Mrs. Hema Ravichandar, Bangalore V. DCIT, Bangalore

ITA 1073/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63665 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAVANAN B JT
• Assessee Lawyers: DEVARAJ
• Keywords: Opportunity of being heard; Earning of tax free income; Retrospective amendment
• Section: 14A; 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1073/BANG/2011 ASSESSMENT YEAR : 2008-09 MRS. HEMA RAVICHANDAR, NO.17, MOYENVILLE ROAD, LANGFORD TOWN, BANGALORE 560 025. PAN : AASPR 0583P VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI DEVARAJ, C.A. RESPONDENT BY : SHRI SARAVANAN, B., JT. CIT(DR) DATE OF HEARING : 23.08.2012 DATE OF PRONOUNCEMENT : 07.09.2012 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 06.09.2011 OF THE CIT(APPEALS)-II, BANGALORE RELATING TO THE A SSESSMENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS FOLLOWS:- 1. THE ORDER OF THE LEARNED APPELLATE AUTHORITY IS BAD IN LAW. ITA NO.1073/BANG/11 PAGE 2 OF 9 2. THE LEARNED APPELLATE AUTHORITY ERRED IN CONFIR MING THE ACTION OF THE LEARNED ASSESSING AUTHORITY IN APPLYI NG THE PROVISIONS OF SECTION 14A READ WITH RULE 8D TO THE INSTANT CASE OF THE APPELLANT, WHEN THE APPELLANT IN FACT HAD NOT I NCURRED ANY AMOUNT, DIRECTLY OR INDIRECTLY, IN EARNING THE TAX EXEMPT INCOME. SHE REFUSED TO FOLLOW THE DECISION OF THE BOMBAY HI GH COURT AND MUMBAI TRIBUNAL TO THE EFFECT UNLESS THERE IS A DIR ECT OR INDIRECT EXPENSES INCURRED, THE PROVISIONS OF SECTION 14A WO ULD NOT APPLY. THE LEARNED APPELLATE AUTHORITY ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING AUTHORITY OF NOT CONSIDERI NG THE CONTENTION OF THE APPELLANT THAT THE TAX EXEMPT INC OME WAS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCE S; AND THAT THE APPELLANT HAD NOT CLAIMED ANY EXPENDITURE UNDER THAT HEAD. ACCORDINGLY, THE PROVISIONS OF SECTION 14A COULD NO T BE APPLIED. ON THE ABOVE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING YOUR APPELLANT PRAYS YOUR HONOUR TO CONS IDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND RENDER JUSTICE. 3. THE ASSESSEE IS AN INDIVIDUAL. SHE DERIVES INCO ME FROM PROFESSION AS HR CONSULTANT. IN THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO NOTICED THAT THE ASSESSEE WAS IN RECEIPT OF INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THE ACT. THE FOLLOWING ARE THE INCOME SO DERIVED BY THE ASSESSEE WHICH WERE CLAIMED EXEMPT :- INCOME FROM MUTUAL FUND U/S. 10(23D) 48,28,196 DIVIDEND U/S. 10(34) 76,83,122 LTCG ON LISTED SECURITIES U/S. 10(38) 1,17,60,384 --------------- 2,42,71,702 --------------- 4. IN VIEW OF THE PROVISIONS OF SECTION 14A OF THE ACT WHICH PROVIDES THAT ANY EXPENDITURE INCURRED IN EARNING INCOME WHI CH DOES NOT FORM PART OF THE TOTAL TURNOVER UNDER THE ACT, SHALL NOT BE A LLOWED AS DEDUCTION IN COMPUTING THE TOTAL INCOME, THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE ITA NO.1073/BANG/11 PAGE 3 OF 9 EXPENSES INCURRED IN EARNING THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL TURNOVER UNDER THE ACT. IN REPLY, THE ASSESS EE BY LETTER DATED 24.12.2010 SUBMITTED AS FOLLOWS:- THE ASSESSEE IS IN RECEIPT OF THE AFORESAID NOTICE FOR THE ABOVE CITED ASSESSMENT YEAR. IN RESPONSE TO THE ABOVE, WE SUBMIT AS FOLLOWS. THE ONLY EXEMPTED INCOME DURING THE YEAR IS DIVIDEN DS RECEIVED FROM INVESTMENTS. THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE DIRECT1Y OR INDIRECTLY IN ORDER TO DERIVE THE EXEMP TED INCOME. THE FINANCIAL PLANNING IN RESPECT OF INVESTMENT IS MAINLY DONE BY THE BANKERS ITS FUNDS MANAGEMENT DIVISION. THE T OTAL AVERAGE INVESTMENTS DURING THE YEAR IS RS. 27,32,29,331/-. EVEN THOUGH THE FUNDS ARE ROUTED THROUGH THE REGULAR BANK ACCOU NTS OF THE ASSESSEE, NO PORTION OF THE SAME REPRESENT BORROWED FUNDS OF THE ASSESSEE BE IT WORKING CAPITAL OR OTHERWISE. THIS C OULD BE NOTICED BY THE FACT THAT THE NET WORTH OF THE ASSESSEE IS R S. 1,76,35,320/- AS AT THE BEGINNING AND RS. 2,74,09,796/- AS AT THE END OF THE FINANCIAL YEAR. THE OWN FUNDS IS FAR IN EXCESS OF T HE AVERAGE INVESTMENTS OF THE ASSESSEE. EVERY OTHER ASSET OF T HE ASSESSEE IS BEING A BUSINESS ASSET; OWN FUNDS WOULD COVER THE A VERAGE INVESTMENTS. THUS, NO PORTION OF THE EXPENSES INCUR RED BY THE ASSESSEE CAN BE ATTRIBUTED TO THE INVESTMENTS. EVERY BIT OF THE EXPENDITURE CLAIMED AS EXPENDITURE BY THE ASSESSEE IS DIRECTLY AND INDIRECTLY ATTRIBUTABLE AN D RELATED TO HER PROFESSIONAL ACTIVITY. WHEN SUCH IS THE CASE NO POR TION OF THE EXPENDITURE HAS ANY CONNECTION, OR BEARING, WITH TH E EXEMPTED PORTION OF THE INCOME. THE BASIC PROPOSITION OF SECTION 14A IS THAT ONLY W HEN AN ASSESSEE HAS INCURRED EXPENDITURE IN EARNING THE EX EMPT INCOME, THE PROVISIONS OF SECTION 14A CAN BE INITIATED. IN THE ABSENCE OF ANY EXPENDITURE HAVING BEEN INCURRED BY THE ASSESSE E, SECTION 14A CANNOT BE INVOKED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE ALS O GAVE A CALCULATION OF DISALLOWANCE THAT IS TO BE MADE U/S. 14A OF THE ACT R.W. RULE 8D OF THE RULES OF A SUM OF Q 13,66,147. THE ASSESSEE ALSO GAVE THE BREAK UP OF EACH OF THE ITEMS OF EXPENDITURE DEBITED IN THE PRO FIT & LOSS ACCOUNT AND ITA NO.1073/BANG/11 PAGE 4 OF 9 CLAIMED THAT ALL THOSE EXPENSES WERE DIRECTLY AND I NDIRECTLY ATTRIBUTABLE AND RELATED TO THE ASSESSEES PROFESSIONAL ACTIVITY. 6. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE. HE WAS OF THE VIEW THAT IT IS NOT POSSIB LE TO EARN EXEMPT INCOME WITHOUT INCURRING SOME EXPENDITURE. THE AO THEREAF TER OBSERVED THAT RULE 8D OF THE RULES HAS BEEN FRAMED TO BRING IN UNIFORM ITY IN ALL CASES. THE AO THEREFORE DISALLOWED A SUM OF Q 13,66,127 U/S. 14A OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 7. ON APPEAL BY THE ASSESSEE, THE LD. CIT(APPEALS) CONFIRMED THE ORDER OF THE AO. ACCORDING TO THE CIT(A), THE TOT AL EXPENSES OF IS Q 1,27,67,266 WERE CLAIMED FOR EARNING PROFESSIONAL I NCOME. THESE EXPENSES WERE IN THE NATURE OF AUDIT FEE, COMPUTER MAINTENANCE, COMPUTER CONSUMABLES, ELECTRICITY, FOREIGN EXCHANGE, TELEPHO NE, STAFF WELFARE, PRINTING, ETC., WHICH ACCORDING TO HIM COULD NOT BE WHOLLY ATTRIBUTABLE TO THE PROFESSIONAL INCOME. SHE WAS ALSO OF THE VIEW THAT SOME EXPENSES WOULD BE ATTRIBUTABLE TO THE EARNING OF EXEMPT INCOME AS THE SAME INFRASTRUCTURE HAS BEEN USED BY THE ASSESSEE FOR EARNING BOTH INCO ME. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WHO SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN APPL YING RULE 8D OF THE INCOME TAX RULES. IN THIS REGARD THE LD. COUNSEL F OR THE ASSESSEE DREW OUR ATTENTION TO THE PROVISIONS OF SECTION 14A(2) OF THE ACT AND SUBMITTED THAT ASSESSEE HAD CLAIMED BEFORE THE A O THAT NO EXPENSES WERE INCURRED BY THE ASSESSEE IN RELATION TO INCOME ITA NO.1073/BANG/11 PAGE 5 OF 9 WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. WHEN SUCH CLAIM IS MADE BY THE ASSESSEE, THE AO WAS REQUIRED TO APPLY HIS MIND TO THE PLEA OF THE ASSESSEE. HE WAS ALSO EXPECTED TO GIVE A FINDING THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM MAD E BY THE ASSESSEE. THE AO WAS ALSO EXPECTED TO SPELL OUT THE REASONS AS TO WHY THE CLAIM MADE BY THE ASSESSEE CANNOT BE ACCEPTED. IT IS ONLY AF TER DOING SO THAT THE AO CAN RESORT TO THE PROVISIONS OF RULE 8D OF THE RULE S. IN THIS REGARD, OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD., 328 ITR 81(BOM) , WHEREIN THE BOMBAY HIGH COURT HAS LAID DOWN THAT RULE 8D CAN BE INVOKED ONLY IF THE AO REJECTS THE CORRECTNESS O F THE CLAIM MADE BY THE ASSESSEE REGARDING EXPENSES INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IN OT HER RESPECTS LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BE FORE THE REVENUE AUTHORITIES. 9. THE LD. D.R SUBMITTED THAT THE VERY FACT THAT TH E AO INVOKED THE PROVISIONS OF RULE 8D OF THE RULES ONLY IMPLIES THA T HE WAS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE WITH REGARD TO THE E XPENSES INCURRED IN EARNING THE EXEMPT INCOME. IN OTHER WORDS, IT WAS SUBMITTED BY THE LD. DR THAT THE SATISFACTION OF THE AO IS IMPLIED. ON MER ITS, IT WAS SUBMITTED THAT THE AO HAS RIGHTLY APPLIED RULE 8D OF THE RULES AND THE ASSESSEE CANNOT HAVE ANY GRIEVANCE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.626 OF 2010 IN THE CASE OF GODREJ & BOYCE MFG.CO.LTD. MUMBAI. VS. DY. COMMISSI ONER OF ITA NO.1073/BANG/11 PAGE 6 OF 9 INCOME TAX,RANGE 10(2), MUMBAI & ANR. 328 ITR 81 ( BOM) HAS HELD AS FOLLOWS: INSERTION OF SUBSECTIONS (2) AND (3) TO SECTION 14 A : 25. SUBSECTIONS (2) AND (3) OF SECTION 14A WERE INS ERTED BY AN AMENDMENT BROUGHT ABOUT BY THE FINANCE ACT OF 2006 WITH EFFECT FROM 1 APRIL 2007. SUBSECTIONS (2) AND (3) PROVIDE AS FOLLOWS : 14A(2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MA Y BE PRESCRIBED, IF THE ASSESSING OFFICER, HAVING REG ARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES N OT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. (3) THE PROVISIONS OF SUBSECTION (2) SHALL ALSO APP LY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL EMPOWER THE ASSESSING OFFICER EITHER TO REASS ESS UNDER SECTION 147 OR PASS AN ORDER ENHANCING THE ASSESSMENT OR REDUCING A REFUND ALREADY MADE OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE UNDER SECTION 154 FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2001. (THE PROVISO WAS INSERTED EARLIER BY THE FINANCE AC T OF 2002 WITH RETROSPECTIVE EFFECT FROM 11.5.2001) UNDER SUBSECTION (2), THE ASSESSING OFFICER IS REQU IRED TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED BY AN ASSESSEE IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED. THE METHOD, HAVING REGARD TO THE MEANING OF THE EXPRESSION PRESCRIBED IN SECTION 2 (33), MUST BE PRESCRIBED BY RULES MADE UNDER THE ACT. WHAT MER ITS EMPHASIS IS THAT THE JURISDICTION OF THE ASSESSING OFFICER TO DETERMINE THE EXPENDITURE INCURRED IN RELATION TO S UCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME , IN ACCORDANCE WITH THE PRESCRIBED METHOD, ARISES IF TH E ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECT NESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXPENDITURE WHICH THE ITA NO.1073/BANG/11 PAGE 7 OF 9 ASSESSEE CLAIMS TO HAVE INCURRED IN RELATION TO INC OME WHICH DOES NOT PART OF THE TOTAL INCOME. MOREOVER, THE SA TISFACTION OF THE ASSESSING OFFICER HAS TO BE ARRIVED AT, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. HENCE, SUB SECTION (2 ) DOES NOT IPSO FACTO ENABLE THE ASSESSING OFFICER TO APPLY THE METHOD PRESCRIBED BY THE RULES STRAIGHTAWAY WITHOUT CONSID ERING WHETHER THE CLAIM MADE BY THE ASSESSEE IN RESPECT O F THE EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME IS CORRECT. THE ASSES SING OFFICER MUST, IN THE FIRST INSTANCE, DETERMINE WHETHER THE CLAIM OF THE ASSESSEE IN THAT REGARD IS CORRECT AND THE DETE RMINATION MUST BE MADE HAVING REGARD TO THE ACCOUNTS OF THE A SSESSEE. THE SATISFACTION OF THE ASSESSING OFFICER MUST BE A RRIVED AT ON AN OBJECTIVE BASIS. IT IS ONLY WHEN THE ASSESSING O FFICER IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE, THAT THE LEGISLATURE DIRECTS HIM TO FOLLOW THE METHOD THAT MAY BE PRESCR IBED. IN A SITUATION WHERE THE ACCOUNTS OF THE ASSESSEE FURNIS H AN OBJECTIVE BASIS FOR THE ASSESSING OFFICER TO ARRIVE AT A SATISFACTION IN REGARD TO THE CORRECTNESS OF THE CL AIM OF THE ASSESSEE OF THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME, THERE WOULD BE NO WARRANT FOR TAKING RECOUR SE TO THE METHOD PRESCRIBED BY THE RULES. FOR, IT IS ONLY IN THE EVENT OF THE ASSESSING OFFICER NOT BEING SO SATISFIED THAT R ECOURSE TO THE PRESCRIBED METHOD IS MANDATED BY LAW. SUB SECTION (3) OF SECTION 14A PROVIDES FOR THE APPLICATION OF SUB SEC TION (2) ALSO TO A SITUATION WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. UNDER THE PROVISO, IT HAS BEEN STIPULATED THAT NOTH ING IN THE SECTION WILL EMPOWER THE ASSESSING OFFICER, FOR AN ASSESSMENT YEAR BEGINNING ON OR BEFORE 1 APRIL 2001 EITHER TO REASSESS UNDER SECTION 147 OR PASS AN ORDER ENHANCING THE ASSESSMENT OR REDUCING THE REFUND ALREADY MADE OR O THERWISE INCREASING THE LIABILITY OF THE ASSESSEE UNDER SECT ION 154. 26. THE CIRCUMSTANCES IN WHICH THE PROVISIONS OF SU B SECTIONS (2) AND (3) WERE INTRODUCED BY AN AMENDMEN T HAVE BEEN ADVERTED TO IN A CIRCULAR OF THE CBDT DATED 28 DECEMBER 2006. (CIRCULAR 14 OF 2006) THE CIRCULAR N OTES THAT IN THE EXISTING PROVISIONS OF SECTION 14A NO METHOD FOR COMPUTING THE EXPENDITURE INCURRED IN RELATION TO I NCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME HAD BE EN PROVIDED. AS A RESULT THERE WAS A CONSIDERABLE DISP UTE BETWEEN TAX PAYERS AND THE REVENUE ON THE METHOD OF DETERMINING SUCH EXPENDITURE. IN THIS BACKGROUND, S UB SECTION (2) WAS INSERTED SO AS TO MAKE IT MANDATORY FOR THE ASSESSING OFFICER TO DETERMINE THE AMOUNT OF EXPEND ITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE ITA NO.1073/BANG/11 PAGE 8 OF 9 TOTAL INCOME IN ACCORDANCE WITH THE METHOD THAT MAY BE PRESCRIBED. THE CIRCULAR, HOWEVER, REITERATES THAT THE ASSESSING OFFICER HAS TO FOLLOW THE PRESCRIBED METH OD IF HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. (U NDERLINING BY US FOR EMPHASIS) 11. IT IS CLEAR FROM THE OBSERVATIONS OF THE HONBL E BOMBAY HIGH COURT REFERRED TO ABOVE THAT THE APPLICATION OF RULE 8D O F THE RULES IS NOT AUTOMATIC. WHEN THE ASSESSEE MAKES THE CLAIM REGAR DING THE QUANTUM OF EXPENSES TO BE DISALLOWED IN TERMS OF SECTION 14A O F THE ACT, IT WAS INCUMBENT ON THE PART OF THE AO TO CONSIDER THE CLA IM OF THE ASSESSEE. IT IS ONLY WHEN THE AO IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE HE CAN HAVE RECOURSE TO THE PROVISIONS OF RULE 8D OF THE I NCOME TAX RULES. THE SATISFACTION THAT THE CLAIM MADE BY THE ASSESSEE RE GARDING EXPENSES INCURRED IN RELATION TO THE INCOME WHICH DOES NOT F ORM PART OF THE TOTAL INCOME UNDER THE ACT, IS NOT CORRECT, HAS TO BE A RRIVED AT BY THE AO, ON AN OBJECTIVE BASIS. IN THE PRESENT CASE, WE FIND THAT THE AO HAS PROCEEDED TO APPLY RULE 8D WITHOUT GIVING ANY FINDING WITH REGAR D TO THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE REGARDING THE DISALL OWANCE TO BE MADE UNDER SECTION 14A OF THE ACT. THE CIT(A) HAS ALSO PROCEEDED ON THE SAME BASIS. WE ARE, THEREFORE, OF THE VIEW THAT THE ORD ERS OF THE CIT(A) HAS TO BE SET ASIDE AND THE ISSUE SHOULD BE REMANDED TO THE A O FOR FRESH CONSIDERATION. THE AO WILL CONSIDER THE CLAIM OF T HE ASSESSEE WITH REGARD TO THE DISALLOWANCE TO BE MADE UNDER SECTION 14A OF THE ACT IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT REFER RED TO ABOVE. THE AO WILL DECIDE THE ISSUE AFTER AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD. ITA NO.1073/BANG/11 PAGE 9 OF 9 12. FOR STATISTICAL PURPOSES THE APPEAL OF THE ASSE SSEE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF SEPTEMBER, 2012. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 7 TH SEPTEMBER, 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.