M/s Avon Cycles Ltd., Ludhiana V. ACIT, Ludhiana

CO 35/CHANDI/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1404 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 08-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK MANGIA
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Depreciation; Additional depreciation; Earning of tax free income; Revenue expenditure
• Section: 14A; 32; 147; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.931 /CHD/2013 (ASSESSMENT YEAR : 2010-11) THE A.C.I.T., VS. M/S AVON CYCLES LTD., CIRCLE V, G.T. ROAD, LUDHIANA. LUDHIANA. PAN: AABCA4140R AND C.O.NO.31/CHD/2013 ARISING OUT OF ITA NO. 931/CHD/2013 (ASSESSMENT YEAR : 2010-11) M/S AVON CYCLES LTD., VS. THE A.C.I.T., G.T. ROAD, CIRCLE V, LUDHIANA. LUDHIANA.. PAN: AABCA4140R ITA NO.687 /CHD/2014 (ASSESSMENT YEAR : 2011-12) THE A.C.I.T., VS. M/S AVON CYCLES LTD., CIRCLE V, G.T. ROAD, LUDHIANA. LUDHIANA. PAN: AABCA4140R AND C.O.NO.35/CHD/2014 ARISING OUT OF ITA NO. 687/CHD/2014 (ASSESSMENT YEAR : 2011-12) M/S AVON CYCLES LTD., VS. THE A.C.I.T., G.T. ROAD, CIRCLE V, LUDHIANA. LUDHIANA.. PAN: AABCA4140R (APPELLANT) (RESPONDENT) 2 ASSESSEE BY : SHRI SUBHASH AGGARWAL DEPARTMENT BY : SHRI VIVEK MANGIA DATE OF HEARING : 01.10.2015 DATE OF PRONOUNCEMENT : 27.11.2015 O R D E R PER RANO JAIN, A.M . : BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 25.7.2013 AND 28.5.2014 FOR ASSESSMENT YEARS 2010-11 AND 2011-12 RESPECTIVELY. THE ASSESSEE HA S FILED CROSS OBJECTIONS AGAINST THE SAME. ITA NO.931/CHD/2013 : 2. THE GROUND NO.1 RAISED BY THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE OF RS.82,10,15 4/- MADE BY THE ASSESSING OFFICER UNDER SECTION 36(1)(I II) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PURCHASED LAND AT VILLAGE BIRMI FOR RS.37,91,820/- AND AT FOCAL POINT FOR RS.4,68,01,73 8/-. SIMILAR INVESTMENT HAD BEEN MADE BY THE ASSESSEE IN LAND AT MOREKARINA AND SHEIKHPURA DURING THE FINANCIAL Y EAR 2008-09. THE ASSESSING OFFICER NOTICED THAT THE A SSESSEE HAD SHOWN SECURED LOANS AMOUNTING TO RS.23.56 CRORE S 3 AND UNSECURED LOANS AMOUNTING TO RS.10.67 CRORES, AGAINST WHICH INTEREST LIABILITY INCURRED WAS RS.3,25,10,882/-. HE ALSO NOTED THAT THERE WAS CA PITAL WORK-IN-PROGRESS AMOUNTING TO RS.1,86,95,645/- INCL UDING THE ADDITION MADE DURING THE YEAR AMOUNTING TO RS.1,02,56,336/-. THE ASSESSING OFFICER ACCORDINGL Y, HELD THAT THE INTEREST TO THE EXTENT OF INTEREST ON INVE STMENT IN LAND WAS NOT FOR BUSINESS PURPOSE AND DISALLOWED IN TEREST @ 12%. SIMILAR DISALLOWANCE UNDER SECTION 36(1)(I II) OF THE ACT WAS MADE PERTAINING TO INVESTMENT IN CAPITA L WORK-IN-PROGRESS ALSO. IN THIS WAY, TOTAL DISALLO WANCE OF RS.82,10,154/- WAS MADE BY THE ASSESSING OFFICER. 4. BEFORE THE LEARNED CIT (APPEALS), IT WAS CONTENDED THAT THE INVESTMENT IN LAND AND BUILDING WERE MADE FOR BUSINESS PURPOSES AND OUT OF OWN RESOURCES . AS REGARDS THE INVESTMENT IN LAND AT MOREKARINA AND SHEIKHPURA, IT WAS SUBMITTED THAT THE INVESTMENTS W ERE OLD ONE AND SIMILAR DISALLOWANCES MADE IN ASSESSMEN T YEARS 2008-09 AND 2009-10 WERE DELETED BY THE LEARN ED CIT (APPEALS) AND THE APPEAL FILED BY THE REVENUE W AS ALSO DISMISSED BY THE CHANDIGARH BENCH OF THE I.T.A.T. I N ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 17.1.2013. AS REGARDS THE INVESTMENT IN LAND AT BIRMI AND IN A PL OT OF LAND AT FOCAL POINT, IT WAS SUBMITTED THAT THESE INVESTMENTS WERE MADE DURING THE YEAR OUT OF ASSESS EES OWN FUNDS. SINCE THE FACTS ARE IDENTICAL WITH THE FACTS RELATING TO INVESTMENT IN LAND AT MOREKARINA AND 4 SHEIKPURA, WHERE INVESTMENTS HAVING BEEN MADE OUT O F OWN FUNDS, INTEREST ON THE SAME HAVE BEEN DELETED B Y THE HIGHER AUTHORITIES. IT WAS PRAYED TO DELETE THE DISALLOWANCE. AS REGARDS THE INVESTMENT IN CAPITA L WORK- IN-PROGRESS, IT WAS SUBMITTED THAT OUT OF RS.1,86,9 5,645/- THERE WAS AN OLD INVESTMENT OF RS.84,39,309/- IN TH IS ACCOUNT AND FURTHER AN ADDITION OF RS.1,02,56,336/- WAS MADE DURING THE YEAR. AS REGARDS THE INTEREST OF O LD INVESTMENT, IT WAS SUBMITTED THAT IN ASSESSMENT YEA R 2009-10, THE SAME DISALLOWANCE WAS MADE, WHICH WAS DELETED BY THE LEARNED CIT (APPEALS). RELIANCE WAS PLACED ON THE ORDER OF THE CHANDIGARH BENCH IN THE CASE OF DCIT VS. SAMRAT FORGING IN ITA NO.975 OF 2011 DATED 24.5.2012. AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE, THE LEARNED CIT (APPEALS) MAINLY RELYING ON THE ORDER OF THE CIT (APPEALS) FOR ASSESSMENT YEAR 2009 -10 DELETED THE DISALLOWANCE. 5. NOW THE DEPARTMENT HAS COME UP IN APPEAL BEFORE US. THE LEARNED D.R. RELIED ON THE ORDER O F THE ASSESSING OFFICER, WHILE THE LEARNED COUNSEL FOR TH E ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS). REITERATING THE SUBMISSIONS EARLIER MA DE BEFORE THE LOWER AUTHORITIES, THE LEARNED COUNSEL F OR THE ASSESSEE FURTHER BROUGHT TO OUR ATTENTION THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN ASSESSEES OWN CASE F OR ASSESSMENT YEAR 2009-10, WHEREBY SIMILAR ISSUE HAS ARISEN, WHICH WAS DELETED BY THE LEARNED CIT (APPEA LS) 5 AND THE ACTION OF THE LEARNED CIT (APPEALS) WAS CON FIRMED BY THE I.T.A.T. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10, WE OBSERVE THAT EXACTLY THE SAME ISSUE HAD ARISEN IN T HAT YEAR ALSO AND THE FINDINGS GIVEN BY THE I.T.A.T. AR E AT PAGE 4, PARA 9 TO 12 OF THE ORDER, WHICH READ AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT SIMILAR ISSUE OF DISALLOWA NCE UNDER SECTION 36(1)(III) OF THE ACT ON THE INVESTME NT MADE IN THE PURCHASE OF LAND AROSE BEFORE THE TRIBU NAL IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEAR 2008-09 (SUPRA) AND VIDE ORDER DATED 17.01.2013, TH E TRIBUNAL HELD AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD MADE INVESTMENT TOTALING RS.4.75 CRORES IN THE PURCHASE OF AGRICULTURAL LAND AS UNDER: 14/1/2006 RS.1,50,00,000/- 9/3/2006 RS. 20,00,000/- 15/2/2007 RS.2,43,00,000/- 15/2/2007 RS. 57,00,000/- 11/4/2007 RS. 5,00,000/- 10. THE FINDING OF THE CIT (APPEALS) VIDE PARA 4.1 OF THE APPELLATE ORDER IS THAT THE ASSESSEE HAD FURNISHED THE COPIES OF BANK ACCOUNTS REFLECTING AVAILABILITY OF FUNDS ON THE DATES WHEN EARLIER INVESTMENTS WERE MADE AND ALSO WHEN PAYMENT OF RS.5 LACS WAS MADE DURING THE YEAR. THE LEARNED D.R. FOR THE REVENUE HAS NOT CONTROVERTED THE FACTUAL FINDING OF THE CIT (APPEALS) THAT THE TOTAL INVESTMENT MADE BY THE ASSESSEE IN THE EARLIER YEAR S 6 AND THE SUM OF RS.5 LACS INVESTED DURING THE YEAR WERE OUT OF ITS OWN FUNDS AND NOT OUT OF BORROWED FUNDS. 11. THE HON'BLE APEX COURT IN MUNJAL SALES CORPORATION VS. CIT [298 ITR 298 (SC)] HAS REVERSED THE FINDINGS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THAT ASSESSEES CASE AND APPEAL FILED BY THE REVENUE AGAINST THAT ASSESSEE REPORTED IN 298 ITR 288 & 294 RESPECTIVELY. THE HON'BLE SUPREME COURT HAVE ALLOWED THE APPEAL OF THE ASSESSEE AGAINST THE DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) OF THE ACT IN VIEW OF THE PROFITS EARNED BY THE ASSESSEE AGAINST WHICH INTEREST FREE LOAN OF RS.5 LACS BEING ADVANCED TO T HE SISTER CONCERN. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION VS. CIT (SUPRA) WE FIND NO MERIT IN THE PLEADINGS OF THE LEARNED D.R. FOR THE REVENU E PLACING RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT, WHICH HAVE BEEN REVERSED BY THE HON'BLE SUPREME COURT. 12. IN THE FACTS OF THE PRESENT CASE WHERE LOAN OF RS.5 LACS HAS BEEN ADVANCED DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE LOAN HAVING BEEN ADVANCED IN THE EARLIER YEARS, WHERE NO DISALLOWANCE WAS MADE OUT OF INTEREST EXPENDITURE AND THE ASSESSEE HAVING ESTABLISHED THE AVAILABILIT Y OF THE NON INTEREST BEARING FUNDS, WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT (APPEALS). TH E GROUND NO.1 RAISED BY THE REVENUE IS THUS DISMISSED. 10. WE FIND THAT THE ISSUE BEFORE THE TRIBUNAL WAS IN RELATION TO THE INVESTMENT MADE IN THE PURCHASE OF THE LAND AND IDENTICAL ISSUE HAS BEEN RAISED BEFORE US. FOLLOWING THE SAME PARITY OF REASONING, WE UPHOLD T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION MADE UNDER SECTION 36(1)(III) OF THE ACT OF RS. 57,36,000/-. 11. THE SECOND DISALLOWANCE MADE UNDER SECTION 36(1)(III) OF THE ACT WAS ON ACCOUNT OF INVESTMENT IN WORK IN PROGRESS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE SAID ADDITION OBSERVING A S UNDER : 7 3.5 AS REGARDS THE DISALLOWANCE OF RS.5,93,348/- O N ACCOUNT OF INVESTMENT IN CAPITAL WORK-IN-PROGRESS I S CONCERNED, THE AO HAS NOT MENTIONED AS TO HOW THE PROVISIONS OF SECTION 36(L)(III) ARE APPLICABLE IN THIS CASE. IT IS NOT THE AO'S CASE THAT THE CONSTRUCTION PERTA INING TO CAPITAL WORK-IN-PROGRESS WAS NOT FOR BUSINESS PURPO SES. THIS CAPITAL WORK-IN-PROGRESS WAS WITH REGARDS TO T HE BUILDING AT AYALI KALAN AND THE AO HAS NOT MENTIONE D EVEN ONCE THAT THIS BUILDING WAS NOT BEING CONSTRUC TED BY THE APPELLANT FOR HIS BUSINESS. THAT BEING SO, NO DISALLOWANCE ON THIS ACCOUNT CAN BE MADE U/S 36(L)( III). THE DISALLOWANCE IF AT ALL IN THESE CIRCUMSTANCES C AN BE MADE UNDER PROVISO TO SECTION 36(L)(III). HOWEVER, FOR APPLYING THE PROVISO IT HAS TO BE SHOWN THAT THE AP PELLANT HAD BORROWED FUNDS SPECIFICALLY FOR CAPITAL WORK-IN - PROGRESS. THE AO HAS NOT SHOWN THAT ANY FUNDS WERE BORROWED FOR THIS PURPOSE. THE CASE OF CIT VS. ABHI HSEK INDUSTRIES IS NOT APPLICABLE IN THE CIRCUMSTANCES O F THE CASE. DISALLOWANCE MADE IS ACCORDINGLY DELETED. THI S GROUND OF APPEAL IS THEREFORE ALLOWED. 12. THE LD. DR FOR THE REVENUE HAS FAILED TO CONTRO VERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AN D IN VIEW THEREOF, WE FIND NO MERIT IN THE GROUND OF APPEAL R AISED BY THE REVENUE AND THE SAME ARE DISMISSED. 7. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE LEARNED CIT (APPEALS). AS THE OLD INVESTMENTS CONTINUE WHICH HAVE BEEN HELD TO BE MADE OUT OF OWN ED FUNDS, AS REGARDS THE INVESTMENTS MADE DURING THE YEAR, BY THE SAME PARITY OF REASONING, WE CONFIRM THE ORDER OF THE LE ARNED CIT (APPEALS) IN THIS REGARD. THE GROUND OF APPEAL RAIS ED BY THE REVENUE IS DECIDED AGAINST IT. 8. THE GROUND NO.2 RAISED BY THE REVENUE RELATES T O DISALLOWANCE OF RS.22,32,298/- BY THE LEARNED CIT ( APPEALS) OUT OF TOTAL DISALLOWANCE OF RS.42,10,688/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES. 8 9. THE CONTENTION OF THE ASSESSEE BEFORE THE LEARNED CIT (APPEALS) WERE THREE FOLD. FIRSTLY, IT WAS SUBMITTED THAT AFTER NETTING THE INTEREST PAID AGAI NST THE INTEREST RECEIVED, THERE IS NO POSITIVE INTEREST WH ICH CAN BE CONSIDERED IN MAKING ANY DISALLOWANCE. SECONDL Y, IT WAS PRAYED THAT INTEREST ON TERM LOAN OF RS.2,12,92 ,379/- AND INTEREST ON PACKING CREDIT LOAN OF RS.1,95,408/ -, TOTALING TO RS.2,14,87,787/- BEING DIRECTLY RELATAB LE TO EARNING TAXABLE INCOME HAS TO BE EXCLUDED FOR COMPUTATION UNDER RULE 8D OF THE INCOME TAX RULES. THIRDLY, IT WAS STATED THAT THE ASSESSEE POSSESSED SUFFICIENT OWNED FUNDS TO MAKE INVESTMENTS, THEREFO RE, NO DISALLOWANCE IS CALLED FOR UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES. THE LE ARNED CIT (APPEALS), RELYING ON HIS OWN ORDER IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2009-10, WHEREBY REFERRING TO THE ORDER OF I.T.A.T. IN ASSESSEES OWN CASE FOR AS SESSMENT YEAR 2008-09, SAME RELIEF WAS GRANTED TO THE ASSESS EE, ACCEPTS THE SECOND CONTENTION OF THE ASSESSEE, I.E. THE INTEREST PAID WHICH IS DIRECTLY RELATABLE TO EARNIN G THE TAXABLE INCOME, VIZ INTEREST ON CASH CREDIT AND PAC KING CREDIT, DIRECTED THE ASSESSING OFFICER TO EXCLUDE T HE SAME FOR COMPUTING DISALLOWANCE UNDER RULE 8D OF THE INC OME TAX RULES. HOWEVER, HE DID NOT CONCUR WITH THE OT HER TWO CONTENTIONS OF THE ASSESSEE. THIS WAY, A PARTI AL RELIEF WAS GIVEN TO THE ASSESSEE. NOW, THE DEPARTMENT IS IN 9 APPEAL AGAINST THE RELIEF GRANTED BY THE LEARNED CI T (APPEALS), WHILE THE ASSESSEE IN ITS CROSS OBJECTIO N HAS RAISED THE ISSUE OF DISALLOWANCE CONFIRMED BY THE L EARNED CIT (APPEALS). 10. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LEARNED CI T (APPEALS) HAS FAILED TO APPRECIATE THAT THE ASSESSE E HAS MADE INVESTMENTS WHICH WOULD YIELD EXEMPTED INCOME AND THUS, SECTION 14A OF THE ACT READ WITH RULE 8D OF T HE INCOME TAX RULES HAS TO COME INTO PLAY MANDATORILY. 11. AS REGARDS ASSESSEES CROSS OBJECTION, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACTION OF THE LEARNED CIT (APPEALS) TO THE EXTENT OF CONFI RMING THE DISALLOWANCE IS AS PER LAW. 12. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UP ON THE ORDER OF THE LEARNED CIT (APPEALS) TO THE EXTEN T RELIEF GIVEN BY HIM. HIS SUBMISSION WAS THAT THE FACTS O F THE CASE ARE VERY CLEAR, SINCE THE INTEREST ON TERM LOA N AND PACKING CREDIT BEING DIRIECTLY RELATABLE TO EARNING THE TAXABLE INCOME, IT CAN NEVER BE TAKEN INTO CONSIDER ATION FOR THE PURPOSES OF COMPUTATION UNDER RULE 8D OF TH E INCOME TAX RULES. FURTHER, IT WAS STATED THAT THE LEARNED CIT (APPEALS) HIMSELF HAS GIVEN RELIEF ON T HE BASIS OF ORDER OF THE I.T.A.T. IN EARLIER YEAR IN ASSESSE ES OWN CASE. AS REGARDS ITS CROSS OBJECTION, THERE WERE TWO CONTENTIONS. FIRSTLY, THE LEARNED COUNSEL FOR THE ASSESSEE 10 REQUESTED FOR NETTING OFF INTEREST. RELIANCE WAS PALCED ON A NUMBER OF JUDGMENT OF VARIOUS BENCHES OF THE TRIB UNAL, INCLUDING THAT OF CHANDIGARH BENCH IN THE CASE OF SHRI SHIV PARSHAD AGGARWAL VS. ACIT, ITA NO.927/CHD/2012 , DATED 27.3.2014. SECONDLY, IT WAS ARGUED THAT IN VIEW OF THE FACT THAT THE ASSESSEE POSSESS SUFFICIENT OWNED FUND TO MAKE INVESTMENTS, NO DISALLOWANCE OF INTEREST CA N BE MADE. 13. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE DO NOT FIND INFIRMITY IN THE ORDER OF THE LEARNE D CIT (APPEALS) TO THE EXTENT OF GRANTING RELIEF TO THE A SSESSEE, AS HE HAS GIVEN IT ON THE BASIS OF THE ORDER OF THE I.T.A.T. IN ASSESSEES OWN CASE IN EARLIER YEAR. THERE CAN BE NO QUARREL ABOUT THE FACT THAT WHILE MAKING THE COMPUT ATION UNDER RULE 8D OF THE INCOME TAX RULES, THE EXPENDIT URE WHICH IS DIRECTLY RELATABLE TO EARNING THE TAXABLE INCOME HAS TO BE EXCLUDED. THE WORDING OF RULE 8D (II) O F THE INCOME TAX RULES IS QUITE CLEAR AS IT HAS BEEN POST ULATED IN THIS PROVISION THAT THE INTEREST RELATABLE TO IN VESTMENT IN TAX FREE FUNDS IS TO BE COMPUTED. THEREFORE, W E DO NOT FIND ANY NEED TO INTERFERE IN THE FINDING GIVEN BY THE LEARNED CIT (APPEALS). THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 11 14. AS REGARDS THE CROSS OBJECTION FILED BY THE ASSESSEE, WE HAVE NO HESITATION IN HOLDING THAT FOR THE PURPOSES OF COMPUTATION UNDER RULE 8D OF THE INCOME TAX RULES, THE NETTING OFF THE INTEREST INCOME OUT OF I NTEREST EXPENDITURE IS TO BE ALLOWED TO THE ASSESSEE. THI S ISSUE HAS BEEN VERY APTLY DISCUSSED BY THE I.T.A.T., CHAN DIGARH BENCH IN THE CASE OF SHIV PARSHAD AGGARWAL (SUPRA ) AT PARA 9, WHICH READS AS UNDER : 9. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAD INCURRED INTE REST EXPENDITURE WHICH IS SET-OFF AGAINST THE INTEREST I NCOME OFFERED UNDER THE HEAD INCOME FROM OTHER SOURCES AND WHERE NO INTEREST EXPENDITURE IS REMAINING TO BE SE T OFF, THERE IS NO MERIT IN THE ORDERS OF THE AUTHORITIES BELOW IN MAKING THE DISALLOWANCE UNDER SECTION 14A OF THE AC T IN LINE WITH RULE 8D(II) OF THE IT RULES. THE ASSESSEE DUR ING THE YEAR UNDER CONSIDERATION HAD EARNED DIVIDEND INCOME OF RS. 305,730/- AGAINST WHICH DISALLOWANCE OF RS. 39,80,7 07/- WAS MADE BY INVOKING THE PROVISIONS OF SECTION 14A OF T HE ACT. WE DELETE THE ADDITION MADE UNDER SECTION 14A READ WITH RULE 8D(II) AT RS. 33,08,071/-. HOWEVER, IN VIEW OF THE ASSESSEE HAVING INCURRED VARIOUS EXPENDITURES, THE DISALLOWANCE WARRANTED UNDER RULE 8D(III) AT % OF THE AVERAGE OF THE VALUE OF INVESTMENT AT RS. 672,635/- IS UPHELD. THE GROUNDS OF APPEAL NO. 1 TO 4 RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 15. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING T HE ORDER OF THE COORDINATE BENCH, WE ALLOW THIS GROUND OF CROSS OBJECTION RAISED BY THE ASSESSEE AND DIRECT T HE ASSESSING OFFICER TO RECOMPUTE THE DISALLOWANCE AS PER THE DIRECTIONS GIVEN ABOVE. THE OTHER CONTENTION RAIS ED BY THE ASSESSEE IN ITS CROSS OBJECTION IS THAT SINCE A SSESSEE 12 HAS SUO MOTTO DISALLOWED THE EXPENSES UNDER SECTION 14A OF THE ACT AMOUNTING TO RS.5,94,638/-, THE ASSESSIN G OFFICER CANNOT MAKE FURTHER DISALLOWANCE ON ACCOUNT OF EXPENDITURE. IT IS AN ADMITTED FACT THAT THE ASSE SSEE ITSELF HAS DISALLOWED AN AMOUNT OF RS.5,94,638/- ON ACCOUNT OF EXPENSES RELATABLE TO EARNING THE TAX FR EE INCOME. IN SUCH A SCENARIO, THE ASSESSING OFFICER HAD TO RECORD A SATISFACTION AS TO WHY HE IS NOT SATISFIED WITH THE DISALLOWANCE SO MADE BY THE ASSESSEE. UNDER SUB-S ECTION (2) OF SECTION 14A OF THE ACT, THE ASSESSING OFFICE R IS REQUIRED TO EXAMINE THE ACCOUNTS OF THE ASSESSEE AN D ONLY WHEN HE IS NOT SATISFIED WITH THE CORRECTNESS OF TH E CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE IN RELATI ON TO EXEMPT INCOME, HE CAN DETERMINE THE AMOUNT OF EXPENDITURE WHICH SHOULD BE DISALLOWED IN ACCORDANC E WITH THE METHOD PRESCRIBED, I.E. RULE 8D OF THE INC OME TAX RULES. EVEN SUB-RULE (1) OF RULE 8D ALSO CATEGO RICALLY STATES THE SAME POSITION. SUB-RULE (2) OF RULE 8D DOES NOT COME INTO PLAY UNLESS THE CONDITION PRESCRIBED UNDER SUB-RULE (1) IS SATISFIED WE DO NOT FIND ANY SUCH SATISFACTION HAVING BEEN RECORDED BY THE ASSESSING OFFICER BEFORE INVOKING SUB-RULE (2) OF RULE 8D OF THE INCO ME TAX RULES. THIS VIEW HAS BEEN HELD BY THE HON'BLE JURIS DICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DEEPAK MITTAL (2013) 361 ITR 131 (P&H) ALSO. IN VIEW O F THE ABOVE, EVEN THE DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF INCOME TAX RULES IS NOT SUSTAINABLE. 13 CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 16. THE GROUND N.3 RAISED BY THE REVENUE IS WITH REGARD TO DELETION OF DISALLOWANCE OF RS.1,82,94,62 5/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECI ATION CLAIMED ON PEF AND TRANSMISSION LINES USED WITH WIN D TURBINE GENERATOR. 17. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD INSTALLED SIX WIND TURBINE GENERATORS DURING THE CURRENT ASSESSMENT YEAR ON WHICH DEPRECIATION @ 80% HAS BEEN CLAIMED. THE ASSESSING OFFICER NOTED THA T THE ASSESSEE HAS INCLUDED ELECTRIC LINE INSTALLATION AN D POWER EVACUATION FACILITY (IN SHORT PEF) AS A PART OF T HE TOTAL UNIT OF WIND TURBINE GENERATORS, ON WHICH DEPRECIAT ION @ 80% HAD BEEN CLAIMED. THE ASSESSING OFFICER WAS O F THE VIEW THAT THE PEF AND ELECTRIC LINE INSTALLATIONS W ERE NOT ELIGIBLE FOR DEPRECIATION @ 80%. HE ALSO NOTED TH AT THE PEF WAS NOT OWNED BY THE ASSESSEE BUT IN FACT, IT H AD ACQUIRED RIGHTS TO USE THE PEF BY MAKING A ONE TIME PAYMENT TO RRB ENERGY AND SUZLON COMPANY. SINCE T HE ASSESSEE HAD GOT AN ENDURING BENEFIT THROUGH THIS, AS SUCH, THE EXPENDITURE INCURRED WAS CAPITAL IN NATUR E. IN THIS WAY, THE ENTIRE DEPRECIATION CLAIMED ON PEF @ 80% WAS DISALLOWED BY THE ASSESSING OFFICER. REGARDING DEPRECIATION ON ELECTRIC LINE FOR POWER TRANSMISSIO N, THE ASSESSING OFFICER HELD THAT THE SAME IS ELIGIBLE FO R DEPRECIATION AT NORMAL RATE OF 15%. IN THIS WAY, A 14 DISALLOWANCE OF RS.1,82,94,625/- WAS MADE BY THE ASSESSING OFFICER. 18. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMITTED BY THE ASSESSEE THAT SIMILAR ISSUE AROSE IN ASSESSMENT YEARS 2008-09 AND 2009-10 ALSO. IN BOTH THE YEARS, THE DISALLOWANCE SO MADE BY THE ASSESSING OF FICER WAS DELETED BY THE CIT (APPEALS). IN ASSESSMENT Y EAR 2008-09 ON APPEAL FILED BY THE DEPARTMENT, THE CHANDIGARH BENCH OF THE TRIBUNAL UPHELD THE ACTION OF THE CIT (APPEALS) AND DELETED THE ADDITION. RELYING O N THE ORDER OF THE CHANDIGARH BENCH IN ASSESSEES OWN CAS E FOR ASSESSMENT YEAR 2008-09, THE CIT (APPEALS) DELETED THE ADDITION. 19. AGGRIEVED BY THE SAID ORDER OF THE LEARNED CIT (APPEALS), THE DEPARTMENT HAS COME UP IN APPEAL BEF ORE US. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED COUNSEL FOR TH E ASSESSEE APART FROM REITERATING THE SUBMISSIONS MAD E BEFORE THE LOWER AUTHORITIES ALSO DREW OUR ATTENTIO N TO THE ORDER OF THE CHANDIGARH BENCH IN ASSESSEES OWN CAS E FOR ASSESSMENT YEAR 2009-10, WHEREBY ON SIMILAR ISSUE T HE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER WAS DELETED. 20. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. 15 ON PERUSAL OF THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH FOR ASSESSMENT YEAR 2009-10, WE SEE THAT ON EXACTLY THE SAME ISSUE, THE I.T.A.T. DISMISSED THE APPEAL OF TH E REVENUE HOLDING AS UNDER : 26. THE ISSUE IN GROUND OF APPEAL NO. 3 RAISED BY THE REVENUE AGAINST THE DELETION OF ADDITION MADE ON AC COUNT OF DISALLOWANCE OF DEPRECIATION ON WIND TURBINE GENERATOR. WE FIND THAT IDENTICAL ISSUE AROSE BEFOR E THE TRIBUNAL IN ASSESSMENT YEAR 2008-09 AND THE TRIBUNA L VIDE PARAS 28 TO 31 HELD AS UNDER : 28. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING VIDE PRESENT GROUND OF APPEAL IS IN RELATION TO ALLOWABILITY OF DEPRECIATION ON POWER EVACUATION INFRASTRUCTURE FACILITY AND ALSO ON THE TRANSMISSION LINES. THE PLEA OF THE ASSESSEE WAS THAT THE SAID POWER EVACUATION INFRASTRUCTURE FACILITY WAS PART AND PARCEL OF THE WINDMILL, WHICH COULD NOT RUN WITHOUT THE SAME. THE ASSESSEE CLAIMED TO HAVE MADE PAYMENTS TO SUZLON ENERGY LTD. FOR BECOMING PART OWNER OF THE SAID FACILITY ALONGWITH OTHER PERSONS WHO WERE UTILIZING THE SAID FACILITY. THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE SAID PART OWNERSHIP AS THE FACILITY WAS SET UP BY SUZLON ENERGY LTD. JOINTLY FOR GROUP OF WINDMILLS, AS IT WAS NOT VIABL E TO SET UP INDEPENDENT POWER EVACUATION INFRASTRUCTURE FACILITY FOR EACH AND EVERY INDIVIDU AL OWNER OF THE WINDMILL. IT WAS ALSO CERTIFIED BY SUZLON ENERGY LTD. THAT THE OWNERSHIP OF THE SAID ASSET HAS BEEN TRANSFERRED TO THE ASSESSEE AND NO DEPRECIATION WAS CLAIMED BY THEM ON THE SAID POWER EVACUATION INFRASTRUCTURE FACILITY. THE CONFIRMATI ON FROM SUZLON ELERGY LTD. HAS BEEN REPRODUCED BY THE CIT (APPEALS), COPY OF WHICH IS FILED BY THE ASSESSEE DURING THE COURSE OF HEARING, WHICH READS AS UNDER: 'THIS HAS REFERENCE TO YOUR QUERY SEEKING CLARIFICATION WITH REGARDS TO COSTS BORNE BY YOU ON SETTING UP OF POWER EVACUATION FACILITY FOR THE WIND MILL IN THE STATE OF GUJARAT. 16 1. THE POWER EVACUATION FACILITY (PEF) SET UP BY US FOR YOU IS PART & PARCEL OF THE WIND MILL. PEF OR THE WIND MILL WOULD BE USELESS WITHOUT THE OTHER. EXISTENCE OF BOTH IS IMPERATIVE FOR RUNNING OF WIND MILL. THIS FACILITY IS SET UP JOINTLY FOR GROUP OF WIND MILLS AS IT IS NOT VIABLE OR FEASIBLE TO SET UP INDEPENDENT PRF FOR EACH AND EVERY INDIVIDUAL WIND MILL OWNER. 2. ALL OPERATIONAL AND BENEFICIAL RIGHTS ATTACHED TO THE POWER EVACUATION F ACILITY HAVE BEEN TRANSFERRED TO YOU. YOU ARE PART OF OWNER OF PEF TILL THE LIFE OF THE WIND MILL. 3. SUZLON ENERGY HAS NEVER CLAIMED ANY DEPRECIATION ON THIS POWER EVACUATION FACILITY.' 29. THE ASSESSEE HAD ALSO CLAIMED THE TRANSMISSION LINES THROUGH WHICH ELECTRICITY IS TRANSMITTED TO ELECTRICITY BOARD AS PART AND PARCEL OF THE WINDMILL. THE ASSESSING OFFICER HAD ALLOWED DEPRECIATION ON THE SAME AT LOWER RATES. 30. THE MUMBAI BENCH OF THE TRIBUNAL IN TRUMAC ENGINEERING CO. PVT. LTD. VS. INCOME TAX OFFICER (SUPRA) HELD THAT TRANSMISSION LINES ARE PART AND PARCEL OF THE WINDMILL AND ARE ENTITLED TO DEPRECIATION @ 100%. THE CIT (APPEALS) WHILE DECIDING THE APPEAL OF THE PRESENT ASSESSEE BEFORE US REFERRED TO THE DECISION IN TRUMAC ENGINEERING CO. PVT. LTD. VS. INCOME TAX OFFICER (SUPRA) AND OBSERVED AS UNDER: THE OTHER JUDGMENT CITED BY THE COUNSEL IS IN THE CASE OF TRUMAC ENGINEERING COMPANY PVT. LTD VS. ITO OF ITA NO. 555/MUM/2003. THE ISSUE RELATED TO REOPENING U/S 147 AND ALSO TO DEPRECIATION ON THE WIND MILL. AS PER AS REOPENING WAS CONCERNED IT WAS DECIDED AGAINST THE ASSESSEE. THE OTHER ISSUE WERE DEALT ON MERITS. THE ASSESSEE HAD CAPITALIZED SOME OF RS. 42.50 LAKHS BEING THE PAYMENT ON ACCOUNT OF CONTRIBUTION MADE TO GEDA FOR CREATION OF COMMON SUB-STATION FOR EVACUATION OF POWER FROM WIND FARM. THE AO HELD THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE AS THE PAYMENT IS NOT MADE FOR CREATING AN ASSET NOR IT IS OWNED BY THE ASSESSEE. THE ASSESSEE FAILED BEFORE THE CIT(A) AND HENCE THE APPEAL BEFORE THE HON'BLE TRIBUNAL. THE TRIBUNAL EXAMINED THE FACTS OF THE CASE IN DETAIL AND HELD AS UNDER:- 17 'CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ASSESSEE'S APPEAL IS O BE ALLOWED ON MERIT. FIRSTLY, IT IS TO BE SEEN THAT THESE MACHINERIES HAD NO INDEPENDENT FUNCTIONING AS SUCH. MERELY BECAUSE IT IMPROVES THE WORKING SYSTEM OR CONTROLLING/MONITORING SYSTEM, IT CANNOT BE TREATED AS AN INDEPENDENT MACHINERY AND NOT PART OF THE INTEGRATED MACHINERY. THE SUBMISSION OF THE LEARNED COUNSEL IS THAT IF THE MACHINERY INSTALLED AT THE FIRST STAGE OF INSTALLING THE WINDMILL ITSELF, THE CLAIM OF THE ASSESSEE WOULD HAVE BEEN ALLOWED. MERELY BECAUSE FOR SOME REASON OR OTHER IT WAS SUBSEQUENTLY INSTALLED DOES NOT MEAN THAT IT IS NOT A PART OF THE MACHINERY AS SUCH. SINCE THE MACHINERY HAD NO INDEPENDENT FUNCTIONING, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE IS TO BE ALLOWED. COMING TO THE PAYMENT MADE TO GEDA, WE ARE OF THE VIEW THAT THE DECISION OF THE HON'BLE CALCUTTA HIGH IT IN THE CASE OF BIRLA JUTE MANUFACTURING LTD (SUPRA) IS CLEARLY APPLICABLE. IN CASE OF EXCEL INDUSTRIES LTD (SUPRA), THE HON'BLE BOMBAY HIGH COURT HELD; PAYMENT MADE FOR OVERHEAD SERVICE LINE, WHICH REMAINED THE PROPERTY OF TRICKY BOARD IS ALLOWABLE AS REVENUE EXPENDITURE. ON FACTS, IN THE INSTANT CASE TIE ASSESSEE, THE PAYMENT TO GEDA IS TO BE ALLOWED IN THE LIGHT OF THIS DECISION OF THE JURISDICTIONAL HIGH COURT. HENCE, APPEAL BY THE ASSESSEE WITH REGARD TO L,2,3,AND 4 ARE ALLOWED 31. THE PUNE BENCH OF THE TRIBUNAL IN POONAWALA FINVEST & AGRO P. LTD. VS. ACIT (SUPRA) HELD AS UNDER: I HAVE GONE THROUGH THE JUDGMENT REPORTED IN (2008) 118 TTJ 68 (PUNE)(TRIBUNAL). ONE OF THE ISSUES IN THE SAID JUDGMENT RELATED TO DEPRECIATION IN RESPECT OF ELECTRICAL ITEMS LIKE TRANSFORMER AND INTERNAL LINES UPTO METERING FOR WHICH THE ASSESSEE HAD PAID RS. 7.00 LAKHS TO SUZLON DEVELOPERS PVT. LTD. THIS GADGET WAS FOR TRANSMISSION OF ELECTRICAL POWER GENERATED UPTO SUB-DIVISION OF MSEB. THE HON'BLE TRIBUNAL HELD THAT THE ELECTRICAL ENERGY SO PRODUCED BY THE WIND MILL IS A WASTE IF IT IS NOT TRANSMITTED TO MSEB SUB-STATION. THE FUNCTION OF SUCH UNIT IS THAT THE ELECTRICITY SO GENERATED IS REQUIRED TO BE TRANSFERRED AND TRANSMITTED TO CABLE LINE UPTO SUB-STATION, WHERE THE ACTUAL 18 UNITS SO GENERATED ARE STORED AND METERED. SINCE THIS IS THE FUNCTION OF TRANSFORMER UPTO DP STRUCTURE, HENCE OUGHT TO BE HELD AS AN INTEGRAL PART OF WIND MILL AND IS CONSEQUENTLY ENTITLED FOR HIGHER RATE OF DEPRECIATION. THE FACTS OF THE CASE ARE IDENTICAL WITH THE FACTS OF THE APPELLANT. 32. THE AHMEDABAD BENCH OF THE TRIBUNAL IN ACIT(OSD) VS. PARRY ENGINEERING & ELECTRONICS P. LTD. IN ITA NO.3317/AHD/2011 WITH C.O.NO.44/AHD/2012 HELD AS UNDER : 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). THE DEPRECIATION IS ALLOWABLE ON RENEWABLE ENERGY DEVICE WHICH ALSO INCLUDES WINDMILL. THE DEPRECIATION AT THE RATE OF 80% IS ALLOWABLE ON THE ENTIRE DEVICE WHICH IS CAPABLE OF GENERATING ELECTRICITY USING WIND ENERGY. THERE IS NO PROVISION IN THE ACT TO BIFURCATE THE DEVICE INTO SEVERAL PARTS AND ALLOW DEPRECIATION THEREON AT DIFFERENT RATES OF DEPRECIATION. THE FOUNDATION, CIVIL AND ELECTRICAL WORKS ARE NECESSARY FOR THE INSTALLATION OF THE WINDMILL AND IS CLEARLY PART AND PARCEL OF THE WINDMILL PROJECT ON WHICH DEPRECIATION AT THE RATE OF 80% IS ALLOWABLE. THE CIT(A) HAS REFERRED TO THE DECISIONS OF THE HIGH COURTS WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUND TAKEN IN THE APPEAL OF THE REVENUE WITH REGARD TO THE DEPRECIATION AND ADDITIONAL DEPRECIATION ON THE FOUNDATION, CIVIL & ELECTRICAL WORKS, INSTALLATION, PAYMENT TO GEDA IS DISMISSED. HOWEVER, WITH REGARD TO DEPRECIATION ON THE CAPITALIZED INTEREST, THERE IS NO FINDING IN THE ORDERS OF THE AO AND THE CIT(A) THAT NO PART OF THE BORROWED AMOUNT WAS UTILISED FOR THE PURCHASE OF THE LAND. ACCORDINGLY, THIS LIMITED ISSUE IS RESTORED TO THE FILE OF THE AO WITH THE DIRECTIONS TO VERIFY THE FACTS AND IN CASE THE BORROWED AMOUNT HAS BEEN UTILISED FOR THE PURPOSE OF PURCHASE OF THE LAND, THEN TO DISALLOW THE DEPRECIATION ON THE CAPITALIZED INTEREST TO THAT EXTENT. WE DIRECT ACCORDINGLY. 33. IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE IS PART OWNER OF POWER EVACUATION INFRASTRUCTURE FACILITY, THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE SAID ASSET. 19 UNDER THE PROVISIONS OF SECTION 32 OF THE ACT, DEPRECIATION IS ALLOWABLE ON THE ASSET WHETHER OWNED WHOLLY OR PARTLY BY THE ASSESSEE BUT THE CONDITION IS THAT THE SAME SHOULD BE USED FOR THE PURPOSES OF BUSINESS. IN VIEW OF THE RATIO LAID DO WN BY THE PUNE BENCH OF THE TRIBUNAL IN POONAWALA FINVEST & AGRO P. LTD. VS. ACIT (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL IN TRUMAC ENGINEERING CO. PVT. LTD. VS. INCOME TAX OFFICER (SUPRA) AND THE AHAMEDABAD BENCH OF THE TRIBUNAL IN ACIT(OSD) VS. PARRY ENGINEERING & ELECTRONICS P. LTD. (SUPRA), WE HOLD THAT THE POWER EVACUATION INFRASTRUCTURE FACILITY IS PART AND PARCEL OF THE WINDMILL THOUGH PARTLY OWNED BY THE ASSESSEE ON WHICH THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION AT THE SAME RATE ON WHICH DEPRECIATION WAS ALLOWED ON THE WINDMILL. FURTHER THE ASSESSEE IS ALSO ENTITLED TO THE CLAIM OF DEPRECIATION AT HIGHER RATE ON THE TRANSMISSION LINES WHICH AGAIN ARE PART AND PARCEL OF THE WINDMILL. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS GROUND NO.3 RAISED BY THE REVENUE. 27. THE ISSUE RAISED BEFORE US IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL (SUPRA) AND FOLLOWING TH E SAME PARITY OF REASONING, UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN FOLLOWING FINDINGS OF THE TRIBUNAL IN EARLIER YEARS, WE DISMI SS GROUNDS OF APPEAL NO. 3 RAISED BY THE REVENUE. 21. SINCE NO DISTINGUISHING FACTS WERE BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH WE DISMISS THIS GROUND OF APPEAL T AKEN BY THE REVENUE. 22. THE GROUND NOS.4 AND 5 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND, HENCE NEEDS NO ADJUDICAT ION. 23. THE APPEAL OF THE REVENUE IS DISMISSED. 20 C.O.NO.31/CHD/2013 (IN ITA NO.931/CHD/2013) : 23. THE ONLY ISSUE RAISED IN THE CROSS OBJECTION FILED BY THE ASSESSEE IS AGAINST THE ACTION OF THE LEARNED CIT (APPEALS) IN CONFIRMING THE PART OF DISALLOWANC E MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE A CT READ WITH SECTION 8D OF THE INCOME TAX RULES. THIS ISS UE HAS BEEN DECIDED BY US IN GROUND NO.2 RAISED BY THE REV ENUE IN ITA NO.931/CHD/2013. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 24. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ITA NO.687/CHD/2014 : 25. IT IS RELEVANT TO OBSERVE HERE THAT THE ALL TH E GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE SI MILAR TO GROUNDS RAISED BY THE REVENUE IN ITA NO.931/CHD/2013 AND THE FINDINGS GIVEN IN ITA NO.931/CHD/2013 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. C.O.NO.35/CHD/2014 (IN ITA NO.931/CHD/2014) : 26. THE ISSUES RAISED BY THE ASSESSEE IN THIS CROS S OBJECTION ARE SIMILAR TO THE ISSUES RAISED BY THE R EVENUE IN C.O.NO.31/CHD/2013 AND THE FINDINGS GIVEN IN C.O.NO.31/CHD/2013 SHALL APPLY TO THIS CASE MUTATIS MUTANDIS. 21 27. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE IN ITA NO.931/CHD/2013 AND ITA NO.687CHD/2014 ARE DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSE E IN C.O.NO.31/CHD/2013 AND C.O.35/CHD/2014 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF NOVEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 27 TH NOVEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH