M/s. Quantrro Global Services Private Limited, New Delhi V. ITO, New Delhi

ITA 2431/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2667 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 12-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: LALITHA KRISHNAMURTHY
• Keywords: Capital asset; Earning of tax free income; Capital receipt
• Section: 14A; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SMT. BEENA A. PILLAI, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 2431/DEL/2014 (ASSESSMENT YEAR 2009-10) APPELLANT BY : SMT. LALITHA KRISHNAMURTHY, CA RESPONDENT BY : SH. ATIQ AHMAD, SR. DR DATE OF HEARING : 10.07.2017 DATE OF PRONOUNCEMENT : 31.07.2017 ORDER PER BEENA A PILLAI, JM: 1. THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAI NST ORDER DATED 02.01.2014, PASSED BY LD. CIT(A)-XVII, NEW DE LHI FOR ASSESSMENT YEAR 2009-10 ON FOLLOWING GROUNDS OF APP EAL: 1. THAT THE DISALLOWANCE OF LOSS OF RS.3,75,40,000/- O N ACCOUNT OF FLUCTUATION IN FOREIGN EXCHANGE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY CIT(APPEALS), BY HOLDING THAT THE SAME HAD BEEN CLAIMED WITHOUT ANY TRANSACTION IN THE RELEVANT YEAR AND WAS ON CAPITAL ACCOUNT INSTEAD OF ON REVENUE ACCOUNT AS CLAIMED BY ASSESSEE, NOT ALLOWABLE AS A LOSS UNDER SECTION 37 O F THE ACT, IS ARBITRARY, UNJUST, BAD IN LAW, WITHOUT ANY B ASIS AND CONTRARY TO THE ACTUAL UTILIZATION OF THE FOREIG N EXCHANGE LOAN. QUANTRRO GLOBAL SERVICES PVT. LTD. BASEMENT, 24, C-BLOCK COMMUNITY CENTRE, JANAKPURI NEW DELHI. VS. ITO WARD-14(4) NEW DELHI. GIR/PAN: AAFCA4469B (APPELLANT) (RESPONDENT) 2 ITA NO. 2431/DEL/2014 (AY 2009-10) 2. THAT THE OBSERVATION MADE BY THE CIT(APPEALS) THAT LOSS ON ACCOUNT OF FLUCTUATION IN FOREIGN EXCHANGE WAS NOT INCURRED IN THE COURSE OF CARRYING ON OF THE BUSINES S AND NOT PART OF TRADING ASSET OF THE COMPANY IS BASED ON SURMISE, CONJECTURE, PRESUMPTION AND CONTRARY TO THE FACTS ON RECORD AND ACCORDINGLY THE ASSESSMENT SO FRAMED BY THE ASSESSING OFFICER AND SUSTAINED BY CIT(APPEALS) ON SUCH UNWARRANTED AND ILLOGICAL INFERE NCE IS BAD IN LAW. 3. THAT WITHOUT PREJUDICE TO ABOVE GROUNDS, THE CIT (APPEALS) HAS ERRED ON FACTS AND UNDER THE LAW IN GIV ING A DIFFERENT TREATMENT TO THE FOREIGN EXCHANGE LOSS IN THE RELEVANT YEAR ON ACCOUNT OF RESTATEMENT OF FOREIGN CURRENCY LOAN TAKEN IN THE PREVIOUS ASSESSMENT YEAR AND CONSEQUENTLY DISALLOWANCE OF FOREIGN EXCHANGE LOSS, IS ARBITRARY, UNJUST, DISCRIMINATORY AND BAD IN LAW. 4. THAT THE DISALLOWANCE OF RS. 1,68,27,395/- UNDER SECTION 14A OF IT ACT MADE BY ASSESSING OFFICER AND SUSTAINED BY CIT (APPEALS) IS ARBITRARY, UNJUST AND A T ANY RATE VERY EXCESSIVE. 5. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 6. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2009 A T LOSS OF RS.25,19,18,008/-. THEREAFTER, ASSESSEE REVISED ITS RETURN ON 18.03.2010 DECLARING A LOSS OF RS.21,13,55,879/-. T HE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143( 2) WAS ISSUED. THEREAFTER, THE CASE WAS TRANSFERRED TO NEW DELHI, AN D THE CASE WAS DISCUSSED WITH REPRESENTATIVES BEFORE LD. AO. 3 ITA NO. 2431/DEL/2014 (AY 2009-10) 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS LD. AO VID E ORDER SHEET ENTRY DATED 07.12.2011, ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS IN RESPECT OF FOREIGN EXCHANGE FLU CTUATION LOSS(NET) AMOUNTING TO RS.3,04,13,033/-. IN RESPONS E ASSESSEE, ASSESSEE FILED NECESSARY DETAILS. ON PERUSAL OF SAM E, LD. AO OBSERVED THAT FOREIGN EXCHANGE FLUCTUATION LOSS OF RS.3,75,40,000/- HAS BEEN INCURRED ON UTI BANK TERM LOAN TAKEN IN FOREIGN CURRENCY. ASSESSEE SUBMITTED THAT LOSS OCCURRED DUE TO FOREIGN EXCHANGE FLUCTUATION ON TERM LOAN, WA S AN ALLOWABLE EXPENDITURE, AS IT WAS CAPITAL IN NATURE. 4. LD. AO HOWEVER, DISALLOWED CLAIM OF ASSESSEE, AS HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED LOAN FROM U TI BANK FOR CAPITAL PURPOSES, AND IT COULD NOT BE ALLOWED AS REV ENUE EXPENDITURE. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. AO OBSERVED THAT, DURING YEAR UNDER CONSIDERATION, ASS ESSEE EARNED DIVIDEND INCOME AMOUNTING TO RS.1,27,03,741/-. IT WA S ALSO OBSERVED THAT ASSESSEE MADE S UO MOTU DISALLOWANCE OF RS.13,84,588/-UNDER SECTION 14A, IN ITS COMPUTATION OF INCOME. ASSESSING OFFICER MADE ADDITION BY OBSERVING THAT A SSESSEE HAS NOT COMPUTED AMOUNT OF AVERAGE INVESTMENTS CORRECTL Y. HE, THEREFORE, RECOMPUTED DISALLOWANCE UNDER SECTION 14A AT RS.1,68,27,395/-. 6. AGGRIEVED BY ORDER OF LD. AO ASSESSEE PREFERRED AP PEAL BEFORE LD.CIT(A), WHO UPHELD THE ADDITIONS MADE. 4 ITA NO. 2431/DEL/2014 (AY 2009-10) 7. AGGRIEVED BY ORDER OF LD. CIT(A) ASSESSEE IS IN AP PEAL BEFORE US NOW. GROUND NO.1-3 8. LD. AR SUBMITTED THAT ASSESSEE HAD OBTAINED FOREIG N CURRENCY LOANS FROM AXIS/UTI BANK; ONE WAS FOR CAPIT AL EXPENDITURE TOWARDS BORROWERS DELIVERY CENTERS AND O THER FOR WORKING CAPITAL REQUIREMENTS OF ASSESSEE. IT HAS BEE N SUBMITTED BY LD. AR THAT AS LOAN WAS A FOREIGN CURRENCY LOAN, IT HAS TO BE REINSTATED AT END OF THE YEAR DUE TO WHICH THEIR OCC URRED FLUCTUATION IN CURRENCY, RESULTING IN A LOSS OF RS. 2,22,14,000/-. 9. LD. AR SUBMITTED THAT ON TERM LOAN AMOUNTING TO RS . 78,560,000/- WAS SANCTIONED FOR CAPITAL PURPOSES WHIC H WAS FULLY UTILISED BY ASSESSEE FOR WORKING CAPITAL REQUI REMENT DURING THE YEAR UNDER CONSIDERATION. SHE SUBMITTED THAT AS SESSEE INVESTED ENTIRE AMOUNT OF LOAN RECEIVED IN MUTUAL F UNDS AND REDEEMED MUTUAL FUNDS AS PER WORKING CAPITAL REQUIRE MENT OF APPELLANT FOR THE YEAR UNDER CONSIDERATION. LD. AR SUBMITTED THAT ON REINSTATEMENT OF LOAN AT THE END OF YEAR THERE A ROSE GAIN, WHICH HAS BEEN ACCEPTED BY AUTHORITIES BELOW. DATE PARTICULARS EXCHANGE RATE OF USD IN INR AMOUNT IN USD AMOUNT IN INR 31-JULY- 07 TERM LOAN UTI BANK 40.29 20,00,000 8,03,60,000 31-MAR-08 GAIN ON ACCOUNT OF REINSTATEMENT @ USD 1 = RS. 39.31 (17,40,000) 31 - MAR - 08 LOAN AFTER REINSTATEMENT 20,00,000 7,86,20,000 31-MAR-09 LOSS ON ACCOUNT OF REINSTATEMENT @ USD 1 = RS. 50.43 50.43 (A) 2,22,40,000 31-MAR-09 LOAN REINSTATEMENT 20,00,000 09-JUNE- 08 WORKING CAPITAL UTI BANK 20,00,000 8,55,60,000 5 ITA NO. 2431/DEL/2014 (AY 2009-10) 31-MAR-09 LOSS ON ACCOUNT OF REINSTATEMENT @ USD 1 = RS. 50.43 50.43 (B) 1,53,00,000 31-MAR-09 LOAN AFTER REINSTATEMENT 20,00,000 10,08,60,000 DISALLOWANCE BY THE ID. ASSESSING OFFICER (A+B) 3,75,40,000 10. LD. AR SUBMITTED THAT TERM LOAN AMOUNTING TO RS. 8,03,60,000/- WAS RECEIVED BY ASSESSEE ON 30.07.2007 BEING PRECEDING ASSESSMENT YEAR. SHE SUBMITTED THAT DURIN G END OF FINANCIAL YEAR THAT IS ON 31.03.2008, LOAN WAS REINS TATED AT RS. 7,86,20,06/- WHICH WAS AVAILABLE FOR ASSESSEE FOR TH E YEAR UNDER CONSIDERATION AS AN OPENING BALANCE. FRESH LOAN OBTA INED DURING THE YEAR UNDER CONSIDERATION WAS UTILIZED TOWARDS WOR KING CAPITAL ON 09.06.2008 AMOUNTING TO RS. 8,55,60,000/ - WHICH HAS BEEN REINSTATED ON 31.03.2009 BEING END OF FINANCIA L YEAR AMOUNTING TO RS. 1,53,00,000/- UPON REINSTATEMENT. 11. SHE REFERRED TO PAGE 9 OF PAPER BOOK WHEREIN THE SU MMARY OF THE LOAN OBTAINED FROM UTI BANK HAS BEEN GIVEN WH ICH IS BEING REPRODUCED HEREUNDER: NATURE OPENING BALANCE RECEIVED DURING THE YEAR REPAID DURING THE YEAR REINSTATEMENT CLOSING BALANCE PURPOSE OF THE LOAN LOAN UTI BANK 7,86,20,000 2,22,40,000 10,08,60,000 FOR WORKING CAPITAL REQUIREMENTS TERM LOAN YES BANK 2,55,00,000 60,00,000 N.A 1,95,00,000 INR LOAN. NO REINSTATEMENT LOAN UTI BANK 8,55,60,000 1,53,00,000 10,08,60,000 ADDITIONAL LOAN FOR WORKING CAPITAL REQUIREMENTS 6 ITA NO. 2431/DEL/2014 (AY 2009-10) 12. LD. AR SUBMITTED THAT LOANS RECEIVED HAS BEEN UTIL ISED FOR THE PURPOSES OF BUSINESS AND THEREFORE, THE LOSS MU ST BE ALLOWED AS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. SHE SUBMITTED THAT ONLY REASON FOR DISALLOWANCE OF ASSESSEES CLAIM IS BASED ON PRESUMPTION BY AUTHORITIES BELOW THAT THERE HAS BEE N NO TRANSACTION THAT HAS TAKEN PLACE DURING YEAR WHICH C OULD RESULT INTO PROFIT OR LOSS TO ASSESSEE AND ALSO THAT LOAN HAS BEEN UTILISED TO ACQUIRE CAPITAL ASSETS. SHE SUBMITTED THAT NEITH ER LD. CIT(A) NOR LD. AO DISPUTED THE METHOD OF ACCOUNTING FOLLOWE D BY ASSESSEE. IN SUPPORT OF CLAIM LD. AR HAS PLACED ON RECORD BEFORE US LEDGER ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION. 13. SHE PLACED RELIANCE UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOYAL M.G.CASES R EPORTED IN 173 TAXMANN 34, WHEREIN IT HAS BEEN HELD THAT; TO EFFECT THE PURPOSE OF ACQUISITION OF THE LOAN I S OF NO CONSEQUENCE BUT WATERS OF CONSEQUENCES UTILISATION OF THE AMOUNT AT THE TIME WHEN THE DEVALUATION TOOK PLACE. 14. SHE ALSO PLACED RELIANCE UPON DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF LOGIC TRONICS PVT. LTD. VS. CIT REPORTED IN 333 ITR 386 WHEREIN HONBLE COURT HAS HELD THAT; IF THE LOAN WAS UTILISED FOR CAPITAL PURPOSES IS (T O PURCHASE CAPITAL ASSETS) THE WEAVERS SHOULD RESULTIN G CAPITAL RECEIPT, BUT IF THE LOAN WAS UTILISED FOR R EVENUE PURPOSES (WORKING CAPITAL PURPOSES) THEN THE WAIVER OF LOAN WOULD RESULT IN TAXABLE INCOME. 15. SHE SUBMITTED THAT SINCE LOAN WAS UTILISED FOR WORKI NG CAPITAL PURPOSE BY ASSESSEE AND FROM THE DATE OF RE CEIPT OF THE 7 ITA NO. 2431/DEL/2014 (AY 2009-10) LOAN ASSESSEE HAS TREATED IT TO BE ON THE REVENUE A CCOUNT, ANY LOSS RESULTING FROM FOREIGN EXCHANGE FLUCTUATION ON EXTERNAL COMMERCIAL BORROWINGS THEN WOULD HAVE TO BE ALLOWABLE UNDER SECTION 37 (1) OF THE ACT. 16. LD. AR SUBMITTED THAT ASSESSEE MAINTAINS ITS BOOKS OF ACCOUNT ON MERCANTILE BASIS AND LOSS ON ACCOUNT OF EXCHANGE FLUCTUATION HAD TO BE ALLOWED IN THE YEAR WHEN IT WAS REFLECTED IN THE BALANCE SHEET AS HAS BEEN HELD BY HONBLE SUPREME COURT IN THE CASE OF ONGC VERSUS CIT REPORTED IN (2010) 189 TAXMANN 292. 17. ON THE CONTRARY LD. SR. DR SUBMITTED THAT, THE LED GER ACCOUNTS SUBMITTED BY LD. AR HAS NOT BEEN PLACED BE FORE AUTHORITIES BELOW. HE ALSO REFERRED TO PAGE 13 OF PA PER BOOK BEING SUMMARY OF WORKING CAPITAL LOAN UTILISATION WHEREIN L D. SR. DR SUBMITTED THAT THIS HAS NEVER BEEN VERIFIED BY AUTH ORITIES BELOW. UPON PUTTING QUESTION TO LD. AR, SHE ADMITTED THAT SUMMARY OF UTILISATION OF THE LOAN PLACED AT PAGE 13 WAS NOT TH ERE BEFORE THE AUTHORITIES BELOW FOR THEIR CONSIDERATION. 18. HE ALSO SUBMITTED THAT ASSESSEE HAS ADMITTED EVEN BEFORE THIS TRIBUNAL THAT LOAN RECEIVED HAVE BEEN UTILISED NOT BEEN SUBSTANTIATED TO HAVE BEEN UTILISED FOR THE PURPOSE S OF ASSESSEES BUSINESS. HE SUBMITTED THAT UNDER SUCH CIRCUMSTANCE S ANY LOSS INCURRED BY ASSESSEE ON ACCOUNT OF SAME CANNOT BE A N ALLOWABLE DEDUCTION UNDER SECTION 37(1) OF THE ACT. LD. SR. D R PLACES RELIANCE UPON ORDERS PASSED BY AUTHORITIES BELOW. 19. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 8 ITA NO. 2431/DEL/2014 (AY 2009-10) 20. IT HAS BEEN ADMITTED BY LD. AR THAT DETAILED AT PA GE 13 OF PAPER BOOK BEING SUMMARY OF UTILISATION OF THE LOAN AND THE LEDGER ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION FOR FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, HA S NOT BEEN PLACED BEFORE AUTHORITIES BELOW FOR THEIR CONSIDERAT ION. IT HAS BEEN SUBMITTED BY LD. AR THAT THESE DETAILS SHOWS TH E MANNER IN WHICH FOREIGN CURRENCY LOAN RECEIVED HAS BEEN UTILIS ED BY ASSESSEE. IT HAS NOT BEEN VERIFIED BY THE AUTHORITI ES BELOW WHETHER LOAN RECEIVED BY ASSESSEE HAS BEEN ACTUALLY UTILISED AS WORKING CAPITAL FOR ASSESSEES BUSINESS. MERELY BY P LACING RELIANCE UPON THE STATEMENTS WOULD NOT ESTABLISH ACT UAL UTILISATION OF LOAN. IN THE INTEREST OF JUSTICE, WE ARE, THEREFORE, INCLINED TO SET ASIDE THIS ISSUE BACK TO LD. CIT(A) WHO WOULD VERIFY THESE DETAILS AS PER LAW. 21. ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 22. GROUND NO. 4 HAS BEEN RAISED BY ASSESSEE AGAINST DISALLOWANCE OF RS. 1,68,27,395/- UNDER SECTION 14A READ WITH RULE 8D. 23. LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSID ERATION ASSESSEE HAD RECEIVED DIVIDEND AMOUNTING TO RS. 1,2 7,03,741/- FROM FOLLOWING INVESTMENTS IN MUTUAL FUNDS: 9 ITA NO. 2431/DEL/2014 (AY 2009-10) 24. LD. AR SUBMITTED THAT INVESTMENTS IN UNQUOTED SHAR ES WAS TO AN EXTENT OF RS. 2,69,26,310/- AND INVESTMENT IN SUBSIDIARIES WAS TO AN EXTENT OF RS. 1,03,47,47,776/- WHICH DID N OT YIELD ANY EXEMPT INCOME DURING PREVIOUS YEAR. SHE SUBMITTED T HAT INVESTMENTS IN SUBSIDIARIES WERE STRATEGIC IN NATURE AND THEREFORE, CANNOT BE INCLUDED FOR THE PURPOSES OF D ISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. 25. LD. AR SUBMITTED THAT ASSESSEE HAD MADE INVESTMENT S IN CERTAIN FOREIGN SUBSIDIARY COMPANY, WHICH DO NOT FOR M PART OF VALUE OF INVESTMENT FOR THE PURPOSES OF DISALLOWANCE UNDER SECTION 14A OF THE ACT. SHE PLACED RELIANCE UPON DE CISION IN THE CASE OF CIT VERSUS SUZLON ENERGY LTD., REPORTED IN (2013) 215 TAXMAN 272. 26. SHE FURTHER SUBMITTED THAT ASSESSEE ALSO DID NOT C ONSIDER INVESTMENTS MADE IN GROWTH FUND FOR THE PURPOSES OF DISALLOWANCE AS THEY DO NOT YIELD ANY DIVIDEND / EXE MPT INCOME. LD. AR SUBMITTED THAT ASSESSEE HAD SUO-MOTU DISALLO WED RS.13,84,588/- UNDER SECTION 14A READ WITH RULE 8D, WHICH WAS COMPUTED AS UNDER : NAME OF THE INVESTMENT AMOUNT OF DIVIDEND 1. DSP ML LIQUID FUND 2,45,390/- 2. ICICI LIQUID PLAN 8,04,209/- 3. DWS MONEY PLUS FUND 79,95,930/- 4. HDFC - CMF-SAVING PLUS PLAN 36,58,393/- TOTAL 1,27,03,741/ - 10 ITA NO. 2431/DEL/2014 (AY 2009-10) QUATRRO BPO SOLUTIONS PRIVATE LIMITED EXPENDITURE IN RELATION TO EXEMPT INCOME AMOUNT INR 1 AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME W HICH DOES NOT FORM PART OF TOTAL INCOME = 2 A AMOUNT OF INTEREST 4,61,10,065 B AVERAGE INVESTMENT OPENING INVESTMENT (DAILY DIVIDEND) = 8,19,01,629 [ONLY MUTUAL FUND] CLOSING INVESTMENT (GROWTH FUND NOT TAKEN) = 1,34,02,626 [ONLY MUTUAL FUND] AVERAGE INVESTMENT = 4,76,52,127 C AVERAGE ASSETS OPENING ASSETS = 1,55,05,26,284 CLOSING ASSETS = 2,28,30,07,428 AVERAGE ASSETS 1,91,67,66,8 56 AXB/C 11,46,328 3 1/2 % OF AVERAGE VALUE OF INVESTMENT AVERAGE INVESTMENT = 4,76,52,127 1/2% 0.50% DISALLOWED AMOUNT 2,38,261 TOTAL EXPENDITURE DISALLOWED 13,84,588 27. LD. AR SUBMITTED THAT ONLY DIFFERENCE IN THE COMPUT ATION OF 14A DISALLOWANCE BY ASSESSEE VIS-A-VIS THAT MADE BY LD. AO IS IN RESPECT OF FOREIGN INVESTMENTS IN SUBSIDIARIES AS WE LL AS INVESTMENTS MADE IN GROWTH FUNDS THAT HAVE BEEN EXCL UDED BY ASSESSEE. SHE SUBMITTED THAT EXCLUSION OF THESE TWO ITEMS FROM COMPUTATION OF DISALLOWANCE IS SUPPORTED BY VARIOUS JUDICIAL PRECEDENTS. 11 ITA NO. 2431/DEL/2014 (AY 2009-10) 28. ON THE CONTRARY LD. SR. DR PLACED HIS RELIANCE ON THE DECISION OF AUTHORITIES BELOW. 29. WE HAVE PERUSED SUBMISSIONS ADVANCED BOTH SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. ASSESSEE HAS PLACED THE LIST OF INVESTMENT AT PAGE 5-7 OF PAPER BOOK. ON PERUSAL OF THE LIST THERE APPEARS THAT ASSESSEE HAS MADE INVESTMENT IN FOREIGN COMPANIES, SUBSIDIARIES CERTAIN UNQUOTED SHARES ETC . LD. AO IS DIRECTED TO VERIFY THESE SCRIPTS AND EXCLUDE THE FO REIGN SUBSIDIARY INVESTMENTS FOR THE PURPOSES OF COMPUTING 14A DISAL LOWANCE. AS FAR AS INVESTMENT MADE IN INDIAN SUBSIDIARY IS CONC ERNED, IT HAS BEEN SUBMITTED THAT THESE WERE STRATEGIC INVESTMENT S NEEDED TO BE MADE BY ASSESSEE. HOWEVER, ASSESSEE HAS NOT DEMON STRATED BEFORE US, THE NEED OF STRATEGIC INVESTMENTS IN SUB SIDIARY. LD. AO IS THEREFORE DIRECTED TO VERIFY DETAILS AND ALSO CH ECK IF ANY EXEMPT INCOME HAS BEEN RECEIVED BY ASSESSEE FROM THESE INV ESTMENTS. 30. FURTHER IN RESPECT OF INVESTMENTS MADE IN FOREIGN SUBSIDIARIES AND GROWTH FUND, LD. AR HAD SUBMITTED T HAT ASSESSEE HAS BEEN MAKING SUCH INVESTMENTS IN THE PR ECEDING ASSESSMENT YEARS WHICH HAS BEEN ACCEPTED BY AUTHORIT IES BELOW. SHE PLACED ON RECORD ASSESSMENT ORDER FOR AYS 2007-0 8 OF A GROUP COMPANY, WHEREIN NO DISALLOWANCE U/S 14A WAS MAD E. FURTHER LD. AO HAS NOT RECORDED ANY SATISFACTION IN RESPECT OF AMOUNT AND REASONS FOR REJECTING THE DISALLOWANCES O FFERED BY ASSESSEE AS PER THE MANDATE U/S 14A(2). LD. AO IS T HEREFORE, DIRECTED NOT TO INCLUDE INVESTMENTS MADE IN FOREIGN SUBSIDIARY 12 ITA NO. 2431/DEL/2014 (AY 2009-10) AND GROWTH FUNDS, AS NOTHING CONTRARY HAS BEEN BROU GHT ON RECORD BY THE AUTHORITIES BELOW. 30. ON THE BASIS OF ABOVE DISCUSSION, LD. AO IS DIRECT ED TO VERIFY INVESTMENTS MADE BY ASSESSEE AND TO CONSIDER DISALLOWANCE UNDER SECTION 14A IN ACCORDANCE WITH LAW. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS A LLOWED FOR STATISTICAL PURPOSES AS DISCUSSED ABOVE. IN THE RESULT APPEAL FILED BY THE ASSESSEE STANDS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2017 SD/- SD/- (PRASHANT MAHARISHI) (BEENA A. P ILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 31.07.2017 @MIT. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK 6. BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) 13 ITA NO. 2431/DEL/2014 (AY 2009-10) S.NO. DETAILS DATE 1 DRAFT DICTATED ON 14.07.2017 2 DRAFT PLACED BEFORE AUTHOR 17.07.2017 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER