Addl. CIT, New Delhi V. M/s Matrix Clothing Pvt. Ltd., Gurgaon

ITA 6554/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3051 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Earning of tax free income; Bad and doubtful debts; Commercial expediency
• Section: 14A; 28

Judgement Text

PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI R.K.PANDA , ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 6554 /DEL/201 6 A.Y.: 20 12 - 13 ACIT SPECIAL RANGE - 6 NEW DELHI VS . MATRIX CLOTHING P.LTD. KHANDSA ROAD VILLAGE MOHAMMADPUR GURGAON PAN: AABCM 8475 B (APPELLANT) (RESPONDENT) A SSESSEE BY SH. ATIQ AHMED, SR.D.R. DEPT. BY SH. SALIL AGGARWAL, ADV. SH. SHAILESH GUPTA, ADV. DATE OF HEARING 28.02. 2018 DATE OF PRONOUNCEMENT 2 3 . 0 3 . 2 0 1 8 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER T HE PRESENT APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST ORDER DATED 14/10/16 PASSED BY LD. CIT (A) - 6, NEW DELHI FOR ASSESSMENT YEAR 2012 - 13 ON THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT( A) IS LEGALLY JUSTIFIED IN DELETING THE DISALLOWANCE AMOUNTING TO RS. 2,23,000 / - UNDER SECTION 14A OF THE ACT (THE ACT) R.W. R 8D OF THE INCOME TAX RULES (THE RULES) WITHOUT CONSIDERING LEGISLATI VE INTEN T OF INTRODUCING SECTION 14A BY THE FINANCE ACT 2001 AS CLARIFIED BY THE CBDT CIRCULAR NO. 5/2014 DATED 10 .02.2014? 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS LEGALLY JUSTIFIED IN DELETING THE DISALLOWANCE AMOUNTING T O PAGE 2 OF 12 RS. 2,23,000 / - U / S 14A OF THE ACT R.W. RULE 8D OF THE RULES WITHOUT CONSIDERING LEGAL PRINCIPLES THAT ALLOWABILITY OF EXPENDITURE UNDER THE ACT IS NOT CONDITIONAL UPON THE EARNING OF THE INCOME AS UPHELD BY HON'BLE SUPREME COURT IN CASE OF CIT VS. RAJEND RA PRASAD MOODY (1978) 115 ITR 519? 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS LEGALLY JUSTIFIED IN DELETING THE ADDITION OF RS. 30,93,336 / - ON ACCOUNT OF INTEREST ON 'INTEREST FREE LOAN TO SISTER CONCERN IGNORING THE FACT TH AT THE ASSESSEE HAD NOT DISCHARGED ITS ONUS THAT INTEREST FREE LOAN WAS GIVEN TO ITS SISTER CONCERN OUT OF INTEREST FREE SURPLUS FUND AVAILABLE TO THE ASSESSEE AND THAT INTEREST FREE LOAN WAS GIVEN FOR THE PURPOSE OF THE BUSINESS? 4. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS LEGALLY JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 57,19,974 / - ON ACCOUNT OF WRITE OFF LOAN TO SISTER CONCERN IGNORING THE FACT THAT NO AMOUNT CORRESPONDING TO BAD DEBTS WAS BOOKED AS REVENUE IN EARLIER YEARS IN ACCORDANCE WITH PROVISION OF SECTION 36(2) (I) OF THE INCOME TAX ACT AND ALSO IGNORING THE FACT THAT THE ASSESSEE IS NOT A BANKING COMPANY.? 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : ASSESSEE IS ENGAGED IN THE MANUFACTURE OF GARMENTS HAVING IT S FACTORY AT GURGAON. IT FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 27/09/12 DECLARING TOTAL INCOME OF RS. 12,64,20,520/ - . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) BY COMPUTING THE TAXABLE INCOME IN THE HANDS OF ASSESSEE PAGE 3 OF 12 AT RS.13,80,54,080/ - . LD. AO WHILE COMPLETING ASSESSMENT MADE FOLLOWING DISALLOWANCES: 1 . DISALLOWANCE U/S 14A RS. 2,2 3,000/ - 2 . DISALLOWANCE OF INTEREST ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO SISTER CONCERNS RS.30,93,336 3 . BAD DEBT ON ACCOUNT OF WRITE OFF OF LOAN TO A SISTER CONCERN RS.57,19,974/ - 4 . INVESTMENTS WRITTEN OFF TREATED AS CAPITAL LOSS INSTEAD OF BUSINESS LOSS RS.25,97,245/ - 2.1. AGGRIEVED BY THE ADDITION MADE BY LD.AO , ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) , WHO PARTLY ALLOWED THE APPEAL. 2.2. AGGRIEVED BY THE ORDER OF LD. CIT (A) REVENUE IS IN APPEAL BEFORE US NOW. 3. GROUND NO. 1 AND 2 RAISED BY THE REVENUE IS IN RESPECT OF DISALLOWANCE AMOUNTING TO RS. 2,23,000/ - MADE BY LD.AO UNDER SECTION 14 A OF THE A CT BEING DELETED BY LD.CIT(A). 3.1. LD. DR PLACED RELIANCE UPON THE ORDER OF LD. AO. 3.2. LD.AR SUBMITTED THAT ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THEREFORE NO DISALLOWANCE IS CALLED FOR BY RELYING UPON DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD V S. CIT REPORTED IN 378 ITR 33 . 3.3. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. ADMITTEDLY ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION , ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN PAGE 4 OF 12 THE OBSERVATIONS OF LD. CIT (A) IN DELETING THE ADDITION MADE BY LD.AO IN RESPECT OF THE DISALLOWAN CES COMPUTED UNDER SECTION 14 A OF THE ACT. 3.4. GROUND NO. 3 IS AGAINST ADDITION AMOUNTING TO RS. 30,93,336/ - DELETED BY LD.CIT(A) ON ACCOUNT OF INTEREST FREE LOAN ADVANCED T O SISTER CONCERN. 3.5. LD. DR SUBMITTED THAT A SSESSING O FFICER HAS RELIED UPON ASSESSMENT ORDER S PASSED FOR ASSESSMENT YEAR 2009 - 10 & 2010 - 1 1 IN MAKING THE ADDITION IN THE HANDS OF ASSESSEE. HE PLACED RELIANCE UPON ORDER PASSED BY LD. AO. 3.6. AT THE O UTSET LD. AR SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED BY CO - ORDINATE BENCH OF THIS T RIBUNAL FOR ASSESSMENT YEAR 200 9 - 10 AND 2010 - 11 IN ITA NO. 2949 AND 2950/ D EL/2014 WHICH IS PLACED AT PAGE 51 - 65 OF THE PAPER BOOK . LD. AR RELIED UPON PAGE 54 OF PAPER BOOK WHERE IN THIS ISSUE HAS BEEN DISCUSSED AT LENGTH. 3.7. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US . THE FACTUAL OBSERVATIONS BY LD.CIT(A) BASED ON WHICH HE HAS DELETED THE ADDITION ARE AS UNDER: C. THE LD.AO HAD MADE A DISALLOWANCE TO THE EXTENT OF RS.30.93 LACS FROM THE CLAIM OF INTEREST BY THE ASSESSEE U/S 36(1)(III) ON THE GROUND THAT THE ASSESSEE HAS DIVERTED ITS INTEREST BEARING FUNDS TO ITS RELATED PERSO N AND ACCORDINGLY INTEREST @ 10.75% ON INTEREST FREE LOANS IS DISALLOWED. D. THE FOLLOWING UNDISPUTED FACTS EMERGE: THE ADVANCE / LOAN WERE GI VEN BY THE ASSESSEE TO A C OMPANY CO ED, WHICH WAS FORMED TO PROMOTE ITS BUSINESS IN INDIA. PAGE 5 OF 12 2. THE ASSESSEE COMPA NY HAD 50% STAKE IN THE SAID COMPANY COED, WITH THE BALANCE 50% HELD BY CBPL. 3. LOAN / ADVANCE OF RS. 285.99 LACS WAS GIVEN BY THE ASSESSEE. SIMILAR LY, LOAN/ADVANCE OF RS 292.3 4 LACS WERE GIVEN BY THE OTHER JOINT VENTURE PARTNER I.E CB P L, TILL MARCH 31, 2012. 4. THE LOAN WAS GIVEN TO SET UP AN INFRASTRUCTURE FOR STARTING A NE W LINE OF BUSINESS. 5. AS A RESULT OF THE ADVANCES GIVEN BY THE ASSESSEE AND CBPL, COED WAS ABLE TO ACHIEVE A SALES TURNOVER OF RS. 190.82 LACS DURING THE FINANCIAL YEAR 2009 - 10; TURNOVER OF RS 28.9 4 LACS IN FINANCIAL YEAR 20 1 0 - 11 AND A TURNOVER O F RS 4.85 LACS IN FINANCIAL YEAR 2011 - 12 . THE LOAN ADVANCE OUTSTANDING IN THE B OOKS OF THE ASSESSEE IS A PART OF CURRENT ASSETS OF THE ASSE SSEE COMPANY. 6. THE A SSESSEE COMPANY HAS EARNED SURPLUS OF RS. 3.586. 4 6 L ACS OVER A PERIOD OF TIME WHICH IS MUCH HIGHER THAN T HE LOAN GIVEN BY IT TO JV COMPANY. IT CLEARLY SHOWS THAT LOAN WAS GIVEN OUT OF INTERNAL ACCRUALS AND NOT FROM BORROWED FUNDS. 7. AS ALREADY STATED ABOVE AND AS CAN BE SEEN FROM THE ACCOUNTS, THE NET CURRENT ASSETS OF RS.4,867.49 LACS (INCLUDING LOAN/ADVANCE OF COED) HAS BEEN FINANCED BY INTEREST BEARING FUNDS OF RS.3,358.46 LACS AND NON - INTEREST BEARING FUNDS OF RS.1,509.03 LACS, RS.1,509.03 LACS IS MUCH MORE THAN RS.285.99 LACS. AS SUCH BASED ON THE FUND FLOW STATEMENT DEPICTED ABOVE, INTEREST BEARING FUNDS HAVE NOT BEEN USED TO GIVE ADVANCE OF RS.285.99 LACS TO A JOINT VENTURE COMPANY. PAGE 6 OF 12 DECISION. AFTER GOING THROUGH THE SUBMISSIONS MADE BY THE ASSESS EE THE FOLLOWING POINTS EMERGE: 1 . THE ASSESEE HAD ADVANCED FUNDS TO A JOINT VENTURE CO MPANY PROMOTED BY IT TO INCREASE ITS LOCAL SA LES IN THE EVENT OF EXPORT ORDERS DRYING UP. 2 . THE FUNDS WERE GIVEN NOT FOR ANY PERSONAL USE. 3 . THE FUNDS WERE GIVEN BY THE ASSESSEE COMPANY FOR BUSINESS PURPOSES. THE HON BLE SUPREME COURT HAS IN ITS DECISION IN THE S.A. BUILDERS STATED AS UNDER: '34. WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COURT IN CIT VS . DALMIA CEMENT (BHARAT ) LTD. (2002) 254 ITR 377 THAT ONCE IT IS ESTABLISHED THAT THAT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSINESS (WHICH NEED NOT NECESSA RILY BE THE BUSINESS OF THE ASSESSEE ITSELF), THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN T HE ARM - CHAIR OF T HE BUS IN ESSM A N OR IN T HE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES O F THE CASE . NO BUSINESSMAN CAN BE COMPELLED TO MAXI MI SE ITS PROFIT. THE INCOME TAX AUTHORITIES MU ST PUT THEMSE L VES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SEE THE TRANSFER OF BORROWED FUNDS TO A SISTER CONCERN FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS. PAGE 7 OF 12 RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY HON BLE SUPREME COURT IN SA BUILDERS C ASE, AND IN VIEW OF THE FACT THAT ON THE SAME FACTS, MY PREDECESSORS HAD ALLOWED THE APPEAL, I HOLD THAT THE LOAN WAS GIVEN FOR COMMERCIAL EXPEDIENCY AND ALLOW THE APPEAL. ACCORDINGLY, THE DISALLOWANCE OF RS.30,93,336/ - IS DELETED. 3.8. FURTHER ON PERUSA L OF THE DECISION OF THIS T RIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 200 9 - 10 AND 20 10 - 11 (SUPRA) IT IS OBSERVED THAT THE ISSUE HAS BEEN DECIDED AS UNDER: 6.1. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THE LD.CIT(A) HAS DELETED THE DISALLOW ANCE ON THE BASIS THAT NEXUS BETWEEN INTEREST BEARING FUNDS AND INTEREST FREE ADVANCE AS WELL AS ADEQUACY OF INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE, HAVE NOT BEEN ANALYSED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS, NOR THE EXPLANATION GIVEN BY ASSESEE THAT THE LOAN WAS GIVEN FOR BUSINESS PURPOSE HAS BEEN REBUTTED BY THE A.O. THE LD.CIT(A) HAS CONCLUDED THAT THE ASSESSEE HAVING ADEQUATE NON - INTEREST BEARING FUNDS, IT CAN BE INFERRED THAT THE LOAN GIVEN HAS NO BEARING ON THE INTEREST EXPENSE CLA IMED BY ASSESSEE ON BORROWED FUNDS. IN ABSENCE OF REBUTTAL OF ABOVE STATED MATERIAL FINDING GIVEN BY LD.CIT(A) ON THE ISSUE EVEN BEFORE THE TRIBUNAL, WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER, WHICH IS COMPREHENSIVE AND REASONED ON E AS WELL AS SUPPORTED BY THE RATIO LAID DOWN IN THE ABOVE CITED DECISIONS. UNCONTROVERTED FINDINGS OF LD.CIT(A) REMAINED THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE COMMERCIAL EXPEDIENCY ESTABLISHED BY THE FACTS UNDER WHICH ADVANCE WAS GIVEN IN THE OR DINARY COURSE OF BUSINESS. THE FIRST PAGE 8 OF 12 APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. GROUND NO.1 IS ACCORDINGLY REJECTED. 3.9. WE OBSERVE THAT THERE IS NO FACTUAL DIFFERENCE IN THE PRECEDING ASSESSMENT YEARS VIS - A - VIS THE YEAR UNDER CONSIDERATION. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF C OORDINATE B ENCH OF THIS T RIBUNAL IN ASSESSEE S OWN CASE FOR A SSESSMENT Y EAR 2009 - 10 A ND 2010 - 11 VIDE ORDER DATED 30/03/17, WE DISMISS THIS GROUND RAISED BY REVENUE. 4. GROUND NO. 4 IS IN RESPECT OF ADDITION AMOUNTING TO RS.57,19,974/ - DELETED BY LD.CIT(A) BEING LOAN AMOUNT WRITTEN OFF GIVEN TO SISTER CONCERN. 4.1. IT IS OBSERVED THAT A SS ESSING O FFICER DISALLOWED ALLEGED AMOUNT AS THE SAID AMOUNT WRITTEN OFF WAS NOT TAKEN AS INCOME IN ANY PRECEDING YEAR, ASSESSEE IS NOT IN THE BUSINESS OF GIVING LOANS, AND THAT , CONDITIONS LAID DOWN IN SECTION 36(2) OF THE ACT WERE NOT FULFILLED. 4.2. AGGRIEVED BY THE ADDITION MADE BY LD. AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). BEFORE LD.CIT(A) ASSESSEE TOOK A PLEA THAT THE SAID AMOUNT IS ALLOWABLE UNDER SECTION 28(I) READ WITH SECTION 36(1)(VII) AS NORMAL BUSINESS LOSS AS THE SISTER CONCERN HAD BEEN DECLARED A SICK COMPANY SUBSEQUENTLY , AND HENCE THE AMOUNT HAD TO BE WRITTEN OFF. LD. CIT (A) DECIDED THE ISSUE AS UNDER: THE FACTS OF THE CASE AS GIVEN ABOVE CLEARLY REFLECT THE FACT THAT THE LOAN WAS GIVEN BY ASSESSEE COMPANY TO EXPAND ITS BUSI NESS. UNFORTUNATELY, THE JOINT VENTURE COMPANY TO WHICH SUCH LOAN WAS GIVEN HAS TURNED SICK, WITH ITS ACCUMULATED LOSSES BEING MUCH MORE THAN ITS PAID UP CAPITAL. THE EXCISE DEPARTMENT AS WELL AS PAGE 9 OF 12 CREDITORS HAVE STARTED LEGAL PROCEEDINGS AGAINST THE JOINT VENTURE COMPANY FOR RECOVERY OF THEIR DUES. THE OTHER JOINT VENTURE PARTNER IS IN LIQUIDATION. THE CHANCES OF RECOVERY OF SUCH LOAN FROM JOINT VENTURE COMPANY IS ALMOST NEGLIGIBLE GIVEN THE ABOVE POSITION. RESPECTFULLY FOLLOWING THE DECISION OF GUJARAT H IGH COURT IN CASE OF MAHENDRA SHAH, AS IT IS A GENUINE LOSS, IT SHOULD RIGHTLY BE ALLOWED AS A BUSINESS LOSS U/S 28. ACCORDINGLY, THE ADDITION OF RS.57,19,947/ - IS DELETED. 4. 3 . LD.DR SUBMITTED THAT ASSESSEE HAS CLAIMED THE SAID AMOUNT AS A WRITE OFF TO BE BAD DEBTS BEFORE LD.AO WHILE BEFORE LD.CIT (A) THE SAID AMOUNT HAS BEEN CLAIMED AS B U S I N E S S LOSS. HE ALSO SUBMITTED THAT ASSESSEE IS NOT IN THE BUSINESS OF ADVANCING LOANS. LD.DR FURTHER SUBMITTED THAT THE SAID AMOUNT CANNOT BE CONSIDERED DIFFE RENTLY BEFORE DIFFERENT AUTHORITIES BY ASSESSEE. HE THUS PLACED RELIANCE UPON ORDER OF LD.AO , AND SUBMITTED THAT ASSESSEE HAS FAILED TO COMPLY WITH CONDITIONS LAID DOWN IN SECTION 36 (2). 4.4 . AT THE OUTSET LD.AR SUBMITTED THAT ASSESSEE COMPANY ADVAN CED LOAN TO ITS SISTER CONCERN , WHICH IS EVIDENT FROM FINANCIAL STATEMENTS OF THE SISTER CONCERN . F URTHER IT IS SUBMITTED THAT THE SISTER CONCERN HAS ACCUMULATED HUGE LOSSES IN THE PRECEDING FINANCIAL YEARS AND NET WOR TH OF SISTER CO NCERN HAS FULLY ERODED. 4. 5 . HE SUBMITTED THAT IT WAS UNDER THE CIRCUMSTANCES THAT THE ASSESSEE HAD WRITTEN OFF THE LOAN ADVANCED TO SISTER CONCERN, WHICH IS ALSO AN ALLOWABLE BUSINESS EXPENDITURE IN THE HANDS OF ASSESSEE , AS ON DATE , SISTER CONCERN TO WHOM LOANS WE RE ADVANCED , BECOME SICK. PAGE 10 OF 12 4. 6 . W E HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 4.7. THE ISSUE BEFORE US IS THAT ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF GARMENTS ADVANCED LO ANS TO CERTAIN CONCERNS AND THE SAME HAVE BECOME NON - RECOVERABLE WHICH WERE WRITTEN OFF AND CLAIMED BEFORE LD. AO AS BAD DEBTS. ASSESSING OFFICER DISALLOWED IT AS IT DID NOT SATISFY THE CONDITIONS OF SECTION 36 (2) OF THE ACT. BEFORE LD. CIT (A) ASSESSEE TOOK THE PLEA THAT IT WOULD BE BUSINESS LOSS WHICH HAS BEEN ACCEPTED BY LD. CIT (A). IT IS NOW THE CASE OF ASSESSEE THAT SUCH LOSSES ARE ALLOWABLE AS BAD DEBTS. LD. DR HAS ARGUED THAT EVEN THE LOSS IS NOT ALLOWABLE. ACCORDING TO US ANY LOSS IS ALLOWABLE TO ASSESSEE UNDER SECTION 28 ITSELF WHILE COMPUTING BUSINESS INCOME OF ASSESSEE IF: SUCH LOSS HAS BEEN ARISEN DURING THE COURSE OF THE BUSINESS OF ASSESSEE; AND IT SHOULD HAVE OCCURRED DURING THE YEAR UNDER CONCERN. 4.8. IN THE PRESENT CASE THE WRITE OFF OF LOSS HAS NOT ARISEN DURING THE COURSE OF BUSINESS OF ASSESSEE AS MONEY LENDING IS NOT THE ACTIVITY THAT IS CARRIED ON BY ASSESSEE AND IT HAS NEVER BEEN THE CLAIM OF ASSESSEE NOR IT HAS BEEN PROVED BEFORE THE AUTHORITIES BELOW. THERE HAS BEEN NO EVIDENCE THAT IS PLACED ON RECORD TO PROVE THAT THE LOSS HAS OCCURRED DURING THE YEAR. THEREFORE THE CLAIM OF LOSS BY ASSESSEE DOES NOT HOLD GOOD ON BOTH THESE COUNTS. THE REASONS GIVEN BY LD. CIT (A) TO ALLOW THE CLAIM AS BUSI NESS LOSS ARE IRRELEVANT AND IS WITHOUT CONSIDERING THE PROVISIONS OF THE ACT. LD. CIT (A) ALSO ACCEPTED THAT THE ISSUE STANDS COVERED IN THE FAVOUR OF ASSESSEE BY THE DECISION OF PAGE 11 OF 12 HON BLE GUJARAT HIGH COURT IN THE CASE OF MANOHAR N SHAH REPORTED IN 280 IT R 462 . WE HAVE PERUSED THE SAID DECISION OF THE HON BLE GUJARAT HIGH COURT, AND IT IS OBSERVED THAT THE LOSS WAS PROVED TO HAVE BEEN ARISEN DURING THE YEAR WHICH WAS ACTUALLY A BUSINESS LOSS. 4.9. THEREFORE WE ARE INCLINED TO REVERSE THE FINDINGS OF LD. CIT (A) AND RESTORE THE ORDER OF LD. AO. 4.10. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS ALLOWED. 5. IN THE RESULT APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE O PEN C OURT ON 2 3 . 0 3 . 2 0 1 8 . S D / - S D / - (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 3 R D MARCH, 2018. *MV PAGE 12 OF 12 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI