M/s. Indiabulls Real Estate Ltd., New Delhi V. DCIT, New Delhi

ITA 1595/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4979 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAVEEN CHANDRA
• Keywords: Share purchase agreement; Opportunity of being heard; Earning of tax free income; Question of law; Difference of opinion; Assessment record; Commercial expediency; Revised return; Reason to believe
• Section: 143(3); 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER. ITA NO. 1595/DEL/2014 [A.Y. 2009-10] M/S INDIA BULLS REAL ESTATE LTD VS. DY. CIT F 60, MALHOTRA BUILDING, CIRCLE 11(1) IIND FLOOR, CONNAUGHT PLACE NEW DELHI NEW DELHI PAN : AABCI 5194 F ITA NO. 2233/DEL/2014 [A.Y. 2009-10] DY. CIT VS. M/S INDIA BULLS REAL ESTATE LTD CIRCLE 11(1) F 60, MALHOTRA BUILDING, NEW DELHI IIND FLOOR, CONNAUGHT PLACE NEW DELHI PAN : AABCI 5194 F [APPELLANT] [RESPONDENT] DATE OF HEARING : 23.08.2017 DATE OF PRONOUNCEMENT : 28.08.2017 ASSESSEE BY : SHRI GAUTAM JAIN SHRI PIYUSH K KAMAL, ADV REVENUE BY : SHRI NAVEEN CHANDRA, C IT-DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER: THESE CROSS APPEALS OF THE ASSESSEE AND REVENU E ARISE FROM THE ORDER OF THE LD. CIT(A)- XV, NEW DELHI VIDE ORDER D ATED 27.01.2014 FOR ASSESSMENT YEAR 2009-10. - 2- 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE G ROUND OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 4,30,30,578/- MADE U/S 14A IN ACCORDANCE WITH RULE 8D 3. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND OF APPEAL: GROUND NO. 1 : THE C1T(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN NOT ADMITTING THE ADDITIONAL GROUND FILED BY THE ASSESS EE THAT THAT FULL VALUE OF CONSIDERATION FOR SALE OF SHARES WERE WRON GLY ASSUMED TO BE RS 10 CRORES WHEREAS THE FULL VALUE OF SALE CONSIDE RATION WAS LATER WORKED OUT TO BE RS 25 LAKHS. GROUND NO. 2 : THE CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN NOT ACCEPTING THE ALTERNATE PLEA MADE BY THE ASSESSEE W ITH REGARD TO COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D THAT INVESTMENT IN SHARES OUGHT TO BE EXCLUDED FROM TH E VALUE OF TOTAL INVESTMENT WHILE COMPUTING THE AVERAGE INVESTMENT AS CONTEMPLATED IN RULE 8D OF IT RULES. GROUND NO.3 : THE APPELLANT PRAYS THAT HE MAY BE ALLOWED TO ADD, AMEND, ALTER OR FOREGO ANY OF THE ABOVE GROUNDS OF APPEAL AS THE CI RCUMSTANCES MAY WARRANT. - 3- 4. BRIEF FACTS OF SOLE GROUND NO. 1 IN REVENUES AP PEAL ARE THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF REA L ESTATE PROJECT DEVELOPMENT. DURING THE ASSESSMENT PROCEEDING, THE AO OBSERVED THAT THE APPELLANT HAD EARNED DIVIDEND INCOME OF RS.1,95 ,118/-. THE AO ASKED THE APPELLANT AS TO WHY THE DISALLOWANCE U/S 14A READ WITH RULE 8D MAY NOT BE MADE IN ITS CASE. THE REPLY OF THE AP PELLANT THAT IT HAD SUO MOTTO DISALLOWED AN AMOUNT OF RS.50,231/- IN TH E COMPUTATION OF INCOME ON ACCOUNT OF EXPENSES INCURRED WITH RESPECT TO THE INVESTMENT MADE IN SHARES, WAS NOT ACCEPTED BY THE . AO, WHO WAS OF THE VIEW THAT EARNING OF EXEMPT INCOME IS NOT IN TH E NATURE OF A PASSIVE ACTIVITY AND HELD THAT IN THE CASE OF THE A PPELLANT, SINCE THE PROVISION OF RULE 8D WERE OPERATIONAL, THE SAME WER E TO BE ADHERED TO. ACCORDINGLY, THE LD. AO APPLIED THE PROVISIONS OF RULE 8D AND MADE DISALLOWANCE OF RS.4,30,80,809/- THEREUNDER, AFTER GIVING ALLOWANCE OF AN AMOUNT OF RS. 50,231/- DISALLOWED BY THE APPELLA NT. 5. THE LD. CIT(A) DELETED THE ADDITIONS FOR THE REA SONS AS MENTIONED IN HIS ORDER. 6. AS REGARDS GROUND NO. 1 OF THE ASSESSEE, DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE AP PELLATE COUNSEL FILED A REQUEST FOR ADMITTING AN ADDITIONAL GROUND AS UNDER: - 4- GROUND NO. 4. THAT FULL VALUE OF CONSIDERATION FO R SALE OF SHARES WERE WRONGLY ASSUMED TO BE RS. 10 CRORES WHE REAS THE FULL VALUE OF SALE CONSIDERATION WAS LATER WORKED O UT TO BE RS. 25 LAKHS. 7. COPY OF THE ADDITIONAL GROUND WAS SENT TO THE AS SESSING OFFICER FOR SEEKING COMMENTS ON THE MATTER. THE ASSESSING OFFICER, VIDE LETTER DATED 14.01.2013 SUBMITTED THAT ADDITIONAL G ROUND OF APPEAL SUBMITTED BY THE APPELLANT SHOULD NOT BE ADMITTED S INCE FROM THE PERUSAL OF ASSESSMENT RECORD, IT IS CLEAR THAT DUE OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS BEFORE THE ASSESSING OFFICER. 8. THE SAID GROUND WAS NOT ADMITTED BY THE LD. CIT( A) AND ON MERITS HE DECIDED THE ISSUE AGAINST THE ASSESSEE. THE REL EVANT FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREINBELOW: 7.9 THE ADDITIONAL GROUND NO.4 FILED BY THE APPELLANT DURING THE COURSE OF THE APPELLATE PROCEEDING RELATING TO RECOMPUTING THE CAPITAL GAIN ON SALE OF SHARES OF THE APPELLANT COMPANY BY REVISING THE SALE CONSIDERATION FROM RS.25 CRORES T O RS.10 LAKHS IN RESPECT OF 50% SHARES OF M/S SHIVALIK LAND DEVELOPM ENT LTD., I FIND THAT THE APPELLANT ITSELF HAD DISCLOSED SALE C ONSIDERATION OF RS.25 LAKHS IN THE RETURN OF INCOME. THE DISCLOSURE MADE BY THE LD. AO ALSO WAS ACCEPTED BY THE LD. AO AND HENCE TH ERE IS NO - 5- DISPUTE IN THE MATTER. THE PROVISIONS OF SECTION 25 1 RELATING TO THE POWERS OF COMMISSIONER OF APPEALS AS PROVIDED I N EXPLANATION BELOW SUB-SECTION(2) PROVIDE THAT IN DI SPOSING OF AN APPEAL, THE COMMISSIONER OF APPEAL MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDING, IN WHICH THE ORDER OF APPEAL AGAINST WAS PASSED BEFORE THE COMMISSIONER O F APPEAL. IN THE CASE OF THE APPELLANT, IT IS EVIDENT THAT THE I SSUE RELATING TO THE REVISION OF CAPITAL GAINS WAS NEVER RAISED AND NO SUCH DIFFERENCE OF OPINION EXISTED BETWEEN AO AND THE AP PELLANT. MOREOVER, IN CASE OF THE SAID M/S SHIVALIK LAND DEV ELOPMENT LIMITED, ITS SHARES ARE NOT LISTED AND THEREFORE TH E MARKET VALUE OF THEIR SHARES CANNOT BE DETERMINED ONLY ON THE BA SIS OF A REVISED SALE AGREEMENT. THE EXPLANATION GIVEN BY TH E APPELLANT REGARDING THE INABILITY TO FILE SUCH CLAIM DURING T HE ASSESSMENT PROCEEDINGS IS NOT SATISFACTORY. MOREOVER, THERE IS NO EXPLANATION, WHATSOEVER, AS TO HOW IN RESPECT OF SA LE OF SOME SHARES, THE TWO CONTRACTING PARTIES COULD SUBSTITUT E THE FULL VALUE OF CONSIDERATION FROM RS.10 CRORES TO RS.25 L AKHS, WITHOUT ANY BASIS. UNDER THE CIRCUMSTANCES, THE REQUEST OF THE APPELLANT TO ADMIT ADDITIONAL GROUND OF APPEAL AGAINST ITS OW N ADMITTED POSITION AT THE TIME OF FILING OF RETURN AND LATER DURING THE ASSESSMENT PROCEEDING CANNOT BE ALLOWED TO BE ACCEP TED. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONS IDERED THE VARIOUS DECISIONS RELIED UPON BY BOTH THE SIDES. AT THE OU TSET, IT WAS - 6- SUBMITTED THAT TOTAL EXEMPT INCOME EARNED BY THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS. 1,95,118/- (PAGE 2 , READ WITH PAGE 9 AND 26), AND VOLUNTARY DISALLOWANCE MADE BY THE AS SESSEE IS RS. 50,231/- (PAGE 2 READ WITH BACK SIDE OF PAGE 97), W HICH IS COMMENSURATE TO THE EXEMPT INCOME AND THUS APPARENT LY DISALLOWANCE MADE OF RS. 4,30,30,578 IS PATENTLY INCORRECT, ABSU RD AND UNTENABLE. 10. IT WAS SUBMITTED THAT IN VIEW OF THE JUDGEMENT OF HONBLE DELHI IN THE CASE OF JOINT INVESTMENT (P) LTD. REPORTED I N 372 ITR 694, (PAGES 30-32 OF JPB) WHEREIN IT HAS BEEN HELD AS UNDER: 9. IN THE PRESENT CASE, THE AO HAS NOT FIRSTLY DIS CLOSED WHY THE APPELLANT/ASSESSEES CLAIM FOR ATTRIBUTING RS. 2,97 ,440/- AS A DISALLOWANCE UNDER SECTION 14A HAD TO BE REJECTED. TAIKISHA SAYS THAT THE JURISDICTION TO PROCEED FURTHER AND D ETERMINE AMOUNTS IS DERIVED AFTER EXAMINATION OF THE ACCOUNT S AND REJECTION IF ANY OF THE ASSESSEES CLAIM OR EXPLANA TION. THE SECOND ASPECT IS THERE APPEARS TO HAVE BEEN NO SCRU TINY OF THE ACCOUNTS BY THE AO - AN ASPECT WHICH IS COMPLETELY UNNOTICED BY THE CIT (A) AND THE ITAT. THE THIRD, AND IN THE OPI NION OF THIS COURT, IMPORTANT ANOMALY WHICH WE CANNOT BE UNMINDF UL IS THAT WHEREAS THE ENTIRE TAX EXEMPT INCOME IS RS. 48,90,0 00/-, THE DISALLOWANCE ULTIMATELY DIRECTED WORKS OUT TO NEARL Y 110% OF THAT SUM, I.E., RS. 52,56,197/-. BY NO STRETCH OF I MAGINATION CAN SECTION 14A OR RULE 8D BE INTERPRETED SO AS TO MEAN - 7- THAT THE ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOW ED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A . AND IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE INCU RRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME. THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURE LY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE. 11 . IT WAS SUBMITTED THAT DISPUTE CANNOT EXCEED THE EXE MPT INCOME, THE DISPUTE AS BEST IS OF RS. 1,44,887/- (RS.1,95,1 18 BEING EXEMPT INCOME - RS. 50,231/- VOLUNTARY DISALLOWANCE MADE B Y ASSESSEE), WHICH TOO IS UNTENABLE HAVING REGARD TO THE NON REC ORDING OF SATISFACTION AS REQUIRED IN SECTION 14A(2) OF ACT. THE ASSESSEE IN SUPPORT OF THE DECISION OF ID. CIT(A) SUBMITTED THA T, IN ABSENCE OF SATISFACTION U/S 14A(2) OF THE ACT READ WITH RULE 8 D(1) OF THE INCOME TAX RULES 1962 DISALLOWANCE MADE OTHERWISE TOO IS UNTENABLE AS HELD BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSING OFFICER DID NOT GIVE CREDENCE TO THE ASSESSEES WOR KING OF VOLUNTARY DISALLOWANCE , HOWEVER REJECTING THE CLAIM OF THE A SSESSEE WITHOUT PROVIDING ANY COGENT REASON AND HAS NOT RECORDED SA TISFACTION THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AS REQUIRED BY THE SECTION 14A(2) OF THE ACT. THE ASSE SSING OFFICER HOWEVER STATING GENERAL REASONS FOR DISALLOWANCE U/ S 14A OF THE ACT. - 8- 12. THE LEARNED CIT(A), THEREFORE REVERSED THE ORDE R OF THE ASSESSING OFFICER AS HELD AT PAGE 8-9 OF CIT(A) ORDER, AS UNDER: 7.4 I FIND THAT IN THE ORIGINAL RETURN OF INCOME F ILED ON 29.09.2009, THE APPELLANT HAD DISALLOWED EXPENDITUR E ATTRIBUTABLE TO EARNING OF TAX-EXEMPT DIVIDEND INCO ME BY MAKING ITS OWN WORKING. THIS CLAIM WAS BASED ON THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS. IN ORDER TO JUSTIFY HIS LACK OF SATISFACTION, THE AO OUGHT TO HAVE IDENTIFIED INSTA NCES SUGGESTING SERIOUS DEFECTS IN THE WORKING OF THE AP PELLANT, HOWEVER, THE AO DID NOT DO THE SAME AND APPLIED THE PROVISIONS OF RULE 8D IN A MECHANICAL MANNER. THERE FORE, IT IS EVIDENT THAT THE ASSESSING OFFICERS LACK OF SATISF ACTION WITH REGARDS THE ORIGINAL CLAIM OF THE APPELLANT WAS NOT BASED ON THE COGENT GROUND. THE LEGISLATURE HAS CAREFULLY THOUGHT OF ACHIEVING A TRADE-OFF BETWEEN THE ACCURATE DETERMINATION OF EXPENSES ATTR IBUTABLE TO TAX-EXEMPT INCOME AND THE SUBJECTIVITY OF METHOD TO BE ADOPTED FOR THIS PURPOSE BY PRESCRIBING RULE 8D. TH E PROVISIONS OF RULE 8D DO NOT LEAVE ANY SCOPE OF SUBJECTIVITY I N THE HAND OF THE ASSESSING OFFICER AND CALL FOR APPLYING THE PRE SCRIBED METHOD TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL I NCOME UNDER THE ACT. THE LAW USES THE WORDS SHALL AND NOT MA Y FOR THIS PURPOSE. HOWEVER, BEFORE RESORTING TO THE PRESCRIBE D METHOD, THE AO IS REQUIRED TO MEET THE PRESCRIBED PROTOCOL U/S 14A(2) AND (3) BY RECORDING HIS LACK OF SATISFACTION ON CO GENT GROUNDS. IN THE CASE OF THE APPELLANT, THE AO DID NOT RECORD HI S LACK OF - 9- SATISFACTION ON ANY COGENT GROUNDS BY DISREGARDING THE COMPUTATION OF DISALLOWANCE MADE BY THE APPELLANT S UMMARILY AND WENT AHEAD TO APPLY THE PROVISIONS OF RULE 8D, AS FAIT ACCOMPLI, WHICH IS CERTAINLY NOT THE LEGISLATIVE IN TENT. IN VIEW OF THE ABOVE, I HOLD THAT THE ACTION OF THE AO OF APPL YING THE PROVISIONS OF RULE 8D, WITHOUT RECORDING LACK OF SA TISFACTION ON THE COGENT GROUND IDENTIFYING MATERIAL DEFECTS IN T HE COMPUTATION OF THE APPELLANT MADE IN THE RETURN OF INCOME U/S 14A, IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SE CTION 14A(2). 13. RELIANCE IS PLACED ON THE FOLLOWING JUDGMEN TS: 394 ITR 449 (SC) GODREJ & BOYCE MANUFACTURING COMPA NY LTD. VS. DCIT (PAGES 1-14 OF JPB) 37. WE DO NOT SEE HOW IN THE AFORESAID FACT SITUAT ION A DIFFERENT VIEW COULD HAVE BEEN TAKEN FOR THE ASSESS MENT YEAR 2002-2003. SUB-SECTIONS (2) AND (3) OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES MERELY PRESC RIBE A FORMULA FOR DETERMINATION OF EXPENDITURE INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN A SITUATION WHERE THE ASSES SING OFFICER IS NOT SATISFIED WITH THE CLAIM OF THE ASSE SSEE.' WHETHER SUCH DETERMINATION IS TO BE MADE ON APPLICA TION OF THE FORMULA UNDER RULE 8D OR IN THE BEST JUDGMEN T OF THE ASSESSING OFFICER, WHAT THE LAW POSTULATES IS T HE REQUIREMENT OF A SATISFACTION IN THE ASSESSING OFFI CER THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS P LACED - 10- BEFORE HIM IT IS NOT POSSIBLE TO GENERATE THE REQUI SITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IT IS ONLY THEREAFTER THAT THE PROVIS IONS OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RUL ES OR A BEST JUDGMENT DETERMINATION, AS EARLIER PREVAILING, WOULD BECOME APPLICABLE. II) 360 ITR 68 (DEL) CIT VS. M/S HERO MANAGEMENT SE RVICE LTD. III) 347 ITR 272 (DEL) MAXOPP INVESTMENT LTD. VS. C IT IV) 358 ITR 310 (DEL) DATED 2.7.2012 CIT VS. CONSOL IDATED PHOTO & FINVEST LTD V) 370 ITR 338 (DEL) CIT VS. TAIKISHA ENGINEERING I NDIA LTD. (PAGES 15-23 OF JPB) 20. HOWEVER, IN THE PRESENT CASE WE NEED NOT REFER TO SUB RULE (2) TO RULE 8D OF THE RULES AS CONDITIONS MENT IONED IN SUB SECTION (2) TO SECTION 14A OF THE ACT READWITH SUB RULE (1) TO RULE 8D OF THE RULES WERE NOT SATISFIED AND THE ASSESSING OFFICER ERRED IN INVOKING SUB RULE (2), W ITHOUT ELUCIDATING AND EXPLAINING WHY THE VOLUNTARY DISALL OWANCE MADE BY THE ASSESSEE WAS UNREASONABLE AND UNSATISFA CTORY. WE DO NOT FIND ANY SUCH SATISFACTION RECORDED IN TH E PRESENT CASE BY THE ASSESSING OFFICER, BEFORE HE INVOKED SU B RULE (2) TO RULE 8D OF THE RULES AND MADE THE RE-COMPUTATION . THEREFORE, THE RESPONDENT ASSESSEE WOULD SUCCEED AN D THE APPEAL SHOULD BE DISMISSED VI) ITA NO. 953/2015 (DEL) PRADEEP KHANNA VS. ACIT - 11- VII) 392 ITR 552 (DEL) PR. CIT V. U.K. PAINTS (INDI A) (P) LTD. 14A(2). THAT APART, SIGNIFICANTLY, THE QUESTION OF APPLYING THE STATUTORILY PRESCRIBED METHOD WOULD ARISE ONLY AND ONLY IF THE ASSESSING OFFICER EXPRESSES AN OPINION REJECTIN G THE ASSESSEES METHODOLOGY AND THE FIGURE OFFERED AT TH E TIME OF ASSESSMENT. THIS IS MATERIAL BECAUSE THE JURISDICTI ON TO GO INTO THE METHOD PRESCRIBED IN THE RULES ARISE ONLY IF THE AMOUNTS THE ASSESSEE OFFERS DOES NOT HAVE ANY REALI STIC CORRELATION WITH THE TAX EXEMPT INCOME. FOR INSTANC E, IN A GIVEN CASE IF A TAX EXEMPT INCOME IS TO THE TUNE OF RS. 5 CRORES AND THE ASSESSEE IS ABLE TO SATISFY THAT EXP ENDITURE RELATABLE TO THAT INCOME OR THE REASONABLE NEXUS TO SUCH INCOME IS RS. 251AKHS THERE HAS TO BE STRONG REASON S WHY THE SAID AMOUNT OF RS. 25 LAKHS ARE TO BE REJECTED. IN OTHER WORDS, THE OPINION OF THE ASSESSING OFFICER I N THE LATER PART (OF SECTION 14A(2)) IS TO BE BASED UPON AN APPRAISAL OF OBJECTIVE MATERIAL RELATING TO THE ASS ESSEES VOLUNTARY DISALLOWANCE OF AMOUNT/ AMOUNTS. NOT ONLY THAT, IF IN THE COURSE OF ASSESSMENT, THE ASSESSING OFFIC ER ENQUIRES FROM THE ASSESSEE ABOUT THE AMOUNTS SPENT, WHICH AR E TO BE DISALLOWED, AND THE ASSESSEE IN FACT DISCLOSES A LA RGER AMOUNT (THAN THE ONE GIVEN IN THE RETURN), IT IS STILL INC UMBENT UPON THE ASSESSING OFFICER TO ENQUIRE INTO SUCH LARGER A MOUNTS AND DETERMINE WHETHER IT HAS NEXUS WITH EXPENDITURE REL ATABLE TO EXEMPT INCOME TO ATTRACT SECTION 14A(1). SANS THIS PROCEDURE, SECTION 14A WOULD BE REDUCED TO MERE FORMALITY WHIC H IT APPEARS TO HAVE BECOME IN THE CIRCUMSTANCES OF THE CASE. - 12- CONSEQUENTLY, WE ARE OF THE OPINION THAT THERE IS N O INFIRMITY IN THE REASONING AND CONCLUSION OF THE INCOME-TAX A PPELLATE TRIBUNAL. THE APPEAL IS ACCORDINGLY DISMISSED. VIII) 372 ITR 694 (DEL) JOINT INVESTMENTS PVT. LTD. VS. CIT (PAGES 30- 32 OF JPB) 9. IN THE PRESENT CASE, THE AO HAS NOT FIRSTLY DIS CLOSED WHY THE APPELLANT/ASSESSEE'S CLAIM FOR ATTRIBUTING RS. 2,97,440 AS A DISALLOWANCE UNDER S. 14A HAD TO BE REJECTED. TAIKI SHA ENGG. INDIA LTD. (SUPRA) SAYS THAT THE JURISDICTION TO PR OCEED FURTHER AND DETERMINE AMOUNTS IS DERIVED AFTER EXAMINATION OF THE ACCOUNTS AND REJECTION IF ANY OF THE ASSESSEE'S CLA IM OR EXPLANATION. THE SECOND ASPECT IS THERE APPEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO-AN ASPECT WHI CH IS COMPLETELY UNNOTICED BY THE CIT(A) AND THE TRIBUNAL . THE THIRD, AND IN THE OPINION OF THIS COURT, IMPORTANT ANOMALY WHICH WE CANNOT BE UNMINDFUL IS THAT WHEREAS THE EN TIRE TAX EXEMPT INCOME IS RS. 48,90,000, THE DISALLOWANCE UL TIMATELY DIRECTED WORKS OUT TO NEARLY 110 PER CENT OF THAT S UM, I.E., RS. 52,56,197. BY NO STRETCH OF IMAGINATION CAN S. 14A OR R. 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EX EMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOW ANCE IS INDICATED IN S. 14A, AND IS ONLY TO THE EXTENT OF D ISALLOWING EXPENDITURE 'INCURRED BY THE ASSESSEE IN RELATION T O THE TAX EXEMPT INCOME'. THIS PROPORTION OR PORTION OF THE T AX EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT AS H AS HAPPENED IN THIS CASE. - 13- BOMB AY HIGH COURT I) 328 ITR 81 (BOM) M/S GODREJ AND BOYCEE MGF. CO. LTD. VS. DCIT PUNJAB & HARYANA HIGH COURT I) 380 ITR 652(P&H) CIT VS. ABHISHEK INDUSTRIAL LTD. II) 393 ITR 223(P&H) PUNJAB TRACTOR LTD. VS. CIT III) 361 ITR 131(P&H) CIT VS. DEEPAK MITTAL (PAGES 33-36 OF JPB) IV) 388 ITR 81 (P&H) CIT VS. MAX INDIA LTD. (PAGES 37-4 5 OF JPB) INCOME TAX APPELLATE TRIBUNAL I) 140 TTJ 73 (CAL) BALARAMPUR CHINI MILLS LTD. VS. DC IT II) 152 ITD 469 (PUNE TRIB.) ASST CIT VS MAGARPATTA TOW NSHIP DEVELOPMENT AND CONSTRUCTION CO. LTD. III) 146 ITD 227 (MUM TRIB.) RAJ SHIPPING AGENCIES LTD. VS. ADDL. CIT IV) ITA NO. 1050/MUM/2010 ASSESSMENT YEAR 2008-09 DATED 5.8.2011 M/S MULTI COMMODITY EXCHANGE OF INDIA LTD. VS. DCIT V) ITA NO. 814/DE/2011 FOR A.Y: 2008-09 JINDAL PHOTO L TD. VS DCIT VI) 52 SOT 39 (MUM) ASSESSMENT YEAR 2008-09 DATED 30.4. 2012 M/S AUCHTEL PRODUCTS LTD. VS. ACIT VI) ITA NO. 47/KOI/2012 ASSESSMENT YEAR 2008-09 DATED 2 2.8.2012 HINDUSTAN PAPER CORPORATION LTD. VS. DCIT VII) ITA NO. 16/CHD/2012 ASSESSMENT YEAR 2008-09 DATED 6 .3.2012 DCIT VS. M/S OSWAL WOLLEN MILLS LTD VIII) ITA NO. 5231/D/2002 A.Y. 2008-09 DATED 17.1.2014 M/ S J.H. FIN- VEST PVT. LTD. VS. DCIT IX) ITA NO. 5526/DEL/2014 A.Y. 2010-11 DATED 28.07.2017 DCIT VS. M/S INDIABULLS FINANCIAL SERVICES LTD. ( PAGES 166- 171 OF PAPER BOOK) - 14- 9. HAVING REGARD TO THE ABOVE JUDICIAL BINDING PRECEDE NTS, WE FIND THAT THE RATIO DECIDENDI EMERGING IS THAT IT I S INCUMBENT UPON THE AO TO RECORD A SATISFACTION THAT HAVING RE GARD TO ACCOUNTS OF ASSESSEE AS PLACED BEFORE HIM, IT IS NO T POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IN THE IN STANT CASE, ASSESSEE HAD MADE CLAIM THAT EXPENSES ATTRIBUTABLE TO EXEMPT INCOME IS RS. 27,72,963/-; THERE IS NO SATISFACTION OF THE AO THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE THE A FORESAID CLAIM OF RS. 27,72,963/- IS NOT ACCEPTABLE. THE AO HAS NO T BEEN ABLE TO POINT OUT THAT ANY DEFECT IN THE CLAIM OF THE AP PELLANT ON ANY COGENT GROUND. ON THE CONTRARY RULE 8D HAS BEEN INVOKED ONLY ON THE ACCOUNT OF QUANTUM OF TAX FREE DIVIDEND INCOME WHICH IS NOT A VALID SATISFACTION. IN VIEW THEREOF, WE FIND NO REASON FOR INTERFERENCE IN THE ORDER OF THE LEARNED CIT(A) AND CONSEQUENTLY UPHOLD THE ORDER DELETING THE DISALLOW ANCE OF RS. 5,23,89,683/- MADE UNDER SECTION 14A OF THE ACT. WE , THEREFORE, ACCORDINGLY, DISMISS THE GROUNDS OF REVENUE. X) ITA NO. 2646/DEL/2014 A.Y. 2008-09 DATED 28.07.2017 DCIT VS. M/S INDIA BULLS INSURANCE ADVISORS LTD.(PAGEL03-110 OF JPB) SO THE DISALLOWANCE MADE BY THE AO WITHOUT RECORDI NG HIS SATISFACTION ON ANY COGENT GROUND BY DISPUTING THE COMPUTATION OF DISALLOWANCE MADE BY THE ASSESSEE RA THER SUBJECTIVELY WRITTEN THAT, THE SUBMISSION OF THE ASSESSEE CANNOT BE ACCEPTED IN VIEW OF THE PROVISIONS CONTAI NED U/S 14A READ WITH RULE 8D IS NOT SUSTAINABLE IN THE EYES OF LAW. - 15- IN THE GIVEN CIRCUMSTANCES, THE CASE LAW RELIED UPO N BY THE ID. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTA NCES OF THE CASE. SO, FINDING NO ILLEGALITY OR PERVERSITY IN TH E FINDING RETURNED BY ID. CIT(A), THE INSTANT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. 14. THE LD. DR RELIED UPON THE DECISION OF THE HON 'BLE DELHI HIGH COURT IN THE CASE OF THE ASSESSEE DATED 21.11.2016 IN ITA NO. 470/2016. IN THIS REGARD AND IN VIEW OF THE JUDGME NT OF HON'BLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE [SUPRA] , THE DECISION OF HON'BLE DELHI HIGH COURT IS NO MORE A GOOD CASE. 15. ACCORDINGLY, THE DISALLOWANCE MADE BY THE ASSES SEE IS APPROPRIATE, CONSIDERING THE PROCESS OF THE INVESTM ENT AND THE STEPS INVOLVED IN AN INVESTMENT ACTIVITY. IT IS EMPHASIZE D THAT IN ORDER TO JUSTIFY THAT NO OTHER COST HAS BEEN INCURRED BY THE ASSESSEE, THE ASSESSEE SUBMITS THAT ACTIVITY OF INVESTMENT IN MUT UAL FUNDS IS NOT COMPLEX OR DRIVEN BY ANY COMPLICATED ANALYSIS AND, EVALUATION. THE OBJECTIVE IS TO INVEST IN A MUTUAL FUND WHICH MAXIM IZES RETURN OVER A SHORT PERIOD OF TIME. THERE ARE NO EXTERNAL OR STAT UTORY APPROVALS OR STATUTORY REQUIREMENT OF MAINTENANCE OF RECORDS. IT IS SUBMITTED THAT OBTAINING APPROVAL FROM TOP MANAGEMENT IS AN INTERN AL PROCESS AND DOES NOT ENTAIL MUCH OF THEIR TIME. FURTHER ON ACCO UNT OF TECHNOLOGY- - 16- BASED ENVIRONMENT AND FACILITY OF ELECTRONIC TRANSF ER OF FUNDS, TASK OF LOWER-LEVEL MANAGEMENT HAS ALSO BECOME QUITE HASSLE -FREE AND DOES NOT NEED MUCH OF THEIR TIME. THUS MAKING AN INVESTM ENT ACTIVITY IS NOT A TIME CONSUMING ACTIVITY. IT DOES NOT INVOLVE FULL DAY EFFORT OF THE PERSONNELS INVOLVED AND HENCE THE SAME OUGHT TO B E ACCEPTED AS SUCH, NO FURTHER DISALLOWANCE IS WARRANTED. 16. ALSO IN ABSENCE OF ANY IDENTIFIED/SPECIFIC E XPENDITURE DISALLOWANCE IS UNTENABLE RELIANCE IS PLACED ON. I) 374 ITR 108 (DEL) ACB INDIA LTD. VS. ACIT (PAGES 46-48 OF JPB) II) 347 ITR 272 (DEL) AT PAGE 290 AND 291 MAXOPP IN VESTMENT LTD. VS. CIT PUNJAB & HARYANA HIGH COURT I) 323 ITR 518 (P&H) CIT VS. HERO CYCLES LTD. INCOME TAX APPELLATE TRIBUNAL I) ITA NO. 3889/MUM/2011 A.Y. 2008-09 JUSTICE SAM P BHARUCHA VS. ADDL. CIT II) 138 TTJ 240 (DEL) MINDA INVESTMENTS LTD. VS. DC IT III) ITA NOS 563 & 564/D/2013 DATED 9.3.2015 M/S BH USHAN ENERGY LTD. VS. ACIT - 17- IV) ITA NO. 305/MAD/2013 DATED 7.11.2013 DCIT V. M/ S ALLIED INVESTMENTS HOUSING (P) LTD. V) ITA NO. 7851/MUM/2011 DATED: 06.05.2013 JK INVES TORS LTD. VS ACIT VI) 129 ITD 237 (MUM) YATISH TRADING CO. (P) LTD. V . ACIT 17. THE ASSESSING OFFICER HAS INCLUDED ALL THE INVE STMENTS FOR CALCULATION OF DISALLOWANCE UNDER RULE 8D OF THE IN COME TAX RULES, 1962.THE DISALLOWANCE UNDER SECTION 14A READ WITH R ULE 8D IS TO BE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THIS CAN BE DONE ONLY BY TAKING INTO CONSIDERAT ION THE INVESTMENT WHICH HAS GIVEN RISE TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME DURING THE INSTANT YEAR. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: ITA NO(S) 1236 AND 1240/MDS/2014 ACIT VS. M/S COMPU TER AGE MANAGEMENT SERVICES (P) LTD. 374 ITR 108 (DEL) ACB INDIA LTD. VS. ACIT (PAGES 46 -48 OF JPB) THE ASSESSING OFFICER, INSTEAD OF ADOPTING THE AVE RAGE VALUE OF INVESTMENT OF WHICH INCOME IS NOT PART OF THE TOTAL INCOME, I.E., THE VALUE OF TAX EXEMPT INVESTMENT, CHOSE TO FACTOR IN THE TOTAL INVESTMENT ITSELF. EVEN THOUGH THE COMMISSIONER OF INCOME-TAX (APPEALS) NOTICED THE EXACT VALUE OF THE INVESTMENT WHICH - 18- YIELDED TAXABLE INCOME HE DID NOT CORRECT THE ERROR BUT CHOSE TO APPLY HIS OWN EQUITY. GIVEN THE RECORD THAT HAD TO BE DONE SO TO SUBSTITUTE THE FIGURE OF RS. 38,61,09,287 WITH THE FIGURE OF RS. 3,53,26.800 AND, THEREAFTER, ARRIVE AT THE EXACT DI SALLOWANCE OF .05 PER CENT. 388 ITR 81 (P&H) CIT VS. MAX INDIA LTD. (PAGES 37-4 5 OF JPB) 381 ITR 107 (P&H) BRIGHT ENTERPRISES (P) LTD. VS. C IT 393 ITR 223 (P&H) PUNJAB TRACTORS LTD. VS. CIT ACCORDINGLY, DISALLOWANCE MADE BY ASSESSING OFFICE R IS NOT IN ACCORDANCE WITH LAW AS IT IS EVIDENT FROM THE TABUL ATED CHART PLACED AT PARA 3.4 ABOVE, THAT INVESTMENT TAKEN FOR DISALLOWANCE UNDER RULE 8D(2)(III), READ WITH SECTI ON 14A OF THE ACT, BY ASSESSING OFFICER, DOES NOT GIVE RISE TO AN Y INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. 18. ALSO, IF INVESTMENT MADE ON ACCOUNT OF STRATEGI C OR FOR CONTROLLING INTEREST, SECTION 14A IS INAPPLICABLE. IT IS SUBMITTED THAT ASSESSEE IS A REAL ESTATE COMPANY. THE MAIN OBJECTI VE OF WHICH IS TO ACQUIRE LAND TO DEVELOP REAL ESTATE PROJECTS AND SE LL IT. IN VIEW OF THE APPLICABLE STATE LAND LAWS, WHICH PUT CEILING ON TH E EXTENT OF ACQUISITION OF LAND, IT WAS IN THE BUSINESS INTERES T OF THE ASSESSEE THAT INSTEAD OF ONE COMPANY ACQUIRING LARGE CHUNKS OF LA ND, SMALL COMPANY OF THE SAME GROUP ACQUIRE SMALL CHUNK OF LAND IN TH E ADJOINING AREA, WHICH HELPS IN NEGOTIATING BETTER LAND PRICE. THUS ASSESSEE HAD MADE - 19- INVESTMENT INTO SEVERAL SUBSIDIARIES COMPANIES, MOS T OF WHICH WERE FORMED FOR THE PURPOSE OF ACQUISITION OF LAND AND F OR WHICH PURPOSE THE APPELLANT HAD MADE INVESTMENT IN THEIR SHARE CA PITAL. NO DIVIDEND INCOME HAS BEEN EARNED BY THE APPELLANT THEREON NOR LIKELY TO BE EARNED, AS THE VERY PURPOSE OF SUCH INVESTMENT WAS TO SUPPORT THE CORE BUSINESS ACTIVITY OF THE COMPANY. IT FT SUBMIT TED THAT THE HONBLE HIGH COURT IN THE CASE OF CIT VS. ORIENTAL STRUCTURAL ENGINEERS PVT. LTD. REPORTED IN 216 TAXMAN 92 (DEL) (PAGES 5JT-59 OFJPB) NOTED THAT, THE ASSESSEE INVESTED IN SHARES OF SUBS IDIARY COMPANIES AND CLAIMED THAT THE SAID SUBSIDIARIES WERE FORMED OUT OF COMMERCIAL EXPEDIENCY IN ORDER TO OBTAIN CONTRACTS FROM THE N HAI. IN THE ASSESSMENT ORDER, THE AO WHILE REJECTING THE COMMER CIAL EXPEDIENCY CLAIM OF THE ASSESSEE, HAS DISALLOWED RS. 35,85,121 /- AS EXPENSES INCURRED IN RELATION TO EXEMPT INCOME U/S 14A READ WITH RULE 8D. BEING AGGRIEVED, THE ASSESSEE APPEALED BEFORE LEARN ED LD. CIT (A) WHERE THE DISALLOWANCE U/S 14A MADE BY AO WAS DELET ED AND THE LD. CIT (A) CATEGORICALLY HELD THAT: IN RESPECT OF INVESTMENTS OF RS.6,07,775,000/- MAD E IN SUBSIDIARY COMPANIES AS PER DOCUMENTS PRODUCED BEFO RE ME, THEY ARE ATTRIBUTABLE TO COMMERCIAL EXPEDIENCY. AND THEREFORE NO EXPENSE AND INTEREST ATTRIBUTABLE TO - 20- THE INVESTMENTS MADE BY THE APPELLANT IN THE SPVS C AN BE DISALLOWED U/S 14AR.W. RULE 8D BECAUSE IT CANNOT BE TERMED AS EXPENSE /INTEREST INCURRED FOR EARNING EXEMPTED INCOME. 19. ON FURTHER APPEAL BY REVENUE AGAINST THE HON BLE CIT(A) ORDER, THE DELHI ITAT AND HONBLE HIGH COURT WHILE DISMISS ING THE APPEAL HELD THAT SUBSIDIARIES FORMED DUE TO COMMERCIAL EXPEDIEN CY CANNOT BE CONSIDERED FOR THE CALCULATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE ACT. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. HOLCIM INDIA (P) LTD. REPORTED IN 217 CTR 282. FURTHER, IN THE CASE OF EIH ASSOCIATED HOTELS LIMITED VS. DCIT (2013-TIOL-796- ITAT-MAD) ( PAGES 60-77 OF THE JPB), WHEREIN CHENNAI ITAT HAS HELD THAT EVEN IF DIVIDEND IS EARNED FROM THE INVESTMENT MADE IN SUBSIDIARY, STILL FOR C ALCULATING AVERAGE INVESTMENTS FOR SECTION 14A THOSE INVESTMENTS NEED TO BE EXCLUDED. THE MOTIVE OF THE ASSESSEE TOWARDS THEINVESTMENT IN SUBSIDIARY WAS NOT FOR EARNING DIVIDEND OR CAPITAL GAIN, BUT TO PR OMOTE BUSINESS OF SUBSIDIARY. THE TRIBUNAL HAS SUPPORTED ABOVE ANALOG Y AND HELD AS UNDER: THE INVESTMENTS MADE BY THE ASSESSEE IN THE SUBSID IARY COMPANY ARE NOT ON ACCOUNT OF INVESTMENT FOR EARNIN G CAPITAL GAINS OR DIVIDEND INCOME. SUCH INVESTMENTS HAVE BEE N MADE BY - 21- THE ASSESSEE TO PROMOTE SUBSIDIARY COMPANY INTO THE HOTEL INDUSTRY. THE ASSESSEE IS NOT INTO THE BUSINESS OF INVESTMENT AND THE INVESTMENTS MADE BY THE ASSESSEE ARE ON ACCOUNT OF BUSINESS EXPEDIENCY. ANY DIVIDEND EARNED BY THE ASSESSEE FRO M INVESTMENT IN SUBSIDIARY COMPANY IS PURELY INCIDENT AL. THEREFORE, THE INVESTMENTS MADE BY THE ASSESSEE IN ITS SUBSIDIARY ARE NOT TO BE RECKONED FOR DISALLOWANCE U/S. 14A R.W.R. 8D. THE AO IS DIRECTED TO RE-COMPUTE THE AVE RAGE VALUE OF INVESTMENT UNDER THE PROVISIONS OF RULE 8D AFTER DE LETING INVESTMENTS MADE BY THE ASSESSEE IN SUBSIDIARY COMP ANY. 20. ALSO IN THE CASE OF GARWARE WALL ROPES LIMITED VS ADD CIT RANGE 5(1), MUMBAI ITA NO.5408/MUM/2012 (PAGES 78 - 85 OF THE JPB) ITAT HAS HELD THAT WHEN INVESTMENT IS MADE IN GROUP CONCERN WITH THE PRIMARY OBJECTIVE OF HOLDING A CONTROLLING STAKE IN THE CONCERN AND NOT TO EARN ANY INCOME OUT OF THE INVESTMENT, THE PROVI SIONS OF SECTION 14A NEED NOT BE APPLIED. THE TRIBUNAL HAS HELD THAT : WE FIND MERIT AND SUBSTANCE IN THE CONTENTION OF T HE ASSESSEE ON THIS POINT BECAUSE THE INVESTMENT HAS BEEN MADE BY THE ASSESSEE IN THE GROUP CONCERN AND NOT IN THE SHARES OF ANY UN- RELATED PARTY. THEREFORE, THE PRIMARY OBJECT OF INV ESTMENT IS HOLDING CONTROLLING STAKE IN THE GROUP CONCERN AND NOT EARNING ANY INCOME OUT OF INVESTMENT. FURTHER THE INVESTMEN T WERE MADE LONG BACK AND NOT IN THE YEAR UNDER CONSIDERAT ION. THEREFORE, IN VIEW OF THE FACT THAT THE INVESTMENT ARE IN THE - 22- GROUP CONCERN WE DO NOT FIND ANY REASON TO BELIEVE THAT THE ASSESSEE WOULD HAVE INCURRED ANY ADMINISTRATIVE EXP ENSES IN HOLDING THESE INVESTMENTS THE AO HAS NOT BROUGHT ON RECORD ANY FACT OR MATERIAL TO SHOW THAT ANY EXPENDITURE HAS B EEN INCURRED ON THE ACTIVITY WHICH HAS RESULTED INTO BOTH TAXABL E AND NON TAXABLE INCOME. THEREFORE, IN OUR VIEW WHEN THE ASS ESSEE HAS PRIMA FACIE BROUGHT OUT A CASE THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME THEN IN THE ABSENCE OF ANY FINDING THA T EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME THE PROVISIONS OF SECTION 14A CANNOT BE APPLIED. ACCORDINGLY WE DE LETE THE ADDITION/DISALLOWANCE MADE BY AO U/S 14A R.W. RULE 8D 21. ABOVE PROPOSITION HAS ALSO BEEN ACCEPTED BY ITA TMUMBAI IN A RECENT CASE OF JM FINANCIAL LIMITED VS. ADDL. CIT 4(31, MUMBAI ITA NO. 4521/MUM/2012. (PAGE NO. 86-96 OF THE PAPER BOOK). IN THE SAID CASE, HONBLE ITAT HAS HELD AS UNDER :- THE ASSESSEE HAS BROUGHT OUT A CASE TO SHOW THAT N O EXPENDITURE HAS BEEN INCURRED FOR MAINTAIN THE 98% OF THE INVESTMENT MADE IN THE SUBSIDIARY COMPANIES, THEREF ORE IN THE ABSENCE OF ANY FINDING THAT ANY EXPENDITURE HAS BEE N INCURRED FOR EARNING THE EXEMPT INCOME, THE DISALLOWANCE MAD E BY THE AO IS NOT JUSTIFIED, ACCORDINGLY THE SAME IS DELETE D. - 23- 22. ACCORDINGLY, DISALLOWANCE MADE BY ASSESSING OFF ICER IS ALSO NOT IN ACCORDANCE WITH LAW ON THE FACTS THAT INVESTMENTS A RE MADE ONLY FOR THE PURPOSE OF STRATEGIC OR CONTROLLING INTEREST, A S IT IS EVIDENT FROM THE TABULATED CHART PLACED AT PARA 3.4 ABOVE. IN LI GHT OF THE AFORESAID, IT IS RESPECTFULLY PRAYED THAT THAT ORDER OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) BE UPHELD. 23. LASTLY IT WAS SUBMITTED THAT DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT EXCEED THE EXEMPT INCOME OF RS. 1,95,118/- EARNED BY THE ASSESSEE (PAGE 2 OF PAPER BOOK). RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I) 372 ITR 694 (DEL) JOINT INVESTMENTS PVT. LTD . VS. CIT (PAGES 30-32 OF JPB) II) I.T. A. NO. 245 /AHD/2013 DATED 27.03.2015 CHUD GAR RANCHODLAL JETHALAL VS. DCIT III) ITA NO.5592/MUM/2012 DATED 01.01.2015 M/S DAGA GLOBAL CHEMICALS PVT. LTD. VS. ASST. CIT IV) ITA NO.986/DEL/2012 DATED 18.03.2015 HT MED IA LTD. VS. ACIT V) 148 ITD 336 (DEL) SAHARA INDIA FINANCIAL COR PN.LTD. VS. DCIT VI) ITA NO. 548/CHD/2011 DATED 30.09.2011 ACIT VS. PUNJAB STATE COOP & MARKETING FED. LTD - 24- VII) ITA NO.4320/DEL/2014 DATED 21.10.2015 ASST. IT VS. M/S KAJARIA CERAMICS LIMITED VIII) ITA NO. 1027/DEL/2013 DATED 23.10.2015 HEMA ENGINEE RING INDUSTRIES LTD. VS. ACIT IX) ITA NO.3763/DEL/2013 DATED 29.04.2015 INDUS VALLEY INVESTMENT & FINANCE PVT. LTD. VS. DCIT 24. IN LIGHT OF THE AFORESAID, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS UPHELD AND APPEAL OF THE REVENUE IS DISMISSED. 25. NOW TAKING UP GROUND 1 OF ASSESSEES APPEAL REGARDING NON ADMISSION OF ADDITIONAL GROUND FILED BY ASSESSEE BE FORE LEANED CIT(A) THAT THAT FULL VALUE OF CONSIDERATION FOR SALE OF SHARES WERE WRONGLY ASSUMED TO BE RS. 10 CRORES WHEREAS THE FULL VALUE OF SALE CONSIDERATION WAS LATER WORKING OUT TO BE RS. 25 LA KHS. 26. FACTS IN BRIEF ARE THAT ON JULY 2006, ASSESSEE ACQUIRED 50,000 SHARES OF RS. 10 EACH OF M/S SHIVALIK LAND DEVELOPM ENT LIMITED (HEREINAFTER REFERRED AS SLDL). THAT ON 04.12.2008 ASSESSEE HAD ENTERED INTO AN AGREEMENT(PAGES 133-136 OF PAPER BO OK) WITH M/S VIRASAT AGRO FOODS PRIVATE LIMITED (HEREINAFTER REF ERRED AS VIRASAT) TO SELL SUCH SHARES FOR A TOTAL CONSIDERATION OF RS. 1 0 CRORES. OUT OF THE - 25- SAID VALUE, AN AMOUNT OF RS. 25 LACS WAS RECEIVED B Y THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. HOWEVER IN ACC ORDANCE WITH THE PROVISIONS OF SECTION 45 OF I.T.ACT., ASSESSEE ACCO UNTED THE CAPITAL GAINS CONSIDERING THE SALE CONSIDERATION AS RS. 10 CRORES AND PAID THE TAXES ACCORDINGLY. A COPY OF COMPUTATION IS PLACED AT PAGE 2 OF PAPER BOOK. FURTHER, SUBSEQUENT TO SHARE PURCHASE AGREEME NT AND TRANSFER OF SALE OF SHARES, SLDL HAD MORTGAGED ITS LAND MEA SURING 11.30 ACRES SITUATED AT KHERKI DHAULA TEHSIL SOHNA DISTRICT GUR GAON IN FAVOUR OF INDIABULLS VIDE MORTGAGE DEED DATED 12.12.2008 ALON GWITH DEPOSIT OF TITLE DOCUMENTS AS A SECURITY FOR FULFILLMENT OF TH E OBLIGATION OF VIRASAT UNDER THE SHARE PURCHASE AGREEMENT AS PER CLAUSE 3. 6 OF ABOVE SAID AGREEMENT REPRODUCED HEREIN BELOW; 3.6 THE PURCHASER HAS REPRESENTED THAT IT IS AT AN ADVANCED STAGE OF ACQUIRING, EITHER IN ITS OWN FAVOUR OR IN THE FAVOUR OF ITS NOMINEE, THE ENTIRE RIGHTS AND TITLE IN THE SAID LA ND ADMEASURING 11.30 ACRES SITUATED AT KHERKI DHAULA, TEHSIL SOHNA DISTT. GURGAON. AS A SECURITY TOWARDS THE PAYMENT OF BALAN CE SALE CONSIDERATION ALONG WITH INTEREST THEREON, IF ANY, AS MENTIONED UNDER THIS AGREEMENT BY THE PURCHASER, THE PURCHASE R SHALL CAUSE THE MORTGAGE UNDER THIS AGREEMENT BY THE PURC HASER, THE PURCHASER SHALL CAUSE THE MORTGAGE OF SAID LAND ADM EASURING 11.30 ACRE SITUATED AT VILLAGE KHERKI DHAULA, TEHSI L SOHNA DISTT GURGAON IN FAVOUR OF SELLER SIMULTANEOUS TO THE EXE CUTION OF THIS AGREEMENT BY THE PARTIES. THE MORTGAGE FOR THIS PUR POSE SHALL - 26- BE ONLY EQUITABLE MORTGAGE BY DEPOSITING THE ORIGIN AL TITLE DEEDS OF THE SAID LAND WITH THE SELLER AND THE SELLER SHA LL ENFORCE THE MORTGAGE ONLY ON DEFAULT OF THE PURCHASER WITH RESP ECT TO THE PAYMENT OF ENTIRE SALE CONSIDERATION UNDER THE SHAR E PURCHASE AGREEMENT INCLUDING INTEREST THEREON. THE SAID MORT GAGE SHALL BE REDEEMED AS SOON AS THE ENTIRE SALE CONSIDERATIO N IS RECEIVED BY THE SELLER IN TERMS OF CLAUSE 3.3 OF THIS AGREEM ENT ON THE SALE CONSIDERATION ALONGWITH INTEREST THEREON IS PAID BY THE PURCHASER IN TERMS OF CLAUSE 3.5. NON ENCASHMENT OF THE SAID CHEQUE OR NON PAYMENT OF BALANCE SALE CONSIDERATION ALONGWITH INTEREST THEREON AS ENVISAGED IN CLAUSE 3.5 SHALL B E DEEMED AS DEFAULT ON PART OF THE PURCHASER FOR THE PURPOSE OF EXERCISING REDEMPTION OF THE MORTGAGE. 27. THEREAFTER SEVERAL DISPUTES AROSE BETWEEN THE P ARTIES AND THE PARTIES FILED LEGAL CASES AND CRIMINAL COMPLAINTS A GAINST EACH OTHER IN VARIOUS COURTS INCLUDING BUT NOT LIMITED TO THE CAS ES AS DETAILED BELOW; (I) INDIABULLS REAL ESTATE LTD. VS. VIRASAT AGRO FOODS PVT. LTD. AND OTHERS (COMPLAINT U/S 138 OF ACT BEARING N O. 5079 DATED 11.09.2009) (II) ARBITRATION CASE NO. 444/2010 TITLED INDIABULLS RE AL ESTATE LTD. VS. VIRASAT AGRO FOODS (P) LTD. AND ANO THERS (INCLUDES A CLAIM BY INDIABULLS AND A COUNTER CLAIM BY VIRASAT) (III) SHIVALIK LAND DEVELOPMENT LTD. VS. PADMINI TECHNOLOGIES LTD. AND OTHERS (INDIABULLS BEING DEFE NDENT), - 27- CIVIL SUIT NO. 369/09. 28. FURTHER ON 01.02.2012 I.E. AFTER THE ASSESSMENT YEAR 2009-10, A SETTLEMENT DEED (PAGES 156-158 OF PAPER BOOK) EXECU TED BETWEEN THE PARTIES OF SHARE PURCHASE AGREEMENT FOR RESOLVING A LL THE DISPUTES AMONG THEMSELVES AS PER TERMS AND CONDITIONS STATED THEREIN AND SALE PRICE IS RENEGOTIATED AS UNDER; 3. THAT THE PARTIES HAVE MUTUALLY AGREED THAT THE CONSIDERATION FOR PURCHASE OF SALE SHARES STAND REV ISED FROM RS. 10,00,00,000/- (RUPEES TEN CRORES ONLY) TO RS. 25,00,000/- (RUPEES TWENTY FIVE LAKHS ONLY). 29. FURTHER IN ACCORDANCE WITH AFORESAID SETTLEMENT DEED A SUPPLEMENTARY SHARE PURCHASE AGREEMENT IS EXECUTED ON 01.02.2012 (PAGES 137-138 OF PAPER BOOK) BETWEEN PARTIES OF SH ARE PURCHASE AGREEMENT DATED 04.12.2008. THE ASSESSEE COULD NOT RAISE THIS CLAIM BEFORE ASSESSING OFFICER AS THE SALE CONSIDERATION ON WHICH TAX WAS PAID WAS REVISED ONLY ON 01.02.2012, HOWEVER ASSESSMENT PROCEEDINGS U/S 143(3) WAS COMPLETED ON 26.12.2011. THEREFORE, THE AFORESAID ISSUE WAS RAISED BEFORE LEARNED CIT(A) VIDE LETTER DATED 12.06.2012(PAGE 130 OF PAPER BOOK) AS ADDITIONAL GROUND. FURTHER SU BMISSIONS DATED 30.10.2012 (PAGES 131-138 OF PAPER BOOK) AND 06.12. 2012 (PAGE 139 OF PAPER BOOK) WERE SUBMITTED BEFORE LEARNED CIT(A). T HEN LEARNED - 28- CIT(A) SENT THE ADDITIONAL GROUND TO THE LEARNED AS SESSING OFFICER FOR SEEKING HIS COMMENTS ON THE MATTER, HOWEVER THE ASS ESSING OFFICER VIDE LETTER DATED 14.01.2013 (PAGE 142 OF PAPER BOO K) SUBMITTED BEFORE ID. CIT(A) THAT ADDITIONAL GROUND OF APPEAL SUBMITTED BY THE APPELLANT SHOULD NOT BE ADMITTED SINCE FROM THE PER USAL OF ASSESSMENT RECORD IT IS CLEAR THAT DUE OPPORTUNITIES WERE PROV IDED TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDING BEFORE THE LEARNED ASSESSING OFFICER. 30. FURTHER, LEARNED CIT (A) HAS ALSO NOT ADMITTED THE ADDITIONAL GROUND AS HELD AT PAGE 20 OF ORDER AS UNDER: 7.9 I FIND THAT THE APPELLANT ITSELF HAD DISCLO SED SALE CONSIDERATION OF RS. 25 LAKHS (HOWEVER DISCLOSED SA LE CONSIDERATION IS RS. 10 CRORES) IN THE RETURN OF IN COME. THE DISCLOSURE MADE BY THE LEARNED AO ALSO WAS ACCEPTED BY THE ID. AO AND HENCE THERE IS NO DISPUTE IN THE MAT TER. THE PROVISIONS OF SECTION 251 RELATING TO POWERS OF COMMISSIONER OF APPEALS AS PROVIDED IN EXPLANATION BELOW SUB-SECTION (2) PROVIDED THAT IN DISPOSING OF AN AP PEAL, THE COMMISSIONER OF APPEAL MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDING, IN WHICH THE ORDER O F THE APPEAL AGAINST WHICH PASSED BEFORE THE LEARNED COMM ISSIONER OF APPEAL. IN THE CASE OF THE APPELLANT IT IS EVIDE NT THAT THE ISSUE RELATING TO THE REVISION OF CAPITAL GAIN WAS NEVER RAISED AND NO SUCH DIFFERENCE OF OPINION EXISTED BETWEEN A O AND THE APPELLANT. MOREOVER IN THE CASE OF THE SAID M/S SHIVALIK - 29- LAND DEVELOPMENT LIMITED, ITS SHARES ARE NOT LISTED AND THEREFORE THE MARKET VALUE OF THEIR SHARES CANNOT B E DETERMINED ONLY ON THE BASIS OF A REVISED SALE AGRE EMENT. THE EXPLANATION GIVEN BY THE APPELLANT REGARDING IN ABILITY TO FILE SUCH CLAIM DURING THE ASSESSMENT PROCEEDINGS I S NOT SATISFACTORY. MOREOVER, THERE IS NO EXPLANATION, WH ATSOEVER, AS TO HOW IN RESPECT OF SALE OF SOME SHARE TWO CONT RACTING PARTIES COULD SUBSTITUTE THE FULL VALUE OF CONSIDER ATION FROM 10 CRORES TO RS. 25 LAKHS. UNDER THE CIRCUMSTANCE S THE REQUEST OF THE APPELLANT TO ADMIT ADDITIONAL GROUND OF APPEAL AGAINST ITS OWN ADMITTED POSITION AT THE TI ME OF FILING OF RETURN AND LATER DURING THE ASSESSMENT PR OCEEDINGS CANNOT BE ALLOWED TO BE ADMITTED. 31. FROM A READING OF THE AFORESAID LETTER OF TH E ASSESSING OFFICER IT IS APPARENT THAT THE ASSESSING OFFICER H AS OBJECTED TO THE ADDITIONAL GROUND ON THE BASIS THAT SINCE FROM THE PERUSAL OF ASSESSMENT RECORD IT IS CLEAR THAT DUE OPPORTUNITIE S WERE PROVIDED TO ASSESSEE DURING THE ASSESSMENT PROCEEDI NGS. THE ASSESSING OFFICER HAS OVERLOOKED THE FACTS OF THE C ASE AND MECHANICALLY GIVEN HIS COMMENT, AS REGARD THE POSIT ION OF RAISING THE GROUND DURING ASSESSMENT PROCEEDINGS. THE ADDIT IONAL ISSUE HAS EMERGED ONLY AFTER THE ASSESSMENT PROCEEDINGS W HICH ARE COMPLETED VIDE ORDER DATED 26.12.2011; AND SALE CON SIDERATION - 30- HAS BEEN CHANGED ONLY ON 01.02.2012 IN SUPPLEMENTAR Y SHARE PURCHASE AGREEMENT. THE LEARNED CIT (A) HAS ERRONEO USLY REJECTED THE CLAIM OF THE ASSESSEE HOLDING THAT, TH E REQUEST OF THE APPELLANT TO ADMIT ADDITIONAL GROUND OF APPEAL IS AGAINST ITS OWN ADMITTED POSITION AT THE TIME OF FILING OF RETU RN AND LATER DURING THE ASSESSMENT PROCEEDINGS, WHICH CANNOT BE ALLOWED TO BE ACCEPTED. THE AFORESAID OBJECTION IS FUNDAMENTA LLY MISCONCEIVED AS THE ISSUE RAISED IS A LEGAL PLEA AN D THEREFORE SUCH A PLEA BASED ON FACTS ON RECORD BROUGHT DURING THE APPELLANT PROCEEDINGS AND, CONFRONTED TO THE LEARNED ASSESSIN G OFFICER, WHO NOT DISPUTED ON THE FACTS IN THE REMAND REPORT, CAN BE RAISED AT ANY STAGE OF THE PROCEEDINGS INCLUDE APPELLATE P ROCEEDINGS. THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD V CIT REPORTED IN 229 ITR 383 HAS HELD AS U NDER: BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDE R A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS WE FAIL TO SEE WHY SU CH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO COR RECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE.[EMPHASIS SUPPLIED] - 31- 32. FURTHER THE FOLLOWING JUDGMENTS ALSO SUPPORT O UR VIEW: I) 160 ITR 920 (SC) CIT VS. MAHALAXMI SUGARMILLS CO. L TD. DELHI HIGH COURT (I) 81 ITR 303 (DEL) CIT VS. BHARAT GENERAL REINSUR ANCE CO. LTD IT IS TRUE THAT THE ASSESSEE ITSELF HAD INCLUDED TH AT DIVIDEND INCOME IN ITS RETURN FOR THE YEAR IN QUESTION BUT T HERE IS NO ESTOPPEL IN THE INCOME-TAX ACT AND THE ASSESSEE HAV ING ITSELF CHALLENGED THE VALIDITY OF TAXING THE DIVIDEND DURI NG THE YEAR OF ASSESSMENT IN QUESTION, IT MUST BE TAKEN THAT IT HA D RESILED FROM THE POSITION WHICH IT HAD WRONGLY TAKEN WHILE TILIN G THE RETURN. QUIT APART FROM IT, IT IS INCUMBENT ON THE INCOME-T AX DEPARTMENT TO FIND OUT WHETHER A PARTICULAR INCOME WAS ASSESSABLE IN THE PARTICULAR YEAR OR NOT. MERELY BE CAUSE THE ASSESSEE WRONGLY INCLUDED THE INCOME IN ITS RETURN FOR A PARTICULAR YEAR, IT CANNOT CONFER JURISDICTION ON T HE DEPARTMENT TO TAX THAT INCOME IN THAT YEAR EVEN THO UGH LEGALLY SUCH INCOME DID NOT PERTAIN TO THAT YEAR. W E ARE THEREFORE OF THE VIEW THAT THE INCOME FROM DIVIDEND WAS NOT ASSESSABLE DURING THE ASSESSMENT YEAR 1958-59, BUT IT WAS ASSESSABLE IN THE ASSESSMENT YEAR 1953-54. IT CANNO T, THEREFORE, BE TAXED IN THE ASSESSMENT YEAR 1958-59. II) 130 ITR 264 (DEL) ARCHNA LUTHANSA VS. CIT III) 211 CTR 357 (DEL) S.D.S MONGA VS. CBDT - 32- 6. SINCE THE EXTRAORDINARY JURISDICTION OF THIS CO URT HAS BEEN INVOKED, THE CONSTRAINTS THAT MAY HAVE BEEN FELT BY THE COMMISSIONER IN DECIDING THE ASSESSEE'S REVISION AP PLICATION UNDER SECTION 264 WOULD NOT IMPINGE ON THE POWERS O F THE COURT UNDER ARTICLE 226 OF THE CONSTITUTION TO CORRECT AN INJUSTICE THAT HAS OCCURRED ALBEIT BECAUSE OF THE PETITIONER/ASSES SEE HIMSELF. ARTICLE 265 OF THE CONSTITUTION MANDATES THAT NO PE RSON SHALL BE TAXED WITHOUT THE AUTHORITY OF LAW. SINCE IN THE PR ESENT CASE THERE IS NO AUTHORITY TO TAX THE ANNUITIES RECEIVED BY THE PETITIONER, WE CONSIDER IT APPROPRIATE TO EXERCISE OUR EXTRAORDINARY POWERS TO CORRECT THE INJUSTICE IV) 52 TAXMANN.COM 226 (DEL) DIT(E) VS. AJAY G. PIRAMA L FOUNDATION (PAGES 132-138 OF JPB) IN JAI PARABOLIC (SUPRA), A DIVISION BENCH OF THIS COURT, AFTER REFERRING TO JUDGMENT OF SUPREME COURT IN JUTE CORP ORATION (SUPRA) AND SOME OTHER JUDGMENTS OBSERVED THAT THER E IS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERT AIN AN ADDITIONAL GROUND WHICH ACCORDING TO THE TRIBUNAL A RISES IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. IN PRUTHVI BROKERS (SUPRA), A DIVISION BENCH OF BOM BAY HIGH COURT, REFERRED TO THE JUDGMENTS OF SUPREME COURT I N JUTE CORPN. OF INDIA LTD. (SUPRA), NTPC (SUPRA) AND GOET ZE (INDIA) LTD. (SUPRA) AND OBSERVED AS UNDER: '23. IT IS CLEAR TO US THAT THE SUPREME COURT DID N OT HOLD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING - 33- OFFICER, IT CAN BE MADE BEFORE THE APPELLATE AUTHOR ITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERT AIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE A SSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER SECTION 254.' THUS THERE CANNOT BE ANY DOUBT OR DEBATE, THAT THE CLAIM AND SUBMISSION COULD HAVE BEEN RAISED BY THE RESPONDENT ASSESSEE BEFORE THE APPELLATE AUTHORITIES. IN EITHER WAY, TH E ISSUE HAS BEEN RIGHTLY DECIDED IN FAVOUR OF THE RESPONDENT AS SESSEE. BOMB AY HIGH COURT] I) 136 ITR 355 (BOM) CIT VIDARBHA AND MARATHWADA VS SMT. ARCHANA R. DHANWATAY II) 269 ITR 1 (BOM) NIRMALA L. MEHTA VS. A. BALAS UBRAMANIAM, CIT III) 310 ITR 310 (BOM) BALMUKUND ACHARYA VS. DC IT 31. HAVING SAID SO, WE MUST OBSERVE THAT THE APEX COURT AND THE VARIOUS HIGH COURTS HAVE RULED THAT THE AUTHORI TIES UNDER THE ACT ARE UNDER AN OBLIGATION TO ACT IN ACCORDANC E WITH LAW. TAX CAN BE COLLECTED ONLY AS PROVIDED UNDER THE ACT . IF ANY ASSESSEE, UNDER A MISTAKE, MISCONCEPTIONS OR ON NOT BEING PROPERLY INSTRUCTED IS OVER ASSESSED, THE AUTHORITI ES UNDER THE ACT ARE REQUIRED TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUE ARE COLLECTED (SEE S.R. KOSTI V CIT (GUJ) (2005) 276 ITR 165, C.P.A. YOOSUF V. I.T.O. (1970) 77 ITR 237, CIT V. BHARAT - 34- GENERAL REINSURANCE CO. LTD, (1971) 81 ITR 303, CIT VS. ARCHANA R. DHANWATE (1982) 136 ITR 355 (BOM). 32. IF PARTICULAR LEVY IS NOT PERMITTED UNDER THE ACT, TAX CANNOT BE LEVIED APPLYING THE DOCTRINE OF ESTOPPEL. (SEE DY. COMMISSIONER OF SALES TAX VS. SREENI PRINTERS (1987 ) 67 SCC 279. 33. THIS COURT IN THE CASE OF NIRMALA L. MEHTA V. A. BALASUBRAMANIAM, C.I.T. (2004) 269 ITR 1 HAS HELD T HAT THERE CANNOT BE ANY ESTOPPEL AGAINST THE STATUTE. ARTICLE 265 OF THE CONSTITUTION OF INDIA IN UNMISTAKABLE TERMS PROVIDE S THAT NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY AUTHORITY OF LAW. ACQUIESCENCE CANNOT TAKE AWAY FROM A PARTY THE RELI EF THAT HE IS ENTITLED TO WHERE THE TAX IS LEVIED OR COLLECTED WITHOUT AUTHORITY OF LAW. IN THE CASE ON HAND, IT WAS OBLIG ATORY ON THE PART OF THE ASSESSING OFFICER TO APPLY HIS MIND TO THE FACTS DISCLOSED IN THE RETURN AND ASSESS THE ASSESSEE KEE PING IN MIND THE LAW HOLDING THE FIELD . 349 ITR 136 (BOM) CIT VS. PRUTHVI BROKERS AND SHAR EHOLDERS (P) LTD. (123-131 OF JPB) 22. IT WAS THEN SUBMITTED BY MR. GUPTA THAT THE SU PREME COURT HAD TAKEN A DIFFERENT VIEW IN GOETZE (INDIA) LIMITED V. COMMISSIONER OF INCOME- TAX, (2006) 157 TAXMAN 1. W E ARE UNABLE TO AGREE. THE DECISION WAS RENDERED BY A BEN CH OF TWO LEARNED JUDGES AND EXPRESSLY REFERS TO THE JUDGMENT OF THE BENCH OF THREE LEARNED JUDGES IN NATIONAL THERMAL P OWER - 35- COMPANY LIMITED VS. COMMISSIONER OF INCOME-TAX (SUP RA). THE QUESTION BEFORE THE COURT WAS WHETHER THE APPELLANT -ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION, OTHER THAN BY FIL ING A REVISED RETURN. AFTER THE RETURN WAS FILED, THE APPELLANT S OUGHT TO CLAIM A DEDUCTION BY WAY OF A LETTER BEFORE THE ASSESSING OFFICER. THE CLAIM, THEREFORE, WAS NOT BEFORE THE APPELLATE AUTH ORITIES. THE DEDUCTION WAS DISALLOWED BY THE ASSESSING OFFICER O N THE GROUND THAT THERE WAS NO PROVISION UNDER THE ACT TO MAKE A N AMENDMENT IN THE RETURN OF INCOME BY MODIFYING AN A PPLICATION AT THE ASSESSMENT STAGE WITHOUT REVISING THE RETURN . THE COMMISSIONER OF INCOME-TAX (APPEALS) ALLOWED THE AS SESSEE'S APPEAL. THE TRIBUNAL, HOWEVER, ALLOWED THE DEPARTME NT'S APPEAL. IN THE SUPREME COURT, THE ASSESSEE RELIED U PON THE JUDGMENT IN NATIONAL THERMAL POWER COMPANY LIMITED CONTENDING THAT IT WAS OPEN TO THE ASSESSEE TO RAIS E THE POINTS OF LAW EVEN BEFORE THE TRIBUNAL. THE SUPREME COURT HELD:- '4. THE DECISION IN QUESTION IS THAT THE POWER OF T HE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS T O ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTIO N OTHERWISE THAN BY FILING A REVISED RETURN. IN THE CIRCUMSTANC ES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CL EAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE A SSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX - 36- APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOMET AX ACT, 1961. THERE SHALL BE NO ORDER AS TO COSTS.' [EMPHAS IS SUPPLIED] 23. IT IS CLEAR TO US THAT THE SUPREME COURT DI D NOT HOLD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING OFFICER, IT CAN BE MADE BEFORE THE APPELLATE AUTHOR ITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERT AIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE A SSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER SECTION 254. V) 349 ITR 404 (BOM) SANCHIT SOFTWARE& SOLUTION S (P) LTD. VS. CIT (PAGES 111-117 OF JPB ) 7. THEREFORE, IN VIEW OF THE ABOVE IT IS CLEAR THA T THE COMMISSIONER OF INCOME-TAX IN THE ORDER DATED 7.04. 2011 COMMITTED A FUNDAMENTAL ERROR IN PROCEEDING ON THE BASIS THAT NO DEDUCTION ON ACCOUNT OF DIVIDEND INCOME AND INCO ME FORM CAPITAL GAINS UNDER SECTION 10 OF THE ACT WAS CLAIM ED. THEREFORE THERE IS AN ERROR ON THE FACE OF THE ORDER DATED 7. 04.2011 AND THE SAME IS NOT SUSTAINABLE.' GUJRAT HIGH COURT 276 ITR 165 (GUJ) S. R. KOSHTI VS. CIT - 37- A WORD OF CAUTION. THE AUTHORITIES UNDER THE ACT A RE UNDER AN OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN B E COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UND ER A MISTAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INSTRUCTED, IS OVER ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRE D TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUE ARE C OLLECTED. THIS COURT, IN AN UNREPORTED DECISION IN CASE OF VI NAY CHANDULAL SATIA VS. N.O. PAREKH, CIT, SPL. CIVIL APPLN. NO. 6 22 OF 1981, RENDERED ON 20TH AUG., 1981, HAS LAID DOWN THE APPR OACH THAT THE AUTHORITIES MUST ADOPT IN SUCH MATTERS IN THE F OLLOWING TERMS; 'THE SUPREME COURT HAS OBSERVED IN NUMEROUS DECISIO NS, INCLUDING RAMLAL AND ORS. VS. REWA COALFIELDS LTD. AIR 1962 SC 361; THE STATE OF WEST BENGAL VS. THE ADMINISTRATOR , HOWRAH MUNICIPALITY AND ORS. AIR 1972 SC 749, AND BABUTMAL RAICHAND OSWAL VS. LAXMIBAL R. TARTE AIR 1975 SC 1297, THAT THE STATE AUTHORITIES SHOULD NOT RAISE TECHNICAL PLEAS IF THE CITIZENS HAVE A LAWFUL RIGHT AND THE LAWFUL RIGHT IS BEING DENIED TO THEM MERELY ON TECHNICAL GROUNDS. THE STATE AUTHORITIES CANNOT ADOPT THE ATTITUDE WHICH PRIVATE LITIGANTS MIGHT ADOPT.' II) 27 TAXMANN.COM 202(GUJ.) ARYAMAN SPINNERS (P) L TD. VS. CIT(PAGES 118-122 OF JPB) ORISSA HIGH COURT I) 106 CALLT 192 NULL SREI INTERNATIONAL FINANCELTD.VS . STATE OF ORISSA AND ORS. DATED 18.3.2008 - 38- FOLLOWING ARTICLE 265 THAT, THERE WAS NO ESTOPPELS AGAINST STATUTE AND, IF A PERSON WAS NOT LIABLE WHETHER THE FOUR COMERS OF THE STATUTE, TO PAY TAX, HE CANNOT BE ASSESSED T O TAX, MERELY BECAUSE THE PRECIOUSLY ADMITTED HIS LIABILITY ON A WRONG NOTION. ACCORDING TO THE COURT, THE LIABILITY TO PAY TAX HA D TO BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF LAW AND NOT AN ADMISSION ALLAHABAD HIGH COURT I) 90 ITR 236 (ALL) DHAMPUR SUGAR MILLS LTD. VS. CIT D ELHI CENTRAL CALCUTTA HIGH COURT I) 57 DTR 39 (CAL) MODERN MALLEABLES LTD. VS. CIT TRIBUNAL I) 35 DTR 388 (MUM) RAJESH RASIKLAL SHAH VS. D CIT II) 15 SOT 252 (MUM) CHICAGO PNEUMATIC INDIA LT .D VS. DCIT III) 94 TTJ 113 (PUNE) LAB INDIA INSTRUMENTS (P ) LTD. VS. DCIT 33. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE MATTER IS SET ASIDE TO THE FILE OF AO WHO WILL VERIFY THE GENUINENESS OF HT CLAIM OF THE ASSESSEE THAT WHETHER THE SALE C ONSIDERATION IS RS. 10 CRORES OR RS. 25 LAKHS AND DECIDE THE ISSUE DE N OVO BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THUS, GROUND NO. 1 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. - 39- 34. AS REGARDS GROUND NO. 2, THE SAME IS CONSEQUENT IAL TO THE SOLE GROUND OF THE REVENUE AND IN VIEW OF OUR FINDINGS I N REVENUES APPEAL, THE SAME IS ALLOWED. 35. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 2233/DEL/2014 IS DISMISSED AND THAT OF THE ASSESSEE IN ITA NO. 1595/DEL/2014 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.08. 2017. SD/- SD/- [KULDIP SINGH] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH AUGUST, 2017 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI