JCIT 17(3), MUMBAI V. NARESH B CHHEDA, MUMBAI

ITA 2552/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78805 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SAXENA
• Assessee Lawyers: PRADIP KAPASI
• Keywords: Business income; Opportunity of being heard; Earning of tax free income; Additional evidence
• Section: 234B; 14A

Judgement Text

` B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NO.2552 /MUM/2012 ( / ASSESSMENT YEAR : 2007-2008 DY. COMMISSIONER OF INCOME TAX 17(3), ROOM NO. 614, 6 TH FLOOR, PIRAMAL CHAMBERS,PAREL, MUMBAI 400 012. / VS. SHRI NARESH B. CHHEDA, 103, PRANAV RESIDENCY, 302, BHIMANI STREET, OPP. NAPPU GARDEN, MATUNGA, MUMBAI 400 019. ./ PAN : ADPPC4365E ( # / APPELLANT ) .. ( $%# / RESPONDENT ) ./ I.T.A. NO.2562 /MUM/2012 ( / ASSESSMENT YEAR : 2007-2008 SHRI NARESH B. CHHEDA, 103, PRANAV RESIDENCY, 302, BHIMANI STREET, OPP. NAPPU GARDEN, MATUNGA, MUMBAI 400 019. / VS. DY. COMMISSIONER OF INCOME TAX 17(3), ROOM NO. 614, 6 TH FLOOR, PIRAMAL CHAMBERS,PAREL, MUMBAI 400 012. ./ PAN : ADPPC4365E ( # / APPELLANT ) .. ( $%# / RESPONDENT ) A SSESSEE BY SHRI PRADIP KAPASI REVENUE BY : SHRI V. SAXENA ) * / DATE OF HEARING : 6-3-2014 ) * / DATE OF PRONOUNCEMENT : 30-04-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THESE TWO APPEALS, ONE FILED BY THE REVENUE BEING I TA NO. 2552/MUM/12 AND THE OTHER FILED BY THE ASSESSEE BEI NG ITA NO. ITA 2562/M/12 & ITA 2552/M/12 2 2562/MUM12, ARE CROSS APPEALS WHICH ARE DIRECTED AG AINST THE ORDER OF LD. CIT(A)- 29,MUMBAI DATED 23-01-2012. 2. GROUND NO. 1 & 2 OF THE REVENUES APPEAL AND GRO UND NO. 1 TO 3 OF THE ASSESSEES APPEAL INVOLVE COMMON AND INTER-LINKED I SSUES RELATING TO THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF PROVISIONS MADE BY THE ASSESSEE FOR VARIOUS LIABILITIES WHICH HAVE BEEN PARTLY SUSTAINE D BY THE LD. CIT(A). 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED INTER ALIA IN THE BUSINESS OF PROPERTY DEVELOPMENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 30-10- 2007 DECLARING TOTAL INCOME OF RS. 23,04,710/-. THE ASSESSEE HAD UNDERT AKEN ONE PROJECT NAMELY GANGA NIWAS FOR REDEVELOPMENT ON A TENANTED PROPE RTY AT MATUNGA, MUMBAI WHICH WAS OWNED BY PAPA PAGALI KALA KENDRA A S PER THE DEVELOPMENT AGREEMENT DATED 31-5-2004. DURING THE Y EAR UNDER CONSIDERATION, THE SAID PROJECT WAS SHOWN AS COMPLE TED BY THE ASSESSE AS MOST OF THE WORK HAD BEEN COMPLETED AND ALL THE FLA TS OF THE PROJECT EXCEPT TWO WERE SOLD TILL 31-3-2007. IN THE P&L ACCOUNT, THE PROVISIONS OF RS. 60 LACS WERE MADE BY THE ASSESSEE IN RESPECT OF THE FO LLOWING EXPENSES RELATED TO GANGA NIWAS PROJECT:- 1) AMOUNT PAYABLE TO PAPA PAGALI KALA KENDRA TOWARDS LANDLORDS CORPUS FUND RS. 15 LAC S 2) AMOUNT PAYABLE TOWARDS TENANTS CORPUS FUND RS. 34,73,301/- 3. PROVISION FOR OTHER EXPENSES RS. 10, 26,699/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE A.O. THAT CORPUS FUND OF RS . 15 LACS WAS PAYABLE TO PAPA PAGALI KALAKENDRA AS PER THE DEVELOPMENT AGREE MENT AND PROVISION FOR THE SAID LIABILITY RELATING TO THE GANGA NIWAS PROJ ECT SHOWN AS COMPLETED WAS MADE. IT WAS SUBMITTED THAT SIMILARLY A SUM OF RS. 34,73,301/- WAS PAYABLE TO THE TENANTS CORPUS FUND AS PER THE AGREEMENT FOR ALTERNATIVE PREMISES ITA 2562/M/12 & ITA 2552/M/12 3 ENTERED INTO WITH THE TENANTS AND THE SAME REPRESEN TING EXPENDITURE OF GANGA NIWAS PROJECT WAS PROVIDED FOR. AS REGARDS TH E PROVISION FOR OTHER EXPENSES, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAME REPRESENTED THE LIABILITY FOR VARIOUS EXPENSES PAYABLE IN RELATION TO GANGA NIWAS PROJECT. RELIANCE WAS PLACED BY THE ASSESSEE IN SUPPORT OF I TS CLAIM FOR THE PROVISIONS MADE FOR THE VARIOUS EXPENSES ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS VS. CIT, 245 ITR 42 8 (SC) WHEREIN IT WAS HELD THAT IF THE BUSINESS LIABILITY HAS ARISEN IN T HE ACCOUNTING YEAR, DEDUCTION IS ALLOWABLE FOR THE SAME ALTHOUGH THE SAID LIABILI TY MAY HAVE QUANTIFIED AT A FUTURE DATE. 4. THE A.O. DID NOT FIND MERIT IN THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PROVISION OF RS. 60 LACS MADE FOR VARIOU S LIABILITIES RELATING TO GANGA NIWAS PROJECT. HE FOUND FROM THE LETTER DATE D 2-12-2007 ADDRESSED BY PAPA PAGALI KALAKENDRA ADDRESSED TO THE ASSESSEE TH AT THE SUM OF RS. 15 LACS WAS KEPT BY THE ASSESSEE AS A REFUNDABLE SECURITY D EPOSIT AND THE SAME WAS NOT ADJUSTED TOWARDS CORPUS AMOUNT TO BEAR THE MUNI CIPAL TAXES OF THE TRUST EVEN UP TO 2-12-2007. ACCORDING TO HIM, THE SAID L IABILITY THUS WAS NOT ACCRUED DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS NOT ALLOWABLE AS DEDUCTION IN THAT YEAR. SIMILARLY, HE FOUND FRO M THE RELEVANT AGREEMENT THAT THE TENANTS CORPUS FUND WAS PAYABLE BY THE ASS ESSEE TO COVER THE MUNICIPAL TAXES LIABILITY OF THE TENANTS FROM 1-12- 2007. HE HELD THAT THIS LIABILITY THUS HAD ALSO NOT ACCRUED DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION ON ACCO UNT OF THE SAID LIABILITY. AS REGARDS PROVISION MADE BY THE ASSESSEE FOR OTHER EXPENSES OF RS. 10,26,699/-, THE A.O. HELD THAT THE SAME REPRESENTE D UNASCERTAINED LIABILITY IN THE ABSENCE OF ANY SPECIFIC DETAILS FURNISHED BY THE ASSESSEE SHOWING THE EXACT BASIS OF THE PROVISION MADE AND THE SAME THER EFORE WAS NOT ALLOWABLE AS DEDUCTION TO THE ASSESSEE. ACCORDINGLY, THE ENTIRE PROVISION OF RS. 60 LACS MADE BY THE ASSESSEE WAS DISALLOWED BY THE A.O. ITA 2562/M/12 & ITA 2552/M/12 4 5. THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DISA LLOWANCE OF PROVISION MADE BY HIM WAS CHALLENGED BY THE ASSESSEE IN AN AP PEAL FILED BEFORE THE LD. CIT(A) AND A DETAILED SUBMISSION IN WRITING WAS FIL ED BY THE ASSESSEE BEFORE THE LD. CIT(A) IN SUPPORT OF ITS CASE ON THIS ISSUE IN THE LIGHT OF SOME ADDITIONAL EVIDENCE. THE SAID SUBMISSIONS MADE BY THE ASSESSEE ALONG WITH THE ADDITIONAL EVIDENCE FILED IN SUPPORT THEREOF WE RE FORWARDED BY THE LD. CIT(A) TO THE A.O. SEEKING HIS COMMENTS THEREON AND AFTER CONSIDERING THE COMMENTS OFFERED BY THE A.O. IN THE REMAND REPORT A S WELL AS SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 15 LACS MADE BY THE A.O. ON ACCOUNT OF PROVISION OF RS. 15 LACS MADE BY THE ASSESSEE FOR PROPERTY TAX LIABILITY OF THE LANDLORD FOR THE FOLLOWING REA SONS GIVEN IN HIS IMPUGNED ORDER:- (I) ACCORDING TO DEVELOPMENT AGREEMENT THE AMOUNT OF RS.15,00,000L WAS AN INTEREST FREE SECURITY DEPOSIT . AS PER THE LETTER DATED 2 12 2007 OF PAPA PAGLI KALA KENDRA CITED BY ASSESSING OFFICER THE SECURITY DEPOSIT REMAINED A DEPOSIT TILL 31.320 07. HENCE THERE WAS NO LIABILITY OF RS 15 LACS AS ON 31 3 2007. (II) IT IS ARGUED THAT THE SECURITY DEPOSIT WILL BE ADJUSTED TOWARDS ONE TIME PAYMENT FOR MUNICIPAL TAXES OF LAND LORD FOR F UTURE YEARS THERE WAS NO SUCH CONTRACTUAL LIABILITY OF THE APPELLANT TO PAY THE FUTURE MUNICIPAL TAXES OF PAPA PAGLI KALA KENDRA. (III) THE APPELLANT HAS FILED A LETTER FROM PAPA PA GLI KENDRA DATED 22 1 2006 DURING APPEAL PROCEEDINGS CLAIMING THAT THEY H AD REQUESTED FOR ADJUSTMENT OF SECURITY DEPOSIT TOWARDS PROPERTY TAX LIABILITY 1 HIS EVIDENCE WAS NOT BEFORE ASSESSING OFFICER AND THERE IS NO REASON WHY IT SHOULD BE ADMITTED NOW). 6. THE ADDITION MADE BY THE A.O. ON ACCOUNT OF PROV ISION OF RS. 34,73,301/- MADE BY THE ASSESSEE FOR CREATING THE C ORPUS FUND OF TENANTS FOR PAYMENT OF PROPERTY TAX, HOWEVER, WAS DELETED BY TH E LD. CIT(A) FOR THE FOLLOWING REASONS :- (I) ASSESSING OFFICER HIMSELF HAS REPRODUCED CLAUS E 21 OF THE AGREEMENT OF ALTERNATIVE PREMISES FOR THE TENANTS T HAT APPELLANT HAS TO PAY TO THE TENANTS FOR A CORPUS FUND CALCULATED TO GENERATE INTEREST ITA 2562/M/12 & ITA 2552/M/12 5 INCOME ACCORDING TO THEIR CARPET AREA. HENCE THIS L IABILITY DID EXIST FROM THE BEGINNING AND THERE WAS A CRYSTALISED CONTRACTU AL LIABILITY. (II) WHEN THE PROJECT GOT COMPLETED AS ON 31 03 200 7 THIS LIABILITY HAS TO BE QUANTIFIED AND PROVIDED FOR APPELLANT HAS COR RECTLY QUANTIFIED THAT AMOUNT, WHICH HAVE BEEN ACTUALLY PAID, LATER IN THE SUBSEQUENT YEAR BY CHEQUE ACCORDING TO MATCHING CONCEPT ALL EXPENSES A SCERTAINED AND QUANTIFIED HAVE TO BE ALLOWED AGAINST THE INCOME WH ICH IS TO BE TAXED. (III) THE ARGUMENT OF THE ASSESSING OFFICER THAT MU NICIPAL TAXES UPTO 30 11 2007 HAS TO BE BORNE BY APPELLANT AND THEREAFTER BY TENANTS ALSO DOES NOT PROVE ANYTHING THERE WAS A CONTRACTUAL LIA BILITY TO PAY FOR A CORPUS FUND TO MEET THE FUTURE PROPERTY TAX LIABILI TIES OF THE TENANTS THIS LIABILITY EXISTED AS ON 31 3 2007 IT WAS NEITH ER CONTINGENT NOR UNASCERTAINED. 7. AS REGARDS THE ADDITION OF RS. 10,28,299/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF PROVISION MADE BY THE AS SESSEE FOR OTHER EXPENSES, THE LD. CIT(A) FOUND THAT THE SAID PROVISION MADE B Y THE ASSESSEE TO THE EXTENT OF RS. 3,50,328/- WAS ON ACCOUNT OF UNASCERTAINED L IABILITY AND THE SAME WAS NOT PAID EVEN IN THE SUBSEQUENT YEAR. THE PROVISI ON MADE BY THE ASSESSEE FOR THE BALANCE AMOUNT, HOWEVER, WAS FOUND TO BE MA DE BY THE ASSESSEE FOR SPECIFIC EXPENSES INCURRED IN RELATION TO THE GANGA NIWAS PROJECT WHICH WERE DULY PAID BY THE ASSESSEE IN THE SUBSEQUENT YEAR. A CCORDINGLY, THE DISALLOWANCE OF RS. 10,28,299/- MADE BY THE A.O. ON THIS COUNT WAS SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 3, 50,228/-. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) SUSTAINING PARTLY THE DISAL LOWANCE MADE BY THE A.O. ON ACCOUNT OF PROVISION MADE FOR VARIOUS EXPENSES/LIAB ILITIES, THE ASSESSEE HAS RAISED GROUND NO. 1 TO 3 IN HIS APPEAL WHILE THE RE VENUE HAS RAISED GROUND NO. 1 & 2 IN ITS APPEAL. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS THE ISSUE RAISED IN GROUND NO. 1 OF THE ASSESSES APPEAL RELATING TO THE DISALLOWANCE O F RS. 15 LACS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF PROVISION MADE FOR THE AMOUNT PAYABLE TOWARDS LANDLORDS CORPUS FUND, WE F IND MERIT IN THE ITA 2562/M/12 & ITA 2552/M/12 6 ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE SAID CORPUS FUND WAS LIABLE TO BE CREATED FOR THE MUNICIPAL TAXES PAYABL E BY THE LANDLORDS AS PER THE AGREEMENT/ARRANGEMENT ARRIVED AT WITH PAPA PAGA LI KALAKENDRA IN PURSUANCE OF THE DEVELOPMENT AGREEMENT DURING THE Y EAR UNDER CONSIDERATION, THE PROVISION MADE FOR THE SAID LIAB ILITY REPRESENTING EXPENDITURE INCURRED IN CONNECTION WITH THE GANGA N IWAS PROJECT WAS LIABLE TO BE ALLOWED AS DEDUCTION ON MATCHING PRINCIPLE SI NCE THE SAID PROJECT WAS SHOWN TO BE COMPLETED DURING THE YEAR UNDER CONSIDE RATION AND THE ENTIRE INCOME THEREFROM WAS OFFERED TO TAX BY THE ASSESSEE . EVEN IF THE SAID PROVISION WAS MADE FOR THE PROPERTY TAX PAYABLE BY THE LANDLORDS IN FUTURE, THE SAME, IN OUR OPINION, IS NOT A RELEVANT CONSIDE RATION TO DECIDE THE ALLOWABILITY OF THE PROVISION MADE BY THE ASSESSEE SO LONG AS THE LIABILITY PROVIDED FOR WAS REPRESENTING THE EXPENDITURE INCUR RED IN RELATION TO GANGA NIWAS PROJECT AND THE SAID LIABILITY WAS AGREED TO BE PAID BY THE ASSESSEE AS PER THE UNDERSTANDING REACHED WITH LANDLORDS DURIN G THE YEAR UNDER CONSIDERATION. IN THIS REGARD, IT IS OBSERVED THAT A LETTER DATED 22-1-2006 ISSUED BY THE PAPA PAGALI KALAKENDRA SEEKING ADJUST MENT OF SECURITY DEPOSIT TOWARDS PROPERTY TAX LIABILITY WAS FILED BY THE ASS ESSEE BEFORE THE LD. CIT(A) AS ADDITIONAL EVIDENCE TO SUPPORT AND SUBSTANTIATE ITS STAND THAT THE LIABILITY TOWARDS LANDLORDS PROPERTY TAX HAVING BEEN ALREADY AGREED TO BE PAID BY THE ASSESSEE, THE PROVISION MADE FOR THE SAID LIABILITY DURING THE YEAR UNDER CONSIDERATION ON COMPLETION OF PROJECT WAS LIABLE T O BE ALLOWED. IT APPEARS THAT THE LD. CIT(A), HOWEVER, DID NOT ADMIT THE SAI D LETTER AS ADDITIONAL EVIDENCE WHICH, IN OUR OPINION, IS NOT JUSTIFIED IN THE FACTS OF THE CASE AS THE SAID EVIDENCE IS RELEVANT TO DECIDE THE ISSUE. WE THEREFORE ADMIT THE LETTER DTD. 22-1-2006 ISSUED BY THE PAPA PAGALI KALAKENDRA AS ADDITIONAL EVIDENCE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE SAID EVIDENCE KEEPING IN VIEW THE OBSERVATIONS ALREADY MADE BY US IN THIS CONTEXT. GROUND NO. 1 OF THE ASSESSEE S APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA 2562/M/12 & ITA 2552/M/12 7 9. AS REGARDS THE ISSUE RAISED IN GROUND NO.1 OF TH E REVENUES APPEAL RELATING TO DELETION BY THE LD.CIT(A) OF THE ADDITI ON OF RS. 34,73,301/- MADE BY THE A.O. ON ACCOUNT OF PROVISION MADE BY THE ASS ESSEE TOWARDS CORPUS FUND TO MEET PROPERTY TAX LIABILITIES OF THE TENANT S, IT IS OBSERVED THAT AS PER CLAUSE 21 OF THE AGREEMENT OF ALTERNATIVE PREMISES FOR THE TENANTS, THE ASSESSEE HAD AGREED TO PAY TO THE TENANTS FOR CREAT ING CORPUS FUND CERTAIN SUM SUFFICIENT TO GENERATE THAT MUCH INTEREST INCOM E WHICH WILL BE SUFFICIENT TO MEET THE FUTURE PROPERTY TAX LIABILITY OF THE TE NANTS OF ALTERNATIVE PREMISES. THIS LIABILITY THUS HAD ALREADY ACCRUED AS PER THE AGREEMENT AND THE SAME REPRESENTING EXPENDITURE OF THE ASSESSEE INCURRED I N CONNECTION WITH THE GANGA NIWAS PROJECT, IN OUR OPINION, WAS LIABLE TO BE ALLOWED AS DEDUCTION AS RIGHTLY CLAIMED BY THE ASSESSEE. THE FACT THAT THE CORPUS FUND WAS CREATED TO MEET THE FUTURE PROPERTY TAX LIABILITY OF THE TENAN TS WAS NOT RELEVANT IN THIS CONTEXT AND THE LD. CIT(A), IN OUR OPINION, WAS FUL LY JUSTIFIED IN ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE FOR THIS CONTRACT UAL LIABILITY. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. 10. AS REGARDS THE COMMON ISSUE INVOLVED IN GROUND NO. 2 OF THE ASSESSEES APPEAL AND GROUND NO. 2 OF THE REVENUES APPEAL REL ATING TO THE DISALLOWANCE OF RS. 10,28,299/- MADE BY THE A.O. ON ACCOUNT OF P ROVISION MADE BY THE ASSESSEE FOR OTHER EXPENSES WHICH HAS BEEN SUSTAINE D BY THE LD. CIT(A) TO THE EXTENT OF RS. 3,50,228/-, IT IS OBSERVED THAT THE P ROVISION OF RS. 10,28,299/- MADE BY THE ASSESSEE FOR OTHER EXPENSES INCURRED IN RELATION TO GANGA NIWAS PROJECT WAS FOUND TO BE MADE FOR UNASCERTAINED LIAB ILITY TO THE EXTENT OF RS. 3,50,228/- BY THE LD. CIT(A) ON VERIFICATION OF THE RELEVANT DETAILS WHICH ESTABLISHED THAT THE SAID PROVISION TO THE EXTENT O F RS. 3,50,228/- WAS NOT MAKE FOR ANY SPECIFIC EXPENSES AND THE SAME WAS NOT EVEN PAID FOR IN THE IMMEDIATELY SUCCEEDING YEAR. THE PROVISION MADE FO R THE BALANCE AMOUNT, HOWEVER, WAS FOUND TO BE MADE BY THE ASSESSEE FOR T HE SPECIFIC EXPENSES ITA 2562/M/12 & ITA 2552/M/12 8 INCURRED IN RELATION TO GANGA NIWAS PROJECT AND THE SAME WAS ALSO PAID FOR IN THE IMMEDIATELY SUCCEEDING YEAR. ON THE BASIS OF T HESE FINDINGS ARRIVED AT BY HIM ON VERIFICATION OF THE RELEVANT DETAILS, THE LD . CIT(A) SUSTAINED THE DISALLOWANCE OF RS. 10,28,299/- MADE BY THE A.O. TO THE EXTENT OF RS. 3,50,228/-. AT THE TIME OF HEARING BEFORE US, NEITH ER THE LD. COUNSEL FOR THE ASSESSEE NOR THE LD. D.R. HAS BEEN ABLE TO CONTROVE RT OR REBUT THE SPECIFIC FINDINGS RECORDED BY THE LD. CIT(A) WHILE DECIDING THIS ISSUE AND THIS BEING SO, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD.CIT(A) SUSTAINING THE DISALLOWANCE OF RS. 10,28, 299/- MADE BY THE A.O. ON THIS ISSUE TO THE EXTENT OF RS. 3,50,228/-. THE SAM E ACCORDINGLY IS UPHELD DISMISSING GROUND NO. 2 OF THE REVENUES APPEAL AS WELL AS GROUND NO. 2 OF THE ASSESSEES APPEAL. 11. IN GROUND NO. 3 OF HIS APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN NOT ADMITTING THE LETTER DTD. 22- 1-2006 ISSUED BY PAPA PAGALI KALAKENDRA AS ADDITIONAL EVIDENCE. THIS ISSUE HAS ALREADY BEEN DECIDED BY US WHILE ADJUDICATING GROUND NO. 1 RAISED IN THE AP PEAL OF THE ASSESSEE. FOLLOWING OUR CONCLUSION DRAWN ON THE ISSUE INVOLVE D IN GROUND NO. 1, WE ALLOW GROUND NO. 3 OF THE ASSESSEES APPEAL. 12. GROUND NO. 4 RAISED IN THE APPEAL OF THE ASSESS EE IS GENERAL IN NATURE SEEKING NO SPECIFIC DECISION FROM US. 13. THE ISSUE INVOLVED IN GROUND NO. 5 OF THE ASSES SEES APPEAL RELATING TO INTEREST U/S 234B AND 234C OF THE ACT IS CONSEQUENT IAL IN NATURE AND THE A.O. IS ACCORDINGLY DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE ASSESSEE ON THIS ISSUE. 14. IN GROUND NO. 3 OF ITS APPEAL, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 61,2 9,348/- MADE BY THE A.O. ITA 2562/M/12 & ITA 2552/M/12 9 BEING THE PROPORTIONATE CONSIDERATION ON ACCOUNT OF THE ADDITIONAL AREA ALLOTTED TO THE TENANTS OVER AND ABOVE THE AREA SAN CTIONED BY MHADA. 15. IN THE GANGA NIWAS PROJECT DEVELOPED BY THE A SSESSEE, THERE WERE 44 FLATS OUT OF WHICH 24 FLATS WERE ALLOTTED TO THE TE NANTS AND 3 TO THE OWNERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS CALLED UPON BY THE A.O. TO FURNISH THE DETAILS OF FLATS ALLOTTE D TO THE TENANTS/OWNERS INCLUDING THE DETAILS OF ORIGINAL CARPET AREA AS PE R MHADA, CARPET AREA ACTUALLY ALLOTTED AND ANY ADDITIONAL AMOUNT CHARGED FOR THE ADDITIONAL AREA. THESE DETAILS REQUIRED BY THE A.O. WERE FURNISHED B Y THE ASSESSEE IN A TABULAR FORM AS UNDER:- SN NAME OF TENANTS/OCCUPANT ORIGINAL CARPET AREA AS PER MHADA CARPET AREA OF NEW FLAT ADDITION AL CARPET AREA (SQ.FT.) REMARKS FOR ADDITIONAL AREA, IF ANY 1 BABY S PADMAVATHI NAIDU 413 415 2 SUSHILA J SHETTY 289 295 3 GEETHA N SHENOY 399 470 71 DUE TO EXISTING ATTACH ED TERRACE IN OLD BUILDING 4 S. VISHWANATHAN 459 470 5 SANTOSH J SHETTY 122 226 104 MINIMUM AREA AS PER MHADA RULES IF 225 SFT. 6 T K ARUMUGAM 443 532 89 RM.21 WAS 136SFT. BUT MIN IMUM AREA AS PER MHADA RULES IS 225SFT. 7 E K BALAKRISHNAN 401 483 82 NO RENT COMPENSATION PAID 8 KALYANJI VIRJI VORA & MUKESH K VORA 464 549 85 NO RENT COMPENSATION PAID 9 RENUKUMAR J VERMA 341 390 49 NO RENT COMPENSATION PAID 10 PUSHPABEN G SADARANGANI+NARESH G SADARANGANI 414 415 11 LAXMICHAND G VIKMANI & RANJAN L VIKMANI 401 477 76 NO RENT COMPENSATION PAID 12 HEMLATA LAXMIPATI NAIDU (WIDOW) 289 390 101 NO RENT COMPENSATION PAID 13 JAYASHRIBEN R DOSHI 289 295 14 MN RAMCHANDRAN 414 507 93 SENIOR CITIZEN TENANT 15 RUPAL M GANDHI WIDOW OF MAYANK 462 565 103 ADDITIONAL AREA DUE TO LOSS OF BUSINESS FOR NO USE OF GARAGE ITA 2562/M/12 & ITA 2552/M/12 10 GANDHI DURING CONSTRUCTION PERIOD 16 SOUTH INDIAN BANK CO- OP. BANK LTD. 213 265 30 NO RENT COMPENSATION PAID FOR ADDL. AREA ABOVE 225SFT. 17 TARA N SAVLA 454 900 446 18 PRADEEP TEMKAR 366 549 183 NO RENT COMPENSATION PAID ALSO DUE TO EXISTING ATTACHED TERRACE IN OLD BLDG. 19 R ARUNKUMAR REDDY 255 255 20 BHAVESH AMRATLAL SHAH 255 335 80 ADDITIONAL AREA DUE TO COVERED OTLA AT GROUND FLOOR OF OLD BUILDING 21 RAJNIKANT R DOSHI 447 560 113 NO RENT COMPENSAT ION PAID ADDITIONAL AREA DUE TO COVERED OTLA AT GROUND FLOOR OF OLD BUILDING 22 PRAKASH R DOSHI 946 1016 70 NO RENT COMPENSATION PA ID 16. ON THE BASIS OF ABOVE DETAILS, IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE CASE OF TARA N. SAVLA ONLY, ADDITIONAL AMOUNT O F RS. 21,07,000/- WAS CHARGED FOR ADDITIONAL 446 SQ. FT. CARPET AREA ALLO TTED. AS REGARDS THE ADDITIONAL AREA ALLOTTED TO THE OTHER TENANTS/OWNER S, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAME WAS GIVEN IN LIEU OF RENT CO MPENSATION NOT PAID, TERRACES IN OLD BUILDING ETC. AND THEREFORE NO EXTR A AMOUNT WAS CHARGED FOR SUCH ADDITIONAL AREA ALLOTTED TO THE TENANTS/OWNERS . THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE A.O. FOR T HE FOLLOWING REASONS:- 1. RENT COMPENSATION WHICH IS WAIVED BY THE PURCHA SER TENANTS IS VERY NOMINAL AND IS NOT COMMENSURATE WITH THE VALUE OF BENEFIT PASSED OVER TO THE TENANTS BY WAY OF ALLOTTING EXTRA CARPE T AREAS. 2. ONCE MHADA HAS DECIDED THE CARPET AREA TO BE ALL OTTED TO EACH TENANT, THE ADDITIONAL CARPET AREA ALLOTTED TO THEM OVER AND ABOVE THE PERMITTED AREA AS GIVEN BY MHADA WITHOUT ANY CONSID ERATION CAN NOT BE JUSTIFIED. 3. IN ONE CASE I.E. IN THE CASE OF TARA SAVIA, TENA NT, THE ASSESSEE HAS RECEIVED CONSIDERATION OF RS.21.07 LACS FOR PRO VIDING EXTRA AREA OF 446 SQ.FT. AND ONE CAR PARKING. ONCE ASSESSEE IS RE CEIVING COMPENSATION FOR ALLOTTING EXTRA CARPET AREA FROM A BOVE PARTY, ON A SIMILAR SITUATION, ITS PLEA THAT NO COMPENSATION HA S BEEN RECEIVED FROM OTHER TENANTS IS NOT ACCEPTABLE. 4. ASSESSEES PLEA THAT WHEREVER, THERE IS NO PAYME NT FOR RENT COMPENSATION, THE EXTRA AREA IS GIVEN WITHOUT CHARG ING ANYTHING. HOWEVER, THIS FACT IS NOT BORNE OUT FROM THE AGREEM ENT WHICH THE ITA 2562/M/12 & ITA 2552/M/12 11 PRIMARY DOCUMENT BETWEEN THE DEVELOPER AND THE PURC HASER. HENCE, THE SUBMISSION HAS NO MERIT. 17. FOR THE REASONS GIVEN ABOVE, THE A.O. PRESUMED THAT THE ASSESSEE MUST HAVE RECEIVED EXTRA AMOUNT FOR THE ADDITIONAL AREA ALLOTTED TO THE OTHER TENANTS/OWNERS WHICH WAS SUPPRESSED BY HIM. THE AM OUNT OF SUCH SUPPRESSED SALES WAS WORKED OUT BY THE A.O. AT RS. 61,29,348/- AS PER THE FOLLOWING WORKING MADE IN THE ASSESSMENT ORDER AND ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED SALES OF EXTRA CARPET AREA ALLOTTED TO T HE TENANTS/OWNERS:- EXTRA ARE ALLOTTED TO TENANTS 1771 SQ.FT. LESS: ALREADY RECD. CONSIDERATION 445 SQ.FT. EXTRA AREA FOR WHICH NO CONSIDERATION RECD. 1329 SQ .FT. CONSIDERATION RECD. FROM TARA SAVLA FOR 446 SQ.FT. EXTRA CARPET AREA AND ONE CAR PARKING 21 ,07,000 LESS: COST OF CAR PARKING 50,000 ---------------- 20,57,000 SO PER SQ.FT. CHARGE FOR EXTRA AREA ALLOTTED 20,57 ,000 446 = RS.4,612/- HENCE, THE VALUE OF 1329 SQ. FT.= RS.61,29,348 18. THE ADDITION OF RS. 61,29,348/- MADE BY THE A.O . ON ACCOUNT OF ALLEGED SUPPRESSED SALES OF ADDITIONAL AREA TO THE TENANTS/ OWNERS WAS DISPUTED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT( A) AND A DETAIL SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. C IT(A) IN SUPPORT OF ITS CASE THAT THE SAID ADDITION MADE BY THE A.O. WAS NOT SUS TAINABLE. AFTER DISCUSSING AND SUMMARIZING THE SAID SUBMISSIONS MADE BY THE AS SESSEE, THE LD. CIT(A) HELD THAT THE ADDITION MADE BY THE A./O. ON ACCOUNT OF ALLEGED SUPPRESSED SALES OF ADDITIONAL AREA TO THE TENANTS/OWNERS WAS NOT SUSTAINABLE AND HE DELETED THE SAME FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- ITA 2562/M/12 & ITA 2552/M/12 12 1. THERE IS NO EVIDENCE PLACED BY THE ASSESSING OF FICER THAT APPELLANT RECEIVED EXTRA CONSIDERATION FOR THE ADDI TIONAL CONSTRUCTED AREA GIVEN TO TENANTS. NO ADDITIONS CAN BE MADE ON THE BASIS OF PRESUMPTIONS. THIS ISSUE WAS ALSO REMANDED TO THE ASSESSING OFFICER IN REMAND PROCEEDINGS ASSESSING OFFICER HAS NOT BRO UGHT ON RECORD ANY CONCRETE EVIDENCE OR ASSERTIONS FROM THE TENANTS TH AT ADDITIONAL CONSIDERATION WAS PAID. (2) APPELLANT HAS EXPLAINED THE CIRCUMSTANCES TO AS SESSING OFFICER WHY CONSTRUCTED AREA GIVEN IS MARGINALLY MORE THAN THE TENANTS SURRENDERED AREA. IN MANY CASES IT IS BECAUSE OF MH ADAS RULE THAT AT LEAST 225 SFT HAS TO BE GIVEN TO TENANT AS A SINGLE UNIT. IN ABOUT 10 CASES IT IS BECAUSE NO RENT COMPENSATION WAS PAID T O THE TENANTS. NOT PAYING RENTAL COMPENSATION IS NOTHING BUT MONEYS E QUIVALENT OTHER REASONS, SUCH AS LOSS OF TERRACE IN THE OLD BUILDIN G LOSS OF GARAGE, ETC. HAVE BEEN TILED AND EXPLAINED BY THE APPELLANT EXPL AINING THE PECULIARITY OF EACH CASE IT CAN BE SEEN FROM THESE REASONS THAT, THERE WERE CONVINCING BUSINESS REASONS FOR GIVING EXTRA C ONSTRUCTED AREA. (3) IT IS NOT POSSIBLE FOR ANY BUILDER TO GIVE THE EXACT SQ FT AREA AS PER THE OLD TENANCY TO THE TENANTS IN NEW BUILDING. (4) THE FACTS OF THE PARTICULAR INSTANCE RELIED UPO N BY THE ASSESSING OFFICER IN ONE CASE WHERE EXTRA CONSIDERATION WAS P AID BY THE BUYER, ARE DIFFERENT FROM THE SMALL MARGINAL TENANTS FROM WHOM NO EXTRA CONSIDERATION IS RECEIVED THE TENANT TARA N SAWLA B OUGHT SUBSTANTIAL ADDITIONAL AREA OF 446 SQ FT WHICH IS NOT A MARGINA L VARIATION SHE DID IT ON HER OWN ACCORD AND BOUGHT ADDITIONAL AREA WITH A DDITIONAL PARKING THIS IS NOT SO WITH OTHER TENANTS SHE HAD NEW CARPE T AREA OF 900 SQ FT AGAINST SURRENDERED AREA OF 443 SQ FT HENCE IT WAS BUT NATURAL TO PAY ADDITIONAL CONSIDERATION. (5) THE APPELLANT HAS SUBMITTED COST BENEFIT ANALYS IS AS UNDER TO NEGATE THE THEORY OF UNDISCLOSED SALES PROPOUNDED B Y THE ASSESSING OFFICER I LIE EXPLANATION IS REASONABLE AND ON THE BASIS OF FACTS. ASSESSING OFFICER HAS NOT POINTED WHY THIS EXPLANAT ION SHOULD NOT BE ACCEPTED. TOTAL CONSIDERATION FOR ADDITIONAL AREA 61,29,348 LESS. CONSIDERATION ATTRIBUTABLE TO WAIVER OF RENT (31,39,830) LESS. CONSIDERATION ATTRIBUTABLE TO BALCONY/OTLA (1 2,88,724) ADDITIONAL AREA ON ACCOUNT OF MHASA RULE (134 SQ.FT) (6,18,008) LESS CONSIDERATION ATTRIBUTABLE TO TRANSIT ACCOMMODATION PROVIDED BY DEVELOPER (6,91,.800) BALANCE 2,90,986 ITA 2562/M/12 & ITA 2552/M/12 13 IN VIEW OF THE ABOVE, I FIND THAT APPELLANT HAS SUC CESSFULLY EXPLAINED THE ADDITIONAL AREA GIVEN TO THE TENANTS. THE DIFF ERENCE AMOUNT OF RS. 2,90,986/- IS ONLY A MARGINAL VARIATION AND CAN BE SUSTAINED. SINCE THERE WAS NEITHER UNDISCLOSED SALES NOR UNDISCLOSED RECEIPTS THE ADDITION OF RS. 612,29,348/- IS DELETED. 19. THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF TH E A.O. ON THIS ISSUE. HE SUBMITTED THAT THE EXCESS AREA ALLOTTED BY THE ASSE SSEE TO THE TENANTS/OWNERS WAS CLAIMED TO BE NOT CHARGED IN LIEW OF NON-PAYMEN T OF RENT TO THE CONCERNED TENANTS FOR ALTERNATIVE ACCOMMODATION. H E SUBMITTED THAT THIS CLAIM OF THE ASSESSEE, HOWEVER, WAS NOT FOUND ACCEP TABLE BY THE A.O. ON THE GROUND THAT THE BENEFIT GIVEN BY THE ASSESSEE TO TH E TENANTS IN THIS FORM WAS HIGHLY DISPROPORTIONATE TO THE NON-PAYMENT OF RENT FOR ALTERNATIVE ACCOMMODATION. HE CONTENDED THAT IT WAS THUS A CLEA R CASE OF DISPROPORTIONATE BENEFIT GIVEN BY THE ASSESSEE TO T HE TENANTS AS MAID OUT BY THE A.O. AND THERE WAS THUS A STRONG PRESUMPTION TH AT THE ASSESSEE MIGHT HAVE RECEIVED THE CONSIDERATION FOR EXTRA AREA ALLO TTED TO THE TENANTS IN CASH. HE CONTENDED THAT THIS EXTRA CONSIDERATION TREATED AS SUPPRESSED SALES WAS QUANTIFIED BY THE A.O. ON A VERY REASONABLE BASIS A ND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE A.O. ON THIS ISSUE ACCEPTING THE STAND OF THE ASSESSEE WITHOUT APPRECIATING THE CASE MADE OUT BY THE A.O. 20. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDER OF THE LD. CIT(A) IN SUPPORT OF THE ASSESSEES CASE ON THIS ISSUE. HE SUBMITTED THAT THE ADDITIONAL AREA WAS G IVEN BY THE ASSESSEE TO THE TENANTS UNDER CERTAIN CIRCUMSTANCES AND FOR VALID R EASONS AND SUCH REASONS WERE DULY ADVANCED BY THE ASSESSEE EXPLAINING THE C IRCUMSTANCES FOR GIVING THE ADDITIONAL AREA TO EACH AND EVERY TENANT. HE SU BMITTED THAT EVEN THE AFFIDAVITS OF THE CONCERNED TENANTS WERE ALSO FILED BY THE ASSESSEE WHEREIN IT WAS CLEARLY STATED BY ALL THE TENANTS THAT THE EXTR A AREA WAS ALLOTTED TO THEM WITHOUT ANY CASH CONSIDERATION. HE CONTENDED THAT THERE WAS NOTHING BROUGHT ON RECORD BY THE A.O. TO SHOW THAT ANY CONS IDERATION FOR THE ADDITIONAL AREA WAS ACTUALLY RECEIVED BY THE ASSESS EE FROM THE TENANTS. ITA 2562/M/12 & ITA 2552/M/12 14 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT T HE REASONS FOR GIVING ADDITIONAL AREA THAN THE AREA PRESCRIBED BY THE MHA DA TO THE TENANTS WERE DULY EXPLAINED BY THE ASSESSEE IN RESPECT OF EACH A ND EVERY TENANTS TO JUSTIFY THE ADDITIONAL AREA ALLOTTED TO THEM. THE A.O., HO WEVER, DID NOT ACCEPT THIS EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE BENEFIT GIVEN BY THE ASSESSEE TO THE TENANTS IN THE FORM OF ADDITIONAL A REA WAS DISPROPORTIONATE AND PRESUMED THAT THE ASSESSEE MIGHT HAVE RECEIVED THE CONSIDERATION FOR EXTRA AREA ALLOTTED TO THE TENANTS IN CASH. AS NOT ED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER, THERE WAS HOWEVER NO EVIDENCE BROUG HT ON RECORD BY THE A.O. TO SHOW THAT ANY EXTRA CONSIDERATION WAS RECEI VED BY THE ASSESSEE FROM THE TENANTS FOR THE EXTRA AREA ALLOTTED TO THEM. O N THE OTHER HAND, THE CIRCUMSTANCES IN WHICH EXTRA AREA CAME TO BE ALLOTT ED TO EACH TENANT WERE EXPLAINED BY THE ASSESSEE AND EXPLANATION SO OFFERE D WAS FOUND TO BE REASONABLE BY THE LD. CIT(A) AFTER RECORDING SPECIF IC OBSERVATIONS/FINDINGS IN HIS IMPUGNED ORDER WHICH HAVE ALREADY BEEN EXTRACTE D BY US IN THE FOREGOING PORTION OF THIS ORDER. IN OUR OPINION, THESE OBSER VATIONS/FINDINGS RECORDED BY THE LD. CIT(A) ARE SUFFICIENT TO SHOW THAT THE REAS ONS GIVEN BY THE ASSESSEE FOR ALLOTTING EXTRA AREA TO THE TENANTS WERE REASONABLE AND CONVINCING AND THERE WAS NO CASE OF RECEIPT OF ANY EXTRA CONSIDERATION B Y THE ASSESSEE IN CASH FOR THE ADDITIONAL AREA ALLOTTED TO THE TENANTS AS ALLE GED BY THE A.O. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF SUPPRESSED SALES AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 3 OF THE REVENUES APPE AL. 22. IN GROUND NO. 4, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS. 3,97,954/- MADE BY THE A.O. U/S 14A R.W.S. RULE 8D OF THE INCOME TAX RULES, 1962. ITA 2562/M/12 & ITA 2552/M/12 15 23. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAD MADE INVESTMENT OF RS. 5 1,35,161/- IN THE SHARES, INCOME FROM WHICH I.E. DIVIDEND IS EXEMPT FROM TAX. HE THEREFORE INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT AND BY APPLYIN G RULE 8D MADE A DISALLOWANCE OF RS. 3,97,954/- ON ACCOUNT OF EXPENS ES INCURRED BY THE ASSESSEE IN RELATION TO THE INVESTMENT MADE IN SHAR ES, THE INCOME FROM WHICH WAS EXEMPT FROM TAX. ON APPEAL, THE LD. CIT(A) DEL ETED THE SAID DISALLOWANCE MADE BY THE A.O. U/S 14A OF THE ACT R.W.S. RULE 8D OF THE INCOME TAX RULES, 1962 HOLDING THAT THE A.O. HIMSELF HAD HELD THAT IN COME FROM SALE OF SHARES WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME. HE HELD THAT THE EXPENSES INCURRED BY THE ASSESSEE IN RELATION TO INVESTMENT MADE IN THE SHARES THUS WERE NOT RELATING TO EXEMPT INCOME BUT THE SAME RELATED TO INCOME TAXABLE AS BUSINESS INCOME. 24. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE LD. COUNSEL FOR THE ASSESSEE, THE DIVIDEND INCOME ON INVESTMENT MADE IN SHARES BEING EXEMPT FROM TAX, THE EXPENSES INCURRED IN RELATION TO THE SAID INVESTMENT IS LIABLE TO BE DISALLOWED U/S 14A OF THE ACT. HOWEVER, AS RIGH TLY POINTED OUT BY HIM RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM.), RULE 8D IS APPLICABLE PROSPECTIVELY FROM A.Y. 2008-09 ONWARDS AND THE DISALLOWANCE U/S 14A OF THE ACT FOR THE YEAR UNDER CONSIDERATION I.E 2007-08 IS LIABLE TO BE MADE U/S 14A OF THE ACT ON SOME REASONABLE BASIS. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE D ISALLOWANCE MADE BY THE A.O. U/S 14A OF THE ACT AND RESTORE THE MATTER TO T HE FILE OF THE A.O. WITH A DIRECTION TO COMPUTE THE DISALLOWANCE TO BE MADE U/ S 14A OF THE ACT BY FOLLOWING SOME REASONABLE METHOD AFTER GIVING THE A SSESSEE AN OPPORTUNITY OF BEING HEARD. GROUND NO. 4 OF THE REVENUES APPEAL I S ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA 2562/M/12 & ITA 2552/M/12 16 25. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-04-2014 . ) 0 1 30-04-2014 ) SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 30-04-2014 [ .../ RK , SR. PS # $&' (' / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. 4 () / THE CIT(A)29 MUMBAI. 4. 4 / CIT 17 MUMBAI 5. $8 , * 8 , / DR, ITAT, MUMBAI A BENCH 6. / GUARD FILE. / BY ORDER, % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI