SAVANI BROTHERS, MUMBAI V. DCIT CIR 17(1), MUMBAI

ITA 3727/MUM/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3421 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SARAVANAN
• Keywords: Notional interest; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO 3727 & 3728/MUM/2015 ( / ASSESSMENT YEAR: 2009-10 & 2010-11) M/S. SAVANI BROTHERS 2 ND FLOOR, BROADWAY SHOPPING CENTRE, DR. AMBEDKAR ROAD, MUMBAI-400 014. / VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 17 (1), 6 TH FLOOR, AAYKAR BHAVAN, MAHARSHI KARVE ROAD, CHURCHGATE, MUMBAI-400 020. ./ ./PAN/GIR NO. AABFS 7440M ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NISHIT GANDHI / RESPONDENT BY : SHRI J. SARAVANAN / DATE OF HEARING : 14/12/2015 !'# / DATE OF PRONOUNCEMENT : 21/01/2016 $% / O R D E R PER RAJESH KUMAR, A. M: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE ORDERS DATED 16.04.2015 OF COMMISSIONER OF INCOME TAX (APPEALS)-32, MUMBAI (HEREINAFTER CALLED AS THE CIT(A)) FOR ASSESSMENT YEAR 2009-10 & 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITA NO.3727/M/2015 ARE AS UNDE R. 2 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF LEARNED ASSESSING OFFICER ESTIMATING ANNUAL VALUE O F PROFIT AT RS. 34,22,500/- INSTEAD OF RS. 6,60,000/- BY ADDING NOTION INTEREST ON INTERES T FREE SECURITY DEPOSIT RESULTING INTO AN ADDITION OF RS. 27,62,500/-. IT IS SUBMITTED THAT THE NOTION INTEREST ON INTERES T FREE SECURITY DEPOSIT CANNOT BE TAKEN AS A DETERMINED FACTOR TO ARRIVE AT THE 'FAIR RENT'. THE CONCLUSIONS ARRIVED AT BY THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS) AND BY THE LEARNED ASSESSING OFFICER ARE CONTRARY TO THE L AW AND AS SUCH THE ADDITIONS MADE ARE OUGHT TO BE DELETED. 2.A THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF LEARNED ASSESSING OFFICER DISALLOWING A SUM OF RS. 35,93,937/- OUT OF INTEREST EXPENDITURE ON THE GROUND THAT APPELLANT HAD GIVEN INTEREST FRE E LOANS AND ADVANCES. IT IS SUBMITTED THAT THE INTEREST EXPENDITURE IS IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND AS SUCH NO DISALLOWANCE IS CALLED FOR. THE CONCLUSION ARRIVED AT BY THE LEARNED COMMISSION ER OF INCOME-TAX (APPEALS) AND BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS, CONTRAR Y TO THE FACTS BASED ON THE PRESUMPTIONS AND CONJECTURES AND AS SUCH THE DISALL OWANCE MADE IS OUGHT TO BE DELETED. 2.B THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF LEARNED ASSESSING OFFICER DISALLOWING A SUM OF RS. 17,60,084/- OUT OF INTEREST EXPENDITURE ON THE GROUND THAT APPELLANT HAD GIVEN INTEREST FRE E LOANS AND ADVANCES . IT IS SUBMITTED THAT THE INTEREST EXPENDITURE IS IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND AS SUCH NO DISALLOWANCE IS CALLED FOR. THE CONCLUSION ARRIVED AT BY THE LEARNED COMMISSION ER OF INCOME-TAX (APPEALS) AND BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS, CONTRAR Y TO THE FACTS BASED ON THE PRESUMPTIONS AND CONJECTURES AND AS SUCH THE DISALL OWANCE MADE IS OUGHT TO BE DELETED. MADE IS OUGHT TO BE DELETED. 2. THE ISSUE RAISED IN THE FIRST GROUND IS AGAINST THE CONFIRMATION OF UPHOLDING OF ESTIMATION OF ANNUAL VALUE AT RS. 34,22,500/- AS AGAINST RS. 6,60,000/- OF THE ASSESSEE BY ADDING NOTIONAL INTEREST ON INTEREST F REE SECURITY SECURITY DEPOSIT AND CALCULATING THE INCOME FROM HOUSE PROPERTY ACCORDIN GLY. 3 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT 2.1. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FI RM FILED ITS RETURN OF INCOME ON 26.07.2009 DECLARING A LOSS OF RS. 47,67,568/-.THE ASSESSEE WAS OWNER OF THE GROUND AND BASEMENT FLOOR OF SAVANI MILLENIUM TOWE R CO-OP HOUSING SOCIETY LTD MEASURING 7,377/- SQ FTS .WHICH WAS LET OUT TO M/S SHIVANI TRANSPORT PVT. LTD AT A MONTHLY RENT RS. 25,000/- BY TAKING INTEREST FREE SECURITY OF RS. 3,30,62,710/- FROM THE SAID COMPANY. BESIDES THE ASSESSEE WAS ALS O OWNER OF 804 SQ FT CARPET AREA ON GROUND FLOOR OF SHIVANI MILLINIUM TOWER WHI CH WAS LET OUT TO TOSCANO INFRASTRUCTURE (P) LTD WITH AMENITIES AND RENT AND OTHER CHARGE FOR SERVICES WERE RS. 3,60,000/- P.A. 2.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E AO FOUND FROM THE PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAD CHARGED EXPE NSES OF RS. 54,27,568/- AGAINST THE RENTAL INCOME CREDITED OF RS. 6,60,000/- THEREB Y SHOWING NET PROFIT OF RS. 47,67,567/-.THE AO OBSERVED THAT THE RENT IN RESPEC T OF GROUND AND BASEMENT FLOOR LET TO M/S SHIVANI TRANSPORTER PVT LTD WAS QUITE LO W AS COMPARED TO THE MARKET RENT AND A SHOW CAUSE WAS ISSUED AS TO WHY THE REN T AND COMPENSATION RECEIVED FROM THE PROPERTY SHOULD NOT BE ASSESSED AS INCOME FROM HOUSE PROPERTY AND ANNUAL LETTING VALUE OF THE PROPERTY U/S 23(1) OF T HE ACT SHOULD NOT BE CALCULATED BY TAKING INTEREST ON THE SECURITY DEPOSIT ON THE L INES OF DECISION OF BOMBAY 4 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT TRIBUNAL IN THE CASE OF TRIVILI INVESTMENTSTS LTD. THE AO FRAMED THE ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 22/12/2011 B Y WORKING OUT THE ALV BY ADDING INTEREST @ 8.5% ON RS. 3,25,00,000/- I.E RS. 27,62,500/- TO THE RENT RECEIVED FOR SUCH PROPERTY AND CALCULATED THE INCOME FROM HO USE PROPERTY AT RS. 23,95,730/- BY REJECTING THE CONTENTION OF THE ASSESSEE THAT RE NT RS. 25,000/- P.M WAS MUTUALLY DECIDED BY TAKING RS. 3,25,00,000/- AS INTEREST FR EE SECURITY. 2.3. AGGRIEVED BY THE ORDER OF AO THE MATTER WAS CA RRIED BEFORE THE FAA BUT THE FAA UPHELD THE ORDER OF AO BY FOLLOWING THE ORDER O F HIS PREDECESSOR CIT(A) FOR THE ASSESSMENT YEAR 2007-08. 2.4. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASE OF THE ASSESSEE WAS COVERED IN ITS FAVOUR BY THE ORDER OF TRIBUNAL IN I TS OWN CASE IN ITA NO.286/MUM/2014 FOR THE ASSESSMENT YEAR 2007-08 IN WHICH A SIMILAR ISSUED HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE TO WHICH THE LD DR DID NOT RAISE ANY OBJECTION. 2.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORDS. FROM THE ORDER OF TRIBUNAL IN ITA NO.286/MUM/2014 F OR THE ASSESSMENT YEAR 2007-08 WE FIND THE IDENTICAL ISSUE ON THE BASIS OF WHICH THE FAA UPHELD THE ORDER 5 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT OF AO WAS DECIDED IN FAVOUR OF THE ASSESSE, THE REL EVANT PARAS ARE REPRODUCED BELOW. THE RELEVANT PARAS 7,8 & 9 ARE REPRODUCED BE LOW:- 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHOR ITIES BELOW AND THE RELEVANT MATERIAL PLACED BEFORE US. WE HAVE AL SO CONSIDERED THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY (SUPRA ). WE HAVE ALSO GONE THROUGH THE REMAND REPORT AND ALSO REPORT OF THE INSPECTOR. THE ENQUIRY REPORT SUBMITTED BY THE INSP ECTOR IS OF VERY GENERAL IN NATURE. WE DO NOT FIND ANY COMPARABLE C ASE CONSIDERED BY THE INSPECTOR IN HIS ENQUIRY REPORT. THE REPORT IS TOTALLY BASED ON SURMISES AND CONJUNCTURES. THE REMAND REPORT SUBMI TTED BY THE AO IS TOTALLY BASED UPON THE REPORT OF THE INSPECTOR. THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF TIP TOP TYPOGRAPHY ( SUPRA) HAS OBSERVED AS UNDER: THE ENQUIRIES THAT THE ASSESSING OFFICER CAN MAKE WOULD BE FOR ASCERTAINING THE GOING RATE. HE CAN MAKE A COMP ARATIVE STUDY AND N ANALYSIS. IN THAT REGARD, TRANSACTIONS OF IDENTICAL OR SIMILAR NATURE CAN BE ASCERTAINED BY OBTAINING T HE REQUISITE DETAILS. HOWEVER, THERE ALSO THE ASSESSIN G OFFICER MUST SAFEGUARD AGAINST ADOPTING THE RATES STATED TH EREIN STRAIGHTAWAY. HE MUST FIND OUT WHETHER THE PROPERTY WHICH HAS BEEN LET OUT OR GIVEN ON LEAVE AND LICENSE BASI S IS OF A SIMILAR NATURE, NAMELY, COMMERCIAL OR RESIDENTIAL. HE SHOULD ALSO SATISFY HIMSELF WHETHER THE RATE OBTAINED BY H IM FROM THE DEALS AND TRANSACTIONS AND DOCUMENTS IN RELATION TH ERETO CAN BE APPLIED OR WHETHER A DEPARTURE THERE FROM CAN BE MADE. 8. THE HONBLE HIGH COURT FURTHER OBSERVED AS UNDER : WE ARE OF THE OPINION THAT MARKET RATE IN THE LOCA LITY IS AN APPROVED METHOD FOR DETERMINING THE FAIR RENTAL VAL UE BUT IT IS ONLY WHEN THE ASSESSING OFFICER IS CONVINCED THAT T HE CASE BEFORE HIM IS SUSPICIOUS, DETERMINATION BY THE PART IES IS DOUBTFUL THAT HE CAN RESORT TO ENQUIRE ABOUT THE PR EVAILING RATE IN THE LOCALITY. WE ARE OF THE VIEW THAT MUNIC IPAL RATEABLE VALUE MAY NOT BE BINDING ON THE ASSESSING OFFICER B UT THAT IS ONLY IN CASES OF AFORE-REFERRED NATURE. IT IS DEFIN ITELY A SAFE GUIDE. 6 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT 9. IN THE LIGHT OF THE AFOREMENTIONED OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT AS MENTIONED ELSEWHERE TH E REPORT IS CRYPTIC WITHOUT THERE BEING ANY COMPARABLE CASE BRO UGHT ON RECORD. THE DETERMINATION OF THE ALV BY THE REVENUE AUTHORI TIES IS ERRONEOUS AND AS MENTIONED ELSEWHERE, THE MUNICIPAL RATEABLE VALUE EXHIBITED AT PAGE-31 OF THE PAPER BOOK IS MUC H LESS THAN THE ANNUAL LET OUT VALUE DISCLOSED BY THE ASSESSEE. WE , THEREFORE, DO NOT FIND ANY REASON FOR MAKING THE IMPUGNED ADDITION. FINDING OF THE LD. CIT(A) IS SET ASIDE AND THE AO IS DIRECTED TO A CCEPT THE ANNUAL LET OUT VALUE AS OFFERED BY THE ASSESSEE. GROUND N O. 1 IS ACCORDINGLY ALLOWED. WE, THEREFORE, BY FOLLOWING THE DECISION OF THE COO RDINATE BENCH ALLOW THE APPEAL OF THE ASSESSEE. THE AO IS DIRECTED ACCORDINGLY. 3. THE ISSUE RAISED IN THE 2 ND GROUND OF APPEAL RELATES TO CONFIRMATION OF ADDITIONS OF RS. 35,93,937/- AND RS. 17,60,084/- WH ICH WAS MADE BY THE AO BY DISALLOWING INTEREST EXPENSES ON GROUND THAT THE A SSESSEE ADVANCED INTEREST FREE LOANS OUT OF INTEREST BEARING FUNDS. 3.1. THE BRIEF FACTS ARE THAT THE ASSESSEE HAD TAKE N A SECURED LOAN OF RS. 2,98,78,458/- FROM CITY BANK AND UNSECURED LOANS O F RS.1,31,59,000/- FROM 52 LOAN CREDITORS AND PAID INTEREST ON THE SECURED AND UNSECURED LOAN OF RS. 35,93,937/- AND RS. 17,60,084/- RESPECTIVELY. THE ASSESSEE HAD ADVANCED LOAN TO M/S MSN ENTERPRISES OF RS. 5,67,95,010/- ON WHICH N O INTEREST WAS RECEIVED DERIVED DURING THE YEAR. 7 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT 3.2. THE AO UPON FINDING THAT THE ASSESSEE HAD ADV ANCED A SUM OF RS.5,67,95,010/- TO M/S MNS ENTERPRISES ON WHICH N O INTEREST WAS CREDITED IN THE P & L A/C WHEREAS IT HAD RAISED INTEREST BEARING F UNDS BOTH SECURED AND UNSECURED AND ACCORDINGLY A SHOW CAUSE NOTICE WAS GIVEN TO T HE ASSESSEE FOR MAKING THE DISALLOWANCE OF RS. 53,54,021/- (RS. 35,93,937/-+RS . 17,60,084/-).THE AO ULTIMATELY DISALLOWED THE INTEREST CLAIMED OF RS. 53,54,021/- BY REJECTING THE REPLY OF THE ASSESSEE AS FILED VIDE LETTER DATED 07.11.20 11 THAT THE SAID LOAN WAS GIVEN ON INTEREST TO M/S MNS ENTERPRISES BUT UNFORTUNATELY BECAME STICKY AND BAD AND THEREFORE, NO INTEREST INCOME WAS RECEIVED . SO MUC H SO THAT EVEN THE LOAN ADVANCED COULD NOT RECOVERED DUE TO THE PRECARIOUS FINANCIAL HEALTH OF SAID PARTY. 3.3. THE LD CIT(A) ALSO DISMISSED THE APPEAL OF TH E ASSESSEE BY FOLLOWING THE ORDER OF PREDECESSOR CIT(A) IN THE ASSESSEMENT YEAR 2007-08. 3.4 THE LD AR FOR THE ASSESSEE AT THE OUTSET POINTE D OUT THAT THE ISSUE INVOLVED IN THIS GROUND OF APPEAL WAS COVERED IN FAVOR OF THE A SSESSEE IN ITS OWN CASE BY THE ORDER OF THE TRIBUNAL IN ITA NO.286/MUM/2014 FOR TH E ASSESSMENT YEAR 2007-08 BY FILING A COPY OF THE SAID ORDER. THE LD DR ALSO AGREED TO THE ARGUMENT OF THE LD AR. 8 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT 3.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS ON RECORDS. FROM THE ORDER OF TRIBUNAL IN ITA NO.286/MUM/2014 F OR THE ASSESSMENT YEAR 2007-08 WE FIND THE AN IDENTICAL ISSUE ON THE BASIS OF WHICH THE FAA UPHELD THE ORDER OF AO WAS DECIDED IN FAVOUR OF THE ASSESSE TH E RELEVANT PARAS OF WHICH ARE REPRODUCED BELOW:- 14. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. ON SIMILAR SET OF FACTS, THE HO NBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS CIT 288 ITR 01 H AS HELD THAT WHAT IS RELEVANT IS WHETHER THE AMOUNT WAS ADVANCED AS A ME ASURE OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIE W WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS. WHAT THE HONBLE SUPREME COURT MEANT WAS WHEN THE BORROWED AMOUNT IS NOT UTI LISED BY THE ASSESSEE IN ITS OWN BUSINESS AND HAS BEEN ADVANCED AS INTEREST FREE LOAN TO ITS SISTER CONCERN THE RELEVANCY IS THE MEASURE OF COMMERCIAL EXPEDIENCY. 15. THE HONBLE SUPREME COURT FURTHER OBSERVED THAT ONCE IT IS ESTABLISHED THAT THERE WAS NEXUS BETWEEN THE EXPEND ITURE AND THE PURPOSE OF THE BUSINESS, THE REVENUE CANNOT JUSTIFI ABLY CLAIM TO PUT ITSELF IN THE ARM-CHAIR OF THE BUSINESSMAN OR I N THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECID E HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMS TANCES OF THE CASE. 16. CONSIDERING THE FACTUAL MATRIX IN THE LIGHT OF THE OBSERVATIONS OF THE HONBLE SUPREME COURT (SUPRA), WE FIND THAT THE LOAN WAS GIVEN ON THE GROUNDS OF COMMERCIAL EXPEDIENCY AND T HEREFORE THE PROPORTIONATE DISALLOWANCE OF INTEREST IS UNCALLED FOR AND DESERVES TO BE DELETED. IN SO FAR AS THE PROPORTIO NATE DISALLOWANCE OF INTEREST ON THE DEBIT BALANCE OF TH E PARTNERS IS CONCERNED, THE SAME HAS TO BE CONSIDERED IN THE LIG HT OF THE PARTNERSHIP DEED AND AS THE PARTNERSHIP DEED IS SIL ENT ON CHARGING 9 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT OF SUCH INTEREST, WE DO NOT FIND ANY REASON FOR SUC H DISALLOWANCES. WE, ACCORDINGLY DIRECT THE AO TO DELETE THE ADDITIO N OF RS. 17,14,747/-. GROUND NO. 2 IS ACCORDINGLY ALLOWED. 17.IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. WE, THEREFORE, DELETE THE ADDITIONS OF RS.53,54,021 /- BY FOLLOWING THE DECISION OF THE COORDINATE BENCH AND ALLOW THE APPEAL OF THE AS SESSEE. THE AO IS DIRECTED ACCORDINGLY. 4. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL IN ITA NO.3728/M/2015 ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF LEARNED ASSESSING OFFICER ESTIMATING ANNUAL VALUE O F PROFIT AT RS. 36,10,420/- INSTEAD OF RS. 27,62,500/- BY ADDING NOTION INTEREST ON INTERE ST FREE SECURITY DEPOSIT RESULTING INTO AN ADDITION OF RS. 8,47,920/-. IT IS SUBMITTED THAT THE NOTION INTEREST ON INTERES T FREE SECURITY DEPOSIT CANNOT BE TAKEN AS A DETERMINED FACTOR TO ARRIVE AT THE 'FAIR RENT'. THE CONCLUSIONS ARRIVED AT BY THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS) AND BY THE LEARNED ASSESSING OFFICER ARE CONTRARY TO THE L AW AND AS SUCH THE ADDITIONS MADE ARE OUGHT TO BE DELETED. 2.A THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF LEARNED ASSESSING OFFICER DISALLOWING A SUM OF RS. 37,67,516/- OUT OF INTEREST EXPENDITURE ON THE GROUND THAT APPELLANT HAD GIVEN INTEREST FRE E LOANS AND ADVANCES. IT IS SUBMITTED THAT THE INTEREST EXPENDITURE IS IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND AS SUCH NO DISALLOWANCE IS CALLED FOR. THE CONCLUSION ARRIVED AT BY THE LEARNED COMMISSION ER OF INCOME-TAX (APPEALS) AND BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS, CONTRAR Y TO THE FACTS BASED ON THE PRESUMPTIONS AND CONJECTURES AND AS SUCH THE DISALL OWANCE MADE IS OUGHT TO BE DELETED. 10 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT 2.B THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING THE ORDER OF LEARNED ASSESSING OFFICER DISALLOWING A SUM OF RS. 17,52,408/- OUT OF INTEREST EXPENDITURE ON THE GROUND THAT APPELLANT HAD GIVEN INTEREST FRE E LOANS AND ADVANCES. IT IS SUBMITTED THAT THE INTEREST EXPENDITURE IS IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND AS SUCH NO DISALLOWANCE IS CALLED FOR. THE CONCLUSION ARRIVED AT BY THE LEARNED COMMISSION ER OF INCOME-TAX (APPEALS) AND BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS, CONTRAR Y TO THE FACTS BASED ON THE PRESUMPTIONS AND CONJECTURES AND AS SUCH THE DISALL OWANCE MADE IS OUGHT TO BE DELETED. 4.1. WE FIND THAT ISSUES INVOLVED IN I.T.A. NO. 3 728/MUM/2011 ASSESSMENT YEAR: 2010-11 ARE SAME AS IN ITA 3727/MUM/2011 ASSE SSMENT YEAR: 2009-10 AND THEREFORE OUR FINDINGS ON THE ISSUE IN ITA NO 3 727/M/2011 WOULD MUTATIS MUTANDIS APPLY TO THIS APPEAL AS WELL. THE APPEAL O F THE ASSESSEE IS THEREFORE ALLOWED. THE AO IS DIRECTED ACCORDINGLY. 5. IN RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2016 SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED :21.01.2016 PS. ASHWINI GAJAKOSH 11 ITA NO. 3727&3728/MUM/2015 (A.Y. 2009-11) M/S. SAVANI BROTHERS, VS. THE DY. CIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI