ACIT 10(2), MUMBAI v. LAWKIM LTD, MUMBAI

ITA 2010/MUM/2010 | 2003-2004
Pronouncement Date: 15-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 201019914 RSA 2010
Assessee PAN AAACL2462N
Bench Mumbai
Appeal Number ITA 2010/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 3 day(s)
Appellant ACIT 10(2), MUMBAI
Respondent LAWKIM LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 15-07-2011
Assessment Year 2003-2004
Appeal Filed On 12-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI R.S. SYAL A.M. AND SHRI V. DURGA RAO J.M. ITA NO. 2010/MUM/2010 ASSESSMENT YEAR: 2003-04 ASSTT. COOMMISSIONER OF INCOME-TAX . APPELLANT ROOM NO. 432 4 TH FLOOR AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. VS. LAWKIM LTD. RESPONDENT PIROJSHA NAGAR L.B.S. MARG VIKROLI (W) MUMBAI 400 089. (PAN AAACL2462N) APPELLANT BY : MR. RAJASHRI DEVIDY REVENUE BY : MISS SONALI GORBOLE ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-21 MUMBAI PASSED ON 16/12/2009 FOR THE ASS ESSMENT YEAR 2003-04 WHEREIN THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE EXPENSE IN CURRED ON CORPORATE FILM MAKING IS REVENUE EXPENDITURE AND BE NEFIT IS NOT OF AN ENDURING NATURE TO THE ASSESSEE COMPANY IN TERMS OF ENHANCED SALES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A O IN IRRECOVERABLE AMOUNTS WRITTEN OFF BY THE ASSESSEE C OMPANY TREATING THE LOSS AS CAPITAL IN NATURE THE LD. CIT( A) FAILED TO ACCEPT THAT THE AMOUNT WRITTEN OFF WAS ADMITTEDLY A N INTER CORPORATE DEPOSIT AND CAN BE DENIED AS CAPITAL LOSS CAPITAL LOSS OF SUCH NATURE CAN ONLY BE ALLOWED IF THE ASSESSEE IS IN MONEY ITA NO. 2010/M/2010 M/S LAWKIM LTD. 2 LENDING BUSINESS AS OBSERVED BY THE HONBLE APEX CO URT IN THE CASE OF A.V. THOMAS & CO. LTD. VS. CIT 48 ITR 67. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. AS REGARDS GROUND NO. 1 REGARDING CORPORATE FILM MAKING CHARGES AMOUNTING TO RS. 1 25 000/- IT IS OBSERVED THAT THE ASSESSEE INCURRED RS. 1 25 000/- AS CORPORATE FILMMAKING CHA RGES AND CLAIMED THE SAME AS SALES PROMOTION EXPENSES. THE AO WAS OF THE OPINION THAT CORPORATE FILMMAKING CHARGES WOULD GIVE BENEFIT OF ENDURING NATURE TO THE ASSESSEE COMPANY IN TERMS OF ENHANCES SALES. HE NCE THE AO DISALLOWED THE SAID EXPENDITURE OF RS. 1 25 000/- A S CAPITAL IN NATURE. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THE CORPORATE FILMMAKING CHARGES INCURRED WERE ALLOWABLE AS DEDUC TION U/S 37(1) OF THE ACT. HE FURTHER SUBMITTED THAT THE SECTION SPEA KS OF EXPENDITURE WHICH WERE NOT COVERED BY THE PROVISIONS OF SECTION 30 TO 36 OF THE ACT AND REFERS TO ANY EXPENDITURE OF REVENUE NATURE INCURRED FOR THE PURPOSES OF BUSINESS. AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO BY HOLDING AS UNDER:- 3.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE. THERE ARE NUMBER OF DECISIONS ON THIS ISSUE HOLDING THAT THE PUBLIC MEMORY IS VERY SHORT AND THE EFFECT OF ANY ADVERTISING FIL M DOES NOT LAST LONG IN THE MEMORY OF PUBLIC. THE COURTS HAVE ALSO HELD THAT EVEN IF SOME ADVANTAGE OF ENDURING NATURE IS DERIVED ON APPLICATION OF THIS TEST EVERY EXPENDITURE WILL NOT BE OF CAPI TAL NATURE. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT THE EXPENDITURE INCURRED ON MAKING OF ADVERTISEMENT FILM IS AN EXPENDITURE OF R EVENUE IN NATURE. IN MY CONSIDERED VIEW THE EXPENDITURE WAS A LLOWABLE TO APPELLANT AS REVENUE EXPENDITURE. THE DISALLOWANCE MADE BY THE AO IS THEREFORE DELETED. 3. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 4. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSING RECORD AS WELL AS GOING THROUGH THE ORDERS OF THE REVENUE ITA NO. 2010/M/2010 M/S LAWKIM LTD. 3 AUTHORITIES WE FIND THAT THE CATEGORICAL FINDING O F THE CIT(A) IS THAT IT HAS BEEN HELD IN VARIOUS DECISIONS THAT THE EXPENDI TURE INCURRED IN MAKING OF ADVERTISEMENT FILM IS AN EXPENDITURE OF R EVENUE IN NATURE. THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF CIT (A) DELETING THE DISALLOWANCE OF RS. 1 25 000/- MADE BY THE AO ON AC COUNT OF CORPORATE FILM MAKING CHARGES TREATING THE SAME AS REVENUE EXPENDITURE. ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 5. AS REGARDS GROUND NO. 2 REGARDING DELETION OF AD DITION OF RS 57 30 641/- WITH REGARD TO IRRECOVERABLE AMOUNTS WR ITTEN OFF IT IS OBSERVED BY THE AO THAT ASSESSEE HAD WRITTEN OFF ADVANCE MADE TO SUPPLIERS AT RS. 70 367/- AND INTER CORPORATE DEPOS IT PLACED WITH ALPIC FINANCE LTD. RS. 48 00 000/- AMOUNT NOT RECO VERED FROM DEBTORS RS. 72 552/- AND ACCRUED INTEREST ON INTER CORPORATE DEPOSITS RS. 8 60 274/- AGGREGATING TO RS. 58 03 193/-.. THE ASESSSEE EXPLAINED BEFORE THE AO THAT THE AMOUNTS RELATES TO AMOUNTS ADVANCED IN THE ORDINARY COURSE OF BUSINESS AND WRI TE OFF OF THE SAME SHOULD BE ALLOWED AS A DEDUCTION AND THE ASSESSEE M ADE DETAILED SUBMISSIONS BEFORE THE AO DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE THE AO WAS OF THE VIEW THAT THE CLAIM OF THE ASSESSEE I S NOT ALLOWABLE IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF BIRLA BROTHERS & CO. 77 ITR 751 AND ANOTHER CASE O F M/S ABDUL KADAR 41 ITR 545. THE AO NOTED THAT IN THE ABOVE M ENTIONED CASES THE HONBLE SUPREME COURT HELD THAT THE BAD DEBTS C AN BE ALLOWED ONLY IF SUCH DEBT IS PASSED THROUGH TRADING ACCOUNT OF PROFIT & LOSS ACCOUNT OF THE ASSESSEE COMPANY. A DEBT CAN BE ALLO WED AS BAD DEBT ONLY IF IT WOULD HAVE GONE INTO ANNUAL ACCOUNTS AS TRADING DEBT OF THE BUSINESS. IF THERE IS BAD DEBT ON ACCOUNT OF LOANS AND ADVANCES GIVEN FOR THE PURPOSE OF INVESTMENT OR OTHERWISE THEN S UCH DEBT IS NOT TREATED AS TRADING DEBT AND THEREFORE NOT ALLOWABL E AS DEDUCTION U/S 36 OF THE ACT AS BAD DEBT. THE AO FURTHER NOTED THA T SECTION 36(1)(VII) ITA NO. 2010/M/2010 M/S LAWKIM LTD. 4 THAT GOVERNS THE ALLOWABILITY OF BAD DEBT IS SUBJEC T TO THE PROVISION OF SECTION 36(2) WHICH PROVIDES THAT THE DEDUCTION SH ALL NOT BE ALLOWED UNLESS THE DEBT HAD BEEN TAKEN INTO ACCOUNT IN COMP UTING THE INCOME OF THE ASSESSEE. THE AO OBSERVED THAT IN VIEW OF TH E ABOVE CLEAR CUT LEGAL RATIO THE AMOUNTS OF RS. 48 00 000/- & RS. 8 60 274/- CANNOT BE ALLOWED TO THE ASSESSEE. THE AMOUNT OF RS. 48 LACS WHICH IS ADMITTEDLY A INTER-CORPORATE DEPOSIT CAN AT BEST BE DEFINED AS A CAPITAL LOSS. CAPITAL LOSSES OF SUCH NATURE CAN ONL Y BE ALLOWED IF THE ASSESSEE IS FOUND TO BE INVOLVED IN MONEY LENDING B USINESS AS OBSERVED BY HONBLE APEX COURT IN THE CASE OF A.V. THOMAS & CO. LTD. VS. CIT (48 ITR 67). THIS POSITION WAS FURTHER REAF FIRMED IN SEVERAL JUDICIAL PRONOUNCEMENTS AS AT CITY MOTOR SERVICES L TD. 61 ITR 418 (MAD.) CIT VS. SIRPUR PAPER MILLS 144 ITR 393 (AP ). THE AO HELD THAT IN THE INSTANT CASE IT IS CRYSTAL CLEAR THAT THE AS SESSEE COMPANY IS NOT IN THE BUSINESS OF MONEY LENDING THEREFORE THE AC T OF MAKING INTER- CORPORATE DEPOSITS BY THE ASSESSEE COMPANY WAS NOT A PRE-MEDITATED BUSINESS ACTIVITY BUT JUST AN EFFORT TO GAINFULLY D EPLOY ITS SURPLUS FUNDS. HE FURTHER HELD THAT THE NO EVIDENCES HAD BE EN PRODUCED BY THE ASSESSEE THAT IT WAS A BUSINESS ACTIVITY CONDUC TED PURELY WITH A VIEW OF MAKING BUSINESS PROFITS. THE AO POINTED OUT THAT INCIDENTALLY RECORDS INDICATE THAT THE INTEREST AC CRUED ON SUCH DEPOSITS IN THE PAST HAS ALSO BEEN SHOWN NOT AS A B USINESS INCOME BUT ONLY AS A MISCELLANEOUS/OTHER INCOME. THE AO T HEREFORE FINALLY HELD THAT THE ARGUMENT OF THE ASSESSEE COMPANY FAIL S AND THE CLAIM FOR WRITE OFF OF RS. 48 00 000/- AND RS. 8 60 274/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE COMPANY. SIMILA RLY THE AMOUNT OF RS. 70 367/- SHOWN BY THE ASSESSEE COMPANY AS ADVAN CES PAID TO SUPPLIERS ALSO CANNOT BE ALLOWED AS A DEDUCTION UND ER SECTION 36(1)(VII) OF THE ACT PURELY BECAUSE THEY HAVE NOT BEEN ROOTED THROUGH PROFIT AND LOSS ACCOUNT IN THE HISTORIC PAST RESUL TING INTO TOTAL ADDITION OF RS. 57 30 461/- TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION ON ACCOUNT OF INADMISSIBLE AND INACCURATE ITA NO. 2010/M/2010 M/S LAWKIM LTD. 5 CLAIM OF BAD DEBTS U/S 36(1)(VII) OF THE ACT. AGGRI EVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 6. BEFORE THE CIT(A) THE ASSESSEE ARGUED THAT IT A DVANCED AMOUNTS TO SUPPLIERS IN THE ORDINARY COURSE OF ITS BUSINESS . IT WAS A COMMON PRACTICE PREVALENT IN THE MANUFACTURING INDUSTRY TO ADVANCE MONIES TO SUPPLIERS TO ENSURE ITS SMOOTH SUPPLY OF MATERIA LS AS AND WHEN REQUIRED. ACCORDINGLY THE ASSESSEE COMPANY ADVANC ED MONEY TO V.L. CABLES PVT. LTD. FOR PURCHASE OF MATERIALS WHICH WA S NOT ACTUALLY DELIVERED. FURTHER THE ASSESSEE PURCHASED MATERIAL S FROM ASIAN HARDWARE BUT PART OF THE MATERIALS SUPPLIED WERE RE JECTED AND CONSEQUENTLY THE DEBIT NOTE WAS RAISED BY THE COMPA NY. ON ACCOUNT OF THEIR RECOVERABILITY OF BOTH THE AMOUNTS AFTER REPEATED FOLLOW UPS SUCH IRRECOVERABLE ADVANCES WERE THEN FINALLY WRITT EN OFF. IN RESPECT OF INTEREST ON INTER CORPORATE DEPOSITS THE ASSESSEE ARGUED THAT IT PLACED CERTAIN INTER CORPORATE DEPOSITS WITH ALPIC FINANCE LTD. AND M/S SON EARTH LTD AND HAD ACCORDINGLY ACCOUNTED AND ACCRUED INTEREST RECEIVABLE ON SUCH DEPOSITS UP TO THE YEAR 31 ST MARCH 2002 IN THE BOOKS OF COMPANY. SUCH INTEREST WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT OF THE RELEVANT YEAR AND ACCORDINGLY T AXED. SUCH INTEREST HAD CONSISTENTLY BEEN ASSESSED AS BUSINESS INCOME. ALPLIC FINANCE WENT INTO LIQUIDATION AND STOPPED PAYING INTEREST. SIMILARLY DUE TO FINANCIAL DIFFICULTIES M/S SUN EARTH LTD DID NOT PA Y INTEREST. IN THE LIGHT OF NON-PAYMENT OF INTEREST BY THESE COMPANIES AND WITH NO HOPE OF RECOVERY THE DIRECTORS OF THE COMPANY DECIDED T O WRITE OFF THE INTEREST ACCRUED IN THE BOOKS. THE SAID AMOUNT OF I NTEREST SINCE ALREADY TAXED IN EARLIER YEARS WAS CLAIMED AS DEDUC TION U/ 36(1)(VII) OF THE ACT. IN RESPECT OF INTER CORPORATE DEPOSIT O F RS. 48 00 000/- PLACED WITH M/S ALPIC FINANCE LTD. THE ASSESSEE AR GUED THAT THE BOMBAY HIGH COURT HAD ORDERED LIQUIDATION OF THE SA ID COMPANY IN AUGUST 2002 IN RESPONSE TO A WINDING UP PETITION FI LED BY THE SMALL INDUSTRIAL DEVELOPMENT BANK OF INDIA. TO THIS EFFEC T THE ASSESSEE FILED NEWSPAPER ARTICLE DATED 29 TH AUGUST 2002 AS EVIDENCE IN THE ITA NO. 2010/M/2010 M/S LAWKIM LTD. 6 LIQUIDATION OF THE SAID COMPANY ALONG WITH THE COPI ES OF CORRESPONDENCE EXCHANGE WITH THE SAID COMPANY FOR R ECOVERY OF DEPOSIT. THE ASSESSEE FURTHER STATED THAT ALL THE E VIDENCES AND THE FACTS WERE SUBMITTED TO AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS. THE IRRECOVERABLE AMOUNT WAS THUS ACTU ALLY WRITTEN OFF BY THE COMPANY IN THE BOOKS OF ACCOUNT. AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) HELD AS UND ER:- 4.3(A) I HAVE CONSIDERED THE FACTS OF THE CASE. IN MY CONSIDERED OPINION THE APPELLANTS CLAIM WAS ALLOWA BLE AS BAD DEBT/BUSINESS LOSS. THE AMOUNT OF RS. 70 367/- WAS PAID AS ADVANCE TO TWO CONCERNS FOR SUPPLY OF MATERIAL. THE ADVANCES WERE MADE IN THE NORMAL COURSE OF BUSINESS. SINCE THE ADVANCES BECAME IRRECOVERABLE THE SAME WERE ALLOWABLE AS BU SINESS LOSS SUFFERED IN THE NORMAL COURSE OF BUSINESS AND HENCE WERE ALLOWABLE AS BUSINESS TO THE APPELLANT. RELIANCE IS PLACED ON [2009] 29 DTR (DEL) 280 BONANZA PORTFOLIO LTD. [20 09] 29 DTR 277(DEL) SECURITIES LTD. [2008] 25 SOT 440(MUM) K OTAK SECURITES LTD. 4.3(B) IN RESPECT OF INTER CORPORATE DEPOSIT OF RS . 48 LAKHS WITH M/S ALPIC FINANCE LTD. THE INTER CORPORATE DEP OSIT WAS PLACED BY APPELLANT IN THE NORMAL COURSE OF BUSINES S AS ONE OF ITS BUSINESS ACTIVITIES. IN THE PAST SEVERAL YEARS THE APPELLANT WAS ACCOUNTING FOR ACCRUED INTEREST THEREON IN THE BOOK S OF ACCOUNT/PROFIT AND LOSS ACCOUNT. THUS THE INCOME O N THE INTER CORPORATE DEPOSIT WAS DULY OFFERED TO TAX BY THE AP PELLANT IN THE PRECEDING YEARS. THUS IT COULD NOT BE DENIED THAT PLACEMENT OF INTER CORPORATE DEPOSIT WAS NOT IN THE NORMAL COURS E OF BUSINESS. THE APPELLANT HAS SATISFACTORILY PROVED THAT THE CO MPANY WENT IN LIQUIDATION AND THEREFORE THERE WAS NO POSSIBILITY OF RECOVER OF THE PRINCIPAL AMOUNT. IN MY CONSIDERED VIEW SUCH I RRECOVERABLE AMOUNT ON WHICH INTEREST INCOME WAS REGULARLY SHOW N BY APPELLANT WAS ALLOWABLE AS BAD DEBT AND ALSO AS BU SINESS LOSS. THERE ARE NUMBER OF DECISIONS ON THIS ISSUE THAT IN THE CASE OF IRRECOVERABLE ADVANCES MADE DURING NORMAL COURSE OF BUSINESS THE SAME WERE ALLOWABLE AS BUSINESS LOSS [2008] 14 DTR 195 (DEL.) GETZ INDIA [2008] 14 DTR 481(AHD)(SB) GUJAR AT GAS FINANCIAL 115 ITD 218. IN THE FACTS AND CIRCUMSTAN CES THE APPELLANTS CLAIM WAS CORRECT CLAIMING SAME AS IRRE COVERABLE ADVANCES AS BUSINESS LOSS. 4.3(C) IN RESPECT OF IRRECOVERABLE ACCRUED INTERES T OF RS. 8 60 274/- ON INTER CORPORATE DEPOSITS PLACED WITH M/S ALPIC FINANCE LTD. AND M/S SUN EARTH LTD. THE SAME WERE ALSO ALLOWABLE TO THE APPELLANT AS BAD DEBT FOR THE REAS ONS THAT THE SAME WERE OFFERED AS INCOME IN THE PRECEDING YEARS THE SAME ITA NO. 2010/M/2010 M/S LAWKIM LTD. 7 WERE WRITTEN OFF IN THE BOOKS OF ACCOUNTS DURING TH E YEAR UNDER CONSIDERATION AND THE APPELLANT HAD FILED SUFFICIEN T EVIDENCES OF THEIR BECOMING BAD. THE ISSUE IS NOW COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIRECT OR OF INCOME TAX VS. OMAN INTERNATIONAL BANK 313 ITR 128 (BOM.) WHEREIN IT WAS HELD THAT TO TREAT THE DEBT AS A BAD HAD TO BE A COMMERCIAL OR BUSINESS DECISION OF THE ASSESSEE BASED ON THE R ELEVANT MATERIAL IN THE POSSESSION OF THE ASSESSEE. ONCE TH E ASSESSEE RECORDS THE DEBT AS BAD IN HIS BOOKS OF ACCOUNT THA T WOULD PRIMA FACIE ESTABLISH THAT IT WAS A BAD DEBT UNLESS THE A O FOR GOOD REASONS HOLD OTHERWISE. THE WRITING OFF IN THE ACCO UNTS NO DOUBT HAS TO BE BONAFIDE. ONCE THAT BE THE CASE THE ASSE SSEE WILL NOT BE CALLED UPON TO DISCHARGE ANY FURTHER BURDEN. AFT ER THE AMENDMENT IT WAS NEITHER OBLIGATORY NOR WAS THE BUR DEN ON THE ASSESSEE TO PROVE THAT THE DEBT WRITTEN OFF BY HIM WAS INDEED BAD AS LONG AS IT WAS BONAFIDE AND BASED ON COMMERC IAL WISDOM OR EXPEDIENCY. 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 8. BEFORE US THE LEARNED DR SUBMITTED THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE SALE AND RE PAIR OF SPECIALIZED ELECTRICAL MOTORS AND ADVANCING INTER-CORPORATE DE POSITS IS NOT THE BUSINESS OF THE ASSESSEE THEREFORE THE CLAIM OF B AD DEBTS U/S 36(1)(VII) IS NOT ALLOWABLE. THE LEARNED DR STRONGL Y SUPPORTED THE ORDER OF THE AO. 9. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE HAS INVITED OUR ATTENTION TO PAGE 36 OF THE PAPER BOOK WHERE STATEMENT OF PARTICULARS REQUIRED TO BE FURNISHED U/S 44AB OF TH E ACT 1961 IN FORM NO. 3CD IS PLACED WHEREIN IT WAS MENTIONED AG AINST NATURE OF BUSINESS OR PROFESSION AT COLUMN 8(A) UNDER PART-B THAT MANUFACTURE AND REPAIR OF SPECIALIZED MOTORS CALIBRATION OF EQ UIPMENT DEALING IN FINANCIAL OPERATIONS FOR PARKING OF SURPLUS FUNDS A ND OTHER ACTIVITIES MORE SPECIFICALLY DEFINED IN THE OBJECT CLAUSE OF T HE MEMORANDUM OF ASSOCIATION OF THE COMPANY. DURING THE YEAR THE COM PANY HAS UNDERTAKEN THE ACTIVITY OF IT ENABLED SERVICES . THE LEARNED COUNSEL POINTED OUT THAT INTER-CORPORATE DEPOSITS ALSO ADVA NCED IN THE EARLIER ITA NO. 2010/M/2010 M/S LAWKIM LTD. 8 YEARS AND OFFERED FOR TAXATION AS BUSINESS INCOME. SHE STRONGLY SUPPORTED THE ORDER PASSED BY THE CIT(A). 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. THE AO HAS OBSERVED IN THE ASSES SMENT ORDER THAT INTEREST ACCRUED ON INTER-CORPORATE DEPOSITS IN THE PAST ALSO NOT SHOWN AS BUSINESS INCOME. WHEREAS THE LEARNED CIT(A ) HAS OBSERVED THAT INCOME ON INTER-CORPORATE DEPOSITS WAS DULY OF FERED FOR TAXATION BY THE ASSESSEE IN THE PRECEDING YEARS. HE GAVE A F INDING THAT THE PLACEMENT OF INTER-CORPORATE DEPOSITS WAS IN THE N ORMAL COURSE OF BUSINESS. IN VIEW OF THE ABOVE CONTRADICTORY FINDIN GS GIVEN BY THE AUTHORITIES BELOW WE SET ASIDE THE ORDER OF THE CI T(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO TO EXAMINE THE IS SUE WHETHER INTEREST RECEIVED ON INTER-CORPORATE DEPOSITS OFFERED FOR TA XATION AS BUSINESS INCOME OR NOT WHETHER PLACEMENT OF INTER-CORPORATE DEPOSITS WAS THE NORMAL COURSE OF BUSINESS OR NOT AND DECIDE THE EN TIRE ISSUE PERTAINING TO ADDITION OF RS. 58 03 193/- CONSISTIN G OF ADVANCE MADE TO SUPPLIERS AT RS. 70 367/- AND INTER CORPORATE DE POSIT PLACED WITH ALPIC FINANCE LTD. RS. 48 00 000/- AMOUNT NOT RECO VERED FROM DEBTORS RS. 72 552/- AND ACCRUED INTEREST ON INTER- CORPORATE DEPOSITS RS. 8 60 274/- DE-NOVO AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. 9. IN THE RESULT APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY 2011. SD/- SD/- (R.S. SYAL) (V. DUR GA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 15 TH JULY 2011 KV ITA NO. 2010/M/2010 M/S LAWKIM LTD. 9 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE A BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI.