RUCHIRAJ SHARES & STOCK BROKERS P. LTD, MUMBAI V. ITO 4(2)(1), MUMBAI

ITA 4012/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8669 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Depreciation; Bad and doubtful debts; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER & SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NO.4012/MUM/2009 A.Y 2005-06 RUCHIRAJ SHARES & STOCK BROKERS P.LTD., 306, NATWAR CHAMBERS, 94, NAGINDAS MASTER ROAD, FORT, MUMBAI 400 023. PAN: AABCR 4896 H VS. THE INCOME TAX OFFICER 4 (2)(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DALPAT SHAH. RESPONDENT BY : SHRI JITENDRA YADAV. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWI NG THREE GROUNDS: 1. THE COMMISSIONER OF INCOME TAX [APPEALS]IV MUMBAI H AS ERRED IN ALLOWING THE BAD DEBTS CLAIMED BY THE APPE LLANT OF ` `` ` .27,48,260/- ONLY TO THE EXTENT OF AMOUNT OF BROKER AGE EARNED WITH RESPECT TO EACH PARTY IN THE YEAR AND NOT THE FULL AMOUNT OF BAD DEBT CLAIMED BY THE APPELLANT. THE APPELLANTS S UBMIT THEY ARE SHARE AND STOCK BROKERS AND THE AMOUNT DUE FROM THE CLIENT WHICH BECOMES RECOVERABLE IS EITHER A BAD DEBT OR I S A BUSINESS LOSS AS THE LOSS OF THE AMOUNT ARISE IN THE COURSE OF BUSINESS AND IS DIRECTLY RELATED TO THE STOCK BROKERING BUSI NESS OF THE APPELLANT. 2. THE SAID CIT[A] ALSO ERRED IN CONFIRMING THE DISALL OWANCE OF ` `` ` .47,55,000/- CLAIMED AS RESEARCH & DEVELOPMENT FEE PAID BY THE APPELLANT. THE APPELLANTS SUBMIT THAT THE PAYEE S ARE NOT RELATED PARTIES AND THE FEES WERE PAID TO THEM FOR CONTINUOUS SERVICE REGARDING SUPPLY OF INFORMATION ON VARIOUS COMPANIES IN WHICH THE APPELLANT WAS INTERESTED FOR THEIR CLI ENTS AS A STOCK BROKER. THERE WAS NO JUSTIFICATION FOR DISALLOWING THIS AMOUNT AS THE PAYMENT IS NOT OF ANY PERSONAL NATURE AND IS IN THE COURSE OF BUSINESS. 3. THE LEARNED CIT[A] ALSO ERRED IN DISALLOWING PAYMEN T OF ` `` ` .1,25,000/- AS PREMIUM FOR KEYMAN INSURANCE POLICY. THE 2 APPELLANTS SUBMIT THAT THE RISK COVERED BY THE POLI CY HAD COMMENCED DURING THE PREVIOUS YEAR AND THEREFORE TH E WHOLE AMOUNT IS ALLOWABLE AS DEDUCTION. 2. GROUND NO.1 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE HAS CLAIMED CERTAIN BAD DEBTS WHICH WERE N OT ALLOWED BY THE AO MAINLY BECAUSE ASSESSEE HAS SIMPLY SHOWN THE BRO KERAGE AS INCOME AND NOT THE WHOLE PROCEEDS AND ACCORDINGLY T HE CONDITIONS LAID DOWN IN SEC.36(2) WERE NOT FULFILLED. ON APPEAL, TH E ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT[A]. 3. BOTH THE PARTIES WERE HEARD. 4. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF DY. CIT VS. SHRI SHREYAS S.MORAKHIA I.T.A.NO.3374/MUM/2004 DATED 16 TH JULY, 2010. IN THIS CASE VIDE PARA-32 IT WAS HELD AS UNDE R [210 ITR 1]: 32. KEEPING IN VIEW ALL THE FACTS OF THE CASE AND THE LEGAL POSITION EMANATING FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE AMOUNT RECEIVABL E BY THE ASSESSEE, WHO IS A SHARE BROKER, FROM HIS CLIENTS AGAINST THE TRANSACTIONS OF PURCHASE OF SHARES ON THEIR BEHALF CONSTITUTES DEBT WHICH IS A TRADING DEBT. THE BROKERAGE/COMMISSION INCOME ARISING FROM SUCH TRANSACTIONS VERY MUCH FORMS PART OF THE SAID DEBT AND WHEN THE AMOUNT OF SUCH BROKERAGE/COMMISSION HAS BEEN TAKEN INTO ACCOUNT IN COMPUTATION OF INCOME OF THE ASSESSEE OF THE RELEVA NT PREVIOUS YEAR OR ANY EARLIER YEAR, IT SATISFIES THE CONDITION STI PULATED IN SECTION 36(2)(I) AND THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.36(1)(VII) BY WAY OF BAD DEBTS AFTER HAVING WRITTEN OF THE SAID DEBTS FROM HIS BOOKS OF ACCOUNT AS IRRECOVERABLE. WE, THEREFORE, ANSWER THE QUESTION REFERRED TO THIS SPECIAL BENCH IN THE AFFIRMATIVE THAT IS IN FAVOUR OF THE ASSESSEE. WE FURTHER FIND THAT THE SPECIAL BENCH HAD ALSO OBS ERVED THAT THOUGH ON PRINCIPLE THE BAD DEBT IS ALLOWABLE, BUT IT NEED S TO BE VERIFIED WHETHER ASSESSEE HAD CREDITED THE BROKERAGE TO SUCH CUSTOMERS ACCOUNT AND WHETHER ANY SECURITY TAKEN FROM SUCH CU STOMERS OR IN 3 SHARES WHICH WERE PURCHASES IN THE ACCOUNT OF SUCH CUSTOMERS FOR WHICH PAYMENT HAS NOT BEEN RECEIVED, WHETHER SUCH S ECURITY/MARGIN MONEY OR PROCEEDS OF SUCH SHARES HAS BEEN CREDITED TO CUSTOMERS AGAINST THE BAD DEBTS. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT[A] AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO ALLOW THE BAD DEBTS AFTER VERIFYING WHETHER BROK ERAGE AND/OR COMMISSION HAS BEEN CREDITED TO THE CUSTOMERS ACCOU NT AND ALSO WHETHER ANY SECURITY OR MARGIN MONEY OR SALE PROCEE DS OF THE SHARES FOR WHICH DELIVERY HAS NOT BEEN TAKEN CREDITED AGAI NST SUCH BAD DEBTS. 5. GROUND NO.2 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE HAD MADE A CLAIM OF ` `` ` .47,55,000/- ON RESEARCH & DEVELOPMENT (R&D). UPON ENQUIRY, INITIALLY ONLY THE COPIES OF THE BILLS WERE SUBMITTED. THE AO MADE SPECIFIC ENQUIRIES AND ASKED THE ASSESSEE TO FILE COPIES OF RESEARCH REPORT AND SERV ICES RENDERED BY SUCH PARTIES. VIDE LETTER DATED 20-11-2007 THE ASSE SSEE FILED SOME COPIES OF THE BILLS FROM SWISS CONSULTANCY AND ALSO GAVE SCRIPT-WISE SUMMARY OF VIJAY TEXTILE AND KE SERA SERA SHARES TR ADED BY THE ASSESSEE, THROUGH WHICH IT WAS CLAIMED THAT SHARES IN VIJAY TEXTILES WERE TRADED FOR ` `` ` .11,31,36,994/- AND SHARES OF KE SERA SERA WERE TRADED FOR ` `` ` .31,86,60,326/-. ULTIMATELY, ASSESSEE WAS ASKED TO PRODUCE THE PARTY FOR VERIFICATION. THE PARTY WAS NOT PRODU CED. HOWEVER, IT WAS MENTIONED VIDE LETTER DATED 17-12-2007 THAT M/S. SW ISS CONSULTANCY HAD PROVIDED DAY-TO-DAY INFORMATION IN RESPECT OF S HARES OF KE SERA SERA LTD. AND ON THE BASIS OF THAT INFORMATION ASSE SSEE HAD PROVIDED 4 INFORMATION [TIPES] TO ITS CUSTOMERS AND ASSESSEE H AD EARNED BROKERAGE OF ` `` ` .12,23,760/- ON THE SHARES OF KE SERA SERA LTD. SIMILARLY, NO DETAILS WERE FILED IN RESPECT OF RESE ARCH REPORT ETC. FROM M/S PREMIUM INVESTMENT. 6. THE AO EXAMINED ALL THE SUBMISSIONS AND OBSERVED THAT AVERAGE RATE OF BROKERAGE OF THE ASSESSEE COMES TO 0.17% WHICH WAS CALCULATED ON THE BASIS OF THE TOTAL BROKERAGE DIVI DED BY THE TOTAL TURNOVER AND EVEN IF IT IS ASSUMED THAT 50% TRANSAC TIONS WERE CONDUCTED BECAUSE OF THE INFORMATION, THEN BROKERAG E ON ACCOUNT OF KE SERA SERA STOCK WOULD BE ` `` ` .3,67,027/- AND NO ONE WOULD SPEND A SUM OF ` `` ` .42 LAKHS APPROXIMATELY ON RESEARCH FOR THIS COMPAN Y JUST TO EARN BROKERAGE OF ` `` ` .3,67,037/-. HE ALSO OBSERVED THAT ASSESSEE HAS ALSO INCURRED A LOSS ON ITS OWN TRADING TO THE TUNE OF ` `` ` .1,34,160/- AS LOSS OF KE SERA SERA SHARES. SIMILARLY, HE ANALYSED THE TRANSACTIONS OF VIJAY TEXTILE. HE ALSO OBSERVED THAT THESE ARE ONLY BOGUS BILLS AND FOR THIS HE POINTED OUT THAT ON VERIFICATION OF DETAILS IT WAS NOTICED THAT M/S SWISS CONSULTANCY WHICH IS AN UNDERTAKING OF SU PREME COMMUNICATION HAS SHOWN SUNDRY DEBTORS OF ` `` ` .21,02,400/- IN THE NAME OF THE ASSESSEE, WHEREAS THE ASSESSEE HAS SHOW N THE DEBTORS AT ` `` ` .39,84,130/-. FURTHER, SINCE NO REPORTS ETC. WERE F ILED IN THE CASE OF PREMIUM INVESTMENT, ULTIMATELY AO HELD THAT THE EXP ENDITURE INCURRED ON R.&D AMOUNTING TO ` `` ` .47,55,000/- AS NOT ALLOWABLE. 7. BEFORE THE CIT[A] IT WAS MAINLY SUBMITTED THAT R &D FEES WERE PAID TO PARTIES WHO WERE ADVISING THE ASSESSEE ON D AY-TO-DAY BUSINESS 5 ON VARIOUS INFORMATION COLLECTED BY THEM THROUGH RE SEARCH WHICH, IN TURN, WAS GIVEN TO THE CUSTOMERS. THE PARTIES TO WH OM SUCH FEES WERE PAID WERE NOT RELATED TO THE ASSESSEE. INITIALLY TH E COPIES OF THE REPORTS RECEIVED BY THE ASSESSEE WERE NOT FILED, BUT ULTIMA TELY WHEN THE LD. CIT[A] WROTE A LETTER TO THE ASSESSEE SOME SAMPLES OF THE REPORTS WERE FILED BEFORE HIM. 8. THE LD. CIT[A] AFTER CONSIDERING THE SUBMI SSIONS, DID NOT FIND MERIT IN THE SAME AND REJECTED THE CLAIM OF THE ASS ESSEE VIDE PARAS 2.9 TO 2.9.10 WHICH ARE AS UNDER: 2.9I HAVE GONE THROUGH THE ORDER OF AO, SUBMISSIO N OF THE APPELLANT AND DETAILS FILED BY THE APPELLANT IN RESPONSE TO T HE DETAILS ASKED BY THIS OFFICE. THE CLAIM OF THE RESEARCH AND DEVELOPM ENT ARE AS UNDER: (I) ` `` ` .42,04,000/- M/S SWIS CONSULTANCY A DIVISION OF SUP REME COMMUNICATIONS LTD. (II) 5,51,000/- M/S PREMIUM INVESTMENTS. 2.9.1 THE CLAIM OF RESEARCH & DEVELOPMENT FEE OF T HE APPELLANT IS FOUND TO BE NON-GENUINE AND BOGUS AND HAS BEEN MADE ONLY VIEW A VIEW TO REDUCE THE TAX LIABILITY OF THE APPELLANT I N VIEW OF THE FACTS AS DISCUSSED BELOW FROM PARA 2.9.2 TO PARA 2.9.9 2.9.2(A) THE COMPANY SUPREME COMMUNICATION IS BA SICALLY A SOFTWARE PRODUCT DEVELOPER COMPANY AND IT HAS NO IN FRASTRUCTURE OR HUMAN CAPITAL CAPABLE OF PRODUCING RESEARCH IN STOC K MARKET BY SUPREME COMMUNICATION WORTH ` `` ` .42 LAKH AND ITS INCOME AND EXPENDITURE SHOW THAT IT COULD NOT HAVE DONE EQUITY RESEARCH WORK WORTH ` `` ` .42 LAKHS. SWIS CONSULTANCY IS SAID TO BE A DIVISIO N OF SUPREME COMMUNICATION LTD. THE ANALYSIS OF ANNUAL REPORT FO R F.Y 04-05 OF SUPREME COMMUNICATION REVEALS THAT THE TURNOVER OF SUPREME COMMUNICATION WAS ` `` ` .4.40 CRORES AND A PROFIT OF ` `` ` .10 LAKHS ONLY. THE DIRECTORS REPORT STATES THAT THE OPERATIONS OF THE COMPANY ARE:- THE COMPANY CONCENTRATES ON DEVELOPMENT OF SOFTWA RE PRODUCTS AND IT IS ALSO ENGAGED IN CONSULTANCY WORK ON A CONTRAC T BASIS. (B) THE P & L ACCOUNT OF SUPREME COMMUNICATION AT PAGE 11 OF THE ANNUAL REPORT IS ANNEXED AS ANNEXURE 2. IT MAY BE S EEN THAT THE INCOME INCLUDES SALES AND SOFTWARE CONSULTANCY SERV ICES (THERE IS NO 6 MENTION AT ALL OF ANY CONSULTANCY SERVICES OR RESEA RCH IN THE EQUITY MARKET.) (C) SIMILARLY, THE EXPENDITURE PART OF THE P & L A CCOUNT SHOWS MATERIAL CONSUME, DIRECT EXPENSES, ADMINISTRATIVE E XPENSES AND DEPRECIATION. THERE IS NO MENTION AT ALL OF ANY EXP ENSES RELATING TO RESEARCH IN THE EQUITY MARKET. SCHEDULE 13 & 14 OF THE ANNUAL REPORT IS ANNEXED AS ANNEXURE 3. IT CONTAINS DETAILS OF OP ENING STOCK AND PURCHASES. DIRECTORS REMUNERATION, PRODUCTION CHAR GES AND TRAVELLING AND CONVEYANCE, WAGE AND SALARY, BUT THERE IS NO ME NTION OF ANY EXPENSE PERTAINING TO RESEARCH IN EQUITY MARKET. (D) SCHEDULE 14 OF ADMINISTRATIVE AND SELLING AND D ISTRIBUTION EXPENSES IS ALSO AT ANNEXURE 3 WHICH AGAIN DO NOT SHOW ANY E XPENSES PERTAINING TO RESEARCH EXPENSES IN EQUITY MARKET. (E) IN FACT, THERE IS NOTHING IN THE ANNUAL REPORT OF SUPREME COMMUNICATION TO SUGGEST THAT IT HAS A DIVISION NAM ED SWIS CONSULTANCY WHICH DOES EQUITY RESEARCH AS A MATTER OF FACT, IT IS OBVIOUS FROM THE ANNUAL REPORT AND ACCOUNTS OF SWI S CONSULTANCY THAT HT HAS UNDERTAKEN ONLY WORK RELATING TO SOFTWA RE PRODUCT AND CONSULTANCY, NOT EVEN NAME OF SWIS CONSULTANCY ANYW HERE MENTIONED IN ANNUAL REPORT OF SUPREME COMMUNICATION. (F) THE COMPANY, SUPREME COMMUNICATION OR SWIS CONS ULTANCY DOES NOT HAVE INFRASTRUCTURE AND CAPABILITY TO PRODUCE A RESEARCH INFORMATION WHICH IS WORTH ` `` ` .42.04 LAKHS, AS THE COMPANY DOES NOT HAVE A SINGLE EMPLOYEE WHOSE REMUNERATION IS EVEN ` `` ` .5 LAKHS AS INDICATED UNDER THE HEAD PARTICULARS OF EMPLOYEES AT PAGE 4 OF THE ANNUAL AUDIT REPORT. A RESEARCH WORK OF HIGH VALUE OF ` `` ` .42.04 LAKH CAN BE PRODUCED ONLY BY A HIGHLY SKILLED FINANCIAL OR STOCK MARKET ANALYST AND THEY CANNOT BE HIRED AT THE LEVEL OF TH E SALARY PAID TO THE EMPLOYEE OF SUPREME COMMUNICATION. THUS, THE VERY B ASIC CAPABILITY TO PRODUCE RESEARCH WORTH A FEE OF ` `` ` .42,04,000/- IS NOT THERE. (G) IT IS REALLY IMPROBABLE THAT THE HIGH QUALITY R ESEARCH WORTH ` `` ` .42 LAKHS CAN BE PRODUCED WITHOUT INCURRING ANY EXPENSE S. THE ONLY REASONABLE CONCLUSION DRAWN IS THAT THE SO-CALLED R ESEARCH WAS NOT UNDERTAKEN BY SUPREME COMMUNICATION AND ITS SO CAL LED DIVISION SWIS CONSULTANCY IS ONLY ON PAPER TO PROVIDE BOGUS ACCOMMODATION ENTRIES. 2.9.3 DISCREPANCY IN ACCOUNTS (A) THE BALANCE SHEET OF THE COMPANY, SUPREME COMMU NICATION AT PAGE 10 OF THE ANNUAL REPORT INDICATES THAT THE COM PANY HAS SUNDRY DEBTORS OF ` `` ` .1,31,82,965/- AND THE SCHEDULE 8 GIVING DETAILS OF SUNDRY DEBTOR DOES NOT HAVE NAMEWISE DETAIL BUT TOTALS FOR THE DEBT EXCEEDING 6 MONTHS IS AT ` `` ` .39.46 LAKHS AND OTHER DEBTORS OF ` `` ` .92.36 LAKHS. THE 7 APPELLANT HAS ENCLOSED DETAILS OF SUNDRY DEBTORS AS ON 31-3-05 [AFTER THE SCHEDULE 11) IN FACT, THE DETAIL OF SUNDRY DEBT OR IS NOT A PART OF THE BALANCE SHEET. INCIDENTALLY, THE ANNUAL REPORT FURN ISHED BY THE APPELLANT VIDE LETTER DATED DECEMBER 8, 2008 CONTAI NS SCHEDULE 14 UPTO PAGE 16 OF THE ANNUAL REPORT PAGE 17 WAS MISSING AN D FROM PAGE 18 TO 21 CONTAINS DETAILS REGARDING AUDITORS REMUNERAT ION, REGISTRATION DETAILS, CASH FLOW STATEMENT AND THE AUDITORS CERT IFICATE AT PAGE 21 THE DETAILS OF SUNDRY DEBTORS AS ON 31-3-05 DOES NOT HA VE ANY PAGE NUMBERS AT THE BOTTOM THUS BY ATTACHING THE SAME, T HE APPELLANT HAS TRIED TO MISLEAD AND MAKE ONE BELIEVE THAT THE SAME IS PART OF THE ANNUAL REPORT. (B)THE DETAILS OF SUNDRY DEBTORS AS ON 31-3-05 SHOW S RUCHIRAJ SHARE & STOCK BROKERS P. LTD. AS SUNDRY DE BTORS OF AMOUNTS DUE UPTO 180 DAYS OF ` `` ` .21,02,400/- ONLY WHEREAS IN THE BOOKS OF APPELLANT THE AMOUNT DUE TO SWIS CONSULTANCY IS SHO WN AT ` `` ` .39,84,130/-. THE LEDGER ACCOUNT OF THE APPELLANT SHOWS THE PAY MENT TO SWIS CONSULTANCY [NO MENTION OF DIVISION OF SUPREME COMM UNICATION LTD] ON 17-5-05 OF ` `` ` .9,47,700/- ` `` ` /9.47.700/- AND ` `` ` /10,44,365/-, THE CHEQUES WERE CLEARED ON 18-5-05, 12-7-05 AND 8-8-05 [AS WRI TTEN IN HAND] AND THE 4 TH PAYMENT IS ON 13-9-05 OF ` `` ` .10,44,365/- CLEARED ON 14-9-05. THUS, IT IS ABUNDANTLY CLEAR THAT NO PAYMENT HAS BE EN MADE BY THE APPELLANT TO SWIS CONSULTANCY [THE SUPPOSED DIVISIO N OF SUPREME COMMUNICATION LTD.] DURING THAT YEAR BUT IN SUBSEQU ENT YEAR. THE ACCOUNT OF SUNDRY DEBTOR SHOWS SUPREME COMMUNICATIO N AMOUNT DUE AT ` `` ` .21,02,400/- AND THUS, THERE IS AN OBVIOUS AND GLAR ING DISCREPANCY IN THE ACCOUNTS OF THE APPELLANT AND SUPREME COMMUN ICATION LTD. 2.9.4 USUAL 4 DEBIT NOTES BUT USUAL & WELL-KNOWN DE TAILS IN THE RESEARCH REPORTS: (I)(A) THE DEBIT NOTE DATED 6 TH JULY 04 STATES THAT COMPANY CHARGES DEBITED TO THE EQUITY RESEARCH OF K. SERA SERA AS P ER OUR MUTUAL UNDERSTANDING AND THE CHANGES OF EQUITY RESEARCH I S ` `` ` .10 LAKHS [ANNEXURE A PAGE 1], THE COPY OF THE RESEARCH REGAR DING K. SERA SERA IS IN 3 PAGES ARE ANNEXED AS ANNEXURE A [PAGES 2, 3 & 4]. (C) A NOTE AND NOT A RESEARCH WORK A CAREFUL REA DING OF THE UNDATED THREE PAGE REPORT [ANNEXURE A PAGES 2 TO 4] REVEALS THAT IS AT BEST A SMALL NOTE ON K SERA SERA AND NOT AT ALL A RESEARCH WORK WORTH 10 LAKH. THE ROUTINE RECOMMENDATION SIMILAR TO THE CASE OF V IJAY TEXTILE [COMPARE LAST LINES OF PAGE 4 & 5 OF ANNEXURE A] IS THERE THE STOCK OFFERS CHANCE OF ABOUT 25 TO 30 PERCENT OVER NEXT 1 2 MONTHS. AND IN CASE OF VIJAY TEXTILE, THE ROUTINE RECOMMENDATION L IKE K SERA SERA IS THERE THAT THE INVESTMENT IN THE STOCK IS RECOMMEN DED FOR AN APPRECIATION OF ABOUT 25% TO 30% OVER NEXT 12 MONTH S. 8 (II)(A) THE DEBIT NOTE DATED 6 TH JANUARY, 05 [ANNEXURE A PAGE 5] STATES BEING CHARGES DEBITED TOWARDS EQUITY RESEARCH OF M /S VIJAY TEXTILE DOES NOT CONTAIN ANY DATE ANYWHERE, AND THE DETAILS OF THE NOTE [IT IS HARDLY A RESEARCH WORK] DOES NOT JUSTIFIES PAYMENT OF ` `` ` .11.02 LAKHS AS ALL THE REPORT CONTAINS INFORMATION WHICH IS EVEN A VAILABLE BY A SEARCH ON WEBSITE OF VIJAY TEXTILES. THE ROUTINE RECOMMEND ATION LIKE K. SERA SERA IS THERE THAT THE INVESTMENT IN THE STOCK IS RECOMMENDED FOR AN APPRECIATION OF ABOUT 25% TO 30% OVER NEXT 12 MONTH S. (III)(A) THE DEBIT NOTE DATED 5 TH OCTOBER, 04 (ANNEXURE A, PAGE 5) STATES BEING CHARGES DEBITED TOWARDS EQUITY RESEAR CH OF THE COMPANY AS PER OUT MUTUAL UNDERSTANDING. THE CHARGES ARE ` `` ` .10 LAKHS AND NO NAME OF ANY COMPANY IS MENTIONED AS IN CASE OF DEBI T NOTE DATED 6 TH JULY, 2004. THE DEBIT NOTE DATED 31 ST MARCH, 05 [ANNEXURE A PAGE 13] IS AGAIN OF ` `` ` .11.02 LAKHS FOR EQUITY RESEARCH OF THE COMPANY, BU T THE COMPANYS NAME IS NOT MENTIONED. THESE PAYMENTS OF ` `` ` .21.02 LAKHS ARE SUPPOSEDLY FOR WEEKLY REPORTS. (B) USUAL DETAILS IN THE REPORT THE APPELLANT ALS O PRODUCED SAMPLE REPORT OF CERTAIN WEEKS, A COPY OF ONE SUCH REPORT OF WEEK ENDED MAY 28, 2004 TO 4 TH JUNE, 2004 IS AT ANNEXURE A, PAGES 14. WHILE GOING THROUGH THIS REPORT IT IS OBVIOUS THAT THE REPORT DOES NTO CONTAINANY INFORMATION WHICH IS MORE THAN THE INFOR MATION EASILY AVAILABLE IN NEWSPAPERS LIKE ECONOMIC TIMES, FINANC IAL EXPRESS OR EVEN BUSINESS PAGES OF ANY NATIONAL NEWSPAPER OR IN THE VARIOUS BUSINESS TV CHANNELS. THE COST OF ALL NEWSPAPERS AN D CHANNELS WOULD BE AROUND ` `` ` .300/- PER MONTH, FOR EXAMPLE, NOT MORE THAN ` `` ` .4,000/- PER YEAR AND THE APPELLANT HAS PAID AN AMOUNT IN EXCESS OF ` `` ` .21.02 LAKHS. (IV) THE DEBIT NOTE OF PREMIUM INVESTMENT, ADDRESS: AB-4, SILVER TOWERS, AQUEM MARGAO, GOA SHOWS NARRATION BEING AM OUNT DEBITED TO YOUR ACCOUNT TOWARDS OUR PROFESSIONAL CHARGE FOR EQUITY RESEARCH MADE ON YOUR BEHALF DURING THE YEAR OF ` `` ` .5,00,000/- SERVICE TAX ` `` ` .50,000/- AND EDUCATION CESS ` `` ` .1,000/-. THE APPELLANT HAS SUBMITTED COPY OF PAN, SERVICE TAX REGISTRATION CERTIFICATE, SALES TAX REGISTRATION CERTIFICATE AND AN ORDER U/S.154 IN CASE OF PREMIUM INVESTMENT SHOWING TOTAL LOSS FOR THE YEAR AT ` `` ` . (-) 1,75,50/- BUT NO EVIDENCE OF ANY EQUITY RESEARCH MADE WAS FURNISHED. 2.9.5 (I) THE APPELLANT STATES THAT HE IS THE BEST PERSON TO JUDGE WHETHER AN EXPENDITURE SHOULD BE INCURRED OR NOT AN D THE INCOME TAX DEPARTMENT CANNOT SIT ON THE JUDGMENT TO JUSTIFY WH ETHER EXPENDITURE WAS REQUIRED OR IS REASONABLE UNLESS SECTION 40A(2) IS APPLICABLE. THE APPELLANT EXPECTS THE INCOME-TAX DEPARTMENT TO BE B LIND AND LACKING EVEN IN A COMMON SENSE, BUT THE HON'BLE SUPREME COU RT IN THE CASE OF IN CIT VS. DURGA PRASAD 82 ITR 540 AT PAGE 545 OF T HE REPORTS THEIR LORDSHIPS OBSERVED.: IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES O N A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHER -WISE IT WILL BE VERY 9 EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS E ITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. TH E TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK IN TO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITIES OF THE RECITALS MADE IN THOSE DOCUMENTS. (II) THE SUPREME COURT OBSERVED THAT THE INCOME TAX AUTHORITIES ARE NOT SUPPOSED TO PUT ON BLINKERS ON THE EYES; A PROB ING SHOULD BE DONE TO GO BEYOND THE SMOKE SCREEN CREATED BY AN ASSESSE E. THE APPELLANT HAS CREATED A SMOKE SCREEN THOUGH VARIOUS DOCUMENTS AND A PROBING INTO THE SAME CLEARLY REVEALS THAT THE CLAIM OF EXP ENDITURE IS NOT GENUINE, BOGUS AND ONLY VIEW A VIEW TO REDUCE THE T AX LIABILITY. 2.9.6 THE SUPREME COMMUNICATION DOES NOT EVEN HAVE A WEBSITE, ITS INCOME IS TEN LAKHS ONLY, A GOOGLE SEARCH ONLY YIEL DS THE DETAILS ABOUT ITS ADDRESS. IT IS EXTREMELY IMPROBABLY TO BELIEVE THAT THE SUPREME COMMUNICATION HAS EXPERTISE AND SKILL TO PRODUCE EQ UITY RESEARCH WORK OF ` `` ` .40,00,000/-. EVEN GREAT EQUITY RESEARCH COMPANY LIKE CRISIL WOULD NOT CHARGE SUCH AMOUNT FOR THIS QUALIT Y OF RESEARCH. THE FINANCIAL STATEMENT AND ANNUAL REPORT OF SUPREME CO MMUNICATION CLEARLY INDICATES THAT IT HAS NOT UNDERTAKEN ANY EQ UITY RESEARCH WORK. 2.9.7 SUCH A POOR RESULTS OF RESEARCH WORTH MORE T HAN ` `` ` .42 LAKH: THE AO HAS ALREADY POINTED OUT THAT THE SO CALLED R ESEARCH WORK IN CASE OF K SERA SERA AND VIJAY TEXTILES HAS GIVEN AP PELLANT, BROKERAGE RECEIPT OF ` `` ` .12,23,760/- AND ` `` ` .4,71,268/- RESPECTIVELY. THE ASSESSEE, VIDE LETTER DATED 20-12-07 TO AO MENTIONED THE LOSS IN CASE OF K SERA SERA OF ` `` ` .1,34,160/- AND PROFIT IN CASE OF VIJAY TEXTILES OF ` `` ` .3,44,169/-. IN ITS OWN TRADING HOWEVER AS PER DETAILS SUBMITTED BY THE APPELLANT THEY HAVE NOT TRADED IN CASE OF K SERA SERA SHARES AND ONLY 1,000 SHARES OF VIJAY TEXTILES WERE PURCHASED AND SOLD IN WHICH PROFIT WAS ` `` ` .9,122/-. 2.9.9 SUCH A LONG DELAY IN PAYMENTS THE DEBIT NOT ES ARE OF L6 JULY, 5 OCT OF 2005 & 5 JANUARY & 31 MARCH OF 2005 BUT TH E PAYMENT OF SWIS CONSULTANCY ARE ON 17-5-05 OF ` `` ` .9,47,000/-, ` `` ` .9,47,000/- AND ` `` ` .10,44,365/-, THE CHEQUES WERE CLEARED ON 18-5-05, 12-7-05 AND 8-8- 05 [AS WRITTEN IN HAND] AND THE 4 TH PAYMENT IS ON 13-9-05 OF ` `` ` .10,44,365/- CLEARED ON 14-9-05. SUCH LONG DELAY FO R PAYMENTS STRENGTHEN THE NEW THAT IT IS A CASE OF CLAIM OF BO GUS EXPENSES TO REDUCE TAX LIABILITY. 2.9.10. IN VIEW OF ABOVE, AND DETAILED DISCUSSION B Y MR. J.T.NARNAWARE, ITO IN THE ASSESSMENT RODER FROM PAR A 4.9 TO 1.13 & PARA 5.1 TO 5.3, THE ADDITION OF ` `` ` .447,55,000 IS CONFIRMED. 10 9. BEFORE US, LD. COUNSEL OF THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT[A]. HE F URTHER SUBMITTED THAT THE AO IS NOT CORRECT IN OBSERVING THAT VERY L OW BROKERAGE WAS RECEIVED AGAINST THE DEALING IN SHARES OF K SERA SE RA WHILE CALCULATING THE AVERAGE BROKERAGE RATE BECAUSE THE TOTAL TURNOV ER WOULD INCLUDE SPECULATIVE TRANSACTIONS ALSO WHICH INVOLVE VERY LI TTLE BROKERAGE. ON A QUERY BY THE BENCH THAT WHETHER HE HAS FILED ANY CO PIES OF RESEARCH REPORTS IN THE PAPER BOOK, HE FILED TWO COPIES OF T HE REPORTS IN RESPECT OF K SERA SERA AND VIJAY TEXTILE WHICH WERE ALSO FI LED BEFORE THE CIT[A]. 10. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED TH E ORDER OF THE AO AND THE CIT[A]. HE FURTHER REFERRED TO THE COPY OF THE RESEARCH REPORTS AND POINTED OUT THAT IT IS A VERY ORDINARY INFORMATION WHICH IS AVAILABLE IN NEWS PAPERS OR ON INTERNET VERY EASILY . THESE REPORTS CANNOT BE CALLED RESEARCH REPORTS. MOREOVER, ASSESS EE HAS NOT FURNISHED ANY DETAILED REPORT AND ONLY TWO RESEARCH REPORTS WHICH WERE FILED BEFORE THE CIT[A] HAVE BEEN PRODUCED BEF ORE US AND EVEN BEFORE CIT[A] DESPITE VARIOUS REMINDERS NO OTHER RE PORTS WERE FILED. THEN HE POINTED OUT TO THE DISCREPANCY FOUND BY THE CIT[A] REGARDING THE OUTSTANDING AMOUNT PAYABLE BY THE ASSESSEE TO S UPREME COMMUNICATION FROM WHO THE RESEARCH REPORTS WERE SA ID TO HAVE BEEN OBTAINED. FROM THE BALANCE-SHEET OF SUPREME COMMUNI CATION IT IS CLEAR THAT DEBT OUTSTANDING IN THE NAME OF THE ASSE SSEE WAS ONLY ` `` ` .21,02,400/- AND THE SAME HAS BEEN SHOWN FOR MORE T HAN SIX MONTHS 11 WHICH BECOMES CLEAR FROM PAGES 28 & 32 OF THE PAPER BOOK WHICH GAVE THE SCHEDULE REGARDING DEBTS AND LIST OF DEBTO RS. HE THEN REFERRED TO PARA 4.9 OF THE AOS ORDER AND POINTED OUT THAT THE AMOUNT SHOWN AS OUTSTANDING BY THE ASSESSEE COMPANY WAS ` `` ` .39,84,130/- WHICH IS CLEARLY DIFFERENT AND NO EXPLANATION HAS BEEN FILED . THESE CONTRADICTIONS CLEARLY SHOW THAT IT WAS ONLY A CASE OF ACCOMMODATION ENTRIES AND THAT IS WHY EVEN THE ACCOUNTS ARE NOT R ECOGNISED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. DR. THE COPIES OF THE RESEARCH REPORTS WERE NOT SUBMITTED BEFORE THE AO AND EVEN B EFORE THE CIT[A] DESPITE VARIOUS REMINDERS. THE COPIES OF ONLY TWO R ESEARCH REPORTS WERE SUBMITTED. THIS CLEARLY SHOWS THAT THERE ARE H ARDLY ANY REPORTS OBTAINED BY THE ASSESSEE. THE TWO REPORTS SUBMITTED BEFORE THE CIT[A] HAVE BEEN ANALYSED BY THE LD. CIT[A] AND EVEN ANNEX ED TO HIS ORDER. WE REPRODUCE ONE OF THE REPORTS WHICH IS AS UNDER: SWISS CONSULTANCY K SE RA SERA PRODUCTION LTD. COMPANY BACKGROUND K SERA SERA PRODUCTION IS AN INDIAN BASED COMPANY, PROVIDES ENTERTAINMENT RELATED SERVICES. THE COMPANY IS PROV IDING, DISTRIBUTING & FINANCING FILMS & TELEVISION SERIALS BSE LISTED G ARNET PAPER MILLS LIMITED WAS TAKEN OVER BY PRESENT PROMOTERS & NAMED K SERA SERA PRODUCTION LTD. IN 2002. INDUSTRY SCENARIO THE ENTERTAINMENT INDUSTRY HAS UNDERGONE A SEA CHAN GE IN LAST DECADE FILM PRODUCTION BUDGET OF BOLLYWOOD FILMS HA VE STARTED SHOOTING UP TO 25 CRORES FOR A FILM. FILM MUSIC ALS O HAS BECOME A BIG SOURCE OF REVENUE. IT HAS BECOME HIGH RISK HIGH RET URN BUSINESS WHICH 12 REQUIRES CORPORATE FINANCE FOR BIG PROJECTS. SUBHAS H GHAI, PRITISH NANDI, PADMALAYA FILMS & G.V.FILMS ARE OTHER BIG NA MES WHICH HAVE BECOME PUBLIC LISTED COMPANIES IN LAST 10 YEARS. BUSINESS MODEL CORPORATIZATION, INTERNATIONALIZATION AND DE-RISKIN G FROM THE CORNERSTONES OF K SERA SERA BUSINESS MODEL. DE-RISKING GIVEN THE FACT THAT THE ENTERTAINMENT INDUSTRY IS I NHERENTLY RISKY, DE-RISKING OPERATIONS FORM A MAJOR PART OF K SERA SERAS STRATEGY. THIS TAKES SEVERAL FORMS, FROM BUILDING A DISTRIBUTION NETWORK TO GETTING IN REVENUE SHARING AGREEMENTS WITH SUPPL IERS & EVEN BOLLYWOOD .. NOT LEGIBLE SOFTWARE PRODUCTION WHICH PROVIDES STEADY ANNUITY STYLE REVENUE IS ANOTHER FO RM OF DE-RISKING THE REVENUE MODEL. AGGRESIVE EXPANSION PLANS K SERA SERA HAS ALONG WITH VERMA CORPORATION LTD. B AGGED A CONTRACT FOR APPROX ` `` ` .270 MILLION FROM SAHAR INDIA MASS COMMUNICATION LTD. TO MAKE 10 HINDI FEATURE FILMS. IT HAS ALSO MADE AN PREFERENTIAL ALLOTMENT OF 15,00,000 EQUITY SHARE S OF ` `` ` .10 EACH AT A PREMIUM. ON JUNE 20 TH 2004 THE BOARD OF DIRECTORS HAVE ALLOTTED 3,54,021 EQUIRY SHARES ON PREFERENTIAL BASIS. CO-PRODUCTION AGREEMENT WITH VERMA CORPORATION LTD . DARNA MANA HAI WITNESSED WORLDWIDE RELEASE ON 25 TH JULY, 2003. IT WAS THE FIRST FEATURE FILMS TO GO OF THE B LOCK OUT OF THE FOUR FILMS THAT K SERA SERA HAD TIED UP TO CO-PRODUCE WI TH VARMA CORPORATION LTD. THE PRODUCTION COMPANY HEADED BY T HE NOTED FILM MAKER, RAM GOPAL VARMA, K SERA SERA POSSES THE STRA TEGIC ADVANTAGE OF ITS STRENGTH IN THE INTERNATIONAL MARKET FOR OVE RSEAS PRODUCTION. FINANCIALS THE COMPANY HAD SHOWN A NET PROFIT OF 3.57 CRORES F OR THE FINANCIAL YEAR ENDING 31 ST MARCH 2004. WE EXPECT PERFORMANCE TO IMPROVE VASTLY AS THE COMPANY HAS AMBITIOUS FILM PR ODUCTION PLANNED FOR RELEASE NEXT YEAR. THE HAS PAID A DIVID END OF 10% FOR THE FINANCIAL YEAR ENDED 31 ST MARCH 2004. THE TURNOVER OF THE COMPANY IS LIKELY TO IMPROVE SUBSTANTIALLY IN THE CURRENT YEAR AS IT HAS RELEASED BIG FILMS LIKE AB-TAXCHHAPPAN GAYAB. MULTI STAR FI LMS LIKE SARKAR ARE UNDER PRODUCTION AND SLATED FOR RELEASE IN THE NEXT FINANCIAL YEAR. WE EXPECT K SERA SERA TO REPORT HUGE INCREASE IN TU RNOVER AND PROFITS 13 IN FUTURE AS ALL ITS DIVISIONS LIKE FILM PRODUCTION , DISTRIBUTION, TELEVISION SERIALS ARE REPORTING HUGE GROWTH. AUDITED 1-4-2003 TO 31-3-2004 (MILLIONS) NET SALES 239.76 OTHER INCOME 3.39 TOTAL INCOME 243.15 EXPENDITURE 183.72 OPERATING PROFIT 59.42 INTEREST (-) 1.03 GROSS PROFIT 58.39 DEPRECIATION (-) 0.77 PROFIT BEFORE TAX 57.62 TAX (-)21.92 PROFIT AFTER TAX 35.70 NET PROFIT 35.70 EQUITY CAPITAL 118.33 RESERVES 82.88 EPS 3.01 PERCENT OF NON PROMOTERS SHARE 89.91 CONCERNS ENTERTAINMENT PARTICULARLY FILM PRODUCTION IS ALWA YS RISKY BUSINESS PRONE TO BIG FLUCTUATIONS IN REVENUES. A F LOP FILM CAN RESULT ADVERSELY ON THE COMPANIES FINANCIAL PERFORMANCE. VALUATION & RECOMMENDATION GROWTH STRATEGY OF THE COMPANY IS LIKELY TO RESULT IN MEGA HITS TO THE CREDIT OF THE COMPANY, RESULTING IN DECENT P ROFIT & BOTTOM LINE. WE EXPECT EPS TO CROSS FACE VALUE NEXT YEAR. AT THE CURRENT MARKET PRICE, THE STOCK OFFERS CHANCE OF 25 TO 30 PER CENT APPRECIATION OVER THE NEXT 12 MONTHS. FO R SWISS CONSULTANCY SD/- THE ABOVE REPORT CLEARLY SHOWS THAT IT IS A DAY-TO- DAY INFORMATION WHICH IS EASILY AVAILABLE FROM DAILY NEWSPAPERS LIK E ECONOMIC TIMES OR FROM INTERNET. THIS CAN HARDLY BE CALLED RESEARCH R EPORT. FURTHER WE FIND THAT THE ASSESSEE HAS SHOWN THE OUTSTANDING AM OUNT OF M/S SUPREME COMMUNICATION AT ` `` ` .39,84,130/- WHEREAS IN THE BALANCE- 14 SHEET OF M/S SUPREME COMMUNICATION AMOUNT OUTSTAND ING AGAINST THE ASSESSEE IS ` `` ` .21,02,400/- AND NO EFFORT WAS MADE BY THE LD. COUN SEL OF THE ASSESSEE TO EXPLAIN THIS DISCREPANCY. THIS F URTHER SHOWS THAT ONLY THE ACCOMMODATION BILLS HAVE BEEN OBTAINED BY THE ASSESSEE. IN THIS BACKGROUND, WE FIND THAT THE ORDER PASSED BY T HE LD. CIT[A] IS VERY REASONABLE CONTAINING ALL THE REASONS AND, THEREFOR E, WE CONFIRM THE SAME. 12. GROUND NO.3 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAS PAID A SUM OF ` `` ` .1,25,000/- AS KEYMAN PREMIUM INSURANCE AGAINST THE POLICY TAKEN IN THE NAME OF SHRI KETAN B. MEHTA, DIRECTOR OF THE CO MPANY. AO NOTED THAT THE PREMIUM WAS PAID FOR THE PERIOD 1-4-2005 T O 31-3-2006 WHICH PERTAINS TO NEXT YEAR AND, THEREFORE, SAME WAS DISA LLOWED. 13. ON APPEAL, ACTION OF THE AO HAS BEEN CONFIRMED BY THE LD. CIT[A]. 14. BEFORE US LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . B. N. EXPORTS 323 ITR 178, WHEREIN INSURANCE PREMIUM PAID ON KEYM AN INSURANCE POLICY, WAS HELD TO BE ALLOWABLE. 15. ON THE OTHER HAND, LD. DR SUBMITTED THAT, NO DO UBT, THAT AFTER THE DECISION OF THE HON'BLE BOMBAY HIGH COURT THE P REMIUM PAID ON KEYMAN INSURANCE POLICY IS ALLOWABLE BUT THE ISSUE RAISED BY THE AO IS DIFFERENT AND THAT IS THE PREMIUM HAS BEEN PAID FOR THE PERIOD 15 CONSISTING OF NEXT FINANCIAL YEAR AND, THEREFORE, T HE SAME IS NOT ALLOWABLE. 16. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT A COPY OF THE INSURANCE POLICY HAS BEEN PLACED IN THE PAPER B OOK AT PAGES 10 TO 15 AND IT SHOWS THAT THE RISK HAS COMMENCED ON 28-3 -2005 THAT MEANS DURING THE YEAR BUT MAJOR PERIOD FALLS IN NEXT YEAR . IT IS NOT CLEAR WHETHER ASSESSEE WAS PROVIDING FOR EXPENDITURE AND ALSO ACCOUNTING FOR PREPAID EXPENDITURE WHICH MEANS THE EXPENDITURE WHICH IS PAYABLE FOR THE PERIOD UNDER CONSIDERATION BUT HAS NOT BEEN PAID AND HAS BEEN TAKEN AS LIABILITY ON ACCRUAL PRINCIPLE AND EXPENDI TURE WHICH HAS BEEN PAID FOR FUTURE HAS BEEN RECKONED AS PREPAID EXPEND ITURE ASSET. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT[A] AND REMIT THIS MATTER BACK TO THE FILE OF THE AO TO SEE THE EXACT POLICY OF ACCOUNTING OF THE ASSESSEE AND THEN DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. B. N. EXPORTS [SUPRA]. 17. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JANUARY, 2011. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI:28 TH JANUARY, 2011. P/-* 16