M/s Premium Capital Market & Investment Ltd., Indore V. The ACIT, 1(2), Indore

ITA 356/IND/2012

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9877 (ITAT-INDORE)
• Duration Of Justice: 6 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2017
• Assessment Year: 1996-1997
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: P N CHOWDHURY
• Keywords: Bogus purchase; Depreciation; Business expenditure; Period of limitation; Wrong claim; Onus to prove; Revenue expenditure
• Section: 143(3); 260A; 148; 11

Judgement Text

ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.356/IND/2012 ASSESSMENT YEAR: 1996-97 M/S. PREMIUM CAPITAL MARKET & INVESTMENT LTD., 401, STARLIT TOWER, 4 TH FLOOR, 29, Y.N. ROAD, INDORE / VS. ACIT - 1(2), INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AABCP2228H ITA NO.390/IND/2012 ASSESSMENT YEAR: 1996-97 ACIT - 1(2), INDORE / VS. M/S. PREMIUM CAPITA L MARKET & INVESTMENT LTD., 401, STARLIT TOWER, 4 TH FLOOR, 29, Y.N. ROAD, INDORE (APPELLANT) (REVENUE ) APPELLANT BY SHRI P.N. CHOWDHURY , A.R. RESPONDENT BY SHRI K.G. GOYAL, DR DATE OF HEARING: 01.08.2018 DATE OF PRONOUNCEMENT: 25.09.2018 ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 2 / O R D E R PER KUL BHARAT, J.M: THESE TWO CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-2, INDORE DAT ED 19.3.2012. ALL THE APPEALS ARE TAKEN UP TOGETHER AND HAS BEEN DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. FIRST WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.356/IND/2012 PERTAINING TO THE ASSESSMENT YEAR 1996-97. THE ASSESSEE HAS RAISED FOLLOWING REVISED GROUNDS OF APPEAL: 1. THAT THE LEARNED CIT(A) ERRED IN NOT DECIDING THE Q UESTION OF VALIDITY OF THE FRESH ASSESSMENT OVERLOOKING THE DIRECTIONS OF THE HON'BL E SUPREME COURT IN ITS ORDER DATED 05.04.2007 IN SLP(CIVIL) NO.5740/2007. THAT ON THE ABOVE FACT THE LEARNED CIT(A) OUGHT TO HAVE DECIDED THE QUESTION WHETHER THE DEPARTMENT WAS ENTITLED TO ANY EXTENSION OF LIMITATION U/S 153(2A) OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED CIT (A) ERRED IN NOT ANNULLING/QUA SHING THE FRESH ASSESSMENT ORDER DATED 12.07.2007 PASSED IN PURSUANCE TO THE ORDER OF THE HON'BLE M.P. HIGH COURT AS THE SAID ASSESSMENT ORDER IS BARRED BY LIMITATION U/S 153(2A ) OF THE INCOME TAX ACT, 1961. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE SAID ASSESSMENT ORDER BEING ILLEGAL AND BAD IN LAW, IT IS THEREFORE, PRAYED THAT THE SAME M AY VERY KINDLY BE NOW ANNULLED/QUASHED. THAT THE LEARNED CIT(A) ALSO ERRED IN OVERLOOKING T HE FACT THAT IN THE ABSENCE OF ANY STAY GRANTED BY ANY COURT AS ENVISAGED UNDER CLAUSE (II) OF EXPLANATION 1 TO SECTION 153, THE PERIOD OF LIMITATION HAD TO BE RECKONED FROM THE DA TE OF THE ITAT ORDER OF 11.12.2000. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE PERIOD OF LIMITATION HAVING EXPIRED, THE ASSESSMENT ORDER THUS BARRED BY LIMITA TION IS ILLEGAL, WITHOUT JURISDICTION AND BAD IN LAW AND HENCE DESERVES TO BE ANNULLED/QUASHE D. 3. WITHOUT PREJUDICE TO THE ABOVE, ASSUMING THOUGH NOT ADMITTING, EVEN IF THE PERIOD OF LIMITATION IS RECKONED FROM THE JUDGMENT OF THE HON 'BLE M.P. HIGH COURT DATED 03.01.2005, THE IMPUGNED ASSESSMENT ORDER DATED 12.07.2007 IS B ARRED BY LIMITATION ULS 153(2A) OF THE ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 3 INCOME TAX ACT, 1961 AND THE SUBSEQUENT ORDER OF TH E HON'BLE M.P. HIGH COURT DATED 19.01.2007 GRANTING EXTENSION OF TIME FOR COMPLETIO N OF ASSESSMENT COULD NOT HAVE AN OVERRIDING EFFECT ON THE STATUTORY PERIOD OF LIMITA TION AS ENVISAGED U/S 153(2A) OF THE INCOME TAX ACT, 1961. 4. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER BY DISALLOWING CLAIM OF 100% DEPRECIATION OF RS.1,08,27,800/- ON LEASED ASSETS (MILK CANS) ALLEGEDLY TREATING THE ENTIRE TRANSACTION OF PURCHA SE AND LEASE OF ASSETS AS BOGUS AND NON GENUINE. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE SAID DISALLOWANCE IS WRONG AND HENCE THE SAID ADDITION DESERVES TO BE DE LETED. 5. THAT THE LEARNED CIT(A) ERRED IN OVERLOOKING THE FA CT THAT IN THE IMMEDIATELY PRECEDING YEAR I.E. A Y 2005-06 THE SAME TRANSACTION WITH THE SAME PERSONS HAS BEEN ACCEPTED AS GENUINE BY THE DEPARTMENT IN REGULAR ASSESSMENT AND EVEN IN RE ASSESSMENT PROCEEDINGS BY EVENTUALLY DROPPING THE PROCEEDINGS U/S 148. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRANSACTION SHOULD HAVE BEEN ACCEPTED AS GENUINE ON THE BASIS OF CONSISTENCY AND IT IS PRAYED THAT THE TRANSACTION MAY NOW BE ACCEPTED AS GENUINE . 6. THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE BURDEN TO PROVE THAT THE TRANSACTION WAS BOGUS AND NON GENUINE LAY ON THE DE PARTMENT AND THE DEPARTMENT HAS FAILED TO BRING ANY COGENT MATERIAL ON RECORD TO DI SPROVE THE TRANSACTION. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DEP ARTMENT HAVING MISERABLY FAILED TO DISCHARGE ITS ONUS AND HAS TRIED TO CONVERT GOOD EV IDENCE INTO BAD EVIDENCE, IT IS PRAYED THAT THE TRANSACTION BE TREATED AS GENUINE. 7. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCES MADE BY THE ASSESSING OFFICER OF 20% OF DEFERRED REVENUE EXPENSES OF RS.4 2,62,1631- ON THE ALLEGED PREMISE THAT THE SAID CLAIM HAS NOT BEEN ALLOWED IN A Y 199 5-96. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE SAID DISALLOWANCE IS WRONG AND CONTRARY TO THE DIRECTIONS OF THE HON'BLE ITAT IN ORDER DATED 11.12.2000. 8. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER OF LEVYING INTEREST ULS 220(2) FROM THE EXPIRY OF 35 D AYS FROM THE DATE OF SERVICE OF ORIGINAL ASSESSMENT ORDER AND DEMAND NOTICE TILL THE DATE OF FRESH ASSESSMENT ORDER IRRESPECTIVE OF THE FACT THAT THE ORIGINAL ASSESSMENT ORDER HAD REACHED FINALITY POST ITAT SETTING IT ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 4 ASIDE AND IN ABSENCE OF ANY CHALLENGE TO THE CONTRA RY. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE INTEREST CHARGED U/S 220(2) IS NOT ONLY CONTRARY TO THE PROVISIONS OF SECTION 220(2) BUT ALSO TO CBDT CIRCU LAR NO.334 OF 03.04.1982 AND IT IS PRAYED THAT INTEREST U/S 220(2), IF ANY, BE CHARGED IN ACCORDANCE WITH LAW. 2. GROUND NOS.1 TO 3 IN THE PRESENT APPEAL ARE RELA TED TO LIMITATION. THESE GROUNDS OF THE ASSESSEES APPEAL WERE DECIDED BY A SEPARATE ORDER DATED 24.4.2012, WHEREB Y THE GROUNDS OF THE ASSESSEES APPEALS WERE REJECTED. G ROUND NOS.4 TO 6 ARE AGAINST DISALLOWING THE CLAIM OF DEP RECIATION ON LEASED ASSETS I.E. MILK CANS. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CAL LED AS THE ACT). IN THE EARLIER GROUND OF LITIGATION, M ATTER TRAVELLED TO THE STAGE OF THE HON'BLE M.P. HIGH COU RT AGAINST ORDER OF THE TRIBUNAL. THE TRIBUNAL IN THE EARLIER ROUND OF LITIGATION HAS QUASHED THE ASSESSMENT ON THE GROUND OF LEGALITY I.E. VALIDITY OF SERVICE OF NOTICE U/S 143 (3) OF THE ACT. HOWEVER, THE TRIBUNAL HAS SET ASIDE THE ISSUE FOR FRESH ADJUDICATION. THE ISSUE OF LEGALITY WAS DECIDED AG AINST THE ASSESSEE BY THE HON'BLE M.P. HIGH COURT. HENCE, TH E ASSESSING OFFICER IN PURSUANCE TO THE DIRECTION OF THE TRIBUNAL ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 5 PASSED THE IMPUGNED ASSESSMENT ORDER. THE A.O. WHI LE PASSING THE IMPUGNED ASSESSMENT ORDER, DECIDED THE CLAIM OF DEPRECIATION AGAINST THE ASSESSEE AND ALSO REJECTED THE CLAIM OF DEFERRED REVENUE EXPENSES. THE CLAIM OF MERCHAN T BANKING FEE WAS ALSO REJECTED BY THE ASSESSING OFFI CER. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, PART LY ALLOWED THE APPEAL, THEREBY, THE CLAIM OF MERCHANT BANKING. AGAINST THIS, ASSESSEE AND REVENUE BOTH ARE IN APPE AL BEFORE THIS TRIBUNAL. 4. APROPOS TO GROUND NOS.4 TO 6, LD. SENIOR COUNSEL VEHEMENTLY ARGUED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. H E SUBMITTED THAT ALL THE MATERIAL EVIDENCES WERE FURNISHE D IN SUPPORT OF ITS CLAIM OF DEPRECIATION. HE FURTHER SUB MITTED THAT THE A.O. MERELY ON THE BASIS OF CONJECTURE AND SURMISES REJECTED THE CLAIM OF THE ASSESSEE. HE SUBM ITTED THAT IN THE IMMEDIATE PRECEDING YEAR, SUCH CLAIM WAS ALLOWED. HE HAS ALSO STATED THAT THE PROCEEDINGS INITIAT ED U/S 148 OF THE ACT IN RESPECT OF THE ASSESSMENT YEAR 1995- 96 WERE ALSO DROPPED. HE SUBMITTED THAT THE REVENUE HAD ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 6 VERIFIED THE GENUINENESS OF THE TRANSACTION. HE FURT HER SUBMITTED THAT THE REVENUE HAS BEEN CHANGING ITS STAND, THEREFORE, SUCH CHANGE OF STAND IS NOT PERMISSIBLE U NDER LAW, UNLESS THERE IS SOME MATERIAL EVIDENCES AVAILABLE. LD. SR. COUNSEL HAS TAKEN US THROUGH THE PAPER BOOK AND TH E ORDERS OF THE AUTHORITIES BELOW. 5. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT FROM THE MATERIAL PLACED ON RECORD, IT IS CLEAR THAT THE ONLY EXPLANATION WITH REGARD TO THE CLAIM OF DEPRECIATION HAS BEEN THAT IN THE EARLIER YEAR, SUCH CLAIM HAS BEEN ALLOW ED. HE SUBMITTED THAT EACH YEAR IS INDEPENDENT ASSESSMENT YEAR. HE FURTHER SUBMITTED THAT ANY OMISSION, ERROR O R LACK OF ENQUIRY WOULD NOT MAKE THE ASSESSEE ELIGIBLE FOR DEDUCTION. HE SUBMITTED THAT ONCE THE FOUNDATION OF CLAIM IS MISSING, HOW SUCH CLAIM WOULD BE ALLOWED. HE SUBMITTED THAT AN INDEPTH INVESTIGATION WAS CARRIED OUT, THEREBY IT WAS REVEALED THAT ENTITY WHERE FOUND, THE ASSESSEES CLAIM TO HAVE PURCHASED THE ASSET WAS NOT CAPABLE OF MANUFACTURING SUCH ASSET. HE SUBMITTED THAT ASSESEE INSTEAD OF REBUTTING EVIDENCES GATHERED DURIN G THE ENQUIRY IS MAKING AN ATTEMPT TO FIND AN ESCAPE ROUTE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 7 OF THE AUTHORITIES BELOW. THE LD. CIT(A) HAS GIVEN H IS FINDING OF FACTS WHICH ARE AS UNDER: 4.2 NOW COMING TO THE CORE ISSUE OF DISALLOWANCE O F DEPRECIATION ON LEASE OF MILK CANES OF RS.1,08,27,800/-, IT IS TO B E STATED AT THE VERY BEGINNING ITSELF THAT THE ENQUIRY CONDUCTED BY AO IN COURSE O F ASSESSMENT PROCEEDINGS AND SUBSEQUENT DETAILED ENQUIRY CONDUCTED BY THIS OFFIC E, BY WHICH THE APPELLANT WAS CONFRONTED BY DETAILED AND SPECIFIC SHOW CAUSE LETTER DATED 24.8.2011, AS HAS BEEN EXTRACTED IN PARA 3 ABOVE, HAVE CONCLUSIVE LY ESTABLISHED BEYOND ANY DOUBT THAT NO PURCHASES OF MILK CANES WHAT SO EVER WERE MADE BY THE APPELLANT COMPANY FROM SHRI MUKESH PANTANGIYA. THE APPELLANT IN RESPONSE TO SUCH SPECIFIC SHOW CAUSE NOTICE ISSUED, WHICH IS SUPPORT ED BY BANKING ENQUIRIES REFERRED IN SUCH SHOW CAUSE LETTER, INSTEAD OF REBU TTING SUCH FINDINGS WITH NECESSARY EVIDENCES AND DETAILS ON FACTS HAS MERELY CHOSEN TO FILE AND COME FORWARD WITH EVASIVE LEGAL CONTENTIONS AND IN SUCH REPLY ALSO HAS AGAIN ADVANCED CONTENTION ON THE ISSUE OF LIMITATION. TH E CONCLUSIVE FINDING ARRIVED IN SUCH SHOW CAUSE NOTICE IN PARA 7 TO PARA 8 (IV) ARE REPRODUCED AT THE COST OF REPETITION, WHEREBY IT IS CONCLUSIVELY ESTABLISHED THAT NO GENUINE MILK CANES WERE PURCHASED AND HENCE THERE BEING NO SUCH ASSETS ACQUIRED BY THE APPELLANT, THE APPELLANT WAS NOT ENTITLED TO THE CLAIM OF DEPR ECIATION WHICH WAS AN EXERCISE OF DUBIOUS TAX EVASION EXERCISE AND HENCE THE AO'S ACTION IS APPROVED IN THIS BEHALF. 7. HOWEVER, FROM THE DISCUSSION MADE IN PARA 3.3 AB OVE, IT IS CRYSTAL CLEAR THAT THE AMOUNTS OF DEPOSITS AND WITHDRAWALS IN AND FROM THE ACCOUNTS OF SHRI GAURAV BANDI, SMT. SUSHMA BANDI, THE APPELLANT ASSESSEE COMPANY & ALSO IN THE ACCOUNT OF GIRNAL TRADING CORPORATION HAVE BEEN RECYCLED THROUGH THE ACCOUNT OF SHRI MUKESH PATANGIA WHICH E STABLISHES THAT NO PURCHASES OF MILK CANS WERE EVER MADE BY THE APPELL ANT COMPANY FROM MUKESH PATANGIA AND NOR THEREFORE, LEASED OUT AS CL AIMED BY THE APPELLANT COMPANY. 7.1 SINCE NO PURCHASES OF MILK CANS WERE ACTUALLY M ADE AND CONSEQUENTLY THE SAME COULD NOT HAVE BEEN LEASED OU T, THOUGH CLAIMED BY THE APPELLANT AND STILL, THE LEASE RENT INCOME FROM LEASING THE SAID MILK CANS HAS BEEN CREDITED IN THE BOOKS OF ACCOUNT OF T HE COMPANY AT RS.61,95,092/-IN A.Y. 1996-97, IT IS CLEAR THAT THE NATURE AND SOURCE OF SUCH CREDITS IN THE BOOKS OF ACCOUNT OF THE COMPANY REMAINED TO BE EXPLAINED SATISFACTORILY. 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES DISC USSED ABOVE, IT IS PROPOSED TO RECORD THE FOLLOWING FINDINGS IN THE AP PEAL ORDER TO BE PASSED IN THE SUBJECT APPEAL: ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 8 (I) THERE WAS NO BUSINESS WHATSOEVER CARRIED ON BY THE APPELLANT COMPANY THOUGH IT CLAIMED TO HAVE ACQUIRED MILK CAN S AND TO HAVE GIVEN THEM ON LEASE; (II) THE ENTIRE EXERCISE IN THE NAME OF THE APPELLANT CO MPANY SHOWS A SERIES OF TRANSACTIONS PREORDAINED BY SHRI S.K. BAN DI, CA AND DIRECTOR OF THE APPELLANT COMPANY IN COMPLICITY WIT H HIS WIFE SMT. SUSHMA BANDI, SO SHRI GAURAV BANDI AND OTHERS LIKE SHRI MUKESH PATANGIA, SHRI SUDHIR WAGHE & SHRI SANTOSH J ADHAV; (III) THE ENTIRE DEPOSITS AND WITHDRAWALS IN BANK AND OTH ER ACCOUNTS WERE AT THE BEHEST OF THE SAID SHRI S.K. BANDI WHO HAD DONE IT ALL BY MISUSING AND ABUSING THE CORPORATE PERSONALI TY OF THE APPELLANT ASSESSEE, WHICH IS AN INSTRUMENTALITY AND A CREATION OF SHRI S.K. BANDI FOR HIS OWN VICIOUS TAX PLANNING DIRECTLY HIT BY THE APEX COURT JUDGEMENT IN THE CASE OF MCDOWEL & C O. LTD. VS. CTO (1985) 154 ITR 148 (SC) AND (IV) DEPRECIATION ON THE ASSETS VIZ. THE MILK CANS AS CL AIMED BY THE APPELLANT @ 100% OF THE ALLEGED COST WHICH HAS BEEN REFUSED BY THE A.O. IS QUITE IN ORDER, THE SAID ASSETS HAVING NEVER BEEN ACQUIRED NOR THEREFORE, OWNED AND USED BY THE APPEL LANT COMPANY FOR ITS BUSINESS; AND 4.2.1 BEFORE CONCLUDING IT WOULD BE FURTHER APPROPR IATE TO EXTRACT OBSERVATIONS MADE BY HON'BLE HIGH COURT OF M.P. IN THIS BEHALF IN PARA 18 OF ITS ORDER: WHAT WAS MORE A MATTER OF SERIOUS CONCERN WAS THE FORGED AND BOGUS CLAIMS MADE BY ASSESSEE IN CLAIMING DEPRECIAT ION. ALL THESE CLAIMS ON A DETAILED INQUIRY MADE BY DIRECTOR OF INVESTIGA TION AT BOMBAY EXPOSED THE ASSESSEE IN INDULGING IN EVADING PAYMEN T OF TAX. THE ASSESSEE WAS GIVEN FULL OPPORTUNITY TO DEFEND. THE Y DID AVAIL OF FULL OPPORTUNITY AND CONTESTED THE CASE BY FILING DOCUME NTS AND WRITTEN SUBMISSION. WE ARE NOT HOWEVER CONCERNED ON THIS I SSUE BECAUSE THE TRIBUNAL HAS REMANDED THE CASE FOR INQUIRY AS DIREC TED BY THE TRIBUNAL AND PASS FINAL ASSESSMENT ORDERS. NEEDLESS TO OBSE RVE THE A.O. WILL AGAIN GIVEN ENOUGH OPPORTUNITY TO ASSESSEE IN PROCE EDINGS AS PER THE DIRECTIVES OF TRIBUNAL CONTAINED IN THE IMPUNGED OR DER. IN THE RESULT, GROUND NO.2 IS ALSO DISMISSED. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, IMPUGNED ORD ER AND MATERIALS AVAILABLE ON RECORD, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. SR. COUNSEL FOR THE ASSESS EE THAT THE REVENUE HAS NOT DISCHARGED ITS ONUS. IF WE ACCEP T THIS ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 9 CONTENTION OF THE ASSESSEE, IT WOULD SET A WRONG PREC EDENT. ADMITTEDLY, IT IS THE ASSESSEE WHO HAD CLAIMED DEPRECIATION, THEREFORE, IT WAS INCUMBENT UPON THE ASSESSEE TO PROVE WITH PLAUSIBLE EVIDENCE THAT IT OWNE D CERTAIN ASSETS WHICH HAD BEEN LEASED AND FETCHING RENT. IN THE PRESENT CASE, ENQUIRY MADE BY THE REVENUE REVEALED THAT THE ENTITY WHERE FROM SUCH ASSETS WERE PURCHASED WAS NOT HAVING CAPACITY TO MANUFACTURE. ENTIRE CLAIM WAS FOUND TO BE BOGUS. IT IS FURTHER ESTABLISHED BY THE REVENUE THAT PURCHASE CONSIDERATION WAS ROUTED BACK, HENCE, THE ENTIRE CLAIM PROVED TO BE A COLOURABLE DEVICE. UNDER THESE FACTS, THE SUBMISSION OF THE ASSESSEE IS DEVOID OF ANY MERIT. SUCH CLAIM CANNOT BE ALLOWED. THE GROUND NOS.4 TO 6 ARE DISMISSED. 8. GROUND NO.7 OF THE ASSESSEES APPEAL IS RELATED TO DEFERRED REVENUE EXPENDITURE. LD. SR. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WR ITTEN SYNOPSIS. THE SUBMISSIONS OF THE ASSESSEE ARE AS UNDE R: THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE DI SALLOWANCES MADE BY THE ASSESSING OFFICER OF 20% OF DEFERRED RE VENUE EXPENSES OF RS.42,62,163/- ON THE ALLEGED PREMISE THAT THE S AID CLAIM HAS NOT BEEN ALLOWED IN AY 1995-96. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE SAID DISALLOWANCE IS WRONG AND CONTRARY TO THE DIRECTIONS OF THE HON'BLE ITAT IN O RDER DATED 11.12.2000. 9. ON THE CONTRARY, LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 10 OF THE AUTHORITIES BELOW. THE LD. CIT(A) HAS DISALLOW ED THE DEFERRED REVENUE EXPENDITURE BY OBSERVING AS UNDER: 4.4.1 NOW COMING TO SECOND PART OF CLAIM BEING 20% OF DEFERRED REVENUE EXPENSES OF RS.42,52,163/-, THE SA ME ARE CLAIMED TO BE INCURRED IN THE PRECEDING FINANCIAL YEAR RELE VANT TO ASSESSMENT YEAR 1995-96. SUCH A CLAIM CANNOT BE ENTERTAINED B OTH IN FACTS AND IN LAW, DURING THE YEAR UNDER CONSIDERATION AS THE FACT WHETHER SUCH EXPENSES WERE GENUINELY INCURRED WERE NEVER EXAMINE D IN THE RELEVANT ASSESSMENT YEAR AND LOOKING TO THE STATE O F AFFAIRS OF THE APPELLANT COMPANY IN ABSENCE OF PROPER SCRUTINY AND EXAMINATION OF SUCH CLAIM OF EXPENSES IN THE RELEVANT ASSESSMENT Y EAR, SUCH CLAIM CANNOT BE ACCEPTED IN THE PRESENT ASSESSMENT YEAR, MORE SO WHEN SUCH CLAIM WAS NOT PRESSED FOR DEDUCTION FOR 1/5 TH OF EXPENSES IN THE PREVIOUS ASSESSMENT YEAR. THE APPELLANT APART FROM FURNISHING BREAK UP OF EXPENSES HAS FAILED TO ESTABLISH ADMISS IBILITY OF 20% OF SUCH EXPENSES DURING THE YEAR UNDER CONSIDERATION, AS IN THE THEN PREVAILING POSITION OF LAW THE CONCEPT OF DEFERRED REVENUE EXPENSES WAS NOT RECOGNISED. THE CLAIM HAS TO BE EXAMINED I N VIEW OF THE LAW AS APPLICABLE IN THE RELEVANT ASSESSMENT YEAR A ND ON THAT COUNT SUCH CLAIM FAILS AND IS ACCORDINGLY SECOND PART OF GROUND NO.4 IS HEREBY DISMISSED. 11. FROM THE ABOVE FINDING OF THE LD. CIT(A), IT IS EVIDENT THAT THE ASSESSEE HAS GIVEN BREAKUP OF THE EXPENSES AT PG.40 OF ITS SUBMISSIONS. THIS REQUIRES VERIFICATION AT THE END OF THE ASSESSING OFFICER. WE THEREFORE, SET ASID E THIS ISSUE FOR THE LIMITED PURPOSE WHETHER SUCH EXPENSES WERE INCURRED FOR THE BUSINESS PURPOSES, IF SO, HE WOULD GRANT ALLOWANCE OF SUCH EXPENSES. 12. COMING TO THE GROUND NO.8 OF THE ASSESSEES APPEAL WHICH IS AGAINST CONFIRMING THE ADDITION IN RESPECT OF ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 11 INTEREST U/S 220(2) OF THE ACT. LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. GROUND NO.8 REGARDING LEVY OF INTEREST U/S 220(2) O F THE ACT : THAT THE LEARNED CIT (A) ERRED IN LAW IN HOLDING TH E ACTION OF ASSESSING OFFICER OF LEVYING INTEREST ULS 220(2) FROM THE EXPIRY OF 35 DAYS FROM THE DATE OF SERVICE OF ORIGINAL ASSESSMENT ORDER DATED 22.03.1999 AND DEMAND NOTICE TILL THE D ATE OF FRESH ASSESSMENT ORDER IRRESPECTIVE OF THE FACT THAT THE ORIGINAL HAD REACHED FINALITY POS T IT AT SETTING IT ASIDE AND IN ABSENCE OF ANY CHALLENGE TO THE CONTRARY RESULTING THE ORIGINAL DE MAND WAS NIL. THUS AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE THE INTEREST CHARGED ULS 220(2) IS NOT ONLY CONTRARY TO THE PROVISIONS OF SECTION 220(2) BUT ALSO TO THE CBDT CIRCULAR NO. 33 4 OF DATED 03.04.1982. THE FACTS AND FACTUAL POSITION :- 1) RETURN OF INCOME THE ORIGINAL RETURN WAS FILED ON 29.11.1996 DECLARI NG INCOME OF RS.5,97,9201- AS PER COMPUTATION OF TOTAL INCOME. COPY OF COMPUTATION AN D COPY OF ORIGINAL RETURN FILED IS ENCLOSED FROM WHICH IT IS EVIDENT THAT TRAVELLING EXPENSES D ISALLOWABLE UNDER RULE 6D WERE ADDED BACK TO THE TOTAL INCOME BY THE ASSESSEE COMPANY AT ITS OWN . THE COMPANY HAD WRITTEN OFF PUBLIC ISSUE AND DEFERRED REVENUE EXPENDITURE OF RS.7,28,2461- O UT OF WHICH A SUM OF RS.5,57,761/- WAS WAS DISALLOWED BESIDES THE AMOUNT OF DEPRECIATION CLAIM ED ON MILK CANES. 2) THE ORIGINAL ASSESSMENT WAS COMPLETED ON 22.03.1 999 COMPUTING INCOME AS UNDER :- NET PROFIT AS PER P & L A/C RS.1,09,12,116/- TRAVELLING EXPENSES IN RS.5,838/- EXCESS OF RULE 6D DISALLOWANCE U/S 35D RS.5,57,761 RS. 5,63,599 /- RS.1,14,75,715/- ADD: DEPRECIATION FOR SEPARATE CONSIDERATION RS. 12,09,877/- RS.1,26,85,592/- LESS: DEPRECIATION TO THE EXTENT ALLOWED RS. 6,58,815/- NET ASSESSED INCOME RS.1,20,26,777/- R/O RS.1,20,26,800/- FROM THE ABOVE IT IS CLEAR THAT IN THE ASSESSMENT, ONLY TWO DISALLOWANCES WERE MADE. A) DISALLOWANCE U/S 35D RS. 5,57,761/- B) DEPRECIATION ON MILK CANES RS.1,08,27,800/- ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 12 THE ABOVE TWO DISALLOWANCES WERE IN DISPUTE BEFORE THE APPELLATE AUTHORITY APART FROM OTHER CLAIMS RAISED BY THE ASSESSEE COMPANY AT APPEAL STA GE. THE ABOVE TWO DISALLOWANCES WERE SET ASIDE BY THE ITAT, VIDE PARA 31,32,33 & 35 OF ITAT' S ORDER DATED 11/12/200 0 AND ONLY OTHER HAND ANNULLED THE ASSESSMENT FOR WANT OF VALID SERV ICE OF NOTICE U/S. 143(2). THUS, IT IS CLEAR THAT ENTIRE ASSESSMENT HAS BEEN SET ASIDE AND WAS RESTOR ED TO THE FILE OF AO FOR RECONSIDERATION 4) AGAINST THE SAID ORDER OF THE IT AT AND AGGRIEVE D BY ANNULMENT OF ASSESSMENT, THE DEPARTMENT PREFERRED APPEAL U/S 260A OF THE IT ACT BEFORE THE HON'BLE HIGH COURT OF MP, INDORE BENCH, INDORE. IT IS IMPORTANT TO NOTE THAT THE DE PARTMENT DID NOT CHALLENGE THE ORDER OF THE IT AT SETTING ASIDE THE ASSESSMENT ON MERITS .THE SAID PART OF SETTING ASIDE OF THE ASSESSMENT ORDER BY IT AT THUS BECAME FINAL IN ABSENCE OF ANY CHALLE NGE TO THAT PART OF ORDER BY DEPARTMENT BEFORE THE HIGH COURT. THE HON'BLE HIGH COURT ALLOW ED THE APPEAL OF THE DEPARTMENT ON THE POINT OF ANNULMENT AND REVERSED THE ORDER OF ITAT TO THE EXTENT OF ANNULMENT OF ASSESSMENT AND DIRECTED THE AO TO MAKE FRESH ASSESSMENT IN ACCORDA NCE WITH THE DIRECTIONS OF THE IT AT. IT IS FURTHER PERTINENT TO NOTE THAT THE HON'BLE HIGH COU RT HAS SPECIFICALLY OBSERVED IN PARAL9 THAT SINCE NO OTHER QUESTION WAS RAISED EXCEPT THE QUEST ION OF SERVICE OF NOTICE, THE HON'BLE HIGH COURT HAS SET ASIDE ONLY THAT PART OF THE ORDER REG ARDING SERVICE OF NOTICE AND THE REMAINING PART OF THE ORDER WAS UPHELD BY HIGH COURT AS THE SAME W AS NOT UNDER CHALLENGE. THE EFFECT OF THE SAID DECISION IS THAT THE ORDER OF IT AT SETTING AS IDE THE ASSESSMENT GOT REVIVED AND ALSO BECAME FINAL IN ABSENCE OF ANY CHALLENGE BY DEPARTMENT. 5) AS CONSEQUENCE OF THE DIRECTIONS OF IT AT SETTIN G ASIDE THE ASSESSMENT FRESH ASSESSMENT HAS BEEN COMPLETED BY AO VIDE HIS IMPUGNED ORDER DATED 12TH JULY 2007. THE AO HAS MAINTAINED HIS EARLIER ORDER AND HAS MADE THE SAME ADDITIONS A S PER ORIGINAL ORDER WHILE PASSING THE SAID ORDER. BUT WHILE MAKING SUCH ASSESSMENT THE A.O HAS NOT ISSUED ANY DIRECTION TO CHARGE OF INTEREST FROM THE 35 DAYS OF THE SERVICE OF ORIGINA L ASSESSMENT ORDER AND DEMAND NOTICE THEREOF BUT WHILE CALCULATING THE DEMAND THE AO HAS IMPOSED INTEREST U/S 220(2) AT RS 91,99,884/-. THE SAID INTEREST HAS BEEN CALCULATED BY AO RIGHT FROM EXPIRY OF 35 DAYS FROM THE DATE OF SERVICE OF THE ORIGINAL ASSESSMENT ORDER AND DEMAND NOTICE I.E . FROM 27-04-1999. THE APPELLANT IS SERIOUSLY AGGRIEVED BECAUSE IN VIE W OF THE SETTING ASIDE OF THE ORIGINAL ORDER OF ASSESSMENT BY ITAT, WHICH HAD ATTAINED FINALITY , T HE IMPOSITION OF INTEREST FROM THE DATE OF ORIGINAL ASSESSMENT IS NOT ONLY CONTRARY TO THE PRO VISIONS OF SECTION 220(2) BUT IS EVEN CONTRARY TO CBDT CIRCULAR NO 334 DATED 03-04-1982. 6) THE CBDT CLARIFIED THE CHARGEABILITY OF INTEREST U/S 220(2) OF THE ACT VIDE CIRCULAR NO. 334 DT. 03.04.1982 AS UNDER :- 'THESE ISSUES WERE COMPREHENSIVELY EXAMINED IN CONS ULTATION WITH THE MINISTRY OF LAW AND THE BOARD HAS BEEN ADVISED: I) WHERE AN ASSESSMENT ORDER IS CANCELLED U/S 146 O R CANCELLED/SET ASIDE BY AN APPELLATE/ REVISIONAL AUTHORITY AND THE CANCELLATION/SETTING A SIDE BECOMES FINAL (I.E., IT IS NOT VARIED AS A ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 13 RESULT OF FURTHER APPEALS I REVISIONS), NO INTEREST UNDER S. 220(2) CAN BE CHARGED PURSUANT TO THE ORIGINAL DEMAND NOTICE. THE NECESSARY COROLLARY OF THIS POSITION WILL BE THAT EVEN WHEN THE ASSESSMENT IS REFRAMED, INTEREST CAN BE CHARGED ONLY AFTER THE EXPIRY OF 35 DAYS FROM THE D ATE OF SERVICE OF DEMAND NOTICE PURSUANT TO SUCH FRESH ASSESSMENT ORDER. II) WHERE THE ASSESSMENT MADE ORIGINALLY BY THE ITO IS EITHER VARIED OR EVEN SET ASIDE BY ONE APPELLATE AUTHORITY BUT, ON FURTHER APPEAL, THE ORI GINAL ORDER OF THE ITO IS RESTORED EITHER IN PART OR WHOLLY, THE INTEREST PAYABLE UNDER S. 220(2) WIL L BE COMPUTED WITH REFERENCE TO THE DUE DATE RECKONED FROM THE ORIGINAL DEEMED NOTICE AND WITH R EFERENCE TO THE TAX FINALLY DETERMINED,. THE FACT THAT DURING AN INTERVENING PERIOD, THERE WAS N O TAX PAYABLE BY THE ASSESSEE UNDER ANY OPERATIVE ORDER WOULD MAKE NO DIFFERENCE TO THIS PO SITION. THE FORGOING LEGAL POSITION WILL APPLY MUTATIS MUTA NDIS TO THE PROCEEDINGS UNDER OTHER DIRECT TAXES ALSO. THESE INSTRUCTIONS MAY BE BROUGHT TO TH E NOTICE OF ALL THE OFFICERS WORKING IN YOUR CHARGE'. ACCORDING TO THE SAID CBDT CIRCULAR, IN A SITUATION LIKE THIS WHEN THE ASSESSMENT ORDER IS CANCELLED I SET ASIDE BY APPELLATE REVISIONAL AUTHO RITY AND THE CANCELLATION I SETTING ASIDE BECOMES FINAL, NO INTEREST U/S 220(2) CAN BE CHARGED PURSUA NT TO THE ORIGINAL DEMAND NOTICE . THE CBDT HAS CLARIFIED THAT THE NECESSARY COROLLARY OF THIS POSITION WILL BE THAT EVEN WHEN THE ASSESSMENT IS REFRAMED, THE INTEREST CAN BE CHARGED ONLY AFTER TH E EXPIRY OF 35 DAYS FROM THE DATE OF SERVICE OF DEMAND NOTICE PURSUANT TO FRESH ASSESSMENT ORDER. T HE SAID CIRCULAR HAS BEEN ISSUED BY CBDT AFTER COMPREHENSIVE EXAMINATION OF THE ISSUE AND IN CONSULTATION WITH MINISTRY OF LAW. NEEDLESS TO STATE THAT THE SAID CIRCULAR ISSUED BY CBDT IS BINDING UPON ALL THE IT AUTHORITIES FUNCTIONING WITHIN THE JURISDICTION OF THE BOARD. R ELIANCE IN THIS RESPECT IS PLACED ON A) IN THE CASE OF DCO BANK VS CIT REPORTED IN 237 I TR 889 (SC) B) IN CASE OF CIT VS TV RAMANAIAH REPORTED IN 157 I TR 300 (MP) 7) IN THE PRESENT CASE, THE ORIGINAL ORDER OF ASSES SMENT WAS CONFIRMED BY CIT(A) BUT ON FURTHER APPEAL, THE IT AT ANNUAL THE ASSESSMENT ON LEGAL G ROUND RELATING TO ISSUE I SERVICE OF NOTICE U/S 143(2) OF THE ACT AND ON MERITS IT SET ASIDE THE AS SESSMENT FOR FRESH ENQUIRY WITH THE DIRECTION TO GIVE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE T HE SUPPLIER & LESSEE OF MILK CANES & TO CONSIDER OTHER CLAIMS. THEREFORE, IN TERMS OF ABOVE CIRCULAR OF CBDT, THE INTEREST U/S 220(2) HAS TO BE CHARGED ONLY IN RESPECT OF DEMAND RAISED AS P ER THE FRESH ASSESSMENT ORDER. SIMILAR ISSUE WAS RAISED IN THE CASE OF MIS NARAD I NVESTMENT & TRADING PVT. LTD. VIS DCIT WHEREIN HON'BLE ITAT MUMBAI, BASED ON ABOVE CIRCULA R, HELD THAT 'IN THE PRESENT CASE THE ORIGINAL ASSESSMENT ORDER HAS BEEN SET ASIDE BY THE TRIBUNAL AND MATTER RESTORED TO THE ASSESSING OFFICER FOR FRESH ASSESSMENT AND THEREFORE IN VIEW OF THE CIRCULAR OF CBDT (SUPRA), THE INTEREST CAN BE LEVIED ONLY FROM THE DATE OF DEFAULT OF THE DEMAND NOTICE ISSUED IN PURSUANCE OF THE FRESH ASSESSMENT ORDER. THE ORDER OF CIT(A) HOLDING THAT INTEREST ULS 220(2) HAS TO BE LEVIED FROM THE ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 14 DATE OF DEFAULT AS PER THE ORIGINAL ASSESSMENT ORDE R THEREFORE CANNOT BE SUSTAINED'. (COPY OF CBDT CIRCULAR DATED 03.04.1982 AND ITAT MUMBAI ORDE R IN APPEAL NO. ITA NO.3JGO/MUM/2010 DATED 19.10.2011 ARE SUBMITTED AT PAGE NO.676 TO 689 OF PAPER BOOK COMPILATION II). CONSIDERING THE ABOVE SUBMISSIONS IT IS PRAYED THAT INTEREST U/S 220(2) MAY KINDLY BE DELETED. 13. ON THE CONTRARY, LD. D.R. OPPOSED THE SUBMISSION S. 14. THE CONTENTION OF THE ASSESSEE IS THAT THE ORIGIN AL ASSESSMENT ORDER WAS SET ASIDE BY THE ITAT WITH DIRECT ION TO MAKE FRESH ASSESSMENT. IT IS FURTHER STATED THAT T HE INTEREST IS CHARGED ONLY IN RESPECT OF THE DEMAND RAIS ED AS PER THE FRESH ASSESSMENT ORDER. IN SUPPORT OF THIS, LD. COUNSEL FOR THE ASSESSEE HAD RELIED UPON THE DECISION OF THE COORDINATE BENCH OF M/S. NARAD INVESTMENT & TRADIN G PVT. LTD. VS. DCIT AND ALSO THE CBDT CIRCULAR NO.334 DATED 3.4.1982. 15. WE FIND MERIT IN THE CONTENTION OF THE LD. COUN SEL FOR THE ASSESSEE. IN VIEW OF THE CBDT CIRCULAR NO.334 DAT ED 3.4.1982 AND THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S. NARAD INVESTMENT & TRADING PVT. LTD. VS. DCIT, WE DIRECT THE ASSESSING OFFICER TO CHARGE INTER EST FROM THE DATE WHEN FRESH ASSESSMENT IS MADE. THIS GROUND O F THE ASSESSEES APPEAL IS ALLOWED. ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 15 16. GROUND NO.9 IS GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 18. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO.390/IND/2012. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. DELETING THE LEASE RENT INCOME OF RS.20,57,148/- WI THOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND FINDINGS GIV EN BY THE A.O. IN ASSESSMENT ORDER. 2. DELETING THE ADDITION OF RS.8,88,593/- THOUGH CAPIT AL ALLOWING AS BUSINESS EXPENDITURE WITHOUT APPRECIATING THE FACTS OF THE CASE AND FINDINGS GIVEN BY THE A.O. IN ASSESSMENT ORDER. 3. DIRECTING THE A.O. TO EXCLUDE MERCHANT BANKING INCO ME OF RS.27 LAKHS WITHOUT APPRECIATING THE FACTS OF THE CASE AN D THE FINDINGS GIVEN BY THE A.O. IN ASSESSMENT ORDER. LD. D.R. SUPPORTED THE ASSESSMENT ORDER ON THESE GROUNDS. 19. ON THE CONTRARY, LD. SR. COUNSEL REITERATED THE SUBMISSIONS AS MADE IN ITS WRITTEN SUBMISSIONS. WRITTEN SYNOPSIS AGAINST THE GROUNDS RAISED BY THE APPELLANT. IT IS SUBMITTED AS UNDER: 1. REGARDING GROUND NO.1 FOR DELETING THE LEASE REN T INCOMEOF RS.20,57,148/- THE AO HAS DISALLOWED CLAIM OF DEPRECIATION OF RS. 1,08,27,8001-BY TREATING THE ENTIRE TRANSACTION OF PURCHASE OF ASSETS AND LEASING THEM TO THE LESSEES AS BOGUS AND NON GENUINE. WITHOUT PREJUDICE , IF ON ONE HAND, SUCH PURCHASE OF ASSETS AND LEASING THEREOF IS TREATED AS BOGUS, LEASE RENTAL O FFERED HAS TO BE EXCLUDED FROM TOTAL INCOME. THE DEPARTMENT IS NOT SUPPOSED TO ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 16 TAKE HOT AND COLD TOGETHER. IF THERE WAS NO EXISTEN CE OF ASSET, LEASE RENTAL WAS ALSO IN THE NATURE OF BOOK ENTRY SO AS TO CLAIM DEPRECIATION ON THE VA LUE OF ASSETS. DEPRECIATION CLAIMED AT RS.108.27 LACS HAS BEEN DISALLOWED HENCE INCOME CRE DITED IN THE BOOKS BY WAY OF LEASE RENTAL SHOULD HAVE BEEN EXCLUDED BECAUSE THERE IS NO JUSTI FICATION WHATSOEVER TO ASSESS SUCH INCOME BY DISALLOWING THE DEPRECIATION THERE AGAINST. THUS THE LEARNED CIT(A) HAS CORRECTLY POINTED OUT T HAT' ONCE IT IS CONCLUSIVELY ESTABLISHED AND HELD THAT THE APPELLANT NEVER ACQUIRED ANY ASSETS W HICH WERE. THE SUBJECT MATTER OF LEASE TRANSACTION, THEN AS A NATURAL COROLLARY TO SUCH FI NDING, THERE CANNOT BE ANY LEASE TRANSACTION FROM SAME NON-EXISTENT ASSETS FROM WHICH THE INCOME COUL D BE EARNED. IT IS TRUE THAT IT IS OFTEN THE HON'BLE SUPREME COURT HAS STRESSED THE CONCEPT OF R EAL INCOME IN MANY TAX DECISIONS. THEREFORE, IF A HYPOTHETICAL AND BOGUS CLAIM OF DEDUCTION AND DEPRECIATION CANNOT BE ALLOWED THEN NATURALLY THE CORRESPONDING INCOME WHICH WAS NEVER IN EXISTEN CE COULD NOT BE BROUGHT TO TAX, IF DONE SO, IN A WAY IT WOULD AMOUNT TO RATHER ADMISSION ON THE PART OF THE DEPARTMENT THAT SUCH TRANSACTION WAS A REAL TRANSACTION WHICH IS NOT THE CASE OF AO IN ANY MANNER. CONSIDERING THE AFORESAID THE LEARNED CIT (A) HAD C ORRECTLY REDUCED THE LEASE RENT INCOME OFRS.20,57,142/- OFFERED IN THE P & L ACCOUNT ON LE ASING OF SUCH BOGUS CLAIM OF ACQUISITION OF MILK CANS 2. REGARDING GROUND NO. 2 FOR DELETING THE ADDITION OF RS.8,88,593/- IN THIS RESPECT WE WOULD LIKE TO MENTION THAT THE C OMPANY DURING THAT YEAR TOOK ON LEASE OFFICE PREMISES AT MUMBAI W.E.F FROM 01/04/95 AND PAID REN T OF RS. 5,41,6501- WHICH HAS BEEN CAPITALIZED, SINCE THE OFFICE PREMISES WERE BEING F URNISHED. BROKERAGE OF RS. 1,04,3701- WAS PAID TO SHRI SANJAY AHUJA FOR GETTING THE PREMISES ON RENT. SINCE THE COMPANY WAS ALREADY IN BUSINESS DURING THE YEAR, THE SAID EXPENSES ARE ALL OWABLE AS REGULAR BUSINESS EXPENSES. IN THIS RESPECT WE MAY SUBMIT THAT THE CALCUTTA HIGH COURT IN THE CASE OF CIT V /S ORIENT BEVERAGE LTD. REPORTED IN 203 ITR 553 HELD THAT BROKERAGE EXPENSE S FOR GETTING A TENANT WERE ALLOWABLE AS DEDUCTIBLE EXPENDITURE EVEN FROM PROPERTY INCOME WH ICH IS BEING TAXED ON NOTIONAL BASIS. THIS VIEW HAS BEEN UPHELD BY THE ITAT INDORE BENCH AND I N CASES REPORTED IN 62 TTJ 185,25 ITC 438 AND 25 BCA 239. IN THE PRESENT CASE THE ASSESSES HAVING INCURRED TH IS EXPENDITURE NOT FOR PURCHASE OF AN IMMOVABLE PROPERTY BUT ONLY FOR GETTING OFFICE PREM ISES ON LEASE, THE SAID EXPENSES ARE ALLOWABLE AS BUSINESS EXPENSES. THIS VIEW IS ALSO S UPPORTED BY VARIOUS DECISIONS INCLUDING THAT OF SUPREME COURT IN THE CASE OF INDIA CEMENT 60 ITR 52 WHERE GUARANTEE COMMISSION PAID FOR OBTAINING TERM LOANS FROM BANKS TO BE UTILIZED FOR PURCHASE OF FIXED ASSETS WAS HELD ALLOWABLE. LIKEWISE THE RENT PAID DURING THE PERIOD OF ITS FUR NISHING IS ALSO ALLOWABLE AS AN ITEM OF BUSINESS EXPENDITURE, BECAUSE THE PREMISES HAD BEEN TAKEN FO R STARTING OF BRANCH OFFICE AT D.N ROAD, MUMBAI. THE SMALL AMOUNT OF BROKERAGE OF RS. 4,200/ - PAID TO S.B. INVESTMENT AND TRAVELING EXPENSES OF DIRECTORS TO THE EXTENT OF RS. 2,38,373 /- WERE ALSO INCURRED IN THE REGULAR COURSE OF BUSINESS BUT WERE CAPITALIZED SO AS TO EXHIBIT BETT ER PROFITABILITY. COMPLETE DETAILS IN RESPECT OF EXPENDITURE CLAIMED AS REVENUE EXPENDITURE TO THE EXTENT OF RS. 8,88,593/- WERE SUBMITTED BEFORE THE ASSTT. COMMISS IONER OF INCOME TAX DURING THE COURSE OF ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 17 REMAND PROCEEDINGS VIDE LETTER DT. 18.06.2007 (COPY THEREOF ALONG WITH ANNEXURE ENCLOSED IN PAPER BOOK COMPILATION -3 AT PAGE NO 691 TO 701 & 7 26 TO 727). ENTIRE EXPENSES THROUGH CAPITALIZED IN THE BOOKS ARE ALLOWABLE AS REGULAR B USINESS EXPENSES. RELIANCE IS PLACED ON FOLLOWING JUDGMENT- A) CIT VS. SAKTHI SOYAS LTD. (2006) 283 ITR 194 (MAD) , B) CIT VS. BERGER PAINTS (INDIA) LTD. (NO.2) [2002] 25 4 ITR 503 (CAL), ONCE TILE FACTS HAVE COME IN OPEN, THEN WHILE ANY B OGUS CLAIMS HAS TO BE DISALLOWED AS HELD ABOVE, GENUINE CLAIM OF EXPENSES NEEDS TO BE CONSID ERED IN ACCORDANCE WITH LAW IRRESPECTIVE OF WRONG STAND ADOPTED BY THE APPELLANT IN THIS BEHALF IN THE FINAL ACCOUNTS, FILLED, MORE SO WHEN IT IS SO DIRECTED BY HON'BLE ITAT. FURTHER THERE BEING NO ADVERSE MATERIAL AND FINDING ON THE ISSUE AND THE CLAIM BEING OTHERWISE PRIMA FACIE A GENUINE CLAIM OF EXPENSES, INCURRED IN REGULAR COURSE OF BUSINESS, IS HEREBY DIRECTED TO BE ALLOWE D AND AO SHALL ACCORDINGLY ALLOW DEDUCTION OF RS. 8,8'8,593/- FROM INCOME ASSESSED. CONSIDERING THE ABOVE THE LD. CIT (A) HAS CORRECTLY DIRECTED TO ALLOW DEDUCTION OFRS.8,88,593/- FROM INCOME ASSESSED. 3. REGARDING GROUND NO.3 FOR EXCLUDING MERCHANT BAN KING INCOME OF RS. 27 LACS :- THE APPELLANT HAD CLAIMED EXCLUSION OF MERCHANT BAN KING FEES OF RS. 27,00,0001- WHICH WAS WRONGLY CREDITED UNDER THE HEAD INCOME FROM MERCHAN T BANKING FEE RECEIVABLE FROM MIS ALASKA CAPITAL MARKET PVT LTD TOWARDS MARKETING OF PUBLIC ISSUE OF MIS VIKAS SPINNING & WEAVING MILLS LTD. AN MOU WAS ENTERED INTO BETWEEN THE APPE LLANT COMPANY AND MIS ALASKA CAPITAL MARKET PVT LTD ON 20.09.1995. SUCH MOV WAS CONDITIO NAL AND WAS EFFECTIVE ONLY IF PUBLIC ISSUE OF MIS VIKAS SPINNING & WEAVING MILLS LTD IS OPENED BEFORE 31. 03 .L996 OTHERWISE IT WILL BE TERMINATED AND THE APPELLANT WILL HAVE NO RIGHTS AN D/OR OBLIGATIONS.PUBLIC ISSUE OF RS.48.50 LACS EQUITY SHARES OF RS.L 0/- EACH OF MIS VIKAS SPINNIN G & WEAVING MILLS LTD. WAS OPENED ON 11.06.L996 I.E. MUCH AFTER 31.03.1996. AFTER OPENIN G OF THE ISSUE, IT WAS UNDER SUBSCRIBED AND ONLY 74% OF THE ISSUE WAS VALIDLY SUBSCRIBED. THE M P STOCK EXCHANGE AND SEBI VIDE THEIR LETTERS DATED 27.07.1996 AND 05.08.1996 DIRECTED TO REFUND THE AMOUNT TO THE INVESTORS AS REQUIRED ULS 73 OF COMPANIES ACT. THUS NOT ONLY THE ISSUE WAS OPENED MUCH AFTER 31.03 .1996 BUT THE SAME DID NOT MATERIALIZE DUE TO UNDER SUBSCRIPTION FROM THE INVESTORS. MIS ALASK A CAPITAL MARKET PVT LTD, WHO WAS THE CONSULTANT AND ADVISOR TO THE SAID PUBLIC ISSUE OF MIS VIKAS SPINNING & WEAVING MILLS LTD, REFUSED TO PAY THE AMOUNT OF MERCHANT BANKER FEE. T HE PRIMARY CONDITION OF OPENING OF ISSUE BEFORE 31.03.1996 WAS NOT FULFILLED HENCE THE APPEL LANT DID NOT BECOME ENTITLE TO RECEIVE ANY AMOUNT TOWARDS MERCHANT BANKER FEE. THERE WAS NEITHER ACCRUAL OF INCOME NOR ANY ADVANCE WAS RECEIVED AGAINST SUCH WORK YET AN ENTRY WAS PASSED IN THE BOOKS OF ACCOUNT TO CLAIM T HE FEE FROM MIS ALASKA CAPITAL MARKET PVT LTD. THE CONSULTANT AND ADVISOR TO THE PUBLIC ISSUE INFORMED THAT SAID MOO WAS TERMINATED AND NEITHER PAYMENT OF S ICH FEES HAD BEEN MADE BY THEM TO PREMIUM CAPITAL MARKET & INVESTMENT LTD NOR THEY HAVE PROVIDED OR CLAIMED PAYMENT OF SU CH FEES IN ITS BOOKS OF ACCOUNTS. THE ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 18 ASSESSMENT OF MIS ALASKA CAPITAL MARKET PVT LTD FOR THE ASSESSMENT YEAR 1996-97 WAS COMPLETED VIS 143(3) WHERE IN IT DID NOT CLAIM ANY EXPENDITURE ON ACCOUNT OF SAID FEES. COMPLETE SET OF DOCUMENTS IN SUPPORT OF AFORESAID F ACTS ARE ENCLOSED IN PAPER BOOK COMPILATION -3 AT PAGE NO 702 TO 718 & 723 TO 725). AS THE AMOUNT OF FEE HAD NEITHER ACCRUED NOR RECEIV ED DURING THE YEAR OR EVEN IN SUBSEQUENT YEARS TO THE COMPANY, IT IS HUMBLY SUBMITTED THAT T HE MERCHANT BANKING INCOME CREDITED TO THE PROFIT AND LOSS ACCOUNT AT RS. 27 LACS SHOULD BE EX CLUDED FROM TOTAL INCOME OF THE APPELLANT COMPANY BASED ON IT A T ORDER DATED 11.12.2000 . RE LIANCE IS PLACED ON FOLLOWING JUDGMENTS:- A) CIT VS. BOKARO STEEL LTD. (1999) 236 ITR 315 (SC ). B) GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 225 I TR 746 (SC). C) CIT VS. SHOORJI VALLABHDAS & CO. (1962) 46 ITR 1 44 (SC). D) ITO VS. DYESTUFFS & CHEMICALS (P) LTD. (1983) 6 LTD 513 (HYD) THE LD. CIT(A) HAS CORRECTLY OBSERVED THAT THE DOCU MENTS ON RECORD CLEARLY ESTABLISHED THAT SUCH COMPANY WAS IN EXISTENCE AT THE RELEVANT PERIO D OF TIME AND EVEN ASSESSMENT ULS 143(3) WAS COMPLETED FOR THE SAME ASST. YEAR 1996-97. THUS THE MERCHANT BANKING INCOME OFFERED AT RS. 27 LACS BEING NOT A REAL AND GENUINE INCOME ACC RUED TO THE INCOME IN TERMS OF MOD AND OTHER EVIDENCES ON RECORD AND COULD NOT HE VALIDLY BROUGHT TO TAX MERELY ON THE BASIS OF ACCOUNTING ENTRY AS HAS BEEN HELD BY HON 'BLE SUPRE ME COURT IN THE CASE OF BOKARO STEEL, GODHRA ELECTRICITY CO. LTD. AND SHOORJI VALLABHDAS & CO .. . (SUPRA) AS NOTED ABOVE AND LD. CIT(A) ACCOR.LINGLY DIRECTED THE AO TO EXCLUDE THE MERCHAN T BANKING INCOME AT RS.27 LACS FROM THE TOTAL INCOME ASSESSED BY HIM. IT IS, THEREFORE, PRAYED THAT THE ABOVE SUBMISSION MAY KINDLY BE TAKEN ON RECORD AND PRESENT DEPARTMENTAL APPEAL MAY KINDLY BE DISMISSED. 20. GROUND NO.1 IS RELATED TO DELETING THE LEASE RENT INCOME OF RS.20,57,148/-. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE TOT ALITY OF THE FACTS AND MATERIALS PLACED BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AS TH E ASSESSING OFFICER ITSELF HAS CONSIDERED THE LEASE TRAN SACTION ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 19 AS BOGUS AND DISALLOWED THE DEPRECIATION. UNDER THESE FACTS, THE REVENUE CANNOT NOW CLAIM THAT THE ASSESSEE HAS EARNED INCOME FROM LEASE RENT. THIS GROUND OF THE REVENUES APPEAL IS DISMISSED. 22. GROUND NO.2 IS AGAINST DELETING THE ADDITION OF RS.8,88,593/-. THE LD. CIT(A) HAS GIVEN HIS FINDING S ON THIS GROUND AS UNDER: 4.4.2 THE DETAILED FINDINGS ARRIVED IN THE MATTER OF BOGUS CLAIM OF DEPRECIATION ON LEASED ASSETS AT RS.1.08 C RORE CLEARLY ESTABLISHES THAT THE ABOVE COMPANY NOT ONLY RESORTE D TO DUBIOUS CLAIM BUT ALSO RESORTED TO OFFER BOGUS INCOME AND S IMULTANEOUSLY CHOSE TO CAPITALIZE REGULAR EXPENSES INCURRED WHICH WERE CLEARLY ADMISSIBLE AS DEDUCTION, THOUGH CAPITALIZED TO SHOW BETTER PROFITABILITY, FOR ULTERIOR MOTIVES. ONCE THE FACT S HAVE COME IN OPEN, THEN WHILE ANY BOGUS CLAIMS HAS TO BE DISALLOWED AS HELD ABOVE, GENUINE CLAIM OF EXPENSES NEEDS TO BE CONSIDERED IN ACCORDANCE WITH LAW IRRESPECTIVE OF WRONG STAND ADOPTED BY THE APPELLANT IN THIS BEHALF IN THE FINAL ACCOUNTS FILED, MORE SO WH EN IT IS SO DIRECTED BY HON'BLE ITAT. THE JUDICIAL DISCIPLINE REQUIRE T HE DIRECTIONS OF SUPERIOR AUTHORITY HAS TO BE GIVEN EFFECT BOTH IN L AW AND SPIRIT UNLESS REVERSED BY HIGHER JUDICIAL FORUM. THE HON' BLE M.P. HIGH COURT HAS NOT INTERFERED WITH ANY OF THE FINDINGS O F THE ITAT IN SETTING ASIDE THE ISSUE AND ARRIVE AT APPROPRIATE F INDINGS IN ACCORDANCE WITH LAW. THE A.O. HAVE THUS FAILED TO CARRY OUT HIS DUTY, THE MATTER BEING OLD THE SAME HAS BEEN DECIDE D ON THE BASIS OF FACTS ON RECORD AND THERE BEING NO ADVERSE MATER IAL AND FINDINGS ON THE ISSUE AND THE CLAIM BEING OTHERWISE PRIMA FA CIE A GENUINE CLAIM OF EXPENSES, INCURRED IN REGULAR COURSE OF BU SINESS, IS HEREBY DIRECTED TO BE ALLOWED AND A.O. SHALL ACCORDINGLY A LLOW DEDUCTION OF RS.8,88,593/- FROM INCOME ASSESSED. 23. THE ABOVE FINDINGS OF FACT IS NOT REBUTTED BY T HE REVENUE BY PLACING ANY CONTRADICTORY EVIDENCE. WE, THEREFORE, DO NOT SEE ANY ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 20 REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. 24. GROUND NO.3 IS AGAINST DIRECTING THE A.O. TO EXCLUDE MERCHANT BANKING INCOME OF RS.27 LAKHS. THE LD. CIT( A) HAS GIVEN HIS FINDINGS ON THIS GROUND AS UNDER: 4.5.1 IN COURSE OF APPEAL PROCEEDINGS THE A.R. INVI TED ATTENTION TO THE RELEVANT FACTS PERTAINING TO CREDI TING OF SUCH INCOME BEING A MOU SIGNED BETWEEN THE APPELLANT AND SAID ALANKAR AND THE TERMS OF MOU BEING NOT IN FACT CARRIED OUT AS A GREED, THE AMOUNT WAS NOT ACTUALLY RECEIVABLE AND WAS RELIABLE TO BE REVERSED AS WRONGLY OFFERED FOR TAXATION. IT IS FURTHER EMPHAS IZED THAT THE SAID AMOUNT IN THE YEAR IN WHICH IT WAS CREDITED OR IN T HE SUBSEQUENT YEARS AND THUS IT IS EMPHASIZED THAT THERE BEING NO SUCH REAL INCOME AND SUCH INCOME SHOULD NOT BE BROUGHT TO TAX AND RELIANCE HAVE BEEN PLACED ON CELEBRATED DECISIONS OF THE HON 'BLE SUPREME COUIRT IN THIS BEHALF AS NOTED HEREUNDER: A) CIT VS. BOKARO STEEL LTD. (1999) 236 ITR 315 (S C) B) GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 225 ITR 746 (SC) C) CIT VS. SHOORJI VALLABHADAS & CO. (1962) 46 ITR 144 (SC) 4.5.2 IT HAS ALREADY BEEN NOTICED ABOVE THAT THE A PPELLANT RESORTED TO DUBIOUS ACCOUNTING PROCEDURE AND RESORT ED TO DISCLOSE HIGHLY INFLATED INCOME BY PRESSING A NON GENUINE CL AIM OF LEASE RENT OF BOGUS PURCHASES OF MILK CANS ON WHICH A BOGUS CL AIM OF DEPRECIATION AT RS.1.08 CRORES WAS PRESSED MAKING A BUSE OF PROVISIONS OF 100% DEPRECIATION OF ASSETS VALUING L ESS THAN RS.5000/- EACH. FURTHER EVEN THE GENUINE CLAIM OF DEDUCTION FOR BUSINESS EXPENSES AT RS.8.8 LACS WERE CAPITALIZED T O DO SO TO SHOW HIGHER PROFITABILITY. THE SAID INCOME FROM MERCHAN T BANKING OFFERED AT RS.27 LAKHS, AS EMERGES FROM THE FACTS ON RECORD WAS NOT REAL INCOME ACCRUED. THE A.O. WHILE BANKING ON TECHNICA L ISSUES AND RELYING ON AUDIT REPORT, WHICH IN THE FACTS OF THE CASE COULD NOT HAVE BEEN RELIED UPON IN ANY MANNER, IGNORED THE REPLY F ILED BY THE SAID COMPANY ALANKAR DATED 20.12.99 WHICH IS ENCLOSED WITH APPEAL ORDER AS ANNEXURE A CATEGORICALLY STATING THE FACTS AS ADVANCED BY APPELLANT AND DENYING THE CLAIM OF THE APPELLANT CO MPANY IN FOLLOWING WORDS: WE HAVE TO CONFIRM THAT WE HAVE NEITHER PAID, DEB ITED OR PROVIDED ABOVE FEES IN OUR BOOKS OF ACCOUNTS NOR WE HAVE CLAIMED ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 21 THE PAYMENT OF ABOVE FEES OF RS.27.00 LACS IN OUR I NCOME TAX RETURN FILED FOR ASSESSMENT YEAR 1996-97. AS THIS FEES WA S NOT PAYABLE TO YOU AS PER THE TERMS OF CLAUSE 4 OF THE MOU WHICH W AS VALIED ONLY IN CONDITION THAT SAID ISSUE OPENS BEFORE 31 ST MARCH 1996. SINCE THE PUBLIC ISSUE OF VIKAS SPINNING & WEAVING MILLS LTD. OPENED BEFORE 31 ST MARCH 1996 AND WE HAVE NOT AVAILED ANY SERVICES ON THAT A/C FROM YOU, THE FEES WAS NOT DUE OR PAYABLE TO YOU AN D THEREFORE THE SAID LIABILITY HAS NOT BEEN PROVIDED IN OUR BOOKS. TO FURTHER CONFIRM THE SAME WE ARE SENDING HEREWITH THE FOLLOWING: 1. COPY OF OUR PROFIT & LOSS A/C FOR THE YEAR ENDED 31 ST MARCH, 1996. 2. COPY OF OUR INCOME TAX RETURN FOR A.Y. 1996-97 ALON G WITH THE COMPUTATION OF TOTAL INCOME. 3. COPY OF NOTICE U/S 143(2) DATED 5.11.1998 ISSUED TO US FOR THE A.Y. 1996-97. 4. COPY OF OUR ASSESSMENT ORDER DATED 18.1.99 FOR A.Y. 1996-97 PASSED U/S 143(3). 5. COPY OF MOU DATED 20.9.95 ENTERED BETWEEN US. 4.5.3 THE A.O., IN THESE CIRCUMSTANCES WITH THE FAC TS AND EVIDENCES ON RECORD, COUILD NOT AND SHOULD NOT HAVE DRAWN ADV ERSE INFERENCE ON ACCOUNT OF NON DELIVERY OF FRESH SUMMONS ISSUED AFTER 10 YEARS OF THE END OF RELEVANT FINANCIAL YEAR. IN FACT, TH E DOCUMENTS ON RECORD CLEARLY ESTABLISH THAT SUCH COMPANY WAS IN E XISTENCE AT THE RELEVANT PERIOD OF TIME AND EVEN ASSESSMENT U/S 143 (3) WAS COMPLETED FOR THE SAME ASSESSMENT YEAR 1996-97. TH US THE MERCHANT BANKING INCOME OFFERED AT RS.27 LACS BEING NOT A REAL AND GENUINE INCOME ACCRUED TO THE INCOME IN TERMS OF MO U AND OTHER EVIDENCES ON RECORD AND COULD NOT BE VALIDLY HAS BE EN HELD BY HON'BLE SUPREME COURT IN THE CASE OF BOKARO STEEL, GODHRA ELECTRICITY CO. LTD. AND SHOORJI VALLABHDAS & CO. (SUPRA) AS NOTED ABOVE. ACCORDINGLY, A.O. IS DIRECTED TO EXCLUDE TH E MERCHANT BANKING INCOME AT RS.27 LACS FROM THE TOTAL INCOME ASSESSED BY HIM. 25. THE ABOVE FINDINGS OF FACT IS NOT REBUTTED BY THE REVENUE BY PLACING ANY CONTRADICTORY EVIDENCE. WE, THEREFORE, DO NOT SEE ANY REASON TO INTERFERE WITH TH E ORDER OF THE CIT(A). HENCE, THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. ITA NOS.356 & 390/IND/2012 M/S/ PREMIUM CAPITAL MARKET & INVESTMENT LTD., INDO RE 22 26. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.356/IND/2012 FOR THE A.Y. 1996-97 IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE REVENUE IN ITA NO.390/IND/2012 FOR THE A.Y. 1996-97 IS DISMISS ED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25.09 .2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 25 /09/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER SR. PRIVATE SECRETARY, INDORE