE NAME OF THE DIRECTOR OF THE ASSESSEE COMPANY VIZ. MR. UVES MOHAMMED YOUNUS SARESHWALA . HOWEVER, AT THE SAME T IME THE OTHER MATERIAL FACTS W HICH WERE BROUGHT TO THE NOTICE OF THE LOWER AUTHORITIES BY THE ASSESSEE I.E. (I). THAT THE PAYMENT TOWARDS THE PURCHASE CONSIDERATION FOR THE MOTOR CAR WAS MADE BY THE ASSESSEE COMPANY; AND (II). THE MOTOR CAR WAS REFLECTED AS AN ASSET IN THE BLOCK OF AS SETS OF THE ASSESSEE COMPANY , WHICH DULY ESTABLISHED THAT THE ASSESSEE COMPANY WAS THE DEFACTO OWNER OF THE MOTOR CAR , HAD REMAINED OMITTED TO BE CONSIDERED BY THE LOWER AUTHORITIES IN THE RIGHT PERSPECTIVE . WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES HAD FAILED TO APPRECIATE THE AFORESAID MATERIAL FACTS WHICH HAVE A STRONG BEARING ON THE ADJUDICATION OF THE ISSUE UNDER CONSIDERATION. THUS, IN THE BACKDROP OF THE AFORESAID FACTS, IT CAN SAFELY B E CONCLUDED THAT THOUGH THE ASSESSEE COMPANY WAS NOT VESTED WITH THE LEGAL OWNERSHIP OF THE VEHICLE, BUT THEN IT REMAINED THE BENEFICIAL OWNER OF THE SAME. WE THUS IN THE BACKDROP OF THE AFORESAID FACTS, FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW T AKEN BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. BASTI SUGAL MILLS COMPANY LTD. (2002) 257 ITR 88)(DEL) AND THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. ARAVALI FINLEASE LTD (2012)341 ITR 282 (GUJ) , THUS, FIND NO REASON TO TAKE A DIFFERENT VI EW. WE THUS BEING OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS DULY ENTITLED TOWARDS THE CLAIM OF DEPRECIATION ON THE AFORESAID MOTOR CAR, SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE DISALLOWANCE OF DEPRECIATION OF RS. 4,44,492 / - SUSTAINE D BY THE CIT(A) . THE GROUND OF APPEAL NO. 4 IS ALLOWED. ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 28 33. WE SHALL NOW ADVERT TO THE ADDITION OF RS. 2,46,78,611/ - MADE BY THE A.O UNDER SEC. 68 OF THE ACT, WHICH THEREAFTER HAD BEEN SUSTAINED BY THE CIT(A). WE FIND FROM A PERUSAL OF THE RECORDS THAT THE ASSESSEE HAD RAISED UNSECURED LOANS AGGREGATING TO RS. 2,46,78,611/ - DURING THE YEAR UNDER CONSIDERATION FROM THE FOLLOWING PARTIES : - SR. NO. PARTICULARS ADDITIONS 1. ZAFAR YUNUS RS. 25,90,000/ - 2. PARSOLI MOTOR WORKS PVT. LTD. RS. 1,64,59,423/ - 3. R.J TRADELINKS PVT. LTD. RS. 19,45,000/ - 4. SALECHA YUNUS RS. 13,70,000/ - 5. PARSOLI CAPITAL MARKETS RS. 23,14,188/ - TOTAL RS. 2,46,78,611/ - ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES , IT EMERGES THAT THE ASSESSEE IS STATED TO HAVE PLACED ON RECORD THE CONFIRMATION LETTERS OF THE AFORESAID PARTIES. FURTHER, IT IS THE CONTENTION OF THE LD. A.R THAT THE VERY SAME CASH CREDITORS WHICH WERE DISALLOWED BY THE A.O WHILE FRAMING THE ASSESSMENT FOR A.Y. 2009 - 10 , WERE HOWEVER ON APPEAL DELETED BY THE CIT(A). IT IS THE CLAIM OF THE ASSESSEE THAT THE AFOREMENTIONED AMOUNTS WERE THE INTEREST FREE UNSECURED LOANS RAISED BY THE ASSESSEE EITHER FROM ITS DIRECTORS OR FROM THE COMPANIES IN WHICH THE SAID PERSONS WERE HOLDING SUBSTANTIAL INTERES T. WE FIND THAT THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE OBSERVATIONS OF THE A.O IN CONTEXT OF TH E ISSUE UNDER CONSIDERATION, HAS UPHELD THE ADDITION OF RS. 2,46,78,611/ - FOR THE REASON THAT NO ADDITIONAL DETAILS OR SUBMISSIONS TO SUBSTANTIATE THE GE NUINENESS AND VERACITY OF THE SAID LOAN TRANSACTION S WERE PLACED ON RECORD BY THE ASSESSEE DURING THE COURSE OF THE APPELLATE PROCEEDINGS. 34. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE AS REGARDS THE ADDITION OF RS. 2,46,78,611/ - MADE UNDER SEC. 68 IN THE HANDS OF THE ASSESSEE , AND ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 29 OBSERVATIONS OF THE LOWER AUTHORITIES AS SUCH. WE FIND THAT IT IS A MATTER OF RECORD WHICH HAS NOT BEEN CONTROVERTED BY THE LD. D.R BEFORE US , THAT THE ASSESSEE HAD PLACED ON RE CORD THE COPIES OF THE CONFIRMATION LETTERS OF THE RESPECTIVE PARTIES WITH THE LOWER AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE BY PLACING ON RECORD THE AFORESAID DOCUMENTARY EVIDENCE HAD TO SOME EXTENT DISCHARGED THE PRIMARY ONUS AS WAS CAST UPON IT. FURTHER, WE FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT AS SOME OF THE CREDITORS WERE OLD PARTIES , AND IN THE PRECEDING YEAR THEY HAVE BEEN TAKEN AS GENUINE, THUS THE VERACITY OF THE LOAN TRANSACTIONS IN THE BACKDROP OF THE S AME HAVING DULY BEEN CONFIRMED BY THEM WOULD CERTAINLY DISPEL THE DOUBTS AS REGARDS THE GENUINENESS AND VERACITY OF THE TRANSACTIONS UNDER CONSIDERATION . HOWEVER, WE ARE ALSO NOT OBLIVIOUS OF THE FACT THAT THE CREDITWORTHINESS OF THE PARTIES IN RESPECT OF A LOAN TRANSACTION DURING A YEAR, HAVING BEEN ACCEPTED BY THE REVENUE IN CONTEXT OF THE SAID TRANSACTION CANNOT HAVE A PRECEDENTIAL VALUE AS REGARDS THE CREDITWORTHINESS OF THE PARTY IN RESPECT OF AN ANOTHER TRANSACTION FOR A DIFFERENT AMOUNT IN A SUBSEQUENT YEAR. IN OTHER WORDS , ACCEPTANCE OF A LOAN TRANSACTION DURING A YEAR CANNOT ACT AS AN ESTOPPEL, THEREIN DEBARRING THE A.O FROM VERIFYING THE SAME IN THE BACKDROP OF THE INDEPENDENT FACTS INVOLVED IN THE SUBSEQUENT TRANSACTION. FURTHER, WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE ASSESSEE HAD PLACED ON RECORD THE CONFIRMATIONS OF THE RESPECTIVE PARTIES , HOWEVER NEITHER ANY EFFORT HAD BEEN PUT IN EITHE R BY THE ASSESSEE TO DISPEL ANY DOUBT S AS REGARDS THE GENUINENESS AND VERACITY OF THE LOAN TRANSACTION S UNDER CONSIDERATION TO THE SATISFACTION OF THE A.O, NOR ANY SUCH EXERCISE FOR MAKING NECESSARY VERIFICATION S ON THE BASIS OF THE CONFIRMATIONS PLACED ON RECORD BY THE ASSESSEE HAD BEEN EMBARKED UPON BY THE A.O. WE THUS, IN ALL FAIRNESS ARE OF THE CONSIDERED VIEW THAT THE MATTER AS REGARDS THE NATURE AND SOURCE OF ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 30 THE CASH CREDITS AGGREGATING TO RS. 2,46,78,611/ - APPEARING IN THE BOOKS OF ACCOUNTS OF T HE ASSESSEE REQUIRES TO BE REVISITED . THE MATTER IS SET ASIDE TO THE FILE OF THE A.O, WHO IS HEREIN DIRECTED TO R E ADJUDICATE THE GENUINENESS AND VERACITY OF THE LOAN TRANSACTIONS UNDER CONSIDERATION AFTER MAKING NECESSARY VERIFICATIONS AS REGARDS THE NATU RE AND SOURCE OF THE AFOREMENTIONED CASH CREDITS. NEEDLESS TO SAY, THE A.O SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE DURING THE COURSE OF THE SET ASIDE PROCEEDINGS. FURT HER, THE ASSESSEE SHALL REMAIN AT A LIBERTY TO PLACE ON R ECORD FRESH DOCUMENTARY EVIDENCE IN ORDER TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE LOAN TRANSACTIONS OF THE PARTIES UNDER CONSIDERATION. THE GROUND OF APPEAL NO. 5 IS ALLOWED FOR STATISTICAL PURPOSE S. 35. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF THE LEGAL AND PROFESSIONAL FEES EXPENSES AMOUNTING TO RS. 41,65,500/ - BY THE A.O WHICH THEREAFTER HAD BEEN SUSTAINED BY THE CIT(A). ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES , IT EMERGES THAT THE LEGAL AND PROFESSIONAL FEES OF RS. 41,65,500/ - HAD BEEN DISALLOWED FOR THE REASON THAT THE SAME PERTAINED TO THE EXPENSES INCURRED BY THE ASSESSEE IN RESPECT OF ITS ONGOING SUIT IN THE SECURITIES APPELLATE TRIBUNAL AND THE HONBLE HIGH COURT OF BOMBAY. THE A.O BEING OF THE VIEW , THAT AS THE AFOREMENTIO NED EXPENSE WAS INCURRED BY THE ASSESSEE COMPANY FOR THE PURPOSE OF EXONERATING ITSELF FROM AN INFRACTION OF LAW, THUS THE SAME WOULD NOT BE ALLOWABLE AS AN EXPENDITURE UNDER SEC. 37(1) OF THE ACT , HAD DISALLOWED THE SAME . THE A.O ON THE BASIS OF HIS CONVICTION THAT THE AFORESAID EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS BY THE ASSESSEE , THUS THE SAME WOULD NOT BE ALLOWABLE UNDER SEC. 37(1) OF THE ACT. ON APPEAL, THE CIT(A) MERELY REFER RING TO THE OBSERVATIONS OF ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 31 HIS PREDECESSOR WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE FOR A.Y. 2010 - 11, ADOPTED THE SAME AND UPHELD THE AFORESAID DISALLOWANCE. 36. THE LD. A.R ASSAILING THE AFORESAID DISALLOWANCE OF THE LEGAL AND PROFESSIONAL FEES , S UBMITTED THAT AS THE SAID EXPENDITURE WAS INCURRED BY THE ASSESSEE IN ORDER TO SAFEGUARD THE INTEREST OF ITS BUSINESS , THE SAME WAS THUS ALLOWABLE UNDER SEC. 37(1) OF THE ACT. FURTHER , IT WAS AVERRED BY THE LD. A.R THAT A SIMILAR DISALLOWANCE MADE BY THE A .O IN THE ASSESSES OWN CASE FOR A.Y. 2008 - 09 , WAS THEREAFTER ON APPEAL D ELETED BY THE CIT(A) , WHICH THEREAFTER HAD BEEN UPHELD BY THE TRIBUNAL IN ACIT, CIRCLE - 4(2), MUMBAI VS. M/S PARSOLI CORPORATION LTD. (ITA NO. 5804/MUM/2013; DATED 25.11.2016). IT WAS AVERRED BY THE LD. A.R , THAT THE TRIBUNAL IN ITS AFORESAID ORDER HAD APPROVED THE DELETION OF THE DISALLOWANCE OF LEGAL AND PROFESSIONAL FEES OF RS. 96.66 LACS BY THE CIT(A), WHICH WAS IN CONTEXT OF PAYMENT MADE BY THE ASSESSEE TO AN ADVOCATE FOR DEFENDING A CRIMINAL COMPLAINT FILED AGAINST IT. IN THE BACKDROP OF THE AFORESAID FACTS, IT WAS SUBMITTED BY THE LD. A.R THAT ON THE SIMILAR FOOTING NO ADVERSE INFERENCE AS REGARDS THE ALLOWABILITY OF THE LEGAL AND PROFESSIONAL FEES OF RS. 41,65,500/ - WHICH WAS PAI D BY THE ASSESSEE TOWARDS AN ONGOING SUIT AGAINST THE ASSESSEE COMPANY IN THE SECURITIES APPELLATE TRIBUNAL AND THE HONBLE HIGH COURT OF BOMBAY WAS LIABLE TO BE DRAWN. 37. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE AS REGARDS THE ALLOWABILITY OF THE LEGAL AND PROFESSIONAL FEES OF RS. 41,65,500/ - PAID BY THE ASSESSEE IN RESPECT OF A SEBI RELATED MATTER , AND FIND SUBSTANTIAL FORCE IN THE CLAIM OF THE LD. A.R. WE ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT AS PER EXPLANATI ON 1 OF 37(1) OF THE ACT , ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 32 PROFESSION , AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. HOWEVER, WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF AN ONGOING SUIT AGAINS T IT IN THE SECURITIES APPELLATE TRIBUNAL AND THE HONBLE HIGH COURT OF BOMBAY , WAS LIABLE TO BE DISALLOWED BY BRINGING THE SAME WITHIN THE SWEEP OF THE EXPLANATION 1 OF SEC. 37(1) OF THE ACT. WE ARE OF THE CONSIDERED VIEW , THAT THE AFORESAID EXPENDITURE I NCURRED BY THE ASSESSEE COMPANY IN ORDER TO SAFEGUARD ITS INTEREST CANNOT BE HELD AS NOT HAVING BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE. IN OUR CONSIDERED VIEW , INCURRING OF AN EXPENDITURE BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR PROHIBITED BY LAW , CAN IN NO WAY BE EQUATED WITH THE EXPENDITURE INCURRED BY THE ASSESSEE BY WAY OF LITIGATION FEES TO SAFEGUARD ITS INTEREST. WE FIND THAT A SIMILAR DISALLOWANCE BY THE A.O OF LEGAL AND PROFESSIONAL FEES OF RS. 96.66 LACS THAT WAS PAID FOR DEFENDING A CRIMINAL COMPLAINT , WAS DELETED BY THE CIT(A) IN THE ASSESSES OWN CASE FOR A.Y. 2008 - 09 , AFTER THE A.O HAD IN HIS REMAND REPORT ADMITTED THAT THE SAID EXPENDITURE WAS ALLOWABLE IN THE HANDS OF THE ASSESSEE. FURTHER, ON APPEAL BY THE REVENUE THE TRIBUNAL HAD UPHELD THE ORDER OF THE CIT(A) AND HAD OBSERVED THAT THE REVENUE COULD NOT SHOW AS HOW THE CLAIM OF THE SAID EXPENDITURE WAS NOT ALLOWABLE. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS AND THE VIEW TAKEN BY THE COORDINAT E BENCH OF THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE ASSESSES OWN CASE FOR A.Y. 2008 - 09 VIZ. ACIT, CIRCLE - 4(2), MUMBAI VS. M/S PARSOLI CORPORATION LTD. (ITA NO. 5804/MUM/2013 ; DATED 25.11.2016), ARE OF THE CONSIDERED VIEW THAT THE L EGAL AND PROFESSIONAL FEES EXPENSES OF RS. 41,65,500/ - INCURRED BY THE ASSESSEE WAS DULY ALLOWABLE AS AN EXPENSE UNDER SEC. 37 OF THE ACT. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS , WE DELETE ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 33 THE DISALLOWANCE OF RS. 41,65,500/ - AND SET ASIDE THE ORDER OF THE CIT(A) TO THE SAID EXTENT. THE GROUND OF APPEAL NO. 6 IS ALLOWED. 38. WE SHALL NOW ADVERT TO THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE WHEREIN IT HAD ASSAILED THE RECHARACTERIZATION OF THE BUSINESS LOSS OF RS. 15,42,375/ - AS A SPECULATION LOSS BY THE A.O. THE LD. A.R IN SUPPORT OF HIS AFORESAID CLAIM HAD AVERRED THAT A SIMILAR CLAIM OF BUSINESS LOSS WAS ALLOWED BY THE A.O WHILE FRAMING THE ASSESSMENT IN THE CASE OF THE ASSESSEE FOR A.Y. 2008 - 09 AND A.Y. 2009 - 10. FURTHER, I T WAS SUBMITTED BY THE LD. A.R THAT A SIMILAR RECHARACTERIZATION OF THE BUSINESS LOSS AS A SPECULATION LOSS BY THE A.O AS PER THE DEEMING PROVISION OF EXPLANATION TO SEC. 73 OF THE ACT , HAD CAME UP BEFORE A COORDINATE BENCH OF THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE ASSESSES OWN CASE FOR A.Y. 2008 - 09 VIZ. ACIT, CIRCLE - 4(2), MUMBAI VS. M/S PARSOLI CORPORATION LTD. (ITA NO. 5804/MUM/2013; DATED 25.11.2016) . IT WAS SUBMITTED BY THE LD. A.R , THAT THE TRIBUNAL AFTER DELIBERATING AT LENG TH ON THE ISSUE UNDER CONSIDERATION HAD SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) , WITH A DIRECTION TO EXAMINE THE SAME AFRESH IN THE LIGHT OF EXPLANATION TO SEC. 73 OF THE ACT. 39. WE HAVE DELIBERAT ED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE CLAIM OF THE LD. A.R THAT THE RE CHARACTERIZATION OF THE BUSINESS LOSS OF RS. 14,92,784/ - AS A SPECULATION LOSS BY THE A.O SUFFERS FROM AN INFIRMITY. WE ARE OF THE CONSIDERED VIEW , THAT AS PER THE EXPLANA TION TO SEC. 73, WHERE ANY PART OF THE BUSINESS OF A COMPANY ([ OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME F ROM OTHER SOURCES] , OR A COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF BANKING ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 34 OR THE GRANTING OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SALE OF SUCH SHARES. WE ARE OF THE CONSIDERED VIEW THAT THE A.O HAD RIGHTLY DECLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE PROVISIO NS OF SEC. 73 WOULD NOT BE APPLICABLE IN RESPEC T OF THE SHARE TRADING LOSS OF RS. 14,92,784/ - THAT WAS SUFFERED BY THE ASSESSEE IN RESPECT OF THE TRA DING OF THE SHARES THAT WERE LYING WITH IT AS STOCK - IN - TRADE , AND NOT AS AN INVESTMENT. WE FIND THAT THE A. O RIGHTLY CONSTRUING THE SCOPE OF EXPLANATION TO SEC. 73 OF THE ACT, AS PER THE EX TANT LAW, HAD CORRECTLY CONCLUDED THAT THE SHARE TRADING LOSS OF RS. 14,92,784/ - WAS A DEEMED SPECULATION LOSS IN THE HANDS OF THE ASSESSEE COMPANY. WE MAY HEREIN OBSERVE THA T THE ASSESSEE HAD AT NO STAGE TRIED TO BRING ITS CASE WITHIN ANY OF THE EXCEPTION CARVED OUT IN THE EXPLANATION TO SEC. 73 OF THE ACT. FURTHER, THE RELIANCE PLACED BY THE LD. A.R ON THE ORDER PASSED BY THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL OF THE RE VENUE IN THE ASSESSES OWN CASE FOR A.Y. 2008 - 09 WOULD IN NO WAY ASSIST ITS CASE. WE FIND THAT THE TRIBUNAL FINDING FORCE IN THE CONTENTION ADVANCED BY THE LD. D.R , THAT THE EXPLANATION TO SEC. 73 BEING A LEGAL FICTION DOES NOT DIFFERENTIATE BETWEEN DELIVERY BASE D TRANSACTION AND A NON - DELIVERY BASE D TRANSACTION, HAD THUS FOR CONSIDERATION OF THE SAID ASPECT SET ASIDE THE MATTER TO THE FILE OF THE CIT(A). WE ARE OF THE CONSIDERED VIEW , THAT AS IN THE CASE BEFORE US, PART OF THE BUSINESS OF THE ASSESSE E COMPANY CONSIST OF THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES , THEREFORE, FOR THE PURPOSES OF SEC. 73 OF THE ACT, IT SHALL BE DEEMED TO BE CARRYING ON SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSIST OF THE PURCHASE AND SALE OF SU CH SHARES. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 35 HAD RIGHTLY RECHARACTERIZED THE SHARE TRADING LOSS OF RS. 14,92,784/ - CLAIMED BY THE ASSESSEE AS A BUSINESS LOSS, AS A SPECULATION LOSS AS PER THE EXPLANATION TO SEC. 73 OF THE ACT. FURTHER, WE FIND THAT THE A.O IN ALL FAIRNESS OBSERVING THAT THE ASSESSEE HAD NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR SPECULATION AND NON - SPECULATION INCOME, THUS IN PROPORTION OF TURNOVER HAD ALLOCATED EXPE NSES OF RS. 49,591/ - , AS HAVING BEEN INCURRED BY THE ASSESSEE IN CONTEXT OF THE SPECULATION ACTIVITY CARRIED OUT BY IT. ON THE BASIS OF THE AFORESAID DELIBERATIONS , THE A.O HAD WORKED OUT THE TOTAL SPECULATION LOSS IN THE HANDS OF THE ASSESSEE AT RS. 15,42 ,375/ - [I.E. RS. 14,92,784/ - + RS. 49,591/ - ] . WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE PERSUADED TO SUBSCRIBE TO THE OBSERVATIONS OF THE LOWER AUTHORITIES AS REGARDS THE RECHARACTERIZATION OF THE SHARE TRADING LOSS OF RS. 14,9 2,784/ - , AND FURTHER ALLOCATION OF EXPENSES OF RS. 49,591/ - TOWARDS THE SPECULATION ACTIVIT IES OF THE ASSESSEE. WE THUS, FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAD APPROVED THE AFORESAID VIEW OF THE A.O, UPHOLD HIS ORDER TO THE SAID EXTENT. TH E ADDITIONAL GROUND O F APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 40. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 41 . THAT BOTH THE APPEALS OF THE ASSESSEE I.E. ITA NO. 149/MUM/2016 FOR A.Y. 2010 - 11 AND ITA NO. 150/MUM/2016 FOR A.Y. 2011 - 12 ARE PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 16 / 11 /201 8 SD/ - SD/ - ( G. MANJUNATHA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 16 . 11 .201 8 PS. ROHIT KUMAR ITA NO (S) . 149 /MUM/201 6 & 150/MUM/2016 PARSOLI CORPORATION LTD V S. A CIT - 4(2) & PARSOLI CORPORATION LTD. VS. DCIT - 4(2) 36 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI