TMI Blog2006 (10) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... ief facts of the case are that the assessee is a share dealer. The interest on the loan at issue was allowed in the initial assessment made under section 143(3). The Ld. CIT by a revision order under section 263 set aside that assessment whereupon the assessment was made afresh under section 143(3)/263 wherein the interest was disallowed holding the borrowing to be otherwise than for the purpose of business. The CIT(A), however, differed and deleted the addition by way of disallowance on the finding that the borrowing was for acquiring a new business premises to meet the requirement of additional office space for installation of plant and machinery for facility of the latest information technology in aid of the business. He held the abandonment of the project following a sudden crisis in the share market as immaterial as the borrowing though abortive was for the purpose of the business. 3. In the Revenue s appeal from that earlier first appellate order under section 143(3)/263 of the Ld. CIT(A), the Tribunal, as aforesaid, restored the assessment to the Assessing Officer. But the Assessing Officer in the fresh assessment under section 143(3)/263/254, pursuant to the Tribunal s d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of before the words Flat No. 71, Madhuli Building indicates that the loan is for Madhuli Building and not for the flat at Sumit Apartment intended to be purchased. This aspect has not been looked into by the lower authorities. So, the Tribunal had the prima facie impression that the borrowing from GHFCL though specifically granted for purchase of flat at 71, Madhuli Building has been utilized for the other flat at 31A, Carmichael Road, Mumbai (Sumit Apartments). This diversion of the borrowing for purchase of the premises different from the premises for which loan had been granted, according to the Tribunal, needed investigation. This aspect has not been looked into. 6. The Ld. D.R. further pointed out that the assessee s Board of Directors adopted the resolution for purchase on 20-2-1995, but abandoned the project too soon, viz., by resolution of the Board of Directors dated 19-4-1995 i.e., in a matter of two months. This, according to him, undermines the reliability of the assessee s project. His next contention was that the assessee s schedule of fixed assets to the Balance Sheet shows that the assessee is also engaged in construction of a building. Therefore, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le was ₹ 72.84 lakh. The corresponding figures of purchases and sales for the instant year 1995-96 shot up to ₹ 3.76 crore and ₹ 4.02 crore respectively. So, the probability of the assessee s need of a larger office space was not disputed at any stage. 8. Now, as for the abandonment of the project of purchase of new office for installation of plant and machinery according to modern information technology, the counsel as before submitted that the abandonment was a salvaging act in the face of a sudden market upset. The need of the hour thus became the preservation of the liquid assets. He also stressed that the trader is the best judge of his commercial decision. The Revenue cannot substitute its opinion for the decision of the trader. On question of the residential nature of the premises the Ld.Counsel for the assessee emphasized that share dealing depends on market intelligence maintaining enormous data bank for which the information technology has now come in handy. The entire trade is carried on by in-camera decision-making of the trader. It is not at all customer-related needing to be in the vicinity of the stock market or in the commercial hub. He emphasiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1983] 142 ITR 1 (All.) for the proposition that the import of the expression for the purpose of is wide enough to encompass any abortive revenue or capital expenditure. The cited decisions are as follows:- 1. CIT v. Malayalam Plantation Ltd.[1964] 53 ITR 140 (SC) wherein it has been held as follows:- The expression for the purpose of the business is wider in scope than the expression for the purpose of earning profits. Its range is wide; it may take in not only the day to day running of a business but also the rationalisation of its administration and modernisation of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for the carrying on of a business. It may comprehend many other acts incidental to the carrying on of the business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for the carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the best interest of the business, i.e., profit making. This depends, as canvassed by the Ld. Counsel for the assessee, on the continuous collection and analysis of data and flow of updated commercial market intelligence. There is no cause for the assessee to be in any commercial area or close to the stock exchange. That apart, the residential nature of any premises acquired or sought to be acquired does not preclude its use for the purpose of the business as correctly held by the CIT(A). 13. We also find that the Assessing Officer enquire into the facts in the light of the observations of the Tribunal in its earlier order. Before the Assessing Officer the assessee demonstrably dispelled the confusion with regard to the particular property for purchase of which the assessee advanced the earnest money in pursuance of agreement for transfer with the intending transferor, Smt. Lata R. Gurnaney. The Ld. D.R s argument that the assessee s intention for purchase might be for letting the property on rent is a matter of speculation because the contemporaneous records viz. board resolution, the loan agreement with GHFCL and the abandonment of the project for purchase following the beari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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