Adani Port-Infrastructure Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 1383/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67933 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: VARTIKA CHOKSHI; S N SOPARKAR
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO.1383/AHD/2013 A.Y. 2008-09 ADANI PORT INFRASTRUCTURE PVT. LTD. (NOW MERGED WITH ADANI ENTERPRISES LIMITED) AHMEDABAD. PAN AACCA 5064 F VS DCIT CIRCLE-(1), AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI O.P. VAISHNAV, CIT- D.R., ASSESSEE(S) BY : SHRI S.N. SOPARKAR & MR. VARTIKA CHOKSHI, A.R. / DATE OF HEARING : 12/11/2013 / DATE OF PRONOUNCEMENT: 22/11/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M AN ORDER OF LEARNED CIT-I, AHMEDABAD, DATED 18.03.2013 PASSED U /S. 263 OF IT ACT. THE APPELLANT HAS CHALLENGED THE ORDER PASSED U/S. 263 AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT ERRED IN ASSUMING HIS JURISDICTION U/S. 263 OF THE IT ACT, W HEREAS THE MANDATORY CONDITIONS FOR ASSUMING SUCH JURISDICTION ARE TOTAL LY ABSENT, WITH THE RESULT THAT THE IMPUGNED ORDER PASSED U/S. 263 IS BAD IN L AW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT ERRED IN ARRIVING AT A CONCLUSION WITHOUT ANY BASIS WHATSOEV ER TO THE EFFECT THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WA S ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT ERRED IN CANCELING THE ASSESSMENT ORDER PASSED BY THE ASSESS ING OFFICER ON 24 TH DECEMBER, 2010 U/S. 143(3) OF THE IT ACT AND DIRECT ING THE ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT. ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 2 - 2. AN ASSESSMENT ORDER WAS PASSED U/S. 143(3), DATE D 24.12.2010 WHICH ACCORDING TO THE LEARNED CIT WAS ERRONEOUS; I NSOFAR, IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOU NT OF FOLLOWING REASONS: THE DISALLOWANCE OF EXPENDITURE RELATED TO EARNING EXEMPT INCOME HAS NOT BEEN COMPUTED AS ENVISAGED U/S. 14A R.W.S. 8D(2)(II I). THE SAID DISALLOWANCE SHOULD BE RS.326.99 LAKHS AND NOT REQUIRED TO BE RE STRICTED TO ADMINISTRATIVE EXPENSES OF RS.6.09 LAKSH. 2.1 IN THE IMPUGNED ORDER, LEARNED COMMISSIONER HAS NOTED THAT WHILE COMPUTING THE DISALLOWANCE U/S.14A THE ASSESSEE HAD VOLUNTARILY DISALLOWED INTEREST EXPENDITURE OF RS.4,81,13,923/- . THE ASSESSEE HAS ALSO DISALLOWED CERTAIN EXPENDITURE AMOUNTING TO RS .7,28,548/-. THEREFORE, THE AGGREGATE DISALLOWANCE AS MADE BY TH E ASSESSEE WAS RS.4,88,96,471/- THE COMPUTATION OF THE ASSESSEE FO R THE SAID DISALLOWANCE AS PER RULE 8D WAS AS UNDER: RULE 8D(2)(I) DIRECT EXPENSES (A) INTEREST DIRECTLY ATTRIBUTABLE TO EARNING OF EXEMPT INCOME RS.4,81,13,923/- (B) DEMAT AND OTHER EXPENSES RS, 7,82,548/- RS. 4,88,96,471/- RULE 8D (2)(II) INTEREST EXPENSES NOT DIRECTLY ATTRIBUTABLE TO EARN ING OF EXEMPT INCOME NIL RULE 8D(2)(III) 0.5% OF AVERAGE VALUE OF INVESTMENT, INCOME FROM W HICH IS EXEMPT (0.5% OF RS.653,99,77,909) RS.3,26,98,890/- ACTUAL EXPENSES DEBITED RS.6,08,524/- 2.2 IT WAS FURTHER NOTED BY LEARNED CIT THAT THE AO HAS RESTRICTED THE DISALLOWANCE UNDER RULE 8D(2)(III) TO THE EXTENT OF THE ACTUAL EXPENDITURE DEBITED TO P & L A/C AMOUNTING TO RS.6,08,524/-. IN SUPPORT OF THE ACTION OF THE AO, IT WAS ARGUED BEFORE LEARNED COMMISSIONE R THAT THE ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 3 - DISALLOWANCE U/S. 14A SHOULD NOT EXCEED THE ACTUAL EXPENSES DEBITED TO THE P & L A/C; THEREFORE, THE ORDER OF THE AO WAS N EITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. LEARNED COMMISSIONER WAS NOT CONVINCED AND HELD THAT THE ORDER OF THE AO WAS ERR ONEOUS AND THE OBSERVATIONS WERE AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED A R AND THE FACTS OF THE CASE. SO FAR AS THE FIRST ISSUE IS CONCERNED, SECTI ON 14A(1) MANDATES THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH IS EXEMPT FROM TAXATION . SUB-SECTION (2) LAYS DOWN THE METHOD BY WHICH SUCH EXPENDITURE INCURRED IS QUANTIFIED. THE METHOD HAS BEEN PRESCRIBED IN RULE 8D, AND COMPRISE S THREE LINKS. THE FIRS LINK RELATES TO EXPENDITURE DIRECTLY ATTRIBUTABLE T O THE EARNING OF EXEMPT INCOME. ON THIS ACCOUNT, THE ASSESSEE HAS ITSELF AL READY DISALLOWED RS.4,88,96,471/-. THE SECOND LINK RELATING TO DISAL LOWANCE OF INTEREST EXPENSES NOT DIRECTLY ATTRIBUTABLE TO EARNING THE EXEMPT INC OME IS TO BE DETERMINED IN TERMS OF THE FORMULA GIVEN IN THE RULE. AS PER THIS FORMULA, DISALLOWANCE WOULD BE NIL, SINCE THE ENTIRE INTEREST EXPENSE AHS BEEN DISALLOWED SUO MOTO BY THE ASSESSEE TREATING THE SAME AS DIRECTLY ATTRI BUTABLE TO EARNING OF EXEMPT INCOME. THE THIRD LINK RELATES TO OF 0.5% OF THE AV ERAGE OF THE VALUE OF INVESTMENT INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. NEITHER THE PROVISIONS OF THE ACT NOR THE PROVISIONS OF THE RULE MANDATE THE RESTRICTION OF THE DISALLOWANCE WORKED OUT UNDER RULE 8D(2)(III ) TO THE AMOUNT OF ACTUAL EXPENDITURE INCURRED. WHATEVER IS THE QUANTUM WORKE D OUT AS PER FORMULA PRESCRIBED IN THE RULE, THE SAME WOULD REPRESENT TH E QUANTUM OF DISALLOWANCE. HENCE, THE AO IN RESTRICTING THE DISA LLOWANCE TO THE AMOUNT OF EXPENSES CLAIMED, HAS DEPARTED FROM THE CLEAR PROVI SIONS OF LAW IN THIS REGARD. THEREFORE, THE ORDER WOULD BE UNSUSTAINABLE IN THE EYES OF LAW. ACCORDINGLY, IT IS HELD THAT THE A.O.S ORDER WAS N OT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTERESTS OF REVENUE. 2.3. IN THE RESULT, THE ORDER OF THE AO FOR A.Y. 20 08-09, DATED 24.12.2010 WAS CANCELLED BY LEARNED COMMISSIONER AND THE AO WAS DIRECTED TO MAKE A FRESH ASSESSMENT. THIS DIRECTION AND THE ORDER OF THE LEARNED COMMISSIONER IS NOW CHALLENGED BEFORE US. 3. FROM THE SIDE OF THE APPELLANT, LEARNED AR, SHRI S.N. SOPARKAR & MR. VARTIKA CHOKSHI APPEARED AND VEHEMENTLY ARGUED THAT THE ORDER OF T HE AO WAS CORRECT BECAUSE THE ASSESSEE HAS CLAIMED THE EXPENDITURE IN P&L ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 4 - A/C ONLY TO THE EXTENT OF RS.6,08,524/-, THEREFORE, THE AO HAS CORRECTLY COMPUTED THE DISALLOWANCE U/S. 14A AS UNDER: THUS, I PROCEED TO COMPUTE THE EXPENDITURE INCURRE D IN RELATION TO EARNING DIVIDEND INCOME AS PER THE PROVISIONS OF SECTION 14 A OF THE ACT IN THE MANNER AS PRESCRIBED UNDER RULE 8D OF THE ACT. THE SAME IS COMPUTED AS UNDER: RULE 8D (2)(I) THE AMOUMT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME NIL RULE 8D (2)(II) AS NO INTEREST EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE-COMPANY DURING THE YEAR, THIS CLAUSE IS NO T APPLICABLE. NIL RULE 8D(2)(III) HALF PERCENT OF THE AVERAGE VALUE OF INVESTMENT INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME = 6539777909 X 0.5% 32698890 TOTAL 32698890 IN VIEW OF THE ABOVE, THE DISALLOWANCE U/S. 14A REA D WITH RULE 8D IS COMPUTED AT RS.3,26,98,890/-. HOWEVER, AS THE ASSES SEE COMPANY HAS CLAIMED ADMINISTRATIVE AND OTHER EXPENDITURE AMOUNTING TO R S.6,08,524/-, THUS THE DISALLOWANCE IS RESTRICTED TO RS.6,08,524/-. 3.1 LEARNED AR HAS PLEADED THAT WHILE MAKING THE DI SALLOWANCE U/S. 14A THE AO HAD DULY CONSIDERED THE FACTUAL POSITION AS WELL AS THE PROVISION OF THE LAW. THE AO HAD TAKEN THE COGNIZAN CE OF THE FACT THAT THE EXPENDITURE AMOUNTING TO RS.4,81,82,348/- WERE ALREADY DISALLOWED BY THE ASSESSEE, THEREFORE, HE HAD TAKEN A VIEW THA T OUT OF THE INTEREST EXPENSES NO FURTHER DISALLOWANCE WAS CALLED FOR U/S . 14A OF IT ACT. ACCORDING TO LEARNED AR, WITH REGARD TO OTHER EXPEN SES, THE AO HAD APPLIED THE FORMULA AS PRESCRIBED UNDER RULE 8D OF THE IT RULES. AS PER THE SAID FORMULA THE TOTAL DISALLOWANCE WAS CALCULA TED BY THE AO AT RS.3,26,98,890/-, HOWEVER, THE TOTAL EXPENDITURE DE BITED TO P&L A/C WAS ONLY RS.6,08,524/-, THEREFORE, THE AO HAD CORRECTLY RESTRICTED THE DISALLOWANCE TO THAT EXTENT, I.E., RS.6,08,524/-. L EARNED AR HAS PLEADED ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 5 - THAT A DISALLOWANCE U/S. 14A COULD BE MADE OUT OF T HE TOTAL EXPENDITURE CLAIMED IN THE P&L A/C AND NOTHING SHOULD BE DISALL OWED IN EXCESS OF THAT FIGURE. IN SUPPORT OF THIS ARGUMENT RELIANCE H AS BEEN PLACED ON THE CASE OF GILLETE GROUP INDIA PVT. LTD., 22 TAXMAN.COM 61 (DE L). 4. FROM THE SIDE OF THE REVENUE, LEARNED CIT-DR, MR . O.P. VAISHNAV APPEARED AND SUPPORTED THE ORDER PASSED U/S. 263 OF IT ACT BY LEARNED COMMISSIONER. HE HAS ARGUED THAT PRIMA FACIE, THE L EARNED COMMISSIONER WAS OF THE OPINION THAT THE ORDER PASS ED BY THE AO WAS ERRONEOUS; HENCE, HE HAS RIGHTLY CONSIDERED TO ANNU L THAT ORDER. HE HAS PLEADED THAT THE LEARNED COMMISSIONER WAS OF THE OP INION THAT THE COMPUTATION OF DISALLOWANCE U/S. 14A READ WITH RULE 8D WAS INCORRECTLY MADE BY THE AO, THEREFORE, IT WAS WITHIN HIS JURISD ICTION TO INVOKE THE PROVISIONS OF SECTION 263 OF IT ACT. ACCORDING TO H IM, THE SCOPE OF SECTION 263 IS VERY WIDE AS HELD IN THE CASE OF MALABAR INDUSTRIAL CO., 243 ITR 83 (SC). 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE CAREFULLY PERUSED THE IMPUGNED ORDER. AS FAR AS THE SCOPE OF SECTION 263 IS CONCERNED, IT IS TRUE THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW WOULD JUSTIFY THE INVOCATION OF THE PROVISIONS OF SECTION 263 OF IT ACT. NATURALLY, IF DUE TO ERRONEO US ASSESSMENT ORDER REVENUE IS LOOSING TAX LAWFULLY THEN SUCH AN ORDER IS CERTAINLY CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. BUT THAT PREJUDICE SHOULD BE EXAMINED JUDICIALLY. THE SAID EXPRESSION AS COINED IN SECTION 263 IS REQUIRED NOT TO BE CONSTRUED IN A PETTIFOGGING MANN ER BUT IT MUST BE GIVEN A DIGNIFIED CONSTRUCTION SO AS TO SEE WHETHER THERE WAS SOME GRIEVOUS ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 6 - ERROR IN THE ASSESSMENT ORDER WHICH IN BROAD RECKON ING MIGHT SET A BAD TREND BY THE AO SO AS TO CAUSE PREJUDICE TO THE ADM INISTRATION OF REVENUE. AS FAR AS THE PRESENT POSITION IS CONCERNE D, THIS IS NOT THE CASE WHERE THE AO HAS NOT APPLIED HIS MIND. FROM THE ASS ESSMENT ORDER ITSELF IT IS EVIDENT THAT THE AO HAD IN FACT APPLIED HIS M IND AND DULY UNDERSTOOD THE FACTS OF THE CASE AS WELL AS THE LAW APPLICABLE . THIS IS ALSO NOT THE CASE THAT NO INQUIRY WAS MADE OR INSUFFICIENT INQUI RY WAS MADE BY THE AO. ON THESE TWO COUNTS, IT IS NOT AN ERRONEOUS ASS ESSMENT ORDER. THE NEXT STEP IS TO ASCERTAIN WHETHER SOME PREJUDICE WA S CAUSED TO THE INTEREST OF THE REVENUE. ACCORDING TO US, AN ERRONE OUS ORDER IS AN ORDER WHICH SUFFERS FROM A PATENT LACK OF UNDERSTANDING O F FACTS AS WELL AS LAW. WHILE ATTRACTING THE PROVISIONS OF SECTION 14-A, IT IS NECESSARY TO EXAMINE WHETHER THERE WAS A PROXIMITY CAUSE FOR DIS ALLOWANCE WHICH IS ITS RELATIONSHIP WITH EXEMPTED INCOME. HENCE, DISAL LOWANCE U/S. 14A REQUIRES FINDING OF INCURRING OF EXPENDITURE FOR EA RNING EXEMPTED INCOME. WE HAVE NOTED THAT WHILE FILING THE RETURN, THE ASSESSEE HAS SUBMITTED THE FOLLOWING COMPUTATION OF INCOME. PROFIT & GAINS OF BUSINESS OF PROFESSION NET LOSS AS PER P & L A/C (BEFORE TAXATION) (-) 48944556 ADD: DISALLOWANCE/ADDITIONS DEMATE CHARGES 657548 PRELIMINARY EXP. W/OFF 429254 FILING FEES EXPS. TOWARDS INCREASING IN AUTHO. SHARE CAPITAL 125000 LOSS FROM PARTNERSHIP FIRM 1949 DOCUMENT & STAMPING CHARGES FOR INCREASING IN AUTHO. SHARE CAPITAL 46136 INTEREST AND OTHER DISALLOWANCE 48113923 49373810 5.1 FURTHER OUR ATTENTION HAS ALSO BEEN DRAWN ON TH E P & L A/C DRAWN ON 31 ST MARCH, 2008 ACCORDING TO WHICH THE ASSESSEE HAS CL AIMED ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 7 - EXPENDITURE IN RESPECT OF FILING FEES, DEMAT CHARGE S, FINANCE CHARGES, ETC, AS FOLLOWS: FILING FEES 126950 DEMATE CHARGES 657548 LEGAL EXPENSES 48236 MISCELLANEOUS EXPENSES ---- FINANCE CHARGES 48182348 PRELIMINARY EXPENSES WRITTEN OFF 429254 49619556 5.2 AS AGAINST THAT THE INCOME OF THE ASSESSEE WAS EARNED FROM PROFESSIONAL FEES OF RS.6,75,000/-. THE ASSESSEE HA D DISALLOWED THE AFORE- LISTED EXPENDITURE AS WE HAVE NOTED FROM THE COMPUT ATION OF INCOME FURNISHED ALONG WITH RETURN. ON THOSE VERY FACTS, T HE RESPECTED CO- ORDINATE BENCH DELHI IN THE CASE OF GILLETE GROUP INDIA (SUPRA) HAS OPINED AS UNDER:- 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SECTION 14A READS AS UNDER:- 'EXPENDITURE INCURRED IN RELATION TO INCOME NOT INC LUDIBLE IN TOTAL INCOME. 14A. [(1) FOR THE PURPOSES OF COMPUTING THE TOTAL I NCOME UNDER THIS CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT O F EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHIC H DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT.] [(2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOU NT 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 MAY BE PRESCRIBED, IF THE ASSESSING OFFICER, HAVING REGARD 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 NOT FORM PART OF THE TOTAL INCOME UNDER THIS A CT. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL ALSO AP PLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE H AS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PA RT OF THE TOTAL INCOME UNDER THIS ACT:] [PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL EMPOWER THE ASSESSING OFFICER EITHER TO REASSESS 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.]' ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 8 - 6. FROM THE ABOVE, IT IS EVIDENT THAT AS PER SUB-SE CTION (1) OF SECTION 14A, NO DEDUCTION IS TO BE ALLOWED IN RESPECT OF EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME. SUB-SECTION (2) OF SECTION 1 4A PROVIDES THE PROCEDURE FOR DETERMINATION OF SUCH EXPENDITURE BY THE ASSESS ING OFFICER. THE BOARD HAS ALSO PRESCRIBED RULE 8D FOR DETERMINING THE EXPENDI TURE INCURRED BY THE ASSESSEE FOR EARNING OF EXEMPT INCOME. THUS, THE DI SALLOWANCE EXPENDITURE CAN BE MADE UNDER SUB-SECTION (1) FOR THE EXPENDITU RE INCURRED FOR EARNING OF EXEMPT INCOME. IN THE CASE UNDER APPEAL BEFORE US, FROM THE PERUSAL OF THE ASSESSEE'S PROFIT & LOSS ACCOUNT, IT IS EVIDENT THA T THE TOTAL EXPENDITURE INCURRED WAS RS.49,04,028/- ONLY. THUS, THE ASSESSE E CLAIMED THE DEDUCTION FOR THE EXPENDITURE OF RS.49,04,0287- WHICH IS DEBI TED TO THE PROFIT & LOSS ACCOUNT. THE DISALLOWANCE CANNOT EXCEED THE EXPENDI TURE ACTUALLY CLAIMED BY THE ASSESSEE. WE, THEREFORE, ACCEPT THE ASSESSEE'S CONTENTION THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUST AINED BY THE LEARNED CIT(A) IN EXCESS OF TOTAL EXPENDITURE DEBITED TO PR OFIT & LOSS ACCOUNT WAS UNJUSTIFIED. ACCORDINGLY, WE RESTRICT THE DISALLOWA NCE TO THE EXTENT OF EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE I.E. R S.49,04,028/-. 5.3 THEREFORE ON MERITS AS WELL WE CAN HOLD THAT IN SUCH SITUATION A DISALLOWANCE U/S. 14A CANNOT EXCEED THE EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE. IN THE ABSENCE OF ANY CONTRADICTORY J UDGMENT PLACED BEFORE US, WE HEREBY RESPECTFULLY FOLLOW THE DECISION OF T HE RESPECTED CO- ORDINATE BENCH AND HOLD THAT THE LEARNED COMMISSION ER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF IT ACT . THE IMPUGNED ORDER PASSED U/S. 263, DATED 18.03.2003 IS HEREBY QUASHED . GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (ANIL CHATURVEDI) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/11/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO.1383/AHD/2013 ADANI PORT INFRASTRUCTURE PVT. LTD. VS. DCIT CIRCLE (1) AHMEDABAD. FOR A.Y. 2008-09 - 9 - 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD