S.R. Thorat Milk Products Pvt. Ltd., Pune V. Assistant Commissioner of Income-tax,

ITA 1537/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1781 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D N PARAKH
• Keywords: Business expenditure; Principle of natural justice; Commercial expediency; Revenue expenditure
• Section: 143(3); 37(1); 148

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.1533 TO 1537/PN/2014 A.YS. : 2004-05, 2005-06, 2007-08 TO 2009-10 S.R. THORAT MILK PRODUCTS PVT. LTD., MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001. PAN : AAECS8818F . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE. . RESPONDENT / APPELLANT BY : SHRI NEELESH KHANDELWAL / RESPONDENT BY : SHRI D. N. PARAKH / DATE OF HEARING : 09.05.2016 / DATE OF PRONOUNCEMENT: 20.05.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE AFORESAID CAPTIONED FIVE APPEALS FILED BY THE S AME ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF CIT(A)-I II, PUNE DATED 27.05.2014 RELATING TO A.YS. 2004-05 AND 2007-08 TO 2009-10 PA SSED U/S 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AN D A.Y. 2005-06 PASSED U/S 143(3) R.W.S. 263 OF THE ACT. SINCE THE ISSUES INV OLVED IN ALL THESE CAPTIONED APPEALS ARE IDENTICAL, HENCE, ALL THESE APPEALS ARE CLUBBED TOGETHER AND ADJUDICATED BY WAY OF THIS COMMON ORDER FOR SAKE OF CONVENIENCE. 2. BEFORE WE PROCEED TO DEAL WITH THE MERITS OF THE CASE, WE SHALL FIRST DISPOSE OF LEGAL OBJECTION RAISED ON BEHALF OF THE ASSESSEE CONCERNING ASSESSMENT YEARS 2004-05, 2007-08 AND 2008-09. THE ASSESSEE HAS INTER-ALIA 2 ITA NOS.1533 TO 1537/PN/2014 RAISED PRELIMINARILY OBJECTIONS FOR IMPROPER COMPLI ANCE OF SECTION 147 OF THE ACT FOR THE ASSESSMENT YEARS 2004-05, 2007-08 AND 2 008-09. THE LD. AUTHORIZED REPRESENTATIVE (AR) FOR THE ASSESSEE SUB MITTED IN THE COURSE OF HEARING THAT THE OBJECTIONS WERE RAISED BY THE ASSE SSEE AGAINST REASONS RECORDED UNDER SECTION 148(2) OF THE ACT, WHICH WER E NOT DISPOSED OFF. 3. TO DELINEATE THE ISSUE, WE SHALL TAKE THE FACTS CONCERNING THE ASSESSMENT YEAR 2004-05. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 08.07.20 10 WHICH WAS DULY SERVED ON THE ASSESSEE ON 26.10.2010. THE ASSESSEE VIDE L ETTER DATED 26.11.2010 SUBMITTED THAT ORIGINAL RETURN FILED ON 21.10.2004 MAY BE TAKEN AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT DATED 15.10.2010. AS PER LETTER OF THE ASSESSEE DATED 18.11.2010, THE ASSESS EE ACKNOWLEDGED THE RECEIPT OF REASONS RECORDED UNDER SECTION 148(2) OF THE ACT . THE ASSESSING OFFICER NOTED THAT TILL 07.12.2011, NO LEGAL OBJECTIONS THE REOF WERE FILED BY THE ASSESSEE. IN THE CIRCUMSTANCES, OWING TO EMBARGO O F LIMITATION FOR COMPLETION OF ASSESSMENT BY 31.12.2011, THE ASSESSING OFFICER OBSERVED THAT NO SPEAKING ORDER IS NEEDED ON THE ISSUE. A SEQUENCE OF EVENTS NOTED ABOVE WOULD SUGGEST THAT THE ASSESSING OFFICER WAS RESTRAINED FROM COMP LYING WITH THE JUDICIAL DIRECTIONS AND DISPOSED OF OBJECTION. THUS, THERE IS NO FORCE IN THE CONTENTION OF THE ASSESSEE THAT OBJECTION TO REASONS RECORDED OUGHT TO HAVE BEEN DISPOSED OF IRRESPECTIVE OF INORDINATE DELAY ON THE PART OF THE ASSESSEE. IT IS THE ASSESSEE WHO HAS TO BLAME ITSELF FOR NOT RAISING THE OBJECTI ON IN REASONABLE TIME AFTER RECEIPT OF THE REASONS RECORDED. THE BLAME CANNOT BE SHIFTED ON THE ASSESSING OFFICER FOR DELAY ON THE PART OF THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF G.K.N. DRIVESHAFTS INDIA LTD. VS. ITO, (2003) 259 ITR 19 (SC) DIRECTED THE ASSESSING OFFICERS TO DISPOSE OF THE O BJECTIONS BY PASSING A SPEAKING ORDER. THESE DIRECTIONS ARE FOUNDED ON TH E PRINCIPLES OF NATURAL JUSTICE. AS NOTED EARLIER, IN THE INSTANT CASE, TH E ASSESSEE HAS NOT BEEN ABLE TO DEMONSTRATE THAT THE OBJECTIONS WERE FILED WITHIN R EASONABLE TIME WHERE THE ASSESSING OFFICER HAS FAILED TO ADHERE TO THE JUDIC IAL FIAT OF THE HONBLE SUPREME COURT. NEEDLESS TO SAY, THE ASSESSING OFFI CER IS UNDER STATUTORY DUTY 3 ITA NOS.1533 TO 1537/PN/2014 TO FRAME THE ASSESSMENT AFTER MAKING SUCH ENQUIRIES AS IT MAY DEEM FIT IN ACCORDANCE WITH LAW. IN ORDER TO ENABLE HIM TO DIS CHARGE THESE STATUTORY RESPONSIBILITIES, IT IS EXPECTED THAT REASONABLE TI ME IS LEFT AT HIS DISPOSAL. THE TASK OF COMPLETING ASSESSMENT CANNOT BE MADE UNENVI ABLE WITH BARELY FEW DAYS LEFT. WE FIND THAT THE ACTION OF THE ASSESSEE IN FILING BELATED LEGAL OBJECTION OF REASONS RECORDED HAS LED TO THE PRESEN T SITUATION FOR WHICH THE ASSESSEE ITSELF ONLY HAS TO BLAME. IN THE ABSENCE OF TIMELY RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 AND RAISING THE OBJ ECTIONS WITHIN REASONABLE TIME AFTER COMPLIANCE, THE ASSESSMENT PROCESS CANNO T BE STIFLED. THE LD. AR ALSO FAILED TO DEMONSTRATE AS HOW THE OBJECTIONS DI SPOSED OF DOES NOT MEET THE REQUIREMENT OF LAW. THEREFORE, WE FIND THAT THE LE GAL OBJECTIONS ARE UNSUSTAINABLE AND ACCORDINGLY DECIDED AGAINST THE A SSESSEE. FOLLOWING THE PARITY OF REASONING IN SIMILAR FACTS, THE OBJECTION S OF THE ASSESSEE CONCERNING THE ASSESSMENT YEARS 2007-08 AND 2008-09 ARE ALSO F OUND UNSUSTAINABLE IN LAW. 4. ON MERITS, THE SOLITARY ISSUE INVOLVED IS DISALL OWANCE OF INTEREST EXPENDITURE INCURRED ON SHARE APPLICATION MONEY REC EIVED FROM SHAREHOLDERS. THE FACTS GERMANE TO THE ISSUE ARE THAT THE ASSESSE E IS A CLOSELY HELD COMPANY. IT IS ENGAGED IN THE BUSINESS OF PROCESSING OF MILK AND MANUFACTURING OF MILK PRODUCTS. FOR THE ASSESSMENT YEAR 2004-05, THE ASS ESSEE CLAIMED INTEREST EXPENSES OF RS.23,04,273/- ON ACCOUNT OF INTEREST P AID ON SHARE APPLICATION MONEY RECEIVED FROM EXISTING SHAREHOLDERS PENDING A LLOTMENT. SIMILAR INTEREST EXPENSES WERE CLAIMED ON THE IMPUGNED SHARE APPLICA TION MONEY IN OTHER ASSESSMENT YEARS IN APPEAL. THE ASSESSING OFFICER QUESTIONED THE ALLOWABILITY OF INTEREST EXPENDITURE UNDER SECTION 36(1)(III) AS WELL AS UNDER SECTION 37(1) OF THE ACT. THE ASSESSING OFFICER BUILT-UP THE CASE A GAINST THE ASSESSEE ON THE GROUND THAT INGREDIENTS OF BORROWING BY THE ASSESSE E AS A POSITIVE ACT OF LENDING BY ONE AND EXPENSE THEREOF BY THE OTHER, CO UPLED WITH AN OBLIGATION OF REFUND OR REPAYMENT THEREOF ARE NOT PRESENT WHEN TH E INTEREST IS PAID ON RECEIPTS IN THE NATURE OF SHARE APPLICATION MONEY. AS PER THE ASSESSING OFFICER, THE AMOUNT RECEIVED BEING IN THE NATURE OF SHARE APPLICATION MONEY, THE OBLIGATION OF REPAYMENT OF ALLEGED BORROWING IS TOTALLY ABSENT. THE 4 ITA NOS.1533 TO 1537/PN/2014 ASSESSING OFFICER ALSO PROCEEDED AGAINST THE ASSESS EE ON THE PREMISE THAT THE RECEIPT OF AMOUNT OF SHARE APPLICATION MONEY IS NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS THE AMOUNT REPRESENTS RECEIPT AG AINST ALLOTMENT AND EXPANSION OF ITS SHARE CAPITAL. THE ASSESSING OFFI CER OBSERVED THAT SHARE CAPITAL IS NEVER BORROWED BUT IS SUBSCRIBED. THERE FORE, THE RECEIPT OF SHARE APPLICATION MONEY WHICH IS A SOURCE OF CAPITAL FOR THE ASSESSEE CAN NEITHER BE CHARACTERIZED AS CAPITAL BORROWED IN TERMS OF SECTI ON 36(1)(III) NOR CAN BE ASCRIBED TO HAVE BEEN INCURRED FOR BUSINESS PURPOSE S. THE ASSESSING OFFICER NEXT OBSERVED THAT THE SHARE APPLICATION MONEY HAS BEEN SOLELY OBTAINED FOR INCREASING THE CAPITAL BASED ON THE ASSESSEE COMPAN Y AS THE OBJECT OF SUCH RECEIPT WAS TO ALLOT THE SHARE AND THUS TO INCREASE ITS SHARE CAPITAL. IN THE LIGHT OF AFORESAID, HE RELIED UPON THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORA TION LTD. VS. CIT, 225 ITR 792 (SC) AND BROOKE BOND INDIA LTD. VS. CIT, (1 997) 140 CTR 598 (SC) TO HOLD THAT EXPENDITURE ON ACCOUNT OF INTEREST PAI D ON SHARE APPLICATION MONEY IS NOT OF A REVENUE IN NATURE BUT A CAPITAL EXPENDI TURE IN NATURE AND THEREFORE IS NOT ALLOWABLE UNDER SECTION 37(1) OF THE ACT. AS R EGARDS THE ALLOWABILITY OF THE INTEREST EXPENDITURE UNDER SECTION 36(1)(III), THE ASSESSING OFFICER OBSERVED THAT IN THE ABSENCE OF ANY ACT OF BORROWIN G BY THE ASSESSEE PER SE CONDITIONS LAID DOWN UNDER SECTION 36(1)(III) ARE N OT FULFILLED. HE ACCORDINGLY DISALLOWED THE INTEREST CLAIMED TO HAVE BEEN PAID A T THE RATE OF 12% PER ANNUM AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE CIT(A) ALSO ENDORSED THE FINDINGS OF THE ASS ESSING OFFICER. THE RELEVANT FINDINGS FROM THE ORDER OF THE CIT(A) ARE REPRODUCED AS UNDER :- 3.3 I HAVE GIVEN CAREFUL CONSIDERATION TO THE SUBM ISSIONS MADE BY THE APPELLANT. THE FACTS ARE UNDISPUTED. THE MONEYS WERE RECEIVED FROM EXISTING SHARE HOLDERS AND THEIR ASSOCIATES IN THE PREVIOUS YEARS AND ALSO DURING THE YEARS UNDER CONSIDERATION. THE SHARES WERE TO BE ALLOTTED AT P AR VALUE. BY 31.03.2003, THE APPELLANT HAD RECEIVED RS.5,95,70,652/- OF SHARE AP PLICATION MONEY THAT WAS PENDING ALLOTMENT. DURING THE F.Y. 2003-04, RELEVA NT TO THE A.Y. 2004-05, THE APPELLANT COMPANY TOOK A DECISION THAT SINCE THE SH ARES COULD NOT BE ALLOTTED WITHIN A REASONABLE PERIOD OF TIME, THE MONEY HAD TO BE RE FUNDED ALONG WITH INTEREST THEREON. VIDE RESOLUTION OF THE BOARD OF DIRECTORS DATED 02.02.2004, IT WAS RESOLVED THAT 'SUBJECT TO THE ARTICLE OF ASSOCIATIO N OF THE COMPANY, MAXIMUM 5 ITA NOS.1533 TO 1537/PN/2014 INTEREST @12% ON THE PENDING ALLOTMENT ON THE SHARE APPLICATION MONEY IS HEREBY ALLOWED AND APPROVED ON THE PENDING ALLOTMENT ON TH E SHARE APPLICATION MONEY RECEIVED FROM TIME TO TIME FROM THE APPLICANT'. CON SEQUENTLY, IN THE RELEVANT A.Y. 2004-05, RS. 28,72,918/- OUT OF THE ABOVE SHARE APP LICATION MONEY STANDING IN THE BOOKS OF THE APPELLANT WAS REFUNDED TO THE SHARE AP PLICANTS ALONG WITH INTEREST OF RS. 23,04,273/-. HOWEVER, THE POSITION IS REVERSED WHEN WE COME TO THE A.Y.S 2008- 09 AND 2009-10. IN THOSE YEARS THE APPELLANT HAS RE CEIVED FRESH SHARE APPLICATION MONEY. ACCORDINGLY, THE YEAR WISE POSITION OF THE S HARE APPLICATION MONEY (SAM) AS PER BOOKS, AMOUNT REFUNDED OUT OF SAM OR A LTERNATIVELY, SHARES ALLOTTED, INTEREST PAID/PAYABLE THEREON AND TDS PAI D ON SUCH INTEREST IS TABULATED AS UNDER: ITEM A.Y.2004-05 A.Y.2005-06 A.Y.2006-07 A.Y.2007-0 8 A.Y. 2008-09 A.Y. 2009-10 SAM RECEIVED PENDING ALLOTMENT 5,95,70,652 3,50,61,817 2,66,20,454 71,86,490 81,80 ,578 1,81,05,056 SAM ALLOTTED 2,37,05,000 - - 2,99,75,000 - - SAM REFUNDED 28,72,918 1,00,36,101 1,90,29,387 25,27,797 - - INTEREST PAYABLE 23,04,273 17,78,963 13,09,805 10,52,770 9,65,429 14 ,76,023 TDS DEDUCTED & PAID 2,35,190 1,84,225 NOT AVAILABLE 1,06,657 94,021 1,5 2,031 3.4 THE MAIN GROUND ON WHICH THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE IS THAT THERE IS NO ACT OF BORROWING IN RESPECT OF SHARE APPLICATION MONEY AND THE ACT OF RECEIVING OR SOLICITING SHARE APPLICATION MONEY IS NOT AKIN TO THE ACT OF BORROWING. ON THIS ISSUE, IT IS SEEN THAT IN THE C OMMENTARY OF RAMAIYA ON COMPANY LAW, THE LEARNED AUTHOR HAS OPINED THAT UNTIL ALLOT MENT OF SHARES IS MADE BY A COMPANY, THERE IS RELATIONSHIP OF A DEBTOR AND THE CREDITOR BETWEEN THE COMPANY AND THE PERSON APPLYING FOR ALLOTMENT OF SHARES. I T HAS BEEN FURTHER OBSERVED THAT THERE IS NO PROHIBITION AGAINST THE COMPANY UTILIZI NG SHARE APPLICATION MONEY. IN THE EVENT OF ALLOTMENT NOT BEING MADE, THE AMOUNT W ILL HAVE TO BE REFUNDED. THERE IS NO DOUBT THAT IF ON PROVED FACTS, IT IS ESTABLISHED THAT COMPANY HAS DECIDED NOT TO ALLOT SHARES, AND THE FACT IS ESTABLISHED EITHER TH ROUGH DIRECT EVIDENCE OR BY NECESSARY IMPLICATIONS, THE SHARE APPLICATION MONEY WOULD BE DEBT OWED AND THEREFORE THE APPELLANT IS NOT UNJUSTIFIED IN PAYIN G INTEREST ON WHAT ARE DEBTS OWED. 3.5 IT IS A MATTER OF RECORD THAT THE SHARE APPLICA TION MONEY HAS NOT BEEN ALLOTTED TO THE APPLICANTS BUT REMAINED UNALLOTTED FOR A SUBSTANTIAL PERIOD OF TIME. THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THE CON TENTION OF THE APPELLANT THAT THE SHARE APPLICATION MONEY WAS UTILIZED FOR BUSINESS P URPOSES. HE HAS NOT ARRIVED AT THE FINDING OF FACT THAT THE SHARE APPLICATION MONE Y WAS UTILIZED FOR NON-BUSINESS PURPOSES OR FOR THE PERSONAL BENEFITS OF THE DIRECT ORS OR SHAREHOLDERS OF THE APPELLANT COMPANY. THE FACTUAL POSITION THAT NONE O F THE FUNDS RECEIVED BY WAY OF SHARE APPLICATION MONEY HAS BEEN SIPHONED OFF TOWAR DS NON-BUSINESS PURPOSES IS CLEAR FROM THE BALANCE SHEET AND THE FUND FLOW STAT EMENT FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. HOWEVER, IN MY VIEW, WHAT NE EDS TO BE EXAMINED IN THE FIRST PLACE, IN ORDER TO ADJUDICATE THE ISSUE, IS WHETHER THE FACTS ON RECORD SHOW THAT THE ACT OF SEEKING SHARE APPLICATION MONEY AND ITS SUBS EQUENT USE WAS NECESSITATED BY THE LEGITIMATE NEED TO RAISE EQUITY FOR BUSINESS PU RPOSES OR NOT AND WHETHER THE APPELLANT INTENDED TO ALLOT THE SHARES OR NOT. IT I S NOT REALLY RELEVANT TO GO INTO THE REALM OF ACCOUNTING TREATMENT OF SHARE APPLICATION MONEY AS PER ICAI COMPENDIUM OF OPINIONS VOL XII AS CONTENDED BY THE APPELLANT A S IT IS NOT GERMANE TO THE ISSUE UNDER APPEAL, WHICH IS WHETHER ANY INTEREST PAID ON SHARE APPLICATION MONEY IS DEDUCTIBLE U/S 36(1)(III) OR ALTERNATIVELY, U/S 37( 1) OF THE INCOME TAX ACT, 1961. 6 ITA NOS.1533 TO 1537/PN/2014 3.6 ACCORDINGLY, WHEN THE DETAILS OF SHARE APPLICAT ION MONEY AND ITS SUBSEQUENT ALLOTMENT AND REFUND WERE CALLED FOR AND EXAMINED, IT WAS REVEALED THAT THE APPELLANT RECEIVED, RIGHT FROM THE A.Y. 2000-2001, CERTAIN SUMS OF MONEY FROM THE DIRECTORS AND THEIR RELATIVES FROM TIME TO TIME SO THAT AS ON 31.03.2003, RS.5,95,70,652/- OF SHARE APPLICATION MONEY WAS STI LL PENDING ALLOTMENT. DURING THE F.Y. 2003-04, RELEVANT TO THE A.Y. 2004-05, DURING WHICH PERIOD, THE APPELLANT RECEIVED A FURTHER SUM OF RS.1,06,40,231/-, THE APP ELLANT COMPANY TOOK A DECISION THAT SINCE THE SHARES COULD NOT BE ALLOTTED WITHIN A REASONABLE PERIOD OF TIME, THE MONEY HAD TO BE REFUNDED ALONG WITH INTEREST THEREO N. VIDE RESOLUTION OF THE BOARD OF DIRECTORS DATED 02.02.2004, IT WAS RESOLVED THAT 'SUBJECT TO THE ARTICLE OF ASSOCIATION OF THE COMPANY, MAXIMUM INTEREST @12% O N THE PENDING ALLOTMENT ON THE SHARE APPLICATION MONEY IS HEREBY ALLOWED AND A PPROVED ON THE PENDING ALLOTMENT ON THE SHARE APPLICATION MONEY RECEIVED F ROM TIME TO TIME FROM THE APPLICANT'. CONSEQUENTLY, IN THE A.Y. 2004-05, RS. 28,72,918/- OUT OF THE ABOVE SHARE APPLICATION MONEY STANDING IN THE BOOKS OF TH E APPELLANT WAS REFUNDED TO THE SHARE APPLICANTS ALONG WITH INTEREST OF RS. 23,04,2 73/-. HOWEVER, IT IS NOTED TO BE OF CRUCIAL IMPORTANCE THAT THE APPELLANT ALLOTTED SHAR E CAPITAL OF RS. 2,37,05,000/- IN THAT YEAR. THIS MAKES IT CLEAR THAT THE APPELLANT D ID NOT BORROW THE MONEY FOR BUSINESS PURPOSES BUT INTENDED TO ALLOT THE SAME TO THE SHARE HOLDERS, THEREBY GIVING THE SAME THE COLOUR OF EQUITY AND NOT BORROWED CAPI TAL. THE FACT THAT PART OF THE MONEY WAS UTILIZED FOR BUSINESS PURPOSES DOES NOT C HANGE THE COLOUR OF THE FUNDS. 3.7. COMING TO THE RELEVANT A.Y. 2005-06, THE APPEL LANT REFUNDED RS. 1,00,36,101/- ALONG WITH INTEREST OF RS. 17,78,963/ -. IT SEEMS THAT THE APPELLANT, KNOWING FULLY WELL THAT THE AUTHORIZED S HARE CAPITAL OF THE COMPANY WAS ONLY RS. 3,00,00,000/- AND THAT IN SUCH A SITUA TION, IT COULD NOT HAVE BEEN IN A POSITION TO ALLOT THE SHARES TO THE PERSONS FR OM WHOM SHARE APPLICATION MONEY WAS RECEIVED, NEVERTHELESS ACCEPTED THE MONEY FROM SHAREHOLDERS, DIRECTORS AND THEIR RELATIVES UNDER THE GARB OF SHARE APPLICA TION MONEY. IN RESPONSE TO ONE OF THE QUERIES RAISED DURING THE APPELLATE PROCEEDINGS AS TO WHY WHEN THE ACCOUNTS OF THE SHARE HOLDER AND THEIR RELATIVES WERE BEING TRE ATED AS CURRENT ACCOUNTS, THE APPELLANT PREFERRED TO TREAT THE SAME AS SHARE APPL ICATION MONEY, THE LEARNED AR HAS CLARIFIED THAT THIS WOULD HAVE DILUTED THE EQUI TY HOLDING IN THE COMPANY. THIS LEADS TO THE IMPRESSION THAT THE APPELLANT DID NOT DELIBERATELY TAKE STEPS TO RAISE THE AUTHORIZED CAPITAL BASE OF THE COMPANY ALTHOUGH IT WAS SITTING ON SHARE HOLDER FUNDS OF SUBSTANTIAL AMOUNTS. IT WAS ONLY FOLLOWING THE BOARD OF DIRECTORS RESOLUTION DATED 20.03.2007, THAT THE APPELLANT COMPANY RESOLV ED TO INCREASE THE AUTHORIZED SHARE CAPITAL FROM RS. 3,00,00,000/- TO RS. 6,00,00 ,000/- AND SIMULTANEOUSLY, DECIDED TO ALLOT 29,97,500 EQUITY SHARES AS FULLY P AID BONUS SHARES TO EXISTING SHARE HOLDERS IN THE PROPORTION OF ONE BONUS SHARE FOR EV ERYONE EXISTING FULLY PAID EQUITY SHARE HELD BY SUCH MEMBER AS ON THE SAID DATE. THUS , THE SUBSCRIBED AND ALLOTTED SHARE CAPITAL INCREASED FROM RS.2,99,75,000/- TO DO UBLE THAT FIGURE OF RS.5,99,50,000/- IN THE YEAR 2007 AND SHARES TO THE EXISTING SHARE HOLDERS WERE ISSUED TO THE TUNE OF RS. 2,99,75,000/-. THEREFORE, IN THE A.Y.2007-08, THE SHARE ALLOTMENT WAS PRIMARILY MADE BY TRANSFER OF RESERVE S, I.E. CAPITALIZATION OF PROFIT FOR ISSUE OF THE 29,97,500 BONUS SHARES. THIS ACT ON TH E PART OF THE APPELLANT REINFORCES THE VIEW THAT DESPITE AVAILABILITY OF FUNDS FROM SH ARE HOLDERS, IT PREFERRED TO REFUND THE MONEY ALONG WITH INTEREST THEREON AND CLAIM ADD ITIONAL EXPENDITURE WHILE THE FACT REMAINS THAT THE APPELLANT INTENDED TO ALLOT S HARES IN THE VERY SAME YEAR THROUGH THE DUBIOUS METHOD OF CAPITALIZATION OF RES ERVES. 3.8. WHEN THE ABOVE FACTS ARE BROUGHT ON RECORD, TH ERE IS NO ROOM LEFT FOR DOUBT THAT THE AMOUNTS IN QUESTION WERE IN THE NATU RE OF EQUITY AND RECEIVED FOR THE PURPOSES OF CAPITAL OUTLAY, EVEN THOUGH SOME PART O F THE SAME MIGHT HAVE BEEN UTILIZED FOR BUSINESS PURPOSES, AND HENCE THE FACTS OF THE PRESENT CASE LIE ON A DIFFERENT PLANE THAN THE FACTS BEFORE THE PUNE ITAT IN WESTERN INDIA FORGINGS LTD. 7 ITA NOS.1533 TO 1537/PN/2014 AND ROHIT EXHAUST SYSTEMS (CITED SUPRA) AND RELIED UPON BY THE APPELLANT. BESIDES, THE FACTS IN WESTERN INDIA FORGINGS LTD. WERE THAT THE SHARE APPLICATION MONEY HAD BEEN RECEIVED FROM VARIOUS MEMBERS OF THE PUBLIC AN D FOR THE PURPOSES OF A PUBLIC ISSUE BUT DUE TO RECESSION AND HIGH COST OF SERVICI NG EQUITY, THE BOARD OF DIRECTORS DECIDED TO REFUND THE AMOUNT COLLECTED. NO SUCH FA CTS ARE THERE IN THE PRESENT CASE, WHEREIN THE FUNDS HAVE BEEN RECEIVED FROM THE EXIST ING SHARE HOLDERS AND THEIR FAMILY MEMBERS. FURTHER, ADMITTEDLY, IN THE CASE B EFORE THE PUNE ITAT, THERE WAS NO INCREASE OF CAPITAL AND THE SHARE APPLICATION MO NEY HAS NOT BEEN CONVERTED INTO ALLOTMENT OF SHARES, WHEREAS IN THE PRESENT CASE, T HERE HAS BEEN ALLOTMENT OF SHARES IN AT LEAST TWO YEARS UNDER APPEAL, I.E. IN THE A.Y .S 2004-05 AND 2007-08. IN VIEW OF THE FOREGOING DISCUSSION, I FIND MYSELF' IN AGREEME NT WITH THE ASSESSING OFFICER'S VIEW THAT WHEN THE MONEY HAD BEEN RECEIVED WITH THE INTENTION AT ALLOTMENT OF SHARES, IT COULD NOT SUBSEQUENTLY ACQUIRE THE COLOU R OF BORROWED FUNDS EVEN THOUGH IT MIGHT HAVE BEEN UTILIZED FOR BUSINESS PUR POSES. ACCORDINGLY, IT IS HELD THAT THE APPELLANT HAS NOT SATISFIED THE FIRST AND FOREMOST CONDITION THAT THERE WAS BORROWING OF MONEY OR CAPITAL BY THE APPELLANT IN ORDER TO CLAIM INTEREST EXPENDITURE U/S 36(1)(III). THE FACTS ON RECORD ARE CLINCHING PROOF THAT THE FUNDS ARE SHARE APPLICATION MONEY AND PARTAKE THE COLOUR OF EQUITY. THE COROLLARY OF THIS FINDING IS THAT THE INTEREST PAID ON SHARE APP LICATION MONEY CANNOT BE CLAIMED U/S 37(1) OF THE INCOME TAX ACT, 1961 IN VI EW OF THE FACT THAT IT CLEARLY IS IN THE NATURE OF CAPITAL OUTLAY AND INTENDED TO EXPAND THE CAPITAL BASE OF THE COMPANY AND THE SAME IS SETTLED LAW BY THE HON'BLE SUPREME COURT OF INDIA IN BROOKE BOND INDIA LTD AND PUNJAB STATE INDUSTRIAL D EVELOPMENT CORPORATION LTD, WHICH HAVE BEEN RELIED UPON BY THE ASSESSING O FFICER. ACCORDINGLY, GROUND NO 1 IS DECIDED AGAINST THE APPELLANT FOR AL L THE YEARS UNDER APPEAL AND IS DISMISSED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US FOR ALL THE FIVE ASSESSMENT YEARS. 7. THE LD. AR VEHEMENTLY SUBMITTED THAT AMOUNT WAS RECEIVED AND LYING AS SHARE APPLICATION MONEY. TILL THE TIME ACTUAL A LLOTMENT OF SHARES ARE MADE, IT IS IN THE NATURE OF ORDINARY FUND SIMILAR TO A B ORROWED FUND. IT WAS POINTED OUT THAT BEFORE THE ALLOTMENT IS CRYSTALLIZED IN FA VOUR OF THE APPLICANTS, NO RIGHT ACCRUES IN THE CAPACITY OF SHAREHOLDERS. HENCE, ME RE RECEIPT OF SHARE APPLICATION MONEY PENDING ALLOTMENT THEREOF CANNOT BE SEEN DIFFERENTLY FROM ORDINARY BORROWED CAPITAL. TILL THE TIME, THE DECI SION TO ALLOT SHARES AGAINST THE SHARE APPLICATION MONEY AND SUBJECT TO FULFILLMENT OF OTHER ATTENDANT TERMS AND CONDITIONS, THE ASSESSEE CANNOT BE BLAMED FOR MAKIN G PAYMENT OF INTEREST THEREON AT A REASONABLE MARKET RATE. THE LD. AR RE FERRED TO THE FINAL ACCOUNTS AND CASH FLOW STATEMENTS FILED WITH THE PAPER BOOK AND SUBMITTED THAT A PERUSAL THEREOF WOULD SHOW THAT THE ENTIRE AMOUNT H AS BEEN DEPLOYED FOR BUSINESS PURPOSES. THE INTEREST EXPENDITURE INCURR ED TO RETAIN THE SHARE 8 ITA NOS.1533 TO 1537/PN/2014 APPLICATION MONEY IS THUS IN THE REVENUE FIELD. TH EREFORE, THE CONTENTION OF THE REVENUE THAT THE EXPENDITURE IS NOT ALLOWABLE IS NO T JUSTIFIED. THE OBLIGATION TO REFUND OR REPAYMENT OF PRINCIPAL AMOUNT RECEIVED IS ALWAYS INHERENT IN SUCH SHARE APPLICATION MONEY UNLESS THERE IS A POSITIVE ACT ON THE PART OF THE ASSESSEE TO CONVERT THE SHARE APPLICATION MONEY INT O SHARE CAPITAL. THE LD. AR SUBMITTED THAT ONE HAS TO LOOK INTO THE INHERENT NA TURE OF THE RECEIPT KEPT AS SHARE APPLICATION MONEY WHICH IS PENDING ALLOTMENT. HE, THEREFORE, SUBMITTED THAT THE REVENUE HAS PROCEEDED ON AN ENTIRELY WRONG PREMISE AND HAS MADE WRONGFUL DISALLOWANCES BOTH UNDER SECTION 36(1)(II) AS WELL AS SECTION 37(1) OF THE ACT. HE RELIED UPON THE DECISION OF THE PUNE B ENCH OF ITAT IN THE CASE OF ACIT VS. ROHIT EXHAUST SYSTEMS PVT. LTD. IN ITA NO. 686/PN/2011 AND OTHERS, ORDER DATED 05.10.2012 WHICH CLEARLY SUPPORTS THE C ASE OF THE ASSESSEE. HE ACCORDINGLY PLEADED FOR SUITABLE RELIEF. 8. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITI ES BELOW. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CASE LAWS CITED . THE ONLY ISSUE INVOLVED IS THE ALLOWABILITY OF INTEREST ON SHARE APPLICATION M ONEY UNDER THE PROVISIONS OF THE INCOME-TAX ACT. WE FIND THAT THE ISSUE IS SQUA RELY COVERED BY THE ORDER OF THE CO-ORDINATE BENCH OF ITAT IN THE CASE OF ROHIT EXHAUST SYSTEMS PVT. LTD. (SUPRA). THE RELEVANT PARAS CONCERNING THE ISSUE A RE REPRODUCED HEREUNDER :- 22. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENU E IN THIS APPEAL RELATES TO THE ORDER OF THE CIT(A) IN ALLOWING THE INTEREST ON SHA RE APPLICATION MONEY WHICH WAS DISALLOWED BY THE AO U/S.37(1) OF THE INCOME TAX AC T. 23. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DU RING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE COMPANY IS A CL OSELY HELD COMPANY AND ONLY THE FAMILY MEMBERS ARE SHARE HOLDERS OF THIS COMPANY. THE TOTAL NUMBER OF SHARES OF THIS COMPANY IS 7,13,752 OF THE VALUE OF RS.10/- EA CH. THE ASSESSEE HAS RECEIVED SHARE APPLICATION MANY FROM VAX INFRADEVELOPER LTD. DURING A.Y. 2004-05 AND 2005-06. HOWEVER, SHARES WERE NOT ALLOTTED AND THE SHARE APPLICATION MONEY PENDING ALLOTMENT FOR THE IMPUGNED ASSESSMENT YEAR AS ON 31-03-2007 WAS SHOWN AT RS.1,43,74,942/-. THE ASSESSEE FOR THE IMPUGNED AS SESSMENT YEAR HAS PAID INTEREST OF RS.14,59,440/- BEING INTEREST @8% PER ANNUM ON S HARE APPLICATION MONEY PENDING ALLOTMENT. THE ASSESSEE CLAIMED THE SAME A S BUSINESS EXPENDITURE TREATING 9 ITA NOS.1533 TO 1537/PN/2014 IT AS BORROWED CAPITAL/LOAN ON THE GROUND THAT THE SAME IS USED FOR DAY-TO-DAY BUSINESS. FOR THE ABOVE PROPOSITION THE ASSESSEE R ELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. HINDUSTAN CONDUCTOR PVT. LTD. 240 ITR 762. 2. KEJARIWAL ENTERPRISES VS. CIT 260 ITR 341 3. INDIA CEMENTS LTD. VS. CIT 60 ITR 52 4. CHALLAPALLI SUGARD LTD. VS. CIT 98 ITR 167 23.1. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EX PLANATION GIVEN BY THE ASSESSEE. DISTINGUISHING THE VARIOUS DECISIONS CITE D BEFORE HIM AND RELYING ON THE VARIOUS DECISIONS THE AO DISALLOWED THE INTEREST SO PAID ON SHARE APPLICATION MONEY. 24. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASS ESSEE HAS UTILISED THE SHARE APPLICATION MONEY PENDING ALLOTMENT FOR THE DAY-TO- DAY BUSINESS WHICH INCLUDES PAYMENTS TO SUPPLIERS OF MATERIALS, LABOUR ETC. THE REBY REDUCING WORKING CAPITAL EXPOSURES FROM BANKS. THE DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF HINDUSTAN CONDUCTORS PVT. LTD. 240 ITR 762 AND T HE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF WESTERN INDIA FORGIN G LTD. VIDE ITA NO.419/PN/2002 WERE BROUGHT TO THE NOTICE OF THE LEARNED CIT(A). 25. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND RELYING ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF WESTERN INDIA FORGING LTD. (SUPRA) THE LEARNED CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. THE AO HAS DISALL OWED THE INTEREST ON SHARE APPLICATION MONEY PENDING ALLOTMENT FOR THE REASON THAT THE SAME CANNOT BE TREATED AS A LOAN OR AMOUNT BORROWED. IN SUPPORT O F THIS PROPOSITION, THE AO HAS RELIED ON THE DECISIONS IN THE CASES OF SHIVALI K FUEL (P) LTD. VS. CIT (2005) 276 ITR 638, TRAVANCORE TITANIUM PRODUCTS LT D. VS. CIT (1978) 114 ITR 626 AND ADDL. CIT VS. BANGALORE SOFT DRINKS (P) LTD. (1980) 126 ITR 38. ON PERUSAL OF THE DECISIONS IT HAS BEEN NOTICE D THAT THE DECISION IN THE CASE OF SHIVALIK FUEL (P) LTD. VS. CIT (2005) 276 I TR 638 IS IN RESPECT OF COMPUTATION OF CAPITAL EMPLOYED U/S.80J AND HENCE N OT RELEVANT FOR DECIDING THE ISSUE UNDER APPEAL. THE ISSUE DECIDED IN THE C ASE OF TRAVANCORE TITANIUM PRODUCTS LTD. VS. CIT (1978) 114 ITR 626 I S WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRI BUNAL WAS RIGHT IN HOLDING THAT THE SUM OF RS.26.5 LAKHS IS NOT MONIES BORROWE D WITHIN THE MEANING OF SUB-RULE (V) OF R.1 OF SCHEDULE II OF THE COMPANIES (PROFITS) SURTAX ACT, 1964 ?. THE ISSUE DECIDED IN THE ABOVE DECISION IS UND ER COMPANIES (PROFITS) SURTAX ACT, 1964 AND THE SAME IS NOT RELEVANT FOR D ECIDING THE ISSUE UNDER APPEAL. IN THE CASE OF ADDL. CIT VS. BANGALORE SOF T DRINKS (P) LTD. (1980) 126 ITR 38 THE ISSUE DECIDED WAS IN RESPECT OF DEDU CTION U/S.80J AND COMPUTATION OF CAPITAL EMPLOYED FOR THE SAID DEDUCT ION U/S.80J AND APPLICABILITY OF RULE-19A(3) ETC. THE ISSUE DECIDE D IN THIS CASE IS ALSO NOT RELEVANT FOR DECIDING THE ISSUE UNDER APPEAL. THE IDENTICAL ISSUE HAS BEEN DECIDED BY HONBLE ITA T, PUNE IN THE CASE OF WESTERN INDIA FORGING LTD. ITA NO. 419/PN/2 002 DATED 24-07-2007 (PCAS JOURNAL FEBRUARY, 2008 PAGE NO. 49 TO 52). I T HAS BEEN HELD THAT FOLLOWING THE PRINCIPLE OF COMMERCIAL EXPEDIENCY, I NTEREST ON SHARE APPLICATION MONEY PENDING ALLOTMENT IS ALLOWABLE. IN THE SAID CASE ALSO, THE SHARE APPLICATION MONEY WAS USED AS WORKING CAPITAL OF BUSINESS. ON PERUSAL OF THE SAID CASE, IT HAS BEEN NOTICED THAT AS PER PROVISIONS OF SECTION 69(5) OF THE COMPANIES ACT, A COMPANY HAS TO PAY IN TEREST @6% PER ANNUM AND AS PER PROVISIONS OF SECTION 73(2) OF THE COMPA NIES ACT, THE MAXIMUM 10 ITA NOS.1533 TO 1537/PN/2014 INTEREST RATE PRESCRIBED IS 15% ON RETURN OF SHARE APPLICATION MONEY IN THE CIRCUMSTANCES CITED U/S.73 OF THE COMPANIES ACT. T HE APPELLANT HAS PAID INTEREST @8% PER ANNUM WHICH CANNOT BE REGARDED AS EXCESSIVE. ANOTHER REASON STATED BY THE AO FOR DISALLOWANCE OF INTEREST IS THAT IT WAS NOT OBLIGATORY FOR THE APPELLANT COMPANY TO PAY INTEREST ON SHARE APPLICATION MONEY PENDING ALLOTMENT. THE HONBLE I TAT PUNE, IN THE CASE OF WESTERN INDIA FORGING LTD ITA NO.419/PN/2002 DAT ED 24-07-2007 HAS CONSIDERED THIS REASON STATED BY THE AO THAT IT WAS NOT OBLIGATORY ON THE PART OF THE APPELLANT COMPANY TO PAY THE INTEREST ON SHA RE APPLICATION MONEY PENDING ALLOTMENT. THE HONBLE ITAT, PUNE HAS REJE CTED THE ABOVE CONTENTION RELYING ON THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF SALES MAGNESITE 214 ITR 1, WHEREIN IT HAS BEEN H ELD THAT EVEN EXPENDITURE INCURRED VOLUNTARILY ON THE GROUND OF COMMERCIAL EX PEDIENCY TO FACILITATE CARRYING ON OF THE BUSINESS WOULD BE DEDUCTIBLE U/S .37. IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND THE R ATIO LAID DOWN BY THE DECISIONS RELIED ON BY THE APPELLANT AND PARTIC ULARLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL TRIBUNAL ON IDEN TICAL ISSUE, THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTERE ST ON SHARE APPLICATION MONEY PENDING ALLOTMENT IS DELETED. THE AO IS, THE REFORE, DIRECTED TO DELETE THE ADDITION OF RS.14,59,440/-. GROUND NO. 1&2 STA NDS ALLOWED. 25.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE RE VENUE IS IN APPEAL BEFORE US. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER B OOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BY BOTH THE SIDES. THERE IS NO DISPUTE TO THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED BY THE COMPANY FROM VAX INFRADEVELOPER LTD. THE ONLY QUESTION IS REGARDING THE ALLOWABILITY OF INTEREST ON SUCH SHARE APPLICATION MONEY PENDING ALLOTMENT WHICH ACCORDING TO THE ASSESSEE SHOULD BE ALLOWED U/S.36( 1) (III) OF THE INCOME TAX ACT AND WHICH ACCORDING TO THE AO IS NOT AN ALLOWABLE E XPENDITURE. WE FIND IN APPEAL THE CIT(A) FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF WESTERN INDIA FORGING LTD. (SUPRA) ALLOWED THE CLAI M OF THE ASSESSEE WHEREIN IT HAS BEEN HELD THAT INTEREST ON SHARE APPLICATION MONEY IS ALLOWABLE ON THE PRINCIPLES OF COMMERCIAL EXPEDIENCY. 27. SINCE THE LEARNED CIT(A) WHILE DECIDING THE ISS UE HAS RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF WE STERN INDIA FORGING LTD. AND SINCE NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE AG AINST THE ORDER OF THE TRIBUNAL, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE. ACCORDINGLY THE GROUND RAISED BY THE REV ENUE IS DISMISSED. 10. IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH OF ITAT, WE FIND CONSIDERABLE MERITS IN THE ARGUMENT OF THE ASSESSEE . WE ALSO FIND SUBSTANCE IN THE VARIOUS CONTENTIONS RAISED ON BEHALF OF THE ASS ESSEE. WE ARE OF THE VIEW THAT THE SHARE APPLICATION MONEY PER SE CANNOT BE CHARACTERIZED AND EQUATED WITH SHARE CAPITAL. THE OBLIGATION TO RETURN THE M ONEY IS ALWAYS IMPLICIT IN THE EVENT OF NON-ALLOTMENT OF SHARES IN LIEU OF THE SHA RE APPLICATION MONEY RECEIVED. ALLOTMENT OF SHARE ARE SUBJECT TO CERTAI N REGULATIONS AND RESTRICTIONS AS PROVIDED UNDER THE COMPANIES ACT. THEREFORE, RE CEIPT BY WAY OF SHARE 11 ITA NOS.1533 TO 1537/PN/2014 APPLICATION MONEY IS NOT RECEIPT HELD TOWARDS SHARE CAPITAL BEFORE ITS CONVERSION. THEREFORE, PAYMENT OF INTEREST OF SHAR E APPLICATION MONEY CANNOT BE TREATED DIFFERENTLY IN THE INCOME-TAX ACT. ONCE THE CONTENTION OF THE ASSESSEE THAT THE MONEY HAS BEEN UTILIZED FOR THE P URPOSE OF BUSINESS REMAINS UN-CONVERTED, THERE IS NO JUSTIFICATION TO HOLD THE ISSUE AGAINST THE ASSESSEE. ACCORDINGLY, THE CLAIM OF INTEREST EXPENDITURE ON S HARE APPLICATION MONEY AS REVENUE EXPENDITURE DESERVES TO BE ALLOWED. THE AS SESSING OFFICER IS THUS DIRECTED TO DELETE THE ADDITION ON MERITS. IN THE RESULT, THE ASSESSEE SUCCEEDS ON THIS ISSUE. 11. THE IDENTICAL ISSUE HAS BEEN RAISED IN OTHER AP PEALS PERTAINING TO DIFFERENT ASSESSMENT YEARS. IN VIEW OF THE PARITY OF FACTS, THE OTHER APPEALS ARE ALSO DISPOSED OF IN THE AFORESAID NOTED TERMS. 12. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE A SSESSEE RELATING TO ASSESSMENT YEAR 2004-05, 2005-06, 2007-08 TO 2009-1 0 ARE DISPOSED OFF, AS ABOVE. ORDER PRONOUNCED ON THIS 20 TH DAY OF MAY, 2016. SD/- SD/- ( VIKAS AWASTHY ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 20 TH MAY, 2016. & ' () *+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III, PUNE; 4) THE CIT-III, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE