Hemkunt Chemicals Pvt Ltd, V. ITO Ward 12 (3),

ITA 1577/DEL/2007

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3932 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 30-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Revenue expenditure
• Section: 133(6)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1577/DEL./2007 ASSESSMENT YEAR: 2001-02 M/S. HEMKUNT CHEMICALS PVT. LTD., HEMKUNT CHAMBERS (STILT FLOOR), 89, NEHRU PLACE, NEW DELHI. PAN- AAACH 0159G (APPELLANT) VS. INCOME - TAX OFFICER, WARD 12(3), NEW DELHI (RESPONDENT) APPELLANT BY SHRI SALIL AGARWAL, ADVOCATE & SHRI SHAILESH GUPTA, C.A. RESPONDENT BY SHRI ARUN KUMAR YADAV, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-16, NEW DELHI DATED 15.02.2007 ON THE FOLLOWING REVISED GROUNDS OF APPEAL: 1) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE FINDIN GS OF THE ASSESSING OFFICER THAT NO BUSINESS WAS DONE BY THE ASSESSEE C OMPANY AND HAS ERRED IN DISALLOWING THE EXPENSES OF RS.22,97,677/-(7,38, 636/- + 15,23,312/- + 10,079/- + 25.650/-). THE SAME WERE INCURRED FOR THE PURPOSES OF BUSINESS AND ARE LIABLE TO BE ALLOWED. 2) THE LD. CIT(A) HAS ERRED IN DISALLOWING THE DEDUC TION OF RS. 15,23,312/- ON ACCOUNT OF INTEREST PAID DURING THE YEAR ON LOAN TAKEN FOR THE PURPOSE OF BUSINESS IN EARLIER YEARS. THE SAME D ESERVES TO BE FULLY ALLOWED. DATE OF HEARING 06.11.2017 DATE OF PRONOUNCEMENT 17 .01.2018 ITA NO. 1577/DEL./2007 2 3) THE LD. CIT(A) HAS ERRED IN ASSESSING THE RENTAL INCOME OF RS. 40,50,000/- UNDER THE HEAD 'INCOME FROM OTHER SOURC ES'. THE SAME WAS ASSESSED AS 'BUSINESS INCOME' AND ACCEPTED BY THE D EPARTMENT IN TWO PREVIOUS YEARS. 4) THE EXPENDITURE OF RS. 4,38,636/- (7,38,636/- -3 ,00,000/-) IS CONNECTED WITH THE EARNING OF RENT AND IS LIABLE TO BE FULLY ALLOWED. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ASSESSEE'S RENTAL INCOME WAS ASSESSED AS 'HOUSE PROPERTY INCOME' EVEN DEDUCTION U/S 24 FOR REPAIRS AMOUNTING TO RS. 10,12,500/- IS LIABLE TO BE FULLY ALLOWED ALONG WITH INTEREST PAID ON THE CAPITAL FOR THE PURPOSE OF ACQ UIRING THE PROPERTY. 5) THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE DEDU CTION OF RS. 3,00,000/- BEING 1/10 OF THE EXPENDITURE OF RS. 30,00,000/- CL AIMED BY THE ASSESSEE. THE SAME DESERVES TO BE FULLY ALLOWED. WITHOUT PREJUDICE TO THE ABOVE, A SUM OF RS. 15,00, 000/- IS LIABLE TO BE FULLY ALLOWED AGAINST THE RENT RECEIVED BY THE ASSE SSEE. THE ASSESSEE OBJECTS TO THE DISALLOWANCE OF EXPENSES AS THE TOTA L EXPENDITURE INCURRED IS FOR THE PURPOSE OF BUSINESS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME DECLARING INCOME OF RS.18,50,410/- WHICH WAS PROCES SED AND TAKEN UP FOR SCRUTINY. STATUTORY NOTICES WERE ISSUED TO THE ASSE SSEE. ON SCRUTINY OF ACCOUNTS, THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE HAS SHOWN SALES OF RS.30,656/- AND ALSO INCOME UNDER THE HEAD OTHER I NCOME AS PER SCHEDULE NO. 10, PLACED AT PAGE 45 OF THE PAPER BOOK. HE HAS SHOWN PURCHASES OF RS.25,650/-. ACCORDINGLY, HE CALCULATED HIS PROFIT AND LOSS AS PER THEIR PROFIT AND LOSS ACCOUNT AND AS PER COMPUTATION OF INCOME, WHICH IS ON PAPER BOOK PAGE 23, CALCULATED THE BUSINESS INCOME OF RS.18,50 ,409/-. IN THE ASSESSMENT ITA NO. 1577/DEL./2007 3 PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD MADE PURCHASES THROUGH ONLY ONE INVOICE FROM PENTAGON SC REWS & FASTERS LTD. AS PER THEIR INVOICE DATED 23.01.2001. INFORMATION WAS CALLED BY ISSUING NOTICE U/S. 133(6) FROM THE SAID COMPANY REGARDING ITS SAL E TRANSACTION AND THE ACCOUNTANT APPEARED, BUT HE WAS UNABLE TO FILE COPY OF CHALLANS FOR DELIVERY OF GOODS. IT WAS ADMITTED BY HIM THAT THE GOODS WERE S UPPLIED BY HIS COMPANY TO THE BUSINESS PREMISES OF THE ASSESSEE AT DELHI FROM THEIR COMPANY AT GHAZIABAD BY USING THEIR VEHICLE. HE FAILED TO EXPL AIN THE DISCREPANCY IN THE STOCK REGISTER IN RESPECT OF COUNTING STOCK OF GOOD S AND SALE OF GOODS WHEN THESE TRANSACTIONS HAVE BEEN CLAIMED TO HAVE BEEN M ADE IN RESPECT OF SAID SALE TO THE ASSESSEE. THE STATEMENTS OF DIRECTOR OF PENTAGON SCREWS & FASTERS LTD. WERE ALSO RECORDED ON 15.03.2004 ON OATH AND H E WAS ALSO UNABLE TO ESTABLISH THE GENUINENESS OF THE SALES TO THE ASSES SEE COMPANY. THE STATEMENTS SO RECORDED BY THE ASSESSING OFFICER WER E CONFRONTED TO THE ASSESSEE COMPANY AND THE ASSESSEE WAS ALSO NOT ABLE TO SHOW ANYTHING TO THE EFFECT THAT GOODS WERE DELIVERED TO ITS PREMISES. T HEREFORE, THE ASSESSING OFFICER DOUBTED THE PURCHASE TRANSACTION SHOWN BY T HE ASSESSEE COMPANY AS SHAM AND BOGUS AND CONCLUDED THAT IF THE PURCHASES ARE BOGUS, THEN THE SALES ARE ALSO NOT GENUINE. ITA NO. 1577/DEL./2007 4 3. ON PERUSAL OF PROFIT AND LOSS ACCOUNT, THE ASSES SING OFFICER FURTHER OBSERVED THAT AS PER SCHEDULE 12, THE ASSESSEE HAS CLAIMED OPERATING AND OTHER EXPENSES OF RS.7,38,636/- WHICH INCLUDED RS.3 ,00,000/- ON ACCOUNT OF DEFERRED REVENUE EXPENSES, WHICH RELATED TO 1/10 TH OF RS.30.00 LACS WHICH WAS INCURRED BY IT TO MAKE PAYMENT TO THE TENANT TO VACATE THE PROPERTY DURING THE YEAR 1996-97. THE ASSESSING OFFICER DISA LLOWED IT AS PER SECTION 35D(1) & (2) OF THE ACT. THE REST AMOUNT OF RS.4,38 ,636/- DEBITED BY THE ASSESSEE AGAINST THE BUSINESS INCOME, OUT OF WHICH ONLY 10% WAS ALLOWED BY THE ASSESSING OFFICER FOR EARNING INCOME FROM OTHER SOURCES AND REST WAS DISALLOWED BECAUSE THE ASSESSEE HAD NOT TAKEN ANY B USINESS ACTIVITY. 4. FURTHER, THE ASSESSING OFFICER NOTED THAT A SUM OF RS.15,23,312/- WAS DEBITED ON ACCOUNT OF INTEREST PAYABLE TO PUNJAB NA TIONAL BANK LTD. ON BEING ASKED, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD TAKEN LOAN FROM PUNJAB NATIONAL BANK IN FEBRUARY, 1995 AND IT WAS ADVANCED TO M/S. RABAB PUBLICATIONS PVT. LTD FROM WHOM THE INTEREST @ 22% WAS CHARGED. ON THIS LOAN, THE ASSESSEE WAS PAYING INTEREST TO THE BANK AND THE SAME WAS CLAIMED SINCE ASSESSMENT YEAR 1995-96 AND DEDUCTION WAS ALS O ALLOWED BY THE REVENUE IN EARLIER ASSESSMENT YEARS. THE ASSESSING OFFICER WAS NOT AGREED WITH THE ASSESSEE AND OBSERVED THAT THE ASSESSEE WA S NOT ENGAGED IN ANY ITA NO. 1577/DEL./2007 5 BUSINESS ACTIVITIES DURING THE RELEVANT YEAR AND DI SALLOWED THE CLAIM OF INTEREST AND ADDED BACK TO THE INCOME OF THE ASSESS EE. 5. DURING THE YEAR, THE ASSESSEE HAD RECEIVED A REN TAL INCOME OF RS.40,50,000/- ON LETTING OUT A LEASE HOLD PROPERTY AND CLAIMED IT TO BE THE BUSINESS INCOME AS IN THE EARLIER YEARS. BUT THE AS SESSING OFFICER CONSIDERED IT UNDER THE HEAD INCOME FROM OTHER SOURCES, HOLDING THAT THE ASSESSEE IS NOT OWNER OF THE PROPERTY AND HE HAS ALSO LOST HIS CASE IN THE LOWER JUDICIAL LEVEL REGARDING OWNERSHIP OF THE PROPERTY. 6. AGGRIEVED BY THE AFORESAID ADDITIONS, THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ACT ION OF THE ASSESSING OFFICER VIDE THE IMPUGNED ORDER. THEREFORE, THE ASSESSEE I S IN THIS APPEAL BEFORE THE TRIBUNAL. 7. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE BU SINESS OF THE ASSESSEE WAS CONTINUED DURING THE YEAR UNDER CONSIDERATION A ND THE ASSESSEE HAD SUBMITTED COPY OF INVOICE BEFORE THE ASSESSING OFFI CER. EVEN THE VENDOR FROM WHOM THE IMPUGNED PURCHASE WAS MADE HAD ADMITTED TO HAVE ISSUED THE SAID INVOICE. THE TAX AUDITOR HAS ALSO GIVEN QUANTITATIV E DETAILS IN HIS TAX AUDIT ITA NO. 1577/DEL./2007 6 REPORT. THE LD. AR ALSO SUBMITTED A GROUND-WISE WRI TTEN SYNOPSIS BEFORE US, WHICH IS REPRODUCED AS UNDER : GROUNDS OF APPEAL 1 WE ARE TO PRODUCE THE EXTRACT OF STOCK REGISTER OF M/S. PENTAGON SCREWS AND FASTENERS PVT. LTD. TO SHOW THAT THERE WAS NO D ISCREPANCY AND THE STRANGE FACT IS THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY EXCEPT SAYING THAT THERE IS SOME DISCRE PANCY. SO HAVING NOT POINTED OUT ANYTHING THE ADVERSE FINDING BASED AS S UCH FINDING CANNOT BE SUSTAINED. DURING THE PERIOD UNDER ASSESSMENT THE APPELLANT CO MPANY HAD MADE PURCHASE OF MATERIALS AT RS. 25,650/-. THE MATERIALS PURCHASED WERE SOLD FOR RS. 30,656/-. IN ADDITION IT HAD 'OTHER INCOME' AMOUNTING TO RS. 51,20,250/-. THE DETAILS OF 'OTHER INCOME' ARE GIVEN HERE UNDER:- DIVIDEND INCOME RS. 10,12,050/- RENTAL INCOME RS. 40,50,000/- INTEREST RS. 58,200/- ------------------- TOTAL RS. 51,20,250/- IN SPITE OF THE ABOVE BUSINESS TRANSACTIONS, THE LD . ASSESSING OFFICER HAD GIVEN A FINDING THAT DURING THE PERIOD UNDER ASSESS MENT NO BUSINESS WAS DONE. THIS FINDING, IT IS RESPECTFULLY SUBMITTED, IS NOT ACTUALLY CORRECT AND THE SAME, THEREFORE, DESERVES TO BE CANCELLED. 1. PURCHASE OF MATERIAL WERE MADE THROUGH BANK ACCO UNT 2. SALE WAS MADE IN CASH 3. STOCK REGISTER FOR PURCHASE WAS PRODUCED 4. DIRECTOR OF PENTAGON SCREWS AND FASTENERS ATTEND ED BEFORE THE ASSESSING OFFICER 5. DIRECTOR OF THE ASSESSEE COMPANY ATTENDED BEFORE THE ASSESSING OFFICER EVEN SO THE CONTENTION OF THE CONTINUITY OF BUSINES S IS NOT ACCEPTED. RELIANCE PLACED ON THE FOLLOWING CASE LAWS:- L. VE. VAIRAVAN CHETTIAR VS. CIT (1969) 72 ITR 114. 119 (MAD.) ITA NO. 1577/DEL./2007 7 INDERCHAND HARI RAM VS. CIT (1953) 23 ITR 437, 442- 3 (ALL) KARSONDAS RANCHHODDASS VS. CIT(1972) 83 ITR I,.20 ( BOM.) MRS. SAROJINI RAJAH VS. CIT (1969) 71 ITR 504 (MAD. ) GROUNDS OF APPEAL..... 2 (INTEREST AMOUNTING TO RS. 15,23,312/-) THE COMPANY HAD TAKEN A LOAN OF RS. 1.45 CRORES FROM BANK OF PUNJAB LIMITED. TOTAL MONEY WAS LENT OUT AND INTEREST WAS R ECEIVED. THE SAME WAS FULLY ALLOWED AS DEDUCTION RIGHT FROM ASSTT. YE AR 1995-96 TO TILL DATE. THE ASSESSEE COMPANY HAS DISALLOWED THE CLAIM HOLDIN G THAT NO BUSINESS HAS BEEN CONDUCTED. GROUNDS OF APPEAL ......3 (RENTAL INCOME OF RS. 40, 50,0007-) RENTAL INCOME OF RS. 40,50,000/- TO BE ASSESSED AS 'INCOME FROM BUSINESS' AS AGAINST 'INCOME FROM OTHER SOURCES AS WERE DONE IN EARLIER YEARS. FACTS CONTINUING TO BE THE SAME, THE CHANGE IS UNWARRANTE D. RELIANCE PLACED ON THE FOLLOWING EASE LAWS:- 1) CIT VS. GIRISH MOHAN GANERIWALA 260 ITR 417 (P&H) IN THIS CASE IT HAS BEEN HELD THAT ALTHOUGH FINDING S IN A PRECEDING YEAR 'DO NOT OPERATE AS RESJUDICATA' IT DOES NOT MEAN THAT I N EVERY SUBSEQUENT YEAR IT IS OPEN TO THE ASSESSING OFFICER TO TAKE A DIFFERENT VIEW IN THE MATTER. OF COURSE HE CAN TAKE A DIFFERENT VIEW IF S OME FRESH MATERIAL IS PLACED BEFORE HIM. 2) H.A. SHAH & CO. VS. CIT 30 ITR 618, 625 (BOMBAY) IN THIS CASE IT WAS HELD THAT ALTHOUGH PRINCIPLE OF RESJUDICATA MAY NOT APPLY TO THE INCOME TAX PROCEEDINGS, THE APPELLATE TRIBUNAL SHOULD BE EXTREMELY SLOW TO DEPART FROM A FINDING GIVEN BY IT EARLIER. EVEN WHERE AN ASSESSING OFFICER HAS AFTER ENQUIRY PROCEEDED TO AS SESS THE ASSESSEE ON A CERTAIN BASIS HE CANNOT ARBITRARILY CHANGE THE ASSE SSMENT SIMPLY ON THE GROUND THAT HE DOES NOT AGREE WITH HIS PREDECESSOR' S FINDINGS. 3) CIT VS. S. DEVARAJ 73 ITR 1, II (MDS) 4) CIT VS. KOTRIKA RAMASWAMY CHETTY (1967) 64 ITR 3 88, 393 (AP) IN THIS CASE IT HAS BEEN HELD THAT THOUGH THE DOCTR INE OF RESJUDICATA IS NOT APPLICABLE TO ORDERS OF THE TRIBUNAL IT IS PROPER AN D DESIRABLE THAT WHEN THE TRIBUNAL TAKES A PARTICULAR VIEW ON THE SCOPE AN D EFFECT OF A STATUTORY PROVISION, IT DOES NOT CONTRADICT ITSELF AND COME T O A DIAMETRICALLY ITA NO. 1577/DEL./2007 8 OPPOSITE VIEW LATER AS IT WOULD BE EMBARRASSING TO THE REVENUE, AND THE ASSESSEE IN GENERAL. IT IS FURTHER SUBMITTED THAT CLAUSE 3 UNDER THE MAI N OBJECTS OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPA NY READ AS UNDER:- TO BUY, PURCHASE OR OTHERWISE ACQUIRE MULTISTOREYED FLATS, HOUSES, BUILDINGS, KINDS AND OTHER PROPERTIES, LEASE HOLD O R FREE HOLD EITHER ON RENT, LEASE OR FOR ANY OTHER CONSIDERATION AND T O SELL, LET, MORTGAGE, ASSIGN, PLEDGE, LEASE OUT OR OTHERWISE DI SPOSE OF ON INSTALLMENT BASIS OR UNDER HIRE PURCHASE AGREEMENTS OR IN ANY OTHER MANNER AND TO CARRY ON THE BUSINESS OF PROPERTY AGE NTS ' FROM THE ABOVE IT WILL BE SEEN THAT ONE OF THE MAIN BUSINESS OF THE ASSESSEE COMPANY IS TO BUY, PURCHASE OR OTHERWISE ACQUIRE BU ILDING ETC. AND LEASE OUT THE SAME DURING THE COURSE OF ITS BUSINESS. IN THE FOLLOWING CASES IT HAS BEEN HELD THAT INCOME EARNED BY THE ASSESSEE FROM I TS LETTING OUT OF BUSINESS ASSETS DURING THE COURSE OF ITS BUSINESS I S ASSESSABLE UNDER THE HEAD. 'INCOME FROM BUSINESS'. 1. SADHUCHARAN ROY CHOWDHURY, IN RE, (1935) 3 ITR 11 4 (CAL.) IN THIS CASE IT WAS HELD THAT INCOME DERIVED BY AN ASSESSEE FROM LEASING OUT OF JUTE PRESS WAS ASSESSABLE UNDER THE HEAD 'IN COME FROM BUSINESS'' AND NOT AS 'PROPERTY INCOME' 2. CIT VS BOSOTTO BROS. LTD. 8 ITR 41 (MAD) IN THIS CASE IT WAS HELD THAT LETTING OUT OF HOTEL WAS 'BUSINESS INCOME' 3. MANOHAR SINGH VS CIT 58 ITR 592 (PUNJ) IN THIS CASE, IT WAS HELD THAT INCOME RECEIVED FROM LETTING OUT OF TENANTS WITH FACILITIES AND SERVICES WAS ASSESSABLE UNDER T HE HEAD 'INCOME FROM BUSINESS' 4. CIT I'S NATIONAL STORAGE (P) LTD 66 ITR 596 (SC) ITA NO. 1577/DEL./2007 9 IN THIS CASE, IT WAS HELD THAT MONTHLY CHARGE REALI ZED FROM LETTING OUT OF ITS UNITS FOR STORAGE OF FILMS WAS ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSINESS' 5. SG MERCANTILE CORPN. (P) LTD. VS CIT 83 ITR 700 (S C) INCOME DERIVED BY A COMPANY FROM SUB-LETTING OF ITS MARKET PLACE AFTER DEVELOPING AND REMODELING WAS ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSINESS' 6. CIT VS. AJMERA INDUSTRIES (P) LTD 103 ITR 245 (CAT .) IN THIS CASE, IT WAS HELD THAT INCOME DERIVED FROM LETTING OUT OF SURPLUS OF NON-FACTORY BUILDING INCLUDING GODOWNS WAS ASSESSAB LE 'AS BUSINESS INCOME' 7. CIT VS V, SHANMUGHAM 147 ITR 692 (MAD) IN THIS CASE IT WAS HELD THAT RENTAL INCOME WAS TO BE ASSESSED AS BUSINESS INCOME WHERE THE LODGING HOUSE WAS BEING RUN ON A C OMMERCIAL BASIS RATHER THAN AS AN OWNER OF PROPERTY. 8. CIT VS MODI INDUSTRIES 210 ITR 123 (DEL) IN THIS CASE IT WAS HELD THAT INCOME FROM PROPERTY WHICH IS OCCUPIED FOR THE PURPOSE OF BUSINESS HAS TO BE ASSESSED AS 'INCO ME FROM BUSINESS' AND NOT AS 'INCOME FROM HOUSE PROPERTY'. IN VIEW OF THE FACT THAT THE ASSESSEE'S INCOME IS B EING ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS' FOR THE LAST SEVERAL YE ARS AND NO NEW FACTS HAVE COME ON RECORD, IT IS RESPECTFULLY SUBMITTED T HAT THE ACCEPTED PRACTICE SHOULD NOT BE DISTURBED AS NO NEW FACTS HA VE COME ON RECORD AND THE ASSESSEE'S INCOME SHOULD BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS' AND DEDUCTION OF EXPENSES AS CLAIMED MAY KINDLY BE FULLY ALLOWED. GROUNDS OF APPEAL ......5 DEDUCTION OF RS. 3,00,000/- OF RS. 15,00,000/-. THE ASSESSEE HAD BEEN CLAIMING WRITE OFF OF 10% OF RS. 30,00,000/- PAID F OR VACATION OF THE PROPERTY FOR WHICH RENT RECEIVED BY THE ASSESSEE RS . 40,50,000/-. THE WRITE ITA NO. 1577/DEL./2007 10 OFF OF 1/10 OF RS. 30 LACS HAS BEEN DISALLOWED AND THE ASSESSEE IS RAISING A PLEA THAT IF RS. 3,00,000/- IS NOT ALLOWED AS DEDUC TION THEN THE FULL AMOUNT OF RS. 15 LACS TO BE ALLOWED TO THE ASSESSEE BEING MONEY PAID TO GET THE PROPERTY VACATED. RELIANCE IS PLACED ON THE FOLLOWI NG DECIDED CASES:- IT WAS HELD IN THE CASE OF CIT VS SMT. T.P. SIDHWA ( 1982) 133 ITR 840 (B'HY) THAT INCOME FROM 'HOUSE PROPERTY' IN THE HAN DS OF A PERSON WHO IS NOT THE OWNER CANNOT BE TAXED AS 'INCOME FROM OTHER SOURCES'. THIS DECISION HAS BEEN APPLIED IN THE CASE OF CIT VS. TRUSTEES OF H.E.M., THE NIZAM'S MISCELLANEOUS TRUST (1986) 160 ITR 253 (AP). IN THE FOLLOWING CASES A VIEW HAS BEEN TAKEN THAT T HE FOCUS OF SECTION 22 IS ON RECEIPT OF INCOME FROM HOUSE PROPERTY. IF IN A G IVEN CASE, IT IS FOUND AS A FACT THAT THE ASSESSEE IS IN OCCUPATION OF THE BUIL DING FOR ALL INTENTS AND PURPOSES EVEN THEN HE IS LIABLE TO INCOME-TAX U/S 2 2. I) SMT. KALA RANI VS. CIT (1981) 130 ITR 321, 325 (PUNJ. ) II) CIT VS. BATATA TRADING CO. (P) LTD. (1989) 179 ITR 603 (PUNJ.) IT HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CA SE OF CIT VS PODAR CEMENTS (P) LTD. 226 ITR 625, 653, 647 (SC) THAT FOR INCOME TO BE ASSESSED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' IT IS N OT NECESSARY THAT THE PERSON RECEIVING THE INCOME SHOULD BE A REGISTERED OWNER OF THE PROPERTY. IN CASE YOUR HONOUR STILL FEEL THAT THE INCOME DERI VED BY THE ASSESSEE COMPANY SHOULD BE BROUGHT TO TAX UNDER THE HEAD 'IN COME FROM OTHER SOURCES' IT IS RESPECTFULLY SUBMITTED THAT AMOUNTS PAID BY THE ASSESSEE COMPANY TO EVICT THE OLD TENANTS SHOULD BE ALLOWED AS A DEDUCTION U/S 57 OF THE IT ACT, AS THE SAME WAS LAID OUT AND EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING HIGHER RENTA L INCOME. IT HAS BEEN HELD IN THE CASE OF SARABHAI SONS P. LT D. VS. CIT 201 ITR 464, 470 (GUJ.) THAT THE CONNECTION BETWEEN THE EXPENDIT URE INCURRED AND THE INCOME EARNED NEED NOT BE DIRECT. EVEN IF THE CONNE CTION IS INDIRECT OR INCIDENTAL THAT CAN BE REGARDED AS SUFFICIENT FOR T HE PURPOSE OF SECTION 57(III). IT IS , THEREFORE, HUMBLY SUBMITTED THAT E VEN IF THE INCOME IS HELD BY YOUR HONOUR TO BE ASSESSABLE UNDER THE HEAD ''INCOM E FROM OTHER SOURCES' THE EXPENDITURE INCURRED FOR EVICTING THE OLD TENAN TS MAY KINDLY BE FULLY ITA NO. 1577/DEL./2007 11 ALLOWED AS HAVING BEEN INCURRED WHOLLY AND EXCLUSIV ELY FOR THE PURPOSE OF EARNING OF HIGHER RENTAL INCOME. GROUNDS OF APPEAL ......4 AS MENTIONED ABOVE OUT OF EXPENDITURE OF RS. 4,38,6 36/- THE ASSESSING OFFICER HAD ALLOWED DEDUCTION OF RS. 43,863/- BEING FOR THE PURPOSE OF EARNING OF DIVIDEND INCOME. REMAINING EXPENSES WERE DISALLOWED BY HIM ON THE PLEA THAT NO BUSINESS WAS DONE DURING THE YE AR. AS DISCUSSED IN DETAIL ABOVE BUSINESS WAS CARRIED ON BY THE APPELLA NT COMPANY DURING THE ASSESSMENT, AND THEREFORE, THE REMAINING EXPENSES D ESERVE TO BE FULLY ALLOWED AS DEDUCTION. EVEN OTHERWISE, ALL THE EXPEN SES HAVING BEEN INCURRED DURING THE COURSE OF AND FOR THE PURPOSE O F BUSINESS DESERVES TO BE FULLY ALLOWED AS DEDUCTION AND NO APPORTIONMENT DONE BY ASSESSING OFFICER IS PERMISSIBLE UNDER THE LAW. THE LD. AR ALSO RELIED ON THE DECISIONS OF HONBLE SUPREME COURT IN THE CASES OF CIT VS. VIKRAM COTTON MILLS LTD., 169 ITR 597 (S C) AND CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT, 373 ITR 673 (SC). 8. THE LEARNED DR, ON THE OTHER HAND, RELYING ON TH E ORDERS OF THE AUTHORITIES BELOW, ALSO SUBMITTED A GROUND-WISE WRI TTEN SYNOPSIS, WHICH READS AS UNDER : (A)GOA 1 : REGARDING THE ISSUE THAT THE ASSESSEE WA S NOT DOING ANY BUSINESS DURING THE YEAR, THUS THE AO DISALLOWED BUSINESS EX PENDITURE. (1). THE APPELLANT SHOWED BUSINESS RECEIPT OF RS. 30 ,656/- AGAINST WHICH BUSINESS EXPENDITURE OF RS. 22,79,677/- WAS C LAIMED. OTHER INCOME WAS OF RS. 51,20,250/- WHICH WAS ADJUSTED AG AINST BUSINESS EXPENDITURE. ITA NO. 1577/DEL./2007 12 (2) PURCHASES WERE SHOWN AT RS. 25,650/-, NO OPENIN G AND CLOSING STOCK. ASSESSEE HAS MADE ONLY TWO PURCHASES AND ONE SALE D URING THE YEAR. PURCHASES MADE FROM SISTER CONCERN AND SALE MADE IN CASH ONLY. (3) AO ISSUED NOTICE U/S 133(6) TO THE PARTY TO WH ICH SALES WAS MADE. IN RESPONSE, ACCOUNTANT OF THE PARTY ATTENDED BUT C OULD NOT SUBSTANTIATE THE PURCHASES BY FURNISHING COPY OF CH ALLAN FOR DELIVERY OF GOODS. (4) AO RECORDED STATEMENT OF THE DIRECTOR OF THE S UPPLIER COMPANY M/S PENTAGON SCREWS AND FASTNERS LTD. WHO COULD NOT EST ABLISH THE SALE TRANSACTION TO THE ASSESSEE COMPANY. (5) AO CONFRONTED THE DIRECTOR OF THE ASSESSEE COMPANY WITH THE ABOVE FINDINGS BUT THE DIRECTOR OF THE ASSESSEE COMPANY A LSO COULD NOT PROVE THAT GOODS PURCHASED WERE DELIVERED TO ITS PR EMISES. (6) AT PAGE 3 OF PAPER BOOK DETAIL OF PURCHASE AND SALE HAS BEEN GIVEN FROM A.Y. 96-97 TO 04-05 WHICH SHOWS THAT THE ASSES SEE HAS NEVER DONE ANY BUSINESS ACTIVITY. IT ENTERED INTO VERY FE W PURCHASE AND SALE TRANSACTION TO CLAIM HUGE BUSINESS EXPENDITURE AGAINST THE TAXABLE INCOME UNDER OTHER HEADS OF INCOME. (7) THE FACTS OF THE CASE ESTABLISH THAT THE ASSESSE E DID NOT DO ANY BUSINESS DURING THE YEAR. THUS THE AO RIGHTLY DISALL OWED EXPENSES OF RS. 3,94,77/-. (8) LD. AO AS WELL AS CIT(A) HAS RIGHTLY HELD THAT M ERE THE FACT THAT THE ASSESSEE HAD MADE PAYMENT AGAINST THE PURCHASES BY CHEQUE DOES NOT ESTABLISH THAT THE ASSESSEE HAS DONE BUSINESS D URING THE YEAR. THUS, DISALLOWANCE MADE BY THE AO DESERVES TO BE UPH ELD. (B) GROUNDS OF APPEAL 2 : DISALLOWANCE OF INTEREST PAID RS. 15,23,312/-: 1) THE ASSESSEE CLAIMED AN EXPENSE OF RS. 15,23,312/ - ON ACCOUNT OF INTEREST PAID AGAINST LOAN OF RS. 1.45 CRORES TAKEN IN 1995 FOR SO CALLED BUSINESS PURPOSES. ITA NO. 1577/DEL./2007 13 2) LOAN RS. 1.45 CRORES WAS TAKEN IN FEB. 1995, REL EVANT TO A.Y. 95-96. AS PER PAGE 91 OF THE PAPER BOOK FURNISHED BY THE A SSESSEE, TOTAL SALE OF THE BUSINESS OF THE ASSESSEE WAS MERE RS. 2 1,85,462/- AND PURCHASE 1,68,631/- SINCE A.Y. 1995-96 THE ASSESSEE HAS BEEN CLAIMING HUGE INTEREST EXPENDITURE AGAINST INCOME U NDER THE OTHER HEADS. IN SUBSEQUENT YEAR THE AMOUNT OF PURCHASE AN D SALE ARE VERY NOMINAL. PL. REFER TO THE PAGE 3 OF THE 2 ND PAPER BOOK. 3) PL. REFER TO PAGE 89 AND 90 OF THE PB WHICH SHOW THAT LOAN TAKEN WAS NOT UTILIZED FOR BUSINESS PURPOSES. FROM THE BA LANCE SHEETS OF SUBSEQUENT YEARS IT IS WELL ESTABLISHED THAT ANY LO AN AMOUNT HAS NEVER BEEN UTILIZED FOR BUSINESS PURPOSES. 4) FROM THE FACTS OF THE CASE IT IS PROVED THAT THE ASSESSEE HAS NEVER UTILIZED LOAN FUNDS FOR BUSINESS PURPOSES BUT CLAIM ED INTEREST EXPENDITURE AS A BUSINESS EXPENDITURE TO MINIMIZE I TS TAXABLE INCOME. 5) THE CLAIM OF THE ASSESSEE THAT ITS CLAIM INTEREST PAID HAS BEEN ACCEPTED BY THE DEPARTMENT IN VARIOUS ASSESSMENT YE ARS IS NOT TRUE. IT IS TO MENTION HERE THAT THE CASE OF THE ASSESSEE COMPANY HAS BEEN UNDER SCRUTINY IN AY 1995-96 & 1997-98 ONLY. PL. RE FER TO PAGE 3 OF 2 ND PAPER BOOK. EVERY ASSESSMENT YEAR IS SEPARATE AND AO IS NOT BOUND TO FOLLOW THE PRECEDENT TO DECIDE ANY RECURRI NG ISSUE BECAUSE RES JUDICATA DOES NOT APPLY IN THE MATTER OF INCOME TAX. THUS THE DISALLOWANCE MADE BY THE AO DESERVES TO BE UPHELD. (C) GROUNDS OF APPEAL 3 : TREATMENT OF RENTAL INCOM E OF RS. 40,50,000/- AS 'INCOME FROM OTHER SOURCES' 1). THE APPELLANT SHOWN RENTAL INCOME FROM PROPERTY TAKEN ON LEASE. 2) RENT RECEIVED FROM LEASE HOLD PROPERTY HAS BEEN SHOWING BY THE ASSESSEE AS BUSINESS INCOME. 3) BUT THE ASSESSEE IS NOT OWNER OF THE PROPERTY A ND HAS LOST ITS CASE IN LOWER COURT ABOUT THE CLAIM OF OWNERSHIP OF THE SAI D PROPERTY. ITA NO. 1577/DEL./2007 14 4) THUS AO HAS RIGHTLY TREATED THE INCOME RECEIVED O N ACCOUNT OF SUBLEASE OF THE PROPERTY TAKEN ON LEASE AS INCOME F ROM OTHER SOURCES. THUS THE APPEAL ON THIS GROUND DESERVES TO BE DISMIS SED. (D)GROUNDS OF APPEAL 4&5: CLAIM OF DEDUCTION U/S 24 (A) 1). FIRST TIME THE ASSESSEE HAS PUT THIS CLAIM WHI CH IS NOT ACCEPTABLE. 2). THE ASSESSEE HAS NEVER SHOWN IN PREVIOUS YEARS O R IN SUBSEQUENT YEARS THE SAID INCOME AS 'INCOME FROM HOUSE PROPERT Y'. IT IS TO MENTION HERE THAT THE CASE OF THE ASSESSEE COMPANY HAS BEEN UNDER SCRUTINY IN AY 1995-96 & 1997-98 ONLY. PL. REFER TO PAGE 3 OF 2 ND PAPER BOOK. EVERY ASSESSMENT YEAR IS SEPARATE AND A O IS NOT BOUND TO FOLLOW THE PRECEDENT TO DECIDE ANY RECURRING ISS UE BECAUSE RES JUDICATA DOES NOT APPLY IN THE MATTER OF INCOME TAX . THUS THE DISALLOWANCE MADE BY THE AO DESERVES TO BE UPHELD. AO MADE INVESTIGATION AND ESTABLISHED THAT THE CLAIM OF THE ASSESSEE WAS' NOT JUSTIFIED, AT THIS STAGE THE ASSESSEE SHOULD NOT BE ALLOWED TO CHANGE ITS STAND TO CLAIM DEDUCTION U/S 24(A). 3). SIMILARLY, THE ASSESSEE CANNOT CHANGE ITS STAN D THAT INTEREST EXPENSES SHOULD BE ALLOWED TO ADJUST AGAINST THE RE NT RECEIVED. LOAN TAKEN WAS NOT HOUSING LOAN. THE ASSESSEE HAS NOT EST ABLISHED THAT THE LOAN TAKEN WAS INVESTED IN THE PROPERTY FROM WH ICH RENT HAS BEEN RECEIVED. THUS THE ASSESSEE'S CLAIM IN THIS REG ARD DOES NOT HAVE ANY SUBSTANCE. (E). GROUNDS OF APPEAL NO. 5: DEFERRED REVENUE EXP ENSES OF RS. 3,00,000/- 1). THE APPELLANT INCURRED AN EXPENDITURE OF RS. 30 LACS IN YEAR 96-97 ON ACCOUNT OF PAYMENT MADE TO A TENANT TO VACANT A PROPERTY. SINCE, THEN IT WRITES OFF 1/10 OF THIS AMOUNT AS DE FERRED REVENUE EXPENDITURE. 2). THERE IS NO PROVISION UNDER THE INCOME TAX ACT TO ALLOW DEFERMENT OF EXPENDITURE INCURRED. THUS THE AO HAS RIGHTLY DIS ALLOWED THE SAME WHICH HAS BEEN UPHELD BY THE CIT(A). ITA NO. 1577/DEL./2007 15 9. WE HAVE HEARD THE SUBMISSIONS OF RIVAL PARTIES A ND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE ISSUE OF TREATMENT GIVEN TO THE RENTAL INCOME OF RS.40,50,000/- IS CONCERNED , WE FIND THAT THE LD. AUTHORITIES BELOW HAVE TREATED THESE RECEIPTS AS I NCOME FROM OTHER SOURCES ONLY ON THE PREMISE THAT THE ASSESSEE WAS NOT THE O WNER OF THE PREMISES AND THE CASE RELATING TO ITS OWNERSHIP STOOD LOST AT TH E LOWER JUDICIAL LEVEL. THIS REASON ASSIGNED BY THE LD. AUTHORITIES BELOW TO TRE AT THE RENTAL INCOME AS INCOME FROM OTHER SOURCES, IN OUR CONSIDERED OPINIO N, IS NOT TENABLE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF CHENNAI PROPERTIES & INVESTMENTS LTD. VS. CIT (SUPRA), WHEREIN THE HONB LE APEX COURT HAS PROPOUNDED AS UNDER : WHILE DECIDING WHETHER THE INCOME RECEIVED FROM LET TING OUT OF PROPERTY IS BUSINESS INCOME OR INCOME FROM HOUSE PROPERTY, D ECIDING FACTOR IS NOT THE OWNERSHIP OF LAND OR LEASES BUT THE NATURE OF T HE ACTIVITY OF THE ASSESSEE AND THE NATURE OF THE OPERATIONS IN RELATI ON TO THEM. THE OBJECTS OF THE COMPANY MUST ALSO BE KEPT IN VIEW TO INTERPR ET THE ACTIVITIES. IN THE INSTANT CASE, CLAUSE (3) OF THE ARTICLE OF A SSOCIATION AND MEMORANDUM OF ASSOCIATION SUBMITTED BY THE ASSESSEE READS AS U NDER : TO BUY, PURCHASE OR OTHERWISE ACQUIRE MULTISTOREYED FLATS, HOUSES, BUILDINGS, KINDS AND OTHER PROPERTIES, LEASE HOLD O R FREE HOLD EITHER ON RENT, LEASE OR FOR ANY OTHER CONSIDERATION AND T O SELL, LET, MORTGAGE, ASSIGN, PLEDGE, LEASE OUT OR OTHERWISE DI SPOSE OF ON INSTALLMENT BASIS OR UNDER HIRE PURCHASE AGREEMENTS OR IN ANY OTHER MANNER AND TO CARRY ON THE BUSINESS OF PROPERTY AGE NTS ' ITA NO. 1577/DEL./2007 16 THIS OBJECT OF THE ASSESSEE COMPANY, IF CONSIDERED IN THE LIGHT OF RATIO LAID DOWN BY HONBLE APEX COURT IN THE CASE OF CHENNAI P ROPERTIES & INVESTMENTS LTD. VS. CIT (SUPRA), THERE REMAINS NO HESITATION T O TREAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE IN THE INSTANT CASE AS BUS INESS INCOME. IN VIEW OF THIS CONCLUSION, WE DO NOT THINK IT NECESSARY TO DECIDE THE ALTERNATIVE GROUND TAKEN BY THE ASSESSEE REGARDING TREATMENT OF THIS A MOUNT AS INCOME FROM HOUSE PROPERTY. 10. BEFORE PARTING WITH THIS ISSUE, WE, HOWEVER, OB SERVE THAT NO BUSINESS OF PURCHASE OR SALE OF GOODS STOOD ESTABLISHED BY THE ASSESSEE AS OBSERVED BY THE AUTHORITIES BELOW. DURING THE STATEMENTS OF ACC OUNTANT OF THE VENDOR RECORDED IN PURSUANCE TO NOTICE U/S. 133(6), THOUGH THE SALE TRANSACTION WAS ADMITTED, BUT NO EVIDENCE REGARDING SUPPLY OF GOODS , SUCH AS COPY OF DELIVERY CHALLAN ETC. COULD NOT BE PLACED BEFORE THE ASSESSI NG OFFICER NOR COULD HE MEET OUT THE DISCREPANCY POINTED OUT BY THE ASSESSING OF FICER IN THEIR THE STOCK REGISTER AFTER THE IMPUGNED SALE BY THE VENDOR. IN THE ADMINISTRATIVE EXPENSES, THE ASSESSEE HAS SHOWN TO HAVE PAID SALES TAX, AS ALSO IN THE PRECEDING YEARS, BUT NO SALES TAX RECORDS COULD BE ADDUCED BEFORE THE AUTHORITIES BELOW TO ESTABLISH ANY PURCHASE OR SALE OF GOODS DURING THE YEAR. BESIDES, THE ASSESSEE HAS CLAIMED TO HAVE MADE THE PAYMENT AGAINST THE ITA NO. 1577/DEL./2007 17 IMPUGNED PURCHASE THROUGH BANKING CHANNEL. HOWEVER, ON PERUSAL OF ASSESSEES ACCOUNT IN THE BOOKS OF VENDOR (PB-88), WE FIND THAT NO PAYMENTS HAVE BEEN MADE BY THE ASSESSEE UPTO 31.03.2001 AND THE ASSESSEE WAS NOT ABLE TO ESTABLISH ANY SUBSEQUENT PAYMENT TO THE SAI D PARTY BEFORE THE AUTHORITIES BELOW. WE, THEREFORE, ENDORSE THE VIEW OF THE AUTHORITIES BELOW REGARDING NO ACTIVITIES OF PURCHASE AND SALES DURIN G THE YEAR AND TRANSACTIONS OF PURCHASE AND SALE SHOWN, AS SHAM. THIS HOWEVER, WOULD NOT AFFECT THE BUSINESS OF ASSESSEE REGARDING RECEIPT OF RENTALS A S NOTED ABOVE. 11. AS FAR AS THE NEXT ISSUE RELATING TO ADMINISTRA TIVE EXPENSES OF RS.4,38,636/- IS CONCERNED, WE FIND THAT THE ASSESS ING OFFICER HAS ALLOWED SUCH EXPENDITURE ONLY TO THE EXTENT OF 10% TO EARN THE INCOME FROM OTHER SOURCES. WE, HOWEVER, FIND THAT THE DISALLOWANCE MA DE BY THE LD. AUTHORITIES BELOW TO THE EXTENT OF 90% OF THE EXPENDITURE CLAIM ED BY THE ASSESSEE IS SOMEWHAT EXCESSIVE. IT IS WORTHWHILE TO NOTE THAT I N ORDER TO KEEP THE COMPANY ALIVE, THE ASSESSEE IS REQUIRED TO MAKE CER TAIN NECESSARY OVERHEAD EXPENSES ALSO APART FROM EARNING THE INCOME, AS THE RE IS NOTHING ON RECORD TO ESTABLISH THAT THE ASSESSEE COMPANY WAS CLOSED ONCE FOR ALL. KEEPING ALL THESE FACTS IN VIEW, WE FEEL IT APPROPRIATE TO ALLOW 50% OF THE TOTAL ADMINISTRATIVE ITA NO. 1577/DEL./2007 18 EXPENDITURE OF RS.4,38,636/- CLAIMED BY THE ASSESSE E. THE ASSESSEE GETS RELIEF ACCORDINGLY. 12. ADVERTING TO THE NEXT ISSUE REGARDING DISALLOWA NCE OF INTEREST OF RS.15,23,312/- ON ACCOUNT OF LOANS TAKEN FROM PNB. THE RECORD REVEALS THAT THE ASSESSEE HAD RAISED LOAN FROM THE BANK TO GIVE THE MONEY TO M/S. RABAB PUBLICATION PVT. LTD. ON HIGHER RATE OF INTEREST OF 22%. THIS LOAN WAS ADMITTEDLY NOT TAKEN FROM THE BANK FOR UTILIZATION THEREOF FOR THE PURPOSE OF ITS OWN BUSINESS. IN THIS CONTEXT, WE HAVE GONE THR OUGH THE COPY OF ACCOUNT OF RABAB PUBLICATIONS PVT. LTD. (PB 50 TO 56) AND WE F IND THAT THE ASSESSEE IS NOT SHOWN TO HAVE RECEIVED ANY INTEREST FROM F.Y. 1997- 98 TO 31.03.2001. THEREFORE, THE INTEREST SHOWN TO HAVE BEEN PAID BY ASSESSEE ON THIS LOAN, WHICH WAS ADVANCED BY THE ASSESSEE TO THIRD PARTY, IN OUR OPINION, HAS RIGHTLY BEEN HELD AS NOT ALLOWABLE TO THE ASSESSEE FOR THE REASON THAT THE PURPOSE OF ADVANCING LOAN TO THIRD PARTY AFTER RAISING IT FROM THE BANK, DOES NOT STAND ESTABLISHED FROM THE ACCOUNT OF THE ASSESSEE, AS NO INTEREST RECEIVED ON SUCH LOAN FROM THE THIRD PARTY, HAS BEEN CREDITED BY THE ASSESSEE IN HIS BOOKS FROM F.Y. 1997-98 TO 31.03.2001. THE PURPOSE OF EARNING INTEREST INCOME, THEREFORE, STOOD DEFEATED AND THEREFORE, THE INTERE ST PAID BY THE ASSESSEE TO THE PNB CLAIMED AS DEDUCTION, IS NOT ADMISSIBLE U/S . 36(1)(III) OF THE IT ACT. ITA NO. 1577/DEL./2007 19 WE, THEREFORE, SUSTAIN THE ADDITION OF RS.15,23,312 /- AS MADE BY THE AUTHORITIES BELOW. 13. COMING TO THE NEXT ISSUE REGARDING 1/10 TH OF DEFERRED REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE IN THE PROFIT A ND LOSS ACCOUNT TOWARDS VACATION OF PROPERTY, WE FIND THAT THERE IS NO PROV ISION IN THE IT ACT TO ALLOW SUCH DEFERRED REVENUE EXPENDITURE U/S. 35D(1) & (2) OF THE IT ACT. IT IS NEITHER THE REVENUE EXPENDITURE NOR AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS DURING THE YEAR. THIS ISSUE IS, THEREFORE, DECIDED AGAINST THE ASSESSEE AND IN FAVO UR OF THE REVENUE. ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2018. SD/- SD/- (H.S. SIDHU) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.01.2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI