M/s Stanley Lifestyle Pvt. Ltd., Bangalore V. Pr.CIT, Bangalore

ITA 608/BANG/2015

• Counselvise Citation: 60821114 RSA 2015
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Commercial expediency
• Section: 263

Judgement Text

ITA.608/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.608/BANG/2015 (ASSESSMENT YEAR : 2010-11) M/S. STANLEY LIFESTYLE P. LTD, NO.12/7, SHAM RAO COMPOUND, MISSION ROAD, BANGALORE 560 027 ..APPELLANT PAN : AALCS3766P V. PRINCIPAL COMMISSIONER OF INCOME-TAX - 6, BANGALORE ..RESPONDENT ASSESSEE BY : SHRI. V. SRINIVASAN, CA REVENUE BY : SHRI. SUNIL KUMAR AGARWALA, JCIT HEARD ON : 03.08.2015 PRONOUNCED ON : 14 .08.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE, IT ASSAILS AN OR DER DT.19.03.2015 OF PR.CIT-6, BENGALURU, PASSED U/S.263 OF THE INCOME-T AX ACT, 1961 (THE ACTIN SHORT). 02. ASSESSEE STATES IN ITS GROUND THAT THERE WAS NO ERROR IN THE ORDER PASSED BY THE AO, WARRANTING A RECTIFICATION U/S.263 OF THE A CT, BY THE PR. CIT. ITA.608/BANG/2015 PAGE - 2 03. FACTS APROPOS ARE THAT ASSESSEE HAD FILED RETUR N FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF RS.3,23,08,650/ -. ASSESSMENT WAS COMPLETED BY THE AO U/S.143(3) ON 26.03.2013. AS P ER THE ASSESSEE IT HAD FURNISHED DETAILS CALLED BY THE AO WHICH INTER ALIA INCLUDED ADVANCES TO ITS RELATED CONCERNS SHOWN IN ITS BALANCE SHEET. FURTH ER AS PER THE ASSESSEE IT HAD ALSO PRODUCED DETAILS OF LOANS WHICH WERE CALLED BY THE AO. ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT, WHEREIN THE DISALL OWANCES MADE WAS CONFINED TO EMPLOYEESCONTRIBUTION TO PF. THEREAFTER ON 24. 02.2014 PR.CIT ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE STATING THAT ASSE SSEE HAD GIVEN ADVANCE OF RS.4,80,09,440/- TO TWO COMPANIES FOR WHICH NO INTE REST WAS CHARGED BY IT. AS PER THE PR. CIT, ASSESSEE HAD, ON THE OTHER HAND PA ID INTEREST OF RS.4,01,14,554/- ON LOANS TAKEN FROM BANKS. FURTHER AS PER THE PR. CIT, THE AMOUNTS BORROWED ON INTEREST WERE UTILISED FOR GIVING LOANS TO RELAT ED PARTIES, AND, AO FAILED TO MAKE CORRESPONDING DISALLOWANCE OF INTEREST. TO TH E ABOVE SHOW CAUSE NOTICE, ASSESSEE FILED A REPLY ON 21.04.2014. IN SUCH REPL Y ASSESSEE STATED THAT THE DETAILS OF THE ADVANCES GIVEN TO THE TWO RELATED CO NCERNS WERE PRODUCED BEFORE THE AO. ASSESSEE ALSO EXPLAINED THAT NO INTEREST B EARING FUNDS WERE UTILISED FOR GIVING SUCH LOANS. AS PER THE ASSESSEE IT HAD SHAR E CAPITAL AND FREE RESERVES FAR IN EXCESS OF THE AMOUNTS ADVANCED TO RELATED PARTIE S AND THEREFORE PRESUMPTION OF THE PR. CIT THAT ADVANCES WERE GIVEN OUT OF THE INTEREST BEARING FUNDS WAS INCORRECT. ASSESSEE ALSO POINTED OUT THAT MAJOR PA RT OF ADVANCES GIVEN TO THE RELATED PARTIES COMPRISED OF RS.4,79,69,399/- GIVEN TO M/S. STANLEY RETAIL LTD, (SRL IN SHORT). AS PER THE ASSESSEE, SRL WAS PRO MOTED BY THE SAME PERSONS ITA.608/BANG/2015 PAGE - 3 WHO WERE THE SHARE HOLDERS OF THE ASSESSEE AND WAS ENGAGED IN RETAIL SELLING OF GOODS MANUFACTURED BY THE ASSESSEE. AGAIN AS PER T HE ASSESSEE SUMS GIVEN BY IT WERE USED BY SRL FOR ESTABLISHING A RETAIL OUT LET TO SELL GOODS MANUFACTURED BY THE ASSESSEE. THUS ACCORDING TO THE ASSESSEE, EVEN IF BORROWED FUNDS WERE PRESUMED TO HAVE BEEN UTILISED FOR GIVING ADVANCES, INTEREST WAS ALLOWABLE BASED ON THE PRINCIPLES OF COMMERCIAL EXPEDIENCY. 04. HOWEVER, THE PR. CIT DID NOT ACCEPT THE ABOVE C ONTENTIONS OF THE ASSESSEE. ACCORDING TO THE LD. CIT, NET CURRENT AS SETS OF THE ASSESSEE WHICH WAS RS.31.72 CRORES AS ON 31.03.2009 HAD GONE UP TO RS.32.08 CRORES AS ON 31.03.2010. THERE WAS NO CHANGE IN THE GROSS BLOCK OF FIXED ASSETS. THUS ACCORDING TO HIM, PART OF THE SHAREHOLDERS FUNDS AN D BORROWED FUNDS WERE USED IN FINANCING THE CURRENT ASSETS. NET CURRENT ASSET S HAVING GONE UP, THERE WAS A CORRESPONDING COST INCURRED FOR FINANCING SUCH CURR ENT ASSETS. ACCORDING TO HIM, ABSTRACT CALCULATIONS BASED ON FIGURES GIVEN I N BALANCE SHEET AT THE OPENING AND THE CLOSING OF THE YEAR, BY ITSELF WOULD NOT GI VE CORRECT RESULTS. AS PER THE CIT, ASSESSEE HAD TAKEN LOAN OF RS.1,00,00,000/- FR OM ENGINEERING DESIGN & SOLUTIONS INDIA P. LTD, ANOTHER SUM OF RS.75 LAKHS FROM ONE LAKSHMI NARAYAN VYAPAAR AND RS.4,65,86,000/- FROM ONE SUNIL SURESH WHICH WERE ALL SQUARED UP DURING THE SAME PREVIOUS YEAR, EXCEPT FOR A SMALL S UM DUE TO SUNIL SURESH. ACCORDING TO HIM, SUCH ADDITIONAL LOANS WHICH WERE TAKEN DURING THE RELEVANT PREVIOUS YEAR THOUGH SQUARED UP DURING THE SAME PRE VIOUS YEAR, WOULD HAVE GONE TO FINANCE THE INVESTMENTS IN THE SISTER CONCE RN. INTEREST COST ON THE ITA.608/BANG/2015 PAGE - 4 WORKING CAPITAL HAD GONE UP FROM RS.2.83 CRORES TO RS.3.57 CRORES. THEREFORE, AS PER THE CIT THE EXPLANATION OF THE ASSESSEE THAT INTEREST-FREE ADVANCES WERE ONLY USED FOR GIVING THE ADVANCES TO THE RELATED CO NCERNS COULD NOT BE BELIEVED. IN SO FAR AS THE CLAIM OF COMMERCIAL EXPEDIENCY WAS CONCERNED, CIT WAS OF THE OPINION THAT ANY ADVANTAGE TO SRL WOULD BE BENEFICI AL ONLY TO ITS PROMOTERS AND NOT TO THE ASSESSEE. AS PER THE CIT, ASSESSEE DID NOT DERIVE ANY ADVANTAGE MORE THAN WHAT IT COULD HAVE GOT IF SUCH RETAIL OUT LETS WERE OPENED BY THIRD PARTIES. WHEN THIRD PARTIES WERE ALSO DOING THE SA ME TYPE OF BUSINESS IN THE SAME TERRITORY AS PER THE CIT, THERE WAS NO COMMERC IAL EXPEDIENCY IN GIVING SUCH HUGE ADVANCES TO SRL FOR OPENING A NEW OUT LE T. ACCORDING TO HIM AO HAD NOT EXAMINED THE ISSUE OF INTEREST-FREE ADVANCE S AS REQUIRED UNDER LAW. HE DIRECTED THE AO TO DISALLOW RS.4,01,14,554/- OUT OF TOTAL INTEREST CHARGED BY THE ASSESSEE TO ITS P & L ACCOUNT CONSIDERING THE PRIME LENDING RATE OF SBI. MODIFICATION OF THE ASSESSMENT ORDER TO THIS EXTENT WAS ORDERED. 05. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DER OF THE PR. CIT, SUBMITTED THAT TWO CONDITIONS NECESSARILY HAD TO BE SATISFIED FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. ACCORDING TO HIM, THERE OUGHT TO BE AN ERROR IN THE ORDER OF AO AND SUCH ORDER HAD TO BE P REJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDING TO HIM, THESE TWO CONDITION S WERE NOT SATISFIED. PLACING RELIANCE ON LETTER DT.04.12.2013 WRITTEN BY ASSESSEE TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AR SUBMITTED THAT ASSESSEE HAD GIVEN DETAILS OF OTHER ADVANCES WHICH WERE CALLED FOR BY THE AO. ACCORDING TO LD. ITA.608/BANG/2015 PAGE - 5 AR, AO HAD CONSIDERED THIS ASPECT WHILE FRAMING THE ASSESSMENT ORDER. IN ANY CASE ACCORDING TO HIM, ASSESSEE HAD SHARE CAPITAL, SHARE APPLICATION MONEY AND RESERVES TOTALLING TO RS.10.41 CRORES AS ON 31.03.2 009 AND RS.13.01 CRORES AS ON 31.03.2010. AS AGAINST THIS, THE TOTAL LOANS GIVEN TO THE TWO SISTER CONCERNS TOTALLED TO RS.4,80,09,443/-. THUS, AS PER THE LD. AR, ASSESSEE HAD SUBSTANTIAL OWN FUNDS FOR MAKING THE INVESTMENTS. ONCE OWN FUN DS WERE THERE, AS PER THE LD. AR, THE PRESUMPTION SHOULD ALWAYS BE THAT INVES TMENTS HAD GONE OUT OF SUCH OWN FUNDS AND NOT FROM INTEREST BEARING FUNDS. AS PER THE LD. AR, IT WAS NOT NECESSARY TO SHOW ONE TO ONE NEXUS. RELIANCE W AS PLACED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CIT V. RELIANCE UTI LITIES AND POWER LTD [(2009) 313 ITR 340]. FURTHER, AS PER THE LD. AR O NCE ASSESSEE HAD SHOWN THAT IT HAD SUBSTANTIAL OWN FUNDS WITH IT AND IT HAD ANS WERED RELATED QUERIES, THEN THE PRESUMPTION THAT THERE WAS ERROR IN THE ORDER OF TH E AO WAS INCORRECT. THERE WAS NO EVIDENCE RELIED ON BY THE PR. CIT WHICH COUL D SHOW THAT ORDER OF THE AO WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. RELYING ON THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD (SUPRA), LD. AR SUBMITTED THAT ASSESSEE HAD GIVEN A REPLY TO THE SHOW CAUSE NOTICE OF THE PR. CIT AND DEMONSTRATED THAT IT HAD SUFFICIENT OWN FUN DS MUCH HIGHER THAN THE LOANS GIVEN TO ITS SISTER CONCERNS. THUS ACCORDING TO HIM, THE ORDER OF AO COULD NOT BE CONSIDERED AS PREJUDICIAL TO THE INTERESTS O F REVENUE. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT V. D. G. GOPALA GOWDA [354 ITR 501]. ITA.608/BANG/2015 PAGE - 6 06. PER CONTRA, LD. DR STRONGLY SUPPORTING THE ORDE R OF PR. CIT SUBMITTED THAT AO HAD NEVER EXAMINED THE ISSUE AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. AO HAD NOT MADE ANY ENQUIRIES WHETHER ANY INTEREST BEARING FUNDS WERE UTILISED FOR GIVING ADVANCES TO THE TWO CONCERNS. AO ALSO HAD NOT EXAMINED WHETHER ANY ELEMENT OF COMMERCIAL EXPEDIEN CY WAS THERE IN SUCH ADVANCES. THUS AS PER THE LD. DR, THERE WERE NO EN QUIRIES MADE WHAT SO EVER BY THE AO. THIS AS PER THE LD. DR RENDERED THE ORD ER OF AO ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WHAT THE ASSESSEE PLACED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS A BREAK UP OF TOTAL OTHER ADVANCES OF RS.4,90,22,247/ - WHICH INTER ALIA INCLUDED THE SUM OF RS. 4,79,69,399/- GIVEN TO SRL AND RS.40 ,044/- GIVEN TO ONE M/S. STANLEY PROPERTIES AND HOSPITALITIES PVT. LTD., BOT H OF WHICH WERE RELATED PARTIES. 08. A CURSORY LOOK OF SCHEDULE IX TO BALANCE-SHEET, PLACED AT PAPER BOOK PAGE -6, SHOW THAT RS.12,50,153/- WHICH WAS THE OPE NING BALANCE UNDER THE HEAD OTHER ADVANCE, HAD GONE UP TO RS.4,90,22,294 /- BY THE END OF THE YEAR. THIS CLEARLY INDICATE THAT ALMOST WHOLE OF THE LOAN S TO THE SISTER CONCERNS WERE GIVEN DURING THE COURSE OF RELEVANT PREVIOUS YEAR. NO DOUBT OWN FUNDS VIZ, SHARE CAPITAL AND RESERVES HAD GONE UP FROM RS.10.4 1 CRORES AS ON 31.03.2009 TO RS.13.01 CRORES AS ON 31.03.2010. HOWEVER THIS INCR EASE WAS MAINLY DUE TO PROFIT OF RS.2.60 CRORES OF THE RELEVANT PREVIOUS Y EAR. AT THE SAME TIME LOANS ITA.608/BANG/2015 PAGE - 7 RAISED WHICH STOOD AT RS.30.04 CRORES AS ON 31.03.2 009 HAD COME DOWN TO RS.27.33 CRORES AS ON 31.03.2010. THE INCREASE OF RS.2.6 CRORES IN CAPITAL AND RESERVES WAS NOT ONLY INSUFFICIENT TO MEET THE ADVA NCE OF RS.4.80 CRORES GIVEN TO THE SISTER CONCERNS DURING THE RELEVANT PREVIOUS YEAR, BUT A PART OF IT WOULD HAVE ALSO GONE FOR REDUCING THE LOANS DUE FROM RS.3 0.04 CRORES TO RS.27.33 CRORES. IT IS HERE THAT OBSERVATION OF THE LD. CIT THAT ASSESSEE HAD RAISED LOAN OF RS.1 CRORE FROM ENGINEERING DESIGN AND SOLUTIONS IN DIA P. LTD, RS.75 LAKHS FROM LAKSHMI NARAYAN VYAPAR AND RS.4.66 CRORES FROM SUNIL SURESH, WHICH WERE SQUARED UP BECOMES RELEVANT. IT IS OBVIOUS TH AT AO AFTER RECEIVING THE BREAK-UP OF THE ADVANCES GIVEN BY THE ASSESSEE, NEV ER VENTURED TO DO AN ANALYSIS OR ENQUIRY WHICH A PRUDENT MAN WOULD HAVE DONE ON T HE FACE OF THE FIGURES IN P & L ACCOUNT AND BALANCE-SHEET FILED BY THE ASSESSEE . VIS-A-VIS THE CONTENTION OF THE ASSESSEE THAT ADVANCES TO SISTER CONCERNS WE RE COMMERCIALLY EXPEDIENT, WE FIND NO SUCH QUESTIONS WERE ASKED BY THE AO NOR ANY DETAILS IN THIS REGARD SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. COMING TO THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE O F RELIANCE UTILITIES AND POWER LTD, THEIR LORDSHIP HAD HAD HELD AS UNDER AT PARA 16 OF ITS JUDGMENT : 16. IF THERE BE INTEREST-FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE H AD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTE REST-FREE FUNDS AVAILABLE. IN OUR OPINION, THE SUPREME COURT IN EAS T INDIA PHARMACEUTICAL WORKS LTD. V. CIT [1997] 224 ITR 627 HAD THE OCCASION TO CONSIDER THE DECISION OF THE CALCUTTA HIGH COURT IN WOOLCOMBERS OF INDIA LTD. [1982] 134 ITR 219 WHERE A SIMILAR ISSUE HAD ARISEN. BEFORE THE SUPRE ME COURT IT WAS ARGUED THAT IT SHOULD HAVE BEEN PRESUMED THAT I N ESSENCE AND TRUE CHARACTER THE TAXES WERE PAID OUT OF THE PROFITS OF THE RELEVANT YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS AND IN THESE ITA.608/BANG/2015 PAGE - 8 CIRCUMSTANCES THE APPELLANT WAS ENTITLED TO CLAIM T HE DEDUCTIONS. THE SUPREME COURT NOTED THAT THE ARGUMENT HAD CONSIDERA BLE FORCE, BUT CONSIDERING THE FACT THAT THE CONTENTION HAD NOT BE EN ADVANCED EARLIER IT DID NOT REQUIRE TO BE ANSWERED. IT THEN NOTED THAT IN WOOLCOMBERS OF INDIA LTD.' S CASE [1982] 134 ITR 219 THE CALCUTTA HIGH COURT HAD COME TO THE CONCLUSION THAT THE PROFITS WERE SUFFICIENT TO MEET THE ADVANCE TAX LIABILITY AND THE PROFITS WERE DEPOSITED IN THE OVER DRAFT AC COUNT OF THE ASSESSEE AND IN SUCH A CASE IT SHOULD BE PRESUMED THAT THE TAXES WERE PAID OUT OF THE PROFITS OF THE YEAR AND NOT OUT OF THE OVERDRAFT AC COUNT FOR THE RUNNING OF THE BUSINESS. IT NOTED THAT TO RAISE THE PRESUMPTIO N, THERE WAS SUFFICIENT MATERIAL AND THE ASSESSEE HAD URGED THE CONTENTION BEFORE THE HIGH COURT. THE PRINCIPLE, THEREFORE, WOULD BE THAT IF THERE AR E FUNDS AVAILABLE BOTH INTEREST-FREE AND OVER DRAFT AND/OR LOANS TAKEN, TH EN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST -FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FU NDS WERE SUFFICIENT TO MEET THE INVESTMENTS. IN THIS CASE THIS PRESUMPTION IS ESTABLISHED CONSIDERING THE FINDING OF FACT BOTH BY THE COMMISS IONER OF INCOME-TAX (APPEALS) AND THE INCOME-TAX APPELLATE TRIBUNAL. IT IS CLEAR THAT THE PRESUMPTION REGARDING INTEREST -FREE AND OVERDRAFT/ LOAN FUNDS BEING AVAILABLE TO THE ASSESSEE WAS ESTABLISHED BY THE ASSESSEE. FURTHER IN THE SAID CASE, THE PROFITS GENERATED DURING THE RELEVAN T PREVIOUS YEAR WAS BY ITSELF SUFFICIENT TO EXPLAIN THE SOURCE OF INVESTMENTS AS WELL. OBSERVATIONS OF HONBLE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS (P) LTD (198 ITR 297) IS ALSO RELEVANT. IT WAS HELD THAT OBSERVATIONS OF COURT I S TO BE UNDERSTOOD ONLY IN THE LIGHT OF THE QUESTIONS BEFORE IT AND A JUDGMENT MUS T BE READ AS A WHOLE. IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WOR K OR SENTENCE DIVORCED FROM THE CONTEXT OF THE QUESTION AND TREAT IT AS COMPLET E LAW. 09. AS FOR THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF D. G. GOPALA GOWDA (SUPRA), ASSESSEE WAS ABLE TO ESTABLISH THAT EVEN IF THE ASSESSMENT WAS SEPARATELY MADE FOR LAND AND BUILDING, THE FORMER A S LONG-TERM CAPITAL GAIN AND LATTER AS SHORT-TERM CAPITAL GAIN, STILL IT WAS NOT LIABLE TO PAY TAX. IT WAS FOR THIS ITA.608/BANG/2015 PAGE - 9 REASON THEIR LORDSHIP HELD THE ASSESSMENT AS NOT PR EJUDICIAL TO THE REVENUE. ON THE OTHER HAND IN THE CASE BEFORE US, ASSESSEE COUL D NOT ESTABLISH THAT IT HAD INTEREST-FREE FUNDSRAISED DURING THE RELEVANT PREVI OUS YEAR TO COVER THE INVESTMENT IN SISTER CONCERNS. THUS BOTH THE CASES RELIED ON BY THE ASSESSEE ARE CLEARLY DISTINGUISHABLE. 10. AS AGAINST THIS WHAT WE FIND IS THAT AO HAD MAD E NO ENQUIRY ON THE ASPECT OF INVESTMENTS. THIS BY ITSELF RENDERED THE ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE UP HOLD THE FINDING OF THE CIT TO THIS EXTENT. HOWEVER, IN SUCH CIRCUMSTANCES THE CI T SHOULD HAVE SET ASIDE THE ASSESSMENT DIRECTING THE AO TO CONDUCT NECESSARY EN QUIRIES AND THEREAFTER CONCLUDE THE ASSESSMENT. ON THE OTHER HAND, CIT HA S DIRECTED THE AO TO MAKE INTEREST DISALLOWANCE OF RS.4,01,14,554/- GIVING NO SCOPE FOR THE AO MAKE NECESSARY ENQUIRIES. WE THEREFORE MODIFY THE ORDER OF THE CIT TO THIS EXTENT, AND DIRECT THE AO TO DO THE FRESH ASSESSMENT IN ACC ORDANCE WITH LAW. ORDERED ACCORDINGLY. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DAY OF A UGUST, 2015. SD/- SD/- (N. V. VASUDEVAN) (ABRAHAM P GEO RGE) JUDICIAL MEMBER ACCOUNTANT MEMBER