IFMR Trust, CHENNAI V. ACIT, CHENNAI

ITA 962/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7739 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 16-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S. SANKARALINGAM
• Assessee Lawyers: LETTING OUT THIS
• Keywords: Business income; Depreciation; Business expenditure; Maximum Marginal Rate; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ' # . $ & ' BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A. NO. 962/MDS/2016 / ASSESSMENT YEAR : 2012-13 M/S. IFMR TRUST, IITM RESEARCH PARK, PHASE 1, 10TH FLOOR, NO.1, KANAGAM VILLAGE (BEHIND TIDEL PARK), TARAMANI, CHENNAI - 600 113. [PAN: AAATI 5801P] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE - 13(1), NO.121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI - 600 034. ( / APPELLANT) ( / RESPONDENT) ) * / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE -.) * / RESPONDENT BY : SHRI S. SANKARALINGAM, CIT * /DATE OF HEARING : 09.02.2017 * /DATE OF PRONOUNCEMENT : 16.02.2017 /O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, CHENNAI VI DE PROCEEDINGS IN ITA NO. 147/2015-16 DATED 28.03.2016 FOR THE ASSESSMENT YEA R 2012-13 AGAINST THE :-2-: I.T.A. NO. 962/MDS/2016 ORDER OF ASSESSMENT PASSED BY THE ACIT CORPORATE CI RCLE - 13(1), CHENNAI (HEREIN AFTER REFERRED TO AS LD. AO) U/S. 143(3) OF THE INCOME TAX ACT (HEREIN AFTER REFERRED TO AS THE ACT) DATED 31.03.2015. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DECISION OF THE LD AO TR EATING THE INCOME DERIVED BY THE ASSESSEE FROM INCOME FROM BUSINESS TO INCOME FRO M OTHER SOURCES AND ALLOWING ONLY 2% OF THE EXPENDITURE ON ADHOC BASIS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS A PRIVATE TRUST ESTABLISHED UNDER THE INDIAN TRUSTS ACT ON 19.10.20 06 WITH AN OBJECT TO PRIMARILY FINANCE THE RURAL SEGMENT, SUPPORT RURAL ENTREPRENE URS, PROMOTE INNOVATIVE BUSINESS OPPORTUNITIES IN RURAL AREAS AND EARN INCO ME FROM SUCH BUSINESS VENTURES. THE ASSESSEE TRUST IS TAXABLE AT MAXIMUM MARGINAL RATE UNDER THE ACT. THE ASSESSEE DERIVED INCOME DURING THE YEAR U NDER APPEAL FROM THE FOLLOWING ACTIVITIES :- INCOME FROM SHARED SERVICES - RS. 1,50,07,46 7/- OFFERED AS BUSINESS INCOME INCOME FROM INFRASTRUCTURE SERVICES - RS. 3,69,15,813/- OFFERED AS BUSINESS INCOME INTEREST ON LOANS TO THIRD PARTIES - RS. 57,67,741/- OFFERED AS BUS INESS INCOME INTEREST ON FD OUT OF SURPLUS FUNDS - RS. 19,73,656/- OFFERED AS INCOME FROM OTHER SOURCES :-3-: I.T.A. NO. 962/MDS/2016 INTEREST ON INVESTMENTS - RS. 3,39,176/- OFFE RED AS BUSINESS INCOME PROVISIONS WRITTEN BACK - RS. 13,60,881/- OFFE RED AS BUSINESS INCOME OTHER INCOME - RS. 30,72,985/- OFFERED AS BUS INESS INCOME TOTAL RS. 6,44,37,719/- AGAINST THIS INCOME, THE ASSESSEE DEBITED THE FOLLO WING EXPENSES :- STAFF COSTS RS. 3,36,42,884/- ADMINISTRATION & OTHER EXPS. RS. 29,39,31,902/- 4. OUT OF THE AFORESAID EXPENDITURE, THE ASSESSEE HAD VOLUNTARILY DISALLOWED IN THE MEMO OF INCOME A SUM OF RS. 24,94,26,022/-. THE REMAINING SUM OF RS. 7,81,48,764/- WAS CLAIMED AS INCURRED FOR THE PURPO SE OF BUSINESS. THESE EXPENSES WERE INCURRED TOWARDS SALARIES AND OTHER S TAFF COSTS, RENT AND AMENITIES, REPAIRS AND MAINTENANCE, POSTAGE & TELEG RAMS, PRINTING & STATIONERY, TELEPHONE EXPENSES, CONSUMABLES, TRAVELLING & CONVE YANCE, CONSULTANCY CHARGES, LEGAL & PROFESSIONAL CHARGES, BROKERAGE & COMMISSIO N, CONFERENCE & SEMINAR EXPENSES, RECRUITMENT CHARGES, OFFICE EXPENSES, SUB SCRIPTION, SPONSORSHIP CHARGES, WEBSITE MAINTENANCE AND INTERNET EXPENSES, AUDITORS REMUNERATION AND MISCELLANEOUS EXPENSES. THE LD AO SHOW CAUSED TH E ASSESSEE AT TO WHY THE ALLOWABILITY OF EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT SHOULD BE RESTRICTED ONLY TO 2% OF GROSS RECEIPTS AS THAT INC URRED FOR EARNING THE INCOME IN ACCORDANCE WITH THE APPELLATE ORDERS FOR THE EARLIE R YEARS. THE ASSESSEE :-4-: I.T.A. NO. 962/MDS/2016 EXPLAINED BEFORE THE LD AO THAT THE FACTS IN THE YE AR UNDER APPEAL WITH REGARD TO THE ACTIVITIES CARRIED ON BY THE ASSESSEE WITH THAT IN THE EARLIER YEARS ARE FACTUALLY DISTINGUISHABLE AND ACCORDINGLY PLEADED THAT THE DE CISION TAKEN IN THE EARLIER YEARS WOULD HAVE NO APPLICATION FOR THE YEAR UNDER APPEAL. THE ASSESSEE SUBMITTED THAT IT UNDERTOOK TWO DISTINCT BUSINESS A CTIVITIES AS UNDER :- SEGMENT I : INCUBATION OF NEW ENTITIES SEGMENT II : PROVIDING SHARED SERVICES & INFRASTRUC TURE SERVICES AND LOANS / INVESTMENTS. 5. THE ASSESSEE CATEGORICALLY SUBMITTED THAT IT HA D UNDERTAKEN ONLY SEGMENT II BUSINESS ACTIVITY DURING THE YEAR UNDER APPEAL A ND AS SUCH THE APPELLATE ORDERS FOR EARLIER YEARS WAS ONLY IN RESPECT OF SEG MENT I BUSINESS ACTIVITY AND HENCE THE SAME CANNOT BE MADE APPLICABLE FOR THE AS ST YEAR 2012-13. THE ASSESSEE ALSO SUBMITTED THAT IT HAD TAKEN ON LEASE A PORTION OF SPACE IN IIT MADRAS RESEARCH PARK WHICH WAS UTILIZED BY THE ASSE SSEE BY LETTING OUT THIS SPACE TO PROVIDE SHARED SERVICES AND INFRASTRUCTURE SERVICES UNDER ITS SEGMENT II BUSINESS ACTIVITY. AS PER THE LEASE AGREEMENT, TH E ASSESSEE HAS PAID AN UPFRONT NON REFUNDABLE ADVANCE LEASE RENT AMOUNTING TO RS. 7,35,92,000/- FOR A TERM OF 20 YEARS AND SOUGHT TO RECOVER THE SAME FROM THE PA RTIES TO WHOM IT HAD IN TURN LET OUT THE SPACE OVER A PERIOD OF 7 YEARS. THE A SSESSEE ALSO PROVIDED CABINS & WORKSTATIONS TO VARIOUS PARTIES BY PROVIDING INFRAS TRUCTURE SERVICES AND HAD RECOVERED THE SAME FROM THOSE PARTIES WHICH HAD BEE N OFFERED AS INCOME IN THE FORM OF INFRASTRUCTURE SERVICES. THE RELEVANT DOC UMENTS IN THIS REGARD WERE ALSO :-5-: I.T.A. NO. 962/MDS/2016 SUBMITTED BEFORE THE LD AO. THE LD AO WITHOUT APP RECIATING THIS FACT, COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 31.3.2015 D ETERMINING TOTAL INCOME AT RS. 6,31,48,970/- UNDER THE HEAD INCOME FROM OTHER SOURCES AFTER GIVING AN ADHOC ALLOWANCE OF 2% OF GROSS RECEIPTS AS EXPENDIT URE FOR EARNING THE INCOME. THIS ACTION WAS UPHELD BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 5.1 THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER ('AO') IN TREATING THE GROSS RECEIPTS OF THE APPELL ANT AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 5.2 THE CIT(A) ERRED IN CONFIRMING THE ORDER OF TH E AO IN ASSESSING THE INCOME EARNED BY THE APPELLANT IN THE REGULAR COURS E OF BUSINESS AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 5.3 THE CIT(A) GROSSLY ERRED IN DISREGARDING THE S EGMENT II BUSINESS ACTIVITIES CARRIED ON THE APPELLANT. 5.4 THE CIT(A) FAILED TO APPRECIATE THAT UNLIKE TH E PRECEDING AY, DURING THE SUBJECT A Y, THE APPELLANT WAS NOT ENGAGED IN I NCUBATION OF ENTITIES AND AS SUCH THE ASSESSMENT ORDER PASSED BY THE ASSE SSING OFFICER ON THE BASIS OF MISCONCEIVED FACTS IS VOID AB INITIO. 5.5 THE CIT(A) GROSSLY ERRED IN FOLLOWING THE ORDE R OF HIS PREDECESSOR FOR THE EARLIER AY 2009-10 WITHOUT APPRECIATING THA T THE FACTS OF THE EARLIER AY 2009-10 WERE COMPLETELY DIFFERENT AND IS NOT APP LICABLE FOR THE SUBJECT AY 2012-13. 5.6 THE CIT(A) GROSSLY FAILED TO APPRECIATE THAT D URING THE SUBJECT AY, THE APPELLANT WAS NOT INVOLVED IN INCUBATION OF NEW ENTITIES AND IT WAS IN FACT PURSUING SEGMENT II BUSINESS ACTIVITY OF PROVI DING SHARED AND INFRASTRUCTURE SERVICES AND AS SUCH THE INCOME GENE RATED FROM SUCH :-6-: I.T.A. NO. 962/MDS/2016 BUSINESS ACTIVITY AND CREDITED TO P&L SHOULD BE ASS ESSED AS 'PROFITS AND GAINS OF BUSINESS' AND IT SHOULD NOT TREATED AS 'IN COME FROM OTHER SOURCES'. 5.7 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT ALL EXPENDITURE DEBITED TO P&L ACCOUNT IN THE SUBJECT AY PERTAINS TO EARNIN G OF BUSINESS INCOME FROM SEGMENT IT BUSINESS ACTIVITY (I.E. PROVIDING S HARED AND INFRASTRUCTURE SERVICES) AND AS SUCH ALL THE EXPENSES DEBITED TO P &L ACCOUNT IS ALLOWABLE AS BUSINESS EXPENDITURE. 5.8 HAVING ACCEPTED THE COMMERCIAL RATIONALE FOR P ROVIDING SHARED SERVICES AND INFRASTRUCTURE SERVICES, THE CIT(A) ER RED IN CONCLUDING THAT SAID RECEIPTS COULD NOT BE ASSESSED AS BUSINESS INC OME SINCE IT WAS MERE REIMBURSEMENT OF COSTS WITHOUT PROPERLY APPRECIATIN G THE BUSINESS TRANSACTION UNDERTAKEN BY THE APPELLANT. 5.9 THE CIT(A) GROSSLY ERRED IN CONCLUDING THAT IN COME FROM SEGMENT II BUSINESS ACTIVITY (I.E. PROVIDING SHARED AND INFRAS TRUCTURE SERVICES) CANNOT BE ASSESSED AS BUSINESS INCOME AS THE APPELLANT WAS RENDERING SERVICES ONLY TO ITS RELATED PARTIES AND AS SUCH IT CANNOT E ARN PROFIT FROM ITSELF. 5.10 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE BUSINESS ACTIVITY OF PROVIDING SHARED AND INFRASTRUCTURE SERVICES COULD NOT BE RE-CATEGORIZED AS A CONTINUATION OF THE INCUBATION ACTIVITY THE NEW E NTITIES. 5.11 THE CIT(A) ERRED IN ASSESSING INTEREST INCOME ON LOANS GRANTED AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' W ITHOUT APPRECIATING THAT GRANTING OF LOANS IS ONE OF THE BUSINESS ACTIV ITIES OF THE APPELLANT. 5.12 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT EVE N GOING BY THE 'PRINCIPLES OF MATCHING', ALL THE EXPENSES DEBITED TO P&L ACCOUNT IN THE SUBJECT AY IS RELATABLE ONLY TO INCOMES CREDITED TO THE P&L ACCOUNT (I.E. SEGMENT II BUSINESS ACTIVITY) AND AS SUCH ALL THE E XPENSES ARE ALLOWABLE AS TAX DEDUCTIBLE EXPENDITURE. :-7-: I.T.A. NO. 962/MDS/2016 5.13 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AO HAD INCORRECTLY CONCLUDED THAT THERE IS NO 'PRINCIPLE OF MATCHING' BETWEEN EXPENDITURE INCURRED AND INCOME EARNED WITHOUT APPRECIATING THA T INCOME FROM SHARED/INFRASTRUCTURE SERVICES HAS BEEN EARNED THRO UGH INCURRENCE OF EXPENDITURE IN THE FORM OF 'RENT', 'STAFF COSTS' AN D 'ADMINISTRATIVE EXPENSES' AND INTEREST INCOME FROM LOANS AND INVEST MENTS HAVE BEEN EARNED THROUGH INCURRENCE OF EXPENDITURE BY WAY OF 'INTEREST/FINANCE CHARGES' AND 'ADMINISTRATIVE & OTHER EXPENSES'. THE REFORE, THE CIT(A) FAILED TO APPRECIATE THAT THESE EXPENSES ARE DIRECT LY RELATABLE TO THE INCOME EARNED BY THE APPELLANT. 5.14 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT, UN DER THE ACT, ANY EXPENDITURE WHICH IS INCURRED 'WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS' IS ALLOWABLE AS DEDUCTION, SUBJECT TO OTH ER PROVISIONS OF THE ACT. 5.15 WITHOUT PREJUDICE TO THE ABOVE, EVEN ASSUMING WITHOUT ACCEPTING THAT THE INCOMES CREDITED TO P&L ACCOUNT IS HELD TO BE ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES', THE CORRESPON DING EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING SUCH INCOME SHOULD BE ALLOWABLE UNDER SECTION 57(III) OF THE AC T. ESTIMATE OF EXPENDITURE AT THE RATE OF 2% 5.16 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ER RED IN CONFIRMING THAT AD-HOC EXPENDITURE AT THE RATE OF 2% OF THE GROSS R ECEIPTS OF THE APPELLANT IS REASONABLE AND ALLOWABLE AS DEDUCTION WHILE COMP UTING THE TOTAL INCOME. 5.17 THE CIT(A) ERRED IN HOLDING THAT AD-HOC EXPEN DITURE AT THE RATE OF 2% OF THE GROSS RECEIPTS OF THE APPELLANT IS REASON ABLE AND ALLOWABLE AS DEDUCTION WITHOUT CONSIDERING THE ACTUAL EXPENDITUR E DEBITED TO THE PROFIT & LOSS ACCOUNT. :-8-: I.T.A. NO. 962/MDS/2016 5.18 THE CIT(A) GROSSLY ERRED IN NOT CONSIDERING T HE COST STATEMENT FILED BY THE APPELLANT WHICH CATEGORICALLY STATES THE DIR ECT EXPENSES INCURRED/DEBITED TO P&L ACCOUNT TO EARN THE INCOMES CREDITED TO THE P&L ACCOUNT. HAVING ACCEPTED THAT THE SAID EXPENSES WER E IN FACT INCURRED BY THE APPELLANT FOR PROVIDING SHARED SERVICES AND INF RASTRUCTURE FACILITIES, THE CIT(A) GROSSLY ERRED IN DISALLOWING THE SAME AND ES TIMATING THE EXPENDITURE AT THE RATE OF 2%. 5.19 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ER RED IN OVERLOOKING THE FACT THAT AD-HOC ALLOWANCE OF EXPENDITURE AT THE RA TE OF 2% IS WITHOUT ANY BASIS. 5.20 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) FA ILED TO APPRECIATE THAT THE AD-HOC ALLOWANCE OF EXPENDITURE AT THE RATE OF 2% IS VERY LESS AND ARBITRARY CONSIDERING THE SCALE OF BUSINESS ACTIVIT IES CARRIED ON BY THE APPELLANT. 5.21 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) OU GHT TO HAVE APPRECIATED THAT, IN ANY EVENT, DEPRECIATION ON FIX ED ASSETS UNDER SECTION 32 OF THE ACT IS A STATUTORY ALLOWANCE WHICH CANNOT BE DISALLOWED. 6. THE LD AR ADVANCED VARIOUS ARGUMENTS BY MAKING REFERENCES TO VARIOUS PAGES OF THE PAPER BOOK STATING THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER APPEAL IS TOTALLY DIFFERENT F ROM THAT CARRIED OUT IN EARLIER YEARS, WHICH HAD NOT BEEN PROPERLY APPRECIATED BY T HE LOWER AUTHORITIES AND ACCORDINGLY PRAYED FOR SETTING ASIDE OF THE ENTIRE APPEAL TO THE FILE OF THE LD AO FOR PROPER ADJUDICATION. IN RESPONSE TO THIS, THE LD DR AGREED FOR SETTING ASIDE OF THE APPEAL TO THE FILE OF THE LD AO IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. :-9-: I.T.A. NO. 962/MDS/2016 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILS OF VARIOUS EXPENSES FI LED BY THE ASSESSEE IN ITS PAPER BOOK. WE FIND THAT THE ASSESSEE HAD NOT DEBITED ANY EXPENDITURE TOWARDS INCUBATION EXPENSES DURING THE YEAR UNDER APPEAL. WE FIND THAT THE ASSESSEE HAD TAKEN A SPACE ON LEASE FROM IIT MADRAS RESEARCH PARK AND HAD UTILIZED THE SAME BY LETTING OUT THE SAME TO VARIOUS PARTIES AND COLLECTED INCOME FROM SHARED SERVICES. WE ALSO FIND THAT THE ASSESSEE HAD ALSO PROVIDED INFRASTRUCTURE IN THE FORM OF PROVIDING CABINS AND WORK STATIONS AND HAD RECOVERED THE COST OF THE SAME WITH MARGINS FROM VARIOUS PARTIES AND HAD DERI VED INCOME FROM INFRASTRUCTURE SERVICES. WE HAVE GONE THROUGH THE AGREEMENT FOR PROVIDING INFRASTRUCTURE AND SHARED SERVICES VIDE PAGES 103 T O 130 OF THE PAPER BOOK ; BREAK UP OF INCOME EARNED IN RELATION TO INFRASTRUC TURE & SHARED SERVICES VIDE PAGE 102 OF PB ; COST WORKING FOR ARRIVING AT INFRA STRUCTURE SERVICE INCOME VIDE PAGES 146 TO 147 OF PB ; SAMPLE INVOICE COPIES REF LECTING COLLECTION OF INFRASTRUCTURE SERVICE FEES ALONG WITH SERVICE TAX VIDE PAGES 148 TO 151 OF PB AND WORKING INDICATING THE PROFIT DERIVED FROM INFRASTR UCTURE SERVICES BASED ON ACCELERATED RECOVERY OF SECURITY DEPOSIT VIDE PAGE 152 OF PB. THE ASSESSEE HAD OFFERED THE INCOME DERIVED FROM THE ABOVE SERVICES (I.E. INCOME FROM SHARED SERVICES , INFRASTRUCTURE SERVICES , INTEREST ON LO ANS ETC) UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION ON THE PREMISE THE SAME WERE EARNED OUT OF THE BUSINESS ACTIVITIES OF THE ASSESSEE AND CLAIMED THE EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS AGAINST SUCH INCOME. IT IS A F ACT THAT THE ASSESSEE HAD NOT CARRIED OUT ANY SEGMENT I BUSINESS ACTIVITY I.E. IN CUBATION OF NEW ENTITIES DURING :-10-: I.T.A. NO. 962/MDS/2016 THE YEAR UNDER APPEAL. IT HAD ONLY CARRIED OUT SE GMENT II BUSINESS ACTIVITIES DURING THE YEAR UNDER APPEAL. THE VARIOUS STREAMS OF INCOME DERIVED FROM SEGMENT II BUSINESS ACTIVITIES WERE STATED ELSEWHER E HEREINABOVE IN THIS ORDER. THIS FACT WAS LOST SIGHT BY THE LOWER AUTHORITIES A ND THE FINDINGS GIVEN BY THE APPELLATE FORUMS IN EARLIER YEARS WERE SIMPLY COPY PASTED WHILE DISPOSING OFF THE APPEAL FOR THE YEAR UNDER APPEAL. WE HOLD THAT TH E ALLOWABILITY OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT SHOULD HAVE TO BE ADJUDICATED BASED ON THE FINDINGS TO BE GIVEN WITH REGARD TO THE VARIOUS STREAMS OF INCOME IN THE FORM OF SHARED SERVICES / INFRASTR UCTURE SERVICES ETC BY THE LOWER AUTHORITIES AND THE HEAD OF INCOME THEREON. THE L D AO WOULD HAVE TO GO THROUGH ALL THE RELEVANT AGREEMENTS ENTERED INTO BY THE ASSESSEE AND GIVE A FINDING AS TO WHETHER THE SAME WOULD FALL WITHIN TH E OBJECTS OF THE ASSESSEE TRUST SO AS TO FALL WITHIN THE AMBIT OF BUSINESS INCOME O F THE ASSESSEE. IN CASE IF THE SAME IS TO BE CONSTRUED AS INCOME FROM OTHER SOURCE S, EVEN THEN THE ALLOWABILITY OF THE VARIOUS EXPENSES WOULD HAVE TO BE CONSIDERED IN THE LIGHT OF THE PROVISIONS OF SECTION 57(III) OF THE ACT. WE AGRE E WITH THE ARGUMENTS OF THE LD AR THAT THE FINDINGS GIVEN IN THE EARLIER YEARS WIT H REGARD TO INCUBATION OF NEW ENTITIES , DOES NOT APPLY TO THE FACTS DURING THE Y EAR UNDER APPEAL. WE HOLD THAT THE LOWER AUTHORITIES HAD NOT ADJUDICATED THE VARIO US STREAMS OF INCOME IN THE CORRECT PERSPECTIVE FOR THE YEAR UNDER APPEAL. ACC ORDINGLY, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PL AY, TO SET ASIDE THE ENTIRE ASSESSMENT TO THE FILE OF THE LD AO FOR DENOVO ADJU DICATION, IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVE N REASONABLE OPPORTUNITY OF :-11-: I.T.A. NO. 962/MDS/2016 BEING HEARD. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 16TH DAY OF FEBRU ARY, 2017 AT CHENNAI. SD/ - ( ' # . $ ) (DUVVURU RL REDDY) /JUDICIAL MEMBER SD/ - ( ) (M. BALAGANESH) / ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 16TH FEBRUARY, 2017 JPV * -&45 65 /COPY TO: 1. ) APPELLANT 2. -.) /RESPONDENT 3. 7 ( )/CIT(A) 4. 7 /CIT 5. 5 -&& /DR 6. 9 /GF