GROWMORE RESEARCH & ASSETS MGT LTD, MUMBAI V. DCIT CEI CIR 31 NOW DCIT CC 4(3), MUMBAI

ITA 1785/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7994 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 14-02-2017
• Assessment Year: 1990-1991
• Appeal Filed On: 26-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Assessee Lawyers: DHARMESH SHAHL
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3); 234B; 43(5)

Judgement Text

, , G, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1785/MUM/2015 ASSESSMENT YEAR: 1990-91 GROWMO RE RESEARCH & ASSETS MGT. LTD., 32 MADHULI DR A.B. RD WORLI MUMBAI-400018 / VS. DCIT CENTRAL CIRCLE 31, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( APPELLANT ) (RESPONDENT ) P.A. NO. AAACG4936C APPELLANT BY SHRI DHARMESH SHAHL & DHAV AL SHAH (AR) REVENUE BY DR. P. DANIEL , (DR) / DATE OF HEARING: 14/02/2017 / DATE OF ORDER: 28/02/2017 / O R D E R PER ASHWANI TANEJA, AM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI -52 (IN SHORT CIT(A)}, DATED 30.01.2015 PASSED ORDER AGAI NST U/S 143(3) R.W. SECTION 150(1) & 147 OF THE INCOME TAX ACT, 1961, ASSESSMENT ORDER DATED 30.03.1999 FOR ASSESSMENT YE AR 1990-91 ON THE FOLLOWING GROUNDS: 1.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUG HT TO HAVE APPRECIATED THAT AS PER THE DECISION OF HON 'BLE SPECIAL COURT DATED 30.04.2010 IN MP NO. 41 OF 1999 , THE ASSETS UNDER CONSIDERATION AND THE CONSEQUENTIA L GROWMORE RESEARCH & ASSETS MGT. 2 INCOME BELONGS TO LATE SHRI HARSHAD S. MEHTA AND HE NCE THE INCOME CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE BEEN TAXED IN TH E HANDS OF LATE SHRI HARSHAD S MEHTA AND NOT IN THE H ANDS OF THE APPELLANT. 2.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.1,95,57,742/- ON ACCOUNT OF TOSS FROM STOCK MARK ET ACTIVITY CLAIMED AS SET OFF AGAINST THE PROFIT FROM MONEY MARKET ACTIVITY. 3.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.2,50,000/- PAID TOWARDS MAINTENANCE OF THE ACCOU NT. 4.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE ON ACCOUNT OF DEPRECIATION AMOUNTING TO RS.2,25,000/-. 5.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGH T TO HAVE APPRECIATED THAT THE APPELLANT WAS ENTITLED TO DEDUCTION ON ACCOUNT OF INTEREST PAYABLE TO THE BROKERAGE FIRMS. 6.THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THE I NTEREST CHARGED U/S 234A, 234B AND 234C OF THE ACT ARE INCORRECT. 7. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE IN COME ASSESSED IN THE HANDS OF THE APPELLANT WERE SUBJECT ED TO THE PROVISIONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX, NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF T HE ACT. 2. DURING THE COURSE OF HEARING GROUND NO.1 WAS NOT PR ESSED AND THEREFORE SAME IS DISMISSED. 3. GROUND NO.2: IN THIS GROUND, THE ASSESSEE IS AGGRIEVED WITH THE ACTION OF LOWER AUTHORITIES IN MAKING DISALLOWA NCE OF RS.1,95,57,742/- ON ACCOUNT OF LOSS FROM STOCK MARK ET ACTIVITY CLAIMED AS SET OFF AGAINST THE PROFIT FROM MONEY MARKET ACTIVITY. GROWMORE RESEARCH & ASSETS MGT. 3 3.1. THE BRIEF BACKGROUND OF THIS ISSUE IS THAT THE ASS ESSEE WAS ENGAGED IN CARRYING OUT VARIOUS ACTIVITIES IN T HE FINANCE MARKET. THE ASSESSEE INCURRED LOSS OF RS.1,95,57,74 2/- FROM SHARE MARKET ACTIVITIES AND SET OFF OF THE SAME AGA INST PROFIT EARNED FROM MONEY MARKET TRANSACTIONS. THE AO DENIE D THE BENEFIT OF SET OFF ON TWO GROUNDS. IT WAS HELD THAT CARRYING OUT THE MONEY MARKET ACTIVITIES WAS ILLEGAL AND THE SAM E WAS NON- SPECULATIVE IN NATURE, WHEREAS LOSS INCURRED IN SHA RE MARKET ACTIVITIES WAS SPECULATIVE IN NATURE. THEREFORE, SP ECULATIVE LOSS CANNOT BE SET OFF AGAINST NON-SPECULATIVE PROFIT. L D. CIT(A) CONFIRMED THE ACTION OF THE AO ON BOTH THE GROUNDS. 3.2. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE TRIBUNAL. 3.3 . DURING THE COURSE OF HEARING BEFORE US, IT WAS ST ATED AT THE OUTSET BY THE LD. COUNSEL APPEARING ON BEHALF O F THE ASSESSEE THAT THIS ISSUE IS NOW COVERED IN FAVOUR O F THE ASSESSEE ON THE BASIS OF DECISION OF THE TRIBUNAL R ENDERED IN THE CASE OF GROUP COMPANY OF THE ASSESSEE NAMELY M/ S. GROWMORE LEASING & INVESTMENTS LTD. V. ACIT FOR A.Y . 1990- 91 TO 2000-01 DATED 12 TH DECEMBER 2007 IN ITA NO.483/MUM/2007, WHEREIN IT WAS HELD THAT THE TRANS ACTIONS IN MONEY MARKET SECURITIES DONE BY THE ASSESSEE WIT HOUT TAKING OR GIVING DELIVERY WERE ALSO SPECULATIVE TRA NSACTIONS AND SPECIAL COURT HAS ALREADY HELD THAT THESE TRANS ACTIONS WERE LEGAL TRANSACTIONS. THEREFORE, PROFIT EARNED O N THESE TRANSACTIONS WAS SPECULATIVE PROFIT AGAINST WHICH S PECULATIVE LOSS OF SHARE MARKET WAS ALLOWABLE TO BE SET OFF. O UR ATTENTION WAS DRAWN ON VARIOUS PAGES OF THE PAPER BOOK WHEREI N GROWMORE RESEARCH & ASSETS MGT. 4 COMPLETE DETAILS WERE GIVEN ABOUT MONEY MARKET TRAN SACTIONS SHOWING THAT THESE TRANSACTIONS WERE DONE BY THE AS SESSEE COMPANY WITHOUT GIVING OR TAKING DELIVERY. 3.4. PER CONTRA, LD. COUNSEL APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT MONEY MARKET UNITS ARE TRANS ACTED ON NON- SPECULATIVE BASIS. FURTHER HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF AP OLLO TYRES LTD. V. CIT 255 ITR 274 WHEREIN IT WAS HELD THAT BU YING AND SELLING OF UNITS BY THE ASSESSEE COMPANY COULD NOT BE TREATED AS SPECULATIVE BUSINESS. HE REQUESTED FOR UPHOLDING THE ORDERS OF THE LOWER AUTHORITIES. 3.5. IN REJOINDER, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF AP OLLO TYRES LIMITED (SUPRA) WAS NOT APPLICABLE ON THE FACTS OF THIS CASE. IN THE SAID JUDGMENT, HONBLE SUPREME COURT HAD EXAMIN ED THE SCOPE OF SECTION 73 WHICH TALKS ABOUT SHARES ONLY WHEREAS THE ASSESSEE IS SEEKING TO CLAIM THE BENEFIT U/S 43 (5) OF THE ACT, WHICH TALKS ABOUT SHARES AS WELL AS UNITS. HE PLACED RELIANCE UPONE JUDGMENT OF DELHI BENCH OF THE TRIBU NAL IN THE CASE OF ANZ GRINDLAYS BANK V. DY. CIT (DELHI) 88 IT D 53 WHEREIN IT WAS HELD THAT TRANSACTIONS OF THE PURCHA SE AND SALE OF UNITS AND THE GOVERNMENT SECURITIES BY THE ASSES SEE WITHOUT ACTUALLY DELIVERY WOULD FALL WITHIN THE SCO PE OF SPECULATIVE TRANSACTIONS AS DEFINED IN SECTION 43(5 ) OF THE ACT. IT WAS SUBMITTED THAT HONBLE DELHI BENCH HAS DELIV ERED ITS JUDGMENTS AFTER TAKING INTO ACCOUNT THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF APPOLLO TYRES LTD. (SU PRA). GROWMORE RESEARCH & ASSETS MGT. 5 3.6. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES AND SUBMISSIONS MADE BY BOTH THE SIDES AS WELL AS JUDGMENT RELIED UPON BY BOTH THE SIDES BEFORE US. T HE ONLY ISSUE TO BE DECIDED BY US IS WHETHER THE TRANSACTIO NS CARRIED OUT BY THE ASSESSEE OF TRADING OF MONEY MARKET SECU RITIES WAS SPECULATIVE OR NON-SPECULATIVE IN NATURE. DURING TH E COURSE OF HEARING, LD. COUNSEL DEMONSTRATED WITH THE HELP OF VARIOUS EVIDENCES IN THE PAPER BOOK IN THE FORM OF CONTRACT NOTES AND OTHER DOCUMENTS TO SHOW THAT NO DELIVERIES WERE EXC HANGED AND ONLY DIFFERENCE AMOUNT WAS SETTLED. OUR ATTEN TION WAS DRAWN ON THE LEDGER ACCOUNT CONTAINING DETAILS OF T RADING OF MONEY MARKET TRANSACTIONS SHOWING THAT IN ALL THE C ASES ONLY DIFFERENCE AMOUNT OF SALE OR PURCHASE OF MONEY MA RKET SECURITIES HAS BEEN CREDITED OR DEBITED IN THE ASSE SSEES A/C BY THE BROKER. THESE EVIDENCES HAVE NOT BEEN CONTROVER TED BY THE LD. SPECIAL COUNSEL OF THE REVENUE. THUS, THE ADMIT TED FACTS BROUGHT ON RECORD ARE THAT NO DELIVERIES WERE EXCHA NGED FOR CARRYING OUT MONEY MARKET TRANSACTIONS BY THE ASSES SEE. IT IS NOTED THAT IN THE IDENTICAL CIRCUMSTANCES ITAT IN T HE CASE OF GROUP COMPANIES OF THE ASSESSEE NAMELY M/S. GROWMOR E LEASING INVESTMENT HELD THAT SUCH TRANSACTIONS WOUL D BE SPECULATED TRANSACTIONS BY OBSERVING AS UNDER: 5.4 WE HAVE HEARD BOTH SIDES IN DETAIL ON THIS PO INT. SHRI VIJAY MEHTA, THE LEARNED CHARTERED ACCOUNTANT APPEARING FOR THE ASSESSEE, HAS PLACED BEFORE US A COPY OF THE JUDGMENT IN SUIT NO.1 OF 2005 (O.S. TRANSFERRED SUIT NO.4018 OF 1995) DELIVERED ON 17.4.2007, BY THE SPECIAL COURT IN THE CASE OF CANBANK FINANCIAL SERVICES LIMITED VS. M/S.V.B.DESAI THE SUIT RAISED ISSUES RELATING TO THE NATURE OF LEGALITY OF FORWARD CONTRACT TRANSACTIONS IN GOVERNMENT SECURITIES. ISSUES NO.4 AND GROWMORE RESEARCH & ASSETS MGT. 6 5 FRAMED BY THE SPECIAL COURT ARE AS FOLLOWS:- '4. WHETHER THE SUIT TRANSACTIONS ARE PROHIBITED BY THE SECURITIES CONTRACT (REGULATION) ACT, 1956 AS A LLEGED IN PARA V OF THE WRITTEN STATEMENT? 5. WHETHER THE SUIT IS BASED ON AN ILLEGALITY AND I S LIABLE TO BE DISMISSED ON THAT GROUND AS ALLEGED IN PARA IV AND VI OF THE WRITTEN STATEMENT? 5.5 THE FINDING OF THE SPECIAL COURT ON THE ABOVE T WO ISSUES ARE EXTRACTED AS FOLLOWS:- 'IN MY OPINION, THEREFORE, THE FACT THAT UNITS OF M UTUAL FUNDS WERE INCLUDED IN THE DEFINITION OF THE TERM 'SECURITIES' BY AMENDING ACT CLEARLY, SHOWS THAT TH E UNITS OF THE MUTUAL FUNDS WERE NOT INCLUDED IN THAT DEFINITION BEFORE THE AMENDMENT. AS OBSERVED BY THE SUPREME COURT IN ITS JUDGMENT IN THE CASE OF R13! V S. PEERLESS GENERAL FINANCE AND INVESTMENT CO. LTD AIR 1987 SC 1023 THAT THE LEGISLATURES RESORT TO INCLUSIVE DEFINITIONS ALSO TO BRING UNDER ONE NOMENCLATURE ALL TRANSACTIONS POSSESSING CERTAIN SIMILAR FEATURES BUT GOING UNDER DIFFERENT NAMES. DEPENDING ON THE CONTEXT, IN THE PROCESS OF ENLARGI NG, THE DEFINITION MAY EVEN BECOME EXHAUSTIVE. IN MY OPINIO N, THEREFORE; THE WORD 'INCLUDE' IS USED IN SECTION 2( H), IN TRUTH AND SUBSTANCE, TO GIVE EXHAUSTIVE DEFINITION OF THE TERM 'SECURITIES' FOR THE PURPOSE OF SECURITIES CONTRACT ACT. THEREFORE, AS ON THE RELEVANT DATE TH E UNITS OF THE MUTUAL FUNDS WHICH WAS THE SUBJECT MATTER OF THE READY FORWARD TRANSACTION BETWEEN THE PARTIES WAS N OT SECURITIES WITHIN THE MEANING OF THE SECURITIES CON TRACT REGULATION ACT, THE TRANSACTION WAS NOT HIT BY THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT UNDER SECTION 16 AND THEREFORE, THE TRANSACTION CANNOT BE SAID TO BE AN ILLEGAL TRANSACTION AS IT WAS NOT PROHIBIT ED BY THE SECURITIES CONTRACT REGULATION ACT. ISSUES NOS. 4 & 5 ARE, THEREFORE, ANSWERED ACCORDINGLY.' 5.6 THUS, THE SPECIAL COURT HAS HELD THAT FORWARD TRANSACTIONS IN GOVERNMENT SECURITIES ARE NOT ILLEG AL. 5.7 THE CASE OF THE ASSESSEE HAS TO BE CONSIDERED I N THE LIGHT OF THE ABOVE JUDGMENT OF THE SPECIAL COUR T. THE CLAIM OF LOSS MADE BY THE ASSESSEE WAS .REJECTED BY THE GROWMORE RESEARCH & ASSETS MGT. 7 ASSESSING AUTHORITY ON THE GROUND THAT THE TRANSACT IONS ENTERED INTO BY THE ASSESSEE WERE ILLEGAL, AND THER EFORE, EXPENSES 'OR LOSSES RELATING TO ILLEGAL BUSINESS CA NNOT BE ALLOWED AS DEDUCTIONS. THE ASSESSEE WAS IN FACT DEALING IN FORWARD TRANSACTIONS OF GOVERNMENT SECUR ITIES. THE TRANSACTIONS WERE ENTERED THROUGH BROKERS. THE ASSESSEE ENTERS INTO AGREEMENT FOR FORWARD DELIVERY OF GOVERNMENT SECURITIES WITH ONE SET OF PARTIES THROU GH THE BROKER. IMMEDIATELY, THE ASSESSEE ALSO ENTERS INTO FORWARD PURCHASE OF GOVERNMENT SECURITIES FROM OTHER SET PA RTIES THROUGH THE BROKER. DELIVERY OF THE INSTRUMENTS IS NEVER TAKEN PLACE. THE TRANSACTIONS ARE FINALLY SETTLED O FF BY PAYING THE DIFFERENTIAL AMOUNT. THE TRANSACTIONS AR E SPECULATIVE TRANSACTIONS. THE ASSESSEE HAS ALSO SHO WN INCOME OUT OF SAME - SET OF TRANSACTIONS, WHICH IS MORE THAN THE LOSS DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ASSESSED THE PROFIT AS IN COME. BUT HE DECLINED TO ALLOW THE LOSS AS DEDUCTION ON T HE GROUND OF ILLEGALITY. 5.8. IN THE LIGHT OF THE JUDGMENT OF THE SPECIAL CO URT, AS MENTIONED ABOVE, IT IS TO BE HELD THAT THE FORWARD TRANSACTIONS ENTERED INTO BY THE ASSESSEE WERE NOT ILLEGAL. THEREFORE, THE LOSS CANNOT BE DISALLOWED ON THAT GR OUND. 3.8. THUS, FROM THE ABOVE ORDER IT IS CLEAR THAT SPECIA L COURT HAS HELD THAT THE FORWARD TRANSACTIONS IN GOVERNMEN T SECURITIES WERE NOT ILLEGAL. IT WAS FURTHER HELD TH AT THESE TRANSACTIONS WERE SPECULATIVE TRANSACTIONS. AS FAR AS RELIANCE PLACED BY LD. SPECIAL COUNSEL UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF M/S. APPOLLO TYRES LTD . (SUPRA) IS CONCERNED, IT IS NOTED THAT THE SAID JUDGMENT ME RELY ANALYSED THE SCOPE OF SECTION 73 WHEREIN EXPRESSION USED BY THE LEGISLATURE WAS SHARES. ON THE OTHER HAND, TH E EXPRESSION USED IN SECTION 43(5) IS NOT ONLY SHARES BUT SEC URITIES AS WELL. THIS DISTINCTION HAS BEEN VERY WELL ANALYSED BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ANZ GRINDLAYS BANK V. GROWMORE RESEARCH & ASSETS MGT. 8 DCIT (SUPRA) WHEREIN IT HAS BEEN HELD AFTER CONSIDE RING AFORESAID JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF APPOLLO TYRES LTD. (SUPRA) THAT TRANSACTIONS OF SAL E AND PURCHASE OF UNITS AND GOVERNMENT SECURITIES BY THE ASSESSEE THROUGH A BROKER WITHOUT EXCHANGE OF ACTUAL DELIVER Y WOULD FALL WITHIN THE SCOPE OF SPECULATIVE TRANSACTIONS A S DEFINED IN SECTION 43(5). THEREFORE, LOSS/PROFIT FROM SHARES M ARKET TRANSACTIONS CAN VERY WELL BE SET OFF/ADJUSTED AGAI NST LOSS/PROFIT OF MONEY MARKET TRANSACTIONS. THIS ISSU E HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY T HE TRIBUNAL IN THE CASE OF GROUP COMPANY OF THE ASSESSEE NAMELY M/S. GROWMORE LEASING INVESTMENT (SUPRA) AS DISCUSSED AB OVE ALSO. NO DISTINCTION HAS BEEN POINTED OUT ON FACTS OR LEGAL POSITION BY THE LD. SPECIAL COUNSEL OF THE REVENUE, THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. GROWMORE LEASING INVESTMENT (SUPRA) AS WELL AS ANZ GRINDLAYS BANK V. DCIT (SUPRA), WE FIND THAT THE CL AIM OF THE ASSESSEE IS ALLOWABLE. THEREFORE DISALLOWANCE MADE BY THE AO IS DIRECTED TO BE DELETED. THUS, GROUND NO.2 IS ALL OWED. 4. GROUND NO.3: IN THIS GROUND, THE ASSESSEE IS AGGRIEVED WITH THE ACTION OF LOWER AUTHORITIES IN MAKING TOWARDS M AINTENANCE OF ACCOUNTS. 4.1. THE BRIEF BACKGROUND IS THAT THIS DISALLOWANCE WAS MADE BY THE LOWER AUTHORITIES ON THE GROUND THAT THE ASS ESSEE WAS NOT ABLE TO PROVE RENDERING OF SERVICE WITH REGARD TO PAYMENT CLAIMED TO BE MADE TO ONE ABCD GROUP WHICH REFERS T O ACCOUNT BACKLOG CLEARANCE DEPARTMENT. DURING THE COURSE OF HEARING, LD. COUNSEL DREW OUR ATTENTION ON THE ACCO UNT OF THE GROWMORE RESEARCH & ASSETS MGT. 9 AFORESAID ABCD GROUP AND REQUESTED FOR DELETING THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES. 4.2. PER CONTRA, LD. SPECIAL COUNSEL SUBMITTED THAT THE ASSESSEE WAS NEITHER ABLE TO CONFIRM THE TRANSACTIO NS NOR ABLE TO PROVE RENDERING OF SERVICES. 4.3. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES AND SUBMISSIONS MADE BY BOTH THE SIDES BEFORE US. IT IS NOTED THAT THE ASSESSEE HAS CLAIMED THAT PAYM ENT WAS MADE TO THE SAID ABCD GROUP FOR CLEARING OF BACKLOG OF ACCOUNTING WORK. BUT, NEITHER THE ASSESSEE WAS ABLE TO SHOW THAT PAYMENT WAS MADE NOR THE ASSESSEE WAS ABLE TO SHOW ANYTHING TO PROVE RENDERING OF SERVICES BY THE PAYE E. THUS, IT COULD BE SUBSTANTIATED BY THE ASSESSEE THAT THIS AM OUNT WAS INCURRED FOR THE BUSINESS PURPOSE OF THE ASSESSEE; IF AT ALL THIS AMOUNT WAS GENUINELY PAID. THEREFORE, IN ABSENCE OF PROPER SUBSTANTIATION, THIS CLAIM IS FOUND TO BE NOT ALLOW ABLE. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER PAS SED BY THE LOWER AUTHORITIES ON THIS ISSUE. THIS GROUND IS REJ ECTED. 5. GROUND NO.4: THIS GROUND DEALS WITH THE ACTION OF LD. CIT(A) IN CONFIRMING DISALLOWANCE ON ACCOUNT OF DEP RECIATION AMOUNTING TO RS.2,25,000/-. 5.1. THE BRIEF BACKGROUND IS THAT THE DISALLOWANCE HAS BEEN MADE OF RS.2,25,000/- ON ACCOUNT OF DEPRECIATION ON THE COMPUTER PURCHASED DURING THE YEAR FOR RS.5,75,000/ - ON THE GROUND THAT USER OF THE COMPUTERS COULD NOT BE PROV ED BY THE ASSESSEE DURING THE YEAR BEFORE US. LD. CIT(A) UPHE LD THE ORDER OF THE AO. GROWMORE RESEARCH & ASSETS MGT. 10 5.2. DURING THE COURSE OF HEARING, IT WAS STATED BY THE LD. COUNSEL THAT COMPLETE EVIDENCES HAVE BEEN GIVEN FOR ACQUISITION AND INSTALLATION OF THE COMPUTER BUT TH ESE HAVE BEEN REJECTED AND DISALLOWANCE HAS BEEN MADE, WHERE AS IN THE FIRST ROUND, LD. CIT(A) HAD ALLOWED RELIEF TO THE A SSESSEE ON THIS GROUND. OUR ATTENTION WAS DRAWN ON THE VARIOUS EVIDENCES ENCLOSED IN THE PAPER BOOK IN THIS REGARD . 5.2. PER CONTRA, LD. SPECIAL COUNSEL RELIED UPON ORDER OF THE LOWER AUTHORITIES. 5.3. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES. IT IS NOTED THAT IN THE FIRST ROUND WH EN LD. CIT(A) HAD PASSED THE ORDER DATED 7 TH APRIL 1994, THEN RELIEF WAS ALLOWED ON THIS SCORE BY OBSERVING AS UNDER: REGARDING DEPRECIATION ON COMPUTER SYSTEM, THE APPELLANT HAS FILED COPY OF RECEIPT DATED 31.3.90 I SSUES BY ADM LTD. FOR PAYMENT OF RS.2,02,500/- ON 31.3.90 BY THE APPELLANT, AS ADVANCE PAYMENT FOR PURCHASE OF IDM SUMMIT MULTI USER UNIX SYSTEM & INFORMIX SOFTWARE A ND DELIVERY CHALLAN DATED 31.3.90, EVIDENCING THE DELI VERY OF THE SYSTEM BEFORE THE END OF THE PREVIOUS YEAR. IT WOULD APPEAR FROM THE ABOVE THAT THE APPELLANT HAD PLACED ORDER FOR COMPUTER SYSTEM ON 31.3.90 FOR WHICH ADVANCE PAYMENT WAS MADE AND THE DELIVERY OF THE SYSTEM WAS AFFECTED ON 31.3.90. IN VIEW OF THE ABOVE, THERE IS NO REASON TO REJECT THE CLAIM FOR DEPRECIATION ON THE COMPUTER. THE APPELLANT IS, THEREFORE, ENTITLED TO ALLOWANCE OF DEPRECIATION OF THE COMPUTER. 5.4. IT IS NOTED THAT GENUINENESS OF THE TRANSACTION HAS NOT BEEN DOUBTED AND INSTALLATION OF THE COMPUTER HAS A LSO NOT BEEN DOUBTED. THE RELIEF HAS BEEN GRANTED BY THE LD . CIT(A) IN THE FIRST ROUND WHICH HAS NOT BEEN ENDORSED BY THE LD. CIT(A) IN THE SECOND ROUND. GROWMORE RESEARCH & ASSETS MGT. 11 5.5. WE AGREE WITH THE LD. CIT(A) IN THE ORDER GIVEN IN THE FIRST ROUND THAT THERE WAS NO REASON TO DENY CLAIM OF DEP RECIATION ON THE COMPUTER. AFTER TAKING INTO ACCOUNT OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE AGREE WITH THE OBSERV ATION AND VIEWS GIVEN BY THE LD. CIT(A) IN THE FIRST ROUND AN D THEREFORE, DELETE THE DISALLOWANCE MADE BY THE AO IN THIS REGA RD. THUS, GROUND NO.4 IS ALLOWED. 6. GROUND NO.5: IN THIS GROUND THE ASSESSEE HAS PRAYED THAT ASSESSEE IS ENTITLED TO DEDUCTION ON ACCOUNT OF INT EREST PAYABLE TO THE BROKERAGE FIRMS. 6.1. DURING THE COURSE OF HEARING IT WAS SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2006-07 A ND 2007- 08 DATED 05.03.2015 IN ITA NO.517 & 5138/MUM/2012. 6.1. PER CONTRA, LD. SPECIAL COUNSEL DID NOT MAKE OUT A NY DISTINCTION ON FACTS OR LEGAL POSITION. IT IS NOTED THAT IN THE AFORESAID JUDGMENT, THE TRIBUNAL DECIDED THIS ISSUE AS UNDER: 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOWANCE OF INTEREST, WE FIND THAT THE LD. CIT( A) HAS FOLLOWED THE FINDINGS GIVEN IN THE CASE OF EMINENT HOLDINGS PVT. LTD. WE FIND THAT THE TRIBUNAL IN THE CASE OF EMINENT HOLDINGS IN ITA NOS. 2139, 2140 AND 2141/MUM/2013 HAVE FOLLOWED THE DECISION OF THE TRIBUNAL GIVEN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE OR DER AND RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) F OR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE FINDINGS O F THE CO- ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILES OF THE LD. CIT(A) FOR FRESH ADJUDICATION AFTER GIVING REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. BEFORE CLOSING THIS ISSUE, THE LD. COUNSEL FOR T HE GROWMORE RESEARCH & ASSETS MGT. 12 ASSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD T HAT THE ISSUE OF INTEREST EXPENDITURE IS PENDING BEFORE THE HONBLE SPECIAL COURT. IT IS THE SAY OF THE LD. COUNSEL THA T THE PROCEEDINGS IN WHICH THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY CONCLUDED WHICH FACT HAS ALREADY BEEN RECORDED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE, DIRECT THE LD. CIT(A ) TO CONSIDER THIS FACT WHILE DECIDING THE ISSUE AFRESH. THE LD. CIT(A) MAY ALSO DIRECT FOR THE TAXING OF INCOME IN THE HANDS OF THE RECIPIENT (FAMILY MEMBERS) IN ACCORDANCE WIT H THE METHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER TH E PROVISIONS OF THE LAW. GROUND NO. 4 IS TREATED AS A LLOWED FOR STATISTICAL PURPOSE. 6.2. DURING THE COURSE OF HEARING BEFORE US, NO DISTINC TION HAS BEEN MADE ON LAW AND FACTS. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID ORDER, WE SEND THIS ISSUE BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. LD. CIT(A) SHALL FO LLOW THE DIRECTIONS AS HAVE BEEN GIVEN IN THE AFORESAID ORDE R. THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PU RPOSES. 7. GROUND NO.6 & 7: THESE GROUNDS DEAL WITH THE LEVY FOR INTEREST U/S 234A, 234B, 234C OF THE ACT. 7.1. DURING THE COURSE OF HEARING, PRAYER MADE BY THE L D. COUNSEL OF ASSESSEE WAS THAT LEVY OF INTEREST IS MA NDATORY BUT COMPUTATION OF THE SAME NEEDS TO BE DONE PROPERLY A S PER LAW AND FACTS OF THIS CASE. IN THE ORDERS PASSED BY THE TRIBUNAL EARLIER, THIS ISSUE HAS BEEN SENT BACK TO THE FILE OF THE AO FOR PROPER COMPUTATION. WE FIND FORCE IN THE PRAYER MAD E BY THE LD. COUNSEL AND ACCORDINGLY HOLD THAT LEVY OF INTER EST IS CONSEQUENTIAL U/S 234A, 234B AND 234C; BUT RESTORE THIS ISSUE BACK TO THE FILE OF THE AO FOR COMPUTING THE INTEREST AFTER GROWMORE RESEARCH & ASSETS MGT. 13 GIVING CREDIT OF AMOUNT OF TDS AND AO SHALL FOLLOW THE DIRECTIONS AS HAVE BEEN GIVEN BY THE TRIBUNAL IN TH E CASE OF GROUP COMPANY NAMELY M/S. HARSH ESTATES PVT. LTD. V . ACIT (ITA NO.1035/MUM/2013 DATED 08.10.2014 WHICH READS AS UNDER: 6. SO FAR AS, CHARGING OF INTEREST U/S 234A, 234B AND 234C IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IT MAY BE SENT TO THE FILE OF THE LD . ASSESSING OFFICER. HOWEVER, THE LD. SPECIAL COUNSEL CONTENDED THAT THE LEVY OF INTEREST IS MANDATORY TH EREFORE IT SHOULD BE DECIDED AGAINST THE ASSESSEE. HOWEVER THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IT MAY BE S ENT TO THE ASSESSING OFFICER FOR ACTUAL CALCULATION PURPOS ES ONLY. AGREED, LEVY OF INTEREST IS MANDATORY AND SOMETIMES CONSEQUENTIAL DEPENDING UPON THE FACTS OF EACH CASE . WE NOTE THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN THE AFORESAID CASES THEREFORE FOLLOWING THE REASONING CONTAINED THEREIN, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTED THE INTEREST LIABILITY AFTER REDUCING TH E AMOUNT OF TAX DEDUCTABLE AT SOURCE AND DECIDE AS PER THE PROVISIONS OF LAW. WE DIRECT ACCORDINGLY, THUS, THI S GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7.2. THUS, THESE GROUNDS ARE SENT BACK TO THE FILE OF T HE AO WITH THE SAME DIRECTIONS AS GIVEN ABOVE AND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF HEARING. SD/- SD/ ( D.T. GARASIA ) ( ASHWANI TANEJA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28/02/2017 GROWMORE RESEARCH & ASSETS MGT. 14 CTX? P.S/. .. !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A)- , MUMBAI 5. #$% &' , &' ) , / DR, ITAT, MUMBAI 6. %*+ , / GUARD FILE. / BY ORDER, # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI GROWMORE RESEARCH & ASSETS MGT. 15 DATE INITIAL 1. DRAFT DICTATED ON 14.2.17 SR.PS 2. DRAFT PLACED BEFORE AUTHOR SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER