DCIT CEN CIR 7(3), MUMBAI v. COWTOWN LAND DEVELOPMENT P.LTD, MUMBAI

ITA 428/MUM/2016 | 2008-2009
Pronouncement Date: 30-11-2017 | Result: Dismissed

Appeal Details

RSA Number 42819914 RSA 2016
Assessee PAN AAACC4889L
Bench Mumbai
Appeal Number ITA 428/MUM/2016
Duration Of Justice 1 year(s) 10 month(s)
Appellant DCIT CEN CIR 7(3), MUMBAI
Respondent COWTOWN LAND DEVELOPMENT P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 27-12-2017
Assessment Year 2008-2009
Appeal Filed On 29-01-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI G. MANJUNATHA ACCOUNTANT MEMBER ITA NO.428/MUM/2016 ASSESSMENT YEAR: 2008-09 DCIT CC-7(3) ROOM NO.655 6TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020 / VS. M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 216 SHAH & NAHAR INDUSTRIAL ESTATE OFF DR. E. MOSES ROAD WORLI MUMBAI-400018 ( / REVENUE) ( ! ' /ASSESSEE) P.A. NO.AAACC4889L / REVENUE BY SHRI RAJAT MITTAL-DR ! ' / ASSESSEE BY SHRI VIJAY MEHTA # $ % ' & / DATE OF HEARING : 30/11/2017 % ' & / DATE OF PRONOUNCEMENT 27/12/2017 ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 30/11/2015 OF THE LD. FIRST APPELLATE AUTHORI TY MUMBAI. THE ONLY GROUND RAISED BY THE ASSESSEE PERT AINS TO DISALLOWANCE OF PROJECT EXPENSES OF RS.6 50 50 0 00/- WITHOUT APPRECIATING THE GENUINENESS OF THE CLAIM O F PAYMENTS AS THE PAYMENTS WERE NEITHER CONFIRMED NOR MENTIONED IN PLEDGED DEED OR MENTION IN ANY OTHER DOCUMENT FILED BY THE ASSESSEE. 2. DURING HEARING THE LD. DR SHRI RAJAT MITTAL ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED BY CONTENDING THAT NO INDEPENDENT CONFIRMATI ON WERE FILED BY THE ASSESSEE. OUR ATTENTION WAS INVI TED TO PARA-4.1 OF THE ASSESSMENT ORDER AND PAGE-15 (PARA- 4.3) OF THE IMPUGNED ORDER. 2.1. ON THE OTHER HAND SHRI VIJAY MEHTA LD. COUN SEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED OR DER BY INVITING OUR ATTENTION TO THE DEVELOPMENT AGREEMENT MADE ON 29/10/2004 BY EXPLAINING THAT THE COMPANY WAS IN ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 3 BIFR SINCE 1990 WHEREIN IT WAS HELD THAT THE COM PANY IS TO BE WOUND UP. IT WAS CONTENDED THAT SETH INDUSTRI ES ENTERED IN TO A DEVELOPMENT RIGHT AGREEMENT AND OUR ATTENTION WAS INVITED TO PAGES 64 TO 67 OF THE PAPE R BOOK. IT WAS SUBMITTED THAT LITIGATION STARTED AND IN THE YE AR 2005 DISCONTENTED SHARE HOLDERS FILED PETITION BEFORE TH E HON'BLE HIGH COURT FOR WHICH OUR ATTENTION WAS INVITED TO O RDER DATED 28/04/2006. IT WAS EXPLAINED THAT THE COMPANY OPPOSED WINDING UP AND TILL 2006 (28/04/2006) NO PAYMENT WAS MADE. IT WAS PLEADED THAT TO SORT OUT T HE DIFFERENCES WITH OTHER PARTIES THE PAYMENT WAS MAD E TO SAFEGUARD THE BUSINESS INTEREST. OUR ATTENTION WAS INVITED TO PAGE-94 TO 101 OF THE PAPER BOOK EVIDENCING THE PAYMENT MADE TO THE DIFFERENT PARTIES ALONG WITH PA GE-102 OF THE PAPER BOOK WHEREIN THE ASSESSEE GOT NO OBJE CTION FROM THESE PARTIES AND SIMILAR LETTERS MADE AVAILAB LE FROM 103 TO 108 (OTHER LITIGATING PARTIES TO WHOM PAYMEN T WERE MADE). IT WAS CLAIMED THAT SHRI NARESH SETH WROTE D IRECTLY TO THE HON'BLE HIGH COURT MENTIONING HIS NO OBJECTI ON AND THEREFORE THE AMOUNT OF RS.1.50 CRORES MADE TO HIM . THE CRUX OF THE ARGUMENT WAS THAT THE SHAREHOLDERS WERE MADE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 4 THE PAYMENTS SO THAT THEY MAY NOT CREATE ANY PROBLE M AND THEIR SHARES WERE OBTAINED THROUGH PLEDGE AGREEMENT S. IT WAS EXPLAINED THAT REST OF THE SHARE HOLDER WERE PA ID RS.5 CRORES AND THEY PLEDGED THEIR SHARES. OUR ATTENTION WAS INVITED TO PAGE 118 OF THE PAPER BOOK EVIDENCING TH EIR SIGNATURE. IT WAS EXPLAINED THAT THE PAYMENT WAS MA DE TO OBTAINED THEIR SHARES FOR WHICH OUR ATTENTION WAS I NVITED TO THE INDEMNITY FILED BY THESE PARTIES. IT WAS EMPATH ETICALLY ASSERTED THAT IF THE AMOUNT OF RS.6.5 CRORES WOULD NOT HAVE BEEN PAID TO THESE PARTIES THE ASSESSEE WAS LIKELY TO LOSE RS. 25 CRORES THEREFORE THE PURPOSE OF PAYMENT IS NOT IN DOUBT. THE AMOUNTS WERE DULY CLAIMED TO BE REFLECTE D IN THE BOOKS OF ACCOUNT OF THE ASSESSEE (PAGE-14 OF TH E PAPER BOOK AND ALSO PAGE-24). IT WAS EXPLAINED THAT THE P AYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE SO AS TO GET NO OBJECTION FROM THESE PARTIES. IT WAS EXPLAINED THAT THERE IS NO EVIDENCE TILL TODAY THAT THE AMOUNTS WERE RECEIV ED BACK FROM THESE PARTIES AND ONCE HON'BLE DELHI HIGH COUR T DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THE PU RPOSE WAS ACHIEVED. ALL PARTIES WERE CLAIMED TO HAVE FILE D CONFIRMATION THEREFORE THEIR IDENTITY IS NOT IN D ISPUTE. THE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 5 ENTIRE TRANSACTION WAS CLAIMED TO BE CONCLUDED DURI NG ASSESSMENT YEAR 2008-09 SO THE PAYMENT WERE MADE. THE CRUX OF THE ARGUMENT IS THAT TO SAFEGUARD BUSINESS INTEREST THE PAYMENT WERE MADE. IT WAS EXPLAINED THAT THE EX PENSES SO INCURRED WERE CAPITALIZED FOR WHICH OUR ATTENTIO N WAS INVITED TO PAGE-17(SCHEDULE-XII) AS THE ENTIRE AMOU NT WAS CLOSING WIP. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY DURING THE RELEVANT TIME CARRIED OUT BUSINESS OF LAND DEVELOPMENT AND CONSTR UCTION OF BUILDING. THE ASSESSEE COMPANY PURCHASED/OBTAINE D DEVELOPMENT RIGHTS OF A PROPERTY AT DAHISAR VIDE AG REEMENT DATED 29/10/2004 WITH SETH INDUSTRIES PVT. LTD. SUBSEQUENT TO THE AGREEMENT (AS PER THE ASSESSEE) T HE ASSESSEE COMPANY CAME TO KNOW THAT THERE WERE DISPU TE AMONG THE SHAREHOLDERS OF SETH INDUSTRIES AND SUCH SHAREHOLDERS HAD FILED PETITION BEFORE THE HON'BLE HIGH COURT OF BOMBAY FOR RELIEF AND WINDING UP OF SETH INDUSTRIES. IN THE EVENT OF WINDING UP OF SETH INDU STRIES IT WOULD HAVE AFFECTED THE BUSINESS RIGHTS OF THE ASSE SSEE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 6 COMPANY OVER THE PROPERTY AND IN ORDER TO CLEAR THE TITLE OF THE PROPERTY FROM THESE LEGAL ENTANGLEMENTS THE AS SESSEE MADE PAYMENTS THROUGH ACCOUNT PAYEE CHEQUE TO VARIO US SHAREHOLDERS AGGREGATING 6.50 CRORES. THE CRUX OF ARGUMENT OF THE ASSESSEE IS THAT THE PAYMENT WAS MA DE TO SUCH LITIGATING SHAREHOLDERS TO SAFEGUARD THE BUSIN ESS INTEREST IN ORDER TO SECURE DAHISAR LAND FREE FROM ALL LEGAL ENCUMBRANCES SO THAT THEY CAN BE DEVELOPED AS A HOU SING PROJECT AND IN THE ABSENCE OF SUCH PAYMENTS THE WH OLE PROJECT INCLUDING OTHER PAYMENTS WOULD HAVE ALSO JEOPARDIZED AND AS SUCH THE PAYMENT WAS MADE FOR COMMERCIAL CONSIDERATION. WHILE FRAMING THE ASSESS MENT U/S 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT) FROM THE NOTES OF ACCOUNTS TO THE AUDIT REPORT IT WAS FOUND BY THE LD. ASSESSING OFFICER THAT THE ASSESSE E MADE PAYMENT OF RS.6 50 50 000/- TO VARIOUS SHAREHOLDER S FROM WHOM DEVELOPMENT RIGHTS WERE OBTAINED. THE ASSESSEE WAS ASKED TO JUSTIFY THE PAYMENT OF THIS AMOUNT WITH CO MPLETE ADDRESSES OF THE PERSON TO WHOM SUCH PAYMENTS WERE MADE ALONG WITH DOCUMENTARY EVIDENCE. THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS:- ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 7 1. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF RESIDENTIAL BUILDIN G. THE ASSESSEE COMPANY PURCHASED DEVELOPMENT RIGHTS FOR PROPERTY AT DAHISAR DIST THANE VIDE DEVELOPME NT AGREEMENT DATED 29 OCTOBER 2004 WITH SETH INDUSTRIE S PVT. LTD. (SELLER COMPANY). THE SAID AGREEMENT WA S REGISTERED WITH THE SUB-REGISTRAR OF ASSURANCE AT THANE UNDER SERIAL NO.8752 OF 2004. THE SELLER COMPANY WAS DECLARED SICK COMPANY UNDER THE PROVISIONS OF SECTION 20(1) OF SICA 1985. THE APPE AL FILED BEFORE AAIFR WAS DISMISSED OF AAIFR. IN 2005 THE ABOVE FACTS CAME TO THE KNOWLEDGE OF T HE ASSESSEE COMPANY. DUE TO VARIOUS DISPUTES AMONG SHAREHOLDER THE CERTAIN SHAREHOLDERS FILED A COMPAN Y PETITION BEFORE THE BOMBAY HIGH COURT IN 2005 FOR VARIOUS RELIEFS INCLUDING WINDING UP OF THE SELLER COMPANY. IN THIS CONTEXT WE ENCLOSE HEREWITH THE C OPY OF INDEX FILED WITH THE BOMBAY HIGH COURT INCLUDING SYNOPSIS AND LETTER RECEIVED FROM THE SHAREHOLDERS. IT CAN BE OBSERVED FROM THE LETTER RECEIVED FROM SHRI JANAK SETH WHERE THE SALE OF DEVELOPMENTS RIGHTS B Y THE SELLER COMPANY TO THE ASSESSEE COMPANY HAS BEEN CHALLENGED. IN THE MEANTIME THE ASSESSEE COMPANY HAD MADE VARIOUS PAYMENTS TO THE SELLER COMPANY FOR DEVELOPMENT RIGHTS ON LAND BELONGING TO THE SELLER COMPANY. NOW TO REMOVE HINDRANCE OF ALL LEGAL CASES AND WINDING UP PETITION PENDING BEFORE DELHI HIGH COURT AND TO SAFEGUARD INTEREST OF THE COMPANY IN SECURING POSSESSION AND CLEAR TITLE TO DAHISAR LAND THE ASSESSEE COMPANY MADE PAYMENTS TO VARIOUS SHAREHOLDERS AGGREGATING TO RS.6.5 CRORES. AFTER MA KING ABOVE PAYMENTS TO THE SHAREHOLDERS THE ASSESSEE COMPANY OBTAINED NOC FROM THE SHAREHOLDERS FOR FILI NG SAME BEFORE DELHI HIGH COURT SO THAT SELLER COMPANY CAN BE TAKEN OUTSIDE THE PURVIEW OF BIFR. WE HUMBLY SUBMIT THAT ADDITIONAL PAYMENTS MADE TO THE SHAREHOLDERS ARE FOR THE PURPOSE OF SECURING DAHISAR LAND FREE FROM ANY LEGAL CASES SO THAT SAME CAN ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 8 BE DEVELOPED AS A HOUSING PROJECT FOR SALE TO CUSTO MERS. WITHOUT SUCH PAYMENTS TO SHAREHOLDERS ALL EXPENDITURE INCURRED INCLUDING TOWARDS DEVELOPMENT WOULD HAVE BEEN ALSO JEOPARDIZED HAD THE SELLER COMPANY BEEN WOUND UP. HENCE IT WAS UTMOST NECESSARY THAT ALL SHAREHOLDERS COMPLY WITH COURT DIRECTIVES OF FILING AFFIDAVIT FOR NO OBJECTION BEF ORE THE DELHI HIGH COURT. AS SUCH THERE WAS COMMERCIAL AN D BUSINESS CONSIDERATION IN MAKING PAYMENTS TO THE SHAREHOLDERS OF RS.6.5 CRORE IN ADDITION TO THE PAY MENT TO THE SELLER COMPANY. WE SUBMIT THAT RELIANCE CAN BE PLACED ON THE FOLLOWING DECISIONS:- A. CIT VS DELHI SAFE DEPOSIT LTD. (1982) 133 ITR 756 WHERE IT IS HELD THAT TO SETTLE DISPUTE AMICABLY TO SAVE ITS REPUTATION AND TO PROTECT SOURCE OF INCOME ANY PAY MENT MADE AS INCIDENTAL TO HIS TRADE FOR THE PURPOSE OF KEEPING TRADE GOING AND OF MAKING IT PAY AND NOT IN OTHER CAPACITY THEM OF A TRADER. B. BOMBAY STEAM NAVIGATION CO. VS CIT (1953) 56 ITR 5 2 WHERE IT IS HELD AS ALLOWABLE EXPENSES IF EXPENDITU RE IS MADE UNDER A INTEGRAL PART OF THE CONDUCT OF BUSINE SS. C. CIT VS SINNAR BIDI UDYOG LTD. (2002) 123 TAXMAN 55 9 (BOM) WHERE IT IS HELD THAT PAYMENT MADE TO SETTLE CONTROVERSY THE ASSESSEE ACCEPTED PAT OF EMPLOYEES CLAIM AND MADE ADDITIONAL RETIREMENT COMPENSATION. 2.3. IT IS ALSO NOTED THAT THE ASSESSEE VIDE ANOT HER COMMUNICATION 23/12/2010 SUBMITTED THE COPIES OF LE TTER ACKNOWLEDGING THE PAYMENTS AMOUNTING TO RS.6.50 CRO RES AND CONFIRMATION FROM RECIPIENT OF SUCH PAYMENTS WE RE FILED. THIS CONTENTION OF THE ASSESSEE WAS DECLINED BY THE LD. ASSESSING OFFICER ON THE GROUND THAT SUCH CONFI RMATION IS NOT ON STAMP PAPERS. IT IS NOTED THAT ON THESE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 9 CONFIRMATION THE DETAILS LIKE CHEQUE NOS. DATE AN D BANK AND THE AMOUNT PAID WERE DULY MENTIONED. THIS FACTU AL MATRIX IS OOZING OUT FROM THE ASSESSMENT ORDER ITSE LF. IT IS ALSO NOTED THAT THE ASSESSEE ALSO FILED AFFIDAVIT F ROM ONE SHRI NARESH SETH (ONE OF THE RECIPIENT). THE LD. AS SESSING OFFICER DISALLOWED THE CLAIMED EXPENDITURE OF RS.6 50 50 000/- DEBITED IN THE PROFIT & LOSS ACCOU NT. 2.4. ON APPEAL BEFORE THE FIRST APPELLATE AUTHORIT Y THE FACTUAL MATRIX WAS CONSIDERED AND ON EXAMINING THE FACTS HELD/OBSERVED (PARA 4.3 ONWARDS) AS UNDER:- 4.3. DECISION I HAVE CONSIDERED THE ASSESSMENT ORDER THE SUBMISS IONS MADE BY THE APPELLANT AND THE CASES RELIED UPON. 4.4. THE APPELLANT HAS ENTERED IN TO A DEVELOPMENT AGREEMENT ON 29/10/2004 WITH SETH INDUSTRIES PRIVAT E LIMITED PROPRIETOR OF M/S. SIMPLEX WOOLEN MILLS T ILE OWNERS AND OTHER CONFIRMING PARTIES IN RESPECT OF PROPERTY COMPRISING OF LAND BUILDINGS AT VILLAGE MAHAIANWADI IN TALUKA THANE FOR A CONSIDERATION OF RS.14.50 CRORES. THIS WAS FOLLOWED BY THE SUPPLEMEN TAL AGREEMENT DATED 22-2-2006 AND A DEED OF CONVEYANCE MADE ON 8/11/2006 FOR PURCHASE PRICE AGREED TO BE R S. 23 04 80 219/-. FROM THE SUBMISSIONS MADE BY THE APPELLANT IT IS NOTED THAT PAYMENT OF RS.6.50 CROR ES HAS BEEN MADE TO SEVEN SHAREHOLDERS IN RESPECT OF WHICH SUPPORTING DOCUMENTS AYE BEEN FILED IN THE COURSE O F ASSESSMENT AS WELL AS APPEAL PROCEEDINGS WHICH INC LUDE COPIES OF LETTERS ACKNOWLEDGING PAYMENTS RECEIPTS FROM THE COMPANY AMOUNTING TO RS.6.50 CRORES COPIES OF ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 10 LETTERS DATED 13-2-2007 ADDRESSED TO THE APPELLANT COMPANY FROM THE SAID SHAREHOLDER STATING THAT THEY WERE SATISFIED WITH THE SALE DEED OF SIMPLEX WOOLEN MILL S AT DAHISAR MUMBAI COPY OF AFFIDAVIT FILED BY MR NARE SH SETH ON BEHALF OF SETH INDUSTRIES LTD AND OTHER PETITION ER DATED 13/2/2007 BEFORE THE HIGH COURT OF DELHI REQUESTING TO WITHDRAW THEIR APPLICATION IN RESPECT OF CWP NO. 3326 OF 1992. THE APPELLANT HAS ALSO FILED COPY OF DEED OF PLEDGE DATED 14/2/2007 WHEREIN THE PIE G EE SHRI II1ANGAL PRABHAT LODHA AGREED TO LEND AND ADVA NCE TO THE PLEDGORS A SUM OF RS. 5 CRORES FOR A PERIOD OF SIX MONTHS FROM THE DATE OF DEED TOGETHER WITH INTEREST AT THE RATE OF 6% PER ANNUM AND THE PLEDGORS MRS SHUKL A SETH MRS. BELA SAHCAL. MS. NAYANTARA SAHGAL MS. V ASUDNA SAHGAL MRS BENU BHARANY MR UDHAV BHARANY AND MR. UMED BHARANY HAVE AGREED TO PLEDGE 2750 NUMBER OF SHARES OF SETH INDUSTRIES PVT. LTD WITH THE PLEDGEE S. THIS HAS BEEN FOLLOWED BY A DECLARATION CUM INDEMNITY DA TED 14.3.2007 WITH RESPECT TO SHARES PLEDGED VIDE DEED OF PLEDGE DATED 14.2.2007 AND ADDENDUM TO PLEDGE DATED 15.2.2007 THE APPELLANT HAS ALSO FILED COPY OF HIGH COURT OF DELHI ORDER DATED 07.03.2007 IN WP(C) 3326/1992 SETTING ASIDE THE ORDER OF BIFR AND AAIFR RECOMMEND ING WINDING UP OF SETH INDUSTRIES LTD. 4.5. I FIND MERIT IN THE SUBMISSIONS MADE BY THE AP PELLANT THAT THE PAYMENT OF RS.6.50 CRORES WAS MADE TO VARI OUS SHAREHOLDERS OF THE SETH INDUSTRIES PVT LTD IN ORDE R TO ENSURE THE WITHDRAWAL OF VARIOUS LITIGATIONS AND SU ITS FILED BEFORE THE HIGH COURT OF DELHI AND HIGH COURT OF MUMBAI SO THAT THE DEVELOPMENT OF THE SAID PROPERTY COULD BE UNDERTAKEN BY THE APPELLANT COMPANY WITHOU T ANY HINDRANCE. THEREFORE THE APPELLANT HAS RIGHTLY CLAIMED IT AS BUSINESS EXPENDITURE TOWARDS THE COST OF LAND/PREMIUM FOR DEVELOPMENT RIGHTS SINCE THESE PAYMENTS WERE MADE TO PROTECT THE BUSINESS INTEREST OF THE APPELLANT AND TO SAFEGUARD ITSELF FROM THE LOSS ES FOLLOWING THE DISPUTES FROM THE SHAREHOLDERS. THE OBJECTION TAKEN BY THE AO. THAT THE CONFIRMATION AR E NOT ON STAMP PAPER IS FOUND TO BE WITHOUT MERIT IN LIGH T OF THE SUPPORTING EVIDENCE AS NOTED ABOVE FILED BY THE APPELLANT. ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 11 4.6. FURTHER I AM INCLINED TO AGREE THAT THE PLEDG E DEED IS ONLY A DEVICE TO SECURE HE SHARES OF THE SHAREHOLDE RS AND TO ENSURE WITHDRAWAL OF OBJECTION FILED BY THESE SHAREHOLDERS. THE SAID AGREEMENT LAPSED DUE TO EXPI RY OF TIME IN F.Y.2007-08 RELEVANT TO AY.2008-09. THEREFO RE THE CLAIM OF EXPENDITURE FOR AY.2008-09 IS FOUND TO BE CORRECT. THE APPELLANT HAS CLAIMED THE EXPENSES IN SCHEDULE XII (I.E. LAND CONSTRUCTION AND DEVELOPMEN T) OF THE PROFIT AND LOSS ACCOUNT. IN VIEW OF THE ABOVE DISCUSSION THE AID EXPENDITURE IS HELD TO BE TOWAR DS BUSINESS EXPENDITURE INCURRED FOR AY. 2008-09. THE ADDITION MADE ON THE GROUND THAT THE COST OF RS.6. 50 CRORES OF LAND/PREMIUM OF DEVELOPMENTS RIGHTS WAS UNSUBSTANTIATED EXPENDITURE AND NOT INCURRED DURING THE PREVIOUS YEAR 2007-08 RELEVANT TO AY. 2008-09 IS F OUND TO BE WITHOUT MERIT. ACCORDINGLY THE ADDITION OF RS.6 50 50 000/- IS DELETED AND THIS GROUND IS ALLO WED. 2.5. IF THE AFORESAID FINDING OF THE LD. COMMISSIO NER OF INCOME TAX (APPEAL) IS ANALYZED THERE IS NO DIS PUTE THAT THE AMOUNT OF RS.6.50 CORES WAS MADE TO SEVEN LITIG ATING SHAREHOLDERS EVEN THE LD. ASSESSING OFFICER HAS NOT DISPUTED THE PAYMENTS. THERE IS UNCONTROVERTED FIND ING (PARA 4.4) OF THE IMPUGNED ORDER THAT SUPPORTING DOCUMENTS WERE DULY FILED DURING ASSESSMENT STAGE AS WELL AS FIRST APPELLATE STAGE WHICH INCLUDES COPIES OF LETTERS ACKNOWLEDGING PAYMENTS WHEREIN SUCH RECIPIENTS WE RE SATISFIED WITH THE SALE DEED OF SIMPLEX WOOLEN MILL S AT DAHISAR AND ONE OF THE RECIPIENT NAMELY SHRI NARESH SETH (ON BEHALF OF SETH INDUSTRIES AND OTHER PETITIONERS ) FILED ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 12 AFFIDAVIT DATED 13/02/2007 BEFORE THE HON'BLE HIGH COURT OF DELHI REQUESTING TO WITHDRAW THE APPLICATION IN RESPECT OF CWP NO.3326/1992. THE ASSESSEE ALSO FILED COPY O F DEED OF PLEDGE DATED 14/02/2007 WHEREIN THE PLEDGEE AG REED TO LAND AND ADVANCE TO PLEDGERS A SUM OF RS.5 CORES TO MRS. SHUKLA SETH MRS. BELA SAHGAL MS. NAYANTARA SAHAGAL MS. VASUDHA SAHGAL MRS. BENU BHARNY MR. UDHAV BHARANY AND MR. UMED BHARANY AND ALL THE PERS ON AGREES TO PLEDGE 2750 SHARES OF SETH INDUSTRIES PVT . LTD. WITH THE PLEDGES FOLLOWED BY A DECLARATION CUM IND EMNITY DATED 14/03/2007 WITH RESPECT TO PLEDGE SHARES VIDE DEED OF PLEDGE DATED 14/02/2007 AND ADDENDUM TO PLEDGE DATED 15/02/2007. THE ASSESSEE BEFORE THE REVENUE AUTHORITIES INCLUDING FIRST APPELLATE AUTHORITY AND ALSO BEFORE THIS TRIBUNAL COPY OF THE ORDER OF THE HON'B LE DELHI HIGH COURT DATED 07/03/2007 IN WP(C)3326 OF 1992 SETTING ASIDE THE ORDER OF BIFR AND AAIFR RECOMMEND ING WINDING UP OF SETH INDUSTRIES LTD. THE TOTALITY OF FACTS CLEARLY INDICATES THAT THE PAYMENT OF RS.6.50 CORES WAS MADE TO VARIOUS SHAREHOLDERS OF SETH INDUSTRIES PVT . LTD. IN ORDER TO WITHDRAWAL OF VARIOUS LITIGATIONS AND SUIT S FILED ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 13 BEFORE THE HON'BLE HIGH COURTS OF DELHI & BOMBAY S O THAT DEVELOPMENT OF THE SAID PROPERTY COULD BE UNDERTAKE N BY THE ASSESSEE COMPANY. IN VIEW OF THIS UNCONTROVERTE D FINDING WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IN ALLOWING THE CLAIMED BUSINESS EXPENDITURE TOWARDS COST OF LAND/DEVELOPMENT RIGHTS TO SAFEGUARD ITS BUSINESS I NTEREST. 3. NOW WE SHALL DEAL WITH THE EXPENDITURE WITH TH E HELP OF CERTAIN CASE LAWS FROM HON'BLE HIGH COURTS/ HON'BLE APEX COURTS. BROADLY SPEAKING WHERE LITIGATION EXP ENSES ARE INCURRED FOR THE PURPOSES OF CREATING CURING O R COMPLETING THE TITLE OF THE ASSESSEE TO THE CAPITAL THEN EXPENSES ARE IN THE NATURE OF CAPITAL EXPENDITURE A ND IF THE LITIGATION EXPENSES ARE INCURRED TO PROTECT THE BUS INESS OF THE ASSESSEE IT MAY CONSIDERED AS REVENUE EXPENDITU RE (DALMIA JAIN COMPANY LTD. VS CIT (1971) 81 IR 754 ( SC). EXPENDITURE ON CIVIL LITIGATION COMMENCED OR CARRIE D OUT BY AN ASSESSEE FOR PROTECTING THE BUSINESS IS ADMISSIB LE AS A BUSINESS EXPENDITURE WHERE THE OBJECT OF THE LITIG ATION WAS TO SECURE A DECLARATION THAT CERTAIN ORDERS AS SO F AR AS THEY SOUGHT TO PUT TO RESTRICTION UPON THE RIGHTS OF THE ASSESSEE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 14 TO CARRY ON ITS BUSINESS IN THE MANNER IN WHICH IT WAS ACCUSTOMED TO DO SO AND TO PREVENT ENFORCEMENT OF S UCH ORDERS THE EXPENDITURE INCURRED IN THAT BEHALF WOU LD WITHOUT DOUBT BE EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSE SSEE (MINAKSHI MILLS LTD. VS CIT 63 ITR 207)(SC)). FROM THESE DECISIONS IT FOLLOWS THAT:- (A) LITIGATION EXPENSES TO SECURE AN ORDER FROM THE COURT FOR ENABLING AN ASSESSEE TO CARRY ON ITS BUSINESS W ITHOUT INTERFERENCE IS AN ALLOWABLE DEDUCTION (B) EXPENDITURE INCURRED TO RESIST IN CIVIL PROCEE DINGS THE ENFORCEMENT OF MEASURE LEGISLATIVE OR EXECUTIV E WHICH IMPOSES RESTRICTIONS ON THE CARRIES OF A BUSINESS O R TO OBTAIN A DECLARATION THAT THE MEASURE WAS INVALID WOULD IF OTHER CONDITIONS WAS SATISFIED BE ADMISSIBLE DEDUC TION AND (C) THE DEDUCTIBILITY OF EXPENDITURE INCURRED IN P ROSECUTING A CIVIL PROCEEDINGS DEPENDS UPON THE NATURE AND PUR POSE OF CIVIL PROCEEDINGS IN RELATION TO BUSINESS OF THE ASSESSEE AND CANNOT BE AFFECTED BY THE FINAL OUTCOME OF THAT BUSINESS. (BIRLA COTTON MILLS & SPINNING AND WEAVIN G MILLS ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 15 LTD. VS CIT 64 ITR 568 586(CAL.) AND AFFIRMED BY H ON'BLE APEX COURT IN (1971) 82 ITR 166 (SC). THIS OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING CASES . (I) CIT VS BENGAL ASSAM INVESTORS LTD. (1969) 72 I TR 319 (II) PREMIER CONSTRUCTION CO. LTD. VS CIT (1966) 62 ITR 176 (BOM.) (III) TRANSPORT CO. PR. LTD. VS CIT (1962) 46 ITR 1 009 1016 (MAD.) (IV) CIT VS MAHARAJADHIRAJA SIR KAMESHWAR SINGH (19 42) 10 ITR 214 (PC) (V) SOUTHERN VS. BORAX CONSOLIDATED LTD. (1942) 10 ITR (SUPP.) 1 (KB) (VI) ASSOCIATED PORTLAND CEMENT MANUFACTURERS LTD. VS KERR. (1946) 27 TAX CAS 103 117 (CA) (VII) EBRAHIM ABOOBAKER V. CIT (1971) 81 ITR 664 (B OM.) 3.1. IF THE PROVISION OF THE ACT WHICH IS CORRESPONDING TO THE SECTION 12(2) OF 1922 ACT USE D IN THIS CONTEXT THE EXPRESSION INCURRED SOLELY FOR THE PU RPOSES OF MAKING OR EARNING SUCH INCOME THE USE OF EXPRESSI ON LAID OUT OR EXPANDED WHOLLY AND EXCLUSIVELY IN SE CTION 57(III) OF THE 1961 ACT IS TO SECURE UNIFORMITY WIT H THE LANGUAGE OF SECTION 37(1) OF THE 1961 ACT. AT THE S AME TIME THE EXPRESSION FOR THE PURPOSES OF BUSINESS OR PR OFESSION HAS A WIDER IMPLICATION THEN THE EXPRESSION FOR TH E ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 16 PURPOSES OF MAKING OR EARNING INCOME USED IN SECTI ON 57(III) OF THE ACT. THE PURPOSE CONTEMPLATED BY SEC TION 57(III) IS MORE SPECIFIC IN CHARACTER. SO FAR AS REASONABLENESS OF THE EXPENDITURE ENVISAGED BY SECT ION 57(III) DEPENDS UPON THE FACTS OF PARTICULAR CASE. THE HON'BLE COURT IN CIT VS NEW SAVAN SUGAR AND GOOD REFINING CO. LTD. (1990) 185 ITR 564 571 (CAL.) HE LD THAT IT IS FOR THE TRIBUNAL TO DECIDE WHETHER THE EXPENDITU RE IS WHOLLY INCURRED FOR THE PURPOSE OF KEEPING THE ASSE SSEE COMPANY IN OPERATION AND EARNING INCOME IN AS MUCH AS THE CONCEPT WHOLLY PERTAINS TO QUANTUM OF THE MON EY EXPENDED. THE HON'BLE COURT FURTHER OBSERVED EVEN IF A PARTICULAR EXPENDITURE IS UN-REMUNERATIVE SUCH EXPENDITURE IS NONETHELESS A PROPER DEDUCTION IF S UCH EXPENDITURE IS MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF EARNING SUCH INCOME. 3.2. IF THE ISSUE IS ANALYZED IN THE LIGHT OF SECT ION 37(1) OF THE ACT BROADLY SPEAKING WHERE LITIGATIO N EXPENSES ARE INCURRED FOR PURPOSES OF CREATING CUR ING OR COMPLETING THE ASSESSEES TITLE TO THE CAPITAL THE N THE SUCH EXPENSES ARE IN THE NATURE OF CAPITAL EXPENDITURE. ON THE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 17 OTHER HAND IF THE LITIGATION EXPENSES ARE INCURRED TO PROTECT THE BUSINESS OF THE ASSESSEE IT MUST BE CO NSIDERED AS REVENUE EXPENDITURE. THIS PROPOSITION IS SUPPORT ED BY HON'BLE APEX COURT IN DALMIA JAIN & CO. LTD. VS CIT (1971) 81 ITR 754 (SC) AND MEENAKSHI MILLS LTD. VS CIT (19 67) 63 ITR 207 (SC). TO BE MORE PRECISE THE TYPE OF LITI GATION OBJECT OR PURPOSE OF THE LITIGATION HAS TO BE ASCER TAINED FROM THE FACTS OF EACH CASE. IF THE OBJECT OR PURPO SE IS TO DEFEND OR MAINTAIN EXISTING TITLE TO THE CAPITAL AS SET OF THE BUSINESS OF THE ASSESSEE THE EXPENDITURE WOULD BE OF REVENUE IN NATURE. THE RATIO LAID DOWN IN FOLLOWING CASES SUPPORTS OUR VIEW:- A) CIT V. BENGAL ASSAM INVESTORS LTD. (1969) 72 ITR 319 325 (CAL); B) CIT V. LIFE INSURANCE CORPORATION OF INDIA (1966) 6 2 ITR 827 (CAL); C) PREMIER CONSTRUCTION CO. LTD. V. CIT (1966) 62 ITR 1 76 (BOM); D) LIBERTY CINEMA V. CIT (1964) 52 ITR 153 167 (CAL) ; TRANSPORT CO. PR. LTD. V. CIT (1962) 46 ITR E) 1009 1016 (MAD); TRANSPORT CO. LTD. V. CIT (1957) 3 1 ITR 259 266-7 (MAD); F) G. VEERAPPA PILLAI V. CIT (1955) 28 ITR 636 (MAD); ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 18 G) CIT V. RAMAN & RAMAN LTD. (1951) 19 ITR 558 569-70 (MAD). ALSO SEE LACHMINARAYAN MODI V. CIT (1955) 28 ITR 322 (ORISSA); H) J. B. ADVANI & CO. LTD. V. CIT (1950) 18 ITR 557 (B OM); I) MAHABIR PRASAD & SONS V. CIT (1945) 13 ITR 340 (LA H); J) CENTRAL INDIA SPINNING WEAVING & MANUFACTURING CO. LTD. V. CIT (1943) 11 ITR 266 (NAG); K) CIT V. MAHARAJADHIRAJA SIR KAMESHWAR SINGH (1942) 1 0 ITR 214 (PC) L) SOUTHERN V. BORAX CONSOLIDATED LTD. (1942) 10 ITR (SU P) 1 (KB) M) ASSOCIATED PORTLAND CEMENT MANUFACTURERS LTD. V. KERR (1946) 27 TAX CAS 103 118 (CA) N) EBRAHIM ABOOBAKER V CIT (1971) 81 ITR 664 (BOM.) 3.3. IN THE CASES OF DEFENDING THE CRIMINAL LITIGA TION WE FIND THAT SECTION 37(1) DOES NOT MAKE ANY DISTIN CTION BETWEEN EXPENDITURE INCURRED IN CIVIL LITIGATION AN D THAT INCURRED IN CRIMINAL LITIGATION. ALL THAT THE COURT HAS TO SEE IS WHETHER THE LEGAL EXPENSES WERE INCURRED BY THE ASSESSEE IN HIS CHARACTER AS A TRADER IN OTHER WOR DS WHETHER THE TRANSACTION IN RESPECT OF WHICH PROCEED INGS ARE TAKEN AROSE OUT OF AND WAS INCIDENTIAL TO ASSES SEE'S BUSINESS. FURTHER IT IS TO BE SEEN WHETHER THE EXP ENDITURE WAS BONAFIDELY INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS [SEE CIT V. BIRLA COTTON S PNG. & ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 19 WVG. MILLS LTD. (1971) 82 ITR 166 (SC); CIT V. DHA NRAJGIRJI RAJA NARSINGIRJI (1973) 91 ITR 544 549 (SC)]. 3.4. SO FAR AS ISSUE OF QUANTUM OF THE EXPENDITUR E TO BE INCURRED IS CONCERNED WE ARE OF THE VIEW IT IS FOR THE ASSESSEE TO DECIDE HOW BEST TO PROTECT HIS OWN INTE REST. IT IS NOT OPEN TO THE DEPARTMENT TO PRESCRIBE WHAT EXPEND ITURE AN ASSESSEE SHOULD INCUR AND IN WHAT CIRCUMSTANCES HE SHOULD INCUR THAT EXPENDITURE. THE RATIO LAID DOWN IN CIT V. DHANRAJGIRJI RAJA NARSINGIRJI (1973) 91 ITR 544 (SC) SUPPORTS OUR VIEW. IN THAT CASE HIS LORDSHIP OBSERV ED: IT IS TRUE THAT IN SOME OF THE CASES THIS COURT HA S HELD THAT AN EXPENDITURE INCURRED BY AN ACCUSED ASSESSEE TO DEFEND HIMSELF AGAINST A CRIMINAL CHARGE DID NOT FA LL WITHIN THE SCOPE OF SECTION 1O(2)(XV)*. THOSE DECIS IONS WERE RENDERED ON THE FACTS OF THOSE CASES. THAT IS NOT THE POSITION IN THIS CASE.' CRIMINAL LITIGATION MAY BE PROSECUTED TO PUT PRESSU RE ON THE ACCUSED TO MAKE GOOD THE LOSS CAUSED TO THE ASSESSEE AND EXPENDI-TURE INCURRED THEREFORE IF H AVING NEXUS WITH THE PROFITS OR BUSINESS ARE ALLOWABLE D EDUCTION SAHARANPUR ELECTRIC SUPPLY CO. LTD. V. CIT (1971) 82 ITR 405 (ALL). ASSESSEE DEFENDING HIMSELF-EXPENSES INCU RRED BY A PERSON EXERCISING A TRADE OR PROFESSION IN DEFEND ING ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 20 HIMSELF IN A CRIMINAL PROSECUTION WHICH ARISES OUT OF HIS BUSINESS OR PROFESSIONAL ACTIVITIES CANNOT BE DEDU CTED AS BUSINESS EXPENDITURE IN THE COMPUTATION OF HIS BUSI NESS INCOME CIT V. H. HIRJEE (1953) 23 ITR 427 431 (SC ); CIT V. GASPER & CO. (1940) 8ITR 100 (RANG)]. IN HIRJEE'S CASE [23 ITR 427] THE ASSESSEE INCURRED EXPENDITURE IN DEFE NDING PROSECUTION UNDER THE HOARDING AND PROFITEERING ORDINANCE 1943 (NO. 35 OF 1943) FOR SELLING GOODS AT BLACK MARKET PRICES. SUCH EXPENDITURE WAS HELD NOT ALLOWA BLE. SIMILARLY EXPENDITURE INCURRED BY A FIRM CARRYING ON EXPORT AND IMPORT BUSINESS IN DEFENDING ONE OF ITS PARTNERS FOR HAVING ACQUIRED FOREIGN EXCHANGE AND NOT FULLY UTILIZING IT FOR IMPORT WERE HELD NOT ALLOWABLE ALTHOUGH THE PARTNER WAS ULTIMATELY ACQUITTED [CIT V. CHAMAN LAL & BRA . (1970) 77 ITR 383 (DELHI)]. THIS CASE WAS HOWEVER DISTIN GUISHED IN CIT V. AHMEDABAD CONTROLLED IRON & STEEL ASSN. P R. LTD. (1975) 99 ITR 567 (GUJ) WHERE EXPENSES INCURRED BY COMPANY IN DEFENDING ITS MANAGING DIRECTOR WERE HEL D ALLOWABLE. IN ORDER TO SO CLAIM SUCH EXPENDITURE TH E ASSESSEE HAS NOT ONLY TO PROVE THAT THE EXPENDITURE WAS INCIDENTAL TO THE BUSINESS BUT ALSO TO SHOW THAT TH E ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 21 EXPENDITURE WAS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS [INDERM ANI JATIA V. CIT (1951) 19 ITR 342 (ALL) ON APPEAL SEE (19 59) 35 ITR 298 (SC)]. 3.5. ASSESSEE DEFENDING AN EMPLOYEE ETC.-WHEN AN EMPLOYEE IS PROSECUTED IN RESPECT OF TRANSACTION IN THE COURSE OF HIS EMPLOYMENT EXPENDITURE INCURRED IN O R ABOUT HIS DEFENSE IS INCURRED FOR THE PROTECTION OF THE G OOD NAME OF THE BUSINESS AND IS AN ALLOWABLE BUSINESS EXPEND ITURE [ J.B. ADVANI & CO. LTD. V. CIT & EPT (1950) 18 ITR 557 (BOM) CONSIDERED IN CIT V. H. HIRJEE (1953) 23 ITR 427 (SC) WHERE THE CORRECTNESS OF ITS ULTIMATE DECISIO N WAS NOT DOUBTED; J.N. SINGH & CO. PR. LTD. V. CIT. (1966) 6 0 ITR 732 (PUNJ)]. LEGAL EXPENSES INCURRED BY ASSESSEE-CO MPANY A SUGAR MILL IN DEFENDING A CRIMINAL PROSECUTION L AUNCHED AGAINST ITS DIRECTOR-MANAGER AND SOME EMPLOYEES ON CHARGE OF CONSPIRACY BETWEEN THE ASSESSEE AND THE R AILWAY EMPLOYEES TO GIVE AND ACCEPT BRIBES IN REGARD TO TR ANSPORT OF SUGARCANE FROM VARIOUS STATIONS TO MILL WERE HEL D TO BE ALLOWABLE DEDUCTIONS [LAKSHMIJI SUGAR MILLS CO. LTD . V. CIT (1967) ITR (SH N) 21 (DELHI)]. SIMILARLY EXPENDITU RE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 22 INCURRED IN DEFENDING A CRIMINAL CASE AGAINST THE D IRECTORS AND PRINCIPAL OFFICERS OF THE ASSESSEE-COMPANY ON T HE ALLEGATION THAT THE VEGETABLE OIL PRODUCED BY THE C OMPANY DID NOT CONTAIN 5% TILL OIL AS REQUIRED BY THE GOVE RNMENT RULE WAS HELD TO BE AN EXPENDITURE INCURRED WITH A VIEW TO PROVING THE QUALITY AND STANDARD OF THE MANUFACTURE D GOODS PRODUCED BY THE ASSESSEE AND THEREFORE DEDU CTIBLE [ROHTAS INDUSTRIES LTD. V. CIT (1968) 67 ITR 361 ( PAT)]. 3.6. IN ANANDA MARGA PRACHARAKA SANG HA V. CIT [(1996) 218 ITR 254 258 2 (CAL)] THE LEGAL EXPE NSES INCURRED BY THE ASSESSEE FOR DEFENDING MARGA GURU THE PRESIDENT OF THE ASSOCIATION AND OTHER MEMBERS OF T HE ASSOCIATION AGAINST CRIMINAL CHARGES HAVE BEEN HELD ALLOWABLE AS A PERMISSIBLE EXPENDITURE WHILE COMPUT ING THE INCOME OF THE ASSESSEE. HOWEVER ON THE QUESTION OF ALLOWABILITY OF LEGAL EXPENSES INCURRED BY THE ASSE SSEE FOR DEFENDING CRIMINAL CHARGES ARISING OUT OF THE PERSO N CIVIL RIGHTS AND UNCONNECTED WITH THE AIMS AND OBJECTS OF THE ASSESSEE-ORGANIZATION SUCH HAS BEEN REMANDED TO TH E TRIBUNAL (P. 273) TO DETERMINE THAT WHETHER SUCH EX PENSES ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 23 WERE RELATED TO THE SOCIETY'S ACTIVITY AND THEN TO DECIDE SUCH QUESTION ABOUT THEIR ALLOWABILITY. 3.7. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER LEADING TO ADDITION MADE TO THE TOTAL INCOME CONCL USION DRAWN IN THE IMPUGNED ORDER MATERIAL AVAILABLE ON RECORD ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE IF K EPT IN JUXTAPOSITION AND ANALYZED WE FIND THAT EVEN THE L D. ASSESSING OFFICER HAS NOT DISPUTED OF MAKING THE PA YMENT OR INCURRING THE EXPENDITURE TO VARIOUS SHARE HOLDE RS OF SETH INDUSTRIES PVT. LTD.. ONE OF THE OBJECTION RAI SED BY THE LD. ASSESSING OFFICER IS THAT THE CONFIRMATIONS WER E NOT FILED ON STAMP PAPERS. WE ARE OF THE VIEW THAT IT I S NOT THE REQUIREMENT OF LAW THAT EVERY TRANSACTION HAS TO BE CONFIRMED ON STAMP PAPERS ONLY. THE PAYMENTS WERE M ADE THROUGH ACCOUNT PAYEE CHEQUES AND THE RECIPIENT PAR TIES DULY ACKNOWLEDGED THE RECEIPT OF SUCH PAYMENTS AND EVEN SHRI NARESH SETH FILED A AFFIDAVIT ON BEHALF OF THE PETITION SHAREHOLDERS (PAGE-109) OF THE PAPER BOOK) BEFORE H ON'BLE DELHI HIGH COURT AND THE APPLICATION WAS WITHDRAWN BY HIM (PAGE-110 OF THE PAPER BOOK). THE DEED OF PLEDG E ON ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 24 BEHALF OF THE RECIPIENTS IS AVAILABLE AT PAGE-111 O F THE PAPER BOOK WHEREIN THE IMPUGNED AMOUNT WAS RECEIVED BY THEM. AT PAGE-117 OF THE PAPER BOOK ALL THE RECIPI ENT HAS DULY PUT THE SIGNATURES AND THE LIST OF SHARES IS A VAILABLE AT PAGE-118 OF THE PAPER BOOK. SO FAR AS THE RECEIPT OF THE AMOUNTS IS CONCERNED THE NAME OF THE PLEDGOR AMOU NT AND THE PAY ORDER ALONG WITH DATE IS AVAILABLE AT P AGE-119 AND ALL THE RECIPIENT HAVE PUT THEIR SIGNATURE ON T HE REVENUE STAMP AS IS EVIDENCED AT PAGE-120 OF THE PA PER BOOK. THE DECLARATION CUM INDEMNITY OF ALL THE RECIPIENTS/CONCERNED PARTIES IS AVAILABLE AT PAGES 121 TO 130 OF THE PAPER BOOK. WE HAVE ALSO PERUSED THE ORD ERS FROM HON'BLE HIGH COURT OF DELHI AND BOMBAY WHICH CLEARLY INDICATES THAT THE ASSESSEE DULY PAID THE I MPUGNED AMOUNTS IN LIEU OF THE SHARES OF THE LITIGATING PAR TIES AND THE EXPENSES WERE INCURRED TO SAFEGUARD THE BUSINES S INTEREST OF THE ASSESSEE WHICH IS PERMISSIBLE UNDE R THE ACT. NO EVIDENCE IN ANY MANNER HAS BEEN ADDUCED BY THE REVENUE CONTRADICTING THE FACTUAL FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 25 IT IS FURTHER NOTED THAT THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT ON 29/10/2004 WITH SETH INDUSTRIES PVT. LTD. AT A CONSIDERATION OF RS.14.50 CROERS FOLLOWED BY SUPPLEMENTAL AGREEMENT DATED 22/02/2006 AND DEED OF CONVEYANCE MADE ON 08/11/2006 AT AGREED PRICE OF RS.23 04 80 219/- AND THE AMOUNT OF RS.6.5 0 CRORES WAS MADE TO THE SHAREHOLDERS IN RESPECT OF W HICH SUPPORTING DOCUMENTS HAVE BEEN DULY FILED. EVEN THR OUGH THE AFFIDAVIT FILED BY SHRI NARESH SETH ON BEHALF O F THE SETH INDUSTRIES AND OTHER PETITIONER DATED 13/02/2007 BE FORE THE HON'BLE HIGH COURT OF DELHI REQUESTING TO WITHD RAW THEIR APPLICATIONS IN RESPECT OF CWP NO.3326 OF 199 2 (AS MENTIONED EARLIER) AND THE ASSESSEE ALSO FILED COPY OF DEED OF PLEDGE DATED 14/02/2007. THESE PARTIES AGREED TO PLEDGE 2750 NUMBER OF SHARE OF SETH INDUSTRIES WITH THE PL EDGEE FOLLOWED BY A DECLARATION CUM INDEMNITY DATED 14/03/2007. IT IS EVIDENTLY CLEAR THAT THE PAYMENT OF RS.6.50 CRORES WAS MADE TO THESE SHAREHOLDERS OF SE TH INDUSTRIES PVT. LTD. FOR WITHDRAWAL OF LITIGATIONS AND SUITS FILED BEFORE HON'BLE HIGH COURT OF DELHI AND BOMBAY SO THAT THE DEVELOPMENT OF THE SAID PROPERTY COULD BE ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 26 SMOOTHLY UNDERTAKEN WITHOUT ANY HINDRANCE CONSEQUENTLY THE EXPENDITURE WAS INCURRED TO PROTE CT THE BUSINESS INTEREST OF THE ASSESSEE AND FURTHER TO SA FEGUARD THE ASSESSEE ITSELF FOR FURTHER LOSSES RESULTANTLY WE FIND NO INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHO RITY. THE SAME IS AFFIRMED. THE APPEAL OF THE REVENUE IS THE REFORE DISMISSED. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30/11/2017. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; + DATED : 27/12/2017 F{X~{T? P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 3' ( - ) / THE CIT MUMBAI. 4. 2 2 3' / CIT(A)- MUMBAI 5. 560' 2 -& ) / DR ITAT MUMBAI ITA NO.428/MUM/2016 M/S COWTOWN LAND DEVELOPMENT PVT. LTD. 27 6. 7 8 / GUARD FILE. ! / BY ORDER 15-'0' //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI