M/s. NHPC Ltd, New Delhi V. ACIT, New Delhi

ITA 1437/DEL/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81824 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN PRASHAD
• Assessee Lawyers: VED JAIN CA SMT RANO JAIN
• Keywords: Capital asset; Depreciation; Earning of tax free income; Advance ruling
• Section: 43B; 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER AND SHRI R.P.YADAV , JUDICIAL MEMBER ITA NO. 1402 /DEL/20 1 2 ( A.Y. 2008 - 09) ITA NO. 1956/DEL/2009 (A.Y. 2006 - 07) ACIT VS. NHPC LTD. CIRCLE II, B - BLOCK, SECTOR 33, CGO COMPLEX, NH - IV NHPC COMPLEX FARIDABAD FARI DABAD AAACNO149C ITA NO. 1437/DEL/2009(A.Y. 2006 - 07) NHPC LTD. VS. ACIT NHPC OFFICE COMPLEX CIRCLE - II SECTOR 33 NEW DELHI NEW DELHI (APPELLANT) (RESPON DENT) APPELLANT BY : SH. VED JAIN C.A., SMT. RANO JAIN, ADV RESPONDENT BY : SH. GUNJAN PRASHAD CIT, DR O R D E R PER : R.S.SYAL, A .M. THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND OTHER BY T HE REVENUE - FOR THE ASSESSMENT YEAR 2006 - 07 AND THE ONLY APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2008 - 09 INVOLVE SOME COMMON ISSUES. AS SUCH, W E ARE ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 2 PROCEEDING TO DISPOSE THEM OF F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSME NT YEAR 2006 - 0 7 2. THE F IRST ISSUE IN THE REVENUE S APPEAL IS AGAINST THE DELETION OF ADDITION OF RS. 51,80,00,000/ - ON ACCOUNT OF TARIFF ADJUSTMENT U/S 115 JB OF THE ACT. BRIEFLY STATED THE FACTS OF THIS ISSUE ARE THAT THE ASSESSEE SHOWED T ARIFF ADJ USTMENT OF RS. 51.80 CRORE OUT OF THE SALE OF RS.1713.79 CRORE . ON BEING CALLED UPON TO EXPLAIN THE REASON FOR THIS ACTION, THE ASSESSEE STATED THAT IT RAISED POWER BILLS DURING THE YEAR AS PER TARIFF FIXED FOR THE PERIOD 1.4.2001 TO 31.3.2004 AND IT WAS REQUIRED TO SUBMIT ITS APPLICATION BEFORE CERC FOR REVISION IN TARIFF RATES AFTER THE TARIFF PERIOD 2004 - 09. THE ASSESSEE FILED ITS REVISED T ARIFF APPLICATION FOR TWO PROJECTS TO THE TUNE OF RS.51.80 CRORE. THE AO HELD THAT THE QUANTIFICATION OF REDUCTION IN SALES WAS BASED THE ON ASSESSEE S PENDING APPLICATION BEFORE CERC AND AS SUCH THIS WAS NOT AN ASCERTAINED LIABILITY. HE, THEREFORE, ADDED BACK THE PROVISION OF RS.51.80 CRORE TO THE BOOK PROFIT U/S 115JB OF THE ACT. THE LD. CIT(A) REVERSED THE ACTION O F THE AO BY RELYING ON HIS ORDER FOR THE IMMEDIATELY PRECEDING YEAR. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT SIMILAR ISSUE WAS RAISED BEFORE THE TRIBUNAL BY THE REVENUE IN ITS APPEAL FOR ASSESSMENT YEAR 2005 - 06. VIDE ORDER DATED 30.9.2014, A COPY OF WHICH IS AVAILABLE ON RECORD, THE T RIBUNAL HAS CONFIRMED THE DELET ION OF THIS ADDITION. THE LD. D R COULD NOT POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS F OR THE ASSESSMENT YEAR 2005 - 06 AND THE INSTANT YEAR. RESPECTFULLY FOLLOWING THE PRECEDENT FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WE APPROVE THE IMPUGNED ORDER ON T HIS ISSUE. THIS GROUND FAILS. ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 3 4. THE NEXT ISSUE IS AGAINST TH E DELETION OF ADDITION OF RS. 1 00,25,510/ - ON ACC OUNT OF D EPRECIATION ON LAND AMORTIZED U/S 115 JB OF THE ACT. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE CLAIMED DEPRECIATION AMOUNTING TO RS.1.30 CRORE AS PER SCHEDULE 5 OF ITS BALANCE SHEET. OUT OF TOTAL DEPRECIATION ON LAND AMOUNTING T O RS.1.30 CRORE, AN AMOUNT OF RS.1.00 CRORE WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND THE BALANCE AMOUNT OF RS. 30.25 LAC WAS AD DED TO THE COST OF CAPITAL WORK - IN - PROGRESS. THE AO HELD THAT NO DEPRECIATION WAS ADMISSIBLE ON LAND. WHILE COMPUTING BOOK PROFIT A S PER SECTION 115JB OF THE ACT, THE AO ADDED BACK THIS AMOUNT. THE LD. CIT(A) DELETED THIS ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RIVAL MATERIAL ON THE RECORD, IT IS SEEN THAT THIS IS ALSO A RECURRING ISSUE. THE TRI BUNAL IN ITS ORDER FOR THE ASSESSMENT YEAR 2004 - 05 DELETED SIMILAR ADDITION. A COPY OF THIS ORDER DATED 30.09.2014 IN ITA NO. 2449/DEL/2008 IS AVAILABLE ON RECORD. THE RELEVANT DISCUSSION HAS BEEN MADE IN PARA 9 OF TH E SAID ORDER UPHOLDING THE VIEW TAKEN B Y THE LD. CIT(A) IN DEL ETING THIS ADDITION IN THE COMPU T A TION U/S 115 JB OF THE ACT. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE HAVING BEEN BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE PRECEDENT , WE APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS I S SUE. THIS GROUND FAIL S . 6. THE NEXT GRIEVANCE OF THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS. 27,05,83,117/ - MADE BY THE ASSESSING OFFICER IN COMPUTING BOOK PROFIT U/S 115 JB IN RESPECT OF P ROVISION FOR GRATUITY, LEAVE ENCASHMENT AND POST RE TIREMENT BENEFITS. BRIEFLY STATED , T HE FACT S OF THIS GROUND THAT THE ASSESSEE CLAIMED DEDUCTION TOWARDS P ROVISION FOR GRATUITY AND LEAVE ENCASHMENT ETC. IN THE COMPUTATION OF B OOK PROFITS AS PER S ECTION 115 JB OF THE ACT. IN SUPPORT OF ITS CONTENTION , T HE ASSESSEE RELIED ON THE JUDGMENT OF THE HON BLE SUPREME ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 4 CO URT IN THE CASE OF BHARAT EARTH M OVERS VS. CIT (2000) 245 ITR 428 (SC) HOLDING THE LIABILITY INCURRED BY THE ASSESSEE UNDER LEAVE ENCASHMENT SCHEME ETC. AS AN ASCERTAINED AND NOT C ONTINGENT LIABIL ITY . NOT CONVINCED WITH THE ASSESSEE S SUBMISSION, THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF THE PR OVISION WHILE COMPUTING BOOK PROFIT U/S 115 JB OF THE ACT. THE LD. CIT(A) CONCURRED WITH THE SUBMISS IONS ADVANCED ON BEHALF OF THE A SSESSEE AND RESTORED THE ASSESSEE S POINT OF VIEW. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD , IT IS NOTICED THAT THE HON BLE SUPREME COURT IN THE AFORENOTED CASE OF BHARAT EARTH MOVERS ( S UPRA) HAS HELD THAT THE LIABILITY I NCURRED BY THE ASSESSEE UNDER THE LEAVE ENCASHMENT SCHEME DETERMINED ON ACTUARIAL VALUATION IS AN ASCERTAINED LIABILITY AND CANNOT BE CONSIDERED AS A CONTI N GENT LIABILITY . HOWEVER, IT IS SIGNIFICANT TO NOTE THAT THE LEGISLATURE HAS STEPPED IN BY INSERTING CLAUSE (F) TO SECTION 43B MANDATING THAT ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE CANNOT BE ALLOWED AS DEDUCTION UNLESS T HIS AMOUNT IS PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE FOR FURNISHING T HE RETURN OF INCOME U/S 139(1) OF THE ACT. IN VIEW OF THIS LEGISLATIVE AMENDMENT NULLIFYING THE RATIO OF THE DECISION IN THE CASE OF BHARAT EARTH MOVER S ( S UPRA) , THE AMOUNT OF SUCH PROVISION CAN BE CLAIMED AS DEDUCTION ONLY ON ACTUAL PAYMENT AND NOT ON TH E SIMPLE CREATION OF PROVISION. HOWEVER, WHEN WE PERUSE THE MANDATE OF EXPLANATION 1 TO SECTION 115JB, IT BECOMES CLEAR THAT CLAUSE (C) TALKS OF MAKING ADDITION TO BOOK PROFIT FOR THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES; OR . IF WE CONSIDER THE JUDGMENT OF THE HON BLE SUPREME COURT HOLDING SUCH A PROVISION AS AN ASCERTAINED LIABILITY AND CLAUSE (F) OF SECTION 43B ON ONE HAND AND CLAUSE (C) OF EXPLANATION 1 TO SECTION 115JB ON THE OTHER , IT BECOMES ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 5 VIVID THAT COMPUTATION OF INCOME UNDER THE NORMAL PROVISIONS DEBARS DEDUCTION FOR THE ASCERTAINED LIABILITY TOWARDS PROVISION FOR LEAVE ENCASHMENT ETC. , UNLESS THE AMOUNT IS ACTUALLY PAID BEFORE THE DUE DAT E. HOWEVER, IN THE COMPUTATION OF BOOK PROFIT U/S 115JB, DEDUCTION IS AVAILABLE FOR SUCH PROVISION OF ASCERTAINED LIABILITY. THE LD. DR HAS NOT DRAWN OUR ATTENTION TOWARDS ANY PART OF THE PROVISIONS OF SECTION 115JB, WHICH MAKE S THE PROVISIONS OF SECTION 43B(F) APPLICABLE TO THE COMPUTATI ON OF BOOK PROFITS. AS THE GROUND RAISED BY THE REVENUE IS ONLY AGAINST THE DELETION OF ADDITION IN THE COMPUTATION OF BOOK PROFIT U/S 115JB, THE IMPUGNED ORDER NEEDS TO BE UPHE LD. IT IS HOWEVER, MADE CLEAR THAT IF THE INCOME UNDER THE NORMAL PROVISIONS O F THE ACT TURNS OUT TO BE MORE THAN THE BOOK PROFIT U/S 115JB AND THE TOTAL INCOME IS TO BE COMPUTED AS PER THE NORMAL PROVISIONS, THEN NO DEDUCTION FOR SUCH PROVISION WOULD BE ADMISSIBLE UNLESS THE AMOUNT OF SUCH PROVISION IS PAID BEFORE THE DUE DATE U/S 139(1) OF THE ACT. 8. THE LAST GROUND OF REVENUE S APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.7.74 CRORE TOWARDS PROVISION FOR DOUBTFUL AND OBSOLESCENCE IN INVENTORY IN T HE COMPUTA TION OF BOOK PROFIT U/S 115 JB OF THE ACT. 9. WE HAV E HEARD THE RIVAL SUBMISSION S AND PERUS ED THE RELEVANT MATERIAL ON THE RECORD . I T IS NOTICED THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE IN ITS O W N CASE FOR THE A.Y. 2004 - 05. THE LD. AR WAS FA I R ENOUGH TO ACCEPT THIS POSITION . RESPECTFULLY FOLLOWING THE PRECEDENT , WE OVER TURN THE IMPUGNED ORDER ON THIS ISSUE AND ALLOW THE GROUND TAKEN BY THE REVENUE . 10. THE ONLY GROUND TAKEN BY THE ASSESSEE IN ITS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.47.88 CRORE ON ACCO UNT OF A DVANCE AGAINST ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 6 DEPRECIATION IN THE COMPUTATION OF INCOME UNDER THE NORMAL PROVISIONS . T HE FACTS OF THIS GROUND ARE THAT THE ASSESSEE REDUCED THE SALES BY CLAIMING THAT THE ADVANCE AGAINST DE PRECIATION TO THE TUNE OF RS. 47.88 CRORE , INCLUDED IN THE SALES , WAS NOT A R EVENUE RECEIPT. RELYING ON THE DECISION RENDERED BY THE A UTHORITY FOR ADVANCE RULING AGAINST THE ASSESSEE ON THIS ISSUE, THE AO TREATED IT AS A R EVENUE RECEIPT AND ACCORDINGLY ADDED THE SAME TO THE TOTAL INCOME. THE LD. CIT(A) UPHE LD THE ASSESSMENT ORDER IN THIS ISSUE. THE ASSESSEE IS AGGRIEVED AGAINST THE ACTION OF THE LD. CIT(A) IN THIS REGARD. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT SIMILAR ISSUE HAS BEE N DECIDED BY THE TRIBUNAL IN ASSESSEE S FAVOUR BY RELYING ON THE SUPREME COURT JUDGM ENT RENDERED IN ASSESSEE S OWN CASE OVER TURNING THE VIEW TAKEN BY THE A UTHORITY FOR ADVANCE RULING ON THE QUESTION OF TAXABILITY OF THE ADVANCE AMOUNT OF DEPRECIATION. T HE LD. AR , ON BEING CALLED UPON TO EXPLAIN THE NATURE OF THIS AMOUNT , STATED THAT THE EXCESS AMOUNT OF SALE RECEIVED FOR FEW EARLIER YEARS, ALSO INCLUDING THE YEAR IN QUESTION, IS L I ABLE TO TAX LATER ON UNDER CERC SCHEME . IN VIEW OF THE ORDERS PASSED BY THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARL IER YEAR S ON THIS ISSUE , W E HOLD THAT THE A DVANCE AGAINST DE PRECIATION CANNOT BE TREATED AS A R EVENUE RECEIPT. HOWEVER, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THAT THE EXCESS AMOUNT RECEIVED IN EARLIER YEARS, W HICH GOT IMMUNED FROM TAXATION IN SUCH EARLIER YEARS, HAS BEEN PROPERLY OFFERED FOR TAXATION IN THE CURRENT YEAR, IF IT SO FALLS FOR TAXATION UNDER THE SCHEME. 12. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AND THAT OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ASSESSMENT YEAR 2008 - 09 ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 7 13 . THE FIRST ISSUE IN THIS D EPARTMENTAL APPEAL IS AGAINST THE DELETION OF ADDITION ON ACCOUNT OF A DVANCE AGAINST DE PRECIATION AMOUNTING TO RS. 57,27, 2 5 ,0 00/ - . IT IS OBSERVED THAT CONTRARY TO THE VIEW TAKEN BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2006 - 07 , IN TH E CURRENT YEAR THE LD. FIRST APPELLATE AUTHORITY PROCEEDED TO DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE . AS THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTATIS MU TAN DIS SIMI LAR TO THOSE FOR THE ASSESSMENT YEAR 2006 - 07 , WE HOLD THAT THE AMOUNT OF A DVANCE AGAINST DE PRECIATION CANNOT BE CHARGED TO TAX UNDER THE NORMAL PROVISIONS OF THE ACT . SIMILAR TO THE DIRECTION GIVEN BY US FOR THE A.Y. 2006 - 07 ABOVE, WE DIRECT THE ASSESSI NG OFFICER TO VERIFY THAT THE EXCESS AMOUNT RECEIVED IN EARLIER YEARS, WHICH GOT IMMUNED FROM TAXATION IN SUCH EARLIER YEARS, HAS BEEN PROPERLY OFFERED FOR TAXATION IN THE CURRENT YEAR, IF IT SO FALLS FOR TAXATION UNDER THE SCHEME. 14 . NEXT GROUND T AKEN BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS. 26,84,24,189/ - ON ACCOUNT OF P ROVISION FOR GRATUITY, LEAVE ENCASHMENT, POST RETIR EMENT, MEDICAL BENEFITS U/S 115 JB OF THE ACT. AS THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE SIMILAR TO THOSE OF THE REVENUE S APPEAL FOR THE A.Y. 2006 - 07, FOLLOWING THE VIEW TAKEN HEREINABOVE , WE HOLD THAT THERE IS NO WARRANT FOR MAKING ANY SUCH ADDITION IN THE COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. HOWEVER, IT IS MADE CLEAR THAT IN THE COMPUTATION OF TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT, SUCH PROVISION CAN BE ALLOWED ONLY TO THE EXTENT OF PAYMENT MADE BEFORE THE DUE DATE AS PER SECTION 139(1) OF THE ACT. 15 . THE NEXT GROUND TAKEN BY THE REVENUE IS AGAINST THE DELETION OF ADDITION ON ACCOUNT OF D EPRECIATION ON LAND AMORTIZED FOR THE PURPOSES OF BOOK PROFIT U/S 115JB OF THE ACT. ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 8 16 . THE FACT S OF THIS GROUND ARE ADMITTEDLY SIMILAR TO THOSE FOR THE ASSESSMENT YEAR 2006 - 07. FOLLOWING THE VIEW TAKEN HEREINABOVE , WE UPHOLD THE IMPUGN ED ORDER AND DISMISS THIS GROUND OF APPEAL. 17 . THE N EXT GROUND IS AGAINST THE DELETION OF ADDITION OF RS. 22,99,80,552/ - ON ACCOUNT OF PROVISION FOR LOSS IN HEDGED TRANSACTION FOR THE PURPOSES OF COMPU T A TION OF BOOK PROFIT U/S 115 JB OF THE ACT AND AL SO THE INCOME UNDER THE NORMAL PROVISIONS OF THE ACT . 18 . BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE PROVIDED FOR A LOSS OF RS. 22. 99 CRORE ON DERIVATIVE EXPOSU R E. O N BEING CALLED UPON T O EXPLAIN AS TO WHY THIS PROVISION BE NOT ADD ED IN COMPUTATION OF BOOK PROFIT AND ALSO IN THE NORMAL COMPUTATION OF INCOME, THE ASSESSEE STATED THAT IT AVAILED LOAN FACILITIES FROM S YNDICATE OF OVERSEAS B ANKERS , WHICH WERE SANCTIONED UNDER THE AUTOMATIC ROUTE OF RBI S EXTERNAL COMMERCIAL BORROWING ( ECB) . THE ASSESSEE ENTERED INTO HEDGIN G /S WAP AGREEMENT WITH BAR CLAYS BANK AND S TANDARD CHARTERED B ANK TO COVER/ PROTECT FROM MARKET VO LATILITY IN SPOT EXCHANGE CURRENCY RATES FOR PAYMENT OF INTEREST AND RE - PAYMENT OF PRINCIPAL AMOUNT OF LOAN IN FOREIGN CURR ENCY. THE DIFFERENTIA L AMOUNT , BEING THE ADVERSE IMPACT ON THE COMPANY ON ACCOUNT OF TOTAL HEDGED AMOUNT , WORKED OUT AT RS. 22.99 CRORE , WHICH WAS CLAIMED AS DEDUCTION. THE ASSESSING OFFICER DID NOT GET CONVINCED WITH THE ASSESSEE S SUBMISSION S IN THIS RE GARD AND HELD THAT THE SAME WAS NOT AN ASCERTAINED LIABILITY AND HENCE LIABLE TO BE ADDED IN THE COMPUTATION OF BOOK PROFIT AS WELL AS NORMAL COMPUTATION OF TOTAL INCOME . THE LD. CIT(A) A GR E ED WITH THE ASSESSEE S CONTENTION S AND GRANTED DEDUCTION FOR THE P ROVISION FROM THE COMPU T A TION OF TOTAL INCOME UNDER THE NORMAL PROVISIONS AS WELL AS BOOK PROFIT UNDER MAT . THE REVENUE IS AGGRIEVED AGAINST THE CIT(A) S ACTION IN THIS REGARD . ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 9 19 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATE RIAL ON RECORD , IT IS SEEN FROM THE IMPUGNED ORDER THAT THE LOAN WAS TAKEN AS A GENERAL PURPOSE LOAN AND NOT FOR PURPOSE OF ACQUISITION OF ANY ASSET . THIS FINDING RETURNED BY THE LD. CIT(A) REMAINED UNCONTROVERTED BY THE LD. DR. AS THE LOAN WAS TAKEN NOT FOR ACQUISITION OF ANY CAPITAL ASSET BUT ON R EVENUE ACCOUNT , THE LOSS SUFFERED ON HEDGING FOR PAYMENT OF INTEREST AND RE - PAYMENT OF PR INCIPAL AMOUNT OF LOAN IN FOREIGN CURRENCY IS DEDUCT I BLE AS AN ASCERTAINED LIABILITY IN VIEW OF THE ANALOGY FROM THE J UDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. WOOD WARD GOVERNER INDIA PVT. LTD. ( 2009 ) 312 ITR 254 ( SC ). IN THIS VIEW OF THE MATTER, SUCH AMOUNT, BEING A PROVISION FOR AN ASCERTAINED LIABILITY, IS DEDUCTIBLE IN THE COMPUTATION OF INCOME, BOT H UNDER THE NORMAL PROVISIONS AND ALSO U/S 115JB OF THE ACT . WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS SCORE . THIS GROUND FAILS. 20 . THE N EXT GROUND IS AGAINST DELETION OF DISALLOWANCE OF RS.7.01 CRORE U/S 14 A OF THE ACT IN THE C OMPU T A TION OF INCOME UNDER THE NORMAL PROVISIONS AND ALSO UNDER THE MAT PROVISIONS. BRIEFLY, STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE MADE I NVESTMENTS IN CERTAIN S ECURITIES YIELDING EXEMPT INCOME. THIS I NVESTMENT, AS PER THE ASSESSING OFFICER , STOOD AT RS. 1014.78 CRORES AS AT THE END OF THE YEAR , FROM WHICH THE ASSESSEE RECEIVED EXEMPT DIVIDEND INCOME OF RS. 36.06 CRORE. THE ASSESSING OFFICER COMPUTED DISALLOW ANCE U/S 14A BY APPLYING RULE 8 D . SUCH COMPUTATION OF DISALLOWANCE AS PER RULE 8D C AME TO RS. 24.90 CRORE. SINCE, THE ASSESSEE HAD VOLUNTARILY MADE DISALLOWANCE OF RS. 17.89 CRORE ON THIS SCORE , THE ASSESSING OFFICER MADE, FURTHER DISALLOWANCE OF RS. 7.01 CRORE UNDER THE NORMAL PROVISI ONS AND ALSO UNDER SECTION 115 JB OF THE ACT . THE LD. CIT(A) DELETED THE DISALLOWANCE. ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 10 21 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD IT CAN BE SEEN FROM THE ASSESSEE S BALANCE SHEET AS ON 3 1 .0 3 .2008 THAT THE AMOUNT OF S HARE CAPITAL WITH R ESERVES AND SURPLUS ST ANDS AT RS. 17,275.83 CRORE. AS AGAINST TH IS, THE A SSESS ING OFFICER HAS HIMSELF DET E R MINED THE AMOUNT INVESTED IN SECURITIES YIELDING EXEMPT INCOME AT RS . 1014.78 CRORE. THUS, IT CAN BE SEEN THAT THE AMOUNT OF SHARE - HOLDERS FUNDS IS FAR IN EXCESS OF THE AM OUNT OF I NVESTMENT YIELDING EXEMPT INCOME. RECENTLY, THE HON BLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. ( 2014 ) 366 ITR 505 (BOM) HAS HELD THAT NO DISALLOWANCE OF INTEREST CAN BE MADE U/S 14A IF THE ASSESSEE S OWN CAPITAL IS MORE THAN THE INVESTMENTS F ETCHING EXEMPT INCOME. SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE GUJARAT HIGH COURT IN CIT VS. S UZLON ENERGY LTD. ( 2013 ) 354 ITR 630 ( GUJ ) . IN VIEW OF THESE PRECEDENTS , IT BECOMES OSTENSIBLE THAT THERE CAN BE NO QUESTION OF DISALLOWANCE OF INTE REST U/S 14 A IN THIS CASE BECAUSE THE AMOUNT OF SHARE - HOLDERS FUND IS MUCH HIGHER THA N THE AMOUNT OF I NVESTMENTS YIELDING EXEMPT INCOME. IF WE PERUSE THE COMPUTATION OF DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER RULE 8D, IT CAN BE SEEN THAT THE DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSE IS TO THE TUNE OF RS.19.65 CRORE . IF SUCH DISALLOWANCE IS DELETED , THE REMAINING AMOU NT OF DISALLOWANCE COMES TO RS. 5.25 CRORES. IT IS DISCERNIBLE THAT THE A SSESSEE ITSELF VOLUNTARILY MADE DISALLO WANCE OF RS. 17.89 CRORE U/ S 14 A . AS TH E REMAINING AMOUNT DISALLOWABLE AS PER RULE 8D IS LESS THAN THE AMOUNT SUO MOTU DISALLOWED BY THE ASSESSEE, THERE IS NO NEED FOR MAKING ANY FURTHER DISALLOWANCE. THE VIEW TAKEN BY THE LD. CIT(A) IN DELETING THE ADDITION U/S 14 A TO THE EXTENT O F RS. 7.01 CRORE UNDER THE NORMAL PROVISION AS WELL AS BOOK PROFIT U/S 115 JB , IS ERGO UPHE LD. THESE TWO GROUNDS , THEREFORE , STAND DISMISSED. ITA NO. 1402 /D/20 1 2,1956/DEL/2009 & 1437/DEL/2009 11 22 . IN THE RESULT , THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. OR DER PRONOUN CED IN THE OPEN COURT ON 17.10.2014 SD/ - ( R.P.YADAV ) JUDICIAL MEMBER SD/ - ( R.S.SYAL ) ACCOUNTANT MEMBER DATED: 17.10.2014 B .RUKHAIYAR COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. BY ORDER DEPUTY REGISTRAR *