ORDER

Laliet Kumar, Judicial Member.- All the above appeals have been filed by the Assessee against the respective orders of Ld. CIT(A) for A.Y’s 2009-10 to 2011-12.

2. Since common issues are involved in all the above appeals and werehared together so these are being disposed off by this consolidated order.

3. We shall take up the appeal in ITA No. 1184/Chd/2012 for A.Y. 2009-10 as a lead case for discussion.

4. The present appeal arises out of the order passed by the Ld. Commissioner of Income Tax (Appeals), Chandigarh dated 16.08.2012 for the assessment year 2009-10.

5. In the present appeal Assessee has raised the following grounds:

1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of proportionate interest on interest free advances to M/s Em Pee Motors Limited(Auto-Division), Em Pee Motors Limited(PP) and M/s Gupta Global Exim (P) Limited which is arbitrary and unjustified.

2. That the Ld. Commissioner of Income Tax (Appeals) has erred in not appreciating the business exigencies and commercial expediency in respect of the afore mentioned advances in the correct perspective and as such the order passed is arbitrary and unjustified.

3. That the Ld. Commissioner of Income Tax(Appeals) has further erred in sustaining an addition of Rs.1,90,004/- out of total addition of Rs.8,44,440/- made by applying the proviso to Section 36(1)(iii) for allegedly not putting to use certain assets which is arbitrary and unjustified.

4. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well as on facts in upholding the addition of Rs.8,62,278/- for alleged non deduction of tax on interest paid to NBFCs and thereafter applying the provisions of section 40(a)(ia) of the Act which is illegal, arbitrary & unjustified.

5. That without prejudice to the above, for argument sake, it is taken that provisions of section 40(a)(ia) are attracted, the said section is applicable only to payments which are payable and not the payments which have been paid off during the year and as such the addition made of the entire payment made is unwarranted and unjustified.

6. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of interest under section 234-A & 234-B of the Act which is not chargeable in the facts of the case.

7. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.

5. 1 Assessee has also raised an additional ground in this appeal which read as under:

” That in the facts and circumstances of the case, the appellant be allowed to claim the installment of conversion charges of Rs. 1,58,87,005/- and interest of Rs. 1,40,67,679/- on conversion charges paid to Chandigarh Administration during the year as Revenue Expenditure being incurred in due course of appellant’s business.”

6. Briefly, the facts of the case, as emanating from the assessment order and the appellate order placed on record , reveal that the assessee is engaged in the business of automobile dealership and during the year had raised multiple claims which were disallowed or partly disallowed by the Assessing Officer.

7. The Ground No. 1& 2 pertains to the disallowance of proportionate interest attributable to interest-free advances made to sister concerns, namely M/s Em Pee Motors Ltd. (Auto Division), M/s Em Pee Motors Ltd. (PP) and M/s Gupta Global Exim (P) Ltd. The Assessing Officer observed that the assessee had borrowed funds on which substantial interest was paid, whereas interest-free advances were extended without establishing any nexus with business purposes. In the absence of any satisfactory explanation during the assessment proceedings, proportionate interest was disallowed by placing reliance on the judgment of the Hon’ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd.

8. The Ld. CIT(A), after examining the submissions of the assessee, recorded a finding that the advances to the aforesaid concerns were not supported by any demonstrable business expediency and appeared to have been made on account of relationship considerations. The explanation furnished was either not made before the Assessing Officer or was unsupported by verifiable evidence.

9. The Ld. AR submitted that the advances were made out of commercial expediency and in furtherance of business interests of the assessee. It was contended that the assessee had business dealings with the said concerns and the advances were necessitated by business requirements, and therefore, no disallowance of interest was warranted in view of settled judicial precedents including the principle laid down in S.A. Builders. It was further argued that the assessee had sufficient own funds and no direct nexus between borrowed funds and advances had been established by the Assessing Officer.

10. Per contra, the Ld. DR strongly supported the orders of the lower authorities and submitted that the assessee had failed to demonstrate any business exigency for making such interest-free advances. It was contended that the advances were made to related concerns without any commercial justification and the ratio of the Hon’ble Punjab & Haryana High Court in Abhishek Industries Ltd. squarely applied. The DR emphasized that the burden to prove commercial expediency lies upon the assessee, which remained undischarged.

11. We have heard the rival contention of the parties and perused the material available on the record. We find that the assessee has failed to establish a direct nexus between the borrowed funds and business purpose of such advances. In view of the settled legal position that interest on borrowed funds diverted for non-business purposes is liable to be disallowed, we do not find any infirmity in the order of the Ld. CIT(A) in sustaining the disallowance. Accordingly, the grounds raised in this regard are dismissed.

12. Ground No. 3 relates to disallowance under the proviso to section 36(1)(iii) on account of interest attributable to capital work-in-progress.

13. The Ld. AR submitted that no specific borrowed funds were utilized for the acquisition of such assets and that the assessee had sufficient internal accruals. It was further contended that the assessee had already disallowed a substantial portion of the interest suo motu and, therefore, no further disallowance was called for.

14. The Ld. DR, on the other hand, relied upon the findings of the Assessing Officer and the Ld. CIT(A) and submitted that once funds are utilised for the acquisition of assets not put to use, the proviso to section 36(1)(iii) is clearly attracted, irrespective of whether funds are mixed or separately identifiable. It was argued that the concept of “common kitty” as laid down in Abhishek Industries Ltd. applies and proportionate disallowance is justified.

15. We have heard the rival contention of the parties and perused the material available on the record. We find that the Ld. CIT(A) has already granted relief, subject to verification of the assessee’s claim of suo motu disallowance. The legal position is clear that interest attributable to assets not put to use is to be capitalised. We, therefore, remand Ground No. 3 to the file of the Assessing Officer for proper verification and passing the appropriate order after considering the submission of the assessee.

16. Ground No. 4 & 5 relates to disallowance under section 40(a)(ia) on account of non-deduction of tax at source on interest paid to NBFCs.

17. The Ld. AR submitted that the provisions of section 40(a)(ia) are applicable only to amounts “payable” at the end of the year and not to amounts already “paid” during the year. Reliance was placed on the decision of the Special Bench in the case of Merilyn Shipping and other supporting judicial precedents. It was thus contended that since the amounts had already been paid during the year, no disallowance could be made. It was further submitted that the NBFC have shown the interest paid by the assessee in their return of income and therefore the disallowance made is without any basis. Accordingly, this issue is required to be decided in favour of the assessee.

18. The Ld. DR, however, strongly opposed the contention and submitted that the interpretation sought by the assessee defeats the very purpose of the provision, which is to enforce compliance of TDS provisions. It was argued that the obligation to deduct tax arises at the time of credit or payment and failure to do so attracts disallowance irrespective of whether the amount remains payable at year end or not.

19. We have heard the rival contentions of the parties and perused the material available on record. We find ourselves in agreement with the reasoning given by the Ld. CIT(A). The interpretation that restricts the applicability of section 40(a)(ia) only to amounts outstanding as at the end of the year leads to unintended and anomalous results and has not received consistent judicial approval. The plea of the assessee that the recipient has deposited the taxes is a new plea raised for the first time before the Tribunal and, in the absence of any supporting material on record, the same cannot be entertained at this stage.

19.1 It is pertinent to note that the controversy regarding the scope of the expression “payable” used in section 40(a)(ia) now stands settled by the judgment of the Hon’ble Supreme Court in the case of Palam Gas Service v. CIT 394 ITR 300 (SC) wherein the Hon’ble Apex Court has categorically held that the provisions of section 40(a)(ia) are applicable not only to amounts which remain payable at the end of the year but also to amounts which have been actually paid during the year without deduction of tax at source. The Hon’ble Supreme Court, after considering the scheme of Chapter XVII-B and the object of introducing section 40(a)(ia), observed that the obligation to deduct tax at source arises at the time of credit of income or payment thereof, whichever is earlier, and there is nothing in the provision to restrict its applicability only to amounts payable as on the year end. It was further held that the interpretation adopted by the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports does not lay down the correct law.

19.2 Thus, the ratio laid down by the Hon’ble Supreme Court clearly negates the contention of the assessee and affirms that disallowance under section 40(a)(ia) would apply irrespective of whether the expenditure has been paid or remains payable during the relevant previous year.

19.3 Respectfully following the aforesaid judgment of the Hon’ble Supreme Court, we uphold the disallowance made under section 40(a)(ia). Accordingly, ground No. 4 & 5 of the appeal are dismissed

20. The additonal ground raised by the assessee relates to the claim of installment of conversion charges amounting to Rs. 1,58,87,005/- and interest thereon amounting to Rs. 1,40,67,679/- paid to the Chandigarh Administration for conversion of land use from industrial to commercial. The contention of the assessee is that such expenditure was incurred out of business necessity to continue its operations and, therefore, should be allowed as revenue expenditure.

21. The contention of the Ld. AR and Ld. DR in respect of this issue were considered in the bunch of appeals in the case of Joshi Automotive (P.) Ltd. v. Asstt. CIT [IT Appeal No. 109 (Chd.) of 2016, dated 20-4-2016] wherein we have held as under:

7. We have given our thoughtful consideration to the rival submissions and the judicial precedents relied upon. There is no quarrel with the settled legal proposition laid down by the Hon’ble Supreme Court in National Thermal Power Co. Ltd. (supra) that the Tribunal has wide powers to entertain a new ground, provided the same is a pure question of law arising from the facts already on record and having a bearing on the tax liability of the assessee. Similarly, the decision in Oswal Woollen Mills Ltd. (supra) also supports the proposition that a claim can be entertained where sufficient material is already available on record.

7.1 However, the applicability of the aforesaid ratio is contingent upon the condition that the additional ground is purely legal and does not require fresh investigation into facts. In the present case, we find that the issue sought to be raised by the assessee is not merely a legal issue simpliciter but is a mixed question of law and fact. The determination of whether the conversion charges and interest thereon are capital or revenue in nature necessarily requires examination of various factual aspects such as the nature and purpose of payment, the rights acquired by the assessee, and whether the expenditure results in an enduring benefit. These aspects were neither examined by the Assessing Officer nor by the Ld. CIT(A), as the assessee itself had treated the expenditure as capital and claimed depreciation thereon.

7.2 Further, we find that the assessee has, in its return of income as well as during the course of assessment and appellate proceedings, consistently taken a stand that the impugned expenditure is capital in nature. It is only at a later stage, after filing of the appeal before the Tribunal on 17.02.2016, that the assessee has sought to change its position by filing the present application on 07.05.2018. In our considered view, permitting such a change would amount to allowing the assessee to approbate and reprobate, which is not permissible in law.

7.3 Coming to the other decisions relied upon by the assessee, we find that the same are distinguishable on facts. In Khanna Watches Ltd. and Atlas Cycle Industries Ltd., the additional grounds were admitted as the relevant facts were already on record and no new factual investigation was required. Similarly, in Indian Hotels Co. Ltd., the Tribunal permitted substitution of a ground where the broad issue regarding allowability of expenditure was already under consideration and all material facts were available on record.

7.4 In contrast, in the present case, the assessee had never claimed the expenditure as revenue before the lower authorities and the authorities below had no occasion to examine the claim from that perspective. Therefore, the admission of the additional grounds would necessitate fresh examination of facts, which is beyond the scope of a pure legal issue.

7.5 As regards the reliance placed on the decision in Micron Instrument Pvt. Ltd., we note that in that case the Tribunal allowed the claim considering that the asset was already in existence and the business was being carried on from the same premises, and the nature of expenditure was apparent from the record. However, in the present case, the factual matrix relating to the nature of conversion charges, the rights acquired, and their impact on the capital structure has not been examined by the lower authorities, and hence the said decision does not advance the case of the assessee.

7.6 We also note that there is a considerable delay in raising the additional grounds. No satisfactory explanation has been brought on record as to why such claim, which is now sought to be raised, was not made either in the return of income or before the Assessing Officer or the Ld. CIT(A). The conduct of the assessee, in our view, indicates that the present claim is an afterthought.

7.7 In view of the foregoing discussion, we are of the considered opinion that the additional grounds sought to be raised by the assessee are not purely legal in nature, but involve investigation into fresh facts and also amount to taking a contradictory stand from that taken earlier. Accordingly, the same are not maintainable.

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13. We have heard the rival submissions and perused the material available on record. The issue before us is whether the assessee is entitled to claim depreciation on conversion charges paid for the change of land use in respect of land not owned by it but taken on lease. The undisputed factual position emerging from the record is that the Chandigarh Administration had notified the policy for conversion of industrial land into commercial use on 11.07.2005. Thereafter, the Letter of Intent for dealership was issued by Honda Seil Cars India Ltd. on 05.08.2006 in favour of Shri Vikram Joshi of M/s Punjab Packages Pvt. Ltd. Subsequently, the owner company, i.e., M/s Punjab Packages Pvt. Ltd., applied for conversion of land use on 15.09.2006 and the competent authority granted approval for such conversion on 10.10.2006 upon payment of prescribed conversion charges. Thus, both the policy framework and the consequential steps for conversion were set in motion and executed by the land-owning entity itself.

13.1 From the above chronology of events, it is evident that the enabling policy for conversion as well as the approval thereof were already in place and stood crystallised in favour of the landowner prior to the assessee carrying on its business activities from the said premises. The conversion of land use is a right flowing from ownership of land, and the corresponding statutory permissions were admittedly granted to M/s Punjab Packages Pvt. Ltd. The assessee, being only a lessee, cannot derive a depreciable right on such expenditure, which is fundamentally linked to ownership.

13.2 It is a settled proposition of law that no depreciation is allowable on land. In the present case, the impugned conversion charges have been incurred solely for change in the character and permissible use of land. Such expenditure does not bring into existence any independent or identifiable depreciable asset in the hands of the assessee but merely facilitates the use of land. Therefore, the same cannot be regarded as forming part of any depreciable asset eligible for allowance under section 32 of the Act.

13.3 The contention of the assessee regarding commercial expediency or business necessity also does not hold merit in the facts of the present case. The relevant triggering events, namely, the notification of the conversion policy, issuance of Letter of Intent and the application and grant of conversion approval, had all taken place either prior to or independent of the assessee’s business requirements. Therefore, the argument that the expenditure was incurred under business compulsion does not stand.

13.4 We shall now deal with the contention of the assessee based on Explanation 1 to section 32 of the Act. The said Explanation creates a legal fiction whereby, in a case where the assessee carries on business in a building not owned by it but held under a lease or other right of occupancy, any capital expenditure incurred on construction of a structure or on renovation, extension or improvement of such building is to be treated as a building owned by the assessee for the limited purpose of allowing depreciation.

13.5 However, for invoking the said provision, the sine qua non is that the expenditure must be incurred on a “building” or on any work in or in relation to the building by way of construction, renovation, extension or improvement. In the present case, the impugned expenditure on conversion charges is not in respect of any building or structure, but relates exclusively to change of land use from industrial to commercial purposes. Such conversion is a statutory permission attached to the land itself and does not partake the character of construction or improvement of a building.

13.6 We find that the building in question was admittedly constructed subsequent to the notification of the conversion policy and the conversion charges were not incurred for bringing into existence or improving any superstructure, but only to alter the permissible use of the land. Therefore, the essential condition for applicability of Explanation 1 to section 32, namely nexus with a building or structure, is clearly absent in the facts of the present case.

13.7 Further, the legal fiction created under Explanation 1 cannot be extended beyond its clear mandate so as to include expenditure relating to land or rights in land. It is trite law that a deeming provision has to be construed strictly and cannot be enlarged to cover situations not contemplated by the legislature. Since land is not a depreciable asset and the impugned expenditure is intrinsically linked to land, the same cannot be brought within the ambit of Explanation 1.In view of the above, we hold that the reliance placed by the assessee on Explanation 1 to section 32 is misconceived and does not entitle it to claim depreciation on the conversion charges. Accordingly, this contention of the assessee is rejected.

13.8 We further find that the reliance placed by the assessee on the deeming fiction contained in Explanation 1 to section 32 is also liable to be tested on the well-settled principles governing interpretation of such provisions. It is a settled position of law that a deeming provision has to be construed strictly and cannot be extended beyond the purpose for which it has been enacted.

13.9 We have considered the scope and import of the deeming provision contained in Explanation 1 to section 32 of the Act. It is a settled position of law that a deeming provision creates a legal fiction whereby a state of affairs which does not exist in reality is assumed to exist for a limited statutory purpose, and the consequences flowing from such assumed state of affairs are to be given effect to. In the context of Explanation 1 to section 32, the legislature has created a limited legal fiction to the effect that where an assessee, not being the owner of a building but holding it under a lease or other right of occupancy, incurs capital expenditure on construction, renovation, extension or improvement of such building, the same shall be treated as a building owned by the assessee for the purpose of allowing depreciation. The object of the said provision is thus to remove the disability arising on account of the absence of legal ownership and to allow depreciation where the assessee has, in substance, made an investment in a business asset in the nature of a building. However, it is equally well settled that such deeming fiction has to be construed strictly and cannot be extended beyond the purpose for which it has been enacted. A legal fiction, though required to be carried to its logical conclusion, cannot be enlarged by importing another fiction or by extending it to situations not contemplated by the legislature.

13.10 Applying the aforesaid principles, it is clear that Explanation 1 to section 32 is confined in its operation to capital expenditure incurred on a “building” or work in relation thereto. The fiction cannot be extended to cover expenditure which is not relatable to a building or structure. In particular, expenditure which is intrinsically connected with land or with rights in land cannot be brought within the ambit of the said provision, as land is not a depreciable asset under the scheme of the Act.

13.11 Further, the deeming provision does not create a new category of depreciable assets but only treats specified capital expenditure on leased premises as a deemed building for the limited purpose of depreciation. The scope of the fiction is thus both specific and restricted, and cannot be invoked to convert every capital outlay connected with premises into a depreciable asset.

13.12 In view of the above settled legal position, the applicability of Explanation 1 to section 32 has to be tested strictly within the confines of its language and purpose, and any attempt to extend the said fiction beyond expenditure on building or structure is not permissible in law.

14. We shall now deal with the judicial precedents relied upon by the assessee. The assessee has placed reliance on various decisions including CIT v. Hindustan Times Ltd., Raza Buland Sugar Co. Ltd. v. CIT and Cooper Engineering Ltd. v. CIT to contend that ownership is not a sine qua non for claiming depreciation. There is no quarrel with the proposition laid down in the said decisions. However, on careful perusal, we find that in all those cases, the assessee had incurred expenditure on tangible depreciable assets, such as buildings, plant, or machinery, which were used for business purposes, and the dispute was only with regard to legal ownership. The Courts, in those circumstances, held that beneficial ownership coupled with user for business purposes would entitle the assessee to depreciation.

14.1 The facts of the present case stand on a completely different footing. Here, the expenditure has not resulted in the creation of any tangible depreciable asset in the hands of the assessee. The conversion charges have been paid for change of land use, which is a right attached to ownership of land. As already held hereinabove, land is not a depreciable asset and no depreciation can be claimed on expenditure relatable to land. Therefore, the ratio of the aforesaid decisions, which deal with depreciable assets, cannot be extended to the present case.

14.2 The assessee has also placed reliance on the decision of the Co-ordinate Bench of the Tribunal in the case of Chandigarh Bottling Co. Pvt. Ltd. in ITA No. 475/Chd/2019 dated 18.08.2022. On perusal of the said decision, we find that the same is clearly distinguishable on facts. In that case, the assessee was either the owner of the land or had rights akin to ownership and the expenditure in question was directly relatable to the business asset owned/controlled by the assessee. It was in those peculiar facts that the Tribunal allowed the claim.

14.3 In the present case, however, the assessee is admittedly not the owner of the land and the conversion permission has been granted to the land-owning entity, i.e., M/s Punjab Packages Pvt. Ltd. The expenditure incurred does not result in creation of any depreciable asset in the hands of the assessee but merely facilitates use of land belonging to another entity. Therefore, the factual foundation on which the decision in the case of Chandigarh Bottling Co. Pvt. Ltd. was rendered is absent in the present case.

15. We have carefully considered the reliance placed by the Ld. AR on the decision of the Co-ordinate Bench in the case of M/s Chandigarh Bottling Co. in ITA Nos. 475 & 476/Chd/2019 dated 18.08.2022. On a perusal of the said order, we find that the issue before the Tribunal therein was whether the conversion charges paid for change of land use were allowable as revenue expenditure under section 37(1) of the Act. The Tribunal, on the peculiar facts of that case, held that the expenditure was incurred for the removal of business restrictions and for the retention of possession of the plot and, therefore, allowable as revenue expenditure.

15.1 However, the facts of the present case are materially distinguishable. In the case of Chandigarh Bottling Co., it was an admitted position that the assessee itself was the allottee/owner of the industrial plot and had been carrying on business on the said plot since 1969. The conversion of land use was necessitated due to a change in Government policy and was thrust upon the assessee to avoid eviction and to continue its existing business. The Tribunal, therefore, held that the payment was for the removal of a restriction and did not result in the acquisition of any capital asset.

15.2 In contradistinction, in the present case, the assessee is admittedly not the owner of the land but only a lessee. The conversion permission has been applied for and granted to M/s Punjab Packages Pvt. Ltd., the land-owning entity. The conversion charges, therefore, are intrinsically linked to ownership rights in land and not to any independent business right of the assessee. Thus, the foundational fact which weighed with the Tribunal in Chandigarh Bottling Co.—namely ownership and pre-existing business rights over the land—is absent in the present case.

15.3 Further, in Chandigarh Bottling Co., the Tribunal was concerned with the allowability of the expenditure as revenue expenditure, whereas in the present case, the assessee has itself treated the expenditure as capital in nature and has claimed depreciation thereon. Once the assessee itself proceeds on the footing that the expenditure is capital, the question before us is confined to whether such capitalised expenditure results in a depreciable asset under section 32, which, for the reasons already recorded, is answered in the negative.

15.4 We also note that in Chandigarh Bottling Co., the Tribunal proceeded on the premise that no capital asset had come into existence and that the payment merely enabled continuation of business by removing restrictions. However, the important aspect, i.e., the conversion of land use, is not merely the removal of a business impediment but is a statutory alteration in the character of land, which vests as a right in the owner and not in the lessee, and was neither discussed nor examined, having reference to the terms of the scheme. Therefore, the nature and legal character of the expenditure itself stand on a different footing.

15.5 Moreover, in the present case, as already discussed, the chronology of events shows that the policy for conversion was notified on 11.07.2005, the Letter of Intent was issued on 05.08.2006, the application for conversion was made by the owner on 15.09.2006 and approval was granted on 10.10.2006. Thus, the conversion was embedded in the ownership rights of the land and cannot be equated with a case where an assessee is compelled to incur expenditure merely to remove operational restrictions in an already existing business setup.

15.6 In view of the above distinguishing features, we are of the considered view that the ratio laid down in the case of Chandigarh Bottling Co. is not applicable to the facts of the present case. The reliance placed thereon by the assessee is, therefore, misplaced and is hereby rejected.

15.7 We have also considered the alternative contention of the assessee that the interest component comprised in the instalments of conversion charges be allowed as a deductible expenditure. However, we find ourselves unable to accept the said plea. It is trite law that for an expenditure to qualify for deduction either under section 37(1) or under section 36(1)(iii) of the Act, the same must be incurred wholly and exclusively for the purposes of the business of the assessee or, in the case of section 36(1)(iii), for the purposes of acquisition of a capital asset of the assessee. In the present case, as discussed hereinabove, the underlying expenditure itself does not pertain to any asset owned by the assessee and is intrinsically linked to land belonging to another entity. Consequently, the interest paid on such instalments cannot be said to have been incurred for acquisition of a capital asset of the assessee so as to fall within the ambit of section 36(1)(iii) of the Act. Further, the assessee has also failed to demonstrate that the said interest expenditure was incurred wholly and exclusively for the purposes of its business so as to qualify for deduction under section 37(1) of the Act. The nexus between the impugned expenditure and the business operations of the assessee is not established in a manner contemplated under the provisions of the Act.

16. In view of the foregoing, we find no merit in the alternative claim of the assessee. Accordingly, the same is rejected. Consequently, all the grounds raised by the assessee, including the additional grounds, stand dismissed.

22. We are of the considered opinion that the additional ground raised by the assessee cannot be admitted, as the same does not satisfy the conditions prescribed for admission of such grounds. However, notwithstanding the nonadmission of the additional ground, we have also examined the issue on merits in the case of M/s Joshi Automotive Pvt. Ltd. & Othrs v. Asst. CIT & Othrs (supra) and upon such consideration, we find no merit in the claim of the assessee. Accordingly, the issue is decided against the assessee on both the question of admission of the additional ground and the merits, by respectfully following the decision of the Coordinate Bench in Joshi Motors (supra).

23. In the result, the Grounds Nos 1, 2, 4, 5 and additional grounds are dismissed, and the Ground No.3 is remanded back to the file of the Assessing Officer.

24. Both the parties fairly submitted that the facts and circumstances of other two appeals i.e ITA No. 792/Chd/2013 and 412/ Chd/2015 are exactly identical to the Appeal in ITA No. 1184/Chd/2012 and similar contentions raised therein may be considered, therefore, our findings and directions given in ITA No. 1184/Chd/2012 shall apply mutatis mutandis to these two appeals as well.

25. Now we shall deal with the appeal in ITA No. 792/Chd/2013 for A.Y. 201011 wherein Assessee has raised the following grounds:

1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of proportionate interest on alleged interest free advance to M/s Gupta Global Exim (P) Limited which is arbitrary and unjustified.

2. That the Ld. Commissioner of Income tax(Appeals) has erred in not appreciating the business exigencies and commercial expediency in respect of the afore mentioned advance in the correct perspective and as such the order passed is arbitrary and unjustified.

3. That the Ld. Commissioner of Income Tax(Appeals) has further erred in enhancing the addition to Rs. 2,73,000/- as against Rs.1,51,514/- made by applying the proviso to Section 36(1)(iii) for allegedly not putting to use certain assets which is arbitrary and unjustified.

4. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well as on facts in upholding the addition of Rs.11,79,520/- for alleged non deduction of tax on interest paid to NBFCs and thereafter applying the provisions of section 40(a)(ia) of the Act which is illegal, arbitrary & unjustified.

5. That without prejudice to the above, for argument sake, it is taken that provisions of section 40(a)(ia) are attracted, the said section is applicable only to payments which are payable and not the payments which have been paid off during the year and as such the addition made of the entire payment made is unwarranted and unjustified.

6. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of interest under section 234-A & 234-B of the Act which is not chargeable in the facts of the case.

7. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.

25 .1 Assessee has also raised an additional ground in this appeal which read as under:

” That in the facts and circumstances of the case, the appellant be allowed to claim the installment of conversion charges of Rs. 1,86,16,493/- and interest of Rs. 1,13,38,192/- on conversion charges paid to Chandigarh Administration during the year as Revenue Expenditure being incurred in due course of appellant’s busness.”

26. The facts as well as the grounds raised before us in the present appeal bearing number 792/Chd/2013 are substantially similar to those adjudicated by us in ITA No. 1184/Chd/2012. Accordingly, in the absence of any distinguishing feature having been pointed out, we respectfully follow our decision rendered therein, which shall apply mutatis mutandis to the present appeal. Consequently, Ground Nos. 1, 2, 4, 5 and the additional grounds are dismissed, whereas Ground No. 3 is restored to the file of the Assessing Officer for fresh adjudication in accordance with law.

27. Now we shall deal with the appeal in ITA No. 412/Chd/2015 for A.Y. 201112 wherein Assessee has raised the following grounds:

1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the addition of Rs.17,77,022/- for alleged non deduction of tax on interest paid to NBFCs and thereafter applying the provisions of section 40(a)(ia) of the Act which is illegal, arbitrary & unjustified.

2. That without prejudice to the above, for argument sake, it is taken that provisions of section 40(a)(ia) are attracted, the said section is applicable only to payments which are payable and not the payments which have been paid off during the year and as such the addition made of the entire payment made is unwarranted and unjustified.

3. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well as on facts in upholding the disallowance of proportionate interest on alleged interest free advance to M/s Gupta Global Exim (P) Limited which is arbitrary and unjustified.

4. That the Ld. Commissioner of Income tax(Appeals) has erred in not appreciating the business exigencies and commercial expediency in respect of the afore mentioned advance in the correct perspective and as such the order passed is arbitrary and unjustified.

5. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the disallowance of proportionate interest of Rs.6,51,563/-on alleged interest free advance to M/s Empee Motors Auto Limited which is arbitrary and unjustified.

6. That the Ld. Commissioner of Income tax(Appeals) has erred in not appreciating the business exigencies and commercial expediency in respect of the afore mentioned advance in the correct perspective and as such the order passed is arbitrary and unjustified.

7. That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the addition of Rs.2,99,54,685/- disallowing the payment made to the Estate Office for change of land use treating it to be capital expenditure which is arbitrary and unjustified.

8. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of interest under section 234-A & 234-B of the Act which is not chargeable in the facts of the case.

9. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.

28. The facts as well as the grounds raised in the present appeal appeal bearing number 412/Chd/ 2015 are identical to those adjudicated by us in ITA No. 1184/Chd/2012. Therefore, for the sake of consistency and in the absence of any distinguishing feature having been brought to our notice, we respectfully follow our decision rendered in the aforesaid appeal. Accordingly, the reasoning and conclusions arrived at therein shall apply mutatis mutandis to the present appeal as well, and Ground Nos. 1 to 7 raised by the assessee are dismissed.

29. In the result, all the above appeals are partly allowed.