SHYAMM MARIWALA, MUMBAI V. ITO WARD -6(3)(3), MUMBAI

ITA 2494/MUM/2021

AI Insights

The case involves Shyamm Mariwala, who appealed against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, Delhi, concerning the assessment year 2010-11. The primary issues in the appeal included disallowances under section 14A related to expenses for earning exempt income, and additions under section 68 concerning unexplained cash credits from unsecured loans. The Tribunal examined the disallowances made under section 14A, which were based on the application of rule 8D of the Income Tax Rules, 1962, and the additions under section 68, which were challenged as being unsupported by adequate evidence of the loans' genuineness and creditworthiness.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 123647 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 31-10-2022
• Assessment Year: misc
• Appeal Filed On: 29-01-2022
• Other Referred Cases: CIT vs. Suzlon Energy Ltd., CIT vs. Microlabs Ltd., CIT vs. Max India Ltd., Commissioner of Income Tax (Large Tax Payer Unit) vs. Reliance Industries Ltd, HDFC Bank Ltd. vs. Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Earning of tax free income; TDS; Rule 8D; Set aside
• Section: 68; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 2494/MUM/2021 Assessment Year: 2010-11 Shyamm Mariwala, 216, Vasan Udyog Bhavan, Senapati Bapat Marg, Lower Parel, Mumbai-400013. Vs. ITO Ward-6(3)(3), Aayakar Bhavan, Mumbai-400013. PAN No. ADVPM 4940 K Appellant Respondent Assessee by : Mr. Subhash Chhajed, AR Revenue by : Mr. R.N. D’Souza, DR Date of Hearing : 01/11/2022 Date of pronouncement : 22/12/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated the 4 th October, 2021 passed by the Ld. Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), Delhi [in short, ‘the Ld. CIT(A)’] for A.Y. 2010-11. During the course of the hearing on 27.10.2022, the assessee filed revised grounds of appeal which are reproduced as under: Ground no. 1: Disallowance u/s 14A 13,11,430/- a. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance Rs.13,11,430 / u/s. 14A of the IT Act read with rule 8D(2) of the Income Tax Rules 1962 subject to partial at Rs. 27,75,397/ b. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in completely disregarding the fact that Assessee's own interest free funds stood at Rs.15,82,93,419/ investment of Rs.6,22,67,077/ 14A is called for in the matter. Ground no.2: Addition u/s 68 amounting to Rs.86,000 / On the facts and in the circumstances of the case a CIT(A) has erred in confirming the addition of Rs. 86,000/ of Income from House property. Ground no.3: Addition U/s 68 amounting to Rs.39,43,820 / a. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition of Rs. 39,43,820/ made by the Ld. AO u/s 68 on account of unexplained cash credit for unsecured, loan taken by the Assessee from his daughters Parthvi S. Mariwala and Yahvi S. Mariwala. of the hearing on 27.10.2022, the assessee filed revised grounds of appeal which are reproduced as under:- Ground no. 1: Disallowance u/s 14A amounting to 13,11,430/- a. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance Rs.13,11,430 / u/s. 14A of the IT Act read with rule 8D(2) of the Income Tax Rules 1962 subject to partial relief by way of replacing the interest amount at Rs. 27,75,397/- for Rs.30,03,417/- for calculation u/r 8D. b. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in completely disregarding the fact that Assessee's est free funds stood at Rs.15,82,93,419/ investment of Rs.6,22,67,077/-and therefore no disallowance u/s 14A is called for in the matter. Ground no.2: Addition u/s 68 amounting to Rs.86,000 / On the facts and in the circumstances of the case a CIT(A) has erred in confirming the addition of Rs. 86,000/ of Income from House property. Ground no.3: Addition U/s 68 amounting to Rs.39,43,820 / a. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in confirming the addition of Rs. 39,43,820/ made by the Ld. AO u/s 68 on account of unexplained cash credit for unsecured, loan taken by the Assessee from his daughters Parthvi S. Mariwala and Yahvi S. Mariwala. Shyamm Mariwala. ITA No. 2494/M/2021 2 of the hearing on 27.10.2022, the assessee filed revised grounds of amounting to a. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance Rs.13,11,430 /- u/s. 14A of the IT Act read with rule 8D(2) of the Income Tax Rules relief by way of replacing the interest amount for calculation u/r 8D. b. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in completely disregarding the fact that Assessee's est free funds stood at Rs.15,82,93,419/-against the and therefore no disallowance u/s Ground no.2: Addition u/s 68 amounting to Rs.86,000 /- On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition of Rs. 86,000/- in respect Ground no.3: Addition U/s 68 amounting to Rs.39,43,820 /- a. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in confirming the addition of Rs. 39,43,820/- made by the Ld. AO u/s 68 on account of unexplained cash credit for unsecured, loan taken by the Assessee from his daughters b. The Ld. CIT Appeal oug respective loans i.e. Rs. 14,16,910/ Rs.24,81,910/ Assessment order are completely wrong as the same are the amount of outstanding as at 31st March 2 taken during the year. c. The Ld. CIT Appeal failed to appreciate that the Assessee has taken two loans of Rs. 16,07,910/ and Yahvi S. Mariwala as per the loan confirmation and bank statements submitted during the course of assessment and appeal proceedings. d. The Ld. CIT Appeal ought to have considered the fact that the each loan of Rs 16,07,910/ proceeds of Tata Mutual Funds as apparent from the Bank Statements of the loan creditors Parthvi S. Mariwala and Yahvi S. Mariwala. 2. Briefly stated the facts of the case are that individual was engaged in the business of trading in shares and leasing properties against rental. For the year under the assessee filed return of income on 15.10.2010 declaring total income of Rs. NIL. The return of income was revised subsequently. However, the total income remained same at Rs. NIL. The return of income filed by the assessee was selected f b. The Ld. CIT Appeal ought to have held that the amounts of respective loans i.e. Rs. 14,16,910/- from Parthvi S. Mariwala and Rs.24,81,910/- from Yahvi S. Mariwala mentioned in the Assessment order are completely wrong as the same are the amount of outstanding as at 31st March 2010 and not the amount of loans taken during the year. c. The Ld. CIT Appeal failed to appreciate that the Assessee has taken two loans of Rs. 16,07,910/- each from Parthvi S. Mariwala and Yahvi S. Mariwala as per the loan confirmation and bank submitted during the course of assessment and appeal proceedings. d. The Ld. CIT Appeal ought to have considered the fact that the each loan of Rs 16,07,910/- has been sourced out of the maturity proceeds of Tata Mutual Funds as apparent from the Bank ements of the loan creditors Parthvi S. Mariwala and Yahvi S. Briefly stated the facts of the case are that the assessee, an individual was engaged in the business of trading in shares and leasing properties against rental. For the year under the assessee filed return of income on 15.10.2010 declaring total income of Rs. NIL. The return of income was revised subsequently. However, the total income remained same at Rs. NIL. The return of income filed by the assessee was selected for scrutiny assessment Shyamm Mariwala. ITA No. 2494/M/2021 3 ht to have held that the amounts of from Parthvi S. Mariwala and from Yahvi S. Mariwala mentioned in the Assessment order are completely wrong as the same are the amount 010 and not the amount of loans c. The Ld. CIT Appeal failed to appreciate that the Assessee has each from Parthvi S. Mariwala and Yahvi S. Mariwala as per the loan confirmation and bank submitted during the course of assessment and appeal d. The Ld. CIT Appeal ought to have considered the fact that the has been sourced out of the maturity proceeds of Tata Mutual Funds as apparent from the Bank ements of the loan creditors Parthvi S. Mariwala and Yahvi S. the assessee, an individual was engaged in the business of trading in shares and leasing properties against rental. For the year under consideration, the assessee filed return of income on 15.10.2010 declaring total income of Rs. NIL. The return of income was revised subsequently. However, the total income remained same at Rs. NIL. The return of or scrutiny assessment and statutory notices under the Income Tax Act, 1961 [in short, “the Act”] were issued and complied with. completed u/s. 143(3) of the Act on 28.03.2013, the Assessing Officer assessed the total income at Rs. addition to the income from house property, disallowance u/s. 14A and addition for unexplained cash credit u/s. 68 of the Act. The claim of the deduction disallowance made in earlier year was also Officer. Aggrieved, the assessee filed appeal before the who after considering the submission of the assessee allowed part relief to the assessee. Aggrieved with the disallowances sustained, the assessee is in appeal befo [ITAT] by way of raising grounds as reproduced above. 3. Before us, the ld. Counsel of the assessee has filed Book containing pages 1 to 46. 4. The revised ground no. 1 relates to disallowance of Rs.13,11,430/- u/s. 14A of the Act. and statutory notices under the Income Tax Act, 1961 [in short, “the Act”] were issued and complied with. In the assessment completed u/s. 143(3) of the Act on 28.03.2013, the Assessing ssessed the total income at Rs.56,83,998/ addition to the income from house property, disallowance u/s. 14A and addition for unexplained cash credit u/s. 68 of the Act. The claim of the deduction for payment of the TDS in respect of the disallowance made in earlier year was also denied by the Assessing Officer. Aggrieved, the assessee filed appeal before the who after considering the submission of the assessee allowed part relief to the assessee. Aggrieved with the disallowances sustained, the assessee is in appeal before the Income Tax Appellate Tribunal [ITAT] by way of raising grounds as reproduced above. Before us, the ld. Counsel of the assessee has filed Book containing pages 1 to 46. The revised ground no. 1 relates to disallowance of u/s. 14A of the Act. Shyamm Mariwala. ITA No. 2494/M/2021 4 and statutory notices under the Income Tax Act, 1961 [in short, In the assessment completed u/s. 143(3) of the Act on 28.03.2013, the Assessing 98/- after making addition to the income from house property, disallowance u/s. 14A and addition for unexplained cash credit u/s. 68 of the Act. The for payment of the TDS in respect of the denied by the Assessing Officer. Aggrieved, the assessee filed appeal before the Ld. CIT(A) who after considering the submission of the assessee allowed part relief to the assessee. Aggrieved with the disallowances sustained, re the Income Tax Appellate Tribunal [ITAT] by way of raising grounds as reproduced above. Before us, the ld. Counsel of the assessee has filed a Paper The revised ground no. 1 relates to disallowance of 5. Brief facts qua this issue are that the assessee h free income of Rs.20,32,100/ made suo moto disallowance of Rs. exempted income. The Assessing taken by the assessee and interest paid including inte overdraft to banks [Rs. interest on car loan [Rs. total investment in partn mutual funds and ot as on 31.03.2010. In view of no disallowance made in respect of the interest expense, the Assessing Officer invoking Rule 8D of the Income Tax Rules, 1962 [in short, “the Rules”] made disallowance as under:- i) U/r. 8D(2)(i) ii) U/r. 8D(2)(ii) iii) U/r. 8D(2)(iii) 6. In this manner, he u/s. 14A r.w.r. 8D. On further appeal, the ld Brief facts qua this issue are that the assessee h 20,32,100/- from various sources. The assessee disallowance of Rs.4,02,454/- against earning of the exempted income. The Assessing Officer observed various loans taken by the assessee and interest paid including inte overdraft to banks [Rs.55,953/-], interest on loan [Rs. interest on car loan [Rs.2,28,020/-]. The Assessing Officer observed total investment in partnership firms, shares of listed companies, mutual funds and other investments totaling to Rs. In view of no disallowance made in respect of the interest expense, the Assessing Officer invoking Rule 8D of the 1962 [in short, “the Rules”] made disallowance U/r. 8D(2)(i) – Rs. NIL U/r. 8D(2)(ii) – Rs. 9,88,602/- U/r. 8D(2)(iii) – Rs. 3,22,828/- In this manner, he made total disallowance of Rs. u/s. 14A r.w.r. 8D. On further appeal, the ld. CIT(A) directed to Shyamm Mariwala. ITA No. 2494/M/2021 5 Brief facts qua this issue are that the assessee has shown tax from various sources. The assessee against earning of the Officer observed various loans taken by the assessee and interest paid including interest on n loan [Rs.27,19,444/-], The Assessing Officer observed ership firms, shares of listed companies, her investments totaling to Rs.6,22,67,077/- In view of no disallowance made in respect of the interest expense, the Assessing Officer invoking Rule 8D of the 1962 [in short, “the Rules”] made disallowance made total disallowance of Rs.13,11,430/- . CIT(A) directed to reduce the interest on car loan for the purpose of calculation of disallowance u/r. 8D(2)(ii). 7. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the assessee has suo moto 14A towards expenditure for earning exempted income the nature of administrative expenses and therefore no separate addition of Rs. 3,22,828/ 8D(2)(iii) is required separately being the disallowance made by the assessee on the administrative expenses higher than the computation of the Assessing Officer u/r. 8D(2)(iii) interest disallowance u/r. 8D(2)(ii) is concerned, the the assessee submitted that the assessee was having sufficient owned funds for investment Ld. Counsel referred to the Balance Sheet filed by the assessee as on 31.03.2010 available on page no. 6 of the Paper Book wherein it is seen that the Capital of the assessee stands at Rs.15,82,93,419/ whereas the investments as on 31.03.2010 is appearing a reduce the interest on car loan for the purpose of calculation of 8D(2)(ii). We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that suo moto made disallowance of Rs. 14A towards expenditure for earning exempted income the nature of administrative expenses and therefore no separate addition of Rs. 3,22,828/- made by the Assessing Officer u/r. ii) is required separately being the disallowance made by the assessee on the administrative expenses higher than the computation of the Assessing Officer u/r. 8D(2)(iii) interest disallowance u/r. 8D(2)(ii) is concerned, the assessee submitted that the assessee was having sufficient owned funds for investment towards earning exempted income. The . Counsel referred to the Balance Sheet filed by the assessee as on 31.03.2010 available on page no. 6 of the Paper Book wherein it is seen that the Capital of the assessee stands at Rs.15,82,93,419/ whereas the investments as on 31.03.2010 is appearing a Shyamm Mariwala. ITA No. 2494/M/2021 6 reduce the interest on car loan for the purpose of calculation of We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that made disallowance of Rs.4,02,454/- u/s. 14A towards expenditure for earning exempted income which are in the nature of administrative expenses and therefore no separate made by the Assessing Officer u/r. ii) is required separately being the disallowance made by the assessee on the administrative expenses higher than the computation of the Assessing Officer u/r. 8D(2)(iii). As far as interest disallowance u/r. 8D(2)(ii) is concerned, the Ld. Counsel of assessee submitted that the assessee was having sufficient towards earning exempted income. The . Counsel referred to the Balance Sheet filed by the assessee as on 31.03.2010 available on page no. 6 of the Paper Book wherein it is seen that the Capital of the assessee stands at Rs.15,82,93,419/- whereas the investments as on 31.03.2010 is appearing at Rs.6,22,67,077/-. Further, the referred to the amount of own capital of Rs. 31.03.2008 against investment of Rs. 31.03.2008 and amount of own capital of Rs. 31.03.2009 against investment of Rs. 31.03.2009. The Ld. Counsel of the assessee relied on the decision of the Hon’ble Supreme Court in the case of Ltd. v. CIT (Civil Appeal no. 9606 of 2011) the decision is reproduced as under: 17. In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest and payment is made out of that mixed fund, the investment must be considered to have been made o put it another way, in respect of payment made out of mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it may no estimation of a proportionate figure. For accepting such a proposition, it would be helpful to refer to the decision of the Bombay High Court in answer was in favour of the assessee on the question, whether the Tribunal was justified in deleting the disallowance under 80M of the Act on the presumption t . Further, the Ld. Counsel of the assessee also he amount of own capital of Rs.17,39,80,590/ .2008 against investment of Rs.5,16,33,218/ nd amount of own capital of Rs.16,72,31,578/ nst investment of Rs.6,68,64,158/ . Counsel of the assessee relied on the decision of the Hon’ble Supreme Court in the case of South Indian Bank Ltd. v. CIT (Civil Appeal no. 9606 of 2011). The relevant part of on is reproduced as under:- 17. In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest and payment is made out of that mixed fund, the investment must be considered to have been made out of the interest free fund. To put it another way, in respect of payment made out of mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it may not be permissible for the Revenue to make an estimation of a proportionate figure. For accepting such a proposition, it would be helpful to refer to the decision of the Bombay High Court in Pr. CIT v. Bombay Dyeing and Mfg. Co. Ltd2 answer was in favour of the assessee on the question, whether the Tribunal was justified in deleting the disallowance under of the Act on the presumption that when the funds available to Shyamm Mariwala. ITA No. 2494/M/2021 7 . Counsel of the assessee also 17,39,80,590/- as on 5,16,33,218/- as on 16,72,31,578/- as on 6,68,64,158/- as on . Counsel of the assessee relied on the decision South Indian Bank . The relevant part of 17. In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest- bearing funds) and payment is made out of that mixed fund, the investment must the interest free fund. To put it another way, in respect of payment made out of mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is t be permissible for the Revenue to make an estimation of a proportionate figure. For accepting such a proposition, it would be helpful to refer to the decision of the Bombay y Dyeing and Mfg. Co. Ltd2 where the answer was in favour of the assessee on the question, whether the Tribunal was justified in deleting the disallowance under Section hat when the funds available to the assessee were both interest free and loans, the investments made would be out of the interest free funds available with the assessee, provided the interest free funds were sufficient to meet the investments. The resultan Bombay High Court judgment was dismissed both on merit and on delay by this Court. The merit of the above proposition of law of the Bombay High Court would now be appreciated in the following discussion. 18. In the abov decision in Commissioner of Income Tax (Large Tax Payer Unit) Vs. Reliance Industries Ltd3 where a Division Bench of this Court expressly held that where there is finding of fact that interest free funds available to assessee were sufficient to meet its investment it will be presumed that investments were made from such interest free funds. 19. In HDFC Bank Ltd. Vs. Deputy Commissioner of Income Tax4, the assessee was a Scheduled Bank and the issue there pertained to disallowance under Bombay High Court even while remanding the case back to Tribunal for adjudicating afresh observed (relying on its own previous judgment in same assessee’s case for a different Assessment Year) that, if assessee possesses sufficient interest free funds as against investment in tax free securities then, there is a presumption that investment which has been made in tax free securities, has of interest free funds available with assessee. In such situation Section 14A views have been expressed 3 (2019) 410 ITR 466 SC/ (2019) 20 SCC 478. 4 (2 the assessee were both interest free and loans, the investments made would be out of the interest free funds available with the assessee, provided the interest free funds were sufficient to meet the investments. The resultant SLP of the Revenue challenging the Bombay High Court judgment was dismissed both on merit and on delay by this Court. The merit of the above proposition of law of the Bombay High Court would now be appreciated in the following 18. In the above context, it would be apposite to refer to a similar decision in Commissioner of Income Tax (Large Tax Payer Unit) Vs. Reliance Industries Ltd3 where a Division Bench of this Court expressly held that where there is finding of fact that interest free s available to assessee were sufficient to meet its investment it will be presumed that investments were made from such interest 19. In HDFC Bank Ltd. Vs. Deputy Commissioner of Income Tax4, the assessee was a Scheduled Bank and the issue there pertained to disallowance under Section 14A. In this case, the Bombay High Court even while remanding the case back to Tribunal for adjudicating afresh observed (relying on its own previous t in same assessee’s case for a different Assessment Year) that, if assessee possesses sufficient interest free funds as against investment in tax free securities then, there is a presumption that investment which has been made in tax free securities, has of interest free funds available with assessee. In such Section 14A of the Act would not be applicable. Similar views have been expressed 3 (2019) 410 ITR 466 SC/ (2019) 20 4 (2016) 383 ITR 529 (Bom) / 2016 SCC Online Bom Shyamm Mariwala. ITA No. 2494/M/2021 8 the assessee were both interest free and loans, the investments made would be out of the interest free funds available with the assessee, provided the interest free funds were sufficient to meet the t SLP of the Revenue challenging the Bombay High Court judgment was dismissed both on merit and on delay by this Court. The merit of the above proposition of law of the Bombay High Court would now be appreciated in the following e context, it would be apposite to refer to a similar decision in Commissioner of Income Tax (Large Tax Payer Unit) Vs. Reliance Industries Ltd3 where a Division Bench of this Court expressly held that where there is finding of fact that interest free s available to assessee were sufficient to meet its investment it will be presumed that investments were made from such interest 19. In HDFC Bank Ltd. Vs. Deputy Commissioner of Income Tax4, the assessee was a Scheduled Bank and the issue therein also . In this case, the Bombay High Court even while remanding the case back to Tribunal for adjudicating afresh observed (relying on its own previous t in same assessee’s case for a different Assessment Year) that, if assessee possesses sufficient interest free funds as against investment in tax free securities then, there is a presumption that investment which has been made in tax free securities, has come out of interest free funds available with assessee. In such of the Act would not be applicable. Similar views have been expressed 3 (2019) 410 ITR 466 SC/ (2019) 20 016) 383 ITR 529 (Bom) / 2016 SCC Online Bom 1109 by other High Courts in CIT Vs. Suzlon Energy Ltd.5, CIT Vs. Microlabs Ltd.6 and CIT Vs. Max India Ltd.7 Mr. S Ganesh the learned Senior Counsel while citing these cases from the High Courts have further p finality. On reading of these judgments, we are of the considered opinion that the High Courts have correctly interpreted the scope of Section 14A 20. Applying the same logic, the disallowance would be legally impermissible for the investment made by the assessees in bonds/shares using interest free funds, under Act. In other words, if investments in securities is made out of common funds and the assessee has available, non funds larger than the investments made in tax in such cases, disallowance under 7.1 In view of the above discussion, since the assessee has adequate funds to cover the exempt income yielding investments and respectfully following the decision of the Hon’ble Supreme Court referred above, we allow this ground of appeal accordingly. 8. Ground no. 2 of the appeal relates to the addition of Rs.86,000/- under the head pressed. Hence, this ground of appeal is dismissed. by other High Courts in CIT Vs. Suzlon Energy Ltd.5, CIT Vs. Microlabs Ltd.6 and CIT Vs. Max India Ltd.7 Mr. S Ganesh the learned Senior Counsel while citing these cases from the High Courts have further pointed out that those judgments have attained finality. On reading of these judgments, we are of the considered opinion that the High Courts have correctly interpreted the scope Section 14A of the Act in their decisions favouring the assessees. 20. Applying the same logic, the disallowance would be legally impermissible for the investment made by the assessees in bonds/shares using interest free funds, under Section 14A Act. In other words, if investments in securities is made out of common funds and the assessee has available, non funds larger than the investments made in tax- free secur in such cases, disallowance under Section 14A cannot be made. In view of the above discussion, since the assessee has adequate funds to cover the exempt income yielding investments respectfully following the decision of the Hon’ble Supreme Court referred above, we allow this ground of appeal accordingly. Ground no. 2 of the appeal relates to the addition of under the head – Income from House Property is not nce, this ground of appeal is dismissed. Shyamm Mariwala. ITA No. 2494/M/2021 9 by other High Courts in CIT Vs. Suzlon Energy Ltd.5, CIT Vs. Microlabs Ltd.6 and CIT Vs. Max India Ltd.7 Mr. S Ganesh the learned Senior Counsel while citing these cases from the High ointed out that those judgments have attained finality. On reading of these judgments, we are of the considered opinion that the High Courts have correctly interpreted the scope n their decisions favouring the assessees. 20. Applying the same logic, the disallowance would be legally impermissible for the investment made by the assessees in Section 14A of the Act. In other words, if investments in securities is made out of common funds and the assessee has available, non-interest-bearing free securities then cannot be made.” In view of the above discussion, since the assessee has adequate funds to cover the exempt income yielding investments respectfully following the decision of the Hon’ble Supreme Court referred above, we allow this ground of appeal accordingly. Ground no. 2 of the appeal relates to the addition of Income from House Property is not 9. The ground no. 3 of the appeal relates to the addition of Rs. 39,43,820 u/s. 68 in respect of unsecured loan taken by the assessee. 10. Brief facts qua this issue are that the amount of Rs.88,66,131/- was appear and the assessee was asked to explain the nature and source thereof. The Assessing Officer observed that parties amounting to under consideration, Sr. No. 1 Parthvi S Mariwala 2 Yahvi S Mariwala Total 11. In the assessment completed, the Assessing O addition of Rs.39,43,820/ prove the genuineness and creditworthiness of the loans taken. On further appeal, the ld. CIT(A) confirmed the addition. 12. Before us, the Ld alleged unsecured loans of Rs. assessee from his daughters Partvi S Mariwala and Yahvi S. The ground no. 3 of the appeal relates to the addition of Rs. 39,43,820 u/s. 68 in respect of unsecured loan taken by the Brief facts qua this issue are that the amount of was appearing in the balance sheet of the assessee and the assessee was asked to explain the nature and source The Assessing Officer observed that loans taken from amounting to Rs.39,43,820/- were taken during the year details of which are as under:- Name of party Amount (Rs.) Parthvi S Mariwala Yahvi S Mariwala Total 39,43,820 In the assessment completed, the Assessing O 39,43,820/- on the ground that the assessee failed to prove the genuineness and creditworthiness of the loans taken. On further appeal, the ld. CIT(A) confirmed the addition. Ld. Counsel of the assessee explained that the loans of Rs.39,43,820/- were taken by the assessee from his daughters Partvi S Mariwala and Yahvi S. Shyamm Mariwala. ITA No. 2494/M/2021 10 The ground no. 3 of the appeal relates to the addition of Rs. 39,43,820 u/s. 68 in respect of unsecured loan taken by the Brief facts qua this issue are that the amount of ing in the balance sheet of the assessee and the assessee was asked to explain the nature and source loans taken from 2 were taken during the year Amount (Rs.) 14,61,910 24,81,910 39,43,820 In the assessment completed, the Assessing Officer made the on the ground that the assessee failed to prove the genuineness and creditworthiness of the loans taken. On further appeal, the ld. CIT(A) confirmed the addition. . Counsel of the assessee explained that the were taken by the assessee from his daughters Partvi S Mariwala and Yahvi S. Mariwala. Further, he clarified that the amounts taken by the ld. Assessing Officer for the purpose of making addition were the amounts which stood as and not the amounts taken during the year under consideration. In this regard, the ld. Counsel drew our attention to page no. 38 and 39 of the Paper Book wherein the confirmations of both the parties are placed wherein it is noted that in the case of Yahvi S. Mariwall, the opening balance of loan reflects at Rs. loan taken during the and closing balance stood at Rs. Mariwall, the opening debit Rs.1,33,000/-, loan taken during the year is Rs. the closing balance stood at Rs. and source of loan, in addition to the confirmations, the ld. Counsel referred to the bank statements at page no. 40 and 42 of the Paper Book and explained the source of the lenders being out of the maturity proceeds of Tata Mutual Funds. These facts have been duly verified from the bank statements which was also filed befor the ld. CIT(A) along with the submissions filed 12.09.2019 and Further, he clarified that the amounts taken by the ld. Assessing Officer for the purpose of making addition were the amounts which stood as on the balance sheet date of 31.03.2010 and not the amounts taken during the year under consideration. In this regard, the ld. Counsel drew our attention to page no. 38 and 39 of the Paper Book wherein the confirmations of both the parties in it is noted that in the case of Yahvi S. Mariwall, balance of loan reflects at Rs.8,87,000/- loan taken during the year under consideration is Rs. nd closing balance stood at Rs.24,81,910/-. As regards Parthvi S. riwall, the opening debit balance of loan appears at an taken during the year is Rs.16,07,910/ he closing balance stood at Rs.14,61,910/-. In regard to the nature and source of loan, in addition to the confirmations, the ld. Counsel referred to the bank statements at page no. 40 and 42 of the Paper Book and explained the source of the lenders being out of the maturity proceeds of Tata Mutual Funds. These facts have been duly verified from the bank statements which was also filed befor the ld. CIT(A) along with the submissions filed 12.09.2019 and Shyamm Mariwala. ITA No. 2494/M/2021 11 Further, he clarified that the amounts taken by the ld. Assessing Officer for the purpose of making addition were the on the balance sheet date of 31.03.2010 and not the amounts taken during the year under consideration. In this regard, the ld. Counsel drew our attention to page no. 38 and 39 of the Paper Book wherein the confirmations of both the parties in it is noted that in the case of Yahvi S. Mariwall, - and amount of year under consideration is Rs.16,07,910/- . As regards Parthvi S. balance of loan appears at 16,07,910/- and In regard to the nature and source of loan, in addition to the confirmations, the ld. Counsel referred to the bank statements at page no. 40 and 42 of the Paper Book and explained the source of the lenders being out of the maturity proceeds of Tata Mutual Funds. These facts have been duly verified from the bank statements which was also filed before the ld. CIT(A) along with the submissions filed 12.09.2019 and 07.10.2019. In view of above, of proving the identity of the lenders, genuineness of the transaction and creditworthiness of the lenders as required u/s. of the Act. Therefore, we set aside the finding of the ld. CIT(A) on the issue in dispute and delete the addition of Rs. ground no. 3 of the appeal is accordingly allowed. 13. In the result, the appeal of the assessee is partly allowed. Order pronounced under Rule 34(4) 1963 on 22/12/2022. Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 22/12/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// In view of above, the assessee has discharged his onus of proving the identity of the lenders, genuineness of the transaction and creditworthiness of the lenders as required u/s. of the Act. Therefore, we set aside the finding of the ld. CIT(A) on the and delete the addition of Rs.39,43,820/ ground no. 3 of the appeal is accordingly allowed. In the result, the appeal of the assessee is partly allowed. Order pronounced under Rule 34(4) of the ITAT Rules, /12/2022. Sd/ RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Shyamm Mariwala. ITA No. 2494/M/2021 12 the assessee has discharged his onus of proving the identity of the lenders, genuineness of the transaction and creditworthiness of the lenders as required u/s. 68 of the Act. Therefore, we set aside the finding of the ld. CIT(A) on the 39,43,820/-. The In the result, the appeal of the assessee is partly allowed. of the ITAT Rules, Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai