BFIL FINANCE LTD ( FORMERLY ITC BHADRACHALAM FINANCE & INVESTMENTS LTD), MUMBAI V. ITO 1(1)-1, MUMBAI

ITA 2648/MUM/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2152 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2005-2006
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Cost of acquisition; Revenue expenditure; Set aside
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.2648/M/2011 ASSESSMENT YEAR: 2005-06 M/S. BFIL FINANCE LTD., (FORMERLY ITC BHADRACHALAM FINANCE & INVESTMENTS LTD.) EUCHARISTIC CONGRESS BLDG. NO.1, 4 TH FLOOR, 5, CONVENT STREET, COLABA, MUMBAI 400 039 PAN: AAACI 3193H VS. THE INCOME TAX OFFICER 1(1)-1, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI FARROKH IRANI, A.R. SHRI NINAD PATADE, A.R. REVENUE BY : MS. JOTHI LAKSHMI NAYAK, D.R. DATE OF HEARING : 06.06.2019 DATE OF PRONOUNCEMENT : 24.06.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 19.10.2010 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2005-06. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINS T THE ORDER OF LD. CIT(A) AFFIRMING THE DISALLOWANCE OF INTEREST O F RS.24,08,118/- AS DISALLOWED BY THE AO FOR DELAYED PAYMENT OF DUES ON THE GROUND THAT THE INTEREST IS PENAL IN NA TURE AND NOT ADMISSIBLE U/S 37 OF THE ACT. ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 2 3. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO OBSERVED THAT ASSESSEE HAS CHARGED I NTEREST OF RS.24,08,118/- PAID TO SOCIETY M/S. LAKSHMI FINANCE AND LEASING COMPANIES COMMERCIAL PREMISES CO-OPERATIVE SOCIETY LTD. TOWARDS INTEREST FOR DELAYED PAYMENT OF CHARG ES AS LEVIED BY THE SOCIETY FOR MAINTENANCE AND OUTSTANDING STAM P DUTY PAYABLE BY THE ASSESSEE IN RESPECT OF THE PROPERTY OWNED AND ALLOTTED IN THE SOCIETY. THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM AS TO HOW THE SAID AMOUNT WAS INCURRED FOR TH E PURPOSE OF BUSINESS. FINALLY, THE AO ADDED THE SAME TO THE IN COME OF THE ASSESSEE BY HOLDING THAT THE AMOUNT OF INTEREST WAS PENAL IN NATURE AND WAS NOT SPENT TOWARDS EARNING OF INCOME DURING THE YEAR UNDER CONSIDERATION. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) UPH ELD THE ORDER OF AO ON THIS ISSUE BY OBSERVING THAT THE INT EREST PAYMENTS WERE PENAL IN NATURE AS ASSESSEE HAS DEFAU LTED IN THE PAYMENT OF INSTALLMENTS OF STAMP DUTY AND MAINTENA NCE CHARGES OF THE SOCIETY AND THUS THE PAYMENT WAS NOT CONTRACTUAL BUT FOR THE DELAYED INSTALLMENTS AND THUS JUSTIFIED THE ADDITION BY THE AO. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE SAID AMOUNT OF INTEREST WAS PAID BY THE ASSESSEE DELAYED INSTALLMENTS TOWARDS PAYMENT OF STAMP DUTY AND MAINTENANCE CHARGES PAYABLE TO THE SOCIETY . THE ASSESSEE OWNED A PROPERTY IN THE SAID SOCIETY. WE OBSERVE THAT DURING 1993-94, NON BANKING FINANCE COMPANIES GOT T OGETHER AND FORMED A SOCIETY NAMED AS M/S. LAKSHMI FINANCE AND LEASING COMPANIES COMMERCIAL PREMISES CO-OPERATIVE SOCIETY ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 3 LTD. WHICH HAD RECEIVED A PIECE OF LAND ON LEASE FR OM MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY IN BANDRA KURLA COMPLEX FOR CONSTRUCTION OF COMMERCIAL PREMISES. T HE ASSESSEE BECAME MEMBER OF THE SAID SOCIETY AND ASSESSEE HAD TO CONTRIBUTE COST OF CONSTRUCTION AND RELATED EXPENSE S IN INSTALLMENTS DEPENDING UPON THE PROGRESS OF THE CON STRUCTION TOWARDS 5000 SQ. FT. SUPER BUILT UP AREA ALLOTTED T O THE ASSESSEE HOWEVER DUE TO FINANCIAL CONSTRAINTS THE ASSESSEE C OULD NOT PAY THE INSTALLMENTS TO THE SOCIETY TOWARDS STAMP DUTY AND MAINTENANCE CHARGES ON TIME. THE ASSESSEE EVEN DEC IDED TO PART WITH THE SAID COMMERCIAL ALLOTMENT BY SELLING THE SAME IN THE MARKET AS THE SUBSTANTIAL AMOUNT WAS DUE TO THE SOCIETY BY THE ASSESSEE. THE SAID SOCIETY CHARGED INTEREST ON THE UNPAID AND OUTSTANDING INSTALLMENTS BEFORE GIVING NOC FOR TRANSFER OF THAT BUILT UP AREA ALLOTTED TO THE ASSESSEE AND THU S ASSESSEE HAD TO PAY RS.24,08,118/- TO THE SOCIETY TOWARDS INTERE ST. WE HAVE EXAMINED AND PERUSED THE VARIOUS DOCUMENTS PLACED ON RECORD SUCH AS CIRCULAR OF THE SOCIETY DATED 21.11.2002 AD DRESSED TO THE MEMBERS SPECIFYING THEREIN THAT MANAGING COMMIT TEE AFTER DUE CONSULTATION IN ANNUAL GENERAL BODY MEETING HAS DECIDED TO COLLECT MAINTENANCE CHARGES FROM THE MEMBER W.E.F. 01.12.2002 AND IF THE AMOUNT IS NOT PAID, INTEREST WOULD BE CH ARGED @ 21% PER ANNUM. WE HAVE ALSO EXAMINED PAGE NO.39 OF THE PAPER BOOK WHICH CONTAINED THE DETAILS OF OUTSTANDING BAL ANCE AND THE INTEREST CHARGED BY THE SOCIETY FROM THE ASSESSEE. AFTER TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CAS E WE OBSERVE THAT THE INTEREST PAID BY THE ASSESSEE ON THE OUTST ANDING INSTALLMENTS OF MAINTENANCE EXPENSES AND STAMP DUTY IS IN NO WAY A PENAL IN NATURE BUT TOWARDS THE DEFAULT COMMI TTED BY THE ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 4 ASSESSEE IN THE PAYMENT OF INSTALLMENTS. THE CASE OF THE ASSESSEE IS SUPPORTED BY A SERIES OF DECISIONS REFE RRED AND RELIED BY THE LD. A.R. DURING THE COURSE OF HEARING NAMELY (I) ITA NO.302/PN/2013 A.Y. 2009-10 ORDER DATED 24.12.2013 IN THE CASE OF ACIT VS. MAHARASHTRA CO-OPERATIVE DEVELOPME NT CO- OPERATION LTD.(II) CIT VS. CATHOLIC SYRIAN BANK LTD . (2013) 130 TAXMAN 447 (KER.-HC) AND CIT VS. NEW ALPINE FORESTS (2000) 113 TAXMAN 316 (J&K). IN THE CASE OF ACIT VS. MAHA RASHTRA DEVELOPMENT CORPORATION LTD.(SUPRA) THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT PENAL INTEREST CHARGED B Y THE BANK IS NOT PENAL IN NATURE IN FACT BUT FOR FAILURE TO GIVE THE CONTRACTUAL COMMITMENT BY THE ASSESSEE WHICH CAN NOT BE EQUATED WITH OFFENCE WHICH IS CONTEMPLATED IN EXPLANATION TO SEC TION 37 OF THE ACT AND THUS UPHELD THE ORDER OF LD. CIT(A) DELETIN G THE DISALLOWANCE OF THE PENAL INTEREST. IN THE CASE OF CIT VS. NEW ALPINE FORESTS (SUPRA) THE HONBLE J & K HIGH COURT HAS HELD THAT INTEREST ON DELAYED PAYMENT OF ROYALTY WAS COM PENSATORY IN NATURE AND ALLOWABLE UNDER SECTION 37(1) OF THE ACT . UNDERLYING FACTS IN THE CASE CIT VS. NEW ALPINE FORESTS (SUPR A) WERE THAT THE ASSESSEE WAS A FOREST CONTRACTOR WHO TOOK ON L EASE CERTAIN FORESTS FROM THE GOVERNMENT ON WHICH IT WAS REQUIRE D TO PAY ROYALTY TO THE FOREST DEPARTMENT WHICH WAS NOT PAID IN TIME AND RESULTED IN THE INTEREST PAYMENT ON THE DELAYED PAY MENT OF ROYALTY. THEREFORE , WE ARE OF THE CONSIDERED VIEW THAT THE PAYMENT OF INTEREST FOR DELAYED PAYMENT OF INSTALLM ENTS OF MAINTENANCE CHARGES AND STAMP DUTY WERE NOT IN PENA L IN NATURE BUT MORE OF CONTRACTUAL. ACCORDINGLY, WE SE T ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE. ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 5 6. THE ISSUE RAISED IN 2 ND GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.33,24,300/- BY L D. CIT(A) AS MADE BY THE AO TOWARDS DEPRECIATION OF PLANT AND MA CHINERY. 7. THE FACTS IN BRIEF ARE THAT THE AO NOTICED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THAT ASSESSEE HAS CLAIMED DEPRECIATION IN RESPECT OF PLANT AND MACHINERY OF RS.33,24,300/-. THE AO NOTED THAT DURING THE YEAR THE ASSETS WERE NOT PUT TO USE BECAUSE COMPANY WAS NOT HAVING ANY BUSINESS SINCE LAST SO MANY YEARS AND THUS ASSETS W ERE ALSO NOT GIVING ANY LEASE INCOME. THE AO FURTHER NOTED THAT THE ASSESSEE WAS WINDING UP HIS BUSINESS OPERATION. THE A.O. FO LLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF RISHIROOP POLYMERS LTD. 102 ITD 128 WHEREIN IT HAS BEEN HELD THAT WHERE THE PLANT AND MACHINERY WERE NOT PUT TO USE BECAUSE OF LOCK OUT AND STRIKE, THE DEPRECIATION WAS NOT AL LOWABLE. 8. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED GROUND RAISED BY THE ASSESSEE ON THIS ISSUE AFTER T AKING INTO CONSIDERATION THE CONTENTIONS OF THE ASSESSEE BY F OLLOWING THE ORDER OF PREDECESSOR THE LD. CIT(A) FOR A.Y. 2002-0 3 IN ASSESSEES OWN CASE AND THUS CONFIRMED THE ADDITION . 9. THE LD. A.R., AT THE OUTSET, SUBMITTED BEFORE TH E BENCH THAT ISSUE INVOLVED IN THE PRESENT GROUND IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2003-04 AND 2004-05 IN ITA NO.6124/M/2008 ORDER DATED 07.10.2009 AND ITA NO.386/M/2009 A.Y. 2004-05. THE LD. A.R. PRAYED BE FORE THE ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 6 BENCH THAT THE GROUND RAISED BY THE ASSESSEE MAY KI NDLY BE ALLOWED BY FOLLOWING THE SAID DECISIONS. 10. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF AUTHORITIES BELOW AND GROUNDS OF APPEAL BY SUBMITTI NG THAT THE ASSESSEE HAS MADE MISLEADING SUBMISSIONS ON LEASE A GREEMENTS BEFORE THE LD. CIT(A) QUA USE OF THESE ASSETS FOR T HE BUSINESS PURPOSE. LD. D.R. SUBMITTED THAT ONUS IS ON THE ASS ESSEE TO PROVE AS FOR WHAT USE THESE ASSETS WERE PUT DURING THE YEAR TOWARDS BUSINESS. THE LD. D.R. SUBMITTED THAT SINC E THE ASSESSEES BUSINESS WAS TOTALLY CLOSED DOWN AND ASS ESSEE HAS NOT RECEIVED ANY LEASE RENT FROM THESE ASSETS, THER EFORE IT CAN NOT BE SAID THAT ASSETS WERE BEING PUT TO USE FOR T HE BUSINESS PURPOSES. THE LD. D.R. SUBMITTED THAT IN EARLIER Y EARS THE ASSETS WERE DIFFERENT AND THEREFORE ISSUE IS NOT CO VERED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH DECISIONS. THE LD. D.R. PRAYED THAT SINCE THE ASSESSEE HAS NOT MET THE NECE SSARY CONDITIONS FOR CLAIMING DEPRECIATION, THEREFORE THE ORDER OF LD. CIT(A) MAY BE AFFIRMED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISION CITED BY THE LD. A.R. IN ASSESSEES OWN CASE IN A.Y. 2003 -04 AND 2004-05. WE FIND THAT THE ISSUE IS SQUARELY COVERE D BY THE SAID DECISIONS IN FAVOUR OF THE ASSESSEE. WE FURTHER NO TE THAT IN A.Y. 2004-05 THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS F OLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N ASSESSEES OWN CASE IN A.Y. 2003-04. THE OPERATIVE PART OF TH E CASE IN ITA NO.386/M/2019 A.Y. 2004-05 IS REPRODUCED AS UNDER: 7. WE FIND THAT THIS ISSUE IS COVERED BY TRIBUNALS DECISION IN ASSESSEES OWN CASE FOR THE AY 2003-04 IN ITA NO. 6124/MUM/2008 ORDER D ATED 07-10- 2009, WHEREIN ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 7 VIDE PARA 4 THE DEPRECIATION WAS ALLOWED AS UNDER: - 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFU LLY. THE DISPUTE IS REGARDING ALLOWABILITY OF DEPRECIATION ON THE LEASED ASSETS. THERE IS NO DISPUTE THAT THE ASSESSEE WAS OWNER OF THE ASSETS AND THE SAME HAD L EASED TO THE LESEES. THE DEPRECIATION HAS BEEN DISALLOWED ONLY ON THE GROUND THAT IN THE RELEVANT YEAR THE ASSESSEE HAD NOT RECEIVED ANY RENTAL INCOME IN THE FORM OF LEASE RENT. IN OUR VIEW ONLY ON THE GROUND THAT NO INCOME WAS RECEIVED DURI NG THE YEAR DEPRECIATION COULD NOT BE DISALLOWED WHEN THE ASSETS HAD BEEN ACTUALLY LEASED. WE ALSO NOTE THAT IN THE EARLIER YEAR THE DEPRECIATION IN RESPECT OF SAM E LEASED ASSETS HAVE ALREADY BEEN ALLOWED BY THE AUTHORITIES WHICH SHOWS THAT THERE W AS NO DOUBT ABOUT GENUINENESS OF LEASE. THE MATCHING PRINCIPLE REQUIRES THAT THE INCOME AND EXPENSES MUST RELATE TO THE SAME PERIOD AND DOES NOT MEAN THAT EXPENSES INCURRED CANNOT BE ALLOWED ONLY BECAUSE NO INCOME HAS BEEN EARNED. IT IS A SET TLED LEGAL POSITION THAT EXPENSE INCURRED WHOLLY AND EXCLUSIVELY FOR EATING OF INCOM E HAS TO BE ALLOWED EVEN IF NO INCOME IS ACTUALLY EARNED. NO CASE HAS BEEN MADE BE FORE US THAT NO INCOME WAS POSSIBLE FROM THE LEASE OF ASSETS OR THAT INCOME WA S NOT INCLUDIBLE IN TOTAL INCOME. WE THEREFORE, ON THE FACTS OF THE CASE HELD THAT DE PRECIATION HAS TO BE ALLOWED. 12. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO ONE AS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN A.Y. 2004- 05, WE ,THEREFORE, RESPECTFULLY FOLLOWING THE SAME, SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO ALLOW THE DEPRECIATION. 13. THE ISSUE RAISED IN GROUND NO.3 IS AGAINST THE CONFIRMATION OF DISALLOWANCE AS MADE BY THE AO ON ACCOUNT OF TEL EPHONE DEPOSITS WRITTEN OFF OF RS.91,500/-. 14. THE FACTS IN BRIEF ARE THAT ASSESSEE HAS CHARGE D RS.3.50 LAKHS UNDER THE HEAD MISCELLANEOUS EXPENSES WHICH I NCLUDED RS.91,500/- ON ACCOUNT OF WRITING OFF OF THE DEPOSI TS WITH THE TELECOM DEPARTMENT. THE AO ASKED THE ASSESSEE TO J USTIFY THE CLAIM WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 10.12.2007 BY SUBMITTING THAT DURING INITIAL PERIOD WHEN THE COMPANY WAS INCORPORATED IN 1991 THE ASSESSEE HAS D EPOSITED RS.91,500/- WITH MTNL TOWARDS DEPOSITS FOR VARIOUS TELEPHONE CONNECTIONS TAKEN FOR ITS OPERATION. THE LD. A.R. SUBMITTED THAT IN VIEW OF THE HUGE LOSSES INCURRED, ENTIRE STAFF O F THE COMPANY ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 8 HAD LEFT AND ITS OPERATIONS WERE ONLY HANDLED BY TH E MANAGERS OF THE HOLDING COMPANY. THE LD. A.R. SUBMITTED THAT D URING THE AUDIT OF THE ACCOUNTS OF THE ASSESSEE, THE STATUTOR Y AUDITORS RAISED OBJECTION ON NON AVAILABILITY OF DEPOSIT REC EIPTS OF RS.91,500/- WHICH COULD NOT BE FOUND DESPITE BEST EFFORTS AND ULTIMATELY , THE AFORESAID AMOUNT OF RS.91,500/- WA S WRITTEN OFF AS BUSINESS/TRADING LOSS DURING THE YEAR. THE ASSE SSEE SUBMITTED THAT IN ABSENCE OF ANY DOCUMENTARY EVIDEN CES, IT WOULD NOT BE POSSIBLE TO CLAIM THE REFUND OF THE SA ID SECURITY DEPOSITS AND THUS REASONED THE WRITING OFF OF THE S ECURITY AS BUSINESS LOSS. THE LD. A.R. REJECTED THE CONTENTIO N OF THE ASSESSEE BY REFERRING TO INSTRUCTION NO.943 ISSUED BY THE SBDT WHEREIN IT HAS BEEN PROVIDED THAT IT IS OPEN TO SUB SCRIBER EITHER TO CLAIM THE ENTIRE AMOUNT PAID UNDER THE OYT SCHEM E IN THE YEAR IN WHICH PAYMENT WAS MADE OR PROPORTIONATELY I N THE YEARS FOR WHICH ADVANCE PAYMENT OF RENT IS MADE. THUS TH E AO HELD THAT THE SAID DEPOSITS COULD HAVE BEEN WRITTEN OFF IN THE YEAR IN WHICH THE CONNECTION WAS TAKEN AND HELD THAT IT CAN NOT BE ALLOWED AS REVENUE EXPENDITURE. 15. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) UP HELD THE ORDER OF AO BY HOLDING THAT THE SAID DISALLOWANCE W AS CORRECTLY MADE. 16. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE REFUND OF SECURITY DEPO SIT FOR TAKING CONNECTION IN THE YEAR 1991 WHEN THE COMPANY WAS FO RMED COULD NOT BE CLAIMED DUE TO NON AVAILABILITY OF PAY MENT RECEIPT. THE STATUTORY AUDITOR OF THE COMPANY RAISED THE ISS UE OF NON AVAILABILITY OF RECEIPTS DURING THE AUDIT AND CONSE QUENTLY IT WAS ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 9 DECIDED TO WRITE OFF THE SAID DEPOSIT AS THE SAME C OULD NOT BE REFUNDED DUE TO NON AVAILABILITY OF RECEIPT OF PAY MENT. IN OUR VIEW, THE ASSESSEE HAS RIGHTLY WRITTEN OFF THE AMOU NT AS BUSINESS/TRADING LOSS AS THE SAID DEPOSITS WERE GIV EN IN THE ORDINARY COURSE OF BUSINESS FOR AVAILING TELEPHONE LINE AND HAS BECOME BAD ONLY DUE TO NON AVAILABILITY OF PAYMENT RECEIPT. WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. D. R. THAT MERE NON AVAILABILITY OF PAYMENT RECEIPT WOULD NOT CONVE RT THE DEPOSITS INTO TRADING/BUSINESS LOSS. SO FAR THE IN STRUCTION NO. 943 IS CONCERNED IT PROVIDES THAT IT CAN BE WRITTEN OFF AS PROVIDED THEREIN BUT DOES NOT PLACE ANY BAR TO WRIT E OFF IN SUBSEQUENT YEAR DUE TO BONAFIDE REASONS. THEREFORE, UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO SET ASIDE T HE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE . 17. THE ISSUE RAISED IN GROUND NO.4 IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE ORDER OF AO ASSESSING THE SHOR T TERM CAPITAL GAIN ON SALE OF OFFICES AT BANDRA KURLA COM PLEX AT RS.2,11,542/-. 18. THE FACTS IN BRIEF ARE THAT DURING THE YEAR, TH E ASSESSEE HAS SOLD ITS OFFICE SPACE AT BANDRA KURLA COMPLEX, MUMB AI FOR RS.3,12,50,000/-. THE ASSESSEE WAS ASKED TO FURNIS H DOCUMENTARY EVIDENCES TOWARDS THE COST OF ACQUISITI ON OF THE ASSET AND CALLED UPON TO EXPLAIN AS TO WHY IT SHOUL D NOT BE ASSESSED UNDER THE HEAD CAPITAL GAIN. THE ASSESSEE REPLIED THAT THE SAID PREMISES WAS NOT AN ASSET AND THEREFORE NO T LIABLE FOR CAPITAL GAIN. IT WAS ALSO STATED THAT THE SAID ASS ET WAS SHOWN IN THE BALANCE SHEET AS CAPITAL WORK IN PROGRESS AT RS .281.73 LAKHS AND ALSO NOT INCLUDED IN THE FIXED ASSETS AND CONSE QUENTLY NO ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 10 DEPRECIATION WAS CLAIMED. ACCORDING TO THE AO THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AND SAID PREMISES WE RE ESSENTIALLY AN ASSET AND THEREFORE HAS TO BE TREATE D AS ASSETS AND AS SUCH THE SALE PROCEEDS WERE LIABLE FOR CAPIT AL GAIN TAX. THE ASSESSEE ALSO FURNISHED THE COPY OF LEDGER ACCO UNT AS A PROOF OF COST OF THE SAID ASSETS AND AS PER THE ACC OUNTS OF THE ASSESSEE TILL 30.06.2004 ASSESSEE HAD PAID TOTAL AM OUNT OF RS.3,58,65,845/- AND HAD AN OUTSTANDING ARREARS OF RS.2,97,590/- PAYABLE TO THE SOCIETY. ACCORDING TO THE AO THE SOCIETY GOT AN OCCUPATION CERTIFICATE ON 02.11.2002 FROM THE AUTHORITY CONCERNED AND CAME TO THE CONCLUSION THAT THE SAID PREMISES WERE CONVERTED IN 2002 WHEREAS THE TRANSFE R WAS AFFECTED ON 30.06.2004 AND THUS THE ASSET WAS HELD FOR LESS THAN THREE YEARS AND THUS IS A SHORT TERM CAPITAL ASSET AND THEREFORE LIABLE FOR SHORT TERM CAPITAL GAIN ASSETS. THE AO ALSO WROTE TO THE SOCIETY TO SUPPLY INFORMATION ABOUT THE COST OF SAID ASSETS. ON THE BASIS OF INFORMATION SUPPLIED BY THE SOCIETY , THE AO CALCULATED THE COST OF THE PROPERTY AT RS.3,10,38,4 58/- WHEREAS THE SALE CONSIDERATION OF THE PROPERTY WAS RS.3,12, 50,000/- AND BROUGHT THE DIFFERENT TO TAX UNDER THE HEAD SHORT T ERM CAPITAL GAIN. 19. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AL SO AFFIRMED THE ORDER OF THE AO ON THIS POINT BY HOLDING THAT I NTEREST PAID BY THE ASSESSEE TO THE SOCIETY CAN NOT BE TREATED AS P ART OF THE COST OF THE ACQUISITION AND THUS UPHELD THE ADDITION. 20. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE COST ACCORDING TO THE A SSESSEE WAS RS.4,23,69,716/- WHEREAS THE COST AS CALCULATED ON THE BASIS OF ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 11 INFORMATION COLLECTED BY THE AO FROM THE SOCIETY WA S RS.3,10,38,458/- COMPRISING RS.2,89,38,458/- AS CON TRIBUTION PAID BY THE ASSESSEE TOWARDS CONSTRUCTION AND RS.21 ,00,000/- AS STAMP DUTY CHARGES AND THUS THE SHORT TERM CAPIT AL GAIN WAS COMPUTED AT RS.2,11,542/-. WHILE CALCULATING THE CO ST OF ACQUISITION, THE AO DID NOT CONSIDER THE MAINTENAN CE CHARGES AND THE INTEREST CHARGES PAID BY THE ASSESS EE AS PART OF COST OF ACQUISITION. WE, FURTHER, FIND THAT THE CO ST AS SHOWN BY THE ASSESSEE IN THE BALANCE SHEET HAS BEEN ACCEPTED BY THE AO IN THE EARLIER YEAR BUT THAT DOES NOT MEAN THAT INF ORMATION COLLECTED BY THE AO AS TO THE COST OF ACQUISITION O F THE ASSESSEE CAN NOT BE APPLIED. IN OUR OPINION THE INTEREST CO ST IF NOT ALLOWED UNDER ANY OTHER PROVISIONS OF THE ACT , THE N IT HAS TO BE ALLOWED. UNDER THESE FACTS, WE OBSERVE THAT THE ISS UE REQUIRED TO BE EXAMINED AT THE LEVEL OF THE AO AGAIN WITH RESPE CT TO COST OF ACQUISITION AS PER THE BOOKS OF ACCOUNTS OF THE ASS ESSEE. WE, THEREFORE, RESTORE BACK THE ISSUE TO THE FILE OF TH E AO WITH THE DIRECTION TO DECIDE THE SAME AS PER FACTS AND LAW A FTER HAVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24.06.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.06.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO.2648/M/2011 M/S. BFIL FINANCE LTD. 12 THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.