ACIT, Kota V. CAREER POINT LTD., Kota

ITA 151/JPR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2109 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY GOYAL C A DHK
• Keywords: Earning of tax free income; Bad and doubtful debts; Notional interest
• Section: 143(3); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 151/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA. CUKE VS. M/S CAREER POINT LTD., 112 - B, SHAKTI NAGAR, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCC 4963 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 07/JP/2017 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 151/JP/2017) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. M/S CAREER POINT LTD., 112 - B, SHAKTI NAGAR, KOTA. CUKE VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCC 4963 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK (ADDL. JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.05.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/05/2017. VKNS'K@ ORDER PER SHRI KUL BHART, JM. THE REVENUE AND THE ASSESSEE HAVE CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-4, JAIPUR DATED 21/12/2016 BY FIL ING APPEAL AND CROSS OBJECTION I.E. ( ITA NO. 151/JP/2017 AND C.O. NO. 07/JP/2017) PERTAINING TO THE ASSESSMENT YEARS 2013-14 RESPECTIVELY. BOTH APPEAL AND CROSS OBJECTION WERE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO. 151/JP/2017 PERTAINING TO THE A.Y. 2012-13. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEA L:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 59,69 ,827/- MADE IN ACCORDANCE WITH THE PROVISION OF SECTION 14A OF THE ACT WHICH WAS DULY COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) WAS JUSTIFIED IN OBSERVING THAT AO HAS ALSO FAILED TO P ROVE NEXUS BETWEEN INTEREST BEARING FUNDS AND INVESTMENT MADE OUT OF T HAT WHEN THERE IS NO SUCH REQUIREMENT EITHER UNDER SECTION 14A OR RULE 8 D. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) WAS JUSTIFIED IN HOLDING THAT NO NOTIONAL INTEREST OR HYPOTHETICAL INTEREST COULD HAVE BEEN DISALLOWED BY THE AO BY INVOKING PROVISIO NS OF SECTION 14A WHEN ASSESSEE HAD ITS OWN FUND AND SUCH FUNDS/RESER VES BEING SUBSTANTIALLY HIGHER THAN, EVEN OTHERWISE THE ADVAN CES TO THE DEBTORS. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S 14A OF T HE ACT WITHOUT GIVING ANY FINDING AS TO HOW THE MANDATORY PROVISIONS OF RULE 8D MEANT FOR COMPUTING THE DISALLOWABLE EXPENDITURE WAS COMPUTED BY THE ASSESSING OFFICER ARE NOT BINDING IN THE CASE OF THE ASSESSEE . THE APPELLANT CRAVE, LEAVE OR RESERVES THE RIGHT TO AMEND MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME B EFORE OR DURING THE HEARING OF THIS APPEAL. 2. BRIEFLY STATED THE FACTS ARE THAT, THE CASE OF T HE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 9 TH MARCH, 2016. WHILE FRAMING THE ASSESSMENT, THE ASSESSMENT OFFICE R OBSERVED THAT ASSESSEE HAD EARNED DIVIDEND INCOME WHICH DID NOT FORM PART OF T HE TOTAL INCOME. HOWEVER, IN RELATION TO THE EARNING OF THE SAID INCOME NO EXPEN DITURE WAS CLAIMED TO HAVE BEEN INCURRED. THEREFORE, THE ASSESSING OFFICER AFTER GIVING SO CAUSE OF MAKING DISALLOWANCE OF U/S 14A OF THE INCOME-TAX ACT, READ WITH RULE 8D OF THE INCOME-TAX 3 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. RULE, 1962 (HEREINAFTER REFERRED TO AS THE RULE) AN D COMPUTED DISALLOWANCE AT RS. 59,69,827/-. 3. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN AP PEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED TH E APPEAL. THE LD. CIT(A) DELETED THE ENTIRE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER BY INVOKING THE PROVISION OF SECTION 14A. NOW, BOTH THE ASSESSEE AND REVENUE HA VE CHALLENGED THE ORDER BY FILING APPEAL AND CROSS OBJECTION RESPECTIVELY. 4. IN THE APPEAL OF THE REVENUE I.E. IN ITA NO. 151/JP/2017 , THE ONLY EFFECTIVE GROUND IS AGAINST, DELETION OF DISALLOWAN CE MADE BY INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE INCOME-TAX RULE. THE LD. DEPARTMENTAL REPRESENTATIVES VEHEMENTLY ARGUED THAT, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAD EARNED EXEMPT INCOME IN THE F ORM OF DIVIDEND INCOME. HE SUBMITTED THAT ASSESSING OFFICER HAS GIVEN FINDING THAT THE ASSESSEE COULD NOT SUBSTANTIATE, THAT NO EXPENDITURE WAS INCURRED BY T HE ASSESSEE IN RELATION TO THE INCOME WHICH DID NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. HE THEREFORE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4.1 ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESS EE SUPPORTED THE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBMISSIONS AS MADE I N THE WRITTEN BRIEF. HE SUBMITTED THAT THE ENTIRE INVESTMENT WAS MADE OUT O F INTEREST FREE FUND. HE SUBMITTED UNDER THE FACTS OF THE PRESENT CASE, THER E IS NO ILLEGALITY INTO THE ORDER OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE. HE FU RTHER SUBMITTED THAT THE ENTIRE INCOME OF THE MUTUAL FUND IS NOT EXEMPT WHICH IS EV IDENT FROM THE COMPUTATION OF THE TOTAL INCOME WHERE FROM THE SALE OF MUTUAL FUND S HAVE BEEN TAXED AS CAPITAL 4 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. GAIN AND THE NEXT YEAR ALSO THE ASSESSEE GAVE THE T AX ON THE GAIN ON SALE OF MUTUAL FUNDS. HE SUBMITTED THAT FROM THE CHART AS ENCLOSE D OUT OF TOTAL INVESTMENT OF RS. 91,58,22,106/- THE INCOME OF INVESTMENT OF RS. 22,0 8,22,106/- WAS EXEMPTED AND THE INCOME ON BALANCE INVESTMENT WAS TAXABLE. HE S UBMITTED THAT, THEREFORE, ENTIRE INVESTMENT COULD NOT BE TAKEN INTO CONSIDERATION FO R COMPUTING THE DISALLOWANCE U/S 14A OF THE ACT. HE FURTHER SUBMITTED THAT EVEN INV OKING THE PROVISION OF SECTION 14A BY THE ASSESSING OFFICER IS FAULTY AS IN THE EARLIE R YEAR, THIS ASSESSMENT YEAR 2012- 13, AND ALSO FACTS WERE IDENTICAL AND NO DISALLOWAN CE WAS MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISION OF SECTION 14A. HE DREW OUR ATTENTION TO THE ASSESSMENT ORDER DATED 31/3/2015 PERTAINING TO THE A.Y. 2012-13 ENCLOSED ALONG WITH THE WRITTEN SUBMISSIONS. 4.2 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW . THE LD. CIT(A) HAS GIVEN A FINDING ON FACT AS UNDER:- ON CAREFUL PERUSAL OF ASSESSEES BALANCE SHEET AS ON 31.3.2013, FOLLOWING DETAILS EMERGED: SHARE CAPITAL (ISSUED & SUBSCRIBED) RS. 18,13,29,39 0/= RESERVE & SURPLUS RS. 3,02,23,49,410/= TOTAL INVESTMENT RS. 91,58,22,106/= OTHER INCOME (P & L A/C) RS. 6,82,91,163/= DIVIDEND INCOME RS. 2,87,80,532/= INTEREST INCOME FROM GR COMPANIES RS. 1,23,21, 610/= INTEREST FROM BANK DEPOSIT RS. 52,68,744/= OTHER LOANS & ADVANCES RS. 33,34,284/= NET GAIN ON SALE OF CURRENT INVESTMENT RS. 1,65,1 2,080/= PROFIT ON SALE OF FIXED ASSETS RS. 6,499/= BAD DEBTS RECOVERED RS. 2,50,455/= MISCELLANEOUS INCOME RS. 18,16,959/= 5 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. ___________________________________________________ RS. 6,82,91,163/= FROM THE CHART CONTAINING THE POSITION OF TAXABILIT Y OF GAIN AROSE ON REDEMPTION/SALES/MATURITY OF INVESTMENTS HELD AT TH E END OF THE YEAR IT IS ALSO SEEN THAT OUT OF TOTAL INVESTMENTS OF RS. 91,58,22, 106/- THE INCOME ON INVESTMENTS OF RS. 22,08,22,106/= WAS ALSO EXEMPTED AND THE INCOME ON BALANCE INVESTMENTS WAS TAXABLE. IN THIS REGARD, I T SUBMITTED THAT THE ENTIRE INVESTMENTS CANNOT BE TAKEN INTO CONSIDERATION FOR COMPUTING THE DISALLOWANCE U/S 14A OF INCOME TAX ACT, 1961 BY THE AO IS ALSO NOT JUSTIFIED. ON PERUSAL OF BALANCE SHEET OF THE ASSESSEE, IT IS FOUND THAT THE ASSESSEE WAS HAVING SUFFICIENT ITS OWN CAPITAL AND RESERVES & SU RPLUS. THE OWN CAPITAL AND RESERVES & SURPLUS OF THE ASSESSEE WAS RS. 3,20,36, 78,800/- WHILE THE INVESTMENTS WERE OF RS. 91,58,22,106/- ONLY. IN VI EW OF THIS, IT IS SUBMITTED THAT THE OWN FUNDS OF THE ASSESSEE IS MUCH MORE THA N TO INVESTMENTS, THEREFORE DISALLOWANCE U/S 14A OF INCOME TAX ACT, 1 961 IS UNCALLED FOR. IN SUPPORT OF ITS CONTENTION, ASSESSEE HAS RELIED UPON FOLLOWING DECISION: EMTICI ENGINEERING LTD. (ITAT AHMADABAD) RAM KRISHNA VERMA (ITAT JAIPUR) VIJAY SOLVEX (RAJASTHAN HIGH COURT) SATISH KATTA(ITAT JAIPUR) MOTOR SALES LTD. (HIGH COURT ALLAHABAD) IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE AS D ISCUSSED ABOVE AND MOST RESPECTFULLY, FOLLOWING THE AFOREMENTIONED CASE LAW S AND WHEN ASSESSEE ADMITTEDLY HAD ITS OWN FUNDS, AS REFERRED TO EARLIE R, AND ADMITTEDLY SUCH FUNDS/RESERVES BEING SUBSTANTIALLY HIGHER THAN, EVE N OTHERWISE, THE ADVANCES TO THE DEBTORS, NO NOTIONAL INTEREST OR HY POTHETICAL INTEREST COULD HAVE BEEN DISALLOWED ON SUCH FACTS, THE ADDITION MA DE BY THE AO BY INVOKING THE PROVISIONS OF SEC 14A OF THE ACT CANNO T BE SUSTAINED. APART 6 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. FROM THIS ALSO, AO HAS FAILED TO PROVE NEXUS BETWEE N INTEREST BEARING FUNDS AND INVESTMENTS MADE OUT OF THAT. ASSESSEES APPEA L IN GR NO. 1 & 2 STANDS ALLOWED. 4.3 THE AFORESAID FINDING OF FACT IS NOT CONTROVERT ED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. IT IS ALSO TRANSP IRED FROM THE RECORD THAT THE ASSESSING OFFICER WHILE COMPUTING THE DISALLOWANCE HAS TAKEN INTO CONSIDERATION BOTH INVESTMENTS RELATED TO EXEMPT INCOME AS WELL A S TAXABLE INCOME. UNDER THESE FACTS IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE BY INVOKING PROVISION SECTION 14A OF T HE ACT. THE MANDATE OF THE SECTION 14A(2) OF THE ACT IS THAT THE ASSESSING OFF ICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME BUT IN THE GIVEN CASE THE ASSESSING OFFICER HAS NOT RESTRICTED ITSELF TO THE EXEMPT INCOME ALSO CONSIDERED THE TAXABLE INCOME, W HILE COMPUTING THE DISALLOWANCE. THE ASSESSING OFFICER FAILED TO GIVE A CLEAR FINDING IN RESPECT OF THE SUBMISSIONS OF THE ASSESSEE THAT THE INVESTMENT WAS MADE OUT OF INTEREST FREE FUND. HOWEVER, THE LD. CIT(A) DEMONSTRATED FROM THE ACCOU NTS OF THE ASSESSEE THAT THE ASSESSEE WAS HAVING SUFFICIENT ON INTEREST FREE FU ND FOR MAKING SUCH INVESTMENT. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN TO THE ORDER OF THE LD. CIT(A), SAME IS HEREBY AFFIRM. THE GROUND OF THE REVENUES APPEAL IS DISMISSED. 5. NOW, COMING TO THE CROSS OBJECTION 07/JP/2017 OF THE ASSESSEE PERTAINING TO A.Y. 2013-14. THE ASSESSEE HAS RAIED FOLLOWING GROUNDS OF THE CRO SS OBJECTION. 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF CASE AN D IN LAW THE LD. AO ERRED IN APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 7 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. 8D OF INCOME TAX RULES IN MECHANICAL MANNER WITHOUT COMPLYING WITH THE CONDITIONS AS STIPULATED IN SECTION 14A(2) OF I . TAX ACT AND WITHOUT DETERMINING THE AMOUNT OF EXPENDITURE INCURRED IN R ELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT AND WITHOUT RECORDING ANY SATISFACTION WITH REGARD TO T HE INCORRECTNESS OF CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITUR E IN RELATION TO SUCH EXEMPT INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. AO NOT JUSTIFIED IN MAKING ADDITION OF RS. 59,69,82 7/- ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S 14A OF THE IT ACT, 196 1 READ WITH RULE 8D OF IT RULES AND CIT(A) HAS RIGHTLY DELETED THE ADDI TION. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING OF APPEAL. 6. THE LD. COUNSEL FOR THE ASSESEE HAS REITERATED T HE SUBMISSIONS MADE IN THE WRITTEN SUBMISSIONS, WHICH ARE REPRODUCED AS UNDER: - 3.1 THE ASSESSEE HAS FILED CROSS OBJECTION TO PROTECT T HE ORDER OF THE LD. CIT(A). HOWEVER, IT RAISED GROUND NO. 1 IN CROSS O BJECTION CHALLENGING THE ADDITION MADE BY THE AO IN MECHANICAL MANNER WI THOUT COMPLYING WITH THE CONDITIONS AS STIPULATED IN SECT ION 14A(2) OF THE IT ACT AND WITHOUT DETERMINING THE AMOUNT OF EXPENDITU RE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FOUND PART O F THE TOTAL INCOME AND WITHOUT RECORDING ANY SATISFACTION WITH REGARD TO THE INCORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPE CT OF SUCH EXPENDITURE IN RELATION TO SUCH EXEMPT INCOME. IN THIS REGARD WE SUBMIT THAT SUB-SECTION (2) OF SECT ION 14A EMPOWERS THE AO TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF TH E TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE AO, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH 8 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. SIMILAR REQUIREMENT IS OF RULE 8D(1). IN THIS CASE EVEN THOUGH THE AO HAS MADE THE DISALLOWANCE BY RELYING O N THE PROVISIONS OF SECTION 14A BUT HE DID NOT COMPLY WITH THE CONDI TIONS AS STIPULATED IN SECTION 14A(2)/RULE 8D(1). HE HAS NOT RECORDED ANY S ATISFACTION WITH REGARD TO THE INCORRECTNESS OF CLAIM OF THE ASSESSEE. SIMILAR ISSUE HAS BEEN DECIDED BY THE JAIPUR BENCH OF THE ITAT IN THE ASSESSEES GROUP CASE. M/S RUBY MERRY ENTERPRISES (P) LTD. VS. JCIT (OSD) CE NTRAL CIRCLE- 3, JAIPUR COPY ENCLOSED . THE FINDINGS OF HONBLE ITAT ARE IN PARA 3.3 OF ITS ORDER WHICH IS REPRODUCED AS UNDER:- 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. AS REGARDS GROUND NO. 1 RAISE D BY THE ASSESSEE, IT IS NOTED THAT SUCH ISSUE HAS ALREADY BEEN DECIDED I N FAVOUR OF THE ASSESSEE BY THE ITAT, JAIPUR SMC BENCH IN ASSESSEE S OWN CASE(SUPRA). THE OBSERVATION OF ITAT JAIPUR, SMC BENCH (SUPRA) I S REPRODUCED AS UNDER:- 3. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME ALONG WITH ORDERS OF TAX AUTHORITIES BELOW. I NOTED THAT THE AO NOTED THAT THE ASSESSEE HAD PAID INTEREST @ 9% ON T HE INVESTMENT MADE AGAINST THE SHARE APPLICATION MONEY. THE BANK STATEMENT OF THE ASSESSEE REVEALED THAT THE PAYMENT OF RS. 80,00 ,000/- WAS MADE BY THE ASSESSEE ON 13.02.2008 AND ANOTHER PAYMENT O F RS. 80,00,000/- WAS MADE ON THE SAME DATE AGAINST THE S HARE APPLICATION MONEY OF M/S CAREER POINT INFOSYSTEM LT D. NO SHARES WERE ALLOTTED AGAINST THE INVESTMENT IN SHARE APPLI CATION MONEY. THE AMOUNT OF RS. 1,60,00,000/- WAS RETURNED BANCK ON 28.8.2008. THE AO, THEREFORE, WORKED OUT THE INTEREST @ 9% ON THE INVESTMENT MADE AGAINST SHARE APPLICATION MONEY FROM 1.04.2008 TO 28.8. 2008 AT RS. 6,00,000/- AND DISALLOWED THE SAME UNDER SEC TION 14A. IT IS THE UNDISPUTED FACT THAT THE ASSESSEE HAS NOT CLAIM ED ANY DISALLOWANCE IN RELATION TO THE INVESTMENT MADE IN SHARE APPLICATION MONEY UNDER THE PROVISION OF SECTION 14A. THE PROV ISION OF SECTION 14A(1) STATES THAT NO DEDUCTION SHALL BE MADE IN RE SPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. SUB-SECTIO N (2) OF SECTION 14A EMPOWERS THE AO TO DETERMINE THE AMOUNT OF EXPE NDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE AO, HAVING REGARD TO THE ACCO UNTS OF THE ASSESSEE IS OT SATISFIED WITH THE CORRECTNESS OF TH E CLAIM OF THE 9 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. FURT HER, SUB-SECTION (3) OF SECTION 14A EMPOWERS THE AO TO APPLY SUB-SEC TION (2) IN A CASE WHERE THE ASSESSEE CLAIM THAT NO EXPENDITURE H AS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PA RT OF THE TOTAL INCOME. IN THIS CASE I NOTED THAT EVEN THOUGH THE A O HAS MADE THE DISALLOWANCE BY RELYING ON THE PROVISIONS OF SECTIO N 14A BUT HE DID NOT COMPLY WITH THE CONDITIONS AS STIPULATED IN SEC TION 14A(2). HE HAS NOT RECORDED ANY SATISFACTION WITH REGARD TO TH E INCORRECTNESS OF CLAIM OF THE ASSESSEE HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE HAVING NO SUCH EVIDENCE OR MATERIAL BROUGHT TO MY N OTICE BY THE LD. D/R WHICH MAY SHOW THAT THE AO HAS GIVEN A FINDING ON THE BASIS OF ACCOUNTS MAINTAINED BY THE ASSESSEE THAT HE IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE. EVEN THE AO HAS NOT RECORDE D THE SATISFACTION AS REGARDS TO THE CLAIM OF THE ASSESSEE. HE IS BOU ND TO COMPUTE THE DISALLOWANCE IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED. IN THIS REGARD IT IS THE RULE 8D WHICH HAS BEEN NOT IFIED WITH EFFECT FROM 24.03.2008. THE ASSESSMENT YEAR INVOLVED IS T HE ASSESSMENT YEAR 2009-10. I DO NOT FIND ANY WHISPER WHATSOEVER BY THE AO OR BY THE LD. D/R THAT THE AO HAS COMPUTED THE DISALLOWAN CE BY APPLYING RULE 8D. IN VIEW OF THIS FACT, I AM OF THE VIEW TH AT IT IS A CASE WHERE NO DISALLOWANCE CAN BE MADE. I ACCORDINGLY SET ASI DE THE ORDER OF LD. CIT(A). 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. RESPECTFULLY FOLLOWING THE DECISION OF ITAT, JAIPUR SMC BENCH IN ASSESSEES OWN CASE FOR THE AY 2009-10 (SUPRA), THE APPEAL OF THE ASESSEE ON THE ISSUE IN QUESTION IS ALLOWED. FURTHER RELIANCE IS PLACED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT CIT VS. M/S GKK CAPITAL MARKETS (P) LTD. {201 7} 392 ITR 196 COPY ENCLOSED. 6.1 ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENT ATIVES HAS OPPOSED THE SUBMISSIONS SINCE, WE HAVE AFFIRMED THE VIEW OF THE LD. CIT(A). THE GROUND RAISED IN THE CROSS OBJECTION BECOMES ACADEMIC. WE THEREF ORE, DISMISS THE GROUND NO. 1 OF THE CROSS OBJECTION. 7. GROUND NO. 2 IS IN SUPPORT OF THE ORDER IMPUGNED SINCE THE FINDING OF THE LD. CIT(A) HAS BEEN AFFIRMED BY THIS TRIBUNAL, THIS GRO UND BECOME IN FRUCTUOUS. 8. GROUND NO. 3 IS GENERAL IN NATURE AND NEEDS NO S EPARATE ADJUDICATION. 10 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA. 9. IN THE RESULT, BOTH APPEAL (ITA NO. 151/JP/2017) OF THE REVENUE AND CROSS OBJECTION (07/JP/2017) OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 11TH DAY OF MAY 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 11/05/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ASSTT. COMMISSIONER OF INCOM E-TAX, CENTRAL CIRCLE, KOTA 2. THE RESPONDENT- M/S CAREER POINT LTD., 112-B, SH AKTI NAGAR, KOTA. 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO & C.O. NO. 151/JP/2017 & 07/J P/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 11 ITA NO. & CO NO. 151/JP/2017 & 07/JP/2017. M/S CAREER POINT LTD., KOTA.