MOTILAL OSWAL SECURITIES LTD, MUMBAI V. ACIT CC 3(3), MUMBAI

ITA 2820/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7839 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 19-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Depreciation; Earning of tax free income; Cost of acquisition; Speculation loss; Bad and doubtful debts
• Section: 143(3); 14A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 2820/MUM/2017 (ASSESSMENT YEAR 20 12-13 ) M/S MOTILAL OSWAL SECURITIES LTD., MOTILAL OSWAL TOWER, GOKHALE ROAD NORTH, PRABHADEVI, MUMBAI-400025. PAN: AAACD3654Q VS. ACIT CC- 3(3), ROOM NO. 1923, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. APPELLANT RESPONDE NT ITA NO. 2841/MUM/2017 (ASSESSMENT YEAR 2012-13 ) ACIT CC- 3(3), ROOM NO. 1923, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. VS. M/S MOTILAL OSWAL SECURITIES LTD., MOTILAL OSWAL TOWER, GOKHALE ROAD NORTH, PRABHADEVI, MUMBAI-400025. PAN: AAACD3654Q APPELLANT RESPONDE NT REVENUE BY : SHRI VIJAY MEHTA WITH SHRI ANUJ KISNADWALA (AR) ASSESSEE BY : SHRI CHAUDHARY ARUN KUMAR SINGH (DR) DATE OF HEARING : 28.12.2018 DATE OF PRONOUNCEMEN T : 2812.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE CROSS-APPEAL ARE DIRECTED AGAINST THE ORDER O F LD. COMMISSIONER OF INCOME-TAX(APPEALS)-51, [FOR SHORT THE LD. CIT(A)], MUMBAI DATED 30 TH JANUARY 2017, WHICH IN TURN ARISES FROM ASSESSMENT ORDER DATED 27 TH MARCH 2015 PASSED UNDER SECTION 143(3) FOR ASSESSMENT YEA R 2012-13. THE ASSESSEE IN ITS APPEAL HAS RAISED FOLLOWING GROUND OF APPEAL: ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED COMMISSIONER APPEAL ERRED IN UPHOLDING THE DISALLOW ANCE UNDER SECTION 14 A READ WITH RULE 8D MADE BY ASSESSING OFFICER AM OUNTING TO RS. 1,62,45,627/-. 2. IN ITA NO. 2841/MUM/2017, THE REVENUE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF BAD DEBTS AND F AILED TO APPRECIATE THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS STIPULATE D U/S 36(1)(VII) READ WITH SECTION 36(2) OF THE IT ACT.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF BAD DEBTS AND F AILED TO APPRECIATE THAT THE ASSESSEE BEING A SHARE BROKER WILL ADJUST THE DEPOS IT AMOUNT RECEIVED FROM THE CLIENT AGAINST THE DUES FROM THE CLIENTS AND HENCE THE BAD DEBT CLAIMED BY ASSESSEE WAS NOT ALLOWABLE IN VIEW OF PROVISIONS OF SECTION 36(1)(VII) R.W SC. 360 OF THE IT ACT.' 3. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN ALLOWING THE DEPRECIATION @ 60% INSTEAD OF 25% ALLO WED BY THE ASSESSING OFFICER ON VSAT AND ERRED IN HOLDING THAT THE VSAT IS A PART OF COMPUTER AND HENCE ELIGIBLE FOR DEPRECIATION @ 60% WITHOUT APPRE CIATING THE FACT THAT VSAT IS ESSENTIALLY A PART OF WIRELESS COMMUNICATION SYSTEM THROUGH SATELLITE WHICH IS EXCLUSIVE FROM THE COMPUTER SYSTEM AND ELIGIBLE FOR DEPRECIATION @ 25%.' 4. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THE FACT THAT THE AO HAS RIGHTLY TREATED THE VANDA LOSS AS SPECULATION LOSS AS PR SECTION 73 OF THE IT ACT.' 5. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE DISAL LOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CUSTOMER RIGHTS WITHOUT APPRE CIATING THAT THE FACT THAT IT COMES WITHIN THE PURVIEW OF BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE THEREBY MAKING IT ELIGIBLE FOR DEPRECATION U/S 32.' 6. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS.6,72,919/- CLAIMED ON FIXED ASSETS ACQUIRED FROM M/S PCML.' 7. THE APPELLANT CRAVES TO LEAVE, TO ADD, TO AMEND AND / OR TO ALTER ANY OF THE GROUND OF APPEAL, IF NEED BE. 8. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATE ABOVE, THE ADDITIONAL GROUNDS OF APPEAL OF THE ASSESSEE MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 3 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMP ANY ENGAGED IN THE BUSINESS OF STOCK BROKING AND MEMBER OF BOMBAY STOC K EXCHANGE (BSE) AND NATIONAL STOCK EXCHANGE (NSC). THE ASSESS EE ALSO PROVIDES SERVICE OF PORTFOLIO MANAGEMENT AND A DEPOSITORY PA RTICIPANT IS A PART OF ITS BUSINESS. THE ASSESSEE FILED ITS RETURN OF INCO ME FOR RELEVANT ASSESSMENT YEAR ON 29 TH OF NOVEMBER 2012 DECLARING TOTAL INCOME OF RS. 98,24,37,170/-. THE ASSESSMENT WAS COMPLETED ON 27 TH MARCH 2015 UNDER SECTION 143(3). THE ASSESSING OFFICER WHILE P ASSING THE ASSESSMENT ORDER MADE VARIOUS ADDITIONS AND DISALLO WANCES CONSISTING OF DISALLOWANCE UNDER SECTION 14A OF RS. 1,62,45,6 27/-. DISALLOWED BAD DEBTS CLAIM OF RS. 57,28,517/-, ALLOWED DEPRECIATIO N ONLY @ 25% IN PLACE OF 60% ON VSAT AND DISALLOWED DEPRECIATION OF RS. 6,72,919/- ON FIXED ASSET ACQUIRED FROM PENISULAR CAPITAL MARKET LTD. (PCML). ON APPEAL BEFORE THE LD. CIT(A), ALL ADDITION/DISALLOW ANCE WAS DELETED EXCEPT CONFIRMING THE DISALLOWANCE UNDER SECTION 14 A. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), BOTH THE PART IES HAVE FILED THEIR RESPECTIVE APPEAL RAISING THE GROUNDS OF APPEAL AS MENTIONED ABOVE. 4. WE HAVE HEARD THE SUBMISSION OF LD. AR OF THE ASSES SEE AND LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. ITA NO. 2841/MUM/2017 BY REVENUE 5. AT THE OUTSET OF HEARING, THE LD. AR OF THE ASSESSE E SUBMITS THAT ALL THE GROUND NO. 1 TO 5 OF THE APPEAL RAISED BY REVENUE I N THEIR APPEAL IN ITA ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 4 NO. 2841/MUM/2017 ARE COVERED BY VARIOUS DECISION O F TRIBUNAL IN ASSESSEES OWN CASE. THE LD. AR OF THE ASSESSEE FUR THER FURNISHED A TABULATED CHART SHOWING THE VARIOUS GROUNDS OF APPE AL COVERED BY THE DECISION OF ORDER OF TRIBUNAL FOR A.Y. 2007-08 TO A .Y. 2011-12. THE LD. AR OF THE ASSESSEE ALSO FURNISHED THE COPY OF DECIS ION OF TRIBUNAL. 6. ON GOING THROUGH THE DETAILS PROVIDED IN THE TABULA TED CHART AND THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y . 2007-08 AND A.Y. 2008-09, 2009-10 & 2010-11, THE LD. DR AGREED THAT SIMILAR ISSUES WERE DECIDED BY TRIBUNAL. THE LD. DR SUBMITS THAT HE REL IED ON THE ORDER OF ASSESSING OFFICER ON ALL GROUNDS OF APPEAL RAISED B Y REVENUE. 7. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AND PE RUSED THE VARIOUS GROUNDS OF APPEAL AND THE ORDERS OF LOWER AUTHORITI ES. GROUND NO. 1 & 2 RELATES TO BAD DEBT. WE HAVE NOTED THAT THE LD. CIT (A) DELETED THE ADDITION BY RELYING UPON THE DECISION OF TRIBUNAL I N ASSESSEES OWN CASE FOR A.Y. 2007-08. WE HAVE NOTED THAT IN APPEAL FOR A.Y. 2007-08, THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL AND THE TRIBUNAL BY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HI GH COURT IN CIT VS. SHREYAS MORAKHIA (342 ITR 285) AND CIT VS. BONANZA PORTFOLIO (322 ITR 178 (DEL.) DISMISSED THE GROUND OF APPEAL RAISE D BY REVENUE. WE HAVE FURTHER NOTED THAT THE SIMILAR GROUND OF APPEA L WAS CONSIDERED BY TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 IN ITA NO. 7328/MUM/2011 AND BY FOLLOWING THE ORDER OF TRIBUNA L IN ASSESSEES ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 5 OWN CASE FOR A.Y. 2007-08, THE ASSESSEE WAS GRANTED THE RELIEF WITH THE FOLLOWING ORDER: 7. IN THE ASSESSMENT YEAR 2009-2010, THE REVENUE I S AGGRIEVED FOR DISALLOWANCE OF CLAIM OF BAD DEBTS. FROM THE RECORD WE FOUND THAT THE ASSESSEE CLAIMED BAD DEBTS OF RS.3,02,30,904/- WHIC H IS ALSO WRITTEN OFF TO P/L ACCOUNT. THE BROKERAGE EARNED IN RESPECT OF THE SAID PARTIES IN LAST 3 YEARS AMOUNTED TO RS.1,36,63,844/-. BY THE IMPUGNED ORDER AFTER GIVING DETAILED FINDING THE CIT(A) HAS DELETED DISALLOWANC E. 7.1 WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE VIDE ORDER OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR A.Y.2007-08 IN ITA NO.168/MUM/2011, DATED 21-1-2015. THE ISSUE IS ALSO SQUARELY COVERED BY THE DECISION OF T HE SPECIAL BENCH IN THE CASE OF CIT VS. SHREYAS S. MORAKHIA. FURTHER, THE D ECISION OF SPECIAL BENCH HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. SHREYAS S. MORAKHIA, 342 ITR 285. RESPECTFU LLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS IN ASSESSEES OWN CASE, WE UPHOLD THE ACTION OF CIT(A) FOR DELETING DISALLOWANCE OF BAD DEBTS. 8. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF TR IBUNAL AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF LD. CIT(A) FOR DELETING THE DISALLOWANCE OF BAD DEBT. IN THE RESUL T, GROUND NO.1 & 2 OF THE APPEAL ARE DISMISSED. 9. GROUND NO.3 RELATES TO ALLOWING 60% DEPRECIATION IN STEAD OF 25% ALLOWED BY ASSESSING OFFICER. WE HAVE NOTED THAT TH IS GROUND OF APPEAL ALSO COVERED BY THE DECISION OF TRIBUNAL IN ASSESSE ES OWN CASE FOR A.Y. 2007-08 AND THE DECISION OF TRIBUNAL IN A.Y. 2009-1 0. WE HAVE NOTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2 009-10 BY FOLLOWING THE DECISION OF TRIBUNAL FOR A.Y. 2007-08 PASSED TH E FOLLOWING ORDER: ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 6 8. WITH REGARD TO DELETING DISALLOWANCE OF DEPREC IATION ON VSAT, WE FOUND THAT THE ASSESSEE COMPANY HAD CLAIMED DEPRECI ATION OF RS.1,04,41,922/- ON VSAT(VERY SMALL APERTURE TERMIN AL) @ 60% OF WDV CONSIDERING THE SAME AS PART COMPUTER. BY FOLLO WING EARLIER ASSESSMENT ORDER, THE AO DECLINED ASSESSEES CLAIM OF DEPRECIATION. THE CIT(A) ALSO FOLLOWING HIS EARLIER ORDER FOR ASSESSM ENT YEAR 2007-08, DELETED THE DISALLOWANCE, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 8.1 WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T RIBUNAL IN ASSESSEES OWN CASE FOR : I) A.YS.2001-02 TO 2004-05 BEING ITA NO.6738 TO 674 1/MUM/2001; II) AY.2005-06 BEING ITA NO.4606/MUM/2008; III) A.Y.2006-07 BEING ITA NO.6371/MUM/2008; AND IV) A.Y.2007-08 BEING ITA NO.168/MUM/2011. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDE R CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBU NAL, AS STATED ABOVE, WE CONFIRM THE ACTION OF CIT(A) FOR DELETING THE DISAL LOWANCE OF DEPRECIATION ON VSAT. 10. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF TR IBUNAL AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF LD. CIT(A) FOR DELETING THE DISALLOWANCE OF BAD DEBT. IN THE RESUL T, GROUND NO.3 OF THE APPEAL IS DISMISSED. 11. GROUND NO.4 RELATES TO DELETING THE ADDITION ON AC COUNT OF VANDA. WE HAVE NOTED THAT THIS GROUND OF APPEAL IS ALSO COVER ED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AN D THE DECISION OF TRIBUNAL IN A.Y. 2009-10. WE HAVE NOTED THAT THE TR IBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 BY FOLLOWING THE DECISION OF TRIBUNAL FOR A.Y. 2007-08 PASSED THE FOLLOWING ORDER: ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 7 9. THE REVENUE IS ALSO AGGRIEVED FOR DELETING DISA LLOWANCE OF VANDA LOSS. THE ASSESSEE INCURRED NET LOSS ON ACCOUNT OF VANDA TRANSACTIONS OF RS.82,68,912/-. THE ASSESSEE CLAIMED THE SAID LOSS AS NORMAL BUSINESS LOSS U/S.28/37(1) OF THE ACT. THE AO WAS OF THE VIEW THA T THE SAID LOSS IS SPECULATIVE IN NATURE AS PER EXPLANATION TO SECTION 73 OF THE ACT AS THE LOSS ARISING FROM THE TRANSACTIONS WERE CARRIED ON BY AS SESSEE HIMSELF FOR ITS OWN PURPOSE. 9.1 WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE VIDE ORDER OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR A.Y.2007-08 IN ITA NO.168/MUM/2011 DATED 2 1.1.2015. THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE VID E ORDER OF THE TRIBUNAL IN THE FOLLOWING CASES :- I) PARKAR SECURITIES LTD., 102 TTJ 235 (AHD); AND II) RAJVI SECURITIES (P) LTD., 50 SOT 592. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDE R CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBU NAL, WE CONFIRM THE ORDER OF CIT(A) FOR DELETING DISALLOWANCE ON VANDA LOSS. 12. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF T RIBUNAL AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF LD. CIT(A) FOR DELETING THE DISALLOWANCE OF VANDA LOSS. IN THE RES ULT, GROUND NO.4 OF THE APPEAL IS DISMISSED. 13. GROUND NO.5 RELATES TO DELETING THE DEPRECIATION ON CUSTOMER RIGHT. WE HAVE NOTED THAT THIS GROUND OF APPEAL ALSO COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 TO A.Y. 2010-11 AND FOR A.Y. 2011-12. WE HAVE NOTED THAT THE TRIBUNAL I N ASSESSEES OWN CASE FOR A.Y. 2011-12 BY FOLLOWING THE DECISION OF TRIBUNAL FOR EARLIER YEARS HAS PASSED THE FOLLOWING ORDER IN ITA NO. 37 8/MUM/2012 DATED 31.03.2017. ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 8 16. WITH REGARD TO CLAIM OF DEPRECIATION ON CUSTOM ER RIGHTS, WE FOUND THAT IN A.Y.2007-08, THE ASSESSEE HAD ACQUIRED CUST OMER RIGHTS AGGREGATING TO RS.6,83,52,328/- FROM THE FOLLOWING CONCERNS IN THE COURSE OF ITS BUSINESS ACQUISITIONS:- NAME OF THE CONCERN COST OF ACQUISITION OF CUSTOMER RIGHTS ACQUIRED (RS.) PENINSULAR CAPITAL MARKETS LTD., 5,18,82,328 MR. M.K.VARGHESE (PROP. OF CAPITAL DEAL & SHARE BROKER) 60,00,000 MANI STOCK BROKERS LTD., 1,04,70 ,000 TOTAL 6,83,52,328 17. THE A.O. DISALLOWED DEPRECIATION FOLLOWING THE REASONS MENTIONED IN A.Y.2007-08 TO A.Y.2010-11 WHEREIN SIMILAR DISALLOW ANCE WAS CONFIRMED. 15. BY THE IMPUGNED ORDER CIT(A) OBSERVED THAT THE FACTS IN THE CASE OF ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF CA PITAL MARKETS (P) LTD., DCIT 56 SOT, 32 AND DIRECTED THE AO TO ALLOW DEPREC IATION CLAIM OF RS.54,06,776/-. THE OBSERVATION OF CIT(A) IS AS UND ER:- I HAVE VERY CAREFULLY CONSIDERED THE MATTER. I FIND IN THE CASE OF INDIA CAPITAL MARKETS (P) LTD. VS. DCIT 56 SOT 32, THE HO N'BLE MUMBAI ITAT HAD CONSIDERED A SIMILAR MATTER. IN THE SAID CASE, THE ASSESSEE, A SHARE BROKER HAD PURCHASED ENTIRE RETAIL CLIENTELE BUSINE SS OF A COMPANY FOR A CERTAIN CONSIDERATION. THE ASSESSEE THEREIN BOOKED THESE EXPENSES AS PURCHASE OF GOODWILL AND CLAIMED DEPRECIATION THERE IN UNDER. S. 32(1)(II). IT WAS HELD THAT THE PURCHASE OF CLIENTELE BUSINESS WAS A RIGHT WHICH COULD BE USED AS A TOOL TO CARRY ON BUSINESS AND THEREFORE ELIGIBLE FOR DEPRECIATION ON THE PAYMENTS MADE, SINCE IT FAL LS WITHIN THE EXPRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR MATTER' USED IN SECTION 32(1)(II) OF THE INCOME TAX ACT, 19 61. THE FACTS IN THE CASE OF THE APPELLANT BEING SIMILAR TO THE FACTS OF THE ABOVE CITED CASE, THE A.O. IS DIRECTED TO ALLOW DEPRECIATION ON THE ACQUI SITION OF CUSTOMER RIGHTS. THE DEPRECIATION CLAIM OF RS. 54,06,776/- I S ACCORDINGLY ALLOWED. 18. WE HAVE CONSIDERED RIVAL CONTENTIONS. AO RELIED ON HIS ORDER FOR A.Y.2007-08. THE ISSUE IS COVERED IN FAVOUR OF ASSE SSEE VIDE ORDERS OF THE HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.200 7-08 IN ITA NO.168/MUM/2011 DATED 21/01/2015 AND A.Y.2008-09 TO 2010-11 IN ITA ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 9 NO.4581/MUM/2012, 7328/MUM/2011 AND 6204/MUM/2013 D ATED 19/02/2016. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR ALLOWING CLAIM OF DEPRECIATION ON CUSTOMERS RIGHT. 14. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF TR IBUNAL AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF LD. CIT(A) FOR DELETING THE DISALLOWANCE OF DEPRECIATION ON CUSTOM ER RIGHTS. IN THE RESULT, GROUND NO.5 OF THE APPEAL IS DISMISSED. 15. GROUND NO. 6 RELATES TO DEPRECIATION ON FIXED ASSET S ACQUIRED FROM PCML. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE L D. CIT(A) WHILE DECIDING THIS ISSUE RELIED UPON ORDER OF HIS PREDEC ESSOR IN A.Y. 2007-08 & A.Y. 2011-12. THE LD AR SUBMITS THAT THE REVENUE HAS NOT CHALLENGED THE FINDING OF LD CIT(A) BEFORE TRIBUNAL IN ALL YEARS. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFIC ER IN ORDER GIVING EFFECT ON THE DIRECTION OF LD CIT(A), HAS ALLOWED THE RELIEF TO THE ASSESSEE AND ALLOWED THE DEPRECIATION TO THE ASSESS EE IN ALL YEARS. THEREFORE, THE ASSESSEE IS ALSO ENTITLED FOR THE RE LIEF OF DEPRECIATION ON FIXED ASSET ACQUIRED FROM PCML FOR THE YEAR UNDER C ONSIDERATION. 16. ON THE OTHER HAND, THE LD. DR SUBMITS THAT THIS GRO UND MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION O F FACT AND TO PASS THE ORDER IN ACCORDANCE WITH LAW. ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 10 17. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND DEEM IT APPROPRIATE TO RESTORE THIS GROUND TO THE FILE OF A SSESSING OFFICER FOR VERIFICATION OF FACT AND TO ALLOW THE RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAW. IN THE RESULT, THIS GROUND OF APPEAL IS A LLOWED FOR STATISTICAL PURPOSE. ITA NO. 2820/MUM/2017 BY ASSESSEE 18. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE SOLE GR OUND OF APPEAL RAISED BY THE ASSESSEE RELATES TO THE DISALLOWANCE UNDER S ECTION 14A. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT ON SIMILAR DISALLOWANCE FOR A.Y. 2008-09 & A.Y. 2009-10, THE ISSUE WAS RESTORED TO T HE FILE OF ASSESSING OFFICER TO RE-COMPUTE THE DISALLOWANCE UNDER SECTIO N 14A. THE ASSESSING OFFICER IN THE SET-ASIDE PROCEEDING ACCEP TED THE WORKING OF ASSESSEE FOR CALCULATING DISALLOWANCE UNDER SECTION 14A. THE LD. AR OF THE ASSESSEE PLACED ON RECORD THE COPY OF ORDER GIV ING EFFECT OF THE ASSESSING OFFICER FOR A.Y. 2008-09 AND A.Y. 2009-10 DATED 02.04.2018 AND 01.06.2018 RESPECTIVELY (PAGE NO. 52 TO 56 OF T HE PB). THE LD. AR FURTHER SUBMITS THAT THE ASSESSEES OWN FUNDS ARE S UFFICIENT TO MEET OUT THE INVESTMENT MADE FOR EARNING THE EXEMPT INCOME. THEREFORE, NO INTEREST DISALLOWANCE UNDER RULE 8D(2)(II) IS WARRA NTED. THE LD. AR FURTHER SUBMITS THAT THIS FACT WAS DULY ACCEPTED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2011-12. THE TRIBUNAL ON THE BASIS OF OBSERVATION THAT THE ASSESSEE HAS SUFFICIENT INTERE ST FREE FUND AVAILABLE TO ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 11 COVER THE VALUE OF INVESTMENT DELETED THE DISALLOWA NCE MADE BY ASSESSING OFFICER. THE LD. AR SUBMITS THAT THE ASSE SSEE HAS SUO MOTO MADE DISALLOWANCE OF RS. 27,64,666/-. THE ASSESSING OFFICER BY INVOKING THE PROVISION OF RULE 8D MADE FURTHER DISA LLOWANCE OF RS. 1,62,45,627/-. THE LD. AR SUBMITS THAT ENTIRE DISAL LOWANCE MADE BY ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IS LI ABLE TO BE DELETED ON THE BASIS OF DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS. 19. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIE D UPON THE ORDER OF ASSESSING OFFICER AND LD. CIT(A). 20. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE ORDER OF AUTHORITIES BELOW. WE HAVE ALSO GONE THROU GH THE ORDER GIVING EFFECT PASSED BY ASSESSING OFFICER FOR A.Y. 2008-09 DATED 02.04.2018 PASSED UNDER SECTION 143(3) R.W.S 250/254 ACCEPTING THE SUO MOTO DISALLOWANCE UNDER SECTION 14A OF RS. 4,89,788/-. THE ORDER OF ASSESSING OFFICER DATED 01.06.2018 FOR A.Y. 2009-10 UNDER SECTION 143(3) R.W.S 250/254 IN ACCEPTING THE SUO MOTO DISALLOWANCE UNDER SECTION 14A FOR RS. 9,82,352/-. AND ORDER GIVING EF FECT FOR A.Y. 2010- 11 DATED 02.05.2018 IN ACCEPTING DISALLOWANCE UNDER SECTION 14A OF RS. 12,60,096/-. THE TRIBUNAL IN ASSESSEES OWN CASE FO R A.Y. 2011-12 DELETED THE DISALLOWANCE UNDER SECTION 14A IN EXCES S OF RS. 11.84 LAKHS (SUO MOTO DISALLOWANCE) VIDE ORDER DATED 31.03.2007 BY MAKING FOLLOWING ORDER: ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 12 19. IN THE APPEAL FILED BY ASSESSEE, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE U/S.14A. 20. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE OWN FUNDS OF ASSESSEE (RS. 555.45 CRORES) ARE SUFFICIENT TO COVE R UP THE VALUE OF INVESTMENT (RS. 41.07 CRORES) SO NO INTEREST DISALL OWING IS REQUIRED TO BE MADE U/ S 14A OF THE ACT. WITH REGARD TO ADMINISTRA TIVE EXPENSES, THE ISSUE IS COVERED VIDE ORDER OF THE HONBLE TRIBUNAL IN AS SESSEES OWN CASE A.Y.S 2008-09 TO 2010-11 IN ITA NO. 4581/MUM/2012, 7328/M UM/2011 AND 6204/MUM/2013 DATED 19.02.2016. THE MATTER HAS BEEN SENT BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE ISSUE IN ACCO RDANCE WITH THE DIRECTION GIVEN BY THE HONBLE TRIBUNAL IN CASE OF SISTER CON CERN OF THE ASSESSEE WHEREIN A SIMILAR WORKING GIVEN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER FOR A.Y.2009-10 TO 2011-12. AFTER GOING THROUGH THE ORDER OF THE TRIBUNAL AS WELL AS CONSEQUENTIAL ORDE RS PASSED BY THE AO, IN THE CASE OF SISTER CONCERN FOR THE A.Y.2009-10 TO 2 011-12, WE DO NOT FIND ANY JUSTIFICATION FOR DISALLOWANCE SO MADE BY THE A O AND CONFIRMED BY CIT(A). ACCORDINGLY AO IS DIRECTED TO DELETE THE DI SALLOWANCE MADE IN EXCESS OF RS.11.84 LAKHS. WE DIRECT ACCORDINGLY. 21. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF TR IBUNAL IN A.Y. 2011- 12 AND ACCEPTANCE OF CONSISTENT DISALLOWANCE FOR A. Y. 2008-09, 2009- 10 & 2010-11 BY ASSESSING OFFICER IN ORDER GIVING E FFECT UNDER SECTION 143(3)/250/254, WE DIRECT THE ASSESSING OFFICER TO ACCEPT THE SUO MOTO DISALLOWANCE UNDER SECTION 14A OF RS. 27,64,666/-. WE DIRECT ACCORDINGLY. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COUR T ON 28/12/2018. SD/- SD/- G. MANJUNATHA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 28.12.2018 ITA NO. 2820 & 2841 MUM 2017-M/S MOTILAL OSWAL SECU RITIES LTD. 13 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR D BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI