ACIT CIR 6(1), MUMBAI V. BLR INDIA P.LTD, MUMBAI

ITA 5556/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4251 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C TIWARI
• Keywords: Unexplained investment; Business income; Business expenditure; Principle of natural justice; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1); 133(6); 194C; 131; 69; 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 5 556 /MUM / 20 13 ( / ASSESSMENT YEAR : 200 8 - 09 ) ASSTT.COMMISSIONER OF INCOME TAX CIRCLE 6 (1) , ROOM NO. 506, 5 TH FLOOR, AAYAKER BHAVAN, M K ROAD, MUMBAI - 400020 / VS. BLR INDIA PVT LTD, 39, FANCY CHAMBERS, 94, SURAT S TEE, MASJID MUMBAI - 400009 ./ PAN : AAA CB3002G ( / APPELLANT ) .. ( / RESPONDENT ) CROSS - OBJECTION NO 247 /MUM/201 4 ARISING OUT OF I.T.A. NO. 5 556 /MUM / 20 13 ( / ASSESSMENT YEAR : 200 8 - 09 ) BLR LOGISTI CS ( INDIA) PVT LTD, (FORMERLY KNOWN AS BLR INDIA PVT.LTD) 39, FANCY CHAMBERS, 94, SURAT STEE, MASJID MUMBAI - 400009 / VS. ASSTT.COMMISSIONER OF INCOME TAX - 8 (1) , MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY : SHRI NAVIN GUPTA / RESPONDENT BY : SHRI S C TIWARI / DATE OF HEARING : 12.1.2016 / DATE OF PRONOUNCEMENT : 11. 4 . 2016 ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 2 / O R D E R PER RAJESH KUMAR , AM : THE APPEAL BY THE REVENUE AND CROSS - OBJECTION THERETO BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 14.6.2013 BY THE LD. CIT(A) - 14 , MUMBAI AND RELATE TO THE ASSESSMENT YEAR 200 8 - 0 9 . SINCE ISSUE S INVOLVED IN THESE CASES AR E COMMON AND THEREFORE, THESE CASES ARE CLUBBED TO GETHER AND HEARD TOGETHER ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD CIT{A} ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND GIVING RELIEF OF RS.34,53,991 / - IN RESPECT THE AIR ENTRIES REMAINING UN - RECONCILED AS THE ASSESSEE WAS UNABLE TO GIVE ANY SATISFACTORY EXPLANATION IN RESPECT OF THE A BOVE ENTRIES EXCEPT STATING THAT 100% RECONCILIATION IS NOT POSSIBLE AND THE UN - RECONCILED ENTRIES ARE PERTAINING TO THE NOTICES NOT RESPONDED BY THE PARTIES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT{A} ERRED IN ALLOWI NG THE APPEAL OF THE ASSESSEE AND DIRECTING THE AO TO TREAT THE EXPENDITURE OF RS. 15.00 LAKHS AS REVENUE EXPENDITURE WHEREAS THE SAID EXPENDITURE HAS BEEN ACTUALLY INCURRED AS CONSULTANCY CHARGES PAID TO M / S TOWER CAPITAL & SECURITIES P. LTD. FOR RAISING EQUITY AS ADMITTED BY THE ASSESSEE ITSELF IN THE WRITTEN STATEMENT BEFORE C IT {A} WHICH CLEARLY SHOWS THAT IT IS DIRECTLY RELATED TO THE CAPITAL EXPANSION OF THE ASSESSEE AND HENCE REQUIRED TO BE TREATED AS CAPITAL EXPENDITURE. 3 WHETHER ON THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT{A} ERRED IN TREATING THE EXPENDITURE OF RS.1 ,63,842/ - AS PRELIMINARY EXPENDITURE QUALIFYING FOR DEDUCTION U/S.35D {2} {III} WHEREAS THE SAID EXPENDITURE HAS ACTUALLY BEEN ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 3 INCURRED AS ROC PAYMENT IN CONNECT ION WITH THE RAISING OF EQUITY CAPITAL AND NOT INCURRED FOR REGISTRATION OF COMPANY . 4 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT{A} ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE AO TO DELETE THE ADDITION OF RS.39,75,OOO/ - MADE U/S.69 OF INCOME TAX ACT 1961, BEING UNACCOUNTED CASH PAYMENT MADE BY THE ASSESSEE FOR THE ACQUISITION OF A COMMERCIAL PROPERTY, BY HOLDING THAT THE PRINCIPLES OF NATURAL JUSTICE HAS BEEN VIOLATED BY THE AO WITHOUT APPRECIATING THE FACT THAT THERE WAS NO VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. THE MD OF THE ASSESSEE WAS CONFRONTED WITH THE INCRIMINATING EVIDENCE DURING THE COURSE OF SURVEY. 5 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD C IT {A} ERRE D IN ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE AO TO DELETE THE ADDITION OF RS.39,75,OOO/ - MADE U/S.69 OF INCOME TAX ACT 1961 , BEING UNACCOUNTED CASH PAYMENT MADE BY THE ASSESSEE FOR THE ACQUISITION OF A COMMERCIAL PROPERTY, BY HOLDING THAT TH E PRINCIPLES OF NATURAL JUSTICE HAS BEEN VIOLATED BY THE AO WITHOUT APPRECIATING THE FACT THAT DURING THE INTERVENING PERIOD OF 35 MONTHS BETWEEN THE DATE OF SURVEY ON 29.02.2008 AND DATE OF ASSESSMENT ON 24.12.2010, THE ASSESSEE HAS NEVER FILED A WRITTEN PETITION ASKING THE AO TO PROVIDE HIM A COPY OF THE INCRIMINATING MATERIAL BEING THE LETTER DATED 24.10.2007. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE A O TO DELETE THE ADDITION OF RS.39,75,000/ - MADE U/S.69 OF INCOME TAX ACT 1961 , BEING UNACCOUNTED CASH PAYMENT MADE BY THE ASSESSEE FOR THE ACQUISITION OF A COMMERCIAL PROPERTY ,WITHOUT TAKING INTO ACCOUNT THE INCRIMINATING EVIDENCE FOUND DURING SURVEY WHI CH TRULY REFLECTED THE GROUND REALITIES AND MARKET PRACTICES IN THE REALTY SECTOR IN URBAN PLACES, THAT UNACCOUNTED CASH PAYMENT OUTSIDE THE BOOKS IS THE NORM RATHER THAN THE EXCEPTION AND CASH CONSIDERATION WAS PAID BY THE ASSESSEE IN THIS CASE ALSO. 7 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A}ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE AO TO DELETE THE ADDITION OF RS.39,75,OOO/ - MADE U/S.69 OF INCOME TAX ACT 1961, BEING UNACCOUNTED CASH PAYMENT MADE BY THE ASSESSEE FOR THE ACQUISITION OF A COMMERCIAL PROPERTY WITHOUT APPRECIATING THE FACT THAT THE HON'BLE SUPREME COURT ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 4 DECISION IN THE CASE OF SUMATI DAYAL VS CIT 214 ITR 801 SQUARELY APPLIES IN THE CASE OF THE ASSESSEE. 8 WHETHER ON THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW, THE LD CLT(A} ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE AO TO DELETE THE ADDITION OF RS.39,75,OOO/ - MADE U/S.69 OF INCOME TAX ACT 1961, BEING UNACCOUNTED CASH PAYMENT MADE BY THE ASSESSEE FOR THE ACQU ISITION OF A COMMERCIAL PROPERTY, BY FAILING TO APPRECIATE THE ELEMENTARY FACT THAT THE INCRIMINATING EVIDENCE CAN NOT BE TRUE TO THE EXTENT IT SUITS THE ASSESSEE ( TWO PAYMENTS BY CHEQUE) AND UNTRUE TO THE EXTENT IT INCARCERATES (BIND) THE ASSESSEE (CASH PAYMENT OF RS. 39.75 LAKHS FOR PURCHASE OF COMMERCIAL PROPERTY FOR WHICH TWO PAYMENTS ARE BY CHEQUE) 3. GROUNDS OF CROSS - OBJECTION ARE REPRODUCED BELOW: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE CROSS - OBJECTOR AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE U/S 40(IA) OF THE ACT OF AMOUNTS AGGREGATING TO RS.9,11,683/ - FROM EMI PAYMENTS MADE TO FINANCIER; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE CROSS - OBJECTOR IN LAW, LD. CIT(A) HAS ERRE D IN UPHOLDING THE DISALLOWANCE U/S 40(IA) OF THE ACT OF AMOUNTS AGGREGATING TO RS.426,138/ - BEING AMOUNTS PAID TO VARIOUS PARTIES IN THE COURSE OF BUSINESS O THE CROSS - OBJECTOR 4 . THE FACT OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.9.2008 DECLARING A TOTAL INCOME OF RS.14,26,16,170/ - . THE CASE WAS SELECTED FOR SCRUTINY. THE NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPORT AND LOGIS TICS BUSINESS AND HAVING ITS INCOME DURING THE YEAR FROM TRANSPORT BUSINESS. A SURVEY WAS CONDUCTED ON 20.2.2008 AT THE BUSINESS PREMISES OF THE ASSESSEE, I.E. HEAD OFFICE AND ITS BRANCHES. ULTIMATELY, T HE ASSESSMENT WAS COMPLETED UNDER ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 5 SECTION 143(3) OF THE ACT VIDE ORDER DATED 24.12.2010 AT AN INCOME OF RS.16,78,68,083/ - BY MAKING VARIOUS ADDITIONS. 5 . THE FIRST ISSUE RAISED IN THE FIRST GROUNDS OF APPEAL BY THE REVENUE IS AGAINST THE DELETION OF RS.34,53,991/ - IN RESPECT THE AIR ENTRIES REMAINI NG UN - RECONCILED AS THE ASSESSEE WAS UNABLE TO GIVE ANY SATISFACTORY EXPLANATION IN RESPECT OF THE UN - RE CONCILED ENTRIES . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND FROM THE AIR DATA OF TDS THAT THERE WERE 759 PARTIES IN THE RECORDS IN VOLVING AMOUNT S OF RS.48,42,51,354/ - OUT OF WHICH RS.1,45,43,421/ - WAS NOT RECONCILED WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO OBSERVED THAT THE TDS CERTIFICATES AS PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WER E NOT TALLYING WITH DETAILS AS PER AIR AND THERE WAS A DIFFEREN CE OF RS.1,45,43,421/ - WHICH THE ASSESSEE WAS ASKED TO RECONCILE . THE ASSESSEE SUBMITTED BEFORE THE AO THAT THERE WERE SEVERAL REASONS FOR SUCH UN - RECONCILED ENTRIES SUCH AS THERE WERE S OME PERSONS WHICH WERE RUNNING THE BUSINESS IN THE NAME OF THE PROPRIETARY CONCERN AND BILLS WERE TAKEN BY THE ASSESSEE IN THE NAME OF THE PROPRIETARY CONCERN WHEREAS PANS WERE IN THE NAME OF THE PROPRIETOR VIZ: A) NAVEEN SHARMA RS.5,98,234/ - ; B) MOHIND ER SINGH RS.271,951/ - C) VIKASH AGARWAL: RS.1,66,590/ - ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 6 SIMILARLY, THERE WOULD BE TIMING DIFFERENCES OF BOOKING THE TRANSACTIONS WHEN WE BOOK OUR SALE AND CUSTOMER DEDUCTS TDS. THE ASSESSEE MIGHT HAVE BOOKED THE SAME IN THE ASSESSMENT YEAR 20 07 - 08 AND THE ACCOUNTED THE SAME AS PER MERCANTILE SYSTEM OF ACCOUNTING WHEREAS OUR CUSTOMER MAY HAVE BOOKED THE PURCHASE IN AY 2008 - 09 WHILE MAKING THE PAYMENT. LASTLY, IN THE BUSINESS OF THE ASSESSEE, THE ASSESSEE EXECUTED BUSINESS THROUGH CHAS (CLEA RING HOUSE AGENTS). IN THE SAID TRANSACTIONS THERE WOULD BE THREE PARTIES INVOLVED VIZ. CONSIGNOR, CONSIGNEE AND A GENT AND BILLING S WERE DONE AS PER THE AGENTS INSTRUCTIONS BUT SOMETIMES THE PAYMENT WAS RECEIVED AND TDS WAS DEDUCTED EITHER BY CONSIGN EE OR BY CONSIGNER AND THUS THE ASSESSEE REQUESTED THE AO TO CONSIDER THAT OVERALL SALE REFLECTED IN THE ACCOUNTS WHICH WAS MORE THAN TWICE THAN THAT AS REJECTED IN AIR AND PRAYED THAT NO DISALLOWANCE WAS CALLED FOR. THE CONTENTION OF THE ASSESSEE W AS REJ ECTED BY THE AO AND ADDITION OF RS.1,45,43,421/ - WAS MADE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF MISMATCH INFORMATION WITH BOOKS OF ACCOUNT ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH CONFIRMATION S FROM THE PARTIES FROM WHOM T HE ASSESSEE RECEIVED THE PAYMENTS AND CONTRACT RECEIPTS . AGGRIEVED BY THE DECISION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO VIDE PARA 4.7 OF THE APPELLATE ORDER HELD AS UNDER : ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 7 4.7 I HAVE CONSIDERED THE SUBMISSIONS OF TH E APPELLANT. THE ISSUE IN QUESTION IS OF ADDITION OF NON - RECONCILED AMOUNT OF R S. 1,45,43,421/ - OF THE AIR INFORMATION TO THE TOTAL INCOME OF THE APPELLANT FOR THE RELEVANT YEAR. THE FACTS WHICH ARE NOT IN DISPUTE ARE ALREADY OUTLINED IN EARLIER PARAGRAPHS. AS PER THE SECOND (AND FINAL) REMAND REPORT OF THE AO, AN AMOUNT OF RS.81,52,127/ - IN RESPECT OF 42 PARTIES IS ALREADY RECONCILED. IN RESPECT OF 5 OTHER PARTIES (TOTAL AMOUNT AS PER AIR DATA RS.36,40,676/ - ), THE ACCOUNTS OF THE APPELLANT TALLY WITH THO SE OF THE CONCERNED PARTIES. A NUMBER OF PARTIES HAVE NOT REPLIED EVEN TO NOTICE U/S 133(6)/131 WHICH SHOWS THAT THE PARTIES HAD EITHER CLOSED DOWN THEIR BUSINESS OR HAVE SHIFTED AND THE PARTICULARS ARE NOT KNOWN EITHER TO THE APPELLANT OR THE DEPARTMEN T. THE APPELLANT HAD REQUESTED THE DEPARTMENT TO SUMMON THE LEDGER ACCOUNTS OF SUCH PARTIES THROUGH NOTICE U/S 133(6), BUT SUCH EFFORTS MADE BY THE AO HAVE NOT SUCCEEDED. HOWEVER IN ABSENCE OF THEIR LEDGER ACCOUNT, IT IS OBVIOUSLY NOT POSSIBLE FOR THE A PPE LLANT TO RECONCILE THE AIR INFORMATION. THE APPELLANT'S RECEIPTS FROM ITS OPERATIONS ARE MORE THAN THE AIR FIGURE I.E. THE TOTAL RECEIPTS OF THE APPELLANT FOR THE YEAR ARE RS.2,42,06,01,170/ - AS AGAINST THE AIR FIGURE OF RS.48,42,51 ,354/ - 4.8 IN VI EW OF THE ABOVE, AND IN VIEW OF MY DECISION IN APPELLANT'S OWN CASE IN AY 2007 - 08 (WHERE THE FACTS WERE ALMOST IDENTICAL), WHICH HAS NOW BEEN UPHELD BY THE HON'BLE ITAT, MUMBAI (SUPRA), THE CONTENTION OF THE APPELLANT HAS TO BE ACCEPTED. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY HON'BLE MUMBAI IT AT IN THE CASE OF SHRL GANESH (SUPRA), CITED BY THE APPELLANT. HENCE THE ADDITION OF RS.1,45,43,421/ - IS DELETED. 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DR SUBMIT TED BEFORE US THAT THE ASSESSEE W A S NOT ABLE TO RE - CONCILE THE DIFFERENCE BETWEEN THE BOOKS OF ACCOUNT WITH THE AIR INFORMATION AND THEREFORE, THE ADDITION WAS RIGHTLY MADE. PER CONTRA, THE LD. AR SUBMITTED BEFORE US THAT RECONCILIATION OF AIR DATA IS NOT POSSIBLE WITH THE BOOKS OF ACCOUNTS AS THE INFORMATION IN THE AIR WERE ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 8 NOT PUT INTO THE COMPUTER BY THE ASSESSEE BUT BY THOSE PARTIES WHO DEDUCTED THE TDS FROM THE CONTRACTUAL PAYMENT S MADE TO THE ASSESSEE . THUS THERE WAS EVERY POSSIBILITY THAT S OME DEDUCTED TAX AT SOURCES ON PAYMENT BASIS WHEREAS OTHERS ON ACCRUAL BASIS AND IN SOME CASES MIGHT HAVE WRONGLY DEDUCTED THE T DS . THE AR FURTHER SUBMITTED THAT THE TOTAL SALES AS SHOWN IN THE BOOKS OF ACCOUNTS WERE RS.2 , 42 , 06 ,01, 170/ - WHEREAS THE TOTAL SALES IN AIR REPORT WERE RS. 48,42,51,354/ - WHICH IS JUST 20% OF THE TOTAL SALES OF THE ASSESSEE. O UT OF THE SAID AIR ENTRIES THE ASSESSEE HAD RECONCILED THE ENTRIES AMOUNTING TO RS. 46,97,07,933/ - MEANING THEREBY THAT 97% OF THE AIR ENTRIES WERE RECONC ILED BY THE ASSESSEE . THE DIFFERENCE MISMATCH MIGHT BE DUE TO FAULTY RETURN FILED BY THE 3 RD PARTY. THE LD. AR FURTHER SUBMITTED THAT IN ORDER TO VERIFY THE UN - RECONCILED ITEMS OF AIR INFORMATION, THE AO HAS SENT NOTICE UNDER SECTION 133(6) TO V ARI OUS PARTIES ON THE ADDRESSES PROVIDED IN THE AIR INFORMATION TWICE BUT ALL THE NOTICES WERE RETURNED BACK UNDELIVERED TO THE DEPARTMENT WHICH PROVE D THAT THE AIR INFORMATION COULD NOT BE RELIED UPON TO MAKE ADDITION IN THE HANDS OF THE ASS ESSEE . THE LD. AR FURTHER SUBMITTED BEFORE US THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO - ORDINATE BENCH IN ITS OWN CASE IN ITA NO. 3057/MUM/2012(AY - 2007 - 08 ) DATED 24.5.2013. THE LD.AR ALSO RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI S GANESH V/S ACIT IN ITA NO.527/MUM/2010 (AY 2006 - 07) DATED 8.12.2010 , WHEREIN IT HAS ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 9 BEEN HELD THAT IN ABSENCE ANY RECORD CONTRARY TO THE FACT, THE REVENUE AUTHORITIES COULD NOT MAKE ANY ADDITION ON ACCOUNT OF AIR INFORMATION. WE FI ND FROM THE ABOVE, THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY ITS OWN DECISION IN M/S. BLR INDIA PVT. LTD (SUPRA) THE RELEVANT FINDINGS OF THE SAID ORDER ARE REPRODUCED BELOW : 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD SHOWN HIGHER INCOME THAN THE INCOME REPORTED IN THE REPORT RECEIVED BY THE AO. IT RECONCILED ALL THE ACCOUNTS WHEREVER LEDGER ENTRIES WERE MADE AVAILABLE TO IT. ONLY IN ONE CASE HE COULD NOT RECONCILE THE ENTRIES. F ROM THE RR OF THE AO IT IS EVIDENT THAT THE FACTS NARRATED BY THE FAA (PARA 2.2) ARE CORRECT AND BASED ON SOUND FOOTINGS. FAA HAD UPHELD A PORTION OF ADDITION WHERE ASSESSEE HAD FAILED TO RECONCILE THE FIGURE. IN OUR OPINION, IN THESE CIRCUMSTANCES, HIS OR DER DOES NOT SUFFER FROM ANY FACTUAL OR LEGAL INFIRMITY. THEREFORE, CONFIRMING HIS ORDER WE DECIDE GROUND NO.1AGAISNT THE AO. W E THEREFORE , FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL UPHOLD THE ORDER OF THE LD. CIT(A). THIS GROUND OF APPEAL IS DISMISSED AND THE AO IS DIRECTED ACCORDINGLY . 7 . ISSUE RAISED IN THE GROUND NO.2 RELATES TO THE DELETION OF ADDITION OF RS.15 LAKHS BY THE LD. CIT(A) BY DIRECTING THE AO TO TREAT THE SAME AS REVENUE EXPENDITURE WHEREAS THE SAID EXPENDITU RE WAS ACTUALLY INCURRED AS CONSULTANCY CHARGES PAID TO M/S TOWER CAPITAL AND SECURITIES PVT LTD. FOR RAISING EQUITY CAPITAL . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD PAID AS HEAD LEGAL AND CONSULTANCY CHARGES OF RS.15 LAKHS TO M/S TOWER CAPITAL AND SECURITIES PVT LTD TOWARDS ISSUE OF SHARES AND CLAIMED THE EXPENSES AS REVENUE IN NATURE. ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 10 THE AO RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BROOK BOND INDIA LTD V/S CIT (1997) 225 ITR 798 /91 AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHREE RAM MILLS LTD V/S CIT 195 ITR 215(BOM) AND CIT V/S SESA GOA (INDIA) LTD (BOM) 282 ITR 197) CAME TO THE CONCLUSION THAT THE SAID EXPENSES WAS CAPITAL IN NATURE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE ALONG WITH OTHER ITEMS OF EXPENSES OF RS.5,05,585/ - . T HE LD. CIT(A) DELETED THE SAME BY HOLDING THAT RS.15 LAKHS PAID TO M/S TOWER CAPITAL AND SECURITIES PVT LTD FOR EXAMINING THE FINANCIAL AND OTHER STRUCTURE OF THE ASSESSEE AND MAKE SUITABLE SUGGESTIONS/RECOMMENDATIONS FOR RESTRUCTURING THE ASSESSEE AND THUS THE EXPENDITURE HAS NOT BEEN INCURRED TOWARDS ISSUE OF SHARES TO RELIANCE CAPITAL LIMITED SPECIFICALLY . AS A RESULT, THE RESTRUCTURING OF THE ASSESSEE WOULD RUN ITS BUSINESS MORE PROFITABLY AND ECONOMICALLY . THE LD. CIT(A) FURTHER HELD GLAXO LABORATORIES LTD 181 ITR 59. THE HONBLE BOMBAY HIGH COURT UNDER THE SIMILAR CIRCUMSTANCES FURTHER HELD THT THE SIMILAR EXPENSES INCURRED FOR RAISING THE SHARE CAPIT AL OF THE ASSESSEE WAS HELD TO BE REVENUE IN NATURE, BECAUSE THE GOVERNMENT OF INDIA WOULD NOT HAVE PERMITTED THE ASSESSEE TO ENTER INTO A FRESH COLLABORATION AGREEMENT WITH THE UK PARENT COMPANY, WHICH WAS NEEDED TO RUN THE BUSINESS OF THE ASSESSEE M ORE PROFITABLY AND THUS HELD THAT THE FACTS OF THE ASSESSEES CASE WERE SQUARELY COVERED BY THE SAID DECISIONS AND DIRECTED TO DELETE THE ADDITION OF RS. 15 LAKHS. ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 11 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFO RE US . WE FIND THAT THE ASSESSEE HAD CLEARLY STATED IN PARA 6 OF THE STATEMENT OF FACTS FILED WITH MEMORANDUM OF APPEAL BEFORE THE LD.CIT(A) THAT 32,21,222 EQUITY SHARES WERE ISSUED TO RELIANCE CAPITAL LTD AND ALSO INCURRED LEGAL AND PROFESSIONAL CH ARGES AND DUE DILIGENCE CHARGES FOR RAISING SHARE CAPITAL FOR ASSESSEE TO CARRY ON ITS BUSINESS MORE EFFICIENTLY AND TO EARN MORE PROFIT . I N SUCH A CASE EXPENDITURE INCURRED IN CONNECTION WITH INCREASE IN SHARE CAPITAL TO MEET THE WORKING CAPITAL REQ UIREMENTS IN THE BUSINESS OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE WE REPRODUCE PARA 6 OF STATEMENT OF FACTS FILED BY THE ASSESSEE BEFORE FAA: - DURING THE YEAR, THE APPELLANT ISSUED 32,21,222 EQUITY SHARES TO RELIANCE CAPITAL LTD. AND INCURRED LEGAL & PROFESSIONAL CHARGES FOR CONSULTANCY CHARGES FOR RAISING CAPITAL AND DUE DILIGENCE CHARGES AMOUNTING TO RS.20,05,0587/ - .THE APPELLANT SUBMIT THAT WHERE THE OBJECT OF ENHANCEMENT OF THE CAPITAL WAS TO HAVE MORE WORKING FUNDS FOR THE APPELLANT TO CARRY ON ITS BUSINESS AND TO EARN MOR E PROFIT AND THAT IN SUCH A CASE THE EXPENDITURE THAT IS INCURRED IN CONNECTION HAS TO BE TREATED AS REVENUE EXPENDITURE. IT WAS SUBMITTED BY THE APPELLANT THAT INCREASE IN THE CAPITAL WAS TO MEET THE NEED FOR WORKING FUNDS FOR THE APPELLANT COMPANY. ON THE SAME FACTS IT WAS DECIDED IN THE CASE OF CIT VS GI LABORATORIES(INDIA) LTD. 181 ITR 59 (BOM), THAT IT WAS HELD TO BE REVE NUE EXPENDITURE. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW OF THE RATIO LAID DOWN IN CIT VS LABORATORIES (INDIA( LTD SUPRA THAT IF THE EXPENDITURE OF RS.15 LAKHS WAS INCURRED IN ORDER TO ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 12 EXAMINE THE CAPITAL STRUCTURE OF THE COMPANY AND IN CONNECTION WITH DUE DILIGENCE THE SAME SHOULD BE ALLOWED TO THE ASSESSEE. WE, THEREFORE, DIRECT THE AO TO EXAMINE THE ASSESSEES CLAIM AND ALLOW THE EXPENSES OF RS.15 LAKHS IF FOUND CORRECT. WE, THEREFORE , RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF ABOVE FACTS . THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 9 . THE ISSUE RAISED IN THE THIRD GROUNDS OF APPEAL RELATES TO DELETION OF RS.1,63,842/ - BY THE LD. CIT(A) BY TREATING THE SAME TO BE ELIGIBLE FOR DEDUCTION U/S 35D(2)(III) OF THE ACT WHEREAS THE SA ID EXPENSES W ERE ACTUALLY INCURRED IN CONNECTION WITH RAISING EQUITY CAPITAL AND NOT INCURRED FOR REGISTRATION OF THE COMPANY. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD WRITTEN OF F A SUM OF RS.3,50,522/ - UNDE R THE HEAD PRELIMINARY EXPENSES . UPON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE, THE AO FOUND THAT SOME AMOUNT S INCLUDED IN THE SAID WRITE - OFF PERTAIN ED TO INCREASE IN AUTHORIZED SHARE CAPITAL AND ISSUE OF SHARES CAPITAL, THE DETAILS THEREOF WERE INCORPORATED AT PAGE 11 OF THE ASSESSMENT ORDER. THE AO RELYING ON THE DECISION AS REFERRED TO IN PARA 10.1 AND 10.2 OF THE ASSESSMENT ORDER HELD THAT THE EXPENDITURES PERTAIN ED TO INCREASE IN AUTHORIZED CAPITAL AND ISSUE OF SHARE CAPITAL AND SAME WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S 35 (2)(III) OF THE ACT. ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 13 10 . THE LD. CIT(A) DELETED THE ADDITION HOLDING THAT THE SAID EXPENDITURE WAS COVERED UNDER THE PROVISIONS OF SECTION 35D OF THE ACT. THE LD. CIT(A) APPEAL ACCEPTED THE ARGUMENTS OF THE LD. AR THAT THESE WERE ALLOWABLE EXPENSES AS THERE WERE M ENTIONED SPECIFICALLY IN SUB - CLAUSE (III) OF CLAUSE (C ) OF SUBSECTION (2) OF SECTION 35D. SIMILARLY, THE EXPENDITURE ON ISSUE OF SHARES WERE ALSO COVERED BY SUB - CLAUSE (4) OF THE ACT. 11 . TH E LD. DR ARGUED BEFORE US THAT RS.1,63,842 / - WERE PAID TO REGIST RAR OF C OMPANY AS FEE FOR INCREASE IN AUTHORIZED SHARES CAPITAL OF THE COMPANY AND SUBMITTED THAT THE SAME WAS NOT COVERED BY T HE PROVISIONS OF SECTION 35(2)(III) AND (4) OF THE ACT AND TH EREFORE THE ORDER OF THE AO BE UPHELD BY SETTING ASIDE THE FINDINGS OF THE LD. CIT(A). 12 . PER CONTRA, THE LD. AR DREW OUR ATTENTION TO THE PROVISIONS OF SECTION 35D (2)(C) (III) OF THE ACT WHICH SPECIFICALLY PROVIDES FOR ADMISSIBILITY OF THE EXPENSES IN CURRED ON INCREASE IN THE SIZE OF THE CAPITAL UNDER THE SAID SECTION. THE LD. AR ARGUED THAT THE ORDER OF THE LD.CIT(A) DESERVES TO BE UPHELD AS IT DID NOT SUFFERS FROM ANY INFIRMITY. ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 14 13 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE BEFORE US. FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 35D(III) (4) OF THE ACT ARE REPRODUCED AS UNDER : 35D. (1).. (2) THE EXPENDITURE REFERRED TO IN SUB - SECTION (1) SHALL BE THE EXPENDITURE SPECIFIED IN ANY ONE OR MORE OF THE FOLLOWING CLAUSES, NAMELY : (A) EXPENDITURE IN CONNECTION WITH (I) PREPARATION OF FEASIBILITY REPORT; (II) PREPARATION OF PROJECT REPORT; (III) CONDUCTING MARKET SURVEY OR ANY OTHER SURVEY NECESSARY FOR THE BUSINESS OF THE ASSESSEE; (IV) ENGINEERING SERVICES RELATING TO THE BUSINESS OF THE ASSESSEE : PROVIDED THAT THE WORK IN CONNECTION WITH THE PREPARATION OF THE FEASIBILITY REPORT OR THE PROJECT REPORT OR THE CONDUCTING OF MARKET SURVEY OR OF ANY OTHER SURVEY OR THE ENGINEERING SERVICES REFERRED TO IN THIS CLAUSE IS CARRIED OUT BY THE ASSESSEE HIMSELF OR BY A CONCERN WHICH IS FOR THE TIME BEING APPROVED IN THIS BEHALF BY THE BOARD; (B) LEGAL CHARGES FOR DRAFTING ANY AGREEMENT BETWEEN THE ASSESSEE AND ANY OTHER PERSON FOR ANY PURPOSE RELAT ING TO THE SETTING UP OR CONDUCT OF THE BUSINESS OF THE ASSESSEE; (C) WHERE THE ASSESSEE IS A COMPANY, ALSO EXPENDITURE (I) BY WAY OF LEGAL CHARGES FOR DRAFTING THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY; (II) ON PRINTING OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION; (III) BY WAY OF FEES FOR REGISTERING THE COMPANY UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 (1 OF 1956); (IV) IN CONNECTION WITH THE ISSUE, FOR PUBLIC SUBSCRIPTION, OF SHARES IN OR DEBENTURES OF THE COMPANY, BEING UNDERWRI TING COMMISSION, BROKERAGE AND CHARGES FOR DRAFTING, TYPING, PRINTING AND ADVERTISEMENT OF THE PROSPECTUS; (D) SUCH OTHER ITEMS OF EXPENDITURE (NOT BEING EXPENDITURE ELIGIBLE FOR ANY ALLOWANCE OR DEDUCTION UNDER ANY OTHER PROVISION OF THIS ACT) AS MAY BE P RESCRIBED. (3) .. (4) WHERE THE ASSESSEE IS A PERSON OTHER THAN A COMPANY OR A CO - OPERATIVE SOCIETY, NO DEDUCTION SHALL BE ADMISSIBLE UNDER SUB - SECTION (1) UNLESS THE ACCOUNTS OF THE ASSESSEE FOR THE YEAR OR YEARS IN WHICH THE EXPENDITURE SPECIFIED IN S UB - SECTION (2) IS INCURRED HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB - SECTION (2) ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 15 OF SECTION 288 , AND THE ASSESSEE FURNISHES, ALONG WITH HIS RETURN OF INCOME FOR THE FIRST YEAR IN WHICH THE DEDUCTION UNDER THIS SECTION IS CLAIMED, THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED. AFTER PERUSING THE PROVISIONS OF SECTION 35(2)(III) OF THE ACT AS ABOVE , WE F IND THAT THE EXPENSES INCURRED FOR INCREASING THE SIZE OF THE AUTHORIZED CAPITAL SPECIFICALLY MENTIONED IN THE SAID SECTION TO BE ADMISSIBLE EXPENSES . WE, THEREFORE, FIND NO INFIRM ITY IN THE ORDER OF THE L D. CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE. THIS GROUND OF REVENUE STANDS DISMISSED. 14 . THE ISSUE RAISED IN GROUNDS OF APPEAL NO.4 TO 8 IS AGAINST THE DELETION OF ADDITION OF RS.39,75,000/ - BY THE LD. CIT(A) AS MAD E BY THE AO U/S 69 OF THE ACT. 15 . THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY ON 29.2.2008. THE STATEMENT U/S 131 OF THE ACT WAS RECORDED OF MR.ASHOK GOYAL, MANAGING DIRECTOR OF THE COMPANY. THE MATERIAL IMPOUNDED DURING THE COU RSE OF SURVEY WAS SHOWN TO MR.ASHOK GOYAL AND ASKED HIM TO EXPLAIN THE CONTENTS OF PAGES 75 TO 80. MR. GOYAL REPLIED THAT THE PAGES 75 TO 80 COMPRISES OF COMPRISES MEMORANDUM OF UNDERSTANDING (MOU). THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSE SSEE U/S 69 OF THE ACT AS UNEXPLAINED INVESTMENT ON THE BASIS OF LETTER AS FOUND BY THE SURVEY TEAM DATED 24.10.2007. THOUGH THE PAYMENT OF CASH WAS ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 16 SPECIFICALLY DENIED BY THE MANAGING DIRECTOR OF THE COMPANY. AGGRIEVED BY THE ORDER OF LD.AO, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD CIT(A), WHO DELETED THE ADDITION MADE BY THE AO BY HOLDING AS UNDER : 11.3 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS OF THE CASE. IT IS SEEN THAT MR ASHOK GOYAL, THE MANAGING DIRE CTOR OF THE APPELLANT COMPANY HAD THOUGH ADMITTED TO HAVE GIVEN TWO CHEQUES OF RS. 25 LAKHS EACH TO MR NITIN MEHTA, HE HAD OBVIOUSLY DENIED ANY PAYMENT OF CASH FOR THE PURCHASE OF THE SAID PROPERTY AT POWAI. HE HAD FURTHER STATED THAT SINCE IT WAS SUBSEQUE NTLY FOUND THAT THE PROPERTY WAS IN DISPUTE, NO FURTHER TRANSACTIONS TOOK PLACE. HOWEVER, THE MOST IMPORTANT FACT IN THIS REGARD TO BE NOTED IS THAT THE ALLEGED DOCUMENT WHERE SUCH FACTS WERE ALLEGEDLY SAID TO HAVE BEEN RECORDED, HAD NEITHER BEEN SHOWN TO THE APPELLANT BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOR ITS COPY HAD BEEN PROVIDED TO THE APPELLANT. THEREFORE, SUCH ADDITION, WHICH IS BASED ON A DOCUMENT, WHICH HAS NEITHER BEEN' SHOWN TO THE APPELLANT, NOR ANY COPY OF THE SAME PROVIDED TO THE APPELLANT, CANNOT BE SUSTAINED IN SUCH CIRCUMSTANCES. THE CONTENTION OF THE APPELLANT THAT THE ADDITION IS NOT JUSTIFIED IS ALSO SUPPORTED BY THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS KHADER KHAN SONS (SUPRA) CITED BY THE APPELLANT. IT MAY BE NOTED THAT IN THE APPELLANT'S CASE, TWO REMAND REPORTS FROM THE AO HAVE BEEN CALLED AND THE SUBMISSIONS OF THE APPELLANT WERE ALSO FORWARDED TO THE AO. HOWEVER, THE AO HAS NOT COMMENTED UPON THE CLAIM OF THE APPELLANT (THAT SUCH DOCUMENT WAS NEITHE R SHOWN TO THE APPELLANT, NOR ANY COPY OF THE SAME WAS PROVIDED) IN THE REMAND REPORTS. THEREFORE, IT IS EVIDENT THAT THE ADDITION OF RS.39,75,0001 - MADE BY THE AO UNDER THE PROVISIONS OF SECTION 69 OF THE ACT IS NOT SOUND AND THE SAME IS LIABLE TO BE DELE TED. I ORDER ACCORDINGLY. 11.4 THIS GROUND OF APPEAL IS ALLOWED. 1 6 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR RELIED ON THE ORDER OF THE AO AND PRAYED THAT THE ORDER OF THE AO BE UPHELD AND THAT OF LF. CIT(A) BE SET ASIDE. ON THE CONTRARY, THE LD. AR REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 17 CIT(A) AND RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT, THE ORDER OF THE LD. CIT(A) BE UPHELD. 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL C ONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE LD. DR SUBMITTED BEFORE US THAT THE SAID LETTER WAS FOUND FROM THE BUSINESS PREMISES OF TH E ASSESSEE COMPANY IN WHICH IT WAS SPECIFICALLY MENTIONED THAT A SUM OF RS.39,75,000/ - WAS PAID TO THE BUI LDER IN CASH NOTWITHSTANDING DENIED BY MR. GOYAL TWO TIMES IN HIS STATEMENT RECORDED BY THE SURVEY TEAM U/S 131 OF THE ACT AND THUS STRONGLY SUPPORTED THE ORDER OF THE AO . PER CONTRA, THE LD. AR SUBMITTED BEFORE US THAT THE PAYMENT OF RS.39,75,000/ - WAS SPECIFICALLY DENIED DURING THE COURSE OF SURVEY BY MANAGING DIRECTOR MR. GOYAL AND ALSO SUBMITTED THAT THE ASSESSEE WAS NOT ALLOWED ACCESS OF THE SAID LETTER THEREBY CAUSING MISCARRIAGE OF PRINCIPLE OF NATURAL JUSTICE AND THE AO SIMPLY ON THE BASIS OF LETTER FOUND DURING THE SURVEY ADDED THE SAME U/S 69 OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT . DURING THE COURSE OF HEARING BEFORE US AND FROM THE RIVAL CONTENTIONS OF THE PARTIES, WE FIND THAT THE AO MADE THE ADDITION ON T HE BASIS OF LETTER DATED 24.10.2007 FOUND DURING THE COURSE OF SURVEY WHICH WAS SPECIFICALLY DENIED BY THE MANAGING DIRECTOR OF THE COMPANY SHRI GOYAL IN HIS STATEMENT RECORDED U/S 131 OF THE ACT . THE AO DID NOT ALLOW AN OPPORTUNITY OF BEING HEA R D TO TH E ASSESSEE TO REBUT THE CONTENTS OF THE ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 18 LETTER BY FURNISHING A COPY OF THE SAME TO THE ASSESSEE AND ALSO FAILED TO COLLECT THE THIRD PARTY EVIDENCE S SUCH AS STATEMENT OF THE BUILDER TO CORROBORATE THE CONTENTS . IN VIEW OF THE ABOVE FACTS W E ARE OF THE O PINION THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND ACCORDINLY WE UP HOLD THE ORDER OF LD.CIT(A) BY DISMISS ING THE GROUND OF REVENUE. CO NO 247/M/2014 ASSESSMENT YEAR 2008 - 09 1 8 . THE BRIEF FACTS RAISED IN THE CROSS OBJECTION FILED BY T HE A SS E SSEE ARE TH A T THE DURING THE YEAR THE ASSESSEE PAID MONTHLY INSTALLMENT OF EMI TOWARDS LOAN TAKEN BY THE ASSESSEE FOR PURCHASE OF TRUCKS AND LORRIES ETC. FROM FOUR PARTIES WHICH ARE AS UNDER : - S.NO. PAID TO AMOUNT PAID RS. 1 CHOLAMANDALAM FINANCE 54226 / - 2 GE CAPITAL TFS LTD 168789/ - 3 RELIANCE CAPITAL LTD 49997/ - 4 KOTAL MAHINDRA PRIME LTD. 638851/ - TOTAL 9111863/ - T HE INTEREST ELEMENT INCLUDED IN THE SAID PAYMENT S WAS CLAIMED BY THE ASSESSEE AS BUSINESS EXPENSES. THE AO DURING THE COURSE O F SCRUTINY PROCEEDINGS FOUND THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THE INTEREST PAYMENT THUS CAME TO THE CONCLUSION THAT THE SAME WAS LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT AND ACCORDINGLY DISALLOWED THE ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 19 ENTIRE AMOUNT OF INTEREST RS.9,11,6 83/ - . SIMILARLY, THE SECOND ISSUE RAISED IN THE CROSS OBJECTION WAS WITH RESPECT TO THE DISALLOWANCE OF RS.4 , 26,138/ - WHICH WAS UPHELD BY THE LD.CIT(A) ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE , T HE DETAILS WHEREOF ARE AS UNDER : - S.NO. NATURE OF PAYMENT PAID TO AMOUT PAID RS. 1 CONTRACT LABOUR CHARGES DIPESH B JADHAV 57,952/ - 2 CONTRACT LABOUR CHARGES AMIT GUPTA 56,000/ - 3 CONTRACT LABOUR CHARGES PROMOD MONDE 50,313/ - 4 FURNITURE REPAIRS AND PAINTING CHARGES RAMESH SHARMA (B ARODA ) 26,252/ - 5 LORRY ENGINE REPAIRS SANDEEP SHARMA (BHLAI) 29,303/ - 6 AIR CONDITIONING REPAIRS AND MAINT. L G ELECTRONIC INDIA PVT LTD. 29,182/ - 7 FURNITURE MAKING LABOUR CHARGES SHIV SHANTI INTERIOR (GOREGAON) 10,820/ - EXCLUDE D 8 ELECTRICAL REPAIRS YADAV ELECTRICAL (GOREGAON) 24, 510 / - 9 OFFICE CABIN REPAIRS ABHISHEK ENGINEERING (MUMBAI) 24,301/ - 10 GODOWN REPAIRING N J BHOIR 128,325/ - TOTAL 436958/ - - ITEM NO.7 10,820/ - RS.426,138 19 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE RELEVANT MATERIALS PLACED BEFORE US AND FIND THAT THE ASSESSEE HAD MADE PAYMENT TO FOUR COMPANIES ON ACCOUNT OF REPAYMENT OF FINANCE BORROWD FROM THEM BY WAY OF EMI WHICH WERE INCLU SIVE OF INTEREST ELEMENT AN D THE ASSESSEE ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 20 HAD NOT DEDUCTED ANY TAX AT SOURCE. SIMILARLY , AS REGARDS THE AMOUNT OF RS.426,138/ - WHICH REPRESENT S THE PAYMENTS OF LABOUR CHARGES, PAINTING , REPAIRS AND MAINTENANCE, ELECTRICITY, GODOWN CHARGES ETC , T HE ASSESSEE DID NOT DEDUCT ANY TAX AT SOURCE AND CONSEQUENTLY, TH E AO DURING THE COURSE OF SCRUTINY FOUND THAT THESE PAYMENTS ARE COVERED UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A), THE ADDITION WAS CONFIRMED ON T HE GROUND THAT THE PAYMENTS WERE TO BE SUBJECTED TO TDS WHICH THE ASSESSEE HA D FAILED TO . THUS, THE ADDITION HAS RIGHTLY BEEN MADE BY THE AO AS IS CLEAR FROM THE FACTS BEFORE US AS THE ASSESSEE HAD FAILED TO DEDUCT THE TAX AT SOURCE WHICH WAS REQUIRE D TO BE DEDUC TE D UNDER THE PROVISION OF SECTION 194A ON EMI S INTEREST ELEMENT AND ALSO U/S 194C WITH RESPECT T O VARIOUS EXPENSES AMOUNTING TO RS.436,958/ - AS STATED HEREINABOVE . T HUS, THE ASSESSEE HAD VIOLATED THE PROVI SI ONS OF THE ACT BY NOT DEDUC TING THE TDS AT SOURCE. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH HAD RIGHTLY CONFIRMED, THE ADDITION WITH RESPECT TO RS.9 , 11 , 863/ - ON ACCOUNT INTEREST OF LOAN S AND RS.4 , 26 , 138/ - FOR VARIOUS EXPENSES AS STATED ABOVE IN PARA 2 0 OF THIS ORDER. ACCORDINGLY, THE CROSS - OBJECTION FILED BY T HE A S SES SEE ARE DISMISSED. ITA NO. 5 556 / MUM/20 13 CO 247 /M/201 3 21 2 0 . IN SUM AND SUBSTANCE, THE APPEAL OF THE REVENUE IS DISMISSED AND ALSO THE CROSS - OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH APRIL , 2016. . 11 TH APR, 2016 SD SD ( /AMIT SHUKLA) ( /RAJESH KUMAR) / JU DICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 11 /0 4 /2016 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE AP PELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI