ACIT, V. M/s IDEB Projects Pvt. Ltd.,

ITA 1531/BANG/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5427 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G R REDDY
• Keywords: Business income; Opportunity of being heard; Revised return
• Section: 139(5); 54; 139

Judgement Text

ITA NO. 1531/B/2012 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.1531(BANG)/2012 (ASSESSMENT YEAR : 2009-10) M/S IDEB PROJECTS PRIVATE LIMITED, 10 TH FLOOR, DELTA TOWERS, SIGMA SOFT PARK, VARTHUR KODI, WHITEFIELD MAIN ROAD, BANGALORE 560066. PAN AAACI5570N VS THE AC IT, CIRCLE 11 ( 4 ) , BANGALORE (RESPONDENT) (APPELLANT) S HRI A. SHANKAR , ADVOCATE ASSESSEE BY SHRI G. R. REDDY, CIT DR REVENUE BY 20/04/2017 DATE OF HEARING 28 /04/2017 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, AM. THIS APPEAL IS FILED BY THE REVENUE THIS IS DIRECTE D AGAINST THE ORDER OF LEARNED CIT (A) I, BANGALORE DATED 17.08.2012 FOR A. Y. 2009 10. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THE ORDER OF THE LEARNED CIT (APPEALS) , IN SO FAR ' AS IT IS PREJUDICIAL TO T HE I NTEREST OF REVENUE , IS OPPOSED TO LAW AND THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN DELETING THE ADDITI ON MA DE B Y THE AO ON ACCOUNTS O F LO W CONTRACT REVENUE OF RS . 29 , 00,71 , 247 / - W H E N THE ASSESSEE HAS CON V ERTED THE INCOME OFRS.5 , 35 , 33 , 3501- ORIGINALLY FIL E D INTO A LOSS OF RS.34 , 49 , 92 , 696 / - I N T HE REVISED R O I WITHOUT APPRECIATING THE FAC T THAT W HEREAS THE E X PENDITURE DEBITED BY THE ASSESSEE TOWARDS EXECUTION HAS BEEN R EDU C E ONLY BY RS.5 . 61 ITA NO. 1531/B/2012 % BUT INCOME HAS BEEN REDUCED BY AROUND 750% AND E XEC UTION COST HAS BEEN REDUCED ONL Y B Y AROUND 1 . 8%. 3. THE CIT(A) ERRED IN D IRECTING THE AO T O RECO MPUTE THE DISALLOWANCE UNDER RULE 8D(2)(III) OF THE LT . RULES AFTER CONSIDE RING THE CORRECT FIGURES AS PER THE BALANCE SH E ET WHEN THE A O HAS RIGHTLY MAD E THE DISALLOWANCE AFTER ANALYZING THE I NV EST ME N T P OR TF O LI O AS GIVEN BY THE ASSE SSEE A T PARA 12 OF THE ASSESSMENT ORDER. 4. THE CIT( A ) ERRE D IN HOLDING AT PARA 4. 3 THAT T HE AVERAGE VALUE OF ASSETS WILL BE TAKEN AS R S.7, 0 40,841,959/- WHER EAS THE ASSE SSEE HIMSELF HAS SHOWN THE NET CUR R ENT ASSETS OF RS . 445 , 99 ,0 3 ,91 0 1 - AS ON MARCH 31 S T , 2009 AND RS . 4 1 5 , 9 2,82,877/- AS ON MARCH 31 ST 2008 IN T HE BALANCE SHEET WHICH H A S BE EN ADOPTE D BY THE AO WHILE CA L CUL ATING THE AVERAGE ASSETS VALUE. 5. THE CIT(A) ERRED I N DE L E T I NG THE DISALLOWANCE OF INTEREST U / S 36(1)(III ) AMOUNTIN G TO RS.23,25 , 95 , 267 / - E V E N THOU G H THE ASSESSEE HA D ADVANCED INTEREST FREE LOA NS T O ITS SISTER CONCERNS OUT O F TH E I N TEREST BEARING BORR OWED FUNDS. 6. THE C IT(A) ERRED IN NOT A P PRECIATING THAT THE CASH FLOW STATEMENT FOR THE YEAR ENDE D 31.3.2009 FILED B Y TH E ASSE SSEE REVEALS THA T THE ASSESSEE COMPANY NEVER HA D ANY P ROFITS FROM ITS OPERATIO NS T O LEND MONEY T O SUBSIDIARY COMPANIES AND OTH E R SISTE R C ONCERNS, AND THAT MONE Y L ENT AND AMO UNTS ADVANCED TO SISTER CONCERNS HAVE B EEN OUT OF THE PROCEEDS FRO M LONG TERM LOA NS TAKEN OFRS . L91 , 84 CRORES FOR THE A . Y . 2008 - 09 AND RS.84 , 45 CRO R E S FOR THE A . Y .20Q9-L0 . . - \ = ; . , 7. THE CIT(A) ERRED IN HOLDIN G AT P AR A 5 . 4 THAT T H E NEXUS WHICH IS REQUIRED FOR THE PURPOSE IS ABSENT W HERE A S THE AO HAS D EAL T I N DEPTH ON . THIS ISSUE IN PARA 14 , MOREOVER BY GIVIN G A PROPER OPPORTUN ITY TO THE ASSESSEE TO PROVE THAT THE AMOUNT TAKEN ON LOAN IS NOT DIVERTED TO S I STER C O NC ERNS . ' ITA NO. 1531/B/2012 8. THE CIT(A) FAILED TO APPRECIATE THAT TH E COMPANY HAS NOT PRO V ED BECAUSE EXPEDIENCY IN GRANTING INTEREST FREE LO A NS T O T H E SISTER CONCERNS . 9. THE CIT(A) , ERRED IN NOT APPRECIATING THE DE C ISION OF THE PUNJAB AND HAR Y ANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTR IES L TD . HOLDING THAT THE ONUS IS ON THE ASSESSEE TO DISCHAR GE THAT THERE WAS A JUSTIFICATION TO ADVANCE TO SISTER CONCERNS OF NO N-BUSINESS PURPOSED. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND OR D ELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF THE AP PEAL. 3. THE REVENUE HAS ALSO FILED SOME ADDITIONAL GROUN DS, WHICH ARE AS UNDER:- 1. LD. CIT(A) OUGHT TO HAVE TREATED THE REVISED RE TURN U/S 139(5) WAS NULL AND VOID SINCE ASSESSEE COMPANY HAS FILED RETURN OF INCOME U/S 139(1) BUT FILED THE RET URN OF LOSS U/S 139(3). 2. LD. CIT(A) OUGHT TO HAVE OBSERVED THAT ASSES SEE COMPANY FILED THE ORIGINAL RETURN OF INCOME U/S 139 (1) WITH A TAXABLE INCOME AND REVISED IT TO A LOSS RETU RN. THE SAME CAN BE POSSIBLE U/S 139(3) BUT NOT U/S 139(5) RWS 139(1). 3. LD. CIT(A) ERRED IN NOT FOLLOWING THE DECISION OF THE HONBLE IAT, BENGALURU IN CASE OF M/S KARNATAKA FOR EST DEVELOPMENT CORPN.LTD.(2012) 23 TAXMANN.COM 314(BANG) DATED 30.3.2012 WHICH WAS DELIVERED ON SA ME SET OF DFACTS AND CONCLUDED THAT RETURN FILED U/S 1 39(1) COULD NOT BE TREATED AS A RETURN U/S 139(3) AND THE REFORE, ITA NO. 1531/B/2012 REVISED RETURN FILED U/S 139(5) COULD NOT BE ACCEPT ED AND HAD TO BE TREATED AS NULL AND VOID. 4. REVENUE CRAVES LEAVE TO ADD, ALTER AMEND, AND/O R DELETE ANY OF THE ROUNDS MENTIONED ABOVE. 4. REGARDING THE ADDITIONAL GROUNDS, LEARNED DR OF THE REVENUE PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF KARNATAKA FOREST DEVELOPMENT CORP. LTD. VS. CIT AS REPORTED IN 54 SO T 76. 5. IN REPLY, IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT EVEN AS PER THIS TRIBUNAL ORDER, WHAT CAN BE HELD IS THAT T HE REVISED RETURN FILED IS NOT A RETURN FILED U/S 139 (3) AND THEREFORE, THE CLAIM O F ASSESSEE FOR CARRY FORWARD OF LOSS CAN BE REJECTED BUT THE REVISED RETURN HAS TO BE ACCEPTED AS VALID IF IT IS FILED WITHIN THE TIME AVAILABLE U/S 139 (5) AND THE ORIGI NAL RETURN WAS FILED WITHIN THE TIME AVAILABLE U/S 139 (1). HE SUBMITTED THAT IN TH E PRESENT CASE, THE ORIGINAL RETURN WAS FILED ON 30.09.2009 I.E. WITHIN THE TIME AVAILABLE U/S 139 (1) AND THE REVISED RETURN WAS FILED ON 28.12.2010 I.E. WITHIN THE TIME AVAILABLE U/S 139 (5). HE SUBMITTED THAT HE IS NOT SERIOUS ABOUT CARRY FOR WARD OF LOSS BECAUSE TILL NOW, THERE IS NO TAXABLE INCOME AND THE PERIOD OF 8 YEAR S HAS EXPIRED ON 31.03.2017 RELEVANT FOR A. Y. 2017 18. ITA NO. 1531/B/2012 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIR ST REPRODUCE PARA 11 OF THE TRIBUNAL ORDER ON WHICH RELIANCE HAS BEEN PLACE D BY LEARNED DR OF THE REVENUE. THIS IS AS UNDER:- 11. THE LEARNED COUNSEL FOR THE ASSESSEE RELYING U PON THE PROVISIONS OF SUB SEC. (5) OF SEC. 139 OF THE INCOM E-TAX ACT HAS SUBMITTED THAT THE ASSESSEE HAS FILED THE O RIGINAL RETURN UNDER SUB SEC. (1) OF THE SEC. 139 AND SUBSE QUENTLY HAVING DISCOVERED THE OMISSION OF THE CLAIM OF LOSS HAS FILED A REVISED RETURN WITHIN THE TIME PRESCRIBED T HERE UNDER, AND, THEREFORE, ACCORDING TO HIM THE REVISED RETURN HAS TO BE CONSIDERED. UNDISPUTEDLY, THE ASSESSEE HA S FILED ORIGINAL RETURN UNDER SUB. SEC. (1) OF SEC. 139 OF THE INCOME-TAX ACT, IN THE SAID RETURN OF INCOME, THE A SSESSEE HAS NOT CLAIMED THE LOSS. SUB SEC. 5 PROVIDES THAT WHERE THE ASSESSEE DISCOVERS ANY OMISSION OR A WRONG STATEMENT, THEN HE CAN FILE A REVISED RETURN. WHERE THE WRONG STATEMENT OR OMISSION RESULTS IN THE CLAIM OF LOSS, THEN WHETHER THE RETURN FILED UNDER SEC. 139(5) IS TO BE CONSIDERED OR NOT IS TO BE NOW SEEN. AS HELD BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF SUNANDA R AM DEKA , 210 ITR 988, THE REQUIREMENT U/S 139(5) IS T HAT THE OMISSION OR WRONG STATEMENT IN THE ORIGINAL RET URN MUST BE DUE TO A BONAFIDE INADVERTENCE OR MISTAKE ON THE PART OF THE ASSESSEE. IN THE CASE BEFORE US, THE AS SESSEE HAS CLAIMED THAT IT HAS ERRONEOUSLY OMITTED TO CLAI M THE LOSS FROM THE HEAD INCOME FROM OTHER SOURCES. WHE THER OMISSION OF SUCH A CLAIM OF LOSS IN THE ORIGINAL RE TURN OF INCOME IS BONAFIDE OR NOT IS TO BE SEEN. FROM THE R EVISED RETURN OF INCOME, IT IS NOTICED THAT THE ASSESSEE H AS NOT ONLY CLAIMED THE LOSS OF THE RELEVANT ASSESSMENT YE AR I.E. 2004-05 TO BE CARRIED FORWARD BUT HAS ALSO CLAIMED THE LOSS OF THE ASSESSMENT YEAR 2003-04 TO BE CARRIED FORWARD. THUS, IT IS TO BE PRESUMED THAT THE ASSESS EE WAS HAVING THE KNOWLEDGE OF THE LOSS FOR THE ASSESSMENT YEAR 2003-04 WHICH WAS TO BE CARRIED FORWARD AND CLAIMED IN ITA NO. 1531/B/2012 THE ASSESSMENT YEAR 2004-05. THEREFORE, WHEN IT FIL ED THE RETURN U/S 139(1) OF THE INCOME-TAX ACT, IT SHOULD HAVE TAKEN THIS LOSS INTO CONSIDERATION AND SHOULD HAVE FILED THE RETURN U/S 139(3) OF THE INCOME-TAX ACT. HAVING FIL ED THE ORIGINAL RETURN OF INCOME U/S 139(1), THE ASSESSEE CANNOT LATER ON FILE THE REVISED RETURN OF INCOME CLAIMING THE LOSS ON THE GROUND THAT IT WAS DISCOVERED SUBSEQUENTLY. THIS ARGUMENT OF THE ASSESSEE IS NOT ACCEPTABLE FOR THE REASONS STATED ABOVE. IN VIEW OF THE SAME, WE ARE IN COMPLE TE AGREEMENT WITH THE FINDINGS OF THE CIT(A) THAT WHEN THE ASSESSEE IS CLAIMING THE LOSS FOR THE RELEVANT ASSE SSMENT YEAR AND ALSO CLAIMING THE LOSS TO BE CARRIED FORWA RD OF THE LOSS OF 2003-04 AND 2004-05 RESPECTIVELY, THEN THE ASSESSEE WAS REQUIRED TO FILE THE RETURN U/S 139(3) OF THE INCOM E-TAX ACT, THEREFORE, THE REVISED RETURN FILED U/S 139(5) CANNOT BE ACCEPTED AND HAS TO BE TREATED AS NULL AND VOID. IN VIEW OF THE SAME, WE UPHOLD THE FINDIN GS OF THE CIT (A) AND ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FAC TS. IN THE CASE OF SUJANI TEXTILE PVT. LTD., THE TRIBUNAL HAS GIVEN A FINDING THAT WHERE THE ASSESSEE HAD FILED THE LOS S RETURN U/S 139(3) WITHIN THE TIME ALLOWED BY LAW AND THE R EVISED RETURN OF INCOME SHOWING HIGHER AMOUNT OF LOSS WAS ALSO FILED WITHIN THE TIME ALLOWED BY LAW THEN THE REVIS ED RETURN REPLACES THE ORIGINAL RETURN. BUT IN THE CAS E BEFORE US, THE ASSESSEE HAS NOT FILED THE RETURN U/S 139(3 ) OF THE ACT WITHIN THE TIME ALLOWED BY LAW BUT HAS FILED TH E REVISED RETURN CLAIMING THE LOSS U/S 139(5) OF THE ACT, THEREFORE, IT CANNOT BE SAID THAT THE REVISED RETUR N OF INCOME REPLACED THE ORIGINAL RETURN OF INCOME AND, THEREFORE, THE RATIO OF THE DECISION IS NOT APPLICA BLE TO THE FACTS OF THE CASE BEFORE US. AS FAR AS THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2003-04 IS CONCERNED, WE FIND THAT THE ASSESSE E HAS MADE THE CLAIM OF DEDUCTION UNDER RULE 7A OF THE IN COME- TAX RULE 1962 DURING THE ASSESSMENT PROCEEDING, BUT THE AO HAD NOT CONSIDERED THE SAME AT THE TIME OF MAKIN G THE ITA NO. 1531/B/2012 ASSESSMENT AND, THEREFORE, THE TRIBUNAL HAD DIRECTE D THE AO TO CONSIDER THE SAME. BUT IN THE RELEVANT ASSESS MENT YEAR, IT IS THE CASE OF THE ASSESSEE FILING THE REV ISED RETURN U/S 139(5) OF THE INCOME-TAX ACT CLAIMING THE APPLI CATION OF RULE 7A AND AS WE HAVE ALREADY HELD THAT THE REV ISED RETURN OF INCOME IS NONEST, THE SAID DECISION IS NO T APPLICABLE TO THE FACTS OF THE CASE BEFORE US. IN V IEW OF THE SAME, THE ASSESSEES APPEAL IS DISMISSED. 7. FROM THE ABOVE PARA, IT COMES OUT THAT IN THAT CASE, THERE WAS LOSS IN A. Y. 2003 04 ALSO, FOR WHICH CARRY FORWARD WAS BEIN G CLAIMED BY THE ASSESSEE IN THE REVISED RETURN FILED U/S 139 (5) FOR A. Y. 2004 05 ALONG WITH CLAIM FOR CARRY FORWARD OF LOSS FOR A. Y. 2004 05 BUT NO SU CH CLAIM WAS MADE IN THE ORIGINAL RETURN FILED U/S 139 (1). THE TRIBUNAL CON SIDERED THE TRIBUNAL ORDER RENDERED IN THE CASE OF SUJANI TEXTILES PVT. LTD., VS. ACIT REPORTED IN 88 ITD 317 WHERE LOSS RETURN WAS FILED U/S 139 (3) SHOWING LESSER LOSS AND SUBSEQUENTLY, IN THE REVISED RETURN, MORE LOSS WAS CLAIMED AND IT WAS HELD BY THE TRIBUNAL THAT SUCH REVISED RETURN REPLACES THE ORIGINAL RETURN. WHEN WE READ ALL THESE TOGETHER, WE FEEL THAT IN THAT CASE, THE ASSESSEE WAS REQUIRED TO FILE LOSS RETURN AT THE TIME OF FILING ORIGINAL RETURN IN VIE W OF LOSS FOR A. Y. 2003 04 AND IF THE ASSESSEE WOULD HAVE DONE SO, THE REVISED RETURN IN THAT CASE WOULD HAVE REPLACED THE ORIGINAL RETURN BUT SINCE, NO LOS S WAS SHOWN IN THE ORIGINAL RETURN IN THAT CASE IN SPITE OF LOSS FOR A. Y. 2003 04, IT WAS HELD THAT THE REVISED RETURN IN THAT CASE WAS NON EST BECAUSE THE ONLY EFFECTIVE CLAIM IN THE REVISED RETURN WAS FOR CARRY FORWARD OF LOSS. BUT I N THE PRESENT CASE, THE FACTS ARE ITA NO. 1531/B/2012 DIFFERENT. IN THE PRESENT CASE, THERE IS NO BROUGHT FORWARD LOSS OF ANY EARLIER YEAR AND THEREFORE, THIS TRIBUNAL ORDER IS NOT APPLICABL E IN THE CONTEXT OF TREATING THE REVISED RETURN AS NON EST BUT AS PER THIS TRIBUNAL ORDER, IT MAY BE HELD THAT CARRY FORWARD OF LOSS IS NOT ALLOWABLE BUT SINCE, THE LEA RNED AR OF THE ASSESSEE IS NOT SERIOUS ABOUT CARRY FORWARD OF LOSS BECAUSE THE SAM E IS OF ACADEMIC INTEREST, WE DO NOT ENTER INTO THIS ASPECT AS TO WHETHER CARRY F ORWARD OF LOSS IS ALLOWABLE OR NOT AND WE HOLD THAT REVISED RETURN IS VALID BUT CA RRY FORWARD OF LOSS IS REJECTED IN VIEW OF THE SUBMISSION OF THE LEARNED AR OF THE ASSESSEE. ADDITIONAL GROUNDS STAND PARTLY ALLOWED. 8. REGARDING THE GROUND NO. 2 RAISED BY THE REVENUE IN THIS APPEAL, LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AN D LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). HE ALSO SU BMITTED THAT AS PER THIS GROUND, IT IS STATED THAT THE INCOME IN THE REVISED RETURN WAS REDUCED BY 750% AS AGAINST REDUCTION IN EXPENSES BY AROUND 1.8% BUT TH IS IS FACTUALLY NOT CORRECT. HE DRAWN OUR ATTENTION TO PAGE 4 OF THE PAPER BOOK BEING THE ORIGINAL P/L ACCOUNT AND POINTED OUT THAT AS PER THE SAME, THE T URNOVER REPORTED IS RS. 416.67 CRORES WHICH HAS BEEN REDUCED TO RS, 387.67 CRORES AS PER REVISED P/L ACCOUNT AVAILABLE ON PAGE 18 OF PAPER BOOK AND THER EFORE, THE REDUCTION IN TURNOVER IS ONLY 6.96% AND NOT 750% AS STATED IN TH E GROUND. HE FAIRLY CONCEDED THAT THE CLAIM IN THE REVISED P/L ACCOUNT IN RESPECT OF REDUCTION IN ITA NO. 1531/B/2012 TURNOVER WAS NOT EXAMINED BY THE A.O. AND THEREFORE , THE MATTER MAY BE RESTORED TO A.O. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. HAVING ACCEPTED THAT THE REVISED RETURN IS VALID SUBJECT TO THE RIDER THAT C ARRY FORWARD OF LOSS, IF ANY, IS NOT ALLOWABLE, IT IS PROPER TO EXAMINE THE VERACITY OF THE ASSESSEES CLAIM IN THE REVISED P/L ACCOUNT IN RESPECT OF REDUCTION IN TURN OVER BUT AS PER THE ASSESSMENT ORDER, THIS CLAIM WAS SUMMARILY REJECTED BY THE A.O. WITH THE OBSERVATION THAT THE ASSESSEE IS FOLLOWING PERCENT AGE OF COMPLETION METHOD (POCM) AND THE INCOME SHOWN IN THE ORIGINAL RETURN IS IN LINE WITH POCM WITHOUT GIVING ANY SPECIFIC FINDING ABOUT THE CLAIM OF THE ASSESSEE THAT THE TURNOVER SHOWN IN THE REVISED RETURN IS BY FOLLOWIN G CORRECT POCM. HENCE, WE RESTORE THE MATTER BACK TO THE A.O. FOR A FRESH DEC ISION BY WAY OF A SPEAKING ORDER AS TO WHAT SHOULD BE THE TURNOVER OF THE PRES ENT YEAR AS PER CORRECT POCM AND AS 7 IF FOUND APPLICABLE. NEEDLESS TO SAY, AD EQUATE OPPORTUNITY OF BEING HEARD SHOULD BE PROVIDED TO THE ASSESSEE. 10. REGARDING GROUNDS 3 & 4 IN RESPECT OF PARTIAL D ELETION OF DISALLOWANCE U/S 14A, LEARNED DR OF THE REVENUE SUPPORTED THE AS SESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE PRESENT YEAR, RULE 8D IS APPLICABLE. AS PER THIS RULE, IF T HE A.O. CAN SHOW DIRECT NEXUS ITA NO. 1531/B/2012 BETWEEN INTEREST EXPENDITURE AND INVESTMENT IN SHAR ES THAN ENTIRE SUCH INTEREST HAS TO BE DISALLOWED. SIMILARLY, IF THE ASSESSEE CA N SHOW THAT PART OF WHOLE INTEREST IS RELATABLE TO EARNING OF TAXABLE INCOME THAN SUCH INTEREST EXPENDITURE CANNOT BE CONSIDERED FOR RULE 8D. BUT THE REMAINING INTEREST EXPENDITURE HAS TO BE PROPORTIONATELY DISALLOWED AS PER RULE 8D. LEARN ED CIT (A) IN PARA 4.6 HAS HELD THAT SUBSTANTIAL PORTION OF INTEREST IS ON BAN K OVERDRAFTS, DEBENTURES AND OTHER BANK CHARGES AND THESE CANNOT BE STATED AS BE ING NOT RELATABLE TO THE BUSINESS INCOME. IN OUR CONSIDERED OPINION, MERELY BECAUSE AN INTEREST IS RELATABLE TO THE BUSINESS INCOME IS NOT SUFFICIENT TO TAKE IT OUT FROM THE APPLICABILITY OF RULE 8D. FOR THAT, IT HAS TO BE SH OWN THAT IT IS FULLY RELATABLE TO EARNING OF TAXABLE INCOME. THE FINDING OF CIT (A) D OES NOT SAY THAT THIS IS FULLY RELATABLE TO EARNING OF TAXABLE INCOME. HENCE, ON T HIS ASPECT, THE ORDER OF CIT (A) IS REVERSED AND THAT OF THE A.O. IS RESTORED. G ROUND NO. 3 IS ALLOWED. REGARDING GROUND NO. 4, WE FIND THAT IN PARA 4.7 OF HIS ORDER, LEARNED CIT (A) HAS ASKED THE A.O. TO RECOMPUTED THE DISALLOWANCE U NDER RULE 8 D (2) (III) AFTER CONSIDERING THE CORRECT FIGURES AS PER BALANCE SHEE T. IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THIS DIRECTION OF CIT (A). THEREFORE, GROUND 4 IS REJECTED. 12. REGARDING GROUNDS 5 TO 9 IN RESPECT OF DELETION OF DISALLOWANCE OF INTEREST OF RS. 23,25,95,267/- U/S 36 (1) (III), LE ARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF TH E ASSESSEE SUPPORTED THE ITA NO. 1531/B/2012 ORDER OF CIT (A). HE ALSO SUBMITTED THAT AS PER THE REVISED BALANCE SHEET ON PAGE 17 OF THE PAPER BOOK, THE OWN INTEREST FREE FU NDS ARE TO THE EXTENT OF RS. 151.44 CRORES ON 31.03.2009 AND RS. 179.63 CRORES O N 31.03.2008. THEN HE DRAWN OUR ATTENTION TO PAGE 11 OF THE ASSESSMENT OR DER AND POINTED OUT THAT AS PER THE A.O., THE INTEREST FREE ADVANCES TO SISTER CONCERN A ON 31.03.2009 IS ONLY RS. 128.89 CRORES AND ON 31.03.2008 ONLY RS. 136.12 CRORES. HE SUBMITTED THAT OWN INTEREST FREE FUNDS ON BOTH THESE DATES I.E. 31 .03.2009 AND 31.03.2008 IS IN EXCESS OF INTEREST FREE ADVANCES AND THEREFORE, NO DISALLOWANCE OF INTEREST IS JUSTIFIED. HE PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF M/S KEMS AUTO COMPONENTS LTD. VS. DCIT IN ITA NO. 100/B /2014 DATED 16.09.2016 (COPY FILED) AND POINTED OUT THAT IN THA T CASE, THE TRIBUNAL FOLLOWED THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD., 313 ITR 540. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN VI EW OF THE FACTS NOTED ABOVE AS PER WHICH, OWN INTEREST FREE FUNDS ON BOTH THESE DATES I.E. 31.03.2009 AND 31.03.2008 IS IN EXCESS OF INTEREST FREE ADVANC ES AND BY RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER CITED BY THE LEARNED A R OF THE ASSESSEE HAVING BEEN RENDERED IN THE CASE OF M/S KEMS AUTO COMPONENTS LT D. VS. DCIT (SUPRA) AND THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. (SUPRA), WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE. THESE GROUNDS ARE REJECTED. ITA NO. 1531/B/2012 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED IN THE TERMS INDICATED ABOVE. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (VIJAY PAL RAO) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 28 /04/2017 AM* COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., BANGALORE ASST T. REGISTRAR