DCIT, Jaipur V. OM METALS INFRAPROJECTS LTD., Jaipur

ITA 230/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5538 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 04-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDER SINGH
• Assessee Lawyers: B V MAHESHWARI
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE:SHRI R.P.TOLANI, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA NO. 230/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE DCIT CIRCLE- 2 ALWAR CUKE VS. M/S. OM METALS INFA-PROJECTS LTD. OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAJENDER SINGH, JCIT - DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.V. MAHESHWARI CA & SHRI RAMESH GOYAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4 /02/2016 VK;DJ VIHY LA-@ ITA NO. 916/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE DCIT CIRCLE- 2 ALWAR CUKE VS. M/S. OM METALS INFA-PROJECTS LTD. OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAJENDER SINGH, JCIT - DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAMESH GOYAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4 /02/2016 ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 2 VKNS'K@ ORDER PER R.P. TOLANI, JM THESE ARE TWO REVENUE APPEALS AGAINST THE RESPECTIV E ORDERS OF LD. CIT(A)-1, JAIPUR DTD. 22-12-2014 FOR AY 2008-09 AN D DTD. 28-10-2014 FOR AY 2011-12. 2.1 ONE COMMON GROUND IN BOTH REVENUE APPEALS FOR T HESE ASSESSMENT YEARS CHALLENGES DISALLOWANCE ON ACCOUNT OF EXPENDI TURE AS U/S 14A APPLYING RULE 8D OF THE INCOME TAX ACT AMOUNTING TO RS. 53,54,056/- AND RS. 1,29,52,621/- FOR AYS 2008-09 AND 11-12 RESPECT IVELY. 3.1 BRIEF FACTS ARE ASSESSEE, OM METALS INFRA-PROJE CTS LTD. IS A LISTED COMPANY, ENGAGED IN THE BUSINESS ACTIVITIES OF HYDR O-MECHANICAL DAM GATES AS ITS MAIN BUSINESS AND ALSO BUSINESS ACTIVITIES L IKE HOTEL, MULTIPLEX, HOUSING PROJECTS ETC. IN BOTH THE YEARS ASSESSEE HA D EARNED DIVIDEND FROM OLD SHARE HOLDINGS AMOUNTING TO RS. 1,14,77,297/- & RS. 1,19645/- RESPECTIVELY. ORIGINAL ASSESSMENT FOR AY 2008-09 WAS COMPLETED U/ S 143(3) WHERE NO SUCH DISALLOWANCE WAS MADE U/S 14A, THE IMPUGNED AD DITION IN AY 2008-09 WAS MADE BY REOPENING ASSESSMENT U/S 147. AND FOR A Y 2011-12 HAS FRAMED U/S 143(3). DURING THE COURSE OF THESE PROCEEDINGS LD. AO ASKED FOR THE ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 3 APPLICABILITY OF SEC. 14A R.W. RULE 8D FOR DISALLOW ANCE EXPENSES ATTRIBUTABLE TO EXEMPT INCOME. ASSESSEE FILED DETAILED REPLIES A ND WORKINGS CONTENDING THAT THE INVESTMENTS IN SHARES AND MUTUAL FUNDS REL ATING TO EXEMPT INCOME WERE OLD AND MADE BY THE COMPANY OUT OF ITS OWN FUN DS. THE BORROWED FUNDS WERE EXCLUSIVELY USED FOR ACQUIRING ITS OTHER ASSETS AND SINCE NO EXPENDITURE WAS INCURRED BY ASSESSEE TO EARN THE EX EMPT INCOME NO DISALLOWANCE U/S 14A RW RULE 8D WAS CALLED FOR. ASS ESSEE RELIED ON VARIOUS JUDICIAL PRECEDENTS IN THIS BEHALF TO SUPPORT ITS C ONTENTIONS. LD. AO REFERRED TO RULE 8D APPLICABLE FROM AY 2008-09 AND RELIED ON : (I) GODREJ AND BOYCE MFG. CO. LTD. V. CIT (2010) 3 28 ITR 81 (BOM) HOLDING THAT ONCE A PROXIMATE CAUSE IS ESTAB LISHED BETWEEN THE EXPENDITURE AND EXEMPT INCOME, DISALLOWANCE U/S 14A IS CALLED FOR. (II) CIT V LEENA RAMCHANDRAN (2011) 339 ITR 296 (K ERALA) HOLDING THAT WHEN WHOLE OF THE BORROWED FUNDS ARE U TILIZED IN PURCHASE OF SHARES, ENTIRE INTEREST SHOULD BE DISAL LOWED U/S 14A. SO FAR AS ACQUISITION OF SHARES IN THE INVESTMENT IS C ONCERNED AND THE ONLY BENEFIT DERIVED IS EXEMPT DIVIDEND INCOME, DISALLOW ANCE U/S 14A IS SQUARELY ATTRACTED. BASED ON THESE OBSERVATIONS LD. AO APPLIED MECHANIC S OF RULE 8D AND MADE THE ABOVE DISALLOWANCES OUT OF EXPENDITURE. 3.2 AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE CIT(A) AND CONTENDED THAT LD. AO SUMMARILY DISMISSED ITS CONTENTIONS AND MADE THE IMPUGNED ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 4 ADDITIONS WHICH WAS CONTRARY TO THE FACTUAL POSITIO N AND JUDICIAL CITATIONS. THE LD. CIT(A) GAVE THE RELIEF IN QUESTION BY MAINL Y HOLDING THAT: (I) LD. AO HAS NOT CONSIDERED THE FINANCIAL BREAKU P, WORKING AND JUDICIAL CITATION CONTENDED BY THE ASSESSEE. IN AY 2008-09 THE CORRECT INVESTMENT IN JV SHARES AND MUTUAL FUNDS WAS TO THE TUNE OF RS. 21,06,71,000/- AND NOT RS. 37,55,36,330/- AS HELD B Y AO. THE MAJOR SHARE INVESTMENT MADE IN JV SHARES TO HOLD CONTROLL ING INTEREST WAS A BUSINESS NECESSITY TO PROMOTE ITS BUSINESS AND CANN OT BE TERMED AN INVESTMENT TO EARN EXEMPT INCOME. (II) TOTAL SHARE CAPITAL AND RESERVES AVAILABLE WI TH ASSESSEE WERE TO THE TUNE OF RS. 378.00 CRORES. IT HAS BEEN ADMITTED BY LD. AO THAT INVESTMENT IN SHARES IS MADE BY THE ASSESSEE OUT OF ITS OWN FUNDS. THE REASON FOR DISALLOWANCE U/S 14A AS GIVEN BY LD. AO IS ONLY THAT STILL RULE 8D IS TO BE MECHANICALLY APPLIED. THIS CLEARLY INDI CATES THAT LD. AO HAS NOT DISCHARGED HIS ONUS ON COGENT REASONS TO ESTABL ISH HOW THE ASSESSEES WORKING ABOUT NON DISALLOWANCE OF EXPENDITURE U/S 1 4A CAN BE FOUND FAULT WITH. (III) FIXED AND CURRENTS ASSETS USED BY THE ASSESSE E IN ITS BUSINESS WERE MORE THAN THE BORROWED MONEYS, THEREFORE, THER E WAS NO REASON TO HOLD THAT ANY PART OF INTEREST INCURRED BY ASSESSEE WAS ATTRIBUTABLE TO INVESTMENTS IN SHARES AND MUTUAL FUNDS. ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 5 (IV) LD. AO HAS FAILED TO BRING ON RECORD ANY EVIDE NCE TO SUGGEST ANY ADMINISTRATIVE OR OTHER EXPENDITURE WAS INCURRE D FOR EARNING EXEMPT INCOME. (V) SINCE LD. AO HAS FAILED TO SUBSTANTIATE THAT A NY DIRECT OR INDIRECT EXPENDITURE WAS INCURRED BY ASSESSEE TO EA RN EXEMPT INCOME OR TO SHOW ANY PROXIMATE NEXUS, THE IMPUGNED DISALLOWA NCE BASED ON NOTIONAL APPORTIONMENT OF TOTAL EXPENDITURE IN THE GUISE OF RULE 8D WAS NOT CALLED FOR. (VI) FOR ATTRACTING SECTION 14A OF THE ACT, THERE S HOULD BE PROXIMATE CAUSE FOR DISALLOWANCE WHICH HAS RELATION SHIP WITH THE TAX EXEMPT INCOME AS HELD BY THE HONBLE SUPREME COURT IN CASE OF CIT VS. WALFORT SHARE AND STOCK BROKERS P. LTD. (2010) 326 ITR 1. LD. AO HAS NOT DISCHARGED THE ONUS OF ESTABLISHING ANY PROXIMA TE RELATIONSHIP BETWEEN THE EXPENDITURE AND THE EXEMPT INCOME IN TH IS CASE. WHICH DOES NOT FORM PART OF THE TOTAL INCOME. IT WAS INCUMBENT ON THE AO TO FIND OUT AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDI TURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND IF SO TO QUANTIFY THE EXPENDITURE OF DISALLOWANCE. THE AO HAS NOT BR OUGHT ON RECORD ANY FACT OR MATERIAL TO SHOW THAT ANY EXPENDITURE HAS B EEN INCURRED ON THE ACTIVITY OF NON TAXABLE INCOME . (VII) IN AY 2008-09, ASSESSEE INCURRED EXPENDITURE OF INT EREST AMOUNTING TO RS. 3,26,05,191/- THE BREAK THEREOF IS AS UNDER:- A. TERM LOAN USED FOR PARTICULAR ASSETS RS. 2,35,26,80 3/- ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 6 B. WORKING CAPITAL USED FOR BUSINESS RS. 90,78, 388/- RS. 3,26,05,191/- THUS THERE WAS NO NEXUS BETWEEN THE INTEREST EXPENS ES INCURRED AND EXEMPT INCOME. SIMILAR WAS THE POSITION FOR AY 2011-12. 3.3 AGGRIEVED REVENUE IS IN APPEALS. LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 3.4 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT:- (I) SUB-SECTION (2) OF SECTION 14A, STIPULATES THAT THE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE I NCURRED IN RELATION TO EXEMPT INCOME WHEN HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITUR E. IN THAT EVENTUALITY BY CORRELATION OF PROXIMATE NEXUS BETWE EN THE EXEMPT INCOME WITH EXPENDITURE INCURRED IN THIS BEHALF BY AN OBJECTIVE ANALYSIS AND FOR COGENT REASONS SUCH EXPENDITURE MA Y BE RECOURSE TO ON THE BASIS OF A REASONABLE AND ACCEPTABLE METHOD OF APPORTIONMENT, AS HELD BY SUPREME COURT IN WALFORT CSE (SUPRA). IN THE CASE OF ASSESSEE THE LD. A. O. HAS NOT GIVEN ANY CORRELATIO N OF NEXUS OR SPECIFIC CATEGORICAL FINDINGS IN THIS BEHALF. RELIANCE IS PLACED ON THE CASES OF:- (1) CIT VS. TAIKISHA ENGEENIGN INDIA LTD. 370 ITR 338 (DELHI) :- THAT THE CLEAR FINDINGS OF THE APPELLATE AUTHORITIE S WERE ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 7 THAT THE ASSESSEE HAD SUFFICIENT FUNDS FOR MAKING I NVESTMENT IN SHARES AND MUTUAL FUNDS. THE FINDINGS COUPLED WITH THE FA ILURES OF THE ASSESSING OFFICER TO RECORD HIS SATISFACTION CLINCH ED THE ISSUE IN FAVOR OF THE ASSESSEE. THE VOLUNTARY DEDUCTIONS MADE BY THE ASSESSEE WERE NOT REJECTED OR HELD TO BE UNSATISFACTORY, ON EXAMI NATION OF ACCOUNTS. THE ASSESSING OFFICER ERRED IN INVOKING SUB-RULE (2 ) WITHOUT ELUCIDATING AND EXPLAINING WHY THE VOLUNTARY DISALL OWANCE MADE BY THE ASSESSEE WAS UNREASONABLE AND UNSATISFACTORY. THERE WAS NO SUCH SATISFACTION RECORDED BY THE ASSESSING OFFICER BEFO RE HE INVOKED SUB- RULE (2) OF RULE 8D AND MADE THE COMPUTATION. THE A SSESSING OFFICER HAS TO REJECT THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EXPENDITURE OR NO EXPENDITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPT INCOME; THE ASSESSING OFFICER WOULD HAVE TO INDICATE COGENT REASONS FOR THE SAME. WE DO NOT FIND ANY SUCH SATISFACTION RECORDE D IN THE PRESENT CASE BY THE ASSESSING OFFICER BEFORE HE INVOKED SUB -RULE (2) OF RULE 8D OF THE RULES AND MADE THE RE-COMPUTATION. THEREF ORE THE RESPONDENT ASSESSEE WOULD SUCCEED. (2) CIT V TAIKISHA ENG. 2014-TIOL-2239-DEL-IT 9 (DELHI HC) :- 18. IT IS IN THIS CONTEXT WE FEEL THAT THE FINDINGS RECORDED BY THE CIT(A) AND THE TRIBUNAL ARE APPROPR IATE AND RELEVANT. THE CLEAR FINDINGS ARE THAT THE ASSESSEE HAD SUFFIC IENT FUNDS FOR MAKING INVESTMENTS IN SHARES AND MUTUAL FUNDS. THE SAID FINDINGS COUPLED WITH THE FAILURE OF THE ASSESSING OFFICER T O HOLD AND RECORD HIS SATISFACTION CLINCHES THE ISSUE IN FAVOUR OF TH E RESPONDENT ASSESSEE AND AGAINST THE REVENUE. (3) JOINT INVESTMENTS PVT. LTD. 372 ITR 694 (DEL HC):- 9. IN THE PRESENT CASE, THE AO HAS NOT FIRSTLY DISC LOSED 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 DETERMINE A MOUNTS IS DERIVED AFTER EXAMINATION OF THE ACCOUNTS AND REJECTION IF ANY OF THE ASSESSEES CLAIM OR EXPLANATION. THE SECOND ASPECT IS THERE AP PEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO - AN ASPECT W HICH IS COMPLETELY ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 8 UNNOTICED BY THE CIT (A) AND THE ITAT. THE THIRD, A ND IN THE OPINION OF THIS COURT, IMPORTANT ANOMALY WHICH WE CANNOT BE UNMINDFUL IS THAT WHEREAS THE ENTIRE TAX EXEMPT INCOME IS RS.48,90,00 0/-, THE DISALLOWANCE ULTIMATELY DIRECTED WORKS OUT TO NEARL Y 110% OF THAT SUM, I.E., RS.52,56,197/-. BY NO STRETCH OF IMAGINA TION CAN SECTION 14A OR RULE 8D BE INTERPRETED SO AS TO MEAN THAT TH E ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOW ANCE IS INDICATED IN SECTION 14A, AND IS ONLY TO THE EXTENT OF DISALL OWING EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EX EMPT INCOME. THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURE LY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE. (4) REGENT AUTO. PVT. ITA/684/DEL/2014 (DEL ITAT) DTD 18-6-15 :- DELHI ITAT AFTER CONSIDERING ITS OWN JUDGMENT IN THE CASE OF HOLICIM INDIA PVT. LTD. AND HONBLE DELHI HIGH COURT IN JOINT INVESTMENTS (SUPRA) REITERATED THE VIEW THAT THE DISALLOWANCE U/S 14A CANNOT THE EXEMPT INCOME. 3.5 IT IS ADMITTED BY LD. AO HIMSELF THAT THE INVE STMENTS IN JV EQUITY AND MUTUAL FUNDS WAS MADE BY THE ASSESSEE OU T OF OWN CAPITAL AND RESERVES. THE DISALLOWANCE IS MADE NOT ON CONSIDERA TION OF ASSESSEES REPLY AND MERITS OF ITS CONTENTION BUT MERELY BY ME CHANICALLY APPLYING RULE 8D. THESE UNAMBIGUOUS OBSERVATIONS ON THE PART OF LD. AO CLEARLY CLINCH THE ISSUE IN FAVOR OF THE ASSESSEE IN VIEW O F ABOVE JUDGMENTS. 3.6 WITHOUT PREJUDICE TO ABOVE IN AY 2011-12, ASSE SSEE EARNED DIVIDEND OF ONLY TO THE EXTENT OF RS. 1,19,645/- WH EREAS RS. 59,01,52,708 ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 9 HAS BEEN DISALLOWED U/S 14A BY MECHANICAL APPLICATI ON OF RULE. IN VIEW OF ABOVE JUDGMENTS EVEN IN WORST CIRCUMSTANCES AND IF ASSESSEES ALL EXPLANATION FAIL, DISALLOWANCE U/S 14A CAN NEVER EX CEED THE EXEMPT INCOME. IN AY 2011-12 ALSO LD. AO HAS ADMITTED THE ACQUISITION OF JV SHARES AND MUTUAL FUNDS FROM THE SAME INTEREST FREE OWN SOURCES I.E. CAPITAL AND RESERVES OF COMPANY. 4.1 APROPOS THE SECOND GROUND RAISED IN AY 2011-12 IN RESPECT OF CONTRIBUTION TO EMPLOYEES PF, IT IS NOT DISPUTED TH AT THE PAYMENTS ARE MADE BY THE ASSESSEE WITHIN THE DUE DATE PRESCRIBED FOR FILING THE RETURN. THE ISSUE IN QUESTION IS SQUARELY COVERED BY HONBL E RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF CIT V. SBBJ (2014) 26 3 ITR 17, WHICH HAS BEEN RELIED BY LD. CIT(A). RESPECTFULLY FOLLOWI NG HONBLE RAJASTHAN HIGH COURT JUDGMENT THIS GROUND IS DISMISSED. 5.1 WE HAVE HEARD THE RIVAL CONTENTIONS, JUDICIAL PRONOUNCEMENTS AND MATERIAL AVAILABLE ON RECORD. FOLLOWING FACTS C LEARLY EMERGE FROM THE RECORD:- ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 10 (I) IT IS ADMITTED BY LD. AO HIMSELF THAT THE INVE STMENTS IN ASSETS FROM WHICH EXEMPT INCOME IS EARNED I.E. JV E QUITY AND MUTUAL FUNDS WERE MADE BY THE ASSESSEE OUT OF ITS OWN CAPI TAL AND RESERVES. (II) ASSESSEES EXPLANATION THAT IN AY 2008-09, IN TEREST EXPENDITURE AMOUNTING TO RS. 3,26,05,191/- WAS INCU RRED AS UNDER: (A) TERM LOAN USED FOR PARTICULAR ASSETS RS. 2,35,26,8 03/- (B) WORKING CAPITAL USED FOR BUSINESS RS. 90,78 ,388/- RS. 3,26,05,191/- THUS THERE WAS NO NEXUS BETWEEN THE INTEREST EXPENS ES AND EXEMPT INCOME. SIMILAR POSITION FOR AY 2011-12 ALSO IS NOT DISPUTED. (III) LD. AO INVOKED SUB-RULE (2) WITHOUT DEMONSTRA TING WHY THE ASSESSEES EXPLANATION WAS UNREASONABLE AND UNS ATISFACTORY. ON ONE HAND IT IS ADMITTED THAT IMPUGNED INVESTMENTS A RE NOT OUT OF BORROWED FUNDS AND THEY WERE OUT OF ASSESSEES OWN RESOURCES. ON THE OTHER HAND A SELF CONTRADICTORY STAND IS ADOPTED BY AO IN THE GUISE OF MECHANICAL RULE AND THESE INTEREST FREE OWN FUNDS A RE INCLUDED AS BORROWED FUNDS. THIS IS IMPERMISSIBLE AND AND CLEAR LY MANIFESTS A SELF CONTRADICTORY APPROACH. (IV) LD. AO HAS FAILED TO CORRELATE PROXIMITY OF AN Y NEXUS BETWEEN THE EXEMPT INCOME WITH EXPENDITURE INCURRED IN THIS BEHALF BY AN OBJECTIVE ANALYSIS AND COGENT REASONS. SINCE THERE IS NO CORRELATION NO BASIS EXISTS FOR METHOD OF ANY APPOR TIONMENT OF EXPENSES, AS HELD BY SUPREME COURT IN WALFORT CASE (SUPRA). ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 11 (V) APROPOS ADMINISTRATIVE OR OTHER EXPENSES THERE IS EVEN NO WHISPER FROM LD. AO THAT ASSESSEE HAD TO INCUR A NY SUCH EXPENDITURE FOR INVESTMENT IN JV OR ACQUISITION OF MUTUAL FUNDS. (VI) HONBLE DELHI HIGH COURT IN TAIKISHA (SUPRA) H ELD THAT TO PROCEED FURTHER FOR DISALLOWANCE U/S 14A RW RULE 8D THE DETERMINATION AMOUNT IS DERIVED AFTER EXAMINATION OF THE ACCOUNTS AND REJECTION IF ASSESSEES CLAIM OR EXPLANATION. WE FIND THAT LD. A O RATHER ACCEPTS THAT THE IMPUGNED INVESTMENTS IN JV EQUITY AND MUTU AL FUNDS IS OUT OF OWN FUNDS OF ASSESSEE, NEVERTHELESS AO PROCEEDS FOR DISALLOWANCE IN THIS BEHALF. THE SECOND ASPECT IS THERE APPEARS TO BE NON SCRUTINY OF THE RELEVANT ASPECTS AND PROPOSITIONS THE LD. AO. (VII) LD. CIT(A) HAS CONSIDERED THE ISSUES, RELEVAN T FACTS, ASSESSEES EXPLANATION AND JUDICIAL PRECEDENTS IN RIGHT PERSPE CTIVES AND BY DETAILED FINDINGS DISLODGED THE AOS OBSERVATIONS A ND FINDINGS. THE ORDERS OF LD. CIT(A) SUFFER FROM NO INCONSISTENCY A ND DESERVE TO BE UPHELD. 5.2 IN VIEW OF THE FACTS, CIRCUMSTANCES, CONTENTION S AND OUR OBSERVATIONS MENTIONED ABOVE & RESPECTFULLY FOLLOWING THE JUDGME NTS IN THE CASE OF TAIKISHA, JOINT INVESTMENTS, REGENT AUTOMOBILES AND HONBLE SUPREME COURT IN THE CASE OF WALFORT SHARES AND STOCK BROKE RS (SUPRA) WE FIND NO ITA NO. 916/JP/2014 DCIT, CIRCLE- 2, JAIPUR VS. M/S. OM METALS INFRA-PROJECTS LTD. , JAIPUR 12 INCONSISTENCY OR INFIRMITY IN THE IMPUGNED ORDERS P ASSED BY LD. CIT(A), WHICH ARE UPHELD. 6.0 IN THE RESULT, REVENUES APPEALS ARE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 4/02/2016 . SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER FNUKAD@ DATED:- 4/02/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE- 2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. OM METALS INFRA-PROJECTS LTD. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.916/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR