The DCIT(OSD)Circle-8, Ahmedabad V. Torrent Cables Ltd., Ahmedabad

ITA 2584/AHD/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8136 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P PATHAK
• Keywords: Depreciation; Earning of tax free income; Proportionate interest; Question of law; Unabsorbed depreciation
• Section: 234B; 14A; 115JB

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.2584/AHD/2012 WITH CROSS OBJECTION NO. 18/AHD/2013 ( ASSESSMENT YEAR : 2009-10) D.C.I.T.(OSD), CIRCLE-8, AHMEDABAD M/S. TORRENT CABLE LIMITED, 6 TH FLOOR, PELICAN BUILDING, OFF ASHRAM ROAD, AHMEDABAD - 380009 / VS. & VS. M/S. TORRENT CABLE LIMITED, 6 TH FLOOR, PELICAN BUILDING, OFF ASHRAM ROAD, AHMEDABAD 380009 D.C.I.T.(OSD), CIRCLE-8, AHMEDABAD ./ ./ PAN/GIR NO. : AAACT5457B ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI O. P. PATHAK, SR. D.R. / RESPONDENT BY : SHRI S. N. SOPARKAR, A.R. DATE OF HEARING 02/05/2018 !'# / DATE OF PRONOUNCEMENT 11/ 06/2018 / O R D E R ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 2 - PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE CIT(A)-XIV, AHMEDA BAD (CIT(A) IN SHORT), DATED 27.08.2012 ARISING IN THE ASSESSME NT ORDER DATED 29.12.2011 PASSED BY THE ASSESSING OFFICER (AO) U/S .143(3) OF THE INCOME TAX ACT, 1961; (THE ACT) CONCERNING ASSESSME NT YEAR 2009-10. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN THE REVENUES APPEAL AS CAPTIONED ABOVE . 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS UNDER: 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X IV, AHMEDABAD ERRED IN AND ON FACTS IN DELETING THE ADD ITION OF AMOUNT DISALLOWED U/S. 14A OF THE ACT WHILE COMPUTI NG THE BOOK PROFIT/INCOME U/S. 115JB OF THE ACT'. 2). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE U/S145A OF THE ACT'. 3). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN RESTRICT ING THE DISALLOWANCE MADE ON ACCOUNT OF DISALLOWANCE OF COM MISSION EXPENSES AT RS.8.7 LACS/- AS AGAINST THE DISALLOWAN CE MADE BY THE AO AT RS.3553269/-'. 4). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTIN G TO ALLOW THE SET OFF AND CARRY FORWARD OF DEPRECIATION'. 5). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 6) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD MAY BE SET-A SIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE R ESTORED. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE POINTED OUT IN THE REVENUES APPEAL THAT G ROUND NO.1 RELATES TO ADJUSTMENT ON ACCOUNT OF DISALLOWANCES MADE U/S. 14A (UNDER THE ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 3 - NORMAL PROVISIONS OF THE ACT) FOR THE PURPOSES OF S PECIAL PROVISIONS OF SECTION 115JB OF THE ACT CONCERNING TAXABILITY ON T HE BASIS OF BOOK PROFITS. THE LEARNED AR POINTED OUT THAT THE ISSUE IS NO LONGER RES INTEGRA AND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DEC ISION OF THE SPECIAL BENCH IN THE CASE OF ACIT & ANR. VS. VIREET INVESTMENT PVT. LTD. & ANR. 165 ITD 27 (DELHI) [SB]. 3.1 WE FIND THAT THE ISSUE IS SQUARELY COVERED IN F AVOUR OF THE ASSESSEE. OUR VIEW IS SUPPORTED BY THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL IN CASE OF ARVIND LTD. VS. DCIT I N ITA NO.1816/AHD/2011 WHERE THE DECISIONS OF THE HONBLE GUJARAT HIGH COURT AND DELHI HIGH COURT WERE ALSO REFERRED FOR D ECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT OPERATIVE PARA OF THE DECISION OF THE CO-ORDINATE BENCH IN ARVIND LTD. (SUPRA) IS REPRODUCED HEREUNDER: 6. WE NOTICE THAT ISSUE IS EVOLVED AND DEVELOPED B Y CERTAIN JUDICIAL PRECEDENTS. WE FIND AT THE FIRST INSTANCE THAT THE IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ALEMBIC LTD. (SUPRA) WHERE THE SUBSTANTIAL QUESTION OF LAW ON THE POINT AS TO WHETHER ADJUSTME NT MADE ON ACCOUNT OF DISALLOWANCE UNDER S.14A OF THE CAN BE S IMILARLY MADE FOR THE PURPOSES OF COMPUTATION OF 'BOOK PROFIT' UNDER S.115JB OF THE ACT WAS ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF T HE ASSESSEE. WE ALSO TAKE NOTE OF DECISION OF THE SPECIAL BENCH REN DERED IN ACIT VS. VIREET INVESTMENT PVT.LTD. & ANR. 165 ITD 27 (DELHI )[SB] WHERE IT WAS HELD THAT THE AO WAS NOT ENTITLED TO TINKER WIT H BOOK PROFITS CONTEMPLATED UNDER S.115JB TOWARDS DISALLOWANCE MAD E UNDER S. 14A OF THE ACT. WE SIMILARLY FIND THAT JUDGEMENT OF HON'BLE BOMBAY HIGH COURT IN CIT VS. BENGAL FINANCE AND INVESTMENT S PVT. LTD. IN ITA NO.337 OF 2013 ORDER DATED 10/02/2015 ALSO COMP LEMENTS THE ISSUE. THUS, SEEN ON THE ANVIL OF THE JUDICIAL FIAT AVAILABLE SQUARELY ON THE ISSUE, WE ARE DISPOSED TO ASSIGN MERITS TO T HE CONTENTIONS ON BEHALF OF THE ASSESSEE. AT THIS JUNCTURE, WE PAUSE TO NOTE THE CONCERN OF REVENUE SEEKING TO PLEAD POSSIBLE REDUNDANCY OF CLAUSE(F) TO EXPLANATION TO S.115JB IN THE EVENT OF DISAGREEMENT WITH THE ACTION OF AO. WE ARE ALIVE TO SUCH CONCERNS. HOWEVER, AS N OTED, WE ARE GOVERNED BY THE SUPERIOR WISDOM AVAILABLE IN THIS R EGARD. HENCE, REMEDY TO REVENUE, IF ANY, PERHAPS LIES ELSEWHERE. ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECISIONS GOVERNING THE FIELD, WE DIRECT THE AO TO DELETE THE ADJUSTMENTS MADE ON ACCOUNT OF EST IMATED ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 4 - DISALLOWANCE DETERMINED UNDER S.14A OF THE ACT WHIL E COMPUTING BOOK PROFIT UNDER S.115JB OF THE ACT. 3.2 IN VIEW OF THE AFORESAID DISCUSSION, GROUND NO.1 OF THE REVENUES APPEAL IS DISMISSED. 4. GROUND NO.2 RELATES TO ADDITION OF RS.2,90,28,90 9/- MADE BY THE AO U/S.145A, WHICH WAS DELETED BY THE CIT(A). THE LEARNED AR SUBMITTED THAT THE AFORESAID GROUND REPRESENTS ADDI TION ON ACCOUNT OF UNUTILIZED CENVAT/MODVAT CREDIT, WHICH IS NOT PERMI SSIBLE IN VIEW OF THE PRINCIPLES LAID DOWN BY THE HONBLE GUJ ARAT HIGH COURT IN CASE OF CIT VS. BELL GRANITO CEREMICA LTD., TAX AP PEAL NOS. 436-437 OF 2011, JUDGMENT DATED 13.06.2012. THE LEARNED AR NEXT SUBMITTED THAT THE CIT(A) HAS CORRECTLY CONCLUDED THE ISSUE I N FAVOUR OF THE ASSESSEE ALSO HAVING REGARD TO THE FACT THAT EFFECT OF PROVISIONS OF SECTION 145A WOULD BE NIL IN THE CASE OF ASSESSEE. WE FIND THAT THE CIT(A) HAS ANALYZED THE ISSUE OBJECTIVELY IN DETAIL AS PER PARA 5 OF ITS ORDER. THE CONCLUSION DRAWN BY THE CIT(A) IS IN CO NSONANCE WITH THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CASE OF BELL GRANTIO (SUPRA). WE ALSO TAKE NOTE OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CIT VS. ORACLE GRANITO PVT. LTD., TAX APPEAL NO. 1030 OF 2017, ORDER DATED 14 TH FEBRUARY, 2018, WHICH SUPPORTS THE CASE OF THE ASSESSEE SQUARELY. THEREFORE, WE DECLI NE TO INTERFERE WITH THE ORDER OF THE CIT(A) IN THIS REGARD. GROUND NO.2 OF THE REVENUES APPEAL IS THEREFORE DISMISSED. 5. GROUND NO.3 CONCERNS DISALLOWANCE OF RS.8,70,000 /- SUSTAINED BY THE CIT(A) OUT OF COMMISSION EXPENSES AS AGAINST DISALLOWANCE OF RS.35.53 LAKHS MADE BY THE ASSESSING OFFICER. THE CIT(A) HAS OBJECTIVELY DEALT WITH THE ISSUE AND FOUND THAT COM MISSION IS RELATABLE TO THE SALES. IT WAS CLAIMED ON BEHALF OF THE ASSE SSEE THAT THE COMMISSION HAS BEEN PAID BY ACCOUNT PAYEE CHEQUES. SIMILAR COMMISSIONS HAVE BEEN PAID IN THE EARLIER YEAR AS W ELL WHICH HAS BEEN ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 5 - DULY ACCEPTED. THE CIT(A) HOWEVER HAS REJECTED THE COMMISSION PAYMENT OF RS.8.7 LAKHS ON THE GROUND THAT THE LIAB ILITY IS ONLY PROVISIONAL AND NOT ASCERTAINED LIABILITY. 6. WE HAVE CAREFULLY GONE THROUGH THE PARA NO.6 OF THE CIT(A)S ORDER DEALING WITH THE ISSUE AND DO NOT SEE ANY REA SON TO INTERFERE THEREWITH. GROUND NO.3 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 7. GROUND NO.4 CONCERNS CLAIM OF SET OFF AND CARRY FORWARD OF UNABSORBED DEPRECIATION A PART OF WHICH RELATES TO ASSESSMENT YEAR 2002-03. IT IS THE CASE OF THE ASSESSEE THAT SET OF F OF UNABSORBED DEPRECIATION AVAILABLE TO THE ASSESSEE ON 01.04.200 2 (A.Y.2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISION S OF SECTION 32(2) OF THE ACT AS AMENDED BY THE FINANCE ACT, 2001 AND NOT BY THE PROVISIONS OF SECTION 32(2) OF THE ACT AS IT STOOD BEFORE THE SAID AMENDMENT. WE FIND THAT THE CONTROVERSY RAISED IN THE ASSESSMENT ORDER IS ALREADY SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL M OTORS (I) PVT. LTD. VS. DY.CIT 354 ITR 244 (GUJ). THUS, WE DO NOT SEE ANY ANOMALY IN THE CONCLUSION DRAWN BY THE CIT(A) IN FAVOUR OF THE ASSESSEE. THUS, WE DECLINE TO INTERFERE. GROUND NO.4 OF THE REVENU ES APPEAL IS DISMISSED. 8. OTHER GROUNDS TAKEN BY THE REVENUE ARE SQUARELY AND/OR GENERAL AND DOES NOT CALL FOR ANY SPECIFIC ADJUDICATION. 9. IN THE COMBINED RESULT, APPEAL OF THE REVENUE IS DISMISSED. 10. WE SHALL NOW ADVERT TO THE CROSS OBJECTION FILE D BY THE ASSESSEE IN REVENUES APPEAL. THE CROSS OBJECTION AS CONCIS ED ON BEHALF OF THE ASSESSEE IS REPRODUCED HEREUNDER: ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 6 - 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMI SSING GROUND NO. 1 OF THE RESPONDENT'S APPEAL BEFORE HIM CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER IM PUGNED BEFORE HIM, BY OBSERVING THAT THE ASSESSMENT ORDER HAD BEEN PASSED AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE RESPONDENT, EVEN AS THE RESPONDENT'S CHALLENGE TO T HE ASSESSMENT ORDER WAS PRIMARILY ON THE GROUND THAT I T HAD BEEN PASSED WITHOUT APPLICATION OF MIND. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN SUSTA INING THE ADDITION OF RS.10,66,376 ON ACCOUNT OF INTEREST INC OME FROM BANKS ON THE GROUND THAT THE RESPONDENT HAD NOT REC ONCILED THE DIFFERENCE IN THE AMOUNTS OF INTEREST AS PER THE AI R AND THE CORRESPONDING AMOUNT ACCOUNTED IN THE RESPONDENT'S BOOKS. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOL DING THE DISALLOWANCE OF RS. 39,502 ON ACCOUNT OF INTEREST E XPENSE AND OF RS.5,68,828 ON ACCOUNT OF ADMINISTRATIVE EXPENDI TURE MADE U/S. 14A READ WITH RULE 8D, ON THE GROUND: (A) THAT THE RESPONDENT HAD FAILED TO DEMONSTRATE THAT ITS INVESTMENTS IN TAX-FREE INCOME PRODUCING ASSETS HAD BEEN MADE FROM INTEREST-FREE FUNDS BY SHOWING A CLEAR NE XUS BETWEEN THE TWO; (B) THAT IT CANNOT BE ACCEPTED THAT NO EXPENDITURE HAD EARNING EXEMPT INCOME; (C) THAT THE ASSESSING OFFICER HAD GIVEN HI S FINDING DISALLOWANCE AFTER APPLYING RULE 8D AFTER CONSIDERI NG THE EXPLANATION. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE A DDITION MADE BY THE LEARNED ASSESSING OFFICER ON THE GROUND THAT THE S FURNISHED BY THE RESPONDENT TO THE BANK SHOWED ITS CLOSING 27,18,38,000 AS AGAINST THE CLOSING STOCK AS PER IT S BALANCE RS.27,10,52,734. 5. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND N RESPONDENT'S APPEAL CHALLENGING LEVY OF INTEREST U/ S. 234A, 234B AND 234C. 6. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E RESPONDENT LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND RESPONDENT'S APPEAL CHALLENGING INITIATION OF PENALTY PRO 271(1)(C), AS BEING PREMATURE IN NATURE. ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 7 - 11. GROUND NOS. 1, 5, 6 & 7 ARE GENERAL AND/OR CONS EQUENTIAL AND THEREFORE DOES NOT CALL FOR SEPARATE ADJUDICATION. 12. GROUND NO.2 OF THE CROSS OBJECTION CONCERNS ADD ITION OF RS.10,66,376/- MADE BY THE AO ON ACCOUNT OF RECONCI LIATION OF INTEREST AS PER DATA AVAILABLE IN AIR (ANNUAL INFOR MATION REPORT) VIS- -VIS BOOKS OF ACCOUNT OF THE ASSESSEE. AS SUBMITT ED ON BEHALF OF THE ASSESSEE, THE CIT(A) HAS WRONGLY SUSTAINED THE ADDI TION OF RS.10,66,376/- ON ACCOUNT OF INTEREST INCOME FROM B ANKS ON THE GROUND THAT THE ASSESSEE HAS NOT RECONCILED THE DIF FERENCE IN THE AMOUNTS OF INTEREST AS PER THE AIR AND THE CORRESPO NDING AMOUNT ACCOUNTED IN THE BOOKS OF THE ASSESSEE. IN THIS RE GARD, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE WHOLE OF INTERE ST APPEARING IN THE AIR HAS BEEN ACCOUNTED FOR EITHER IN THE ASSESSMENT YEAR 2009-10 IN QUESTION OR IN THE SUBSEQUENT ASSESSMENT YEAR AS AN D WHEN THE INTEREST HAS BECOME ACCRUED AND DUE TO THE ASSESSEE. THE LE ARNED AR EMPHASIZED THAT NO INCOME WHATSOEVER HAS ESCAPED AS SESSMENT ON THIS SCORE. AFTER PERUSAL OF THE CASE RECORDS, WE CONSI DER IT EXPEDIENT TO SET ASIDE THE ISSUE BACK TO THE FILE OF THE AO FOR RE-EXAMINATION OF FACTS. THE ASSESSEE SHALL PROVIDE THE RECONCILIATI ON OF DIFFERENCE IN QUESTION AND SHALL SUPPORT ITS CLAIM OF TAXABILITY IN ONE OR THE OTHER YEAR. THE AO SHALL ADJUDICATE THE ISSUE IN ACCORDA NCE WITH LAW AFTER PROPER OPPORTUNITY GIVEN TO THE ASSESSEE IN THIS RE GARD. THE GROUND NO.2 OF THE CROSS OBJECTION IS THUS ALLOWED FOR STA TISTICAL PURPOSES. 13. GROUND NO.3 CONCERNS DISALLOWANCE OF RS.6,08,33 0/- UNDER S.14A READ WITH RULE 8D OF THE INCOME TAX RULES. THE DIS ALLOWANCE UNDER RULE 8D COMPRISES OF RS.39,502/- ON ACCOUNT OF INTE REST EXPENSES AND RS.5,68,828/- ON ACCOUNT OF ADMINISTRATIVE EXPENSES . THE AO OBSERVED THAT ASSESSEE HAS MADE HUGE INVESTMENTS AN D EARNED SUBSTANTIAL EXEMPT INCOME OF RS. 97,68,386/-. THE A SSESSEE HAS MADE ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 8 - A SUO MOTU DISALLOWANCE OF RS.8000/- ATTRIBUTABLE TO EXEMPT I NCOME. HOWEVER, THE AO RE-COMPUTED THE DISALLOWANCE BY APP LYING RULE 8D OF THE INCOME TAX RULES AMOUNTING TO RS.6,08,330/-. AS REGARDS DISALLOWANCE ON PROPORTIONATE INTEREST COMPONENT, W E FIND MERIT IN THE PLEA OF THE ASSESSEE THAT IN VIEW OF THE SUBSTANTIA L OWN FUNDS AVAILABLE AT THE DISPOSAL OF THE ASSESSEE IN EXCESS OF THE CO RRESPONDING INVESTMENTS GIVING RISE TO TAX FREE INCOME. THERE I S NO WARRANT FOR MAKING DISALLOWANCE IN VIEW OF LONG LINE OF JUDICIA L PRECEDENT. HOWEVER, WE DO NOT SEE ANY MERIT FOR SETTING ASIDE THE DISALLOWANCE TOWARDS ADMINISTRATIVE AND GENERAL EXPENSES PLEADED ON BEHALF OF THE ASSESSEE. THE PRESENCE OF ADMINISTRATIVE INVOLVEME NT QUA THE INVESTMENT ACTIVITY CANNOT BE RULED OUT IN VIEW OF THE STATUTORY PRESUMPTION IN THIS REGARD, UNDER RULE 8D(2)(III) O F THE IT RULES. THEREFORE, WHILE THE ASSESSEE GETS RELIEF TOWARDS D ISALLOWANCE TO THE EXTENT OF RS.39,502/- ATTRIBUTABLE TO INTEREST EXPE NSE, WE DECLINE TO INTERFERE WITH THE BALANCE DISALLOWANCE OF RS.5,68, 828/- MADE UNDER RULE 8D OF THE IT RULES. GROUND NO.3 IS THUS PARTL Y ALLOWED. 14. GROUND NO.4 CONSISTS ADDITION TOWARDS UNDER VAL UATION OF CLOSING STOCK AS SUSTAINED BY THE CIT(A) TO THE EXT ENT OF RS. 7,85,266/-. AS NOTED BY THE REVENUE AUTHORITIES, T HE ASSESSEE HAS SHOWN VALUE OF CLOSING STOCK AT THE END OF THE FINA NCIAL YEAR ON 31.03.2009 AS PER BALANCE SHEET AT RS.27,10,52,734/ - WHEREAS THE VALUE OF STOCK DECLINED AS PER STOCK STATEMENT GIVE N TO BANK AT RS.27,18,38,000/-. THE AO ACCORDINGLY HELD THAT TH E ASSESSEE HAS UNDERVALUED THE STOCK IN ITS BOOKS OF ACCOUNTS BY R S.7,85,266/-. THE CIT(A) CONFIRMED THE AFORESAID ACTION. IN THIS CON TEXT, IT CAN BE SEEN, THE CLOSING STOCK VALUE IS PEGGED AT A STAGGERING A MOUNT OF RS.27.10 CRORE ON WHICH A DISCREPANCY OF MEAGER AMOUNT OF RS .7.85 LAKHS HAS BEEN OBSERVED. NEEDLESS TO SAY, THE CLOSING STOCK STATEMENTS FILED WITH THE BANK ARE PROVISIONAL AND THERE IS ALWAYS A ROOM FOR SUCH SMALL VARIATIONS. THE STOCK STATEMENT IS ORDINARIL Y GIVEN IMMEDIATELY ITA NO. 2584/AHD/12 WITH CO NO.18/AHD/2013 [DCIT(OSD) VS. TORRENT CABLE LTD.] A.Y. 2009-10 - 9 - AT THE END OF THE FINANCIAL YEAR WHEREAS IT IS THE CASE OF THE ASSESSEE THAT THE FINALIZATION OF ACCOUNT AND AUDIT TAKES PL ACE AFTER A TIME LAG WHICH MAY GIVE RISE TO SOME SMALLER DIFFERENCES IN THE BUSINESS OF THIS SCALE. HAVING REGARD TO THE QUANTUM OF STOCK, THE ADDITION MERELY BASED ON A STOCK STATEMENT FILED WITH BANK IS NOT A T ALL JUSTIFIED. DUE TO SMALLNESS OF THE DIFFERENCE, THE BONAFIDES OF TH E ASSESSEE IS RATHER IMPLICIT. THEREFORE, WE CANNOT APPROVE A NARROW AN D PEDANTIC APPROACH OF THE REVENUE IN THIS REGARD. THE ADDITI ON ON THIS SCORE IS THEREFORE DIRECTED TO BE DELETED. GROUND NO.4 OF T HE CROSS OBJECTION OF THE ASSESSEE IS THEREFORE ALLOWED. 15. IN THE RESULT, THE CROSS OBJECTION OF THE ASSES SEE IS PARTLY ALLOWED. 16. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE IS DISMISSED WHEREAS THE CROSS OBJECTION FILED BY THE ASSESSEE I S PARTLY ALLOWED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 11/06/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 11/06/ 2018