Ausom International Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(3), Surat

ITA 261/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1820 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Business expenditure; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM, & SHRI MANISH BORA D, AM. ITA NO. 261/AHD/2012 ASST. YEAR:2008-09 AUSOM INTERNATIONAL P. LTD., 601, SWAGAT, C.G. ROAD, ELLISBRIDGE, AHMEDABAD. VS. ITO, WD-1(3), AHMEDABAD. APPELLANT RESPONDENT PAN AABCN 0895Q APPELLANT BY SHRI M. K. PATEL, AR RESPONDENT BY SHRI DINESH SINGH, SR.DR DATE OF HEARING: 4/4/2016 DATE OF PRONOUNCEMENT: 6/4/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST THE OR DER OF LD. CIT(A) 6, AHMEDABAD IN APPEAL NO.CIT(A)-VI/ITO/WD-1 (3)/160/10-11. ASSESSMENT U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) WAS FRAMED ON 14.12.2010 FOR ASST. YEAR 2008-09 BY ITO, WD-1(3), AHMEDABAD. GROUNDS OF APPEAL RAISED BY ASSESSEE ARE AS UNDER :- 1. THAT ON FACTS AND IN LAW THE LD. CIT(A) HAS GRIE VOUSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS.19,67,261/- MADE U/S 14A OF THE ACT. ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 2 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND ANY GROUND OF APPEAL. 2. FROM GOING THROUGH THE FILE, WE OBSERVE THAT ASS ESSEE HAS FILED THE APPEAL LATE BY 62 DAYS. ON BEING ASKED ABOUT TH E REASON FOR DELAY IN FILING THE APPEAL, LD. AR SUBMITTED THAT A FTER RECEIVING THE ORDER FROM LD. CIT(A) ASSESSEE HAD TO MOVE URGENTLY TO HIS NATIVE PLACE IN UTTAR PRADESH DUE TO ILL HEALTH OF HIS MOT HER AND OTHER FAMILY PROBLEMS. LAST DATE FOR FILING THE APPEAL WAS 29.11 .2012 WHEREAS ASSESSEE RETURNED FROM HIS NATIVE PLACE ON 3 RD WEEK OF JANUARY, 2012 DUE TO WHICH THIS DELAY OCCURRED AND LD. AR ALSO PL ACED ON RECORD AN AFFIDAVIT SIGNED BY THE PERSON ON BEHALF OF THE ASS ESSEE. 3. AFTER CONSIDERING THE SUBMISSIONS OF LD. AR AND GOING THROUGH THE AFFIDAVIT PLACED ON RECORD, WE ARE OF THE VIEW THAT ASSESSEE WAS PREVENTED BY SUFFICIENT REASON FROM FILING THE APPE AL IN THE STATUTORY TIME LIMIT AND, THEREFORE, WE CONDONE THE DELAY OF 62 DAYS AND ADMIT THE APPEAL FOR HEARING. 4. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF TRADING GOLD, SILVER AND SHARES & SECURITIES. IT FI LED ITS RETURN OF INCOME ON 29.9.2008 DECLARING TOTAL INCOME OF RS.7,08,732/ -. CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143 (2) DATED 4.8.2009 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 10.8.2008. THE CASE ALONG WITH VARIOUS DETAILS WAS DISCUSSED B EFORE LD. ASSESSING OFFICER. DURING THE YEAR UNDER APPEAL ASS ESSEE HAD DERIVED DIVIDEND INCOME OF RS. 2,07,300/- FROM VARI OUS MUTUAL FUNDS ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 3 AND SHARES AND SECURITIES. LD. ASSESSING OFFICER WA S OF THE VIEW THAT ASSESSEE HAS NOT MADE ANY DISALLOWANCE OF EXPENDITU RE U/S 14A OF THE ACT FOR EARNING EXEMPT INCOME AND WENT AHEAD T O APPLY RULE 8D OF THE IT RULES, 1962 AND WORKED OUT DISALLOWANCE O F RS.79,67,261/- AND ASSESSED THE INCOME AT RS.86,75,993/-. 5. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) WHO DISMISSED THE GROUNDS OF APPEAL AND CONFIRMED THE A DDITION BY OBSERVING AS UNDER :- 2.3 1 HAVE CONSIDERED THE FACTS OF THE CASE; ASSESS MENT ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER MADE DISALLOWANCE OF: EXPENSE REL ATING TO EXEMPT INCOME. SUCH DISALLOWANCE WAS CONSIDERED NECESSARY SINCE APPELLANT -DID NOT D ISALLOW ANY PART OF INTEREST AND OTHER EXPENSES TREATING THE SAME AS RELATING TO INVESTMEN T RESULTING IN EXEMPT INCOME. NOW RULE 8D IS HELD TO BE APPLICABLE WITH EFFECT FROM ASSESSMENT Y EAR 2008-09 BY BOMBAY HIGH COURT, THE DISALLOWANCE OF EXPENSES RELATING TO EXEMPT INCOME ARE TO BE MADE BY THE METHOD PRESCRIBED IN THE SAID RULE. IT IS NOT IN DISPUTE THAT APPELLANT EARNED EXEMPT INCOME IN THE FORM OF DIVIDEND ON INVESTMENT 'AND TRADING STOCK OF MORE THAN R$ 290 L ACS. APPELLANT PAID INTEREST OF RS 80.88 LACS ON BORROWED FUNDS USED FOR BUSINESS PURPOSES A S WELL AS MAKING INVESTMENTS. APPELLANT INCURRED SUBSTANTIAL EMPLOYEES' REMUNERATION AND OT HER ADMINISTRATIVE EXPENSES, PART OF. WHICH MAY RELATE TO INVESTMENT RESULTING IN EXEMPT INCOME . SIMILARLY PAYMENT OF INTEREST WILL ALSO PARTLY RELATE TO INVESTMENT AND TRADING RESULTING IN EXEMP T INCOME THEREFORE DISALLOWANCE UNDER SECTION 14 A ON ACCOUNT OF INTEREST AND OTHER EXPENSES ARE NECESSARY. COMING TO THE METHOD OF COMPUTATION OF DISALLOWANC E UNDER SECTION U A, ASSESSING OFFICER DISALLOWED EXPENSES RELATABLE TO EXEMPT INC OME AS PER RULE 8D WHICH IS MANDATORY FROM ASSESSMENT YEAR 2008-09. FOR INTEREST, PROPORTIONAT E EXPENSE IS DISALLOWABLE WHEREAS FOR OTHER EXPENSES ,5% OF AVERAGE INVESTMENT VALUE IS DISALLO WABLE. CONSIDERING THE FOCI THAT APPELLANT CLAIMED HUGE .ADMINISTRATIVE AND OTHER EXPENSES, TH E DISALLOWANCE OF ADMINISTRATIVE EXPENSES MADE BY THE ASSESSING OFFICER @.5% OF INVESTMENT RESULTING IN EXEMPT INCOME IS AS PER .THE FORMULA GIVEN IN RULE 8D WHICH IS MANDATORY FOR MAK ING DISALLOWANCE. IN VIEW OF THIS THE ADDITION @ .5% OF INVESTMENT RESULTING IN EXEMPT INCOME MADE BY THE ASSESSING OFFICER IS CONFIRMED, AS REGARDS INTEREST, APPELLANT HAD BORROWED FUNDS O N WHICH -INTEREST WAS PAID. WHILE MAKING INVESTMENTS, BOTH BORROWED FUNDS AS WELL AS OWN FUNDS WERE USED HENCE ONE CANNOT SAY THAT BORROWED FUNDS WERE USED ONLY FOR BUSINESS PUR POSE AND OWNED CAPITAL WAS ONLY USED FOR INVESTMENT. ADMITTEDLY NO SEPARATE ACCOUNTS ARE MAI NTAINED FOR BUSINESS AND INVESTMENT ACTIVITIES THEREFORE APPELLANT'S CLAIM IS NOT JUSTI FIED THAT BORROWED FUNDS WERE NOT USED IN MAKING INVESTMENT.' THEREFORE IN THE ABSENCE OF CLEAR CUT DETAILS OF UTILIZATION OF FUNDS, THE FORMULA GIVEN IN RULE 8D WHICH IS MANDATORY FROM THIS YEAR ONWARD IS TO BE APPLIED. THE DECISIONS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE IN VIEW OF THE FACT THAT DIVIDEND RECEIVABLE ON EVEN TRADING STOCK IS EXEMPT AND DISALLOWANCE OF EXPENSES ARE TO BE MADE. SINCE ASSESSING OFFICER WORKED OUT INTEREST DISALLOWANCE AS PER RULE 8D, THE INTER EST DISALLOWANCE IS CONFIRMED. THESE GROUNDS ARE ACCORDINGLY DISMISSED. ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 4 6. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 7. LD. AR SUBMITTED THAT LD. ASSESSING OFFICER HAS MADE DISALLOWANCE U/S 14A OF THE ACT OF RS.79,67,261/- W ITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS EARNED EXEM PT INCOME DURING THE YEAR ONLY AT RS.2,07,300/- AND LD. ASSESSING OF FICER HAS ALSO IGNORED THE FACT THAT ASSESSEE IS ENGAGED IN THE BU SINESS OF TRADING OF SHARES AND SECURITIES AND NOT AS INVESTOR AND TH E DIVIDEND INCOME WAS INCIDENTAL IN NATURE. LD. AR ALSO REFERRED AND RELIED TO THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF M/S K. RATANCHAND & CO. VS. ITO IN ITA NO.2660/AHD/2011 FOR ASST. YEAR 2008 -09 WHEREIN ON SIMILAR FACTS WHEREIN ASSESSEE WAS CARRYING ON BUSI NESS OF TRADING IN SHARES AND SECURITIES AND EARNED DIVIDEND INCOME OF RS.58,963/- AND DISALLOWANCE WAS MADE U/S 14A OF THE ACT AND IN THE SE GIVEN FACTS CO-ORDINATE BENCH DECIDED THE ISSUE BY RESTRICTING THE DISALLOWANCE U/S 14A OF THE ACT ONLY TO THE EXTENT OF EXEMPT INC OME EARNED BY THE ASSESSEE DURING THE YEAR. 8. ON THE OTHER HAND, LD. DR SUBMITTED THAT EVEN IF ASSESSEE HAS EARNED A MEAGER AMOUNT OF DIVIDEND INCOME AT RS. 2, 07,300/- BUT THE ASSESSEE HAS SHOWN SHARES AND SECURITIES AS INVENTO RY AT RS.1,90,79,378/- WHICH IS A SUBSTANTIAL AMOUNT AND ASSESSEE HAS ALSO CLAIMED EXPENDITURE OF INTEREST. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. SOLITARY GRIEVANCE OF THE ASSESSEE IS AG AINST THE ACTION OF LD. CIT(A) CONFIRMING THE ADDITION OF RS. 19,67,261 /- ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE ACT R.W.RULE 8D OF THE IT RULES. FROM ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 5 GOING THROUGH THE ASSESSMENT ORDER WE OBSERVE THAT ASSESSEE HAS EARNED DIVIDEND INCOME AT RS.2,07,300/- AND IT IS A LSO UNDISPUTED FACT THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TR ADING OF SHARES AND SECURITIES. FROM GOING THROUGH THE DECISION OF THE CO-ORDINATE BENCH REFERRED AND RELIED ON BY LD. AR IN THE CASE OF M/S K. RATANCHAND & CO. VS. ITO (SUPRA), WE FIND THAT THE ISSUE RAISED IN THE APPEAL BEFORE US IS FULLY COVERED BY THE DECISION O F THE CO-ORDINATE BENCH WHEREIN SIMILAR ISSUES CAME UP BEFORE THE TRI BUNAL AND IT HAS BEEN HAVE HELD THAT IN SUCH CASES DISALLOWANCE U/S 14A SHOULD NOT EXCEED EXEMPT INCOME EARNED BY THE ASSESSEE. WHILE DECIDING SO CO-ORDINATE BENCH HAS OBSERVED AS UNDER :- 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS AVAILABLE RECO RDS INCLUDING PAPER BOOK AND CASE LAWS RELIED BY THE LD. AR. ADDITION OF RS.4,04 ,204/- HAS BEEN MADE BY THE AO AGAINST DIVIDEND INCOME OF RS.58,963/-. NOTHING CONTRARY HAS BEEN BROUGHT TO THE FACT THAT ASSESSEE IS A DEALER IN SHARES AND PROFIT IN SHARE BUSINESS HAS BEEN SHOWN BY THE ASSESSEE UNDER THE HEAD INCOME F ROM BUSINESS. A.O. HAS NOT MADE ANY SPECIFIC FINDING TO SUPPORT THE DISALL OWANCE MADE BY HIM. FURTHER IN CASE OF ZAVERI VIRJIBHAI MANDALIA VS. ACIT IN I TA NO.469/AHD/2007 FOR AY 2004-05, THE CO-ORDINATE BENCH HELD WHERE THE ASSES SEE IS A DEALER IN SHARE AND PROFIT IN SHARE BUSINESS IS TAXED AS BUSINESS I NCOME SECTION 14A OF THE ACT DOES NOT APPLY. THE RELEVANT PORTION OF THE DECISIO N IS REPRODUCED BELOW - 12. IN THE PRESENT CASE BEFORE US IT IS SEEN THAT THE ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF SHARES, THE INCOME FROM WHICH IS ALSO ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND PR OFESSION. THE ASSESSEE HAD BORROWED FUNDS FROM KOTAK MAHINDRA INV ESTMENT LTD. FOR THE PURPOSE OF PURCHASE OF UNITS AND SHARES WHICH I N FACT HAVE BEEN UTILIZED FOR PURCHASE OF UNITS AND SHARES. THE ASSE SSEE HAS PAID INTEREST ON THE AMOUNT BORROWED FROM KOTAK MAHINDRA INVESTME NT LTD. THESE FACTS HAVE NOT BEEN CONTROVERTED BY REVENUE. THE ASSESSEE HAS INCURRED INTEREST EXPENSES FOR PURCHASE OF SHARES AND UNITS OF MUTUAL FUND AND THE BORROWED FUNDS HAVE BEEN USED FOR ACQUISITION OF UN ITS ARE IN DISPUTE. THE AO ALSO HELD THAT ASSESSEE IS IN THE BUSINESS OF PU RCHASE/SALE OF SHARES AND WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) T HE LOSS OF RS.1,51,21196 INCURRED ON THE SALE/PURCHASE OF UNIT S HAS BEEN TREATED AS ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 6 BUSINESS LOSS. IN VIEW OF THE AFORESAID FACTS, IT C AN BE STATED THAT ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF SHARES. ONCE THE PURCHASE AND SALE OF SHARES IS HELD TO BE A BUSINES S ACTIVITY, THE INTEREST PAID THEREON HAS TO BE TREATED AS BUSINESS EXPENSES IN VIEW OF THE HONBLE HIGH COURT DECISION IN THE CASE OF ADDL. CI T VS. LAXMI AGENTS (SUPRA). THUS FOLLOWING THE DECISION OF THE CO-ORDI NATE BENCH AND THE HONBLE HIGH COURT, WE ARE OF THE VIEW THAT IN THE PRESENT FACTS OF THE CASE, THE INTEREST EXPENSES INCURRED BY THE ASSESSE E HAVE TO BE TREATED AS BUSINESS EXPENSES AND NO DISALLOWANCE CAN BE MAD E UNDER SEC.14A. WE ACCORDINGLY DIRECT THE DELETION OF THE DISALLOWA NCE MADE BY AO. THUS THIS GROUND OF ASSESSEE IS ALLOWED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 7. FURTHER IN THE CASE OF JIVRAJ TEA LTD. VS. DCIT, CIRCLE-1, SURAT IN ITA NO.866/AHD/2012 AND OTHERS, THE CO-ORDINATE BENCH H ELD THAT DISALLOWANCE UNDER SECTION 14A CANNOT BE MORE THAN THE EXEMPT IN COME. THE RELEVANT PORTION OF THE DECISION IS REPRODUCED BELOW- 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEE RECEIVED EXEMPT DIVIDEND INCOME OF RS.900/-. THE ASSESSING OFFICER WAS OF THE OPINION THAT EXPENDITU RE INCURRED FOR EARNING THE EXEMPT DIVIDEND INCOME WAS NOT ALLOWABL E TO THE ASSESSEE AND THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE TOWARDS THE EARNING OF THE EXEMPTED DIVIDEND INCOME, HE BY INVO KING THE PROVISIONS OF SECTION 14A COMPUTED EXPENDITURE ATTR IBUTABLE TO THE EARNING OF EXEMPT DIVIDEND INCOME UNDER RULE 8D OF THE INCOME-TAX RULES AND MADE DISALLOWANCE FOR INTEREST EXPENDITUR E OF RS.1,49,710/- AND ADMINISTRATIVE EXPENSES OF RS.12,750/-. THE ASS ESSEE UNSUCCESSFULLY APPEALED BEFORE THE CIT(A). THE CONT ENTION OF THE ASSESSEE IS THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE IN THE FORM OF SHARE CAPITAL AND FREE RESERVES AS ON T HE DATE OF BALANCE- SHEET WAS RS.17,86,69,501/- AND THE INVESTMENTS AT THE END OF THE YEAR WAS AT RS.1,26,00,538/- ONLY. THEREFORE, IN VI EW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF HI TACHI HOME AND LIFE SOLUTIONS (I) LTD. (SUPRA) AND TORRENT POWER LTD. ( SUPRA), NO DISALLOWANCE TOWARDS INTEREST EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME CAN BE MADE. REGARDING THE DISALLOWANCE OF A DMINISTRATIVE EXPENSES OF RS.12,750/-, WE FIND THAT THE CHANDIGAR H BENCH OF THE TRIBUNAL IN THE CASE OF A.C.I.T. VS. PUNJAB STATE C OOP & MARKETING FED. LTD. IN ITA NO. ITA NO.548/CHD/2011 FOR AY 2007- 08 HAS HELD THAT DISALLOWANCE U/S. 14A READ WITH RULE 8D CANNOT EXCE ED THE EXEMPT DIVIDEND INCOME. THEREFORE, WE RESTRICT THE DISALLO WANCE OF ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 7 ADMINISTRATIVE EXPENSES TO RS.900/- ONLY, BEING THE EXEMPT DIVIDEND INCOME EARNED BY THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. THE FACTS OF THE CASE OF ASSESSEE ARE WELL COVER ED BY THE ABOVE REFERRED JUDICIAL PRONOUNCEMENTS OF THE CO-ORDINATE BENCHES. SO MUCH SO THAT IT IS UNDOUBTED THAT ASSESSEE IS A DEALER IN SHARES, TRAD ING OF SHARES HAS BEEN SHOWN AS INCOME FROM BUSINESS, STOCK IN TRADE IN SHARES I S AT RS.41,16,992 INVESTMENT IN SHARES NOT HELD FOR BUSINESS ARE ONLY RS.51,000, AND DIVIDEND INCOME EARNED DURING THE YEAR IS RS.58,963. HOWEVER, ASSESSEE HAS MAINTAINED SAME BOOKS OF ACCOUNTS FOR HIS BUSINESS OF TRADING IN CLOTH, TRAD ING IN SHARES, COMMISSION INCOME, INCOME FROM REAL ESTATE AND EXEMPT INCOME. THERE IS NO BIFURCATION AVAILABLE ON RECORD TO SEGREGATE THE ENTIRE EXPENSE S INCURRED ON THE TYPE OF BUSINESS ACTIVITIES CARRIED ON AND SOME ELEMENT OF COST FOR EARNING EXEMPT INCOME CANNOT BE IGNORED IN THESE CIRCUMSTANCES. TH E ASSESSEE HAS DEMONSTRATED THAT IT HAS CARRIED OUT THE BUSINESS A CTIVITY OF SALE AND PURCHASE OF SHARES. THE REVENUE ON THE OTHER HAND COULD NOT PLA CE ANY CONTRARY MATERIAL ON RECORD. THEREFORE, IN THE LIGHT OF DECISION OF THE CO-ORDINATE BENCHES WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS NOT JUSTIFIED I N INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. THE DIVIDEND SO EARNED IS I NCIDENTAL TO NORMAL BUSINESS ACTIVITIES OF THE ASSESSEE. MOREOVER, THE AO HAS MA DE DISALLOWANCE OF RS.4,04,204/- WHEREAS THE ASSESSEE HAS EARNED EXEMP T INCOME IN THE FORM OF DIVIDEND OF RS.58,963/-. EVEN ASSUMING THAT SOME EX PENDITURE IS REQUIRED TO BE DISALLOWED BUT SUCH DISALLOWANCE SHOULD NOT EXCEED THE QUANTUM OF EXEMPT INCOME. THEREFORE, IN VIEW OF THE DECISION OF THE C O-ORDINATE BENCHES WE HEREBY HOLD THAT THE ADDITION UNDER SECTION 14A CANNOT BE MORE THAN THE EXEMPT INCOME AND SHOULD THEREFORE BE RESTRICTED TO RS.58,963/-. THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE CO -ORDINATE BENCH IN THE CASE OF M/S K. RATANCHAND & CO. VS. ITO (SUPRA ), WE ARE OF THE VIEW THAT ON THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE, DISALLOWANCE U/S 14A OF THE ACT SHOULD BE RESTRICTE D TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESSEE AT RS. 2,07,30 0/-. 10. OTHER GROUND IS OF GENERAL NATURE, WHICH NEEDS NO ADJUDICATION. ITA NO. 261/AHD/2012 ASST. YEAR 2008-09 8 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6/4/2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 6/4/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 4/4/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 6/4/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7/4/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: