M/s. NH SECURITIES LTD., MUMBAI V. ACIT CENT CIR. - 40, MUMBAI

ITA 2784/MUM/2008

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70629 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-12-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 23-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DENIAL DR
• Keywords: Business income; Speculation loss
• Section: 43B; 234B

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H, MUMBAI !' , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO , AM ./I.T.A. NO.2784/M/2008 (AY: 2003-2004) ./I.T.A. NO.2785/M/2008 (AY: 2004-2005) M/S. NH SECURITIES LTD., BHUPEN CHAMBERS, GROUND FLOOR, 9, DALAL STREET, FORT, MUMBAI -23. & / VS. ACIT, CENTRAL CIRCLE - 40, MUMBAI. ' $ ./PAN : AAACS 7140 Q ( '( /APPELLANT) .. ( )*'( / RESPONDENT) '( + , / APPELLANT BY : SHRI RAJIV KHANDELWAL )*'( + , / RESPONDENT BY : DR. DENIAL, DR & + -$ /DATE OF HEARING : 04.07.2013 ./0 + -$ /DATE OF PRONOUNCEMENT : 2.8.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION FOR THE A YS 2003-04 & 2004-05. BOTH THE APPEALS ARE FILED BY THE ASSESSEE ON 23.4. 2008 AGAINST THE SEPARATE ORDERS OF CIT (A), CENTRAL VII, MUMBAI COMMONLY DATED 4.2. 2008. SINCE, THE ISSUES INVOLVED ARE IDENTICAL, FOR THE SAKE OF CONVENIENCE, BOTH TH E APPEALS ARE CLUBBED AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS. 2. FIRSTLY, WE SHALL TAKE UP ITA NO.2784/M/2008 (AY : 2003-2004) AND THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL READ AS UNDER: 1. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO IN NOT ALLOWING LOSS OF RS. 90,87,575/- ON TRANSACTIONS BACKED BY DELIVERY ON THE BASIS THAT THE TRANSACTIONS ARE NOT GENUINE IN NATURE AND THAT NO BUSINESS ACTIVITY HAS BEEN CARRIED ON BY THE APPELLANTS. THE APPELLANTS CONTENDED THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE OBSERVATIONS AND ACTION OF THE CIT (A) IN UPHOLDING THE ACTION OF THE AO IN NOT ALLOWING THE IMPUGNED LOSS ARE ERRONE OUS, BASELESS AND CONTRARY TO THE PROVISIONS OF LAW. THE CIT (A) OUGHT TO HAVE ALLOWE D THE IMPUGNED LOSS AS CLAIMED BY THE APPELLANTS. 2 2. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING A SUM OF RS. 34,374/- UNDER SECTION 43B BEING PAYMENT TO PROVIDENT FUND ON THE BASIS THAT THERE HAS BEEN DELAY IN DEPOSITING THE SAID SU MS WITHIN THE SPECIFIED DUE DATES. THE APPELLANTS CONTEND THAT ON THE FACTS AND CIRCUM STANCES AND IN LAW, THE CIT (A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE O F THE IMPUGNED STATUTORY PAYMENTS AND THE SAID DISALLOWANCE REQUIRES TO BE D ELETED. 3. THE CIT (A) ERRED IN ENHANCING THE ASSESSMENT BY DISALLOWING ENTIRE EXPENSES CLAIMED BY THE APPELLANTS AND FURTHER NOT ALLOWING CARRY FORWARD OF BUSINESS LOSS ALLOWED BY THE AO ON THE GROUND THAT THE APPELLANT S HAVE NOT CARRIED ON ANY BUSINESS ACTIVITY. THE APPELLANT CONTENDED THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS FALLEN IN ERROR IN DISALLOWING THE DEDUCTION FOR EXPENSES AND NOT ALLOWING CARRY FORWARD OF BUSINESS LOSS INASMUCH AS THE APPELLANTS HAVE CARRIED ON BUSINESS ACTIVITY. 4. THE CIT (A) ERRED IN NOT ADJUDICATING THE FOLLOW ING ADDITIONAL GROUND OF APPEAL. THE AO ERRED IN CONSIDERING INTEREST RECEIVED ON FIXED DEPOSITS RS. 25,67,144/- AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME . THE APPELLANTS CONTENDED THAT THE AO OUGHT NOT TO H AVE CONSIDERED THE INTEREST RECEIVED ON FIXED DEPOSITS AS INCOME FROM OTHER SOURCES INASMUCH AS THE FIXED DEPOSITS HAVE BEEN MAINTAINED FOR THE PURPOSE OF BUSINESS. THE APPELLANTS SUBMIT THAT THE CIT (A) OUGHT TO HAV E ADJUDICATED THE AFORESAID GROUND OF APPEAL WHICH IS ALSO PART OF GR OUND OF APPEAL NO.5 OF THE GROUNDS OF APPEAL TO THE CIT (A). 5. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO IN CHARGING INTEREST U/S 234B OF THE ACT. THE APPELLANTS CONTENDED THAT THE CIT (A) OUGHT TO HAVE DELETED THE INTEREST CHARGED UNDER SECTION 234B INASMUCH AS THE APPELLAN TS, IN TERMS OF SECTION 208 ARE NOT LIABLE TO PAY ADVANCE TAX. 3. GROUND NO.1 RELATES TO THE DISALLOWANCE OF RS. 90,87,575 /- ON THE GROUND THAT NO BUSINESS ACTIVITY WAS CARRIED OUT DURING THE YEAR. AT THE OUTSET, SHRI RAJIV KHANDELWAL, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE VIDE ITA NO.792/M/2008 (AY 2001-2002) AND ANOTHER DECISION OF THE ITAT VIDE ITA NO.78/M/2009 (AY 2002-2003). BRINGING OUR ATTENTION TO PARA 6 OF THE SAID ORDER FOR AY 2001-2 002, LD COUNSEL MENTIONED THAT GROUND NO.1 OF THE INSTANT APPEAL NEEDS TO BE SET ASIDE WITH IDENTICAL DIRECTIONS AND FOR FRESH EXAMINATION OF THE ISSUES. 4. WE HAVE PERUSED THE SAID PARA 6 FROM THE ORDER O F THE TRIBUNAL, RELEVANT FOR THE AY 2001-02 AND REPRODUCE THE SAME HERE UNDER: 6. CONSIDERING THE VOLUMINOUS DETAILS FILED BEFORE US SUPPORTING ASSESSEES CLAIM AND ON PERUSAL OF THE ORDERS OF THE AO AND TH E CIT (A), WE ARE OF THE OPINION THAT THE AO HAS DISALLOWED THE CLAIMS ON CERTAIN GE NERAL PRINCIPLES ABOUT THE KETAN 3 PAREKH GROUP CASES AND OBSERVATIONS OF THE JPC AND SEBI WITHOUT EXAMINING THE INDIVIDUAL DETAILS OF THE ASSESSEE COMPANY FOR THE IMPUGNED YEAR. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THE MATTER REQUIRES RE-E XAMINATION BY THE AO. IT IS ALSO NOTICED THAT IN THE CASE OF SAI MANGAL INVESTRADE LT D THE COORDINATE BENCH VIDE ORDER DATED 25.11.2009 HAS ACCEPTED THAT THE TRANSA CTIONS ARE GENUINE AND THE LOSS CLAIMED PERTAINS TO VALUATION OF STOCK AT COST OR NET REAL IZABLE VALUE AND ACCORDINGLY THE GROUNDS OF THE ASSESSEE WERE ALLOWED. IN VIEW OF THIS FINDING OF THE FACT IN ANOTHER GROUP CONCERN, WE ARE OF THE OPINION THAT T HE AO SHOULD EXAMINE THE NATURE OF THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WITHOUT GET TING AFFECTED / PERSUADED BY THE OBSERVATIONS OF THE SEBI AND JPC, UNLESS THEY ARE APPLICABLE TO THE FACTS IN THE ASSESSEE CASE. IT IS ALSO BROU GHT TO OUR NOTICE THAT THERE WAS SPECIAL AUDIT CONDUCTED OF ASSESSEES TRANSACTIONS AND THE REPORT WAS NOT PLACED ON RECORD. THE AO IS DIRECTED TO CONSIDER THE ISSUES AFRESH IN THE LIGHT OF THE FACTS ON RECORD AND NEEDLESS TO SAY THAT THE ASSESSEE SHOULD BE GIVEN OPPORTUNITY BEFORE DECIDING THE ISSUES. FOR THIS PURPOSE THE ORDERS OF THE AO AND CIT (A) ON THIS ISSUE ARE SET ASIDE AND THE ASSESSMENT IS RESTORED BACK TO THE AO TO C ONSIDER IT AFRESH AFTER EXAMINING THE FACTS AND ACCORDING TO THE LAW. 5. IT IS THE CLAIM OF THE ASSESSEE DESPITE THE DIREC TION OF THE SEBI & JPC, THE ASSESSEE IS DEEMED ENGAGED IN THE BUSINESS AND THER EFORE THE LOSS CONSTITUTES THE GENUINE ONE. CONSIDERING THE ABOVE, WE ARE OF THE O PINION THAT THE GROUND NO.1 SHOULD BE SET ASIDE WITH IDENTICAL DIRECTIONS. ACCORDINGLY, GROUND NO .1 RAISED BY THE ASSESSEE IS SET ASIDE . 6. GROUND NO.2 PERTAINS TO THE ALLOWABILITY OF SUM OF RS. 34,374/- WHICH WAS ORIGINALLY NOT ALLOWED U/S 43B, CONSIDERING THE FAC T THAT THE SAID AMOUNT BEING PAYMENT TO THE PROVIDENT FUND, WAS NOT PAID BEFORE THE SPECIFIED DUE DATES. IN THIS REGARD, LD COUNSEL SUBMITTED THAT THE SAID AMOUNTS THOUGH NOT PAID BEFORE THE SPECIFIED DUE DATES, AND THEY WERE ACTUALLY PAID BEFORE DUE DATE FOR FILING OF RETURN OF INCOME. IN THIS REGARD, LD COUNSEL MENTIONED TH AT THE DATES OF THE PAYMENTS MAY BE EXAMINED BY THE AO AND ALLOW THE CL AIM OF THE ASSESSEE AS PER THE PREVAILING JUDGMENTAL LAW IN FORCE. WE FIND MER IT IN THE REQUEST OF THE LD COUNSEL. ACCORDINGLY, WE DIRECT THE AO TO ALLOW TH E CLAIM OF THE ASSESSEE SUBJECT TO THE CONDITION THAT THE AMOUNTS WERE PAID BEFORE THE DUE DATES FOR FILING OF THE RETURN OF INCOME AND THE CLAIM IS IN ACCORDANCE WIT H THE PROVISIONS OF THE ACT. ACCORDINGLY, GROUND NO.2 IS ALLOWED AS ABOVE. 7. GROUND NO.3 RELATES TO ENHANCEMENT OF ASSESSMENT BY DISALLOWING ENTIRE EXPENSES AND ALSO NOT ALLOWING CARRY FORWARD OF BUS INESS LOSS ON THE GROUND THAT THE ASSESSEE HAS NOT CARRIED ON ANY BUS INESS ACTIVITY FOR THE YEAR UNDER CONSIDERATION. AT THE OUTSET, LD COUNSEL FOR THE A SSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL VIDE ITA NO.5244/M/2011 (AY:2007-20 08) IN THE CASE OF ACIT VS. 4 CLASSIC SHARES & STOCK BROKING P. LTD. AND BROUGHT OUR ATTENTION TO GROUND NO.1 OF THE SAID ORDER WHICH WAS ADJUDICATED IN PARA 2 DISM ISSING THE APPEAL OF THE REVENUE ON IDENTICAL FACTS. LD COUNSEL ALSO MENTIONED THAT THE ISSUE OF ALLOWABILITY OF EXPENSES WAS ADJUDICATED IN FAVOUR OF THE ASSESSEE AND THE CLAIM OF THE ASSESSEE REGARDING THE EXISTENCE OF BUSINESS WAS ALSO WELL A PPRECIATED CONSIDERING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. NKP SECURITIES (P) LTD VIDE ITA NO.5008 & 5009/M/2007. REGARDING THE ISSUE OF ALLOWABILITY O F CARRY FORWARD OF BUSINESS LOSS AND NON-APPLICABILITY OF THE PROVISIONS OF EXPLANAT ION-1 TO SECTION 73 OF THE ACT, LD COUNSEL MENTIONED THAT THE ISSUE BECOMES CONSEQUENT IAL TO THE ASPECTS RELATING TO EXISTENCE OF THE BUSINESS, THE ISSUE NEEDS TO BE SE T ASIDE VIDE GROUND NO.1 OF THE PRESENT APPEAL. 8. PER CONTRA, LD DR MENTIONED THAT THE GROUND NO.1, WHICH HAS AN ISSUE RELATING TO THE EXISTENCE OF THE BUSINESS ACTIVITY DURING THE YEAR WAS SET ASIDE TO THE FILES OF THE AO RELYING ON THE ORDER OF THE TRIBUNA L IN THE ASSESSEES OWN CASE FOR THE AY 2001-02 AND 2002-03. THE ASPECTS OF ALLOWAB ILITY OF EXPENSES AS WELL AS THE APPLICABILITY OF EXPLANATION-1 TO SECTION 73 OF THE ACT, MAY ALSO BE ACCORDINGLY SENT TO THE FILES OF THE AO FOR CONCERTED / COORDINATED ADJUDICATION OF THE ISSUES RAISED IN GROUND NO.1 & 2 TOGETHER. 9. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE AND WE FIND MERIT IN THE PRAYER OF THE LD DR AND ACCORDINGLY, WE REMIT THE ISSUES R AISED IN GROUND NO.3 ALSO TO THE FILES OF THE AO FOR DECIDING THE ISSUE AFRESH IN TH E LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2001 -02 AND 2002-03 (SUPRA) AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF CLASSIC SHARES & STOCK BROKING P. LTD (SUPRA). ACCORDINGLY, GROUND NO.3 IS SET ASIDE. 10. GROUND NO.4 RELATES TO THE ALLOWABILITY OF INTEREST INCOME RECEIVED ON FIXED DEPOSITS AND THE PROPER HEAD OF INCOME FOR TAXING THE SAID INTEREST INCOME. ASSESSEES CLAIM IS THAT THE INTEREST INCOME HAS TO BE TAXED AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES. IN THIS R EGARD, LD COUNSEL SUBMITTED THAT AN IDENTICAL ISSUE WAS ADJUDICATED IN THE CASE OF C LASSIC SHARES & STOCK BROKING P. LTD (SUPRA) AND GROUND NO.2 OF THE SAID ORDER IS RE LEVANT IN THIS REGARD. THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE DIRECTING THE AO TO TAX THE INCOME UNDER THE HEAD 5 PROFITS AND GAINS FROM BUSINESS OR THE PROFESSION. PARA 3 & 4 OF THE SAID ORDER ARE RELEVANT IN THIS REGARD AND THE SAME ARE REPRODUCED HERE UNDER: 3. AS REGARDS THE GROUND NO.2, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE HEAD OF INCOME UNDER WHICH INTEREST AND MISCELLANEOUS INCOME IS ASSESSABLE TO TAX IN THE HANDS OF THE ASSESSEE, IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL RENDERED IN THE CASES OF VARIOUS SISTE R CONCERNS OF THE ASSESSEE COMPANY BELONGING TO THE SAME GROUP. IN ONE OF SUC H DECISIONS RENDERED IN THE CASE OF M/S. CLASSIC SHARES & STOCK BROKING SERVICE S LTD. VS. ACIT (ITA NO.191/MUM/2008 AND ITA NO.1135/MUM/2008 DATED 19.11. 2010) FOR ASSESSMENT YEAR 2002-2003 AND 2003-04, THE TRIBUNAL HAS DECIDE D A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 4 .2 OF ITS ORDER: . THE DISPUTE IS REGARDING NATURE OF INTEREST INCOME RECEIVED BY THE ASSESSEE FROM THE FDRS PLEADED WITH THE BANKS FOR I SSUE OF BANK GUARANTEE TO THE STOCK EXCHANGE IN CONNECTION WITH THE TRADIN G BUSINESS OF THE ASSESSEE. THE ASSESSEE HAD BEEN DEBARRED BY SEBI FOR SHARE TRANSACTIONS BUSINESS IN 2001 DUE TO ALLEGATIONS OF IRREGULARITIES AND MANIPULATIONS . THE CASE OF THE ASSESSEE IS THAT THE ORDER OF SE BI HAD BEEN CHALLENGED. THE LICENSE OF THE ASSESSEE H AD BEEN CANCELLED ONLY IN THE YEAR 2005 AND THE ORDER CANCELLING THE LICENSE HAD ALSO BEEN CHALLENGED BY THE ASSESSEE WHICH WAS DISMISSED BY SAT MUCH LAT ER AND THE OF SAT WAS ALSO CONFIRMED BY THE HONBLE SUPREME COURT. BUT T HESE WERE SUBSEQUENT ACTIVITIES AND IN THE YEAR UNDER CONSIDERATION THE BUSINESS OF THE ASSESSEE HAD NOT CLOSED AND IT WAS ONLY SUSPENDED IN VIEW OF THE ADVERSE ORDER OF THE SEBI. WE FIND SMALLER SITUATION HAD BEEN CONSIDERE D BY THE TRIBUNAL IN THE CASE OF KNP SECURITIES PVT. LTD (SUPRA) ANOTHER CON CERN OF KETAN PAREKH GROUP IN WHICH SIMILAR CLAIM WAS MADE BY THE ASSESS EE THAT BUSINESS WAS IN EXISTENCE AND NOT CLOSED. THE TRIBUNAL FOLLOWING T HE JUDGMENT OF HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. VELLORE ELECTRICAL CORPORATION LTD (243 ITR 529) HELD THAT THE BUSINESS HAD NOT CLOSED AND THE CLAIM OF EXPENDITURE HAD TO BE ALLOWED. RESPECTFULLY FOLLOW ING THE SAID DECISION OF THE TRIBUNAL, WE HOLD THAT THE BUSINESS OF THE ASSE SSEE HAD NOT BEEN CLOSED IN THE RELEVANT YEAR AND THEREFORE, FDRS HAD TO BE TREATED AS PLEDGED IN CONNECTED WITH THE BUSINESS WHICH WAS IN EXISTENCE AND THEREFORE THE INTEREST INCOME HAD T BE TREATED AS INCIDENTAL BUSI NESS INCOME . WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT (A) AND ALLOWED THE CLAIM OF THE ASSESSEE. 11. FURTHER, WE FIND THAT AN IDENTICAL ISSUE CAME U P FOR ADJUDICATION IN THE CASE OF M/S. TRIUMPH SECURITIES LTD VS. ACIT VIDE ITA NO .2111/M/2008 FOR THE AY 2002- 03 AND THE TRIBUNAL HELD THAT THE INTEREST INCOME NEEDS TO BE TAXED AS BUSINESS INCOME AS PER THE DISCUSSION GIVEN IN PARA 8 OF THE SAID ORDER OF THE TRIBUNAL DATED 17.4.2013. WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE AND TAX THE SAME UNDER THE HEAD PROFITS A ND GAINS FROM BUSINESS & PROFESSION ON EXAMINING THE SIMILARITY OF THE FACT S OF THE CITED CASE LAWS. ACCORDINGLY, GROUND NO.4 IS ALLOWED AS ABOVE. 6 12. GROUND NO.5 RELATES TO CHARGING OF INTEREST U/S 234B WHICH IS CONSEQUENTIAL TO THE ABOVE GROUNDS. WE DISMISS GROUND NO.4 BEING CONSEQUENTIAL IN NATURE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED PRO-TANTO. ITA NO. 2785/M/2008 (AY: 2004-2005) 14. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GR OUNDS WHICH READ AS UNDER: 1. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO IN NOT ALLOWING BUSINESS LOSS OF RS. 7,64,501/- ON THE BASIS THAT THE SAME I S NOT GENUINE IN NATURE. THE APPELLANTS CONTENDED THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE OBSERVATIONS AND ACTION OF THE CIT (A) IN UPHOLDING THE ACTION OF THE AO IN NOT ALLOWING THE IMPUGNED LOSS ARE ERRONE OUS, BASELESS AND CONTRARY TO THE PROVISIONS OF LAW. THE CIT (A) OUGHT TO HAVE ALLOWE D THE IMPUGNED LOSS AS CLAIMED BY THE APPELLANTS. 2. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO IN TREATING INTEREST RECEIVED ON FIXED DEPOSITS RS. 12,69,136/- AS INCO ME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME. THE APPELLANT CONTENDED THAT THE CIT (A) OUGHT NOT TO HAVE CONSIDERED THE INTEREST RECEIVED ON FIXED DEPOSITS AS BUSINESS INCOME INASM UCH AS THE FIXED DEPOSITS HAVE BEEN MAINTAINED FOR THE PURPOSE OF BUSINESS. 3. THE CIT (A) ERRED IN ENHANCING THE ASSESSMENT BY DISALLOWING ENTIRE EXPENSES CLAIMED BY THE APPELLANT AND FURTHER NOT A LLOWING CARRY FORWARD OF BUSINESS LOSS ALLOWED BY THE AO ON THE GROUND THAT THE APPEL LANT HAVE NOT CARRIED ON ANY BUSINESS ACTIVITY. THE APPELLANTS CONTENDED THAT ON THE FACTS AND IN C IRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS FALLEN IN ERROR IN DISA LLOWING THE DEDUCTION FOR EXPENSES AND NOT ALLOWING CARRY FORWARD OF BUSINESS LOSS INA SMUCH AS THE APPELLANTS HAVE CARRIED ON BUSINESS ACTIVITY. THE APPELLANT FURTHER, CONTENDED THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE RESULTANT BUSINESS LOSS CA NNOT BE CONSIDERED AS SPECULATION LOSS BY INVOKING THE PROVISIONS OF EXPLANATION TO S ECTION 73. 4. THE CIT (A) ERRED IN CONFIRMING THE ACTION OF TH E AO IN CHARGING INTEREST UNDER SECTION 234B OF THE ACT. THE APPELLANTS CONTEND THAT THE CIT (A) OUGHT NOT T O HAVE UPHELD THE CHARGE OF IMPUGNED INTEREST UNDER SECTION 234B INASMUCH AS THE APPELLANTS, IN TERMS OF SECTION 208 ARE NOT LIABLE TO PAY ADVANCE TAX. 15. AT THE OUTSET, BOTH THE LD REPRESENTATIVES OF T HE PARTIES CONCURRED IN STATING THAT THE GROUND NO.1 OF THIS APPEAL FOR THE AY 2004 -05 IS IDENTICAL TO THE GROUND NO.1 RAISED AND ADJUDICATED IN APPEAL ITA NO.2784/M /2008 (AY: 2003-2004) IN THE ABOVE PARAS OF THIS ORDER. ON EXAMINING THE SAME, W E FIND THAT THE ISSUE RAISED IN 7 THIS GROUND SHOULD ALSO BE SET ASIDE WITH IDENTICAL DIRECTIONS. ACCORDINGLY, GROUND NO.1 IS SET ASIDE. 16. GROUND NO.2 RELATES TO THE ALLOWABILITY OF INTEREST INCOME RECEIVED ON FIXED DEPOSITS AND THIS GROUND IDENTICAL TO THE GROUND 4 DISCUSSED VIDE PARA 10 ABOVE. CONSIDERING THE IDENTICAL NATURE OF THE ISSUE IN TH ESE GROUNDS, WE HOLD THAT THE INTEREST INCOME NEEDS TO BE TAXED AS BUSINESS INCO ME AS PER THE DISCUSSION GIVEN ABOVE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE AND TAX THE SAME UNDER THE HEAD PROFITS A ND GAINS FROM BUSINESS AND PROFESSION ON EXAMINING THE SIMILARITY OF THE FACT S. ACCORDINGLY, GROUND NO.4 IS ALLOWED AS ABOVE. 17. GROUND NO.3 RELATES TO ENHANCEMENT OF ASSESSMENT BY DISALLOWING ENTIRE EXPENSES AND ALSO NOT ALLOWING CARRY FORWARD OF BUS INESS LOSS ON THE GROUND THAT THE ASSESSEE HAS NOT CARRIED ON ANY BUSINESS ACTIVI TY FOR THE YEAR UNDER CONSIDERATION. AT THE OUTSET, BOTH THE LD REPRESEN TATIVES OF BOTH THE PARTIES ARE CONCURRED IN STATING THAT THIS GROUND IS IDENTICAL TO THE GROUND NO.3 RAISED AND ADJUDICATED IN APPEAL ITA NO.2784/M/2008 (AY: 2003- 2004) VIDE PARA 7 T0 9 ABOVE. ON EXAMINING THE SAME, WE FIND THAT THE ISSUE RAISE D IN THIS GROUND, WHICH IS CLEARLY IDENTICAL TO THAT OF GROUND NO.3 OF ITA NO.2784/M/2 008, WHEREIN, AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE SET ASIDE THE ISSUE TO THE FILES OF THE AO VIDE PARA 7 TO 9 OF THIS ORDER, IN THE SAME LINE TH IS GROUND SHOULD ALSO BE SET ASIDE WITH IDENTICAL DIRECTIONS. ACCORDINGLY, GROUND NO. 3 IS SET ASIDE. 18. GROUND NO.4 RELATES TO CHARGING OF INTEREST U/S 234B WHICH IS CONSEQUENTIAL TO THE ABOVE GROUNDS. WE DISMISS GROUND NO.4 BEING CONSEQUENTIAL IN NATURE. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED PRO TANTO . ORDER PRONOUNCED IN THE OPEN COURT ON 2.8.2013. SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 1& 2.8.2013. 8 . & . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. 2- ( ) / THE CIT(A)- 4. 2- / CIT 5. 3 45 )-& , , / DR, ITAT, MUMBAI 6. 5!6 7 / GUARD FILE. *3- )- //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI