GVPR Engineers Ltd., Hyd, Secunderabad V. ACIT, Circle-2(2), Hyd, Hyderabad

ITA 1018/HYD/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2297 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 02-12-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 15-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Opportunity of being heard; Earning of tax free income; Condonation of delay; Revised return; Rule 8D
• Section: 14A; 260A; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1017/HYD/16 2011-12 GVPR ENGINEERS LIMITED, HYDERABAD [PAN: AAACG7614F] ASST. COMMISSIONER OF INCOME TAX, CC-5, [NOW ACIT-2(2)] HYDERABAD 1018/HYD/16 2012-13 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2), HYDERABAD 521/HYD/17 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(2), HYDERABAD M/S.GVPR ENGINEERS LIMITED, HYDERABAD [PAN: AAACG7614F] 20/HYD/17 2012-13 FOR ASSESSEE : SHRI M.V.ANIL KUMAR, AR FOR REVENUE : SHRI Y.V.S.T.SAI, CIT-DR DATE OF HEARING : 02-12-2019 DATE OF PRONOUNCEMENT : 05-12-2019 O R D E R PER D.KARUNAKARA RAO, A.M. : THESE APPEALS ARE FILED BY BOTH THE ASSESSEE AND THE REVENUE, AGAINST THE ORDERS OF THE COMMISSIONER OF INC OME TAX (APPEALS)-2, HYDERABAD, FOR THE AYS.2011-12 & 2012-1 3 RESPECTIVELY. SINCE THE ISSUE INVOLVED IN THESE APPEA LS IS COMMON AND IDENTICAL, EXCEPT THE AMOUNTS MENTIONED THEREIN, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED-OF BY WAY OF THIS COMMON ORDER. GVPR ENGINEERS LIMITED (GROUP CASE) :- 2 -: CONDONATION OF DELAY: 2. REVENUE FILED BOTH THE APPEALS WITH A DELAY OF 254 DAYS FOR THE AY.2011-12 AND 179 DAYS FOR THE AY.2012-13 (178 D AYS AS PER THE AFFIDAVIT). FOR THAT, REVENUE HAS FILED SEPARATE AF FIDAVITS, SEEKING CONDONATION OF DELAY IN FILING THE APPEALS. 2.1. CONSIDERING THE PETITIONS FOR CONDONATION OF DELA Y IN RESPECT OF REVENUE AND BEING SATISFIED WITH THE REASONABLE CA USE FOR THE DELAY, WE HEREBY CONDONE THE DELAY IN FILING THE APP EALS, WHICH ARE ADMITTED AND BEING HEARD ON MERITS. 3. FIRST, WE SHALL TAKE UP THE APPEALS OF ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE APPEAL OF ASSESSEE FOR THE AY.201 1-12 IS DISCUSSED HERE UNDER IN DETAIL: 4. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE-COMPANY C ARRYING ON BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE PROJECTS (IR RIGATION PROJECTS AND ELECTRIC PROJECTS), FILED ITS RETURN OF IN COME FOR THE AY.2011-12 ON 30-09-2011, ADMITTING TAXABLE INCOME OF RS.11,72,01,883/-, AFTER CLAIMING DEDUCTION U/S.80-IA OF THE INCOME TAX ACT [ACT] OF RS.15,83,50,255/-. SUBSEQUENT LY, A REVISED RETURN WAS FILED ON 02-12-2011, ADMITTING TAXABLE INCOM E OF RS.7,77,09,635/- AND ANOTHER REVISED RETURN ON 30-03- 2012, ADMITTING AN INCOME OF RS.1,89,50,255/- WHEREIN THE DE DUCTION U/S.80-IA WAS CLAIMED AT RS.21,71,10,351/-. THE RETUR N WAS PROCESSED U/S.143(1) OF THE ACT. THE ASSESSING OFFIC ER (AO) ISSUED A NOTICE U/S.148 OF THE ACT ON 18-03-2013 AND THE ASSES SEE FILED A LETTER DT.25-03-2013 REQUESTING TO ACCEPT THE RETURN FILE D ON 30-03- GVPR ENGINEERS LIMITED (GROUP CASE) :- 3 -: 2012 BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/ S.148 OF THE ACT. AFTER THAT, ASSESSMENT WAS COMPLETED BY THE AO. IN THE RE-ASSESSMENT ORDER, THE AO QUANTIFIED THE INCOME AT RS .24.34 CRORES (ROUNDED-OFF). AO DISALLOWED DEDUCTIONS CLAI MED U/S.80-IA OF THE ACT. 4.1. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE CIT(A). 5. CIT(A) PARTLY ALLOWED THE APPEAL OF ASSESSEE. AGGR IEVED WITH THE SAME, THE ASSESSEE FILED AN APPEAL BEFORE THE TRI BUNAL WITH THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE IN NOT ALLOWING DEDUCTION UNDER SECTION 80IA(4)(IV)(B) OF THE INCOME TAX ACT, 1961. 2. YOUR APPELLANT SUBMITS THAT SETTING UP OF NEW TR ANSMISSION OR DISTRIBUTION LINES IS ALSO DEVELOPMENT OF INFRASTRU CTURE AND IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961. 3. YOUR APPELLANT SUBMITS THAT SETTING UP OF NEW TR ANSMISSION OR DISTRIBUTION LINES ON TURNKEY BASIS IS NOT MERE WOR KS CONTRACT, THEREFORE THE EXPLANATION TO SUB-SECTION 13 OF SECTION 80IA A RE NOT APPLICABLE AND IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4)(IV)(B) OF THE INCOME TAX ACT, 1961. 4. THE CIT(A) AND THE ASSESSING OFFICER IGNORED THE PROVISION TO SECTION 80IA(4)(IV)(B), BY VIRTUE OF WHICH THE PROFIT DERIV ED FROM LAYING OF SUCH NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUTI ON AND NOT PROFIT DERIVED FROM TRANSMISSION OR DISTRIBUTION LINES, THEREFORE YOUR APPEL1ANT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4)(IV)(B) EXPLANAT ION IN RESPECT OF PROFIT DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FO R TRANSMISSION OR DISTRIBUTION. 5. THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE UNDER SECTION 14A, THE DISALLOWANCE MAY BE DELETED. 5.1. SUMMARIZING THE GROUNDS, LD.COUNSEL FOR THE ASSE SSEE SUBMITTED THAT GROUND NOS.1 TO 4 RELATES TO ALLOWABILITY OF GVPR ENGINEERS LIMITED (GROUP CASE) :- 4 -: DEDUCTION U/S.80IA(4)(IV)(B) OF THE ACT AND GROUND NO. 5 PERTAINS TO DISALLOWANCE MADE U/S.14A OF THE ACT. 6. REGARDING GROUND NOS.1 TO 4 FOR THE AY.2011-12, CO VERING THE ISSUES RAISED IN THE GROUNDS OF BOTH THE APPEALS FO R BOTH THE YEARS, LD.COUNSEL FOR THE ASSESSEE MADE THE FOLLOWING WRITTEN SUBMISSIONS, AND THE SAME ARE EXTRACTED AS UNDER: ISSUES INVOLVED IN THESE APPEALS ARE: DEDUCTION UNDER SECTION 80IA(4)(I)(C) IN RESPECT OF CIVIL WORKS INCLUDING IRRIGATION PROJECTS AND 80IA(4)(IV)(B) IN RESPECT O F ELECTRICAL PROJECTS 1. ASSESSEE APPEAL ARE IN RELATION TO DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA IN RESPECT OF ELECTRICAL PROJECTS U/S 80IA(4)(IV)(B) : THE CIT(A) BASED ON THE APPEAL ORDER OF THE CIT(A) & ITAT FOR THE ASSESSMENT YEAR 2010-11 IN ITA NO. 765/HYD/2014, 74 0/HYD/2014 & CO NO. 47/HYD/2014 DATED 29-02-2016, DIFFERING FROM THE EARLIER ITAT ORDER IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 20 04-05 TO 2009-16 ITA NO. 347/HYD/200S & 13 OTHERS DATED 29-02-2012. THE HON'BLE ITAT IN ITS ORDER IN ITA NO 347/HYD/2005, AT PAGES 16 TO 21 THE PROJECTS ARE EXTRACTED AND THE DIRECTION OF THE ITAT IS AT 44 8 TH LINE READS AS UNDER: 'THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSEE SH OULD NOT BE DENIED THE DEDUCTION UNDER SECTION 811A OF THE ACT IF THE CONT RACTS INVOLVES DESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INV OLVEMENT AND DEFECT CORRECTION AND LIABILITY PERIOD THEN SUCH CONTRACTS CANNOT BE CALLED A SIMPLE WORKS CONTRACTS TO DENY THE DEDUCTION U/S 80 IA OF ACT. IN OUR OPINION THE CONTRACTS WHICH CONTAIN ABOVE FEATURES TO BE SEGREGATED ON THIS DEDUCTION U/S 80IA HAS TO BE GRANTED AND THE O THER AGREEMENTS WHICH ARE PURE WORKS CONTRACTS HIT BY THE EXPLANATI ON SECTION 80IA(13), THOSE WORKS ARE NOT ENTITLE FOR DEDUCTION U/S 80IA OF THE ACT. THE PROFIT FROM THE CONTRACTS WHICH INVOLVES DESIGN, DEVELOPME NT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT AND DEFECT CORRE CTION AND LIABILITY PERIOD IS TO BE COMPUTED BY ASSESSING OFFICER ON PR O-RATA BASIS OF TURNOVER. THE ASSESSING OFFICER IS DIRECTED TO EXAM INE THE RECORDS ACCORDINGLY AND GRANT DEDUCTION ON ELIGIBLE TURNOVE R AS DIRECTED ABOVE. .' GVPR ENGINEERS LIMITED (GROUP CASE) :- 5 -: IN VIEW OF THE ABOVE DIRECTIONS OF THE ITAT BOTH IR RIGATION PROJECTS AS WELL AS ELECTRICAL PROJECTS ARE ELIGIBLE FOR DEDUCTION U NDER SECTION 80IA(4)(I)(C) AND 80IA(4)(IV) OF THE INCOME TAX ACT, 1961. FOR THE ASSESSMENT YEAR 2010-11 THE CIT(A) AS WELL AS THE ITAT HAVE DENIED DEDUCTION UNDER SECTION 80IA (4) (VI) (B) TH E RELEVANT PARA ARE: CIT(A) ORDER PAGES 9 PARA 6.5 READS AS UNDER: THUS, AS FAR AS THESE TWO ELECTRICAL WORKS ARE CONC ERNED, THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA(4)(IV)(B), SINC E THE APPELLANT IS NOT A POWER TRANSMISSION OR DISTRIBUTION UNDERTAKING. THE DEDUCTION CLAIMED TO THE TUNE OF RS. 3,63,21,718/- IS THEREFORE ERRONEOU S AND IS NOT ADMISSIBLE. ACCORDINGLY, THE DISALLOWANCE MADE TO THIS EXTENT I S THEREFORE UPHELD. AND ITAT ORDER AT PAGE 9 & 10 PARA 8.1 TOWARDS END GAVE A FINDING: 'WE FIND THAT THOUGH THE PROJECTS THEREIN INCLUDED ELECTRICITY PROJECTS AS WELL, ITAT HAS NOT BROUGHT OUT THE DISTINCTION BETW EEN SECTION 80IA(4)(IV)(B) AND THEREFORE, IT CANNOT BE SAID THAT THIS ISSUE IS COVERED BY THOSE ORDERS. FROM THE ABOVE OBSERVATIONS AND THE DETAILED OBSERV ATIONS MADE BY THE CIT(A) TO COME TO A CONCLUSION THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80IA(4)(IV)(B). ACCORDINGLY, WE UPHOL D THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE GROUND OF APPEAL OF A SSESSEE.' WE SUBMIT THAT THE UNDERTAKING REFERRED TO IN SECTI ON 80IA(4)(IV) AND UNDERTAKING REFERRED TO IN THE PROVISO TO SECTION 8 0IA(4)(IV)(B) ARE DIFFERENT AND CANNOT BE THE SAME. THE UNDERTAKING REFERRED TO IN SECTION 80IA(4)(IV) CAN BE CONFINED TO THE POWER TRANSMISSION OR DISTRI BUTION UNDERTAKING WHEREAS THE UNDERTAKING REFERRED TO THE PROVISO TO THIS SECTION IS DIFFERENT. THE PROVISO READS AS UNDER: 'PROVIDED THE DEDUCTION UNDER THIS SECTION TO AN UN DERTAKING UNDER SUB-CLAUSE (B) SHALL BE ALLOWED ONLY IN RELATION TO THE PROFIT S DERIVED FROM LAYING OF SUCH 'NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUT ION.' IN CASE THE UNDERTAKING INVOLVED IN TRANSMISSION AN D DISTRIBUTION UNDERTAKES LAYING OF THE SUCH NETWORK OF NEW LINES WILL BE CAPITAL AND NATURE AND CANNOT EARN PROFIT FOR SUCH LAYING OF NE W LINES, THEREFORE, THERE HAS TO BE ANOTHER UNDERTAKING. HENCE YOUR APPELLANT IS ELIGIBLE FOR DEDUCTION ON PROFITS FROM ELECTRICAL PROJECTS. IT I S PRAYED THAT DEDUCTION UNDER SECTION 80IA(4)(IV)(B) MAY BE ALLOWED. 2. THE DEPARTMENT APPEAL ARE IN RESPECT OF DEDUCTION ALLOWED BY CIT(A) UNDER SECTION 80IA(4)(I)(C) - GVPR ENGINEERS LIMITED (GROUP CASE) :- 6 -: THE CIT(A) HAS FOLLOWED THE ITAT ORDER FOR AY 2004- 05 TO 2009-10, IN ITA NO 347/H/2008 & OTHERS, ORDER OF THE CIT(A) AS WELL ITAT ORDER FOR AY 2010-11, THE RELEVANT PARA ARE: THE HON'BLE ITAT IN ITS ORDER IN ITA NO 347/HYD/200 8, AT PAGES 16 TO 21 THE PROJECTS ARE EXTRACTED AND THE DIRECTION OF THE ITAT IS AT 44 8TH LINE READS AS UNDER: 'THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSEE SH OULD NOT BE DENIED THE DEDUCTION UNDER SECTION 811A OF THE ACT IF THE CONTRACTS INVO LVES DESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT AND DEFECT CORRE CTION AND LIABILITY PERIOD THEN SUCH CONTRACTS CANNOT BE CALLED A SIMPLE WORKS CONTRACTS TO DENY THE DEDUCTION U/S 80IA OF ACT. IN OUR OPINION THE CONTRACTS WHICH CONTAIN ABO VE FEATURES TO BE SEGREGATED ON THIS DEDUCTION U/S 80IA HAS TO BE GRANTED AND THE OTHER AGREEMENTS WHICH ARE PURE WORKS CONTRACTS HIT BY THE EXPLANATION SECTION 80IA(13), THOSE WORKS ARE NOT ENTITLE FOR DEDUCTION U/S 80IA OF THE ACT. THE PROFIT FROM THE CONTRACTS WHICH INVOLVES DESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INV OLVEMENT AND DEFECT CORRECTION AND LIABILITY PERIOD IS TO BE COMPUTED BY ASSESSING OFFICER ON PRO-RATA BASIS OF TURNOVER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE RE CORDS ACCORDINGLY AND GRANT DEDUCTION ON ELIGIBLE TURNOVER AS DIRECTED ABOVE. . FOR THE ASSESSMENT YEAR 2010-11 THE CIT(A) AS WELL AS THE ITAT HAVE ALLOWED DEDUCTION UNDER SECTION 80LA (4) (1) (C) TH E RELEVANT PARA ARE: CIT(A) ORDER PAGES 6 PARA 6.2 READS AS UNDER: THE ISSUE IN THE EARLIER ORDER BEFORE THE HON'BLE TRIBUNAL WAS WHETHER THE APPELLANT IS A WORK CONTRACTOR OR NOT. THE TRIBUNAL HAD GIVEN A FINDING THAT THE APPELLANT IS NOT A MERE WORK CONTRACTOR AND IS THER EFORE INTITLED FOR DEDUCTION U/S 80IA. THUS, ONCE AN APPELLANT IS ELIGIBLE FOR T HE DEDUCTION UNDER SECTION 80IA, THEN, THIS CLAIM IS TO BE ALLOWED IN TERMS OF THE O RDER OF THE HON'BLE ITA T IN APPELLANT'S OWN CASE FOR EARLIER YEARS. THIS FINDIN G CAN THEREFORE BE APPLIED TO THE FIRST THREE PROJECTS NAMELY THE CLAIM OF DEDUCT ION U/S 80IA (4)(1)(C). ACCORDINGLY, THE CLAIM OF THE DEDUCTION U/S 80IA(4) (I)(C) TO THE TUNE OF RS. 5,15,54,567/- IS THEREFORE ALLOWED.' AND ITAT ORDER AT PAGE 11 PARA 10.1 READS AS UNDER: 'THE REVENUE HAS FILED AN APPEAL U/S 260A OF THE AC T CHALLENGING THE ABOVE ORDER OF ITAT BEFORE THE HON'BLE HIGH COURT. IN THE SAID ORDER, I T WAS HELD THAT THESE CONTRACTS ARE NOT IN THE NATURE OF WORKS CONTRACTS AND THEREBY EXPLAN ATION TO THE PROVISIONS OF SECTION 80IA(13) ARE NOT ATTRACTED. HENCE, JUST TO MAINTAIN CONSISTENCY WITH THE STAND OF THE REVENUE AND TO KEEP THE ISSUE ALIVE, AO HAS DISALLO WED THE DEDUCTION U/S 80IA(4)(I)(C). APART FROM THAT THERE IS NO MERIT IN SUCH DISALLOWA NCE. HOWEVER, THE ID. CIT(A) HAS GVPR ENGINEERS LIMITED (GROUP CASE) :- 7 -: ALLOWED ASSESSEE'S CLAIM U/S 80IA(4)(I)(C) RELYING ON THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL (SUPRA), HENCE, WE ARE INCLINED TO UP HOLD THE ORDER OF CIT (A). IN THIS REGARD AS THE ORDER OF THE CIT(A) IS IN LINE WITH THE ORDE R OF ITAT.' IN VIEW OF THE ABOVE, THE DEPARTMENT APPEALS MAY BE DISMISSED. 6.1. FURTHER, RELYING ON THE DECISION OF HON'BLE ITAT VIDE ITS ORDER DT.29-02-2012 IN ITA NO.347/HYD/2008 AND OTHERS, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THESE ISSUES HAVE TO B E REMANDED TO THE FILE OF CIT(A) FOR PASSING AN ORDER I N COMPLIANCE WITH THE SAID ORDER OF THE TRIBUNAL. REFERRING TO ABOV E NOTE, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE I S ENTITLED TO DEDUCTION U/S.80IA(4) OF THE ACT IN RESPECT OF BOTH TH E TYPES OF THE PROJECTS. THE SAID ORDER OF THE TRIBUNAL HELPS THE ASSESSEE IF AN EFFECT IS GIVEN AND THE SAID DECISION IS HONOURED BY THE AO. FURTHER, REFERRING TO THE ALLOWABILITY OF DEDUCTION U/ S.80IA(4)(I)(C) OF THE ACT, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IT AT ALREADY TAKEN A VIEW IN THIS REGARD AND CONSEQUENTLY, THE APPEALS OF THE REVENUE ARE DISMISSED. 7. AFTER HEARING BOTH THE SIDES AND ALSO CONSIDERING TH E DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA, WE ARE OF THE OPINION THAT THE DIRECTIONS SHOULD BE GIVEN TO THE CIT(A) TO GO BY THE SAID ORDER OF THE TRIBU NAL. AO SHALL GRANT AN OPPORTUNITY OF BEING HEARD. ACCORDINGLY, GR OUND NOS. 1 TO 4 ARE ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.5 RELATES TO DISALLOWANCE U/S.14A OF THE ACT. THE RELEVANT FACTS INCLUDES THAT THE ASSESSEE EARNED DIVIDEN D INCOME OF RS.4.5 LAKHS, WHICH IS CLAIMED AS EXEMPT. DURING THE RE- GVPR ENGINEERS LIMITED (GROUP CASE) :- 8 -: ASSESSMENT PROCEEDINGS, AO NOTED THE CLAIM OF INTERES T DEBIT AND INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT. THE ASSESSEE RELIED ON THE DECISION OF HON'BLE HIGH COURT OF GUJAR AT IN THE CASE OF CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION LTD., [128 TAXMANN 142] (GUJ). REJECTING THE SAME, AO MENTIONED THAT ASSESSEE CLAIMED THE FINANCIAL CHARGES OF RS.12.63 C RORES AND THEREFORE, APPLIED THE SAID PROVISIONS OF SECTION 14A R.W. RULE 8D OF INCOME TAX RULES. ACCORDINGLY, THE DISALLOWANCE IS Q UANTIFIED AT RS.2,57,955/- UNDER THE CLAUSE (II) AND (III) OF RUL E 8D(2) OF THE INCOME TAX RULES. 8.1. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APP EAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF ASSESSEE ON THIS ISSUE, STATING AS UNDER: 8.2. I HAVE GONE THROUGH THE ABOVE AND I FIND THAT THE ACTION OF THE AO IS JUSTIFIED IN MAKING A DISALLOWANCE OF RS.2,35,455/- U/S.14A R.W.R.8D(2)(II) OF THE ACT, AS THE ASSESSEE FAILED TO REBUT THE AO S CONCLUSIONS THAT THE INTEREST BEARING BORROWED FUNDS ARE NOT UTILIZED FO R EARNING EXEMPT INCOME OF RS.45,00,000/-. 8.3. FURTHER, THE AO MADE A DISALLOWANCE OF RS.22,5 00/- U/S.14A R.W.R.8D(2)(III) OF THE ACT. THIS ACTION OF THE AO IS ALSO JUSTIFIED, AS IT IS VERY COMMON TO MAKE USE OF THE ADMINISTRATIVE MANPOWER FOR EARNING EXEMPT INCOME ALSO AND WHICH IS NOT RULED O UT AND THEREFORE, THE SAID ACTION OF THE AO IS CONFIRMED. THEREFORE, THE DISALLOWANCE OF RS.2,57,955/- MADE U/S.14A R.W.R.8D IS HEREBY CONFI RMED. AS A RESULT, THE GROUNDS RAISED ARE DISMISSED. 8.2. BEFORE US, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(A) ON THIS ISSUE REQUIRES REVERSAL. 8.3. ON THE OTHER HAND LD.DR FOR THE REVENUE RELIED HE AVILY ON THE ORDERS OF THE AO AS WELL AS THE CIT(A). GVPR ENGINEERS LIMITED (GROUP CASE) :- 9 -: 8.4. ON BEARING BOTH THE SIDES ON THIS LIMITED ISSUE, WE FIND THAT THERE IS NO DISPUTE ABOUT THE EARNING OF THE DIVIDEND I NCOME OF RS.4.5 LAKHS. IT IS ALSO A FACT THAT THE FINANCE CHARGES WERE INCURRED BY THE ASSESSEE AS SEEN FROM THE PROFIT & LOS S A/C. CONSIDERING THE EXEMPT NATURE OF THE DIVIDEND INCOME, TH E ONUS OF THE ASSESSEE IS TO DEMONSTRATE THAT NONE OF THE FINANCE CH ARGES WERE INCURRED FOR INVESTMENTS, WHICH YIELDED THE DIVI DEND INCOME TO THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. THE OR DERS OF THE AO AND CIT(A) ARE NOT CLEAR ABOUT THE EXTENT OF INVESTME NTS MADE BY THE ASSESSEE OUT OF THE INTEREST BEARING BORROWED FU NDS. IT IS ALSO NOT EMANATING FROM THE ORDERS ABOUT THE FACTS ON THE SUFFICIENCY OF NON-INTEREST FREE FUNDS FOR EXPLAININ G THE DIVIDEND YIELDING INVESTMENTS. THEREFORE, IN ALL FAIRNESS, WE ARE OF THE OPINION THAT THIS ISSUE SHOULD ALSO BE REMANDED TO THE FILE OF AO FOR FRESH CONSIDERATION. HENCE, THIS GROUND OF ASSESS EE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8.5. IN THE RESULT, THE APPEAL OF ASSESSEE FOR THE AY.2 011-12 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. APPEAL OF ASSESSEE FOR THE AY.2012-13: 9. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO ONE AS DECIDED BY US IN ITA NO.1017/HYD/2016, AY.2011-12 ( SUPRA) AND THEREFORE OUR FINDINGS IN THE SAID APPEAL, MUTATIS MUTANDIS , WOULD APPLY TO THIS APPEAL AS WELL. HENCE, THIS APPEAL OF A SSESSEE IS ALSO TREATED AS ALLOWED FOR STATISTICAL PURPOSES. GVPR ENGINEERS LIMITED (GROUP CASE) :- 10 -: APPEALS OF REVENUE FOR THE AYS.2011-12 & 2012-13: 10. AT THE TIME OF HEARING, BOTH THE COUNSELS MENTIONED TH AT THE ISSUE RAISED IN GROUND NO.2 IN BOTH THE APPEALS OF R EVENUE ARE COVERED BY THE COMMON WRITTEN NOTE GIVEN BY THE ASSESSEE IN CONNECTION WITH THE GROUND NOS.1 TO 4, RAISED IN ASSES SEES APPEALS. WHILE DEALING WITH THE ISSUES RAISED IN ASSE SSEES APPEALS, WE REMITTED THE ENTIRE ISSUE TO THE FILE OF AO ONLY TO COM PLY WITH THE EXISTING ORDER OF THE CO-ORDINATE BENCH OF THE TRIB UNAL DT.29-02-2012 IN ITA NO.347/HYD/2008 AND OTHERS (SUPR A) AND PASS A SPEAKING ORDER. AO IS DIRECTED TO PASS AN ORD ER STRICTLY IN COMPLIANCE OF THE SAID ORDER OF THE TRIBUNAL, AFTER EX AMINING THE FACTS. CONSIDERING THE SAME AND FOR THE SAKE OF CONSI STENCY, THESE APPEALS OF REVENUE ARE ALSO TREATED AS ALLOWED FOR S TATISTICAL PURPOSES. 11. TO SUM-UP, BOTH THE APPEALS OF ASSESSEE AND THE APPEALS OF REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DECEMBER, 2019 SD/- SD/- (V. DURGA RAO) (D. KARUNAKA RA RAO) JUDICIAL MEMBER ACCOUNT ANT MEMBER HYDERABAD, DATED 5 TH DECEMBER, 2019 TNMM GVPR ENGINEERS LIMITED (GROUP CASE) :- 11 -: COPY TO : 1. GVPR ENGINEERS LIMITED, C/O.M.ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, SURYA TOWERS, S.D.ROAD, SECUNDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2( 2), HYDERABAD. 3. THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE-2(2) , HYDERABAD. 4. CIT(APPEALS)-2, HYDERABAD. 5. PR.CIT-2, HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.