HAGWOOD COMMERCIAL DEVELOPERS P.LTD, MUMBAI V. DCIT CEN CIR 2(3), MUMBAI

ITA 2751/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7706 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Business expenditure; Earning of tax free income
• Section: 14A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2750 / MUM . /2018 ( ASSESSMENT YEAR : 20 13 14 ) HAGWOOD COMMERCIAL DEVELOPERS P. LTD. 105/106, PROVOUGE HOUSE OFF NEW LINK ROAD, ANDHERI (E) MUMBAI 400 053 PAN AABCH7508Q . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(3), MUMBAI . RESPONDENT ITA NO. 2751 /MUM. /2018 ( ASSESSMENT YEAR : 20 13 14 ) HAGWOOD COMMERCIAL DEVELOPERS P. LTD. 105/106, PROVOUGE HOUSE OFF NEW LINK ROAD, ANDHERI (E) MUMBAI 400 053 PAN AABCH7508Q . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(3), MUMBAI . RESPONDENT ASSESSEE BY : SHRI RUSHABH MEHTA REVENUE BY : SHRI CHAITANYA ANJARIA DATE OF HEARING 02 . 01 .201 9 DATE OF ORDER 16.01.2019 2 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. O R D E R A FORESAID APPEAL S HA VE BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER S DATED 28 TH MARCH 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 48 , MUMBAI , PERTAINING TO ASSESSMENT YEAR S 20 13 14 AND 2014 15. ITA NO.2750/MUM./2018 ASSESSMENT YEAR : 2013 14 2 . IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF ` 87,64,365, REPRESENTING THE EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT. 3 . BRIEF FACTS ARE, THE ASSESSEE , A COMPANY , IS ENGAGED IN THE BUSINESS OF CONSTRUCTING A RESIDENTIAL BUILDING A M ALL AT NAGPUR. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 19 TH SEPTEMBER 2013 DECLARING LOSS OF ` 72,75,579. DURING THE ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS DEBITED EXPENSES OF ` 8 8,40,025, TO THE PROFIT & LOSS A CCOUNT CALLED UPON THE ASSESSEE TO EXPLAIN WHY SUCH CLAIM SHOULD NOT BE DISALLOWED, SINCE, THE ASSESSEE HAS NOT OFFERED ANY BUSINES S INCOME AND THE PROJECT IS STILL UNDER PROGRESS. IN REPLY DATED 23 RD FEBRUARY 2016 THE ASSESSEE JUSTIFIED THE DEDUCTION CLAIMED BY STATING THAT AS PER THE ACCOUNTING PRINCIPLE ADOPTED BY IT CONSISTENTLY IN 3 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. CONFORMITY WITH ACCOUNTING STANDARD 2 AND 7 ISSUE D BY INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI) , ALL THE CONSTRUCTION EXPENSES ARE ADDED TO CAPITAL WORK IN PROGRESS AND INDIRECT EXPENSES LIKE ADMINISTRATIVE COSTS ARE DEBIT ED TO THE PROFIT & LOSS ACCOUNT. HOWEVER , THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. REFERRING TO THE NOTES TO ACCOUNTS FORMING PART OF THE AUDITED STATEMENT OF ACCOUNT FOR THE FINANCIAL YEAR S 2009 10, 2010 11 AND 2011 12. HE OBSERVED THAT THE ASSESSEE IS NEITHE R A BUILDER AND DEVELOPER ENGAGED IN DEVELOPING REAL ESTATE FOR SALE TO CONSUMERS NOR A CONTRACTOR ENGAGED IN CONSTRUCTION ACTIVITY. THEREFORE, ACCOUNTING STANDARD 7 AND 9 WOULD NOT APPLY TO THE ASSESSEE. THOUGH, THE ASSESSING OFFICER OBSERVED THAT IN THE SUBSEQUENT ASSESSMENT YEAR S THE ASSESSEE MAY SHOW INCOME FROM THE PROJECTS UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS, HOWEVER, DURING THIS YEAR, THE BUSINESS OF THE ASSESSEE HAS NOT BEEN SET UP, HENCE, THE EXPENSES INCURRED PRIOR TO SETTING UP OF THE B USINESS AND COMMENCEMENT OF THE BUSINESS WOULD FALL UNDER THE CATEGORY OF PRE OPERATIVE EXPENSES. THUS, ON THE BASIS OF THE ABOVE OBSERVATIONS ULTIMATELY, THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE CLAIMED OF ` 87,64,365. BEING AGGRIEVED WITH SUCH DI SALLOWANCE, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. 4 . BEFORE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE REITERATED THE STAND TAKEN BEFORE THE ASSESSING OFFICER. FURTHER, THE ASSESSEE ALSO SUBMITTED THAT SIMILAR DISALLOWANCE MAD E BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2012 13 WAS DELETED BY THE TRIBUNAL. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE TRIBUNAL HAS ALLOWED ASSESSEES CLAIM ONLY UPON CONSIDERING THE ISSUE WHETHER THE ASSESSEES BUSINESS IS SET UP OR NOT. SHE OBSERVED , THE TRIBUNAL HAS NOT ADJUDICATED WHETHER THE EXPENDITURE CLAIMED SHOULD BE PART OF CAPITAL WORK IN PROGRESS. HAVING OBSERVED AS AFORESAID, LEARNED COMMISSIONER (APPEALS) ULTIMATELY HELD THAT S INCE THE PROJECT IS AT ITS INITIAL STAGES AND NOT MUCH CONSTRUCTION HAS TAKEN PLACE, THE NATURE OF EXPENSES INCURRED ARE CAPITAL IN NATURE FOR SETTING UP OF BUSINESS AND FOR LONG TERM BENEFIT OF THE PROJECT. REFERRING TO THE PROFIT & LOSS AC COUNT FOR ASSES SMENT YEAR 2013 14 AND 20 14 15, SHE OBSERVED THAT THE ASSESSEE HAS NOT OFFERED ANY REVENUE FROM BUSINESS OPERATIONS WHICH ALSO PROVES THAT THE BUILDING PROJECT IS AT THE STAGE OF INFAN CY. THEREFORE , BY APPLYING MATCHING CONCEPT, THE EXPENSES SINCE NOT RELA TABLE TO THE EARNING OF INCOME, IT CANNOT BE ALLOWED. THUS, SHE SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE HAS UNDERTAKEN A RESIDENTIAL PROJECT AS WELL AS A PROJECT FOR BUILDING A 5 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. MALL. HE SUBMITTED , FOR RECOGNITION OF REVENUE FROM THESE PROJECTS THE ASSESSEE IS CONSISTENT LY FOLLOWING THE METHOD OF ACCOUNTING AS PER ICAI GUIDELINES ISSUED VIDE AS 2, AS 7 AND AS 9. HE SUBMITTED , IN TERMS OF THE SAID GUIDELINES, EXPENDITURE RELATING TO THE CONSTRUCTION ACTIVITY ARE ADDED TO CAPITAL WORK IN PROGRESS AND INDIRECT EXPENDITURES RELATING TO ADMINISTRATIVE COSTS ARE DEBITED TO PROFIT & LOSS ACCOUNT. HE SUBMITTED , FOLLOWING THE AF ORESAID PRINCIPLE OF ACCOUNTING THE ASSESSEE HAS DEBITED EXPENDITURE IN SIMILAR MANNER IN THE PRECEDING ASSESSMENT YEARS ALSO. HE SUBMITTED , WHILE DECIDING THE DISPUTE RELATING TO IDENTICAL DISALLOWANCE MADE IN ASSESSMENT YEAR 2012 13, THE TRIBUNAL IN ITA NO.1306 /MUM./2015, DATED 8 TH FEBRUARY 2017, HAS ALLOWED ASSESSEES CLAIM. HE SUBMITTED , THERE BEING NO DIFFERENCE IN FACT IN THE IMPUGNED ASSESSMENT YEAR, THE DECISION OF THE TRIBUNAL SQUARELY APPLIES. HE SUBMITTED , THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD AND AS PER INCOME COMPUTATION AND DISCLOSURE S TANDARD III RELATING TO CONSTRUCTION CONTRACTS, INCOME HAS TO BE OFFERED ONLY AFTER THE CONSTRUCTION OF THE PROJECT EXCEEDS 25% . HE SUBMITTED , ADMINISTRATIVE EXPENDITURE INCURRED BY THE ASSESSEE RELATES TO MARKETING EXPENSES WHICH WAS NECESSARY FOR CREATING AWARENESS AMONGST PROSPECTIVE BUYERS. HE SUBMITTED , BY INCURRING SUCH EXPENDITURE THE ASSESSEE HAS RECEIVED SUBSTANTIAL ADVANCES AND IT HAS OFFERED INCOME FROM THE PROJECTS IN ASSESSMENT YEAR 2015 16 6 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. AND 2016 17. THUS, HE SUBMITTED , THE DISALLOWANCE MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS). 7 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSEE HAS UNDERTAKEN CONSTRUCTION OF A RESIDENTIAL PROJECT AS WELL AS A MALL AT NAGPUR AND SUCH CONSTRUCTION ACTIVITY IS CONTINUING FROM THE PAST YEAR S I.E., FROM ASS ESSMENT YEAR 2008 09 ONWARDS. IT IS EVIDENT, THE ASSESSEE IS FOLLOWING PERCENTAGE OF COMPLETION METHOD FOR RECOGNIZING REVENUE FROM THE AFORESAID PROJECT. AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE CONSISTENTLY FROM THE PAST YEARS, IT ADDS AL L CONSTRUCTION RELATED EXPENDITURES TO CAPITAL WORK IN PROGRESS AND ALL OTHER INDIRECT EXPENSES INCLUDING ADMINISTRATIVE COST IS DEBITED TO THE PROFIT & LOSS ACCOUNT. IT IS ALSO A FACT ON RECORD THAT THE METHOD OF ACCOUNT ING FOLLOWED BY THE ASSESSEE IS IN CONFORMITY WITH THE GUIDELINES ISSUED BY THE ICAI IN AS 2, AS 7 AND AS 9. THE DEPARTMENTAL AUTHORITIES HAVE DISALLOWED ASSESSEES CLAIM OF EXPENDITURE PRIMARILY ON THE REASONING THAT CONSTRUCTION OF THE PROJECT ARE AT THE INITIAL STAGE, HENCE, ALL EXPENDIT URE RELATING TO SUCH PROJECT HAVE TO BE TREATED AS PRE 7 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. OPERATIVE EXPENSES, HENCE, CAPITAL IN NATURE. IT IS RELEVANT TO OBSERVE , WHILE DECIDING SIMILAR ISSUE RELATING TO DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE IN ASSESSMENT YEAR 2012 13 ON IDENTICAL REASONING OF THE DEPARTMENTAL AUTHORITIES, THE TRIBUNAL IN THE ORDER CITED SUPRA HAS HELD AS UNDER: WE HAVE OBSERVED THAT ACTIVITY TOWARDS CONSTRUCTION OF MALL AND RESIDENTIAL COMPLEX WAS STARTED WAY BACK IN ASSESSMENT YEAR 2008 - 09 ONWARDS AS EMERGING FROM THE RECORDS. WE FIND THAT THE ASSESSEE IS CONSISTENTLY FOLLOWING AS - 2 & AS - 7 ISSUED BY ICAI WHICH ARE MANDATORY STANDARDS WHEREBY THE DIRECT COSTS ARE ADDED TO THE CAPITAL WORK - INPROGRESS BEING CONSTRUCTION OF THE MALL AND RESIDENTIAL COMPLEX AND ALL THE INDIRECT EXPENSES BEING GENERAL OVERHEAD ARE CHARGED TO THE P&L ACCOUNT. WE HAVE OBSERVED THAT THE ASSESSEE HAS SET UP THE BUSINESS BY ACQUIRING LAND AND OBTAINING APPROVAL FOR CONSTRUCTION OF MALL AND RESIDENTIAL COMPLEX ALTHOUGH THE MALL HAS NOT COMMENCED BUSINESS TILL THE END OF THE RELEVANT PREVIOUS YEAR . THE ASSESSEE HAS RIGHTLY CHARGED THE GENERAL OVERHEAD EXPENSES BEING INDIRECT EXPENSES INCURRED IN THE P&L ACCOUNT IN COMPLIANCE WITH AS - 2 & AS - 7 WHICH IS MANDATORY AS PER ICAI AND NOTIFI ED BY CENTRAL GOVERNMENT AS PER SECTION 211(3C) OF THE COMPANIES ACT, 1956 WHEREIN THE COMPANIES ARE STATUTORILY REQUIRED TO FOLLOW THE SAME. IT COULD NOT BE POINTED OUT BY LEARNED DR THAT HOW BY FOLLOWING THE AFORE - STATED ACCOUNTING STANDARDS WHICH ARE MA NDATORY ACCOUNTING STANDARDS, PROFITS OF THE ASSESSEE COULD NOT BE COMPUTED CORRECTLY. THE ACCOUNTING STANDARDS ISSUED BY ICAI WHICH IS AN EXPERT BODY CANNOT BE DISCARDED LIGHTLY UNLESS IT IS SHOWN THAT BY FOLLOWING THE SAID ACCOUNTING STANDARDS THE PROFIT S COULD NOT COMPUTED CORRECTLY IN ACCORDANCE WITH PROVISIONS OF SECTION 145 OF THE ACT OR THE SAID ACCOUNTING STANDARDS ARE DIRECTLY IN CONFLICT WITH PROVISIONS OF THE ACT. SECTION 3 OF THE ACT STIPULATE THAT THE PREVIOUS YEAR SHALL BE THE PERIOD BEGINNING WITH THE DATE OF SETTING UP OF THE BUSINESS OR PROFESSION OR, AS THE CASE MAY BE, THE DATE ON WHICH THE SOURCE OF INCOME NEWLY COMES INTO EXISTENCE AND ENDING WITH THE SAID FINANCIAL YEAR AND THUS IT IS NOT NECESSARY THE BUSINESS HAD ACTUALLY COMMENCED FO R CLAIMING THE EXPENSES BUT THE RELEVANT IS THE SETTING UP OF THE BUSINESS WHICH IN OUR CONSIDERED VIEW IN THE INSTANT APPEAL BUSINESS WAS SET - UP WHEN THE ASSESSEE TOOK STEPS TO PURCHASE LAND AND OBTAINED NECESSARY APPROVALS FOR SETTING UP OF MALL AND RESI DENTIAL COMPLEX AT NAGPUR. IN OUR CONSIDERED VIEW, THERE IS NO INFIRMITY IN THE WELL 8 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. REASONED ORDER OF THE LD. CIT(A) WHICH WE ARE NOT INCLINED TO INTERFERE WITH WHOM WE AGREE AS IN OUR CONSIDERED VIEW THE GENERAL OVERHEAD EXPENSES BEING INDIRECT EXPENSES WERE RIGHTLY DEBITED BY THE ASSESSEE TO THE P&L ACCOUNT AS NORMAL BUSINESS EXPENSES, KEEPING IN VIEW FACTS AND CIRCUMSTANCES OF THE CASE. WE ORDER ACCORDINGLY. 8 . THOUGH, LEARNED COMMISSIONER (APPEALS) HAS MADE AN ATTEMPT TO DISTINGUISH THE AFORESAID DECIS ION OF THE TRIBUNAL BY OBSERVING THAT THE TRIBUNAL HAS NOT DECIDED THE ISSUE WHETHER THE PRE OPERATIVE EXPENSES HAVE TO BE ADDED TO THE CAPITAL WORK IN PROGRESS, HOWEVER, ON A CAREFUL READING OF THE DECISION OF THE TRIBUNAL AS REPRODUCED HEREIN ABOVE, IT I S VERY MUCH CLEAR THAT THE TRIBUNAL BEING CONSCIOUS OF THE FACT THAT THE ASSESSEE BY CONSISTENTLY FOLLOWING AS 2 AND AS 7, WAS ADDING DIRECT COST TO THE CAPITAL WORK IN PROGRESS AND ALL INDIRECT EXPENSES BEING GENERAL OVERHEAD ARE DEBITED TO THE PROFIT & L OSS ACCOUNT HAS ALLOWED ASSESSEES CLAIM BY HOLDING THAT GENERAL OVERHEAD EXPENSES BEING INDIRECT EXPENSES HAVE BEEN RIGHTLY DEBITED BY THE ASSESSEE TO THE PROFIT & LOSS ACCOUNT AS NORMAL BUSINESS EXPENSES. THE AFORESAID OBSERVATION OF THE TRIBUNAL IS VERY MUCH CLEAR AND LEAVES NO ROOM FOR AMBIGUITY. THEREFORE, THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) THAT THE TRIBUNAL HAS NOT DECIDED THE ISSUE, IN MY VIEW, IS UNACCEPTABLE AND IS CONTRARY TO THE FACTS ON RECORD. SINCE , THE RE IS NO DIFFERENCE I N THE FACTUAL BASIS UPON WHICH THE DISALLOWANCE OF EXPENDITURE WAS MADE IN ASSESSMENT YEAR 2012 13 9 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. AND IN THE IMPUGNED ASSESSMENT YEAR, IN MY CONSIDERED OPINION, THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2012 13 REFERRED TO ABOVE , SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, I DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 9 . IN VIEW OF MY DECISION IN GROUND NO.1 AS AFORESAID, THE ISSUE RAISED IN GROUND NO.2, HAS BECOME REDUNDANT, HENCE, DOES NOT REQUIRE ADJUDICATION. ACCORDINGLY, GROUND NO.2, IS DISMISSED. 10 . IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF ` 19,45,213, UNDER SECTION 14A OF THE ACT. 11 . BRIEF FACTS ARE, IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS EARNED EXEMPT INCOME AND THE INVESTMENTS MADE BY THE ASSESSEE IN EXEMPT INCOME YIELDING ASSETS STANDS AT ` 56 CRORE , CA LLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE UNDER SECTION 14A R/W RULE 8D SHOULD NOT BE MADE. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAS ALREADY MADE A DISALLOWANCE OF ` 8,54,787 BY ATTRIBUTING THE EXPENSES RELATABLE TO THE EARNING OF EX EMPT INCOME. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND PROCEEDED TO COMPUTE DISALLOWANCE UNDER RULE 10 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. 8D(2)(III) AT ` 19,45,213. THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPEL LATE AUTHORITY, HOWEVER, SHE DID NOT ENTERTAIN THE GROUND , SINCE , IN THE COMPUTATION OF INCOME THE ASSESSING OFFICER HAS NOT MADE ANY SEPARATE DISALLOWANCE UNDER SECTION 14A OF THE ACT. 12 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR IS ` 7 LAKH, WHEREAS, THE ASSESSEE HAS VOLUNTARILY DISALLOWED AN AMOUNT OF ` 8,54,787. THUS, HE SUBMITTED , NO FURTHER DISALLOWANCE IS CALLED FOR. 13 . THE LEARNED DEPARTMENTAL REPRESENTAT IVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS). 14 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE SPECIFIC CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE BEFORE ME IS, SINCE THE DISALLOWANCE MADE B Y THE ASSESSEE UNDER SECTION 14A OF THE ACT EXCEEDS THE EXEMPT INCOME EARNED IN THE RELEVANT PREVIOUS YEAR, NO FURTHER DISALLOWANCE SHOULD BE MADE. I FIND SUBSTANTIAL MERIT IN THE AFORESAID SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENT ATIVE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO VERIFY THE AFORESAID CLAIM OF THE ASSESSEE AND IN CASE IT IS FOUND THAT THE DISALLOWANCE MADE BY THE ASSESSEE VOLUNTARILY UNDER 11 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. SECTION 14A OF THE ACT IS MORE THAN THE EXEMPT INCOME EARNED IN THE RELEVA NT PREVIOUS YEAR, NO FURTHER DISALLOWANCE SHOULD BE MADE OVER AND ABOVE THE AMOUNT OF ` 8,54,787, MADE BY THE ASSESSEE ITSELF. THIS GROUND IS ALLOWED. 15 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ITA NO.2750/MUM./2018 ASSESSMENT YEAR : 2013 14 16 . GROUND NO.1, IS IDENTICAL TO GROUND NO.1 OF ITA NO.2751/MUM./ 2018. FOLLOWING OUR DECISION THEREIN, I DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 17 . GROUND NO.2, IS IDENTICAL TO GROUND NO.2 OF ITA NO.2751/MUM./ 2018. FOLLOWING OUR DECISION THEREIN , I DISMISS THE GROUND RAISED. 18 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. 19 . TO SUM UP, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.2019 SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 16.01.2019 12 HAGWOOD COMMERCIAL DEVELOPERS P. LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI