OBEROI REALTY LTD ( FORMELRY KNOWN AS KINGSTON PROPERTIES P.LTD), MUMBAI V. ASST CIT CEN CIR 23, MUMBAI

ITA 1050/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2689 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: R MURLIDHAR
• Keywords: Business income; Business expenditure; Earning of tax free income
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1050/MUM/2013 ASSESSMENT YEAR: 2009-10 OBEROI REALTY LIMITED (FORMERLY KNOWN AS KINGSTON PROPERTIES PVT. LTD.) COMMERZ, 3 RD FLOOR, INTERNATIONAL BUSINESS PARK, OBEROI GARDEN CITY, OFF WSTERN EXPRESS HIGHWAY, GOREGAON (E), MUMBAI- 400063. PAN: AABCK0235H VS. ACIT, CC-23, R. NO. 409, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. MURLIDHAR REVENUE BY : SHRI B.S.BIST (DR) DATE OF HEARING : 12.08.2015 DATE OF PRONOUNCEMENT : 04.11.2015 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-40, MUMBAI DATED 22.11.2010 BY RAISING THE FOLLOWING GROUNDS OF APPE AL: 1. DISALLOWANCE OF EXPENSES U/S. 14A: THE LEARNED A.O. HAS ERRED IN LAW AND FACTS BY MAKI NG ADDITION OF RS.62,25,245/- TO THE TOTAL INCOME OF THE APPELLANT BY DISALLOWING EXPENDITURE U/S. 14A OF THE ACT READ WITH RULE 8D O F THE INCOME-TAX RULES,1962 WITHOUT ESTABLISHING ANY NEXUS BETWEEN T HE EXPENDITURE 2 ITA NO. 1050/M/2013 OBEROI REALTY LTD. INCURRED AND THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ABOVE ACTION OF THE LEARNED A.O. 2. DISALLOWANCE OF BMC CHARGES OF RS. 29,81,800/-: A. THE LEARNED A.O HAS ERRED IN LAW AND FACTS IN DI SALLOWING PAYMENT OF BMC CHARGES OF RS. 29,81,8001-, PERTAINING TO THE P ROJECT NAMED 'OBEROI -WOODS', BY TREATING IT AS PENAL IN NATURE AS PER EXPLANATION TO SECTION 3 7( 1) OF THE ACT AND NOT ALLOWING THE SAM E U/S 37(1) OF THE ACT BY IGNORING THE FACT THAT THE SAME WERE COMPENSATOR Y IN NATURE AND LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS AND NOT FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW AND THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN CONFIRMING THE ABOVE ACTIONS OF THE LEARNED A.O. B. THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS FURTHER ERRED IN LAW AND FACTS IN REJECTING THE ALTERNATIVE PLEA OF THE APPELLANT THAT IN CASE THE SAID EXPENSES OF RS. 29,81,800/- ARE ADDED TO THE TOTAL INCOME, THE SAME SHOULD BE ALLOWED AS A DEDUCTION U/S 80IB( 10) OF THE ACT, AS THE SAID DISALLOWANCE WILL RESULT IN THE INCREASE THE P ROFITS OF THE SAID PROJECT, WHICH ARE ELIGIBLE FOR DEDUCTION U/S 80RB (10) OF THE ACT. THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RE JECTED THE PLEA ON THE GROUND THAT THE APPELLANT HAD NOT CLAIMED IT U/S 80A(5) OF THE ACT. 3. DISALLOWANCE OF BMC CHARGES OF RS. 53,56,100/-: A. THE LEARNED ASSESSING OFFICER (A.O.) HAS ERRED I N LAW AND FACTS IN DISALLOWING PAYMENT OF BMC CHARGES OF RS. 53,56,100 1-, PERTAINING TO THE PROJECT NAMED 'OBEROI-7, BY TREATING IT AS PENA L IN NATURE AS PER EXPLANATION TO SECTION 3 7(1) OF THE INCOME-TAX ACT 1961 (THE ACT) AND NOT ALLOWING THE SAME U/S 37(1) OF THE ACT BY IGNOR ING THE FACT THAT THE SAME WERE COMPENSATORY IN NATURE AND LAID OUT WHOLL Y AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NOT FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW AND THE HON'BLE COMMI SSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ABOVE ACT IONS OF THE LEARNED A.O. B. THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS FURTHER ERRED IN LAW AND FACTS IN REJECTING THE ALTERNATIVE PLEA OF THE APPELLANT THAT EVEN IF THE SAID EXPENSES OF RS. 53,56,100/- ARE AD DED TO THE TOTAL INCOME, THE SAME SHOULD BE REDUCED FROM THE WORK-IN-PROGRES S OF THE SAID PROJECT AS THE ENTIRE STOCK WAS UNSOLD AND WAS IN STOCK FOR THE YEAR UNDER CONSIDERATION AND NO SALES HAS BEEN RECOGNIZED DURI NG THE YEAR. 4. DISALLOWANCE OF BMC CHARGES OF RS. 24,78,000/-: 3 ITA NO. 1050/M/2013 OBEROI REALTY LTD. A. THE LEARNED A.O HAS ERRED IN LAW AND FACTS IN ER RED IN LAW AND FACTS IN DISALLOWING BMC CHARGES OF RS. 24,78,0001-, PERTAIN ING TO THE PROJECT NAMED 'OBEROI INTERNATIONAL' SCHOOL' BY TREATING IT AS PENAL IN NATURE AS PER EXPLANATION TO SECTION 3 7(1) OF THE ACT AND NO T ALLOWING THE SAME ULS 3 7( 1) OF THE ACT BY IGNORING THE FACT THAT TH E SAME WERE COMPENSATORY IN NATURE AND LAID OUT WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF BUSINESS AND NOT FOR ANY PURPOSE WHICH I S AN OFFENCE OR WHICH IS PROHIBITED BY LAW AND THE HON'BLE COMMISSIONER O F INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ABOVE ACTIONS OF THE LEARNED A.O. B. THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS FURTHER ERRED IN LAW AND FACTS IN REJECTING THE ALTERNATIVE PLEA OF THE APPELLANT THAT THE SAID EXPENSES OF RS. 24,78,000/- SHOULD NOT BE ADDE D TO THE TOTAL INCOME, BUT SHOULD BE REDUCED FROM THE CAPITAL WORK IN PROG RESS AS THE SAME WERE CAPITALIZED IN THE BOOKS OF ACCOUNTS OF THE AP PELLANT AND NOT CHARGED TO THE PROFIT AND LOSS ACCOUNT. 5. DISALLOWANCE OF CUSTOMS CHARGES OF RS. 44,00,000 /-: A. THE LEARNED A.O HAS ERRED IN LAW AND FACTS IN DI SALLOWING PAYMENT OF CUSTOMS CHARGES OF RS.44,00,000/- BY TREATING IT AS PENAL IN NATURE AS PER EXPLANATION TO SECTION 37(1) OF THE ACT AND NOT ALLOWING THE SAME U/S 37(1) OF THE ACT BY IGNORING THE FACT THAT THE SAME WERE COMPENSATORY IN NATURE AND LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NOT FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW AND THE HO N'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ABOVE ACTIONS OF THE LEARNED A.O. B. THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS FURTHER ERRED IN LA AND FACTS IN REJECTING THE ALTERNATIVE PLEA O F THE APPELLANT THAT EVEN IF THE SAID EXPENSES OF RS.44,00,000/- ARE ADDED TO THE TOTAL INCOME, THE SAME SHOULD BE REDUCED FROM THE CAPITAL WORK IN PRO GRESS AS THE SAME WERE CAPITALISED IN THE BOOKS OF ACCOUNTS OF THE AP PELLANT AND NOT CHARGED TO THE PROFIT AND LOSS ACCOUNT. 6. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER AND/OR DELETE THE ABOVE GROUNDS OF APPEAL. 2. AS PER OUR OPINION THERE ARE TWO BASIC ISSUES FOR O UR CONSIDERATION I.E. DISALLOWANCE MADE U/S 14A AND THE SECOND ONE THE DISALLOWANCE OF BMC CHARGES AND CUSTOM CHARGES WHICH WERE DISALLOWED U/S 37(1) OF THE I.T. ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCOME OF RS. 14,01,61,5 62/-. THE RETURN WAS SELECTED FOR 4 ITA NO. 1050/M/2013 OBEROI REALTY LTD. SCRUTINY AND AFTER ISSUANCE OF NOTICE, THE ASSESSEE DISALLOWED A SUM OF ` . 62,25,245/- U/S 14A OF THE I.T. ACT AND FURTHER DISALLOWED A SU M OF ` . 1,52,16,797/- BEING REGULARIZATION CHARGES PAID TO BMC AND ` . 1,08,15,900/- ON ACCOUNT OF PENALTY PAID TO CUSTOM DEPARTMENT OF ` . 44,00,897/- AND FURTHER A SUM OF ` . 1,08,15,900/- FURTHER CHARGE PAID TO BMC FOR REGULARIZATION OF PROJECT OF OBEROI WOODS, OBEROI 7 AND OBEROI INTERNATIONAL SCHOOL AND INITIATED PENALTY P ROCEEDING. 4. AGAINST THE ORDER OF ASSESSING OFFICER (AO), THE AS SESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) UPHELD THE ADDITION MADE ON A CCOUNT OF BOTH THE ISSUES AS MENTIONED IN PARA 2 ABOVE IN THE IMPUGNED ORDER DAT ED 24.01.2012 AGAINST WHICH THE PRESENT APPEAL IS FILED. 5. WE HAVE HEARD THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND THE DEPARTMENTAL REPRESENTATIVE (DR) OF THE REVENUE AND GONE THROUGH THE MATERIAL AVAIALBE ON RECORD, THE ASSESSEE HAS PLACED ON RECO RD AND THE SUPPORTING DOCUMENT IN RESPECT OF PAYMENT OF BMC CHARGED AND THE VARIOUS R ECEIPTS ALONG WITH THE VARIOUS PAYMENT RECEIPTS MADE ON ACCOUNT OF CUSTOM DUTY CHA RGES AND NOTIFICATION NO. 18 (RE-2008)/2004-09) ISSUED FROM MINISTRY OF COMMERCE & INDUSTRY, DEPARTMENT OF FINANCE ALONG WITH THE BALANCE-SHEET AND PROFIT & L OSS A/C AND AUDIT REPORT AND INTIMATION OF DISAPPROVAL U/S 346 OF THE MUMBAI MUN ICIPAL CORPORATION, CERTIFICATE OF COMMENCEMENT OF PROJECT(S), AND PERMISSION TO OCCUP Y THE COMPLETED PROJECT. WE HAVE FURTHER SEEN THE DIFFERENT RECEIPTS OF PAYMENT PAID TO THE OFFICE OF BMC AS REGULARIZATION CHARGES. 6. THE AR OF THE ASSESSEE HAS RELIED UPON THE JUDGMENT DATED 31.10.2014 IN ITA NO. 4239/MUM/2011 TITLED AS M/S M.P.GUPTA VS. ITO, WHER EIN THE COORDINATE BENCH OF MUMBAI TRIBUNAL WHILE RELYING UPON THE JUDGEMENTS OF HONBLE SUPREME COURT IN THE CASE OF PRAKASH COTTON MILLS P. LTD. VS. CIT[19 93] 201 ITR 684 (SC) AND CIT VS. AHMEDABAD COTTON MFG. CO. LTD. [1994] 205 ITR 163 ( SC) , HELD THAT STATUTORY IMPOST PAID AS DAMAGES, PENALTY OR INTEREST, IF COM PENSATORY IN NATURE, IT IS ALLOWABLE AS BUSINESS EXPENDITURE. THE ID SR. COUNSEL FOR THE ASSESSEE ALSO DRAW ATTENTION TO THE ORDER OF THE LD. CIT(A) WHEREIN REFERENCE WAS MADE TO CASES OF T. KHEMCHAND TEJOOMAL, 161 ITR 492 AND AGRA LEATHERS LTD. ITR 79 2. THE ID. SR. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE CASES PERTAINED TO PE NALTIES LEVIED BY THE CUSTOMS AUTHORITIES FOR THE UNLAWFUL ACT OF THE ASSESSEE, H OWEVER, IN THE PRESENT CASE THE 5 ITA NO. 1050/M/2013 OBEROI REALTY LTD. ASSESSEE HAS NOT COMMITTED ANY UNLAWFUL ACT, THEREF ORE, AND THESE CASES ARE NOT APPLICABLE TO THE ASSESSEE. THE LD. SR. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION TO THE RELEVANT OBSERVATION IN THE CASE O F AGRA LEATHERIES WHEREIN THE COURT HAS SAID THAT THE HON'BLE BOMBAY HIGH COURT HAD COR RECTLY ALLOWED THE EXPENDITURE AS A BUSINESS EXPENDITURE AS WELL AS ALLOWED TO BE ADD ED TOWARDS THE COST OF GOODS. 7. FURTHER, RELIANCE WAS ALSO PLACED ON THE DECISION O F HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. HERO CYCLES LTD., 17 B TR 281 AND IN THE CASE OF CIT VS. INDUSTRIAL CABLES (I) LTD. 212 CTR 513 WHEREIN 'PEN ALTY' LEVIED FOR DRAWING EXTRA LOADING FROM THE GRID, IN VIOLATION OF POWER RULES AND REGULATIONS WAS HELD TO BE ALLOWABLE AS IT WAS NOT LEVIED FOR DELIBERATE VIOLA TION OF LAW. ATTENTION WAS ALSO INVITED TO THE MEMORANDUM TO THE FINANCE BILL 1998 TO SHOW THAT THE PURPOSE OF INTRODUCING EXPLANATION TO SECTION 37(1) OF THE ACT WAS TO APPLY THE SAME IN THE CASE OF UNLAWFUL EXPENDITURE SUCH AS ON ACCOUNT OF PROTE CTION MONEY, EXTORTION, HUFTA, BRIBES ETC. AND NOT TO THE NORMAL BUSINESS EXPENSES . 8. LD. DR FOR REVENUE HAS FURTHER RELIED UPON THE JUD GMENT OF KARNATAKA HIGH COURT IN CASE TITLED AS CIT VS. MAMTA ENTERPRISES REPORTED I N 2004(1) 266 ITR 356 (KAR), WHEREIN IT WAS HELD THAT PUTTING UP CONSTRUCTION WI THOUT THERE BEING A SANCTION PLAN AS AN OFFENCE UNDER KARNATAKA MUNICIPAL CORPORATION AC T, 1976 AND IT IS TREATED AS AND PROHIBITED BY LAW. IN OUR OPINION, THE FACT OF THE CASE RELIED BY LD. DR ARE AT VARIANCE. IN THE PRESENT CASE, THE ASSESSEE HAS PAID THE CHAR GES ON ACCOUNT OF REGULARIZATION CHARGES TO THE BMC AND DR HAS NOT BROUGHT IN OUR NO TICE THAT ANY DEVIATION IS AN OFFENCE UNDER THE STATUTORY PROVISION OR BY-LAWS OF BMC. 9. WE HAVE ALSO SEEN THE ORDER PASSED BY COMMISSIONER OF CUSTOM (IMPORT) DATED WHEREIN, THE GOODS OF THE ASSESSEE WERE PERMITTED TO BE CLEAR ON THE PAYMENT OF RS. 44,00,897/- AS LEVIED UNDER VARIOUS PROVISION OF CU STOM ACT. 10. CONSIDERING AND RESPECTFULLY FOLLOWING THE JUDGMENT OF CO-ORDINATE BENCH, AS DISCUSSED ABOVE, THE DISALLOWANCE MADE ON ACCOUNT OF BMC CHARGES AND CUSTOM CHARGES ARE DELETED. 11. ANOTHER GROUND FOR OUR CONSIDERATION IS THE DISALLO WANCE MADE U/S 14A OF IT ACT. THE AO MADE THE DISALLOWANCE U/S 14 A ,READ WITH RULE 8 D, ON AN AMOUNT EQUAL TO ONE HALF PERCENT OF THE AVERAGE VALUE OF THE INVESTMENT , WHICH WERE APPEARING IN THE BALANCE SHEET OF THE ASSESSEE ON THE FIRST DAY OF T HE PREVIOUS YEAR , WHICH IS SHOWN AT RS.124,50,48,994/- AND THUS CALCULATING THE DISALLO WANCE @ 0.5% THE AMOUNT WAS CALCULATED RS. 62,25,245/-. 6 ITA NO. 1050/M/2013 OBEROI REALTY LTD. 12. THE LD. CIT(A) WHILE DEALING WITH THIS GROUND OBSER VED AS UNDER 4.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER, PER USED THE SUBMISSIONS AND ALSO DISCUSSED THE CASE WITH THE ARS OF THE APPELLANT. T HE APPELLANT CLAIMS THAT NO SUBSTANTIAL MANPOWER WAS REQUIRED FOR MAKING INVESTMENTS. IT WA S FURTHER SUBMITTED THAT TOTAL INDIRECT EXPENSES FOR THE COMPANY WAS RS.85,14,130/ -, WHICH TOO RELATED TO THE MAIN BUSINESS OF REAL ESTATE. HOWEVER, ON PERUSAL OF THE PROFIT & LOSS ACCOUNT, IT IS 'NOTED THAT THE APPELLANT HAS NOT CONSIDERED THE OTHER EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT, E.G. MANPOWER COST OF RS.4.96 CRORES (WHICH INCLUDE S, REMUNERATION TO DIRECTORS, EMPLOYEE COST AND STAFF WELFARE EXPENSES). IT WOULD BE PERTINENT TO MENTION HERE THAT AS PER SCHEDULE 12 TO PROFIT & LOSS ACCOUNT, THIS AMOU NT OF ` . 4.96 CRORES HAS BEEN ARRIVED AT AFTER REDUCING THE AMOUNT OF MANPOWER COSTS RELA TING TO PROJECTS AMOUNTING TO RS.16.59 CRORES, AND, HENCE, THE AMOUNT OF RS.4.96 CRORES IS ONLY THE ADMINISTRATIVE MANPOWER COST. THE APPELLANT HAS ALSO CLAIMED DEPRE CIATION OF RS.2.88 CRORES. THE APPELLANT FAILED TO PRODUCE BEFORE ME THE INDEPENDE NT ACCOUNTS MAINTAINED FOR REAL ESTATE BUSINESS AND FOR INVESTMENTS IN SHARES, AND, HENCE, THE APPELLANT'S ACCOUNTS ARE MIXED. THEREFORE, THE CLAIM THAT NO EXPENDITURE IS RELATAB LE TO EARNING OF EXEMPT INCOME IS NOT CORRECT. IN SUCH A SITUATION, THE PROVISIONS OF SEC .14A ARE SQUARELY APPLICABLE. FURTHER, THE APPELLANT IN ITS SUBMISSIONS HAS STATED THAT TH E INDIRECT EXPENSES RELATABLE TO EARNING OF EXEMPT INCOME WILL BE NEGLIGIBLE, I.E. NOT EXCEE DING RS.10,000/-, SINCE 2/3 MAN-HOURS OF A PEON AND ONE EXECUTIVE WERE USED FOR ACCOUNTIN G AND OTHER RECORD KEEPING PURPOSES. THUS, THE APPELLANT HAS' ADMITTED 'THAT P ART OF THE EXPENDITURE IS ATTRIBUTABLE TO EARNING OF EXEMPT INCOME AND THEREAFTER ONLY THE AM OUNT REMAINS TO BE QUANTIFIED. THIS CONFIRMS THE SATISFACTION OF AO. AS PER THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT [ 328ITR 81], ONCE THIS SATISFACTION IS ARRIVED AT, THE PROVISIONS OF RULE 8D ARE TRIGGERED . UNDER THESE CIRCUMSTANCES, I FIND NO FORCE IN THE ARGUMENT OF THE APPELLANT THAT THE AO, HAD ARBITRARILY APPLIED RULE 8D. THE APPELLANT HAS RELIED ON THE DECISION IN THE CASE OF SEARCH ENVIRO LTD. AND SIL INVESTMENTS, WHICH RELATE TO THE PERIOD FOR WHICH R ULE 8D IS NOT APPLICABLE, AS HELD BY THE HON'BLE BOMBAY HIGH COURT, AND, HENCE, ARE NOT RELE VANT FURTHER, THE FACTS IN THE CASE OF JUSTICE SAM P. BHARUCAA ARE DISTINGUISHABLE, SINCE AS DISCUSSED ABOVE, THE APPELLANT'S BOOKS OF ACCOUNTS ARE ,MIXED FOR BUSINESS INCOME AN D DIVIDEND INCOME. IN VIEW OF THESE FACTS AND, THE LEGAL POSITION AS DISCUSSED ABOVE, T HE DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES WORKED OUT ON THE BASIS OF FORMULA IN RULE 8D, MADE U/S.14A BY THE AO, IS UPHELD. 7 ITA NO. 1050/M/2013 OBEROI REALTY LTD. 13. WE HAVE SEEN THE COPY OF THE BALANCE SHEET AND PRO FIT AND LOSS ACCOUNT OF THE ASSESSEE, COPY OF WHICH IS PLACED ON RECORD IN THE FORM OF PA PER BOOK FROM PAGE NO. 42 TO 68 OF PAPER BOOK. THE ASSESSEE HAS NOT SATISFIED THE AO AS TO WHY THE DISALLOWANCE U/S 14 A READ WITH RULE 8D, BE NOT MADE, HOWEVER BEFORE THE CIT(A) THE ASSESSEE HAD ADMITTED THAT AND INDIRECT EXPENDITURE OF RS. 93,12,971/- HA S BEEN CHARGED TO THE P/L ACCOUNT AN ESTIMATED AMOUNT OF RS. 10,000/- COULD HAVE BEEN IN CURRED IN EARNING THE EXEMPT INCOME. THUS BOTH THE CONDITION FOR INVOKING RULE D WAS SAT ISFIED. THE LD AR FOR THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL BEFORE US AS TO WHY THE DI SALLOWANCE MADE U/S 14 A READ WITH RULE D IS WRONG, THUS THE ADDITION U/S 14A, MADE B Y AO , WHICH WAS SUSTAINED BY CIT(A) DOES NOT REQUIRE ANY INTERFERENCE. 14. IN THE ABOVE CIRCUMSTANCES, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH NOVEMBER 2015. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 04/11/2015 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/