AMITABH HIRAWAT, MUMBAI V. ITO WD 14(1)-1, MUMBAI

ITA 1693/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6303 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 13-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Keywords: Sale consideration of property below Jantri Value; Business income; Salary income; Cost of acquisition; Fair market value; Bad and doubtful debts; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI V.DURGA R AO, JM ITA NO.1693/MUM/2009 : ASST.YEAR 2005-2006 SHRI AMITABH HIRAWAT 2A KITAB MAHAL, 1 ST FLOOR 192 DR.D.N.ROAD MUMBAI 400 001. PA NO.AADPH5362D. VS. THE INCOME TAX OFFICER WARD 14(1)-1 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUNIL HIRAWAT RESPONDENT BY : KESHAV SAXENA O R D E R PER J.SUDHAKAR REDDY, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) XIX, MUMBAI DATED 17.12.2008 FOR ASSESSMENT YEAR 2005-2006. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL WHO DERIVED INCOME FROM SALARY, LONG TERM CAPITAL GAIN AND BUSINESS IN COME FROM THE CARRYING ON OF VARIOUS FINANCIAL TRANSACTIONS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2005-2006 ON 31.08.2005 DECLARING T OTAL LOSS OF RS.23,22,790. THE ASSESSING OFFICER PASSED ORDER U/S.143(3) OF TH E ACT ON 18.09.2007 INTER ALIA DETERMINING THE LONG TERM CAPITAL GAIN ON SALE OF L AND AT RS.1,02,59,112 AS AGAINST THE ASSESSEES CLAIM OF RS.26,89,111 AND DISALLOWIN G THE CLAIM FOR BAD DEBTS ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED IN ANY MONE Y LENDING BUSINESS DURING THE YEAR OR IN THE PAST YEARS AND THAT THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCES TO SHOW THAT THE DEBTS WRITTEN OFF HAVE B ECOME BAD. ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 2 3. ON THE ISSUE OF LONG TERM CAPITAL GAINS, THE ASS ESSEE SOLD LAND AT JAIPUR AND CALCULATED LONG TERM CAPITAL GAINS AS PER U/S.50C. SINCE THE PROPERTY WAS ACQUIRED PRIOR TO 1.4.1981 THE FAIR MARKET VALUE AS ON 1.4.1 981 WAS ADOPTED BY THE ASSESSEE, IN PLACE OF COST OF ACQUISITION, AT RS.2,02,500 ON THE GROUND THAT THIS RATE WAS ADOPTED FOR THE PURPOSE OF WEALTH-TAX AND HAS BEEN ACCEPTED NU THE REVENUE BY COMPLETING THE WEALTH-TAX ASSESSMENT. THE ASSESSING OFFICER HELD THAT, IN THE ABSENCE OF VALUATION REPORT AS ON 1.4.1981 FROM APP ROVED VALUER, THE ASSESSEES CONTENTION CANNOT BE ACCEPTED. SINCE THE ASSESSEE H AS TAKEN THE VALUE OF LAND AT JAIPUR IN ITS BALANCE SHEET AT RS.87,697, THE ASSES SING OFFICER HAS ADOPTED THE SAID AMOUNT IN PLACE OF RS.2,02,500/- ADOPTED BY THE ASS ESSEE FOR CALCULATION OF INDEX COST AS ON 1.4.1981, AND ARRIVED AT THE LONG TERM C APITAL GAINS ON SALE OF LAND AT RS.1,02,59,112 AS AGAINST RS.26,89,111 AS CLAIMED B Y THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING THE APPELLATE PROCEEDINGS, THE AS SESSEE SUBMITTED A VALUATION REPORT FROM THE APPROVED VALUER AND CLAIMED THAT TH E MARKET VALUE OF THE ASSET IN QUESTION AS ON 1.4.1981 WAS RS.5,04,000. HE WANTED THE LONG TERM CAPITAL GAINS TO BE RE-COMPUTED BY TAKING THE F.M.V. OF THE SAID ASS ET AS ON 1.4.1981 AS PER THE VALUATION REPORT. THE FIRST APPELLATE AUTHORITY REJ ECTED THIS CONTENTION OF THE ASSESSEE. NEVERTHELESS HE HELD THAT THE ASSESSING O FFICER SHOULD HAVE TAKEN THE MARKET VALUE OF THE ASSET AS DECLARED IN THE WEALTH -TAX RETURN. HENCE HE GRANTED PART RELIEF TO THE ASSESSEE. ON THE ISSUE OF ALLOWA NCE OF BAD DEBTS, THE LEARNED CIT(A) ALSO HELD THAT THE ASSESSEE HAS NOT CARRIED ON ANY BUSINESS DURING THE YEAR AND HENCE THERE IS NO QUESTION OF ALLOWING ANY EXPE NSES INCLUDING BAD DEBT. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUNDS:- ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 3 1. LONG TERM CAPITAL GAIN : (I) ON FACTS AND IN LAW, THE LEARNED CIT(A) HAS ER RED IN NOT DIRECTING THE ASSESSING OFFICER TO CONSIDER THE MAR KET VALUE OF LAND AT RS.5,04,000/- AS ON 1.4.1981 AS PER THE REPORT O F THE GOVT. APPROVED VALUER. UNDER THE FACTS AND CIRCUMSTANCES, HE OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO CONSIDER THE MARKET VALUE OF LAND AT RS.5,04,000/- AS ON 1.4.1981 AS PER THE REP ORT OF THE GOVT. APPROVED VALUER. (II) THE LEARNED CIT(A) HAD ERRED IN RELYING ON TH E DECISION OF SUPREME COURT IN THE CASE OF SHEKHAWATI GENERAL TRA DERS LTD. VS. ITO (82 ITR 788) WHICH IS NOT APPLICABLE TO THE CAS E OF APPELLANT. 2. BAD DEBTS RS.49,82,812 : (I) ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD ER RED IN HOLDING THAT THE APPELLANT HAS NOT CARRIED OUT ANY BUSINESS DURING THE YEAR. UNDER THE FACTS AND CIRCUMSTANCES OF THE MATTER, HE OUGHT NOT TO HAVE HELD THE SAME. (II) ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD E RRED IN HOLDING THAT INTEREST ON DEBTS GIVEN DOES NOT FORM PART OF THE TOTAL INCOME OF EARLIER YEARS. UNDER THE FACTS AND CIRCUMSTANCES OF THE MATTER, HE OUGHT NOT TO HAVE HELD SO. (III) ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD ERRED IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS CLAIMED OF RS.49,82,312/-. UNDER THE FACTS AND CIRCUMSTANCES OF THE MATTER, HE OUGHT TO HAVE DELETED THE SAID DISALLOWANCE OF RS.49,82,312/-. (IV) WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO.2(I II), THE LEARNED CIT(A) HAD FAILED TO APPRECIATE THAT THE INTEREST O FFERED AS INCOME IN EARLIER YEARS OUGHT TO HAVE BEEN ALLOWED AS DEDUCTI ON FROM TOTAL INCOME OF THE APPELLANT IN THE PREVIOUS YEAR RELATI NG TO ASST. YEAR 2005-2006. 5. MR.SUNIL HIRAWAT, THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ASSESSING OFFICER IN HIS ORDER HAS STATED THAT, HE WOULD RE-CALCULATE THE CAPITAL GAINS ON RECEIPT OF VALUATION REPORT FROM THE APPRO VED VALUER. HE SUBMITTED THAT, AS THE ASSESSEE HAS NOW OBTAINED THE REPORT, THE VA LUE FIXED BY THE APPROVED ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 4 VALUER AS ON 1.4.1981 SHOULD HAVE BEEN ADOPTED BY T HE ASSESSING OFFICER AND THE CAPITAL GAIN RE-COMPUTED. HE FILED A PAPER BOOK RUN NING INTO 56 PAGES AND DREW THE ATTENTION OF THE BENCH TO CBDT CIRCULAR NO.14 D ATED 11.4.1955, SPECIFICALLY PARA 3 AND SUBMITTED THAT THE BOARD HAS DIRECTED TH E OFFICERS OF THE DEPARTMENT NOT TO TAKE ADVANTAGE OF THE IGNORANCE OF AN ASSESSEE A S TO HIS RIGHTS. HE FURTHER STATED IT IS ONE OF THEIR DUTIES TO ASSIST A TAXPAYER IN E VERY REASONABLE WAY, PARTICULAR IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SHOULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PRO CEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. HE REFERRED TO THE ORDER OF THE CIT(A) AND SUBMITTED THAT HIS CLAIM WA S REJECTED ON THE BASIS OF CBDT CIRCULAR NO.549 DATED 31.10.1989 CLARIFYING TH AT THE ASSESSMENT ORDER PASSED U/S.143(3) CANNOT BE AT LOWER ASSESSED FIGUR E THAN WHAT HAS BEEN DETERMINED. HE SUBMITTED THAT THE TOTAL INCOME AS R ETURNED AND AS ASSESSED CANNOT BE VIEWED IN ISOLATION AND THE TOTAL DISALLOWANCES MADE IN THE ASSESSMENT ORDER SHOULD BE SEEN. HE SUBMITTED THAT THE DVO HAS GIVEN SALE INSTANCES OF ADJOINING PLOT AND THIS CAN BE THE BEST COMPARABLE FOR ARRIVI NG AT THE VALUE AS ON 1.4.1981. 6. COMING TO THE SECOND ISSUE OF DISALLOWANCE OF BA D DEBT, THE LEARNED COUNSEL TOOK THIS BENCH TO PAGES 9 TO 13 OF THE PAPER BOOK CONSISTING OF COPY OF ACCOUNTS OF K.CHANDRA SHEKHAR FROM ASSESSMENT YEARS 2001-200 2 TO 2005-2006 AND PAPER BOOK PAGES 14 TO 17 CONSISTING OF COPY OF ACCOUNT O F PADMAVATI TEXTILES LTD. FOR ASSESSMENT YEARS 2000-2001 TO 2005-2006 AND SUBMITT ED THAT THE ASSESSEE HAS BEEN REGULARLY HAVING DEALING WITH THESE PARTIES AND THE Y HAVE PAID INTEREST ALL THESE YEARS AND THE SAME HAS BEEN OFFERED TO TAX AS BUSIN ESS INCOME YEAR AFTER YEAR AND THEY HAVE BEEN ACCEPTED AS SUCH. HE POINTED OUT THA T PAGE 18 WHICH GIVES THE TOTAL INTEREST EARNED BY THE ASSESSEE FROM THESE TWO PART IES I.E. K.CHANDRA SHEKHAR AND PADMAVATI TEXTILES LTD. HE FURTHER DREW THE ATTENTI ON OF THE BENCH TO THE ANNUAL ACCOUNT FOR THE PERIOD ENDED ON 31 ST MARCH, 2004 AND SPECIFICALLY TO THE DETAILS OF INTEREST AT PAGE 20 AND POINTED OUT THAT UNDER THE INTEREST ACCOUNT THERE ARE ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 5 NUMEROUS TRANSACTIONS AND THE TOTAL INTEREST RECEIP T IS AT RS.15.76 LAKHS AS AGAINST INTEREST PAYMENT OF RS.14.07 LAKHS. SIMILARLY HE PO INTED OUT THAT IN THE STATEMENT OF ACCOUNT FOR THE YEAR ENDED ON 31 ST MARCH, 2006 WHERE SUNDRY CREDITORS IS AT RS.8.54 CRORE AND SUNDRY DEBTORS WERE AT RS.86.27 L AKHS. HE FURTHER TOOK US THE DETAILS OF INTEREST AT PAGE 49 AND POINTED OUT THAT THERE WERE BOTH DEBTS AND CREDITS IN THIS ACCOUNT. HE DREW OUR ATTENTION TO THE COMPU TATION OF INCOME FOR ALL THESE ASSESSMENT YEARS WHEREIN THE INTEREST INCOME HAS BE EN ASSESSED UNDER THE HEAD BUSINESS INCOME. THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE FINDING OF THE ASSESSING OFFICER AS CONFIRMED BY THE FIRST APPELLATE AUTHORITY IS AGAINST THE FACTS ON RECORD. HE VEHEMENTLY SUBMITTED THAT THE R ECORDING OF FACTS BY THE A.O. AS ACCEPTED BY THE LEARNED CIT(A) THAT THE ASSESSEE HA S NOT CARRIED OUT ANY BUSINESS DURING THE YEAR, IS AGAINST THE FACTS AND RECORDS O F THE CASE. HE SUBMITTED THAT THE RECORDING OF THE CIT(A) THAT THE ASSESSEE HAD FILED CERTAIN COMPUTERIZED LEDGER ACCOUNT AND IT DOES NOT PROVE THE NATURE OF BUSINES S IS ALSO NOT CORRECT AS THE ENTIRE RECORDS AND THE RETURN OF INCOME OF ALL THE EARLIER YEARS WERE AVAILABLE WITH THE DEPARTMENT AND THE COMPUTATION OF INCOMES ETC. WERE FILED BY THE ASSESSEE. IN LAW, HE SUBMITTED THAT THE ISSUE IS COVERED IN ITS FAVOU R BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT [(2010) 323 ITR 397 (SC)]. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE MR.KESHA V SAXENA SUBMITTED THAT THE DVOS REPORT WAS SUBMITTED BY THE ASSESSEE AFTER THE CONCLUSION OF THE ASSESSMENT AND WHEN THE PROCEEDINGS ARE PENDING BEF ORE THE CIT(A) THE ASSESSING OFFICER HAD NO JURISDICTION WHATSOEVER TO MODIFY TH E ASSESSMENT BY ACCEPTING THE DVOS REPORT SUBSEQUENTLY FILED BY THE ASSESSEE. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT [(2006) 284 ITR 323 (SC)] AND SUBMITTED THAT THE CIT(A) WAS RIGHT IN REJECTI NG THE CLAIM OF THE ASSESSEE TO RE-COMPUTE LONG TERM CAPITAL GAIN BY TA KING THE FAIR MARKET VALUE AS ON 1.4.1981, AS PER THE VALUE DETERMINED BY THE DVO. H E SUBMITTED THAT AN OPTION WAS GIVEN TO THE ASSESSEE TO OBTAIN ADDITIONAL INFO RMATION BY WAY OF APPROVED ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 6 VALUERS REPORT, HOWEVER, THE ASSESSEE HAS BROUGHT O N RECORD THE FAIR MARKET VALUE AS DECLARED IN THE WEALTH-TAX RETURN. HE RELIED ON THE ORDER OF THE CIT(A) PARA 6.1 AND SUBMITTED THAT THE ASSESSING OFFICER CANNOT GO BEYOND THE RELIEF CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME AND GRANT FURT HER RELIEF TO THE ASSESSEE. ON THE ISSUE OF BAD DEBTS, THE LEARNED DR SUBMITTED THAT T HE ASSESSEE HAS NOT PROVED EITHER BEFORE THE A.O. OR BEFORE THE CIT(A) THAT IT WAS IN THE BUSINESS OF MONEY LENDING IN THE EARLIER ASSESSMENT YEARS. ON LOOKING AT THE PAPERS FILED BY WAY OF PAPER BOOK, THE LEARNED DR SUBMITTED THAT IT APPEARS THAT THE ASSESSEE IS IN THE BUSINESS OF FINANCING AND THE MATTER SHOULD BE RESTORED TO T HE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. HE RELIED ON THE DECISION O F THE SUPREME COURT IN THE CASE OF S.A.BUILDERS LTD. VS. CIT(A) & ANRS. [(2007) 288 IT R 1 (SC)] AND SUBMITTED THAT THE PURPOSE OF MONEY LENDING HAS TO BE EXAMINE D. HE ALSO RELIED ON THE ORDER OF THE LEARNED CIT(A). 8. JOINING THE ISSUE THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THIS BENCH OF THE TRIBUNAL IN ITA NO.2642/MUM/2008 ORDER DATED 4 TH JUNE, 2009 IN THE CASE OF M/S.WORLD TRADERS MFG. CO. VS. DCIT HAD HEL D THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) HAS BEEN CONSIDERED BY THE PUNJAB & HARYANA HIGH COURT IN TH E CASE OF CIT VS. RAMCO INTERNATIONAL [(2009) 17 DTR (P&H) 214] WHEREIN IT WAS HELD THAT THE CIT(A)S OBJECTION THAT THE DEDUCTION CANNOT BE CLAIMED, IS NOT CORRECT. HE POINTED OUT THAT WHEN THE CIT(A) CALLED FOR REMAND REPORT, AFTER ADM ITTING AND FORWARDING THE DVOS REPORT TO THE ASSESSING OFFICER, IT IS NOT OPE N FOR THE REVENUE TO RELY ON THE DECISION OF GOETZE (INDIA) LTD. (SUPRA). 9. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERAT ION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, AS WELL AS THE CASE LAW C ITED, WE HOLD AS FOLLOWS. ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 7 10. ON THE FIRST ISSUE OF MARKET VALUE OF PROPERTY AS ON 1.4.1981, WE FIND THAT THE ASSESSEE HAS ADOPTED THE MARKET VALUE DECLARED BY HIM IN THE WEALTH-TAX RETURN WHICH IS AN AMOUNT OF RS.2,02,500. LATER ON DUE TO THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, OBTAINED VALUATION REPORT WHEREIN THE APPROVED VALUER STATED THE MARKET VALUE OF THE ASSE T IN QUESTION AS ON 1.4.1981 AT RS.5,04,000. THE ISSUE BEFORE US IS, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FIRST APPELLATE AUTHORITY WAS RIGHT IN DI RECTING THE ASSESSING OFFICER TO ADOPT THE FMV AT RS.2,02,500 INSTEAD OF FMV AT RS.5 ,04,000. 11. IN OUR CONSIDERED OPINION, THE ORDER OF THE AUT HORITIES BELOW ON THIS ISSUE HAS TO BE UPHELD FOR MORE THAN ONE REASON. THE MARK ET VALUE OF THE PROPERTY HAS BEEN DETERMINED BY THE ASSESSEE AND DECLARED IN THE WEALTH-TAX RETURN FOR THE ASSESSMENT YEAR 1982-83. THE SAME VALUE HAS ADOPTED BY HIM WHILE COMPUTING LONG TERM CAPITAL GAIN. ADDITIONAL INFORMATION OBTA INED BY THE ASSESSEE BY WAY OF APPROVED VALUERS REPORT, SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER, DOES NOT TO OUR MIND, HELP THE ASSESSEE BY REQUIRING THE A.O. TO RE-COMPUTE THE CAPITAL GAIN BASED ON THIS FMV. THE VALUER IN THIS VALUATIO N REPORT IS CONTRARY TO THE VALUE DISCLOSED BY THE ASSESSEE IN HIS WEALTH-TAX R ETURN. EVEN OTHERWISE THE VALUATION IS AN OPINION AND THE OPINION OF THE APPR OVED VALUER IS NOT SOMETHING WHICH BINDS THE ASSESSING OFFICER, WHEN THERE ARE C ONTRARY FACTS BY WAY OF VALUE OF FMV DECLARED IN THE WEALTH-TAX RETURN. IN ANY EV ENT THE ASSESSING OFFICER CANNOT ASSESS THE TOTAL INCOME OF THE ASSESSEE AT A FIGURE LOWER THAN THE RETURNED INCOME. WHILE SAYING SO WE AGREE WITH THE PROPOSITI ON STATED BY THE ASSESSEE THAT THE RETURNED INCOME AND THE ASSESSED INCOME SHOULD BE SEEN AFTER THE ADDITIONS AND DISALLOWANCE UNDER ALL THE HEADS OF INCOME WHICH GO ES INTO THE GROSS TOTAL INCOME. AS WE ARE OF THE OPINION THAT THE F.M.W. DECLARED I N THE WEALTH-TAX RETURN WAS RIGHTLY DIRECTED TO BE ADOPTED BY THE CIT(A) ON FAC TS WE NEED NOT GO INTO THE OTHER LEGAL ISSUES AS IT WOULD BE AN ACADEMIC EXERCISE. T HUS, WE DISMISS GROUND NO.1 OF THE ASSESSEE AND UPHOLD THE FINDING OF THE LEARNED CIT(A) IN THIS REGARD. ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 8 12. COMING TO GROUND NO.2, WE ARE NOT IN AGREEMENT WITH THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ISSUE SHOULD BE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION FOR THE RE ASON THAT THE ASSESSEE IN ALL THE EARLIER YEARS RETURN, SUBMISSIONS AND STATEMENT OF ACCOUNT, DEMONSTRATED THAT THE ASSESSEE HAS CARRIED ON MONEY LENDING BUSINESS. WE HAVE PERUSED THE LEDGER ACCOUNTS OF THE PARTIES, BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SCHEDULES, OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-2004, 2004-2 005 AND 2005-2006 AND FIND THAT THE ASSESSEE HAS CARRIED OUT MONEY LENDING BUS INESS AND HAS BEEN RECEIVING INTEREST FROM SEVERAL PARTIES AND HAS ALSO PAYING I NTEREST TO CERTAIN PARTIES. THE ASSESSEE HAS FILED RETURNS OF INCOME, IN ALL THESE YEARS, DECLARING NET INTEREST INCOME EARNED FROM MONEY LENDING BUSINESS AS BUSINE SS INCOME. THE DEPARTMENT HAS ASSESSED THE SAME AS SUCH. ON THESE FACTS AND C IRCUMSTANCES, WE UPHOLD THE CONTENTION OF THE ASSESSEE THAT THE RECORDING OF FA CTS BY THE CIT(A) AS WELL AS BY THE ASSESSING OFFICER, ARE INCORRECT AND PERVERSE. WE, THEREFORE, DECLINE TO ACCEPT THE CONTENTION OF THE AUTHORITIES BELOW THAT THE AS SESSEE IS NOT ENGAGED IN THE MONEY LENDING BUSINESS EITHER DURING THE YEAR OR IN THE EARLIER YEARS. COMING TO THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATI VE THAT THE DECISION OF S.A.BUILDERS LTD. (SUPRA) IS RELEVANT TO THE CASE, WE FIND THAT THE CASE HAS NO APPLICATION TO THESE FACTS. IN S.A.BUILDRS LTD., THE HONBLE SUPREME COURT WAS DEALING WITH THE ISSUE OF DISALLOWANCE U/S.36(1)(II I). IT IS NOBODYS CASE THAT THE LENDING OF MONEY IN THIS CASE WAS NOT FOR BUSINESS PURPOSES. 13. IN VIEW OF THE THESE FACTS WHICH WERE BEFORE TH E A.O., CIT(A) AND BEFORE US, WE UPHOLD THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE WAS CARRYING ON MONEY LENDING BUSINESS. IT HAS FURNISHED DOCUMENTARY EVIDENCES TO SUPPORT THE CLAIM OF WRITE OFF OF BAD DEBTS. AS THE ASSESSEE HAS WRITTEN OFF THE AMOUNTS AS BAD DEBTS IN ITS BOOKS O F ACCOUNT AND THE GENUINENESS OF THE WRITTEN OFF IS NOT DOUBTED BY THE REVENUE, WE H OLD THAT THE ISSUE IS COVERED BY ITA NO.1693/MUM/2009 SHRI AMITABH HIRAWAT. 9 THE DECISION OF THE SUPREME COURT IN THE CASE OF T.R.F. LTD. (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS GROUND. 14. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF NOVEMBER, 2010. SD/- SD/- ( V.DURGA RAO ) ( J.SUDHAKAR REDDY ) JUDICIAL MEMBER ACCOUNT ANT MEMBER MUMBAI : 24 TH NOVEMBER, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XIV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.