Dheeraj Cosultancy P Ltd Mumbai v. Acit Cen Cir 5 4 Mumbai

D In The Income Tax Appellate Tribunal D Bench Mumbai Before Shri C N Prasad Judicial Member And Shri Ramit Kochar Accountant Member I T A No 3377 Mum 2017 Assessment Year 2012 13 Dheeraj Consultancy P Ltd 203 Capri Bldg Opp Hdil To W Ers Anant Kanekar Marg Bandra E Mumbai 400051 V Acit Cen Cir 5 4 19 Th Floor R No 1927 Air India Bldg Nariman Point Mumbai 40002 1 Pan Aa A Cd 7825 P Appellant Respondent Assessee By Shri Rahul K Hakani Revenue By Shri Purushotaam Kumar Date Of Hearing 13 12 2017 Date Of Pronouncement 20 12 2017 O R D E R Per Ramit Kochar Accountant Member This Appeal Filed By The Assessee Being Ita No 3377 Mum 2017 For Assessment Year 2012 13 Is Directed Against The Appellate Order Dated 31 01 2017 Passed By Lea Rned Commissioner Of Income Tax Appeals 53 Mumbai Hereinafter Called The Cit A For Assessment Year 2012 13 Appellate Proceedings Had Arisen Before Learned Cit A From The Assessment Order Dated 26 03 2015 Passed By Learned Assessing Officer Hereinafter Called The Ao U S 143 3 Of The Income Tax Act 1961 Hereinafter Called The Act 2 The Grounds Of Appeal Raised By The Assessee In The Memo Of Appeal Filed With The Income Tax Appellate Tribun Al Mumbai Hereinafter Called The Tribunal Read As Under 1 The Learned Cit A Has Erred In Law On Facts In Upholding Disallowances Made Of Finance Cost Incurred During The Year Under The I T A No 3377 Mum 2017 2 Consideration U S 36 1 Iii Of The It Act 1961 To The Tu Ne Of Rs 1 37 08 749 2 The Learned Cit A Has Erred In Law On Facts In Upholding Imposition Re Computation Of Interest Under Section 234 B Of The Act In The Order Of Income Tax Passed By The Assessing Officer U S 143 3 Of The Income Tax Act 19 61 Which Is Bad In Law 3 The Brief Facts Of The Cas E Are That Assessee Has Claimed To Be In The Business Of Advertising Agency During Course Of Assessment Proceedings U S 143 3 R W S 143 2 I T Was Observed By The A O That Assessee Has Debited Incurred Finance Cost Amounting To Rs 1 37 08 749 As Interest On Bank Over Draft T He Assessee Was Asked By The Ao To Explain Wh Y Such Finance Cost Should Be Allowed As Business Expenses If There Is No Business Carried On By The Assessee During The Assessment Year T He Assessee Submitted As Under During A Y 2010 11 The Assessee Company Has Entered In To Memorandum Of Understanding Mou With M S Sapphire Land Development Pvt Ltd For Purchase Of Land Viz Manvelpada Situated At Vasai West Mumbai For A Consideration Of Rs 30 00 00 000 And As A Part Of Advance Payment The Company Has Paid Rs 26 49 62 262 To M S Sapphir E Land Development Pv T Ltd On 10 04 2010 By Obtaining Overdraft Facility From Punjab And Maharashtra Co Op Ba Nk Limited However The Deal Could Not Be Materialized Over Price Issues And The Assessee Company Had Received Back The Advance Amount From M S Sapphire Land Development Pvt Ltd Through Emerald Realtors Pvt Ltd And Closed The Overdraft Facility By R Epaying The Amount Due To The Punjab And Maharashtra Co Op Bank Limited On 18 07 2011 The Interest Claim Of Rs 1 37 08 749 Paid To Punjab And Maharashtra Co Op Bank Limited During The Year Under Consideration Pertains To The Overdra Ft Amount Outstandin G During A Y 2011 12 And Is Solely For The Purpose Of Business Of The Assessee Company As The Assessee Company Has Used The Overdraft Facility For Making Advance Payment For Purchase Of Business Assets And Hence The Same Should Be Allowed As Deduction The A O Observed That The Finance Cost Cannot Be Allowed As Business Expenses As There Is No Business Activity During The Year Under Consideration Vide Assessment Order Dated 26 03 2015 Passed By The Ao U S 143 3 4 Aggrieved By The Assessment Order D Ated 26 03 2105 Passed By The Ao T He Assessee Filed An Appeal Before Learned Cit A It Wa S Explained By The I T A No 3377 Mum 2017 3 Assessee Before Learned Cit A That The Assessee Has Entered Into Mou With M S Sapphire Land Development Pvt Ltd For Purchase Of Land Viz Manv Elpada Situated At Vasai West Mumbai For A Consideration Of Rs 30 00 00 000 And As A Part Of Advance Payment The Assessee Has Paid Rs 26 49 Crore To M S Sapphir E Land Development Pvt Ltd On 10 04 2010 By Obtaining Overdraft Facility From Punjab And Maharashtra Co Op Bank Limited It Was Also Explained By The Assessee That The Deal Could Not Materialise Over The Price Issue And Appellant Has Received Back The Advanced Amount From M S Sapphire Land Development Pvt Ltd Through Emerald Realtors Pvt Ltd And Closed The Overdraft Facility From The Bank By Repaying The Amount Due To The Bank On 18 07 2011 It Was Claimed That The Said Expenses Were For The Purposes Of The Business Of The Assessee For Making Advance Payment For Purchase Of Business Assets And Hence The Same Is Deductible As Business Expense Under The Provision S Of S Ection 36 1 Iii T He Assessee Relied Upon Decision Of Honble Supreme Court In The Case Of Madhav Prasad Jatia V Cit 118 Itr 200 Sc S A Builders Limited V Cit 288 Itr 1 Sc And Decision Of Honble Delhi High Court In The Case Of Punjab Stainless Steel Industries V Cit 324 Itr 396 Del Hc To Contend That Interest Paid By The Assessee On Overdraft Be Allowed U S 36 1 Iii As The Overdraft From Bank Was Used For Bus Iness Purposes And Hence Should Be Allowed As Business Expenses The Learned Cit A Rejected The Contention S Of The A Ssessee By Holding As Under Vide Appellate Order Dated 31 01 2017 Passed By Learned Cit A 5 3 1 I Have Considered The Submissions Of The Appellant And Perused The Materials Available On Reco Rd The Point For Adjudication I S Whether The A O Was Justified In Disa Llowing The Finance Cost Of Rs 1 37 08 749 On The Ground That There Was No Business Activity During The Relevant Period In Th Is Connection The Appellant Has Rightly Drawn Attention To The Meaning Of The Phrase For The Purpose Of Business Occurring In Section 36 L Iii Of The A Ct It Is Well Established That Where The Assessee Makes A Claim For Deduction In Terms Of Section 3 6 1 Iii He Has To Place Materials In Support Of His Claim Of Entitlement To The Deduction And That The Assessee Has To Satisfy The Assessing Authority That He Is Entitled To Obtain Deduction In Accordance With The Taxing Statute 155 Itr 262 Cal 185 Itr 324 Mad 193 Itr 344 Ori And 222 I Tr 163 Mad It Is Well Settled That While Claiming Deduction Of Interest Paid U S 36 1 Iii Of The Act The Onus Is On The Assessee To Show That Borrowed Funds Had Been Utilized By Way Of Commercial Expediency It Is Also Well Established That The Question Whether The Interest Free Advances To Some Sister Concern Etc Were Extended For Commercial Expediency Or Not Is A Question Of Fact For This I T A No 3377 Mum 2017 4 Purpose As Held In The Case Of S A Builders Ltd Supra What Needs To Be Examined Is The Purpose For Which The Assessee Advanced The Money To Its Sister Concern And What The Sister Concern Did With This Money 5 3 2 Let Us Now Examine Whether The Appellant In The Present Case Has Been Able To Discharge The Onus Cast Upon It In This Regard In The First Place It Is Found That The A O Is Correct In Observing That There Was No Business Activity Carried On By The Appel Lant During The Relevant Period It Is Noticed From The Record That The Appellant Does Not Have An Office Either Of Its Own Or A Rented One There Is No Office Premises Appearing In The Schedule Of Fixed Assets Attached With The Balance Sheet As On 31 03 2 012 Nor Has Any Office Rent Expenditure Been Debited To The P L Account The Appellant Has Also No T Debited Any Salaries To The P L Account Which Shows That It Has Not Employees Or Staff Either The Appellant Is Found To Be Having Only Investments To The T Une Of Rs 10 73 Crores In Shares Of Hdil And Group Companies In Other Words The Appellant Seems To Be Engaged In Managing The Said Investments And Earning Dividend There On Which Cannot Be Regarded As A Business Activity Within The Meaning Of Section 2 1 3 Of The Act The Position Is Found To Be No Different Even In The Immediately Preceding A Y 2011 12 In These Circumstances There Are Strong Reasons To Believe That The Appellant Had Discontinued The Business Of Advertising Agency The Appellant Has Not Placed On Record Cogent And Credible Materials In Order To Demonstrate That It Not Onl Y Had Positive Intention But Had Also Taken Necessary Steps To Resume Business In Subsequent Years In View Of This Position No Fault Can Be Found With The Action Of T He A O Is Disallowing The Appellants Claim Of Deduction Of Aforesaid Finance Cost Of Rs L 37 08 749 U S 28 I Of The Act 5 3 3 Secondly It Deserves To Be Noted That The Appellant Company Was Incorporated To Carry On The Business Of Advertising Ag Ency And Had Nothing To Do With The Business Of Land Dealings It Is Observed From The Record That The Appellant Was Having Investments In Quoted And Unquoted Shares Of Hdi L And Its Group Companies Only And That It Had Not Made Any Investment In Acquiring Land In The Preceding A Y 2011 12 Except The Transaction In Question Likewise The Appellant Was Having Neither Any Opening Stock Nor Any Closing Stock Of Land During F Y 2011 12 Relevant To The A Y Under Consideration Although The Appellant Has Not Placed On Record Copy Of Its Memorandum Of Association It Can Safely Be Assumed That The Activity Of Purchase And Sale Of Lands Is Not Among The Main Objects For Which The Appellant Company Was Set Up Therefore It Can By No Stretch Of Imagination Be Sai D That The Aforesaid Bank Overdraft For Alleged Purchase Of Land From Sldpl Had Been Obtained And The Corresponding Finance Cost Had Been Incurred For The Purpose Of Business Of The Appellant So As To Be Deductible U S 36 1 Iii Of The Act And The Disall Owan Ce Of Finance Cost Of Rs 1 37 08 749 Made By The A O Deserves To Be Upheld On This Ground Also 5 3 4 Thirdly The Appellant Has Shown To Have Earned Dividend Of Rs 4 50 000 From A Co Operative Bank Which Has Been Offered To Tax Under The Head Income From Other Sources Since The Aforesaid Finance Cost On Bank Overdraft Had Not Been Incurred Wholly And Exclusively For The Purpose Of Earning Taxable Dividend Income It Is I T A No 3377 Mum 2017 5 Held That The Same Cannot Be Allowed To Be Deducted Even U S 57 Iii Of The Act 5 3 5 And Finally It Deserves To Be Noted That T He Appellant Sldpl And Emerald Realtors Pvt Ltd Are Associated Entities Forming Part Of Hdil Group In View Of The Close Relationship Among These Parties It Is Difficult To Accept The Contention That Some Deal For Alleged Purchase Of Land Between The Appellant And Sldpl Could Not Materialize Over Price Issues The Appellant Has Not Placed On Record Copy Of The Mo U Executed With Sldpl For Alleged Purchase Of Land And Therefore It Is Not Possible To Ascertain The Terms And Conditions Of The Same Be That As It May The Whole Arrangement In Substance Appears To Be A Case Of Diversion Of Interest Bearing Funds To Sister Concerns For Extra Commercial Consideration Although It Has Been C Lothed In The Form Of An Advance Against Purchase Of Business Asset Since The Aforesaid Companies Are Closely Connected It Is Not Uncommon For Them To Provide Financial Accommodation To Each Other Depending On The Capacity Of One Entity To Raise Funds An D Fund Requirements Of The Other Associate Entity The Factum Of Diversion Of Interest Bearing Funds To Associate Concerns Is Also Proved By The Fact That While Money Was Advanced By The Appellant To Sldpl The Repayment Has Been Received From Emerald Real Tors Pvt Ltd Moreover A Perusal Of The Audited Accounts Of The Appellant Reveals That The Appellant Had Raised Overdraft Facility From The Bank Which Was Secured By Equitable Mortgage Of The Land At Cochin As Mentioned In Schedule 6 To The Balance Shee T Since The Appellant Does Not Own Any Land At Cochin It Is Evident That The Said Land Belongs To Some Other Associate Concern Of The Appellant It Is Noticed From The Record That The Appellant Advanced Money To Sldpl On 10 04 2010 And Received It Back From Emerald Realtors Pvt Ltd On 18 07 2011 In This Regard The Appellant Has Not Placed Any Material On Record Any Cogent Materials To Show What Its Sister Concern Sldpl Did With The Money Advanced And How It Served To Advance The Business Interest Of The Appellant The Burden Of Proof U S 36 L Iii On The Appellant Cannot Be Said To Have Been Discharged Merely By Citing Some Case Laws Or Elaborating The Meaning Of The Words Commercial Expediency 5 3 6 In View Of The Above Discussion There Is No Hesitation In Holding That The Appellant Had Failed To Discharge The Onus Of Proving That That The Borrowed Funds On Which Interest Is Claimed As Deduction Had Been Utilized For The Purpose Of Business And That The Aforesaid Interest Expenditure Of Rs L 37 08 749 Had Been Incurred Out Of Commercial Expediency The Disallowance Of Interest Of Rs 1 37 08 749 Made By The A O Is Accordingly Upheld Even U S 36 1 Iii Of The Act Ground No 2 Of The Present Appeal Is Hence Dismissed 5 Aggrieved By The Appellate Order Dated 31 01 2017 Passed By Learned Cit A The Assessee Has Come In An Appeal Before The Tribunal A T Outset Ld Counsel For The Assessee Submitted That The Disallowance Of Int Erest Has Been Made U S 36 1 Iii By The Authorities Bel Ow As The I T A No 3377 Mum 2017 6 Assessee Could Not Prove That The Said Interest Expenses Were Incurred For The Purpose Of Business Of The Assessee The Assessee Placed On Record Memorandum Of A Ssociation Moa To Justify That The Real Estate Business Is Part Of The Business Act Ivities Of The Assessee By Referring To Sub Clause 5 Of Clause B Of The Objects Incidental Or Ancillary To The Attainment Of The Main Objects Which Is Reproduced As Under B The Objects Incidental Or Ancillary To The Attainment Of The Main Objects 5 To Purchase Or Otherwise Acquire Erect Maintain Reconstruct And Adopt Any Buildings Offices Workshops Showrooms Warehouses Factories Mills Plants Machineries Accessories And Other Things Found Necessary Or Convenient For The Purposes Of The Company And Also Enlarging Or Pulling Down Removing Or Placing All Or Any Of The Buildings Mill Premises And Machinery For The Time Being The Property In Possession Of The Company And By Expending From Time To Time Such Sums Of Money As May Be Necessary Or Expedient For The Purpose Of Improving Adding To Altering Repairing And Maintaining The Buildings Machineries An D Properties For The Time Being Of The Company Thus It Was Submitted That Real Estate Business Activity Although Did Not Found Mentioned In The Main Object Clause In Moa But The Same Is Part Of The Objects Incidental Or Ancillary To The Atta Inment Of The Main Objects Of The Assessee I T Was Submitted That The Mou Entered Into By The Assessee With The M S Sapphir E Land Development Pvt Ltd Is Not Available As There Was A Fire In The Office Of The Assessee On 18 11 2010 And All The Documents Were Destroyed In The Fire He Placed On Record Intimation Sent To The Senior Inspector Of P Olice Nirmal Nagar Police Station Bandra E Ast Mumbai Vide Letter Dated 20 11 2010 And It Was Pointed Out That The Name Of The Assessee Found Mentioned In Sai D Letter Sent To Police Along With The Name Of Sapphire Land Development Private Limited Wherein Documents Of The Companies Mentioned In The Said Letter Were Destroyed In The Fire T Hus It Was Submitted That It Is Now Not Possible To Produce Any Record With Respect I T A No 3377 Mum 2017 7 To The Mous And Cancellation Thereof It Was Submitted That The Assessee Advanced Money To Sapphire Land Development Private Limited On 10 04 2010 For Purchase Of Land While The Refund Of Money Was Made By E Marald Realtor Private Limited On 18 07 2011 It Was Submitted That All The Three Parties Mainly Assessee M S Sapphir E Land Development Pvt Ltd And Emerald Realtors Pvt Ltd Are Associated Sister Concern Thus It Is Claimed That The Business Of Real E State Is Within The Object Clause Of The Assessee Which Was Incidental Or Ancillary To The Attainment Of The Main Object S Of The Assessee The Learned Counsel For The Assessee Also Relied Upon The Decision Of Honble Karnataka High Court In The Case Of Ci T V Srid Ev Enterprises 1991 59 Taxman 439 Kar Hc I T Was Also Submitted That The Loans Were Obtained In Earlier Year S And No Disallowance Were Made In Earlier Year S As The Interest Was Allowed In Earlier Years And Hence The Same Was To Be Allowed In T His Year Also Keeping In View Principles Of Consistency It Was Submitted That This Is The Firs T Year When The Interest On Said Loans Were Dis Allowed On Being Asked By The Bench The Ld Counsel For The Assessee Submitted That In The Earlier Year S R Eve Nue Has Not Framed Assessment U S 143 3 R W S 143 2 And Only Intimation U S 143 1 Were Sent Thus It Was Submitted That The Interest Should Be Allowed As Business Expenses While At The Same Time It Is Submitted That Mous And Cancellation Of The Said Mou Is Not Available Ld Dr On The Other Hand Submitted That This Is First Time That The Assessee Has Taken The Plea That There Was A Fire In The Office Of The Assessee In 2010 Wherein The Records Were Destroyed It Was Submitted That No Such Ple A Was Ever Taken Before The Authorities Below It Was Submitted That The A O Framed The Assessment In The Year 2015 While The Learned Cit A Adjudicated The First Appeal In Year 2017 While The Fire As Now Claimed By The Assesssee Which Allegedly Destroyed R Ecords Of The Assessee Took Place On 18 11 2010 While The Assessment Year Under Consideration Is Ay 2012 13 I T Is Submitted That The Assessee Has No Business During The Impugned Assessment Year Which Is Evident From Audited Financial Statements As Only R Evenue Is Dividend Income The Learned Dr Would Reply On The Order S Of The Authorities Below I T A No 3377 Mum 2017 8 6 We Have Consider Ed Rival Contention S And Perused The Material On Record Including Cited Case Laws And Orders Of Authorities Below W E Have Observed That The Assessee Has Claimed To Be Engaged In The Business Of Advertising Agency The Assessee Has Filed Copy Of Memorandum And Articles Of Association Wherein The Main Object Clause Are Relating To The Advertisements And Other Consulta Ncies The Assessee Has Claimed By Virtue Of Clause B 5 Which Are Objects Incidental And Ancillary To The Main Object Clause That The Assessee Is Entitled To Carry Out Real Estate Business The Said Incidental Or Ancillary Objects To Attainment Of Main Objects As Per Clause B 5 Are Reproduced Hereunder B The Objects Incidental Or Ancillary To The Attainment Of The Main Objects 5 To Purchase Or Otherwise Acquire Erect Maintain Reconstruct And Adopt Any Buildings Offices Workshops Showrooms Warehouses Factories Mills Plants Machineries Accessories And Other Things Found Necessary Or Convenient For The Purposes Of The Company And Also Enlarging Or Pulling Down Removing Or Placing All Or Any Of The Buildings Mill P Remises And Machinery For The Time Being The Property In Possession Of The Company And By Expending From Time To Time Such Sums Of Money As May Be Necessary Or Expedient For The Purpose Of Improving Adding To Altering Repairing And Maintaining The Bui Ldings Machineries And Properties For The Time Being Of The Company We Are Afraid That Clause B 5 As Reproduced Above Is Merely An Incidental Or Ancillary Objects To The Achievements Of The Main Objects While The Main Objects As Per Moa Of The Assessee Is To Pursue Advertising Agency Business And Consultancy Business Related Thereto No Resolution Passed By Board Of Directors Shareholders Is Placed On Record To Substantiate That The Assessee Has Adopted To Carry Out Business Of Real Est Ate As Are Contained In Other Objects Clause On Perusal Of The Audited Financial Statements Of The Assessee Which Are Placed In Paper Book Filed With The Tribunal It Is I T A No 3377 Mum 2017 9 Observed That There Has Been No Revenue From Activities Of Advertising Agency Or Rea L Estate Business During The Previous Year Relevant To The Impugned Assessment Year The Only Revenue Earned By The Assessee Is From Dividend Income To The Tune Of Rs 4 50 Lacs The Other Expenses Apart From Finance Costs Also Reveal That There Is No Business Activity Of Advertising Agency Real Estate Business Which Was Carried On By The Assessee As There Are Negligible Expenses Such As Audit Fee Filing Fee Etc Paid By The Assesseee During The Previous Year To Keep Company Af Loat And To Do Statutory Compliances The Assessee Has Claimed That Over A Period Of Time It Has Advanced Substantial Amount Of Rs 26 49 Crore To M S Sapphir E Land Development Pvt Ltd Out Of Total Stated Consideration Of Rs 30 Crores Stated To Be For Purchase Of La Nd Viz Manvelpada Situated At Vasai West Mumbai Which Advances Were Made Out Of Overdraft Loan Of Rs 30 38 Crore S Obtained From Punjab And Maharashtra Co Op Bank Limited The Said Amount Was Stated To Have Been Received Back By The As Sessee On 18 11 2011 From Emarald Realtors Private Limited T He Assessee Has Failed To Bring On Record Mou Agreement Stated To Be Entered Into With Sapphire Land Development Private Limited To Substantiate Its Contention That The Advances Made To M S S Apphir E Land Development Pvt Ltd Are Towards Purchase Acquisition Of The Said Property All The Three Companies Namely Assessee Sapphire Land Development Private Limited And Emarald Realtors Private Limited From Whom The Assessee Received Back The Sa Id Amounts Are Sister Associated Concerns I T Was Also No T Brought On Record Whether The Said Mou Was Registered With Registering Authority As Is Required Under Amended Law As Contained In The Registration Act 1908 The Cancellation Agreement Stated To Be Entered In July 2011 For Cancelling Mou Is Also Not On Record And Hence It Could Not Be See N As To The Terms And Reasons For The Cancellation Of The Said Mou N Ow It Is Claimed For The First Time Before The Tribunal T Hat There Was A Fire In T He Office Of The Assessee On 18 11 2010 And All The Records Were Destroyed In Any Case Cancellation Deed Was Alleged To Be Entered On 18 07 2011 Which In Any Case Cannot Be Part Of Records Alleged To Be Destroyed In Fire Which Took Place On 18 11 2010 An D The Assessee Could Have Produced Cancellation Deed For Cancellation Of Mou N O Such Contention Of Fire Taking Place In Office On 18 11 2010 Was Raised Before The Authority Below Wherein The A O Framed Assessment In The Year 2015 And Learned Cit A Adjudic Ated Appellate Order I T A No 3377 Mum 2017 10 In 2017 It Is Pertinent To Mention The Advances Were Paid By Assessee To M S Sapphire Land Development Pvt Ltd And The Refund Has Been Received From Emerald Realtors Pvt Ltd While There Is No Such Reasons Furnished By The Assessee As To Why Emarald Realtors Private Limited Refunded The Money On Alleged Cancellation Of Mou While It Is Admitted Position That All The Three Companies Mainly Assessee M S Sapphire Land Development Pvt Ltd And Emerald Realtors Pvt Ltd Are Associate D Sister Concerns I T Becomes All The More Important For The Assessee To Have Brought On Record Cogent Evidences To Substantiate Its Contention As All The Three Parties Are Related Parties Sister Concerns No Such Evidences Are Brought On Record To Prove The Genuineness Of The Transaction For Entering Into An Mou For Purchase Of Land As Well To Prove Genuineness Of The Transaction For Cancellation Of Mou It Is Also Pertinent To Mention There Is No Income Earned By The Assessee As Per Audited Financial Sta Tements From Advertising Business As Well From Real Estate Business Apart From Dividend Income Of Rs 4 50 Lacs It Is Also Not On Record Backed With Evidences As To What Was The Purpose Of Acquiring Said Land For Which The Assessee Paid Substantial Advances Of More Than Rs 26 Crores Out Of The Total Stated Consideration Of Rs 30 Crores Was It Do Develop Real Est Ate Or Was It To Construct An Office For Its Own Use Is Not Known As The Same Is Not Brought On Record In The Absence Of Any Evidence On Records It Cannot Be Concluded Whether Expenses Towards Interest Costs On Bank Overdraft Were Revenue In Nature Or Cap Ital In Nature It Is Also Not On Record As To What Steps The Assessee Took Post Entering Into Alleged Mou As To Getting Building Plans Approved Etc W R T Said Land Proposed To Be Acquired By The Assessee These Are The Facts Which Are Especially Within The Knowledge Of The Assessee And Onus Is On The Assessee To Bring On Record Cogent Evidences To Substantiate That Interest Has Been Paid For The Purposes Of Business Of T He Assessee And The Conditions As Stipulated U S 36 1 Iii Are Duly Complied With Which In The Instant Case Has Not Been Done By The Assessee M Erely Because The Revenue Has Accepted The Said Claim Of Interest As Business Expenses In The Earlier Years In The Summary Proceedi Ngs U S 143 1 Does Not Create Re S Judicata As Revenue Has Nev Er Gone Into The Details Of The Said Claim As The Return Of Income Was Accepted In Summary Manner U S 143 1 Without Scrutiny Being Conducted U S 143 3 R W S 143 2 Thus Mere Acceptance Of The Claim In Earlier Years In Proceedings U S 143 1 Does Not Debar Revenue From Examining The Claim On Merits In I T A No 3377 Mum 2017 11 Subsequent Years And Does Not Create A Bar Of Res Judicata We Are Fully Aware That Consistency Is To Be Maintained But The Claim Of Interest Expenses Was Never Examined By The Revenue In Any Of The Earl Ier Years As Scrutiny Proceedings Were Not Initiated In Any Of The Earlier Years Since Said Loan S W Ere Raised By The Assessee Thus Only Bal D Statements Are Made By The Assessee For Claiming That The Interest Has Been Paid For The Business Purposes While N O Such Evidences Are Brought On Record By The Assessee To Prove Its Contention That The Said Loans Were Used For Business Purposes By The Assessee And Mandate Of Section 36 1 Iii Was Complied With The Payments And The Return Thereof Of The Said Advance S Are From The Sister Concerns And In The Absence Thereof Of The Evidences On Record To Substantiate That These Were Business Expenses We Are Afraid Claim Of The Assessee To Allow Interest Expenses On Bank Overdraft To The Tune Of Rs 1 37 08 749 As Bus Iness Expenses Cannot Be Accepted And Hence The Appeal Of The Assessee Is Dismissed Thus Keeping In View Entire Factual Matrix Of The Case T He Claim Of The Assessee Is Rejected The Assessee Fails In This Appeal We Order Accordingly 7 In The Result Appeal Of The Assessee In I T A No 3377 Mum 2017 For Assessment Year 2012 13 Is Dismissed Order Prono Unced In The Open Court On 2 0 12 2017 2 0 12 2017 S D S D C N Prasad Ramit Kochar Judicial Member Accounta Nt Member Mumbai Dated 2 0 12 2017 Nishant Verma Sr Private Secretary I T A No 3377 Mum 2017 12 Copy To 1 The Appellant 2 The Respondent 3 The Cit A Concerned Mumbai 4 The Cit Concerned Mumbai 5 The Dr Bench E 6 Master File Tue Copy By Order Dy Asstt Registrar Itat Mumbai