SAURASHTRA FERROUS P.LTD, MUMBAI V. DCIT WD OSD 9(1), MUMBAI

ITA 7196/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75423 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN PRASAD
• Assessee Lawyers: FIROZE B ANDHYARUJIN
• Keywords: Unexplained cash credit; Gift; Transfer pricing; International transaction; Additional evidence; Corroborative evidences; Onus to prove
• Section: 68; 69

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , ' , BEFORE S/SHRI B. R. BASKARAN, AM & AMIT SHUKLA, JM ./ ITA NO. 7196/MUM/2012 ( # # # # # ## # / ASSESSMENT YEAR 2009-10 ) SAURASHTRA FERROUS P LTD C/O M/S KUCHERIA & ASSOCIATES 59 JOLLY MAKER NO.2, NARIMAN POINT MUMBAI / VS. THE DY COMMR OF INCOME TAX WARD OSD 9(1), MUMBAI ./ PAN : AAJCS0160P ( & / APPELLANT APPELLANT APPELLANT APPELLANT) ( '(& / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) & ) / APPELLANT BY : SH FIROZE B ANDHYARUJIN '(& ) / RESPONDENT BY : :: : SH RAJESH RANJAN PRASAD, DR ) + / DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 11 1111 11 TH THTH TH FEB 2014 FEB 2014 FEB 2014 FEB 2014 ) + / DATE OF PRONOUNCEMENT : DATE OF PRONOUNCEMENT : DATE OF PRONOUNCEMENT : DATE OF PRONOUNCEMENT : 14 1414 14 TH THTH TH FEB 2014 FEB 2014 FEB 2014 FEB 2014 / O R D E R PER B.R. BASKARAN, AM: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 3.9.2012 PASSED BY THE LD CIT(A) -19, MUMBAI AND IT RELATES TO THE AY 2009-10. 2 THE ASSESSEE IS CHALLENGING THE DECISION OF THE L D CIT(A) IN CONFIRMING THE ADDITION OF RS. 21.76 CRORES MADE BY THE AO U/S 68 OF THE ACT. SOURASHTRA FERROUS 2 3 THE FACTS RELATING TO THE SAID ISSUE ARE STATED I N BRIEF: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE O F PIG IRON AND CAST IRON ARTICLES. DURING THE COURSE OF SCRUTINY PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION, THE AO NOTICED THAT THE ASSESSEE HAS ISSUED DEBENTURES FOR AN AMOUNT OF RS.21.76 CRORES TO A COMPANY NAMED M/S GR EAT VALLEY P LTD., HAVING ADDRESS AT 308 ST JAMES COURT, PORT LOIUS, MAURITIU S (FOREIGN COMPANY). THE AO ASKED THE ASSESSEE TO FURNISH DETAILS TO PROVE THE SAID CREDIT IN TERMS OF THE PROVISIONS OF SEC. 68 OF THE ACT, I.E. TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CREDITOR. THE AO ALSO ASKED THE ASSESSEE TO FURNISH COPIES OF NECESSARY APPROVAL OBTAINED FROM RESERVE BANK OF IN DIA AND REGISTRAR OF COMPANIES. THE ASSESSEE FURNISHED COPIES OF INCOR PORATION CERTIFICATE OF M/S GREAT VALLEY P LTD, CERTIFICATE OF FOREIGN INWARD R EMITTANCE ISSUED BY HDFC BANK. ON EXAMINATION OF THE DETAILS FILED BY THE ASSESSEE , THE AO TOOK THE VIEW THAT THE ASSESSEE HAS ONLY PROVED THE IDENTITY OF THE CO MPANY AND THE DETAILS OF FLOW OF MONEY THROUGH THE BANKING CHANNELS AND IT HAS FA ILED TO PROVE THE CREDIT WORTHINESS OF M/S GREAT VALLEY P LTD IN TERMS OF SE C.68 OF THE ACT. HENCE, THE AO ADDED THE AMOUNT OF RS.21.76 CRORES TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 3.1 BEFORE THE LD CIT(A) THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCES INCLUDING A CERTIFICATE OBTAINED FROM THE BANK NAME D BARCLAYS BANK PLC. IT IS PERTINENT TO NOTE THAT THE LD CIT(A) DID NOT CONSID ER THE SAID CERTIFICATE AND HE SOURASHTRA FERROUS 3 ALSO DID NOT SEEK COMMENTS FROM THE AO ON THE ADDIT IONAL EVIDENCE FILED BY THE ASSESSEE. THE LD CIT(A) ALSO TOOK THE VIEW THAT TH E ASSESSEE HAS ONLY PROVED THE IDENTITY OF M/S GREEN VALLEY PVT LTD AND ALSO T HE GENUINENESS OF THE TRANSACTION I.E. FLOW OF MONEY THROUGH BANKING CHAN NEL. SINCE THE ASSESSEE DID NOT FURNISH ANY DOCUMENT TO PROVE THE CREDITWORTHIN ESS OF M/S GREAT VALLEY CO P LTD, THE LD CIT(A) AFFORDED AN OPPORTUNITY TO THE A SSESSEE TO FURNISH RELEVANT DOCUMENTS. HOWEVER, THE ASSESSEE DID NOT FILE ANY DOCUMENT AND HENCE THE FIRST APPELLATE AUTHORITY TOOK THE VIEW THAT THE AS SESSEE COULD NOT PROVE THE FINANCIAL CAPACITY OF M/S GREAT VALLEY P LTD TO SUB SCRIBE TO THE DEBENTURES ISSUED BY THE ASSESSEE COMPANY. HENCE BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS P R GAN APATHY &ANR IN CIVIL APPEAL NOS 4654 TO 4655 OF 2007 AND ALSO ON THE FOLLOWING CASE LAWS, THE LD CIT(A) SUSTAINED THE ADDITION MADE BY THE AO: I) KALE KHAN MOHAMMED HANIF V CIT (50 ITR 01) II)GOVINDARAJULU MODALIAR VS CIT (72 ITR 194) III) SREELEKHA BANERJEE VS CIT (1964 AIR 697) IV)AKM GOVINDASWAMY CHATIAR VS ITO 244 ITR 559 AGGRIEVED BY THE DECISION OF THE LD CIT(A), THE ASS ESSEE HAS FILED THIS APPEAL BEFORE US. 4. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE RECEIVED THE DEBENTURE PROCEEDS FROM A FOREIGN COMPANY NAMED M/S GREAT VALLEY P LTD. THROUGH BANKING CHANNELS. HE SUBMITTED THAT, EVEN T HOUGH IT WAS AN SOURASHTRA FERROUS 4 INTERNATIONAL TRANSACTION, THE AO HAS INVOKED THE P ROVISIONS OF SEC. 68 OF THE ACT. REFERRING TO THE FIRST PROVISO INSERTED IN SEC. 68 OF THE ACT, THE LD COUNSEL SUBMITTED THAT THE PROVISIONS OF SEC. 68 IS INTENDE D TO BE APPLIED TO TRANSACTIONS WITH RESIDENTS ONLY. THE LD COUNSEL FURTHER SUBMIT TED THAT, IN SPITE OF THE ABOVE SAID LEGAL POSITION, THE ASSESSEE HAS PROVED THE ID ENTITY OF THE COMPANY BY FURNISHING A COPY OF CERTIFICATE OF INCORPORATION I SSUED BY THE REGISTRAR OF COMPANIES, REPUBLIC OF MAURITIUS. THE LD COUNSEL A LSO INVITED OUR ATTENTION TO THE COPY OF CATEGORY 2 GLOBAL BUSINESS LICENSE IS SUED BY THE REPUBLIC OF MAURITIUS AND ALSO A COPY OF TAX RESIDENCY CERTIFI CATE ISSUED BY THE MAURITIUS REVENUE AUTHORITY AND SUBMITTED THAT BOTH THESE CER TIFICATES ALSO PROVE THE IDENTITY OF THE ASSESSEE. HE SUBMITTED THAT THE GL OBAL BUSINESS LICENSE ENABLES M/S GREAT VALLEY P LTD TO CARRY ON GLOBAL TRANSACTI ONS. THE LD COUNSEL FAIRLY SUBMITTED THAT THE TAX RESIDENCY CERTIFICATE WAS OB TAINED ONLY IN 2011 AND NOT FOR THE YEAR UNDER CONSIDERATION. THE LD COUNSEL A LSO SUBMITTED THAT THE GENUINENESS OF TRANSACTION HAVE ALSO BEEN PROVED, S INCE THE FUNDS WERE TRANSFERRED THROUGH BANKING CHANNELS. IN THIS REGA RD, THE LD COUNSEL TOOK SUPPORT FROM THE CERTIFICATE ISSUED BY THE HDFC BAN K. BESIDES THE ABOVE, THE LD COUNSEL ALSO FURNISHED COPIES OF LETTER WRITTEN BY THE ASSESSEE AS WELL AS THE HDFC BANK TO RBI FOR REPORTING THE IMPUGNED FINANCI AL TRANSACTION. HE FURTHER SUBMITTED THAT THE FOREIGN COMPANY REFERRED ABOVE H AS MADE INVESTMENTS NOT ONLY IN THE ASSESSEE COMPANY, BUT ALSO IN OTHER COM PANIES. SINCE THE ASSESSEE IS RECEIVING FUNDS FROM IT, THE ASSESSEE WAS NOT I N A POSITION TO ENFORCE THE SOURASHTRA FERROUS 5 FOREIGN COMPANY TO FURNISH THE DETAILS OF THEIR BAL ANCE SHEET AND OTHER FINANCIAL INFORMATION. THE LD COUNSEL FURTHER SUBMITTED IT I S THE PREROGATIVE OF THE FOREIGN COMPANY EITHER TO GIVE OR NOT TO GIVE COPIES OF ITS ACCOUNT, SINCE THE ASSESSEE IS IN THE RECEIVING END. THE LD COUNSEL SUBMITTED THA T THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE U/S 68 OF THE ACT FOR THE FOLLOWING SIX REASONS:- (A) THE PROVISIONS OF SEC. 68 OF THE ACT ARE NOT A PPLICABLE TO THE INTERNATIONAL TRANSACTIONS. (B) THE PROVISIONS OF SEC. 68 IS APPLICABLE ONLY TO THE RESIDENT ASSESSEES, WHICH IS EVIDENCED BY THE FIRST PROVISO TO SEC. 68 INSERTED WITH EFFECT FROM 1.4.2013. (C) THE TAX AUTHORITIES HAVE ACCEPTED ABOUT THE ID ENTITY OF THE SUBSCRIBER OF THE DEBENTURES. (D) THE TRANSACTIONS HAVE BEEN CARRIED THROUGH BAN KING CHANNELS. FURTHER THE ASSESSEE HAS REPORTED ABOUT THE RECEIPT OF FUNDS FROM A FOREIGN COMPANY TO RBI AS PER FEMA ACT. HENCE GENUI NENESS OF TRANSACTIONS CANNOT BE DOUBTED. (E) THE CIRCULAR NO.5 (F.NO. 73A/2/69-IT(A-II) DA TED 20-2-1969 ISSUED BY CBDT ON SEC. 68 OF THE ACT SPECIFICALLY STATES T HAT THERE IS NO QUESTION OF A REMITTANCE INTO THE COUNTRY BEING SUBJECTED TO INCOME TAX IN INDIA. IT FURTHER STATES THAT THE QUESTION OF ASSESSMENT TO T AX ARISES ONLY WHEN THERE IS NO EVIDENCE TO SHOW THAT THE AMOUNT, IN QU ESTION, IN FACT REPRESENTS SUCH REMITTANCE. IN THE INSTANCE CASE, THE FOREIGN COMPANY HAS REMITTED MONEY TO THE ASSESSEE FROM ITS BANK AC COUNTS. (F) IF THE TRANSACTION IS PROVED TO BE GENUINE THE N THE CREDIT WORTHINESS OF THE FOREIGN COMPANY SHOULD BE TAKEN AS HAVING BE EN PROVED. SOURASHTRA FERROUS 6 THE LD A.R PLACED RELIANCE ON FOLLOWING CASE LAWS T O SUPPORT HIS PROPOSITIONS. I) SMT SUSILA RAMASAMY VS ACIT 37 SOT 146 (CHENNAI) II) CIT VS M/S PONDY METAL & ROLLING MILL (ITA 788 OF 2006) ORDER DATED 19.2.2007 OF DELHI HIGH COURT III) RASSIAN TECHNOLOGY CENTRE(P) VD DCIT IN ITA NO. 4932 AND OTHERS DELHI/2011 THE LD A.R FURTHER SUBMITTED THAT THE DECISION REND ERED BY THE HONBLE SUPREME COURT IN THE CASE OF P R GANAPATHY (SUPRA) CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE AS THE QUESTION THAT WAS EXAMINED BY THE SUPREME COURT IN THE ABOVE SAID CASE WAS WHETHER THE CLAIM OF RECEIP T OF PURPORTED GIFT WAS A GIFT IN THE LEGAL SENSE. FURTHER, THE ASSESSEE IN THAT CASE DID NOT GIVE ANY EVIDENCE TO SHOW THAT THE ALLEGED DONORS HAD ADEQUA TE FUNDS IN THEIR RESPECTIVE ACCOUNTS TO MAKE THE PURPORTED GIFT(S). THE LD COU NSEL SUBMITTED THAT IN THE INSTANT CASE, THE FOREIGN COMPANY, VIZ., M/S GREAT VALLEY PVT LTD HAS FURNISHED A CERTIFICATE OBTAINED FROM BARCLAYS BANK, WHICH SHOW S THAT THE ASSESSEE HAD SUFFICIENT BALANCE IN ITS ACCOUNT AND THE FUNDS WER E TRANSFERRED TO THE ASSESSEE FROM THE ABOVE SAID BANK ACCOUNT. ACCORDINGLY, THE LD COUNSEL SUBMITTED THAT THE ASSESSEE HAS ALSO DISCHARGED THE PRIMARY BURDEN PLACED UPON IT U/S 68 OF THE ACT. 5. ON THE CONTRARY, THE LD DR PLACED STRONG REL IANCE ON THE ORDER OF THE AO AND THE DECISION OF THE LD CIT(A). THE LD DR FURTHE R SUBMITTED THAT THE PRIMARY RESPONSIBILITY TO PROVE THE CASH CREDITS IS PLACED UPON THE ASSESSEE I.E. THE SOURASHTRA FERROUS 7 ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF THE C REDITORS, CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION. T HE LD DR SUBMITTED THAT THE ASSESSEE HEREIN HAS OBTAINED LOANS IN THE FORM OF D EBENTURES AND HENCE HE IS REQUIRED TO PROVE ALL THE THREE MAIN INGREDIENTS ST ATED ABOVE. HOWEVER, THE ASSESSEE, IN THE INSTANT CASE, HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE COMPANY M/S GREAT VALLEY CO P LTD., EVEN THOUGH AN OPPORTUNITY TO PROVE THE SAME WAS AFFORDED BY THE LD CIT(A) ALSO DURING THE COURSE OF APPELLATE PROCEEDINGS. THE LD DR FURTHER SUBMITTED THAT THE ASSESSEE HAS ONLY FURNISHED COPIES OF FORWARDING LETTERS ADDRESSED TO RESERVE B ANK OF INDIA AND IT DID NOT FURNISH ANY DOCUMENT TO SHOW THAT THE RBI HAS GIVEN ITS APPROVAL TO THE FUNDS RECEIVED BY IT FROM THE MAURITIUS COMPANY. THE LD D R FURTHER SUBMITTED THAT APPROVAL GRANTED BY THE RBI WAS ALSO ONE OF THE ESS ENTIAL DOCUMENTS TO PROVE THE GENUINENESS OF THE LOAN. THE LD DR FURTHER SUBM ITTED THAT THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE O F R P GANAPATHY AND OTHERS (SUPRA) SHALL BE SQUARELY APPLICABLE TO THE INSTANT CASE AND HENCE IT IS THE RESPONSIBILITY OF THE ASSESSEE TO PROVE THE CREDIT WORTHINESS OF THE TRANSACTION. THE LD D.R HAS ALSO PLACED RELIANCE ON THE DECISION OF THE SUPREME COURT IN THE CASE OF A K M GOVINDASWAMY CHETTIAR (SUPRA) TO SUBS TANTIATE ITS CONTENTION THAT THE ASSESSEE IS REQUIRED TO PROVE THE CASH CREDITS EVEN IN THE CASE REMITTANCES RECEIVED FROM ABROAD ALSO. SOURASHTRA FERROUS 8 6. IN THE REJOINDER, THE LD A.R SUBMITTED THAT THE FACTS PREVAILING IN THE CASE OF P.R. GANAPATHY (SUPRA) AND A.K.M. GOVINDASWAMY C HETTIAR (SUPRA) ARE DIFFERENT AND HENCE THOSE DECISIONS CANNOT BE APPLI ED TO THE FACTS OF THE INSTANT CASE. 7. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THE FIRST AND FOREMOST CONTENTIONS OF THE LD A.R WAS THAT THE PROVISIONS OF SEC. 68 CANNOT BE APPLIED TO AN INTERNATIONAL TRANSACTION. IN SUP PORT OF THIS CONTENTION, HE PLACED RELIANCE ON CERTAIN DECISIONS REFERRED SUPRA . WE HAVE CAREFULLY CONSIDERED THOSE DECISIONS. IN THE CASE OF PONDU M ETAL AND ROLLING MILL (SUPRA), THE ISSUE RELATED TO THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE THEREIN. IN THE INSTANT CASE, THE ASSESSEE HAS REC EIVED LOANS IN THE FORM OF DEBENTURES AND HENCE, IN OUR VIEW, THE RATIO OF T HE SAID DECISION CANNOT BE APPLIED TO THE FACTS OF THE INSTANT CASE. IN THE C ASE OF RUSSIAN TECHNOLOGY CENTRE (SUPRA) ALSO, THE ISSUE WAS RELATED TO SHAR E APPLICATION MONEY RECEIVED FROM A FOREIGN PARENT COMPANY. FURTHER PARAGRAPH 8 .3 OF THE ORDER OF THE TRIBUNAL, WHICH IS EXTRACTED BELOW, CLEARLY SHOW TH AT THE ASSESSEE THEREIN HAS ALSO PROVED THE CREDIT WORTHINESS OF THE CONTRIBUTO R OF SHARE APPLICATION MONEY. 8.3 THUS THE ASSESSEE BEFORE ASSESSING OFFICER PROVIDED ALL POSSIBLE INFORMATION WHICH WAS HUMANLY POSSIBLE IN THE MATTE R TO DISCHARGE PRIMARY ONUS CAST BY SEC. 68. THE MONEYS HAVE UNDI SPUTEDLY COME THROUGH BANKING CHANNELS, APPROVALS BY THE HIGHEST INVESTMENT BOARD, I.E., FIPB HAS BEEN SOUGHT BEFORE BRINGING CAPITAL IN THE COUNTRY , ALL STATUTORY COMPLIANCES RELATING TO SHARE CAPITAL REC EIVED FROM FOREIGN COMPANY HAD BEEN DULY MADE AND THE SOURCES OF THE SOURCE HAD ALSO BEEN ESTABLISHED IN AS MUCH AS THE BALANCE SHEET OF RTCHL SOURASHTRA FERROUS 9 CLEARLY SHOWS THAT THE INVESTMENT IN THE ASSESSEE C OMPANY WAS FUNDED OUT OF LOANS FROM SHARE HOLDERS . HOWEVER IN THE INSTANT CASE, THERE WAS NO PRIOR APP ROVAL OF INDIAN GOVERNMENT AUTHORITIES (IF REQUIRED) AND FURTHER THE ASSESSEE HAS MISERABLY FAILED TO PROVE THE SOURCE AVAILABLE WITH M/S GREAT VALLEY CO. PVT LTD, I.E., THE CREDIT WORTHINESS OF THE SAID COMPANY WITH SUPPORTING EVIDENCES. IN FACT, THE SUBMISSION OF THE LD A.R WAS THAT THE ASSESSEE COULD NOT ENFORCE THE ABOVE SAID COMPANY TO FURNISH THE FINANCIAL DETAILS, WHICH APPEARS TO BE VERY STRANGE TO US. HENCE, IN OUR VIEW, THE ASSESSEE CANNOT TAKE SUPPORT OF THIS DECISION ALSO. THE ISSUE CONSIDERED IN THE CASE OF SMT. SUSILA RAMASAMY (SUP RA) WAS ABOUT THE APPLICABILITY OF PROVISIONS OF SEC. 69 OF THE ACT O N AN ASSESSEE, WHO WAS A NON- RESIDENT INDIAN. IN THE INSTANT CASE, WE ARE CONCE RNED WITH THE APPLICABILITY OF THE PROVISIONS OF SEC. 68 TO AN INDIAN ASSESSEE ON THE LOAN RECEIVED BY IT. HENCE, IN OUR VIEW, THE ASSESSEE CANNOT TAKE SUPPOR T OF THE CASE OF SMT. SUSILA RAMASAMY (SUPRA) ALSO. 8. THE DELHI BENCH OF TRIBUNAL, IN THE CASE OF RUSSIAN TECHNOLOGY CENTRE, HAS CONSIDERED THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF FINLAY CORPORATION (84 TTJ 788) AND HAS EXTRACTED CERTAIN OBSERVATION IN PARAGRAPH 11 OF ITS ORDER. IN THE C ASE OF FINLAY CORPORATION, THE DELHI BENCH OF TRIBUNAL, IN PARAGRAPH 12, HAS MADE FOLLOWING OBSERVATIONS:- IT IS THE SETTLED LEGAL POSITION THAT BURDEN IS ON THE REVENUE TO PROVE THAT INCOME OF AN ASSESSEE FALLS WITHIN THE NET OF TAXAT ION. ONCE IT IS SO SOURASHTRA FERROUS 10 PROVED THEN THE BURDEN IS ON THE ASSESSEE TO PROVE THAT SUCH INCOME IS EXEMPT FROM TAXATION. REFERENCE CAN BE MADE TO THE SUPREME COURT JUDGMENT IN THE CASE OF PARIMISETTI SEETHARAMAMMA V S. CIT (1965)(57 ITR 532)(SC). SEC. 52 BEING CHARGING SECTION, THE BURDEN IS ON THE REVENUE TO PROVE THAT THE INCOME OF THE NON-RESIDEN T FALLS WITHIN THE AMBIT OF SUCH SECTION. ON THE OTHER HAND, THE LEGISLATURE HAS CAST THE ONUS ON THE ASSESSEE TO EXPLAIN THE SOURCE OF M ONEY FALLING WITHIN THE AMBIT OF SEC. 68 OR SEC. 69. THESE SECT IONS ARE OF UNIVERSAL APPLICATION AND DO NOT MAKE ANY DISTINCTI ON BETWEEN A RESIDENT OR NON-RESIDENT. THE ABOVE SAID OBSERVATIONS MADE BY THE DELHI BENCH OF TRIBUNAL MAKES IT VERY CLEAR THAT THE ASSESSEE IS REQURIED TO DISCHARGE TH E PRIMARY BURDEN PLACED UPON HIM, EVEN IF THE LOAN WAS RECEIVED FROM A FOREIGN C OMPANY, I.E., EVEN IF IT IS AN INTERNATIONAL TRANSACTION. THE LD A.R ALSO TOOK SU PPORT OF THE FIRST PROVISO TO SECTION 68 OF THE ACT. A PERUSAL OF THE SAID PROVI SO WOULD SHOW THAT IT IS APPLIED IN RESPECT OF SHARE APPLICATION MONEY, SHARE CAPITA L, SHARE PREMIUM OR ANY SUCH SUM BY WHATEVER NAME CALLED, MEANING THEREBY THE SA ID PROVISO IS APPLICABLE ONLY TO RECEIPTS TOWARDS SHARE CAPITAL ONLY BY A CL OSELY HELD COMPANY AND NOT TO LOANS RECEIVED IN THE FORM OF DEBENTURES. THE CIRC ULAR RELIED ON BY THE ASSESSEE (SUPRA) RELATES TO THE PERSONS MIGRATING FROM WEST/ EAST PAKISTAN, BURMA, EAST AFRICAN COUNTRIES AND HENCE THE CONCESSION GIVEN TO THEM LONG BACK AGO, IN OUR VIEW, CANNOT BE TAKEN SUPPORT OF BY THE ASSESSEE IN THE INSTANT CASE. 9. THE FOREGOING DISCUSSIONS WOULD SHOW THAT TH E ASSESSEE IS REQUIRED TO DISCHARGE THE INITIAL BURDEN OF PROOF PLACED UPON H IM U/S 68 OF THE ACT IN RESPECT OF LOAN RECEIVED IN THE FORM OF DEBENTURES EVEN IF IT IS RECEIVED FROM A FOREIGN SOURASHTRA FERROUS 11 COMPANY. HENCE, WE ARE UNANBLE TO ACCEPT WITH THE CONTENTION OF THE ASSESSEE THAT THE CREDIT WORTHINESS SHOULD BE DEEMED TO HAVE BEEN PROVED, IF THE IDENTITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS ARE PROVED. IN OUR VIEW, THE ASSESSEE IS REQUIRED TO PROVE ALL THE THREE MAIN IN GREDIENTS IN RESPECT OF DEBENTURE PROCEEDS RECEIVED FROM M/S GREAT VALLEY P VT. LTD., MAURITIUS. 10. IN THE INSTANT CASE, IT IS A FACT THAT THE ASSESSEE DID NOT FURNISH ANY MATERIAL TO PROVE THE CREDIT WORTHINESS BEFORE THE AO. HOWEVER, BEFORE THE LD CIT(A), THE ASSESSEE HAS FURNISHED A CERTIFICATE OB TAINED FROM M/S BARCLAYS BANK TO THE EFFECT THAT THE FUNDS WERE TRANSFERRED TO TH E ASSESSEE COMPANY FROM OUT OF THE BALANCE AVAILABLE IN A BANK ACCOUNT. IT IS PERTINENT TO NOTE THAT THE SAID CERTIFICATE IS VERY BALD IN NATURE, I.E., IT DID NO T GIVE ANY DETAIL ABOUT THE BANK ACCOUNT, I.E., THE BANK ACCOUNT NUMBER, THE ACCOUNT HOLDER NAME, WHEN THE ACCOUNT WAS OPENED, DETAILS OF DATES AND AMOUNTS OF DEPOSIT IN THE SAID BANK ACCOUNT ETC. BE THAT AS IT MAY, THE FACT REMAINS T HAT THE SAID CERTIFICATE HAS NOT BEEN EXAMINED BY THE LD CIT(A) OR BY THE AO (IN THE REMAND PROCEEDINGS). WHATEVER MAY BE THE WORTH, THE ASSESSEE HAS FURNISH ED A CERTIFICATE OBTAINED FROM M/S BARCLAYS BANK IN ORDER TO PROVE THE CREDIT WORTHINESS OF THE FOREIGN COMPANY, REFERRED ABOVE AND HENCE, IN OUR VIEW, THE TAX AUTHORITIES SHOULD HAVE EXAMINED THE SAME AND THERE AFTER, THEY SHOULD HAVE TAKEN A DECISION. HENCE, IN OUR VIEW, THE ISSUE BEFORE US NEEDS TO BE EXAMIN ED AFRESH AT THE END OF THE ASSESSING OFFICER BY DULY CONSIDERING THE MATERIAL FURNISHED BY THE ASSESSEE TO SOURASHTRA FERROUS 12 PROVE THE CREDIT WORTHINESS. ACCORDINGLY, WE SET A SIDE THE ORDER OF LD CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH T HE DIRECTION TO EXAMINE THE ISSUE AFRESH BY DULY CONSIDERING THE ABOVE SAID CER TIFICATE ISSUED BY THE BANK AND ALSO ANY OTHER MATERIAL OR INFORMATION THAT MAY BE FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANC E WITH THE LAW. 11 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. . #. ) 0) 23 ) ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEB 2014 . ) 8 14TH FEB 2014 ) SD/- SD/- ( AMIT SHUKLA ) ( B R BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 8 DATED 14 TH FEB 2014 . . ./ RAJ RAJRAJ RAJ , SR. PS SOURASHTRA FERROUS 13 ) )) ) ': ': ': ': ;: ;: ;: ;: / COPY OF THE ORDER FORWARDED TO : 1. & / THE APPELLANT 2. '(& / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. : ' , , / DR, ITAT, MUMBAI 6. # / GUARD FILE. / // / BY ORDER, (: ' //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI