Prabhatam Advertising Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 5798/DEL/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9368 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: GAUTAM JAIN PIYUSH KAMAL
• Keywords: Opportunity of being heard; Retrospective amendment; Additional evidence; Notional interest; Revenue expenditure
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.5798/DEL/2014 ASSESSMENT YEAR: 2009-10 PRABHATAM ADVERTISING PVT. LTD., RASHTRIYA TOWER, 38, RANI JHANSI ROAD, JHANDEWALAN, DELHI. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-14(1), NEW DELHI. TAN/PAN:AAECP 0417B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAUTAM JAIN, PIYUSH KAMAL, ADV.& SHRI LALIT MOHAN, CA RESPONDENT BY: SHRI SURENDER PAL, SR.D.R DATE OF HEARING: 04 10 2018 DATE OF PRONOUNCEMENT: 19 12 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 29.08.2014, PASSED BY LD. COMM ISSIONER OF INCOME TAX (APPEALS)-XXVIII, NEW DELHIFOR THE QU ANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEA R 2009-10. 2. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.5798/DEL/2014 2 2 1. THAT THE IMPUGNED ORDER IS AGAINST THE FACTS OF THE CASE, UNJUSTIFIED, AGAINST THE PRINCIPALS OF NATURAL JUST ICE AND BAD IN LAW. 2. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRED IN HOLDING THE ADDITION OF RS. 1,20,56,085/- BY THE LD. AO ON ACCO UNT OF SALE OF SHARES VIDE PARA NO. 3 OF THE ASSESSMENT ORDER IN AN ENVIS AGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITTED BY THE APPELLANT AND WITHOUT ANY COGENT EVIDENCE. 3. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRE D IN HOLDING THE ADDITION OF RS. 1,29,91,587/- BY THE LD. AO ON ACCO UNT OF DISALLOWANCE OF 4/5LH OF THE EXPENDITURE OF RS. 1,62,39,484/- BE ING ACCOUNT INCURRED IN RESPECT OF BUS QUEUE SHELTERS (BQS), BY TREATING THE SAME AS DEFERRED-REVENUE IN NATURE VIDE PARA NO. 4 OF THE ASSESSMENT ORDER IN AN ENVISAGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITTED BY THE APPELLANT AND WITHOUT AN Y COGENT EVIDENCE. 4. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRE D IN HOLDING THE ADDITION OF RS. 27,297/- BY THE LD AO ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE IN RESPECT OF CHARGES FOR LATE FILING O F SERVICE TAX RETURN VIDE PARA NO. 5 OF THE ASSESSMENT ORDER IN AN ENVISAGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITT ED BY THE APPELLANT AND WITHOUT ANY COGENT EVIDENCE. 5. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRE D IN HOLDING THE ADDITION OF RS. 1,47,647/- BY THE LD AO ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE IN RESPECT OF BIHAR PROJECT EXPENSES VI DE PARA NO. 6 OF THE ASSESSMENT ORDER IN AN ENVISAGED MANNER WITHOUT CON SIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITTED BY THE APPELLAN T AND WITHOUT ANY COGENT EVIDENCE. 6. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRED IN HOLDING THE ADDITION BEING DISALLOWANCE OF RS. 28,94,472/- AS N OTIONAL INTEREST ON THE AMOUNT OF LOANS AND ADVANCES OF RS. 4,82,41,209 /- BY THE LD AO VIDE PARA NO. 7 OF THE ASSESSMENT ORDER IN AN ENVIS AGED MANNER ITA NO.5798/DEL/2014 3 3 WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITTED BY THE APPELLANT AND WITHOUT ANY COGENT EVIDENCE. 7. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRED IN HOLDING THE ADDITION BEING DISALLOWANCE OF RS. 16,65,0007- AS N OTIONAL INTEREST ON INVESTMENT OF RS. 1,38,75,013/- IN A JOINT VENTURE BY THE LD AO VIDE PARA NO. 8 OF THE ASSESSMENT ORDER IN AN ENVISAGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITT ED BY THE APPELLANT AND WITHOUT ANY COGENT EVIDENCE. 8. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRE D IN HOLDING THE ADDITION OF RS. 5,09,74,000/- BY THE LD AO ON ACCOU NT OF SHARE CAPITAL/SHARE APPLICATION MONEY/SHARE PREMIUM RAISE D DURING THE YEAR VIDE PARA NO. 9 OF THE ASSESSMENT ORDER IN AN ENVIS AGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITTED BY THE APPELLANT AND WITHOUT ANY COGENT EVIDENCE. 9. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRE D IN HOLDING THE ADDITION OF RS. 20,908/- BY THE LD AO ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D V IDE PARA NO. 10 OF THE ASSESSMENT ORDER IN AN ENVISAGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DOCUMENTS SUBMITTED BY THE APPELLAN T AND WITHOUT ANY COGENT EVIDENCE. 10. ON FACTS & IN LAW, THE CIT (A) HAS GROSSLY ERRE D IN HOLDING THE ADDITION OF RS.27,57,000/- BY THE LD AO ON ACCOUNT OF DISALLOWANCE U/S 40A(IA) VIDE PARA NO. 11 OF THE ASSESSMENT ORDE R IN AN ENVISAGED MANNER WITHOUT CONSIDERING FACTS OF THE CASE AND DO CUMENTS SUBMITTED BY THE APPELLANT AND WITHOUT ANY COGENT EVIDENCE. 11. ON FACTS & IN LAW, THE LD. CIT (A) HAS GROSSLY ERRED IN LAW IN DISREGARDING THE SUBMISSIONS MADE AND DOCUMENTS SUB MITTED BY THE APPELLANT AND PASSED THE ORDER WITHOUT PROVIDING RE ASONABLE OPPORTUNITY OF BEING HEARD. ITA NO.5798/DEL/2014 4 4 12. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING ORDER OF THE ASSESSING OFFICER ARBITRARILY AND WITHOUT ANY JUSTIFICATION. 13. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R, DELETE, RESCIND, FOREGO OR WITHDRAW ANY OR ALL THE GROUNDS OF APPEAL AT ANYTIME BEFORE OR DURING THE COURSE OF HEARING. 3. AT THE OUTSET, LEARNED COUNSEL HAS NOT PRESSED G ROUND NO.9 RELATING TO DISALLOWANCE MADE U/S.14A READ WITH RUL E 8D. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. WE WILL TAKE UP REST OF THE GROUNDS AS RAISED BY THE ASSESSEE BE FORE US. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF ADVERTISING IN ELECTRONIC MEDIA WIT H VARIOUS REGIONAL NEW CHANNELS AND ALSO PROVIDES WHOLE RANGE OF SERVICES INCLUDING AD CAMPAIGN, DESIGN, CREATIVE AND STRATEG Y INCUBATION AND DEVELOPMENT, ADVERTISEMENT IN PRINT AND ELECTRO NIC MEDIA. IN SO FAR AS THE ADDITION OF RS.1,20,56,085/- ON ACCOU NT OF SALE OF SHARES, THE ASSESSING OFFICER FROM THE PERUSAL OF T HE ANNUAL ACCOUNT AND REPORT OF AUDITORS NOTED THAT TRANSACTI ON OF SALES OF SHARES FOR RS.1,20,56,085/- AND PROFIT OF RS.28,88, 976/- EARNED THEREON ARE NOT PROPERLY REFLECTED IN THE AFFAIRS A ND IN THE PROFITS OF THE COMPANY. THE RELEVANT EXTRACT OF THE AUDITOR S READS AS UNDER: 'EXCEPT FOR THE TRANSACTION OF SALE OF SHARES BOOKE D IN THE PROFIT & LOSS ACCOUNT FOR A SUM OF RS.1,20,56,085/-. IT HAS BEEN EXPLAINED TO US THAT THE SAID SHARES HAVE BEEN SOLD BY THE BROKER BUT TH E PAYMENT HAS NOT BEEN MADE TO THE COMPANY. DEMAND ACCOUNT STATEMENTS HAVE NOT BEEN PROVIDED FOR VERIFICATION. THE COMPANY HAS FILED A SUIT AGAINST THE BROKER FOR RECOVERING OF THE SAID AMOUNT. THE COST OF SHARES SOLD, AS ITA NO.5798/DEL/2014 5 5 APPEARING IN THE BOOKS OF ACCOUNTS IS RS.91,67,109. 93 AND THUS THE PROFIT WORKS OUT TO RS.28,88,975.07. 5. THE LD. ASSESSING OFFICER HELD THAT THOUGH THE O PENING STOCK OF SHARE OF RS.91,67,110/- WERE DULY DEBITED IN THE PROFIT AND LOSS ACCOUNT AS PART OF COST OF PRODUCTION, BUT NEI THER THE SALE AMOUNT NOR THE PROFIT ON SALE OF SHARES HAS BEEN SH OWN IN THE CREDIT SIDE OF THE PROFIT AND LOSS ACCOUNT. ACCORDI NGLY, HE MADE AN ADDITION OF RS.1,20,56,085/- AS SALE CONSIDERATI ON NOT DISCLOSED BY THE ASSESSEE COMPANY. 6. BEFORE THE LD. CIT (A), THE ASSESSEE SUBMITT ED THAT THE SALE VALUE OF THESE SHARES HAVE BEEN DULY DECLARED IN TH E PROFIT AND LOSS ACCOUNT BY THE ASSESSEE COMPANY AND ALSO DEMON STRATED THIS FACT BY WAY OF VARIOUS EVIDENCES IN THE FORM O F PROFIT AND LOSS ACCOUNT, I.E., TRIAL BALANCE; CLIENT-WISE DETAILS O F SALE OF SHARES INCLUDING STOCK SUMMARY OF OPENING STOCK AND SALE S UMMARY; AUDITED P& L ACCOUNT IN BALANCE SHEET. APART FROM T HAT ASSESSEE HAS ALSO FILED FOLLOWING DETAILS WHICH WERE IN THE FORM OF ADDITIONAL EVIDENCES. A . DETAIL OF BILL OUTWARD/SALE ACCOUNT HEAD B. THE ORDER OF MEDIATION CENTRE C. COPY OF AGREEMENT FOR SETTLEMENT DATED 12.05.2008 D. LEDGER ACCOUNT OF AG SHARES AND SECURITIES LTD. E. COPY OF PROFIT AND LOSS ACCOUNT. F. QUANTITY WISE DETAIL OF SALE OF SHARES ALONG WITH C OPY OF LEDGER ACCOUNT OF SALE OF SHARES AND SET OF AUDITED BA LANCE SHEETS. ITA NO.5798/DEL/2014 6 6 6.1 LD. CIT (A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY CONFI RMATION IN THIS REGARD OR DEMAT ACCOUNT OR THE BANK STATEMENT. THE ASSESSEE EVEN FAILED TO FILE BROKERS CONTRACT NOTE AND MODE OF PAYMENT OF THE SALE. 7. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE, M R. GAUTAM JAIN AFTER DRAWING OUR ATTENTION TO THE VARIOUS DOCUMENT S FILED BEFORE THE AUTHORITIES BELOW SUBMITTED THAT THE TOTAL CRED IT ON ACCOUNT OF SALE OF SHARES WAS RS.75,71,95,345/-; AND THE HE AD WISE BREAK UP AS PLACED IN THE PAPER BOOK WERE AS UNDER: SR. NO. PARTICULARS OF SALES ACCOUNT AMOUNT (RS.) 1 BILL OUTWARD 1 10,63,00,203.07 2 BILL OUTWARD - 10% 51,56,001.20 3 BILL OUTWARD 10% [OTHER THAN CHANNEL) 1,05,56,423.04 4 BILL OUTWARD 12% 1,65,23,566.77 5 BILL OUTWARD (12%) OTHER THAN CHANNEL 2,34,66,498.33 6 BILL OUTWARD 1.8% 28,13,47,797.12 7 BILL OUTWARD BBY 1,63,52,171.94 8 BILL OUTWARD BBY 1.8 7,49,98,083.51 9 PRODUCTION SALE 16,500.00 10 PROFIT ON SALE OF SHARES 28,88,975.07 11 SALES CST 2% (AGAINST FORM-C) 7,14,480.00 12 SALES OF SHARES - DELIVERIES 91,67,109.93 13 SALES OTHER 20,06,12,563.00 14 SALES-VAT 12.5% 73, 45,424.00 15 SALES-VAT 4% 17,49,548.00 TOTAL 75,71,95,344.98 THUS, HE SUBMITTED THAT SUM OF RS.1,20,56,085/- STA NDS DULY CREDITED IN THE P&L ACCOUNT IN THE FOLLOWING M ANNER: SR.NO. HEAD AMOUNT (RS.) I) PROFIT ON SALE OF SHARES 28,88,975.07 II) SALES OF SHARES - DELIVERIES 91,67,109.93 TOTAL 1,20,56,085 ITA NO.5798/DEL/2014 7 7 7.1 HE FURTHER SUBMITTED THAT EVEN THE AUDITORS NOTE CLEARLY STATES THAT THE SHARES HAVE BEEN SOLD BY THE ASSESS EE. THUS, THERE IS NO QUESTION OF ANY SALE NOT BEING RECORDED IN THE P&L ACCOUNT. THE DISPUTE WAS WITH REGARD TO THE BROKER ONLY AND THIS IS THE REASON WHY THE AUDITORS HAVE GIVEN THEIR REM ARK. 8. ON THE OTHER HAND, LEARNED DR STRONGLY RELI ED UPON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THERE WA S NON- COMPLIANCE BY THE ASSESSEE BEFORE THE ASSESSING OFF ICER AND THEREFORE, THE ADDITION HAS RIGHTLY BEEN MADE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS W ELL AS MATERIAL REFERRED TO BEFORE US. THE SOLE REASON FOR MAKING T HE ADDITION BY THE ASSESSING OFFICER WAS THAT AUDITORS HAVE GIVEN A REMARK THAT PAYMENT HAS NOT BEEN MADE BY THE COMPANY ON THE SAL E OF THE SHARES; AND DEMAT ACCOUNT HAS NOT BEEN PROVIDED FOR VERIFICATION. FROM THE PERUSAL OF THE MATERIAL PLAC ED ON RECORD AND AS REFERRED TO BEFORE US BY THE LEARNED COUNSEL , WE FIND THAT IT CANNOT BE DISPUTED THAT AMOUNT OF RS.1,20,56,085 /- ON ACCOUNT OF SALE OF SHARES HAVE BEEN DULY REFLECTED IN THE P&L ACCOUNT WHICH IS FAIRLY EVIDENT FROM THE BREAK UP G IVEN BY THE LEARNED COUNSEL AS INCORPORATED ABOVE. THE PROFIT O N THE SALE OF SHARES AMOUNTING TO RS.28,88,975/- HAD ALREADY BEEN DISCLOSED IN THE ACCOUNTS. EVEN FROM THE BARE PERUSAL OF THE AUDITORS NOTE IT IS SEEN THAT THE AMOUNT HAS BEEN SHOWN BY THE AS SESSEE FROM SALE OF SHARES ALBEIT IT HAS BEEN NOTED THAT THERE IS SOME DISPUTE AGAINST THE BROKER FOR RECOVERY OF THE AMOUNT. ONCE THERE IS NO DISPUTE REGARDING SALE OF SHARES AND PROFIT ON SUCH SHARES DULY ITA NO.5798/DEL/2014 8 8 DISCLOSED, THEN TO TREAT THAT THE WHOLE AMOUNT OF S ALE SEPARATELY AS INCOME OF THE ASSESSEE ONCE AGAIN WOULD BE ABSUR D. IT IS NOT THE CASE OF THE ASSESSING OFFICER AND LD. CIT(A) TH AT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE. WHENC E, NEITHER THE AUDITOR HAS DISPUTED THE SALE NOR THE ACCOUNTS OTHE RWISE SHOW THAT THE SALE OF SHARES HAS NOT BEEN REFLECTED, THE N TO HOLD THAT THE ENTIRE SALE OF SHARES SHOULD BE ADDED WOULD BE ERRONEOUS. IN ANY CASE, THE ASSESSEE HAS FILED VARIOUS DOCUMENTS TO DEMONSTRATE THE SALE OF SHARES WHICH ARE AS UNDER:- NO. 1 COPY OF PROFIT AND LOSS ACCOUNT OF M/S RASTRIYA ADV ERTISING AGENCY 2 COPY OF STOCK SUMMARY AS ON 1.4.2008 3 QUANTITY WISE DETAILS OF SALE OF SHARES (STOCK SUMM ARY OPENING STOCK AS ON 01.04.2008 SALE SUMMARY FOR THE PERIOD 01.04.2008 TO 31.03.2009) 4 COPY OF LEDGER ACCOUNT OF SALES OF SHARES-DELIVERIE S IN THE BOOKS OF M/S RASHTRIYA ADVERTISING AGENCY FOR THE P ERIOD 1.4.2008 TO 31.3.2009 5 COPY OF LEDGER ACCOUNT OF PROFIT ON SALE OF SHARES IN THE BOOKS OF M/S RASHTRIYA ADVERTISING AGENCY FOR THE PERIOD 1.4.2008 TO 31.3.2008 6 GROUP SUMMARY IN THE BOOKS OF APPELLANT COMPANY 7 COPY OF ORDER OF MEDIATION IN CASE OF APPELLANT AND ANURANJAN PANDEY 8 COPY OF AGREEMENT DATED 12.5.2008 BETWEEN ANU SHARE S AND SECURITIES (P) LTD. AND MR. DINESH GUPTA 9 COPY OF LEDGER ACCOUNT OF AG SHARES & SECURITIES LT D. IN THE BOOKS OF APPELLANT COMPANY IN THE BOOKS OF M/S RASH TRIYA ADVERTISING AGENCY FOR THE PERIOD 5.9.2007 TO 31.3. 2009 10 COPY OF LEDGER ACCOUNT OF AG SHARES & SECURITIES LT D. IN THE BOOKS OF APPELLANT COMPANY FOR 1.4.2010 TO 3.13.201 3 THUS, THE ADDITION OF THIS AMOUNT IN WAKE OF AFORES AID DOCUMENTS CAN BE UPHELD AND SAME IS DIRECTED TO BE DELETED. 10. COMING TO THE DISALLOWANCE OF RS.1,29,91,587 /- BEING 4/5 TH OF THE EXPENDITURE OF RS.1,62,39,484/- CLAIMED BY T HE ITA NO.5798/DEL/2014 9 9 ASSESSEE BEING AMOUNT INCURRED IN RESPECT OF BUS QU EUE SHELTERS WHICH HAS BEEN TREATED AS DEFERRED REVENUE EXPENDIT URE BY THE AO, IT HAS BEEN POINTED OUT BY THE LEARNED COUNSEL THAT THIS ISSUE STANDS COVERED BY THE DECISION OF THE TRIBUNAL IN A SSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011-12 IN ITA NO.1439 /DEL/2015, WHEREIN THIS TRIBUNAL FOLLOWING THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF CITI FINANCIAL CONSUMER FINANCE LTD., REPORTED IN 335 ITR 29 (DEL.) HAVE DELETED THE SAME ADDITION. 11. LEARNED DEPARTMENT REPRESENTATIVE ON THE OTHE R HAND STRONGLY RELIED UPON THE ORDER OF THE LD. CIT(A). 12. FROM THE PERUSAL OF THE IMPUGNED ORDER, IT IS SEEN THAT ASSESSEE HAS INCURRED EXPENDITURE OF RS.1,62,39,484 /- ON CONSTRUCTION OF BUS QUEUE SHELTER ON BOT BASIS. THE ENTIRE EXPENDITURE HAS BEEN CLAIMED AS REVENUE BY THE ASSE SSEE, WHEREAS THE ASSESSING OFFICER HAS HELD THAT 1/5 TH OF THE EXPENDITURE IS ALLOWABLE AS DEFERRED EXPENDITURE TO BE AMORTIZED OVER SUCCEEDING YEARS. THE ISSUE, WHETHER DEPARTMEN T CAN TREAT A REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE AS DE FERRED REVENUE EXPENDITURE TO BE ALLOWABLE OVER A PERIOD O F TIME HAS BEEN DISCUSSED THREADBARE BY THE HON'BLE SUPREME CO URT IN THE CASE OF TAPARIA TOOLS LTD. VS. JCIT, 323 ITR 605. T HE RELEVANT OBSERVATION OF THE HONBLE COURT IN THIS REGARD REA DS AS UNDER: 18. WHAT FOLLOWS FROM THE ABOVE IS THAT NORMALLY THE ORDINARY RULE IS TO BE APPLIED, NAMELY, REVENUE EXPENDITURE INCURRED IN A PARTICULAR YEAR IS TO BE ALLOWED IN THAT YEAR. THUS, IF THE ASSESSE E CLAIMS THAT EXPENDITURE IN THAT YEAR, THE IT DEPARTMENT CANNOT DENY THE SAME. HOWEVER, IN THOSE CASES WHERE THE ASSESSEE HIMSELF WANTS TO SPREAD ITA NO.5798/DEL/2014 10 10 THE EXPENDITURE OVER A PERIOD OF ENSUING YEARS, IT CAN BE ALLOWED ONLY IF THE PRINCIPLE OF 'MATCHING CONCEPT' IS SATISFIED, W HICH UPTO NOW HAS BEEN RESTRICTED TO THE CASES OF DEBENTURES. 19. IN THE INSTANT CASE, AS NOTICED ABOVE, THE ASS ESSEE DID NOT WANT SPREAD OVER OF THIS EXPENDITURE OVER A PERIOD OF FI VE YEARS AS IN THE RETURN FILED BY IT, IT HAD CLAIMED THE ENTIRE INTER EST PAID UPFRONT AS DEDUCTIBLE EXPENDITURE IN THE SAME YEAR. IN SUCH A SITUATION, WHEN THIS COURSE OF ACTION WAS PERMISSIBLE IN LAW TO THE ASSE SSEE AS IT WAS IN CONSONANCE WITH THE PROVISIONS OF THE ACT WHICH PER MIT THE ASSESSEE TO CLAIM THE EXPENDITURE IN THE YEAR IN WHICH IT WAS I NCURRED, MERELY BECAUSE A DIFFERENT TREATMENT WAS GIVEN IN THE BOOK S OF ACCOUNT CANNOT BE A FACTOR WHICH WOULD DEPRIVE THE ASSESSEE FROM C LAIMING THE ENTIRE EXPENDITURE AS A DEDUCTION. IT HAS BEEN HELD REPEATEDLY BY THIS COURT THAT ENTRIES IN THE BOOKS OF ACCOUNT ARE NOT DETERM INATIVE OR CONCLUSIVE AND THE MATTER IS TO BE EXAMINED ON THE TOUCHSTONE OF PROVISIONS CONTAINED IN THE ACT [SEE - KEDARNATH JUTE MFG. CO. LTD. V. CIT [1971] 82 ITR 363 FSC); TUTICORIN ALKALI CHEMICALS & FERTILIZ ERS LTD. V. CIT (1997) 227 ITR 172/93 TAXMAN 502 (SC); SUTLEJ COTTON MILLS LTD. V. CIT F 19791 116 ITR 1 (SC) AND UNITED COMMERCIAL BANK V. CIT [1999] 240 ITR 355/106 TAXMAN 601 (SC). 20. AT THE MOST, AN INFERENCE CAN BE DRAWN THAT BY SHOWING THIS EXPENDITURE IN A SPREAD OVER MANNER IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD INITIALLY INTENDED TO MAKE SUCH AN OPT ION. HOWEVER, IT ABANDONED THE SAME BEFORE REACHING THE CRUCIAL STAG E, INASMUCH AS, IN THE INCOME TAX RETURN FILED BY THE ASSESSEE, IT CHO SE TO CLAIM THE ENTIRE EXPENDITURE IN THE YEAR IN WHICH IT WAS SPENT/PAID BY INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT. ONCE A RETURN IN THAT MANNER WAS FILED, THE AO WAS BOUND TO CARRY OUT THE ASSESSMENT BY APPLYING THE PROVISIONS OF THAT A CT AND NOT TO GO BEYOND THE SAID RETURN. THERE IS NO ESTOPPEL AGAINS T THE STATUTE AND THE ACT ENABLES AND ENTITLES THE ASSESSEE TO CLAIM THE ENTIRE EXPENDITURE IN THE MANNER IT IS CLAIMED. ITA NO.5798/DEL/2014 11 11 13. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BL E APEX COURT, THAT ONCE THE ASSESSEE HAS SHOWN IT AS REVENUE EXPE NDITURE, THEN REVENUE CANNOT DISALLOW THE SAME BY SPREADING IT OV ER THE YEARS AND ALLOW ONLY PART OF IT. IN ANY CASE, THIS ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE IN THE SUCCEEDING YEARS, THE REFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL,WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. 14. NEXT ISSUE RELATES TO DISALLOWANCE OF EXPEND ITURE IN RESPECT OF CHARGES FOR LATE FILING OF SERVICE TAX RETURN OF RS.27,297/-. 15. THE ASSESSING OFFICER HAS TREATED THE CHARGE S PAID BY THE ASSESSEE FOR LATE FILING OF SERVICE TAX RETURN BY I NVOKING EXPLANATION TO SECTION 37(1) TO BE IN THE NATURE OF OFFENCE. 16. AFTER HEARING BOTH THE PARTIES AND LOOKING T O THE NATURE OF DISALLOWANCE MADE, IT IS SEEN THAT THE PAYMENT HAS BEEN MADE FOR DELAY IN FILING OF RETURN WHICH IS MERE COMPENS ATORY IN NATURE AND IS NOT ON ACCOUNT OF ANY OFFENCE PROHIBITED UND ER ANY LAW. HENCE SUCH A PAYMENT CANNOT BE DISALLOWED BY INVOKI NG EXPLANATION TO SECTION 371 AND THE SAME IS HEREBY DIRECTED TO BE DELETED. 17. IN SO FAR AS DISALLOWANCE OF RS.1,47,647/- ON ACCOUNT OF EXPENDITURE IN RESPECT OF BIHAR PROJECT EXPENSES, T HE ASSESSING OFFICER HAS DENIED THE CLAIM ON THE GROUND THAT ASS ESSEE COULD NOT PROVE THE EXPENSES NOR ANY NEXUS WITH BUSINESS ACTIVITY WAS SUBMITTED. THIS FINDING HAS BEEN UPHELD BY THE LD. CIT(A) ALSO ON ITA NO.5798/DEL/2014 12 12 THE GROUND THAT ASSESSEE HAD BEEN UNABLE TO PRODUCE ANY EVIDENCE OF PROOF OF EXPENDITURE INCURRED BY THE AS SESSEE. 18. EVEN BEFORE US, THE ASSESSEE HAS ONLY FURNIS HED DETAILS AND LEDGER ACCOUNT BUT NO EVIDENCES OF SUCH EXPENSES HA VE BEEN FILED TO SHOW THAT THE SAME HAS BEEN INCURRED FOR THE PUR POSE OF BUSINESS. ACCORDINGLY, THE ACTION OF THE AUTHORITIE S BELOW IS UPHELD. THUS, THIS GROUND IS DISMISSED. 19. IN GROUND NO.6, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.28,94,472/- ON ACCOUNT OF NOTIONAL INTEREST O N THE AMOUNT OF LOANS AND ADVANCES OF RS.4,82,41,209/- GIVEN TO THE FOLLOWING PARTIES:- SR. NO. NAME OF PARTY AMOUNT (RS.) I) VANDANCE PODDAR 2,00,00,000 II) PRABHATAM AVIATION (P) LTD. 34,31,209 III) PRABHATAM DEVELOPERS (P) LTD. 3,27,60,000 IV) PRABHATAM PARKASH 50,000 V) SMT. SANTOSH DEVI 1,00,00,000 TOTAL 4,82,41,209 20. LEARNED ASSESSING OFFICER HAS MADE THE DISAL LOWANCE OF INTEREST @1% PER MONTH FOR SIX MONTHS. THE ASSESSIN G OFFICER NOTED THAT ASSESSEE HAS CLAIMED SUM OF RS.1,53,16,4 88/- ON ACCOUNT OF FINANCE CHARGES ON THE LOANS TAKEN BY IT AND ACCORDINGLY, HE MADE THE DISALLOWANCE ON NOTIONAL B ASIS THAT THERE IS DIVERSION OF INTEREST BEARING FUNDS. 21. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT ASSESSEE HAD UTILIZED THE LOANS PURELY FOR THE BUSI NESS PURPOSE ITA NO.5798/DEL/2014 13 13 AND IN ANY CASE IT HAD HUGE SURPLUS FUNDS IN THE FO RM OF SHARE CAPITAL, SHARE APPLICATION MONEY AND RESERVES AND S URPLUS AGGREGATING TO RS.15,75,16,837/-, WHICH IS EVIDENT FROM AUDITED BALANCE SHEET WHICH REFLECTS THE FOLLOWING FIGURE:- SR.NO. PARTICULARS AMOUNT (RS.) I) SHARE CAPITAL & SHARE APPLICATION MONEY 2,77,55,310 II) RESERVES 12,97,61,527 TOTAL 15,75,16,837 22. AFTER RELYING UPON VARIOUS DECISIONS IN HIS WRITTEN SYNOPSIS, HE SUBMITTED THAT ONCE IT HAS BEEN FOUND THAT ASSES SEE HAS SURPLUS FUNDS, THEN NO DISALLOWANCE CAN BE MADE ON ADVANCES GIVEN TO THE SUBSIDIARY/SISTER CONCERN. 23. ON THE OTHER HAND, LD. DR HAS STRONGLY RELIE D UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT A SSESSEE HAS TO PROVE THE NEXUS BETWEEN THE INTEREST BEARING FUNDS AND THE SURPLUS FUNDS WHICH HAS NOT BEEN GIVEN. 24. AFTER HEARING THE RIVAL SUBMISSION AND ON PE RUSAL OF THE RELEVANT MATERIAL REFERRED TO BEFORE US, WE FIND TH AT ASSESSEE HAS GIVEN INTEREST FREE ADVANCES AGGREGATING TO RS.4,82 ,41,209/- TO ITS RELATED CONCERNS/PERSONS. AT THE OUTSET, FROM T HE PERUSAL OF THE FINANCIAL STATEMENTS IT IS QUITE EVIDENT THAT T HE ASSESSEE HAS HUGE SURPLUS FUNDS AGGREGATING TO RS.15.75 CRORE AN D THUS, WHEN ASSESSEE HAS SUCH HUGE INTEREST FREE SURPLUS F UNDS THEN PRESUMPTION IS ALWAYS THERE THAT THESE FUNDS MUST H AVE GIVEN OUT OF SURPLUS FUNDS THIS PROPOSITION HAS BEEN UPHE LD BY CATENA OF JUDGMENT LIKE, CIT VS. BHARTI TELEVENTURES LTD ., REPORTED IN ITA NO.5798/DEL/2014 14 14 331 ITR 502 (DEL); CIT VS. RELIANCE UTILITIES AND P OWER LTD., 313 ITR 340 (BOM); CIT VS. HB STOCK HOLDINGS LTD, 1 84 TAXMAN 352 (DEL). APART FROM THAT LEARNED COUNSEL HAS BROUGHT ON RECORD THAT IDENTICAL CLAIM HAS BEEN ACCEPTED BY THE DEPARTMENT RIGHT FROM ASSESSMENT YEAR 2010-11 TO 20 14-15 AND NO DISALLOWANCE WAS EVER MADE. IN VIEW OF THE AFORE SAID FACTS, WE DO NOT FIND ANY REASON TO SUSTAIN SUCH A DISALLOWAN CE OF NOTIONAL INTEREST AND SAME IS DIRECTED TO BE DELETED. 25. SIMILARLY WITH REGARD TO DISALLOWANCE OF SUM OF RS.16,65,000/- ON ACCOUNT OF NOTIONAL INTEREST ON I NVESTMENT OF RS.1,38,75,013/- IN A JOINT VENTURE WITH A PURPOSE T O DEVELOP A RESIDENTIAL PLOT BELONGING TO DIRECTOR THE COMPANY, SHRI DINESH GUPTA, LEARNED ASSESSING OFFICER NOTED THAT SHRI DI NESH GUPTA HAS INTEREST OF MORE THAN 20% IN THE COMPANY, AND T HEREFORE, THIS IS AN INTEREST-BEARING FUND DIVERTED TO HIM. A CCORDINGLY,HE DISALLOWED INTEREST ON THIS AMOUNT, AMOUNTING TO RS .16,65,000/- 26. BEFORE US, LEARNED COUNSEL REITERATED THE SAM E SUBMISSION THAT LOOKING TO THE AVAILABILITY OF SUCH HUGE INTER EST FREE SURPLUS FUNDS NO DISALLOWANCE SHOULD BE MADE. 27. ON THE OTHER HAND, LEARNED DR HAS STRONGLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 28. HERE IN THIS CASE ALSO THE ASSESSEE HAS MAD E INVESTMENT IN A JOINT VENTURE FOR THE PURPOSE OF DEVELOPING A RESI DENTIAL PLOT AND DISALLOWANCE OF INTEREST HAS BEEN MADE ON NOTIO NAL BASIS ON THE GROUND THAT THE DIRECTOR HAS MORE THAN 20% OF I NTEREST IN THE COMPANY AND INTEREST-BEARING FUNDS HAVE BEEN DIVERT ED. ONCE ITA NO.5798/DEL/2014 15 15 ASSESSEES INTEREST FREE SURPLUS FUNDS FAR EXCEEDS THE FUNDS GIVEN TO SISTER CONCERN OR TO ANY JOINT VENTURE COMPANY, THEN TO HOLD THAT THE SAID AMOUNT MUST HAVE BEEN GIVEN FREE INTE REST-BEARING FUNDS WOULD BE FARFETCHED SO AS TO MAKE ANY KIND OF DISALLOWANCE OF NOTIONAL INTEREST. ACCORDINGLY, FOLLOWING THE SA ME REASONING AND THE FINDING GIVEN IN THE FOREGOING PARAGRAPH, W E DIRECT THE ASSESSING OFFICER TO DELETE THE SAID ADDITION. 29. THE NEXT MAJOR ISSUE IS WITH REGARD TO THE A DDITION ON ACCOUNT OF SHARE CAPITAL/SHARE PREMIUM RAISED BY TH E ASSESSEE DURING THE YEAR FROM TWO SHAREHOLDER COMPANIES, NAM ELY, (I) PRABHATM INVESTMENT LTD. RS.5 CRORE; (II) ANJANINA NDAN STEEL PVT. LTD. RS.9,74,000/-. LEARNED ASSESSING OFFICER HAS MADE THE ADDITION ON THE GROUND THAT ASSESSEE COULD NOT FILE ANY CONFIRMATION, COPY OF BANK STATEMENT AND RETURN OF INCOME OF THE SUBSCRIBERS, EXCEPT FOR FORM NO.2 WHICH IS FILLEDFO R ALLOTMENT OF SHARES AND ASSESSEES OWN BANK ACCOUNT. IN ABSENCE OF ANY DETAILS, THE ASSESSING OFFICER ADDED THE ENTIRE AMO UNT U/S.68. 30. BEFORE THE LD. CIT(A), THE ASSESSEE IN SUPPO RT OF THE AFORESAID TRANSACTIONS, FILED CONFIRMATION FROM THE PARTIES; INCOME TAX RETURN OF THE PARTIES AND THE BANK STATE MENT OF THE PARTIES SHOWING THE CREDITWORTHINESS OF THESE COMPA NIES. FURTHER, ASSESSEE HAS ALSO FILED FOLLOWING DOCUMENT S:- (I) CONFIRMATION LETTER DATED 20.12.2011 FROM M/S PRABHATAM INVESTMENT PVT. LTD. SUBSCRIBER; ITA NO.5798/DEL/2014 16 16 (II) COPY OF E FILING ACKNOWLEDGEMENT 1TR-V FOR THE AY. 2009 10 SHOWING FILED ON 31.03.2010. INCOME SHOWING AT ZERO AND TDS CLAIMED RS. 12360/ AND CLAIMED REFUND; (III) COPY OF BANK STATEMENT ACCOUNT NO 30105802877 OF THE SHARE SUBSCRIBER COMPANY, (IV) DETAILS OF PAYMENTS MADE BY CHEQUE. 31. LD. CIT(A) HAS CONFIRMED THE SAID ADDITION HOLDING THAT; FIRSTLY , THE SUBSCRIBER COMPANY WAS NOT SHOWING ANY INCOME, AND THEREFORE, IT DID NOT HAVE ANY CAPACITY TO MAKESUCH A HUGE INVESTMENT IN THE SHARE CAPITAL. SECONDLY , THE SUBSCRIBER COMPANY DID NOT HAVE ANY PROFIT- MAKING APPARATUS AND HAS MERELY ROTATED THE MONEY THROUGH ITS BANK ACCOUNT. HE RELIED UPON THE DECISION OF HON'BLE DELHI HIGH C OURT IN THE CASE OF N. TARIKA PROPERTIES PVT. LTD., ITA NO.2080/2010. THE BANK STATEMENT OF M/S. PRABHATAM SHOWS TRANSFER ENTRIES IN ITS ACCOUNT ON THE DAY IN WHICH THE CHEQ UE HAS BEEN FORWARDED TO THE ASSESSEE COMPANY AND THE BALA NCE SHEET FOR THE YEAR ENDING 31 ST MARCH, 2009 SHOWS THAT IT HAD CURRENT LIABILITIES OF RS. 8.25 CRORE. AFTER ANALYZING THESE FACTS HE HELD THAT ASSESSEE H AS USED ITS OWN UNACCOUNTED MONEY TO GET IN THE FORM OF SHARE C APITAL FROM THESE COMPANIES. ITA NO.5798/DEL/2014 17 17 32. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT ASSESSEE HAS DISCHARGE THE PRIMA FACIEONUS BY FILIN G FOLLOWING DOCUMENTS IN THE CASE OF M/S. PRABHATAM INVESTMENT: - I. COPY OF CONFIRMATION OF PURCHASE OF SHARES DATED 20 . 12.2011. II) COPY OF BANK STATEMENT OF M/S PRABHATAM INVESTMENTS LTD. III) PAYMENTS DETAILS OF M/S PRABHATAM ADVERTISING (P) LTD. IN THE BOOKS OF PRABHATAM INVESTMENT (P) LTD. IV) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME DATED 31 . 3.2016 FOR ASSESSMENT YEAR 2009-10 IN THE CASE OF M/S PRABHATAM INVESTMENT (P) LTD. V) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME DATED 2 . 7.2013 FOR ASSESSMENT YEAR 2012-13 ALONGWITH AUDITED FINANCIAL STATEMENT IN THE CASE OF PRABHATAM INVEST MENT (P) LTD. VI) COPY OF GROUP SUMMARY OF SHARES IN THE CASE OF PRABHATAM INVESTMENTS (P) LTD. VII) COPY OF CONFIRMATION OF ACCOUNTS FROM PRABHATAM INVESTMENTS (P) LTD. VIII) COPY OF LEDGER ACCOUNT OF M/S PRABHATM ADVERTISING (P) LTD. IN THE BOOKS OF M/S PRABHATAM INVESTMENTS (P) LTD. IX) SHARES CAPITAL ACCOUNT ALONGWITH FORM 2 FILED BY APPELLANT COMPANY BEFORE ROC. X) COPY OF CREDIT FACILITIES FROM STATE BANK OF AC COUNT. XI) COPY OF LEDGER ACCOUNT OF PRABHATAM ADVERTISIN G (P) LTD. (SHARES ) IN THE BOOKS OF PRABHATAM INVESTMENT S (P) LTD. ITA NO.5798/DEL/2014 18 18 XII) COPY OF AUDITED FINANCIAL STATEMENT AS ON 31. 3.2009 IN THE CASE OF M/S PRABHATAM INVESTMENTS (P) LTD. XIII) COPY OF CONFIRMATION OF PURCHASE OF SHARES F ILED BY M/S PRABHATAM INVESTMENTS (P) LTD. BEFORE DCIT ALON GWITH BANK STATEMENT. XIV) COPY OF BANK STATEMENT OF APPELLANT COMPANY. IN THE CASE OF M/S. ANJANINANDAN PVT. LTD., HE HAS R EFERRED TO THE FOLLOWING DOCUMENTS:- I) COPY OF BANK STATEMENT OF M/S ANJANI NANDAN STEE LS PVT. LTD. AND THE APPELLANT REFLECTING THE RELEVANT TRANSACTION. II) AUDITED FINANCIAL STATEMENT AS ON 31.3.2012 IN THE CASE OF ANJANI NANDAN STEELS (P) LTD. COPY OF CONFIRMATION FROM ANJANI NANDAN STEEL (P) LTD. V) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME DAT ED 13.10.2011 ALONGWITH AUDITED FINANCIAL STATEMENT FO R ASSESSMENT YEAR 2011-12 IN THE CASE OF ANJANI NANDAN STEEL (P) LTD. VI) COPY CONFIRMATION FROM ANJANI NANDAN STEEL (P) LTD. VII) COPY OF APPLICATION FOR ISSUE OF SHARES BY M/ S ANJANI NANDAN STEELS (P) LTD. TO APPELLANT COMPANY. VIII) COPY OF LEDGER ACCOUNT OF APPELLANT COMPANY IN THE BOOKS OF M/S ANJANI NANDAN STEELS (P) LTD. IX) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME DA TED 22.9.2009 ALONGWITH COMPUTATION OF INCOME AND AUDITED FINANCI AL STATEMENT IN THE CASE OF ANJANI NANDAN STEEL (P) LTD. FOR ASSESS MENT YEAR 2009-10. 33. HE FURTHER POINTED OUT THAT IN SO FAR AS M/S . PRABHATAM INVESTMENT IS CONCERNED, THE SOURCE STANDS PROVED F ROM THE FACT THAT IT HAD SHARE CAPITAL AND SHARE APPLICATION MON EY ITA NO.5798/DEL/2014 19 19 AGGREGATING TO RS.93.75 CRORE WHICH WAS FAR EXCESS THE INVESTMENT MADE IN SHARE CAPITAL WITH THE ASSESSEE COMPANY AND HE ALSO DREW OUR ATTENTION TO THE BALANCE SHEET OF THE SAID COMPANY WHICH GIVES THE FOLLOWING STATE OF AFFAIRS AS ON 31.03.2009 AND AS ON 31.03.2008 PROVING THE NET WOR TH OF THE SAID COMPANY. NET WORTH OF THE COMPANY PARTICULAR AS ON AS ON 31.3.2009 31.3.2009 SHARE CAPITAL 20, 000,000 20,000,000 SHARE APPLICATION 91,75,39 ,475 69,24,43,000 LOAN FUND SECURED LOAN -- 12,96,77,774 UNSECURED LOAN 5,00,000 4,75,000 GRAND TOTAL 93,80,39,4 75 84,25,95,774 APPLICATION OF FUNDS FIXED ASSETS INVESTMENT 24,47,73,120 29,02,73,120 CURRENT ASSETS LOAN & ADVANCES CASH & BANK BALANCES 29212 990 691474 LOANS & ADVANCES 67,31,34,262 62,80,72,217 LESS: CURRENT LIABILITIES CURRENT LIABILITIES & PROVISIONS . 82505429 77940983 NET CURRENT ASSETS 59,06,28,833 55,01,31,234 MISCELLANEOUS EXPENDITURE 87,446 1,31,168 PROFIT & LOSS ACCOUNT 25,50,073 20,60,252 GRAND TOTAL 938039475 84,25,95,774 SIMILARLY IN THE CASE OF OTHER COMPANY ALSO THE NET WORTH OF THE COMPANY FROM THE BALANCE SHEET WAS GIVEN IN THE FOL LOWING MANNER: PARTICULARS AS ON 31.3.2012 AS ON 31.03.2011 SHAREHOLDERS FUND SHARE CAPITAL 10,00,000 10,00,000 RESERVE AND SURPLUS (63,209) (56,190) NON CURRENT LIABILITY 27,80,000 27,80,000 ITA NO.5798/DEL/2014 20 20 OTHER CURRENT LIABILITY 2800 2500 GRAND TOTAL 37,19,591 37,26,310 NON - CURRENT ASSETS LONG TERM LOAN AND ADVANCES 37,01,960 37,01,960 CURRENT ASSETS CASH & BANK BALANCE 17,631 24,350 LOANS & ADVANCES TOTAL 37,19,591 37,26,310 34. THUS, FROM THESE EVIDENCES, HE POINTED OUT T HAT NOT ONLY THE COMPANY HAS CREDITWORTHINESS BUT ALSO THE ENTIR E TRANSACTION IS GENUINE. LD. COUNSEL ALSO RELIED UPON THE CATENA OF JUDGMENT. THE DETAIL OF WHICH HAVE BEEN GIVEN BY HIM IN HIS W RITTEN SYNOPSIS. 35. ON THE OTHER HAND, LD. DR STRONGLY RELIED U PON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT LD. CIT(A) HAS TH READBARE DISCUSS THE FINANCIAL STATUS OF THESE COMPANIES AND ALSO DEMONSTRATED AS TO HOW THESE COMPANIES WERE NOT GEN ERATING ANY REVENUE BUT WERE ROUTING MONEY FROM THEIR ACCOU NTS FOR THE PURPOSE OF INVESTMENT. 36. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS W ELL AS MATERIAL REFERRED TO BEFORE US. FROM THE STAGE OF THE ASSESS ING OFFICER, ADDITION HAS BEEN MADE ON THE GROUND THAT THE ASSES SEE COULD NOT FILE CONFIRMATION, BALANCE SHEET OR INCOME TAX RETURN OF THESE COMPANIES. HOWEVER, BEFORE THE LD. CIT(A) ALL THE E VIDENCES WERE FILED AS NOTED ABOVE WHICH WERE ALSO SENT TO THE AO TO SUBMIT HIS REMAND REPORT.HOWEVER, LD. CIT(A) HAS MERELY GONE B Y THE FACT THAT THESE COMPANIES WERE NOT HAVING SUBSTANTIAL IN COME AND IN THEIR BALANCE SHEET THERE WERE HAVING HUGE LIABILIT IES AND ITA NO.5798/DEL/2014 21 21 THEREFORE,THESE COMPANIES HAVE BEEN USED AS A CONDU IT FOR ROUTING THE ASSESSEES OWN UNACCOUNTED MONEY. FIRST OF ALL, IT IS NOT IN DISPUTE THAT THE MONEY RECEIVED BY THE ASSES SEE COMPANY IN THE FORM OF SHARE APPLICATION HAS COME THROUGH T HESE COMPANIES FROM THEIR BANK ACCOUNTS ON VARIOUS DATES THROUGH ACCOUNT PAYEE CHEQUES. THESE COMPANIES HAVE ALSO FI LED THEIR CONFIRMATION, BANK STATEMENT, DETAILS OF PAYMENT DU LY REFLECTED IN THEIR BOOKS OF ACCOUNT, AUDITED BALANCE SHEET, C OPY OF RETURN OF INCOME, DETAILS FOR ALLOTMENT OF SHARE ETC. ERGO , IDENTITY AND GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. I N SO FAR AS CREDITWORTHINESS IS CONCERNED, WE FIND THAT PRABHAT AM INVESTMENT LTD HAS AVAILABILITY OF HUGE FUNDS IN TH E FORM OF SHARE APPLICATION MONEY RECEIVED BY IT WHICH WAS MORE THA N RS. 91.75 CRORES AND IT HAS SHOWN INVESTMENT IN VARIOUS COMPA NIESAT RS.34.48 CRORES. THE BALANCE SHEET FILED BEFORE US REFLECTS THAT IT HAS HUGE FUNDS FROM WHERE IT HAS MADE AN INVESTMENT . IT HAS NOT BEEN BROUGHT ON RECORD BY ANY INQUIRY OR BY WAY OF ANY INFORMATION FROM SOME EXTERNAL SOURCE THAT THE ASSE SSEEMIGHT HAVE TAKEN ANY ACCOMMODATION ENTRYFROM THESE COMPAN IES, ALBEIT IT IS A GROUP CONCERN/GROUP ENTITY AND ALL THE TRAN SACTIONS HAD BEEN DULY REFLECTED IN THE BOOKS AND AUDITED ACCOUN TS. THE MONEY AGAIN IN THEIR BANK ACCOUNTS HAVE COME BY WAY OF CLEARING. IF AO OR CIT(A) HAD ANY DOUBT ABOUT THE S OURCES OF FUND IN THEIR ACCOUNTS, THEN SAME SHOULD HAVE BEEN INQUI RED FROM THEM OR EXAMINED IN THEIR HANDS, LIKE THE SHARE APP LICATION MONEY RECEIVED BY THEM IS GENUINE OR NOT. IN SO FAR AS ASSESSEE IS CONCERNED THE ONUS WHICH WAS CAST UPON IT HAS BEEN DULY DISCHARGED AND WITHOUT THERE BEING ANY CONTRARY MAT ERIAL ON ITA NO.5798/DEL/2014 22 22 RECORD NO ADVERSE VIEW CAN BE DRAWN. THE ASSESSEE C ANNOT PROVE THE SOURCE OF THE SOURCE AND IF THERE WAS ANY DUBIO US NATURE OF TRANSACTION FOR ROUTING ANY UNACCOUNTED MONEY THEN ONUS WAS UPON THE REVENUE TO PROVE IT. EVEN AT THE REMAND ST AGE ALSO, NO INQUIRY WHATSOEVER HAS BEEN MADE BY THE ASSESSING O FFICER TO PROVE THAT ASSESSEES OWN ACCOUNTED MONEY HAS BEEN ROUTED THROUGH THESE COMPANIES. EVEN IF DURING THE YEAR, T HESE COMPANIES DID NOT HAVE ANY REVENUE FROM OPERATIONS, BUT IF IT IS AN INVESTMENT COMPANY WHICH HAS FUNDS AVAILABLE WIT H IT IN THE FORM OF SHARE CAPITAL AND SHARE APPLICATION MONEY W HICH HAS BEEN MADE FOR THE PURPOSE OF INVESTMENT IN OTHER GR OUP COMPANIES, THEN IT CANNOT BE HELD THAT THEIR SOURCE IS NOT PROVED OR THESE COMPANIES DID NOT HAVE ANY CREDITWORTHINES S. THUS, IN THIS CASE, NATURE AND THE SOURCE OF THE CREDIT HAS BEEN FULLY EXPLAINED AND WITHOUT THERE BEING ANY CONTRARY MATE RIAL BROUGHT ON RECORD BY THE DEPARTMENT THE ADDITION CANNOT BE SUSTAINED U/S 68; AND CONSEQUENTLY, SAME IS DIRECTED TO BE DE LETED. 37. LASTLY, COMING TO THE ISSUE OF DISALLOWANCE OF RS.27,57,000/- MADE U/S.40A(IA), THE FACTS IN BRIEF ARE THAT, ASSESSEE HAS RAISED LOAN FROM NBFC AND HAS PAID INT EREST OF RS.27,57,000/- WHICH WAS CLAIMED AS AN EXPENDITURE. HOWEVER, THE ASSESSEE HAS NOT DEDUCTED TDS ON SUCH A PAYMENT . 38. BEFORE US THE LD. COUNSEL THOUGH ADMITTED THA T TDS HAS NOT BEEN DEDUCTED BUT NOW IN VIEW OF 3 RD PROVISO TO SECTION 40(A)(IA), BROUGHT BY THE FINANCE ACT, 2014, W.E.F. 2014-2015, THE DISALLOWANCE IF AT ALL WHICH COULD BE MADE, WOULD B E 30% OF THE EXPENDITURE CLAIMED, AND THEREFORE, THE DISALLOWANC E IF AT ALL ITA NO.5798/DEL/2014 23 23 SHOULD BE RESTRICTED TO 30%. SUCH A PROVISO HAS TO BE GIVEN RETROSPECTIVE EFFECT IN VIEW OF VARIOUS DECISIONS, LIKE IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP WHICH WAS IN RESPE CT OF 2 ND PROVISO TO SECTION 40A(IA). HE SUBMITTED THAT SAME PRINCIPLE WOULD APPLY HERE ALSO. 39. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER THAT DISALLOWANCE SHOULD BE RESTRICTED TO 30% IN VIEW OF THE NEWLY INSERTED PROVISO. THUS, THIS GROUND IS PARTLY ALLOW ED. 40. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH DECEMBER, 2018