SITSONS INDIA PVT. LTD., THANE V. ADDL.C.I.T. RG. 1 CIRCLE 1, THANE

ITA 4540/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75428 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURIDR
• Keywords: Business income; Additional evidence; Commercial expediency
• Section: 14A

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , ' , BEFORE S/SHRI B. R. BASKARAN, AM & AMIT SHUKLA, JM I.T.A. NO.4540/MUM/2012 & ITA NO.4570/MUM/2012 ( # ## # # ## # / ASSESSMENT YEAR 2007-08) M/S SITSONS INDIA P LTD W-76 MIDC PHASE II DOMBIVILI (E) THANE / VS. THE ASST COMMR OF INCOME TAX RANGE 1 KALYAN ./ AADCS9489D ( & / '(& APPELLANT/RESPONDENT) ( '(& / & RESPONDENT/APPELLANT) & / ASSESSEE BY : SHRI JITENDRA JAIN '(& * /RESPONDENT BY : SHRI ASHOK SURI,DR * + / DATE OF HEARING : 10.02.2014 * + /DATE OF PRONOUNCEMENT : 14. 02.2014 / O R D E R PER B.R. BASKARAN, AM: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 28.3.2012 PASSED BY THE LD CIT(A)-I, THANE AND THEY RELATE TO THE AY 20 08-09. 2 THE APPEAL FILED BY THE ASSESSEE RELATE TO THE FO LLOWING TWO ISSUES: SITSON INDIA P LTD 2 I) DISALLOWANCE OF PART OF ADMINISTRATIVE EXPENDIT URE MADE U/S 14A OF THE ACT II) ASSESSMENT OF PROFIT ON SALE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS AS AGAINST INCOME FROM CAPITAL GAIN DECL ARED BY THE ASSESSEE. 2.1 THE REVENUE IS IN APPEAL IN RESPECT OF THE FOLL OWING ISSUES: I) DISALLOWANCE OF INTEREST EXPENDITURE MADE U/S 3 6(1)(III) OF THE ACT. II) DISALLOWANCE OF PART OF INTEREST EXPENDITURE MADE U/S 14A OF THE ACT. 3 THE FACTS RELATING TO THE ISSUE ARE STATED IN BRI EF: THE ASSESSEE IS A CLOSELY HELD COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF BOILERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE HAS EARNED DIVIDEND INCOME OF RS.20,14,033/-, WHICH WAS EXEMPTED FROM TAXATION . HOWEVER, THE ASSESSEE DID NOT MAKE ANY DISALLOWANCE AS REQUIRED U/S 14A OF THE AC T. HENCE, THE AO, BY INVOKING THE PROVISIONS OF SEC. 14A OF THE ACT, (A) DISALLOWED 0.5% OF AVERAGE VALUE OF INVESTMENTS , WHICH WORKED OUT TO RS.. 4,84,640/- AND (B) DISALLOWED A PART OF INTEREST EXPENDITURE IN A CCORDANCE WITH RULE 8D, I.E., INTEREST EXPENDITURE EQUIVALENT TO PROPORTION OF TH E AVERAGE VALUE OF INVESTMENT TO AVERAGE OF TOTAL ASSETS. 3.1 IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DEL ETED THE DISALLOWANCE OF INTEREST MADE U/S 14A OF THE ACT ON THE REASONING THAT THE A SSESSEE DID NOT INCUR ANY INTEREST EXPENDITURE FOR EARNING TAX FREE DIVIDEND. HOWEVER , HE CONFIRMED THE DISALLOWANCE OF SITSON INDIA P LTD 3 PART OF ADMINISTRATIVE EXPENDITURE MADE, AS HE FOUN D THE SAME TO BE IN ACCORDANCE WITH THE PROVISIONS OF SEC. 14A OF THE ACT AND RULE 8D OF THE INCOME TAX RULES. IN THIS REGARD, THE LD CIT(A) ALSO TOOK SUPPORT OF THE DECI SION OF THE TRIBUNAL IN THE CASE OF CITY CORPORATION FINANCE (INDIA) LTD REPORTED IN 10 8 ITD 457 (MUM). THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD CIT(A) IN CONFI RMING THE PART OF ADMINISTRATIVE EXPENDITURE AMOUNTING TO RS. 4,84,630/-. THE REVEN UE IS AGGRIEVED BY THE DECISION OF THE LD CIT(A) IN DELETING THE DISALLOWANCE RELATING TO INTEREST EXPENDITURE OF RS.14,82,201/-. 4 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E AO DID NOT RECORD ANY SATISFACTION BEFORE PROCEEDING TO MAKE DISALLOWANCE U/S 14A OF THE ACT. HE FURTHER SUBMITTED THAT THE ASSESSEE DID NOT USE LOAN FUNDS FOR MAKING INVESTMENTS IN SHARES/MUTUAL FUNDS AND HENCE THERE WAS NO REQUIREM ENT TO DISALLOW ANY PART OF INTEREST EXPENDITURE. HE SUBMITTED THAT THE ASSESS EE HAD BORROWED FUNDS FROM IS DIRECTORS LONG BACK IN THE AY 2003-04 AND HENCE IT WAS NOT CORRECT TO SAY THAT THOSE FUNDS WERE USED FOR MAKING INVESTMENTS. HE FURTHER SUBMITTED THAT THE AO DID NOT MAKE ANY SUCH DISALLOWANCE IN THE EARLIER YEARS, TH OUGH THE ASSESSEE HAD BEEN GETTING DIVIDEND INCOME IN THOSE YEARS ALSO. BY PLACING RE LIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRIDEV ENTERPRI SES REPORTED IN 192 ITR 165, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE IN THE INSTANT YEAR, WHEN NO SUCH DI SALLOWANCE WAS MADE IN THE EARLIER YEARS ON IDENTICAL SET OF FACTS. THE LD COUNSEL FU RTHER SUBMITTED THAT THE ASSESSEE IS SITSON INDIA P LTD 4 HAVING SUFFICIENT INTEREST FREE FUNDS, WHICH WAS FA R MORE THAN THE AMOUNT OF INVESTMENTS MADE IN SHARES AND MUTUAL FUNDS. THE L D COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAD SURPLUS FUNDS AND IT HAS INVESTED THEM, NOT ONLY IN SHARES AND INVESTMENTS BUT ALSO IN BANK DEPOSITS. HE SUBMITTE D THAT IT IS THE ASSESSEES PREROGATIVE TO DECIDE ABOUT THE MODE OF UTILISING T HE SURPLUS FUNDS AND HENCE, IN THE INSTANT CASE, THE ASSESSEE HAS USED THE SURPLUS FUN DS TO MAKE DEPOSITS ALSO. THE AO HAD ASSESSED THE INTEREST EARNED OUT OF BANK DEPOSI TS UNDER THE HEAD INCOME FROM OTHER SOURCES AND HENCE THERE IS NO REQUIREMENT OF MAKING ANY DISALLOWANCE IF THE INTEREST EXPENDITURE IS NETTED AGAINST THE INTEREST RECEIPTS. THE LD COUNSEL FURTHER SUBMITTED THAT THE PRESUMPTION SHOULD BE THAT THE I NTEREST FREE FUNDS HAVE BEEN UTILIZED FOR MAKING INVESTMENTS, WHEN THE ASSESSEE IS HAVING BOTH INTEREST BEARING AND INTEREST FREE FUNDS. IN THIS REGARD, HE PLACED REL IANCE ON THE DECISION OF JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RE LIANCE UTILITIES & POWER LTD REPORTED IN 313 ITR 340. THE LD COUNSEL FURTHER SU BMITTED THAT THE AO HAS DISALLOWED THE INTEREST EXPENDITURE U/S 36(1)(III) ALSO, WHICH HAS RESULTED IN DOUBLE DISALLOWANCE OF SAME EXPENDITURE. ACCORDINGLY HE SUBMITTED THAT TH E LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF PART OF INTEREST EXPEN DITURE. 4.1 WITH REGARD TO THE DISALLOWANCE OF PART OF ADMINISTRATIVE EXPENSES, THE LD COUNSEL SUBMITTED THAT THE ASSESSEE HAS RECEIVED DI VIDEND INCOME DIRECTLY INTO ITS BANK ACCOUNT AND HENCE, PRACTICALLY NO EXPENDITURE WAS I NCURRED IN EARNING THE DIVIDEND INCOME. ACCORDINGLY, HE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING DISALLOWANCE SITSON INDIA P LTD 5 OF 0.5% OF AVERAGE VALUE OF INTEREST TOWARDS ADMINI STRATIVE EXPENDITURE. ALTERNATIVELY, THE LD COUNSEL SUBMITTED THAT THE AO SHOULD HAVE RE STRICTED ON THE VALUE OF INVESTMENT WHICH HAS ACTUALLY YIELDED INCOME. IN THIS REGARD, HE PLACED RELIANCE REPORTED IN CALCUTTA TRIBUNAL (2013) 35 TAXMAN.COM 404. 4.2. ON THE CONTRARY, THE LD DR SUBMITTED THAT THE BORROWED FUNDS WOULD LOOSE ITS IDENTITY, WHEN IT IS THROUGH IN THE COMMON POOL OF FUNDS AND HENCE IT IS NOT CORRECT ON THE PART OF THE ASSESSEE TO CONTEND THAT THE INVEST MENTS HAVE BEEN MADE OUT OF INTEREST FREE FUNDS. THE LD DR SUBMITTED THAT THE CLAIM OF AVAILABILITY OF HUGE INTEREST FREE FUNDS IS ALSO NOT CORRECT. BY INVITING OUR AT TENTION TO THE BALANCE SHEET AS ON 31.3.2007, WHICH IS PLACED IN PAGE 33 OF THE PAPER BOOK FILED BY THE ASSESSEE, THE LD D.R SUBMITTED THAT THE ASSESSEE WAS HAVING INTEREST FREE FUNDS (OWN FUNDS) OF RS. 5.40 CRORES AS ON THE YEAR ENDING 31.3.2007 I.E. IN THE YEAR IMMEDIATELY PRECEDING TO THE YEAR UNDER CONSIDERATION. IN THAT YEAR ALSO, THE A SSESSEE HAD UNSECURED LOANS OF RS. 2.12 CRORES. THUS THE AGGREGATE LONG TERM FUNDS TH AT WERE AVAILABLE AS ON 31.3.2007 WAS ABOUT RS.7.50 CRORES. HOWEVER, THE TOTAL INVE STMENTS MADE BY THE ASSESSEE AS ON THAT DATE WAS RS.12.26 CRORES, WHICH PROVES THAT TH E ASSESSEE HAS USED THE LOAN FUNDS AS WELL AS OWN FUNDSFOR MAKING INVESTMENTS. ACCORD INGLY, THE LD DR SUBMITTED THAT IT IS NOT CORRECT ON THE PART OF THE ASSESSEE THAT IT HA D UTILIZED ONLY ITS OWN FUNDS (INTEREST FREE) ONLY TO MAKE INVESTMENTS IN SHARES AND MUTUAL FUNDS. ACCORDINGLY, HE SUBMITTED THAT THE AO WAS RIGHT IN LAW IN MAKING THE DISALLOW ANCE OF INTEREST EXPENDITURE IN TERMS OF RULE 8D OF I T RULES. WITH REGARD TO THE DISALL OWANCE OF ADMINISTRATIVE EXPENDITURE SITSON INDIA P LTD 6 MADE BY THE AO, THE LD DR SUBMITTED THAT THE AO HAS MADE THE SAID DISALLOWANCE IN ACCORDANCE WITH RULE 8D OF I T RULES. 4.3. IN THE REJOINDER, THE LD A.R SUBMITTED THA T THE INSTANT ASSESSMENT YEAR BEING ASSESSMENT YEAR 2008-09, IT MAY NOT BE PROPER TO RE FER THE BALANCE SHEET RELATING TO THE IMMEDIATELY PRECEDING YEAR, I.E., 31.3.2007. 5. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS D ISALLOWED PART OF ADMINISTRATIVE EXPENSES @ 0.5% OF AVERAGE VALUE OF INVESTMENTS BY APPLYING THE PROVISIONS OF RULE 8D(2)(III) OF INCOME TAX RULES. THE AO HAS ALSO DI SALLOWED PART OF INTEREST EXPENSES BY APPLYING THE PROVISIONS OF RULE 8D(2)(II) OF THE IN COME TAX RULES. 5.1 THE FIRST CONTENTION OF THE ASSESSEE WAS TH AT THE AO HAS MADE THE IMPUGNED DISALLOWANCE WITHOUT RECORDING A SATISFACTION ABOUT THE INCORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE. THE ABOVE SAID CONTENTION OF THE ASSESSEE CAN BE APPRECIATED IF WE READ SUB-SECTION (2) OF SEC. 14A, WHICH READS AS UN DER:- (2) THE ASSESSING OFFICER SHALL DETERMINE THE AM OUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE P RESCRIBED, IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSES SEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. SITSON INDIA P LTD 7 5.2 A CAREFUL READING OF THE PROVISIONS EXTRACTED A BOVE WOULD SHOW THAT THE ASSESSING OFFICER IS REQUIRED TO DETERMINE THE AMOU NT OF EXPENDITURE INCURRED IN RELATION TO EXEMPTED INCOME, IF HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE, HAVING REGARD TO THE ACCOUNTS OF THE ASSE SSEE. THE ABOVE CITED SECTION NO WHERE STATES THAT THE SATISFACTION NEEDS TO BE RECO RDED IN WRITING. THE VERY FACT THAT THE ASSESSING OFFICER HAS PROCEEDED TO INVOKE THE P ROVISIONS OF SUB-SECTION (2) SHOWS THAT THE ASSESSING OFFICER WAS NOT SATISFIED WITH T HE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE. IN THIS CONTEXT, IT IS ALSO PERTINEN T TO NOTE SUB-SECTION (3) OF SEC. 14, WHICH READS AS UNDER:- (3) THE PROVISIONS OF SUB-SECTION (2) SHALL ALSO APPLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INC URRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. 5.3 IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED T HAT IT DID NOT INCUR ANY EXPENDITURE IN RELATION TO EARNING OF THE DIVIDEND INCOME. ACCORDING TO SUB-SECTION (3) OF SEC. 14, THE PROVISIONS OF SUB-SECTION SHALL HAV E AUTOMATIC APPLICATION WHEN SUCH A CLAIM IS MADE. IN THAT KIND OF SITUATION, IN OUR V IEW, THE QUESTION OF EXAMINING ABOUT SATISFACTION OF THE ASSESSING OFFICER WITH REGARD T O THE CLAIM OF THE ASSESSEE DOES NOT ARISE, DUE TO LEGAL FICTION EMBODIED IN SUB-SECTION (3) OF THE ACT. ACCORDINGLY, WE DISMISS THE SAID LEGAL CONTENTION URGED BEFORE US B Y THE ASSESSEE. SITSON INDIA P LTD 8 5.4 THE LD A.R ALSO CONTENDED THAT THE AO, HAVI NG NOT MADE SIMILAR DISALLOWANCES IN THE EARLIER YEARS, IS PRECLUDED FOR MAKING THE IMPU GNED DISALLOWANCE IN THE YEAR UNDER CONSIDERATION. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF SRIDEV ENTERPRIS ES (SUPRA). WE NOTICE THAT THE SAID DECISION WAS RENDERED PRIOR TO THE INTRODUCTION OF PROVISIONS OF SEC. 14A OF THE ACT. FURTHER WE NOTICE THAT THE ASSESSEE DID NOT SHOW TH AT THE ASSESSING OFFICER HAD REFRAINED FROM MAKING SIMILAR KIND OF DISALLOWANCE, AFTER APPLYING HIS MIND, IN ANY OF THE EARLIER YEARS. EVEN OTHERWISE, IT IS A WELL EST ABLISHED PROPOSITION THAT THE PRINCIPLES OF REJUDICATA IS NOT APPLICABLE TO INCOME TAX PROCE EDINGS. HENCE, WE REJECT THIS LEGAL CONTENTION ALSO. 5.5 THE LD D.R INVITED OUR ATTENTION TO THE BA LANCE SHEET AS AT 31.3.2007 AND HAS SHOWN THAT THE ASSESEE HAS USED THE LOAN FUNDS ALSO FOR MAKING INVESTMENTS. AS ALREADY STATED, THE INVESTMENT AS ON 31.3.2007 STOO D AT RS.12.26 CRORES, WHICH WAS MORE THAN THE AGGREGATE AMOUNT OF OWN FUNDS (5.40 C RORES) AND UNSECURED LOANS (2.21 CRORES). A READING OF THE ABOVE SAID FIGURES WOULD SHOW THAT THE LOAN FUNDS HAVE BEEN USED FOR MAKING INVESTMENTS AND HENCE, IN OUR VIEW, DISALLOWANCE MADE BY THE AO IS JUSTIFIABLE. THOUGH THE LD A.R CONTENDED THA T THE BALANCE SHEET AS AT 31.3.2008 IS REQUIRED TO BE CONSIDERED, YET WE ARE NOT INCLIN ED TO ACCEPT THE SAID CONTENTION FOR THE SIMPLE REASON THAT THE BALANCES OF OWN FUNDS, L OAN FUNDS AND INVESTMENTS ARE BROUGHT FORWARD FROM THE EARLIER YEARS TO THE YEAR UNDER CONSIDERATION. THE BALANCE SITSON INDIA P LTD 9 SHEET AS AT 31.3.2007, I.E., THE YEAR IMMEDIATELY P RECEDING TO THE YEAR UNDER CONSIDERATION CLEARLY SHOW ABOUT THE UTILISATION OF LOAN FUNDS FOR MAKING INVESTMENTS. FURTHER THE PROFIT FOR THE YEAR ENDED 31.3.2008 SHA LL BE DEEMED TO HAVE ACCRUED ONLY ON THE LAST DAY OF THE FINANCIAL YEAR AND HENCE ON THAT COUNT ALSO THE CONTENTION OF THE ASSESSEE IS LIABLE TO BE REJECTED. IN VIEW OF THE FACTUAL POSITION DISCUSSED ABOVE, IN OUR VIEW, THERE IS NO NECESSITY TO FOLLOW THE PRINCIPLE S LAID DOWN IN THE CASE OF RELIANCE UTILITIES & POWER LTD (SUPRA). 5.6 THE LD A.R CONTENDED THAT THE AVERAGE VALUE O F INVESTMENTS SHOULD BE ARRIVED BY CONSIDERING ONLY THOSE INVESTMENTS WHICH HAVE YIELD ED DIVIDEND. THOUGH THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY CALCUTT A BENCH OF TRIBUNAL, WE ARE UNABLE TO ACCEPT THE SAME IN VIEW OF THE CLEAR PROVISIONS PRESCRIBED IN RULE 2(II) OF RULE 8D OF THE INCOME TAX RULES. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT PROVISIONS:- B = THE AVERAGE OF VALUE OF INVESTMENTY, INCOME F ROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR. 5.7 A CAREFUL PERUSAL OF THE ABOVE SAID PROVISIONS WOULD SHOW THAT THE WORDS DOES NOT OR SHALL NOT HAVE GOT THEIR OWN SIGNIFICANCE , I.E., THE WORDS DOES NOT REFER TO THE INCOME WHICH HAS ALREADY BEEN RECEIVED AND THE WORDS SHALL NOT REFER TO THE INCOME THAT MAY BE RECEIVED. IN OUR VIEW, THE WORD S SHALL NOT MANDATES THAT THE SITSON INDIA P LTD 10 ENTIRE INVESTMENTS, THE INCOME WHICH SHALL NOT FORM PART OF THE TOTAL INCOME ARE REQUIRED TO BE CONSIDERED, OTHERWISE THE WORDS SHA LL NOT SHALL LOOSE ITS SIGNIFICANCE IN THE ABOVE SAID PROVISION. ACCORDINGLY, WE REJECT T HE SAID CONTENTIONS OF THE ASSESSEE. 5.8 THE INTEREST INCOME HAS BEEN RECEIVED FROM BANK DEPOSIT, WHILE INTEREST PAYMENT IS MADE TO DIRECTORS AND NOT AGAINST ANY BA NK LOAN. HENCE, IN OUR VIEW, THE QUESTION OF NETTING OFF INTEREST WILL NOT ARISE. 6 IN VIEW OF THE FOREGOING DISCUSSIONS, IN OUR VIEW, THE AO WAS JUSTIFIED IN MAKING DISALLOWANCE OF PART OF INTEREST EXPENDITURE IN TER MS OF RULE 8D(2)(II) OF THE INCOME TAX RULES READ WITH SECTION 14A OF THE ACT. ACCORDINGL Y, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE ADDITION MADE BY THE ASSESSING OFFICER. 7. THE NEXT ISSUE PERTAINS TO THE DISALLOWANCE OF 0.5% OF THE AVERAGE VALUE OF INVESTMENTS MADE TOWARDS ADMINISTRATIVE EXPENSES IN TERMS OF RULE 8D(2)(III) OF THE ACT. WE HAVE ALSO NOTICED THAT THE SAID DISALLOWAN CE IS REQUIRED TO BE MADE IN TERMS OF SEC. 14A(3) OF THE ACT, EVEN IF THE ASSESSEE CLAIMS THAT HE DID NOT INCUR ANY EXPENDITURE. HENCE, WE DO NOT FIND ANY INFIRMITY I N THE DECISION OF LD CIT(A) ON THIS ISSUE AND ACCORDINGLY CONFIRM THE SAME. 8. THE NEXT ISSUE URGED BY REVENUE RELATES TO TH E DELETION OF DISALLOWANCE OF RS.26,54,640/- MADE U/S 36(1)(III) OF THE ACT. THE AO NOTICED THAT THE ASSESSEE HAS INVESTED A SUM OF RS.3.25 CRORES IN M/S HASSAN BIOM ASS COMPANY PVT LTD FROM WHICH IT DID NOT RECEIVE ANY BENEFITS. THE AO NOTICED THAT THE ASSESSEE HAD ALSO TAKEN LOANS SITSON INDIA P LTD 11 FROM ITS DIRECTORS AND HAS CLAIMED INTEREST EXPENDI TURE OF RS.26,54,640/- ON THE SAID LOANS. ACCORDINGLY, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS DELIBERATELY DIVERTED THE INTEREST BEARING FUNDS FOR NON-PRODUCTIVE PURPO SES AND ACCORDINGLY DISALLOWED THE INTEREST EXPENDITURE OF RS.26,54,640/- CLAIMED BY T HE ASSESSEE. THE LD CIT(A), HOWEVER, DELETED THE DISALLOWNCE BY HOLDING THAT TH E INVESTMENT CANNOT BE CONSIDERED AS HAVING BEEN MADE FOR NON-BUSINESS PURPOSES. THE REVENUE IS AGGRIEVED BY THE SAID DECISION OF LD CIT(A). 8.1 THE LD D.R SUBMITTED THAT THE ASSESSEE DID NOT DERIVE ANY BENEFIT FROM THE INVESTMENT MADE IN M/S HASSAN BIOMASS POWER CO. PVT LTD AND HENCE THE AO WAS JUSTIFIED IN DISALLOWING THE INTEREST EXPENDITURE C LAIMED BY THE ASSESSEE. 8.2 ON THE CONTRARY, THE LD COUNSEL FOR THE AS SESSEE SUBMITTED THAT THERE IS COMMERCIAL EXPEDIENCY IN MAKING THE ABOVE SAID INVE STMENT. IN THIS REGARD, THE LD COUNSEL INVITED OUR ATTENTION TO PAGE 55 OF THE PAP ER BOOK WHEREIN A COPY OF THE MOU ENTERED BETWEEN THE ASSESSEE AND ANOTHER COMPANY NA MED NEWCON ENERGY MART (NEG) IS PLACED. THE LD COUNSEL SUBMITTED THAT THE ASSESSEE AND NEG HAVE AGREED TO JOINTLY COLLOBORATE TO DESIGN, FINANCE, BUILD AND C OMMISSON 8 MW BIOMASS FUELED POWER PLAT AT HASSEN, KARNATAKA. AS PER THE AGREEMENT, THE ASSESSEE WAS REQUIRED TO INVEST APPROXIMATELY RS. 3.70 CRORES TOWARDS EQUITY SHARES CAPITAL. IN PURSUANCE OF THE SAID SITSON INDIA P LTD 12 INVESTMENT, THE ASSESSEE WAS SELECTED AS A TURN KE Y CONTRACTOR TO BUILD A BIOMASS FUELLED POWER PLANT. IN ORDER TO EXECUTE THE MOU, BOTH THE PARTIES CITED ABOVE HAVE FORMED A SPECIAL PURPOSE VEHICLE, I.E., THE COMPAN Y NAMED M/S HASSAN BIOMASS POWER CO. PVT. LTD AND THE ASSESSEE MADE INVESTMENT OF 3.25 CRORES TOWARDS THE SHARE CAPITAL OF THE SAID COMPANY. THE ASSESSEE LATER O N ENTERED INTO A CONTRACT WITH HASSAN BIOMASS POWER CO. PVT LTD ON 26.8.2003 FOR SUPPLYI NG CERTAIN GOODS REQUIRED FOR SETTING UP OF 8 MW POWER PLANT. IN PURSUANCE OF CO NTRACT, THE ASSESSEE HAS SUPPLIED MATERIAL TO M/S HASSAN BIOMASS P LTD. THE LD COUN SEL INVITED OUR ATTENTION TO THE COPY OF LEDGER ACCOUNT PLACED IN PAGE 88 TO 98 OF THE PA PER BOOK TO SUBSTANTIATE THE CLAIM THAT THE ASSESSEE HAS SUPPLIED THE MATERIAL TO M/S HASSAN BIOMASS POWER CO. PVT LTD. ACCORDINGLY, HE SUBMITTED THAT THERE WAS A COMMERC IAL EXPEDIENCY IN MAKING THE INVESTMENT AND THE ASSESSEE HAS ALSO DERIVED COMMER CIAL BENEFITS THEREFROM. THE LD A.R FURTHER SUBMTITED THAT THE ASSESSEE WAS HAVING HUGE INTEREST FREE FUNDS AND HENCE THE PRESUMPTION LAID DOWN IN THE CASE OF RELIANCE U TILITIES & POWER LTD (SUPRA) SHALL BE APPLICABLE TO THE FACTS OF THE INSTANT ISSUE ALSO. ACCORDINGLY, HE SUBMITTED THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE M ADE BY THE AO. 9. WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISS UE AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAD ENTERED INTO AN AGR EEMENT WITH M/S NUCON ENERGY GROUP, MAURITIUS, WAY BACK IN THE YEAR 2003 FOR SET TING UP A BIOMASS FUELLED POWER PLANT. THERE IS NO DISPUTE THAT THE ASSESSEE WAS REQUIRED TO INVEST A SUM OF RS.3.70 SITSON INDIA P LTD 13 CRORE AS PER THE ABOVE SAID AGREEMENT. FURTHER THE TERMS OF THE AGREEMENT ALSO SHOW THAT THE ASSESSEE WAS SELECTED AS A TURNKEY CONTRAC TOR FOR EXECUTING THE PROJECT. ACCORDING TO THE ASSESSEE, A SPECIAL PURPOSE VEHICL E, VIZ., M/S HASSAN BIOMASS POWSER COMPANY PRIVATE LTD WAS FORMED AND THE ASSESSEE HAS CONTRIBUTED A SUM OF RS.3.25 CRORES TOWARDS ITS SHARE CAPITAL. ACCORDING TO THE LD A.R, THE OTHER SHARE HOLDER WAS M/S NUCON ENERGY GROUP, MAURITIUS. WE NOTICE THAT T HESE FACTUAL ASPECTS HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. HOWEVER, T HE FACTUAL POSITION NARRATED BY THE LD A.R WOULD SHOW THAT THE ASSESSEE WAS HAVING A CO MMERCIAL INTEREST AND ALSO OBLIGATION IN MAKING INVESTMENT OF RS.3.25 CRORES, REFERRED ABOVE. BESIDES THE ABOVE, THE ASSESSEE HAS ALSO SUPPLIED THE MATERIALS TO M/S HASSAN BIOMASS POWER COMPANY PVT LTD. WE NOTICE THAT THE SAID INVESTMENT HAS BE EN MADE IN THE EARLIER YEARS, I.E., IT IS REFLECTED IN THE BALANCE SHEET AS AT 31.3.2005. UNDER THESE SET OF FACTS, THE LD CIT(A) HAS EXPRESSED THE VIEW THAT THE INVESTMENT O F RS.3.25 CRORES CANNOT BE SAID TO BE FOR NON-BUSINESS PURPOSES. IN VIEW OF THE FOREG OING DISCUSSIONS, WE ARE ALSO INCLINED TO ACCEPT THE VIEW EXPRESSED BY LD CIT(A). ACCORDINGLY, WE UPHOLD HIS VIEW ON THIS ISSUE. 10. THE NEXT ISSUE RELATES TO THE HEAD OF INCOME UN DER WHICH THE GAIN REALIZED ON SALE OF SHARES IS ASSESSABLE. THE ASSESSING OFFICE R ASSESSED THE PROFIT ON SALE OF SHARES UNDER THE HEAD INCOME FROM BUSINESS, AS AGAINST T HE CLAIM OF THE ASSESSEE THAT IT SHOULD BE ASSESSED AS CAPITAL GAINS. THE FACTS R ELATING TO THE SAID ISSUE ARE DISCUSSED SITSON INDIA P LTD 14 IN BRIEF. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED THE PROFIT FROM SALE OF SHARES AS UNDER:- LONG TERM CAPITAL GAINS - RS. 16,16,752/- SHORT TERM CAPITAL GAINS - RS.1,74,14,332/- 10.1 THE AO NOTICED THAT THE TAX AUDITOR, WHILE GIV ING THE DETAILS OF BUSINESSES CARRIED ON BY THE ASSESSEE IN THE TAX AUDIT REPORT, HAD SHO WN THE ACTIVITY OF TRADING IN SHARES AS ONE OF THE BUSINESS ACTIVITIES OF THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE WAS DEALING IN SHARES VERY FREQUENTLY AND ALSO IN A REGULAR MANNER. THE DETAILS OF TRANSACTIONS ENTERED INTO BY THE ASSESSE E WERE NOTED AS UNDER BY THE AO:- (A) TOTAL SALE TRANSACTION OF SHARES : 178 (B) TOTAL VALUE OF SALE TRANSACTIONS : RS.19.62 C RORES (C) TOTAL PURCHASE TRANSACTION AGAINST WHICH SALES WERE MADE DURING THE YEAR : 178 (D) VALUE OF ABOVE PURCHASES : RS.18.06 CRORES (E) NO. OF SHARES SOLD : 10,18,224. 10.2 THE AO ALSO TOOK NOTE OF FOLLOWING CASE LAW, W HEREIN THE VARIOUS CRITERIAN TO DECIDE ABOUT THE NATURE OF TRANSACTIONS IN SHARES W ERE LAID DOWN:- (A) RAJ BAHADUR VISHESHWAR SIGH VS. CIT (41 ITR 685)(S C) (B) DALHOUSIE INVESTMENT TRUST CO. LTD VS. CIT (68 ITR 486)(SC) (C) CIT VS. SUTLEJ COTTON MILLS SUPPLY AGENCY (100 ITR 706)(SC) (D) CIT VS. ASSOCIATED INDUSTRIAL DEVELOPMENT CO. (182 ITR 586)(SC) (E) CIT VS. H. HOLCK LARSEN (160 ITR 167)(SC) SITSON INDIA P LTD 15 10.3 ACCORDINGLY THE AO CAME TO THE CONCLUSION THAT THE VOLUME, FREQUENCY AND CONSISTENCY OF TRANSACTIONS SHOW THAT THE INTENTION OF THE ASSESSEE WAS TO CARRY ON THE BUSINESS OF DEALING IN SHARES. THE AO ALSO NOTICED THAT THE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE WAS WRONG AS THE CONCERNED SHARES WERE FOUND TO HAVE BEEN SOLD WITHIN A PERIOD OF ONE YEAR. HOWEVER, SINCE T HE AO CAME TO THE CONCLUSION TO ASSESS THE GAINS REALIZED ON SALE OF SHARES AS BUSI NESS INCOME, HE ASSESSED BOTH THE LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAINS DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS. 10.4 THE LD CIT(A) ALSO CONFIRMED THE VIEW OF THE A SSESSING OFFICER FOR THE REASON THAT (A) THE ASSESSEE DID NOT RETAIN SUBSTANTIAL PORTION OF PURCHASES OF SHARES AS INVESTMENT. (B) THERE ARE HIGH FREQUENCY AND VOLUME OF PURCHASES AN D SALE OF SHARES. (C) THE AUDITOR OF THE ASSESSEE HAS VERY CLEARLY INDICA TED IN THE AUDIT REPORT IN FORM NO.3CD THAT THE ASSESSEE COMPANY HAS ENGAGED I N TRADING OF SHARES. THE ASSESSEE IS AGGRIEVED BY THE SAID DECISION OF L D CIT(A). 11. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OBTAINED A CLARIFICATORY LETTER FROM THE TAX AUDITOR AND FURNI SHED THE SAME BEFORE THE LD CIT(A). IN THE SAID LETTER, THE AUDITOR HAS CLARIFIED THAT THE TRADING IN SHARES WAS NOT THE BUSINESS OF THE ASSESSEE. THE LD COUNSEL SUBMITTED THAT THE LD CIT(A) HAD CALLED FOR A REMAND REPORT FROM THE AO ON THE ADDITIONAL EVIDENCES FILE D BEFORE HIM, INCLUDING THE LETTER SITSON INDIA P LTD 16 REFERRED ABOVE. HOWEVER, THE AO DID NOT OFFER ANY COMMENT ON THE LETTER ISSUED BY THE AO. THE LD CIT(A) ALSO DID NOT MAKE ANY OBSERVATIO N ABOUT THE LETTER. THE LD COUNSEL SUBMITTED THAT THE TAX AUDITOR HAS INADVERTENTLY SH OWN THE TRADING IN SHARES AS ONE OF THE BUSINESS ACTIVITIES CARRIED ON BY THE ASSESSEE, WHICH IS AGAINST THE FACTS. HE SUBMITTED THAT THE ASSESSEE NEVER INTENDED TO CARRY ON THE ACTIVITY OF TRADING IN SHARES AS ITS BUSINESS ACTIVITY AND HENCE IT HAS DECLARED THE GAINS REALIZED ON SALE OF SHARES UNDER THE HEAD CAPITAL GAINS. THE LD COUNSEL FUR THER SUBMITTED THAT THE ASSESSEE HAS ALL ALONG BEEN DECLARING THE PURCHASE OF SHARES AS AN ITEM OF INVESTMENT IN ITS BOOKS OF ACCOUNT AND BALANCE SHEET AND IT HAS NEVER TREATED THE SAME AS ITS STOCK IN TRADE. REGARDING THE VOLUME OF TRANSACTIONS NOTED BY THE AO, THE LD A.R SUBMITTED THAT THE SINGLE ORDER OF PURCHASE/SALES PLACED BY T HE ASSESSEE HAS BEEN EXECUTED BY WAY OF SEVERAL SMALL LOTS. TO SUBSTANTIATE HIS CON TENTION, THE LD A.R INVITED OUR ATTENTION TO THE COPIES OF CONTRACT NOTES, WHICH AR E PLACED IN PAGES 41 TO 54 OF THE PAPER BOOK AND SUBMITTED THAT THE ORDER PLACED FOR PURCHASE/SALE OF PARTICULAR QUANTITY OF SHARES ON A SINGLE DAY HAS BEEN EXECUTED BY SEV ERAL SMALLER TRANSACTIONS. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE TAX AUTH ORITIES ARE NOT CORRECT IN PRESUMING THAT THERE WERE FREQUENT TRANSACTIONS OF PURCHASE A ND SALE OF SHARES. THE LD A.R FURTHER SUBMITTED THAT THE ASSESSEE WAS INDULGING I N INTRA DAY TRANSACTIONS (I.E., PURCHASE AND SALE OF SHARES ON THE VERY SAME DAY) O NLY OCCASIONALLY AND THE GAIN REALISED ON SUCH TYPE OF TRANSACTIONS WAS ONLY RS.1 0,20,817/-. ACCORDINGLY HE SUBMITTED THAT THE PROFIT REALIZED ON SALE OF SHARE S SHOULD BE ASSESSED UNDER THE HEAD CAPITAL GAINS ONLY. SITSON INDIA P LTD 17 11.1 ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE TAX AUDITOR SHALL GIVE REPORT IN FORM NO.3CD AFTER GETTING NECESSARY DETAILS FROM TH E ASSESSEE. HENCE, IT IS THE ASSESSEE WHO USUALLY SUPPLIES INFORMATION ABOUT THE VARIOUS BUSINESSES CARRIED ON BY IT. ACCORDINGLY THE LD D.R SUBMITTED THAT THE ASSESSEE WOULD HAVE STATED THAT IT WAS CARRYING ON BUSINESS OF SHARE TRADING AND HENCE THE TAX AUDITOR HAS NOTED THE SAME IN THE TAX AUDIT REPORT. ACCORDINGLY, HE CONTENDED TH AT IT IS NOT RIGHT ON THE PART OF THE ASSESSEE TO PASS THE BLAME UPON THE TAX AUDITOR. H E FURTHER SUBMITTED THAT THE INTENTION OF THE ASSESSEE WAS TO CARRY ON THE SHARE TRADING ACTIVITY AS A BUSINESS ACTIVITY ONLY. REFERRING TO THE CLARIFICATORY LETT ER GIVEN BY THE TAX AUDITOR, THE LD D.R SUBMITTED THAT THE TAX AUDITOR IS MAKING ONLY A POS SIBLE INTERPRETATION OF THE REPORT GIVEN BY HIM AND HE HAS NOT CLARIFIED THE MATTER IN UNEQUIVOCAL TERMS. THE LD D.R FURTHER SUBMITTED THAT THE TAX AUDITOR HAS REFERRED TO THE REPORT GIVEN BY HIM ANNEXURE-I TO FORM 3CD TO SUBMIT THAT HE HAS GIVEN THE BUSINESS AS MANUFACTURING INDUSTRY ENGINEERING GOODS. THE LD D.R SUBMITTED THAT THE AUDITOR IS REQUIRED TO GIVE ONLY MAIN AREA OF BUSINESS ACTIVITIES AND NOT ALL BUSINESS ACTIVITIES AND HENCE THE TAX AUDITOR COULD NOT PLACE RELIANCE ON IT TO CHANG E HIS VIEW. THE LD D.R FURTHER SUBMITTED THAT THE ASSESSEE WAS INDULGING IN FREQUE NT PURCHASE AND SALE OF SHARES OF HIGH VOLUME AND HENCE THE TAX AUTHORITIES WERE RIGH T IN LAW IN ASSESSING THE INCOME GENERATED FROM SHARE TRADING AS BUSINESS INCOME. SITSON INDIA P LTD 18 12. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE TAX AUTHORITIES HAVE PL ACED STRONG RELIANCE ON THE TAX AUDIT REPORT AND ALSO ON THE FREQUENCY OF TRANSACTIONS TO DECIDE ABOUT THE NATURE OF ACTIVITIES CARRIED BY THE ASSESSEE IN RESPECT OF SHARE TRADING . THE CONTENTION OF THE ASSESSEE IS THAT THE TAX AUDITOR HAS COMMITTED AN ERROR AND HEN CE HE HAS ISSUED A CLARIFICATORY LETTER. THE LD A.R ALSO POINTED OUT THAT THE SAID LETTER WAS NOT CONSIDERED EITHER BY THE LD CIT(A) OR BY THE AO (DURING REMAND PROCEEDINGS) . THE LD A.R ALSO SUBMITTED THAT THE REPORT GIVEN BY THE TAX AUDITOR CANNOT BE CONSI DERED AS A SOLE OR ULTIMATE FACTOR IN ORDER TO DECIDE ABOUT THE NATURE OF SHARE TRADING T RANSACTIONS CARRIED ON BY THE ASSESSEE, EVEN THOUGH HE PLEADED ABOUT THE NON-CONS IDERATION OF CLARIFICATORY LETTER ISSUED BY THE TAX AUDITOR. 12.1 HOWEVER, ACCORDING TO LD D.R, THE TAX AUDI TOR DO NOT INDEPENDENTLY REPORT ABOUT THE NATURE OF BUSINESSES CARRIED ON BY THE AS SESSEE. ACCORDINGLY TO LD D.R, THE TAX AUDITOR FURNISHES SUCH INFORMATION ON THE BASIS OF INFORMATION FURNISHED TO HIM BY THE ASSESSEE. THUS, ACCORDING TO LD D.R, THE INTE NTION OF THE ASSESSEE WAS TO CARRY ON SHARE TRADING TRANSACTIONS AS A BUSINESS ACTIVITY O NLY. 12.2 HOWEVER, IT IS A FACT THAT NEITHER THE LD CIT(A) NOR THE AO (IN REMAND PROCEEDINGS) DID DISCUSS ANYTHING ABOUT THE CLARIFI CATORY LETTER ISSUED BY THE TAX AUDITOR. FURTHER THEY DID NOT CONSIDER IT NECESSAR Y TO EXAMINE THE AUDITOR, WHEN THE ASSESSEE IS DISPUTING THE TAX AUDIT REPORT. IN OU R VIEW, WHEN THE ASSESSEE IS PLACING SITSON INDIA P LTD 19 SOME MATERIAL TO CONTROVERT THE REPORT GIVEN BY THE TAX AUDITOR, THE TAX AUTHORITIES SHOULD HAVE CARRIED OUT NECESSARY ENQUIRIES, BEFORE PLACING FULL RELIANCE ON THE TAX AUDIT REPORT, WHICH WAS DISPUTED BY THE ASSESSEE. FURTHE R THE ASSESSEE IS NOW DISPUTING BEFORE US ABOUT THE FINDING GIVEN ON THE QUANTUM O F TRANSACTIONS CARRIED OUT IN THE COURSE OF SHARE TRADING ACTIVITY, I.E., ACCORDING T O THE ASSESSEE, A SINGLE ORDER OF PURCHASE/SALES HAS BEEN EXECUTED THROUGH A SERIES O F SMALLER TRANSACTIONS. THE ASSESSEE HAS ALSO PLACED SAMPLE COPIES OF ORDERS IN THE PAPER BOOK. IN OUR VIEW, THE NUMBER OF ORDERS PLACED FOR PURCHASE/SALES OF SHARE S SHOULD HAVE BEEN CONSIDERED TO DECIDE ABOUT THE FREQUENCY AND REGULARITY OF TRANSA CTIONS. HENCE, ACCORDING TO THE ASSESSEE, THE TAX AUTHORITIES HAVE NOT PROPERLY APP RECIATED THIS IMPORTANT ASPECT IN PROPER PERSPECTIVE. HOWEVER, THE ASSESSEE DID NOT FURNISH FULL DETAILS ABOUT THE NUMBER OF TRANSACTIONS OF PURCHASE/SALES OF SHARES ENTERED BY HIM. FURTHER ACCORDING TO THE ASSESSEE, IT DID NOT CARRY OUT INTRA DAY TRA NSACTIONS VERY FREQUENTLY. THUS, ACCORDING TO THE ASSESSEE, THERE WAS NO INTENTION T O CARRY ON SHARE TRADING ACTIVITIES AS A BUSINESS ACTIVITY, BUT ONLY AS AN INVESTMENT ACTI VITY. ACCORDING TO THE ASSESSEE, THIS IS EVIDENCED BY THE FACT THAT IT HAS SHOWN THE SHAR ES ON HAND AS INVESTMENT IN THE BALANCE SHEET AND NOT AS STOCK IN TRADE. ACCORDI NG TO THE ASSESSEE, THE TAX AUTHORITIES HAVE FAILED TO CONSIDER THESE ASPECTS. 13 THE FOREGOING DISCUSSIONS SHOW THAT THE TAX A UTHORITIES HAVE REACHED THEIR OWN CONCLUSIONS WITHOUT PROPERLY APPRECIATING THE F ACTS SURROUNDING THE ISSUE, SITSON INDIA P LTD 20 PARTICULARLY THE CLARIFICATORY LETTER ISSUED BY THE TAX AUDITOR, THE FREQUENCY OF TRANSACTIONS ETC. HENCE, IN OUR VIEW, THIS ISSUE R EQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE T HIS ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIR ECTION TO EXAMINE THE ISSUE AFRESH BY DULY CONSIDERING ALL THE MATERIALS THAT MAY BE PROD UCED BY THE ASSESSEE AND ALSO THE FACTS SURROUNDING THE ISSUE AND TAKE APPROPRIATE DE CISION IN ACCORDANCE WITH THE LAW. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE AS WELL AS THE REVENUE ARE PARTLY ALLOWED. . #. * * ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEB 2014 . * 4 14TH FEB 2014 * SD/- SD /- ( AMIT SHUKLA ) ( B R BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 4 DATED 14 TH FEB 2014 . . ./ RAJ , SR. PS SITSON INDIA P LTD 21 * ** * ' '' ' 6 66 6 7 77 76 66 6 / COPY OF THE ORDER FORWARDED TO : 1. & / THE APPELLANT 2. '(& / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 6 ' , , / DR, ITAT, MUMBAI 6. # / GUARD FILE. / // / BY ORDER, (6 ' //TRUE COPY// / // / ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI