M/s Haryana State Industrial & Infrastructure Dev. Corp. Ltd., Panchkula V. ACIT, Panchkula

ITA 733/CHANDI/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6638 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 20-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GULSHAN RAI
• Assessee Lawyers: A K JINDAL; RATTAN KAUR
• Keywords: Capital asset; Business income; Depreciation; Business expenditure; Period of limitation; Tax effect
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS.184 & 185/CHD/2010 (ASSESSMENT YEARS : 2005-06 & 2006-07) ITA NO.966/CHD/2010 (ASSESSMENT YEAR : 2007-08) ITA NO.827/CHD/2011 (ASSESSMENT YEAR : 2008-09) ITA NO.98/CHD/2013 (ASSESSMENT YEAR : 2009-10) ITA NOS.728 & 729/CHD/2010 (ASSESSMENT YEARS : 2010-11 & 2011-12) ITA NO.733/CHD/2014 (ASSESSMENT YEAR : 2012-13) AND ITA NO.791/CHD/2015 (ASSESSMENT YEAR : 2013-14) M/S HARYANA STATE INDUSTRIAL VS. THE ADDL.C.I.T., & INFRASTRUCTURE DEV. CORP. LTD., RANGE PANCHKULA. C: 13-14, SECTOR 6, PANCHKULA. PAN: AAACH 4114 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. JINDAL & MS.RATTAN KAUR RESPONDENT BY : SHRI GULSHAN RAI, CIT DR DATE OF HEARING : 13.09.2017 DATE OF PRONOUNCEMENT : 16.11.2017 ORDER PER ANNAPURNA GUPTA, A.M. : ALL THE ABOVE NINE APPEALS HAVE BEEN FILED BY THE S AME ASSESSEE AGAINST SEPARATE ORDERS OF THE LD. COMMISS IONER OF INCOME TAX (APPEALS), PANCHKULA (HEREINAFTER REFERR ED TO AS (CIT(APPEALS) DATED 30.11.2009, 30.11.2009, 3.5.2 010, 1.7.2011, 7.12.2012, 13.5.2013, 17.5.2013, 25.7.201 4 AND 2 24.8.2015, RELATING TO ASSESSMENT YEARS 2005-06, 2 006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-1 3 AND 2013-14 RESPECTIVELY. IT WAS COMMON GROUND BET WEEN BOTH THE PARTIES THAT THE ISSUES INVOLVED IN ALL TH E APPEALS WAS IDENTICAL. ALL THE APPEALS WERE, THEREFORE, HEA RD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON, CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE WE SHALL BE DEALING WI TH THE FACTS IN THE CASE OF ITA NO.184/CHD/2010 RELATI NG TO ASSESSMENT YEAR 2005-06. ITA NO.184/CHD/2010: 2. GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE REA DS AS UNDER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS. 3,67,81,729/- ON ACCOUN T OF UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UN CALLED FOR. 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE HAD SHOWN AN AMOUNT OF RS.3,67,81,729/- AS LIABILIT Y IN THE BALANCE SHEET WHICH, DURING ASSESSMENT PROCEEDINGS, WAS EXPLAINED AS BEING REFUNDS OF APPLICATION MONEY, S ENT TO UNSUCCESSFUL APPLICANTS OF PLOTS, WHICH WAS RECEIVE D BACK BY THE ASSESSEE CORPORATION DUE TO NON-ACCEPTANCE O F THE SAID REFUNDS BY THE APPLICANTS. THE ASSESSEE CLAIM ED THAT IT WAS IN THE NATURE OF ITS LIABILITY WHICH HAD NOT CEASED TO EXIST, SINCE THE SAID REFUNDS HAD NEITHER BEEN FORF EITED BY THE ASSESSEE CORPORATION, NOR CONSIDERED AS NOT PAY ABLE. THE ASSESSEE FURTHER SUBMITTED THAT THE AMOUNT HAD NOT 3 BEEN WAIVED OFF BY THE APPLICANTS/ALLOTTEES ALSO, B UT THEY WERE IN FACT DISPUTING THE REFUNDS AND CLAIMING THA T THE PLOT BE ALLOTTED TO THEM. THE ASSESSEE, THEREFORE, SUBMITTED THAT THE LIABILITY HAD NOT CEASED TO EXIST AND THUS COULD NOT BE TREATED AS ITS INCOME. THE ASSESSING OFFICER RE JECTED THE ASSESSEES CONTENTION STATING THAT SINCE THE AS SESSEE HAD ALREADY ATTEMPTED TO REFUND THE AMOUNT AND NO C LAIM WAS MADE BY THE PAYER OF THE SAID AMOUNT, THE ASSES SEE HAD BECOME RICHER BY THIS AMOUNT OF UN-CLAIMED MONEY OUTSTANDING IN ITS BALANCE SHEET. THE ASSESSING OF FICER STATED THAT THE SAME TANTAMOUNTED TO INCOME ACCRUIN G TO THE ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS . RELYING UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. T.V. SUNDRAM IYENGAR & SONS LTD. (SC) 222 I TR 344, THE ASSESSING OFFICER HELD THE UN-CLAIMED LIAB ILITY TO BE INCOME, INCLUDIBLE IN THE HANDS OF THE ASSESSEE AND ACCORDINGLY MADE ADDITION OF RS.3,67,81,729/- TO TH E INCOME OF THE ASSESSEE. 4. BEFORE THE LD.CIT(APPEALS) THE ASSESSEE DISTINGU ISHED THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER P OINTING OUT THAT IN THE SAID CASE IT WAS THE SURPLUS REMAIN ING AFTER ISSUANCE OF REFUND WHICH WAS TREATED AS INCOME OF T HE ASSESSEE, WHEREAS IN THE CASE OF THE ASSESSEE THERE WAS NO SUCH SURPLUS REMAINING AND, THEREFORE, THE DECISION OF THE HON'BLE APEX COURT T.V. SUNDRAM IYENGAR & SONS LTD. (SUPRA) DID NOT APPLY IN THE FACTS OF THE PRESENT C ASE. THE ASSESSEE FURTHER REITERATED ITS CONTENTION MADE BEF ORE THE 4 ASSESSING OFFICER THAT THE LIABILITY ON ACCOUNT OF UN-CLAIMED REFUNDS HAD NOT CEASED TO EXIST SINCE THE ALLOTTEES WERE DISPUTING THE NON-ALLOTMENT OF PLOT TO THEM AND IN CASE THE SAME IS DIRECTED TO BE ALLOTTED THE AMOUNT OF APPLI CATION MONEY WOULD REQUIRE TO BE ADJUSTED. THE ASSESSEE A LSO CONTENDED THAT THE REFUNDS WERE ISSUED THROUGH CHEQ UES WHICH WERE VALID FOR A PERIOD OF SIX MONTHS AFTER W HICH THE AMOUNTS WERE TRANSFERRED BY THE ASSESSEE TO UN-CLAI MED LIABILITY WHICH BECOMES BARRED BY LIMITATION ONLY A FTER THE EXPIRY OF THREE YEARS FROM THE DATE OF ISSUE OF CHE QUE. THE ASSESSEE ALSO POINTED OUT THAT THE PROCESS OF REFUN DING THE AMOUNT WAS STILL GOING ON AND THE ASSESSEE HAD REFU NDED AN AMOUNT OF RS.1.86 CRORES DURING THE YEAR AND RS.4.5 9 CRORES IN THE SUBSEQUENT YEARS. THUS THE ASSESSEE POINTED OUT THAT THE SAID AMOUNT WAS A RUNNING ACCOUNT AND COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. THE LD.CIT(APPEALS) REJECTED ALL THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ADDITION MADE BY HOLDING AT PARA 6.2 OF ITS ORDER AS UNDER: 6.2 ON CAREFUL CONSIDERATION OF THE ABOVE FACTS AND ARGUMENTS, IT IS FOUND THAT THE ARGUMENTS OF THE COU NSEL FOR THE APPELLANT ARE DEVOID OF ANY MERIT AND ARE REJECTE D. THE AO HAS RIGHTLY HELD THAT THE APPELLANT'S CASE IS NO T OF CESSION OF LIABILITY U/S 41(1) OF THE I.T.ACT AND THEREFORE THE DECISION OF THE HON'BLE GUJARAT HIGH COURT MENTIONED ABOVE IS N OT APPLICABLE. THE AO HAS RIGHTLY HELD THAT THE APPELLANT 'S CASE IS OF BUSINESS RECEIPTS IN THE ORDINARY COURSE OF BUSI NESS. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. T.V. SUNDERAM LYENGAR IS SQUARELY APPLICABLE. THE AO H AS RIGHTLY HELD THAT THE APPELLANT HAS MADE AN ATTEMPT TO REFUND THE AMOUNT BY SENDING THE CHEQUES TO THE APPLICANT. T HE UNCLAIMED CHEQUES THUS REPRESENT THE BUSINESS RECEIP TS OF THE APPELLANT WHICH ARE CLEARLY TAXABLE. AS REGARDS, THE ARGUMENTS OF THE COUNSEL THAT THE UNCLAIMED LIABILITY ACCOUNT IS A RUNNING ACCOUNT TO WHICH THE UNCLAIMED LIABILITI ES ARE 5 CREDITED AND AMOUNTS REFUNDED ARE DEBITED ALSO DOES NOT HELP HIM SINCE THE APPELLANT CAN CLAIM THE AMOUNTS REFUNDE D OUT OF THIS ACCOUNT AS EXPENDITURE OF THE YEAR IN WHICH RE FUND IS GIVEN. IT IS HELD THAT THE ADDITION OF RS.3,67,81,729/- HAS BEEN RIGHTLY MADE BY THE AO AND THE SAME IS UPHELD. THIS GROUND OF APPEAL IS REJECTED. 5. BEFORE US LD.COUNSEL FOR THE ASSESSEE REITERATE D THE CONTENTIONS MADE BEFORE THE CIT(A),WHILE THE LD.DR RELIED ON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S. THE ISSUE IN THE PRESENT GROUND IS WHETHER UNCLAIMED R EFUNDS OF APPLICATION MONEY OUTSTANDING IN THE BOOKS OF A CCOUNTS OF THE ASSESSEE CAN BE TREATED AS ITS INCOME. 7. THE FACTS WHICH ARE RELEVANT TO THE ISSUE ARE TH AT THE ASSESSEE IN THE REGULAR COURSE OF CARRYING ON ITS B USINESS RECEIVES APPLICATION MONEY FOR ALLOTMENT OF PLOTS. PLOTS ARE ALLOTTED IN SOME CASES ONLY WHILE THE REST OF THE APPLICANTS ARE REFUNDED THEIR MONEY. IN SOME CASES THE REFUND S REMAIN UNCLAIMED BY THE APPLICANTS WHICH THE ASSESS EE REFLECTS AS ITS LIABILITY IN THE BALANCE SHEET. THE ARGUMENT OF THE ASSESSEE FOR DOING SO IS THAT THE UNCLAIMED REFUNDS ARE ITS CONTINUING LIABILITIES SINCE THE SAME SHALL HAVE TO BE REFUNDED WHENEVER ASKED FOR IN THE FUTURE OR WILL H AVE TO BE ADJUSTED AGAINST THE ALLOTMENT OF PLOTS IF DIRECTED BY THE COURTS IN APPEALS FILED BY THE APPLICANTS AGAINST T HE REFUNDS MADE. THE SPECIFIC CONTENTIONS MADE BY THE ASSESSEE IN THIS REGARD, BRIEFLY STATED, ARE AS UND ER: 6 A) THE ASSESSEE HAS NOT FORFEITED THE SAID UNCLAIMED REFUNDS AND ADMITS THE SAME TO BE ITS LIABILITY. B) THE APPLICANTS TO WHOM THE AMOUNT WAS TO BE REFUNDED HAVE NOT WAIVED OFF THEIR CLAIMS. C) THE SAID AMOUNT WAS RUNNING ACCOUNT OF THE ASSESSEE, OUT OF WHICH REFUNDS WERE BEING ISSUED EV EN IN SUBSEQUENT YEARS. D) SOME OF THE APPLICANTS HAD FILED CASES IN COURT S FOR ALLOTMENT OF PLOT AND PENDING DECISION WITH REG ARD TO WHICH THE SAID REFUNDS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE IN ANY CASE. E) THE ASSESSEE HAD NOT TAKEN THE SAID AMOUNT TO IT S PROFIT & LOSS ACCOUNT. F) THE DECISION OF THE HON'BLE APEX COURT T.V. SUNDRAM IYENAR & SONS LTD. (SUPRA) RELIED UPON BY T HE REVENUE IN SUPPORT OF THE ADDITION MADE, WAS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE AS IN T HE SAID CASE IT WAS SURPLUS REMAINING AFTER ISSUANCE O F REFUNDS WHICH WAS TREATED AS INCOME OF THE ASSESSEE WHILE IN THE CASE OF ASSESSEE NO SURPLUS AS SUCH REMAINED AND THE ENTIRE AMOUNT WAS REFUNDABLE. 8. THE LD. COUNSEL FOR THE ASSESSEE, DURING THE COU RSE OF HEARING BEFORE US, ON A NUMBER OF OCCASIONS, WAS AS KED AT BAR TO SUBMIT THE POLICY OF THE ASSESSEE CORPORATIO N WITH 7 REGARD TO FORFEITURE OF THE UNCLAIMED REFUNDS. NO THING WAS FILED OR SUBMITTED BEFORE US AND IT WAS REITERATED THAT ITS LIABILITY TO REFUND THE APPLICATION MONEY NEVER CEA SED TO EXIST. 9. THE REVENUE, ON THE OTHER HAND, HAS CLAIMED THAT THE ENTIRE UNCLAIMED REFUNDS WERE REVENUE RECEIPTS OF T HE ASSESSEE IRRESPECTIVE OF THE PERIOD OF TIME THEY RE MAINED UNCLAIMED. THE REVENUE HAS HEAVILY RELIED UPON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF T .V. SUNDRAM IYENGAR & SONS LTD. (SUPRA) IN SUPPORT OF I TS CONTENTION. THE REVENUE ALSO RELIED UPON THE DECIS ION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHIPSOFT TECHNOLOGY PVT. LTD. 210 TAXMANN.173 IN SUPPORT OF ITS CONTENTION THAT IT WOULD BE ILLOGICAL FOR THE LIABI LITY TO CONTINUE TO EXIST FOREVER WHILE THE ASSESSEE ENJOYS THE BENEFIT OF THE AMOUNT RETAINED BY IT BY WAY OF LIAB ILITY. 10. WE HAVE HEARD BOTH THE PARTIES. WE ARE UNABLE TO COMPLETELY AGREE WITH THE CONTENTIONS OF EITHER OF THE PARTIES. THE REVENUES CONTENTION OF THE REFUNDS B ECOMING THE INCOME OF THE ASSESSEE THE MOMENT IT BECOMES UNCLAIMED BY THE APPLICANT IS NOT ACCEPTABLE. THERE COULD BE A NUMBER OF REASONS FOR THE REFUNDS REMAINING UNCLAIMED. IT COULD BE ON ACCOUNT OF THE APPLICANT S NOT CLAIMING THE SAME SINCE THEY WISH TO DISPUTE AND SE EK ALLOTMENT OF PLOT IN RETURN OR IT COULD BE FOR THE REASON THAT THE REFUNDS DID NOT REACH THE APPLICANTS FOR ANY R EASON OR WAS NOT ENCASHED BY THE APPLICANTS. THEREFORE, THE RE IS 8 ALWAYS THE POSSIBILITY OF THE UNCLAIMED REFUNDS BE ING CLAIMED IN FUTURE OR BEING ADJUSTED BY WAY OF ALLOT MENT OF PLOT, IF DIRECTED BY COURTS. IT CANNOT THEREFORE BE SAID THAT THE MOMENT THE REFUNDS ARE RETURNED AS UNCLAIMED, L IABILITY FOR REFUNDING THE SAME CEASES TO EXIST, AND IT BECO MES THE INCOME OF THE ASSESSEE. AT THIS JUNCTURE, WE MAY A DD THAT THE RELIANCE PLACED BY THE LD. DR ON THE DECISION O F THE HON'BLE APEX COURT IN THE CASE OF T.V. SUNDRAM IYEN GAR & SONS LTD. (SUPRA) IS MISPLACED SINCE THE FACTS AND DISPUTE BEFORE THE HON'BLE APEX COURT IN THAT CASE WAS ENTI RELY DIFFERENT. IN THAT CASE, THE ISSUE WAS VIS--VIS U NCLAIMED SECURITY DEPOSITS OF CUSTOMERS WHICH WAS CREDITED T O THE PROFIT & LOSS ACCOUNT BY THE ASSESSEE. WHILE THE AS SESSEE, IN THE SAID CASE, CLAIMED THAT THE SAID DEPOSITS WE RE CAPITAL IN NATURE AND THEREFORE COULD NOT BE TREATED AS ITS INCOME EVEN ON CESSATION OF LIABILITY TO REPAY, THE REVEN UE CONTENDED THAT THE CHARACTER OF THE INCOME THOUGH ORIGINALLY CAPITAL HAD CHANGED WITH THE EFFLUX OF T IME AND HAD BECOME REVENUE IN NATURE. THE ISSUE, THEREFORE , BEFORE THE HON'BLE COURT WAS WHETHER THE LIABILITY WHICH H AD CEASED TO EXIST WAS CAPITAL OR REVENUE IN NATURE, W HICH THE HON'BLE APEX COURT HELD AGAINST THE ASSESSEE HOLDIN G THAT WITH EFFLUX OF TIME THE NATURE OF THE LIABILITY HAD CHANGED BECOMING REVENUE IN NATURE AND THUS IN THE NATURE O F INCOME OF THE ASSESSEE. IN THE PRESENT CASE, THE I SSUE IS ENTIRELY DIFFERENT. IN THE FIRST PLACE, THE ASSESSE E IN THE PRESENT CASE HAS NOT CLAIMED THAT ITS LIABILITY TO REFUND THE SHARE APPLICATION MONEY HAS CEASED TO EXIST, NOR HA S IT 9 CREDITED THE SAME TO THE PROFIT & LOSS ACCOUNT. THE ISSUE IN THE PRESENT CASE ALSO IS NOT WHETHER THE SAID LI ABILITY IS CAPITAL OR REVENUE IN NATURE. THEREFORE, THE DECIS ION OF THE HON'BLE APEX COURT IN THE CASE OF T.V. SUNDRAM IYEN AR & SONS LTD. (SUPRA) WILL NOT APPLY TO THE FACTS OF TH E PRESENT CASE. 11. THE ASSESSEES CONTENTION THAT ITS LIABILITY TO REFUND DOES NOT CEASE TO EXIST AS IT CONTINUES TO REFLECT IT AS LIABILITY IN THE BALANCE SHEET AND WOULD BE LIABLE TO REFUND THE AMOUNT WHENEVER CLAIMED IN FUTURE OR ADJUST IT AGAINST ALLOTMENT OF ANY PLOT OF LAND, IS ALSO NOT ACCEPTAB LE. THE HON'BLE DELHI HIGH COURT IN CASE CHIPSOFT TECHNOLOG Y PVT. LTD. (SUPRA) HAD AN OCCASION TO DEAL WITH IDENTICAL ISSUE WHEREIN IT HELD THAT THE VIEW THAT THE LIABILITY DO ES NOT CEASE AS LONG AS IT IS REFLECTED IN THE BOOKS AND M ERE LAPSE OF TIME DOES NOT EFFACE THE LIABILITY, IS AN ABSTRA CT AND THEORETICAL VIEW, FAR REMOVED FROM REALITY. THE HO N'BLE COURT HELD THAT IT WOULD BE ILLOGICAL TO HOLD THAT A DEBTOR SHOULD BE GIVEN THE BENEFIT OF HIS SHOWING THE AMOU NT OF LIABILITY EVEN THOUGH HE COULD NOT BE ENTITLED IN L AW TO SAY THAT A CLAIM FOR ITS RECOVERY IS TIME BARRED AND CO NTINUES TO ENJOY SAID AMOUNT. THE RELEVANT FINDINGS AT PARA 9 & 10 OF THE ORDER IN THIS REGARD ARE AS UNDER: TWO ASPECTS ARE TO BE NOTICED IN THIS CONTEXT. THE FIRST IS THAT THE VIEW THAT LIABILITY DOES NOT CEASE AS LON G AS IT IS REFLECTED IN THE BOOKS, AND THAT MERE LAPSE OF THE TIM E GIVEN TO THE CREDITOR OR THE WORKMAN, TO RECOVER THE AMOUNTS D UE, DOES NOT EFFACE THE LIABILITY, THOUGH IT BARS THE REMEDY. THI S VIEW, WITH RESPECT IS AN ABSTRACT AND THEORETICAL ONE, AND DOES NOT GROUND ITSELF IN REALITY. INTERPRETATION OF LAWS, PART ICULARLY FISCAL AND COMMERCIAL LEGISLATION IS INCREASINGLY BASED ON 10 PRAGMATIC REALITIES, WHICH MEANS THAT EVEN THOUGH TH E LAW PERMITS THE DEBTOR TO TAKE ALL DEFENCES, AND SUCCESSFULLY AVOID LIABILITY, FOR ABSTRACT JURISTIC PURPOSES, HE WOULD BE SHOWN AS A DEBTOR. IN OTHER WORDS, WOULD BE ILLOGICAL TO SAY THAT A DEBTOR OR AN EMPLOYER, HOLDING ON TO UNPAID DUES, SHOULD BE GIVEN THE BENEFIT OF HIS SHOWING THE AMOUNT AS A LIABILITY , EVEN THOUGH HE WOULD BE ENTITLED IN LAW TO SAY THAT A CLAIM FOR ITS RECOVERY IS TIME BARRED, AND CONTINUE TO ENJOY THE AMOUN T. THE SECOND REASON WHY THE ASSESSE'S CONTENTION IS UNACC EPTABLE IS BECAUSE WITH EFFECT FROM 1-4-1997 BY VIRTUE OF FINA NCE ACT, 1996 (NO.2), AN EXPLANATION WAS ADDED TO SECTION 41 WHI CH SPELLS OUT THAT 'LOSS OR EXPENDITURE OR SOME BENEFIT I N RESPECT OF ANY SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF' SHALL INCLUDE THE REMISSION OR CESSATION OF A NY LIABILITY BY A UNILATERAL ACT BY THE FIRST MENTIONED PERSON UNDER CLAUSE'. THE EXPRESSION 'INCLUDE' IS SIGNIFICANT; PARLIAMENT DID NOT USE THE EXPRESSION 'MEANS'. NECESS ARILY, EVEN OMISSION TO PAY, OVER A PERIOD OF TIME, AND THE R ESULTANT BENEFIT DERIVED BY THE EMPLOYER/ASSESSE WOULD THEREFO RE QUALIFY AS A CESSATION OF LIABILITY, ALBEIT BY OPERATION OF LAW. 10. THE SUBMISSION OF THE ASSESSE THAT NO PERIOD OF LIMITATION IS PROVIDED FOR UNDER THE INDUSTRIAL DISPUTES ACT, AS A RESULT OF WHICH IT IS EXPOSED TO LIABILITY AT ANY TIME, IS INSUBST ANTIAL AND UNPERSUASIVE. THEREFORE, IT IS NEITHER ACCEPTABLE THAT THE REFUN D BECOMES THE INCOME OF THE ASSESSEE THE MOMENT IT IS UNCLAIMED NOR DOES IT TO CONTINUE TO REMAIN THE LI ABILITY OF THE ASSESSEE FOREVER. THERE HAS TO BE A REASONABLE PERIOD OF LIMITATION BEYOND WHICH THE LIABILITY FOR REFUNDING THE APPLICATION MONEY CANNOT BE SAID TO SUBSIST. 12. DURING THE COURSE OF HEARING BEFORE US, LD. COU NSEL FOR THE ASSESSEE FAIRLY ADMITTED TO A PERIOD OF THREE Y EARS, FROM THE DATE OF ISSUANCE OF CHEQUE, TO BE A REASONABLE PERIOD OF LIMITATION FOR THE LIABILITY TO SUBSIST. WE ALSO FIND THAT EVEN BEFORE THE LD.CIT(APPEALS) THE ASSESSEE HAD CO NTENDED SO, CLAIMING THAT THE REFUND WOULD BECOME BARRED BY LIMITATION AFTER A PERIOD OF THREE YEARS FROM THE D ATE OF ISSUANCE OF CHEQUE OF REFUND. THE LD. COUNSEL FOR THE 11 ASSESSEE AGREED THAT THE LIABILITY SUBSISTING BEYO ND THIS PERIOD BE TREATED AS THE BUSINESS INCOME OF THE ASS ESSEE HAVING BEEN EARNED IN THE ORDINARY COURSE OF BUSINE SS. THE LD. COUNSEL FOR ASSESSEE FURTHER REQUESTED FOR EXCL UDING THE FOLLOWING AMOUNTS FROM THE AFORESTATED UNCLAIMED RE FUNDS BARRED BY LIMITATION : A) REFUNDS AGAINST WHICH CASES HAD BEEN FILED IN COURTS BY THE APPLICANTS SEEKING ALLOTMENT OF PLOTS INSTEAD AND WHICH WERE STILL PENDING FOR ADJUDICATI ON. B) REFUNDS WHICH HAD BEEN SUBSEQUENTLY ADJUSTED BY WAY OF ALLOTMENT OF PLOTS. C) REFUNDS WHICH HAD BEEN SUBSEQUENTLY ADJUSTED BY WAY OF REFUNDS CLAIMED. THE LD. DR AGREED TO THE SAME. 13. IN VIEW OF THE ABOVE THEREFORE, WE HOLD THAT OU T OF THE OUTSTANDING LIABILITY ON ACCOUNT OF UN-CLAIMED REFU ND OF RS.3,67,81,729/-, LIABILITIES WHICH HAVE BEEN OUTST ANDING FOR A PERIOD OF MORE THAN THREE YEARS, AFTER THE IS SUANCE OF CHEQUES OF REFUND, ONLY BE TREATED AS THE INCOME OF THE ASSESSEE SUBJECT TO ADJUSTMENT BEING MADE OUT OF TH EM ON ACCOUNT OF THE FOLLOWING: A) THE REFUNDS AGAINST WHICH CASES, FILED BY THE APPLICANTS FOR ALLOTMENT OF PLOTS, IN COURTS ARE PENDING. B) THE AMOUNTS WHICH HAVE BEEN SUBSEQUENTLY ADJUSTED BY WAY OF ALLOTMENT OF PLOTS. 12 C) THE AMOUNTS WHICH HAVE BEEN SUBSEQUENTLY ADJUSTED BY WAY OF REFUND CLAIMED /ISSUED EVEN AFT ER THE EXPIRY OF THREE YEARS FROM THE DATE THEY BECAME DUE TO THE CLAIMANTS/APPLICANTS. GROUND OF APPEAL NO.1 OF THE ASSESSEE IS, THEREFOR E, DISPOSED OFF IN ABOVE TERMS AND STANDS PARTLY ALLOW ED. 14. GROUND NO.2 (A) & (B) RAISED BY THE ASSESSEE RE ADS AS UNDER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS O F THE CASE IN UPHOLDING AN ADDITION OF RS. 35.46 CRORES ON ACC OUNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIG HLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS. 3.74 CR ORES WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 15. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE WAS INDULGING IN FINANCING ACTIVITIES AND THE ACTIV ITY OF SETTING UP OF INDUSTRIAL ESTATES. DURING ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE R ECEIPTS AND EXPENSES FROM THE ACTIVITY OF SETTING UP OF IND USTRIAL ESTATES, WAS NOT REFLECTED IN THE PROFIT & LOSS ACC OUNT OF THE ASSESSEE. ON BEING CONFRONTED WITH THE SAME THE ASSESSEE CLAIMED THAT THIS WAS ACTIVITY WAS CARRIED OUT ON A NO PROFIT AND NO LOSS BASIS AND IT WAS FOLLOWING CA SH BASIS OF ACCOUNTING FOR THE SAME AND REFLECTING THE SURPLUS/DEFICIT IN THE SAME IN ITS BALANCE SHEET AS CURRENT ASSETS. THE ASSESSING OFFICER DID NOT FIND THIS ME THOD, OF TRANSFERRING THE ENTIRE RECEIPTS FROM INDUSTRIAL AC TIVITY TO THE BALANCE SHEET, AS A CORRECT METHOD OF ACCOUNTIN G. 13 FURTHER HE ACCEPTED THAT THE DIRECT COST COMPONENT RELATING TO THIS ACTIVITY TOWARDS LAND ACQUISITION AND DEVEL OPMENT COULD BE CAPITALIZED, BUT VIS-A-VIS THE INDIRECT CO ST COMPONENT, HE FOUND FROM THE COST SHEETS PREPARED B Y THE ASSESSEE OF CERTAIN INDUSTRIAL AREAS DEVELOPED, THA T THEY COMPRISED 22% OF THE TOTAL COLLECTION. THE ASSESSIN G OFFICER ALSO FOUND THAT THE ACTUAL INDIRECT EXPENSES INCURR ED WERE LESS. HE, THEREFORE, HELD THAT PROFITS WERE EARNED ON THE INDIRECT COST COMPONENT AND CALCULATED THE PROFIT E ARNED DURING THE YEAR ON ACCOUNT OF THE SAME AS UNDER : RECEIPT FOR INDIRECT EXPENSES TOTAL RECOVERIES 273,39,99,927/- RELATABLE TO INDIRECT EXPENSES OR FOR THE PURPOSE OF ADMN CHARGES, INTEREST ETC. (20% OF THE ABOVE) 54,67,99,985/- LESS EXPENSES ALREADY INCURRED IN CAPITAL HEAD OF INDUSTRIAL ESTATES 14,91,69,810/- LESS EXPENSES ALREADY ALLOCATED IN P&L AS RELATABLE TO INDUSTRIAL ESTATES 4,30,42,231/ - SUB TOTAL 19,22,12,041/- ADDITION ON ACCOUNT OF INDIRECT 35,45,87,944 CHARGES RECEIVED THE ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 16. BEFORE THE LD.CIT(APPEALS) THE ASSESSEE MADE DE TAILED SUBMISSIONS REPRODUCED AT PAGES 8 TO 12 OF THE CIT(APPEALS)S ORDER. BRIEFLY STATED, THE ASSESSEE CHALLENGED THE ADDITION MADE FOR THE FOLLOWING REASONS: A) THAT IT HAD CONSISTENTLY BEEN FOLLOWING THIS METHOD IN THE PAST, WHICH HAD BEEN ACCEPTED BY THE 14 DEPARTMENT ALSO AND, THEREFORE, THERE WAS NO REASON TO DISTURB THE SAME. B) CALCULATION OF SURPLUS/INCOME GENERATED FROM THE AFORESAID ACTIVITY BY THE AO WAS FLAWED FOR THE FOLLOWING REASONS: I) THE ASSESSING OFFICER HAD ONLY TAKEN INTO CONSIDERATION THE INDIRECT EXPENSES INCURRED AT HEAD OFFICE AND NOT CONSIDERED THE FIELD OFFICE EXPENSES FOR REDUCING FROM THE CHARGES COLLECTED ON ACCOUNT OF INDIRECT EXPENSES INCURRED ON THE ACTIVITY. II) WHILE INTEREST CHARGES HAD BEEN RECOVERED TO BE PAID OVER A PERIOD OF THREE YEARS, INTEREST HAD BEEN REDUCED FOR ONLY ONE YEAR. III) NONE OF THE PROJECT UNDERTAKEN BY THE ASSESSEE WERE COMPLETE. THEREFORE, NO PROFIT OR LOSS COULD BE COMPUTED AND IN ANY CASE, NO SURPLUS WAS GENERATED SINCE THE SAME, IF ANY, WAS UTILIZED TOWARDS THE MAINTENANCE OF THE PROJECTS. IV) THE SURPLUS, IF ANY, GENERATED WAS USED TO MEET EXTRA EXPENSES OF THE ASSESSEE. THE LD.CIT(APPEALS) REJECTED ALL THE CONTENTIONS O F THE ASSESSEE STATING THAT: A) THE ASSESSEE HAD NOT PROVED THAT IT WAS OPERATIN G ON NO PROFIT NO LOSS BASIS AND THOUGH THE SAME MAY BE THE OBJECT OF THE ASSESSEE BUT INCOME STILL HAD TO BE COMPUTED ON THE BASIS OF ACTUAL STATE OF AFFAIRS AN D AS DIRECTED BY LAW. B) EXTRA EXPENSES INCURRED BY THE ASSESSEE WERE NOT IN THE NATURE OF ITS BUSINESS ACTIVITY BUT WERE ACT UALLY ON ACCOUNT OF CARRYING OUT THE DUTY OF THE STATE GOVERNMENT AND, THEREFORE, NOT ALLOWABLE. 15 C) SINCE THE ASSESSEE HAD NOT SUBMITTED ACTUAL CALCULATION OF RECEIPT AND EXPENSES AFTER TAKING IN TO ACCOUNT ALL ACTIVITIES, THE PLEA OF FLAW IN CALCULA TION WAS REJECTED. D) THAT CONSISTENCY COULD BE DISTURBED IF WARRANTE D BY THE FACTS OF THE CASE. 17. BEFORE US LD. COUNSEL FOR ASSESSEE RELIED ON TH E SUBMISSIONS MADE BEFORE THE CIT(A).LD COUNSEL FOR T HE ASSESSEE ALSO RAISED AN ALTERNATE PLEA THAT THE ASS ESSEE HAD CHANGED ITS METHOD OF ACCOUNTING INCOME FROM THIS A CTIVITY TO MERCANTILE METHOD FROM THE FINANCIAL YEAR 2013-1 4, RELEVANT TO ASSESSMENT YEAR 2014-15, IN ORDER TO C OMPLY WITH THE PROVISIONS OF THE COMPANIES ACT, AND THE I NCOME FROM THIS ACTIVITY, FOR THE PERIOD SINCE INCEPTION TILL 31-03- 2014, HAD BEEN COMPUTED AS PER THIS METHOD AND INCL UDED IN THE PROFIT AND LOSS ACCOUNT OF THAT YEAR. LD.COU NSEL FOR THE ASSESSEE THEREFORE STATED THAT SINCE THE INCOME FOR THE IMPUGNED YEAR HAD ALREADY BEEN INCLUDED IN A.Y 2014 -15 AND TAXES PAID THEREON THERE WAS NO REASON TO TAX T HE SAME IN THE IMPUGNED YEAR. 18. LD.DR ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A). 19. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES. THE ADDITION MADE IN THE PRESENT CASE RELATES TO PROFITS EARNED FROM INDUSTRIAL ESTATE DEVELOPMEN T ACTIVITY, WHICH THE ASSESSEE CLAIMED WAS BEING CARR IED OUT ON A NO LOSS NO PROFIT BASIS, ACCOUNTED FOR ON CASH BASIS AND SURPLUS OR DEFICIT IN THE RECEIPT OVER EXPENSES REFLECTED 16 IN THE BALANCE SHEET, WHILE THE REVENUE NEGATED TH IS CONTENTION STATING THAT PROFIT WAS ACTUALLY EARNED BY THE ASSESSEE, FROM THE INDIRECT COST COMPONENT RECOVER ED ON ACCOUNT OF THE SAID ACTIVITY ,WHICH WAS THUS LIABLE TO BE TAXED. 20. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS F OLLOWING THE CASH BASIS FOR ACCOUNTING ITS INCOME FROM INDUS TRIAL ESTATE DEVELOPMENT AND REFLECTING THE DIFFERENCE BE TWEEN THE RECEIPTS AND EXPENDITURE ON THIS ACCOUNT IN ITS BALANCE SHEET. THE REVENUE, WE FIND, HAS NOT OBJECTED TO T HE METHOD OF ACCOUNTING, I.E. CASH BASIS, FOLLOWED BY THE ASSESSEE. ITS ONLY CONTENTION IS THAT THE ASSESSEE EARNS SURPLUS ON ACCOUNT OF THE SAME WHICH SHOULD BE BR OUGHT TO TAX, THUS REJECTING ASSESSEES CLAIM THAT NO PRO FIT OR LOSS WAS DERIVED FROM IT. AS FAR AS THIS ACT OF THE REVENUE IS CONCERNED, OF REJECTING ASSESSEES CLAIM OF OPERATING ON A NO PRO FIT NO LOSS BASIS, WE FIND NO INFIRMITY IN THE SAME, FOR THE RE ASON THAT AS RIGHTLY POINTED OUT BY THE CIT(APPEALS), THE AS SESSEE HAS NOT SUBSTANTIATED ITS CLAIM OF OPERATING ON NO PROFIT NO LOSS BASIS, EITHER BEFORE THE LOWER AUTHORITIES OR EVEN BEFORE US. NO BASIS FOR THIS CLAIM WAS DEMONSTRATED BEFORE US, BY THE LD.COUNSEL FOR THE ASSESSEE. FURTHER, WE ARE AL SO IN AGREEMENT WITH THE LD.CIT(APPEALS) THAT OPERATING O F NO PROFIT NO LOSS BASIS MAY BE THE OBJECTIVE OF THE AS SESSEE BUT THE INCOME OF THE ASSESSEE HAS TO BE DETERMINED ON THE BASIS OF ACTUAL STATE OF AFFAIRS AND AS PER THE INC OME TAX 17 ACT. THE CLAIM OF THE ASSESSEE, WE FIND, IS FURTHE R NEGATED BY THE CONTENTION RAISED BEFORE US DURING THE COURS E OF ARGUMENTS MADE, THAT ALL THE PROFITS AND LOSSES PER TAINING TO THE ACTIVITY FOR THE IMPUGNED YEAR HAD BEEN ACCO UNTED FOR IN ASSESSMENT YEAR 2014-15. A CERTIFICATE TO T HIS EFFECT WAS ALSO FILED BEFORE US. THEREFORE, TO THE EXTENT THAT THE PROFIT AND LOSS ON THE ACCEPTED CASH BASIS OF ACCOU NTING IS TO BE DETERMINED AND CHARGED TO TAX, WE UPHOLD THE FINDINGS OF THE LD.CIT(APPEALS) THAT THE SURPLUS SHOULD BE A CTUALLY CALCULATED AND CHARGED TO TAX FOR THE IMPUGNED YEAR . BUT AT THE SAME TIME, CONSIDERING THE CONTENTIONS OF THE LD. COUNSEL FOR ASSESSEE, THAT ALL THE PROFITS OR LOSSES EARNED FROM INDUSTRIAL ACTIVITY RIGHT UP TO ASSESSM ENT YEAR 2013-14 HAVE BEEN ACCOUNTED FOR IN THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2014-15, UPON CHANGE IN M ETHOD OF ACCOUNTING FROM THE CASH TO MERCANTILE, TO WHICH EFFECT A CERTIFICATE FROM THE STATUTORY AUDITORS OF THE ASSE SSEE COMPANY WAS ALSO FILED BEFORE US, WE AGREE WITH T HE LD.COUNSEL THAT THE ADDITION ON ACCOUNT OF PROFITS EARNED IN THE IMPUGNED YEAR WOULD ONLY TANTAMOUNT TO TAXING T HE SAME INCOME TWICE. THE ASSESSEE HAVING ADMITTEDLY SUBJECTED TO TAX PROFIT OR LOSS FROM THE IMPUGNED A CTIVITY CALCULATED ON MERCANTILE BASIS IN THE ASSESSMENT YE AR 2014-15, THE ONLY ISSUE WHICH REMAINS IS VIS--VIS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THE HON'BLE APEX COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. IN CIVIL APPEAL NO.5195 OF 2011/9101 OF 20139100 OF 18 2013/125 OF 2013 DATED 8.10.2013, WHILE SEIZED WITH IDENTICAL ISSUE, HELD THAT AS LONG AS THE REVENUE I S NOT DEPRIVED OF ANY TAX, THE DISPUTE REMAINS MERELY ACA DEMIC AND, THEREFORE, THE LITIGATION REMAINS FRUITLESS AN D THERE WAS NO NEED FOR THE REVENUE TO CONTINUE WITH THE SA ME. THE RELEVANT FINDINGS OF THE HON'BLE APEX COURT AT PARA 32 OF THE ORDER ARE AS UNDER: 32. THIRDLY, THE REAL QUESTION CONCERNING US IS THE Y EAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS N O DISPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR, THE ASSESSEE DID MAKE IMPORTS AND DID DERIVE BENEFITS UNDER THE ADVAN CE LICENCE AND THE DUTY ENTITLEMENT PASS BOOK AND PAID T AX THEREON. THEREFORE, IT IS NOT AS IF THE REVENUE HAS BE EN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFORE, THE DISPUTE RA ISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS, HEREFORE, NO NEED FOR THE REVE NUE TO CONTINUE WITH THIS LITIGATION WHEN IT WAS QUITE CLEAR T HAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS 21. CONSIDERING THE ABOVE AND IN THE LIGHT OF CERTI FICATE FILED BY THE ASSESSEE TO THIS EFFECT FROM THE STATU TORY AUDITORS OF THE COMPANY, WE CONSIDER IT FIT TO REST ORE THE ISSUE TO THE ASSESSING OFFICER TO VERIFY THE CORREC TNESS OF THE CLAIM MADE IN THE CERTIFICATE THAT THE INCOME F OR THE IMPUGNED YEAR HAD BEEN REFLECTED IN ASSESSMENT YEAR 2014- 15 AND FURTHER TO VERIFY THAT THE SAME HAD BEEN INC LUDED IN THE TAXABLE INCOME OF THE ASSESSEE FOR THE IMPUGNED YEAR AND DUE TAXES PAID THEREON, AND THEREAFTER DECIDE T HE ISSUE IN ACCORDANCE WITH LAW. WE MAY ADD THAT THE ASSESSE E BE GIVEN DUE OPPORTUNITY OF HEARING AND IS FREE TO ADD UCE ALL EVIDENCES IT WISHES TO RELY UPON. 19 IN VIEW OF THE ABOVE GROUND OF APPEAL NO.2 RAISE D BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE S. 22. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE AMOUNT OF CAPITAL GAIN ON SALE OF SHARE S AMOUNTING TO RS. 85,73,413/- AS BUSINESS INCOME WHIC H IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 23. THE CHALLENGE IN THE ABOVE GROUND IS TO THE TRE ATMENT OF PROFITS EARNED ON SALE OF SHARES AS BUSINESS INC OME OF THE ASSESSEE AS AGAINST CAPITAL GAIN SHOWN BY THE A SSESSEE. BRIEF FACTS RELEVANT TO THE SAME ARE THAT THE ASSE SSEE HAD SHOWN PROFITS EARNED FROM THE SALE OF SHARES AS CAPITAL GAINS AND CLAIMED EXEMPTION FROM PAYMENT OF TAX ON THE SAME. THE ASSESSING OFFICER FOUND THAT THERE WERE TWO METHODS FOLLOWED BY THE ASSESSEE OF DOING ITS FINAN CING BUSINESS. FIRST BEING EQUITY PROPORTIONATE AND SEC OND INVESTMENT BANKING. THE ASSESSING OFFICER OBSERVED THAT IN BOTH THE CASES, THE ASSESSEE RELEASED THE AMOUNT OF ADVANCE AFTER ADJUSTING THE AMOUNT OF INTEREST ACCR UED ON SUCH LOAN MEANING THEREBY THAT THE ASSESSEE RETAINE D THE EQUITY OF THE BORROWER AND SUBSEQUENTLY SOLD IT BAC K TO THE BORROWER OR IN THE OPEN MARKET FIXING MINIMUM RATE OF SALE TO BE INCLUSIVE OF THE INTEREST OF 20% PER ANNUM. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE BASIC I NTENTION OF HOLDING EQUITY BY THE ASSESSEE WAS TO EARN INTEREST ON THE 20 LOANS ADVANCED AND, THEREFORE, HELD THAT THE TRANSA CTION COULD NOT BE CLASSIFIED AS CAPITAL GAIN. THE ASSESS ING OFFICER HELD THAT IT WAS IN THE ORDINARY COURSE OF BUSINESS OF THE ASSESSEE AND RELATED TO ITS PRIMARY OBJECT O F FINANCING AND WAS, THEREFORE, CLEARLY BUSINESS PROF IT OF THE ASSESSEE. HE, THEREFORE, HELD THE PROFIT OF RS.85,7 3,413/- TO BE THE BUSINESS PROFIT OF THE ASSESSEE. 24. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE PLEADE D THAT IT WAS PARTICIPATING IN EQUITY FOR THE PAST 20 YEAR S AND FUNDS FOR THE PURPOSE WERE BEING SUPPLIED BY THE S TATE GOVERNMENT BY WAY OF SHARE CAPITAL. IT WAS POINTED OUT THAT NO INTEREST BEARING FUNDS WERE USED FOR THIS A CTIVITY. THE ASSESSEE ALSO POINTED OUT THAT WHILE PURCHASING THE EQUITY OF ANY COMPANY THERE WAS A CONDITION THAT SU CH EQUITY WOULD NOT BE DISPOSED OFF BY THE ASSESSEE BE FORE THE PERIOD OF ATLEAST 3 TO 5 YEARS. THUS, THE ASSESSEE POINTED OUT THAT INTENTION WAS NEVER TO TRADE IN SHARES OR TO DO BUSINESS BUT TO MAKE LONG TERM INVESTMENT, WHICH WA S TO BE TREATED AS CAPITAL ASSET. THE ASSESSEE RELIED U PON THE JUDGMENT OF THE SPECIAL BENCH OF I.T.A.T. IN THE CA SE OF PSIDC VS. DCIT REPORTED IN 292 ITR 268 AND ON CIRCU LAR NO.4 DATED 15.6.2007 OF THE CBDT, WHICH REFERRED TO THE PRINCIPLES ON THE BASIS OF WHICH IT HAS TO BE DECID ED WHETHER THESE ARE CAPITAL INVESTMENTS OR STOCK IN T RADE. THE LD.CIT(APPEALS) REJECTED THE CONTENTIONS OF THE ASSESSEE HOLDING THAT THE DOMINANT INTENTION OF THE ASSESSEE WAS TO FINANCE THE UNITS AND HAD MINIMUM PERCENTAGE OF RET URN ON 21 THE SAME AND, THEREFORE, INCOME EARNED WAS IN THE N ATURE OF BUSINESS INCOME OF THE ASSESSEE. THE RELEVANT FIND INGS OF THE LD.CIT(APPEALS) AT PARA 8.2 OF HIS ORDER ARE AS UNDER: 8.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND SUBMISSIONS OF THE COUNSEL AND ALSO OBSERVATIONS AND FINDINGS OF THE AO. I DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE COUNSEL AND THE SAME ARE REJECTED. WHAT IS TO SEEN HERE IS T HE PURPOSE FOR WHICH THE APPELLANT CORPORATION HAS BEEN SET UP. T HE MAIN ACTIVITY OF THE APPELLANT CORPORATION IS TO FINANCE THE INDUSTRIAL UNITS AND THE FINANCING IS DONE EITHER BY PROVIDING CLEAN LOANS TO THE INDUSTRIAL UNITS OR BY THE METHOD OF EQUITY PARTICIPATION. IN BOTH THE METHODS THE DOMINANT INTENTION IS TO FI NANCE THE UNIT. IN CASE OF CLEAN LOAN INTEREST IS CHARGED ON TH E MONEY ADVANCED AND IN THE CASE OF EQUITY PARTICIPATION TH E MINIMUM PROFIT IS PREDETERMINED SINCE THE PRICE OF THE SHAR ES IN THE BUY BACK ARRANGEMENT ARE FIXED BY INCLUDING INTEREST EL EMENT @ 20% PER ANNUM. THE BORROWING UNIT BUYS BACK THE SHA RES AFTER 3 TO 5 YEARS AND PAYS THE PREDETERMINED PRICE TO TH E APPELLANT CORPORATION AND IN CASE, THE MARKET PRICE OF THE SHAR E IS HIGHER THE APPELLANT CAN SELL THE SAME IN THE MARKET. THE PROFIT E ARNED BY THE APPELLANT ON THE BUY BACK OF THESE SHARES IS NOTHING BUT INTEREST ON THE MONEY LENT TO THE INDUSTRIAL UNITS . THE DOMINANT INTENTION OF THE APPELLANT IS TO FINANCE THE UNITS AND HAVE MINIMUM PERCENTAGE OF RETURN ON THE SAME. KEEP ING IN VIEW THE MAIN INTENTION OF THE APPELLANT OF FINANCING THE UNITS BY WAY OF EQUITY PARTICIPATION IT IS HELD TO BE BUSINESS ACTIVITY OF THE APPELLANT. IT IS IMMATERIAL WHETHER THE EQUITY IS HE LD BY THE APPELLANT FOR A PERIOD OF 3 TO 5 YEARS BECAUSE GE NERALLY THE FINANCE IS FOR A LONG DURATION OF TIME. EVEN IN THE C ASE OF CLEAN LOANS THE BORROWING UNITS RETAIN THEM FOR A LONG PERI OD WHICH MAY BE EVEN MORE THAN 5 YEAR. HENCE, THE ARGUMENT O F THE COUNSEL THAT THE EQUITY IS HELD FOR A PERIOD OF 3 TO 5 YEARS AND HENCE IS IN THE SHAPE OF LONG TERM INVESTMENT IS D EVOID OF ANY MERIT. THE AO HAS RIGHTLY HELD THAT THE INVES TMENT IN EQUITY SHARES BY WAY OF EQUITY PARTICIPATION IS NOTHI NG BUT BUSINESS INVESTMENT OF THE APPELLANT AND THE PROFIT EARNED ON SALE OF THESE SHARES ON THE BASIS OF BUY BACK ARRANGEMENT IS NOTHING BUT BUSINESS INCOME OF THE APPELLANT. THE CASE LAWS RELIED UPON BY THE AO ARE SQUARELY APPLICABLE AND THE CASE LAWS RELIED UPON BY THE COUNSEL DO NOT HELP HIM AS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER AND ALSO FOR THE REASON THAT THE APPELLANT HAS PURCHASED THE EQUITY SHARES OF THE UN ITS BY WAY OF EQUITY PARTICIPATION WITH THE DOMINANT INTEN TION OF EXTENDING FINANCE TO THE BORROWING UNITS AND HENCE THE CASE LAWS ARE NOT APPLICABLE TO THE FACTS OF THE CASE. T HIS GROUND OF APPEAL IS REJECTED. 22 25. BEFORE US, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT ORIGINALLY THE ASSESSEE WAS PUNJAB STATE INDUS TRIAL & INFRASTRUCTURE DEVELOPMENT PVT. LTD. (PSIDC) AND HA D CHANGED THEREAFTER TO HARYANA STATE INFRASTRUCTURE DEVELOPMENT CORPORATION (HSIDC). THE LD. COUNSEL F OR ASSESSEE THEREAFTER REITERATED THE CONTENTION MADE BEFORE THE LOWER AUTHORITIES STATING THAT THE INVESTMENT I N SHARES WAS BY WAY OF CAPITAL INVESTMENT AND NOT STOCK-IN-T RADE. THE LD. COUNSEL FOR ASSESSEE POINTED OUT TO THE FAC T THAT EVERY COLLABORATION AGREEMENT ENTERED INTO BY THE A SSESSEE CORPORATION WITH A COLLABORATOR, GAVE AN OPTION TO THE PROMOTERS TO BUY THE SHARES AT MARKET VALUE OR COST PLUS 20% WHICHEVER WAS HIGHER AND IF THE PROMOTERS DID N OT BUY IT THE ASSESSEE CORPORATION COULD SELL IT IN THE MA RKET ALSO. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE RELEVANT CLAUSES IN ONE OF THE COLLABORATION AGREEM ENT AS UNDER: BUY-BACK ARRANGEMENT :- 24. (A) AT ANY TIME AFTER THE COMPANY GOES IN FOR COMMERCIAL PRODUCTION AND/OF ITS SHARES ARE LISTED ON STOCK EXCHANGE/OTCE, THE CORPORATION MAY OFF-LOAD ITS SHARE-HOLDING IN THE COMPANY PARTIALLY OR FULLY IN SUCH MANNER AS IT MAY DEEM FIT. THE COLLABORATOR WILL HOWEVER HAVE THE PRE- EMPTIVE RIGHT TO BUY THE SHAREHOLDING OF THE CORPORATION. SIMILARLY, THE COLLABORATOR MAY ALSO HAVE A RIGHT TO MAKE A REQUEST TO BUY BACK THE EQUITY SHARE-HOLDING OF THE CORPORATION AS PER CLAUSE 24(C) OF THIS AGREEMENT. THIS OPTION CAN BE EXERCISED ONLY ONCE WITHIN THREE YEARS OF THE COMMENCEMENT OF THE COMMERCIAL PRODUCTION BY THE COMPANY. (B) AFTER EXPIRY OF THREE YEARS FROM THE DATE OF COMMENCEMENT OF COMMERCIAL PRODUCTION BY THE COMPANY OR THE DATE OF FIRST DISBURSEMENT TOWARDS EQUITY CAPITAL, WHICHEVER IS EARLIER, THE 23 COLLABORATOR SHALL BE BOUND TO PURCHASE THE EQUITY SHARE-HOLDING OF THE CORPORATION IN THE COMPANY. PROVIDED THAT THE CORPORATION MAY AT ITS DISCRETION RETAIN THE SHARES ACQUIRED BY IT THROUGH OVER SUBSCRIPTION OR RIGHTS ISSUE OR BONUS SHARES. (C) ON BUY BACK OF SHARE-HOLDING OF THE CORPORATION BY THE COLLABORATOR UNDER SUB CLAUSE (B), THE PRICE TO BE PAID SHALL BE HIGHEST OF THE, (I) ISSUE PRICE OF THE SHARES PLUS INTEREST @ 20% P.A. WITH YEARLY RESTS FROM THE DATE OF FIRST DISBURSEMENT TOWARDS EQUITY SHARES BY THE CORPORATION UNDER THIS AGREEMENT, OR (II) THE AVERAGE OF THE DAILY HIGHEST PRICE OF THE SHARES QUOTED ON ANY OF INDIAN STOCK EXCHANGES FOR A PERIOD OF TWO MONTHS PROCEEDING THE DATE OF PURCHASE OF SHARES HELD BY THE CORPORATION AS PROVIDED IN CLAUSE (B) ABOVE; OR (III) ASSESSED VALUE OF THE SHARES AS DETERMINED BY THE AUDITORS OF THE COMPANY ON THE BASIS OF NET WORTH OF THE COMPANY ON THE DATE OF SALE OF THE SHARES. (D) THE SALE AND PURCHASE OF THE SHARES BY THE COLLABORATOR PROVIDED UNDER SUB-CLAUSE (A) AND (B), PAYMENT OF PRICE THEREFOR AND DELIVERY OF SHARE- SCRIPS AND TRANSFER DEEDS RELATIVE THERETO, SHALL B E COMPLETED WITHIN ONE MONTH FROM THE DUE DATE OR DATE OF OPTION UNDER SUB-CLAUSE (A) AS THE CASE MAY BE. PROVIDED THAT FAILURE OF THE COLLABORATOR TO PAY FOR AND PURCHASE THE SHARES WITHIN ONE MONTH AFTER EXERCISING THE OPTION SHALL BE CONSTRUED AS HIS CONSENT TO THE CORPORATION OFFLOADING THESE SHARES IN THE MARKET. (E) IN THE EVENT THE COLLABORATOR FAILS TO PURCHASE THE EQUITY SHARES OF THE CORPORATION IN THE COMPANY AS PROVIDED IN CLAUSE 24(B) ABOVE, THE OPERATION OF CLAUSE 20 HEREOF WILL REMAIN SUSPENDED AT THE OPTION OF THE CORPORATION UNTIL THE ENTIRE SUM PAYABLE BY THE COLLABORATOR FOR THE PURCHASE OF THE SHARE-HOLDINGS OF THE CORPORATION IN THE COMPANY IS PAID OFF IN FULL AND THE MANAGING DIRECTOR BEING A NOMINEE OF THE COLLABORATOR SHALL RESIGN. IN SUCH AN EVENT THE CORPORATION SHALL ALSO HAVE THE OPTION TO RECOMMEND ONE OF ITS NOMINEES TO BE APPOINTED AS MANAGING DIRECTOR BY THE BOARD OF DIRECTORS AND THE SAID NOMINEE OF THE CORPORATION AFTER BEING SO APPOINTED, SHALL CONTINUE TO BE THE MANAGING 24 DIRECTOR AS LONG AS THE OPERATION OF CLAUSE 20 REMAINS SUSPENDED. IMMEDIATELY UPON THE COMPLETION OF THE PAYMENT BY THE COLLABORATOR OF THE FULL AMOUNT PAYABLE IN RESPECT OF PURCHASE OF SHARES, THIS SUB- CLAUSE WILL CEASE TO BE OPERATIVE AND THE MANAGEMENT OF THE COMPANY WILL BE CARRIED ON AS BEFORE BY THE MANAGING DIRECTOR WHO WILL BE APPOINTED ON THE RECOMMENDATIONS OF THE COLLABORATOR IN TERMS OF CLAUSE 20 HEREOF. (F) THE CORPORATION SHALL, IN THE EVENT THE COLLABORATOR FAILS TO PURCHASE THE EQUITY SHARES OF THE CORPORATION IN THE COMPANY AS PROVIDED IN CLAUSE 24(B) OR TO PAY FOR THEM AS PROVIDED IN SUB- CLAUSE (C) WITHIN THE TIME LIMIT SPECIFIED IN SUB- CLAUSE (D) ABOVE, BE ENTITLED TO SELL ITS SHARES IN THE COMPANY EITHER BY PUBLIC AUCTION OR THROUGH THE RECOGNIZED SHARE BROKERS AT THE STOCK EXCHANGE WHERE THE SHARES ARE LISTED BY PRIVATE NEGOTIATIONS AT THE RISK AND COST OF THE COLLABORATOR. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, STATED TH AT THE EQUITY PARTICIPATION BY THE ASSESSEE CORPORATION IN THE COLLABORATOR COMPANY WAS NOT A FINANCING ARRANGEMEN T FOR EARNING INCOME THEREFROM BY WAY OF INTEREST AND THU S THE INVESTMENTS COULD NOT BE TREATED AS STOCK-IN-TRADE . RELIANCE WAS PLACED ON THE DECISION OF THE SPECIAL BENCH OF THE I.T.A.T. IN THE CASE OF PUNJAB STATE INDUSTRIAL CORPORATION LTD. VS. DCIT, REPORTED IN 102 ITD 1. THE LD. COUNSEL FOR ASSESSEE ALSO DREW OUR ATTENTION TO THE FACT THAT UPTO ASSESSMENT YEAR 2005-06, THE SAID INCOME HAD A LWAYS BEEN ASSESSED AS CAPITAL GAIN AND REVENUE HAD SOUGH T TO CHANGE THE SAME WITHOUT ANY BASIS. THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HA RYANA STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD., 336 ITR 641 IN THIS REGARD. 25 26. THE LD. DR, ON THE OTHER HAND RELIED UPON THE O RDER OF THE LD.CIT(APPEALS). 27. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. WE HAVE ALSO GONE THROUGH THE ORDER OF THE SPECIAL BEN CH OF THE I.T.A.T. IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. (SUPRA). ON PERUSAL O F THE SAME WE FIND THAT THE ASSESSEE IN THE SAID CASE WAS INVOLVED IN IDENTICAL ACTIVITY OF FINANCING INDUSTR IAL UNDERTAKINGS AND IDENTICAL ISSUE WAS RAISED BEFORE THE BENCH WHETHER PROFITS EARNED FROM SALE OF SHARES WO ULD BE BUSINESS INCOME OR CAPITAL GAINS . THE RELEVANT POR TION OF ANNUAL REPORT OF THE CORPORATION FOR FINANCIAL YEAR 1996-97 WAS RELIED UPON TO DETERMINE THE NATURE OF THE ACT IVITIES CARRIED OUT BY THE ASSESSEE AND WHICH ARE REPRODUCE D AT PARA 82 OF THE ORDER AS UNDER: THE FOLLOWING PORTION OF THE ANNUAL REPORT FOR FINAN CIAL YEAR 1996-97 WILL INDICATE THE NATURE OF THE ACTIVITIES OF T HE ASSESSEE :- (3) INVESTMENTS (A) THE COMPANY'S INVESTMENT, IN PURSUANCE OF ITS OB JECTS TO ASSIST BY WAY OF EQUITY PARTICIPATION FOR THE ADVANCEMENT, PROMOTION AND DEVELOPMENT OF INDUSTRY IN THE STATE IS MEANT TO BE HELD FOR LONG-TERM AND AS SUCH ARE VALUED, AT COST. (B) THE PROFIT/LOSS ON SALE OF SHARES IS BEING ACCOU NTED FOR IN THE YEAR IN WHICH THE SHARE SCRIPTS ALONGWITH THE DU LY EXECUTED TRANSFER DEEDS ARE ACTUALLY DELIVERED TO T HE TRANSFEREES IRRESPECTIVE OF THE TIME AT WHICH THE CONSIDERATION FOR THE SAME HAS BEEN RECEIVED. (C) THE CORPORATION MAKES DIS-INVESTMENT OF ITS SHAR EHOLDINGS JOINT/ASSISTED SECTOR PROJECTS AND PRIVATE SECTOR P ROJECTS AS PER THE PROVISIONS CONTAINED IN THE FINANCIAL COLL AB- ORATION AGREEMENTS AND BUY-BACK UNDERTAKING S RESPECTIVELY EXECUTED BY THE COLLABORATORS/PROMOTERS WITH THE CORPORATION. 26 (D) AS PER FINANCIAL COLLABORATION AGREEMENT THE COL LABORATORS HAVE TO BUY-BACK THE SHARES AT THE END OF SPECIFIED P ERIOD AT THE HIGHEST MARKET PRICE QUOTED ON RECOGNIZED ST OCK EXCHANGE(S) OR THE BOOK VALUE ALONG WITH THE SIMPLE INTEREST AT THE LENDING RATE AT WHICH THE FINAN CIAL INSTITUTION/BANKS HAVE PROVIDED LONG-TERM FINANCE T O THE COMPANY, WHICHEVER IS HIGHER. HOWEVER, THE TERMS OF STANDARD FINANCIAL COLLABORATION AGREEMENT HAVE BEEN AMENDED W.E.F. 18-10-1996 WHICH PROVIDE FOR BUY-BACK OF THE CORPORATION'S INVESTMEN TS AT HIGHEST PRICE QUOTED ON THE STOCK EXCHANGES 3 MONTH S PRIOR TO THE DATE OF OPTION OR WITH INTEREST AT THE RATE OF WHICH THE CORPORATION PROVIDES TERM LOANS TO THE LO ANEES, COMPOUNDED HALF YEARLY, WHICHEVER IS HIGHER. HENCE NO PROVISION FOR DEPRECIATION IN THE VALUE OF INVESTME NT HAS BEEN MADE AS PER THE GUIDELINES PROVIDED IN TERMS OF IDBI CIRCULAR DATED 26-4-1994, 23-6-1994 AND 8-5-1996 AN D 19-2-1997. (E) THE MARKET VALUE OF SHARES IN CASE OF QUOTED SHA RES IS CALCULATED ON THE BASIS OF SHARES LAST QUOTED IN A RECOGNIZED STOCK EXCHANGE ON OR BEFORE 31ST MARCH A S THE CASE MAY BE. HOWEVER, IN CASE OF SHARES WHICH ARE NOT QUOTED IN STOCK EXCHANGE SINCE LONG HAVE BEEN S TARTED AT COST. (4) PROJECT PROMOTION EXPENSES IN PROMOTION OF PROJECTS BEING UNDERTAKEN BY THE CO RPORATION, THE EXPENSES INCURRED ON SUCH PROJECTS DURING THE IMPLEMENTATION STAGES ARE CHARGED TO THE REVENUE OF T HE YEAR IN WHICH THE PAYMENT ARE MADE AND SHOWN UNDER THE H EAD 'PROJECT SURVEY EXPENSES'. THE RECOVERY OF SUCH EXP ENSES OF THE RESPECTIVE PROJECTS (EXCEPTING THE CASES OF ABANDONE D PROJECTS WHERE NO RECOVERIES ARE MADE) ARE CREDITED TO THE HE AD 'RECEIPTS ON ACCOUNT OF PROJECTS MATURED' IN THE YE ARS OF MATURITY OF RESPECTIVE PROJECTS. THE ABOVE POLICY HA S BEEN ADOPTED BECAUSE PROMOTION OF PROJECTS IS A MAJOR AC TIVITY OF THE CORPORATION. RECOVERY, IF ANY, MADE IN THE SUBSEQUE NT YEARS ON ACCOUNT OF ABANDONED PROJECTS IS CREDITED TO THE MI SCELLANEOUS INCOME IN THE YEAR OF ACTUAL RECEIPT.' THE ISSUE WAS THEREAFTER DECIDED IN FAVOUR OF THE ASSESSEE HOLDING THE PROFITS EARNED TO BE IN THE NA TURE OF CAPITAL GAINS. THE RELEVANT FINDINGS AT PARA 102 & 103 OF THE ORDER IS AS UNDER: 102. ANOTHER COMMON ISSUE INVOLVED IN THE APPEALS OF THE REVENUE IS RELATING TO ASSESSING THE PROFIT ON SALE OF SHARES UNDER THE HEAD 'CAPITAL GAINS'. THE REVENUE HAS RAI SED THE GROUND OF APPEAL IN THIS REGARD IN GROUND NO. 2 IN 27 ASSESSMENT YEAR 1994-95, GROUND NO. 2 IN ASSESSMENT YEAR 1995-96 AND GROUND NO. 1 IN ASSESSMENT YEAR 1996-97 AND GROUND NO. 1 IN ASSESSMENT YEAR 1997-98. 103. THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE AS SESSEE BY THE ORDER OF TRIBUNAL FOR ASSESSMENT YEARS 199 0-91 TO 1992-93 (SUPRA). THE OPERATIVE PORTION IS IN PARA 11 OF THE ORDER WHICH IS HEREBY ADOPTED AND REPRODUCED HEREUNDER: '11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND HAVE GONE THROUGH THE ORDERS OF THE ASSESSING OFFIC ER AS WELL AS THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). AS PER THE INDUSTRIAL POLICY OF THE PUNJAB GOVERNMENT, THE A SSESSEE CORPORATION WAS TO ACT AS A CATALYST FOR ESTABLISHME NT OF NEW INDUSTRIAL PROJECTS IN THE STATE OF PUNJAB, THE ASSESSEE COLLABORATORS ORATION WAS TO ACT AS A CATAL YST FOR ESTABLISHMENT OF NEW INDUSTRIALS PROJECT IN THE STATE OF PUNJAB BY ACTING AS PROMOTERS/COLLABORATORS ALONGWITH OTHE R INDUSTRIAL ENTREPRENEURS. AT THE TIME OF THE START O F THE PROJECT, THE ASSESSEE CORPORATION MAKES INVESTMENT A ND WHEN THE PRODUCTION IN THE PROJECTS REACHES UPTO A CERTAIN LEVEL WHERE AFTER THE PROJECTS BECOME SELF-SUFFIC IENT, IT DISINVESTS THOSE HOLDINGS IN THAT PROJECT BY SELLIN G IT TO THE OTHER PROMOTER WITH A VIEW TO REALIZE FUNDS FOR INVESTMENTS IN OTHER PROJECTS. THUS BASICALLY THE INVESTMENT IN SHARES OF COMPANIES WHICH WERE JOINTLY PROMOTED BY THE ASSESSEE ALONGWITH OTHER INDUSTRIAL UNDERTAKINGS IS IN THE NATURE OF AN INVESTME NT AND ANY PROFIT/GAIN EARNED BY THE ASSESSEE ON THE REALIZATION OF SUCH AN INVESTMENT IS LIABLE TO TAX UNDER THE HEAD 'CAPITAL GAINS' AND THIS POSITION HAS ALL AL ONG BEEN ACCEPTED EVEN BY THE DEPARTMENTAL AUTHORITIES UPTO THE ASSESSMENT YEAR 1989-90. ACCORDINGLY WE HO LD THAT THE PROFIT AND GAIN REALIZED BY THE ASSESSEE O N ACCOUNT OF DISINVESTMENT OF SHARES IS LIABLE TO TAX AS CAPITA L GAINS. AS SUCH THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER S ECTION 48(2).' GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMIS SED. 28. MOREOVER ON ANOTHER ISSUE BEFORE THE BENCH, WHE THER THE DEDUCTION U/S 80M OF THE ACT ON THE DIVIDEND EA RNED WAS TO BE DETERMINED AFTER DEDUCTING PROPORTIONATE ADMINISTRATIVE EXPENSES OR INTEREST EXPENSES, IT WA S HELD THAT THE NATURE OF HOLDING OF THE SHARES WAS IMPERA TIVE TO DECIDE THE ISSUE. THE MAJORITY VIEW OF THE BENCH, O N THE NATURE OF THE INVESTMENT, WAS THAT THE ASSESSEE WAS HOLDING SHARES AS CAPITAL INVESTMENT. THE RELEVANT FINDING S OF THE 28 MAJORITY VIEW OF THE BENCH AT PARA 42 OF THE ORDER IS AS UNDER: 42. IN THE PRESENT CASE THE ASSESSEE WAS HOLDING SHARES AS A CAPITAL INVESTMENT. THE SHARES WERE NOT STOCK IN TRADE OF THE ASSESSEE. THE DIVIDEND INCOME EARNED BY THE ASSESSEE MIGHT HAVE COME CONNECTION WITH BUSINESS. BUT THIS CONNECTION IS NO T SUFFICIENT TO MAKE DIVIDEND INCOMEBUSINESS INCOME. SHARES WERE HELD BY THE ASSESSEE AS A CAPITAL INVESTMENT. DIVIDEND RECEIVED BY THE ASSESSEE/COMPANY CAN UNDER NO CIRCUMSTANCES BE HELD TO BE BUSINESS INCOME. IT IS INCIDENTAL INCOME RECEIVED BY THE ASSESSEE ON ACCOUNT OF HOLDING OF A CAPITAL INVESTMENT. IT CANNOT HAVE A CHARACTER DIFFERENT FROM THE CHARACTER OF SHARES IN THE HANDS OF THE ASSESSEE. SHARES WERE NOT TRADING ASSETS. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THAT IN THE CASE OF PSIDC, THE ISSUE STANDS SQUARELY CO VERED BY THE SAID DECISION. 29. THE REVENUE CONTENDED BEFORE US THAT THE FINDI NGS WERE MERE OBSERVATIONS I.E. OBITOR DICTUM. WE FIND NO MERIT IN THE SAME SINCE ON THE ISSUE OF THE NATURE OF PRO FITS EARNED THE ITAT HAS CLEARLY HELD THE SAME TO BE IN THE NATURE OF CAP ITAL GAINS. FURTHER EVEN ON THE ISSUE OF DEDUCTION U/S 80M THE FINDINGS OF THE ITAT THAT THE PURCHASES OF SHARES WAS BY WAY OF INVESTMENT CANNOT BE SAID TO BE AN OBITER DICTUM. AN OBITOR DICTUM IS A LATIN PHRASE MEANING BY WAY I.E. A REMARK IN A JUDGMENT THAT IS SAID IN PASSING. AS IS EVIDENT FROM THE ABOVE, TH E SAID WERE THE FINDINGS OF THE MAJORITY VIEW BASED ON THE FACTS OF THE CASE WHICH CANNOT BE TERMED AS INCIDENTAL OR P ASSING REMARK OR OPINION. THEREFORE, WE REJECT THE CONTEN TION OF THE REVENUE THAT THE DECISION IN THE CASE OF PSIDC CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. 29 MOREOVER, IT IS NOT DISPUTED THAT SINCE INCEPTION THE ASSESSEE HAS BEEN CLAIMING THE PROFITS EARNED FROM SALE OF SHARES AS CAPITAL GAINS WHICH HAS NEVER BEEN DISTUR BED BY THE REVENUE. NO CHANGE IN THE CIRCUMSTANCES IN RES PECT OF THE IMPUGNED ASSESSMENT YEAR HAVE ALSO BEEN BROUGHT TO OUR NOTICE. THEREFORE, WE AGREE WITH THE LD. COUNS EL FOR ASSESSEE THAT THERE WAS NO REASON TO DISTURB THAT P OSITION IN THE IMPUGNED YEAR. THE HON'BLE APEX COURT IN TH E CASE OF RADHA SOAMI SATSANG VS. CIT 193 ITR 321(SC) HELD THAT WHERE FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERE NT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAD ALLOWED THAT POSITION TO BE S USTAINED BY WAY OF NOT CHALLENGING THAT ORDER, THEN IT WOULD NOT AT ALL BE APPROPRIATE TO PERMIT THAT POSITION TO BE CH ALLENGED IN SUBSEQUENT YEAR. 30. IN VIEW OF THE SAME, WE HOLD THAT THE PROFITS E ARNED BY THE ASSESSEE FROM SALE OF SHARES BE TREATED AS CAPI TAL GAIN AND ADDITION MADE BY TREATING THE SAME AS INCOME FR OM BUSINESS OF THE ASSESSEE BE DELETED. GROUND OF APPEAL NO.3(A) RAISED BY THE ASSESSEE THEREFORE STANDS ALLOWED. 31. GROUND NO.3(B) RAISED BY THE ASSESSEE RELATES T O THE ISSUE OF ALLOWANCE OF EXPENDITURE AGAINST THE PROFI TS EARNED FROM SALE OF SHARES AND BEING CONSEQUENTIAL TO HOL DING THE PROFITS FROM SALE OF SHARES AS BUSINESS INCOME, THE SAME BECOMES INFRUCTUOUS IN VIEW OF OUR HOLDING THE GAIN S EARNED FROM SALE OF SHARES AS CAPITAL GAINS. 30 32. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ITA NO.185/CHD/2010(A.Y. 2006-07) 33. GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE READ AS UNDER: 1. (A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACT S OF THE CASE IN UPHOLDING AN ADDITION OF RS.9,74,98,671/- ON ACCOUNT OF UN-CLAIMED REFUNDS UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. B) THAT THE APPELLANT DISPUTES THE ADDITION OF RS.3,67,81,729/- FORMING PART OF RS.9,74,98,681/- WHICH HAS ALREADY BEEN ADDED IN THE AY 2005-06. 2. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ACCEP TING THE METHOD OF ACCOUNTING CONSISTENTLY BEING FOLLOWED BY T HE APPELLANT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. 34. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUES IN THESE GROUNDS ARE SIMILAR TO THE ISSUE IN GROUND NO.1 RAI SED BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10 & 13 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO WITH EQUA L FORCE. GROUND NOS.1 AND 2 RAISED BY THE ASSESSEE ARE, THER EFORE, PARTLY ALLOWED. 35. GROUND NOS.3, 4 AND 5 RAISED BY THE ASSESSEE RE AD AS UNDER: 3.THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ACCE PTING THAT THE INDUSTRIAL AREA ACTIVITY IS BEING CARRIED ON NO PROFI T NO LOSS BASIS UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. 4. A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN UPHOLDI NG THE COMPUTATION OF INCOME FROM INDUSTRIAL AREA ACTIVITY A T RS.32.93 CRORES UNDER THE FACTS & CIRCUMSTANCES OF TH E CASE. B) THE APPELLANT DISPUTES THE QUANTUM OF INCOME COMPUTED. 31 5. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ALLOWING THE DEDUCTION FOR EXPENDITURE INCURRED ON KMP EXPRESSWA Y AMOUNTING TO RS.277.70 CRORES UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. 36. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUES IN THESE GROUNDS ARE SIMILAR TO THE ISSUE IN GROUND NO.2 RAI SED BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NOS.3, 4 AND 5 RAISED BY THE ASSESSEE THEREF ORE STAND ALLOWED FOR STATISTICAL PURPOSES. 37. GROUND NO.6 RAISED BY THE ASSESSEE READS AS UND ER: 6. A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN UPHOLD ING THE AMOUNT OF CAPITAL GAIN ON SALE OF SHARES AMOUNTING TO RS. 30,36,995/- AS BUSINESS INCOME UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. B) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ADJUDI CATING THE GROUND OF APPEAL DISPUTING THE FINDING OF A. A. REGARD ING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVI NG BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD UNDER THE FACTS & CIRCUMSTANCES O F THE CASE. 38. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 27-31 OF OUR ORDER ABOVE, SHALL APPLY TO THIS CASE ALSO MUTATIS MUTAND IS. GROUND NO.6(A) RAISED BY THE ASSESSEE STANDS ALLOWE D AND GROUND NO.6(B) RAISED BY THE ASSESSEE IS DISMISSED. 39. GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE RE ADS AS UNDER: 32 7. A) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING DIVIDEND ON SHARES AMOUNTING TO RS. 2,97,432/- AS BUSINESS IN COME UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. B) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ADJU DICATING THE GROUND OF APPEAL DISPUTING THE FINDING OF A.A. REGA RDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVIN G BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. 40. DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSE E HAD EARNED DIVIDEND INCOME AMOUNTING TO RS.2,97,432 /-. THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE CORPORATION HAD BEEN SET UP WITH THE MAIN OBJECT TO ESTABLISH INDUSTRIAL ESTATES AND TO PROVIDE FINANCE FOR GROWTH OF INDUSTRY IN THE STATE, THE SHARES ACQUIRE D BY IT WERE CLOSELY RELATED TO ITS BUSINESS ACTIVITY AND D IVIDEND INCOME EARNED THEREFROM WAS THUS TO BE TREATED AS I NCOME FROM BUSINESS. THE ASSESSING OFFICER RELIED UPON T HE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF B ROOK BOND INDIA LTD. VS. CIT, 162 ITR 373. HE FURTHER H ELD THAT THE PROVISIONS OF SECTION 14A WOULD COME INTO PLAY AND PROPORTIONATE EXPENDITURE ALSO WAS DISALLOWED IN CA SE THE DIVIDEND INCOME IS HELD TO BE EXEMPT. THE LD.CIT(A PPEALS) UPHELD THE ADDITION SO MADE. 41. BEFORE US, THE LD. COUNSEL FOR ASSESSEE STATED THAT THE DIVIDEND INCOME HAS BEEN EXEMPTED FROM THE TAXATION BY THE FINANCE ACT, 2003 W.E.F. 1.1.2004 BY VIRTUE OF INSERTION OF SECTION 10(34) IN THE ACT AND, THEREFORE, IT MAD E NO DIFFERENCE WHETHER DIVIDEND INCOME WAS IN THE NATUR E OF BUSINESS INCOME OR OTHERWISE AND THE SAME COULD NOT BE SUBJECTED TO TAX IN ANY CASE. 33 42. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE OR DER OF THE CIT(APPEALS) AND THE ASSESSING OFFICER. 43. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. WE FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSEL FO R ASSESSEE. THE FINANCE ACT, 2003 INSERTED CLAUSE (3 4) TO SECTION 10 WHICH DEALS WITH INCOME WHICH ARE EXEMPT FROM TAXATION AND DO NOT FORM PART OF THE TOTAL INCOME A T ALL, EXCLUDING THE INCOME BY WAY OF DIVIDEND FROM THE PU RVIEW OF TAXATION. AT THE SAME TIME, WE FIND SECTION 115 O WAS INSERTED IN THE ACT MAKING THE COMPANIES DISTRIBUTI NG DIVIDEND TO PAY TAX AT A SPECIFIED RATE THEREON. T HUS TAXATION OF DIVIDEND CHANGED HANDS FROM THE RECIPIE NT TO THE PAYER OF DIVIDEND BY VIRTUE OF THIS AMENDMENT B ROUGHT ABOUT IN THE ACT. DIVIDEND OF ALL NATURE AND COLOUR WHETHER SOURCED FROM THE BUSINESS ACTIVITIES OF THE ASSESSE E OR OTHERWISE IS NOT TAXABLE IN THE HANDS OF THE RECIPI ENT BUT IS TO BE TAXED BY THE PAYER OF DIVIDEND OR IN OTHER WO RDS, THE COMPANIES DECLARING AND DISTRIBUTING DIVIDEND. IN VIEW OF THE SAME, THEREFORE, WE CANNOT AGREE WITH THE CONTE NTIONS OF THE REVENUE THAT THE SAID DIVIDEND IS TO BE TAXE D IN THE HANDS OF THE ASSESSEE BEING IN THE NATURE OF BUSINE SS INCOME. THE RELIANCE PLACED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF BROOK BOND INDIA LTD. (SU PRA) DOES NOT APPLY TO THE PRESENT CASE SINCE IT RELATED TO THE ASSESSMENT YEAR 1955-56 AND 1956-57 WHEN THE POSITI ON OF LAW VIS--VIS TAXATION OF DIVIDEND WAS GOVERNED BY THE 34 INCOME TAX ACT, 1922 WHICH TAXED DIVIDEND IN THE HA NDS OF THE RECIPIENT. EVEN OTHERWISE WE HAVE ALREADY HELD THAT THE INCOME EARNED FROM SALE OF SHARES BE TREATED AS CAPITAL GA INS, HOLDING THE ACTIVITY OF THE ASSESSEE AS INVESTMENT AND NOT TRADING IN SHARES, THEREFORE, THE DIVIDEND INCOME E ARNED FROM THE SHARES CANNOT BE SAID TO BE FROM BUSINESS ACTIVITY OF THE ASSESSEE. HOWEVER SINCE THE DIVIDEND INCOME IS EXEMPT FROM T AX, THE PROVISIONS OF SECTION 14A DISALLOWING EXPENSES INCURRED FOR EARNING THE SAME, ARE ATTRACTED.FOR THE LIMITED PURPOSE OF APPLYING THE PROVISIONS OF SECTION 14A ,THE ISSU E IS RESTORED BACK TO THE FILE OF THE AO,WITH A DIRECTIO N TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 44. IN VIEW OF THE SAME, THE ADDITION MADE TO THE I NCOME OF THE ASSESSEE ON ACCOUNT OF DIVIDEND INCOME IS, T HEREFORE, DELETED. AND THE ISSUE OF DETERMINING THE EXPENSES DISALLOWABLE AS PER SECTION 14A IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE IS, THEREFORE STANDS ADJUDICATED AS ABOVE. 45. GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE RE ADS AS UNDER: 35 8. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN UPHOLDING THAT THE INVESTMENT OF RS.231.44 CRORES IS NOT FOR BUSINE SS PURPOSE UNDER THE FACTS & CIRCUMSTANCES OF THE CASE . 46. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSING OFFICER HAD MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS PAID RS.231.44 CRORES TOWARDS KUNDLI- MANESAR-PALWAL EXPRESS WAY AND THE EXPENDITURE IS N OT DIRECTLY RELATABLE TO THE BUSINESS OF THE ASSESSEE SINCE IT IS NOT INCIDENTAL TO CARRYING OUT THE BASIC ACTIVITIES OF THE ASSESSEE. THE ASSESSEE IS DEVELOPING INDUSTRIAL ES TATES AND FINANCING INDUSTRIAL ACTIVITY AND IS NOT INVOLVED I N CONSTRUCTION OF EXPRESS WAYS. THE ASSESSING OFFICER OBSERVED THAT ON THE ONE HAND THE ASSESSEE HAD RAIS ED INTEREST BEARING LOANS ON WHICH INTEREST AMOUNTING TO RS.7,96,23,433/- HAD BEEN PAID AND, ON THE OTHER HA ND, NON BUSINESS EXPENDITURE AMOUNTING TO RS.231.44 CRO RES HAS BEEN INCURRED. THE ASSESSING OFFICER, THEREFORE , DISALLOWED INTEREST EXPENDITURE @ 10% ON THE EXPEND ITURE OF RS.231.44 CRORES BEING FOR NON BUSINESS PURPOSES . SINCE, THE DISALLOWANCE WORKED OUT TO MORE THAN THE INTERE ST EXPENDITURE THE ASSESSING OFFICER DISALLOWED WHOLE OF THE INTEREST EXPENDITURE AMOUNTING TO RS.7,96,23,433/-B Y RELYING ON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRY' 286 ITR 1. 47. THE LD.CIT(A) HELD THE INVESTMENTS TO BE FOR NO N- BUSINESS PURPOSE BUT AT THE SAME TIME AGREED WITH T HE ASSESSEES ARGUMENT THAT IN THE CASE OF SUFFICIENCY OF OWN INTEREST FREE FUNDS NO DISALLOWANCE OF INTEREST WAS WARRANTED .HE THEREFORE DIRECTED THE ASSESSING OFFI CER TO 36 EXAMINE THE FUND FLOW POSITION OF THE ASSESSEE AND MAKE DISALLOWANCE ONLY TO THE EXTENT BORROWED FUNDS WERE UTILIZED FOR MAKING THE INVESTMENT. 48. THE ASSESSEE IN THE PRESENT GROUND HAS CHALLENG ED THE FINDING OF THE CIT(A) THAT THE INVESTMENTS WERE FOR NON- BUSINESS PURPOSE. 49. NO ARGUMENTS WERE ADVANCED DURING THE COURSE OF HEARING BEFORE US BY THE LD.COUNSEL FOR THE ASSESSE E. GROUND NO.8 THEREFORE STANDS DISMISSED. 50. THE APPEAL OF THE ASSESSEE THEREFORE STANDS PAR TLY ALLOWED. ITA NO.966/CHD/2010 (A.Y. 2007-08) 51. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.2,22,66,591/- ON ACCOUNT OF UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UN CALLED FOR. 52. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF THE O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.1 RAISED BY THE ASSESSEE STANDS PARTLY AL LOWED. 53. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.118.79 CRORES ON 37 ACCOUNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHI CH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.360.87 CRORES & DELHI METRO TO GURGAON AMOUNTING TO RS.40 CRORES WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 54. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.2 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF THE ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 55. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE AMOUNT OF CAPITAL GAIN ON SALE OF SHARE S AMOUNTING TO RS.1,70,86,676/- AS BUSINESS INCOME WHI CH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 56. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 27-31 OF THE O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3(A) RAISED BY THE ASSESSEE IS ALLOWED AN D GROUND NO.3(B) IS DISMISSED. 57. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 38 4. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE DIVIDEND ON SHARES AMOUNTING TO RS.2,4 8,224/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 58. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.7 RAISE D BY THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 43-44 OF THE ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.4(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED. 59. GROUND NO.5 RAISED BY THE ASSESSEE READS AS UND ER: 5. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THAT THE INVESTMENT OF RS.360.87 CRORES IS NOT FOR BUSINESS PURPOSE WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 60. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.8 RAISE D BY THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 49 OF THE OR DER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.5 RAISED BY THE ASSESSEE IS THEREFORE DIS MISSED . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.827/CHD/2011(A.Y. 2008-09) 61. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 39 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.2,63,53,622/- ON ACCOUNT OF UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UN CALLED FOR. 62. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWE D. 63. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.254.80 CRORES ON ACCO UNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIG HLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.21.10 CR ORES & DELHI METRO TO GURGAON AMOUNTING TO RS.40 CRORES WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 64. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.2 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.2(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 65. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE AMOUNT OF CAPITAL GAIN ON SALE OF SHARE S AMOUNTING TO RS.1,51,12,884/- AS BUSINESS INCOME WHI CH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. 40 A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 66. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 27-31 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3(A) BY THE ASSESSEE IS ALLOWED AND GROUN D NO.3(B) RAISED BY THE ASSESSEE IS DISMISSED. 67. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 4. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE DIVIDEND ON SHARES AMOUNTING TO RS.4,3 3,381/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 68. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.7 RAISE D BY THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 43-44 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.4(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED. 69. GROUND NO.5 RAISED BY THE ASSESSEE READS AS UND ER 5. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS O F THE CASE IN UPHOLDING THAT THE INVESTMENT OF RS.22.22 CRORES IS NOT FOR BUSINESS PURPOSE WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 70. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS 41 GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.8 RAISE D BY THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 49 OF THE ORDE R ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.5 RAISED BY THE ASSESSEE IS DISMISSED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.98/CHD/2013(A.Y. 2009-10) 71. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.3,20,11,625/- ON ACCOUNT OF UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 72. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWE D. 73. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.152.55 CRORES ON ACCO UNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIG HLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.76.62 CR ORES & DELHI METRO TO GURGAON AMOUNTING TO RS.18.13 CROR ES WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 74. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.2 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S 42 GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.2(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 75. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE AMOUNT OF CAPITAL GAIN ON SALE OF SHARE S AMOUNTING TO RS.22,000/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 76. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 27-31 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3(A) BY THE ASSESSEE IS ALLOWED AND GROUN D NO.3(B) RAISED BY THE ASSESSEE IS DISMISSED. 77. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UND ER: 4. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE DIVIDEND ON SHARES AMOUNTING TO RS.4,4 4,910/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 78. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.7 RAISE D BY 43 THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 43-44 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDIS. GROUND NO.4(A) & (B) RAISED BY THE ASSESS EE IS ALLOWED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.728/CHD/2013(A.Y. 2010-11) 79. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.17,98,598/- ON ACCOUNT OF UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 80. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWE D. 81. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.180.17 CRORES ON ACCO UNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIG HLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.81.99 CR ORES & DELHI METRO TO GURGAON AMOUNTING TO RS.17 CRORES WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 82. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.2 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S 44 GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.2(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 83. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE DIVIDEND ON SHARES AMOUNTING TO RS.3,2 6,060/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 84. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.7 RAISE D BY THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 43-44 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.729/CHD/2013(A.Y. 2011-12) 85. GROUND NOS.1 RAISED BY THE ASSESSEE READ AS UN DER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.1,58,98,296/- ON ACCOUNT OF UNCLAIMED REFUNDS UNDER THE FACTS & CIRCUMSTANCES O F THE CASE. 86. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUES IN THESE GROUNDS ARE SIMILAR TO THE ISSUE IN GROUND NO.1 RAI SED BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF OUR ORDER 45 ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NOS.1 RAISED BY THE ASSESSEE ARE PARTLY ALL OWED. 87. GROUND NOS.2 (A) & (B) RAISED BY THE ASSESSEE R EAD AS UNDER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACT S OF THE CASE IN UPHOLDING AN ADDITION OF RS.136.42 CRORES ON ACC OUNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIG HLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.16.87 CR ORES & DELHI METRO TO GURGAON AMOUNTING TO RS.70 LACS WH ICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 88. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUES IN THESE GROUNDS ARE SIMILAR TO THE ISSUE IN GROUND NO.2 RAI SED BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORC E. GROUND NOS.2(A) & (B) RAISED BY THE ASSESSEE ARE PA RTLY ALLOWED. 89. GROUND NO.3(A) & (B) RAISED BY THE ASSESSEE REA DS AS UNDER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE AMOUNT OF CAPITAL GAIN ON SALE OF SHA RES AMOUNTING TO RS.1,32,38,997/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUT ING THE FINDING OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHI CH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 90. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY 46 THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 27-31 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3 (A) RAISED BY THE ASSESSEE IS ALLOWED A ND GROUND NO.3(B) RAISED BY THE ASSESSEE IS DISMISSED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.733/CHD/2014(A.Y. 2012-13) 91. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.18,38,67,254/- ON ACCOUNT O F UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 92. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWE D. 93. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.35.13 CRORES ON ACCOU NT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.25.81 CR ORES & DELHI METRO TO FARIDABAD AMOUNTING TO RS.25 CRORES W HICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 94. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.2 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S 47 GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.2(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 95. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UND ER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE DIVIDEND ON SHARES AMOUNTING TO RS.32,25,160/- AS BUSINESS INCOME WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 96. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY THE ASSESSEE IN ITA NO.185/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.185/CHD/2010 AT PARA 43-44 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3(A) RAISED BY THE ASSESSEE IS ALLOWED AN D GROUND NO.3(B) RAISED BY THE ASSESSEE IS DISMISSED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.791/CHD/2015(A.Y. 2013-14) 97. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 1. THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.21,17,93,427/- ON ACCOUNT O F UNCLAIMED REFUNDS WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 98. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE I N THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S 48 GIVEN IN ITA NO.184/CHD/2010 AT PARA 10-13 OF OUR ORDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWE D. 99. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING AN ADDITION OF RS.104.14 CRORES ON ACCO UNT OF INCOME FROM INDUSTRIAL AREA ACTIVITY WHICH IS HIG HLY UNJUSTIFIED & UNCALLED FOR. B) THAT THE LD. CIT (A) HAS ERRED UNDER THE FACTS & CIRCUMSTANCES OF THE CASE IN NOT ALLOWING EXPENDITURE INCURRED ON KMP EXPRESSWAY AMOUNTING TO RS.15.20 CR ORES WHICH IS HIGHLY UNJUSTIFIED & UNCALLED FOR. 100. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.2 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 20-21 OF OUR O RDER ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.2(A) & (B) RAISED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 101. GROUND NO.3 RAISED BY THE ASSESSEE READS AS U NDER: 3. A) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE DIVIDEND PROFIT ON SHARES AMOUNTING TO RS.11,66,138/- AS BUSINESS INCOME AGAINST THE CAPITAL LOSS OF RS.3,69,22,532/- WHICH IS HIGHLY UNJUSTIFIED & UNCALLE D FOR. B) THAT THE LD. CIT (A) HAS ERRED IN LAW & FACTS IN NOT ADJUDICATING THE GROUND OF APPEAL DISPUTING THE FINDI NG OF A. A. REGARDING EXPENDITURE IN RELATION TO INVESTMENT IN SHARES HAVING BEEN CHARGED TO PROFIT & LOSS ACCOUNT IN THE ABSENCE OF ANY MATERIAL ON RECORD WHICH IS HIGHLY UNJUSTIFIED , & UNCALLED FOR. 102. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISE D BY THE ASSESSEE IN ITA NO.184/CHD/2010 AND THE FINDING S GIVEN IN ITA NO.184/CHD/2010 AT PARA 27-31 OF OUR O RDER 49 ABOVE SHALL APPLY TO THIS CASE ALSO MUTATIS MUTANDI S. GROUND NO.3(A) RAISED BY THE ASSESSEE IS ALLOWED AN D GROUND NO.3(B) RAISED BY THE ASSESSEE IS DISMISSED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 103. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH NOVEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH