S. K. AGROTECH INDUSTRIES LTD., MUMBAI V. ITO 13(2)(2), MUMBAI

ITA 6551/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1760 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: HARESH PURUSHOTTAMDAS SHAH
• Keywords: Business expenditure; Opportunity of being heard; Principle of natural justice; Commercial expediency
• Section: 143(3); 37(1)

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.6551/ MUM/2016 ( / ASSESSMENT YEAR : 2012 - 13) S.K AGROTECH INDUSTRIES LTD. GAYATRI BHAVAN BUILDING, 5 TH FLOOR, 90 FEET ROAD, THAKUR COMPLEX , KANDIVALI (E), MUMBAI - 400101 / V. ITO 13(2)(2) MUMBAI ./ PAN :AANCS2708 K ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. HAR E SH PURUSHOTTAMDAS SHAH REVENUE BY : SHRI. CHAUDHARY ARUN KUMAR SINGH / DATE OF HEARING : 17.10.2018 / DATE OF PRONOUNCEMENT : 14 .11 .2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE , BEING ITA NO. 6551/MUM/2016, IS DIRECTED AGAINST APPELLATE ORDER DATED 22.08.2016 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 21, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2012 - 13 , THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM A SSESSMENT ORDER DATED 31.03.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2012 - 13 . I.T.A. NO.6551/MUM/2016 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - YOUR APPELLANT CRAVES LEAVE TO RAI SE THE FOLLOWING GROUNDS OF APPEAL WITHOUT PREJUDICE TO ONE ANOTHER & THEREFORE, YOUR APPELLANT PRAYS THAT THE FOLLOWING GROUNDS OF APPEAL MAYBE DECIDED INDEPENDENTLY. (1) ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LEARNED CIT(A) - 21, MUMBAI [REFERRED AS 'CIT(A)'] ERRED IN CONFIRMING DISALLOWANCE OF ENTIRE INTEREST COST OF RS. 3,68,74 ,156 / - WITHOUT GIVING PROPER AND SUFFICIENT OPPORTUNITY. (2) ON THE FACTS AND CIRCUMSTANCES THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE INTEREST COST WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. (3) ON THE FACTS AND CIRCUMSTANCES, YOUR APPELLANT PRAYS THAT THE ALLEGED ADDITION ON ACCOUNT OF DISALLOWANCE OF ENTIRE INTEREST COST MAY BE DELETED. (4) YOUR APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND / OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF MANUFACTURING AND TRADING OF FLEXIBLE PACKING AND STATIONARY ITEMS. THE ASSESSEE HAD DECLARED TOTAL TURNOVER OF RS. 43,30,32,220/ - AND GROSS PROFIT OF RS. 22.29% AND NET PROFIT OF ( - )0.051% . THE AO OBSERVED THAT HEAVY EXPENSES WERE DEBITED TO PROFI T AND LOSS ACCOUNT. T HE MAJOR EXPENSES WERE INTEREST DEBITED TO THE TUNE OF RS. 3.68 CRORES . THE ASSESSEE HAD CLAIMED TOTAL LOSS OF RS. 2,16,97,500/ - IN THE RETURN OF INCOME FILED ON 29.09.2013 . 4. THE AO ASKED T HE ASSESSEE TO JUSTIFY DIFFERENCE S IN OPENING STOCK OF CURRENT YEAR WITH THE CLOSING STOCK OF THE PREVIOUS YEAR, TO EXPLAIN UTILISATION OF INTEREST BEARING FUNDS WITH DATE WISE FUND FLOW CHART TO EXPLAIN WHETHER THE INTEREST BEARING FUNDS WERE UTILISED WHOLLY AND EXCLUSIVELY FOR THE BUSINE SS PURPOSES WITH SUPPORTING DOCUMENTARY EVIDENCES , DETAILS OF LOAN AND ADVANCES GIVEN TO THE SUBSIDIARY COMPANIES WITH INTEREST RECEIVED AND RATE OF INTEREST CHARGED. THE AO I.T.A. NO.6551/MUM/2016 3 OBSERVED THAT THE ASSESSEE DEBITED INTEREST OF RS. 3.68 CRORES TO PROFIT AND LOSS ACCOUNT WHEREAS THE ASSESSEE HAD SHOWN INTEREST FREE LOANS TO SUBSIDIARY COMPANIES AT RS. 8.89 CRORE AND INTEREST FREE ADVANCES RECOVERABLE IN CASH OF RS. 1.55 CRORES. THE ASSESSEE WAS ASKED TO EXPLAIN HOW INTEREST BEARING FUN D WERE UTILISED BY THE ASSES SEE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE . THE ASSESSEE AS PE R AO COULD NOT EXPLAIN AS TO HOW INTEREST BEARING FUND S WERE UTILISED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY FOR BUSINESS OF THE ASSESSEE NOR BOOKS OF ACCOUNTS WER E PRODUCED WERE PRODUCED BY THE ASSESSEE BEFORE THE AO . THE AO DISALLOWED INTEREST EXPENSES OF RS. 3,68,74,156/ - WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE , VIDE ASSESSMENT ORDER DATED 30.03.2015 PASSED U/S 143(3) OF THE 1961 ACT. 5. AGGRIEVED BY THE A SSESSMENT FRAMED BY THE AO U/S 143(3) OF THE 1961 ACT VIDE ASSESSMENT ORDER DATED 30.03.2015 , T HE ASSESSEE FILED FIRST APPEAL WITH LEARNED CIT(A) AND THE SAME WAS DECIDED BY AN EX - PARTE APPELLATE ORDER DATED 22.08.2016 PASSED BY LD. CIT(A) WHEREIN PART R ELIEF WAS GRANTED TO THE ASSESSEE BY LEARNED CIT(A) , BY HOLDING AS UNDER: - 7. I HAVE CONSIDERED THE FACTS OF THE CASE, CAREFULLY. NOTHING WAS FURNISHED BY THE APPELLANT TO SHOW THAT THE CLAIM OF INTEREST EXPENDITURE IS ALLOWABLE. HOWEVER, FROM THE COPY OF BALANCE SHEET FILED, IT IS SEEN THAT THE SECURED LOAN COMPRISES TERM LOAN FROM BANK OF RS.16.49 CRORES, WORKING CAPITAL FACILITIES OF RS 10.47 CRORES AND SUPPLIERS CREDIT (TERM LOAN) OF RS.6.30 CRORES. THE OTHER LONG TERM LIABILITIES ARE FROM PROMOTERS & OTHERS AND HIRE PURCHASE LOAN. THE FIXED ASSET HAS GONE UP BY RS 28.13 CORES COMPRISING OF INCREASE IN PLANT AND MACHINERY. AS AGAINST THIS, THE TERM LOAN CAME DOWN BY RS 1.49 CRORES, AND SUPPLIER CREDIT BY RS 63 LAKHS. ONLY WORKING CAPITAL WENT UP BY RS 10.47 CRORES. WHILE THE ASSESSING OFFICER HAS STATED THAT THE LOANS TO SUBSIDIARY COMPANIES ARE RS 889 LAKHS, THE BALANCE SHEET SHOWS THE SAME AS TRADE RECEIVABLES AND NOT AS LOANS AND ADVANCES. THE SHORT TERM LOAN AND ADVANCES ARE RS 138 LAKHS AND INVEST MENTS IN SUBSIDIARIES ARE RS 268 LA KHS. THE INTEREST EXPENDITURE IS REFLECTED IN THE BALANCE SHEET AND ACCOUNTS AT RS 360 LAKHS OF TERM LOAN INTEREST AND INTEREST ON OTHERS OF RS 3 LAKHS AND BANK CHARGES OF RS. 4 LAKHS . IT APPEARS THAT WHAT IS LISTED AS TERM LOAN INTEREST IS ACTUALLY INTEREST ON TERM LOAN, SUPPLIERS CREDIT AND WORKING LOAN. THE INTEREST EXPENSE WORKS OUT TO ABOUT 13% ON THE LOANS DURING THE YEAR WHICH IS 2854 LAKHS. THUS, IT IS NOT I.T.A. NO.6551/MUM/2016 4 UNREASONABLE TO CONS IDER THAT SOME OF THE INTEREST EXPENDITURE INCURRED ON TERM LOAN FROM BANK IS USED FOR ADDITION TO FIXED ASSETS BY THE APPELLANT. SINCE THE APPELLANT HAS NOT FURNISHED THE DETAILS CALLED FOR BY THE ASSESSING OFFICER, THE RESORT TO DISALLOWANCE OF INTEREST FOR NON - BUSINESS PURPOSES IS UPHELD. THOUGH THE APPELLANT HAS NOT FURNISHED DETAILS, IT WOULD HOWEVER BE REASONABLE TO DISALLOW 13% OF AVERAGE SHORT TERM LOANS AND ADVANCES AND INVESTMENTS OF RS 391 LAKHS DURING THE YEAR. ACCORDINGLY, DISALLOWANCE OF INTER EST OF RS 51 LAKHS IS UPHELD. THE BALANCE DISALLOWANCE OF INTEREST IS DELETED. 6 . THE ASSESSEE BEING AGGRIEVED BY THE APPELLATE ORDER DATED 22.08.2016 PASSED BY LEARNED CIT(A) FILED A N APPEAL WITH THE TRIBUNAL . I T WAS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT THE ASSES SEE COULD NOT PROPERLY EXPLAIN ITS CASE BEFORE THE AUTHORITIES BELOW AND IN THE CASE OF APPELLATE ORDER PASSED BY LEARNED CIT(A) WAS AN EX - PARTE ORDER . IT WAS SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND TRADING O F FLEXIBLE PACKING AND STATIONARY ITEMS . IT WAS SUBMITTED IT IS NOT DOUBTED THAT T HERE WAS AN INCREASE IN CAPITAL WORK IN PROGRESS AND WHATEVER IS THE EXPENSES /INTEREST ATTRIBUTABLE TO THE CAPITAL WORK IN PROGRESS WILL BE DEBITED TO THE FIXED ASSETS WHILE POST COMMENCEMENT OF COMMERCIAL PRODUCTION, THE EXPENSES/INTEREST WILL BE CHARGED TO REVENUE ACCOUNT . THUS, EXPENSES AND INTEREST ATTRIBUTABLE TO REVENUE OPERATION S SHOULD BE ALLOWED TO THE ASSESSEE . THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTI ON TO PROFIT AND L OSS ACCOUNT WHICH IS PLACED IN PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL , WHEREIN THE REVENUE FROM THE OPERATION S WERE TO THE TUNE OF RS. 36.53 CRORES . IT WAS SUBMITTED THAT APPELLATE ORDER PASSED BY LEARNED CIT(A) WAS AN EX - PAR TE ORDER AND PRAYERS WERE MADE THAT MATTER MAY BE SET ASIDE AND RESTORED TO THE FILE OF LD. CIT(A) FOR DENOVO ADJUDICATION OF THE ISSUE ON MERITS AS IT IS PRAYED BEFORE THE BENCH THAT THE ASSESSEE HAS A VERY GOOD CASE ON MERITS AND IF OPPORTUNITY IS GRAN TED THE ASSESSEE WILL PRODUCE ALL COGENT EVIDENCES/EXPLANATIONS BEFORE THE AUTHORITIES TO PROVE ITS CONTENTIONS AS TO ALLOWABILITY OF INTEREST EXPENSES AS BUSINESS EXPENSES . IT WAS SUBMITTED THAT THE ASSESSEE WILL BE SUBMITTING COMPLETE DETAILS , BOOKS OF ACCOUNTS AND COGENT EVIDENCES BEFORE LD. CIT(A) TO JUSTIFY ITS STAND AND THE N THE DECISION COULD BE TAKEN BY LD. I.T.A. NO.6551/MUM/2016 5 CIT(A) AFTER CONSIDERING EVIDENCES ON RECORD ON MERITS IN ACCORDANCE WITH LAW. THE ASSESSEE HAS FILED PAPER BOOK WITH THE TRIBUNAL CONTAINING 92 PAGES W HEREIN DETAILS ARE ENCLOSED SUCH AS AUDIT ED BALANCE SHEET S F OR THREE YEARS, STATEMENT OF CAPITAL WORK IN PROGRESS, AND INTEREST PAID DETAILS ETC. . THE LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS NOT COOPERATED WITH THE AUTHORITIES BELOW IN ASSESSMENT PROCEEDINGS AS WELL IN APPELLATE PROCEEDINGS CONDUCTED BY LEARNED CIT(A) AND EVEN BOOKS OF ACCOUNTS WERE NOT PRODUCED . THE LEARNED DR SUBMITTED THAT THE ONUS IS ON THE ASSESSEE TO PRODUCE RELEVAN T EVIDENCES /EXPLANATIONS TO SUPPORT ITS CONTENTION S . 7. WE HAVE CONSIDERED RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD INCLUDING ORDERS OF AUTHORITIES BELOW AND PAPER BOOK FILED BY THE ASSESSEE. W E HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF FLEXI BLE PACKING AND STATIONARY ITEMS. THE ASSESSEE HAS BOOKED INTEREST EXPENDITURE OF RS.3,68,74,156/ - IN PROFIT AND LOSS ACCOUNT INCURRED ON SECURED AND UNSECURED LOANS AVAILED BY IT. THE ASSESSES HAS ADVANCED RS. 8.89 CRORES AS INTEREST F REE LOANS TO SUBSIDIARY COMPANIES AND RS. 1.55 CRORES AS ADVANCES RECOVERABLE IN CASH WITHOUT CHARGING OF ANY INTEREST. THE ASSESSEE WAS ASKED TO EXPLAIN THE UTILISATION OF INTEREST BEARING BORROWED FUNDS WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ITS BUSI NESS WITH COGENT EVIDENCES/EXPLANATIONS . THE ASSESSEE COULD NOT EXPLAIN/JUSTIFY THE SAME NOR BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO WHICH LED TO THE ADDITIONS TO THE TUNE OF RS. 3,68,74,156/ - TOWARDS DISALLOWANCE OF INTEREST EXPENSES WHICH WERE ADDE D BY THE AO TO THE INCOME OF THE ASSESSEE. THE ASSESSEE DID NOT APPEAR BEFORE THE LEARNED CIT(A) WHICH LED TO AN EX - PARTE APPELLATE ORDER DATED 22.08.2016 PASSED BY LEARNED CIT(A) WHO HOWEVER GRANTED PART RELIEF TO THE ASSESSEE , BY HOLDING AS UNDER: 7. I HAVE CONSIDERED THE FACTS OF THE CASE, CAREFULLY. NOTHING WAS FURNISHED BY THE APPELLANT TO SHOW THAT THE CLAIM OF INTEREST EXPENDITURE IS ALLOWABLE. HOWEVER, FROM THE COPY OF BALANCE SHEET FILED, IT IS SEEN THAT THE SECURED LOAN COMPRISES TERM LOAN FRO M BANK OF RS.16.49 CRORES, WORKING CAPITAL I.T.A. NO.6551/MUM/2016 6 FACILITIES OF RS 10.47 CRORES AND SUPPLIERS CREDIT (TERM LOAN) OF RS.6.30 CRORES. THE OTHER LONG TERM LIABILITIES ARE FROM PROMOTERS & OTHERS AND HIRE PURCHASE LOAN. THE FIXED ASSET HAS GONE UP BY RS 28.13 CORES C OMPRISING OF INCREASE IN PLANT AND MACHINERY. AS AGAINST THIS, THE TERM LOAN CAME DOWN BY RS 1.49 CRORES, AND SUPPLIER CREDIT BY RS 63 LAKHS. ONLY WORKING CAPITAL WENT UP BY RS 10.47 CRORES. WHILE THE ASSESSING OFFICER HAS STATED THAT THE LOANS TO SUBSIDIA RY COMPANIES ARE RS 889 LAKHS, THE BALANCE SHEET SHOWS THE SAME AS TRADE RECEIVABLES AND NOT AS LOANS AND ADVANCES. THE SHORT TERM LOAN AND ADVANCES ARE RS 138 LAKHS AND INVESTMENTS IN SUBSIDIARIES ARE RS 268 LAKHS. THE INTEREST EXPENDITURE IS REFLECTED IN THE BALANCE SHEET AND ACCOUNTS AT RS 360 LAKHS OF TERM LOAN INTEREST AND INTEREST ON OTHERS OF RS 3 LAKHS AND BANK CHARGES OF RS. 4 LAKHS. IT APPEARS THAT WHAT IS LISTED AS TERM LOAN INTEREST IS ACTUALLY INTEREST ON TERM LOAN, SUPPLIERS CREDIT AND WORKIN G LOAN. THE INTEREST EXPENSE WORKS OUT TO ABOUT 13% ON THE LOANS DURING THE YEAR WHICH IS 2854 LAKHS. THUS, IT IS NOT UNREASONABLE TO CONSIDER THAT SOME OF THE INTEREST EXPENDITURE INCURRED ON TERM LOAN FROM BANK IS USED FOR ADDITION TO FIXED ASSETS BY THE APPELLANT. SINCE THE APPELLANT HAS NOT FURNISHED THE DETAILS CALLED FOR BY THE ASSESSING OFFICER, THE RESORT TO DISALLOWANCE OF INTEREST FOR NON - BUSINESS PURPOSES IS UPHELD. THOUGH THE APPELLANT HAS NOT FURNISHED DETAILS, IT WOULD HOWEVER BE REASONABLE TO DISALLOW 13% OF AVERAGE SHORT TERM LOANS AND ADVANCES AND INVESTMENTS OF RS 391 LAKHS DURING THE YEAR. ACCORDINGLY, DISALLOWANCE OF INTEREST OF RS 51 LAKHS IS UPHELD. THE BALANCE DISALLOWANCE OF INTEREST IS DELETED. THE ASSESSEE IS NOW CONCEDING AND PRAY ING THAT IF ONE MORE OPPORTUNITY IS GRANTED , THE ASSESSEE WILL PRODUCE ITS BOOKS OF ACCOUNTS A ND ALSO SUBMIT COMPLETE DETAILS/ COGENT EVIDENCES BEFORE THE AUTHORITIES TO SUBSTANTIATE ITS STAND THAT INTEREST BEARING FUNDS WERE UTILISED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE , WHICH THEN CAN BE VERIFIED BY THE AUTHORITIES . THE ONUS IS ON THE ASSESSEE TO PROVE THAT EXPENSES /INTEREST WERE INCURRED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSES OF ITS BUSINESS , AND THE SAID EXPENSES ARE NEITHER CAPITAL IN NATURE NOR ARE THEY PERSONAL IN NATURE , SO AS TO PROVE THAT MANDATE OF SECTION 37(1) IS FULFILLED . THE ONUS WHICH LAY ON THE ASSESSEE WAS NOT FULFILLED SO FAR IN THE INSTA NT CASE BEFORE THE AUTHORITIES BELOW . WE HAVE ALSO OBSERVED FROM THE DIRECTORS REPORT ATTACHED TO THE AUDIT ED BALANCE S HEET FILED BY THE ASSESSEE IN PAPER BOOK FOR THE FINANCIAL YEAR ENDED 31.03.201 0 THAT THE ASSESSEE WAS UNDERTAKING EXPANSION PROJECT FO R NEW UNIT AT GAT NO. 3361 AT POST KALEDHON , TAL. KHATAV , DISTRICT I.T.A. NO.6551/MUM/2016 7 SATARA FOR MANUFACTURING OF FLEXIBLE PACKAGING LAMINATES AND THERMOFORMING WITH AN ESTIMATE D COST OF RS. 30 CRORES (PB/PAGE 80) . THE ASSESSEE HAS ALSO CLAIMED IN ITS DIRECTORS REPORT ATTA CHED TO THE AUDITED BALANCE SHEET FILED BY THE ASSESSEE IN PAPER BOOK FOR THE FINANCIAL YEAR ENDED 31.03.2011 THAT IT COMMENCED ITS COMMERCIAL PRODUCTION BY END OF NOVEMBER 2010. WE HAVE ALSO OBSERVED THAT THE ASSESSEE HAS RAISED SEVER AL TERM LOANS AND WOR K ING CAPITAL LOANS ON WHICH INTEREST WAS PAID . THE ASSESSEE ALSO FILED LEDGER ACCOUNT OF CAPITAL WIP FROM SEPTEMBER 2009 TILL JANUARY 2012(PB/PAGE 3 - 4). THE ASSESSEE HAS CAPITALISED PLANT AND MACH INERY IN THE FINANCIAL YEAR ENDED 31.03.2012. WE ARE PRESENT LY SEIZED OF AN APPEAL FILED FOR AY 2012 - 13. WE HAVE ALSO OBSERVED FROM THE AUDITED FINANCIAL STATEMENTS FILED FOR THE IMPUGNED ASSESSMENT YEAR AY 2012 - 13 (PB/PAGE 34) THAT THE SYMBOLIC PHYSICAL POSSESSION OF SECURED ASSETS OF THE ASSESEEE COMPANY WERE TAK EN OVER BY SBI UNDER SARFESI ACT ,2002 TO RECOVER SECURED LOANS . THE ASSESSEE HAS CLAIMED TO HAVE CHALLENGED THE SAID ACTION OF SBI BY FILING AN APPLICATION U/S 17(1) OF SARFESI ACT,2002.(PB/PAGE 34). THE ASSESSEE NEED TO RECONCILE ALL THE AFORE - SAID IMPORT ANT MILESTONE S SO AS TO EVIDENCE THAT THE INTEREST BEARING FUNDS WERE USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE AND THEY ARE NEIT HER CAPITAL IN NATURE NOR HIT BY VIRTUE OF BEING PERSONAL IN NATURE SO AS TO SATISFY MANDAT E OF SECTION 37(1) OF THE 1961 ACT . ALL RELEVANT SANCTION LETTERS ISSUED BY THE BANKERS SANCTIONING OF LOANS IN FAVOUR OF THE ASSESSEE ALONG WITH ITS DISBURSEMENT AND UTILISATION DETAILS ARE TO BE BROUGHT ON RECORD TO JUSTIFY THAT THE LOANS WERE UTILISED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE AND THESE EXPENSES ARE NEITHER CAPITAL IN NATURE N OR PERSONAL IN NATURE, SO AS TO SATISFY MANDATE OF SECTION 37(1) OF TH E 1961 ACT. THE ASSESSEE HAS ALSO TO JUSTIFY THAT THE INTEREST FREE FUNDS/LOANS ADVANCED BY IT TO VARIOUS ENTITIES INCLUDING SUBSIDIARY COMPANY ARE GOVERNED BY PRINCIPLES OF COMMERCIAL EXPEDIENCY. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S. A. BUILDERS LIMITED V. CIT (2007) 288 ITR 1(SC). THE ONUS IS ON THE I.T.A. NO.6551/MUM/2016 8 ASSESSEE TO S ATISFY THE SAME WHICH DID NOT GE T FULFILLED SO FAR . THE ASSESSEE HAS PRAYED AND CONCEDED THAT IF THE ISSUE IS RESTORED TO THE FILE OF LD. CIT(A) , THEN THE ASSESSEE WI LL BE AB LE TO DULY EXPLAIN THE SAME BEFORE THE LD. CIT(A) WITH COGENT EVIDENCES/EXPLANATIONS . K EEPING IN VIEW ENTIRE FACTUAL MATRIX AND SPECTRUM OF THE CASE AND ALSO THAT SUBMISSIONS/EXPLANATIONS OF THE ASSESSEES TO JUSTIFY ITS STAND WILL REQUIRE VERIFICATIONS B Y AUTHORITIES , WE ARE RESTORING THE MATTER BACK TO THE FILE OF THE LD. CIT(A) FOR DENOVO DETERMINATION /ADJUDICATION OF THE ISSUE AFTER GIVING ASSESSEE AN PROPER OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW , WITH THE CONDITION THAT THE ASSESSEE WILL DEPOSIT RS. 10,000/ - ( RS. TEN THOUSAND ONLY ) WITHIN 30 DAYS OF RECEIPT OF THIS ORDER WITH PRIME MINISTER NATIONAL RELIEF FUND AND SHALL FILE NECESSARY PAID RECEIPTS/CHALLANS WITH LD. CIT(A) AS WELL AO TO SUBSTANTIATE THAT OUR AFORESAID DIRECTIONS IMPOSING COSTS ARE FULFILLED . THE LD. CIT(A) SHALL ADMIT ALL RELEVANT EVIDENCES/EXPLANATIONS FILED BY THE ASSESSEE IN ITS SUPPORT WHICH SHALL BE EVALUATED BY LEARNED CIT(A) ON MERITS IN ACCORDANCE WITH LAW . WE ORDER ACCORDINGLY. 8. IN THE RESULT APPEAL FILED BY THE ASSESSEE IN ITA NO. 6551/MUM/2016 FOR AY 2012 - 13 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .1 1 .2018. 14 .1 1 .2018 SD/ - SD/ - (JOGINDER SINGH) (RAMIT KOCHAR) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 14 .11 .2018 NISHANT VERMA SR. PRIVATE SECRETARY I.T.A. NO.6551/MUM/2016 9 COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI