Lyons Technologies Ltd., Ahmedabad V. The ACIT., Circle-4, Ahmedabad

ITA 3060/AHD/2004

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9453 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-10-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 14-10-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: P D SHAH
• Keywords: Capital asset; Business income; Depreciation; Bad and doubtful debts; Revenue expenditure; Capital expenditure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHME DABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER. AND SHRI N. S. SAINI, ACCOUNTANT MEMBER I.T.A.NO.3060/AHD/2004 ASSESSMENT YEAR :2001-02 LYONS TECHNOLOGIES LTD., C/O. MEHTA LODHA & CO., CHARTERED ACCOUNTANTS, 105 SAKAR-1, ASHRAM ROAD, AHMEDABAD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, NAVJEEVAN BUILDING, OFF. ASHRAM ROAD, AHMEDABAD. APPELLANT RESPONDENT. PAN NO: AAACL 3547 Q APPELLANT BY : SHRI P. D. SHAH. RESPONDENT BY : SHRI R. K. DHANESTA, D.R. ORDER PER SHRI N.S. SAINI ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE LEARNED C.I.T.(A)-VIII, AHMEDABAD DATED 10-8-2004. 2. GROUND NO.1 OF THE APPEAL IS AS FOLLOWS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AND FACTS IN DISALLOWING THE CLAIM AS REVE NUE EXPENSES ON THE PORTAL DEVELOPMENT RS.5,11,170/-. THE SAME IS TO B E ALLOWED AS REVENUE EXPENDITURE OR ALTERNATIVELY DEPRECIATION TH EREON IS TO BE GIVEN. ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEVELOPED WEBSITES AND HAS TREATED THE EXPENDI TURE INCURRED ON THEM AS CAPITAL IN NATURE IN THE BOOKS OF ACCOUNTS MAI NTAINED BY THE ASSESSEE BUT HAS CLAIMED THE EXPENSES AS REVENUE EXPENDITURE IN COMPUTATION OF TOTAL INCOME. HE FURTHER OBSERVED THAT T HE EXPENDITURE ON DEVELOPMENT OF WEBSITES HAS GIVEN AN ENDURING BENEFIT . HE THEREFORE, DISALLOWED THE DEDUCTION FOR RS.5,11,170/- BY TREATING THE SAME AS CAPITAL EXPENDITURE. 4. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF KEDARNATH JUTE MILLS COMPANY LTD., VS. C.I.T. 82 IT R-363 AND SUBMITTED THAT IT HAS BEEN HELD BY THE HONBLE SUPREME COURT TAT ENT RIES MADE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT DETERMINATIVE OF THE NATURE OF EXPENDITURE WHETHER CAPITAL OR REVENUE. THEREFORE, T HE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE EXPENDITURE ON DEVELOP MENT OF WEBSITES AS CAPITAL EXPENDITURE RELYING UPON BOOKS OF ACCOUNTS OF TH E ASSESSEE. THE ASSESSEE ALSO RELIED UPON THE DECISION OF AHMEDABAD BENCH O F THE TRIBUNAL IN THE CASE OF LUBI ELECTRICALS 27 TLR 520 WHERE IT WAS H ELD THAT EXPENDITURE INCURRED ON PURCHASE OF SOFTWARE PROGRAMME FOR COMPUTER WAS ALLOWABLE AS REVENUE EXPENSES. THE ASSESSEE ALSO RELIED ON THE DECISION O F JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF BUSINESS INFORMATION PROCE SSING SERVICES VS. ACIT 67 TTJ 131 WHERE IT WAS HELD THAT SOFTWARE HAS UN CERTAIN SHORT AND UNWARRANTED LIFE AS THEY REQUIRE FREQUENT CHANGES INC LUDING SUBSTANTIAL ELEMENT OR EVEN REWRITING THE ENTIRE PROGRAMME FOR VARIOUS REASONS THEREFORE, THE EXPENDITURE INCURRED WAS REVENUE IN NA TURE. BESIDES THIS IT WAS ALSO ARGUED BY THE ASSESSEE WEBSITES SUFFERS INHERENT IN GREDIENTS AND CHARACTERISTICS SUCH AS UNCERTAINTY OR OBSOLESCENCE, UNWARRANTE D LIFE ETC., AND THEREFORE, EXPENSES INCURRED ON DEVELOPMENT OF WEB SITES SHOULD BE VIEWED IN THE CONTEXT OF THE PRESENT DAY TECHNOLOGY IR RESPECTIVE OF THE FACT THAT BENEFIT FROM THE WEBSITES MAY ACCRUE TO THE ASSESSEE OVER THE LIFT OF ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 3 THE PRODUCT. ACCORDINGLY, IT WAS CONTENDED THAT EXPENSES I NCURRED ON CREATION OF WEBSITES SHOULD BE TREATED AS REVENUE EXPEND ITURE AND ALLOW DEDUCTION. IN THE ALTERNATIVE, IT WAS ALSO ARGUED THA T SINCE PORTAL DEVELOPMENT EXPENSES WERE CAPITALIZED DEPRECIATION SHOUL D BE ALLOWED ON THE SAME. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE INT ERNET COMMERCE COMPANIES SELL THEIR PRODUCTS AND SERVICES ON INTERNET THRO UGH THEIR WEBSITES. E-COMMERCE TRANSACTIONS FOR ALL THE INGREDIENTS OF TRADITIONAL BUSINESS TRANSACTIONS. HE HELD THAT WEBSITE IS BASICALLY A DO MAIN PLACE ON THE INTERNET FOR WHICH A PARTY CAN DISPLAY ITS GOODS AND SERVICES ALONG WITH OTHER INFORMATION. THE PROSPECTIVE BUYERS CAN VISIT THE WEBSITE AND PLACE THEIR ORDERS. IN OTHER WORDS WEBSITE ACTS AS A SHOP OR SH OWROOM IN WHICH GOODS CAN BE DISPLAYED AND PEOPLE CAN VISIT THEM. THE EX PENSES INCURRED IN CREATION OF WEBSITE WOULD THEREFORE BE IN THE NATURE OF EXPENSES INCURRED FOR THE CONSTRUCTION OF A SHOP OR SHOWROOM. THE SHOWROOM GIVE S ENDURING BENEFIT TO THE PARTY AND EXPENSES INCURRED IN THE CONSTR UCTION OR PURCHASES OF A SHOP ARE BASICALLY CAPITAL IN NATURE. SIMILARLY, T HE EXPENSES INCURRED ON CREATION OF WEBSITE ARE REQUIRED TO BE TREATED AS CAPIT AL EXPENDITURE AS THE SAME GIVES ENDURING BENEFIT TO THE ASSESSEE FOR ITS BUSINE SS. THEREFORE, THE ACTION OF THE ASSESSING OFFICER TREATING THE EXPENSES AS CA PITAL EXPENDITURE IS UPHELD. THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) FURTHER OBSERVED THAT AS REGARDS DEPRECIATION ALLOWABLE ON THE EXPENDITURE INCURRED ON SETTING UP OF WEBSITE, DEPRECIATION IS ALLOWABLE ONL Y ON THOSE ASSETS WHICH CAN BE CLASSIFIED AS DEPRECIABLE ASSETS DUE TO WEAR A ND TEAR OF THE BUSINESS TRANSACTIONS. HE OBSERVED THAT THERE WAS NO CONCEPT O F WEAR AND TEAR IN A WEBSITE AND THEREFORE DEPRECIATION WAS NOT A LLOWABLE ON THE EXPENDITURE CAPITALIZED. HE FURTHER NOTED THAT IN THE DEPRECIATION CHART PROVIDED IN THE INCOME TAX RULES, THERE IS NO CATEGORI ZATION FOR WEBSITES. ACCORDINGLY HE DISMISSED THE GROUND OF APPEAL OF THE ASSESSE E. ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 4 5. THE AUTHORISED REPRESENTATIVE SUBMITTED BEFORE US TH AT IN THE CASE OF CIT VS. INDIAN VISIT.COM (P) LTD., 176 TAXMAN 164 HON BLE DELHI HIGH COURT HELD THAT EXPENDITURE ON DEVELOPMENT OF WEBSITE PROV IDES AN ENDURING BENEFIT TO AN ASSESSEE, THE INTENT AND PURPOSE BEHIND DE VELOPMENT OF A WEBSITE IS NOT TO CREATE AN ASSET BUT ONLY TO PROVIDE TH E MEANS FOR DISSEMINATION OF INFORMATION ABOUT THE ASSESSEE AMONG ITS CLIENTS THE PURPOSE COULD BE ACHIEVED BY THE ASSESSEE IN THE PAST BY P RINTING TRAVEL BROCHURES AND OTHER PUBLISHED MATERIAL AND PAMPHLETS. MERE ENDURING BENEFIT, DE HORS OF ANY ACCRETION TO FIXED CAPITAL WOUL D NOT MAKE EXPENDITURE A CAPITAL EXPENDITURE. ACCORDINGLY, HE SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AD CONFIRMED BY THE CIT (A) SHOUL D BE DELETED. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MA TERIAL ON RECORD WE FIND THAT IN THE INSTANT CASE THE ASSESSEE HAS DEVELOPED TH REE WEBSITES AND INCURRED EXPENDITURE AT RS.5,11,170/- WHICH WAS CLAIMED AS A REVENUE EXPENDITURE IN THE COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG WITH RETURN OF INCOME ALTHOUGH THE SAID EXPENDITURE WAS TRE ATED AS A CAPITAL EXPENDITURE IN ITS BOOKS OF ACCOUNTS. THE ASSESSING OFFICER O BSERVED THAT THE ASSESSEE HAS TREATED THE EXPENDITURE IN QUESTION AS CAPITA L EXPENDITURE IN ITS BOOKS OF ACCOUNTS AND THAT THE EXPENDITURE PROVIDES E NDURING BENEFIT TO THE ASSESSEE DID NOT ALLOW DEDUCTION FOR THE EXPENDITUR E BY HOLDING IT TO BE A CAPITAL EXPENDITURE. IN APPEAL, THE CIT (A) CONFIRM ED THE ACTION OF THE ASSESSING OFFICER. 7. BEFORE US THE ASSESSEE RELIED UPON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. INDIAN VISIT.COM (P) LTD. (2009) 176 TAXMAN 164 WHEREIN IT HAS BEEN HELD THAT EXPENDITURE ON DE VELOPMENT OF WEBSITE WITH A VIEW TO DISSEMINATING THE INFORMATION ABOUT A SSESSEES BUSINESS ACTIVITIES AMONGST ITS CLIENTS IS REVENUE EXPENDITURE EVE N THOUGH RESULTING IN ENDURING BENEFIT. THE DEPARTMENTAL REPRESENTATIVE C OULD NOT CITE ANY CONTRARY DECISION BEFORE US. WE FIND THAT IN THE INSTAN T CASE, IT IS NOT IN ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 5 DISPUTE THAT THE EXPENDITURE IN QUESTION WAS INCURRED F OR DEVELOPING OF WEBSITE FOR DISSEMINATING INFORMATION LIKE ADVERTISEMEN T EXPENSES. THOUGH THE EXPENDITURE IN QUESTION MAY YIELD ENDURING BENEF IT TO THE ASSESSEE BUT NO NEW CAPITAL ASSET WAS ACQUIRED BY THE ASSESSEE. THUS, IN O UR CONSIDERED OPINION THE ABOVE CITED DECISION OF THE HON'BLE DELHI HI GH COURT IN THE CASE OF INDIAN VISIT.COM PVT. LTD., (SUPRA) IS SQUARELY AP PLICABLE TO THE FACTS OF THE INSTANT CASE. WE THEREFORE, RESPECTFULLY FOLLOWING T HE SAME SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE DISALLO WANCE OF WEBSITE EXPENSES OF RS.5,11,170/-. THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS AS FOLLOW S:- 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AND FACTS IN DISALLOWING THE CLAIM OF RS.17 ,88,460/-, BEING BAD DEBTS WRITTEN OFF IN RESPECT OF TWO PARTIES. THE SAM E SHOULD BE ALLOWED IN FULL AS BAD DEBTS OR BUSINESS LOSS. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIME D DEDUCTION OF BAD DEBTS OF RS.14,48,460/- BEING THE AMOUNT RECEIVAB LE FROM BEMCO SLEEPERS LTD., AND RS.3,40,000/- FROM FICON LEASE AND F INANCE LTD. THE ASSESSING OFFICER DISALLOWED THE CLAIM FOR BAD DEBT TO T HE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT A BANKING NOR ENGAGED IN THE BUSINESS OF MONEY LENDING AND THEREFORE, BAD DEBT IS NOT ALLOWA BLE TO THE ASSESSEE. HE FURTHER OBSERVED THAT THE ASSESSEE HAS PRODUCED EVIDENCE T O SHOW THAT IT HAS INSTITUTED CIVIL SUIT OR OTHER LEGAL ACTIONS FOR RE ALIZATION OF THE DEPOSITS. ACCORDINGLY, HE HELD THAT THE AMOUNT WAS NOT A TRADE D EBT BUT A DEPOSIT AND ON ITS BECOMING BAD THE SAME WAS A CAPITAL LOSS OR LOSS OF I NVESTMENT AND THEREFORE NOT ALLOWABLE DEDUCTION AS BAD DEBT. REGA RDING RECEIVABLE OF RS.3,40,000/- FROM FICON LEASE & FINANCE LTD., THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE ADVANCED RS.3,40,000/- ON 23-4 -1996 FOR PURCHASE OF SHARES FOR TRADING PURPOSE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS HAVING SUBSTANTIAL INTEREST IN THE SAID CO MPANY AND WAS HOLDING 226200 EQUITY SHARES OF RS.10 EACH OF THIS COMPAN Y. THESE SHARES ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 6 WERE HELD AS INVESTMENT AND THEREFORE, IT WAS HELD THA T THE ADVANCE GIVEN BY THE ASSESSEE COMPANY WAS NOT FOR THE PURPOSE OF PURCHASI NG SHARES FOR TRADING. HE ALSO NOTED THAT THE ASSESSEE HAS NOT DEDUCED A NY EVIDENCE TO SHOW THAT THE AMOUNT IN QUESTION HAS REALLY BECOME BAD AND IS IRRECOVERABLE. THEREFORE, HE ALLOWED DEDUCTION FOR BA D DEBT TO THE ASSESSEE. 10. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THERE WAS NOTHING IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY TO INDICATE THAT THE COMPANY WAS EITHER A BANKI NG COMPANY OR MONEY LENDING COMPANY. THE AMOUNT OF RS.14,48,460/- WAS GIVEN TO M/S. BEMCO SLEEPERS LTD., AS INTER-CORPORATE DEPOSIT AND TH EREFORE, CANNOT BE TREATED AS MONEY LENDING IN THE ORDINARY COURSE OF BUSI NESS OF BANKING OR MONEY LENDING. THEREFORE, THE ASSESSEE COMPANY WAS NOT COVERED BY EXCLUSION OF CLAUSE 36(2) AND CONSEQUENTLY THE DEDUCTION F OR THE BAD DEBT WAS NOT ALLOWABLE. REGARDING THE SUM OF RS.3,40,000/- IN QUESTION THE CIT(A) OBSERVED THAT THE AMOUNT WAS NEVER OFFERED FOR TAXATION IN ANY EARLIER PREVIOUS YEAR. THE ASSESSEE COMPANY WAS NOT A BANK ING COMPANY OR A MONEY LENDING COMPANY AND THE EXCLUSION OF CLAUSE OF SECTION 36(2) WAS NOT APPLICABLE TO IT. MOREOVER, THE AMOUNT WAS GIVEN AS ADVANCE FOR PURCHASE OF SHARES FOR TRADING PURPOSE AND THEREFORE, IT CANNOT BE TREATED AS MONEY GIVEN IN THE NORMAL COURSE OF BANKING OR MONEY LENDING AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOW ING THE BAD DEBT. 11. THE AUTHORISED REPRESENTATIVE RELIED UPON THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF C.I.T. VS. GILLANDERS ARBU THNOT & CO., 138 ITR- 763 (CAL.) WHERE IT WAS HELD THAT LOSS INCURRED ON ACCO UNT OF IRRECOVERABLE LOAN GIVEN TO SUBSIDIARY COMPANY IN THE USUAL COURSE OF THE BUSINESS AS A TRADING LOSS. HE ALSO RELIED UPON THE DECISION OF RAJASTHA N HIGH COURT IN THE CASE OF CIT VS. ANJANI KUMAR CO. LTD., 259 ITR 114 (RA J.) WHERE IT WAS HELD THAT IRRECOVERABLE ADVANCE PAYMENT MADE BY THE ASSESSEE F OR ACQUISITION OF CAPITAL ASSET WHICH DID NOT MATERIALIZE WAS ALLOWABLE AS BUSINESS LOSS. ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 7 12. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORD ER OF THE CIT (A). 13. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORDS WE FIND THAT IN THE INSTANT CASE THE ASSESSEE MADE INTER CORPORATE DEPOSIT OF RS.14,48,460/- TO BEMCO SLEEPERS LTD., WHICH BECAME IRRECOVERABLE AND THE ASSESSEE HAD WRITTEN OFF THE SAME I N THE BOOKS OF ACCOUNTS AND CLAIMED THE SAME AS BAD DEBT. FURTHER, THE ASSESSEE HAD GIVEN ADVANCE OF RS.3,40,000/- TO FICON LEASE & FINANCE LTD. F OR PURCHASE OF SHARES FOR TRADING PURPOSES. THE SAID ADVANCE ALSO BECAME I RRECOVERABLE AND WAS ALSO WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND CLA IMED AS BAD DEBT. THE A.O. DISALLOWED THE CLAIM FOR BAD DEBT OF THESE TW O AMOUNTS TO THE ASSESSEE FOR THE REASON THAT THE ASSESSEE WAS NOT IN THE BUSI NESS OF BANKING OR MONEY LENDING. FURTHER THE CONDITIONS LAID DOWN IN SECTION 36(2) OF THE ACT WERE NOT SATISFIED. 14. IN APPEAL, THE CIT (A) CONFIRMED THE ACTION OF T HE ASSESSING OFFICER. 15. THE AUTHORISED REPRESENTATIVE SUBMITTED THAT THE I NTER-CORPORATE DEPOSIT WAS GIVEN BY THE ASSESSEE DURING THE COURSE OF ITS FINANCE BUSINESS. SINCE THE AMOUNT WAS ADVANCED DURING THE NORMAL COURSE O F BUSINESS OF THE ASSESSEE WHICH HAD BECOME IRRECOVERABLE, THEREFORE, THE SAM E WAS CLAIMED AS BAD DEBT AFTER WRITING OFF THE SAME IN THE BOOKS OF ACCOUNTS. SIMILARLY, IN THE CASE OF FICON LEASE AND FINANCE LTD., RS.3,40,000/- W AS ADVANCED FOR PURCHASE OF SHARES FOR TRADING PURPOSE. SINCE THE AMOUNT BECAME BAD AND AS THE AMOUNT WAS ADVANCED DURING THE NORMAL COURSE OF BUSINESS OF THE ASSESSEE THE SAME WAS WRITTEN OFF IN THE BOOKS OF ACCOUNTS AN D CLAIMED AS BAD DEBT. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTI FIED IN DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE AND CIT (A) WAS NOT JUST IFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. 16. WE FIND FROM THE ASSESSMENT ORDER OF THE YEAR UNDE R CONSIDERATION THAT THE LEARNED ASSESSING OFFICER HAS RECORDED THE NATURE OF ASSESSEES ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 8 BUSINESS AS DEALING IN SHARES, EXPORT OF TRADING GOODS, F INANCING, CONSULTING ACTIVITIES AND PROVIDING SOFTWARE SOLUTIONS AND EDUCATI ON. THUS, THE CONTENTION OF THE ASSESSEE THAT INTER CORPORATE DEPOSITS IN QUESTION WERE GIVEN DURING THE NORMAL COURSE OF FINANCING BUSINESS IN W HICH THE ASSESSEE WAS ENGAGED COULD NOT BE CONTROVERTED BY THE REVENUE. NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT INTEREST INCOME EARNED ON DEPOSITS IN EARLIER YEARS WERE NOT ASSESSED AS BUSINESS INCOME OF THE ASSESSEE AND DEPOSITS IN QUESTION WERE NOT TREATED AS ASSET O F FINANCING BUSINESS OF THE ASSESSEE. IN THE ABOVE CIRCUMSTANCES, IN OUR CO NSIDERED OPINION THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN D ISALLOWING THE CLAIM OF BAD DEBTS OF RS.14,48,460/-. 17. IN RESPECT OF ADVANCE OF RS.3,40,000/- GIVEN TO FICO N LEASE AND FINANCE LTD., THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SUBSTANTIAL INTEREST IN THE SAID COMPANY I.E. FICON LEASE AND FINACNCE LTD. THE ASSESSEE IS HOLDING 2,26,200 EQUITY SHARES OF RS.10 EACH FULLY PAID UP OF THE SAID COMPANY AS REFLECTED IN SCHEDULE-VI OF THE BALA NCE SHEET OF ASSESSMENT YEAR 2001-02. THESE SHARES ARE HELD AS INVESTMENT . IN THIS BACKGROUND, THE ADVANCE GIVEN BY THE ASSESSEE TO THE SAID COMPANY IS NOT FOR THE PURPOSE OF PURCHASE OF SHARES FOR TRADING. NO M ATERIAL WAS BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE ADVANCE WAS GIV EN FOR PURCHASE OF SHARES FOR TRADING PURPOSES BY THE ASSESSEE. COPY OF AG REEMENT FOR PURCHASE OF SHARES COULD NOT BE BROUGHT ON RECORD BY THE ASSESSEE. THE FACT BROUGHT ON RECORD BY THE LEARNED ASSESSING OFFICER SHOWS TH AT THE ASSESSEE PURCHASED SHARES OF THE COMPANY IN QUESTION IN EARLIER YE AR AND SHOWN THE SAME AS INVESTMENT IN CONTRADISTINCTION TO TRADING SHARES. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE ASSESSEE WE FIND NO ER ROR IN THE FINDING OF THE LOWER AUTHORITIES TO THE EFFECT THAT ADVANCE WAS GI VEN TO M/S. FICON LEASE AND FINANCE LTD., FOR NOT PURCHASING SHARES FOR TRA DING. THUS, THE DISALLOWANCE OF RS.3,40,000/- IS CONFIRMED. THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA.NO.3060/AHD/ 2004 ASSESSMENT YEAR: 2 001-02 9 18. THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS THAT THE INTEREST CHARGED U/S. 234B IS TO BE DELETED. AT THE TIME OF THE HEARIN G THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE DID NOT MAKE ANY SUBMISSIO N ON THIS GROUND OF APPEAL. THEREFORE, IT IS DISMISSED FOR WANT OF PROSECU TION. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 2 9 TH DAY OF OCTOBER, 2010. SD/- SD /- (BHAVNESH SAINI) (N. S. SAINI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. AHMEDABAD : ON THIS 29 TH DAY OF OCTOBER, 2010. COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT (A)VIII, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER. (DY./ASSISTANT REGISTRAR), ITAT, AHMEDABAD. DATE. INITIALS. 1. DRAFTED DICTATED ON 21 -10-2010 2. DRAFT PLACED BEFORE AUTHORITY. 25-10-20 10 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER. 28-10-2 010 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 28-10- 2010 5. APPROVED DRAFT COMES TO P.S. 29-10-2010 6. KEPT FOR PRONOUNCEMENT ON 29-10-2010 7. FILE SENT TO THE BENCH CLERK. 29-10-20 10 8. DATE ON WHICH FILE GOES TO AR 9. DATE OF DISPATCH OF ORDER.