I.T.O Wd - 7(1),kolkata, Kolkata V. M/s Avro Commercial Company Limited., Kolkata

ITA 21/KOL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5023 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE JCITLD
• Keywords: Business income; Earning of tax free income; Source of fund; Deemed dividend
• Section: 143(3); 14A

Judgement Text

ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI N.V.VASUDEVAN, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 21/KOL/2013 A.Y 2009-10 I.T.O WARD 7(1), KOLKATA VS. M/S. AVRO COMMERCIAL COMPANY. LTD PAN: AAECA 1892M (APPELLANT) ( RESPONDENT) C.O NO. 28/KOL/2013 [ ARISING OUT OF ITA NO. 21/KOL/2013 A.Y 2009-10 M/S. AVRO COMMERCIAL COMPANY. LTD VS. I.T.O WARD 7(1), KOLKATA (CROSS OBJECTOR) (RESPONDENT/DEPARTMENT) FOR THE APPELLANT/DEPARTMENT: SHRI P INAKI MUKHERJEE, JCIT, LD.SR.DR FOR THE CROSS OBJECTOR/ASSESSEE: SHRI MANOJ KATARUKA, ADVOCATE, LD.AR DATE OF HEARING: 15-02-2016 DATE OF PRONOUNCEMENT: 09 -03 -2 016 ORDER SHRI M.BALAGANESH, AM BOTH THE APPEAL OF THE REVENUE AND CROSS OBJEC TION OF THE ASSESSEE ARE ARISING OUT OF THE ORDER OF THE LEARNED CIT(A)-VIII, KOLKAT A IN APPEAL NO. 99/CIT(A)- VIII/KOL/2011-12 DATED 30-08-2012 AGAINST THE ORD ER OF ASSESSMENT FRAMED BY THE LD.AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). 2. AS THE ISSUES INVOLVED ARE IDENTICAL IN THE AS SESSMENT YEAR UNDER APPEAL, BOTH THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF TH E ASSESSEE ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SA KE OF CONVENIENCE. 3. AT THE OUTSET, IT IS NOTICED THAT THERE IS A D ELAY OF 40 DAYS AND 11 DAYS IN FILING THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE BEFORE US. WITH THE ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 2 CONSENT OF BOTH THE PARTIES, BOTH THE DELAY IN FI LING THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE CONDONED, AND THE SAME ARE ADMITTED AND DISPOSED OFF AFTER PERUSING THE MATERIAL AVAILAB LE ON RECORD ON MERITS. 4. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER A SUM OF RS.1,09,15,000/- WOULD BE BROUGHT TO TAX AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE I.T ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE IS DERIVING ITS INCOME FROM SHARES , DEALING IN FUTURES AND OPTIONS AND INVES TMENTS. THE ASSESSEE HAS DECLARED BUSINESS INCOME OF RS. 69,462/- AND CLAIMED SPEC ULATIVE BUSINESS LOSS OF RS. 50,529/- AND SHORT TERM CAPITAL LOSS OF RS. 44,45, 967/-. THE LD. AO OBSERVED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.1,0915000/ ON DI FFERENT DATES FROM ITS GROUP COMPANY, M/S. JET AGE FINANCE PVT. LTD ( IN SHORT M /S. JAFPL). THE FOLLOWING FACTS ARE UNDISPUTED:- A. THE ASSESSEE IS HOLDING @11.81% SHARES OF M/S. JAFP L . B. THE ACCUMULATED PROFITS OF M/S. JAFPL AS ON 31-03 -2008 WAS RS.28,72,80,404/- AND AS ON 31-03-2009 WAS RS.31,6 6,33,101/-. 5.1 THE ASSESSEE TOOK THIS LOAN FOR VERY SHORT PERIOD OF TIME FROM M/S. JAFPL AND REPAID THE SAME BEFORE THE END OF THE PREVIOUS YEAR . BEFORE THE LD.AO, THE ASSESSEE ARGUED THAT M/S. JAFPL IS A NON BANKING FINANCIAL C OMPANY [ IN SHORT NBFC] AND HOLDING CERTIFICATE OF REGISTRATION FROM THE RBI. THE MAIN OBJECT OF THE COMPANY, I.E M/S. JAFPL IS MONEY LENDING BUSINESS AMONG OTHERS. A SUM OF RS. 66.22 LAKHS HAS BEEN DERIVED AS INTEREST INCOME BY M/S. JAFPL. M/S. JAFPL HAD DEPLOYED RS.18,82,80,249/- IN ITS MONEY LENDING BUSINESS O UT OF TOTAL LIQUID FUNDS AVAILABLE AT RS. 31,24,44, 463/-. IT WAS ARGUED THAT WHERE LEND ING IS MADE IN THE ORDINARY COURSE OF BUSINESS TO THE SHAREHOLDER AND WHERE LENDING IS ALSO SUBSTANTIAL PART OF THE BUSINESS OF THE LENDING COMPANY, THEN IT WOULD FALL UNDER TH E EXCEPTION CLAUSE OF SECTION ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 3 2(22)(E) OF THE I.T ACT. THE LD.AO OBSERVED THE FOL LOWING FROM THE INCOME CRITERIA OF THE ASSESSEE , WHICH IS TABULATED AS BELOW :- PARTICULARS OF INCOME AS ON 31/03/2009 AS ON 31/03/2008 1) SALE OF SHARES RS.8,84,01,687 NIL 2)INTEREST INCOME RS.66,21,789 RS.79,95,548 3)PROFIT ON SALE RS.2,26,59,650 RS.2,77,05,361 OF INVESTMENTS 4) OTHER INCOME RS.1,33,05,036 (RS.94,60,872) 5.2 ACCORDING TO THE LD.AO, THE TOTAL INCOME OF THE ASSESSEE IS RS.3.59 CRORES AND OUT OF WHICH INTEREST INCOME IS ONLY RS.66 LAKHS, WHICH IS NOT EVEN 20% OF THE TOTAL INCOME. BASED ON THIS, HE CONCLUDED FROM THE INCO ME CRITERION, THAT LENDING IS NOT SUBSTANTIAL PART OF BUSINESS OF THE LENDING COMPANY , M/S. JAFPL. 5.3. THE LD. AO OBSERVED THE FOLLOWING FROM FUNDS DEPLOYMENT CRITERION, WHICH IS TABULATED AS BELOW:- PARTICULARS AS ON 31/03/2009 AS ON 31/03/2008 1) CAPITAL RS.36,50,26,678 RS.33,89,87,440 2) INVESTMENTS RS. 33,40,66,614 RS.25,28,44,997 3) % AGE OF TOTAL CAPITAL 91.5% 74.58% 4) LOAN & ADVANCE RS.1,83,47,769 RS. 74,578 5) % AGE OF TOTAL CAPITAL 5% 22% 5.4 THE LD.AO OBSERVED THAT M/S. JAFPL DESPITE M AKING GOOD PROFITS HAS NOT CHOSEN TO DECLARE DIVIDEND FOR SO MANY YEARS. THE L D.AO OBSERVED THAT IN THIS SCENARIO GRANTING OF LOANS TO THE ASSESSEE BEING SHAREHOLDER WITHOUT DECLARING DIVIDENDS NEED TO BE CONSTRUED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT GOING BY THE REAL INTENTION OF THE SAID PROVISION. ON THE 1 ST APPEAL, THE LD.CIT(A) APPRECIATED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITION AS MADE BY TH E LD.AO ON THIS ISSUE. AGGRIEVED ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 4 THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS ALSO FILED CROSS OBJECTION FOR ITS ALTERNATIVE CLAIM. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PAPER BOOK AS FILED BY THE ASS ESSEE BEFORE US. AT THE OUTSET, IT WOULD BE PERTINENT TO REPRODUCE THE PROVISIONS OF S ECTION 2(22)(E) OF THE ACT:- (22) DIVIDEND INCLUDES- ( A) TO (D) *** *** *** *** (E) ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WH ETHER AS REPRESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE)[MADE AFTER THE 31ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER', BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVID END WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHIC H SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBS TANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID C ONCERN)] OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE I NDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS' ; BUT 'DIVIDEND' DOES NOT INCLUDE- (I) A DISTRIBUTION MADE IN ACCORDANCE WITH SUB-CLAU SE (C) OR SUB- CLAUSE (D) IN RESPECT OF ANY SHARE ISSUED FOR FULL CASH CONSIDERATION , WHERE THE HOLDER OF THE SHARE IS NOT ENTITLED IN THE EVENT OF LIQUIDATION TO PARTICIPATE IN THE SURPLUS ASSETS; '[(IA) A DISTRIBUTION MADE IN ACCORDANCE WITH SUB-C LAUSE (C) OR SUB- CLAUSE (D) IN SO FAR AS SUCH DISTRIBUTION IS ATTRIB UTABLE TO THE CAPITALISED PROFITS OF THE COMPANY REPRESENTING BON US SHARES ALLOTTED TO ITS EQUITY SHAREHOLDERS AFTER THE 31ST DAY OF MARCH, 1964, [ AND BEFORE THE 1 ST DAY OF APRIL, 1965] ;] (II) ANY ADVANCE OR LOAN MADE TO A SHAREHOLDER [ OR THE SAID CONCERN] BY A COMPANY IN THE ORDINARY COURSE OF ITS BUSINESS , WHERE THE LENDING OF MONEY IS A SUBSTANTIAL PART OF THE BUSIN ESS OF THE ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 5 COMPANY; 7. WE FIND THAT THE EXPRESSION SUBSTANTIAL PART OF THE BUSINESS HAS NOT BEEN DEFINED IN THE INCOME-TAX ACT. IN GENERAL PARLANCE , THE DICTIONARY MEANING CAN BE ADOPTED FOR THE MEANING OF THE WORD SUBSTANTIAL AND AS PER ENGLISH OXFORD SHORTER DICTIONARY THE WORD SUBSTANTIAL MEANS OF SOLID M ATERIAL OR STRUCTURE, STOUT, HEAVY, AMPLE AND NOURISHING; LARGE, HEAVY; OF AMPLE O R CONSIDERABLE AMOUNT OR SIZE; SIZEABLE, FAIRLY LARGE; HAVING FORCE OR EFFECT. WE FIND THAT M/S. JAFPL I.E THE LENDING COMPANY WAS INCORPORATED ON 18-02-1994 AND THE RESE RVE BANK OF INDIA [RBI] GRANTED CERTIFICATE OF REGISTRATION AS A NON- BANK ING FINANCIAL COMPANY [ IN SHORT NBFC] ON 7-3-1998. IT IS NOT IN DISPUTE THAT M/S . JAFPL, BEING A NBFC, IS ENGAGED IN THE BUSINESS OF GRANTING LOANS AND ADVA NCES, ACQUISITION OF SHARES, STOCKS, BONDS, DEBENTURES, SECURITIES ISSUED BY THE GOVERNM ENT OR LOCAL AUTHORITIES OR OTHER SECURITIES LIKE MARKETABLE NATURE. WE ALSO FIND FRO M THE TAX AUDIT REPORT IN FORM NO.3CD OF M/S. JAFPL FOR THE ASSESSMENT YEAR 2009-1 0, THE TAX AUDITOR HAD MENTIONED THE NATURE OF BUSINESS AS INVESTMENT, FI NANCE ACTIVITIES AND TRADING IN SHARES. WE FIND FROM THE PAPER BOOK THAT THERE AR E ONLY TWO SOURCES OF INCOME OF M/S. JAFPL, ONE BEING FROM INVESTMENT IN SHARES AND OTHER FROM GIVING LOANS AND ADVANCES. IT IS TO BE SEEN NOW THAT WHETHER THE L OANS AND ADVANCES HAVE BEEN GIVEN TO THE ASSESSEE BY M/S. JAFPL IN THE ORDINARY COURSE O F ITS BUSINESS AND WHETHER THE LENDING OF MONEY IS A SUBSTANTIAL PART OF ITS BUSIN ESS IN VIEW OF THE FACT THAT SUBSTANTIAL PART OF THE BUSINESS IS NOT DEFINED I N THE I.T ACT, DICTIONARY MEANING AND FACTORS SUCH AS THE CAPITAL EMPLOYED, INCOME CRITE RION, PAST HISTORY, HAVE TO BE TAKEN INTO CONSIDERATION FOR DETERMINING THE NATURE. WE FIND FROM PAGE 70 OF THE PAPER BOOK THAT M/S. JAFPL HAD GRANTED LOANS AND ADVANCES DUR ING THE YEAR UNDER CONSIDERATION TO ITS VARIOUS PARTIES INCLUDING THE ASSESSEE AMOU NTING TO RS.11,26,65,003/- WHICH IS MORE THAN 30% OF CAPITAL EMPLOYED BY M/S. JAFPL. WE FIND FROM PAGE NO. 88 OF THE ASSESSEES PAPER BOOK CONTAINING THE LEDGER ACCOUNT OF M/S. JAFPL IN ITS BOOKS OF ASSESSEE THAT THE ASSESSEE HAS BEEN FREQUENTLY RECE IVING AND REPAYING MONIES FROM/TO ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 6 M/S. JAFPL. IT WAS EFFECTIVELY OPERATED ON CURRENT ACCOUNT BASIS. WE ALSO FIND FROM PAGE 38 OF THE PAPER BOOK CONTAINING THE TAX AUDIT REPORT ( IN FORM NO. 3CD) OF M/S. JAFPL, WHEREIN THE TAX AUDITOR HAS STATED THAT M/S. JAFPL HAS STARTED TRADING IN SHARES IN ASSESSMENT YEAR 2009-10 AS A NEW BUSINES S ACTIVITY. 8. WE FIND THAT THE EXPRESSION SUBSTANTIAL PART OF BUSINESS HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT REGARDING APPLICAB ILITY OF PROVISIONS OF SECTION 2(22)(E) IN THE CASE OF CIT VS. PARLE PLASTICS LIMITED & ANR REPORTED IN (2 011) 332 ITR 63 (BOM) . THE HONBLE BOMBAY HIGH COURT HAS HELD AS UNDER: - 11. THE EXPRESSION USED UNDER CL. (II) OF S. 2(22) IS 'SUBSTANTIAL PART OF THE BUSINESS'. WE WOULD, THEREFORE, HAVE TO ASCERTAIN T HE MEANING OF THE WORD 'SUBSTANTIAL', APPEARING IN THE EXPRESSION 'SUBSTAN TIAL PART OF THE BUSINESS'. STROUD'S JUDICIAL DICTIONARY, FIFTH EDIT ION, GIVES THE FIRST MEANING OF WORD 'SUBSTANTIAL' AS 'A WORD OF NO FIXE D MEANING, IT IS AN UNSATISFACTORY MEDIUM FOR CARRYING THE IDEA OF SOME ASCERTAINABLE PROPORTION OF THE WHOLE'. THE DECISION OF TERRY'S M OTORS LT. VS. RINDER (1948) S.A.S.R. 167 IS GIVEN IN SUPPORT OF THIS MEA NING. IN THE MEANING NO. 8, WHILE CONSIDERING 'SUBSTANTIAL AMOUNT', IT IS ST ATED THAT OUT OF A RENT OF 80 PER ANNUM, 13 PER ANNUM ATTRIBUTABLE TO THE AM OUNT PAID FOR FURNITURE, WAS A SUBSTANTIAL AMOUNT, ON THE BASIS O F THE DECISION IN MACLAY VS. DIXON 170 L.T. 49. IN MEANING NO. 15, RELYING U PON THE DECISION OF LADBROOKE (FOOTBALL) VS. WILLIAM HILL (FOOTBALL) (1 964) 1 W.L.R. 273, IT IS SAID THAT IN DECIDING WHETHER THE REPRODUCED PART O F COPYRIGHT MATERIAL IS A 'SUBSTANTIAL' PART OF THE WHOLE, IT IS THE QUALITY RATHER THAN THE QUANTITY OF THE PART THAT SHOULD BE CONSIDERED. BLACK'S LAW DIC TIONARY, SIXTH EDITION DEFINES THE WORD 'SUBSTANTIAL' AS 'OF REAL WORTH AN D IMPORTANCE; OF CONSIDERABLE VALUE; VALUABLE; BELONGING TO SUBSTANC E; ACTUALLY EXISTING; REAL; NOT SEEMING OR IMAGINARY; NOT ILLUSIVE; SOLID ; TRUE; VERITABLE. SOMETHING WORTHWHILE AS DISTINGUISHED FROM SOMETHIN G WITHOUT VALUE OR MERELY NOMINAL.' NO DECISION WAS CITED BEFORE US WH EREIN A VIEW HAS BEEN TAKEN THAT IN ORDER TO SHOW THAT A PART OR THE WHOL E TO BE TREATED AS 'SUBSTANTIAL PART', THE PART MUST EXCEED 50 PER CEN T OF THE WHOLE. IN OUR VIEW, THE EXPRESSION 'SUBSTANTIAL PART' DOES NOT CO NNOTE AN IDEA OF BEING THE 'MAJOR PART' OR THE PART THAT CONSTITUTES MAJO RITY OF THE WHOLE. IF THE LEGISLATURE REALLY INTENDED THAT MORE THAN 50 PER C ENT OF THE BUSINESS OF THE LENDING COMPANY MUST COME FROM THE BUSINESS OF LEND ING, NOTHING PREVENTED THE LEGISLATURE FROM USING THE EXPRESSION 'MAJORITY OF BUSINESS'. IF THE LEGISLATURE AT ALL INTENDED THAT A PARTICULA R MINIMUM PERCENTAGE OF ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 7 THE BUSINESS OF A LENDING COMPANY SHOULD COME FROM THE BUSINESS OF LENDING, THE LEGISLATURE COULD HAVE SPECIFICALLY PR OVIDED FOR THAT PERCENTAGE WHILE DRAFTING CL.(II) OF S.2(22) OF THE ACT. THE LEGISLATURE HAD DELIBERATELY USED THE WORD SUBSTANTIAL INSTEAD OF USING THE WO RD 'MAJOR' AND/OR SPECIFYING ANY PERCENTAGE OF THE BUSINESS OR PROFIT TO BE COMING FROM THE LENDING BUSINESS OF THE LENDING COMPANY FOR THE PUR POSE OF CL. (II) OF S. 2(22) OF THE ACT. WE WOULD GIVE A AN ILLUSTRATION T O ASCERTAIN THE MEANING OF THE EXPRESSION 'SUBSTANTIAL BUSINESS' OR 'SUBSTA NTIAL INCOME' OF A COMPANY. IN THE MODERN DAYS, LARGE NUMBER OF COMPAN IES DO NOT RESTRICT TO ONE OR TWO BUSINESSES. THEY CARRY ON NUMEROUS ACTIV ITIES AND CARRY ON NUMEROUS BUSINESSES AND HAVE NUMEROUS BUSINESS DIVI SIONS. LET US TAKE A CASE OF A FIRST COMPANY WHICH HAS 3 DIVISIONS OF WO RKS CONSISTING OF THREE DIFFERENT TYPES OF BUSINESS. TURNOVER AS WELL AS TH E PROFIT OF THE FIRST DIVISION IS 40 PER CENT; TURNOVER AND PROFIT OF SEC OND DIVISION IS 30 PER CENT AND THE TURNOVER AND PROFIT OF THE THIRD LINE OF B USINESS IS 30 PER CENT. IN THE CASE OF THIS COMPANY NO PART OF THE BUSINESS HA S TURNOVER EXCEEDING 50 PER CENT AND NO PART OF THE BUSINESS COMPANY GENER ATES PROFIT OF MORE THAN 50 PER CENT OF THE TOTAL. IN SUCH A CASE CAN IT B E SAID THAT NONE OF THE BUSINESS OF THE SAID COMPANY IS A SUBSTANTIAL BUSIN ESS OF THE COMPANY. IN OUR VIEW NOW. THE FIRST BUSINESS WHICH CONSTITUTES 40 PER CENT OF THE TURNOVER AND CONTRIBUTES 40 PER CENT TO THE PROFIT WOULD BE THE SINGLE LARGEST PART OF THE BUSINESS OF THE COMPANY, THE SECOND AND THIRD DIVISIONS OF THE BUSINESS, EACH OF WHICH CONTRIBUTES 30 PER CENT OF THE TURNOVER AS WELL AS PROFIT OF THE COMPANY, THOUGH NOT THE MAJOR AND NOT EVEN SINGLE LARGEST PART OF THE BUSINESS OF THE COMPANY, WOULD STILL BE A SUBSTANTIAL PART OF THE BUSINESS OF THE COMPANY, BECAUSE IF ANY PART OF THE THREE DIVISIONS OF THE BUSINESS OF THE COMPANY WAS TO BE CLOSED DOWN, THAT WOULD RESULT IN LOSS OF TURNOVER AND/OR BUSINESS OF 30 PE R CENT, ORDINARILY NO COMPANY WOULD REGARD SUCH PART OF THE BUSINESS AS INSIGNIFICANT. AS RIGHTLY OBSERVED IN STROUDS JUDICIAL DICTIONARY, IT IS NO T POSSIBLE TO GIVE ANY FIXED DEFINITION OF THE WORD SUBSTANTIAL IN RELATION TO A A SUBSTANTIAL BUSINESS OF A COMPANY. ANY BUSINESS OF A COMPANY WHICH THE COMPANY DOES NOT REGARD AS SMALL, TRIVIAL OR INCONSEQUENTIAL AS COM PARED TO THE WHOLE OF THE BUSINESS IS SUBSTANTIAL BUSINESS. VARIOUS FACTORS AND CIRCUMSTANCES WOULD BE REQUIRED TO BE LOOKED INTO WHILE CONSIDERING WHETHER A PART OF THE BUSINESS OF A COMPANY IS ITS SUBSTANTIAL BUSINESS. SOMETIMES A PORTION WHICH CONTRIBUTES SUBSTANTIAL PART OF THE TURNOVER , THOUGH IT CONTRIBUTES A RELATIVELY SMALL PORTION OF THE PROFIT, WOULD BE SU BSTANTIAL PART OF THE BUSINESS. SIMILARLY, A PORTION WHICH RELATIVELY SMA LL AS COMPARED TO THE TOTAL TURNOVER, BUT GENERATES LARGE, SAY MORE THAN 50 PER CENT OF THE TOTAL PROFIT OF THE COMPANY WOULD ALSO BE SUBSTANTIAL PA RT OF ITS BUSINESS. PERCENTAGE OF TURNOVER IN RELATION TO THE WHOLE AS ALSO THE PERCENTAGE OF THE PROFIT IN RELATION TO THE WHOLE AND SOMETIMES EVEN PERCENTAGE OF A ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 8 MANPOWER USED FOR A PARTICULAR PART OF BUSINESS IN RELATION TO THE TOTAL MANPOWER OR WORKING FORCE OF THE COMPANY WOULD BE REQUIRED TO BE TAKEN INTO CONSIDERATION. EMPLOYEES OF A COMPANY ARE NOW CALLED ITS HUMAN RESOURCES AND, THEREFORE, THE PERCENTAGE OF HUMAN RESOURCES USED BY THE COMPANY FOR CARRYING ON A PARTICULAR DIVISION O F BUSINESS MAY ALSO BE REQUIRED TO BE TAKEN INTO CONSIDERATION WHILE CONSI DERING WHETHER A PARTICULAR BUSINESS FORMS SUBSTANTIAL PART OF ITS BUSINESS. THE LD.AR SUBMITTED THAT THE MARKET FOR LOANS AND ADVANCES AND INVESTMENT IN SHARES VARY FROM YEAR TO YEAR. M/S. JAFPL, A NBFC, WHICH HAS OWN CAPITAL OF AROUND RS. 36 CRORES AND HAS INVESTED ITS MONEY IN BONDS, ST OCKS, DEBENTURES ETC. AND GIVING OF LOANS AND ADVANCES, WHICH IS BEST SUITED FOR ITS GR OWTH OPENING APPARATUS. HE ARGUED THAT MONEY MARKET BY GRANTING OF LOANS AND ADVANCE S IN THE FORM OF INTER CORPORATE DEPOSITS ON SHORT TERM AS IN LONG TERM BASIS MAY O R MAY NOT BE LUCRATIVE IN A PARTICULAR YEAR. THEREFORE, THE FUNDS ARE TO BE PUT UNDER BET TER OPTION SUCH AS IN INVESTMENT, MUTUAL FUNDS AND SHARES WITH AN EXPECTATION TO Y IELD BETTER RESULTS. HE FURTHER ARGUED THAT THERE IS NO DOUBT THAT DURING THE YEAR, M/S. JAFPL HAS A CURRENT ADVANCE AMOUNT OF RS. 11 CRORES AND TOTAL DEPLOYMENT OF FUND IN TH E LOANS AND ADVANCES WAS MUCH MORE THAN THAT AS PER THE STATEMENT FILED AND THESE FIGURES INDICATE THAT SUBSTANTIAL PART OF THE BUSINESS OF THE LENDING COMPANY IS OF MONEY LENDING. HE FURTHER ARGUED THAT IT DOES NOT MATTER WHETHER THE ADVANCES HAVE BEEN REF UNDED DURING THE YEAR AND BALANCE OF LOANS AND ADVANCES AT THE END OF THE YEAR HAD GO T REDUCED. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD.AR. WE HOLD THAT WHAT HAS T O BE SEEN IS THE NATURE OF THE LENDING COMPANYS BUSINESS AND ANALYSIS OF DEPLOYM ENT OF FUNDS DURING THE YEAR AND ALSO IN PREVIOUS YEARS AND INTENTION OF THE PARTY. WE HOLD THAT BY SEEING THE BALANCE SHEET AT THE END OF THE YEAR, WHICH ONLY REFLECTS T HE FINANCIAL STATUS OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ALL THROUGHOUT THE YEAR , BUT WHAT HAS TO BE SEEN IS THE ACTUAL PICTURE AND AFFAIRS OF THE LENDING COMPANY TO DETE RMINE THE CORRECT NATURE OF BUSINESS. WE DRAW SUPPORT FROM THE DECISION OF TH E HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RAVI AGARWAL VS. ACIT REPORTED IN (201 5) 64 TAXMANN.COM 31 (ALL.) VIDE ORDER DATED 8-10-2015 , WHEREIN IT HAS BEEN HELD AS BELOW :- ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 9 11 WE ARE OF THE OPINION THAT IT IS NOT POSSIBLE TO GIVE A FIXED DEFINITION OF THE WORD 'SUBSTANTIAL' IN RELATION TO A SUBSTANT IAL BUSINESS OF A COMPANY. WE ARE OF THE OPINION THAT ANY BUSINESS OF A COMPANY WHICH IS NOT TRIVIAL OR INCONSEQUENTIAL AS COMPARED TO THE W HOLE OF THE BUSINESS WOULD BE TERMED AS SUBSTANTIAL PART OF THE BUSINESS . IN THE INSTANT CASE, THE ASSESSING OFFICER HAS HELD THAT THE BUSINESS OF GIV ING LOANS AND ADVANCES BY SARNATH FINANCE COMPANY CONSTITUTED LESS THAN 20% O F THE TOTAL INVESTMENT AND, THEREFORE, THE SAME IS NOT A SUBSTANTIAL PART OF THE BUSINESS OF THE COMPANY. IN OUR VIEW, SUCH REASONING IS PER SE MISC ONCEIVED. 12. WE FIND FROM A PERUSAL OF THE ORDER OF THE TRIB UNAL THAT SARNATH FINANCE CO. IS ADMITTEDLY ENGAGED IN THE BUSINESS O F LOANS AND ADVANCES, AS IS CLEAR FROM THE MEMORANDUM OF ASSOCIATION. THE TRIBUNAL PICKS HOLES FROM THE BALANCE SHEET OF THE SARNATH FINANCE CO. C ONTENDING THAT UNDER THE HEADING 'LOANS AND ADVANCES' THE COMPANY HAD MA DE SUB GROUPS, NAMELY, 'LOANS AND ADVANCES' AND 'STOCKS ON HIRE IN CLUDING HIRE PURCHASE'. THE TRIBUNAL, THEREFORE, CONCLUDED THAT A SUBSTANTIAL PART OF THE BUSINESS OF THE SAID FINANCE COMPANY WAS HIRE PURCH ASE. IN OUR VIEW, THE TRIBUNAL HAS SIDE TRACKED THE ISSUE WITHOUT REALISI NG THAT 'STOCKS ON HIRE' WAS ALSO SHOWN UNDER THE HEADING OF 'LOANS AND ADVA NCES' IN THE BALANCE SHEET OF THE FINANCE COMPANY. THE BREAK UP OF DIFFE RENT KINDS OF LOANS AND ADVANCES INDICATED BY THE SAID FINANCE COMPANY IN I TS BALANCE SHEET WAS FOR ITS CONVENIENCE. THE FACT REMAINS THAT THE FINA NCE COMPANY WAS SUBSTANTIALLY CARRYING ON THE BUSINESS OF LENDING M ONEY WHICH WAS ITS MAIN BUSINESS. 8.1 FROM THE AFORESAID DECISION, WE FIND THAT THE HONBLE ALLAHABAD HIGH COURT HAD HELD THAT THE INCOME AND FUNDS DEPLOYED EVEN I F IT IS LESS THAN 20% OF THE TOTAL INVESTMENT WOULD STILL BE CONSTRUED AS SUBSTANTIA L PART OF BUSINESS OF THE COMPANY. WE ALSO DRAW SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH OF THE DELHI TRIBUNAL IN THE CASE OF MRS. REKHA MODI VS. ITO IN ITA NO. 821/DEL/04 DATED 19-01- 2007, WHEREIN THE DELHI TRIBUNAL HELD THAT 20% CRITERION SHALL BE RELEVANT TO DETERMINE THE SUBSTANTIAL PART OF THE BUSINESS IN THE CONTE XT OF SECTION 2(22)(E) OF THE ACT. FURTHER, WE DRAW SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH OF ITAT LUCKNOW IN THE CASE OF DCIT VS. KISHORILAL AGARWAL REPORTED IN (2014) 150 ITD 741(LUCKNOW) , WHEREIN IT HAS BEEN HELD AS FOLLOWS:- ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 10 14. IN THE LIGHT OF AFORESAID JUDICIAL PRONOUNCEME NT, WE HAVE EXAMINED THE FACTS OF THE CASE IN HAND AND WE ARE OF THE VIE W THAT THERE SHOULD NOT BE ANY CONTROVERSY THAT 'SUBSTANTIAL PART OF BUSINE SS' IS NOT EQUIVALENT TO THE WORD 'MAJOR PART OF BUSINESS', AS THE LEGISLATU RE HAS NOT USED THE WORDS 'MAJOR PART OF BUSINESS' IN PLACE OF 'SUBSTAN TIAL PART OF BUSINESS'. HAD IT BEEN USED, THEN IT WOULD HAVE TO BE EXAMINED THAT ASSESSEE'S BUSINESS SHOULD BE MORE THAN 50% IN THAT PARTICULAR ACTIVITY. BUT THE LEGISLATURE HAS CONSCIOUSLY USED THE WORDS 'SUBSTAN TIAL PART OF BUSINESS' WHICH MEANS THAT ANY BUSINESS OF A COMPANY WHICH TH E COMPANY DOES NOT REGARD AS SMALL, TRIVIAL, OR INCONSEQUENTIAL AS COM PARED TO THE WHOLE OF THE BUSINESS IS SUBSTANTIAL BUSINESS. THEREFORE, IF PARTICULAR PERCENT OF CAPITAL OF THE COMPANY IS EMPLOYED IN THE MONEY LEN DING BUSINESS, THE COMPANY CAN BE CALLED TO HAVE SUBSTANTIAL PART OF B USINESS IN MONEY LENDING. IN THE LIGHT OF EXPLANATION 3(B) BELOW SEC TION 2(22)(E) OF THE ACT, WHERE A PERSON SHALL BE DEEMED TO HAVE A SUBSTANTIA L INTEREST IN A CONCERN, OTHER THAN A COMPANY, IF HE IS, AT ANY TIM E DURING THE PREVIOUS YEAR, BENEFICIALLY ENTITLED TO NOT LESS THAN TWENTY PER CENT OF THE INCOME OF THAT CONCERN AND THE ORDER OF THE TRIBUNAL IN THE C ASE OF MRS REKHA MODI VS. INCOME OFFICER, NEW DELHI (SUPRA) AND OTHER JUD GMENT OF THE HON'BLE HIGH COURT, WE ARE OF THE VIEW THAT IF 20% OF THE C APITAL OF THE COMPANY IS DEPLOYED IN MONEY LENDING BUSINESS OF THE COMPANY, THE COMPANY SHALL BE HELD TO HAVE A SUBSTANTIAL PART OF BUSINESS IN MONE Y LENDING. 8.2 WE ALSO PLACE OUR RELIANCE ON THE DECISION OF T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JAYANT H. MODI REPORTED IN ( 2015) 232 TAXMAN 0337 (BOM.) , WHEREIN IT HAS BEEN HELD AS BELOW:- 7. THE TRIBUNAL ALSO REFERRED TO THE ASSESSMENT OR DER IN THE CASE OF M/S. JMC SECURITIES PVT. LTD FOR THE YEAR UNDE R CONSIDERATION, NAMELY 2006-07, WHEREIN THE NATURE OF THE BUSINESS OF THAT COMPANY WAS INDICATED AS FINANCE. THE COMPANY CONTI NUED IN THE BUSINESS OF SHORT TERM FINANCE OF IDLE FUNDS. M/S. JMC SECURITIES PVT. LTD. DURING THE YEAR UNDER CONSIDERATION, EARN ED INTEREST INCOME TO THE TUNE OF RS.9,16,088/- WHICH CONSTITUT ED ABOUT 70% OF ITS TOTAL BUSINESS INCOME AMOUNTING TO RS.13,04,088 /-. THE MAXIMUM AMOUNT OF LOAN ADVANCED BY THE COMPANY DURI NG THE YEAR UNDER CONSIDERATION WAS TO THE TUNE OF RS. 95, 45,000/-. THAT CONSTITUTED 32% OF THE TOTAL FUNDS AVAILABLE WITH T HE SAID COMPANY. IN THESE CIRCUMSTANCES, THE TRIBUNAL CONCLUDED THAT THAT THE LENDING OF MONEY IS A SUBSTANTIAL PART OF THE BUSI NESS OF M/S. JMC SECURITIES PVT. LTD. THE ADDITION MADE BY THE ASSES SING OFFICER AND SUSTAINED BY THE COMMISSIONER WAS NOT VALID AND LEG AL, ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 11 PARTICULARLY IN THE BACKGROUND FACTS. IN THE LIGHT OF THE UNDISPUTED FACTUAL POSITION, WE ARE OF THE VIEW THAT THE TRIBU NAL'S ORDER IS CORRECT AND RELIANCE PLACED BY IT ON THE DIVISION B ENCH JUDGMENT OF THIS COURT IS NOT MISPLACED. 8.3 FROM THE DETAILS AVAILABLE AS PER RECORDS, WE FIND THAT THE LIQUID FUNDS AVAILABLE WITH THE ASSESSEE WERE RS.31,24,44,463/- AND ASSESS EE HAD GRANTED LOANS DURING THE YEAR AMOUNTING TO RS.11,26,65,003/-, WHICH WORKS OU T TO 36.06% OF TOTAL LIQUID FUNDS AVAILABLE. HENCE, IT CAN BE SAFELY CONCLUDED THAT T HE LENDING ACTIVITY IS SUBSTANTIAL PART OF THE BUSINESS OF M/S. JAFPL FROM THE FACTUAL POSI TION AS STATED HEREIN ABOVE FROM THE ANGLE OF FUNDS DEPLOYMENT CRITERION. 8.4. THE LD. AR FOR THE ASSESSEE ALSO MADE AN ALTER NATIVE ARGUMENT THAT WHAT WAS RECEIVED BY THE ASSESSEE FROM M/S. JAFPL IS ONLY IN THE NATURE OF INTER CORPORATE DEPOSITS AND NOT LOANS AND ADVANCES. HENCE, THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE MADE APPLICABLE IN THE FACTS OF THE CASE. HE ALSO ARGUED THAT M/S. JAFPL HAD SHOWN INTEREST INCOME AS INTEREST RECEI VED ON INTER CORPORATE DEPOSITS IN ITS BOOKS. HE STATED THAT TERMS LOAN, ADVANCE AND DEPOSIT ARE DISTINCT AND SEPARATE, IN SUPPORT OF THIS PROPOSITION, HE PLACED HIS RELIANCE ON THE FOLLOWING DECISIONS:- 1) ITAT MUMBAI IN THE CASE OF OIL INDUSTRIES VS. DCIT REPORTED IN 28 SOT 383(MUM.TRIB) 2) ITAT KOLKATA IN THE CASE OF IFB AGRO INDUSTRIES VS. DCIT REPORTED IN 63 SOT 207 (KOL.TRIB). 3) ITAT KOLKATA IN THE CASE OF DCIT VS. P.C CHANDRA H OLDINGS P.LTD IN 38 CCH 115(KOL.TRIB) 8.5 HE ARGUED THAT IN ALL THESE AFORESAID DECISION S THE EXPRESSION LOANS, ADVANCES AND DEPOSITS HAVE BEEN DISTINGUISHED. IT HAS ALSO BEEN HELD THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT CANNOT BE MADE APPLICABLE FOR INTER CORPORATE DEPOSITS AS RECEIVED BY THE ASSESSEE. HE ALSO ARGUED THAT M/S. JAFPL IN THE ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 12 INSTANT CASE HAS GOT NO BORROWINGS AND HAS GOT OWN FUNDS OF RS. 10.45 CRORES. ACCORDINGLY, IT HAD CHOSEN TO PLACE DEPOSITS WITH T HE ASSESSEEE. 8.6 IN VIEW OF ABOVE, WE FURTHER FIND LOT OF FORCE IN THE ALTERNATIVE ARGUMENT OF THE LD. AR OF THE ASSESSEE AND THE DECISIONS AS RELIED UPON BY HIM BEFORE US. IN VIEW OF THE AFORESAID FINDINGS AND JUDICIAL PRECEDENTS REL IED UPON HEREIN ABOVE IN RESPECT OF EXPRESSION SUBSTANTIAL PART OF THE BUSINESS AND T HE ALTERNATIVE ARGUMENT OF THE ASSESSEE, WE HOLD THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE U/S. 2(22)(E) OF THE ACT. ACCORDINGLY, THE GROUND NOS. 1 ,2 & 3 U/S. 2(22) (E) OF THE ACT AS RAISED BY THE REVENUE ARE DISMISSED. 9. THE LAST GROUND OF REVENUES APPEAL AND CROSS OBJECTION OF THE ASSESSEE TO BE DECIDED IS AS TO WHETHER THE LD.AO IS JUSTIFIED IN MAKING DISALLOWANCE U/S. 14A OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. WE FIND THAT THE ASSESSEE HAS RAISED CROSS OBJ ECTION VIDE CO NO. 28/KOL/2013(ARISING OUT OF ITA NO. 21/KOL/2013 FOR THE A.Y 2009-10) ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) ERRED TO DIRECT THE ASSESSING OFFICER FOR RECALCULATION OF DISALLOWANCE U/S. 14A, WHEREAS THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER U/S. 14A OF RS.311105/- WAS WITHOUT RECORDI NG ANY SATISFACTION AND CONTRARY TO THE PROVISIONS OF LAW AND THEREFORE THE ACTION OF THE LD.CIT(APPEAL) NOT TO DELETE THE ENTIRE DISALLOWANC E U/S. 14A IS BAD IN LAW. 2. THAT ALTERNATIVELY THE DISALLOWANCE U/S. 14A RE AD WITH RULE 8D IS TO BE MADE IN RESPECT OF ONLY THOSE INVESTMENTS WH ICH DOES NOT AND SHALL NOT FORM PART OF TOTAL INCOME. 11. THUS, GROUND NO.2 OF REVENUES APPEAL AND GROUN DS OF CROSS OBJECTION OF THE ASSESSEE ARE TAKEN UP TOGETHER FOR DISPOSAL AS IT INVOLVES REGARDING THE ISSUE OF DISALLOWANCE OF U/S. 14A OF THE ACT. ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 13 12. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE HAD DISALLOWED A SUM OF RS.15,451/- VOLUNTARILY U/S. 14A OF THE ACT IN ITS RETURN OF INCOME . THE LD.AO APPLIED THE PROVISIONS OF RULE 8D(2)(III) OF THE IT RULES 1 962 IN RESPECT OF INVESTMENTS YIELDING EXEMPT INCOME AND MADE A DISALLOWANCE OF RS.3,13,008/- U/S. 14A. ON 1 ST APPEAL, THE LD.CIT(A) HAD DIRECTED THE LD.AO TO ADO PT RS. 87,216/- FOR MAKING DISALLOWANCE U/S. 14A OF THE ACT. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT NO SATISFAC TION WAS RECORDED BY THE LD.AO IN TERMS OF RULE 8D(1) OF THE IT RULES, 1962, WHICH I S MANDATORY AS IN THE INSTANT CASE, THE ASSESSEE HAD DISALLOWED A SUM OF RS.15,451/- VO LUNTARILY IN THE RETURN OF INCOME U/S. 14A AND WITHOUT GIVING A CATEGORICAL FINDING HOW THE SAID FIGURE IS INCORRECT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, THE LD.AO CANNOT RESORT TO DIRECTLY ADOPT THE RULE 8D(2) AND MAKE DISALLOWANCE THEREON. WE FI ND THAT BOTH THE LD. AO AS WELL AS THE LD. CIT(A) HAD NOT ADDRESSED THIS ASPECT, WHICH IS CRUCIAL AND IT GOES TO THE ROOT OF THE MATTER. WE HOLD THAT WITHOUT RECORDING SATISFACTION IN TERMS OF RULE 8D(1), THE LD.AO CANNOT DIRECTLY APPLY THE RULE 8D(2) OF T HE I.T RULES 1962. WE DRAW SUPPORT FROM THE FOLLOWING DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT, CENTRAL II VS. REI AGRO LTD IN GA NO.3022 OF 2013 ITAT 161 OF 2013 DATED 23.12.2013, WHEREIN IT HAS BEEN HELD AS UND ER:- THE COURT : THE ASSESSING OFFICER DISALLOWED THE CONTRIBUTION MADE BY THE ASSESSEE TOWARDS PROVIDENT FUND TO THE EXTENT OFF A SUM OF RS.1,92,913/- ON THE GROUND THAT THE DEPOSIT WAS MADE BEYOND THE STIPULATED TIME. THE ASSESSING OFFICER ALSO DISALLOWED THE EXPENDITU RE UNDER SECTION L4A OF THE INCOME TAX ACT, 1961 WITHOUT FIR ST RECORDING THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CL AIM AS REGARDS THE CLAIM THAT 'NO EXPENDITURE' WAS MADE BY THE ASSESSE E. THE CONTRIBUTION TOWARDS PROVIDENT FUND, EVEN IF DE POSITED BEYOND THE STIPULATED PERIOD, IS ALLOWABLE BY VIRTUE OF TH E AMENDMENT AND THE DISALLOWANCE UNDER SECTION L4A OF THE INCOME TA X ACT, 1961 IS ITA NO.21//K/2013 CO NO.28/K/2013 -A-AM M/S.AVRO COMMERCIAL CO.LTD 14 PLAINLY CONTRARY TO THE PROVISIONS OF THE STATUTE. THE CIT, IN THE CIRCUMSTANCES, ALLOWED THE APPEAL OF THE ASSESSEE A ND THE TRIBUNAL DID NOT INTERFERE. CHALLENGING THE ORDER OF THE TRIBUNAL, THE PRESENT APPEAL HAS BEEN FILED. WE HAVE HEARD MR. BHOWMIK AND ARE OF THE OPINION TH AT NO POINT OF LAW HAS BEEN RAISED. THEREFORE, THIS APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT (SUPRA), WE HAVE NO HESITATION IN DIRECTING T HE LD. AO TO DELETE THE ADDITION MADE ON THIS COUNT U/S. 14A OF THE ACT. THIS GROUN D OF REVENUES APPEAL IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE I S DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 09 - 0 3 - 2016 1.. THE APPELLANT/DEPARTMENT: INCOME TAX OFFICER, WARD 7(1), AAYKAR BHAVAN, P-7 CHOWRINGHEE SQUARE, 5 TH FL, KOL-69. 2 THE RESPONDENT/ASSESSEE- M/S. AVRO COMMERCIAL COM PANY LTD SHUBHAM 9 TH FL., 1 SAROJINI NAIDU DARANI, KOL-17. 2 ND FL. KOLKATA-700017. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- ( N.V.VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 09 -03-2016 COPY OF THE ORDER FORWARDED TO:-