M/s. Siva Projects Engineering & Enterprises Limited, CHENNAI V. ACIT, CHENNAI

ITA 1896/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57956 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S DEEPA
• Keywords: Business expenditure; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1896/MDS/2011 (ASSESSMENT YEAR : 2008-09) M/S SIVA PROJECTS ENGINEERING & ENTERPRISES LIMITED, STERLING TOWERS, 327, ANNA SALAI, CHENNAI - 600 018. PAN : AAACK4026B (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(4), CHENNAI - 600 034 . (RESPONDENT) APPELLANT BY : MS. S. DEEPA RESPONDENT BY : SHRI SHAJ I P. JACOB, ADDL. CIT DATE OF HEARING : 09.02.2012 DATE OF PRONOUNCEMENT : 17.02.2012 2 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY ASSESSEE FOR THE ASSES SMENT YEAR 2008-2009 AGAINST THE ORDER DATED 30.08.2011 O F COMMISSIONER OF INCOME TAX [APPEALS] -V, CHENNAI. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN TEN GROUN DS OF APPEAL. THE CRUX OF THE ISSUE INVOLVED IN ALL THE GROUNDS O F APPEAL TAKEN BY THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIR MING THE DISALLOWANCE OF EXPENDITURE OF RS. 38,15,247/-. 3. AT THE OUTSET, WE WOULD LIKE TO STATE HERE THAT THE LD. CIT(A) IN THE APPEAL OF THE ASSESSEE HAS CONFIRMED THE DIS ALLOWANCE OF EXPENDITURE OF RS. 37,87,800/- AND HAS DELETED THE DISALLOWANCE OF INTEREST OF RS. 27,447/-MADE U/S 14AOF THE ACT. THEREFORE, THE GRIEVANCE OF THE ASSESSEE WHICH REMAINS TO BE ADJUD ICATED BY US IS WITH REGARD TO DISALLOWANCE OF EXPENDITURE OF RS. 3 7,87,800/-. 3 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER FOUND THAT THE ASSESSEE HAD MADE INVESTMENT OF RS. 101,56 ,27,000/- AND CORRESPONDING INVESTMENT AS ON 31.3.2007 WERE AT RS . 49,94,93,000/- WHICH SHOWS A CONSIDERABLE INCREASE IN THE INVESTMENT IN THE YEAR UNDER CONSIDERATION. THE ASS ESSEE SUBMITTED THAT NO EXPENDITURE WAS INCURRED IN RELATION TO THE INVESTMENTS IN QUESTION. THE ASSESSING OFFICER DID NOT ACCEPT THE REPLY OF THE ASSESSEE AND HELD THAT SINCE THERE WAS CONSIDERABLE INCREASE IN THE INVESTMENTS MADE, THE CLAIM THAT NO EXPENDITURE WAS INCURRED WAS NOT TENABLE. HENCE THE ASSESSING OFFICER MADE DISA LLOWANCE OF RS. 37,87,800/- U/S 14A OF THE ACT R.W.R. 8D OF THE RUL ES. 5. BEFORE THE LD. CIT(A), THE LD. A.R. SUBMITTED TH AT THE PROVISIONS OF SECTION 14A ARE NOT ATTRACTED TO THE FACTS OF THE CASE OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR 20 08-09 SINCE THE ASSESSEE DID NOT EARN ANY INCOME FOR THE IMPUGNED A SSESSMENT YEAR WHICH WAS EXEMPT FROM TAX AND THAT THE ASSESSEE DID NOT INCUR ANY EXPENDITURE TO EARN INCOME EXEMPT FROM TAX. RELIAN CE WAS PLACED ON THE FOLLOWING DECISIONS: 4 (A) CIT VS WALFORT AND STOCK BROKERS PVT. LTD. (2010 TIOL, 47) (B) NAVIN CHEMICAL MANUFACTURING AND TRADING CO. LTD. V S. COLLECTOR OF CUSTOMS (1993) (4 SCC 320) (C) CIT VS. HERO CYCLES LTD. (2010) (323 ITR 518) 6. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER: 7.3 THE APPELLANT COMPANY HAS OBJECTED TO THE DISALLOWANCE OF EXPENDITURE BY INVOKING THE PROVISI ONS OF SECTION 14A ON TWO GROUNDS NAMELY (I) THE APPELLANT DID NOT EARN ANY INCOME DURING THE SUBJECT A.Y., WHICH WAS EXEMPTED FROM TAX; AND (II) THE APPELLANT DID NOT INCUR ANY EXPENDITURE TO EARN AN INCOME EXEMPT INCOME. AS REGARDS FIRST REASON THAT THE APPELLANT DID NOT EARN ANY INCOME DURING THE SUBJECT A.Y., WHICH WAS EXEMPTED FROM TAX, IT IS NO LONGER VALID IN VIEW OF THE DECISION OF HONBLE ITAT DELHI (SPECIAL BENCH) IN THE CASE OF CHEMINVES T LTD VS. 5 INCOME TAX OFFICER 124 TTJ 577 (DEL) (SB) WHEREIN B Y DRAWING ANALOGY FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJENDRA PRASAD MOODY 115 ITR 522 IT WAS HE LD THAT THE SUPREME COURT HELD THAT INTEREST ON MONIES BOR ROWED FOR PURCHASE OF SHARES WAS ALLOWABLE AS A DEDUCTION U/S 57 (III) IRRESPECTIVE OF WHETHER OR NOT THERE IS ANY Y IELD OF DIVIDEND TO THE ASSESSEE. IT WAS HELD THAT THE WOR DS EXPENDITURE INCURRED FOR MAKING OR EARNING THE INC OME IN S. 57(III) DID NOT MEAN THAT INCOME ACTUALLY HAD TO BE EARNED FOR THE ALLOWABILITY OF THE EXPENDITURE. THE CONV ERSE OF THIS PRINCIPLE IS NOW APPLICABLE. I.E. S. 14A DISALLOWS EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME AND IN ORDER FOR THE EXPENDITURE TO BE DISA LLOWED, ACTUAL INCOME NEED NOT BE EARNED. AS ALREADY DISCUSSED ABOVE, RULE 8D CONSIDERS THREE CIRCUMSTANCES UNDER WHICH DISALLOWANCE IS REQUIRED TO BE MADE. EVEN AT THE RISK OF BEING REPETITIVE THESE A RE MENTIONED AS UNDER: (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME; (II) SECONDLY, PROPORTIONATE DISALLOWANCE OF INTEREST WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULA R INCOME OR RECEIPT, AND; 6 (III) THIRDLY, AN AMOUNT EQUAL TO ONE-HALF PERCENT OF THE AVERAGE OF THE VALUE OF THE INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME , AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR. THE DISALLOWANCE, AS ENVISAGED ABOVE, IS AGGREGATE OF ALL THE THREE. THEREFORE, THERE MAY NOT BE ANY DISALLOWANC E UNDER (I) AND (II) ABOVE BUT STILL ON FACTS OF A CASE THE RE CAN BE DISALLOWANCE UNDER (III) ABOVE. NOW APPLYING THE FACTS OF THE CASE OF THE APPELLANT TO THE ABOVE SAID THREE DISALLOWANCES AS PER PROVISIONS OF RULE 8D REFERRED ABOVE, ONE CAN CLEARLY RULE OUT THAT DISAL LOWANCE IS NOT CALLED FOR AS PER (I) & (II) ABOVE AS THERE IS NO DIRECT INTEREST EXPENDITURE FOR MAKING INVESTMENTS DURING THE YEAR AND THE INTEREST PAID BY THE APPELLANT IS ON ACCOUN T OF VEHICLE LOAN. THE A.O. ALSO HAS NOT MADE ANY DISA LLOWANCE AS PER (I) ABOVE. HOWEVER, THE DISALLOWANCE MADE A T RS. 27,447/- AS PE R (II) A BOV E BY TH E AO I S UNW ARRA NTE D AN D N O T JUSTIFIED AS TH E E NTIR E I NT E RE S T C OST OF R S. 49,26 0 / - ( D ISC USS E D A BO VE) P E R T A IN S T O HIR E PUR C H A S E L OAN . T H E R EF OR E, I DIR EC T T H E A O TO D E L E TE THIS DISALLOWAN C E OF RS . 2 7, 44 7/-. 7 TH E MOOT QU E STION I S WHETHER THER E I S A C ASE FOR DISALLOWANC E A S P E R (III) ABOV E . TO EXAM I NE THIS ASP E CT THE ASS E SSMEN T RE CORDS WERE CALLED FOR A N D TH E S T UDY OF THE BALANCE SHEET OF THE APPELLANT COMPANY REVEAL T HAT THE 'I N V ESTMENTS' PORTFOLIO OF THE APPELLANT COMPANY IS QUITE PROACTIV E AS P E R F IG URES GIVEN IN THE BALANC E SHEET. (AMOUNT IN RUPEES) (AMOUNT IN RUPEES) AS ON 31.3.2008 AS ON 31.3.2007 REMARKS TOTAL OF ASSETS (A) 124,67,79,000 1 43,10,64,000 [AS PER BALANCE SHEET] INVESTMENT [B] 101,56,27,000 49,94,93,000 PERCENTAGE OF [B] TO [A] THE ABOVE ANALYSIS CLEARLY SHOWS THAT INVESTMENT CO NSTITUTE THE MAJOR CO MPON E NT OF THE ASSETS AS IT CONSTITUTE 81 . 46 % OF TOTAL ASSETS (34.90 % LAST Y E AR) OF TH E APPELLANT COMPANY AND THE PERCENTAGE OF THE INVESTMENT HA S S HO W N SUBSTANTIAL INCREASE OF 203 . 36 % AS ON 31.03.2008 COMPARED TO 8 31 . 03 . 2007. IT DOES NOT REQUIRE ELABORATION THAT HUGE INVESTMENT DECISIONS TAKEN BY TH E MANAGEMENT ARE 'NON- ROUTINE' , STRATEGI C AND IMPORTANT AND S UBSTANTIAL TIME AND MONEY IS SPENT BY THE TOP MANAGEMENT IN THESE D E CISIONS. THE DECISION MAKING COST OF INVESTMENT IS NOT ONE TIME A S CONTINUOUS MONITORING, REVIEW AND COURSE CORRECTION IS REQUIRED TO BE DONE IN C AS E OF LARGE INVESTMENT PORTFOLIO. IN . TH E BACKGROUND OF THE FACTS OF THE CASE OF T H E APP E LLANT NARRATED ABOVE, THE DECISIONS RELIED ON BY THE APPE LLANT HAVE BEE N E X AMINED. IT IS FOUND THAT IN THE CASE OF THE APPELLANT INVESTMENT ACTIVITY YI E LDING EXEMPTED INCOME CONSTITUTE A SUBSTANTIAL PART OF ITS BUSINESS AND IN VIEW OF THE INVESTMENT BEING FUNDED OUT OF NON-INTEREST BEARING FUNDS THE ONLY ISSUE REQUIRING ADJUDICATION IS WHAT IS THE PURPOSE FOR I NCURRING BUSINESS EXPENDITURE. OBVIOUSLY, TO PURSUE THE MAJO R OBJECTIVE AND INVESTMENT ACTIVITY CONSTITUTE THE SU BSTANTIAL ACTIVITY. THEREFORE THE APPLICATION OF THIRD LIMB OF RULE 8D IS DIRECT IN THE CASE OF THE APPELLANT AND HENCE THE D ECISIONS RELIED ON BY THE APPELLANT ARE NOT DIRECTLY APPLICA BLE ON THE 9 FACTS OF ITS CASE. IN TH E C ASE OF APPELLANT COMPANY , INVE S TMENT CONSTITUTE MAJ OR A C TIVITY AN D I S GAINING MORE PROMINENC E OV E R THE YEARS AND H E N CE SUBSTANTIAL M ANAGE M E NT A ND ADM I NISTRAT I VE C O ST RE QUIR E S T O B E AP PO RTION ED ATTR IBU TA BL E TO T H AT A C TIVITY . THE ' SKY ROCKETING ' OF MANAG E R I AL REMUNERATI ON I N CO RP O R ATE SE C T OR UNDERSCORES THE POINT THAT MANAGEMENT DECISIONS HAVE HIGH C OSTS AND IF ' I N VESTMENT DECISIONS' CONSTITUTE TH E MAJOR ACTIVITY OF AN E NT E RPRI SE, SUBSTAN TI A L COST NORMALLY IS REQUIR E D TO B E ATTRIBUT E D TO SUCH A C TIVITY. HO WEV E R, THE LEGISLATION, IN ITS WISDOM, TO AVOID 'HAIR SPLITTING ' AND TO PU T REST TO THIS ISSUE HAS PROVIDED FOR DISALLOWANCE @ 0.5 % OF THE AV ER AG E O F THE V A L UE OF THE INVESTMENT AS IN (III) ABOVE, WHICH IN MY CONSIDERED OPINION SQUARELY APPLIES TO THE FACTS OF THE CASE OF THE APPELLANT. IN V I EW OF THE ABOVE DISCUSSION I FIND THAT THE AO HAS RIGHTLY MADE DISALLOWANCE OF INDIRECT EXPENSES 10 U NDER ( III) A B OVE WHICH HE WAS A L SO DUTY BOUND TO CONSIDER IN VIEW OF TH E MA N D ATE O F SEC T ION 14A READ WITH RULE 8 D IN T H E R I GHT SPIRIT OF THE INTERPRETATION BY THE HON ' BL E COURTS, AS ABOVE . THE WO RKING OF TH E QU A NTUM UNDER (I I I) ABOVE IS NOT DISPUTED BY THE APPELLANT AND T HE SAME IS ALSO FOUND TO B E CORRECT . THEREFORE, T H E ACTION OF THE AO IN DIS AL LOWI N G EXP E NDITURE @ 0.5 % OF TH E AVERAG E V ALUE OF INVESTMENT S AT RS. 37, 8 7,8 00 / - IS C ONF I RMED . AS REGARDS DISALLOWANC E OUT OF THE INTER ES T AT RS . 27, 447 /-, THE SAM E HAS ALREA DY BEEN DI R ECTED TO BE DE L E T ED . I N RESULT THIS G R O U N D O F APP E AL I S PARTLY ALLOWED. 7. THUS THE LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 27,447/- MADE ON ACCOUNT OF INTEREST EXPENDITURE BUT SUSTAI NED THE DISALLOWANCE OF EXPENDITURE @ 0.5% OF THE AVERAGE VALUE OF INVESTMENT. BEING AGGRIEVED AGAINST THIS SUSTENANCE OF DISALLOWANCE OF EXPENDITURE, THE ASSESSEE IS IN APPEAL BEFORE US . 11 8. THE LD. A.R. REITERATED HIS SUBMISSIONS AS MADE BEFORE THE LD. CIT(A) AND THE LD. D.R., ON THE OTHER HAND, SUPPORT ED THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL ON RECORD. IN T HE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S MADE AN INVESTMENT OF RS. 101,56,27,000/- ON WHICH INCOME I S NOT TAXABLE. HE ALSO OBSERVED THAT IN THE IMMEDIATELY PRECEDING YEAR, SUCH INVESTMENTS WERE TO THE TUNE OF RS. 49,94,93,000/-. THEREFORE, SUBSTANTIAL INVESTMENT OF ABOUT RS. 52 CRORES WAS M ADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. FURT HER, THE ASSESSEE CLAIMED NO EXPENDITURE WAS INCURRED IN RELATION TO SUCH INVESTMENT. THE ASSESSING OFFICER, THEREFORE, INVOKING THE PROV ISIONS OF RULE 8D OF THE RULES R.W.S 14A OF THE ACT DISALLOWED 0.5% O F THE AVERAGE INVESTMENT WHICH WORKED OUT TO RS. 37,87,800/- AND DISALLOWED THE SAME. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ABOV E ACTION OF THE ASSESSING OFFICER. 12 10. BEFORE US, THE LD. A.R. OF THE ASSESSEE SUBMITT ED THAT NO EXEMPT INCOME WAS EARNED DURING THE YEAR AND NO EXP ENDITURE WAS INCURRED IN RELATION TO EARNING EXEMPT INCOME AND T HEREFORE DISALLOWANCE BY INVOKING RULE 8D WAS NOT WARRANTED. SHE ALSO SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT NO EX PENDITURE WAS INCURRED IN RELATION TO INVESTMENT OF RS. 101,56,27 ,000/- WAS NOT FOUND TO BE INCORRECT BY THE LD. CIT(A). THEREFORE , DISALLOWANCE OF RS. 37,87,800/- SHOULD HAVE BEEN DELETED BY THE LD. CIT(A). 11. THE LD. D.R. SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 12. WE FIND THAT THE DELHI SPECIAL BENCH OF THE TRI IN THE CASE OF CHEMINVEST LTD. VS. ITO 124 TTJ 577 [DEL] [SB] HAS HELD THAT WHEN INVESTMENTS ARE MADE WHICH GENERATE EXEMPT INCOME, THEN FOR DISALLOWING EXPENDITURE U/S 14A IT IS NOT NECESSARY THAT EXEMPT INCOME MUST HAVE ACCRUED TO THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. IN VIEW OF THE ABOVE BINDING DECISI ON OF THE SPECIAL BENCH OF THE TRIBUNAL, WE DO NOT FIND MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT AS THERE IS NO EXEMPT INCOME EARNED B Y THE ASSESSEE 13 DURING THE YEAR UNDER CONSIDERATION, THEREFORE, DIS ALLOWANCE OF EXPENDITURE BY INVOKING PROVISIONS OF RULE 14A CANN OT BE MADE. 13. HOWEVER, WE FIND THAT IN THE INSTANT CASE, THE ASSESSING OFFICER HAS NOT BROUGHT NO MATERIAL ON RECORD TO SH OW THAT THE CLAIM OF THE ASSESSEE THAT NO ACTUAL EXPENDITURE WA S INCURRED IN MAKING INVESTMENTS IN QUESTION WAS NOT CORRECT. TH E ASSESSING OFFICER, WITHOUT DISPUTING THE CORRECTNESS OF THE C LAIM OF THE ASSESSEE HAS INVOKED THE PROVISIONS OF RULE 8D. SU B-RULE (1) OF RULE 8D READS AS UNDER: (1) WHERE THE ASSESSING OFFICER, HAVING REGARD TO T HE ACCOUNTS OF THE ASSESSEE OF A PREVIOUS YEAR IS NOT SATISFIED WITH (A) THE CORRECTNESS OF THE CLAIM OF EXPENDITURE MADE BY THE ASSESSEE OR (B) THE CLAIM MADE BY THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT FOR SUCH PREVIOUS YEAR HE SHALL DETERMINE THE AMOUNT OF EXPENDITURE IN 14 RELATION TO SUCH INCOME IN ACCORDANCE WITH THE PROVISIONS OF SUB-RULE (2). 14. THUS IT IS OBSERVED THAT FOR DETERMINING THE AM OUNT DISALLOWABLE AS PER PROVISIONS OF RULE 8D(2) THE CO NDITION PRECEDENT IS THAT THE ASSESSING OFFICER MUST COME TO A CONCLU SION HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE THAT CLAIM O F THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED IN RELATION TO EXE MPT INCOME IS NOT CORRECT. WE FIND THAT IN THE INSTANT CASE, NO SUCH SATISFACTION HAS BEEN ARRIVED AT. THEREFORE, COMPUTATION OF DIS ALLOWABLE AMOUNT AS PER RULE 8D(2) CANNOT BE SUSTAINED. THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HERO CYCLES L TD [SUPRA] HAS HELD THAT DISALLOWANCE U/S 14A REQUIRES A FINDING O F INCURRING OF EXPENDITURE WHERE IT IS FOUND THAT FOR EARNING EXEM PT INCOME, NO EXPENDITURE HAS BEEN INCURRED, DISALLOWANCE U/S 14A CANNOT BE SUSTAINED. THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT 328 ITR 81 [B OM] HAS HELD THAT BEFORE INVOKING OF POWERS U/R 8D, THE ASSESSIN G OFFICER MUST HAVE OBJECTIVE SATISFACTION HAVING REGARD TO THE AC COUNTS OF THE 15 ASSESSEE THAT CLAIM OF THE ASSESSEE OF EXPENSES INC URRED IN RELATION TO EXEMPT INCOME IS NOT CORRECT. IN VIEW OF THE AB OVE, IN OUR CONSIDERED OPINION, DISALLOWANCE OF RS. 37,87,800/- BY INVOKING RULE 8D WITHOUT OBJECTIVE SATISFACTION ABOUT THE CL AIM OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED IN RELATI ON TO EXEMPT INCOME IS NOT SUSTAINABLE. WE, THEREFORE, DELETE D ISALLOWANCE OF EXPENDITURE OF RS. 37,87,800/- AND ALLOW THE GROUND S OF APPEAL OF THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 17.02.201 2. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH FEBRUARY, 2012. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI-III, CHENNAI (5) D.R. (6) GUARD FILE