SUDITI INDUSRIES LTD, NAVI MUMBAI V. ACIT CIR 10(3), MUMBAI

ITA 665/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75502 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 23-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Assessee Lawyers: R S SANGHAI
• Keywords: Capital asset; Business income; Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIJAY PAL RA O, JM ./ I.T.A. NO. 665/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) SUDITI INDUSTRIES LTD. C-253/254, TTC INDUSTRIAL AREA, MIDC, PAWNE VILLAGE, TURBHE, NAVI MUMBAI-400 705 / VS. ASST. CIT, CIRCLE 10(3), 4 TH FLOOR, AAYKAR BHAWAN, CHURCHGATE, MUMBAI-400 020 ./ ./PAN/GIR NO. AADCS 0967 L ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ! $ % / APPELLANT BY : SHRI R. S. SANGHAI '#! $ % / RESPONDENT BY : SHRI GIRIJA DAYAL & ' ( $ ) * / DATE OF HEARING : 23.01.2014 +,- $ ) * / DATE OF PRONOUNCEMENT : 05.02.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-22, MUMBAI (CIT(A) FOR SH ORT) DATED 29.12.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2008-09 VIDE ORDER DATED 16.12.2010. THE APPEAL RAISES FIVE ISSUES PER ITS F IVE GROUNDS, WHICH WE SHALL TAKE UP IN SERIATIM. 2. THE FIRST ISSUE IS WITH REGARD TO THE ADDITION I N THE SUM OF RS.28,04,95,352/- U/S.41(1) R.W.S. 28(IV) OF THE ACT ON ACCOUNT OF TH E WAIVER OF OLD LOANS ALLOWED TO THE 2 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT ASSESSEE BY THE LENDER, IDBI, AS A PART OF A ONE-TI ME SETTLEMENT UNDER ITS SECURITIES ASSET STABILISATION FUND (SASF). THE ASSESSEES PRINCIPAL GRIEVANCE BEFORE US, TO NO REBUTTAL BY THE LD. DEPARTMENTAL REPRESENTATIVE (DR), WAS THAT THE SAID AMOUNT STANDS ASSESSED DE HORS AND WITHOUT REGARD TO THE DETAILS OF THE VARIOUS L OANS COMPRISED IN THE ONE-TIME SETTLEMENT, AND FOR WHICH THE LD. AUTHORIZED REPRES ENTATIVE (AR), THE ASSESSEES COUNSEL, WOULD ADVERT OUR ATTENTION TO PGS.7, 80 AND 101 OF THE ASSESSEES PAPER-BOOK (PB). OF THE NINE LOANS THAT STOOD WAIVED, BEARING A TOTAL LIABI LITY OF RS.44.66 CRORES, I.E., INCLUDING INTEREST AND LIQUIDATED DAMAGES, ONLY TWO LOANS WER E FOR WORKING CAPITAL PURPOSES, WHILE THE BALANCE SEVEN WERE TERM LOANS FOR ACQUISITION O F CAPITAL ASSETS. IN FACT, OF THE TWO, ONE OF THE WORKING CAPITAL LOANS, OUTSTOOD ONLY AT AN A MOUNT OF RS.0.24 LACS AS ON 01.04.2002, SO THAT IN EFFECT THERE WAS ONLY ONE WO RKING CAPITAL LOAN, GRANTED ON 29.12.1998 FOR RS.840 LACS, IN THE LOANS WAIVED. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE REVENUE, IT IS CLAIMED, HAS PROCEEDED ON THE BASIS THAT NONE OF TH E LOANS WAIVED BY INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI) ARE FOR ACQUIRING CAPITAL ASSETS, WHILE THE FACTS ON RECORD REVEAL OTHERWISE. AS WE DISCERN, THE REVENUE CANNOT BE SAID TO BE OBLIVIOUS OF THE FACT THAT THE LOANS THAT STOOD PARTLY WAIVED OFF BY THE IDBI UNDER ITS REHABILITATION SCHEME WERE PRE-DOMINANTLY TERM LOANS; RATHER, ADVERTING T O THE FACT THAT DEPRECIATION HAD BEEN CLAIMED ON THE ASSETS ACQUIRED THEREBY. THE SAID AR GUMENT, IN OUR VIEW, RATHER THAN ASSISTING THE REVENUE, FURTHER DEPLETES ITS CASE IN ASMUCH AS IT ONLY IMPLIES THAT THE NATURE OF THE BENEFIT ARISING ON THE WAIVER OF THE LOAN IS INDEPENDENT OF THE MANNER OF THE UTILIZATION THEREOF. IN FACT, THE APEX COURT HAS TI ME AND AGAIN, I.E., IN THE CONTEXT OF THE FACT SITUATION OF THE VARIOUS CASES, AS IN THE CASE OF CIT VS. TATA IRON & STEEL CO. LTD. [1998] 231 ITR 285 (SC), SOUGHT TO CLARIFY THAT THE COST OF AN ASSET IS INDEPENDENT OF THE LOAN OBTAINED TO ACQUIRE IT, SO THAT IT WOULD NOT I N ANY MANNER ALTER WITH THE MANNER AND MODE OF REPAYMENT OF THE LOAN, OR ITS NON-REPAYMENT . THAT IS, THE RAISING OF CAPITAL BORROWED OR OTHERWISE, IS A MATTER DISTINCT AND SEP ARATE FROM ITS APPLICATION, SO THAT THE WAIVER OF A LOAN SHOULD BEAR THE SAME CHARACTER IRR ESPECTIVE OF THE ASSET WHEREIN THE SAME 3 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT STANDS DEPLOYED. SO HOWEVER, THE HONBLE JURISDICTI ONAL HIGH COURT HAS TIME AND AGAIN UNEQUIVOCALLY HELD THAT WHILE THE WAIVER OF A TERM LOAN, APPLIED IN CAPITAL ASSETS DEPRECIABLE OR OTHERWISE, WOULD BE A CAPITAL RECEIP T AND, THUS, NOT INCOME BY DEFINITION, THAT OF A WORKING CAPITAL LOAN, UTILIZED FOR WORKIN G CAPITAL PURPOSES, I.E., FOR RUNNING THE BUSINESS, WOULD BEAR A DIFFERENT CHARACTER, I.E., O F A TRADE RECEIPT, AND IS THEREFORE ASSESSABLE AS BUSINESS INCOME U/S.28. THIS VIEW STA NDS AGAIN REITERATED BY IT AS RECENTLY AS IN CIT VS. XYLON HOLDINGS PVT. LTD. [2013] 90 DTR 205 (BOM), ADVERTING TO ITS EARLIER DECISIONS IN MAHINDRA & MAHINDRA LTD. VS. CIT [2003] 261 ITR 501 (BOM) AND SOLID CONTAINERS LTD. VS. DEPUTY CIT [2009] 308 ITR 417 (BOM). FURTHER, THOUGH THE HONB LE COURT IN SOLID CONTAINERS LTD. (SUPRA) EXPLAINED ITS DECISION WITH REFERENCE TO TH E INCIDENCE OF RETENTION OF THE (WORKING CAPITAL) LOA N FUNDS, SINCE WAIVED, IN BUSINESS, WHICH CONDITION MAY NOT OBTAIN, AS IN THE INSTANT C ASE, WHERE THE ASSESSEE IS INFLICTED WITH SERIOUS SICKNESS, IN OUR VIEW THIS WOULD NOT MAKE A MATERIAL CHANGE. THIS IS AS THE SAID LOSS WOULD ONLY SIGNIFY THE ABSORPTION OF THE FUNDS AND, FURTHER, IS AVAILABLE FOR SET OFF AGAINST THE INCOME OF THE ASSESSEE FOR THE SAME AS WELL AS THE SUBSEQUENT YEARS. THE ASSESSMENT OF INCOME ON ACCOUNT OF WAIVER OF LOAN, ON THE OTHER HAND, IS DUE TO IT NO LONGER REPRESENTING A LIABILITY, SO THAT THE CORRES PONDING CAPITAL BECOMES THE ASSESSEES OWN CAPITAL. THAT IS, THERE IS A CHANGE IN CHARACTE R ON WAIVER. THE REVENUE HAS, THUS, IN PROCEEDING IN THE MANNER IT HAS, ACTED CONTRARY NOT ONLY TO THE FACTS BORNE OUT BY MATERIAL ON RECORD, BUT ALSO TO THE LAW AS EXPLAINED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE MATTER WOULD, PER FORCE THE OBTAINING FACTS, HAVE T O BE RESTORED BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR AN ADJUDICATION IN ACCORDAN CE WITH THE LAW AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY TO PRESENT ITS CA SE. THE ASSESSEE SHALL BE AT LIBERTY TO PLEAD AND SUBSTANTIATE ITS CASE ON ALL ASPECTS OF T HE MATTER. WE DECIDE ACCORDINGLY. 4. THE SECOND ISSUE CONCERNS THE DISALLOWANCE U/S.1 4A. THE ASSESSEES CASE BEFORE US, AS BEFORE THE LD. CIT(A), WAS THAT NO DISALLOWA NCE TOWARD INTEREST SHALL ARISE AS THE INVESTMENT IN SHARES WAS MADE IN THE F.Y. 1994-95, WHEREAT THE ASSESSEE HAD SUFFICIENT CAPITAL. SECONDLY, THE WORKING OF THE AVERAGE INVES TMENT FOR THE PURPOSE OF RULE 8D, 4 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT WHICH MAY APPLY, IS WRONGLY MADE, AND TOWARD WHICH THE ASSESSEE HAS MOVED THE RECTIFICATION APPLICATION. THE REVENUES CASE, ON THE OTHER HAND, IS BASED ON THE APPLICATION OF RULE 8D INASMUCH AS THE ONUS TO SHOW THAT THE SAME IS NOT A PPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS ON THE ASSESSEE, WHICH IT HAS NOT, SO THAT THE RULE SHALL APPLY BY DEFAULT. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE FUNDS, BESIDES BEING FUNGIBLE, ARE IN A STATE OF DYNAMIC FLUX IN A N ENTITY AS A COMMERCIAL ENTITY. AS SUCH, EVEN AS THE ASSESSEE MAY HAVE HAD ADEQUATE FUNDS FO R INVESTMENT IN SHARES IN THE YEAR OF THEIR ACQUISITION (WHICH THOUGH WOULD NEED TO BE EX HIBITED), DEPLETION OF CAPITAL OVER TIME, AS ON ACCOUNT OF CONTINUING LOSSES, MAY RESUL T IT IN BEING FINANCED WHOLLY OR PARTLY IN TIME BY BORROWED CAPITAL. THE ONUS TO ESTABLISH ITS CLAIM IS ON THE ASSESSEE, FAILING WHICH RULE 8D WOULD APPLY. THE MATTER IS, ACCORDING LY, RESTORED BACK TO THE FILE OF THE A.O., WHO SHALL ALSO ADDRESS THE ASSESSEES GRIEVAN CE QUA THE MISTAKE CLAIMED TO HAVE INFLICTED HIS WORKING. WE DECIDE ACCORDINGLY. 6. THE ASSESSEES THIRD GROUND IN FACT REPRESENTS I TS ALTERNATE CLAIM FOR ALLOWING DEDUCTION U/S.43B ON PAYMENT OF INTEREST TO IDBI, A T RS.834.19 LACS. THE ENTIRE WAIVER OF RS.2804.95 LACS OUT OF THE OUTSTANDING DEMAND OF RS .4466.07 LACS BEING CONSIDERED AS TOWARDS PRINCIPAL, THE ASSESSEE CONTENDS IN THE ALT ERNATIVE THAT TO THE EXTENT OF PAYMENT, INTEREST ON TERM LOANS MAY BE ALLOWED TO IT INASMUC H AS NO DEDUCTION IN ITS RESPECT STOOD CLAIMED OR ALLOWED, BEING UNPAID, IN VIEW OF SECTIO N 43B(E). 7. WE HAVE HEARD THE PARTIES. THE ASSESSEES ARGUME NT IS UNEXCEPTIONAL. IT WAS, ON QUERY, CLARIFIED BY THE LD. AR THAT NO BREAK-UP OF THE WAIVER HAD BEEN PROVIDED BY IDBI. IF THAT BE SO, THE ENTIRE OUTSTANDING HAVING BEEN C ONSIDERED AS A SINGLE OUTSTANDING SUM, THE VARIOUS COMPONENTS THEREOF, AND RESULTANTLY OF THE AMOUNT PAID, WOULD NEED TO BE ASCERTAINED ON SOME REASONABLE BASIS, AS FOR EXAMPL E PROPORTIONATELY. FROM THE ASSESSEES POINT OF VIEW, IF NO DEDUCTION ON ACCOUN T OF INTEREST (OR LIQUIDATED DAMAGES) 5 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT HAS BEEN CLAIMED OR ALLOWED, WHETHER ON ACCOUNT OF NON-PAYMENT OR OTHERWISE, NO INCOME ON ITS WRITE BACK IN ACCOUNTS ON WAIVER SHAL L ARISE. TO THE EXTENT OF THE AMOUNT ATTRIBUTABLE THERETO, DEDUCTION U/S. 36(1)(III) WOU LD ENSUE WHERE NOT CLAIMED ON ACCRUAL ON ACCOUNT OF APPLICATION OF SECTION 43B(E). THE TR EATMENT ACCORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT WOULD ALSO BE RELEVANT. THIS MATTE R SHALL ALSO, THEREFORE, BE ADJUDICATED BY THE A.O., I.E., ALONG WITH THE ASSESSEES FIRST GROUND BEFORE US AND, ACCORDINGLY, STANDS REMITTED TO HIM FOR THE PURPOSE. WE DECIDE ACCORDIN GLY. 8. THE NEXT GROUND IS IN RESPECT OF LOSS ON FIRE, D ISALLOWED AS CAPITAL EXPENDITURE. THE SAID LOSS, ON VERIFICATION OF DETAILS, WAS FOUN D TO BE ON ACCOUNT OF CAPITAL WORK-IN- PROGRESS (RS.48.40 LACS); WDV OF PLANT AND MACHINER Y (RS.19.50 LACS), BESIDES ON SALE OF A STRUCTURE (RS.149.43 LACS), ARISING ON THE SALE O F STRUCTURE TO ITS SISTER CONCERN, M/S. HARSH EOU ESTATES PVT. LTD. THE SAME WAS DISALLOWED AS BEING CAPITAL IN NATURE. THE LD. CIT(A) CONFIRMED THE LOSS, HOLDING AS UNDER: 6.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, PERU SED THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO DISCUSSED THE CASE W ITH THE A.R. OF THE APPELLANT. DURING APPELLATE PROCEEDINGS, THE APPELL ANT WAS ASKED TO FURNISH THE DETAILS OF INSURANCE CLAIM RECEIVED FROM INSURA NCE COMPANY ALONG WITH INSPECTION REPORT DETAILING THE ASSETS DESTROYED AN D ITS VALUATION. IN RESPONSE, THE ASSESSEE HAS FURNISHED COPY OF SURVEY REPORT WHICH IS MERELY A DRAFT BEING UNSIGNED. NO DETAILS FROM THE INSURAN CE COMPANY REGARDING THE ASSETS DESTROYED AND ITS VALUATION HAVE BEEN PR ODUCED BEFORE ME. ACCORDINGLY, I DO NOT FIND ANY FORCE IN THE CONTENT ION OF THE APPELLANT AND THE TREATMENT OF LOSS AS CAPITAL IN NATURE BY A.O. IS UPHELD. 9. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 9.1 THE MATTER HAS BEEN DECIDED BY THE FIRST APPELL ATE AUTHORITY IN THE ABSENCE OF THE ADEQUATE DETAILS. ON MERITS, WE FIRSTLY OBSERVE THA T THE TOTAL AMOUNT UNDER REFERENCE IS AT RS.2,17,32,987/-, I.E., INCLUDING BOTH THE LOSS ON FIRE AS WELL AS THE LOSS ON SALE OF STRUCTURE. THE TWO WOULD, THEREFORE, NEED TO BE CONSIDERED SEP ARATELY , WHICH HAS NOT BEEN, BOTH FOR WANT OF DETAILS AS WELL AS DUE APPLI CATION. IN FACT, THE TOTAL LOSS CLAIMED IS AT RS.2.67 CRORES (PARA 5.1 OF THE ASSESSMENT ORDER ), SO THAT THE NATURE AND THE QUANTUM OF THE AMOUNT ALREADY ALLOWED IS ALSO NOT CLEAR. 6 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT 9.2 FURTHER, THE ASSESSEE HAS SINCE RECEIVED AN INS URANCE CLAIM AT RS.99,53,155/-, SO THAT THE LOSS ARISING TO THE ASSESSEE ON FIRE WOULD STAND REDUCED TO THAT EXTENT. THE ASSESSEE IS FOLLOWING ACCRUAL METHOD OF ACCOUNTING, WHICH IS EVEN OTHERWISE MANDATORY ON IT, SO THAT THE AMOUNT/S AS CLAIMED OR ANTICIPAT ED TO BE REALIZED AGAINST INSURANCE CONTRACT/S OUGHT TO HAVE BEEN FACTORED BY IT IN ACC OUNTS, AND ONLY THE BALANCE AMOUNT/S CLAIMED AS ITS SHARE OF THE LOSS SUSTAINED. FURTHE R, THE FACT THAT THE SAME (INSURANCE CLAIM) STANDS OFFERED AS INCOME FOR THE SUBSEQUENT YEAR (A.Y. 2009-10), AS STATED BEFORE US, IS TO NO MOMENT INASMUCH AS THE INCOME HAS TO B E ASSESSED FOR EACH YEAR SEPARATELY, AND IT BEING ASSESSED FOR ANOTHER YEAR WOULD NOT OP ERATE TO NOT BRING IT TO TAX IN THE YEAR IN WHICH IT ARISES OR ACCRUES. IN FACT, AS AFORE-SA ID, NO PART OF IT COULD BE SAID TO BE INCOME INASMUCH AS IT ONLY GOES TO REDUCE THE LOSS SUSTAIN ED, WHETHER ON CAPITAL OR REVENUE ACCOUNT, AND WHICH BRINGS US TO THE NEXT PART OF OU R DISCUSSION. FURTHER ON, THE LOSS, APART FROM THAT IN RESPECT OF STOCK-IN-TRADE, ASSESSED BY THE INSURANCE COMPANY AT RS.44,12,907/- (AND AGAINST WH ICH THE ASSESSEE HAS RECEIVED A CLAIM FOR RS.29,04,826/- / PB PGS.263-264), IS IN R ESPECT OF CAPITAL ASSET/S DESTROYED IN FIRE. THE LOSS OF CAPITAL ASSET WOULD BE A CAPITAL EXPENDITURE BY DEFINITION. IN FACT, THE INSURANCE CLAIM RECEIVED AGAINST THE LOSS/DESTRUCTI ON OF A CAPITAL ASSET ITSELF WOULD REVEAL THE DICHOTOMY OR THE INTERNAL INCONSISTENCY IN THE ASSESSEES STAND OF THE IMPUGNED LOSS ON FIRE AS BEING NOT ON CAPITAL ACCOUNT. SIMPLY PUT , THE CAPITAL ASSET/S IS INSURED AGAINST A DEFINED LOSS, AND ON THE SAME BEING SUSTAINED, COMP ENSATED AGAINST. THE SAME, RATHER, BEING ONLY MONEYS PAYABLE, AS DEFINED UNDER EXPLANATION TO SECTION 32(III), WOULD GO TO REDUCE THE WRITTEN DOWN VALUE (WDV) OF THE RELEVANT BLOCK OF ASSETS U/S.43(6)(C). 9.3 FURTHER, THE ASSESSEE ALSO CLAIMS TO HAVE INCUR RED EXPENDITURE TOWARD RESTORING THE ASSETS TO THEIR NORMATIVE STATE, SO THAT THE SAME I S IN THE NATURE OF REPAIRS. IT IS, FIRSTLY, NOT CLEAR AS TO IF THE IMPUGNED LOSS CONTAINS SUCH EXPE NDITURE. FURTHER, IF AND TO THE EXTENT SO, SO THAT THE ASSESSEE HAS INCURRED EXPENDITURE IN RE STORING THE ASSET/S DESTROYED TO ITS NORMATIVE WORKING CONDITION, THE SAID EXPENDITURE, AS REDUCED BY THE INSURANCE CLAIM RECEIVED/RECEIVABLE IN ITS RESPECT, WOULD BE A REVE NUE EXPENDITURE ARISING IN THE NORMAL 7 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT COURSE OF BUSINESS, THOUGH ON ACCOUNT OF AN ABNORMA L EVENT OF A FIRE. THE WDV (OF THE RELEVANT BLOCK OF ASSETS) WOULD STAND TO BE INCREAS ED ONLY WHERE AND TO THE EXTENT THERE IS AN UP-GRADATION ON ACCOUNT OF THE EXPENDITURE INCUR RED BEYOND THE PREVIOUSLY ASSESSED STANDARD OF PERFORMANCE, I.E., IN THE OPERATIONAL C APACITY OR CAPABILITY, INCLUDING AS TO THE UNEXPIRED LIFESPAN OF THE RELEVANT ASSET. THIS IS A N INCREASE IN WDV AND, SIMULTANEOUSLY, REDUCTION THEREIN, COULD ONLY BE ON ACCOUNT AND TO THE EXTENT OF AN INCREASE IN VALUE OF THE CAPITAL STRUCTURE, THE PROFIT MAKING APPARATUS, OR, AS THE CASE MAY BE, AN IMPAIRMENT OR DEPLETION THEREIN. TO THE EXTENT THERE IS NO SUC H INCREASE OR DECREASE, THERE CAN BE NO ADDITION OR REDUCTION IN THE VALUE OF THE RELEVANT BLOCK OF ASSETS. RATHER, THE WDV, BEING STATUTORILY DEFINED, REDUCTION THEREIN COULD ONLY B E ON ACCOUNT OF MONEYS PAYABLE. 9.4 THE LOSS ON THE SALE OF STRUCTURE, AS IT WOULD APPEAR TO US, IS ON A DIFFERENT FOOTING, SO THAT WHERE AND TO THE EXTENT IN RELATION TO A CA PITAL ASSET, FORMING PART OF THE FIRMS CAPITAL STRUCTURE, WOULD BE ON CAPITAL ACCOUNT, EVE N AS STATED BY THE AUTHORITIES BELOW. 9.5 THE MATTER, IN VIEW OF THE FOREGOING, IS LARGEL Y INDETERMINATE. ACCORDINGLY, WE ONLY CONSIDER IT FIT AND PROPER THAT THE MATTER IS RESTORED FOR AFRESH ADJUDICATION TO THE FILE OF THE A.O. PER A SPEAKING ORDER AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY TO STATE ITS CASE. THE A.O. SHALL, IN DOING SO, HAVE R EGARD TO OUR FOREGOING OBSERVATIONS. 10. THE FIFTH AND THE LAST GROUND OF THE APPEAL REL ATES TO THE ASSESSMENT OF INTEREST RECEIVED AT RS.1,48,318/- AS INCOME FROM OTHER SOUR CES, AS AGAINST BUSINESS INCOME RETURNED BY THE ASSESSEE. THE SAME WAS NOT ACCEPTED BY THE REVENUE FOLLOWING THE PRECEDENTS, AS IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS. C IT [1997] 227 ITR 172 (SC) AND SOUTH INDIA SHIPPING CORPN. VS. CIT [1999] 240 ITR 24 (MAD). 11. THE MATTER WAS NOT SPECIFICALLY ARGUED BEFORE U S. WE SHALL NEVERTHELESS DECIDE THE SAME ON THE BASIS OF THE LAW, ADOPTING THE FACTS AS BORNE OUT BY THE MATERIAL ON RECORD, INASMUCH AS THE SAID GROUND WAS NOT SPECIFICALLY ST ATED BY THE LD. AR AS NOT PRESSED. NO MATERIAL HAS BEEN PLACED ON RECORD TO ESTABLISH THA T THE INTEREST EARNED IS ON DEPOSITS THAT OUGHT TO BE NECESSARILY MADE ON ACCOUNT OF BUSINESS EXIGENCIES, SO THAT INTEREST TO THAT 8 ITA NO. 665/MUM/2012 (A.Y. 2008-09) SUDITI INDUSTRIES LTD. VS. ASST. CIT EXTENT STANDS EARNED AS INCIDENT TO THE BUSINESS. I N ITS ABSENCE, THE SAME, AS PER THE SETTLED LAW, WOULD BE ASSESSABLE U/S.56. WE, THEREFORE, FIN D NO INFIRMITY IN THE SAID ASSESSMENT AND, ACCORDINGLY, DECLINE INTERFERENCE. WE DECIDE A CCORDINGLY. 12. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. /- )0 '1 2/) $ 3$ 456 7 8 7. 9 ) $ ) :; ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 05, 2014 SD/- SD/- (VIJAY PAL RAO) (SANJAY AROR A) / JUDICIAL MEMBER / ACCOUNTANT MEMBER & <( MUMBAI; =' DATED : 05.02.2014 .'../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. & >) ( ) / THE CIT(A) 4. & >) / CIT CONCERNED 5. A B ')'C1 , * C1- , & <( / DR, ITAT, MUMBAI 6. B D2 E ( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , & <( / ITAT, MUMBAI