M/s Vardhman Polytex Limited, Ludhiana V. DCIT, Ludhiana

CO 39/CHANDI/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2495 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 09-05-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 24-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Depreciation; Earning of tax free income; Proportionate interest; Additional evidence; Capital receipt; Revenue expenditure; Capital expenditure; TDS; Rule 8D
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !' #$ % & ' ($ , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.837/CHD/2018 / ASSESSMENT YEAR : 2010-11 M/S VARDHMAN POLYTEX LTD., VARDHMAN PARK, CHANDIGARH ROAD, LUDHIANA. THE D.C.I.T., CIRCLE-I, LUDHIANA. ./PAN NO: AAACV5821H ./ ITA NO.1062/CHD/2016 / ASSESSMENT YEAR : 2011-12 THE D.C.I.T., CIRCLE-I, LUDHIANA. M/S VARDHMAN POLYTEX LTD., VARDHMAN PARK, CHANDIGARH ROAD, LUDHIANA. ./PAN NO: AAACV5821H C.O. NO.39/CHD/2016 IN ./ ITA NO.1062/CHD/2016 / ASSESSMENT YEAR : 2011-12 M/S VARDHMAN POLYTEX LTD., VARDHMAN PARK, CHANDIGARH ROAD, LUDHIANA. . THE D.C.I.T., CIRCLE-I, LUDHIANA. ./PAN NO: AAACV5821H ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 2 /ASSESSEE BY : SHRI SUBHASH AGGARWAL, ADV. / REVENUE BY : SHRI MANJIT SINGH, SR. DR ! ' /DATE OF HEARING : 09.05.2019 #$%& ' /DATE OF PRONOUNCEMENT: 21.06.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER THE APPEAL OF THE ASSESSEE IN ITA NO.837/CHD/2018 AND THE APPEAL OF THE REVENUE IN ITA NO.1062/CHD/20 18 AND ASSESSES CROSS OBJECTION IN CO NO.39/2016, HAVE BEEN FILED AGAINST THE SEPARATE ORDERS OF THE COMMISSION ER OF INCOME TAX (APPEALS)-1, LUDHIANA (IN SHORT CIT(A) DATED 29.3.2018 AND 26.7.2016 PASSED U/S 250(6) OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT), R ELATING TO ASSESSMENT YEARS 2010-11 AND 2011-12 RESPECTIVELY. SINCE COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF F BY THIS COMMON, CONSOLIDATED ORDER. FOR THE SAKE OF CONVEN IENCE, WE SHALL FIRST BE TAKING UP THE APPEAL OF THE ASSES SEE IN ITA NO.837/CHD/2018 . ITA NO.837/CHD/2018(ASSESSEES APPEAL): A.Y 2010-11 ) 2. THE GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE ARE LEGAL GROUNDS CHALLENGING THE JURISDICTION ASSU MED ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 3 BY THE A.O. IN INITIATING PROCEEDINGS U/S 147/148 O F THE ACT AND THE SAME READ AS UNDER: 1. THAT THE LEARNED CIT(A)-1 HAS ERRED IN CONFIRMI NG THE ACTION OF THE AO IN INITIATING PROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT. 2. THAT ALL THE FACTS STOOD DISCLOSED AND DISCUSSED DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS AND TH ERE WAS NO JUSTIFICATION FOR THE ISSUE OF NOTICE U/S 14 7/148. 3. THE SAID GROUNDS WERE NOT PRESSED BEFORE US AND, THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UNDER: 3. THAT THE CIT(A) HAS ERRED IN CONFIRMING PREMIUM OF RS. 1,75,72,704/--PAYABLE ON REDEMPTION OF FCCB BONDS WRONGLY HOLDING THE SAME TO THE IN THE NATURE OF CAPITAL EXPENDITURE. 5. THE ABOVE GROUND RELATES TO THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE OF EXPENSES BEING PREMIUM PAYABLE ON REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS(IN SHORT REFERRED TO AS FCCB) AMOUNTING TO RS.1,75,72,704/-. 6. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE COMPANY HAD RAISED ZERO COUPON FCCB ON 12.2.2008 AT PAR AGGREGATING TO USD 10 MILLION. THE FCCB HAD MATURITY PERIOD OF 5 YEARS AND 7 DAYS AND ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 4 WERE OPTIONALLY CONVERTIBLE INTO EQUITY SHARES AT A PRICE OF RS.106.86 PER SHARE OR WERE TO BE REDEEMED AT A PREMIUM OF 3.26% WITHIN THE STIPULATED PERIOD. TH E ASSESSEE HAD CLAIMED THE PREMIUM PAYABLE ON THE REDEMPTION OF THE SAID BONDS AS A REDUCTION FROM TH E SHARE PREMIUM ACCOUNT IN ITS BALANCE SHEET, BUT IN THE COMPUTATION OF INCOME ACCOMPANYING THE RETURN O F INCOME, THE SAME WAS REDUCED FROM THE INCOME ON WHICH THE TAX WAS PAYABLE, CLAIMING IT AS A REVENUE EXPENDITURE. THE ENTIRE AMOUNT SO CLAIMED, AMOUNTIN G TO RS.1,75,72,704/-, WAS DISALLOWED BY THE A.O., ON THE GROUND THAT THE SAID EXPENDITURE WAS CAPITAL IN NATURE. THIS WAS UPHELD BY THE LD.CIT(A) FOLLOWING THE ORDERS PASSED BY THE FIRST APPELLATE AUTHORITY IN T HE CASE OF THE ASSESSEE ITSELF IN SUBSEQUENT ASSESSMEN T YEARS I.E. ASSESSMENT YEARS 2011-12 AND 2012-13. 7. BEFORE US, THE LD.COUNSEL FOR THE ASSSESSEE AT T HE OUTSET POINTED OUT THAT IDENTICAL ISSUE HAD BEEN DE ALT WITH BY THE ITAT CHANDIGARH BENCH IN THE CASE OF VARDHMAN TEXTILES LTD. VS. ADDL.CIT IN ITA NO.787/2015, 894/2015, 483/2016 AND 518/2016 DATED 14.3.2019 HOLDING THE PREMIUM ON FCCB BONDS ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 5 TO BE REVENUE IN NATURE. RELIANCE WAS ALSO PLACED O N THE DECISION OF THE I.T.A.T., HYDERABAD BENCH IN TH E CASE OF GATI LTD. VS. ACIT IN ITA NO.1467/2017, DAT ED 20.6.2018 AND ON THE DECISION OF THE I.T.A.T., MUMB AI BENCH IN THE CASE OF STRIDES SHASUN LTD. VS. ACIT I N ITA NO.864/2011 DATED 8.6.2018. COPIES OF ALL THE ABOVE ORDERS WERE PLACED BEFORE US. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE ORDER OF THE ITAT CHANDIGARH BENCH IN THE CASE OF VARDHMAN TEXTILES LTD. (SUPRA) AND F IND THAT THE I.T.A.T. IN THE SAID CASE HAD DEALT WITH T HE TREATMENT OF THE PREMIUM PAID ON FCCB BONDS WHETHER CAPITAL OR REVENUE IN NATURE AND HAD HELD THAT THE SAME WAS REVENUE IN NATURE. AT THE SAME TIME, WE FIND THAT THE I.T.A.T. HAD ALSO HELD THAT THE SAID EXPENDITURE WAS TO BE ALLOWED ONLY FOR THE YEA R OF PAYMENT AND THE RELEVANT FINDINGS OF THE I.T.A.T. A T PARA NOS.13 TO 15 OF THE ORDER ARE AS UNDER: ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 6 13. GROUND NO.5 : VIDE GROUND NO.5, THE ASSESSEE HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN HOLDING THAT THE PREMIUM PAID ON REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB) IS CAPITAL RECEIPT AS AGAINST THE CLAIM OF THE ASSESSEE THAT THE SAME IS REVENUE EXPENDITURE. THE FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE ISSUED FOREIGN CURRENCY CONVERTIBLE BONDS IN THE YEAR 2006 AND THESE WERE TO BE MATURED IN FEBRUARY 2011. AS THE BONDS HOLDERS DID NOT EXERCISE THEIR OPTION TO CONVERT THE BONDS IN EQUITY SHARES, SO FCCB WERE REPAID ALONG WITH PREMIUM / INTEREST @ 6% PER ANNUM. THE LOWER AUTHORITIES TREATED THE AFORESAID PAYMENT AS CAPITAL PAYMENT AND DENIED THE DEDUCTION OF EXPENDITURE IN THIS RESPECT. 14. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN TH E OWN CASE OF THE ASSESSEE M/S VARDHMAN TEXTILES LTD VS. ADDL. CIT LUDHIANA IN ITA NO. 1429/CHD/2010 FOR THE ASSESSMENT YEAR 2006-07 AND IN ITA NO. 270/CHD/2011 FOR ASSESSMENT YEAR 2007-08 ORDER DATED 18.12.2018, WHEREIN, ON IDENTICAL FACTS, THE TRIBUNAL AFTER CONSIDERING THE RELEVANT FACTS HAS HELD THAT THE SAID EXPENDITURE IS TO BE TREATED AS REVENUE EXPENDITURE, IN THE YEAR OF PAYMENT. THE RELEVANT FINDINGS OF THE TRIBUNAL ON THIS ISSUE ARE REPRODUCED AS UNDER:- 20. GROUND NO. 9 : VIDE GROUND NO.9, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING PREMIUM PAYABLE ON REDEMPTION OF OPTIONALLY CONVERTIBLE FOREIGN CURRENCY BONDS AS REVENUE EXPENDITURE. 21. THE LD. COUNSEL FOR THE ASSESSEE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT PATIALA VS. INDUSTRIAL CABLES (P) LTD. REPORTED IN (2007) 162 TAXMAN 272 (P&H), WHEREIN, THE ISSUE IS AS TO WHETHER THE PREMIUM PAID ON EXPIRY / REDEMPTION OF ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 7 DEBENTURES WAS TO BE TREATED AS CAPITAL EXPENDITURE OR REVENUE EXPENDITURE. THE HON'BLE COURT WHILE RELYING UPON THE OTHER CASE LAWS HELD THAT THE SAID PREMIUM PAID BY THE ASSESSEE ON REDEMPTION OF DEBENTURES AS REVENUE EXPENDITURE. THE LD. COUNSEL HAS FURTHER RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TAPARIA TOOLS LTD VS. JCIT (2015) 7 TAXMAN 361 WHEREIN, THE HON'BLE SUPREME COURT HAS HELD THAT SUCH TYPE OF PREMIUM / INTEREST PAID TO DEBENTURE HOLDERS WAS TO BE ALLOWED AS REVENUE EXPENDITURE IN THE YEAR OF PAYMENT ITSELF. ADMITTEDLY, IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS BOOKED THE AFORESAID EXPENSES PAYABLE WHICH WAS PAID IN THE ASSESSMENT YEAR 2011-12. IN VIEW OF THIS, THE SAID EXPENDITURE IS TO BE ALLOWED IN THE YEAR OF PAYMENT. SUBJECT TO THE ABOVE OBSERVATION, THIS GROUND OF THE ASSESSEES APPEAL FOR THE YEAR UNDER CONSIDERATION IS HEREBY DISMISSED. 15. THE LD. DR COULD NOT REBUT THE ABOVE FINDINGS OF THE TRIBUNAL BY BRINGING OUT ANY DISTINGUISHING FACT OR CASE LAW. IN VIEW OF THIS, THIS ISSUE, IN THE ABOVE TERMS, IS DECIDED IN FAVOUR OF THE ASSESSEE. 10. SINCE THE ISSUE INVOLVED IN THE PRESENT CASE IS IDENTICAL TO THAT IN THE CASE OF VARDHMAN TEXTILES LTD. (SUPRA) AND THE LD. DR HAVING NOT BROUGHT ANY DISTINGUISHING FACTS TO OUR NOTICE, NOR HAVING DRAW N OUR ATTENTION TO THE DECISION OF THE HON'BLE HIGH COURT OR HIGHER AUTHORITY CONTRARY TO THAT RENDERED BY ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 8 THE I.T.A.T. IN THE CASE OF VARDHMAN TEXTILES LTD. (SUPRA), THE DECISION RENDERED BY THE I.T.A.T. IN THE CASE OF VARDHMAN TEXTILES LTD. (SUPRA) WILL APPLY T O THE PRESENT CASE ALSO, FOLLOWING WHICH, WE HOLD THA T THE PREMIUM ON FCCB BONDS IS IN THE NATURE OF REVENUE AND IS TO BE ALLOWED IN THE YEAR OF PAYMENT OF THE SAME. GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS ALLOWED IN THE ABOVE TERMS. 11. IN EFFECT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.1062/CHD/2016(REVENUES APPEAL): 12. GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER: 1. WHETHER ON FACTS AND ON CIRCUMSTANCES OF THE CA SE IN LAW, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION AMOUNTING TO RS. 1,05,11,097/- MADE U/S 14A OF INCOME-TAX ACT, 1961 READ WITH RULE 8D? 13. THE ABOVE GROUND RELATES TO DISALLOWANCE OF EXPENSES PERTAINING TO EXEMPT INCOME EARNED BY THE ASSESSEE UNDER THE PROVISION OF SECTION 14A OF THE ACT. 14. BRIEFLY STATED, THE A.O. ON NOTICING THAT THE ASSESSEE HAD MADE INVESTMENT AMOUNTING TO ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 9 RS.13260.07 LACS AND HAD INCURRED INTEREST EXPENDITURE OF RS.4792.33 LACS, ASKED THE ASSESSEE WHY EXPENSES INCURRED IN RELATION TO THE SAME BE NO T DISALLOWED U/S 14A OF THE ACT, SINCE THE ASSESSEE H AD EARNED DIVIDEND INCOME FROM THE SAME WHICH WERE EXEMPT FROM TAXATION. THE ASSESSEE REPLIED THAT IT HAD EARNED DIVIDEND INCOME OF RS.11,57,390/- FROM THE SAID INVESTMENTS LIKE ANY OTHER INVESTOR AND SUBMITTED A DETAILED REPLY IN THIS REGARD. THE AO W AS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND APPLYING RULE 8D OF THE INCOME TAX RULES,1962, WORKED OUT THE DISALLOWANCE OF INTEREST AND ADMINISTRATIVE EXPENSES AT RS.98,38,097/- & RS.6,73,000/- RESPECTIVELY, AMOUNTING IN ALL TO RS.1,05,11,097/-. ACCORDINGLY DISALLOWANCE OF RS. 1,05,11,097/- WAS MADE U/S 14A OF THE ACT. 15. THE LD.CIT(A) DELETED THE DISALLOWANCE ON FINDI NG THAT IDENTICAL DISALLOWANCE MADE IN THE PRECEDING YEARS I.E. A.Y. 2008-09 TO 2010-11 HAD BEEN DELETED IN APPEAL BY THE LD.CIT(A). 16. BEFORE US, THE LD.COUNSEL FOR THE ASSSESSEE AT THE OUTSET POINTED OUT THAT THE MATTER HAD TRAVELLED UP TO ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 10 THE I.T.A.T. IN THE PRECEDING YEARS SINCE THE DEPARTMENT HAD GONE IN APPEAL AGAINST THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE AND THE I.T.A .T. HAD IN TURN UPHELD THE ORDER OF THE LD.CIT(A) ON FINDING THAT THERE WERE SUFFICIENT OWN FUNDS AVAILA BLE WITH THE ASSESSEE FOR THE PURPOSE OF MAKING THE IMPUGNED INVESTMENT, THUS RAISING THE PRESUMPTION THAT THE OWN FUNDS WERE USED FOR MAKING THE INVESTMENTS , CALLING FOR NO DISALLOWANCE OF INTER EST EXPENSES U/S 14A OF THE ACT, AND ALSO IN THE ABSENC E OF ANY SATISFACTION RECORDED BY THE AO AS TO THE CL AIM OF THE ASSESSEE OF NOT HAVING INCURRED ANY EXPENDIT URE FOR EARNING EXEMPT INCOME, THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES WAS ALSO DELETED. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE I.T.A.T. IN THIS REGARD FOR ASSESSMENT YEAR 2008-09 IN ITA NOS.372/CHD/2015 DATED 19.4.2016 AT PARA NOS.8 TO 10 OF THE ORDER AS UNDER: 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. AS POINTED OUT BY Y THE LEARNED COUNSEL FOR THE ASSESSEE, FROM THE PERUSAL OF RECORD, WE OBSERVE THAT THE ASSESSEE HAS MORE THAN SUFFICIENT OWNED FUNDS TO MAKE INVESTMENTS. SINCE IT IS HAVING HUGE OWNED ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 11 FUNDS AND IN COMPARISON TO THAT INVESTMENTS ARE OF A VERY LESSER AMOUNT, IN VIEW OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KAPSONS ASSOCIATES INVESTMENT P. LTD. (SUPRA), WE CAN SAFELY INFER THAT THE INVESTMENTS HAVE BEEN MADE OUT OF OWNED FUNDS AND NOT FROM BORROWED FUNDS. THIS PROPOSITION HAS ALSO BEEN LAID DOWN BY THE JURISDICTION HIGH COURT IN ANOTHER CASE OF BRIGHT ENTERPRISES P. LTD. VS. CIT IN ITA NO.224 OF 2013 (O&M) DATED 24.7.2015 IN THE FOLLOWING TERMS : 16. AS WE NOTED EARLIER, THE FUNDS/RESERVES OF THE APPELLANT WERE SUFFICIENT TO COVER THE INTEREST FREE ADVANCES MADE BY IT OF RS.10.29 CRORES TO ITS SISTE R COMPANY. WE ARE ENTIRELY IN AGREEMENT WITH THE JUDGMENT OF THE BOMBAY HIGH COURT IN COMMISSIONER OF INCOME TAX VS. RELIANCE UTILITIES & POWER LTD., (2009) 313 ITR 340, PARA-10, THAT IF THERE ARE INTE REST FREE FUNDS AVAILABLE A PRESUMPTION WOULD ARISE THAT INVESTMENT WOULD BE OUT OF THE INTEREST FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY IF THE INTE REST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENT. 9. IN VIEW OF THE ABOVE, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT WITH RESPECT TO INTEREST EXPENDITURE CAN BE MADE. AS REGARDS THE ADMINISTRATIVE EXPENDITURE, WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE CASE OF CIT VS. DEEPAK MITTAL (SUPRA), THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY SATISFACTION RECORDED BY THE ASSESSING OFFICER AS TO THE CLAIM OF THE ASSESSEE, THE DISALLOWANCE MADE BY HIM ON ACCOUNT OF ADMINISTRATIVE EXPENSES UNDER RULE 8D OF THE INCOME TAX RULES IS NOT AS PER LAW. IN VIEW OF THE ABOVE, THE ACTION OF THE LEARNED CIT (APPEALS) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT IS CONFIRMED. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 10. BEFORE PARTING, WE WOULD LIKE TO DEAL WITH THE CASE LAWS SUBMITTED BY THE LEARNED D.R. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 12 FIRST CASE IS THAT OF HON'BLE SUPREME COURT IN WALFORT SHARE & STOCK PVT. LTD. (SUPRA). THE DECISION WAS RENDERED ON THE ISSUE OF DIVIDEND STRIPPING AND WHILE ANALYZING THE ISSUE THE INTERPRETATION OF SECTION 14A OF THE ACT CAME BEFORE THE APEX COURT. THE FINDING GIVEN BY THE HON'BLE SUPREME COURT IS THAT THE EXPENSES ALLOWED CAN ONLY BE IN RESPECT OF EARNING OF TAXABLE INCOME. WE DO NOT HAVE ANY QUARREL WITH THE SAID PROPOSITION AND BOW BEFORE THE HON'BLE SUPREME COURT. HOWEVER, THIS IS WHAT THE PURPORT OF SECTION 14A IS, WHILE THE ISSUE OR DISPUTE ARISE S AS TO THE COMPUTATION OF AMOUNT OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME ONLY. SECOND CASE RELIED ON BY THE LEARNED D.R. IS THAT OF SPECI AL BENCH OF I.T.A.T. DELHI IN CHEMINVEST LTD. (SUPRA). WE WOULD LIKE TO STATE HERE THAT THE SAID ORDER OF THE SPECIAL BENCH OF I.T.A.T. DELHI HAS BEEN REVERSED BY THE HON'BLE DELHI HIGH COURT IN ITA NO. 749 OF 2014 DATED 2.9.2015, WHEREBY IT HAS BEEN HELD VERY CATEGORICALLY THAT DISALLOWANCE UNDER SECTION 14A OF THE ACT CANNOT BE MADE IN THE YEAR I N WHICH NO EXEMPT INCOME HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE. IN ALL THE ORDERS OF TH E I.T.A.T., CHANDIGARH BENCH RELIED ON BY THE LEARNED D.R., WE FIND THAT THE BENEFIT OF THE JUDGMENTS OF JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF KAPSONS ASSOCIATES INVESTMENTS P. LTD. (SUPRA) AND BRIGHT ENTERPRISES P. LTD. (SUPRA) TO THE EFFECT THAT IN THE PRESENCE OF SUFFICIENT OWNED FUNDS, PRESUMPTION CAN BE RAISED THAT THE INVESTMENTS WERE MADE OUT OF OWNED FUNDS, WAS NOT AVAILABLE TO THE COORDINATE BENCHES OF THE I.T.A.T. IT WAS POINTED OUT THAT FOLLOWING THE ABOVE DECISION, THE ITAT DELETED DISALLOWANCE MADE IN SUBSEQUENT ASSESSMENT YEARS ALSO .I.E A.Y 2009-10 & 2010-11,VIDE ITS ORDER IN ITA NO.396 & 397/2015 DATED 19-04-2016. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 13 17. THE LD.COUNSEL FOR THE ASSSESSEE THEREAFTER POINTED OUT THAT IN THE IMPUGNED YEAR ALSO THE ASSESSEE HAD SUFFICIENT OWN FUNDS FOR MAKING THE IMPUGNED INVESTMENT OF RS.13260.07 LACS AS UNDER: AVAILABILITY OF OWN FUNDS 31.03.2011 SHARE CAPITAL & RESERVES 17603.45 INCOME OF THE YEAR 3585.22 ADD DEPRECIATION 2731.77 TOTAL 6316.99 NET INCREASE IN CASH AND CASH EQUIVALENTS 1092.46 18. THE LD.COUNSEL FOR THE ASSSESSEE CONTENDED THAT THE ISSUE THEREFORE STOOD COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE I.T.A.T. IN THE CASE O F THE ASSESSEE ITSELF FOR THE PRECEDING YEARS VIDE ITS OR DER IN ITA NOS.372, 396 & 397/CHD/2015 DATED 19.4.2016. COPY OF THE ORDER WAS PLACED BEFORE US. 19. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE A.O. 20. WE HAVE HEARD THE RIVAL CONTENTIONS CAREFULLY. WE HAVE ALSO GONE THROUGH THE ORDER OF THE I.T.A.T. FO R THE PRECEDING YEARS, AS POINTED OUT BY THE LD.COUNS EL FOR THE ASSSESSEE BEFORE US. ON GOING THROUGH THE SAME WE FIND THAT THE I.T.A.T. IN THE PRECEDING YE ARS ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 14 HAD DELETED THE DISALLOWANCE OF INTEREST EXPENSES MADE U/S 14A OF THE ACT ON FINDING THAT THE ASSESSE E HAD SUFFICIENT OWN FUNDS AVAILABLE FOR THE PURPOSE OF MAKING THE IMPUGNED INVESTMENT. THE ITAT HAD ALSO DELETED THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES , IN THE ABSENCE OF ANY SATISFACTION RECORDED BY THE AO AS TO THE CLAIM OF THE ASSESSEE OF NOT HAVING INCUR RED ANY EXPENDITURE FOR EARNING EXEMPT INCOME. 21. IN THE IMPUGNED CASE, THE LD.COUNSEL FOR THE ASSSESSEE HAS DEMONSTRATED THAT THE ASSESSEE HAD OWN FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES AMOUNTING TO RS.17603.45 LACS AND INCOME OF THE YEAR AMOUNTING TO RS.3585.22 LACS, WHILE THE INVESTMENTS MADE AMOUNTED TO RS.13260.07 LACS. THE LD. DR HAS BEEN UNABLE TO DRAW OUR ATTENTION TO ANY DISTINGUISHING FACTS AS COMPARED TO THAT IN THE PRECEDING YEARS AND HAS BEEN UNABLE TO CONTROVERT T HE FACTUAL CONTENTION OF THE ASSESSEE. IN VIEW OF THE SAME, WE HOLD THAT THE ISSUE STANDS SQUARELY COVERE D BY THE DECISION OF THE I.T.A.T. IN THE PRECEDING YE ARS, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE LD.CIT(A ) ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 15 IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES O F RS.98,38,097/- MADE U/S 14A OF THE ACT . 22. AS FOR THE ADMINISTRATIVE EXPENSES DISALLOWED AMOUNTING TO RS.6,73,000/-,WE FIND THAT THE LD.CIT( A) HAS FOLLOWED THE ORDER PASSED BY THE FIRST APPELLAT E AUTHORITY IN PRECEDING ASSESSMENT YEARS ON THE ISSU E OF DISALLOWANCE MADE U/S 14A , WHERE THE FINDINGS O F THE CIT(A) ARE THAT SINCE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR MAKING INVESTMENT IN PURCHASE OF SHARES, NO DISALLOWANCE IS WARRANTED AN D FURTHER THAT NO DISALLOWANCE CAN BE MADE WITHOUT POINTING OUT CONNECTION BETWEEN THE EXPENDITURE INCURRED AND THE EXEMPT INCOME. THE LD.CIT(A) , WHI LE FOLLOWING THIS DECISION HAS NOT POINTED OUT THE IDENTITY OF FACTS VIS A VIS ABSENCE OF DEMONSTRATIO N OF CONNECTION BETWEEN EXPENSE INCURRED AND EXEMPT INCOME. THE LD.CIT(A) HAS NOT MENTIONED ANY FACT REGARDING SATISFACTION OF THE AO THAT THERE WAS CONNECTION BETWEEN EXPENSES INCURRED BY THE ASSESSE E AND EARNING OF EXEMPT INCOME. EVEN THE ITAT, WE FIN D, HAD UPHELD THE DELETION OF DISALLOWANCE OF ADMINISTRATIVE EXPENSES ON THIS ACCOUNT ,FINDING ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 16 ABSENCE OF SATISFACTION RECORDED BY THE AO VIS A VI S THE INCORRECTNESS OF THE CLAIM OF THE ASSESSEE OF HAVING INCURRED NO EXPENSES. WE THEREFORE HOLD THAT THE ISSUE OF DISALLOWANCE OF ADMINISTRATIVE EXPENSE S CANNOT BE TREATED AS COVERED BY THE ORDER OF THE IT AT IN THE PRECEDING YEARS IN THE CASE OF THE ASSESSEE, IN THE ABSENCE ESTABLISHMENT OF IDENTITY OF FACTS WITH THE PRECEDING YEAR. THE ISSUE IS THEREFORE RESTORED BAC K TO THE CIT(A) TO BE ADJUDICATED AFRESH AFTER GIVING DU E OPPORTUNITY OF HEARING TO THE ASSESSEE . 23. IN EFFECT THE ORDER OF THE LD.CIT(A) DELETING DISALLOWANCE MADE U/S 14A OF THE ACT OF INTEREST AMOUNTING TO RS.98,38,097/- IS DELETED WHILE THE ISSUE RELATING TO DISALLOWANCE OF ADMINISTRATIVE EXPENSES OF RS.6,73,000/- IS RESTORED BACK TO THE CIT(A) FOR ADJUDICATION AFRESH. GROUND OF APPEAL NO.1 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 24. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDER: 2. WHETHER ON FACTS AND ON CIRCUMSTANCES OF THE CA SE IN LAW, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 17 ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON INVESTMENTS FOR NON BUSINESS PURPOSE AMOUNTING TO RS. 9,74,00,000/- MADE U/S 36(L)(III) OF INCOME-TAX ACT, 1961? 25. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE A.O. DISALLOWED INTEREST EXPENDITURE ON INVESTMENTS MADE TO THE TUNE OF RS.13260.07 LACS FROM WHERE EXEMPT INCOME WOULD ACCRUE TO THE ASSESSEE, FOR THE REASON THAT THE INVESTMENTS WERE NOT FOR THE BUSINESS OF T HE ASSESSEE. THE AO WORKED OUT PROPORTIONATE INTEREST @ 8.14% ON THE IMPUGNED INVESTMENTS WHICH CAME TO RS.1079.37 LACS BUT RESTRICTED THE SAME TO RS.974.2 6 LACS AFTER REDUCING THEREFROM THE DISALLOWANCE OF INTEREST MADE U/S 14A OF THE ACT ON THE SAID INVESTMENTS, AMOUNTING TO RS.105.11 LACS. 26. THE LD.CIT(A) DELETED THE DISALLOWANCE ON FINDI NG THAT IDENTICAL DISALLOWANCE MADE IN THE PRECEDING YEARS I.E. A.Y 2008-09 TO 2010-11 HAD BEEN DELETED IN APPEAL BY THE LD.CIT(A). 27. WE HAVE HEARD THE RIVAL CONTENTIONS . ADMITTED LY DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT ,HAS BEEN MADE ON INVESTMENTS IN RESPECT OF WHICH THE INTEREST EXPENDITURE INCURRED WAS DISALLOWED U/S 14 A ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 18 OF THE ACT ALSO, THOUGH FOR DIFFERENT REASONS. THE DISALLOWANCE OF INTEREST HAS BEEN MADE U/S 14A OF T HE ACT ATTRIBUTING THE SAME AS HAVING BEEN INCURRED FO R EARNING EXEMPT INCOME IN THE FORM OF DIVIDEND EARNE D FROM THE SAID INVESTMENTS. UNDER SECTION 36(1)(III) INTEREST HAS BEEN DISALLOWED FOR THE REASON THAT T HE EXPENSES WERE NOT FOUND TO HAVE BEEN INCURRED FOR T HE PURPOSE OF BUSINESS OF THE ASSESSEE. IN BOTH THE CASES, HOWEVER, INTEREST EXPENDITURE INCURRED FOR MAKING THE INVESTMENT HAS BEEN DISALLOWED . 28. SINCE WE HAVE HELD THAT NO INTEREST IS TO BE DISALLOWED U/S 14A OF THE ACT , IN THE LIGHT OF TH E FACT THAT SUFFICIENT OWN FUNDS WERE AVAILABLE WITH THE ASSESSEE WHICH RAISE THE PRESUMPTION THAT THESE INTEREST FREE FUNDS WERE USED FOR MAKING THE INVESTMENTS, THERE REMAINS NO BASIS FOR MAKING DISALLOWANCE OF INTEREST EXPENSES INCURRED FOR MAKI NG THE VERY SAME INVESTMENTS IN ANY OTHER SECTION, WHI CH IN THE PRESENT CASE IS SECTION 36(1)(III) OF THE AC T. THE ORDER OF THE LD. CIT(A), DELETING THE DISALLOWANCE OF INTEREST MADE U/S 36(1)(III) AMOUNT ING TO RS.9.74 CRORES, IS THEREFORE UPHELD. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 19 GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 29. GROUND NO.3 RAISED BY THE REVENUE READS AS UNDER: 3. WHETHER ON FACTS AND ON CIRCUMSTANCES OF THE CAS E IN LAW, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON LOANS AND ADVANCES GIVEN FOR NON BUSINESS PURPOSES AMOUNTING TO RS. 28,51,128/- MADE U/S 36(L)(III) OF INCOME-TAX ACT, 1961? 30. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE A.O MADE DISALLOWANCE OF INTEREST EXPENDITURE ON ACCOUN T OF LOANS AND ADVANCES MADE TO SUBSIDIARY COMPANIES I.E. OSWAL INDUSTRIAL ENTERPRISES (P) LTD. OF RS.1,61,73,000/- AND FM HAMMERLS VERWALTINGS GMBH OF RS.2,16,12,000/- ON FINDING THAT THE SAID ADVANC ES WERE NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSE E. ACCORDINGLY, THE PROPORTIONATE DISALLOWANCE OF INTE REST EXPENSES WAS MADE AMOUNTING TO RS.28,51,182/- U/S 36(1)(III) OF THE ACT. 31. THE LD.CIT(A) DELETED THE DISALLOWANCE ON FINDI NG THAT IDENTICAL DISALLOWANCE MADE IN THE PRECEDING YEARS I.E. A.Y. 2008-09 TO 2010-11 HAD BEEN DELETED IN APPEAL BY THE LD.CIT(A). ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 20 32. BEFORE US, THE LD.COUNSEL FOR THE ASSSESSEE AT THE OUTSET POINTED OUT THAT THE MATTER HAD TRAVELLED UP TO THE I.T.A.T. IN THE PRECEDING YEARS SINCE THE DEPARTMENT HAD GONE IN APPEAL AGAINST THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE AND THE I.T.A.T. HAD IN TURN UPHELD THE ORDER OF THE LD.CIT (A) ON FINDING THAT THERE WAS SUFFICIENT OWN FUNDS AVAILABLE WITH THE ASSESSEE FOR THE PURPOSE OF MAKI NG THE IMPUGNED INVESTMENT CALLING FOR NO DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE I.T.A.T. IN THIS REGAR D FOR ASSESSMENT YEAR 2008-09 IN ITA NOS.372, 396 & 397/CHD/2015 DATED 19.4.2016 AT PARA NOS.17 & 18 OF THE ORDER AS UNDER: 17. THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT OWNED FUNDS OF THE COMPANY ARE TO THE TUNE OF RS.167,15,49,000/- WHILE THE INVESTMENTS IN THE SHARE APPLICATION MONEY OF SUBSIDIARY COMPANIES IS AMOUNTING TO RS.37,54,63,646/- IN OSWAL RETAIL PVT. LTD. AND RS.12,17,14,976/- IN OSWAL FM HAMMERLE TEXTILES LTD. TOTALING RS.49,71,78,622/- ONLY. IT WAS STATED THAT IN THE JUDGMENTS OF JURISDICTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES (SUPRA) AND KAPSONS ASSOCIATES INVESTMENTS P. LTD. (SUPRA), IT HAS BEEN CATEGORICALLY HELD IN THE CONTEXT OF SECTION 36(1)(III) THAT IN THE PRESENCE OF SUFFICIENT OWNED FUNDS WITH THE ASSESSEE, IT CAN BE PRESUMED THAT THE INVESTMENTS HAVE BEEN MADE OUT OF OWNED ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 21 FUNDS AND NO BORROWED FUNDS HAVE BEEN USED IN THE SAME. IN VIEW OF THIS, IT WAS PRAYED THAT THE ACTION OF THE LEARNED CIT (APPEALS) IN DELETING THE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT MAY BE CONFIRMED. 18. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF RECORD AND SUBMISSIONS GIVEN BY THE LEARNED COUNSEL FOR THE ASSESSEE, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS HAVING MORE THAN SUFFICIENT OWNED FUNDS MUCH LARGER THAN THE TOTAL INVESTMENTS MADE IN THE SHARE CAPITAL OF THE SUBSIDIARY COMPANIES. THEREFORE, WE ARE IN AGREEMENT WITH THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES (SUPRA) AND KAPSONS ASSOCIATES INVESTMENTS P. LTD. (SUPRA), WE CAN VERY EASILY PRESUMED THAT THE INVESTMENTS HAVE BEEN MADE OUT OF THE NON INTEREST BEARING FUNDS. THEREFORE, NO DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT CAN BE MADE. SINCE IT IS HEL D THAT THE INVESTMENTS WERE MADE OUT OF NON INTEREST BEARING FUNDS, IT IS AUTOMATICALLY PRESUMED THAT WITH REGARD TO THESE INVESTMENTS THE ASSESSEE HAD NOT MADE ANY CLAIM OF INTEREST UNDER SECTION 36(1)(II) OF THE ACT. THEREFORE, THERE IS NO NEED FOR THE ASSESSEE TO PROVE THAT THE FUNDS WERE LENT FOR BUSINESS PURPOSES OR NOT. IN VIEW OF THIS, WE DO NOT FIND ANY NEED TO INTERFERE IN THE ORDER OF THE LEARNED CIT (APPEALS) IN THIS RESPECT. THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS DISMISSED. 33. IT WAS POINTED OUT THAT FOLLOWING THE ABOVE DECISION, THE ITAT DELETED DISALLOWANCE MADE IN SUBSEQUENT ASSESSMENT YEARS ALSO I.E. A.Y 2009-10 & ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 22 2010-11,VIDE ITS ORDER IN ITA NO.396 & 397/2015 DATED 19-04-2016 34. THE LD.COUNSEL FOR THE ASSSESSEE THEREAFTER POINTED OUT THAT IN THE IMPUGNED YEAR ALSO THE ASSESSEE HAD SUFFICIENT OWN FUNDS FOR MAKING THE IMPUGNED INVESTMENT AS UNDER: AVAILABILITY OF OWN FUNDS 31.03.2011 SHARE CAPITAL & RESERVES 17603.45 INCOME OF THE YEAR 3585.22 ADD DEPRECIATION 2731.77 TOTAL 6316.99 NET INCREASE IN CASH AND CASH EQUIVALENTS 1092.46 35. THE LD.COUNSEL FOR THE ASSSESSEE CONTENDED THAT THE ISSUE THEREFORE STOOD COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE I.T.A.T. IN THE CASE O F THE ASSESSEE ITSELF FOR THE PRECEDING YEARS VIDE ITS OR DER IN ITA NOS.372, 396 & 397/CHD/2015 DATED 19.4.2016. COPY OF THE ORDER WAS PLACED BEFORE US. 36. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE A.O. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 23 37. WE HAVE HEARD THE RIVAL CONTENTIONS CAREFULLY. WE HAVE ALSO GONE THROUGH THE ORDER OF THE I.T.A.T. FO R THE PRECEDING YEARS, AS POINTED OUT BY THE LD.COUNS EL FOR THE ASSSESSEE BEFORE US. ON GOING THROUGH THE SAME WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD.COUNSEL FOR THE ASSSESSEE THAT THE I.T.A.T. IN T HE PRECEDING YEARS HAD DELETED DISALLOWANCE OF INTERE ST EXPENSES MADE U/S 36(1)(III) OF THE ACT ON FINDING THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS AVAILABLE FOR THE PURPOSE OF MAKING THE IMPUGNED INVESTMENT. IN THE IMPUGNED CASE ALSO, THE LD.COUNSEL FOR THE ASSSESSEE DEMONSTRATED THAT THE ASSESSEE HAD OWN FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES AMOUNTING TO RS.17603.45 LACS AND INCOME OF THE YEAR AMOUNTING TO RS.3585.22 LACS, WHILE THE LOANS/ADVANCES MADE AMOUNTED TO RS.377.85 LACS (161.73 LACS + 216.12 LACS). THE LD. DR HAS BEEN UNABLE TO CONTROVERT THE FACTUAL CONTENTION OF THE ASSESSEE. IN VIEW OF THE PROPOSITION APPLIED IN TH E PRECEDING YEARS BY THE ITAT AND CONSIDERING THE FAC T THAT SUFFICIENT OWN FUNDS WERE DEMONSTRATED TO EXIS T BY THE ASSESSEE, WE SEE NO REASON TO UPHOLD THE DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT. WE ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 24 THEREFORE UPHOLD THE ORDER OF THE LD.CIT(A) DELETI NG THE DISALLOWANCE OF INTEREST EXPENSES MADE U/S 36(1)(III) OF THE ACT AMOUNTING TO RS.28,51,182/-. GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 38. GROUND NOS.4 AND 5 RAISED BY THE REVENUE RELATE TO THE SAME ISSUE OF DISALLOWANCE OF INTEREST EXPENDITURE INCURRED ON FOREIGN CURRENCY CONVERTIBL E BOND (IN SHORT FCCB) AND READ AS UNDER: 4. WHETHER ON FACTS AND ON CIRCUMSTANCES OF THE CA SE IN LAW, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST PAYMENT ON FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB) AMOUNTING TO RS. 1,20,92,984/-? 5. WHETHER ON FACTS AND ON CIRCUMSTANCES OF THE CAS E IN LAW, LD. CIT(A) WAS RIGHT IN TREATING THE INTEREST PAYMENT IN FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB ) AS REVENUE IN NATURE WITHOUT APPRECIATING THAT NATU RE OF APPLICATION OF THESE FUNDS WAS OF CAPITAL EXPENDITURE? 39. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT DURI NG ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE COMPANY HAD ISSUED FCCB AGGREGATING TO RS.10 MILLION USD, WHICH WAS HAVING A MATURITY PF 5 YEARS AND 7 DAYS AND OPTIONALLY CONVERTIBLE INTO EQUITY SHARE AT A PRICE OF 106.86 PER SHARE. FURTH ER 2% INTEREST RATE PER ANNUM WAS ALSO PAYABLE ON THE ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 25 SAID FCCB SEMI-ANNUALLY. THE A.O. DISALLOWED THE ENTIRE AMOUNT OF INTEREST AND PREMIUM PAYABLE ON TH E SAME WHICH WAS CLAIMED BY THE ASSESSEE AMOUNTING TO RS.1,20,92,984/- AND RS.1,76,13,971/- RESPECTIVELY. 40. THE LD.CIT(A) UPHELD THE DISALLOWANCE OF PREMIU M PAYABLE ON CONVERSION OF FCCB, WHILE HE DELETED THE DISALLOWANCE OF INTEREST ON FINDING THAT THE A.O. H AD NOT DISPUTED THE SAID CLAIM MADE BY THE ASSESSEE AN D HIS ENTIRE FINDINGS WERE IN RELATION TO ONLY THE PREMIUM PAYABLE BY THE ASSESSEE ON CONVERSION OF TH E BONDS. THE LD.CIT(A) FURTHER HELD THAT THE PAYMENT OF INTEREST WAS NOT A CONTINGENT LIABILITY AS IN THE C ASE OF PREMIUM BUT WAS ACTUAL LIABILITY OF THE ASSESSEE BEING BOUND TO PAY THE SAME SEMI-ANNUALLY ON THE DU E DATE. ACCORDINGLY, THE LD.CIT(A) HELD THAT FCCB WAS IN THE NATURE OF LOANS UNTIL CONVERTED INTO EQUITY AND THE INTEREST PAYMENT THEREON WAS ON A LIABILITY/LOA N AND NOT EQUITY. HE, THEREFORE, HELD THAT THE ASSESS EE WAS ENTITLED TO CLAIM THE SAID EXPENSES AND RELIED UPON THE DECISION OF THE I.T.A.T., MUMBAI BENCH IN THE CASE OF MAHINDRA & MAHINDRA LTD., VS. DCIT IN I TA NO.8597/MUM/2010 AND ON THE DECISION OF THE ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 26 I.T.A.T. BANGALORE BENCH IN THE CASE OF M/S CRANE SOFTWARE INTERNATIONAL LTD ITA NOS.774 & 775/BANG/2010. THE RELEVANT FINDINGS OF THE CIT(A) AT PARA 6.5 OF HIS ORDER IS AS UNDER: 6.5 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE BASIS OF THE ADDITIONS MADE AND THE ARGUMENTS OF TH E AR. THE APPELLANT HAS CLAIMED INTEREST PAID ON FOREIGN CURRENCY CONVERTIBLE BOND OF RS. 1,20,92,984/- BESIDES PREMI UM PAYABLE ON REDEMPTION OF RS. 1,76,13,971/-. THE BRE AK-UP OF INTEREST .AND PREMIUM PAYABLE ON REDEMPTION WAS DUL Y PRODUCED BEFORE THE ASSESSING OFFICER. THE COPY OF ACCOUNT OF INTEREST PAYMENT AND TDS DEPOSITED WAS FILED. THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE OF PREMIU M ON REDEMPTION OF FCCB AND HAS TREATED IT AS A CAPITAL EXPENDITURE BUT WHILE MAKING THE ADDITION ON THE SA ID ACCOUNT, HAS ADDED THE COMPONENT OF INTEREST ON FCC B ALSO, WITHOUT DISCUSSING THE SAME. THE SAME WAS NOT DISPU TED/ QUESTIONED BY THE ASSESSING OFFICER AS SUCH. ONLY T HE PREMIUM PAYABLE ON FCCB HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER AND NOT THE ISSUE OF INTEREST THER EON. THE FCCB HAS NOT BEEN CONVERTED INTO EQUITY SHARE. THE COMPANY WAS PAYING INTEREST TO THE BOND HOLDERS. THE FCCBS/ WERE HAVING COUPON INTEREST RATE OF 2% CALCULATED AND PA ID ON SEMI- ANNUAL BASIS/ THE APPELLANT COMPANY WAS BOUND TO DISCHARGE ITS OBLIGATION OF PAYING THE INTEREST ON THE DUE DATES. THE CONVERSION OF FCCB INTO THE CAPITAL OF T HE COMPANY ON THE CONSENT OF THE BOND HOLDERS, WHEN THEY EXERC ISE THEIR OPTION, IS A FUTURE EVENT. ACCORDING TO THE AR, PR ESENTLY IT IS A LOAN AND THE POSSIBLE EQUITY CHARACTER OF THE FUND IS A CONTINGENCY. DURING THE YEAR UNDER CONSIDERATION, I T WAS IN THE NATURE OF INTEREST ON LIABILITY/ LOAN AND NO T EQUITY. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 27 THE PAYMENT OF INTEREST HAS NOT BEEN DISPUTED BY TH E ASSESSING OFFICER. THE COMPANY HAS COMPLIED WITH TH E PROVISIONS OF SECTION 115AC AND 196C IN DEDUCTING T DS AS THE INTEREST INCOME HAS ARISEN IN THE HANDS OF NON- RESIDENT BOND HOLDERS IN INDIA. THE AR HAS PLACED RELIANCE O N THE DECISION OF THE HON'BLE MUMBAI ITAT IN THE CASE OF MAHINDRA & MAHINDRA MUMBAI VS. ACIT IN ITA NO. 8597/MUM/2010 WHEREIN IT HAS BEEN HELD THAT INTEREST PAYMENT ON FCCBS IS AN ALLOWABLE EXPENDITURE. SIMIL ARLY, RELIANCE HAS BEEN PLACED ON THE DECISION OF THE HON'BLE ITAT BANGLORE BENCH IN THE CASE OF M/S CRANE SOFTWARE VS . DCIT IN ITA NO. 774, 775/BANG/2010 IN SUPPORT OF THE SAID CONTENTION REGARDING ALLOWABILITY OF FCCB INTEREST. THE AR HAS FURTHER SUBMITTED THAT EVEN IF IT IS ASSUMED TH AT THIS PAYMENT IS AN ACCRETION OF CAPITAL AND PAID TO EQUI TY SHAREHOLDERS, THE INTEREST COMPONENT WILL NOT BE CO NVERTED TO SHARE CAPITAL. THE AR HAS FURTHER RELIED ON THE JUD GMENTS IN THE CASE OF PERFORMING RIGHT SOCIETY LTD. VS. CIT (1997) 106 ITR 11(SC) AND HIRA MILLS LTD VS. ITO (1946) 14 ITR 417 (ALL) WHEREIN IT HAS BEEN HELD THAT WHERE INTEREST HAS BE EN PAID TO BONDHOLDERS AND TDS HAS BEEN DEDUCTED; THE INTEREST EXPENDITURE IS ALLOWABLE. THE APPELLANT COMPANY HAS BEEN PAYING INTEREST ON FCCB FROM A.Y.2009-10 AFTER DEDU CTION OF TDS AND THE SAME HAS BEEN ALLOWED U/S 143(3) FOR A. Y. 2009-10 AND 2010-11. THEREFORE, THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST PAID ON F CCB. GROUND OF APPEAL NO.5 (A) IS HEREBY ALLOWED. 41. BEFORE US THE LD. DR RELIED UPON THE ORDER OF T HE A.O., WHILE THE LD.COUNSEL FOR THE ASSSESSEE RELIED UPON THE ORDER OF THE CIT(A). ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 28 42. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE BEFO RE US RELATES TO CLAIM OF THE ASSESSEE OF INTEREST EXPENDITURE INCURRED ON FCCB ISSUED BY IT. THE FACT THAT THE SAID BONDS WERE ISSUED AT INTEREST RATE OF 2% PER ANNUM TO BE PAID SEMI-ANNUALLY IS NOT DISPUTED. IT IS ALSO NOT DISPUTED THAT THE INTEREST WAS PAID ON THE BONDS AND NOT ON THEIR CONVERSION INTO EQUITY. THEREFORE, THE FINDINGS OF THE LD.CIT(A) THAT THE INTEREST EXPENDITURE WAS THE ACTUAL LIABILITY OF TH E ASSESSEE ON LOANS TAKEN BY IT IN THE FORM OF BONDS, WE FIND IS CORRECT. THE LD. DR HAS BEEN UNABLE TO DRAW OUR ATTENTION TO ANY INFIRMITY IN THE FINDINGS OF T HE LD.CIT(A) IN THIS REGARD. FURTHER THE LD. DR HAS BE EN UNABLE TO DRAW OUR ATTENTION /POINT OUT, AS TO WHY THE ASSESSEES CLAIM OF INTEREST EXPENDITURE WAS DISALLOWABLE. IN VIEW OF THE SAME, WE HAVE NO HESITATION IN UPHOLDING THE ORDER OF THE CIT(A) IN ALLOWING THE CLAIM OF INTEREST EXPENSES INCURRED ON FCCB AMOUNTING TO RS.1,20,92,984/-. THE GROUND OF APPEAL NO.4 AND 5 RAISED BY THE REVENUE ARE DISMISSED. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 29 IN EFFECT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 43. WE SHALL NOW DEAL WITH THE ASSESSEES CROSS OBJECTION OF THE ASSESSEE IN C.O.NO.39/CHD/2016. 44. GROUNDS OF APPEAL NO.1 RAISED BY THE ASSESSEE R EAD AS UNDER: 1. THAT THE LEARNED CIT (A)-1, LUDHIANA, HAS ERRED IN DISALLOWING PREMIUM PAIN ON REDEMPTION OF FCCB WRONGLY HOLDING THE SAME TO BE IN THE NATURE OF CAP ITAL EXPENDITURE AS AGAINST REVENUE EXPENDITURE CLAIMED BY THE APPELLANT. B. THAT THE ACTION OF LD. CIT(A) IS AGAINST THE LAW AND FACTS OF THE CASE. 45. IT WAS COMMON GROUND BETWEEN BOTH THE PARTIES THAT THE ISSUE RAISED IN THIS GROUND WAS IDENTICAL TO THAT RAISED IN THE APPEAL OF THE ASSESSEE IN ITA NO.837/CHD/2018 ADJUDICATED ABOVE. OUR FINDINGS RENDERED THEREIN AT PARA NOS.9 & 10 OF OUR ORDER, WILL APPLY WITH FULL FORCE, FOLLOWING WHICH WE ALLOW THE GROUND RAISED IN THE SAME TERMS AS IN GROUND NO. 1 OF ITA NO.837/CHD/2018. GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED IN ABOVE TERMS. ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 30 46. GROUND NO.2(A) & (B) RAISED BY THE ASSESSEE REA D AS UNDER: 2. A. THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLD ING ADDITION OF RS.7,36,977/- ON ACCOUNT OF DIFFERENCE IN THE BALANCE OF M/S ACE BUILDING TECHNOLOGIES PVT. L TD IGNORING THE SUBMISSION OF THE APPELLANT AND HAS FURTHER ERRED IN NOT ADMITTING THE EVIDENCE WHICH I N FACTS STOOD FILED BEFORE THE AO. B. THAT IN ANY CASE THE DISALLOWANCE IS AGAINST T HE LAW AND FACTS OF THE CASE AND FURTHER THE DIFFERENCE DI D NOT RELATE TO THE YEAR UNDER CONSIDERATION. 47. BRIEFLY STATED, THE A.O. HAD MADE AN ADDITION O F RS.7,36,977/- ON ACCOUNT OF NON RECONCILIATION OF T HE ACCOUNT OF ONE M/S ACE BUILDING TECHNOLOGIES PVT. L TD. IT WAS NOTICED THAT WHILE THE ACCOUNT STATEMENT SUBMIT TED BY THE ASSESSEE OF THE SAID COMPANY SHOWED DEBIT BALAN CE OF RS.14,74,983.72, THE ASSESSEE IN ITS BOOKS HAD REFL ECTED A CREDIT BALANCE OF RS.7,37,987/- IN RESPECT OF THE S AID PARTY. SINCE THE ASSESSEE WAS UNABLE TO RECONCILE THE DIFF ERENCE IN THE ACCOUNTS, THE A.O. MADE AN ADDITION OF RS.7,37, 987/- IN THE INCOME OF THE ASSESSEE. 48. BEFORE THE LD.CIT(A) THE ASSESSEE FILED DETAILE D SUBMISSIONS STATING THAT M/S ACE BUILDING TECHNOLOG IES PVT. LTD. WAS BUILDING CONSTRUCTION CONTRACTOR OF T HE ASSESSEE WITH WHOM THE ASSESSEE HAD BEEN DEALING SI NCE 2008 AND THE DIFFERENCE IN HE ACCOUNT STATEMENT AS REFLECTED ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 31 IN THE BOOKS OF BOTH THE PARTIES WAS ON ACCOUNT OF THE FACT THAT THE DEBIT NOTES RAISED BY THE ASSESSEE ON THE SAID PARTY HAD NOT BEEN ACCOUNTED FOR BY IT IN ITS BOOKS THOUG H THE OTHER PARTY HAD NOT DISPUTED THE SAME ALSO AND ULTI MATELY THAT ALL AMOUNT PAYABLE TO M/S ACE BUILDING TECHNOL OGIES PVT. LTD. (SUPRA) HAD BEEN SETTLED. THE ASSESSEE FI LED COPY OF THE ACCOUNT OF M/S ACE BUILDING TECHNOLOGIES PVT. L TD. (SUPRA) REFLECTING THE DEBIT NOTES RAISED AND ALSO COPY OF THE BANK STATEMENT AS EVIDENCE OF THE ABOVE EXPLANATION . THE SUBMISSION MADE BY THE ASSESSEE IN THIS REGARD AS REPRODUCED AT PARA 8.1 OF THE CIT(A)S ORDER IS AS UNDER: 1. ASSESSEE COMPANY HAS AWARDED THE CONTRACT OF RS.6,66,430,31/- FOR CONSTRUCTION OF ITS BUILDING T O M/S ACE BUILD TECHNOLOGIES PVT LTD AND PAYMENT OF RS 6,66,430,31/- HAS BEEN MADE TO THE SAID PARTY. THE COPY OF ACCOUNT OF M/S ACE BUILD TECHNOLOGIES PVT LTD IS ENCLOSED HERE WITH AT PAGES NO. THE ASSESSEE COMPANY HAS BEEN DEALING WITH THE CONTRACTOR SINCE 2008. 2. THE ASSESSING OFFICER HAS SUMMONED THE ACCOUNT STATEMENT OF THE SAID PARTY AND THE CLOSING BALANCE AS ON 31.03.2011 AS REFLECTING IN THE PARTY'S STATEMENT IS RS. 14,74,983.72 AS BORNE FROM THE ASSESSMENT ORDER DATED 28.03.2011 WHERE AS THE CLOSING BALANCE AS PER BOOKS OF THE ASSESSEE COMPAN Y IS RS. 7,37,987/- AND CONSEQUENTLY AN ADDITION OF R S. 7,36,997/- HAS BEEN MADE TO THE INCOME OF THE ASSES SEE ON ACCOUNT OF DIFFERENCE. 3. AT THE OUTSET, IT IS SUBMITTED THE ASSESSEE HAS BEEN ASKED TO EXPLAIN THE DIFFERENCE IN ACCOUNT STATEMEN TS ON 24.03.2015 AND THE ASSESSEE HAS BEEN ASKED TO SUBMI T ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 32 ITS REPLY AND RECONCILIATION ON 25.03.2015. THE ASS ESSEE COMPANY HAS FILED ITS STATEMENT OF ACCOUNT ALONG WI TH BANK STATEMENT AND HAS EXPLAINED THAT THE DIFFERENC E IN ACCOUNT IS ON ACCOUNT OF DEBIT NOTES RAISED ON T HE PARTY WHICH HAVE NOT BEEN ACCEPTED BY THE PARTY. THE ADDITION HAS BEEN MADE WITHOUT CONSIDERING THE REPRESENTATION AND EVIDENCE GIVEN BY THE PARTY. 4. ALSO THE ASSESSEE COMPANY HAS SUBMITTED THAT TH E OUTSTANDING AMOUNT AS PER ITS BOOKS HAS BEEN PAID O FF IN THE NEXT FINANCIAL YEAR 2011-2012 AND THERE IS N O OUTSTANDING AMOUNT PAYABLE TO THE SAID PARTY WHICH IS EVIDENT FROM THE FACT THERE HAS BEEN NO DEALING WIT H THE PARTY AFTER THE SAID FINAL PAYMENT. 5. THE DIFFERENCE IN ACCOUNT STATEMENT IS BECAUSE OF THE VARIOUS DEBIT NOTES RAISED TO THE PARTY AS IS EVIDE NT FROM THE ACCOUNT STATEMENT WHICH HAVE NOT BEEN ACCOUNTED FOR BY THE SAID PARTY. HOWEVER, THE SAID PARTY HAS NOT RAISED ANY DISPUTE WITH REGARD TO THE IMPUGNED PAYMENT TILL DATE. THE ENTIRE RECONCILIATION STATEMENT HAS BEEN SUBMITTED TO THE LD ASSESSING OFFICER BUT HE HAS NOT CONSIDERED THE SAME WHILE PASSING THE ASSESSMENT ORDER. THEREFORE, IN VIEW OF THE ABOVE FACTS AND SUBMISSIO NS THE ASSESSEE COMPANY REQUESTS YOUR GOOD-SELF TO DELETE THE ADDITION MADE BY THE LD. ASSESSING OFFICER W.R.T. N ON RECONCILIATION OF ACCOUNT. 49. THE LD.CIT(A) DISMISSED THE CONTENTION OF THE A SSESSEE STATING THAT THE COPY OF THE ACCOUNT OF THE SAID PA RTY PRODUCED BY THE ASSESSEE WAS AN ADDITIONAL EVIDENCE FILED WITHOUT ANY REQUEST MADE AS PER RULE 46A OF THE INC OME TAX, 1962 AND THUS COULD NOT BE ADMITTED. THE LD.CI T(A), THEREFORE, HELD THAT IN THE ABSENCE OF ANY EVIDENCE FOR RECONCILING THE DIFFERENCE THE ADDITION MADE BY THE A.O. WAS ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 33 JUSTIFIED. ACCORDINGLY, THE LD.CIT(A) UPHELD THE AD DITION MADE BY THE A.O. 50. BEFORE US THE LD.COUNSEL FOR THE ASSSESSEE STAT ED THAT THE ACT OF THE LD.CIT(A) IN REJECTING THE ADDITIONA L EVIDENCE WAS UNJUSTIFIED SINCE IT WENT TO THE ROOT OF THE M ATTER EXPLAINING THE DIFFERENCE IN THE ACCOUNTS. HE PLEAD ED, THEREFORE, THAT THE EVIDENCE BE ADMITTED AND THE IS SUE BE ADJUDICATED ACCORDINGLY. 51. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 52. WE HAVE HEARD THE RIVAL CONTENTIONS. UNDOUBTEDL Y, THE COPY OF THE ACCOUNT OF M/S ACE BUILDING TECHNOLOGIE S PVT. LTD. (SUPRA) SUBMITTED BY THE ASSESSEE DURING ASSES SMENT PROCEEDINGS EXPLAINED THE REASON FOR THE DIFFERENCE IN THE BALANCE REFLECTED OF THE SAID PARTY IN THE BOOKS OF THE ASSESSEE AND AS REFLECTED IN THE BOOKS OF M/S ACE B UILDING TECHNOLOGIES PVT. LTD. (SUPRA). INTEREST OF JUSTICE DEMANDED THAT THE SAME BE ADMITTED AND CONSIDERED FOR ADJUDI CATING THE ISSUE. MOREOVER, WE FIND THAT THE BOOKS OF ACCO UNTS OF THE ASSESSEE IN ANY CASE, WERE PRODUCED DURING ASSE SSMENT PROCEEDINGS. THEREFORE, WE FAIL TO UNDERSTAND HOW A COPY OF ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 34 THE ACCOUNT OF THE PARTY FOR THE IMPUGNED YEAR REFL ECTING THE DEBIT NOTES ISSUED TO IT, CONSTITUTED ADDITIONAL EV IDENCE. 53. FOR THE AFORESAID REASONS, WE CONSIDER IT FIT T O RESTORE THE ISSUE BACK TO THE LD.CIT(A) WITH DIRECTION TO A DJUDICATE THE SAME IN THE LIGHT OF THE EVIDENCE FILED BY THE ASSESSEE. NEEDLESS TO ADD DUE OPPORTUNITY BE GIVEN TO THE ASS ESSEE OF HEARING. THE GROUND NO.2(A) & (B) RAISED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IN EFFECT, THE CROSS OBJECTION FILED BY THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES. 54. IN THE RESULT; I) THE APPEAL OF THE ASSESSEE IN ITA NO.837/CHD/2018 IS PARTLY ALLOWED. II) THE APPEAL OF THE REVENUE IN ITA NO.1062/CHD/2016 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. III) THE C.O.NO.39/CHD/2016 FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD /- % & ' ($ (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER )* /ACCOUNTANT MEMBER ,% /DATED: 21 ST JUNE, 2019 * $ * ITA NOS.837 & 1062/CHD/2018 A.YS.2010-11 & 2011-12 35 $'( )*+* / COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT 2. (-, / THE RESPONDENT 3. . / CIT 4. . ( )/ THE CIT(A) 5. */0( 1 , '1 , 23405 / DR, ITAT, CHANDIGARH 6. 046! / GUARD FILE $' / BY ORDER, / ASSISTANT REGISTRAR