ION EXCHANGE (INDIA ) LTD, MUMBAI V. DCIT 6(1), MUMBAI

ITA 710/MUM/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79184 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: K
• Next Hearing Date: 03-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2014
• Court: TRIBUNAL
• Keywords: Business income; Transfer pricing; Principle of natural justice; International transaction; Rule of consistency; Earning of tax free income; Scheme of amalgamation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BE NCH, MUMBAI JH JH JH JH VKJ VKJVKJ VKJ- -- - LH LHLH LH- -- - 'KEKZ 'KEKZ 'KEKZ 'KEKZ] ] ] ] YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ,OA ,OA ,OA ,OA JH JH JH JH FOT; IKY JKO] U;KF;D LNL; FOT; IKY JKO] U;KF;D LNL; FOT; IKY JKO] U;KF;D LNL; FOT; IKY JKO] U;KF;D LNL; DS LE{K DS LE{K DS LE{K DS LE{K BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER VK;DJ VIHY LA[;K / ITA NO.710/MUM/2014 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2009-10 M/S ION EXCHANGE INDIA LTD. ION HOUSE, 4 TH FLOOR, DR. E. MOSES RD. MAHALAXMI MUMBAI 400011 VS. DCIT, CIR. 6(1), MUMBAI ROOM NO. 506, 5 TH FLOOR AAYKAR BHAVAN, M.K. ROAD, MUMBAI 20. PAN:-AAACI1726L APPELLANT RESPONDENT VK;DJ VIHY LA[;K / ITA NO.1330/MUM/2014 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2009-10 DCIT, CIR. 6(1), MUMBAI ROOM NO. 506, 5 TH FLOOR AAYKAR BHAVAN, M.K. ROAD, MUMBAI 20. VS. M/S ION EXCHANGE INDIA LTD. ION HOUSE, 4 TH FLOOR, DR. E. MOSES RD. MAHALAXMI MUMBAI 400011. PAN:-AAACI1726L APPELLANT RESPONDENT ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI PRV RAGHVAN REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI SHRIKANT NAMDEO ORDER PER VIJAY PAL RAO, JM THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDE R DATED 18.12.2013 OF CIT(A) FOR THE A.Y. 2009-10.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL: DATE OF HEARING 3.07.2014 DATE OF PRONOUNCEMENT 3.07.2014 M/S ION EXCHANGE INDIA LTD. 2 | P A G E THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER:- 1 ) PRINCIPLES OF NATURAL JUSTICE AND LACK OF REASONI NG:- (I) THE COMMISSIONER OF INCOME-TAX (APPEALS) 15, MU MBAI (ERRS) / DEPUTY CIT (TP) 1(8), MUMBAI (TPO) HAS ERRED IN LAW AND ON FAC TS IN NOT DISPOSING OFF YOUR APPELLANTS' OBJECTIONS ABOUT NON-MAINTAINABILI TY OF THE REFERENCE PROCEEDINGS INITIATED U/S 92CA OF THE ITA AND NON S ATISFACTION OF THE DEPUTY COMMISSIONER OF INCOME-TAX 6(1), MUMBAI.(AO), VIDE PARAGRAPH XXI AT PAGES 29 - 40 OF THEIR LETTER DATED DEE. 23, 2011, BY WAY OF A SPEAKING ORDER. (II) THE LEARNED CITA HAS ERRED IN LAW AND ON FACTS IN HOLDING AT PARAGRAPH 4.3.I OF HIS APPELLATE ORDER, THAT 'AZTEC SOFTWARE' DECISION IN 107 ITD 141 BANGALORE SB WHICH HAS BEEN AFFIRMED BY THE HON'BLE HIGH COURT 23 TAXMANN.COM 413 IS APPLICABLE IN YOUR APPELLANTS CA SE. (III) THE LEARNED CITA OUGHT TO HAVE FOLLOWED THE R ATIO OF THE BINDING DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACCT VS SHUKLA AND BROS (2010) 30 VST 114 (SC). 2) TRANSFER PRICING ADJUSTMENT :- INTEREST ON LOAN ADVANCES TO AES (I) THE CITA HAS ERRED IN LAW AND ON FACTS, VIDE PA RAGRAPH 5.4 AT PAGES 13 - 15 OF HIS APPELLATE ORDER IN DIRECTING THE AO TO CO NSIDER THE INTEREST ON FOREIGN AES @ LIBOR RATE PLUS 250 BASIS POINT AND / OR LIBOR RATE PLUS 150 BASIS ON POINTS ON THE ADVANCES. (II) THE LEARNED CITA OUGHT TO HAVE FOLLOWED THE RA TIO OF THE DECISION IN THE CASE OF COTTON NATURALS (I) P LTD. VS DCIT (ITAT DE LHI) PUBLISHED IN WWW.ITATONLINE.ORG IN APRIL 05, 2013. 3) DISALLOWANCE U/S 14A - RS.S31,962/- :- (I) THE CITA HAS ERRED IN LAW AND ON FACTS, VIDE PA RAGRAPH 6 AT PAGE NO.15 TO 17 OF HIS APPELLATE ORDER, IN UPHOLDING AO'S CALCUL ATION OF AN AMOUNT OF RS.531,962/- TOWARDS EXPENDITURE INCURRED U/S 14A F OR A DIVIDEND INCOME OF RS.19,89,150/- (II) THE LEARNED CITA OUGHT TO HAVE FOLLOWED THE RA TIO OF THE DECISION IN THE CASE OF DCIT VS ALLIED INVESTMENTS HOUSING P. LD. ( ITAT CHENNAI) PUBLISHED IN ITAT ONLINE IN DECEMBER 2013. (III) WITHOUT PREJUDICE, IT IS SUBMITTED, THAT AT T HE MOST THE AO, IN ORDER TO JUSTIFY A VERY SMALL AND NEGLIGIBLE AMOUNT OF TIME, EFFORT AND EXPENDITURE IS REQUIRED M/S ION EXCHANGE INDIA LTD. 3 | P A G E TO EARN DIVIDEND INCOME, SHOULD HAVE DISALLOWED 0.5 % OF SUCH EXEMPT INCOME. (IV) WITHOUT PREJUDICE, IT IS SUBMITTED, THAT AT TH E MOST THE AO SHOULD HAVE FOLLOWED THE PRECEDENCE OF AY 2007-2008 IN YOUR APP ELLANT'S OWN CASE. (V) IN DOING SO, THE CITA HAS OVERLOOKED THE FACT T HAT THE AO HAD ALREADY DISALLOWED CERTAIN EXPENSES OF INTEREST ON THE SO-C ALLED INVESTMENTS IN SHARES OUT OF BORROWED FUNDS AND, THUS, THIS DISALLOWANCE IS A DOUBLE JEOPARDY. . 4) DISALLOWANCE OF INTEREST FREE ADVANCES TO SUBSID IARY COMPANIES RS.288,350/- / DISALLOWANCE OF INTEREST EXPENDITURE ON INVESTMENT FOR CONTROLLING INTEREST RS. 28,12,827/- :- (I) THE CITA HAS ERRED IN LAW AND ON FACTS IN UPHOL DING, VIDE PARAGRAPH 7 AT PAGE 17 TO 20 OF HIS APPELLATE ORDER, THE DISALLOWA NCE OF RS.288,350/- INCURRED ON INTEREST ON FUNDS BORROWED BY IT, WHICH DO NOT APPEAR TO HAVE BEEN DEPLOYED FOR THE PURPOSES OF THEIR BUSINESS BU T UTILISED FOR LENDING TO YOUR APPELLANTS GROUP COMPANIES AND SUBSIDIARIES. (II) THE CITA HAS ERRED IN LAW AND ON FACTS IN OVER LOOKING YOUR APPELLANTS CONTENTION THAT THE AO HAS EXTENSIVELY DISCUSSED CE RTAIN COURT DECISIONS WITHOUT DISCUSSING THE SAME AT THE TIME OF ASSESSME NT PROCEEDINGS. THE LEARNED CITA HAS NOT DISPOSED OFF THIS GROUND EVEN THOUGH THE SAME IS APPEARING IN HIS APPELLATE ORDER AT PARAGRAPH 7.3 A T PAGE 20. (III) THE LEARNED CITA HAS ERRED IN LAW AND ON FACT S IN UPHOLDING, VIDE PARAGRAPHS 8 AT PAGE NO.21 TO 23 OF HIS APPELLATE O RDER, THE DISALLOWANCE OF RS. 28,12,827/- MADE BY THE AO ON INTEREST EXPENDIT URE BEING CAPITAL IN NATURE ATTRIBUTABLE TO INVESTMENT IN SUBSIDIARIES F OR CONTROLLING INTEREST. (IV) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN OVERLOOKING YOUR APPELLANTS CONTENTION THAT THE AO HAS EXTENSIVELY D ISCUSSED CERTAIN COURT DECISIONS WITHOUT DISCUSSING THE SAME AT THE TIME O F ASSESSMENT PROCEEDINGS. THE LEARNED CITA HAS NOT DISPOSED OFF THIS GROUND E VEN THOUGH THE SAME IS APPEARING IN HIS APPELLATE ORDER AT PARAGRAPH 8.3 A T PAGE 22. (V) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE EVIDENCE OF THE ORDER OF THE HON'BLE BOMBAY HIGH CO URT DATED APRIL 04, 2000, ALONG WITH THE SCHEME OF AMALGAMATION OF HYDRANAUTI CS MEMBRANES INDIA LIMITED AND ION EXCHANGE FINANCE LIMITED WITH YOUR APPELLANTS. (VI) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HE FACT IN THE ABSENCE OF ESTABLISHING ANY CLEAR NEXUS THAT THE BORROWED FUND S WERE USED FOR MAKING THE SAID ADVANCE, IT CANNOT BE SAID THAT THE BORROW ED FUNDS WERE USED FOR MAKING THE SAID ADVANCE. M/S ION EXCHANGE INDIA LTD. 4 | P A G E 5.) ADDITION ON ACCOUNT OF INTEREST ON BORROWED CAP ITAL TOWARDS CAPITAL WORK IN PROGRESS RS.LL,473/- :- (I) THE LEARNED CITA HAS ERRED IN LAW AND ON FACTS, VIDE PARAGRAPH 9 AT PAGE NOS.25 TO 25 OF HIS APPELLATE ORDER, IN UPHOLDING T HE DISALLOWANCE OF RS.L1,473/- TOWARDS INTEREST PAID ON BORROWED FUND TOWARDS CAPITAL WORK IN PROGRESS. (II) THE LEARNED CITA HAS ERRED IN LAW AND ON FACTS , VIDE PARAGRAPH 9.4 AT PAGE NOS.24 TO 25 OF HIS APPELLATE ORDER, IN HOLDIN G THAT HON'BLE SUPREME COURT'S DECISION IN TUTICORIN ALKALI CHEMICALS & FE RTILIZERS LTD. VS CIT (1997) 227 ITR 172 (SC) IS NOT APPLICABLE IN YOUR APPELLAN TS CASE. (III) THE LEARNED CITA HAS NOT DISPOSED OF THE CONT ENTION OF YOUR APPELLANTS EVEN THOUGH THE SAME HAS BEEN RECORDED IN PARAGRAPH 9.3.II OF THE APPELLATE ORDER AT PAGE 24. 6.) GENERAL - THE LEARNED CITA HAS ERRED IN LAW AND ON FACTS, VI DE PARAGRAPH 10 TO 12 AT PAGE NOS 25 TO 27, IN HOLDING THAT:- (I) THE ANOMALY IN MISMATCH OF AIR AND PUTTING THE ONUS ON THE APPELLANTS; AND (II) THE ISSUE REGARDING INITIATION OF PENALTY U/S 271(1)(C) IS PREMATURE. 7.) RELIEF / PRAYER: - IN VIEW OF THE AFORESTATED F ACTUAL AND LEGAL POSITION, WE HUMBLY REQUEST YOUR HONOURS TO- ( I) TO MODIFY THE APPELLATE ORDER OF THE CITA TO THE ABOVE EXTENT; (II) DELETE THE ABOVE MENTIONED DISALLOWANCES MADE BY THE AO IN THE ASSESSMENT ORDER; AND (III) ANY OTHER RELIEF AS YOUR HONOURS MAY DEEM FIT AND APPROPRIATE, MAY PLEASE BE GRANTED. THE REVENUE HAS RAISED SOLITARY GROUND WHICH IS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE RATE OF INTERE ST ON INTEREST FRE LOAN GIVEN TO FOREIGN SUBSIDIARY SHOULD BE CHARGED USING LIBOR RA TE INSTEAD OF AVERAGE YIELD ON CORPORATE BOND TAKEN BY THE TPO 2. GROUND NO. 1 OF THE ASSESSEES APPEAL IS GENERAL IN NATURE AND NO SPECIFIC FINDING OR ADJUDICATION IS REQUIRED. M/S ION EXCHANGE INDIA LTD. 5 | P A G E 3. GROUND NO. 2 OF THE ASSESSEES APPEAL AND SOLITA RY GROUND RAISED BY THE REVENUE ARE COMMON REGARDING THE ARMS LENGTH INTER EST ON INTEREST FREE LOANS GIVEN TO THE AE. 3.1 WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THIS ISSUE IS PERPETUA L IN NATURE, FOR THE A.Y. 2008-09, THE TRIBUNAL CONSIDERED AND ADJUDICATED AN IDENTICAL ISSUE VIDE ORDER DATED 10.02.2014 IN ITA NO 5109/MUM/2014 AND ITA N O. 5334/MUM/2012. WE FURTHER NOTE THAT THE CIT(A) FOR THE A.Y. 2008-09 H AD ALSO DIRECTED THE ASSESSING OFFICER TO TAKE THE ARMS LENGTH INTEREST UP TO THE FIVE YEARS AS LIBOR +150 BASIS POINT AND FOR THE PERIOD OF MORE T HAN FIVE YEARS, THE INTEREST RATE AT LIBOR +250 BASIS POINT. THE AVERAGE LIBOR R ATE WAS TO BE CONSIDERED FOR SIX MONTHS. FOR THE YEAR UNDER CONSIDERATION, S IMILAR DIRECTION HAS BEEN GIVEN BY THE CIT(A). THIS TRIBUNAL FOR THE A.Y. 200 8-09 HAS CONFIRMED THE ORDER OF CIT(A) IN PARA 2.4 AS UNDER:- 2.4 WE HAVE HEARD BOTH PARTIES ON THIS ISSUE AND W E FOUND THAT LD. CIT(A) HAS RIGHTLY HELD THAT ACCORDING TO AFOREMENTIONED M ASTER CIRCULAR ISSUED BY RBI THE ALP OF IMPUGNED INTERNATIONAL TRANSACTIONS SHOULD BE WORKED OUT. WE FOUND THAT SUCH VIEW TAKEN BY LD. CIT(A) HAS BEEN C ONSISTENTLY FOLLOWED BY ITAT AS IS OBSERVED BY LD. CIT(A) IN HIS ORDER. THE REFORE, WE DECLINE TO INTERFERE IN SUCH DIRECTIONS ISSUED BY LD. CIT(A). ACCORDINGLY, THIS GROUND OF THE ASSESSEES APPEAL AS WELL AS DEPARTMENTAL APPEA LS ARE DISMISSED . 3.2 SINCE THE ISSUE IS IDENTICAL, THEREFORE, FOLLOW ING THE RULE OF CONSISTENCY, WE UPHOLD THE ORDER OF CIT(A) QUA THIS ISSUE. CONSE QUENTLY GROUND NO. 2 OF THE ASSESSEES APPEAL AND SOLE GROUND RAISED IN THE REVENUES APPEAL ARE DISMISSED. 4. GROUND NO. 3 IS REGARDING DISALLOWANCE U/S 14A. 4.1 WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT AN IDENTICAL ISSUE HAS M/S ION EXCHANGE INDIA LTD. 6 | P A G E BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASS ESSEES OWN CASE FOR THE A.Y. 2008-09 IN PARA 3.3 AS UNDER:- 3.3 WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTE NTIONS HAVE CAREFULLY BEEN CONSIDERED. FROM THE ORDER OF AO AND LD. CIT(A) WE HAVE FOUND THAT IT WAS THE CONTENTION OF ASSESSEE THAT IT DID NOT INCUR IN TEREST EXPENDITURE FOR THE PURPOSE OF MAKING INVESTMENT OUT OF WHICH THE ASSES SEE HAS EARNED TAX FREE INCOME. SUCH CONTENTION HAS NOT BEEN EXAMINED BY EI THER OF THEM. THEREFORE, TO THE EXTENT IT RELATES TO DISALLOWANCE OF INTERES T WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF AO WITH DIRECT ION TO RE-EXAMINE THE DISALLOWANCE TO THAT EXTENT. SO FAR AS IT RELATES T O ANOTHER COMPONENT WHICH RELATES TO OTHER EXPENSES, WE UPHOLD THE SAME. ACCO RDINGLY, GROUND NO.2 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4.2 THEREFORE, FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL, THE ISSUE OF DISALLOWANCE OF INTEREST EXPENDITURE U/S 14A IS RES TORED TO THE RECORD OF THE ASSESSING OFFICER WITH THE DIRECTION TO RE-EXAMINE THE DISALLOWANCE ON ACCOUNT OF INTEREST EXPENDITURE BY CONSIDERING THE CLAIM OF THE ASSESSEE THAT NO INTEREST BEARING FUND IS USED FOR INVESTMENT IN SHA RES/SECURITIES GIVING RISE TO TAX FREE INCOME. 4.3 AS REGARDS THE OTHER ADMINISTRATIVE EXPENSES, T HE TRIBUNAL FOR THE A.Y. 2008-09 HAS UPHELD THE DISALLOWANCE MADE BY THE AU THORITIES BELOW. ACCORDINGLY FOLLOWING THE ORDER OF THIS TRIBUNAL FO R THE A.Y. 2008-09, WE UPHOLD THE DISALLOWANCE MADE U/S 14A ON ACCOUNT OF ADMINSI TRATIVE EXPENSES. 5. GROUND NO. 4 IS REGARDING DISALLOWANCE OF INTERE ST ON INTEREST FREE ADVANCES GIVEN TO THE SUBSIDIARY COMPANISES. 5.1 WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THIS ISSUE IS ALSO PER PETUAL IN NATURE AND INVOLVED IN THE A.YS 2005-06 TO 2008-09, THE TRIBUNAL WHILE DECIDING THE IDENTICAL ISSUE FOR THE A.Y. 2008-09 HAS NOTICED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED M/S ION EXCHANGE INDIA LTD. 7 | P A G E BY THE TRIBUNAL FOR THE A.Y. 2005-06 AND 2007-08. T HE RELEVANT PART OF THE FINDING OF THE TRIBUNAL FOR THE A.Y. 2008-09 IS IN PARA 4.3 AS UNDER:- 4.3 AFTER HEARING BOTH THE PARTIES, AS IT HAS NOT BEEN POINTED OUT THAT THEREIS ANY DIFFERENCE IN FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE, AND EARLIER YEARS DECIDED BY THE TRIBUNAL, RESPECTFULLY FOLLOWI NG THE AFOREMENTIONED ORDER, WE RESTORE THIS ISSUE TO THE FILE OF AO WITH SIMILA R DIRECTIONS AS HAVE BEEN GIVEN IN RESPECT OF ASSESSMENT YEAR 2005-06 AND 200 7-08. THIS GROUND OF THE ASSESSEE IS TREATED TO BE ALLOWED FOR STATISTICAL P URPOSES. 5.2 FOLLOWING THE ORDER OF THIS TRIBUNAL, WE SET AS IDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER WITH THE SIMILAR DIRECTION S AS HAVE BEEN GIVEN BY THIS TRIBUNAL FOR THE A.Y. 2005-06 AND 2007-08 AND FOLLO WED IN THE A.Y. 2008-09 AS WELL. 6. GROUND NO. 5 IS REGARDING DISALLOWANCE OF INTERE ST ON BORROWED CAPITAL USED FOR WORK IN PROGRESS. 6.1 WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSID ERED BY THIS TRIBUNAL FOR THE A.Y. 2008-09 AND THE TRIBUNAL RESTORED THE ISSU E TO THE RECORD OF THE ASSESSING OFFICER IN PARA 5.3 AS UNDER:- 5.3 WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTE NTIONS HAVE CAREFULLY BEEN CONSIDERED. SINCE WE ARE RESTORING OTHER ISSUES TO THE FILE OF AO, THEREFORE, IN THE INTEREST OF JUSTICE THIS ISSUE IS ALSO RESTORED BACK TO THE FILE OF AO FOR RE- ADJUDICATION WITH A DIRECTION TO GIVE APPROPRIATE O PPORTUNITY TO THE ASSESSEE TO BRING ALL FACTS ON RECORDS. AFTER BRINGING ALL FACT S ON RECORD, THIS ISSUE WILL BE RE-ADJUDICATED BY THE AO AS PER LAW. THIS GROUND IS TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES. 6.2 FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL, W E SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO DECIDE THE SAME AS PER LAW AFTER CONSIDERING ALL THE RELEVANT FACTS AND AFTER PROVID ING AN OPPORTUNITY TO THE ASSESSEE TO BRING ON RECORD THE RELEVANT FACTS. 7. GROUND NO. 6(I) IS REGARDING ADDITION ON ACCOUNT OF MIS-MATCH OF AIR INFORMATION WITH RESPECT TO THE RENTAL INCOME. THE ASSESSING OFFICER HAS MADE M/S ION EXCHANGE INDIA LTD. 8 | P A G E AN ADDITION OF RS. 321552/- TO THE INCOME OF THE AS SESSEE ON THE BASIS OF MIS- MATCH OF AIR INFORMATION/DATA WITH BOOKS OF ACCOUNT S OF THE ASSESSEE. THIS MISMATCH IS REGARDING THE RENTAL INCOME OF THE ASSE SSEE FROM CALCUTTA OFFICE PROPERTY. 7.1 ON APPEAL, CIT(A) HAS CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER ON THE GROUND THAT AN IDENTICAL ISSUE WAS D ECIDED AGAINST THE ASSESSEE FOR THE A.Y. 2008-09 AND THERE IS NO CHANGE IN THE FACTS FOR THE YEAR UNDER CONSIDERATION. 7.2 BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS NOT RECEIVED THE AL LEGED AMOUNT FROM THE TENANT AND, THEREFORE, THE ADDITION MADE BY THE ASS ESSING OFFICER ON THE BASIS OF SOME WRONG INFORMATION IS NOT JUSTIFIED. 7.3 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED TH AT THE ASSESSEE HAS FAILED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS. 3,21,552/- WAS NOT OFFERED TO TAX WHICH SHOWN BY THE TENANT IN THE TDS RECORD. HE HAS FURTHER SUBMITTED THAT EVEN IF THE ASSESSEE HAS NOT RECEIVED THE SAID AMOUNT, THE INCOME HAS TO BE ASSESSED ON ACCRUAL BASIS. 7.4 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE COMPLETE FACTS REGARDING T HIS ISSUE HAVE NOT BEEN BROUGHT ON RECORD BY THE AUTHORITIES BELOW. EVEN TH E ASSESSEE HAS ALSO NOT PRODUCED ANYTHING TO SHOW THAT THE RENTAL INCOME HA S BEEN OFFERED TO TAX ON ACCRUAL BASIS AND FOR THE ENTIRE PERIOD OF TWELVE M ONTHS OF THE PREVIOUS YEAR. IT IS PERTINENT TO MENTION THAT THE RENTAL INCOME OFF ERED AS BUSINESS INCOME HAS TO BE ASSESSED ON ACCRUAL BASIS IRRESPECTIVE OF THE ACTUAL RECEIPT. THEREFORE, IN THE ABSENCE OF RELEVANT FACTS AND RECORDS IT IS NOT POSSIBLE TO GIVE A CONCLUSIVE FINDING ON THIS ISSUE. ACCORDINGLY WE SET ASIDE THI S ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO VERIFY THE RELEVANT FACTS WHET HER THE ASSESSEE HAS OFFERED M/S ION EXCHANGE INDIA LTD. 9 | P A G E RENTAL INCOME FOR THE ENTIRE YEAR ON ACCRUAL BASIS OR NOT AND THEN DECIDE THE ISSUE AS PER LAW. 8. GROUND NO. 6(II) IS REGARDING INITIATION OF PENA LTY PROCEEDINGS. THIS ISSUE IS PREMATURE AND, THEREFORE, DISMISSED. 9. GROUND NO. 7 IS PRAYER WHICH DOES NOT REQUIRE AN Y SPECIFIC FINDING. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE WHEREAS THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 3-7-2014 SD/- SD/- ( R .C.SHARMA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 3-7 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, K BENCH, ITAT, MUMBAI 6. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI