DCIT circle 9 (1), v. Sunrays Properties & Investment Co. Pvt. LTd,

ITA 4031/DEL/2007 | 2003-2004
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 403120114 RSA 2007
Assessee PAN AAACS3655C
Bench Delhi
Appeal Number ITA 4031/DEL/2007
Duration Of Justice 3 year(s) 9 month(s) 7 day(s)
Appellant DCIT circle 9 (1),
Respondent Sunrays Properties & Investment Co. Pvt. LTd,
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 15-07-2011
Date Of Final Hearing 15-06-2011
Next Hearing Date 15-06-2011
Assessment Year 2003-2004
Appeal Filed On 08-10-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH G DELHI ] BEFORE SHRI R. P. TOLANI JM AND SHRI K. D. RANJ AN AM I. T. APPEAL NO. 4031 (DEL) OF 2007. ASSESSMENT YEAR : 2003-04. DY. COMMISSIONER OF INCOME-TAX M/S. SUNRAYS PROPERTIES & INVESTMENT CO. P. LTD. C I R C L E : 9 (1) VS. 414/1 4 TH FLOOR; DDA COMMERCIAL COMPLEX N E W D E L H I. DISTT. CENTRE JANAK P URI N E W D E L H I. P A N / G I R NO. AAA CS 3655 C. ( APPELLANT ) ( RE SPONDENT ) ASSESSEE BY : SHRI ANOOP SHARMA ADV.; & SHRI MANU K. GIRI ADV.; DEPARTMENT BY : SHRI B. KISHORE SR. D. R. O R D E R. PER K. D. RANJAN AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 3-04 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)XII NEW DELHI. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.41 61 135/- MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON SECURED LOANS FOR RS .41 61 135/-. 3.1 THE ONLY ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE DISALLOWANCE OF RS.41 61 135/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTERES T PAID ON SECURED LOANS. THE FACTS OF THE CASE 2 I. T. APPEAL NO. 4031 (DEL) OF 2007 . STATED IN BRIEF ARE THAT THE ASSESSEE COMPANY HAD T AKEN CORPORATE LOAN OF RS.11 CRORES FROM ICICI BANK ON 28 TH AUGUST 1999 FOR THE PURPOSE OF MEETING A PART OF ASSESSEES FUND REQUIREMENTS FOR CONVERSION OF WARRANTS OF APOLLO TYRES LTD. HELD BY THE ASSESSEE COMPANY TO THE EQUITY SHARES OF APOLLO TYRES LTD. AND OTHER REQUIREMENT OF FUNDS. THE LOAN WAS SANCTIONED AGAINST PLEDGE OF EQUITY SHARES OF APOLLO TYRES LTD. BY PROMOTERS OF COMPANY. AT THE END OF EVERY FORTNIGHT THE VALUE OF PLEDGED SHARES SHALL BE AT LEAST TWICE OF THE AMOUNT OUTSTANDING UNDER THIS LOAN. THE VALUE OF SHARES SHALL BE CALCULATED AS THE LOWER OF AVERAGE CLOSING PRICES OF THE SHARES ON NSE AND BSE FOR THAT FORTNIGHT. THE COMPANY AT ALL POIN TS OF TIME SHALL MAINTAIN A DEBT SERVICE COVER OF 1.5 BETWEEN SUCCESSIVE DUE DATES. THE COMPANY SHALL PROCURE AND DELIVER TO ICICI BEFORE ANY DISBURSEMENT BY ICICI OUT OF THE FACILITY IRRE COVERABLE AND UNCONDITIONAL PERSONAL GUARANTEE FROM SHRI O. S. KANWAR IN FAVOUR OF ICIC I FOR THE REPAYMENT OF THE FACILITY AND THE PAYMENT OF ALL INTEREST AND OTHER MONEY PAYABLE BY THE COMPANY. THE AGREEMENT ALSO PROVIDED THAT THE ASSESSEE COMPANY SHALL NOT PAY ANY GUARANT EE COMMISSION TO THE SAID GUARANTOR. THE ASSESSEE COMPANY AVAILED THE TERM LOAN WHICH WAS U TILIZED BY THE COMPANY FOR CONVERSION OF WARRANTS OF APOLLO TYRES LTD. INTO EQUITY SHARES. D URING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY PAID THE FOLLOWING AMOUNTS AS INTEREST-FREE LOAN TO SHRI O.S. KANWAR AS UNDER:- SL.NO. D A T E . A M O U N T S . 1. 26/04/2002 RS.10 00 000/- & RS.1 40 00 000 /-; 2. 21/05/2002 RS.1 20 00 000/-; 3. 06/06/2002 RS.50 00 000/-. 3.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS REQUIRED THE ASSESSEE TO SHOW REASONS AS TO WHY INTEREST WAS NOT CHARGED ON THE LOAN AMOUNTS PAID TO SHRI O. S. KANWAR. IT WAS SUBMITTED BY THE ASSESSEE THAT SHRI O. S. KANWA R HAD GIVEN HIS PERSONAL GUARANTEE TO THE BANK FOR AVAILING TERM LOAN OF RS.11 CRORES REQUIRE D FOR CONVERSION OF WARRANTS OF APOLLO TYRES LTD. INTO EQUITY SHARES OF APOLLO TYRES LTD. THE F UND WAS SANCTIONED BY THE BANK WITH THE CLEAR UNDERSTANDING FROM THE COMPANY THAT NO GUARANTEE CO MMISSION SHALL BE PAID TO THE GUARANTOR BY THE COMPANY. THE ASSESSEE DID NOT PAY ANY GUARANTE E COMMISSION TO SHRI O. S. KANWAR. HAD 3 I. T. APPEAL NO. 4031 (DEL) OF 2007 . THIS CONDITION NOT BEEN IMPOSED BY THE BANK THE AS SESSEE WOULD HAVE PAID THE GUARANTEE COMMISSION EVERY YEAR TO SHRI O. S. KANWAR AND HAD CLAIMED PAYMENTS OF GUARANTEE COMMISSION AS BUSINESS EXPENDITURE AND WOULD HAVE B EEN ALLOWED AS DEDUCTION. IT WAS ALSO SUBMITTED THAT SHRI O. S. KANWAR WAS NEITHER A SHAR E-HOLDER NOR DIRECTOR OF THE ASSESSEE COMPANY AND AS SUCH HE HAD NO INTEREST IN ANY TRANS ACTION CARRIED ON BY THE COMPANY. SINCE NO GUARANTEE COMMISSION WAS PAID TO SHRI O.S. KANWAR INTEREST ON LOAN GIVEN BY THE ASSESSEE TO SHRI O. S. KANWAR WAS NOT CHARGED. SHRI O. S. KANW AR WAS ONE OF THE DIRECTORS OF APOLLO TYRES LTD. IT WAS SUBMITTED THAT THE LOAN WAS GIVEN FROM ASSESSEES OWN FUNDS. ANOTHER AMOUNT OF INTEREST FREE LOAN OF RS.7 LAKHS WAS GIVEN TO SHRI U. S. OBEROI. THE AO EXAMINED THE FINANCIAL STATUS OF THE ASSESSEE. THE ASSESSEE COMPANY HAD D EBIT BALANCES OF ACCUMULATED LOSSES OF RS.4 64 29 380/- AND RS.4 16 67 012/- AS ON 31 ST MARCH 2003 AND 31 ST MARCH 2002 RESPECTIVELY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE CO MPANY PREFERRED TO UTILIZE ITS BORROWED FUNDS FOR ADVANCING INTEREST FREE LOANS TO THE EXTENT OF RS.3 20 00 000/- TO SHRI O. S. KANWAR AND RS.5 LAKHS TO SHRI U. S. OBEROI HAVING NO NEXUS WITH THE BUSINESS OF THE ASSESSEE COMPANY. IN THE CIRCUMSTANCES AND ON THE FACTS OF THE CASE THE AMOU NT OF INTEREST OF RS.1 64 59 587/- ON SECURED AND UNSECURED LOANS DEBITED TO PROFIT AND LOSS ACCO UNT CLAIMED BY THE ASSESSEE AS BUSINESS EXPENDITURE COULD NOT BE CONSIDERED AS ALLOWABLE EX PENDITURE UNDER SECTION 37(1) OF THE ACT AS THE SAME WAS NOT EXPENDED WHOLLY AND EXCLUSIVELY FO R THE PURPOSES OF BUSINESS. THEREFORE THE INTEREST PAID ON SECURED LOANS OF ICICI AND KOTAK MAHINDRA TO THE EXTENT OF INTEREST AT THE RATE OF 14.5 PER CENT ON THE ABOVE-MENTIONED INTEREST FR EE LOANS/ADVANCES FOR THE RELEVANT/PROPORTIONATE PERIOD WAS TREATED AS EXPEND ITURE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS BY THE ASSESSEE COMPANY. T HE AO ACCORDINGLY DISALLOWED THE AMOUNT OF RS.41 61 135/-. 4. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE COMPANY WAS SANCTIONED RUPEE TERM LOAN NOT EXCEEDING RS.11 CRORES TO BORROW FROM ICICI BANK RELATED FOR THE PURPOSE OF MAKING A PART OF ASSESSEES FUNDS REQUIREMENT FOR C ONVERSION OF WARRANT OF APOLLO TYRES LTD. HELD BY THE ASSESSEE TO EQUITY SHARES OF APOLLO TYR ES LTD. AND THE OTHER REQUIREMENTS OF FUNDS. THERE WAS ONE OF THE CONDITIONS OF PERSONAL GUARANT EE OF SHRI O. S. KANWAR IN THE CORPORATE RUPEE TERM LOAN AGREEMENT EXECUTED BETWEEN THE ASSE SSEE AND ICICI BANK ON 28/08/2009. 4 I. T. APPEAL NO. 4031 (DEL) OF 2007 . DURING THE YEAR UNDER CONSIDERATION SHRI O. S. KAN WAR WAS PROVIDED INTEREST FREE LOAN. IT WAS ALSO SUBMITTED THAT THE LOAN WAS SANCTIONED ON 28/0 8/2009 AND THE REPAYMENT OF LOAN STARTED ON 15/09/2000. THE ASSESSEE HAD NOT RECEIVED ANY INST ALLMENT OF LOAN FROM THE BANK DURING THE YEAR UNDER CONSIDERATION. THEREFORE IT WAS WRONG ON TH E PART OF ASSESSING OFFICER TO SAY THAT SHRI O. S. KANWAR WAS PAID OUT OF THE LOAN RAISED FROM THE BANK. THE FUNDS WERE ADVANCED TO SHRI O. S. KANWAR OUT OF COMPANYS OWN FUNDS. THE LOAN RAISED FROM ICICI WAS DIRECTLY REMITTED TO APOLLO TYRES LTD. AND THIS LOAN TRANSACTION WAS NOT ROUTED THROUGH THE BANK ACCOUNT OF THE ASSESSEE WHICH FURTHER PROVED THAT SHRI O. S. KANWA R WAS NOT PAID OUT OF LOAN RAISED BY THE ASSESSEE COMPANY BUT IT WAS PAID OUT OF COMPANYS OWN FUNDS. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ASSUMED THAT THE COMPANY HAD FOREGONE THE INTEREST ON THE LOAN PAID TO SHRI KANWAR AT THE RATE OF 14.5 PER CENT AND THE IN TEREST HAD NOT BEEN CHARGED BY THE COMPANY ON SECURED LOANS RAISED BY IT FROM THE BANK. AS REGAR DS THE LOAN ADVANCED TO SHRI U. S. OBEROI IT WAS SUBMITTED THAT THERE WAS OPENING BALANCE OF RS. 5 LACS AS ON 5/02/2002 AGAINST WHICH THE COMPANY HAD RECEIVED BACK RS. 2 LACS ON 25 TH SEPTEMBER 2002 LEAVING A BALANCE OF RS. 3 LACS DUE FROM HIM. HE IS NEITHER A SHARE HOLDER NOR A W HOLE-TIME DIRECTOR OF THE ASSESSEE COMPANY AND HAD ALSO NOT BEEN PAID REMUNERATION FROM THE CO MPANY. THE LOAN WAS ADVANCED TO HIM IN THE PREVIOUS YEAR AND NO PORTION OF LOAN WAS PAID O UT OF TERM LOAN RAISED FROM THE BANK. IT IS IN THE WISDOM OF BOARD OF DIRECTORS TO WAIVE THE INTER EST AMOUNT CHARGED FROM HIM BECAUSE OF THE REASON THAT HE WAS NOT GETTING ANY REMUNERATION NOR WAS ANY BENEFIT/PERQUISITE BEING PROVIDED BY THE COMPANY TO SHRI UBEROI. THEREFORE THE DISA LLOWANCE OF INTERST WAS NOT JUSTIFIED. 5. THE LD. CIT (A) ON CONSIDERATION OF THE ABOVE FA CTS AND RELYING ON DECISION IN THE CASE OF CIT VS. BRITANNIA INDUSTRIES LTD. 285 ITR 525 (CAL. ) AND HONBLE SUPREME COURT DECISION IN THE CASE OF GODHRA ELECTRICITY CO. LTD. 225 ITR 746 AND GAUHATI HIGH COURT DECISION IN THE CASE OF KESRI CHAND JAISUKH LAL VS. CIT 248 ITR 47 HELD THA T NO ADDITION ON ACCOUNT OF NOTIONAL INTEREST COULD BE CHARGED IN THE CASE OF THE ASSESS EE. HE ACCORDINGLY DELETED THE ADDITION. 6. BEFORE US THE LD. SR. DR SUBMITTED THAT NO CASE OF BUSINESS EXPEDIENCY HAD BEEN MADE OUT BY THE ASSESSEE. THE LOAN WAS RECEIVED FROM TH E BANK IN 1999 AND THE LOAN HAS BEEN PAID IN 5 I. T. APPEAL NO. 4031 (DEL) OF 2007 . THE FINANCIAL YEAR 2002-03. THEREFORE THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION ON THE BASIS OF COMMERCIAL EXPEDIENCY. HE PLACED R ELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PUNJAB STAINLESS STEEL IN DUSTRIES VS. CIT 324 ITR 396 (DEL). IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS BEEN PAYING IN TEREST AT THE RATE OF 14.5 PER CENT TO THE BANKS WHEREAS INTEREST FREE LOAN HAS BEEN ADVANCED. HE F URTHER SUBMITTED THAT THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF COMMISSION NOT CHARGED FOR GIVING BANK GUARANTEE DOES NOT COMMENSURATE WITH THE INTEREST FOREGONE. HAD THIS AMOUNT NOT GIVEN FREE OF INTEREST THE ASSESSEE WOULD HAVE SAVED INTEREST TO THAT EXTENT B Y MAKING THE PAYMENT TO THE BANK. THEREFORE IT IS NOT A CASE OF COMMERCIAL EXPEDIENCY WHICH HAD BEEN EXPLAINED BY HONBLE DELHI HIGH COURT IN THE CASE OF PUNJAB STAINLESS STEEL INDUSTR IES (SUPRA). ON THE OTHER HAND THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT (AP PEALS) RELYING ON THE DECISIONS OF VARIOUS COURTS SUCH AS DCIT VS. CORE HEALTHCARE 198 ITR 194 (SC); CIT VS. SABINA DETERGENTS P. LTD. 303 ITR 320 (MAD.); AND S. A. BUILDERS VS. CIT 288 ITR 1(SC). 7.1 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE RECEIVED TERM LOAN AT THE RATE OF 14.5 PER CENT PER ANNUM FROM ICICI BANK AND KOTAK MAHINDRA. IN ADDITION TO SECURITIES PLEDGED THESE FINANCIAL INSTITUTIONS ASKED THE ASSESSEE TO FURNISH PERSONAL GUARANTEE OF SHRI O. S. KANWAR. S HRI O. S. KANWAR HAD GIVEN HIS PERSONAL GUARANTEE FOR THE SANCTION OF THE LOAN IN FAVOUR OF THE ASSESSEE WITHOUT CHARGING ANY GUARANTEE COMMISSION. THE SAID LOAN WAS SANCTIONED BY ICICI AND KOTAK MAHINDRA ON 28 TH AUGUST 1999. THE ASSESSEE HAD GIVEN INTEREST FREE LOAN TO SHRI O . S. KANWAR IN THE MONTH OF APRIL 2002 TO JUNE 2002. THE CONTENTION OF THE ASSESSEE IS THAT THE INTEREST FREE LOAN HAS BEEN ADVANCED TO SHRI O. S. KANWAR IN LIEU OF FAVOUR OF GIVING PERSO NAL GUARANTEE TO FINANCIAL INSTITUTIONS WITHOUT PAYMENT OF ANY COMMISSION IN RESPECT OF THE GUARANT EE GIVEN BY SHRI O. S. KANWAR. THE ASSESSEE OPTED TERM LOAN OF RS.11 CRORES FOR CONVER SION OF WARRANTS OF APOLLO TYRES INTO EQUITY SHARES OF APOLLO TYRES LTD. IT IS ALSO A FACT THA T THE ASSESSEE COMPANY HAD PLEDGED SECURITIES FOR OBTAINING THE LOANS FROM FINANCIAL INSTITUTIONS. SH RI O. S. KANWAR AT THE TIME WHEN HE GAVE PERSONAL GUARANTEE WAS ONE OF THE DIRECTORS OF APOL LO TYRES LTD.(FOR SHORT ATL). 6 I. T. APPEAL NO. 4031 (DEL) OF 2007 . 7.2 WE HAVE GONE THROUGH THE TERMS AND CONDITIONS O F AGREEMENT DATED 28.08.1999. CLAUSES 3.1 TO 3.4 OF THE AGREEMENT PROVIDE FOR THE SECURIT IES TO BE GIVEN BY THE ASSESSEE AND ARE REPRODUCED AS UNDER:- 3.1 SECURITY FOR THE FACILITY : THE FACILITY TOGETHER WITH ALL INTEREST LIQUIDATED DAMAGES FRONT END FEE PREMIA ON PREPAYMENT COSTS CHARGES EXPENSES AND OTHER MO NIES WHATSOEVER STIPULATED IN OR PAYABLE UNDER THE FACILITY AGREEMENT SHALL BE SECURED AS STATED BELOW : (XV) PLEDGE OF 6.186 MILLION REGISTERED EQUITY SHA RES OF ATL HELD BY THE PROMOTERS. ANY FURTHER STAKE ACQUIRED BY THE PROMO TERS SHALL ALSO BE PLEDGED UNDER THIS TRANSACTION IRRESPECTIVE OF ADEQUACY OF SECURITY COVER; (XVI) NEGATIVE PLEDGE OF 1.4 MILLION SHARES OF ATL HELD BY THE PROMOTERS ALLOTTED UNDER PREFERENTIAL ALLOTMENT IN SEPTEMBER 1998 AND HELD WITH A LOCK IN PERIOD EXPIRING ON SEPTEMBER 17 2001. THE PROMOTERS SHAL L GIVE AN UNDERTAKING TO CREATE PLEDGE ON THE ABOVE 1.34 MILLION SHARES ON E XPIRY OF THE LOCK IN PERIOD; (XVII) THE ABOVE PLEDGE SHALL RANK PARI PASSU WITH THE PLEDGES TO BE CREATED IN FAVOUR OF ICICI TO SECURE THE RUPEE LOANS OF RS.70 MILLION GIVEN TO NEERAJ CONSULTANTS LTD. AND RS.120 MILLION TO CONSTRUCTIVE FINANCE (P) LTD.; (XVIII) A LIEN ON DIVIDENDS PAYABLE BY ATL ON 7.52 6 MILLION SHARES (INCLUDING THE 6.186 MILLION SHARES PLEDGED AND 1.34 MILLION SHARE S HAVING A LOCK-IN.); (XIX) A LIEN ON THE MANAGEMENT COMMISSION PAYABLE BY ATL TO SHRI O. S. KANWAR AND SHRI NEERAJ KANWAR; (XX) CHARGE OVER ALL MOVABLE ASSETS OF THE COMPANY ; (XXI) IRREVOCABLE AND UNCONDITIONAL PERSONAL GUARA NTEE OF SHRI O. S. KANWAR SHRI NEERAJ KANWAR AND SHRI RAAJA KANWAR. 7 I. T. APPEAL NO. 4031 (DEL) OF 2007 . 3.2 SECURITY COVER : (V) AT THE END OF EVERY FORTNIGHT THE VALUE OF THE PLEDGED SHARES SHALL BE AT LEAST TWICE THE AMOUNT OF OUTSTANDING UNDER THIS LOAN. T HE VALUE OF THE SHARES SHALL BE CALCULATED AS THE LOWER OF AVERAGE CLOSING PRICES O F THE SHARES ON THE NSE AND THE BSE FOR THAT FORTNIGHT; (VI) THE COMPANY SHALL AT ALL POINTS OF TIME MAINT AIN A DEBT SERVICE COVER OF 1.5 BETWEEN SUCCESSIVE DUE DATES; 3.3 CONTINGENT CONDITIONS : (XVII) THE PLEDGED SHARES SHALL BE VALUED EVERY FO RTNIGHT AND SHORTFALL IF ANY SHALL BE REPLENISHED BY THE COMPANY SO AS TO MAINT AIN MINIMUM 100 PER CENT MARGIN BY WAY OF ADDITIONAL SECURITY OR REPAYMENT OF UNCOVERED AMOUNTS; (XVIII) THE COMPANY SHALL REPLENISH THE SHORTFALL IN SECURITY WITHIN A WEEK OF SUCH SHORTFALL; (XIX) IN THE EVENT OF FAILURE TO REPLENISH THE SHO RTFALL IN SECURITY ICICI SHALL HAVE THE OPTION TO CALL BACK A PART OF THE LOAN; (XX) ICICI RETAINS THE RIGHT TO REFUSE ADDITIONAL SECURITY AND SELL THE SHARES OF PART THEREOF IF THE SECURITY COVER FALLS BELOW 2 TI MES. 3.4 GUARANTEE : THE COMPANY SHALL PROCURE AND DELIVER TO ICICI BEFO RE ANY DISBURSEMENT BY ICICI OUT OF THE FACILITY IRREVOCABLE AND UNCONDIT IONAL PERSONAL GUARANTEE FROM SHRI O. S. KANWAR SHRI NEERAJ KANWAR AND SHRI RAAJ A KANWAR IN FAVOUR OF ICICI FOR THE DUE REPAYMENT OF THE FACILITY AND THE PAYMENT OF ALL INTEREST AND OTHER MONIES PAYABLE BY THE COMPANY IN A FORM PRES CRIBED BY ICICI. THE COMPANY SHALL NOT PAY ANY GUARANTEE COMMISSION TO T HE SAID GUARANTORS. 8 I. T. APPEAL NO. 4031 (DEL) OF 2007 . 7.3 FROM THE PERUSAL OF THE TERMS AND CONDITIONS OF SECURITY GIVEN BY THE ASSESSEE FOR THE PURPOSE OF BORROWING FUNDS FROM ICICI LTD. IT IS CL EAR THAT THE PROMOTERS OF THE ASSESSEE HAD PLEDGED 6.186 MILLION REGISTERED EQUITY SHARES OF A TL HELD BY THEM. THE PROMOTERS HAVE ALSO GIVEN UNDERTAKING TO CREATE PLEDGE ON 1.34 MILLION SHARES OUT OF 1.4 MILLION SHARES ALLOTTED TO PROMOTERS UNDER PREFERENTIAL ALLOTMENT IN SEPTEMBER 1998 ON THE EXPIRY OF LOCK-IN PERIOD. A LIEN ON DIVIDENDS PAYABLE BY APOLLO TYRES LTD. ON 7 .526 MILLION SHARES [6.186 + 1.34] WAS ALSO CREATED. CHARGE OVER ALL MOVABLE ASSETS OF THE COM PANY WAS ALSO CREATED. CLAUSE 3.2 OF SECURITY COVER PROVIDES THAT THE VALUE OF PLEDGED SHARES SHA LL BE AT LEAST TWICE OF THE AMOUNT OF OUTSTANDING LOAN. THE VALUE OF SHARES WAS TO BE CA LCULATED AS LOWER OF THE AVERAGE CLOSING PRICES OF SHARES ON NSE AND BSE FORTNIGHTLY. THE COMPANY WAS TO MAINTAIN AT ALL POINTS OF TIME A DEBT SERVICE COVER OF 1.5 BETWEEN SUCCESSIVE DUE DATES. IN A CASE IF THERE WAS ANY SHORTFALL IN THE VALUE OF PLEDGED SHARES THE ASSESSEE WAS REQUIRE TO REPLENISH SO AS TO MAINTAIN MINIMUM 100 PER CENT MARGIN BY WAY OF ADDITIONAL SECURITY OR REPAYM ENT OF UNCOVERED AMOUNT. ICICI RETAINED THE RIGHT TO REFUSE ADDITIONAL SECURITY AND SELL THE SH ARES OR PART THEREOF IF THE SECURITY FELL BELOW TWO TIMES. FROM THE ABOVE TERMS AND CONDITIONS OF THE AGREEMENT GIVEN TO THE ASSESSEE IT IS EVIDENT THAT THE LOAN WAS SANCTIONED BY ICICI AND KOTAK MA HINDRA LTD. MERELY BECAUSE OF PERSONAL GUARANTEE GIVEN BY SHRI O. S. KANWAR AND THE ASSESS EE WAS SO MUCH OBLIGED TO ADVANCE INTEREST FREE LOAN TO SHRI O. S. KANWAR THAT TOO AFTER EXPIR Y OF PERIOD OF ALMOST THREE YEARS. 7.4 WE HAVE ALSO GONE THROUGH THE EXTRACTS OF BOARD S MEETING OF APOLLO FINANCE LTD. HELD ON 27 TH SEPTEMBER 2000 WHEREIN ISSUANCE OF CORPORATE GUAR ANTEE WAS APPROVED. AS PER MINUTES OF THE BOARDS MEETING IT IS SEEN THAT THE DIRECTOR S HAVE NOTED THAT ICICI LTD. HAD SANCTIONED FINANCIAL ASSISTANCE TO THE EXTENT OF RS.30 CRORES VIDE THEIR LETTER DATED 5 TH AUGUST 1999 TO CONSTRUCTIVE FINANCE PVT. LTD. SUNRAYS PROPERTIES AND INVESTMENT COMPANY PVT. LTD. AND NEERAJ CONSULTANTS LTD. TO MEET A PART OF THEIR FUN D REQUIREMENT. THESE COMPANIES HAD REQUESTED APOLLO FINANCE LTD. FOR ISSUANCE OF CORPO RATE GUARANTEE IN FAVOUR OF ICICI LTD. BY THE COMPANY. AFTER SOME DELIBERATIONS THE BOARD OF APO LLO FINANCE LTD. PASSED THE FOLLOWING RESOLUTION:- 9 I. T. APPEAL NO. 4031 (DEL) OF 2007 . RESOLVED THAT SHRI PROSAD DASGUPTA SHRI P. N. WA HAL DIRECTORS AND SHRI SATISH MAHAJAN MANAGER DIRECTOR OF THE COMPANY BE AND A RE HEREBY SEVERALLY AUTHORIZED TO EXECUTE CORPORATE GUARANTEE(S) IN FAVOUR OF ICICI L TD. IN CONNECTION WITH FINANCIAL ASSISTANCE TO BE GIVEN BY ICICI LTD. TO CONSTRUCTIV E FINANCE PVT. LTD. FOR RS.12 CRORES SUNRAYS PROPERTIES AND INVESTMENT COMPANY PVT. LTD. FOR RS.11 CRORES AND NEERAJ CONSULTANTS LTD. FOR RS.7 CRORES IN CONSIDERATION O F WHICH A COMMISSION OF 1.8 PER CENT PER ANNUM BE CHARGED FROM THE THREE AFORESAID COMPA NIES AVAILING THE SAID FINANCIAL ASSISTANCE. RESOLOVED FURTHER THAT SHRI PROSAD DASGUPTA SHRI P . N. WAHAL DIRECTORS AND SHRI SATISH MAHAJAN MANAGER DIRECTOR OF THE COMPANY B E AND ARE SEVERALLY AUTHORIZED TO SIGN ANY DEAL AGREEMENT UNDERTAKING ETC. FOR THE PURPOSE OF ISSUANCE OF CORPORATE GUARANTEE AND AFFIX COMMON SEAL OF THE COMPANY AS M AY BE NECESSARY FOR THIS PURPOSE ON BEHALF OF THE COMPANY IN ACCORDANCE WITH THE PROVIS IONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY. RESOLVED FURTHER THAT A CERTIFIED TRUE COPY OF THE ABOVE RESOLUTION BE FORWARDED TO ICICI LTD. UNDER THE SIGNATURES OF ANY ONE DIRECTOR FOR THE TIME BEING OF THE COMPANY. 7.5 FROM THE BOARD RESOLUTION OF APOLLO FINANCE LTD . IT IS CLEAR THAT APOLLO FINANCE LTD. HAVE EXTENDED CORPORATE GUARANTEE TO ICICI LTD. AT A COMMISSION OF 1.8 PER CENT PER ANNUM. FURTHER FROM THE DEBIT NOTES RAISED BY APOLLO FINAN CE LTD. AS ON 30 TH SEPTEMBER 2002 AND 27/11/2002 PLACED AT PAPER BOOK PAGES 36 TO 38 APOL LO FINANCE LTD. HAVE CHARGES COMMISSION AT THE RATE OF 1.8 PER CENT ON MARKET VALUE OF SHARES PLEDGED. AS PER REPAYMENT SCHEDULE THE FIRST TRANCHE RUPEE LOAN OF 5.5 CRORES WAS TO BE PAID IN 7 EQUAL HALF-YEARLY INSTALLMENTS COMMENCING FROM 15 TH SEPTEMBER 2000 AND ENDING ON 15 TH SEPTEMBER 2003. THE REPAYMENT OF SECOND TRANCHE OF LOAN WAS TO BE DECIDED AT THE TIME OF DI SBURSEMENT OF LOAN. 7.6 FROM THESE FACTS IT IS AMPLE CLEAR THAT CORPORA TE GUARANTEE HAS BEEN EXTENDED ON PAYMENT OF COMMISSION OF 1.8 PER CENT PER ANNUM BY APOLLO F INANCE LTD. IN ADDITION TO THE RATE OF 10 I. T. APPEAL NO. 4031 (DEL) OF 2007 . INTEREST CHARGED BY FINANCIAL INSTITUTIONS I.E. ICI CI LTD. AND KOTAK MAHINDRA LTD. IT IS IMPORTANT TO NOTE THAT INVOKING OF SECURITY COVER OR CORPORAT E GUARANTEE WOULD ARISE WHEN THERE IS A FAILURE ON THE PART OF BORROWERS. FROM THESE FACTS IT IS C LEAR THAT ICICI LTD. AND KOTAK MAHINDRA HAVE NOT ADVANCED THE LOANS ONLY ON THE BASIS OF GUARANT EE GIVEN BY SHRI O. S. KANWAR. APOLLO FINANCE LTD. HAVE EXTENDED THE CORPORATE GUARANTEE ON BEHALF OF THE ASSESSEE TO ICICI LTD. THE COPY OF SAID PERSONAL GUARANTEE OF SH. O.S. KANWAR HAS NOT BEEN GIVEN. SHRI O. S. KANWAR IS NEITHER A SHARE HOLDER NOR HAS ANY INTEREST IN THE ASSESSEE COMPANY OR RELATED TO THE DIRECTORS OF THE COMPANY AND THEREFORE IT IS NOT KNOWN AS TO WH Y SHRI O. S. KANWAR WOULD HAVE GIVEN HIS PERSONAL GUARANTEE. THE LOAN OF RS 5.5 CRORES IN FI RST TRANCHE WAS REPAYABLE IN SEVEN HALF YEARLY INSTALLMENTS STATING FROM 15.09.2000. IT WOULD MEAN THAT THE LOAN OF RS 5.5 CRORES WAS DISBURSED ON 15.03.2000. AFTER PAYMENT OF FIRST INSTALLMENT O N 15.09.2000 APOLLO FINANCE LTD HAD EXTENDED CORPORATE GUARANTEE ON PAYMENT OF COMMISSI ON @ 1.8% OF MARKET VALUE OF SHARES OF ATL PLEDGED. IF APOLLO FINANCE LTD HAD GIVEN CORPOR ATE GUARANTEE WHERE WAS NECESSITY OF PERSONAL GUARANTEE OF SH. O.S. KANWAR. THE ASSESSEE IS TAKING THIS PLEA ON THE BASIS OF A CONDITION IN THE AGREEMENT. THERE IS NO SUCH CONDIT ION IN THE SAID AGREEMENT ABOUT CORPORATE GUARANTEE FROM APOLLO FINANCE LTD. BUT ICICI BANK H AD TAKEN A CORPORATE GUARANTEE. THEREFORE MERELY ON THE BASIS OF CLAUSE IT CANNOT BE PRESUMED THAT SH. OS KANWAR WOULD HAVE GIVEN THE PERSONAL GUARANTEE. IN VIEW OF THESE FACTS WE ARE O F THE CONSIDERED OPINION THAT NO CASE OF BUSINESS EXPEDIENCY HAS BEEN MADE OUT BY THE ASSESS EE. 8. THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF DCIT VS. CORE HEALTH LTD. 298 ITR 194 (SC) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE RELIED UPON BY THE LD. AR OF THE ASSESSEE. IN THAT CASE THE ISSUE RELATED TO PAYMEN T OF INTEREST ON BORROWED FUNDS FOR PURCHASE OF MACHINERY FOR THE PURPOSES OF BUSINESS. THE INTERE ST WAS ALLOWABLE EVEN IF THE MACHINERY WAS NOT USED IN THE YEAR OF BORROWING. HONBLE SUPREME COURT HELD THAT ALL THAT THE SECTION 36(1)(III) OF THE ACT REQUIRES IS THAT THE ASSESSEE MUST BORRO W CAPITAL AND THE PURPOSE OF BORROWING MUST BE FOR THE BUSINESS WHICH IS CARRIED ON BY THE ASSESSE E IN THE YEAR OF ACCOUNT. THIS DECISION IS DISTINGUISHABLE ON FACTS AND IS NOT APPLICABLE TO T HE FACTS OF THE ASSESSEES CASE. 11 I. T. APPEAL NO. 4031 (DEL) OF 2007 . 9. THE LD. AR OF THE ASSESSEE HAS RELIED ON THE DEC ISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BRITANNIA INDUSTRIES LTD. 280 I TR 525 (CAL). IN THIS CASE THE ASSESSEE HAD PACKING CREDIT SANCTIONED BY SYNDICATE BANK TO THE EXTENT OF RS.25 LAKHS WHICH WAS ENHANCED TO RS.175 LAKHS. ON EVERY DATE OF ENHANCEMENT OF P ACKING CREDIT A SUM OF RS.165 LAKHS WAS ADVANCED TO M THROUGH A CHEQUE DRAWN ON SYNDICATE B ANK. THE ASSESSING OFFICER FOUND THAT THE FIRM TO WHICH INTEREST FREE LOAN WAS ADVANCED WAS C ONSTITUTED BY THE RELATIVES OF THE DIRECTORS OF THE ASSESSEE. THE AO POINTED OUT THAT THE ADVANCE WAS MADE TO M WITHOUT ANY SECURITY AND WITHOUT ANY STIPULATION FOR PAYMENT OF INTEREST WHE REAS THE ASSESSEE HAD PAID 12 PER CENT INTEREST ON PACKING CREDIT TO SYNDICATE BANK. THE AO DISALL OWED THE INTEREST. ON APPEAL THE TRIBUNAL FOUND THAT THE ASSESSEE WAS HAVING MIXED ACCOUNT IN WHICH SALES AND PACKING CREDITS WERE CREDITED AND AN ADVANCE WAS GRANTED FROM THE SAID M IXED ACCOUNT. IT WAS ALSO FOUND THAT THE ASSESSEE WAS HAVING SUFFICIENT FUNDS FOR MAKING ADV ANCE FREE OF INTEREST. THE TRIBUNAL HELD THAT THE INTEREST PAID WAS DEDUCTIBLE. THE STAND TAKEN B Y THE TRIBUNAL WAS UPHELD BY THE HIGH COURT. THE FACTS OF THE CASE BEFORE US ARE DISTINGUISHABLE ON FACTS AS THE ASSESSEE HAD NOT PROVED WITH EVIDENCE THAT THE INTEREST FREE ADVANCE MADE TO SHR I O. S. KANWAR AND SHRI U. S. OBEROI HAVE COME OUT OF FUNDS OF THE ASSESSEE. 10. THE DECISION OF HONBLE SUPREME COURT IN THE CA SE OF S.A. BUILDERS VS. CIT 288 ITR 1 IT HAS BEEN HELD THAT IN A CASE WHERE BORROWED AMOU NT IS NOT UTILIZED BY THE ASSESSEE IN ITS OWN BUSINESS BUT HAD BEEN ADVANCED AS INTEREST FREE LO AN THE RELEVANT FACTOR IS TO BE SEEN IS WHETHER THE AMOUNT WAS ADVANCED AS A MEASURE OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS . ONCE IT IS HELD THAT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF BUSINESS THE REVENUE COULD NOT JUSTIFY CLAIM TO PUT ITSELF IN THE ARMS CHAIR OF THE BUSINESSMAN OR IN THE POSITION OF BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HOW MUCH WAS REASONABLE EXPENDIT URE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. IN THE CASE BEFORE US THE ASSESSEE HAD RECEIVED LOAN IN TERMS OF AGREEMENT DATED 25/08/1999 AND THE INTEREST FREE LOAN HAS BEEN ADVA NCED IN APRIL 2002 TO JUNE 2002. THE ASSESSEE HAD GIVEN CORPORATE GUARANTEE OF APOLLO FI NANCE LTD ON PAYMENT OF GUARANTEE COMMISSION OF 1.8% PER ANNUM. THIS DOES NOT PROVE ANY BUSINESS EXPEDIENCY BETWEEN THE LOAN TAKEN BY THE ASSESSEE FROM ICICI LTD. IN 1999 AND I NTEREST FREE ADVANCE MADE TO SHRI O. S. 12 I. T. APPEAL NO. 4031 (DEL) OF 2007 . KANWAR AND SHRI U. S. OBEROI IN APRIL 2002 TO JUNE 2002. THEREFORE THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S. A. BUILDERS VS. CIT (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE. 11. THE LD. AR OF THE ASSESSEE HAS ALSO RELIED ON T HE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SABINA DETERGENTS P. LTD. 30 3 ITR 320 (MAD). IN THIS CASE THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF SCOULDING PO WER PICKLES ETC. AND CLAIMED EXPENDITURE IN RESPECT OF ADVERTISEMENT OF PICKLES MARKETED BY IT WHICH WERE MANUFACTURED BY ITS SISTER CONCERN. THE AO DISALLOWED THE AMOUNT OF ADVERTISE MENT EXPENDITURE ON THE GROUND THAT THE EXPENDITURE WAS INCURRED FOR PROMOTING THE PRODUCTS MANUFACTURED BY ITS SISTER CONCERN AND THERE WAS NO MEMORANDUM OF UNDERSTANDING OR AGREEME NT BETWEEN THE ASSESSEE AND THE MANUFACTURING COMPANY IN THIS REGARD. THE LD. CIT (A) ALSO CONFIRMED THE DISALLOWANCE. HOWEVER THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSE SSEE. ON FURTHER APPEAL IT WAS HELD THAT THE MARKETING OF PRODUCTS OF ITS SISTER CONCERN BY ITSE LF WAS A TRADE UNDERTAKEN BY THE ASSESSEE AND THE EXPENSES CLAIMED WERE THE EXPENSES INCURRED DUR ING THE COURSE OF SUCH MARKETING. THE ASSESSEE INCURRED EXPENSES NOT IN ITS PERSONAL CAPA CITY AS AN AGENT FOR THE PRODUCTS MANUFACTURED BY ITS SISTER CONCERN BUT IN ITS CAPACITY AS BUSIN ESSMAN IN MARKETING THE PRODUCTS BY ITSELF. THIS DECISION OF HONBLE MADRAS HIGH COURT IS ALSO NOT A PPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 12. DURING THE COURSE OF HEARING THE LD. SR. DR STR ONGLY RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PUNJAB STAINLESS ST EEL INDUSTRIES VS. CIT 324 ITR 396 WHEREIN IT HAS BEEN HELD AS UNDER :- THE COMMERCIAL EXPEDIENCY WOULD INCLUDE SUCH PUR POSE AS IS EXPECTED BY THE ASSESSEE TO ADVANCE ITS BUSINESS INTEREST AND MAY I NCLUDE MEASURES TAKEN FOR PRESERVATION PROTECTION OR ADVANCEMENT OF ITS BUSI NESS INTERESTS. THE BUSINESS INTEREST OF THE ASSESSEE HAS TO BE DISTINGUISHED FR OM THE PERSONAL INTEREST OF ITS DIRECTORS OR PARTNERS AS THE CASE MAY BE. IN OTHE R WORDS THERE HAS TO BE A NEXUS BETWEEN ADVANCING OF FUNDS AND BUSINESS INTEREST OF THE ASSESSEE. THE APPROPRIATE TEST IN SUCH A CASE WOULD BE AS TO WHET HER A REASONABLE PERSON 13 I. T. APPEAL NO. 4031 (DEL) OF 2007 . STEPPING INTO THE SHOES OF THE DIRECTORS/PARTNERS O F THE ASSESSEE AND WORKING SOLELY IN THE INTEREST OF THE ASSESSEE WOULD HAVE E XTENDED SUCH INTEREST FREE ADVANCES. SOME BUSINESS OBJECTIVE SHOULD BE SOUGHT TO HAVE BEEN ACHIEVED BY EXTENDING SUCH INTEREST FREE ADVANCE WHEN THE ASSES SEE ITSELF IS BORROWING FUNDS FOR RUNNING ITS BUSINESS. IT MAY NOT BE RELEVANT A S TO WHETHER ADVANCES HAVE BEEN EXTENDED OUT OF BORROWED FUNDS OR OUT OF MIXED FUND S WHICH INCLUDED BORROWED FUNDS. THE TEST TO BE APPLIED IN SUCH CASES IS NOT THE SOURCE OF FUNDS BUT THE PURPOSE FOR WHICH ADVANCES WERE EXTENDED. 13. IF WE EXAMINE THE FACTS OF THE CASE BEFORE US I N THE LIGHT OF DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PUNJAB STAINLESS STEEL IN DUSTRIES VS. CIT (SUPRA) WE FIND THAT NO BUSINESS OBJECTIVE HAS BEEN ACHIEVED BY EXTENDING S UCH INTEREST-FREE LOAN WHEN THE ASSESSEE ITSELF HAS BEEN BORROWING FUNDS FOR RUNNING ITS BUS INESS. THEREFORE NO CASE OF COMMERCIAL EXPEDIENCY HAD BEEN MADE OUT BY THE ASSESSEE. 14. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIR VS. ABHISHEK INDUSTRIES 286 ITR1 HAS HELD THAT WHERE AMOUNT IS ADVANCED FROM A MIXED ACCOUNT OR SHARE CAPITAL OR SALE PROCEEDS OR PROFITS THE CONTENTION OF ASSESSEE THAT IT WOULD NOT BE DEEM DIVERSION OF BORROWED CAPITAL OR THAT THE REVENUE HAD NOT ABLE TO ESTABLI SH NEXUS OF THE FUNDS ADVANCED TO SISTER CONCERN WITH THE BORROWED FUNDS IS NOT CORRECT. O NCE IT IS WORN OUT FROM THE RECORD THAT THE ASSESSEE HAD BORROWED CERTAIN FUNDS ON WHICH LIABIL ITY TO PAY INTEREST IS BEING INCURRED AND ON THE OTHER HAND CERTAIN AMOUNTS HAD BEEN ADVANCED T O SISTER CONCERNS OR OTHERS WITHOUT CARRYING ANY INTEREST AND WITHOUT ANY BUSINESS PURPOSE THE INTEREST TO THE EXTENT THE ADVANCE HAD BEEN MADE WITHOUT CARRYING ANY INTEREST IS TO BE DISALLO WED UNDER SECTION 36(1)(III) OF THE ACT. 15. IN THE CASE BEFORE US THE ASSESSEE HAD RECEIVE D RS.5.5 CRORES OF LOAN IN FIRST TRANCHE IN MARCH 2000 FOR THE PURPOSE OF CONVERSION OF WARRAN TS OF APOLLO TYRES LTD. INTO EQUITY SHARES. THE PAYMENT HAS BEEN DIRECTLY MADE TO APOLLO TYRES LTD. THEREFORE THE PAYMENT OF INTEREST FREE LOAN HAS NOT COME OUT OF RS 5.5 CRORES ADVANCED IN MARCH 2000. AT THE SAME TIME IT IS NOT 14 I. T. APPEAL NO. 4031 (DEL) OF 2007 . KNOWN AS TO WHEN THE PAYMENT OF SECOND LOAN OF RS 5 .5 CRORES WAS MADE. IN THE ABSENCE OF FULL FACTS IT IS NOT POSSIBLE FOR US TO DECIDE THE ISSUE RELATING TO DISALLOWANCE OF INTEREST. WE THEREFORE FEEL IT PROPER TO SET ASIDE THE ISSUE TO THE FILE ASSESSING OFFICER WITH THE DIRECTION OBTA IN NECESSARY DETAILS OF SECOND LOAN TAKEN AND DECIDE T HE ISSUE OF ALLOWANCE INTEREST PAID BY THE ASSESSEE ON BORROWED FUNDS IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS. NEEDLESS TO SAY THE ASSESSEE WILL BE GIVEN PROPER OPPORTUNITY OF BEING HEARD BEF ORE DECIDING THE ISSUE. 16. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PROPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 15 TH JULY 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JULY 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.