INDUSIND MEDIA & COMMUNICATIONS LTD, MUMBAI V. ACIT 16(1), MUMBAI

ITA 1167/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0687 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR RAI LD
• Assessee Lawyers: MIHIR NANAVDEKARLD
• Keywords: Depreciation; Earning of tax free income; Question of law; Revised return; Unabsorbed depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 115JB; 32; 11

Judgement Text

ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.772/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) ASSIS TANT COMMISSIONER OF INCOME TAX - 16(1) ROOM NO.439, AAYKAR BHAVVAN, M.K.ROAD, MUMBAI-400 020 / VS. INDUSIND MEDIA & COMMUNICATION L TD. IN CENTRE, 49/50,MIDC,12 TH ROAD ANDHERI (E), MUMBAI-400 093 '# ./ ./ PAN/GIR NO.AAACI-1198-L ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) & ./I.T.A. NO.1167/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) INDUSIND MEDIA & COMMUNICATION LTD. IN CENTRE, 49/50,MIDC,12 TH ROAD ANDHERI (E), MUMBAI-400 093 / VS. ASSIS TANT COMMISSIONER OF INCOME TAX - 16(1) ROOM NO.439, AAYKAR BHAVVAN, M.K.ROAD, MUMBAI-400 020 '# ./ ./ PAN/GIR NO.AAACI-1198-L ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SAURABH KUMAR RAI, LD.DR ASSESSEE BY : MIHIR NANAVDEKAR,LD.AR / DATE OF HEARING : 10/01/2018 / DATE OF PRONOUNCEMENT : 17 /01/2018 2 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEALS FOR A.Y.2011-12 WHICH CONTE ST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-4 [CIT(A)] , MUMBAI, APPEAL NO. CIT(A)-4/TR-334/APPEAL-(3)/ACIT.11(1)/2014-15 DATED 05/11/2015. THE ASSESSMENT FOR IMPUGNED AY WAS COMPLETED U/S 143(3) BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-11(1), MUMBAI [AO] ON 17 /02/2014. FIRST WE TAKE UP REVENUES APPEAL ITA NO.772/MUM/2016 WHERE THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL HAVE BEEN RAISED BEFORE US:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, WHETHER THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE UNABSORBED DEPRECIATI ON PERTAINING TO AY 1996-97 TO AY 2001-02 WAS ALLOWABLE TO BE CARRIED FORWARD AND ADJUSTED AFTER THE LAPSE OF 8 (EIGHT) ASSESSMENT YEARS, IN VIEW OF THE SECTION 32 (2) AS SUBSTITUTED BY THE FINANCE ACT,2001? 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THAT THE PROVISION CO NTAINED IN SECTION 32(2) AS SUBSTITUTED BY THE FINANCE ACT,2001 WITH EFFECT FRO M 1.4.2002, IS SUBSTANTIVE AND IS PROSPECTIVELY APPLICABLE TO A.YS.2002-03 ONWARDS . 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE CIT(A) WAS JUSTIFIED IN PLACING RELIANCE ON THE HONBLE GUJARA T HIGH COURTS ORDER DATED 23.08.2012 IN SCA NO.1773 OF 2012 IN THE CASE OF GE NERAL MOTORS(I) PVT. LTD. VS DCIT, WHEREIN THE SUPREME COURT, WHILE DISMISSING T HE SLP FILED BY THE REVENUE HAS EXPRESSLY KEPT THE QUESTION OF LAW OPEN . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE CIT(A) WAS JUSTIFIED IN PLACING RELIANCE ON THE HONBLE GUJARA T HIGH COURTS ORDER DATED 23.08.2012 IN SCA NO.1773 OF 2012, IN THE CASE OF G ENERAL MOTORS (I) PVT. LTD. VS DCIT, WHEREIN THE DECISION OF ITAT, MUMBAI , E SPECIAL BENCH IN THE CASE OF DCIT VS TIMES GUARANTY LTD (ITA NOS.4917 AND 4918 (MUM) OF 2008 DATED 30.06.2010) WAS NOT CONSIDERED ALTHOUGH THE SPECIAL BENCH WAS SPECIALLY CONSTITUTED BY THE MUMBAI TRIBUNAL TO DECIDE THE IS SUE OF APPLICABILITY OF PROVISIONS OF SECTION 32(2), IN VIEW OF THE AMENDME NTS MADE BY THE FINANCE ACT,1996 AND FINANCE ACT,2001, VIS A VIS CARRY FORW ARD AND SET-OFF OF THE UNABSORBED DEPRECIATION. 5. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF CABLE TELEVISION AND TRANSMISSION OF SATELLITE CHANNELS ETC. WAS ASSESSED U/S 143(3) OF THE INCOME TAX ACT, 1961 AT RS.38,01,10,120/- UNDER NOR MAL PROVISIONS AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 28/09/2011 WHICH WA S SUBSEQUENTLY REVISED ON 28/09/2012. THE SOLE ISSUE UNDER REVENUES APPEAL IS SET-OFF OF BROUGHT FORWARD UNABSORBED DEP RECIATION BEYOND EIGHT YEARS. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE HAD BROUGHT FORWARD UNABSORBED DEPRECIATION PERTAINING TO AY 1996-97 TO AY 2000-2001 AGGREGATING TO RS.38,90,30,345/- AND SINC E EIGHT YEARS HAD ALREADY ELAPSED TO SET-OFF THE SAME, LD. AO OPINED THAT THE SAME COULD NOT BE ALLOWED TO THE ASSESSEE IN TERMS OF PROVISIONS O F SECTION 32(2). ACCORDINGLY, THE SAME WAS DENIED TO THE ASSESSEE. H OWEVER THE ASSESSEE CONTESTED THE SAME SUCCESSFULLY BEFORE LD. CIT(A) V IDE IMPUGNED ORDER DATED 05/11/2015 WHERE THE LD. CIT(A) CONCURRED WIT H ASSESSEES STAND AND CONCLUDED THE MATTER IN THE FOLLOWING MANNER:- 4.1 IN APPEAL, IT IS CONTENDED THAT SINCE THE ISSU E HAS BEEN DECIDED BY THE LD. CIT(A) ALLOWING THE SET OFF OF CARRY FORWARD UNABSORBED DE PRECIATION, SAME MAY BE ACCEPTED. THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF GENERAL MOTORS INDIA PVT. LTD. VS. DCIT 82 DTR 304, THE SLP OF THE DEPARTMENT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. THIS DECISION HAS BEEN LATER ON FOLL OWED BY THE GUJARAT HIGH COURT IN THE CASE OF SYMBIOTICS LTD. V. ACIT 46 TAXMAN.COM 8 7 (GUJ), SAHAKARI KHAND UDYOG MANDAL 46 TAXMAN.COM 69 AND BY HONBLE ITAT, MUMBAI IN THE CASE OF DCIT VS. BAJAJ HINDUSTAN LTD. 147 ITD 709. 4.2 I HAVE CONSIDERED THE ISSUE UNDER APPEAL CAR EFULLY. I FIND THAT THIS ISSUE HAS BEEN DECIDED BY MY LEARNED PREDECESSOR IN A.Y.2009-10 WH ICH IS AS UNDER:- 3.3 I HAVE CONSIDERED THE FACTS AND PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT SECTION 32(2) HAS BEEN AMENDED BY FINANCE ACT, 2001 AND THE AMENDED PROVISIONS PROVIDES THAT WHERE, IN THE ASSESSMENT O F THE ASSESSEE, FULL EFFECT 4 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE FOR THAT P REVIOUS YEAR, OWING TO THE PROFIT OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-SECTION(2) OF SECTION 72 AND SUB- SECTION(3) OF SECTION 73, THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFF ECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE, SHALL BE ADDED TO THE AMOUNT OF THE AL LOWANCE FOR DEPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART O F THAT ALLOWANCE. THEREFORE, BY AMENDMENT IN SECTION 32(1), UNABSORBED DEPRECIAT ION OF EARLIER YEARS BECAME PART OF THE DEPRECIATION OF THE CURRENT YEAR AND CAN BE ALLOWED TO BE SET OFF IN THE FUTURE YEARS. THE BOARD HAS ALSO CLARIFI ED VIDE CIRCULAR NO.14 OF 2001 THE INTENT OF THE AMENDMENT THAT IT IS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AND MACHINERY AND ACCORDINGLY THE AMENDMENT DISPENSES WITH RESTRICTION OF 8 YEARS FOR CARRY FOR WARD AND SET OFF OF UNABSORBED DEPRECIATION. THE AR HAS PLACED RELIANCE ON THE LAT EST DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS PV T. LTD. IN ITA NO.1773 OF 2012 DATED 23.08.2012, WHEREIN, IT WAS HELD THAT AN Y UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1 ST DAY OF APRIL, 2002 (A.Y.2002-03) WILL BE DEALT WIT H IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT,2001 AND ONCE CIRCULAR NO.14 OF 2001 CLARIFIED THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECI ATION HAD BEEN DISPENSED WITH, THE UNABSORBED DEPRECIATION FROM A.Y.1997-98 TO 2001-02 GOT CARRIED FORWARD TO A.Y.2002-03 AND BECAME A PART THEREOF, I T CAME TO BE GOVERNED BY THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINAN CE ACT 2001 AND WERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. SINCE THE DECI SION OF HONBLE HIGH COURT IS LATEST ONE SPECIFIED DECISION RELIED BY THE A.O. TH EREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION, THE A.O IS DIRECTED TO ALLO W THE CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION IN ACCORDANCE OF PROVISI ON OF SECTION 32(2) OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS TREATED AS AL LOWED. 4.3 RESPECTFULLY FOLLOWING THE DECISION OF MY LEA RNED PREDECESSOR AND ALSO THE DECISION OF HONBLE JURISDICTIONAL ITAT AND GUJARAT HIGH COURT, A.O IS DIRECTED TO ALLOW THE SET OFF OF CARRY FORWARD UNABSORBED DEPRECIATIO N OF RS.38,90,345/- AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 2.3 THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEN DED THAT THE AMENDMENT IN SECTION 32 WAS PROSPECTIVE IN NATURE A ND THEREFORE, THE SET- OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION COUL D NOT BE ALLOWED TO THE ASSESSEE BEYOND EIGHT YEARS. PER CONTRA, THE LD. COUNSEL FOR ASSESSEE [AR] PLACED RELIANCE ON THE STAND OF LD. FIRST APPE LLATE AUTHORITY AND 5 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 CONTENDED THAT THE ISSUE NOW STOOD SQUARELY COVERED IN ASSESSEES FAVOUR BY SEVERAL JUDICIAL PRONOUNCEMENTS AND CBDT CIRCULA R NO. 14 OF 2001. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. AFTER GOING THROUGH THE SAME, WE CONCUR WIT H THE STAND OF LD. AR THAT THE ISSUE STOOD COVERED IN ASSESSEES FAVOUR F IRSTLY BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2009-10 VIDE ITA NO. 9/MUM/2013 ORDER DATED 29/01/2016, A COPY OF WHICH HAS BEEN PL ACED ON RECORD. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CITED ORDE R HAS FOLLOWED THE RATIO OF JUDGMENT RENDERED BY HONBLE GUJARAT HIGH COURT IN GENERAL MOTORS INDIA P. LTD. VS. DCIT [354 ITR 244]. THE REVENUE COULD NOT PLACE ON RECORD ANY CONTRARY JUDGMENT TO CONTROVERT THE SAME. THE SAME IS FURTHER FORTIFIED BY CBDT CIRCULAR NO.14 OF 2001. RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDENT, WE DISMISS REVENUES APPEAL AND CONCUR W ITH THE STAND OF LD. CIT(A). RESULTANTLY, THE REVENUES APPEAL STANDS DI SMISSED. ASSESSEES APPEAL ITA NO. 1167/MUM/2016 AY 2011-12 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN HIS APPEAL:- (I) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS ERRED IN UPHOLDIN G A DISALLOWANCE OF RS.5,34,72,365/- MADE U/S 14A R.W.RULE 8(D) OF THE INCOME TAX ACT BOTH IN THE NORMAL COMPUTATION AS WELL AS BOOK PROFITS COMP UTED U/S 115JB OF THE INCOME TAX OF THE INCOME TAX ACT. IN DOING SO, THE CIT(APPEALS) FURTHER ERRED IN OBSERVING THAT THE APPELLANT HAS NOT REFUT ED THE FINDINGS OF THE TAX AUDITOR. THE QUANTIFICATION OF DISALLOWANCE IN THE TAX AUDIT REPORT WAS WITHOUT PREJUDICE TO THE REPRESENTATION MADE BY THE APPELLANT FOR CONSIDERATION OF THE DISALLOWANCE U/S 14A R.W.RULE 8(D) AT RS.NIL. (II) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT LOAN PROCESSING FEES PAID OF RS.60 LAC S TO GE MONEY FINANCIAL SERVICES PRIVATE LTD. IS A CAPITAL EXPENDITURE. HE HAS FURTHER ERRED IN 6 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 OBSERVING THAT GE MONEY FINANCIAL SERVICES PRIVATE LTD. IS A COMPANY BELONGING TO THE HINDUJA GROUP. 5.1 FACTS QUA THE FIRST GROUND IS THAT DURING ASSESSMENT PROCEEDI NGS, IT WAS NOTED THAT DISALLOWANCE U/S 14A FOR RS.5,34,72, 365/- AS REPORTED IN THE TAX AUDIT REPORT WAS NOT MADE BY THE ASSESSEE IN ITS COMPUTATION OF INCOME. THE ASSESSEE POINTED OUT THAT THE INVESTMEN T WERE MAINLY IN SHARES OF UNLISTED JOINT VENTURE ENTITIES, WHOSE CA PITAL GAIN, WHEN DIVESTED WOULD BE FULLY TAXABLE UNDER THE HEAD CAPITAL GAINS AND HENCE, NO ADJUSTMENT OF DISALLOWANCE HAS BEEN MADE BY THE ASS ESSEE WHILE COMPUTING INCOME UNDER THE NORMAL PROVISIONS AS WEL L AS UNDER THE PROVISIONS OF SECTION 115JB. HOWEVER, NOT CONVINCED BY THE REASONING, LD. AO DISALLOWED THE SAME AND ADDED THE SAME WHILE COM PUTING INCOME UNDER NORMAL PROVISIONS AS WELL AS UNDER SECTION 11 5JB. 5.2 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH OUT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/11/2 015 WHERE LD. CIT(A) NOTED THAT THE ASSESSEE DERIVED EXEMPT INCOME OF RS .52.02 LACS WHICH COMPRISED OF DIVIDEND ON MUTUAL FUNDS FOR RS.51.61 LACS AND OTHER DIVIDEND OF RS.0.41 LACS. IT WAS FURTHER NOTED THAT THE AGGREGATE DISALLOWANCE U/S 14A READ WITH RULE 8D FOR RS.5,34,72,366/- COMPRISED OF DIRECT INTEREST DISALLOWANCE U/R 8D(2)(I) FOR RS.5, 05,45,559/- AND EXPENSE DISALLOWANCE U/R 8D(2)(III) FOR RS.29,26,807/-. IT WAS ALSO APPRECIATED THAT THE INVESTMENTS UNDER VARIOUS HEADS VIZ. INVESTMENT IN GOVERNMENT SECURITIES, SUBSIDIARIES, GROUP COMPANIES & MUTUAL FUND REFLECTED 7 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 INCREASE OF RS.55.20 CRORES DURING THE IMPUGNED AY. FINALLY, UPON DUE CONSIDERATION OF FACTUAL MATRIX AND PLACING RELIANC E ON THE STAND OF ITS PREDECESSOR FOR AY 2009-10 IN ASSESSEES OWN CASE, LD. CIT(A) CONFIRMED THE STAND OF LD. AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5.3 THE SECOND ISSUE UNDER ASSESSEES APPEAL IS LOAN PROCESSING CHARGES OF RS.60 LACS. IT WAS NOTED THAT THE ASSESSEE INCUR RED LOAN PROCESSING FEES OF RS.75 LACS AND DEBITED RS.15 LACS IN THE PROFIT & LOSS ACCOUNT AND TREATED THE BALANCE RS.60 LACS AS DEFERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUNTS. HOWEVER, DURING COURSE O F ASSESSMENT PROCEEDINGS, IT FURTHER CLAIMED THE BALA NCE RS.60 LACS AS REVENUE EXPENDITURE WHICH WAS DISALLOWED BY LD. AO BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF GOETZ INDIA PRIVATE LIMITED [284 ITR 323]. 5.4 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH OUT ANY SUCCESS BEFORE LD. CIT(A) WHERE, ON MERITS, IT WAS NOTED TH AT THE ASSESSEE OBTAINED THE LOAN FROM GE CAPITAL SERVICES LIMITED FOR REPAYMENT OF UNSECURED LOANS WHICH WERE UTILIZED TO MAKE THE INVESTMENTS A ND THEREFORE, THE SAME BEING, CAPITAL IN NATURE, WAS NOT ALLOWABLE TO THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5.5 THE LD. COUNSEL FOR ASSESSEE [AR], AT THE OUTSE T, DREW OUR ATTENTION TO THE FACT THAT ADJUSTMENT OF DISALLOWANCE U/S 14A IS NOT CALLED FOR WHILE ARRIVING AT BOOK PROFITS U/S 115JB IN VIEW OF THE D ECISION OF DELHI TRIBUNAL (SPECIAL BENCH) RENDERED IN ACIT VS. VIREET INVESTMENT (P.) LTD. [82 8 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 TAXMANN.COM 415]. PROCEEDING FURTHER, LD. COUNSEL FOR ASSESSEE DREW O UR ATTENTION TO THE FACT THAT THE ASSESSEE CONTESTED T HE STAND OF REVENUE QUA DISALLOWANCE U/S 14A IN AY 2009-10 BEFORE THIS TRIB UNAL VIDE ITA NO. 356/MUM/2013 DATED 29/01/2016 WHERE THE MATTER, CON SIDERING THE RATIO OF THIS TRIBUNAL RENDERED IN IN GARWARE WALL ROPES LTD. [46 TAXMANN.COM 18], WAS REMITTED BACK TO THE FILE OF LD. AO WITH CERTAI N DIRECTIONS. QUA LOAN PROCESSING FEES, THE LD. AR PRIMARILY CONTENDED THA T THE NATURE AND PURPOSE OF LOAN WAS IRRELEVANT FOR DETERMINING ITS ALLOWABILITY AND THEREFORE, THE SAME WAS ALLOWABLE TO THE ASSESSEE. RELIANCE HA S BEEN PLACED ON THE DECISION OF HONBLE SUPREME COURT IN INDIA CEMENTS LTD. VS. CIT [60 ITR 52] & HONBLE MADRAS HIGH COURT IN CIT VS. SUPER SPINNING MILLS LTD. [296 ITR 168] & HONBLE BOMBAY HIGH COURT IN BAJAJ TEMPO LTD. VS. CIT [ITA NO. 128 OF 2000 22/06/2017]. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS ADJUSTMENT OF DISALLOWANCE U/S 14 A IN COMPUTATION OF BOOK PROFIT U/S 115JB IS CONCERNED, WE FIND THAT TH E MATTER STOOD SQUARELY IN ASSESSEES FAVOUR BY THE CITED JUDGMENT OF DELHI TRIBUNAL (SPECIAL BENCH) RENDERED IN ACIT VS. VIREET INVESTMENT (P.) LTD. [82 TAXMANN.COM 415]. UPON PERUSAL OF THE SAME, WE FIND THAT SPECIAL BENC H, AFTER CONSIDERING TWO CONTRARY DECISION OF HONBLE DELHI HIGH COURT TITLED AS CIT VS. GOETZE (INDIA) LTD. [2014 361 ITR 505] & PCIT VS. BHUSHAN STEEL LTD. [ITA 593/2015 DATED 29/09/2015], TOOK THE VIEW FAVORABLE TO THE ASSESSEE IN TERMS OF RATIO OF DECISION OF HONBLE SUPREME CO URT RENDERED IN CIT VS. 9 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 VEGETABLE PRODUCTS LIMITED [1973 88 ITR 192]. THE DECISION IN PCIT VS. BHUSHAN STEEL LTD. , IN TURN, PLACED RELIANCE ON THE DECISION OF HONB LE SUPREME COURT RENDERED IN APOLLO TYRES LTD. VS. CIT [255 ITR 273] WHICH HELD THAT THE ASSESSING OFFICER DID NOT HAVE THE JU RISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT & LOSS ACCOUNT EXCEP T TO THE EXTENT PROVIDED IN EXPLANATION TO SECTION 115J. SIMILAR VIEW HAS BE EN EXPRESSED BY OUR JURISDICTIONAL BOMBAY HIGH COURT RENDERED IN CIT VS. JSW ENERGY LIMITED [2015 60 TAXMANN.COM 303], CIT V. ESSAR TELEHOLDINGS LTD. [ITA NO. 438 OF 2012, DATED 07/08/2014] & CIT VS. BENGAL FINANCE & INVESTMENTS PVT. LIMITED [ITA NO. 337 OF 2013 DATED 10/02/2015]. THEREFORE, RESPECTFULLY FOLLOWING THE CATENA OF JUDGMENT IN ASSESSEES FAVO UR, WE, AT THE OUTSET, HOLD THAT ADJUSTMENT OF DISALLOWANCE U/S 14A WAS NO T REQUIRED TO BE MADE IN BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB. T HE GROUND OF ASSESSEES APPEAL STANDS ALLOWED TO THAT EXTENT. 7. SO FAR AS THE QUANTUM DISALLOWANCE U/S 14A READ WITH RULE 8D IS CONCERNED, WE FIND THAT THE ISSUE AROSE IN ASSESSEE S OWN CASE FOR AY 2009-10 WHERE THE MATTER WAS REMANDED BACK TO LD. A O FOR RECONSIDERATION OF ASSESSEES DOCUMENTARY EVIDENCES AND RATIO OF DECISION OF THIS TRIBUNAL RENDERED IN GARWARE WALL ROPES LTD. [SUPRA]. UPON PERUSAL OF FACTUAL MATRIX IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS BEEN SADDLED WITH MAJOR DISALLOWANCE OF RS.505.45 LACS U /R 8D(2)(I) ON ACCOUNT OF DIRECT INTEREST EXPENDITURE . THE LD. AR CONTENDED THAT THE INVESTMENTS MADE IN JOINT VENTURES WERE STRATEGIC IN NATURE AND HAD TO BE EXCLUDED 10 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 WHILE ARRIVING AT THE DISALLOWANCE U/S 14A. AT THE SAME TIME, IT IS UNCONTROVERTED FACT THAT THE GAINS FROM SALE OF THO SE INVESTMENTS WERE TAXABLE UNDER THE HEAD CAPITAL GAINS. AS CORRECTLY NOTED BY LD. CIT(A), THE ASSESSEE FAILED THE REFUTE THE FINDINGS OF TAX AUDITOR IN THIS REGARD AND COULD NOT DEMONSTRATE THAT IT DID NOT INCUR ANY DIR ECT EXPENDITURE TO MAKE THE INVESTMENTS. THEREFORE, THE ISSUE, IN OUR OPINI ON, REMAINS INCONCLUSIVE AND REQUIRES RECONSIDERATION BY LD. AO. HENCE, THE MATTER IS REMITTED BACK TO LD. AO TO RE-APPRECIATE THE FACTUAL MATRIX WITH A DIRECTION TO ASSESSEE TO JUSTIFY HIS STAND FORTHWITH, FAILING WHICH THE LD. AO SHALL BE AT LIBERTY TO DECIDE THE SAME AS PER LAW ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THIS GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES . 8. SO FAR AS ASSESSEES CLAIM OF LOAN PROCESSING FEES IS CONCERNED , WE FIND THAT THE ASSESSEE INCURRED LOAN PROCESSING FEES OF RS.75 LACS OUT WHICH RS.15 LACS WERE DEBITED TO THE PROFIT & LOSS ACCOUNT WHEREAS THE BALANCE RS.60 LACS WAS TREATED AS DEFERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUNT. FURTHER, THE ASSESSEE DID NOT CLA IM THE BALANCE RS.60 LACS EITHER IN COMPUTATION OF INCOME OR BY FILING T HE REVISED RETURN OF INCOME BUT CLAIMED THE SAME DURING THE COURSE OF AS SESSMENT PROCEEDINGS BEFORE LD. AO. IT IS QUITE EVIDENT FROM THE ORDER O F LD. CIT(A) THAT THE LOAN HAS BEEN UTILIZED TO REPAY THE EXISTING UNSECURED L OANS WHICH WERE OBTAINED TO MAKE VARIOUS INVESTMENTS. UNDISPUTEDLY, THE SALE OF INVESTMENTS WAS CHARGEABLE UNDER THE HEAD CAPITAL GAINS . IN SUCH A SCENARIO, WE FIND THAT THE RELIANCE OF LD. AR ON VA RIOUS CASE LAWS COULD NOT 11 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 HELP ASSESSEE SINCE THE FACT OF THOSE CASES REVEALS THAT THE LOAN WAS UTILIZED FOR THE PURPOSE OF CAPITAL EXPANSION OF AS SESSEES BUSINESS AND THE PURPOSE OF THE SAME WAS CAPITAL EXPENDITURE. THIS V ITAL FACT IS MISSING IN THE PRESENT CASE. FURTHER, IT IS ALSO NOT EVIDENT F ROM MATERIAL ON RECORD THAT THE ASSESSEE DID NOT CLAIM THE BALANCE DEFERRED REV ENUE EXPENDITURE IN SUBSEQUENT YEARS ON PROPORTIONATE BASIS. THEREFORE, THIS MATTER IS ALSO REMANDED BACK TO THE LD. AO FOR RE-APPRECIATION OF THE FACTUAL MATRIX ON ABOVE LINES WITH A DIRECTION TO ASSESSEE TO SUBSTAN TIATE HIS STAND FAILING WHICH LD. AO SHALL BE AT LIBERTY TO DECIDE THE SAME AS PER LAW ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. RESULTANTLY, THIS GROUND OF ASSESSEES APPEAL ALSO STANDS ALLOWED FOR STATISTICAL PURPOSES . 9. IN NUTSHELL, REVENUES APPEAL ITA NO.772/MUM/201 6 STANDS DISMISSED WHEREAS ASSESSEES APPEAL ITA NO. 1167/MUM/2016 STA NDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17.01.2018 SR.PS:- THIRUMALESH 12 ITA NOS.772 &1167/MUM/2016 INDUSIND MEDIA & COMMUNICATION LIMITED ASSESSMENT YEAR 2011-12 ! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. &. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI