GSFS Capital & Securities Ltd., Ahmedabad V. The Dy.CIT.,Circle-4, Ahmedabad

ITA 2087/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94902 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAGENDRA SINGH
• Assessee Lawyers: NUTAN R VAKIL
• Keywords: Earning of tax free income; Revised return
• Section: 14A; 139(5); 147

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2087/AHD/2011 [ASSTT/YEAR 2007-2008] GSFS CAPITAL AND SECURITIES LTD. B WING, THIRD FLOOR KHANIJ BHAVAN |NR. UNIVERSITY GROUND VASTRAPUR. PAN : AACG 7164 Q VS DCIT, CIR.4 AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI NUTAN R. VAKIL REVENUE BY : SHRI NAGENDRA SINGH, DR ! / DATE OF HEARING : 02/12/2015 '#$ ! / DATE OF PRONOUNCEMENT: /12/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A)-XX, AHMEDABAD DATED 3.2.2011 PASSED FOR T HE ASSTT.YEAR 2007-08. 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE NOT IN CON SONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) R ULES, 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN B RIEF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CON FIRMING THE ITA NO.2087/AHD/2011 2 DISALLOWANCE MADE BY THE AO UNDER SECTION 14A R.W. RULE 8D OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME OF RS.1 8,92,950/-. THIS RETURN WAS REVISED BY THE ASSESSEE ON 28.1.2009 DEC LARING TOTAL INCOME OF RS.4,11,630/-. IN THE REVISED RETURN, THE ASSES SEE HAS REDUCED SUO MOTO DISALLOWANCE UNDER SECTION 14A FROM RS.21,74,522/- TO RS.6,93,201/- BY APPLYING THE PROVISION OF RULE 8D R.W. SECTION 14A. COGNIZANCE OF THIS RETURN WAS NOT TAKEN BY THE AO O N THE GROUND THAT IT WAS NOT FILED WITHIN THE TIME AVAILABLE UNDER SECTI ON 139(5) OF THE INCOME TAX ACT. THE LD.AO HAS OBSERVED THAT THE AS SESSEE-COMPANY MADE INVESTMENT OF RS.8.9 CRORES IN TAX FREE INVEST MENT. HE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSEE FOR THE PURPO SE OF SECTION 14A IN THE ORIGINAL. THE ASSESSEE HAS MADE DISALLOWANC E OF RS.21,74,522/-. ACCORDING TO THE AO THIS DISALLOWANCE HAS BEEN WORK ED OUT ON THE BASIS OF RULE 8D R.W.S. 14A OF THE ACT. SINCE THE AMOUNT CONSIDERED BY THE ASSESSEE WAS REASONABLE ONE, THE LD.AO DID NOT MAKE ANY INTERFERENCE WITH THE DISALLOWANCE. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE CONT ENDED THAT THE HONBLE BOMBAY HIGH COURT IT HE CASE OF GODREJ BOYC E MANUFACTURING CO. LTD. DCIT, 328 ITR 81 HAS HELD THAT THE RULE 8D CANNOT BE APPLIED RETROSPECTIVELY. IT IS APPLICABLE FROM THE ASSESSM ENT YEAR 2008-09. THUS, IT IS NOT APPLICABLE IN THE ASSESSMENT YEAR 2 007-08. IN THE COMPUTATION MADE BY THE ASSESSEE ON THE BASIS OF TH IS RULE COULD NOT BE APPROVED BY THE AO. THE LD. COUNSEL FOR THE ASSESSE E FURTHER CONTENDED THAT THE ASSESSEE IN ITS RETURN HAS ITSELF ADDED BA CK A SUM OF RS.21,74,522/-, BUT THAT ADMISSION WAS MADE BY THE ASSESSEE ON AN ITA NO.2087/AHD/2011 3 ERRONEOUS INTERPRETATION OF RULE 8D. ONCE THE RULE 8D IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE, THEN, THE LD.AO OUGHT TO HAVE WORKED OUT THE AMOUNTS ON REASONABLE BASIS. THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. MILTON LAMINATES LTD., RENDERED IN TAX APPEAL NO.122 OF 20 10. HE PLACED ON RECORD COPY OF THE HONBLE GUJARAT HIGH COURTS ORD ER. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE AO. 7 WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. IN THE ORIGINAL RETURN FILED BY THE ASSESSEE, A DISALLOWANCE OF RS.21,74,522/- WAS MADE BY THE ASSE SSEE ITSELF. THIS AMOUNT WAS ADDED BACK BY THE ASSESSEE ON THE GROUND THAT IT IS RELATABLE TO EARNING OF EXEMPT INCOME. THE ASSESSE E HAS FILED REVISED RETURN ON 28.1.2009. AS PER SECTION 139(5) OF THE ACT, THE REVISED RETURN COULD BE FILED WITHIN ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR COMPLETION OF THE ASSESSMENT WHI CHEVER IS EARLIER. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 25 .10.2008. ONE YEAR WAS ALREADY EXPIRED ON 31.3.2009. THUS, THE R EVISED RETURN FILED BY THE ASSESSEE WAS NOT IN TIME. NEXT QUESTION IS WHETHER DISALLOWANCE CAN BE MADE WITH THE HELP OF RULE 8D OR NOT. THE H ONBLE DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENTS LTD. VS CIT REPORTED IN 347 ITR 272 (DEL.) HAS EXPLAINED THE POSITION LUCIDLY. PARA 28 TO 32 OF THE JUDGMENT IS WORTH TO NOTE. THEY READ AS UNDER: 28. IT WAS CONTENDED THAT UNLESS AND UNTIL THERE W AS ACTUAL EXPENDITURE FOR EARNING THE EXEMPTED INCOME, THERE COULD NOT BE ANY DISALLOWANCE UNDER SECTION 14A. WHILE WE AGREE THAT THE EXPRESSION EXPENDITURE INCURRED REFERS TO ACTUAL EXPENDITURE AND NOT TO SOME IMAGINED EXPENDITURE WE WOULD LIKE TO MAKE IT CLEAR THAT THE ACTUAL EXPENDITURE THAT IS IN CONT EMPLATION UNDER SECTION 14A(1) OF THE SAID ACT IS THE ACTUAL EXPE NDITURE IN RELATION TO OR IN CONNECTION WITH OR PERTAINING TO EXEMPT INCOME. THE COROLLARY TO THIS IS THAT IF NO EXPENDITURE IS INCURRED IN RELATION TO THE EXEMPT INCOME, NO DISALLOWANCE CAN BE MADE U NDER ITA NO.2087/AHD/2011 4 SECTION 14A OF THE SAID ACT. SCOPE OF SUB-SECTIONS (2) AND (3) OF SECTION 14A 29. SUB-SECTION (2) OF SECTION 14 A OF THE SAID ACT PROVIDES THE MANNER IN WHICH THE ASSESSING OFFICER IS TO DETERMI NE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. HOWEVER, IF WE EXAMINE TH E PROVISION CAREFULLY, WE WOULD FIND THAT THE ASSESSING OFFICER IS REQUIRED TO DETERMINE THE AMOUNT OF SUCH EXPENDITURE ONLY IF TH E ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSES SEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME W HICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SAID ACT. I N OTHER WORDS, THE REQUIREMENT OF THE ASSESSING OFFICER EMBARKING UPON A DETERMINATION OF THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME WOULD BE TRIGGERED ONLY IF THE ASSESS ING OFFICER RETURNS A FINDING THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPEND ITURE. THEREFORE, THE CONDITION PRECEDENT FOR THE ASSESSIN G OFFICER ENTERING UPON A DETERMINATION OF THE AMOUNT OF THE EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME IS THAT THE A SSESSING OFFICER MUST RECORD THAT HE IS NOT SATISFIED WITH THE CORRE CTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITUR E. SUB-SECTION (3) IS NOTHING BUT AN OFFSHOOT OF SUB-SECTION (2) O F SECTION 14A. SUB-SECTION (3) APPLIES TO CASES WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INC OME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SA ID ACT. IN OTHER WORDS, SUB-SECTION (2) DEALS WITH CASES WHERE THE ASSESSEE SPECIFIES A POSITIVE AMOUNT OF EXPENDITURE IN RELAT ION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SAID ACT AND SUB-SECTION (3) APPLIES TO CASES WHERE THE ASSE SSEE ASSERTS THAT NO EXPENDITURE HAD BEEN INCURRED IN RELATION T O EXEMPT INCOME. IN BOTH CASES, THE ASSESSING OFFICER, IF SA TISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE OR NO EXPENDITURE, AS THE CASE MAY BE, CANNOT EMBARK UPON A DETERMINATION OF THE AMOUNT OF EXPEND ITURE IN ACCORDANCE WITH ANY PRESCRIBED METHOD, AS MENTIONED IN SUB- SECTION (2) OF SECTION 14A OF THE SAID ACT. IT IS O NLY IF THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECT NESS OF THE CLAIM OF THE ASSESSEE, IN BOTH CASES, THAT THE ASSESSING OFFICER GETS JURISDICTION TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SAID ACT IN ACCORDANCE WITH THE PR ESCRIBED METHOD. THE PRESCRIBED METHOD BEING THE METHOD STIP ULATED IN RULE 8D OF THE SAID RULES. WHILE REJECTING THE CLAI M OF THE ITA NO.2087/AHD/2011 5 ASSESSEE WITH REGARD TO THE EXPENDITURE OR NO EXPEN DITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPT INCOME, THE ASSE SSING OFFICER WOULD HAVE TO INDICATE COGENT REASONS FOR THE SAME. RULE 8D 30. AS WE HAVE ALREADY NOTICED, SUB-SECTION (2) OF SECT ION 14A OF THE SAID ACT REFERS TO THE METHOD OF DETERMINATION OF T HE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME. THE EXPRESSION USED IS SUCH METHOD AS MAY BE PRESCRI BED. WE HAVE ALREADY MENTIONED ABOVE THAT BY VIRTUE OF NOTI FICATION NO.45/2008 DATED 24/03/2008, THE CENTRAL BOARD OF D IRECT TAXES INTRODUCED RULE 8D IN THE SAID RULES. THE SAID RULE 8D ALSO MAKES IT CLEAR THAT WHERE THE ASSESSING OFFICER, HAVING R EGARD TO THE ACCOUNTS OF THE ASSESSEE OF A PREVIOUS YEAR, IS NOT SATISFIED WITH (A) THE CORRECTNESS OF THE CLAIM OF EXPENDITURE MAD E BY THE ASSESSEE; OR (B) THE CLAIM MADE BY THE ASSESSEE THA T NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SAID AC T FOR SUCH PREVIOUS YEAR, THE ASSESSING OFFICER SHALL DETERMIN E THE AMOUNT OF THE EXPENDITURE IN RELATION TO SUCH INCOME IN AC CORDANCE WITH THE PROVISIONS OF SUB-RULE (2) OF RULE 8D. WE MAY O BSERVE THAT RULE 8D(1) PLACES THE PROVISIONS OF SECTION 14A(2) AND (3) IN THE CORRECT PERSPECTIVE. AS WE HAVE ALREADY SEEN, WHILE DISCUSSING THE PROVISIONS OF SUB-SECTIONS (2) AND (3) OF SECTION 1 4A, THE CONDITION PRECEDENT FOR THE ASSESSING OFFICER TO HI MSELF DETERMINE THE AMOUNT OF EXPENDITURE IS THAT HE MUST RECORD HI S DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM O F EXPENDITURE MADE BY THE ASSESSEE OR WITH THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURR ED. IT IS ONLY WHEN THIS CONDITION PRECEDENT IS SATISFIED THAT THE ASSESSING OFFICER IS REQUIRED TO DETERMINE THE AMOUNT OF EXPE NDITURE IN RELATION TO INCOME NOT INCLUDABLE IN TOTAL INCOME I N THE MANNER INDICATED IN SUB-RULE (2) OF RULE 8D OF THE SAID RU LES. 31. IT IS, THEREFORE, CLEAR THAT DETERMINATION OF T HE AMOUNT OF EXPENDITURE IN RELATION TO EXEMPT INCOME UNDER RULE 8D WOULD ONLY COME INTO PLAY WHEN THE ASSESSING OFFICER REJE CTS THE CLAIM OF THE ASSESSEE IN THIS REGARD. IF ONE EXAMINES SUB -RULE (2) OF RULE 8D, WE FIND THAT THE METHOD FOR DETERMINING TH E EXPENDITURE IN RELATION TO EXEMPT INCOME HAS THREE COMPONENTS. THE FIRST COMPONENT BEING THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME . THE SECOND ITA NO.2087/AHD/2011 6 COMPONENT BEING COMPUTED ON THE BASIS OF THE FORMUL A GIVEN THEREIN IN A CASE WHERE THE ASSESSEE INCURS EXPENDI TURE BY WAY OF INTEREST WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT. THE FORMULA ESSENTIALLY APPORTIONS THE AMOUNT OF EXPENDITURE BY WAY OF INTEREST [OTHER THAN THE AMOU NT OF INTEREST INCLUDED IN CLAUSE (I)] INCURRED DURING THE PREVIOU S YEAR IN THE RATIO OF THE AVERAGE VALUE OF INVESTMENT, INCOME FR OM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, TO THE AVERAGE OF THE TOTAL ASSETS OF THE ASSESSEE. THE THIRD COMPONE NT IS AN ARTIFICIAL FIGURE ONE HALF PERCENT OF THE AVERAGE VALUE OF THE INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET S OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR. IT IS THE AGGREGATE OF THESE THREE COMPONENTS WHICH WO ULD CONSTITUTE THE EXPENDITURE IN RELATION TO EXEMPT IN COME AND IT IS THIS AMOUNT OF EXPENDITURE WHICH WOULD BE DISALLOWE D UNDER SECTION 14A OF THE SAID ACT. IT IS, THEREFORE, CLEA R THAT IN TERMS OF THE SAID RULE, THE AMOUNT OF EXPENDITURE IN RELATIO N TO EXEMPT INCOME HAS TWO ASPECTS (A) DIRECT AND (B) INDIREC T. THE DIRECT EXPENDITURE IS STRAIGHTAWAY TAKEN INTO ACCOUNT BY V IRTUE OF CLAUSE (I) OF SUB-RULE (2) OF RULE 8D. THE INDIRECT EXPEND ITURE, WHERE IT IS BY WAY OF INTEREST, IS COMPUTED THROUGH THE PRINCIP LE OF APPORTIONMENT, AS INDICATED ABOVE. AND, IN CASES WH ERE THE INDIRECT EXPENDITURE IS NOT BY WAY OF INTEREST, A R ULE OF THUMB FIGURE OF ONE HALF PERCENT OF THE AVERAGE VALUE OF THE INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART O F THE TOTAL INCOME, IS TAKEN. DO SUB-SECTIONS (2) AND (3) OF SE CTION 14A AND RULE 8D APPLY RETROSPECTIVELY ? 32. WHILE EXAMINING THE LEGISLATIVE HISTORY OF SECT ION 14A AND RULE 8D, WE HAVE ALREADY NOTED THAT SECTION 14A, AS INTRODUCED BY VIRTUE OF THE FINANCE ACT, 2001, WAS WITH RETROS PECTIVE EFFECT FROM 01.04.1962. THE PROVISO WAS INSERTED BY VIRTUE OF THE FINANCE ACT, 2002 AND IT WAS MADE CLEAR THAT NOTHIN G IN SECTION 14A EMPOWERED THE ASSESSING OFFICER TO EITHER RE-AS SESS UNDER SECTION 147 OR PASS AN ORDER ENHANCING THE ASSESSME NT OR REDUCING THE REFUND ALREADY MADE OR OTHERWISE INCRE ASING THE LIABILITY OF THE ASSESSEE UNDER SECTION 154, FOR AN Y ASSESSMENT YEAR BEGINNING ON OR BEFORE THE FIRST DAY OF APRIL, 2001. THUS, IN RESPECT OF ALL THE ASSESSMENT YEARS PRIOR TO THE AS SESSMENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2001, CONCLUDED ASSESSMENTS COULD NOT BE DISTURBED DESPITE THE FACT THAT SECTION 14A HAD BEEN EXPRESSLY MADE RETROSPECTIVE WITH EFFE CT FROM 01.04.1962. THE PROVISIONS OF SECTION 14A, WHICH WE RE RETROSPECTIVE WITH EFFECT FROM 01.04.1962 ARE NOW E NCAPSULATED ITA NO.2087/AHD/2011 7 IN SUB-SECTION (1) OF SECTION 14A. IT IS ALSO CLEAR THAT SUB-SECTIONS (2) AND (3) OF SECTION 14A WERE INTRODUCED SUBSEQUE NTLY BY VIRTUE OF THE FINANCE ACT, 2006 AND WERE INTRODUCED WITH E FFECT FROM 01.04.2007. HOWEVER, ALTHOUGH SUB-SECTIONS (2) AND (3) HAD BEEN INTRODUCED WITH EFFECT FROM 01.04.2007, THEY R EMAINED EMPTY SHELLS INASMUCH AS THE EXPRESSION SUCH METHO D AS MAY BE PRESCRIBED GOT MEANING ONLY BY THE INTRODUCTION OF RULE 8D BY VIRTUE OF THE INCOME-TAX (FIFTH AMENDMENT) RULES, 2 008 WHICH WAS NOTIFIED BY THE CENTRAL BOARD OF DIRECT TAXES B Y ITS NOTIFICATION NO.45/2008 DATED 24/03/2008. 8. IN THE PRESENT CASE, THE AO HAS NOT MADE ADDITIO N WITH THE HELP OF RULE 8D. THE AO HAS OBSERVED THAT KEEPING IN VIEW THE QUANTUM OF INVESTMENT I.E. RS.8.9 CRORES EXPENSES ADDED BY THE ASSESSEE ITSELF AT RS.21,74,52/- IS REASONABLE EXPENSES, HENCE, HE IS SATISFIED WITH THE ACCOUNTS OF THE ASSESSEE AND DOES NOT WANT TO MAKE FURTHER ENHANCEMENT. NOW, THE ASSESSEE WANTS TO GO BACK WI TH THE DECLARATION MADE BY IT. IT IS TRUE THAT INCOME TAX OFFICER IS SUPPOSED TO DETERMINE TRUE TAXABLE INCOME OF THE ASSESSEE AS OBSERVED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MILTON LAMINATES (SUPRA), BUT THE FACT IS WHERE IS THE LAPSE ? HOW ONE CAN PLEAD THAT THE AO HAS FA ILED TO CARRY OUT HIS EXERCISE ? ACCORDING TO THE ASSESSEE, THE DISALLOW ANCE UNDER SECTION 14A OUGHT TO BE RS.6,93,201/- WHICH IT HAS WORKED O UT IN THE ALLEGED REVISED RETURN. BUT, WHAT IS BASIS TO WORK OUT THI S DISALLOWANCE? THE ASSESSEE COULD NOT DEMONSTRATE BEFORE THE AO AS TO HOW THE EXPENDITURE IT HAS ADDED BACK RELATING TO EARNING O F EXEMPT INCOME WERE INFLATED OR ADDED BACK UNDER MISTAKEN FACT. H ERE IT IS NOT THE CASE THAT SOME STATUTORY BENEFIT WAS AVAILABLE TO THE AS SESSEE, WHICH BY MISTAKE IT REFRAIN TO CLAIM SUCH BENEFIT. IN THE P RESENT CASE, THE ASSESSEE HAS TO WORK OUT THE EXPENDITURE RELATABLE TO EARNING OF EXEMPT INCOME, WHICH IT HAS WORKED OUT ITSELF. UNL ESS IT IS POINTED OUT THAT SUCH WORKING WAS BASED ON MISCONCEPTION OF FAC T OR MISCONSTRUCTION OF LAW, IT CANNOT BE ALLOWED TO TAK E SOMERSAULT FROM THE DECLARATION MADE BY IT IN THE RETURN OF INCOME. TH EREFORE, THE ASSESSEE ITA NO.2087/AHD/2011 8 CANNOT DRAW ANY BENEFIT FROM THE JUDGMENT CITED BEF ORE US. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A), WHICH IS UPHELD. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 10 TH DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER