Newton Equipement Pvt. Ltd., Baroda V. The Income tax Officer, Ward-4(1), Baroda

ITA 1573/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8608 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-03-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 16-06-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital asset; Business income; Fair market value; Scheme of amalgamation; Revenue expenditure; Capital expenditure
• Section: 234B; 37(1); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:04/03/2010 DRAFTED ON: 04/03/2 010 ITA NO.1573/AHD/2006 ASSESSMENT YEAR : 2002-2003 NEWTON EQUIPMENT PVT. LTD. 864/B, GIDC, MAKARPURA, VADODARA. VS. INCOME TAX OFFICER, WARD-4(1), VADODARA. PAN/GIR NO. : AAACM 6521 E (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.N.SOPARKAR. A.R. RESPONDENT BY: SHRI C.K.MISHRA SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-III, BARODA, D ATED 12.04.2006. 2. THE GROUND NO.1 OF THE APPEAL READS AS UNDER:- 1.0 THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN LAW AND ON FACTS HAS CONFIRMED THE ADDITIONS OF REDUCTION O F RS.6,32,400/- IN INVESTMENTS HELD BY THE APPELLANT ON THE GROUND THA T THE APPELLANT HAS WRONGLY CHARGED OFF SUCH REDUCTION TO THE PROFIT & LOSS ACCOUNT. 1.1 THE APPELLANT COMPANY HAD INVESTMENTS IN NEWTON ENGINEERING & CONSTRUCTION COMPANY LIMITED (NECCL) AND HITECH ORG OCHEM LIMITED (HOL). THE SAID TWO COMPANIES WERE AMALGAMATED VIDE GUJARAT HIGH COURT ORDER DATED 5 TH SEPTEMBER, 2000. WHILE PASSING THE SAID ORDER, THE GUJARAT HIGH COURT ALSO APPROVED AND SANCTIONED THE ALTERAT ION OF SHARE CAPITAL OF HOL WHICH COMPRISED OF (I) REDUCTION OF SHARE CAPIT AL UNDER SECTION 100 OF THE COMPANIES ACT, 1956 BY CANCELLATION OF 60% OF S HARE CAPITAL, AND (II) CONSOLIDATION OF SHARE CAPITAL SO AS TO MAKE THE FA CE VALUE OF RS.10/- PER SHARE. IN TERMS OF THE SCHEME FIRST THE SHARE OF RS .10/- WAS REDUCED TO RS.4/- PER SHARE AND THEN THE SHARE CAPITAL WAS CON SOLIDATED INTO THE REQUISITE NO. OF SHARES SO AS MAKE EACH SHARE WITH A FACE VALUE OF RS.10/-. ACCORDINGLY, THE COMPANY RECEIVED FRESH SHARES WITH REDUCED VALUE AND THE ITA NO .1573 /AHD/2006 - 2 - REDUCTION AMOUNTING TO RS.6,32,400/- WAS CHARGED TO PROFIT & LOSS ACCOUNT. 3. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS DECIDED THE ISSUE AS UNDER:- 3. THE SECOND GROUND OF APPEAL IS REGARDING DISALL OWANCE OF ASSESSEE'S CLAIM OF DEDUCTION OF RS.6,32,400/- ON A CCOUNT OF LOSS ON INVESTMENT. THE FACTS IN THIS REGARD ARE THAT, THE A SSESSEE COMPANY HAD INVESTMENTS OF RS.10 LAKHS AND RS.10.54 LAKHS IN THE SHARES OF M/S.NEWTON ENGINEERING & CONSTRUCTION CO.LTD. (NECC L) AND M/S.HI- TECH ORGOCHEM LTD.(HOL), RESPECTIVELY. PURSUANT TO T HE SCHEME OF AMALGAMATION OF NECCL AND HOL, APPROVED BY THE HON'B LE GUJARAT HIGH COURT, VIDE ORDER DATED 5-9-2000 (W.E.F.1-4-199 6), NECCL MERGED WITH HOL AND THE NAME OF HOL WAS CHANGED TO NEWTON ENGINEERING CHEMICALS LTD.(NECL). THE APPELLANT COM PANY (NEPL) RECEIVED FRESH SHARES IN NECL IN LIEU OF SHARES HELD IN NECCL & HOL. WHILE APPROVING THE SCHEME OF AMALGAMATION OF NECCL & HOL, THE HON'BLE HIGH COURT ALSO SANCTIONED 60% REDUCTION OF SHARE CAPITAL OF HOL. ACCORDINGLY, THERE WAS REDUCTION OF RS.6,32,40 0/- IN THE SHARES HELD BY THE APPELLANT COMPANY IN HOL. THE ASSESSEE DEBITED TO THE P & L ACCOUNT, 60% (I.E RS.6,32,400/-) OF THE SHARE VA LUE OF RS,10.54 LACS AND CLAIMED IT AS DEDUCTION. THE ASSESSING OFF ICER HELD THAT THE LOSS CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE U/S.3 7(L) AS REVENUE EXPENSE. THE ASSESSING OFFICER, FURTHER REFERRED TO THE PROVISIONS OF SECTION 47 (VII) OF THE ACT, WHICH STATE THAT WHERE THE CAPITAL ASSET BEING SHARE OR SHARES IN A AMALGAMATED COMPANY WHIC H IS AN INDIAN COMPANY, BECOME THE PROPERTY OF THE ASSESSEE IN CON SIDERATION OF TRANSFER REFERRED TO CLAUSE (VII) OF SECTION 47, THE TRANSACTION SHALL NOT BE REGARDED AS 'TRANSFER 7 . THE ASSESSING OFFICER, THEREFORE, HELD THAT, THE CLAIM OF LOSS IS NOT ALLOWABLE AS CAPITAL LOSS ALSO AS THERE IS NO 'TRANSFER 7 OF SHARES DURING THE YEAR, WITHIN THE MEANING OF S ECTION 47(III) OF THE ACT. THE ASSESSING OFFICER ALSO REFE RRED TO SECTION 49(2) OF THE ACT AND OBSERVED THAT THE ASSESSEE BEING A SH AREHOLDER OF M/S.HOL AND M/S.NECCL, IS NOT REQUIRED TO REDUCE TH E COST OF INVESTMENT AS SHOWN IN THE BOOKS TOWARDS SHAREHOLDIN G OF M/S.HOL AND M/S.NECCL AND THEREFORE, THE COST IN THE BOOKS OF ACCOUNT SHOULD NOT HAVE BEEN REDUCED. THUS, THE ASSESSING OF FICER HELD THAT AS PER SECTION 37(1) AS WELL AS SECTION 47(VII) R.W. S.49(2), THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION OF RS.6,32,4007 - AS REVENUE EXPENSE. 5.1 BEFORE ME, IT WAS SUBMITTED BY THE APPELLANT TH AT THERE IS NOTHING IN THE WORDINGS OF SECTION 49(2), ACCORDING TO WHICH THE LOSS/REDUCTION IN INVESTMENTS SHOWN BY THE APPELLANT CAN BE ITA NO .1573 /AHD/2006 - 3 - DISALLOWED; THAT THE COST OF SHARES OF THE AMALGAMA TED COMPANY I.E NECL SHALL BE THE COST OF SHARES OF THE AMALGAMATIN G COMPANY I.E HOL; THAT AS PER THE SCHEME OF AMALGAMATION APPROVED BY THE GUJARAT HIGH COURT, THERE WAS CANCELLATION/REDUCTIO N AND CONSOLIDATION OF SHARE CAPITAL OF HOL AND NOT OF NE CL. THE APPELLANT ARGUED THAT IT HAD RIGHTLY CHARGED OFF REDUCTION IN ITS INVESTMENT, TO THE PROFIT AND LOSS ACCOUNT. 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E. THE AMOUNT OF RS.6,32,400/- CAN BE ALLOWED AS REVENUE DEDUCTION ONLY IF THE EXPENDITURE IS ONE WHICH IS COVERED BY THE PROVISIONS OF SECTION 30 TO 43D OF THE ACT. HOWEVER, THE DEDUCTION CLAIMED BY T HE APPELLANT IS NOT COVERED BY ANY OF THE PROVISIONS CONTAINED IN THE SE SECTIONS. THE PROVISIONS OF SECTION 37(1), WHICH IS A RESIDUARY SE CTION FOR ALLOWING ANY EXPENDITURE, ARE ALSO NOT APPLICABLE AS UNDER T HIS SECTION ONLY THAT EXPENDITURE WHICH IS INCURRED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF BUSINESS AND NOT A CAPITAL EXPENDITURE, CAN BE ALLOWED AS DEDUCTION. THE CLAIM OF DEDUCTION OF RS.6,32,400/- IS NOT IN THE NATURE OF EXPENDITURE INCURRED . IT IS ONLY A REDUC TION IN THE VALUE OF SHARES HELD AS INVESTMENT. THEREFORE, THIS AMOUNT IS CLEARLY A REDUCTION IN VALUE OF CAPITAL INVESTMENT WHICH CANNOT BE ALLOWED AS DEDUCTION U/S.37(L) OF THE ACT OR UNDER ANY OTHER P ROVISIONS CONTAINED IN SECTIONS 30 TO 43D. 5.2.1 THE ASSESSIN G OFFICER HAS ALSO REFERRED TO THE PROVISIONS OF SECTION 47 (VII) OF TH E ACT AND HAS HELD THAT THE TRANSACTION OF REDUCTION IN VALUE OF INVESTM ENT IS NOT A 'TRANSFER' AND, THEREFORE, THE LOSS CANNOT BE ALLOW ED AS CAPITAL LOSS. AS PER SECTION 47(VII) OF THE ACT, ANY TRANSFER OF S HARES BY A SHAREHOLDER IN THE SCHEME OF AMALGAMATION IS NOT RE GARDED AS 'TRANSFER', IF THE TRANSFER IS MADE IN CONSIDERATIO N OF ALLOTMENT OF SHARES TO THE SHAREHOLDER IN THE AMALGAMATED COMPAN Y BEING AN INDIAN COMPANY. THUS, THE TRANSFER OF SHARES OF NEC CL & HOL BY THE ASSESSEE IN THE SCHEME OF AMALGAMATION AND CONSEQUE NT RECEIPT OF SHARES OF IMECL (EARLIER KNOWN AS HOL) BY THE APPEL LANT CANNOT BE REGARDED AS 'TRANSFER' AS PER THE PROVISIONS OF SECT ION 47(VII) OF THE ACT. ONCE THE TRANSACTION IS NOT CONSIDERED AS 'TRA NSFER' OF CAPITAL ASSET, THERE IS NO QUESTION OF COMPUTATION OF ANY L OSS UNDER THE HEAD 'CAPITAL GAINS' ALSO. THE ASSESSING OFFICER HAS ALS O REFERRED TO THE PROVISIONS OF SECTION 49(2) OF THE ACT REGARDING DET ERMINATION OF THE COST OF SHARES IN THE AMALGAMATED COMPANY. IN MY VIE W, THIS ISSUE IS IRRELEVANT AT THIS STAGE, AS THE SHARES HELD BY THE ASSESSEE IN THE AMALGAMATED COMPANY HAVE NOT BEEN TRANSFERRED DURING THE YEAR UNDER CONSIDERATION. ITA NO .1573 /AHD/2006 - 4 - 5.3 TO SUM UP, IT IS HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF RS.6,32,400/- AS REVENUE EXPENSE. FURTH ER, THE AMOUNT OF RS.6,32,400/- IS ALSO NOT LOSS UNDER THE HEAD 'C APITAL GAIN'. 4. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSE SSEE SUBMITTED THAT ASSESSEE MADE INVESTMENT IN NEWTON ENGINEERING AND C ONSTRUCTION CO. LTD. AND HITECH ORGOCHEM LTD.. THE TWO COMPANIES WERE AMALG AMATED VIDE ORDER OF GUJARAT HIGH COURT DATED 5 TH SEPTEMBER 2000. THE HON'BLE HIGH COURT APPROVED THE ALTERATION OF SHARE CAPITAL OF HITECH ORGOCHEM LTD. WHICH RESULTED IN CANCELLATION OF 60% OF SHARE CAPITAL. THE LOSS THUS , SUFFERED BY THE ASSESSEE WAS CLAIMED IN THE PROFIT AND LOSS ACCOUNT AS A REVENUE EXPENDITURE BY THE ASSESSEE AND THE SAME WAS DISALLOWED BY THE LEARNED ASSESSIN G OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). B EING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OT HER HAND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED TO HAVE SUFFERED LOSS ON ITS INVESTM ENT MADE IN THE SHARES OF NEWTON ENGINEERING AND CONSTRUCTION CO.LTD. AND HIT ECH ORGOCHEM LTD. ON THEIR AMALGAMATION BY CANCELLATION OF 60% OF SHARE CAPITA L. THE LOSS WAS CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE BY DEBITING THE SAME IN THE PROFIT & LOSS ACCOUNT OF THE COMPANY. ON A QUERY RAISED BY THE BE NCH THAT UNDER WHICH HEAD, THE ACQUISITION OF THE SHARES OF THE TWO COMPANY WA S SHOWN BY THE ASSESSEE IN THE BALANCE SHEET, WHETHER STOCK IN TRADE OR INVEST MENT. TO THIS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE REPLIED TH AT THE SHARES WERE SHOWN AS INVESTMENT IN THE BALANCE SHEET OF THE ASSESSEE. TH US, IT WAS OBSERVED THAT THE SHARE IN QUESTION WERE CAPITAL ASSET OF THE ASSESSE E COMPANY AND NOT ITS STOCK IN TRADE. AT THIS JUNCTURE, THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE CONCEDED BEFORE THE TRIBUNAL THAT SUCH CAPITAL LOSS CANNOT BE ALLOWED AS REVENUE ITA NO .1573 /AHD/2006 - 5 - EXPENDITURE TO THE ASSESSEE AND AGREED THAT THIS GR OUND OF APPEAL CAN BE DECIDED AGAINST THE ASSESSEE. THEREFORE THIS GROUND OF APPE AL OF THE ASSESSEE IS DISMISSED. 7. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN LAW AND ON FACTS HAS CONFIRMED THE ADDITIONS OF CONSULTANCY EXPENSES AMOUNTING TO RS.15,000/-PAID TO SHRI N. RAVI VIKRAM BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE INCOME TAX ACT, 1961. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED THE ISSUE AS FOLLOWS:- 6. THE GROUND OF APPEAL NO.3 IS REGARDING DISALLOW ANCE OF CONSULTANCY CHARGES OF RS.15000/- PAID TO SHRI N.RAVI VIKRAM. SHRI N.RAVI VIKRAM IS THE SON OF THE DIRECTOR OF THE APPELLANT COMPANY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT FURNISH SPECIFIC DETAILS OF CONSULTANCY SERVICES RENDERED BY SHRI RAVI VIKRAM. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40A(2)(B) AND DISAL LOWED THE CLAIM. 6.1 BEFORE ME, THE APPELLANT SUBMITTED THAT SHRI N. RAVI VIKRAM IS A QUALIFIED MECHANICAL ENGINEER IN INDUSTRIAL & SYSTE MS ENGINEERING FROM THE OHIO INDUSTRIAL UNIVERSITY, USA AND WAS ENGAGED IN DAY-TODAY BUSINESS OF THE COMPANY. THE APPELLANT ARGUED THAT MERELY BECAUSE HE IS THE SON OF DIRECTOR, THE EXPENDITURE SHOULD NOT BE DISALLOWED. . 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLAN T. DURING THE COURSE OF HEARING OF APPEAL, THE ASSESSEE WAS ASKED TO FURNIS H PROOF OF EDUCATIONAL QUALIFICATION OF SHRI N.RAVI VIKRAM. FROM THE COPY O F B.E DEGREE OF SHRI N.RAVI VIKRAM, IT IS SEEN THAT SHRI N.RAVI VIKRAM OBT AINED THE B.E. DEGREE IN JUNE, 2004 AND, THUS, DURING THE YEAR ENDING 31- 3-2002, SHRI N.RAVI VIKRAM HAD JUST COMPLETED SECOND YEAR OF ENGINEERIN G AND WAS STILL A STUDENT. IT IS DIFFICULT TO ACCEPT THAT THE ASSESSE E WOULD HAVE PAID CONSULTANCY CHARGES TO ANY PERSON WHO WAS STILL AN ENGINEERING STUDENT AND IN THE PRESENT CASE, THE CONSULTANCY CHARGES AP PEAR TO HAVE BEEN PAID MAINLY ON ACCOUNT OF THE CLOSE RELATIONSHIP BETWEEN THE DIRECTOR AND SHRI N.RAVI VIKRAM. THE ASSESSEE HAS ALSO NOT BEEN ABLE T O FURNISH ANY EVIDENCE OF SPECIFIC CONSULTANCY SERVICES PROVIDED BY SHRI N.R AVI VIKRAM. IN VIEW OF THESE FACTS, IT IS HELD THAT THE PAYMENT OF CONSULT ANCY FEES PAID TO SHRI N.RAVI VIKRAM WAS UNREASONABLE AND THE ASSESSING OFF ICER WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 40A(2), THEREBY DI SALLOWING PAYMENT OF RS.15,000/-. THE GROUND OF APPEAL NO.3 IS DISMISSED . ITA NO .1573 /AHD/2006 - 6 - 9. LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ARGUED THAT THE LEARNED ASSESSING OFFICER BY INVOKING PROVISIONS OF S ECITON40A(2)(B) WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE CONSULTANCY EXP ENSES OF RS.15,000/- TO THE SON OF THE MANAGING DIRECTOR. SOME REASONABLE EXPENSES SHOULD BE ALLOWED TO THE ASSESSEE. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE FOR CONSULTANCY CHARGES OF RS.15,000/- PAID TO SHRI RAVI M. VIKRAM WAS DISALLOWED BY THE LOWER AUTHORITIES. THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED AS UNDER:- 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT. DURING THE COURSE OF HEARING OF APPEAL, THE ASSESSEE WAS ASKED TO FURNISH PROOF OF EDUCATIONAL QUALIFICATION OF SHRI N.RAVI VIKRAM. FRO M THE COPY OF B.E DEGREE OF SHRI N.RAVI VIKRAM, IT IS SEEN THAT SHRI N .RAVI VIKRAM OBTAINED THE B.E. DEGREE IN JUNE, 2004 AND, THUS, DURING THE YEAR ENDING 31-3-2002, SHRI N.RAVI VIKRAM HAD JUST COMPLETED SECOND YEAR OF ENGINEERING AND WAS STILL A STUDENT. IT IS DIFFICULT TO ACCEPT THAT THE ASSESSEE WOULD HAVE PAID CONSULTANCY CHARGES TO ANY PERSON WHO WAS STILL AN ENGINEERING STUDENT AND IN THE PRESENT CASE, THE CONSULTANCY CHARGES AP PEAR TO HAVE BEEN PAID MAINLY ON ACCOUNT OF THE CLOSE RELATIONSHIP BETWEEN THE DIRECTOR AND SHRI N.RAVI VIKRAM. THE ASSESSEE HAS ALSO NOT BEEN ABLE T O FURNISH ANY EVIDENCE OF SPECIFIC CONSULTANCY SERVICES PROVIDED BY SHRI N.R AVI VIKRAM. IN VIEW OF THESE FACTS, IT IS HELD THAT THE PAYMENT OF CONSULT ANCY FEES PAID TO SHRI N.RAVI VIKRAM WAS UNREASONABLE AND THE ASSESSING OFF ICER WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 40A(2), THEREBY DI SALLOWING PAYMENT OF RS.15,000/-. 12. WE AGREE WITH THE CONTENTION OF THE LEARNED AUT HORISED REPRESENTATIVE OF THE ASSESSEE THAT FOR RENDERING CONSULTANCY SERVICE POSSESSION OF PROFESSIONAL QUALIFICATION IS NOT A CONDITION PRECEDENT AND ANY PERSON HAVING KNOWLEDGE OR EXPERIENCE CAN RENDER CONSULTANCY SERVICE. FURTHER, WE ALSO AGREE WITH THE ITA NO .1573 /AHD/2006 - 7 - CONTENTION THAT UNDER SECTION 40A(2)(B) THE WHOLE O F THE AMOUNT CANNOT BE DISALLOWED AND ONLY THAT PORTION OF THE AMOUNT WHIC H IS FOUND TO BE IN EXCESS OF THE FAIR MARKET VALUE OF SUCH SERVICES CAN ONLY BE DI SALLOWED. HOWEVER, IN THE INSTANT CASE, WE FIND THAT BOTH THE LOWER AUTHORITI ES HAS OBSERVED THAT THE SPECIFIC DETAILS OF THE SERVICES RENDERED BY SHREE R AVI M. VIKRAM COULD NOT BE PRODUCED BY THE ASSESSEE AND THUS, BOTH THE LOWER A UTHORITIES HAVE EXPRESSED THEIR DOUBT ABOUT THE GENUINENESS OR BUSINESS PURPO SE FOR INCURRING THE EXPENDITURE IN QUESTION. WE FIND THAT NO DETAILS COULD BE BROUGHT BEFORE US ALSO BY THE ASSESSEE TO SHOW THE FACT OF ACTUAL REN DERING OF ANY CONSULTANCY SERVICE BY SHREE RAVI M. VIKRAM WHO IS SON OF THE MAN AGING DIRECTOR OF THE ASSESSEE COMPANY. IN ABSENCE OF ANY SUCH MATERIAL, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AU THORITIES. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 13. GROUND NO.3 OF THE APPEAL READS AS UNDER:- 3.0 THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) ERRED IN LAW AND ON FACTS HAS CONFIRMED THE ADDITIONS OF RS.2,26 ,655/- ON ACCOUNT OF PURCHASES MADE DURING THE YEAR TREATING THE SAME AS TRANSACTION COVERED UNDER SECTION 40A(2)(B) OF THE INCOME TAX ACT, 1961 . 3.1 THE APPELLANT SUBMIT THAT THE COMPANY HAS PURCHASED THE MATERIAL AT THE MARKET PRICE PREVAILING AT THE RELEVANT TIME AND THE TRANSACTION WAS PURELY A COMMERCIAL TRANSACTION HAVING BUSINESS EXP EDIENCY. 3.2 THE APPELLANT, THEREFORE, PRAYS THAT THE ARBITRARY DISALLOWANCE MADE ON THIS COUNT BY INVOKING THE PROVISIONS OF SE CTION 40A(2)(B) OF THE ACT MAY BE DELETED. 14. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS DECIDED THE ISSUE AS FOLLOWS:- 7. THE GROUND OF APPEAL NO.4 IS REGARDING DISALLOW ANCE OF RS.2,26,655/- U/S.40A(2) (B) OF THE ACT. THE FA CTS IN THIS REGARD ARE THAT THE ASSESSEE HAD PURCHASED STEEL WORTH RS. 14,28,80 57-FROM M/S.NEWTON ENGINEERING & CHEMICALS LTD. (NECL), AN ASSOCIATE C ONCERN COVERED BY THE DEFINITION OF 'SPECIFIED PERSON' AS PER SECTION 40A (2)(B) OF THE ACT. THE ASSESSING OFFICER NOTICED THAT STEEL WAS PURCHASED AT RATES VARYING FROM ITA NO .1573 /AHD/2006 - 8 - RS.16,7317- PER MT TO RS.28,2007- PER MT. THE ASSES SING OFFICER OBSERVED THAT ABOUT 50 MT OF STEEL WAS PURCHASED AT AVERAGE RATE OF RS.17,0847- PER M.T WHEREAS 20.39 MT OF STEEL WAS PURCHASED AT RS.28,200/- PER M.T. THE ASSESSING OFFICER FOUND THE RATE OF RS.28,200/- PER M.T AS EXCESSIVE AND BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B) , DISALLOWED THE AMOUNT OF RS.2,26,655/- (RS.28,200 - RS.17,084 X 20.39MT). 7.1 BEFORE ME, THE APPELLANT ARGUED THAT THE STEEL PURCHASED AT AVERAGE RATE OF RS.17,084/- PER M.T WAS MILD STEEL PLATE QU ALITY VIZ. IS 2062 GRADE B, WHEREAS STEEL PURCHASED AT THE RATE OF RS.28,200 /- PER M.T WAS OF BOILER QUALITY WHICH IS ASTM AS PER INTERNATIONAL CODE 516 GRADE-60. THE APPELLANT ALSO FILED A COPY OF CERTIFICATE FROM NEC L TO THIS EFFECT. THE APPELLANT ARGUED THAT THE PURCHASES WERE MADE AT MA RKET PRICE PREVAILING AT THE RELEVANT TIME AND IT WAS PURELY A COMMERCIAL TRANSACTION. 7.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT. DURING THE COURSE OF HEARING OF APPEAL, THE APPELLANT WAS REQUESTED TO P RODUCE THE PURCHASE BILLS. THE APPELLANT, HOWEVER, INFORMED THAT NO SEP ARATE PURCHASE BILLS WERE RAISED BY NECL AND ONLY DEBIT NOTE AS REPRODUC ED IN THE ASSESSMENT ORDER, WAS ISSUED BY NECL. FROM THE PERUSAL OF DEBI T NOTE, IT CAN BE SEEN THAT THE DEBIT NOTE DOES NOT CONTAIN DETAILS OF DAT ES OF PURCHASES AND QUALITY OF GOODS SUPPLIED. THUS, NOTHING CAN BE SAI D ABOUT THE DIFFERENT GRADES OF STEEL BOUGHT FOR NECL. THE APPELLANT DID FILE SOME PURCHASE BILLS OF NECL WHEREIN NECLHAD PURCHASED H.R.PLATE, M.S. P LATE, PLAIN PLATES, AT THE RATE OF RS.16,1547-, 16,1577-, & 16,731/- PER M .T. SIMILARLY, BILLS FOR PURCHASE OF NON-ALLOY STEEL PLATES @ RS.28,200 PER M.T BY NECL, WERE ALSO FILED. HOWEVER, THESE DOCUMENTS ARE NOT SUFFICIENT TO PROVE THAT THE RATES PAID BY THE ASSESSES WERE THE MARKET RATES OF THE Q UALITY OF GOODS SUPPLIED TO THE APPELLANT. THESE ARE THE BILLS OF PURCHASES BY NECL AND THERE IS NOTHING TO SHOW THAT THE SAME GOODS WERE SOLD TO TH E APPELLANT. THE APPELLANT HAS ALSO NOT SHOWN THAT THE GOODS MANUFAC TURED BY USING THE DIFFERENT QUALITY OF STEEL WERE SOLD AT DIFFERENT R ATES. IN ABSENCE OF ANY SUPPORTING MATERIAL TO SHOW THAT THE APPELLANT HAD PAID DIFFERENT CHARGES FOR DIFFERENT GRADES OF STEEL, I HAVE NO OPTION BUT TO HOLD THAT PAYMENT BY THE ASSESSEE FOR PURCHASE OF STEEL @ RS.28,200/- WA S EXCESSIVE AND UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS FOR WHICH THE PAYMENT WAS MADE. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, IS CONFIRMED. 15. LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSE E SUBMITTED THAT THERE WAS DIFFERENCE IN THE RATE OF PURCHASES OF STEEL BY THE ASSESSEE FROM ITS ASSOCIATE CONCERN AS THE QUALITY OF MATERIAL PURCHASED WAS DI FFERENT. IT WAS ALSO SUBMITTED THAT THE PURCHASE BILL OF THE ASSOCIATE CONCERN WAS ALSO FILED BEFORE THE LEARNED ITA NO .1573 /AHD/2006 - 9 - ASSESSING OFFICER WHICH SHOWED THAT THE MATERIAL WH ICH WAS SOLD TO THE ASSESSEE AT THE RATE RS.28,200/- PER METRIC TONE WAS PURCHAS ED BY THE ASSOCIATE CONCERN AT THE RATE RS.24,600/- PER METRIC TONE. THEREFORE, T HE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS PAID EXCESS PURCHASE PRICE FOR PURCHASE OF 20.39 METRIC TONE AND THEREBY MAKING DI SALLOWANCE OF RS.2,26,665/- BY ADOPTING THE AVERAGE RATE OF PURCHASE AT RS.17,0 84/- PER METRIC TONE IN PALACE OF RS.28,200/- PER METRIC TONE AND THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE SA ME. 16. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE SUPPORTED THE ACTION OF THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) . 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER DISALLOWED RS.2,26,665/- OUT OF P URCHASES MADE BY THE ASSESSEE FROM ASSOCIATE CONCERN M/S.NEWTON ENGINEERING AND C HEMICAL LTD. ON THE GROUND THAT THE PURCHASE PRICE FROM M/S.NEWTON ENGINEERING AND CHEMICAL LTD. WAS MORE THAN THE AVERAGE PURCHASE PRICE FROM OTHERS. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE A BOVE ACTION OF THE LEARNED ASSESSING OFFICER BY OBSERVING AS UNDER:- 7.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT. DURING THE COURSE OF HEARING OF APPEAL, THE APPELLANT WAS REQUESTED T O PRODUCE THE PURCHASE BILLS. THE APPELLANT, HOWEVER, INFORMED THAT NO SEP ARATE PURCHASE BILLS WERE RAISED BY NECL AND ONLY DEBIT NOTE AS REPRODUC ED IN THE ASSESSMENT ORDER, WAS ISSUED BY NECL. FROM THE PERUSAL OF DEBI T NOTE, IT CAN BE SEEN THAT THE DEBIT NOTE DOES NOT CONTAIN DETAILS OF DAT ES OF PURCHASES AND QUALITY OF GOODS SUPPLIED. THUS, NOTHING CAN BE SAI D ABOUT THE DIFFERENT GRADES OF STEEL BOUGHT FOR NECL. THE APPELLANT DID FILE SOME PURCHASE BILLS OF NECL WHEREIN NECLHAD PURCHASED H.R.PLATE, M.S. P LATE, PLAIN PLATES, AT THE RATE OF RS.16,1547-, 16,1577-, & 16,731/- PER M .T. SIMILARLY, BILLS FOR PURCHASE OF NON-ALLOY STEEL PLATES @ RS.28,200 PER M.T BY NECL, WERE ALSO FILED. HOWEVER, THESE DOCUMENTS ARE NOT SUFFICIENT TO PROVE THAT THE RATES PAID BY THE ASSESSES WERE THE MARKET RATES OF THE Q UALITY OF GOODS SUPPLIED TO THE APPELLANT. THESE ARE THE BILLS OF PURCHASES BY NECL AND THERE IS ITA NO .1573 /AHD/2006 - 10 - NOTHING TO SHOW THAT THE SAME GOODS WERE SOLD TO TH E APPELLANT. THE APPELLANT HAS ALSO NOT SHOWN THAT THE GOODS MANUFAC TURED BY USING THE DIFFERENT QUALITY OF STEEL WERE SOLD AT DIFFERENT R ATES. IN ABSENCE OF ANY SUPPORTING MATERIAL TO SHOW THAT THE APPELLANT HAD PAID DIFFERENT CHARGES FOR DIFFERENT GRADES OF STEEL, I HAVE NO OPTION BUT TO HOLD THAT PAYMENT BY THE ASSESSEE FOR PURCHASE OF STEEL @ RS.28,200/- WA S EXCESSIVE AND UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS FOR WHICH THE PAYMENT WAS MADE. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, IS CONFIRMED. 18. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE FURNISHED COPY OF TWO PURCHASE BILLS OF M/S.NEWTON ENGINEERING AND CHEMICAL LTD. WHICH ARE PLACED AT PAGE NOS.7 AND 8 OF THE PA PER BOOK. THE SAID PURCHASE BILLS SHOWS THAT M/S.NEWTON ENGINEERING AND CHEMICA L LTD. PURCHASED ON 14.11.2000, C.S.PLATES 2500 X 10000 X 6MM THK 1 NO. 1220 KG. @ RS. 27.50 PER KG. AND 2500 X 2500 X 8 MM THK 1 NO. 400 KG. @ RS.2 7.75 PER KG. AND ON 25.01.2001, D.Q. PLATES ASTM A516/GRADE 60 4.02 M .T. @RS.24600/- PER M.T. AND D.Q. PLATES ASTM A516/GRADE 60, 34.56 M.T. @ 2 4000/- PER M.T.. ON THE BASIS OF THE ABOVE, THE LEARNED AUTHORISED REPRESENT ATIVE OF THE ASSESSEE SUBMITTED THAT THE PURCHASE BILLS SHOWS THAT M/S.N EWTON ENGINEERING AND CHEMICAL LTD. HAS MADE REASONABLE PROFIT ON SALES M ADE BY IT TO THE ASSESSEE AND THEREFORE, THE LOWER AUTHORITIES WERE NOT JUSTIFIE D IN INVOKING THE PROVISIONS OF SECTION 40A(2)(B) TO DISALLOW RS.2,26,655/-. WE FI ND THAT THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE COULD NOT DISPUTE THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT THE DEBIT NOTE RAISED BY M/S.NEWTON ENGINEERING AND CHEMICAL LTD. DOES NOT CONTAIN ANY DATE AND DOES NOT SPECIFY THE QUALITY OF MATERIAL SUPPLIED BY THEM TO THE ASS ESSEE. FURTHER, THE OBSERVATION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO THE EFFECT THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE GOODS IN RESPECT OF THE PURCHASE BILLS OF M/S. NEWTON ENGINE ERING AND CHEMICAL LTD. WAS PRODUCED WAS THE GOODS SUPPLIED BY THE M/S. NEWTON ENGINEERING AND CHEMICAL LTD. TO THE ASSESSEE AND THAT THE ASSESSEE ACTUALLY PURCHASED AND USED DIFFERENT QUALITY OF STEEL COULD NOT BE CONTROVERTED BY THE L EARNED DEPARTMENTAL ITA NO .1573 /AHD/2006 - 11 - REPRESENTATIVE. WE FIND THAT THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ALSO COULD NOT BRING ON RECORD BEFORE US M ATERIAL TO THE ABOVE EFFECT. WE ARE CONSCIOUS OF THE FACT THAT FOR MAKING DISALL OWANCE UNDER SECTION 40A(2)(B) OF THE ACT, THE ONUS IS ON THE REVENUE TO PROVE THAT THE GOODS PURCHASE FROM ASSOCIATE CONCERNS WERE AT A PRICE MORE THAN THE MA RKET VALUE ON THE DATE OF THE PURCHASE. THE ABOVE ONUS CANNOT BE DISCHARGED BY SIM PLY COMPARING THE RATES OF PURCHASES FROM ASSOCIATE CONCERNS WITH THE AVERAGE R ATE OF PURCHASE BY THE ASSESSEE FROM OTHER PARTIES OF THE WHOLE YEAR. HOWE VER, IN THE INSTANT CASE, IT IS OBSERVED THAT THE ASSESSEE COULD NOT SHOW THE EXACT DATE OF PURCHASE AND THE QUALITY OF GOODS WHICH WERE PURCHASED FROM THE ASSO CIATE CONCERNS. ON THE ABOVE FACTS OF THE CASE, THE REVENUE WAS NOT ALLOWED TO COMPARE THE MARKET RATE OF ACTUAL DATE AND ACTUAL QUALITY OF GOODS PURCHASE FROM THE ASSOCIATE CONCERNS. IN THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIN D ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. THEREFORE , GROUND OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 19. GROUND NOS.4 AND 5 OF THE APPEAL READS AS UNDER :- 4.0 THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN LAW AND ON FACTS HAS CONFIRMED CERTAIN INCOMES VIZ., (I) LE ASE RENT INCOME RS. 12,00,000/- (WHICH INCLUDES MACHINERY HIRE CHARGES RS.9,00,000/-), (II) INTEREST INCOME RS.2,30,887/- AND, (III) DIVIDEND I NCOME RS.1,01,080/-, AS 'INCOME FROM OTHER SOURCES' AND NOT AS BUSINESS INC OME. 5.0 THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT ALL THE ABOVE INCOMES HAVE BEEN EAR NED IN THE ORDINARY COURSE OF BUSINESS AND UNDER NO CIRCUMSTANCES THE S AME CAN BE TAXED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' 20. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS DECIDED THE ISSUE AS FOLLOWS:- 9. THE GROUND OF APPEAL NO.6 IS REGARDING TREATMEN T OF LEASE RENTALS OF RS.12 LAKHS, INTEREST INCOME OF RS.2,30,887/-DIVIDEN D INCOME OF RS.1,01,080/- AND SUNDRY CREDIT BALANCE WRITTEN OFF AT RS.2,47,491/- AS INCOME FROM OTHER SOURCES AS AGAINST THE ASSESSEE 'S CLAIM OF INCOME FROM 'BUSINESS'. ITA NO .1573 /AHD/2006 - 12 - THE ASSESSEE GAVE PLANT AND MACHINERY AND WORK SHOP PREMISES FOR USE ON LICENCE, TO NECL. THE AGREEMENT WAS EXECUTED ON 16- 1-1997 FOR A PERIOD OF 5 YEARS, WITH AN OPTION TO RENEW THE AGREEMENT F OR SUCH FURTHER PERIOD ON THE TERMS AND CONDITIONS MUTUALLY AGREED UPON. T HE ASSESSING OFFICER TREATED THE INCOME UNDER THE HEAD 'INCOME FROM OTHE R SOURCES'. 9.1 BEFORE ME, THE APPELLANT ARGUED THAT THE ABOVE R EFERRED INCOME WAS EARNED IN THE ORDINARY COURSE OF BUSINESS AND, THER EFORE, ASSESSABLE AS BUSINESS INCOME. 9.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLAN T. THE 'DIVIDEND INCOME' IS CLEARLY IN THE NATURE OF INCOME FROM OTH ER SOURCES AS PER SECTION 56 (2)(I) OF THE ACT. AS REGARDS SUNDRY CRE DIT BALANCES WRITTEN OF, THE SAME IS IN THE NATURE OF BUSINESS INCOME AS PER SECTION 41(1) OF THE ACT. AS REGARDS 'LEASE RENT INCOME' OF RS.12 LAKHS, AS PER SECTION 56(2)(III), WHERE AN ASSESSEE LETS ON HIRE MACHINERY,, PLANT OR FURNITURE AND ALSO BUILDING AND THE LETTING OF THE BUILDING IS INSEPAR ABLE FROM THE LETTING OF MACHINERY, PLANT OR FURNITURE, THE INCOME FROM SUCH LETTING, IF IT IS NOT CHARGEABLE TO INCOME TAX UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS OR PROFESSION', IS CHARGEABLE UNDER THE HEAD 'INCOME F ROM OTHER SOURCES'. IN THE PRESENT CASE, THE ASSESSEE HAS LET OUT FACTORY BUILDING ALONGWITH LEASE OF PLANT AND MACHINERY. SINCE THE PLANT AND MACHINE RY IS INSTALLED IN THE FACTORY BUILDING, THE LETTING OF THE BUILDING AND P LANT AND MACHINERY IS INSEPARABLE. THE INCOME FROM HIRE WAS, THEREFORE, R IGHTLY TREATED AS INCOME ASSESSABLE UNDER THE HEAD 'OTHER SOURCES'. A S REGARDS, 'INTEREST INCOME' ALSO, THE ASSESSEE HAS NOT SHOWN HOW SUCH I NCOME IS INCOME FROM BUSINESS. THE ASSESSING OFFICER'S ACTION OF TREATIN G THE INTEREST INCOME AS INCOME FROM 'OTHER SOURCES' IS CONFIRMED. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. L EARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AT THE TIME OF THE HE ARING, SUBMITTED THAT HE IS NOT PRESSING THE ISSUE REGARDING INTEREST INCOME OF RS.230,887/- AND DIVIDEND INCOME OF RS.1,01,080/- ASSESSED AS INCOME FROM OTH ER SOURCES BY THE LEARNED ASSESSING OFFICER IN PLACE OF BUSINESS INCOME AS CL AIMED BY THE ASSESSEE. THEREFORE, THESE PARTS OF THE GROUND OF APPEAL ARE DISMISSED. HE SUBMITTED THAT HE IS ONLY PRESSING THE ISSUE OF LEASE RENT INCOME OF RS.12,00,000/- ASSESSED BY THE LEARNED ASSESSING OFFICER UNDER THE HEAD INCOME FROM OTHER SOURCES IN PLACE OF BUSINESS INCOME SHOWN BY THE ASSESSEE. HE ARGUED THAT THE ONLY REASON GIVEN BY THE LEARNED ASSESSING OFFICER WAS THAT SINCE THE BUILDING TOGETHER WITH THE ITA NO .1573 /AHD/2006 - 13 - PLANT AND MACHINERY WAS LET OUT THEREFORE, THE SAME HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HE ARGUED THAT THE LEASE RENT INCOME EARNED FROM LETTING OUT OF THE PREMISES WHICH IS RS.3 LACS SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY BUT LEASE RENT OF R S.9 LACS EARNED FROM HIRING CHARGES OF MACHINERY SHOULD BE ASSESSED UNDER THE H EAD BUSINESS INCOME. WE FIND THAT THE LEARNED AUTHORISED REPRESENTATIVE OF T HE ASSESSEE COULD NOT GIVE ANY REASON AS TO WHY LEASE RENT IN RESPECT OF PLANT AND MACHINERY SHOULD BE ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS OR PROFESSION. NO SPECIFIC MISTAKE IN THE ORDERS OF THE LOWER AUTHORITIES COUL D BE POINTED OUT BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. F ROM THE ASSESSMENT ORDER, IT IS OBSERVED THAT WORKSHOP ALONG WITH PLANT AND MA CHINERY WAS GIVEN ON LEASE BY THE ASSESSEE ON 16.01.1997. THUS, THE LEASE RENT WAS EARNED BY THE ASSESSEE CONTINUOUSLY FROM THE ASSESSMENT YEAR 1997-98 AND T HE YEAR UNDER APPEAL IS THE ASSESSMENT YEAR 2002-03. THE LEARNED AUTHORISED RE PRESENTATIVE OF THE ASSESSEE COULD NOT BRING ANY MATERIAL BEFORE US TO SHOW THAT SUCH LEASE RENT ALSO RECEIVED IN EARLIER YEARS WAS ASSESSED AS BUSINESS I NCOME BY THE REVENUE AND NOT AS INCOME FROM OTHER SOURCES. IN ABSENCE OF ANY SU CH MATERIALS, WE DO NOT FIND ANY FORCE IN THIS GROUND OF APPEAL OF THE ASSESSEE. THEREFORE, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 22. GROUND NO.6 OF THE APPEAL READS AS UNDER:- 6.0 THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN LAW AND ON FACTS CONFIRMED CHARGING INTEREST UNDER SECT ION 234B ETC. OF THE INCOME TAX ACT, 1961 WITHOUT ANY BASE WHATSOEVER. 23. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS DECIDED THE ISSUE AS FOLLOWS:- 12. THE GROUND OF APPEAL NO.9 IS REGARDING CHARGIN G OF INTEREST U/S.234B OF THE ACT. IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ANJUM M.H.GHASWALA 252 ITR 1 THAT CHARGING OF INTER EST UNDER SECTION 234B IS, MANDATORY. IN VIEW OF THE DECISION OF THE A PEX COURT, THE GROUND OF APPEAL NO.9 IS DISMISSED. ITA NO .1573 /AHD/2006 - 14 - 24. NO ARGUMENT WAS MADE BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ON THIS GROUND OF APPEAL TAKEN BY THE ASS ESSEE. WE HOLD THAT CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT IS CONSEQ UENTIAL AND ACCORDINGLY DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER, SIGNED DATED AND PRONOUNCED IN THE COURT 12 /03/2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER AC COUNTANT MEMBER AHMEDABAD; DATED 12/03/2009 PREPARED AND COMPARED BY PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS) 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD