M/s. Hooghly Mills Projects Ltd., Kolkata V. DCIT, Central Circle - VII, Kolkata, Kolkata

ITA 549/KOL/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4327 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: S JHAJHORIA
• Keywords: Business expenditure; Opportunity of being heard; Maximum Marginal Rate; Deemed dividend; Prejudicial to interest
• Section: 43B; 143(3); 115JB; 201(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY, JUDICIAL MEMBER ITA NO.549/KOL/2011 ASSESSMENT YEARS:2006-07 M/S HOOGHLY MILLS PROJECTS LTD., C/O SALARPURIA JAJODIA & CO. 7, C.R. AVENUE, KOLKATA-72 [ PAN NO.AAACH 7668 G ] / V/S . DCIT, CENTRAL CIRCLE- VII, 18, RABIDRA SARANI, KOLKATA-01 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S. JHAJHORIA, FCA /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 04-10-2016 /DATE OF PRONOUNCEMENT 26-10-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER OF PASSED BY COMMISSIONER OF INCO ME TAX (CENTRAL-I), KOLKATA U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT) VIDE M.NO. CIT (C-I/263/HOOGHLY MILLS PROJ.LTD./TECH/10-11/KOL/113 202-04 DATED 08.03.2011. ASSESSMENT WAS FRAMED BY DCIT, CC-VII, KOLKATA U/S 143(3) OF THE ACT. GROUNDS RAISED BY ASSESSEE PER ITS APPEAL ARE AS UNDER:- 1. FOR THAT IN VIEW OF THE FACTS AN CIRCUMSTANCES ORDER U/S. 263 MADE BY CIT (CENTRAL-I), KOLKATA, IS WHOLLY BAD, ILLEGAL AND VO ID ABINTIO BOTH OF POINTS OF LAW AS WELL AS FACTS AND FOR THAT IN VIEW OF THE FA TS AND CIRCUMSTANCES ORDER U/S. 143(3) HAVING BEEN MADE BY THE AO AFTER OBTAINING A LL NECESSARY DETAILS AND PARTICULARS AND AFTER FULLY SATISFYING HIMSELF ON A LL THE ISSUES AND THE A.O ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 2 HAVING TAKEN ONE OF THE POSSIBLE VIEWS THE ORDER OF THE A.O CANNOT BE SAID TO BE ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE AND IN VIEW OF THE FACTS AND CIRCUMSTANCES SUCH ORDER U/S. 263 IS LIABLE TO BE CANCELLED / SET ASIDE. 2. FOR THAT WITHOUT PREJUDICE TO WHAT HAS BEEN STAT ED ABOVE AND EVEN OTHERWISE IN CONNECTION WITH APPLICABILITY OF PROVISIONS OF S ECTION 2(22)(E) THE CIT IS WHOLLY UNJUSTIFIED IN SETTING ASIDE THE MATTER AND REFERRING IT BACK TO THE AO WITHOUT GIVING A DEFINITE DIRECTION TO FOLLOW THE D IRECTIONS OF THE ITAT IN THIS MATTER AS PER ORDER OF THE ITAT FOR THE ASSESSMENT YEAR 2005-06 AND IN VIEW OF THE FACTS AND CIRCUMSTANCES THE ORDER OF THE CIT M AY KINDLY BE AMENDED / MODIFIED TO THIS EXTENT. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE CIT IS WHOLLY UNJUSTIFIED IN SETTING ASIDE THE MATTER IN RESPECT OF PAYMENT O F RS.1,70,00,000/- BEING ALLOWABLE U/S. 43B ON THE BASIS OF ACTUAL PAYMENT K EEPING IN VIEW THE DECISION OF THE ITAT IN THIS REGARD FOR ASSESSMENT YEAR 200 5-06 AND IN VIEW OF THE FACTS AND CIRCUMSTANCES ORDER U/S. 263 MAY KINDLY BE AMEN DED / MODIFIED IN ACCORDANCE WITH THE DIRECTIONS OF ITAT, KOLKATA BEN CH FOR THE ASSESSMENT YEAR 2005-06. 4. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES NO AMOUNT OUT OF BORROWAL HAVING BEEN USED AND UTILIZED FOR THE PURPOSE OF CA PITAL WORK IN PROGRESS AND THE ENTIRE AMOUNT SPENT ON CAPITAL WORK IN PROGRESS BEING OUT OF OWN FUND AND / OR NON INTEREST BEARING FUND THE CIT IS WHOLLY UN JUSTIFIED IN SETTING ASIDE THE MATTER ON THIS ISSUE AND IN VIEW OF THE FACTS AND C IRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. 5. WITHOUT PREJUDICE AND EVEN OTHERWISE AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE CIT IS WHOLLY UNJUSTIFIED IN SETT ING ASIDE THE ENTIRE ORDER OF THE AO BY TREATING THE ENTIRE ORDER OF THE AO AS ER RONEOUS INASMUCH AS PREJUDICIAL INTEREST OF REVENUE AND IN VIEW OF THE FACTS AND CIRCUMSTANCES SUCH DIRECTION OF THE CIT MAY KINDLY BE RESTRICTED AND M ODIFIED TO THE POINTS RAISED IN SHOW CAUSE NOTICE. SHRI S. JHAJHORIA, LD. AUTHORIZED REPRESENTATIVE AP PEARED ON BEHALF OF ASSESSEE AND SHRI RADHEY SHYAM, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. FACTS IN BRIEF ARE THAT ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN MANUFACTURING BUSINESS OF JUTE GOODS. TH E ASSESSEE, FOR THE YEAR UNDER CONSIDERATION HAS FILED ITS RETURN OF INCOME ON 20. 11.2006 SHOWING TOTAL INCOME OF 30,04,954/- U/S 115JB OF THE ACT. SUBSEQUENTLY ASSE SSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING TOTAL INCOME AT 1,42,45,720/- BY MAKING CERTAIN ADDITIONS / ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 3 DISALLOWANCES TO THE TOTAL INCOME OF ASSESSEE. LD. CIT UNDER SECTION 263 OF THE ACT OBSERVED CERTAIN DEFECTS IN THE ASSESSMENT ORDER PA SSED UNDER SECTION 143(3) OF THE ACT AS DETAILED UNDER :- 1) ASSESSEE WAS HOLDING THE BENEFICIAL SHARE OF M/S MEGA RESOURCES LTD. (MMRL FOR SHORT) HAVING MORE THAN 10% OF THE VOTI NG RIGHTS AND ACCORDINGLY THE PROVISION OF SEC. 2(22)(E) WERE ATTRACTED ON TH E AMOUNT OF LOAN RECEIVED BY ASSESSEE FROM MMRL. THE ASSESSING OFFICER AT THE TI ME OF ASSESSMENT PROCEEDINGS HAS NOT APPLIED THE PROVISION OF SEC. 2 (22)(E) OF THE ACT. 2) THE AO HAS ALLOWED THE DEDUCTION OF 1.17 CRORES TOWARDS EMPLOYEES CONTRIBUTION UNDER THE FAMILY PENSION FUND/PF FUND WHICH IS IN CONTRAVENTION OF THE PROVISION OF SEC. 36(1)(VA) OF THE ACT. 3) THE AO HAS NOT DISALLOWED THE INTEREST PAYMENT O F RS.6.30 LAKHS PAID TO M/S METHONI TEA LTD. (MMTL FOR SHORT) THOUGH THE PAYMEN T WAS MADE WITHOUT DEDUCTING THE TDS U/S. 194A OF THE ACT R.W.S. 40(A) (IA) OF THE ACT. 4) THE BORROWED FUND WAS UTILIZED IN THE CAPITAL WO RK-IN-PROGRESS FORMING PART OF FIXED ASSET BUT THE AO HAS NOT DISALLOWED THE EXPEN DITURE ON THE BORROWED FUND USED IN SUCH CAPITAL WORK-IN-PROGRESS. IN VIEW OF ABOVE THE LD. CIT ISSUED SHOW CAUSE NOTI CE FOR HOLDING THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. THE ASSESSEE MAKES THE SUBMISSION AS UNDER : A) THE PROVISION OF SEC. 2(22)(E) OF THE ACT IS NO T APPLICABLE TO THE ASSESSEE AS IT HOLDS SHARE OF MMRL TO THE TUNE OF 1 0,99,300 EQUITY SHARES WHICH IS LESS THAN 10% OF THE TOTAL SHARES O F MMRL I.E. 1.20 CRORES EQUITY SHARES. THE ASSESSEE SUBMITTED A LETT ER FROM MMRL IN SUPPORT OF ITS CONTENTION. THE ASSESSEE FURTHER SUB MITTED THAT THE PROVISION OF SEC. 2(22)(E) WILL BE ATTRACTED ONLY W HEN IT HAS REGISTERED SHAREHOLDING IN ITS OWN NAME EXCEEDING 10% OF EQUIT Y SHARES OF MMRL. THE ASSESSEE FURTHER SUBMITTED THAT IN ITS OW N CASE FOR AY 2005-06 ON THE IDENTICAL ISSUE THE HONBLE ITAT HAS DECIDED ISSUE IN ITS FAVOUR. ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 4 B) THE ASSESSEE SUBMITTED THAT THE PAYMENT HAS ACT UALLY BEEN MADE FOR RS.1.70 CRORES IN THE YEAR UNDER CONSIDERATION AND THEREFORE IT IS ALLOWABLE DEDUCTION IN TERMS OF SEC.43B OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT IN ITS OWN CASE FOR A.Y. 2005-06 AND SIMILAR ISSUE WAS DECIDED BY THE HONBLE TRIBUNAL IN ITS FAVOUR; C) THE ASSESSEE SUBMITTED THAT THE TDS WAS NOT DED UCTED ON THE PAYMENT OF RS.6.03 LAKHS BECAUSE THE PARTY HAS ISSUED CERTI FICATE FOR NON- DEDUCTION OF TDS; D) THE ASSESSEE SUBMITTED THAT NO PART OF BORROWED FUND HAS BEEN UTILIZED IN CAPITAL WORK-IN-PROGRESS. THEREFORE, THE QUESTIO N OF MAKING DISALLOWANCE OF THE INTEREST EXPENSE DOES NOT ARISE . THE ASSESSEE MADE THE INVESTMENT IN THE CAPITAL WORK-IN-PROGRESS OUT OF ITS OWN AND BORROWED FUND. THE ISSUE OF THE INTEREST ON THE BOR ROWED FUND WAS DULY CONSIDERED BY AO AT THE TIME OF ASSESSMENT AND ACCO RDINGLY, IT WAS ALLOWED BY AO. THE ASSESSEE FURTHER SUBMITTED THAT IN ITS OWN CASE FOR AY 2005-06 AO DID NOT MAKE ANY DISALLOWANCE AFTER V ERIFYING ON THE FACTS OF THE CASE. 2.1 HOWEVER, LD. CIT IN HIS IMPUGNED ORDER PASSED U /S. 263 DISREGARDED THE CLAIM OF ASSESSEE BY OBSERVING AS UNDER:- I HAVE CAREFULLY PERUSED THE SUBMISSION OF THE ASS ESSEE AND THE RELEVANT DOCUMENTS. THE ASSESSEE HAS SUBMITTED THAT THE ISSU E REGARDING APPLICABILITY OF SEC. 2(22)(E) MAY BE SET ASIDE TO THE AO FOR VERIFI CATION. IN VIEW OF THE AFORESAID FACT THE ASSESSMENT ORDER IS SET ASIDE ON THIS ISSUE. AS FAR AS SUBMISSIONS REGARDING OTHER ISSUES ARE CO NCERNED, THESE HAVE NO MERIT. THE CASE LAWS RELIED UPON ARE NOT APPLICABLE BECAUSE THE FACTS ARE DISTINGUISHABLE. AS PER TAX AUDIT REPORT AND ASSESS EE LETTER DATED 12.12.2008 THE PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS FAMI LY PENSION FUND AND PF WAS MADE OUT OF ACCUMULATED LIABILITY. THE PAYMENT WAS NOT MADE ON OR BEFORE THE DUE DATE AS PER SEC. 36(1)(VA) OF THE IT ACT HE NCE WAS DISALLOWABLE. SINCE THE AO DID NOT DISALLOW IT, THE ASSESSMENT ORDER HA S BECOME ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER I S SET SIDE ON THIS ISSUE ALSO. THE PROVISION OF SEC. 40(A)(IA) WAS APPLICABLE IN R ESPECT OF INTEREST PAID TO M/S METHONI TEA LTD. SINCE THE AO FAILED TO DO SO THE A SSESSMENT ORDER HAS BECOME ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 5 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E ON THIS ISSUE ALSO. HENCE, THE ASSESSMENT ORDER IS SET SIDE ON THIS ISSUE ALSO . IT IS APPARENT FROM, THE AUDIT ACCOUNTS AND NOTES O N ACCOUNT THAT NO PORTION OF INTEREST PAID ON LOANS HAS BEEN CAPITALIZED IN THE CAPITAL WORKING PROGRESS OF FIXED ASSETS. CAPITAL WORKING PROGRESS BROUGHT FORW ARD WAS AT RS.82489922/- CWIP C/F IS RS.2,42,21,556/-. APPARENTLY, LOAN FUND S WERE UTILIZED FOR CWIP ALSO. BUT NO SUCH INTEREST HAS BEEN DISALLOWED AS C APITAL EXPENDITURE IN THE ASSESSMENT. HENCE THE ASSESSMENT ORDER ON THIS ISSU E IS ALSO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THE DISCUSSION IN THE PRECEDING PARAGRAP H IT IS HELD THAT THE ORDER PASSED U/S. 143(3) OF THE IT ACT IS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE. HENCE, THE ORDER IS SET ASIDE U/S. 263 WIT H A DIRECTION TO THE ASSESSING OFFICER TO COMPLETE IT AS PER LAW, AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. BEING AGGRIEVED BY THIS ORDER OF LD. CIT ASSESSEE C AME IN APPEAL BEFORE US. 3. BEFORE US LD. AR FOR THE ASSESSEE FILED PAPER BO OK WHICH IS RUNNING INTO PAGES FROM 1 TO 105 AND SUBMITTED AS UNDER: I) AS PER THE PROVISION OF SEC. 2(22)(E) OF THE AC T SHAREHOLDERS MUST BE A REGISTERED HOLDER OF THE SHARE AND IN THE INSTANT C ASE, ASSESSEE HOLDS 10,99,300 EQUITY SHARES WHICH 9.16% OF THE TOTAL NU MBER OF EQUITY SHARES. SINCE THE SHARE OF ASSESSEE IN THE COMPANY MMRL IS LESS THAN 10% OF THE TOTAL EQUITY SHARES, THEREFORE THE PROVI SION OF SEC. 2(22)(E) OF THE ACT IS NOT APPLICABLE. LD. AR IN SUPPORT OF ASS ESSEES CLAIM HAS SUBMITTED THE COPY OF REGISTER OF MEMBERS AND SHARE LEDGER SHOWING THE REGISTERED SHARES IN THE NAME OF ASSESSEE WHICH IS 10,99300 EQUITY SHARE WHICH ARE PLACED ON 105 OF THE PAPER BOOK; IN REJOINDER, LD. DR SUBMITTED THAT AO WHILE FRAMING THE ASSESSMENT ORDER HAS NOT EXAMINED THE ISSUE OF SEC. 2(22)(E) O F THE ACT AND THEREFORE IT SHOULD BE RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AND HE VEHEMENTLY RELIED ON THE ORDER PASSED BY LD. CIT. II) WITH REGARD TO DISALLOWANCE OF 1.70 CRORES ON ACCOUNT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND FAMILY PENSION FUND, LD . AR SUBMITTED THAT THE PAYMENT WAS DULY MADE IN THE YEAR UNDER CO NSIDERATION AS PER ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 6 THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N ASSESSEES OWN CASE AND SAME IS ALLOWABLE AS PER THE PROVISION OF SE. 4 3B OF THE ACT. IN REJOINDER, LD. DR SUBMITTED THAT THE ISSUE HAS NOT BEEN EXAMINED BY AO AND THEREFORE IT SHOULD BE RESTORED BACK TO T HE FILE OF AO FOR FRESH ADJUDICATION. III) WITH REGARD TO DISALLOWANCE OF INTEREST OF 6.30 LAKH ON ACCOUNT OF NON- DEDUCTION OF TDS LD. AR SUBMITTED THAT THE PAYEE HA S INCLUDED THE INTEREST INCOME IN ITS RECEIPTS AND HAS OFFERED THE SAME TO TAX WHILE FILING IT RETURN. THEREFORE, LD. AR STATED THAT ASS ESSEE CANNOT BE HELD AS DEFAULTER IN VIEW OF THE FIRST PROVISO TO SEC. 201( 1) R.W.S. SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT. ON THE OTHER HAND, LD. DR SUBMITTED THAT ISSUE HAS NOT BEEN EXAMINED BY AO WHETHER THE RECEIPT HAS BEEN SHOWN B Y THE PAYEE IN ITS BOOKS OF ACCOUNT AND OFFERED TO TAX. IN REGARD TO T HIS, LD. DR PRAYED BEFORE THE BENCH TO RESTORE THE ISSUE BACK TO THE F ILE OF AO FOR FURTHER EXAMINATION. IV) WITH REGARD TO THE ISSUE OF INTEREST ON THE BO RROWED FUND TO THE CAPITAL WORK-IN-PROGRESS LD. AR SUBMITTED THAT NO BORROWED FUND HAS BEEN UTILIZED IN THE CAPITAL WORK-IN-PROGRESS AND ENTIRE AMOUNT INVESTED IN THE CAPITAL WORK-IN-PROGRESS WAS OUT OF INTERNAL ACCRUA LS, SHARE CAPITAL AND RESERVE OF THE COMPANY. THE AO HAS NOT DISALLOWED T HE SAME IN HIS ASSESSMENT ORDER BECAUSE THE ISSUE AND THE FACT OF THE CASE WERE DULY EXAMINED BY HIM. EVEN IN THE EARLIER ASSESSMENT YEA R I.E., 2005-06 NO SUCH DISALLOWANCE WAS MADE BY AO. FURTHER, LD. AR S UBMITTED THAT AO HAS TAKEN A POSSIBLE VIEW FOR NOT MAKING ANY DISALL OWANCE OF INTEREST TOWARDS THE CAPITAL WORK-IN-PROGRESS. LD. AR ALSO S UBMITTED THAT DURING THE YEAR NO-EXPENDITURE WAS INCURRED TOWARDS THE CA PITAL WORK-IN- PROGRESS. THEREFORE, NO SUCH DISALLOWANCE IS WARRAN TED AND ACCORDINGLY ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 7 THE ORDER PASSED BY AO CANNOT BE HELD ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ON THE CONTRARY, LD. DR VEHEMENTLY RELIED ON THE ORDER OF LD. CIT AND HE LEFT ISSUE TO THE DISCRETION OF THE BENCH. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING D ISCUSSION, WE FIND THAT IMPUGNED ORDER PASSED BY LD. CIT U/S 263 HELD THAT THE ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E ON THE REASONS DISCUSSED ABOVE. NOW THE QUESTION BEFORE US AROSE WHETHER THE IMPUGN ED ORDER PASSED BY LD. CIT U/S. 263 IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE IN TEREST OF REVENUE IN THE AFORESAID FACTS AND CIRCUMSTANCES. OUR DISPOSAL OF THE CASE S TAND AS UNDER:- A) WITH REGARD TO ISSUE FOR THE DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT, WE FIND IN THE SIMILAR FACTS AND CIRCUMSTANCES IN ASSESSEES O WN CASE THIS TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE IN A.Y 200 5-06 IN ITA NO.1729/KOL/2011 DATED 01.08.2014 FOR A.Y.05-06. THE RELEVANT OPERA TIVE PORTION OF THE SAID ORDER IS REPRODUCED BELOW:- 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US ALSO ASSESSEE PRODUCED THE SHAREHOLDERS REGISTER FOR THE RELEVANT YEAR AND FILED COPY OF TH E RELEVANT SHAREHOLDERS REGISTER OF HOOGHLY MILLS PROJECT LTD., I.E. THE AS SESSEE AND ALSO PRODUCED COPY OF SHAREHOLDERS REGISTER OF MEGA RESOURCES LTD., WH EREIN THE REGISTERED SHAREHOLDERS ARE TO THE EXTENT OF 10,99,300 SHARES ONLY AS REGISTERED SHAREHOLDERS AND NOT THE SHAREHOLDERS TO THE EXTENT OF 13,99,100 AS ALLEGED BY THE LOWER AUTHORITIES. FOR THIS PROPOSITION, WE HAV E TO SEE ONLY THE REGISTERED SHAREHOLDERS AS HELD BY THE SPECIAL BENCH OF THIS I TAT, MUMBAI BENCH IN THE CASE OF BHAUMIK COLOUR P. LTD. SUPRA WHEREIN IT IS HELD AS UNDER:- 41. IN THE LIGHT OF THE ABOVE DISCUSSION, THE QUES TIONS REFERRED TO THE SPECIAL BENCH ARE ANSWERED AS FOLLOWS: ON THE FIRST QUESTION: DEEMED DIVIDEND CAN BE ASSESSED ONLY IN THE HANDS O F A PERSON WHO IS A SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF A PERSON OTHER THAN A SHAREHOLDER. ON THE SECOND QUESTION: ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 8 THE EXPRESSION SHAREHOLDER REFERRED TO IN SECTION 2(22)(E) REFERS TO BOTH A REGISTERED SHAREHOLDER AND BENEFIC IAL SHAREHOLDER. IF A PERSON IS A REGISTERED SHAREHOLDE R BUT NOT THE BENEFICIAL SHAREHOLDER THAN THE PROVISIONS OF SECTI ON 2(22)(E) WILL NOT APPLY. SIMILARLY IF A PERSON IS A BENEFICIAL SH AREHOLDER BUT NOT A REGISTERED SHAREHOLDER THEN ALSO THE PROVISIO NS OF SECTION 2(22)(E) WILL NOT APPLY. FROM THE ABOVE FACTS AND CIRCUMSTANCES THE ISSUE IS VERY CLEAR THAT THE ASSESSEE IS HOLDING REGISTERED SHARES TO THE TUNE O F 10,99,3000 IN MEGA RESOURCES LTD. AND NOT 13,99100 AS ALLEGED BY THE R EVENUE. NO DOUBT THE TOTAL SHAREHOLDING OF THE ASSESSEE IN MEGA RESOURCES LTD. IS TO THE TUNE OF 13,99,100 BUT REGISTERED SHAREHOLDERS ARE TO THE EXTENT OF 10 ,99,300. WE HAVE TO SEE ONLY THE REGISTERED SHAREHOLDING AND NOT THE BENEFICIAL SHAREHOLDER. FOR THIS, THE ASSESSEE HAS FILED EVIDENCE BEFORE THE LOWER AUTHOR ITIES AND EVEN BEFORE US NOW. IN SUCH CIRCUMSTANCES, THIS ISSUE BEING COVERE D BY THE SPECIAL BENCH OF THIS TRIBUNAL, MUMBAI BENCH IN THE CASE OF BHAUMIK COLOUR P. LTD., SUPRA. RESPECTFULLY FOLLOWING THE SAME, WE DELETE THE ADDI TION AND REVERSE THE ORDERS OF THE LOWER AUTHORITIES. WE ALSO FIND THAT SIMILAR ISSUE WAS ALSO RAISED IN AY 2006-07 WHERE THE TRIBUNAL IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN ITA NO.360/KOL/2014 DATED 31.05.2016 AND RELEVANT EXTRACT IS REPRODUCED BELOW:- 19. IN THE PRESENT CASE, THE CASE OF THE ASSESSEE WAS THAT THE INTEREST PAID TO M/S METHONI TEA LTD ON UNSECURED LOAN AND DEBITED T O THE P/L ACCOUNT AND DID NOT DEDUCT THE TAX U/SEC 194A OF THE ACT. THESE FAC TS ARE NOT DISPUTED BY THE EITHER OF THE LOWER AUTHORITIES AS IT CAN BE SEEN F ROM THE RECORD. THEREFORE, THE QUESTION BEFORE US WHETHER THE ASSESSEE COULD BE TR EATED AS DEFAULTER IN VIEW OF THE PRINCIPLE ENUNCIATED BY THE HON'BLE HIGH COURT OF DELHI SUPRA, WE HOLD THAT THE ASSESSEE CANNOT BE A DEFAULTER IN VIEW OF THE FIRST PROVISO TO SECTION 201(1) R/W SECOND PROVISO TO SECTION 40(A)(IA) OF T HE ACT. AS OPINED BY THE HON'BLE HIGH COURT OF DELHI SUPRA THAT THE SECOND P ROVISO TO SECTION 4(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE HAVING RETROS PECTIVE EFFECT FORM 01-04- 2005 AND THE CASE ON HAND BEING FOR A.Y 2005-06, IN OUR VIEW, THE MATTER SHALL GO BACK TO AO. THEREFORE, WE REMAND GROUND NO. 3 TO AO FOR EXAMINATION AND FOR VERIFICATION OF THE REQUIRED DETAILS OF THE RES IDENT I.E. M/S METHONI TEA LTD AND DIRECT THE ASSESSEE TO COOPERATE IN COMPLETING THE ASSESSMENT. GROUND NO. 3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 9 RESPECTFULLY FOLLOWING THE PRECEDENTS IN ASSESSEES OWN CASE (SUPRA) WE FIND THAT THE IMPUGNED REVISION ORDER UNSUSTAINABLE IN LAW, AND W E, THEREFORE CANCEL THE SAME. THE ISSUE GETS THE RELIEF ACCORDINGLY. AO IS DIRECTED A CCORDINGLY. B) WITH REGARD TO DISALLOWANCE OF 1.70 CRORES ON ACCOUNT OF EMPLOYEES CONTRIBUTION U/S. 36(1)(VA) OF THE ACT WE FIND THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN ITS FAVOUR IN ITA NO.173 OF 2011 WITH REFERENCE TO GA NO. 1763 OF 2011 DATED 30.09.2011 WHEREIN THE RELEVANT EXTRACT IS REPRODUC ED BELOW:- THE ONLY QUESTION THAT ARISES FOR DETERMINATION IN THIS APPEAL IS WHETHER THE TRIBUNAL BELOW WAS JUSTIFIED IN DELETING THE ADDITI ON MADE BY C.I.T.(APPEALS) IN RESPECT OF THE AMOUNT OF CONTRIBUTION TO PROVIDE NT FUND MADE BY THE ASSESSEE AFTER DUE DATE PRESCRIBED UNDER EMPLOYEES PROVIDENT FUND ACT AND RULES MADE THEREUNDER BUT BEFORE THE DATE OF FILING OF TH E RETURN. IT APPEARS THAT THE AFORESAID QUESTION HAS NOW BEEN SETTLED BY THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. VINAY CEMENT LTD. REPORTED IN 2007 (213) CTR 268 (SC) WHEREIN IT HAS BEEN HELD THAT IF THE AMOUNT HAS BEEN DEPOSITED BEFORE FILING OF RETURN, THE SAME IS ENTITLED TO DEDUCTION UNDER SECTION 43B OF THE INCOME-TAX ACT. WE, THEREFORE, FIND THAT THE TRIBUNAL APPEAL RIGHTL Y DELETED THE SAID ADDITION MADE BY THE C.I.T.(APPEALS. NO SUBSTANTIAL LAW BEIN G INVOLVED IN THIS APPEAL, WE SUMMARILY DISMISS THIS APPEAL. IN VIEW OF THE DISMISSAL OF THE APPEAL ITSELF, THE CONNECTED APPLICATION HAS BECOME INFRUCTUOUS AND THE SAME IS DISPOSED OF ACCO RDINGLY. WE ALSO FIND THAT LD. CIT(A) IN ASSESSEES OWN CASE IN AY 2007-08 HAS ALSO DELETED THE ADDITION MADE BY ASSESSING OFFICER HAVING RELIA NCE IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC). WE ALSO RELY IN ASSESSEE S OWN CASE FOR AY 2005-06 IN ITA NO.913/KOL/2010 DATED 24.09.2010 WHERE THE ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE AND RELEVANT EXTRACT OF THE ORDE R IS REPRODUCED BELOW:- 10. WE OBSERVE THAT THE AO ON SIMILAR FACTS AND CO NSIDERING THE ORDER OF HON'BLE CALCUTTA HIGH COURT DATED 24.03.2004, A COP Y PLACED ON RECORD, ALLOWED THE CLAIM OF THE ASSESSEE OF RS.1,20,00,000 TOWARDS PAYMENT OF ARREARS OF PROVIDENT FUND IN THE ASSESSMENT YEAR 2004-05 ON THE GROUND THAT THE SAME WERE PAID BEFORE DUE DATE OF FILING OF RETURN. WE O BSERVE THAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE MADE PAYMENT OF RS.75,00,000 OUT OF ARREARS OF PRECEDING ASSESSMENT YEARS TOWARDS PROVI DENT FUND IN MONTHLY ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 10 INSTALMENTS BEFORE DUE DATE OF FILING OF RETURN OF INCOME AND THE AO ALLOWED THE SAME. DURING THE CURSE OF HEARING THE LEARNED A R SUBMITTED THAT THE SAID PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUES, DULY REF LECTED IN THE BOOKS OF ACCOUNT AND THE QUESTION OF SHOWING IT IN THE CASH FLOW STATEMENT DOES NOT ARISE. WE OBSERVE THAT THE LEARNED DR COULD NOT DIS PUTE THE ABOVE FACTS SAVE AND EXCEPT SUBMITTING THAT EMPLOYEES SHARE OF PROV IDENT FUND COULD NOT BE ALLOWED IF IT IS NOT PAID WITHIN DUE DATE AS PER SE CTION 36(1)(VA) OF THE ACT. CONSIDERING THE FACTS OF THE CASE AS STATED HEREINA BOVE, WE DO NOT FIND MERIT IN THE CONTENTION OF LEARNED DR BECAUSE SIMILAR CLAIM OF THE ASSESSEE WAS ALLOWED BY THE AO IN THE PRECEDING ASSESSMENT YEAR 2004-05 ON SIMILAR FACTS AS IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HENC E, WE AGREE WITH THE LEARNED AR THAT THE AO HAS TAKEN A CONSISTENT AND O NE OF THE POSSIBLE VIEW IN ALLOWING THE CLAIM OF THE ASSESSEE AND THEREFORE LE ARNED CIT IS NOT JUSTIFIED TO INVOKE HIS JURISDICTION U/S. 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THIS REGARD WE CONSIDER IT PRUDENT TO STAT E FOLLOWING OBSERVATIONS OF ITAT, BOMBAY BENCH AS MADE IN THE CASE OF PATIL COT TON CO. LTD. REPORTED IN 64 ITD 273:- ADMITTEDLY, WHEN THERE ARE TWO VIEWS POSSIBLE IN A CASE THEN MERE FACT THAT THE ASSESSING OFFICER HAS TAKE ONE VIEW WOULD NOT RENDER HIS ORDER AS ERRONEOUS THOUGH IT MAY BE PREJUDICIAL TO THE INTER ESTS OF THE REVENUE. FOR EXERCISING POWERS U/S. 263 TWO CONDITIONS MUST BE SATISFIED. FIRSTLY, THE ORDER SOUGHT TO BE REVISED MUST BE ERRONEOUS AN D SECONDLY, BY REASON OF THE SAID ORDER THERE MUST BE PREJUDICE CA USED TO THE REVENUE. IN THIS CASE, IT MAY BE NOTED THAT A PREJUDICE IS C AUSED TO THE REVENUE BY ADOPTING A VIEW FAVOURABLE TO THE ASSESSEE, YET, TH E ORDER CANNOT BE SAID TO BE ERRONEOUS AS A POSSIBLE VIEW IN ACCORDANCE WI TH THE DECISIONS OF THE TRIBUNAL (SUPRA) WAS ADOPTED BY THE ASSESSING O FFICER. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE VIEW THAT THE ACTION OF THE CIT U/S. 263 WAS NOT WARRANTED AS THE VIEW TAKEN BY THE AO CANNOT BE SAID TO BE ERRONEOUS IN VIEW OF THE DE CISIONS OF THE TRIBUNAL QUOTED ELSEWHERE IN THIS ORDER. WE ACCORDI NGLY CANCEL THE ORDERS OF THE CIT US. 263 AND RESTORE THE ORDERS OF THE AO. IN VIEW OF THE ABOVE, WE ARE OF CONSIDERED VIEW THA T ORDER OF LD. CIT CANNOT BE JUSTIFIED TO HOLD THAT ASSESSMENT ORDER IS ERRONEOU S. RESPECTFULLY FOLLOWING THE PRECEDENTS AS ABOVE, WE HOLD THAT THE IMPUGNED REVISION ORDER IS UNSUSTAINABLE IN LAW AND, WE, THEREFORE, C ANCEL THE SAME AS UNSUSTAINABLE IN LAW. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. C) WITH REGARD TO DISALLOWANCE OF INTEREST FOR 6.30 LAKH ON ACCOUNT OF NON- DEDUCTION OF TDS WE CONCUR WITH THE ARGUMENT PLACED BY LD. AR THAT ASSESSEE CANNOT BE HELD DEFAULTER FOR NON DEDUCTION OF TDS I N VIEW OF THE AMENDED ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 11 PROVISION OF SEC. 201(1) R.W.S. 40(A)(IA) OF THE AC T AS PER THE AMENDED PROVISIONS OF THE ACT IF THE PAYEE INCLUDES THE REC EIPT FROM ASSESSEE IN ITS BOOKS OF ACCOUNTS AND OFFERS THE TAX ON THE SAME TH EN IT CANNOT BE HELD AS DEFAULTER FOR NON DEDUCTION OF TDS. THEREFORE THE EXPENSES CANNOT BE DISALLOWED ON ACCOUNT OF NON DEDUCTION OF TDS. IN T HIS CONNECTION, WE RELY ON ASSESSEES OWN CASE IN ITA NO. 361/KOL/2014 DATED 31.05.2016 (SUPRA) WHEREIN THE RELEVANT EXTRACT IS REPRODUCED BELOW:- 19. IN THE PRESENT CASE, THE CASE OF THE ASSESSEE WAS THAT THE INTEREST PAID TO M/S METHONI TEA LTD ON UNSECURED LOAN AND DEBITED T O THE P/L ACCOUNT AND DID NOT DEDUCT THE TAX U/SEC 194A OF THE ACT. THESE FAC TS ARE NOT DISPUTED BY THE EITHER OF THE LOWER AUTHORITIES AS IT CAN BE SEEN F ROM THE RECORD. THEREFORE, THE QUESTION BEFORE US WHETHER THE ASSESSEE COULD BE TR EATED AS DEFAULTER IN VIEW OF THE PRINCIPLE ENUNCIATED BY THE HON'BLE HIGH COURT OF DELHI SUPRA, WE HOLD THAT THE ASSESSEE CANNOT BE A DEFAULTER IN VIEW OF THE FIRST PROVISO TO SECTION 201(1) R/W SECOND PROVISO TO SECTION 40(A)(IA) OF T HE ACT. AS OPINED BY THE HON'BLE HIGH COURT OF DELHI SUPRA THAT THE SECOND P ROVISO TO SECTION 4(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE HAVING RETROS PECTIVE EFFECT FORM 01-04- 2005 AND THE CASE ON HAND BEING FOR A.Y 2005-06, IN OUR VIEW, THE MATTER SHALL GO BACK TO AO. THEREFORE, WE REMAND GROUND NO. 3 TO AO FOR EXAMINATION AND FOR VERIFICATION OF THE REQUIRED DETAILS OF THE RES IDENT I.E. M/S METHONI TEA LTD AND DIRECT THE ASSESSEE TO COOPERATE IN COMPLETING THE ASSESSMENT. GROUND NO. 3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENT WE R ESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AFTER PROVIDING REASONABL E OPPORTUNITY OF BEING HEARD TO ASSESSEE. IN CASE THE PAYEE HAS INCLUDED THE RECEIP TS FROM THE ASSESSEE IN ITS BOOKS ACCOUNTS FOR TAX PURPOSES THEN THE DEDUCTION FOR TH E INTEREST EXPENSES ARE ALLOWED TO THE ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS A LLOWED FOR STATISTICAL PURPOSES. 7. WITH REGARD TO ADJUDICATION OF INTEREST TO THE C APITAL WORK-IN-PROGRESS WE FIND THAT ASSESSEE HAS ITS OWN FUND OF 51,88,49,185/- AND CAPITAL WORK-IN-PROGRESS OF 2,42,21,556/-. LD. AR IN SUPPORT OF ASSESSEES CLAI M HAS SUBMITTED THE AUDITED FINANCIAL STATEMENTS WHICH ARE PLACED ON PAGES 58 T O 64 OF THE PAPER BOOK. WE ALSO FIND THAT NO INTEREST WAS ALLOCATED IN EARLIER ASSE SSMENT YEAR WHEN THE CAPITAL WORK-IN- PROGRESS WAS OF 8,24,89,922/-. IN THE YEAR UNDER CONSIDERATION THE SUBSTANTIAL AMOUNT FROM CAPITAL WORK-IN-PROGRESS HAS BEEN TRANS FERRED TO THE RESPECTIVE BLOCK OF ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 12 FIXED ASSET AND BALANCE REMAINED AT THE END OF THE YEAR IS AT 2,42,21,556/- ONLY. AS WE FIND THAT THERE WAS NO DISALLOWANCE IN THE EARLI ER YEAR, THEREFORE, WE ARE NOT INCLINED TO UPHOLD THE ORDER OF LD. CIT UNDER SECTI ON 263 OF THE ACT HOLDING THE ORDER OF THE AO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON- ALLOCATION OF INTEREST TO THE CAPITAL WORK-IN-PROGR ESS. BESIDES ABOVE, WE ALSO FIND THAT VARIOUS COURTS HAVE HELD THAT WHEN THERE IS NO DIRE CT LINK BETWEEN CAPITAL BORROWED AND THE INTEREST EXPENSES VIS-A-VIS INVESTMENT THEN IT IS PRESUMED THE INVESTMENT HAS BEEN MADE OUT OF ITS OWN FUND OF ASSESSEE SUBJECT TO THE CONDITION THAT OWN FUND IS SUFFICIENT ENOUGH TO COVER SUCH INVESTMENT. IN THE INSTANT CASE, LD. CIT IN HIS IMPUGNED ORDER U/S. 263 OF THE ACT ALLEGED THAT BOR ROWED FUND HAS BEEN INVESTED IN THE CAPITAL WORK-IN-PROGRESS AND THE INTEREST PERTI NENT TO SUCH BORROWED FUND INVESTED IN CAPITAL WORK-IN-PROGRESS HAS NOT BEEN ALLOCATED TO SUCH CAPITAL WORK-IN-PROGRESS. FROM THE FACTS, IT IS CLEAR THERE IS SUFFICIENT FUN D AVAILABLE TO ASSESSEE FOR MAKING THE INVESTMENT IN THE CAPITAL WORK-IN-PROGRESS. THEREFO RE, WE ARE NOT INCLINED TO UPHOLD THE ORDER OF LD. CIT UNDER SECTION 263 OF THE ACT H OLDING THE ORDER OF THE AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS CONNECTION, WE ALSO RELY IN THE CASE OF CIT VS. BRITANNIA INDUSTRIES LTD. 280 ITR 525 WHERE THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER : BUSINESS EXPENDITUREINTEREST ON BORROWED CAPITAL INTEREST-FREE ADVANCES TO OTHERSADVANCE WAS MADE TO FIRM MCAP CONSTITUTED BY RELATIVES OF DIRECTORS OF THE ASSESSEE-COMPANYIN VIEW OF DEFINI TION OF 'RELATIVE IN S. 2(41), MCAP IS NOT A FIRM OF RELATIVESFURTHER, CON CURRENT FINDING HAS BEEN RECORDED BY CIT(A) AND THE TRIBUNAL THAT MCAP SUPPL IED SUBSTANTIAL QUANTITY OF CASHEW NUT KERNELS TO THE ASSESSEE-COMPANY IN TH E REGULAR COURSE OF BUSINESSTHUS, THE ADVANCE WAS MADE FOR THE PURPOSE OF BUSINESS AND NOT FOR ANY EXTRANEOUS CONSIDERATION OR OTHERWISEFURTHER, THE ADVANCE WAS GIVEN FROM THE MIXED ACCOUNT WHERE THE ENTIRE SALE PROCEE DS WERE DEPOSITED AND THERE WERE SUFFICIENT FUND FOR MAKING THE ADVANCEP AYMENT WAS THUS MADE OUT OF ASSESSEES OWN FUND AND BORROWED CAPITAL WAS NOT SIPHONED OUTTHEREFORE, ASSESSEE IS ENTITLED TO DEDUCTION UNDER S. 36(1)(II I) IN RESPECT OF INTEREST ON BORROWED FUNDS SIMILARLY THE HONBLE HIGH COURT OF BOMBAY HAS DECI DED THE ISSUE IN FAVOUR OF ASSESSEE IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. 313 ITR 340. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELO W. ITA NO.549/KOL/2011 A.Y.2006 -07 M/S HOOGHLY MILLS PROJECTS LTD. VS. DCIT, CC -VII, KOL. PAGE 13 BUSINESS EXPENDITUREINTEREST ON BORROWED CAPITAL INVESTMENT OF INTEREST- BEARING FUNDS IN SISTER CONCERNSCONTENTION OF THE REVENUE THAT THE SHAREHOLDERS FUND TO THE TUNE OF OVER RS. 172 CRORE S WAS UTILISED FOR THE PURPOSE OF FIXED ASSETS AS PER THE BALANCE SHEET AS ON 31ST MARCH, 1999, AND THUS THE SAME WAS NOT AVAILABLE FOR INVESTMENT IS FALLACIOUS FIRSTLY, IT IS THE BALANCE SHEET AS ON 31ST MARCH, 2000, THAT WOULD BE RELEVANT AND NOT THE BALANCE SHEET AS ON 31ST MARCH, 1999 AS THE INVESTMENTS WERE MADE MAINL Y DURING JANUARY, 2000 TO MARCH, 2000SECONDLY, REVENUE HAS BEEN UNABLE TO PO INT OUT THAT THE SHAREHOLDERS FUNDS WERE UTILISED FOR THE PURPOSE OF FIXED ASSETSTHAT APART, BOTH CIT(A) AND THE TRIBUNAL HAVE RECORDED A CLEAR FINDI NG THAT THE ASSESSEE POSSESSED INTEREST-FREE FUNDS OF ITS OWN WHICH WERE GENERATED IN THE COURSE OF THE RELEVANT FINANCIAL YEARBESIDES, FUNDS OF RS. 3 98.19 CRORES INCLUDING RS. 180 CRORES OF SHARE CAPITAL WERE AVAILABLE WITH THE ASS ESSEETHUS, THE FINDING OF FACT RECORDED BY THE CIT(A) AND THE TRIBUNAL AS TO AVAIL ABILITY OF INTEREST-FREE FUNDS CANNOT BE FAULTED AND NO PART OF INTEREST ON BORROW INGS CAN BE DISALLOWED RESPECTFULLY FOLLOWING THE PROPOSITION LAID DOWN BY THE RESPECTIVE COURTS, WE FIND THAT THE IMPUGNED REVISION ORDER UNSUSTAINABLE IN LAW AN D WE, THEREFORE CANCEL THE SAME. THE ISSUE GETS THE RELIEF ACCORDINGLY. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED PAR TLY FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 26/10/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ! - 26/10/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S HOOGHLY MILLS PROJECTS LTD. C/O.SALA RPURIA JAJODIA & CO.7, C.R.AVENUE, KOLKATA-72 2. /RESPONDENT-DCIT, CC-VII, 18, RABINDRA SARANI, KOLK ATA-7001 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ , /TRUE COPY/ / '#,