ACIT CIR 4(1), Mumbai V. KNP SECURITIES PVT LTD, Mumbai

ITA 4412/MUM/2003

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7341 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 1999-2000
• Appeal Filed On: 05-06-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Depreciation; Speculation loss; Speculative transactions
• Section: 208; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 4412/MUM/2003 (ASSESSMENT YEAR: 1999-2000) ACIT, CIRCLE - 4(1) M/S. KNP SECURITIES PVT. LTD. ROOM NO. 640, 6TH FLOOR BHUPEN CHAMBERS, GROUND FLO OR AAYAKAR BHAVAN, M.K. ROAD VS. DALAL STREET, MUMBAI 400023 MUMBAI 400020 PAN - AAACK 4712 C APPELLANT RESPONDENT APPELLANT BY: DR. P. DANIEL RESPONDENT BY: SHRI RAJIV KHANDELWAL O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) IV DATED 25.03.2003 FOR A.Y. 1999-2000. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 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 DEP RECIATION OF RS.32,50,000 ON BSE MEMBERSHIP CARD IGNORING THE FA CT THAT DEPRECIATION ON BSE MEMBERSHIP CARD IS NOT ALLOWABL E. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.49, 66,658 ON ACCOUNT OF ALLOCATION OF EXPENDITURE IN RESPECT OF SPECULAT ION LOSS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE EXPENSES ALLOCATED IN RESPECT OF SPECULATION LOSS IGNORING THE RATIO LAID DOWN IN TH E CASE OF EASTERN AVIATION & INDUSTRIES LTD., 208 ITR 1023 (CAL) 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.23, 07,285 ON ACCOUNT OF CESSATION OF LIABILITY IGNORING THE FACT THAT TH E ASSESSEE COULD NOT PRODUCE ANY CONFIRMATION FROM THE CREDITORS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.76, 778/- ON ACCOUNT OF INTEREST NOT BEING CHARGED ON THE LOANS GIVEN BY THE ASSESSEE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.76, 788 ON ACCOUNT OF ITA NO. 4412/MUM/2003 M/S. KNP SECURITIES PVT. LTD. 2 INTEREST NOT BEING CHARGED ON THE LOANS GIVEN BY TH E ASSESSEE IGNORING THE RATIO LAID DOWN IN THE CASE OF INDIAN METALS & FERRO ALLOYS LTD. VS. CIT (193 ITR 344) (OIRS) THAT THE O NUS IS ON THE ASSESSEE TO PROVE THAT THE MONEY ADVANCED CAME FROM ITS OWN FUNDS AND NOT FROM BORROWED FUNDS.: GROUND NOS. 7 & 8 ARE GENERAL IN NATURE AND DOES NO T REQUIRE ANY ADJUDICATION. 3. WE HAVE HEARD THE LEARNED D.R. AND LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED COUNSEL ALSO FILED COPY OF WRITTEN SUB MISSIONS FILED BEFORE THE CIT(A). 4. GROUND NO. 1 REFERS TO THE DIRECTION OF THE CIT(A) IN ALLOWING DEPRECIATION ON BSE MEMBERSHIP CARD. BOTH THE PARTI ES HAVE FAIRLY CONCEDED THAT THIS ISSUE WAS DECIDED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES & STOCKS LTD. 318 ITR 687 WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT BSE MEMBERSHIP CARD IS NOT ELIGIBLE FOR DEPRECIATION. RESPECTFULLY FOLLOWING THE SAME WE RE VERSE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE A.O. GROUND NO. 1 IS CONSIDERED ALLOWED. 5. GROUND NOS. 2 & 3 PERTAIN TO THE ALLOCATION OF INTEREST IN RESPECT O F SPECULATION LOSS. THE A.O. IN HIS ORDER HAS OBSERVE D THAT THE ASSESSEE HAS EARNED AN AMOUNT OF RS.1,31,39,526/- ON ACCOUNT OF TRADING IN SHARES AND ALSO EARNED BROKERAGE AMOUNT OF RS.1,49,75,135/-. H E WAS OF THE OPINION THAT ACCORDING TO EXPLANATION TO SECTION 73 THE NAT URE OF SHARE TRADING BUSINESS OF THE ASSESSEE IS DEEMED TO BE SPECULATIV E. AS PER EXPLANATION TO SECTION 28, SPECULATION BUSINESS SHOULD BE SEGREGAT ED FROM OTHER BUSINESS. HE THEREAFTER SEGREGATED THE TRANSACTIONS AND ALLOC ATED THE EXPENDITURE AND ARRIVED AT A SPECULATION LOSS OF RS.49,66,658/-. 6. BEFORE THE CIT(A) IT WAS CONTENDED THAT THE ACTIVIT IES OF SHARE BROKING AND SHARE TRADING ARE ONE INDIVISIBLE BUSINESS CARR IED ON BY THE ASSESSEE AS THEY HAVE COMMON SET OF BOOKS OF ACCOUNT, COMMON FU NDS AND COMMON MANAGEMENT. IT IS ALSO A FACT THAT INDIVISIBILITY O F BUSINESS IS SUPPORTED BY ALL RULES AND REGULATION GOVERNING SUCH TRADES, BYE LAWS OF BSE. IT IS FURTHER CONTENDED THAT ATTRIBUTION OF PROPORTIONATE EXPENSE S WAS INCORRECT AS THE EXPLANATION TO SECTION 28 CAN BE INVOKED ONLY WHEN TRANSACTIONS ARE IN THE NATURE OF SPECULATIVE TRANSACTIONS. PROVISIONS OF E XPLANATION TO SECTION 28 ITA NO. 4412/MUM/2003 M/S. KNP SECURITIES PVT. LTD. 3 CANNOT BE INVOKED AND ACCORDINGLY TREATING VARIOUS TRANSACTIONS AS SPECULATIVE DOES NOT ARISE. AFTER CONSIDERING ASSES SEES EXPLANATION THE LEARNED CIT(A) HAS DECIDED AS UNDER: - 7. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESS EE AND ALSO THE ORDER OF THE A.O. IT IS WELL SETTLED THAT WHEN THE LANGUAGE EMPLOYED BY THE ENACTMENT IS CLEAR, THERE IS NO QUESTION OF INT ERPRETING THE PROVISIONS IN ANY MANNER EXCEPT BY GIVING THEM THEIR PLAIN AND OBVIOUS MEANING (MANISH PLASTICS V CCI 99 STC 293) . THE OBJECT OR PURPOSE OF ALL CONSTRUCTIONS OR INTERPRETATIONS IS TO ASCERTAIN TH E INTENTION OF LAW MAKERS AND MAKE IT EFFECTIVE. IN CASE OF DOUBT OR D IFFICULTIES, ENCOUNTERED IN ASCRIBING PROPER MEANING TO PROVISIO NS OR WORD IN A PROVISION, THE REASONS FOR SUCH ENACTMENT NEED TO B E LOOKED INTO TO ASCERTAIN THE INTENTION OF LEGISLATURE M. RANGASWAMI V CWT 221 ITR 39) . THUS, WHEN THE LANGUAGE IS CLEAR, THE INTENTION O F THE LEGISLATURE IS TO BE GATHERED FROM THE LANGUAGE USED WHAT IS TO BE BORNE IN MIND IS AS TO WHAT HAS BEEN SAID IN THE STATUTE AS ALSO WHAT H AS NOT BEEN SAID (CIT V J.H. GOTLA 156 ITR 323) . FURTHER, AS RIGHTLY POINTED OUT BY THE ASSESSEE, SUPREME COURT HAS HELD IN THE CASE OF STATE OR TAMILNADU V. M.K. KANDASWAMI THAT IN INTERPRETING THEIR [PROVISIONS A CONSTRUCTION WHICH WOULD DEFEAT ITS PURPOSE SHOULD BE AVOIDED AND COURTS SHOULD ALSO REFRAIN FROM ADOPTING A CONSTRUC TION WHICH WOULD UPSET OR EVEN IMPAIR THE PURPOSE IN INTRODUCING A P ARTICULAR PROVISIONS IN THE STATURE. THUS, IT IS VERY CLEAR THAT CONSTRUCTI ON NEED TO BE DONE WITH A PURPOSE AND SHOULD NOT TRAVERSE BEYOND THE MEANIN G OF THE STATUTE. THE PROVISIONS OF SECTION 73 ONLY SAY THAT IF THE A SSESSEES BUSINESS CONSISTS ANY PURCHASE AND SALE OF SHARES, THE SAID BUSINESS WOULD BE SPECULATIVE BUSINESS AND LOSS ON ACCOUNT OF SUCH SP ECULATIVE BUSINESS WOULD BE DEEMED TO BE SPECULATION LOSS AND THE SAME IS ALLOWED TO BE SET OFF AGAINST THE SPECULATION PROFIT. NOWHERE IN THE ACT, IT IS PROVIDED THAT EXPENDITURE SHOULD BE ALLOCATED WITH RESPECT T O SUCH TRANSACTIONS. IT IS TRUE THAT SPECULATION BUSINESS AS DEFINED U/S . 43 NEED TO BE COMPUTED AS SEPARATE BUSINESS UNDER THE EXPLANATION 28 TREATING THAT SPECULATION BUSINESS TO BE DISTINCT AND SEPARATE FR OM ANY OTHER BUSINESS. THE SPECULATION BUSINESS WHICH HAS BEEN D EFINED U/S. 43 IS THE BUSINESS. THE SPECULATION BUSINESS WHICH HAS BE EN DEFINED U/S. 43 IS THE BUSINESS WHERE ACTUAL DELIVERY OF THE GOODS OR SHARES DOES NOT TAKE PLACE WHEREAS IN THE DEEMING PROVISIONS OF EXP LANATION TO SECTION 73 EVEN THERE IS PHYSICAL DELIVERY OF SHARES, IT IS DEEMED TO BE SPECULATION LOSS FOR THE LIMITED PURPOSE OF SETTING IT OFF AGAINST THE SPECULATION PROFIT. WHEN THE SHARE TRADING ACTIVITY OF THE ASSESSEE IS DEEMED TO BE SPECULATION BUSINESS, THERE CAN NOT BE ANOTHER DEEMING PROVISION OR IT CANNOT BE DEEMED BY THE ASSESSING O FFICER THAT THESE TRANSACTIONS WOULD AMOUNT TO TRANSACTIONS U/S. 43. ACT DOES NOT PROVIDE FOR THAT. AS STATED EARLIER, WHAT IS TO BE BORNE IN MIND IS THE INTENTION OF LEGISLATURE AND WHAT HAS BEEN SAID IN THE STATUTE A ND ALSO WHAT HAS NOT BEEN SAID. WHAT HAS NOT BEEN SAID IN THIS CONTEXT I S ALLOCATION OF EXPENDITURE. HENCE THE ASSESSING OFFICER CANNOT IMP ORT A MEANING WHICH HAS NOT BEEN PERMITTED BY THE LEGISLATURE. ITA NO. 4412/MUM/2003 M/S. KNP SECURITIES PVT. LTD. 4 8. FURTHER SUPREME COURT HAS ALSO OBSERVED IN THE C ASE OF CIT VS. MOTHER INDIAN REFRIGERATION INDIA PVT. LTD. (155 IT R 711) THAT LEGAL FICTION HAS TO BE CARRIED TO ITS LOGICAL CON CLUSION BUT ONLY WITHIN THE FIELD OF DEFINITE PURPOSE FOR WHICH FICTION IS CREATED. IT IS WELL SETTLED THAT LEGAL FICTIONS ARE CREATED ONLY FOR SOME DEFIN ITE PURPOSE AND THESE MUST BE LIMITED TO THAT PURPOSE AND SHOULD NOT BE E XTENDED BEYOND THAT LEGITIMATE FIELD. THUS FICTION WHICH HAS BEEN CRE ATED FOR THE PURPOSE OF SECTION 73 HAS VERY LIMITED PURPOSE I.E., TREATING THE SHARE TRADING OF ASSESSEE AS SPECULATIVE BUSINESS, BEYOND THIS, THER E CAN NOT BE ANY OTHER INTERPRETATION NOR ANYBODY IS ALLOWED TO CREA TE FICTION WITHIN FICTION AND SAY THAT ALLOCATION OF EXPENDITURE NEED TO BE D ONE IN THIS REGARD IN RESPECT OF THE SAID SPECULATION BUSINESS. HENCE ALL OCATION MADE BY THE A.O. IS DELETED. 7. BEFORE US THE LEARNED DR AND COUNSEL REITERATED RES PECTIVE SUBMISSIONS. WE HAVE CONSIDERED THE ISSUE. AS CORRE CTLY HELD BY THE CIT(A), CONSIDERING SPECULATIVE NATURE OF TRANSACTIONS WILL COME ONLY WHEN A PARTICULAR TRANSACTION IS CONSIDERED AS SPECULATIVE IN NATURE UNDER SECTION 43(5). SO LONG AS THE ASSESSEE IS DEALING IN DELIVE RY BASED TRANSACTIONS EXPLANATION TO SECTION 28 DOES NOT COME INTO OPERAT ION AS THERE ARE NO SPECULATIVE TRANSACTIONS TO BE CONSIDERED UNDER SEC TION 43(5). THE ISSUE CAN ONLY BE CONSIDERED WITH REFERENCE TO SECTION 73 EXP LANATION. THAT PORTION OF SECTION WILL COME INTO PLAY AFTER CONSIDERING THE I NCOME UNDER THE HEAD BUSINESS AS ALSO INCOME UNDER OTHER HEADS. AS RI GHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE ALLOCATION OF EXPENDITURE AND SEGREGATION OF BUSINESS WILL COME INTO PICTURE ONLY WHEN THE ASSESSEE INDULGES IN SPECULATIVE NATURE OF TRANSACTIONS. ON THE FACTS OF THE CASE WE DO NOT SEE ANY REASON TO DIFFER FROM THE FINDINGS O F THE CIT(A). HIS ORDER IS CORRECT BOTH ON FACTS AS WELL AS ON LAW. ACCORDINGL Y GROUND NOS. 2 & 3 ARE REJECTED. 8. GROUND NO. 4 PERTAINS TO THE TREATMENT OF A.O. AND BRINING TO T AX AN AMOUNT OF RS.23,07,285/- AS CESSATION OF LIABILITY. WHILE VERIFYING THE SUNDRY CREDITORS CONFIRMATION IN RESPECT OF TWO SUN DRY CREDITORS, I.E. KRISHNA TEXPORT INDUSTRIES P. LTD. AND 20 TH CENTURY HOLDING P. LTD., HAVE NOT BEEN FURNISHED BY THE ASSESSEE AND AO TREATED T HE AMOUNTS AS INCOME UNDER SECTION 41(1). IT WAS CONTENDED BEFORE THE CI T(A) THAT THE PROVISIONS OF SECTION 41(1) DOES NOT APPLY AND THESE BALANCES ARE SHOWN AS LIABILITY IN THE BALANCE SHEET AS ON 31.03.1999 AND HAS NEITHER REMI TTED NOR CEASED TO BE ITA NO. 4412/MUM/2003 M/S. KNP SECURITIES PVT. LTD. 5 LIABILITY. HOWEVER, THE A.O. HAS NOT SHOWN THAT THE RE HAS BEEN ANY REMISSION OR CESSATION OF LIABILITY. AFTER CONSIDERING ASSESS EES SUBMISSION THE CIT(A) HAS DELETED THE ADDITION STATING AS UNDER: - 11. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND ALSO THE ORDER OF THE A.O. IT IS TRUE, THAT THE ASSESSEE HAS BEEN ASKED TO PRODUCE THE CONFIRMATIONS WITHIN A SHORT PERIOD OF TIME. TH OUGH THE ASSESSEE WAS ABLE TO PROCURE LARGE NUMBER OF CONFIRMATIONS, THE CONFIRMATIONS IN RESPECT OF THESE TWO PARTIES COULD NOT BE PROCURED DUE TO PAUCITY OF TIME. FURTHER THE A.O. HAS NOT PROVED THAT THERE HAS BEEN REMISSION OR CESSATION OF LIABILITY FOR BRINGING THIS CASE U/S. 41(1). THE A.O. HAS TO HAVE MATERIAL EVIDENCE IN SUPPORT OF THE CONTENTION THAT THESE LIABILITIES HAVE BEEN CEASED IN THE YEAR UNDER CONSIDERATION. S INCE THE ONUS HAS NOT BEEN DISCHARGED BY A.O., NO ADDITION CAN BE MAD E U/S. 41(1). FURTHER, FROM THE GROUPINGS, FORMING PART OF BALANC E SHEET AS ON 31.3.2000, IT IS SEEN THAT THE CREDIT BALANCE STAND ING IN THE NAME OF 20 TH CENTURY HOLDINGS P. LTD. TO THE TUNE OF RS.22,85,23 1/- AS ON 31.02.1999 HAS COM DOWN TO RS.1,24,000/-. THE OTHER CREDITOR I .E., KRISHNA TEXPORT INDUSTRIES P. LTD. HAS CEASED TO BE CREDITOR IN THE BOOKS OF ASSESSEE AS ON 31.3.2000. THIS GOES TO PROVE THAT ASSESSEE HAS MADE PAYMENT IN RESPECT OF CREDITOR STANDING IN THE NAME OF KRISHAN TEXPORT INDUSTRIES P. LTD. AND HAS ALSO MADE SUBSTANTIAL PAYMENT IN RESPE CT OF THE CREDIT STANDING IN THE NAME OF 20 TH CENTURY HOLDING P. LTD. WHICH IN FAT HAS BEEN REDUCED TO RS.1,24,000/- AS ON 31.3.2000 FROM RS.22,85,231/- AS ON 31.03.1999. SINCE THERE HAS NOT BEEN ANY REMISSI ON OR CESSATION OF THE LIABILITY, THE ADDITION MADE U/S. 41(1) STANDS DELETED. 9. IN VIEW OF THE FACTS STATED BY THE CIT(A), THERE IS NO NEED TO INTERFERE WITH THE ORDERS OF THE CIT(A). THE A.O. HAS NOT MAD E OUT ANY CASE THAT THERE IS CESSATION OF LIABILITY. JUST BECAUSE ASSESSEE HA S NOT BEEN ABLE TO FURNISH CONFIRMATION IN RESPECT OF THE OUTSTANDING CREDITS IT DOES NOT MEAN THAT THE AMOUNTS HAVE BEEN CEASED TO BE IN THE BOOKS OF ACCO UNT AND TREATED AS INCOME UNDER SECTION 41(1). ON THE FACTS OF THE CAS E THE ORDER OF THE CIT(A) IS CONFIRMED AND THE GROUND IS REJECTED. 10. GROUND NOS. 5 & 6 PERTAINS TO DISALLOWANCE OF INTEREST ON THE PLEA THAT ASSESSEE HAS ADVANCED INTEREST FREE LOANS TO T HREE PARTIES AND SINCE THE ASSESSEE FAILED TO ESTABLISH THE NEXUS AND THE LOAN S HAVE BEEN ADVANCED OUT OF BORROWED FUNDS. IT WAS THE CONTENTION THAT ASSES SEE HAD SUFFICIENT FUNDS TO COVER THE ENTIRE ADVANCE ON NON-INTEREST BEARING FUNDS WHICH WERE AVAILABLE WITH THE ASSESSEE. CONSIDERING THE FACTS AND LEGAL PRINCIPLES THE CIT(A) DELETED THE ADDITION STATING AS UNDER: - ITA NO. 4412/MUM/2003 M/S. KNP SECURITIES PVT. LTD. 6 14. I HAVE CONSIDERED THE SUBMISSIONS ANDS ALSO TH E ORDER OF THE A.O. IT IS TRUE THAT THE ASSESSEE HAD ENOUGH FUNDS TO CO VER THESE INTEREST FREE ADVANCES. ANYHOW, THE ONUS IS ON THE ASSESSEE TO EX PLAIN AND ESTABLISH THE NEXUS, WHEN CALLED UPON BY THE A.O. TO ESTABLIS H SUCH NEXUS. APPARENTLY, THE A.O. HAS NEVER ASKED THE ASSESSEE T O ESTABLISH THE NEXUS BETWEEN THE BORROWALS AND INTEREST FREE LOANS . SINCE THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH TH E NEXUS, WHEN CALLED UPON BY THE A.O. TO ESTABLISH NEXUS, THE A.O. CAN N OT PRESUME THAT ADVANCES WERE GIVEN OUT OF BORROWED FUNDS ONLY [CIT VS. MOTOR GENERAL FINANCE 254 ITR 449 (DELHI)]. THIS ADDITION ALSO STANDS DELETED. 11. HEREIN ALSO AFTER CONSIDERING THE ARGUMENTS OF THE LEARNED D.R. AND COUNSEL WE ARE OF THE VIEW THAT THERE IS NO CASE FO R THE DISALLOWANCE OF INTEREST AS ASSESSEE HAD SUFFICIENT PROFITS TO MAKE NECESSARY ADVANCES. IT IS ALSO ON RECORD THAT THE ASSESSEE HAS ADVANCED ONLY AN AMOUNT OF RS.8,500/- WHEREAS THE SAID SAI MANGAL INVEST TRADE LTD. IS A CLIENT AND HAS PURCHASE AND SALES TO THE TUNE OF RS.379.20 CRORES. IT IS AL SO ON RECORD THAT A LOAN OF RS.1 LAKH WAS GIVEN TO MR. NARENDRA VYAS ON 9 TH OCTOBER 1998 AND THERE IS NO NEXUS WITH THE BORROWED FUNDS. FURTHER, IT IS AL SO ON RECORD THAT THE LOAN TO SANDEEP JHUNJHUNWALA WAS GIVEN ON 30 TH MARCH 1999, HENCE THE DISALLOWANCE OF ANY INTEREST EVEN OTHERWISE DOES NO T ARISE IN THIS ASSESSMENT YEAR. IN VIEW OF THESE FACTS, IN THE ABS ENCE OF ANY EVIDENCE OR MATERIAL TO INDICATE THAT THE ASSESSEE HAD ADVANCED MONIES OUT OF BORROWED FUNDS THE PRESUMPTION WOULD ARISE THAT THE MONEY WA S ADVANCED OUT OF OWN FUNDS. CONSIDERING THE PROFITS OF THE ASSESSEE AND THE RESERVES AVAILABLE WITH IT ADVANCE OF SMALL AMOUNTS TO THE PARTIES CAN NOT BE CONSIDERED FOR DISALLOWANCE OF INTEREST. ON BOTH FACTS AND LAW, TH E REVENUE HAS NOT MADE OUT ANY CASE TO DIFFER FROM THE FINDINGS OF THE CIT (A). ACCORDINGLY THE SAME IS REJECTED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED PAR TLY. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26 TH MARCH 2010 ITA NO. 4412/MUM/2003 M/S. KNP SECURITIES PVT. LTD. 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) IV, MUMBAI 4. THE CIT IV, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.