SAIDARSHAN BUSINESS CENTRES P. LTD, MUMBAI V. ITO 7(2)(2), MUMBAI

ITA 4213/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55728 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 27-09-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 09-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JEHANGIR D MISTRI
• Keywords: Reopening of assessment; Capital asset; Business income; Depreciation; Business expenditure; Rule of consistency; Additional evidence; Cost of acquisition; Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 246; 148

Judgement Text

1 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E BEFORE SHRI R.K. PANDA, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 4213 & 4214/MUM/2009 ASSESSMENT YEARS 1999-2000 & 2000-01 ITA NO. 4215/MUM/2009 ASSESSMENT YEAR 2002-03 ITA NO. 4216 & 4217/MUM/2009 ASSESSMENT YEARS 2004-05 & 2005-06 ITA NO. 4391/MUM/2009 ASSESSMENT YEAR 2006-07 ITA NO. 5062/MUM/2010 ASSESSMENT YEAR 2007-08 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD., 405-408, NAVBHARAT ESTATE B-WING, ZAKARIA BUNDER RD., SEWRI (W), MUMBAI 400 015. PAN AAACS 5801J VS. INCOME TAX OFFICER WARD 7(2)(2), MUMBAI. APPELLANT RESPONDENT ITA NO. 5070/MUM/2009 ASSESSMENT YEAR 2006-07 INCOME TAX OFFICER WARD 7(2)(2), MUMBAI. VS. M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD., 405-408, NAVBHARAT ESTATE B-WING, ZAKARIA BUNDER RD.,SEWRI (WEST), MUMBAI 400 015. PAN AAACS 5801J APPELLANT RESPONDENT ASSESSEE BY SHRI JEHANGIR D. MIST RI & SHRI VIJAY MEHTA DEPARTMENT BY SHRI B. JAYA KUMAR SHRI PARTHASARATHI NAIK 2 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. DATE OF HEARING 27.09.2011 DATE OF PRONOUNCEMENT 31.10.2011 ORDER PER BENCH. THE ABOVE APPEALS FILED BY THE ASSESSEE (EXCEPT IT A NO. 5070/MUM/2009 WHICH IS FILED BY THE REVENUE) ARE DI RECTED AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A) VII, MUMBAI RELAT ING TO DIFFERENT ASSESSMENT YEARS. SINCE COMMON GROUNDS ARE INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO. 4213/MUM/2010 (BY THE ASSESSEE FOR A.Y. 199 9-2000) 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF DEALING IN SHARES AND SECURITIES AND PROVIDING BUSINESS CENTRE SERVICES ON RENT. THE ASSESSEE FILED ITS RET URN OF INCOME ON 21/12/1999 DECLARING NIL INCOME WHICH WAS PROCESS ED U/S 143(1)(A) OF THE ACT ON 17.11.2000. SUBSEQUENTLY, THE CASE WAS RE-OPENED AND NOTICE U/S 148 OF THE ACT WAS ISSUED AND SERVED ON THE ASS ESSEE ON 24.3.2006. THE ASSESSEE, IN RESPONSE TO THE SAME REQUESTED THE A.O. TO TREAT THE ORIGINAL RETURN FILED BE TREATED AS RETURN IN RESPO NSE TO NOTICE U/S 148. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E A.O. NOTED THAT THE ASSESSEE COMPANY HAS SHOWN SALE OF SHARES AND SECUR ITIES AT ` 11900/-, BUSINESS CENTRE RECEIPTS ` 30,03,039/-, DIVIDEND ` 59,877/- AND INTEREST INCOME OF ` 18,232/-. THE ASSESSEE COMPANY HAS CLAIMED VARIOU S EXPENSES AND HAS SHOWN NET BUSINESS INCOME AT ` NIL. HE NOTED THAT THE 3 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. ASSESSEE COMPANY IS THE OWNER OF THE PREMISES AT PA REL AND SEWRI, MUMBAI. THE RENTAL INCOME FROM THE PROPERTIES HAS BEEN SHOWN BY THE ASSESSEE COMPANY AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE PROPERTY. THE AO, THEREFORE, ASKED THE ASSE SSEE TO SHOW CAUSE AS TO WHY THE INCOME RECEIVED FROM THE LET OUT OF THE PROPERTIES SHOWN BY IT AS BUSINESS INCOME SHOULD NOT BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 2.2 IT WAS EXPLAINED BY THE ASSESSEE THAT THE COMPA NY WAS RECEIVING CHARGES FOR SERVICE CENTRE AND THE SAME SHOULD BE T AXED AS INCOME ARISING FROM BUSINESS CENTRE AND RIGHTLY TAXED UNDER THE HE AD PROFITS AND GAINS OF BUSINESS. HOWEVER, THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. RELYING ON THE DECISION OF HONBLE C ALCUTTA HIGH COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. VS. CIT REPORT ED IN 249 ITR 47 WHEREIN IT HAS BEEN HELD THAT INCOME FROM THE LET O UT OF THE PROPERTIES SHALL BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND A COUPLE OF OTHER DECISIONS, HE CAME TO THE CONCLUSION THAT REN TAL INCOME HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY IRRESPECTIVE OF THE FACT THAT LEASING OF SITE IS ONE OF THE OBJECTS OF THE ASSESSEE COMPANY. HE FURTHER NOTED THAT THE ASSESSMENT OF THE ASSESSEE C OMPANY FOR A.Y. 2003- 04 HAS BEEN COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT IN WHICH THE RECEIPTS FROM THE BUSINESS CENTRE WAS TAXED UNDER T HE HEAD INCOME FROM HOUSE PROPERTY WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, THE A.O. TREATED THE BUSINESS CENTRE RECEIPT S OF ` 30,03,039/- AS INCOME FROM HOUSE PROPERTY AND HE ALLOWED THE NECES SARY DEDUCTION U/S 24(1) OF THE ACT. SO FAR AS THE ALLOWABILITY OF VA RIOUS EXPENSES DEBITED IN THE P&L ACCOUNT, HE HELD THAT SUCH EXPENSES DO NOT HAVE ANY NEXUS WITH THE PROFIT OF ` 11,900/- ON ACCOUNT OF SALE OF SHARES AND SECURITI ES. HE, THEREFORE, DID NOT ALLOW ANY EXPENSES AGAINST THE S ALE OF SHARES AND SECURITIES. 4 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 3. BEFORE THE LD. CIT(A) THE ASSESSEE CHALLENGED TH E VALIDITY OF REASSESSMENT PROCEEDINGS, TREATMENT OF THE BUSINESS CENTRE INCOME AS INCOME FROM HOUSE PROPERTY AND DISALLOWANCE OF TH E ENTIRE EXPENSES. VARIOUS ARGUMENTS WERE ADVANCED FOR THE ABOVE THREE PROPOSITIONS. THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE A.O. AF TER CONSIDERING THE REMAND REPORT AND THE VARIOUS ARGUMENTS ADVANCED BY THE ASSESSEE BEFORE HIM, HE UPHELD THE REOPENING OF THE ASSESSMENT. RE LYING ON A COUPLE OF DECISIONS INCLUDING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 VIDE ORDER IN ITA NO. 2508/MUM/2006 DT D. 30.5.2007 WHEREIN IT HAS BEEN HELD THAT SUCH INCOME HAS TO BE CONSIDERED AS INCOME FROM HOUSE PROPERTY, HE UPHELD THE ACTION OF THE A .O. IN TREATING THE BUSINESS CENTRE RECEIPTS AS INCOME FROM HOUSE PROPE RTY. 3.1 SO FAR AS THE DISALLOWANCE OF VARIOUS EXPENSES BY THE A.O. DISREGARDING THE BUSINESS INCOME OF THE ASSESSEE, T HE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS CLAIMED THE FOLLOWING EXPENSE S IN THE P&L ACCOUNT:- SR. NO. EXPENSE AMOUNT 1 DIRECTORS REMUNERATION 1,75,000/- 2 PAYMENT TO STAFF 1,65,097/- 3 ELECTRICITY CHARGES 4,22,157/- 4 PAYMENT TO AUDITORS 33,900/- 5 RATES & TAXES 1,10,192/- 6 OFFICE EXPENSES 10,688/- 7 LEGAL & PROFESSIONAL FEES 49,900/- 8 TELEPHONE & POSTAGE CHARGES 3,65,410/- 9 REPARIS & MAINTENANCE 62,443/- 10 SUNDRY BALANCE WRITTEN OFF 6,448/- 11 MISCELLANEOUS EXPENSES 23,440/- 12 DEPRECIATION AS PER INCOME TAX ACT 23,64,922/- TOTAL 37,89,597/- 5 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 3.2 SO FAR AS THE EXPENSES RELATING TO DEPRECIATION , SUNDRY BALANCES WRITTEN OFF AND LEGAL AND PROFESSIONAL FEES ARE CON CERNED, HE HELD THAT THE SAME ARE NOT ALLOWABLE. SO FAR AS THE CLAIM OF ` 62,443/- ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENSES IS CONCERNED HE HE LD THAT THE SAME CANNOT BE ALLOWED SINCE THE STATUTORY DEDUCTION OF 25% OF ALV U/S 24(1) WILL TAKE CARE OF THE SAME. AS REGARDS THE CLAIM O F ` 1,10,192/- RELATING TO RATES AND TAXES, HE HELD THAT THE SAME IS ALLOWABLE AS DEDUCTION U/S 23 OF THE ACT FROM INCOME FROM HOUSE PROPERTY SUBJECT T O THE PRODUCTION OF EVIDENCES BEFORE THE AO. 3.3 SO FAR AS THE REMAINING EXPENSES ARE CONCERNED , HE HELD THAT THE A.O. HAS ACCEPTED THAT THE ASSESSEE WAS DEALING IN SHARES RIGHT FROM A.Y. 1995-96. THEREFORE, IRRESPECTIVE OF THE VOLUME OF SHARES TRANSACTED, THE ASSESSEE HAS TO BE ALLOWED CERTAIN EXPENSES AGAINST THE HEAD INCOME FROM BUSINESS. FURTHER, HE HELD THAT IN VIEW OF THE VAR IOUS DECISIONS BY THE JUDICIAL AUTHORITIES, THE ASSESSEE IS ENTITLED TO C ERTAIN EXPENSES TO MAINTAIN ITS CORPORATE ENTITY. HE OBSERVED THAT THE A.O. HA S NO EVIDENCE IN HIS POSSESSION THAT THESE EXPENSES HAVE NOT BEEN INCURR ED. HE, THEREFORE, DIRECTED THE AO TO ALLOW THE FOLLOWING EXPENSES AMO UNTING TO RS 4,57,284/- OUT OF THE TOTAL CLAIM OF ` 37,89,597/-. S.NO. CLAIMED ALLOWED AMOUNT 1 DIRECTORS REMUNERATION 1,75,000/- 50% 87,500/- 2 PAYMENT TO STAFF 1,65,097/- 50% 82,549/- 3 ELECTRICITY CHARGES 4,22,157/- 30% 1,26,648/- 4 PAYMENT TO AUDITORS 33,900/- 100% 33,900/- 5 TELEPHONE & POSTAGE CHARGES 3,65,410/- 30% 1,09,623/- 6 OFFICE EXPENSES 10,688/- 50% 5,344/- 7 MISCELLANEOUS EXPENSES 23,440/- 50% 11,720/- 6 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. TOTAL 4,57,284/- AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 4. GROUNDS OF APPEAL NO. 1 BY THE ASSESSEE RELATES TO THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE RE-OPENING OF THE ASSESSMEN T. 4.1 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT STARTING FROM A.Y. 1995-96 ONWARDS THE A.O. IN THE ORDER PASSED U/S 14 3(3) HAS ACCEPTED THE RECEIPT FROM THE BUSINESS CENTRE INCOME AS INCOME FROM BUSINESS. NOW, THE A.O. WANTS TO TREAT THE BUSINESS CENTRE INCOME AS INCOME FROM HOUSE PROPERTY TO DISALLOW THE DEPRECIATION AND VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. REFERRING TO PAGE 4 TO 6 OF THE PAPER BO OK, HE DREW THE ATTENTION OF THE BENCH TO THE ORDER PASSED U/S 143(3) ON 16.3 .1998 FOR THE A.Y.1995- 96 IN WHICH THE A.O. HAS ALLOWED DEPRECIATION TREAT ING THE INCOME FROM BUSINESS CENTRE AS BUSINESS INCOME. REFERRING TO PAGE 7 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE COM PUTATION OF INCOME FILED FOR THE A.Y. 1995-96 IN WHICH THE BUSINESS CENTRE I NCOME HAS BEEN COMPUTED UNDER THE HEAD BUSINESS INCOME. REFERRI NG TO PAGE 9 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO T HE STATEMENT OF CALCULATION OF DEPRECIATION AS PER INCOME TAX RULES . REFERRING TO PAGE 11OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE P&L ACCOUNT FOR THE YEAR ENDED 31.3.1995 WHEREIN THE INCOME FROM BU SINESS CENTRE WAS DECLARED AT ` 5,78,502.00 AND THE SALE OF SHARES AND SECURITIES WAS DECLARED AT ` 34,84,431/-. REFERRING TO PAGE 10 OF THE PAPER BO OK, HE DREW THE ATTENTION OF THE BENCH TO THE BALANCE SHEET AS ON 31 ST MARCH, 1995. 7 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 4.2 REFERRING TO PAGE 13 TO 15 OF THE PAPER BOOK, H E DREW THE ATTENTION OF THE BENCH TO THE ORDER PASSED U/S 143(3) FOR A.Y. 1 996-97 WHEREIN THE A.O. HAS TREATED THE BUSINESS CENTRE RECEIPT AS BUSINESS INCOME ON WHICH DEPRECIATION HAS BEEN ALLOWED. REFERRING TO PAGE 1 6 AND 17 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE COM PUTATION OF INCOME FOR THE A.Y.2006-07 WHEREIN THE ASSESSEE HAS DECLARED R ECEIPTS FROM BUSINESS CENTRE AS BUSINESS INCOME. REFERRING TO PAGE 21 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO P&L ACCOUNT FOR THE Y EAR ENDED 31.3.1996 WHEREIN THE ASSESSEE HAS DECLARED THE SALE OF SHARE S AND SECURITIES AT ` 16,24,195.00 AND RECEIPT FROM BUSINESS CENTRE AT ` 9,47,079.00 AND HAS CLAIMED VARIOUS EXPENSES. 4.3 REFERRING TO PAGE 22 TO 24 OF THE PAPER BOOK, T HE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE ASS ESSMENT ORDER DTD. 29.2.2010 PASSED BY THE A.O. U/S 143(3) FOR THE A.Y . 1997-98 WHEREIN DEPRECIATION ON THE PREMISES ON WHICH THE BUSINESS CENTRE RECEIPT HAS BEEN RECEIVED HAS BEEN ALLOWED. REFERRING TO PAGE 25 TO 26 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE COM PUTATION OF TOTAL INCOME FOR A.Y. 1997-98 WHEREIN THE RECEIPT FROM BU SINESS CENTRE HAS BEEN COMPUTED AS BUSINESS INCOME AS PER P&L ACCOUNT. RE FERRING TO PAGE 30 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE TRADING AND P&L ACCOUNT FOR THE YEAR ENDED 31.3.1997 WHEREIN THE AS SESSEE HAS DECLARED THE SALE OF SHARES & SECURITIES AT ` 34,80,406.00 AND THE INCOME FROM BUSINESS CENTRE AT ` 9,67,978.00. HE SUBMITTED THAT THE VARIOUS EXPENS ES DEBITED TO THE P&L ACCOUNT HAS BEEN ACCEPTED BY THE A.O. IN HIS ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 4.4 REFERRING TO PAGE 32 AND 33 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE ORDER PASSED U/S 143(3) DTD. 30 .11.2010 FOR THE A.Y. 8 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 1998-99. REFERRING TO PAGE 39 OF THE PAPER BOOK, H E DREW THE ATTENTION OF THE BENCH TO THE TRADING AND P&L ACCOUNT ENDED 31 ST MARCH 1998 WHEREIN THE ASSESSEE HAS DECLARED SALE OF SHARES AND SECURI TIES AT ` 51,62,027.90 AND THE INCOME FROM BUSINESS CENTRE AT ` 10,52,905.00. REFERRING TO PAGE 44 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE TRADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.3.1999 ACCORDING TO WHICH THE SALE OF SHARES & SECURITIES ARE SHOWN AT ` 11,900/- AND THE BUSINESS CENTRE INCOME HAS BEEN SHOWN AT ` 30,03,039/-. HE SUBMITTED THAT THE VARIOUS EXPENSES DEBITED TO THE P&L ACCOUNT ARE SAME. ONLY DUE TO MELT-DOWN OF THE SHARE MARKET THE SALES OF SHARES AND SECURITIES HAVE GONE DOWN. THE DEPRECIATION OF THE ASSESSEE HAS GONE UP DURING THE YEAR BECAUSE OF ADDITION OF CAPITAL ASSETS. HE SUBMITTED THAT THE ASSESSEE HAS NOT STOPPED THE SHARE TRADING ACTIVITY. REFERRING TO PAGE 49 O F THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE DETAILS OF CLOSIN G STOCK OF SHARES AND SECURITIES SHOWN AT ` 391564/-. REFERRING TO THE COPY OF THE ASSESSMENT ORDER FOR A.Y. 2001-02 PLACED AT PAGE NO. 58 TO 60, HE SUBMITTED THAT THE A.O. IN THE ORDER PASSED U/S 143(3) ON 25.11.2003 H AS ACCEPTED THE BUSINESS CENTRE RECEIPTS AS BUSINESS INCOME AND H AS ALLOWED THE VARIOUS EXPENSES. REFERRING TO PAGE 57 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE SHOW CAUSE NOTICE DTD. 26 TH AUGUST, 2003 FOR A.Y. 2001- 02 WHEREIN THE A.O. HAS ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE INCOME FROM BUSINESS CENTRE SHOULD NOT BE TREATED A S INCOME FROM HOUSE PROPERTY. REFERRING TO VARIOUS REPLIES GIVEN BY T HE ASSESSEE, HE SUBMITTED THAT THE ASSESSEE HAS FILED DETAIL REASONS INCLUDIN G VARIOUS LEGAL DECISIONS SUPPORTING THE STAND THAT SUCH BUSINESS CENTRE RECE IPT SHOULD BE TREATED AS BUSINESS INCOME. HE SUBMITTED THAT THE A.O. IN THE ORDER PASSED U/S 143(3) ON 25.11.2003 HAS ACCEPTED SUCH CLAIM OF THE ASSESSEE. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS VS. DCIT & ANOTHER REPORTED IN [2009] 308 IT R 195 (BOM), HE SUBMITTED THAT ONCE THE A.O. HAS ASKED FOR THE DETA ILS WHICH WERE PROVIDED 9 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. BY THE ASSESSEE, THE A.O. SUBSEQUENTLY CANNOT SAY T HAT THERE WAS NO APPLICATION OF MIND. REFERRING TO PAGE 61 TO 63 OF THE PAPER BOOK HE SUBMITTED THAT VIDE ORDER DTD. 30 TH SEPTEMBER, 2005 FOR A.Y. 2003-04 IN THE ORDER PASSED U/S 143(3) R.W.S. 147, THE AO HAS TREATED THE BUSINESS CENTRE RECEIPT AS INCOME FROM HOUSE PROPERTY WHIC H HAS BEEN UPHELD BY THE TRIBUNAL ON 30 TH MAY, 2007. 4.5 REFERRING TO PAGE 3 OF THE PAPER BOOK, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE REASONS RECO RDED. REFERRING TO THE SAME HE SUBMITTED THAT NO NEW FACT HAS COME TO THE LIGHT OR HAS BEEN DISCOVERED. REFERRING TO PAGE 44 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE TRADING AND PROFIT AND LOSS ACCOUN T FOR THE YEAR ENDED 31 ST MAY, 1999 AND SUBMITTED THAT THE ASSESSEE HAS SHOW N SALE OF SHARES AND SECURITIES AT ` 11,900/-. HE SUBMITTED THAT THE AMOUNT IS VERY SM ALL BECAUSE OF MELT-DOWN IN THE SHARE MARKETING. THE A .O. IN THE BODY OF THE ASSESSMENT ORDER HAS ACCEPTED THE BUSINESS INCOME A T ` 11,900/-. THE LD. CIT(A) HAS GIVEN PART RELIEF OF THE VARIOUS EXPENSE S DEBITED IN THE P&L ACCOUNT AND THE REVENUE HAS NOT FILED ANY APPEAL BE FORE THE TRIBUNAL. HE SUBMITTED THAT WHEN PART OF THE BUSINESS PREMISES H AS BEEN UTILIZED FOR BUSINESS PURPOSE, THE ASSESSEE MUST GET THE WHOLE O F THE EXPENSES AS DEDUCTION OUT OF THE BUSINESS INCOME. 4.6 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONCE THE ASSESSEE HAS GOT BUSINESS, HE MUST GET FULL DEDUCTION. THERE IS NO DISCUSSION ABOUT THE BUSINESS ACTIVITY BY THE A.O. NO NEW MATERIAL OR NEW FACT WAS BROUGHT ON RECORD. THE A.O. HAD PASSED ORDER U/S 143(3). TH EREFORE, HOW A REASONABLE PERSON COMES TO THE CONCLUSION THAT INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS NOT UNDERSTOOD. HE SUBMIT TED THAT WHEN THE A.O. KNOWS THAT ASSESSEE HAS GOT BUSINESS AND NO TA NGIBLE FACT OR MATERIAL 10 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. HAD COME TO THE NOTICE AFTER THE ORDER PASSED IN TH E A.Y. 2000-01 U/S 143(3) AND WHEN THE A.O. DOES NOT HAVE THE INFORMAT ION AS TO HOW MUCH INCOME HAS ESCAPED ASSESSMENT FOR THE PURPOSE OF LI MITATION PRESCRIBED U/S 147, THEREFORE, THE REOPENING OF THE ASSESSMENT IS INVALID. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS VS. DCIT & ANOTHER REPORTED IN [2009] 308 ITR 195 ( BOM), HE SUBMITTED THAT INITIATION OF RE-ASSESSMENT PROCEEDINGS WOULD AMOUNT TO CHANGE OF OPINION BY THE A.O. AS IT WAS MERELY A FRESH APPLIC ATION OF MIND BY THE A.O. TO THE SAME SET OF FACTS. SINCE THE A.O. HAD FAILE D TO APPLY HIS MIND TO THE RELEVANT MATERIAL WHILE FRAMING THE ASSESSMENT ORDE R, HE COULD NOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPEN THE ASSESSMEN T U/S 147 OF THE ACT. A MERE CHANGE OF OPINION BY THE A.O. IS NOT A GROUN D FOR RE-ASSESSMENT. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF ICICI PRUDENTIAL LIFE INSURANCE CO. VS. ACIT REPORT ED IN 325 ITR 471, HE SUBMITTED THAT THE POWER TO REOPEN AN ASSESSMENT IS NOT AKIN TO A POWER TO REVIEW THE ORDER OF ASSESSMENT AND A MERE CHANGE OF OPINION WOULD NOT JUSTIFY A RECOURSE TO THE POWER U/S 147. UNLESS THE A.O. HAS TANGIBLE MATERIAL TO REOPEN AN ASSESSMENT, THE POWER CANNOT BE HELD TO BE VALIDLY EXERCISED. AGAIN REFERRING TO THE REASONS RECORDED BY THE A.O. FOR RE- OPENING OF THE ASSESSMENT, HE SUBMITTED THAT THERE IS NO MENTION OF TANGIBLE MATERIAL AND THE SAID REASONS ONLY REFER T O ASSESSMENT YEAR 2003- 04 WHEREIN THE BUSINESS CENTRE INCOME HAS BEEN TREA TED AS INCOME FROM HOUSE PROPERTY. REFERRING TO THE DECISION OF THE MUMBAI ITAT IN THE CASE OF M/S BIJOU INVESTORS GALAXY PVT. LTD. VS. ITO IN ITA NO. 6479/MUM/2003 ORDER DT. 4 TH JUNE, 2004 FOR A.Y. 2001-02 AND A SERIES OF OTHER DECISIONS FILED IN THE PAPER BOOK, HE SUBMITTED THAT IN VIEW OF RULE OF CONSISTENCY ALONE, THE REASSESSMENT PROCEEDINGS SHOULD BE TREAT ED AS NULL AND VOID. HE SUBMITTED THAT FOR A.Y. 1999-2000 THE REVENUE IS NOT IN APPEAL AGAINST THE FINDING OF THE LD. CIT(A)S ORDER THAT THE ASSE SSEE IS IN BUSINESS. HE ACCORDINGLY SUBMITTED THAT THE REASSESSMENT PROCEED INGS SHOULD BE HELD AS 11 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. VOID AB INITIO. REFERRING TO THE DECISION OF THE HO NBLE MADHYA PRADESH HIGH COURT IN THE CASE OF AJAY SINGH VS. CIT (MP) AND AR JUN SINGH VS. ADIT (INVESTIGATION) (MP) REPORTED IN 246 ITR 363, HE SU BMITTED THAT THE AMOUNT HAS TO BE QUANTIFIED FOR THE PURPOSE OF LIMITATION FOR REOPENING OF THE ASSESSMENT. HE, ACCORDINGLY, SUBMITTED THAT SINCE IN THE REASONS RECORDED BY THE A.O. THERE IS NOTHING ABOUT QUANTIFICATION O F AMOUNT THAT HAS ESCAPED ASSESSMENT, THEREFORE, THE REOPENING CANNOT BE SUSTAINED. THEREFORE, THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 5. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE REASSESSMENT NOTICE HAS BEEN ISSUED WITHIN A PERIOD OF 6 YEARS. THE ASSESSMENT WAS COMPLETED U/S 143)(1)(A) AND, THEREFORE, THERE WAS NO APPLICATION OF MIND BY THE AO. THEREFORE, IN VIEW OF THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS REPORTE D IN 291 ITR 500, THE REASSESSMENT PROCEEDINGS INITIATED BY THE A.O. HAS RIGHTLY BEEN UPHELD BY THE LD. CIT(A). HE FURTHER SUBMITTED THAT ON IDENT ICAL FACTS AND CIRCUMSTANCES, THE REASSESSMENT PROCEEDINGS HAVE BE EN UPHELD BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ORIGINAL RETURN FILED BY THE ASSESSEE ON 21.12.1999 WAS PROC ESSED U/S 143(1)(A) ON 17.11.2000. THE NOTICE U/S 148 OF THE ACT DTD. 23. 3.2006 WAS SERVED ON THE ASSESSEE ON 24.3.2003 WHICH IS WITHIN A PERIOD OF 6 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, IN VIE W OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (SUPRA) THE REASSESSMENT PROCEEDINGS INITIATED BY THE A.O. AND UPHELD BY THE LD. CIT(A) ARE VALID. THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND ARE NOT APPLICABLE TO THE FACTS OF THE 12 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. PRESENT CASE. FURTHER, THE TRIBUNAL IN ASSESSEES O WN CASE FOR A.Y. 2003-04 HAS ALSO UPHELD THE RE-ASSESSMENT PROCEEDINGS UNDER IDENTICAL FACTS. THE GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALID ITY OF RE-OPENING OF ASSESSMENT, IS ACCORDINGLY DISMISSED. 7. GROUND NO. 2 RELATES TO THE ORDER OF THE LD. CIT (A) IN UPHOLDING THE AOS ACTION IN TREATING THE RECEIPT FROM BUSINESS C ENTRE AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME TREATE D BY THE A.O. 7.1 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAD PURCHASED A NEW PR EMISES AT SEWRI AMOUNTING TO ` 3,12,90,047/- WHICH HAS BEEN ADDED TO THE OFFICE P REMISES AND HAS ENTERED INTO THE BLOCK OF ASSETS. THE A.O. HAS NOT BOTHERED TO GO THROUGH THE DETAILS AND THE LD. CIT(A) FOLLOWING TH E ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE HAS UPHELD THE BUSINESS CENTRE INCOME AS INCOME FROM HOUSE PROPERTY. REFERRING TO A SAMPLE COPY O F THE BUSINESS SERVICE CENTRE AGREEMENT PLACED AT PAGE 77 TO 83 OF THE PAP ER BOOK, HE SUBMITTED THAT THE COMPANY ALLOWED VARIOUS FACILITIES AND AME NITIES INCLUDING COMMON TELEPHONE FACILITIES, OFFICE ATTENDANTS AND DELIVERY BOYS, PROVIDE USE OF TELEPHONE/FAX LINES/INTERNET FACILITIES AND OTHER COMMUNICATION FACILITIES, PROVIDES CLEAN AND HYGIENIC CONDITION A T ALL TIMES AND MAINTAIN EFFICIENT AND TECHNOLOGICALLY ADVANCED SERVICES IN THE CENTRE. HE SUBMITTED THAT THE BUSINESS CENTRE REMAINS OPEN BETWEEN 9.00A M TO 7.00 PM ON ALL WEEK DAYS FROM MONDAY TO SATURDAY EXCEPT BANK HOLID AYS. HE SUBMITTED THAT AS PER THE SAID AGREEMENT, THE SERVICE CHARGES RECEIVED BY THE ASSESSEE IS EXCLUSIVE OF ELECTRICITY, TELEPHONE, TELEX, PHOT OCOPY AND FACSIMILE CHARGES AND OTHER EXPENSES AS MAY BE AGREED BETWEEN THE PAR TIES TO THIS AGREEMENT. REFERRING TO VARIOUS OTHER CLAUSES OF TH E AGREEMENT, HE SUBMITTED THAT THE ASSESSEE IS IN FULL CONTROL OF T HE SAID BUSINESS CENTRE. IT 13 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. IS A CASE OF COMPOSITE LETTING OUT OF THE PROPERTY AND, THEREFORE, THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2003-04 CA NNOT BE FOLLOWED IPSO FACTO. THE TRIBUNAL HAS NOT ADJUDICATED AS TO HOW T HE BUSINESS OPERATION OF THE ASSESSEE IS CONDUCTED. HE, THEREFORE, SUBMITTE D THAT THE FACTS OF THE TRIBUNAL ORDER ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. REFERRING TO A SERIES OF DECISIONS FILED IN THE PAPER BOOK INCLU DING THE DECISION OF THE TRIBUNAL IN THE CASE OF GESCO CORPORATION LTD. VS. ACIT REPORTED IN 31 SOT 132 (MUM) HE SUBMITTED THAT THE BUSINESS CENTRE REC EIPT HAS TO BE TREATED AS BUSINESS INCOME AS AGAINST INCOME FROM HOUSE PROPERTY. 8. THE LD. D.R., ON THE OTHER HAND, WHILE SUPPORTIN G THE ORDER OF THE LD. CIT(A) SUBMITTED THAT THE ISSUE STANDS DECIDED AGAI NST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 WHICH HAS BEEN FOLLOWED BY THE LD. CIT(A). 8.1 AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 AND THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 2508/MUM/2006 OR DER DT. 30.5.2007 FOR A.Y. 2003-04, FOLLOWING THE DECISION OF SHAMBHU INV ESTMENT AND VARIOUS OTHER DECISIONS, HAS UPHELD THE ORDER OF THE LD. CI T(A) IN CONSIDERING THE BUSINESS CENTRE RECEIPT AS INCOME FROM HOUSE PROPE RTY. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE DECISION OF LD. C IT(A) IN CONSIDERING THE RECEIPTS FROM BUSINESS CENTRE AS INCOME FROM HOUSE PROPERTY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 9. GROUNDS OF APPEAL NO. 3 BY THE ASSESSEE READS AS UNDER:- REIMBURSEMENT OF EXPENSES OF ` 3,82,700/- TO BE IGNORED. THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN TREATING THE REIMBURSEMENT OF E XPENSES OF ` 14 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 3,82,700/- AS INCOME UNDER THE HEAD INCOME FROM HO USE PROPERTY. HE OUGHT TO HAVE EXCLUDED THE SAID REIM BURSEMENT OF EXPENSES FROM INCOME FROM HOUSE PROPERTY AND ALSO F ROM TOTAL INCOME AS DONE BY A.O. HIMSELF IN A.Y. 2000-01 AND 2002-03. ALTERNATIVELY, HE SHOULD HAVE TAXED UNDER THE HEAD INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES. 9.1 FACTS OF THE CASE, IN BRIEF, ARE THAT T HE ASSESSEE RECEIVED BUSINESS CENTRE CHARGES OF ` 26,20,339/-, REIMBURSEMENT OF ELECTRICITY EXPENSES ` 1,88,571/- AND REIMBURSEMENT OF TELEPHONE EXPENSES OF ` 1,94,129/- TOTALING ` 30,03,039/-. THE A.O. CONSIDERED THE ENTIRE AMOUNT OF ` 30,03,039/- AS RENTAL INCOME AND AFTER ALLOWING DED UCTION U/S 24(1) TREATED THE BALANCE INCOME AS INCOME FROM HOUSE PRO PERTY. IN APPEAL, THE LD. CIT(A) ALSO DID NOT GIVE ANY RELIEF ON THIS ACC OUNT. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE REIMBU RSEMENT OF ELECTRICITY AND TELEPHONE EXPENSES AGGREGATING TO ` 3,82,700/- CANNOT FORM PART OF THE INCOME FROM HOUSE PROPERTY WHICH HAS BEEN WRONGLY T AXED. REFERRING TO PAGE 154 AND 155 OF THE PAPER BOOK WHICH CONTAINS T HE DETAILS OF REIMBURSEMENT OF TELEPHONE AND ELECTRICITY EXPENSES , HE SUBMITTED THAT OUT OF THE TOTAL ELECTRICITY EXPENSES OF ` 4,22,157/- WHICH HAS BEEN DEBITED TO THE P&L ACCOUNT AN AMOUNT OF ` 1,88,571/- HAS BEEN REIMBURSED FROM ITS CLIENTS. OUT OF THE TELEPHONE EXPENSES OF ` 3,65,409/-, AN AMOUNT OF ` 1,94,129/- HAS BEEN REIMBURSED FROM THE CLIENTS. SI NCE THE ASSESSEE HAS RECEIVED THIS AMOUNT SEPARATELY AGAINST THE DEBIT N OTES RAISED FROM TIME TO TIME, THE SAME SHOULD NOT BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. REFERRING TO THE ORDER FOR A.Y. 2000-01 PASSED U/S 143(3) R.W.S. 147, HE SUBMITTED THAT THE A.O. HAS EXCLUDED THE RE IMBURSEMENT OF SUCH EXPENSES FROM THE TOTAL RECEIPT WHILE CALCULATING T HE RENTAL INCOME. HE ACCORDINGLY SUBMITTED THAT THE ABOVE EXPENSES SHOUL D BE REDUCED FROM THE BUSINESS CENTRE RECEIPT. 10. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. CIT(A). 15 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 11. AFTER HEARING BOTH THE SIDES WE FIND FORCE IN T HE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE REIMBURSEMENT OF TELEPHONE AND ELECTRICITY EXPENSES SHOULD BE EXCLUDED FROM THE BU SINESS CENTRE RECEIPT. WE FIND FROM THE ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT FOR A.O. 2000-01, A COPY OF WHICH IS PLACED AT PAGE 93 TO 97 OF THE PAPER BOOK, THAT THE A.O. HAS EXCLUDED SUCH REIMBURSEMENT OF EXPENSE S FROM THE GROSS BUSINESS CENTRE RECEIPTS WHILE TREATING SUCH INCOME AS INCOME FROM HOUSE PROPERTY. WE, THEREFORE, FIND NO REASON AS TO WHY THE REIMBURSEMENT OF EXPENSES SHOULD NOT BE EXCLUDED FROM THE BUSINESS C ENTRE RECEIPTS WHICH HAS BEEN TREATED AS INCOME FROM HOUSE PROPERTY. WE, THEREFORE, DIRECT THE A.O. TO EXCLUDE AN AMOUNT OF ` 3,82,700/- FROM THE BUSINESS CENTRE RECEIPT WHILE CALCULATING THE BUSINESS CENTRE RECEI PT AS INCOME FROM HOUSE PROPERTY. THIS GROUND BY THE ASSESSEE IS ACCORDING LY ALLOWED. 12. GROUNDS OF APPEAL NO. 4 & 5 READ AS UNDER:- GROUND NO. 4 : THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT INCOME FROM SALE OF SHARES OF RS 11,900/- HAS BEEN ASSESSED BY ASSESSING OFFIC ER UNDER THE HEAD INCOME FROM BUSINESS AND THEREFORE HE SHOULD H AVE ALLOWED ALL THE EXPENSES INCURRED BY THE ASSESSEE A GAINST THIS BUSINESS. GROUND NO. 5: ALLOWANCE OF EXPENSES: THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND IN FACTS IN RESTRICTING THE DEDUCT ION OF EXPENSES TO THE EXTENT OF RS 5,67,476/- WHICH COMPRISES OF R S 1,10,192/- TOWARDS MUNICIPAL TAXES AND RS 4,57,284/- TOWARDS V ARIOUS OTHER EXPENSES OUT OF RS 37,89,597/-. THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED ALL THE REMAINING EXPENSES OF RS 32,22,121/- INCLUDING DEPRECIATION EITHER AGAINST BUSINESS INCOME OR AGAINST INCOME FR OM OTHER SOURCES. 13. FACTS OF THE CASE, IN BRIEF, ARE THAT THE A.O. WITH OUT MAKING ANY DISCUSSION IN THE BODY OF THE ASSESSMENT ORDER TAXE D THE AMOUNT OF ` 16 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 11,900/- BEING INCOME FROM SALE OF SHARES AS BUSINE SS INCOME. HE, HOWEVER, DID NOT ALLOW ANY EXPENSES CLAIMED IN THE P&L ACCOUNT ON THE GROUND THAT THESE EXPENSES DONT HAVE ANY NEXUS WIT H THE PROFIT OF `. 11,900/-. IN APPEAL, THE LD. CIT(A) GAVE PARTIAL R ELIEF OF EXPENSES AMOUNTING TO ` 4,57,284/- OUT OF THE TOTAL EXPENSES INCLUDING DEP RECIATION CLAIMED BY THE ASSESSEE AT ` 37,89,597/- BY HOLDING THAT THE ASSESSEE HAS NOT STOPPED ITS BUSINESS, THAT SOME EXPENSES ARE RE QUIRED TO MAINTAIN THE CORPORATE STATUS OF THE ASSESSEE AND THERE IS NO EV IDENCE BROUGHT ON RECORD BY THE A.O. THAT THESE EXPENSES ARE NOT INCURRED. 13.1 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T IRRESPECTIVE OF THE VOLUME OF BUSINESS OR INCOME EARNED BY THE ASSESSEE FROM SUCH BUSINESS ACTIVITY, THE FULL EXPENSE HAS TO BE ALLOWED AS DED UCTION. FURTHER DEPRECIATION ON THE BUSINESS PREMISES FROM WHERE TH E ASSESSEE IS CONDUCTING ITS BUSINESS ACTIVITY HAS ALSO TO BE ALL OWED. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE NOTHING HAS BEEN BROUGHT O N RECORD BY THE A.O. AS TO WHICH OF THE EXPENDITURE IS NOT FOR THE PURPO SE OF BUSINESS. FURTHER, IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT ONCE THE ASSET HAS ENTERED INTO THE BLOCK OF ASSET, THE AO C ANNOT DISALLOW THE DEPRECIATION. FOR THIS PROPOSITION, THE LD. COUNSE L FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS REPORTED IN 322 ITR 542, 38 SOT 208, 22 SOT 429, 21 SOT 122, 142 TAXMAN 316 AND 240 ITR 94. 14. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIE D ON THE ORDER OF THE LD. CIT(A). 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE INCOME OF 17 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. ` 11,900/- ARISING FROM SALE OF SHARES HAS BEEN TREA TED BY THE A.O. AS BUSINESS INCOME. THERE IS ALSO NO DISPUTE TO THE F ACT THAT VARIOUS EXPENSES INCURRED BY THE ASSESSEE AND DEBITED TO THE P&L ACC OUNT HAS NOT BEEN PROVED TO BE FALSE OR UNTRUE. IT IS ALSO A FACT TH AT THE LD. CIT(A) WHILE GIVING PART RELIEF TO THE ASSESSEE HAS HELD THAT SOME EXPE NDITURE IS REQUIRED FOR MAINTAINING THE CORPORATE STATUS OF THE ASSESSEE. WE FIND THE ASSESSEE WAS IN THE BUSINESS OF DEALING IN SHARES RIGHT FROM A.Y . 1995-96 AND THERE IS NO EVIDENCE IN THE POSSESSION OF THE A.O. THAT THE EXP ENSES HAVE NOT BEEN INCURRED. THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE PARTIA L RELIEF GIVEN BY THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. DR. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IRRESPECTIVE OF T HE VOLUME OF BUSINESS AND IRRESPECTIVE OF THE INCOME FROM SUCH BUSINESS, THE ENTIRE EXPENSES HAVE TO BE ALLOWED SINCE NOTHING HAS BEEN BROUGHT ON RECORD THAT THE EXPENDITURE HAS NOT BEEN INCURRED FOR THE PURPOSE OF BUSINESS. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E. HOWEVER, CONSIDERING THE FACT THAT BUSINESS CENTRE RECEIPT WHICH HAS BEE N TREATED AS INCOME FROM HOUSE PROPERTY BY THE LD. CIT(A) HAS BEEN UPH ELD BY US AND THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 24(1) AND CON SIDERING THE FACT THAT PART OF THE EXPENDITURE RELATING TO EARNING OF BUSI NESS CENTRE INCOME MIGHT HAVE BEEN INCLUDED IN THE EXPENSES DEBITED, THEREFO RE, IN OUR CONSIDERED OPINION, THE ENTIRE EXPENDITURE CANNOT BE ALLOWED A S DEDUCTION. SIMILARLY, SINCE THE ASSESSEE IS ONLY PARTIALLY UTILIZING THE PREMISES AT PAREL FOR CONDUCTING ITS BUSINESS AND ALSO GETTING RENTAL INC OME FROM THE SAID PREMISES, THEREFORE, IN OUR OPINION, FULL DEPRECIAT ION CANNOT BE ALLOWED ON THE PAREL PREMISES. FURTHER NO DEPRECIATION IS ALLO WABLE ON THE NEW PREMISES PURCHASED DURING THE YEAR I.E. PREMISES AT SEWRI. HOWEVER, THE ASSESSEE IN OUR OPINION, IS ENTITLED TO DEPRECIATIO N ON OTHER ASSETS. THIS VIEW OF OURS FINDS SUPPORT FROM THE DECISION OF THE HON'BLE HIMCHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. KIRTI RES ORTS (P) LTD. REPORTED IN 18 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 243 CTR 341 WHEREIN IT HAS BEEN HELD THAT ONCE THE ASSESSEE COMPANY IS IN EXISTENCE, IT IS ENTITLED TO DEPRECIATION THOUGH T IT HAS DISCONTINUED ITS BUSINESS. 15.1 CONSIDERING THE TOTALITY OF THE FACTS OF THE C ASE WE MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ALLOW THE FOLLO WING EXPENSES :- 1. DIRECTORS REMUNERATION 75% OF `. 1,75,000/- 2. STAFF PAYMENT 75% OF `. 1,65,097/- 3. ELECTRICITY CHARGES ( `. 4,22,157/- - `. 1,88,571/-) 75% OF `. 2,33,586/- 4. PAYMENT TO AUDITORS (AS HELD BY THE LD. CIT(A)) 100% OF `. 33,900/-) 5. RATES AND TAXES (TO BE ALLOWED U/S.23 AS HELD BY THE LD. CIT(A)) 6. OFFICE EXPENSES 75% OF `. 10,688 7. LEGAL & PROFESSIONAL FEES 75% OF `. 49,900/- 8. TELEPHONE & POSTAGE CHARGES ( `. 3,65,409 - `. 1,94,129) 75% OF `. 1,71,280/- 9. REPAIRS AND MAINTENANCE 50% OF `. 62,443/- 10. SUNDRY BALANCE WRITTEN OFF 75% OF `. 6,448/- 11. MISC. EXPENSES 75% OF `. 23,440/- OVER AND ABOVE THE ASSESSEE IS ENTITLED TO 50% OF T HE DEPRECIATION ALLOWABLE TO PROPERTY SITUATED AT PAREL AND 50% OF THE DEPRECIATION ALLOWABLE ON FURNITURE AND FIXTURES, AIR CONDITIONS , OFFICE EQUIPMENT AND COMPUTER SYSTEM ETC. THE AO SHALL COMPUTE THE DEDUC TION ALLOWABLE IN THE ABOVE LINES AND ALLOW THE SAME AS DEDUCTION FROM TH E BUSINESS INCOME. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY T HE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 19 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. ITA NO. 4214 /MUM/2009 ASSESSMENT YEARS 2000-01 16. THE GROUND OF APPEAL NO.1 BY THE ASSESSEE RELAT ES TO REOPENING OF ASSESSMENT BY THE A.O. AND CONFIRMED BY THE LD. CIT (A). 16.1 AFTER HEARING BOTH THE SIDES, WE FIND THE ABOV E GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.1 BY THE ASSESSEE IN ITA N O.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISE D BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWING THE SAME RATIO, THE GROUN DS OF APPEAL NO.1 BY THE ASSESSEE IN THE ABOVE APPEAL IS DISMISSED. 17. IN GROUNDS OF APPEAL NO.2 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE ORDER OF THE A.O. I N TREATING THE RECEIPT OF ` 63,63,000/- AS INCOME FORM HOUSE PROPERTY AS AGAI NST BUSINESS INCOME TREATED BY THE ASSESSEE. 17.1 AFTER HEARING BOTH THE PARTIES WE FIND THE GRO UND OF APPEAL NO.2 IN THE ABOVE APPEAL IS IDENTICAL TO THE GROUNDS OF APP EAL NO.2 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND OF APPEAL HAS BEEN DECIDED AGAINST THE ASSESSEE BY UPH OLDING THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. FOLLOWING THE SAME RATIO THE GROUND OF APPEAL NO.2 IN THE ABOVE APPEAL IS DISMISSED. 18. IN GROUNDS OF APPEAL NO. 3 AND 4 THE ASSESSEE H AS CHALLENGED THE ORDER OF THE LD. CIT(A) IN RESTRICTING THE DEDUCTIO N OF EXPENSES BY SUSTAINING AN AMOUNT OF ` 68,52,019/-. 18.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.5 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE WITH CERTAIN DIRECTIONS THEREIN. FOLLOWING THE SAME RATIO THE DIRECTION FOR THE IMPUGNED ASSESSMENT YEAR IS A S UNDER :- 20 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 1) DIRECTORS REMUNERATION 75% OF ` 1,80,000/- 2) PAYMENT TO STAFF 75% OF ` 2,79,611/- 3) ELECTRICITY CHARGES 75% OF 6,35,577/- 4) PAYMENT TO AUDITORS 100% OF 18,900/- 5) TELEPHONE AND POSTAGE 75% OF ` 5,80,963/- 6) MOTOR CAR EXPENSES 75% OF ` 20,666/- 7) MISCELLANEOUS EXPENSES 75% OF ` 54,869/- 8) LEGAL & PROFESSIONAL 75% OF ` 4,88,160/- 9) REPAIRS & MAINTENANCE 50% OF ` 2,40,741/- 10) LEASE RENTAL CHARGES 50% OF ` 58,000/- THE ASSESSEE IS ALSO ENTITLED TO DEPRECIATION ON PR EMISES AT PAREL AND OTHER ASSETS @ 50% OF THE ALLOWABLE DEPRECIATION IN LINE WITH OUR DIRECTION IN ITA NO. 4213/MUM/2009. WE HOLD AND DIRECT ACCORDINGLY . THE GROUNDS BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. ITA NO. 4215 /MUM/2009 ASSESSMENT YEARS 2002-03 19. THE GROUND OF APPEAL NO.1 IN THIS APPEAL RELATE S TO REOPENING OF ASSESSMENT BY THE A.O. AND CONFIRMED BY THE LD. CIT (A). 19.1 AFTER HEARING BOTH THE SIDES, WE FIND THE ABOV E GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.1 BY THE ASSESSEE IN ITA N O.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISE D BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWING THE SAME RATIO, THE GROUN DS OF APPEAL NO.1 BY THE ASSESSEE IN THE ABOVE APPEAL IS DISMISSED. 20. IN GROUNDS OF APPEAL NO.2 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE LD. CIT(A) IN TREATING THE RECEIPT OF ` 56 ,31,200/- AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME TREAT ED BY THE ASSESSEE. 20.1 AFTER HEARING BOTH THE PARTIES WE FIND THE GRO UND OF APPEAL NO.2 IN THE ABOVE APPEAL IS IDENTICAL TO THE GROUNDS OF APP EAL NO.2 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND 21 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. HAS BEEN DECIDED AGAINST THE ASSESSEE BY UPHOLDING THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. FOLLOWING THE SAME RATIO THE GROUND OF APPEAL NO.2 IN THE ABOVE APPEAL IS DISMISSED. 21. IN GROUNDS OF APPEAL NO. 3 AND 4 THE ASSESSEE H AS CHALLENGED THE ORDER OF THE LD. CIT(A) IN RESTRICTING THE DEDUCTIO N OF EXPENSES BY SUSTAINING THE AMOUNT OF ` 57,68,532/- . 21.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.5 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE WITH CERTAIN DIRECTIONS THEREIN. FOLLOWING THE SAME RATIO THE DIRECTION FOR THE IMPUGNED ASSESSMENT YEAR IS A S UNDER :- 1) DIRECTORS REMUNERATION 75% OF ` 1,80,000/- 2) PAYMENT TO STAFF 75% OF 3,74,693/- 3) ELECTRICITY CHARGES 75% OF 6,96,744/- 4) PAYMENT TO AUDITORS 100% OF 18,900/- 5) TELEPHONE AND POSTAGE 75% OF ` 5,15,998/- 6) MOTOR CAR EXPENSES 75% OF ` 1,79,055/- 7) MISCELLANEOUS EXPENSES 75% OF ` 95,958/- 8) LEGAL & PROFESSIONAL 75% OF ` 3,12,504/- 9) REPAIRS & MAINTENANCE 50% OF ` 5,41,658/- 10) LEASE RENTAL CHARGES 50% OF ` 1,16000/- THE ASSESSEE IS FURTHER ENTITLED TO DEPRECIATION @ 50% OF THE ALLOWABLE DEPRECIATION ON THE PAREL PREMISES AND OTHER ASSETS AS PER OUR DIRECTIONS IN ITA NO. 4213/MUM/2008. WE HOLD AND DIRECT ACCORDIN GLY. THE ABOVE GROUNDS BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLO WED. ITA NO. 4216 & 4217/MUM/2009 ASSESSMENT YEARS 2004-05 & 2005-06 22. THE GROUND OF APPEAL NO.1 IN THE ABOVE TWO APPEALS RELATES TO TREATMENT OF RECEIPT FROM BUSINESS CENTRE AS INCOM E FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME TREATED BY THE ASSESSE E. 22 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 23. AFTER HEARING BOTH THE SIDES WE FIND THE FIRST GROUND BY THE ASSESSEE IN THE ABOVE TWO APPEALS IS IDENTICAL TO THE GROUND S OF APPEAL NO.2 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWIN G THE SAME RATIO THE GROUNDS OF APPEAL NO.1 IN THE ABOVE APPEALS IS DISM ISSED. 24. THE GROUNDS OF APPEAL NO.2 BY THE ASSESSEE RELA TES TO THE REIMBURSEMENT OF EXPENSES OF ` 8,73,586/- FOR THE ASSESSMENT YEAR 2004- 05 AND ` 9,78,944/- FOR THE ASSESSMENT YEAR 2005-06 TO BE EX CLUDED FROM INCOME FROM HOUSE PROPERTY AS COMPUTED BY THE AO. 25. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.3 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH CE RTAIN DIRECTIONS. FOLLOWING THE SAME RATIO THE GROUNDS OF APPEAL NO.2 BY THE ASSESSEE IN THE ABOVE TWO APPEALS ARE ALLOWED. 26. THE GROUND OF APPEAL NO.3 IN ITA NO.4216/MUM/20 09 RELATES TO DISALLOWANCES OF EXPENSES OF ` 47,43,049/- AND IN ITA NO.4217/MUM/2009 RELATES TO DISALLOWANCE OF EXPENSES OF ` 44,21,948/-. 26.1 AFTER HEARING BOTH THE SIDES WE FIND OUT OF TH E VARIOUS EXPENSES CLAIMED BY THE ASSESSEE, THE LD. CIT(A) SUSTAINED A N AMOUNT OF ` 47,43,049/- FOR THE ASSESSMENT YEAR 2004-05 AND ` 44,21,948/- FOR THE ASSESSMENT YEAR 2005-06. ADMITTEDLY THERE IS NO BUS INESS INCOME DECLARED BY THE ASSESSEE DURING THE YEAR. THEREFORE, THE VAR IOUS EXPENSES CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED IN FULL. FURTHER OUR DIRECTIONS IN ITA NO.4213/MUM/2009 TO 4315/MUM/2009 ON THIS ISSUE ALS O WILL NOT BE APPLICABLE TO THE FACTS FOR ITA NO.4216/MUM/2009 AN D 4217/MUM/2009. HOWEVER, IN THE LIGHT OF OUR OBSERVATION IN ITA NO. 4213/MUM/2010 FOR A.Y. 1999-2000, THE ASSESSEE IS ENTITLED TO DEPRECI ATION. WE, THEREFORE, 23 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. MODIFY THE ORDER OF THE LD. CIT(A) TO THIS EXTENT A ND DIRECT THE A.O. TO ALLOW 50% OF THE ALLOWABLE DEPRECIATION ONLY ON PAREL PRE MISES AND OTHER ASSETS APPEARING IN THE BALANCE SHEET OVER AND ABOVE THE E XPENSES ALLOWED BY THE LD. CIT(A). THE GROUNDS OF APPEAL BY THE ASSESSEE FOR THE ABOVE TWO YEARS ARE ACCORDINGLY ALLOWED PARTLY. ITA NO : 4391/MUM/2009 27. IN GROUNDS OF APPEAL NO.1 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE A.O. IN TREATING THE RECEIPT FROM BUSINESS CENTRE INCOME AS INCOME FROM HOUSE P ROPERTY AS AGAINST BUSINESS INCOME TREATED BY THE ASSESSEE. 27.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND BY THE ASSESSEE IS IDENTICAL TO THE GROUNDS OF APPEAL NO.2 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWIN G THE SAME RATIO THIS GROUND BY THE ASSESSEE IS DISMISSED. 28. THE GROUNDS OF APPEAL NO.2 RELATES TO THE REIMB URSEMENT OF EXPENSES OF `. 50,000/- AS INCOME UNDER THE HEAD INCOME FROM HOUS E PROPERTY. 28.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.3 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH CE RTAIN DIRECTIONS. FOLLOWING THE SAME RATIO THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED. 29. GROUND OF APPEAL NO. 3 BY THE ASSESSEE READS AS UNDER:- THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF ASSESS ING OFFICER TO TAX INTEREST INCOME OF ` 32,73,829/- UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME UNDER THE HEA D INCOME FROM BUSINESS. 24 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. HE OUGHT TO HAVE TREATED THE INTEREST INCOME AS BU SINESS INCOME. 29.1 FACTS OF THE CASE IN BRIEF ARE THAT THE A.O. D URING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS RECEIVED INTEREST INCOME OF ` 32,73,829/- AND HAS TREATED THE SAME AS BUSINESS I NCOME. ON BEING QUESTIONED BY THE A.O., IT WAS SUBMITTED BY T HE ASSESSEE THAT IT HAS STARTED THE BUSINESS OF FINANCING ACTIVITY BY TAKIN G LOANS AND ADVANCING LOANS TO OTHER PARTIES ON INTEREST. ACCORDINGLY IT WAS REQUESTED THAT THE INTEREST INCOME FROM FINANCING ACTIVITY HAS TO BE T AXED UNDER THE HEAD INCOME FROM BUSINESS. HOWEVER, THE A.O. WAS NOT CO NVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND TREATED THE S AME AS INCOME FROM OTHER SOURCES FOR THE FOLLOWING REASONS:- I) THE :NEXUS OF INTEREST INCOME WITH THE EXPENSES CLAIMED HAS NOT BEEN PROVED. II) NO EVIDENCE HAS BEEN FILED TO SUGGEST THAT THE BORROWING & LENDING IS THE ASSESSEES BUSINESS EXCEPT FOR SAYIN G THAT THE MEMORANDUM OF ASSOCIATION AUTHORIZES SUCH ACTIVITY. III) DURING THE YEAR, BORROWING AND LENDING ACTIVIT Y INVOLVES ONLY ONE LENDER AND THE BORROWERS. IV) WITHOUT PREJUDICE, THE SO CALLED BUSINESS ACTIV ITY HAS STARTED ON 168-2005 (THE DATE OF OBTAINING FIRST LOAN FROM CAL YON BANK). ANY EXPENDITURE CLAIMED PRIOR TO 16-8-2005 IS TO BE DIS ALLOWED SINCE THEY ARE INCURRED PRIOR TO SETTING UP OF THE BUSINESS. V) IN THE YEARS UPTO AY 2005-06, ASSESSEE USED TO C LAIM ALL THESE EXPENSES AGAINST INCOME FROM BUSINESS CENTRE. FOR A LL THESE YEARS THE INCOME FROM BUSINESS CENTRE WAS TREATED AS BUSINESS INCOME IN THE RETURN FILED. HOWEVER, THIS INCOME IS ASSESSED UNDER THE H EAD INCOME FROM HOUSE PROPERTY IN THE EARLIER YEARS AND THE HBLE I TAT HAS CONFIRMED THE HEAD OF INCOME IN AY 2003-04. ALL THESE EXPENSES WE RE DISALLOWED IN THE EARLIER YEARS. TO SOMEHOW CLAIM THESE EXPENSES, THE ASSESSEE HAS ADOPTED THE MODUS OPERANDI OF PRESENTING INCOME FRO M OTHER SOURCES AS BUSINESS INCOME. 25 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. VI) AS PER CLAUSE 8(A) OF FORM 3CD, THE NATURE OF B USINESS OF THE ASSESSEE IS STATED TO BE PROVIDING BUSINESS CENTRE SERVICES. THUS, THE CLAIM OF THE ASSESSEE THAT IT HAS STARTED BUSINESS OF BORROWING AND LENDING MONEY IS CONTRARY TO THE DOCUMENTS SUBMITTED BY THE ASSESSEE HIMSELF. VII) THERE IS NO MENTION OF STARTING OF THE NEW BUSINESS EITHER IN THE DIRECTORS REPORT OR IN THE NOTES TO THE ACCOUNT. FURTHER, THE INTEREST INCOME IS CLASSIFIED AS OTHER INCOME (SCHEDULE L) AND NOT AS INCOME FROM SA LES AND OPERATIONS (SCHEDULE K). 29.2 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT IT HAD RESTARTED THE BUSINESS OF FINANCING AS PER THE RESOLUTION PASSED BY THE BOARD IN THEIR MEETING HELD ON 14.6.2005. THE COMPANY WAS AUTHORI ZED TO DO THE BUSINESS OF FINANCING ACTIVITIES I.E LOANS TAKEN AN D GIVEN AS PER MAIN OBJECT NO. 3 OF THE MEMORANDUM OF ASSOCIATION. THE COPY O F THE RELEVANT PAGE OF THE CLAUSE WAS FILED TO SUPPORT ITS CLAIM. IT WAS SUBMITTED THAT THE ASSESSEE BORROWED MONEY FROM CAYLON BANK WHICH HAS BEEN UTILIZED TO BE ADVANCED TO THREE PARTIES AT % TO 1% MORE THAN IN TEREST PAYABLE TO THE BANK. IT WAS SUBMITTED THAT THERE WAS A DIRECT NEX US OF EXPENSES CLAIMED AGAINST THE INTEREST INCOME. IT WAS FURTHER EXPLAIN ED THAT THE ASSESSEE HAD INCURRED VARIOUS EXPENSES SUCH AS SALARY TO STAFF, DIRECTORS REMUNERATION, LEGAL & PROFESSIONAL CHARGES ETC. FOR THE PURPOSE OF BUSINESS AND SHOWN IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE COMPANY HAD CARRIED THE ACTIVITY OF LENDING AND BORROWING MONEY IN A SYSTEMATIC AND ORGANIZED MANNER. IT WAS IMMATERIAL WHETHER THE MONEY WAS BORROWED FROM ONE PARTY AND THE SAME WAS GIVEN TO ONLY THREE PARTIES. IT WAS SUBMI TTED THAT THE ASSESSEE HAD BORROWED ADEQUATE MONEY FROM THE BANK WHICH IT CAN EMPLOY FOR THE PURPOSE OF LOANS TO BE GIVEN. IT WAS ALSO SUBMITTE D THAT THE ITAT HAS NO OCCASION TO CONSIDER THE ISSUE OF ALLOWING EXPENSES AGAINST FINANCE BUSINESS AS THERE WAS NO SUCH GROUND BEFORE THE ITA T IN THE EARLIER YEARS. RELYING ON A COUPLE OF DECISIONS, IT WAS SUBMITTED THAT ANY ACTIVITY WHICH IS DONE IN A SYSTEMATIC AND ORGANIZED MANNER AND CONTI NUOUSLY WITH A VIEW TO EARN PROFIT HAS TO BE CONSIDERED AS BUSINESS. 26 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 29.3 WITHOUT PREJUDICE TO THE ABOVE CONTENTION, IT WAS ALSO SUBMITTED THAT THE INTEREST EXPENDITURE OF ` 31,52,636/- INCURRED BY THE ASSESSEE WAS INEXTRICABLY RELATED TO THE EARNING OF THE INTEREST INCOME. SINCE THE INTEREST INCOME HAD BEEN TAXED UNDER THE HEAD INCOME FROM O THER SOURCES, THE INTEREST EXPENDITURE WAS ALLOWABLE AS A DEDUCTION U /S 57(III) OF THE I.T. ACT. A COPY OF THE LEDGER ACCOUNT OF THE BANK AND THE CO PIES OF LEDGER ACCOUNTS OF LOANS GIVEN TO VARIOUS PARTIES WERE FURNISHED TO SUPPORT THE CLAIM OF DIRECT NEXUS OF THE LOAN OBTAINED FROM THE BANK AND LOAN GIVEN TO THE PARTIES. 29.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E, THE LD. CIT(A) HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLI SH THAT THE INCOME FROM LOANS GIVEN AND LOANS TAKEN WAS TAXABLE UNDER THE H EAD INCOME FROM BUSINESS. ACCORDING TO HIM, UNDER THE PROVISIONS O F SECTION 4 OF THE I.T. ACT 1961 THE INTEREST INCOME WAS VERY MUCH REQUIRED TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE, HE UPH ELD THE ACTION OF THE A.O. IN TREATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. HOWEVER, HE HELD THAT THERE IS A DIRECT NEXUS BETWE EN MONEY BORROWED AND MONEY ADVANCED ON INTEREST. THEREFORE, HE DIRECTED THE A.O. TO ALLOW THE INTEREST EXPENDITURE OF ` 31,52.636/- INCURRED BY THE ASSESSEE AS A DEDUCTION. AGGRIEVED WITH SUCH ORDER OF THE LD. CI T(A), THE ASSESSEE IS IN APPEAL BEFORE US. 29.5 THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE COPY OF THE RESOLUTION OF THE BOARD OF DIRECTORS HELD ON 14.6.2005 (A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NO. 27) SUBMITTED THAT THE COMPANY STARTED THE BUSINESS OF FINANCING ACTIVITY BY PASSING THE NECESSARY BOAR D RESOLUTION. REFERRING TO PAGE 15 OF THE PAPER BOOK, HE SUBMITTED THAT THE COMPANY HAS OBTAINED 27 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. LOAN OF ` 8,24,00,000/- FROM CALYON BANK FOR THE PURPOSE OF ITS FINANCING ACTIVITY. REFERRING TO PAGE 18 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE UNSECURED LOANS AND ADVANCES GIVEN TO VARIOUS PARTIES AMOUNTING TO ` 81717400/-. REFERRING TO PAGE 20 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE INTEREST INC OME OF ` 32,73,829/. REFERRING TO PAGE 56 & 57 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LEDGER ACCOUNT OF CALYON BANK AND LEDG ER ACCOUNT OF M/S ALANKRITA FINANCE & INVESTMENTS PRIVATE LIMITED RES PECTIVELY AND TRIED TO EXPLAIN THE NEXUS OF LOAN OBTAINED AND LOAN ADVANCE D. HE SUBMITTED THAT IN THE SUBSEQUENT YEAR, SUCH INTEREST INCOME HAD GO NE UP TO ` 65052840/. HE SUBMITTED THAT SINCE THERE ARE REGULAR TRANSACTI ONS IN A SYSTEMATIC AND ORGANIZED MANNER AS PER THE BOARD RESOLUTION AND AS PER ONE OF THE MAIN OBJECTS CLAUSE OF MEMORANDUM OF ASSOCIATION, THEREF ORE, SUCH INCOME HAS TO BE TREATED AS BUSINESS INCOME. HE SUBMITTED T HAT THERE IS NO SUCH STANDARD FORMULA TO EXPLAIN AS TO HOW THE INCOME HA S TO BE TREATED AS BUSINESS INCOME. HOWEVER, ALTHOUGH THE INCOME IN T HE SUBSEQUENT YEAR HAS GONE UP, THE LD. CIT(A) IN HIS ORDER VIDE PARA NO. 5.9 HAS NOT GIVEN ANY REASON AS TO HOW SUCH INTEREST INCOME SHOULD NOT BE TREATED AS INCOME FROM BUSINESS. ACCORDINGLY HE SUBMITTED THAT INTER EST INCOME HAS TO BE TREATED AS BUSINESS INCOME. 29.6 THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDER OF THE LD. CIT(A). 29.7 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK WE FIND ONE OF THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED ON ITS INCORPORATION IS TO FINANCE IN DUSTRIAL ENTERPRISES (PAPER BOOK PAGE NO. 28 & 29). WE FIND FROM PAGE 2 7 OF THE PAPER BOOK 28 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. THAT THE BOARD OF DIRECTORS IN THEIR MEETING HELD O N 14THE JUNE, 2005 HAD PASSED THE FOLLOWING RESOLUTION:- CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF SAIDARSHAN BUSINESS CENTRES PRIVATE LIMITED HELD ON 14TH JUNE, 2005. THE CHAIRMAN INFORMED THE BOARD THAT COMPANY BORROW S FUNDS FROM BANKS, FINANCIAL INSTITUTIONS AND OTHER BODY CORPORATE IN ORDER TO M EET ITS FINANCIAL REQUIREMENTS TO RESTART THE BUSINESS OF FINANCE ACTIVITIES. THE DIRECTORS P RESENT DISCUSSED THE SUBJECT IN DETAILS AND PASSED FOLLOWING RESOLUTION UNANIMOUSLY. RESOLVED THAT CONSENT OF THE BOARD BE AND IS HEREB Y ACCORDED TO THE COMPANY TO BORROW MONEY FROM BANKS, FINANCIAL INSTITUTIONS, BO DY CORPORATE ETC. IN ORDER TO MEET ITS FINANCIAL REQUIREMENTS AND TO LEND OTHERS AS MAY BE DEEMED FIT AND VIABLE BY THE BOARD OF DIRECTORS OF THE COMPANY. RESOLVED FURTHER THAT SMT INDU A. MERCHANT, SHRI SU DHIR A. MERCHANT AND SHRI VIREN A. MERCHANT THREE OF THE DIRECTORS OF THE COMPANY BE A ND ARE HEREBY AUTHORIZED TO TAKE NECESSARY STEPS TO GIVE EFFECT TO THE ABOVE RESOLUT ION 29.8 WE FIND THE INTEREST INCOME OF ` 32.74 LACS DURING THE YEAR HAS GONE UP TO ` 6,50,52,840/- IN THE SUBSEQUENT YEAR. WE THEREFORE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IN A SYSTEMATIC AND ORGANIZED MANNER HAD STARTED THE BUS INESS OF FINANCING ACTIVITY WHICH IS IN LINE WITH ONE OF THE MAIN OBJE CTS OF THE MEMORANDUM OF ASSOCIATION AND AS PER THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS. THEREFORE THE INCOME FROM FINANCING ACTIVITY, IN OU R OPINION, HAS TO BE TREATED AS BUSINESS INCOME. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 30. GROUND OF APPEAL NO. 4 BY THE ASSESSEE READS AS UNDER:- ALLOWANCE OF EXPENSES: THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND IN FACTS IN RESTRICTING THE DEDUCT ION OF EXPENSES TO THE EXTENT OF ` 10,96,364/- WHICH COMPRISES OF ` 3,87,432/- TOWARDS MUNICIPAL TAXES AND ` 7,08,932/- TOWARDS VARIOUS OTHER EXPENSES OUT OF ` 45,41,436/-. THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED ALL THE REMAINING 29 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. EXPENSES OF ` 34,45,072/- INCLUDING DEPRECIATION EITHER AGAINST BUSINESS INCOME OR AGAINST INCOME FROM OTHER SOURCE S. 30.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROU ND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.5 IN ITA NO.4213/MUM/2009. WE FIND OUT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE, THE LD. C IT(A) HAS GIVEN PART RELIEF, THE DETAILS OF WHICH ARE AS UNDER:- SL NO. CLAIMED ALLOWED AMOUNT ( ` ) 1 DIRECTORS REMUNERATION 3,00,000 50% 1,50,000 2 PAYMENT TO STAFF 4,12,515 50% 2,06,257 3 PAYMENT TO AUDITORS 19,642 100% 19,642 4 INSURANCE CHARGES 8,678 50% 4,339 5 TELEPHONE & POST CHARGES 34,856 30% 10,457 6 MOTOR CAR EXPENSES 4,80,674 50% 2,40,337 7 MISCELLANEOUS EXPENSES 1,55,801 50% 77,900 TOTAL 7,08,932 30.2 SINCE WE HAVE HELD THAT THE FINANCING ACTIVITY OF THE ASSESSEE IS TO BE TREATED AS BUSINESS INCOME THEREFORE IN LINE WITH O UR OBSERVATIONS IN GROUND NO. 5 IN ITA NO. 4213/MUM/2009, WE DIRECT TH E A.O. TO ALLOW THE FOLLOWING EXPENDITURE: 1) DIRECTORS REMUNERATION 75% OF ` 300000/- 2) PAYMENT TO STAFF 75% OF ` 412515/- 3) PAYMENT TO AUDITORS 100% OF ` 19642/- 4) INSURANCE CHARGES 75% OF ` 8678/- 5) TELEPHONE AND POSTAGE 75% OF ` 34856/- 6) MOTOR CAR EXPENSES 75% OF ` 480674/- 7) MISCELLANEOUS EXPENSES 75% OF ` 155801/- 8) LEGAL & PROFESSIONAL 75% OF ` 390793/- 9) REPAIRS & MAINTENANCE 50% OF ` 699864/- 10) RATES AND TAXES (TO BE ALLOWED U/S 23 AS DIREC TED BY THE CIT(A) THE ASSESSEE IS ALSO ENTITLED TO DEPRECIATION @ 50% OF THE ALLOWABLE DEPRECIATION ONLY ON PAREL PREMISES AND OTHER ASSET S AS PER OUR OBSERVATIONS IN ITA NO. 4213/MUM/2009. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 30 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 31. GROUND OF APPEAL NO, 5 BY THE ASSESSEE READS AS UNDER:- THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN NOT ALLOWING CARRY FORWARD OF L ONG TERM CAPITAL LOSS ON SALE OF UNQUOTED SHARES OF ` 10,25,258/. 31.1 AFTER HEARING BOTH THE SIDES WE FIND THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER ABOUT THE CARRY FORWARD OF LONG TE RM CAPITAL LOSS ON SALE OF UNQUOTED SHARES. IN APPEAL, THE LD. CIT(A) REJE CTED THE CLAIM ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH ANY EVID ENCE REGARDING THE BREAK UP VALUE OF UNQUOTED SHARES TO SUBSTANTIATE THEIR C OST OF ACQUISITION. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTERESTS OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ISSUE BAC K TO THE FILE OF THE A.O. WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO TH E ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION REGA RDING THE COST OF ACQUISITION. THE A.O. SHALL DECIDE THE ISSUE AFRES H IN ACCORDANCE WITH LAW. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 5070/MUM/2009 (BY REVENUE FOR A.Y. 2006-07) 32. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN LAW IN ALLOWING EXPENSES UNDER VARIOUS HEADS WHICH ARE NOT ALLOWABLE UNDER SECTION 24 AGAINST INCOME FROM HOUSE PROPERTY. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN LAW IN ALLOWING EXPENSES AMOUNTING TO RS.7,08,932/- UNDER VARIOUS HEADS WHICH ARE DISPROPORTIONATE AND WHAT CANNOT BE ATTRIBUTED TO E ARN THE INCOME ASSESSED UNDER INCOME FROM HOUSE PROPERTY. `3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW INTEREST EXPENDITURE IN CURRED FOR EARNING SUCH INCOME RELYING ON THE FACTS AND EVIDENCE SUBMITTED DURING THE APPELLA TE PROCEEDINGS WHICH WERE NOT SUBMITTED BEFORE THE A.O. DURING ASSESSMENT PROCEED INGS WHICH IS IN VIOLATION TO RULE 46A. 31 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW EXPENDITURE WHICH WAS C LAIMED AS BUSINESS EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE CIT(A) HIMSELF HAS H ELD THAT BUSINESS CENTRE RECEIPT IS AN INCOME FROM HOUSE PROPERTY AS HELD BY THE A.O. 5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE A.O. TO ADJUST THE INTEREST EXPENSES AGAINST INTEREST RECEIVED WHEN THE ASSESSEE COULD NOT PROVE THE NEXUS OF EXPENSES AGAI NST INTEREST INCOME. 32.1 AFTER HEARING BOTH THE SIDES WE FIND THE REVEN UE HAS PREFERRED THIS APPEAL AGAINST THE PART RELIEF GIVEN BY THE LD. CIT (A) ON ACCOUNT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE WHICH WAS DISALLOW ED BY THE A.O. WE HAVE ALREADY DECIDED THE ISSUE IN ASSESSEES APPEAL AND HAS GIVEN CERTAIN FURTHER RELIEF TO THE ASSESSEE HOLDING THE FINANCIN G ACTIVITY OF THE ASSESSEE AS BUSINESS. FURTHER UNDER IDENTICAL FACTS AND CIR CUMSTANCES OF THE CASE, THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2000-0 1, 2002-03, 2004-05 AND 2005-06 HAD DISMISSED THE APPEAL FILED BY THE R EVENUE AGAINST THE PART RELIEF GIVEN TO THE ASSESSEE BY THE CIT(A). U NDER THESE CIRCUMSTANCES, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. S O FAR AS ONE OF THE GROUNDS BY THE REVENUE WHICH RELATES TO VIOLATION O F RULE 46-A, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE DETAILS FILED BEFORE THE A.O. AND SUBMITTED THAT THE SAME IS NOT AN ADDITIONAL EVIDENCE AND THE LD. D.R. COULD NOT CONTROVERT. THEREFORE, T HE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO. 5062/MUM/2010 (BY ASSESSEE FOR A.Y. 2007-08 ) 33. IN GROUND OF APPEAL NO. 1 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE LD. CIT(A) IN TREATING THE RECEIPT FROM BUSINES S CENTRE OF ` 36,73,200/- AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINES S INCOME TREATED BY THE ASSESSEE. 32 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. 34. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.2 IN ITA NO.4213/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND AGAI NST THE ASSESSEE. FOLLOWING THE SAME RATIO THIS GROUND RAISED BY THE ASSESSEE IS DISMISSED. 35. GROUND NO. 2 RAISED BY THE ASSESSEE READS AS UN DER:- THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN TREATING THE INTEREST INCOME OF ` 6,50,52,829/- UNDER THE HEAD INCOME FROM OTHER SOU RCES INSTEAD OF INCOME FROM BUSINESS. HE OUGHT TO HAV E TREATED THE INTEREST INCOME AS BUSINESS INCOME AND INTEREST EXP ENSES AS BUSINESS EXPENSES. 35.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.3 IN ITA NO.4391/MUM/2009. WE HAVE ALREADY DECIDED THE ISSUE AND HELD THAT THE INTEREST FROM F INANCING ACTIVITY OF THE ASSESSEES BUSINESS INCOME AS AGAINST INCOME FROM O THER SOURCES TREATED BY THE A.O. AND UPHELD BY THE LD. CIT(A). FOLLOWING THE SAME RATIO THE INTEREST INCOME OF ` 6,50,52,829/- IS HELD TO BE INCOME FROM BUSINESS. 36. GROUND NO. 3 RAISED BY THE ASSESSEE READS AS UN DER:- ALLOWANCE OF EXPENSES: THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN RESTRICTING THE DE DUCTION OF EXPENSES TO THE EXTENT OF ` 7,35,029/- ONLY. HE OUGHT TO HAVE ALLOWED ALL THE REMAINING EXPENSES INCLUDIN G DEPRECIATION AGAINST BUSINESS INCOME. 36.1 AFTER HEARING BOTH THE SIDES WE FIND OUT OF THE VAR IOUS EXPENSES CLAIMED BY THE ASSESSEE, THE LD. CIT(A) ALLOWED PAR T RELIEF WHICH IS AS UNDER:- 33 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. SL NO EXPENSE CLAIMED IN PROFIT & LOSS A/C FOR THE YEAR ENDED 31.03.2007 TO BE ALLOWED AS PER CIT(A) ORDER IN A.Y. 06-07 (TO MAINTAIN CONSISTENCY) PERCENTAGE AMOUNT ( ` ) 1 DIRECTORS REMUNERATION 300,000 50% 150,000 2 PAYMENT TO STAFF 439,120 50% 219,560 3 PAYMENT TO AUDITORS 18,000 100% 18,000 4 INSURANCE CHARGES 13,324 50% 6,662 5 MOTOR CAR EXPENSES 456,024 50% 228,012 6 MISCELLANEOUS EXPENSES 225,589 50% 112,795 735,029 36.2 W E FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUNDS OF APPEAL NO.4 IN ITA NO.4391/MUM/2009. WE HAVE ALREADY DECIDED TH E ISSUE AND HAVE GIVEN CERTAIN RELIEF TO THE ASSESSEE BY MODIFYING T HE ORDER OF THE LD. CIT(A). FOLLOWING THE SAME RATIO, WE MODIFY THE ORDER OF TH E LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE EXPENSES WHICH ARE AS UNDER:- 1) DIRECTORS REMUNERATION 75% OF ` 300000/- 2) PAYMENT TO STAFF 75% OF ` 439120/- 3) PAYMENT TO AUDITORS 100% OF ` 18,000/- 4) INSURANCE CHARGES 75% OF ` 13324/- 5) MOTOR CAR EXPENSES 75% OF ` 456024/- 6) MISCELLANEOUS EXPENSES 75% OF ` 225589/- 8) LEGAL & PROFESSIONAL 75% OF ` 407888/- 9) REPAIRS & MAINTENANCE 50% OF ` 555226/- 10) RATES AND TAXES (TO BE ALLOWED U/S 23 AS DIREC TED BY THE CIT(A) THE ASSESSEE IS ALSO ENTITLED TO DEPRECIATION @ 50% OF THE ALLOWABLE DEPRECIATION ONLY ON PAREL PREMISES AND OTHER ASSET S AS PER OUR OBSERVATIONS IN ITA NO. 4213/MUM/2009. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 37. GROUND NO. 4 RAISED BY THE ASSESSEE READS AS UN DER:- 34 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. INTEREST ON VEHICLE LOAN: THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND IN FACTS IN RESTRICTING THE DEDUCT ION TO ` 13,304/- BEING 50% OF INTEREST ON VEHICLE LOAN. HE OUGHT TO HAVE ALLOWED THE ENTIRE INTEREST ON VEHICLE LOAN. 37.1 AFTER HEARING BOTH THE SIDES WE FIND THE LD. C IT(A) HAS ALLOWED 50% DEDUCTION ON ACCOUNT OF INTEREST ON VEHICLE LOAN. SINCE WE HAVE HELD THAT THE ASSESSEE IS IN THE BUSINESS OF FINANCING AND SI NCE THE ENTIRE AMOUNT CANNOT BE ALLOWED AS DEDUCTION SINCE PART OF THE EX PENDITURE IS HELD TO BE RELATABLE TO EARNING THE BUSINESS CENTRE INCOME, TH EREFORE, WE DIRECT THE A.O. TO ALLOW THE DEDUCTION @ 75% OF THE INTEREST E XPENDITURE. THIS GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 38. IN THE RESULT, ITA NO. 5070/MUM2009 FILED BY TH E REVENUE IS DISMISSED AND ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 31.10.2011. SD/- SD/- (V. DURGA RAO) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31.10.2010. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT CONCERNED, MUMBAI 5. THE DR BENCH, E 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 35 ITA 4213-17,4391,5062,5070/ M/2009 M/S SAIDARSHAN BUSINESS CENTRES PVT. LTD. DATE INITIALS 1 DRAFT DICTATED ON 29.9.2011,4.10.11,25.10.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 3.10.2011,5.10.11,25.10.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER