ACIT 6(1), MUMBAI V. INTEGRATED TECHNOLOGY SOLUTIONS P.LTD, MUMBAI

ITA 3325/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3996 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 08-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: HARESH BUCH
• Keywords: Unexplained cash credit; Capital asset; Depreciation; Business expenditure; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 43B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3325/M/2012 ASSESSMENT YEAR: 2005-06 DCIT, CIR. 6(1), R.NO.506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD., NIRLON HOUSE, 3 RD FLOOR, DR. ANNIE BESANT ROAD, WORLI, MUMBAI 400 025 PAN: AAACI 1867B (APPELLANT) (RESPONDENT) ITA NO.3803/M/2012 ASSESSMENT YEAR: 2005-06 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD., NIRLON HOUSE, 3 RD FLOOR, DR. A.B. ROAD, WORLI, MUMBAI 400 025 PAN: AAACI 1867B VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(1), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI HARESH BUCH, A.R. & MS. MONIKA AGARWAL, A.R REVENUE BY : SHRI B. YADAGIRI, D.R. DATE OF HEARING : 08.12.2015 DATE OF PRONOUNCEMENT : .02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED CROSS APPEALS ONE BY THE REVENUE AND THE OTHER BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORDER DATE D 27.02.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2005-06. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE. THE ASSESSEE HAS TAKEN THE FOLLOWING GRO UNDS OF APPEAL: ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 2 GROUND I 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 14 MU MBAI ('CIT(A)'), ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISAL LOWING A SUM OF RS.17,00,000/- (AFTER CONSIDERING DEPRECIATION) INCURRED FOR SOFTW ARE DEVELOPMENT AND MAINTENANCE ON THE ALLEGED GROUND THAT THE SAME IS CAPITAL EXPENDITURE,. 2. THE APPELLANT PRAYS THAT THE SAID SOFTWARE DEVEL OPMENT EXPENDITURE BE TREATED AS REVENUE EXPENDITURE AND BE ALLOWED AS A BUSINESS EXPENDITURE. GROUND II 1. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A,O. IN TREATING LOAN OF 1,25,01,689/- TAXABLE U/S. 68 OF THE INCOME TAX ACT , 1961 ('THE ACT') AND FURTHER ENHANCING THE INCOME TO RS.1,61,15,409/- ON ALLEGED GROUND THAT THE SAME IS UNEXPLAINED CREDIT WITHIN THE MEANING OF SE CTION 68 OF THE ACT. 2. THE APPELLANT THEREFORE PRAYS THAT THE SAID ADD ITION BE DELETED. GROUND III: THE APPELLANT CRAVES LEAVES TO ADD TO, ALTER AND / OR AMEND THE ABOVE GROUNDS OF APPEAL. GROUND NO.1 2. VIDE GROUND NO.1, THE ASSESSEE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF A SUM OF RS.17 LA KHS HOLDING THE SAME AS A CAPITAL EXPENDITURE AS AGAINST THE CLAIM OF THE ASS ESSEE THAT THE SAME BEING OF REVENUE IN NATURE. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE INCURRED VARIOUS EXPENSES FOR SOFTWARE DEVELOPMENT AND MAINT ENANCE AMOUNTING TO RS.44,34,703/-. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) DISALLOWED THE SAID EXPENDITURE TREATING THE SAME A S CAPITAL IN NATURE; HOWEVER, HE ALLOWED THE DEPRECATION ON THE SAME. BEING AGGR IEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT (A). 3. THE LD. CIT(A) IN THE IMPUGNED ORDER HAS DISCUSS ED THE INDIVIDUAL ITEMS RELATING TO THE EACH OF THE SOFTWARE EXPENSES . AFTER CONSIDERING THE DETAILS SUBMITTED BY THE ASSESSEE, HE HAS HELD THAT EXCEPT THE EXPENSES RELATING TO SOFTWARE ADAPTATION CHARGES FOR TERMINALS ACTIVA TED ON 22.07.04, THE OTHER SOFTWARE EXPENSES INCURRED BY THE ASSESSEE FOR MAIN TENANCE AND BACK UP ETC. WERE OF REVENUE IN NATURE. IN RESPECT OF THE EXPEN SES OF RS.17 LAKHS INCURRED ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 3 ON ACCOUNT OF SOFTWARE ADAPTATION CHARGES FOR TERMI NALS, HE HAS HELD THAT THE SAME WERE IN THE NATURE OF OPERATING SOFTWARE AND T HUS CAPITAL IN NATURE. HE, HOWEVER, HAS ALLOWED DEPRECIATION ON THE SAME AS PE R THE RULES. THE ASSESSEE, THUS, HAS COME IN APPEAL BEFORE US AGITATING THE AB OVE ACTION OF THE LD. CIT(A). 4. THE LD. A.R. OF THE ASSESSEE, BEFORE US, HAS SUB MITTED THAT THE SAID EXPENSES WERE INCURRED BY THE ASSESSEE FOR UP-GRADA TION OF THE ALREADY INSTALLED SOFTWARE. IT HAS BEEN SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF ONLINE LOTTERY. THE ALREADY EXISTING SOFTWARE IN T HE LOTTERY TERMINAL OF THE ASSESSEE WAS NOT SUPPORTING THE SOFTWARE USED BY TH E MARTIN LOTTERIES IN RELATION TO WHICH THE ASSESSEE HAS BEEN RUNNING THE ABOVE BUSINESS. THE ASSESSEE UPGRADED THE SOFTWARE FOR SMOOTH RUNNING O F LOTTERY BUSINESS. THIS SOFTWARE WAS ACTIVATED ON 22.07.04. THE ASSESSEE, IN THIS RESPECT, HAS RELIED UPON THE COPY OF THE INVOICE DATED 07.12.04 PLACED AT PAGE 117 OF THE PAPER BOOK. THE LD. A.R. HAS FURTHER SUBMITTED THAT ALL THE EARLIER EXPENSES INCURRED ON OPERATING SOFTWARE HAD ALREADY BEEN CAPITALIZED BY THE ASSESSEE, ITSELF, IN THE EARLIER YEAR. THE EXPENDITURE OF RS.17 LAKHS W AS INCURRED BY THE ASSESSEE FOR UP-GRADATION OF EXISTING SOFTWARE WHICH IN FACT CONTRIBUTED TOWARDS THE SMOOTH RUNNING OF THE BUSINESS OF THE ASSESSEE. HE , THEREFORE, HAS SUBMITTED THAT SUCH SOFTWARE EXPENSES HAVING LIFE OF SHORT DU RATION WHICH REQUIRE CONTINUOUS UP-GRADATION DUE TO NEW TECHNOLOGY INTR ODUCED FROM TIME TO TIME AND NOT HAVING LONG TERM ENDURING BENEFIT WERE REQU IRED TO BE TREATED AS REVENUE IN NATURE. HE, IN THIS RESPECT, HAS RELIED UPON THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACI T VS. SANGHVI SAVLA STOCK BROKERS LTD. (2014) 43 TAXMANN.COM 323 (MUM-TRIB.) . THE TRIBUNAL IN THE SAID DECISION HAS VERY ELABORATELY DISCUSSED ABOUT THE NATURE OF THE SOFTWARE EXPENSES AND HAS OBSERVED THAT SOFTWARE KEEP ON CHA NGING AT A VERY PAST PACE WITH THE GROWING REQUIREMENT IN THE DAY TO DAY BUSI NESS. MOST OF THE SOFTWARE BECOME OBSOLETE IN SHORT SPAN AND NEW AND UPGRADED VERSIONS ARE REQUIRED FOR ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 4 BETTER FUNCTIONING AND THAT ANY EXPENDITURE ON SUCH AN UP-GRADATION OR BUYING OF SOFTWARE FOR FACILITATION AND EFFICIENT WORKING OF OPERATIONS THROUGH COMPUTERS IN DAY TO DAY BUSINESS MANAGEMENT IS TO B E TREATED AS REVENUE IN NATURE UNTIL AND UNLESS IT IS ESTABLISHED THAT THE SOFTWARE INSTALLED HAS A VERY LONG LASTING LIFE AND ENDURING BENEFIT ON A CAPITAL ASSET. THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL IN PARA 12 OF THE SAID DECISION, FOR THE SAKE OF CONVENIENCE, ARE REPRODUCED AS UNDER: . WHETHER ANY PARTICULAR EXPENSE FALLS IN THE CAPITAL FIELD OR REVENUE FIELD HAS TO BE JUDGED, LOOKING TO THE NATURE OF EX PENSES AND VARIOUS TESTS LAID DOWN BY THE COURTS FROM TIME IMMEMORIAL. IN THIS AG E OF COMPUTERIZATION, VARIOUS SOFTWARES ARE DEVELOPED FOR SMOOTH FUNCTIONING OF V ARIOUS BUSINESS NEEDS THAT HELPS BUSINESS TO RUN EFFECTIVELY, EFFICIENTLY AND PROFITABLY. THE SOFTWARES KEEP ON CHANGING AT A VERY FAST PACE WITH THE GROWING RE QUIREMENT IN THE DAY-TO- DAY BUSINESS. MOST OF THE SOFTWARES BECOME OBSOLETE IN SHORT SPAN AND NEW AND UPGRADED VERSION ARE REQUIRED FOR BETTER FUNCTIONIN G. UNLESS, IT HAS BEEN BROUGHT ON RECORD THAT THE SOFTWARE INSTALLED HAS A VERY LO NG LASTING LIFE AND ENDURING BENEFIT ON A CAPITAL ASSET, THEN, PROBABLY IT CAN BE SAID THAT IT MAY NOT BE OF REVENUE IN NATURE. HOWEVER, THE SOFTWARE APPLICATIO N, PER-SE, DO NOT, IN ANY MANNER, SUPPLANTS THE SOURCE OF INCOME OR MAKE ANY ADDITION TO THE CAPITAL SIDE OF THE ASSESSEE. THUS, IN OUR OPINION, SOFTWARE APPLIC ATION EXPENSES ARE NOTHING, BUT UP-GRADATION OF EFFICIENT WORKING OF OPERATIONS THR OUGH COMPUTERS IN THE DAY-TO- DAY BUSINESS MANAGEMENT, WHICH KEEPS ON CHANGING PE RIODICALLY AND THUS ANY EXPENDITURE ON SUCH AN UPGRADATION OR BUYING OF SOF TWARE IS REVENUE EXPENDITURE ONLY. THE DECISIONS AS RELIED UPON BY T HE LEARNED COUNSEL ALSO SUPPORTS OUR VIEW. EVEN THOUGH THE RULES HAVE PROVI DED RATE OF DEPRECIATION ON COMPUTER SOFTWARE, BUT THAT DOES NOT LEAD TO ANY KI ND OF DRAWING LEGAL INFERENCE THAT ALL THE SOFTWARES HAVE TO BE CHARACT ERISED AS CAPITAL ASSET. THUS, THE GROUNDS RAISED BY THE ASSESSEE IN THE CRO SS OBJECTION ARE TREATED AS ALLOWED. 5. THE ABOVE OBSERVATIONS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL CAN BE SAFELY APPLIED TO THE CASE OF THE ASSESSEE WHEREIN THE ASSESSEE HAD DEMONSTRATED THAT THE ABOVE EXPENDITURE OF RS.17 LA KHS WAS INCURRED BY THE ASSESSEE FOR UP GRADATION OF EXISTING SOFTWARE FOR SMOOTH RUNNING OF ONLINE LOTTERY BUSINESS OF THE ASSESSEE. WE, THEREFORE, H OLD THAT THE SAID EXPENDITURE WAS RIGHTLY CLAIMED BY THE ASSESSEE AS REVENUE EXPE NDITURE. WE, ACCORDINGLY, HEREBY, SET ASIDE THE FINDING OF THE LD. CIT(A) ON THIS ISSUE AND DELETE THE DISALLOWANCE SO MADE BY THE LOWER AUTHORITIES ON TH IS ISSUE AND DIRECT THE AO TO TREAT THE SAID SOFTWARE EXPENSES OF RS.17 LAKHS AS REVENUE IN NATURE. ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 5 GROUND NO.2 6. VIDE GROUND NO.2, THE ASSESSEE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN UPHOLDING THE ACTION OF THE AO IN TREATING THE L OAN OF RS.1,25,01,689/- AS UNEXPLAINED CREDIT AND TAXABLE UNDER SECTION 68 OF THE ACT. THE ASSESSEE HAS FURTHER AGITATED THE ACTION OF THE CIT(A) IN FURTH ER ENHANCING THE INCOME TO RS.1,61,15,409/- ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE ACT. THE BRIEF FACTS LEADING TO THE ABOVE ADDITION ARE T HAT THE AO NOTICED THAT THE ASSESSEE HAD TAKEN UNSECURED LOAN AMOUNTING TO RS.1,88,62,689/-, OUTSTANDING BALANCE OF THE SAME AT THE YEAR-END BEI NG RS.4,66,72,689/-. IT WAS STATED THAT OUT OF THE TOTAL OUTSTANDING UNSECURED LOANS, AN AMOUNT OF RS.4,12,47,000/- BELONGED TO THE ASSESSEES HOLDING COMPANY MARKETING AND BRAND SOLUTIONS (INDIA) PVT. LTD. (IN SHORT M & B) AND THE BALANCE OF RS.54,25,689/- TO MODI ENTERTAINMENT LTD. (IN SH ORT MODI) (A RELATED COMPANY). THE AMOUNT BELONGING TO MODI, REPRESENTE D EXCESS AMOUNT RECEIVED DURING THE CURRENT ASSESSMENT YEAR AGAINST THE ADVANCE GIVEN BY THE ASSESSEE IN EARLIER YEARS. THAT DURING THE YEAR UN DER CONSIDERATION, AN AMOUNT OF RS.1,34,37,000/- HAD BEEN RECEIVED BY THE ASSESS EE FROM M & B. THE AO TREATED THE LOANS OF RS.1,25,01,689/- AS UNEXPLAINE D CREDIT IN THE BOOKS OF THE ASSESSEE IN THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE ACT ON THE GROUND THAT THE ENTRIES IN RESPECT OF THESE LOANS REMAINED UNEXPLAINED. BEING AGGRIEVED BY THE SAID ADDITION, THE ASSESSEE PREFER RED APPEAL BEFORE THE LD. CIT(A). 7. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THA T IT HAD TAKEN THE LOAN WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAD OBTAINED LOAN FROM ITS HOLDING COMPANY IN RESPECT OF WHICH I T HAD ALSO SUBMITTED CONFIRMATION OF THE LENDER TO THE AO. AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN THE REMAND REPORT, THE AO STATED THAT THE ASSESSEE HAD TAKEN LOAN FROM VARIOUS PARTIES AND THAT MANY OF THESE LOANS WERE SQUARED U P DURING THE YEAR UNDER ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 6 CONSIDERATION. HOWEVER, ENTRIES, IN RESPECT OF THE SE LOANS, HAD REMAINED UNEXPLAINED. HE THEREFORE ADDED THE TOTAL LOAN AMO UNTING TO RS.1,25,01,689/- INTO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. THE AO ALSO POINTED OUT THAT THERE WAS A MISMATCH OF THE FIGURE AND THAT THE CORRECT ADDITION SHOULD HAVE BEEN AT RS.1,61,15,409/- INSTE AD OF RS.1,25,01,689/-. THE AO ALSO REPORTED IN THE REMAND REPORT THAT THE ASSE SSEE HAD FAILED TO PROVE THE GENUINENESS IN RESPECT OF ENTRIES MENTIONED FROM SL . NO.1 TO 141 OF THE AUDITORS REPORT EXCEPT THE ENTRY AT SL. NO.142 REP RESENTING LOAN TAKEN FROM M& B WHICH WAS FOUND TO BE ACCEPTABLE. CONSIDERING THE ABOVE REPORT OF THE AO, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD F AILED TO PROVE THE GENUINENESS OF TRANSACTIONS AND FURNISH THE CONFIRM ATIONS FROM THE PARTIES. ONLY THE CONFIRMATION FROM ONE PARTY I.E. M & B WAS FURNISHED. HE ACCORDINGLY HELD THAT THE ADDITIONS IN RESPECT OF L OAN FROM PARTIES MENTIONED AT SL. NO.1 TO 141 OF THE AUDITORS REPORT WERE LIABLE TO BE CONFIRMED. WHILE HOLDING SO, HE, ALSO OBSERVED THAT THE AO HAD NOT M ADE ADDITIONS IN RESPECT OF LOANS TAKEN FROM M & B OR FROM MODI, WHICH WERE SIS TER CONCERNS OF THE ASSESSEE. HE ACCORDINGLY UPHELD THE ADDITIONS MADE BY THE AO IN RESPECT OF PARTIES LISTED FROM SL. NO.1 TO 141 IN THE AUDITOR S REPORT SUBMITTED BY THE ASSESSEE, HOWEVER, HELD THAT THE ASSESSEE HAD SUBMI TTED CONFIRMATIONS IN RESPECT OF M & B AND MODI. HE WORKED THE CORRECT F IGURE OF ADDITION AT RS.1,61,15,409/- AND ADDED BACK THE SAME TO THE INC OME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE HAS COME IN APPEAL BE FORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. AT THE OUTSET, THE LD. A.R. OF THE ASSESSE E, BEFORE US, HAS SUBMITTED THAT THE AMOUNTS IN QUESTION CREDITED INTO THE ACCO UNTS OF THE ASSESSEE WERE, IN FACT, NOT THE LOANS. THESE, IN FACT, WERE THE SECU RITY DEPOSITS RECEIVED BY THE ASSESSEE FROM THE RETAILERS. THE LD. A.R. HAS BROU GHT OUR ATTENTION TO THE APPLICATION DATED 17.07.14 MOVED FOR ADMISSION OF A DDITIONAL EVIDENCE WHEREIN IT HAS BEEN STATED THAT THE ASSESSEE WAS IN POSSESSION OF VARIOUS ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 7 DOCUMENTS SUCH AS RETAILER APPLICATION FORMS, DISTR IBUTOR AGREEMENT AND THE RELEVANT RECEIPTS DEPICTING THE RECEIPT OF AMOUNT F ROM VARIOUS PERSONS ALONG WITH RETAILER APPLICATION FORM. THE SAID RETAILER APPLICATION FROMS WERE NOT ONLY SIGNED BY THE RESPECTIVE PARTIES BUT ALSO HAVI NG THE PHOTOGRAPHS OF THE EACH PARTY AFFIXED ALONG WITH NAME, ADDRESS ETC. DU LY MENTIONED THEREUPON. THE LD. A.R. HAS FURTHER SUBMITTED THAT THE ABOVE S TATED DOCUMENTS WERE SUFFICIENT ENOUGH TO PROVE THE GENUINENESS OF TRANS ACTIONS AND THE SOURCE OF CREDITS INTO THE ACCOUNTS OF THE ASSESSEE. IT HAS BEEN EXPLAINED THAT THESE DOCUMENTS PERTAINED TO A 10 YEAR OLD PERIOD AND THE ASSESSEE WAS MAKING ALL OUT EFFORT TO TRACE THE SAME, HOWEVER, DESPITE BEST EFFORTS THE SAME COULD NOT BE PRODUCED BEFORE THE LOWER AUTHORITIES. SINCE THE S AID DOCUMENTS HAVE NOW BEEN RETRIEVED AND THE SAME GO TO THE ROOT OF THE C ASE, IT HAS BEEN PLEADED THAT THE SAME BE ADMITTED AS ADDITIONAL EVIDENCE IN SUPP ORT OF THE PLEADINGS OF THE ASSESSEE. THE LD. A.R. IN THIS RESPECT HAS FURTHER RELIED UPON AN AFFIDAVIT OF ONE MR. SUSHIL M. WAGHMARE, DIRECTOR OF THE ASSESSE E COMPANY, WHEREIN, THE ABOVE FACTS HAVE BEEN EXPLAINED AND IT HAS BEEN SUB MITTED THAT THE ABOVE DOCUMENTS BE TAKEN INTO CONSIDERATION FOR JUST AND PROPER DECISION OF THE CASE. 9. WE HAVE GONE THROUGH THE APPLICATION, AFFIDAVIT AND THE RELEVANT DOCUMENTS. WE FIND THAT THE RELEVANT DOCUMENTS GO TO THE ROOT OF THE CASE AND ARE VERY MUCH NECESSARY TO BE LOOKED INTO FOR JUST AND PROPER DECISION OF THE CASE. WE, THEREFORE, ALLOW THE APPLICATION OF THE ASSESSEE FOR ADDITIONAL EVIDENCE AND DIRECT THE AO TO ADMIT THE DOCUMENTS R ELIED UPON AND SOUGHT TO BE PRODUCED BY THE ASSESSEE AND AFTER CONSIDERING T HE SAID DOCUMENTS/EVIDENCE, DECIDE THE ISSUE AFRESH IN ACCO RDANCE WITH LAW. THIS ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF THE AO . GROUND NO.3 10. GROUND NO.3 TAKEN BY THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 8 11. NOW WE COME TO THE APPEAL OF THE REVENUE I.E. I TA NO.3325/M/2012. ITA NO.3325/M/2012 12. THE REVENUE IN ITS APPEAL HAS TAKEN THE FOLLOWI NG REVISED GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF R S.47,84,336/- WITHOUT APPRECIATING THE FACT THAT ASSESSEE COULD NOT SUBMI T DETAILS OF INTEREST PAID AND USAGE OF BORROWED FUNDS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE A.O OF RS.4,52,84 9/- EVEN WHEN PAYMENT OF EMPLOYEES' CONTRIBUTION TO P.F. WAS MADE BEYOND THE DUE DATE PRESCRIBED UNDER THE P.F. ACT AS PER REQUIREMENTS O F SECTION 36(VA) OF THE ACT, WITHOUT APPRECIATING THAT THE EMPLOYEES CO NTRIBUTION TO P.F IS NOT COVERED BY SECTION 43B OF THE ACT AND THEREFORE PAYMENT BEYOND DUE DATE PRESCRIBED UNDER P.F.ACT AS PER SECTION 36(VA) OF THE L.T.ACT BUT BEFORE FILING OF RETURN WOULD NOT MITIGATE THE VIOLATIONS OF SECTION 36(VA) OF I.T.ACT.4. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE TO THE FILE OF AO OR CONFIRM THE ORDER OF THE AO. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. GROUND NO.1 13. GROUND NO.1 IS RELATING TO THE ACTION OF THE LD . CIT(A) IN DELETING THE DISALLOWANCE OF INTEREST OF RS.47,84,336/-. THE LD . CIT(A), WHILE DELETING THE SAID DISALLOWANCE OF INTEREST, HAS OBSERVED THAT TH E LOAN AMOUNT IN QUESTION WAS IN FACT THE SECURITY DEPOSITS RECEIVED BY THE A SSESSEE FROM THE RETAILERS AND THAT THE SAME WAS USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 14. THE LD. D.R., IN THIS RESPECT, HAS SUBMITTED TH AT THE FINDING OF THE LD. CIT(A) ARE VIRTUALLY NOT BASED ON ANY CONCRETE EVID ENCE ON THE FILE IN THIS RESPECT. 15. AFTER GOING THROUGH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND CONSIDERING THE SUBMISSIONS OF THE LD. REPRESENTATI VES OF THE PARTIES, WE THINK ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 9 IT PROPER TO RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO IN THE LIGHT OF OUR OBSERVATIONS MADE ABOVE WHILE RESTORING THE ISSUE O F ADDITION OF RS.1,61,15,409/- MADE UNDER SECTION 68 BY THE LOWER AUTHORITIES IN RELATION TO GROUND NO.2 OF THE ASSESSEES APPEAL. SINCE THIS I SSUE IS INTERLINKED AND CONNECTED WITH THE ISSUE RAISED VIDE GROUND NO.2 IN THE ASSESSEES APPEAL, WE THEREFORE, DIRECT THE AO TO DECIDE THIS ISSUE ALSO AFRESH IN THE LIGHT OF EVIDENCES FURNISHED BY THE ASSESSEE IN THIS RESPECT. GROUND NO.2 16. GROUND NO.2 TAKEN BY THE REVENUE IS RELATING TO THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE AO IN R ESPECT OF LATE DEPOSIT OF EMPLOYEES CONTRIBUTION TO PF. THE CONTENTION OF T HE REVENUE IS THAT THE SAID CONTRIBUTION WAS MADE BEYOND THE DUE DATE PRESCRIBE D UNDER THE PF ACT AND HENCE THERE WAS A VIOLATION OF THE PROVISION OF SEC TION 36(VA) OF THE INCOME TAX ACT. BOTH THE LD. REPRESENTATIVES OF THE PARTI ES HAVE FAIRLY AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIO NS LTD. REPORTED IN (2009) 319 ITR 306 (SC) WHEREIN THE HONBLE SUPREME COURT INTER ALIA HAS HELD THAT THE AMENDMENT TO SECTION 43B VIDE FINANCE ACT, 2003 W.E.F. 01.04.2004, WHEREBY, THE SECOND PROVISO TO SECTION 43B HAS BEEN DELETED AND FURTHER AMENDMENT TO 1 ST PROVISO HAS BEEN MADE, WHEREBY, IT HAS BEEN PROVID ED THAT NOTHING CONTAINED IN THE SAID SECTION SHALL AP PLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE FOR FURNISHING THE RETURN OF INCOME, IS RETROSPECTIVE IN NATURE AND WOULD OPERATE FROM 01.04.1988. THE HONBLE BOMBAY HIGH COURT HAS IN THE CASE OF CIT VS. HINDUSTAN ORGANICS CHEMICALS LTD. IN ITA NO.399 OF 2012 VIDE ORDER DATED 11.07.14 HAS HELD THAT THE EMPLOYEES CONTRIBUTION TO PF IS COVERED BY THE SAID DECISION AND THAT THE APPLICABLE DATE WILL BE ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR DEPOSIT OF THE SAID CONTRIBUTION. MOREOVER, WE FIND THAT THE ASSESSMENT YEAR UNDER CONSIDERATION B EFORE US IS A.Y. 2005-06 FOR ITA NO.3325/M/2012 ITA NO.3803/M/2012 M/S. INTEGRATED TECHNOLOGY SOLUTIONS P. LTD. 10 WHICH THE SAID AMENDMENT OTHERWISE IS APPLICABLE. THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ARE THEREFORE UPHELD. 17. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE APP EAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.02.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.