M/s. BHIMASHANKAR PROPERTIES DEVELOPMENT P. LTD., MUMBAI V. ITO Wd. - 3(1)(2), MUMBAI

ITA 4308/MUM/2006

• Counselvise Citation: 430819914 RSA 2006
• Duration Of Justice: 8 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 25-11-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 21-07-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NITESH JOSHI
• Assessee Lawyers: SACCHIDAND DUBEY
• Keywords: Business income; Business expenditure; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 147; 148; 56; 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI , BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 4305/MUM/2006 ( / ASSESSMENT YEAR: 1998-99) ITA NO. : 4306/MUM/2006 ( / ASSESSMENT YEAR: 1999-2000) ITA NO. : 4307/MUM/2006 ( / ASSESSMENT YEAR: 2000-2001) ITA NO. : 4308/MUM/2006 ( / ASSESSMENT YEAR: 2001-2002) / ITA NO. : 3252/MUM/2009 ( / ASSESSMENT YEAR: 2003-2004) BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD., C/O M/S KAPADIA ASSOCIATES, 910 RAHEJA CHAMBERS, 213, NARIMAN POINT, MUMBAI -400 021 .: PAN: AAACB 2308 R VS INCOME TAX OFFICER, WARD 3(1)(2), ROOM NO. 666/668A, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : ! '#$# # SHRI SACCHIDAND DUBEY RESPONDENT BY : ! $%& '(& SHRI NITESH JOSHI /DATE OF HEARING : 18-11-2014 / DATE OF PRONOUNCEMENT : 26-12-2014 ORDER , , , , : :: : PER VIVEK VARMA, JM : FIVE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT(A) XXVII, MUMBAI: ASST. YEAR CIT(A) DT. OF CIT(A) ORDER 1998-1999 XVII 16.03.2006 1999-2000 XVII 16.03.2006 2000-2001 XVII 16.03.2006 2001-2002 XVII 20.03.2006 2002-2003 XVII 20.02.2009 2. IN THE ASSESSMENT YEARS 1998-99 TO 2001-02, THE FIR ST GROUND OF APPEAL BEFORE US READS AS UNDER: BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW IN UPHOLDING THE ACTION OF THE LEARNED INCOME TAX OFFICER (HEREIN AFTER REFERRED TO AS 'ASSESSING OFFICER') IN REOPENING THE ASSESSMENT UNDER SECTION 148. THE APPELLANT SUBMITS THAT THE ORDER PASSED UNDER SECTION 143(3) R. W. S. 147 IS ILLEGAL, NULL AND VOID AND BAD IN LAW AS THE ASSESSMENT FOR EARLIER YEARS ON SIMILAR ISSUES WERE COMPLETED AFTER THOROUGH SCRUTINY AND ACCEPTING THE STAND OF THE APPELLANT AND THERE HAVE BEEN NO CHANGES IN FACTS REQUIRING RECONSIDERATION AND FURTHER AS THE REASONS FOR REOPENING HAVE NOT BEEN COMMUNICATED TO THE APPELLANT SO FAR. 3. IT IS SEEN THAT THE ASSESSEE HAS TAKEN A SIMILAR GROU ND ALONG WITH CATEGORICAL MENTION IN THE S0F THAT THE REASON S HAD NOT BEEN SUPPLIED TO THE ASSESSEE. 4. IT IS SEEN FROM THE LETTERS WRITTEN TO THE AO, DATED 14.04.2005 AND 23.04.2005 (APB 66, 67 & 68) THAT THE ASSE SSEE HAD MADE SPECIFIC REQUESTS FOR THE SUPPLY OF THE REASON S, WHICH THE REVENUE AUTHORITIES FAILED TO COMMUNICATE. 5. THIS NON SUPPLYING OF THE REASONS FOR REOPENING HAS VITIATED THE ENTIRE REASSESSMENT PROCEEDINGS AT THE THR ESHOLD, AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CAS E OF GKN DRIVESHAFTS (INDIA) LTD. VS CIT REPORTED IN 259 ITR 19 (SC). IN SUCH A CASE WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE CASE TO THE FILE OF THE AO, WITH A DIRECTION THAT THE A O SHALL SUPPLY THE REASONS TO THE ASSESSEE AND ON RECEIPT OF THE OBJECTIONS, HE SHALL FIRST DISPOSE OFF THE OBJECTIONS OF THE ASSESSEE AND THEN PROCEED TO FRAME THE ASSESSMENT. 6. SINCE WE HAVE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON LEGAL GROUNDS, TO THE FILE OF THE AO, WE DO NO T FIND ANY REASON TO ADJUDICATE ON MERITS. HENCE, GOA ON MERITS HAVE THEREFORE, BECOME INFRUCTUOUS. 7. APPEALS OF ASSESSMENT YEARS 1998-99 TO 2001-02 ARE THUS ALLOWED FOR STATISTICAL REASONS/PURPOSES. BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 3 ITA NO. 3252/MUM/2009 : ASST. YEAR 2002-03 : 8 . THE FOLLOWING GROUNDS HAVE BEEN TAKEN: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW IN UPHOLDING THE ACTION OF THE LEARNED INCOME TAX OFFICER (HEREIN AFTER REFERRED TO AS 'ASSESSING OFFICER') IN REOPENING THE ASSESSMENT UNDER SECTION 148. THE APPELLANT SUBMITS THAT THE ORDER PASSED UNDER SECTION 143(3) R. W. S. 147 IS ILLEGAL, NULL AND VOID AND BAD IN LAW AS THE ASSESSMENT FOR EARLIER YEARS ON SIMILAR ISSUES WERE COMPLETED AFTER THOROUGH SCRUTINY AND ACCEPTING THE STAND OF THE APPELLANT AND THERE HAVE BEEN NO CHANGES IN FACTS REQUIRING RECONSIDERATION AND FURTHER AS THE REASONS FOR REOPENING HAVE NOT BEEN COMMUNICATED TO THE APPELLANT SO FAR. 2. THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ASSESSING THE INTEREST INCOME RECEIVED BY THE APPEL LANT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AS AGAIN ST INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINES S OR PROFESSION' IGNORING THE DETAILED SUBMISSIONS FILED BY THE APPELLANT IN THIS REGARD INCLUDING THE FACTS THAT THE ACTIVITY OF HOUSING FINANCE WAS IN PURSUAN CE OF THE RESOLUTION PASSED BY THE APPELLANT'S BOARD OF DIRECTORS AND AFTER OBTAINING NECESSARY CLARIFICATI ON FROM THE RBI IN THIS REGARD. 3 (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW, IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN DISALLOWING VARIOUS EXPENDITURE INCURRED BY THE APPELLANT FOR THE EARNING THE BUSINESS INCOME. (B) THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER OUGHT TO ASSESS THE INTEREST INCOME AS BUSINESS INCOME AND THE VARIOUS EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. 4. WITHOUT PREJUDICE TO WHAT HAS BEEN STATED ABOVE, THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT DEDUCT ION FOR VARIOUS EXPENSES INCURRED BY THE APPELLANT WOUL D BE AVAILABLE EVEN IF THE INCOME BY WAY OF INTEREST INCOME WAS ASSESSABLE AS INCOME FROM OTHER SOURCES. 5. THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) ERRED IN REJECTING THE CONTENT ION OF THE APPELLANT THAT SINCE NO INTEREST UNDER SECTI ON 234B WAS LEVIABLE AT THE TIME WHEN ORIGINAL ASSESSMENT WAS COMPLETED, INTEREST CAN NOT BE LEVIED WHILE PASSING ORDER UNDER SECTION 143(3) R.W .S. 147. 6. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED: A. TO TREAT INTEREST INCOME AS INCOME UNDER THE HEA D PROFITS & GAINS OF BUSINESS OR PROFESSION AND NOT UNDER HEAD INCOME FROM OTHER SOURCES BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 4 B. TO DELETE THE DISALLOWANCE MADE OF A SUM OF RS. 11,85,083/- OUT OF TOTAL EXPENDITURE INCURRED; C. TO ASSESSEE INTEREST INCOME AS BUSINESS INCOME A ND TO ALLOW VARIOUS EXPENSES CLAIMED IN PROFIT AND LOSS ACCOUNT; D. WITHOUT PREJUDICE TO WHAT HAS BEEN STATED ABOVE, TO ALLOW VARIOUS EXPENSES INCURRED BY THE APPELLANT EVEN IF THE INTEREST INCOME WAS ASSESSABLE AS INCOME FROM OTHER SOURCES; E. TO DELETE THE INTEREST LEVIED UNDER SECTION 234B F. TO DELETE INTEREST LEVIED UNDER SECTION 234B ; AND TO MODIFY THE ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. 7. EACH OF THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 8 THE APPELLANT CRAVES LIBERTY TO ADD, TO ALTER AND /OR AMEND THE GROUNDS OF APPEAL AS AND WHEN GIVEN. 9. GROUND NO. 1 PERTAINS TO ISSUE AND INITIATION OF PROCEEDINGS U/S 148. THE ASSESSEE HAS TAKEN IN CASUAL M ANNER THAT ASSESSMENTS IN EARLIER YEARS WAS FRAMED IN SCRUTINY ASSESSMENT AND SINCE THERE IS NO CHANGE IN THE FACTS A ND CIRCUMSTANCES, THE ISSUE OF NOTICE IS GERMANE ON THOSE PROCEEDINGS AND THEREFORE, IT AMOUNTS TO CHANGE OF OPINION , AND THEREFORE, INITIATION OF REASSESSMENT PROCEEDINGS ARE BAD IN LAW. 10. WE HAVE GONE THROUGH THE GOA AND HAVE PERUSED TH E ORDERS. WE FIND THAT GOA IS REPETITIVE AND CUT & PASTE, BE CAUSE THE ASSESSMENTS IN PRECEDING YEARS HAVE BEEN FRAMED AG AINST THE ASSESSEE, WHICH WE HAVE SET ASIDE. SINCE THE FACTS IN THE CURRENT YEAR ARE DIFFERENT, THE SIMILAR CONCLUSION CANNOT BE DRAWN AND THEREFORE, WE SUSTAIN THE PROCEEDINGS U/S 148 . HENCE, GROUND NO. 1 IS REJECTED. 11. GROUND NO. 2 PERTAINS TO DISALLOWANCE AND CLAIM OF THE ASSESSEE TO TREAT INTEREST AS BUSINESS AND HOLDING THE SAME TO BE INCOME FROM OTHER SOURCES. 12. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE FOLLOWING FACTS, 4.1 DURING THE YEAR, THE APPELLANT DECLARED INTERE ST FROM MANEKLAL BHANDRI OF RS.8,99,120/- AND INTEREST ON ., BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 5 IT REFUND AT RS.44,241/-. THE APPELLANT SUBMITTED T HAT IT WAS INCORPORATED IN THE YEAR 1994 UNDER THE PROVISI ONS OF COMPANIES ACT, 1956 AND THE MAIN OBJECTS INCIDEN TAL TO OR ANCILLARY TO THE ATTAINMENT OF THE MAIN OBJEC TS INTER ALIA INCLUDED THE FOLLOWING: DEVELOPMENT OF PROPERTIES. LENDING & ADVANCING OF FUNDS 4.2 THE APPELLANT STARTED LOOKING FOR AVENUES TO EM BARK ON ITS BUSINESS OF DEVELOPMENT OF PROPERTIES. HOWEV ER, DUE TO LULL IN I.E. PROPERTY MARKET AT THE RELEVANT TIME, THE UNCERTAINTIES PREVAILING AT THE RELEVANT TIME AND V OLATILE MARKET CONDITIONS, THE APPELLANT DECIDED TO EMBARK ON THE HOUSING FINANCE BUSINESS. IN ACCORDANCE WITH TH E REQUIREMENTS OF THE COMPANIES ACT, 1956, THE APPELL ANT PASSED NECESSARY RESOLUTION OF ITS BOARD OF DIRECTO RS TO MAKE THE ACTIVITY OF HOUSING FINANCE AS ITS MAIN BUSINESS ACTIVITY. THE APPELLANT SOUGHT AND OBTAINE D NECESSARY CLARIFICATION FROM THE RESERVE BANK OF IN DIA, WHICH CLARIFIED THAT THE APPELLANT DOES NOT REQUIRE SEPARATE RBI PERMISSION FOR ITS ACTIVITY OF HOUSING FINANCE. ACCORDINGLY, APPELLANT STARTED CARRYING ON HOUSING FINANCE BUSINESS AND THE INCOME RECEIVED THEREFROM WAS TREATED AS BUSINESS INCOME AND WAS OFFERED AS SUCH. THE APPELLANT FURTHER SUBMITTED TH AT THE SAME TREATMENT HAS BEEN ACCORDED TO SUCH INCOME IN THE PAST AS WELL, WHEREIN SUCH INCOME HAS BEEN ASSESSED AS BUSINESS INCOME. THE AO DID NOT ACCEPT THE SUBMISSION MADE BY THE APPELLANT ON FOLLOWING GROUN DS:- 1. THE ASSESSEE COMPANY HAS ITS PRIME OBJECTIVE CA RRY ON THE BUSINESS OF DEVELOPMENT OF PROPERTIES. 2. FROM THE INCORPORATION OF THE COMPANY, THE ASSE SSEE HAS NEVER CARRIED OUT ITS BUSINESS ACTIVITY OF DEVELOPMENT OF PROPERTIES ETC. 3. THE ASSESSEE IS NOT AN INVESTMENT COMPANY AND A LSO NOT AN NBFC. 4. THE ASSESSEE HAS ADVANCED RS. 66,04,000/- TO SH RI MANEKLAL BHANDARI ON INTEREST. 5. FROM THE A.Y. 1997-98 TO TILL DATE THE LOAN HAS ADVANCED TO ONE SINGLE PARTY. ALSO, INTEREST RECEIVABLE HAS NOT BEEN RECEIVED FULLY IN EVERY YEA R. AND INTEREST RECEIVABLE IS RS.69, 18,921 /-. 6. THE ONLY INCOME EARNED IS INTEREST INCOME. 7. THERE IS NO BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE. 8. THE INTEREST WAS REQUIRED TO BE TREATED AS INCO ME FROM OILIER SOURCES IN VIEW OF THE DECISION OF VARI OUS COURTS INCLUDING THE DECISION IN THE CASE OF SOUTH INDIA SHIPPING CORPORATION LTD VS CIT (240 ITR 2), AND NOT AS BUSINESS INCOME. 9. ON APPLICATION OF THE PRINCIPLE OF RES-JUDICA TA EVERY ASSESSMENT IS A SEPARATE ASSESSMENT AND THE ASSESSEES CONTENTION THAT IN A.Y. 1995-96 AND 1996-97 THE INTEREST INCOME IS TREATED AS BUSINESS INCOME CANNOT BE ACCEPTED. HENCE IN VIEW OF THE ABOVE FACTS AND THE DECISION O F SOUTH INDIA SHIPPING CORPORATION LTD VS CIT (240 I] 'R 24), AND VARIOUS OTHER DECISIONS ON THE SUBJECT, IT IS CLEAR THAT INTEREST INCOME IN THIS CASE WAS NOT ASSESSABL E AS BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 6 BUSINESS INCOME BUT WAS REQUIRED TO BE ASSESSED AS INCOME FROM OTHER SOURCES. 13. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS, OBSERVED, 5 I HAVE GONE THROUGH THE FACTS OF THE CASE, SUBMISSI ON MADE AND ALSO THE ASSESSMENT ORDER. I HAVE NOTED TH AT THE APPELLANT'S PRIME OBJECTIVE AS PER MEMORANDUM AND ARTICLES OF ASSOCIATION IS TO CARRY ON BUSINESS OF DEVELOPMENT OF PROPERTIES. HOWEVER, FROM THE INCORPORATION OF THE COMPANY, THE APPELLANT NEVER CARRIED ITS BUSINESS ACTIVITIES OF DEVELOPMENT PROPERTIES RATHER THE APPELLANT HAS ADVANCED A SUM OF RS. 66,04,000/- TO SHRI MANEKLAL BHANDARI AGAINS T INTEREST. I HAVE ALSO NOTED THAT FROM THE A.Y.97-98 TILL DATE THE LOAN ADVANCED WAS ONLY TO ONE PERSON I.E. SHRI MANEKLAL BHANDARI. SUCH FACTS HAVE BEEN INCORPORATED BY THE AO WHILE CONSIDERING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. THIS HAS ALSO BEEN POINTED OUT BY THE AO THAT THE APPELL ANT IS NOT AN INVESTMENT COMPANY AND ALSO NOT AN NBFC. HENCE, I FIND THE INTEREST INCOME IS TO BE TREATED AS INCOME FROM OTHER SOURCES, AS EARNING ON INTEREST I S NOT APPELLANT'S BUSINESS. IT IS ALSO NOTED THAT THI S ISSUE HA: BEEN DECIDED BY MY PREDECESSORS IN APPELLANT'S CASE FOR EARLIER ASST. YEARS. CONSIDERI NG THESE FACTS, I FIND THE AO IS JUSTIFIED IN TAXING INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 14. THE CIT(A), THEREFORE, REJECTED THE CONTENTIONS OF THE ASSESSEE. 15. AGAINST THIS ORDER OF THE CIT(A), THE ASSESSEE IS IN APP EAL BEFORE THE ITAT. 16. BEFORE US, THE AR REITERATED THE SUBMISSIONS MADE BEFO RE THE REVENUE AUTHORITIES AND PLEADED THAT THE INTEREST IN COME SHOULD BE TREATED UNDER THE HEAD INCOME FROM BUSINESS & NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. 17. THE DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 18. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE MATERIAL ON RECORD AND ORDERS OF THE REVENUE AUTHORITIES. BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 7 19. THE FACTUM OF THE ASSESSEE APPLYING TO THE RBI FOR G ETTING INTO HOUSING FINANCE AND THE RBI ALLOWING THE ASSESSEE FOR THE SAME HAS NOT BEEN DISPUTED. THE FACTUM OF THE ASSESSEE TO GET INTO HOUSING FINANCE BUSINESS BY PASSING THE REQUIRED RESO LUTION BY THE BOARD OF DIRECTORS IS ALSO NOT DISPUTED. THE ONLY REASON AND BASIS TAKEN BY THE REVENUE AUTHORITIES IS THAT THE ASSESSEE IS IN THE BUSINESS OF HOUSING DEVELOPMENT AND SINCE IT IS NO T A NBFC, THE INTEREST RECEIVED HAS TO BE TREATED U/S 56 & NOT UNDER BUSINESS. 20. WE CANNOT ACCEPT THE REASONING OF THE REVENUE AUTH ORITIES WHEREIN THEY HAVE SIMPLY IGNORED THE DOCUMENTS PRODUCE D BEFORE THEM BECAUSE THE REQUISITE DOCUMENTS WERE PRODU CED BEFORE THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT INTEREST RECEIVED FROM MANEKLAL BHANDARI AT RS. 8,99,120/- IS TO BE TREATED AS BUSINESS INCOME. HOWEVER, INTEREST ON INC OME TAX REFUND AT RS. 44,241/- IS TO BE TREATED AS INCOME FROM OT HER SOURCES. 21. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO TREAT THE RECEIPT OF INTEREST INCOME FROM MR. MANEKLAL BHANDARI AS BUSINESS INCOME (RS. 8,99,120/- ). 22. GROUND NO. 2 IS THEREFORE, PARTLY ALLOWED. 23. GROUND NO. 3 PERTAINS TO DISALLOWANCE OF EXPENSES OF RS. 11,85, 083/-. 24. THE REVENUE AUTHORITIES DISALLOWED THE EXPENSES BECA USE THERE WAS NO BUSINESS OF THE BUSINESS WITH REGARD TO HO USING DEVELOPMENT. 25. BEFORE THE REVENUE AUTHORITIES THE ASSESSEE PRODUCE D BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 8 AUDITED ACCOUNTS, BOOKS OF ACCOUNTS AND DETAILS FILED WITH R OC TO SHOW THAT THE MOVEMENT OF BUSINESS WAS SLOW AS THER E WAS LULL IN THE MARKET. HOWEVER BUSINESS AS SUCH WAS GOING ON AND THE EXPENSES WERE CLAIMED AS GENUINE BUSINESS EXPENSES. 26. THE REVENUE AUTHORITIES DISREGARDED THE CLAIM OF THE ASSESSEE. 27. AGAINST THIS, THE ASSESSEE IS NOW BEFORE THE ITAT. 28. BEFORE US, THE AR REITERATED THE SUBMISSIONS THAT LULL IN THE BUSINESS DOES NOT AMOUNT TO CLOSE OF BUSINESS AND THEREFORE, THE CLAIM OF BUSINESS EXPENSES WAS GENUINE. 29. THE DR ON THE OTHER HAND RELIED HEAVILY ON THE ORDERS OF THE REVENUE AUTHORITIES. 30. WE HAVE HEARD THE ARGUMENTS. IT IS A FACT THAT THER E WAS A SLOWNESS IN THE BUSINESS OF THE ASSESSEE BUT THE ASSES SEE, AS WE HAVE OBSERVED IN THE PREVIOUS GOA, HAD DIVERSIFIED ITS BUSIN ESS TO HOUSING FINANCE AND WAS MAINTAINING ITS BUSINESS PREMISES AND BUSINESS MODUS. THIS CLEARLY SHOWS THAT THE ASSESSE E WAS CARRYING ON THE BUSINESS AND THE EXPENSES BEING INCURRE D WERE BUSINESS EXPENSES. IT IS ALSO A FACT THAT THERE IS NO CLAIM OF THE REVENUE AUTHORITIES TO HOLD THE EXPENSES TO BE NON GENUINE. 31. IN SUCH A CIRCUMSTANCES, WE ARE INCLINED TO ACCEPT T HE ARGUMENTS AND GOA OF THE ASSESSEE TO ALLOW THE EXPENSE , AS DISALLOWED. 32. WE, THEREFORE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE EXPENSES AGGREGATING TO RS. 11,85,083/- UNDER VARIOUS HEADS. 33. GROUND NO. 3 IS THEREFORE ALLOWED. BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 9 34. GROUND NO. 4 IS ALTERNATIVE TO GOA NO. 3, HENCE IT BECOMES INFRUCTUOUS. 35. GROUND NO. 5 PERTAINS TO INTEREST U/S 234B. 36. SINCE THE LEVY OF INTEREST IS CONSEQUENTIAL TO THE FINA L OUTCOME OF THE TAX COMPUTATION, WE DIRECT THE AO TO CHA RGE INTEREST AS PER LAW AND AS PER JUDICIAL PRECEDENTS. 37. IN THE RESULT, THE APPEAL AS FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. TO SUM UP: APPEALS OF ASSESSMENT YEARS 1998-99 TO 2001-02 ARE ALLOWED FOR STATISTICAL REASONS APPEAL OF ASSESSMENT YEAR 2002-03 IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON 26.12.2014 SD/- SD/- ( ) ( ) # # # # # # # # (RAJENDRA) ( VIVEK VARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 26 TH DECEMBER, 2014 %/ COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT(A)-27/XXVII, MUMBAI. 4) THE CIT- CITY-III/3, MUMBAI. 5) ,-./ %$ , , / THE D.R. I BENCH, MUMBAI. 6) /01 2 COPY TO GUARD FILE. BHIMASHANKAR PROPERTIES DEVELOPMENT PVT LTD ITAS NO. 4305 TO 4308/MUM/2006 ITA NO. 3252/MUM/2009 10 #&$ / BY ORDER / / TRUE COPY / / 3 / 4 ' , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * *CHAVAN, SR.PS