DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 1(2),, PUNE vs. M/S. PHADINS CLINIC PRIVATE LIMITED,, PUNE

The ld. DR, Shri M.G. Jasnani submits that the assessee itself agreed for the disallowance on its own before the AO and has no right to file appeal before the CIT(A). The ld. DR drew our attention to para 4.a of the assessment order and argued that the authorized representative on behalf of the assessee agreed for the disallowance of proportionate interest on the loan utilized for purchase of shares and accordingly made signature on the order sheet. He vehemently argued that, in view of the same the CIT(A) should not have considered the grounds challenging the disallowance made by the AO. The CIT(A) by accepting the submissions of assessee deleted the addition without going into the merits of facts and circumstances of the case. Secondly, he submits that the assessee opted for Vivad Se Vishwas Scheme for A.Ys. 2012-13 and 2013-14 and by following principle of consistency the assessee should have considered in opting Vivad Se Vishwas Scheme for the year under consideration. The ld. DR, Sri M.G. Jasnani, vehemently argued that for A.Ys. 2012-13 and 2013- 14, the CIT(A) passed the same order on the same lines that of the year under consideration, but, having getting relief from the CIT(A) the assessee opted for Vivad Se Vishwas Scheme. The Hon’ble Supreme Court held the principle of consistency should be followed in the Income Tax proceedings and the assessee should have followed the same in opting Vivad Se Vishwas Scheme for the year under consideration. Thirdly, the CIT(A) was not justified in giving relief to the assessee without considering the case on merits. The CIT(A) simply accepted the submissions of assessee and gave relief without giving any independent finding, which is not justified.

On the other hand, the ld. AR, Shri Sanket Joshi placed on record the decision of Hon’ble Supreme Court in the case of Bharat Heavy Electricals Ltd. Vs. Mahendra Prasad Jakhmola & Ors. in Civil Appeal Nos. 1799-1800 of 2019 rebutting the arguments of ld. DR. He drew our attention to the finding of Hon’ble Supreme Court at page 13 which held that concessions on mixed questions of fact and law cannot decide cases as the evidence, as a whole has to be weighed and inferences drawn therefrom and argued that it is open to assessee to challenge the issue in appeal, even though, authorized representative of assessee admits before the AO.

Further, the ld. AR placed on record the Gazette Publication of Direct Tax Vivad Se Vishwas Act, 2020 and argued that Explanation to Section 5, that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the Income Tax authority to contend that the assessee acquiesced in the decision on the disputed issue by settling the dispute.

Further, the ld. AR drew our attention to clarification on provisions of the Direct Tax Vivad se Vishwas Bill, 2020 dated 4th March, 2020 issued by the CBDT. He drew our attention to Q. No. 52 and 55 and argued that Section 5 to Vivad Se Vishwas Act created embargo on the Revenue Department on such argument that the assessee should opt for Vivad Se Vishwas Scheme for subsequent year.

Heard both the parties and perused the material available on record. The ld. DR vehemently contended that the assessee has no right to agitate before the CIT(A) as well as this Tribunal regarding the disallowance made by the AO on account of interest payment. We note that according to ld. DR that the assessee itself agreed for the disallowance before the AO and is precluded from contesting the issue before the authorities challenging the same. The ld. AR placed on record the decision of Hon’ble Supreme Court in the case of Bharat Heavy Electricals Ltd. (supra) wherein the Hon’ble Supreme Court observed that concessions on mixed questions of fact and law cannot decide cases as the evidence as a whole has to be weighed and inferences drawn therefrom. We note, further, the Hon’ble Supreme Court referred to a decision in the case of Swami Krishnanand Govindananad Vs. Managing Director, Oswal Hosiery (Regd.) reported in (2002) 3 SCC 39 which held, even a concession on facts disputed by a respondent in its written statement cannot bind the respondent, on an occasion, that the statement made by the counsel cannot be accepted as an admission so as to bind the respondent. Further, the Hon’ble Supreme Court referred to a decision in the case of C.M. Arumugam Vs. S. Rajgopal reported in (1976) 1 SCC 863 which held that a question involving mixed question of law and fact and a concession made by the party on such a question at the stage of argument before the High Court, cannot preclude him from reagitating it in the appeal before the Supreme Court. The relevant portion of the findings of the Hon’ble Supreme Court reads as under: “What is clear from the evidence that was led by the parties is that the aforesaid gate passes were issued, as has been stated by the appellant’s witness, only at the request of the contractor for the sake of safety and also from the administrative point of view. The idea was security, as otherwise any person could enter the precincts of the factory. This evidence was missed by the Labour Court when it arrived at a conclusion that a direct relationship ought to be inferred from this fact alone. Further, as has been correctly pointed out by Shri Sudhir Chandra, the appellant has, not only in the first review, but also in the writ petition filed, taken the plea that no such concession was ever made. Moreover, quite apart from this plea and the counter plea of Ms. Jain that the person who has made such concession should have stated that he did not do so, concessions on mixed questions of fact and law cannot decide cases as the evidence as a whole has to be weighed and inferences drawn therefrom. Even a concession on facts disputed by a respondent in its written statement cannot bind the respondent. Thus, in Swami Krishnanand Govindananad v. Managing Director, Oswal Hosiery (Regd.) [(2002) 3 SCC 39, this Court held: “2. ……. It appears that when the case was posted for trial, the learned counsel appearing for the respondent conceded the facts disputed by the respondent in his written statement before the Court. That statement of the advocate was recorded by the Additional Rent Controller thus: “The respondent’s learned counsel has admitted the ground of eviction and also the fact that the applicant is a public charitable institution and for that purpose it required the premises.” ………. 3. ………. Whether the appellant is an institution within the meaning of Section 22 of the Act and whether it required bona fide the premises for furtherance of its activities, are questions touching the jurisdiction of the Additional Rent Controller. He can record his satisfaction only when he holds on these questions in favour of the appellant. For so holding there must be material on record to support his satisfaction otherwise the satisfaction not based on any material or based on irrelevant material, would be vitiated and any order passed on such a satisfaction will be without jurisdiction. There can be no doubt that admission of a party is a relevant material. But can the statement made by the learned counsel of a party across the Bar be treated as admission of the party? Having regard to the requirements of Section 18 of the Evidence Act, on the facts of this case, in our view, the aforementioned statement of the counsel for the respondent cannot be accepted as an admission so as to bind the respondent. Excluding that statement from consideration, there was thus no material before the Additional Rent Controller to record his satisfaction within the meaning of clause (d) of Section 22 of the Act. It follows that the order of eviction was without jurisdiction.” Equally, where a question is a mixed question of fact and law, a concession made by a lawyer or his authorised representative at the stage of arguments cannot preclude the party for whom such person appears from re- agitating the point in appeal. In ‘C.M. Arumugam v. S. Rajgopal’ [(1976) 1 SCC 863], this Court held: “8. ………. That question is a mixed question of law and fact and we do not think that a concession made by the first respondent on such a question at the stage of argument before the High Court, can preclude him from reagitating it in the appeal before this Court, when it formed the subject-matter of an issue before the High Court and full and complete evidence in regard to such issue was led by both parties……….” It would be perverse to decide based only on a concession, without more, that a direct relationship exists between the employer and the workmen. Equally perverse is finding that the extended definition of ‘employer’ contained in the Act would automatically apply. The extended definition contained in section 2(i)(iv) of the Uttar Pradesh Industrial Disputes Act reads as follows: “2. Definitions. ……………………………………………………………………………… ………………………………………………………………………………

Therefore, the finding rendered by the Hon’ble Supreme Court in the case of Bharat Heavy Electricals Ltd. (supra) by referring to decisions in the cases of Swami Krishnanand Govindananad (supra) and C.M. Arumugam (supra) is applicable to the facts on hand and we hold a concession made by the authorized representative before the AO in the assessment proceedings cannot preclude the assessee in reagitating the same point in the appeal. Therefore, we are unable to accept the contention of ld. DR in submitting that the assessee has no role to challenge the disallowance made on the admission of assessee before the CIT(A).

Coming to vehement contention of ld. DR that the assessee should have followed principle of consistency in availing scheme under Vivad Se Vishwas in terms of being availed for A.Y. 2012-13 and 2013-14. On perusal of the Direct Tax Vivad Se Vishwas Act, 2020, the Explanation to Section 5 of the said Act which clarifies that making a declaration under the said Act shall not amount to conceding the tax position. The relevant portion reads as under: “5. (1) The designated authority shall, within a period of fifteen days from the date of receipt of the declaration, by order, determine the amount payable by the declarant in accordance with the provisions of this Act and grant a certificate to the declarant containing particulars of the tax arrear and the amount payable after such determination, in such form as may be prescribed. (2) The declarant shall pay the amount determined under sub-section (1) within fifteen days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form and thereupon the designated authority shall pass an order stating that the declarant has paid the amount. (3) Every order passed under sub-section (1), determining the amount payable under this Act, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the Income-tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise, entered into by India with any other country or territory outside India. Explanation.—For the removal of doubts, it is hereby clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a party in appeal or writ petition or special leave petition to contend that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.”

Further, in Circular No. 7/2020 dated 04-03-2020 issued by the CBDT by way of a clarification on provisions of Direct Tax Vivad Se Vishwas Bill, 2020, clarified to a question asked vide Q. No. 52 will the result of Vivad Se Vishwas be applied to same issues pending before AO. We note that the CBDT clarified as No, by explaining the only issues covered in the declaration are settled in the dispute without any prejudice to same issues pending in other cases. We find that the CBDT very clearly explained vide answer to Q. No. 52 that the issues settled in Vivad Se Vishwas Act is not applicable to the same issues pending before AO which means that the issue covered in Vivad Se Vishwas Act are settled without any prejudice to the same issues pending in other assessment years concerning the same assessee.

Further, vide answer to Q. No. 55 that the CBDT reiterated, the Explanation to clause 5 of Vivad Se Vishwas Act by stating, the declaration made by the party shall not amount to conceding the tax position and it shall not be lawful for the Income Tax authority or the declarant being a part in appeal has acquiesced in the decision on the disputed issue by settling the dispute. We find force in the arguments of ld. AR that it is not open for the appellant-revenue to take a stand that the assessee accepted the additions made by the AO in earlier years and cannot dispute it in future assessment years. The relevant portion reads as under: “Question No. 52. Will the result of this Vivad se Vishwas be applied to same issues pending before AO? Answer No, only the issues covered in the declaration are settled in the dispute without any prejudice to same issues pending in other cases. It has been clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a part in appeal or writ or in SLP to contend that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute. Question No. 55. The appellant has settled the dispute under Vivad se Vishwas in an assessment year. Whether it is open for Revenue to take a stand that the additions have been accepted by the appellant and hence he cannot dispute it in future assessment years? Answer Please refer answer to question no 52. It has been clarified in Explanation to clause 5 that making a declaration under Vivad se Vishwas shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a part in appeal or writ or in SLP to contend that the declarant or the income tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.”

We note that answers to Q. Nos. 52 and 55 r.w. Explanation to clause 5 of the Vivad Se Vishwas created embargo on the appellant- revenue to challenge that the assessee has acquiesced the disputed issue by settling the same availing option under the Vivad Se Vishwas Act and it should be applicable to the same issue pending. Therefore, the arguments of Ld. DR are rejected.

Further, to the vehement contention of ld. DR that no independent finding given by the CIT(A) with regard to merits of the case on hand. The ld. AR, in reply, drew our attention to at Para 5.3.2 of impugned order and submits that the CIT(A) recorded the relevant facts and sequence of events explained by the assessee relating to the issue on hand and the CIT(A) taking into consideration the said facts and sequence of events along with the relevant evidences held that the interest was incurred by the assessee under commercial expediency in securing of its own business and the same was incurred for the purpose of business of assessee. The ld. AR supported the order of CIT(A) and argued that the statement of ld. DR is incorrect that no independent finding given by the CIT(A) on the issue on hand. The ld. AR drew our attention to sequence of events recorded by the CIT(A) from pages 16 to 21 and by placing reliance on the decisions of Hon’ble High Court of Bombay in the case of CIT Vs. Srishti Securities Pvt. Ltd. reported in [2009] 183 Taxman 159 (Bombay), in the case of Phil Corpn. Ltd. reported in [2011] 14 taxmann.com 58 (Bombay) and in the case of Hero Cycles Pvt. Ltd. reported in [2015] 379 ITR 347 (SC) of Hon’ble Supreme Court, argued that interest payable on borrowed funds which are utilized for purchase of shares both by way of investment as well as stock in trade is allowable deduction. On perusal of the impugned order, we note that the CIT(A) examined every detail involving the facts of the case and also the sequence of events showing, availing loans from the bank for purchase of shares and payment of interest on such loans held to be commercial expediency in securing in furtherance of the assessee business. We note that on an examination of the impugned order, the reasons recorded by the CIT(A) involving the issue on hand, we shall examine the relevant facts and sequence of events in para 5.3.2 of impugned order concerning the deduction on account of interest expenditure.

We note that the assessee i.e. M/s Phadnis Clinic Pvt. Ltd. for short hereafter as PCPL being run, managed and controlled by Dr. Avinash R. Phadnis for short hereafter as Dr. ARP and Dr. (Mrs.) Amita Avinash Phadnis for short hereafter as Dr. AAP since last many years. Dr. Avinash R. Phadnis is Gynecologist and IVF specialist (In Vitro Fertilization). Dr. (Mrs.) Amita Avinash Phadnis is Pediatrician and Neo Natal Specialist. The hospital was earlier located in small old place called as SHREE CLINIC around 30 bed facility in Pune. As the business of the owner doctors (Dr.ARP & Dr. AAP ) was growing, they felt need for new, ultra-modern bigger hospital to cater to the increasing demand. They decided to construct their own new bigger 100 bedded facility and started searching for new place sometime in 2003. Later on they decided upon a half completed site (basement, plinth and minor superstructure) on plot of land owned by TATA Finance Limited. The property was purchased by the assessee for Rs.4.59 crores by availing Term Loan from Corporation Bank Ltd for the entire hospital. During F.Y. 2006-07 Corporation Bank granted and disbursed a loan of Rs.12 Crores. Due to price escalations, additional funds were required to complete the hospital building. Corporation Bank sanctioned and disbursed additional term loan of Rs.4.40 crores during F.Y.2007-08. The building was completed with bank finance. The fund requirement for fully furnishing the hospital building with machinery, furniture etc. was around Rs. 20-25 crores to make the hospital fully operational and functional thereafter. Corporation Bank declined to sanction any additional loan for completing the project. Dr. ARP & Dr. AAP made frantic efforts to collect money for finishing the project and a capital venture company agreed to invest money by putting money as share capital on certain terms and conditions.

As the venture capital company was neither ready to accept and share Term Loan Liability availed for constructing the building nor were they interested in ownership rights in the Hospital building belonging to assessee. Therefore, the assessee reached an understanding with the investor capital venture company, that Dr ARP and Dr. AAP would form a new company for hospital business and accordingly, a Company, by name Oyster & Pearl Hospitals Pvt. Ltd. for short hereafter as ONP was formed on 30-11-2007 by Dr. ARP & Dr. AAP. We note that it was agreed that the venture Capital Company would invest Rs.20,99,66,736/-as their 49% share. Thus, 49% shares were allotted to the Venture Capital Company and the Venture Capital Company transferred money to new company ONP. We note that the entire money was utilized for purchasing and installing furniture, fixtures and equipment. The Venture Capital Company selected and finalized the suppliers for the same and the newly constructed hospital building of assessee Company PCPL was leased to ONP for 9 years 11 months by a registered lease deed as required by the venture Capital Company. Thus the company ONP took the hospital building on lease from assessee and purchased required furniture and equipment out of funds infused by Venture Capital Company. At the same time, the new company (ONP) also entered into an agreement for Professional Services with the Dr. ARP & Dr. (MRS.) AAP. According to assessee that the two agreements (i.e. Shareholder’s Agreement and Lease Deed) had many adverse, restrictive clauses, but, both Dr. ARP & DR. (Mrs.) AAP agreed for these clauses as they had no option or alternative as they wanted the hospital to be completed. The hospital business commenced on a good note, but, due to too many restrictions and restrictive clauses, both Dr. ARP and Dr. (Mrs.) AAP started feeling the effect and the financial pinch and the JV partner was also not happy as they felt that their money had not grown fast.

The promoters of the assessee i.e Dr. ARP and Dr. (Mrs.) AAP felt regarding the condition of minimum gross collection of the Hospital, both Doctors Dr. ARP and Dr. (Mrs.) AAP were not allowed to take any professional fees. Due to the said condition of minimum profit, they both felt there was threat of reduction in lease rentals being condition in lease agreement and the term loan liability of assessee borrowed against hospital building had gone up substantially.

At the same time, we note that the capital venture company with 49% shareholding were also not happy as the collection was not as what they had expected earlier. During the said period, assessee also felt the monthly servicing of the term loan from Corporation bank was becoming cumbersome and heavy to manage from lease rental received from ONP as per lease agreement. The promoters, Dr. ARP and Dr. (Mrs.) AAP decided to shift the loan to another bank where interest would be lower (though marginally) and repayment period longer than what was sanctioned by Corporation bank, as Corporation bank was not willing to grant any concession. The entire balance term loan against hospital land and building of Rs.19 crore was shifted to Bank of Baroda on 28-04-2010 (FY2010-2011) which gave more period and charged slightly lower interest. The capital venture company (holding 49% in ONP where entire business was being conducted) being unsatisfied with current trend of marginal increase in turnover with DR.ARP, Dr. (Mrs.) AAP, started taking serious turn to the extent that the venture capital company started threatening to sell their entire share capital to any willing third party buyer and by virtue of Shareholder's Agreement. Had the investor sold its 49% stake in ONP to any third party, it had many risk for assessee and Dr. ARP and Dr. (Mrs.) AAP due to various restrictive clauses in agreements entered into by assessee and Dr. ARP, Dr. (Mrs.) AAP with ONP.

The assessee and promotors of ONP felt had the investor capital venture company implemented right of “Drag Along” which involved sale/transfer of equity shares up to 100% of Company's capital as mentioned in article 13.3.1 of Shareholder's Agreement then the entire shareholding of the assessee would have gone putting promoters shareholding at stake. Under the said circumstances, the assessee and promoters of ONP had with them very little negotiating power and had to agree for the money demanded by the capital venture investor company for selling its shares in the ONP to assessee and the assessee succumbed under pressure for retaining its property and business built over many years and finally agreed to pay Rs.34.20 crores towards shares held by investor in ONP. As the Bank Of Baroda declined to lend additional money to assessee to purchase shares of ONP, the Saraswat cooperative Bank agreed to lend money for purchase of shares, but, it insisted on transferring assessee’s term loan availed from Bank of Baroda for building construction to Saraswat cooperative bank, in order to secure the entire loan of Rs.43.30 crores advanced to assessee by mortgaging its property.

On bare reading of the above relevant facts and sequence of events we note that the assessee incurred the said interest expenditure in securing furtherance of business under commercial expediency as a prudent business entity. We find direct nexus between the interest expenditure claimed which was incurred towards payment of interest on the loan availed from Bank of Baroda and Saraswat cooperative Bank for the purpose of assessee’s business. We note that the CIT(A) recorded its reasons from para 5.3.4 and held the assessee is entitled to claim deduction on account of interest payment u/sec 36(1) (iii) of the Act by taking support from the decisions of Hon’ble High Court of Bombay in the case of Srishti Securities Pvt. Ltd. (supra) and also Phil Corpn. Ltd. (supra). All that we have to examine is that whether the assessee availed any loan, whether the same has been utilized 1for the purpose of the business and any interest paid to the said loan. Once it is established that the interest paid is for a loan taken for business, then it is an allowable deduction.

We note that the assessee purchased shares held by the investor Venture Capital Company in ONP which was formed in 2007 by Dr. ARP and Dr. AAP of assessee in the ordinary course of its business. There is no dispute about the fact that the said purchase of shares held by investor Venture Capital Company in its own ONP to have control by the assessee. It was of the intention of the assessee, had the assessee not purchased the said 49% of the shares from the investor Venture Capital Company, its control would go into third party competitors and its interest for running the hospital could have been jeopardized. We note that the assessee borrowed a sum of Rs.43.30 crores from Saraswat Co-operative Bank amongst which utilized closure of construction loan account with Bank of Baroda and purchase of shares of investor Venture Capital Company in ONP. Admittedly, the assessing officer allowed deduction of interest expenditure incurred to Bank of Baroda, so, therefore, the assessing officer satisfied with the test of business purpose in respect of interest expenditure incurred to closure of construction account with Bank of Baroda, but, however denied to the interest payment expenditure incurred in purchasing the share of 49% of ONP held by investor capital venture company. Therefore, it is clear that the assessee obtained loan from Saraswat Co-operative Bank, part of which paid towards purchase of shares of its ONP, having purely business purpose to save the assessee’s interest from outside private entities. It is also observed that the purchase of shares of its sister concern was only for saving of assessee’s own business, as a result the assessee took over the entire shareholding of ONP which is its sister concern and avoided interference from third party business operations. Therefore, in order to examine the allowability of interest expenditure on funds borrowed, when the part of such borrowed funds utilized for purchasing of shares in ONP, the interest paid by the assessee on the amount borrowed for purchasing of such shares of its managed company, in our opinion, is allowable deduction. We find the funds borrowed by the assessee from the Saraswat Cooperative Bank were utilized for the purpose of business and the interest paid thereon would constitute an allowable deduction. There is no diversion of funds for non- business purpose and no finding or allegation from assessing officer to that effect. The assessee utilized borrowed funds for its own business, therefore, assessee is entitled to claim deduction on account of interest expenditure and we find no infirmity in the order of CIT(A) in deleting the disallowance of Rs.1,42,91,085/- made by the Assessing Officer on account of interest expenditure. Thus, the order of CIT(A) is justified. Ground No. 1 raised by the appellant-revenue is dismissed.

Ground No. 2 raised by the appellant-revenue challenging the action of CIT(A) in deleting the addition made on account of processing fee Rs.42,94,017/- paid to banking institutions.

We find the CIT(A) deleted the said addition by recording its reasons taking into consideration the relief granted to the assessee on account of interest payment. According to CIT(A) when the loans availed from Bank of Baroda and Saraswat Bank were utilized for the purpose of business, the assessee is entitled to claim deduction on account of processing fee as business expenditure. The relevant part at para 5.5.1 of impugned order is reproduced here-in-below : “5.5.1. Here the AO is referring to the para 4(a) of the assessment order wherein it is mentioned that a loan of Rs.43.30 crores was taken from Saraswat Bank. Out of Rs.43.30 crores, an amount of Rs.22.79 crores was used for purchase of shares of Oyster and Peal Hospital Pvt. Ltd. The remaining amount of loan of Rs.20.51 crores (43.30 cr. Minus 22.79 cr.) taken form Saraswat Bank was used for repayment of the term loan taken from bank of Baroda. From the records, it is seen that originally in the year 2006-07, the appellant company borrowed from Corporation Bank for the construction of hospital building, afterwards this loan was shifted to Bank of Baroda which offered lower rate of interest and extended loan repayment period. Later on, the appellant replaced this loan with Saraswat Bank in F.Y. 2010-11 relevant to AY 2011-12 (the year under consideration) to gain more extended repayment period and lower rate of interest and repaid the loan borrowed from Bank of Baroda. It is an normal in business to replace the high cost loan by low cost loan. So, it cannot be said that the loan which was taken from Saraswat bank was not utilized for business purpose. The appellant used a part of it to repay an earlier business loan taken from Bank of Baroda. Further, the part of loan taken from Saraswat bank, which was used to purchase shares of Oyster & Pearl Hospitals Pvt. Ltd. has already been held as being utilized for the purpose of business of the appellant. Thus, once it is held that the loans taken from Bank of Baroda and from Saraswat Bank were utilized for the purpose of the business of the appellant, the loan processing fees paid to both the bank also becomes allowable business expense. Addition of Rs.42,94,017/- is deleted. Accordingly, Ground No. 1(d) of the appellant is ALLOWED.”

In view of our decision on ground No. 1, where we confirmed the order of CIT-A in holding the expenditure on account of interest payment on loans availed from bank for business purpose is allowable deduction, therefore, we find no infirmity in the order of CIT(A) in holding the assessee is entitled to claim deduction on account of processing fees. Thus, we agree with the reasons recorded by the CIT(A) in para 5.5.1 in impugned order and it is justified. Thus, ground No. 2 raised by the appellant- revenue is dismissed.