Hari Orgachem Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Circle-4, Ahmedabad

CO 62/AHD/2013

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3381 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Corroborative evidences
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 203/AHD/13 & C.O. NO. 62/AHD/2013 (ASSESSMENT YEAR: 2009-10) THE DCIT, CIRCLE-4, AHMEDABAD HARI ORGOCHEM PVT. LTD. 1, AVADH APARTMENT NR. PARIMAL CROSSING, PALDI, AHMEDABAD V/S V/S HARI ORGOCHEM PVT. LTD. 1, AVADH APARTMENT NR. PARIMAL CROSSING, PALDI, AHMEDABAD THE DCIT, CIRCLE-4, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACH7088L APPELLANT BY : SHRI JAMES KURIAN, SR. D.R . RESPONDENT BY : SHRI VARTIK CHOKSI, A.R. ( )/ ORDER DATE OF HEARING : 22-07-2016 DATE OF PRONOUNCEMENT : 27 -07-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NO. 203/AHD/2013 & C.O. NO. 62/AHD/2013 ARE APP EAL BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE PREFERR ED AGAINST THE ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 2 VERY SAME ORDER OF THE LD. CIT(A)-VIII, AHMEDABAD D ATED 25.10.2012 PERTAINING TO A.Y. 2009-10. 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS U NDER:- 1. THE LD. CLT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 12,00,000/- ON ACCOUNT OF FEES & LEGAL EXPENSES WIT HOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO PROVIDE ANY EVIDENCES FR OM WHICH IT COULD ESTABLISH THAT THE EMPLOYEES OF DCPL HAD RENDERED SERVICES TO THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.30,00,000/- MADE ON ACCOUNT OF RENT EXPENSES WIT HOUT APPRECIATING THE FACT THAT BOTH THE PARTIES WERE DOING THEIR BUSINESS ACT IVITIES FROM THE SAME PREMISES DURING THIS PERIOD AND NO EVIDENCE TO SHOW ITS REAS ONABLENESS WAS FURNISHED BEFORE THE A.O. 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE AND TRADING OF CHEMICALS. THE RETURN FOR THE YEAR UNDER CONSIDERAT ION WAS FILED ON 29.09.2009 DECLARING TOTAL INCOME AT RS. 6,21,65,76 0/-. 4. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT UND ER CASS AND STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 24,00,000/- IN ITS PROFIT AND LOSS ACCOUNT BEING FEES AND LEGAL EX PENSES. ON FURTHER VERIFICATION, THE A.O. FOUND THAT THE RECIPIENT IS A RELATED PARTY COVERED U/S. 40A(2)(B) OF THE ACT. ASSESSEE WAS ASKED TO JU STIFY THE PAYMENT. ASSESSEE FILED A DETAILED REPLY WHICH READS AS UNDE R:- FEES AND LEGAL EXPENSES OF RS 24,00,000- ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 3 IN THIS CONNECTION IT IS SUBMITTED THAT THE ASSESSE E COMPANY HAS DEBITED RS. 24,00,000/- AS FEES AND LEGAL EXPENSES PAID TO DHAR NIDHAR CHEMICALS PVT LTD (FOR SHORT DCPL). THE REASON FOR MAKING SUCH PAYMENT IS THAT THE ASSESSEE HAST TAKEN ON HIRE CERTAIN SKILLED STAFF OF DCPL THE SALARY OF THE SAID STAFF HAS BEEN PAID BY THE DCPL AND IN CONSIDERATION OF THE SAME, HIRE CHA RGES IN THE NAME OF FEES AND LEGAL EXPENSES HAS BEEN PAID TO DCPL. FOR YOUR HONO R'S IMMEDIATE REFERENCE THE LIST OF PERSON WHOSE SERVICES WERE HIRED BY THE ASS ESSEE IS GIVEN AS UNDER: NAME OF EMPLOYEE DESIGNATION HITENDRA JDOSHI SECRETARY NARAYAN M SUTHAR ACCOUNT AND AUDIT MANAGER VRAJESH M SHAH SALESMAN TEJENDRA PPANCHAL ACCOUNTANT JESSAMMA STENO BHAVIN P CHEMIST HITESH PATEL SUPERVISOR FIVE EMPLOYEES WORKERS THE TOTAL EXPENDITURE TOWARDS THE SALARY OF RS. 23 LAKHS HAS BEEN PAID BY DHARNIDHAR CHEMICALS PVT. LTD., FURTHER, AN AGREEME NT STATING THE PURPOSE OF HIRING OUT THE ABOVE MENTIONED STAFF TO HARI ORGOCH EM PVT. LTD HAS BEEN ENTERED INTO BETWEEN ASSESSEE AND DHARNIDHAR CHEMICALS PVT. LTD, THE COPY OF AGREEMENT IS ATTACHED HEREWITH AND MARKED AS ANNEXURE-1. IN THE SAID AGREEMENT, IT IS MENTIONED THAT THE HARI ORGOCHEM PVT. LTD. WILL TAK E SKILLED AND SEMI SKILLED STAFF OF DHARNIDHAR CHEMICAL PVT. LTD. FURTHER PLANT AND MACHINERY WHICH REMAINED IDLE DUE TO REDUCTION IN PRODUCTION OF DHARNIDHAR C HEMICAL PVT. LTD ALSO HIRED OUT AND THE PAYMENT OF RS. 24 LACS INCLUDES THE PAR T OF HIRE CHARGES OF PLANT AND MACHINERY. FURTHER, DHARNIDHAR CHEMICAL PVT. LIMITE D IS REGULARLY ASSESSED TO ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 4 TAX AND THE SAID RS. 24 LAKHS PAID BY HARI ORGOCHEM PVT. LIMITED TO DHARNIDHAR CHEMICAL PVT. LIMITED IS OFFERED FOR TAXATION IN TH E YEAR UNDER CONSIDERATION. THE ASSESSEE IS IN SEVERE NEED OF THE ABOVE STATED STAF F FOR RUNNING ITS BUSINESS ACTIVITY AND THEREFORE MUST BE CONSIDERED AS WHOLLY AND EXCL USIVELY INCURRED FOR THE PURPOSE OF THE BUSINESS. FURTHER, AS PRODUCTION OF CURRENT ASSESSMENT YEAR H AS BEEN INCREASED, IT REQUIRED MORE PERSONS FOR LEGAL AND SECRETARIAL WORK, SOME O F THE EMPLOYEES REFERRED HEREIN ABOVE HAVE WORKED FOR ASSESSEE COMPANY FOR W HICH IT HAS MADE PAYMENT OF RS.2 LACS PER MONTH. ON/THE BASIS OF THE ABOVE M ENTIONED FACTS THE HON'BLE CIT(A) HAS ALLOWED (RS. 12,00,000/- IN THE PREVIOUS ASSESSMENT YEAR I.E. IN THE AY 2008-09.' 6. THE ABOVEMENTIONED SUBMISSIONS DID NOT FIND ANY FAV OUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS NO T SUBMITTED ANY DETAILS OF SERVICES RENDERED BY THE EMPLOYEES NOR T HERE IS ANY EVIDENCE TO SHOW THAT THE EMPLOYEES WERE SOLELY AT THE DISPOSAL OF THE ASSESSEE COMPANY, THE A.O. DISALLOWED 50% ON AD-HOC BASIS AND MADE AN ADDITION OF RS. 12,00,000/-. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOUND THAT AN IDENTICAL ISSUE HAD ARISEN IN THE CASE OF T HE ASSESSEE IN A.Y. 2007-08 WHERE HIS PREDECESSOR HAS DELETED THE ADDIT ION. FOLLOWING THE ORDER OF HIS PREDECESSOR, THE LD. CIT(A) DELETED TH E ADDITIONS MADE BY THE A.O. ON PRESUMPTION. 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 5 10. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE STATED THA T AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CA SE IN ITA NO. 2120/AHD/2011 DATED 30.09.2015. THE LD. D.R. COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE DE CISION OF THE CO- ORDINATE BENCH (SUPRA), WE FIND THAT THE REASONING GIVEN BY THE A.O. FOR MAKING THE ADDITION OF RS. 12 LACS IS IDENTICAL TO WHAT WAS CONSIDERED BY THE CO-ORDINATE BENCH (SUPRA). THE RE LEVANT FACTS CONSIDERED BY THE CO-ORDINATE BENCH AND THE FINDING S THEREON READ AS UNDER:- 7.1. THE ASSESSING OFFICER MADE DISALLOWANCE ON THE BASIS THAT THE PAYMENTS HAVE BEEN RECENTLY INTRODUCED. THE AGREEMENT BETWEEN TWO CONCERNS UNDER THE SAME MANAGEMENT IS LOOSELY WORDED AND DOES NOT HAVE ANY OUTLINED DETAILED NATURE, PURPOSE AND JUSTIFICATION OF THE AMOUNT IN QUESTION . FURTHER, THE ASSESSING OFFICER OBSERVED THAT NO SUPPORTING EVIDENCE HAS BEEN PLACE D ON RECORD. SERVICE RENDERED BY AFORESAID EMPLOYEES OF DHARNIDHAR CHEMI CALS PVT. LTD. AND PROCEEDED TO HOLD THAT THE FEES FOR SERVICES OF THE EMPLOYEES OF THE DHARNIDHAR CHEMICALS PVT. LTD. AS EXCESSIVE BY 50% OF THE AMOU NT PAID TO THE ASSOCIATE CONCERN OF THE ASSESSEE WAS DISALLOWED AND ADDED BA CK TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, THE ID. CIT(A) DELETED THE SAME ON THE BASIS THAT IN EARLIER YEAR SIMILAR DISALLOWANCE WAS MADE AND PREDECESSOR OF THE CIT(A) IN A.Y. 2007- 08 HAD DELETED THE DISALLOWANCE. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE. LD. COUNSEL FOR THE ASSESSEE HAD POINTED OUT THAT T HE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 45/AHD/2011 HAS CONFIRMED THE F INDING OF THE ID. CIT(A). WE FIND THAT THE CO-ORDINATE BENCH IN ITA NO. 45/AHD/2 011 FOR A.Y. 2007-08 HAS CONFIRMED THE ORDER OF ID. CIT(A) IN PARA 13 BY OBS ERVING AS UNDER: ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 6 '13. WE FIND THAT NO SPECIFIC MISTAKE IN THE FINDIN GS OF THE LD.CIT(A) COULD BE POINTED OUT BY THE. LD. DR. WE FIND THAT THE GEN UINENESS OF THE PAYMENT IS NOT IN DISPUTE. THE ASSESSING OFFICER AFTER OBSE RVING ABOUT THE LOSS INCURRED BY THE ASSESSEE COMPANY HAS BROUGHT NO MAT ERIAL ON RECORD AFTER MAKING INVESTIGATION TO SHOW THAT THE ASSESSEE HAS NOT RECEIVED THE SERVICES FOR WHICH PAYMENTS WERE MADE BY THE ASSESS EE. RATHER, ON THE OTHER HAND, THE ALLOWANCE OF DEDUCTION AT THE RATE OF 50% SHOWS THAT THE ASSESSING OFFICER ALSO AGREED THAT SERVICES OF THE STAFF OF THE PAYEE COMPANY WERE UTILIZED BY THE ASSESSEE COMPANY FOR I TS BUSINESS PURPOSE. NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE CONSIDERATION FOR SERVICES RECEIVED BY THE ASSESSEE WAS SO EXCESSIVE AS TO WARRANT ANY DISALLOWANCE OUT OF THE SAME. IT IS ALSO OBSERVED T HAT THE AMOUNT OF CONSIDERATION PAID WAS AS PER MEMORANDUM OF UNDERST ANDING ENTERED INTO BY THE ASSESSEE WITH THE PAYEE COMPANY. IN VIE W OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY GOOD REASON T O INTERFERE WITH THE ORDER OF THE LD.CIT(A), HENCE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ' 7.2 THE REVENUE HAS NOT POINTED OUT ANY CHANGE INTO THE FACTS AND CIRCUMSTANCES. THEREFORE, TAKING A CONSISTENT VIEW, THIS GROUND OF REVENUES APPEAL IS REJECTED AND THE ORDER OF THE LD. CIT(A) IS CONFIRMED. 12. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH (SUPRA), WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 1 IS ACCORDINGLY DISMISSED. 13. GROUND NO. 2 RELATES TO THE DELETION OF THE ADDITIO N OF RS. 30,00,000/- MADE ON ACCOUNT OF RENT EXPENSES ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 7 14. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E A.O. FOUND THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 60,0 0,000/- AS RENT PAID TO DHARNIDHAR CHEMICALS PVT. LTD. (DCPL). THE ASSESSEE WAS ASKED TO JUSTIFY THE PAYMENT OF RENT TO THE RELATED PARTY ALONG WITH NECESSARY SUPPORTING EVIDENCES. THE REPLY OF THE AS SESSEE READS AS UNDER:- RENT, RATES AND TAXES OF RS. 60,00,000/- IN REGARDS TO THE SAME, IT IS SUBMITTED THAT ASSESS EE COMPANY HAS DEBITED RS. 60,00,000/- AS RENT, RATES AND TAXES PAID TO DCPL. THE REASON FOR MAKING SUCH PAYMENT IS THAT THE ASSESSEE COMPANY HAS TAKEN PLAN T AND MACHINERY AS WELL AS BUILDING ON LEASE OF DCPL. THE PAYMENT OF RS. 60,00 ,000/- HAS BEEN MADE BY ASSESSEE COMPANY AS PER THE AGREEMENT BETWEEN DCPL AND ASSESSEE COMPANY. THE SAME CAN BE VERIFIED FROM THE COPY OF AGREEMENT ATTACHED AS ANNEXURE-1 (SUPRA) OF THE SAME SUBMISSION. THE ABOVE MENTIONED PAYMENT MADE TO DHARNIDHAR CHEM ICALS PVT LTD. U/S. 40A(2)(B) AND THE SAID TRANSACTIONS ARE REFLECTED I N THE ACCOUNT OF DCPL WHICH IS ATTACHED HEREWITH VIDES ANNEXURE-2. 15. THE REPLY OF THE ASSESSEE DID NOT FIND ANY FAVOUR W ITH THE A.O WHO WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS NO T SUBMITTED THE BIFURCATION OF THE DETAILS OF WORK FORCE, THE DETAI L OF PLANT AND MACHINERY UTILIZED BY IT. THE A.O. PROCEEDED BY DIS ALLOWING 50% OF THE RENT PAID AND MADE AN ADDITION OF RS. 30,00,000/- U /S. 40A(2)(B) OF THE ACT. 16. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 17. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND DRAWING SUPPORT FROM THE DECISION OF THE TRIBUNAL, MUMBAI B ENCHES, JODHPUR ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 8 BENCH AND ALSO FROM THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF VOLTAMP TRANSFORMER S PVT. LTD. 129 ITR 105, THE LD. CIT(A) CONCLUDED BY HOLDING THAT THE O NLY BASIS OF MAKING THE DISALLOWANCE BY THE A.O. IS THAT THE RENT HAS B EEN PAID TO A RELATED PARTY. THOUGH THE A.O. HAS NOT BROUGHT ANY COMPARAB LE CASE WHICH COULD JUSTIFY THE PAYMENT BY THE ASSESSEE TO THE RE LATED PARTY AS EXCESSIVE AND ACCORDINGLY DELETED THE ADDITIONS OF RS. 30,00,000/-. 18. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 19. THE LD. D.R. STRONGLY RELIED UPON THE FINDINGS OF T HE A.O. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. 20. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ADDITIONS MADE BY THE A.O. ARE U/S. 40A(2)(B) OF THE ACT. NO DOUBT, T HAT THE PAYMENT OF RENT HAS BEEN PAID TO A RELATED PARTY BUT AT THE SA ME TIME, IT IS INCUMBENT UPON THE A.O. TO BRING CORROBORATIVE EVID ENCES ON RECORD TO PROVE THE PAYMENT AS EXCESSIVE. WE FIND THAT THE A. O. HAS NOT BROUGHT ON RECORD ANY COMPARABLE CASES, MERELY, BEC AUSE THE A.O. WAS OF THE OPINION THAT THE PAYMENT IS EXCESSIVE WO ULD NOT JUSTIFY THE IMPUGNED ADDITION. THE OBSERVATIONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VOLTAMP TRANSFORMERS PVT. LTD (SUPRA ) NEEDS SPECIAL MENTION AND WHICH READS AS UNDER:- SO FAR AS THE LEGITIMATE BUSINESS NEEDS OF AN ASS ESSEE OR THE BENEFIT DERIVED BY OR ACCRUING TO THE ASSESSEE FROM GOODS, SERVICES OR FACILITIES ETC. ARE CONCERNED, THESE AR E NOT TO BE ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 9 JUDGED FROM THE VIEW POINT OF A REVENUE OFFICER, BU T FROM THE VIEW POINT OF A BUSINESSMAN. 21. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF T HE ABOVE OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COU RT, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROU ND NO. 2 IS ACCORDINGLY DISMISSED. C.O. NO. 62/AHD/2013 FOR A.Y. 2009-10 22. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE D ISALLOWANCE MADE U/S. 14A OF THE ACT. 23. WE FIND THAT DURING THE YEAR, THE ASSESSEE HAS EARN ED DIVIDEND INCOME OF RS. 33,92,011/- FROM SHARES AND MUTUAL FU NDS WHICH WERE CLAIMED AS EXEMPT U/S. 10(34) OF THE ACT. WE ALSO F IND THAT THE ASSESSEE HAS MADE SUO MOTU MADE DISALLOWANCE OF RS. ONE LAC U/S. 14A OF THE ACT. 24. THE A.O. WAS OF THE FIRM BELIEF THAT THE DISALLOWAN CE MADE BY THE ASSESSEE IS NOT SUFFICIENT AND INVOKING THE PRO VISIONS OF SECTION 14A READ WITH RULE 8D, THE A.O. COMPUTED THE DISALL OWANCE AT RS. 7,56,929/- AND ADDED THE SAME TO THE RETURN INCOME OF THE ASSESSEE. 25. ASSESSEE STRONGLY AGITATED THE MATTER BEFORE THE LD . CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 10 26. FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A.Y. 200 8-09, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. U/S. 14A OF THE ACT. 27. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 28. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY STATED TH AT THE ASSESSEE IS HAVING SUFFICIENT OWN FUNDS TO MAKE THE IMPUGNED INVESTMENTS IN SHARES AND MUTUAL FUNDS, THEREFORE, THERE IS NO CASE FOR MAKING THE DISALLOWANCE IN RESPECT OF INTEREST. IT IS SAY OF THE LD. COUNSEL THAT INSOFAR AS THE DISALLOWANCE OF ADMINIS TRATIVE EXPENSES IS CONCERNED, THE ASSESSEE HAS SUO MOTU DISALLOWED RS. 1,00,000/- WHICH IS SUFFICIENT TO COVER THE EXPENDITURE RELATE D TO EARNING OF EXEMPT INCOME. 29. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE A.O. 30. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE INVESTMENTS WHICH COULD YIELD TAX EXEMPT INCOME ARE AT RS. 15.30 CRORES WHEREAS THE CAPITAL AND THE AVA ILABLE RESERVES WITH THE ASSESSEE COMPANY IS AT RS. 32.64 CRORES. DRAWIN G SUPPORT FROM THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF RELIANCE UTILITIES & POWER 313 ITR 340 AND HDFC LTD . 366 ITR 505, IN OUR CONSIDERED OPINION, WHEN THE ASSESSEE HAS SUFFI CIENT INTEREST FREE OWN FUNDS TO MEET OUT THE INVESTMENTS, THERE SHOULD NOT BE ANY DISALLOWANCE ON ACCOUNT OF INTEREST. ITA NO. 203 & C.O. NO. 62/AHD/2013 . A.Y. 2009-1 0 11 31. INSOFAR AS THE ALLOCATION OF ADMINISTRATIVE EXPENSE S ARE CONCERNED, THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS SUO MOTU DISALLOWED RS. 1,00,000/- WHICH SHOULD COVER THE RE LATED EXPENDITURE FOR EARNING THE EXEMPT INCOME. WE, THEREFORE, DO NO T FIND ANY REASON FOR MAKING THE IMPUGNED DISALLOWANCES. 32. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 7,56, 929/-. CROSS OBJECTION OF THE ASSESSEE IS ACCORDINGLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 07 - 2 016. SD/- SD/- (S.K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD