DCIT CIR 3(3), MUMBAI V. WARTSILA INDIA LTD, MUMBAI

ITA 3931/MUM/2009

• Counselvise Citation: 393119914 RSA 2009
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 25-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 19-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAVAN VED PER R K
• Assessee Lawyers: J D MISTRY; SANJIV M SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Earning of tax free income; Speculation loss; Bad and doubtful debts
• Section: 50C; 14A; 37(1); 11

Judgement Text

1 ITA NO.2027/MUM/2009 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI G GG G BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI D K AGARWAL, JM & SHRI D K AGARWAL, JM & SHRI D K AGARWAL, JM & SHRI D K AGARWAL, JM & SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM ITA NO. ITA NO. ITA NO. ITA NO. 2027/MUM/2009 2027/MUM/2009 2027/MUM/2009 2027/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2005 2005 2005 2005- -- -06 0606 06 ) )) ) WARTSILA INDIA LTD 48 NECO CHAMBERS SECTOR 11 CBD, BELAPUR NAVI MUMBAI 400 0614 VS THE DY COMMR OF INCOME TAX RANGE 3(3), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAACW0345D AAACW0345D AAACW0345D AAACW0345D ITA NO. ITA NO. ITA NO. ITA NO. 3931/MUM/2009 3931/MUM/2009 3931/MUM/2009 3931/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2005 2005 2005 2005- -- -06 06 06 06 ) )) ) THE DY COMMR OF INCOME TAX RANGE 3(3), MUMBAI VS WARTSILA INDIA LTD 48 NECO CHAMBERS SECTOR 11 CBD, BELAPUR NAVI MUMBAI 400 0614 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) A SSESSEE BY SHRI J D MISTRY & SANJIV M SHAH REVENUE BY SHRI PAVAN VED CIT-DR PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM THESE ARE CROSS APPEALS; THE FIRST ONE FILED BY TH E ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AGAINST T HE ORDER DATED 19.2.2009 OF THE CIT(A) XXXII, MUMBAI RELATING TO ASSESSMENT YEA R 2005-06. FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 ITA NO.2027/MUM/2009 ITA NO. 2027/MUM/2009 ( ITA NO. 2027/MUM/2009 ( ITA NO. 2027/MUM/2009 ( ITA NO. 2027/MUM/2009 ( BY THE ASSESSEE BY THE ASSESSEE BY THE ASSESSEE BY THE ASSESSEE) )) ) 2 IN GROUNDS OF APPEAL NO.1, THE ASSESSEE HAS CHALL ENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSING OF FICER IN DISALLOWING THE PROVISION FOR TRADE GUARANTEES OF RS. 1,41,92,093/- . 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF DIESEL GENERATING SETS AND INSTALLATION AND SERVICE OF DIESEL GENERATING POWER PLANTS. FROM THE ACCOUNTS OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED AN E XPENSE OF RS. 1,41,92,093/ ON ACCOUNT OF PROVISION FOR TRADE GUARANTEE. FROM THE PERUSAL OF THE METHOD OF ARRIVING AT SUCH TRADE GUARANTEE PROVISION, THE ASS ESSING OFFICER NOTED THAT THERE WAS NO CONSISTENCY AND THERE WAS NO SCIENTIFIC METH OD TO ARRIVE AT SUCH VALUES OF PROVISION FOR TRADE GUARANTEE. THEREFORE, ACCORD ING TO THE ASSESSING OFFICER, IT APPEARS THAT PRIMA FACIE, THE ASSESSEE HAS CLAIMED CONTINGENT LIABILITIES. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE PROVISION FOR SUCH TRADE GUARANTEE SHOULD NOT BE DISALLOWED. 2.2 REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, HE CAME TO THE CONCLUSION THAT PROVISION CREATED BY THE ASSESSEE I S PURELY IRRATIONAL AND ADHOC BASIS AND THEREFORE, IS IN THE NATURE OF CONTINGENT LIABILITY, WHICH IS NOT AN ALLOWABLE DEDUCTION IN VIEW OF THE PROVISIONS OF TH E ACT. THE LIABILITY IN THIS PARTICULAR CASE HAS NOT ACCRUED. IT IS THE IRRATIO NAL BELIEF OF THE ASSESSEE THAT SUCH AND SUCH AMOUNT OF LIABILITY MAY ACCRUE ON ACC OUNT OF REPAIRS DURING THE WARRANTY PERIOD. SINCE THE METHOD FOLLOWED BY THE ASSESSEE IS NOT EVIDENT, FROM 3 ITA NO.2027/MUM/2009 THE WIDE DISCREPANCY IN THE FIGURE OF ACTUAL LIABIL ITY AND PROVISION, THE VARIOUS DECISIONS CITED BY THE ASSESSEE ARE ALSO NOT APPLIC ABLE TO THE FACTS OF THE PRESENT CASE. RELYING ON A COUPLE OF DECISIONS, THE ASSES SING OFFICER DISALLOWED THE AMOUNT OF RS. 1,41,92,093/- BEING IN THE NATURE OF CONTINGENT LIABILITY. AFTER DEDUCTING ACTUAL EXPENDITURE OF RS. 64,33,230/- INC URRED BY THE ASSESSEE HE DISALLOWED AN AMOUNT OF RS. 77,58,863/-. 3 IN APPEAL, THE CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 1991-92 UPHELD THE ACTION OF THE AS SESSING OFFICER AND HELD THAT PROVISION OF TRADE GUARANTEE DEBITED IN THE BO OKS OF ACCOUNT IS NOT AN ASCERTAINED LIABILITY AND HENCE IT DOES NOT QUALIFY FOR DEDUCTION. HE, HOWEVER, DIRECTED THE ASSESSING OFFICER TO GIVE DEDUCTION TO THE ASSESSEE OF THE ACTUAL EXPENDITURE INCURRED IN RESPECT OF TRADE GUARANTEE PERFORMANCE DURING THE EARLIER YEAR. 4 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL HERE BEFORE US. 5 THE LD COUNSEL FOR THE ASSESSEE, AT THE OUTSET, R EFERRING TO THE DECISION OF THE TRIBUNAL IN ASSESSES OWN CASE IN ITA NO.7114/M UM/2008 ORDER DATED 26.2.2010 FOR THE ASSESSMENT YEAR 2004-05, SUBMITTE D THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE TRIBUNAL IN ASSESSES OWN CASE. REFERRING TO PARA 5 OF THE ORDER, HE DRE W THE ATTENTION OF THE BENCH TO 4 ITA NO.2027/MUM/2009 THE DISPUTE RELATING TO DISALLOWANCE OF PROVISION F OR TRADE GUARANTEE OF RS. 1,03,04,465/- FOR THE ASSESSMENT YEAR 2004-05. 5.1 REFERRING TO PARA 10 OF THE ORDER, HE SUBMITTED THAT THE ISSUE WAS STATED TO BE COVERED IN FAVOUR OF THE ASSESSEE FROM ASSES SMENT YEAR 1990-91 TO 2001- 02 IN ASSESSEES OWN CASE. 5.2 REFERRING TO PARAS 13 TO 16 OF THE ORDER, HE DR EW THE ATTENTION OF THE BENCH TO THE FINDINGS GIVEN BY THE TRIBUNAL AND SUB MITTED THAT THE TRIBUNAL FOLLOWING THE CONSISTENT DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ROTORK CONTROLS INDIA P LTD VS CIT AND ORS REPORTED IN 314 ITR 62 HAD SET ASID E THE ORDER OF THE CIT(A) AND ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, THIS BEING A COVERED MATTER, THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 5.3 THE LD DR, ON THE OTHER HAND, FAIRLY CONCEDED T HAT THE GROUND IN PRINCIPLE IS COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. HOWEVER, HE SUBMITTED THAT QUANTIFICATION IS REQUIRED TO BE EXA MINED AT THE LEVEL OF THE ASSESSING OFFICER SINCE THE PERIOD OF WARRANTY IS N OT KNOWN. HE, ACCORDINGLY SUBMITTED THAT THE MATTER MAY BE SET ASIDE TO THE F ILE OF THE ASSESSING OFFICER FOR QUANTIFICATION. 6 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK 5 ITA NO.2027/MUM/2009 FILED ON BEHALF OF THE ASSESSEE. AFTER HEARING BO TH THE PARTIES, WE FIND THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE C ONSISTENT DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL IN ASSESSEES OW N CASE FROM ASSESSMENT YEARS 1990-91 TILL 2001-02 AND ASSESSMENT YEAR 2004 -05. IN VIEW OF THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2004-05 WHERE THE TRIBUNAL AFTER CONSIDERING THE DECISION I N THE CASE OF THE ASSESSEE FOR EARLIER YEARS HAS ALLOWED THE CLAIM AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE LD DR, THIS GROUND BY THE ASSESSEE IS ALLOWED. 7 GROUNDS OF APPEAL NO.2 RELATES TO D ISALLOWANCE OF BAD DEBTS OF RS,. 1,32,009/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 7.1 FACTS OF THE CASE, IN BRIEF, ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO FILE COMPLETE DETAILS OF BAD DEBTS AND JUSTIFY THE CLAIM. IT WAS SUBMITTED BY THE ASSESSEE THAT AFTER AMENDMENT OF SEC 36(1)(VII) OF THE I T ACT WITH EFF ECT FROM 1.4.1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO SHOW THAT THE DEBT HA S BECOME BAD. IT WAS SUBMITTED THAT WHAT IS REQUIRED TO SHOW IS THAT THE DEBT HAVING BECOME BAD HAS BEEN WRITTEN OFF. HOWEVER, THE ASSESSING OFFICER D ID NOT ACCEPT THE SUBMISSION OF THE AS SESSEE AND DISALLOWED THE CLAIM OF BAD DEBT AMOUNTI NG TO RS. 74,01,262/- 7.2 BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE IS SUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 6 ITA NO.2027/MUM/2009 2003-04 AND 2004-05. IT WAS SUBMITTED THAT SINCE TH E ASSESSEE HAS WRITTEN OFF THE BAD DEBTS IN THE BOOKS OF ACCOUNT, THE SAME HAS TO BE ALLOWED AS DEDUCTION. A NUMBER OF DECISIONS WERE CITED BEFORE THE CIT(A). 7.3 HOWEVER, THE CIT(A) SUSTAINED AN AMOUNT OF RS. 1,32,009/- OUT OF THE TOTAL CLAIM OF BAD DEBTS OF RS. 74,01,262/- DISALLOWED BY THE ASSESSING OFFICER BY HOLDING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND FOUND THE SAME ACCEPTABLE; SO FAR AS BAD DEBTS FULFILLING THE TWO CONDITIONS AS PER PARA 3.3 ARE CONCERNED. HOWEVER, FROM THE ASSESSMENT ORDER, IT IS ALSO EVIDENT THAT DEBTS IN RESPECT OF BHARAT SHELL, RELIANCE CHEMOTEX AND MADRAS CEMENTS ARE ON ACCOUNT OF SERVICE TAX REVERSION WHICH WAS N OT CREDITED TO P&L ACCOUNT ORIGINALLY. HENCE, THESE DEBTS WERE NOT TAK EN INTO ACCOUNT WHILE COMPUTING THE INCOME OF THE EARLIER YEAR(S). THUS O NE OF THE CONDITIONS OF PARA 3.3 IS NOT SATISFIED. THE AGGREGATE OF THESE D EBTS IS RS. 1,32,009/- WHICH WILL NOT BE ALLOWABLE U/S 36(1)(VII) OF THE ACT. THUS OUT OF TOTAL CLAIM OF RS. 74,01,262/, DISALLOWANCE OF AN AMOUNT OF RS. 1,32,009/- IS UPHELD AND BALANCE ADDITION OF RS. 72,69,253/- IS DELETED. 8 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL HERE BEFORE US. 9 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE HAS SUPPLIED CERTAIN GENERATOR SETS AND THE ASSESSEE WAS TO GIVE CERTAIN SERVICES; THEREFORE, THE SERVICE TAX WAS PAYABLE BY THE ASSESSEE. HOWEV ER, THE ASSESSEE HAD NOT CHARGED ANY SERVICE TAX FROM THE CLIENTS WHO PAID T HE BILL ONLY. THEREFORE, THE ASSESSEE IS LIABLE TO PAY SERVICE TAX. THEREFORE, I F THE AMOUNT IS NOT ALLOWED AS BAD DEBT, THEN IT HAS TO BE ALLOWED AS TRADING LOS S U/S 37(1) OF THE I T ACT. 7 ITA NO.2027/MUM/2009 9.1 THE LD DR, ON THE OTHER HAND RELIED ON THE ORDE RS OF THE ASSESSING OFFICER AND THE CIT(A). 10 AFTER HEARING BOTH THE SIDES, WE FIND THE CIT(A) SUSTAINED AN AMOUNT OF RS.1,32,009/- AS BAD DEBT CLAIMED BY THE ASSESSEE O N THE GROUND THAT THIS BAD DEBT AMOUNT HAS NOT BEEN TAKEN INTO ACCOUNT WHILE COMPUTING THE INCOME OF THE EARLIER YEARS. IT IS THE SUBMISSION OF THE LD COUNSEL FOR THE ASSESSEE THAT SINCE THE ASSESSEE HAS PAID SERVICE TAX BUT NOT COL LECTED THE SAME FROM THE CLIENTS; THEREFORE, IF THE SAME IS NOT ALLOWED AS B AD DEBT, IT SHOULD BE ALLOWED AS TRADING LOSS U/S 37(1) OF THE I T ACT. SINCE ADMIT TEDLY, PROVISIONS OF SEC. 36(2) HAS NOT BEEN FULFILLED IN THE CASE OF THE ASSESSE E; THEREFORE, THE SAME CANNOT BE ALLOWED AS BAD DEBT. 10.1 AS REGARDS THE SUBMISSION OF THE LD COUNSEL FO R THE ASSESSEE THAT THE SAME HAS TO BE ALLOWED AS TRADING LOSS U/S 37(1), WE ARE OF THE OPINION THAT THE SAME CAN BE ALLOWED AS TRADING LOSS PROVIDED THE ASSESSE E CAN PROVE THE SAME BEFORE THE ASSESSING OFFICER BY FILING THE DETAILS THAT TH E SERVICE TAX HAS BEEN PAID DURING THIS YEAR. UNDER THESE CIRCUMSTANCES, WE DE EM IT PROPER TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WIT H THE DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EV IDENCE TO HIS SATISFACTION THAT SUCH SERVICE TAX HAS BEEN PAID DURING THIS YEAR. TH E ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIREC T ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 8 ITA NO.2027/MUM/2009 11 NEXT GROUND RELATES TO DISALLOWANCE U/S 14A OF T HE I T ACT AMOUNTING TO RS. 38,68,322/-. 11.1 FACTS OF THE CASE, IN BRIEF, ARE THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO FURNISH DETAILS OF EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME AND ALSO REQUESTED TO SHOW CAUSE AS TO WHY THE EXPENSES INCURRED AND CLAIMED I N RESPECT OF EXEMPT INCOME SHOULD NOT BE DISALLOWED. THE ASSESSEE, IN ITS REP LY, SUBMITTED THAT NO EXPENDITURE WAS INCURRED BY IT TO EARN THE DIVIDEND INCOME. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE BY CONCLUDING THAT BORROWED FUNDS WERE USED FOR MAKING INVESTMENT BECAUSE THE ACCOUNTS SHOW LOAN FUNDS RS. 22.86 CRORES. THE ASSESSING OF FICER, THEREFORE, DISALLOWED AN AMOUNT OF RS. 1,18,98,725/- U/S 14A R.W.R 8D BY DISALLOWING INTEREST O F RS. 80,30,403/- AND ADMINISTRATIVE EXPENSES OF RS. 38,68,322/- 12 IN APPEAL, THE CIT(A) GAVE PART RELIEF TO THE AS SESSEE BY HOLDING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT . AS REGARDS THE DISALLOWANCE OF INTEREST ON LOANS IT IS SEEN THAT B ORROWED FUNDS WERE USED PURELY FOR BUSINESS PURPOSES. HOWEVER, AS REGARDS A DMINISTRATIVE AND OTHER EXPENSES ARE CONCERNED, I AM NOT IN AGREEMENT WITH THE CONTENTION OF THE APPELLANT THAT NO EXPENSES HAVE BEEN INCURRE D BY IT FOR EARNING EXEMPT INCOME. ACCORDINGLY, I UPHOLD THE DISALLOWAN CE BY THE ASSESSING OFFICER OF ADMINISTRATIVE AND OTHER EXPENSES BEING INCURRED IN RELATION TO EARNING EXEMPT INCOME AS PER RULE 8D IN VIEW OF THE JUDGMENT OF HONBLE MUMBAI ITAT, SB IN THE CASE OF DAGA CAPITAL MANAGEM ENT PVT LTD AND OTHER (ITANO.8057/M/03, 183,1372 AND 2048/M/05) DAT ED 20.10.2008. SAME HAS BEEN COMPUTED BY THE ASSESSING OFFICER A T RS. 38,68,322/-. HOWEVER, THE ASSESSING OFFICER WILL AGAIN VERIFY TH E SAME BEFORE GIVING EFFECT TO THIS ORDER. THEREFORE, CLAIM OF THE APPEL LANT IS PARTLY ALLOWED. 9 ITA NO.2027/MUM/2009 13 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL HERE BEFORE US. 14 THE LD COUNSEL FOR THE ASSESSEE, REFERRING TO TH E DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT REPORTED IN 328 ITR 81 SUBMITTED THAT RULE 8D BEIN G PERSPECTIVE IN NATURE IS NOT APPLICABLE TO THE IMPUGNED ASSESSMENT YEAR. HOWEVER , AS REGARDS THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES, HE SUBMITT ED THAT REASONABLE AMOUNT MAY BE DISALLOWED. 14.1 THE LD DR ON THE OTHER HAND SUBMITTED THAT THE ISSUE SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD (SUPRA) FOR DETERMINATION OF THE EXPENDITURE TO BE DISALLOWED. 15 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONS IDERED THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED SUPRA. SINCE THE A SSESSMENT YEAR INVOLVED IN THE INSTANT CASE IS ASSESSMENT YEAR 2005-06; THEREFORE, IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG P LTD (SUPRA) RULE 8D BEING PERSPECTIVE IN NATURE IS NOT APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR. HOWEVER, FOR THE PURPOSE OF QUANTIFICATION OF THE D ISALLOWANCE, WE DEEM IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER WITH A 10 ITA NO.2027/MUM/2009 DIRECTION TO RE-COMPUTE THE DISALLOWANCE IN THE LIG HT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED SUPRA. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTI CAL PURPOSE. 16 NEXT GROUNDS RELATES TO DISALLOWANCE OF SET OFF OF LONG TERM CAPITAL LOSS OF RS. 98,13,766/-. 16.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSING OFFICER NOTED FROM THE COMPUTATION OF TOTAL INCOME THAT THE ASSESSEE HAS CLAIMED SET OFF OF BROUGHT FORWARD LOSS OF RS. 98,13,766/- UNDER THE HEAD CAP ITAL GAINS. ON BEING QUESTIONED BY THE AO TO JUSTIFY THE CLAIM, THE ASSE SSEE SUBMITTED AS UNDER: THE COMPANY CONTENDS THAT THE AMENDMENT TO SEC 74 WITH RESPECT TO CARRY FORWARD AND SET OF CAPITAL LOSSES IS EFFECTIV E PROSPECTIVELY I.E. WITH RESPECT TO SHORT TERM AND LONG TERM LOSSES OF AY 20 03-04 ONWARDS, AND NOT IN RESPECT OF CAPITAL LOSSES OF EARLIER YEARS. ACCORDINGLY, THE SET OFF OF CAPITAL LOSSES IN RESPECT OF EARLIER YEARS WILL BE GOVERNED BY THE PROVISIONS OF THE ERSTWHILE SEC. 74 I.E. THE PRE-AMENDED SECTI ON. HENCE, THE BROUGHT FORWARD LONG TERM LOSS, IF ANY, IN RESPECT OF AYS U PTO 2002-03 HAS BEEN SET OFF AGAINST THE SHORT TERM CAPITAL GAINS OF THE REL EVANT AY. 16.2 ON BEING FURTHER QUESTIONED BY THE ASSESSING O FFICER, TO EXPLAIN AS TO WHY SET OFF SHOULD NOT BE DISALLOWED, IT WAS SUBMITTED THAT THE PROVISIONS OF SEC. 50C ARE NOT APPLICABLE TO SEC. 74. THE ASSETS WERE HELD FOR LONG TIME; THEREFORE, PROFIT ON SALE OF SUCH ASSETS CAN BE SET OFF AGAINST BROUG HT FORWARD LOSSES. 16.3 HOWEVER, THE AO WAS NOT CONVINCED WITH THE EXP LANATION OF THE ASSESSEE. HE NOTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INCOME 11 ITA NO.2027/MUM/2009 UNDER THE HEAD LONG TERM CAPITAL GAINS. HOWEVER, THE BROUGHT FORWARD LOSS UNDER THE HEAD LONG TERM CAPITAL GAIN HAS NOT BEEN SET OFF AGAINST THE LONG TERM CAPITAL GAIN OF THIS YEAR BUT HAS BEEN SET OFF AGAI NST SHORT TERM CAPITAL GAIN. THE ACT IS AMENDED AND AS PER NEW PROVISIONS OF SEC. 74 , THE SET OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSS AGAINST INCOME FROM SHORT TERM CAPITAL GAIN IS NOT PERMISSIBLE. HE, ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE RELATING TO SET OFF OF BROUGHT FORWARD LOSS OF RS. 98,13,766/- UNDE R THE HEAD CAPITAL GAINS 17 BEFORE THE CIT(A), THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS SHAH SADIQ AND SONS REPORTED IN 166 ITR 1 02 WAS CITED. IT WAS ALSO SUBMITTED THAT AN IDENTICAL ISSUE HAS ARISEN IN THE CASE OF THE ASSESSEE FOR AY 2004-05 AND THE CLAIM OF THE ASSESSEE WAS REJECTED. 17.1 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E, THE CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE BY HOLDING AS UND ER: I HAVE CONSIDERED THE CLAIM OF THE APPELLANT VIS-A -VIS THE CASE LAW CITED BY HIM. AS PER SEC. 74(1)(B) OF THE ACT WHICH WAS A MENDED W.E.F 1.4.2003 I.E. AY 2003-04, ANY LONG TERM CAPITAL LOSS BROUGHT FORWARD FROM EARLIER YEAR CAN BE SET OFF ONLY AGAINST THE INCOME UNDER T HE HEAD CAPITAL GAINS ASSESSABLE IN RESPECT OF ANY OTHER CAPITAL ASSET NO T BEING A SHORT TERM CAPITAL ASSET. HENCE, THE APPELLANT IS NOT ENTITLED TO THE SET OFF AS CLAIMED. IN THE CASE OF CIT VS SHAH SADIQ AND SONS 166 ITR 1 02, THE SUBJECT MATTER WAS COMPLETELY DIFFERENT, WHERE THE QUESTION WAS RE GARDING SET OFF OF BROUGHT FORWARD SPECULATION LOSS UNDER 1922 ACT VIS -A-VIS 1961 ACT. HENCE, THIS CASE LAW CANNOT BE SAID TO BE APPLICABL E BECAUSE THE FACTS ARE NOT IDENTICAL, THEREFORE, CLAIM OF THE APPELLANT IN THIS REGARD IS NOT ACCEPTABLE. 12 ITA NO.2027/MUM/2009 18 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSES SEE IS IN APPEAL HERE BEFORE US. 19 THE LD COUNSEL FOR THE ASSESSEEE SUBMITTED THAT THIS ISSUE STANDS DECIDED AGAINST THE ASSESSEE IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2004-05. REFERRING TO PARA 19 OF THE O RDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2004-05, HE DREW THE ATTENTION OF THE BENCH TO THE GROUND RAISED BY THE ASSESSEE WHERE IN THE SET OFF OF LONG TERM CAPITAL GAIN OF RS 6,91,789/- MADE BY THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A) WAS THE ISSUE. REFERRING TO PARAS 25 TO 28 OF THE ORDER, HE SUBMITTED THAT THE TRIBUNAL, AFTER DISCUSSING THE ISSUE AT LENGTH HAS DISMISSED THE GROUND RAISED BY THE ASSESSEE. THE LD COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE DECISION OF THE TRIBUNAL DISTINGUISHING THE DECISION OF THE HONBLE SUPREME COURT IS WRONG AND ERRONEOUS AND THEREFORE, THE ASSESSEE HAS GONE TO H IGH COURT ON THIS ISSUE. HE SUBMITTED THAT THE FACTS DURING THE IMPUGNED ASSESS MENT YEAR ARE DIFFERENT IN THE SENSE THAT THE ASSESSEE HAS GOT SURPLUS U/S 50 OF THE I T ACT. 19.1 REFERRING TO PROVISIONS OF SEC. 50, HE SUBMITT ED THAT ANY SURPLUS ON ACCOUNT OF TRANSFER OF DEPRECIABLE ASSETS SHALL BE DEEMED TO BE CAPITAL GAIN WHICH CAN BE SET OFF AGAINST BROUGHT FORWARD CAPITA L LOSS. HOWEVER, THE ISSUE WAS NOT THERE IN THE PRECEDING ASSESSMENT YEAR; THE REFORE, THE DECISION OF THE TRIBUNAL FOR THE PRECEDING ASSESSMENT YEAR IS NOT A PPLICABLE TO THE FACTS OF THE PRESENT YEAR. HE SUBMITTED THAT SEC. 50 MODIFIES T HE PROVISIONS OF SEC. 48 AND 49. HOWEVER, IT DOES NOT AFFECT THE PROVISIONS OF S EC. 2 (42A) OF THE I T ACT. 1961. 13 ITA NO.2027/MUM/2009 19.2 REFERRING TO THE DECISION OF THE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS ACE BUILDERS P LTD REPORTED IN 281 ITR 210(BOM) , HE SUBMITTED THAT IT IS ONLY SHORT TERM BECAUSE OF THE DEEMING PROVISION OF SEC. 50 OTHERWISE, IT IS A LONG TERM ASSET. 19.3 THE LD DR, ON THE OTHER HAND, RELIED ON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE JUTE AND INDU STRIES LTD VS CIT REPORTED IN 120 ITR 921. REFERRING TO THE SAID DECISION, HE SU BMITTED THAT IT IS A CARDINAL PRINCIPLE OF THE TAX LAW THAT THE LAW TO BE APPLIED IS THAT IN FORCE IN THE ASSESSMENT YEAR UNLESS OTHERWISE PROVIDED EXPRESSLY OR BY NECESSARY IMPLICATION. HE SUBMITTED THAT NO ESTOPPELS IS APPL ICABLE AND AS PER THE PROVISIONS OF SEC. 50, GAIN THAT ARISES ON SALE OF DEPRECIABLE ASSET IS SHORT TERM CAPITAL GAIN AND THEREFORE, THE SAME CANNOT BE SET OFF AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS. 19.4 THE LD COUNSEL FOR THE ASSESSEE, IN HIS REJOIN DER SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF SHAH SADIQ AND SONS (S UPRA) HAS CONSIDERED THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OR RELIANCE JUTE MILLS CO LTD VS CIT REPORTED IN 86 ITR 570. 19 REFERRING TO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS S S C SHOES LTD REPORTED IN 259 ITR 674, H E SUBMITTED THAT VESTED RIGHT HAD ACCRUED IN FAVOUR OF THE ASSESSEE WHICH IS NOT TAKEN AWAY EITHER EXPRESSLY OR BY NECESSARY IMPLICATION BY THE DELETION OF SEC TION 80VVA. FOLLOWING THE SAME RATIO AND ALSO IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE 14 ITA NO.2027/MUM/2009 CASE OF ACE BUILDERS LTD (SUPRA), HE SUBMITTED THAT THE ISSUE HAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. 20 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. THE ISSUE, IN THE INSTANT CASE IS NON ALLOWANCE OF SET OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSS AGAINST SHOR T TERM CAPITAL GAINS OF THE YEAR ON ACCOUNT OF SALE OF DEPRECIABLE ASSET. IN O UR OPINION, THE MATTER REQUIRES FRESH ADJUDICATION AT THE LEVEL OF THE AO SINCE THE CLAIM OF THE ASSESSEE HAS NOT BEEN ADJUDICATED IN THE LIGHT OF THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF ACE BUILDERS P LTD (SUPRA) AND IN THE LIGHT OF THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF S S C SHOES LTD (S UPRA). SINCE THE FACTS OF THE IMPUGNED ASSESSMENT YEAR ARE DIFFERENT FROM THE FAC TS FOR ASSESSMENT YEAR 2004-05; THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD COUNSEL FOR THE ASSESSEE THAT THE ORDER OF THE TRIBUNAL FOR ASSESS MENT YEAR 2004-05 CANNOT BE FOLLOWED FOR THIS YEAR. 21 CONSIDERING THE TOTALITY OF THE FACTS OF THE CAS E, WE DEEM IT PROPER TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR S TATISTICAL PURPOSE. 15 ITA NO.2027/MUM/2009 22 REMAINING GROUNDS IN THIS APPEAL BEING GENERAL I N NATURE ARE DISMISSED. ITA NO. 3931/MUM/2009 (BY THE REVENUE ITA NO. 3931/MUM/2009 (BY THE REVENUE ITA NO. 3931/MUM/2009 (BY THE REVENUE ITA NO. 3931/MUM/2009 (BY THE REVENUE ) )) ) 23 GROUNDS OF APPEAL NO.1 BY THE REVENUE READS AS U NDER: WHILE UPHOLDING THE ACTION OF THE ASSESSING OFFICE R IN NOT ALLOWING ANY DEDUCTION ON ACCOUNT OF PROVISION OF TRADE GUARANTE E, THE LD CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO GIVE DE DUCTION OF THE ACTUAL EXPENDITURE INCURRED IN RESPECT OF TRADE GUARANTEE PERFORMANCE DURING THE YEAR AND ALSO OF WRITTEN BACK OF EARLIER YEAR. WHILE DOING SO, THE LD CIT(A) HAS FAILED TO APPRECIATE THAT ACTUAL EXPENDI TURE INCURRED DURING THE YEAR HAS ALREADY BEEN ALLOWED BY THE ASSESSING OFFI CER. 24 AFTER HEARING BOTH THE SIDES, WE FIND THE FACTS ARE NARRATED ALREADY WHILE DISCUSSING THE GROUNDS OF APPEAL NO.1 BY THE ASSESS EE. WHILE ADJUDICATING THE GROUND RAISED BY THE ASSESSEE, WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS.7125 AND 7126/MUM/2004 ORDER DATED 31.7.2 008 FOR AYS 1999-00 AND 2000-01 VIDE PARAS 5 & 6 OF THE ORDER HAS HELD AS UNDER: THE TRIBUNAL IN ITA NO.6386/MUM/1998 RELATING TO A Y 1990-91 IN ASSESSEES OWN CASE, VIDE ORDER DATE 1 ST JULY, 2005 HAD HELD THAT THE PROVISIONS MADE ON ACCOUNT OF TRADE GUARANTEES IS AN ASCERTAINED LIABILITY AS THE SALE PROCEEDS COLLECTED BY THE ASSESSEE COMP ANY ALSO INCLUDED AN APPROPRIATE AMOUNT AGAINST SUCH ANTICIPATED EXPEND ITURE ON ACCOUNT OF AFTER SALES SERVICE. THE TRIBUNAL ACCORDINGLY DIREC TED THE AO TO ALLOW THE DEDUCTION ON ACCOUNT OF SUCH EXPENDITURE. THE LD AR FOR THE ASSESSEE POINTED OUT THAT IDENTICAL ISSUES THEREAFTER AROSE IN AY 1991-92 TO 1997-98 AND THE TRIBUNAL CONSISTENTLY ALLOWED THE CLAIM OF THE ASSESSEE FROM YEAR TO YEAR. THE LD AR FURTHER POINTED OUT THAT THE ASS ESSEE HAD CLAIMED THE EXPENDITURE ON ACTUAL BASIS ALSO AND IT WAS DIRECTE D BY THE TRIBUNAL THAT THE AO SHALL WITHDRAW ANY SUCH ALLOWANCE ALLOWED TO THE ASSESSEE ON THE BASIS OF ACTUAL PAYMENT. THE ISSUE BEFORE US IS ALSO SIMILAR TO THE ISSUE WH ICH AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER YEAR S. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCHES, WE DIRECT THE A O TO ALLOW THE CLAIM OF THE ASSESSEE ON ACCOUNT OF PROVISION MADE FOR TRADE GUARANTEE IN BOTH THE YEARS UNDER APPEAL. HOWEVER, THE AO IS DIRECTED TO WITHDRAW THE ALLOWANCE, IF ANY, MADE IN THIS REGARD IN THE SUBSE QUENT YEARS ON THE BASIS OF ACTUAL PAYMENTS. THUS, GROUND NO.2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 16 ITA NO.2027/MUM/2009 25 WE HAVE ALREADY DIRECTED THE ASSESSING OFFICER T O ALLOW THE CLAIM OF THE ASSESSEE ON ACCOUNT OF PROVISIONS MADE FOR TRADE GU ARANTEE. THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL CITED ABOVE, WE DIRECT THE ASSESSING OFFICER TO WITHDRAW THE ALLOWANCE, IF ANY, MADE IN THIS REG ARD IN SUBSEQUENT YEARS ON THE BASIS OF THE ACTUAL PAYMENT. THE ASSESSING OFFI CER SHALL VERIFY THE RECORDS AND FOLLOW THE DIRECTION AS GIVEN BY THE TRIBUNAL I N EARLIER YEARS. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE REVENU E IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 26 GROUNDS OF APPEAL NO.2 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE A ND IN LAW, THE LD CIT(A RELYING ON HIS PREVIOUS ORDERS IN THE SAME CASE ERR ED IN DELETING THE ADDITION OF RS. 38,71,816/- MADE ON ACCOUNT OF LIQU IDATED DAMAGES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HA S FAILED TO FURNISH EVIDENCE AND ESTABLISH THAT THE ASSESSEE WAS LIABLE TO PAY LIQUIDATED DAMAGES. 27 AFTER HEARING BOTH THE SIDES, WE FIND THE ASSESS EE HAS CLAIMED EXPENDITURE OF RS. 38,71,816/- ON ACCOUNT OF LIQUID ATED DAMAGES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH EVIDENCE AND ESTABLISH THAT IT WAS LIABLE TO PAY LIQUIDATED DAMAGES TO THE CLIENTS AS MENTIONED IN THE BODY OF THE ASSESSMENT ORDER. THE ASSESSEE SIMPLY FURNISHED COP Y OF THE AGREEMENT IN RESPECT OF 2 - 3 PARTIES WHEREIN THERE IS A CLAUSE FOR LIQUIDATED DAMAGES. HOWEVER, WHETHER ANY LIQUIDATED DAMAGES WERE ACTUAL LY INCURRED BY THE ASSESSEE HAS NOT BEEN FURNISHED. THEREFORE, THE ASS ESSING OFFICER CAME TO THE CONCLUSION THAT IT CANNOT BE ESTABLISHED WHETHER TH E ASSESSEE, IN FACT HAD INCURRED ANY LIQUIDATED DAMAGES OR NOT. RELYING O N A COUPLE OF DECISIONS, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF LIQUIDATE D DAMAGES AMOUNTING TO RS. 38,71,816/-. 27.1 IN APPEAL, THE CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER; 17 ITA NO.2027/MUM/2009 SO FAR AS LIQUIDATED DAMAGES ARE CONCERNED, IT IS OBSERVED BY THE ASSESSING OFFICER THAT THE APPELLANT HAD NOT FURNI SHED FULL AND COMPLETE DETAILS OF LIQUIDATED DAMAGES BEFORE THE ASSESSING OFFICER . ALTHOUGH LIQUIDATED DAMAGES IN RESPECT OF SIX PARTIES HAVE B EEN CLAIMED, THE APPELLANT ALLEGEDLY FURNISHED ONLY A COPY OF AGREEM ENT WITH SOME OF THESE PARTIES. HOWEVER, NO FURTHER DETAILS OF PARTIES AND SETTLEMENT AMOUNT IN RESPECT THEREOF WERE FURNISHED. THE APPELLANT HAS S IMPLY QUOTED THE AMOUNTS IN RESPECT OF THESE PARTIES. IT IS ALSO NOT TOLD AS TO HOW THE AMOUNTS OF SUCH DAMAGES WERE COMPUTED, IF ANY, CLAI MED BY THESE PARTIES. HENCE, THE ASSESSING OFFICER RELYING UPON THE JUDGMENTS IN THE CAUSE OF CALCUTTA AGENCY LTD 19 ITR 191 (SC), TRAN SPORT CORPORATION OF IND LTD 256 ITR 701 (A)) AND IMPERIAL CHEMICAL INDU STRIES (INDIA) P LTD, 74 ITR 17(AP) DISALLOWED THIS CLAIM. BEFORE THE UNDERS IGNED, THE APPELLANT HAS STATED THAT SUCH DAMAGES CLAIMED IN EARLIER YEA RS HAVE BEEN ALLOWED BY CIT(A) CONSISTENTLY. I THEREFORE, HOLD THAT THE APPELLANT IS ENTITLED TO THE SAID CLAIM. MY PREDECESSORS AND MYSELF HAVE IN EARL IER YEARS CONSISTENTLY ALLOWED THIS CLAIM OF THE APPELLANT. HENCE, CLAIM O F LIQUIDATED DAMAGES IS ALLOWED U/S 37(1) OF THE ACT AND DISALLOWANCE IN TH IS REGARD IS DELETED. 28 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL HERE BEFORE US. 29 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FI ND THE ASSESSEE, ADMITTEDLY HAS NOT FURNISHED THE FULL DETAILS BEFORE THE AO. W E FIND THE CIT(A) DELETED THE ADDITION MERELY ON THE STATEMENT OF THE ASSESSEE TH AT SUCH DAMAGES CLAIMED IN EARLIER YEAR HAVE BEEN ALLOWED BY THE CIT(A) CONSIS TENTLY. SINCE THE ONUS CAST UPON THE ASSESSEE WAS NOT DISCHARGED AND THE CIT(A) MERELY ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE HAS DELETED THE DIS ALLOWANCE; THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE SAME IS NOT SUST AINABLE IN LAW. FOR CLAIMING ANY EXPENSE AS DEDUCTION, THE ONUS IS ALWAYS ON THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER THAT THE SAME IS DEDUCTIBLE. IN THE INSTANT CASE, THE ASSESSEE FAIL ED TO DISCHARGE THE ONUS CAST ON IT. THE LD CIT(A) MERELY ON THE BASIS OF THE STA TEMENT BY THE ASSESSEE DELETED 18 ITA NO.2027/MUM/2009 THE DISALLOWANCE WHICH IS NOT SUSTAINABLE IN LAW. W E, THEREFORE, DEEM IT PROPER TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER WITH THE DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTA NTIATE WITH EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER THAT LIABILI TY FOR LIQUIDATED DAMAGES WERE ACTUALLY INCURRED BY THE ASSESSEE. THE ASSESSING O FFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER ALLOWING RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDING LY. GROUNDS OF APPEAL NO.2 BY THE REVENUE, IS ACCORDINGLY ALLOWED FOR STATISTI CAL PURPOSE. 30 GROUNDS OF APPEAL NO.3 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING AN ADDITION OF RS. 80,30,4 03/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST WITHOUT AP PRECIATING THE FACT THAT THE PROVISIONS F THE SEC.14A AND RULE 8 D WERE SQUA RELY APPLICABLE IN THIS CASE. 31 AFTER HEARING BOTH THE SIDES, WE FIND THIS GROU ND IS CO-RELATED TO THE GROUNDS OF APPEAL NO3 BY THE ASSESSEE IN ITA NO.202 7/MUM/2009. WE HAVE ALREADY RESTORED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF THE JU RISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO P LTD (SUPRA). FOLLOWING THE SAME RATIO, WE RESTORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG (SUPRA). NEEDLESS TO SAY THE ASSESSING OFFICER SHA LL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT AC CORDINGLY. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY ALLOWED FOR STATISTIC AL PURPOSE. 19 ITA NO.2027/MUM/2009 32 IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WE LL AS THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 27 TH , DAY OF APRIL 2011. SD/- SD/- ( (( ( D K AGARWAL D K AGARWAL D K AGARWAL D K AGARWAL ) )) ) JUDICIAL MEMBER ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 27 TH ,APRIL 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI