Arvind Brands Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 1509/AHD/2012

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2742 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 25-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Business expenditure; Earning of tax free income; Proportionate interest; Question of law
• Section: 14A; 115JB

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 1509/AHD/2012 ( ASSESSMENT YEAR : 2009-10) ARVIND BRANDS LTD. ARVIND MILLS PREMISES, NARODA ROAD, AHMEDABAD 380025 / VS. DCIT CIRCLE-1, AHMEDABAD ( APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO.1639/AHD/2012 ( ASSESSMENT YEAR : 2009-10) DCIT CIRCLE-1, AHMEDABAD / VS. ARVIND BRANDS LTD. ARVIND MILLS PREMISES, NARODA ROAD, AHMEDABAD 380025 ./ ./ PAN/GIR NO. : AAACE4173D ( APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI VARTIK CHOKSI, A.R. / REVENUE BY : SHRI S. K. DEV, SR. D.R. DATE OF HEARING 22/10/2018 !'# / DATE OF PRONOUNCEMENT 02/11/2018 / O R D E R ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 2 - PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AS WELL AS BY REVENUE AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME TAX (APPEALS)-6, AHMEDABAD (CIT(A) IN SHOR T), DATED 18.05.2012 EMANATING FROM THE ASSESSMENT ORDER DATE D 27.12.2011 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3 ) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMEN T YEAR 2009- 10. 2. WE SHALL FIRST TAKE ASSESSEES APPEAL IN ITA NO. 1509/AHD/2012 FOR ADJUDICATION PURPOSES. 3. THE ASSESSEE HAS FILED CONCISE GROUND WHICH READ S AS UNDER: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOL DING (THOUGH PARTLY, AFTER DIRECTING REDUCTION IN THE QU ANTUM OF THE DISALLOWANCE BY ORDERING RECTIFICATION OF ERRORS IN THE COMPUTATION THEREOF) THE DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSE (RS.81,60,822 MADE IN THE ASSESSMENT ORDER WHICH HAS BEEN DIRECTED TO BE REWORKED AFTER RECTIFICATIO N OF ERRORS) AND OF ADMINISTRATIVE EXPENDITURE OF RS.43,119 (RED UCED FROM THE DISALLOWANCE OF RS.8,01,260 IN THE ASSESSMENT O RDER, AFTER RECTIFICATION OF ERROR) MADE BY THE LEARNED ASSESSI NG OFFICER U/S. 14A READ WITH RULE 8D. 2.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOL DING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.26,40,000 MADE BY THE LEARNED ASSESSING OFFICER U/S.36(1)(III) (ALBEI T, SUBJECT TO A DIRECTION FOR REDUCING THE QUANTUM THEREOF AFTER TAKING INTO ACCOUNT THE ACTUAL PERIOD FOR WHICH THE INTEREST FR EE ADVANCE TO THE SISTER CONCERN IN QUESTION WAS GIVEN AS AGAI NST THE ENTIRE YEAR ADOPTED BY THE LEARNED ASSESSING OFFICE R). 2.2 WITHOUT PREJUDICE TO THE FOREGOING, IN LAW AN D IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEAR NED CIT(A) HAS GROSSLY ERRED IN FAILING TO APPRECIATE THAT IT WAS NOT OPEN TO HIM TO JUSTIFY UPHOLDING OF THE IMPUGNED DISALLO WANCE AFTER ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 3 - DISMISSING THE EMINENT MERITS OF THE APPELLANT'S CA SE CONSISTING, INTER ALIA, OF THE APPELLANT HAVING ADE QUATE INTEREST-FREE FUNDS, BY SUGGESTING THAT INTEREST-FR EE CURRENT LIABILITIES BEING WORKING CAPITAL, CANNOT BE CONSID ERED FOR GIVING LOANS AND ADVANCES; THAT THIS WAS FOR THE SI MPLE REASON THAT ONLY A CURSORY LOOK AT THE APPELLANT'S BALANCE SHEET SHOWED ACTUAL USE OF INTEREST-FREE WORKING CA PITAL FUNDS FOR MAKING ADVANCES. 2.3 WITHOUT PREJUDICE TO THE FOREGOING, IN LAW A ND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEAR NED CIT(A) HAS GROSSLY ERRED IN FAILING TO APPRECIATE THAT EVE N IF ANY DISALLOWANCE OF INTEREST EXPENSE U/S. 36(1)(III) WA S WARRANTED, THE QUANTUM THEREOF WAS REQUIRED TO BE A RRIVED AT @ 2.8% P.A. WHICH WAS THE AVERAGE COST OF BORROWING S OF THE APPELLANT, INSTEAD OF @12% P.A. ADOPTED BY THE LEAR NED ASSESSING OFFICER ON AN AD HOC BASIS. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOL DING THE LEARNED ASSESSING OFFICER'S ACTION OF ADDING THE AM OUNT OF RS.89,62,082 DISALLOWED U/S. 14A (WHILE COMPUTING T HE APPELLANT'S TOTAL INCOME UNDER THE NORMAL PROVISION S OF THE INCOME-TAX ACT, 1961) WHILE COMPUTING THE APPELLANT 'S BOOK PROFIT U/S. 115JB. 4. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE STRAIGHTWAY ADVERTED OUR ATTENTION TO THE COMPUTATION OF INCOME FOR AY 2009-10 PLACED AT PAGE NO.54 OF TH E PAPER BOOK AND POINTED OUT THAT THE ASSESSEE HAS SUO MOTO DISALLOWED INTEREST EXPENDITURE OF RS.73,90,315/- AS ATTRIBUTABLE TO IN VESTMENT IN SHARES WHICH IS GIVING RISE TO THE TAX FREE INCOME IN QUESTION. THE LEARNED AR THEREAFTER SUBMITTED THAT TAX FREE DIVID END INCOME EARNED BY THE ASSESSEE STANDS AT RS.17,40,000/- WHI CH IS FAR BELOW THE SUO MOTO DISALLOWANCE ALREADY OFFERED BY ASSESSEE. IN THE CIRCUMSTANCES, INVOCATION OF RULE 14A AND RULE 8D T O COMPUTE DISALLOWANCE IN EXCESS OF TAX FREE DIVIDEND EARNED IS NOT JUSTIFIED AT ALL. FOR THIS PROPOSITION, THE LEARNED AR FOR T HE ASSESSEE SUBMITTED THAT THERE ARE SEVERAL JUDICIAL PRONOUNCE MENTS AVAILABLE FOR THE PROPOSITION THAT SECTION 14A OF THE ACT DIS ALLOWANCE COULD ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 4 - NOT BE KICKED IN WHERE THERE WAS NO EXEMPT INCOME E ARNED BY THE ASSESSEE. BY THE SAME TOKEN, THE DISALLOWANCE UNDE R S.14A OF THE ACT CANNOT ORDINARILY EXCEED EXEMPT INCOME UNDER S. 14A OF THE ACT. WITHOUT PREJUDICE AND AS AN ALTERNATE CONTENT ION, THE LEARNED AR FOR THE ASSESSEE REFERRED TO PAGE NO.14 OF THE P APER BOOK AND SUBMITTED IN VIEW OF THE DISALLOWANCE OF INTEREST E XPENDITURE SUO MOTO ALREADY MADE, THE ADDITIONAL DISALLOWANCE UNDER S.1 4A OF THE ACT WORKS OUT TO RS.2,72,066/- ONLY. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE AO AND CBDT CIRCULAR PREVAILING IN THIS REGARD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE SUBSTANTIVE QUESTION ARISES FOR DETERMINATION IS WH ETHER IT IS JUSTIFIED FOR REVENUE TO DISALLOW THE EXPENDITURE R ELATABLE TO EXEMPT INCOME IN EXCESS OF TAX FREE INCOME BY INVOK ING SECTION 14A OF THE ACT. IN THIS REGARD, WE TAKE NOTE OF TH E CBDT CIRCULAR NO.5/2014 DATED 11.02.2014 WHICH SEEKS TO EMPHASIZE THAT ALL EXPENSES PERTAINING TO AN EXEMPT INCOME IS REQUIRED TO BE DISALLOWED NOTWITHSTANDING THE FACT THAT NO CORRESP ONDING TAX FREE INCOME HAS BEEN EARNED DURING THE FINANCIAL YEAR. HOWEVER, DESPITE THE CIRCULAR, VARIOUS COURTS HAVE HELD THAT SECTION 14A DISALLOWANCE CANNOT BE KICKED IN WHEN THERE WAS NO EXEMPT INCOME EARNED BY THE ASSESSEE. HONBLE DELHI HIGH COURT I N PCIT VS IL&FS ENERGY DEVELOPMENT COMPANY LTD. (2017) 84 TAX MAN.COM 186(DELHI) AND THE HONBLE MADRAS HIGH COURT IN CIT V. CHETTINAD LOGISTICS (P.) LIMITED (2017) 80 TAXMANN.COM 221(MA DRAS) HAVE EXPRESSED A CLEAR DISAGREEMENT WITH CBDT CIRCULAR A ND HELD THAT WHERE THERE IS NO EXEMPT INCOME IN RELEVANT YEAR TH ERE CANNOT BE A DISALLOWANCE OF EXPENDITURE UNDER S.14A OF THE ACT. SIMILAR ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 5 - PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF CORRTECH ENERGY (P.) LTD (2014) 45 T AXMANN.COM. 116 (GUJ) AND PR.CIT VS. INDIA GELATINE AND CHEMICA LS LTD. (2016) 66 TAXMANN.COM 356 (GUJ). THE AFORESAID JUDICIAL F IAT WAS REITERATED BY THE HONBLE DELHI HIGH COURT IN THE C ASE OF JOINT INVESTMENTS PVT. LTD. VS. CIT REPORTED IN 372 ITR 6 92 (DELHI) WHEREIN HONBLE DELHI HIGH COURT HAS CATEGORICALLY RULED THAT DISALLOWANCE UNDER S.14A OF THE ACT CANNOT EXCEED T HE AMOUNT OF TAX EXEMPT INCOME. NOTABLY, THE SLP FILED AGAINST THE DECISION OF HONBLE MADRAS HIGH COURT IN CHETTINAD LOGISTICS (S UPRA) HAS BEEN DISMISSED BY HONBLE SUPREME COURT IN CIT VS. CHETT INAD LOGISTICS (P.) LTD. (2018) 95 TAXMANN.COM 250 (SC). HENCE, IN CONFORMITY WITH THE JUDICIAL PRECEDENTS, WE FIND ME RIT IN THE PLEA OF THE ASSESSEE. THE DISALLOWANCE MADE BY THE ASSES SEE SUO MOTO ALREADY EXCEEDS THE EXEMPT INCOME AND THEREFORE, NO FURTHER DISALLOWANCE UNDER S. 14A R.W. RULE 8D OF THE INCOM E TAX RULES IS JUSTIFIED IN CONSONANCE WITH THE JUDICIAL PRECEDENT S. 7. IN THE RESULT, GROUND NO.1 OF THE ASSESSEES APP EAL IS ALLOWED. 8. GROUND NO.2 CONCERNS DISALLOWANCE OF INTEREST UN DER S.36(1)(III) OF THE ACT. THE LEARNED AR FOR THE AS SESSEE DOES NOT SEEK TO SERIOUSLY PURSUE THE GRIEVANCE RAISED IN TH IS REGARD OWING TO ITS SMALLNESS IN THE CONTEXT. THUS, GROUND NO.2 IS DISMISSED AS NOT PRESSED. 9. GROUND NO.3 CONCERNS ADJUSTMENT TOWARDS DISALLOW ANCE UNDER S.14A OF THE ACT FOR THE PURPOSES OF COMPUTATION OF BOOK PROFIT UNDER S.115JB OF THE ACT. ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 6 - 10. AS POINTED OUT ON BEHALF OF THE ASSESSEE, THE I SSUE IS SQUARELY COVERED IN THE GROUP CASE OF THE ASSESSEE IN ARVIND LTD. VS. DCIT ITA NO.1816/AHD/2011 & ANR. ORDER DATED 08.03.2018. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CO-ORDI NATE BENCH IS QUOTED HEREUNDER FOR READY REFERENCE: 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ALS O SEVERAL JUDICIAL PRECEDENTS CITED. IN THE PRESENT CASE, WE ARE CON CERNED WITH THE LIMITED CONTROVERSY AS TO WHETHER, FOR THE PURPOSES OF COMPUTATION OF BOOK PROFIT UNDER S.115JB, THE AO IS ENTITLED TO INCREASE BOOK PROFIT BY THE EQUIVALENT AMOUNT OF DISALLOWANCES A S FOUND ATTRIBUTABLE TO EXEMPT INCOME UNDER NORMAL PROVISIO NS OR NOT. WHILE IT IS THE CASE OF THE ASSESSEE THAT IN VIEW O F LONG LINE OF JUDICIAL PRECEDENTS, SUCH ADJUSTMENT IN BOOK PROFI T IS NOT PERMISSIBLE, IT IS THE CASE OF REVENUE THAT IN VIEW OF CODIFIED LAW IN THIS REGARD, THE BOOK PROFIT UNDER 115JB HAS BEEN RIGHTLY INCREASED BY THE REVENUE. 6. WE NOTICE THAT ISSUE IS EVOLVED AND DEVELOPED BY CERTAIN JUDICIAL PRECEDENTS. WE FIND AT THE FIRST INSTANCE THAT THE IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ALEMBIC LTD. (SUPRA) WHERE THE SUBSTANTIAL QUESTION OF LAW ON THE POINT AS TO WHETHER ADJUSTME NT MADE ON ACCOUNT OF DISALLOWANCE UNDER S.14A OF THE CAN BE S IMILARLY MADE FOR THE PURPOSES OF COMPUTATION OF BOOK PROFIT UN DER S.115JB OF THE ACT WAS ANSWERED AGAINST THE REVENUE AND IN FAV OUR OF THE ASSESSEE. WE ALSO TAKE NOTE OF DECISION OF THE SP ECIAL BENCH RENDERED IN ACIT VS. VIREET INVESTMENT PVT. LTD. & ANR. 165 ITD 27 (DELHI)[SB] WHERE IT WAS HELD THAT THE AO WAS NOT E NTITLED TO TINKER WITH BOOK PROFITS CONTEMPLATED UNDER S.115JB TOWARD S DISALLOWANCE MADE UNDER S.14A OF THE ACT. WE SIMILARLY FIND THA T JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN CIT VS. BENGAL FINANCE AND INVESTMENTS PVT. LTD. IN ITA NO.337 OF 2013 ORDER D ATED 10/02/2015 ALSO COMPLEMENTS THE ISSUE. THUS, SEEN ON THE ANVI L OF THE JUDICIAL FIAT AVAILABLE SQUARELY ON THE ISSUE, WE ARE DISPOS ED TO ASSIGN MERITS TO THE CONTENTIONS ON BEHALF OF THE ASSESSEE . AT THIS JUNCTURE, WE PAUSE TO NOTE THE CONCERN OF REVENUE SEEKING TO PLEAD POSSIBLE REDUNDANCY OF CLAUSE(F) TO EXPLANATION TO S.115JB I N THE EVENT OF DISAGREEMENT WITH THE ACTION OF AO. WE ARE ALIVE T O SUCH CONCERNS. HOWEVER, AS NOTED, WE ARE GOVERNED BY THE SUPERIOR WISDOM AVAILABLE IN THIS REGARD. HENCE, REMEDY TO REVENUE , IF ANY, PERHAPS LIES ELSEWHERE. ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECISIONS GOVERNING THE FIELD, WE DIRECT THE AO TO DELETE THE ADJUSTMENTS MADE ON ACCOUNT OF ESTIMATED DISALLOWANCE DETERMINED UND ER S.14A OF THE ACT WHILE COMPUTING BOOK PROFIT UNDER U/S.115JB O F THE ACT. ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 7 - 11 IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH ON THE IDENTICAL ISSUE, THE AO IS DIRECTED TO DELETE THE A DJUSTMENTS MADE ON ACCOUNT OF DISALLOWANCE UNDER S.14A OF THE ACT FOR THE PURPOSES OF COMPUTATION OF BOOK PROFIT UNDER S.115JB OF THE ACT . CONSEQUENTLY, GROUND NO.3 OF THE ASSESSEES APPEAL IS ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 13. WE SHALL NOW TURN TO THE REDRESSAL OF REVENUES APPEAL IN ITA NO.1639/AHD/2012. 14. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO RECOMPUTED DISALLOWANCE U/S 14A R.W.R. 8D(2)(II) BY CONSIDERING INTEREST AT RS.90.6 LACS INSTEAD OF RS. 164.50 LACS. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO RESTRICT THE DISALLOWANCE U/S 14A R.W.R. 8D(2)(III) TO THE EXTENT OF ADMINISTRATIVE EXPENSES OF RS.43,119/-. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE DISALLOWANCE U/S 14A R.W.R. 36(1)(III) ATTRIBUTABLE TO THE PERIOD OF INTEREST FREE LOAN. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO BOOK PROFIT U/S 115JB TO THE EXTENT OF CONFIRMED DISALLOWANCE U/S14A OF THE ACT. 15. GROUND NOS. 1 & 2 OF THE REVENUES APPEAL CONCE RN DISALLOWANCE UNDER S.14A OF THE ACT. IN VIEW OF TH E CONCLUSION DRAWN IN THE PRECEDING PARAGRAPHS THAT THE DISALLOW ANCE UNDER S.14A OF THE ACT OUGHT NOT TO EXCEED THE CORRESPOND ING EXEMPT INCOME, GROUND NOS. 1 & 2 OF THE REVENUES APPEAL A RE DISMISSED. ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 8 - 16. GROUND NO.3 OF THE REVENUES APPEAL CONCERNS RE LIEF GIVEN BY THE CIT(A) WHILE COMPUTING THE DISALLOWANCE UNDE R S.36(1)(III) OF THE ACT. 17. THE RELEVANT PARA DEALING WITH THE ISSUE BY THE CIT(A) READS AS UNDER: 3. THE GROUNDS NO.3 & NO.4 IS AGAINST DISALLOWANCE OF RS. 26,40,000/- U/S36(1)(III) OF THE I.T.ACT. 3.1 THE A.O. HAS STATED IN THE ASSESSMENT ORDER DTD .27/12/2011 WHICH IS AS UNDER: 'THE ASSESSEE HAS DEBITED A SUM OF RS. 1,64,50,000/ - TOWARDS INTEREST EXPENSES. IF IS SEEN THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOAN OF 2.20 CRORES TO M/S ASMAN INVESTMENT LTD. AN ASSOCIATE CONCERN. LOOKING TO THE FACTS OF THE CASE, THE ASSE SSEE VIDE ORDER SHEET ENTRY DATED 21/10/20! 1 WAS QUERIED REGARDING THE ALLOWABILITY OF FULL AMOUNT OF INTEREST AS CLAIMED BY IF, AS IT HAD DIVERTED INTEREST BEARING FUNDS TO ITS SISTER CONCE RNS WITHOUT INTEREST FOR NON BUSINESS PURPOSES. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 15/12/2 011 SUBMITTED AS UNDER:- '7. INTEREST FREE ADVANCE TO ASMAN INVESTMENT S LTD: YOUR GOOD SELVES HAVE CALLED UPON TO SUBMIT JUSTIFICATION WITH RESPECT TO INTEREST FREE ADVANCE S GIVEN TO ASMAN INVESTMENTS LTD. DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE COMPANY HAD ADVANCED RS . 2.20 CR TO ASMAN INVESTMENTS LTD., WHICH IS ITS GRO UP COMPANY AND THE FUNDS WERE ADVANCED FOR SHORT TERM, HENCE INTEREST IS NOT CHARGED. THE SAID LOAN IS ADVANCED FOR BUSINESS PURPOSE. MOREOVER, THE COMPANY HAS ADVANCED THE LOANS PUTS I TS INTERNAL INTEREST FREE FUNDS, THE BREAK-UP OF WHICH IS AS UNDER: PARTICULARS 31.03.2009 SHARE CAPITAL RS. 0.72 CR WORKING CAPITAL RS.50.15 CR TOTAL RS.50.87 CR ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 9 - FURTHER, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS SOLD ITS FIXED ASSETS AND HAS EARNED TOTAL SAFES CONSIDERATION OF RS. 1.75 CR. IT WAS HOWEVER EXPLAINED THAT THE BANK ACCOUNT WAS MIXED ACCOUNT, HENCE DIRECT NEXUS COULD NOT BE PROVED. TH EREFORE, THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 15/12/20 J1 W AS QUERIED REGARDING THE ALLOWABILITY OF FULL AMOUNT OF INTERE ST AS CLAIMED BY IT, AS IT HAD DIVERTED INTEREST BEARING FUNDS TO IT S SISTER CONCERNS WITHOUT INTEREST FOR NON BUSINESS PURPOSES. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 23/12/2 01] SUBMITTED AS UNDER:- 'YOUR GOOD SELVES HAVE CALLED UPON TO PROVIDE AN EXPLANATION AS TO WHY INTEREST FREE ADVANCES ARE GIVEN TO ASMAN INVESTMENTS PVT. LTD. IN THIS REGARDS, IF IS SUBMITTED THAT VIDE SUBMISSION DATED 15/12/2011, THE ASSESSEE COMPANY HAS ALREADY SUBMITTED REPLY TO THIS POINT RAISED BY YOUR GOOD SELVES.' THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCES THAT THE FU NDS WERE GIVEN FROM INTEREST FREE FUNDS OF THE COMPANY. INTE REST ON BORROWED CAPITAL IS ALLOWED AS A DEDUCTION FROM BUS INESS ONLY IF IF SATISFIES THE CONDITION THAT IF IS FOR T HE PURPOSE OF BUSINESS OR PROFESSION. NO EVIDENCE HAS BEEN FURNIS HED EVEN REGARDING THE BUSINESS NEXUS OR PURPOSE OF GIVING T HIS INTEREST FREE : LOAN ON SHORT TERM BASIS. THUS THE ASSESSEE ON ONE HAND BORROWS MONEY ON WHICH IT PAYS INTEREST, A ND ON THE OTHER DIVERTS THIS MONEY TO ITS ASSOCIATE CONCERNS FOR NON BUSINESS PURPOSES WITHOUT CHARGING ANY INTEREST. TH US, THE ACCOUNTS OF THE ASSESSEE STANDS DEBITED AND THE ASS ESSEE CLAIMS DEDUCTION OF INTEREST WHICH HAS NOT BEEN USE D FOR THE PURPOSE OF BUSINESS, WHICH IS CLEARLY NOT ALLOWABLE . WITHOUT PREJUDICE, EVEN IF THE CONTENTION OF THE ASSESSEE I S ACCEPTED THAT THE AMOUNT OF LOAN TO SISTER CONCERN WAS GIVEN OUT OF ITS NON INTEREST BEARING FUNDS REPRESENTING ITS CAPITAL AND RESERVES, EVEN THEN, THE CONTENTION OF THE ASSESSEE FOR ALLOWING FULL AMOUNT OF INTEREST CANNOT BE ACCEPTED . IF IS BECAUSE IF THE ASSESSEE HAD NOT ADVANCED LOANS TO I TS ASSOCIATE CONCERN FREE OF INTEREST, THE INTEREST PA ID ON LOAN TAKEN COULD HAVE BEEN SAVED TO THAT EXTENT. ATTENTION IS INVITED TO THE DECISION OF CIT VS ABHISHEK INDUSTRIES LTD 286 ITR 1(P&H) , WHEREIN THE HON'BLE COURT HAS HELD AS UNDER: ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 10 - BUSINESS EXPENDITUREINTEREST ON BORROWED CAPITALI NTEREST- FREE ADVANCES TO SISTER CONCERNCONTENTION OF THE A SSESSEE THAT LOANS WERE ADVANCED TO THE SISTER-CONCERNS OUT OF COMPANY'S OWN FUNDS AND NOT OUT OF BORROWED FUNDS A ND THEREFORE, NO PART OF INTEREST ON BORROWINGS COULD BE DISALLOWED CANNOT BE ACCEPTEDBESIDES THE SUBSTANTI AL AMOUNT OF TERM LOAN WHICH IS REQUIRED TO BE REPAID AS PER THE FIXED SCHEDULE, THERE WAS SUBSTANTIAL AMOUNT OF WOR KING CAPITAL LOAN WHICH BEARS INTEREST ONLY TO THE EXTEN T OF DEBIT BALANCE IN THE ACCOUNTIN CASE THE ASSESSEE HAD NOT ADVANCED LOANS TO ITS SISTER-CONCERNS FREE OF INTER EST, THE INTEREST PAID ON WORKING CAPITAL LOAN COULD HAVE CE RTAINLY BEEN SAVED TO THAT EXTENTIF IN THE PROCESS OF EXAM INATION OF GENUINENESS OF DEDUCTION OF INTEREST, IT TRANSPIRES THAT THE ASSESSEE HAS ADVANCED CERTAIN FUNDS TO SISTER-CONCE RNS OR ANY OTHER PERSON WITHOUT ANY INTEREST, HEAVY ONUS LIES ON THE ASSESSEE TO JUSTIFY DEDUCTION OF INTEREST PAID ON L OANS RAISED BY IT TO THAT EXTENT THEORY OF DIRECT NEXUS OF THE FUNDS BETWEEN BORROWINGS OF THE FUNDS AND DIVERSION THERE OF FOR NON-BUSINESS PURPOSES CANNOT BE ACCEPTEDRATHER, TH ERE SHOULD BE NEXUS OF USE OF BORROWED FUNDS FOR THE PU RPOSE OF BUSINESS TO CLAIM DEDUCTION UNDER S. 36(1)(III) SU BMISSION THAT THE OBSERVATION TO THE EFFECT THAT IF THE AMOU NT IS ADVANCED FROM A MIXED ACCOUNT OR SHARE CAPITAL OR S ALE PROCEEDS OR PROFITS, ETC., THE SAME WOULD NOT BE TE RMED AS DIVERSION OF BORROWED CAPITAL OR THAT THE REVENUE H AD NOT BEEN ABLE TO ESTABLISH NEXUS OF THE FUNDS ADVANCED TO THE SISTER - CONCERNS WITH THE BORROWED FUNDS IS NOT TE NABLE THEREFORE, INTEREST PAID BY THE ASSESSEE TO THE EXT ENT THE AMOUNTS WERE DIVERTED TO SISTER-CONCERNS ON INTERES T-FREE BASIS ARE TO BE DISALLOWED INTEREST ON BORROWED CAPITAL IS ALLOWED AS A DEDUCT ION FROM BUSINESS ONLY IF IT SATISFIES THE CONDITION THAT IT IS FOR THE PURPOSE OF BUSINESS OR PROFESSION. WHERE THE MONEY BORROWED WA S DERIVED FOR GIVING INTEREST FREE LOANS TO SISTER CONCERN/OTHERS , THE PROPORTIONATE INTEREST ATTRIBUTABLE TO SUCH LOANS COULD BE LEGITI MATELY DISALLOWED BY THE ASSESSING OFFICER. IT WAS SO HELD IN S.A. BU ILDERS LTD. V. CIT (2004) 269 ITR 535 (P&H). FURTHER, THIS VIEW WAS AC CEPTED IN CIT V. H.R. SUGAR FACTORY PVT. LTD. [1971] 187 ITR 363 (ALL) IN A CASE, WHERE MONEY WAS BORROWED FOR PURPOSES OF BUSINESS, BUT ADVANCED AT A CONCESSIONAL RATE TO ITS DIRECTORS, SO THAT TH E HIGH COURT UPHELD THE INFERENCE OF THE REVENUE TO DISALLOW THE AMOUNT TO THE EXTENT OF DIFFERENCE IN INTEREST RATES, THOUGH THE REVENUE WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE FUNDS ALLEGED LY DIVERTED. THE HIGH COURT POINTED OUT THAT NO BUSINESS PURPOSE WAS SERVED BY SUCH LENDING AND THAT THE AMOUNTS WERE SUBSTANTIAL AND C ANNOT BE GLOSSED OVER AND THAT THE FACT THAT THE ASSESSEE BO RROWS MONEY FOR ITS BUSINESS CANNOT BY ITSELF JUSTIFY THE DEDUCTION . THE TRIBUNAL'S ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 11 - APPROACH IN ALLOWING DEDUCTION FOR THESE REASONS WA S CHARACTERIZED BY THE HIGH COURT AS 'NOT ONLY SUPERFICIAL BUT TOO NAIVE'. WHERE THE ASSESSEE LENDS MONEY WITHOUT INTEREST, TH ERE CAN BE NO INFERENCE OF NOTIONAL INCOME BASED ON REASONABLE INTEREST, WHICH THE ASSESSEE MIGHT HAVE CHARGED FOR /ENDING TO RELA TIVES OR SISTER CONCERNS/OTHERS. BUT THEN, IT IS POSSIBLE IN SUCH C ASES, TO DISALLOW A PROPORTIONATE PART OF INTEREST PAID ON SUCH BORROWE D CAPITAL, IF ANY, TO THE EXTENT THAT THE BORROWED FUNDS ARE UTILIZED FOR INTEREST-FREE ADVANCES AND ADVANCES FOR CAPITAL GOODS. DISALLOWAN CE IS ON THE GROUND THAT IF WILL NOT BE ELIGIBLE FOR DEDUCTION A S EXPENDITURE INCURRED FOR PURPOSES OF BUSINESS. FURTHER, RELIANC E IS PLACED ON THE FOLLOWING DECISIONS:- 1. PATEL FILTER LTD. VS. CIT [2003] 264 ITR 21 (GUJ ) 2. CIT VS. VALLABH GLASS WORKS LTD. [1982] 137 ITR 389 (GUJ.) 3. CIT VS. H. R. SUGAR FACTORY PVT. LTD. [1991] 187 ITR 363 (ALL.) 4. INDIAN SAVING PRODUCTS LTD. VS. CIJ [2004] 265 I TR 250 (RAJ.) 5. CALDERN PHARMACEUTICAL PVT. LTD. VS. CIT [2004] 265 ITR 244 (KAL.) 6. CIT VS. BOMBAY SAMACHAR LTD. [1969] 74 ITR 723 (BOM.) 7. K, SOMASUNDRAM & BRO. [ J999] 238 ITR 939 (MADRA S) 8. ELMER HAVELL ELECTRICS VS. CIT [2005] 277 ITR 54 9 (DEL.) IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSEE COMPANY HAS DIVERTED INTEREST BEARING FUNDS FOR ADVANCING INTER EST FREE FUNDS OR INTEREST CHARGED AT LOWER RATE TO ITS SISTER CONCER N. IN VIEW OF THE ABOVE NARRATED FACTS AND THE JUDICIA L PRONOUNCEMENTS, THE CLAIM OF THE ASSESSEE IN RESPEC T OF INTEREST PAID ON ACCOUNT OF VARIOUS UNSECURED LOANS AND SECU RED LOANS AGGREGATING TO RS. 26,40,000/- (TAKING THE AVERAGE RATE OF 12% AT WHICH THE ASSESSEE HAS PAID INTEREST) IS HEREBY DIS ALLOWED, AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE.' 3.2 THE APPELLANT HAS SUBMITTED IN ITS WRITTE N SUBMISSION, WHICH IS AS UNDER: ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 12 - 'THE NEXT DISPUTED ISSUE PERTAINS TO DISALLOWANCE O F INTEREST EXPENDITURE TO THE EXTENT OF RS.26,40,000 MADE BY T HE ASSESSING OFFICER ON THE ASSUMPTION THAT THE ASSESS EE UTILIZED INTEREST BEARING BORROWED FUNDS FOR ADVANCING INTER EST FREE LOANS OF RS.2.20 CRORES TO M/S. ASMAN INVESTMENTS L TD. WHICH IS AN ASSOCIATE CONCERN. DURING THE COURSE OF THE A SSESSMENT PROCEEDINGS THIS ISSUE WAS RAISED BY THE ASSESSING OFFICER AND THE ASSESSEE FILED WRITTEN REPLY DATED 15.12.20 11 CONTENDING THAT THE ASSESSEE WAS HAVING INTEREST FR EE FUNDS TO THE EXTENT OF RS.52.62 CRORES WHICH FULLY COVER THE ADVANCEMENT OF A SUM OF RS.2.20 CRORES. THE ASSESSI NG OFFICER REJECTED THIS SUBMISSION, AS ACCORDING TO H IM, NO DIRECT NEXUS COULD BE ESTABLISHED BETWEEN THE INTER EST FREE FUNDS AND THE LOAN OF RS.2.20 CRORES. FURTHER, THE ARGUMENT OF THE APPELLANT-COMPANY THAT THE AFORESAID SUM WAS AD VANCED TO THE ASSOCIATE CONCERN FOR A SHORT TERM ENTIRELY FOR BUSINESS PURPOSES WAS ALSO REJECTED BY THE ASSESSING OFFICER . ACCORDINGLY, HE MADE THE IMPUGNED DISALLOWANCE OF RS.26,40,000. HE HAS ALSO REFERRED TO CERTAIN CASES WHICH ARE DIFFERENT ON FACTS. 3.2 IT IS SUBMITTED THAT ADVANCING OF INTEREST FREE LOAN TO THE ASSOCIATE CONCERN FOR A SHORT PERIOD WAS ENTIRELY F OR BUSINESS PURPOSES AND, THEREFORE, NO DISALLOWANCE CAN BE MAD E. FURTHER, THE ASSESSEE, AS EXPLAINED ABOVE, WAS IN P OSSESSION OF ADEQUATE INTEREST FREE FUNDS AND, THEREFORE, IF MUST BE ASSUMED THAT THE LOAN OF RS.2.20 CRORES CAME OUT OF THE INTEREST FREE FUNDS OF MORE THAN RS.52 CRORES. WHIL E MAKING SUBMISSIONS WITH REGARD TO DISALLOWANCE U/S. 14A AS ABOVE, THE LEGAL POSITION ON THIS ISSUE HAS BEEN THOROUGHL Y EXPLAINED AND IN RESPECT OF THIS DISALLOWANCE ALSO THE APPELL ANT RELIES ON THE SAME SUBMISSIONS WHICH MAY KINDLY BE CONSIDE RED. 3.3 WITHOUT PREJUDICE TO THE ABOVE , EVEN IF THE REASONING OF THE LEARNED ASSESSING OFFICER FOR DISALLOWING INTEREST U/S 36(1) (III) IS CONSIDERED AS ACCEPTABLE AND TENABLE, THEN ALSO THE QUANTUM OF DISALLOWANCE IS WRONGLY COMPUTED AS TO T HE RATE APPLIED AND AS TO THE PERIOD FOR WHICH IT IS COMPUT ED. (A) AVERAGE RATE AT WHICH FUNDS ARE AVAILABLE THE (EARNED ASSESSING OFFICER HAS TAKEN 12% P.A. AS AN AVERAGE RATE TO DISALLOW THE INTEREST EXPENDITURE U /S 36(1)(III). THE AVERAGE RATE AT WHICH THE FUNDS ARE AVAILABLE WITH THE APPELLANT CAN BE COMPUTED BY COMPARING THE TOTAL INTEREST EXPENDITURE AND THE FUNDS AVAILABLE WITH T HE APPELLANT AS ON 31.03.2009. THE COMPUTATION OF AVER AGE RATE IS SHOWN AS UNDER: ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 13 - PARTICULARS AMOUNT (IN RS) TOTAL INTEREST EXPENDITURE (A) 1,64,50,000 TOTAL FUNDS AVAILABLE EQUITY SHARE CAPITAL 72,05,890 LOANS FROM COMPANIES 7,89,02,103 CURRENT LIABLIFIES 50,15,03,000 TOTAL FUNDS AVAILABLE (B) 58,76,10,993 AVERAGE RATE = INTEREST EXPENDITURE / TOTAL FUNDS (A*100/B) 2.8% HENCE, THE AVERAGE RATE AT WHICH THE FUNDS ARE AVAI LABLE TO THE APPELLANT IS 2.8% PER ANNUM. SO, THE LEARNED AS SESSING OFFICER HAS GROSSLY ERRED IN APPLYING AVERAGE RATE FOR DISALLOWING INTEREST U/S 36(1)(III) AT 12% P.A., WH EN THE FUNDS ARE AVAILABLE BEARING AVERAGE COST OF 2.8% PER ANNU M. (B) PERIOD FOR WHICH THE AMOUNT OF RS 2.2 CRORES IS ADVANCED TO ASMAN INVESTMENT LTD. THE DATE ON WHICH TRANSACTIONS OF ADVANCING HAVE TA KEN PLACE AND THE AMOUNT WHICH IS ADVANCED TO ASMAN INVESTMEN T LTD IS SHOWN IN THE TABLE PRESENTED BELOW AND ACCORDINGLY THE PERIOD FOR WHICH THE AMOUNT IS ADVANCED IS COMPUTED : DATE AMOUNT (IN RS) ADVANCED RECEIVED 26.02.2009 85,00,000 07.03.2009 5,00,00,000 23.03.2009 3,65,00,000 27.03.2009 2,20,00,000 31.03.2009 2,20,00,000 ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 14 - AMOUNT ON WHICH INTEREST IS CHARGED PERIOD FOR WHICH THE AMOUNT IS ADVANCED FIN DAYS] INTEREST @12% P.A. (CONSIDERING THE RATE DETERMINED BY THE AO) (IN RS) INTEREST @ 2.8% P.A. (CONSIDERING THE AVERAGE RATE AT WHICH FUNDS ARE AVAILABLE) (IN RS) 85,00,000 25 69,863 16,301 2,80,00,000 16 1,47,288 34,367 2,20,00,000 20 1,44,658 33,753 2,20,00,000 1 7,233 1,688 TOTAL INTEREST THAT CAN BE DISALLOWED U/S. 36(1) (III) 3,69,041 86,110 FROM THE ABOVE TABLE THE FOLLOWING CONCLUSIONS CAN BE DRAWN: I) CONSIDERING THE PERIOD FOR WHICH THE AMOUNT IS ADVANCED TO ASMAN INVESTMENT LTD., THE MAXIMUM DISALLOWANCE OF INTEREST U/S 36(1)(III) THAT CAN BE MADE, TAKING THE AVERAGE RATE AT WHICH THE LEARNED ASSESS ING OFFICER HAS COMPUTED THE SAID DISALLOWANCE IE. 12% P.A. IS RS 3,69,041/-. II) CONSIDERING THE AVERAGE RATE OF 2.8% P.A., AT W HICH THE FUNDS ARE AVAILABLE WITH THE APPELLANT COMPANY, THE MAXIMUM AMOUNT OF DISALLOWANCE THAT CAN BE MADE U/S 36(1)(III) IS RS. 86,110/-. HENCE, THE LEARNED ASSESSING OFFICER HAS GROSSLY ER RED IN COMPUTING THE DISALLOWANCE OF INTEREST EXPENDITURE U/S. 36(1)(III) AT RS. 26,40,000/-.' 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSESS MENT ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER DISALLOWE D INTEREST ON BORROWED FUNDS ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN TO THE ASSOCIATE CONCERN. IT IS NOT IN DISPUTE THAT THE LO AN GIVEN TO ASSOCIATE CONCERN WAS WITHOUT ANY BUSINESS PURPOSE AND THEREFORE BORROWED FUNDS DIVERTED TO GIVE LOAN WILL ATTRACT D ISALLOWANCE OF INTEREST. APPELLANT SUBMITTED THAT IT WAS HAVING SU BSTANTIAL CURRENT LIABILITIES OF 50.15 CRORES AND THEREFORE THE AVERA GE COST OF BORROWING COMES TO ONLY 2.8%. CURRENT LIABILITIES ARE TEMPORARY AND SHORT DURATION FUNDS FOR DAY-TO-DAY BUSINESS RE QUIREMENTS. CURRENT LIABILITIES CANNOT BE CONSIDERED FOR GIVING LOANS AND ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 15 - ADVANCES OR MAKING INVESTMENTS. THEREFORE IT WILL NOT BE CONSIDERED WHILE COMPUTING AVERAGE RATE OF INTEREST . AFTER REMOVING CURRENT LIABILITIES, THE INTEREST RATE WORKS OUT TO MORE THAN 12% AND THEREFORE DISALLOWANCE OF INTEREST MADE BY THE ASSE SSING OFFICER AT 12% IS JUSTIFIED AND DOES NOT REQU IRE ANY INTERFERENCE. APPELLANT ALSO OBJECTED THE COMPUTATION OF DISALLO WANCE ON THE GROUND THAT ADVANCE TO THE SISTER CONCERN WAS G IVEN FOR THE PART OF THE YEAR WHEREAS ASSESSING OFFICER MADE DISALLOW ANCE FOR ENTIRE 12 MONTHS. I AGREE WITH THE APPELLANT THAT DISALLOW ANCE OF INTEREST CAN BE MADE ONLY WITH REFERENCE TO THE PERIOD OF IN TEREST FREE LOAN. APPELLANT SUBMITTED THE DATES ON WHICH LOANS WERE G IVEN AND COMPUTED DISALLOWANCE OF INTEREST @12% AT RS 369041 . ASSESSING OFFICER IS DIRECTED TO VERIFY THE APPELLANT'S CLAIM AND RESTRICT THE DISALLOWANCE OF INTEREST FOR THE PERIOD OF INTEREST FREE LOAN REMAINING OUTSTANDING DURING THE YEAR. THE DISALLOW ANCE WORKED OUT FOR THIS PERIOD IS CONFIRMED AS AGAINST THE DIS ALLOWANCE FOR 12 MONTHS MADE BY THE ASSESSING OFFICER. 18. WE FIND THAT THE ISSUE INVOLVED IS ESSENTIALLY FACTUAL IN NATURE. WHILE THE AO HAS DISALLOWED INTEREST ON BOR ROWED FUNDS ATTRIBUTABLE TO INTEREST FREE ADVANCES GIVEN TO ASS OCIATE CONCERNS, CIT(A) HAS TAKEN NOTE OF THE EXACT PERIOD FOR WHICH THE ADVANCE WAS LENT AND RE-WORKED THE DISALLOWANCE UNDER S.36( 1)(III) OF THE ACT AT RS. 3,69,041/-. WE DO NOT SEE ANY INFIRMITY IN THE APPROACH OF THE CIT(A) WHILE ANALYZING FACTUAL ASPECTS AND T HUS DECLINE TO INTERFERE. 19. CONSEQUENTLY, GROUND NO. 3 OF THE REVENUES APP EAL IS DISMISSED. 20. GROUND NO.4 CONCERNS ADDITION TO BOOK PROFIT UN DER S.115JB OF THE ACT ON ACCOUNT OF DISALLOWANCE UNDER S.14A O F THE ACT. 21. IN VIEW OF THE DISCUSSION MADE IN THE PRECEDING PARAGRAPHS, NO ADDITION TO BOOK PROFIT UNDER S.115JB IS PERMISS IBLE TOWARDS ESTIMATED DISALLOWANCE COMPUTED UNDER S.14A R.W. RU LE 8D OF THE ITA NOS.1509 & 1639/AHD/12 [ARVIND BRANDS LTD.] A.Y. 2009-10 - 16 - INCOME TAX RULES. THEREFORE, WE DO NOT SEE ANY MER IT IN THE GRIEVANCE RAISED ON BEHALF OF THE REVENUE. 22. HENCE, GROUND NO.4 OF THE REVENUES APPEAL IS D ISMISSED. 23. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 24. IN CONCLUSION, THE ASSESSEES APPEAL IS PARTLY ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/11/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 02/11/201 8