M/S. Arihant Capital Markets Ltd., Indore V. The ACIT, CENTRAL-1, Indore

CO 17/Ind/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3796 (ITAT-INDORE)
• Duration Of Justice: 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: KAPIL SHAH
• Keywords: Business income; Business expenditure; Earning of tax free income
• Section: 143(3); 142(1); 14A; 37

Judgement Text

ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 1 IN THE INCOME TAX APPELLATE TRIBU NAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.370/IND/2017 ASSESSMENT YEAR: 2013-14 ACIT CIRCLE 1, INDORE ::: APPELLANT VS M/S ARIHANT CAPITAL MARKETS LTD. INDORE ::: RESPONDENT C.O. NO. 17/IND/2018 ARISING OUT OF ITA NO. 370/IND2017 M/S ARIHANT CAPITAL MARKETS LTD. INDORE ::: OBJECTOR VS ACIT CENTRAL 1 INDORE ::: RESPONDENT REVENUE BY SHRI K.G. GOYAL ASSESSEE BY SHRI AJAY TULSIYAN & SHRI KAPIL SHAH DATE OF HEARING 18.5.2018 DATE OF PRONOUNCEMENT 31.5.2018 ORDER PER MANISH BORAD, AM THE REVENUE HAS FILED THE APPEAL WHEREAS THE ASSESS EE HAS FILED THE CROSS OBJECTION RELATING TO THE ASSESSMEN T YEAR 2013-14 AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 2 (APPEALS)-I, INDORE, DATED 28.2.2017 ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT DATED 15.3.2016 FRAMED BY THE DCIT 1(1), INDORE. 2. IN ITS APPEAL, THE REVENUE HAS TAKEN THE FO LLOWING GROUNDS OF APPEAL :- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN RESTRICTING THE DISALLOWANCE MADE BY A.O. U/S 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF THE INCOME TAX RULES TO 0.05% WITHOUT APPRECIATING THE FACTS A ND EVIDENCES BROUGHT INTO LIGHT BY THE A.O. DURING ASS ESSMENT PROCEEDINGS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF RS. 1,62,098/- ON ACCOUNT OF DISALLOWANCE OF PENALT Y AND RS.15,508/- ON ACCOUNT OF DISALLOWANCE OF PRIOR PER IOD EXPENSES WITHOUT APPRECIATING THE FACTS AND EVIDENC ES BROUGHT INTO LIGHT BY THE A.O. DURING ASSESSMENT PROCEEDING S. IN CROSS OBJECTION THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS :- ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 3 (I) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION U/S 14A TO THE EXTENT OF RS. 5,77,013/-. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE CONFIRM ED IS WRONG AND UNCALLED FOR. (II) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS. 1,99,500/- OUT OF PRIOR PERIOD EXPENSES MADE BY THE LEARNED A.O. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE CONFIRMED IS WRONG AND UNCALLED FOR. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE REQUESTED FOR NOT PRESSING BOTH THE GROUNDS RAISED IN CROSS O BJECTIONS. THE LEARNED DR HAS NO OBJECTION. WE, THEREFORE, DISMISS THE GROUNDS RAISED IN CROSS OBJECTION OF THE ASSESSEE. 4. NOW WE ARE LEFT WITH THE REVENUES APPEAL. APRO POS GROUND NO. 1 RELATING TO DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D, BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE DECL ARED INCOME OF RS.3,14,87,710/- IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2013-14 ON 26.9.2013. CASE SELECTED FOR SCRUTI NY AND NECESSARY NOTICES U/S 143(2) AND 142(1) OF THE ACT DULY SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER ON GOING THROUGH THE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 4 FINANCIAL STATEMENTS OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENTS IN QUOTED/UNQUOTED SHARES AND ALSO INCU RRED EXPENDITURE ON INTEREST. HOWEVER, NO EXPENDITURE H AS BEEN DISALLOWED U/S 14A OF THE ACT. THE ASSESSING OFFICE R ACCORDINGLY APPLYING THE METHOD PROVIDED UNDER RULE 8D OF THE I NCOME TAX RULES READ WITH SECTION 14A OF THE ACT MADE DISALLO WANCE OF RS. 52,26,627/- WHICH COMPRISED OF INTEREST DISALLOWANC E OF RS. 42,64,143/- AND DISALLOWANCE FOR ADMINISTRATIVE EXP ENSES OF RS. 9,62,484/-. 5. AGGRIEVED WITH THE FINDINGS OF THE ASSESSING OFF ICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) AND MAJORLY SUCCEEDED AS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED TOTAL DISALLOWANCE FOR INTEREST EXPENDITURE AND SUSTAINED ADMINISTRATIVE EXPENDITUR E DISALLOWANCE OF RS. 5,77,013/-. 6. NOW THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR VEHEMENTLY ARGUED SUPPORTING THE ORDER OF THE ASSESSING OFFICER AND FURTHER HEAVILY RELIED UPON T HE JUDGMENT OF ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 5 THE HON'BLE APEX COURT IN THE CASE OF MAXOPP INVEST MENT LIMITED VS. CIT; 101 CCH 0092. 7. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND FURTHER ADDED THAT NO EXPENDITURE WAS INCURRED IN R ELATION TO EARNING EXEMPT INCOME. THE INVESTMENTS WERE MADE OU T OF THE OWN CAPITAL AND RESERVES AND THE ASSESSEE HAS NO EFFECT IVE BORROWING ON THE CONTRARY IT HAD HUGE BANK BALANCE. THE ASSESSEE HAS EARNED NET INTEREST INCOME AT THE CLOSE OF THE YEAR AND THERE IS A DIRECT NEXUS OF INTEREST EXPENDITURE WITH THE EARNING OF TAXABLE INCOME. IT WAS ALSO SUBMITTED THAT MAJOR INVESTMENTS WERE BROUGHT FORWARD FROM EARLIER YEARS AND THEY MAJORLY INCLUDED UNLISTED SH ARES OF SUBSIDIARY COMPANIES WHICH NEVER YIELDED ANY INCOME . THE LEARNED COUNSEL FOR THE ASSESSEE ALSO DIFFERENTIATED THE FA CTS OF THE ASSESSEES CASE WITH THE FACTS EMINATING IN THE CAS E OF MAXOPP INVESTMENT LTD. (SUPRA) WHICH MAINLY FOCUSED ON THE POINT THAT IN THE CASE OF MAXOPP INVESTMENT LTD. (SUPRA) CASE, TH E INVESTMENTS WERE MADE OUT OF THE BORROWED FUNDS ON WHICH INTERE ST EXPENDITURE WAS INCURRED WHEREAS IN THE CASE OF THE ASSESSEE IN VESTMENTS WERE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 6 MADE OUT OF OWN CAPITAL AND RESERVES AND, HENCE, NO INTEREST WAS INCURRED IN RESPECT OF SUCH INVESTMENT. RELIANCE WA S PLACED ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. RELIANCE UTILITIES & POWER LIMITED; 313 ITR 340 AND ANOTHER JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F HDFC BANK LTD.; 366 ITR 505. THE LEARNED COUNSEL FOR THE ASSE SSEE FURTHER PLACED RELIANCE ON THE FOLLOWING JUDGMENTS :- A FOR THE PROPOSITION THAT IF BOTH FUNDS ARE AVAILABLE WITH THE ASSESSEE THAT IS INTEREST BEARING AND INTEREST FREE , THEN THE PRESUMPTION WOULD ARISE THAT INVESTMENT WOULD BE OUT O F INTEREST FREE FUNDS AVAILABLE WITH THE COMPANY, IF T HE SAME ARE SUFFICIENT TO MEET THE INVESTMENTS . (I) DECISION OF HONORABLE HIGH COURT OF BOMBAY IN THE CA SE OF CIT V/S. M/S. RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 0340 99 104 (II) DECISION OF HONORABLE HIGH COURT OF BOMBAY IN T HE CASE OF CIT V/S HDFC BANK LTD 366 ITR 505 (2014) . 105 109 B WHILE APPORTIONING INTEREST EXPENDITURE UNDER RULE 8D(2)(II), INTEREST EXPENDITURE INCURRED FOR EARNING TAXABLE INCOME SHOULD BE EXCLUDED FROM CONSIDERATION. DECISION OF HONORABLE HIGH COURT OF DELHI IN THE CAS E OF PR CIT VS BHARTI OVERSEAS PVT LTD [TS-5584-HC-2015] (2 016) 237 TAXMAN 0417 (DELHI) 110 116 C ONLY INVESTMENTS YIELDING EXEMPT INCOME OUGHT TO BE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 7 CONSIDERED. THE HONOURABLE DELHI HIGH COURT IN THE CASE OF ACB INDIA LTD V/S ACIT [(2015) 374 ITR 0108 (DEL)] HAS HELD THAT FOR THE PURPOSE OF RULE-8D, ONLY THOSE INVESTMENTS SHALL BE CONSIDERED WHICH HAVE ACTUALLY YIELDED EXEMPT INCOME DURING THE RELEVANT PREVIOUS YEAR. THUS, IT IS NOT THE TOTAL INVESTMENT AT THE BEGINNING OF THE YEAR AND AT THE END OF THE YEAR, WHICH IS TO BE CONSIDERED BUT IT IS THE AVERAG E OF THE VALUE OF INVESTMENTS WHICH HAS GIVEN RISE TO THE INC OME WHICH DOES NOT FORM PART OF THE TOTAL INCOME WHICH IS TO BE CONSIDERED. D IN RESPECT OF THE INVESTMENTS MADE IN UNLISTED SUB SIDIARIES COMPANIES WHICH NEVER GENERATED ANY EXEMPT INCOME FOR THE PROPOSITION THAT WHEN NO EXEMPT INCOME IS EARNE D DISALLOWANCE U/S 14A IS NOT CALLED FOR. DECISION OF HONORABLE HIGH COURT OF DELHI IN THE CA SE OF M/S. CHEMINVEST LIMITED V/S. CIT (2015) 378 ITR 003 3 (DELHI). REVERSING THE DECISION OF THE SPECIAL BENCH OF THE T RIBUNAL IT WAS HELD THAT WHERE NO EXEMPT INCOME HAS BEEN RE CEIVED BY THE ASSESSEE IN THE PREVIOUS YEAR, DISALLOWANCE UN DER SECTION 14A OF THE ACT IS NOT WARRANTED. THE HIGH C OURT HAS FURTHER HELD THAT RELIANCE PLACED BY THE SPECIAL BEN CH ON THE DECISION OF THE SUPREME COURT IN THE CASE OF RAJENDRA PRASAD MOODY WAS MISPLACED IN AS MUCH AS THE SUPRE ME COURT IN THE SAID CASE DEALT WITH THE INTERPRETATION OF SECTION 57(III) OF THE ACT, WHICH IS AN ALLOWANCE PROVISION AND THE SAME WOULD, THEREFORE, NOT APPLY WITH RESPECT TO INTERPRETATION OF SECTION 14A OF THE ACT, WHICH IS FOR COMPUTING DISALLOWANCE OF EXPENDITURE INCURRED IN REL ATION TO EARNING OF EXEMPT INCOME. DECISION OF HONORABLE HIGH COURT OF ALLAHABAD IN TH E CASE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 8 OF CIT V/S. M/S. SHIVAM MOTORS (P) LTD. (2015) 230 TAXMAN 0059 (ALLAHABAD). SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOS ES OF COMPUTING THE TOTAL INCOME UNDER THE CHAPTER, NO DED UCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TO TAL INCOME UNDER THE ACT. HENCE, WHAT SECTION 14A PROVIDES IS T HAT IF THERE IS ANY INCOME WHICH DOES NOT FORM PART OF THE INCOME UN DER THE ACT, THE EXPENDITURE WHICH IS INCURRED FOR EARNING THE IN COME IS NOT AN ALLOWABLE DEDUCTION. FOR THE YEAR IN QUESTION, THE FINDING OF FACT IS THAT THE ASSESSEE HAD NOT EARNED ANY TAX FREE INCOME . HENCE, IN THE ABSENCE OF ANY TAX FREE INCOME, CORRESPONDING EXPENDIT URE COULD NOT BE WORKED OUT FOR DISALLOWANCE U/S 14A. DECISION OF HONORABLE HIGH COURT OF DELHI IN THE CA SE OF CIT V/S. M/S. HOLCIM INDIA P. LTD. (2014) 90 CCH 00 81 DEL HC. RELYING UPON ON THE DECISION RENDERED BY THE PUNJAB AN D HARYANA HIGH COURT IN CIT VS. M/S. LAKHANI MARKETING INCL. ITA NO. 970/2008, IN WHICH THE HONORABLE COURT HAS MADE REFERENCE TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT VS. HERO CYCLES LIMITED, [2010] 323 ITR 518AND C IT VS. WINSOME TEXTILE INDUSTRIES LIMITED, [2009] 319 ITR 20 4 AND HELD THAT SECTION 14A CANNOT BE INVOKED WHEN NO EXE MPT INCOME WAS EARNED. REDINGTON INDIA LTD. V/S ADDL. CIT (2016) 97 CCH 02 19 (CHENNAI) OVERRULING THE CIRCULAR 5 OF 2014 IN RESPECT OF 14A HELD THAT THE PROVISION OF SECTION 14A R.W.R. 8D CANNOT BE MADE APPLICABLE IN A VACUUM I.E. IN THE ABSENCE OF EXEMPT INCOME. 203 208 DECISION OF HONORABLE GUJARAT HIGH COURT IN CIT VS. CORRTECH ENERGY (P.) LTD. [(2015) 372 ITR 0097 (GUJ) E FOR THE PROPOSITION THAT THE DISALLOWANCE IS NOT TENABLE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 9 WHERE THE AO DID NOT RECORDED PROPER SATISFACTION. DECISION OF HONORABLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT CENTRAL II V/S. M/S. REI AGRO LTD. GA NO. 3022 OF 2012 ITAT 161 OF 2013 DATED 23.12.2013. 120 121 DECISION OF HONORABLE ITAT KOLKATTA BENCH IN THE C ASE OF DCIT V/S. M/S. REI AGRO LTD. IN ITA NO. 1811/KOL/20 12 DATED 14.05.2013. 122 133 DECISION OF HONOURABLE HIGH COURT OF PUNJAB & HARYAN A IN THE CASE OF PR. CIT V/S EMPIRE PACKAGE (P) LTD. (20 16) 136 DTR 0342 ( P&H) 134 143 F CIRCULAR NO. 5 OF 2014 DATED 11.02.2014 OVERRULED. REDINGTON INDIA LTD. V/S ADDL. CIT (2016) 97 CCH 02 19 (CHENNAI) 203 208 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD AND HAVE ALSO GONE THROUGH THE JUDGMENTS REFERRED TO AND RELIED UPON BY BOTH THE PARTIES. TH E ISSUE BEFORE US IS WITH REGARD TO DISALLOWANCE U/S 14A WHICH RELATE S TO DISALLOWANCE OF EXPENDITURE INCURRED FOR EARNING EX EMPTED INCOME. THE TOTAL DISALLOWANCE MADE BY THE ASSESSING OFFICE R U/S 14A OF THE ACT OFRS. 52,26,627/- COMPRISED OF TWO ITEMS (I) UNDER RULE 8D(2)(II) INDIRECT INTEREST EXPENSES RS.42,64,143/- (II) UNDER RULE 8D2(III) OTHER EXPENSES RS. 9,62, 484/- ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 10 9. FIRST OF ALL, WE WOULD LIKE TO DEAL WITH THE INT EREST DISALLOWANCE OF RS.42,64,143/-. 10. THE INVESTMENTS HELD BY THE ASSESSEE, AS REFLEC TED IN THE BALANCE SHEET AT PAGE 5 OF THE PAPER BOOK ARE SUMMA RISED AS FOLLOWS :- S.NO. PARTICULARS 31.03.2013 31.03.2012 1. UNQUOTED INVESTMENTS (I) NONCURRENT INVESTMENT(IN SHARES OF STOCK EXCHANGE) 5,05,000 5,05,000 ( II ) IN SHARES OF SUBSIDIARY COMPANIES 7,66,36,480 7,65,31,480 ( III ) IN SHARES OF CO-OPERATIVE BANK 5,000 5,000 TOTAL 7,71,46,480 7,70,41,480 2 INVESTMENT IN QUOTED SHARES 6,37,42,726 12,70,62,695 3 INVESTMENT IN QUOTED UNITS 4,00,00,000 - GRAND TOTAL (1+2+3) 18,08,89,206 20,41,04,175 ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 11 11. THE ASSESSEE EARNED DIVIDEND INCOME OF RS.38,46 ,571/- DURING THE YEAR. TOTAL INTEREST EXPENDITURE INCURRE D DURING THE YEAR IS RS.2,04,36,402/- AND THE INTEREST INCOME FROM FD RS AND OTHER SOURCES IS RS.5,79,73,438/- THEREBY SHOWING NET INT EREST INCOME OF RS. 3,75,37,036/-. THE ASSESSEE HAS ALSO TAKEN WORK ING CAPITAL LOAN ON WHICH INTEREST EXPENDITURE HAS BEEN INCURRE D. THE ABOVE CHART CLEARLY SHOWS THAT THE INVESTMENTS DURING THE YEAR MAJORLY CONSISTS OF INVESTMENTS IN UNQUOTED EQUITY SHARES A S WELL AS SHARES OF SUBSIDIARY COMPANIES VALUED AT RS.7,71,46,480/-. 12. WE ALSO FIND THAT THE ASSESSEE POSSESSED SHARE CAPITAL AND RESERVE SURPLUS TOTALING RS. 50.86 CRORES AND RS. 5 1.67 CRORES APPROXIMATELY AS ON 31.3.2012 AND 31.3.2013, RESPEC TIVELY. THESE ACCUMULATED CAPITAL AND RESERVES ARE MUCH MORE THAN THE INVESTMENTS MADE IN THE EQUITY SHARES FETCHING EXEM PTED INCOME. AS ON 31.3.2012 AND 31.3.2013 INVESTMENT IN QUOTED SHARES FETCHING EXEMPTED INCOME IS RS.12.71 CRORES (APPROX ) AND RS. 6.37 CRORES (APPROX) WHICH IS NOT MORE THAN 20% OF THE T OTAL INTEREST FREE CAPITAL & RESERVES. ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 12 13. IN THE BACKGROUND OF ABOVE FACTS, WE OBSERVE TH AT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE IN TEREST DISALLOWANCE OBSERVING AS UNDER :- 5. GROUND NO. 1 : THIS GROUND OF THE APPELLANT IS DIRECTED AGAINST THE DISALLOWANCE OF RS. 5226627/- U/S 14A O F THE ACT. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMEN T ORDER ARE REPRODUCED AT PARA NO. 2 ABOVE AND THE DETAILED SUB MISSIONS OF THE APPELLANT ARE REPRODUCED AT PARA NO. 3 ABOVE. 5.1 ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN T HAT THE A.O. HAS REJECTED THE CONTENTION OF THE APPELLANT THAT N O INTEREST BEARING FUNDS WERE UTILISED IN MAKING INVESTMENTS Y IELDING EXEMPT INCOME AND SUCH REJECTION IS WITHOUT CONSIDE RING THE DETAILED EXPLANATION OF THE APPELLANT. FROM THE MAT ERIAL PLACED ON RECORD WHICH WAS ALSO BEFORE THE A.O. IT IS SEEN THAT THE MAJOR INVESTMENTS WERE MADE IN THE EARLIER YEARS FR OM OWN FUNDS AND NO BORROWED FUNDS WERE UTILISED IN MAKING THESE INVESTMENTS. FURTHER THE INVESTMENTS MADE DURING T HE YEAR UNDER CONSIDERATION WERE ALSO NOT MADE FROM BORROWE D FUNDS. THE CAPITAL AND RESERVE FUNDS WITH THE APPELLANT ST OOD AT RS. ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 13 51.66 CRORES AS ON 31.3.2012 AND THESE WERE AT RS.5 2.44 AS ON 31.3.2013 WHILE THE NON CURRENTE INVESTMENTS INCREA SED MARGINALLY FROM 7.70 CR TO 7.71 CRORE AND THE CURRE NT INVESTMENTS REDUCED FROM 12.70 CRORE TO 10.37 CRORE AND THE STOCK IN TRADE STOOD AT NIL AS ON 31.3.2013 AS AGAI NST 6.81 CRORES AS ON 31.3.2012. THE OWN CAPITAL AND DISPOS ABLE RESERVES FAR EXCEEDED THE INVESTMENTS. MAJORITY OF THE INVESTMENTS WERE MADE IN THE EARLIER YEAR AND AS SE EN FROM THE APPELLATE ORDERS FOR A.Y. 2010-11 THE INVESTMENT IN THAT YEAR WAS ALSO ONLY RS. 78.98 LACS AND IN THE APPELLATE O RDERS FOR BOTH A.Y. 2009-10 AND 2010-11 IT HAS BEEN HELD THAT THE INVESTMENT WAS FAR LESS THAN THE OWN FUNDS AND THEREFORE NO IN TEREST EXPENSE CAN BE SAID TO BE INCURRED IN RELATION TO I NVESTMENT EARNING EXEMPT INCOME. THE ONLY FRESH INVESTMENT MA DE IN MUTUAL FUNDS FOR RS. 4.0 CRORES DURING THE YEAR UND ER CONSIDERATION WAS ALSO ESTABLISHED TO HAVE NO NEXUS WITH THE INTEREST BEARING FUNDS. THESE FACTS HAVE NOT BEEN R EPUDIATED BY THE A.O. BY PLACING ANY DETAILS ESTABLISHING THAT T HIS IS NOT THE CASE. IN VIEW OF THE ABOVE IT CANNOT BE SAID THAT T HE INVESTMENTS YIELDING EXEMPT INCOME IF ANY WERE OUT OF BORROWED FUNDS AND ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 14 THEREFORE INTEREST QUALIFIED FOR DISALLOWANCE U/S 1 4A OF THE ACT. FURTHER ASA PER THE EXTANT LEGAL POSITION ALSO IT I S HELD IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. ( 2009) 366 ITR 505 THAT IF BOTH FUNDS ARE AVAILABLE WITH THE ASSES SEE I.E. INTEREST BEARING FUNDS AND INTEREST FREE FUNDS THEN THE PRESUMPTION WOULD ARISE THAT INVESTMENT MADE WOULD BE OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE COMPANY, IF THE INTEREST FREE FUNDS ARE SUFFICIENT TO MEET THE INVESTMENTS A ND IN VIEW OF THE ABOVE NO PRESUMPTION CAN BE DRAWN IN THE ABSENC E OF DEFINITE MATERIAL BROUGHT ON RECORD TO SHOW THAT TH E INTEREST BEARING FUNDS WERE UTILISED FOR INVESTMENTS EARNING EXEMPT INCOME. NO SUCH DEFINITE MATERIAL IS ON RECORD TO SHOW THAT THE BROUGHT FORWARD INVESTMENTS ARE OUT OF INTEREST BEA RING FUNDS AND THE INVESTMENTS MADE DURING THE YEAR ARE ALREAD Y ESTABLISHED TO BE OUT OF INTEREST FREE FUNDS. 5.2 IT IS ALSO TO BE NOTED THAT THE APPELLANT FURTH ER EXPLAINED THAT INTEREST INCOME OFFERED OFRS. 30929734/- IS MA INLY RECEIVED FROM BANKS ON FDRS AND ALSO INTEREST OF RS. 2704370 4/- RECEIVED FROM ITS CLIENTS AS DEFERRED PAYMENT CHARG ES TOTALING TO ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 15 RS. 57973438/- WHEREAS THE INTEREST PAYMENT OF RS. 20436402/- IS ON ITS WORKING CAPITAL BORROWINGS DUR ING THE YEAR AND THE NET INTEREST INCOME EARNED OF RS. 37537036/ - HAS BEEN ASSESSED AS BUSINESS INCOME. THE APPELLANT AS A BRO KER OF BOTH BSE AND NSE HAS TAKEN WORKING CAPITAL LIMITS TO CAT ER TO THE PAY-IN AND PAY-OUT OBLIGATIONS OF THESE EXCHANGES. AT THE END OF THE EVERY TRADING SESSION THE APPELLANT NEEDS TO ME ET OUT THE MARGINS AND PAYOUTS OF THE EXCHANGES ACCORDING TO T HE OPEN POSITIONS TAKEN BY ITS CUSTOMER. THE CUSTOMERS GENE RALLY PAY THE AMOUNT TO THE APPELLANT TOWARDS THEIR OUTSTANDING I N 3-4 WORKING DAYS WHEREAS THE APPELLANT IS REQUIRED TO P AY TO THE EXCHANGES ON REGULAR BASIS. FOR THIS REASON THE AP- P HASA TAKEN WORKING CAPITAL LIMITS FROM BANK AND ON UTILISATION OF SUCH LIMIT THE APPELLANT HAS INCURRED THE INTEREST EXPENSE. FR OM THE SANCTION LETTER ISSUED BY THE BANK IN RESPECT OF TH E OVERDRAFT LIMIT TAKEN FOR WORKING CAPITAL PURPOSE BY THE APPE LLANT, IT IS VERIFIABLE FROM THE PAGE 2 OF THE LETTER THAT THE P URPOSE OF THE LOANT AKEN WAS WORKING CAPITAL REQUIREMENT/STOCK E XCHANGE OBLIGATIONS. FROM THE PERUSAL OF THE SECURITY CLAU SE MENTIONED ON THE SAME PAGE IT IS APPARENT THAT THE LIMIT TAKE N FROM BANBK ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 16 WAS SECURED AGAINST THE FDRS MADE AND PLEDGED BY TH E APPELLANT. THE OVERDRAFT FACILITY TAKEN BY THE APP ELLANT IS UTILISED ONLY FOR PAY OUTS ON ACCOUNT OF POSITIONS HELD BY TH CLIENTS TO STOCK EXCHANGE. THE APPELLANTS INTEREST COST ON OVERDRAFT AGAINST FDS IS THUS DIRECTLY RELATED TO T HE CORE BROKING BUSINESS OF THE APPELLANT. IN VIEW OF THE ABVOVE IT IS THUS EVIDENT THAT THE INTEREST EXPENDITURE WAS OUTSIDE THE SCOPE OF SECTION 14A OF THE ACT. IT HAS BEEN HELD IN THE CASE OF PR CIT VS. BHARTI OVERSEAS PVT. LTD.; 237 TAXMANN 417 (2015) (DELHI) THAT WHILE APPORTIONING INTEREST EXPENDITURE UNDER CLAUSE (II) OF RULE 8D(2) OF THE RULES, INTEREST EXPENDITURE INCURRED FOR EAR NING TAXABLE INCOME SHOULD BE EXCLUDED FROM CONSIDERATION. 5.3 THE A.O. HAS FURTHER REJECTED THE CONTENTION OF THE APPELLANT THAT NO DISALLOWANCE IS CALLED FOR WHEN T HERE IS NO EXEMPT INCOME EARNED DURING THE YEAR. THE A.O. HAS RELIED PRIMARILY ON THE DECISION OF THE SPECIAL BENCH OF I TAT DELHI IN THE CASE OF CHEMINVEST LTD. THE SAID DECISION HAS B EEN REVERSED BY THE DELHI HIGH COURT BY HOLDING AS UNDER ;- ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 17 (I) THE EXPRESSION DOES NOT FORM PART OF THE TOT AL INCOME IN SECTION 14A OF THE ENVISAGES THAT THERE SHOULD BE A N ACTUAL RECEIPT OF INCOME WHICH IS NOT INCLUDIBLE IN THE TO TAL INCOME DURING THE RELEVANT PREVIOUS YEASR FOR THE PURPOSE OF DISALLOWING ONLY EXPENDITURE INCURRED IN RELATION TO THE SAID I NCOME/. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMP T INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. THE DECISION OF THE SUPREME COURT IN RAJENDRA PRASAD MO ODY (SUPRA) WAS RENDERED IN THE CONTEXT OF ALLOWABILITY OF DEDU CTION UNDER SECTION 57(III) OF THE ACT, WHERE THE EXPRESSION US ED IS FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. SECTION 14A OF THE ACT ON THE OTHER HAND CONTAINS THE EXPRESSION IN R ELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME . THE DECISION IN RAJENDRA PRASAD MOODY CANNOT BE USED IN THE REVERSE TO CONTEND THAT EVEN IF NO INCOME HAS BEEN RECEIVED, THE EXPENDITURE INCURRED CAN BE DISALLOWED UNDER SECTIO N 14A OF THE ACT. 5.4 THE A.O. HAS ALSO REJECTED THE CONTENTION OF TH E APPELLANT THAT INVESTMENTS IN SHARES OF UNLISTED PRIVATE LIMI TED SUBSIDIARY ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 18 COMPANIES/ASSOCIATE CONCERNS AND THE SHARES HELD AS STOCK IN TRADE ARE MADE OUT OF COMMERCIAL BUSINESS EXPEDIENC Y AND DOES NOT ATTRACT DISALLOWANCE U/S 14A. INVESTMENTS MADE IN STOCK IN TRADE IS NOT MADE FOR THE PURPOSE OF EARNING OF TAX EXEMPT INCOME IN FORM OF DIVIDEND. THE DIVIDEND INCOME EA RNED ON THE SHARES HELD AS STOCK IN TRADE IS INCIDENTAL TO ITS HOLDING DIVIDEND DECLARED BY VARIOUS LISTED COMPANIES IS MISCULE IN COMPARISON TO THEIR MARKET RATES AND NO INVESTMENT IS MADE WITH T HE INTENTION OF EARNING SUCH NOMINAL DIVIDEND. IN THE CASE OF CC I LTD. VS. JCIT (KAR) 206 TAXMANN 563 IT HAS BEEN HELD THAT 14 A DOES NOT APPLY IN RESPECT OF SHARES HELD AS STOCK IN TRADE. DISALLOWANCE ON NOTIONAL BASIS IS INVALID WHEN NO EXPENDITURE I S INCURRED BY THE ASSESSEE IN EARNING DIVIDEND INCOME, NOTIONAL E XPENDITURE CANNOT BE DISALLOWED U/S 14A. THE ASSESSEE HAD NOT RETAINED SHARES WITH THE INTENTION OF EARNING DIVIDEND. THE DIVIDEND INCOME WAS INCIDENTAL TO THE BUSINESS OF SALE OF SH ARES WHICH REMAINED UNSOLD BY THE ASSESSEE. IT CANOT BE SAID THAT THE EXPENDITURE INCURRED IN ACQUIRING THE SHARES HAD TO BE APPORTIONED TO THE EXTENT OF DIVIDEND INCOME AND TH AT THERE SHOULD BE A DISALLOWANCE U/S 14A. ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 19 5.5 CONSIDERING THE ABOVE DISCUSSION AND KEEPING IN VIEW THE APPELLATE DECISIONS IN THE APPELLANTS OWN CASE FOR A.Y. 2009-10 AND A.Y. 2010-11 AS THE FACTS FOR THE YEAR UNDER CO NSIDERATION ARE IDENTICAL TO THE FACTS PREVAILING IN THE EARLIE R YEARS, THE DISALLOWANCE WORKED OUT BY THE A.O. UNDER SECTION 1 4A READ WITH RULE 8D AT RS. 5226627/- IS DIRECTED TO BE RES TRICTED TO 0.05% OF THE AVERAGE INVESTMENTS EXCLUDING THE INVE STMENT IN UNQUOTED SUBSIDIARIES AND ALSO EXCLUDING THE INVEST MENT IN STOCK IN TRADE WHICH WORKS OUT TO RS. 577013/-. THI S GROUND OF THE APPELLANT IS THEREFORE PARTLY ALLOWED. 14. FURTHER, DURING THE COURSE OF HEARING, THE LEAR NED DR RELIED UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF MAXOPP INVESTMENT LTD (SUPRA). WE, HOWEVER, FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE FACTS OF THE ASSESSEES CASE ARE ALTOGETHER DIFFERENT FROM THAT OF MAXOPP I NVESTMENT LTD. (SUPRA). BOTH CAN BE DIFFERENTIATED IN THE FOLLOWI NG MANNER :- SL. NO FACTS OF MAXOPP INVESTMENT LTD. AND FINDINGS OF THE HONBLE SUPREME COURT FACTS OF THE APPELLANTS CASE AND HIS CONTENTIONS 1. MAJOR INVESTMENTS WERE MADE IN THE SHARES OF HERE THE MAJOR INVESTMENT IS IN THE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 20 WIDELY HELD QUOTED/ LISTED PUBLIC LIMITED GROUP COMPANY. SHARES OF CLOSELY HELD UNLISTED GROUP COMPANIES, SHARES OF WHICH ARE NOT QUOTED. AS THE GAINS ARISING OUT OF SALE OF SUCH SHARES IS TAXABLE UNDER THE HEAD OF CAPITAL GAINS AND THE ASSESSEE HAS NEVER EARNED ANY EXEMPT INCOME IN RESPECT OF THESE INVESTMENTS. 2. SUBSTANTIAL DIVIDEND INCOME WAS EARNED FROM THE INVESTMENTS IN THE SHARES OF INVESTEE LISTED GROUP COMPANY. THIS DIVIDEND INCOME WAS CLAIMED AS EXEMPT IN RETURN OF INCOME. NO DIVIDEND INCOME HAS BEEN EVER EARNED BY THE ASSESSEE FROM THE INVESTMENTS IN THE SHARES OF PRIVATE COMPANIES. IN THIS SCENARIO, THE INSTIGATION OF PROVISION OF SECTION 14A IN RESPECT OF SUCH INVESTMENT FAILS AB- INITIO. 3. IN MAXOPP THE INVESTMENT WAS MADE OUT OF BORROWED FUNDS ON WHICH INTEREST EXPENDITURE WAS INCURRED. IN THE PRESENT CASE THE INVESTMENT WAS MADE OUT OF OWN CAPITAL & RESERVES AND NOT OUT OF BORROWED FUNDS HENCE NO INTEREST WAS INCURRED IN RESPECT OF THIS INVESTMENT. 4. THE INTENT BEHIND THE IN THE PRESENT CASE ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 21 LEGISLATION IN INSERTION OF SECTION 14A WAS NOT TO PERMIT THE ASSESSEE DOUBLE BENEFIT OF EXEMPT INCOME ON ONE HAND AND DEDUCTION OF EXPENSE ON ANOTHER (AS OBSERVED IN PARA 3 AND 6) DOUBLE BENEFIT CAN NEVER ARISE TO THE ASSESSEE AS NO DIVIDEND INCOME WAS EARNED OR ACCRUED ON SUCH SHARES AND FURTHER ANY GAIN WHICH MAY ARISE ON THE SALE OF SUCH UNQUOTED SHARES WILL ACCRUE TO THE ASSESSEE IN FORM OF TAXABLE INCOME ONLY. ON THE BASIS OF THE ABOVE DISTINGUISHABLE FACTS OF BOTH THE CASES THE CASE OF THE ASSESSEE IS CLEARLY DISTINGUISHABLE ON FACTS AND IS ON A MUCH BETTER FOOTINGS THAN THE CASE OF MAXOPP INVEST MENTS LIMITED, RATHER THE OBSERVATIONS OF THE HONBLE APEX COURT F URTHER STRENGTHENS THE APPELLANTS CONTENTION IN SO FAR AS THAT THE DISALLOWANCE CAN BE CONTEMPLATED ONLY WHEN EXEMPT I NCOME IS EARNED AND THERE IS SOME EXPENDITURE INCURRED. THE HONOURABLE SUPREME COURT ALSO UPHELD ITS OWN FINDINGS RENDERED IN CIT V/S WALLFORT SHARES & STOCK BROKERS PVT. LTD. (2010) 32 6 ITR 1 (SC) THAT THE BASIC PRINCIPAL OF TAXATION IS TO TAX THE NET INCOME AND ON THE SAME ANALOGY THE EXEMPTION IS ALSO IN RESPECT O F NET INCOME ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 22 ENTAILING THAT WHEN THERE IS NO EXEMPT INCOME, DISA LLOWANCE IS NOT ATTRACTED. 15. THE ABOVE DISTINGUISHING FACTS PROVE THAT THE F INDING OF THE HON'BLE APEX COURT CANNOT BE APPLIED TO THE FACTS O F THE ASSESSEES CASE BECAUSE IT IS WELL EVIDENT THAT THE BORROWED F UNDS HAVE NOT BEEN UTILISED FOR THE PURPOSE OF MAKING INVESTMENTS IN SHARES AND SECURITIES. IT HAS ALSO BEEN CONSISTENTLY HELD BY VARIOUS HON'BLE COURTS THAT IF THE ASSESSEE POSSESSES SUFFICIENT CA PITAL AND RESERVES AS WELL AS INTEREST FREE FUNDS AND IF THERE IS NO F INDING BY THE REVENUE AUTHORITIES THAT INTEREST BEARING FUNDS HAV E BEEN APPLIED FOR INVESTING IN SHARES AND SECURITIES, IT HAS TO B E PRESUMED THAT THE ASSESSEE HAS INVESTED ITS OWN CAPITAL AND RESER VES I.E. INTEREST FREE FUNDS FOR MAKING THE INVESTMENTS. WE FIND SUPP ORT FROM THE JUDGMENT OF THER HON'BLE HIGH COURT OF BOMBAY IN TH E CASE OF RELIANCE UTILITIES (SUPRA) AND HDFC BANK (SUPRA). W E, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS OF THE H ON'BLE COURTS, ARE OF THE CONSIDERED VIEW THAT THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE INTEREST DISA LLOWANCE OF RS. 42,64,143/-. ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 23 16. AS REGARDS THE DISALLOWANCE OF ADMINISTRATIVE E XPENDITURE OF RS.9,62,484/-, WE FIND NO REASON TO INTERFERE WITH THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHO HA S SUSTAINED THE ADDITION OF RS. 5,77,013/- BY KEEPING IN VIEW T HE INVESTMENTS MADE IN QUOTED SHARES AS WELL AS UNQUOTED SHARES AS WELL AS LOOKING TO THE ASPECT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHARES. WE ACCORDINGLY UPHOLD THE SAME. 17. IN THE RESULT, GROUND NO. 1 OF REVENUES APPEAL IS DISMISSED. 18. APROPOS GROUND NO. 2 WHEREIN THE REVENUE HAS CH ALLENGED THE DELETION OF ADDITION OF RS. 1,62,098/- ON ACCOUNT O F DISALLOWANCE OF PENALTY AND RS. 15,508/- ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES, THE LEARNED DR SUPPORTED THE OBSERVATIONS OF THE ASSESSING OFFICER WHEREAS THE LEARNED COUNSEL FOR T HE ASSESSEE HAS RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS). THE LEARNED COUNSEL FOR THE ASSESSEE AL SO REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. STOCK & BOND TRADING COMPANY; ITA NO. 4117 OF 2010 WHEREIN IT HAS BEEN HELD THAT PAYMENTS MADE TO THE STOCK EXCHA NGE FOR VIOLATION OF THEIR REGULATION ARE NOT ON ACCOUNT OF OFFENCE WHICH IS ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 24 PROHIBITED BY LAW AND, HENCE, THE INVOCATION OF EXP LANATION TO SECTION 37 OF THE ACT IS NOT JUSTIFIED. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE PAID PENALTY OF R S.1,62,098/- LEVIED BY STOCK EXCHANGE FOR PROCEDURAL DEFAULTS SU CH A DELAY IN SUBMISSION OF RETURN, ETC. BUT NOWHERE IT HAS BEEN MENTIONED THAT IT IS FOR INFRINGEMENT OF ANY LAW. THE LEARNED ASSE SSING OFFICER DISALLOWED THIS EXPENDITURE. HOWEVER, THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) DELETED THE DISALLOWANCE. FRO M A PERUSAL OF THE FINDING OF THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) AS WELL AS GOING THROUGH THE SUBMISSIONS GIVEN BY THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS THE STOCK & BOND TRADING COMPANY (SU PRA), WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE MADE NO OF FENCE PROHIBITED BY LAW WHICH CAN BE CONTEMPLATED TO BE COVERED UNDE R EXPLANATION TO SECTION 37 OF THE ACT AND, THEREFORE, THE PAYMEN T OF PENALTY MADE BY THE ASSESSEE TO THE STOCK EXCHANGE IS A REGULAR BUSINESS EXPENDITURE AND THE IMPUGNED DISALLOWANCE HAS RIGHT LY BEEN ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 25 DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS). WE UPHOLD THE SAME. 20. AS REGARDS THE DISALLOWANCE OF RS. 15,508/- BEI NG TREATED AS PRIOR PERIOD EXPENSES BY THE LEARNED ASSESSING OFFI CER WE FIND THAT THE PAYMENT RELATED TO SERVICE TAX AND THE NECESSAR Y PROOF OF PAYMENT WAS PLACED ON RECORD. THEREFORE, AS THE LIA BILITY HAS CRYSTALISED DURING THE YEAR, THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS RIGHTLY ALLOWED THE ASSESSEES CL AIM OF EXPENDITURE OF RS.15,508/-. NO INTERFERENCE IS, TH EREFORE, CALLED FOR IN THE FINDINGS OF THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS). WE ACCORDINGLY UPHOLD THE SAME. REVENUE S GROUND NO. 2 IS, THEREFORE, DISMISSED. 21. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 31 ST MAY, 2018. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 31 MAY, 2018 DN/- ITA NO. 370/IND/2017 &CO 17/2018 M/S ARIHANT CAPITAL 26 COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE BY ORDER PRIVATE SECRETARY