HARSH ESTATES PVT. LTD., MUMBAI V. DY. CIT - CC- 4(3), MUMBAI

ITA 6957/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6419 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL SPECIAL
• Keywords: Rule of consistency; Proportionate interest; Cost of acquisition; Notional interest; TDS; Liquidation
• Section: 143(3); 234B; 14A; 201; 13; 12

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6957/MUM/2018 (ASSESSMENT YEAR 2013-14) ITA NO. 6958/MUM/2018 (ASSESSMENT YEAR 2014-15) ITA NO. 6959/MUM/2018 (ASSESSMENT YEAR 2015-16) HARSH ESTATES PVT. LTD. 32, MADHULI APARTMENT, 3 RD FLOOR, DR. A.B. ROAD, WORLI, MUMBAI-400018. P AN: AAACH3480L VS. DCIT, CC-4(3) ROOM NO. 1921, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. APPELLANT RESPONDENT ITA NO.6765/MUM/2018 (ASSESSMENT YEAR 2013-14) ITA NO. 6766/MUM/2018 (ASSESSMENT YEAR 2014-15) ITA NO. 6767/MUM/2018 (ASSESSMENT YEAR 2015-16) DCIT, CC-4(3) CEN RG. 4 PR.CIT(C) -2, ROOM NO. 1921, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. VS. HARSH ESTATES PVT. LTD. 32, MADHULI APARTMENT, 3 RD FLOOR, DR. A.B. ROAD, WORLI, MUMBAI-400018. P AN: AAACH3480L APPELLANT RESPONDENT APPELLANT BY : SH. DHARMESH SHAH (AR) RESPONDENT BY : DR. P. DANIEL SPECIAL COUNSEL DATE OF HEARING : 15.09.2020 DATE OF PRONOUNCEMEN T : 15.09.2020 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER BENCH; 1. THIS SET OF SIX APPEALS, OUT OF WHICH THREE APPEAL BY ASSESSEE AND THREE APPEAL BY REVENUE ARE DIRECTED AGAINST THE ORDER O F LD. COMMISSIONER OF INCOME TAX (APPEALS)-52 [FOR SHORT THE LD. CIT(A)], MUMBAI DATED ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 2 17.09.2018 FOR ASSESSMENT YEARS 2013-14, 2014-15 AN D 2015-016. IN ALL APPEALS, THE ASSESSEE AS WELL AS REVENUE HAS RAISED THE IDENTICAL GROUNDS OF APPEAL EXCEPT VARIATION OF FIGURES, THEREFORE, ALL THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE DISPOSED OF BY A CONSOLIDAT ED ORDER. FOR APPRECIATION OF FACTS, THE APPEALS FOR A.Y. 2013-14 IS TREATED AS LEAD CASE. THE ASSESSEE IN ITS APPEAL IN ITA NO. 6957/MUM/2018 HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUG HT TO HAVE ALLOWED THE DEDUCTION OF INTEREST EXPENDITURE OF RS. 2,33,38,93 0/- AS FOLLOWS: SR. NO. ENTITIES INTEREST @ 12% PER ANNUM PAYABLE 1. M/S. JYOTI H. MEHTA 4,37,06,074 TOTAL 4,37,06,074 LESS: PROPORTIONATE DISALLOWANCE OF INTEREST U/S. 14A OF THE ACT (-) 2,03,67,144 TOTAL 2,33,38,930 THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT THE APPELLANT WAS ELIGIBLE FOR DEDUCTION AT LEAST TO TH E EXTENT OF RS. 4,07,230/-, BEING THE INCOME EARNED DURING THE YEAR . 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTEREST U/S. 234A, 2348 AND 234C OF THE ACT. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME ASSESSED IN THE HA NDS OF THE APPELLANT WERE SUBJECTED TO THE PROVISIONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX, NO INTEREST CAN BE COMPUTED U/S. 234A, 2348 AND 234C OF THE ACT . 2. THE REVENUE IN ITS CROSS APPEAL HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN CAPITALIZING THE DISALLOWAN CE OF INTEREST U/S. 14A OF THE I.T. ACT, 1961 OF RS. 2,59,98,276/- ONLY RELYING ON THE DECISION OF THE HONBLE ITAT IN ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 3 CASE OF SHRI SUDHIR S. MEHTA IN ITA NO. 5799/MUM/20 14 FOR A.YS. 2009-10 TO A.Y. 2011-12 WHICH HAS ITSELF BEEN CHALLENGED BY THE DEP ARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT. 3. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT ALL THE GROUNDS OF APPEAL RAI SED BY ASSESSEE AS WELL AS BY REVENUE ARE COVERED BY THE DECISIONS OF TRIBUNAL IN ASSESSEES GROUP CASE. 4. FOR GROUND NO. 1, THE LD. AR OF THE ASSESSEE SUBMIT S THAT ASSESSEE IS CLAIMING DEDUCTION OF INTEREST EXPENSES TO THE EXTE NT OF RS. 4,07,230/- BEING THE INCOME EARNED DURING THE YEAR. THE LD. AR OF TH E ASSESSEE SUBMITS THAT THIS ISSUE IS COVERED BY THE DECISION OF TRIBUNAL I N ASSESSEES GROUP CASE IN CASCADE HOLDINGS PVT. LTD. VS. DCIT FOR A.Y. 2012-1 3, 2013-14 & 2015- 16 IN ITA NO. 6965, 6966 & 6968/MUM/2018 DATED 16.0 3.2020 AS WELL AS IN PRATIMA H. MEHTA VS. DCIT IN ITA NO. 5839/MUM/20 18 DATED 27.11.2019 FOR A.Y. 2014-15 AND FURTHER IN CASE OF AATUR HOLDINGS PVT. LTD. VS. DCIT IN ITA NO. 6954 TO 6956/MUM/2018 DATED 13. 03.2020 FOR A.Y. 2013-14 TO 2015-16. THE LD. AR OF THE ASSESSEE ALSO PLACED THE COPY OF ALL THOSE DECISIONS ON RECORD. 5. ON THE OTHER HAND, THE LD. SPECIAL COUNSEL FOR REVE NUE SUBMITS THAT HE RELIED UPON THE ORDER OF ASSESSING OFFICER AND OF LD CIT(A ). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND FIND THAT ON IDENTICAL GROUNDS OF APPEAL IN ASSESSEES GROUP CAS E IN ITA NO. 6954 TO 6956/MUM/2018 FOR A.Y. 2013-14 TO 2015-16, THE CO-O RDINATE BENCH OF TRIBUNAL ON IDENTICAL GROUNDS OF APPEAL PASSED THE FOLLOWING ORDER: ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 4 9. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND PERUSED THE RECORD. WE HAVE NOTED THAT THIS ISSUE HAS REPEATEDLY BEING EXA MINED BY TRIBUNAL IN ASSESSEES GROUP CASES FOR VARIOUS YEARS. WE HAVE NOTED THAT I N GROWMORE LEASING AND INVESTMENT LTD. (SUPRA), THE CASE OF SUDHIR S. MEHT A IN ITA NO. 5799/M/2014 WAS TREATED AS LEAD CASE AND THE TRIBUNAL ON SIMILAR GR OUND OF APPEAL PASSED THE FOLLOWING ORDER: 12. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE HA VE ALSO GONE THROUGH THE CASE LAW AS HAS BEEN CITED BEFORE US THE RELEVANT PROVIS IONS OF THE SPECIAL COURT ACT WHICH HAS BEEN REFERRED TO BEFORE US DURING THE CO URSE OF HEARING. THIS IS AN UNDISPUTED FACT WHICH WE NOTED THAT THE ASSESSEE IS A NOTIFIED PERSON FROM 08.06.1992 UNDER SECTION 3(2) OF THE SPECIAL COURT ACT. AS PER THE PROVISIONS OF THE SPECIAL COURT ACT CONTRACT ENTERED INTO BY A NOTIFIED PERSON PRIOR T O NOTIFICATION MADE UNDER SECTION 3(2) ARE NOT AFFECTED BY THE NOTIFICATION. SECTION 4(1) OF THE SPECIAL COURT ACT EMPOWERS THE CUSTODIAN TO CANCEL ANY CONTRACT OR AGREEMENT ENTERED INTO BETWEEN 01.04.1991 TO 06.06. 1992 IF THE CUSTODIAN FINDS THAT THESE CONTRACTS HAVE BEEN ENTERED INTO FRAUDUL ENTLY OR TO DEFEAT THE PROVISIONS OF THE SPECIAL COURT ACT . IN A.Y. 1990-91, THE AO IN THE ASSESSMENT ORDER P ASSED UNDER SECTION 143(3) DATED 26.03.1993 ALLOWED THE INTEREST EXPENSES TO THE ASSESSEE TO THE EXTENT OF `5,86,404/-. FROM PAGE 75 OF THE PAPER BOOK WHICH CONTAINS THE COMPUTATION OF INCOME FOR A.Y. 1990-91 , WE NOTED THAT THE ASSESSEE HAS DISCLOSED THE LOAN TAKEN FOR THE PURCHASE OF IN VESTMENT. THE ASSESSEE IS CONSISTENTLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNT ING WHICH IS APPARENT EVEN FROM THE ASSESSMENT ORDER OF A.Y. 1990-91 AS WELL A S FROM THE IMPUGNED ASSESSMENT YEAR. THE ORDER FOR A.Y. 1990-91 IN FACT HAS BEEN PASSED BY THE AO AFTER THE DATE OF NOTIFICATION AND THE ENACTMENT OF THE SPECIAL COURT ACT . WE HAVE GONE THROUGH THE ORDER PASSED BY THE CIT(A) IN THE CASE OF SHRI ASHWIN S. MEHTA ASSESSMENT YEARS 2010-11 AND 2011-12, WHERE WE NOTE D THAT THIS ISSUE OF TAXABILITY OF INTEREST INCOME OF THE ASSESSEE AND O THER PARTIES HAS SPECIFICALLY BEEN DEALT WITH BY THE CIT(A) AND ACCORDINGLY INTER EST INCOME OF `10,68,83,732/- WAS BROUGHT TO TAX. IN VIEW OF THIS FACT IT IS APPA RENT THAT THE ASSESSEE IS LIABLE TO ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 5 PAY INTEREST ON THE AMOUNT OUTSTANDING. THEREFORE T HE LIABILITY TOWARDS INTEREST GOT ACCRUED. UNDER THE MERCANTILE SYSTEM OF ACCOUNT ING INTEREST IS DEDUCTIBLE WHEN IT HAS ACCRUED. THIS ALSO PROVES THAT THERE WA S AN AGREEMENT, MAY BE ORAL, TO PAY THE INTEREST ON THE BORROWED FUNDS BY THE AS SESSEE TO THE OTHER FAMILY MEMBERS. WE, THEREFORE, REJECT THE PLEA OF THE LEAR NED D.R. THAT NO LIABILITY TOWARDS GROWMORE LEASING & INVESTMENT LTD. & OTHERS INTEREST HAS ACCRUED BUT IT WAS MERELY A CONTINGENT LIABILITY. WE NOTED THAT SECTION 4 OF THE SPECIAL COURT ACT EMPOWERS THE CUSTODIAN AND THE COURT TO CANCEL ANY CONTRACT OR AGREEMENT IN RELATION TO THE PROPERTY OF A PERSON NOTIFIED UNDER THAT ACT PROVIDED THEY HAVE ENTERED INTO FRAUDULENTLY. IN THIS CASE NO COGENT M ATERIAL OR EVIDENCE HAS BEEN BROUGHT TO OUR KNOWLEDGE OR PLACED BEFORE US WHICH MAY PROVE THAT THE CUSTODIAN UNDER SECTION 4(1) OF THE SPECIAL COURT ACT HAS TAKEN ANY ACTION TO C ANCEL THE TERMS RELATING TO PAYMENT OF INTEREST. RATHER WE HA VE NOTED FROM THE AFFIDAVIT OF THE CUSTODIAN DATED 01.03.2006 IN M.P. NO. 41 OF 19 99 THAT THE CUSTODIAN SEEKING TO LEVY INTEREST @ 15% TO 18% PER ANNUM. THEREFORE THE INTEREST ON OUTSTANDING CREDIT BALANCE OF THE BROKERAGE FIRM HAS ACCRUED AS ACTUAL LIABILITY. THE ISSUE WITH REGARD TO CONTRACT FOR PAYMENT OF INTEREST HAS BEEN RAISED BY THE AO AND THE CIT(A) IN THE CASE OF OTHER NOTIFIED ENTITIES DULY APPROVE THE EXISTENCE OF LIABILITY. WE NOTED THAT IN THE CASE OF GROWMORE LE ASING & FINANCE LTD. FOR A.Y. 2007-08 BY ORDER DATED 26.06.2014 THE CIT(A) FOLLOW ED THE FINDING IN THE CASE OF OTHER GROUP CONCERNS, I.E. EMINENT HOLDING PVT. LTD. BY OBSERVING AS UNDER: - '6.3 I HAVE GONE THROUGH THE SUBMISSIONS OF THE LD. AR. I FIND THAT THOUGH THERE IS NO EXPRESS DOCUMENT EVIDENCING PAYMENT OF INTEREST TO THE BROKERAGE FIRMS, THE INTENTIONS OF THE PARTIES WERE ALWAYS SO, THIS IS E VIDENT FROM THE FACT THAT IDENTICAL CLAIM WAS ALSO MADE DURING A.Y. 1990-91 AND THE SAM E WAS ALLOWED TO THE APPELLANT AND OTHER CONCERNS. THE CLAIM MADE IN THE AFFIDAVIT OF CUSTODIAN IN MP NO. 41 OF 1999 ALSO SUPPORTS THIS CLAIM. I ALSO AGREE WITH TH E APPELLANT THAT THERE NEED NOT BE ANY WRITTEN AGREEMENT AND THAT THE ORAL AGREEMENT C OUPLED WITH THE ACTIONS AND INTENTIONS OF THE PARTIES IS SUFFICIENT TO PROVE TH E EXISTENCE OF THE LIABILITY.' 13. SIMILAR ISSUE WAS INVOLVED IN THE CASE OF OTHER FAMILY MEMBER, I.E. SHRI HITESH S. MEHTA FOR A.Y. 2005-06 WHERE ALSO THE AO HAS DISPUTED THE VERY EXISTENCE OF LIABILITY TOWARDS INTEREST TO CREDITOR S. THE CIT(A) VIDE HIS ORDER DATED 31.08.2010 CONFIRMED AND APPROVED THE CLAIM O F THE ASSESSEE THAT THERE ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 6 WAS NO NEED FOR ANY WRITTEN AGREEMENT AND THAT THE ORAL AGREEMENT COUPLED WITH ACTION AND INTENTIONS OF THE PARTIES IS SUFFICIENT TO PROVE THE EXISTENCE OF LIABILITY. THIS ORDER OF THE CIT(A) WAS FOLLOWED BY HIM IN THE CASE OF THE ASSESSEE WHILE ADJUDICATING THE GROUND RELATING TO THE GROWMORE LE ASING & INVESTMENT LTD. & OTHERS INTEREST EXPENSES FOR A.Y. 2006-07 VIDE ORDE R DATED 27.09.2013 UNDER PARA 6 WHICH HAS BEEN REPRODUCED UNDER PARA 18 OF T HE ORDER OF THE ASSESSEE. THESE FINDING AND OBSERVATION IN THE ABOVE ORDERS O F THE CIT(A) HAS NOT BEEN DISPUTED BY THE REVENUE BY FILING AN APPEAL. IN VIE W OF THIS FINDING BECOMING FINAL, IN OUR VIEW, THE EXISTENCE OF LIABILITY FOR PAYMENT OF INTEREST CANNOT BE DISPUTED. 14. COMING TO THE OBJECTION OF THE REVENUE THAT INT EREST CANNOT BE ALLOWED AS DEDUCTION HAS NOT BEEN SHOWN BY RECIPIENTS IN THEIR INCOME. AS HAS BEEN DISCUSSED BY US IN THE PRECEDING PARAGRAPHS THE INT EREST HAS BEEN SHOWN AS INCOME BY MR. ASHWIN S. MEHTA IN ASSESSMENT YEARS 2 010- 11 AND 2011-12. WE ALSO NOTED THAT LATE SHRI HARSHAD MEHTA HAS BEEN OF FERING HIS INCOME ON CASH BASIS AND THE METHOD OF ACCOUNTING HAS BEEN DULY UP HELD BY THE TRIBUNAL IN HIS CASE FOR A.Y. 1989-90. EVEN OTHERWISE DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE CANNOT BE MADE MERELY BECAUSE IN THE OPINI ON OF THE AO THE CORRESPONDING INTEREST INCOME HAS NOT BEEN OFFERED BY THE RECIPIENTS. THE INTEREST CAN BE ALLOWED ON THE BASIS OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. WE NOTED THAT SIMILAR ISSUE WHEN AROSE IN THE CASE OF M/S. GROWMORE LEASING & INVESTMENT LTD. VS. CIT IN ITA NO. 51354 & 5136/MUM/2012 WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL WHILE SETTING ASI DE THE ISSUE TO THE FILE OF THE CIT(A) DIRECTED HIM TO TAX THE INCOME IN THE HANDS OF RECIPIENT FAMILY MEMBERS IN ACCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWE D BY THEM. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED A.R. THAT SINCE THE A SSESSEE AS WELL AS THE RECIPIENTS ARE NOTIFIED ENTITIES UNDER THE SPECIAL COURT ACT UNLESS THE COURT DIRECTS FOR DISTRIBUTION OF THE ASSETS TOWARDS EXISTING LIABILI TIES UNDER SECTION 11(2) OF THE SPECIAL COURT ACT, THE ASSESSEE CANNOT MAKE THE PAY MENT TO THESE CREDITORS. EVEN OTHERWISE SINCE THE EXISTENCE OF LIABILITY TOWARDS INTEREST HAS ACCRUED ESPECIALLY WHEN THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTE M OF ACCOUNTING THE INTEREST IS TO BE ALLOWED. DURING THE COURSE OF HEARING WE RAIS ED A QUERY ABOUT THE NEXUS OF INTEREST EXPENSES WITH THE INTEREST INCOME. THE LEA RNED A.R. POINTED OUT THAT THE ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 7 LIABILITY IN THE PRESENT CASE WAS ACCRUED ON ACCOUN T OF PURCHASES OF SHARES AND GROWMORE LEASING&INVESTMENT LTD. & OTHERS SECUR ITIES BY THE ASSESSEE WHICH WERE SOLD IN TERMS OF THE DIRECTIONS OF THE H ON'BLE SPECIAL COURT IN SUBSEQUENT YEARS AND THE SALE PROCEEDS SO RECEIVED WERE INVESTED IN TERM DEPOSITS WITH THE BANKS AND ACCORDINGLY THE ASSESSEE HAS CLA IMED INTEREST EXPENDITURE AGAINST THE INTEREST EARNED ON TERM DEPOSITS. NO CO NTRARY EVIDENCES OR MATERIAL WERE BROUGHT TO OUR KNOWLEDGE TO CONTRADICT THIS FA CT. IN VIEW OF THIS FACT WE FIND THAT THERE IS A NEXUS BETWEEN BORROWED FUNDS AND IN VESTMENTS IN TERM DEPOSITS. THEREFORE, THE INTEREST PAID ON THE BORROWED FUNDS HAS TO BE ALLOWED OUT OF THE INTEREST EARNED BY THE ASSESSEE ON TERM DEPOSITS. W E NOTED THAT IDENTICAL ISSUE WAS RAISED IN THE CASE OF M/S. GROWMORE LEASING & I NVESTMENT LTD. IN A.Y. 2007-08. THE CIT(A) IN HIS ORDER DATED 26.02.2012 C ONSIDERED THE ISSUE OF NEXUS OF INTEREST EXPENDITURE WITH INTEREST INCOME, FOLLO WING HIS OWN FINDING IN THE CASE OF ANOTHER NOTIFIED ENTITY, I.E. EMINENT HOLDI NG PVT. LTD. FOR A.Y. 2007-08 WHICH ARE REPRODUCED AS UNDER: - 'AS REGARDS THE NEXUS OF THE INTEREST EXPENDITURE W ITH THE INTEREST INCOME, I FIND THAT THE BALANCE SHEET OF THE APPELLANT AND THE AFF IDAVIT FILED BY THE CUSTODIAN BEFORE THE HON'BLE SPECIAL COURT SUPPORTS THE FACT THAT THE FUNDS BORROWED FROM SHRI HARSHAD S. MEHTA WERE DEPLOYED BY THE APPELLAN T IN VARIOUS ASSETS LIKE SHARES AND SECURITIES, PROPERTIES, ETC. THESE FUNDS GENERA TED INCOME IN THE FORM OF DIVIDEND AND INTEREST INCOME. AFTER BEING NOTIFIED, SUCH SHARES AND SECURITIES GOT CONVERTED INTO FIXED DEPOSITS WITH VARIOUS BANKS. T HESE FIXED DEPOSITS GENERATED INTEREST INCOME WHICH IS OFFERED TO TAX. HENCE, A R EASONABLE NEXUS CAN BE SAID TO EXIST BETWEEN THE INTEREST LIABILITY INCURRED BY TH E APPELLANT, AND THE INTEREST INCOME EARNED FROM THESE ASSETS. HOWEVER, THIS MATT ER BEING SUB-JUDICE BEFORE THE HON'BLE SPECIAL COURT, NO FINDING CAN BE GIVEN ON T HESE MATTERS.' 15. SIMILAR ISSUE HAS ARISEN IN THE CASE OF SHRI HI TESH S. MEHTA FOR A.Y. 2005-06 WHEREIN THE CIT(A) VIDE HIS ORDER DATED 31.08.2010 APPROVED THE NEXUS BETWEEN BORROWED FUNDS AND THE INVESTMENT IN TERM DEPOSIT W HICH HAS BEEN FOLLOWED BY THE CIT(A) EVEN IN THE CASE OF THE ASSESSEE FOR A.Y . 2006-07 DATED 27.09.2013. WE DO NOT AGREE WITH THE SUBMISSION OF THE LEARNED D.R. THAT INTEREST EXPENSES CANNOT BE ALLOWED TILL THE HON'BLE SPECIAL COURT DE CIDE THE ISSUE. THE ALLOWANCE OR DISALLOWANCE OF THE EXPENDITURE DEPENDS ON THE A CCRUAL OF EXPENDITURE. EVEN ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 8 NO DISPUTE HAS BEEN RAISED IN RESPECT OF INTEREST O N SUCH CREDIT BALANCES BEFORE THE GROWMORE LEASING&INVESTMENT LTD. & OTHERS SPECI AL COURT. EVEN ON THIS BASIS, FOLLOWING THE PRINCIPLE OF CONSISTENCY, AS T HE INTEREST HAS BEEN ALLOWED AS DEDUCTION IN THE A.Y. 2006-07 AND THERE IS NO CHANG E IN THE FACTS, THE DEDUCTION IN RESPECT OF THE INTEREST EXPENDITURE HAS TO BE AL LOWED. OUR AFORESAID VIEW IS SUPPORTED BY THE FOLLOWING DECISIONS: THE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG SAOMI BAGH VS. CIT 193 ITR 321 REFERRED TO THE FOLLOWING PASSAGE FROM HOYS TEAD V COMMISSIONER OF TAXATION 1926 AC 155 (PC), WHEREIN IT WAS OBSERVED (PAGE 328): 'PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO N BECAUSE OF NEW VIEW THEY MAY ENTERTAIN OF THE LAW OF THE CASE, OR NEW VERSIONS W HICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHER OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERT AIN CIRCUMSTANCES. IF THIS WERE PERMITTED, LITIGATION WOULD HAVE NO END, EXCEPT WHE N LEGAL INGENUITY IS EXHAUSTED. IT IS A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIRDLY, THE SAME PRINC IPLE, NAMELY, THAT OF SETTING TO REST RIGHTS OF LITIGANTS, APPLIES TO THE CASE WHERE A PO INT, FUNDAMENTAL TO THE DECISION, TAKEN OR ASSUMED BY THE PLAINTIFF AND TRAVERSABLE B Y THE DEFENDANT, HAS NOT BEEN TRAVERSED. IN THAT CASE ALSO A DEFENDANT IS BOUND B Y THE JUDGEMENT, ALTHOUGH IT MAY BE TRUE ENOUGH THAT SUBSEQUENT LIGHT OR INGENUITY M IGHT SUGGEST SOME TRAVERSE WHICH HAD NOT BEEN TAKEN.' AT PG 329 OF THE JUDGEMENT, THEIR LORDSHIPS OBSERVE D AS UNDER: 'WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RE S JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THOUGH THE DIFFERENT ASSESSMENT YEARS HA S BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING GROWMORE LEASING & INVESTMENT LTD. & OT HERS THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE C HANGED IN A SUBSEQUENT YEAR. 19. ON THESE REASONINGS IN THE ABSENCE OF ANY MATER IAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER AND IF THERE WA S NOT CHANGE IT WAS IN SUPPORT OF THE ASSESSES - WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CONTRARY TO ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 9 WHAT HAD BEEN DECIDED BY THE COMMISSION OF INCOME-T AX IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THAT THESE APPEALS SHOULD BE ALLOWED AND THE Q UESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE NAMELY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG WAS ENTITLED TO EXEMPTION UN DER SECTIONS 11 AND 12 OF THE INCOME TAX ACT OF 1961.' THE AFORESAID DICTUM OF LAW WAS REITERATED RECENTLY BY THE SUPREME COURT IN CIT VS. EXCEL INDUSTRIES LTD . : 358 ITR 295. 'IT APPEARS FROM THE RECORD THAT IN SEVERAL ASSESSM ENT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RESPECT OF SOME ASSESSMENT YEARS THE MATTER WAS TAKEN UP IN APPEAL BEFORE THE BOMBAY HIGH COURT BUT WITHOUT ANY SUCCESS. THAT BEING SO, THE REVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER SPEND THE TAX PAYERS MONEY IN PURSUING LITIG ATION FOR THE SAKE OF IT.' 16. IN VIEW OF OUR AFORESAID DISCUSSION WE SET ASID E THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW DEDUCTION IN RESPECT OF SAID INTEREST ACCRUED AND CALCULATED AT 12% PER ANNUM AMOUNTING TO `2,64,72,208/- AFTER DISALLOWING PROPORTIONATE INTEREST IN RESPECT OF THE INVESTMENT IN GROWMORE L EASING & INVESTMENT LTD. & OTHERS SHARES AMOUNTING TO `3,51,176/- AFTER VERIFY ING THE CALCULATION OF THE INTEREST QUANTIFICATION. THE GROWMORE INVESTMENT LTD. IN ITA NO.1219/M/17 WA S ADJUDICATED IN PARA-56 TO 59 IN THE ORDER DATED 27.12.2017 WITH FOLLOWING OBSERVATION. 60. GROUND NO. 1 RELATES TO THE CLAIM OF INTEREST BY THE ASSESSEE AMOUNTING TO `1,43,721/- AFTER DISALLOWING PROPORTIONATE INTERES T AMOUNTING TO `2,12,47,194/- OUT OF INTEREST EARNED BY THE ASSESSEE ON TERM DEPO SITS. BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS ARISEN IN ITA NO. 5799/MUM/2 015 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10 AND WHATEVER VIEW THE TRIBUNAL MAY TAKEN IN THAT CASE THE SAME VIEW MAY BE TAKEN IN THE IMPUGNE D CASE. AFTER HEARING THE RIVAL SUBMISSIONS AND CONSIDERING THE SAME WE NOTED THAT THIS TRIBUNAL WHILE DISPOSING OF THE SAID GROUND ALLOWED CLAIM OF THE A SSESSEE IN RESPECT OF INTEREST EXPENDITURE AFTER PROPORTIONATE DISALLOWANCE. WE, T HEREFORE, RESPECTFULLY ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 10 FOLLOWING OUR FINDING GIVEN IN ITA NO. 5799/MUM/201 5 IN THE CASE OF SHRI SUDHIR S. MEHTA FOR A.Y. 2009-10 ALLOW THE CLAIM OF INTERE ST OF THE ASSESSEE TO THE EXTENT OF `1,43,721/- AFTER PROPORTIONATELY DISALLO WING A SUM OF `2,12,47,194/- AND GIVE SIMILAR DIRECTION TO THE AO AS GIVEN IN IT A NO. 5799/MUM/2015. THUS, GROUND NO. 1 IS ALLOWED. 10. THE AFORESAID ORDER DATED 27.12.2019 WAS FOLLOWED I N ASHWIN S. MEHTA IN ITA NO. 2474/M/2015. FURTHER, IN CASE OF PRATIMA H. MEHTA V /S DCIT IN ITA NO. 5839/M/2018 DATED 27.11.2019, THE CO-ORDINATE BENCH ALLOWED SIMILAR R ELIEF BY PASSING THE FOLLOWING ORDER: 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD FILED ITS RET URN OF INCOME IN THE A.Y.2014- 15 ON 28/07/2015 DECLARING TOTAL LOSS OF RS.2,01,67 ,672/-. THE LD. AO OBSERVED THAT THE ASSESSEE HAD SHOWN INTEREST RECEIPTS OF RS .18,01,778/- ON TERM DEPOSITS OF RS.332.11 LAKHS KEPT WITH ANDHRA BANK, BANK OF BARODA, INDIAN BANK, STATE BANK OF BIKANER & JAIPUR AND UCO BANK. WE FIN D THAT THESE INTEREST RECEIPTS WERE OFFERED TO TAX BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. WE FIND THAT AGAINST THESE INTEREST RECEI PTS, THE ASSESSEE HAD CLAIMED DEDUCTION U/S.57 OF THE ACT TOWARDS INTEREST EXPEND ITURE IN THE SUM OF RS.2,19,69,050/- ON THE AMOUNTS OUTSTANDING TO THE RELATED NOTIFIED BROKER ENTITIES, I.E. M/S.ASHWIN MEHTA AND M/S. J H MEHTA. WE FIND THAT THE LD. AO DISALLOWED THE CLAIM OF DEDUCTION OF INTEREST U/S.5 7 OF THE ACT IN THE SUM OF RS.2,19,69,050/- ON THE GROUND THAT THE SAID LIABIL ITY IS PROVISIONAL AS WELL AS CONTINGENT IN NATURE. THE LD. AO HAD ALSO OBSERVED THAT THE ASSESSEE WAS CLAIMING INTEREST EXPENDITURE ON THE AMOUNT OUTSTAN DING TO THE SAID RELATED NOTIFIED BROKER ENTITIES, HOWEVER, THESE BROKER ENT ITIES WERE NOT CHARGING ON THE OTHER CLIENTS. 7.1. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS NOTI FIED PERSON UNDER THE PROVISIONS OF SPECIAL COURTS (TRIAL OF OFFENCES RELATING TO TR ANSACTIONS IN SECURITIES) ACT, 1992 SINCE 08/06/1992 AND IN VIEW OF THE NOTIFICATI ON ISSUED BY THE HONBLE SPECIAL COURT, THE PROPERTIES OF THE APPLICANTS WER E VESTED WITH THE CUSTODIAN. WE FIND THAT THE ENTIRE ISSUE REVOLVES ON THE POINT OF BORROWED FUNDS BEING DIVERTED FOR NON-BUSINESS PURPOSES BY THE ASSESSEE AND HENCE, CORRESPONDINGLY ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 11 THE INTEREST PAID BY THE ASSESSEE REQUIRES TO BE DI SALLOWED, IN THE OPINION OF THE ASSESSING OFFICER. WE FIND THAT THE LD. AR HAD PLEA DED THAT THE BORROWINGS WERE MADE BY THE ASSESSEE IN THE YEAR 1990 AND INVESTED IN THE SHARES OF VARIOUS COMPANIES. THE INTEREST PAID ON SUCH BORROWINGS WAS ALLOWED AS DEDUCTION FROM TIME TO TIME TO THE ASSESSEE IN THE PAST. THE LD. AR PLEADED THAT THOSE SHARES WERE SOLD IN THE OPEN MARKET AT MUCH HIGHER PRICE IN THE YEAR 2009-10 AND THE SALE PROCEEDS THEREON WERE EITHER KEPT IN T HE FORM OF FIXED DEPOSITS WITH VARIOUS BANKS OR UTILIZED FOR MAKING PAYMENTS TO CERTAIN PARTIES WHO ARE ALSO NOTIFIED ENTITIES. THE LD. AR PLACED ON THE RE CORD THE BALANCE SHEET OF THE ASSESSEE AS ON 31/03/2014 FROM WHICH THE FOLLOWING ITEMS REQUIRE CRUCIAL CONSIDERATION:- LIABILITY SIDE 1. CAPITAL ACCOUNT BALANCE AS ON 31/03/2014 - RS.70 ,22,40,565/- 2. LOAN FROM M/S. ASHWIN S MEHTA - RS.11,58,95,466/ - 3. LOAN FROM M/S. J.H. MEHTA - RS.10,47,41,410/- 4. LOAN FROM MS DEEPIKA A MEHTA - RS. 20,500/- 5. LOAN FROM SHRI HITESH S MEHTA - RS. 15,480/- ASSET SIDE 1. INVESTMENT IN TERM DEPOSITS - RS.3,32,11,643/- 2. PREPAID TAXES A. TDS - RS.6,15,17,832/- B. WEALTH TAX - RS. 1,792/- C. INCOME TAX - RS.29,11,19,135/- D. ADVANCE TAX - RS. 60,66,341/- 3. LOAN TO M/S. HARSHAD S MEHTA - RS.47,37,93,346/- 7.2. FROM THE DETAILS PROVIDED IN THE BALANCE SHEET AS ON 31.3.2013 AND 31.3.2014, WE FIND THAT THE OWN FUNDS OF THE ASSESS EE IN THE FORM OF CAPITAL ACCOUNT BALANCE WAS RS.70,22,40,565/- AS ON 31/03/2 014 AND RS.70,03,89,126/- AS ON 31/03/2013. THE LD. AR PLEADED THAT THE AMOUN TS WERE PAID TO SHRI HARSHAD S MEHTA IN THE SUM OF RS.47,37,93,346/- OUT OF WITHDRAWAL OF FIXED DEPOSITS KEPT WITH VARIOUS BANKS AND AS PER THE DIR ECTIONS OF HONBLE SPECIAL COURT. HENCE, THERE CANNOT BE ANY CHARGING OF INTER EST ON THE SAID LOANS PAID TO ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 12 SHRI HARSHAD S MEHTA BY THE ASSESSEE. WE FIND LOT O F FORCE IN THE SAID ARGUMENT OF THE LD. AR THAT WHEN THE AMOUNTS WERE ADVANCED T O CERTAIN NOTIFIED PERSONS IN ORDER TO COMPLY WITH THE DIRECTIONS OF THE HONB LE SPECIAL COURT WITH SPECIFIC DIRECTIONS FOR UTILISATION OF THOSE FUNDS SUBSEQUEN TLY ALSO, THE ASSESSEE CANNOT BE FASTENED WITH A NOTIONAL INTEREST LIABILITY WHIL E COMPLYING WITH THE SAID DIRECTIONS OF THE HONBLE SPECIAL COURT. MOREOVER, WE ALSO FIND THAT THE PREPAID TAXES PAID BY THE ASSESSEE IN THE FORM OF TDS, WEAL TH TAX, INCOME TAX AND ADVANCE TAX HAS GOT NO RELEVANCE WITH THE BORROWING S OF THE ASSESSEE AS ADMITTEDLY THOSE WERE PAID BY THE ASSESSEE OVER THE YEARS OUT OF THE INCOME EARNED BY THE ASSESSEE IN SEVERAL YEARS AND OUT OF MATURITY PROCEEDS OF FIXED DEPOSITS / SALE PROCEEDS OF SHARES. HENCE, THERE CA NNOT BE ANY ASSUMPTION THAT THE BORROWED FUNDS WERE USED BY THE ASSESSEE FOR MA KING PAYMENTS TOWARDS THE AFORESAID TAXES. THE LD. AR ALSO STATED THAT TH E BORROWINGS MADE BY THE ASSESSEE FROM THE FOUR PARTIES I.E. M/S. ASHWIN S M EHTA, M/S. J.H. MEHTA, MS DEEPIKA A MEHTA AND SHRI HITESH S MEHTA WERE MADE W AY BACK IN 1990 AND NO FRESH BORROWINGS HAD HAPPENED THEREAFTER. HENCE, TH ERE CANNOT BE ANY ALLEGATION THAT THOSE BORROWED FUNDS WERE UTILIZED FOR MAKING PAYMENTS OF TAXES AS DETAILED ABOVE. WE FIND THAT IN ANY CASE, ASSESSEE IS HAVING SUFFICIENT OWN FUNDS IN ITS KITTY AS IS PREVALENT IN THE BALAN CE SHEET AND HENCE, THERE CANNOT BE ANY DISALLOWANCE OF INTEREST ON THAT COUN T ITSELF. RELIANCE IN THIS REGARD IS PLACED ON HONBLE JURISDICTIONAL HIGH COU RT IN CASE OF RELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 (BOM). HENCE , WE DIRECT THE LD. AO TO DELETE THE DISALLOWANCE OF INTEREST IN THE SUM OF R S.2,19,69,050/-. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 11. CONSIDERING THE CONSISTENT DECISION OF THE TRIBUNAL AND RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE INTEREST EXPENSES TO THE ASSESSEE. SO FAR AS OBJECTION OF LD. DR FOR THE REVENUE THAT IN ABSENCE OF WRITTEN CONTRACT, NO INTEREST EXPENSES IS ALLOWABLE, WE HAVE NOTED THAT SIMILAR OBJECTION WAS CONSIDERED BY TRIBUNAL IN EARLIER YEAR AND WAS NOT ACCEPTED. ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 13 12. WE HAVE FURTHER NOTED THAT ON SIMILAR DISALLOWANCE IN ASSESSEES GROUP CASE IN CASCADE HOLDINGS PVT. LTD.(SUPRA) FOR A.Y. 2012-13, 2013-14 & 2015-15 SIMILAR RELIEF WAS ALLOWED TO THE ASSESSEE IN ITA NO. 6965, 6966 & 6968/MUM/2018 DATED 16.03.2020. THE RELEVAN T PART OF THE ORDER IS EXTRACTED AS UNDER; 9. CONSIDERED THE RIVAL SUBMISSION AND MATERIAL PLA CED ON RECORD, WE NOTICE FROM THE RECORDS THAT THE ASSESSEE HAS EARNED INTEREST I NCOME FROM THE DEPOSITS IN BANK. THESE DEPOSITS ARE OUT OF THE BALANCE OF LIQUIDATIN G CERTAIN INVESTMENTS. SINCE THE ASSESSEE IS UNDER THE DIRECT CONTROL OF HON'BLE SPL . COURT AND ALL THE ISSUES ARE PENDING BEFORE THE HON'BLE SPL. COURT. THE PLEA OF THE ASSESSEE IS THAT THERE IS ORAL CONTRACT BETWEEN THE PARTIES TO PAY 12% PER AN NUM AND WHATEVER THE INTEREST INCOME EARNED BY THE ASSESSEE ARE OUT OF THE SURPLU S OF THE LIQUIDATION OF CERTAIN INVESTMENT. THE INVESTMENT AS WELL AS THE FUND MANA GEMENT ARE UNDER THE SUPERVISION OF THE HON'BLE SPL. COURT, ASSESSEE HAS NO ROLE TO PLAY. FROM THE FACTS ON RECORD, PRIMA FACIE, IT APPEARS THAT THERE IS A NEXUS BETWEEN THE BORROWED FUNDS ON WHICH ASSESSEE HAS PAID INTEREST AND THE I NVESTMENT ON WHICH IT HAS EARNED INTEREST INCOME. THEREFORE, THE ASSESSEE SHO ULD GET DEDUCTION OF INTEREST EXPENDITURE TO THE EXTENT OF INTEREST INCOME EARNED OF RS. 3,52,622/-. IT IS RELEVANT TO OBSERVE, IN ASSESSEE'S OWN CASE IN AY 2017-18, T HE AO HIMSELF HAS ALLOWED CLAIM OF DEDUCTION OF INTEREST EXPENDITURE TO THE E XTENT OF INTEREST INCOME EARNED DURING THAT YEAR, IN VIEW OF THE AFORESAID, THE GRO UND IS ALLOWED AS INDICATED ABOVE. 13. CONSIDERING THE CONSISTENT DECISION OF THE TRIBUNAL IN ASSESSEES GROUP CASE ON IDENTICAL GROUNDS OF APPEAL, THE GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. NO CONTRARY FACTS OR LAW IS BROUGHT TO OUR NOTICE TO TAKE OTHER VIEW. 14. GROUND NO.2 & 3 RELATES TO LEVY OF INTEREST UNDER S ECTION 234A, 234B & 234C. THE LD. AR OF THE ASSESSEE SUBMITS THAT THESE GROUNDS OF APPEAL ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 14 ARE ALSO COVERED BY THE DECISION OF TRIBUNAL IN ASS ESSEES GROUP CASE IN AATUR HOLDINGS PVT. LTD. (SUPRA). 15. ON THE OTHER HAND, THE LD. SPECIAL COUNSEL FOR REVE NUE RELIED UPON THE ORDER OF LOWER AUTHORITIES. 16. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND FIND THAT IN ASSESSEES GROUP CASE IN AATUR HOLDINGS PVT. LTD. ( SUPRA) FOR A.Y. 2013- 14, 2014-15 & 2015-16 THE CO-ORDINATE BENCH OF TRIB UNAL BY FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES GROUP CASE IN S UDHIR S. MEHTA IN ITA NO. 5799/MUM/2015, PASSED THE FOLLOWING ORDER: 12. GROUND NO. 2 & 3 RELATES TO LEVY OF COLLECTION OF INTEREST UNDER SECTION 234A, 234B & 234C AND CHARGING OF INTEREST EXCLUDING THE INCOME WHICH IS SUBJECT LA TDS. \X'!E HAVE NOTED THAT ON SIMILAR GROUND OF APP EAL IN ASSESSEE'S GROUP CASE IN ITA NO. 5799/MUM/2015 IN CASE OF SUDHIR S. MEHTA, T HE ISSUE WAS DECIDED THAT INTEREST LEVIED UNDER SECTION 234A, 234B & 234C BE RECOMPUTED AFTER EXCLUDING THE INCOME WHICH IS SUBJECT TO TDS. THEREFORE, CONS IDERING THE DECISION IN ITA NO. 5799/MUM/2015, THE ASSESSING OFFICER IS DIRECTE D TO RE-COMPUTE THE INTEREST ACCORDINGLY, IN THE RESULT, THESE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. 17. CONSIDERING THE CONSISTENT DECISIONS OF TRIBUNAL, T HE ASSESSING OFFICER DIRECTED TO RE-COMPUTE THE INTEREST BY FOLLOWING TH E DECISION OF TRIBUNAL IN ASSESSEES GROUP CASE IN ITA NO. 5799/MUM/2015 I N CASE OF SUDHIR S. MEHTA (SUPRA). 18. IN THE RESULT, THESE GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 6958 & 6959/MUM/2018 FOR A.Y. 2014-15 & 201 5-16 BY ASSESSEE ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 15 19. THE ASSESSEE HAS RAISED THE IDENTICAL GROUNDS OF AP PEAL AS RAISED IN APPEAL FOR A.Y. 2013-14, WHICH WE HAVE ALLOWED BY F OLLOWING THE DECISIONS OF TRIBUNAL IN ASSESSEES GROUP CASE. THE REFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, THESE APPEALS ARE ALSO AL LOWED WITH SIMILAR DIRECTIONS. ITA NO. 6765/MUM/2018 FOR A.Y. 2013-14 BY REVENUE 20. AT THE OUTSET OF HEARING, THE LD. AR OF THE ASSESSE E SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY REVENUE IS COVERED BY T HE DECISION OF TRIBUNAL IN ASSESSEES GROUP CASE IN CASCADE HOLDIN GS PVT. LTD. (SUPRA) FOR A.Y. 2012-13, 2013-14 & 2015-16 IN ITA NO. 6768 , 6769 & 6771/MUM/2018 DATED 16.03.2020. THE LD. AR OF THE A SSESSEE SUBMITS THAT IN ALL ABOVE CASE, THE TRIBUNAL DIRECTED THE A SSESSING OFFICER TO TREAT THE PROPORTIONATE INTEREST EXPENSES DISALLOWED TO T HE PART OF COST OF ACQUISITION OF SHARE AND SECURITIES. 21. ON THE OTHER HAND, THE LD. SPECIAL COUNSEL FOR THE REVENUE RELIED UPON THE ORDER OF ASSESSING OFFICER. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE HAVE NO TED THAT ON IDENTICAL GROUNDS OF APPEAL IN ASSESSEES GROUP CASE IN CASCA DE HOLDINGS PVT. LTD. (SUPRA), THE TRIBUNAL PASSED THE FOLLOWING ORDER: 14. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PAS SED BY REVENUE AUTHORITIES. WE FIND THAT THE IDENTICAL GROUND RAISED IN THE PRESEN T APPEAL HAS ALREADY BEEN ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 16 DECIDED BY THE COORDINATE BENCH OF IT A T IN ITA NO . 5799/MURNL20 15 FOR AY 2009-10 IN SHRI SUDHIR S. MEHTA CASE, WHEREIN THE H ON'BLE ITAT HAS ALLOWED THE GROUND ON MERIT IN FAVOUR OF ASSESSEE. FOR THE SAKE OF CLARITY, WHICH IS REPRODUCED BELOW:- 17. NOW COMING TO THE ADDITIONAL GROUND RAISED WITH RESPECT TO CAPITALIZATION OF INTEREST WE ARE OF THE VIEW THAT TO THE EXTENT THE INTEREST RELATE TO THE INVESTMENT, I.E. BEING DISALLOWABLE U NDER SECTION 57 WILL BECOME PART OF COST OF ACQUISITION OF SHARES AND TH EREFORE THE AO IS DIRECTED TO TAKE IT AS PART OF THE COST OF SHARES F OR DETERMINING PROFIT ON SALE OF THE SHARES. THUS, THE ADDITIONAL GROUND STA NDS ALLOWED TO THAT EXTENT. 15. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH OF ITAT, WHICH IS APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASES, WE ARE INCLINED TO ACCEPT THE FINDINGS OF LD.CIT(A) AND DISMISS THE GR OUND RAISED BY THE REVENUE IN ALL THESE APPEALS. 16. IN THE NET RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED AND ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 23. CONSIDERING THE CONSISTENT DECISION OF TRIBUNAL IN ASSESSEES GROUP CASE, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL R AISED BY REVENUE. NO CONTRARY FACTS OR LAW IS BROUGHT TO OUR NOTICE TO T AKE OTHER VIEW. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 6766 & 6767/MUM/2018 FOR A.Y. 2014-15 & 201 5-16 BY REVENUE 24. WE HAVE NOTED THAT IN BOTH THE YEARS THE REVENUE HA S RAISED THE IDENTICAL GROUNDS OF APPEAL AS RAISED IN APPEAL FOR A.Y. 2013 -14, WHICH WE HAVE DISMISSED, THEREFORE, CONSIDERING THE PRINCIPLE OF CONSISTENCY, THESE APPEALS ARE ALSO DISMISSED WITH SIMILAR OBSERVATION S. ITA NO. 6957 TO 6959 & 6765 TO 6767 MUM 2 018-HARSH ESTATES PVT. LTD. 17 ORDER PRONOUNCED IN OPEN COURT ON 15/09/2020. SD/- SD/ - RAJESH KUMAR PAWAN SINGH ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, DATE: 15 .09.2020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI