Express News Papers Pvt. Ltd., CHENNAI V. DCIT Corporate Circle 2(1), CHENNAI

CO 65/CHNY/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 4099 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 28-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Business expenditure; Earning of tax free income; Bad and doubtful debts
• Section: 14A; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . , .. ', BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO.710/CHNY/2018 $% % /ASSESSMENT YEAR: 2013-14 THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-2(1), ROOM NO.511, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G.ROAD, CHENNAI-600 034. VS. M/S.EXPRESS NEWS PAPERS PVT. LTD., NO.2, EXPRESS ESTATES, CLUB HOUSE ROAD, MOUNT ROAD, CHENNAI-600 002. [PAN: AAACE 1702 G ] ( ( /APPELLANT) ( )*( /RESPONDENT) CROSS OBJECTION NO.65/CHNY/2018 $% % /ASSESSMENT YEAR: 2013-14 M/S.EXPRESS NEWS PAPERS PVT. LTD., NO.2, EXPRESS ESTATES, CLUB HOUSE ROAD, MOUNT ROAD, CHENNAI-600 002. VS. THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-2(1), ROOM NO.511, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G.ROAD, CHENNAI-600 034. [PAN: AAACE 1702 G ] ( ( /APPELLANT) ( )*( /RESPONDENT) DEPARTMENT BY : MR.CLEMENT RAMESH KUMAR, ADDL.CIT ASSESSEE BY : MR.G.BASKAR, ADV. 3 /DATE OF HEARING : 30.07.2018 3 /DATE OF PRONOUNCEMENT : 01.08.2018 ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 2 -: / O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER : THIS IS AN APPEAL AND A CROSS-OBJECTION FILED BY T HE REVENUE AND ASSESSEE RESPECTIVELY DIRECTED AN ORDER DATED 30.11 .2017 OF THE COMMISSIONER OF INCOME TAX (A)-6, CHENNAI. 2. APPEAL OF THE REVENUE IS CONSIDERED FIRST. SOLE ISSUE RAISED BY THE REVENUE IS ON A DISALLOWANCE MADE BY THE AO U/S.14A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) READ ALONG WITH RUL E 8D OF INCOME TAX RULES, 1962 (IN SHORT THE RULES), WHICH WAS DELET ED BY THE LD.CIT(A). LD.COUNSEL FOR THE REVENUE SUBMITTED THAT THE LD.CI T(A) FELL IN ERROR IN DIRECTING THE EXCLUSION OF INVESTMENTS MADE BY THE ASSESSEE IN ITS SUBSIDIARY COMPANY, WHILE COMPUTING THE DISALLOWANC E U/S.14A OF THE ACT. AS PER THE LD.DR, THERE COULD BE NO DIFFERENTIATION BETWEEN INVESTMENTS HELD FOR STRATEGIC PURPOSES AND INVESTMENTS HELD WI TH THE ROLE INTENTION OF HAVING DIVIDEND INCOME. RELIANCE WAS PLACED ON A J UDGMENT OF THE HONBLE APEX COURT IN THE CASE OF M/S.MAXOPP INVEST MENT LTD., VS. CIT IN CIVIL APPEAL NO.104 TO 109 OF 2015 DATED 12.02.2018 . 3. PER CONTRA, THE LD.AR STRONGLY SUPPORTING THE OR DER OF THE LD.CIT(A) SUBMITTED THAT IN ASSESSEES OWN CASE FOR AY 2010-1 1, SUCH EXCLUSION OF INVESTMENTS IN SUBSIDIARY COMPANY WAS ALLOWED BY TH E LD.CIT(A), AND THIS WAS NOT CHALLENGED BY THE REVENUE. AS PER THE LD.D R, THE SPECIAL BENCH ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 3 -: OF THIS TRIBUNAL IN THE CASE OF ACIT VS. VIREET INV ESTMENT PVT. LTD. (2017) 165 ITD 27, HAD DIRECTED EXCLUSION OF INVESTMENTS M ADE FOR STRATEGIC PURPOSES WHILE COMPUTING DISALLOWANCE U/S.14A OF TH E ACT. RELIANCE WAS ALSO PLACED ON A CO-ORDINATE BENCH ORDER IN THE CAS E OF M/S.REAL TALENT ENGINEERING PVT. LTD. VS. DCIT (ITA NO.121/CHNY/201 8 DATED 12.07.2018. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF AUTHORITIES BELOW. THE QUESTION WHETHER STRATEGIC I NVESTMENTS ARE TO BE EXCLUDED WHILE COMPUTING DISALLOWANCE U/S.14A OF TH E ACT, HAS BEEN CLEARLY ADDRESSED BY THE HONBLE APEX COURT IN THE CASE OF M/S.MAXOPP INVESTMENT LTD., SUPRA. WHAT WAS HELD BY THEIR LOR DSHIPS AT PARAGRAPHS NO.31 TO 41 OF THE JUDGMENT IS REPRODUCED HEREUNDER : 31) WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE ARGUMENT OF COUNSEL FOR THE PARTIES ON BOTH SIDES, IN THE LIGHT OF VARIOUS JUDGMENTS WHICH HAVE BEEN CITED BEFORE US, SOME OF WHICH HAVE ALREADY BEEN TAKEN NO TE OF ABOVE. 32) IN THE FIRST INSTANCE, IT NEEDS TO BE RECOGNISE D THAT AS PER SECTION 14A(1) OF THE ACT, DEDUCTION OF THAT EXPENDITURE IS NOT TO BE ALLOWED WHICH HAS BEEN INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. AXIOMATICALLY, IT IS THAT EXPENDITURE ALONE WHICH HAS BEEN INCURRED IN RELATION TO THE INCOME WHICH IS IN CLUDIBLE IN TOTAL INCOME THAT HAS TO BE DISALLOWED. IF AN EXPENDITURE INCURRED HAS NO CAUSAL CONNECTION WITH THE EXEMPTED INCOME, THEN SUCH AN EXPENDITURE WOULD OBV IOUSLY BE TREATED AS NOT RELATED TO THE INCOME THAT IS EXEMPTED FROM TAX, AN D SUCH EXPENDITURE WOULD BE ALLOWED AS BUSINESS EXPENDITURE. TO PUT IT DIFFEREN TLY, SUCH EXPENDITURE WOULD THEN BE CONSIDERED AS INCURRED IN RESPECT OF OTHER INCOME WHICH IS TO BE TREATED AS PART OF THE TOTAL INCOME. 33) THERE IS NO QUARREL IN ASSIGNING THIS MEANING T O SECTION 14A OF THE ACT. IN FACT, ALL THE HIGH COURTS, WHETHER IT IS THE DELHI HIGH COURT ON THE ONE HAND OR THE PUNJAB AND HARYANA HIGH COURT ON THE OTHER HAND, HA VE AGREED IN PROVIDING THIS INTERPRETATION TO SECTION 14A OF THE ACT. THE ENTIRE DISPUTE IS AS TO WHAT INTERPRETATION IS TO BE GIVEN TO THE WORDS IN RELA TION TO IN THE GIVEN SCENARIO, VIZ. WHERE THE DIVIDEND INCOME ON THE SHARES IS EARNED, THOUGH THE DOMINANT PURPOSE FOR SUBSCRIBING IN THOSE SHARES OF THE INVESTEE COM PANY WAS NOT TO EARN DIVIDEND. WE HAVE TWO SCENARIOS IN THESE SETS OF APPEALS. IN ONE GROUP OF CASES THE MAIN PURPOSE FOR INVESTING IN SHARES WAS TO GAIN CONTROL OVER THE INVESTEE COMPANY. OTHER CASES ARE THOSE WHERE THE SHARES OF INVESTEE COMPANY WERE HELD BY THE ASSESSEES AS STOCK-IN-TRADE (I.E. AS A BUSINESS ACT IVITY) AND NOT AS INVESTMENT TO ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 4 -: EARN DIVIDENDS. IN THIS CONTEXT, IT IS TO BE EXAMIN ED AS TO WHETHER THE EXPENDITURE WAS INCURRED, IN RESPECTIVE SCENARIOS, IN RELATION TO THE DIVIDEND INCOME OR NOT. 34) HAVING CLARIFIED THE AFORESAID POSITION, THE FI RST AND FOREMOST ISSUE THAT FALLS FOR CONSIDERATION IS AS TO WHETHER THE DOMINANT PUR POSE TEST, WHICH IS PRESSED INTO SERVICE BY THE ASSESSEES WOULD APPLY WHILE INT ERPRETING SECTION 14A OF THE ACT OR WE HAVE TO GO BY THE THEORY OF APPORTIONMENT . WE ARE OF THE OPINION THAT THE DOMINANT PURPOSE FOR WHICH THE INVESTMENT INTO SHARES IS MADE BY AN ASSESSEE MAY NOT BE RELEVANT. NO DOUBT, THE ASSESSE E LIKE MAXOPP INVESTMENT LIMITED MAY HAVE MADE THE INVESTMENT IN ORDER TO GA IN CONTROL OF THE INVESTEE COMPANY. HOWEVER, THAT DOES NOT APPEAR TO BE A RELE VANT FACTOR IN DETERMINING THE ISSUE AT HAND. FACT REMAINS THAT SUCH DIVIDEND INCOME IS NON-TAXABLE. IN THIS SCENARIO, IF EXPENDITURE IS INCURRED ON EARNING THE DIVIDEND INCOME, THAT MUCH OF THE EXPENDITURE WHICH IS ATTRIBUTABLE TO THE DIVIDE ND INCOME HAS TO BE DISALLOWED AND CANNOT BE TREATED AS BUSINESS EXPENDITURE. KEEP ING THIS OBJECTIVE BEHIND SECTION14A OF THE ACT IN MIND, THE SAID PROVISION H AS TO BE INTERPRETED, PARTICULARLY, THE WORD IN RELATION TO THE INCOME THAT DOES NOT FORM PART OF TOTAL INCOME. CONSIDERED IN THIS HUE, THE PRINCIPLE OF AP PORTIONMENT OF EXPENSES COMES INTO PLAY AS THAT IS THE PRINCIPLE WHICH IS ENGRAIN ED IN SECTION 14A OF THE ACT. THIS IS SO HELD IN WALFORT SHARE AND STOCK BROKERS P LTD ., RELEVANT PASSAGE WHEREOF IS ALREADY REPRODUCED ABOVE, FOR THE SAKE OF CONTINUIT Y OF DISCUSSION, WE WOULD LIKE TO QUOTE THE FOLLOWING FEW LINES THEREFROM. THE NEXT PHRASE IS, IN RELATION TO INCOME WHICH D OES NOT FORM PART OF TOTAL INCOME UNDER THE ACT. IT MEANS THAT IF AN INCOME D OES NOT FORM PART OF TOTAL INCOME, THEN THE RELATED EXPENDITURE IS OUTSIDE THE AMBIT OF THE APPLICABILITY OF SECTION 14A .. XXX XXX XXX THE THEORY OF APPORTIONMENT OF EXPENDIT URE BETWEEN TAXABLE AND NON-TAXABLE HAS, IN PRINCIPLE, BEEN NOW WIDENED UND ER SECTION 14 A. 35) THE DELHI HIGH COURT, THEREFORE, CORRECTLY OBSE RVED THAT PRIOR TO INTRODUCTION OF SECTION 14A OF THE ACT, THE LAW WAS THAT WHEN AN ASSESSEE HAD A COMPOSITE AND INDIVISIBLE BUSINESS WHICH HAD ELEMENTS OF BOTH TAXABLE AND NON-TAXABLE INCOME, THE ENTIRE EXPENDITURE IN RESPECT OF SAID B USINESS WAS DEDUCTIBLE AND, IN SUCH A CASE, THE PRINCIPLE OF APPORTIONMENT OF THE EXPENDITURE RELATING TO THE NON- TAXABLE INCOME DID NOT APPLY. THE PRINCIPLE OF APPO RTIONMENT WAS MADE AVAILABLE ONLY WHERE THE BUSINESS WAS DIVISIBLE. IT IS TO FIN D A CURE TO THE AFORESAID PROBLEM THAT THE LEGISLATURE HAS NOT ONLY INSERTED SECTION 14A BY THE FINANCE (AMENDMENT) ACT , 2001 BUT ALSO MADE IT RETROSPECTIVE, I.E., 1962 W HEN THE INCOME TAX ACT ITSELF CAME INTO FORCE. THE AFORESAID INTENT WAS E XPRESSED LOUDLY AND CLEARLY IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL, 2001. WE, THUS, AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COURT, AND ARE NOT INCLINED TO ACCEPT THE OPINION OF PUNJAB & HARY ANA HIGH COURT WHICH WENT BY DOMINANT PURPOSE THEORY. THE AFORESAID REASONING WO ULD BE APPLICABLE IN CASES WHERE SHARES ARE HELD AS INVESTMENT IN THE INVESTEE COMPANY, MAY BE FOR THE PURPOSE OF HAVING CONTROLLING INTEREST THEREIN. ON THAT REASONING, APPEALS OF MAXOPP INVESTMENT LIMITED AS WELL AS SIMILAR CASES WHERE SHARES WERE PURCHASED BY THE ASSESSEES TO HAVE CONTROLLING INTEREST IN TH E INVESTEE COMPANIES HAVE TO FAIL AND ARE, THEREFORE, DISMISSED. 36) THERE IS YET ANOTHER ASPECT WHICH STILL NEEDS T O BE LOOKED INTO. WHAT HAPPENS WHEN THE SHARES ARE HELD AS STOCK-IN-TRADE AND NO T AS INVESTMENT, PARTICULARLY, BY THE BANKS? ON THIS SPECIFIC ASPECT, CBDT HAS ISS UED CIRCULAR NO. 18/2015 DATED NOVEMBER 02, 2015. ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 5 -: 37) THIS CIRCULAR HAS ALREADY BEEN REPRODUCED IN PA RA 19 ABOVE. THIS CIRCULAR TAKES NOTE OF THE JUDGMENT OF THIS COURT IN NAWANSH AHAR CASE WHEREIN IT IS HELD THAT INVESTMENTS MADE BY A BANKING CONCERN ARE PART OF THE BUSINESS OR BANKING. THEREFORE, THE INCOME ARISES FROM SUCH INVESTMENTS IS ATTRIBUTABLE TO BUSINESS OF BANKING FALLING UNDER THE HEAD PROFITS AND GAINS O F BUSINESS AND PROFESSION. ON THAT BASIS, THE CIRCULAR CONTAINS THE DECISION OF T HE BOARD THAT NO APPEAL WOULD BE FILED ON THIS GROUND BY THE OFFICERS OF THE DEPARTM ENT AND IF THE APPEALS ARE ALREADY FILED, THEY SHOULD BE WITHDRAWN. A READING OF THIS CIRCULAR WOULD MAKE IT CLEAR THAT THE ISSUE WAS AS TO WHETHER INCOME BY WA Y OF INTEREST ON SECURITIES SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD I NCOME FROM OTHER SOURCES OR IT IS TO FALL UNDER THE HEAD PROFITS AND GAINS OF BUS INESS AND PROFESSION. THE BOARD, GOING BY THE DECISION OF THIS COURT IN NAWANSHAHAR CASE, CLARIFIED THAT IT HAS TO BE TREATED AS INCOME FALLING UNDER THE HEAD PROFITS A ND GAINS OF BUSINESS AND PROFESSION. THE BOARD ALSO WENT TO THE EXTENT OF S AYING THAT THIS WOULD NOT BE LIMITED ONLY TO CO-OPERATIVE SOCIETIES/BANKS CLAIMI NG DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT BUT WOULD ALSO BE APPLICABLE TO ALL BAN KS/COMMERCIAL BANKS, TO WHICH BANKING REGULATION ACT , 1949 APPLIES. 38) FROM THIS, PUNJAB AND HARYANA HIGH COURT POINTE D OUT THAT THIS CIRCULAR CARVES OUT A DISTINCTION BETWEEN STOCK-IN-TRADE AND INV ESTMENT AND PROVIDES THAT IF THE MOTIVE BEHIND PURCHASE AND SALE OF SHARES IS TO EAR N PROFIT, THEN THE SAME WOULD BE TREATED AS TRADING PROFIT AND IF THE OBJECT IS T O DERIVE INCOME BY WAY OF DIVIDEND THEN THE PROFIT WOULD BE SAID TO HAVE ACCR UED FROM INVESTMENT. TO THIS EXTENT, THE HIGH COURT MAY BE CORRECT. AT THE SAME TIME, WE DO NOT AGREE WITH THE TEST OF DOMINANT INTENTION APPLIED BY THE PUNJA B AND HARYANA HIGH COURT, WHICH WE HAVE ALREADY DISCARDED. IN THAT EVENT, THE QUESTION IS AS TO ON WHAT BASIS THOSE CASES ARE TO BE DECIDED WHERE THE SHARE S OF OTHER COMPANIES ARE PURCHASED BY THE ASSESSEES AS STOCK-IN-TRADE AND NOT AS INVESTMENT. WE PROCEED TO DISCUSS THIS ASPECT HEREINAFTER. 39) IN THOSE CASES, WHERE SHARES ARE HELD AS STOCK- IN-TRADE, THE MAIN PURPOSE IS TO TRADE IN THOSE SHARES AND EARN PROFITS THEREFROM . HOWEVER, WE ARE NOT CONCERNED WITH THOSE PROFITS WHICH WOULD NATURALLY BE TREATED AS INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS AND PROFE SSION. WHAT HAPPENS IS THAT, IN THE PROCESS, WHEN THE SHARES ARE HELD AS STOCK- IN-TRADE, CERTAIN DIVIDEND IS ALSO EARNED, THOUGH INCIDENTALLY, WHICH IS ALSO AN INCOME. HOWEVER, BY VIRTUE OF SECTION 10 (34) OF THE ACT, THIS DIVIDEND INCOME IS NOT TO BE INCLUDED IN THE TOTAL INCOME AND IS EXEMPT FROM TAX. THIS TRIGGERS THE APPLICABILITY OF SECTION 14A OF THE ACT WHICH IS BASED ON THE THEORY OF APPORTI ONMENT OF EXPENDITURE BETWEEN TAXABLE AND NON-TAXABLE INCOME AS HELD IN W ALFORT SHARE AND STOCK BROKERS P LTD. CASE. THEREFORE, TO THAT EXTENT, DEP ENDING UPON THE FACTS OF EACH CASE, THE EXPENDITURE INCURRED IN ACQUIRING THOSE S HARES WILL HAVE TO BE APPORTIONED. 40) WE NOTE FROM THE FACTS IN THE STATE BANK OF PAT IALA CASES THAT THE AO, WHILE PASSING THE ASSESSMENT ORDER, HAD ALREADY RESTRICTE D THE DISALLOWANCE TO THE AMOUNT WHICH WAS CLAIMED AS EXEMPT INCOME BY APPLYI NG THE FORMULA CONTAINED IN RULE 8D OF THE RULES AND HOLDING THAT SECTION 14A OF THE ACT WOULD BE APPLICABLE. IN SPITE OF THIS EXERCISE OF APPORTIONM ENT OF EXPENDITURE CARRIED OUT BY THE AO, CIT(A) DISALLOWED THE ENTIRE DEDUCTION OF E XPENDITURE. THAT VIEW OF THE CIT(A) WAS CLEARLY UNTENABLE AND RIGHTLY SET ASIDE BY THE ITAT. THEREFORE, ON FACTS, THE PUNJAB AND HARYANA HIGH COURT HAS ARRIVE D AT A CORRECT CONCLUSION BY AFFIRMING THE VIEW OF THE ITAT, THOUGH WE ARE NO T SUBSCRIBING TO THE THEORY OF DOMINANT INTENTION APPLIED BY THE HIGH COURT. IT IS TO BE KEPT IN MIND THAT IN THOSE CASES WHERE SHARES ARE HELD AS STOCK-IN-TRADE, IT BECOMES A BUSINESS ACTIVITY OF THE ASSESSEE TO DEAL IN THOSE SHARES AS A BUSINESS PROPOSITION. WHETHER DIVIDEND ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 6 -: IS EARNED OR NOT BECOMES IMMATERIAL. IN FACT, IT WO ULD BE A QUIRK OF FATE THAT WHEN THE INVESTEE COMPANY DECLARED DIVIDEND, THOSE SHARE S ARE HELD BY THE ASSESSEE, THOUGH THE ASSESSEE HAS TO ULTIMATELY TRADE THOSE S HARES BY SELLING THEM TO EARN PROFITS. THE SITUATION HERE IS, THEREFORE, DIFFEREN T FROM THE CASE LIKE MAXOPP INVESTMENT LTD. WHERE THE ASSESSEE WOULD CONTINUE T O HOLD THOSE SHARES AS IT WANTS TO RETAIN CONTROL OVER THE INVESTEE COMPANY. IN THAT CASE, WHENEVER DIVIDEND IS DECLARED BY THE INVESTEE COMPANY THAT W OULD NECESSARILY BE EARNED BY THE ASSESSEE AND THE ASSESSEE ALONE. THEREFORE, EVE N AT THE TIME OF INVESTING INTO THOSE SHARES, THE ASSESSEE KNOWS THAT IT MAY GENERA TE DIVIDEND INCOME AS WELL AND AS AND WHEN SUCH DIVIDEND INCOME IS GENERATED T HAT WOULD BE EARNED BY THE ASSESSEE. IN CONTRAST, WHERE THE SHARES ARE HELD AS STOCK-IN-TRADE, THIS MAY NOT BE NECESSARILY A SITUATION. THE MAIN PURPOSE IS TO LIQUIDATE THOSE SHARES WHENEVER THE SHARE PRICE GOES UP IN ORDER TO EARN PROFITS. I N THE RESULT, THE APPEALS FILED BY THE REVENUE CHALLENGING THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT IN STATE BANK OF PATIALA ALSO FAIL, THOUGH LAW IN THIS RESPECT HAS BEEN CLARIFIED HEREINABOVE. 41) HAVING REGARD TO THE LANGUAGE OF SECTION 14A(2) OF THE ACT, READ WITH RULE 8D OF THE RULES, WE ALSO MAKE IT CLEAR THAT BEFORE APP LYING THE THEORY OF APPORTIONMENT, THE AO NEEDS TO RECORD SATISFACTION THAT HAVING REGARD TO THE KIND OF THE ASSESSEE, SUO MOTO DISALLOWANCE UNDER SECTION 14A WAS NOT CORRECT. IT WILL BE IN THOSE CASES WHERE THE ASSESSEE IN HIS RETURN HAS HIMSELF APPORTIONED BUT THE AO WAS NOT ACCEPTING THE SAID APPORTIONMENT. IN THAT EVENTUALITY, IT WILL HAVE TO RECORD ITS SATISFACTION TO THIS EFFECT. FURTHER, WHILE RECORDING SUCH A SATISFACTION, NATURE OF LOAN TAKEN BY THE ASSESSEE FOR PURCHASING THE SHARES/MAKING THE INVESTMENT IN SHARES IS TO BE EXAMINED BY THE AO. 5. IN OUR OPINION, THE DECISIONS OF THE TRIBUNAL RE LIED ON BY THE LD.AR WERE EITHER RENDERED PRIOR TO THE JUDGMENT OF THE H ONBLE APEX COURT IN THE CASE OF M/S.MAXOPP INVESTMENT LTD., OR RENDERED WITHOUT CONSIDERING THIS JUDGMENT OF THE HONBLE APEX COURT. HENCE, TH ESE DECISIONS CANNOT FURTHER THE ASSESSEES CASE. WE ARE THEREFORE, OF T HE OPINION THAT THE LD.CIT(A) FELL IN ERROR IN DIRECTING THE AO TO EXCL UDE THE INVESTMENTS OF RS.250,06,75,100/- MADE BY THE ASSESSEE IN M/S.EXPR ESS INFRASTRUCTURE PVT. LTD., FOR THE PURPOSE OF COMPUTING DISALLOWANC E U/S.14A OF THE ACT. THE ORDER OF THE LD.CIT(A) IS SET-ASIDE AND THE DIS ALLOWANCE MADE BY THE AO IS REINSTATED. ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 7 -: 6. NOW WE TAKE UP THE CROSS-OBJECTION OF THE ASSESS EE: IT IS AGGRIEVED THAT CLAIM FOR WRITE OFF OF BAD DEBTS AMO UNTING TO RS.1,14,15,207/- WAS DISALLOWED DESPITE THE JUDGMEN T OF THE HONBLE APEX COURT IN THE CASE OF M/S.TRF LTD. VS. CIT REPO RTED IN 323 ITR 397. 7. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONE O F THE OBJECTS OF THE ASSESSEE COMPANY WAS DOING MONEY LENDING BUSINESS. AS PER THE LD.AR, THE ASSESSEE HAD GRANTED ADVANCE OF RS.1.60 CRORES TO ONE MR.SANJAY KHEMANI DURING THE FY 2000-01 AGAINST SECURITY OF S HARES. CONTENTION OF THE LD.AR WAS THAT THE SAID PARTY HAD REFUNDED A PA RT OF SUCH AMOUNT BY THE END OF THE YEAR 2001-02, AND HAD ALSO PAID INTE REST THEREON. AS PER THE LD.AR, THE SAID PARTY DID NOT REFUND ANY MONEY AFTER THE YEAR 2001- 02, AND THEREFORE THE BOARD OF THE ASSESSEE DECIDED TO WRITE OFF THE LOAN AS BAD DEBT. CONTENTION OF THE LD.AR WAS THAT AUTH ORITIES LOWER TOOK A VIEW THAT ONLY A TRADING DEBT COULD BE WRITTEN OFF. AS PER THE LD.AR, SINCE THE LOAN GIVEN BY THE ASSESSEE FELL WITHIN ITS OBJE CTS, IT COULD BE ONLY CONSIDERED AS A TRADING DEBT. THUS, ACCORDING TO HIM, THE WRITE OFF WAS ALLOWABLE UNDER LAW. 8. PER CONTRA, THE LD.DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. ASSESSEE WAS A PUBLISHER OF NEWSPAPER AND MAGAZINES. THOUGH IT SAY THAT ONE OF ITS OBJECTS IS TO CARRY ON BUSINESS OF MONEY LENDING, OBVIOUSLY, IT WAS ONLY ONE OF THE INCIDENTAL AND/OR OTHER OBJECT AND NOT ITS M AIN OBJECT. THAT APART, WE FIND THAT ITA NO.710/CHNY/2018 & CO NO.65/CHNY/2018 :- 8 -: THE LOAN GIVEN TO MR.SANJAY KHEMANI WAS THE SOLE INSTANCE OF A LOAN G IVEN TO ANY PERSON OTHER THAN THOSE WHO WERE NOT RELATED TO ITS MAIN BUSINESS ASSESSEE. HENCE, IN OUR OPINION ASSESSEES CLAIM T HAT IT HAD ADVANCED LOAN TO MR.SANJAY KHEMANI AS A PART OF ITS BUSINESS IS NOT ACCEPTABLE. AS FOR THE JUDGMENT OF THE HONBLE APEX COURT IN THE C ASE OF M/S.TRF LTD., SUPRA, RELIED ON BY THE LD.AR THEIR LORDSHIPS DID N OT HOLD THAT CONDITIONS SET OUT IN SECTIONS.36(1)(VII) AND SEC.36(2) WERE N OT REQUIRED TO BE SATISFIED WHILE EFFECTING A WRITE OFF OF BAD DEBTS. THEREFORE, IN OUR OPINION THE LOWER AUTHORITIES WERE JUSTIFIED DISALLOWING CL AIM AS BAD DEBT WRITE OFF. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ERS OF THE LOWER AUTHORITIES. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED, WHEREAS THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON THE DAY OF AUGUST 1 ST , 2018, AT CHENNAI. SD / - SD / - ( . . ' ) ( DUVVURU R.L. REDDY ) $ /JUDICIAL MEMBER ( . ) ( ABRAHAM P.GEORGE ) /ACCOUNTANT MEMBER /CHENNAI, 8 /DATED: AUGUST 01, 2018. TLN 3 )$9: ;: /COPY TO: 1. ( /APPELLANT 4. < /CIT 2. )*( /RESPONDENT 5. : )$$ /DR 3. < ( ) /CIT(A) 6. % /GF