ORDER
K.P.T, Thangal, V.P.
This appeal by the assessee is for the assessment year 2001-02.
2. The first ground of objection taken by the assessee is directed against the order of the CIT(A) in upholding the estimate of rental income at Rs. 1.24 crores in place of actual receipt of Rs. 3,80,160 in respect of ground and first floor property by the assessee. The case of the assessee is that the CIT(A) ignored the fact, which was brought to his notice, that the rental income was fixed on the basis of agreement between the assessee company and the registered firm from whom the property had been acquired by the assessee and that the rental income had been accepted by the department in scrutiny assessment for five years, from assessment years 1989-90 to 1998-99. Assessee is also aggrieved for nonconsideration of the decision relied by the assessee in the case of CIT v. Indra & Co. (2004) 268 ITR 240 (Cal.), wherein the Hon’ble High Court held that if the agreement is found genuine in the case of property let out by the assessee and sublet by the tenant, the amount actually received constituted the annual value.
3. The assessee filed the return on 30-10-2001, declaring income at Rs. 31,90,100. The assessee is engaged in the business of trading in MS wire, business center and financing, i.e., bill discounting. assessing officer, during assessment proceedings noticed, in the Profit & Loss Account and computation the assessee declared an amount of Rs. 1,23,80,168 as rent received under the head “Income from house property”. Assessee claimed Rs. 10, 12,923 as Municipal tax, Rs. 28,43,809 as I/4th of rent being repairs and interest on loan amount of Rs. 26,03,355. The net income from house property was Rs. 59,13,340. Assessing Officer also noticed from the details furnished, the assessee received Rs. 1,20,00,000 from M/s. IIS Infotech Ltd. being rent; whereas the rent received from two Directors of the firm was only Rs. 3,80,160.
4. The facts leading to the dispute, briefly narrated, as under:
Assessee constructed a building named “Marwah House”, consisting of ground and first floor measuring 15,840 sq. ft. somewhere in 1988. The ground and first floor have two units each and each unit had an area of 7,980 sq. ft. All the four units in both ground and first floor were let out to two Directors, viz. Shri S K Marwah and Shri R K Marwah and two firms by name Marwah Brothers and Marwah Warehousing Corporation separately by an agreement dated 23-8-1988, with effect from 1-4-1988. The rate fixed per unit for letting out was Re. 1 per sq. ft. per month. Subsequently assessing officer noticed, the assessee had constructed a second floor in the same building measuring same area, i.e., 15,840 sq. ft. and the second floor was let out to one third party, i.e., M/s. IIS Infotech Ltd., for a monthly rent of Rs. 10 lakhs. There are three agreements in this regard one is for taking the property on rent for Rs. 4 lakhs per month; the second one is for Rs. 4 lakhs per month for using facilities such as airconditioners, electrical equipments, etc.; and the third one is for Rs. 2 lakhs per month for using car parking, etc. Assessee received in total Rs. 1,20,00,000 as rent and this was also offered under the head “Income from house property’. The tenant also declared this payment as rent and deducted TDS. The assessing officer has not objected to the splitting of the amount into three items as everything was offered to tax as “Income from house property”.
5. In addition to the rent received at Rs. 1,20,00,000, there is an additional interest-free loan of Rs. 90 lakhs. Assessing Officer observed that the rental value should have been more had not the assessee received the deposit. Therefore, he proposed to add notional interest as well. Assessing Officer held, as per section 22 of the Income Tax Act, 1961, income from house property is to be determined on the basis of annual value of the property and the value of the property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year. Thus, to the rent fixed at Rs. 1,20,00,000, notional interest was also added; the total of which worked out to Rs. 136.2 lakhs.
6. Assessee objected the notional interest as well. Assessee relied on the following decisions and contended that notional interest cannot be charged, which was not accepted by the assessing officer :
(i) CIT v. Satya Co. Ltd. (1994) 75 Taxman 193 (Cal.)
(ii) CIT v. M Ratanchand Chordia (1997) 228 ITR 626 (Mad.)
(iii) CIT v. J K Investors (Bombay) Ltd. (2001) 248 ITR 723 (Bom.) and
(iv) B & A Plantation & Ind. v. CIT (2001) 117 Taxman 323 (Gau.).
7. The next point, i.e., while fetching a rent of Rs. 1.2 crores for the second floor, the ground and first floor was fetching only Rs. 3,80,160, the assessing officer held. This is an absurd figure. If the rent fetched from second floor is taken as the basis, the ground and first floor independently should fetch the same rent, if not more. The commercial value of the ground and first floor is more. However, assessing officer noticed, the Directors are paying the company a very meagre amount and it is clear, he held, that the fair market rent is not shown from ground and first floor as required by virtue of section 23(1)(a). He further noted from the files of Directors and the firms of company that the same property, which they have taken at Re. 1 per sq. ft., was sub-let to a third party for an annual value of Rs. 1.2 crores. This property has been let out to M/s, Tata Share Registry Ltd. Shri R.K. Marwah and Shri S.K. Marwah let out 7,920 sq. ft. each to M/s. Tata Share Registry Ltd. for annual rent of Rs. 31,10,400 per unit. The firms have not let out the property but used for their own business. Assessing Officer held, if this is the basis, i.e., rent received for one single unit of 7,920 sq. ft., then the total rent receivable under section 23(l)(a) for four units would be Rs. 1,24,41,600. He held though the tax under the head “Income from house property” is a tax on income, yet in fact it is not a tax upon rent received but upon inherent capacity of the building to yield income. As per section 23(1)(a) it is a reasonable expected rent that is to be taxed. While coming to above conclusion he further noticed that several factors need to be considered while determining reasonable rent, such as
(a) location of the property, i.e., area;
(b) floors of the property, i.e., ground, first, second, etc.;
(c) annual ratable value of the property fixed by the Municipality;
(d) rent on similar properties in neighbourhood;
(e) rent which the property likely to fetch having regard to demand and supply;
(f) cost of construction of the property;
(g) nature of the property, i.e., residential or commercial; and
(h) deposits received by the landlord from tenants, etc.
8. However, the assessing officer further noted that in majority of cases the annual value of the property is determined by taking into account the factors, such as(i) Municipal valuation of the property; (ii) fair rent of the property and whichever higher rent is generally considered as gross annual value. While fixing the fair rent of the property, the assessing officer taken note that from the records of the Directors of the company the same property which they had taken for a paltry sum was let out for a huge rent, which is clearly the fair rent of the property, which should be treated as the annual letting value of the property for tax purpose. Thus, he issued a show-cause notice.
9. In reply, the assessee submitted, ground and first floor was constructed as early as in the year 1988 and it was given on rent from 1-4-1988 vide agreement dated 23-3-1988. The second floor was constructed. recently and given on rent only on 27-3-2000 to different parties. It was also contended that as far as ground and first floor are concerned, the quantum of rent stipulated by agreement between the tenant and the landlord is to be considered as fair. By virtue of the said agreement the tenant is protected by the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, both against increase in rent and eviction. Therefore, the rent of ground and first floor cannot be compared with the recently rented second floor. it was further contended that the annual value of the house property should be determined in accordance with the Rent Control legislation where the property is situated in a place covered by such legislation and for the above proposition the assessee relied on the decisions of the Supreme Court in the case of Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee (1980) 122 ITR 700 (SC) and in the case of Shiela Kaushish v. CIT (1981) 131 ITR 435 (SC). However, the plea of the assessee was rejected by the assessing officer mainly for the following reasons:
(a) He held that even in the year 1988, the reasonable price for letting out of the property would be more than Re. 1 per sq. ft. He held, the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, was in existence from 1947 onwards and why then the building was let out for a meagre rent in 1988?
(b) The company let out the property to its Directors. The rent is not fixed on the basis of actual market price. In the normal circumstances the affordable and reasonable rent should be what the landlord might reasonably expected to get from a hypothetical tenant unless the rent is inflated or depressed by reason of extraneous considerations, such as relationship, expectation of some other benefit, etc. He held, the reasonableness of rent is undermined for extraneous consideration and let out the property for a meagre rent to its Directors. He relied on the decision of the Hon’ble Calcutta High Court in the case of Corporation of Calcutta v. Padma Debi (1962) 3 SCR 49 (Cal).
(c) assessing officer further held, if the Directors of the company could let out the property for a higher rent, there is no reason why the company also could do the same thing. The decision is taken by the Directors. Hence he held, it is a colourable device. He fixed the annual market value at Rs. 1,24,41,600. The decisions of the Hon’ble Supreme Court relied by the assessee in the case of Shiela Kaushish (supra) and Dewan Daulat Rai Kapoor’s case (supra), were distinguished by the assessing officer.
10. While fixing the annual letting value the assessing officer also considered that ground and first floor had higher commercial value; but the assessing officer has not given any factors that influenced the determination of ground and first floor vis-a-vis second floor. He also noted, even if the annual value of second floor is taken as the annual value for ground and first floor, the total rent would be about Rs. 2.6 crores. He further noted, in fact the annual value of ground floor should be atleast two times more than the annual value of second floor. However, he held, the rent reasonably to be fetched cannot exceed the standard rent fixed by the authorities or fair rent received or receivable. Thus he confined the ground and first floor annual value at Rs. 1,24,41,600. Aggrieved by the above order the assessee went in appeal before the first appellate authority.
11. Assessee, before the CIT(A), made written submissions. It was submitted that the condition under which the take-over was carried out by the assessee was that the retiring partners of erstwhile firm will take the said building on monthly tenancy on rent payable at the rate of Re. 1 per sq. ft., which was an over-riding condition. Ground and first floor of the building was let out and this position was accepted by the department. The existing firm, viz. M/s. National Wire Products was dissolved on 31-12-1984 and the assessee company took over the business. It was on the occasion of this taking over the retiring partners stipulated the condition as mentioned above. Accordingly, the assessments were completed under section 143(3), for the assessment years 1989-90 to 1998-99, accepting the gross rental income declared. it was contended before the CIT(A) that there should be finality and certainty in litigations arising out of Income-tax Act and for the above proposition the assessee relied on the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Dalmia Dadri Cement Ltd. (1970) 77 ITR 410 (P&H) and the decision of the Hon’ble Calcutta High Court in the case of Russel Properties (P.) Ltd. v. A. Chowdhary, Addl. CIT (1977) 109 ITR 229 (Cal). It was contended, the earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse and the decision has been arrived at after due enquiry and the tax authorities giving earlier decision considered material facts at that relevant point of time as it exists. The assessee also relied on the decision of the Hon’ble Orissa High Court in the case of CIT v. Belpahar Refractories Ltd. (1981) 128 ITR 6 (Ori). It was further submitted, the Directors are paying tax on the amount received by them and therefore it will lead to double taxation if the amount is taxed again in the hands of assessee also. It was further submitted, as noted above, that the assessee company let out the premises as per the conditions in the takeover agreement made with the retiring partners. The assessee company cannot increase the rent as it is against the terms of the agreement. By virtue of the agreement, the tenant is protected by the Bombay Rents, Hotel and Lodging, House Rates Control Act, 1947. Again the assessee relied on the decisions of the Hon’ble Supreme Court in the case of Dewan Daulat Rai Kapoor (supra) and in the case of Shield Kaushish (supra), wherein it was laid down that the annual value of the house property should be determined in accordance with the Rent Control Legislation where the property is situated and if it is covered by Rent Control Legislation. Assessee further relied on the decision of the Hon’ble Madras High Court in the case of M. Ratanchand Chordia (supra), wherein it was held that the annual letting value of the property should be determined in accordance with the Rent Control Legislation where the property is situated in a place covered by Rent Control Legislation. The claim of the assessee was rejected by the CIT(A), observing as under:
“8.2 Estimating the rental income of ground and first floor of the property of the appellant. The background of the case is that the appellant had taken over the business a partnership firm of M/s. National Wire Products on the dissolution of the firm on 31-12-1984. The said firm was owning a building which consisted of ground and first floor containing four units. It is stated that one of the conditions under which take over was carried out was that the three retiring partners of erstwhile firm as well as one Marwah Warehousing Corpn. will be each given one until on the ground and first floor of the said building on monthly tenancy on rent payable at the rate of Re. 1 per sq. ft. Accordingly, the ground and first floor of the building has been let out. In the course of assessment proceedings, the assessing officer noted that the assessee had let out two of the units i.e., ground and first floor to the directors on rent of Rs. 3,80,160. The assessing officer gathered information from two directors that they have let out the said two units at much higher rent of Rs. 62,10,400. Therefore, the assessing officer has estimated a fair rent for four units at double the above rent which is Rs. 1,24,41,600 and held that the annual value of ground and first floor of the premises is assessable at Rs. 1,24,41,600 in the hands of the appellant. The appellant has objected to this addition and stated that it is not the first year that the premises have been let out or sublet by the appellant. This position has been accepted by the department from the inception. The aforesaid argument of the appellant is not acceptable because every year is a different year. Further, the assessing officer has estimated the fair rent of ground floor at Rs. 1,24,41,600 on the ground that two of the tenants who are present directors of the company have themselves let out the premises and are receiving rent of Rs. 62,20,800 on letting out the said premises. It is a clear case of diverting the income of the appellant company to its directors. This has rightly been assessed by the assessing officer. The findings of the assessing officer in the assessment order and self speaking and elaborate. I am in agreement with the findings of the assessing officer. The action of the assessing officer is supported by the decision of Madras High Court in the case of N. Natraja v. Dy. CIT 266 ITR 277 (Mad). Therefore, this ground of appeal along with other connected grounds is dismissed.”
Aggrieved by the above order, the assessee is in appeal before the Tribunal.
12. The assessee’s representative submitted, the firm, M/s. National Wire Products came into existence with effect from 1-6-1961. Shri Krishanlal M Marwah, Shri Rajeshwarlal Marwah and Shri Sushil K. Marwah were the partners and joining of M/s. Marwah Steels Pvt. Ltd. was with effect from 1-2-1984 onwards. The extract of the Register of Firms, showing the Constitution is placed at page 1 of the Paper Book. The Purchase Deed dated 16-7-1964 for the purchase of property by three partners, Shri K.L. Marwah, Shri Raj Marwah and Shri Sushil Marwah is placed at pages 2 to 24 of the Paper Book. Copy of company’s Board Resolution dated 2812-1984 that the warehouse should be let out to three ex-partners of the erstwhile firm, M/s. National Wire Products, at Re. 1 per sq. ft. is placed at pages 25 and 26 of the Paper Book. Letter to the assessing officer dated 20-6-1987, enclosing Dissolution Deed dated 1-1-1985 and Agreement Deed dated 29-12-1984 is evidenced at Pages 27 to 39 of the Paper Book. Copy of the tenancy agreement between the company and three partners of the dissolved firm, letting the property at the rate of Re. 1 per sq. ft. is given at pages 40 to 47 of the Paper Book. It is-submitted that at the time of Resolution passed for dissolution, 32,000 sq. ft. was under three partners and each of them got 8,000 sq. ft. and M/s. Marwah Warehousing Corporation got another 8,000 sq. ft. At the time of retirement of the partners, it was one of the conditions put by them that the premises should be given to them on rent at the rate of Re. 1 per sq. ft. Assessee was constrained to accept this condition and revenue had accepted all this and assessed the income offered by the partners. Subsequently, second floor was built and given on rent around the year 2000. Hence, the two rents cannot be compared and treated alike. The company entered into agreement with the Directors on the basis of dissolution in the year 1984, whereas the rent was fixed for the second floor only in 2000. At that point of time, assessee’s representative submitted, one or two Rupees rent was prevailing in the market. Even if Rs. 2 was prevailing in the market, the assessee could not charge as it is because it was constrained by the Deed of Dissolution and this was the condition put by the retiring partners. Assessee’s representative further submitted, the additions made by the assessing officer and confirmed by the CIT(A) are not justified because in the earlier years the department itself accepted the position all along. Assessee company let out the premises as per the condition in the take over agreement, which has over-riding effect. Assessee also cannot increase the rent now as it will go against a protected tenant by virtue of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
Assessee’s case is also supported by the decisions of the Hon’ble Supreme Court in the cases of Dewan Daulat Rai Kapoor (supra) and Shiela Kaushish (supra), wherein their Lordships held that the annual value of the house property should be determined in accordance with the Rent Control Legislation where it is situated. Assessee also placed reliance on the decision of the Hon’ble Madras High Court in the case of M. Ratanchand Chordia (supra).
13. On the other hand, the learned departmental Representative submitted, supporting the orders of the revenue authorities, that for the second floor the assessee is receiving rent of Rs. 1,20,00,000 and also in addition to that the assessee received a deposit/loan of Rs. 90 lakhs interest free. If the notional interest taken and added to the actual rent received, the rent comes to Rs. 1.36 crores; whereas double of this area is fetching rent of only Rs. 3,80,160, which by no imagination could be justified. The learned DR submitted, the same property has been rented out by the Directors to another company for a rent of Rs. 31,10,400 each. Then the rent receivable by virtue of section 23(1)(a) for units altogether will be about Rs. 1,24,41,600. Hence, he submitted, the orders of the revenue authorities may be upheld.
14. In reply to the above, the assessee’s representative submitted, the department has not doubted the genuineness of the dissolution of the firm, at the time of which the erstwhile partners put the condition that the premises should be rented out to them at Re. 1 per sq. ft. by virtue of Rent Control Act, the assessee had no chance of getting enhanced rent from the person concerned. Even otherwise, the assessee’s representative submitted, other partners actually receiving the higher rent have declared it and the tax is paid in their individual capacity. Therefore, if the same amount is taxed in the hands of the assessee as well, it will amount to double taxation.
15. Hearing the rival submissions and going through the decisions cited, we are of the view that the appeal by the assessee is to be allowed. It is true, the income from house property is to be determined on the basis of annual letting value as per section 23(l) of the Act. The annual value of the property shall be the same for which the property might reasonably be expected to let out from year to year. But at the same time it is to be seen that in the instant case of the assessee, while the building was being constructed, the erstwhile firm decided to dissolve and Marwah brothers retiring from the firm. It was one of the conditions of the dissolution of the firm that the building will be let out on construction to Marwah brothers, partners of the firm or their nominee, on rent at the rate of Re. 1 per sq. ft. per month. The company had no right to overlook this. This agreement is dated 1984. The Dissolution Deed was followed by; it is dated 1-1-1985. The premise was self-occupied for some time; but subsequently let out. It is also to be seen that two Marwah brothers ie., Shri R.K. Marwah and Shri S.K, Marwah sub-let the premises on annual rent of Rs. 31,10,400.
The firm has not let out it and it is being used for its own business. The second floor was built and completed in the year 2000. Now the question is whether the assessee had any power to increase the rent. It appears, the present assessee has no power to increase the rent.
16. If that be so, then the question is what should be the amount that expected to be “the sum for which the property might reasonably be expected to let” appearing in section 23(1)(a). By virtue of section 5(10)(b)(iii) of BRCA, the standard rent in the instant case would be the rent at which the premises were first let out, So the standard rent in the case of the assessee would be the rent, which fixed at the time when the building was let out. The issue relating to determination of annual letting value of the let out portion of the building did not fall within the ambit of section 23(1)(a) because the building was already tenanted from 1984 onwards.
17. In the case of Dewan Daulat Rai Kapoor (supra) the Hon’ble Supreme Court held as under:
“The Legislature obviously regards recovery of rent in excess of the standard rent as exploitative of the tenant and would it be proper for the court to say that it would be reasonable on the part of the landlord to expect to recover such exploitative rent from the tenant? We are, therefore, of the view that, ever. if the standard rent has not been fixed by the controller, the landlord cannot reasonably expect to receive from a hypothetical tenant anything more than the standard rent determinable under the Act and this would be so equally whether the building has been let out to a tenant who has lost his right to apply for fixation of the standard rent or the building is self-occupied by the owner.” (p. 716)
18. In the case of Shiela Kaushish (supra), the Hon’ble Supreme Court held, the standard rent determined under, the provisions of Rent Control law would be the annual value even though the standard rent not determined. This view has been taken by the Tribunal, Mumbai Bench, in the case of Jt. CIT v. Kedareshwar Investment and Trading Co. Ltd. and also in the case of Gagan Trading Co. Ltd. v. Asst. CIT (2005) 93 ITD 426 (Mum.). In view of the above the appeal by the assessee on this point is allowed.
19. In the case of Indra & Co. (supra), the Hon’ble Calcutta High Court held that if the revenue is not suspecting the agreements either between the landlord and the tenant or between the tenant and the sub-tenant, or held to be executed as a result of collusion, the actual rent received by the assessee is to be considered for the purpose of income from house property. In the instant case of the assessee, the first dissolution of the erstwhile existing firm and the partners is not held to be collusive. This was a case, wherein the assessee, the owner of the first floor of the building, entered into a formal agreement with a tenant, ‘T’ in respect of office space and subsequently ‘T’ entered into another agreement with State bank of Bikaner and Jaipur for sub-letting it for a higher amount and the Hon’ble High Court held, this is the amount received actually by the assessee construed the annual value of the property and not the subsequent amount which the first tenant rented out to a third party. The appeal by the assessee, hence, on this ground allowed.
20. Coming to the notional interest charged amounting to Rs. 16,20,000, this issue is squarely covered against the revenue by the decision of the Hon’ble Jurisdictional High Court in the case of J.K. Investors (Bombay) Ltd. (supra). In this case the Hon’ble High Court held that notional interest on interest free deposit received from the lessee would not form part of the actual rent under section 23(1)(b) of the Income Tax Act, 1961. Thus, the addition made by the assessing officer and confirmed by the CIT(A) is to be deleted. It is deleted.
21. The third effective ground urged by the assessee is against the addition retained by the CIT(A) being accrued discounting charges amounting to Rs. 18,11,010.
22. During the assessment proceedings the assessing officer noticed, assessee has discounted bills of M/s. Lok Housing and Construction Ltd. with effect from 5-12-1995. The assessee was receiving charges up to 3-5-1997. For the assessment year 1988-89 also addition was made at Rs. 8,37,335 on the basis of accrued bill discounting/ interest charges. It was considered again for the assessment year under consideration. When questioned, it was stated by the assessee that M/s. Lok Housing and Construction Ltd. informed the assessee vide their letter dated 16-4-1977 that they were unable to repay any amount with interest due to liquidity problem. Subsequently M/s. Lok Housing and Construction Ltd. formulated a scheme for repayment and the assessee could receive Rs. 1,78,394 and Rs. 53,898 towards principal amount. The balance was outstanding. It was contended, it is doubtful of recovery of this amount. Assessee filed a case for winding up against that party. All the proceedings claimed to be stayed by the Hon’ble High Court. So also in the case of M/s. Vitara Chemicals Ltd., though the assessee provided the amount, even the receipt of capital amount itself is doubtful. There is no question of any interest. However, the assessing officer noticed that the assessee was following mercantile system of accounting. Assessee should have accounted the charges /interest on accrual basis. With the above observation, assessing officer made the addition. Assessee approached the first appellate authority.
23. The addition was confirmed by the CIT(A) vide para 8.4 of his order on the following lines:
“8.4 The last ground is regarding addition on account of discounting charges deemed to have been received by the appellant, on accrual basis. The assessing officer has added an amount of Rs. 18,11,010 on account of discounting charges/ interest charges on the ground that the amount had accrued during the assessment year 2001-02. On the other hand, the appellant has explained that the appellant was in the business of discounting bills. The appellant while discounting bills would deduct the charges and the balance amount was advanced to the party. The assessing officer has made addition in respect of two parties namely Globe Housing & Construction Ltd. and Vitara Chemicals Ltd. It has been submitted that these parties were sick parties and even the principle amount was not recoverable from these parties. Therefore, the assessing officer has erred in calculating notional discounting charges. The above argument of the appellant is not acceptable. The appellant is following ‘mercantile system of accounting’ and it was supposed to offer this income on ‘accrual basis’ which has not been done. The findings of the assessing officer on this point are very elaborate and self speaking. I am in agreement with the findings of the assessing officer and therefore, this ground of appeal is also dismissed.”
Aggrieved by the above order, the assessee is in appeal before the Tribunal.
24. It is submitted that M/s. Lok Housing and Construction Ltd. has been declared as Relief Undertaking under Bombay Relief Undertaking Act by the State Government vide Notification given at pages 111 and 112 of the Paper Book. According to this Notification, the liability of this party has been suspended and not enforceable. The recovery proceedings also stopped by the Government regarding discounting charges from M/s. Vitara Chemicals Ltd. It is the case of the assessee that the assessee filed a complaint under section 138 of the Negotiable Instrument Act before the Magistrate but the High Court stayed all the proceedings against the company as the company was passing through winding up process.
25. The learned DR supported the orders of the revenue authorities.
26. Considering the above facts and on the basis of the material placed in the Paper Book at Page 111 being the Notification dated 4-4-2002; and also the order of the Hon’ble Bombay High Court in the matter of M/s. Vitara Chemicals Ltd., we are of the view that there is no justification in making the addition. The appeal by the assessee on this ground is allowed.
27. In the result, appeal of the assessee stands allowed.