| SooperKanoon Citation | sooperkanoon.com/72714 |
| Court | Income Tax Appellate Tribunal ITAT Mumbai |
| Decided On | Aug-07-2003 |
| Judge | S Chandra, I Bansal |
| Reported in | (2004)90ITD287(Mum.) |
| Appellant | The Dcit, Spl. Range 18 |
| Respondent | Aakrosh Investment and Leasing P. |
"1 On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in holding that provision of Section 73 read with explanation thereto are not applicable in the assessee company and thereby further erred in directing to allow the set off of losses amounting to Rs. 9,30,946/- incurred in the business of purchase and sale of shares against the other income. The said view is well supported by the decided case by Hon'ble Calcutta High Court in the case of Eastern Aviation and Industries Ltd. v. CIT (A) reported at 208 ITR 1023." "2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in directing to restrict the expenses on earning the dividend income at Rs. 6429/- (being 1% of dividend income) as against Rs. 165097/- worked out by A.O. as attributable to earning of dividend income, without appreciating the facts and circumstances on which findings of A.O. in the assessment order was based. The learned CIT (A) further failed to appreciate that action of A.O. in working out the expenses on earning dividend income has been upheld and as such ought to have upheld the disallowance of expenses of Rs. 165097/- which is just and reasonable." 3. The learned representatives of the parties have been heard, their arguments considered and records perused.
4. The assessee is a Private Limited Company engaged in the business of purchase and sale of shares. The assessee filed its return for the A.Y.1990-91, declaring loss of Rs. 43,35,2.81 on 27.12.1990. The Assessing Officer computed the total income of the assessee in his order dated 20.7.92 at Rs. 3,56,220/-. He started the computation of total income from net loss as per profit and loss account and added Rs. 25,07,739/- on the ground that the assessee had not shown interest of Rs. 23,26,224/- etc. though accrued as books are kept on mercantile basis.
Since the assessee had not charged interest on advances to two concerns, though it had paid interest on this borrowings, the A.O.disallowed Rs. 10,73,837/- out of interest and added it to the income of the assessee. He also disallowed Rs. 3,48,485/- being management fee paid by the assessee on the ground that it was for consideration other than business. Interest of Rs. 1,16,968/- was also disallowed for the reason that it was attributable to the speculation loss suffered by the assessee. He thus arrived at the negative figure of Rs. 9,30,946/- and observed that the said figure of loss arose on account of purchase and sale of shares, which will be treated as speculation loss in view of the explanation to Section 73 of the Act and will be carried forward to be adjusted against the future profits from speculation business. He further recorded the finding that speculation loss of Rs. 12,61,615/- will also be carried forward, Thereafter, the A.O. determined the income from other sources. The assessee had declared dividend income of Rs. 6,42,900/-, and claimed deduction of Rs. 6,42,700/- Under Section 80M. The Assessing Officer, however, allowed deduction Under Section 80M at Rs. 2,86,681/- by allocating expenditure of Rs. 1,65,097/- attributable to earning of dividend income of Rs. 6,42,900/- as against expenditure of Rs. 200/-shown by the assessee. As stated earlier, the total income was computed at positive figure of Rs. 3,56,220/-. The assessment was challenged before the CIT (A) including the additions/disallowances made by the A.O. as also application of provisions of Section 73 read with Explanation thereto.
5. The CIT (A) deleted the addition of Rs. 25,07,739/- holding that it tantamounts to double addition. He also deleted the disallowance of interest of Rs. 10,37,837/-. He also deleted the disallowance of management fees of Rs. 3,48,485/-. The disallowance of proportionate interest of Rs. 1,16,966/- from speculation loss was also deleted. As regards treatment of business loss as speculation loss by the Assessing Officer in view of the Explanation to Section 73 of the Act, it was submitted before the CIT (A) as under:- 1) Explanation to Section 73 envisages purchase and sale of shares.
During the previous year relevant to the assessment year 1990-91, the assessee had purchased shares worth Rs. 240.02 lakhs but had not sold any shares. Hence, the assessee had not incurred any loss in share trading.
2) The loss was mainly due to payment of interest and other expenses incurred during the course of business. The loss could not therefore be treated as speculation loss by invoking explanation to Section 3) The Assessing Officer determined the gross total income of the assessee at Rs. 6,42,900/- being the income from dividend and as per the explanation to Section 73, Section 73 is not applicable where the gross total income of the company consists mainly of "income from interest on securities, income from house property, capital gains and income from other sources". Since the income of the assessee was only income from other sources, the provisions of Section 73 is not applicable. Therefore, the loss incurred should be treated as business loss and should be set off against dividend income and the balance should be carried forward as business loss.
6. The CIT (A) considered the submissions of the assessee. He rejected the assessee's contention that its loss cannot be treated to have been incurred from share trading since it had not sold any shares during the previous year. According to the CIT (A), merely because there was no sale of shares during the previous year, it cannot be said that the business of the company was not purchase and sale of shares. The CIT (A), however, agreed with the contention of the assessee that since the gross total income of the assessee consists of only income from other sources, the provisions of Section 73 are in applicable in its case and therefore, the loss incurred should be treated as business loss. The revenue is aggrieved and Ground No. 1 relates thereto.
7. The learned D.R. submitted that the loss is negative profit. In the case of the assessee, the Assessing Officer has computed business loss at Rs. 9,30,946/- which after giving effect to the CIT (A)'s order amounted to Rs. 49,77,975/-. The income from other sources amounts to Rs. 6,42,900/-. The learned D.R. argued that since business loss is higher than the income from other sources, the provision of explanation to Section 73 is applicable to the case of the assessee. Relying on the decision in "Eastern Aviation and Industries Ltd. v. CIT (A)", 208 ITR 1023 (Cal.), the learned D.R. submitted that the CIT (A) has considered only positive income whereas in "Eastern Aviation and Industries Ltd".
(supra), it has been held that business loss in absolute figure without taking into account plus or minus figure and income from other sources as it is has to be taken into consideration. He therefore, submitted that the order of the CIT (A) be set aside.
8. The learned Counsel for the assessee on the other hand submitted that the assessee does not fall within the ambit of explanation to Section 73 because in the year of account, there was only purchase of shares but no sale thereof had taken place. If that be so, it is evident that the assessee had not incurred any loss in shares as there was no trading at all in shares. He invited our attention to the annual accounts for the year ended 31.3.90, and Schedule O thereof in support the above contention. He further submitted that the loss has arisen out of interest and not because of share trading. The Assessing Officer was, therefore, not correct in saying that there was loss of Rs. 9,30,946/- in purchase and sale of shares. The learned Counsel for the assessee further submitted that it would be evident from Schedule O of the annual accounts for the year ended 31.3.90 that during the year, the assessee purchased 2,13,800 equity shares worth Rs. 238.73 lakhs of Reliance Industries Limited only. He argued that to fall within the mischief of the explanation to Section 73, the assessee's business must consist of purchase and sale of shares. He emphasized that there should be purchase and sale of shares of companies and not of a company. In the case of the assessee, there is purchase of shares of a company, namely, Reliance Industries Limited and there is no sale of shares at all in the year of account. Relying on the decision in "Laxmi Foods and Export Ltd. v. ACIT", 62 ITD 315, He argued that plurality of transaction and plurality of companies is a pre-condition for attracting the provisions of explanation to Section 73. This pre-condition, he submitted, is not satisfied in the case of the assessee, as there is purchase of shares of a single company and there is no sale of shares at all in the year of account The learned Counsel for the assessee further submitted that an investment company is outside the mischief of the explanation to Section 73. The deeming provisions of the explanation to Section 73 are in applicable to an investment company. For the purposes of the said explanation, Investment Company means a company whose gross total income consists mainly of income from interest on securities, house property, capital gains and income from other sources. Relying on the decision in "CIT (A) v. Amritlal and Co. Ltd.", 212 ITR 540(Bom), the learned Counsel for the assessee argued that if the activities of the company are such that its total gross income 'mainly' consists of interest from securities etc, it would be termed an investment company. The word 'mainly' is some what akin to 'wholly' and has been used to mean the whole or a substantial portion of the total gross income of the assessee. It cannot be construed to mean "not less than fifty-one percent". In this connection, he filed a chart of composition of gross total income for the A.Y. 1990-91 to 1995-96 (both the years inclusive) to say that the percentage of income from other sources to gross total income is minus (-) 15% in A.Y. 1990-91, 0% in A.Y. 1991-92, 100% in A.Y. 1992-93, 58% in A.Y. 1993-94, 73% in A.Y. 1994-95, and 81% in A.Y, 1995-96. Placing reliance on the definition the expression gross total income in Section 80 B(5), the learned Counsel for the assessee submitted that the loss from business of Rs. 49,77,975/- would not come in the computation of gross total income and looked at from this angle, the decision of the Hon'ble Calcutta High Court in "Eastern Aviation and Industries yd. (supra) would not militate against the assessee, in whose case the gross total income is Rs. 6,42,900. The learned Counsel for the assessee, thus, supported the order of the CIT (A). In his counter arguments, the learned D.R. pointed out that the assessee is in the business of purchase and sale of shares, which is evident from Para 3 of Schedule O of the annual accounts for the year ended 31.3.90, wherein, it is stated that the company is dealing in shares and hence, the same has been treated as stock-in-trade. He further pointed out that the assessee had speculative loss in share transaction amounting to Rs. 12.61 lakhs. He further submitted that Section 43 (5) defines the speculation transaction and Section 73 provides a segregation of "net loss computed in respect of speculation business carried on by the assessee" in the matter of carry-forward of losses. The assessee's case, therefore, falls within the net of Section 73.
9. We have given careful consideration to the rival submissions. The admitted facts as culled from the material on record are these, It is the second year of the company's business. From the Director's Report, which forms part of the annual accounts of the company for the year ended 31.3.90, it is obvious that during the previous year relevant to the A.Y. under consideration, the assessee company dealt in shares and securities, which fact is also corroborated by Para 3 of Schedule 'O' of the aforesaid annual accounts, wherein, it is stated that since the company is dealing in shares, the same has been treated as stock-in-trade. It is also stated in the Director's Report (Page 3 of the Paper Book) that the company incurred loss of Rs. 55.97 lakhs, hence, the dividend is not recommended. Balance Sheet as at 31.3.90 (copy at page 8 of the Paper Book) shows that the company was started with share capital of Rs. 8000/- which increased to Rs. 10000/- in the year of account. The company obtained secured loans from Infrastructure Leasing and Finance Services Ltd., against pledge of shares of Rs. 400 lakhs in the preceding year, which has increased to Rs. 495 lakhs in the year of account. Last year, no fund was utilised towards "investment" whereas an amount of Rs. 15,000/- has been shown as investment towards purchase of 150 equity shares of M/s. Vision Advertising and Marketing (P) Ltd., of Rs. 100/- each. During the preceding year, an amount of Rs. 1.29 lakhs was applied towards purchase of inventories, i.e., 1000 equity shares quoted at Stock Exchange shown as stock-in-trade, whereas funds to the extent of Rs. 238.73 lakhs have been applied towards purchase of inventories, i.e., 213300 equity shares of Reliance Industries Limited (stock-in-trade) in the year of account. Last year, the assessee had applied funds to the extent of Rs. 396.35 lakhs in giving loans and advances which was reduced to Rs. 280.85 lakhs in the year of account. A look to Schedule 'K' (page 11 of Paper Book) would show that last year there was profit of Rs. 2.09 lakhs on sale of shares. In the year of account, the assessee company earned dividend income of Rs. 6.40 lakhs, whereas in the preceding year, there was no dividend income at all and in the year of account, no profit at all on sale of shares. Profit and Loss account for the year ended 31.3.90 shows that a sum of Rs. 50.22 lakhs stands debited under the head 'interest and bill discounting charges'. This expenditure by way of interest etc., has been incurred in respect of funds borrowed for the purpose of business, namely, purchase of stock in-trade, i.e., shares.
10. It is in the aforesaid factual matrix that we proceed to examine the respective contentions of the parties.
11. In para 17 of his order, the CIT (A) has given the following findings: - "I have considered the submissions of the Authorized Representative.
I find no merits in his contention that since the appellant had not sold any shares during the year, its loss cannot be treated to have been incurred from share trading. Incidentally, there was no sale of shares during the year and for this it cannot be said that the company's business was not purchase and sale of shares." 12. The assesses company has not challenged the above findings of the CIT (A) either by way of appeal to the Tribunal or by way of cross objection. Thus, the findings of the CIT (A), namely that even though the assessee has not sold any shares in the year of account, its loss can be treated as loss incurred from share trading and even if there was no sale of shares in the year of account, the business of the company was still that of purchase and sale of shares, have attained finality.
13. The effect of the above findings of the CIT (A) which has become final is that the loss incurred by the assessee is from the assessee's business of purchase and sale of shares. In this view of the matter, reliance by the learned Counsel for the assessee on the decision of Laxmi Foods and Exports Ltd., (supra) is misplaced. In CIT (A) v. Sun Distributors & Mining Co. Ltd, 68 Taxman 223, their Lordships of Hon'ble Calcutta High Court held that it is not a requirement of Section 73 that both purchase and sale of shares should take place in the same year. What is required to attract Section 73 is that the business of the assessee should consist of purchase and sale of shares.
Their Lordships observed as under:- "Section 73 will apply where any part of the business of the company consists in the purchase and sale of shares of other companies.
Therefore, it has to be seen whether the assessee has such a business. It might be that in a particular year shares were only sold or in a particular year the shares were only purchased. The second does not require that both sale and purchase should take place in the same year. What is to be seen is whether the business of the assessee consists in purchase and sale of shares. In the instant case, the assessee had a business of buying and selling the shares. The shares were treated as stock-in-trade. The closing stock of the shares had been valued just as any other stock-in-trade was valued by an assessee. There were small lots of sale of shares in this year. But that would not make any difference to the main question, which was whether the assessee was engaged in the business of sale and purchase of shares. If it was found that any part of the business of the assessee consisted, in the purchase and sale of shares, then for the purpose of Section 73 such a company shall be deemed to be carrying on a speculation business to the extent the business consisted of purchase and sale of such shares. It is not the requirement of the section that both purchase and sale of shares should take place in the same year. But what the section requires is that there need be a business of sale and purchase of shares and the assessee-company carries on that business in the relevant year of account The very fact that shares were valued as stock-in-trade and the loss was disclosed as a purchase and sale of shares was carried on by the assessee. To the extent such business was carried on, the business of the assessee must be treated as speculation business." This decision squarely applies to the facts of the assessee's case before us and provides a direct answer to the arguments of the learned Counsel for the assessee that the assessee does not fall within the purview of explanation to Section 73 because in the year of account, there was only purchase of shares and no sale of shares. Their Lordships have held in the decision (supra) that section does not require that both purchase and sale of shares should take place in the same year. What is to be seen is whether the business of the assessee consists in purchase and sale of shares 14. Explanation to Section 73 stipulates that where any part of the business of a company consists in the purchase and sale of shares of other companies, such company shall, for the purposes of Section 73, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares.
15. In view of the above findings of the CIT (A) read with the decision of the Hon'ble Calcutta High Court in Sun Distributors and Mining Co.
Ltd., (supra), the case of the assessee is caught within the mischief of explanation to Section 73. This will not be so, if gross total income of the assessee company consists mainly of income which is chargeable under the heads, "Interest on Securities, Income from house property, Capital gains and Income from other sources". We may call if as "excluded category". The finding of the CIT (A) in this regard is that since the gross total income of the assessee consists of only income from other sources, the provisions of Section 73 is not applicable in its case and therefore, the loss incurred is to be treated as business loss. It is this finding, which has been challenged by the revenue, 16. From the facts of the assessee's case enumerated earlier, it may be noted that the dividend income earned by the assessee is attributable to the equity shares of Reliance Industries Ltd., held by the assessee as stock-in-trade in its business of purchase and sale of shares. In other words, the dividend received by the assessee is not attributable to investments by the assessee in shares.
17. On these facts, can it be said that the dividend income of the assessee forms part of its income from business? The answer has to be in the affirmative in view of the Apex Court's judgment in Western States Trading Co. Pvt. Ltd. v. CIT 80 ITR 21 (SC), wherein their Lordships held thus: - "If shares are held by an assessee as part of his trading assets, dividends on those shares would form part of the income from business of the assessee. The assessee will therefore be entitled to claim set off of loss from its business carried forwarded from earlier years against dividends of the current year from the shares held as stock-in-trade of his business under Section 24 (2) of the Income tax Act, 1922." 18. It is obvious from the above that when the shares are held as part of trading assets, dividends on such shares would form part of income from business of the assessee. In the case before us also, admittedly, the assessee is carrying on the business of purchase and sale of shares and that the shares are held as stock-in-trade. The decision of the Apex Court squarely applies to the facts of the assessee's case. If the impugned dividend income is brought to tax by applying the decision (supra) of the Apex Court, the entire income of the assessee would be income from business and there would be no income at all under the heads, "Interest on securities, Income from house property, Capital gains and Income from other sources". In this view of the matter, the gross total income of the assessee will consists of only business income and the assessee's case will fall within the explanation to Section 73 and not in the excluded category thereof.
19. We have perused the decision relied upon by the learned Counsel for the assessee in the case of Amritlal and Co. Ltd. (supra). In our considered opinion, this decision also does not help the assessee. In this case, the Hon'ble Jurisdictional High Court was considering whether the assessee was an investment company within the meaning of Section 109 of the Act. Section 109 (it) defined "investment company" as under: - ""investment company" means a company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources".
20. It would thus appear that the definition of "Investment Company" is similar to Companies which fall into excluded category under Explanation to Section 73. In that case, gross total income of the assessee was Rs. 19,66,798/- out of which, Rs. 10,67,474/- happens to form the income from House property, Other sources and Capital gains.
The Assessing Officer held the company to be an 'investment company' within the meaning of Section 109 (ii) of the Act. On the basis of that, the income from the aforesaid source was more than 50% of its gross total income. On appeal, the CIT (A) and the Tribunal did not agree with the finding of the Assessing Officer. The revenue filed reference before the Hon'ble High Court and the High Court laid down the test which is to be applied for determining whether a company can be termed as "investment company" or not. At page 545 of the report, their Lordships observed thus: - "From the definition of investment company set out above, it is evident that a company can be held to be an investment company only if its gross total income consists mainly of income which is chargeable under the heads specified therein. It is not the actual income arising in a particular year under those heads vis-a-vis income falling under other heads that is determinative of the real character of a company. The decisive factor is the nature of the activities of the company which give rise in the income. A company engaged mainly in business or industrial activities cannot be held to be an investment company merely because in a particular year its income from such business or industrial activity is insignificant or a negative figure and most of the income of that year turns out to be income from investment, income from securities, capital gains, etc." 21. At page 546 of the report, their Lordships again reiterated the same view, which reads as under:- "Thus, in order to term a company an "investment company" its gross total income should consist "mainly" of income from securities, house property, capital gains, etc. The expression "mainly" appearing in the definition of investment company in Clause (ii) means "substantially" or "primarily". If the business of the company consists mainly in dealing in goods or merchandise, it cannot be held to be an "investment company" within the meaning of Clause (ii) merely because, for one reason or the other its income from business happens to fall short of its income from investments, etc., in a particular previous year. The decisive factor for determining whether a company is an "investment company" or any other company is, therefore, the true nature of the primary activities of the company".
22. From the above, it is abundantly clear that the decisive factor for determining whether a company is an "investment company" or not is the true nature of the primary activities of the company which gives rise to the income and not the actual income from such activities during a particular year. This test is equally applicable for determining whether a company is covered within the Excluded category of the Explanation to Section 73. This is because the definition of "investment company" in the erstwhile Section 109 (ii) is incorporated as the companies which fall into the excluded category under the Explanation to Section 73. Looked at from this angle, and having regard to the admitted facts of the assessee's case before us, the primary activity of the assesses is purchase and sale of shares. This is the only business activity of the assessee. From the extract of the observation of the Hon'ble High Court at page 545 of the report given above, it is obvious that their Lordships have held that a company engaged mainly in business or industrial activities cannot be held to be an "investment company" merely because in a particular year, its income from such business or industrial activity is insignificant or a negative figure. It is an undisputed fact that the assessee before us is engaged mainly, which word is akin to wholly in the business of purchase and sale of shares. If that be so, in our opinion, the decision (supra) of the Hon'ble Jurisdictional High Court would not render any assistance to the assessee and the assessee's case would not fall within the excluded category of Explanation to Section 73. In other words, the case of the assesses, in our considered opinion, falls within the ambit of the explanation to Section 73.
23. In Eastern Aviation and Industries Ltd. (supra), relied upon by the learned D.R. in the context of computation of income for purposes of finding out if the assessee is an investment company, their Lordships observed that the words "income or profits and gains" should be understood as including the loss also. So that in one sense, "profits and gains" represent "positive income", whereas "Loss" represent "negative profit". Both positive and negative profits are of revenue character. Both must enter into the computation, wherever it becomes material in the taxable income of the assessee. In that case for the assessment year 1983-84, the Income Tax Officer held that the business loss shown by the assessee had to be taken as speculative loss in view of the Explanation to Section 73. The assessee went in appeal before the Commissioner of Income Tax (Appeals) and contended that if was an "investment company" within the meaning of Section 109 (ii) of the Act, as its dividend income was greater than the business income, and, consequently, the business loss in shares could not be taken as speculative loss in view of the Explanation to Section 73. The argument of the assessee was accepted by the Commissioner of Income tax (Appeals), who directed the Income tax Officer to treat the loss from share dealings as an ordinary business, loss and not as a speculative loss. On further appeal by the revenue, the Tribunal held that the loss from share dealing was more than the income from other sources, and that, therefore, the assessee was not an investment company. The assessee took the matter before the High Court in reference and the High Court upheld the findings of the Tribunal thus: - "From the assessment order passed in the case of the assessee company it was dear that the assessee had shown a net loss of Rs. 28,50,358/- in its profit and loss account for the previous year under reference. This included speculative loss in share transactions amounting to Rs. 7,95,447/-, loss in regular share dealing business amounting to Rs. 12,90,145, and loss of interest attributable to the share dealing business amounting to Rs. 8,21,400/-. As against the above, the only income of the assessee company for the year under reference was by way of dividend amounting to Rs. 3,87,603/-. In other words, the business loss of Rs. 21,11,545/- was clearly more than the income by way of dividend.
Hence for the year under reference, it could not be said to be a company whose gross total income consisted mainly of income which was chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources", since the business loss exceeded income computed under the head "Income from other sources". As such, the Explanation to Section 73 was clearly applicable and the loss suffered by the assessee company in its share trading transactions inclusive of interest paid on borrowed monies attributable to that business was rightly treated by the Tribunal as a loss in speculative business." 24. The conclusion which emerges from the discussion above is that the loss from trading in shares has to be treated as speculation loss. In this view of the matter, we reverse the findings of the CIT (A) on the point and allow ground No. 1 of the revenue.
25. Apropos ground No. 2 above. The Assessing Officer apportioned the total expenses including the interest, in the ratio of dividend income and arrived at expenses of Rs. 1,65,097/-, as against expenditure of Rs. 200/- claimed by the assessee, which according to him would have been incurred for earning dividend income of Rs. 6,42,900/-, for the purposes of deduction under Section 80M.26. On appeal, it was contended that the interest was paid for money borrowed for purposes of business and was fully allowable Under Section 36 (1)(iii) and was not possible to allocate a portion of that interest as against income from dividend. Reliance was placed on the decision in Cottron Fabrics Ltd., 131 ITR 99(Guj) and in the case of Enemour Investments Ltd., 72 Taxman 273 (Cal). It was also contended that expenses were in the nature of fixed overheads and were not incurred for earning dividend income. It was argued that the only requirement of encashing dividend warrants was to deposit the same with the bankers of the company and for this purpose, the estimated expenditure of Rs. 200/- shown as attributable for earning dividend income was just and reasonable. The submissions of the assessee found favour with the CIT (A), who was of the view that it will be fair and reasonable to estimate 1% of dividend income amounting to Rs. 6,429/- as attributable to earning dividend income. Accordingly, he directed the A.O. to calculate admissible deduction under Section 80M. The revenue is aggrieved and ground No. 2 relates thereto.
27. The learned D.R. supported the order of the Assessing Officer and referred to the following decisions:- The learned Counsel for the assessee on the other hand supported the order of the CIT (A).
28. On consideration of the arguments advanced by the parties, we are of the view that the CIT (A) has not examined the issue before him in the correct perspective having regard to the nature of assessee's business. We, therefore, consider it proper and in the interest of justice to set aside the order of the CIT (A) on the point and restore the matter back to his file for deciding the issue afresh keeping, inter alia, the decisions relied upon by the learned D.R. and in accordance with law after allowing reasonable opportunity of being heard to the parties. It is ordered and directed accordingly.