M/s M.S.J. Colonizers & Leasing Co. Ltd., v. The ACIT, Cir. 1(1),

1 IN THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO. 380/IND/2003 A.Y. 1996-97 ASSTT. COMMISSIONER OF INCOME TAX 1(1) INDORE APPELLANT VS M/S MSJ COLONISING & LEASING LIMITED INDORE GIR NO. M16 RESPONDENT ITA NOS. 213/IND/2000 317/IND/2003 & 401/IND/2000 A.YS 1996-97 1996-97 AND 1997-98 M/S MSJ COLONISING & LEASING LIMITED INDORE APPELLANT VS JT. COMMR. OF INCOMETAX (ASSTT) SPL. RANGE I INDORE RESPONDENT 2 DEPARTMENT BY SMT. APARNA KARAN SR. DR ASSESSEE BY SHRI MANJIT SACHDEVA O R D E R PER BENCH THESE APPEALS BELONG TO THE SAME ASSESSEE AND INVO LVE COMMON ISSUES HENCE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PE RUSED THE MATERIAL ON RECORD. 3. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE S UGGESTED THAT THE REVENUES APPEAL IN ITA NO. 380/IND/2003 COULD BE TAKEN FIRST AS DISPOSAL OF THIS APPEAL WOULD COVE R THE ASSESSEES APPEAL IN ITA NO. 317/IND/2003 AND ONE OF THE MAJOR GROUNDS IN ITA NO. 213/IND/2000 HENCE WE T OOK UP THIS APPEAL FIRST. 3 4. THE GROUND RAISED IN THIS APPEAL READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS. 27 5 9 500/- ON ACCOUNT OF UNEXPLAINED DEPOSITS OF RS.3634000/- ON ACCOUNT OF SHARE CAPITAL ON THE GROUND THAT IDENTITY OF S HARE HOLDERS IS ESTABLISHED ESPECIALLY WHEN THERE IS NO EVIDEN CE ON RECORDS THAT THE SAID SHAREHOLDERS IN FACT INVES TED THE MONEY IN THE PURCHASE OF SHARES AND THUS IN VIEW O F DECISION OF CIT V. SOPHIA FINANCE LTD. 205 ITR 98 (DEL) ADDITION COULD NOT BE DELETED. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPA NY RAISED SHARE CAPITAL IN THE YEAR UNDER CONSIDERATION THR OUGH PUBLIC ISSUE. IN THE ORIGINAL ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO VERIFY T HE SHARE HOLDERS OF THE ASSESSEE COMPANY. THE ASSESSE E SUBMITTED CERTAIN DETAILS HOWEVER NOT BEING SATIS FIED WITH SUCH DETAILS THE ASSESSING OFFICER CONDUCTED INQUIRES THROUGH THE INSPECTOR. THE ASSESSING OFFI CER FOUND THAT IN THE ABSENCE OF COMPLETE ADDRESSES SOME OF THE SHARE HOLDERS WERE NOT FOUND AT THE GIVEN ADDRESSES HENCE THE ASSESSING OFFICER ADDED A SUM OF RS.53 25 000/- AS UNDISCLOSED INCOME OF THE ASSESSE E UNDER SECTION 68 OF THE ACT FOR THE REASON THAT TH E ASSESSEE FAILED TO PROVE THE IDENTITY CREDITOR WOR THINESS 4 AND GENUINENESS OF THE SHARE APPLICATION TRANSACTIO NS. 6. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OMETAX (APPEALS) THE ASSESSEE POINTED OUT VARIOUS DISCREPANCIES IN THE MANNER IN WHICH SUCH INQUIRES WERE CONDUCTED BY THE ASSESSING OFFICER FOR EXAMPLE TH E INSPECTOR OF INCOMETAX POSED HIMSELF AS INSPECTOR O F MUNICIPAL CORPORATION AND EVEN STATEMENTS WERE NOT RECORDED IN THE MANNER AS REQUIRED BY LAW. THE LEA RNED COMMISSIONER OF INCOMETAX (APPEALS) SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDIC ATION. IN SUCH PROCEEDINGS THE ASSESSING OFFICER REQUIRED TH E ASSESSEE TO PRODUCE THE SHARE HOLDERS WHICH THE ASSESSEE FAILED TO DO. HOWEVER IN THE COURSE OF SU CH PROCEEDINGS SHARE HOLDERS FOR A SUM OF RS. 15 91 0 00/- WERE ACCEPTED BY THE ASSESSING OFFICER WHICH REPRESENTED THE AMOUNT OF CALLS IN ARREARS. THE ASSESSING OFFICER HOWEVER MADE AN ADDITION OF RS. 36 34 000/- TO THE TOTAL INCOME OF THE ASSESSEE AGA IN. 7. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS) 5 WHEREIN THE ASSESSEE SUBMITTED THAT AS REGARDS TO 5 0 SHARE HOLDERS WHO WERE NOT PRODUCED THE ASSESSEE HAD SUBMITTED COMPLETE ADDRESSES GIR/PANS HENCE THER E WAS NO QUESTION OF ANY PERSONAL APPEARANCE. IT WAS ALSO CONTENDED THAT NO EFFORT WAS MADE BY THE ASSESSING OFFICER TO VERIFY THE TRANSACTIONS OF THESE PERSONS FROM THEIR RESPECTIVE INCOMETAX RECORDS. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CALLED THE REMA ND REPORT FROM THE ASSESSING OFFICER ON THESE CONTENTI ONS OF THE ASSESSEE WHEREIN IT WAS CONTENDED THAT OUT OF THESE 15 PERSONS IN CASE OF 7 PERSONS NOTICE HAD RETURN ED BACK UNSERVED IN THE ORIGINAL PROCEEDINGS. THE ASSESSING OFFICER ALSO SUBMITTED THAT IN CASE OF ON E SHARE HOLDER SHRI SANJAY KASLIWAL A FACT HAD EMER GED THAT A SUM OF RS.1 LAC INVESTED BY HIM IN THE SHARE CAPITAL HAD BEEN GIVEN TO BY HIM THE DIRECTOR OF T HE COMPANY. THE ASSESSEE THEREAFTER FILED THE NECESSA RY DOCUMENTARY EVIDENCES AS REQUIRED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE ASSESSEE ALSO SUBMITTED THAT IT WAS A CASE OF PUBLIC LIMITED COMPANY HENCE IT WAS NOT EXPECTED TO KNOW EACH AN D 6 EVERY SHARE HOLDER AND PLACED RELIANCE ON THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. STELLER INVESTMENT LIMITED; 192 ITR 287. THE ASSESSEE ALSO RELIED UPON VARIOUS OTHER JUDICIAL DECISIONS IN THI S REGARD. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AF TER CONSIDERING THESE SUBMISSIONS HELD AS UNDER :- IN THIS CASE THE APPELLANT HAS GIVEN THE LIST OF 15 PERSONS STATING THEIR RESPECTIVE GIR/PAN WHICH WAS NOT CONSIDERED ENOUGH BY THE AO WHO REQUIRED FURTHER PROOF REGARDING THEIR ACKNOWLEDGEMENT OF RETURN CAPITAL ACCOUNT ETC. THE ACTION OF THE AO COULD NOT BE TREATED TO BE JUSTIFIED AS THE APPELLANT HAD DISCHARGED ITS ONUS. THE AO SHOULD HAVE REFERRED TO THE RELEVANT RECORDS LYING WITH THE DEPARTMENT RATHER THAN ASKING THE APPELLANT TO FURNISH THE DETAILS WHICH IN THE CASE OF A PUBLIC LIMITED COMPANY IS RATHER DIFFICULT TO OBTAIN. IT IS ALSO NOTICED FROM THE COPIES OF SHARE APPLICATION FORMS THAT THE FOLLOWING PERSONS ALSO NAMED IN THE PRECEDING PARAS HAVE MADE THE INVESTMENT BY WAY OF ACCOUNT PAYEE CHEQUES. :- BHARAT SARANG RS. 80 000/- CHEQUE NO.4186314 ON CANARA BANK INDORE NIRMAL KASLIWAL RS.75 000/- CHEQUE NO. 48823 ON SBI INDORE USHA KASLIWAL RS. 75 000/- CHEQUE NO.49666 ON SBI INDORE 7 THUS THE IDENTITY OF THESE PERSONS STANDS PROVED. ADDITION MADE IN THEIR RESPECT IS THEREFORE DELETED. PERUSAL OF THE ORIGINAL ASSESSMENT ORDER FURTHER REVEALS THAT THE INSPECTORS DEPUTED FOR MAKING ON-THE-SPOT ENQUIRY HAD REPORTED THAT IN RESPECT OF SEVERAL SHAREHOLDERS THEIR IDENTITY WAS ESTABLISHED BUT THE ADDITION WAS MADE ON THE BASIS OF THE DOUBTS REGARDING THEIR CREDIT WORTHINESS. IN VIEW OF THE CITATIONS MADE ABOVE SUCH ADDITION CANNOT BE UPHELD. IN THE CASE OF STELLAR INVESTMENT (SUPRA) THE COURTS HELD THAT ADDITION COULD NOT BE MADE IN THE HANDS OF THE COMPANY IN CASE OF BOGUS/NON-GENUINE SHAREHOLDER BUT IT DID NOT IMPLY THAT THE DECISION PERTAINED TO NON-EXISTENT SHAREHOLDERS ALSO MORE SO IN VIEW OF THE FACT THAT IN THIS CASE MORE THAN 90% OF THE INVESTMENT HAS BEEN MADE BY THE INVESTORS BY WAS OF CASH WHICH IS ANOTHER POINTER TO THE INVESTMENT MADE BY THE PROMOTERS IN NON-EXISTENT CASES BY INVESTING THEIR OWN UNACCOUNTED MONEY. IN SUCH A SITUATION ONUS ON THE COMPANY CANNOT BE CONSIDERED DISCHARGED AS IT HAS FAILED TO FURNISH ANY NEW ADDRESSES OF SUCH PERSONS NOR COULD COME UP WITH ANY COGENT EXPLANATION. THUS THE ACTION OF THE AO IS JUSTIFIED IN THE CASE OF ALL THE SHAREHOLDERS AS IDENTIFIED IN THE ORIGINAL ORDER WHERE THE SAID PERSONS COULD NOT BE LOCATED ON THE ADDRESS GIVEN BY THE ASSESSEE. HOWEVER THE AO IS DIRECTED TO EXCLUDE THE INVESTMENT MADE IN THE CASES WHERE THE SHAREHOLDERS WERE FOUND RESIDING AS PER THE ADDRESS GIVEN BY THE ASSESSEE NOTWITHSTANDING THE FACT THAT THEIR CREDIT- 8 WORTHINESS WAS DOUBTED BY THE AO. SUCH CASES ARE STATED ASBELOW :- --------------------------------------------------- ----- - PAGE GROUP TOTAL NO. ADDRESS NO. IDENTITY OF PERSONS NO. ----------------------------------------------- ---------- 16&17 D 5 45B NEMINAGAR INDORE 17 F 4 DESIGN-19 SUDAMA NAGAR 17 F 2 618 SUDAMA NAGAR 18 G 3 D-62 SUDAMA NAGAR 18&19 H 25 D-61 SUDAMA NAGAR 18 I 3 D-49 SUDAMA NAGAR 20 L 5 62/4 PARDESIPURA 22 O 4 78 TILAKNAGAR EXTN. IN THE LIGHT OF THE AFORESAID FACTS THE APPEAL IS PARTLY ALLOWED. 8. AGGRIEVED BY THIS BOTH THE REVENUE AS WELL AS T HE ASSESSEE ARE IN APPEAL BEFORE US. 9. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE NARRATED THESE FACTS TOOK US THROUGH THE ORIGINAL ASSESSMENT ORDER AS WELL AS THE ASSESSING OFFICERS OBSERVATION IN THE ASSESSMENT ORDER PASSED BY HIM I N THE SET ASIDE PROCEEDINGS. SHE FURTHER PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 10. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES IN THE ORIGINAL PROCEEDINGS AS WELL AS IN THE SET 9 ASIDE PROCEEDINGS. 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. SO FAR AS THE IMPUGNED DELETION IS CONCERNE D WE FIND THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DELETED THE ADDITION IN RESPECT OF SH ARE HOLDERS WHOSE IDENTITY HAS BEEN PROVED. THIS VIEW OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IS ALSO IN ACCORDANCE WITH THE DECISIONS OF HIGHER JUDICIAL FO RUMS. HAVING STATED SO WE DO NOT CONSIDER IT NECESSARY T O FURTHER DELIBERATE ON THE ISSUE AS WE ARE IN AGREEM ENT WITH THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN THIS REGARD AND THE SAME HAV E BEEN REPRODUCED IN THIS ORDER HEREINBEFORE. WE FUR THER FIND THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS ALSO SUPPORTS THE CLAIM OF T HE ASSESSEE. ACCORDINGLY WE DO NOT FIND ANY MERIT IN THIS GROUND OF THE REVENUE. THE SAME IS THEREFORE DISMISSED. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 10 13. NOW WE SHALL TAKE THE ASSESSEES APPEAL IN ITA NO. 317/IND2003 WHEREIN THE ASSESSEE IS AGGRIEVED BY TH E DECISION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN CONFIRMING THE ADDITION OF RS.9 74 500 /- ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL. 14. THE FACTS OF THIS ISSUE HAVE ALREADY BEEN NARRA TED WHILE DISPOSING OF THE REVENUES APPEAL IN ITA NO. 380/IND/2003 HENCE NOT REPEATED. 15. BOTH THE PARTIES HAVE REITERATED THEIR RESPECTI VE STAND. WE FIND THAT IN RESPECT OF SUCH SHARE HOLDERS THE ASSESSEE HAS NOT PROVED THE IDENTITY OF SUCH SHARE HOLDERS EITHER BY FURNISHING THE CORRECT PARTICULAR S OF SUCH SHARE HOLDERS OR BY PRODUCING THEM BEFORE THE REVEN UE AUTHORITIES. THE DETAILED FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAVE ALREADY BE EN REPRODUCED HEREINBEFORE. THUS TAKING INTO CONSIDE RATION THE OVERALL FACTS AND THE LEGAL POSITION WE HOLD T HAT THERE IS NO MERIT IN THIS APPEAL OF THE ASSESSEE. BEFORE PARTING WE MAY ADD THAT DURING THE COURSE OF HEARING THE L EARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED TO SET A SIDE 11 THE MATTER WHEREIN THE NECESSARY DOCUMENTARY EVIDE NCE COULD BE FURNISHED. HOWEVER THE BENCH OPINED THAT FOR SETTING ASIDE THE LEARNED COUNSEL FOR THE ASSESSEE SHOULD HAVE FURNISHED FURTHER DOCUMENTARY EVIDENCES SO AS TO MAKE OUT A CASE WHERE HE COULD GET RELIEF. HOWEVER IN THE ABSENCE OF SUCH DOCUMENTARY EVIDENC E THERE WAS NO JUSTIFICATION IN SETTING ASIDE THE MAT TER AGAIN TO THE FILE OF THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS) OR THE ASSESSING OFFICER. ACCORDINGLY WE DISMISS ALL THE GROUNDS RAISED BY THE ASSESSEE. 16. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. 17. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN ITA NO. 213/IND/2000. 18. IN GROUND NO. 1 THE ASSESSEE IS AGGRIEVED WITH THE DECISION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE DEPRECIATION ON OFFICE FURNITURE AT RS.39 225/-. 12 19. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFF ICER FOUND THAT IN CASE OF ADDITION TO THE FURNITURE THE BILL PRODUCED WAS IN THE NAME OF MR. JAIN MD OF THE COMPANY AND NOT IN THE NAME OF THE COMPANY AND IN RESPECT OF CERTAI N ASSETS THE BILLS WERE NOT PRODUCED BY THE ASSESSEE . HENCE HE DISALLOWED THE DEPRECIATION CLAIMED BY TH E ASSESSEE THEREON. 20. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEA RNED COMMISSIONER OF INCOMETAX (APPEALS) WHEREIN IT WAS SUBMITTED THAT DUE TO SHIFTING OF THE OFFICE THE B ILLS WERE MISPLACED AND UNTRACEABLE AND PRODUCED THE BILLS BE FORE HIM. HOWEVER THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS) DID NOT TAKE NOTE THEREOF AS THE SAME WER E NOT PRODUCED BEFORE THE ASSESSING OFFICER AND TREATED S UCH ACTION OF THE ASSESSEE AS AN AFTER-THOUGHT. THE LE ARNED COMMISSIONER OF INCOMETAX (APPEALS) ACCORDINGLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 21. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 22. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED T HE FACTS AND REITERATED THE SUBMISSIONS MADE BEFORE THE REVE NUE 13 AUTHORITIES. IN ADDITION THE LEARNED COUNSEL FOR T HE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. KU. SATYA SETHIA; 143 ITR 486 FOR THE PROPOSITION THAT IN VIE W OF THE EVIDENCE SUBMITTED BEFORE THE REVENUE AUTHORITIES THE ASSESSEES CLAIM FOR DEPRECIATION WAS ALLOWABLE. 23. ON THE OTHER HAND LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE PREFERRED TO RELY STRONGLY ON THE OR DERS OF THE REVENUE AUTHORITIES. 24. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT THE BILLS WHICH WERE MISPL ACED HAVE SUBSEQUENTLY BEEN PRODUCED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HENCE IN OUR OPINION THE SAME SHOULD HAVE BEEN TAKEN INTO CONSIDERATION AND IF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS HAVING ANY DOUBT REGARDING SUCH BILLS HE COULD HAVE INQUIRED DIRECTLY OR THRO UGH THE ASSESSING OFFICER GENUINENESS OF SUCH PURCHASE TRANSACTIONS FROM THE SUPPLIERS. IN OUR OPINION T HIS 14 DOCUMENTARY EVIDENCE IS SUFFICIENT TO JUSTIFY THE C LAIM OF THE ASSESSEE. ACCORDINGLY WE ACCEPT THIS GROUND O F THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GRANT DEPRECIATION AS CLAIMED BY THE ASSESSEE. 25. IN GROUND NO. 2 THE ISSUE INVOLVED IS REGARDING TH E ASSESSEES CLAIM FOR RIGHT OFF OF AN AMOUNT UNDER S ECTION 35D OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESS ED AT THE VERY OUTSET POINTED THAT THERE WAS A RECENT DE CISION OF SOME HIGH COURT WHEREIN IT HAS BEEN HELD THAT T HE FINANCE COMPANY COULD NOT BE CONSIDERED AS AN INDUS TRIAL COMPANY HENCE NOT ENTITLED TO DEDUCTION UNDER SEC TION 35D OF THE ACT . THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT IN THE EARLIER YEAR THE ASSESSEES CLAIM HAD BEEN ALLOWED. HOWEVER HE FAIRLY ADMITTED THAT IN VIEW OF THE RECENT DECISION THE CLAIM OF THE ASSES SEE WAS NOT ALLOWABLE. ACCORDINGLY WE DISMISS THIS GROUND OF THE ASSESSEE. 26. IN GROUND NO. 3 THE ASSESSEE IS AGITATING THE ISSU E OF HEAD OF ASSESSMENT OF INTEREST INCOME EARNED BY THE ASSESSEE. IT IS NOTED THAT BOTH THE REVENUE AUTHOR ITIES 15 HAVE ASSESSED THIS INCOME UNDER THE HEAD INCOME FR OM OTHER SOURCES. THE LEARNED COUNSEL FOR THE ASSESSE D AT THE VERY OUTSET SUBMITTED THAT IN THE CASE OF INTE REST TAX PROCEEDINGS THE ASSESSEE COMPANY WAS FOUND TO HAVE BEEN ENGAGED IN CARRYING ON FINANCIAL ACTIVITIES AN D THE INTEREST TAX WAS PAID. HENCE THE DEPARTMENTS STAN D WAS NOT CORRECT IN THE INCOME TAX PROCEEDINGS. THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF INTERE ST TAX ASSESSMENT TO SUPPORT HIS CONTENTION. THE LEARNED S ENIOR DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT TH E CLAIM OF THE ASSESSEE HOWEVER SHE PREFERRED TO RE LY ON THE ORDERS OF THE AUTHORITIES BELOW. 27. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IN VIEW OF INTEREST TAX ASSESSMENT PROCEED INGS AS WELL AS HAVING REGARD TO THE NATURE OF ACTIVITIE S CARRIED ON BY THE ASSESSEE WE ARE OF THE VIEW THAT SUCH IN COME IS TO BE ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. HENCE WE ACCEPT THIS GRO UND OF THE ASSESSEE. 16 28. THE ISSUE OF INVESTMENT IN SHARES AS NON-BUSINESS EXPENDITURE WAS NOT PRESSED AND DISMISSED AS NOT PRESSED. 29. THE NEXT ISSUE IS REGARDING THE DEPRECIATION ON SHU TTERING PLATES WHICH WAS REJECTED BY THE ASSESSING OFFICER AS THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH PUR CHASE WAS A BOGUS TRANSACTION. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO CONFIRMED THE ACTION OF TH E ASSESSING OFFICER ON THE BASIS OF STATEMENT OF SHRI ANSHU JAIN WHEREIN THE SALE TRANSACTION WAS CONFIRMED. HOWEVER HE COULD NOT GIVE EXACT DETAILS AND THE LE ARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS OF THE OPIN ION THAT SUCH TRANSACTION WAS NOT GENUINE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 30. DURING THE COURSE OF HEARING BEFORE US WE ASKED TH E ASSESSEE TO POINT OUT HOW THESE SHUTTER PLATES WERE UTILISED ? THE ASSESSEE SUBMITTED THAT THE TRANSACT ION OF SALE HAD BEEN ACCEPTED IN THE IN THE HANDS OF THE S ELLERS AND THE ASSESSEE HAD UTILISED THESE SHUTTERING PLAT ES BY GIVING THEM ON LEASE AND THE LEASE INCOME HAD BEEN 17 ASSESSED. 31. ON THE OTHER HAND THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE PLACED STRONG RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 32. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. THE MOST PERTINENT FACT IS THAT THE LEASE IN COME EARNED BY THE ASSESSEE ON LEASING OF SUCH SHUTTERIN G PLATES HAS BEEN ASSESSED BY THE REVENUE AUTHORITIES HENCE WE ARE UNABLE TO UNDERSTAND AS TO HOW THE TRANSACTION OF PURCHASE CAN BE CONSIDERED AS BOGUS. WE FURTHER FIND THAT THE COST OF PURCHASE OF SUCH ASSE TS IS NOT IN DISPUTE. IN THIS VIEW OF THE MATTER WE ACCEPT T HIS CLAIM OF THE ASSESSEE. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. 33. THE NEXT ISSUE IS REGARDING THE UNPROVED SHARE CAPI TAL OF RS.55 25 000/-. 34. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SHE WAS NOT PRESSING THE INVESTMENT OF 18 RS.1 LAC MADE BY SANJAY KASLIWAL. THEREAFTER SHE SUBMITTED THAT THE OTHER ADDITIONS WOULD BE TAKEN C ARE OF BY THE DECISION IN THE ASSESSEES AS WELL AS IN THE REVENUES APPEAL IN THE COURSE OF SET ASIDE PROCEED INGS WHICH WAS ALSO BEFORE THE BENCH. SINCE WE HAVE ALRE ADY DECIDED THIS ISSUE IN THE APPEAL IN ITA NOS. 380 AN D 317/IND/03 HENCE WE DISMISS THIS GROUND OF THE ASSESSEE AS INFRUCTUOUS. 35. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 36. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN ITA NO. 401/IND/2000. 37. THE ISSUE RAISED IN GROUND NO. 1 IS IDENTICAL TO TH E ISSUE RAISED IN GROUND NO. 1 OF THE ASSESSEES APPEAL IN ITA NO. 213/IND/003 HENCE FOLLOWING THE SAME REASONS WE ACCEPT THIS GROUND OF THE ASSESSEE. 38. THE NEXT ISSUE IN GROUND NO. 2 IS ALSO IDENTICAL TO THE ISSUE RAISED IN GROUND NO. 4 OF THE ASSESSEES APPE AL IN ITA NO.213/IND/00. HENCE WE ACCEPT THIS GROUND OF THE 19 ASSESSEE FOR THE SAME REASONS. 39. THE ISSUE RAISED IN GROUND NO. 3 IS REGARDING ALLOW ANCE OF RIGHT OFF OF PRELIMINARY EXPENSES U/S 35D OF THE AC T WHICH WAS ALSO THERE IN EARLIER YEAR IN ITA NO. 213/IND/2 000 HENCE THIS GROUND OF THE ASSESSEE IS DISMISSED FOR THE SAME REASONS. 40. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. 41. TO SUM UP ITA NOS. 380/IND/2003 AND 317/IND2003 AR E DISMISSED WHEREAS ITA NOS. 213/IND/2000 AND ITA NO . 401/IND/2000 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 RD APRIL 2010. SD SD (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER APRIL 23 2010 COPY TO APPELLANT RESPONDENT CIT CIT (A) DR GU ARD FILE DN/ 20