MONGA STRAYFIELD P.LTD, MUMBAI V. DCIT 9(2), MUMBAI

ITA 4606/MUM/2009

• Counselvise Citation: 460619914 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 14-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: PARAS S SALVA
• Keywords: Capital asset; Business expenditure; Opportunity of being heard; Cost of acquisition; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER I.T.A. NO. 4606/MUM/2009 ASSESSMENT YEAR : 2006-07. MONGA STRAYFIELD LTD., DY. COMMISSIONER OF INCOME-TAX, 5, ARUN BAZAR, S.V. ROAD, VS. 9(2), MUMBAI. MALAD (W), MUMBAI 400064. PAN : AABCM6205H APPELLANT. RESPONDENT. APPELLANT BY : SHRI PARAS S. SALVA. RESPONDENT BY: SHRI V.V. SHASTRI. DATE OF HEARING : 21-10-2011. DATE OF PRONOUNC EMENT : 09-11-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-IX, MUMBAI DATED 08-06-2009 AND THE SO LITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS.51,71,01 3/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF EXPENSES INCURRED BY THE ASSESSEE FOR ACQUIRING THE SHARES OF OTHER COMPANY TREATING THE SAME AS CAPITAL IN NATURE. 2. THE RELEVANT FACTS OF THE CASE AS MENTIONED BY T HE AO IN HIS ORDER ARE AS FOLLOWS: 2 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. THE ASSESSEE IS A COMPANY WHICH WAS INCORPORATED I N INDIA IN JULY, 1996 AS A JOINT VENTURE COMPANY OF M/S MONGA ELECTRONICS P. LTD. AND M/S STRAYFIELD LTD., U.K. WITH EACH HAVING 50% SHAREHOLDING. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF RADIO FREQUENCY TEXTILE YA RN DRYER. THERE WAS A CHANGE IN THE OWNER OF M/S STRAYFIELD LTD., U.K. AND THE N EW OWNERS M/S INDUCTOHEAT OFFERED THE STAKE IN M/S STRAYFIELD LTD., U.K. TO M/S MONGA ELECTRONICS P. LTD. AFTER THE DUE DILIGENCE, M/S MONGA STRAYFIELD INDIA BOUGHT THE SHARES OF M/S STRAYFIELD LTD., U.K. ACCORDING TO THE AO, THE ASSE SSEE COMPANY THUS ACQUIRED SHARES OF M/S STRAYFIELD LTD., U.K. FOR TOTAL CONS IDERATION OF RS.2,20,37,400/- WHICH WAS DULY REFLECTED IN ITS BALANCE SHEET UNDER THE HEAD INVESTMENT IN CONNECTION WITH THE SAID ACQUISITION, THE ASSESSEE COMPANY INCURRED EXPENDITURE ON LEGAL AND PROFESSIONAL FEES AMOUNTING TO RS.25,90,9 45/- AND TRAVELLING EXPENSES AMOUNTING TO RS.18,34,185/-. IT ALSO INCURRED EXPEN DITURE OF RS.11,61,275/- TOWARDS CHARGES FOR OBTAINING THE LETTER OF CREDIT AND RS.7,90,200/- FOR FRANKING OF MORTGAGE. THE OTHER CHARGES AMOUNTING TO RS.4,52,44 1/- WERE ALSO INCURRED BY THE ASSESSEE WHICH WAS DIRECTLY RELATABLE TO THE LOAN T AKEN BY THE ASSESSEE TO FUND THE INVESTMENT MADE IN THE SHARES OF M/S STRAYFIELD LT D., U.K. ACCORDING TO THE AO, ALL THESE EXPENSES INCURRED BY THE ASSESSEE AGGREGA TING TO RS.51,71,013/- IN CONNECTION WITH ACQUISITION OF SHARES WERE CAPITAL IN NATURE AND ACCORDINGLY THE ASSESSEE WAS CALLED UPON BY HIM TO EXPLAIN AND JUST IFY ITS CLAIM FOR DEDUCTION ON ACCOUNT OF THE SAID EXPENSES. IN REPLY, THE FOLLOWI NG EXPLANATION WAS MAINLY OFFERED BY THE ASSESSEE : (A) THE COMPANY SUBSCRIBED TO THE SHARES OF MONGA S TRAYFIELD LTD. U.K. (LATER RENAMED AS STRAYFIELD LTD. U.K.). THE SAID U .K. COMPANY ACQUIRED BUSINESS OF JOINT VENTURE COMPANY IN U.K. THE AMOUNT OF RS.2,20,37,400/- REPRESENTS INVESTMENT BY THE ASSES SEE COMPANY. 3 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. (B) THE SAID INVESTMENT WAS MADE FOR PROTECTING AND PROMOTING THE EXISTING BUSINESS OF THE ASSESSEES COMPANY. (C) THE EXPENSES REFERRED TO IN YOUR LETTER ARE PRI MA FACIE THE REVENUE IN THE NATURE BEING LEGAL AND PROFESSIONAL FEES, TRAVE LLING EXPENSES, BANK CHARGES AND INTEREST. THEY HAVE BEEN INCURRED FOR E XPANSION OF THE EXISTING BUSINESS AND NOT FOR ACQUIRING ANY FIXED A SSETS NOR FOR ANY NEW VENTURES/SET-UP OF NEW BUSINESS. (D) THE INVESTMENT IN SHARES IS FOR A CAPITAL ASSET S WHICH IS FINANCIAL ASSETS AS PER SECTION 55(2)(AA) AND ITS COST OF ACQ UISITION IS THE AMOUNT ACTUALLY PAID FOR ACQUIRING SAID SHARES. THE ACCOUN TING STANDARD AS 13 ALSO PRESCRIBES THE SAME TREATMENT. (E) INTEREST PAID AMOUNT BORROWED FOR THE PURPOSE O F ACQUIRING SHARE IN THE BUSINESS OF ANOTHER TRANSPORT COMPANY BY THE TR ANSPORT COMPANY WAS ALLOWED PER P.V. MOHAMED GHOUSE V. CIT (1963) 4 3 ITR 127(MAD.). (LAW & PRACTICE OF INCOME TAX VOLUME 1 S EPTEMBER, 2001 PAGE 1016). WE HAVE ALSO REFERS TO VARIOUS AUT HORITIES IN OUR PREVIOUS LETTERS. THE MOST RELEVANT HOWEVER IS REPE ATED. THE HON. SUPREME COURT IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS. GUJARAT ALKALIES AND CHEMICALS LTD. [2008] 299 ITR 85 (SC) HELD THAT THE COMMITMENT CHARGES PAID BY THE ASSESSEE IN RESPECT OF PROJECT FOR EXTENSION OF EXISTING BUSINESS IS ALLOWABLE AS BUSINESS EXPENDITURE (KINDLY REFER TO LETTER DATED 3/11/2008). THE SAID LETTER ALSO REFERS TO ANOTHER RELEVANT JUDGMENT OF GILEETE GROUP INDIA 17 3 TAXMAN 52 (DELHI) ON ALLOWABILITY OF CONSULTANCY FEES FOR BUS INESS EXTENSION. (F) THE INTEREST ON CAPITAL BORROWED FOR THE PURPOS E OF BUSINESS IS FULLY ALLOWABLE IRRESPECTIVE OF WHETHER IT IS FOR REVENUE EXPENDITURE OR CAPITAL EXPENDITURE EXCEPT IN THE CASE OF NEW BUSIN ESS OR PRIOR PERIOD INTEREST/ BEFORE USE OF THE FIXED ASSET. THE BANK M ORTGAGE EXPENSES AND BANK PROCESSING CHARGES ALSO FOR IN THE SAME CA TEGORY AS THEY ARE REQUIRED FOR BANK BORROWING AND HENCE PART TAKE THE NATURE OF INTEREST EXPENSES. (G) THE BREAK-UP OF BANK CHARGES AND INTEREST AS RE QUIRED IN PARA FIVE AND SIX OF YOUR LETTER IS ENCLOSED. THE INTEREST AS WEL L AS BANK CHARGES ARE INCURRED IN THE NORMAL COURSE OF EXISTING BUSINESS OF THE COMPANY. 4 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE WAS N OT FOUND SATISFACTORY BY THE AO. ACCORDING TO HIM, THE COST OF ACQUISITION OF SH ARES HAVING BEEN SHOWN BY THE ASSESSEE UNDER THE HEAD INVESTMENT IN ITS BALANCE SHEET, THE EXPENDITURE DIRECTLY RELATABLE TO THE ACQUISITION OF SHARES WAS LIABLE T O BE TREATED AS CAPITAL IN NATURE. FOR THIS CONCLUSION, HE RELIED ON THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION VS. CIT 225 ITR 792 AND DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF EXPENSES INCURRED IN RELATION TO ACQUISITION OF SHARES TREATING THE S AME AS CAPITAL IN NATURE. 3. THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF EX PENDITURE INCURRED IN RELATION TO ACQUISITION OF SHARES WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LEARNED CIT(APPEALS). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(APPEALS), IT WAS SUBMITTED O N BEHALF OF THE ASSESSEE THAT THE EXPENSES IN QUESTION WERE INCURRED FOR THE EXPA NSION OF THE ASSESSEES EXISTING BUSINESS AND THE SAME, THEREFORE, WERE FULLY ALLOWA BLE ON THE GROUND OF BUSINESS EXIGENCIES. IT WAS CONTENDED THAT THE SAID EXPENSES DID NOT HAVE ANY RELATION WHATSOEVER TO THE CAPITAL BASE OF THE ASSESSEE COMP ANY AS THE SAME WERE RELATED TO THE INVESTMENT MADE BY IT IN A SUBSIDIARY COMPANY F OR EXPANSION OF EXISTING BUSINESS. IT WAS CONTENDED THAT THE CAPITAL ASSETS IS ONE THING WHEREAS CAPITAL BASE OF THE ASSESSEE COMPANY IS ANOTHER THING AND THE PR INCIPLES APPLICABLE TO THE CAPITAL BASE COULD NOT BE APPLIED TO CAPITAL ASSETS. IN SUP PORT OF THIS CONTENTION, RELIANCE WAS PLACED ON BEHALF OF THE ASSESSEE ON THE VARIOUS JUDICIAL PRONOUNCEMENTS. THE LEARNED CIT(APPEALS) DID NOT FIND MERIT IN THE CONT ENTIONS RAISED ON BEHALF OF THE ASSESSEE COMPANY IN SUPPORT OF ITS CLAIM FOR DEDUCT ION ON ACCOUNT OF EXPENSES INCURRED IN RELATION TO ACQUISITION OF SHARES AND C ONFIRMED THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF THE SAID EXPENSES FOR THE F OLLOWING REASONS GIVEN IN PARAGRAPH NO. 7 OF HIS IMPUGNED ORDER : 5 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. I HAVE GONE THROUGH THE CONTENTION OF THE APPELLA NT AS WELL AS THAT OF THE AO. IN SO FAR AS THE EXPENSES INCURRED IN RELAT ION TO ACQUISITION OF SHARES IN SUBSIDIARY COMPANY IS CONCERNED IT IS NOT IN DIS PUTE THAT THE COMPANYS INDIAN PROMOTERS WERE HOLDING 50% OF STAKE IN EXIST ING COMPANY WHERE AS BALANCE 50% STAKE WAS HELD BY THE FOREIGN COUNTER P AR VIZ. STRAYFIELD LTD. U.K., WHOSE IN TURN HOLDING WAS THEN TAKEN OVER BY OTHER GROUP OF COMPANY. SINCE THE NEW MANAGEMENT WAS NOT INTERESTED TO HOLD THE STAKE IN APPELLANTS COMPANY THEY DECIDED TO BE OFFLOAD THE SAME. IT IS UNDER THESE CIRCUMSTANCES THE APPELLANT COMPANY HAD DECIDED TO FORM A SUBSIDIARY TO MORE PARTICULARLY ACQUIRED THE STAKE OF THE APPELLA NT COMPANY WHICH WAS DECIDED TO BE OFFLOADED BY THE MANAGEMENT OF UK COU NTERPART. IT IS THEREFORE NOT IN DOUBT THAT WHAT THE COMPANY HAS AC QUIRED IS NOTHING BUT A STAKE OF FOREIGN PARTNER THROUGH A SUBSIDIARY FORME D FOR THE PURPOSE. THE FORMATION OF SUBSIDIARY WAS NOTHING BUT A STEP TOWA RDS ACQUISITION OF THE FOREIGN PARTNERS STAKE IN THE COMPANY AS AGAINST E XPANSION OF EXISTING BUSINESS AS HAS BEEN CLAIMED BY THE APPELLANT COMPA NY. IT IS MERELY A STEP FOR ACQUISITION OF COMPANYS OWN SHARES AS AGAINST INDIRECTLY AS AGAINST ANY EXPANSION OF THE BUSINESS AS HAS BEEN VEHEMENTLY CL AIMED BY THE APPELLANT COMPANY. FURTHER IT IS ALSO TRUE THAT THE COMPANY I S SNOT IN THE BUSINESS OF ACQUISITION OF SHARES AND THEREFORE THE EXPENSES CO ULD NOT BE TREATED AS FOR THE PURPOSE OF THE EXISTING BUSINESS AND SINCE ENTI RE EXERCISE IS NOTHING BUT ACQUISITION OF SHARES WHICH IS NOTHING BUT CAPITAL ACQUISITION THE EXPENSES INCURRED COULD NOT BE TREATED AS REVENUE EXPENSES. IT IS IN THIS PERSPECTIVE THAT THE RELIANCE PLACED BY THE APPELLANT COMPANY O N VARIOUS JUDICIAL PRONOUNCEMENTS ARE OF NO AVAIL AND THEREFORE THE SA ME CAN NOT COME TO THE RESCUE OF THE APPELLANT COMPANY. FURTHER APPELLANT HAD NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW AS TO HOW THE APPELLANT COMPANYS TITLE AND THE BUSINESS WAS UNDER THREAT THAT SUCH EXPENSES WERE N ECESSARY MAY IT BE TRUE THAT ACQUISITION OF SUCH SHARES BY SOME OTHER COUNT ERPART MAY HAVE IMPACT OF EXISTING SHARE HOLDERS OR PROMOTER OF THE APPELL ANT COMPANY NEVERTHELESS SUCH EXPENSES COULD NOT HELD EXPENDED TO SAVE THE B USINESS OF THE APPELLANT COMPANY AND THEREFORE SINCE THE APPELLANT IS NOT IN THE BUSINESS OF ACQUISITION OF SHARES I AM NOT INCLINED TO ACCEPT T HE ARGUMENT OF THE APPELLANT COMPANY THAT EXPENSES INCURRED FOR THE PU RPOSE OF THE EXPANSION OF THE BUSINESS SINCE ACQUISITION OF OWN SHARES WOU LD NOT AFFECT THE EXISTING BUSINESS OF THE COMPANY BUT WOULD HAVE EFFECT ON RE DUCING THE CAPITAL BASE OF THE COMPANY WHICH IS VERY WELL DEEMED TO BE NOTH ING BUT CAPITAL IN NATURE AND ACCORDINGLY THE RELIANCE PLACED BY THE A O ON JUDICIAL PRONOUNCEMENT IN CASE OF PUNJAB STATE INDUSTRIAL DE VELOPMENT CORPN. VS. 6 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. CIT 225 ITR 792 IS MORE APT AND APPLICABLE TO THE A PPELLANTS CASE AND THEREFORE CONSIDERING THE FACTS OF THE CASE I AM NO T INCLINED TO ACCEPT THE ARGUMENTS OF THE APPELLANT COMPANY AND HENCE THIS G ROUND OF APPEAL IS THEREFORE DISMISSED. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER HAVING CONSIDERED THE REL EVANT RECORD INCLUDING THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE SUBM ISSIONS MADE BY BOTH THE SIDES, IT WAS FOUND BY US THAT THERE WAS NO CLARITY IN THE MATERIAL FACTS RELEVANT TO THE ACQUISITION OF SHARES MADE BY THE ASSESSEE IN RELAT ION TO WHICH THE IMPUGNED EXPENSES WERE CLAIMED TO BE INCURRED. THE LEARNED C OUNSEL FOR THE ASSESSEE, THEREFORE, WAS REQUIRED BY US TO CLARIFY THE FACTUA L POSITION. AS EXPLAINED BY HIM, M/S INDUCTO HEAT EUROP LTD. U.K. BOUGHT STRAYFIELD LTD. U.K. IN THE MONTH OF APRIL, 1999. THE CORE BUSINESS OF INDUCTO HEAT WAS INDUCTION AND NOT R.F. DRYERS IN WHICH THE ASSESSEE COMPANY WAS INVOLVED AND INTE RESTED. IT WAS, THEREFORE, NECESSARY FOR THE ASSESSEE COMPANY TO TAKE OVER THE BUSINESS OF R.F. DRYERS FROM STRAYFIELD LTD. U.K. ACCORDINGLY THE ASSESSEE COMPA NY FORMED A SUBSIDIARY COMPANY, NAMELY, M/S MONGA STRAYFIELD LTD. U.K. IN OCT., 2005 WHICH PURCHASED THE R.F. DRYERS UNIT I.E. BUSINESS ASSETS FROM STRA YFIELD LTD. U.K. IN DECEMBER, 2005. THE ASSESSEE COMPANY THUS MADE INVESTMENT IN THE SHARES OF ITS SUBSIDIARY COMPANY M/S MONGA STRAYFIELD LTD. U.K. AND THE IMPU GNED EXPENSES WERE INCURRED IN CONNECTION WITH THE SAID ACQUISITION OF SHARES. 5. AFTER EXPLAINING THE RELEVANT FACTUAL POSITION A S ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MADE THE FOLLOWING SUBMISSIONS BEFORE US : 7 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. I) THE AO AND THE LEARNED CIT(APPEALS) HAS MISUNDE RSTOOD THE FACTS. THE ASSESSEE HAS NOT ACQUIRED SHARES OF M/S STRAYFI ELD U.K. II) THE ASSESSEE FORMED A NEW SUBSIDIARY I.E. M/S MONGA STRAYFIELD LTD. U.K. WHO PURCHASES THE BUSINESS DIVISION RELATING T O R.F. DRYERS. III) THE SHARES ARE REFLECTED AS INVESTMENT IN THE BALANCE SHEET. IV) THE EXPENSES WHICH ARE CLAIMED WERE INCURRED D URING PLANNING STAGE. THE ASSESSEE HAD TO PLAN THE STRATEGY TO ACQUIRE TH E R.F. DRYERS BUSINESS DIVISION. THESE EXPENSES ARE REVENUE IN NATURE. V) THE EXPENSES INCURRED FOR CONSULTATION WITH LAW YERS, TRAVELLING FEES, INTEREST ON BORROWING FROM BANKS TO FUND THE ACQUIS ITION ARE NOT DIRECTLY RELATED TO ACQUISITION. THEY ARE RATHER REVENUE IN NATURE INCU RRED IN ROUTINE COURSE OF BUSINESS ALLOWABLE U/S 37. VI) WITHOUT PREJUDICE TO ABOVE, THE EXPENSES INCUR RED FOR ACQUIRING THE SHARES OF FOREIGN SUBSIDIARY IS ALLOWABLE AS BUSINE SS EXPENDITURE AS THE DIVIDEND FROM FOREIGN SUBSIDIARY IS TAXABLE. VII) THE ASSESSEE HAS RECEIVED DIVIDEND OF RS.20,1 4,400/- (40,000 US $) FOR THE YEAR 2008-09 AND OFFERED FOR TAXATION. 6. KEEPING IN VIEW THE EXPLANATION OFFERED BY THE L EARNED COUNSEL FOR THE ASSESSEE WHILE CLARIFYING THE RELEVANT FACTUAL POSI TION AND THE SUBMISSIONS MADE IN THE LIGHT OF THE SAID EXPLANATION, WE FIND THAT THE MATERIAL FACTS OF THE CASE RELEVANT TO THE ISSUE UNDER CONSIDERATION HAVE NOT BEEN APPR ECIATED BY THE AUTHORITIES BELOW IN THE RIGHT PERSPECTIVE. THIS MIGHT HAVE HAPPENED BECAUSE OF THE LACK OF CLARITY IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND THE FACTUAL POSITION HAS BECOME CLEAR ONLY WHEN THE FACTUAL CONTRADICTIONS W ERE BROUGHT TO THE NOTICE OF THE 8 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. LEARNED COUNSEL FOR THE ASSESSEE BY US AND EXPLANAT ION WAS SOUGHT FROM HIM TO CLARIFY THE POSITION. AS IT HAS COME OUT NOW, THE I NVESTMENT WAS MADE BY THE ASSESSEE COMPANY IN THE SHARES OF ITS SUBSIDIARY CO MPANY, NAMELY, M/S MONGA STRAYFIELD LTD. U.K. AND NOT IN THE SHARES OF STRAY FIELD LTD. U.K. AS ASSUMED BY THE AUTHORITIES BELOW. MOREOVER, THE SAID SUBSIDIARY CO MPANY ACQUIRED THE BUSINESS ASSETS, NAMELY, R.F. DRYER UNIT FROM STRAYFIELD LTD . U.K. AND THIS ACQUISITION HAS BEEN CLAIMED TO BE BY THE ASSESSEE COMPANY AS FOR T HE PURPOSE OF ITS BUSINESS. ACCORDINGLY THE EXPENSES INCURRED FOR ACQUISITION O F SHARES OF ITS SUBSIDIARY COMPANY M/S MONGA STRAYFIELD LTD. UK HAVE BEEN CLA IMED TO BE EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS BY THE ASSESSEE COMPANY. IN OUR OPINION, THIS CLAIM OF THE ASSESSEE COMPANY NEEDS TO BE EXAMINED AFRESH IN THE LIGHT OF CLEAR FACTUAL POSITION WHICH HAS NOW EMERGED AT THIS STAGE. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF TH E AO FOR DECIDING THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THI S 9 TH DAY OF NOV., 2011. SD/- SD /- (R.S.PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 9 TH NOV., 2011. WAKODE 9 ITA NO.4606/MUM/2009 ASSESSMENT YEAR : 2006-07. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, H-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI.