M/s Serendipity Infolabs Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-6(1)(1), Bangalore

ITA 2428/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1669 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-10-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 23-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Depreciation; Principle of natural justice; Fair market value; Bad and doubtful debts; Validity of assessment
• Section: 10; 143(3); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2428/BANG/2018 ASSESSMENT YEAR : 2015-16 SERENDIPITY INFOLABS PVT. LTD., (AMALGAMATE WITH ANI TECHNOLOGIES PVT. LTD.,) REGENT INSIGNIA, #414, 3 RD FLOOR, 4 TH BLOCK, 17 TH MAIN, 100 FEET ROAD, KORAMANGALA, BENGALURU-560 034. PAN AAPCS 4079 P VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6(1)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, C.A RESPONDENT BY : SMT. R PREMI, JCIT DATE OF HEARING : 11-12-2020 DATE OF PRONOUNCEMENT : 11-12-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL ARISES OUT OF ORDER PASSED BY LD .CIT (A)-6, BANGALORE FOR ASSESSMENT YEAR 2015-16 ON FOLLOWING GROUNDS OF APPEAL: PAGE 2 OF 13 ITA NO.2428/BANG/2018 1. THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSE SSING OFFICER ('AO') AND THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ['CIT(A)'] UND ER INCOME TAX ACT, 1961 ('THE ACT') ARE NOT IN ACCORDANCE WITH THE LAW , MADE IN VIOLATION OF THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE AND IS CON TRARY TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) AND LD. AO ERRED IN REVALUING THE FAIR MARKET VALUE OF THE SHA RES ISSUED TO MULTI SECTOR SEED FUND AND TREATING INR 6,216,077 AS INCOME FROM OTHER SOURCES AS PER THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE AC T. 3. THE LD. CIT(A) AND LD. AO ERRED BY IGNORING THE VALUATION CERTIFICATE ISSUED BY AN INDEPENDENT CHARTERED ACCOUNTANT FOR T HE FAIR VALUE OF THE SHARES AS PER THE RULE 11UA OF THE RULES. 4. THE LD. CIT(A) AND LD. AO ERRED IN STATING THAT CAPITAL INTRODUCTION BY THE MULTI SECTOR SEED FUND IS PRIOR TO EFFECTIVE DA TE OF CBDT CIRCULAR NO. 52/2012 DATED 29/11/2012 WHEREAS THE CAPITAL INTROD UCTION MADE BY THE MULTI SECTOR SEED FUND IS ON 21 MAY 2014. 5. THE LD. CIT(A) AND LD. AO ERRED IN THE FACT THAT THE 'MULTI SECTOR SEED FUND' IS SEBI REGISTERED VENTURE CAPITAL FUND VIDE REGISTRATION NUMBER IN/VCF/10-11/0201 DATED 07 JANUARY 2011 AND THE PRO VISIONS OF SECTION 56(2)(VIIB) IS NOT APPLICABLE IN THE INSTANT CASE. 6. THE LD. CIT(A) ERRED IN STATING THAT VALUATION C ERTIFICATE ISSUED BY AN INDEPENDENT CHARTERED ACCOUNTANT DOES NOT GIVE AN I NDEPENDENT OPINION BUT HAS MERELY PREPARED THE REPORT BASED ON THE FIG URES PROVIDED BY THE APPELLANT'S MANAGEMENT, WHICH OBVIOUSLY WOULD BE SU BJECTIVE AND SELF- SERVING IN NATURE. 2. ASSESSEE HAS ALSO RAISED FOLLOWING ADDITIONAL GR OUND VIDE APPLICATION DATED 14/10/2020: 7. THE LEARNED ASSESSING OFFICER ('AO') ERRED IN LAW AND ON FACTS IN PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) O N NON-EXISTENT AND MERGED ENTITY - M/S SERENDIPITY INFOLABS PRIVAT E LIMITED (NOW AMALGAMATED WITH ANI TECHNOLOGIES PRIVATE LIMITED). THE ORDER SO PASSED ON NON-EXISTENT AND MERGED ENTITY IS INVALID , BAD IN LAW AND LIABLE TO BE QUASHED. 3. LD.AR SUBMITTED THAT, ADDITIONAL GROUND RELATES TO PASSING OF ASSESSMENT ORDER UNDER SECTION 143(3) ON A NON-E XISTENT MERGED ENTITY BEING M/S. SERENDIPITY INFO LABS PVT. LTD. LD.AR PAGE 3 OF 13 ITA NO.2428/BANG/2018 SUBMITTED THAT THE FACT OF MERGER OF M/S.SERENDIPIT Y IN FOR LABS PVT.LTD. WITH M/S.ANI TECHNOLOGIES INDIA PVT.LTD., WAS BROUGHT ON RECORD BEFORE LD.AO, VIDE LETTER DATED 21/12/201 7 WHICH IS PLACED AT PAGE 123 OF PAPER BOOK. HE SUBMITTED THAT NO NEW FACTS NEEDS TO BE INVESTIGATED UPON FOR ADJUDICATING THE ADDITIONAL GROUND AND THEREFORE THE SAME MAY BE ADMITTED. 4. ON THE CONTRARY LD.SR.DR COULD NOT CONTROVERT AD MISSION OF THE LEGAL ISSUE RAISED BY ASSESSEE. 5. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SID ES IN LIGHT OF RECORDS PLACED BEFORE US. 5.1. LD.AR IN SUPPORT OF HIS CONTENTION IS PLACED R ELIANCE ON DECISION OF HONBLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD VS CIT REPORTED IN 229 ITR 383 . 5.2. WE AGREE WITH THE SUBMISSION OF LD.AR THAT NO NEW FACTS NEEDS TO BE VERIFIED/CONSIDERED FOR DECIDING THE IS SUE ALLEGED BY ASSESSEE IN THE ADDITIONAL GROUND. MORE SO THE GROU ND PERTAINS TO A LEGAL ISSUE THAT GOES TO THE ROOT CAUSE OF ASSESS MENT AND THEREFORE DESERVES TO BE ADMITTED. ACCORDINGLY ADDITIONAL GROUND RAISED BY ASSESSEE ST ANDS ADMITTED. 6. AS THE ISSUE ALLEGED BY ASSESSEE IN THE ADDITION AL GROUND GOES TO THE ROOT CAUSE, WE INTEND TO DECIDE THE ADDITION AL GROUND BEFORE GOING INTO THE MERITS OF THE CASE. PAGE 4 OF 13 ITA NO.2428/BANG/2018 6.1. LD. A.R. SUBMITTED THAT ASSESSMENT ORDER PASSE D BY LD. AO IS IN THE NAME OF NONEXISTING COMPANY AND IS NULLIT Y, VOID AB INITIO AND BAD IN LAW. HE SUBMITTED THAT EVEN DESPITE INT IMATION TO LD.AO, ASSESSMENT ORDER HAS BEEN PASSED IN THE N AME OF M/S.SERENDIPITY INFOLABS PVT.LTD. IT HAS BEEN SUBMI TTED BY LD.AR THAT, SECTION 292B CANNOT BE APPLIED TO THE ORDERS TO CURE ILLEGALITY, AND THEREFORE THE ASSESSMENT ORDER SO P ASSED BY LD.AO DATED 26/12/2017 IN THE NAME OF M/S.SERENDIPITY INF OLABS PVT.LTD., DESERVES TO BE QUASHED. HE PLACED RELIANC E ON FOLLOWING DECISION IN SUPPORT OF ITS CONTENTION: PCIT VS MARUTI SUZUKI INDIA PVT.LTD (2019) 416 ITR 613 (SC); PCIT VS BMA CAPFIN LTD., REPORTED IN (2018) 100 TAXMANN.COM 330 (SC); GENPACT INDIA PVT.LTD VS DCIT REPORTED IN (2020) 11 8 TAXMANN.COM 40 (DEL-TRIB); SATYAM COMPUTER SERVICES LTD VS DCIT (2020) 117 TAXMANN.COM 593 (MUM-TRIB); 6.2. ON THE CONTRARY, LD.SR.DR OBJECTED FOR THE ISS UE ALLEGED IN ADDITIONAL GROUND. SHE ADMITTED THAT INTIMATION WAS FILED BY ASSESSEE ON 21/07/2017 WHILE REPLYING TO THE LIST O F FIXED ASSETS HELD BY ASSESSEE AS ON DATE. SHE SUBMITTED THAT, NO TICE UNDER SECTION 143 (2) WAS ISSUED TO M/S.SERENDIPITY INFO LABS PVT.LTD., ON 21/03/2016 AND ASSESSEE STARTED MAKING SUBMISSIO NS BEFORE LD.AO VIDE ITS LETTER DATED 01/12/2017, 15/12/2017, 19/12/2017 AND 21/12/2017. LD.SR.DR SUBMITTED THAT, THE MERGER WAS APPROVED BY NCLT ON 28/07/2017 WHICH WAS INTIMATED TO ASSESSEE BY MINISTRY OF CORPORATE AFFA IRS ON 31/07/2017. LD.SR.DR SUBMITTED THAT, ASSESSEE DID N OT FILE PAGE 5 OF 13 ITA NO.2428/BANG/2018 INDEPENDENT LETTER, IMMEDIATELY INFORMING LD.AO REG ARDING APPROVAL OF MERGER AND THAT M/S.SERENDIPITY INFOLAB S PVT.LTD., IS NO LONGER IN EXISTENCE. SHE SUBMITTED THAT, ASSESSE E HAD ALREADY FILED DETAILS OF PROVIDING ADDITIONS TO THE FIXED A SSETS ALONG WITH BILLS/INVOICES AND THE RATE OF DEPRECIATION CLAIMED WIDE ITS REPLY DATED 19/12/2017. 6.3. IT WAS THUS SUBMITTED BY LD.SR.DR THAT, ENTIRE ASSESSMENT PROCEEDINGS CARRIED OUT BY LD.AO WAS PARTICIPATED B Y THE REPRESENTATIVE APPEARING FOR M/S.SERENDIPITY INFOLA BS PVT.LTD., WITHOUT ANY OBJECTION. HE FURTHER SUBMITTED THAT IN COME FOR FINANCIAL YEAR 01/04/2014 TO 31/03/2015, FILED IN T HE NAME OF M/S.SERENDIPITY INFOLABS PVT.LTD., WAS BEING ASSESS ED. REFERRING TO THE RELEVANT DATES OF APPROVAL OF MERGER BY NCLT DATED 28/07/2017 AND ITS INTIMATION BY MINISTRY OF CORPOR ATE AFFAIRS DATED 31/07/2017, SHE SUBMITTED THAT THE SCHEME WAS MADE EFFECTIVE FROM 31/03/2015 BEING THE LAST DAY OF FIN ANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. 6.4. LD.SR.DR SUBMITTED THAT, ASSESSEE HAD SUFFICI ENT TIME TO INFORM LD.AO REGARDING THE MERGER OF M/S.SERENDIPIT Y INFOLABS PVT.LTD. WITH M/S.ANI TECHNOLOGIES PVT.LTD. HOWEVER , 5 DAYS PRIOR TO PASSING OF ASSESSMENT ORDER, THE SAME WAS INFORMED TO LD.AO IN THE MANNER, WHICH WOULD NOT IMMEDIATELY CO ME TO THE NOTICE OF ASSESSING OFFICER. SHE SUBMITTED THAT ALL THE SUBMISSIONS FILED BY ASSESSEE BEFORE LD.AO IN RESPO NSE TO NOTICE UNDER SECTION 143 (2), WAS AFTER THE DATE OF APPROV AL OF MERGER AND INTIMATION OF THE SAME BY MINISTRY OF CORPORATE AFFAIRS. PAGE 6 OF 13 ITA NO.2428/BANG/2018 6.5. HOWEVER NOT ANY INTIMATION WAS FILED INFORMING ABOUT THE CHANGE OF NAME. IT WAS IN THE MIDDLE OF LAST REPLY DATED 21/12/2017 FILED BY ASSESSEE THERE IS A MENTION REG ARDING THE CHANGE OF NAME. SHE SUBMITTED THAT, ASSESSEE FILED RECTIFICATION APPLICATION DATED 10/04/2018 BEFORE LD.AO, AGAINST ORDER DATED 26/12/2017, WHICH IS PENDING AS ON DATE FOR DISPOSA L HOWEVER IT DOES NOT RAISE THE ISSUE OF ASSESSMENT ORDER BEING PASSED IN THE WRONG NAME. 6.6. IT HAS THUS BEEN VEHEMENTLY SUBMITTED BY LD.SR .DR THAT, NONE OF THE REPLIES FILED BY ASSESSEE BEFORE LD.AO HIGHLIGHTS CHANGE IN THE NAME OF ASSESSEE. SHE THUS SUBMITTED THAT, ASSESSMENT ORDER PASSED IN THE NAME OF M/S.SERENDIP ITY INFOLABS PVT.LTD., IS RECTIFIABLE UNDER 292B OF THE ACT. 7. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SID ES IN LIGHT OF RECORDS PLACED BEFORE. 7.1. IT HAS BEEN SUBMITTED BY LD.AR THAT, DURING MA RCH 2015, ANI TECHNOLOGIES PVT.LTD ACQUIRED 100% STAKE IN M/S .SERENDIPITY INFOLABS PVT.LTD.. SUBSEQUENTLY, M/S.SERENDIPITY IN FOLABS PVT.LTD., AND ANI TECHNOLOGIES PVT.LTD., FILED SCHE ME OF COMPOSITE ARRANGEMENT OF MERGER UNDER PROVISIONS OF SECTION 2 33 OF COMPANIES ACT, BEFORE HONBLE NATIONAL COMPANY LAW TRIBUNAL . HONBLE NATIONAL COMPANY LAW TRIBUNAL, APPROVED THE SCHEME OF MERGER ON 28/07/2017 W.E.F. 31/03/2015. ASSESSEE ST RONGLY RELIED ON DECISION OF HONBLE SUPREME COURT IN CASE OF DCIT VS MARUTI SUZUKI INDIA LTD ., REPORTED IN (2019) FOR 16 ITR 613 AND PAGE 7 OF 13 ITA NO.2428/BANG/2018 CHALLENGED VALIDITY OF ASSESSMENT ORDER DATED 26/12 /2017, AS IT IS PASSED IN THE NAME OF TRANSFEROR COMPANY. 7.2. FOR THE SAKE OF CONVENIENCE WE TABULATE RELEVA NT FACTS OBSERVED BY HONBLE SUPREME COURT IN CASE OF MARUTI SUZUKI INDIA LTD (SUPRA) FOR COMPARING WITH FACTS OF ASSESSEE BEFORE US. FACTS IN CASE OF MARUTI SUZUKI(SUPRA) BEFORE HONBLE SUPREME COURT FACTS IN CASE OF ASSESSEE BEFORE US . ASSESSMENT YEAR INVOLVED IS 2012-13, RELEVANT FINANCIAL YEAR 01/04/2011 TO 31/03/2012 ASSESSMENT YEAR INVOLVED IS 2015-16, RELEVANT FINANCIAL YEAR; 01/04/2014 TO 31/03/2015. AMALGAMATION WAS APPROVED ON 29/01/2013 W.E.F. 01/04/2012 MERGER WAS APPROVED ON 28/07/2017 W.E.F. 31/03/2015 NOTICE UNDER SECTION 143(2) WAS ISSUED ON 26/09/2013 NOTICE UNDER SECTION 143(2) WAS ISSUED ON 21/03/2016 INTIMATION REGARDING AMALGAMATION TO LD.AO FILED ON 02/04/2013. INTIMATION REGARDING MERGER WHILE FURNISHING CERTAIN DETAILS ON 21/12/2017 DATE OF ASSESSMENT ORDER 11/03/2016 IN THE NAME OF AMALGAMATED COMPANY DATE OF ASSESSMENT ORDER: 26/12/2017 IN THE NAME OF TRANSFEROR COMPANY. 7.3. FROM THE ABOVE, IT IS QUITE CLEAR THAT, IN THE PRESENT FACTS OF CASE, NOTICE UNDER SECTION 143(2) WAS ISSUED TO M/S .SERENDIPITY INFOLABS PVT.LTD., MUCH PRIOR TO DATE OF APPROVAL O F MERGER BY HONBLE NCLT, AND THAT, THE MERGER WAS APPROVED DURING PENDENCY OF ASSESSMENT BEFORE LD.AO. ONE MORE FACT BROUGHT TO OUR NOTICE BY LD.SR.DR IS THAT, REPLIES TO 143(2) N OTICE ARE FILED BY ASSESSEE MUCH AFTER THE DATE OF APPROVAL OF MERGER, AND ASSESSEE NEVER INTIMATED THE SAME TO LD.AO. SHE SUBMITTED TH AT IN FINAL PAGE 8 OF 13 ITA NO.2428/BANG/2018 REPLY DATED 21/12/2017 IN AN INTERNAL PARAGRAPH ASS ESSEE INTIMATED IT THE FORM OF PASSING REFERENCE. 7.4. WE ALSO NOTE THAT, THE ASSESSMENT ORDER PASSED IS PASSED WITHIN 4 DAYS OF FILING OF REPLY DATED 21/12/2017. WE ALSO NOTE THAT, EVEN WHEN SUBSEQUENTLY ASSESSEE FILED RECTIFI CATION APPLICATION BEFORE LD.AO, THE SAME HAS NOT BEEN BRO UGHT TO THE NOTICE OF LD.AO FOR CORRECTING THE NAME. WE FAIL TO UNDERSTAND THE REASON, WHY ASSESSEE NEVER BROUGHT TO NOTICE OF LD.AO REGARDING THE MERGER AND NON-EXISTENCE OF M/S.SERENDIPITY INFOLABS PVT.LTD. , IMMEDIATELY AFTER 31/07/2017 IN ACCORDANCE WITH LAW. 7.5. THE FACTS OF PRESENT ASSESSEE IS NOT IDENTICAL WITH THE FACTS OBSERVED BY HONBLE SUPREME COURT IN CASE OF MARUTI SUZUKI INDIA PVT. LTD., (SUPRA) . ALSO THE RATIO LAID DOWN IN THE DECISIONS RELIED UPON BY LD.AR ARE BASED ON DIFFERENT FACTS AND DO N OT COME TO RESCUE ASSESSEE IN THE PRESENT FACTS NOTED BY US HE RE IN ABOVE. UNDER SUCH CIRCUMSTANCES, WE FIND THE ASSESSMENT OR DER BEING PASSED BY LD.AO IN THE NAME OF M/S.SERENDIPITY INFOLABS PVT.LTD., IS MERE IRREGULARITY, WHICH IS RECTIFIABLE UNDER 29 2B OF THE ACT. LD.AO IS DIRECTED TO TAKE NECESSARY STEPS TO RECTIF Y THE SAME. WE THEREFORE DISMISS THE ADDITIONAL GROUND RAISED B Y ASSESSEE. GROUND NO.1-6 8. COMING TO THE FACTS ON MERITS, LD.AR IN THE SUBM ISSION DATED 14/10/2020 STATED THAT ASSESSING OFFICER HAD MADE F OLLOWING DISALLOWANCES IN THE ASSESSMENT ORDER: PAGE 9 OF 13 ITA NO.2428/BANG/2018 DISALLOWANCE OF BAD DEBTS OF RS.4,22,000/- DISALLOWANCE OF INTEREST ON DELAYED PAYMENT OF STAT UTORY DUES AMOUNTING TO RS.18,62,000/- DISALLOWANCE OF AMORTISATION OF INTANGIBLE ASSETS U NDER SECTION 35D AMOUNTING TO RS.59,46,000/- REVALUATION OF SHARE PREMIUM UNDER SECTION 56(2)(VI IB) AMOUNTING TO RS.62,16,077/- 8.1. AGGRIEVED BY ADDITIONS, ASSESSEE PREFERRED APP EAL BEFORE LD.CIT(A). LD.CIT(A) DELETED DISALLOWANCE OF BAD DE BTS. LD.CIT(A) ON CONSIDERING SUBMISSIONS BY ASSESSEE DI RECTED LD.AO TO VERIFY IF ASSESSEE HAS ACTUALLY SUO MOTO DISALLOWED SUM OF RS.15,68,759/- IN ITS COMPUTATION BEING INTE REST PAYMENT AND ALSO DIRECTED LD.AO TO VERIFY IF ASSESS EE HAD DISALLOWED A SUM OF RS.59,46,000/- TOWARDS DEPRECIA TION ON SOFTWARE UNDER SECTION 35D. 8.2. IN RESPECT OF ADDITION MADE UNDER SECTION 56(2 )(VIIIB) OF THE ACT LD.CIT(A) AGREED WITH LD.AO AND OBSERVED TH AT THE REPORT PREPARED BY THE CHARTERED ACCOUNTANT IS BASE D ON INFORMATION GIVEN BY THE MANAGEMENT WHICH IS A SELF -SERVING DOCUMENT WHICH CANNOT BE RELIED ON. 8.3. BEFORE US, ASSESSEE IS IN APPEAL ONLY IN RESPE CT OF ADDITION AMOUNTING TO RS.62,16,077/- UNDER SECTION 56(2)(VII B) OF THE ACT. 8.4 IT IS SUBMITTED BY LD.AR THAT ASSESSEE IS A VE NTURE CAPITAL UNDERTAKING RECEIVING MONIES FROM OTHER VENTURE CAP ITAL FUNDS. IT HAS BEEN STATED THAT ASSESSEE IS GOVERNED BY REGULATION 2 OF THE VENTURE CAPITAL REGULATIONS AS PER SECTION 10(23FB) OF THE ACT. HE SUBMITTED THAT PROVISIONS O F SECTION PAGE 10 OF 13 ITA NO.2428/BANG/2018 56(VIIB) DO NOT APPLY TO ASSESSEE AS THE FUNDS ARE RECEIVED FROM NON RESIDENT VENTURE CAPITAL FUNDS. 8.5 LD.AR SUBMITTED THAT ALL THE DETAILS IN RESPEC T OF THE MONIES RECEIVED BY ASSESSEE WERE PLACED BEFORE AUTH ORITIES BELOW. HOWEVER LD.CIT(A) HELD AS UNDER: 11. ON THE ISSUE OF ADDITION OF RS 6216,077/- MADE U/S 56(2)(VIIB) OF THE ACT, IT IS NO DOUBT TRUE THAT TH E ACT PERMITS APPELLANT TO CHOSE DCF METHOD AND ADOPT THE VALUATION BY A CHARTERED ACCOUNTANT IN THE PRESENT CASE HOWEVER, THE REPORT OF THE CHARTERED ACCOUNTANT CLE ARLY STATES THAT THE REPORT IS BASED ON INFORMATION GIVE N BY THE MANAGEMENT AND THE ACCOMPANYING ANNEXURE 2 TO THE REPORT CONTAINS DISCLAIMERS BY THE CA, WHICH CLEARL Y INDICATES THAT THE CA DOES NOT GIVE AN INDEPENDENT OPINION, BUT HAS MERELY PREPARED A REPORT BASED ON FIGURES PROVIDED BY THE COMPANY MANAGEMENT, WHICH OBVIOUSLY WOULD BE SUBJECTIVE AND SELF SERVING IN N ATURE. THE DOES NOT MAKE AN INDEPENDENT VERIFICATION BASED ON MARKET CONDITIONS. HENCE THIS REPORT CANNOT BE ACCE PTED. THE ADDITION MADE BY THE AO THEREFORE STANDS CONFIRMED. 9. WE NOTE THAT, AUTHORITIES BELOW HAVE NOT CONSID ERED THE MATERIALS AVAILABLE ON RECORD TO DECIDE THE ISSUE O N MERITS. WE ARE THEREFORE REMANDING THE ISSUE BACK TO LD.AO. AS SESSEE IS DIRECTED TO FILE ALL NECESSARY DOCUMENTS AND EVIDEN CES IN SUPPORT OF ITS CLAIM AND TO ESTABLISH ITSELF TO BE A VENTUR E CAPITAL COMPANY. LD.AO SHALL THEN CONSIDER THE ISSUE AFRESH IN LIGHT OF EVIDENCES/DOCUMENTS FILED IN ACCORDANCE WITH LAW. N EEDLESS TO SAY THAT, PROPER OPPORTUNITY SHALL BE GRANTED TO AS SESSEE IN ACCORDANCE WITH LAW. PAGE 11 OF 13 ITA NO.2428/BANG/2018 ACCORDINGLY, GROUNDS RAISED BY ASSESSEE ON MERITS S TANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DEC, 2020 SD/- SD/- (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 11 TH DEC, 2020. /VMS/ PAGE 12 OF 13 ITA NO.2428/BANG/2018 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE