Ardor In-Fin Pvt. Ltd., Ahmedabad V. The Income tax Officer, Ward-1(3), Ahmedabad

ITA 1121/AHD/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1293 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-04-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: ANKIT TALSANIA
• Keywords: Earning of tax free income; Revised return; Rule 8D
• Section: 14A; 250; 143(2)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT ./ ITA NO. 1121/AHD/2015 / ASSESSMENT YEAR: 2011-12 ARDOR-IN-FIN P LTD ARDOR HOUSE, MONDEAL BUSINESS PARK B/S.GURUDWARA THALEJ, S.G. ROAD AHMEDABAD 380 059. PAN : AAGCA 2925 B VS ITO, WARD-7(3) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ANKIT TALSANIA REVENUE BY : SHRI LALIT P.JAIN, SR.DR / DATE OF HEARING : 22/05/2020 /DATE OF PRONOUNCEMENT : 2705/2020 O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-6, AHMEDABAD DATED 23.2.2015 PASSED FOR T HE ASSTT.YEAR 2011- 12. 2. ORIGINALLY THE ASSESSEE TOOK THREE GROUNDS OF AP PEAL, WHEREIN IT HAS CHALLENGED CONFIRMATION OF DISALLOWANCE OF RS.2 ,97,347/- MADE BY THE AO UNDER SECTION 14A OF THE INCOME TAX ACT, 196 1 R.W RULE 8D(2)(III) OF THE INCOME TAX RULES. HOWEVER, DURING THE PENDE NCY OF THE APPEAL THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS OF APPEA L WHEREBY IT HAS PLEADED THAT THE ASSESSEE HAS MADE DISALLOWANCE OF RS.59,55,723/- UNDER SECTION 14A SUO MOTTO . SINCE THERE IS NO TAX FREE INCOME IN THE HANDS O F ITA NO.1121/AHD/2015 - 2 - THE ASSESSEE, AND THEREFORE, IN VIEW OF DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CORRTECT ENERGY P.LTD. DATED 2 4.3.2014 NO DISALLOWANCE DESERVES O BE MADE. THIS PLEA WAS RAI SED BY THE ASSESSEE IN THE ORIGINAL GROUNDS OF APPEAL ALSO, AND HE MADE REFERENCE TO THIS DECISION OF HONBLE GUJARAT HIGH COURT. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECO RD THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 30.9.2011 DECLARING T OTAL INCOME AT RS.13,28,278/-. THIS RETURN WAS FILED ELECTRONICAL LY. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT, AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. T HE LD.AO OBSERVED THAT AS PER RULE 8D(2) THE ASSESSEE WAS REQUIRED TO DISALLOW 0.5% OF THE AVERAGE VALUE OF THE INVESTMENT ON ACCOUNT OF ADMIN ISTRATIVE EXPENSES. HE FOUND THAT THE ASSESSEE HAS NOT CALCULATED THE D ISALLOWANCE UNDER SECTION 14A WITH HELP OF THIS FORMULA, RATHER UNDER THE HEAD ADMINISTRATIVE EXPENSES, IT HAS DISALLOWED A SUM OF 6,275/-. THUS, THE AO TOOK NOTE OF THE INVESTMENT AND APPLIED FORMULA. HE WORKED OUT A DISALLOWANCE AT RS.2,97,347/-. DISSATISFIED WITH T HE DISALLOWANCE THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FI RST APPELLATE AUTHORITY. BUT THE LD.CIT(A) CONCURRED WITH THE AO AND CONFIRM ED THE DISALLOWANCE. 4. BEFORE ME, IT WAS CONTENDED BY THE LD.COUNSEL FO R THE ASSESSEE THAT IN THE COMPUTATION, THE ASSESSEE HAS SUO MOTTO DISALLOWED A SUM OF RS.59,55,723/- TOWARDS INTEREST EXPENSES PLUS ADMIN ISTRATIVE EXPENSES. THE ASSESSEE WAS NOT HAVING ANY EXEMPT INCOME, AND THEREFORE, NO EXPENDITURE WAS REQUIRED TO BE DISALLOWED BY THE AS SESSEE. HE MADE ITA NO.1121/AHD/2015 - 3 - REFERENCE TO THE DECISION OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF CORRTECH ENERGY P.LTD. (SUPRA). HE FURTHER SUBMITT ED THAT HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER , 229 ITR 383 (SC) HAS PROPOUNDED THAT IF ANY ISSUE IS GOING TO THE AF FECT THE ULTIMATE TAXABILITY OF THE ASSESSEE, THEN THE ASSESSEE IS EN TITLED TO RAKE UP THIS ISSUE AT ANY STAGE OF THE PROCEEDINGS. HE FURTHER RELIED UPON THE ORDER OF THE ITAT IN THE CASE OF DCIT VS. GREELAND INFRAC ON P. LTD. ITA NO.2039 & 2040/AHD/2016. HE POINTED OUT THAT IN TH IS DECISION, AN IDENTICAL SITUATION WAS CONSIDERED BY THE TRIBUNAL. THE ASSESSEE HAS SUO MOTTO DISALLOWED CERTAIN EXPENDITURE UNDER SECTION 14A, HOWEVER, NO EXPENDITURE WERE TO BE DISALLOWED. THE DEPARTMENT TOOK THE STAND THAT IF THIS EXPENDITURE IS BEING ALLOWED TO THE ASSESSE E, THEN THE INCOME WILL BE REDUCED IN NEGATIVE I.E. IT WILL COME DONE FROM THE INCOME WHICH HAS BEEN ADMITTED BY THE ASSESSEE IN ITS RETURN OF INCO ME. THE ASSESSEE HAS NOT FILED ANY REVISED RETURN, AND THEREFORE, IT IS NOT ENTITLED FOR THIS RELIEF. THE CIT(A) IN THE CASE OF GREELAND INFRACON (SUPRA) HAS ALLOWED THIS PLEA OF THE ASSESSEE. THE MATTER TRAVELLED TO THE TRIBUNAL, AND THE TRIBUNAL HAS UPHELD THE ORDER OF THE CIT(A). SHRI TALSANIA INFORMED ME THAT TAX APPEAL BEARING NO.239 OF 2019 WAS FILED BE FORE THE HONBLE GUJARAT HIGH COURT AGAINST THIS ORDER OF THE TRIBUN AL, AND SAME STOOD DISMISSED ON 9.7.2019. ON THE STRENGTH OF THIS DEC ISION, HE PLEADED THAT ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE BE ALLOWED; DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ADMINISTR ATIVE EXPENSES AS WELL AS DISALLOWANCE WORKED OUT BY THE ASSESSEE SUO MOTTO FOR THE PURPOSE OF SECTION 14A BE DELETED, AND THE AO BE DI RECTED TO RE- COMPUTE THE INCOME OF THE ASSESSEE. ITA NO.1121/AHD/2015 - 4 - 5. ON THE OTHER HAND, THE LD.DR WAS UNABLE TO CONTR OVERT THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 6. AT THIS STAGE, I DEEM IT APPROPRIATE TO TAKE NOT E OF THE DISCUSSION MADE BY THE TRIBUNAL IN THE CASE OF GREELAND INFRAC ON(SUPRA) BECAUSE THE ISSUE IS VERBATIM SAME. THE FINDING OF THE TRI BUNAL IN THE CASE OF GREELAND INFRACON (SUPRA) READS AS UNDER: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE SUBSTANTIVE QU ESTION ARISES IN THE REVENUE'S APPEAL IS TO ASCERTAIN THE CORRECTNESS OF THE ACTION OF THE CIT(A) IN REFUSING TO ENDORSE THE ACTION OF THE AO F OR RESORTING TO DISALLOWANCE UNDER S.14A OF THE ACT. TWO BROAD ISSU ES EMERGES IN THE CONTEXT OF THE CASE; (I) WHETHER THE DISALLOWANCE U NDER S.14A IS MAINTAINABLE WHERE ADMITTEDLY NO EXEMPT INCOME I.E. DIVIDEND WAS EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT Y EAR AND (II) WHETHER THE CIT(A) WAS JUSTIFIED IN GOING BEYOND THE RETURN OF INCOME AND REMOVE THE DISALLOWANCE WHICH THE ASSESSEE ITSELF H AS MADE WHILE FILING THE RETURN OF INCOME. IN OTHER WORDS, WHETHER THE A CTION OF THE CIT(A) IN BRINGING DOWN THE INCOME RETURNED BY THE ASSESSEE A ND GRANTING RELIEF ON THE ISSUES NOT RAISED AT THE TIME OF FILING ORIGINA L RETURN OF INCOME OR BY WAY OF REVISED RETURN AT A SUBSEQUENT STAGE IS JUST IFIED IN LAW OR NOT. 7. THE FIRST ISSUE FRAMED ABOVE APPEARS QUITE SIMPL E AS WE SEE. WHILE ADJUDICATING THE ISSUE, WE TAKE NOTE OF CBDT CIRCUL AR NO. 5/2014 DATED 11/02/2014 WHICH SEEKS TO EMPHASIZE THAT ALL EXPENS ES PERTAINING TO AN EXEMPT INCOME IS REQUIRED TO BE DISALLOWED NOTWITHS TANDING THE FACT THAT NO CORRESPONDING TAX FREE INCOME HAS BEEN EARNED DU RING THE FINANCIAL YEAR. NOTWITHSTANDING THE AFORESAID CIRCULAR, VARIO US COURTS HAVE HELD THAT SECTION 14A OF THE ACT DISALLOWANCE CANNOT BE KICKED WHEN THERE WAS NO EXEMPT INCOME EARNED BY THE ASSESSEE AS IS THE C ASE IN THE PRESENT APPEALS. HON'BLE DELHI HIGH COURT IN PCIT VS IL&FS ENERGY DEVELOPMENT COMPANY LTD. (2017) 84 TAXMAN.COM 186(DE LHI) AND THE HON'BLE MADRAS HIGH COURT IN CIT V. CHETTINAD LOGIS TICS (P.) LIMITED (2017) 80 TAXMANN.COM 221(MADRAS) HAVE EXPRESSED A C LEAR DISAGREEMENT WITH CBDT CIRCULAR AND HELD THAT WHERE THERE IS NO EXEMPT INCOME IN RELEVANT YEAR THERE CANNOT BE A DI SALLOWANCE OF EXPENDITURE UNDER S.14A OF THE ACT. SIMILAR PROPOSI TION HAS BEEN LAID DOWN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY ITA NO.1121/AHD/2015 - 5 - (P.) LTD (2014) 45 TAXMANN.COM. 116 (GUJ) AND PR.CIT VS. INDIA GELATINE AND CHEMICALS LTD. (2016) 66 TAXMANN.COM 35 6 (GUJ). THE AFORESAID JUDICIAL FIAT WAS REITERATED BY THE HON'B LE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD. VS. CIT REP ORTED IN 372 ITR 692 (DELHI) WHEREIN HON'BLE DELHI HIGH COURT HAS CATEGOR ICALLY RULED THAT DISALLOWANCE UNDER S.14A OF THE ACT CANNOT EXCEED T HE AMOUNT OF TAX EXEMPT INCOME. NOTABLY, THE SLP FILED AGAINST THE D ECISION OF HON'BLE MADRAS HIGH COURT IN CHETTINAD LOGISTICS (SUPRA) HAS BEEN DISMISSED BY HON'BLE SUPREME COURT IN CIT VS. CHETTINAD LOGISTIC S (P.) LTD. (2018) 95 TAXMANN.COM 250 (SC). HENCE, IN CONFORMITY WITH T HE JUDICIAL PRECEDENTS, WE FIND SUBSTANTIAL MERIT IN THE CONCLU SION DRAWN BY THE CIT(A) WHICH ESSENTIALLY HOLDS THAT SECTION 14A OF T HE ACT CAN BE TRIGGERED ONLY IF ASSESSEE SEEKS TO SQUARE OFF EXPE NDITURE AGAINST THE INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UND ER THE ACT AND SECTION 14A OF THE ACT CANNOT BE INVOKED WHERE NO EXEMPT INCOME WAS EARNED IN THE RELEVANT ASSESSMENT YEARS. IN CON SONANCE WITH THE JUDICIAL PRECEDENTS, WE DO NOT SEE ANY INFIRMITY I N THE CONCLUSION DRAWN BY THE CIT(A) FOR NON-APPLICABILITY OF SECTION 14A O F THE ACT IN THE FACTS OF THE CASE. 8. WE SHALL NOW TURN TO THE SECOND ISSUE RAISED ON BEHALF OF THE REVENUE REGARDING PROPRIETY OF THE ACTION OF THE CIT(A) IN G RANTING RELIEF ON THE DISALLOWANCE (SUO MOTO MADE BY THE ASSESSEE) BEYOND THE RETURN OF INCOME AND IN THE ABSENCE OF ANY FORMAL REVISED RET URN. THE CIT(A) HAS DISCUSSED THIS ASPECT IN VERY GREAT DETAIL IN PARA 2.5 TO 2.28 OF ITS ORDER. WE ARE NOT INCLINED TO REITERATE THE FINDINGS OF TH E CIT(A). HOWEVER, WE FULLY ENDORSE THE OBSERVATIONS OF THE CIT(A) WHICH E SSENTIALLY HOLDS THAT THE MISTAKE OR INADVERTENCE ON THE PART OF THE ASSE SSEE WHEREBY AN INCOME NOT TAXABLE HAS BEEN WRONGLY OFFERED FOR TAX, WILL NOT OPERATE AS ANY KIND OF ESTOPPEL AGAINST THE ASSESSEE AND REGARDLESS OF WHETHER THE REVISED RETURN WAS FILED OR NOT. ONCE THE ASSESSEE IS IN A POSITION TO SHOW THAT IT HAS BEEN OVER ASSESSED UNDER THE PROVISIONS OF THE ACT EVEN ON ACCOUNT OF ASSESSEE'S OWN MISTAKE OR OTHERWISE, THE REVENUE IS UNDER DUTY TO ASSESS CORRECT INCOME. 9. IT IS TRITE THAT THE AUTHORITIES UNDER THE ACT A RE UNDER SACROSANCT OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN B E COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MIS TAKE, MIS-CONCEPTION OR NOT BEING PROPERLY INSTRUCTED, IS OVER ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO ENSURE THAT ONLY LEGITIMATE TAX DUES ARE COLLECTED. THIS IS THE VIEW WHICH FLOWS FROM INNUMERABLE JUDGM ENTS INCLUDING CIT VS. SHELLY PRODUCTS (2003) 261 ITR 367 (SC), S. R. K OSHTI VS. ITA NO.1121/AHD/2015 - 6 - CIT (2005) 276 ITR 165 (GUJ), ESTER INDUSTRIES VS. C IT (2009) 185 TAXMAN 266 (DELHI) AND CIT VS. PRUTHVI BROKERS & SH AREHOLDERS (P.) LTD. [2012] 349 ITR 336 (BOM). THE ESSENCE OF THESE D ECISIONS ARE THAT MERE ADMISSION ON THE PART OF THE ASSESSEE WITH RES PECT TO AN ADDITION/DISALLOWANCE IN ITS ORIGINAL RETURN OR IN REVISED RETURN WOULD NOT IPSO FACTO BAR AN ASSESSEE FROM CLAIMING AN EXP ENSE OR DISPUTING AN ADDITION IF IT IS OTHERWISE PERMISSIBLE UNDER LAW. IT IS THUS WELL SETTLED THAT IF A PARTICULAR INCOME IS NOT TAXABLE UNDER TH E ACT, IT CANNOT BE TAXED ON THE BASIS OF ESTOPPEL OR ANY OTHER EQUITABLE DOC TRINE. THE REVENUE AUTHORITIES CANNOT ENFORCE UNTENABLE ACTIONS OF THE ASSESSEE AGAINST IT WHICH LED TO DECLARATION OF INCOME OF HIGHER AMOUNT INCORRECTLY. IT IS THUS OPEN TO ASSESSEE TO SHOW THAT IT WAS OVER ASSESSED IN CORRECTLY OWING TO ITS OWN MISTAKE. 10. SO VIEWED, WE DO NOT SEE ANY POTENCY IN THE ARG UMENT LAID ON BEHALF OF THE REVENUE THAT THE CIT(A) ALLEGEDLY COMMITTED E RROR IN GRANTING TOTAL RELIEF IN THE MATTER OF DISALLOWANCE UNDER S. 14A OF THE ACT. IN OUR CONSIDERED VIEW, THE ACTION OF THE CIT(A) IN GRANTIN G RELIEF UNDER S.14A OF THE ACT ON ACCOUNT SUO MOTO DISALLOWANCE BY THE ASSESSEE AND THEREBY GRANTING RELIEF HIGHER THAN CLAIMED IN THE RETURN O F INCOME CANNOT BE FAULTED IN LAW. 7. THIS ORDER HAS BEEN UPHELD BY THE HONBLE HIGH C OURT. IT IS PERTINENT TO NOTE THAT ON THE ISSUE, WHETHER SUO MOTTO DISALLOWANCE MADE BY THE ASSESSEE, COULD BE EXCLUDED FROM THE TAXABLE INCOME OFFERED BY ITSELF, BY THE APPELLATE AUTHORITY, ON THE BASIS OF POSITION OF LAW CHANGED, ON ACCOUNT OF SUBSEQUENT DECISION OF THE HONBLE HI GH COURT ? IT IS TRUE THAT RETURN WAS FILED BY THE ASSESSEE ON 30.9.2011. AT THAT POINT OF TIME DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CORRTECT ENERGY P.LTD. WAS NOT IN PICTURE. IT WAS DELIVERED ON 24. 3.2014. THEREFORE, ON THE BASIS OF POSITION OF LAW, THE ASSESSEE MIGHT HA VE WORKED OUT THE EXPENSES WHICH WERE REQUIRED TO BE DISALLOWED UNDER SECTION 14A IN SPITE OF NON-AVAILABILITY OF TAX FREE INCOME. THE QUESTION IS, WHETHER THE ASSESSEE CAN BE PERMITTED TO TAKE A PLEA THAT HIS S ELF-ADMISSION IN THE RETURN OF INCOME BE ALLOWED TO BE WITHDRAWN ON THE BASIS OF SUBSEQUENT ITA NO.1121/AHD/2015 - 7 - DECISION OF HONBLE JURISDICTIONAL HIGH COURT, AND HIS INCOME IS TO BE RE- COMPUTED ? WITH REGARD TO THE ABOVE PROPOSITION, TH E ITAT IN THE CASE OF GREELAND INFRACON (SUPRA) HAS ALREADY TAKEN NOTE OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF S.R. KOSH TI VS. CIT, 276 ITR 165 AS WELL AS CIT VS. SHELLY PRODUCTS, 261 ITR 367 (SC). THE TRIBUNAL HAS FURTHER MADE REFERENCE TO THE DECISION OF HONB LE DELHI HIGH COURT AS WELL AS HONBLE BOMBAY HIGH COURT IN THE FINDING EXTRACTED (SUPRA). APART FROM THE ABOVE, I AM OF THE VIEW THAT A COURT DECIDES A DISPUTE BETWEEN THE PARTIES. THE CAUSE CAN INVOLVE DECISIO N ON FACTS. IT CAN ALSO INVOLVE A DECISION ON A POINT OF LAW. BOTH MAY HAVE BEARING ON THE ULTIMATE RESULT OF THE CASE. WHEN A COURT INTERPRET S A PROVISION, IT DECIDES AS TO WHAT IS THE MEANING AND EFFECT OF THE WORDS USED BY THE LEGISLATURE. IT IS A DECLARATION REGARDING THE STAT UTE. IN OTHER WORDS, THE JUDGMENT DECLARES AS TO WHAT THE LEGISLATURE HAD SA ID AT THE TIME OF THE PROMULGATION OF THE LAW. THE DECLARATION IS - THIS WAS THE LAW. THIS IS THE LAW. THIS IS HOW THE PROVISION SHALL BE CONSTRU ED. IN THE DECISION OF CORRTECH ENERGY (SUPRA) THE HONBLE GUJARAT HIGH CO URT HAS CONSTRUED SECTION 14A THAT IN CASE THERE IS NO EXEMPT INCOME TO AN ASSESSEE, THEN NO EXPENSES CAN BE WORKED OUT HYPOTHETICALLY FOR TH E PURPOSE OF DISALLOWANCE UNDER SECTION 14A. THIS DECISION HAS COME AFTER FILING OF THE RETURN BY THE ASSESSEE. BUT THIS DECISION MADE IT CLEAR WHAT IS POSITION OF LAW PREVALENT AT THE TIME OF FILING OF THE RETURN, AND HOW THE ASSESSEE HAS COMMITTED AN ERROR WHICH OUGHT TO HAVE BEEN LOOKED INTO BY THE AO WHILE PASSING THE ASSESSMENT ORDER OR BY THE CIT(A) WHILE DECIDING THE APPEAL IN THE YEAR 2015, WHEN THIS DEC ISION CAME IN. THE ITAT IN THE CASE OF GREENLAND INFRACON (SUPRA) HAS ALSO MADE REFERENCE TO A LARGE NUMBER OF DECISIONS AS WELL AS BOARD CIR CULAR POINTING OUT THAT ITA NO.1121/AHD/2015 - 8 - IT IS THE DUTY OF THE REVENUE TO GUIDE THE ASSESSEE FOR COMPUTING TRUE INCOME. IF SOMETHING HAS BEEN OFFERED BY AN ASSESS EE PATENTLY UNDER SOME MISCONSTRUCTION OF LAW, THEN THE REVENUE CANNO T BE PERMITTED TO PLEAD THAT SINCE THE ASSESSEE HAS OFFERED AS ITS IN COME, THEREFORE, IT HAS TO BE TAXED. THEREFORE, RESPECTFULLY FOLLOWING ORDER OF THE ITAT, DIVISION BENCH, WHICH IS BASED ON LARGE NUMBER OF DECISIONS INCLUDING THAT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF S. R. KOSHTI (SUPRA), I ALLOW THE ADDITIONAL GROUND OF APPEAL AS WELL AS OR IGINAL GROUND RAISED BY THE ASSESSEE. IN OTHER WORDS, SINCE THERE IS NO TAX FREE INCOME, THERE COULD NOT BE ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT. I DIRECT THE AO TO RE-COMPUTE THE INCOME OF THE ASSESSEE AFTER E XCLUDING THE SUO MOTTO AMOUNT DISALLOWED BY THE ASSESSEE OF RS.59,55,723/ -. APART FROM THE ABOVE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ADMINISTRATIVE EXPENSES OF RS.2,97,347/- IS CONCERNED, THIS ALSO S TANDS DELETED. BOTH AMOUNTS BE EXCLUDED FROM THE COMPUTATION OF INCOME, AND THEREAFTER INCOME OF THE ASSESSEE BE DULY DETERMINED. APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 27 TH MAY, 2020. SD/- (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED, 27/05/2020