LAKSHMI BUILDER & DEVELOPERS, MUMBAI V. ACIT 31(2), MUMBAI

ITA 2997/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0836 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: DINESH VYAS SR
• Keywords: Depreciation; Rule of consistency; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 29 9 7 / MUM./2006 ( ASSESSMENT YEAR : 1999 2000 ) ASSTT. COMMISSIONER OF INCOME TAX (OSD), CIRCLE 2(1), MUMBAI . APPELLANT V/S M/S. TATA MOROTS LTD. (EARLIER KNOWN AS M/S. TATA FINANCE LTD. ) AHURA CENTRE, 4 TH FLOOR MAHAKALI CAVES ROAD ANDHERI (E), MUMBAI 400 093 PAN AAACT1629F . RESPONDENT ITA NO. 2735/MUM./2006 ( ASSESSMENT YEAR : 1999 2000 ) M/S. TATA MOROTS LTD. (EARLIER KNOWN AS M/S. TATA FINANCE LTD.) AHURA CENTRE, 4 TH FLOOR MAHAKALI CAVES ROAD ANDHERI (E), MUMBAI 400 093 PAN AAACT1629F . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX RANGE 8(3), MUMBAI [PRESENTLY ASSESSED WITH ACIT (OSD) 2(1)] . RESPONDENT REVENUE BY : SHR I MANJUNATHA SWAMY, CIT ASSESSEE BY : S HRI DINESH VYAS, SR. COUNSEL DATE OF HEARING 17.01 .201 8 DATE OF ORDER 24.01.2018 2 M/S. TATA MOROTS LTD. O R D E R PER SAKTIJIT DEY, J.M. AFORESAID CROSS APPEALS ARISE OUT OF ORDER DATED 20 TH FEBRUARY 2006, PASSED BY THE LEARNED COMMISSIONER (APPEALS) X, MUMBAI, FOR THE ASSESSMENT YEAR 1999 2000. 2 . I N GROUND NO.1, ASSESSEE HAS CHALLENGED DISALLOWANCE OF DEPRECIATION AMOUNTING TO ` 55,02,27,227, ON LEASED ASSETS. 3 . B RIEF FACTS ARE, THE ASSESSEE EARLIER KNOWN AS TATA FINANCE LIMITED WAS ENGAGED IN FINANCING AND RELATED ACTIVITY. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH DECEMBER 1999, DECLARING LOSS OF ` 1,14,86,748 UNDER NORMAL PROVISIONS AND BOOK PROFIT OF ` 13,18,79,252, ON WHICH ASSESSEE PAID TAXES. IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF ` 55,02,27,226, ON ASSETS LEASED BY IT WHICH INCLUDES DEPRECIATION @ 50% AMOUNTING TO ` 16,04,71,679, ON LEASED ASSETS DEPRECIATION ON WHICH WAS DISALLOWED IN ASSESSMENT YEAR 1998 99. THE ASSESSING OFFICER BEING OF THE VIEW THAT ALLOWABILITY OF DEPRECIATION IS BASED ON FULFILLMENT OF TWIN CONDITION OF OWNERSHIP OF ASSETS BY THE CLAIMENT AND ITS USER FOR THE PURPOSE OF BUSINESS , CALLED UPON THE ASSESSEE JUSTIFY ITS CLAIM. THOUGH, THE ASSESSEE MADE ELABORATE SUBMISSIONS JUSTIFYING ITS CLAIM 3 M/S. TATA MOROTS LTD. OF DEPRECIATION, HOW EVER, THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER REFERRING TO THE SALE AND LEASE BACK TRANSACTION S ENTERED WITH DIFFERENT COMPANIES HELD THAT THEY ARE SIMPLY IN THE NATURE OF FINANCE / LOAN TRANSACTIO N, THEREFORE , THE ASSESSEE IS NEITHER THE OWNER OF THE ASSETS NOR SUCH ASSETS WERE USED FOR THE PURPOSE OF ITS BUSINESS. ACCORDINGLY, HE DISALLOWED ASSESSEES CLAIM OF DEPRECIATION ON LEASED ASSETS. 4 . THOUGH, THE ASSESSEE CHALLENGED THE DISALLOWANCE OF DEP RECIATION BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER, HE ALSO SUSTAINED THE DISALLOWANCE. 5 . THE L EARNED SR. COUNSEL, SHRI DINESH VYAS, APPEARING FOR THE ASSESSEE SUBMITTED THAT IN THE PRECEDING ASSESSMENT YEAR S IN ASSESSEES OWN CASE, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY APPLYING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CASE OF ICDS LTD. V/S CIT, 350 ITR 527 (SC). IN THIS CONTEXT, HE REFERRED TO THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR S 1994 95 TO 1998 99 . HE SUBMITTED, THERE BEING NO DIFFERENCE IN FACT S ON THE BASIS OF WHICH THE TRIBUNAL HAD DECIDED THE ISSUE IN ASSESSEES OWN CASE EARLIER, THE DECISIONS HAVE TO BE FOLLOWED IN THE IMPUGNED ASSESSMENT YEAR AS WELL. FU RTHER, HE ALSO RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S APOLL O FINVEST (I) LTD., ITA NO.2298 OF 2013. 4 M/S. TATA MOROTS LTD. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SHRI MANJUNATHA SWAMY, RELIED UPON THE OBSERVATIONS OF THE DEPARTMENTAL AUTHO RITIES. 7 . WE HAVE CONSIDERED RIVAL SUBMISIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. UNDISPUTEDLY, THE ISSUE RELATING TO ASSESSEES CLAIM OF DEPRECIATION ON LEASED ASSETS IS A RECURRIN G DISPUTE BETWEEN TH E PARTIES FROM THE PRECEDING ASSESSMENT YEARS. THE DEPARTMENTAL AU THORITIES TREATING THE LEASE TRANSACTION AS FINANCE TRANSACTION CONTINUED TO DISALLOW ASSESSEES CLAIM OF DEPRECIATION. HOWEVER, THE TRIBUNAL WHILE DECIDING THE ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1997 98 AND 1998 99 IN ITA NO.6214/MUM./ 2003 AND OTHERS, DATED 6 TH JANUARY 2017, FOLLOWED THE DECISION OF THE HON'BLE SUPREME COURT IN ICDS LTD. (SUPRA) AND ALLOWED ASSESSEES CLAIM OF DEPRECIATION. FOLLOWING THE AFORESAID DECISION, THE TRIBUNAL AGAIN WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEARS 1994 95 TO 1997 98 IN ITA NO.1 484 1487/MUM./2012, DATED 12 TH JUNE 2017, ALLOWED ASSESSEES CLAIM WITH THE FOLLOWING OBSERVATIONS: PARA 5 AND 6 8 . THERE BEING NO DIFFERENCE IN FACTS NOR ANY CONTRARY DECISION BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO ORDINATE BENCH IN 5 M/S. TATA MOROTS LTD. ASSESSEES OWN CASE , AS REFERRED TO ABOVE, WHEREIN, THE PRINCIPL E LAID DOWN BY THE HON'BLE SUPREME COURT IN ICDS LTD. (SUPRA), WERE APPLIED WE ALLOW DEPRECIATION CLAIMED BY THE ASSESSEE. THIS GROUND IS ALLOWED. 9 . IN GROUND NO.2, ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF AN AMOUNT OF ` 89,10,830, BEING EXPENSES INCURRE D FOR INCREASE IN AUTHORISED SHARE CAPITAL. 10 . BRIEF FACTS ARE, THE ASSESSING OFFICER WHILE EXAMINING THE NATURE OF THE EXPENDITURE CLAIMED FOUND THAT IT WAS RELATED TO INCREASE OF AUTHORISED SHARE CAPITAL OF THE COMPANY. THEREFORE, TREATING THE EXPENDITURE INCURRED AS CAPITAL NATURE, HE DISALLOWED THE CLAIM. 11 . THE LEARNED COMMISSIONER (APPEALS) ALSO SUSTAINED THE DISALLOWANCE FOR THE VERY SAME REASON. 12 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. LEARNED SR. COUNSEL FOR THE ASSESSE E FAIRLY CONCEDED THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION V/S CIT, 225 ITR 792 AND BROOKE BOND INDIA LTD V/S CIT, 225 ITR 798, THE EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE TREATED A S CAPITAL IN NATURE. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF THE FIRST APPELLATE AUTHORITY ON THIS ISSUE. G ROUND NO.2 IS DISMISSED. 6 M/S. TATA MOROTS LTD. 13 . IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO ` 9,87,760=54. 14 . BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF ` 9,87,760=54 TOWARDS EXPENSES RELATING TO PRIOR PERIOD CALLED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM. THOUGH, THE AS SESSEE VIDE LETTER DATED 27 TH FEBRUARY 2002, SUBMITTED THAT THE EXPENDITURE WAS CLAIMED BECAUSE IT CRYSTALLIZED IN THE IMPUGNED ASSESSMENT YEAR, HOWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE DISALLOWED THE EXPENDITURE CLAIMED. 15 . T HE FIRST APPELLATE AUTHORITY ALSO CONFIRMED THE DISALLOWANCE. 16 . LEARNED SR. COUNSEL DRAWING OUR ATTENTION TO THE AUDIT REPORT IN FORM NO.3CD FILED BEFORE THE ASSESSING OFFICER SUBMITTED THAT IN THE RELEVANT ASSESSMENT YEAR WHILE THE ASSESSEE OFFERED PRIOR P ERIOD INCOME OF ` 76,06,741=23 IT CLAIMED PRIOR PERIOD EXPENDITURE OF ` 9,87,760=54. HE SUBMITTED, THOUGH, THE INCOME AND EXPENDITURE RELATED TO THE PRIOR PERIOD, HOWEVER, SINCE THEY CRYSTILAZED IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE OFFERED THE INC OME TO TAX AND CLAIMED THE EXPENDITURE RELATING TO PRIOR PERIOD. HE SUBMITTED, WHEN THE DEPARTMENT IS ACCEPTING THE PRIOR PERIOD INCOME, THERE IS NO REASON WHY IT SHOULD DISALLOW THE PRIOR PERIOD EXPENDITURE. FURTHER, 7 M/S. TATA MOROTS LTD. THE LEARNED SR. COUNSEL SUBMITT ED, THE PRIOR PERIOD EXPENSES IF NETTED OFF AGAINST PRIOR PERIOD INCOME, NO DISALLOWANCE COULD BE MADE. FURTHER, HE SUBMITTED, THE YEAR OF ALLOWANCE OF EXPENDITURE BECOME S IMMATERIAL WHEN IT IS REVENUE NEUTRAL DUE TO SAME TAX RATE. IN SUPPORT OF SUCH CONTENTION, THE LEARNED SR. COUNSEL RELIED UPON THE FOLLOWING DECISIONS: I ) CIT V/S EXCEL INDUSTRIES LTD., 358 ITR 295 (SC); II ) CIT V/S N AGRI MILLS CO. LTD., 33 ITR 681 (BOM.); III ) CIT V/S EXXONMOBIL LUBRICANTS PVT. LTD., 328 ITR 17 (DEL.); IV ) CIT V/S MAHANAGAR GAS LTD., 221 TAXMAN 80 (BOM.); AND V ) CIT V/S JAGATJIT INDUSTRIES LTD., 339 ITR 382 (DEL.). 17 . FINALLY, LEARNED SR. COUNSEL SUBMITTED, THOUGH, THE ASSESSEE IS FOLLOWING SIMILAR METHOD OF ACCOUNTING WITH REGARD TO PRIOR PERIOD INCOME AND EXPENDITURE, NO SUCH DISALLOWANCE HAS BEEN MADE EITHER IN THE PRECEDING OR SUCCEEDING ASSESSMENT YEAR S . THEREFORE, APPLYING THE RULE OF CONSISTENCY ALSO, THE EXPENDITURE HAS TO BE ALLOWED. 18 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE L EARNED COMMISSIONER (APPEALS). 19 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. IN 8 M/S. TATA MOROTS LTD. SO FAR AS THE FACTUAL ASPECT OF THE ISSUE IS CONCERNED, THERE IS NO DISPUTE THAT IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS OFFERED PRIOR PERIOD INCOME OF ` 76,06,741=23 AND CLAIMED PRIOR PERIOD EXPENDITURE OF ` 9,87,760=54. BEFORE THE ASS ESSING OFFICER, THE ASSESSEE ALSO JUSTIFIED ITS CLAIM BY STATING THAT S UCH EXPENDITURE DID CRYSTALLIZE IN THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER HAS NOT REBUTTED THE AFORESAID CLAIM OF THE ASSESSEE WITH ANY COGENT REASONING. MOREOVER, WHEN THE ASSESSING OF FICER HAS NO OBJECTION IN ACCEPTING THE PRIOR PERIOD INCOME , APPLYING THE SAME PRINCIPLE HE SHOULD NOT HAVE OBJECTED TO THE CLAIM OF PRIOR PERIOD EXPENDITURE WHEN SUCH EXPENDITURE CLAIMED BY THE ASSESSEE IS FAR LESS THAN THE PRIOR PERIOD INCOME. EVEN THE E XPENDITURE COULD HAVE BEEN NETTED OUT AGAINST THE INCOME RELATING TO PRIOR PERIOD. THEREFORE, KEEPING IN VIEW THE RATIO LAID DOWN, WE ALLOW ASSESSEES CLAIM AND DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENDITURE. THIS GROUND IS ALLOWED. 20 . GROUND NO.4 RAISED BY THE ASSESSEE CORRESPONDING TO THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN ITS APPEAL, THE ISSUE OF DISALLOWANCE UNDER SECTION 14A OF THE ACT HAS BEEN RAISED. 21 . BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER NOTICING THAT IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS EARNED EXEMPT INCOME BY WAY OF DIVIDEND AMOUNTING TO ` 9 M/S. TATA MOROTS LTD. 9,96,85,247, WHEREAS IT HAS NOT DISALLOWED ANY EXPENSES ATTRIBUTABLE TO SUCH INCOME EARNED AS PER SECTION 14A OF THE ACT, CALLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE UNDER THE SAID PROVISION SHOULD NOT BE MADE. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT INVESTMENT IN EXEMPT INCOME YIELDING ASSETS WERE MADE OUT OF OWN FUNDS, THEREFORE, NO DISALLOWANCE OF INTER EST EXPENDITURE CAN BE MADE. FURTHER, IT WAS SUBMITTED, NO EXPENDITURE HAVING SPECIFICALLY INCURRED ONLY AND EXCLUSIVELY FOR THE INVESTMENT ACTIVITY DISALLOWANCE UNDER SECTION 14A CANNOT BE MADE. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE RELIED UPON A NUM BER OF CASE LAWS. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. HE OBSERVED, IN EVERY YEAR, THERE IS CERTAIN INCREASE IN CAPITAL, INTEREST BEARING BORROWINGS AND PROFITS OF THAT YEAR. HOWEVER, IT IS IMPROBABLE TO C O RELATE THAT ONLY CAPITAL OF PROFITS OF THE YEAR W AS INVESTED IN EARNING THE EXEMPT INCOME. HE OBSERVED, DUE TO BLENDING OF FUNDS LOGICALLY IT HAS TO BE HELD THAT INTEREST BEARING FUNDS WERE ALSO USED IN INVESTMENT ACTIVITIES. THEREFORE, DISALLOWANCE OF INTEREST EXPENDITURE ON PROPORTIONATE BASIS HAS TO BE MADE. ACCORDINGLY, HE DISALLOWED INTEREST EXPENDITURE TO THE TUNE OF ` 34.96 CRORE. FURTHER, THE ASSESSING OFFI CER HELD THAT THE ASSESSEE MUST HAVE INCURRED OTHER EXPENSES LIKE SALARY, TRAVELLING, CONVEYANCE, TELEPHONE, OFFICE MAINTENANCE, GENERAL EXPENDITURE FOR EARNING DIVIDEND INCOME WHICH CANNOT BE QUANTIFIED ON EXACT BASIS. THEREFORE, HE DISALLOWED 10% OF 10 M/S. TATA MOROTS LTD. THE DIVIDEND INCOME TOWARDS EXPENDITURE INCURR ED FOR EARNING SUCH INCOME. AGAINST THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 22 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPHELD DISALLOWANCE OF INTEREST EXPENDITURE, HOWEVER, INSOFAR AS AD HOC DISALLOWANCE OF 10% OUT OF OTHER EXPENDITURE IS CONCERNED, THE FIRST APPELLATE AUTHORITY DELETED THE DISALLOWANCE ON THE REASONING THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS INCURRED ANY OTHER EXPENDITURE FOR EARNING THE DIVIDEND INCOME. WHILE THE ASSESSEE IS CHALLENGING DISALLOWANCE OF INTEREST EXPENDITURE, THE DEPARTMENT IS AGGRIEVED WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEA LS) IN DELETING DISALLOWANCE OF OTHER EXPENDITURE. 23 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE REITERATING THE STAND TAKEN BEFORE THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT OWN SURPLUS INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE DURING THE RELEVANT PREV IOUS YEAR FAR EXCEEDS THE INVESTMENTS MADE IN SHARES, THEREFORE, NO DISALLOWANCE OF INTEREST EXPENDITURE CAN BE MADE. HE SUBMITTED, CONSIDERING THE AFORESAID FACTOR, THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1999 2000 TO 2002 03, HAS DELETED THE DISALLOWANCE OF INTEREST EXPENDITURE. FURTHER, IN SUPPORT OF HIS 11 M/S. TATA MOROTS LTD. CONTENTION, THE LEARNED SR. COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: I ) HDFC BANK LTD. V/S CIT, 383 ITR 529 (BOM.); II ) CIT V/S HDFC BANK LTD., 366 ITR 505 (BOM.); AND III ) CIT V/S RELIANCE UTILITIES & POWER LTD., 313 ITR 340 (BOM.). 24 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, THOUGH, SUPPORTED THE DECISION OF THE FIRST APPELLATE AUTHORITY IN RESPECT OF DISALLOWANCE OF INTEREST EXPENDITURE, HOWEVER, SO FAR AS DISALLOWANCE OF OTHER EXPENDITURE IS CONCERNED, HE SUBMITTED, THE FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN DELE TING THE DISALLOWANCE OF OTHER EXPENDITURES MADE BY THE ASSESSING OFFICER. 25 . IN THE REJOINDER, THE LEARNED SR. COUNSEL SUBMITTED, THOUGH, DISALLOWANCE OF OTHER E XPENDITURE IS NOT CALLED FOR, HOWEVER, ONE PERCENT OUT OF THE DIVIDEND INCOME CAN BE DISALLOWED IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1999 2000 TO 2002 03. 26 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO EXAMINED THE DECISIONS RELIED UPON. INSOFAR AS DISALLOWANCE OF INTEREST EXPENDITURE IS CONCERNED, NOTABLY, THE FINANCIAL STATEMENT OF THE ASSESSEE CLEARLY DEMONSTRATE THE FAC T THAT THE ASSESSEE WAS HAVING OWN INTEREST FREE FUND AVAILABLE WHICH FAR 12 M/S. TATA MOROTS LTD. EXCEEDS THE INVESTMENTS MADE. IN FACT, THE ASSESSING OFFICER AT PAGE 40 OF THE ASSESSMENT ORDER HAS HIMSELF REPRODUCED THE DETAILS OF FUND AVAILABLE WITH THE ASSESSEE AND INVESTMENT MADE. A PERUSAL OF THE SAID FIGURE WOULD REVEAL THAT WHILE THE ASSESSEE HAS OWN INTEREST FREE FUNDS AVAILABLE WITH IT AMOUNTING TO ` 411.76 CRORE, THE INVESTMENT S MADE WERE TO THE TUNE OF ` 249.82 CRORE. THUS, THE ASSESSEE HAVING SUFFICIENT INTEREST FREE F UNDS AVAILABLE WITH IT TO TAKE CARE OF IT INVESTMENTS, NO DISALLOWANCE OUT OF INTEREST EXPENDITURE CAN BE MADE UNDER SECTION 14A OF THE ACT IN VIEW OF THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) RELIED UPON BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE. IN FACT, IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1999 2000 TO 2002 03, THE CO ORDINATE BENCH WHILE DECIDING THE APPEAL IN ITA NO.3329/MUM./2011 AND OTHERS DATED 31 ST AUGUST 2017, DELETED THE DISALLOWANCE OF INTEREST EXPENDITURE APPLYING T HE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT REFERRED TO ABOVE. IN VIEW OF THE AFORESAID, WE DELETE THE DISALLOWANCE OF INTEREST EXPENDITURE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS). INSOFAR AS DISALL OWANCE OF OTHER EXPENDITURE UNDER SECTION 14A IS CONCERNED, NOTABLY, THE TRIBUNAL WHILE DECIDING ASSESSEES APPEALS FOR 1999 2000 TO 2002 03 IN THE ORDER REFERRED TO ABOVE, SUSTAINED SUCH DISALLOWANCE TO BE MADE UNDER SECTION 14A AT ONE PERCENT OF THE EXEM PT INCOME. FOLLOWING THE AFORESAID DECISION OF THE CO ORDINATE BENCH, WE DIRECT THE ASSESSING 13 M/S. TATA MOROTS LTD. OFFICER TO DISALLOW ONE PERCENT OF THE DIVIDEND INCOME EARNED DURING THE YEAR. GROUND RAISED BY THE ASSESSEE IS ALLOWED AND GROUND RAISED BY THE REVENUE IS PARTLY ALLOWED. 27 . IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2018 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 24.01.2018 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 (DY./ASSTT. REGISTRAR) ITAT, MUMBAI