Sanghvi Forging & Engg.Ltd., Baroda V. The DCIT, Circle-2(1)(1), Baroda

ITA 2307/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4949 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 16-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Question of law; Initiation of penalty proceedings; Revenue expenditure; Capital expenditure
• Section: 43B; 14A

Judgement Text

PAGE 1 OF 17 , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD BEFORE , SHR I A.D. JAIN , VICE PRESIDENT AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO S.706/AHD/2016 / ASSTT. YEAR : 2012 - 2013 & ./ ITA NOS.2307/AHD/2017 / ASSTT. YEAR: 2013 - 2014 SANGHVI FORGING & ENGG. LTD , A - 8, PARVATI CHAMBERS , OPP. APSARA CINEMA , PRATAPNAGAR , BARODA - 390004. PAN: AADCS2903E VS . A.C.I.T , CIRCLE - 2(1 ) (1) , VADODARA. (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : M S . URVASHI SHODHAN , A.R REVENUE BY : SMT. SMITI SAMANT , SR . DR / DATE OF HEARING : 08 / 04 / 201 9 / DATE OF PRONOUNCEMENT: 23/05 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED TWO APPEAL S HAVE BEEN FILED AT THE INSTANCE OF THE AS SESSEE AGAINST THE TWO SEPARATE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 2 , VADODARA [ LD. CIT (A) IN SHORT] , DATED 23 / 0 2 / 2016 AND 09/08/2017 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143 (3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 2 OF 17 11 / 02 / 201 5 AND 23/03/2016 RELEVANT TO ASSESSMENT YEAR S (AY S ) 2012 - 13 & 2013 - 14 . FIRST , WE TAKE UP ITA NO.706/AHD.2016 FOR A.Y. 2012 - 13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF DISALLOWING ? 1,20,5607 - BEING EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND ON THE ERRONEOUS PLEA THAT IT IS DISALLOWABLE. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT HAVING PAID THE CONTRIBUTION BEFORE THE DUE DATE OF FILING THE RETURN, NO PART OF THE SAME IS DISALLOWABLE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF DISALLOWING 80,41,107/ - OUT OF INTEREST PAID ON THE ERRONEOUS PLEA THAT THE SAME IS NOT A REVENUE EXPENDITURE. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT NO PART OF THE INTEREST DISALLOWED IS A CAPITAL EXPENDITURE AS PER SECTION 36(L)(III) OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF DISALLOWING 4,96,350/ - OUT OF PROFESSIONAL FEES PAID ON THE ERRONEOUS PLEA THAT IT IS NOT A REVENUE EXPENDITURE IN NATURE. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT THE SAID EXPENDITURE IS NOT A CAPITAL EXPENDITURE IN NATURE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF MAKING AN ADDITION OF ? 11,23,077/ - ON THE ERRONEOUS PLEA THAT SALES RETURN IS NOT INCLUDED IN THE CLOSING STOCK. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT THE SALES RETURN IS ALREADY INCLUDED IN THE STOCK. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 3 OF 17 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF DISALLOWING ? 1,66,355/ - OF FOREIGN TRAVEL EXPENSES ON THE ERRONEOUS PLEA THAT THE SAID EXPENSES IS NON BUSINESS IN NATURE. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AN D ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT THE ENTIRE FOREIGN TRAVEL EXPENSE HAS BEEN INCURRED FULLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS. 6. THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT IS NOT JUSTIFIED. 7. THE LEVY OF INTEREST U/S 234A/B/C OF THE ACT IS NOT JUSTIFIED. 8. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER AND/OR AMEND THE GROUNDS HEREINABOVE TAKEN. THE 1 ST ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO BY UPHOLDING THE ADDITION OF 1,20,560.00 ON ACCOUNT OF DELAY IN THE DEPOSIT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND. 2. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION FOR FEW MONTHS HAS FAILED TO DEPOSIT THE EMPLOYEE S CONTRIBUTION TOWARDS PROVIDENT FUND WITHIN THE TIME AS PRESCRIBED UNDER THE PROVIDENT FUND ACT. ACCORDINGLY , THE AO TREATED SUCH EMPLOYEES CONTRIBUTION OF RS. 1,20,560.00 DUE TO DELAY IN TH E DEPOSIT AS INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 2(24)(X) OF THE ACT , AND ACCORDINGLY , HE DISALLOWED THE DEDUCTION FOR THE SAME UNDER SECTION 36(1)(VA) OF THE ACT. THUS THE AMOUNT DISALLOWED BY THE AO WAS ADDED TO THE TOTAL INCOME OF TH E ASSESSEE. 3. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). THE ASSESSEE BEFORE THE LEARNED CIT (A) SUBMITTED THAT SUCH EMPLOYEES ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 4 OF 17 CONTRIBUTION TOWARDS THE PF WAS DEPOSITED BEFORE FILING THE INCOME TAX RETURN AND THEREFORE THE SAME SHOULD BE ALLOWED AS A DEDUCTION UNDER SECTION 43B OF THE ACT. 3.1 HOWEVER THE LEARNED CIT (A) DISREGARDED THE CONTENTION OF THE ASSESSEE AFTER HAVING A RELIANCE ON THE JUDG MENT OF H ON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VERSUS GSRTC REPORTED IN 366 ITR 170. ACCORDINGLY , THE LEARNED CIT (A) CONFIRMED THE ORDER OF THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED AR BEFORE US SUBMITTED THAT THE PAYMENT TOWARDS THE EMPLOYEE ' S PROVIDENT FUND WA S MADE AFTER THE DUE DATE BUT WITHIN IN THE GRACE PERIOD AS SPECIFIED UNDER THE PF ACT IN ALL THE CASES EXCEPT IN CASE. AS SUCH THE LD. AR CLAI MED THAT THE PAYMENT TOWARDS THE EMPLOYEES' PROVIDENT FUND WITHIN THE GRACE PERIOD NEEDS TO BE ALLOWED. 5. ON THE OTHER HAND , THE LEARNE D DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS THE SETTLED LAW THAT THE PAYMENT MADE BY THE ASSESSEE TOWARDS THE EMPLOYEES ' CONTRIBUTION WITHIN THE DUE DATE IS ELIGIBLE FOR THE DEDUCTION . HOWEVER , IF IT HAS NOT BEEN PAID WITHIN THE DUE DATE AS PRESCRIBED UNDER THE RELEVANT ACT , THE SAME CANNOT BE ALLOWED AS A DEDUCTION TO THE ASSESSEE IN VIEW OF THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GSRTC ( SUPRA ) . ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 5 OF 17 6.1 ON PERUSAL OF THE ORDER OF THE HO N BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GSRTC, WE NOTE THAT IT IS SILENT ABOUT THE PAYMENT OF EMPLOYEES CONTRIBUTION WITHIN THE EXTENDED/GRACE PERIOD. THUS THE QUESTION ARISES FOR OUR ADJUDICATION WHETHER THE ASSESSEE IS ENTITLED TO THE DEDUCTION UNDER SECTION 36 ( 1 )(VA ) OF THE ACT IF THE PAYMENT TOWARDS THE EMPLOYEE ' S CONTRIBUTION HAS BEEN MADE WITHIN THE EXTENDED TIME/ GRACE PERIOD. REGARDING THIS , WE NOTE THAT THE PROVIDENT FUND ACT ITSELF PERMITS THE ASSESSEE TO DEPOSIT THE EMPLOYEE S CONTRIBUTION TOWARDS THE PF WITH IN THE EXTENDED TIME. THEREFORE IN OUR CONSIDERED VIEW , THE ASSESSEE WILL GET THE BENEFIT OF THE DEDUCTION IF THE AMOUNT OF THE PF IS DEPOSIT ED WITHIN THE EXTENDED TIME AS PRESCRIBED UNDER THE RELEVANT OF LAW. REGARDING THIS , WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF H ON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. AMOLI ORGANICS (P.) LTD. REPORTED IN 40 TAXMAN.COM 149 WHEREIN IT WAS HELD AS UNDER: 4. IT IS REQUIRED TO BE NOTED AT THIS STAGE THAT AS SUCH IT WAS THE CASE ON BEHALF OF ASSESSEE THAT AS SUCH THEIR EMPLOYEE S CONTRIBUTION WAS IN FACT DEPOSITED WITH THE PROVIDENT FUND AUTHORITY WITHIN THE GRACE PERIOD PERMISSIBLE UNDER THE RELEVANT PROVIDENT FUND ACT WITH RESPECT TO SUBSTANTIAL AMOUNT AND, THEREFORE, IT CAN BE SAID THAT THE ACTUALLY THE AMOUNT HAS BEEN DEPOSITED WITH THE CONCERNED PROVIDENT FUND AUTHORITY WITHIN THE STIPULATED TIME UNDER THE RELEVANT PROVIDENT FUND ACT. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXX UNDER SUCH CIRCUMSTANCES, AS SUCH NO ERROR AND/OR ILLEGALITY HAS BEEN COMMITTED BY THE LEARNED TRIBUNAL IN GRANTING DEDUCTION TO THE ASSESSEE WITH RESPECT TO THE AMOUNT DEPOSITED WITH THE PROVIDENT FUND DEPARTMENT WITHIN THE EXTENDED PERIOD / GRACE PERIOD. UNDER THE CIRCUMSTANCES, NO OTHER ISSUES ARE REQUIRED TO BE CONS IDERED. NO QUESTION OF LAW MUCHLESS ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT APPEAL. 9. IN VIEW OF THE ABOVE, THE PRESENT APPEAL DESERVES TO BE DISMISSED AND ACCORDINGLY, THE SAME IS DISMISSED. 6.2 IN VIEW OF THE ABOVE , WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION EVEN THERE WAS A DELAY IN THE PAYMENT OF EMP LOYEES PROVIDENT FUND PROVIDED IF IT WAS PAID WITHIN THE GRACE PERIOD PROVIDED UNDER THE ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 6 OF 17 RELEVANT ACT. ON PERUSAL OF THE AO ORDER, WE NOTE THAT THE ASSESSEE DEPOSIT ED THE EMPLOYEES CONTRIBUTION TOWARDS PF WITHIN THE GRACE PERIOD EXCEPT IN ONE CASE , I.E. APRIL 2011 FOR RS. 1022.00 ONLY. ACCORDINGLY , WE UPHOLD THE ADDITION TO THE EXTENT OF 1,022.00 ONLY. THUS WE DIRECT THE AO TO DELETE THE ADDITION OF THE REMAINING A MOUNT OF THE DISALLOWANCE WHICH WAS PAID WITHIN THE GRACE PERIOD. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE 2 ND ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE AO FOR 80,4 1,107.00 ON ACCOUNT OF TREATING INTEREST EXPENSES AS CAPITAL IN NATURE. 7. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS GIVEN THE ADVANCES TO CERTAIN PARTIES TOWARDS THE SUPPLY OF CAPITAL GOODS AND CAPITAL ASSETS AMOUNTING TO 6 , 70 , 09 , 224 .00 ONLY. TH E ASSESSEE DURING THE ASSESSMENT PROCEEDINGS SUBMITTED THAT SUCH ADVANCES HA D BEEN GIVEN OUT OF ITS OWN CAPITAL. THE ASSESSEE TO JUSTIFY ITS STAND HAS ALSO SUBMITTED THAT IT HAS RAISED FUND TO THE TUNE OF RS. 4 0 CRORES APPROX OUT OF THE I PO IN APRIL /MAY 2011. THEREFORE THERE IS NO QUESTION OF MAKING THE DISALLOWANCE OF INTEREST EXPENSES. HOWEVER, THE AO FOUND THAT THERE IS AN INCREASE OF RS. 4 2 , 38 , 91 , 170 .00 ON ACCOUNT OF CAPITAL WORKING PROGRESS WHICH PROVES THAT THE FUND OF THE ASSESSEE WAS BLOCKED IN OTHER CAPITAL ASSETS. ACCORDINGLY , THE AO REQUIRED THE ASSESSEE TO FILE THE NECESSARY DETAILS ESTABLISHING THE NEXUS BETWEEN THE FUND UTILI Z ED IN ADVANCING SUCH CAPITAL ASSETS. HOWEVER , THE ASSESSEE FAILED TO FURNISH THE SAME. THEREFORE THE AO OPI NED TH AT THE ASSESSEE HAS UTILISED THE BORROWED FUND IN ADVANCING SUCH CAPITAL ASSETS. ACCORDINGLY , THE AO MADE THE DISALLOWANCE OF 80 , 41 , 107 .00 BEING 12% ON THE AMOUNT OF ADVANCES GIVEN FOR THE ACQUISITION OF CAPITAL ASSETS/GOODS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 7 OF 17 8. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNE D C IT - A WHO ALSO CONFIRMED THE ORDER OF THE AO AFTER ALLOWING RELIE F IN PART TO THE ASSESSEE BY OBSERVING AS UNDER: 4,2. GROUND 3 PERTAINS TO DISALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO RS.80,41,107/ - ON ACCOUNT OF INTEREST PERTAINING TO ADVANCES GIVEN FOR PURCHASE OF CAPITAL ASSETS. THE ASSESSING OFFICER HAS WORKED OUT TOTAL ADVANCES FOR PURCHASE OF ASSETS AT RS. 6,70,09,2247 - AND ACCORDINGLY WORKED OUT THE DISALLOWANCE BY A PPLYING 12% RATE OF INTEREST PER ANNUM. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AUTHORIZED REPRESENTATIVE HAS VEHEMENTLY SUBMITTED THAT THE APPELLANT COMPANY HAD OWN FUNDS AMOUNTING TO RS,43.60 CRORES ON ACCOUNT OF INCREASE IN SHARE CAPITAL, SH ARE PREMIUM AND PROFIT OF THE YEAR WHICH EXCEEDED PURCHASE OF FIXED ASSETS AND CAPITAL WORK - IN - PROGRESS. HOWEVER, THE LD.NOT DIRECT NEXUS BETWEEN OWN FOR OF CAPITAL ASSETS. ACCORDINGLY,HE WAS REQUIRED TO PROVE THE NEXUS AND FILE THE COPY OF BANK STATEM ENT, VIDE WRITTEN SUBMISSION DATED 18.02.2016, THE LD, AUTHORIZED REPRESENTATIVE HAS FILED COPY OF CASH CREDIT ACCOUNT WITH STATE BANK OF INDIA FOR THE PERIOD FROM 11.08.2011 TO 20,08.2011, 26.12.2011 TO 31.12.2011, AS ON 13.01.2012 AND 12.03.2012 TO 18.03 .2012. ON PERUSAL OF THE BANK STATEMENT OF CASH CREDIT ACCOUNT, FOLLOWING FACTS HAVE EMERGED: - SR. NO. PAYMENT TO DATE AMOUNT BALANCE IN CC A/C. 1 SCHLAGER INDUSTRIES 11.08.2011 1,57,49,590 ( - ) 2,54,90,771 2 JMDAL STEEL & POWER 13.01.2012 24,12,430 ( - ) 6,29,36,181 3 - 26.12.2011 35,58,650 ( - ) 6,04,12,796 4 DEMAG CRANES & COMPO 27.12.2011 35,58,701 ( - ) 6,24,06,791 5 AMERIKAN STEELS 15.03.2012 22,37,960 ( - ) 7,85,54,528 6 SUPREME ENGINEERING WORKS 15.03.2012 85,00,050 ( - ) 8,70,64,578 FROM THE ABOVE DETAILS, IT IS CRYSTAL CLEAR THAT THE APPELLANT COMPANY HAS UTILIZED INTEREST BEARING FUNDS FOR MAKING ADVANCES FOR PURCHASE OF FOR NEW UNIT SINCE THE BALANCE IN THE CASH CREDIT ACCOUNT WAS ALWAYS NEGATIVE. IT MAY ALSO BE NOTED THAT THE APPELLANT HAS NOT FURNISHED BANK STATEMENT FOR THE ENTIRE PERIOD WITH A CLEARJ CUT INTENTION TO AVOID DETECTION OF DIRECT NEXUS BETWEEN THE BORROWED FUNDS AND MONEY ADVANCED FOR PURCHASE OF NEW ASSETS . ACCORDINGLY, THE DAIRN ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 8 OF 17 OF APPELLANT THAT IT HAS UTILIZED OWN FUNDS, HAS BEEN FOUND TO BE INCORRECT. AS PER THE PROVISIONS OF SECTION 36(L)(III), INTEREST EXPENDITURE PERTAINING TO THE ACQUISITION OF ASSETS HAS TO BE CAPITALIZED FOR THE PERIOD TILL THE ASSETS ARE PUT TO USE. ACCORDINGLY, IN MY CONSIDERED VIEW CLAIM OF INTEREST IN RESPECT OF THE INTEREST BEARING FUNDS UTILIZED FOR PURCHASE OF NEW FOR NEW UNIT CANNOT BE ALLOWED AS AN EXPENDITURE AND ACCORDINGLY THE ACTION OF THE ASSESSING OFFICER IS CONFIR MED. HOWEVER, IT IS NOTICED THAT THE APPELLANT HAS CLAIMED CAPITALIZATION OF INTEREST TO THE EXTENT OF RS.12,90,355/ - IN RESPECT OF TERM LOAN UTILIZED FOR PURCHASE OF FIXED ASSETS. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE CONTENTION OF AP PELLANT AND IF THE INTEREST OF RS.12,90,355/ - IS A READY CAPITALIZED AND DISALLOWED BY THE APPELLANT ITSELF, THEN THE SAME CANNOT BE AGAIN DISALLOWED AND ADDED TO THE INCOME OF THE APPELLANT. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE FACTUAL POSITION AND ALLOW CONSEQUENTIAL RELIEF. THUS, APPELLANT PARTLY SUCCEEDS IN THE RESPECT OF GROUND NO. 3. 9. B EING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED AR BEFORE US SUBMITTED THAT ITS OWN FUNDS EXCEED THE A MOUNT OF ADVANCES GIVEN TO THE PARTIES. THEREFORE THERE CANNOT BE ANY DISALLOWANCE OF INTEREST EXPENSES. THE LEARNED AR IN SUPPORT OF HIS CLAIM DREW OUR ATTENTION ON THE AUDITED FINANCIAL STATEMENTS PLACED ON PAGES 1 TO 27 OF THE PAPER BOOK. 10. ON THE O THER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSEE FAILED TO FURNISH THE CO - CORRELATION BETWEEN THE BORROWED FUND VIZ A VIZ THE FUND ADVANCE D TO ACQUIRE THE CAPITAL ASSETS. THEREFORE THE ASSESSEE HAS UTILISED THE BORROWED FUND. THE LEARNER DR VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS SETTLED LAW THAT THERE CANNOT BE ANY DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSES IF THE OWN FUND OF THE ASSESSEE EXCEEDS THE ADVANCES GIVEN FOR THE CAPITAL GOODS. THE AVAILABILITY OF THE OWN FUND EXCEEDING THE IMPUGNED ADVANCES HAS NOT BEEN DOUBTED. IN HOLDING SO, WE FIND SUPPORT AND ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 9 OF 17 GUIDANCE FROM THE JUDGMENT OF HON BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTIL ITIES AND POWER LTD. REPORTED IN 313 ITR 340 WHEREIN IT WAS HELD AS UNDER: - THE PRINCIPLE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST - FREE AND OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST - FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST - FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. IN THIS CASE THIS PRESUMPTION IS ESTABLISHED C ONSIDERING THE FINDING OF FACT BOTH BY THE CIT(A) AND TRIBUNAL . SIMILARLY, WE ALSO RELY ON THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD REPORTED IN 366 ITR 505 (BOM). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: - WHERE ASSESSEE'S CAPITAL, PROFIT RESERVES, SURPLUS AND CURRENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVESTMENT IN TAX - FREE SECURITIES, IT WOULD HAVE TO BE PRESUMED THAT INVESTMENT MADE BY THE ASSESSEE WOULD BE OUT OF THE INTEREST - FREE FUNDS AVAIL ABLE WITH ASSESSEE AND NO DISALLOWANCE WAS WARRANTED U/S 14A. SIMILARLY, WE ALSO FIND SUPPORT FROM THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF UTI BANK LTD. REPORTED IN 32 TAXMANN.COM 370 WHERE THE HEADNOTE READS AS UNDER : IF THERE ARE S UFFICIENT INTEREST FREE FUNDS TO MEET TAX FREE INVESTMENTS, THEY ARE PRESUMED TO BE MADE FROM INTEREST FREE FUNDS AND NOT LOANED FUNDS AND NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A . IN VIEW OF THE ABOVE PROPOSITION, WE HOLD THAT NO DISALLOWANCE OF INTEREST EXPENSE CLAIMED BY THE ASSESSEE CAN BE MADE ON ACCOUNT OF THE ADVANCES GIVEN FOR THE CAPITAL GOODS AS DISCUSSED ABOVE. HENCE, WE REVERSE THE ORDER OF THE AUTHORITIES BELOW. THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY HIM. THUS THE GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 10 OF 17 THE 3 RD ISSUE RAISED BY THE ASSESSEE IS THAT LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOWANCES MADE BY THE AO FOR RS. 4, 96 , 350 .00 BY TREATING THE PROFESSIONAL FEE AS CAPITAL IN NATURE. 12. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS INCURRED AN EXPENSE OF RS. 4, 96 , 350 .00 WHICH WAS PAID TO CRISIL LTD. THE ASSESSEE CLAIMED THAT A REPORT WAS OBTAINED FROM CRISIL LTD IN CONNECTION WITH THE CREDIT FACILITIES AVAILED FROM THE BANK BY IT . THE ASSESSEE ALSO SUBMITTED THAT THE CREDIT RATING BY THE CRISIL WAS CARRIED OUT IN AUGUST 2011 WHEREAS THE IPO WAS BROUGHT IN APRIL /MAY 2011 . T HEREFORE THE PAYMENT MADE TO THE CRISIL CANNOT BE LINKED WITH THE IPO EXPENSES. 12.1 HOWE VER, THE AO ON PERUSAL OF THE CRISIL REPORT OBSERVED THAT IT INDICATES THE KEY STOCK STATISTICS, SHAREHOLDING PATTERN AND PERFORMANCE VIZ A VIZ MARKET. THE AO FURTHER FOUND THAT THE CRISIL HAS ISSUED THE INVOICE DATED 23 RD JUNE 2011. THE AO ALSO FOUND THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF ITS CONTENTION THAT SUCH CRISIL REPORT WAS OBTAINED IN CONNECTION WITH THE BANK FINANCE. 12.2 IN VIEW OF THE ABOVE, THE AO TREATED THE PAYMENT MADE TO THE CRISIL AS CAPITAL IN NATURE. ACCORDINGLY , THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) . 13. T HE ASSESSEE BEFORE THE LEARNED CIT (A) SUBMITTED THAT THE C REDIT RATING FROM THE C RISIL WAS CARRIED OUT I N CONNECTION WITH THE BANK FINANCE . ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 11 OF 17 T HEREFORE THE SAME CANNOT BE TREATED AS CAPITAL IN NATURE ON THE REASONING THAT IT PERTAINS TO THE IPO WHICH WAS ISSUED IN THE MONTH OF APPEAL/MAY 2011. 13.1 HOWEVER THE LEARNED CIT (A), FOUND THAT THE C RISIL HAS CARRIED OUT THE RESEARCH ACTIVITY ABOUT THE EQUITY SHARES OF THE ASSESSEE. THEREFORE HE WAS OF THE VIEW THAT SUCH EXPENSES WERE INCURRED IN CONNECTION WITH THE IPO BROUGHT BY THE ASSESSEE. THEREFORE THE PAYMENT TO THE CRISIL IS LIKE CAPITAL EXPENDITURE BEING RELATED TO THE IPO BROUGHT BY THE ASSESSEE. ACCORDINGLY , THE LEARNE D CIT (A) CONFIRMED THE ORDER OF THE AO. BEING AGGRIEVED BY THE ORDER OF THE LEARNE D C IT - A, THE ASSESSEE IS IN APPEAL BEFORE US. 14. THE LEARNED AR BEFORE US REITERATED THE ISSUE AS MADE BEFORE THE AUTHORITIES BELOW . O N THE OTHER HAND , THE LEARNE D DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE CASE ON HAND ARISES FO R OUR ADJUDICATION WHETHER THE PAYMENT MADE TO THE CRISIL WAS RELATED TO THE IPO BROUGHT TO THE ASSESSEE , OR IT WAS PAID IN CONNECTION WITH THE FINANCE FACILITY AVAILED BY THE ASSESSEE. ON PERUSAL OF THE ORDER OF THE AUTHORITIES BELOW, WE NOTE THAT THE REP ORT FROM THE CRISIL SPEAKS ABOUT THE SHARES OF THE ASSESSEE. IT IS NOWHERE MENTIONED THAT THE REPORT FROM THE CRISIL IS LINKED WITH THE BANK FINANCE AVAILED BY THE ASSESSEE. THE LEARNED AR HAS ALSO NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT THE CRISIL REPORT WAS OBTAINED IN CONNECTION WITH THE BANK FINANCE. THE ONUS LIES ON THE ASSESSEE TO JUSTIFY ITS STAN D BAS ED O N THE DOCUMENTARY EVIDENCE. THUS IN THE ABSENCE OF SUFFICIENT DOCUMENTARY ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 12 OF 17 EVIDENCE BY THE ASSESSEE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT (A). ACCORDINGLY , WE CONFIRM THE SAME. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. THE 4 TH ISSUE RAISED BY THE ASSESSEE IS THAT LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE AO BY MAKING THE ADDITION OF 11 , 23 , 077 .00 BY HOLDING THAT THE SALES RETURN WAS NOT INCLUDED IN THE CLOSING STOCK. 15.1 THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HA D SHOWN SALES RETURN FROM SUBSIDIARY COMPANY AMOUNTING TO 11 , 23 , 077 .00 WHICH WAS NOT INCLUDED IN THE CLOSING STOCK OF THE ASSESSEE. THEREFORE THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS UNDERSTATED ITS INCOME BY THE AMOUNT OF 1 1 , 23 , 077 .00 AND ACCORDINGLY ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 16. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNE D C IT - A. THE ASSESSEE BEFORE THE LEARNED CIT (A) SUBMITTED THAT IT HA D MADE NECESSARY ACCOUNTING ENTRIES IN ITS BOOKS OF ACCOUNTS CONCERNING THE SALES RETURN WHICH WAS ALSO SHOWN IN THE CLOSING INVENTORY. THE ASSESSEE ALSO SUBMITTED THAT IT IS M AINTAINING BOOKS OF ACCOUNTS ON SAP AND ONCE THE SALES RETURN HAS BEEN SHOWN , THEN THE CLOSING STOCK WILL INCREASE AUTOMATICALLY WITH SIMULTANEOUS AMOUNT . 16.1 HOWEVER, THE LEARNED CIT (A) DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE A SSESSEE FAILED TO PROVE BASED ON DOCUMENTARY EVIDENCE THAT THE CLOSING STOCK HAS INCREASED BY THE AMOUNT OF SALES RETURN. THEREFORE THE LEARNER CIT (A) CONFIRMED THE ORDER OF THE AO. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 13 OF 17 BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 17. THE LEARNED AR BEFORE US REITERATED THE SUBMIS SION AS MADE BEFORE THE LEARNERD C IT - A. 18. ON THE OTHER HAND , THE LEARNE D DR SUBMITTED THAT THE ASSESSEE WAS UNDER THE OBLIGATION TO SHOW FROM ITS BOOKS OF ACCOUNTS THAT ITS CLOSING STOCK HAS INCREASED BY THE AMOUNT OF SALES RETURN BASED ON DOCUMENTARY EVIDENCE. BUT THE ASSESSEE FAILED TO DO SO. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS A VAILABLE ON RECORD. THERE IS NO AMBIGUITY TO THE FACT THAT THE CLOSING STOCK WILL INCREASE BY THE AMOUNT OF THE SALES RETURN. THIS FACT CAN BE VERIFIED BASED ON RELEVANT DOCUMENTARY EVIDENCE. BUT THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRODUCED ANY PI ECE OF EVIDENCE BEFORE US SUGGESTING THAT THE CLOSING STOCK OF THE ASSESSEE WAS ENHANCED BY THE SALES RETURN. THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IS MAINTAINING ITS ACCOUNTS ON SAP AND THE MOMENT THE ENTRY FOR SALES RETUR N WILL BE MADE THE CLOSING STOCK WILL ENHANCE AUTOMATICALLY APPEARS TO BE CORRECT . BUT E VEN WE ASSUME THAT THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE IS CORRECT, THEN ALSO IT HAS TO BE BASED ON SOME DOCUMENTARY EVIDENCE. THUS IN THE ABSENCE OF AN Y DOCUMENTARY EVIDENCE BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION, WE ARE NOT IMPRESSED WITH THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (A). HENCE THE GROUND OF APPEAL O F THE ASSESSEE IS DISMISSED. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 14 OF 17 THE 5 TH ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE MAD E BY THE AO FOR 1, 66 , 355 ON ACCOUNT OF FOREIGN TRAVELING EXPENSES. 20. THE ASSESSEE DURING THE YEAR AMONG OTHER TRAVELING EXPENSES HAS INCURRED AN EXPENSE OF 1 , 6 , 6355 .00 ON FOREIGN TRAVELING TO PARIS AND KOREA BUT FAILED TO JUSTIFY ANY BUSINESS CONNECTION WITH THESE COUNTRIES. THEREFORE THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 21. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO HAS CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: 4.5. GROUND NO, 6 PERTAINS TO DISALLOWANCE OF PART OF FOREIGN TRAVELING EXPENSES AMOUNTING TO RS.1,66,355/ - ON ACCOUNT OF NO N BUSINESS USE. IT IS NOTICED THAT APPELLANT COMPANY HAS INCURRED FOREIGN TRAVELING EXPENSES AMOUNTING TO RS.12,77,910/ - ON ACCOUNT OF TRAVELING OF MR. JAYANTI SANGHVI AND MR. NARESH SANGHVI TO VARIOUS DESTINATIONS SUCH AS USA, NETHERLAND, GERMANY, PARIS A ND KOREA. ON INQUIRY, IT WAS FOUND BY THE ASSESSING OFFICER THAT APPELLANT COMPANY HAD NO BUSINESS IN THE PLACES VIZ,, PARIS AND KOREA. SINCE THERE WAS NO BUSINESS IN THE PLACES VIZ. PARIS ANDF KOREA, THE EXPENDITURE INCURRED IN RESPECT OF TRAVELING TO THE SEJ PLACES/COUNTRIES, IN MY CONSIDERED VIEW, CANNOT BE HELD TO BE FOR THE PURPOSES OF BUSINESS. ACCORDINGLY, THE DISALLOWANCE OF RS.1,66,355/ - MADJ ON THIS ACCOUNT DESERVES TO BE SUSTAINED AND HENCE THE SAME IS SUSTAINEC THUS, APPELLANT FAILS IN RESPECT OF GROUND NO. 6. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 22. THE LEARNED AR BEFORE US SUBMITTED THAT THE DIRECTORS HAVE VISITED PARIS AND KOREA TO EXPLORE THE EXPORT BUSINESS. THEREFORE THE SESSS EXPENSES W ERE INCURRED EXCLUSIVELY AND WHOLLY FOR THE PURPOSE OF THE BUSINESS. THE LD. AR R EITERATED THE SUBMISSION AS MADE BEFORE THE LEARNED C IT - A. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 15 OF 17 23. ON THE OTHER HAND , THE LEARNE D DR SUBMITTED THAT THE ASSESSEE FAILED TO PROVE BASED ON DOCUMENTARY EVIDENCE TH AT THE ASSESSEE HAS INCURRED FOREIGN TRAVELING EXPENSES TO PARIS AND KOREA WAS IN CONNECTION WITH ITS BUSINESS ACTIVITIES. ACCORDINGLY , THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. THE ONUS LIES ON THE ASSESSEE TO JUSTIFY ITS FOREIGN TRAVELING EXPENSES THAT THE SAME WAS INCURRED TO EXPLORE THE MARKET IN PARIS AND THE KOREA ON THE BASIS OF SOME DOCUMENTARY EVIDENCE SUCH AS EXCHANGE OF EMAILS, IN VITATIONS FROM THE FOREIGN PARTIES, DETAILS OF THE PARTIES WITH W HOM THE ASSESSEE ME T IN THOSE COUNTRIES. BUT WE NOTE THAT THE ASSESSEE FAILED TO FILE ANY PIECE OF EVIDENCE IN SUPPORT OF ITS CONTENTION. THUS IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE BY T HE ASSESSEE IN SUPPORT OF ITS CONTENTION, WE ARE NOT IMPRESSED WITH THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (A). HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED . 24.1 THE 6 TH ISSUE RAISED BY THE ASSESSEE RELATES TO THE PENALTY PROCEEDINGS UNDER SECTION 271 ( 1 )(C) OF THE ACT WHICH IS PREMATURE TO DECIDE IS THIS STAGE. THER EFORE WE DISMISS THE SAME AS IN F RUCTUOUS . THE ISSUE RAISED BY THE ASSESSEE GROUND NO. 7 IS CONSEQUENTIAL NATURE , AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 8 IS GENERAL , AND THE SAME DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 16 OF 17 IN THE RESULT , THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. COMING TO ITA 2307/AHD/2017 FOR A.Y 2013 - 14. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF DISALLOWING ? 58,728/ - BEING EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND ON THE ERRONEOUS PLEA THAT IT IS DISALLOWABLE. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT HAVING PAID THE CO NTRIBUTION BEFORE THE DUE DATE OF FILING THE RETURN, NO PART OF THE SAME IS DISALLOWABLE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE APPELLANT'S CASE IN UPHOLDING THE ACTION OF THE LD. AO OF DISALLOWING ? 32 ,00,4187 - OUT OF INTEREST PAID ON THE ERRONEOUS PLEA THAT THE SAME IS NOT A REVENUE EXPENDITURE. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN NOT APPRECIATING THE FACT THAT NO PART OF THE INTEREST DISALLOWED IS A CAPITAL EXPENDITURE AS PER SECTION 36(L)(III) OF THE ACT. 4. THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT IS NOT JUSTIFIED. 5. THE LEVY OF INTEREST U/S 234A/B/C OF THE ACT IS NOT JUSTIFIED. 6. THE APPELLANT CRAVES LEAVE TO ADD , TO ALTER AND/OR AMEND THE GROUNDS HEREINABOVE TAKEN. 25. THE 1 ST ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO BY UPHOLDING THE ADDITION OF 58,728.00 ON ACCOUNT OF DELAY IN THE DEPOSIT OF EMPLOYEES CO NTRIBUTION TO PROVIDENT FUND. ITA NO S.706/AHD/2016 & 2307/ AHD/2017 ASSTT. YEAR S 2012 - 13 & 2013 - 14 PAGE 17 OF 17 AT THE OUTSET WE NOTE THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY US IN ITA/706/2016 VIDE PARA NUMBER 6 OF THIS ORDER. THUS RESPECTFULLY FOLLOWING THE SAME WE DECIDE THE IMPUGNED ISSUE IN FAVOR OF THE ASSESSEE. THE 2 ND ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE AO FOR 32,00,418.00 ON ACCOUNT OF TREATING INTEREST EXPENSES AS CAPITAL IN NATURE. 26. AT THE OUTSET WE NOTE THAT THE IDENTICAL ISSUE HAS BEEN DEC IDED BY US IN ITA/706/2016 VIDE PARA NUMBER 11 OF THIS ORDER. THUS RESPECTFULLY FOLLOWING THE SAME WE DECIDED THE IMPUGNED ISSUE IN FAVOUR OF THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 27. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE BEARING ITA NO. 706/ AHD/ 2016 FOR A.Y. 2012 - 13 IS PARTLY ALLOWED AND ITA NO. 2307/AHD/2016 FOR A.Y. 2013 - 14 IS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 23/05 / 2019 AT AHMEDABAD. - SD - - SD - (A.D. JAIN ) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 23 / 05 /2019 M ANISH