M/s. Devyani Internatioanl Ltd., New Delhi V. ACIT, New Delhi

CO 294/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3699 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Search and seizure; Earning of tax free income
• Section: 153A; 14A; 133(6); 27; 132; 154

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 860 & 862 /DEL/2015 (ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 ) ACIT, CENTRAL CIRCLE - 7, NEW DELHI VS. DEVYANI INTERNATIONAL LTD, R/O. F - 2/7, OKHLA INDUSTRIAL AREA, PHASE - I, NEW DELHI PAN:AABCD55534A (APPELLANT) (RESPONDENT) CO NO. 293 AND 294/DEL/2015 (IN ITA NO. 860 & 862/DEL/2015) (ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 ) DEVYANI INTERNATIONAL LTD, R/O. F - 2/7, OKHLA INDUSTRIAL AREA, PHASE - I, NEW DELHI PAN:AABCD55534A VS. ACIT, CENTRAL CIRCLE - 7, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : MS. RACHNA SINGH, CIT DR ASSESSEE BY: SHRI AKSHAT JAIN, CA DATE OF HEARING 24/01/2018 DATE OF PRONOUNCEMENT 0 6 / 0 4 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. ITA NO. 860/ DEL/ 2015 CO NO. 293/DEL/2015 ASSESSMENT YEAR 2009 10 1. ITA NO. 860/ DEL/ 2015 IS PREFERRED BY THE LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 7, NEW DELHI (THE LD. AO) AGAINST THE ORDER OF THE LD. CIT (A) XXXI, NEW DELHI IN ASSESSMENT YEAR 2009 10 PASSED ON 14/11/2014. . ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN I TA NO. 860/DEL/2015 FOR THE ASSESSMENT YEAR 2009 - 10: - 1. THE ORDER OF THE LD CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN LAW IN DELETING THE ENTIRE ADDITION OF RS. 12263917/ - MADE BY THE AO BEING EXPENDITURE INCURRED TO EARN EXEMPT INCOME U/S 14A OF THE IT ACT AND HAS NOT APPRECIATED THE FACT THAT THE AO HAS REDUCED THE DISALLOWANCE U/S 14A FROM RS. 12263917/ - TO RS. 1219330/ - VIDE ORDER U/S 154 DATED 24.09.2014 THEREBY ALLOWING FULL RELIEF TO ASSESSEE INSTEAD OF RS. 1219330/ - . 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN LAW I N DELETING THE ADDITION OF RS. 4416836/ - MADE BY THE AO ON ACCOUNT OF EXPLAINED ADVERTISEMENT EXPENSES. 3. BRIEF FACTS OF THE CASE SHOWS THAT ASSESSEE IS A COMPANY. THE SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE INCOME TAX ACT WERE CARRIED OUT ON M/S JAIPURIA GROUP OF CASES ON 27/3/2012. THE ASSESSEE WAS ONE OF THE COMPANY BELONGING TO THAT GROUP. THEREFORE, THE NOTICE UNDER SEC TION 153A OF THE ACT WAS ISSUED ON 8/4/2013. IN RESPONSE TO THAT ASSESSEE FILED ITS RETURN OF INCOME ON 20/6/2013 DECLA RING AN INCOME OF RS. 351,23,800/ . THE LD. ASSESSING OFFICER PASSED AN ORDER UNDER SECTION 153A OF THE ACT AT RS. 518,04,550/ - . THE LD. AO MADE DISALLOWANCE OF UNEXPLAINED EXPENDITURE ON ADVERTISEMENT OF RS. 4416836/ AND UNDER SECTION 14A OF RS. 12263917 / - . 4. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD. AO PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO AS PER ORDER DATED 14/11/2014 DELETED THE DISALLOWANCE ON ACCOUNT OF ADVERTISEMENT EXPENDITURE OF RS. 4416,836/ . HOWEVER WITH RESPECT TO THE DISALLOWANCE U NDER SECTION 14 A OF THE ACT OF RS. 12263917/ , THOUGH HELD THAT THAT LD. AO HAS INVOKED THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES 1962 WITHOUT RECORDING THE SATISFACTION, BUT CONFIRMED DISALLOWANCE OF EXPENSES @0.5% OF THE AVERAGE INVESTMENT. 5. B EFORE THE LD. CIT (A) THE ASSESSEE FURTHER RAISED THE GROUND THAT THAT ANY ADDITION THAT IS REQUIRED TO BE MADE UNDER THE PROVISIONS OF SECTION ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 3 153A OF THE INCOME TAX ACT IS TO BE MADE ONLY ON THE BASIS OF INCRIMINATING EVIDENCE FOUND DURING THE COURSE OF SEARCH. HOWEVER, THE LD. CIT (A) REJECTED THE GROUND OF THE APPEAL OF THE ASSESSEE. 6. THEREFORE REVENUE AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) AGAINST THE DELETION OF THE BOTH THE ABOVE DISALLOWANCES HAS PREFERRED AN APPEAL BEFORE US. ASSESSEE HAS ALSO FILED CROSS OBJECTION IN CO NO. 293/DEL/2015 IN ITA NO. 860/DEL/2015 WHEREIN FOLLOWING GROUNDS OF APPEAL WERE RAISED: - 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN UPHOLDING THE DISALLOWANCE OF RS. 129304/ - U/S 14A READ WITH RULE 8D OF THE INCOME TAX ACT & RULES RESPECTIVELY. 2. THAT THE LD CIT(A) ERRED IN HOLDING THAT SOME EXPENSES ARE TO BE ALL OCATED IN EARNING EXEMPT INCOME. 3. THAT THE CIT(A) OUGHT TO HAVE APPRECIATED THAT IF THERE IS NO EXEMPT INCOME THEN NO DISALLOWANCE IS TO BE MADE U/S 14A EVEN IF ITSELF HAD OFFERED THE DISALLOWANCE, THE SAME WAS LIABLE TO BE DELETED IN VIEW OF THE INTERP RETATION OF HAT PROVISIONS BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD ITA NO. 486 AND OTHER HIGH COURT IN VARIOUS CASES. 4. THAT THE AFORESAID CROSS OBJECTIONS ON LEGAL ISSUE ARE ADMISSIBLE IN VIEW FOR THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD VS. CIT (1998) 229 ITR 383 (SC). 7. THE LD AR INVOKED THE PROVISIONS OF 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES STATING THAT GROUND NO. 1 BEFORE LD. CIT (A) WAS DECIDED AGAINST THE ASSESSE WHERE THE ASSESSEE CONTENDED THAT NO ADDITION CAN BE MADE IN THE ASSESSMENT OF THE INCOME TAX ACT IN ABSENCE OF ANY INCRIMINATING FOUND IN SEARCH. TO SUPPORT HIS CONTENTION HE RE FERRED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. KABUL CHAWLA (2015) 61 TAXMANN.COM 412 (DELHI). 8. THEREFORE, BEFORE DECIDING THE ISSUES OF THE APPEALS OF THE REVENUE AND THE ASSESSEE IT IS IMPORTANT TO NOTE THAT IMPUGNED ASSESSMENT YEAR IS ASSESSMENT YEAR 2009 - 10 AND WHICH IS FRAMED PURSUANT TO THE SEARCH CARRIED OUT ON 27/3/2012. THEREFORE AS ON THE DATE OF THE SEARCH AY 2009 10 WAS CONCLUDED ASSESSMENT AS THE LAST DATE FOR ISSUE OF THE ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 4 NOTICE UNDER SECTION 143(2) OF THE ACT WAS ONL Y UP TO 30/9/2010. THEREFORE, APPARENTLY THE ASSESSMENT YEAR INVOLVED IS A COMPLETED ASSESSMENT AND DOES NOT ABATE. HENCE, ANY ADJUSTMENT TO THE TOTAL INCOME RETURNED OR ASSESSED FOR THAT PARTICULAR ASSESSMENT YEAR UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT IS REQUIRED TO BE DISTURBED ONLY IF ANY INCRIMINATING EVIDENCES ARE FOUND DURING THE COURSE OF SEARCH. 9. ON THIS PREMISES THE LD. CIT DR VEHEMENTLY SUBMITTED THAT WITH RESPECT TO THE ADVERTISEMENT EXPENDITURE DURING THE POST - SEARCH ENQUIRIES THE ASS ESSEE WAS ASKED TO FURNISH THE DETAILS OF THE ADVERTISEMENT EXPENDITURE HENCE THERE IS SOME INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFORE, SHE SUBMITTED THAT AS FAR AS THE ADDITION WITH RESPECT TO THE ADVERTISEMENT EXPENDITURE IS MADE THE INCRIMINATING EVIDENCES WERE FOUND DURING THE COURSE OF POST SEARCH INVESTIGATION MADE BY THE INVESTIGATION WING. SHE FURTHER STATED THAT THERE IS NO REQUIREMENT THAT ADDITION IS REQUIRED TO BE MADE ONLY BASED ON INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH. THEREFORE, SHE SUBMITTED THAT THERE IS NO REQUIREMENT OF ANY INCRIMINATING MATERIAL TO MAKE AN ADDITION IN CONCLUDED ASSESSMENT UNDER SECTION 153A OF THE INCOME TAX ACT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND THE ORDERS O F THE LOWER AUTHORITIES. ON READING THE ASSESSMENT ORDER PASSED BY THE LD. ASSESSING OFFICER WE FIND THAT THERE IS NO MENTION OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE UNEXPLAINED ADVERTISEMENT EXPENSES. FURTHER WI TH RESPECT TO THE DISALLOWANCE MADE UNDER SECTION 14 A OF THE INCOME TAX ACT THERE IS NO REFERENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN VIEW OF THIS IT IS APPARENT THAT BOTH THE DISALLOWANCE UNDER SECTION 14 A OF THE INCOME T AX ACT AS WELL AS THE DISALLOWANCE ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON ADVERTISEMENT EXPENSES WERE MADE WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELH I HIGH COURT ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 5 IN CASE OF CIT VERSUS KABUL CHAWLA (SUPRA) WHEREIN IT HAS BEEN HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENTS UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTH ED DURING THE COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT DISCLOSED OR MADE KNOWN IN COURSE OF ORIGINAL ASSESSMENT. THEREFORE, IN THE PRESENT CASE THE IMPUGNED ASSESSMENT YEAR 2009 10, WHICH IS A CONCLUDED ASSESSMENT, CANNOT BE DISTURBED WITHOUT ANY I NCRIMINATING MATERIAL. FOR BOTH THE ABOVE ADDITIONS THE LD. ASSESSING OFFICER AS WELL AS THE LD. CIT (A) AND THE LD. DR COULD NOT SHOW US ANY INCRIMINATING MATERIAL. IN VIEW OF THIS WE WITHOUT GOING INTO THE MERIT OF THE DISALLOWANCES, DIRECT THE LD. ASS ESSING OFFICER TO DELETE AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. ACCORDINGLY, WE REVERSE THE FINDING OF THE LD. CIT (A) IN THE IMPUGNED APPEAL AND ALLOW THE CROSS OBJECTIONS AS WELL AS THE ARGUMENT OF THE ASSESSEE UNDER RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED AND APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 862/DEL/2015 CO NO. 294/DEL/2015 ASSESSMENT YEAR 2011 - 12 11. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT APPEALS XXXI, NEW DELHI DATED 14/11/2014 FOR ASSESSMENT YEAR 2011 12. 12. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 862/DEL/2015 FOR THE ASSESSMENT YEAR 2011 - 12 : - 1. THE ORDER OF THE LD CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 6970436/ - MADE BY THE ASSESSING OFFICER BEING EXPENDITURE INCURRED TO EARN EXEMPT INCOME U /S 14A. ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 6 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 19189959 / - MADE BY THE AO ON ACCOUNT OF EXPLAINED ADVERTISEMENT EXPENSES. 13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN CO NO. 294/DEL/2015 FOR THE ASSESSMENT YEAR 2011 - 12: - 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN UPHOLDING THE DISALLOWANCE OF RS. 5767092/ - U/S 14A READ WITH RULE 8D OF THE INCOME TAX ACT & RULES RESPECTIVELY. 2. THAT THE LD CIT(A) ERRED IN HOLDING THAT SOME EXPENSES ARE TO BE ALLOCATED IN EARNING EXEMPT INCOME. 3. WITHOUT PREJUDICE THE ABOVE, THE DISALLOWANCE OF RS. 5767092/ - U/S 14A OF THE ACT IS GROSSLY EXCESSIVE AGAINST THE DIVIDEND INCOME OF RS. 16960/ - IN VIEW OF THE ABOVE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD VS. CIT (2015) 373 ITR 694. 4. THAT THE AFORESAID CROSS OBJECTIONS ON LEGAL ISSUE ARE ADMISSIBLE IN VIEW FOR THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THE RMAL POWER CORPORATION LTD VS. CIT (1998) 229 ITR 383 (SC). 14. FACTS OF THE CASE SHOWS THAT APPELLANT IS A COMPANY ENGAGED IN THE BUSINESS OF RUNNING RESTAURANTS UNDER THE BRAND NAME PIZZA HUT, KFC, COSTA COFFEE ETC. IT IS ALSO TRADING IN BEVERAGES AND CO NSULTANCY AND OTHER SERVICES. SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 27/3/2012. CONSEQUENTLY, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 8/4/2013. THE ASSESSEE FILED ITS RETURN OF INCOME ON 20/6/2013 SHOWING INCOME OF RS. 576,47,840/. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER MADE A DISALLOWANCE ON ACCOUNT OF UNEXPLAINED ADVERTISEMENT EXPENDITURE OF RS. 19189959/ - . A FURTHER DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT WAS MADE OF RS. 697036/ - . CONSEQUENTLY THE ASSESSMENT ORDER WAS PASSED ON 28/3/2014 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. 838,08,240/. 15. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LD. CIT (A), WHO AS PER ORDER DATED ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 7 14/11/2014 DELETED THE DISALLOWANCE OF RS. 1918 9959/ ON ACCOUNT OF THE ADVERTISEMENT EXPENDITURE. HE FURTHER RESTRICTED THE DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT TO 0.5% OF THE AVERAGE VALUE OF INVESTMENT. THE ASSESSEE ON ITS OWN DISALLOWED A SUM OF RS. 57,67,092/ NO MORE DISALLOWANCE WAS CONFIRMED THE LD. CIT (A). 16. THEREFORE, REVENUE HAS FILED AN APPEAL AND ASSESSEE HAS PREFERRED CROSS OBJECTION IN THAT APPEAL. FIRST WE PROCEED TO DECIDE THE APPEAL OF THE REVEN UE. 17. THE FIRST GROUND OF APPEAL IS GENERAL IN NATURE AND THEREFORE SAME IS DISMISSED. 18. THE 2ND GROUND OF APPEAL OF THE REVENUE IS AGAINST THE DELETION OF THE ADDITION OF RS. 6 970436/ MADE BY THE ASSESSING OFFICER BEING EXPENDITURE INCURRED TO EARN EXEMPT INCOME UNDER SECTION 14 A OF THE INCOME TAX ACT . AS THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO ON SECTION 14 A OF THE INCOME TAX ACT THE SAME ARE ALSO CONSIDERED TOGETHER. 19. THE BRIEF FACTS OF THE ISSUE IS THAT LD. ASSESSING OFFICER NOTED THAT THE ASS ESSEE HAS MADE INVESTMENT OF RS. 11,58,30,000/ - DURING THE YEAR UNDER CONSIDERATION AND THEREFORE THE ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE APPLICABILITY OF RULE 8D OF THE INCOME TAX RULES 1962. THE ASSESSEE DID NOT FILE ANY EXPLANATION REGARDING THE ABO VE QUERY. THEREFORE , THE LD. ASSESSING OFFICER INVOKING THE PROVISIONS OF RULE 8D MADE A DISALLOWANCE OF RS. 6970436/. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A) WHO HELD THAT THE LD. ASSESSING OFFICER HAS NOT RECORDED THE SATISFACTION BEFORE IN VOKING RULE 8D OF THE INCOME TAX RULES FOR WORKING OUT DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT. HE FURTHER HELD THAT ASSESSEE HAS ONLY INCURRED THE BANK CHARGES AND INTEREST PAID ON PURCHASE OF VEHICLE , THUS , THERE IS NO LINK BETWEEN THE EXEM PT INCOME WITH SUCH BANK CHARGES AND INTEREST. THEREFORE , HE SUBMITTED THAT NO INTEREST DISALLOWANCE CAN BE MADE. HE FURTHER HELD THAT LD. ASSESSING OFFICER HAS FAILED TO CONSIDER THE FACT THAT THE DIVIDEND ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 8 INCOME FROM INVESTMENT IN THE FOREIGN COMPANIES A RE NOT EXEMPT FROM TAXATION AND THEREFORE THE DISALLOWANCE UNDER SECTION 14A CANNOT BE MADE. HOWEVER IN THE END HE CONFIRMED DISALLOWANCE OF EXPENSES @ 0.5% OF THE AVERAGE VALUE OF INVESTMENT TOWARDS THE EXPENDITURE RELATING TO INVESTMENTS . IN THE END HE NO TED THAT AS ASSESSEE HAS DISALLOWED ON ITS OWN SUM OF RS. 7 67092/ ONLY ON THE P RESUMPTION ABOUT APPLICATION OF PROVISIONS OF SECTION 14 A READ WITH RULE 8D IS AUTOMATIC AND MANDATORY AND THEREFORE HE DID NOT INCLUDE ANY FURTHER DISALLOWANCE TO BE MADE. 20. TH E LD. CIT DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE PROVISIONS OF RULE 8D IS MANDATORY AS THE IMPUGNED ASSESSMENT YEAR IS 2011 12. S H E SUBMITTED A DETAILED NOTE ON DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT. 21. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS MADE INVESTMENT IN A FOREIGN COMPANY AND DIVIDEND INCOME FROM THE SAME IS NOT EXEMPT. THEREFORE HE SUBMITTED THAT IF THERE IS NO EXEMPT INCOME NO DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT CAN BE MADE H E RELIED UPON THE ORDER OF THE LD. CIT (A). 22. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THE INSTANT CASE THE ASSESSEE HAS MADE AN INVESTMENT IN THE SHARES OF FOREIGN COMPANIES , INCOME FROM WHIC H CANNOT BE EXEMPT AS PER THE PROVISIONS OF THE INCOME TAX ACT . EVEN OTHERWISE THE ASSESSEE ON ITS OWN HAS DISALLOWED A SUM OF RS. 5767092/ - ONLY ON THE ASSUMPTION THAT THE PROVISIONS OF SECTION 14A READ WITH RULE 8D IS AUTOMATIC AND MANDATORY. EVEN OTHERW ISE THE LD. ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION WITH REGARD TO THE DISALLOWANCE OFFERED BY THE ASSESSEE ON ITS OWN. WITHOUT RECORDING SUCH SATISFACTION THE LD. ASSESSING OFFICER PROCEEDS TO MAKE ANY DISALLOWANCE INVOKING RULE 8D OF THE INCO ME TAX RULES IS BAD IN LAW. IN VIEW OF ABOVE FACTS WE DISMISS GROUND NO. 2 OF THE APPEAL OF THE REVENUE AND ALSO DISPOSE THE CROSS ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 9 OBJECTION FILED BY THE ASSESSEE INVOLVING THE GROUNDS RELATING TO DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT BY AL LOWING IT. 23. THE 3RD GROUND OF APPEAL OF THE REVENUE IS WITH RESPECT TO THE DELETION OF ADDITION OF RS. 19189959/ - MADE BY LD. ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED ADVERTISEMENT EXPENSES. THE ASSESSEE HAS CLAIMED THE ADVERTISEMENT AND PUBLICITY EXPENS ES OF RS. 13,75,82,635/ UNDER THE HEAD SELLING AND DISTRIBUTION EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT , DURING THE FINANCIAL YEAR UNDER CONSIDERATION. THE LD. ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF MAJOR EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHICH ALSO INCLUDES ADVERTISEMENT AND PUBLICITY EXPENSES AND JUSTIFICATION WITH DOCUMENTARY EVIDENCES FOR ITS ALLOWABILITY. THE ASSESSEE SUBMITTED THE PARTY WISE DETAILS OF ADVERTISEMENT EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCO UNT. HOWEVER THE L D ASSESSING OFFICER DISALLOWED THE EXPENDITURE OF RS. 19189959/ ON THE BASIS OF NON RECEIPT OF CONFIRMATION. ACCORDING TO ASSESSEE THE CONFORMATION HAVE BEEN RECEIVED ONLY IN RESPECT OF 2 PARTIES AMOUNTING TO RS. 11,83,92,676/ . FURTHER ,ACCORDING TO THE LD AO, THE ASSESSEE DID NOT FILE COMPLETE DETAILS IN RESPECT OF THOSE PARTIES. FURTHER IN ONE OF THE CASES THE NOTICE UNDER SECTION 133(6) WAS ALSO NOT COMPLIED WITH. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD ASSESSING OFFICER PREFE RRED AN APPEAL BEFORE THE LD. CIT (A). HE DELETED THE DISALLOWANCE RELYING ON ORDER FOR THE ASSESSMENT YEAR 2010 - 11. HE NOTED THAT THE ASSESSEE SUBMITTED THE COMPLETE DETAILS BEFORE THE LD. ASSESSING OFFICER HOWEVER THE LD. AO ALLOWED THE EXPENDITURE WHICH WERE CONFIRMED BY PARTIES UNDER SECTION 133(6) OF THE ACT AND DISALLOWED THE BALANCE SUM WHERE NO CONF I RMATION WAS RECEIVED. 24. THE LD. CIT D R VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. SHE SUBMITTED THAT THE ASSESSEE HAS FAILED TO CONFIRM THE DETAILS OF THE ADVERTISEMENT AND PUBLICITY EXPENDITURE INCURRED TO THAT EXTENT THE LD. ASSESSING OFFICER HAS DISALLOWED THE SAME. ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 10 25. THE LD. AUTHORIZED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT (A) AND SUBMITTED THAT LD. CIT (A) HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR THIS YEAR RELYING ON HIS OWN ORDER FOR ASSESSMENT YEAR 2010 - 11 AS STATED IN PARAGRAPH NUMBER 3.1.1 OF THE ORDER OF THE LD. CIT (A). HE FURTHER SUBMITTED THAT ABOVE ORDER HAS BEEN ACCEPTED BY THE REVENUE AND NO FURTHER APPEAL HAS BEEN PREFERRED. HE THEREFORE SUBMITTED THAT THE FACTS OF THAT CASE AND THE PRESENT CASE ARE IDENTICAL. 26. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND THE ORDERS OF THE LOWER AUTHORITY WITH RESPECT TO DISALLOWANCE OF ADVERTISEMENT EXPENDITURE. THE ASSESSEE HAS PRODUCED THE RELEVANT DETAILS BEFORE THE ASSESSING OFFICER WITH RESPECT TO THE ABOVE EXPENDI TURE. THE LD. ASSESSING OFFICER HAS ISSUED NOTICES UNDER SECTION 133 (6) OF THE INCOME TAX ACT AND SOME OF THE PARTIES HAVE RESPONDED AND SOME DID NOT. THEREFORE THE LD. ASSESSING OFFICER HAS DISALLOWED THE AMOUNT OF EXPENDITURE WHICH HAS NOT BEEN RESPONDE D BY THE PARTIES. IN THE PRESENT CASE THE ASSESSEE HAS PRODUCED THE COMPLETE DETAILS OF THE EXPENDITURE INCURRED BY IT IN ASSESSMENT AND SALES PROMOTION EXPENDITURE. NO FAULT CAN BE FOUND WITH THE ASSESSEE IF THE PARTIES DO NOT RESPOND TO THE NOTICE UNDER SECTION 133 (6) OF THE INCOME TAX ACT. MORE SO IN THE IDENTICAL SITUATION IN CASE OF ASSESSEE FOR YEARS INCLUDING ASSESSMENT YEAR 2010 - 11 THE LD. CIT (A) HAS DELETED THE DISALLOWANCE AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE. THE RE VENUE HAS ACCEPTED THAT ORDER AND THEREFORE THERE IS NO REASON TO CHALLENGE THE SAME ON IDENTICAL ISSUE BEFORE THE COORDINATE BENCH IN ABSENCE OF ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. NO SUCH CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CA SE WAS BROUGHT ON RECORD BEFORE US. IN VIEW OF THIS WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT (A) DELETING THE ABOVE DISALLOWANCE. IN THE RESULT GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS DISMISSED. ACIT VS. DEVYANI INTERNATIONAL LTD, ITA NO. 860 & 862/DEL/2015 CO NO. 293 AND 294/DEL/2015 ASSESSMENT YEAR: 2009 - 10 AND 2011 - 12 PAGE | 11 27. IN THE RESULT, FOR ASSESSMENT YEAR 2011 - 12 APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 / 0 4 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 6 / 04 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI